1.  Disclosures as per RBI requirement:
 
 1.3.3 Disclosure in risk exposure in Derivative
 
 (i) Qualitative Disclosure: Operations in the Treasury are segregated
 into three functional areas, namely. Front-office, Mid-office and
 Back-office, equipped with necessary infrastructure and trained
 officers, whose responsibilities are well defined.
 
 The Integrated Treasury policy of the Bank clearly lays down the types
 of financial derivative instruments, scope of usages, approval process
 as also the limits like the open position limits, deal size limits and
 stop loss limits for trading in approved instruments.
 
 The Mid Office is handled by Risk Management Department. Daily report
 is submitted to Risk Management Department, which, in turn appraises
 the risks profile to the senior management on the assets and liability
 management.
 
 The Bank ensures that the transactions with the corporate clients are
 undertaken only after the inherent credit exposures are quantified and
 approved in terms of the approval process laid down in the Derivative
 Policy for customer appropriateness and suitability and necessary
 documents like ISDA agreements etc. are duly executed. The Bank has
 adopted Current Exposure Method for monitoring the credit exposures.
 
 The Bank also uses financial derivative transactions for hedging its on
 or off Balance Sheet exposures. The Integrated Treasury Policy of the
 Bank spells out the approval process for hedging the exposures. The
 hedge transactions are monitored on a regular basis and the notional
 profits or losses are calculated on MTM basis.
 
 The hedged/non hedged transactions are recorded separately. The hedged
 transactions are accounted for on accrual basis.
 
 In case of Option contracts, guidelines issued by FEDAI from time to
 time for recognition of income, premium and discount are being
 followed.
 
 While sanctioning the limits, the competent authority may stipulate
 condition of obtaining collaterals/margin as deemed appropriate. The
 derivative limits are reviewed periodically along with other credit
 limits.
 
 The customer related derivative transactions for notional value (at
 market rate) of Rs. 162.07 crore are covered with counter party banks,
 on back- to- back basis for identical amount and tenure and the Bank
 does not have any market risk.
 
 1.7.3 Risk category-wise Country Exposure:
 
 The net funded exposure of the bank in respect of foreign exchange
 transactions with each country is within 1% of the total assets of the
 Bank and hence no country risk provision is required as per extant RBI
 guidelines.
 
 1.7.4 Details of Single Borrower Limit (SBL)/ Group Borrower Limits
 (GBL) exceeded by the Bank: During the year ended 31-03-2011, the Bank
 has not exceeded the Individual /Group borrowers exposure ceiling
 fixed by RBI.
 
 1.7.5 Unsecured Advances: The Bank has not granted any finance to
 projects against collaterals by way of intangible securities such as
 charge over the rights, licences, authorisations, etc.
 
 1.8 Miscellaneous
 
 1.8.2. Penalties imposed by RBI: No Penalty was imposed by the Reserve
 Bank of India during the year.
 
 2. Accounting Standards:
 
 In compliance with the guidelines issued by the Reserve Bank of India
 regarding disclosure requirements of the various Accounting Standards,
 following information is disclosed:
 
 2.1 Accounting Standard 5 – Net Profit or Loss for the period, Prior
 period items and changes in accounting policy
 
 There is no material prior period items.
 
 The Bank has changed its estimate with effect from October 1, 2010
 relating to charging of provisions for Non- performing advances at
 rates higher than that prescribed by the Reserve Bank of India to the
 rates prescribed under the prudential norms of Reserve bank of India
 from time to time. Due to this change, the net profit after tax for the
 year is higher by Rs. 26.36 crore.
 
 2.2 Accounting Standard 9 – Revenue Recognition
 
 Income recognised on cash basis is neither material nor require
 disclosure
 
 2.3 Accounting Standard 15 – Employee Benefits: 
 
 2.3.1 Various Benefits made available to the Employees are:- 
 
 a) Pension: The Bank has defined benefit plan under Pension Trust to
 employees who have opted for Pension Scheme under the Pension & Group
 Schemes unit of LIC of India, by purchasing annuity for optees
 separated after completion of 20 years of service. The Benefits under
 this plan are based on last drawn salary and the tenure of employment.
 The Liability for the pension is determined and provided on the basis
 of actuarial valuation.
 
 b) Gratuity: In accordance with the applicable Indian Laws, the Bank
 provides for defined gratuity benefit retirement plan (‘the Gratuity
 Plan) covering eligible employees. This plan provides for a lumpsum
 payment to the eligible employees on retirement, death, incapacitation
 or termination of employment of amounts that are based on the last
 drawn salary and tenure of employment. Liabilities with regard to the
 gratuity plan are determined by actuarial valuation and contributed to
 the gratuity fund trust. Trustees administer the contribution made to
 the trust and invest in specific designated securities as mandated by
 law, which generally comprise of Central and State Government Bonds and
 debt instruments of Government owned corporations.
 
 c) Leave Encashment (PL): The bank permits encashment of leave
 accumulated by employees on retirement, resignation and during the
 course of service. The liability of encashment of such leave is
 determined and provided on the basis of actuarial valuation performed
 by an independent actuary at the balance sheet date.
 
 d) Provident Fund: The Bank pays fixed contribution to Provident Fund
 at predetermined rates to a separate trust, which invests the funds in
 permitted securities. The contribution to the fund is recognised as
 expense and is charged to the profit and Loss account. The obligation
 of the Bank is limited to such contributions.  As on 31st March 2011,
 there was no liability due and outstanding to the fund by the Bank.
 
 e) Other Long term Employee Benefits: Other than the employees benefits
 listed above, the Bank also gives certain long term benefits to the
 employees, which include Medical aid, reimbursement of hospitalization
 expenses to the employees / their family members, compensated absence
 such as sick leave and casual leave etc. The bank has made provision
 for such liabilities on an ad-hoc basis
 
 g) On account of other long term employees benefits like LFC
 Encashment, Medical Aid, Hospitalisation Reimbursement, Sick Leave etc
 .provision of Rs. 3.05 crore is held.
 
 2.3.2 In terms of the requirement of the Accounting Standard 15 –
 Employee Benefits, the entire amount of Rs. 190.71 crore (towards
 pension of Rs. 151.59 crore and Gratuity of Rs. 39.12 crore) on account
 of re-opening of pension option and enhancement in gratuity limit is
 required to be charged to Profit and Loss Account.  However, in
 accordance with the permission accorded by the Reserve Bank of India
 vide their letter DBOD.  No. BP.BC. 15896/ 21.04.018/2010-11 dated 8th
 April 2011, the bank has debited the profit and Loss account a sum of
 Rs. 57.26 crore including entire liability towards retired employees on
 account of pension and Rs. 7.82 crore on account of Gratuity liability.
 The balance unamortized amount of Rs. 94.33 crore towards pension and
 Rs. 31.30 crore towards gratuity will be dealt with as per guidelines
 of the Reserve Bank of India
 
 2.3.3.  Employee Stock Options (ESOP)
 
 The shareholders of the Bank have approved the Employees Stock Options
 Scheme (ESOS) at the Annual General Meeting held on 15.7.2006 for grant
 to eligible employees up to 1500000 stock options in aggregate.
 Accordingly stock options have been granted to the eligible employees
 at an exercise price of Rs. 50 per share.  As per the Scheme the stock
 options granted would vest in a graded manner i.e 40% after the first
 year, 30% in the second year and the remaining 30% before the end of
 the third year from the date of grant. The vested options, subject to
 other conditions, are exercisable within a period of 5 years from the
 respective dates of vesting. During the year ended March 31, 2011 the
 Bank has provided a sum of Rs. 1.23 crore as employee compensation cost
 being the proportionate accounting value in respect of stock options.
 
 2.4 Accounting Standard 17 – Segment reporting:
 
 For the purpose of segment reporting in terms of AS 17 of ICAI and as
 prescribed in RBI guidelines, the business of the Bank has been
 classified into 4 segments i.e.(a) Treasury operations (b) Corporate /
 Wholesale Banking (c) Retail Banking and (d) Other Banking Operations.
 Since the Bank does not have any overseas branch, reporting under
 geographic segment does not arise. Segment assets have been identified
 and segment liabilities have been allocated on the basis of segment
 assets.
 
 Part B - Geographic Segments: There is only one segment i.e. Domestic
 segment
 
 2.5 Accounting Standard 18 – Related Party disclosures:
 
 There is no related party transaction other than remuneration paid to
 Mr P Jayarama Bhat as Managing Director and Chief Executive Officer
 from 01.04.2010 onwards, a sum of Rs. 32,40,000/- (previous year Rs.
 23,16,774/- from 13.07.2009 to 31.03.2010) as remuneration and
 contribution to Provident Fund, etc.
 
 4,120 Equity shares (previous year 2,800 Equity shares) allotment of
 which is in abeyance due to restraint orders received and matter being
 sub-judice. The same has not been considered for EPS calculation.
 
 2.8 Accounting Standard 28 – Impairment of Assets: In the opinion of
 the management, there is no impairment of the fixed assets to any
 material extent as at 31st March 2011 requiring recognition in terms of
 Accounting Standard 28.
 
 2.9 Accounting Standard 29 – Provision, Contingent liabilities and
 Contingent assets: Movement in Provision for Contingencies: ( Rs. in
 crore)
 
 Particulars   Opening as on  Provision made   Provision  Closing as on
                 01-04-2010   during the year  reversed/   31-03-2011
                                               adjusted
 
 Provision for   5.34            0.20            Nil          5.54 
 Contingencies
 
 
 3.3 Drawdown from Reserves:
 
 A sum of Rs. 7.20 crore has been transferred from Investment Reserve
 Account net of Statutory Reserves and tax to the Profit and Loss
 Appropriation account as per Reserve Bank of India guidelines.
 
 3.5 Disclosure of Letters of Comforts (LOC): The Bank issues Letter of
 Comforts on behalf of its various constituents against the credit
 limits sanctioned to them. In the opinion of the management, no
 significant financial impact and/or cumulative financial obligations
 have been assessed under LOCs issued by the Bank in the past or during
 the current year and remaining outstanding as of 31st March 2011.
 
 3.6 Provisioning Coverage Ratio (PCR): The banks provision coverage
 ratio as of March 31, 2011 is 60.08 %.
 
 4.  Reconciliation of Branch Adjustments and Balancing of Subsidiary
 Ledgers:
 
 a) Balancing of Subsidiary Ledgers are completed in all
 branches/offices. b) Reconciliation of branch adjustments/ Inter Bank
 accounts has been completed up to 31-03-2011 and steps are being taken
 to give effect to consequential adjustments of pending items.
 
 5.  Investments: The percentage of investments under “Held to Maturity”
 category – SLR as on 31st March 2011 was 19.48% of the Net Demand and
 Time Liabilities of the bank (Previous Year 23.90%), which is within
 the permissible limit as per RBI guidelines.
 
 6.  Rights Issue: During the year, pursuant to the Rights issue in the
 ratio of 2:5, the bank allotted 5,37,68,615 Equity shares of Rs. 10/-
 each at a premium of Rs. 75/- per share aggregating to Rs. 457.03
 crore. In accordance with the provisions of section 78(2)(c) of the
 Companys Act 1956 and as provided under the Letter of Offer dated
 February 18, 2011 the expenses incurred in this connection, aggregating
 to Rs. 3.15 crore have been charged off to the share premium account.
 
 7.  Tax demands under appeal: A sum of Rs. 47.34 crore (Previous year
 Rs. 101.76 crore) is outstanding on account of demands raised by the
 Income Tax Department in earlier years which have been paid under
 protest. No provision is considered necessary in respect of these
 demands, as the Bank has been advised that there are good chances of
 success in appeals/ considering favourable appellate orders on
 identical issues for earlier assessment years.  Provision for income
 tax for the year has been made after due consideration of decisions of
 appellate authorities and advice of counsels.
 
 8.  Premises: Premises include buildings in possession and occupation
 of the Bank pending execution of title deeds and/or Co-operative
 Societies yet to be formed amounting to Rs. 0.22 crore (Previous year
 Rs. 0.22 crore)
 
 9.  Previous years figures have been regrouped/rearranged/given in
 brackets wherever necessary and feasible to conform to the current year
 classifications.