1.  Capital Adequacy Ratio:
 
 The Bank computes Capital Adequacy Ratio as per RBI guidelines. The
 prudential norms laid down by RBI, for capital adequacy under Basel I
 framework (Basel I) require the Bank to maintain a Capital to Risk
 weighted Assets Ratio at a minimum of 9%, covering credit risk and
 market risk. As per RBI directions, the Bank has migrated to the New
 Capital Adequacy Framework (Basel II) with effect from March 31, 2009.
 Under the Basel II guidelines, the Bank is required to maintain Capital
 to Risk weighted Assets Ratio, at a minimum of 9% on an on-going basis
 covering, credit risk, market risk and operational risk. Further, the
 minimum capital to be maintained by the Bank is subjected to a
 prudential floor which is the higher of :
 
 (a) Minimum capital to be maintained under the New Capital Adequacy
 Framework (Basel II); and
 
 (b) 80% of the minimum capital to be maintained under Basel I
 guidelines
 
 3.2 Exchange Traded Interest Rate Derivatives:
 
 The Bank has not undertaken exchange traded interest rate derivative
 transactions during the year.
 
 3.3 Disclosures on Risk Exposure in Derivatives
 
 The Risk Management Department of the Bank is responsible for
 measuring, reporting and monitoring risk arising from Derivatives
 transactions. Risk Management Department functions independent of the
 Treasury. The risk management methods generally applied are
 quantitative like Value at Risk, PV01, stop-loss limits, counterparty
 limits, deal sizes and overnight positions.
 
 The Risk Management function undertakes the following activities:
 
 - Monitors daily derivatives operations against the set out policies
 and limits
 
 - Reviews daily profitability, product-wise, and activity reports for
 derivatives operations
 
 - Reports MIS and exceptions to the Top Management on a daily basis
 
 - Ensures monitoring of effectiveness of derivative deals identified as
 hedges against the terms of the hedging instruments and underlying
 hedged risk.
 
 Bank undertakes derivative transactions for hedging of customers
 exposure, hedging the Banks exposure and for trading purposes wherever
 permitted by RBI.
 
 Derivative trades are done both for the Banks balance sheet hedging
 requirements and also for the customer hedging requirements. The
 Customers use these products offered to hedge their forex and interest
 rate exposure.  All the trades with customers are covered on a
 back-to-back basis with other market makers.
 
 The Derivatives policy, approved by Board of Directors, define the
 framework for carrying out the derivatives business and lays down
 policies and processes adopted to measure, monitor and report risk
 arising from derivative transactions. Derivatives Policy provides :
 
 - Appropriate risk limits for different derivatives products
 
 - Authority for review of limit breaches and to take appropriate
 actions.
 
 Derivatives policy prescribes ‘Product Suitability and Customer
 Appropriateness policy which is used to classify the clients depending
 on their understanding of the derivative products.
 
 Contents
 
 * During the tenor of the hedge minimum PV01 was 15.15 lacs
 
 Note 1: Based on the PV01 of the outstanding derivatives as at March
 31, 2011.
 
 Note 2: Based on the absolute value of PV01 of the derivatives
 outstanding during the year. Derivative contracts that are
 “back-to-back” have not been included herein.
 
 Note 3: Mark to Market positions above includes interest accrued on the
 swaps.
 
 Note 4: Forward Exchange Contracts are not included in the Currency
 derivates above.
 
 Note 5: There were no outstanding currency futures as on March 31,
 2011.
 
 Foreign Currency exposure not hedged by derivative instruments (Net
 Open Position) as on March 31, 2011 is Rs.  (5.69) crores (previous
 year Rs. (0.20) crores).
 
 4. Asset Quality:
 
 4.5 During the year, there has been no purchase / sale of
 non-performing financial assets from /to other banks.
 
 4.6 During the year, there was no securitization transaction pertaining
 to Standard Advances (previous year Nil).
 
 4.7 Provision on Standard Assets :
 
 Provision towards Standard Assets has not been netted off from Advances
 but included in ‘Other Liabilities and Provisions – Others in Schedule
 5.
 
 5.  Business ratios:
 
 Note:
 
 (1) Working funds are calculated at the average of working funds as per
 the Banks monthly returns (Form X) filed with the RBI.
 
 (2) Business per employee (deposits plus gross advances) is computed
 excluding Inter-bank deposits.
 
 (3) Returns on Assets are computed with reference to average working
 funds.
 
 7.4 Single borrower limit and Group Borrower Limit:
 
 During the year the Bank has not exceeded the prudential credit
 exposure limit in respect of Single Borrower and Group Borrowers.
 
 7.5 Unsecured advances
 
 The Bank has not extended any project advances where the collateral is
 an intangible asset such as a charge over rights, licences,
 authorizations etc. As such, the Unsecured Advances of Rs. 3,714.28
 crores (previous year Rs. 2,837.18 crores) as given in Schedule 9B(iii)
 are without any collateral or security.
 
 9.  Miscellaneous:
 
 9.2 Disclosure of penalties imposed by RBI :
 
 The Reserve Bank of India has not imposed any penalty on the Bank u/s
 46(4) of the Banking Regulation Act, 1949.
 
 9.3 Fixed Assets:
 
 Cost of premises includes Rs. 4.09 crores (previous year RS. 4.09 
 crores) in respect of properties for which execution of documents and 
 registration formalities are in progress. Of these properties, the 
 Bank has not obtained full possession of one property having WDV of 
 Rs. 1.78 crores (previous year Rs. 1.81 crores) and has filed a suit
 for the same.
 
 9.4 Changes in Accounting Estimates – Revision of estimated useful life
 of fixed assets
 
 With effect from January 1, 2011, the estimated useful life of
 Furniture and Fixtures has been revised to 10 years from 15 years,
 Electrical Installation and Other Office Equipment to 10 years from 20
 years, and Vehicles to 5 years from 10 years. Consequent to this
 revision, the depreciation charged to Profit and Loss account during
 the year is higher by Rs. 12.66 crores with a corresponding decrease in
 the carrying amount of Other Fixed Assets under Schedule 10 as at the
 Balance Sheet date.
 
 9.5 Other Assets:
 
 Other assets include stock of gold on consignment basis of Rs. 10.96
 crores (previous year Rs. 13.05 crores) and Net Deferred Tax Assets Rs.
 47.88 crores (previous year Rs. 23.38 crores).
 
 9.6 Other Liabilities and Provisions:
 
 Other Liabilities – Others include credit balances in nostro accounts
 aggregating Rs. 66.86 crores (previous year Rs. 86.74 crores).
 
 9.7 Contingent Liabilities:
 
 Claims against the Bank not acknowledged as debts comprise tax demands
 in respect of which the Bank is in appeal of Rs. 49.64 crores (previous
 year Rs. 151.41 crores) and the cases sub-judice Rs. 159.96 crores
 (previous year Rs. 145.92 crores). The above are based on the
 managements estimate, and no significant liability is expected to
 arise out of the same.
 
 9.8 Other Income
 
 9.8.2 Miscellaneous income includes recovery from bad debts written off
 Rs. 20.95 crores (previous year Rs. 22.23 crores), lease rentals Rs.
 2.47 crores (previous year Rs. 19.68 crores) and others (processing
 charges, cheque return charges and depository services charges, etc.)
 Rs. 238.71 crores (previous year Rs. 153.62 crores).
 
 9.9 The Bank does not have any Overseas branches and hence the
 disclosure regarding total assets, NPAs and revenue is not applicable.
 
 9.10 The Bank does not have any Off-balance Sheet SPVs (which are
 required to be consolidated as per accounting standards).
 
 10.  Employee Stock Option Scheme (“ESOS”):
 
 The shareholders of the Bank had approved Employee Stock Option Scheme
 (ESOS) on September 18, 2007, enabling the Board and /or the
 Compensation Committee to grant such number of Options of the Bank not
 exceeding 7% of the aggregate number of issued and paid up equity
 shares of the Bank, in line with the guidelines of the Securities &
 Exchange Board of India (SEBI). The options shall vest at the
 discretion of the Compensation Committee, but within a maximum period
 of five years from the date of grant of option. The exercise price for
 each grant shall be decided by the Compensation Committee, which would
 normally be based on the latest available closing price. Upon vesting,
 the options shall have to be exercised within a maximum period of five
 years. The ESOS scheme is equity settled where the employees will
 receive one equity share per option.
 
 Recognition of expense
 
 The Bank follows the intrinsic value method to account for its ESOS in
 accordance with the Guidance Note on “Accounting for Employee
 Share-based Payments” issued by the ICAI. Excess of fair market price
 over the exercise price of an option as at the grant date is recognized
 as a deferred compensation cost and amortized on a straight-line basis
 over the vesting period of such options. The fair market price is the
 latest available closing price, prior to the date of the meeting of
 Board of Directors, in which options are granted, on the stock exchange
 on which the shares of the Bank are listed. Since shares are listed in
 more than one stock exchange, the stock exchange where the Banks
 shares have been traded highest on the said date is considered.
 
 Fair value methodology:
 
 Expected volatility is a measure of the amount by which the equity
 share price is expected to fluctuate during a period. The measure of
 volatility used in Black-Scholes option pricing model is the annualized
 standard deviation of the continuously compounded rates of return on
 the share over a period of time. Expected volatility has been computed
 by considering the historical data on daily volatility in the closing
 equity share price on NSE, over a prior period equivalent to the
 expected life of the options, till the date of the grant.
 
 Bank has charged Rs. 6.48 crores to P&L being the intrinsic value of
 stock options granted for the year ended March 31, 2011. Had the Bank
 adopted the Black-Scholes model based fair valuation, compensation cost
 for the year ended March 31, 2011, would have increased by Rs. 25.20
 crores and the proforma profit after tax would have been lower
 correspondingly. On a proforma basis, the basic and diluted earnings
 per share would have been Rs. 12.58 and Rs. 12.32 respectively.
 
 The weighted average fair value of options granted during the year
 ended March 31, 2011 is Rs. 126.87.
 
 11.  Disclosures - Accounting Standards :
 
 11.1 Net Profit or Loss for the period, prior period items and changes
 in accounting policies (AS-5):
 
 There has been no material change in Accounting Policies adopted during
 the year ended March 31, 2011, from those followed for the year ended
 March 31, 2010.
 
 11.2 Employee Benefits (AS-15):
 
 Gratuity:
 
 The benefit of Gratuity is funded defined benefit plan. For this
 purpose the company has obtained two qualifying insurance policies from
 LIC of India and Aviva Life Insurance Company India Limited. The
 following table summarises the components of net expenses recognized in
 the profit and loss account and funded status and amounts recognized in
 the balance sheet, on the basis of actuarial valuation :
 
 Leave Encashment :
 
 The Company provides benefits to its employees under the Leave
 Encashment pay plan, which is a non- contributory defined benefit plan.
 The employees of the company during the tenure of their employment are
 entitled to carry forward unutilized balance of Privilege Leave upto
 180 days.
 
 Provision for Leave Encashment has been made in the accounts on the
 basis of actuarial valuation as at the balance sheet date.
 
 11.3 Segment Reporting (AS-17):
 
 The Bank operates in four business segments, viz. Treasury, Corporate /
 Wholesale Banking, Retail Banking and Other Banking Operations. There
 are no significant residual operations carried by the Bank.
 
 Geographic Segments:
 
 The business operations of the Bank are largely concentrated in India.
 Activities outside India are restricted to resource mobilization in the
 international markets. Since the Bank does not have material earnings
 emanating from foreign operations, the Bank is considered to operate
 only in domestic segment.
 
 11.4 Related party transactions (AS-18):
 
 The following is the information on transactions with related parties:
 
 Key Management Personnel:
 
 Mr. Romesh Sobti, Managing Director
 
 Associates:    IndusInd Information Technology Limited
 
                IndusInd Marketing and Financial Services 
                Private Limited
 
                IBL Services & Solutions Private Limited 
 
 Subsidiaries : ALF Insurance Services Private Limited
 
 11.7 Consolidated Financial Statements – Subsidiary(AS 21):
 
 ALF Insurance Services Pvt. Ltd., subsidiary of the Bank, could not
 commence operations. Consequent to the resolution of Board of
 Directors, the process of winding up of the said company has since been
 initiated.  Accordingly, no consolidated financial statements have been
 drawn up as per AS-21 “Consolidated Financial Statements”.
 
 11.8 Taxation (AS 22):
 
 (a).  Provision for tax has been made after considering contingency
 provision as admissible deduction.
 
 11.9 In the opinion of the Bank there is no impairment of its fixed
 Assets to any material extent as at March 31, 2010, requiring
 recognition in terms of Accounting Standard 28.
 
 12.3 Letters of Comfort
 
 Bank has not issued any letter of comfort during the year.
 
 13.  The Bank does not carry any floating provision in the books.
 
 14.  The Micro, Small and Medium Enterprises Development Act, 2006 that
 came into force from October 2, 2006, provides for certain disclosures
 in respect of Micro, Small and Medium enterprises. There have been no
 reported cases of delays in payments to micro and small enterprises or
 interest payments due to delays in such payments
 
 15.  Previous years figures have been regrouped/ reclassified wherever
 necessary.