CORPORATE GOVERNANCE PROJECT

AXIS BANK
1. Board Structure (Size, Percentage of Non-Executives Directors &
Independent Directors)

The composition of the Board of Directors of the Bank (Board) is governed by the
provisions of the Companies Act, 1956, the BankingRegulation Act, 1949 and Clause
49 of the Listing Agreement.

The Board has fourteen (14) Directors as on March 31, 2014.

There are 7 Independent Directors constituting one-half ofthe Boards membership
with Shri S. B. Mathur designated as the Lead Independent Director.The composition
of the Banks Board includes the representatives of the Administrator of the Specified
Undertaking ofthe Unit Trust of India (SUUTI) and the Life Insurance Corporation of
India (LIC), the Banks promoters. The followingmembers constitute the Board:


SanjivMisra Chairman
Promoter Nominee of SUUTI
Shikha Sharma Managing Director & CEO
K. N. Prithviraj Promoter Nominee of SUUTI
V. R. Kaundinya Independent
S. B. Mathur Independent
Prasad R. Menon Independent
R. N. Bhattacharyya Promoter Nominee of SUUTI
Samir K. Barua Independent
Som Mittal Independent
IreenaVittal Independent
RohitBhagat Independent
UshaSangwan Promoter - Nominee of LIC
SomnathSengupta Executive Director and Head (Corporate Centre)
V. Srinivasan Executive Director and Head (Corporate Banking)


2. Board Power &Functioning

The Board is responsiblefor the management of the Banks business. The functions,
responsibilities, role and accountability of the Board are welldefined. In addition to
monitoring corporate performance, the Board also carries out functions such as taking
care of allthe statutory agenda, approving the Business Plan and all major policies,
reviewing and approving the annual budgets,borrowing limits and fixing exposure
limits. It ensures that the Bank keeps shareholders informed about plans,
strategiesand performance. The detailed reports of the Banks performance are
periodically placed before the Board.

3.Audit Committee (Composition & powers, no. of meetings etc)

The Audit Committee of the Board of Directors functions with the following main
objectives:
To provide direction and to oversee the operation of the audit function.
To review the internal audit system with special emphasis on its quality and
effectiveness.
To review internal and concurrent audit reports of large branches with a focus on
all major areas of housekeeping, particularly inter-branch adjustment accounts,
arrears in the balancing of the books andun-reconciled entries in inter-bank and
Nostro accounts and frauds.
To discuss matters related to frauds.
To discuss and follow up for audit issues related to Long Form Audit Report.
To discuss and follow up for issues related to RBI Inspection Report(s).
To review the system of appointment and remuneration of concurrent auditors and
external auditors.
To oversee the Banks financial reporting process and the disclosure of its
financial information, to ensurethat the financial statements are correct, sufficient
and credible.
To recommend to the Board, the appointment, re-appointment, and if required, the
replacement or removalof the Statutory Auditor and to fix their audit fees.
To approve payments to Statutory Auditors for any other services rendered by
them.
To review, with the management, the annual financial statements before
submission to the Board for itsapproval with particular reference to:
- Matters required being included in the Directors Responsibility Statement in the
Boards report interms of Clause (2AA) of Section 217 of the Companies Act,
1956.
- Changes, if any, in accounting policies & practices and reasons for the same.
- Major accounting entries involving estimates based on the exercise of judgment
by the management.
- Significant adjustments made in the financial statements arising out of audit
findings.
- Compliance with listing and other legal requirements relating to financial
statements.
- Disclosure of any related party transactions.
- Qualifications in the draft audit report.
To review, with the management, the quarterly financial statements before
submission to the Board for itsapproval.
To review, with the management, the statement of uses/application of funds raised
through an issue (publicissue, rights issue, preferential issue etc.), the statement of
funds utilized for purposes other than thosestated in the offer
document/prospectus/notice and the report submitted by the agency monitoring
theutilization of proceeds of a public or rights issue and making appropriate
recommendations to the Board fortaking steps in the matter.
4.Remuneration andNomination committees

Remuneration Committee The HR and Remuneration Committee of the Board oversees
the framing, review and implementation of thecompensation policy of the Bank on behalf of the
Board. The Committee works in close coordination with theRisk Management Committee of the
Bank, in order to achieve effective alignment between remuneration andrisks.
Nomination Committee
The Nomination Committee of the Board of Directors functions with the following main
objectives:
i. To undertake a process of due diligence to determine the suitability of any person for
appointment/continuing to hold appointment as a director on the Board, based upon qualification,
expertise, track record,integrity and other fit and proper criteria.
ii. To examine the vacancies that will come up at the Board on account of retirement or
otherwise.
iii. To evaluate the skills that exist, and those that are absent but needed at the Board level, and
search forappropriate candidates who have the profile to provide such skill sets.
iv. To create a recommendatory list of Directors for deliberation and decision-making at the
Board-level; and
v. To review the composition of Committees of the Board, and identify and recommend to the
Board, theDirectors who can best serve as members of each Board Committee.

2 meetings of Nomination Committee were held during the year on 22nd April 2013 and 16th
October 2013.

5. Whistleblower Policies

A central tenet in the Banks Policy on Corporate Governance is commitment to ethics,integrity,
accountability and transparency. To ensure that the highest standards are maintained in these
aspectson an on-going basis and to provide safeguards to various stakeholders (including
shareholders, depositors andemployees) the Bank has formulated a Whistleblower Policy. The
Policy provides employees with the opportunityto address serious concerns arising from
irregularities, malpractices and other misdemeanours committed by theBanks personnel by
approaching a Committee set-up for the purpose (known as the Whistleblower Committee).In
case, senior management commits an offence, the Policy enables the Banks staff to report the
concernsdirectly to the Audit Committee of the Board. The Policy is intended to encourage
employees to report suspectedor actual occurrence of illegal, unethical or inappropriate actions,
behaviour or practices by staff without fear ofretribution. The employees use this Policy
regularly as a tool to voice their concerns on irregularities, malpracticesand other
misdemeanours. To ensure smooth flow and management of complaints under Whistleblower
policy,a new web-based application - Corporate Whistleblower has been set up which also
provides an option foranonymous reporting thereby enabling the employees to lodge their
complaints online over a secure platformwithout fear of revelation of identity. This would create
a business culture of honesty, integrity and complianceand would encourage employees to speak
up so that preventive action is initiated. It is hereby affirmed that theBank has not denied
personal access to the Audit Committee of the Board and that the Policy contains
provisionsprotecting Whistleblowers from unfair termination and other unfair prejudicial, and
employment practice. TheAudit Committee of the Board reviews, on a quarterly basis, a synopsis
of the complaints received and theresolution thereof.

6. Report on Management's Discussion and Analysis

Macroeconomic and Industry Developments :
Fiscal 2014 saw a combination of various external and internal events that kept markets
turbulent, interest rates high andinvestor confidence low, resulting in shrinking investment and
GDP growth. Due to apprehensions of an impending taper ofthe US Federal Reserves
Quantitative Easing programme, emerging markets, including India, experienced foreign
investmentoutflows and currency volatility. Indias macroeconomic imbalances at the beginning
of the year exposed it to this volatility aswell, forcing stringent policy responses. However,
improving fundamentals have gradually restored some stability in the markets.
Indian economic growth had slowed rapidly from 8.9% in 2010-11 to an officially estimated
4.9% in fiscal 2014, caused in largepart by structural factors impeding investment activity.
Decline in financial savings, sluggish growth in fixed capital formation oversuccessive quarters,
persistence of high inflation and low business confidence contributed to the decline in potential
growth,particularly in the absence of adequate structural policy measures.
Inflation had emerged as the central concern during the year and in combination with the current
account and fiscal deficits,had forced Reserve Bank of India (RBI) to raise its policy Repo rate
by 75 basis points. While most of the slowdown was due to asteep drop in investment, a cut in
the Governments spending in order to contain the fiscal deficit at less than the budgeted 4.8%of
GDP also contributed to a slowdown in consumption. For fiscal 2014, fiscal deficit has been
revised down to 4.6% of GDP.
The biggest turnaround was in the Current Account Deficit, which had shrunk from $88 billion
in fiscal 2013 to $31 billion inthe first 3 quarters of fiscal 2014. For fiscal 2014, the current
account deficit is expected to be ~2% of GDP. With large capitalinflows via Foreign Currency
Non-Resident (FCNR-B) deposits and bank capital, the Rupee has stabilised at around 60-
62/USDand has been one of the best performing emerging market currencies over the past few
months.
The Repo rate increases have pushed up the floor for rates and despite liquidity infusion by RBI,
short term interest rates haveremained high. One of the consequences of the slowdown and high
inflation has been a contraction of financial savings ofhouseholds, with a preference for
investment in assets like gold and real estate. This has, in turn, affected deposit accretionwith
banks. The exceptional liquidity tightening measures of RBI leading to higher rates had resulted
in a temporary spike incredit growth in favour of banks compared to credit substitutes in the
money market, but this had gradually normalised. Onthe resources front, strong NRI inflows
through the FCNR(B) deposits route have helped improve deposit growth. For the fiscal2014,
deposit growth in the system was 14.6%, while credit growth was 14.3%.
Financial Performance :
During 2013-14, the operating environment for the banking system continued to be challenging
with persistent high inflation,muted growth, slowdown in credit off-take, concerns regarding
growing non-performing assets and a high incidence of assetsbeing restructured. Despite these
challenges, the Banks strategy to build its business upon strong customer franchises,
whileadopting a prudent approach, had resulted in delivering strong results. The underlying
performance of the business remainedstrong with revenue growth remaining well ahead of cost
growth. The Bank reported a net profit of `6,217.67 crores for the yearended 31st March 2014,
registering a growth of 20.05% over the net profit of `5,179.43 crores last year. The healthy
growth inearnings was driven by contribution from all segments. The Bank continued to focus on
the quality of growth and displayed strong growth in key balance sheet parameters for the
yearended 31st March 2014. The total assets increased by12.53% to `383,245 crores, total
deposits increasedby 11.22% to `280,945 crores while total advancesincreased by 16.81% to
`230,067 crores.During the year, the Bank continued to expand itsnetwork, with increased focus
on the semi-urbanand rural areas. Both the Retail and SME segmentscontinued to benefit from
this network expansion andhave justifiably remained the key growth drivers forthe Bank during
the year. The Bank remains committedto a customer-centric approach in dealing with itsclientele
aided by dependable technology and simplegrowth in key balance sheet parameters for the
yearended 31st March 2014. The total assets increased by12.53% to `383,245 crores, total
deposits increasedby 11.22% to `280,945 crores while total advancesincreased by 16.81% to
`230,067 crores.During the year, the Bank continued to expand itsnetwork, with increased focus
on the semi-urbanand rural areas. Both the Retail and SME segmentscontinued to benefit from
this network expansion andhave justifiably remained the key growth drivers forthe Bank during
the year. The Bank remains committedto a customer-centric approach in dealing with itsclientele
aided by dependable technology and simpleprocesses. A well distributed branch banking
channelcomplemented by a robust alternate distributionchannel have helped the Bank to deliver a
wide rangeof products and services to its customers across the country and overseas processes. A
well distributed branch banking channelcomplemented by a robust alternate distributionchannel
have helped the Bank to deliver a wide rangeof products and services to its customers across the
country and overseas.

Business Segments' Update :
Axis Bank has achieved healthy growth across various operating and financial parameters in the
last financial year.
Retail Banking:
The Retail Banking segment is one of the key drivers of the Banks growth
strategy,encompassing a wide range of products delivered through multiple channels toits
customers. The Bank today offers a complete suite of products across deposits,loans, investment
solutions, payments and cards to its customers. The Bank iscommitted to developing long-term
relationships with its customers by providinghigh-quality services and products through regular
customer engagement in an easyand convenient manner. During the year, the Bank engaged in
Lakshya, a retailbanking transformation initiative, which is currently live in more than 1,100
branches,comprising around 80% of the Banks low-cost deposit business. Various
initiativesunder the Lakshya program have helped increase sales productivity and
operationalefficiency while at the same time focusing on increasing customer satisfaction
andimproving employee work life balance.
International Operations :
The international operations of the Bank continue to be at the core of its strategy to expand the
horizon of the product offerings,and delivery channels to various geographies and across client
segments, covering a wide spectrum of retail and corporate bankingsolutions. During the year,
the Bank expanded its overseas branch network by upgrading its representative office in
Shanghaiinto a branch. The Bank is the first Indian private sector bank to set up a branch in
China. Further during the year, the Banksfirst overseas banking subsidiary - Axis Bank UK
Limited commenced its operations. The Bank now has overseas presence in sixcountries with
network of five branches at Singapore, Hong Kong, DIFC Dubai, Colombo (Sri Lanka) and
Shanghai (China),two representative offices at Dubai and Abu Dhabi and an overseas banking
subsidiary in the United Kingdom.
Information Technology
The Banks continuous endeavour has been to use technology to further improve the customers
experience while transactingwith the Bank. In this regard, it has empowered its relationship
managers with a complete 360 degree view of the customersrelationship with the Bank. Thus, it
has concisely captured the customers existing relationship and likely future needs leading
tosuperior service, better business opportunities through higher cross sell using a seamless multi-
channel experience. To further theBanks green initiatives, technology has helped in issuance of
Green Pin through ATM and IVR channels for new to bank debitcard customers resulting in cost
savings in deliverables management. Further, technology has been one of the key contributorsin
the Banks launch of multi-currency travel cards. A new and faster platform was implemented to
enable foreign exchangemoney transfers for retail customers. The Bank has also re-vamped its
loan system architecture with in-memory computing, amuch faster process to achieve higher
volumes and faster turnaround time in loan processing.
Risk Management and Portfolio Quality :
The Banks risk management processes are guided by well-defined policies appropriate for
various risk categories,independent risk oversight and periodic monitoring through the sub-
committees of the Board of Directors. The Board setsthe overall risk appetite and philosophy for
the Bank. The Committee of Directors, the Risk Management Committee andthe Audit
Committee of the Board, which are sub-committees of the Board, review various aspects of risk
arising from thebusinesses of the Bank.

7. Disclosure on Related Party Transactions

The significant transactions between the Bank and related parties during the year ended 31
March, 2014 aregiven below. A specific related party transaction is disclosed as a significant
related party transaction whereverit exceeds 10% of the aggregate value of all related party
transactions in that category:
Dividend paid: Administrator of The Specified Undertaking of the Unit Trust of India `175.00
crores(previous year `155.56 crores), Life Insurance Corporation of India `78.77 crores (previous
year `64.06crores)
Dividend received: Axis Trustee Services Ltd. `1.88 crores (previous year `1.50 crores)
Interest paid: Life Insurance Corporation of India `928.77 crores (previous year `731.58 crores)
Interest received: Axis Bank UK Ltd. `6.52 crores (previous year Nil) and Axis Finance Ltd.
`1.27 crores(previous year Nil)
Investment of the Bank: Axis Bank UK Ltd. `299.57 crores (previous year Nil) and Axis
Finance Ltd. `250crores (previous year Nil)
Investment of related party in the Bank: Mrs. Shikha Sharma `7.35 crores (previous year `1.48
crores) andMr. V. Srinivasan `2.43 crores (previous year `2.04 crores)
Redemption of subordinated debt: Life Insurance Corporation of India `25.00 crores (previous
year `80crores) and General Insurance Corporation of India `15 crores (previous year Nil)
Sale of Investments: Life Insurance Corporation of India `221.71 crores (previous year
`1,030.60crores), General Insurance Corporation of India `181.37 crores (previous year `85.00
crores), New IndiaAssurance Company Ltd. `147.51 crores (previous year Nil), National
Insurance Company Ltd. `109.97crores (previous year `191.79 crores), United India Insurance
Company Ltd. `79.12 crores (previous year`115.03 crores)


8. Code of Conduct

This Code of Ethics / Conduct intends to ensure adherence to highest business and ethical
standards while conducting the business of the Bank and compliance with the legal and
regulatory requirements. The Bank values the ethical business standards very highly and intends
adherence thereto in every segment of its business.