1 Capital
 
 1.1 Capital Adequacy Ratio
 
 a) During the year the Bank allotted 67,300 PNCPS of Rs. 1,00,000 each
 on receipt of subscription aggregating to Rs. 673 Crores from
 Government of India. As on 31.03.2011 Government of India holds
 1,82,300 PNCPS of Rs. 1,00,000 each aggregating to Rs. 1823 Crores.
 These PNCPS carry an annual floating coupon to be benchmarked to Repo
 Rate with a spread of 100 basis points to be reset annually based on
 the prevailing Repo rate on the relevant date. These PNCPS are part of
 Tier I Capital.
 
 b) During the year, Bank received contribution of Rs. 940 Crores
 towards equity share capital from Government of India and allotted
 7,81,57,479 equity shares of Rs. 10/- each at issue price of Rs.
 120.27. Out of Rs. 940 crore, Rs. 78.16 crore is transferred to Share
 Capital Account and Rs. 861.84 crore towards Share Premium Account.
 
 2.3 Non-SLR Investment Portfolio
 
 * An amount of Rs. 9.77 crores of Central Government Non SLR Bond is
 included in Govt Securities in Schedule 8.
 
 During the financial year 2010-11 there was transfer of securities from
 Available for Sale (AFS) to Held to Maturity (HTM) category of Rs.
 3116.95 Crores. Depreciation amounting to Rs. 172.28 crores on account
 of such transfer has been charged to profit and loss account.
 
 3.3 Disclosures on risk exposure in derivatives
 
 Qualitative Disclosures
 
 i) The Structure and organization for management of risk in derivatives
 trading:
 
 The organization structure consists of Investment Wing at the Corporate
 level which report to the Executive Directors and Chairman & Managing
 Director and ultimately to the Board. Risk Management Department is
 informed of the transactions as and when they take place.
 
 ii) The scope and nature of risk measurement, risk reporting and risk
 monitoring systems:
 
 a) The Interest Rate Swap (IRS) transactions undertaken by the Bank are
 for hedging and trading purposes. Derivative as a product is also
 offered to the customer as per RBI norms. Such transactions are
 undertaken as per policies of the bank formulated based on RBI
 guidelines.
 
 b)The risk is measured in the interest rate derivative transactions
 depending on the movement of benchmark interest rates for the remaining
 life of the interest rate swap contracts. All interest rate derivative
 transactions are included for the purpose of risk measurement. The risk
 is evaluated and reports are placed to the CMD/ED daily and Board
 periodically. Risk is monitored based on the mark to market position of
 the interest rate derivative transactions.
 
 (iii) Policies for hedging and /or mitigating risk and strategies and
 processes for monitoring the continuing effectiveness of hedges/
 mitigants:
 
 IRS is undertaken on the actual interest bearing underlying assets or
 liabilities. The notional principal amount and maturity of the hedge
 does not exceed the value and maturity of underlying asset/liability.
 The risk is monitored on the mark to market basis of the outstanding
 interest rate swap contracts and accordingly the effectiveness of the
 hedge is determined.
 
 Collateral required upon entering into IRS is Nil. Notional principal
 amount of IRS multiplied by the relevant conversion factor and the
 respective risk weight of the counter party has been taken into account
 for determining the capital requirements.
 
 c) Other Disclosures for Interest Rate Swaps
 
 The Bank has undertaken fixed to floating and floating to fixed
 interest rate swaps on underlying assets and liabilities. The loss of
 income on the above IRS will be Rs. 10.51 Crore (Rs. 97.68 Crore), in
 case counter-parties fail to fulfill their obligations. There is no
 concentration of credit risk arising from IRS transactions undertaken
 as the counter-parties are banks and the exposure is within the
 exposure limit permitted.
 
 8.2 Disclosure of penalties imposed by RBI.
 
 Reserve Bank of India has not imposed any penalty on the Bank u/s 46(4)
 of the Banking regulation Act, 1949
 
 9.0. Disclosures Requirement as per Accounting Standards:
 
 9.1 There is no material prior period item included in Profit & Loss
 account required to be disclosed as per AS – 5 issued by ICAI read with
 RBI guidelines.
 
 9.2 Revenue Recognition
 
 Commission earned on Letter of Credit and Guarantees issued are
 recognised on realization basis as per Banks accounting policy which
 is not in accordance with AS-9.  However, the amount is insignificant.
 
 9.3 AS - 15 –Employee Benefits
 
 Provision for Employee Benefits viz. Pension, Gratuity, Leave
 Encashment, Sick Leave, LFC/LTC, medical benefits to self and family
 members of retired Directors and Directors in service etc. has been
 made as per Revised Accounting Standard (AS) -15. In terms of Limited
 Revision to AS-15 Employee Benefits (Revised 2005) and guidelines notes
 thereon, the Bank has recognised the increase in transitional liability
 over the liability that could have been recognised as per the Pre
 Revised AS-15 as on 31.03.2007 as an expense over 5 years from
 financial year 2007-08. Accordingly, Rs. 88.68 crores (Rs. 88.68
 crores) has been charged to Profit & Loss Account towards amortisation
 of the increase in transitional liability. The un-amortised portion of
 the increase in transitional liability on account of Revised AS-15 is
 Rs. 88.69 crore (Rs. 177.37 crore) as on 31.03.2011.
 
 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 10563 number of employees, the Bank has
 incurred a pension liability of Rs. 507.84 crore (Rs. Nil). Further,
 during the year, the limit of gratuity payable to the employees of the
 Bank 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. 292.51 crore (Rs. Nil).
 
 In terms of the requirements of the Revised Accounting Standard (AS)
 15, Employee Benefits, the entire amount of Rs. 800.35 crores (ie. Rs.
 507.84 crores + Rs. 292.51 crores) is required to be charged to the
 Profit and Loss Account.  However, 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 provisions of the said circular, the Bank would
 amortise the amount of Rs. 800.35 over a period of five years.
 Accordingly, Rs. 160.07 crore (representing one-fifth of Rs. 800.35
 crore) has been charged to the Profit and Loss Account. In terms of the
 requirements of the aforesaid RBI circular, the balance amount carried
 forward, i.e., Rs. 640.28 crore (Rs. 800.35 crore – Rs.160.07 crore)
 does not include any amount relating to separated / retired employees.
 
 Had such a circular not been issued by the RBI, the profit of the Bank
 would have been lower by Rs. 640.28 crore pursuant to application of
 the requirements of Revised AS 15.
 
 In addition to Rs. 160.07 crore (Rs. Nil), an amount of Rs. 461.84
 crore (Rs. 265.06 crore), which includes full liability for the retired
 / separated employees towards second option for pension and liability
 for other employee benefits, has been charged to Profit & Loss Account
 towards current years liability.
 
 Investment Details:
 
 a) Investment with LIC of India for Gratuity Fund – 100%
 
 b) Major Categories of Plan assets as percentage of Fair Value in
 respect of Pension Fund
 
 9.5 Related Party Disclosures:
 
 a) Key Management Personnel 
 
 i) Chairman and Managing Director
 
 Shri S.K. Goel (Till 30.06.2010) 
 
 Shri Arun Kaul (From 01.09.2010)
 
 ii) Executive Directors
 
 Shri V.K. Dhingra (Till 30.4.2010)
 
 Shri Ajai Kumar (From 07.12.2009)
 
 Shri N.R. Badrinarayanan (From 01.9.2010)
 
 b) Transactions with Key Management Personnel
 
 c) Associates
 
 Regional Rural Banks sponsored by the Bank are as under:
 
 i) Jaipur Thar Gramin Bank
 
 ii) Kalinga Gramya Bank
 
 iii) Bihar Kshetriya Gramin Bank
 
 iv) Mahakaushal Gramin Bank
 
 v) Paschim Banga Gramin Bank
 
 d) The transactions with Associates have not been disclosed in view of
 Para -9 of the 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 Enterprises
 
 9.6 . EARNINGS PER SHARE (EPS):
 
 Basic & Diluted EPS after Extra-ordinary item: Rs. 14.29 per share
 
 9.7 As the Bank does not have Subsidiaries or controlling interest in
 Associates/Joint Ventures, AS 21 relating to Consolidated Financial
 Statements, AS 23 relating to Accounting for Investments in Associates
 in Consolidated Financial Statements and AS 27 relating to Financial
 Reporting of Interest in Joint Ventures issued by the ICAI are not
 applicable to the Bank.
 
 9.8 Taxes on Income
 
 a) During the year net amount of Rs. 30.51 crore (Rs. 77.60 Crore) has
 been recognised as Deferred Tax Asset as per accounting standard AS-22.
 However, DTA on carried forward loss as per return to the extent of Rs.
 371.27 Crore (Rs. 202.27 Crore) has gone for appeal, has not been
 recognised on account of prudence.
 
 b) In accordance with the Guidance Note on Accounting for credit
 available in respect of MAT under the Income Tax Act, 1961 issued by
 the ICAI, the MAT credit for the current year amounting to Rs. 286.10
 crore (Rs.160.64 crore) has been credited to P&L Account under
 Provisions and Contingencies by debiting MAT credit entitlement
 Account since the management is of the opinion that the MAT credit can
 be set off during the specified period as per the Provisions of the
 Income Tax Act, 1961.
 
 9.9 Intangible assets
 
 Fixed Assets include computer software, which has been considered as
 intangible assets as per AS-26 issued by the ICAI.  The movement in
 software asset is given below:
 
 9.10 Impairment of Assets
 
 In view of the absence of the indication of material impairment within
 the meaning of clause 5 to clause 13 of Accounting Standard-28
 Impairment of Assets, no impairment of fixed assets is required in
 respect of current financial year.
 
 10.0 Additional disclosures:
 
 10.2 Contingent Liabilities
 
 a) Such liabilities as mentioned at Serial No. (I) of Schedule 12 of
 Balance Sheet are dependent upon the judgement of court, arbitration
 award, 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 and necessary provision is
 made where claim against the Bank is tenable.
 
 b) Based on various appellate decisions on identical issues / pending
 approval of Committee on Disputes for pursuing appeals, disputed demand
 of Income Tax, Penalty, Interest and Interest Tax amounting to Rs.
 10.66 crore (Rs.96.39 crore) has been shown in Schedule 12 under
 Contingent Liability.  No provision has been considered necessary by
 the Management as the matters are pending for appeal before various
 competent Authorities and payments/adjustment of Rs. 10.65 crore (Rs.
 40.65 crore) has been included in Other Assets in Schedule 11.
 
 10.3 Floating Provisions Nil
 
 10.4 Draw Down From Reserves
 
 There is no draw down from Reserves.
 
 10.7 Provisioning Coverage Ratio
 
 The provision coverage Ratio of the Bank with reference to Gross NPA
 position as on 30.09.2010 is 70%. As per RBI Circular No.
 DBOD.No.BPBC.87/21.04.048/2010-11 dated 21.04.2011 an amount of Rs.
 210.32 Crore has been kept under an account styled as counter cyclical
 provisioning buffer representing a surplus of provision under PCR vis a
 vis as required under prudential norms.  The provision coverage as on
 31.03.2011 works out to 51.60%
 
 10.14 Off-balance Sheet SPVs sponsored
 
 Bank has not sponsored any SPVs.
 
 10.15 Agricultural Debt Waiver & Debt Relief Scheme-2008 (ADWDR- 2008)
 
 1.  Under Agricultural Debt Waiver and Debt Relief Scheme
 (ADWDRS)-2008, last date of payment of 75% of the overdue amount in
 default by the Others Farmers has expired on 30.06.2010.
 
 2.  In terms of RBI guidelines, 7333 accounts of other farmers
 amounting to Rs. 141.63 crore were classified as NPA as on
 
 30.09.2010 with 100% provision. Bank has received full reimbursement of
 claim of Rs. 536.33 crore against Debt Waiver and Rs. 42.46 crore
 against Debt Relief submitted up to the period 31.03.2010.
 
 3.  During, 01.10.2010 to 31.03.2011, the Bank has recovered Rs. 23.54
 crore from 1951 Nos. of Other Farmers relating to ADWDRS-2008. With a
 view to recover from these NPA accounts, a special OTS scheme has been
 introduced by the Bank where all ADWDRS accounts declared as NPA up to
 30.09.2010 will be covered. As per provision of this OTS scheme Bank
 has a provision for fresh lending to such Borrowers after One Time
 Settlement.
 
 4.  As on 31.03.2011 Bank has submitted claim duly audited by the
 Statutory Central Auditors as below:- a) Debt Waiver – Rs. 1.38 Crore
 against Small and Marginal Farmers b) Debt Relief – Rs. 9.00 Crore
 against 5079 Other Farmers.
 
 10.16 Reconciliation:
 
 Reconciliation of entries outstanding has been drawn upto 31.03.2011 in
 case of Inter-Branch Accounts and in Inter-Bank Accounts.  Elimination
 of entries outstanding in Inter-Bank Accounts including Reserve Bank of
 India, State Bank of India, NOSTRO Accounts etc. and in Inter-Branch
 Accounts viz. drafts, suspense, branch adjustment, clearing
 transactions, fund transfers, telegraphic transfers, balances
 pertaining to advances paid for acquisition of assets, sundry creditors
 etc. is in progress. In the opinion of the management, consequential
 effect of the above on the revenue/assets/liabilities will not be
 material.
 
 10.17 Fixed Assets
 
 a) Bank had revalued on few occasions in the past, its premises by
 independent qualified valuers and the excess of fair market value over
 the original cost was credited to revaluation reserve. As on date
 aggregate amount of revaluation reserve (net of revaluation relating to
 assets disposed of) is Rs. 584.06 Crore (Rs. 576.80 Crore) and
 depreciation on the revalued portion charged to the above revaluation
 reserve (net of depreciation relating to assets disposed of) is
 Rs.149.12 Crore(Rs.173.98 crore).
 
 b) Premises include Assets with written down value of Rs. 2.58 Crores
 (Rs. 2.58 Crore ) which were revalued at Rs. 23.03 Crore (Rs. 23.03
 Crore) in respect of which documentation/ registration is pending.
 
 c) Estimated amount of contracts (net of advance) remaining to be
 executed on capital account and not provided for Rs. 6.36 Crore (Rs.
 15.22 Crore)
 
 10.18. Break up of provision held against non-performing advances into
 facility-wise, security-wise and sector-wise is not ascertained. The
 same is deducted on estimated basis from gross advances in the various
 categories to arrive at the balance of net advances as stated in
 Schedule 9 of the Balance Sheet.
 
 10.19. In the light of RBIs clarification dated 17th September 2010,
 Credit Linked Notes (CLNs) amounting to Rs. 415.10 crore has been
 classified under Investment Category, which were hitherto grouped under
 Loans and Advances resulting in Marked to Market (MTM) loss of Rs. 9.03
 crore which has been provided in the Profit & loss Account for the year
 ended 31st March, 2011. On the same analogy, the MTM loss of Rs. 4.23
 crore on Credit Default Swaps of Rs. 89.19 crore has been provided in
 the Profit & loss Account for the year ended 31st March, 2011.
 
 10.20 Note on Revised Balance Sheet.
 
 The Financial Statements were approved by the Board of Directors on
 29.04.2011 proposing a dividend at the rate of Rs. 2/- per equity
 share. Subsequently, on receiving directives from GOI reiterating to
 pay a minimum dividend of 20% on equity or 20% of post tax profit
 whichever is higher, the Dividend on equity shares has been proposed at
 Rs. 3/- per share and the Financial Statements as on 31.03.2011 have
 been revised to include an amount of Rs. 219.52 crores towards proposed
 Dividend of Rs. 3/- per equity share and tax thereon which have been
 duly approved by the Board of Directors at its meeting held on
 17.05.2011.
 
 10.21. The bracketed figures indicate previous years figures.
 Previous years figures have been re-grouped / re-arranged/re-casted
 wherever considered necessary.