IDBI Bank

The Bank has changed its name from Industrial Development Bank of
 India Limited to IDBI Bank Limited to properly reflect the business
 of banking being carried on by it. The new name has become effective
 from May 07, 2008 the date on which the Registrar of Companies (ROC),
 Maharashtra issued fresh certificate of incorporation. Earlier,
 shareholders of your Bank approved the proposal for the said name
 change by passing special resolution under Section 21 of the Companies
 Act, 1956 through voting by postal ballot.
 
 The Board of Directors of your Bank is pleased to present its Report on
 the business and operations of your Bank for the financial year ended
 31 st March 2008.  The financial information presented in this Report
 is in terms of the form and content prescribed by the Banking
 Regulation Act, 1949 and the rules made thereunder.
 
 Your Banks financial highlights for the period under review are given
 in Table I.
 
 Total assets of your Bank reached Rs. 1,30,694 crore at end-March 2008,
 due to robust growth registered in advances and investments. This
 growth was well
 
                                                        As at year-end 
                                                  2006-07       2007-08
 
 Capital                                           724.4         724.8
 Reserves & Surplus                               7575.5        8097.2
 Deposits                                       43,354.0      72,998.0
 Borrowings                                     42,404.4      38,612.5
 Other Liabilities &                              9781.0      10,261.9
 Provisions  Total Liabilities                1,03,839.3    1,30,694.4
 Cash & Balances with                             5406.5        6694.8
 RBI
 Balances with Banks and Money at Call &          1504.6        2064.0
 Short Notice
 Investments                                    25,675.3      32,802.9
 Advances                                       62,470.8      82,212.7
 Fixed & Other Assets                             8782.1        6920.0
 Total Assets                                 1,03,839.3    1,30,694.4
 
                                                        For the period 
                                                  2006-07       2007-08
 
 Total Income (net of                              7148.6       9145.9
 provisions)
 Total Expenses                                    6466.0       8323.2
 Profit Before Tax                                  682.6        822.7
 Provision for Tax                                   52.3         93.2
 Profit After Tax                                   630.3        729.5
 
 supported by the increase in aggregate deposits during 2007-08, which
 stood at Rs.72,998 crore with healthy growth of 68.4%. Through
 conscious efforts, your Bank, brought down its dependence on borrowings
 as visible from its reduced level of Rs!38,612 crore at end-March
 2008.Total advances of your Bank stood at Rs.82,213 crore as on March
 31, 2008, reflecting a growth rate of 3 1.6%. As a result, total
 business, defined as aggregation of deposits and advances, moved up by
 46.7% during the financial year 2007-08. Considering deposits by way of
 bonds, business of the Bank moved up by 32.9% during the financial
 year.
 
 Particulars                                     2006-07        2007-08
 
 Net Profit/(Loss) for the year                   630.3         729.5
 Profit/(Loss) brought forward                   1030.7        1314.9
 IDBI Exim (J) Special Fund                         1.7             -
 Profit available for appropriations             1662.7        2044.4
 Appropriations
 Transferred to Statutory Reserve                 158.0         183.0
 Transferred to Capital Reserve                    11.0           3.1
 Transferred to General Reserve                     1.7        1600.0
 Transferred to Special Reserve
 created and maintained u/s                        50.0          70.0
 36( I )(viii) of IT Act, 1961
 Dividend
 - Equity Shares                                  108.7         145.0
 - Tax on Proposed Dividend                        18.5          22.3
 Balance of Profit carried to                    1314.9          21.0
 
 Balance Sheet
 Profit and Appropriations
 
 During the year April 2007-March 2008, gross income earned by your Bank
 amounted to Rs.9656.3 crore, comprising interest income of Rs.8020.8
 crore and other income of Rs. 1635.5 crore. Provisions during the
 period amounted to Rs.603.6 crore comprising Rs. 510.4 crore for bad &
 doubtful debts and investments and Rs.93.2 crore towards tax. After
 netting the provisions of Rs. 510.4 crore for bad & doubtful debts and
 investments, net income was at Rs.9145.9 crore. Total expenditure of
 your Bank.during the year, excluding provisions and contingencies,
 stood at Rs.8323.2 crore consisting of Rs.7364.4 crore of interest
 expenses and Rs.958.8 crore of operational expenses.
 
 Your Banks working during the year resulted in a Profit Before Tax
 (PBT) of Rs:822.7 crore.  After making a provision of Rs.93.2 crore
 towards taxation, Profit After Tax (PAT) amounted to Rs.729.5
 crore.Appropriation of PAT as approved by the Board of Directors is
 given in Table 2. For each share of face value of Rs. 10, Earning Per
 Share (EPS) during the year stood at Rs. 10.1 and Book Value Per Share
 stood at Rs.93.4 as at end-March 2008.
 
 Dividend
 
 The Directors are pleased to recommend dividend at 20% on the fully
 paid-up equity capital for the financial year 2007-08.
 
 Capital Adequacy
 
 Capital Adequacy Ratio (CAR) of your Bank continued to remain sound.
 Against the stipulated RBI norm of 9%, your Banks CAR as at end-March
 2008 worked out to 11.95%.TheTier-l CAR also was at a high level of
 7.42%.Though the current level of capital is adequate for the present
 business requirements, your Bank would continue to ensure that capital
 is adequate and supportive to its long-term business plans and is
 deployed effectively to optimize its cost. Your Bank has also
 undertaken proactive measures to ensure compliance with the Basel-ll
 framework.
 
 Business Strategy
 
 The year gained strategic positioning in terms of creation of various
 business verticals to ensure increasingly valuable focus on key aspects
 of banking business. During the financial year, your Bank continued to
 expand its reach, both in terms of its branch network and ATMs, in
 order to provide improved services to the existing clientele and bring
 in larger base to its service frame.
 
 The Bank increasingly emphasized loan relationships with improved yield
 without sacrificing on quality front.  Diversification of assets and
 liability base was the fundamental principle followed during the year
 to build up the book. In its endeavour to de-risk the balance sheet and
 enhance upon the yield, it has been the principal strategy of your Bank
 to increasingly provide working capital assistance and sufficiently
 cater to the business requirements of entrepreneurs operating in the
 domain of SME. On the liability side, the Bank adopted concious policy
 to reduce dependence on borrowings through increased mobilisation of
 deposits, which was realised through effective implementation of
 resource plan. Your Bank remained alert to the competitive environment
 and market volatility; and evolved appropriate strategies to improve
 top line income as well as its bottom line. Steps were also taken to
 boost the non-interest income by taking advantage
 
 Home Loans made easy: Banks officials interacting with the customers
 at a property exhibition.
 
 Business Standard organized the Annual Banking Round Table at Mumbai
 to discuss the subject 2009: Are Indian banks ready?. Our CMD Shri
 Yogesh Agarwal participated in the Round Table along with CEOs of
 leading banks.  of the buoyant capital market as also continued thrust
 on fee-based income.
 
 Your Bank, since its conversion into a commercial bank, concentrated on
 easing cost of funds by expanding its deposit base, more prominently
 under current and savings accounts.  The Banks Benchmark Prime Lending
 Rate (BPLR) was also aligned with the movement of interest rate.With
 increased opportunities for cross- selling, your Bank aims to widen its
 revenue model with concentrated focus on fee income. Your Bank is also
 in the process of opening overseas offices.
 
 New Business Initiatives
 
 Your Bank, during the financial year, floated a few innovative
 products, broadly designed in accordance with the requirements and
 feedback of its clients. Lending products like loans against commercial
 property, loans against loan receivables and reverse mortgage loans
 were introduced and marketed effectively through our branches. Facility
 and system revamping was carried out to provide education loans online.
 On the liability side, niche saving bank accounts went live for women.
 The Bank also introduced 3-in-l savings-cum-demat accounts with trading
 facility during the year.  Financial inclusion was taken a step ahead
 with provision of mobile van banking amenities at Satara.
 
 SME segment is emerging as one of the key growth engines of the Indian
 economy. Your Bank has been designing customized products for SMEs from
 time-to-time and accordingly launched special current account for
 hosiery industry during the financial year. In building up valuable
 relationships in this area, your Bank has set up City SME Centres
 (CSCs) keeping in mind the specific requirements of SME business.
 
 In order to ensure customer delight, a regional processing centre was
 opened at Kolkata. This would consequently reduce delivery time for
 customers in the eastern part of the country and would also soften the
 associated service - cost.
 
 As an effort to arrest unwarranted transactions, And Money Laundering
 (AML) software went live from January 18, 2008 and thereby placed your
 Bank as one of the leading banks in taking effective steps to curb
 money laundering towards the greater cause of preventing global
 terrorism.
 
 Your Banks decision to enter into Life Insurance business with a Joint
 Venture Agreement with Fortis Insurance International N.V. (Fortis),
 and Federal Bank Ltd., took operational shape during this year, with
 authorization from Insurance Regulatory and Development Authority
 (IRDA).The Company during the year came up with two innovative products
 Wealthsurance andHomesurance which have been getting encouraging
 response from a variety of people across the country.
 
 Organisational Structure
 
 As an attestation of its customer-centric approach, your Bank has
 effected enabling modifications in its organizational structure to make
 it adequately responsive to the financial requirements and goals of
 clients. The earlier SBU-based operating model has been replaced with
 more effective and efficient customer-focused vertical model capable
 of delivering world class products and services. Entire spectrum of
 your Banks business is now covered by customer- oriented verticals
 viz. infrastructure and syndication, large corporate, mid-corporate,
 personal banking, small & medium enterprises, agri-business,
 international banking, treasury and transaction banking.
 
 Your Bank has developed an innovative credit delivery model for SMEs
 and has gradually been building up City SME Centres (CSCs). The CSCs
 would provide support in terms of loan processing of the proposals as
 also would undertake back office related activities to buttress the
 credit delivery mechanism. The dedicated SME Relationship Managers at
 branches would provide a single customer touch point to provide whole
 range of banking services with regard to SMEs.
 
 Organisational restructuring during the current year also dovetails
 much-awaited solutions to define seniority across the merged entities.
 With this your Bank has attained complete organizational integration of
 all functional areas.
 
 During the period under review your Bank increased its branch network
 by opening 67 more branches. In addition, a complete review was
 undertaken with regard to relocation of branches to more potential
 areas and 32 branches were effectively shifted to new locations. During
 the financial year 2008-09, your Bank has an ambitious plan for
 expansion of the network including its ATM network.
 
 Board of Directors
 
 Your Banks Board of Directors is broad-based and constitution thereof
 is governed by the provisions of the Banking Regulation Act, 1949, the
 Companies Act, 1956, the Articles of Association of the Bank and
 satisfies the requirements of corporate governance as envisaged in the
 Listing Agreement with the Stock Exchanges. The Board functions through
 itself as well as various Board Committees constituted to provide
 focused governance in important functional areas of the Bank.
 
 As on March 31,2008,the Board comprised I I Directors with 3 Executive
 Directors (including Chairman), 2 Non Executive Directors and 6
 Independent Directors.  Shri Yogesh Agarwal, Chairman & Managing
 Director as Executive Chairman, Shri O.V. Bundellu and Shri Jitender
 Balakrishnan, Dy. Managing Directors as Wholetime Directors, Shri Arun
 Ramanathan and ShriAjay Shankar, Central Government officials as Non
 Executive Directors, Shri Analjit Singh, Smt. Lila Firoz Poonawalla,
 
 Shri K. Narasimha Murthy, Shri R. V. Gupta, Shri H. L Zutshi and Shri
 A. Sakthivel as Independent Directors constitute the Board.
 
 No Director on the Board of your Bank is in any way related to any
 other Director on the Board of the Bank.
 
 The Board has 7 (seven) committees, namely, Executive Committee, Audit
 Committee, Shareholders / Investors Grievance Committee, Frauds
 Monitoring Committee, Risk Management Committee, Customer Service
 Committee and Information Technology Committee.
 
 Corporate Governance
 
 Your Bank is committed to adopting the best practices in the area of
 corporate governance. Your Bank believes that proper corporate
 governance is not just a requirement for regulatory compliance, but
 also a facilitator for enhancement of shareholders value. The details
 of corporate governance practices followed in your Bank are given in
 this Annual Report as a separate section under Management Discussion
 and Analysis.
 
 Disclosure regarding Remuneration of Employees under Section 2I7(2A) of
 the Companies Act, 1956
 
 In terms of Section 2I7(2A) of the Companies Act, 1956 and the rules
 made thereunder, the required information is contained in annexure and
 forms part of this Report.  However, in terms of section 219( I )(iv)
 of the said Act, the Directors Report and Annual Accounts, being
 circulated among the shareholders, do not contain the aforesaid
 annexure. The detailed annexure will be available for inspection of the
 shareholders at the registered office of the Bank during working hours
 for a period of 21 days before the date of AGM.
 
 Two personnel were in the service of the Bank for the whole year and
 were in receipt of remuneration of over Rs.24 lakh per annum. Further,
 17 personnel, who were in the service of the Bank for part of the year,
 received remuneration in excess of Rs.2 lakh per month for the period
 they were in the service of the Bank.
 
 The provisions of Section 2l7(l)(e) of the Act relating to conversion
 of energy and technology absorption do not apply to your Bank.
 
 Directors Responsibility Statement
 
 The Board of Directors hereby declares and confirms that:
 
 (i) in the preparation of accounts, the applicable accounting standards
 had been followed along with proper explanation relating to material
 departure.
 
 (ii) the Directors had adopted such accounting policies and applied
 them consistently and made judgments and estimates that are reasonable
 and prudent so as to give a true and fair view of the state of affairs
 of your Bank at the end of the accounting year and of the profit or
 loss of your Bank for that period.
 
 (iii) the Directors had taken proper and sufficient care for the
 maintenance of adequate accounting records, in accordance with the
 regulatory provisions, for safeguarding the assets of your Bank and for
 preventing and detecting fraud and other irregularities.
 
 (iv) the Directors had prepared the accounts on a going concern basis.
 
 Acknowledgements
 
 The Board of Directors of your Bank is extremely thankful to the
 Government of India, Reserve Bank of India (RBI), Securities and
 Exchange Board of India (SEBI) and the Insurance Regulatory and
 Development Authority (IRDA) for their continued co-operation and
 guidance. The Board indeed appreciates the co operation and support
 extended by the State Governments and other banking/financial
 institutions.
 
 The Board of your Bank wishes to thank various multilateral
 institutions and international banks/ institutions for their continued
 support. The Board also takes this opportunity to thank all its
 shareholders and customers for extending their support during the year
 and looks forward to their continued association in the years
 ahead.Your Bank has gained considerably by the sincere and devoted
 services rendered by its entire staff for which the Board is pleased to
 place on record its deep appreciation of the services.
 
 Place: Mumbai                                  Yogesh Agarwal
 Date : 26-04-2008                         Chairman & Managing Director