TO THE MEMBERS
 
 The Directors of your Bank have great pleasure in presenting this 84th
 Annual Report on the business and operations of your Bank together with
 the Audited Accounts for the year ended 31st March, 2011 ( FY 2010-11).
 
 1. FINANCIAL PERFORMANCE
 
 The highlights of the financial performance of your Bank for the year
 ended 31st March, 2011 are as under:
 
                                                   (Rs in crores)
 
                                       For the year ended
 
                              31st March 2011        31st March 2010
 
 Total Deposits                   11149.51                9075.38
 
 Total Advances                    8094.42                6277.50
 
 Investments                       3518.85                2983.22
 
 Total Income                      1201.85                1012.88
 
 Operating profit                   273.86                 166.21
 
 Provisions and contingencies       172.72                 135.54
 
 Net Profit                         101.14                  30.67
 
 Your bank registered appreciable growth in business volumes that
 compares very favourably with the industry average. The Bank attained
 total business of Rs. 19,243.96 crores in FY 2010-11, a growth of 25.35%
 over Rs. 15,352.88 crores in FY 2009-10.
 
 Deposits grew 23%, from Rs. 9075.38 crores as at 31st March 2010 to Rs.
 11149.51 crores as at 31st March 2011, and total advances expanded by
 29%, from Rs. 6277.50 crores to Rs. 8094.42 crores in FY 2010-11. Of
 this, lending to priority sector rose from Rs. 2142.44 crores in the
 previous year to Rs. 2635.22 crores as on 31st March 2011. Agricultural
 advances increased to Rs. 1199.35 crores from Rs. 980.26 crores and
 advances to weaker section recorded a significant growth from Rs. 569.27
 crores to Rs. 735.02 crores.
 
 The Bank''s exposures to sensitive sectors including Real Estate and
 Capital Market were maintained well within the regulatory limits.
 
 2. INVESTMENTS
 
 As at the end of the year under review, the total investments of the
 Bank stood at Rs. 3518.85 crores as against Rs. 2983.22 crores at 31st
 March 2010.
 
 Your Bank''s Treasury continues to focus on sound Asset-Liability
 Management and on servicing clients with appropriate treasury products,
 and was managed well in a systematic way in a challenging year when
 interest rates kept moving up and liquidity conditions were tight for
 some part of the year.
 
 3. PROFIT
 
 The Bank has posted a healthy operating profit of Rs. 273.86 crores in
 FY 2010-11 against Rs. 166.21 crores in the previous year FY 2009-10, an
 increase of 65%. The net profit for the year, after provisions and
 taxes, crossed Rs. 100 Crores for the first time in the history of the
 bank, ending at Rs. 101.14 crores as against Rs. 30.67 crores recorded in
 the previous year - a growth of 240%.
 
 4. APPROPRIATIONS
 
                                              (Rs in crores)
  
 Particulars                               For the year ended
 
                               31st March 2011    31st March 2010
 
 Profit brought forward              0.16             0.28
 
 Amount available for 
 appropriation                     101.30            30.96 
 
 Transfer to:
 
 Statutory Reserve                  26.00            10.00
 
 Capital Reserve                     1.27             0.66
 
 Other Reserve                      40.25            12.32 
 
 Transfer to Special Reserve 
 u/s 36 (1)
 (viii) of the IT Act, 1961          5.00            1.00
 
 Proposed Dividend                  24.38            5.85
 
 Corporate Dividend Tax              4.15            0.97
 
 Balance of Profit carried 
 forward                             0.25            0.16
 
 In FY 2010-11, transfer to Reserves from profits amounted to Rs. 72.52
 crores as against Rs. 23.98 crores in FY 2009-10.
 
 5. DIVIDEND
 
 Your Board of Directors are pleased to recommend a dividend of Rs. 2.50
 (25%) per share for the year ended 31st March, 2011 as against Rs. 0.60
 (6%) per share for previous year ended 31st March, 2010.
 
 6. EPS / BOOK VALUE
 
 Earnings Per Share stood at Rs.10.37 for the year ended 31st March, 2011
 as compared to Rs. 4.95 as on 31st March, 2010.
 
 Book Value of the share, after reckoning payment of dividend, has increased
 to Rs. 83.23 as on 31st March, 2011 as compared to Rs. 75.79 as on 31st March,
 2010.
 
 7. NET OWNED FUNDS / CAPITAL ADEQUACY RATIO
 
 Net Owned Funds (NOF) of the Bank increased from Rs. 738.99 crores as at
 the end of FY 2009-10 to Rs. 811.70 crores as at the end of FY 2010-11,
 reflecting a growth of 9.83%. During the year, your Bank revalued its
 fixed assets portfolio of owned properties and transferred an amount of
 Rs. 80.73 crore to Revaluation Reserve.
 
 As on 31st March, 2011 your Bank''s Capital Adequacy Ratio (CAR) stood
 at 13.19% (Basel-II), well above the regulatory minimum of 9.00%.
 Without considering the Revaluation Reserve, the CAR would be 12.70%.
 
 The Tier-I and Tier-II components of Capital Adequacy Ratio were
 comfortable at 10.78% and 2.41% respectively.
 
 8. NON PERFORMING ASSETS (NPA''s)
 
 Your bank addressed the challenge of NPAs through structural and
 process changes led by the Board. Combining strong recovery efforts
 with tightening of credit processes and monitoring, Gross and Net NPAs
 were reduced significantly. Gross NPA to Gross Advance as on 31st March
 2011 stands at 1.93% and net NPA at 0.90% corresponding to 5.12% and
 4.11% respectively as at 31st March 2010.
 
 The Provision Coverage Ratio stood at 77.17% against the stipulated
 level of 70% as on 31st March 2011.
 
 In FY 2010-11, provisions against NPAs was Rs. 56.64 Crores as against
 Rs.119.27 Crores in the previous year. The Board is constantly
 monitoring the performance of your Bank on the NPA front through
 frequent reviews aided by technology solutions for identifying NPAs in
 the system. Credit origination and monitoring skills are being added
 significantly to strengthen the ongoing efforts to build a strong
 credit portfolio so that NPAs remain under control and the bank
 continues to grow consistently and profitably as a significant player.
 
 9. BRANCH AND ATM NETWORK
 
 As mentioned in our previous report, during FY 2010-11, the Bank opened
 3 branches, Surat in Gujarat (a second Branch), Punjagutta in Andhra
 Pradesh and Raipur in Chhattisgarh. The Bank now has 274 branches
 including one satellite office and 9 Extension counters spread across
 15 states and one Union Territory. Your bank has also increased the
 number of own ATMs for better service to its Retail customers,
 increasing it from 175 to 274 as on date.  More investments are in
 progress to expand the network of branches and ATMs in FY 2011-12.
 Besides, for better administration and operational efficiencies, 8
 Regional offices have now replaced 4 Zonal offices, of which 6 have
 already started operations.
 
 10. IMPROVING CUSTOMER SERVICE THROUGH TECHNOLOGY
 
 Your Bank has a robust technology platform extending services that
 address customer needs across segments. Your Board is now focused on
 strengthening sales orientation at the branch level and through
 specific vertical streams to be able to market the capabilities more
 effectively. The strategy is to be amongst the top banks in the
 emerging technology products. In FY 2010-11, the emphasis has been on
 developing alternate channels as a powerful service delivery platform,
 focused on enhancing customer service.  ATM and Mobile banking have
 become very important tools for your Bank for customer retention as
 well as acquisition. A string of technology-aided products and services
 were launched in FY 2010-11, namely:
 
 - Interbank Mobile Payment Services.
 
 - Funds transfer and Ticket Booking through mobile.
 
 - Funds transfer facility in ATMs.
 
 - Fee payment through ATM.
 
 - Secured Intra / Inter Bank Funds transfer with multi factor
 authentication, in Internet Banking.
 
 - Revamped website with more interactive functionalities / facilities.
 
 Your Board is pleased to note that your Bank is the first Private
 Sector Bank in South India to launch Interbank Mobile Payment
 Services (IMPS) in association with National Payment Corporation of
 India (NPCI) and was the tenth bank pan India Bank to launch this
 facility. Your Bank is also ahead in commencing the Cheque Truncation
 System (CTS) at Chennai, an initiative by NPCI.
 
 Investments continue by way of network expansion - opening of branches
 and more ATMs. FY 2011-2012 could see the number growing to 500 ATMs.
 Your Bank is also focused on improving customer service at all points
 of contact, including making the ATM experience delightful for
 customers through innovation and new ideas. There are also initiatives
 on safe banking underway to benefit customers who are fast shifting to
 electronic channels. Through tie ups, our Customers now have the
 benefit of using over 70,000 ATMs across the country including those of
 other banks.
 
 Bank has successfully implemented Enterprises Storage solution at its
 primary and DR site for high availability of critical applications. To
 ensure Business Continuity and Disaster Recovery regular DR Drills are
 being conducted.
 
 Your bank''s website has been given a new contemporary look to
 facilitate more features & services to the customers by introducing
 features like map based search, make an appointment with the bank etc.
 Technology will be used as an integral tool in the business strategy as
 we scale up our operations.
 
 11. INTERNATIONAL BUSINESS
 
 During the year, the Bank achieved Foreign Exchange Business turnover
 of Rs. 4900.58 crores as against Rs. 3462.43 crores during the previous
 year registering a growth of 41.53%. Lending to export sector however,
 decreased from Rs. 274.28 crores to Rs. 215.43 crores, FY 2011-12 will
 see a refreshed approach to service clients on the export front and to
 substantially increase the Foreign Exchange volumes through better
 reach of Treasury functions.  Your Bank does not have any overseas
 operations.
      
 12. WEALTH MANAGEMENT / PARABANKING ACTIVITIES
 
 - Life Insurance: Bank has entered into a tie-up with LIC of India to
 solicit Life Insurance policies for our customers. All the products of
 LIC are available through our branches. Bancassurance tie up has been
 successfully embedded through training and we see this as a big step in
 improving fee income.
 
 - General Insurance: Bank has tie-up with M/s.Bajaj Allianz General
 Insurance Company to market the General Insurance products.
 
 - Mutual Funds & PMS: The Bank is presently having tie-up with Ten
 leading Asset Management Companies for promoting various Mutual Fund
 Schemes. In addition we are promoting Port Folio Management Services
 (PMS) through UTI Asset Management.
 
 - Money Transfer through Branch Channels: In addition to foreign inward
 remittances arrangement with M/s.Weizmann Forex Ltd. for extending
 Western Union Money Transfer facility, Bank has tied-up with M/s.UAE
 Exchange & Financial Services Ltd., for offering Global Money Transfer
 services through Xpress Money and Moneygram.
 
 - Money Transfer through Direct Remittances: Your Bank has tied up with
 Times Money - Remit 2 India & Al-ahalia for Inward remittance from
 Abroad which enables the NRIs to remit the amount directly to their
 account / other residents.
 
 - PAN Card Services: Bank has tied-up with M/s.UTI Infrastructure &
 Technology Services Ltd., (UTIITSL) as PAN Service Agent (PSA) of
 collecting the PAN application across the country through Branches.
 
 - Depository Participant Services: Your Bank has registered as a
 Depository Participant with NSDL and with necessary regulatory
 clearances, this product is part of the suite that is offered to our
 customers.  As responsible equity culture spreads, this business will
 offer a good platform for more value added products.
 
 - ASBA: As Bankers to the issue, the Bank can now receive subscriptions
 under ASBA mode thus enabling the investors to earn interest till
 allotment of securities.
 
 - Financial Inclusion : Your bank has been actively participating in
 the Financial Inclusion campaign, extending basic banking services to
 the unorganized sectors of the economy, through Business Facilitator
 and Business correspondent model. During FY 2011-12, as a part of the
 policy initiatives of Reserve Bank of India, Business Correspondents
 have been engaged to implement financial inclusion in 18 allotted
 villages with population of over 2000 in Tamilnadu, based on this
 experience, this service will be extended to the 50 allotted villages.
 In addition, your Bank has opened over 28,000 No Frills Accounts to
 gradually improve banking penetration through its branches.
 
 Wealth Management opportunities, in the towns your branch traditionally
 has presence, are significant and these new products are intended to
 improve the overall customer service and provide exposure to these
 products.
 
 Even as more and more new products are being made available to the
 customers, responsible service continues to be imbedded in the Bank''s
 tradition, and your Bank has an effective customer grievance redressal
 framework as well. Your Bank is committed to treating customers fairly
 as part of the BCSBI code and the policies and processes are designed
 to strict adherence, under Board''s monitoring.
 
 It will also be a matter of pride to note that your Bank was adjudged
 the second fastest growing Bank in the small Bank category in the
 BT-PWC survey in FY 2010-11.
 
 13. RISK
 
 Risk and Return are two sides of the same coin in the activities of any
 bank.  Risk Management is critical in the way modern business is
 operated because of dynamic business environment to which businesses
 are exposed. It is not only a requirement under several voluntary codes
 and statutes, but also makes business sense to identify the probability
 of not achieving strategic and business goals. Risk management has to
 be embedded in business processes to ensure that it is being practised
 and made part of the culture of the organization. With this in mind,
 the bank has established systems and policies ensuring an ongoing
 assessment of relevant risk types on an individual basis and in the
 aggregate as well.
 
 The Board of Directors effectively monitor the risk management. A Board
 Level Committee oversees the implementation of Credit risk, Market risk
 and Operational risk policy prescriptions. The Asset Liability
 Management Committee (ALCO) looks into the management of Liquidity and
 Market risks and ensure adherence to prudential limits. At the
 organizational level, an Integrated Risk Management Department
 functions at Head Office to identify, measure, monitor and reduce risk;
 optimize returns and assess the required capital level. Bank has
 automated the process of Capital Calculation and introduced Base Rate
 as per RBI Guidelines during this financial year. Bank has a robust
 credit risk assessment system to ascribe borrower risk grades.  This
 facilitates data collection and analysis for moving towards Advanced
 Approaches. Bank has in place well defined framework for managing
 Market Risk. Basic Indicator Approach has been adopted for computation
 of capital charge for Operational Risk.
 
 The Bank has migrated to Basel II- New Capital Adequacy Framework
 (NCAF) - from March 2009 and is preparing ICAAP document to assess its
 inherent risks and capital requirements. Bank uses Stress Testing and
 Scenario Analysis in various risks as required under Pillar II for
 enhancing risk assessment and to provide the bank a better
 understanding of the likely impact even in extreme circumstances.
 Technology is extensively used in measuring and discussing market risk
 using statistical tools, including stress testing.
 
 14. INTERNAL CONTROL SYSTEMS
 
 The Bank has put in place well articulated internal control measures in
 tune with the complexity of business operations, organization''s size
 and supervisory compliance standards. The following Audit & Inspections
 are carried out:
 
 - Regular Comprehensive transaction based inspection by trained
 internal inspector of branches.
 
 - Risk Based internal Audit to measure the risk in branches and work
 out the mitigating techniques.
 
 - Pre-disbursement credit audit.
 
 - Concurrent Audit by Empanelled Chartered Accountant Firms.
 
 - Information System Audit by Specialized and trained inspectors.
 
 - Statutory Audit of branches and Controlling offices by Chartered
 Accountant Firms in terms of the guidelines of the Reserve Bank of
 India.
 
 The Audit Committee of the Executives review the inspection of branches
 carried out by the internal inspectors. The Audit Committee of the
 Board (ACB) is supervising the entire audit functions of the Bank and
 the compliance thereof.  Budgets are agreed on various parameters
 including Revenue and Costs, and progress measured for appropriate
 mid-term corrective measures at the Board Level.
 
 15. HUMAN RESOURCE
 
 As on 31st March, 2011, the total number of employees of the Bank stood
 at 2626. The employee productivity measured in terms of Business per
 employee, increased to Rs.7.19 crores from Rs. 5.60 crores in the
 previous year. Following the 9th Bipartite settlement, significant
 arrears of salary was paid to employees.  Gratuity too has been raised
 to the substantially revised statutory limit. Bank also offered the
 Defined Benefit Pension Option as per the All India Settlement signed
 by the Indian Banks Association on behalf of several banks including
 your own, with the All India Staff and Officers Unions / Federation, to
 1386 eligible employees - both serving and retired. This employee
 benefit involved a significant investment of Rs. 90 Cr. Industrial
 relations in the Bank remained cordial during the year and both Staff
 Union and Officers Association continued to lend significant support to
 the management''s initiatives in improving the productivity.
 
 16. SOCIAL INITIATIVES
 
 Your bank continues its tradition of being active in supporting worthy
 social causes. In FY 2010-11, your bank had given financial assistance
 for construction of building to Karur Anbu Karangal, an orphanage. The
 bank is sponsoring a medical centre at Vengamedu, Karur since 1994
 catering to the medical requirements of the needy people under the
 aegis of Karur Rotary Club. Your bank has lent financial support to the
 Karnataka Arya Vysya Charitable Trust, Bangalore which extends
 scholarships to the needy students for their education. The bank has
 also joined hands with the Isha Foundation, Karur to plant 500 trees in
 Karur. The renovation work undertaken at the Sri Kadhir Narasinga
 Perumal Temple has had financial support from your bank.  The bank has
 also provided material support to the orphanage during their visit to
 theme park, arranged by the Rotary Club of Karur.
 
 Your bank has a policy of being a responsible corporate citizen, at the
 forefront of environmental and social causes in its areas of operations
 and this is built into the operational framework.
 
 17. CORPORATE GOVERNANCE
 
 Corporate Governance of the Bank continues to rest on the fundamental
 pillar of high ethical values, designed to enhance and protect the
 interest of all the stakeholders. The Bank has complied with the code
 of corporate governance as enumerated in Clause 49 of the Listing
 Agreement. All the Directors on the Board have executed deed of
 covenant and undertaking individually in line with the recommendations
 of Dr. Ganguly Committee Report.
 
 Pursuant to Clause 49 of the Listing Agreement, a Management Discussion
 and Analysis is presented in Annexure-A, Report on Board Committees is
 furnished in Annexure-B. Composition of the Board of Directors together
 with the attendance of Directors at various meeting of the Board, its
 Committees and Annual General Meeting and the number of directorships
 held by them along with the details of Audit Committee and Share
 Transfer & Investors'' Grievances Committee are furnished in Annexure-C.
 General Shareholders'' information is furnished in Annexure-D.
 
 18. BOARD OF DIRECTORS
 
 Mr.S.Narayan demitted office as the Non-Executive Chairman of the Board
 on 27.01.2011 on completion of his two year term. Your Board wishes to
 place on record their sincere appreciation of the valuable services and
 guidance Mr.S.Narayan rendered during his tenure.
 
 Mr.P.R.Somasundaram was appointed as Managing Director of the Bank with
 effect from 02.08.2010 for a period of three years as per the approval
 of Reserve Bank of India and Mr.K.S.R.Anjaneyulu, who functioned as the
 interim Managing Director from January 2010 has since reverted to his
 role as
 
 Executive Director of the Bank. The Board places on record their
 appreciation of the effective role played by Mr.K.S.R.Anjaneyulu as the
 Managing Director in the interim.
 
 Mr.K.Balaji, Director, resigned from the Board effective 19th July 2011
 after having served on the Board for close to 6 years. Your Board
 wishes to thank Mr.K.Balaji for the advice and support he gave during
 his tenure.
 
 Mr.B.K.Manjunath, Mr.N.Saiprasad and Mr. K.R.Pradeep are the directors
 retiring by rotation at the ensuing Annual General Meeting and being
 eligible, offer themselves for reappointment.
 
 19. DIRECTORS'' RESPONSIBILITY STATEMENT
 
 The Board of Directors of your Bank confirm that in the preparation of
 the annual accounts for the year ended March 31, 2011:
 
 - The applicable accounting standards have been followed along with
 proper explanation relating to material departures, if any.
 
 - The accounting policies framed in accordance with the guidelines of
 the Reserve Bank of India were applied consistently.
 
 - Reasonable and prudent judgment and estimates were made wherever
 required so as to present a true and fair view of the state of affairs
 of the Bank as at the end of the financial year and the profit of the
 Bank for the year ended on March 31, 2011.
 
 - Proper and sufficient care was taken for the maintenance of adequate
 accounting records in accordance with the provisions of applicable laws
 governing banks in India; and
 
 - Accounts have been prepared on a ''going concern'' basis.
 
 
 20. STATUTORY DISCLOSURE
 
 1.  The provisions of Section 217(1) (e) of the Companies Act, 1956
 relating to conservation of energy and technology absorption do not
 apply to your Bank. The Bank has, however, used Information Technology
      extensively in its operations.
 
 2.  The Bank continued to encourage the country''s exports and will
 endeavor to enlarge its export financing.
 
 3.  The information required under Section 217(2A) of the Companies
 Act, 1956 and the rules made there under, is annexed elsewhere in this
 report.
 
 4.  The report on the Corporate Governance is annexed and forms part of
 this report.
 
 21. FY 2011-12 : OUTLOOK
 
 The Bank will continue its emphasis on consistent profitable growth
 even as it steps up investments behind improved customer service
 through a network of new branches and ATMs, refurbishment of existing
 branches, significant hiring of new talent from Tier 2 towns, training
 and significant process changes, with outsourcing where relevant.
 Responsible growth in Advances will be coupled with appropriate
 de-risking strategies on the portfolio to control NPAs while improving
 NIM. New products will focus on increasing fee income and Retail
 business will be strengthened. Staff productivity will be key to
 improved profitability and technology-aided products will drive growth.
 Administrative functions like H.R and Audit will be significantly
 strengthened. Risk management and strict regulatory compliance will
 continue to be the platforms on which FY 2011-12 will consolidate the
 growth platform. The strategy should enable your Bank to rise sharply
 in the league of private sector Indian banks and reflect good growth in
 profitability.
 
 22. AUDITORS
 
 The Statutory audit of the Bank was carried out by M/s.Sagar &
 Associates, Chartered Accountants, Hyderabad whose report is annexed
 and forms part of this report. The Statutory Central and Branch
 Auditors have audited all the branches and other offices of the Bank.
 
 Explanation is offered below on the auditors'' qualification on Note
 1(a) & (b) in Schedule 18 to the audited annual accounts.
 
 Unadjusted items in Inter-Branch accounts adjusted till date have no
 significant impact on the published accounts. Reconciliation of entries
 continues to be in progress.
 
 23. ACKNOWLEDGMENT
 
 Your Directors would like to thank the shareholders and customers for
 their continued goodwill and support. The Board also gratefully
 acknowledges the guidance and co-operation received from the Reserve
 Bank of India and other regulatory and government authorities like
 SEBI, NSE and Department of Income Tax.
 
 Your Directors would also like to express their sincere appreciation of
 the contribution made by the management and staff including the Staff
 Union and Officers'' Association for their support in delivering a
 significantly improved performance and look forward to a more evolved
 relationship as steps are taken to re-orient the bank for the future.
 
 A special word of thanks is recorded here from every member of the
 Board to the Executive administration and all the employees during the
 year for crossing the milestone of Rs.100 crores in Net Profit.
 
 
                       For and on behalf of the Board of Directors
 
 Place : Mumbai                                        K.R.Pradeep
 
 Date : 20.07.2011                         Chairman of the Meeting