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Directors Report of Dena Bank

Mar 31, 2018

The Members

1. The Board of Directors has great pleasure in presenting the Annual Report along with the Audited Financial Statement of Accounts and the Cash Flow Statement of the Bank for the year ended March 31, 2018.

2. Performance Highlights

i. Savings Bank Deposits of the Bank increased from Rs. 36,239 cr as on 31^st March, 2017 to Rs. 36,471 cr as on 31^st March, 2018 registering a growth of 0.64%.

ii. CASA Deposits of the Bank decreased from Rs. 43,222 cr as on 31^st March, 2017 to Rs. 42,485 cr as on 31^st March, 2018 registering a reduction of 1.71%. CASA as percentage of Total Deposit has increased from 37.93% as on 31^st March, 2017 to 40.03% as on 31^st March, 2018.

iii. Priority Sector Advances decreased from Rs. 36,992 crore as on 31st March, 2017 to Rs. 35,949 crore as on 31st March, 2018, registering a negative growth of 2.82%. Priority Sector Advances as of 31.03.2018 42.27% of Adjusted Net Bank Credit (ANBC) surpassed the regulatory target of 40%.

iv. Agricultural Advances increased from Rs. 16,375 crore as on 31st March, 2017 to Rs. 18,179 crore as on 31st March, 2018, registering a Y-o-Y growth of 11.02%. Agriculture Advances constituted 21.38% of Adjusted Net Bank Credit (ANBC), surpassing the regulatory target of 18%.

v. MSME advance under priority sector decreased from Rs. 15,316 crore as on 31st March, 2017 to Rs. 11,638 crore as on 31st March, 2018, registering a negative growth of 24.01%.

vi. Total Retail advance has registered Y-o-Y negative growth of 0.46 % and stood at the level of Rs. 13,240 crore as on 31st March, 2018 as against Rs.13,301 crore as on 31st March, 2017.

vii. Bankâs Operating profit for the FY 2017-18 has decreased by 15.76 % to Rs. 1,171 cr as compared to Rs. 1,390 cr for the FY 2016-17.

viii. Interest income on investments for the FY 2017-18 has decreased by 7.71% to Rs. 2682 cr as against Rs. 2,906 cr for the FY 2016-17.

ix. Capital to Risk (Weighted) Asset Ratio (CRAR) under Basel III has decreased and stood at 11.09 % as on 31st March, 2018 as compared to 11.39% as on 31st March, 2017.

x. Tier I capital ratio of the Bank decreased from 9.05% as on 31st March 2017 to 8.81% as on 31^st March 2018.

xi. Cash recovery in NPA accounts stood at 931.24 cr in FY 201718 compared to Rs. 1,119.87 cr in FY 2016-17.

xii. Recovery in Written-Off accounts increased from Rs. 115 cr for FY 2016-17 to Rs. 142 cr in FY 2017-18.

xiii. Cost of Deposits reduced from 6.43% for FY 2016-17 to 5.62% for FY 2017-18 and as a result Interest Expenses on Deposits reduced from Rs. 7,213 cr as on 31st March, 2017 to Rs. 5,955 cr as on 31st March, 2018.

xiv. Key Statistics

(Rs. In Crore)

Particulars	As of 31^st March
Particulars	2017	2018
Deposits	113,943	106,130
Advances	77,538	74,239
Business Mix	191,481	180,369
Investments	40,190	38,040
Priority Sector	36,992	35,949
Agriculture	16,375	18,179

Retail	13,301	13,240
MSME-PS	15,316	11,638
Gross NPA	12,619	16,361
Net NPA	7,735	7,839
% of Gross NPA to Gross Advance	16.27	22.04
% of Net NPA to Net Advance	10.66	11.95

3. Income Analysis

The financial performance of the Bank for the year 2017-18 is summarized below:

(Rs. In Crore)

Particulars	As of 31st March
	2017	2018
Operating Profit	1,390.21	1,171.16
Interest Income	10,181.67	8,932.23
Interest Expenditure	7,773.31	6,456.41
Net Interest Income	2,408.36	2,475.82
Non-Interest Income	1,251.39	1,163.52
Provisions and contingencies	2,253.84	3,094.31
Profit before Tax	[1,275.36]	[3178.75]
Provision for Taxes	[411.73]	[1255.60]
Net Profit	[863.63]	[1923.15]

4. Key Financial Indicators

(in %)

Particulars	As of 31st March
	2017	2018
Net Interest Margin	2.00	2.19
Return on Assets	[0.67]	[1.59]
Cost to Income Ratio	62.01	67.82
Provision Coverage Ratio	50.56	60.20
Cost of Deposit	6.43	5.62
Cost of Funds	6.54	5.84
Yield on Advance	8.98	8.00
Yield on Fund	8.03	7.51
Yield on Investments	7.57	7.26
Return on Equity	[13.50]	[26.17]
Earning Per Share (Rs.)	[11.89]	[18.06]
Book Value (Rs.)	65.42	27.45

5. During the year 2017-18, Bank has not opened any new Branch, due to Prompt Corrective Action (PCA) enforced on Bank by Reserve Bank of India. Further, Bank has merged two Branches in other existing Branch and Branch network of the Bank stood at 1,872 (including 72 Satellite Offices). All the branches of the Bank are covered under CBS.

6. During the year 2017-18, Bank has established 3 new E-Smart centers taking the total to 98. In E-Smart centers, customers can deposit cash, deposit cheques, withdraw cash, get their passbooks printed and access their account through internet banking facility on 24*7 basis.

7. During the year 2017-18, Bank installed 1775 POS and has launched a new mobile banking channel i.e. Unified payment Interface (UPI) promoted by NPCI.

8. Dividend

Board of Directors has not recommended any Dividend for the FY 2017-18.

9. Net Worth and CRAR

9.1 Net Worth of the Bank stood at Rs. 5108.04 cr as on 31^st March, 2018.

9.2 CRAR :

(in %)

	Basel III
	March 2017	March 2018
CRAR Tier- I Capital	9.05	8.81
CRAR Tier -II Capital	2.34	2.28
Total	11.39	11.09

10. Changes in Board of Directors

10.1 The Board of Directors of the Bank, as on 31^st March 2018, comprised two Executive Directors, being whole-time Directors and six other directors as under:

- One Government of India Nominee Director,

- One Reserve Bank of India Nominee Director;

- Two Directors appointed by Govt. of India; and

- Two Shareholdersâ elected Directors;

10.2 Shri Ashwani Kumar, Chairman & Managing Director, ceased to be a Director of the Bank w.e.f. 31.12.2017, after completion of his 5 years tenure in terms of Notification No. F.No.4/4/2011-BO.I. dated 09th November, 2012 received from Government of India, Ministry of Finance, Department of Financial Services. The Board of Directors placed on record their appreciation for the exemplary leadership and direction provided by Shri Ashwani Kumar, during his tenure as Chairman & Managing Director on the Board of the Bank.

10.3 Smt Trishna Guha, Executive Director, retired from the Board on August 31, 2017, upon attaining superannuation. The Board of Directors placed on record their appreciation for valuable contribution made by Smt Trishna Guha, during her tenure as Executive Director on the Board of the Bank.

10.4 Dr. Rajesh Kumar Yaduvanshi has been appointed as Executive Director in terms of Notification No. F.No.4/5/(6)2017-BO.I. dated 09th October, 2017 received from Government of India, Ministry of Finance, Department of Financial Services w.e.f. 09th October, 2017 for a period of three years or until further orders, whichever is earlier under Clause (a) of Sub-Section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with sub-clause (1) of clause 3 and subclause (1) of clause 8 of The Nationalized Banks (Management & Miscellaneous Provisions) Scheme, 1970.

10.5 Shri Bankim R Desai, Workmen Employee Director, appointed under Clause (e) of Sub-section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with sub-clause (1) & (2) of clause 9 of The Nationalized Banks (Management & Miscellaneous Provisions) Scheme 1970/1980, w.e.f. 19.09.2014, ceased to be a Director of the Bank from 19.09.2017 on completion of his tenure. The Board of Directors placed on record their appreciation for valuable guidance provided by Shri Bankim R Desai, during his tenure as Director on the Board of the Bank.

10.6 Dr. Umesh Bellur, Shareholder Director, elected under clause (i) of sub-section (3) of Section 9 of Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980, w.e.f. 24th March, 2015, ceased to be a Director of the Bank upon completion of his tenure of three years on 23rd March, 2018. The Board of Directors placed on record their appreciation for valuable guidance provided by Dr. Umesh Bellur, during his tenure as Director on the Board of the Bank.

10.7 Shri V Chandrasekaran, Shareholder Director, elected under clause (i) of sub-section (3) of Section 9 of Banking Companies (A Acquisition and Transfer of Undertakings) Act, 1970/1980, w.e.f. 24th March, 2015, ceased to be a Director of the Bank upon completion of his tenure of three years on 23rd March, 2018. The Board of Directors placed on record their appreciation for valuable guidance provided by Shri V Chandrasekaran, during his tenure as Director on the Board of the Bank.

10.8 Dr. Yasho Verdhan Verma, Shareholder Director, elected under clause (i) of sub-section (3) of Section 9 of Banking Companies (A Acquisition and Transfer of Undertakings) Act, 1970/1980, w.e.f. 24th March, 2015, ceased to be a Director of the Bank upon completion of his tenure of three years on 23rd March, 2018. The Board of Directors placed on record their appreciation for valuable guidance provided by Dr Yasho Verdhan Verma, during his tenure as Director on the Board of the Bank.

10.9 During the Financial Year under review, in terms of Clause (i) of sub-section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980, the Bank conducted an Extraordinary General Meeting of Shareholders of the Bank other than the Central Government, for election of two Shareholder Directors at Sir Sorabji Pochkhanawala Bankersâ Training College, Mumbai on March 27, 2018. After the successful exercise of election, two Shareholder Directors i.e. (i) Dr Yasho Verdhan Verma and (ii) Shri Rakesh Kumar, were elected as Shareholder Directors representing shareholders other than Central Government. These Directors have hold office for three years w.e.f. March 28, 2018.

11. Directorsâ Responsibility Statement

The Directors, in preparation of the annual accounts for the year ended March 31, 2018, confirm the following:

i. That in the preparation of the annual accounts, the applicable standards have been followed along with proper explanation relating to material departures.

ii. That they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit or loss of the Bank during the period.

iii. That they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of applicable laws governing banks in India for preventing and detecting frauds and other irregularities.

iv. That they have prepared the annual accounts on a going concern basis.

Acknowledgments

12.1 The Board of Directors expresses its patronage and sincere thanks to the Bankâs valued customers, shareholders and well-wishers for their valuable contribution towards the progress of the Bank and seek their continued support and co-operation in future.

12.2 The Board of Directors acknowledges with gratitude, the timely advice, valuable guidance and support received from Government of India, Reserve Bank of India & other regulators.

12.3 The Board of Directors is also thankful to the Financial Institutions / Banks and Correspondents for their cooperation and support to the Bank.

12.4 The Board of Directors wish to place on record, the deep appreciation of the valuable contribution made by the staff, at all levels, for the progress achieved in Bankâs business. The Directors look forward to their continued cooperation in faster business development and progress of the Bank.

For and on behalf of Board of Directors

Place: Mumbai (Ramesh S. Singh)

Date: 31.05.2018 Executive Director

Mar 31, 2017

The Members

2. Performance highlights

i) Savings Bank Deposits of the Bank increased from Rs, 28,067 cr as on 31^st March, 2016 to Rs, 36,239 cr as on 31^st March, 2017 registering a growth of 29.12%.

ii) CASA Deposits of the Bank increased from Rs, 34,369 cr as on 31^st March, 2016 to Rs, 43,222 cr as on 31^st March, 2017 registering a growth of 25.76%. CASA as percentage of Total Deposit has increased from 29.27% as on 31^st March, 2016 to 37.93% as on 31^st March, 2017.

iii) Priority Sector Advances increased from Rs, 34,117 cr as on 31^st March, 2016 to Rs, 36,992 cr as on 31^st March, 2017, registering a growth of 8.43% and constituted 40.71% of Adjusted Net Bank Credit (ANBC), surpassing the regulatory minimum of 40%.

iv) Agricultural Advances increased from Rs, 15,912 cr as on 31^st March, 2016 to Rs, 16,375 cr as on 31^st March, 2017, registering a growth of 2.90% and constituted 18.02% of Adjusted Net Bank Credit(ANBC), surpassing the regulatory minimum of 18%.

v) Priority Sector MSME advances increased from Rs, 13,957 cr as on 31^st March, 2016 to Rs, 15,316 cr as on 31^st March, 2017, registering a growth of 9.74%

vi) Total Retail advance has registered Y-o-Y growth of 10.35% and stood at the level of Rs,13,301 cr as on 31^st March, 2017 as against Rs,12,053 cr as on 31^st March, 2016.

vii) Bankâs Operating profit for the FY 2016-17 has increased by 50.24% to Rs, 1,390 cr as compared to Rs, 925 cr for the FY 2015-16. Increase in the Operating Profit in FY 2016-17 is mainly due to increase in profit on sale of investment from Rs, 107 cr during FY 2015-16 to Rs, 632 cr during FY 2016-17.

viii) Interest income on investments for the FY 2016-17 has increased by 11.43% to Rs, 2,906 cr as against Rs, 2,608 cr for the FY 2015-16.

ix) Capital to Risk (Weighted) Asset Ratio (CRAR) under Basel III improved and stood at 11.39% as on 31^st March, 2017 as compared to 11.00% as on 31^st March, 2016.

x) Tier I capital ratio of the Bank increased from 8.59% as on 31^st March

2016 to 9.05% as on 31^st March 2017.

xi) Cash recovery in NPA accounts increased from Rs, 728 cr of FY 201516 to Rs, 1,120 cr in FY 2016-17.

xii) Recovery in Written-Off accounts increased from Rs, 66 cr for FY 201516 to Rs, 115 cr in FY 2016-17

xiii) Cost of Deposits reduced from 7.20% for FY 2015-16 to 6.43% for FY 2016-17 and as a result Interest Expenses on Deposits reduced from Rs, 7,717 cr as on 31^st March, 2016 to Rs, 7,213 cr as on 31^st March, 2017.

xiv) Key Statistics

(Amt in Rs, cr)

Particulars	As of 31^st March
Particulars	2016	2017
Deposits	1,17,431	1,13,943
Advances	85,811	77,538
Business Mix	2,03,242	1,91,481
Investments	35,345	40,190
Priority Sector	34,117	36,992
Agriculture	15,912	16,375

Particulars	As of 31^st March
Particulars	2016	2017
Retail	12,053	13,301
MSME-PS	13,957	15,316
Gross NPA	8,560	12,619
Net NPA	5,230	7,735
% of Gross NPA to Gross Advance	9.98	16.27
% of Net NPA to Net Advance	6.35	10.66

3. income Analysis

The financial performance of the Bank for the year 2016-2017 is summarized below:

(Amt in Rs, cr)

Particulars	As of 31^st March
	2016	2017
Operating Profit	925.30	1,390.21
Interest Income	10,645.73	10,181.67
Interest Expenditure	8,168.99	7,773.31
Net Interest Income	2,476.75	2,408.36
Non-Interest Income	716.80	1,251.39
Provisions and contingencies	1,860.62	2,253.84
Profit before Tax	[1,550.89]	[1,275.36]
Provision for Taxes	[615.57]	[411.73]
Net Profit	[935.32]	[863.63]

4. Key financial indicators

(in %)

Particulars	As of 31^st March
Particulars	2016	2017
Net Interest Margin	2.16	2.00
Return on Assets	[0.75]	[0.67]
Cost to Income Ratio	71.03	62.01
Provision Coverage Ratio	52.79	50.56
Cost of Deposit	7.20	6.43
Cost of Funds	7.25	6.54
Yield on Advance	10.05	8.98
Yield on Fund	8.84	8.03
Yield on Investments	7.75	7.57
Return on Equity	[13.54]	[13.50]
Earning Per Share ( Rs,)	[15.50]	[11.89]
Book Value (Rs,)	87.98	65.42

5. During the year 2016-17, Bank opened 30 new Branches and Branch network of the Bank increased to 1,874 (including Satellite Offices). All the branches of the Bank are covered under CBS.

6. During the year 2016-17, Bank has established 21 new E-Smart centers taking the total to 95. In E-Smart centers, customers can deposit cash, deposit cheques, withdraw cash, get their passbooks printed and access their account through internet banking facility on 24*7 basis.

7. During the year 2016-17, Bank installed 5,300 POS and has launched a new mobile banking channel i.e. Unified payment Interface (UPI) promoted by NPCI.

8. Dividend

Board of Directors has not recommended Dividend for the FY 201617.

9. net Worth and CRAR

9.1 Net Worth of the Bank stood at Rs, 4,842.92 cr as on 31^st March, 2017.

9.2 CRAR :

(in %)

	Basel iii
	March 2016	March 2017
CRAR Tier- I Capital	8.59	9.05
CRAR Tier -II Capital	2.41	2.34
Total	11.00	11.39

10. Changes in Board of Directors

10.1 The Board of Directors of the Bank, as on 31^st March 2017, comprised of Chairman & Managing Director and two Executive Directors, being whole-time Directors and eight other directors as under:

One Government of India Nominee Director,

One Reserve Bank of India Nominee Director;

One Workmen Employee Director, Two Part-time Non-official Director, appointed by Govt. of India; and Three Shareholdersâ elected Directors;

10.2 Shri V Vasanthan, Reserve Bank of India Nominee Director, appointed under Clause (c), Sub-Section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with sub-clause (1) of clause 3 of Nationalized Banks (Management & Miscellaneous Provisions) Scheme, 1970/1980, ceased to be a Director of the Bank w.e.f. May 03, 2016. The Board of Directors places on record their appreciation for valuable guidance provided by Shri V Vasanthan, during his tenure as Director on the Board of the Bank.

10.3 In terms of Notification No. F.No.6/3/2011-BO.I. dated 03^rd May, 2016 received from Government of India, Ministry of Finance, Department of Financial Services, Shri S C Murmu has been nominated as Reserve Bank of India Nominee Director on the Board of the Bank under Clause (c), Sub-Section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with sub-clause (1) of clause 3 of Nationalized Banks (Management & Miscellaneous Provisions) Scheme, 1970/1980, in place of Shri V Vasanthan.

10.4 Shri A Subramanya, appointed as part-time non-official Director on the Board of the Bank under sub-section 3 (h) and (3-A) of Section 9 of The Banking Companies (Acquisition and Transfer of Undertakings) Act 1970/1980 read with sub-clause (1) of clause 3 of the Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1970/1980, ceased to be a Director of the Bank w.e.f. 05^th December, 2016 on completion of his tenure. The Board of Directors places on record its appreciation for valuable guidance provided by Shri A Subramanya, during his tenure as Director on the Board of the Bank.

11. Directorsâ Responsibility Statement

The Directors, in preparation of the annual accounts for the year ended March 31, 2017, confirm the following:

i. That in the preparation of the annual accounts, the applicable standards have been followed along with proper explanation relating to material departures.

ii. That they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit or loss of the Bank during the period.

iv. That they have prepared the annual accounts on a going concern basis.

12. Acknowledgments

12.2 The Board of Directors acknowledges with gratitude, the timely advice, valuable guidance and support received from Government of India and Reserve Bank of India & other regulators.

12.3 The Board of Directors is also thankful to the Financial Institutions / Banks and Correspondents for their cooperation and support to the Bank.

For and on behalf of Board of Directors

Place: Mumbai (Ashwani Kumar)

Date: 19^th May 2017 Chairman & Managing Director

Mar 31, 2016

1. The Board of Directors has great pleasure in presenting the Annual Report along with the Audited Financial Statement of Accounts and the Cash Flow Statement of the Bank for the year ended March 31, 2016.

2. Performance Highlights

2.1 During the current financial year the aggregate Business Mix (Deposits Advances) of the Bank reached Rs. 2,03,242 cr as on 31st March, 2016. The total Business Mix of the Bank increased by Rs. 6,677 cr registering a growth of 3.41% on year on year.

2.2 Total Deposit of the Bank increased from Rs. 1,15,936 cr as on 31st March, 2015 to Rs. 1,17,431 cr as on 31st March, 2016 registering a growth of 1.29%.

2.3 Savings Bank Deposits of the Bank increased from Rs. 25,706 cr as on 31st March, 2015 to Rs. 28,067 cr as on 31st March, 2016 registering a growth of 9.18%.

2.4 CASA Deposits of the Bank increased from Rs. 32,121 cr as on 31st March, 2015 to Rs. 34,369 cr as on 31st March, 2016 registering a growth of 7.00%.

2.5 Advances of the Bank increased by Rs. 5,182 cr from Rs. 80,629 cr as on 31st March, 2015 to Rs. 85,811 cr as on 31st March, 2016, registering a growth of 6.43%.

2.6 $ Priority Sector Advances increased by Rs.5,663 cr from Rs. 28,454 cr as on 31st March, 2015 to Rs. 34,117 cr as on 31st March, 2016, registering a growth of 19.90% and constituted 40.23% of Adjusted Net Bank Credit (ANBC), surpassing the regulatory minimum of 40%.

2.7 $ Agricultural Advances increased by Rs. 4,046 cr from Rs. 11,866 cr as on 31st March, 2015 to Rs. 15,912 cr as on 31st March, 2016, registering a growth of 34.10% and constituted 18.77% of Adjusted Net Bank Credit (ANBC), surpassing the regulatory minimum of 18%.

2.8 Cost of Deposits reduced from 7.66% as on 31st March, 2015 to 7.20% as on 31st March, 2016 and as a result Interest Expenses on Deposits reduced by Rs. 272 cr from Rs. 7,989 cr as on 31st March, 2015 to Rs. 7,717 cr as on 31st March, 2016.

2.9 As on 31st March 2016, the Capital to Risk (Weighted) Asset Ratio (CRAR) under Basel III improved and stood at 11.00% as compared to 10.93% during 31st March 2015, against the requirement of 9.625%.

2.10 The Tier I capital ratio of the Bank increased from 7.67% as on 31st March 2015 to 8.59% as on 31st March 2016 as against the requirement of 7.625%.

2.11 Cash recovery in NPA accounts increased from Rs. 595 cr of FY 2014- 15 to Rs. 728 cr in FY 2015-16.

2.12 Recovery in Written-Off accounts increased from Rs. 34 cr for FY 2014- 15 to Rs. 73 cr for FY 2015-16.

2.13 Bank earned non-interest income of Rs. 32.26 cr from Aadhar Enrollment.

$ Including RIDF & IBPC

2.14 Key Statistics

(Amt in Rs. cr)

Particulars As of 31st March

2015 2016

Deposits 1,15,936 1,17,431

Advances 80,629 85,811

Investments 36,624* 35,345

Priority Sector 28,454 34,117

Agriculture 11,866 15,912

Retail 10,910 12,053

MSME 15,256 13,983

Gross NPA 4,393 8,560

Net NPA 3,014 5,230

% of Gross NPA to 5.45 9.98 Gross Advance

% of Net NPA to Net 3.82 6.35 Advance

* includes RIDF of Rs. 3,737 cr

3. Income Analysis

The financial performance of the Bank for the year 2015-2016 is summarized below:

(Amt in Rs. cr)

Particulars As of 31st March

2015 2016

Operating Profit 1,330.27 925.30

Interest Income 10,763.49 10,645.73

Interest Expenditure 8,315.62 8,168.99

Net Interest Income 2,447.87 2,476.75

Non-Interest Income 721.33 716.80

Provisions and 1,064.80 1,860.62 contingencies

Profit before Tax 67.66* [1550.89]

Provision for Taxes [197.82*] [615.57]

Net Profit 265.48 [935.32] *including wealth tax

4. Key Financial Indicators

(in %)

Particulars As of 31st March

2015 2016

Net Interest Margin 2.25 2.16

Return on Assets 0.22 [0.75]

Cost to Income Ratio 58.02 71.03

Provision Coverage 52.97 52.79 Ratio

Cost of Deposit 7.66 7.20

Cost of Funds 7.71 7.25

Yield on Advance 10.89 10.05

Yield on Fund 9.42 8.84

Yield on Investments 7.80 7.75

Return on Equity 4.08 [13.54]

Earning Per Share (Rs.) 4.94 [15.50]

Book Value (Rs.) 119.84 87.98

5. During the year 2015-16, Bank opened 107 new Branches and Branch network of the Bank increased to 1,846 (including Satellite Offices). All the branches of the Bank are covered under CBS.

6. During the year 2015-16, Bank established 74 E-Smart centers. In E-Smart centers, customers can deposit cash, deposit cheques, withdraw cash, get their passbooks printed and access their account through internet banking facility on 24*7 basis. Bank has targeted to establish 100 E-Smart Centres.

7. Dividend

Board of Directors have not recommended Dividend for the FY 2015-16.

8. Net Worth and CRAR

8.1 Net Worth of the Bank stood at Rs. 4,937.70 cr as on 31st March, 2016.

8.2 CRAR :

(in %)

Basel III

March 2015 March 2016

CRAR Tier- I Capital 7.67 8.59

CRAR Tier -II Capital 3.26 2.41

Total 10.93 11.00

9. Changes in Board of Directors

9.1 The Board of Directors of the Bank, as on 31st March 2016, comprised of Chairman & Managing Director and two Executive Directors, being whole-time Directors and nine other directors as under:

- One Government of India Nominee Director,

- One Reserve Bank of India Nominee Director;

- One Workmen Employee Director,

- Three Directors appointed by Govt. of India, and

- Three Shareholders'' elected Directors;

9.2 In terms of Notification No. F.No.4/6/2015-BO.I. dated 02nd November, 2015 received from Government of India, Ministry of Finance, Department of Financial Services, Shri Ravi Krishan Takkar has been elevated & appointed as MD & CEO of UCO Bank under Clause (a), Sub-Section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with sub-clause (1) of clause 3, clause 6 and sub-clause (1) of clause 8 of Nationalized Banks (Management & Miscellaneous Provisions) Scheme, 1970/1980. The Board of Directors placed on record their appreciation for valuable contribution made by Shri Ravi Krishan Takkar during his tenure as Executive Director on the Board of the Bank.

9.3 In terms of Notification No. F.No.4/5/2015-BO.I. dated 22nd January, 2016 received from Government of India, Ministry of Finance, Department of Financial Services, Shri Ramesh S Singh has been appointed as Executive Director on the Board of the Bank w.e.f. 22nd January, 2016 for a period of three years or until further orders, whichever is earlier under Clause (a), Sub-Section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with sub-clause (1) of clause 3 and sub-clause (1) of clause 8 of Nationalized Banks (Management & Miscellaneous Provisions) Scheme, 1970/1980.

9.4 Ms Anna Roy, Government Nominee Director, appointed under Clause (b), Sub-Section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with sub-clause (1) of clause 3 of Nationalized Banks (Management & Miscellaneous Provisions) Scheme, 1970/1980, ceased to be a Director of the Bank w.e.f. September 09, 2015. The Board of Directors placed on record their appreciation for valuable guidance provided by Ms Anna Roy, during her tenure as Director on the Board of the Bank.

9.5 In terms of Notification No.F.No.7/2/2012-BO.I dated 15th January, 2016 received from Government of India, Ministry of Finance, Department of Financial Services, Shri Ashok Kumar Singh has been appointed as Government Nominee Director on the Board of the Bank until further orders under Clause (b) of Sub-Section (3) of Section 9 of The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980, read with sub-clause (1) of clause 3 of The Nationalized Banks (Management and Miscellaneous Provisions) Scheme, 1970/1980, in place of Ms Anna Roy.

9.6 Shri Mohan Lal Gupta, Officer Employee Director, appointed under Clause (f) of Sub-section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with Sub-Clause (1) & (2) of Clause 9 of The Nationalized Banks (Management and Miscellaneous Provisions) Scheme, 1970/1980, w.e.f. 01st January 2013, ceased to be a Director of the Bank from 1st January, 2016 on completion of his tenure. The Board of Directors placed on record their appreciation for valuable guidance provided by Shri Mohan Lal Gupta, during his tenure as Director on the Board of the Bank.

9.7 In terms of Notification No.F.No.6/19/2015-BOI dated 28th January, 2016 received from Government of India, Ministry of Finance, Department of Financial Services, Shri Amit Chatterjee has been appointed as Part-time Non-official Director on the Board of Directors of the Bank for a period of three years from the date of notification of his appointment or until further orders, whichever is earliest, under sub-section 3 (h) and (3-A) of Section 9 of The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with sub-clause (1) of clause 3 of The Nationalized Banks (Management and Miscellaneous Provisions) Schemes, 1970/1980.

9.8 In terms of Notification No.F.No.6/18/2015-BO.I dated 28th January, 2016 received from Government of India, Ministry of Finance, Department of Financial Services, Shri G Gopalakrishna has been appointed as Part-time Non-official Director on the Board of Directors of the Bank for a period of three years from the date of notification of his appointment or until further orders, whichever is earliest, under sub-section 3 (h) and (3-A) of Section 9 of The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with sub-clause (1) of clause 3 of The Nationalized Banks (Management and Miscellaneous Provisions) Schemes, 1970/1980.

10 Directors'' Responsibility Statement

The Directors, in preparation of the annual accounts for the year ended March 31, 2016, confirm the following:

i. That in the preparation of the annual accounts, the applicable standards have been followed along with proper explanation relating to material departures.

ii. That they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit or loss of the Bank during the period.

iii. That they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of applicable laws governing banks in India for preventing and detecting frauds and other irregularities.

iv. That they have prepared the annual accounts on a going concern basis.

11. Acknowledgments

11.1 The Board of Directors expresses its patronage and sincere thanks to the Bank''s valued customers, shareholders and well-wishers for their valuable contribution towards the progress of the Bank and seek their continued support and co-operation in future.

11.2 The Board of Directors acknowledges with gratitude, the timely advice, valuable guidance and support received from Government of India and Reserve Bank of India.

11.3 The Board of Directors is also thankful to the Financial Institutions / Banks and Correspondents for their cooperation and support to the Bank.

11.4 The Board of Directors wish to place on record, the deep appreciation of the valuable contribution made by the staff, at all levels, for the progress achieved in Bank''s business. The Directors look forward to their continued cooperation in faster business development and progress of the Bank.

For and on behalf of Board of Directors

Place : Mumbai (Ashwani Kumar)

Date : 1st June, 2016 Chairman & Managing Director

Mar 31, 2015

Dear Members

1. The Board of Directors has great pleasure in presenting the Annual Report along with the Audited Financial Statement of Accounts and the Cash Flow statement of the Bank for the year ended March 31, 2015.

2. Performance Highlights

2.1 During the FY 2014-15, the Business Mix (Deposits Advances) of the Bank reached RS. 1,96,565 cr as on 31st March, 2015. Total Business Mix of the Bank increased by RS. 7,915 cr registering a growth of 4.20% on Y-O-Y basis.

2.2 Total Deposit of the Bank increased from RS. 1,10,028 cr as on 31st March, 2014 to RS. 1,15,936 cr as on 31st March, 2015, registering a growth of 5.37%.

2.3 Gross advances of the Bank increased by RS. 2,007 cr from RS. 78,622 cr as on 31st March, 2014 to RS. 80,629 cr as on 31st March, 2015, registering a growth of 2.55%.

2.4 Credit to Direct Agriculture sector increased by 19.24 % from RS. 6,886 cr as on 31st March, 2014 to RS. 8,211 cr as on 31st March, 2015.

2.5 Micro, Small and Medium Enterprises (MSME) Credit posted a growth of RS. 2,039 cr from RS. 13,217 cr as on 31st March, 2014 to RS. 15,256 cr as on 31st March, 2015, registering a growth of 15.42 %.

2.6 Direct Retail Credit posted a growth of RS. 1,204 cr from RS. 9,706 cr as on 31st March, 2014 to RS. 10,910 cr as on 31st March, 2015, registering a growth of 12.41 %.

2.7 With concerted efforts for recovery in NPA Accounts, during FY 2014-15, Bank made Cash Recovery of RS. 594.70 cr, upgraded accounts to the tune of RS. 786.98 cr and recovered an amount of RS. 33.19 cr in written-off accounts.

2.8 Key Statistics

(Amt in RS. cr) Particulars As of 31st March 2014 2015

Deposits 1,10,028 1,15,936

Advances 78,622 80,629

Investments 37,088 36,624

Priority Sector 26,173 28,454

MSME 13,217 15,256

Agriculture 10,800 12,312

Retail 9,706 10,910

Gross NPA 2,616 4,393

Net NPA 1,819 3,014

% of Gross NPA to 3.33 5.45 Gross Advance

% of Net NPA to Net 2.35 3.82 Advance

Capital Adequacy 11.14% 10.93% Ratio (Basel III)

3. Income Analysis

3.1 The Operating Profit of the Bank stood at RS. 1,330 cr as compared to RS.1,774 cr of previous year.

3.2 The Net Profit of the Bank stood at RS. 265.48 cr as compared to RS. 551.66 cr of previous year.

Financial performance of the Bank for FY 2014-2015 is summarized below:

(Amt in RS. cr) Particulars As of 31st March 2014 2015

Operating Profit 1,774.03 1,330.27

Interest Income 9,978.47 10,763.49

Interest Expenditure 7,473.39 8,315.62

Net Interest Income 2,505.08 2,447.87

Non-Interest Income 916.73 721.33

Provisions and contingencies 1,222.37 1,064.79

Profit before Tax 257.69 67.40

Provision for Taxes [293.97] [198.08]

Net Profit 551.66 265.48

4. Key Financial Indicators (% age) Particulars As of 31st March 2014 2015

Net Interest Margin 2.52 2.25

Return on Assets 0.51 0.22

Cost to Income Ratio 48.16 58.02

CRAR Basel III 11.14 10.93

Provision Coverage Ratio 56.44 52.97

Cost of Deposit 7.60 7.66

Cost of Funds 7.62 7.71

Yield on Advances 11.29 10.89

Yield on Funds 9.60 9.42

Yield on Investments 7.57 7.80

Return on Equity 9.82 4.08

Earning Per Share 14.40 4.94

Book Value 123.03 125.01

5. During FY 2014-15, the Bank opened 106 new Branches and Branch network of the Bank increased to 1,739 including Satellite Offices. All the branches of the Bank are covered under CBS.

6. ATM Network of the Bank increased to 1,482 including 125 offsite ATMs. Card base of the Bank as on 31st Mar 2015 stands at 57.79 lacs. Bank has ATM sharing arrangement through VISA, CASHNET & NFS tie-ups, enabling more than 1,65,000 ATM access points & more than 4.70 lacs Merchant Establishments (MEs) in India and more than 1 million ATMs & 26 Million MEs abroad, for the benefit of Bank''s customers. Bank also provides Dena International Gold Debit Card to HNI customers with Visa affiliation.

7. Dividend

The Board of Directors in its meeting held on 15th May, 2015 have recommended Dividend of RS. 0.90 per share i.e. 9.00% for FY 2014-15. Tax on dividend will be paid by the Bank. Total outflow on account of dividend will be RS. 60.60 cr (including dividend tax ).

8. Net Worth and CRAR

8.1 Net Worth of the Bank improved to RS. 5,960 cr as on 31st March, 2015 from RS. 5,804 cr as on 31st March, 2014, registering a growth of RS. 156 cr (2.69%).

(% age) Basel III March 2014 March 2015

CRAR Tier- I Capital 7.43 7.67

CRAR Tier -II Capital 3.71 3.26

Total 11.14 10.93

Changes in Board of Directors

9.1 The Board of Directors of the Bank, as on 31st March 2015, comprised of Chairman & Managing Director and two Executive Directors, being whole-time Directors and eight other directors as under:

* One Government of India Nominee Director,

* One Reserve Bank of India Nominee Director;

* One Workmen Employee Director,

* One Officer Employee Director;

* One Director appointed by Govt. of India, and

* Three Shareholder Directors;

9.2 Shri Rajat Sachar, Government Nominee Director, appointed under clause (b), sub-section (3) of Section 9 of Baking Companies (Acquisition and Transfer of Undertaking) Act, 1970/1980 read with sub-clause (1) of clause 3 of Nationalized Banks (Management & Miscellaneous Provision) Scheme, 1970/1980 w,e,f. 30th September, 2013 ceased to be Director of the Bank from 15th April, 2014. The Board of Directors places on record its appreciation for valuable guidance provided by Shri Rajat Sachar, during his tenure as Director on the Board of the Bank.

9.3 In terms of Notification No.F.No.6/3/2012-BO-I dated 16th April, 2014 received from Government of India, Ministry of Finance, Department of Financial Services, Ms Anna Roy has been appointed as Government Nominee Director on the Board of the Bank until further orders under Clause (b) of Sub-section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act 1970/1980, read with sub-clause (1) of clause 3 of Nationalized Banks (Management and Miscellaneous Provisions) Scheme, 1970/1980, in place of Shri Rajat Sachar.

9.4 Shri J Balasubramanian, Chartered Accountant Director, appointed under Clause (g) of Sub-section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 w.e.f. 30th June 2011 ceased to be Director of the Bank from 30th June 2014 on completion of his tenure. The Board of Directors places on record its appreciation for valuable guidance provided By Shri J Balasubramanian, during his tenure as Director on the Board of the Bank.

9.5 Shri S P Sharma, Workmen Employee Director, appointed under Clause (e) of Sub-section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with sub-clause (1) & (2) of clause 9 of Nationalized Banks (Management & Miscellaneous Provisions) Scheme 1970/1980, w.e.f. 30th November 2011 retired from the Board on 30th June, 2014 upon attaining superannuation. The Board of Directors places on record its appreciation for valuable guidance provided by Shri S P Sharma, during his tenure as Director on the Board of the Bank.

9.6 Shri Vijay Kapoor, appointed as part-time non-official Director on the Board of the Bank under Clause (h) and (3-A), Sub-Section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with sub-clause (1) of clause 3 of Nationalized Banks (Management & Miscellaneous Provisions) Scheme, 1970/1980, w.e.f. 2nd August 2011, ceased to be a Director of the Bank from 2nd August 2014 on completion of his tenure. The Board of Directors places on record its appreciation for valuable guidance provided by Shri Vijay Kapoor, during his tenure as Director on the Board of the Bank.

9.7 In terms of Notification No.F.No.6/6/2014-BO-I dated 19th September, 2014 received from Government of India, Ministry of Finance, Department of Financial Services, Shri Bankim R Desai, has been appointed as Workmen Employee Director on the Board of the Bank for a period of three years from the date of notification of his appointment or until he ceases to be a Workmen Employee of the Bank or until further orders, whichever is the earliest, under Clause (e) of Sub-section 3 of Section 9 of The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with Sub-clause (1) & (2) of clause 9 of The Nationalized Banks (Management & Miscellaneous Provisions) Scheme 1970/1980.

9.8 Shri Rakesh Goel, appointed as part-time non-official Director on the Board of the Bank under Clause (h) and (3-A), Sub-Section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with sub-clause (1) of clause 3 of Nationalized Banks (Management & Miscellaneous Provisions) Scheme, 1970/1980, w.e.f. 12th October 2011, ceased to be a Director of the Bank from 12th October 2014 on completion of his tenure. The Board of Directors places on record its appreciation for valuable guidance provided by Shri Rakesh Goel, during his tenure as Director on the Board of the Bank.

9.9 Shri Rohit M. Desai, Shareholder Director, elected under clause (i) of sub-section (3) of Section 9 of Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980, w.e.f. 17th March, 2012, ceased to be a Director of the Bank from 17th March, 2015 on completion of his tenure. The Board of Directors places on record its appreciation for valuable guidance provided by Shri Rohit M Desai, during his tenure as Director on the Board of the Bank.

9.10 Shri Mukesh Mohan, Shareholder Director, elected under clause (i) of sub-section (3) of Section 9 of Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980, w.e.f. 17th March,

2012, ceased to be a Director of the Bank from 17th March, 2015 on completion of his tenure. The Board of Directors places on record its appreciation for valuable guidance provided by Shri Mukesh Mohan, during his tenure as Director on the Board of the Bank.

9.11 Dr P S Pasricha, Shareholder Director, elected under clause (i) of sub-section (3) of Section 9 of Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980, w.e.f. 24th December, 2013, ceased to be a Director of the Bank from 17th March, 2015 on completion of his tenure. The Board of Directors places on record its appreciation for valuable guidance provided by Dr P S Pasricha, during his tenure as Director on the Board of the Bank.

9.12 During the Financial Year under review, in terms of Clause (i) of sub-section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980, Bank conducted an Extraordinary General Meeting of Shareholders of the Bank for election of three Shareholder Directors at Sir Sorabji Pochkhanwala Bankers'' Training College, Mumbai on March 23, 2015. Three Shareholder Directors i.e. (i) Dr Umesh Bellur, (ii) Shri V Chandrasekaran and (iii) Dr Yasho Verdhan Verma, were elected as Shareholder Directors representing shareholders other than Central Government. These Directors will hold office for three years from March 24, 2015.

10.00 Directors'' Responsibility Statement

The Directors, in preparation of the annual accounts for the year ended March 31, 2015, confirm the following:

I. That in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures if any.

II. That Bank has selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit or loss of the Bank during the period.

III. That Bank has taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of applicable laws governing banks in India for preventing and detecting frauds and other irregularities.

IV. That Bank has prepared the annual accounts on a going concern basis.

11. Acknowledgments

11.1The Board of Directors expresses its patronage and sincere thanks to the Bank''s valued customers, shareholders and well-wishers for their valuable contribution towards the progress of the Bank and seeks their continued support and co-operation in future.

11.2 The Board of Directors acknowledges with gratitude, the timely advice, valuable guidance and support received from Government of India and Reserve Bank of India.

11.3 The Board of Directors is also thankful to the Financial Institutions / Banks and Correspondents for their cooperation and support to the Bank.

11.4 The Board of Directors wish to place on record, the deep appreciation of the valuable contribution made by the staff, at all levels, for the progress achieved in Bank''s business. The Directors look forward to their continued cooperation in faster business development and progress of the Bank.

For and on behalf of Board of Directors

Place : Mumbai (Ashwani Kumar) Date : May 23, 2015 Chairman & Managing Director

Mar 31, 2013

To The Members

1. The Board of Directors have great pleasure in presenting the Annual Report along with the Audited Financial Statement of Accounts and the Cash Flow statement of the Bank for the year ended March 31, 2013.

This year Bank is celebrating its Platinum Jubilee Year of its glorious existence.

2. Performance Highlights

2.1 During the current financial year the aggregate Business Mix (Deposits Advances) of the Bank crossed the milestone mark of Rs.1,50,000 Crore and reached a level of Rs.1,63,664 Crore as on 31st March, 2013. The total Business Mix of the Bank increased by Rs. 29,338 Crore registering a growth of 21.84% on year on year .

2.2 Total Deposit of the Bank increased from Rs. 77,167 Crore as on 31st March, 2012 to Rs. 97,207 Crore as on 31st March, 2013, registering a growth of 25.97 %.

2.3 Advances of the Bank increased by Rs. 9,298 Crore from Rs. 57,159 Crore as on 31st March, 2012 to Rs. 66,457 Crore as on 31st March, 2013, registering a growth of 16.27%.

2.4 Micro, Small and Medium Enterprises (MSME) Credit posted a growth of Rs. 2,382 Crore from Rs. 8,291 Crore as on 31st March, 2012 to Rs. 10,673 Crore as on 31st March, 2013, registering a growth of 28.73%.

2.5 Retail Credit posted a growth of Rs. 442 Crore from Rs. 7,282 Crore as on 31st March, 2012 to Rs. 7,724 Crore as on 31st March, 2013, registering a growth of 6.07%.

2.6 With concerted efforts for recovery in NPA Accounts, Bank could make Cash Recovery of Rs. 227.44 Crore during the year 2012-13. The upgradation was effected to the tune of Rs. 159.13 Crore. The recovery in written off accounts during the year was Rs. 78.73 Crore including recovery of interest in written off accounts.

(Rs. in Crore)

Particulars As of March, 2012 As of March, 2013

Deposits 77,167 97,207

Advances 57,159 66,457

Investments 23,208 34,547

Priority Sector 15,501 18,868

Agriculture 5,544 6,719

Retail 7,282 7,724

MSME 8,291 10,673

Gross NPA 957 1,452

Net NPA 572 917

% Gross NPA to Gross Advance 1.67 2.19

% of Net NPA to Net Advance 1.01 1.39

Capital Adequacy Ratio 11.51 11.03

3. Income Analysis

3.1 The Operating Profit of the Bank increased to Rs. 1,739 Crore during the year from Rs.1,528 Crore in the previous year registering an increase of Rs. 211 Crore (13.77%).

3.2 The Net Profit increased to Rs. 810 Crore during the year from Rs. 803 Crore in the previous year recording an increase of Rs. 7 Crore (0.90%).

The financial performance of the Bank during year 2012-2013 is summarized below:

(Amt in Rs. Crore)

Particulars During 2011-12 During 2012-13

Operating Profit 1528.43 1738.86

Interest Income 6794.13 8,899.39

Interest Expenditure 4693.13 6516.29

Net Interest Income 2101.00 2,383.10

Non Interest Income 582.17 655.46

Provisions and contingencies 725.29 928.48

Profit before Tax 966.17 1032.42

Provision for Taxes 163.03 222.04

Net Profit 803.14 810.38

4. Key Financial Indicators

Some of the Key Financial ratios are presented below

(in %)

Particulars 31st March, 2012 31st March, 2013

Net Interest Margin 3.17 2.80

Return on Assets 1.08 0.86

Cost to Income Ratio 43.04 42.77

CRAR under Basel II 11.51 11.03

NPA Coverage Ratio 75.53 69.58

Cost Of Deposit 7.06 7.70

Cost of Funds 7.11 7.70

Yield on Advance 11.77 11.76

Yield on Fund 9.78 10.00

Return on Equity 20.72 17.62

Earning Per Share (Rs.) 24.08 23.15

Book Value (Rs.) 126.91 156.68

5. During the year 2012-13, the Bank opened 122 new Branches including upgradation of 7 Satellite Offices in to full fledged branches and Branch network of the Bank increased to 1464. All the branches of the Bank are covered under CBS.

6. The ATM Network of the Bank increased to 620 including 125 offsite ATMs. Bank''s customers have access to 1,16,000 ATMs in the shared network, 4.70 Lacs plus Merchant Establishments (MEs) in India. World wide, our customers have access to more than 1 million ATMs and 26 million MEs.

7. Dividend

The Board of Directors is pleased to recommend a all time high dividend of Rs. 4.70 per share i.e., 47 % for 2012-13. The tax on dividend will be paid by the Bank. The total outflow on account of dividend will be Rs. 192.49 Crore ( including dividend tax ).

8. Net Worth and CRAR

8.1 Net Worth of the Bank improved to Rs. 4,625.83 crore as on 31.03.2013 from Rs.4,256.14 crore as on 31.03.2012, registering a growth of Rs. 369.69 Crore (8.69%).

8.2 Capital to Risk (Weighted) Asset Ratio (CRAR) as of March 2013 stood at 11.03% as compared to 11.51% as of March 2012.

8.3 The Tier I capital adequacy ratio of the Bank under Basel II is 7.26% as against 8.86% as of March 2012.

(in %)

Basel I Basel II March 2012 March 2013 March 2012 March 2013

CRAR Tier- I Capital 7.75 6.36 8.86 7.26

CRAR Tier -II Capital 2.32 3.31 2.65 3.77

Total 10.07 9.67 11.51 11.03

9. Changes in Board of Directors

9.1 The Board of Directors of the Bank, as on 31st March 2013, comprised of Chairman & Managing Director and Executive Director, both being whole-time Directors and ten other directors as under:

- One Government of India Nominee Director,

- One Reserve Bank of India Nominee Director;

- One Workmen Employee Director,

- One Officer Employee Director;

- One Chartered Accountant Director,

- Two Directors appointed by Govt. of India, and

- Three Shareholders'' elected Directors;

9.2 The tenure of Smt. Nupur Mitra as Chairperson & Managing Director, ended on 31st December, 2012 upon attaining superannuation.

9.3 Shri Ashwani Kumar has been appointed as Chairman & Managing Director on the Board of the Bank for a period of five years w.e.f. 1st January, 2013.

9.4 Shri N. S. Vishwanathan, Reserve Bank of India Nominee Director ceased to be a Director of the Bank w.e.f. 5th September, 2012.

9.5 Shri V. Vasanthan has been nominated by Reserve Bank of India as Director on the Board of the Bank w.e.f. 6th September, 2012.

9.6 The tenure of Shri Ignatius M. Almeida as Officer Employee Director ended on 30th November, 2012 upon attaining superannuation.

9.7 Shri Mohan Lal Gupta has been appointed as Officer Employee Director on the Board of the Bank w.e.f 1st January, 2013.

10.00 Directors'' Responsibility Statement

The Directors, in preparation of the annual accounts for the year ended March 31, 2013, confirm the following:

I. That in the preparation of the annual accounts, the applicable standards have been followed along with proper explanation relating to material departures.

II. That they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit or loss of the Bank during the period.

III. That they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of applicable laws governing banks in India for preventing and detecting frauds and other irregularities.

IV. That they have prepared the annual accounts on a going concern basis.

11. Acknowledgments

11.1 The Board of Directors expresses its sincere thanks to the Bank''s valued customers, shareholders and well wishers for their valuable contribution towards the progress of the Bank and seek their continued support and co-operation in future.

11.2 The Board of Directors acknowledges with gratitude, the timely advice, valuable guidance and support received from Government of India and Reserve Bank of India.

11.3 The Board of Directors are also thankful to the Financial Institutions / Banks and Correspondents for their cooperation and support to the Bank.

11.4 The Board of Directors wish to place on record, the deep appreciation of the valuable contribution made by the staff, at all levels, for the progress achieved in Bank''s business. The Directors look forward to their continued cooperation in faster business development and progress of the Bank.

For and on behalf of Board of Directors

Date: 11.05.2013 (Ashwani Kumar)

Place: Mumbai Chairman & Managing Director

Mar 31, 2012

1. The Board of Directors have pleasure in presenting the Annual Report along with the Audited Financial Statement of Accounts and the Cash Flow statement of the Bank for the year ended March 31, 2012.

2. Performance Highlights

2.1 Aggregate Business Mix (Deposits Advances) of the Bank scaled a level of Rs. 1,34,326 Crore during the financial year ended 31st March, 2012. The total Business Mix of the Bank increased by Rs. 24,953.01 Crore to Rs. 1,34,326.00 Crore at the end of the year 2011-12 from Rs. 1,09,372.99 Crore as on 31st March, 2011, registering a growth of 22.81% .

2.2 Total Deposit of the Bank increased by Rs. 12,957.18 Crore from Rs. 64,209.62 Crore as on 31st March, 2011 to Rs. 77,166.80 Crore as on 31st March, 2012, registering a growth of 20.18 %.

2.3 Advances of the Bank increased by Rs. 11,996.43 Crore from Rs. 45,163.37 Crore as on 31st March, 2011 to Rs. 57,159.20 Crore as on 31st March, 2012, registering a growth of 26.56%.

2.4 Micro, Small and Medium Enterprises (MSME) Credit posted a growth of Rs. 1,507.41 Crore from Rs. 6,783.72 Crore as on 31st March, 2011 to Rs. 8291.13 Crore as on 31st March, 2012, registering a growth of 22.22%.

2.5 Retail Credit posted a growth of Rs. 1,146.91 Crore from Rs. 6,135.59 Crore as on 31st March, 2011 to Rs. 7,282.50 Crore as on 31st March, 2012, registering a growth of 18.69%.

2.6 Recovery efforts in NPA Accounts of the Bank yielded good results. Cash recovery during the year 2011-12 stood at Rs. 222.56 Crore and Upgradation to the tune of Rs.191.47 Crore. The recovery in written off accounts during the year was Rs. 81.93 Crore including recovery of interest in written off accounts of Rs. 12.17 Crore.

(Amt in Rs. Crore) Particulars As of March, 2011 As of March, 2012

Deposits 64,209.62 77,166 80

Advances 45,163.37 57,159.20

Investments 18,860.22 23,207.80

Priority Sector 15,150.00 17,153.00

Agriculture 6,389.38 6,989.00

Retail 6,135.59 7,282.50

MSME 6,783.72 8,291.13

Gross NPA 842.24 956.50

Net NPA 548.95 571.73

1.86 1.67 % of Gross NPA to Gross Advance

1.22 1.01 % of Net NPA to Net Advance

13.41 11.51 Capital Adequacy Ratio %

3. Income Analysis

3.1 The Operating Profit of the Bank increased to Rs. 1528.43 Crore for the year from Rs.1223.79 Crore in the previous year registering an increase of Rs. 304.64 Crore (24.89%).

3.2 The Net Profit increased to Rs. 803.14 Crore for the year from Rs. 611.63 Crore in the previous year recording an increase of Rs. 191.51 Crore (31.31%).

The financial performance of the Bank for the year 2011-2012 is summarized below:

(Amt in Rs. Crore) Particulars As of March, 2011 As of March, 2012

Operating Profit 1,223.79 1,528.43

Interest Income 5,033.53 6,794.13

Interest Expenditure 3,270.16 4,693.13

Net Interest Income 1,763.37 2,101.00

Non Interest Income 533.84 582.17

612.16 725.29 Provisions and contingencies

Profit before Tax 898.59 966.17

Provision for Taxes 286.96 163.03

Net Profit 611.63 803.14

4. Key Financial Indicators

Some of the Key Financial ratios are presented below:

(in %) Particulars As of March, 2011 As of March, 2012

Net Interest Margin 3.17 3.17

Return on Assets 1.00 1.08

Cost to Income Ratio 46.73 43.04

13.41 11.51 CRAR under Basel II

74.62 75.53 NPA Coverage Ratio (Provision) as per new RBI guidelines

Cost of Deposit 5.76 7.06

Cost of Funds 5.87 7.11

Yield on Advance 10.24 11.77

Yield on Fund 8.62 9.78

Return on Equity 26.71 20.72

Earning Per Share (Rs) 21.26 24.08

Book Value (Rs) 123.85 126.91

5. During the year 2011-12, the Bank opened 51 new Branches and Branch network of the Bank increased to 1342. All the branches of the Bank are covered under CBS.

6. The ATM Network of the Bank increased to 543, it includes 113 offsite ATMs. Bank's customers have access to 90,000 ATMs in the shared network, 4.70 Lacs plus Merchant Establishments (MEs) in India. World wide, our customers have access to more than 1 million ATMs and 26 million MEs.

7. Dividend

The Board of Directors are pleased to recommend dividend of Rs. 3.00 per share i.e., 30% on face value of Rs. 10 for 2011-12. The tax on dividend will be paid by the Bank. The total outflow on account of dividend will be Rs. 122.05 Crore ( including dividend tax ).

8. Net Worth and CRAR

8.1 Net Worth of the Bank improved to Rs. 4,256.14 crore as on 31.03.2012 from Rs. 3,366.43 crore as on 31.03.2011, registering a growth of Rs. 889.71 Crore (26.43%).

8.2 Capital to Risk (Weighted) Asset Ratio (CRAR) as of March, 2012 works out to 11.51% as compared to 13.41% as of March,2011.

8.3 During the year, the Bank allotted 1.66 Crore Equity Shares of face value of Rs. 10/- at a price of Rs. 90.73 (including premium of Rs. 80.73) aggregating Rs. 151.24 Crore to Life Insurance Corporation of India on preferential basis. With the above allotment, Government of India holding in the Bank stands reduced to 55.24 % from 58.01%.

8.4 The Tier I capital adequacy ratio of the Bank under Basel II is 8.86% as against 9.77% as of March, 2011. The table below gives detail CRAR as per Basel-I and Basel-II.

(in %) Basel I Basel II

March 2011 March 2012 March 2011 March 2012

CRAR Tier- I Capital 8.04 7.75 9.77 8.86

CRAR Tier-II Capital 3.00 2.32 3.64 2.65

Total 11.04 10.07 13.41 11.51

9. Changes in Board of Directors

9.1 The Board of Directors of the Bank, as on 31st March 2012, comprised of Chairperson & Managing Director and Executive Director, both being whole-time Directors and ten other directors as under:

- One Government of India Nominee Director,

- One Reserve Bank of India Nominee Director;

- One Workmen Employee Director,

- One Officer Employee Director;

- One Chartered Accountant Director,

- Two Directors appointed by Govt. of India, and

- Three Shareholders' elected Directors;

9.2 Shri D. L. Rawal, Chairman & Managing Director, retired from the Board on 31st October, 2011 upon attaining superannuation. The Board of Directors places on record their appreciation for the exemplary leadership and direction provided by Shri D. L. Rawal, during his tenure as Chairman & Managing Director on the Board of the Bank.

9.3 In terms of Notification No. F.No.13/19/2011-BO.I. dated 14th October, 2011 received from Government of India, Ministry of Finance, Department of Financial Services, Smt. Nupur Mitra, Executive Director, Indian Overseas Bank and Chairperson & Managing Director designate has been appointed as Executive Director on attachment basis on the Board of the Bank w.e.f. 16th October, 2011 till 31st October, 2011.

9.4 In terms of Notification No. F.No.4/4/2010-BO.I. dated 2nd September, 2011 received from Government of India, Ministry of Finance, Department of Financial Services, Smt. Nupur Mitra has been appointed as Chairperson & Managing Director on the Board of the Bank for a period w.e.f. 1st November, 2011 till 31st December, 2012 i.e. the date of her superannuation or until further orders, whichever is earlier under Clause (a), Sub-Section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with sub-clause (1) of clause

3, clause 5, clause 6, clause 7 and sub-clause (1) of clause 8 of Nationalized Banks (Management & Miscellaneous Provisions) Scheme, 1970/1980.

9.5 Shri B. P. Vijayendra, Reserve Bank of India Nominee Director, appointed under Clause (c), Sub-Section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with sub-clause (1) of clause 3 of Nationalized Banks (Management & Miscellaneous Provisions) Scheme, 1970/1980, ceased to be a Director of the Bank w.e.f. May 29, 2011. The Board of Directors places on record their appreciation for valuable guidance provided by Shri B. P. Vijayendra, during his tenure as Director on the Board of the Bank.

9.6 In terms of Notification No. F.No.6/3/2011-BO.I. dated 30th May, 2011 received from Government of India, Ministry of Finance, Department of Financial Services, Shri N. S. Vishwanathan has been nominated as Reserve Bank of India Nominee Director on the Board of the Bank under Clause (c), Sub-Section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with sub-clause (1) of clause 3 of Nationalized Banks (Management & Miscellaneous Provisions) Scheme, 1970/1980, in place of Shri B. P Vijayendra.

9.7 In terms of Notification No. F.No.6/26/2010-BO.I. dated 30th June, 2011 received from Government of India, Ministry of Finance, Department of Financial Services, Shri J. Balasubramanian has been nominated as part-time non-official Director under Chartered Accountant Category on the Board of the Bank under Clause (g), Sub-Section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with sub- clause (b) of clause 9(2) of Nationalized Banks (Management & Miscellaneous Provisions) Scheme, 1970/1980.

9.8 In terms of Notification No. F.No.6/53/2010-BO.I. dated 2nd August, 2011 received from Government of India, Ministry of Finance, Department of Financial Services, Shri Vijay Kapoor has been nominated as part-time non-official Director on the Board of the Bank for a period of three years or until further orders, whichever is earlier, under Clause (h) and (3-A), Sub-Section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with sub-clause (1) of clause 3 of Nationalized Banks (Management & Miscellaneous Provisions) Scheme, 1970/1980.

9.9 In terms of Notification No. F.No.6/33/2010-BO.I. dated 12th October, 2011 received from Government of India, Ministry of Finance, Department of Financial Services, Shri Rakesh Goel has been nominated as part-time non-official Director on the Board of the Bank for a period of three years or until further orders, whichever is earlier, under Clause (h) and (3-A), Sub-Section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with sub-clause (1) of clause 3 of Nationalized Banks (Management & Miscellaneous Provisions) Scheme, 1970/1980.

9.10 In terms of Notification No. F.No.9/30/2009-BO.I dated 23rd November, 2011 received from Government of India, Ministry of Finance, Department of Financial Services, Shri Satya Prakash Sharma has been appointed as Workmen Employee Director on the Board of the Bank till 30th June, 2014 i.e. the date of his superannuation or till he ceases to be a workmen employee of the Bank or until further orders, whichever is earlier, under Clause (e), Sub-Section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with sub- clause (1) & (2) of clause 9 of Nationalized Banks (Management & Miscellaneous Provisions) Scheme, 1970/1980.

9.11 Dr. Tarsem Chand, Government Nominee Director, appointed under Clause (b) of Sub-section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 w.e.f. June 10, 2008, ceased to be a Director of the Bank from 1st December, 2011. The Board of Directors places on record their appreciation for valuable guidance provided by Dr. Tarsem Chand, during his tenure as Director on the Board of the Bank.

9.12 In terms of Notification No. F.No.6/1/2010-BO.I dated 2nd December, 2011 received from Government of India, Ministry of Finance, Department of Financial Services, Shri S. K. Jindal has been appointed as Government Nominee Director on the Board of the Bank until further orders under Clause (b), Sub-Section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with sub-clause (1) of clause 3 of Nationalized Banks (Management & Miscellaneous Provisions) Scheme, 1970/1980, in place of Dr. Tarsem Chand.

9.13 Dr. Sunil Gupta, Shareholder Director, elected under clause (i) of sub-section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 w.e.f. March 17, 2009, ceased to be a Director of the Bank from 16th March, 2012 on completion of his tenure. The Board of Directors places on record their appreciation for valuable guidance provided by Dr. Sunil Gupta, during his tenure as Director on the Board of the Bank.

9.14 Shri Rohit Khanna, Shareholder Director, elected under clause (i) of sub-section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 w.e.f. March 17, 2009, ceased to be a Director of the Bank from 16th March, 2012 on completion of his tenure. The Board of Directors places on record their appreciation for valuable guidance provided by Shri Rohit Khanna, during his tenure as Director on the Board of the Bank.

9.15 During the Financial Year under review, in terms of Clause (i) of sub-section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, the Bank conducted an Extraordinary General Meeting of Shareholders of the Bank other than the Central Government, for election of three Shareholder Directors, at Sir Sorabji Pochkhanwala Bankers' Training College, Mumbai, on March 9, 2012. After the successful exercise of election, Dr. Pritam Singh was re-elected and two Shareholder Directors i.e. (i) Shri Rohit M. Desai, (ii) Shri Mukesh Mohan were elected as Shareholder Directors representing shareholders other than Central Government. These Directors will hold office for three years from March 17, 2012.

10.00 Directors' Responsibility Statement

The Directors, in preparation of the annual accounts for the year ended March 31, 2012, confirm the following:

I. That in the preparation of the annual accounts, the applicable standards have been followed along with proper explanation relating to material departures.

II. That they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit or loss of the Bank during the period.

III. That they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of applicable laws governing banks in India for preventing and detecting frauds and other irregularities.

IV. That they have prepared the annual accounts on a going concern basis.

11. Acknowledgments

11.1 The Board of Directors expresses its patronage and sincere thanks to the Bank's valued customers, shareholders and well wishers for their valuable contribution towards the progress of the Bank and seek their continued support and co-operation in future.

11.2 The Board of Directors acknowledges with gratitude, the timely advice, valuable guidance and support received from Government of India and Reserve Bank of India.

11.3 The Board of Directors are also thankful to the Financial Institutions / Banks and Correspondents for their cooperation and support to the Bank.

11.4 The Board of Directors wish to place on record, the deep appreciation of the valuable contribution made by the staff, at all levels, for the progress achieved in Bank's business. The Directors look forward to their continued cooperation in faster business development and progress of the Bank.

For and on behalf of Board of Directors

(Nupur Mitra)

Chairperson & Managing Director

Date : 17.05.2012

Place: Mumbai

Mar 31, 2011

1. The Board of Directors have pleasure in presenting the Annual Report along with the Audited Financial Statement of Accounts and the Cash Flow statement of the Bank for the year ended March 31, 2011.

2. Performance Highlights

2.1 Aggregate Business Mix (Deposits + Advances) of the Bank crossed the Milestone Mark of Rs. 1,00,000 Crore during the financial year ended 31st March, 2011. The total Business Mix of the Bank increased by Rs. 22,306.30 Crore to Rs. 1,09,372.99 Crore as on 31 March, 2011 from Rs. 87,066.69 Crore as on 31st March 2010, registering a growth of 25.62% .

2.2 Total Deposit of the Bank increased by Rs. 12,865.34 Crore from Rs. 51,344.28 Crore as on 31st March, 2010 to Rs. 64,209.62 Crore as on 31st March, 2011, registering a growth of 25.05%.

2.3 Advances of the Bank increased by Rs. 9,441.96 Crore from Rs. 35,721.41 Crore as on 31st March, 2010 to ? 45,163.37 Crore as on 31st March, 2011, registering a growth of 26.42%.

2.4 Micro, Small and Medium Enterprises (MSME) Credit posted a growth of Rs. 1,136.32 Crore from Rs. 5,647.37 Crore as on 31st March, 2010 to Rs. 6,783.69 Crore as on 31st March, 2011, registering a growth of 20.12%.

2.5 Retail Credit posted a growth of Rs. 755.68 from Rs. 5,379.91 Crore as on 31st March, 2010 to Rs. 6,135.59 Crore as on 31st March, 2011, registering a growth of 14.05%.

2.6 Recovery efforts in NPA Accounts of the Bank yielded good results. Cash recovery during the year 2010-11 stood at Rs. 191.05 Crore and upgradation to the tune of Rs. 171.12 Crore. The Bank recorded an all time high recovery in written off accounts during the year at Rs. 134.58 Crore as against Rs. 125.54 Crore recorded during the previous year.

(Amt in Rs. Crore) Particulars As of March 2010 As of March 2011

Deposits 51,344.28 64,209.62

Advances 35,721.41 45,163.37

Investments 15,760.14 18,860.22

Priority Sector 11,718.00 15,150.00

Agriculture 4,826.22 6,389.38

Retail 5,379.91 6,135.59

MSME 5,647.36 6,783.69

Gross NPA 641.99 842.24

Net NPA 427.53 548.95

% of Gross NPA to Gross Advances 1.80 1.86

% of Net NPA to Net Advances 1.21 1.22

Capital Adequacy Ratio 12.77 13.41

3. Income Analysis

3.1 The Operating Profit of the Bank increased to Rs. 1223.79 Crore for the year from Rs. 840.58 Crore in the previous year registering an increase of Rs. 383.21 Crore (45.59%).

3.2 The Net Profit increased to Rs. 611.63 Crore for the year from Rs. 511.25 Crore in the previous year recording an increase of Rs. 100.38 Crore (19.63%).

The financial performance of the Bank for the year 2010-2011 is summarized below (Amt in Rs. Crore)

Particulars As of March As of March 2010 2011

Operating Profit 840.58 1223.79

Interest Income 4,010.36 5,033.53

Interest Expenditure 2,910.33 3,270.16

Net Interest Income 1,100.03 1,763.37

Non Interest Income 588.63 533.84

Provisions and contingencies 329.32 325.20

Profit before Tax 686.79 898.59

Provision for Taxes 175.54 286.96

Net Profit 511.25 611.63

4. Key Financial Indicators

Some of the Key Financial ratios are presented below:

(Amt in Rs. Crores)

Particulars As on March As on March 2010 2011

Net Interest Margin 2.61 3.17

Return on Assets 1.01 1.00

Cost to Income Ratio 50.22 46.73

CRAR under Basel II 12.77 13.41

NPA Coverage Ratio (Prov) As per new RBI guideliness 78.61 74.62

Cost of Deposit 6.21 5.76

Cost of Funds 6.31 5.87

Yield on Advance 10.32 10.24

Yield on Fund 8.47 8.62

Return on Equity 23.55 26.71

Earning Per Share 17.83 21.26

Book Value 84.04 123.85

5. During the year 2010-11, the Bank opened 68 new Branches and Branch network of the Bank increased to 1291. All the branches of the Bank are covered under CBS.

6. The ATM Network of the Bank increased to 496, it includes 105 offsite ATMs. Banks customers have access to 70,000 ATMs in the shared network, 4.70 Lacs plus Merchant Establishments (MEs) in India. World wide, our customers have access to more than 1 million ATMs and 26 million MEs.

7. Dividend

The Board of Directors are pleased to recommend dividend of Rs. 2.20 per share i.e., 22 % for 2010-11. The tax on dividend will be paid by the Bank. The total outflow on account of dividend wilt be Rs. 85.53 Crore (including dividend tax).

8. Net Worth and CRAR

8.1 Net Worth of the Bank improved to Rs. 3,366.43 crore as on 31.03.2011 from Rs. 2,201.64 crore as on 31.03.2010, registering a growth of Rs. 1,164.79 Crore (52.91%).

8.2 Capital to Risk (Weighted) Asset Ratio (CRAR) as of March 2011 works out to 13.41% as compared to 12.77% as of March 2010.

8.3 During the year, the Bank allotted 4.65 Crore Equity Shares of face value of Rs.10/- at a price of Rs. 115.75 (including premium of Rs. 105.75) aggregating Rs. 539 crore to the Government of India on preferential basis. With the above allotment, Government of India holding in the Bank stands enhanced to 58.01% from 51.19%.

8.4 The Tier I capital of the Bank under Basel II is improved to 9.77% as against 8.16% as of March 2010.

Basel I Basel II March March March March 2010 2011 2010 2011

Tier- I Capital 6.80 8.04 8.16 9.77

Tier -II Capital 3.85 3.00 4.61 3.64

Total 10.65 11.04 12.77 13.41

9. Changes in Board of Directors

9.1 The Board of Directors of the Bank, as on 31st March 2011, comprised of Chairman & Managing Director and Executive Director, both being whole-time Directors and six other directors as under:

- One Government of India Nominee Director

- One Reserve Bank of India Nominee Director

- One Officer Employee Director and

- Three Shareholders elected Directors

9.2 Shri Chandra Kishore, Reserve Bank of India Nominee Director, appointed under Clause (c) of Sub-section (3) of Section 9 of the Banking Companies (Acquisition and Transfer

of Undertakings) Act, 1970/1980 (as amended vide Banking Companies (Acquisition and Transfer Undertakings) and Financial Institutions Laws (Amendment) Act, 2006 read with Sub-clause (1) of Clause 3 of Nationalized Banks (Management and Miscellaneous Provisions) Scheme 1970/1980 w.e.f. February 27, 2007, ceased to be a Director of the Bank w.e.f. July 29, 2010. The Board of Directors place on record their appreciation for valuable guidance provided by Shri Chandra Kishore, during his tenure as Director on the Board of the Bank.

9.3 In terms of Notification No. F.No.9/2/2007-B.O.I. dated 30th July, 2010 received from Government of India, Ministry of Finance, * Department of Financial Services, Shri B. P. Vijayendra has been nominated as Director on the Board of the Bank under Clause (c), Sub-Section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with sub-clause (1) of clause 3 of Nationalised Banks (Management & Miscellaneous Provisions) Scheme, 1970/1980, in place of Shri Chandra Kishore.

9.4 Dr. Kamlesh Kumar Goel, Director, appointed under Clause (h) of Sub-section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 w.e.f. February 4,2009, ceased to be a Director of the Bank from February 3,2011 on completion of his tenure. The Board of Directors place on record their appreciation for valuable guidance provided by Dr. Goel, during his tenure as Director on the Board of the Bank.

10. Directors Responsibility Statement

The Directors, in preparation of the annual accounts for the year ended March 31, 2011, confirm the following:

i) That in the preparation of the annual accounts, the applicable standards have been followed along with proper explanation relating to material departures.

ii) That they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit or loss of the Bank during the period.

iii) That they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of applicable laws governing banks in India for preventing and detecting frauds and other irregularities.

iv) That they have prepared the annual accounts on a going concern basis.

11. Acknowledgments

11.1 The Board of Directors expresses its patronage and sincere thanks to the Banks valued customers, shareholders and well wishers for their valuable contribution towards the progress of the Bank and seek their continued support and co-operation in future.

11.2 The Board of Directors acknowledges with gratitude, the timely advice, valuable guidance and support received from Government of India and Reserve Bank of India.

11.3 The Board of Directors express special thanks to Government of India for infusing capital ? 539 crore and thus enabling bank to maintain a Tier I CRAR, as on 31st March, 2011, above the prescribed benchmark.

11.4 The Board of Directors are also thankful to the Financial Institutions / Banks and Correspondents for their cooperation and support to the Bank.

11.5 The Board of Directors wish to place on record, the deep appreciation of the valuable contribution made by the staff, at all levels, for the progress achieved in Banks business. The Directors look forward to their continued cooperation in faster business development and progress of the Bank.

For and on behalf of Board of Directors

(D. L. Rawal) Chairman & Managing Director

Place : Mumbai Date : 01.06.2011

Mar 31, 2010

1. The Board of Directors have great pleasure in presenting the Annual Report of the Bank along with the Audited Financial Statement of Accounts and the Cash Flow statement for the year ended 31st March, 2010.

2. FINANCIAL PERFORMANCE

2.1 The Operating Profit of the Bank increased to Rs. 840.58 crores for the year ended 31st March, 2010 from Rs. 726.36 crores in the previous year registering an increase of Rs. 114.22 crores (15.72%).

2.2 The Net Profit increased to Rs. 511.25 crores for the Year ended 31st March, 2010 from Rs. 422.66 crores in the previous year recording an increase of Rs. 88.59 crores (20.96%).

The financial performance of the Bank for the year 2009-2010 is summarized below:

Amount in Crore

Particulars As of 31st March, 2009 As of 31st March, 2010 Operating Profit 726.36 840.58

Interest Income 3447.50 4010.36

2383.07 2910.33 Interest Expenditure 1064.43 1100.03

Net Interest Income 430.13 588.63

Non Interest Income 303.70 329.32

Provisions and contingencies 541.43 686.79

Profit before Tax

Provision for Taxes 118.77 175.54

Net Profit 422.66 511.25

3. Performance Highlight

3.1 The aggregate Business Mix of the Bank crossed the level of Rs. 87000 crores during the financial year ended 31st March, 2010. The total Business Mix of the Bank increased by Rs. 14830 crores to Rs. 87066 crores at the end of the year 2009-2010 from Rs. 72236 crores recording the growth rate of 20.53 % .

3.2 The total Deposit registered a growth of Rs. 8294 crores (19.26%) from Rs. 43051 crore as on 31st March, 2009 to Rs. 51345 crores as on 31st March, 2010.

3.3 The Advances of the Bank increased by Rs. 6536 crores from Rs. 29185 crores as on 31st March, 2010 to Rs. 35721 crores as on 31st March, 2010 registering a growth of 22.40%.

3.4 The multipronged efforts of the Bank in recovery of NPAÃs has resulted in the improvement in the asset quality of the Bank during the year. Bank effected a cash recovery and upgradation of NPAÃs of Rs. 423.83 crores compared to Rs. 380.10 crores in the previous year. Recovery in writeoff has also increased by Rs.25.94 crore from Rs. 100.24 crores as of March 2009 to Rs. 126.18 crores as of March 2010.

Amount in crore

Particulars As of 31st March, 2009 As of 31st March, 2010 Total Deposits 43050.61 51344.27

Gross Advances 29185.36 35721.41

Gross Investments 12538.32 15760.14

Priority Sector 9715.00 11718.00

Agriculture 3851.00 4826.00

Retail 4424.44 5379.91

MSME 4774.74 5647.36

Gross NPA 620.77 641.99

Net NPA 313.38 427.53

% of Gross NPA to Gross Advance 2.13 1.80

% of Net NPA to Net Advance 1.09 1.21

Capital Adequacy Ratio 12.07 12.77

4. Key Financial Indicat Some of the Key Financial ratios are presented below

Particulars As of 31st March, 2009 As of 31st March, 2010

Net Interest Margin 2.91 2.61

Return on Assets 1.02 1.01

Cost to Income Ratio 51.40 50.22

CRAR under Basel II 12.07 12.77

NPA Coverage Ratio (Prov.) As per new RBI guidelines

Cost of Deposit 6.36 6.21

Cost of Funds 6.47 6.31

Yield on Advance 10.71 10.32

Yield on Fund 8.76 8.52

Return on Equity 24.05 23.55

Earning Per Share 14.74 17.83

Book Value 65.84 84.04

5. Branch Network:

During the year 2009-10, the total Branch network of the Bank increased to 1223 including 39 new Branches and all the branches of the Bank are covered under CBS.

6. ATM Network:

Total number of ATMs increased to 396 which included 101 offsite ATMs and customers can have access to 9,45,000 ATMs in the shared network.

7. Dividend

The Board of Directors is pleased to recommend a final dividend of Rs. 2.00 per share i.e., 20% for 2009-10. The dividend for fi nancial year 2009-10 shall be subject to tax on dividend to be paid by the Bank. The total outflow on account of dividend for 2009-10 is Rs.67,11,37,606/- including dividend tax.

8. Net Worth and CRAR

8.1 The Net Worth of the Bank improved to Rs. 2212.50 crore as on 31.03.2010 from Rs. 1666.83 crore as on 31.03.2009 registering a growth of Rs. 545.67 crore (32.74 %).

8.2 The Capital to Risk (Weighted) Asset Ratio (CRAR) is 12.77% as of March 2010, compared to 12.07% as of March 2009, against the requirement of 9%.

8.3 During the year, the Bank raised Tier I capital by way of Innovative Perpetual Debt Instrument (IPDI) aggregating to Rs. 125 crore.

8.4 The Tier I capital of CRAR component under Basel II is 8.16% as of March 2010 as against 6.76% as of March 2009.

Basel I Basel II March 2009 March 2010 March 2009 March 2010 Tier- I Capital 6.01 6.80 6.76 8.16

Tier -II Capital 4.72 3.85 5.31 4.61

Total 10.73 10.65 12.07 12.77

9. Changes in Board of Directors

9.1 The Board of Directors of the Bank comprised of Chairman & Managing Director and Executive Director, both being whole-time Directors and seven other directors as under, as on 31st March, 2010:

Ã One Government of India Nominee Director;

Ã One Reserve Bank of India Nominee Director;

Ã One Officer Employee Director;

Ã One Director nominated by Government of India; and

Ã Three ShareholdersÃ elected Directors:

9.2 Shri Bhaskar Sen, ceased to be Executive Director of the Bank w.e.f. 28th February, 2010, upon his elevation as Chairman & Managing Director of United Bank of India. The Board of Directors places on record their appreciation for the valuable contribution made by Shri Bhaskar Sen during his tenure as Executive Director on the Board of the Bank.

9.3 The Government of India, Ministry of Finance, Department of Financial Services vide notifi cation F.No. 9/12/2009-BO-I dated 25th January, 2010 in terms of Clause (a) of Sub-section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with Sub-clause (1) of Clause 3, Sub- clause (1) of Clause 8 of the Nationalised Banks

(Management and Miscellaneous Provisions) Scheme, 1970/1980, after consultation with Reserve Bank of India had appointed Shri Ashok K. Dutt as Executive Director of the Bank for a period with effect from the date of his taking charge of the post i.e. 1st March, 2010 and upto 31.01.2014 i.e. the date of his superannuation and until further orders, whichever is earlier.

9.4 Shri V. S. Sivakumar, Director, elected under Clause (h) of Sub-section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 w.e.f. 21st November, 2007, resigned from the Board and his resignation was accepted by Government of India on 27th October, 2009. The Board of Directors places on record their appreciation for valuable guidance provided by Shri V. S. Sivakumar, during his tenure as Director on the Board of the Bank.

9.5 Shri A. Gopalakrishnan, Chartered Accountant Director, appointed under Clause (g) of Sub-section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 w.e.f. 14th December, 2006, ceased to be a Director of the Bank from 13th December, 2009 on completion of his tenure. The Board of Directors places on record their appreciation for valuable guidance provided by Shri A. Gopalakrishnan, during his tenure as Director on the Board of the Bank.

9.6 Shri M. Surya Naik, Director, elected under Clause (h) of Sub-section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 w.e.f. 31st December, 2007, ceased to be a Director of the Bank from 30th December,

2009 on completion of his tenure. The Board of Directors places on record their appreciation for valuable guidance provided by Shri M. Surya Naik, during his tenure as Director on the Board of the Bank.

9.7 Shri M. G. Shinde, Workmen Employee Director, appointed under Clause (e) of Sub-section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 read with Sub-clause (2)(a) of Clause 9 of Nationalized Banks (Management and Miscellaneous Provisions) Sceme, 1970 w.e.f. 19th September, 2007, retired from the Board on 28th February,

2010 upon attaining superannuation. The Board of Directors places on record their appreciation for valuable guidance provided by Shri M. G. Shinde, during his tenure as Director on the Board of the Bank.

9.8 The Government of India, Ministry of Finance, Department of Financial Services vide notifi cation F.No.9/10/2009-BO-I dated 18th February, 2010 in terms of Clause (f) of Sub-section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with Sub-clause (1) & (2) of Clause 9 of the Nationalized Banks (Management and Miscellaneous Provisions) Scheme, 1970/1980, after consultation with Reserve Bank of India had appointed Shri Ignatius M. Almeida as Offi cer Employee Director on the Board of Directors of the Bank for a period of three years from the date of notifi cation i.e. 18th February, 2010 and upto 30.11.2012 i.e. the date of his superannuation or until he ceases to be an offi cer of the Bank or until further orders, whichever is earlier.

10. DirectorsÃ Responsibility Statement

The Directors, in preparation of the annual accounts for the year ended March 31, 2010, confi rm the following:

I. That in the preparation of the annual accounts, the applicable standards had been followed along with proper explanation relating to material departures.

11. That they had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent as to give a true and fair view of the state of affairs of the Bank at the end of the fi nancial year and of the profi t or loss of the Bank for the period.

III. That they had taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provisions of applicable laws governing banks in India for preventing and detecting fraud and other irregularities.

IV. That they had prepared the annual accounts on a going concern basis.

II. Acknowledgments

11.1 The Board of Directors expresses its patronage and sincere thanks to the BankÃs valued customers, shareholders and well wishers for their valuable contribution towards the progress of the Bank and seek their continued support and co-operation in future.

11.2 The Board of Directors acknowledges with gratitude, the timely advice, valuable guidance and support received from Government of India and Reserve Bank of India.

11.3 The Board of Directors are also thankful to the Financial Institutions / Banks and Correspondents for their cooperation and support to the Bank.

11.4 The Board of Directors wish to place on record, the deep appreciation of the valuable contribution made by the staff, at all levels, without which the progress achieved would have been unattainable. The Directors look forward to their continued cooperation in faster business development and progress of the Bank.

For and on behalf of Board of Directors (D.L. Rawal) Chairman and Managing Director

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