Union Bank of India

Dear Shareholders,
 
 In my last message dated the 5th May 2003, I had mentioned that we are
 on our way to making our Bank a world class banking institution. Some
 of the highlights of our performance in this direction during the year
 were:
 
 * We have taken up an ambitious plan for bringing world class
 technology to the Bank.
 
 - We introduced Core Banking Solutions to connect chosen branches to
 provide any time anywhere banking to our customers at these locations.
 This project has now made substantial progress with 151 branches
 brought under this network as of March 2004 capturing more than 30% of
 the Bank's business.
 
 -  At all these branches, the Bank offers telebanking facilities.
 
 - We have received a licence for internet banking and the soft launch
 has just been successfully carried out.
 
 - By way of enhancing our delivery channel capabilities, we have
 increased the number of ATM by 136 during the year to 238 at various
 centers with the Bank's own ATM switch. We also have an alliance with 5
 other Banks viz. Bank of India, Indian Bank.Syndicate Bank, Dena Bank
 and United Bank of India for a shared network of more than 800 ATMs.
 
 * The Bank has made progress in the vital area of Risk Management. We
 have adopted an integrated approach to the management of various risks.
 
 - The policies framed and procedures adopted are benchmarked with best
 practices in the industry.
 
 - The Bank has proactive credit risk management practices such as
 periodical industry studies and makes regular analysis of the credit
 portfolio . Operational risk is mitigated by a comprehensive system of
 internal controls and systems and procedures to monitor transactions.
 
 - The Bank proactively manages Market Risk through repricing of
 incremental Assets and Liabilities and uses interest rate derivatives
 appropriately. The Bank has constituted its Asset and Liability
 Management Committee and formed a Supervisory Committee of Directors
 (ALM and Risk Management) to oversee these functions.
 
 * We have a state of the art integrated treasury which now offers our
 customers financial derivative products.
 
 * Retail Banking continued to be a thrust area for the Bank. We have
 fashioned a wide array of retail products to suit the need of almost
 every type of customer.
 
 - These products are constantly upgraded with powerful features making
 them competitive with the best products that the industry can offer.
 
 * Fee based income continues to grow with the New Initiatives such as
 Insurance, Demat services, marketing of Mutual Funds and Gold Bullion
 having achieved substantial momentum during the year.
 
 * Constantly aware of the fact that the branch continues to be the
 major point of delivery the Bank has started the process of having
 branches certified under ISO 9001-2000. At the end of the year 228 of
 these units, accounting for 33% of Bank's business, were certified.
 
 * The year also saw the Bank receive recognition on several counts.
 
 * Moodys' Investor Services upgraded our Bank's rating from E + to
 D-(The upgrade reflects the consistent improvement in the bank's core
 profitability and asset quality in recent years.)
 
 - Our Bank's Tier II Capital Bonds were assigned the AA+(Ind) rating by
 Fitch Rating India Pvt. Ltd.
 
 - The Bank was among the seven new entrants from India to the Forbes -
 2000 list of Worlds biggest and most powerful companies as measured by
 a composite rating for sales, profits, assets and market.
 
 - The Juhu Tara Mumbai Branch of the Bank was adjudged the most Techno
 savvy and customer friendly branch by Institute for Development &
 Research in Banking Technology, Hyderabad.
 
 - The Bank bagged the award from the Gem and Jewellery Export Council
 for highest growth in total limits sanctioned to the diamond industry.
 
 We are now on the fast track and have set for ourselves ambitious
 business targets for the current year. With the forecast of a near
 normal monsoon, pick up of credit in sectors like infrastructure,
 retail, agriculture and SMEs and with the improved climate for recovery
 of non-performing assets, we look forward to bettering our performance
 in the current year.
 
 With warm regards,
 
                                                       Yours Sincerely,
 Place : Mumbai                                                                
 Date : 19th May 2004                                      V. Leeladhar