1.0.0 Disclosures on risk exposure in derivatives :
 
 (i) Qualitative Disclosure
 
 The Treasury Policy of the bank lays down the types of financial
 derivative instruments, scope of usages, approval procedures and the
 limits like open position limits, stop loss limits and counter party
 exposure limits for undertaking derivative transactions.
 
 The Bank uses financial derivative transactions for hedging its on or
 off balance sheet exposures as well as for market making. Basically,
 these products are used for hedging risk, reducing cost and increasing
 the yield in such transactions and for proprietary trading.
 
 The types of risk to which the bank is exposed to are credit risk,
 market risk, country risk and operational risk, The Bank has risk
 management policies (approved by Board of Directors of the Bank), which
 is designed to measure the financial risks for transactions in the
 trading book on a regular basis, by way of MTM, VaR and PV01, and to
 set appropriate risk limits. These are monitored by means of reliable
 and up to date Management Information Systems by the Risk Management
 Department of the Bank from time to time who, in turn, appraises the
 risk profile to the Risk management Committee of Directors, which is
 presided over by the Bank’s Chairman and Managing Director.
 
 The counter parties to the transactions are banks and corporate
 entities. The deals are done under approved exposure limits.  The bank
 has adopted the current exposure method prescribed by Reserve Bank of
 India for measuring Credit Exposure on Derivative products as per which
 the bank sums the total replacement cost (obtained by mark to market of
 all its contracts with positive value i.e. when the bank has to receive
 money from the counter party) and an amount for potential future
 changes in credit exposure calculated on the basis of the total
 notional principal amount of the contract multiplied by the relevant
 credit conversion factors according to the residual maturity as
 detailed herein under:-
 
 The hedge/non-hedge (market making) transactions are recorded
 separately. Hedging derivatives are accounted for on an accrual basis.
 Trading derivative positions are marked-to- market (MTM) and the
 resulting losses, if any, are recognized in the Profit and Loss
 Account. Profit, if any is not recognized.  Income and Expenditure
 relating to interest rate swaps are recognized on the settlement date.
 Gains/losses on termination of the trading swaps are recorded on the
 termination date as income/expenditure.
 
 1.1.1 Amount of Unsecured Advances The amount of advances, for which
 intangible securities, such as charge over the rights, licenses,
 authority etc. have been taken as security is Rs. 832.88 crores and the
 same has been classified as unsecured, forming part of unsecured
 advances as reflected in schedule 9 of the balance sheet. Such advances
 to total unsecured advances are 1.70 %
 
 1.1.2 Disclosure of penalties imposed by RBI
 
 During the financial year 2010-11, the bank has not been subjected to
 any penalty for contravention or non-compliance with any requirement of
 the Banking Regulation Act, 1949, or any rules or conditions specified
 by the Reserve Bank of India in accordance with the said Act.
 
 2. Status of Letters of Comfort
 
 A. Letters of Comfort (LOC’s) issued during the Current Financial
 Year.
 
 During the current financial year Bank has not issued any Letter of
 Comfort to meet the requirements of the overseas/domestic regulators
 while seeking their approval for establishing subsidiaries / opening of
 branches.
 
 B. Cumulative position of LOC’s outstanding on 31.03.2011
 
 During the financial year 2009-10, Bank has issued only one Letter of
 Comfort to meet the requirements of the overseas / domestic regulators
 while seeking their approval for establishing subsidiaries / opening of
 branches. The Letter of Comfort was issued to Reserve Bank of New
 Zealand for the Bank’s subsidiary in that country.
 
 The subsidiary Bank of Baroda (New Zealand) Ltd.  has been registered
 as a Bank in New Zealand on 01.09.2009.
 
 B. Disclosure in terms of Accounting Standards (AS) issued by the
 Institute of Chartered Accountants of India:
 
 1. Employee Benefits (AS-15)
 
 1.1 Bank has adopted the Accounting Standard (AS-15) issued by ICAI and
 effective from 07.12.2006. The standard has been revised and notified
 on 17.12.2007.  The provisions contained in AS-15 give option to the
 bank, to charge the transitional liability as an expense in its Profit
 and Loss Account spread over a period of 5 years.  Bank has exercised
 this option and accordingly made an incremental provision for employee
 benefits such as pension, gratuity, leave encashment and other
 retirement benefits to the extent of 1/5th of the total transitional
 liability commencing from financial year 2007-08, which is crystallized
 on Actuarial valuation at Rs. 901.00 Crores.  The unrecognized amount
 of Rs. 180.20 Crores will be charged by end of March 31, 2012.
 
 1.2 GRATUITY:
 
 The Bank pays gratuity to employees who retire or resign from Bank’s
 service. The Bank makes contributions to an in-house trust, towards
 funding this gratuity, payable every year. In accordance with the
 gratuity fund’s rules, actuarial valuation of gratuity liability is
 calculated based on certain assumptions regarding rate of interest,
 salary growth, mortality and staff attrition as per the projected unit
 credit actuarial method.
 
 The investment of the funds is made according to investment pattern
 prescribed by the Government of India.
 
 The gratuity payable is worked out by way of 3 different schemes and
 the entitlement is based on what is most beneficial to employees.
 
 1.3 PENSION
 
 1.3.1 Bank of Baroda pays pension, a defined benefit plan covering the
 employees who have opted for pension and also to the employees joining
 the bank’s service on or after 29.9.1995. The plan provides for a
 pension on a monthly basis to these employees on their cessation from
 Bank’s service based on the respective employee’s salary and years of
 qualifying service with the Bank. Employees covered under Bank of
 Baroda (Employees’) Pension Regulations, 1995 are not eligible for
 Bank’s contribution to Provident Fund. Pension fund is managed by
 in-house trustees.
 
 1.3.2 Prudential Regulatory treatment (reopening of Pension option and
 enhancement of gratuity)
 
 During the year, the Bank reopened the pension option for such of its
 employees who had not opted for the pension scheme earlier. As a result
 of exercise of which by 18989 employees, the Bank has incurred a
 liability of Rs.1829.90 Crores. Further, during the year, the limit of
 gratuity payable to the employees of the banks was also enhanced
 pursuant to the amendment to the Payment of Gratuity Act, 1972. As a
 result, the gratuity liability of the Bank has increased by Rs. NIL.
 
 In terms of the requirements of the AS 15 - Employee Benefits, the
 entire amount of Rs.1829.90 Crores is required to be charged to the
 Profit and Loss Account.  However, the RBI has issued a circular no.
 DBOD.  BP.BC.80/21.04.018/2010-11 on Re-opening of Pension Option to
 Employees of Public Sector Banks and Enhancement in Gratuity Limits –
 Prudential Regulatory Treatment, dated 9th February 2011. In accordance
 with the provisions of the said Circular, the Bank has charged an
 amount of ` 365.98 Crores (representing one-fifth of Rs.1829.90 Crores)
 to the Profit and Loss Account.  The unrecognised balance amount of
 Rs.1463.92 Crores (Rs.1829.90 – Rs.365.98 Crores) shall be accounted
 for and charged off over the balance period stipulated in the said
 circular. This amount does not include any employees relating to
 separated/ retired employees.
 
 Had the said Circular not been issued by the RBI, the profit of the
 Bank would have been lower by Rs.1463.92 Crores pursuant to application
 of the requirements of AS 15.
 
 Consequential financial effect on other components of the financial
 statements, including on Provision for Taxation, deferred Taxation, the
 transfer to statutory / other reserves & earning per share has not been
 ascertained.
 
 The Bank has proposed dividend of Rs.753.35 Crores (Rs.16.50 per share)
 which is subject to compliance of section 15 and consequential
 notification to this effect by the Government of India under Section 53
 of the Banking Regulation Act, 1949.
 
 1.4 PROVIDENT FUND
 
 Bank of Baroda is statutorily required to maintain a provident fund as
 a part of its retirement benefits to its employees. This fund is
 administered by a Bank managed trust. Each employee contributes 10% of
 their basic salary and eligible allowances and Bank of Baroda
 contributes an equal amount to the fund. The investment of the fund is
 made according to investment pattern prescribed by the Government of
 India.
 
 1.5 LEAVE ENCASHMENT
 
 An employee is entitled to encash privilege leave standing to his/her
 credit subject to a maximum of 240 days on the date of
 superannuation/Voluntary Retirement/death.
 
 However, on resignation, an employee is entitled to get encashment to
 the tune of 50% of the privilege leave standing to the credit subject
 to a maximum of 120 days.
 
 1.6 ADDITIONAL RETIREMENT BENEFIT
 
 The scheme for additional retirement benefit provides that an officer
 on his Retirement/ Voluntary retirement/ Death shall be eligible for
 additional retirement benefit, provided he had completed-30-years of
 service in Bank.
 
 In the same manner, award staff member on Retirement/ Voluntary
 Retirement/ Death shall be eligible for additional retirement benefit,
 provided he had completed – 30-years of service in Bank.
 
 However, in case of dismissal, discharge, termination, compulsory
 retirement and resignation additional retirement benefit shall not be
 payable, irrespective of any number of years of service.
 
 Notes on Segment Reporting:
 
 1. As per guidelines of RBI on compliance with Accountin Standards
 AS-17, Bank has adopted “Treasur Operations”, Wholesale, Retail and
 “Other Bankin Operations” as Primary business segments an “Domestic”
 and “International” as secondary / geographi segments.
 
 2. Segment revenue represents revenue from externa customers.
 
 3. In determining the segment results, the funds transfe price
 mechanism followed by the bank has been used.
 
 4. Capital employed for each segment has been allocate proportionate
 to the assets of the segment.
 
 5. Results, Revenue and Capital Employed of Other Banking operations
 include figures relating to International Operations.
 
 4. Related Party Disclosures (AS – 18)
 
 Names of the Related Parties and their relationship wit the Bank:
 
 (a) Subsidiaries:
 
 i) BOB Capital Markets Limited
 
 ii) BOB Cards Limited
 
 iii) The Nainital Bank Limited
 
 iv) Bank of Baroda (Botswana) Limited
 
 v) Bank of Baroda (Kenya) Limited
 
 vi) Bank of Baroda (Uganda) Limited
 
 vii) Bank of Baroda (Guyana) Inc.
 
 viii) Bank of Baroda (UK) Limited
 
 ix) Bank of Baroda (Tanzania) Limited
 
 x) Baroda Capital Markets (Uganda) Limited.  (Subsidiary of Bank of
 Baroda Uganda Ltd.)
 
 xi) BOB Trinidad & Tobago Ltd.
 
 xii) Bank of Baroda (Ghana) Ltd.
 
 xiii) Bank of Baroda (New Zealand) Ltd.
 
 (b) Associates: (i) Baroda Uttar Pradesh Gramin Bank 
 
 (ii) Nainital-Almora Kshetriya Gramin Bank 
 
 (iii) Baroda Rajasthan Gramin Bank 
 
 (iv) Baroda Gujarat Gramin Bank 
 
 (v) Jhabua-Dhar Kshetriya Gramin Bank 
 
 (vi) Indo Zambia Bank Limited 
 
 (vii) Baroda Pioneer Asset Management Co. Ltd.
 
 (c) Joint Ventures 
 
 i) India First Life Insurance Company Ltd.
 
 ii) India International Bank (Malaysia) Bhd.
 
 (D) Key Management Personnel:
 
 * Amount includes arrears on account of VI pay commission and
 incentives.
 
 The transactions with the Subsidiaries and Associate Banks have not
 been disclosed in view of para 9 of the (AS) – 18 Related Parties
 Disclosure, which exempts state controlled enterprises from making any
 disclosure pertaining to their transactions with other related parties
 which are also state controlled.
 
 7. Discontinuing operations (AS 24)
 
 During the financial year 2010-11 the bank has not discontinued the
 operations of any of its branches, which resulted in shedding of
 liability and realization of the assets and no decision has been
 finalized to discontinue an operation in its entirety, which will have
 the above effect.
 
 8. Impairment of Assets (AS-28)
 
 In view of the absence of indication of material impairment within the
 meaning of clause 5 to clause 13 of Accounting Standard-28 “Impairment
 of Assets”, no impairment of fixed assets is required in respect of
 current financial year.
 
 9. Provisions, Contingent Liabilities and Contingent Assets (AS-29)
 
 9.2 Contingent Liabilities
 
 Such liabilities as mentioned at Serial No (I) to (VI) of Schedule 12
 of Balance Sheet are dependent upon, the outcome of court, arbitration,
 out of court settlement, disposal of appeals, the amount being called
 up, terms of contractual obligations, development and raising of demand
 by concerned parties respectively. No reimbursement is expected in such
 cases.
 
 C. Other Notes to Accounts
 
 1. Balancing of Books and Reconciliation
 
 Initial matching of debit and credit outstanding entries in various
 heads of accounts included in Inter office Adjustments has been
 completed upto 31.03.2011, the reconciliation of which is in progress.
 
 2. Capital
 
 During the year bank has allotted 2,72,79,579 equity shares of Rs.10/-
 each at a premium of Rs. 892.14 per share to Govt.  of India as
 determined by the Board in accordance with regulation 76 (1) of SEBI
 ICDR regulation on preferential basis. The total amount of capital
 received by the Bank on this account is Rs. 2,461.00 Crores and
 consequently the Government holding have increased from 53.81% to
 57.03%.
 
 3. Capital Reserves
 
 Capital Reserve includes appreciation arising on revaluation of
 immovable properties and amount subscribed by Government of India under
 the World Bank’s Scheme for Export Development Projects for small /
 medium scale industries.
 
 4. Investments
 
 4.1 In terms of RBI Guidelines, during the year, the bank has
 transferred a portion of Government Securities (SLR) kept in “Available
 for Sale” category to “Held to Maturity” category.  The resultant
 depreciation of Rs. 75.80 Crores (previous year Rs. 3.25 Crores) has
 been charged to the Profit & Loss Account.
 
 4.2 Profit on sale of investments held under “Held to maturity”
 category amounting to Rs..41.92 Crores has been taken to the Profit and
 Loss Account and thereafter an amount of Rs.  20.99 Crores has been
 appropriated to the Capital Reserve, net of taxes and transferred to
 Statutory Reserve under section 17 of the Banking Regulation Act, 1949.
 
 5 Provision for Taxes
 
 5.1 Provision for Taxes has been arrived at after due consideration of
 decisions of the appellate authorities and advice of counsels.
 
 5.2 Tax paid in advance / tax deducted at source appearing under “Other
 Assets”
 
 amounting to Rs.1958.16 Crores (previous year Rs.1293.49 Crores)
 represents amounts adjusted by the department / paid by the Bank in
 respect of disputed tax demands for various assessment yeaRs. No
 provision is considered necessary in respect of the said demands, as in
 the bank’s view, duly supported by counsels opinion and / or judicial
 pronouncements, additions / disallowances made by the Assessing Officer
 are not sustainable.
 
 5.3 The Bank has claimed deduction under section 36(1) (viii) of the
 Income-tax
 
 Act,1961 in respect of the eligible business as specified in the said
 section and has accordingly transferred a sum of Rs. 335.39 Crores to
 the corresponding Special Reserve account and reported under Other
 Reserve.
 
 6. Premises-
 
 6.1 Execution of conveyance deeds is pending in respect of certain
 properties at Rs. 88.63 Crores (Previous year Rs..65.30 Crores) -
 (Original Cost).
 
 6.2 Certain properties of the Bank are stated at revalued amounts. The
 gross amount of the revaluation included in premises as at the year Rs.
 1747.83 Crores) and net of depreciation the revaluation amounts to
 Rs.1223.90 Crores (Previous Year Rs. 1321.25 Crores).
 
 6.2 Premises include assets under construction / acquisition amounting
 to Rs. 43.77 Crores (Previous year Rs. 63.93 Crores).
 
 7. BOB Fiscal Services Limited (BOBFSL), erstwhile wholly owned
 subsidiary of Bank of Baroda, had passed a special resolution for
 voluntary winding up of the company on 24.09.1990 and the liquidator
 was appointed for the same.
 
 BOBFSL entered into an agreement with Bank of Baroda pursuant to which
 entire assets and liabilities of BOBFSL were transferred to BOB as a
 going concern / as sale in liquidation of the entire business
 w.e.f.28.2.1991. As the company could not be liquidated due to pending
 legal cases; a decision to merge BOBFSL with Bank of Baroda was taken
 in the Annual General Meeting of BOBFSL held on 30th March 2007.
 
 Bank has approved the merger of M/s. BOB Fiscal Services Limited with
 Bank of Baroda in its Board meeting on 28.01.2009 and authorized Bank
 to file necessary petition for merger of BOBFSL with BOB before the
 High Court.