1.0 Exchange Traded Interest Rate Derivatives
 
 The Bank has not contracted any Exchange Traded Interest Rate
 Derivatives during the year under review.
 
 1.1 Risk Exposure in Derivatives
 
 1.1.1 Qualitative Disclosures :
 
 Bank has been doing hedging of asset as well as liability using IRS.
 The hedging transactions have been accounted on an accrual basis.
 Swaps, which hedge interest bearing asset / liability, are accounted
 for as the asset or liability hedged. Valuation of outstanding swap
 contracts is on marked to market basis.
 
 All swap deals have been undertaken based on the guidelines of
 International Swaps Dealers Association. Bank has adequate internal
 approvals and control systems prior to concluding transactions. There
 exists a clear functional segregation between (i) trading (Dealing)
 (ii) back office (settlement, monitoring and control) and (iii)
 accounting sections.
 
 In the derivatives segment, the bank is doing proprietary trading in
 Currency Futures (CF) and Overnight Index Swaps (OIS). The activities
 in this segment are governed by the Derivatives Policy approved by the
 banks Board.
 
 Exchange traded FIX Derivatives i.e. Currency Futures, are valued at the
 Exchange determined prices and the resultant gains and losses are
 recognized in the Profit and Loss account.
 
 The gain or loss in OIS transactions is booked in the Profit and Loss
 account on the maturity or unwinding of the deal whichever is earlier.
 For the purpose of valuation of outstanding OIS deals, the fair value
 of the total swap is computed on the basis of the amount that would be
 receivable or payable on termination of the swap as on the balance
 sheet date. Losses arising therefrom, if any, are fully provided for
 while the profits , if any, are ignored.
 
 The Bank is having the following products under derivatives.
 
 - Overnight Index Swaps
 
 - Currency Futures
 
 No naked positions under the said heads were outstanding as on 31 March
 2011.
 
 1.1.2 During the year, the Bank had transferred a portion of its
 Government Securities (SLR) held in the AFS category to the HTM
 category at the least of Cost / Book Value / Market price pursuant to
 enabling regulatory guidelines. The shifting of securities of Rs.4982.05
 crore (previous year Rs.1710.12 crore ) resulted in depreciation of
 Rs.176.23 crore (previous year Rs.49.23 crore).The depreciation provision
 available as on 31st March 2010 in GOI AFS securities amounting to
 Rs.138.72 crore was utilized and the balance amount of Rs.37.51 crore was
 debited to P&L account on account of shifting. The Bank also shifted
 Rs.1718.31 crore ( previous year Rs.1127.08 crore ) of government
 securities from HTM to AFS with out incurring any depreciation.
 
 1.1.3 In case of securities classified under HTM category, if
 acquisition cost is more than the face value, the premium is amortized
 over the remaining period to maturity. For the Financial Year 2010-11,
 a sum of Rs.43.38 crore (previous year Rs.71.05 crore) has been amortized
 and the same is reflected as a deduction from Income on Investments.
 
 1.2 Unsecured Advances
 
 Out of total unsecured advances, advances secured by intangible
 securities such as rights, licenses, authority etc charged to the bank
 as collateral in respect of projects (including infrastructure
 projects) is Rs..611.22 Crore. Estimated total value of such intangible
 collaterals mentioned above as on 31.03.2011 isRs. 12206.28 Crore
 available for lenders having charge.
 
 2.  MISCELLANEOUS
 
 2.1 Reconciliation and Adjustments
 
 2.1.1 Reconciliation of Inter Branch Account is completed up to
 31.03.2011. The Bank through various effective steps has achieved
 reduction in the outstanding entries. Adjustment of the remaining
 outstanding entries is in progress. As per the Management, 10548
 entries aggregating to Rs. 7.55 crore are outstanding.
 
 2.1.2 In view of net credit position in respect of unreconciled entries
 in the Inter Branch Account outstanding for more than 6 months as on
 31.03.2011, no provision is required.
 
 2.1.3 Old outstanding entries in drafts payable, clearing adjustment,
 sundries receivable, sundry deposit accounts, etc. and in bank
 reconciliation relating to Reserve Bank of India and other banks are
 being regularly reviewed for appropriate adjustments.
 
 2.1.4 Balancing of subsidiary ledgers/registers and reconciliation with
 general ledgers are in progress at some branches.  In the opinion of
 the management, consequential financial impact of the above on the
 accounts will not be significant.
 
 2.2 Amount of Provision made for Income Tax during the year:
 
                                             (Rs.. In crore)
  
                                        2010-11       2009-10 
 
 Provision for Taxation (IT 6 WT)        920.39        796.62
 
 
 a) The disputed Income Tax demand outstanding as at 31 03 2011 amounts
 to Rs. 507.35 Crore (previous year Rs..574.94 Crore), out of which Rs. 348.60
 Crore (previous year Rs..348.34 Crore) has been paid / adjusted by the
 Department against refund orders. Considering the various judicial
 pronouncements on similar issues in favour of the Bank and the Appeals
 filed by the Bank for earlier Assessment Years pending before various
 appellate authorities, no provision is considered necessary.
 
 The Bank has to pay tax under normal method for the current year.
 Hence, during the year, MAT entitlement credit to the tune of Rs. 120.00
 Crore has been reversed out of the MAT credit entitlement assets
 created in the earlier years. Balance outstanding under MAT entitlement
 Credit account as on 31.03.2011 is Rs.436.27 Crore.
 
 2.3 Disclosure of Penalties imposed by RBI
 
 During the year, RBI has imposed penalty of Rs. 7.87 lakhs for shortfall
 in CRR and Rs. 2.50 lakhs for discrepancy in Currency Chest remittances.
 
 2.4 Fixed Assets
 
 2.4.1 Premises include properties costing Rs.. 11.11 Crore, the book
 value of which is Rs..64.50 Crore (previous year Rs.. 11.11 Crore and
 Rs..66.27 Crore respectively), for which registration formalities are in
 progress.
 
 2.4.2 Bank revalued its immovable properties during the year 2008-09 at
 fair market value by approved valuers and the resultant appreciation of
 Rs.. 1057.76 Crore was credited to Revaluation Reserve Account.
 Depreciation on the revalued portion amounting to Rs..30.52 Crore
 (previous year Rs..30.52 Crore) has been charged to Profit & Loss A/c and
 an equivalent withdrawal is made from the Revaluation Reserve
 Account.
 
 2.5 Break-up of Provisions & Contingencies shown under the head
 Expenditure in Profit and Loss Account:
 
                                                      (Rs.. in crore)
 
 Provision made towards                           2010 -11  2009-10
 
 i) Depreciation in the value of Investments        61.431  (95.95)
 
 ii) Non-Performing Advances                        719.36  402.14
 
 Investments                                         (5,71) (10.04)
 
 iii) Standard Advances                              13.61   (0.38)
 
 Income Tax & FBT                               920.39  796.62
 
 v> Restructured Advances                             2.50   80.43
 
 vi) Others                                        (128.97)  19.54
 
    Total                                          1577.61 1192.36
 
 2.6 Floating Provisions :                          (Rs.. In crore)
 
         Floating Provisions Account                2010-11    2009-10
 
    Opening Balance (1st April)                  205.00     105.00
 
 (b)   Additions during the year                      0.00       0.00
 
 (c)   Reduction during the above year               65.42*      NIL