J.2 Associate Banks
 
 SBIs five Associate Banks had a market share of 5.88% in deposits and
 6.00% in advances as on last Friday of March 2011.
 
 Table : Performance Highlights of Associate Banks (ABs)
 
                                                           (Rs. in Crs)
 
                                           As on      As on   Change
                                      31.03.2010  31.03.2011    (%)
 
 Total Assets                           3,18,580    3,68,283  15.60
 
 Agg. Deposits                          2,72,790    3,11,645  14.24
 
 Total Advances                         2,04,573    2,40,423  17.52
 
 Operating Profit                       5,841.90    7,568.68  29.56
 
 Net Profit                             2,958.80    3,598.43  21.62
 
 Credit Deposit Ratio                     74.15%      77.29%   4.23
 
 Capital Adequacy Ratio                    13.66       13.25  -0.41
 
 Gross NPA                              3,504.68    5,066.50  44.56
 
 Net NPA                                1,692.96    2,443.69  44.34
 
 Return on Equity                         18.97%      19.08%   0.11
 
 J.3 SBI Commercial & International Bank Ltd.  (SBICI)
 
 As at the end of March 2011, the aggregate Deposits and total Advances
 of SBICI stood at Rs. 453.27 crores and Rs. 271.43 crores respectively.
 The Bank recorded an operating and net profit of Rs. 5.25 crores and
 Rs. 4.21 crores respectively.  The net NPA as at the end of March 2011
 was NIL.
 
 J.4 SBI Capital Markets Limited (SBICAP)
 
 SBICAP is a full service investment banking outfit offering Project
 Advisory Services, arrangement of Structured Finance, Capital Market
 Services like Equity Issuances, Mergers & Acquisitions and arrangement
 of Private Equity, etc. SBICAP is a leader in India in Project Finance
 with over 40% market share.
 
 The following are some of the many awards / recognitions won by the
 Company during the year:
 
 - Bank of the year award 2010 for Asia Pacific Region for the 3rd
 consecutive year by Thomson Reuters.
 
 - Loan House of the Year Award for the 2nd consecutive year by IFR
 Asia.
 
 - Euromoney Project Finance Indian Deals awards –
 
 - Indian Petrochemical Deal of the Year 2010- ONGC Mangalore
 Petrochemicals
 
 - Indian Industrial Deal of the Year 2010 – Dungsam Cement
 
 - Indian Oil & Gas Deal of the Year 2010- GSPC KG Offshore
 
 - Ranked No 1 Global Mandated Lead Arrangers for 2010 by PFI ( Thomson
 Reuters) for the second successive year.
 
 - Ranked No 1 Global Lead Arrangers for the second successive year by
 Dealogic.
 
 - Ranked 1st with an impressive market share of 13.3% for the 1st
 quarter of calendar 2011 on the Asia Ex-Japan Syndicated Loans Table as
 per Bloomberg.
 
 - Ranked 2nd in terms of issues handled and 3rd in terms of amount
 raised during the financial year 2010-11.
 
 - Ranked 1st in Rights Issues- both in terms of number of issues and
 amount raised
 
 - Ranked 1st in number of PSU Divestment Issues.
 
 The company has posted PAT of Rs. 374.72 crores as on 31.03.2011 as
 against Rs. 137.12 crores as on 31.03.2010 thus recording YoY growth of
 173%.  Also declared an interim dividend of 400%.
 
 J.4.1 SBICAP Securities Limited (SSL)
 
 SSL, a wholly owned subsidiary of SBI Capital Markets Ltd., besides
 offering equity broking services to retail and institutional clients
 both in cash as well as in Futures and Options segments, is also
 engaged in Sales & Distribution of other financial products like Mutual
 Funds, etc. SSL has 100 branches and offers Demat, e-broking, e-IPO and
 e-MF services to both retail and institutional clients.  SSL currently
 has more than 1.89 lac customers in their books. The Company has posted
 a profit of Rs.4.59 crores as on 31.03.2011 during the current year.
 
 J.4.2 SBICAPS Ventures Limited (SVL)
 
 SVL is a wholly owned subsidiary of SBI Capital Markets Ltd. SVL earned
 a net profit of Rs. 0.59 crore during 2010-11.
 
 SVL sold its stake in SS Ventures Services Ltd., a venture capital fund
 set up jointly by SVL and SBI Holdings Inc (Softbank), Japan and its
 stake in India Japan Fund to SBI Holdings Inc and Knowledge Investments
 (Mauritius) Ltd at a total consideration of Rs. 3.47 crores and Rs.
 2.60 lac respectively.
 
 J.4.3 SBICAP (UK) Ltd. ( SUL)
 
 SUL is a wholly owned subsidiary of SBI Capital Markets Ltd. During the
 year SUL has booked a revenue of Rs. 2.16 crores and has posted a net
 profit of Rs. 0.20 crore despite the global recessionary scenario.
 
 SUL is positioning itself as a Relationship outfit for SBI Capital
 Markets in UK and Europe.  Relationships are being built with FIIs,
 Financial Institutions, Law Firms, Accounting Firms, etc to market the
 business products of SBICAP.
 
 J.4.4 SBICAP TRUSTEE Co. Ltd. (STCL)
 
 SBICAP TRUSTEE Co Ltd (STCL), a wholly owned subsidiary of SBI Capital
 Markets Ltd., which has commenced security trustee business with effect
 from 1st August 2008 has earned a gross income of 8.31 Rs.crores and a
 Net Profit of Rs. 4.43 crores during 2010-11 as against Gross Income of
 Rs. 3.78 crores and Net Profit of Rs. 1.94 crores during 2009-10.
 
 J.5 SBI DFHI Ltd. (SBI DFHI)
 
 - SBI acquired Asian Development Banks and Industrial Investment Bank
 of Indias stake (4.69% and 0.47% respectively) in SBI DFHI during the
 course of the year.
 
 - SBI group holds 72.17 % share in the Company, which is a primary
 dealer.
 
 - For the period ended 31st March 2011, the Companys PAT was Rs. 56.94
 crores as against Rs. 89.23 crores during March 2010. The lower profit
 is mainly attributed to the impact of hikes in Repo rates by RBI and
 yield on investments remaining stagnant.
 
 - The market share of SBIDFHI has increased from 2.71% as on 31.03.2010
 to 3.41% as on 31.03.2011.
 
 - The secondary market turnover during the year was Rs. 97,885 crores
 as against Rs. 78,911 crores during the corresponding period in 2010
 (YoY growth of 24%).
 
 J.6 SBI Cards & Payments Services Pvt. Ltd.  (SBICSPL)
 
 - SBI Cards, the only stand-alone credit card issuing company in India,
 is a joint venture between State Bank of India and GE Capital
 Corporation, wherein SBI holds 60% stake.
 
 - The Cards in Force (CIF) of the Company stands at 23 lac and the
 receivables are at Rs. 1,795 crores at the end of March 2011.
 
 - The Company has posted a net profit of Rs. 7.10 crores as on March
 2011 as against a loss of Rs. 152.4 crores as on 31.03.2010.
 
 - SBI Card has emerged as the most trusted brand by being the
 undisputed Gold Award winner in Readers Digest Trusted Brands Survey
 2010 for the third year in a row.
 
 Table : The Performance Highlights of the Associate Banks as on
 31.03.2011 are as under:
 
                                                          (Rs. in Crs)
 
 Name of the Bank    SBIs share  Deposits  Advances Operating     Net 
                     in the                             Profit  Profit
                     capital (%) 
 
 State Bank of
 
 Bikaner & Jaipur        75.00      53319     41744    1140.25  550.88
 
 Hyderabad              100.00      90178     65437    2319.47 1166.24
 
 Mysore                  92.33      42779     34440    1173.75  500.62
 
 Patiala                100.00      67771     52331    1759.24  652.96
 
 Travancore              75.00      57598     46471    1175.97  727.73
 
 All 5 Banks                       311645    240423    7568.68 3598.43
 
 - SBI Card has won the CNBC Awaaz Consumer Awards 2010.
 
 J.7 SBI Life Insurance Company Limited (SBILIFE)
 
 - SBI Life is Joint Venture Company between SBI and BNP Paribas in
 which SBI holds 74% stake.
 
 - SBI Life has a unique multi-distribution model comprising
 Bancassurance, Retail Agency & Institutional Alliances and Group
 Corporate Channels for distribution of insurance products.
 
 - Gross Premium of the Company Crossed Rs. 12,000 crores with YoY
 growth of 28%.
 
 - SBI Life has a market share of 19.22% of the total market share of
 private insurers which stood at 31.30% as on 31.03.2011. Overall market
 share (including Life Insurance Corporation of India) of SBI Life stood
 at 6.02% as at 31st March 2011.
 
 - Recorded a PAT of Rs. 366.30 crores as on 31.03.2011 as against Rs.
 276.46 crores as on 31.03.2010.
 
 - The ‘Assets under Management of SBI Life recorded a growth of 40%
 YoY to reach Rs. 40,162 crores as on 31st March 2011.
 
 - SBI Life expanded its branch network by adding 135 branches during
 the year bringing the total number of branches to 629.
 
 - ICRA has reaffirmed iAAA rating to the company indicating highest
 claim paying ability.
 
 - CRISIL has reaffirmed its highest financial rating AAA/ Stable.
 
 The following are some of the awards / recognitions achieved by the
 Company during 2010-11:
 
 - NDTV Profit business leadership 2010-11 award for organizational
 excellence.
 
 - Bloomberg UTV Award for Financial Excellence 2010-11.
 
 - Outlook Money Award Runner Up for the Best Life Insurance Company
 2010-11.
 
 - ICS Quality Champion Award 2010-11.
 
 - IS0 9001:2000 certification for superior claim process.
 
 J.8 SBI Funds Management (P) Ltd. (SBIFMPL)
 
 - SBIFMPL, the Mutual Fund arm of SBI, is the 6th largest Fund House in
 terms of Assets Under Management and a leading player in the market
 with 6 million investors.
 
 - The schemes of the Fund House have performed consistently over the
 years and have emerged as the preferred investment for investors.
 
 - The company has posted a PAT of Rs. 78.85 crores as on 31.03.2011
 registering a YoY growth of 4%.
 
 - The average Assets Under Management (AUM) of the company stood at
 Rs. 41,672 crores as against Rs. 37,417 crores as on March 2010
 achieving a YoY growth of 11% as against the growth of 6% for the
 Mutual Fund Industry.
 
 J.9 SBI Global Factors Ltd. (SBIGFL)
 
 - SBIGFL is one of the leading factoring companies in India which has
 the highest market share (over 90%) in export & import factoring.
 
 - During the year ended 31st March 2011, the turnover of the company
 decreased to Rs. 7,605 crores from Rs. 12,978 crores as on 31st March
 2010 due to the sluggish growth in industrial production during the
 year impacting the top line growth.
 
 - The company incurred a loss of Rs. 125.62 crores during the year
 ended 31.03.2011 as against a profit of Rs. 6.58 crores earned on
 31.03.2010 mainly on account of slow down in economy and due to higher
 provisioning for NPAs and Write-offs.
 
 J.10 SBI Pension Funds Pvt. Ltd. (SBIPF)
 
 SBIPF is one of the three Fund Managers appointed by Pension Fund
 Regulatory & Development Authority (PFRDA) for management of Pension
 Funds under the New Pension System for Central Government (except
 
 Armed Forces) and State Government Employees. SBIPF, a wholly owned
 subsidiary of the State Bank Group, commenced its operations from April
 2008. The total Assets Under Management of the company as on 31st
 March 2011 were Rs. 3,764.11 crores (YoY growth of 65%). As at 31st
 March 2011, SBIPF was managing 44% of the corpus under the Central Govt
 Scheme, 39 % under State Govt scheme and 64% under the informal sector.
 The Company recorded a net profit of Rs. 0.32 lac.
 
 Important Developments during the year in Associates & Subsidiaries:
 
 - State Bank of Indore, one of the Associate Banks, was acquired on
 26th August 2010 after the final approval from RBI and GoI.
 
 - State Bank of Mysore raised Rs. 583.20 crores equity through a Rights
 Issue during the year.
 
 - State Bank of Bikaner & Jaipurs Rights Issue for raising Rs. 780
 crores was open from 28th March to 11th April 2011.
 
 Support & Control Operations
 
 K Information Technology
 
 L Risk Management & Internal Controls
 
 M Customer Service & Corporate Social Responsibility
 
 N Corporate Communication & Change
 
 O Right to Information Act
 
 P Human Resources
 
 Q Business Process Re-engineering
 
 R Official Language
 
 S KYC/AML/CFT Measures
 
 T Fraud Prevention & Monitoring
 
 U Compensation Policy for deficiency in Service
 
 V Banks Outsourcing Policy
 
 W Super Circle of Excellence
 
 X Green Banking Initiatives
 
 K.  INFORMATION TECHNOLOGY
 
 Networking: The Bank has implemented a secure, robust scalable WAN
 architecture network built with equipments owned by SBI, connecting
 19,347 Branches/Offices and 25,005 ATMs of State Bank Group through
 leased lines, VSATs and CDMA technology.
 
 Core Banking: CBS roll out across the domestic branches is supported
 with a state-of-the-art centralized infrastructural setup and a robust
 Primary / DR setup, providing uninterrupted continuity of Banks
 operations. It facilitates the scalability for future growth,
 interfacing with multiple alternate channels, reduction in transaction
 costs, improved operating efficiency.  Milestones of 52 millions peak
 transactions in a day, 1,861 Transactions per second and managing 258
 million accounts have been achieved in recent months. Operatives have
 been provided with tools for on-line real time transaction
 verification. E-Trade – internet based front end application has been
 rolled out for corporate customers for processing various trade finance
 transactions.
 
 ATM: State Bank Group crossed an important milestone of rolling out
 25,000th ATM during the year. Apart from Cash Withdrawal, Balance
 enquiry, Mini statement and Card to Card transfer, several value added
 services such as Utility Bill Payment, Temple/Trust Donations, Fee
 Payment, Mobile top up, Cash/ Cheque deposit (at select ATMs), Cheque
 book request, Payment of Insurance premium, SBI Credit Card Bill
 Payment etc. are also being offered at 25,005 ATMs of the State Bank
 Group. Usage of debit cards at PoS terminal has increased
 significantly. Bunch Note Acceptor (for direct acceptance of cash),
 Multifunction kiosks (for offering non-cash ATM transactions, Internet
 Banking transaction, passbook printing etc.),
 
 low cost rural ATMs and solar powered ATMs have also been rolled out.
 
 Internet Banking: The Banks Internet Banking solution is a
 comprehensive suite of products for both Retail and Corporate users.
 Some of the new features enabled during the year include online
 nomination and closure of e-TDR/STDR, opening closing of e-RD, viewing
 of Form 26 (Annual statement 26 for income tax credits), stop payment
 of cheques, request for multicity cheque book, registration of mobile
 number in Core Banking account for SMS alerts of core transactions,
 online issuance of gift cards and top up, online validation of PAN
 while making tax payment, display of notional interest in housing loan
 account etc.
 
 Payment Systems Group: The volume of RTGS and NEFT transactions has
 increased significantly.
 
 Contact Centre operates on 24x7 basis from two locations Bengaluru and
 Vadodara. Contact Centre is currently providing the following services:
 Complaint Management System, Pension Management System, Lead Management
 System, Account Enquiry Services, Payment Tracking System, Card
 Tracking Services, Hotlisting of Cards, ATM PIN Regeneration, Providing
 MMID (Mobile Money Identifier) information under IMPS (Interbank Mobile
 Payment Services), Balance and Statement on mobile.
 
 In respect of Prepaid Cards, the facility of placing request and
 funding for procurement of Gift Card has been enabled through Internet
 Banking portal (www.onlinesbi.com).
 
 Mobile Banking: A host of Mobile Banking services, such as Fund
 Transfers, Enquiry
 
 Services, Demat Account Enquiry, Cheque book request, Bill payment,
 Mobile top up, DTH recharge, SBI Life Premium Payment, E-tag recharge
 to pay toll tax, Merchant payments and Inter Bank Mobile Payment
 Services (IMPS) are currently being offered. IMPS has been added during
 the year.
 
 Mobile Banking Services are currently offered under five channels viz.
 SMS, GPRS, WAP, USSD and SMS banking. SMS Banking has been introduced
 during the last quarter of the year.  The Mobile Banking user base has
 crossed one million by the end of the year.
 
 Enterprise Data Warehouse: The Phase II of the Enterprise Data
 Warehouse Project (EDWP) has commenced. While a few business critical
 reports are already provided by EDWP, the end users will have access to
 all regular and ad hoc reports required for operational and decision
 making requirements through a web portal in a phased manner.
 
 Information Security: Bank has implemented a robust IT Policy and
 Information System Security Policy which is in line with the
 international best practices. These policies are reviewed periodically
 and suitably strengthened in order to address emerging threats. Regular
 security drills and employee awareness programs are conducted to ensure
 security and increase awareness among staff.  Business Continuity
 Management System (BCMS) has been implemented at Global IT centre,
 Belapur.
 
 Foreign Offices: 131 branches in 23 countries, including 2 OBUs in
 India, run their operations on common banking application software
 Finacle, with their databases connected to a central Data Centre backed
 up by a
 
 synchronized Disaster Recovery site. The Rupee remittances from foreign
 centres are routed through the central Payment Hub for credit to
 accounts maintained with State Bank Group. The NEFT mechanism is used
 for credits to accounts with other banks. The foreign offices also use
 the centralized SWIFT infrastructure for their financial messages. All
 foreign offices use Internet Banking channel, and 113 ATMs at various
 locations abroad cater to the Banks overseas customers with most of
 the ATMs connected to centralized ATM Switch in India.
 
 RRB Computerisation:
 
 Out of 18 RRBs sponsored by the Bank, 10 RRBs have been computerised on
 CBS platform using BaNCS application software through the ASP model.
 
 Awards & Accolades:
 
 During the year, The Bank has received the following national and
 international awards in recognition of its technology implementation:
 
 - The Banker – Innovation in Banking Technology Awards 2010 – State
 Bank of India was declared Winner in ‘Innovation in Eco-IT category
 for its GREEN ATM installation.
 
 - The NASSCOM CNBC IT User Award 2010 – in the Banking Vertical for its
 various IT initiatives.
 
 - IDRBT Banking Technology Excellence Awards 2009: The Bank won two
 awards in ‘Best Use of Technology for Financial Inclusion and ‘Mobile
 Banking and Payment Applications.
 
 - Best IT Implementation Awards 2010 by PC Quest: SBIs Project ‘Green
 IT @ SBI was rated as the Best Green IT Project for its GREEN ATM
 installation.
 
 - Skoch Award 2010- in the Virtual Corporation Award category for its
 project – ‘E-Payment Solution which covers all our E-Governance
 initiatives on Corporate Internet Banking Platform.
 
 - Silver EDGE Award – for its Data Centre Consolidation Project of
 Foreign Offices Department.
 
 - Amaron Quanta Express Uptime Champion Awards 2010 (Banking and
 Finance Category) – the award recognizes organizations who have
 implemented solutions that guarantee an optimal infrastructure uptime
 24x7.
 
 - VISA 2009 Global Service Award-the Banks ATM cum debit card was
 declared to have the lowest transaction response time.
 
 - IBA Technology Award: Best Customer Initiative, Counter, Best Online
 Banking, Best Risk Management (Runner up).
 
 L. RISK MANAGEMENT & INTERNAL CONTROLS Risk Management in SBI
 
 L.1 Risk Management Structure
 
 - An independent Risk Governance Structure is in place for Integrated
 Risk Management covering Credit, Market, Operational and Group Risks.
 This framework visualises empowerment of Business Units at the
 operating level, with technology being the key driver, enabling
 identification and management of risk at the place of origination.
 
 - The Risk Management Committee of the
 
 Board (RMCB) has the overall responsibility to monitor and manage
 Enterprise Wide Risk. The Credit Risk Management Committee (CRMC),
 Market Risk Management Committee (MRMC), Operational Risk Management
 Committee (ORMC), Group Risk Management Committee (GRMC) and Asset
 Liability Management Committee (ALCO) support RMCB.
 
 - MD & Group Executive (Associates & Subsidiaries) and MD & Group
 Executive (International Banking) are the members of RMCB, while MD &
 Group Executive (National Banking) and MD & Chief Financial Officer are
 invited to attend all the meetings of the Committee. The Deputy
 Managing Director & Chief Credit and Risk Officer head CRMC, MRMC, ORMC
 and GRMC. ALCO is headed by the Managing Director & Chief Financial
 Officer.
 
 - Risk Management is perceived as an enabler for business growth and in
 strategic business planning, by aligning business strategy to the
 underlying risks. This is achieved by constantly re-assessing the
 inter-dependencies / interfaces amongst each silo of Risk and business
 functions.
 
 - Bank is in the process of implementing Enterprise Risk Management
 (ERM) that will integrate all the Risk Management functions of the
 Bank, explore inter-dependencies amongst various risk types and act as
 a support system to strategic decision-making process.
 
 L.2 Basel II Implementation
 
 - In accordance with RBI guidelines, the Bank has migrated to the Basel
 II framework, with the Standardised Approach for Credit Risk and Basic
 Indicator approach for Operational Risk w.e.f.  March 31, 2008, having
 already implemented the Standardised Duration Method for Market Risk
 w.e.f. March 31, 2006.
 
 - Simultaneously, the Bank is updating and fine- tuning its Systems and
 Procedures, Information Technology (IT) capabilities, Risk Assessment
 and Risk Governance structure to meet the requirements of the Advanced
 Approaches under Basel II.
 
 - Various initiatives such as new Credit Risk Assessment Models,
 independent validation of Internal Ratings, loss data collection and
 computation of market risk Value at Risk (VaR) and improvement in Loan
 Data Quality would facilitate efficient use of Capital as well as
 smooth transition to Advanced Approaches.
 
 - Risk Awareness exercises are being conducted across the Bank to
 enhance the degree of awareness at the Operating levels, in alignment
 with better risk management practices, Basel II requirements and
 over-arching aim of conservation and optimum use of capital.
 
 - Keeping in view the changes that the Banks portfolios may undergo in
 stressed situations, the Bank has in place a policy, which provides a
 
 framework for conducting the Stress Tests at periodic intervals and
 initiating remedial measures wherever warranted. The scope of the tests
 is constantly reviewed to include more stringent and new scenarios.
 
 L.3 Credit Risk Management
 
 - Credit Risk Management process encompasses identification,
 assessment, measurement, monitoring and control of the Credit
 Exposures.  Well-defined basic risk measures such as CRA (Credit Risk
 Assessment) models, Industry Exposure norms, Counter-party Exposure
 limits, Substantial Exposure limits, etc., have been put in place.
 
 - Credit Risk components such as Probability of Default (PD), Loss
 Given Default (LGD) and Exposure at Default (EAD) are being computed.
 
 - Frequency of Stress Tests in respect of Credit Risk has been
 increased from Annual to Half-yearly, to identify Credit Risk at an
 early stage and to initiate appropriate measures to contain/ mitigate
 Credit Risk.
 
 L.4 Market Risk Management
 
 - Market Risk Management is governed by the Board approved policies for
 investment, Private Equity & Venture Capital, trading in Bonds,
 Equities, Foreign Exchange and Derivatives.
 
 - Exposure, Stop Loss, Modified Duration, PV01 and Value at Risk (VaR)
 limits have been prescribed. These limits, along with other Management
 Action Triggers, are tracked daily and necessary action initiated, as
 required, to keep Market Risk within approved limits.
 
 L.5 Operational Risk Management
 
 - The Bank manages operational risks by having in place and maintaining
 a comprehensive system of internal controls and policies.
 
 - The main objectives of the Banks Operational Risk Management are to
 continuously review systems and control mechanisms, create awareness of
 operational risk throughout the Bank, assign risk ownership, alignment
 of risk management activities with business strategy and ensuring
 compliance with regulatory requirements.
 
 - The Operational Risk Management policy of the Bank establishes a
 consistent framework for systematic and pro-active identification,
 assessment, measurement, monitoring and mitigation of operational risk.
 The Policy applies to all business and functional areas within the
 Bank, and is supplemented by operational systems, procedures and
 guidelines which are periodically updated.
 
 L.6 Group Risk Management
 
 - The State Bank Group is recognised as a major Financial Conglomerate
 and as a systemically important financial intermediary, with
 significant presence in various financial markets.
 
 - Accordingly, it is imperative, both from the regulatory point of view
 as well as from the Groups own internal control and risk management
 point of view, to oversee the functioning of individual entities in the
 Group and periodically assess the overall level of risk in the Group.
 This facilitates optimal utilization of capital resources and adoption
 of a uniform set of risk practices across the Group Entities.
 
 - The Group Risk Management Policy applies to all Associate Banks,
 Banking and Non-banking Subsidiaries and Joint Ventures of the State
 Bank Group under the jurisdiction of specified regulators and complying
 with the relevant Accounting Standards, where the SBI has
 
 investment in equity shares of 30% and more with control over
 management.
 
 - With a view to enabling the Group Entities to assess their material
 risks and adequacy of the risk management processes and capital, all
 Group members, including Non-banking Subsidiaries are encouraged to
 align their policies and practices with the Group, follow Basel
 prescriptions and international best practices.
 
 L.7 Asset Liability Management
 
 - The Asset Liability Management Committee (ALCO) of the Bank is
 entrusted with the evolvement of appropriate systems and procedures in
 order to identify and analyse balance sheet risks and setting of
 benchmark parameters for efficient management of these risks.
 
 - ALM Department, being the support group to ALCO, monitors the Banks
 market risk such as liquidity risk, interest rate risk etc., by
 analysing various ALM reports / returns. The ALM department reviews the
 ALM Policy and complies with the Banks / RBIs policy guidelines on an
 ongoing basis.
 
 - The Market Related Fund Transfer Pricing Mechanism has been
 implemented for evaluating the business performance of the branches of
 the Bank.
 
 L.8 Internal Controls
 
 The Bank has in-built internal control systems with well-defined
 responsibilities at each level.  The Bank carries out mainly two
 streams of audits - Inspection & Audit and Management Audit covering
 different facets of Internal Audit requirement. Apart from these,
 Credit Audit is conducted for units with large credit limits and
 Concurrent Audit is carried out at branches having
 
 large deposits, advances and other risk exposures and selected BPR
 Outfits.  Expenditure Audit, involving scrutiny of accounts and
 correctness of expenditure incurred, is conducted at Corporate Centre
 Establishments, Local Head Offices, Zonal Offices, On Locale Regional
 Offices, Regional Business Offices, Lead Bank Offices, etc. To verify
 the level of rectification of irregularities by branches, audit of
 compliance at select branches is also undertaken. The Information
 System Audit (IS Audit) of the centralised IT establishments is being
 conducted.
 
 L.8.1 Risk Focussed Internal Audit (RFIA)
 
 The inspection system plays an important and critical role of
 introducing international best practices in the internal audit function
 which is regarded as a critical component of Corporate Governance.
 Inspection & Management Audit Department undertakes a critical review
 of the entire working of auditee units. Risk Focussed Internal Audit,
 an adjunct to risk based supervision as per RBI directives, is in vogue
 in the Banks audit system.
 
 L.8.2 Inspection & Audit of branches
 
 All domestic branches have been segregated into 3 groups on the basis
 of business profile and risk exposures. While audit of Group I branches
 and credit oriented BPR entities (excepting SARC) is administered by
 Central Audit Unit (CAU) at Inspection & Management Audit Department
 headed by a General Manager (CAU), audit of branches in Group II &
 Group III category and other BPR entities are conducted by ten Zonal
 Inspection Offices, located at various Centres, each of which is headed
 by a General Manager (I&A). The audit of branches and BPR entities is
 conducted as per the periodicity approved by Audit Committee of the
 Board (ACB) which is well within RBI norms. During the period from
 
 01.04.2010 to 31.03.2011, 7,871 domestic branches (Group I: 86 Group
 II: 1,421; & Group III: 6,364) were audited.
 
 L.8.3 Audit of BPR entities
 
 In the wake of introducing various BPR initiatives, audit process for
 the BPR entities has been developed and introduced. Taking into account
 the processes involved in each of the entities, exclusive Audit Report
 Formats, with appropriate audit queries, have been introduced. These
 entities are being evaluated on risk parameters. During the period from
 01.04.2010 to 31.03.2011, 323 BPR entities (Group I: 138 & Group II:
 185) were audited.
 
 L.8.4 Cluster Audit
 
 A number of Centres have been brought under the gamut of BPR and
 several branches are linked with BPR entities. To be able to identify
 and mitigate the risk at such branches, where the process is still
 underway, the department has introduced an initiative called ‘Cluster
 Audit wherein a simultaneous audit of BPR entities and identified
 branches linked to the BPR in a particular centre is taken up . During
 the period from 01.04.2010 to 31.03.2011, Cluster Audit was conducted
 in 46 Centres covering 1,188 Branches & 125 BPR entities.  This brought
 to light the audit health of the centre.
 
 L.8.5 Management Audit
 
 With the introduction of Risk Focussed Internal Audit, Management Audit
 has been reoriented to focus on the effectiveness of risk management in
 the processes and the procedures followed in the Bank. Management Audit
 universe comprises of Corporate Centre Establishments; Circles / Apex
 Training Institutions, Associate Banks; Subsidiaries (Domestic /
 Foreign); Joint Ventures
 
 (Domestic / Foreign), Regional Rural Banks sponsored by the Bank
 (RRBs). During the period from 01.04.2010 to 31.03.2011, Management
 Audit of 45 domestic offices/establishments was carried out.
 
 L.8.6 Credit Audit
 
 Credit Audit aims at achieving continuous improvement in the quality of
 Commercial Credit portfolio of the Bank through critically examining
 individual large commercial loans with exposures of Rs. 5 crores and
 above.  Credit Audit System (CAS), which has been aligned with Risk
 Focussed Internal Audit, assesses whether the Banks laid down policies
 in the area of credit appraisal, sanction of loans and credit
 administration are meticulously complied with. CAS also provides
 feedback to the business unit by way of warning signals about the
 quality of advance portfolio in the unit and suggests remedial
 measures. It also comments on the risk rating awarded and whether it is
 in order.  Credit Audit carries out a review of all individual advances
 above the cut off limit within 6 months of sanction/enhancement/
 renewal as off-site audit and a post sanction audit once in 12 months
 as on-site. During the period 01.04.2010 to 31.03.2011, Credit Audit
 (on-site) was conducted in 456 Branches, covering 5,733 accounts with
 aggregate exposures of Rs. 5,72,958 crores.  Credit Audit (Off-site)
 was conducted in 14 Circles (including MCROs/CAG functioning in the
 geographical area of the respective Circles) during the same period,
 covering 6,875 proposals (domestic) with aggregate exposure of Rs.
 8,43,864 crores.
 
 L.8.7 Information System Audit:
 
 Since April 2006, all the Branches are being subjected to Information
 Systems (IS) audit to
 
 assess the IT related risks as part of audit of the branch. A ‘Handbook
 on Self Audit of Information Systems was introduced to facilitate
 branches for evaluating the efficiency level of IT systems. IS Audit of
 centralised IT establishments has commenced in January 2007. During the
 period from 01.04.2010 to 31.03.2011, IS Audit of 40 centralised IT
 establishments was completed.
 
 L.8.8 Foreign Offices Audit:
 
 Home Office Audit was carried out at 40 Branches / offices during
 01.04.2010 to 31.03.2011, which included Inspection and Audit of 31
 Branches, Management Audit of 4 Representative offices, 1 Subsidiary
 and 4 Regional Offices.
 
 L.8.9 CONCURRENT AUDIT SYSTEM:
 
 Concurrent Audit system is essentially a control process integral to
 the establishment of sound internal accounting functions, effective
 controls and overseeing of operations.  It works as a tool for the
 Controllers of operations for scrutiny of day-to-day operations.
 Concurrent Audit System is reviewed on an on-going basis as per the RBI
 directives so as to cover 30-40% of the Banks Deposits and 60-70% of
 the Banks Advances and other risk exposures. Inspection & Audit
 department prescribes the processes, guidelines and formats for the
 conduct of concurrent audit at branches and BPR entities.  As on
 31.03.2011, the system covers 30.15 % of deposits and 75.21 % of
 advances and other risk exposures of the Bank.
 
 L.9 Vigilance
 
 The main objective of vigilance activity in the Bank is not to reduce
 but enhance the level of managerial efficiency and effectiveness in the
 organization. Risk taking is integral part of the
 
 banking business. Therefore, every loss does not necessarily become
 subject matter of vigilance enquiry. Motivated or reckless decisions
 that cause damage to the Bank are essentially dealt as vigilance ones.
 While vigilance aims at punishing the delinquent employees, it also
 protects the legitimate and bonafide business decisions taken by them
 and any other action devoid of malafides. The Vigilance Department in
 the Bank functions on these principles.
 
 Based on the principle Prevention is Better Than Cure, the Vigilance
 Department is actively involved in the preventive measures, which aim
 at taking steps, which are essential for avoiding recurrence of similar
 nature of frauds in the Bank.  At the same time, Vigilance department
 is taking proactive measures to prevent the incidences of frauds
 arising in CBS environment.
 
 Considering the size of the Organization, we have set up vigilance
 departments at each of the 14 Circles, headed by Deputy General
 Managers. At Corporate Centre, Vigilance set up is headed by Chief
 Vigilance Officer of the rank of Chief General Manager. The department
 reports to the Chairman directly and conducts its affairs
 independently. The guidelines of the Central Vigilance Commission (CVC)
 are followed in letter and spirit in its functioning.
 
 M.  CUSTOMER SERVICE & CORPORATE SOCIAL RESPONSIBILITY
 
 M.1. CUSTOMER SERVICE
 
 - Several transformation exercises for different categories of
 employees were conducted such as ‘Parivartan, ‘SBI Citizen, ‘Udan,
 ‘Jagruti etc.  towards better understanding of interpersonal
 relationships mainly with the customers.
 
 - The Grievance Redressal Policy of the Bank is formulated on the basis
 of the Model Policy
 
 Framed by Indian Banks Association and provisions of the revised Code
 of Commitments to Customers released by Banking Codes and Standards
 Board of India in August 2009.  Branches are required to redress
 customer grievances within three weeks of receipt against the time
 limit of 30 days prescribed in the Code.
 
 - The Standing Committee on Customer Service constituted at the Local
 Head Offices with representatives from customers including Senior
 Citizens review the overall position of Customer Service in the Circle.
 Analysis of the consolidated data for Customer Grievances for all
 Circles is being put up to the Customer Service Committee of the
 Central Board every quarter to identify common systemic issues that
 require rectification, and also review the remedial measures taken by
 the Bank for improving the Customer Service.
 
 - The Contact Centre of the Bank has been enhanced to provide wholesome
 help to customers including
 
 - Enquiries on products and services,
 
 - Account related information, balance enquiry,
 
 - ATM card related information including blocking of cards,
 
 - Income tax refund related queries,
 
 - Demat account information,
 
 - Pension related information to pensioners.
 
 - A web based Complaint Management System (CMS) launched in December
 2009 helps customers to register their ATM related complaints at the
 Toll Free number of Contact Centre. The complaints are resolved by the
 ATM Switch Centre and branches within RBI stipulated time limit of 12
 days. As pension
 
 related complaints continue to be the major area of complaints, CMS
 facility has now also been extended for acceptance of complaints
 relating to pensions, deceased accounts, Lockers and NRI accounts.
 
 - The Bank has launched a mobile and web based service for customer
 grievance redressal - ‘SMS Unhappy Service. Any customer, who wants to
 lodge a complaint, sends an SMS UNHAPPY to a specified number. The
 Bank responds to the SMS by calling back to the customer on the same
 mobile number and records the details of the complaint and sends to
 respective Branches who are required to advise resolution within 48
 hours.
 
 M.2. CORPORATE SOCIAL RESPONSIBILITY (CSR)
 
 Corporate Social Responsibility has been a part of the State Bank of
 India since 1973 under the name of Community Service Banking covering
 various social, environmental and welfare activities.
 
 The stated CSR Philosophy is as follows:
 
 - The Bank is a corporate citizen, with resources at its command and
 benefits which it derives from operating in society in general. It,
 therefore, owes a solemn duty to the less fortunate and
 under-privileged members of the same society.
 
 - Staff members are encouraged to make their contribution by
 understanding the aspirations of the public around them and by
 endeavouring to evolve measures to remove indisputable social and
 developmental lacunae. This will lead to their self-development and
 improvement of the Banks image besides development of the Community.
 
 During the financial year 2010-2011, numerous welfare and social
 activities were implemented
 
 both in Banking and Non-Banking areas with the basic aim of raising the
 quality of life in the community, especially in and around the area of
 operation of the branches. Particular attention was given to
 ameliorating the condition of the downtrodden and under- privileged
 common man.
 
 Currently, the focus areas under Community Service Banking are:
 
 - Health
 
 - Education
 
 - Adoption of the Girl Child
 
 - Womens empowerment
 
 - Child development
 
 - Welfare and rehabilitation of poor and handicapped
 
 - Assistance to poor and under privileged
 
 - Entrepreneur development programmes
 
 - Vocational guidance
 
 - Thrust for assistance to IT education in Rural/Tribal/unreached areas
 
 - Environment Protection
 
 - Assistance during natural calamities
 
 Projects during 2010-11
 
 a) Natural Calamities
 
 Donations amounting to Rs. 2 crores were made to UP Chief Ministers
 Relief Fund for providing relief and rehabilitation to victims of
 Natural Calamities.
 
 b) Community Service Banking
 
 2,547 projects have been assisted with Rs. 25.95 crores covering the
 areas of Health, Education, Assistance for Sports, Handicapped,
 Environment and Assistance to tribals & other underprivileged members
 of society.
 
 c) Adoption of the Girl Child
 
 Societys preference for the boy child has resulted in a large number
 of instances when the girl child is deprived of familial attention,
 education, affection, healthcare and in extreme cases, even food. In
 order to supplement the efforts of the Govt., to change this concept,
 branches adopt Girl Children in the age group of 6 to 14 years, who are
 orphans / destitute / physically handicapped / belong to poor families.
 
 This initiative started in 2008 with 8,338 children has in its role
 17,627 girl children at present with an assistance of Rs. 3.49 crores
 extended during the year 2010-11 under Community Service Banking.
 
 Apart from financial assistance, individual employees from the Bank /
 spouses of employees adopt one or two children for care, mentoring,
 counselling, to try and fulfil the role of a guide.  This includes
 periodic visits to the schools by Staff Members, talking to the girl
 child to understand her difficulties, academic or otherwise, and
 offering solutions. A close liaison is also maintained with the
 teachers and the academic progress of the girl child is monitored. If
 felt necessary, timely corrective action is suggested.
 
 While gradually increasing the coverage, the Bank has emphasised that
 individual care and attention to the adopted children as originally
 envisaged, should not be diluted.
 
 d) Research & Development Fund
 
 The Bank set up the Research & Development Fund in 1977 with the
 primary objective of supporting research work relevant broadly to the
 activities of the Bank.
 
 In the year 2010, State Bank of India Chair on Energy and Environment
 has been instituted for
 
 Rs. 50 lac in IIT Kanpur with particular emphasis towards innovations
 in the field of solar energy.  This step demonstrates Banks concern
 for energy and environmental issues.
 
 Besides, the Bank has also made an annual contribution of GBP 100,000
 towards a Chair set up by the Bank jointly with RBI at the Asia
 Research Centre at London School of Economics.  An amount of Rs. 2
 crores has been earmarked for ‘SBI Chair for Public Leadership set up
 in Indian School of Business, Hyderabad.
 
 M.3. SBI CHILDRENS WELFARE FUND
 
 The Fund was set up with donations from the employees of SBI with
 matching contributions from the Bank to assist underprivileged and poor
 children in their overall development.  During the year 2010-11, 6
 projects were assisted with Rs. 5.62 lac.
 
 M.4. EDUCATION PARTNERING WITH MCGM
 
 The Municipal Corporation of Greater Mumbai (MCGM) has launched a
 project to transform and upgrade the outcome of education in schools
 run by the Municipal Corporation. The Bank has agreed to support this
 project as a partner for a period of 2 years as this project may evolve
 as a model for replication across the country. Contribution to the tune
 of Rs. 3.97 crores has been made by the Bank towards this project in
 2010-11.
 
 M.5. SBI YOUTH FOR INDIA
 
 (Harnessing Youth Power for Rural Development)
 
 SBI Youth for India is a fellowship programme initiated, funded and
 managed by the State Bank of India in partnership with reputed NGOs.
 
 The Programme seeks to help India secure an equitable and sustainable
 growth path by:
 
 - Providing educated Indian youth with an opportunity to touch lives
 and create positive change at the grass root level in rural India.
 
 - Providing NGOs working on development projects in rural India with
 educated manpower whose skill sets can be used to catalyze rural
 development.
 
 - Promoting a forum for the Programme alumni to share ideas and
 contribute to rural development throughout their professional life.
 
 Project Work
 
 - The selected candidates are assigned a project according to their
 interest/skill and as per the need of the respective NGO.
 
 - Throughout the project, they will be provided a mentor from the
 partner NGO who will help them to address the challenges in the project
 assigned.
 
 - In consultation with their mentor, they will have to define an
 outcome that they intend to achieve at the end of the project and will
 then have to work towards it.
 
 The programme offers the candidates a wide variety of projects to
 choose from. The project will cover a whole gamut of areas like Cluster
 Development, Watershed Development, Environment Protection,
 Biotechnology, Computer Literacy, Womens Empowerment, Dairy Husbandry,
 Bio-Diversity,
 
 Eco-Technology, Insurance, Coastal Research Systems etc.
 
 The Bank seeks to make a lasting impact in the rural scenario through
 this program.
 
 N.  CORPORATE COMMUNICATION & CHANGE
 
 - Following the earlier Parivaritan initiatives, Intervention II & III
 under Citizen SBI, were implemented during the year. While Intervention
 II emphasized on the collective fulfillment, Intervention III was about
 identifying opportunities, thereby paving the way for business
 development and lasting relationships.
 
 - The Intervention IV was conceived as a Senior Management Citizenship
 Vision Programme to bring about recognition of the critical changes
 required in SBI by way of policies/processes.
 
 O. RIGHT TO INFORMATION ACT 2005 (RTI ACT 2005)
 
 Suitable structure has been put in place at Branches/ Administrative
 Offices/ Regional Business Offices/Local Head Offices for handling
 requests and appeals under RTI Act 2005.  Further, an exclusive ‘RTI
 Department has been created in Corporate Centre to handle and
 co-ordinate various issues under the Act. For convenience of the
 public, the Bank has also created an RTI link on its website
 http://www.statebankofindia.com and http://www.sbi.co.in.
 
 P.  HUMAN RESOURCES (HR)
 
 HR INITIATIVES
 
 A number of key initiatives have been taken by the Bank during the
 current year to motivate the employees to perform better so as to
 achieve the Banks growth plans.
 
 PERSONNEL MANAGEMENT
 
 - Defined Contribution Pension Scheme (DCPS) was introduced for all
 categories of employees recruited w.e.f 01.08.2010.
 
 - Pursuant to Industry-wise settlement / Joint Note dated 27.04.2010,
 pension benefits will be extended to the Retirees of e-SBS and e- SBIN,
 who opt for pension as the second option.
 
 - Revision made in Terms & Conditions of Contractual
 officers-Management Trainees, Chartered Accountants, Credit Analysts
 (WB/CAG) and Customer Relationship Executives (WB/MCG).
 
 CADRE MANAGEMENT
 
 - Policy for recruitment of Probationary Officers (POs) reviewed and
 methodology of one-tier written examination in respect of POs for SBI &
 Associate Banks was made applicable to reduce the cycle of recruitment.
 
 - 3,746 Probationary Officers were recruited during the year, out of
 which 2,294 POs have joined the Bank till 31.03.2011.
 
 - Contractual employees viz. CRE(PB), CRE(ME), OMRs etc. were absorbed
 in the Bank as permanent officers in Junior Management Grade as one
 time measure.
 
 - 487 Management Executives recruited directly in MMGS-II grade to meet
 the specialized needs of the Bank.
 
 Recruitment
 
 - 25,327 clerical staff were recruited during the year out of which
 18,628 have joined the Bank till 31.03.2011. This is the largest
 recruitment exercise undertaken in the Banking sector and will further
 augment the staff strength in tandem with the Banks branch expansion
 drive and manpower requirement on account of promotion and retirement
 etc. This will not only help in reducing the age profile of staff but
 will also provide an opportunity for greater mobility and marketing
 thrust across the Bank to achieve its growth plans.
 
 Industrial Relations
 
 - Excellence in Industrial Relations was maintained with both the
 Officers and Staff Federations by maintaining healthy dialogue /
 discussions with them during the year. Issues raised by the Federations
 were properly examined and adequately responded to.
 
 HRMS
 
 - Salary processing for 2.05 lac employees across SBI and pension
 processing of 1.12 lac IBI/SBI Pensioners have been centralised.
 
 - The Training Management System, Centralised PF accounting &
 processing, leave and attendance management, fixed assets management
 etc. will improve the employee management and also make the HR
 processes more efficient.
 
 STRATEGIC TRAINING UNIT
 
 The Strategic Training Unit (STU), operationalized on 5th April 2010,
 has taken a number of initiatives towards giving a new dimension to the
 training philosophy of the Bank. Some of the major initiatives in this
 regard are as follows:
 
 - A website of STU has been launched to which the entire training
 system has been linked.
 
 - Under the leadership Pipeline, Jagriti Programme was launched
 covering all AGMs having more than 2 years of residual service.
 
 - E-learning through HRMS portal has been expanded over 158 courses
 currently.
 
 - A new initiative in Distance Learning has been taken by SBSC by
 introducing Mobile Learning.
 
 STAFF STRENGTH AS ON 31.03.2011
 
 Category                Total        %
 
 Officers               79,728    35.77
 
 Clerical             1,02,701    46.07
 
 Sub-staff              40,504    18.16
 
 TOTAL                2,22,933   100.00
 
 IMPLEMENTATION OF PERSONS WITH DISABILITIES (PWD) ACT 1995
 
 Our Bank provides reservation to persons with disabilities (PWDs) as
 per the guidelines of the Government of India and section 33 of the PWD
 Act 1995. The total number of persons with
 
 disabilities who were employed as on 31.03.2011 was 2,525, consisting
 of 530 officers, 1,754 clerical and 241 sub-staff.
 
 REPRESENTATION OF SCHEDULED CASTES AND SCHEDULED TRIBES
 
 As on the 31st March 2011, 43,657 (19.58%) of the Banks total staff
 strength, belonged to Scheduled Caste and 15,812 (7.09%) belonged to
 Scheduled Tribes.
 
 In order to discuss issues relating to reservation policy and
 effectively redress the grievances of the SC/ST employees, Liaison
 Officers have been designated at all Local Head Offices of the Bank as
 also at the Corporate Centre at Mumbai.
 
 Senior officials of the Bank hold regular meetings at periodic
 intervals with the representatives of National Federation of SBI SC/ST
 Employees at Corporate Centre as also with the representatives of
 Circle level SC/ST Welfare Associations at the Local Head Offices and
 Administrative Offices where issues pertaining to implementation of
 reservation policies are discussed. This has ensured redressal of
 grievances to a large extent.
 
 Government of India representative inspected the reservation roasters
 for SCs/STs/OBCs/ PWDs at all the 14 Circles and found this maintained
 satisfactorily.
 
 The Bank has been conducting workshops on reservation policy for
 SCs/STs/OBCs to impart up-to-date knowledge/ latest operatives about
 the reservation policy and related areas to the SC/ST cell officers,
 representatives of SC/ST welfare Association and the Liaison officers.
 
 Pre-recruitment and pre-promotion training programmes are being
 conducted to enable SC/ST candidates to achieve the prescribed
 standards to effectively compete with other candidates.
 
 Q.  BUSINESS PROCESS RE-ENGINEERING (BPR)
 
 Following various BPR initiatives carried out during the last few
 years, the Bank was able to improve performance in key business areas
 and quality of customer service. Many of the large sized branches have
 been split into smaller branches to enable them to offer focused
 service to specific segment of customers.
 
 The endeavour of BPR initiatives in the Bank is to continuously usher
 in changes / uniform business processes to ensure prompt, efficient
 delivery of products and services to our customers. All these
 initiatives have helped the Bank in creating a new operating
 architecture capable of meeting global competition.
 
 R.  OFFICIAL LANGUAGE
 
 The implementation of official language policy in the Bank is not only
 a statutory requirement but also a business need. The Bank made all
 possible efforts to comply with the statutory provisions relating to
 the official language policy of the Govt. of India during the year and
 took several initiatives to provide benefit of Banks different schemes
 to the masses through Hindi and other Indian languages.
 
 Many special workshops were conducted for newly recruited clerical
 staff and Probationary Officers to equip them with functional knowledge
 of the official language Hindi.  In order to encourage the staff to use
 Hindi in their day to day work, Quarterly Shabdavali
 
 Smaran and many more competitions were organised during the year.
 
 Bank has enhanced the amount of honorarium paid to staff members on
 passing different Hindi exams. Many staff members have taken advantage
 of these incentive schemes which will help in encouraging the use of
 Hindi in the Bank.
 
 Bank hosted quarterly meetings of the Ministry of Finance and Reserve
 Bank of India and an Annual Conference of all the public sector banks
 and financial institutions successfully during the year which received
 lavish appreciation from these two regulatory authorities.
 
 On the other hand, the Bank took various initiatives in its endeavour
 to deliver its products and services to the masses in Hindi and other
 Indian languages. These include advertisements through Newspapers/
 Magazines, pamphlets (Print Media) through Electronic Medium (TV/Films
 etc.) and also by way of Exhibition (Banner, Hoardings etc.) in Hindi
 and other Indian regional languages.
 
 The Committee of Parliament on Official Language also appreciated the
 efforts being made by the Bank for promoting the use of Hindi.
 
 Banks In-House Hindi magazine ‘Prayas has once again bagged first
 prize for the year 2009-10. Banks Hindi House Journal ‘Prayas has
 bagged first prize in this competition for the fifth time in recent
 years.
 
 S.  KYC/AML/CFT MEASURES
 
 - The Bank has put in place the Board approved revised policy on Know
 Your Customer (KYC) / Anti Money Laundering (AML) / Combating Financing
 of the Terrorism (CFT) measures in line with Master Circular issued by
 Reserve
 
 Bank of India on the subject. The main components of the Policy are as
 follows:
 
 - Customer Acceptance
 
 - Customer Identification
 
 - Monitoring of Transactions
 
 - Training of personnel
 
 - Preservation of Records
 
 - Procedural Guidelines to facilitate implementation of the Policy have
 also been circulated after approval of the Central Board.
 
 - Monitoring of Transactions is done with a view to submit undernoted
 reports to Financial Intelligence Unit-India mandated by rules of
 Prevention of Money Laundering Act, 2002.
 
 - Cash Transaction Reports (CTRs)
 
 - Counterfeit Currency Reports (CCRs)
 
 - Suspicious Transaction Reports (STRs)
 
 - Training on KYC/AML is being imparted on an ongoing basis in the
 Bank. In addition to exclusive KYC/AML programmes, all training
 programmes/seminars/workshops, have a KYC/AML session included in the
 programme.  Further, the Bank has decided to observe 1st August every
 year as KYC Compliance and Fraud Prevention day to maintain
 appropriate awareness and involvement levels across the Bank as also to
 create proper understanding of KYC issues among the members of public.
 
 T.  FRAUD PREVENTION AND MONITORING
 
 The measures taken for prevention of frauds are as under :
 
 - The KYC Compliance and Fraud Prevention day was observed on 2nd
 August 2010, as 1st August was Sunday.
 
 - The Bank has introduced detailed process of tallying Admin Cash
 Balance with Physical Cash balance in ATM.
 
 - SBIMF Warrants are being paid through ‘Dividend Warrant Payment
 Module on CBS and not by purchasing Warrants as DDP
 
 - The Preventive Vigilance Committees are formed at the branches having
 staff strength of 10 or more (including SAM branches) and at CPCs/Cells
 irrespective of their staff strength, as per the revised scheme
 approved by the Vigilance Department at Corporate Centre.
 
 - Encourage/popularize ‘Whistle Blower concept.
 
 - Advise Controllers to ensure that secrecy of passwords is not
 compromised.
 
 - Fraud Analysis Cell (FAC) has been created at Jaipur to monitor
 transactions through alerts being thrown by the software.
 
 - Ensure swift conclusion of staff accountability exercise, especially
 in cases with insider involvement.
 
 U.  COMPENSATION POLICY FOR DEFICIENCY IN SERVICE
 
 As a premier Bank of the nation, SBI always strives to create and
 maintain highest standards of customer service and in any unlikely
 event of any slippage in services extended to customers, the Bank has
 put in place a Board approved Compensation Policy to compensate for
 such slippages. The policy ensures that appropriate financial
 compensation is provided to the recipients to these services, without
 requesting for it.
 
 V.  BANKS OUTSOURCING POLICY
 
 RBI have permitted banks to outsource non-core functions and the Bank
 has accordingly put in place a Board approved Outsourcing Policy.
 
 W.  SUPER CIRCLE OF EXCELLENCE (SCE)
 
 The concept of Super Circle of Excellence (SCE) has been conceived to
 impart focus on a subset of branches to deliver high growth, improve
 efficiency, ensure high quality of customer service and also act as a
 forum for sharing of best practices.
 
 As on 31.03.2011, there were 703 branches in Super Circle of
 Excellence, which include 592 NBG branches (339 Metro branches + 253
 Urban branches) and 111 RBG branches (27 Rural + 84 Semi Urban).
 
 The SCE branches focus mainly on Retail business and the performance in
 all focus areas is benchmarked with the performance of non-SCE branches
 of the Bank as well as competitor banks.  The focus of this subset is
 also on marketing and promotion of technological products, increasing
 cross selling and other income, containment of overheads & NPAs,
 providing customer service of the highest order, strengthening HNI
 customer base, pushing for Financial Planning & Advisory Services and
 devising strategies to improve the Banks Market Share. The performance
 of SCE branches is measured every month on a multi dimensional
 efficiency matrix.
 
 While the share of SCE branches in terms of number of branches has come
 down from 5.64% in March 2010 to 5.22% in March 2011, the contribution
 to overall Bank business has increased from 12.34% to 12.41% in PER
 Domestic deposits, 16.44% to 17.98% in PER advances and 13.11% to
 16.11% in cross selling income.
 
 X.  GREEN BANKING INITIATIVES
 
 - As part of the Banks on going Green Banking initiatives, windmill
 project has been successfully commissioned and power thus generated is
 being consumed by our branches/offices in the States of Maharashtra,
 Gujarat and Tamilnadu. This reduces dependence on polluting thermal
 power to the extent of renewable power generated by the Banks
 windmills.
 
 - The imperatives of sustainable usage of resources, including energy
 and efficient disposal of wastes have been effectively propagated
 amongst the stakeholders, in the form of adopting energy efficiency
 measures, efficient usage of paper and water, installation of Solar
 ATMs, introduction of Green Channel Banking (Paperless Banking).
 
 - The Bank has been encouraging customers by extending project loans on
 concessionary interest rates to reduce Green House gases (GHGs)
 emissions; by adopting efficient manufacturing practices through
 acquisition of latest technology. The Bank also arranges consultancy
 services by roping in the services of empanelled CDM consultants in CDM
 (Clean Development Mechanism) registration process.  The Bank has also
 launched a loan product to facilitate upfront finance to the project
 developers by way of securitisation of Carbon Emission Reduction (CER)
 receivables.
 
 - The Bank has initiated a pilot project to determine its Carbon
 footprint levels, which will help in determining the Banks resource
 consumption pattern and enable the Bank to take effective steps to
 implement various measures for sustainable usage in a cost effective
 way.
 
 - Special drive for fruit bearing tree plantation during monsoons was
 taken up across all Circles, which has been very successful and
 sustained efforts are being made to ensure the survival of the plants
 as well.
 
 RESPONSIBILITY STATEMENT
 
 The Board of Directors hereby states :
 
 i. that in the preparation of the annual accounts, the applicable
 accounting standards have been followed along with proper explanation
 relating to material departures;
 
 ii. that they have selected such accounting policies and applied them
 consistently and made judgements and estimates as are reasonable and
 prudent, so as to give a true and fair view of the state of affairs of
 the Bank as on the 31st March 2011, and of the profit and loss of the
 Bank for the year ended on that date;
 
 iii. that they have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Banking Regulation Act, 1949 and State Bank of India
 Act, 1955 for safeguarding the assets of the Bank and preventing and
 detecting frauds and other irregularities; and
 
 iv. that they have prepared the annual accounts on a going concern
 basis.
 
 ACKNOWLEDGEMENT
 
 During the year, Shri S.K. Bhattacharyya, Managing Director, (under
 section 19(b)) ceased to be a director on the Banks Board consequent
 to his superannuation on 31st October 2010. Further, consequent to the
 amendment to Section 20(3A) of SBI Act, 1955 restricting the term of
 office of Directors nominated under section 19(d) by Govt.  of India to
 three years coming into force with effect from 15th September 2010, Dr.
 Deva Nand Balodhi and Prof. Md. Salahuddin Ansari ceased to be
 directors from the Central Board as on that date.  Shri Ashok Chawla,
 Govt. Nominee, ceased to be a director on the Banks Central Board
 consequent to his superannuation on 31st January 2011.
 
 Dr. (Mrs.) Vasantha Bharuchas term of three years, as Director on the
 Central Board, ended on 24th February 2011. Shri O.P Bhatt, Chairman,
 retired on attaining superannuation, as at the close of business on
 31.03.2011.
 
 Shri G.D. Nadaf was nominated to the Board under Section 19 (cb) with
 effect from 4th November 2010 as Officer Employee Director.  Shri
 Shashi Kant Sharma was nominated as Govt.  Nominee Director, under
 Section 19(e), vide Notification dated 18th February 2011 vice Shri
 Ashok Chawla. Shri Rashpal Malhotra was nominated to the Board under
 Section 19(d) with effect from 10th May 2011 by Central Govt.
 
 The Directors place on record their appreciation of the contribution
 made by Shri O.P. Bhatt, Shri S.K. Bhattacharyya, Dr. Deva Nand
 Balodhi, Prof. Md. Salahuddin Ansari, Shri Ashok Chawla & Dr. (Mrs.)
 Vasantha Bharucha to the deliberations of the Board and welcome Shri
 G.D. Nadaf, Shri Shashi Kant Sharma and Shri Rashpal Malhotra on the
 Board.
 
 The Directors also express their gratitude for the guidance and
 cooperation received from the Government of India, RBI, SEBI, IRDA and
 other government and regulatory agencies.
 
 The Directors also thank all the valued clients, shareholders, banks
 and financial institutions, stock exchanges, rating agencies and other
 stakeholders for their patronage and support, and take this opportunity
 to express their appreciation of the dedicated and committed team of
 employees of the Bank.
 
                                               For and on behalf of the 
                                             Central Board of Directors
 
                                                       Pratip Chaudhuri
                                                               Chairman
 
 Date : 17th May, 2011