Hong Kong branch of the bank has taken exposure on Credit Linked Notes,
 Floating Rate Notes and Fixed Interest bonds etc. These are acquired
 under Investment portfolio at foreign offices, which are governed under
 Trading Book Policy for PNB Hong Kong. The bank intends to hold such
 instruments till its maturity. The aggregate value of such portfolio as
 on the date of balance sheet is Rs 257.57 crores (previous year
 Rs.235.86).
 
 1.  Derivatives
 
 1a. Forward Rate Agreement/ Interest Rate Swap
 
 Nature & Terms of the swaps including information on credit and market
 risk: Hedge Swaps: Interest rate swaps for hedging Tier-II Bonds,
 Deposits, Floating rate loans & back-to-back swaps.  Trading Swaps:
 Interest rate swaps market risk: Nil
 
 2c. Disclosure on risk exposure in derivatives
 
 I Qualitative Disclosure
 
 1. The bank uses derivatives products for hedging its own balance sheet
 items as well as trading purposes. The risk- management of derivative
 operation is headed by a senior executive, who reports to the top
 management, independent of the line functions. Trading positions are
 marked to market on daily basis.
 
 2.  The derivative policy is framed by the Risk Management Division,
 which includes measurement of credit risk and market risk.
 
 3.  The hedge transactions are undertaken for balance sheet management.
 Proper system for reporting and monitoring of risks is in place.
 
 4.  Policy for hedging and processes for monitoring the same is in
 place.
 
 5.  Accounting policy for recording hedge and non-hedge transactions
 are in place, which includes recognition of income, premiums and
 discounts. Valuation of outstanding contracts, provisioning, collateral
 and credit risk mitigation are being done.
 
 6c. Risk Category wise Country Exposure
 
 Banks net funded exposure for risk category-wise country exposures for
 each country is less than 1% of banks assets as on 31.03.2011 and as
 such no provision is required in terms of RBI Master Cir. No. DBOD NO.
 BP.BC.21/21.04.048/2010- 11-10 dated July 1, 2010.
 
 7d. Details of Single Borrower Limit and Group Borrower Limit exceeded
 by the bank.
 
 The Bank has not exceeded prudential exposure ceilings in respect of
 any Group Accounts and individual borrowers during period 01.04.2010 
 to 31.03.2011.
 
 8. Disclosure of penalties imposed by the RBI:
 
 During the year no penalty has been imposed by RBI on the bank.
 Other Disclosures required by Accounting Standards
 
 9. AS -5 Prior Period and Change in Accounting Policy
 
 There were no material prior period income/expenditure items requiring
 disclosure under AS-5.
 
 10. AS- 9 Revenue Recognition:
 
 Certain items of income are recognized on realization basis as per
 Accounting Policy No. 10(4). However, the said income is not considered
 to be material.
 
 11. AS 15 – Employees Benefits:
 
 ADOPTION OF AS – 15(R):
 
 The Bank has adopted Accounting Standard 15(R) - Employee Benefits,
 issued by the Institute of Chartered Accountants of India (ICAI), with
 effect from 1st April 2007.
 
 The Bank recognizes in its books of accounts the liability arising out
 of Employee Benefits as the sum of the present value of obligation as
 reduced by fair value of plan assets on the Balance Sheet date.
 
 TRANSITIONAL LIABILITY
 
 The transitional liability as on 01.04.10 on account of other long-term
 employee benefits such as Leave fare concession, Accumulating
 compensating sick leave, Silver jubilee award etc. to the extent not
 charged was amounting to Rs. 87.40 crores. A sum of Rs. 43.80 crores
 representing one fifth of transitional liability has been charged to
 Profit & Loss A/c of the current financial year ended 31st March 2011.
 The balance- unrecognized liabilities of Rs 43.60 crores have been
 carried forward and the same will be charged off in the next year.
 
 OPENING OF PENSION OPTION TO EMPLOYEES AND ENHANCEMENT IN GRATUITY
 LIMITS:
 
 During the year, the Bank reopened the pension option for such of its
 employees who had not opted for the pension scheme earlier. As a result
 of exercise of which by 33982 employees, the bank has incurred a 
 liability of Rs.2757.65 crores. Further during the year, the limit of 
 gratuity payable to the employees of the banks was also enhanced 
 pursuant to the amendment to the Payment of Gratuity Act, 1972. As a 
 result the gratuity liability of the Bank has increased by Rs.566.00 
 crores. These Liabilities are calculated on the basis of actuarial 
 valuation.
 
 In terms of the requirements of the Accounting Standard (AS) 15,
 Employee Benefits, the entire of Rs3323.65 crores.  (Rs.2757.65 cr. +
 Rs.566.00 cr.) is required to be charged to the Profit and Loss
 Account. However, the RBI has issued a circular no.
 DBOD.BP.BC.80/21.04.018/2010-11 dated 9th February 2011, on Re-opening
 of Pension Option to Employees of Public Sector Banks and Enhancement
 in Gratuity Limits-Prudential Regulatory Treatment. In accordance with
 the provisions of the said Circular, the Bank has charged off Rs.664.73
 crores. representing one-fifth of Rs.  3323.65 crores to Profit & Loss
 Account for the year. In terms of the requirements of the aforesaid RBI
 circular, the balance amount carried forward, i.e. Rs 2658.92
 crores.(Rs3323.65 cr- Rs. 664.73 cr.) does not include any liability
 relating to separated/retired employees. Such balance amount carried
 forward has been grouped in Schedule 5 under head Others and
 correspondingly in Schedule 11 under Others and will be charged off
 in subsequent years
 
 Had such a circular not been issued by the RBI the profit of the bank
 would have been lower by Rs 2658.92 crores pursuant to application of
 the requirements of AS 15.
 
 DISCLOSURE IN ACCORDANCE WITH AS - 15(R):
 
 In line with the accounting policy and as per the Accounting Standard -
 15(R), the summarized position of post employment benefits are
 recognized in the Profit & Loss A/c and Balance Sheet as under:
 
 XIII. Basis of Actuarial assumption considered
 
 Particulars         Basis of assumption
 
 Discount rate       Discount rate has been determined by 
                     reference to market yields on the balance 
                     sheet date on Government Bonds of term 
                     consistent with estimated term of the 
                     obligations as per para 78 of AS15R.
 
 Expected rate       The expected return on plan assets is 
 of return on        based on market  expectations, 
 plan assets         at the beginning of the period, 
                     for returns over the entire life of 
                     the related obligation.
 
 Rate of             The estimates of future salary increases 
 escalation in       considered in actuarial valuations taking
 salary              into account inflation, seniority,
                     promotion and  other relevant factors 
                     mentioned in paras 83-91 and 120(I) of
                     AS15R.
 
 Attrition rate      Attrition rate has been determined by 
                     reference to past and expected future 
                     experience and includes all types of 
                     withdrawals other than death but 
                     including those due to disability.
 
 12. SEGMENT REPORTING FOR THE QUARTER YEAR ENDED 31ST MARCH 2011
 
 Note:
 
 1.  Segment Liabilities are distributed in the ratio of their
 respective Segment Assets.
 
 2.  As the operations outside India are less than the threshold limit
 of 10%, secondary segment information has not been required to be
 furnished.
 
 13. Disclosure of Related Parties as per AS -18 issued by ICAI
 
 Names of the related parties and their relationship with the Bank:
 
 Key Management Personnel:
 
 1.  Shri K. R. Kamath, Chairman & Managing Director
 
 2.  Shri M. V. Tanksale, Executive Director
 
 3.  Shri Rakesh Sethi, Executive Director
                                        (w.e.f. 01.01.2011)
 
 4.  Shri Nagesh Pydah, Executive Director
                                        (Upto 31.12.2010)
 
 Subsidiaries
 
 i) PNB Gilts Ltd.
 
 ii) PNB Housing Finance Ltd.
 
 iii) Punjab National Bank (International) Ltd., UK
 
 iv) PNB Investment Services Ltd
 
 v) Druk PNB Bank Ltd.
 
 vi) PNB Principal Insurance Broking Pvt. Ltd.
 
 vii) Principal PNB Life Insurance Company Ltd
 
 viii) JSC Dana Bank
 
 Associates:
 
 i) Everest Bank Limited
 
 ii) Principal PNB Asset Management Company Pvt. Ltd.
 
 iii) Principal Trustee Company Private Limited
 
 iv) Assets Care & Reconstructions Enterprises Ltd.
 
 v) India Factoring & Finance Solutions Pvt. Ltd.
 
 vi) Madhya Bihar Gramin Bank, Patna
 
 vii) Haryana Gramin Bank, Rohtak
 
 viii) Himachal Gramin Bank, Mandi
 
 ix) Punjab Gramin Bank, Kapurthala
 
 x) Rajasthan Gramin Bank, Alwar
 
 xi) Sarva UP Gramin Bank, Meerut
 
 The transactions with the subsidiaries and certain associates have not
 been disclosed in view of para-9 of AS-18 Related Party Disclosure,
 which exempts state controlled enterprises from making any disclosures
 pertaining to their transactions with other related parties, which are
 also state controlled.
 
 14. Accounting for Leases – AS 19 Financial Leases:
 
 a.  Value of assets acquired on financial lease and included in other
 fixed assets (including furniture and fixture). Value of assets
 acquired during the year under financial lease: Rs.41.65 lakhs. The
 amount of depreciation provided thereon: Rs 34.60 lakhs upto
 31.03.2011. The written down value as on 31.03.2011: Rs 7.05 lakhs
 
 b.  Minimum Lease Payment due not later than one year: 
 
 Min. Lease Payment                     Rs. 7.05 lakhs 
 
 Present value of Min. Lease Payment    Rs. 5.49 lakhs 
 
 Intt. Included in Min. Lease payment   Rs. 1.56 lakhs
 
 c.  Minimum Lease Payment due later than one year but not later than
 five years:
 
 Min. Lease Payment                           -
 
 Present value of Min. Lease Payment          -
 
 Interest included in Min. Lease payment      -
 
 d.  Minimum Lease Payment due later than five years: NIL
 
 e.  Information on operating lease is not ascertained.
 
 15. AS 28 – Impairment of Assets
 
 A substantial portion of the banks assets comprise of financial
 assets to which Accounting Standard 28 Impairment of Assets is not
 applicable. In the opinion of the bank, there is no impairment of its
 assets (to which the standard applies) to any material extent as at
 31.03.2011 requiring recognition in terms of the said standard.
 However, as a measure of abundant caution, an ad-hoc provision of Rs
 5.00 crores already made in earlier years is continued in the accounts.
 
 16. AS-29 Provisions, Contingent Liabilities and Contingent Assets 
 
 i) Movement of provisions for liabilities*
 
 ii) Refer Schedule-12 on contingent liabilities
 
 Such liabilities at S.No.(I), (II), (III), (IV), (V) & (VI) are
 dependent upon the outcome of Court / arbitration / out of court
 settlement, disposal of appeals, the amount being called up, terms of
 contractual obligations, devolvement and raising of demand by concerned
 parties, respectively. No reimbursement is expected in such cases.
 
 17. The Bank has issued a Letter of Comfort in respect of its
 subsidiary Punjab National Bank (International) Ltd. in UK, to
 Financial Services Authority (FSA), the regulator in United Kingdom,
 committing that the bank shall provide financial support to Punjab
 National Bank (International) Ltd., UK so that it meets its financial
 commitments if they fall due. However, no financial obligation has
 arisen as on 31st March 2011.
 
 V.  Off-balance sheet SPVs sponsored (which are required to be
 consolidated as per accounting norms)
 
                 Name of the SPV sponsored
 
               Domestic             Overseas
 
                 NIL                   NIL
 
 18. Reward Points of Credit Card:
 
 PNB Global Credit Cardholders are rewarded as and when they make
 purchase through usage of Credit Card. Reward Points are generated at
 the time of usage of Credit Card by Cardholder at Merchant
 Establishment. Card holder can redeem the accumulated reward points.
 The amount payable on account of reward points is charged to Profit and
 Loss account and credited to Sundry Provision Account on daily basis
 because such amount is quantifiable.
 
 19. Other Notes
 
 a) As per RBI guidelines, the Bank has worked out the amount of inter
 Branch Credit entries outstanding for more than 5 years, pertaining to
 the period up to 31.03.2005, to be transferred to a Blocked Account.
 Accordingly, a sum of Rs.70.95 crores (net of adjustments since carried
 out) has been included under Other Liabilities-others in schedule-5.
 
 Claims of Rs. 0.078 lac has been received during the year against Inter
 Branch Credit entries Blocked and transferred to General Reserve, has
 been met by transfer from General Reserve Rs.0.059 lac and to debit of
 Profit and Loss Account Rs. 0.019 lac.
 
 b) Premises include properties amounting to Rs. 10.98 crores (Net of
 Depreciation) (previous year Rs. 11.35 crores) {cost Rs. 15.89 crores}
 (previous year Rs. 15.89 crores) awaiting registration of title deeds.
 Premises include capital work in progress of Rs. 86.09 crores (previous
 year Rs.95.85 crores).
 
 c) No provision is considered necessary in respect of disputed Income
 Tax and Fringe Benefit Tax demands of Rs.881.43 crores (previous year
 Rs. 1480.80 crore) as in the banks view, duly supported by expert
 opinion and/ or decision in banks own appeals on same issues,
 additions / disallowances made are not sustainable.  Against these
 disputed demands, Rs. 881.43 crores (previous year Rs.1388.24 crores)
 has been paid.
 
 d) During the year bank has allotted 15,09,657 equity shares of Rs.10/-
 each at a premium of Rs. 1208.82 per share to Govt. of India as
 determined by the Board in terms of the Chapter VII of the SEBI
 Regulations, 2009, as amended from time to time (the SEBI ICDR
 Regulations) on preferential basis. The total amount of capital
 received by the bank on this account is Rs.184.00 crores and
 consequently the Government holding has increased from 57.80% to
 58.00%.
 
 e) The Board of Directors has recommended dividend of
 
 Rs. 22/- per equity share of Rs. 10 each ( 220% of the paid up capital
 of the bank), subject to approval by members.
 
 20. Figures of the previous year have been regrouped / rearranged /
 reclassified wherever necessary.