The Directors have pleasure in presenting the 92nd Annual Report of
 your Bank along with statement of Audited Balance Sheet, Profit & Loss
 Account, Cash-Flow Statement on standalone and consolidated basis and
 the Report on Management Discussion & Analysis for the financial year
 ended 31st March 2011. The Corporate Governance Report also forms part
 of the Annual Report.
 
 1.  Overview
 
 a.  Your Bank continued with the healthy performance track record
 during the year 2010-11 while pursuing its broad Vision & Mission
 objective of becoming the Bank of frst choice in chosen areas. These
 objectives have short-term as well as long-term goalposts. In the
 short-run, customer acquisition, business expansion and a profitable
 growth are the key outcomes while in the long-run Bank pursues a
 sustainable improvement in the process effciency, product enrichment
 and people productivity. Our journey towards accomplishing the Vision
 involves creating values for our customers, our employees and you, our
 shareholders.
 
 b.  During the fiscal year 2010-11, the business environment was not so
 benign; however, your Bank reported healthy results. Bank also launched
 two initiatives during the year, for achieving customer service
 excellence and building a strong human capital chain in the
 organization. These two initiatives, along with a number of enablers
 created in the recent years would help your Bank become one of the most
 preferred banks amongst the existing customer pool and the two emerging
 customer classes, namely the NextGen customers and new Bankable class.
 Your Bank is laying a strong foundation for a sustainable growth in the
 future that would enhance the market share and shareholders value.
 
 Table - 1
 
 Key Performance Indicators (Rs. crore)
 
                                     FY 2010    FY 2011   Annual Change
 
 Total Business                       291289    355483     22.04%
 
 Net Interest Income                    4192      6216     48.28%
 
 Operating Profit                        3659      4305     17.66%
 
 Provisions                             1584      2223     40.34%
 
 Net Profit                              2075      2082      0.34%
 
 Net Interest Margin (NIM)             2.71%     3.33%     62 bps
 
 Capital Adequacy Ratio               12.51%    12.95%     44 bps
 
 Gross Profit per employee              13.18     15.52     17.75%
 
 (Rs. lakh)
 
 Dividend (Rs. per share)                  5.5       8.0     45.45%
 
 Book Value per Share (Rs.)             173.38    213.17     22.95%
 
 c. The brief highlight of the Banks performance is discussed below,
 followed by a detailed report on Management Discussion and Analysis.
 
 2.  Business Performance
 
 a.  Total Business of your Bank increased by 22.04% from Rs. 2,91,289
 crore as on March 31, 2010 to Rs. 3,55,483 crore as on March 31, 2011.
 
 b.  This comprised Deposit growth of 19.07% from Rs. 1,70,040 crore to Rs.
 2,02,461 crore and Advances growth of 26.20% from Rs. 1,21,249 crore to Rs.
 1,53,022 crore.
 
 c.  Bank has one branch outside India at Hong Kong.  The business of
 Hong Kong branch increased by 94.53%, though on a lower base. Deposits
 increased from Rs. 370 crore to Rs. 570 crore and advances increased from Rs.
 2,977 crore to Rs. 5,941crore.
 
 3.  Financial Performance
 
 a.  Net Interest Income recorded a growth rate of 48.28% from Rs. 4,192
 crore for the year 2009-10 to Rs. 6,216 crore for the year 2010-11.
 
 b.  Total Income of the Bank increased by 21.04% from Rs. 15,277 crore to
 Rs. 18,491 crore. Interest income was the major contributor, within which
 interest on advances recorded a growth of 24.08% from Rs. 9,696 crore to
 Rs. 12,031 crore. Interest income on investments increased by 14.93% from
 Rs. 3,482 crore to Rs. 4,002 crore. Yield on advances stood at 9.86% for
 the year 2010-11 from 9.94% in the previous year.  Yield on
 investments, however, increased to 6.55% for the year 2010-11 from
 6.32% in the previous year, refecting higher coupon on government
 securities.  Total yield on funds also recorded an improvement of 29
 basis points (bps) from 8.04% to 8.33%.
 
 c.  Non-interest income increased by 3.24% from Rs. 1,975 crore to Rs.
 2,039 crore. The major drag was 19.02% fall in income from profit on
 sale of investments due to volatile and uncertain market conditions
 prevailing during the year. Excluding this item, non-interest income
 growth would be 12.34%.
 
 Table - 2
 
                                                (Rs. In crore)
 
                            FY-10     FY-11     Growth%
 
 Inland Commision            352       365       3.69
 
 Treasury Income             573       464     -19.02
 
 Income from Forex           323       429      32.82
 transaction
 
 Recovery in Written         183       212      15.85
 -off Accounts
 
 Miscellaneous               544       569       4.60
 
 Total                      1975      2039       3.24
 
 d.  Total Expenses increased by 22.10% from Rs. 11,618 crore to Rs. 14,186
 crore. Interest expenses growth was contained at 12.36% by prudent
 liability management. It increased from Rs. 9,110 crore to Rs. 10,236
 crore. The cost of deposits was contained at 5.53% as of March 2011
 compared to 5.94% in the previous year. Total cost of funds also
 declined from 5.51% to 5.19% despite tight liquidity conditions in the
 financial market and higher policy rates.
 
 e.  A decline in cost of funds and increase in yield on funds resulted
 in 62 bps gain in the Net Interest Margin from 2.71% in the year
 2009-10 to 3.33% for 2010-11. NIM remained above 3% for all quarters of
 the year, and touching 3.44% during the last two quarters of the fscal.
 
 f.  However, establishment expenses increased by 91.88% from Rs. 1,355
 crore to Rs. 2,600 crore, mainly due to second pension option on account
 of implementation of bipartite wage settlement and gratuity liabilities
 due to statutory increase in gratuity limit from Rs. 3.5 lakh to Rs. 10
 lakh. The liability on account of pension was Rs. 1,146 crore for the
 year 2010-11 as against Rs. 178 crore in the previous year.  This
 additional provision impacted the Profitability of the Bank. Further, in
 accordance with RBI guidelines pension liabilities of Rs. 1,352 crore and
 Gratuity liability of Rs. 260 crore have been carried forward to be
 charged over the next four years.
 
 Table - 3
 
                                                    (Rs. In crore)
 
                             FY-10     FY-11     Growth%
 
 Staff Expenses              1355      2600       91.88
 
 Other Operating             1153      1350       17.09
 Expenses
 
 Total Operating             2508      3950       57.50
 Expenses
 
 g. The Operating Profit for the year 2010-11 was Rs. 4,305 crore, an
 increase of 17.66% over Rs. 3,659 crore recorded in the previous year.
 
 h. Provisions for the year 2010-11 stood at Rs. 2,223 crore, an increase
 of 40.34% over Rs. 1,584 crore in the previous year. The increased
 provisions were mainly on account of non-performing assets.
 
 i. The higher pension & gratuity liabilities, provisions for
 non-performing assets and lower treasury income impacted the Net Profit
 of the Bank. It stood at Rs. 2082 crore for the year 2010-11 compared to
 Rs. 2075 crore in the previous year. However, the major hits on the Net
 Profit of the Bank are one-time in nature.
 
 j. The factors impacting net profit also impacted effciency and
 Profitability ratios of the Bank. The Return on Average Assets for the
 year 2010-11 stood at 1.05% compared to 1.25% for 2009-10. During the
 same period, Cost-to-income Ratio increased to 47.85% from 40.66%
 reflecting sharp rise in establishment expenses.
 
 4.  Productivity Ratios
 
 a. Average Business per employee recorded 18.93% average annual growth
 rate during the last four years.  During the same period Average
 Business per branch and Gross Profit per Employee have shown average
 annual growth rate of 12.42% and 15.66% respectively. During the year
 2010-11, Bank recorded growth in productivity indicators.
 
 Table - 4
 
                                                      (Rs. In Lakh)
 
                      FY-08   FY-09    FY-10  FY-11     CAGR(%)
 
 Average Business      620     694     853    1043       18.93
 Per Employee
 
 Average Business     6752    7461    8449    9593       12.42
 
 Per Branch
 
 Gross Profit Per     10.03    11.2   13.18   15.52       15.66
 Employee
 
 Gross Profit per       109     120     130     143        9.47
 Branch
 
 5.  Dividend
 
 Your Directors are pleased to recommend a dividend of 80% for the year
 2010-11, i.e. Rs. 8.0 for each share with face value of Rs. 10.0, as
 compared to 55% in the previous year. Total outflow on account of
 dividend is Rs. 488.06 crore including dividend tax. The dividend policy
 of your Bank intends to suitably reward the shareholders while pursuing
 the objective of adequate capital adequacy ratio for supporting the
 growth in business.
 
 6.  Shareholders Return
 
 Your Banks net worth improved by 27.56% to Rs. 11172 crore from Rs. 8758
 crore in the previous year. Thus, the Book Value per share increased to
 Rs. 213.17 from Rs. 173.38 in the previous year. Earnings per share stood
 at Rs. 39.71 from Rs. 41.08 in the previous year. Return on Equity was
 reported at 18.63% for the year 2010-11 from 23.69% in the previous
 year.
 
 7.  Rating and Capital Raising
 
 a.  CRISIL assigned AAA/Stable rating to Union Bank of Indias Upper
 Tier II bonds. The rating factors in Union Banks healthy market
 position, comfortable resource profle, and adequate earnings profle.
 
 b.  Bank raised Capital through issuance of Tier II bonds of Rs. 500
 crore during the financial year 2010 -2011.
 
 c.  The Bank received an amount of Rs. 111 crore on the 14th July, 2010
 towards contribution of the central government in the Perpetual Non
 Cumulative Preference Shares (PNCPS) of the bank. Bank has allotted
 11,10,00,000 Perpetual Non-Cumulative Preference Shares (PNCPS) of Rs.
 10/- each to Govt.  of India, carrying annual foating coupon
 benchmarked to Repo Rate with a spread of 100 bps, to be readjusted
 annually based on the prevailing Repo Rate on the relevant date.
 
 d.  Bank also allotted on preferential basis 1,92,14,515 equity shares
 of Rs. 10/- each at a premium of Rs. 344.94 to Govt. of India. Consequently
 the Government shareholding in the Bank increased from 55.43% to
 57.06%. On account of this preferential issue to Government of India,
 Banks capital increased by Rs. 682 crore.
 
 8.  Capital Adequacy Ratio
 
 Capital Adequacy Ratio (CAR), as per Basel II stood at 12.95% as on
 March 31, 2011, refecting an increase of 44 basis points from 12.51% in
 the previous year. The CAR of your Bank is well above the regulatory
 benchmark of 9%. Tier I CAR stood at 8.69% compared to 7.91% a year
 ago.
 
 Table-5
 
                                             (Rs. In crore)
 
                                       FY-10        FY-11
 
 Total Risk Weighted Assets           122598       140095
 
 Capital Fund                          15336        18146
 
 Tier-I Capital                         9697        12178
 
 CAR-Basel-II                         12.51%       12.95%
 
 Tier-I                                7.91%        8.69%
 
 Tier-2                                4.60%        4.26%
 
 9.  Delivery Channels
 
 a.  Your bank crossed a branch network milestone of 3000 during the
 year. As on March 31, 2011, Banks total branches in India stood at
 3015, including 211 new branches opened during the year 2010-11.
 Besides, Bank also has a branch in Honk Kong. The total number of
 outlets including extension counters and service branches is 3104 as on
 March 31, 2011 compared to 2910 outlets in the previous year. Total
 number of ATMs increased to 2634 during the year, implying an addition
 of 307 ATMs.
 
 b.  Your Bank believes that the customers must get choice of channels
 including alternative delivery channels. With this objective, Bank has
 channel facilities of Call Centre, internet banking and mobile banking
 besides branches and ATMs. There is continuous addition of services
 offered through these alternative channels and they are fnding favour
 with the customers.
 
 c.  The overseas presence of the Bank includes one branch and fve
 representative offces at Shanghai, Beijing (both in China), Abu Dhabi
 (UAE), Sydney (Australia) and London (UK). The offce at London was
 opened during the year 2010-11.
 
 d.  During the year, Bank also received approval from the Reserve Bank
 of India for converting the representative offce at Sydney into a
 branch and the representative offce in London (UK) into a subsidiary.
 
 Bank also has approvals for opening a branch in Antwerp (Belgium) and
 representative offices at Johannesburg (South Africa) and Toronto
 (Canada).  Consequent to RBIs approvals, further processes are at
 different stages.
 
 10.  Brand Building
 
 In todays competitive banking industry, brand building has become
 imperative for banks. Your Bank regained the brand power through a
 series of initiatives in the recent years including re-branding
 exercise undertaken during the year 2008-09. This continued during
 2010-11 with various customer centric measures and publicity campaigns.
 Union Home 10 on 10 media campaign received wide publicity across all
 media. Similarly, Banks brand power and brand recall gained positively
 during ICC World Cup. Your Bank is building a brand which is responsive
 and value creating for the customers and shareholders. Another aspect
 of brand building that your Bank pursues is becoming a strong employer
 brand so that the Bank is able to attract and retain talents.
 
 11.  Awards & Accolades
 
 Your Bank received recognition and awards for its performance and
 initiatives in many areas.
 
 a.  Dale Carnegie leadership award was conferred on Union Bank of India
 by Dale Carnegie Training for the Banks transformation initiatives
 undertaken through project Nav Nirman. With this, your Bank is in the
 coveted club of previous winners like Ford Motor Company, Coca-Cola,
 Adidas, Boeing and Wipro Technologies.
 
 b.  Award for Excellence in Corporate governance was given at the 10th
 ICSI National Award for Excellence in Corporate Governance, 2010
 
 c.  Outlook Money recognized the Bank as the Best Home Loan Provider
 
 d.  Skoch Financial Inclusion Award 2011 was received for innovative
 work in the area of financial inclusion, particularly fnancing of farmer
 members of Primary Agriculture Cooperative Societies
 
 e.  Bank received Special Prize from IDRBT for excellence in
 implementing Mobile Banking and Payment application
 
 f.  Bank received Asian Banker (Singapore) award for Best
 Implementation of Middleware
 
 g. Bank received ABCI (Association of Business Communication of India)
 award for Marketing and Brand communication
 
 h. Banks in-house journal, Union Dhara bagged 7 awards along with most
 prestigious Magazine of the year Award at 50th Award ceremony of ABCI
 
 i. For promotion of Offcial Language, Bank received Reserve Bank
 Rajbhasha Shield as First Prize under linguistic Region B for the
 year 2009-10. Bank also received during the year First Prize under
 Indira Gandhi Rajbhasha Shield (2008-09) announced by the Government of
 India.
 
 12.  Directors
 
 During the year, the following changes took place in the Board of
 Directors:
 
 1.  Shri B.M. Sharma, Chartered Accountant was nominated by the
 Government under sub-section 3 (g) of section 9 of Banking companies
 (Acquisition & Transfer of Undertakings) Act, 1970/1980 w.e.f. April
 16, 2010 as Non-Executive Director under Chartered Accountant category.
 
 2.  Smt. Meena Hemchandra, RBI Nominee Director was nominated by the
 Government under clause (c) of sub-section 3 of section 9 of Banking
 companies (Acquisition & Transfer of Undertakings) Act, 1970/1980 read
 with sub clause (1) of clause 3 of The Nationalized Banks (Management
 and Miscellaneous Provisions) Scheme 1970/1980 w.e.f.  30.07.2010, in
 place of Shri K. Sivaraman whose term ended on 29.07.2010.
 
 3.  Shri S. S. Mundra was appointed Executive Director by the
 Government of India and joined the Bank on September 1, 2010, in place
 of Shri S. Raman who was appointed as the Chairman & Managing Director
 of Canara Bank
 
 4.  The term of offce of Shri Ashok Singh Part Time Non-offcial
 Director came to an end during the year under review on his resignation
 w.e.f. 25.01.2011.  Appointment for the vacancy thereof by the
 Government is awaited.
 
 5.  While welcoming all the new Directors, the Board places on record
 the valuable services rendered by Shri K.Sivaraman, Shri S. Raman and
 Shri Ashok Singh.
 
 13.  Directors Responsibility Statement
 
 The Directors confrm that in the preparation of the annual accounts for
 the year ended March 31, 2011.
 
 1.  The applicable accounting standards have been followed and there
 are no material departures from prescribed accounting standards.
 
 2.  The accounting policies framed in accordance with the guidelines of
 the Reserve Bank of India, were consistently applied.
 
 3.  Reasonable and prudent judgement and estimates were made so as to
 give a true and fair view of the state of affairs of the Bank at the
 end of the financial year and of the Profit of the Bank for the year
 ended on March 31, 2011.
 
 4.  Proper and sufficient care was taken for the maintenance of
 adequate accounting records in accordance with the provisions of
 applicable laws governing banks in India and,
 
 5.  The accounts have been prepared on going concern basis.
 
 14.  Corporate Governance
 
 The Board of the bank is committed to adopt good Corporate Governance
 practices in letter and spirit. A detailed report on Corporate
 Governance is given in a separate Section of the Annual Report. Bank
 has been awarded with Certifcate of Recognition for excellence in
 Corporate Governance at the 10th ICSI National Award.  The Bank was
 selected as one of the Top 25 companies in India for excellence in
 Corporate Governance practices by the Institute of Company Secretaries
 of India partnering with Ministry of Corporate Affairs, Government of
 India for the years 2008-09 and 2009-2010. The corporate Governance
 report for year 2010-2011 has no audit qualifcations.
 
 15.  Corporate Social Responsibility
 
 a. Your Bank is actively engaged in community and social development
 and pursues this goal under the aegis of specially set up Union Bank
 Social Foundation. Various activities are carried out by this
 Foundation through a widespread presence of 202 Village knowledge
 Centres (VKCs), 103 Union Adarsh Gram, 8 Financial Literacy and Credit
 Counseling Centres (FLCC), 13 R-SETIs (Rural Self- employment and
 Training Institutes) across the country. This includes 1 VKC and 7 FLCC
 opened during the year.
 
 b.  Each VKC assists in overall development of the village by
 coordinating with various developmental agencies/Government departments
 and disseminate knowledge to farmers about latest developments in
 methods of cultivation, technologies, proper use of fertilizers,
 pesticides etc. Under Union Adarsh Gram Yojana, Bank undertakes a
 holistic development of the village by converting it into a model
 village.  Similarly, R-SETI and FLCC extend financial literacy,
 counseling and training to the needy people so that they become part of
 the mainstream.
 
 c.  During the year 2010-11, your Bank extended a donation of Rs. 175.65
 lakh to various entities for the purpose of education, health and
 medical emergency, relief, basic amenities etc. Your Bank is examining
 the possibility of providing the solar-powered lanterns to the
 households in the103 Union Adarsh Gram.  The objective is to provide
 illumination to the electricity deprived villages that will facilitate
 livelihood by increasing the productive hours for rural entrepreneurs,
 help spread education, improve health, bio-conservation and moreover, a
 ray of hope for everyone.
 
 16.  Acknowledgement
 
 The Board expresses its gratitude to the Government of India, Reserve
 Bank of India, Securities & Exchange Board of India, Insurance
 Regulatory and Development Authority and Central Vigilance Commission
 for the valuable guidance and support received from them. The Board
 also thanks the financial institutions and correspondent banks for
 their co-operation and support.  The Board acknowledges the unstinted
 support of customers, shareholders and all other stakeholders. The
 Board wishes to place on record its appreciation of the dedicated
 services and contribution made by members of staff in the overall
 performance of Bank.
 
 For and on behalf of the Board of Directors,
 
 (M. V. Nair)
 
 Chairman & Managing Director
 
 Place: Mumbai
 Dated: 20th May, 2011