Oriental Bank of Commerce

The Board of directors have pleasure in presenting this Annual report
 together with the Audited Balance Sheet and Profit & Loss Account of
 the Bank for the Year ended 31st March, 2008.
 
 1.  BUSINESS OPERATIONS
 
 The Business of the Bank crossed Rs.133000 crore mark and stood at
 Rs.133184 crore on March,31st 2008.Total deposits of the Bank stood at
 Rs. 77856.70 crore and have shown an increase of Rs.13860.73 crore
 depicting a growth of 21.66% .Demand deposits, consisting of saving and
 current accounts, have risen from Rs.19389.94 crore in March 2007 to
 Rs. 21723.47 crore in March,2008, thereby recording a growth of
 12.03%.In the wake of North-bound movement in rate of interest during
 the fiscal year 2007-08,cost of deposit increased to 7.08% as against
 5.8% during the previous year fiscal .On the other hand ,net advances
 ,as at end-March2008 stood at Rs 54565.83 crore registering a growth of
 Rs.23.62% During the fiscal 2007-08,yield on advances has improved to
 10.25% from the previous years level of 8.6%.  The credit deposit
 ratio of the Bank ,as at end-March2008,stood at 71.43%,same as in the
 previous year. The Bank ensured adequate flow of credit to the
 productive sectors of the economy. The Loans & Advances portfolio of
 the bank is well diversified and balanced. The Bank has ensured that
 its exposure to sensitive sectors such as Capital Markets, Real Estate,
 NBFCs etc. is well within the regulatory & prudential cap.
 
 2.  CAPITAL & RESERVES
 
 During the year, the bank transferred a sum of Rs.200.36 crore to the
 reserves (which includes Rs.89.00 crore transferred to Statutory
 Reserves, Rs 111.36 crore to Revenue and other Reserves) out of the
 Profit for the year 2007-08.With this, capital & reserves as on March
 31, 2008 have gone upto Rs 5775.90 crore as against Rs. 5600.31 crore
 as at end March 2007, while the ratio of Capital & Reserves to average
 working funds stood at 6.99% as on 31.03.2008 as against 8.19% as on
 31st March,2007.
 
 3.  CAPITAL ADEQUACY RATIO
 
 As on March 31,2008 the capital Adequacy Ratio of the Bank stood at
 12.12% as against 12.51% as at March,2007.This is well above the
 regulatory minimum requirement of 9.0% .
 
 4.  FINANCIAL PERFORMANCE
 
 The Bank has posted a total income of Rs.7454.84 crore during the year
 as against Rs. 5768.16 crore last year thus registering an increase of
 Rs. 1686.68 crore (a growth of 29.24%) during the fiscal 2007-08 .
 Gross profit of the Bank went upto Rs. 1219.04 crore in 2007-08 as
 against Rs. 1296.69 crore last year .The Bank has made a net profit of
 Rs. 840.94 crore, after making all required provisions, showing an
 increase of Rs. 14.13 crore (growth of 1.71%) during the fiscal
 2007-08.
 
 Appropriation from the Net Profit have been effected as per table given
 below:-
 
 Table 1 : Financial Performance                     (Rupees in crores)
                                               31.03.2008   31.03.2007
 
 Deposit & Other borrowings                      79696.54     64618.58
 Advances (Net)                                  54565.83     44138.47
 Interest Income                                  6838.18      5164.90
 Other Income                                      616.66       603.26
 Total Income                                     7454.84      5768.16
 Interest Paid                                    5156.17      3473.58
 Operating Expenses                               1079.63       997.89
 Total Expenses                                   6235.80      4471.47
 Gross-Profit                                     1219.04      1296.69
 Provisions & Contingencies                        378.10       469.88
 Net Profit                                        840.94       826.81
 Add-Profit brought forward                          0.42         0.88
 Less-Amalgamation adjustment                      487.72       246.00
 Written -off
 Net Profit available for appropriation            353.64       581.69
 APPROPRIATION
 Transfer to Statutory reserve                      89.00       146.00
 Transfer to Revenue and Other reserve             111.36       284.00
 Transfer to investment Fluctuation Reserve          0.00         0.00
 Transfer of staff welfare fund                     15.00        15.00
 Transfer to capital reserve                         0.00         0.00
 Interim Dividend                                    0.00        50.10
 Proposed Dividend                                 117.75        67.65
 Tax on Dividend                                    20.01        18.52
 Balance carried over to Balance Sheet.              0.51         0.42
 
 5.  DIVIDEND
 
 Your Banks policy of declaring dividend is to reward the share holders
 as well as to plough back profit for maintaining a healthy capital
 adequacy ratio & supporting future growth. Accordingly, your Directors
 are pleased to pay a total dividend of 47% for the year ended 31st
 March, 2008, which is the same for the preceding year.
 
 6.  SECTORAL DEPLOYMENT OF CREDIT TO PRIORITY SECTOR
 
 Banks advances to priority sector increased by Rs. 2804.63 crore from
 Rs. 15955.20 crore in March 2007 to Rs. 18759.83 crore in March 2008
 registering a growth of 17.58%. The Priority Sector Advances
 constituted 42.50% of banks Adjusted Net Bank Credit (ANBC) against
 the stipulation of 40%. The comparative position of advances under
 various segments of Priority Sector, as at the end of March 2007 and
 March 2008, is as follows:
                                                  (Amount Rs! in crore)
 
 S.      Sectors                                 March 2007  March 2008
 No.
 
 1.      Priority sector credit                    15955.20    18759.83
 2.      Agriculture                                5732.28     6930.05
         Direct Agriculture                         2867.06     3463.91
         Indirect Agriculture                       2865.22     3466.14
 3.      SSI/SE                                     3364.09     5015.05
 4.      Educational Loan                            398.21      568.75
 5.      Housing Loan                               5039.99     5244.87
 6.      Other P.S.                                 1420.63     1001.11
 
 6.1 AGRICULTURE ADVANCES
 
 Banks advances to agriculture increased by Rs.1197.77 crore from
 Rs.5732.28 crore in March 2007 to Rs.6930.05 crore in March 2008,
 registering a growth of 20.90%. The advances to direct agriculture
 segment increased by Rs.596.85 crqre from Rs.2867.06 crore as on
 31.3.2007 to Rs. 3463.91 crore as on 31.3.2008, constituting a growth
 of 20.82%. The Indirect agriculture advances increased by Rs.600.92
 crore from Rs. 2865.22 crore as on 31.3.2007 to Rs. 3466.14 crore as on
 31.3.2008 showing an increase of 20.97%.
 
 6.1.1 Flow of credit to Agriculture sector (Fresh disbursement)
 
 During the financial year 2007-08, flow of credit to agriculture sector
 amounted to Rs. 1794.94 crore. During the year, a total of 66,255 new
 agriculture loan accounts were added by 316 semi- urban and 273 rural
 branches. There was an average addition of 113 new agriculture loan
 accounts per rural and semi-urban branch.
 
 6.1.2 Oriental Green Card (Kisan Credit Card)
 
 During the year, Bank issued 54,634 cards to farmers with a view to
 provide loan for crop production, working capital for allied activities
 and consumption needs. The aggregate credit disbursed through these
 cards during the year was Rs.662.99 crore. With this, the cumulative
 number of cards issued rose to 4,95,275 in March 2008.
 
 6.1.3 Oriental Kisan Gold Card (OKGC)
 
 In order to meet comprehensively the requirement of working capital and
 investment credit of farmer, bank issues OKGCs.
 
 During 2007-08, Bank issued 1157 OKGC to farmers in rural areas. The
 aggregate credit disbursed during the year amounted to Rs. 28.20 crore,
 taking the cumulative number of OKGCs issued to 4771.
 
 6.1.4 Hi-tech Dairy
 
 The bank has launched Hi-tech commercial dairy scheme on pilot basis
 which besides providing self employment opportunities to rural youth in
 the State of Punjab promotes diversification of productive activities
 in rural areas. This scheme has been launched in association with
 Punjab State Dairy Development Board, Punjab Milkfed and Milk Time. As
 on 31.3.2008, an amount of Rs.37.56 crore was sanctioned in 349 units.
 
 6.1.5 Agriclinic and Agribusiness Centres
 
 Bank is providing credit assistance to agriculture graduates for
 setting up agriclinic and agribusiness centers. As on March 2008, 54
 Agriclinic and Agribusiness centers were financed amounting to Rs.
 673.14 lakh.
 
 Oriental Saur Urja Dohan Scheme
 
 The fossil fuel resources are limited in quantity and are fast
 depleting. The poor use Kerosene as common fuel for lighting.  The
 rural people face problem of home lighting due to non- availability of
 grid electric power supply. Even if there is power supply, frequent
 load shedding and low voltage is a regular phenomenon in rural areas.
 To overcome these problems the Bank is implementing a scheme for
 financing solar water heating and lighting system, for creating a
 viable alternate to conventional source of energy. The scheme is open
 to individual, institutional, commercial and industrial users. Bank has
 tied up with Bhartiya Vikas Trust (BVT), a NG0, for imparting training
 to Branch Managers on solar finance, to users and entrepreneurs for
 capacity building and also for demonstration / awareness camps to
 encourage rural population to adopt solar energy for home lighting.
 
 Under Solar Lighting System, bank has financed 153 units amounting to
 Rs.16.15 lakh in the states of Uttar Pradesh & Rajasthan during the
 year. The bank finance for Solar Heating System amounted to Rs.99.25
 lakh under MNRE tie up arrangement and bank claimed subsidy of Rs.13.10
 lakh during the year.
 
 6.1.6 Small and Medium Enterprises (SMEs)
 
 Banks exposure to Small Enterprises sector stood at Rs. 5015.05 crore
 at the end of March 2008 and has shown an increase of Rs.  1650.96
 crore, recording an impressive growth rate of 49% Further, SME advances
 increased by Rs. 1181.08 crore to Rs. 6228.17, registering a growth of
 23.40% against the Year on Year growth stipulation of 20%. The Tiny /
 Micro sector advances increased by Rs. 321.07 crore to Rs. 1328.30
 crore posting a growth of 31.88%.
 
 Bank has entered into a MOU with SIDBI for co-financing of the SME
 sector in the clusters of Punjab and Delhi and with NSIC for
 outsourcing credit proposals for lending. The Bank has entered into a
 tie-up arrangement with SME Rating Agency of India Ltd.  (SMERA) for
 providing comprehensive rating services to SMEs borrowers of the Bank
 at subsidized rates.
 
 6.1.7 Oriental Bank Grameen Project (OBGP)
 
 Presently, as many as 356 villages are covered under the project.  The
 bank has formed 3864 SHGs consisting of 19223 members.  The cumulative
 amount advanced to these groups as at the end of March 2008 was Rs.
 26.67 crore. Savings to the tune of Rs.  6.00 crore have been mobilized
 by the Self Help Groups so far.
 
 6.1.8 Advances to weaker sections
 
 Advances to weaker sections, consisting of beneficiaries belonging to
 scheduled castes/scheduled tribes, small and marginal farmers, landless
 labourers, Rural Artisans, beneficiaries under Govt.  Sponsored Schemes
 (except PMRY) were of the order of Rs. 2337 crore as at the end of
 March 2008 as against Rs. 1965 crore as at the end of March 2007.
 
 6.1.9 Credit under Differential Rate of Interest Scheme
 
 Credit flow at concessional rate of interest of 4% p.a. to the low-
 income group of the society both in rural having annual family income
 upto Rs. 6500/- and urban having annual family income upto Rs. 7200/-
 (since revised to Rs.18000 and Rs.24000 respectively w.e.f. April 2008)
 centers was Rs. 123.24 crore as at the end of March 2008.
 
 6.1.10 Loans to SCs/STs
 
 Bank continued its thrust in providing financial assistance to SCs/STs
 beneficiaries. The advances to these beneficiaries improved to Rs.
 452.40 crore in March 2008 against Rs. 437.62 crore as at the end of
 March 2007. Recovery position of loan to SC/ST borrowers under Priority
 Sector as at the end of March 2008 was 69% to demand.
 
 6.1.11 Prime Minister Rozgar Yojana (PMRY)
 
 With a view to providing self-employment opportunities to eddcated
 unemployed youth in the unorganized sector, Bank, ever since the
 introduction of the scheme has been extending financial assistance to
 the beneficiaries under the scheme. It provided credit assistance to
 6859 youths to the tune of Rs.59.01 crore during 2007-08.
 
 6.1.12 Swarn Jyanti Shahri Rojgar Yojana (SJSRY)
 
 For providing gainful employment to urban poor (living below the urban
 poverty line) through setting up self employment ventures, bank is
 providing financial assistance under the scheme since its inception.
 The bank financed to 2192 beneficiaries to the tune of Rs.7.60 crore
 during 2007-08.
 
 6.1.13 Swarn Jyanti Gram Swrojgar Yojana (SGSY)
 
 The scheme is operative in rural areas of the country and covers the
 aspects of self employment such as organization of rural poor into Self
 Help Groups (SHGs) training, credit, technology, infrastructure and
 marketing. The bank is participating in the scheme. During 2007-08,
 bank provided financial assistance to 1511 individuals swarojgaries to
 the tune of Rs.5.55 crore and 351 SHGs to the tune of Rs.5.84 crore.
 
 6.1.14 Credit Flow to Women Beneficiaries
 
 Bank has implemented 14-points action plan for strengthening of credit
 flow to women as advised by the Government of India. Bank has
 designated 9 branches as specialized branches for women entrepreneurs.
 It has put in place a number of credit schemes, such as Oriental Mahila
 Vikas Yojana, Financing for Beauty Parlours, Boutiques, Tailoring
 shops, Saloons, Professional & Self Employed Women, Scheme for
 financing working women, Oriental Swaran Yojana. Besides, a special
 project called Oriental Bank Grameen Project (OBGP) provides all types
 of banking assistance to the rural poor women. On account of a number
 of schemes catering to the needs of Women entrepreneurs, the Banks
 advance to women increased by Rs.428.47 crore from Rs.2118.96 crore as
 on March 2007 to Rs.2547.43 crore as on March 2008 registering a growth
 of 20.22%.  Banks advances to women beneficiaries as on March 2008 was
 5.77% of ANBC against the stipulation of 5%.
 
 6.1.15 Financial Inclusion
 
 With a view to provide banking facilities to the sections of society so
 far deprived from the formal financial sector, bank implemented
 financial inclusion policy. Bank adopted three pronged strategies for
 financial inclusion. First, rural branches of the bank adopted villages
 for financial inclusion. Second, both Lead Districts of the bank
 volunteered for 100% financial inclusion. Third, banks branches
 participated in districts identified by the respective SLBCs.
 
 Under village adoption scheme, bank covered 884 villages with 2,96,359
 households. 73422 deposit a/cs were opened and 25,024 loans/GCCs were
 issued. In Banks Lead districts of Ferozepur completed 100% financial
 inclusion in all 997 villages and 156 wards having 2,89,896 households
 and opened 45,292 No Frill Accounts. In Sriganganagar District, Bank
 completed 100% financial inclusion in 3031 villages and 231 wards
 having 3,22,270 households and opened 69,316 new accounts.
 
 6.1.16 OBC Rural Development Trust
 
 Bank set up a Special Purpose Vehicle, OBC Rural Development Trust,
 with a view to institute Rural Development Training & Resource
 
 Centres at different locations. The main objective of the Trust is to
 provide training on latest techniques of agriculture & animal
 husbandry, maintenance of farm machinery, skill upgradation of rural
 youth for self employment, capacity building of the rural poor,
 specially the Self Help Groups, training to educated unemployed youth
 and village adoption for all round development.  Four such centers have
 become operational at Sriganganagar, Jaipur (Rajasthan), Ferozepur
 (Punjab) and Rudrapur (Uttarakhand).
 
 In all 77 training programmes were organized in which 3598 people were
 imparted training. The training programmes were conducted on latest
 agronomic practices, rearing of animals, local crafts like Phulkari in
 Punjab, tailoring, cottage & agro processing and computer related
 trainings to the unemployment youth.  Special training programmes were
 organised exclusively for the members of SCs/STs and Minority
 communities. A total of 2824 trained persons were credit linked for
 pursuing/setting up of economic activities.
 
 6.1.17 Urban Micro Finance
 
 The Institute of Social Service (ISS) is a registered society working
 for Empowerment of women and children from weaker sections to create
 self-sustainable community of their own. The institute is also
 conducting vocational training to make women and youth economically
 self-reliant. Bank is supporting the Empowerment of Women & Children
 Project run by ISS, thus helps in capacity building among women and
 children residing in the urban slums of Delhi. The women have been
 organized in SHGs for urban micro finance.
 
 6.2.  Retail Credit
 
 Retail Credit segment continues to be the thrust area of lending.  The
 Bank is having 12 retail credit schemes including Home Loans to meet
 the requirements of various sections of the Society. The Bank has been
 formulating customized schemes and is also having tie-ups with various
 institutions to boost its retail segment.
 
 6.3 Education Loan
 
 Bank continued its efforts for extending Education Loans to the needy
 and deserving students. During the admission session, education loan
 camps were organized in the campus of educational institutions. The
 education loan portfolio of the Bank showed healthy growth of over 43%
 during the current year and the same stood at Rs.583.49 crore as on
 31.03.2008.
 
 With a view to enabling the students aspiring to avail education loan
 from our Bank, the facility of Online Education Loan Application has
 been launched on 31.03.2008 and the applicants can apply online by
 visiting the banks website http:// www.obcindia.co.in.
 
 7. TREASURY OPERATIONS
 
 The Secondary Market operations in Government Securities and equity
 remained volatile during the 1st half of the financial year 2007-08 but
 remained bullish in the 2nd half, giving opportunity to the Bank to
 increase its turnover as well as profit. The Bank had shifted
 securities for Book Value of Rs.2047.93 crore from available for sale
 (AFS) category to held to maturity (HTM) category and booked
 depreciation of Rs.210.00 crore. The turnover in the secondary market
 has increased from Rs.11230.03 crore in the year 2006-07 to Rs.
 18726.78 crore in the year 2007-08. The net profit from secondary
 market operation has increased from Rs.112 crore to Rs.153 crore during
 the year 2007-08 after accounting for brokerage paid etc. The aggregate
 investment of the Bank increased to Rs.24009.27 crore as the end of
 2007- 08 as against Rs.20013.45 crore as end of the financial year
 2006-
 
 07.  The yield on investment has increased to 8.01% from 7.89% as
 compared to last year due to maturing of high coupon securities and
 holding of Treasury Bills in the Investment Portfolio.
 
 8.  MERCHANT BANKING ACTIVITIES:
 
 Bank has been registered as Depository Participant with both NSDL &
 CDSL. Nearly 1,00,000 customers are availing the demat services from
 the Bank. Bank has rolled out online trading services in collaboration
 withIDBI Capital Market Services to its customers.  During 2008-09,
 the Bank is planning to add more branches that will offer depository
 services to its customers.
 
 9.  FOREIGN EXCHANGE BUSINESS
 
 During the fiscal 2007-2008, Forex Merchant Turnover achieved at
 Rs.37106.97 crore as on 31.3.2008, as against Rs.30008 crore as on
 31.3.2007. Export Credit at the end of March 2008 stood at Rs.4156.11
 crore as against Rs.3404.00 crore at the end of March 2007, thereby
 recording a growth of 22.09%. Foreign Currency Loans are being offered
 at competitive rate and requirement of the clients were met efficiently
 by the Bank. The Foreign Currency portfolio has grown up to USD354.50
 million as on 31.3.2008 as against USD192.37 million as on 31.3.2007.
 Necessary support to the clientele is also extended in arranging
 Buyers Credit and External Commercial Borrowings through strong
 network of correspondence banks across the world. The Bank has
 established NRI Cell at Corporate level for management of NRI Inward
 Remittances and speedy credit of remittances directly to the accounts
 of NRI customers. Bank has participated in various Conferences/
 exhibitions for promoting NRI activities in order to bring more
 visibility amongst NRIs and attracting their business. The Bank has
 received the permission from Central Bank of the UAE to open
 Representative office in Dubai and same shall be operationalised
 shortly. This platform will further give boost in our endeavor to
 attract more NRI business. The Fee based products like Western Union
 Money Transfer and Exchange House business have shown substantial
 growth during the financial year. The Bank has also tied up with
 correspondent banks for trade finance arrangements to speed up
 transactions and also to rationalise the charges.
 
 10. NEW INITIATIVES
 
 With a view to shore up Non-Interest income to boost the bottom line of
 the Bank and also make inroads into newer areas, an seperate Department
 has been set up at Head Office. The Department has made foray into
 marketing of various Non-Interest income products and services this
 year. It is our endeavour to sensitise every Regional Office to become
 market savvy by identifying officers/workmen who have the willingness
 and aptitude for marketing and then utilizing their services at
 identified centers (with potential of growth) on full time basis. As
 Banks are becoming Financial Super Markets, cross selling of products
 will be the order of the day.  Greater emphasis is also laid on
 customer acquisition especially new generation customers, who are
 presently not aware of the dynamism prevailing in public sector Banks.
 
 10.1 LIFE INSURANCE BUSINESS:
 
 During April-March 2007-2008, the Bank has sold 11230 life insurance
 policies with first premium collection of Rs. 46.00 Crore as on March
 31, 2008. Bank is also putting in marketing efforts to acquire banking
 business of LIC of India branches at various locations. For the FY 2008
 - 09, the Bank has projected Rs. 65.00 Crore (25% increase) as first
 premium collection.
 
 Bank has entered into Joint Venture for Life Insurance Business with
 Canara Bank and HSBC Insurance (Asia Pacific). On 5th March 2007, a non
 binding MOU has been signed between OBC, Canara Bank and HSBC Insurance
 for establishing a Life Insurance Company in India. Under the proposed
 agreement, Canara Bank will hold 51% stake in the new Company, HSBC
 will hold 26% share in equity and OBC will hold the remaining 23%
 shareholding.  The new Company is expected to start business by June,
 2008.
 
 10.2 GENERAL INSURANCE BUSINESS:
 
 Under general insurance business the Bank has been registering a steady
 growth and has procured 76981 policies with premium collection of Rs.
 35.18 Crore upto March 31, 2008 (against Rs.  25.02 Crore last year),
 i.e. 25% growth. This section of Bank assurance business is stated to
 consolidated further by making use of cash mangement services at
 various locations. This business is also expected to improve fee based
 income of the bank.
 
 For FY 2008-2009, the premiaum collection figure is expected to be Rs.
 40.50 Crore (25% increase).
 
 10.3 MUTUAL FUND BUSINESS:
 
 Bank had entered into an agreement with M/s Franklin Templeton Asset
 Management (India) Pvt. Ltd. for selling of their Mutual Fund products
 through the banks branches. In the fist phase, the sates of these
 products will be limited to select branches and gradually, on
 successful implementation, all other branches will be allowed to sell
 the Mutual Fund Products. The Bank has mobilized investment of Rs.
 30.00 Crore during the period registering 60% growth in the current
 financial year. We have identified 100 Branches to start with and are
 hopeful of taking this portfolio to greater heights.
 
 With a view to providing various investment opportunites to clients,
 our bank has approved the distribution of various schemes of five more
 Mutual Fund Houses as under:
 
 1.  M/s Reliance Mutual Fund.
 
 2.  M/s DSP Merrill Lynch.
 
 3.  M/s Kotak Mahindra Mutual Fund.
 
 4.  M/s SBI Mutual Fund.
 
 5.  M/s Canara Robeco.
 
 Out of five Mutual Fund Houses, we have already launched distribution
 of products of first three Mutual fund Houses. We have moblised AUM of
 Rs. 30.00 crores as on March 31, 2008.
 
 11.  BRANCH EXPANSION
 
 During 2007-08, the Bank has opened 36 new branches besides upgradation
 of 14 Extension Counters. As on 31/03/2008, the total number of
 branches stood at 1323 as against 1273 as on 31/03/2007. The population
 group-wise classification of branches as at end- March, 2008 is as
 under:
 
 Sr.  Classification                                        As on As on
 No.                                           31.03.2007    31.03.2008
 
 1.         Rural                                   264         273
 2.         Semi-urban                              342         316
 3.         Urban                                   407         408
 4.         Metropolitan                            260         326
            Total                                  1273        1323
 
 12.  CUSTOMER SERVICE
 
 In its continued endeavor to provide fair, transparent and quality
 services to all the customers, the bank is a member of the Banking
 Codes & Standards Board of India (BCSBI) and has adopted and
 implemented voluntary Code of BCSBI for individual customers and the
 same has been put on Banks website. The code booklet, was got printed
 in Hindi & English and circulated to all the customers & staff.
 
 The Bank has revised & formulated Cheque Collection Policy,
 Compensation Policy, Security Repossession Policy and Policy for
 Grievance Redressal Mechanism in line with best practices and all the
 above policies have been put on Banks dynamic & interactive website
 for general information of public.
 
 The bank has also launched Web-based Customer Grievance Redressal
 System during the year under reference for prompt redresal of
 customers grievances. Apart from above various
 posters/pamphlets/handouts/circulars containing banks schemes /products
 etc., are provided at the branches for further improving service.
 
 Besides teams have been constituted at branch level for interaction
 with the customers and make them aware of banks various
 products/scheme.
 
 13.  KNOW YOUR CUSTOMER (KYC) NORMS & ANTIMONEY LAUNDERING (AML)
 MEASURES
 
 To comply with the various laws and regulations, national as well as
 international, Govt, of India and Reserve Bank of India directives /
 instructions & guidelines, primarily to prevent the bank from being
 used, intentionally or unintentionally, by criminal elements for money
 laundering activities, KYC Policy has been formulated.  The Policy
 combines four key elements viz. Customer Acceptance Policy, Customer
 Identification Procedures, Monitoring of Transactions and Risk
 Management. This will enable the bank to know / understand the
 customers and their financial dealings better and shall further help in
 managing risks more prudently.  The detailed guidelines and subsequent
 instructions are being reiterated from time to time for strict
 compliance by the field functionaries. The bank is already complying
 with the requirement of submission of statutory returns to the FIU-IND
 as a sequel to the new legislation on Prevention of Money Laundering
 Act-2002.  The Bank has already procured a computer Software solution
 for complying with KYC/AML norms and generation of alerts for
 suspicious nature transactions, which is under testing and at the final
 stage of implementation.
 
 14.  IMPLEMENTATION OF OFFICIAL LANGUAGE
 
 During the year under review, Bank continued its concerted efforts to
 further accelerate use of Hindi in its working and to implement the
 guidelines/directives received from Govt, of India and Reserve Bank of
 India. Concrete and effective steps were taken to achieve the region
 wise targets set by the Department of Official Language, Ministry of
 Home Affairs, Govt, of India in the Annual Programme- 2007-08. To
 assess the progress made in the field of usage of Hindi, the Third
 Sub-Committee of the Committee of Parliament on Official Language
 visited Head Office and the Sub Committee of Draft and Evidence
 Committee inspected Regional Offices Chandigarh, Mumbai(South) & branch
 office Sayaji Ganj, Baroda during the year. The honourable Members of
 Committee appreciated the progress made by the Bank and extended their
 valuable guidance. For the year 2006-07 the Bank was awarded Second
 Prize & in-House Magazine AADHAAR was awarded Third prize under Inter
 Bank Rajbhasha Shield Pratiyogita and Inter Bank House Journal
 Pratiyogita respectively by the Banks Town Official Language
 Implementation Committee, Delhi. In compliance with the Official
 Language Policy of Govt, of India, 209 branches/ offices were got
 notified under rule 10(4) of Official Languages Rules, 1976. To
 propagate use of Hindi on computers the necessary training was imparted
 to the staff by conducting Hindi workshops as well as in other
 programmes at regular intervals so as to facilitate to do their work on
 computers in Hindi. To provide banking facilities to customers in Hindi
 by the CBS branches, the bilingual software prepared by M/s. Image
 Point, Pune has been installed on pilot basis in some of the branches
 as an alternate arrangement, till the new version of bilingual data
 processing software FINACLE is provided by M/s. INF0SYS.
 
 The e-circulars on newly introduced 0BC web portal is made available
 in bilingual form during the year under review so that all staff
 members of the Bank are able to see circulars/messages in Hindi on the
 portal. Banks new interactive dynamic website was made bilingual. Also
 Banks ATM-cum-Debit card PROTON has been made bilingual. The option
 of Hindi is made available on ATMs and Tele-banking. In compliance with
 the guidelines received from the Department of Official Language,
 Ministry of Home Affairs, Govt, of India, Hindi day/ Hindi fortnight /
 Hindi month were celebrated in different Offices/Branches of the Bank
 in the month of September, 2007. During the year under review, Hindi
 books on Literature and Banking were made available for the Hindi
 libraries set up at Head Office, Regional Offices and selected
 branches. All the issues of Banks quarterly in-House Magazine
 AADHAAR were published regularly in bilingual form.
 
 15. RECOVERY
 
 During the fiscal 2007-08, concerted efforts were continued at all
 levels and the Bank has been able to recover Rs. 883.86 crore in NPA
 accounts (including write off), which includes cash recovery amounting
 to Rs. 512.67 crore. Out of above total recovery, a sum of Rs. 753.70
 crore tantamount to reduction in NPAs and remaining amount of Rs.
 130.16 crore has attributed towards revenue of the Bank. The Bank has
 effectively utilized the mechanism of Recovery Camps, One Time
 Settlement (OTS) scheme for Distressed Farmers, OTS scheme of Housing
 Loans & Retail Loans, SARFAESI Act, Lok Adalat, Sale of Financial
 Assets to ARCIL as well as General Settlement Policy of the Bank. Due
 to improved recovery performance, %age of Gross NPAs to Gross Advances
 has come down from 3.20% as on 31.03.2007 to 2.31% as on 31.03.2008.
 Many hard core NPAs of the Bank have been resolved during this period.
 Out of total 1323 branches of the Bank, there are 209 NPA free branches
 as on 31.03.2008.
 
 16. HUMAN RESOURCE DEVELOPMENT & TRAINING
 
 Banking in recent years has undergone tremendous transformation.  This
 change has come about in the wake of opening up of the financial
 sector, sweeping changes in IT/communication and growing customers
 expectations.
 
 The above changes have necessitated amongst others a need to change the
 skill upgradation curriculum. From purely up gradation of core skills,
 the need for imbibing new skills especially in marketing, understanding
 customer expectations and development of products has arisen. To
 achieve these objectives the Bank had drawn up a comprehensive detailed
 training programme for the year 2007-08. Our focus in Training during
 the year 2007-08 has been on the following streams:-
 
 Recovery Management, Effective Branch Management, Programmes for Hall
 Incharge, Risk Management, Lending strategies to SMEs, Corporate
 finance and Retail finance, Marketing of Banks products, Forex
 Management, General Banking in CBS environment with use of IT.
 
 In 340 programmes 7436 employees were imparted training in the above
 streams and other areas of Banking. Further, another 1015 Officers were
 nominated in Advanced Training Programmes in key operational and
 behavioural streams in pioneer training institutions like; Reserve Bank
 of India, College of Agricultural Banking, Pune, NIBM, Pune, JNIDB,
 Hyderabad, IIMs, NIBSC0M, Noida, State Bank Academy, Hyderabad, IMAGE,
 Chennai, IDRBT, Hyderabad, FEDAI, CRISIL, IBA, Indian Institute of
 Banking Finance, ICFAI, Hyderabad and MDI, Gurgaon etc. to quote a few.
 Senior/top management functionaries were deputed for overseas exposure
 so as to have a feel of best international practices and their impact
 on Indian banking.
 
 During the year 2007-08, 201 Specialist Officers and 343 Clerks were
 recruited through test/interviews in different grades under various
 streams such as Financial Analysis, Forex, SSI, Law, Agriculture, IT,
 HRD and Hindi etc. and were deputed for General Banking/specialized
 training in their respective streams so as to provide them with
 adequate exposure in order to conduct themselves comfortably in their
 new assignments. Further, the Bank has also identified 200 vacancies of
 Probationary Officers and the process for filling up these vacancies
 shall be completed shortly. This will help in further improving age
 profile of employees as well as increasing the productivity /
 profitability of the Bank by ensuring optimum utilization of Human
 Resources. As at the end of March 2008, the Bank had 6825 Officers,
 5216 Non - Subordinate and 2763 Subordinate Staff, i.e. a total of
 14804 employees.
 
 The Bank has complied with alt Government guidelines in respect of
 reservation for employees belonging to SC/ST/OBC/PWD/EXSM besides
 providing laid down concessions/relaxations to them. The grievances of
 SC/ST/OBC employees, if any, were resolved through SC/ST Cell working
 at all Regional Offices and at Head Office under the charge of Liaison
 Officer/ Chief Liaison Officer.
 
 BOARD OF DIRECTORS
 
 During 2007-2008,14 meetings of Board of Directors, 17 meetings of
 Management Committee of Board, 6 meetings of Audit Committee of Board,
 were held.
 
 During the year Sh. Alok K Misra, Chairman and Managing Director, took
 charge of the Bank on 04.06.2007. Two new Directors namely Sh. Vijay
 Jagirdar & Dr. R S Maharshi, Directors under Sec 9 (3) (h) of the
 Banking Companies (Acquisition and Transfer of Undertakings), Act, 1980
 were nominated by the Central Government on 13.11.2007.
 
 The Report on Corporate Governance may be read for other details
 relating to the Directors of the Bank.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 The Directors confirm that, in the preparation of the Annual Accounts
 for the year ended 31st March 2008,
 
 (a) the applicable accounting standards have been followed along with
 proper explanation relating to material departures, if any,
 
 (b) the accounting policies framed in accordance with the guidelines of
 the Reserve Bank of India, were consistently applied,
 
 (c) reasonable and prudent judgment and estimates were made so as to
 give true and fair view of the state of affairs of the bank at the end
 of the financial year and of the profit of the bank for the year ended
 on 31st March 2008,
 
 (d) 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 the accounts have been
 prepared on a going concern basis.
 
 ACKNOWLEDGEMENTS
 
 The Board of Directors thank Government of India, Ministry of Finance,
 Department of Economic Affairs and Reserve Bank of India and other
 Government & Regulatory Agencies for their valuable guidance and
 continued support provided to the Bank throughout the year. The Board
 of Directors are also grateful to the valued customers, esteemed
 shareholders, stakeholders and public at large for their patronage and
 confidence reposed in the Bank.
 
 The Board of directors place on record their great appreciation of the
 commitment, sense of involvement and dedication exhibited by each staff
 member in the overall development, growth and prosperity of the Bank
 and Look forward to their continued support and whole-hearted
 co-operation for realization of the goals in the year ahead.
 
                                      For and on behalf of the Board
 
 New Delhi                                  (ALOK K MISRA)
 23rd April 2008                        CHAIRMAN & MANAGING DIRECTOR