Dena Bank

The Board of Directors have pleasure in presenting the Annual Report of
 the Bank together with the Audited Balance Sheet and Profit & Loss
 Account for the financial year ended March 31, 2008.
 
 1.000 MANAGEMENT DISCUSSION AND ANALYSIS
 
 1.100 Macro-Economic Scenario
 
 The Indian economy continued its march towards economic development by
 expanding at a robust pace during 2007-08 for the fifth consecutive
 year. The advance estimates of Central Statistical Organisation (CSO)
 show that the real GDP growth rate is placed at
 
 8.7 per cent in 2007-08 as compared with 9.6 per cent in 2006-07,
 reflecting moderation in growth in all the three sectors, viz.,
 agriculture and allied activities, industry and services.
 Notwithstanding the moderation, the growth performance was largely in
 tune with the high average real GDP growth of 8.7 per cent per annum
 during the five-year period, 2003-04 to 2007-08.  
 
 According to the Third Advance Estimates for 2007-08, the total food
 grains production is slated to reach an all- time high at 227.3 million
 tonnes, recording an increase of 4.6 per cent over the previous year
 (217.3 million tonnes). The production during 2007-08 would exceed the
 target set earlier (221.5 million tonnes) by 5.8 million tonnes. During
 2007-08 (April-February) the index of industrial production (IIP) rose
 by 8.7 per cent as compared with an increase of 11.2 per cent during
 2006-07 (April-February). The manufacturing sector recorded a growth of
 9.1 per cent during 2007-08 (April-February) as compared with 12.2 per
 cent during April-February 2006-07. During the same period, the growth
 of the infrastructure sector was placed at 5.6 per cent as compared
 with 8.7 per cent during the corresponding period of the previous year,
 reflecting deceleration in all the sectors, except coal. 
 
 The services sector maintained its double-digit growth at 10.6 per cent
 during 2007-08 despite some moderation in pace. It continued to be the
 major contributor to GDP growth. As compared to previous year, leading
 indicators for the period April 2007 to Feb 2008 show moderate growth
 rate in service sector activities like tourist arrivals, revenue
 earning freight traffic of the railways, new cell phone connections,
 passengers handled by civil aviation at domestic terminals, and also
 some other sectors like commercial vehicle production, cement and steel
 industries.
 
 Gross Domestic Saving (GDS), as a percentage of GDP at current market
 prices, was placed at 34.8 per cent in 2006-07 as compared with 34.3
 per cent in 2005-06, reflecting improved saving performance by the
 private corporate and public sectors. The household saving rate
 declined marginally in 2006-07 from the previous year on account of
 decline in the financial saving rate.  The sales and net profits of
 Reserve Banks sample non-government non-financial companies moderated
 during 2007-08 (up to December 2007) relative to the previous year.
 However, gross profits to sales ratio improved marginally over the same
 period.
 
 1.200 Annual Policy Statement of RBI:
 
 1.201. Reserve Bank of Indias monetary stance in its Annual Statement
 of Policy for the year 2007-08 noted that barring the emergence of any
 adverse and unexpected developments in various sectors of the economy
 and keeping in view the current assessment of the economy including the
 outlook for inflation, the overall stance of monetary policy in the
 period ahead will continue to be to reinforce the emphasis on price
 stability and well-anchored inflation expectations while ensuring a
 monetary and interest rate environment that supports export and
 investment demand in the economy so as to enable continuation of the
 growth momentum; to re-emphasize credit quality and orderly conditions
 in financial markets for securing macro economic and, in particular,
 financial stability while simultaneously pursuing greater credit
 penetration and financial inclusion and to respond swiftly with all
 possible measures as appropriate to the evolving global and domestic
 situation impinging on inflation expectations and the growth momentum.
 
 1.202 The evolving changes in the economy during the second half saw
 asset prices in equity market considerably falling, with the BSE Sensex
 falling from the high of 21000 to around 15000. The inflation raised
 its ugly head again steadily climbing to over 7% by year end as against
 the comfort level of 5% as originally targeted by the Regulator.
 However, the inflation is largely considered to be due to supply side
 pressures leading to a slew of fiscal measures and other steps to rein
 in prices of essential commodities and other basic items like steel and
 cement.
 
 1.203 The conduct of the monetary policy during the year was therefore
 largely influenced by inflationary tendencies in the economy.
 
 1.300 Movement of Interest Rates
 
 1.301 The year saw the continuing north bound journey of interest
 rates. Both, deposits & advances witnessed rise in Interest rates, in
 the Banking system.
 
 The rates on deposits saw frequent hikes that had peaked to around 9%
 to 9.5% for 5 year tenor. The concerns of the Government that such high
 interest rates may hurt economic growth, some banks had reduced their
 Benchmark Prime Lending Rates by around 25 to 50 basis points during
 the last quarter of the year. However, Retail loans, particularly under
 the housing segment bore the brunt of the increase in interest rates.
 Concerns on asset quality in this segment also contributed to hardening
 of interest rates.
 
 1.400 Banking Industry Trends:
 
 1.401 The aggregate deposits of the banking system registered an almost
 similar growth viz. 22.2% during the year as against 23% achieved
 during the previous year. On the bank credit side, there was lower off
 take due to which, it increased by 21.6% as compared to growth of 27.6%
 posted during the previous year.  Though sub-BPLR loans continued to
 form a sizeable part of bank loans & advances, the year 2007-08 saw a
 falling share of fresh sanctions under sub-BPLR.
 
 1.402 Rising asset prices, particularly those of the real estates,
 coupled with concerns on asset quality led the regulator to bring in
 prudential norms on capital market and real estate exposures, in terms
 of stringencies on exposures as well as capital allocation requirements
 by way of higher risk weight and higher provisioning prescriptions.
 
 1.403 A significant step taken by the Regulator towards 2nd half of the
 year was to reschedule the calendar for adherence to the new capital
 adequacy framework, more popularly known as Basel II norms.  The
 revised calendar now runs from March 2008 for banks that are
 internationally active and gives one year leverage to other banks i.e.
 up to March 2009.
 
 2.000 BUSINESS PERFORMANCE OF THE BANK
 
 2.100 Business Mix
 
 2.101 The Business Mix of the Bank reached to a level of Rs. 57324.34
 Crs. as at the end of the year, registering a growth of 23.62% over the
 level of Rs. 46372.98 Crs. as at the end of previous year.
 
 2.102 Deposits have grown by Rs. 6253.27 Crs during the year to Rs.
 33943.18 Crs representing a growth of 22.58% over the level of Rs.
 27689.91 Cr as at the end of previous year.
 
 2.103 Gross Advances of the Bank have increased at a higher rate of
 25.15 % to reach a level of Rs. 23381.16 Crs. as compared to a level of
 Rs. 18683.07 Crs. as at the end of March 2007.
 
 2.104 The composition of Total Business Mix of the
 
 Bank for the last two years is as under:
                                                          (Rs. in Crs.)
 Particulars              As at March 31, 2007     As at March 31, 2008
 
 Total Deposits                  27689.91                33943.18
 Total Advances                  18683.07                23381.16
 Total Business Mix              46372.98                57324.34
 
 2.200 Deposit Mobilisation
 
 2.201 The Bank had mobilized Deposits worth Rs.
 
 Rs.  6253.27 Crs during the year.  A comparative position of
 mobilization of deposits vis-a-vis previous year, under various
 segments is as under:
                                                          (Rs. in Crs.)
                                              2007              2008
                                              March 07         March 08
 
 Current                                       3214             3016
                                             (12.13)           (9.36)
 Saving                                        9044            10239
                                             (34.12%)         (31.77)
 Term                                         14248            18977
                                             (53.75%)         (58.87)
 Aggregate Deposits                           26506            32232
 CASA to Aggregate Deposits [%]               46.25%           41.13%
 Inter Bank Deposits                           1184             1711
 Total Deposits                               27690            33943
 
 (Figures in brackets indicate percentage deposits to aggregate
 deposits).
 
 2.202 The decline in share of CASA deposits was on account of interest
 rate scenario. A number of banks had launched deposit schemes for fixed
 no. of days like 400 days, 500 days, etc with highly attractive
 interest rates. The Bank has also launched two such schemes viz. Dena
 Gold Scheme and Dena Diamond Scheme The high interest differentials
 that these schemes offered led to a flight of deposits from CASA and
 hence the decline in share of CASA deposits.
 
 2.300 Credit Dispensation
 
 The Bank had laid emphasis on smoother flow of credit to the productive
 sectors of economy and retail credit, led by housing loans, during the
 year. Resultantly, Gross Advances of the Bank had increased by Rs.
 4698.09 Crs or 25.15% during the year moving from Rs 18683.07 Crs as on
 March 31, 2007 to Rs. 23381.16 Crs. as on March 31, 2008. The Net
 Advances had increased from Rs. 18303.39 Crs. as on March 31, 2007 to
 Rs. 23023.98 Crs. as on March 31, 2008, representing an increase of
 25.79%.
 
 2.400 Retail Credit
 
 2.401 Retail Credit has been identified as one of the growth engines
 for increasing credit portfolio of the Bank. The Bank has 9 Retail
 Banking Schemes catering to various needs of a customer. The schemes
 are modified from time to time keeping in view the market scenario,
 customer requirements and feed-back from field functionaries. Concerted
 efforts were made to popularise the retail banking schemes through wide
 publicity.
 
 2.402 Retail Asset Centre
 
 In order to take advantage of the potential available for enlarging our
 retail lending portfolio and also to ensure better quality, uniformity
 and speed in appraisal and sanctions, the Bank operationalised a Retail
 Asset Centre at its Juhu Vile Parle Branch. The Retail Asset Centre
 will carry out all the functions relating to retail advance and is
 expected to ensure quantitative and qualitative growth of retail
 business and also cut down multiplicity of functions and efforts at
 branches. It is further proposed to operationalise few more Retail
 Asset Centres at Banks potential multi branch centres.
 
 2.403 Refinement of Schemes
 
 The Bank further refined its Dena- Vidyalaxmi Educational Loan Scheme
 for pursuing studies in India and abroad. Under the revised scheme the
 loan limits for pursuing higher studies in India and abroad have been
 enhanced to Rs. 10 lakhs and Rs. 20 lakhs respectively.
 
 2.404 Tie-up with Institutions
 
 During the year, tie-up arrangements for education loans under Dena
 Vidyalaxmi Scheme were made with some leading educational institutions
 under Shri Vile Parle Kelwani Mandal like Narsee Monjee Institute of
 Management Studies & Shri D.J. Sanghvi Engg.  College, Thakur Education
 Trust, Kandivli etc. Further, Bank also entered into tie-up
 arrangements for sanctioning Car Loans, Personal Loans, Consumer
 Durables Finance, Dena Niwas loans with various corporates /
 institutions / departments.
 
 During the financial year more thrust was given on providing education
 loans to deserving students to enable them to pursue higher studies
 which yielded in 29.97% growth in education loans over previous year.
 
 Similarly, under housing finance, the outstanding registered a growth
 of 23.76%. The outstanding amount under total retail credit registered
 a growth of 25.62% showing an increase of Rs. 877.02 crores to reach
 the level of Rs. 4299.95 crores as of 31.3.2008.  The schemes namely
 Dena Niwas, Dena Rent and Dena Vidyalaxmi have contributed towards
 growth of retail credit during the year 2007-08.
 
 2.405 Direct Housing Finance
 
 Fresh disbursements to the tune of Rs. 238.54 Crs. were made during the
 year, under the scheme, enabling net increase in outstanding credit
 from Rs. 1433.20 Crs. as on March 07 to Rs. 1653.76 Crs. as at the end
 of the year, thus reflecting a growth of 15.39%.
 
 2.406 Educational Loan
 
 Outstanding under the Educational Loan Scheme, increased from Rs.
 161.37 Crs. to Rs. 209.74 Crs. as at the end of the year i.e. an
 increase of Rs. 48.37 Crs. or 29.97%.
 
 2.500 Advances to Priority Sector:
 
 2.501 The Bank has been consistently fulfilling its social obligations
 in respect of priority sector lending.  The Bank had adopted multi
 pronged strategies during the year, to augment credit flow to various
 segments of priority sector with special thrust on agriculture, in tune
 with Governments policy of enhancing the credit flow to agriculture in
 order to increase farm productivity. The RBI has issued revised
 guidelines to banks in respect of lending to Priority Sector.
 
 Priority Sector Advances of the Bank have thus increased from the level
 of Rs. 6662.00 Crs. as of March, 2007 to Rs. 8095.75 Crs. as on March,
 2008 registering a growth of 21.52% over previous year. The ratio of
 priority sector advances to Adjusted net bank credit stood at 43.32% as
 of March, 2008 against the regulatory guidelines of 40%.
 
 2.502 Lending to Agriculture
 
 In line with the Governments Farm Credit Package, the Bank has been
 continuously taking necessary measures to step up the flow of credit to
 agriculture.
 
 During the year, the outstanding under agriculture credit increased
 from the level of Rs. 2,200.00 Crs. as on March, 2007 (as per revised
 guidelines of RBI) to Rs. 2794.27 Crs. as at the end of the year,
 representing a growth of 27.01%. The outstanding exposure under
 agriculture credit represented 14.95% of Adjusted Net Bank Credit.
 
 2.503 Progress under Special Agricultural Credit Plan
 
 The Bank has consistently been achieving the 30% target for incremental
 flow of credit to agriculture, by disbursing Rs. 1285.67 crores during
 the year of which Rs. 1150.22 crores under direct agriculture
 witnessing a growth of 29.81% benefiting around 44112 new farmers.
 
 2.504 Dena Kisan Credit Cards
 
 The Bank had issued 30903 fresh Kisan Credit Cards (KCCs) involving an
 outlay of Rs. 240.77 Crs. during the year, taking the total tally of
 KCCs to 1,30,332 involving an outstanding credit of Rs. 914.40 Crs., as
 at the end of the year.
 
 2.505 Progress under Micro Irrigation Systems (MIS):
 
 The subsidy Scheme announced by Govt, of Gujarat under MIS is being
 implemented in association with M/s Gujarat Green Revolution Company
 Ltd. The Bank financed 1927 farmers aggregating Rs. 32.51 Crs for
 installation of micro irrigation systems.
 
 2.506 Relief to Farmers under Govt, of Indias 2% interest Subvention
 Scheme:
 
 The Bank has credited a total amount of interest relief of Rs. 13.34
 crore under 2% inerest subvention scheme of Gol to the eligible farmers
 during 2007-08
 
 2.507 Formation of Farmers Clubs:
 
 The Bank had facilitated formation of 245 new FCs during the year,
 taking the total tally to 1004 by the end of the year. It is noteworthy
 to mention that Dena Singhali Farmers Club promoted by our Mahuda
 branch of Kheda district in the state of Gujarat has received the
 National Award at the Hands of the Honble Union Finance Minister as
 the best performing Farmers Clubs in the state of Gujarat.
 
 2.508 Financing to Self Help Groups (SHGs):
 
 During the current year 2077 new SHGs were credit linked covering an
 outlay of Rs. 15.74 Crs. The cumulative number of SHGs credit linked by
 the bank increased to 4,985 as at the end of the year involving an
 outlay of Rs. 32.78 Crs.
 
 2.509 Credit Flow to Women
 
 The aggregate credit flow to women had increased from Rs. 694.81 Crs.
 as of March 2007 to a level of Rs. 821.81 Crs. representing a growth of
 18.28% as at the end of the year. With a view to create awareness on
 women empowerment, the Bank had organized a number of events on the
 International Womens Day.
 
 2.510 Advances to weaker section
 
 Consistent with the growth in priority sector advances, the advances to
 the weaker section increased from the level of Rs. 904.07 Crs. as of
 March, 2007 to Rs. 1171.97 Crs. as of March, 2008, representing a
 growth of 29.63%.
 
 2.511 Advances to SCs / STs
 
 The aggregate level of advances to SC/ST, within the priority sector
 increased from the level of Rs. 294.39 Crs. as of March, 2007 to Rs.
 387.79 Crs. as of March, 2008, showing a growth of 31.73%.
 
 2.512 Coverage under CGTMSE scheme:
 
 The Bank has been participating in the Credit Guarantee Fund Trust for
 Small and Micro Enterprises (CGTMSE) to provide collateral free loans
 to small and micro-enterprises. In order to mitigate the burden on
 entrepreneurs, the Bank is also bearing the 50% of the Guarantee fees.
 The total number of cases covered under the scheme stood at 1497 with a
 guarantee cover of Rs. 40.59 Crs., as at the end of the year.
 
 2.513 Golden Jubilee Rural Housing Finance Scheme (GJRHFS)
 
 In order to promote financing of dwelling units in rural areas, the
 Bank has been implementing GJRHFS. The Bank had achieved the target to
 the extent of 102.20% under the scheme, during the year.
 
 2.514 Dena Surya Urja Scheme:
 
 Under this scheme, the Bank is financing solar water heating systems
 for domestic industrial and commercial sectors at softer rates of
 interest under tie up arrangement with Indian Renewable Energy
 Development Agency Limited (IREDA) under the aegis of Ministry of Non
 Conventional Energy Resources.  Under the scheme Rs. 24 lakhs have been
 financed to 95 beneficiaries.
 
 2.515 Prime Ministers 15 point Programme for the welfare of
 Minorities:
 
 As per the guidelines of Govt, of India has prepared road map laying
 down specific state-wise annual targets over the next three years to
 ensure that priority sector lending to minority communities is raised
 to 15% by the end of 2009-2010. The Banks advances to specified
 minority community stood at 263.12 crores which constitutes 3.36% of
 Priority Sector Advances as of March 2008.
 
 2.516 Government Sponsored Schemes
 
 The Bank continues to make earnest efforts to implement government
 sponsored schemes aimed at eradication of poverty and for generating
 self employment. The Bank had sanctioned loans to 3,537 beneficiaries
 under Prime Ministers Rozgar Yojana (PMRY) amounting to Rs. 22.97 Crs.
 and also granted loans to 5785 beneficiaries under Swaranjayanti Gram
 
 Swarozgar Yojana (SGSY) to the tune of Rs. 24.09 Crs.during the year.
 The percentage of recovery to demand under PMRY for the year ended
 March 2008 is 43.56% and of which for SC/ST is 45.24%. The percentage
 of recovery to demand under SGSY for the year ended March 2008 for
 individual is 50.95%, for SHG is 74.44% and of which for SC/ST is
 48.14%.
 
 2.517 Dena General Credit Card (DGCC) Scheme:
 
 The Bank has issued 5492 DGC Cards as of March 2008.
 
 2.518 Selection of Pilot District in Gujarat by SLBC for 100% Financial
 Inclusion :
 
 The SLBC for Gujarat State has selected Gandhinagar district in Gujarat
 for 100% financial inclusion in which more than 34000 No frill accounts
 have been opened by the Bank and more than 300 GCC have also been
 issued.
 
 Based on the experience gained, the scheme was extended in other
 districts in Gujarat during the year 2007-08. and nearly cent percent
 financial inclusion had been achieved in 9 districts.
 
 2.519 Dena Bhoomiheen Kisan Credit Card:
 
 The Bank has introduced a special scheme for tenant farmers, oral
 lessees, share croppers, landless labourers etc. wherein credit
 facility up to Rs. 25,000/- is granted for various agricultural and
 allied purposes with a provision of consumption also. Under the scheme
 3435 Bhoomiheen Kisan Credit Cards involving an outlay of Rs. 8.50 Crs.
 have been issued as at the end of March 2008.
 
 2.520 NEW SCHEMES:
 
 2.520.1 Dena Tractor Borrower Insurance Scheme:
 
 The Bank has tied up with Life Insurance Corporation of India (LIC) for
 providing life insurance cover to tractor loan accountholders under
 Mortgage Redemption Insurance Scheme wherein the prospective as well as
 existing borrowers life is insured.
 
 2.520.2 Tie-up with NBHC:
 
 Bank has tied up with National Bulk Handling Corporation for providing
 financial assistance to farmers and others against pledge of warehouse
 receipts.
 
 2.520.3 Credit Counseling Centers/Financial Literacy:
 
 RBI has directed the Banks to open the Credit Counseling centers in the
 respective Lead districts in order to increase the outreach to the
 remote places and ensure banking services to the uncovered population,
 in the district with the coordination among Banks branches to ensure
 100% financial inclusion.  Accordingly, in pursuance with the
 guidelines of RBI, to set up Credit Counseling Centers. Bank has rolled
 out its first Credit Counseling Center at Himatnagar (Dist.
 Sabarkantha) in Gandhinagar Region on 08.08.2007.  Bank has opened
 Credit Counseling centers at Palanpur, Mehsana, Bhuj in the state of
 Gujarat and Silvassa in the UT of Dadra Nagar Haveli. The said centers
 are christened as Dena Mitras.
 
 2.520.4 Financial Inclusion:
 
 Bank has entered in to an MoU with M/s Zero Mass Finance ( ZMF) as
 business correspondent for financial inclusion in Gujarat state on
 pilot basis and with M/s Little World as Technology provider for the
 same
 
 2.520.5 Tie-up with India Post
 
 In terms of the guidelines issued by RBI, the Bank has entered into MOU
 with Maharashtra Postal Circle for engaging services of Post Offices as
 Business Facilitators, for purveying rural credit in the State of
 Maharashtra.
 
 OTHER MEASURES:
 
 2.521 CORPORATE SOCIAL RESPONSIBILITIES
 
 2.521.1 Rural Development & Self Employment Training Institute
 (RUDSETIs)
 
 The Bank had set up a society viz. Dena Rural Development Foundation
 which in turn had set up 2 RUDSETIs at Bhuj and Mehsana in the State of
 Gujarat during 2005. The RUDSETIs are imparting training to unemployed
 rural youth and women for capacity building so as to enable them to
 setup self employment ventures. Over 2864 rural youth/women have
 already been imparted training by these RUDSETIs. The settlement ratio
 of the trainees of both the RUDSETIs was 53%.
 
 2.521.2 Sponsoring Education of Girl Child
 
 As a part of Corporate Social Responsibility, the Bank had introduced a
 novel scheme viz. Dena Laxmi Shiksha Protsahan Yojana to sponsor
 education of Girl Child in the villages served by the Bank. The scheme
 aims at providing a scholarship of Rs 1500/- per annum to one
 identified girl student belonging to Below Poverty Line (BPL) family,
 to be selected from each of the schools based on the highest marks
 secured in 7th Standard, from the villages under the command area of
 the Bank in the State of Gujarat and Union Territory of Dadra Nagar &
 Haveli. The Bank has so far provided scholarship to 754 children under
 the scheme.
 
 2.521.3 Training to Farmers
 
 In order to acquaint /empower the farmers with latest technological
 developments / knowledge in the field of agriculture, the Bank has been
 arranging training programmes to its farmer borrowers in association
 with Agricultural Universities.
 
 2.522 Visit of the Parliamentary Committees
 
 The Parliamentary Standing Committees on Urban Development visited
 Ahmedabad on 28th June 2007.  Further, the Standing Committee on Rural
 Development visited Ahmedabad on -11th January, 2008 for on the spot
 study on SGSY . The Committee on Subordinate Legislation, Rajya Sabha
 visited Mumbai on 19th January, 2008 for discussion on Service
 Regulations of Regional Rural Banks (Officers & Employees). The
 Department Related Parliamentary Standing Committee on Industry visited
 Mumbai on 4th February, 2008 to discuss the policy package to step up
 credit to SME sector and other related issues.
 
 2.523 State Level Bankers Committee (SLBC) Responsibilities
 
 The Bank has been successfully discharging its responsibilities as a
 Convener of SLBC for the State of Gujarat and also as Convener of UTLBC
 for the Union Territory of Dadara & Nagar Haveli. The SLBC has played
 catalytic role for the development of banking in the State of Gujarat
 through constant monitoring of various Priority Sector and
 developmental schemes.  The targets envisaged under the State Credit
 plans have been surpassed, as a result, the CD Ratio of the banking
 system improved to over 73%.  -
 
 2.524 Lead Bank Scheme
 
 The Bank plays a Lead role in 13 districts; covering 7 districts in
 Gujarat, 5 districts in Chhattisgarh and one in Union Territory of
 Dadra & Nagar Haveli.
 
 2.525 Regional Rural Banks sponsored by the Bank
 
 The Bank has two RRBs namely Dena Gujarat Gramin Bank (DGGB) in the
 State of Gujarat and Durg Rajnandgaon Gramin Bank (DRGB) in the State
 of Chhattisgarh.
 
 Both the RRBs sponsored by Dena Bank have a network of 243 branches
 spread over 10 districts of Gujarat and Chhattisgargh. The total
 business mix of these RRBs stood at Rs. 2418 Crore as of March 2008.
 For the financial year ended 31st March, 2008, both the RRBs together
 have earned net profit of Rs. 16.49 crores and had accumulated surplus
 of Rs. 57.19 crores as of March 2008.
 
 2.600 Advances to SME Sector
 
 SME sector continued to be a key segment in the growth of Indian
 Economy. The Government of India had passed, the Micro Small & Medium
 Enterprises Development Act, 2006 (MSME Act, 2006) in June, 2006 for
 the promotion, development and enhancing competitiveness of MSME units.
 Besides defining the MSME units, supporting structures for facilitating
 growth of MSME have salso been laid down under the said act.
 
 In the light of the above enactment, the Bank had given further
 momentum to the steps already initiated to foster the flow of credit to
 SME units and had come out with few new initiatives as follows:
 
 - 38 additional branches were identified as SME branches during the
 year, increasing the total tally of such branches to 78;
 
 - SME Help Desk had been introduced at Regional Offices for providing
 counseling and guidance to SME Entrepreneurs on their projects and
 assessing their credit requirements;
 
 - The Bank continues to encourage SME units for interest incentives
 through its arrangement with SMERA for credit rating and with SIDBI
 for co-financing of units.
 
 All these measures resulted in growth of SME credit by 23.01% as
 against 20% growth directed by Government of India. In absolute terms,
 the SME advances increased from Rs. 3158 Crs. (Including advances to
 trade and services) as on March 2007 to Rs. 3884.87 Crs. as at the end
 of the year.
 
 2.700 Corporate Credit
 
 The Bank had identified 40 branches for focused attention towards
 Corporate & Institutional borrowers, where specialized manpower &
 infrastructural facilities were provided. Two-tier structure was put in
 place for credit delivery at such branches for expeditious decision,
 process.
 
 Corporate Debt Restructuring (CDR) Cell had been established at HO to
 addresses timely restructuring of the borrowal accounts of the Bank.
 
 Credit Monitoring Cell, established at Corporate Office remains
 actively engaged in monitoring and sensitizing the operational staff at
 every level for ensuring identification of early warning signals in the
 standard borrowal accounts for timely action and improvement in the
 asset quality.
 
 3.000 INVESTMENT OPERATIONS
 
 3.100 Gross Investments of the Bank increased from Rs.9325 Crs. as at
 March 31, 2007 to Rs. 10335 Crs.  as at March 31, 2008, thereby
 registering a growth of 10.84%. Similarly, Net Investments also
 increased from Rs.9235 Crs. as at March 31, 2007 to Rs. 10283 Crs.  as
 at March 31, 2008.
 
 3.101 The market continued to be volatile with rise in YTM of
 securities across all tenors, leading to a fall in market prices of
 securities. Despite the adverse scenario, the Bank was able to book
 profit of Rs. 90 Crs on sale of securities during the financial year
 2007-08 as against Rs 39 Crs. during the financial year 2006-07.
 
 3.102 The Average Yield on Investments, including profit on sale of
 Investments remained at the same level (of previous year) at 7.74% for
 the year ended March 31,2008.
 
 4.000 INCOME & EXPENSES
 
 4.100 Income
 
 4.101 Total income of the Bank for the year increased by Rs.. 643.98
 Crs. or 25.66 % and stood at Rs. 3154.02 Crs. as compared to an Income
 of Rs.2510.04 Crs. earned during the previous year.
 
 4.102 Interest income of the Bank increased by 27.92% to record a level
 of Rs. 2710.05 Crs. while other income increased by 13.40% to Rs 443.97
 Crs.
 
 4.103 Growth in interest income of the Bank was achieved mainly due to
 a considerable increase in the interest income from advances i.e. by
 40.35%, despite continued pressure for lending at sub-PLR rates from
 corporate sector. The achievement could be attributed to the strategies
 adopted by the Bank by concentrating on high yielding credit viz. SME,
 Retail & Agriculture, etc.  and re-pricing of bulk corporate loans.
 Interest income from investments showed modest increase of 9.17% during
 the year on account of adverse market conditions.
 
 4.200 Expenses
 
 4.201 Total expenses registered an increase of 31.63% over the previous
 year. This was mainly on account of increase of 43.86% in interest
 expenses due to increase in cost of deposits. Operating expenses showed
 marginal increase of 6.37%.
 
 4.300 Profitability Analysis
 
 4.301 Banks net interest income (Nil) increased by 4.39% and stood at
 Rs. 892.91 Crs. as compared to Rs.  855.36 Crs posted during the
 previous year.
 
 4.302 Other Income increased from Rs 391.52 Crs of 2006-07 to Rs 443.97
 Crs of 2007-08 showing an increase of Rs 52.45 Crs. This increase
 includes an increase of Rs 29.89 Crs on account of profit from sale of
 fixed assets.
 
 4.303 The Bank continued to give thrust on recoveries in written off
 advances during the year, which resulted in recovery of Rs 134.28 Crs
 under this segment. During the previous year, the recovery under this
 segment was Rs 155.60 Crs which included Rs 69 crores from sale of NPAs
 to ARCIL.
 
 4.400 Operating Profit
 
 4.401 Operating profit of the Bank registered an increase of 8.04% and
 stood at Rs 686.44 Crs. as compared to Rs 635.37 Crs posted during the
 previous year.
 
 4.500 Net Profit
 
 4.501 With the Banks focus on containing interest costs, looking for
 opportunities of high yielding advance and a major thrust on recovery
 in written off accounts, the Bank was successful in posting 78.50 %
 rise in Net Profits during the year. The Net Profit of the Bank stood
 at Rs.359.79 Crs. as against Rs. 201.56 Crores posted during the
 previous year.
 
 4.502 A comparison of income, expenses and provisions & contingencies
 with the previous year is given hereunder:
                                                            (Rs in Crs)
 
 Particulars                              FY 06-07         FY 07-08
 
 Interest Income                          2118.52           2710.05
 Non. Interest Income                      391.52            443.97
 Total Income                             2510.04           3154.02
 Interest Expended                        1263.16           1817.14
 Operating Expenses                        611.51            650.44
 Total Expenses                           1874.67           2467.58
 Operating Profit                          635.37            686.44
 Provisions & Contingencies                433.81            326.65
 Net Profit                                201.56            359.79
 
 5.000 CRAR for 2007-08
 
 5.100 With accretion to the capital funds during the year through
 plough back of profits, Tier I Capital of the Bank increased from Rs
 1086.81 Crs. as at the end of the previous year to Rs 1535.54 Crs. as
 at 31st March 2008, representing a growth of 41.29%. The eligible Tier
 II capital increased from Rs. 979.36 Crs. as at 31st March 2007 to Rs.
 986.38 Crs as at the end of the year.  The Bank had raised Rs.125 Crs
 by way of Innovative Perpetual Bonds (forming part of Tier I Capital)
 and Rs 106 Crs by way of Redeemable Lower Tier-ll Bonds during the year
 2007-08. The Net worth of the Bank increased to Rs. 1410.55 crores from
 Rs. 1086.81 crores, registering a growth of 29.79%
 
 5.101 The core CRAR increased from 6.06% to 6.75% during the period,
 despite substantial increase in Risk weighted assets due to business
 expansion.  The Capital Adequacy Ratio (CRAR) of the Bank declined
 marginally by 43 bps from 11.52% in March 2007 to 11.09% as at the end
 of the year.
 
 5.102 With the option of raising further capital through new innovative
 instruments, the CRAR of the Bank is not only above the minimum
 regulatory prescription of 9% but also provides ample scope for further
 expansion of business and increasing the asset base.
 
 6.000 Dividend
 
 6.100 The Board of Directors has recommended Dividend at 10% per share
 for the year 2007-08 as against 8% for the year 2006-07.
 
 7.000 BRANCH NETWORK
 
 7.100 The Bank opened 25 new branches in different parts of the country
 during the year, thus increasing the total number of branches to 1160.
 The Bank has laid its first foot print in the state of Himachal Pradesh
 by opening three branches viz. Simla, Baddi and Solan during the year.
 The Bank has also opened eight branches in the Minority concentrated
 districts.
 
 7.101 The sector-wise breakup of the branch network of the Bank as on
 31st March 2008 is as under:
 
                                                            (Rs in Crs)
 
 Sector                         No of branches        Percent to Total
 
 Rural                                491                 42.33%
 Semi Urban                           197                 16.98%
 Urban                                256                 22.07%
 Metro                                216                 18.62%
 Total                               1160                100.00%
 include 98 Satellite Offices
 
 8.000 ASSET QUALITY & RECOVERY MANAGEMENT
 
 8.100 The Bank continued its vigorous efforts towards improvement in
 asset quality with a focus on reduction in non performing assets
 (NPAs). The two pronged strategy in this direction involved putting in
 place a robust Credit Monitoring Mechanism on one hand, to identify
 Early Warning Signals to prevent fresh slippages and simultaneously
 being aggressive in up gradation / recovery of NPAs through action
 under SARFAESI and negotiated settlements etc.
 
 8.101 Resultantly, Gross NPAs of the Bank were reduced by Rs. 171.88
 Crs (23.09%) from Rs. 744.48 Crs. as on 31st March, 2007 to Rs.572.60
 Crs. as at the end of the year. Net NPAs were reduced by Rs. 149.37 Crs
 (40.95%) from Rs. 364.80 Crs. as of 31st March, 2007 to Rs. 215.43 Crs.
 as at the end of the year. Gross NPA Ratio, therefore, stands improved
 by 153 bps to 2.45% and Net NPAs by 105 bps to 0.94% as at the end of
 the year.
 
 8.102 Cash recoveries including other credits were Rs. 184.86 Crs i.e.
 24.83% of opening Gross NPAs as of 01.04.2007 as compared to Rs 247.29
 Crs i.e.  26.18% cash recovery of the opening Gross NPAs in the
 previous year. Up gradation were higher at Rs. 114.07 Crs as compared
 to Rs. 76.61 Crs during the previous year. Total Cash recoveries i.e.
 including those in written off accounts during the year ended March,
 2008 was Rs. 299.15 Crs as against Rs. 402.89 Crs effected during the
 previous year.
 
 8.103 The Bank has made provisions for NPAs amounting to Rs. 264.18
 Crs. during the year as compared to Rs. 287.90 Crs. made during the
 previous year.
 
 8.104 The comparative position of Gross and Net NPAs is given below.
 
                                                    (Rs, in Crs.)      
                                              March 2007    March 2008
 
 Gross Advances                               18683.07      23381.16
 Gross NPAs                                     744.48        572.60
 Gross NPA to Gross Advances                      3.98%         2.45%
 Net Advances                                 18303.39      23023.99
 Net NPAs                                       364.80        215.43
 Net NPA to Net Advances                          1.99%         0.94%
 Provision Cover                                 50.05%            -
 
 8.200 Initiatives on improvement in Asset Quality
 
 8.201 NPA Recovery Cells have been established at all the Regional
 Offices. The Recovery Committees meet at regular periodical intervals
 to review the progress made in the NPAs and to further identify &
 pursue the potential accounts for compromise / negotiated settlements.
 
 8.202 The Bank had organized 1052 recovery camps during the year, with
 participation of 636 branches across various centres. 9898 borrowers
 had attended such camps. 2083 NPA accounts were settled during the year
 through such recovery camps.
 
 8.203 Special One Time Compromised Settlement Scheme:
 
 Encouraged by the response from small NPA borrowers, the Bank had
 extended Special One Time Settlement scheme for Small Borrowers
 (outstanding up to Rs.2 lacs) by another year i.e. up to 31st March 08.
 The Bank had succeeded to settle/close 9051 accounts with outstanding
 of Rs. 16.56 Crs. and upgraded 2903 accounts of Rs. 8.26 Crs. through
 the scheme, during the year.
 
 The Bank had also adopted a simplified and parameterised One Time
 Settlement policy for all other NPA accounts which had resulted into
 settlement of 1776 accounts with outstanding of Rs. 196.28 Crs.  Cash
 recovery to the tune of Rs. 91.68 Crs. was effected during the year, in
 these accounts.
 
 8.204 Sale of NPA amongst Banks/FIs and ARCs
 
 In Terms of the RBI Guidelines issued on 23.04.2003 & 13.07.2005, the
 Bank had sold inter alia, during 2005 - 06, One NPA A/c, M/s Spectrum
 Power Generation Ltd to ARCIL. During the Year, Two Half Yearly
 deferred Payment Guarantee Installments were taken over by ARCIL with
 Aggregate Amount of Rs. 9.58 Crs.
 
 8.205 Recovery under SARFAESI Act
 
 As an aggressive step towards recovery from NPAs, 1458 Notices were
 issued in the eligible accounts involving an amount of Rs. 288.24 Crs.
 under SARFAESI Act. In view of the deterrent provisions of the Act, the
 Bank was successful in recovering an amount of Rs. 113.97 Crs in 1346
 A/cs ( including those where notices were issued during previous years)
 during the year 2007-08.
 
 8.206 Recovery through Lok Adalats
 
 The Bank laid emphasis on early resolution of disputes and recoveries
 from its defaulters through Lok Adalats.  The Bank had recovered Rs.
 4.76 Lacs during 2007-08 in the cases settled during the previous
 years.
 
 8.207 Recovery through Suits in the Debt Recovery Tribunal/Civil Courts
 2196 recovery cases involving an amount of Rs. 1486.57 Crs filed by the
 Bank were pending for adjudication before DRTs / Courts as at the end
 of the year. 1718 Recovery Certificates / Decrees involving an amount
 of Rs.  598.12 Crs were under execution by the DRTs/Civil Courts. The
 Bank had recovered Amount of Rs. 58.07 Crs during the year 2007-08.
 
 8.208 BIFR Cases
 
 In Terms of recovery policy approved by the Board, a Nodal Officer
 stationed at New Delhi, has been identified for Co-coordinating the
 BIFR Cases. During the year, 23 cases were removed on account of
 closure of accounts due to compromise,. cases rejected by BIFR, abated.
 The Bank has recovered a sum of Rs. 28.32 Crs during the year in 13
 BIFR Cases. Thus, 52 cases involving an amount of Rs. 380.95 Crs were
 lying pending before BIFR/AAIFR as the end of the Year.
 
 9.000 INTERNATIONAL BANKING
 
 9.100 The Bank is having its Integrated Treasury Business at Mumbai
 which is functioning as Category A Authorized Dealer (AD) Branch of
 the Bank. The Bank also has 34 Category B Authorized Dealer (AD)
 Branches spread over the country catering to the needs of exporters,
 importers.
 
 9.101 The Bank is maintaining 19 Nostra accounts in all major
 currencies and has a number of Foreign Correspondents all over the
 world, to cater to the needs of exporters, importers and others
 (including NRI). The Bank is a member of The Clearing Corporation of
 India Ltd., (CCIL) for settlement of Government Security deals and
 Inter Bank Forex deals in USD / INR.
 
 9.102 The Merchant Forex Turnover of the Bank has improved by 20.80 %
 increasing from Rs. 17,065.03 Crs to Rs. 20,620.94 Crs achieved during
 the year 2007 - 08. Out of this, Export Turnover has increased by
 25.90% over the previous year.
 
 9.103 With effect from April 2007 Reserve Bank of India (RBI)
 introduced interest subvention scheme by which exporters will get
 export credit at concessional interest rates at pre-shipment stage and
 at post- shipment stage. For the year 2007 - 08 this was extended to
 218 accounts with an export turn over of Rs. 2905 Crores. They were
 provided relief under the scheme extended to specified sector (as
 guided by RBI).
 
 9.104 Providing hassle free, effective & efficient foreign inward
 remittances is another area of focus and for providing this the Bank
 has placed multi channel facilities, [a] The Bank provides an on-line
 web enabled remittances facility under the brand Dena India Remit
 which provides a safe, secure, speedy and cost effective facility to
 the remitters (including NRI) based in USA, UK and Euro land, [b] The
 Bank has tied up with Western Union Money Transfer Services by
 facilitating the beneficiaries to collect the transferred money at
 short time intervals, [c] In order to provide money transfer facilities
 to expatriates from Gulf countries and from UK the Bank has continued
 to extend the Rupee Drawing Arrangement (DDA) with UAE Exchange Centre
 LLC Abu Dhabi
 
 10.000 SALE OF THIRD PARTY PRODUCTS
 
 10.101 In pursuance of its stated mission to provide to its customers
 premier financial services of great value, the Bank has made a foray
 into distribution of third party products viz. Insurance and Mutual
 Funds. This also helps the Bank in augmenting its non-interest income.
 During the year 2007-08, the Bank further widened the range of third
 party products which have been well received by customers of the Bank.
 
 10.102 Distribution of Mutual Fund products
 
 The Bank entered into arrangement with 3 more reputed mutual funds viz.
 Birla Sunlife Mutual Fund, Tata Mutual Fund and SBI Mutual Fund for
 distribution of their mutual fund products through the selected
 branches. With this, the Bank now has strategic marketing alliance with
 11 major Mutual Funds.
 
 10.103 BANCASSURANCE: Distribution of insurance products
 
 The Bank has existing tie up with the Life Insurance Corporation of
 India for distribution of their life insurance products. During the
 year, the bancassurance arrangement with The Oriental Insurance Company
 Ltd. for distribution of their non-life insurance products was renewed.
 The entire range of life and general insurance products of these 2
 insurance companies is offered by the Bank to its customers at all
 branches, including the following products that were introduced during
 the year by The Oriental Insurance Company Ltd. exclusively for
 customers of the Bank:
 
 1. Oriental Health Royal Mediclaim Scheme : Under this scheme, medical
 insurance [mediclaim] cover upto Rs. 5 lacs is available at very low
 premium on family floater basis, which offers insurance cover for the
 entire family comprising of self, spouse and two dependent children,
 under one policy.  Cashless facility for treatment at hospitals is
 provided through TPAs.
 
 2. Personal Accident Policy, under which accident insurance cover of
 Rs.5 lacs is available to the account holder at the nominal premium of
 Rs. 100/- only. The policy offers 24 hours, world wide insurance
 cover.
 
 10.103.1 During the year, the Bank also tied up with the Export Credit
 Guarantee Corporation [ECGC] to make available various export insurance
 policies to exporters at the Banks branches itself.
 
 10.103.2 The Bank introduced two insurance linked products during the
 year viz. Dena Tractor Borrowers Life Insurance Scheme and Dena
 Recurring Depositors Insurance Scheme, under which the account
 holders can avail of life insurance cover provided by Life Insurance
 Corporation of India.
 
 10.103.3 To give thrust to insurance business, the Bank organised
 Special Insurance Campaigns through all its branches two times during
 the year, which yielded good business and income for the Bank.
 
 11.000 INFORMATION TECHNOLOGY
 
 11.100 Core Banking Solution
 
 11.101 The Bank had embarked upon a process of transformation through
 technology with a view to enhance customer satisfaction and to leverage
 business growth. Befitting the initiative, the CBS project has been
 named as DENA GARIMA. The Bank has engaged the services of M/s Wipro,
 a leading service provider in IT enabled services, for an end-to-end
 solution for Core Banking Operations of the Bank. It is backed by
 Finacle software support from M/s Infosys Technologies Ltd. The Core
 Banking system bundles a host of customer friendly services like
 Internet Banking, Phone Banking, Mobile Banking and Cash Management
 Services etc. besides software system for integrated Treasury
 operations. A number of third party software solutions are also being
 integrated mainly with a view to address Regulatory concerns.
 
 11.102 the Project was kicked off with migration of existing operations
 at banks Mahim Branch in Mumbai on 12th March 07.
 
 11.103 As of March 2008, 108 branches are functioning on the CBS
 platform covering 21 states and 50 centres with a business coverage of
 around 55%. Besides all new branches are directly opened with CBS. In
 all, 850 branches of the Bank are slated for coverage under CBS
 covering 92% of its branches.
 
 11.200 Other IT Initiatives
 
 11.201 Total Branch Computerization
 
 With a view to prepare itself for introducing more and more technology
 driven products, services and delivery channels as well as complying
 with CVC directive, Bank has computerized 100% of its branches covering
 98.91% of its business. All service Branches., Authorised Dealer
 Branches & Branches handling Govt business are fully computerized.
 
 11.202 Networking
 
 Realizing the importance of communication infrastructure in present 
 day technology driven banking, Bank has set up its own network named as
 DENANET using 521 Leased Lines, 226 ISDN lines , 121 VSATs and 615
 Dial-up lines connecting 1068 branches, 36 administrative offices
 spread over 300 centers. Critical applications like ATM , Any Branch
 Banking ( ABB ), RTGS/ NEFT applications, the corporate e-mail service,
 MIS data transfer between branches, Regional Offices & Corporate Office
 and remote support to Branches / RO are enabled by Denanet. This
 network is upgraded to support the Banks Core Banking solution.
 
 11.203 ATM Installations
 
 11.203.1 In keeping with the universal trend of introducing ATMs as the
 most popular & convenient mode of delivery channels, a total of 316
 ATMs have been installed as on 31st March 2008 all over the country
 covering 142 centers.. Out of these ATMs, 243 are Onsite and 73 are
 Offsite. 2 of the ATMs are bio- metric to facilitate illiterate
 customers operating the ATM with thumb impression. The bio-metric ATMs
 also speak out instructions to the customers. Dena Bank has signed a
 Memorandum of Understanding with Indian Railways for installation of
 ATMs and kiosks for issuing various kinds of Railway tickets,
 E-tickets, Monthly/ Quarterly tickets, PRS tickets and UTS tickets. As
 of March 2008, 10 ATMs have been installed at various Railway Stations.
 
 11.203.2 The Bank is a member of VISA where the banks cardholders can
 access their accounts from more than 1, 00,000 Merchant Establishments
 (ME) and VISA ATMs all over India and more than 13 million MEs and
 890,000 ATMs internationally.
 
 11.203.3 Besides this, the Bank has ATM sharing arrangement with
 Corporation Bank and CashTree group of banks, Cashnet group, SBI & NFS
 group of Banks. These tie-ups provide access to ATM cardholders of the
 Bank to over 20000 ATMs. The Bank has also introduced value added
 services over the ATMs like Mobile Pre-paid Top-up.
 
 11.204 Network based Services & Applications
 
 11.204.1 With a view to channelise this infrastructure for customer
 satisfaction and maximize the ROI made in creation thereof, we have
 introduced the following network based products and services:
 
 ATM / Debit Cards
 
 - Any Branch Banking
 
 - Data Transfer & Remote Support
 
 - RTGS &NEFT
 
 - Corporate E-MAIL
 
 - Dena BillPay
 
 - Internet Banking service for non-CBS branches
 
 11.204.2 Internet Banking - Dena i connect (CBS branches) - Dena i
 connect is the internet banking service for the customers of all Core
 Banking Solution (CBS) branches. This enables the customer having
 internet facility to access their accounts in the form of a) Balance
 inquiry b) Mini Statement (last 10 transactions) c) Detailed Statement
 of Accounts d) Cheque book inquiry e) Cheque stop request f) Direct tax
 e-payment g) Fund transfer (Self) i) Outward cheque inquiry
 
 11.204.3 Banks Web sites - Bank has its website with netizen friendly
 features like Branch Locators, Calculators, Two-click navigation system
 etc. The webmaster keeps the website updated and dynamic on an ongoing
 basis.
 
 With robust IT infrastructure; the Bank is well poised to take the leap
 forward to drive technology towards affording greater customer
 convenience.
 
 12.000 RISK MANAGEMENT
 
 The Bank has put in place structured risk management systems &
 architecture that is overseen by a Committee of Directors on Integrated
 Risk Management.  Management level Committees on Asset Liability
 (ALCO), Credit Risk Management and Operational Risk Management
 constitute the core level of focused risk management systems. The Bank
 has also identified Risk Managers at all controlling offices to focus
 on operational risk factors and arranged for their training.
 
 During the year, the Bank revised and updated its risk related Policies
 in line with the Basel II norms, changes in operating environment and
 with a view to manage credit and market risks in an effective manner.
 
 Business Continuity Plans have been formulated for all critical
 processes of the Bank. The Bank has also set up and operationalized
 Disaster Recovery Centre for its Core Banking Operations.
 
 Mid-Office of the Bank was strengthened and its functions were made
 broad based further for an effective monitoring of market risk. A
 system of verification of the credit rating of borrowers was introduced
 and credit monitoring system was further streamlined for focused
 attention on improvement in asset quality.
 
 During the year, the Bank has entered into Memorandum of
 Understandings with the four major external credit rating agencies of
 the country (CARE, CRISIL, Fitch Ratings & ICRA) for facilitating the
 Banks large unrated borrowers to get themselves rated. These MOUs
 provide for concessions in rating fees to be charged to the Banks
 borrowers, particularly for SME sector. The Bank had also convened a
 meeting of its large unrated corporate borrowers in Mumbai wherein
 interaction between borrowers and the credit rating agencies was
 facilitated.
 
 12.100 Basel II Norms Compliance:
 
 The Bank has also taken adequate measures for being in readiness to
 embrace Basel II norms by March 2009.  Quarterly parallel runs were
 carried out to assess the impact of Basel II norms on capital adequacy
 of the Bank. Based on the results of the parallel runs, the Bank is
 confident of compliance to the New Capital Adequacy Framework (Basel
 II). In order to facilitate continuing compliance to Basel II norms on
 enterprise wide basis, the Bank has procured and is in the process of
 implementing two software systems for Asset Liability Management and
 Risk Management as part of its Core Banking implementation. The Bank
 continued with the system of comprehensive risk profiling of the Bank
 in line with regulatory guidelines that will facilitate integrated risk
 management.
 
 13.000 HUMAN RESOURCES MANAGEMENT
 
 13.100 The Bank, keeping in view its requirement of specialised skills
 in the field of IT, Marketing, Credit, HR & Personnel, Agriculture,
 Legal and Security etc, inducted 255 new officers under various scales
 and disciplines. Bank also inducted 149 clerks and 7 Substaff to meet
 its requirements of personnel for the increasing business levels and
 opening of new branches.
 
 13.200 In the vibrant banking scenario, it is very much necessary to
 update knowledge and skill of employees to improve the efficiency
 standards of performance by imparting necessary training and
 retraining. Keeping this in view, Bank had focused on enhancement and
 sharpening of the skills of its staff by providing continuous learning
 opportunities.
 
 13.201 Certain special training programmes such Motivational Workshop
 for the members of CMD & ED Club at Lonavala, Programme on CBS for
 Union leaders & Programme on Dena Insights (an inspirational Management
 Training Programme to manifest Dena Vision 2010) for Officers were
 conducted.
 
 13.202 During the year, the Bank had provided training to 5,218
 employees (i.e. 3,350 Officers, 1,630 Clerks and 238 Subordinates) in
 thrust areas- of Credit, Rural Banking, Retail Banking,. Risk
 Management, Treasury, Marketing, Information Technology, Management
 Development, Customer Orientation, etc.  The Bank had also conducted
 pre-examination training for SC/ST candidates appearing for Banks
 Probationary Officers examinations.
 
 13.203 The Bank also utilizes external training resources from reputed
 Management Institutes and Training Institutions in India and abroad,
 with a view to providing specialized training in newer areas of skill
 development as also to provide wider exposure to executives and
 officers. During the year, 205 executives / officers were deputed for
 external training programmes in different functional, managerial,
 behavioural areas and Leadership, enroute to Transformation.
 
 13.204 The staff strength of the Bank declined from 10,120 as on March
 31, 2007 to 9,957 as at the end of the year due to natural depletion,
 resignations and retirements. The total strength, comprised of 3,609
 Officers, 4,093 Clerks and 2,255 Subordinate staff, included 1701 women
 employees. The representation of Scheduled Castes, Scheduled Tribes
 employees in the Bank was in conformity with the prescribed level.
 
 13.300 Grievances Redressal Mechanism for SC/ST/OBC Employees
 
 13.301 The Bank has nominated a lop Executive in the rank of General
 Manager to officiate as Chief Liaison Officer to oversee implementation
 of Reservation Policy for Scheduled Caste and Scheduled Tribes. The
 quarterly meetings with All India Dena Bank SC/ST/OBC Employees
 Federation were held at periodic intervals at Head Office to redress
 problems / grievances.
 
 13.400 Industrial Relations
 
 13.401 The Industrial Relations during the year remained congenial for
 growth and development. As a part of the Industrial Relations
 initiative, a grievance redressal mechanism is in place in the Bank to
 address the grievances of individual employees.
 
 14.000 Customer Service
 
 The Bank has concentrated on internalizing customer expectations and
 aspirations more intensely. During the year, the Bank had continued the
 following measures to improve customer satisfaction:
 
 14.100 ISO 9001:2000 Certification of Branches
 
 14.101 ISO 9001:2000 certification is a progressive step towards
 ensuring quality management system in the branches. It ensures optimum
 utilization of resources of man, material and money resulting in
 enhancement of customer satisfaction. 48 additional branches had
 obtained ISO 9001:2000 certification during the year, increasing the
 tally of ISO certified branches to 287 as at the end of the year.
 
 14.200 Redressal of Customer Grievances
 
 14.201 The Bank is according top priority to resolve customers
 complaints/grievances promptly. The customers of the Bank can
 correspond directly, through letters, e-mails or through the web-site
 of the Bank and pose their questions /queries /grievances, if any.
 
 14.300 Standing Committee on Procedures & performance Audit of Customer
 Service
 
 14.301 With an objective of effecting continuous improvement in the
 customer service, the Bank has constituted a Standing Committee on
 Customer Service, which is headed by the Chairman & Managing Director.
 
 14.302 In addition to above, the Bank has formed Customer Service
 Committee of the Board at the apex level to advise measures for
 enhancing the quality of customer service and improving the level of
 customer satisfaction.
 
 14.400 Code of Banks Commitments to the Customers:
 
 14.401 RBI has constituted Banking Codes and Standards Board of India
 for measuring the performance of banks against a bench mark reflecting
 the best practices (Codes & Standards). The Bank has adopted Code of
 Banks Commitments to the Customers and is fully committed to its
 adherence.
 
 14.402 The Bank is a member of BCSBI having registration number as PS
 037 and a top executive in the rank of General Manager is appointed as
 the Code Compliance Officer on behalf of the Bank.
 
 15.000 INTERNAL CONTROL AND VIGILANCE
 
 15.100 Bank has an effective vigilance set-up in place at its Corporate
 Office for control, monitoring and supervision of various vigilance
 functions with specific focus in the area of preventive vigilance.
 Implementation of the instructions/guidelines on internal control and
 vigilance functioning issued by the Govt, of India, Central Vigilance
 Commission and Reserve Bank of India were ensured. The information
 received through Indian Banks Association regarding the modus operandi
 and instances of fraud perpetrated at other banks,
 precautions/preventive vigilance steps to be taken was also shared with
 the employees by way of circular instructions & guidelines on ongoing
 basis as a measure of continuous vigilance awareness to keep them
 vigilant and alert to avoid fraud in various areas of operation. The
 Bank also shares with IBA the information regarding frauds perpetrated
 on the Bank.
 
 15.101 Regular trainings and educative workshops are also conducted to
 sensitise and improve the faculty of vigilance awareness in the
 employees. Continuous endeavours are made to improve the systems and
 procedures for an effective vigilance in the Bank. The functions of the
 department is also reviewed by Banks Board on quarterly basis.
 
 15.102 With a view to strengthen the vigilance machinery, constant
 efforts to improve the systems and procedures are made by reiterating
 the Banks guidelines in various operational areas. As per the Reserve
 Bank of India directives, a policy framework on Know Your Customer
 (KYC) & Anti-Money Laundering Measures (AML) duly approved by the
 Banks Board has been put in place. The Bank had taken all measures for
 effective implementation of KYC guidelines and AML on continuous basis
 as advised by RBI from time to time including monitoring and reporting
 of transactions through the Principal Officer.  Bank is thus KYC
 compliant.
 
 15.103 As per directives given by Central Vigilance Commission, all the
 stores / purchase contracts and Tenders floated by Bank beyond certain
 bench mark level are displayed and updated on Banks Website to make
 Contract Management more transparent and effective.
 
 15.104 The Bank has an in-built system of effective control and
 supervision of the functioning of its various branches scattered all
 over the country. In compliance with guidelines of RBI on audit of
 Branches, Regional Offices & Departments at Head Office, the Inspection
 Department is conducting various types of audits through internal
 inspectors, external Chartered Accountants firms and CISA / DISA
 qualified IS Auditors from time to time and ensures strict adherence to
 the laid down systems and procedures and timely plugging of loopholes,
 if any. The branches and administrative departments are subjected to
 Risk Based Internal Audit, Concurrent Audit, Management Audit,
 Information Systems Audit, Revenue Audit and Propriety Audit apart from
 Snap Audit as and when required. These activities are well documented
 and guided by the policies approved by Board.
 
 15.105 In line with directives of RBI and to comply with requirement
 under BASEL II accord, Bank has adopted Risk Based Internal Audit
 (RBIA) for inspection w.e.f. 1st April,2007. The officials inspecting
 the branches have been given adequate training for conduct of RBIA. The
 Bank had carried out RBIA of 649 Branches by internally trained
 inspectors as well as by the experienced empanelled external auditors.
 
 15.106 To further strengthen adherence to the systems and control, the
 Bank has geared up monitoring mechanism. Besides monitoring through
 concurrent audit at various branches, periodical review at regional
 levels is also monitored by the inspection department at Corporate
 Office. The strategic approach with special emphasis on strict
 adherence to systems and procedures has enabled improvement in the
 inspection ratings of large number of branches. The effective steps
 taken are monitored on an ongoing basis for timely rectification of
 irregularities pointed out in the inspection reports to help/improve
 the operational efficiency and regulatory rating of the Bank.
 
 16.000 MARKETING
 
 16.100 During the year 2007-2008, wide publicity was given to different
 products & schemes of our Bank through press, electronic and Outdoor
 media.
 
 16.200 New products launched during the year especially the two premium
 products Dena Internatonal Gold Debit Card and Dena Internet
 Banking were given wide publicity through Newspaper Ads in major
 publication, Hoardings and Banners.  Banks advertisements appeared on
 popular television channels on important festivals and occasions such
 as Independence Day and Diwali etc. Direct Marketing campaigns were
 taken up through sponsorship and putting up stalls in various
 events/exhibitions like SME Summit SME Vision 2010 -Solution and
 Strategies at Delhi, Ludhiana and Mumbai, Agricultural Exhibition-
 Krishi 2007 held in Nashik etc. Special Rural Publicity campaign were
 carried out with emphasis on credit facilities to Minority Communities
 through wall paintings, Hoardings & print media.
 
 16.300 The Bank has undertaken branding exercise on local trains in
 Mumbai by painting the entire Train on the Western, Central and Harbour
 lines which are the busiest public transport modes. Branding on Railway
 tickets was also done. These initiatives received high appreciation
 from all the corners and the Bank was able to extract good mileage in a
 very cost effective manner.
 
 16.400 A major corporate campaign with the tag line Apnepan Ka Ehsaas
 was carried in leading newspapers all over India in English and
 regional languages. This was a major initiative in boosting the
 Corporate image and Brand recall, which received a very good response
 not only from the General Public but also from the Media.
 
 17.000 Corporate Services
 
 17.100 The Bank is registered as Bankers to the issue and Depository
 Participant with Securities Exchange Board of India (SEBI).
 
 17.101 As Bankers to the Issue, the Bank is extending its services for
 paying Dividend / Interest warrants / Refund orders to various
 corporate clients. The Bank is also working as Collecting Bank for
 various Corporate Clients.
 
 17.102 The Bank is a Depository Participant of National Securities
 Depositary Limited (NSDL) and has specialized Capital Market Branch in
 Mumbai. This Branch is extending various types of services relating to
 Demat / Remat of shares & securities.
 
 18.000 RAJBHASHA
 
 18.100 The Bank continued to be in the forefront to promote the
 official language, Hindi as a measure of recognition of the efforts put
 in during the financial year under review.
 
 18.101 Banks Vadodara and Chennai Regional Offices won the First Prize
 each for the year 2006-2007 for best implementation of official
 language in the annual assessment done by Banks Town Official Language
 Implementation Committee (TOLIC), Vadodara.and Chennai Respectiovely.
 This is the third consecutive year Vadodara Regional Office is winning
 First Prize for the purpose. Banks Coimbatore Branch and Bangalore
 Regional Office were also awarded 2nd and Consolation prizes
 respectively for excellent performance in implementation of official
 language by Banks Town Official Language Implementation Committee
 Coimbatore and Bangalore.during 2006-07.
 
 18.102 Bank received consolation prize in the competition conducted by
 Maharashtra State Level Bankers Committee (Rajbhasha), Pune for good
 performance in implementation of official language Hindi in the Bank in
 its offices/Branches situated in Maharashtra State during 2006-07.
 
 18.103 The Bank continued to conduct special training programme to
 promote the use of Hindi and also continued with the policy of
 extending incentives like awarding shields/trophies and offering cash
 incentives etc.
 
 18.104 During the financial year,95 Hindi Workshop were conducted and
 640 officers & 794 other employees were trained. In addition to these
 140 Desk Training Programmes were also conducted to impart practical
 training to the employees for doing the official work in Hindi.
 
 18.105 Keeping pace with the technological changes, the Bank has
 provided computer based bilingual word processing facilities on all
 computers in use at various administrative offices viz. Regional
 Offices and Corporate Offices.
 
 18.106 During the period under review bank has provided e-mail
 facilities in Hindi by installing Akruti Easymailer software in Central
 e-mail server.
 
 18.107 The computer training programme were conducted to promote the
 use of these facilities through Hindi medium. All the ATMs installed
 by the Bank have been provided with bilingual access facilities.
 
 18.108 The Drafting and Evidence subcommittee of the committee of
 Parliament on Official Language visited banks Pune Regional Office on
 18-12-2007 and Ahmedabad from 25.03.08 to 28.03.2008 respectively.
 During the period they had discussion on implementation of Hindi with
 Chairman and some member of the Town Official Language Implementation
 Committee. Bank being convener and General Manager (Gujarat) being
 Chairman of Town Official Language Implementation Committee Ahmedabad
 they had discussed the efforts being made by Town Official Language
 Implementation Committee in implementation of Hindi and expressed its
 satisfaction over the efforts being made by the bank. In Pune they had
 discussion with 15 member Banks of Town Official Language
 Implementation Committee of which Bank was one of the Participant.
 
 18.109 Bank Branches/offices in all the three lingual regions are
 constantly improving level of implementation of official Language
 Policy of Government of India.
 
 19.000 OPPORTUNITIES AND THREATS
 
 The main threat that banks face is the interest rate movements
 consequent to the high level of inflation.  The current scenario that
 is likely to lead to hardening of interest rates will further squeeze
 the available margins. The banking sector is also scheduled for a major
 event in that from April 1, 2009, the liberalized norms for entry of
 foreign banks and FDI in financial sector will come into force leading
 to more pronounced competition levels. The Bank continues to review its
 interest rates on both assets and liabilities to ensure that while it
 remains competitive in the market, the concerns of profitability are
 also adequately addressed.
 
 While foreign banks and internationally active Indian banks have
 embraced Basel II norms as at 31st march 2008, other Indian banks
 including the Bank are set to adhere to Basel II by 31st March 2009.
 The Bank however does not perceive the capital requirements arising out
 of Basel II implementation by March 2009 as a threat, keeping in view
 the consistently improving profitability and avenues to raise various
 hybrid debt instruments as per RBI guidelines.
 
 20.000 NEW PRODUCTS
 
 The following new products are introduced during the period 1st April
 2007 - 31st March 2008.
 
 20.100 Dena Diamond Deposit Scheme:
 
 With a view to remain competitive with other players in the market, the
 Bank had introduced Dena Diamond Deposit Scheme for a limited period
 with effect from 26th May 2007 with an objective to tap medium term
 deposits. The scheme offered the depositor an opportunity to earn
 higher interest for their investment for a fixed maturity period of 700
 days. The scheme was offered upto 30th November 2007 only.
 
 20.200 Dena Recurring Depositors Insurance Scheme;
 
 As per the tie-up arrangement with Life Insurance Corporation of India,
 Dena Recurring Depositors Insurance Scheme provides life insurance
 cover to Recurring Deposit account holder to the extent of the Maturity
 value of the Recurring Deposit, against risk of death during the tenure
 of Recurring Deposit, by paying a nominal annual Insurance premium. In
 all cases of unfortunate death of depositor during the period of RD,
 family / dependants of depositor will receive full maturity value of
 such Recurring Deposit.
 
 20.300 Dena Tractor Borrowers Life Insurance Scheme:
 
 In tie-up arrangement with Life Insurance Corporation of India, Dena
 Tractor Borrowers Life Insurance Scheme Is launched, which provides
 life insurance cover to Tractor loan borrowers to the extent of
 outstanding loan against risk of death during tenure of loan. In case
 of unfortunate death of Tractor Loan Borrower during currency of loan,
 LIC will settle the claim to liquidate outstanding loan amount. Thus
 family / dependents of the Tractor Loan Borrower are not burdened with
 repayment of outstanding loan. The insurance premium can be included in
 the project cost & financed by the Bank.
 
 21.000 RIGHT TO INFORMATION ACT
 
 Bank has designated State Public Information Officers & Central Public
 Information Officers for dealing with request received from Citizens
 of India under RT Act 2005. Like wise Bank has also designated an
 Appellate Authority who is Senior in Rank to the SPIOs /CPIOs.
 
 The Bank has received 165/request under RT Act during the Year.
 Requests had duly been attended/ replied as per the norms. The
 Appellate Authority had disposed of all the 50 Appeals received during
 the Years, under the said Act.
 
 22.000 OUTLOOK
 
 Near to medium term objectives and goals are driven by the Banks
 Vision 2010 that aims at emerging as a preferred Bank of customers
 choice in its area of operations. The Bank has commissioned an exercise
 for repositioning itself that includes restructuring the support
 systems at Corporate and other levels to ensure active handholding of
 the operating units. The strategy is mainly targeted towards improved
 performance levels at par with peer bank group.  Towards this end, the
 bank has initiated a number of steps like implementation of Core
 banking, strengthening of vital functions like Treasury, Credit, Risk
 Management etc by recruiting a large number of professionally qualified
 manpower etc.
 
 The Bank shall continue its war on non performing assets for further
 improvement in Asset Quality and building up the resource base in a
 cost effective manner so as to enable maximization of profits for
 sustained business growth. The banks Credit Monitoring System will
 play a vital role in this direction.  Emphasis would also be laid on
 augmenting fee based income through sale of third party products and
 exploring other untapped avenues viz. Gold Trading etc.
 
 23.000 BOARD OF DIRECTORS
 
 23.100 The Board of Directors of the Bank comprised of Chairman &
 Managing Director and Executive Director, both being whole-time
 Directors and nine other directors as under, as on 31st March 2008:
 
 - One Reserve Bank of India Nominee director;
 
 - One Chartered Accountant Director, nominated by Government of India;
 
 - One workmen Employee director;
 
 - One Officer Employee director;
 
 - Two directors nominated by Government of India; and
 
 - 3 Shareholders elected Directors;
 
 23.101 Shri U.S. Kohli, Executive Director, retired from the Board on
 31st August 2007 upon attaining superannuation. The Board of Directors
 places on record its appreciation for the valuable contribution made by
 Shri U.S. Kohli, during his tenure as Executive Director on the Board
 of the Bank.
 
 23.102 The Government of India, Ministry of Finance, Department of
 -Financial Services vide notification F. No. 9/21/2006-BO-l dated
 November 7, 2007 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 Bhaskar Sen as Executive Director of the Bank
 for a period of five years with effect from the date of his taking
 charge of the post i.e. November 7, 2007 and until further orders,
 whichever is earlier.
 
 23.103 The Government of India, Ministry of Finance, Department of
 Financial Services vide notification F.NO.15/6/2006-IR dated September
 19, 2007 in terms of 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 the Nationalised Banks
 (Management and Miscellaneous Provisions) Scheme, 1970 had appointed
 Shri Madhukarrao G. Shinde as Workmen Employee Director on the Board of
 the Bank with effect from September 19, 2007 till he attains the age of
 superannuation i.e. February 28, 2010 or until his successor is duly
 appointed or till he ceases to be a workmen employee of the Bank or
 until further orders, whichever is earlier.
 
 23.104 The Government of India, Ministry of Finance, Department of
 Financial Services vide notification F.NO.9/22/2006-BO-I dated November
 21, 2007 in terms of 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, had
 nominated Shri V.S. Sivakumar as part-time non- official Director on
 the Board of the Bank for a period of three years with effect from
 November 21, 2007 or until further orders, whichever is earlier.
 
 23.105 The Government of India, Ministry of Finance, Department of
 Financial Services vide notification F.No.9/22/2006-BO-l dated December
 31, 2007 in terms of 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, had
 nominated Shri M. Surya Naik as part-time non- official Director on the
 Board of the Bank for a period of two years with effect from December
 31, 2007 or until further orders, whichever is earlier.
 
 23.106 Shri Sudhir Joshipura, 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 the Nationalised Banks (Management and
 Miscellaneous Provisions) Scheme, 1970, with effect from February 8,
 2002 ceased to be a Director of the Bank from September 19, 2007. The
 Board of Directors places on record its appreciation for the valuable
 services rendered by Shri Sudhir Joshipura, during his tenure as
 Director on the Board of the Bank.
 
 23.107 Shri R.L. Banerjee, Director appointed 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 Nationalised Banks (Management and Miscellaneous
 Provisions) Scheme, 1970/1980, with effect from October 31, 2006 ceased
 to be a Director of the Bank from December 31, 2007. The Board of
 Directors places on record its appreciation for valuable guidance
 provided Shri R.L. Banerjee, during his tenure as Director on the Board
 of the Bank.
 
 24.000 ACKNOWLEDGEMENTS
 
 24.100 The Directors express their sincere thanks to the Banks valued
 customers, shareholders and well wishers for their valuable
 contribution to the progress of the Bank and seek their continued
 support and co- operation in future.
 
 24.101 The Directors acknowledge with gratitude, the timely advice,
 valuable guidance and support received from Government of India and
 Reserve Bank of India.
 
 24.102 The Directors are also thankful to the Financial
 Institutions/Banks and Correspondents for their cooperation and support
 to the Bank.
 
 24.103 The Directors wish to place on record, the deep appreciation of
 the valuable contribution of the staff, at all levels, without which
 the progress achieved would have been unattainable. The Directprs look
 forward to their continued cooperation in faster business development
 and progress of the Bank.
 
                                For and on behalf of Board of Directors
 
                                         (P. L. Gairola)
                                    Chairman & Managing Director