Dear Shareholder,
 
 It is my pleasure to present the Annual Report for the year ended 31st
 March, 2012.
 
 At the outset, let me congratulate you on your great Bank completing
 100 years of yeomen services to the people of this great nation. The
 Bank celebrated the centenary year across the country through all its
 offices and branches. During the centenary year, special cultural
 programme was organized at country''s capital, New Delhi and at the
 financial capital, Mumbai. The programme held on 21.12.2011 at Delhi
 was graced by Shri Pranab Mukherjee, Honorable Finance Minister, GOI,
 Shri Namo Narain Meena, MOS, GOI, Shri D.K.Mittal (IAS), Secretary,
 Dept. of Financial Services, MOF, GOI. On this occasion following new
 initiatives were taken:
 
 – Opening of 100 branches
 
 – Release of '' History Book'' on the Bank
 
 – Inauguration of Financial Literacy and Credit Counseling Centre,
 Kota
 
 – Launching of websites Gateway to Prime Minister Relief Fund
 
 – Felicitation of octogenarian Customers - living legend of the Bank
 
 The programme held in Mumbai on 26.12.2011 was graced by Chief Minister
 of Maharashtra, Shri Prithviraj Chavan and during the event - opening
 of 100 ATMs , felicitation of unsung Heroes, faliciation of Gram
 Pradhan of Sangvi Mohadi village . VIP customers and Ex-Top Executives
 were also felicitated.  The celebrations reaped a huge benefit by way
 of building a heightened brand-building of this great institution. Your
 bank can now boast as of one of the best Banking Brand in the country.
 
 The year gone by has seen many negatives in the Economic and Political
 scenario both globally and locally.  The adverse Balance of Payment,
 the crude oil price, the falling Rupee against the USD, the sliding GDP
 growth, the inflation - look from any angle, the situation looked
 challenging. Against all the adverse conditions, your bank showed a
 respectable growth in the operating profit, albeit under moderate
 growth in Deposit and Advances. The interest rate hike on resources
 also did its bit in reducing the margin on income. The commodity prices
 remained constantly high thereby forcing RBI to resort to successive
 hiking of policy rates. The Euro Zone continues to falter and possibly
 has reached the worst possible level.  The headline inflation and the
 core inflation still threaten the growth machinery of the economy.
 RBI''s anti-inflationary stance may not allow it to soften the policy
 rates for greater part of this financial year.  Despite a record food
 grain production in the Agriculture & Allied activities which recorded
 growth of 5.4 per cent during the last year, the supply and storage
 constraints worked adversely and could not contain inflation.
 Industrial production throughout the year showed a very tardy growth.
 The GDP projection was lowered successively to a level of 6.9%, as
 against a growth of 8.6 per cent during 2010-11.
 
 Your Bank has achieved a total business level of Rs. 346898 crore. The
 Bank changed its strategies by clearly diversifying in favour of retail
 business. The High cost deposits (i.e above card rate) and CDs have
 been contained at the June''2011 level. This step was taken as a measure
 of cost management. There is a clear shift towards the retail credit
 growth. A bank with more than 4000 branches needs to be a Retail Bank.
 Our strategies have started yielding results and would show significant
 growth in the coming financial year.
 
 Cost of fund of the Bank has gone up from 5.82 per cent for 2010-11 to
 7.28 per cent for 2011-12, which is in line with the industry. However,
 despite the sharp increase in cost of funds, Net Interest Income was
 only marginally impacted from Rs. 5326 crore to Rs. 5169 crore. This was
 in the backdrop of an interest reversal amounting to Rs. 403 crore due 
 to additional slippage in NPA.
 
 Operating profit of your bank increased y-o-y by 8.65% from Rs. 2591
 crore to Rs. 2815 crore. However, Net profit showed a fall from Rs. 1252
 crore to Rs. 533 crore on account of provisioning in NPA and restructured
 accounts .The main factor was recognition of 100% system driven NPA and
 high exposure to Discoms and aviation sector. The severity of the
 economic conditions affecting the industrial and financial market
 sectors did not only affect your bank but all the banks in the country.
 Provisions and write back of interest amounted to Rs. 2685 crore during
 the year.
 
 I really feel privileged to lead one of the largest Public Sector
 banks, that too joining this great institution at a time when it
 celebrated its centenary year. Despite the fact that the financial
 results have been only moderate, there have been a lot of qualitative
 improvements. The strong branch network of 4011 branches spread across
 entire geography of the country with matching workforce of over 35000
 will lead your Bank to a greater height in the coming year. The
 guidance on financial parameters for the coming financial year aimed at
 achieving enhanced value for all the stakeholders in the Bank. I
 express my sincere gratitude for your unstinted support.
 
 With best wishes,
 
 Yours sincerely,
 
 Mohan V Tanksale
 
 Place : Mumbai
 
 Date : May 24, 2012