The Banks Directors have pleasure in presenting the Seventeenth Annual
 Report covering business and operations of the Bank, together with the
 audited accounts for the year ended March 31, 2011.
 
 The financial performance for the year ended March 31, 2011 is
 summarized as under:
 
                                                 (Rs. in crores)
 
                                           As on           As on
                                  March 31, 2011  March 31, 2010
 
 Deposits                              34,365.37       26,710.17
 
 Advances                              26,165.65       20,550.59
 
 Operating Profit 
 (before Depreciation and 
 Provisions and Contingencies)          1,142.22          749.19
 
 Net Profit                               577.32          350.31
 
 
 During the year, the Banks deposits grew by 28.66% and advances
 increased by 27.32%, despite the mixed growth signals
 
 Contents
 
 in the Indian economy and the tentative recovery witnessed in the
 global outlook.
 
 The focus during the year continued to be on increasing the earnings
 from core banking business and on strengthening the fee income streams.
 
 Operating Profit (before Depreciation and Provisions and Contingencies)
 during the year under review rose by 52.46% to Rs. 1,142.22 crores,
 from the level of Rs. 749.19 crores in the previous year.
 
 The Banks Net Profit, after considering necessary provisions and
 contingencies and all expenses, was higher by 64.80% at Rs. 577.32
 crores as against Rs. 350.31 crores in the previous year.
 
 Appropriations
 
 The Directors recommend appropriation of profit as under:
 
                                                     (Rs. in crores)
 
 Operating Profit before Depreciation 
 and Provisions & Contingencies                             1,142.22 
 
 Less: Depreciation on Fixed Assets                            60.55
 
 Less: Provisions & Contingencies                             504.35
 
 Net Profit                                                   577.32
 
 Profit Brought forward                                       391.51
 
 Amount available for Appropriation                           968.83
 
 Transfer to Statutory Reserve                                144.33
 
 Transfer to Capital Reserve                                    1.10
 
 Transfer to Investment Reserve Account                         0.69
 
 Proposed Dividend                                             93.23
 
 Tax on Dividend                                               15.12
 
 Balance carried over to Balance Sheet                        714.36
 
 Total Appropriations                                         968.83
 
 Dividend
 
 The Earning per Share (EPS) of the Bank has risen to Rs. 13.16 during
 the year 2010-11 from Rs. 9.01 in the previous year.
 
 Looking to the overall improvement in performance and the growth
 outlook for the current year, the Directors recommend a dividend of Rs.
 2.00 per equity share of Rs. 10/- each for the year ended March 31,
 2011. (Dividend for the year 2009-10 was Rs. 1.80 per equity share of
 Rs.10/- each). The Bank shall pay tax on the amount of dividend paid,
 which will be tax-free in the hands of the shareholders.
 
 Financial Performance
 
 During the year 2010-11, the Bank continued to leverage its business on
 the three performance planks of Productivity, Profitability and
 Efficiency, which brought about a significant change in the
 year-on-year performance. There has been substantial and all-round
 improvement in various financial parameters during the year.
 
 The Banks Total Income grew by 31.98% to Rs. 4,303.02 crores from Rs.
 3,260.47 crores last year.
 
 The sharp rise in profitability was the result of a healthy increase in
 the core income streams. Net Interest Income improved by 55.29% to Rs.
 1,376.49 crores from Rs. 886.41 crores while the Non-Interest Income
 rose to Rs. 713.66 crores from Rs. 553.48 crores, a rise of 28.94%.
 
 Yield on advances was marginally lower at 12.36% during the year, as
 against the yield of 12.61% in 2009-10. Cost of deposits, however,
 decreased more sharply to 6.32% as against 6.82% in the previous year.
 Accordingly, the Net Interest Margin (NIM) rose to 3.47% during the
 year, as compared with 2.88% in 2009-10.
 
 Though the Bank expanded its branch network substantially to reach 300
 branches as against 210 at the beginning of the year, higher revenue
 growth and better cost management resulted in Cost / Income
 (Efficiency) Ratio improving to 48.25% in 2010-11 as against 51.12% in
 2009-10. Revenue per employee during the year improved to `29.83 lakhs
 from Rs.26.75 lakhs in the previous year.
 
 Quality of the Banks assets improved further, with Net Non-Performing
 Assets (Net NPAs) falling to 0.28% as at March 31, 2011 from 0.50% last
 year. The Provisioning Coverage Ratio (PCR) improved significantly to
 72.61% as compared to 60.14% last year.
 
 On the liabilities side, the emphasis continued to be on broadbasing
 the deposit franchise and on reduction in the overall cost of deposits.
 This task was accomplished by leveraging on the expanded branch network
 and the pan-India marketing setup, offering innovative products and
 service propositions, sustained promotional campaigns, and enabling
 customers with alternate channels like ATMs, Internet Banking, etc. The
 strengthened infrastructure was leveraged to boost the Current and
 Savings Account (CASA) balances to 27.15% from the level of 23.67% last
 year.
 
 The Bank introduced several new products and services for its chosen
 client segments, through its Transaction Banking Group and Global
 Markets Group. Deeper understanding of client requirements and the
 ability to put technology to efficient use formed the bedrock on which
 new products and service propositions were created.
 
 The Bank kept up its focus on broadbasing as well as strengthening the
 fee-based income streams, resulting in a smart growth in non-interest
 income. Moving forward, the Bank plans to upscale the growth momentum
 through further enhancements in diverse revenue streams such as foreign
 exchange business, investment banking, structured trade and treasury
 products, distribution of third party products like mutual funds and
 insurance, international remittances, bullion operations and
 transaction banking activities, including the depository business and
 the commodity market business.
 
 Share Capital
 
 On September 24, 2010, the Bank issued 5,00,00,000 equity shares of Rs.
 10/- each through a Qualified Institutional Placement (QIP), at a
 premium of Rs. 224.55 per share. During the year under review Bank
 allotted 53,19,195 equity shares to employees pursuant to the exercise
 of Options under its Employees Stock Option Scheme, 2007.
 
 Pursuant to the above, the Paid-up Share Capital and Share Premium
 Account increased by Rs. 55.32 crores and Rs. 1129.19 crores
 respectively.
 
 As at March 31, 2011, the Paid-up Equity Capital of the Bank consisted
 of 46,57,73,835 shares of Rs. 10/- each, excluding forfeited shares.
 
 Tier II Capital
 
 In view of the Tier I capital infusion through the issue of equity
 shares, the Bank did not raise any Tier II capital during the year.
 There is substantial headroom available to the Bank to raise Tier II
 Capital in future.
 
 Capital Adequacy
 
 The Bank is adequately capitalized. The Capital Adequacy Ratio of the
 Bank, calculated as per the New Capital Adequacy Framework (Basel II
 norms) of RBI, is set out below:
 
                                   March 31, 2011     March 31, 2010
 
 i) Capital Adequacy Ratio (CRAR)          15.89%             15.33%
 
 ii) CRAR- Tier I Capital                  12.29%              9.65%
 
 iii) CRAR- Tier II Capital                 3.60%              5.68%
 
 Ratings
 
 Given below are some of the ratings assigned by Credit Rating Agencies
 to the Banks deposit and borrowing programmes:
 
 - P1+ rating for Fixed Deposits and Certificate of Deposits (upto 1
 year contracted maturity) by CRISIL.
 
 - ‘LAA- for Lower Tier II Subordinate Debt program and ‘LA+ for Upper
 Tier II Bond program by ICRA.
 
 - ‘CARE AA- for Lower Tier II Subordinate Debt program by CARE.
 
 - ‘AA-(ind) for Lower Tier II Subordinate Debt program, ‘A(ind) for
 Upper Tier II bond program and F1+ for Short Term program by Fitch
 Ratings.
 
 Directors
 
 Mr. R. Seshasayee was re-appointed Non-executive Chairman of the Bank
 in July 24, 2009 for a further period of two years.  Mr. Seshasayees
 tenure accordingly concludes on July 23, 2011.
 
 Re-appointment of Mr. Seshasayee as Non-executive Chairman of the Bank,
 for a further period of two years with effect from July 24, 2011 is
 accordingly proposed, subject to approval of the Reserve Bank of India.
 
 Mr. Ashok Kini and Mr. T. Anantha Narayanan, Directors, retire by
 rotation, and being eligible, have offered themselves for
 re-appointment.
 
 Mr. Romesh Sobti was appointed Managing Director and CEO of the Bank
 w.e.f. February 1, 2008 for a period of three years.  Since Mr. Sobtis
 tenure would conclude on January 31, 2011, approval of the Members for
 his re-appointment was sought in the 16th Annual General Meeting of the
 Bank held on June 28, 2010, subject to the approval of the Reserve Bank
 of India.
 
 The Bank has since received the approval from Reserve Bank of India for
 re-appointment of Mr. Romesh Sobti as Managing Director and CEO for a
 period of three years, w.e.f. February 1, 2011, vide RBI letter dated
 January 13, 2011 on the terms and conditions indicated therein.
 
 Mr. R. Sundararaman, who had joined the Banks Board on October 30,
 2002, ceased to hold office from October 30, 2010 upon completion of
 the maximum permissible tenure of 8 years on the Board of the Bank vide
 Section 10A(2A)(i) of the Banking Regulation Act, 1949. The Directors
 wish to place on record their sincere appreciation for the valuable
 services rendered by him during his tenure as Director of the Bank.
 
 Auditors
 
 M/s M. P. Chitale & Co., Chartered Accountants are the Auditors of the
 Bank and will retire at the conclusion of the ensuing Annual General
 Meeting. They have been associated with the Bank as Statutory Auditors
 for the past four financial years, and are not eligible for
 re-appointment in accordance with the RBIs policy of rotation and
 resting. The Board places on record its deep appreciation of the
 professional services rendered by M/s M. P. Chitale & Co., during their
 association with the Bank.
 
 M/s B S R & Co., Chartered Accountants are proposed to be appointed as
 the Statutory Auditors of the Bank for the year 2011-12. Members are
 requested to consider the appointment of M/s B S R & Co., as the
 Statutory Auditors of the Bank till the conclusion of the next Annual
 General Meeting at a remuneration to be decided by the Board of
 Directors. Their appointment is subject to the approval of the Reserve
 Bank of India. A certificate from M/s B S R & Co. has been received to
 the effect that their appointment, if made, would be within the
 prescribed limits under Section 224(1) of the Companies Act, 1956.
 
 Auditors Report
 
 M/s. M. P. Chitale & Co., Chartered Accountants, have audited the
 accounts of the Bank for the year 2010-11 and their Report is annexed.
 There are no qualifications in the Auditors Report.
 
 Statutory Disclosures
 
 Information, wherever required under the Banking Regulation Act, 1949
 or the Companies Act, 1956 as applicable to a banking company, has been
 laid out in the schedules attached and forms part of the Balance Sheet
 and Profit and Loss Account.
 
 There are no material changes and commitments affecting the financial
 position of the Bank, which have occurred between the end of the
 financial year 2010-11 to which the Balance Sheet relates and the date
 of this Report.
 
 Considering the nature of activities as an entity in the financial
 services sector, the provisions of Section 217(1)(e) of the Companies
 Act, 1956 relating to conservation of energy and technology absorption
 do not apply to the Bank. The Bank has, however, made optimum use of
 information technology in its operations.
 
 The Bank had 7008 employees on its rolls as on March 31, 2011. The
 information required under Section 217(2A) of the Companies Act, 1956
 and the rules made thereunder is given in the annexure appended hereto
 and forms part of this Report.  In terms of Section 219(1)(b)(iv) of
 the Companies Act, this Report and the Accounts are being sent to the
 shareholders excluding the aforesaid annexure. Any shareholder
 interested in obtaining a copy of the said annexure may write to the
 Company Secretary at the Registered Office of the Bank.
 
 Employee Stock Option Scheme
 
 The Bank had instituted an Employee Stock Option Scheme (ESOS) to
 enable its employees, including Whole-time Directors, to participate in
 the future growth of the Bank. Under the Scheme, Options which upon
 exercise or conversion could give rise to the issue of a number of
 shares not exceeding in the aggregate 7% of the issued equity capital
 of the Bank from time to time can be granted. The Employee Stock Option
 Scheme is in accordance with the Securities and Exchange Board of India
 (Employee Stock Option Scheme and Employee Stock Purchase Scheme)
 Guidelines, 1999. The eligibility and number of options to be granted
 to an employee is determined on the basis of criteria laid down in the
 Scheme and is approved by the Compensation Committee of the Board of
 Directors.
 
 An aggregate of 2,36,25,450 Options have been granted under the Scheme.
 Statutory disclosures as required by the revised SEBI Guidelines on
 ESOS are given in the Annexure to this Report.
 
 Corporate Governance
 
 The Bank continues its endeavour to adopt the best prevalent Corporate
 Governance practices. A separate report on the status of implementation
 of Corporate Governance, as required under Clause 49 of the Listing
 Agreements with the relevant Stock Exchanges, is included in the
 section on ‘Corporate Governance which forms part of this Report. M/s.
 Bhandari & Associates, Company Secretaries have certified that the
 conditions of Corporate Governance as stipulated in Clause 49 of the
 Listing Agreements with the Stock Exchanges have been complied with by
 the Bank. A copy of their Certificate is also attached to the Section
 on ‘Corporate Governance.
 
 Directors Responsibility Statement
 
 Pursuant to the provisions of Section 217(2AA) of the Companies Act,
 1956, the Directors hereby certify and confirm that:
 
 (i) in the preparation of the Annual Accounts, the applicable
 Accounting Standards have been followed along with proper explanation
 relating to material departures;
 
 (ii) the Directors have selected such accounting policies and applied
 them consistently and made judgements and estimates that are reasonable
 and prudent so as to give a true and fair view of the state of affairs
 of the Bank as at March 31, 2011 and of the profit of the Bank for the
 year ended on that date.
 
 (iii) the Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956 and Banking Regulation Act, 1949
 for safeguarding the assets of the Bank and for preventing and
 detecting fraud and other irregularities; and
 
 (iv) the Annual Accounts have been prepared on a ‘going concern basis.
 
 Acknowledgements
 
 The Directors are grateful to the shareholders of the Bank for the
 trust and confidence reposed by them in the Bank.
 
 The Directors are also grateful to the Reserve Bank of India, the
 Ministry of Corporate Affairs, the Securities and Exchange Board of
 India and the Stock Exchanges for the guidance and support extended by
 them to the Bank.
 
 The Board expresses its deep sense of appreciation to all employees for
 their excellent performance, strong work ethic and unswerving
 commitment, which qualities have contributed to the Banks continued
 progress in a challenging environment.
 
 The Board thanks its valued customers for their patronage, and looks
 forward to the growing of this mutually supportive relationship in
 future.
 
                        For and on behalf of the Board of Directors
 
                                                      R. Seshasayee
                                                           Chairman
 
 Place : Mumbai 
 Date  : May 23, 2011