The Core Executive Team

(Standing from L to R): S. V. Parthasarathy (Head - Consumer Finance), Zubin Mody (Head - Human Resources), Paul Abraham (Chief Operating Officer), Suhail Chander (Head - Corporate & Commercial Banking), Moses Harding (Head - Global Markets Group), K. Sridhar (Chief Risk Officer). (Seated from L to R): Ramesh Ganesan (Head - Transaction Banking), Sumant Kathpalia (Head - Consumer Banking), Romesh Sobti (Managing Director & CEO), Suresh Pai (Head - Corporate Services & Communication), S. V. Zaregaonkar (CFO & Investor Relations).

Board of Directors (As on March 31, 2009) Mr. R. Seshasayee, Chairman Mr. R. Sundararaman Mr. T. Anantha Narayanan Dr. T. T. Ram Mohan Mrs. Pallavi Shroff Mr. Premchand Godha Mr. Ajay Hinduja Mr. S. C. Tripathi Mr. Ashok Kini Mr. Romesh Sobti, Managing Director & CEO Mr. Y. M. Kale (Alternate Director to Mr. Ajay Hinduja) Company Secretary Mr. Haresh Gajwani Auditors M/s. M. P. Chitale & Co. Hamam House, 1st Floor Ambalal Doshi Marg Fort, Mumbai 400001 Solicitors M/s. Crawford Bayley & Co. Solicitors & Advocates State Bank Building NGN Vaidya Marg Mumbai - 400023 Registrar & Share Transfer Agent Link Intime India Pvt. Ltd. C-13, Pannalal Silk Mills Compound L.B.S. Marg, Bhandup (West) Mumbai - 400078 Tel: 022 25963838 / 25946980 Fax: 022 25946969 Registered Office 2401, Gen. Thimmayya Road (Cantonment) Pune - 411001

Contents
Notice Directors' Report . Management Discussion & Analysis Corporate Governance .. Auditors' Report Balance Sheet Profit & Loss Account ... Schedules .. Principal Accounting Policies Notes on Accounts . Cash Flow Statement . Balance Sheet in US Dollars . Subsidiary - Directors' Report, Auditors' Report and Accounts.. Branch Network

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NOTICE is hereby given that the Fifteenth Annual General Meeting of the Members of IndusInd Bank Limited will be held at Hotel Sun-n-Sand, 262, Bund Garden Road, Pune 411001, India, on Friday, July 3, 2009, at 2.00 p.m. to transact the following business: Ordinary Business 1. 2. 3. 4. 5. 6. To consider and adopt the Balance Sheet as at March 31, 2009 and the Prot and Loss Account for the year ended March 31, 2009 together with the Reports of the Directors and Auditors thereon. To declare Dividend for the year. To appoint a Director in place of Mr. T. Anantha Narayanan, who retires by rotation and, being eligible, offers himself for reappointment. To appoint a Director in place of Mr. Premchand Godha, who retires by rotation and, being eligible, offers himself for reappointment. To appoint a Director in place of Mr. Ajay Hinduja, who retires by rotation and, being eligible, offers himself for reappointment. To appoint M/s. M. P. Chitale & Co., Chartered Accountants, as Statutory Central Auditors for the Bank to hold ofce from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting, and to authorise the Board of Directors to x the remuneration of the Statutory Auditors, and to appoint branch auditors, if any, in consultation with the Statutory Auditors and to x their remuneration.

Special Business 7. Authority for further issue / placement of securities including American Depository Receipts / Global Depository Receipts / Qualied Institutions Placement, etc. To consider and, if thought t, to pass with or without modication(s) the following resolution as a Special Resolution: RESOLVED THAT pursuant to the provisions of Section 81 and other applicable provisions, if any, of the Companies Act, 1956 [including any amendment thereto or modication(s) or re-enactment(s) thereof] and in accordance with the provisions of the Memorandum and Articles of Association of the Bank, the Listing Agreements entered into by the Bank with the respective Stock Exchanges where the equity shares of the Bank are listed, and subject to the Regulations / Guidelines, if any, prescribed by Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), nancial institutions and all other concerned and relevant authorities from time to time, to the extent applicable and subject to such approvals, consents, permissions and sanctions of the Government of India, SEBI, RBI and all other appropriate authorities, institutions or bodies and subject to such conditions and modications as may be prescribed by any of them while granting such approvals, consents, permissions and sanctions, and agreed to by the Board of Directors of the Bank (hereinafter referred to as the Board, which term shall be deemed to include any Committee(s) constituted / to be constituted by the Board to exercise its powers including the powers conferred by this Resolution) which the Board be and is hereby authorised to accept, if it thinks t in the interest of the Bank, to create, issue, offer and / or allot, in the course of one or more public or private offerings by way of public issue, rights issue, preferential allotment including Qualied Institutional Placement pursuant to Chapter XIII-A of the SEBI (Disclosure and Investor Protection) Guidelines, 2000 as amended from time to time, or otherwise, in the domestic or one or more international markets, equity shares and / or equity shares through depository receipts and / or convertible bonds and / or securities convertible into equity shares at the option of the Bank and / or the holder(s) of such securities, American Depository Receipts (ADRs) / Global Depository Receipts (GDRs) representing equity shares or convertible securities and / or securities with or without detachable / non-detachable warrants with a right exercisable by the warrant-holder to subscribe for the equity shares and / or warrants with an option exercisable by the warrant-holder to subscribe for equity shares, and / or any instrument or securities representing either equity shares and / or convertible securities linked to equity shares (all of which are hereinafter collectively referred to as securities) subscribed in Indian / foreign currency(ies) to investors (whether resident and / or non-resident and / or strategic investors and / or institutions or banks and / or incorporated bodies and / or trustees or otherwise, and whether or not such investors are Members of the Bank) / Foreign Institutional Investors (FIIs) / Mutual Funds / Pension Funds / Venture Capital Funds / Banks and such other persons or entities excluding promoters in case of preferential allotment, whether or not such investors are members of the Bank, to all or any of them jointly or severally, through prospectus(es) and / or placement documents(s) or offer letter(s) or circular(s) and / or on private placement basis for, (or which upon conversion of all securities so created, issued, offered and / or allotted could give rise to the issue of) an aggregate face value of equity shares not exceeding 25 per cent of the Authorised Equity Share Capital of the Bank at such time or times with or without voting rights in general meetings / class 4

meetings, at such price or prices, at such interest or additional interest, at a discount or at the premium to market price or prices and in such form and manner and on such terms and conditions or such modications thereto, including the number of securities to be issued, face value, rate of interest, redemption period, manner of redemption, amount of premium on redemption / prepayment, number of equity shares, to be allotted on conversion / redemption / extinguishments of debt(s), exercise of rights attached to the warrants and / or any other nancial instrument, period of conversion, xing of record date or book closure and all other related or incidental matters as the Board may in its absolute discretion think t and decide according to the directives / guidelines issued by the appropriate authority(ies) and in consultation with the Merchant Banker(s) and / or Lead Manager(s) and / or Underwriter(s) and / or Advisor(s) and / or such other person(s), but without requiring any further approval or consent from the shareholders and also subject to the applicable guidelines for the time being in force; RESOLVED FURTHER THAT, without prejudice to the generality of the above, the aforesaid issue of the securities may have all or any terms or combinations of terms in accordance with prevalent market practice including but not limited to terms and conditions relating to payment of interest, dividend, premium on redemption at the option of the Bank and / or holders of any securities, including terms for issue of additional equity shares or variations of the price or period of conversion of securities into equity shares or issue of equity shares during the period of the securities or terms pertaining to voting rights or option(s) for early redemption of securities; RESOLVED FURTHER THAT, without prejudice to the generality of the above, the preferential allotment of such securities, the relevant date on the basis of which the price of the resultant shares shall be determined, shall be the date of the meeting in which the Board of the company or the Committee of Directors duly authorised by the Board of the company decides to open the proposed issue and that the allotment of such securities shall be made in the form of Qualied Institutional Placement to Qualied Institutional Buyers, in accordance with the provisions of Chapter XIII-A of the SEBI (Disclosure and Investor Protection) Guidelines, 2000 as amended from time to time; RESOLVED FURTHER THAT the Board be and is hereby authorised to enter into and execute all such agreements and arrangements with any Lead Manager(s), Co-Lead Manager(s), Manager(s), Advisor(s), Underwriter(s), Guarantor(s), Depository(ies), Custodian(s) and all such agencies as may be involved or concerned in such offerings of securities and to remunerate all such agencies by way of commission, brokerage, fees or the like, and also to seek the listing of such Securities in one or more Indian / International Stock Exchanges; RESOLVED FURTHER THAT the Bank and / or any agencies or bodies authorised by the Board may issue depository receipts or certicates representing the underlying equity shares in the capital of the Bank or such other securities in bearer, negotiable, or registered form with such features and attributes as may be required and are prevalent in the Indian and / or International Capital Markets for the instruments of this nature and to provide for the tradability and free transferability thereof as per market practices and regulations (including listing on one or more stock exchanges in or outside India); RESOLVED FURTHER THAT the Board be and is hereby authorised to create, issue, offer and allot such number of equity shares as may be required to be issued and allotted upon conversion of any securities referred to above or as may be necessary in accordance with the terms of the offer, all such shares ranking in all respects pari passu inter se and with the then existing equity shares of the Bank in all respects, save and except that such equity shares or securities or instruments representing the same may be without voting rights, if permitted by law and / or, shall carry the right to receive pro rata dividend from the date of allotment, as may be decided by the Board, declared for the nancial year in which the allotment of shares shall become effective; RESOLVED FURTHER THAT the Board be and is hereby authorised to create such mortgage and / or charge on the immovable and movable assets of the Company or on the whole or any part of the undertaking/s of the Company under Section 293(1)(a) of the Companies Act, 1956, in respect of any Security(ies) issued by the Bank pursuant to this Resolution and in the event such security(ies) is / are required to be secured and for that purpose to accept such terms and conditions and to execute such documents and writings as the Board may consider necessary or proper; RESOLVED FURTHER THAT, for the purpose of giving effect to any creation, issue, offer or allotment of equity shares or securities or instruments representing the same, as described above, the Board be and is hereby authorised, on behalf of the Bank, to do all such acts, deeds, matters and things as it may, in its absolute discretion, deem necessary or desirable for such purpose, including without limitation, entering into arrangements for managing, underwriting, marketing, listing, trading, acting as depository, custodian, registrar, paying and conversion agent, trustee and to issue any offer document(s) and sign all applications, lings, deeds, documents and writings and to pay any fees, commissions, remuneration, expenses relating thereto and with power on behalf of the Bank to settle all questions, difculties or doubts, that may arise in regard to such 5

issue(s) or allotment(s) as it may, in its absolute discretion deem t; RESOLVED FURTHER THAT the Board be and is hereby authorised to delegate all or any of the powers herein conferred to any Committee or any one or more whole-time directors of the Bank; RESOLVED FURTHER THAT this resolution shall be in vogue for a period of 12 months from the date passing by the members or till the next Annual General Meeting, whichever is less. Notes: 1. A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF / HERSELF AND THE PROXY NEED NOT BE A MEMBER OF THE BANK. The proxy form should be lodged with the Bank at its Registered Ofce at least 48 hours before the time of the meeting. The relative Explanatory Statement pursuant to Section 173(2) of the Companies Act, 1956, in respect of the Special Businesses is annexed hereto. All documents referred to in the Notice and Explanatory Statement are open for inspection at the Registered Ofce of the Bank during ofce hours on all working days except public holidays between 11.00 a.m. and 1.00 p.m. upto the date of the Annual General Meeting (AGM). The Register of Members and Share Transfer Books of the Bank will remain closed from Wednesday, June 24, 2009 to Friday, July 3, 2009 (both days inclusive). The Dividend would be made payable on or after Monday, July 6, 2009 to the shareholders whose names stand in the Register of Members on Tuesday, June 23, 2009. Shareholders are requested to furnish contact details such as e-mail IDs, cell phone numbers and telephone numbers to the Company Secretary or to the Registrars to enable the Bank to communicate to shareholders more frequently the information about developments in the Bank. Members / proxies should bring the attendance slip duly lled in for attending the AGM. A brief prole of the Directors retiring by rotation and eligible for re-appointment is furnished in the Report on Corporate Governance. Members are requested to kindly bring their copies of the Annual Report to the AGM.

2. 3.

4. 5. 6.

7. 8. 9.

EXPLANATORY STATEMENT UNDER SECTION 173(2) OF THE COMPANIES ACT, 1956 Item No. 7 Resolution set out in Item No.7 is an enabling Resolution conferring authority on the Board to cover all corporate requirements and contingencies to issue securities of appropriate nature at opportune time, including the size, structure, price and timing of the issue(s) at the appropriate time(s). The Board will x the detailed terms of the nal size of the offering, exact timing, and other related aspects after careful analysis and discussions with lead managers, prevailing market conditions and in line with the extant guidelines issued by SEBI, RBI or any other statutory and / or other regulatory authorities either in India or overseas, in this regard. The Resolution also enables the Bank to place equity capital with Qualied Institutional Buyers in accordance with Guidelines for Qualied Institutions Placement forming part of SEBI (Disclosure and Investor Protection) Guidelines 2000 as amended from time to time. Section 81 of the Companies Act, 1956 provides, inter alia, that whenever it is proposed to increase the subscribed capital of a company by a further issue and allotment of shares, such shares shall be offered to the existing shareholders of the company in the manner laid down in the said Section, unless the shareholders decide otherwise in a general meeting. The listing agreement/s with the stock exchanges provide, inter alia, that a listed company in the rst instance should offer all the shares and debentures to be further issued for subscription pro rata to the equity shareholders unless the shareholders decide otherwise in a general meeting. Members are requested to pass the resolution under Item No. 7 as a special resolution. None of the Directors of the Bank is in any way concerned or interested in the passing of the Resolution. By Order of the Board Company Secretary Mumbai, May 28, 2009 6

DIRECTORS REPORT: 2008-09

To all Members, Your Banks Directors have pleasure in presenting the Fifteenth Annual Report covering business and operations of your Bank, together with the audited accounts for the year ended March 31, 2009. The nancial performance for the year ended March 31, 2009 is summarized as under: As on March 31, 2009 22110.25 15770.64 412.42 148.34 (Rs. in crores) As on March 31, 2008 19037.42 12795.31 236.35 75.05

Deposits Advances Operating Prot (before depreciation and provisions and contingencies) Net Prot

Your Banks deposits grew by 16.14% and advances rose by 23.25%, despite the unsettled situation in the international nancial markets coupled with slowdown in economic growth in India. The focus during the year continued to be on earnings from core banking business and to augment the fee-based income. The Operating Prot (before depreciation and provisions and contingencies) during the year under review improved to Rs.412.42 crores as against Rs.236.35 crores in the previous year, a rise of 74.50%. Your Banks Net Prot, after considering necessary provisions and contingencies and all expenses, was higher by 97.65% at Rs.148.34 crores as against Rs.75.05 crores in the previous year. Appropriations Your Directors recommend appropriation of prot as under: Operating Prot before Depreciation and Provisions and Contingencies Less: Depreciation on Fixed Assets Less: Provisions and Contingencies Net Prot Prot Brought Forward Amount available for Appropriation Transfer to Statutory Reserve Transfer to Capital Reserve Transfer to Investment Reserve Account Proposed Dividend Tax on Dividend Balance carried over to Balance Sheet Total Appropriations Dividend The Earning Per Share (EPS) of your Bank has risen to Rs.4.28 during the year 2008-09 from Rs.2.35 in the previous year. Looking to the overall improvement in performance and the growth outlook for the current year, your Directors recommend a dividend of Rs.1.20 per equity share of Rs.10/- each for the year ended March 31, 2009. (Dividend for the year 2007-08 was Re.0.60 per equity share of Rs.10 each). The Bank shall pay tax on the amount of dividend paid, which will be tax-free in the hands of the shareholders. The Proposed Dividend amount of Rs.44.71 crores includes the amount of Rs.2.11 crores, being the dividend paid, as per applicable guidelines, for the year 2007-08 on 3,51,92,064 shares issued in June 2008. Financial Performance During the year 2008-09, your Bank leveraged its business on the three planks of Productivity, Protability and Efciency, which brought about a sea change in the year-on-year performance. There has been substantial and all-round improvement in various nancial parameters during the year. 8 (Rs. in crores) 412.42 44.17 219.91 148.34 242.99 391.33 37.09 53.40 1.53 44.71 7.60 247.00 391.33

Your Banks Total Income grew by 26.97% to Rs.2765.73 crores from Rs.2178.24 crores. The sharp rise in protability arose from a healthy increase in core interest streams. Net Interest Income improved by 52.60% to Rs.459.03 crores from Rs.300.80 crores. Non-Interest Income rose to Rs.456.25 crores from Rs.297.58 crores, a rise of 53.32%. Yield on advances rose during the year to 13.23%, as against the yield of 11.76% in 2007-08. Cost of deposits for the year 2008-09 was 8.22% as against 7.84% last year. Net Interest Margin (NIM) pre-amortisation improved substantially, to 1.96% in 2008-09 compared with 1.53% last year. Higher revenue growth and better cost management resulted in Cost / Income Ratio improving to 59.77% in 2008-09 as against 67.21% last year. Revenue per employee during the year improved to Rs.21.53 lakhs from Rs.20.86 lakhs last year. Quality of your Banks assets also witnessed rapid improvement, with Non-Performing Assets falling to 1.14% as at March 31, 2009 from 2.27% last year. On the liabilities side, the emphasis was on retailising the deposit franchise and reduction in the overall cost of deposits. This task was accomplished by leveraging on the expanded branch network, the pan-India marketing set-up and through alternate channels like ATMs, Internet Banking, etc. The strengthened infrastructure was extensively used for maximizing cross-selling of products. Your Bank introduced several new products and services in various segments, including in the newly set up Transaction Banking segment, which gave impetus to Trade and Cash Management products as well as electronic nancial services. Your Banks focus on fee-based income has paid rich dividends. Moving forward, your Bank plans to upscale Non-Interest Income through lucrative revenue streams like foreign exchange business, investment banking, high-end treasury products, distribution of third-party products like mutual funds and insurance, international remittances, bullion operations and transaction banking activities, including depository business, commodity market business, etc. Share Capital On June 24, 2008, your Bank issued 3,51,92,064 equity shares of Rs.10/- each in the form of Global Depository Receipts (GDR), each representing one equity share, at a price of US$ 1.47 per GDR. Accordingly, the Paid-up Share Capital and Share Premium Account stand increased by Rs.35.19 crores and Rs.187.00 crores respectively. As at March 31, 2009, the Paid-up Equity Capital of the Bank consisted of 35,50,00,000 shares of Rs.10 each, apart from the value of forfeited shares. Tier II Capital On March 31, 2009, your Bank issued 1000 Unsecured, Non-Convertible, Redeemable, Subordinated bonds (Tier II Bonds) of Rs.10,00,000 each aggregating to Rs.100 crores for a tenure of 63 months at a coupon of 10.50% p.a. payable annually, to augment the capital base. Capital Adequacy In terms of its guidelines for implementation of new Capital Adequacy Framework issued on 27th April 2007, RBI has directed banks not having operational presence outside India to migrate to the Revised Framework for Capital Computation (under Basel II) with effect from March 31, 2009. The migration is proposed in a phased manner over a three-year period, during which banks are required to compute their capital requirements in terms of both Basel I and Basel II. The minimum capital to be maintained by your Bank under the revised Framework is subject to a prudential oor of 100%, 90% and 80% of the capital requirement under Basel I over the year March 2009, 2010 and 2011 respectively. The capital adequacy ratio of the Bank, calculated as per RBI guidelines, is set out below: Items i) ii) iii) Capital Adequacy Ratio (CRAR) CRAR Tier I Capital (%) CRAR Tier II Capital (%) March 31, 2009 (Basel I) 12.33% 7.52% 4.81% March 31, 2009 (Basel II) 12.55% 7.65% 4.90%

Rating Your Bank has received the highest rating A1+ for Certicate of Deposits from ICRA Ltd., while CRISIL Ltd. has assigned the highest rating of P1+ for Certicate of Deposits as well as for Fixed Deposits (upto 1 year contracted maturity). Your Banks Lower Tier II bonds have also been rated LA+ and Upper Tier II bonds as LA by ICRA Ltd., while Fitch Ratings India Pvt. Ltd. has rated the said instruments as A (ind) and BBB+ (ind) respectively. 9

Directors Mr. T. Anantha Narayanan, Mr. Premchand Godha and Mr. Ajay Hinduja, Directors, retire by rotation, and being eligible, have offered themselves for re-appointment. Mr. Y. M. Kale was appointed as Alternate Director to Mr. Ajay Hinduja by the Board at its meeting held on January 15, 2009. Auditors M/s. M. P. Chitale & Co., Chartered Accountants, the Statutory Central Auditors of the Bank, who have audited the accounts of the Bank for the year 2008-09, will retire at the ensuing Annual General Meeting and are eligible for re-appointment. Members are requested to consider their re-appointment and authorise the Board to x their remuneration. The appointment of the Statutory Auditors will be subject to the approval of Reserve Bank of India. The members are further requested to authorise the Board to appoint branch auditors, if any, in consultation with the Statutory Auditors and to x their remuneration. Auditors Report M/s. M. P. Chitale & Co., Chartered Accountants, the Statutory Central Auditors of the Bank, have audited the accounts of the Bank for the year 2008-09 and their Report is annexed. There are no qualications in the Auditors Report. Statutory Disclosures Information, wherever required under the Banking Regulation Act, 1949 or the Companies Act, 1956 as applicable to a banking company, has been laid out in the schedules attached and forms part of the Balance Sheet and Prot and Loss Account. There are no material changes and commitments affecting the nancial position of your Bank, which have occurred between the end of the nancial year 2008-09 to which the Balance Sheet relates and the date of this Report. Considering the nature of activities as an entity in the nancial services sector, the provisions of Section 217(1)(e) of the Companies Act, 1956 relating to conservation of energy and technology absorption do not apply to your Bank. Your Bank has, however, made optimum use of information technology in its operations. Your Bank had 4251 employees on its rolls as on March 31, 2009. The information required under Section 217(2A) of the Companies Act, 1956 and the rules made thereunder is given in the annexure appended hereto and forms part of this Report. In terms of section 219(1)(b)(iv) of the Companies Act, this Report and the Accounts are being sent to the shareholders excluding the aforesaid annexure. Any shareholder interested in obtaining a copy of the said annexure may write to the Company Secretary at the Registered Ofce of the Bank. Employee Stock Option Scheme Your Bank had instituted an Employee Stock Option Scheme to enable its employees, including Whole-time Directors, to participate in the future growth of the Bank. Under the Scheme, options which upon exercise or conversion could give rise to the issue of a number of shares not exceeding in the aggregate 7% of the issued equity capital of your Bank from time to time can be granted. The Employee Stock Option Scheme is in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The eligibility and number of options to be granted to an employee are determined on the basis of criteria laid down in the Scheme and is approved by the Compensation Committee of the Board of Directors. An aggregate of 1,56,21,000 options have been granted under the Scheme. Statutory disclosures as required by the revised SEBI Guidelines on ESOS are given in the Annexure to this Report. Corporate Governance Your Bank continues its endeavour to adopt the best prevalent Corporate Governance practices. A separate report on the status of implementation of Corporate Governance guidelines, as required under Clause 49 (as applicable from January 1, 2006) of the Listing Agreements with the relevant Stock Exchanges, is included in the section on Corporate Governance which forms part of this Report. M/s. Bhandari & Associates, Company Secretaries, have certied that the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreements with the Stock Exchanges have been complied with by the Bank. A copy of their Certicate is also attached to the Section on Corporate Governance. Directors Responsibility Statement Pursuant to the provisions of section 217(2AA) of the Companies Act, 1956, your Directors hereby certify and conrm that: (i) in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

10

(ii) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as at March 31, 2009 and of the prot of the Bank for the year ended on that date; (iii) the Directors have taken proper and sufcient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 and Banking Regulation Act, 1949 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities; and (iv) the Annual Accounts have been prepared on a going concern basis. Acknowledgement Your Directors place on record their appreciation for the contribution made by the employees during the year towards the growth of your Bank. The Directors are grateful to the shareholders of the Bank for their continued trust and condence reposed in the Bank. The Directors are also grateful to the Reserve Bank of India, the Ministry of Corporate Affairs, the Securities and Exchange Board of India and the Stock Exchanges for their guidance and support extended to the Bank. The Board thanks its valued customers for their support and condence, and looks forward to the continuance of this mutually supportive relationship in future. For and on behalf of the Board of Directors

Mumbai, May 28, 2009

R. Seshasayee Chairman

11

ANNEXURE TO THE DIRECTORS REPORT

STATUTORY DISCLOSURES REGARDING ESOPs (FORMING PART OF THE DIRECTORS REPORT FOR THE YEAR ENDED MARCH 31, 2009)
Sr. Particulars No. ESOP 2007 ESOP 2007 (Granted to Key Managerial Personnel on 18/07/2008) 1,00,00,000 1,00,00,000 NIL INTRINSIC VALUE NIL NIL 1,00,00,000 NIL NIL N.A. 1,00,00,000 1,00,00,000 None None ESOP 2007 (Granted to other employees on 18/07/2008) 21,65,000 21,65,000 NIL INTRINSIC VALUE NIL NIL 21,65,000 NIL NIL N.A. 21,65,000 NIL None None ESOP 2007 (Granted to other employees on 17/12/2008) 34,56,000 34,56,000 NIL INTRINSIC VALUE NIL NIL 34,56,000 NIL NIL N.A. 34,56,000 NIL None None

1) 2)

No. of Options granted during the year No. of Options issued during the year

1,00,00,000 1,00,00,000 1,00,00,000 INTRINSIC VALUE NIL NIL NIL NIL NIL N.A. NIL 1,00,00,000 None None

2A) No of options surrendered during the year (Refer note no. 1 & 2 below) 3) 4) 5) 6) 7) 8) 9) Pricing Formula No. of Options vested No. of Options exercised No. of shares arising as a result of exercise of options Options lapsed Variation in terms of Option Money realised by exercise of option

10) Total number of options in force 11) Employeewise details of options granted to: a) b) c) Key Managerial Personnel (Refer Table A as mentioned below) Any other employee who receives a grant in any one year of option amounting to 5% or more of options granted during the year. Identied employees who were granted Options, during any one year, equal or exceeding 1% of the issued Capital (excluding outstanding warrants and conversions) of the company at the time of the grant.

12) Diluted Earnings per share (EPS) pursuant to issue of shares on exercise of option, calculated as per Accounting Standard (AS) 20- Earning Per Share 13) FAIR VALUE RELATED DISCLOSURE Increase in the employee compensation cost computed at fair value over the cost computed using intrinsic cost method. (Rs in crore) Net Prot, if the employee compensation cost has been computed at fair value (Rs. in crore) Basic EPS if the employee compensation cost had been computed at fair value (Rs.) Diluted EPS if the employee compensation cost had been computed at fair value (Rs.) SIGNIFICANT ASSUMPTIONS USED TO ESTIMATE FAIR VALUE Risk Free Interest Rate Expected Life Expected Volatility Dividend Yield Price of the underlying share in the market at the time of option grant. Table A Options to Key Managerial Personnel who were granted options in excess of 5% of the total options granted during the year. Name 1) Mr. Romesh Sobti, Managing Director 2) Mr. Paul Abraham, Chief Operating Ofcer 3) Mr. Sumant Kathpalia, Head (Consumer Banking) 4) Mr. Suhail Chander, Head (Corporate & Commercial Banking) 5) Mr. K. S. Sridhar, Chief Risk Ofcer

Not applicable

Not applicable

Not applicable

Not applicable

0.16 74.89 2.34 2.34 7.48% to 7.60% 7.80% 14.30% 71.55

0.34 147.47 4.28 4.25 5.12% to 6.39% 10.49% 13.70% 50.60

0.34 147.47 4.28 4.25 5.12% to 6.39% 10.49% 13.70% 50.60

0.53 147.47 4.28 4.25 5.12% to 6.39% 11.01% 13.70% 38.95

1 year to 3 years 1 year to 3 years 1 year to 3 years 1 year to 3 years

No. of Options NIL NIL NIL NIL NIL Not applicable 20,00,000 20,00,000 20,00,000 20,00,000 20,00,000 18-07-2009 18-07-2010 31-01-2011 NIL NIL NIL NIL NIL 18-07-2009 18-07-2010 18-07-2011 NIL NIL NIL NIL NIL 17-12-2009 17-12-2010 17-12-2011

Notes to Table A
1) 33% of these options will vest on 33% of these options will vest on 34% of these options will vest on

Note (1) - Pursuant to the Special Resolution passed by the shareholders in the Annual General Meeting held on September 22, 2008, fresh Options were granted under the Employee Stock Options Scheme 2007 to such of those employees, who had surrendered the options granted earlier. Note (2) - Accordingly, stock-based compensation expense of Rs.051 crore accounted for in earlier year is reversed.

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MANAGEMENT DISCUSSION & ANALYSIS

Macro Economic Scenario and Banking Environment The year 2008-09 was characterized by the global nancial crisis that originated in the US sub-prime sector and broader nancial markets and spread throughout the world, turning into a full-blown global economic crisis of a proportion not seen in the recent past. The global nancial environment has been in a crisis phase since mid-September 2008, following the growing distress among giant international nancial institutions. As a result of the sharp slowdown, exports fell, liquidity dried down in the global markets and investment plans were put on hold. Notwithstanding several challenges, particularly from the global economy, the Indian economy remained relatively resilient, and its nancial institutions have remained sound and solvent. The forecasts of the various international agencies point to recessionary conditions during the remainder of 2009 as well. Reecting the impact of global developments on the Indian economy as well as the domestic cyclical factors, various surveys of economic activity point towards moderation in economic activity in the current year. The estimates of Indias GDP growth during scal 2009-10 have been lowered to between 6.5% to 7%. With the increasing integration of the Indian economy with the global economy, the slump in exports has hit domestic demand, particularly since several export segments are employment-intensive. The demand slowdown, which has led to inventory buildups and strained cash ows, has led to concerns about potential defaults on bank loans and consequently the need for debt restructuring. Although the economic condition of major developed economies is not expected to improve in 2009, there is a belief in some quarters that the worst may be over. In India, there is a distinct improvement in sentiment due to the decisive results in the recently concluded parliamentary elections. Your Bank shall continue its pursuit of building its business upon strong customer franchises supported by technology-backed banking products. The outlook for your Banks performance during the current year remains strong. Banks Performance during 2008-09 Business Performance The salient features of your Banks operating performance during the year 2008-09 are summarized in the table below: (Rs. in crores) 2008-09 2007-08 YOY Growth Interest Earned 2309.47 1880.66 22.80% Interest Expended 1850.44 1579.86 17.13% Net Interest Income 459.03 300.80 52.60% Other income: 456.25 297.58 53.32% Fee & Misc. Income 427.36 255.28 67.41% Bad Debts Recovery 28.89 42.30 -31.70% Total Operating Income 915.28 598.38 52.96% Operating Expenses excluding Depreciation 502.86 362.03 38.90% Operating Prot before depreciation and provisions 412.42 236.35 74.50% Less: Provisions & Contingencies 219.91 121.13 81.55% Net Prot 148.34 75.05 97.65% In spite of a turbulent market environment, your Banks Net Prot, after considering necessary provisions and contingencies and all expenses, rose by 97.65% to Rs.148.34 crores, as against Rs.75.05 crores in the previous year. The Operating Prot (before depreciation and provisions and contingencies) was higher at Rs.412.42 crores as against Rs.236.35 crores in the previous year, a rise of 74.50%. The core earnings of your Bank through Net Interest Income improved by 52.60% to Rs.459.03 crores from Rs.300.80 crores. Yield on advances rose during the year to 13.23%, as against the yield of 11.76% in 2007-08. Cost of deposits for the year 200809 was 8.22% as against 7.84% last year. Net Interest Margin (NIM) improved, pre-amortisation, to 1.96% in 2008-09 compared with 1.53% last year. Non-Interest Income rose to Rs.456.25 crores from Rs.297.58 crores, recording a y-o-y rise of 53.33%. Higher revenue growth and better cost management resulted in Cost / Income Ratio improving to 59.76% in 2008-09 as against 67.2% last year. Revenue per employee during the year improved to Rs.21.53 lakhs from Rs.20.86 lakhs last year. 13

Quality of your Banks assets also witnessed rapid improvement, with Non-Performing Assets falling to 1.14% as at March 31, 2009 from 2.27% last year. Your Bank had opened for subscription on June 17, 2008, the issue of 3,51,92,064 Global Depository Receipts (GDRs) to be listed in the Luxembourg Stock Exchange, each GDR representing one equity share of the Bank of the face value of Rs.10/-, fully paid. On the successful conclusion of the issue, your Banks Paid-up Capital has risen to Rs.355.19 crores. During the year, your Bank has issued on private placement basis 1000 Unsecured, Redeemable, Non-convertible, Subordinated bonds of Rupees Ten lakhs each aggregating to Rs.100 crores. These bonds qualify for classication as Tier II Capital. Operational / Product Performance Retail / Consumer Banking During 2008-09, your Banks Retail (Consumer) Banking business showed a healthy growth in revenue. Savings book grew at 9%, Fixed Deposits grew at 20% and Current Account book grew at over 24% on y-o-y basis. Your Bank launched various new products and services which were targeted at building wealth management capabilities as well as enhancing the existing banking channels. Your Bank launched the Gold and Investment verticals, which contributed in excess of Rs.5 crores of revenue in the rst year of operations. Your Bank also launched two new channels Wealth Relationship Managers and the Central Acquisition Team (CAT). The new CAT introduced more than 1,50,000 clients and mobilised Rs.250 crores of retail CASA balance in FY 2008-09. With constant technology upgradation and launch of customized products and services, your Bank was able to retain and deepen the protable client base. The tie-ups with Aviva and Cholamandalam MS help your Bank offer a wider array of Life Insurance and General Insurance products to the customers. Your Bank launched innovative products like Indus Money and Indus Young Saver along with several service enhancements. The Sales through Service model was implemented across all branches. In the Current Accounts space, your Bank launched products and services like Indus Edge, Indus Prestige, Indus Escrow and Indus Collect to enhance the business banking experience. With RBI releasing to your Bank licences for 30 new branches, 50 ATMs and 6 mobile ATMs, your Banks strategy of expanding banking operations to different locations in the country and into new growth markets will gain further momentum during the current year. Your Bank has since launched 5 new look model branches across the country. The Branch governance model implemented has tighter controls on processes and compliance. Your Bank focused on key initiatives like client engagement, compliance and operating process management to enhance the quality of delivery of banking products and services. Consumer Finance Consumer Finance Division (CFD) of your Bank extends asset-backed nancing for a wide range of vehicles spanning across heavy commercial vehicles, three-wheelers, cars, two-wheelers, etc. Besides, speciality Construction Equipments like Tippers, Cranes, Excavators, and Loaders are also nanced. The thrust product during the year was three-wheelers, as this product line yielded high returns. Disbursements during the current year were, however, affected by the general industry slowdown and lower offtake of vehicles and sales recorded by the automobile sector. The total disbursements made during the year 2008-09 was Rs.4269 crores (2007-08: Rs.4358 crores) to new loan accounts numbering 3.77 lakhs (2007-08: 3.38 lakhs). The focus during the year was to optimize the product mix to maximize yields and at the same time maintain portfolio quality. Disbursements for Commercial Vehicles were of the order of Rs. 2608 crores as against Rs.2521 crores in 2007-08. Disbursements for construction equipment loans were at Rs.617 crores, as against Rs.798 crores in the previous year. The disbursements for two-wheeler loans were Rs.767 crores, as against Rs.770 crores in 2007-08. Disbursement for car loans was Rs.241 crores as compared to Rs.269 crores in the previous year. Disbursements in the three-wheeler segment grew by Rs.166 crores to Rs.522 crores from Rs.356 crores. Your Banks CFD is the lead nancier in this segment and holds a market share of 12% in the three-wheeler segment, apart from 10% market share in the passenger segment and 16% in the goods segment. CFD also earned a fee-based income of about Rs.26.91 crore, primarily through distribution of various third-party insurance products, including Credit Shield, which is a personal accident cover offered to your Banks customers through Cholamandam MS General Insurance, being the strategic partner of your Bank for bancassurance in the General Insurance segment. Cross selling to the existing customer base and offering them value-added products resulted in the launch of Top-up loans. 14

Top-up loans is a nance product offered to existing prompt-paying customers on the unencumbered portion of their mother loan contract. The product was launched during the second quarter and the disbursement was Rs.36 crores. CFD operations are efciently supported by state-of-the-art document storage and retrieval facility at your Banks Karapakkam unit (near Chennai) that handles loan document processing and record maintenance. CFDs data centre, also located at Karapakkam, has state-of-the-art facilities in terms of data / equipment protection mechanisms and access rights with sensors to monitor movement within the data centre. Corporate & Commercial Banking Keeping in view the objective of creating a client-centric organization, the Corporate and Commercial Banking Group (CCBG) moved from a branch-based banking model to a business unit model during the year. In its new form, CCBG comprises four Strategic Business Units, viz., Corporate & Investment Banking, Commercial Banking, Business Banking and Financial Institutions & Public Sector. CCBG has also rationalized its geographic coverage by moving people to centres where its clients are located. Each strategic business unit is tasked with maximizing revenue from its clients by deepening relationships and acquiring additional quality relationships from its focus area. Corporate & Investment Banking Group This segment covers large corporate clients, i.e., generally corporates with a turnover in excess of Rs.1000 crores. This Group also houses the Investment Banking Team that executes Investment Banking mandates for your Banks clients. This business underwent a substantial change in 2009, with the hiring of a new Relationship Management Team and changes in your Banks client prole. During the year, a client-focused 40-member strong Relationship Team was built and it brought about 50 large new clients from Indias leading business houses to your Bank, achieving an aggressive asset growth of more than 100% during the year. Highlights of the year: Upgraded the overall credit quality of your Banks asset portfolio by a gradual phasing out of weaker credits and replacing this portfolio with better credits; Enhanced the overall client protability by targeting better-structured deals and active cross-sell of trade and global market products such as Interest Rate Swaps and Option Contracts; Concluded a complex and structured international trade transaction worth about USD 600 mln with large reputed corporates, giving your Bank the necessary llip in terms of fees and market prole; The Investment Banking product team in the C&I business, with delivery capability in Corporate Debt Restructuring, Rupee Debt Syndication and Structured Acquisition Financing / Corporate Finance transactions with special focus on high growth mid-cap companies, successfully concluded relationship-led Rupee and foreign currency debt syndication deals and structured corporate nance mandates in a short span of six months from launch. This group acquired 62 new connections during the year.

Commercial Banking Group Set up with a view to target the sweet spot of the Indian corporate space, Commercial Banking Group focuses on companies with turnover ranging from Rs.25 crores to Rs.1000 crores. These would typically be companies in the fast growing SME and mid-market segment. The Group today operates out of 26 cities, in four zones. The broad business theme of the Group is centred around the following: Increased cross-sell through better alignment of Relationship Managers (RMs) with the product groups in Transaction Banking and Global Markets Groups; Developing a strong risk management culture by proactive account monitoring and client-call programmes; Emphasis on improvements in RM productivity by measuring revenue and relationship per RM. The non-productive relationships were exited & RM productivity on relationship had been increased at 19 clients per RM, with their revenue productivity at Rs.8 crores each. This group acquired 139 new relationships during the year.

Business Banking Group The Business Banking Group (BBG) covers small business with turnover below Rs.25 crores. The entire country has been divided into 5 Zones, each being headed by a Zonal Head. The zones are further divided in 19 Regions which cover 79 cities across the country. 15

The core product range includes working capital facilities (cash credit, export nance, WCDL etc.) contributing to 60% of book size. Besides this, the BBG team also focuses on various allied products viz., warehousing nance, inventory nance, etc. Business Banking has now increased focus on Fee Income by way of higher processing fee, fee on non-funded facilities and forex business (remittances, derivatives, etc.) Business Banking is targeting higher productivity and protability at employee and client level, by way of aggressive new client acquisitions and regular portfolio monitoring. Proactive management of existing portfolio includes timely renewals, regular follow up in sensitive cases, exit strategy, etc. The highlights of the year are: Repricing of the loan book, which is now benchmarked to the market; Warehouse nancing portfolio was quickly ramped up to Rs.250 crores in the segment of Priority Sector Lending; Aggressive acquisition of priority sector assets, primarily through Warehouse Receipt nancing; This group acquired about 1100 clients during the year, and the book grew by 67%.

Financial Institutions & Public Sector Group The Financial Institutions & Public Sector (FIPS) Group was created to provide customized solutions to the banking needs of Public Sector Undertakings (PSUs), both Central and State, as well as to Government Bodies and Financial Institutions like banks, insurance companies and mutual funds. The Group is structured as under: The Public Sector Group, which manages the PSU and Government relationships and caters to the banking needs of PSUs and Government Bodies; The FI Group, which manages correspondent banking relationships with domestic and international banks and provides banking solutions for cooperative banks and domestic commercial banks.

The relationships of both the Groups are managed through 4 Zonal Heads along with a team of 30 Relationship Managers (RMs). Presently, the team is based at 18 locations. The highlights of the year are: A large part of your Banks deposits are managed by this group. Their strategy substantially improved your Banks liquidity, despite adverse market conditions. Implementation of a focused product strategy for cooperative banks resulted in acquiring several new relationships in this segment. The FIPS Group acquired 56 new relationships during 2008-09.

Global Markets Group The Global Markets Group (GMG) is a multi-task unit of your Bank comprising functions such as: Support to all Business Units in sale of international business products including derivatives, bullion import, etc; Conduct proprietary trading in xed income, currencies, equity markets within the set policy framework; and Management of Balance Sheet and ALM, including maintenance of SLR / CRR as well as resources of your bank with the objective of achieving cost reduction and yield maximization with effective control over the market and interest rate risks.

Thus, the GMG functions primarily pertain to Corporate Forex, Proprietary Trading and Money and Capital Market activities. The contribution of GMG includes income from forex operations and trading activity, which grew to Rs.206.56 crores from Rs.99.17 crores in 2007-08, a year-on-year growth of 137%. Exchange income from forex operations grew by over 170% to Rs.73.20 crores from Rs.27 crores. As part of the corporate forex activity, your Bank rolled out GMG sales infrastructure on pan-India basis, divided into three zones, with Product Managers located at major centers, thereby giving geographical reach to GMG for better customer engagement. Further, a dedicated Structured Products Desk has been created in the Dealing Room in Mumbai to offer various risk management / derivative products. GMG provides market information and advisory services through SMS alerts, daily newsletters and direct one-on-one interaction with customers. Your Bank took full advantage of the prevailing volatility in the market and capitalized on the proprietary trading opportunities. 16

The Forex Proprietary Desk contributed Rs.40.56 crores and emerged as one of the important players in the Currency Futures Market. Your Bank has commenced dealing on all major Currency Future Exchanges in India. The investment portfolio of your Bank mainly comprises core SLR investments as prescribed by the Reserve Bank of India. Investment in Non-SLR instruments and RIDF bonds amounting to Rs.8088.34 crores gave an overall yield of 6.88% p.a., while yield from core SLR investments was 7.50% p.a. In view of the then prevailing market conditions, your Bank resorted to running a near-zero Bond Trading book in the wake of the rising yields in the rst half of FY 2008-09. However, in the second half, with policy rate cuts, your Bank focused on trading activity. Money and Capital Markets Desk undertakes proprietary trading activity that covers Fixed Income Bonds, Equity and Interest Rate Swaps. This activity contributed Rs.121.55 crores for the year. Your Bank has reduced its cost of funds through accessing the Call Money Market with an average borrowing of Rs.660.14 crores. Overall, the liquidity management of your Bank was well under control. The Money & Capital Markets Desk effectively managed the ALM and Balance Sheet and deployed surplus funds at protable yields. Transaction Banking Group The Transaction Banking Group was set up in your Bank in 2008-09, with a vision to provide new innovative product offerings across the client segments of Corporate as well as Consumer Banking. This Group was broadly aligned under the product lines of Cash Management Services, Trade Services & Financing, Supply Chain Financing, Global Remittances, Commodity Financing, Electronic Banking and Capital & Commodity Markets, so as to have a highly focused approach to each of these businesses. During the year under review, your Bank rolled out its complete suite of Cash Management products. These products were designed to leverage your Banks wide reach and the extensive distribution network. The collection and payments products launched by your Bank are best in class, supported by robust electronic banking delivery capabilities. Your Bank has received notable mandates, including the function of settlement banking for the Tea trade at four auction centers in India. Going forward, your Bank proposes to launch a new state-of-the-art electronic banking portal that would enable corporate customers to seamlessly interact with your Bank for a wide range of their banking requirements. Your Bank is introducing an integrated Electronic Banking platform through which next-generation banking innovations shall be made available to its customers. The thrust is on enhancing the customers banking experience by shifting controls into his hands, enabling the participation of all stakeholders, setting up an environment of transparency and easy access to information and resources, and creating an online platform that is responsive enough to meet the ever changing customer needs. Your Banks Corporate Internet Banking platform is the rst of these offerings, planned to be rolled out shortly. It will enable your Banks customers to conduct transactions in a secure and efcient environment and facilitate business by offering host-to-host convenience and exibility to meet the entire range of banking requirements under Cash Management, Trade Services and Supply Chain Financing. The Global Remittances business at the Bank saw a signicant thrust during the year, with the addition of seven new Exchange House partners across GCC countries. In addition to this, your Bank also launched the new Indus Fast Remit platform for capturing online remittances from the US to India. This facility is being offered in association with The Bank of New York Mellon, who are the clearing partners. Going forward, it is proposed to extend the online offering to countries in Europe and South East Asia. Over 7 lakh global remittance transactions were handled during the year 2008-09, a volume increase of about 125% over the previous year. The value of remittances processed in 2008-09 was higher by 163% over the value of transactions processed in 2007-08. The Capital and Commodity Markets Division of your Bank focuses on serving Capital and Commodity Exchanges and brokers. Your Bank has the unique distinction of being a Clearing-cum-Settlement Banker to all the major Exchanges viz., NSE, BSE, NCDEX, MCX and NMCE. During the year under review, your Bank enlarged its empanelment with the addition of the Currency Derivatives Segment of NSE, BSE and MCXSX. Your Bank has also acquired Trading-cum-Clearing membership on these Exchanges. Your Bank became Clearing Bank to the rst Energy Exchange of India, the Indian Energy Exchange to cover participants in the Energy Segment. Your Banks Fort Branch is the all-India nodal branch for this purpose and offers 12 hours a day banking services to capital and commodities market participants. Your Bank has also been empanelled with major Bond Issuers like REC, NHAI (for Capital Gain Bonds) and with NABARD (for Bhavishya Nirman Bonds) to enlarge its bouquet of third-party products offerings. While the year under review was a challenging one for the capital markets which witnessed high volatility and saw indices falling up to 40% off the peak, your Bank managed not only to protect its exposure but also selectively expand its portfolio while ensuring that there were no NPAs in this business during the year. 17

Your Banks Capital Market Exposure which as at March 31, 2008 constituted 33.20% of your Banks net worth stood at 26.27% of the net worth as at March 31, 2009, well in compliance with the revised RBI guidelines. The Commodity Financing business of the Bank was extended to 10 states and marked the addition of a number of new commodities, leading to a signicant growth in the asset book. Your Bank has become one of the leading players in this business today. Your Bank has managed to spread its counterparty risk in this business by enlisting new Collateral Managers as well, apart from following a prudent process of due diligence. The outstandings under this head as at March 31, 2009 stood at about Rs.260 crores, higher by 67% over the previous year. The Trade Services and Supply Chain Groups focus on providing end-to-end trade solutions to customers, across their value chain. Besides providing all the vanilla trade solutions such as LCs, Guarantees as well as export and domestic trade credits, your Bank aims at helping clients enhance their cash ow and balance sheet management and improve working capital ows by unlocking funds in the working capital cycle, apart from supporting sales efforts and generating strong customer-supplier loyalty. The supply side nancing solutions that have been launched recently are highly effective tools for negotiating preferential purchase terms and strengthening relationships with strategic partners and core suppliers. For suppliers, the solutions provide assured and cost-effective nancing of trade receivables, thereby improving Days Sales Outstanding (DSO) and in some cases potential balance sheet advantages from converting accounts receivable to cash. On the receivables side, your Bank has structured unique solutions providing competitive source of funding and working capital advantages. Taking its supply chain capabilities a step further, your Bank is also looking at establishing a nancing solution for suppliers of select corporates offering competitively priced pre-shipment loans. Your Bank is developing a supply chain portal enabling further efciencies and cost saving through process automation and electronic document management. Financial Restructuring and Reconstruction Group All activities related to recovery of non-performing loans and restructuring of stressed assets are handled by the Financial Restructuring and Reconstruction Group (FRRG). The role of FRRG has become crucial given the challenging credit environment faced by banks in India. Your Bank has actively utilized the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests Act (SARFAESI) for enforcing securities charged to the Bank in the case of defaulting borrowers as well as to take appropriate portfolio intervention like sale of non-performing loans to specialized asset reconstruction companies. Wherever considered necessary, the Bank has restructured the loans given to otherwise viable businesses which have faced cash ow problems causing them to delay or default in servicing their loan obligations. Your Bank has recovered an amount of Rs.28.90 crores (previous year Rs.42.30 crores) in written off accounts. Net NPAs of your Bank stood at 1.14% (Previous year 2.27%). The gures for NPAs include accounts aggregating Rs.27.35 crores for which applications for restructuring have been received during the year. Such accounts, if restructured, may get upgraded as standard assets. Priority Sector Lending Your Bank has earned the distinction of achieving the RBI-prescribed target as well as sub-targets for Priority Sector Advances. Priority Sector Advances aggregated Rs.6298.79 crores at the end of March 2009 and represented 49.23% of your Banks Net Bank Credit (NBC), compared with 52.75% at the end of March 2008. During the year, your Bank nanced over 2,67,668 agriculturists and the aggregate Direct Agricultural Advances stood at Rs.2039.44 crores representing 15.94% of your Banks NBC at the end of March 2009 compared with 9.70% at the end of March 2008. During the year, your Banks nance to Weaker Sections stood at Rs.1274.86 crores representing 9.96% of your Banks NBC at the end of March 2009 compared to 0.31% at the end of March 2008. Other priority sector advances such as nance to small enterprises represented 25.38% of your Banks NBC at the end of March 2009, compared with 35.56% at the end of March 2008. Enterprise-wide Risk Management Banking business is exposed to a wide spectrum of risks, and it is imperative that the various risks faced by the Bank are effectively monitored, measured and managed. A strong Enterprise-wide Risk Management (ERM) framework, a cornerstone of prudent banking, enables effective and pro-active management of various risks while supporting rapid business growth, helps reduce volatility in earnings and enhances shareholder value. The ERM framework provides a single-window view of the risks faced by the Bank and facilitates integration and coordination in management and monitoring of risks. Your Bank has set up an integrated Risk Management Department, independent of business functions, covering Credit Risk, Market Risk, Operational Risk and Asset-Liability Management (ALM) functions. The risk management practices adopted by your Bank are akin to the best in the industry and are adaptable to a dynamic operating environment. 18

Basel II Reinforcement of Risk Management Your Bank has adopted New Capital Adequacy framework under Basel-II w.e.f. 31.03.2009 for measurement and maintenance of capital adequacy. The New Capital Adequacy framework has enabled the Bank in moving towards allocation of capital based on risk sensitivity. As a prudent measure, your Bank has been undertaking computation of capital requirement under Basel-II since June 2006 under a parallel run. Your Bank has implemented a highly sophisticated system to enable automated computation of capital requirements under Basel-II. The system also supports adoption of advanced approaches under New Capital Adequacy framework for computation of capital charge towards Credit Risk, Market Risk and Operational Risk. Your Bank, in addition to compliance with Pillar-I requirements under Basel-II, has also adopted and implemented the Policy on Internal Capital Adequacy Assessment Process (ICAAP), which facilitates identication and measurement of other material risks (other than the risks covered under Pillar-I). Credit Risk Credit risk is managed both at the Transaction level and Portfolio level. The key objective of credit risk management is to achieve appropriate reward in relation to risks assumed whilst maintaining the credit quality within the dened risk appetite. The various measures adopted by your Bank for managing credit risk are outlined hereunder: Gauging credit risk at the time of credit approval by means of risk rating models designed and implemented for different segments of obligors. Credit Portfolio Management analysis to manage composition of portfolio, its quality and concentration risk. Stress testing of portfolios to measure its shock absorbing capacity and its impact on protability and capital adequacy. Measurement and monitoring of credit quality regularly by means of Weighted Average Credit Rating (WACR) of the Portfolios. Prudential internal limits for assuming exposures on counterparty. Monitoring of prescribed portfolio level limits. Management of Bank Risk and Country Risk by setting structural limits on the basis of risk prole.

Market Risk Market risk arises from changes in interest rates, exchange rates, equity prices and risk related factors such as market volatilities. Market risk is actively managed and aligned with the Banks risk appetite. The Bank manages market risk in the trading portfolios using a robust market risk management framework prescribed in its Market Risk Management policy. The framework includes Value-at-Risk (VaR) limits (for foreign exchange portfolio) and sensitivity limits (for Investments and Derivatives Portfolios) besides various operational limits such as Stop-Loss limits, Exposure limits, Deal-size limits, etc. The market risk management function is independent of the Banks Treasury business and is responsible for: Ensuring compliance with Banks Market Risk Management Policy and monitoring market risk exposures to be in line with the risk limits set by the Board of Directors; Identication, measurement, monitoring, analysis and reporting of the market risks arising out of various trading portfolios; and Determination of appropriate policies and methodologies for measurement and controlling the market risks.

The prime objective of the Banks trading activities is client facilitation and providing products to Banks client base at competitive prices. Further, the Bank also takes positions for proprietary activities. Financial instruments held in the Banks trading portfolio include debt securities, equities, foreign exchange currencies and derivative nancial instruments (forwards, swaps and options etc). Interest Rate Risk in the Banking Book (IRRBB) Interest rate risk in the Banking Book arises from the Banks non-trading activities in four principal forms: Repricing Risk Optionality Basis Risk - Arises from differences in the repricing terms of the Banks assets and liabilities. - Arises where a customer has an option to exit a deal early. - Arises where offsetting investments do not experience price changes in entirely opposite directions from each other. Yield Curve Risk - Arises as a result of non-parallel changes in the yield curve. 19

From an economic perspective, it is the Banks policy to minimise the sensitivity to changes in interest rates on assets and liabilities. Interest rate risk is calculated on the basis of its repricing behaviour of each asset, liability and off-Balance Sheet product. Banks Assets and Liabilities Management Policy has laid down limits as per the Banks risk appetite on the impact on NII for a change in the interest rate. Liquidity Risk and Asset Liability Management (ALM) Liquidity management within the Bank addresses the risk arising from mismatches in maturities across the balance sheet. The Asset and Liability Management Committee (ALCO) of your Bank is chaired by the Managing Director and includes Chief Operating Ofcer, Chief Risk Ofcer, CFO, Heads of Business Units and Functional Heads. ALCO meetings were convened frequently during the year, wherein analytical presentations were made providing detailed analysis of liquidity position, interest rate risks, product mix, business growth versus budgets and interest rate outlook, which helped to review the business strategies regularly and undertake new initiatives. In order to adopt more advanced and sophisticated techniques of assets-liabilities management, your Bank has acquired a stateof-the-art ALM system. The Banks ALM system supports effective management of liquidity risk and interest rate risk, covering 100% of its assets and liabilities. Liquidity Risk is monitored through Structural Liquidity Gaps, Dynamic Liquidity position, Liquidity Ratios analysis and Behavioral analysis, with prudential limits for negative gaps in various time buckets. Interest Rate Sensitivity is monitored through prudential limits for Rate Sensitive Gaps and other risk parameters. Interest Rate Risk on the Investment portfolio is monitored through Modied Duration on a daily basis. Optimum risk is assumed through duration to balance between risk containment and prot generation from market movements.

Your Bank is also in the process of implementing an advanced system for Funds Transfer Pricing (FTP), which shall reinforce the pricing mechanism and enhance performance management framework. Stress Testing Your Bank performs stress tests regularly to simulate as to how the stressed events may impact its funding and liquidity position. The stress tests help the Bank to be better equipped to meet the stressed situations, if they arise, and also to overcome them and prevent them from becoming a serious threat. Contingency Planning Contingency funding plans have been developed to anticipate and respond to approaching or actual material deterioration in market conditions. Your Bank reviews its contingency plans in the light of evolving market conditions. The contingency funding plan covers the available sources for contingent funding to supplement cash ow shortages, the roles and responsibilities of those involved in the contingency plans and the Contingency Triggers. Operational Risk Operational risk is the potential for incurring loss due to failure of employees, technology, systems or processes, projects, disasters, external factors, frauds, etc., including legal and regulatory risks. Your Bank seeks to ensure that key operational risks are managed in a timely and effective manner through a framework of policies, procedures and tools to identify, assess, monitor, control and report such inherent risks in its business. Operational risk occurs on account of fraud, human error, failed processes, inadequate systems, damage to physical assets, improper behavior or external events, etc. Your Banks Risk Management Department provides necessary direction and undertakes meaningful initiatives for implementation of Operational Risk Management framework within the Bank. The Operational Risk Framework comprises Policy guidelines, KRIs, Loss Data collection, Risk & Control Self Assessment (RCSA) and risk proling of branches. The various products launched by your Bank are approved by Operational Risk Management Committee (ORMC), which identies the risks inherent in the product and prescribes controls to mitigate the risks. Systems Risk Your Bank has taken various initiatives such as establishment of Disaster Recovery Site, IT Security framework, In-house Data Centre, Business Continuity Plan, etc. towards mitigation of systems risks. 20

Branch Network As at the end of the nancial year 2008-09, your Bank had a total of 180 branches and 184 off-site ATMs spread across 147 geographical locations. Your Bank has received authorization from Reserve Bank of India for opening of 30 new branches and 56 off-site ATMs. Your Bank has presence in 28 States and Union Territories. In addition, your Bank also has representative ofces in London and Dubai. Infrastructure Your Bank has commenced the process of opening new look branches to enhance the banking experience of customers and to provide personal attention to their needs. Five branches with the new look have already been opened at Bandra, Kolkata, Ludhiana, Vadodara and Lucknow. During the year, Consumer Banking opened its new Administrative Ofce in Gurgaon. Your Banks Consumer Finance Division moved into its own four-storey building at G. N. Chetty Road in Chennai. Your Bank has installed Close Circuit TVs (CCTVs) at select branches and ATMs as a security measure during the year. This exercise will be continued in the year 2009-10 so as to cover other select branches and all off-site ATMs. Banking Operations Your Bank has strengthened the policy framework on Know Your Customer (KYC) norms and Anti Money Laundering (AML) measures from time to time, in line with the policies of Reserve Bank of India. Your Bank has implemented a simplied procedure of Know Your Customer which will benet lower income group persons to open accounts with minimal documentation. In compliance with RBI directives, your Bank has undertaken review of risk categorization of all customers accounts. Your Bank is a member of Banking Codes and Standards Board of India (BCSBI), which was set up to ensure that banks in India adhere to a voluntary Code, which suggests minimum standards for fair treatment to customers availing bank services. Your Bank has made a commitment to adhere to all the provisions of the Code prescribed by BCSBI. Your Bank has implemented almost all provisions of the Code. The Code is displayed at all branches of your Bank and is also hosted on your Banks website in thirteen languages. In June 2008, the Honble Finance Minister released the Code of Commitment to Micro and Small Enterprises (MSE Code). MSE Code is a voluntary Code, which sets minimum standards of banking practices for banks to follow when they are dealing with micro and small enterprises as dened in the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. It provides protection to MSE customers and explains how banks are expected to deal with customers in day-to-day operations and in times of nancial difculty. As a member of BCSBI, your Bank has adopted the MSE Code in full. More metro centres were brought under centralized clearing for quicker and efcient process. Accordingly, clearing was centralized at Kolkata, Chennai, Bangalore, Chandigarh and Ludhiana. It will be your Banks endeavour to bring more centres under centralized clearing in the near future. Automated ECS has been implemented at major centres. Cheque Truncation System (CTS), which was implemented in New Delhi by RBI, was operationalised in March 2008 and has fully stabilized. Your Bank is participating in clearing through CTS. Your Bank has implemented various system upgrades which include the Teller Module, Expenses Management, etc. Your Bank has strengthened its branch processes and monitoring capability to ensure smooth functioning of day-to-day activities. Your Bank has improved internal controls and compliance through the following: Separate and independent Compliance function has been set up for Bank-wide compliance; Vigilance function has also been set up; Expense management software has been deployed at all branches for facilitating cost control; Branch Monitoring Unit is operative for regular monitoring of branch operations; Voucher verication process has also been operationalised during the year for checking all the entries posted by the branches; and Process adherence and Quality function has been operationalised for attaining uniformity in processes followed by branches, to minimize operational risk.

Your Bank has revised and adopted a comprehensive policy, in pursuance of RBI advices, on settlement of claims in respect of deceased depositors. The Policy covers all types of deposits, and has simplied the procedure for settlement. 21

Your Bank has adopted the Best Practice Code, relating to transaction processing, with the objective of documenting the procedures in line with national and international best practices. Your Bank has also put in place a Deposit Policy and a Fair Practice Code. While the former outlines the guiding principles in respect of various deposit products of the Bank, terms and conditions governing the operations of these accounts and the rights of depositors, the Fair Practice Code is a voluntary code establishing standards to be followed by all our branches in their dealings with the customers. Your Bank has also framed Citizens Charter to promote fair banking practices and to give information in respect of various activities relating to customer service. Your Bank has put in place the Compensation Policy as a part of commitment to its customers to compensate them in case of your Bank being unable to meet the service levels committed to the customers. The main objective of the Policy is to establish a system whereby Bank shall compensate the customer for any direct and actual loss by way of internal loss / payment of charges by customer due to deciency in service of the Bank, to the extent mentioned in the policy. The Policy is based on the principle of transparency and fairness in the treatment of customers. Prompt, efcient and courteous service is a key to success for any service organization and your Bank has recognized it and has formulated the Grievance Redressal Policy. The Policy aims to minimize the instances of customer complaints through effective service delivery, a review mechanism and prompt redressal of customer grievances. Internal Control Systems and their adequacy Operational Controls Your Bank has laid down the policy framework related to Know Your Customer (KYC) norms and Anti Money Laundering Measures (AML). The policy has been framed on the basis of recommendations of the Financial Action Task Force and the paper on Customer Due Diligence for Banks issued by the Basel Committee on Banking Supervision. The AML software that has been implemented has effectively brought the operational risk under control. In accordance with RBIs recommendations, a Committee on Procedures and Performance Audit on Public Service in Banks (CPPAPS), comprising senior functional heads of the Bank and a few customers, has been established. The performance of the CPPAPS is also reviewed by the Customer Service Committee of the Board of Directors. Customer Service Your Bank has constituted a Branch Level Customer Service Committee (CSC) at all branches comprising employees and customers of the Branch. CSC meetings are convened every month to examine complaints / suggestions, cases of delay, difculties faced / reported by customers/ members of the Committee. Feedbacks and suggestions are submitted to CPPAPS. CPPAPS examines and provides relevant feedback to the Customer Service Committee of the Board for necessary policy / procedural action. Grievance Redressal Mechanism Your Bank has designed an escalation process for all customer complaints received at branches and Corporate Ofce. A quarterly report related to complaints received and redressed is placed before the Board of Directors. Based on the recurrence of complaints in specic area, causative factors are identied and necessary remedial measures are initiated. Your Bank maintains a dedicated page for lodging of complaints and complaint redressal mechanism on its website www.indusind.com where information on the escalation process and the details of the nodal ofcer to receive complaints has been furnished. These details are also displayed at the Banks Branches. Details of the Banking Ombudsman Scheme 2006 are also displayed at branches and provided on the website. Your Bank has also created a link on its website for a Complaint Form, which gives opportunity to all our customers to air their grievances in a simplied way and get their complaints redressed without delay. With a view to enhance customer interface your Bank has initiated specic measures such as: Upgradation of Contact Centre and bringing more functions under the ambit of the same; Deployment of special software at all branches for logging in customer complaints as also requests, mainly to track their status at any point of time with the ultimate objective of ensuring that the customers requirements are met on priority. This software will also equip your Bank to get a complete view of the issues raised by every customer over a period of time, and facilitate identication of repeat instances so as to take corrective action to improve service quality; Evaluation of software for Relationship Management to ensure that all customer contacts are recorded and tracked for nal closure as also to ensure that the customers requirements are evaluated and factored in new product lines.

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Inspection and Audit Your Banks Internal Audit function is sufciently geared to make an independent and objective evaluation of the adequacy and effectiveness of internal controls on an ongoing basis to ensure that business units adhere to compliance requirements and internal guidelines. To achieve this end, comprehensive processes have been established for the internal auditors to ensure that all facets of your Banks operations are subjected to scrutiny. Your Banks Internal Audit function undertakes a comprehensive risk based audit of all its business units. An Audit Plan is drawn up on the basis of a risk proling of auditee units. Accordingly, your Bank undertakes internal audit of its business units at a frequency synchronized to the risk prole of each unit in line with the spirit of Risk-Based Internal Audit. The scope of risk-based internal audit besides examining the adequacy and effectiveness of Internal Control Systems and external compliance also evaluates the risk residing at the auditee units. Credit quality assurance audit is also undertaken. To complement the Banks Internal Audit function, we have strong concurrent audit system in place. Further, in order to effectively address business concerns and to react with speed, your Banks Internal Audit function is decentralized, and has been functioning as an integrated unit to cover all its operational activities. Regional Auditors at different locations are equipped to evaluate all aspects of the Banks business. Your Bank has developed an effective online surveillance system by using its fully networked Core Banking Software, welldened and strong internal controls, need-based access to computer systems and clear audit trails which have helped to mitigate operational risks. To facilitate ownership of the quality control mindset, all exception reports are now available on the system, for viewing and use by business units. There is a constant push to automate audit activities in order to enhance transparency and standardization, as well as to speed up the availability of MIS to Top Management. To ensure independence of the audit function and in line with best corporate governance practices, the Internal Audit function has a reporting line to the Audit Committee of the Board, which oversees the performance and reviews the effectiveness of controls laid down by the Bank and compliance with regulatory guidelines, besides rendering effective guidance to ensure conformity with best practices in the area of Internal Audit. Human Resources / Industrial Relations Human capital is the key resource that the company creates, develops and nurtures. Human Resource functions focus is to ensure employee satisfaction and retention by creating a performance enabling work culture within the organization. In the year 2008-09, the manpower strength of your Bank grew from 2,869 employees in 2007-08 to 4,251 employees. Despite the prevailing economic slowdown and recessionary market trends, your Bank hired aggressively to match its business expansion initiatives. This year witnessed higher intake of quality professionals from peer banks and other reputed corporates, reinforcing the belief that your Bank has become a preferred employer. In order to improve the knowledge base and skills of employees, your Bank intensied focus on learning and development activities. During the year, the Bank conducted more than 60,000 learning man-hours covering 5,500 participants in areas of Product, Process, soft skills and specialized domain-based training programs. E-learning initiatives comprising online course modules and online assessment tests were launched across the Bank to provide scalability of learning and to reduce turnaround time of disseminating learning. With a view to nourishing a performance-oriented culture, the concept of SMART Goals, comprising dened goals and targets was launched across your Bank. Performance reviews on SMARTs were conducted periodically to track progress on goal achievements. ESOP scheme was launched for critical employees to make them key stakeholders in the growth of the Bank. New market-aligned designations in synchronization with business realities were launched for employees across your Bank. In order to improve end-user satisfaction, there is a concerted effort to automate all HR processes and launch of Online Leave Application Processing System, Learning Management System and HRIS Implementation in progress are steps in that direction. During the year, creating of avenues for employee recreation was focused upon by organizing get-togethers and participation in various sports tournaments to make workplace a fun place and improve employee productivity and commitment. Employee Stock Option Scheme Your Bank had instituted an Employee Stock Option Scheme to enable its employees, including Whole-time Directors, to participate in the future growth of the Bank. Under the Scheme, options which upon exercise or conversion could give rise to the issue of a number of shares not exceeding in the aggregate 7% of the issued equity capital of your Bank from time to time can be granted. The Employee Stock Option Scheme is in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The eligibility and number of options to be granted to an employee is determined on the basis of criteria laid down in the Scheme and is approved by the Compensation Committee of the Board of Directors. An aggregate of 1,56,21,000 options have been granted under the Scheme. Statutory disclosures as required by the revised SEBI Guidelines on ESOS are given in the Annexure to the Directors Report. 23

Other Initiatives underway Quality Quality is a critical differentiator in the service industry, and IndusInd Bank has had the unique distinction of getting its entire Branch Network certied as compliant with ISO 9001:2000. However, with the passage of time, it was necessary to move beyond this, and to embed quality in every aspect of the Banks activities. Your Banks corporate ambition is to reposition itself as a Top 3 performer among new generation private sector banks in 3 years, measured by Protability, Productivity & Efciency. This calls for tripling revenues in 3 years, and to meet this challenge, a six-pronged strategy was spelt out at the commencement of the last nancial year. In tandem with this strategy, it was decided to initially concentrate efforts on raising quality in 6-7 identied areas. Teams with relevant skills are working on each such project under the leadership of a Top Executive. Each team is working on specic actions within its project brief, and progressively, new activities will be taken up as possibilities and payoffs from actions underway are exhausted. This movement shall progressively cover larger aspects of the Banks operations, products, people, the way of relating by employees with clients and colleagues, communication with the external environment, etc. The Bank has tied up with the Confederation of Indian Industrys Institute of Quality (CII-IQ), Bangalore, for the implementation of a Quality Management Program. This initiative was kicked off with a series of workshops facilitated by CII-IQ faculty across the country, where Managers were sensitized to the need for quality, and practiced converting quality concepts into denite action steps for regular implementation. Shareholder delight With a view to promoting transparency and promoting shareholder delight, apart from frequent interaction by your Bank with the Registrar & Transfer Agent, steps have been taken to obtain contact details such as e-mail IDs, cell phone numbers and telephone numbers of all shareholders so as to communicate to shareholders information about developments in the Bank. This direct communication would be in addition to the regular dissemination of information through usual channels such as the Stock Exchanges, Press, etc. Going forward, your Banks shareholders shall receive best-of-class shareholder services and be the best informed about developments in the Bank. Information Technology Any organisation has a primary goal to increase year-on-year protability, without losing focus on its customers. Value additions to customers and rendering of courteous and efcient customer service have to be ensured at all times for customer acquisition and retention. Information Technology plays a major role in realizing this goal. Your Bank has always been at the fore front in deploying the latest, state-of-the art technology, a fact which has been endorsed by a prestigious Banking Association like the IBA and IT organizations like MiSYS International, IBM, etc. Earlier initiatives are stable and running smoothly like the robust infrastructure with fall-back communication links (MPLS & VSAT), Server & Storage Consolidation on AS/400 machine with multi-operating system deployment to reap benets of virtualization & on-demand Technologies, critical systems hosted at a Suntone certied data center at Mumbai, comprehensive and robust DR (at Chennai) for Core Banking (running Mimix solution for on-line replication) and ATM switch with annual drills, STP for RTGS & NEFT, SMS-based Mobile banking, VISA Gold Card, Gift Card, Sunday banking, 8-to-8 banking, Contact Centre, etc. The Banks Core Banking Software - Equation from Misys U.K. - has been upgraded to support new functionality, enhance security & efcient processing, to satisfy new business requirements and to help launch new and sophisticated banking products. A major customer delivery channel, the Internet Banking was upgraded with the DataBase on Oracle to support new functionality and cater to a larger customer base. With a view to improve processes and minimize manual intervention, centralisation and automation of TDS System, automation of ECS processing, etc. are in place. Besides adding new channels of communication and banking, for customer delight, the Bank has deployed an Internet Payment Gateway, a Contact Centre and the 3-in-1 account. The Payment Gateway enables your Banks customers to transact on-line with various merchants such as IRCTC (Indian Railways Ticket Booking) and Bill Desk (On-Line Utility Bill Payments) to name a few. The Contact Centre provides Banks Customers an Automated Interactive Voice Response System, besides interaction with the Agents, through which customers can execute transactions such as Funds Transfer, Stop Cheque Request, Cheque Book Request, Balance Enquiry, Account Statement, etc. The 3-in-1 account, i.e., movement account and DP account from your Bank along with the share trading account from Religare has enabled our customers to do on-line trading with ease. Your Bank has also developed an effective MIS system, Analytical CRM system and Data Warehouse. Apart from ensuring regulatory compliance, these devices enable the Banks Management to measure and closely monitor performance in various business spheres and on several parameters such as efciency, expenses, customer protability, etc. 24

Apart from ensuring very high availability (business-as-usual status), some of the new initiatives taken up during 2008-09 are as follows: Upgrade of various solutions for efciency and providing new functionalities like Equation (core banking solution), Opics Plus (Treasury system) Swift Alliance Access, Cash Management Solution, Anti Money Laundering, etc. Implementation of new solutions for better control and efciency like the front-end Teller system (GUI-based, user-friendly), e-mail archiving, Fax server, Active Directory, etc. Project undertaken for network backbone strengthening, security enhancement, consolidation of data center and servers and shifting DR from Hyderabad to Chennai. Initiated the project for setting up an infrastructure for document management & workow with twin objective of improving efciency and TAT (turnaround time). Account opening process will be totally electronic with minimal paper movement. Talisma, a CRM solution for contact centre, was upgraded for better management of customer requests and complaints. Three modules (Business Solution Packs) namely, Basel-II, ALM & FTP went live on Reveleus platform purchased from Oracle Financial Services. There has been no signicant change in the relevant laws affecting the banking industry during the year 2008-09. The Bank has developed Legal Cases Management Module for online database of legal cases led by the Bank and against the Bank. Status of legal cases is updated by branches. With the introduction of this module, details of various legal cases are available by click of the mouse. The Bank has revised and streamlined the existing procedure of credit documentation which has reduced the turnaround time for credit disbursement to borrowers.

Legal

Corporate Communications The major focus of your Bank during the year 2008-09 was on increase of visibility and to reposition itself as a bank with value-added products and services. In order to achieve the set objectives and to remain competitive in the market, a number of new initiatives have been taken and optimum use is made of both internal and external communication channels to achieve the ambitious goals. Signages have been changed across the country: your Banks name was earlier written against a white background and in two lines, which was not creating an impact in terms of visibility. Hence, without changing the colours and the name of the Bank, a new format has been created in which the base colour of the signage is burgundy and the Banks name is shown in white, in a single line. In a phased manner, all the signages of the branches and offsite ATMs were changed. This improved the visibility of the Brand and the Bank has witnessed a continuous rise in footfalls. During the year, there were also launches of new products and services and along with it a series of new collaterals like posters, banners, iers and tent cards were introduced, donning a new look. Apart from a pan-India print campaign through vernacular and local dailies at regular intervals, this year, other media channels like radio, SMS services and TV channels were also considered for boosting resource mobilization and product campaigns. Your Bank also advertised on Airport Trolleys at select locations, with a focus on creating better awareness of the brand. In the pursuit of enhancing the overall brand visibility and repositioning it as a smart, energetic, young and pleasand brand personality, your Bank conceptualized a new positioning statement Makes you feel richer. The new campaign has been rolled out in all news channels, general entertainment channels and in leading regional channels. On the sponsorship front, your Bank participated in multi-dimensional issues ranging from sports, philanthropy, Indian music with service organizations / NGOs and corporate bodies to gain effective visibility. Some of the major events which your Bank associated with were Pravasi Bharatiya Divas, Mumbai Football League, Priyadarshani Academy, Pandit Chaturlal Memorial Music Concert and many other events at various branches. Recognitions and Awards - Year 2008-09 Your Bank bagged The Economic Times Acer Intel Smart Workplace Award, in the Financial Services category. These awards were instituted with the objective of recognizing companies, which have used technology to enhance productivity in their workplace. Awards were announced in various categories like nancial services, industrial markets, consumer markets, infrastructure, entertainment and information / communication. Your Bank ranked 7th in a cluster of 15 similar member banks based on size (number of branches / ofces, employee strength, deposits and number of customers) in a Customer Satisfaction Survey conducted by Indian Banks Association (IBA) through Gallup Consulting to establish industry benchmarks for key aspects of customer service and evaluate individual banks against this benchmark.

25

CORPORATE GOVERNANCE
Certicate on Compliance with the conditions of Corporate Governance under Clause 49 of the Listing Agreement(s) To the members of IndusInd Bank Limited: We have examined the compliance of conditions of Corporate Governance by IndusInd Bank Limited (the Bank) for the year ended 31st March, 2009 as stipulated in Clause 49 of the Listing Agreement of the said Bank with the Stock Exchanges. The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limited to procedures and implementation thereof adopted by the Bank for ensuring compliance with the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the nancial statements of the Bank. In our opinion and to the best of our information and according to the explanations given to us, we certify that the Bank has complied with the conditions of Corporate Governance as stipulated in the above-mentioned Listing Agreement. We further state that such compliance is neither an assurance as to the future viability of the Bank nor the efciency or effectiveness with which the Management has conducted the affairs of the Bank. For Bhandari & Associates Company Secretaries S. N. Bhandari Proprietor C. P. 366

Mumbai, May 5, 2009 Certication by the Chief Financial Ofcer and the Managing Director

In terms of the revised Clause 49 of the Listing Agreement, the Certication by the Managing Director & CEO and the Chief Financial Ofcer of the Bank, on the nancial statements and the internal controls relating to nancial reporting has been obtained and submitted to the Board. The Banks Philosophy on the Code of Corporate Governance Your Bank believes that consistent implementation of good Corporate Governance practices contributes towards developing and sustaining the best operating systems and procedures. The systems which have evolved allow sufcient freedom to the Board and the Management to make decisions and take actions towards the growth of the Bank, and simultaneously remain within the framework of effective accountability. To maintain high standards of good Corporate Governance, your Directors have formed various Committees of the Board. The Committees meet regularly to achieve their specic objectives. Your Bank is committed to operate on commercial principles ensuring, at the same time, the need to remain accountable, transparent and responsive to its stakeholders. Your Bank acknowledges the need to uphold the integrity of every transaction it enters into and believes that honesty and integrity in its internal conduct would be judged by its external behaviour. In this context, your Directors have adopted a Code of Conduct for Directors and Senior Management. This Code attempts to set forth the guiding principles on which the Bank shall operate and conduct its daily business with its multitudinous stakeholders, government and regulatory agencies, media, and anyone else with whom it is connected.

Code of Conduct for Directors and Senior Management The Board of Directors has laid down a code of conduct for all Board Members and Senior Management1 of the Bank. The said code of conduct has been uploaded on the website of the Bank (www.indusind.com) under the Shareholder-related Matters section. The same is available for reference in the following URL: http://www.indusind.com/downloads/codeofconduct06.pdf Declaration by the Managing Director: All members of the Board and Senior Management have afrmed to the Board, of having complied with the Code of Conduct during the year ended March 31, 2009 and no violation of the Code of Conduct has been reported during the year.
1 For this purpose, the term Senior Management means personnel of the Bank who are members of its core management team, excluding Board of Directors. This comprises members of management who are of the level of functional heads.

QUALITY POLICY IndusInd Bank is committed to meet and strive to exceed customer requirements through timely, error-free and courteous service. We shall continually improve the effectiveness of our work process through training, customer feedback and review of systems. THE MISSION To position IndusInd Bank Limited as a Top 3 performer in the new private bank space in 3 years measured by the 3 parameters of Protability, Productivity and Efciency. 26

Board of Directors i. Composition The Board comprises Directors who have specialised knowledge and professional experience in diverse elds. Information in respect of each Director is given below: Name of Director Mr. R. Seshasayee Date of Birth 1-6-1948 Special Knowledge / Practical Experience Part-time Non-executive Finance and General Chairman Management Independent Non-executive Banking Nature of Directorship Occupation Managing Director of Ashok Leyland Ltd. Retired as Dy. Managing Director of State Bank of India Retired as Executive Director (Finance) of Ashok Leyland Ltd. Professor - Finance & Accounting, IIM Ahmedabad Practising Advocate Industrialist Industrialist

Mr. R. Sundararaman 12-5-1942

Mr. T. Anantha Narayanan

9-4-1945

Dr. T.T. Ram Mohan

28-1-1956

Independent Non-executive Agriculture & Rural Economy (Practical experience), Finance (Special Knowledge) Independent Non-executive Banking & Finance

Mrs. Pallavi Shroff Mr. Premchand Godha Mr. Ajay Hinduja

22-4-1956 8-1-1947 12-12-1967

Mr. S. C. Tripathi Mr. Ashok Kini Mr. Romesh Sobti ii. Meetings

1-1-1946 12-12-1945 24-3-1950

Independent Non-executive Law Independent Non-executive Finance & SSI (Practical experience) Banking & Finance Non-executive Director (Director, IndusInd International Holdings Ltd., Mauritius, a promoter company.) Independent Non-executive Rural Economy & Cooperation Independent Non-executive Banking Whole-time Director Banking

I.A.S. (Retd.), Advocate Retired as Managing Director of State Bank of India Managing Director & CEO

During the year ended March 31, 2009, 6 meetings of the Board were held on, June 24, 2008, July 25, 2008, September 22, 2008, October 16, 2008, January 15, 2009 and March 24, 2009. Details of attendance at the Board Meetings and the previous Annual General Meeting, other Directorships and Membership of Committees pertaining to each Director are as follows: Name of the Director No. of Board Meetings attended 6 5 5 6 0 4 2* 6 6 2 6 No. of other Public Limited Companies in which Director2 10 0 6 2 6 3 1 9 3 5 0 No. of Committees of the Bank in which member 4 5 9 5 3 3 1 3 2 0 9 Whether attended last AGM Yes Yes Yes Yes No Yes Yes Yes Yes No Yes

Mr. R. Seshasayee Mr. R. Sundararaman Mr. T. Anantha Narayanan Dr. T. T. Ram Mohan Mrs. Pallavi S. Shroff Mr. Premchand Godha Mr. Ajay Hinduja Mr. S. C. Tripathi Mr. Ashok Kini Mr. Y. M. Kale1 Mr. Romesh Sobti 1. 2.

Inducted on the Board as Alternate Director to Mr. Ajay Hinduja w.e.f. January 15, 2009. *Two other meetings were attended by Mr. Y. M. Kale in the capacity of Alternate Director to Mr. Ajay Hinduja. Excludes Foreign Companies, Private Limited Companies, Trusts, etc. 27

iii. Remuneration Non-executive Directors compensation: The members of the Bank, at the 11th Annual General Meeting held on September 3, 2005, passed a resolution authorising the Board of Directors of the Bank to x the sitting fee payable to Non-executive Directors in accordance with Rule 10B of the Companies (Central Governments) General Rules & Forms, 1956 as amended from time to time read with section 310 of the Companies Act, 1956, or any other rule, regulation, notication issued by any competent authority from time to time as may be applicable. Subsequently, SEBI, vide circular No.SEBI/CFD/DIL/CG/1/2006/13 dated January 13, 2006 has claried that the requirement of obtaining prior approval of shareholders at a general meeting shall not apply to the payment of sitting fees to Nonexecutive Directors, if made within the limits prescribed under the Companies Act, 1956. The Bank has not granted stock options to any of the Non-executive Directors. The details of sitting fees paid to the Nonexecutive Directors for attending the Board and Committee meetings held during the year 2008-09 are as under: Name of Director Salary *(including perquisites & allowances) Sitting Fee (Rs.) Total (Rs.)

Mr. R. Seshasayee Mr. R. Sundararaman Mr. T. Anantha Narayanan Dr. T. T. Ram Mohan Mrs. Pallavi S. Shroff Mr. Premchand Godha Mr. Ajay P. Hinduja Mr. S. C. Tripathi Mr. Ashok Kini Mr. Y. M. Kale a.

2,70,000 4,70,000 4,70,000 3,20,000 20,000 1,00,000 40,000 2,60,000 2,40,000 40,000

2,70,000 4,70,000 4,70,000 3,20,000 20,000 1,00,000 40,000 2,60,000 2,40,000 40,000

The criteria for making payment of remuneration to the Non-executive Directors are as follows: An amount of Rs.20,000/- per meeting is being paid towards sitting fee for attending meetings of the Board, Committee of Directors and the Audit Committee, to the Non-executive Directors in accordance with Rule 10B of the Companies (Central Governments) General Rules & Forms, 1956. With effect from May 2, 2006, the Board has decided that an amount of Rs.10,000/- per meeting be paid as Sitting Fee to the Non-executive Directors for attending meetings of Committees other than those mentioned in (a) above.

b.

Whole-time Directors compensation: The appointment of Whole-time Director is made with the approval of the Reserve Bank of India. Mr. Romesh Sobti, Managing Director: The details of the terms of appointment as approved by the Reserve Bank of India in respect of Mr. Romesh Sobti, Managing Director & CEO of the Bank w.e.f. February 1, 2008, comprise the following: Salary of Rs.100.80 lakhs p.a., Other Allowances of Rs.122.95 lakhs p.a., facility of company-leased and furnished accommodation, Provident Fund at 12% of Salary, Gratuity at one months Salary, Pension at two months Salary, Medical Expenses of upto Rs.1 lakh p.a., Mediclaim for self and family members, Personal Accident Insurance, Performance-based Bonus, membership of two clubs and two ofcial cars with drivers. The appointment is for a period of 3 years commencing from February 1, 2008. Stock Options amounting to 20,00,000 shares at Rs.48/- per share have been offered as part of the remuneration package. iv. Shareholding The Equity shares held by Directors as on March 31, 2009 are (i) Mr. T. Anantha Narayanan 580 (0.0002%); (ii) Mr. Premchand Godha 100 (0.0000%) and (iii) Dr. T.T. Ram Mohan 2,300 (0.0006%). No Director of the Bank holds shares in your Bank for other person/s on a benecial basis. No Director holds any other security issued by the Bank. Details of Directors to be re-appointed at the AGM Mr. T. Anantha Narayanan, Mr. Premchand Godha and Mr. Ajay Hinduja, Directors, retire by rotation at the forthcoming Annual General Meeting, in accordance with Article 112 of the Articles of Association of your Bank and the applicable provisions of the Companies Act, 1956. 28

Mr. T. Anantha Narayanan, Mr. Premchand Godha and Mr. Ajay Hinduja, being eligible, have offered themselves for re-appointment as Directors of the Bank. A brief prole of the Directors seeking re-appointment is given below:
Director Qualication and Experience Expertise in specic functional areas Date of Appointment Name of companies in which Director Number of Committees (of other companies in which member) 5 Shareholding (No. of shares) 580

Mr. T. Anantha Narayanan

B. Com, ACA, AICWA. Finance professional with 40 years experience. Also, involved in general industrial matters through CII; also an organic farmer. B. Com., A.C.A. A rst generation entrepreneur, having over 35 years of experience, including 31 years in the Pharmaceuticals industry. Initial 4 years, practised as a Chartered Accountant.

Agriculture & 18.03.2004 Rural Economy

Ashley Holdings Limited Allsec Technologies Limited Ashley Investments Limited Ashok Leyland Project Services Limited Sanco Trans Limited Sundaram BNP Paribas Asset Management Co. Ltd.

Mr. Premchand Godha

Finance and SSI (Practical experience)

31.10.2006

Ipca Laboratories Limited Vasant Investments Corporation Limited Brescon Corporate Advisors Limited Kaygee Investments Private Limited Gudakesh Investments & Traders Private Limited Paranthapa Investments & Traders Private Limited Kaygee - Loparex India Private Limited Ipca Traditional Remedies Pvt. Limited Cognizant Finance Pvt. Limited Makers Laboratories Limited Exon Laboratories Pvt. Limited Paschim Chemicals Pvt. Limited Mexin Medicaments Pvt. Limited Sea Mist Properties Pvt. Limited

100

Mr. Ajay Hinduja

Degree in Economics (with specialisation in Finance)

Banking & Finance

31.10.2006

Hinduja Group India Limited

Nil

Nil

Committees of the Board The Board has constituted several Committees of Directors to take decisions and monitor the activities falling within their terms of reference. The Boards Committees are as follows: Committee of Directors Terms of Reference: The Committee of Directors exercises powers delegated to it by the Board, for managing the affairs of your Bank; for efcient control over operational areas; and for ensuring speedy disposal of matters requiring immediate approval. Composition: Meetings: The Committee comprises six members viz., Mr. R. Seshasayee (Chairman), Mr. R. Sundararaman, Mr. T. Anantha Narayanan, Mrs. Pallavi Shroff, Dr. T. T. Ram Mohan and Mr. Romesh Sobti. The Committee met eight times during the nancial year 2008-09, viz., on May 15, 2008 (Mr. T. Anantha Narayanan and Mrs. Pallavi Shroff were unable to attend), June 24, 2008 (Mrs. Pallavi Shroff and Mr. Romesh Sobti were unable to attend); August 14, 2008 (Mrs. Pallavi Shroff and Mr. Romesh Sobti were unable to attend), November 11, 2008 (Dr. T. T. Ram Mohan, Mrs. Pallavi Shroff and Mr. Romesh Sobti were unable to attend), November 26, 2008 (Mrs. Pallavi Shroff was unable to attend), January 5, 2009 (Mr. R. Seshasayee, Mrs. Pallavi Shroff and Mr. Romesh Sobti were unable to attend), February 3, 2009 (Mr. R. Seshasayee, Dr. T. T. Ram Mohan and Mrs. Pallavi Shroff were unable to attend), and March 12, 2009 (Mr. R. Seshasayee, Mrs. Pallavi Shroff and Mr. Romesh Sobti were unable to attend). Except as indicated within the brackets, all the members had attended these meetings.

29

Audit Committee of the Board Terms of reference: The role of the Audit Committee includes, inter alia, (1) Oversight of the Banks nancial reporting process and the disclosure of its nancial information to ensure that the nancial statements are correct, sufcient and credible, (2) Recommending to the Board, the appointment / re-appointment of auditors and xation of audit fees, (3) Reviewing with the management, the quarterly and annual nancial statements before submission to the Board for approval, with particular reference to:(i) Changes, if any, in accounting policies and practices and reasons for the same; (ii) Major accounting entries involving estimates based on the exercise of judgment by the management; (iii) Signicant adjustments made in the nancial statements arising out of audit ndings; (iv) Disclosure of related party transactions, if any; (v) Qualications in the draft Audit Report; and (vi) Management discussion and analysis of nancial condition and results of operations. The specialised functions of the Audit Committee include (1) Reviewing with the management, the performance of statutory and internal auditors and the adequacy of the internal control systems, (2) Reviewing the ndings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature. Composition: The Committee comprises four members viz., Mr. T. Anantha Narayanan (Chairman), Mr. R. Sundararaman (term concluded on March 24, 2009), Mr. S. C. Tripathi, Mr. Ashok Kini and Mr. Premchand Godha (inducted on March 24, 2009). The Committee met six times during the nancial year 2008-09, viz., on June 23, 2008, July 25, 2008, August 14, 2008, October 15, 2008, January 15, 2009 (Mr. R. Sundararaman was unable to attend) and March 2, 2009 (Mr. Ashok Kini was unable to attend). Except as indicated within the brackets, all the members had attended these meetings.

Meetings:

Nomination Committee Terms of reference: The Committee conducts due diligence as to the credentials of any Director before his / her appointment, and makes appropriate recommendations to the Board, in consonance with the Dr. Ganguly Committee recommendations and the requirements of RBI. The Committee also discharges the functions of the Remuneration Committee envisaged in Clause 49 of the Listing Agreement. Composition: Meetings: The Committee comprises ve members viz., Mr. R. Seshasayee (Chairman), Mr. R. Sundararaman, Mr. T. Anantha Narayanan, Mr. Ajay Hinduja and Mr. Romesh Sobti. The Committee met twice during the nancial year 2008-09, viz., on November 26, 2008 (Mr. Ajay Hinduja was unable to attend) and on March 24, 2009 (Mr. T. Anantha Narayanan and Mr. Ajay Hinduja were unable to attend). Except as indicated within the brackets, all the members had attended these meetings.

Stakeholders Relations Committee Terms of Reference: The objective of the Stakeholders Relations Committee is the redressal of stakeholders complaints. The Company Secretary discharges the responsibilities of a Compliance Ofcer. Composition: Meetings: The Committee comprises two members viz., Mr. T. Anantha Narayanan and Mr. Romesh Sobti. Meetings of the Committee are chaired by Mr. T. Anantha Narayanan, a Non-executive Director. The Committee met twice during the nancial year, viz., on October 16, 2008 and March 2, 2009.

Special Committee for monitoring large value frauds Terms of reference: In accordance with the directives of Reserve Bank of India, a Special Committee has been set up for monitoring and follow-up of cases of frauds involving amounts of Rs.1 crore and above. Composition: The Committee comprises ve members viz., Mr. R. Sundararaman (term concluded on March 24, 2009), Mr. T. Anantha Narayanan, Dr. T. T. Ram Mohan, Mrs. Pallavi Shroff, Mr. Premchand Godha (inducted on March 24, 2009) and Mr. Romesh Sobti. A Non-executive Director is elected the Chairman by the members present at the meeting. The Committee met twice during the nancial year, viz., on October 16, 2008 (Mrs. Pallavi Shroff and Mr. Romesh Sobti were unable to attend) and March 23, 2009 (Mr. T. Anantha Narayanan and Mrs. Pallavi Shroff were unable to attend). Except as indicated within the brackets, all the members had attended the meeting.

Meetings:

30

Customer Service Committee Terms of reference: The Committees function is to monitor the customer service extended by your Bank and to attend to the needs of customers. Composition: Meetings: The Committee comprises three members viz., Dr. T. T. Ram Mohan, Mr. Premchand Godha and Mr. Romesh Sobti. A Non-executive Director is elected Chairman by the members present at the meeting. The Committee met twice during the nancial year, viz., on October 16, 2008 (Mr. Romesh Sobti was unable to attend) and March 24, 2009. Except as indicated within the brackets, all the members had attended the meetings.

Risk Management Committee Terms of reference: The Committees role is to examine risk policies and procedures developed by your Bank and to monitor adherence to various risk parameters and prudential limits by the various operating departments. Composition: The Committee comprises four members, viz., Mr. R. Sundararaman, Mr. T. Anantha Narayanan, Dr. T. T. Ram Mohan, and Mr. Romesh Sobti. A Non-executive Director is elected Chairman by the members present at the meeting. The Committee met twice during the nancial year, viz., on October 16, 2008 and March 23, 2009 (Mr. T. Anantha Narayanan was unable to attend). Except as indicated within the brackets, all the members had attended these meetings.

Meetings:

Finance Committee Terms of reference: The Committees role is to decide on the appropriate mode of issue of capital; to nalise, settle, approve or agree to terms and conditions including the pricing for the said capital-raising programme; nalise, settle, approve, and authorise the executing of any document, deed, writing, undertaking, guarantee or other papers (including any modication thereof) in connection with the capital-raising programme and authorise the afxing of the Common Seal of the Company, if necessary thereto in accordance with the provisions of Articles of Association of the Company; to appoint and to x terms and conditions of merchant bankers, investment bankers, lead or other managers, advisors, solicitors, agents or such other persons or intermediaries as may be deemed necessary for the capital-raising programme; to do all such things and deal with all such matters and take all such steps as may be necessary to give effect to the resolution for raising of capital and to settle / resolve any question or difculties that may arise with regard to the said programme. Composition: Meetings: The Committee comprises four members viz., Mr. R. Seshasayee (Chairman), Mr. T. Anantha Narayanan, Mr. S. C. Tripathi and Mr. Romesh Sobti. The Committee met once during the nancial year, viz., on June 24, 2008 (Mr. S. C. Tripathi and Mr. Romesh Sobti were unable to attend).

Compensation Committee Terms of reference: The Committees role is to make recommendations on the issues of augmentation of capital and the issuance of the Banks shares to its employees under the ESOP Scheme. Composition: Meetings: The Committee comprises four members viz., Mr. R. Seshasayee (Chairman), Mr. R. Sundararaman, Mr. T. Anantha Narayanan, and Mrs. Pallavi Shroff. The Committee met thrice during the nancial year, viz., on May 2, 2008 (Mrs. Pallavi Shroff was unable to attend), July 18, 2008 (Mrs. Pallavi Shroff was unable to attend) and December 17, 2008 (Mr. R. Seshasayee and Mrs. Pallavi Shroff were unable to attend). Except as indicated within the brackets, all the members had attended these meetings.

Vigilance Committee Terms of reference: The Committee conducts overview of cases of lapses of vigilance nature on the part of employees of the Bank. Composition: Meetings: The Committee comprises three members viz., Dr. T. T. Ram Mohan, Mr. S. C. Tripathi and Mr. Romesh Sobti. The Committee met twice during the nancial year, viz., on January 15, 2009 (Mr. Romesh Sobti was unable 31

to attend) and March 24, 2009. Except as indicated within the brackets, all the members had attended these meetings. Information Technology Committee Terms of reference: The Committee conducts Board-level overview of aligning Information Technology with the business strategy of the Bank aimed at offering better service to customers, improved risk management and superior performance. Composition: Meetings: The Committee comprises four members, viz., Mr. Ashok Kini (Chairman - inducted w.e.f. June 24, 2008), Mr. T. Anantha Narayanan, Mr. R. Sundararaman, and Mr. Romesh Sobti. The Committee met twice during the nancial year, viz., on July 24, 2008 and December 17, 2008. All members had attended the meetings.

Details of the three previous Annual General Meetings AGM 12th 13th 14th Day and Date Thursday, September 28, 2006 Tuesday, September 18, 2007 Monday, September 22, 2008 Time 10.30 a.m. 12.00 noon 2.00 p.m. Venue Hotel Sun-n-Sand 262 Bund Garden Road, Pune - 411001 Hotel Taj Blue Diamond 11, Koregaon Road, Pune - 411001 Hotel Sun-n-Sand, 262, Bund Garden Road, Pune 411001 Whether Special Resolution Passed Yes Yes Yes

Special Resolution The details of Special Resolutions passed at the General Meetings of shareholders in the last three years are given below: General Body Meeting Date Resolution Authority for further issue / placement of securities including ADRs/GDRs, and Qualied Institutions Placement. Alteration to Articles of Association consequent upon RBIs directive that private sector banks have a Part-time Chairman of the Board of Directors and a separate Chief Executive Ofcer / Managing Director who would be responsible for dayto-day management. Authority for further issue / placement of securities including ADRs, GDRs and Qualied Institutions Placement. Authority for Employee Stock Options Scheme (ESOS). Authority for further issue / placement of securities including ADRs, GDRs and Qualied Institutions Placement. Variation in terms of options granted to employees. Enhancement of Authorised Capital. Twelfth Annual General Meeting September 28, 2006 Thirteenth Annual General Meeting September 18, 2007

Fourteenth Annual General Meeting September 22, 2008 Postal Ballot

No Resolutions were passed through postal ballot during the last nancial year. Material Disclosures Related Party Transactions: During the year, there were no materially signicant related party transactions that could have had any potential for conict with the interests of your Bank at large. Details are available in Schedule XVIII (Notes on Accounts) forming part of the Audited Financial Statements for the year. Penalties, etc.: In the matter of irregularities observed in the opening of a demat account in October 2000, Securities and Exchange Board of India (SEBI) vide its Order dated August 10, 2006, had suspended the Banks registration as Depository Participant of NSDL for a period of fteen days. The Bank complied with the Order, and accordingly no new depository accounts were opened from August 31, 2006 to September 14, 2006. 32

Disqualication of Directors: As on March 31, 2009, none of the Directors of your Bank was disqualied under section 274(1) (g) of the Companies Act, 1956. Mandatory requirements of Clause 49: Your Bank has complied with all the mandatory requirements of Corporate Governance stipulated under Clause 49 of the Listing Agreement. A certicate to this effect has been issued by M/s. Bhandari & Associates, Company Secretaries, and the same has been incorporated elsewhere in this document. Accounting Standards: In the preparation of nancial statements for the year 2008-2009, the treatment prescribed in the Accounting Standards issued by the Institute of Chartered Accountants of India from time to time and as required in terms of RBI guidelines has been followed by your Bank. Non-Mandatory requirements of Clause 49 of the Listing Agreement The status of compliance with the non-mandatory requirements of Clause 49 of the Listing Agreement is given below. The Chairmans Ofce: The Chairman (Non-executive) has been provided with an ofce at the Corporate Ofce of the Bank. Tenure of Independent Directors: While Clause 49 puts forth a non-mandatory requirement that the tenure of a Director may be restricted to nine years, according to Section 10A (2A) of the Banking Regulation Act 1949 no director of a banking company, other than its Chairman or whole-time Director, by whatever name called, shall hold ofce continuously for a period exceeding eight years. This requirement has been complied with by your Bank. Remuneration Committee: In accordance with the requirements stipulated by RBI, pursuant to the Ganguly Committee Report, your Board of Directors has constituted a Nomination Committee comprising two Non-executive Independent Directors, two Nonexecutive Directors and one Whole-time Director. The Committee conducts due diligence as to the credentials of any Director before his appointment and makes appropriate recommendations to the Board. This Committee also discharges the functions of the Remuneration Committee envisaged in Clause 49 of the Listing Agreement. Shareholder Rights: All information pertaining to business and developmental activities are intimated to the Stock Exchanges on a continuous basis. The Stock Exchanges in turn announce the corporate information on their respective websites. The quarterly nancial results are published in the newspapers, apart from being reported on the websites of the Stock Exchanges. Therefore, your Bank does not nd it expedient to send individual communications to the shareholders regarding signicant events and nancial performance every half-year. Audit qualications: There are no qualications in the Auditors Report. Training of Board Members: Your Directors are being provided with opportunities to attend seminars and workshops in order to equip themselves with relevant inputs for effective discharge of their responsibilities as Directors. Mechanism for evaluating Non-executive Board Members: Your Bank does not have a mechanism for evaluating the performance of Non-executive Directors. Whistleblower Policy: In line with RBI regulations towards strengthening nancial stability and enhancing public condence in the robustness of the nancial sector, your Bank has instituted the Protected Disclosures Scheme. Your Bank has also operatonalised a Whistle Blower Policy. Means of Communication Besides communicating to the Stock Exchanges where your Banks shares are listed, the nancial results of the Bank are also published on a quarterly basis in leading nancial publications, viz., Economic Times, Financial Express, Business Standard and Business Line. The information related to the nancial results are also hosted under the Media Room and Investor Relations sections on Banks website (www.indusind.com <http://www.indusind.com) The said sections are updated regularly. Quarterly Press meets are organized during which the results are formally announced to the media and press releases are issued for publication. Regular interviews with the electronic channels on the awareness of results and other available opportunities are held by the Managing Director and the Chief Operating Ofcer. Analyst Meets and Press Conferences are also held periodically. Subsidiary Company ALF Insurance Services Private Limited Your Bank does not have a material non-listed Indian subsidiary as dened in Clause 49 of the Listing Agreement. However, ALF Insurance Services Private Limited is a wholly-owned subsidiary of your Bank. The Company was set up to do the business of Insurance Corporate Broking, but has not commenced operations as yet. The Audit Committee of your Bank has reviewed the nancial statements and investments of the subsidiary, ALF Insurance Services Private Limited. The minutes of the Board meetings of this subsidiary company have been placed before the Board of your Bank. 33

Corporate Social Responsibility (CSR) CSR has always been close to your Banks business strategy. Your Bank took the opportunity of launching the Green Banking project. As a part of this project, a campaign Hum aur Hariyali has been launched to increase awareness about environmental issues; and through this awareness, achieve the goal of Sustainable Development during the year which was declared as the International Year of Planet Earth, 2008 by the UN General Assembly. Through the Hum aur Hariyali campaign, your Bank has delved into different aspects of Green Banking and has reached out to both staff and customers, encouraging them to make sustainable choices and changes. Through this campaign, your Bank endeavours to green the ofce spaces, reduce resource consumption, minimize carbon footprint and support environmental initiatives. General Information for Shareholders Registration No. Financial Year Board meeting for adoption of audited nancial accounts Day, Date and Time of 15th Annual General Meeting Venue Financial Calendar Book Closure Date of Dividend Payment Banks Website Range Shares Upto 1,000 1,001 - 5,000 5,001 - 10,000 10,001 50,000 50,001 & above TOTAL No. of Folios 112814 7348 748 524 141 121575 : : : : : : : : : 11-76333 2008-2009 May 5, 2009 Friday, July 3, 2009 at 2.00 p.m. Hotel Sun-n-Sand, Pune April 1 to March 31 Wednesday, June 24, 2009 to Friday, July 3, 2009 On or after July 6, 2009 www.indusind.com % 92.79 6.04 0.62 0.43 0.12 100.00 No. of shares 26049094 15336676 5618026 10911433 297084771 355000000 % 7.34 4.32 1.58 3.07 83.69 100.00

Distribution of shareholding of IndusInd Bank as at March 31, 2009

Outstanding GDRs/ADRs/Warrants or any Convertible Debentures, conversion date and likely impact on equity Your Bank has 64,682,364 GDRs (equivalent to 64,682,364 equity shares) outstanding, which constituted 18.22% of your Banks equity capital as at March 31, 2009. Shareholding as at March 31, 2009 i. Distribution Category A. Promoters holding B. Non-Promoters Holding 1 Institutional Investors a Mutual Funds and UTI b Banks, Financial Institutions, Insurance Companies (Central/State Gov. Institutions/Non-government Institutions) c FIIs Sub Total 2 Global Depository Receipts 3 Others a Private Corporate Bodies b Indian Public* c NRIs/OCBs* d Clearing Members Sub Total GRAND TOTAL * No. of shares held % of shareholding 90999984 25.63 264000016 74.37 288075 3254089 66523764 70065928 64682364 52010061 55843739 12195530 9202394 129251724 355000000 0.08 0.92 18.74 19.74 18.22 14.65 15.73 3.44 2.59 36.41 100.00

Indian Public includes 2980 shares held by Resident Independent Directors.

34

ii.

Major Shareholders (with more than 1 percent shareholding) S. No. 1 2 3 4 5 6 7 8 9 10 11 Name of Shareholder IndusInd International Holdings Ltd. The Bank Of New York (GDR-Depository). Ashok Leyland Ltd. Lotus Global Investments Ltd. IndusInd Limited Societe Bancaire Privee Sa Arisaig Partners (Asia) Pte Ltd A/c Arisaig India Fund Ltd. Hinduja Ventures Limited KII Limited De Five (Mauritius ) Holdings Ltd. Sital K Motwani No. of shares held 68499984 64682364 19215698 16261166 15500000 12439868 10358876 10077391 8306663 7000000 5652120 % of shareholding 19.30 18.22 5.41 4.58 4.37 3.50 2.92 2.84 2.34 1.97 1.59

iii. Total foreign shareholding No. of shares held Total foreign shareholding Of which GDRs Details of complaints received and resolved from April 1, 2008 to March 31, 2009 Complaints Non-Receipt of Share Certicate Non-Receipt of Dividend Warrants Non-Receipt of Endorsement Stickers Non-Receipt of Annual Report Non-Receipt of Demat Credit/ Remat Certicate Non-Receipt of Rejected DRF Non-Receipt of Exchanged Certicate Non-Receipt of Split / Duplicate/ Replacement Certicate Others Total Listing details of the Banks Equity Shares Name of the Stock Exchange Bombay Stock Exchange Limited National Stock Exchange of India Limited Address of the Stock Exchange Phiroz Jeejeebhoy Towers, Dalal Street, Mumbai 400001. Exchange Plaza, 5th Floor Bandra-Kurla Complex, Plot No. C/1, G Block, Bandra (E), Mumbai - 400 051. Socit de la Bourse de Luxembourg Societe Anonyme RC Luxembourg B 6222 Stock Code No. 532187 Annual Listing Fee Rs.3,10,219/paid upto March 2010. INDUSINDBK Normal EQ (physical) Depository AE (manual lots) Depository BE (odd lots) 111202 Rs.3,08,840/paid upto March 2010. Euro 3,750.00 paid upto December 31, 2009. Received 78 333 1 7 47 10 1 21 40 538 Attended to 78 333 1 7 47 10 1 21 40 538 Pending 0 0 0 0 0 0 0 0 0 0 No. of shares held 234401642 64682364 % of shareholding 66.03 18.22

Luxembourg Stock Exchange (Global Depository Receipts)

35

Market Price Data of the Banks shares i. National Stock Exchange of India Limited Date 1-Apr-08 2-May-08 2-Jun-08 1-Jul-08 1-Aug-08 1-Sep-08 1-Oct-08 3-Nov-08 1-Dec-08 1-Jan-09 2-Feb-09 2-Mar-09 31-Mar-09 Open (Rs.) 80.00 91.00 80.25 53.00 56.00 59.20 56.00 42.00 32.90 38.00 32.75 30.00 32.00 Price of Shares Turnover in Rs. Lakhs High (Rs.) Low (Rs.) Close (Rs.) 80.30 76.30 77.95 240.71 103.50 91.00 102.35 5456.90 80.25 70.00 71.85 1053.67 56.40 52.00 52.95 553.25 58.85 55.60 58.45 321.65 60.90 58.25 60.45 166.85 59.80 54.30 57.80 294.18 44.00 41.50 42.45 111.38 33.00 30.15 30.50 68.04 39.60 37.50 39.25 82.97 33.95 32.05 32.70 68.44 30.10 28.30 28.60 33.28 32.95 31.10 32.10 1227.77 Nifty 4739.55 5228.20 4739.60 3896.75 4413.55 4348.65 3950.75 3043.85 2682.90 3033.45 2766.65 2674.60 3020.95 Bank Nifty 6608.10 7871.90 6347.15 4732.85 5961.90 6128.85 5982.40 4875.70 4124.30 5116.55 4238.15 3718.35 4133.20

ii.

Bombay Stock Exchange Limited Date 1-Apr-08 2-May-08 2-Jun-08 1-Jul-08 1-Aug-08 1-Sep-08 1-Oct-08 3-Nov-08 1-Dec-08 1-Jan-09 2-Feb-09 2-Mar-09 31-Mar-09 Open (Rs.) 79.40 92.80 79.90 53.25 55.30 59.70 55.60 43.00 31.50 37.30 33.75 29.70 32.10 Price of Shares High (Rs.) 80.25 103.25 79.90 56.30 58.90 60.75 58.70 43.90 33.00 39.50 34.00 30.15 33.25 Low (Rs.) Close (Rs.) 76.55 78.00 91.50 102.25 70.15 72.40 52.00 53.35 55.30 58.45 58.10 60.30 54.40 57.70 41.65 42.40 30.35 30.80 37.30 39.15 31.50 32.55 28.35 28.70 31.10 32.30 Turnover in Rs. Lakhs 97.39 2542.07 394.79 289.83 104.73 69.29 96.85 35.14 21.88 28.30 24.06 10.02 691.74 SENSEX 15626.62 17600.12 16063.18 12961.68 14656.69 14498.51 13055.67 10337.68 8839.87 9903.46 9066.70 8607.08 9708.50 BANKEX 7643.55 9142.18 7454.33 5583.59 6728.65 7021.35 6688.28 5387.39 4465.82 5585.01 4649.58 4033.99 4490.97

36

Dematerialisation of shares and liquidity Your Banks shares are tradable (in electronic form only) at the Bombay Stock Exchange Limited and the National Stock Exchange of India Limited. 95.13% of the Banks shares are dematerialised and the rest remain in physical form. The volume of trades and share price information is provided elsewhere in this document. In view of the numerous advantages offered by the depository system, members holding shares of the Bank in physical form are requested to get the same dematerialised and converted to the electronic form. Share Transfer System A Share Transfer Committee comprising the Banks executives has been formed to deal with matters relating to transfer of shares, issue of duplicate share certicates in lieu of mutilated share certicates or those which are misplaced / lost, and other related matters. The approvals granted by the Share Transfer Committee are conrmed at subsequent Board meetings. With a view to expediting the process of physical share transfers, the Share Transfer Committee meets on the rst and third Friday of every month. Trading in the Banks shares now takes place compulsorily in dematerialised form. However, members holding share certicates in physical form are entitled to transfer their shareholding by forwarding the share certicates along with valid, duly executed and stamped transfer deed signed by the member (or on his/her behalf) and the transferee to the Bank or to the Banks Registrar & Share Transfer Agent, Link Intime India Pvt. Ltd. Registrar & Share Transfer Agent Link Intime India Pvt. Limited C-13, Pannalal Silk Mills Compound L.B.S. Marg, Bhandup (West) Mumbai 400078 Contact Person: Mr. Kirtikumar Kanchan Tel. No.: 25963838 / 25946980 Fax: 25946969 Email: kirtikumar.kanchan@linkintime.co.in Redressal of Investors Grievances In order to service the investors in an efcient manner and to attend to their grievances, your Bank has constituted an Investor Services Cell at its Corporate Ofce at Mumbai. Members are welcome to contact: Mr. Lalit Dalvi Investor Services Cell IndusInd Bank Ltd. Solitaire Corporate Park 167, Guru Hargovindji Marg Andheri (East), Mumbai - 400093 Tel: 022 66412487 Fax: 022 66412347 Email: investor@indusind.com Unclaimed Dividends In accordance with the provisions of Section 205A of the Companies Act, 1956, read with Investor Education and Protection Fund (Awareness and Protection of Investors), Rules 2001, the dividends that remain unclaimed for a period of seven years from the date of transfer of the dividend to unpaid dividend account, shall be transferred to the Investor Education and Protection Fund (IEPF). The table below gives the due dates for such transfers that are required to be effected during the period August 2009 October 2010. Members are requested to take note of the due dates for such transfers. Year 2001-02 2001-02 2002-03 2002-03 Type of dividend Final Final Final Final Date of Payment of Dividend 25 July 2002 28 September 2002 22 July 2003 29 September 2003 Name of Company Ashok Leyland Finance Ltd. IndusInd Bank Ltd. Ashok Leyland Finance Ltd. IndusInd Bank Ltd. Due date for transfer to IEPF 23 30 20 30 August 2009 October 2009 August 2010 October 2010

Pursuant to Section 205C of the Companies Act, 1956, it is claried that no claims shall lie against IEPF or the Bank in respect of individual amounts which have remained unclaimed or unpaid for a period of seven years from the dates that they rst became due for payment, and no payment shall be made in respect of any such amounts. 37

AUDITORS REPORT
To the Members of IndusInd Bank Limited 1. We have audited the attached Balance Sheet of IndusInd Bank Limited (the Bank) as at March 31, 2009 and also the Prot and Loss Account and Cash Flow Statement annexed thereto for the year ended on that date in which are incorporated the returns of 122 branches & 2 representative ofces overseas audited by us and 59 branches audited by branch auditors. These nancial statements are the responsibility of the Banks management. Our responsibility is to express an opinion on these nancial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the nancial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the nancial statements. An audit also includes assessing the accounting principles used and signicant estimates made by management, as well as evaluating the overall nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion. The Balance Sheet and Prot and Loss Account have been drawn up in accordance with the provisions of Section 29 of the Third Schedule to the Banking Regulation Act, 1949, read with section 211 of the Companies Act, 1956 (the Companies Act). We report that: a) b) c) 5. 6. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit and have found them to be satisfactory; In our opinion, the transactions of the Bank, which have come to our notice, have been within its powers; The returns received from the branches of the Bank have been found adequate for the purposes of our audit.

2.

3.

4.

In our opinion, the Balance Sheet, Prot and Loss Account and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 in so far they apply to the Bank. We further report that: (i) the Balance Sheet, Prot and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account and with the audited returns received from the branches;

(ii) in our opinion, proper books of accounts as required by law have been kept by the Bank so far as appears from our examination of those books; (iii) the reports on account of the branches audited by branch auditors have been dealt with in preparing our report in the manner considered necessary by us; (iv) on the basis of written representations received from the directors, as on March 31, 2009, and taken on record by the Board of Directors, we report that none of the directors are disqualied from being appointed as director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956. 7. In our opinion and to the best of our information and according to the explanations given to us, the said accounts together with the notes thereon give the information required by the Banking Regulation Act, 1949 as well as the Companies Act, 1956, in the manner so required for banking companies, and give a true and fair view in conformity with the accounting principles generally accepted in India. (i) in case of the Balance Sheet, of the state of affairs of the Bank as at March 31, 2009; (ii) in case of Prot and Loss Account, of the prot for the year ended on that date; and (iii) in case of Cash Flow Statement, of the cash ows for the year ended on that date. For M P Chitale & Co. Chartered Accountants
Ashutosh Pednekar

Mumbai, May 5, 2009

Partner ICAI M No.41047

38

39

BALANCE SHEET AS AT MARCH 31, 2009

Rupees in '000s SCHEDULE
CAPITAL AND LIABILITIES As at 31.03.09 As at 31.03.08

Capital Employee Stock Options Outstanding Reserves and Surplus Deposits Borrowings Other Liabilities and Provisions
TOTAL

I XVIII (9) II III IV V

355,19,21 1,15,10 1308,05,11 22110,25,27 1856,45,53 1983,58,03

27614,68,25

320,00,00 50,68 1029,20,66 19037,42,27 1095,43,46 1779,31,12

23261,88,19

ASSETS

Cash and Balances with Reserve Bank of India Balances with Banks and Money at Call and Short Notice Investments Advances Fixed Assets Other Assets
TOTAL

VI VII VIII IX X XI

1190,78,98 732,90,49 8083,40,55 15770,63,59 623,19,34 1213,75,30

27614,68,25

1526,26,14 651,77,18 6629,69,61 12795,30,76 625,14,84 1033,69,66

23261,88,19

Contingent Liabilities Bills for Collection Principal Accounting Policies Notes on Accounts The schedules referred to above form an integral part of Balance Sheet.

XII

44299,17,33 2937,73,35

30981,93,07 1761,20,60

XVII XVIII

The Balance Sheet has been prepared in conformity with Form "A" of the Third Schedule to the Banking Regulation Act, 1949. As per our report of even date.
For M.P. Chitale & Co.

For INDUSIND BANK LTD.

R. Seshasayee T. Anantha Narayanan

Chartered Accountants
Ashutosh Pednekar

Chairman
Romesh Sobti

Director

Partner Place : Mumbai Date : May 5, 2009

S. V. Zaregaonkar

Managing Director
Haresh Gajwani

Chief Financial Ofcer

Company Secretary

40

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2009
Rupees in '000s SCHEDULE
I. INCOME Year ended 31.03.09 Year ended 31.03.08

Interest Earned Other Income

TOTAL II. EXPENDITURE

XIII XIV

2309,47,44 456,25,35
2765,72,79

1880,66,09 297,57,77
2178,23,86

Interest Expended Operating Expenses Provisions and Contingencies

TOTAL III. PROFIT

XV XVI

1850,44,14 547,03,41 219,91,36

2617,38,91 148,33,88

1579,85,97 402,19,28 121,13,23

2103,18,48 75,05,38

Prot brought forward

AMOUNT AVAILABLE FOR APPROPRIATION IV. APPROPRIATIONS TOTAL

242,99,07
391,32,95

211,39,12
286,44,50

Transfer to a) b) c) d) e) Statutory Reserve Capital Reserve Investment Reserve Account Dividend (Proposed) Corporate Dividend Tax 37,08,47 53,40,29 1,53,23 44,71,15 7,59,87 144,33,01 Balance transferred to Balance Sheet
TOTAL

18,76,35 2,24,13 19,18,85 3,26,10 43,45,43 242,99,07

286,44,50

246,99,94
391,32,95

Earnings per share (basic)(Rupees) Earnings per share (diluted)(Rupees) Principal Accounting Policies

XVIII(10.6) XVIII(10.6) XVII

4.28 4.27

2.35 2.35

Notes on Accounts XVIII The schedules referred to above form an integral part of Prot & Loss Account. The Prot & Loss Account has been prepared in conformity with Form "B" of the Third Schedule to the Banking Regulation Act, 1949. As per our report of even date.
For M.P. Chitale & Co.

For INDUSIND BANK LTD.

R. Seshasayee T. Anantha Narayanan

Chartered Accountants
Ashutosh Pednekar

Chairman
Romesh Sobti

Director

Partner Place : Mumbai Date : May 5, 2009

S. V. Zaregaonkar

Managing Director
Haresh Gajwani

Chief Financial Ofcer

Company Secretary

41

SCHEDULES
Rupees in '000s
As at 31.03.09 SCHEDULE - I CAPITAL Authorised Capital As at 31.03.08

50,00,00,000 (Previous year 40,00,00,000) equity shares of Rs.10/- each

Issued, Subscribed and Called Up Capital

500,00,00 355,00,00 355,00,00 19,21

400,00,00 319,80,79 319,80,79 19,21

35,50,00,000 (Previous year 31,98,07,936) equity shares of Rs.10/- each

Paid up Capital

35,50,00,000 (Previous year 31,98,07,936) equity shares of Rs.10/- each Add : Forfeited 3,84,200 (Previous year 3,84,200) equity shares of Rs.10/- each On June 24, 2008, Bank issued 3,51,92,064 equity shares of Rs.10/- in the form of Global Depository Receipts each representing one share at a price of US $ 1.47 per GDR. Accordingly as at March 31, 2009, the paid-up share capital and share premium account under reserves of the Bank stand increased by Rs.35,19,21 and Rs.186,99,83 respectively.
TOTAL SCHEDULE - II RESERVES AND SURPLUS 1 Statutory Reserve

355,19,21

320,00,00

Opening balance Additions during the year

2 Capital Reserve

98,80,84 37,08,47
135,89,31

80,04,49 18,76,35
98,80,84

Opening balance Additions during the year

3 Share Premium Account

32,27,37 53,40,29
85,67,66

30,03,24 2,24,13
32,27,37

Opening balance Additions during the year

4 General Reserve

412,96,39 186,99,83
599,96,22

412,96,39
412,96,39

Opening balance
5 Investment Allowance Reserve

1,35,57
1,35,57

1,35,57
1,35,57

Opening balance
6 Investment Reserve Account

1,00,00
1,00,00

1,00,00
1,00,00

Opening Balance Additions during the year

1,53,23
1,53,23

242,99,07

7 8

Balance in Prot & Loss Account Revaluation Reserve

246,99,94

Opening balance Addition during the year Deduction during the year
TOTAL (1-8)

239,81,42 4,18,24
235,63,18 1308,05,11

240,77,98 96,56
239,81,42 1029,20,66

42

SCHEDULES (Contd.)
Rupees in '000s
As at 31.03.09 SCHEDULE - III DEPOSITS A 1 Demand Deposits As at 31.03.08

i) ii)
2 3

From Banks From Others

40,25,02 2914,71,51 1299,93,56 2378,21,93 15477,13,25

TOTAL (1, 2 & 3) 22110,25,27

36,89,17 1765,00,44 1186,42,50 1409,07,49 14640,02,67

19037,42,27

Savings Bank Deposits Term Deposits

i) ii)

From Banks From Others

Deposits of Branches

1 2

In India Outside India

TOTAL

22110,25,27
22110,25,27

19037,42,27
19037,42,27

SCHEDULE - IV BORROWINGS 1 Borrowings in India

i) ii)
2

Reserve Bank of India Other Banks

200,00,00 59,09,31 846,70,62 750,65,60

TOTAL (1 & 2) 1856,45,53

19,00,00 64,77,75 562,66,01 448,99,70

1095,43,46

iii) Other Institutions and Agencies

Borrowings outside India

Secured borrowings included in 1 & 2 above

SCHEDULE - V OTHER LIABILITIES AND PROVISIONS

1 2 3 4 5 6

Inter-ofce Adjustments (Net) Bills Payable Interest Accrued Unsecured Non-Convertible Redeemable Debentures/Bonds (Subordinated for Tier-II Capital) Unsecured Non-Convertible Redeemable Non-Cumulative Subordinated Upper Tier II Bonds Others (including Provisions and proposed dividend)
TOTAL

13,65,44 274,96,64 208,69,77 651,60,00

2,70,60 317,36,87 177,20,32 587,10,00

308,90,00 525,76,18
1983,58,03

308,90,00 386,03,33
1779,31,12

SCHEDULE - VI CASH AND BALANCES WITH RESERVE BANK OF INDIA 1 2 Cash in hand (including foreign currency notes) Balances with Reserve Bank of India

141,87,78 1048,91,20
TOTAL (1 & 2) 1190,78,98

108,07,79 1418,18,35
1526,26,14

i) ii)

In Current Accounts In Other Accounts

43

SCHEDULES (Contd.)
As at 31.03.09 SCHEDULE - VII BALANCES WITH BANKS AND MONEY AT CALL AND SHORT NOTICE 1 In India

Rupees in '000s
As at 31.03.08

i)

ii)
2

Balances with Banks a) In Current Accounts b) In Other Deposit Accounts Money at Call and Short Notice with banks
TOTAL (i & ii)

227,05,62 383,30,10
610,35,72

317,52,19 216,78,46
534,30,65

Outside India

i) In Current Accounts ii) In Other Deposit Accounts iii) Money at Call and Short Notice
TOTAL (i, ii & iii) GRAND TOTAL (1 & 2) Schedule - VIII INVESTMENTS 1 Investments in India

26,17,97 96,36,80
122,54,77 732,90,49

21,97,97 67,40,16 28,08,40

117,46,53 651,77,18

Gross Value Less : Provision for Depreciation

Net value of Investments in India

8088,33,99 4,93,44
8083,40,55

6645,79,83 16,10,22
6629,69,61

Comprising : i) Government securities ii) Other approved securities iii) Shares iv) Debentures and bonds v) Subsidiaries and/ or Joint Ventures vi) Others - Deposits under RIDF scheme with NABARD Security Receipt and Others
2 Investments Outside India TOTAL (1 & 2) SCHEDULE - IX ADVANCES

6294,35,91 3,75,31 35,71,92 14,25,04 50,00 1656,69,98 78,12,39

8083,40,55

5435,71,27 3,76,18 39,05,62 40,21,21 50,00 1102,51,33 7,94,00

6629,69,61

i) Bills Purchased and Discounted ii) Cash Credits, Overdrafts and Loans Repayable on Demand iii) Term Loans
TOTAL

1385,88,15 5089,48,33 9295,27,11

15770,63,59

446,00,55 3709,98,56 8639,31,65

12795,30,76

i) ii)

Secured by Tangible Assets (includes advances against book debts) Covered by Bank / Government Guarantees (includes advances against L/Cs issued by Banks) iii) Unsecured
TOTAL

13747,76,32 789,41,71 1233,45,56

15770,63,59

11687,88,04 172,74,72 934,68,00

12795,30,76

i)

Advances in India a) Priority Sector b) Public Sector c) Banks d) Others

TOTAL

5568,78,57 174,06,39 7,73,15 10020,05,48

15770,63,59

5005,53,11 138,56,76 4,89,04 7646,31,85

12795,30,76

ii)

Advances Outside India

TOTAL ( i & ii)

15770,63,59

12795,30,76

44

SCHEDULES (Contd.)
Rupees in '000s
As at 31.03.09 SCHEDULE - X FIXED ASSETS 1 PREMISES As at 31.03.08

i) ii)

At cost as at the beginning of the year Revaluation during the year

402,37,57 4,51,95
406,89,52

156,31,74 240,77,98 5,27,85

402,37,57

iii) Additions during the year iv) Less : Deductions during the year v) Less : Depreciation to date
TOTAL 2 Other Fixed Assets (including furniture & xtures)

83,18 22,79,22
383,27,12

17,05,77
385,31,80

i) ii)

At cost as at the beginning of the year Additions during the year [includes Assets given on lease Rs.225,71,92 (Previous year Rs.225,71,92)]

567,55,21 42,18,78 609,73,99 9,14,96 374,61,83

TOTAL 225,97,20

518,75,65 50,96,80 569,72,45 2,17,24 337,34,73

230,20,48

iii) Less : Deductions during the year iv) Less : Depreciation to date

Capital Work in Progress TOTAL (1, 2 & 3)

13,95,02
623,19,34

9,62,56
625,14,84

SCHEDULE - XI OTHER ASSETS

1 2 3 4 5

Interest Accrued Tax Paid in Advance / tax deducted at source (net of provision) Stationery & Stamps Non-banking assets acquired in satisfaction of claims Others [includes Deposits with banks Rs.98,35,54 being credit enhancement against Securitised Assets (Previous year Rs.210,07,81)]
TOTAL

208,61,80 243,66,77 1,56,81 60,13,46 699,76,46

1213,75,30

194,44,20 220,17,15 1,17,75 56,54,41 561,36,15

1033,69,66

SCHEDULE - XII CONTINGENT LIABILITIES

1 2 3 4

Claims against the Bank not acknowledged as debts Liability on account of outstanding Forward Exchange Contracts Liability on account of outstanding Derivative Contracts Guarantees given on behalf of constituents a) b) In India Outside India

247,76,61 30453,66,88 9830,87,30 1746,77,44 2020,09,10 TOTAL 44299,17,33

236,62,00 17112,85,04 9148,99,52 1803,13,70 2680,32,81 30981,93,07

5 6

Acceptances, Endorsements and Other Obligations Other Items for which the Bank is contingently liable

45

SCHEDULES (Contd.)
Rupees in '000s
Year ended 31.03.09 SCHEDULE - XIII INTEREST EARNED Year ended 31.03.08

1 2 3 4

Interest / Discount on Advances / Bills Income on Investments Interest on Balances with RBI and Other Inter-Bank Funds Others
TOTAL

1793,31,12 483,24,01 15,77,27 17,15,04

2309,47,44

1425,32,94 403,47,01 21,91,63 29,94,51

1880,66,09

SCHEDULE - XIV OTHER INCOME

1 2 3 4 5 6

Commission, Exchange and Brokerage Prot on Sale of Investments / Derivatives (Net) Prot / (Loss) on Sale of Land, Buildings and Other Assets Prot on exchange transactions (Net) Income earned by way of dividend from companies in India Miscellaneous Income
TOTAL

139,10,18 121,55,48 (30,62,76) 71,87,66 2,87,95 151,46,84

456,25,35

100,98,09 19,44,23 (67,09) 28,89,35 37,35 148,55,84

297,57,77

SCHEDULE - XV INTEREST EXPENDED

1 2 3

Interest on Deposits Interest on Reserve Bank of India / Inter-Bank Borrowings Others including interest on Subordinate Debts and Upper Tier II bonds
TOTAL

1575,96,94 119,96,96 154,50,24

1850,44,14

1401,15,44 55,83,52 122,87,01

1579,85,97

SCHEDULE - XVI OPERATING EXPENSES

1 2 3 4 5 6 7 8 9

Payments to and Provisions for Employees Rent, Taxes and Lighting (includes operating lease rentals) Printing and Stationery Advertisement and Publicity Depreciation on Bank's Property Directors' Fees, Allowances and Expenses Auditors' Fees and Expenses (includes branch auditors) Law Charges Postage, Telegrams, Telephones, etc.

187,14,44 49,63,62 13,09,01 15,51,16 44,16,82 55,19 99,76 12,87,46 27,47,14 41,70,49 20,22,34 57,45,06 76,20,92
TOTAL 547,03,41

121,89,66 36,58,88 11,23,73 2,10,68 40,15,86 60,83 98,39 13,16,42 23,20,76 30,84,84 17,34,79 46,35,57 57,68,87
402,19,28

10 Repairs and Maintenance 11 Insurance 12 Service Provider Fees 13 Other Expenditure

46

Schedule No. XVII PRINCIPAL ACCOUNTING POLICIES

1) General: 1.1 The accompanying nancial statements have been prepared on the historical cost convention, except where otherwise stated, and in accordance with the accounting standards referred to in Section 211(3C) of the Companies Act, 1956, and notied by the Companies (Accounting Standards) Rules, 2006, read with guidelines issued by the Reserve Bank of India (RBI) and conform to the statutory provisions and practices prevailing within the banking industry in India. The preparation of the nancial statements, in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and disclosure of contingent liabilities in the nancial statements. Management believes that the estimates used in the preparation of the nancial statements are prudent and reasonable. Any revisions to the accounting estimates are recognised prospectively in current and future periods. Monetary assets and liabilities denominated in foreign currency are translated at the balance sheet date at the exchange rates notied by the Foreign Exchange Dealers Association of India (FEDAI) and the resulting gains or losses are recognised in the prot and loss account. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined. 2.2 2.3 All Foreign Exchange contracts outstanding at the balance sheet date are re-valued at the rates of exchange notied by the FEDAI for specied maturities and the resulting gains or losses are recognised in the prot and loss account. The Swap Cost arising on account of foreign currency swap contracts to convert foreign currency funded liabilities into rupee liability is charged to Prot and loss account as Interest Others by amortizing over the underlying swap period. Income and Expenditure items are translated at the rates of exchange prevailing on the date of the transaction. Contingent liability at the balance sheet date on account of outstanding forward foreign exchange contracts, guarantees, acceptances, endorsements and other obligations denominated in foreign currency is stated at the closing rates of exchange notied by FEDAI. The signicant accounting policies in accordance with the RBI guidelines and subsequent circulars issued by the RBI are as follows: 3.1 Categorisation of investments: In accordance with the guidelines issued by RBI, the Bank classies its investment portfolio into the following three categories: i) ii) iii) 3.2 Held to Maturity (HTM) Securities acquired by the Bank with the intention to hold till maturity. Held for Trading (HFT) Securities acquired by the Bank with the intention to trade. Available for Sale (AFS) Securities which do not fall within the above two categories are classied as available for sale.

1.2

2)

Transactions involving Foreign Exchange: 2.1

2.4 2.5

3)

Investments:

Classication of Investments: For the purpose of disclosure in the Balance Sheet, investments have been classied under six groups as required under RBI guidelines - Government Securities, Other Approved Securities, Shares, Debentures and Bonds, Investments in Subsidiaries/ Joint Ventures and Other Investments.

3.3

Valuation of Investments: (i) Held to Maturity These investments are carried at their acquisition cost. Any premium on acquisition is amortised over the balance period to maturity. The amortised amount is deducted from Interest earned Income on investments (Item 2 of Schedule XIII). The book value of security is reduced to the extent of amount amortised during the relevant accounting period. Diminution other than temporary, if any, in the value of such investments is determined and provided for on each investment individually. 47

(ii)

Held for Trading Each scrip in this category is re-valued at the market price or fair value and the resultant depreciation of each scrip in this category is recognised in the Prot and Loss account. Appreciation, if any, is ignored. Market value of government securities is determined on the basis of the prices/ YTM published by RBI or the prices/ YTM periodically declared by Primary Dealers Association of India (PDAI) jointly with Fixed Income Money Market and Derivatives Association (FIMMDA) for valuation at year-end. In case of unquoted government securities, market price or fair value is determined as per the prices/ YTM published by FIMMDA. Available for Sale Each scrip in this category is re-valued at the market price or fair value and the resultant depreciation of each scrip in this category is recognised in the Prot and Loss account. Appreciation, if any, is ignored. Market value of government securities (excluding treasury bills) is determined on the basis of the price list published by RBI or the prices periodically declared by PDAI jointly with FIMMDA for valuation at year-end. In case of unquoted government securities market price or fair value is determined as per the rates published by FIMMDA. Market value of other debt securities is determined based on the yield curve and spreads provided by FIMMDA. Equity shares are valued at cost or the closing quotes on a recognised stock exchange, whichever is lower. Treasury bills are valued at carrying cost, which includes discount amortised over the period to maturity. Units of mutual funds are valued at the lower of cost and net asset value provided by the respective mutual funds.

(iii)

(iv)

Investments in Equity Shares held as Long-term investments by erstwhile IndusInd Enterprises & Finance Ltd. and Ashok Leyland Finance Ltd. (since merged) are valued at cost. Provision towards diminution in the value of such Long-term investments is made only if the diminution in value is not temporary in the opinion of management. Broken period interest on debt instruments is treated as a revenue item. Brokerage, commission, etc. pertaining to investments paid at the time of acquisition is charged to revenue. Repurchase (REPO) and reverse repurchase (reverse REPO) transactions are considered and accounted for on an outright sale and purchase basis. REPO interest Income/ Expenditure is accounted based on the RBI guidelines. However, depreciation in their value, if any, compared to their original book value, in case of reverse REPO is recognised in the Prot & Loss Account.

(v) (vi)

(vii) Prot in respect of investments sold from HTM category is included in Prot on Sale of Investments and equal amount is transferred out of P & L Appropriation account after tax and Statutory Reserve, to Capital Reserve account. (viii) Security Receipts (SR) are valued at the lower of redemption value of the security or the Net Asset Value (NAV) obtained from Securitization Company/ Reconstruction Company. (ix) In the event, provisions created on account of depreciation in the AFS or HFT categories are found to be in excess of the required amount in any year, the excess is credited to Prot and Loss account and an equivalent amount (net of taxes, if any and net of transfer to Statutory Reserves as applicable to such excess provision) is appropriated to an Investment Reserve account (IRA) in Schedule II Reserves & Surplus under the head Revenue & Other reserves. The balance in IRA account is included under Tier II within the overall ceiling of 1.25% of total Risk Weighted Assets prescribed for General Provisions / Loss reserves. The balance in IRA account is used to meet provision on account of depreciation in AFS and HFT categories by transferring an equivalent amount to Prot and Loss account as and when required. 4) Derivatives: Derivative contracts are designated as hedging or trading and accounted for as follows: (i) The hedging contracts comprise interest rate swaps and currency swaps undertaken to hedge interest rate risk on certain assets and liabilities. The net interest receivable/ payable is accounted on an accrual basis over the life of the swaps. However, where the hedge is designated with an asset or liability that is carried at market value or lower of cost and market value in the nancial statements, then the hedging is also marked to market with the resulting gain or loss recorded as an adjustment to the market value of designated assets or liabilities. The trading contracts comprise proprietary trading in interest rate swaps and currency futures. The gain/ loss arising on unwinding or termination of the contracts, is accounted for in the Prot and Loss account. Trading contracts outstanding as at the balance sheet date are re-valued at their fair value and resulting gains / losses are recognised in the Prot and Loss account.

(ii)

48

(iii) (iv) 5) 5.1 5.2 5.3

Premium paid and received on currency options is accounted up-front in the Prot and Loss account as all options are undertaken on a back-to-back basis. Provisioning of overdue customer receivable on derivative contracts, if any, is made as per RBI guidelines. Advances are classied as per the RBI guidelines into standard, sub-standard, doubtful and loss assets after considering subsequent recoveries to date. Provision for non-performing assets is made in conformity with the RBI guidelines. In accordance with RBI guidelines, general provision on standard assets has been made at 0.40% of the outstanding amount on a portfolio basis except in the case of direct advances to agricultural and SME sectors, where the provision has been made at 0.25%. Advances are disclosed in the Balance Sheet, net of provisions and interest suspended for non-performing advances. Provision made against standard assets is included in Other Liabilities and Provisions. Advances include the Banks participation in / contributions to Pass Through Certicates (PTCs) and /or to the assetbacked assignment of loan assets of other banks / nancial institutions where the Bank has participated on risksharing basis. Advances exclude derecognised securitised advances, inter-bank participation and bills rediscounted. Amounts recovered against bad debts written off in earlier years and, provisions no longer considered necessary in context of the current status of the borrower are written back / recognised to the Prot and Loss account to the extent such write-offs / provisions were charged to the Prot and Loss account. Restructured / rescheduled accounts: In case of restructured / rescheduled accounts provision is made for the sacrice against erosion/ diminution in fair value of restructured loans, in accordance with the general framework of restructuring of advances issued by RBI vide circular dated August 27, 2008 and subsequently modied vide circular dated April 09, 2009. The erosion in fair value of the advances is computed as difference between fair value of the loan before and after restructuring. Fair value of the loan before restructuring is computed as the present value of cash ows representing the interest at the existing rate charged on the advance before restructuring and the principal, discounted at a rate equal to the Banks BPLR as on the date of restructuring plus the appropriate term premium and credit risk premium for the borrower category on the date of restructuring. Fair value of the loan after restructuring is computed as the present value of cash ows representing the interest at the rate charged on the advance on restructuring and the principal, discounted at a rate equal to Banks BPLR as on the date of restructuring plus the appropriate term premium and credit risk premium for the borrower category on the date of restructuring. The restructured accounts have been treated as standard where the restructuring package has been implemented during the year.

Advances:

5.4 5.5

5.6 5.7

5.8

6)

Securitisation Transactions: 6.1 The Bank transfers loans through securitisation transactions. The Bank securitises its loan receivables both through Bilateral Direct Assignment route as well as transfer to Special Purpose Vehicles (SPV) in securitisation transactions. The securitisation transactions are without recourse to the Bank. The transferred loans and such securitised-out receivables are de-recognised in the balance sheet as and when these are sold (true sale criteria being fully met) and the consideration has been received by the Bank. Gains / losses are recognised only if the Bank surrenders the rights to the benets specied in the loan contracts. In respect of certain transactions, the Bank provides credit enhancements in the form of cash collaterals / guarantee and/or by subordination of cashows to senior Pass Through Certicates (PTC). Retained interest and subordinated PTCs are disclosed under Advances in the balance sheet. Recognition of gain or loss arising out of Securitisation of Standard Assets : In terms of RBI guidelines issued on February 1, 2006, prot/premium arising on account of sale of standard assets, being the difference between the sale consideration and book value, is amortised over the life of the securities issued by the Special Purpose Vehicles (SPV). Any loss arising on account of the sale is recognized in the Prot and Loss Account in the period in which the sale occurs. 49

6.2

6.3

6.4

7)

Fixed Assets: 7.1 Fixed assets (including assets given on operating lease) have been stated at cost (except in the case of premises which were re-valued based on values determined by approved valuers) less accumulated depreciation and impairment, if any. Cost includes incidental expenditure incurred on the assets before they are ready for intended use. The carrying amount of xed assets is reviewed at each balance sheet date if there are any indications of impairment based on internal / external factors. The appreciation on revaluation is credited to Revaluation Reserve. Depreciation relating to revaluation is adjusted against the Revaluation Reserve. Depreciation has been provided pro rata for the period of use, on Straight Line Method as per the rates prescribed under Schedule XIV to the Companies Act, 1956, except in respect of computers, which are depreciated at the rate of 33.33%. These rates are reective of managements estimate of the useful life of the related xed assets. Income by way of interest and discount on performing assets is recognised on accrual basis and on non-performing assets the same is accounted for on realisation. Interest on Government securities, debentures and other xed income securities is recognised on accrual basis. Income on discounted instruments is recognised over the tenor of the instrument on a straight-line basis. Dividend income is accounted on accrual basis when the right to receive payment is established. Commission (except for commission on Deferred Payment Guarantees which is recognised on accrual basis), exchange and brokerage are recognised on realisation. Lease income and service charges earned by the Consumer Finance Division are recognised on accrual basis. Income from distribution of insurance products is recognised on the basis of business booked.

7.2 7.3

8)

Revenue Recognition: 8.1 8.2 8.3 8.4 8.5 8.6

9)

Operating Leases: Lease rental obligations in respect of assets taken on operating lease are charged to prot and loss account on straight-line basis over the lease term. Initial direct costs are charged to prot and loss account. Assets given under leases in respect of which all the risks and benets of ownership are effectively retained by the Bank are classied as operating leases. Lease rentals received under operating leases are recognized in the prot and loss account on accrual basis as per contracts.

10) Retirement and Other Employee Benets: 10.1 Payments under the Group Gratuity policies of the Bank are made to Life Insurance Corporation of India (for Consumer Finance Division (CFD)) and Aviva Life Insurance Company India Limited (other than CFD) on the basis of actuarial valuation as at the balance sheet date and considered as a dened benet scheme. 10.2 Provident fund contributions are made under trust separately established for the purpose and the scheme administered by Regional Provident Fund Commissioner (RPFC), as applicable. 10.3 Provision for compensated absences has been made in the accounts on the basis of actuarial valuation as at the balance sheet date. The actuarial valuation is carried out as per the projected unit credit method. 10.4 The Bank has applied the intrinsic value method to account for the compensation cost of ESOP to the employees of the Bank. Intrinsic value is the amount by which the quoted market price of the underlying shares on the grant date exceeds the exercise price of the options. Accordingly, the compensation cost is amortized over the vesting period. 11) Segment Reporting: In accordance with the guidelines issued by RBI, effective April 1, 2007, Bank has adopted Segment Reporting as under: 1. Treasury includes all investment portfolio, prot/ loss on sale of investments, prot/loss on foreign exchange transactions, equities, income from derivatives and money market operations. The expenses of this segment consist of interest expenses on funds borrowed from external sources as well as internal sources and depreciation / amortisation of premium on Held to Maturity category investments. Corporate/ Wholesale Banking includes lending and deposits from corporate customers and identied earnings and expenses of the segment. Retail Banking includes lending and deposits from retail customers and identied earnings and expenses of the segment. Other Banking Operations includes all other operations not covered under Treasury, Wholesale Banking and Retail Banking.

2. 3. 4. 50

12) Income-tax: Tax expenses comprise current, deferred and fringe benet taxes. Current income tax and fringe benet tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961. Deferred income taxes reect the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufcient future taxable income will be available against which such deferred tax assets can be realized. Unrecognized deferred tax assets of earlier years are re-assessed and recognised to the extent that it has become reasonably certain that future taxable income will be available against which such deferred tax assets can be realized. 13) Earnings per Share: Earnings per share are calculated by dividing the net prot or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period. Diluted earnings per equity share have been computed using the weighted average number of equity shares and dilutive potential equity shares outstanding as at end of the year. 14) Provisions: A provision is recognised when there is an obligation as a result of past event. It is probable that an outow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reect the current best estimates. 15) Others: Cash and cash equivalents in the cash ow statement comprise cash and balances with RBI (Schedule VI) and balances with banks and money at call and short notice (Schedule VII).

Schedule No. XVIII

NOTES ON ACCOUNTS 1. Capital Adequacy Ratio: In terms of its guidelines for implementation of new capital adequacy framework issued on 27th April 2007, RBI has directed banks not having operational presence outside India to migrate to the revised frame work for capital computation (under Basel II) with effect from March 31, 2009. The migration is proposed in phased manner over a three-year period during which banks are required to compute their capital requirements in terms of both Basel I and Basel II. The minimum capital to be maintained by Bank under the revised frame work is subject to a prudential oor of 100%, 90% and 80% of the capital requirement under Basel I over the year March 2009, 2010 and 2011 respectively. The capital adequacy ratio of the Bank, calculated as per RBI guidelines (Basel I requirement being higher) is set out below : Items i) ii) iii) iv) 2. Capital Adequacy Ratio (CRAR) CRAR Tier I Capital (%) CRAR Tier II Capital (%) Amount of subordinated debt raised as Tier-II capital (Rs. in crores) March 31, 2009 12.33% 7.52% 4.81% 100.00 March 31, 2008 11.91% 6.70% 5.21% 50.00 (Rs. in crores) 2008-2009 (1) Value of Investments : (i) Gross Value of Investments (a) In India (b) Outside India (ii) Provision for Depreciation (a) In India (b) Outside India (iii) Net Value of Investments (a) In India (b) Outside India 8088.34 8088.34 4.93 4.93 8083.41 8083.41 2007-2008 6645.80 6645.80 16.10 16.10 6629.70 6629.70 51

Investments:

(2) Movements in provision held towards depreciation on Investments : (i) Opening Balance (ii) Add: Provision made during the year (iii) Less: Write-off / write-back of excess provision during the year (iv) Closing Balance Category wise details of Investments (Net): 31/03/2009 HTM i) ii) iii) iv) v) vi) Government securities Other approved securities Shares Debentures and bonds Subsidiaries and/ or Joint Ventures Others Deposits under RIDF scheme with NABARD, SR/PTC, etc. Total 5493.95 5.35 0.50 1656.70 7156.50 AFS 800.41 3.75 30.37 14.25 78.13 926.91 HFT HTM 4677.88 5.35 0.50 1102.52 5786.25

16.10 0.01 11.18 4.93

12.78 6.37 3.05 16.10 (Rs. in crores)

31/03/2008 AFS 579.39 3.76 33.71 40.21 7.94 665.01 HFT 178.44 178.44

2.1 Details of Repo / Reverse Repo (including liquidity adjustment facility) deals done during the year ended March 31, 2009 : (Rs. in crores) Minimum outstanding during the year Securities sold under repos Securities purchased under reverse repos
Note: Amounts in brackets represent previous year gures

Maximum outstanding during the year 724.50 (430.00) (175.00)

Daily average As on March 31, 2009 outstanding during the year 93.00 (53.77) (2.81) 40.00 (390.00) (Rs. in crores) Extent of Extent of unrated unlisted Securities* securities**

30.37 (0.95) (2.00)

2.2 a)

Issuer composition of Non-SLR investments as at March 31, 2009: Amount Extent of private placement Extent of below investment grade securities

No. Issuer

1 2 3 4 5 6 7

PSUs FIs *** Banks Private corporates Subsidiaries/ Joint Ventures Others Provision held towards depreciation Total
**Excludes investments in NABARD RIDF *** Includes deposits placed with NABARD RIDF.

1657.22 14.04 38.15 0.50 79.49 (4.10) 1785.30

0.52 14.04 79.49 94.05

26.06 26.06

0.52 1.36 1.88

*Excludes investments in NABARD RIDF and equity shares

Note: Central government 8.07 GOI 2017 Security pledged with CCIL is not considered as Non SLR investment holding

52

b) No.

Issuer composition of Non-SLR investments as at March 31, 2008: Issuer Amount Extent of private placement Extent of below investment grade securities

(Rs. in crores) Extent of Extent of unlisted unrated Securities* securities**

1 2 3 4 5 6 7

PSUs FIs *** Banks Private corporates Subsidiaries/ Joint Ventures Others Provision held towards depreciation Total

0.01 1103.04 41.65 42.41 0.50 59.34 (7.20) 1239.75

0.52 41.65 9.30 51.47

0.01 5.00 1.36 6.37

0.01 0.52 5.00 7.22 0.50 1.36 14.61

*Excludes investments in NABARD RIDF, Oil Bonds, and equity shares **Excludes investments in NABARD RIDF, and Oil Bonds. *** Includes deposits placed with NABARD RIDF. Note: 1. Security pledged with CCIL have not been considered as Non- SLR investment holding. 2. 06.96 OIL SP 09 have been considered in the above disclosure.

c)

Non-performing Non-SLR investments: 2008-2009

(Rs. in crores) 2007-2008 3.88 3.88

Particulars Opening balance Additions during the year since 1st April Reductions during the above period Closing balance Total provisions held 3. Derivatives: 3.1 Forward Rate Agreement/Interest Rate Swap: Items 1) 2) 3) 4) 5) 3.2 3.3 The notional principal of swap agreements Losses which would be incurred if counter-parties failed to fulll their obligations under the agreements. Collateral required by the bank upon entering into swaps Concentration of credit risk arising from the swaps (with banks) The fair value of the swap book

(Rs. in crores) March 31, 2009 9724.36 167.36 70.92% (2.25) March 31, 2008 8950.00 83.93 73% 0.06

Exchange Traded Interest Rate Derivatives: The Bank has not undertaken exchange traded interest rate derivative transactions during the year. Disclosures on Risk Exposure in Derivatives Qualitative disclosure The Bank has entered into interest rate swap contracts to hedge on-balance sheet assets & liabilities and for trading purposes. The Bank has also offered currency option contracts, interest rate swaps and forward rate agreements to customers and covered it on back-to-back basis. The Banks Funds & Investments Policy and Market Risk Management Policy, approved by the Board, provides for using derivative products in an efcient manner as tools for mitigating market risk. The Policies cover dealing guidelines and prescribes exposure limits for derivative products. 53

Risk Management Department independently monitors the derivative position of the Bank, and reports Marked to Market position of Derivative Portfolio to top management on a daily basis. The Basis Present Value (PV01) of the derivative portfolio is also computed on a daily basis and reported to top management.

Derivative contracts transacted during the current year were in accordance with the prescribed Market Risk Policy and the Funds & Investment Policy approved by the Board. The Nature and Terms of the IRS (excluding IRS denominated in foreign currency and done on back to back basis) is set out below: (Rs. in crores) Nature Hedging Trading Trading Quantitative Disclosures March 31, 2009 Sr. No Particulars Currency Derivatives Interest rate Derivatives 9724.36 125.00 9599.36 Nos. 5 137 139 Notional Principal 125 4675 4375 Benchmark Terms

MIBOR Fixed receivable v/s oating payable MIBOR Fixed payable v/s oating receivable MIBOR Fixed receivable v/s oating payable (Rs. in crores) March 31, 2008 Currency Derivatives Interest rate Derivatives 8950.00 125.00 8825.00

Derivatives (Notional Principal Amount) a) b) For hedging For trading

Marked to Market Positions a) b) Asset (+) Liability (-) 2.25 247.36 1.43 83.93

3 4

Credit Exposure Likely impact of one percentage change in interest rate (100*PV01) (Note 1) a) b) on hedging derivatives on trading derivatives

0.25 (0.50)

1.34 0.01

Maximum and Minimum of 100*PV01 observed during the year (Note 2) a) on hedging b) on trading Max: 1.34 Min: 0.24 Max: 4.28 Min: 0.01 Max: 2.41 Min : 1.34 Max:18.37 Min : 0.00

Note 1: Note 2: Note 3: Note 4: Note 5:

Based on the PV01 of the outstanding derivatives as at March 31, 2009. Based on the absolute value of PV01 of the derivatives outstanding during the year. Derivative contracts that are back-to-back have not been included herein. Mark to Market positions above includes interest accrued on the swaps. Forward Exchange Contracts are not included in the Currency derivates above. There were no outstanding currency futures as on March 31, 2009.

Foreign Currency exposure not hedged by derivative instruments Rs. (0.56) crores (Net Open position as on March 31, 2009) (previous year Rs. (6.83) crores).

54

4.

Asset Quality: 4.1 Non-Performing Assets: Items (i) (ii) Net NPAs to Net Advances (%) Movement in NPAs (Gross) a) b) c) d) (iii) a) b) c) d) (iv) Opening Balance Additions during the year Reductions during the year Closing Balance Opening Balance Additions during the year Reductions during the year Closing Balance 392.31 219.00 356.29 255.02 291.02 81.04 192.93 179.13 342.73 155.49 105.91 392.31 273.75 102.45 85.18 291.02 2008-2009 1.14% (Rs. in crores) 2007-2008 2.27%

Movement in Net NPAs

Movement in provisions for NPAs (excluding provisions on standard assets) a) b) c) d) Opening Balance Provisions made during the year Write-off/write-back of excess provisions Closing Balance 101.29 137.96 163.36 75.89 68.98 53.04 20.73 101.29 (Rs. in crores) *Others (Consumer/ Vehicle loans) 106 (18) 13.64 (1.72) 0.41 () 106 (18) 13.64 (1.72) 0.41 ()

4.2 Details of Loan Assets subjected to Restructuring during the year ended March 31, 2009 CDR Mechanism SME Debt Restructuring

No. of Borrowers Standard Advances Restructured Amount Outstanding Sacrice (diminution in the fair value) No. of Borrowers Amount Outstanding Sacrice (diminution in the fair value) No. of Borrowers Amount Outstanding Sacrice (diminution in the fair value) No. of Borrowers Amount Outstanding Sacrice (diminution in the fair value)
* includes consumer/ vehicle loans 105 borrowal accounts involving Rs.7.29 crores Note: Amounts in brackets represent previous year gures

2 () 29.18 () 4.17 () 2 () 29.18 () 4.17 ()

Substandard Advances Restructured Doubtful Advances Restructured

TOTAL

55

As per RBI Circular No. 124/21.04.132/2008-09 dated 17th April 2009 following are additional disclosures regarding restructured accounts: Sr. No. 1 2 Disclosures Application received up to March 31, 2009 for restructuring, in respect of accounts which were standard as on September 1, 2008. Of (1), proposals approved and implemented as on March 31, 2009 and thus became eligible for special regulatory treatment and classied as standard assets as on the date of the balance sheet. Of (1), proposals approved and implemented as on March 31, 2009 but could not be upgraded to the standard category. Of (1), proposals under process/ implementation which were standard as on March 31, 2009. Of (1), proposals under process/ implementation which turned NPA as on March 31, 2009 but are expected to be classied as standard assets on full implementation of the package. Number *110 *108 Amount (Rs in crore) 70.17 42.82

3 4 5

27.35

* includes consumer/ vehicle loans 105 borrowal accounts involving Rs.7.29 crores 4.3 Details of nancial assets sold to Securitisation / Reconstruction Company for asset reconstruction: (Rs. in crores) Items 1) 2) 3) 4) 5) 4.4 No. of accounts Aggregate value (net of provisions) of accounts sold to SC/ RC Aggregate consideration Additional consideration realized in respect of accounts transferred in earlier years Aggregate gain/ (loss) over net book value Bank has not purchased/sold non-performing nancial assets from /to other banks. 2008-2009 2007-2008 35 40.00 26.00 (14.00) 10.70

4.5 Assets Securitised: Items 1) 2) 3) 4) 5) Number of deals concluded Total number of loans securitised Book Value of Loans securitised (Rs. crores) Sale consideration received for the securitised assets (Rs. crores) Gain/loss on sale on account of securitisation (Rs. crores)* 20082009 20072008

Outstanding value of services provided: Outstanding value of credit enhancement ** Outstanding value of First Loss Facility Outstanding value of Second Loss Facility (Guarantee) *** Outstanding value of Liquidity facility
* ** *** Net of securitisation expenses and nance charges for the month in which the assets were securitised.

(Rs. in crores) (Rs. in crores) 99.34 137.25 62.98 80.46 17.13

Represents credit enhancement provided for securitisation deals undertaken prior to issue of RBI circular on draft guidelines on securitisation of standard assets where bifurcation into rst loss and second loss facility is not available Second loss facility has been provided in the form of a Guarantee by a third party (second loss facility provider)

The Bank is the servicing agent for all the securitisation deals undertaken.

56

4.6 Provision on Standard Assets: Items Cumulative Provision held for Standard Assets March 31, 2009 59.12

(Rs. in crores) March 31, 2008 52.26

Provision towards Standard assets has been shown separately as Contingent Provisions against standard asset under Other liabilities and Provisions Others in Schedule V of the Balance Sheet. 5. Business ratios: March 31, 2009 i) ii) iii) iv) v) vi) Note: (1) (2) 6. Working funds are calculated at the average of working funds as per the Banks monthly returns (Form X) led with the RBI. Business per employee (deposits plus gross advances) is computed excluding Inter bank deposits. Interest income as a percentage to working funds Non-interest income as a percentage to working funds Operating prot as a percentage to working funds Return on assets Business (deposits plus gross advances) per employee including trainees (Rs. in lakhs) Prot per employee including trainees (Rs. in lakhs) 9.09% 1.80% 1.45% 0.58% 836.00 3.49 March 31, 2008 8.63% 1.16% 0.88% 0.34% 1062.67 2.62

Asset Liability Management: Maturity Pattern of Assets and Liabilities : (a) As at March 31, 2009: Next Day 27 Days 8 14 Days 15-28 Days 29 days to 3 months 2478.16 2435.80 83.92 539.41 Over 3 months to 6 months 1755.45 1489.94 49.29 76.36 Over 6 months to 1 year 2374.02 4695.26 511.56 127.80 Over 1 Over 3 year to years to 3 years 5 years 8175.24 3593.44 881.00 76.45 2747.42 745.87 1041.73 664.61 (Rs. in crores) Over 5 years Total

Deposits Loans & Advances Investment Securities Borrowings Foreign currency assets Foreign currency liabilities b)

84.81 476.46 0.50 7.50 5.69 62.61

583.10 834.61 264.60 39.49

494.28 587.19 199.62 11.98

697.80 675.21 14.94 257.23

2719.97 22110.25 236.86 15770.64 5036.25 55.63 62.14 8083.41 1856.46 67.83 62.61

As at March 31, 2008: Next Day 2 7 8 14 Days Days 1528 Days 29 days to 3 months 2699.21 1353.69 42.48 155.65 Over 3 months to 6 months 1369.21 1258.34 245.74 314.87 Over 6 months to 1 year 1995.82 3476.05 392.42 21.47 Over 1 Over 3 year to years to 3 years 5 years 6685.41 4364.17 766.38

(Rs. in crores) Over 5 years Total

Deposits Loans & Advances Investment Securities Borrowings Foreign currency assets Foreign currency liabilities

80.28 289.01 1.19 1.64 15.33

647.44 353.61 56.49

354.25 386.92 18.48

366.29 606.48 30.07

2468.72 2370.79 19037.42 416.16 290.88 12795.31 6629.70 1095.43 39.09 15.33

1764.60 3418.08 497.21 37.45

57

7.

Exposures: 7.1 Exposure to Real Estate Sector : Items a) Direct Exposure (i) Residential Mortgages [of which individual housing loans upto Rs.20 lakhs is Rs. 120.41 crores (previous year Rs.132.11 crores)] (ii) (iii) Commercial Real Estate * Investments in Mortgage Backed Securities (MBS) and other securitised Exposures: a) b) b) Residential Commercial Real Estate 44.69 665.81 134.72 468.02 448.64 153.69 172.48 179.61 (Rs. in crores) March 31, 2009 March 31, 2008

Indirect Exposure Fund based and non-fund based exposures on National Housing Bank (NHB) and Housing Finance Companies (HFCs) Total Real Estate Exposure

* Does not include corporate lending backed by mortgage of land and building. 7.2 Exposure to Capital Market: Items (i) direct investment in equity shares, convertible bonds, convertible debentures and units of equity oriented mutual funds the corpus of which is not exclusively invested in corporate debt; advances against shares/bonds/ debentures or other securities or on clean basis to individuals for investment in shares (including IPOs/ESOPs), convertible bonds, convertible debentures, and units of equity-oriented mutual funds; advances for any other purposes where shares or convertible bonds or convertible debentures or units of equity oriented mutual funds are taken as primary security; advances for any other purposes to the extent secured by the collateral security of shares or convertible bonds or convertible debentures or units of equity oriented mutual funds i.e. where the primary security other than shares / convertible bonds/ convertible debentures/units of equity oriented mutual funds `does not fully cover the advances; secured and unsecured advances to stockbrokers and guarantees issued on behalf of stockbrokers and market makers; loans sanctioned to corporates against the security of shares / bonds/debentures or other securities or on clean basis for meeting promoters contribution to the equity of new companies in anticipation of raising resources; (Rs. in crores) March 31, 2009 7.15 March 31, 2008 11.41

(ii)

83.69

93.34

(iii) (iv)

NIL NIL

NIL NIL

(v) (vi)

284.43 NIL

246.12 NIL

(vii) bridge loans to companies against expected equity ows/issues; (viii) underwriting commitments taken up by the banks in respect of primary issue of shares or convertible bonds or convertible debentures or units of equity oriented mutual funds; (ix) (x) nancing to stockbrokers for margin trading; all exposures to Venture Capital Funds (both registered and unregistered) will be deemed to be on par with equity and hence will be reckoned for compliance with the capital market exposure ceilings (both direct and indirect) Total Exposure to Capital Market 58

NIL NIL

NIL NIL

NIL NIL

NIL NIL

375.27

350.87

7.3. Exposure to Country Risk: a) In terms of Reserve Bank of India circular No. DBOD BP.BC.No.3/21.04.018/ 2008-09 dated July 1, 2008, the exposure of the Bank to country risk is as under: (Rs. in crores) Risk category Insignicant Low Moderate High Very High Restricted Off Credit Total Exposure (net) as at March 31, 2009 374.98 340.32 2.52 0.81 3.73 0.32 722.68 Provision held as at March 31, 2009 Exposure (net) as at March 31, 2008 211.09 19.07 71.63 7.18 2.31 2.36 0.27 313.91 Provision held as at March 31, 2008

7.4 Single Borrower limit and Group Borrower Limit: During the year the Bank has not exceeded the prudential credit exposure limit in respect of Single Borrower and Group Borrowers. 8. Miscellaneous: 8.1 Amount of Provisions for taxation during the year : Particulars Provision for Income Tax /deferred tax Fringe Benets tax Wealth tax Total 8.2 Disclosure of penalties imposed by RBI : The Reserve Bank of India has not imposed any penalty on the Bank u/s 46(4) of the Banking Regulation Act, 1949. 8.3 Fixed Assets : Cost of premises includes Rs.4.02 crores (previous year Rs.4.02 crores) in respect of properties for which execution of documents and registration formalities are in progress. Of these properties, the Bank has not obtained full possession of one property having WDV of Rs.1.85 crores (previous year Rs.1.89 crores) and has led a suit for the same. 8.3 Other Assets: i) ii) Non-banking assets acquired in satisfaction of claims includes vehicles repossessed by the Bank, which are readily saleable, aggregating to Rs.60.13 crores (previous year Rs.56.54 crores). Other assets include cash collateral (including liquidity facility) of Rs.98.36 crores (previous year Rs.210.08 crores) and stock of gold on consignment basis of Rs.32.27 crores (previous year Rs.28.97 crores). (Rs. in crores) 2008-09 76.20 2.60 0.35 79.15 2007-08 36.83 2.10 0.30 39.23

8.5 Other Liabilities and Provisions: Included in Other Liabilities Others are credit balances in nostro accounts aggregating Rs.113.85 crores (previous year Rs.59.04 crores). 8.6 Contingent Liabilities: Claims against the Bank not acknowledged as debts comprise tax demands in respect of which the Bank is in appeal of Rs.167.53 crores (previous year Rs.148.07 crores) and the cases sub-judice Rs.80.23 crores (previous year Rs.88.55 crores). The above are based on the managements estimate, and no signicant liability is expected to arise out of the same. 8.7 Other Income 8.7.1 Commission, Exchange and Brokerage includes commission on insurance business of Rs.63.84 crores (previous year Rs.38.62 crores). 59

8.7.2 Miscellaneous income includes recovery from bad debts written off Rs.28.89 crores (previous year Rs.42.30 crores), lease rentals Rs.18.80 crores (previous year Rs.19.69 crores) and others (processing charges, cheque return charges and depository services charges, etc.) Rs.103.78 crores (previous year Rs.86.57 crores). 9. Employee Stock Option Scheme (ESOS): The shareholders of the Bank had approved Employee Stock Option Scheme (ESOS) on September 18, 2007, enabling the Board and /or the Compensation Committee to grant such number of equity shares, including Options, of the Bank not exceeding 7% of the aggregate number of issued and paid up equity shares of the Bank, in line with the guidelines of the Securities & Exchange Board of India (SEBI). Pursuant thereto, the Compensation Committee of the Bank granted 1,56,21,000 options on various dates as follows : Sr. No 1. 2. Date of grant 18/07/2008 17/12/2008 No. of options 1,21,65,000 34,56,000

The ESOS scheme is equity settled wherein the employees will receive equity shares. Stock option activity under the scheme during the year ended March 31, 2009 : Options Outstanding Options Outstanding 2008-09 2007-08 Outstanding at the beginning of the year Surrendered during the year Granted during the year Exercised during the year Forfeited / lapsed during the year Outstanding at the end of the year Options exercisable The Options are vested over a period of 3 years Pursuant to the special resolution passed by the shareholders in the AGM held on September 22, 2008, fresh options were granted under the Employee Stock Options Scheme 2007 to such of those employees who surrendered the options granted earlier. Accordingly stock based compensation expense accounted for in earlier year of Rs.0.51 crores is reversed. Fair value methodology: The fair value of options used to compute proforma net income and earnings per equity share have been estimated using the Black-Scholes-Merton option pricing model. The Bank estimated the volatility based on historical share prices. The various assumptions considered in the Pricing model for ESOSs granted during the year ended March 31, 2009 are: Options Granted on 18/07/2008 Average Dividend yield Expected Volatility Risk free Interest Rates Expected life of options Expected forfeiture 60 13.70% 10.49% 5.12% to 6.39% 1 year to 3 years NIL Options Granted on 17/12/2008 13.70% 11.01% 5.12% to 6.39% 1 year to 3 years NIL 1,00,00,000 1,00,00,000 1,56,21,000 Nil Nil 1,56,21,000 Nil Nil Nil 1,00,00,000 Nil Nil 1,00,00,000 Nil

Impact of fair value method on net prot and EPS: Had the compensation cost for the Banks Employee Stock Option Scheme (ESOS) outstanding been determined based on the fair value approach, the Banks net prot and earnings per share would have been as per the proforma amounts indicated below: (Rs. in crores) Year ended March 31, 2009 Prot attributable to Equity Shareholders (Rs. in crores) (Net prot after tax) Add : Stock based compensation expense accounted Less: Stock based compensation expense determined under fair value based method (Proforma) Net Prot (Proforma) Weighted average number of equity shares outstanding during the year Nominal value of Equity Shares (Rs.) Basic Earnings per Share (Rs.) Basic Earnings per Share (Rs.) (Proforma) Diluted Earnings per Share (Rs.) (Reported) Diluted Earnings per Share (Rs.) (Proforma) 10. Disclosures - Accounting Standards : 10.1 Net Prot or Loss for the period, prior period items and changes in accounting policies (AS-5) : There has been no material change in Accounting Policies adopted during the year ended March 31, 2009 from those followed for the year ended March 31, 2008. 10.2 Employee Benets (AS-15): Gratuity: The benet of Gratuity is funded dened benet plan. For this purpose the company has obtained a qualifying insurance policy from LIC of India (for Consumer Finance Division (CFD)) and Aviva Life Insurance Company India Limited (other than CFD) on the basis of actuarial valuation as at the balance sheet date. (Rs. in crores) Particulars Gratuity (Funded) March 31, 2009 8.82 0.63 1.79 (1.46) 0.46 10.24 6.05 0.64 5.77 (1.46) (0.03) 10.97 Gratuity (Funded) March 31, 2008 7.16 0.52 1.69 (3.74) 3.19 8.82 5.04 0.47 4.24 (3.74) 0.04 6.05 61 148.34 1.15 2.02 147.47 34,69,01,004 10 4.28 4.25 4.27 4.24 Year ended March 31, 2008 75.05 0.51 0.67 74.89 31,98,07,936 10 2.35 2.34 2.35 2.34

Changes in the present value of the obligation 1 2 3 4 5 6 7 1 2 3 4 5 6 Present Value of obligation 01/04/2008 Interest Cost Current Service Cost Past Service Cost Benets Paid Actuarial (gain) / loss on Obligation Present Value of obligation 31/03/2009 Fair value of Plan Assets 01/04/2008 Expected Return on Plan assets Contributions Benets Paid Actual Return on Plan Assets Fair Value of Plan Assets as at March 31, 2009

Reconciliation of opening and closing balance of the fair value of the Plan Assets

Particulars

Gratuity (Funded) March 31, 2009

Gratuity (Funded) March 31, 2008

Prot & Loss Expenses 1 2 3 4 5 Current Service Cost Interest Cost Expected Return on Plan assets Net Actuarial gain (loss) recognised in the year Expenses Recognised in the statement of Prot & Loss 1.79 0.63 (0.64) 0.49 2.27 1.69 0.52 (0.47) 3.15 4.89

Actuarial Assumptions 1 2 3 Discount Rate Expected Rate of Return on Plan Assets Expected Rate of Salary Increase 8.00% 8.00% 4.00% & 5.00%* 8.00% and 7.50%* 8.00% 4.00% & 3.50%*

* Pertains to the employees of Consumer Finance Division. Leave Encashment : The company provides benets to its employees under the Leave Encashment pay plan, which is a non-contributory dened benet plan. The employees of the company during the tenure of their employment are entitled to carry forward unutilized balance of Privilege Leave upto 180 days. Provision for Leave Encashment has been made in the accounts on the basis of actuarial valuation as at the balance sheet date. (Rs. in crores) Particulars 1 2 3 4 5 6 1 2 3 1 2 3 4 1 2 Actuarial Value of Present Value of Obligation (PVO) Opening Balance Interest Cost Service Cost Benets paid Actuarial (gain) loss on Obligation Present Value of Obligation 31/03/2009 Present Value of Obligation as at 31.03.09 Un-funded Liability as at 31.03.09 Un-funded Liability recognised in Balance Sheet Interest Cost Service Cost Gain (loss) recognised in the year Net Gain / Loss Discount Rate Expected Rate of Salary Increase March 31, 2009 March 31, 2008 8.39 0.59 1.69 (2.62) (0.08) 7.97 7.97 7.97 7.97 0.59 1.69 0.08 2.20 7.00% 4.00% 8.14 0.65 0.91 (1.43) 0.12 8.39 8.39 8.39 8.39 0.65 0.91 0.12 1.68 8.00% & 8.20%* 5.00% & 6.00%*

Balance Sheet Statement

Prot & Loss Account

Actuarial Assumptions

* Pertains to the employees of Consumer Finance Division 62

10.3 Segment Reporting (AS-17): The Bank operates in four business segments, viz. Treasury, Corporate/ Wholesale Banking, Retail Banking and Other Banking Operations. There are no signicant residual operations carried by the Bank. Summary: Part A: Business Segments
Business Segment Particulars Revenue Inter-Segment Revenue Total Income Result Unallocated Expenses Operating Prot Income Taxes and Other Provisions Extraordinary prot/ loss Net Prot Other Information: Segment Assets Unallocated Assets Total Assets Segment Liabilities Unallocated Liabilities Total Liabilities 1877.35 1045.66 11522.05 11084.34 11064.63 8435.72 0.00 0.00 9260.66 8242.34 6726.08 3619.44 10682.94 10082.15 0.00 0.00 26669.68 945.00 27614.68 24464.03 3150.65 27614.68 21943.93 1317.95 23261.88 20565.72 2696.16 23261.88 72.48 (86.67) 90.97 60.15 245.29 271.66 3.69 2.17 Treasury 31/03/09 31/03/08 689.38 491.09 Corporate/ Wholesale Banking Retail Banking Other Banking Operation

(Rs. in crores)
Total

31/03/09 31/03/08 31/03/09 31/03/08 31/03/09 31/03/08 31/03/09 31/03/08 1122.41 1040.68 1498.22 1244.11 22.47 24.40 3332.48 (566.76) 2765.72 412.43 44.18 368.25 219.91 0.00 148.34 2800.28 (622.04) 2178.24 247.31 51.12 196.19 121.14 0.00 75.05

Geographic Segments: Domestic 31/03/09 Revenue Assets 2765.72 27614.68 31/03/08 2178.24 23261.88 International 31/03/09 NIL NIL 31/03/08 NIL NIL

(Rs. in crores) Total 31/03/09 2765.72 27614.68 31/03/08 2178.24 23261.88

The business operations of the Bank are largely concentrated in India. Activities outside India are restricted to resource mobilization in the international markets. Since the Bank does not have material earnings emanating from foreign operations, the Bank is considered to operate only in domestic segment. 10.4 Related party transactions (AS-18): The following is the information on transactions with related parties : Key Management Personnel : Mr. Romesh Sobti, Managing Director Associates: IndusInd Information Technology Limited IndusInd Marketing and Financial Services Private Limited Alln Marketing Services Private Limited (upto Nov. 08, 2008) Alln Distribution Private Limited (upto Nov. 08, 2008) IBL Services & Solutions Private Limited Alln Insurance Specialities Private Limited (upto Nov. 08, 2008) Alln Insurance Services Private Limited (upto Nov. 08, 2008) Subsidiaries: ALF Insurance Services Private Limited 63

Summarized transactions with related parties for the year ended March 31, 2009: Items / Related Party Subsidiaries Associates/ Key Joint Management ventures personnel 2.40 (6.46) 8.76 (10.21) 0.60 (0.60) 0.08 2.55 47.96 0.97 5.26 (5.68) 1.60 (1.64) 0.01 2.58

(Rs. in crores) Relatives of key Management Personnel Total

Deposits Advances Investments Interest Paid Rendering of Services Receiving of services Receiving of services- Capitalised Management Contracts Other Liabilities (creditors for expenses, security deposits etc.) Receivable of Services

0.61 (0.62) 0.50 (0.50) 0.05

4.61 (8.72) 8.76 (10.21) 1.10 (1.10) 0.14 2.55 47.96 2.58 0.97 5.26 (5.68)

Note: Figures in bracket represent maximum outstanding during the year. Summarised Transactions with related parties for the year ended March 31, 2008: Items / Related Party Subsidiaries (Rs. in crores) Total

Associates/ Key Relatives Joint ventures Management of key personnel Management Personnel 2.99 (11.48) 5.01 (8.55) 0.60 (0.60) 0.09 17.53 43.87 5.26 15.08 5.95 (7.43) 0.13 (1.00) (0.15) () 0.02 2.14 () () () 0.02 ()

Deposits Advances Investments Interest Paid Rendering of Services Receiving of services Receiving of services- Capitalised Management Contracts Other Liabilities (creditors for expenses, security deposits etc) Receivable of Services

0.60 (0.60) () 0.50 (0.50) 0.05

3.72 (13.08) 5.01 (8.70) 1.10 (1.10) 0.16 17.53 43.89 5.26 2.14 15.08 5.95 (7.43)

Note: Figures in bracket represent maximum outstanding during the year. 64

10.5 The Bank does not have any non-cancelable operating leases during the year, where it is the lessee. The details of other operating leases are as under: Operating leases: Transaction I Particulars Description of the asset Gross carrying amount Accumulated depreciation Depreciation recognized during the current year Contingent Rent recognized during the year Minimum Lease Payments (MLP) 2008-09 Wind Turbine Generator37 Nos. 25.68 8.15 1.36 4.03 MLP based on the actual consumption of electricity at the contracted rates by the lessee. Accordingly, future minimum lease payments are indeterminate. (Rs. in crores) 2008-09 Wind Turbine Generator 88 Nos. 72.45 17.95 3.83 12.00 24.25 72.45 14.12 3.83 12.00 36.25 2007-08 25.68 6.79 1.36 4.37 (Rs. in crores) 2007-08

Transaction II Particulars Description of the asset Gross carrying amount Accumulated depreciation Depreciation recognized during the current year Minimum Lease Payments (MLP) Not later than one year Later than one year and not later than ve years Later than ve years 10.6 Earnings per share (AS 20):

The numerators and denominators used to calculate the earning per share as per AS-20 are as under: Year ended March 31, 2009 Net Prot as Reported (Rs. in crores) Net Prot (Proforma) Weighted average number of equity shares outstanding during the year Nominal value of Equity Shares (Rs.) Basic Earnings per Share (Rs.) Basic Earnings per Share (Rs.) (Proforma) Diluted Earnings per Share (Rs.) (Reported) Diluted Earnings per Share (Rs.) (Proforma) 10.7 Consolidated Financial Statements Subsidiary (AS 21): ALF Insurance Services Pvt. Ltd., subsidiary of the Bank, is yet to commence operations for want of necessary regulatory approvals. Accordingly, no consolidated nancial statements have been drawn up as per AS-21 Consolidated Financial Statements. 10.8 Taxation (AS 22): (a). Provision for tax has been made after considering contingency provision as admissible deduction. 65 148.34 147.47 34,69,01,004 10 4.28 4.25 4.27 4.24 Year ended March 31, 2008 75.05 74.89 31,98,07,936 10 2.35 2.34 2.35 2.34

(b).

Deferred Tax (AS-22): The major components of deferred tax assets/ liabilities as on March 31, 2009 are as under: (Rs. in crores) 31.03.2009 Deferred Tax Assets Liabilities 31.30 53.32 31.03.2008 Deferred Tax Assets Liabilities 34.81 55.62

Timing difference on account of : Difference between book depreciation and depreciation under the Income Tax Act, 1961 Difference between Provisions for doubtful debts and advances and amount allowable under Section 36(1)(viia) of the Income Tax Act, 1961 Interest on securities Income Recognition Others Sub-total Net closing balance carried to Balance Sheet (included in Sch. V Others)

0.01 2.38 55.71

30.22 61.52 5.81

0.01 1.82 57.45

26.88 61.69 4.24

10.9 In the opinion of the Bank there is no impairment of its Fixed Assets to any material extent as at March 31, 2009 requiring recognition in terms of Accounting Standard 28. 11. Additional Disclosures: 11.1 Provisions and Contingencies charged to Prot and Loss account for the year consist of: (Rs. in crores) Break up of Provisions and Contingencies shown under the head Expenditure in Prot and Loss account Depreciation on Investments Provision for non-performing assets including bad debts written off Provision towards Standard Assets Income Tax / Wealth Tax / Deferred Tax/ Fringe Benet Tax Other provisions and contingencies Repossessed Assets Others Total 11.2 Disclosure of Complaints: A. No. (a) (b) (c) (d) B. No. (a) (b) (c) (d) Customer Complaints Particulars No. of complaints No. of complaints No. of complaints No. of complaints pending at the beginning of the year received during the year redressed during the year pending at the end of the year 2008-09 44 303 287 60 2007-08 39 182 177 44 March 31, 2009 (3.09) 125.29 6.86 79.15 7.47 4.23 219.91 March 31, 2008 3.63 60.90 7.45 39.23 4.35 5.58 121.14

Awards passed by the Banking Ombudsman Particulars No. of unimplemented Awards at the beginning of the year No. of Awards passed by the Banking Ombudsmen during the year No. of Awards implemented during the year No. of unimplemented Awards at the end of the year 2008-09 Nil Nil Nil Nil 2007-08 Nil Nil Nil Nil

(Compiled by management and relied by auditors) 11.3 Letters of Comfort Bank has not issued any letter of comfort during the year. Bank does not carry any oating provision in the books. Suppliers / service providers covered under Micro, Small, Medium Enterprises Development Act, 2006, have not furnished the information regarding ling of necessary memorandum with the appropriate authority. Hence, information required to be disclosed under section 22 of the said Act is not given. Previous years gures have been regrouped/ reclassied wherever necessary.

12. 13.

14. 66

CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2009
(Rs. in crores) For the year For the year ended 31.3.2009 ended 31.3.2008 A. Cash Flow from Operating Activities Net Prot after taxes Adjustments for non-cash charges : Depreciation on Fixed Assets Provision on Investments Tax Provisions (Income Tax/ Wealth Tax/ Deferred Tax) Employees Stock Option Expenses Loan loss and Other Provisions Interest on Tier II / Upper Tier II bonds (treated separately) (Prot) / Loss on sale of xed assets Operating Prot before Working Capital changes Adjustments for : Increase in trade and Other Receivables (Advances and Other Assets) Increase in Inventories (Investments) Increase in Trade Payables (Deposits, Borrowings and Other Liabilities) Cash generated from Operations Direct taxes paid Net Cash from Operating Activities B. Cash Flow from Investing Activities Purchase of Fixed Assets Sale of Fixed Assets (Proceeds) Net Cash used in Investing Activities C. Cash Flow from Financing Activities Proceeds from GDR issue Capital Premium Dividends paid Proceeds from Issue of Unsecured Non-Convertible Redeemable Subordinated Tier II Bonds Proceeds from Unsecured Non-convertible Redeemable Non-Cumulative Subordinated Upper Tier II Bonds Redemption of Sub-ordinated Tier II capital Interest on Tier II / Upper Tier II bonds Net Cash used in Financing Activities Net increase in Cash and Cash Equivalents Cash and Cash Equivalents as on the rst day of the year Cash and Cash Equivalents as on the last day of the year 148.34 44.17 (3.09) 79.15 0.64 143.85 77.27 2.60 492.93 (3311.17) (1450.62) 3946.23 (322.63) (67.22) (389.85) (51.05) 2.06 (48.99) 35.19 187.00 (24.92) 100.00 (35.50) (77.27) 184.50 (254.34) 2178.03 1923.69 75.05 40.16 3.63 39.23 0.51 37.29 76.58 (14.70) 257.75 (1769.75) (741.67) 1991.82 (261.85) (65.26) (327.11) (56.98) 15.75 (41.23) (22.45) 50.00 (76.58) (49.03) (417.37) 2595.40 2178.03

Notes : 1. The above Cash Flow Statement has been prepared under the indirect method as set out in Accounting Standard 3 on Cash Flow Statement issued by the Institute of Chartered Accountants of India (ICAI). 2. Figures in brackets indicate cash outow. 3. Refer to note 15 under Schedule No. XVII. 4. Previous years gures have been regrouped and recast to conform to the current years classication.

As per our report of even date. For M.P. Chitale & Co. Chartered Accountants Ashutosh Pednekar Partner Place : Mumbai Date : May 5, 2009

For INDUSIND BANK LTD. R. Seshasayee Chairman Romesh Sobti Managing Director S. V. Zaregaonkar Chief Financial Ofcer Haresh Gajwani Company Secretary T. Anantha Narayanan Director

67

DISCLOSURES UNDER THE NEW CAPITAL ADEQUACY FRAMEWORK (BASEL II GUIDELINES)

I. Scope of Application IndusInd Bank Limited (the Bank) is a commercial bank, which was incorporated on January 31, 1994. The Bank has only one subsidiary - Aln Insurance Services Ltd. The nancials of the subsidiary are not consolidated with the Banks nancials as the said company could not commence business and CRAR is computed on the nancial position of the Bank alone. The amount of capital held in this subsidiary is deducted from Capital funds, i.e. 50% Tier I and 50% Tier II. II. Capital Structure Equity Capital : The Bank has authorised share capital of Rs.500.00 crores comprising 50,00,00,000 equity share of Rs.10/- each. As on March 31, 2009, the Bank has issued, subscribed and paid-up capital of Rs.355.19 crores, constituting 35,50,00,000 shares of Rs.10/- each. The Banks shares are listed on the National Stock Exchange and the Bombay Stock Exchange. The GDRs issued by the Bank are listed on the Luxembourg Stock Exchange. During the year, the Bank has raised capital in the form of equity shares through offerings of overseas Global Depository Receipts (GDRs), each GDR representing one equity share of the Bank of the face value of Rs.10/- issued at US$ 1.47 per share fully paid. The provisions of the Companies Act, 1956 and other applicable laws and regulations govern the rights and obligations of the equity share capital of the Bank. Debt Capital Instruments : The Bank has raised capital through subordinated bonds (Unsecured Redeemable Non-convertible Bonds) eligible as Tier 2 capital, details of which are given below. Upper Tier 2 Capital : The aggregate value of Upper Tier 2 capital as on March 31, 2009 was Rs.308.90 crores as per the table below : Sr. Date of No. Placement 1. 31.03.2006 2. 3 30.09.2006 23.12.2006 Amount Coupon (%) (Rs. in crs.) 100.00 Payable semi-annually @ 9.60% p.a for rst 10 years and @ 10% p.a. from 11th year till redemption 80.20 Payable semi-annually @ 10.25% p.a for rst 10 years and @ 10.75% p.a. from 11th year till redemption 128.70 Payable semi-annually @ 9.75% p.a for rst 10 years and @ 10.25% p.a. from 11th year till redemption 308.90 Redemption Date 30.03.2021 30.09.2021 23.12.2021

Total Subordinated Debt

As on March 31, 2009, the Bank had an outstanding subordinated debt (Unsecured Redeemable Non-convertible Bonds) aggregating Rs.651.60 crores the details of which are stated below: Sr. No. 1. 2. 3. Date of Placement 31.03.2004 30.06.2004 Amount (Rs. in crs.) 66.50 48.00 50.00 82.00 15.00 75.10 115.00 50.00 50.00 100.00 651.60 crores qualied Coupon (%) @7.00% p.a. payable annually @6.80% p.a payable annually @7.00% p.a. payable annually @8.10% pa. payable annually @ 1 year Gsec (INBMK) + 190 bps payable semi-annually @8.50% p.a payable annually @8.40% p.a. payable annually @10% p.a. payable semi-annually @10.35% p.a. payable semi-annually @10.50% p.a. payable annually as Tier 2 capital. Redemption Date 30.06.2009 30.04.2010 30.04.2014 30.06.2010 30.06.2010 30.06.2014 30.05.2015 30.06.2012 29.04.2013 30.06.2014

4. 5. 6. 7. Of 68

31.03.2005 11.04.2005 11.04.2005 30.12.2005 30.03.2007 29.09.2007 31.03.2009 Total this, Rs.439.10

Composition of the Capital Tier I and Tier II as on March 31, 2009 Tier I Capital Paid up Share Capital Reserves Innovative Instruments Other Capital Instruments Gross Tier I Capital Deductions Investments in Subsidiaries and Associates Credit enhancements under Securitisation Net Tier I Capital Tier II Capital Upper Tier II Bonds Sub-ordinated debts General Provisions / IRA and Revaluation Reserves Gross Tier II Capital Deductions Investments in Subsidiaries and Associates Credit enhancements under Securitisation Net Tier II Capital Total eligible capital Debt Capital instruments eligible for inclusion in Upper Tier 2 Capital Total amount outstanding Of which amount raised during the current year Amount eligible to be reckoned as Capital funds Subordinated debt eligible for inclusion in Lower Tier 2 Capital Total amount outstanding Of which amount raised during the current year Amount eligible to be reckoned as Capital funds Tier I Capital Funds Tier II Capital Funds Total Eligible Capital Funds III. Capital Adequacy

(Rs. in crores) 355.19 1,072.04 1,427.23 0.55 0.45 1,426.23 308.90 439.10 166.69 914.69 0.55 0.45 913.69 2,339.92 308.90 308.90 308.90 651.60 100.00 439.10 1,426.23 913.69 2,339.92

Capital requirements for Credit Risk, Market Risk and Operational Risk as on March 31, 2009 Risk Type Capital requirements for Credit Risk Portfolio Subject to Standardised approach Securitisation exposures Capital requirements for Market Risk Standardised Duration Approach Interest Rate Risk Foreign Exchange Risk (including gold) Equity Risk Capital requirements for Operational Risk Basic Indicator Approach Total Capital requirements at 9% Total Capital Funds CRAR Rs. in crores 1,548.44 1,547.99 0.45 30.98 15.02 9.00 6.96 98.53 98.53 1,677.95 2,339.92 12.55% 69

Under Basel II, Banks CRAR works out to be 12.55% as on March 31, 2009, which is higher by 0.22% as compared to 12.33% under Basel I. Integrated Risk Management: Objectives and Organisation Structure : The Bank has established an Enterprise-wide Risk Management Department responsible for Bank-wide risk management covering Credit risk, Market risk (including ALM) and Operational risk, independent of the Business segments. The Risk Management Department focuses on identication, measurement, monitoring and controlling of risks across various segments. The Bank has been progressively adopting the best International practices so as to continually reinforce its Risk Management functions. Objectives and Policies: The set up of Risk Management Department is hereunder: Managing Director Chief Risk Ofcer Head Risk Mgmt

Credit Risk Management

Market Risk Management

Operational Risk Management

Asset Liability Management

Separate Committees are set up to manage and control various risks as specied below : Risk Management Committee (RMC) Asset Liability Management Committee (ALCO) Credit Risk Management Committee (CRMC) Market Risk Management Committee (MRMC) Operational Risk Management Committee (ORMC)

Bank has articulated various risk policies which specify the risks, controls and measurement techniques. The policies are framed keeping risk appetite as the central objective. Against this background, the Bank identies a number of key risk components. For each of these components, the Bank determines a target that represents the Banks perception of the component in question. The risk policies are vetted by the sub-committees, viz. CRMC, MRMC, etc. and are put forth to RMC, which is a subcommittee of the Board. Upon vetting of the policies by RMC, the same is placed for the approval of the Board and implemented. Bank has put in place a comprehensive policy on ICAAP, which presents a holistic view of the material risks faced, control environment, risk management processes, risk measurement techniques, capital adequacy and capital planning. Policies are periodically reviewed and revised to address the changes in the economy / banking sector and Banks risk prole. Monitoring of various risks is undertaken at periodic intervals and a report is submitted to Top management / Board. Credit Risk The Bank manages credit risk comprehensively; both at Transaction level and at Portfolio level. Some of the major initiatives taken are listed below. Bank uses a robust Risk rating framework for evaluating credit risk of the borrowers. The Bank uses segment-specic rating models which are equipped with transition matrix capabilities. Risks on various counter-parties such as corporates, banks, are monitored through counter-party exposure limits, governed by country risk exposure limits also in case of international trades. The Bank manages risk at the portfolio level too, with portfolio level prudential exposure limits to mitigate concentration risk. The Bank has a well-diversied portfolio across various industries and segments, as illustrated by the following data. o Retail and schematic exposures (which provide wider diversication benets) account for as much as 45% of the total fund-based advances.

70

The Banks corporate exposure is fully diversied across 85 industries, thus insulated from individual industry cycles.

The above initiatives support qualitative business growth while managing inherent risks within the risk appetite. Market Risk Key sources of Market Risk are Liquidity Risk, Interest Rate Risk, Price Risk and Foreign Exchange Risk. The Bank has implemented a state-of-the-art Treasury system which supports robust risk management capabilities and facilitates Straightthrough Processing. Market Risk is effectively managed through comprehensive policy framework which provides various tools such as Markto-Market, Duration analysis, Value-at-Risk, besides through operational limits such as stop-loss limits, exposure limits, deal-size limits, maturity ladder, etc. Asset Liability Management (ALM) The Banks ALM system supports effective management of liquidity risk and interest rate risk, covering 100% of its assets and liabilities. Liquidity Risk is monitored through Structural Liquidity Gaps, Dynamic Liquidity position, Liquidity Ratios analysis and Behavioral analysis, with prudential limits for negative gaps in various time buckets. Interest Rate Sensitivity is monitored through prudential limits for Rate Sensitive Gaps and other risk parameters. Interest Rate Risk on the Investment portfolio is monitored through Modied Duration on a daily basis. Optimum risk is assumed through duration, to balance between risk containment and prot generation from market movements.

ALCO meetings were convened frequently during the nancial year, wherein analytical presentations were made providing detailed analysis of liquidity position, interest rate risks, product mix, business growth v/s budgets, interest rate outlook, which helped to review the business strategies regularly and undertake new initiatives. The interest rate outlook projected in ALCO meetings during the last two years have largely been in line with the actual interest rate trend taking place. Operational Risk Operational Risk is managed by addressing People Risk, Process Risk, Systems Risk as well as risks arising out of external environment. The Bank has efcient audit mechanism, involving periodical on-site audit, concurrent audits, on the spot and off-site surveillance enabled by the Banks advanced technology and Core Banking System. The Bank has initiated the process of putting in place Operational Risk Management Framework, using sophisticated tools, such as: Key Risks Indicators Score Cards Risk Events Loss Data Near Miss Events

The framework would help in mitigation of operational risks and optimization of capital requirement towards operational risks under Basel II norms. Systems Risk As part of Systems-related Operational Risk Management initiatives, the Bank has achieved the following. The Bank has formulated and implemented a comprehensive Business Continuity Plan (BCP) to ensure continuity of its critical business functions and extension of banking services to its customers. The Bank has established an effective Disaster Recovery site at a distant location, with on-line, real-time replication of data, both in Mumbai and Chennai. Comprehensive IT security framework has been put in place to ensure complete data security and integrity. The Bank has housed its data center in a professionally managed environment, with sophisticated and fool-proof security features and assured supply of utilities.

The robust Risk Management framework created in the Bank supports rapid and qualitative growth with optimization of risks and maximization of shareholder value. 71

IV.

Credit Risk Exposures Credit Risk is dened as the probability / potential that the borrower or counter-party may fail to meet its obligations in accordance with agreed terms. It involves inability or unwillingness of a borrower or counter-party to meet commitments in relation to lending, trading, hedging, settlement and other nancial transactions. Credit Risk is made up of two components: 1. 2. Transaction Risk (or Default Risk), which represents the risk arising from individual credit exposures and Portfolio Risk, which represents the risk inherent in the portfolio of credit assets (concentration of assets, correlation among portfolios, etc.).

Credit risk is found in a variety of transactions across the Banks portfolio including not only loans, off balance sheet exposures, investments and nancial guarantees, but also the risk of a counterparty in a derivative transaction becoming unable to meet its obligations. Credit risk constitutes the largest risk to which the Bank is exposed. The Bank has adequate system support which facilitates credit risk management and measurement across its portfolio. The system support is strengthened and expanded as and when new exposures are added to the Banks portfolio. The Bank has articulated comprehensive guidelines for managing credit risk as outlined in Credit Policy, Credit Risk and related Policies framework, Bank Risk Policy, Country Risk Policy and Recovery Policy. The Credit Risk Management systems used at the Bank have been implemented in accordance with these guidelines and best market practices. The credit risk management process focuses on both specic transactions and on groups of specic exposures as portfolios. The Banks credit risk and related policies and systems focus are framed to achieve the following key objectives: Monitoring concentration risk in particular products, segments, geographies etc. thereby avoiding concentration risk from excessive exposures to any particular product, segment, geography etc. Assisting in building quality credit portfolio and balancing risks and returns in line with Banks risk appetite Tracking Credit quality migration Determining how much capital to hold against each class of the assets Undertaking Stress testing to evaluate the credit portfolio strength To develop a greater ability to recognize and avoid potential problems Alignment of Risk Strategy with Business Strategy Adherence to regulatory guidelines

Credit Risk Management at specic transaction level The central objective for managing credit risk at each transaction level is development of evaluation and monitoring system that covers the entire life cycle of the exposure, i.e. opportunity for transaction, assessing the credit risk, granting of credit, disbursement and subsequent monitoring, identifying the obligors with emerging credit problems, remedial action in event of credit quality deterioration and repayment or termination of the obligation. The Credit Policy of the Bank stipulates for applicability of various norms for managing credit risk at a specic transaction level and more relevant to the target segment of the obligors. The Credit Policy covers all the types of obligors, viz. Corporate, SME, Trader, Business Banking and Schematic Loans such as Home Loan, Personal Loan, etc. The major components of Credit Policy are mentioned below : The transaction with the customer/ prospective customer is undertaken with an aim to build long term relationship. All the related internal and regulatory guidelines such as KYC norms, RBI prudential norms, etc. are adhered to while assessing the credit request of the borrower. The credit is granted with due diligence and detailed insight into the customers circumstances and of specic assessments that provide a context for such credits. The facility is granted based on the customers creditworthiness, capital base or assets to assure that the customer is able to substantiate the repayment. Due regard is also given to the industry in which the customer is operating, the business specic risks and management capability and their risk appetite. Regular follow-up in the overall health of the borrower is undertaken to assess whether the basis of granting credit has changed. When loans and credits are granted to borrowers falling outside preferred credit rating, the Bank normally considers sufcient collateral. However, collaterals are not the sole criteria for lending, which is generally done based on assessing the adequacy of the cash ows.

72

The Bank has dened exposures limit on the basis of internal risk rating of the borrower. The Bank is particularly cautious when granting credits to businesses in affected or seasonal industries. In terms of Banks country risk management, due caution is exercised when assuming risk in countries with an unstable economic or political scenario.

Credit Approval Committee The Bank has put in place the principle of Committee or Approval Grids approach while according sanctions to the credit proposals. This provides for an unbiased, objective assessment/evaluation of credit proposals. Such Committees consists of one or more ofcials from an independent department, which has no volume or prot targets to achieve. The spirit of the credit approving system is that no credit proposals are approved or recommended to higher authorities unless all the members of the Committee or Approval Grids agree on the acceptability of the proposal in all respects. In case of disagreement the proposal is referred to next higher Committee whose decision to approve or decline with conditions is then nal. The following Approval Grids are constituted: Corporate & Commercial Banking Segment Branch Credit Committee (BCC) Zonal Credit Committee (ZCC) Corporate Ofce Credit Committee (COCC) I Corporate Ofce Credit Committee (COCC) II Executive Credit Committee (ECC) Consumer Banking Segment : The scheme of delegation under Consumer Banking Segment includes Vehicle nancing, personal loans, housing loans and other schematic loans under multi-tier Committee based approach as under: Branch Credit Committee Consumer Banking (BCC CB) Regional Credit Committee Consumer Banking (RCC-CB) Corporate Ofce Credit Committee Consumer Banking (COCC- CB I & II) The credit proposals which are beyond the delegated powers of ECC are placed to Committee of Directors (COD) or Board of Directors (BOD) for approval. Risk Classication The Bank monitors the overall health of its customers on an on-going basis to ensure that any weakening of a customers earnings or liquidity is detected as early as possible. As part of the credit process, customers are classied according to the credit quality in terms of internal rating, and the classication is regularly updated on receipt of new information/ changes in the factors affecting the position of the customer. The Bank has operationalised the following risk rating/scoring models depending on the target segment of the borrower: Large Corporate, Small & Medium Enterprises, NBFC, Business Banking Trading entities, Capital Market Broker and Commodity Exchange Broker Financial Institutions/Primary Dealers and Banks Retail customers (Schematic Loans) which are assigned credit scoring

Rating grades in each rating model is on a scale of 1 to 8. The model-specic rating grades are named distinctly. Each model-specic rating grade reects the relative ratings of the borrowers under that particular segment. For instance, L4 indicates a superior risk prole of a Large Corporate, when compared to another Large Corporate rated L5. In order to have a common risk language across the Bank, these model specic ratings are mapped to common scale ratings which facilitate measurement of risk prole of different segments of borrower by means of common risk ladder. The various purposes for which the rating models are used are mentioned hereunder: Risk based pricing i.e. higher premium for higher risk Capital allocation (under Basel II IRB approaches) Portfolio Management Efciency in lending decision 73

To assess the quality of the borrower single point reference of credit risk of the borrower Minimum rating norms for assuming exposures Prudential ceiling for single borrower exposures linked to rating Frequency of review of exposures. Frequency of internal auditing of exposures To measure the portfolio quality Target for quality of advances portfolio is monitored by way of Weighted Average Credit Rating (WACR).

Credit Quality Assurance: Bank has also adopted Loan Review Mechanism (LRM), which involves independent assessment of the quality of an advance, effectiveness of loan administration, compliance with internal policies of bank and regulatory framework, adequacy of loan loss provisions (for NPAs) and portfolio quality. It also helps in tracking weaknesses developing in the account for initiating corrective measures in time. LRM is carried out by Credit Quality Assurance team, which is independent of Credit and Business functions. Credit Risk Management at Portfolio level: The accumulation of individual exposures leads to portfolio, which creates the possibility of concentration risk. The concentration risk, ideally on account of borrowers/ products with similar risk prole, may arise in various forms such as Single Borrower, Group of Borrowers, Sensitive Sector, Industry wise Exposure, Unsecured Exposure, Rating wise Exposure, Off Balance sheet Exposure, Product wise Exposure, etc. The credit risk concentration is addressed by means of structural and prudential limits stipulated in the Credit Risk Policy and other related policies. Concentration risk on account of exposures to counter-parties (both single borrower and group of borrowers), Industry-wise, Rating-wise, Product-wise, etc. is being monitored by Risk Management Dept (RMD). For this purpose, exposures in all business units, viz. branches, treasury, investment banking, etc. by way of all instruments (loans, equity/debt investments, derivative exposures, etc.) are being considered. Such monitoring is carried out at monthly intervals. Besides, respective business units are monitoring the exposure on continuous real-time basis. The concentration risk is further evaluated in terms of statistical measures and benchmarks. A comprehensive Stress Testing framework based on several factors and risk drivers assessing the impact of stressed scenario on Credit quality, its resultant after effect on Banks protability and capital adequacy, is placed to Top Management /Board every quarter/ annually. The framework highlights the Banks credit portfolio under 3 different levels of intensity across default, i.e. mild, medium and severe, and analyses its impact on the portfolio quality and solvency level. Impaired credit - Non Performing Assets (NPAs): The guidelines as laid down by RBI Master Circular No. DBOD.No.BP.BC.20/21.04.048/2008-09 dated July 1, 2008, on Asset classication, Income Recognition and Provisioning to Advances portfolio are followed while classifying Non-performing Assets (NPAs). The guidelines are as under: a) b) An asset, including a leased asset, becomes non-performing when it ceases to generate income for the bank A non performing asset (NPA) is a loan or an advance where; i. ii. iii. iv. v. vi. interest and / or installment of principal remains overdue for a period of more than 90 days in respect of a term loan, the account remains out of order, in respect of an Overdraft / Cash Credit (OD/ CC), the bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted, the installment of principal or interest thereon remains overdue for two crop seasons for short duration crops, the installment of principal or interest thereon remains overdue for one crop season for long duration crops, the amount of liquidity facility remains outstanding for more than 90 days, in respect of a securitisation transaction undertaken in terms of RBI guidelines on Securitisation dated February 1, 2006.

Out of Order status: An account should be treated as out of order if the outstanding balance remains continuously in excess of the sanctioned limit / drawing power. In cases where the outstanding balance in the principal operating account is less than the sanctioned limit / drawing power, but there are no credits continuously for 90 days as on the date of Balance Sheet or credits are not enough to cover the interest debited during the same period, these accounts should be treated as out of order. Overdue: Any amount due to the bank under any credit facility is overdue if it is not paid on the due date xed by the bank. 74

(i)

Total Gross Credit Risk Exposure Rs. in crores 26,680 5,240 31,920

Fund Based* Non Fund Based** Total Exposures * ** (ii)

Includes all exposures such as Cash Credit, Overdrafts, Term Loan, Cash, SLR securities, etc., which are held in banking book Off-Balance items such as LC, BG and credit exposure equivalent of Inter-bank forwards, merchant forward contracts and derivatives, etc. Geographical Distribution of Exposures Domestic 26,680 5,240 31,920 (Rs. in crores) Overseas (Rs. in crores) Fund Based Non Fund Based 77 112 16 29 0 0 23 5 6 0 0 0 0 0 0 0 28

Fund Based Non Fund Based Total Exposures Industry-Wise Distribution of Exposures Industries Steel Steel-Long Products Steel Flats-CR,GP/GC Steel - Alloy Sponge Iron Iron and Steel Rolling Mills Stainless Steel Textiles Textiles - Readymade Garments Textiles - Cotton bre / yarn Textiles - Cotton fabrics Textiles - Synthetic Fabrics Textiles - Manmade bres / yarn Cotton ginning, Cleaning, Baling Textile - Jute Textile Machinery Real Estate - Commercial Lease Rental Discounting Commercial Property Land & Buildings Developers Others Telecom Telecom Equipments Telecom - Cellular Telecom Cables Pharmaceuticals Pharmaceuticals - Bulk Drugs Pharmaceuticals - Formulations Chemicals Chemicals - Organic Chemicals - Inorganic

183 113 200 25 19 6 196 99 94 9 9 1 1 1 143 1 254 3 117 32 18 173 156 98 17

113 4 1 12 0 41 53 75

Automobiles Automobiles-Passenger Cars Automobiles-2/3 wheelers Automobiles-Commercial Vehicle Infrastructure Project Construction (Turnkey) Other Infrastructure Petroleum & Products NBFCs (other than HFCs) Gems and Jewellery Micronance Institution Engineering & Machinery Capital Market Broker Contract Construction Food Credit Plastic & Plastic Products Power Coal Fast Moving Consumer Goods Electronic components Tyres Paper - Writing and Printing Fertilizers - Nitrogenous Electric Equipment SME - Miscellaneous-Mfng Sugar Petrochemicals Mining, Quarrying & Minerals Other Food processing Beverage, Breweries, Distileries Auto Ancillaries Aluminum Diversied Paper - Industrial Tiles/Sanitaryware Consumer Finance Division Other Industries Residual assets Total Exposures Residual Contractual Maturity break down of assets Next Day Cash Balances with RBI Balances with other Banks Investments Advances (excl NPAs) Fixed Assets Other Assets Total 76 141.88 352.86 0.50 476.46 5.69 27 Days 71.62 264.60 834.61 8 14 15 28 Days days 54.18 199.62 587.19 6.73 847.72 20.96 111.98 14.94 675.21 6.73 829.82 29 days 3mths 52.45 131.82 83.92 2435.80 18.60 2722.59 3 6 6 mths mths 1 year 31.47 2.45 49.29 1489.94 25.33 1598.48 31.47 511.56 140.99 13 year 283.21 7.99

6 5 2 149 215 400 309 236 238 153 46 121 99 63 64 14 68 52 41 49 2 18 31 36 1 26 36 32 93 30 12 20 12 7127 3996 10910 26680

0 0 0 269 16 0 0 66 0 24 130 6 0 25 12 55 1 7 15 4 205 30 10 6 40 11 0 1 16 0 10 0 0 0 3761 0 5240 (Rs. in crores)

3 5 Above 5 years years 178.32 451.03 5036.25 623.19 800.51 7147.84

Total 141.88 1048.91 732.90 8083.41 623.19 1213.75 27614.68

881.00 1041.73 745.87 209.17

4695.26 3593.44

236.86 15770.64

977.39 1170.83

5379.28 4974.81 1965.92

Movement of NPAs and Provision for NPAs as on 31.03.09 A Amount of NPAs (Gross) Sub-standard Doubtful 1 Doubtful 2 Doubtful 3 Loss B C Net NPAs NPA ratios Gross NPA to Gross advances (%) Net NPA to Net advances (%) D Movement of NPAs (Gross) Opening Balance as on 01.04.08 Additions during the year Reductions during the year Closing Balance as on 31.03.09 E Movement of provision for NPAs Opening as on 01.04.08 Provision made in 2008-09 Write off / Write back of excess provisions Closing as on 31.03.09

(Rs. in crores)

137.16 78.58 32.43 6.64 0.21 179.13 1.61% 1.14% 392.31 219.00 356.29 255.02 101.29 137.96 163.36 75.89

Non Performing Investments and Movement of provision for depreciation on Non Performing Investments (Rs. in crores) A B C Amount of Non-Performing Investments Amount of provision held for non-performing investments Movement of provision for depreciation on investments Opening as on 01.04.08 Add: Provision made in 2008-09 Less: Write-off/ write-back of excess provision Closing Balance as on 31.3.09 V. Credit risk : Disclosures for portfolios under the standardised approach As per the Basel II guidelines on Standardised approach, the risk weight on the certain categories of domestic counter parties is determined on the external rating assigned by any one of the accredited rating agencies, i.e. CRISIL, ICRA, CARE and Fitch. For Foreign counterparties and banks, rating assigned by S&P, Moodys and Fitch are used. The Bank computes risk weight on the basis of external rating assigned, both Long Term and Short Term, for the facilities availed by the borrower. The external ratings assigned are generally facility specic. The Bank follows the procedures laid down in the Basel II guidelines for usage of external ratings as under: Ratings assigned by one rating agency are used for all the types of claims on the borrowing entity. Long term ratings are used for facilities with contractual maturity of one year & above. Short term ratings are applied for facilities with contractual maturity of less than one year. If either the short term or long term ratings attracts 150% risk weight on any of the claims on the borrower, the Bank assigns uniform risk weight of 150% on all the unrated claims, both short term and long term. In case of multiple ratings, if there are two ratings assigned to the facility that maps to different risk weights, the rating that maps to higher risk weight is used. In case of three or more ratings, the ratings corresponding to the two lowest risk weights is referred to and the higher of those two risk weights is be applied. i.e., the second lowest risk weight. For securitised transactions, SO ratings assigned by the rating agency are applied for arriving at the risk weights. 77 16.10 0.01 11.18 4.93 0 0

Presently, the banks do not assign any risk weight on the basis of proxy ratings. Risk weight-wise distribution of credit Exposures. Category Below 100% Risk Weights 100% Risk Weights More than 100% Risk Weights Deducted - Investments in subsidiaries VI. Credit risk mitigation: Disclosures for standardised approach The Bank mitigates credit exposure with eligible collateral and guarantees to reduce the credit risk of obligors as stipulated under Basel II. In principle with mitigating credit risk, Bank has put in place a comprehensive policy on Credit Risk Mitigants and Collaterals for recognizing the eligible collaterals and guarantors for netting the exposures and reducing the credit risk of obligors. Basic procedures and descriptions of controls as well as types of standard collateral, guarantees necessary in granting credit, evaluation methods for different types of credit and collateral, applicable haircuts to collateral and revaluation of collateral are stipulated in the Banks credit policy and credit risk mitigant policy. The Bank uses net exposure for capital calculations after netting deposit and eligible collaterals. All collateral and guarantees are recorded and the details are linked to individual accounts. Perfection of security interest, date, currency and correlation between collateral and counterparty are also considered. As lending is conned to default risk, Bank accepts collateral securities to minimize the impact of loss and consequently reducing the credit risk. The type of collateral is determined based on the nature of facility, product type, counter party risk and its credit quality. However, as explained earlier, collateral is not the sole criteria for granting credit. For Corporate, SME and Business Banking clients, working capital facility is generally secured by charge on oating assets and Term loan is secured by xed assets. In case of project nancing, Bank stipulates for escrow of receivables along with the underlying project assets. The credit risk policy clearly denes the type of secondary securities and minimum percentage of it to the total exposures is to be obtained in case of credit to obligors falling outside the preferred rating grade. The credit facilities are secured by secondary collaterals such as cash deposits, KVP, NSC, IVP, guarantee, mortgages, etc. Bank also grants unsecured credit to the borrowers with high standing and low credit risk prole. In case of schematic products such as Home Loan, Auto Loan, etc., Loan to value ratio, margin and valuation/revaluation of collaterals is dened in the product programme. The valuation is generally carried out by the empanelled valuer of the Bank. Bank has also put in place approved product paper on loan against warehouse receipts, shares and other securities. The margin, valuation and revaluation of the assets is specied in the product note. The credit approving authorities decides on the type and amount of collaterals for each type of facility on a case-to-case basis. For schematic loans and facilities offered under product programme, securities are obtained as dened in the product notes. Eligible nancial asset collateral and guarantor For the purpose of credit risk mitigation, i.e. offsetting the amount of collateral against the individual/ pool of exposures to which the collaterals are assigned, nancial asset collateral types are dened by the Bank as per the New Capital Adequacy Framework to include Fixed deposits, KVP, IVP, NSC, Life Insurance Policies, Gold, Securities issued by Central and State Governments and units of Mutual Fund. On a similar note, the eligible guarantors are classied into the following categories: Sovereigns, Sovereign entities, Banks and Primary Dealers with lower risk weights than the counterparty. Other entities rated AA(-) or better including guarantee cover provided by parent, subsidiary and afliate companies when they have lower risk weight than the obligor. Particulars Exposure before applying eligible mitigants Exposure after applying eligible mitigants VII. Securitisation: Disclosure for standardised approach Securitisation means a process by which a single performing asset or a pool of performing assets are sold to a bankruptcy remote SPV and transferred from the balance sheet of the originator to the SPV in return for an immediate cash payment. 78 Rs. in crores 3,035 693 (1.10) Rs. in crores 17,218 13,186 1,516

SPV means any company, trust, or other entity constituted or established for a specic purpose - (a) activities of which are limited to those for accomplishing the purpose of the company, trust or other entity as the case may be; and (b) which is structured in a manner intended to isolate the corporation, trust or entity as the case may be, from the credit risk of an originator to make it bankruptcy remote. The securitization of assets generally being undertaken by the Bank is on the basis of True Sale, which provides 100% protection to the Bank from the default. All risks in the securitised portfolio are transferred to the Special Purpose Vehicle (SPV). Post-securitisation, Bank continues to service the loans transferred under securitization. Bank also provides for credit enhancements in the form of cash collaterals. Gains on securitisation are recognized over the period of underlying securities issued by the SPV. Loss on securitization is accounted for immediately. The Bank, in the past, had securitized its assets with the objectives of managing its funding requirements, improving liquidity, diversifying the portfolio risk, managing interest rate risk and capital adequacy. The Bank has not securitised any of its portfolio for the past 3 years. Bank has bought back exposure on securitization originated by it, the outstanding of which as of March 31, 2009 was Rs.26.14 crores. The Bank has also purchased securitized exposures of highest credit quality AAA (SO) and equivalent. The securitized assets, both the purchased and transferred, have been progressively declining on account of scheduled recoveries. Roles played by the Bank In the securitization transaction, the Bank has taken up the following roles: Originator: The Bank disburses the credit, after detailed appraisal. The individual accounts are repacked into a pool for transferring credit risk to the third party. The Bank has securitised its Commercial vehicles, Utility vehicles, Car Loans and Construction Equipment exposures. The securitised tranches have been assigned highest credit quality rating AAA (SO) and equivalent by the rating agencies reecting superior quality of the underlying assets. Investor: Investing in the securitised pool originated by the other Bank/FIs, having highest credit quality for the purpose of Balance sheet management and diversifying credit prole. Servicer: The Bank acts as a servicer when loans which were originated by the Bank are used as underlying assets in securitization. As the exposures are booked by the Bank, it emphasises on continuing and enriching the relationship with the clients. Provider of Credit enhancement: To manage the issue of delinquencies in the underlying assets by effectively addressing the repayment obligation, under the transaction, of the investors. Provider of Liquidity facilities: To bridge the timing gap in collection of recoveries from the underlying pool and transferring the cash ows, as per the schedule, to the investors.

Regulatory framework for Capital Requirement against Securitisation: Treatment of credit enhancements provided by an originator : Credit enhancement facilities include all arrangements provided to the SPV that could result in a bank absorbing losses of the SPV or its investors. Such facilities are provided by both originators and third parties. Bank is required to hold capital against the credit risk assumed when it provides credit enhancement, either explicitly or implicitly, to a special purpose vehicle or its investors. Treatment of First Loss Facility: The rst loss credit enhancement provided by the originator is reduced from capital funds and the deduction is capped at the amount of capital that the bank would have been required to hold for the full value of the assets, had they not been securitised. The deduction is made 50% from Tier 1 and 50% from Tier 2 capital. Treatment of Second Loss Facility: The second loss credit enhancement provided by the originator is reduced from capital funds to the full extent. The deduction is made 50% from Tier 1 and 50% from Tier 2 capital. Treatment of credit enhancements provided by third party : Treatment of First Loss Facility: The rst loss credit enhancement provided by third party service providers is reduced from capital to the full extent as mentioned in paragraph above. 79

Treatment of Second Loss Facility: The second loss credit enhancement is treated as a direct credit substitute with a 100 per cent credit conversion factor and a 100% risk weight covering the amount of the facility. Names of ECAIs used for securitisations and the types of securitisation exposure for which each agency is used: The Bank uses the ratings assigned by the accredited rating agencies, viz., CRISIL and ICRA for the purpose of the following securitised transactions: Investment in securitised pools/ Pass through certicates (PTC) Underlying assets in the tranches. Liquidity support (i) Break up of Exposures securitised by the Bank (Rs. in crores) Amount (O/s Principal amount) 1.40 0.29 8.07 0.24 10.00

Exposure Type

Commercial Vehicles Utility Vehicles Four Wheeler Construction Equipments Personal Loan Home Loan Total Securitised Exposure (ii) Amount of impaired or past due assets securitised

Exposure Type Commercial Vehicles Utility Vehicles Four Wheeler Construction Equipments Personal Loan Home Loan (iii) Break up of aggregate amount of securitisation exposure purchased by exposure type Rs. in crores 18.71 5.51 2.34 0.10 10.00 36.66 NA

Exposure Type Commercial Vehicles Utility Vehicles Four Wheeler Used Cars Personal Loan Two Wheelers Others Liquidity Facilities Credit Enhancements Other Commitments Total 80

(iv)

Risk Weight wise break up of amount of securitisation exposure retained or purchased by exposure type Rs. in crores 26.66 10.00 36.66 (Rs. in crores) Other deductions

Risk Weight Category Less than 100% 100% More than 100% Deductions Liquidity Facilities Credit Enhancements Other Commitments Total (v) Break up of securitised exposures deducted by exposure type Deducted from Tier I Credit Enhancement deducted from Tier I and Tier II capital 1.40 0.29 8.07 0.24 10.00

Exposure Type

Commercial Vehicles Utility Vehicles Four Wheeler Construction Equipments Personal Loan Home Loan Total (vi)

Total number and book value of loans asset securitised- by type of underlying assets FY 2008-09 Total no, of assets securitised Amount FY 2007-08 Total no, of assets securitised Amount

Exposure Type

Commercial Vehicles Utility Vehicles Four Wheeler Construction Equipments Personal Loan Home Loan (vii) Summary of Securitised activity Particulars Sale consideration received for securitised assets Net gain/Loss on account of securitisation (viii) Summary of form and quantum of services provided Particulars Outstanding Credit enhancements Funded Non Funded Outstanding Liquidity Facility Net outstanding servicing assets/liabilities Outstanding subordinate contributions FY 2008-09 FY 2007-08 FY 2008-09 NA FY 2007-08 NA NA NA

NA

NA

81

VIII. Market Risk in Trading book Market Risk may be dened as the possibility of loss to a bank caused by changes in the market variables. The market risk for the Bank is governed by the Market Risk Policy and Funds and Investment policy which are approved by the Board. These policies serve to outline the Banks risk appetite and risk philosophy in respect of Treasury / Forex / Equity / Derivatives / Bullion operations, and the controls that are considered essential for the management of market risks. The policies are reviewed periodically to update it with changed business requirements, economic environment and revised regulatory guidelines. Sources of Market Risk: Market risks arise from the following risk factors: Price risk for bonds, forex, equities and bullion Interest rate risk for investments, derivatives, etc Exchange rate risk for currencies; and Trading / liquidity risk. Objectives of Market Risk Management: The broad objectives of Market Risk management are: Management of interest rate risk and currency risk of the trading portfolio. Adequate control and suitable reporting of investments, Forex, Equity and Derivative portfolios Compliance with regulatory and internal guidelines. Monitoring and Control of transactions of market related instruments.

Scope and nature of Risk Reporting and Measurement Systems : Reporting The Bank reports on the various investments, Foreign exchange positions and derivatives position with their related risk measures to the top management and the committees of the Board on a periodic basis. The Bank periodically reports the related positions to the regulators in compliance with regulatory requirements. Measurement The Bank monitoring its risks through risk management tools and techniques such as are Value-at-Risk, Modied Duration, PV01, Stop Loss, amongst others. Based on the risk appetite of the Bank, various risk limits are placed which is monitored on a daily basis. Capital requirements for Market Risks @ 9% Market Risk elements Interest Rate Risk Foreign Exchange Risk (including gold) Equity Risk (Rs. in crores) Amount of capital required 15.02 9.00 6.96

Operational Risk The Bank has framed operational Risk Management Policy duly approved by the board. Other policies adopted by the Board that deals with management of operational risk are (a) Information System Security Policy (b) Policy on Know Your Customer (KYC) and Anti Money Laundering Policy (AML) process (c) IT business continuity and Disaster Recovery Plan and (d) Business Continuity Plan (BCP). The Operational Risk Management Policy adopted by the Bank outlines organization structure and detailed process for management of Operational Risk. The basic objective of the policy is to closely integrate Operational Management System to risk management processes of the Bank by clearly assigning roles for effectively identifying, assessing, monitoring and controlling / mitigating operational risk exposures, including material operational losses. Operational risks in the Bank are managed through comprehensive and well-articulated internal control frameworks. The Bank has initiated process of capturing, reporting and assessing risk events at the process level using RCSA framework. IX. Interest Rate Risk in the Banking Book (IRRBB) Interest Rate Risk is the risk of loss in the Banks net income and net equity value arising out of a change in level of interest rates and / or their implied volatility. Interest rate risk arises from holding assets and liabilities with different principal amounts, maturity dates and re-pricing dates. The Bank holds assets, liabilities and off balance sheet items across various markets with different maturity or re-pricing dates and linked to different benchmark rates, thus creating exposure to unexpected changes in the level of interest rates in such markets. Interest rate risk in the banking book refers to the risk associated with interest rate sensitive instruments that are not held in the trading book of the Bank.

82

Risk Management Framework The Board of the Bank has overall responsibility for management of risks and it decides the risk management policy of the Bank and sets limits for liquidity, interest rate, foreign exchange and equity price risks. The Asset Liability Management Committee (ALCO) consisting of the Banks senior management including Managing Director is responsible for ensuring adherence to the limits set by the Board as well as for deciding the business strategy of the Bank (for the assets and liabilities) in line with the Banks budget and decided risk management objectives. ALCO decides strategies and species prudential limits for management of interest rate risk in the banking book within the broad parameters laid down by Board of Directors. These limits are monitored periodically and the breaches, if any, are reported to ALCO. Monitoring and Control The Board of Directors has approved the Asset-Liability Management policy. The policy is intended to be exible to deal with rapidly changing conditions; any variations from policy should be reported to the Board of Directors with recommendations and approval from the ALCO. The Bank has put in place a mechanism for regular computation and monitoring of prudential limits and ratios for liquidity and interest rate risk management. The Bank uses its system capability for limits and ratio monitoring. The ALCO support group generates periodic reports for reporting these to ALCO and senior management of the Bank. The ALM support group carries out various analysis related to assets and liabilities, forecast of nancial market outlook, computes liquidity ratios and interest rate risk values based on the earnings and economic value perspective. Risk Measurement and Reporting Framework: The estimation of interest rate risk involves interest rate sensitive assets (RSAs) and interest rate sensitive liabilities (RSLs). The techniques for managing interest rate risk include: Interest rate sensitivity gap Analysis Earning at Risk Analysis Stress Testing

Interest Rate Sensitivity Gap: The gap or mismatch risk as at a given date, is measured by calculating gaps over different time intervals. Gap analysis measures mismatches between Rate Sensitive Liabilities (RSL) and Rate Sensitive Assets (RSA) (including off-balance sheet positions). The report is prepared by grouping liabilities, assets and off-balance sheet positions into time buckets according to residual maturity or next re-pricing period, whichever is earlier. The difference between RSA and RSL for each time bucket signies the gap in that time bucket. The gap report provides a good framework for determining the earnings impact. Earning at Risk: Any change in interest rate would impact Banks net interest income (NII) and the value of its xed income portfolio (price risk). The interest rate risk is measured by EaR, that is the sensitivity of the NII to a 100 basis points adverse change in the level of interest rates. Stress Testing: The Bank measures the impact on net interest margin (NIM) / EaR after taking into account various possible movement in interest rates across tenor and their impact on the earnings and economic value of the Bank is calculated for each of these scenarios. These reports are prepared on a monthly basis for measurement of interest rate risk. With an upward rate shock of 1% across the curve, as per Rate Sensitive Gaps in INR as on 26.03.2009, the earning shows a decline of Rs. 45.45 crores. The impact of change in interest rate by 100 bps and 50 bps has been computed on open positions (as on March 31, 2009) and shown hereunder against the respective currencies: Currency INR USD JPY GBP EUR Others Total (100) 45.44 0.02 0.00 0.00 0.00 -0.01 45.45 Change in interest rates (in bps) Impact on NII (Rupees in crores) (50) 50 22.72 -22.72 0.01 -0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 22.72 -22.72

100 -45.44 -0.02 0.00 0.00 0.00 0.01 -45.45 83

US DOLLARS DENOMINATED BALANCE SHEET AS AT MARCH 31, 2009

(Millions of US$)
1 USD = 50.72 CAPITAL AND LIABILITIES As at 31.03.09 As at 31.03.08

Capital Employee Stock Options Outstanding Reserves and Surplus Deposits Borrowings Other Liabilities & Provisions
TOTAL ASSETS

70.03 0.23 257.90 4359.28 366.02 391.08 5444.54 234.78 144.50 1593.73 3109.35 122.87 239.31
TOTAL

63.09 0.10 202.92 3753.43 215.98 350.81 4586.33 300.92 128.50 1307.12 2522.73 123.26 203.80 4586.33 6108.42 347.24

Cash and Balances with Reserve Bank of India Balances with Banks and Money at Call and Short Notice Investments Advances Fixed Assets Other Assets Contingent Liabilities Bills for Collection

5444.54 8734.06 579.21

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2009
(Millions of US$)
1 USD = Rs.50.72 I INCOME Year ended 31.03.09 Year ended 31.03.08

Interest Earned Other Income

TOTAL II EXPENDITURE

455.34 89.96 545.30 364.84 107.85 43.36

TOTAL

370.79 58.67 429.46 311.49 79.30 23.88 414.67 14.79 41.68 56.47

Interest Expended Operating Expenses Provisions and Contingencies

III PROFIT

516.05 29.25 47.91 77.16

Add: Prot brought forward

AMOUNT AVAILABLE FOR APPROPRIATION IV APPROPRIATIONS

Transfer to a) Statutory Reserve b) Capital Reserve c) Investment Reserve Account d) Dividend (Proposed) e) Corporate Dividend Tax Balance carried over to Balance Sheet
TOTAL

7.31 10.53 0.30 8.82 1.50 28.46 48.70 77.16

3.70 0.44 3.78 0.64 8.56 47.91 56.47

84

SUBSIDIARY COMPANY ALF Insurance Services Private Limited DIRECTORS REPORT Your Directors are pleased to present the Sixth Annual Report along with the audited accounts for the year ended March 31, 2009. Financial Performance (In Rupees) Particulars Year ended March 31, 2009 5,48,926 5,48,926 91,801 91,801 4,57,125 1,31,431 3,25,694 8,42,635 11,68,330 Year ended March 31, 2008 5,61,847 5,61,847 51,534 51,534 5,10,313 1,75,316 3,34,997 5,07,638 8,42,635

(iii) (iv) (v)

Interest Income Total Income Administrative and Other Expenses Total Expenditure Net Prot Before Tax Provision for Taxation Prot After Tax Prot brought forward from previous year Prot carried to Balance Sheet Business Your Company is in the business of Insurance Corporate Broking.

(vi)

The Balance Sheet and Prot and Loss Account dealt with by this report are in agreement with the books of account; In our opinion, the Balance Sheet and Prot and Loss Account dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956; On the basis of written representations received from the Directors, as on 31st March 2009 and taken on record by the Board of Directors, we report that none of the Directors is disqualied as on 31st March 2009 from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956; In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2009, (b) in the case of the Prot and Loss Account of the Prot for the year ended on that date. For PRASAD & SRINATH Chartered Accountants S.PRASAD Partner M.No.12847

Outlook for the future Upon getting license from IRDA, your Company will be doing business with all the public sector companies namely, New India Assurance Company Limited, Oriental Insurance Company Limited, United India Insurance Company Limited and National Insurance Company Limited. Board of Directors Mr. C M Sambasivam, Director, retires by rotation and he being eligible, offers himself for reappointment. Directors Responsibility Statement a) In the preparation of the annual accounts for the period ended March 31, 2009 the applicable accounting standards have been followed by the Company. b) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2009 and the prot of the Company for the period ended on that date. c) The Directors have taken proper and sufcient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities. d) The accounts of the company have been prepared on a going concern basis. Auditors M/s. Prasad and Srinath, Chartered Accountants, Chennai, retire at the ensuing Annual General Meeting and are eligible for re-appointment. Secretarial Compliance Certicate Secretarial Compliance Certicate pursuant to Section 383A of the Companies Act issued by Mr. G. Ramachandran, Company Secretary in Practice is attached and the same forms part of this report. Particulars of employees None of the employees are covered under Section 217 (2A) of the Companies Act read with Companies (Particulars of Employees) Rules, 1975. Conservation of Energy, Technology absorption and Foreign Exchange Earning/Outgo Your Company has no activities relating to Conservation of Energy or Technology Absorption. Your Company did not have any foreign earnings or outgo. Acknowledgement Your Directors wish to place on record their deep appreciation for the whole-hearted and sincere co-operation from its Bankers and other associates. On behalf of the Board of Directors C. M. Sambasivam S. T. Krishnekumaar Directors

Place: Chennai Date : April 15, 2009

Chennai April 15, 2009

AUDITORS REPORT Auditors Report to the members of ALF Insurance Services Private Limited 1. We have audited the attached balance sheet of ALF Insurance Services Private Limited as at 31st March 2009, and the Prot and Loss Account for the year ended on that date annexed thereto. These nancial statements are the responsibility of the companys management. Our responsibility is to express an opinion on these nancial statements based on our audit. 2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the nancial statements. An audit also includes assessing the accounting principles used and signicant estimates made by management, as well as evaluating the overall nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditors Report) Order, 2003 as amended by the Companies (Auditors Report) (Amendment) Order, 2004, issued by the Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specied in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to above, we report that: (i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit; (ii) In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination of those books;

ANNEXURE Referred to in paragraph 3 of our report of even date, 1) The Company does not have any Fixed Asset and hence maintenance of register and physical verication does not arise. 2) The Company does not have any stock of inventory and hence reporting on physical verication does not arise. 3) a) The Company has neither granted nor taken any loans, secured or unsecured to/ from companies, rms, or other parties covered in the register maintained under section 301 of the Companies Act, 1956. 4) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and the nature of its business. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal system. 5) a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered. b) None of the said transactions have exceeded Rs.5 Lakhs in value in respect of any party in one nancial year. 6) The company has not accepted deposits from the Public during the year. 7) The company does not have separate internal audit system. However in our opinion the existing internal control procedures are sufcient considering the size and nature of business of the company. 8) The Central Government has not prescribed maintenance of any cost records under Section 209 (1) (d) of the Companies Act, 1956. 9) a) The Company is regular in depositing applicable undisputed statutory dues with appropriate statutory authorities. b) According to the information and explanations given to us, there were no disputed amounts payable in respect of Income tax, Wealth tax, Sales tax, Customs duty, Excise duty, Service tax and Cess as at 31.03.2009 for a period of more than six months from the date they became payable. 10) The Company does not have accumulated losses. The company has not incurred cash losses during the year covered by our audit and the immediately preceding year. 11) The Company does not have any dues to a bank or to a nancial institutions or to Debenture holders. 12) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. 13) The Company is not a chit fund or a nidhi / mutual benet fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the company. 14) The Company is not dealing in or trading in shares, securities, debentures and other investments. Therefore, the provisions of clause 4(xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the company. 15) The Company has not given any guarantee for loans taken by others from banks or nancial institutions. 16) The Company does not have any term loan. 17) The Company has not raised funds on short-term basis. 18) The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act. 19) The Company has not issued any debentures. 20) The Company has not raised money by way of public issues. 21) During the course of our examination of the books of account carried out in accordance with the generally accepted auditing practices in India, we have neither come across any instance of fraud on or by the company, noticed or reported during the year, nor have we been informed of such case by the management. For PRASAD & SRINATH Chartered Accountants S.PRASAD Partner M.No.12847 Place: Chennai Date : April 15, 2009

85

BALANCE SHEET AS AT MARCH 31, 2009 SOURCE OF FUNDS SCH March 31, 2009 Rs. Shareholders' Funds Share Capital Reserves and Surplus TOTAL APPLICATION OF FUNDS Current Assets Loans and Advances Less: Current Liabilities and Provisions Net Current Assets Preliminary Expenses TOTAL 3 4 6,727,057 558,727 6,168,330 6,168,330 6,228,889 386,254 5,842,635 5,842,635 1 2 5,000,000 1,168,330 6,168,330 5,000,000 842,635 5,842,635 Rs. March 31, 2008 Rs. Rs.

SCHEDULES TO ACCOUNTS March 31, 2009 1. SHARE CAPITAL Authorised 5,00,000 Equity Shares of Rs.10/each Issued, Subscribed and Paid up 5,00,000 equity shares of Rs.10/each [The entire capital is held by IndusInd Bank Ltd. and its nominees] 2. RESERVES AND SURPLUS Prot and Loss Account TOTAL 3. CURRENT ASSETS, LOANS AND ADVANCES Interest Receivable Tax Deducted at source Advance Tax Paid Bank Balance (with Scheduled Bank) For and on behalf of the Board In current Account In Fixed Deposit Account TOTAL 133,639 5,805,431 5,939,070 6,727,057 32,832 5,558,435 5,591,267 6,228,889 377,584 350,762 59,640 388,733 237,683 11,206 1,168,330 1,168,330 842,635 842,635 5,000,000 5,000,000 Rs. Rs. March 31, 2008 Rs. Rs.

5,000,000

5,000,000

Schedules and Notes to the Accounts form part of this Balance Sheet As per our Report of even date For and on behalf of Prasad & Srinath Chartered Accountants S. Prasad Partner M.No.12847 Place : Chennai Date : April 15, 2009 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2009 SCH March 31, 2009 Rs. INCOME Interest On Fixed Deposit (TDS Rs.113079 ; previous year Rs.114072) TOTAL INCOME EXPENDITURE Administration Preliminary Expenses written - off TOTAL EXPENDITURE Prot Before Tax Less: Provision for Taxation Less: Provision for Taxation (for Prior Period) Prot after Tax Prot brought forward from previous year Prot carried to Balance Sheet (B) (A-B) 5 91,801 91,801 457,125 131,431 325,694 842,635 1,168,330 48,324 3,210 51,534 510,313 173,454 1,862 334,997 507,638 842,635 2. 3. 4. (A) 548,926 561,847 548,926 561,847 March 31, 2008 Rs.

C.M.SAMBASIVAM Director

S.T.KRISHNEKUMAAR Director

4.

Current Liabilities & Provisions a) b) Current liabilities Sundry Creditors Provisions Provision for Taxation TOTAL 502,382 558,727 370,951 386,254 56,345 15,303

5.

Administrative Expenses Rates & Taxes Professional Charges Audit Fees(including service tax) Statutory Audit Fees Certication Bank Charges TOTAL 11,030 300 91,801 11,236 1,124 242 48,324 41,300 39,171 13,956 21,766

ACCOUNTING POLICIES 1. Revenue Recognition 1.1 1.2 Interest on Fixed Deposit is accounted on accrual basis. Retirement Benets

The Company does not have any employees and hence provision towards gratuity and encashment of leave has not been made in accounts. The Company does not have any deferred tax liability. The gures have been rounded to nearest Rupee. Previous year gure have been regrouped wherever necessary. For and on behalf of the Board

Schedules and Notes to the Accounts form part of this Balance Sheet As per our Report of even date For and on behalf of Prasad & Srinath Chartered Accountants S. Prasad Partner M.No.12847 Place : Chennai Date : April 15, 2009 C.M.SAMBASIVAM Director S.T.KRISHNEKUMAAR Director For and on behalf of the Board

For and on behalf of PRASAD & SRINATH Chartered Accountants

S.PRASAD Partner M. No.12847 Place : Chennai Date : April 15, 2009

C.M. SAMBASIVAM Director

S.T. KRISHNEKUMAAR Director

86

STATEMENT PURSUANT TO SEC.212 (1) (E) OF THE COMPANIES ACT, 1956 RELATING TO SUBSIDIARY COMPANY AS ON MARCH 31, 2009

1 2 3 4 5

Name of Subsidiary Company Financial Year ending Holding Companys Interest Extent of holding

: ALF Insurance Services Pvt. Ltd. : March 31, 2009 : 4,99,998 Equity Shares of Rs.10/- face value : 100%

Prot (Loss) for the nancial year of the subsidiary so far as it concerns : Rs.3,25,694 the member of the holding company and not dealt with in the books of accounts of the holding company Prot (Loss) for the nancial year of the subsidiary so far as it concerns : Rs. Nil the member of the holding company and dealt with in the books of accounts of the holding company Prot (Loss) for the previous nancial year of the subsidiary so far as it : Rs.3,34,997 concerns the member of the holding company and not dealt with in the books of accounts of the holding company Prot (Loss) for the previous nancial year of the subsidiary so far as : Rs. Nil it concerns the member of the holding company and dealt with in the books of accounts of the holding company

INDUSIND BANK - LAST 10 YEARS

(Rs. in crores)

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Deposits Advances Capital Reserves & Surplus Borrowings Investments Interest Income Other Income Interest Expenses Operating Expenses (excluding depreciation) Operating Prot (before depreciation) Provisions & Contingencies (including depreciation) Net Prot Number of branches Number of Extn.Counters Number of OSAs 5018 6546 7187 8400 8598 11200 13114 15006 17645 19037 22110 2662 3677 4237 5574 5348 7812 9000 9310 11084 12795 15771 159 370 41 159 374 55 159 385 41 159 403 87 219 383 290 510 291 539 611 291 576 535 320 320 355

737 1029 1308 593 1095 1856

237 2310

2095 2731 2494 2485 2535 3972 4069 5410 5892 6630 8083 594 83 479 66 132 95 37 26 3 0 637 145 501 68 213 157 56 27 4 0 729 116 569 75 201 160 41 32 4 0 710 184 547 74 273 222 51 40 7 30 743 258 558 93 350 260 90 53 10 64 986 1134 1188 1500 1881 2309 345 669 180 482 220 262 61 12 80 251 719 220 446 236 210 115 9 80 189 244 298 456

873 1229 1580 1850 281 223 186 37 137 8 83 310 205 137 68 170 0 99 362 236 161 75 180 0 173 503 412 264 148 180 0 184

87

Branch Network
Andhra Pradesh Ananthapur Email ID: anap@indusind.com Tel.: (08554) 244955, 249373, 651286 Banjara Hills Email ID: hyme@indusind.com Tel.: (040) 2354 5274 / 47 Chittoor Email ID: chap@indusind.com Tel.: (08572) 221166 / 230044 Gajuwaka Email ID: gaju@indusind.com Tel.: (0891) 2514125 / 133, 2758223, 2512720, 2512724, 2729537 Gudivada Email ID: gdap@indusind.com Tel.: (08670) 249033, 249044 Guntur Email ID: guap@indusind.com Tel.: (08674) 2331001 / 2 Hyderabad Email ID: hybe@indusind.com Tel.: (040) 2790 7660 / 64 / 65 / 4663 Kadapa Email ID: kaap@indusind.com Tel.: (08562) 243411 Kodad Email ID: koap@indusind.com Tel.: (08683) 256043 Kurnool Email ID: kuap@indusind.com Tel.: (08518) 223425, 325420 Miryalaguda Email ID: miap@indusind.com Tel.: (08689) 243050 Nellore Email ID: neap@indusind.com Tel.: (0861) 2306369, 6522208 Seethummadhara Email ID: vjfs@indusind.com Tel.: (0891) 2707326 / 29 Vijayawada Email ID: viap@indusind.com Tel.: (0866) 2492633/44 Visakhapatnam Email ID: cdwa@indusind.com Tel.: (0891) 2702202 / 198 Warangal Email ID: waan@indusind.com Tel.: (0870) 2433555 Assam Dibrugarh Email ID: dias@indusind.com Tel.: (0373) 2323756, 2323759 Guwahati Email ID: gugs@indusind.com Tel.: (0361) 2452864 / 65, 2463503 Jorhat Email ID: joas@indusind.com Tel.: (0376) 2301408 Silchar Email ID: sias@indusind.com Tel.: (03842) 226466, 226477, 226759 Tezpur Email ID: teas@indusind.com Tel.: (03712) 230922 / 924 / 926 Tinsukia Email ID: tias@indusind.com Tel.: (0374) 2340122 Bihar Patna Email ID: parp@indusind.com Tel.: (0612) 2500938

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Haryana Gurgaon Email ID: guud@indusind.com Tel.: (0124) 2388883 - 5 Hissar Email ID: hiha@indusind.com Tel.: (01662) 226340 / 2 Karnal Email ID: kaha@indusind.com Tel.: (0184) 226 8955 / 56 / 57 /58 Panchkula Email ID: panc@indusind.com Tel.: (0172) 5024380 / 4389 Rohtak Email ID: roha@indusind.com Tel.: (01262)645715 / 645669 / 327890 Himachal Pradesh Shimla Email ID: shhp@indusind.com Tel.: (0177) 2654187, 2652217 Jammu & Kashmir Srinagar Email ID: srjk@indusind.com Tel.: (0194) 2480755, 2480772 Jharkhand Bokaro Email ID: bojh@indusind.com Tel.: (06542) 233418 / 20 Dhanbad Email ID: dhbm@indusind.com Tel.: (0326) 2305700, 2309888, 2309801 Hazaribagh Email ID: hajh@indusind.com Tel.: (06546) 224920/922/923 Jamshedpur Email ID: jajh@indusind.com Tel.: (0657) 3294929, 2756115 / 116 Ranchi Email ID: ramr@indusind.com Tel.: (0651) 2330137, 2330147, 2330134 Karnataka Bangalore Email ID: bgmg@indusind.com Tel.: (080) 25592318 / 19 / 27 /31 Basavanagudi Email ID: bgjn@indusind.com Tel.: (080) 26610251-54 Bidadi Email ID: bika@indusind.com Tel.: (080) 27204805 Bommassandra Email ID: bmka@indusind.com Tel.: (08110) 27836556 / 6557 Hubli Email ID: huka@indusind.com Tel.: (0836) 2358263 / 64 / 65 Mangalore Email ID: maka@indusind.com Tel.: (0824) 2425101 / 102 / 103 / 104 Marathalli Email ID: mrka@indusind.com Tel.: (080) 25233405/406, 65358822 Mysore Email ID: myka@indusind.com Tel.: (0821) 4252061/62/ 4262899 Shimoga Email ID: shka@indusind.com Tel.: (08182) 227722

Kerala Alappuzha Email ID: alke@indusind.com Tel.: (0477) 2230888 / 0997 / 8442 Kakkanad Email ID: koka@indusind.com Tel.: (0484) 2413252 / 3211 / 3266 Kannur Email ID: kake@indusind.com Tel.: (0497) 2705944 / 45, 3259660 Kattappana Email ID: ktke@indusind.com Tel.: (04868) 252470/71/72 Kazhakuttom Email ID: katc@indusind.com Tel.: (0471) 2527 550 / 1 / 2 Kochi Email ID: koch1@indusind.com Tel.: (0484) 2360888 (4 lines), 442 2288, 236 0720 / 0775 Kollam Email ID: klke@indusind.com Tel.: (0474) 2766985 / 86 / 87 Kottayam Email ID: koke@indusind.com Tel.: (0481) 2303615, 2560728, 2351737 Malappuram Email ID: make@indusind.com Tel.: (0483) 2735810, 3298200, 3256575 Palakkad Email ID: pala@indusind.com Tel.: (0491) 2573900 / 901 Direct : 2571900 Perinthalmanna Email ID: peke@indusind.com Tel.: (04933) 224600 / 1 / 2 Thiruvalla Email ID: tike@indusind.com Tel.: (0469) 2600241 /243 Thiruvananthapuram Email ID: trmg@indusind.com Tel.: (0471) 2339931, 2339932 Thrissur Email ID: tris@indusind.com Tel.: (0487) 2323178, 2323378, 2322762 Madhya Pradesh Bhopal Email ID: bhnm@indusind.com Tel.: (0755) 4228090 /91/ 92 Chhindwara Email ID: chmp@indusind.com Tel.: (07162) 245204, 247917 Gwalior Email ID: gwmp@indusind.com Tel.: (0751) 2235564 / 65 Indore Email ID: inab@indusind.com Tel.: (0731) 2542696 / 7 / 8 Jabalpur Email ID: jamp@indusind.com Tel.: (0761) 4006180, 4010100 Maharashtra Andheri Email ID: boan@indusind.com Tel.: (022) 28237636 - 40 Aurangabad Email ID: aumh@indusind.com Tel.: (0240) 2353760 / 56 / 58 / 59 Bandra Email ID: basv@indusind.com Tel.: (022) 26457800 / 8320

Chembur Email ID: boch@indusind.com Tel.: (022) 25260881 / 82 / 85 Dadar Email ID: boda@indusind.com Tel.: (022) 24167911 / 17 Fort Email ID: boms@indusind.com Tel.: (022) 66366580 - 83 Kandivali Email ID: boka@indusind.com Tel.: (022) 28022079 / 80 Kolhapur Email ID: komh@indusind.com Tel.: (0231) 6512007 / 8 / 9 Lokhandwala Email ID: bolo@indusind.com Tel.: (022) 66951107 - 10 Mahim Email ID: bavs@indusind.com Tel.: (022) 24455301 / 24455563 Mulund Email ID: bomu@indusind.com Tel.: (022) 2592 7080 / 6808 / 6833 Nagpur Email ID: nass@indusind.com Tel.: (0712) 2547456, 2534188 Nariman Point Email ID: bonp1@indusind.com Tel.: (022) 22022404 / 407 / 415 / 419 Opera House Email ID: booh@indusind.com Tel.: (022) 23857474 / 9494 Panvel Email ID: pamr@indusind.com Tel.: (022) 2748 3252 Pune Email ID: pugt@indusind.com Tel.: (020) 26343201 / 227 / 228 / 229 / 236 / 238 Thane Email ID: both@indusind.com Tel.: (022) 25390387 / 88 / 89 Vashi Email ID: bova@indusind.com Tel.: (022) 27830026 / 27 / 1028 Mizoram Aizwal Email ID: aimi@indusind.com New Delhi Barahkhambha Email ID: debk@indusind.com Tel.: (011) 23738040 / 8408 / 8407 Janakpuri Email ID: dejp@indusind.com Tel.: (011) 41000141 - 43 Nehru Place Email ID: denp@indusind.com Tel.: (011) 26481119 / 20 / 36 / 2623 6538 / 2642 1120 Preet Vihar Email ID: depv@indusind.com Tel.: (011) 22051623 / 32 /64 / 28 Punjabi Bagh Email ID: depb@indusind.com Tel.: (011) 25220037 / 38 Orissa Balasore Email ID: baor@indusind.com Tel.: (06782) 240274 / 6, 268293

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Notes

PROXY FORM Registered Ofce: 2401, General Thimmayya Road. (Cantonment), Pune 411 001

Folio No. DPID-Client ID No. No. of shares held

I/We................................................................... of .................. in the district of ........................ being a member / members of the above named Bank, hereby appoint .......................................... of .......................in the district of.......................or failing him ........ ............................. of ......................... in the district of .............................. as my / our proxy to vote for me / us on my / our behalf at the Fifteenth Annual General Meeting of the Bank to be held at Hotel Sun-n-Sand, 262, Bund Garden Road, Pune - 411001 on Friday, July 3, 2009 at 2.00 p.m. and at any adjournment thereof. Signed this ....................................day of...................................., 2009 Signature Revenue Stamp

NOTE: This proxy form, in order to be effective and valid, should be duly stamped, completed and signed and must be deposited at the Registered Ofce of the Bank not less than 48 hours before the time of the Meeting. ATTENDANCE SLIP Registered Ofce: 2401, General Thimmayya Road. (Cantonment), Pune 411 001 Folio No. DPID-Client ID No. No. of shares held

15th Annual General Meeting, Friday, July 3, 2009 at 2.00 p.m. at Hotel Sun-n-Sand, 262, Bund Garden Road, Pune - 411001 I hereby record my presence at the 15th Annual General Meeting of the Bank to be held on Friday, July 3, 2009 at 2.00 p.m. at Hotel Sun-n-Sand, 262, Bund Garden Road, Pune - 411001. Name of the shareholder / proxy (in block letters)............................................................................................................................ Signature of the shareholder I proxy ................................................................................................................................................ NOTE: Shareholders attending the meeting in person or by proxy are requested to complete the attendance slip and hand it over to the Bank ofcials at the entrance of the meeting hall. BANK ACCOUNT PARTICULARS / ECS MANDATE FORM Folio No. No. of shares held

I/We.................................................................................................... do hereby authorise Induslnd Bank Limited to * Print the following details on my / our Dividend Warrant * Credit my dividend account directly to my Bank account by Electronic Clearing Services (ECS). (* Strike out whichever is not applicable.) Particulars of Bank Account: A. B. Bank Name Branch Name Address with PIN code (for ECS Mandate only) C. D. E. 9 Digit Code Number of the Bank and Branch (as appearing on the MICR Cheque) Account Type (Saving/Current/NRE/NRO) : ................................................................................................................... : ................................................................................................................... : ................................................................................................................... : ...................................................................................................................

Account No. (as appearing on the cheque Book) : ...................................................................................................................

I/We shall not hold the bank responsible if the ECS could not be implemented or the Bank discontinues the ECS, for any reason. Link Intime India Pvt. Ltd. MAIL TO Unit: Induslnd Bank Ltd., C-13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup (W), Mumbai 400 078 ............................................................. Signature of the Shareholder NOTE: Please attach the photocopy of a cheque or a blank cancelled cheque issued by your Bank relating to your above account for verifying the accuracy of the 9 digit code number. In case you are holding shares in demat form, kindly advise your Depository Participant to take note of your Bank account particulars I ECS Mandate.