Central Bank of India

Dear Shareholder,
 
 Since March 2, 2009 I have had the honour of leading Central Bank of
 India. I am fully aware of the challenges, both external and internal,
 that the Bank faces just two years from its centenary. Nevertheless, it
 is in these turbulent times that opportunities galore are thrown up. As
 the Chinese proverb goes, It is better to light a candle than curse
 the darkness.
 
 Macro economic environment:
 
 The year 2008-09 had been a remarkable year for the resilience shown by
 the Indian economy and particularly by the financial sector in the face
 of synchronized global downturn. It is a matter of great satisfaction
 that none of the banks / financial institutions was funded or required
 emergency funding from the Government, unlike in the USA and Euro Zone.
 Our robust regulatory framework and domestic demand driven growth have
 largely contained the spillover effect of the crisis.  Further, the pro
 -active and nuanced monetary policy of the Reserve Bank of India
 created stable and orderly conditions in the money and credit markets
 in the face of uncertain conditions prevailing in other major financial
 markets of the world, especially after collapse of Lehman Brothers in
 September 2008.
 
 There has been a deceleration in the growth of the domestic economy due
 to lower services sector growth, reduced private consumption and
 investment demand and the industrial slowdown, along with declining
 export demand.  However, the fiscal and monetary stimulus measures
 initiated by the Government and RBI significantly improved market
 sentiments and these are expected to cushion the downturn by
 stabilizing the economic activity. Assuming that the present macro
 economic variables do not undergo adverse changes, the GDP growth for
 2009-10 at 6.0 percent - as projected by the RBI - is achievable.
 
 Despite slowdown in the economy and consequent deceleration, the
 financial sector has reported one of the highest growth figures among
 all sectors of the domestic economy. For the Public Sector banks in the
 country - which account for over 75 per- cent of the total assets of
 the scheduled commercial banks in the country - the year witnessed
 their stellar role in bringing the economy on the higher trajectory
 growth path by taking lead in reducing interest rates and supplying
 credit to the various productive sectors of the economy. The Public
 Sector banks also successfully implemented the debt waiver and relief
 scheme for farmers announced by the Government.
 
 Business Performance Highlights:
 
 On business parameters, the Bank continued to perform well. The total
 business of the Bank increased to Rs 2,18,012 crore, registering a
 year-on-year growth of 18.1 percent. Total deposits of the Bank
 recorded a growth of about 19.0 percent at Rs 1,31,272 crore and the
 CASA registered a growth of 9.84 percent. Gross credit reg- istered a
 growth of 16.76 percent and stood at Rs. 86,740 crore. The credit
 deployed under Priority Sector increased from Rs 25,442 crore as at the
 end of previous year to Rs 29,270 crore as at the end of the year,
 which is a y-o-y growth of 15.05 percent.  Direct agriculture recorded
 a growth of 27.91 percent, despite adjustment of Rs 399.59 crore under
 the Debt Waiver Scheme. Educational Loan portfolio recorded a growth of
 46.88 percent. Infrastructure finance recorded a growth of 50.51% with
 balance outstanding at Rs 15,382 crores.
 
 Gross NPAs reduced to 2.67 percent from 3.16 percent in the previous
 year. Net NPA reduced to 1.24 percent from 1.45 percent in the previous
 year. Operating Profit increased by 13.33 percent from Rs 1,268 crore
 to Rs 1,437 crore and Net Profit increased by 3.82 percent from Rs 550
 crore to Rs 571 crore. Net worth increased by 12.82 percent from Rs
 3,901 crore to Rs 4,401 crore. Business- per-employee and
 Business-per-branch also increased to Rs 5.60 crore and Rs 54.23 crore,
 respectively. As per Basel-I, the Capital Adequacy ratio (CRAR)
 increased to 11.75 percent from 10.42 percent during the previous year.
 Further, as per Basel-ll, the CRAR of the bank stood at 13.12 percent
 as at the end of the year.
 
 As a responsible corporate citizen and to achieve the socio-economic
 uplift of the excluded masses information, Technology Based Financial
 Inclusion was launched by the Bank in four districts in the country.
 Five Rural Development & Self Employment Training Institutes (RUDSETI)
 were opened to encourage development of rural entrepreneurship. Further
 under Cent-Sahyog scheme, free counseling was provided to the
 distressed farmers, borrowers at two centers. The Bank also covered
 2026? women beneficiaries under the Janashree Bima Yojana. apart from
 providing credit linkage to a large number of SHGs.
 
 The Road Ahead
 
 Your Bank has a new top management team comprising the Chairman and
 Managing Director and two Executive Directors They bring to bear upon
 the Bank rich experience proven performance and complementary
 perspectives.
 
 A new operational Mission viz OPERATION NAVCHETANA - the Rejuvenation
 has been launched. The objective is to leverage the human resources for
 higher productivity and vitality. Result-oriented well-defined goals
 have been launched, with central focus being enhanced profitability,
 which have been set to take the Bank to new heights of business and
 ensure sustainable growth
 
 We reiterate our commitment to enhanced value for all the stakeholders
 in the Bank viz. Central Government RBI, shareholders, customers and
 staff members As a leading public sector bank, we pledge ourselves to
 maintain the highest standards of professionalism in our work At the
 core of our vision is the Aam Aadmi the common man in rural and urban
 areas and bringing value based solutions for the unserved and
 underserved.
 
 Improving Profitability, deployment of credit with thrust on retail
 credit and SME, up-gradation of technology and development of human
 resources are some of the key-areas identified under operation Nav
 Chetana. Rewriting our business strategies leveraging our human
 resources, upgrading technology and other infrastructure for achieving
 these goals form the basis of our strategies
 
 I would like to thank RBI and Ministry of Finance Govt of India for
 their support and guidance and the Board of Directors for their
 cooperation I would also take this opportunity to thank all the
 employees for their active involvement and dedicated services, which
 have contributed to the progress of the Bank.
 
 With best wishes,
 
 Yours sincerely,
 
                                                         S Sridhar
                                           Chairman & Managing Director
 
 Place : Mumbai
 Date  : July 1, 2009