1.1.1 - Qualitative Disclosure:
 
 The Bank undertakes foreign exchange forward contracts for its
 customers and hedges them with other banks.  The bank also deals with
 other banks in proprietary trading duly adhering to risk limits
 permitted by RBI, set in the policy and is monitored by mid office. The
 Marked to Market values are monitored on monthly basis for foreign
 exchange forward contracts. The credit equivalent is computed under
 current exposure method. The Bank''s treasury department operates under
 three functional areas namely Front Office, Mid Office and Back Office.
 The operations are conducted in terms of the policy guidelines issued
 by Reserve Bank of India from time to time and as approved by the Board
 of the Bank.
 
 2. ASSET QUALITY
 
 a) Non Performing Loan Provisioning Coverage Ratio is 76.69% (Previous
 Year 70.27%).
 
 b) The Bank has made provisions for Non Performing Assets at enhanced
 rates as advised in Reserve Bank of India''s Circular DBOD.No.BP.BC
 94/21.04.048/2011-12 dated 18.05.2011.
 
 2.1 Details of financial assets sold to Securitisation / Reconstruction
 company for Asset Reconstruction:
 
 The bank has not sold any financial assets to Securitisation /
 Reconstruction Company for Asset Reconstruction and hence no disclosure
 is given.  (Previous year - Nil).
 
 2.2 Details of Non-performing financial assets purchased / sold:
 
 The bank has not purchased/sold any financial assets from/to Banks
 (Previous Year - NIL).
 
 2.3 Details of Single Borrower Limit (SBL) / Group Borrower Limit (GBL)
 exceeded by the Bank Single Borrower Limit / Group Borrower Limit has
 not been exceeded during the year.
 
 2.4 Unsecured Advances - Advances secured by intangible securities such
 as Rights, licences authorisations, etc.  - NIL
 
 3.  MISCELLANEOUS
 
 3.1 Penalties imposed by RBI
 
 No penalty was imposed on the bank by the Reserve Bank of India during
 the year.
 
 4.  DISCLOSURES AS PER ACCOUNTING STANDARDS
 
 The bank has complied with the Accounting Standards (AS) issued by the
 Institute of Chartered Accountants of India and the following
 disclosures are made in accordance with RBI''s guidelines.
 
 i) Prior Period Items - AS 5
 
 There are no material prior period items of income / expenditure during
 the year requiring disclosure.
 
 ii) Revenue Recognition - AS 9
 
 Income / Expenditure of certain items recognised on cash basis (AS 9)
 are not considered to be material.
 
 iii) Employee benefits - AS 15
 
 The liability towards Gratuity is met through annual premium payments
 determined on actuarial valuation by Life Insurance Corporation of
 India under their Group Gratuity Life Assurance Scheme.
 
 The Bank along with its employees contributes a defined sum to City
 Union Bank Employees Pension Fund Superannuation Scheme of Life
 Insurance Corporation of India to meet the post retirement annuity
 payments of its employees.
 
 Leave encashment benefits of employees are provided on an actuarial
 basis but not funded.
 
 vi) Related Party disclosures - AS 18
 
 (i) Related Parties:
 
 Parent / Subsidiaries / Associates/JV - NIL
 
 Key Management Personnel - Sri S. Balasubramanian, MD & CEO 
 
 (ii) Related Party Transactions:
 
 Remuneration (cost to the bank) - Rs.27,00,000/-
 
 viii) Consolidated Financial Statements (CFS) - AS 21
 
 The bank has no subsidiaries.
 
 ix) Accounting for Taxes on Income - AS 22
 
 The Bank has complied with the provisions of Accounting Standard 22 on
 accounting for taxes on income issued by the Institute of Chartered
 Accountants of India.
 
 x) Accounting for Investments in Associates in CFS - AS 23
 
 The bank has no Associates.
 
 xi) Discontinuing Operations - AS 24
 
 The bank has not discontinued any operations.
 
 xii) Intangible Assets - AS 26
 
 The Bank has followed AS 26 - Intangible Asset issued by ICAI and the
 guidelines issued by RBI and has been consistent with the compliance.
 
 xiii) Impairment of Assets - AS 28
 
 In the opinion of the management there is no impairment to the assets
 to which AS 28 - Impairment of Assets applies.
 
 xiv) Provisions & Contingencies - AS 29
 
 The details of the provisions and contingencies, contingent
 liabilities, the movement of provisions on NPA''s and depreciation on
 investments which are considered material are disclosed elsewhere under
 the appropriate headings as per RBI guidelines.
 
 5.0 Drawdown from Reserves
 
 The Bank has not drawn any amount from Reserves during the year.
 
 5.1 Letters of Comfort issued in respect of Subsidiaries during
 financial year 2010-11 - NIL (Disclosure as per RBI''s Mail Box
 instruction dated 11-Feb-2009)
 
 5.2 Provision Coverage Ratio (PCR)
 
 The Provision Coverage Ratio (PCR) of the bank as on 31.03.2011 is
 76.69%.
 
 5.3 Overseas Assets, NPAs and Revenue
 
 No SPV either Domestic or Overseas has been sponsored by the bank.
 
 5.4 Off-Balance Sheet SPVs sponsored
 
 The Bank has not sponsored any SPVs.
 
 5.5 Income Tax
 
 Provision for income tax in the current year has been arrived at
 consistent with earlier years after considering various judicial
 decisions on certain disputed issues.
 
 Of the disputed income tax of earlier years amounting to Rs.174.05 cr
 the bank has appellate orders in its favour for Rs.122.60 cr. No
 provision is considered for the entire disputed taxes based on the
 orders received by the bank and similar decisions at various stages of
 the Tribunal and Higher judicial Forums.
 
 5.6 Inter Branch Reconciliation
 
 Reconciliation of Central Office accounts maintained by branches has
 been completed upto 31.03.2011. Adjustment of outstanding entries in
 Inter Branch Reimbursement account, Clearing Difference Receivable,
 Funds in Transit and other similar accounts is in progress. In the
 opinion of the management, there is no consequential material impact.
 
 5.7 Employees Stock Option
 
 The bank has allotted 50,31,003 shares during the year to its eligible
 employees who have exercised their options granted under ESOS of the
 Bank.
 
 5.8 In the absence of notification under Sec 441 A of the Companies
 Act, 1956 on the cess leviable for the purpose of rehabilitation /
 revival / protection of assets of Sick Industrial Company, no provision
 has been made for the same during the year.
 
 5.9 Previous year''s figures have been regrouped wherever necessary to
 conform to the current year classification.