1.  Reconciliation of entries outstanding as on 31.03.2012 in the
 inter-branch and other accounts has been drawn. Matching of entries
 outstanding in inter-branch and inter-bank accounts including balances
 in drafts accounts, suspense accounts, branch adjustment accounts,
 clearing transactions, funds transfers, telegraphic transfers, balances
 pertaining to dividends / interest/ refund orders paid / payable
 accounts, advances paid for acquisition of assets, etc. is complete
 upto 31.12.2011 and is under progress for the remaining period. In the
 opinion of the Bank, consequential effect of the above on the revenue /
 assets / liabilities is not material.
 
 2.  In respect of certain premises acquired by the Bank having written
 down value of Rs 6.70 crore, (previous year Rs 7.44 crore) documentation
 / registration are yet to be completed pending legal or other
 formalities.
 
 3.  In the case of un-audited branches, the returns / classification of
 advances as reported by the concerned branches have been adopted.
 
 4.  Claims pending and to be preferred with ECGCI Limited amounting to
 Rs 14.05 crore (previous year Rs 53.78 crore) have been considered as
 realisable for the purpose of computing provisions.
 
 5.  No provision other than those made, have been considered necessary
 by the Management in respect of disputed tax liabilities in view of the
 judgements in favour of the Bank. Further, certain deductions have been
 considered while working out tax provisions in respect of some claims
 under Income Tax Act based on the legal opinions obtained.
 
 Note: (1) *Total under column 3 should tally with the total of
 Investments included under the following categories in Schedule 8 to
 the balance sheet:
 
 a.  Shares
 
 b.  Debentures & Bonds
 
 c.  Subsidiaries/joint ventures
 
 d.  Others
 
 (2) Amounts reported under columns 4, 5, 6 and 7 above may not be
 mutually exclusive.
 
 ** Includes the investment under RIDF of f 2477.70 Cr.
 
 Note: (1) *Total under column 3 should tally with the total of
 Investments included under the following categories in Schedule 8 to
 the balance sheet:
 
 a.  Shares
 
 b.  Debentures & Bonds
 
 c.  Subsidiaries/joint ventures
 
 d.  Others
 
 (2) Amounts reported under columns 4, 5, 6 and 7 above may not be
 mutually exclusive.
 
 ** Includes the investment under RIDF off 2141.01 Cr.
 
 1) Interest Rate Swaps were undertaken for the purpose of hedging
 interest rate risk on assets/liabilities and for trading purpose.
 
 2.  The terms of swaps are to receive fixed interest rate against
 floating interest rate or vice versa.
 
 3.  The counterparties for the swaps are banks and the exposure with
 each bank is within the approved credit exposure limits.
 
 i) Disclosures on risk exposure in derivatives a) Qualitative
 Disclosure
 
 Bank has put in place a comprehensive derivative policy for undertaking
 derivative transactions for hedging, trading and servicing customers''
 purpose as per RBI guidelines duly approved by the Board. The policy
 lays down the type, scope and usage with appropriate limits for
 derivative transactions. From the view point of operational efficiency
 and risk oversight the Derivatives desk is segregated into Front
 Office, Mid Office and Back Office with clear segregation of portfolio.
 The derivative hedges are continuously monitored for effective
 performance as per laid down policy and corrective measures are taken
 for mitigating the risk.
 
 a) In respect of the advances restructured under the Prudential
 Guidelines of the Reserve Bank of India dated 27th August 2008 and the
 subsequent clarifications / guidelines issued from time to time in this
 respect, the Bank has provided a sum of Rs 46.74 Crores (previous year Rs
 7.31 Crores) as diminution in the fair value of advances on account of
 such restructuring which in the Bank''s opinion is considered adequate
 in view of revision in rate of interest on such restructured advances.
 The full implementation of the conditions laid down for restructuring
 in the said Circular are being complied with.
 
 Assets and Liabilities are classified as per the guidelines issued by
 the Reserve Bank of India, compiled by the management and relied upon
 by the auditors.
 
 * Figures are broadly net of provision ** Borrowings in India
 
 The net funded exposure of the Bank in respect of foreign exchange
 transactions with each country is within 1% of the total assets of the
 Bank and hence no provision is required to be made as per the Reserve
 Bank of India Circular DBOD.  BP.BC.71/21.04.103/2002-03 dated
 19.02.2003 read with DBOD.BP.BC.96/21.04.103/2003-04 dated 17.06.2004.
 
 PRUDENTIAL EXPOSURE CEILING: 15% 5% [subject to compliance of
 Conditions required under Exceptional circumstances]; [Rs 939.50
 Crores  313.17 crores; i.e., Rs 1252.67 crores]
 
 The Board of Directors has accorded approval under the guidelines on
 Prudential Exposure Norms, upon compliance of conditions relating
 to Exceptional Circumstances.
 
 Note: Out of total limit approved of Rs 1260.00 crores, some of the term
 loans to KPTCL are approved for laying new transmission lines, falling
 under Infrastructure Category, where permissible exposure level
 is 20% of Capital Funds of the Bank, under PE Guidelines of RBI.
 However, as, not all the exposure to KPTCL is eligible to be classified
 under Infrastructure Category, the same are reported as the
 guidelines of RBI on disclosure requirements
 
 ii) The Bank has not made any financing for margin trading and also
 not securitised any assets during the year.
 
 iii) Provision coverage ratio: Coverage ratio as of 31.03.2012 is
 62.40% (previous year 63.69%) as per RBI guidelines.  However, the Bank
 has achieved the PCR as envisaged in RBI circular DBOD.
 No.BP.BC.87-21.048/2010-11 dt.21.04.2011.
 
 iv) Unsecured advances : The Bank has no unsecured advances wherein
 intangible securities have been taken as collateral securities.
 
 During the year 2011 - 2012, the bank had issued 139 letters of comfort
 amounting to USD 91,527,882.65 covering import of goods into India.
 These letters of comfort have been issued after due assessment of its
 financial impact on the bank and with the approval of the competent
 authority. As on the date of the balance sheet 74 letters of comfort
 amounting to USD 51.02 million (approximately Rs 259.56 crores @ USD 1 =
 Rs 50.875) are outstanding which, in the opinion of the management, will
 not have any significant impact on the bank''s financial position.
 
 6.  Compliance with information to be disclosed under Accounting
 Standards notified by the Ministry of Corporate Affairs under
 Companies(Accounting Standards) Rules, 2006:
 
 i) There were no material prior period income/ expenditure required to
 be disclosed as per AS -5.
 
 ii) In terms of accounting policy No.9 of the Bank, some items are
 recognised on cash basis. However, the management is of the view that
 since the amount involved is not material, it does not require any
 disclosure under AS-9.
 
 iii) The Bank is revaluing foreign currency transactions consistently
 at the weekly average rate of the last week of the preceding month,
 prescribed by FEDAI, instead of the rate at the date of the transaction
 as per AS 11. The management is of the view that there is no material
 impact on the accounts for the year.
 
 iv) The following information is disclosed under AS-15.
 
 During the year 2010-11, 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 provisions of the said Circular, Rs.596 crores
 identified in the year 2010-11 is being amortised over a period of five
 years. Accordingly, Rs 119 crores (representing one-fifth of Rs 596
 crores) has been charged to the Profit and Loss Account. In terms of the
 requirements of the aforesaid RBI circular, the balance amount carried
 forward is Rs 357 crores.
 
 The above has resulted in decrease in the profit of the bank for the
 current year by Rs 119 crores and corresponding increase in accumulated
 profits of the Bank by Rs 357 crores with corresponding increase in the
 Current Assets of the Bank by the same amount.
 
 # For the purpose of segment reporting in terms of AS-17 and as
 prescribed in RBI guidelines, the business of the Bank has been
 classified into four segments i.e., a) Treasury Operations (b)
 Corporate/Wholesale Banking, (c) Retail Banking and (d)Other Banking
 Operations
 
 # Since the Bank does not have any Overseas branch, reporting under
 geographic segment is not applicable.
 
 # Expenses wherever directly related to segments have been accordingly
 allocated to segments and wherever not directly related have been
 allocated on the basis of segment revenue.
 
 # Assets/liabilities wherever directly related to segments have been
 accordingly allocated to segments and wherever not directly related
 have been allocated on the basis of segment revenue/segments assets
 ratio. The above information has been compiled based on data available
 at Head Office.
 
 vii) The Bank has identified the following as related party as per
 AS-18 on Related Party
 
 a) Key Management Personnel :
 
 1) Shri H.S. Upendra Kamath, Chairman & Managing Director
 
 2) Smt Shubhalakshmi Panse, Executive Director
 
 viii) Earning Per Share(AS-20)
 
 The Bank reports basic earnings per equity share in accordance with
 Accounting Standard 20 on Earnings per Share.  Basic earnings per
 share for the period is computed by dividing net profit after tax by
 the weighted average number of equity shares outstanding during the
 year.
 
 ix) Accounting for Taxes on Income (AS-22)
 
 The Bank has accounted for Taxes on Income in compliance with
 Accounting Standard 22 - Accounting for Taxes on Income issued by
 the ICAI. Accordingly, deferred tax assets and liabilities are
 recognised.
 
 x) In the opinion of the Management, there is no material impairment of
 any of the Fixed Assets of the Bank as per Accounting Standard 28 -
 Impairment of Assets.
 
 7.  Reserve Bank of India has not imposed any penalty during the year.
 
 Note: Floating provision has been utilised for reckoning the provision
 required in respect of substandard advances.
 
 8.  The bank has drawn down a sum of Rs 0.02 Crore from General Reserve
 on account of Lapsed Demand Drafts
 
 9.  Bank is not having adequate information in respect of
 Suppliers/Service providers covered under Micro, Small Medium
 Enterprises Development Act, 2006. In view of this, information
 required to be disclosed u/s 22 of the said Act is not given.
 
 10.  Previous year''s figures have been re-grouped / re-classified /
 re-cast wherever necessary to conform to current year''s
 classification.