1.  INTER-BRANCH TRANSACTIONS:
 
 Inter branch/Office accounts reconciliation has been completed upto
 31.03.2011 and all the Inter branch entries have been reconciled upto
 31.03.2011.
 
 2.  BALANCING OF BOOKS:
 
 The books of accounts have been balanced and tallied in all branches of
 the Bank up to 31st March 2011. Reconciliation of accounts with Banks,
 in few branches, is in progress.
 
 3.  INVESTMENTS:
 
 In line with the extant guidelines of Reserve Bank of India, the Bank
 has shifted certain securities from HTM category to AFS category and
 depreciation to the tune of Rs.20.66 crore has been provided.
 
 The percentage of SLR investments under Held to Maturity category as
 on 31.03.2011 was 21.72% of Demand and Time Liability of the Bank
 (Previous year 20.83%), which is within the permissible limit as per
 RBI guidelines.
 
 4.  DISCLOSURE REQUIREMENT AS PER ACCOUNTING STANDARDS:
 
 In compliance with the guidelines issued by the Reserve Bank of India
 regarding disclosure requirements of the various Accounting Standards,
 the following information is disclosed:
 
 4.1 Net Profit or loss for the period, Prior Period Items and Changes
 in Accounting Policies (AS-5):
 
 There are no material prior period income and expenditure included in
 the Profit & Loss account, which requires a disclosure as per AS-5.
 
 4.2 Revenue Recognition: (AS-9):
 
 Income / Expenditure items recognized on cash basis are either not
 material or does not require disclosure under AS-9.
 
 4.3 Employee Benefits: (AS-15):
 
 The Bank is following Accounting Standard 15 (Revised 2005) Employee
 Benefits as under:
 
 (i) In respect of Contributory Plan, viz., Provident Fund,
 
 the Bank pays fixed contribution at pre-determined rates to a separate
 Trust, which invests in permitted securities. The obligation of the
 Bank is limited to such fixed contribution.
 
 (ii) In respect of Defined Benefit Plans, viz., Gratuity and Pension,
 provision has been made based on actuarial valuation as per the
 guidelines.
 
 (iii) In respect of other employee benefits such as Leave encashment
 and Medical leave, provisioning requirement has been made based on
 actuarial valuation.
 
 Pension Liability :
 
 An estimated liability of Rs.86.52 crore has been determined by the
 Actuary in respect of pension liability arising out of wage settlement
 and also on account of 2nd option of pension. Out of which, an amount
 of Rs.14.33 crore, which pertains to the pension liability for retired
 employees, was debited to the profit and loss account. 1/5th of the
 remaining amount being Rs.14.44 crore was also debited in the profit
 and loss account. The balance amount of Rs.57.75 crore will be
 amortized over a period of four years from 2011-12.
 
 Gratuity Liability :
 
 An estimated liability of Rs.17.17 crore has been determined by the
 Actuary in respect of Gratuity liability arising out of wage
 settlement.  Out of which, an amount of Rs.4.85 crore, which pertains
 to the gratuity liability for retired employees, was debited to the
 profit and loss account.  1/5th of the remaining amount being Rs.2.46
 crore was also debited in the profit and loss account. The balance
 amount of Rs.9.86 crore will be amortized over a period of four years
 from 2011-12.
 
 The absorption /amortization of pension and gratuity liabilities over a
 period of 5 years are considered on the basis of guidelines issued by
 Reserve Bank of India.
 
 Employees Stock Option:
 
 The Compensation committee of the Board of Directors has granted in
 aggregate 5,29,750 stock options, grant date being 24th February 2010
 to the employees of the Bank under the Karur Vysya Bank Employees Stock
 Option Scheme 2010, at an exercise price of Rs. 150/- per share. As on
 31.03.2011, the options in force are 5,22,433. These stock options
 would vest on 30.04.2011 and accordingly the Bank has provided a sum of
 Rs.8.10 Cr being the proportionate Compensation Expenses.
 
 Part B: Geographic segments
 
 Geographical Segment consists only of the Domestic Segment since the
 Bank does not have any foreign branch.
 
 4.7 Accounting for Taxes on Income (AS-22):
 
 The Bank has recognized Deferred Tax Asset / Liability (DTA/DTL) and
 has accounted for the Net Deferred Tax as on 31.03.2011.
 
 4.8.  Impairment of Assets (AS - 28)
 
 In the opinion of the Management, there is no impairment of its Fixed
 Asset to any material extent as at 31.03.2011 requiring recognition in
 terms of Accounting Standard 28.
 
 5.3.3 Disclosures on risk exposure in derivatives:
 
 Qualitative Disclosure:
 
 Structure, Organisation, Scope, Nature of risk management in
 derivatives:
 
 The organization structure consists of Treasury Department which is
 segregated into three functional areas i.e., front office, mid office
 and back office.
 
 Rupee derivative deals are executed for hedging or for trading. The
 risk in the derivatives portfolio is monitored by assessing the mark to
 market (MTM) position of the portfolio on a daily basis and the impact
 on account of probable market movements. The overall portfolio is
 operated within the risk limit fixed by the Bank.
 
 Forex derivative deals are offered to clients on back-to-back basis.
 The outstanding deals are marked to market on monthly basis. The MTM
 values are informed to the clients every month after getting it from
 the counterparty banks.
 
 The Board reviews the risk profile of the outstanding portfolio at
 regular intervals.
 
 Accounting:
 
 Accounting Policies as per RBI guidelines have been adopted. The hedge
 swaps are accounted for like a hedge of the asset or liability.  The
 income / expense on hedge swaps are accounted on accrual basis except
 where swaps transactions whose underlying is subjected to mark to
 market. Such hedge swaps are marked to market on a monthly basis and
 the gain / losses are recorded as an adjustment to the designated asset
 / liability. The Non hedge swaps are marked to market every month and
 the MTM losses in the basket are accounted in the books while MTM
 profits are ignored.
 
 Collateral Security:
 
 As per market practice, no collateral security is insisted on for the
 contracts with counter parties like Banks / PDs etc. For deals with
 Corporate Clients, appropriate collateral security / margin etc. are
 stipulated whenever considered necessary.
 
 Credit Risk Mitigation:
 
 Most of the deals have been contracted with Banks / Major PDs/highly
 rated clients and no default risk is anticipated on the deals with
 them.
 
 Dealing in derivatives is centralized in the treasury of the Bank.
 Derivative transactions are entered into by the treasury front office.
 Treasury middle office conducts an independent check of the
 transactions entered into by the front office and also undertakes
 activities such as confirmation, settlement, accounting, risk
 monitoring and reporting and ensures compliance with various internal
 and regulatory guidelines.
 
 The market making and the proprietary trading activities in derivatives
 are governed by the derivatives policy of the Bank, which lays down the
 position limits, stop loss limits as well as other risk limits. As far
 as forex derivatives are concerned, they are undertaken on back-to-back
 basis only.
 
 Risk monitoring on derivatives portfolio is done on a daily basis. The
 Bank measures and monitors risk using PVBP (Price Value of a Basis
 Point) approach. Risk reporting on derivatives forms an integral part
 of the management information system and the marked to market position
 and the PVBP of the derivatives portfolio is reported on a daily basis
 to the top management.
 
 Risk monitoring on forex derivatives is done on a monthly basis after
 getting the monthly MTM values from the counterparty banks.  It is
 reported to the top management and related clients on monthly basis.
 
 5.7.4. Details of Single Borrower Limit (SGL), Group Borrower Limit
 (GBL) exceeded by the bank.
 
 The Bank has not exceeded the prudential credit exposure limits in
 respect of Single Borrower Limit and Group Borrower Limit.
 
 5.7.5 Unsecured Advances:
 
 The total of advances for which intangible securities such as charge
 over the rights, licenses, authorisations etc have been taken as
 securities is NIL.
 
 6.3 Draw Down from Reserves
 
 During the financial year 2010-11 there has been no draw down from the
 Reserves.
 
 6.5 Disclosure of Letters of Comfort (LOCs)
 
 The amount of Letters of Comfort issued and outstanding as on 31st
 March 2011 was Rs.256.44 crore.
 
 6.6 Provision Coverage Ratio (PCR)
 
 The Provision Coverage Ratio as on 31.03.2011 is 93.92%
 
 6.7 Bancassurance Business:
 
 The Bank has received an amount of Rs.4.63 crore (life insurance -
 Rs.3.45 crore, Non-life insurance - Rs.1.18 crore) towards Fee /
 Remuneration in respect of the bancassurance business undertaken during
 01.04.2010 to 31.03.2011.
 
 6.11 Overseas Assets, NPAs and Revenue : NIL
 
 6.12 Off-balance sheet SPVs sponsored (which are required to be
 consolidated as per accounting norms) : NIL
 
 7.1 Increase in Paid-up share capital and Share Premium:
 
 The movement in Paid-up Share Capital and Share Premium is due to Issue
 of Bonus Shares and Rights issue during the year ended 31st March 2011.
 
 7.2 Special Reserve U/s 36 (1) (viii) of I.T. Act :
 
 As per Section 36 (1)(viii) of the Income Tax Act, 1961, the Bank has
 appropriated an amount of Rs.30.00 crore towards Special Reserve of for
 the year 2010-11, being the eligible amount of deduction available
 under the said provision.
 
 8.  Figures of the previous year have been
 regrouped/rearranged/reclassified wherever necessary.