1.  DERIVATIVES
 
 1.1 Forward Rate Agreements / Interest Rate Swaps (IRS)
 
 Singapore branch entered into Derivatives contracts of the nature of
 Interest Rate Swaps (IRS) to hedge on balance sheet assets. The
 notional principal value of Swaps was SGD 2.00 Mio (Rs8.10 Crore). IRS
 was undertaken for hedging purposes. The outstanding swap position was
 to receive floating rate of interest and pay fixed rate of interest.
 
 1.2 Exchange Traded Interest Rate Derivatives
 
 The bank has not contracted any exchange traded interest derivatives
 during the year under review.
 
 1.2 Risk Exposure in Derivatives
 
 1.2.1 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 control
 systems and also internal approvals 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
 Bank''s Board.
 
 Exchange traded FX 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 there from, if any, are fully provided for
 while the profits , if any, are ignored.
 
 Quantitative Disclosures
 
 The Bank is active in the following products under derivatives.
 
 -- Overnight Index Swaps
 
 -- Currency Futures
 
 The outstanding OIS position as on 31st March 2012 was Rs 150 crore
 while no naked positions under Currency Futures was outstanding as on
 31st March 2012 (previous year- Nil).
 
 1.3.1 Profit on account of sale of securities from HTM category
 amounting to Rs 3.32 crore (previous year Rs 2.36 crore) has been taken
 to Profit and Loss Account and thereafter an amount of Rs 1.68 crore
 (previous year Rs 1.18 crore) was transferred to Capital Reserve Account
 (net of taxes and amount required to be transferred to statutory
 reserves).
 
 1.3.2 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 2074.23
 crore (previous year Rs 4982.05 crore) resulted in depreciation of Rs
 77.19 crore (previous year Rs 176.23 crore).  The depreciation provision
 available as on 31st March 2011 in GOI AFS securities amounting to Rs
 43.89 crore was utilized and the balance amount of Rs 33.30 crore was
 debited to P&L account of current year on account of shifting.
 
 1.3.3 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 2011-12,
 a sum of Rs 31.73 crore (previous year Rs 43.38 crore) has been amortized
 and the same is reflected as a deduction from ''Income on Investments''.
 
 During the year, Bank has changed its Accounting Policy in respect of
 Provisioning for Non-Performing assets as detailed below:
 
 (a) Provisioning for all non performing assets classified as
 substandard has been increased to 25% from 01.04.2011 in place of 20%.
 
 (b) Provisioning for doubtful assets at the rates prescribed in IRAC
 Norms in respect of all advances categorized under D1 and D2 from
 01.07.2011 as against 100% followed upto 30.06.2011.
 
 Consequent to the above mentioned changes, the Net Profit for the
 current year is higher by Rs 285.61 crore.
 
 2.1.1 Non Performing Loan Provisioning Coverage Ratio is 70.13%
 (previous year 84.30%)
 
 2.1.2 As per Recovery Policy of the Bank, any recovery should be first
 appropriated to Book balance (Principal) and then to Unpaid Legal
 Expenses (MLE) and thereafter to unpaid interest.
 
 COUNTRY RISK MANAGEMENT:
 
 The Bank has analysed its net funded exposure to various countries as
 on 31.03.2012 and such exposure to countries other than Singapore is
 well within the stipulation of 1% of the total assets of the Bank. In
 respect of Singapore, which is classified under Insignificant risk
 category by ECGC Ltd, a provision of Rs 4.54 Cr (Previous year Rs 3.47
 Cr) is available.
 
 3.1 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 1465.37 Crore. Estimated total value of such intangible
 collaterals mentioned above as on 31.03.2012 is Rs 8917.55 Crore.
 
 4.  MISCELLANEOUS
 
 4.1 Reconciliation and Adjustments
 
 4.1.1 Reconciliation of Inter Branch Account is completed up to
 31.03.2012. 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, 8577 IBGA
 credit entries aggregating to Rs 6.45 crore are outstanding.
 
 4.1.2 In view of net credit position in respect of unreconciled entries
 in the Inter Branch Account outstanding for more than 6 months as on
 31.03.2012, no provision is required.
 
 4.1.3 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.
 
 4.1.4 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.
 
 a) The disputed Income Tax demand outstanding as at 31.03.2012 amounts
 to Rs 770.35 Crore (previous year Rs 507.35 Crore), out of which Rs 517.24
 Crore (previous year Rs 348.60 Crore) has been paid / adjusted by the
 Department against refund dues. No provision is considered necessary
 for the said disputed demands on account of judicial pronouncements and
 favourable decisions in Bank''s own case.
 
 b) Provision for income tax has been made after due consideration of
 favourable decisions of Appellate Authorities / Opinion of Counsels and
 is net of reversal of Rs 151.17 crore, being the provision of earlier
 years considered as no longer required.
 
 4.2 Disclosure of Penalties imposed by RBI
 
 During the year, RBI has imposed penalty of Rs 12.37 lakhs for
 non-detection of forged notes, shortages in cash remittances and
 discrepancy in Currency Chest handling operation.
 
 4.3 Fixed Assets
 
 4.3.1 Premises include properties costing Rs 10.80 Crore, the book value
 of which is Rs 59.96 Crore (previous year Rs 11.11 Crore and Rs 64.50
 Crore respectively), for which registration formalities are in
 progress.
 
 4.3.2 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.
 
 4.5 Letter of comfort issued by the Bank:
 
 During the year ended 31.03.2012, 717 letters of comfort have been
 issued by the bank amounting to Rs 3239.12 Crore.  The letters of
 comfort outstanding as on 31.03.2012 are 394 amounting to Rs 1585.25
 Crore.
 
 4.6 In view of the Letter of Responsibility given by the Bank to the
 Monetary Authority of Singapore, the Bank maintains deposit to the
 extent of USD 43 mio (equivalent to INR 218.76 Crore approx as on
 31.03.2012) with Singapore Branch to meet the minimum Net Adjusted
 Capital Funds requirement of the Branch.
 
 4.7 Indian Bank Trust for Rural Development:
 
 Indian Bank Trust for Rural Development has been set up by the Bank on
 22.09.08 to exclusively focus on rural development and accomplish
 perceptibly better results by coordinating with various other players/
 agencies who are also engaged in the development of rural areas. Total
 Contribution committed by the Bank to the Trust is Rs 10.00 Crore.
 
 Under the Trust, Indian Bank Self Employment Training Institutes
 (INDSETIs) have been established in eight centers (Chittoor, Cuddalore,
 Dharmapuri, Kancheepuram, Puducherry, Salem, Thiruvallur and Vellore)
 to impart skill oriented training to rural unemployed youth, to enable
 them to either self / wage employed.
 
 The Bank has also set up Financial Literacy and Credit Counseling
 Centers (FLCCs) in Cuddalore, Dharmapuri, Kancheepuram, Krishnagiri,
 Namakkal, Salem, Thiruvallur, Thiruvannamalai, Villupuram and Vellore
 in Tamil Nadu, Kollam in Kerala, Chittoor and Machilipatnam in Andhra
 Pradesh, Puducherry in U.T. of Puducherry, to provide financial
 literacy and Credit Counselling services to the general public free of
 cost.
 
 5.  DISCLOSURES IN TERMS OF ACCOUNTING STANDARDS (AS):
 
 5.1 CASH FLOW STATEMENT (AS 3)
 
 The Cash Flow statement for the year 2011-12 is annexed separately.
 
 5.2 EMPLOYEE BENEFITS (AS 15)
 
 During the current year, a sum of Rs 92 crore has been charged to Profit
 & Loss Account towards transitional liability arising upon first time
 implementation of AS 15 made from the financial year 2007-08. The
 remaining unrecognized transitional liability as on 31.03.2012 is nil.
 
 During the year 2010-11, the Bank reopened the pension option for such
 of its employees who had not opted for the pension scheme earlier and
 the limit of gratuity payable to the employees of the bank was also
 enhanced pursuant to the amendment to the Payment of Gratuity Act,
 1972. As a result, the pension liability in respect of existing
 employees was Rs 813.22 crore and the increase in gratuity liability was
 Rs 166.00 crore as per actuarial valuation. RBI, vide circular
 No.DBOD:BP:BC/80/21.04.018/2010-11 dated 09.02.2011, permitted Banks to
 charge 1 /5th of such liability every year.  Accordingly, during the
 current year, a sum of Rs 162.65 crore towards pension and Rs 33.20 crore
 towards gratuity is charged to Profit and Loss account. The
 unrecognized liability pending for amortization over the remaining
 period is Rs 487.93 crore towards pension and Rs 99.60 crore towards
 gratuity
 
 * Expected Rate of return on Plan Assets not applicable for Leave
 encashment.
 
 The estimates of future salary increases are considered taking into
 account inflation, seniority, promotion and other relevant factors,
 such as supply and demand in the employment market.
 
 5.3 SEGMENT REPORTING (AS 17)
 
 As per the Reserve Bank of India guidelines on Accounting Standards,
 the Bank''s operations are classified into Primary segment i.e. the
 business segment comprising of ''Treasury'', ''Corporate / Wholesale
 Banking'', ''Retail Banking'' and ''Other Banking Operations'' and Secondary
 segment being the geographical segment comprising of ''Domestic'' and
 ''International'' as follows:
 
 Segmental expenses have been apportioned on the basis of segmental
 assets, wherever direct allocation is not possible.  Previous year
 figures have been re-grouped wherever necessary.
 
 b) The transactions with subsidiaries and associates have not been
 disclosed in view of para 9 of AS-18 ''Related Party Disclosure'', which
 exempts state controlled enterprises from making any disclosure
 pertaining to their transactions with other related parties which are
 also state controlled enterprises.
 
 5.4 Leases (AS 19)
 
 The properties taken on lease/rental basis are renewable/ cancelable at
 the option of the Bank. The Bank''s liabilities in respect of disputes
 pertaining to additional rent / lease rent are recognized on settlement
 or on renewal.
 
 * No provision for Deferred Tax Liability on deduction claimed under
 Section 36(1)(viii) of the Income Tax Act, 1961 has been made as the
 same is considered as permanent difference consequent to the decision
 of the Bank not to withdraw the reserve.
 
 5.5 Impairment of Assets (AS 28)
 
 Fixed Assets being the non-financial assets possessed by the Bank are
 treated as Corporate Assets and not as Cash generating units, as such
 there is no impairment of assets and consequently no impairment loss
 has been recognized.
 
 6 Dividend
 
 Equity Shares: Provision for Equity Dividend represents proposed
 dividend at Rs 7.50 (75%) per Equity Share amounting to Rs 322.33 crore
 for the year (previous year at Rs 7.50 (75%) per Equity Share amounting
 to Rs 322.33 crore).
 
 Perpetual Non-Cumulative Preference Shares: The Preference Dividend
 proposed for the year is Rs 40.00 crore, reckoned at 10% p.a. from April
 01, 2011 to March 31, 2012 (Previous year Rs 40.00 crore at 10% p.a.).
 
 7 Miscellaneous income includes:
 
 i) a sum of Rs133.30 Crore (previous year Rs128.15 Crore) being recovery
 in written-off accounts.
 
 ii) Rs 52.33 crore being reversal of Deferred Tax Liability created in
 the earlier years in respect of Special Reserve created U/S 36 (i)
 (viii) of the Income Tax Act, since in the opinion of the Management it
 is only a permanent difference and not capable of reversal.
 
 iii) Rs 134.46 Crore (previous year Rs146.42 Crore) being recovery of
 processing charges during the year.
 
 8.  There is no outstanding dues payable by the bank to MSME units
 pending beyond the time limit prescribed under MSMED Act, 2006 as on
 31.03.2012.
 
 9.  Previous year''s figures have been regrouped / reclassified,
 wherever necessary, to conform to current year''s figures.