1.  Reconciliation
 
 The reconciliation of outstanding entries in inter branch/office
 transactions as on 31st March 2011 has been substantially completed and
 the efect, if any, of pending entries will not be material.
 
 2.  During the year the accounting policy, hitherto followed by the
 Bank up to the year ended 31.03.2010, of not providing for depreciation
 on assets sold/disposed of during the year except for vehicles, has
 been changed by providing depreciation on all the assets sold/disposed
 of during the year for the period up to the date of sale. The change as
 above does not have any impact on the Profit for the year.
 
 3.  The net liability arising on exercise of second option for Pension
 by employees (other than separated/retired employees) actuarially
 determined at Rs. 168.43cr is fully reckoned and disclosed as liability
 in the Balance Sheet, and 1/5th of the said liability amounting to Rs.
 33.71 cr.  is charged to the Profit and Loss Account of the year and
 balance unamortized amount of Rs. 134.72 cr is carried forward to be
 amortised equally over the succeeding four years, as per approval of
 RBI (vide letter no.DBOD.No.BP.  BC.15896/21.04.018/2010-11 dated
 08.04.2011).  The amounts relating to separated/retired employees have
 been fully charged to the Profit and Loss Account.
 
 In terms of the requirements of the Accounting Standard (AS) 15,
 Employee benefits, the entire amount of Rs. 168.43 crore is required to be
 charged to the Profit and Loss Account. Had such an approval circular
 not been issued by the RBI, the Profit of the bank would have been lower
 by Rs. 134.72 crore pursuant to application of the requirements of AS 15.
 
 4.  The provision made for Dividend recommended
 
 for the year ended March 31 2011 is subject to the notifcation of
 exemption by Government of India u/s 53 read with Section 15 of the
 Banking Regulation Act 1949, which is being sought for.
 
 5.2 Investments
 
 5.2.1 a) Investments under HTM (excluding specifed investments as per
 RBI norms) account for 21.01% (previous year 22.76%) of demand and time
 liabilities as at the end of March 2011 as against permitted ceiling of
 25% stipulated by RBI.
 
 b) In respect of securities held under HTM category premium of Rs. 21.90
 crore (previous year Rs. 23.93 crore) has been amortised during the year
 and debited under interest received on government securities.
 
 c) Profit on sale of securities from HTM category amounting to Rs. Nil
 crore (previous year Rs. 16.58 crore) has been taken to Profit and Loss
 Account and a sum of Rs. Nil crore (previous year Rs. 8.20 crore) being net
 of taxes and transfer to statutory reserve of such Profit, appropriated
 to Capital Reserve.
 
 5.3.3 Disclosure on Risk exposure in Derivatives Qualitative
 Disclosures
 
 Structure, organization, scope and nature of management of risk in
 derivatives etc.
 
 The organizational structure consists of Treasury Department which is
 segregated into three functional areas, ie, front ofce, mid ofce and
 back ofce. Derivative deals are executed for hedging and market making.
 
 The risk in the derivatives is monitored by regularly assessing Marked
 to Market Position (MTM) of the entire portfolio and the impact on
 account of the probable market movements. Various risk limits have been
 put in place under diferent segments of the derivatives, as approved by
 Board. The risk profle of the outstanding portfolio is reviewed by
 Board at regular intervals. For own balance sheet management, hedging
 policies are devised to mitigate risks, lower borrowing costs and
 enhance yields. The current outstanding under the derivatives portfolio
 were executed for trading only.
 
 Accounting:
 
 Board Approved Accounting Policies as per RBI guidelines have been
 adopted. The hedge swaps are accounted for like a hedge of the asset or
 liability. The hedge swaps are accounted on accrual basis except where
 swaps for hedging marked to market asset/liability. Such hedge swaps
 are marked to market on a monthly basis and the gain/losses are
 recorded as an adjustment to the designated asset/liability. The Non
 hedge swaps are marked to market every month and the MTM losses in the
 basket are accounted in the books while MTM Profits are ignored.
 
 Collateral Security:
 
 As per market practice, no collateral security is insisted on for the
 contracts with counter parties like Banks/ PDs etc. For deals with
 Corporate Clients, appropriate collateral security/margin etc. are
 stipulated wherever considered necessary.
 
 Credit Risk Mitigation:
 
 Most of the deals have been contracted with Banks/ Major PDs and no
 default risk is anticipated on the deals with them. In the case of
 deals with corporate clients, the outstanding positions are closely
 monitored for the default risks and appropriate measures are initiated.
 
 5.7.3 Country Risk (As compiled by the Management)
 
 The net funded exposure of the Bank in respect of foreign exchange
 transactions with each country is within 1% of the total assets of the
 Bank and hence no provision is required to be made in respect of
 country risk as per the RBI circular DBOD.BP.BC.96/21.04.103/2003-04
 dated 17 June 2004.
 
 5.7.7 Details of Overseas Assets, NPAs and Revenue
 
 Nil
 
 5.7.8 Of balance Sheet SPV sponsored
 
 Nil
 
 6.  Fixed Assets
 
 i) During the year 1995-96, the appreciation of Rs. 9.65 crore in the
 value of land and buildings consequent upon revaluation by approved
 valuers was credited to Capital Reserve. Depreciation for the year on
 the net addition to value on such revaluation of assets at Rs. 0.23 crore
 (previous year Rs. 0.24 crore) has been transferred from Capital Reserve
 to Profit & Loss Account. There has been no revaluation of assets during
 this year.
 
 ii) Land and premises include fats Rs. 0.37 crore (previous year Rs. 0.37
 crore), written down value Rs. 0.19 crore (previous year Rs. 0.21 crore),
 taken possession of and being used by the Bank, for which
 documentation/ registration formalities are to be completed.
 
 iii) Safe & Furniture includes cost of software relating to Core
 Banking solution of Rs. 15.26 crore (Previous year Rs. 15.26 crore) with
 written down value of Rs.Nil crore (previous year Rs. 1.68 crore)
 
 7.  The bank had implemented the Agricultural Debt Waiver and Debt
 Relief scheme 2008 notifed by the Government of India. The claim made
 under the debt waiver has been fully received and the balance amount
 receivable from Government in respect of the debts subjected to debt
 relief Rs. 2.03 crore is included under Other Assets (Schedule 11) as per
 RBI circular.
 
 8.  Disclosure in terms of Accounting Standard
 
 8.1 There is no material prior period income/expenditure requiring
 disclosure under AS 5 ''Net Profit or Loss for the Period, Prior period
 items and changes in Accounting policies issued by the Institute of
 Chartered Accountants of India.
 
 8.2 Employee benefits (AS 15)
 
 a) Defned Contribution Plan
 
 Provident Fund
 
 Eligible employees (employees not opted for pension plan) receive
 benefits from a provident fund, which is a defned contribution plan.
 Aggregate contributions along with interest thereon are paid at
 retirement, death, incapacitation or termination of employment. Both
 the employee and the Bank make monthly contributions to the Federal
 Bank Employees'' Provident Fund equal to a specifed percentage of the
 covered employees'' salary. The Bank has no other obligation than the
 monthly contribution.
 
 The Bank recognized Rs. 15.84 Crore (Previous year Rs. 6.44 Crore) for
 provident fund contribution in the Profit and Loss account.
 
 New Pension Scheme
 
 As per the industry wise settlement dated 27.04.2010, the employees
 joined the service of the bank on or after 01.04.2010 are not eligible
 for the existing pension scheme. They will be eligible for Defned
 Contributory Pension Scheme on the lines of new pension scheme
 introduced for employees of Central Govt. with efect from 01.01.2004.
 Employee shall contribute 10% of Pay and Dearness Allowance towards
 defned contributory Pension Scheme and Bank shall make a matching
 contribution in respect of these employees. There shall be no separate
 Provident Fund for employees joining on or after 01/04/2010.  The full
 details of the Scheme and its working are yet to be received from IBA.
 
 (b) Defned benefit plan
 
 1) Gratuity
 
 The Bank provides for gratuity, a defned benefit retirement plan (the
 “Gratuity Plan”) covering eligible employee. The Gratuity Plan provides
 a lump sum payment to vested employees at retirement, death,
 incapacitation or termination of employment, of an amount based on the
 respective employees'' salary and the tenure of employment. Vesting
 occurs upon completion of fve years of service as per Payment of
 Gratuity Act, 1972 and amendment with efect from 24.05.2010 or as per
 the provisions of the Federal Bank Employees'' Gratuity Trust Fund
 Rules/Award. Liabilities with regard to the Gratuity Plan are
 determined by actuarial valuation as of the Balance Sheet date, based
 upon which, the company contributes all the ascertained liabilities to
 the Federal Bank Employees'' Gratuity Trust Fund (the “Trust”). Trustees
 administer contributions made to the Trust and contributions are
 invested in specifc investments as permitted by law.
 
 2) Superannuation / Pension
 
 The Bank provides for monthly pension, a defned benefit retirement plan
 (the “pension plan”) covering eligible employees. The pension plan
 provides a monthly pension after retirement of the employees till death
 and to the family after the death of the pensioner. The monthly pension
 is based on the respective employees'' salary and the tenure of
 employment. Vesting occurs upon completion of ten years of service. The
 bank pays the monthly pension by purchasing annuities from Life
 Insurance Corporation of India (LIC). Liabilities with regard to the
 pension plan are determined by actuarial valuation as of the Balance
 Sheet date, based upon which, the company contributes all the
 ascertained liabilities to the Federal Bank (Employees'') Pension Fund
 (the “Trust”). Trustees administer contributions made to the Trust and
 contributions are invested in specifc investments as permitted by law.
 
 Consequent to the industry level settlement dated 27.04.2010, Bank has
 implemented Second option for pension in line with the settlement.
 Accordingly 2701 existing employees, 341 retired employees and 35
 family pension benefciaries exercised second option for pension. The
 Employer''s Contribution to Provident Fund in respect of these employees
 has been transferred to the Federal Bank (employees'') Pension Fund by
 the Bank.
 
 The following table as furnished by actuary sets out the funded status
 of gratuity / pension plan and the amounts recognized in the Bank''s
 financial statements as at March 31, 2011.
 
 (c) Leave encashment
 
 The employees of the Bank are entitled to compensated absence. The
 employees can carry forward a portion of the unutilised accrued
 compensated absence and utilise it in future periods or receive cash
 compensation at retirement or termination of employment for the
 unutilized accrued compensated absence for a maximum of 240 days. The
 Bank records an obligation for compensated absences in the period in
 which the employee renders the services that increase this entitlement.
 The Bank measures the expected cost of compensated absence as the
 additional amount that the Bank expects to pay as a result of the
 unused entitlement that has accumulated at the balance sheet date based
 on actuarial valuations.
 
 (d) Sick Leave / Leave Travel Concession / Unavailed Casual Leave.
 
 A sum of Rs. 22.10 crore (Previous year Rs. 20.91 crore) has been provided
 towards the above liabilities in accordance with AS 15 (Revised) based
 on actuarial valuation.
 
 8.6 Taxation (AS 22)
 
 i. The disputed amount of income tax demand as on 31.03.2011 amounts to
 Rs. 564.55 crore. In the opinion of the Bank no provision is considered
 necessary in respect of the above disputed demand in view of various
 judicial decisions and the same has been disclosed as contingent
 liability.
 
 9.  Additional Disclosures:
 
 9.1 Provisions and Contingencies debited in Profit and Loss Account
 during the year:
 
                                                       (Rs. crore)
 
 For the year ended / As at          31 March 2011     31 March 2010
 
 i) Provision towards NPAs (net)            488.85            413.11
 
 ii) Provision for Investments               11.13            -97.74
 
 iii) Provision for Standard Assets          14.35              0.20
 
 iv) Provision for Taxation:
 
 Current Tax                                316.26            361.50
 
 Deferred tax                                -1.53             33.50
 
 Fringe benefit tax                             -                 -
 
 v) Provision towards P/V sacrifice 
 on restructuring, other                     11.11             89.73
 contingencies etc
 
 Total                                      840.17            800.30
 
 9.4.2 Provision coverage ratio
 
 Provision coverage ratio as on 31 March 2011 stood at 82.06%
 
 9.4.3 Amount of advances for which intangible securities such as charge
 over rights, licences, authority etc.  has been taken as collateral
 security and the value of such collateral security
 
 Total amount of advances for which intangible securities such as charge
 over the rights, licenses, authority, etc. has been taken: Rs.100 crore
 
 The estimated value of such intangible collateral security : Rs.
 295.43crore
 
 9.4.4 There are no dues to micro and small enterprises as at 31 March
 2011. This disclosure is based on the records available with the Bank.
 
 9.4.5 The Bank has not issued any letters of comforts coming within the
 Prudential Norms for Issuance of Letters of Comforts by banks regarding
 their subsidiaries (DBOD.No. BP.BC.65/21.04.009/2007-08 dated March 4,
 2008).
 
 9.4.6 The Bank has not made any draw down of reserves during the year.
 
 9.5 Previous year''s fgures have been regrouped and recast wherever
 necessary.