1. INVESTMENTS
 
 (i) The Banks holding of total SLR securities in Held to Maturity
 Category (HTM) is 22.66% (previous year 22.56%) of DTL as on the last
 Friday of the second preceeding fortnight. The total investment in HTM
 category is equal to 86.90% (Previous year 86.56%) of its total
 investments and the excess of Held to Maturity category investments
 over 25% of total investments comprises of SLR securities. The Banks
 holdings in Held to Maturity Category of investments are within the
 overall limits stipulated by RBI.
 
 (ii) As per RBI guidelines, an amount of Rs.4.47 Crores (Previous year
 Rs. 13.11 Crores) being the balance amount of Profit on Sale of
 securities [net of applicable taxes and Statutory Reserve] in Held to
 Maturity category has been transferred to Capital Reserve.
 
 2.0 Disclosure on risk exposure in derivatives
 
 2.1.1 Qualitative Disclosures:
 
 Forward Contracts are the only derivatives held in the books of the
 Bank.  The Bank enters into forward contracts with the customers and
 covers the resultant position in the inter bank market.  The Bank also
 trades in Inter Bank forward contracts on its own with a view to derive
 profits. The Bank does not have any unhedged foreign exchange exposure
 other than the open overnight position.
 
 The Bank has put in place Board approved policy for monitoring various
 risks associated with the above mentioned transactions. The risks are
 managed by prescribing various limits and ensuring that the exposures
 are within the limits. Such limits are prescribed in the following
 areas.
 
 a) Overnight Exposure Limits
 
 b) Daylight exposure Limits
 
 c) Aggregate and currency-wise gap Limits
 
 d) Stop Loss Limits
 
 e) VaR Limits
 
 f) Limit on Proprietary Trading
 
 g) Limit on Counter Party Bank
 
 In terms of Board approved policy, the limits are monitored by Mid
 Office and discretionary power is vested with functionaries at various
 levels to ratify/ approve the breaches, if any.
 
 3.4.2.1 Provision on Small Restructured Loan Assets
 
 Considering the difficulties in computing the diminution in fair value
 of Restructured Accounts below Rs.1 Crore individually, the Bank, in
 terms of RBI circular no.DBOD.No. BP.BC.No. 37/ 21.04.132/2008-09 dated
 the 271 August, 2008, had opted to provide 5% of these advances, as
 provision for diminution in fair value of receivables, in all branches,
 other than top 20 branches audited by Statutory Central Auditors till
 the year ended 31st March2010. During the current year ended 31s1
 March2011, provision for diminution in fair value of Restructured
 Accounts irrespective of amounts have been individually calculated at
 all the branches.
 
 Prudential norm at 15% of the capital funds as on 31.03.2010 for a
 Single Borrower is Rs. 546.54crores and 40% for Group borrowers is Rs.
 1457.45crores.
 
 Prudential norm of additional 5% (Rs.182.18crores) of the capital funds
 as on 31.03.2010 for Single borrower provided the additional credit
 exposure is on account of extension of credit to Infrastructure
 Projects.
 
 Prudential norm of additional 10% (Rs. 364.36crores) of the capital
 funds as on 31.03.2010 for Group borrowers provided the additional
 credit exposure is on account of extension of credit to Infrastructure
 Projects.
 
 Prudential norm of additional 10% (Rs. 364.36crores) of the capital
 funds as on 31.03.2010 for Oil Companies who have been issued Oil bonds
 (which do not have SLR Status) by the Govt of India.
 
 Prudential Norms for single NBFC is 10% of the banks capital funds as
 on 31.03.2010 - Rs.364.36crores.
 
 Prudential Norms for a single NBFC - AFC (Asset Financing Company) is
 15% of the banks capital funds as on 31.03.2010 - Rs.546.54crores.
 
 Prudential norms on account of funds lent by NBFC - AFC to
 infrastructure sector are 20% of the Banks capital funds as on
 31.03.2010 - Rs.728.72crores.
 
 The above statement is exclusive of Food Credit, which is outside the
 purview of prudential norms.
 
 3.8.2 The disputed Income tax demands as at 31st March, 2011 amount to
 Rs. 218.33 crores (Previous Year - Rs. 182.12crores) out of which Rs.
 218.33crores (Previous Year - Rs. 182.12crores) has been paid /
 adjusted by the Income Tax Dept against refund orders. Considering the
 various judicial pronouncements on similar issue in favour of the Bank
 and the appeals filed by the Bank for earlier Assessment Years and
 pending before various Appellate authorities, no provision is
 considered necessary.
 
 3.8.3 The Tax liability on- Book Profits under the provisions of
 Section 115 JB of the Income Tax Act, 1961 amounts to Rs. 232.68
 Crores. The Bank has recognised eligible MAT credit as an asset in the
 current year amounting to Rs. 61.55crores available for future set off
 under section 115JAA of Income Tax Act and accordingly Rs 171.13 crores
 has been charged to Profit & Loss account.
 
 3.9 Penalties imposed by the Reserve Bank of India during the year
 2010-11
 
 - NIL-
 
 3.10 RECONCILIATION: I. Inter Branch:
 
 1.  Inter Branch Reconciliation is an ongoing process and is under
 progress.  In terms of RBI guidelines, the Banks are required to close
 inter-branch reconciliation within six months. The Inter Branch
 Reconciliation upto 31.12.2010 has been closed after reconciliation of
 all the debit entries.
 
 2.  A sum of Rs. 157.15 lacs was transferred to Profit & Loss Account
 in 2005 - 06 being the net credit balance in the inter branch accounts
 upto 31st March 1999 pending reconciliation, in terms of RBI letter No.
 DBS/ CO.SMC.No.8809/22.09.001/2005-06 dated 19.12.2005. Out of this,a
 claim of Rs. 2.36 lacs was preferred and debited during the earlier
 years There was no claim during the year 2010-11 and the amount of
 unreconciled entries of Inter Branch Accounts stands at Rs. 154.79 lacs
 as on 31st March2011.
 
 3.  The Bank has transferred all outstanding unreconciled credit
 entries from 01.04.1999 to 31.03.2005 to a blocked account as per RBI
 guidelines vide letter No BP.BC/73/21.04.018/98 dated 27.07.1998. The
 balance in Blocked accounts in respect of both BCG & Drafts as on 31st
 March, 2011 is Rs. 18.87 Crores.
 
 4. The Core Inter Branch Account being maintained in CBS is reconciled
 automatically by the system as per yearly statement of affairs as on
 31st March, 2011.
 
 II. Inter-Bank: Reconciliation of Accounts under SBI Agency Clearing
 Scheme and Associate Bank Settlement of Transactions (ABSOT) Scheme is
 an on-going process and is under progress.
 
 Ill Others: The reconciliation of various other accounts including
 National & Local Clearing Account, Branch System Suspense Account,
 Forex Clearing
 
 Account, ATM transactions and IBIT Account is an on going process and
 is under progress.
 
 IV Impact of the above, if any, on the Profit & Loss Account and
 Balance Sheet, in the opinion of the management, is not material.
 
 3.11 Income on Investments in Schedule 13 of Interest earned para II is
 net of amortization of premium on HTM Investments Rs. 54.92 Crores
 (Previous Year Rs. 63.22Crores).
 
 3.12 Other Fixed assets include assets jointly owned by the Bank, State
 Bank of India and Other Associate Banks.
 
 3.13. REVALUATION OF FIXED ASSETS
 
 The premises (Land & Building) of the Bank consisting of Land and
 Building were revalued on 01.04.2008 on the basis of reports of
 approved valuers and upward revision in value amounting to Rs. 609.97
 Crores was credited to Revaluation Reserve Account. The depreciation
 for the year on incremental amount amounting to Rs. 8.04 Crores is
 withdrawn from Revaluation Reserve.  There is thus, no impact on the
 profits for the year. The Revaluation Reserve as at 31st March 2011
 stands at Rs.  583.85 Crores.
 
 4.  Disclosure requirements as per Accounting Standards
 
 The Bank has generally complied with all . the applicable Accounting
 Standards issued by the Institute of Chartered Accountants of
 India(ICAI) read with the relevant guidelines of Reserve Bank of India.
 The following disclosures (not made elsewhere in the financial
 statements including Significant Accounting Policies and Notes on
 Accounts) are made hereunder in accordance with the provisions of the
 applicable mandatory Accounting Standards, issued by the Institute of
 Chartered Accountants of India.
 
 4.1 Cash Flow Statements (AS 3 Revised):
 
 In terms of para 45 of the Standard, the amount of significant cash and
 cash equivalent balances held by the enterprise that are not available
 for use by it, are Rs. Nil (excluding balances required to be
 maintained for the purpose of Cash Reserve Ratio).
 
 4.2 Net Profit or Loss for the period, prior period items and changes
 in accounting policies (AS-5)
 
 In terms of Accounting Standard 5 issued by the Institute of Chartered
 Accountants of India read with RBI guidelines, prior period items are
 
 (i) Other Prior Period Items - expenditure - Rs. 21.56 Crores and
 income - Rs 0.70 Crores.
 
 4.3 Revenue Recognition (AS 9)
 
 The revenue has been recognized in terms of AS 9 on Revenue
 recognition, the guidelines issued by Reserve Bank of India and the
 Accounting Policy of the Bank.
 
 4.4 Employees Benefits- Accounting Standards -15 (Revised):
 
 4.4.1 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 the said option by 2947 employees, the Bank has
 incurred a liability of Rs 58.49 Crores in respect of the 2616
 continuing employees. 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 which resulted in
 increase in gratuity liability of the Bank by Rs.74.69 Crores.
 
 In terms of the requirements of the Accounting Standard (AS) 15,
 Employee Benefits, the entire amount of Rs133.18 Crores is required to
 be charged to the Profit and Loss Account for the year. However the
 Reserve Bank of India has issued a circular no.
 DBOD.BP.BC.80/21.04.018/2010-11 on Re-opening of Pension Option to
 Employees of Public Sector Banks and Enhancement in Gratuity Limits-
 Prudential Regulatory Treatment, dated 9th February 2011. In accordance
 with the guidelines of the Reserve Bank of India, the Bank has opted to
 amortise an amount of Rs.133.18 Crores over the period of five years.
 Accordingly, Rs. 26.64 Crores (representing one-fifth of Rs.  133.18
 Crores) has been charged to the Profit and Loss Account. In compliance
 of the aforesaid RBI guidelines, the balance amount carried forward
 i.e., Rs.  106.54 Crores does not include any amount relating to
 separated/retired employees.
 
 Had such a circular not been issued by the Reserve Bank of India, the
 Profits of the Bank would have been lower by Rs106.54 Crores pursuant
 to application of the requirements of AS 15.
 
 4.4.2 In terms of AS 15 (revised), Bank has made provision for the
 following Long Term Employee benefits for the year 2010-11.
 
 4.4.3 Contributions made to the Retired Employee Medical Benefit
 Scheme, being at the sole discretion of the Management, is not
 recognized by the Management as a Long Term Employee Benefit and
 therefore no provision has been considered necessary for this liability
 on actuarial basis.
 
 4.5 Segmental Reporting - (AS-17):
 
 The following segments have been identified:
 
 i. Primary Segment (Business Segment):
 
 Treasury Operations
 
 Corporate/Wholesale Banking
 
 Retail Banking
 
 II. The Geographic segment consists of only the Domestic segment as the
 Bank does not have any foreign branches.
 
 1.  The Bank has got two main business segments namely Treasury
 Operations and Banking Operations. Banking Operations are further
 segmented to Corporate/Wholesale Banking and Retail Banking and there
 is no Other Banking Operations
 
 2.  PRICING OF INTER-SEGMENTAL TRANSFERS:
 
 Corporate/Wholesale banking and Retail Banking Operations Segment are
 the primary resource mobilising units. The Treasury segment is a
 recipient of funds from these operatons apart from resource mobilized
 by treasury segment from REPO, CBLO, Call Money, IBTM and Export credit
 refinance. The cost of funds mobilized by treasury from corporate/
 wholesale banking and retail banking is computed at the cost of
 deposits of Corporate/Wholesale Banking and Retail banking. Pricing of
 Inter Segmental transfer in Treasury is reduced from the operating
 profit of Treasury Segment and added to the Operating Profit of
 Corporate/Wholesale banking in the ratio of deposits allocated to these
 segments.
 
 3. REVENUE :
 
 All income relating to Treasury Operations are considered for the said
 segment. All interest as furnished by ITS Department and as certified
 by the Management for all borrowal accounts with exposures above Rs.5
 crores are classified as Corporate/Wholesale Banking segment.  The
 balance interest is treated as relating to retail banking segment. The
 other interest income/other income is allocated under
 Corporate/Wholesale and Retail Banking segments in the ratio of total
 income of these segments(excluding other interest income/other income
 and interest segment revenue).
 
 4. ALLOCATION OF EXPENSES:
 
 Expenses incurred at Corporate Centre establishment directly
 attributable to Treasury Operations are allocated accordingly. As
 regards Corporate/ Wholesale and retail banking segment interest paid
 on deposits is segregated to these segments in the ratio of deposits to
 these segments (deposits are allocated on the basis of outstanding
 advances pertaining to these segments).  Employees expenses are
 allocated to the Treasury segment in proportion to the number of
 Employees of that segment to the total employees of the Bank. Other
 interest paid, provisions relating to employees and other operative
 expenditure for Corporate/Wholesale and Retail Banking segment are
 allocated based on the income earned by these segments(excluding inter
 segmental revenue). Interest paid on Tier I/Tier 11/ Subordinated bonds
 are classified as Unallocated.
 
 5. SEGMENTAL ASSETS:
 
 All assets which are directly attributable to treasury operations are
 considered for Treasury Operations Segment. All outstandings in advance
 accounts for borrowers with exposures above Rs.5 crores as furnished by
 ITS Department and as certified by the Management is considered as
 assets pertaining to Corporate/Wholesale Banking segment.  Other
 outstandings in advances segments is shown as pertaining to Retail
 Banking .Segment. All other assets are segregated and added to the
 segment advances pertaining to Corporate/ Wholesale and Retail Banking
 segment in the ratio of outstanding balances of advances in these
 segments.
 
 6. SEGMENTAL LIABILITIES:
 
 All liabilities which are directly attributable to Treasury Operations
 segment are allocated accordingly. Other deposits are allocated and
 segregated for Corporate/ Wholesale segment in the ratio of outstanding
 balances of advances for the respective segments. With regard to other
 liabilities, provisions and contingencies, the allocation to
 Corporate/Wholesale and Retail Banking segments are made on the basis
 of the outstanding balances of advances under these segments.  Tier
 I/Tier 11/
 
 Subordinated bonds are classified as Unallocated.
 
 4.6 Related party transactions (AS 18)
 
 4.6.1 In accordance with AS 18 issued by the ICAI and the RBI
 guidelines, details relating to Related Party transactions are
 disclosed hereunder:
 
 4.6.2 All the other related parties are State Controlled enterprises as
 defined in AS 18 issued by the Institute of Chartered Accountants of
 India as such Transactions with them are not required to be disclosed.
 
 4.7 Leases (AS 19)
 
 (i) The Bank has taken premises only on rental basis and has no
 long-term operating leases taken/given and hence reporting under AS 19
 is not considered necessary.
 
 (ii) No financial lease has been executed after April 1, 2001.
 
 4.10 INTANGIBLE ASSETS (AS-26)
 
 The present practice of depreciating software which forms integral part
 of hardware @ 33.33% (on straight line method) and depreciating other
 software @ 100% irrespective of date of purchase is consistently
 followed by the bank in line with AS 26 issued by ICAI.
 
 4.11 IMPAIRMENT OF ASSETS (AS-28)
 
 In the opinion of the management, there is no impairment of any of the
 fixed assets of the Bank.
 
 4.12 Provisions, Contingent Liabilities & Contingent Assets (AS-29)
 
  Rs. in Crores)
 
 Particulars    Provisions                                       Remarks
                   as       Additions  Amount  Unused Provision
                at the      during     used           as at the 
                beginning   the year          amounts close
                   of                        reversed of the 
                                                      year
                the year                      during 
                                              the
                                              year
 
 Other 
 Provisions 
 including 
 adhoc 
 provision
 
 Provision 
 for Wage 
 Arrears         165.11       0.00    113.4   51.27    Nil         Nil
 
 Provision 
 for Interest 
 sacrifice on
 restructured 
 standard 
 advances         80.61       0.00     0.00   2.50    78.11        Nil
 
 Provision 
 for Frauds       11.40       5.39     0.00   0.00    16.79        Nil
 
 * Provision for depreciation, impairment of assets and doubtful debts
 are adjusted to carrying amount of assets and these have not been
 included above in terms of para 7 of the Accounting standards.
 Provision against standard assets has already been disclosed in para
 3.4.5 above.
 
 b) CONTINGENT LIABILITIES
 
                                                  (Rs. in Crores)
 
 2009-10               Particulars                      2010-11
 
             Claims not acknowledged as debt :
 
 0.01        Counter Suits filed by the Borrowers 
             against whom Bank has initiated 
             legal action                                  0.01
 
 1.02        Cases filed in Consumer/Civil Courts 
             for deficiency in services                    1.30
 
 184.37      Any other claims against the Bank 
             not acknowledged as debts                   221.10
 
 1610.22     Guarantees issued on behalf of 
             constituents                               1816.72
 
 2884.45     Acceptances, endorsements and 
             other obligations*                         3632.75
 
 15377.39    Other items, for which the bank 
             is contingently liable                    11294.63
 
 20057.46         Total                                16966.51
 
 6. DRAW DOWN FROM RESERVES
 
 In the year 2009-10, an amount of Rs. 18.23 Crores (net of applicable
 tax and statutory reserve) being excess in the provision for
 depreciation arising as a result of valuation of AFS Category was
 transferred to Investment Reserve. Out of the above, Rs. 4.68 Crores
 (net of applicable tax and Statutory Reserve) has been utilized to the
 extent of the depreciation in the value of investments held in AFS
 Category during the year.
 
 9. PROVISION COVERAGE RATIO:
 
 The Provision to Gross NPA of the Bank as on 31st March 2011 is 67.60%
 (Previous Year - 66.93%)
 
 10.  BANCASSURANCE BUSINESS :
 
 During the financial year 2010 -11, the Bank has earned a sum of Rs.
 11.85 Crores (Previous Year- Rs. 6.51 Crores as fees and remuneration
 from Bancassurance business. The details of the fees / remuneration
 earned are as under:
 
 1.  Income from SBI life business
 
 Rs. 9.29 Crores (Previous Year
 
 - Rs. 5.49 Crores)
 
 2.  Income from General Insurance business
 
 Rs. 1.77 Crores (Previous Year
 
 - Rs. 1.02 Crores)
 
 3.  Others (SBI Cards, SBI Mutual Funds)
 
 Rs. 0.79crores (Previous Year - Nil)
 
 11. SHARE HOLDING:
 
 11.1 The shareholding of State Bank of India in the Banks Paid up
 Capital as at 31st March 2011 is 92.33 % (Previous year 92.33%).
 
 11.2 The Bank has issued 1,07,99,790 Rights Equity Shares of Rs 10/-
 each at a premium of Rs 530/- per share aggregating Rs 583,18,86,600 to
 its existing shareholders on 9th October 2010 thus increasing the
 Equity Share Capital to Rs 46,79,97,900.
 
 11.3 EMPLOYEE STOCK OPTION: Nil
 
 12. PROVISIONS AND CONTINGENCIES
 
 12.1 In terms of the Reserve Bank of India guidelines, the following
 additional disclosures have been made and the data as computed by the
 management are relied upon by the auditors:
 
 Exposures computed based on credit and investment exposure as
 prescribed in RBI Master Circular on Exposure Norms DBOD.No.Dir.BC.
 14/13.03.00/2010-11 dated July 1, 2010.
 
 14.  In terms of the Reserve Bank of India guidelines, the Bank has
 reversed unrealized income represented by Funded Interest Term Loan on
 Restructured Accounts. Accordingly, the Bank has reversed unrealized
 interest amounting to Rs. 46.54 Crores (which includes Rs. 21.51 Crores
 pertaining to earlier years) by debit to the Interest Income of the
 current year. Interest pertaining to earlier years has been shown under
 Prior Period Items in Note No 4.2.
 
 15.  During the year the Bank has evolved a policy of Prudential/
 Technical write off of Non-Performing Advances (NPAs) at the Head
 Office level while retaining the NPA status of these advances at the
 branches. In terms of the said policy, the Bank has technically written
 off NPAs amounting to Rs.229.14 Crores during the Financial Year 2010-
 11 and made an additional provision of Rs. 16.34 Crores in respect of
 these advances to cover 100% outstanding.
 
 16. During the year the Bank has changed its accounting procedure
 regarding recording of interest already charged and not collected on
 Advances turning NPA.  The uncollected interest has earlier been kept
 in separate accounts i.e. Interest not collected Account (INCA)^/
 Unrealised Interest of earlier years (URIPY) and reversed to the
 respective Advance accounts. This change of procedure, however will not
 have any impact on the Profits of the Bank for the year.
 
 17.  Other Assets include Rs. 22.07 Crores recoverable from Govt of
 India towards claims under Agriculture Debt Waiver and Debt Relief
 Scheme 2008 for its extended period. The Bank is under the process of
 submitting the said claims with the Govt of India. Further, the
 provision of Rs. 11.17 Crores made during the previous years towards
 diminution in the present value of the receivables is continued till
 the final settlement of the claims by the Govt of India.
 
 18.  The figures of the previous years have been regrouped/re-arranged,
 wherever considered necessary.