1. The financial results for the year ended March 31, 2009 have been audited by statutory central auditors and approved by the Board of Directors at its meeting held on May 08, 2009.

2. The financial results for the year ended March 31, 2009 hove been arrived at after providing for non-performing assets, standard assets and investment depreciation as per prudential norms issued by the Reserve Bank of India (RBI) and making necessary provision for Income Tax, Deferred Tax, Fringe Benefit Tax, Depreciation on Fixed Assets. etc.

3. In terms of the Revised Accounting Standard (AS)-15 necessary provision for Employees Benefits viz. pension, gratuity, leave encashment, sick leave, LFC/LTC etc. has been made Rs 118.07 crore (Rs 71.97 crore) towards current years liability and Rs 88.68 crore (Rs 88.68) crore towards amortisation of the increase in liability have been charged to Profit & Loss Account. The unamortised portion of the increase in liability is Rs 266.06 crore (Rs 354.75 crore) as on March 31, 2009.

4. On approval of Banks capital restructuring plan by the GOI effective from December 22, 2008 Bank has converted Rs 250 crore out of equity holding of the GOI into Perpetual Non-Cumulative Preference Shares (PNCPS) of equal amount carrying a coupon rate of repo + 100 basis points to be reset annually, resulting in reduction of Bank´s equity share capital from Rs 799.36 crore to Rs 549.360 crore and GOI´s equity Share holding from 74.98% to 63.59% EPS for three months / year ended March 31, 2009 has been arrived at taking into account the above restructuring. GOI has further subscribed to PNCPS of Rs 450 crore on March 30, 2009 carrying an annual floating coupon benchmarked to Repo rate with a spread of 100 basis points to be resel annually. These PNCPS form part of Tier I Capital.

5. During the year the Bank has raised subordinated debt of Rs 275 crore (Rs 420 crore) by issue of unsecured redeemable bonds under Tier II Capital.

6. Pending outcome of negotiations on wage revision between Indian Banks’ Association on behalf of member banks and Unions of workmen / officers, an ad hoc provision of Rs 50 crore has been made during the quarter aggregating to Rs 150 crore for the year ended March 31, 2009.

7. On implementation of GOI´s Agricultural Debt Waiver & Debt Relief (ADWDR) Scheme 2008 the preliminary claim, duly certified by the Central Statutory Auditors of the Bank of Rs 525.28 crore was lodged with RBI. Rs 215.36 crore being 41% of the claim lodged has been reimbursed by the RBI during the year ended March 31, 2009. However, no effect has been given in the accounts in respect of the Debt Relief Scheme to Other Farmers for the year ended March 31, 2009.

8. Observation of the Central Statutory Auditors:

Provision of Rs 50 crore against advances by way of Credit Linked Notes (CLNs) amounting to Rs 101.44 crore following petition for bankruptcy by a holding company of the Issuer of CLNs.

Our reply

The bankruptcy of issuer of CLNs is one of the Events of Default and the issuer has to thereupon deliver the FCCBs to the CLN holder. Bank has lodged claim with the Bankruptcy Trustee for the underlying FCCBs issued by the reference entities which are of good rating and financial standing. Bank as on abundant precaution has made provision of Rs 50 crore during the year against these CLNs and continues to recognize this as Standard Advance.

9. As per Guidance Note on Accounting for credit available in respect of MAT under Income Tax Act, 1961, bank has recognized MAT Credit of Rs 74.22 crore (Rs 91.20 crore) as bank opines that the MAT credit can be set off within the specified period as per IT Act 1961.

10. Reconciliation of outstanding entries in Suspense Accounts and Inter Branch/Office Accounts has been completed up to March 31, 2009 and reconciliation for the remaining period is also in progress. The impact of such reconciliation on the accounts will not be material.

11. Dividends @ Re 1 per equity share of Rs 10 each and at stipulated rate on PNCPS have been recommended by the Board.

12. The previous period figures have been regrouped /rearranged wherever necessary.

Subodh Kumar Goel
Chairman & Managing Director

Virendra Kumar Dhingra
Executive Director

Brij Mohan Mittal
Executive Director