1.  Reconciliation
 
 Reconciliation of inter-bank and inter-branch transactions has been
 completed up to 31st March 2011, Steps for elimination of outstanding
 entries are in progress. Since the outstanding entries to be eliminated
 are insignificant, no material consequential effect is anticipated.
 
 2.  Investments
 
 2.2 SLR Securities under Held to Maturity accounted for 20.95%
 (previous year 22.39%) of banks Demand and Time liabilities as at the
 end of March 2011, as against the ceiling of 25% stipulated by RBI.
 
 2.3 In respect of Held to Maturity category of Investments, premium of
 Rs.53.00 crore was amortised during the year (Previous year Rs.114.47
 crore).
 
 2.4 Securities of face value of Rs.200 crores (previous year Rs.100
 crores) towards Settlement Guarantee Fund and securities for Rs.5855
 crore crores (previous year Rs.4855 crore) towards collateral for
 borrowing under Collateralised Borrowing and Lending Obligations have
 been kept with Clearing Corporation of India Ltd. Besides, a sum of
 Rs.1.80 crore (previous year NIL) has been lodged with NSCCL towards
 Currency Derivatives Segment, Rs.5.00 crore (previous year NIL) with
 CCIL towards Default Fund for
 
 forex operations, Rs.1.17 crore (previous year NIL) with Indian
 Clearing Corporation Ltd., towards Currency Derivatives Segment.
 
 2.5 Shares under Investments in Schedule 8 includes Rs.21,89,07,080/-
 (Previous year Rs.21,89,07,080/-) being advance towards share capital
 in Regional Rural Banks pending allotment of shares.
 
 3.  Advances
 
 3.1 The Classification for advances and provisions for possible loss
 has been made as per prudential norms issued by Reserve Bank of India.
 
 3.2 Claims pending settlement and claims yet to be lodged with
 Guarantee Institutions identified by the branches have been considered
 for provisioning requirements on the basis that such claims are valid
 and recoverable.
 
 3.3 In assessing the realisability of certain advances, the estimated
 value of security, Central Government guarantees etc. have been
 considered for the purpose of asset classification and income
 recognition.
 
 3.4 The classification of advances, as certified by the Branch Managers
 have been incorporated, in respect of unaudited branches.
 
 3.5 The Bank has a floating provision of Rs.171.36 crores (Previous
 Year Rs.171.36 crores) in respect of Gross Non- performing Advances
 over and above the minimum provision prescribed by RBI with a view to
 strengthening the financial stability of the Bank.
 
 4.  Fixed Assets
 
 4.1 During the year 2008-09, the bank has revalued its premises (land
 and buildings) other than those at overseas branches and added an
 amount of Rs. 1123.55 crores to the existing carrying value of assets.
 The revaluation has been done by approved valuers.
 
 4.2 A sum of Rs.0.51 crore (previous year Rs.1.61 crore) being profit
 on sale of Fixed Assets during the year has been appropriated to
 Capital Reserve as on 31.03.2011.
 
 5.  Rupee Interest Rate Swap:
 
 An amount of Rs.2.33 crore (previous year Rs.4.69 crore) is kept in
 deferred income on account of gains on termination of Rupee Interest
 Rate Swaps taken for hedging and would be recognized over the remaining
 contractual life of swap or life of the assets/liabilities, whichever
 is earlier.
 
 6.  Capital and Reserves:
 
 6.1 The bank had during the year raised equity share capital of Rs.1054
 crore including share premium of Rs.980.05 crore by way of preferential
 allotment of 7,39,49,343 equity shares to Government of India on
 24.3.2011.  Pursuant to the above the share holding of Government of
 India has increased from 61.23% to 65.87%.
 
 6.2 During the year, the Bank has raised Tier II capital amounting to
 Rs. 1967.00 crore (previous year Rs. 800.00 Crore) by issue of
 Lower/Upper Tier II bonds.
 
 7.  Taxes
 
 Taking into consideration the decisions of Appellate Authorities,
 judicial pronouncements and the opinion of tax experts, no provision
 has been considered necessary in respect of disputed and other demands
 of income tax amounting to Rs.566.68 crore (previous year Rs. 406.92
 crore)
 
 8.  Agricultural Debt Waiver and Debt Relief Scheme 2008
 
 8.1 In terms of Agricultural Debt Waiver and Debt Relief Scheme 2008,
 framed by the Government of India, the Bank has received Rs.581.58
 crore from Reserve Bank of India on account of loans to small and
 marginal farmers, out of the amount eligible for debt waiver of Rs.676
 crore.
 
 8.2 The balance amount due from the Government of India under the above
 scheme amounting to Rs.94.42 crore is shown as Claim Receivable from
 Government of India for ADW&DRS 2008 and included under advances in
 Schedule 9 as per Reserve Bank of India circular.
 
 9.  Shree Suvarna Sahakari Bank Ltd
 
 During the year 2009-10, the Bank has taken over specific assets and
 liabilities of M/s. Shree Suvarna Sahakari Bank Ltd., Pune (which was
 under moratorium), with effect from the close of business on 19.05.2009
 with the approval of RBI and other authorities.The deficit representing
 excess of liabilities over assets taken over as on the said date
 amounting to Rs.246.52 crore has to be absorbed over a period of three
 years, as permitted by Reserve Bank of India. The Bank has absorbed the
 deficit, amounting to Rs.164.34 crore (Rs.82.17 crore during the year
 2009-10 and Rs.82.17 crore during the year 2010-11). The balance of
 deficit amounting to Rs.82.18 crore will be absorbed before 31.03.2012.
 
 10.  Pension and Gratuity Liability
 
 During the year, the bank reopened the pension option for such of its
 employees who had not opted for the Pension Scheme earlier.  As a
 result of exercise of this option by 11571 employees, the bank had
 incurred a liability of Rs.758.65 crore. Further, during the year, 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 Gratuity liability of the bank has increased by
 Rs.246.56 crore.
 
 In terms of the requirements of the Accounting Standard
 (AS-15).Employee Benefits, the entire amount of Rs.1005.21 crore is
 required to be charged to the Profit and Loss account.  However, the
 Reserve Bank of India has issued a circular No.DBOD.BP.BC.80/21.04.018/
 2010-11, on Reopening of Pension Option to employees of Public Sector
 Banks and enhancement in Gratuity limits - Prudential
 
 Regulatory Treatment, dated 09.02.2011.  In accordance with the
 provisions of the said Circular, the bank would amortise the amount of
 Rs.1005.21 crore over a period of 5 years.  Accordingly, Rs.201.04
 crore (representing one-fifth of Rs.1005.21 crore) has been charged to
 the Profit and Loss Account. In terms of the requirements of the
 aforesaid, RBI Circular, the balance amount carried forward, i.e.,
 Rs.804.17 crore does not include any employees relating to separated /
 retired employees. Had such a circular not been issued by the RBI, the
 profit of the bank would have been lower by Rs.804.17 crore pursuant to
 application of the requirements of AS-15.
 
 * Due to issuance of 7,39,49,343 equity shares to Government of India
 on preferential allotment.
 
 3.3 DISCLOSURES ON RISK EXPOSURE IN DERIVATIVES
 
 3.3.1 Qualitative Disclosure
 
 Treasury (Foreign)
 
 The Bank uses Interest Rate Swaps (IRS), Currency Swaps and Options for
 hedging purpose to mitigate interest rate risk and currency risk in
 banking book. The Bank also offers these products to corporate clients
 to enable them to manage their own currency and interest rate risk.
 Such transactions are entered only with Clients and Banks having
 agreements in place.
 
 a) The Risk Management Policies of the Bank allows using of derivative
 products to hedge the risk in Interest / Exchange rates that arise on
 account of overseas borrowing / FCNR (B) portfolio / the asset
 liability mis-match, for funding overseas branches etc., and also to
 offer derivative products on back-to-back basis to customers.
 
 b) The Bank has a system of evaluating the derivatives exposures
 separately and placing appropriate credit lines for execution of
 derivative transactions duly reckoning the Net Worth and security
 backing of individual clients.
 
 c) The Bank has set in place appropriate control systems to assess the
 risks associated in using derivatives as hedge instruments and proper
 risk reporting systems are in place to monitor all aspects relating to
 derivative transactions. The derivative transactions were undertaken
 only with banks and counterparties well within their respective
 exposure limit approved by
 
 appropriate credit sanctioning authorities for each counter party.
 
 d) The Bank has set necessary limits in place for using derivatives and
 its position is continuously monitored.
 
 e) The Bank has a system of continuous monitoring and appraisal of
 resultant exposures across the administrative hierarchy for initiation
 of necessary follow up actions.
 
 f) Derivatives are used by the Bank to hedge the Banks Balance Sheet
 and offered to select corporate clients on back-to-back basis. In
 respect of hedge transactions the value and maturity of hedges has not
 exceeded that of the underlying exposure. In respect of back-to- back
 transactions the transactions with clients are fully matched with
 counter party bank transactions and there is no uncovered exposure.
 
 g) The income from such derivatives are amortised and taken to Profit
 and Loss Account on accrual basis over the life of the contract. In
 case of early termination of swaps undertaken for Balance Sheet
 management, income on account of such gains would be recognised over
 the remaining contractual life of the swap or life of the assets /
 liabilities whichever is lower. In case of early termination of
 derivatives undertaken for customers on a back-to-back basis, income on
 account of such things will be recognised on termination.
 
 h) All the hedge transactions have been accounted on accrual basis.
 Valuations of the outstanding contracts are done on Mark to Market
 basis. The Bank has duly approved Risk Management and Accounting
 procedures for dealing in derivatives.
 
 i) The derivative transactions are conducted in accordance with the
 guidelines of Reserve Bank of India.
 
 Treasury (Domestic)
 
 The Bank uses the Rupee Interest Rate Swaps (IRS) for hedging purpose
 to mitigate interest rate risk in Govt. Securities and to reduce the
 
 cost of Subordinated Debt and term deposits.  In addition, the bank
 also enters into rupee interest rate swaps for trading purposes as per
 the policy duly approved by the Board. Swap transactions are entered
 only with Banks having ISDA agreements in place.
 
 a) The Bank has put in place an appropriate structure and organization
 for management of risk which includes Treasury Department, Asset
 Liability Management Committee and Risk Management Committee of the
 Board.
 
 b) Derivative transactions carry Market Risk (arising from adverse
 movement in interest rates), credit risk (arising from probable counter
 party failure), liquidity risk (arising from failure to meet funding
 requirements or execute the transaction at a reasonable price),
 operational risk, regulatory risk and reputation risk. The Bank has
 laid down policies, set in place appropriate control systems to assess
 the risks associated in using derivatives and proper risk reporting and
 mitigation systems are in place to monitor all risks relating to
 derivative transactions. The IRS transactions were undertaken with only
 Banks as counter party and well within the exposure limit approved by
 the Board of the Bank for each counter party.
 
 c) Derivatives are used by the Bank for trading and hedging. The bank
 has an approved policy in force for derivatives and has set necessary
 limits for the use of derivatives and the position is continuously
 monitored. The value and maturity of the hedges which are used only as
 back to back or to hedge banks Balance Sheet has not exceeded that of
 the underlying exposure.
 
 d) The Accounting Policy for derivatives has been drawn up in
 accordance with RBI guidelines, as disclosed in Schedule 17 -
 Significant Accounting Policies (Policy No.6).
 
 4.1.2 Provision Coverage Ratio
 
 The Provision Coverage Ratio (PCR) computed as per the RBI guidelines
 stood at 70.45% as on 31.03.2011.
 
 4.4 Details of non-performing financial assets purchased/sold from
 other banks
 
 7.4 Details of Single Borrower Limit (SBL), Group Borrower Limit (GBL)
 exceeded by the bank:
 
 As per RBI guidelines and terms of Loan Policy Document of our Bank for
 2011, the permissible level of Single Borrower exposure ceiling is Rs.
 1758.15 crore (15% of Capital funds) and Rs.4688.40 crore for Group
 Borrower limit (40% of Capital funds). SBL and GBL in case of overseas
 branches was enhanced to USD 40 Mio and USD 60 Mio respectively with
 effect from 11.12.2010.
 
 # Limits to the captioned borrower was enhanced to USD 40 Mio vide MCB
 sanction of 10.2.2011 and this sanction is within the revised SBL of
 USD 40 Mio.
 
 8.  MISCELLANEOUS
 
 8.2 Disclosure of Penalties imposed by RBI
 
 NIL
 
 During the year 2009-10, the Bank has issued a Letter of Comfort (LOC)
 undertaking to maintain a minimum CRAR of 12% in respect of Bangkok
 branch.
 
 During the year 2010-11, the bank has issued a letter of comfort
 favoring Bank Negara Malaysia. The Bank in association with other JV
 partners will provide support to India International Bank (Malaysia)
 Bhd in funding, business and other matters as and when required and
 ensure that it complies with the requirements of the Malaysian laws,
 regulations and policies in the conduct of its business operations and
 management.
 
 *Fees/Remuneration received in respect of the Bancassurance Business
 undertaken by the Bank.
 
 9.  DISCLOSURES IN TERMS OF ACCOUNTING STANDARDS
 
 9.1 Accounting Standard 15 - Employee Benefits
 
 i) The Bank had adopted Accounting Standard 15 (Revised) Employees
 Benefits issued by the Institute of Chartered Accountants of India,
 with effect from 1st April 2007.
 
 * The un-funded net liability in Pension and Gratuity Funds, are to be
 amortised over a period of next 4 years.
 
 * The information for experience adjustments for the previous year are
 not available.
 
 The estimates of future salary increases, considered in actuarial
 valuation, take into account actual return on plan assets, inflation,
 seniority, promotion and other relevant factors, such as supply and
 demand in employee market.
 
 In respect of overseas branches, disclosures if any, required for
 Employee Benefit Schemes are not made in the absence of information.
 
 (b) The financial assumptions considered for the calculations are as
 under:
 
 Discount Rate: The discount rate has been chosen by reference to market
 yield on government bonds as on the date of valuation. (Balance sheet
 date 31.03.2011)
 
 Expected Rate of Return: In case of Pension and Leave Encashment, the
 expected rate of return is taken on the basis of yield on government
 bonds. In case of gratuity, the actual return has been taken.
 
 Salary Increase: On the basis of past data.
 
 (c) Banks best estimate expected to be paid in next Financial Year for
 Gratuity is Rs.90 crore (Previous year - NIL).
 
 (d) The contribution on account of Defined Contribution Scheme -
 Provident Fund Rs.780.65 crore (previous year Rs.716.16 crore), out of
 which an amount of Rs.763.08 crore has been transferred to Pension Fund
 from PF Fund on account of II option of pension.
 
 9.2 Accounting Standard 17- Segment Reporting
 
 The bank has adopted Reserve Bank of Indias revised guidelines issued
 in April 2007 on Segment Reporting in terms of which the reportable
 segments have been divided into Treasury, Corporate/Wholesale Banking,
 Retail Banking and Other Banking Operations.
 
 9.3 Accounting Standard 18- Related Party Disclosures
 
 Names of the related parties and their relationship with the bank
 
 1  Parent              Indian Overseas Bank
 
 2  Associates          Pandyan Grama Bank
 
                        Neelachal Gamya Bank
 
 3. Subsidiaries        None
 
 4. Jointly controlled 
    entity              India International Bank (Malaysia) Bhd.
 
 *Remuneration includes salary & allowances, salary arrears, performance
 incentives, leave encashment arrears and gratuity arrears.
 
 9.5 Accounting Standard 21 - Consolidated Financial Statements (CFS)
 
 As there is no subsidiary, no consolidated financial statement is
 considered necessary.
 
 9.7 Accounting Standard 26 - Intangible Assets
 
 The application software in use in the bank has been developed in-house
 and has evolved over a period of time. Hence, the costs of software is
 essentially part of Banks operational expenses like wages etc. and as
 such are charged to the respective heads of expenditure in the Profit
 and Loss Account.
 
 9.8 Accounting Standard 27 - Financial Reporting of Interests in Joint
 Ventures
 
 Bank has signed a Joint Venture with Bank of Baroda and Andhra Bank to
 open a bank in Malaysia. Bank Negara, the Central Bank of Malaysia, has
 issued the licence to the Joint Venture on 16.04.2010. The Joint
 Venture has been incorporated at Malaysia on 13.08.2010 in the name of
 INDIA INTERNATIONAL BANK (MALAYSIA) BHD, with a total capital of MYR
 300 Mio, Our bank share is 35% - MYR 105 Mio. Our bank has so far
 subscribed to 14035 shares of MYR 10 each towards preliminary expenses
 of the Joint Venture aggregating to MYR140350 (INR0.21 crore). The
 Joint Venture is expected to commence operations shortly.
 
 9.9 Accounting Standard 28 - Impairment of Assets
 
 Fixed Assets owned by the Bank are treated as Corporate Assets and
 are not Cash Generating Units as defined by AS28 issued by ICAI. In
 the opinion of the Management, there is no impairment of any of the
 Fixed Assets of the Bank.
 
 9.10 Accounting Standard 29 - Provision for Contingent Liabilities and
 Contingent Assets:
 
 The guidelines issued by the Institute of Chartered Accountants of
 India in this respect have been incorporated at the appropriate places.
 
 10 Concentration of Deposits, Advances, Exposures and NPAs
 
 11 Comparative Figures:
 
 Previous years figures have been regrouped / rearranged wherever
 necessary.