Dear Shareholders,
 
 It gives me great pleasure to place the Bank''s Annual Report and
 financial statements for the year 2011-12, in your hands.  I would like
 to share with you, the highlights and performance indicators of the
 Bank during the year.
 
 Economic Scenario
 
 We had to operate in an environment which was not very conducive for an
 accelerated growth. The global economic scenario was hardly inspiring
 throughout the year. In September 2011, the turmoil in Eurozone and the
 outlook of US economy drew adverse inferences from the international
 rating agencies. Against this backdrop, the growth prospects and price
 stability in the Indian economy looked more promising.
 
 After having grown at the rate of 8.4 % in each of the two preceding
 years, the Indian Economy is estimated to have grown at a lower rate of
 6.9% in 2011-12. Agriculture and Services sectors are continuing to
 perform well but the weakening Industrial growth, particularly the
 Manufacturing Sector, has caused the slowdown of India''s economy.
 Inflation as measured by the Wholesale Price Index (WPI) was high
 during most of the current fiscal year.
 
 The trade imbalance arising out of exports of USD 370 billion as
 against imports of USD 489 billion, depleted the Foreign Exchange
 Reserves from USD 305 billion as on 31st March 2011 to USD 294 billion
 as on 31st March 2012. Even though the exports registered a growth of
 20.94% in dollar terms, during the year 2011-12, it was outpaced by the
 import growth of 32.15%, in dollar terms, during the same period.
 
 During 2011-12, equity markets fluctuated with intermittent corrections
 in line with the global trend. The BSE Sensex had come down from
 19445.22 as on 31.03.2011 to 17404.20 as on 31.3.2012.
 
 - The CD Ratio stood at 80.29 % as on 31.3.2012 as against 78.35% as
 on 31.3.2011.
 
 - Net Investments of the Bank as on 31.3.2012 had increased to Rs.
 55,566 crore from Rs. 48,610 crore as on 31.3.2011.
 
 Profits
 
 - Operating Profit registered a y-o-y growth of Rs. 673 crore
 (23.54%) and was higher at Rs. 3,534 crore for year ended 31.3.2012 as
 against Rs. 2,861 crore for year ended 31.3.2011.
 
 - Net Profit of the Bank for year ended 31.3.2012 stood at Rs 1,050
 crore.
 
 - The Bank''s total income recorded a growth of 46.91 % during the
 year ended 31.3.2012 from Rs. 13,326.56 crore for the year ended
 31.3.2011 to Rs. 19,578.13 crore for the year ended 31.3.2012.
 
 - Net Interest Income improved to Rs. 5,016 crore for 2011-12 as
 compared to Rs. 4,028 crore for 2010-11, registering a growth of
 19.20%.
 
 - The Other Income during 2011 -12 increased to Rs 1,681 crore from
 Rs. 1,225 crore for 2010-11, a growth rate of 37.22 %.
 
 - Net Interest Margin stood at 2.75 % for 2011-12.
 
 Branch network expansion
 
 - During the year, your Bank opened 447 branches increasing its
 pan-India presence. 73.38% of these new branches are located in Rural
 and Semi Urban centres.
 
 - These new branches will provide speedy growth of business in the
 years ahead.
 
 - The Bank reached yet another milestone of crossing 1000 branches in
 the state of Tamil Nadu on 10th February 2012, thus becoming the first
 Bank to achieve the feat.
 
 Other highlights
 
 - Priority Sector advances as a percentage to Adjusted Net Bank
 Credit stood at 41.50 % as on 31.3.2012, as against the RBI norms of
 40%.
 
 - Agricultural credit portfolio of the Bank registered a growth of
 Rs. 3,360 crore (20.93 %) from Rs. 16,056 crore to Rs. 19,416 crore in
 the year under review. The ratio of Agricultural advances to Adjusted
 Net Bank Credit at 18.82 % exceeded the 18 % norm.
 
 - SME sector advances stood at Rs. 16,600 crore as on 31.3.2012, an
 increase of 40.21%, from Rs. 11,839 crore as on 31.3.2011.
 
 - Business per employee has increased from Rs 10.05 crore as on
 31.3.2011 to Rs. 11.76 crore as on 31.3.2012.
 
 - Gross NPA stood at Rs. 3,920 crore as on 31.3.2012 as against Rs.
 3,090 crore as on 31.3.2011 and in percentage terms, the Gross NPA
 ratio was 2.74 % as on 31.3.2012 as against 2.72 % as on 31.3.2011
 (marginal increase of two basis points).
 
 - Net NPA stood at Rs. 1,907 crore as on 31.3.2012 as against Rs.
 1,328 crore as on 31.3.2011. In percentage terms, the Net NPA ratio was
 1.35 % as on 31.3.2012 as compared to 1.19 % as on 31.3.2011.
 
 - The Bank maintained a Provision Coverage Ratio of 67.68 % as on
 31.3.2012.
 
 - The Bank with an international presence has already moved to the
 revised New Capital Adequacy Framework (BASEL II) from 31.3.2008 in
 line with RBI guidelines.  CRAR as per BASEL-II framework as on
 31.3.2012 works out to 13.32% which is well above the requirement of 9%
 prescribed by RBI.
 
 Dividend
 
 - A dividend of 45% has been recommended by the Board of Directors
 for the year 2011 -12.
 
 Para Banking
 
 In the area of Para-banking, emphasis is laid on marketing of insurance
 products, sale of gold coins and IT enabled products through periodic
 campaigns conducted at the branches. This is to improve our fee based
 income. The Bank continues with its Corporate Agency arrangement
 entered into with Universal Sompo General Insurance Company Limited
 (the Non-Life Insurance Joint Venture Company of your Bank with
 Allahabad Bank, Karnataka Bank, Dabur Investment Corporation and Sompo
 Japan Insurance Inc.) for distribution of non-life insurance products.
 
 Steps to improve profitability
 
 Your Bank is poised to continue its good growth in the coming year as
 well, by further improving its market share. Greater stress is laid on
 improving the CASA ratio and steep reduction of NPAs through intensive
 recovery measures. We are also taking appropriate steps to improve
 profitability by posting better NIM and resorting to cost control
 measures.  Overseas Operations
 
 As regards our overseas operations, we have six full-fledged overseas
 branches - two in Hong Kong and one each in Singapore, South Korea, Sri
 Lanka and Thailand. Remittance Centers function in Boon Lay and
 Serangoon, Singapore while an Extension Counter is located in Sri
 Lanka.
 
 The Bank''s Representative Offices are located in Guangzhou (China),
 Kuala Lumpur (Malaysia), Ho Chi Minh City (Vietnam) and Al Karama
 (Dubai) and Bank is in the process of taking up with Regulator for
 full-fledged status for these representative offices.
 
 Our Bank has signed a joint venture agreement with Bank of Baroda and
 Andhra Bank to open a Banking subsidiary in Malaysia in the name of
 India International Bank (Malaysia) BHD. Our Bank''s share in
 the Joint-venture is 35% (MYR 108.50 Mio) and as of 31.3.2012, Bank has
 invested Rs 12.96 Crores towards 819035 shares of MYR 10 each
 aggregating to MYR 8190350. The Joint Venture is expected to commence
 operations shortly.
 
 Platinum Jubilee
 
 The Bank completed its 75 glorious years of banking on 10th February
 2012. During the year-long celebrations, functions were held in major
 cities of the country. Four Platinum Jubilee Commemorative lectures by
 distinguished personalities were organised in Chennai and Hyderabad.
 Special Platinum Jubilee celebration functions were held in which
 eminent professionals, representatives from select Self Help Groups,
 Business Correspondents and Farm Schools were felicitated.  New
 products were launched. The Bank organised the annual Bankers
 Conference (BANCON 2011) during 4th to 6th November 2011, in which
 contemporary leaders in the fields of banking, industry, trade and
 finance presented their views.  Awards won by IOB
 
 Your Bank has won the following awards for its excellent performance
 
 - The First Prize for National Award for Excellence in MSE Lending
 during the year 2010-11 and the award was given by H.E. the President
 of India
 
 - The Best Public Sector Bank under Micro Credit category for Dun &
 Bradstreet and Polaris Software Banking Awards 2011
 
 - The First Prize by Government of India for the Hindi House Journal
 of the Bank ''Vani'' and the award was given by H.E. the President of
 India
 
 - Skoch Award 2012 for Financial Inclusion of Nilgiri Tribals The
 Best Banker Award 2012 given by SME Chamber of India
 
 - Skoch Challenger Award 2012 for Corporate Social Responsibility
 
 Our Commitment
 
 The well spread network of branches, efficient customer service and the
 committed human resources, are the strong points of the Bank. These
 strengths would open up new opportunities apart from building the
 existing relationships.  The challenges and competition in the Industry
 would be responded with strategic innovations so as to expand our
 market position and deliver our commitment to optimise value and
 returns to our customers, shareholders and employees.
 
 Acknowledgments
 
 The valuable support of our shareholders and the trust they reposed on
 the management will inspire us to turn out better results year after
 year to meet the aspirations of all our stakeholders. I am indebted for
 your commitment and goodwill.
 
                                                     Yours sincerely,
 
                                                         M. NARENDRA
 
                                      Chairman and Managing Director