Ladies & Gentlemen, It is my great pleasure to welcome you all at the Fifteenth Annual General Meeting of your Bank

Bank of Baroda. At the outset, I would like to thank you for your continuous trust, support and patronage extended to the Bank, which is recognized as a premier brand in the Indian banking industry. The Directors Report, Auditors Report and Audited Accounts with the notes thereon for the year 2010-11 have been in your hands for sometime. With your consent, I shall take them as read. The Annual Report sent to you gives a detailed overview of your Banks performance across various quantitative and qualitative parameters during the year 2010-11. In todays meeting, I will like to share with you some thoughts on how your Bank is positioned and the strategies designed by us to make your Bank the Most Admired Bank in the banking space. Before I begin to discuss the specific issues of your Bank, I would like to touch upon the economic and banking environment in which the Bank delivered its performance during the year 2010-11. Economic and Banking Environment From a macroeconomic perspective, the year 2010-11 was a year of great contrasts. While the global economic recovery advanced, it remained uneven between advanced nations and emerging markets. However, India along with China continued to perform as a new growth pole in the world economy throughout 2010-11. During 2010-11, Indias economic growth further improved to 8.5% from 8.0% in 2009-10 on the back of a strong rebound in agriculture (6.6%) and sustained levels of activity in manufacturing (8.3%) and services like trade, hotels, transport & communications (10.3%) and financing, insurance, real estate & business services (9.9%). Aggregate demand indicators too remained healthy as reflected in the rate of real private final consumption expenditure at 58.3% and the rate of real gross fixed capital formation at 32.0%. Moreover, 37.5% growth in exports on year on year basis during 2010-11, helped in reducing the concerns surrounding widening of the current account deficit. At end-March, 2011, the size of the Indian economy was estimated at US$ 1.75 trillion (or Rs 80 trillion).

Notwithstanding a good growth tempo, inflation remained the major policy concern during 2010-11. Throughout the year, it stubbornly stayed above the Reserve Bank of Indias (RBIs) indicative projections. Rising inflation prompted the RBI to raise its key policy rate eight times during 2010-11 by 350 bps to 6.75%, albeit in a step-wise fashion to balance the trade-off between growth and inflation. Headline inflation based on wholesale prices stood at 9.02% in March, 2011 and CPI-based inflation for industrial workers too was high at 8.82%. Consistent with the RBIs monetary policy stance, liquidity conditions stayed tight for most part of the year with some easing during the last quarter. Both deposit and lending rates of commercial banks firmed up quite sharply since August, 2010 onwards. Yet on the back of strong capex and working capital demand, the banking industrys non-food credit expanded healthily by 21.2% (y-o-y). However, its aggregate deposits grew rather modestly by 15.8% (y-o-y). According to the RBIs data, the sectoral deployment of banks non-food credit became increasingly broad-based during the year under review. The strong growth environment and the improved corporate credit profile eased the asset quality concerns especially for those banks that had maintained well diversified loan-books and modest exposures to sensitive sectors. Overview of the Banks Performance in 2010-11 Your Banks strong capital and liquidity position, robust deposit franchise and high ranking credit culture have enabled it to gain market share consistently during the past three years along with superior profitability and the best asset quality standards. Your Banks strong fundamentals as reflected in its ROAA (Return on Average Assets) at 1.33% and ROE (Return on Equity) at 21.48% during 2010-11 have helped it demonstrate its differentiation sustainably. Even as it has grown its balance sheet at faster pace than the industry average, it has sustained the best asset quality standards. Your Banks incremental slippage ratio at 1.2% averaged over the last six years has been the lowest in the Indian banking system. With its consistently high Provision Coverage Ratio around 85.0% [including the technical write-offs], your Bank is well covered against any downside economic growth risks in the future.

Moreover, your Bank comfortably achieved all the targets under the Statement of Intent that it had committed to the Government of India on business, profitability and asset quality fronts for the year 2010-11. I would now like to discuss the main highlights of your Banks performance during the year under review. Global Business The Global Business of your Bank reached the level of Rs 5,34,116 crore in 2010-11 with an annual growth of 28.3%. While Global Deposits registered a growth of 26.6% (y-o-y), Global (Net) Advances expanded by 30.7%. In domestic operations, your Banks Deposits grew by 25.8% (y-o-y), whereas Advances (net) expanded by 28.7%. A consistent growth tempo year after year, enabled your Bank to increase its market share in Deposits from 3.70% in 2006-07 to 4.04% in 2010-11 and in Advances from 3.53% to 4.01% during the same period. Your Banks low-cost deposits (CASA) grew at the healthy pace of 22.6% (y-o-y) in global operations during 2010-11. In domestic operations also, the CASA growth was maintained at 21.4% despite a significant hardening of term deposit rates. This enabled your Bank to maintain a decent domestic CASA share at 34.4% during 2010-11. As in the past, your Banks international operations continued to remain an important supporter to its overall business growth during 2010-11. As on 31st March, 2011, your Bank was present in 25 countries with 85 offices. During the year under review, the Total Business of the Banks International branches registered a robust growth of 32.5% on the back of surging world trade volumes and a rebound in the activities of Indian corporates abroad. In International operations, the Banks Customer Deposits increased by 23.4%, Total Deposits by 29.3% and Advances by 36.6%. Supported by steady and better than industry average spreads and a good pool of fee-based income, the Banks Gross Profit in International operations posted a healthy growth of 23.9%. The Banks International Business contributed 24.6% to the Banks Global Business, 17.1% to its Gross Profits and 32.1% to its Core Fee-based Income. Besides, the Total Assets of the Banks International Operations increased from Rs 68,375 crore to Rs 91,273 crore registering a growth of 33.5% during the year 2010-11.

Segment-wise Business During 2010-11, your Bank continued its thrust on well-balanced growth across all business segments to manage the credit risk well. The Bank posted a growth of 29.6% in its SME segment; 13.5% in Farm Credit (with 28.7% in Direct Agricultural Credit); 33.8% in Retail Credit (with 21.6% in Home Loans); and 21.0% in Credit to Weaker Sections. The Banks Credit to Priority Sectors too expanded by 18.2% in 2010-11 and formed 43.57% of its Adjusted Net Bank Credit, easily surpassing the mandatory requirement of 40.00%. Net Interest Income & Margin Supported by healthy credit expansion and prudent management of liabilities, the Banks Net Interest Income (NII) grew by a rich 49.8% (y-o-y) during 2010-11. Moreover, it has sequentially grown quarter after quarter, since the last quarter of the previous year 2009-10. An efficient pricing of loans and deposits and prompt responses to the policy signals enabled your Bank to deliver a Net Interest Margin (NIM) of 3.72% in Domestic Operations and 3.12% in Global Operations during the year 2010-11. Profitability Despite increased provisions, especially on account of the pension liabilities of the employees, a strong growth in NII (at 48.2%), a good traction of core fee-based income like commission, exchange and brokerage and a modest growth in operating expenses enabled your Bank to grow its Operating Profit by 43.8% (y-o-y) to Rs 6,981.61 crore and Net Profit by 38.7% (y-o-y) to Rs 4,241.68 crore in 2010-11. Asset Quality While the Indian banking industry continued to reel under the pressure of stressed asset quality, your bank could again restrict its Gross NPA to 1.36% and Net NPA to 0.35% during 2010-11, thanks to its robust systems of credit origination, credit monitoring and asset recovery. The Banks Incremental Delinquency Ratio too was contained at 1.09% during the year under review. Your Banks rigorous follow up of all NPA accounts and timely response to early warning signals resulted in Cash Recovery of Rs 455.49 crore. Your Bank could upgrade accounts to the tune of Rs 189.17 crore to standard category.

Moreover, your Bank recovered Rs 272.66 crore from the prudentially written off accounts. Your Banks NPA Coverage Ratio (including technical write-off) stood at the rich level of 85.0% in 2010-11 as against the regulatory requirement of 70.0%. Cost-Income Ratio Your Banks Cost-Income Ratio further declined from 43.57% in 2009-10 to 39.87% in 2010-11 on the back of improved operating efficiency during the year under review. Capital Adequacy Your Banks Capital Adequacy Ratio stood at the comfortable level of 14.52% under Basel II as on 31st March, 2011 with Tier I Capital at 9.99%. During the year under review, the Bank strengthened its Capital Base by raising Rs 1,500 crore through Unsecured Subordinated Bonds and Rs 711.50 crore through Innovative Perpetual Bonds. In order to facilitate the Banks credit expansion, the Government of India infused an additional capital of Rs 2,461 crore during the year under review, raising its shareholding from 53.8% to 57.0%. Net Worth Your Banks Net Worth grew by a rich 43.27% (y-o-y) to Rs 19,750.63 crore from the last years level of Rs 13,785.14 crore. Return on Average Assets Your Banks Return on Average Assets sharply improved from 1.21% in 2009-10 to 1.33% on the back of sustained gains in core earnings and operating efficiency. Return on Equity Despite widening of the equity base, your Banks Return on Equity stood at the healthy level of 21.48% during 2010-11 on the back of improved profitability and productivity. Book Value per Share

Your Banks Book Value per Share sharply improved from Rs 378.44 in 2009-10 to Rs 504.43 reflecting a rich growth of 33.3% (y-o-y). Earnings Per Share Your Banks Earnings per Share too increased significantly from Rs 83.96 in2009-10 to Rs 116.37 in 2010-11 (crossing the mark of Rs 100 for the first time during an interim quarter of 2010-11) reflecting a sizeable growth of 38.60% (y-o-y). Business per Employee Your Banks profitability has been continuously improving on the back of steady improvement in its staff productivity. For instance, the Banks Business per Employee grew by a robust 25.28% just in a years time from Rs 9.81 crore in 2009-10 to Rs 12.29 crore in 2010-11. Your Bank undertook several strategic initiatives during the year 2010-11 to speed up its journey towards its vision of establishing itself as the most admired bank of the country. Let me now share with you the details of your Banks new initiatives during the year under review.

Banks Key Strategic Initiatives Human Resources (HR) The function of HR Management in your Bank primarily focuses on aligning its existing HR capabilities with the future business plans with a view to maximize returns and fulfill the objective of its massive business transformation plan. Your Bank took several initiatives during the year under review, to enhance the level of employee motivation, commitment and productivity. Your Bank is endowed with a competent and motivated employee base of around 39,385 who are engaged in handling the extensive business operations of the Bank across the globe. During 201011, your Bank implemented a comprehensive HR technology platform covering HR Management, Training, Payroll & Leave modules enabling automation of various functions. Considering the critical need for building leadership competencies in Senior Executives, your Bank launched a comprehensive leadership development

program Project UDAAN during 2010-11 with the prime objective of creating leaders for the future. Such a massive and comprehensive leadership development effort is unparalleled in the Indian banking industry and first of its kind for any Indian state-owned Bank. Business Process Reengineering (BPR) Your Banks BPR project known as Project- Navnirmaan too made further progress during 2010-11. This project has altogether 18 activities covering both the BPR and organisational restructuring, aimed at transforming the Banks branches into modern sales & service outlets. The major aim of this effort is to give a big boost to sales growth by enhancing customer satisfaction and by making possible alternate channel migration. The most important initiatives planned under this project include (1) Conversion of all metro and urban branches into modern centres known as Baroda Next branches (so far 154 branches of your Bank have been rolled out in five zones and 14 regions); (2) Creation of Automated and Leaner Back Offices like City Back Office (your Bank has already introduced automated cheque processing in Mumbai on 17 Jan, 2011), Regional Back Office (five offices are being opened coupled with technology changes for faster account opening), Establishment of two Call Centres, Creation of Academy of Excellence, Introduction of Frontline Automation at select branches for customer convenience and Organisational Restructuring. The initial impact of Baroda Next migration has been found to be rewarding both in terms of increased customer satisfaction and CASA growth. New Technology Platform During 2010-11, your Bank made substantial progress in its end-to-end business and IT strategy project covering the Banks domestic, overseas and subsidiary operations. As you are aware, all the branches and extension counters in India were brought on the Core Banking Solution (CBS) platform last year itself. Additionally, the CBS was implemented during 2010-11 in your Banks five sponsored Regional Rural Banks at the record speed, covering 1,218 branches and three extension counters. As on 11 April, 2011, your Bank completed 100.0% CBS implementation in its overseas business also.

Your Bank has been providing to its customers Internet Banking, viz., Baroda Connect and other facilities such as online payment of direct and indirect taxes and certain State Government taxes, utility bills, rail tickets, online shopping, donation to temples and institutional fee payment. Your Bank took many initiatives during the year to provide its corporate customers the facility of direct salary uploads, trade finance and State Tax payments. By 31st March 2011, the Banks ATM network expanded to 1,561. Your Bank also launched mobile ATMs in Ahmedabad, Pune, Lucknow and New Delhi. During the year under review, your Bank also introduced Mobile Banking (Baroda M-connect) on a pilot basis. Initiatives in Retail Business Your Bank opened 266 new domestic branches and merged two branches during 2010-11. The Banks Retail Business continued to be one of the main supporters to its overall business growth during 2010-11. Your Bank launched two new retail asset products styled as Baroda Traders Loan Against the Security of Gold Ornaments /Jewellaries and Baroda Advance Against Gold Ornaments/Jewellaries at all Metro and Urban branches in India. As per the directives of the government, your Bank started an Education Loan Interest Subsidy scheme for students belonging to economically weaker sections. On the liabilities side, a term-deposit product termed as Baroda Utsav Deposit Scheme for 444 days was introduced to mobilize term deposits in accordance with the depositors preference. Furthermore, your Bank launched two new retail liability products under Savings Bank Segment styled as Baroda Pensioners Savings Account specially meant for pensioners and a life insurance linked savings product styled as Baroda Jeevan Suraksha Savings Account under a Tie-up arrangement with its Joint Venture Company IndiaFirst Life Insurance Company. Initiatives in Priority Sectors & Financial Inclusion Your Bank has always considered Priority Sectors very important not just to fulfill the nations developmental priority, but also from the perspective of leveraging the vast potential of the rural economy through its wide network of 1,171 rural and 832 semi-urban branches. Your Bank opened 157 new branches in rural and semi-urban areas during 2010-11. Under its flagship agriculture loan product Baroda Kisan Credit Card, your Bank issued as

many as 2,44,558 Credit Cards during this year to provide credit to farmers. Moreover, as a part of its microfinance initiatives, your Bank credit-linked 19,257 Self Help Groups with an amount of Rs 164 crore. Your Bank has, by now, established 52 Baroda Grameen Paramarsh Kendras (BGPKs) to provide credit counseling and financial literacy to rural community. Also, during the year under review, your Bank opened 11 more Baroda Swarojgar Vikas Sansthans (BSVSs) / Baroda R-SETI Centres taking the total number of BSVS to 36. Your Bank opened 14 new financial literacy and credit counselling centres, christened as SARATHEE, to promote financial inclusion and economic upliftment. Besides, your Bank has already implemented the Business Facilitators model across the country to accelerate Financial Inclusion of the excluded segment as well as to augment agriculture portfolio. This year, your Bank also set up a Micro Loan Factory at Raebareli and Sultanpur in U.P. to facilitate SHG financing through a mobile van. Initiatives in MSME Business Thanks to Indias robust economic growth and the governments thrust towards promoting the Micro, Small and Medium Enterprises (MSMEs), several opportunities have opened up for this segment. To reap business opportunities from this segment, your Bank established a special and novel delivery model viz. SME Loan Factory almost four years ago. At present, 36 such loan factories are operational all over India enabling the Bank to extract good quality business from this segment. Moreover, your Bank has introduced five new customer-centric area specific products to suit the local cluster needs of MSMEs. During 2010-11, your Bank sponsored workshop on Management Skills to source financing and Management of Technology by SMEs for entrepreneurs arranged by AIMA at Faridabad. Also, your Bank introduced an electronic tracking system for SME credit proposals with a view to have good control over turnaround time. Your Bank has focused on achieving total customer relationship through enhanced cross selling, location-specific meetings and involving various trade bodies at national and state levels. Initiatives to Diversify Income Streams

To diversify its income streams and to evolve as a true universal bank, your Bank has been providing various third-party products in Life Insurance, Non Life Insurance including Health Insurance, Mutual Funds and Equity Trading under the Tie-up arrangements with different partners. For instance, Baroda Pioneer Asset Management Co. Ltd. a joint venture in Mutual Fund in association with Pioneer Investments of Italy, and IndiaFirst Life Insurance Co. a joint venture in Life Insurance with Andhra Bank and L&G of UK have successfully positioned themselves in the Indian market with encouraging performance even in the initial stages of their business. During the year 2010-11, your Bank launched Application Supported by Blocked Amount Facility (ASBA) for its net banking customers to provide them with the convenience of a simple, instant, secure and 24x7 on-line facility to apply for IPO/FPO/NFO. Initiatives in International Business Leveraging on its largest and strongest international network of branches/offices, your Bank posted a robust performance in its International Operations during the year under review. Backed by its impressive credit story, your Bank could easily raise US$ 500 million in February 2011 under its MTN programme and US$ 225 million as Syndicated Loans to finance the expansion of its overseas assets. During the year under review, your Bank opened seven new branches/offices abroad including the ones belonging to the Banks overseas subsidiaries. One branch was opened at Ilford, Essex (U.K.) and five Electronic Banking Service Units (EBSUs) became operational at different locations in UAE. Your Banks subsidiary in New Zealand Bank of Baroda (New Zealand) commenced operations with the opening of branch at Auckland. After implementation of CBS, your Bank launched various new products and services to meet the requirements of diversified groups of overseas customers. The number of ATMs at overseas territories and subsidiaries increased to 68 as on 31st March, 2011. Your Bank has also implemented effectively the Global Treasury Solution in its key territories like UK, UAE, Bahamas, Bahrain, Hong Kong, Singapore and Belgium. Your Bank has taken various technological initiatives in overseas operations such as implementation of Centralized SWIFT activity through Data Centre in Mumbai, Payment Messaging System with Anti

Money Laundering check, Anti Money laundering Compliance and Online List Matching solution. While your Bank implemented Transaction-based Internet Banking facility for its customers in Uganda, Botswana, UAE, New Zealand, Kenya, Mauritius and Seychelles, a Viewbased e-banking facility was made available in Fiji, Oman, Tanzania and UK. Corporate Social Responsibility (CSR) Initiatives As a responsible corporate citizen, it has been the vision of your Bank to empower the community through socio-economic development of underprivileged and weaker sections. In its continued efforts to make a difference to the society at large, your Bank further intensified its efforts in this direction in 2010-11. As stated earlier, your Bank has established 36 Baroda Swarojgar Vikas Sansthan (Baroda R-SETI) for imparting training to unemployed youth, free of cost for gainful self employment and entrepreneurship skill development. This is done with a view to improve their economic status and give a boost to the local economy. Additionally, your Bank has established 52 Baroda Gramin Paramarsh Kendra for knowledge sharing, problem solving and credit counseling for rural masses across the country. In order to spread awareness among the rural masses on various financial and banking services and to speed up the process of Financial Inclusion, your Bank has also established 18 Financial Literacy and Credit Counseling Centres (FLCC). Your Bank has neatly designed a three year Financial Inclusion Plan based on two delivery channel models [1] Application Service Provider (ASP) model with Biometric Smart Card based technology and [2] Mobile Banking model using Mobile Vans within a cluster of villages in close proximity to the Banks existing branches. During the period under review, your Bank deployed four such mobile vans one each in Gujarat and Bihar and two in Uttar Pradesh. The Road Ahead The financial year 2011-12 is going to be quite challenging for the Indian banking industry. According to the RBIs Annual Monetary Policy document, high global crude oil and other commodity prices pose big risks to Indias growth and inflation. Yet, the GDP growth is expected to stay

close to the trend in 2011-12 (around 8.0%), which itself is a huge opportunity for our banking sector. Given this, managing credit growth above industry-average along with superior asset quality will be the key challenge for your Bank during 201112. However, your Banks comfortable position with respect to capital and liquidity, strong systems of credit origination and credit monitoring, continuous investment in human capital and novel BPR initiatives during the last couple of years give it enough confidence that it will be able to shoulder this challenge well. Even during 2011-12, thrust will be placed on efficient pricing of deposits and loans, higher CASA mobilization and lower dependence on bulk business for margin improvement. In particular, your Bank would endeavour to (1) attain a well-balanced growth in its loan-book across different sectors like retail, SME, agriculture, wholesale etc. and across different geographies (including domestic & overseas), (2) further strengthen its systems for credit origination and monitoring and, (3) maintain a high provision coverage ratio to protect the quality of its asset portfolio from any downside growth risks. A stable average growth in all business parameters coupled with minimum fresh slippages; a robust fee-based income in line with the growth of corporate credit business and a prudent control over operating expenses will be the primary objectives of your Bank during 2011-12. Your Banks wellcapitalised balance sheet and excellent liquidity management would enable it to gain further market share during 2011-12. Your Bank has been steadily building solid foundations for future growth by continuously working on enhancing its HR capabilities through a BPR project and various leadership development programmes. It has also been focusing on speedy development of marketing and sales and service culture within the organization. Towards this goal, your Bank has selected as its motto for the year 2011-12 Business Growth through Sales and Service Excellence. As in the past, your Bank would initiate many business initiatives during 2011-12 with enhanced customer orientation. Your Bank would concentrate on sharpening its competitive edge by

improving its business strategies/performance and by protecting its credibility by delivering on the promises. The first quarter of the year 2011-12 has demonstrated that your Bank is well positioned and on the right course to achieve its set business objectives for 2011-12. Acknowledgement I would like to take this opportunity to thank the Members of the Board for their valuable guidance, support and prudent counsel. I and my colleagues on the Board place on record our appreciation for continued support and guidance received from the Government of India, RBI, SEBI, other regulatory authorities, various financial institutions, banks and correspondents in India and abroad. We also place on record our appreciation for the unstinted trust and support of our customers, shareholders, investors and vendors. As in the past, our performance during 2010-11 was driven by the dedication and commitment of our employees. On your behalf as well as on behalf of the Board of Directors, I salute the employees of the Bank on another impressive performance for the year 2010-11. Before I conclude, I would like to thank all of you for your presence and interest in the Bank. Thank you. M.D. MALLYA Chairman and Managing Director