Dear Members,The Board of Directors of your Bank have great pleasure in presenting the 47* Annual Report of the Banktogether with the audited Balance Sheet and Profit and Loss Account for the year ended 31st March, 2010.^vary^cs::^ l&sssElfta; Your Bank continued it's all round progress during the year'under review as can beobserved from the following comparative position:- 2008-09 09-10Paid Up Capital & Reserves 717.72 818.57

Deposits 3174.81 4170.62

Advances 1856.39 2564.73

Investments/ FDs 1883.20 2154.82

Working Capital 4122.15 5,237.63

Gross Income 446.45 435.68

Net Profit 92.36 29.90*

The Deposits of your Bank have grown by Rs.995.81 crores during the year registering a growth of 31.37% and'the Advances have grown by Rs.708.34 crores registering a growth of 38.16%. As a result of the good growthof Advances, the Bank has achieved a CD ratio of 61.50% as on 31.03.2010 as against the CD ratio of 58.47%as on 31.03.2009[* The actual amount of Net Profit for 2009 - 10 is Rs.18.56 crore,. Rs.8.43'crore is added to Net Profit bytransfer from Investment Fluctuation Reserve, due to Investment depreciation provision made during the yearby debiting Profit & Loss account, & Rs.2.91 crore is added to Net Profit due to reversal of provision forSick Leave made earlier, out of General Reserve Fund.]ill The number of shareholder members has increased from 1,23,011 to 1,29,584 during the yearas 8,245 new members were admitted; whereas membership of 1,672 members was discontinued because ofresignation, death etc. At the end of the year 2009-10, the nominal membership of the Bank stood at 71,044.:S®:7ws: The paid up capital of your Bank increased from Rs.45.77 Crores as on

31.03.2009 to Rs.56.16 Crores as on 31.03.2010 registering a growth of 22.70% over the previous year.The reserves and other funds have increased from Rs.671.95 crores as on 31.03.2009 to Rs. 762.41 croresas on 31.03.2010. The overall additional contribution to reserves and other funds was to the order ofRs.90.46 crores.Vr7g':.i!.d-:'.:y; CCfoffis',*; The working capital, which amounted to Rs.4122.15 crores as on 31.03.2009 has gone upto Rs. 5237.63 crores as on 31.03.2010 recording an increase of Rs. 1,115.48 crores and a growth of27.06%.

funds, reserves and additional deposits mobilized during the year. The irivestments/FDshave increased from Rs. 1883.20 crores as on 31.03.2009 to Rs.2154.82 crores as on 31.03.2010.The investments mainly comprised of Central, State Government and Trustee Securities of Rs. 1940.71 crores,Fixed Deposits with Maharashtra State Co-op. Bank Ltd., and other notified banks of Rs.212.42 crores, PublicSector Undertaking Bonds and other investments of Rs. 1.69 crores.:.V- &: !-::.£ /^r^o^rfa.'if.ffg.gn During the year, your Bank has earned gross income of Rs.435.68 crores, asagainst Rs. 446.45 crores in the previous year. The net profit after tax of the Bank for the year, after makingprovisions as required under the Multi-State Co-op. Societies Act and Rules, amounted to Rs.29.90* crores asagainst Rs.92.36 crores in the previous year. The Board of Directors recommend the following appropriationof the net profit: -[* The actual amount of Net Profit for 2009 - 10 is Rs.18.56 crore, Rs.8.43 crore is added to Net Profit bytransfer from Investment Fluctuation Reserve, due to Investment depreciation provision made during the yearby debiting Profit & Loss account, & Rs.2.91 crore is added to Net Profit due to reversal of provision for SickLeave made earlier, out of General Reserve Fund.]

Sr. No.1234567

89101112ParticularsStatutory Reserve [25%]Contingency Reserve Fund [10%]Education Fund [1%]Dividend [15%]Bonus \Ex-gratiaBuilding FundForeign Exchange Fluctuation ReserveGeneral Reserve FundInvestment Fluctuation ReserveLong Term. Finance Special Reserve FundMembers Welfare FundMembers Benevolent FundTotal :(Amt. in Rs.)4,64,20,632.451,85,61,388.00.18,56,139.007,40,00,000.008,10,00,000.003,93,00,000.0025,00,000.002,91,16,643.0029,00,000.0023,85,000.006,00,000.004,00,000.00299,039,802.45Dividend: The Board of Directors have pleasure in recommending payment of dividend for the year underreview at 15 %, the maximum permissible as per the Bye-laws of the Bank. Dividend will be payable to the newshareholders enrolled during the year 2009-10 oh pro-rata basis.Payment of Insurance Premium to DICGC; Your Bank has made payment on 24th May, 2010 of InsurancePremium amounting to Rs. 1,93,65,380.50 to DICGC for the period ending September 2010. [under section 15of the DICGC Act, 1961].Audit: As per the provisions of' Multi-State Co-op. Societies Act, 2002, the Annual General Body held on02.08.2009 appointed M/s. Borkar & Muzumdar, Chartered Accountants as Statutory Auditors of your Bankfor the year 2009-2010. They have conducted Statutory Audit of the Bank and its branches for the year2009-2010. We are grateful to the auditors for the valuable suggestions made by them during the course of

audit, for improvement of the general working of the Bank.

Act, 1'949 (as applicable to Co-op. Societies) was carried out for the period from 01.04.2008 to 31.03.2009 byShri L. M. Kamble, General Manager, Urban Banks Department, Reserve Bank of India. The inspectors havemade various suggestions during the course of the inspection for improvement of your Bank's working. We aregrateful to the inspectors for the valuable suggestions made by them.Concurrent Audit. Internal Inspection and I.S. Audit; Branches falling within the prescribed parametersand the Head Office Departments were covered under concurrent audit as laid down by Reserve Bank of India.The concurrent audit is conducted by qualified external Chartered Accountants. Besides, the internal inspectionstaff regularly conducts periodical inspection of branches. Total 78 branches and 6 Head Office Departmentswere covered under Information Systems Audit for the year 2009-10, out of which 26 branches were auditedby Internal IS Audit Department and for remaining 52 branches and 6 departments, external IS Auditors wereappointed by your Bank. The Audit Committee of the Board monitors the follow up action taken by thebranches and departments for rectification of audit and inspection findings.Board of Directors;[i] The Board of Directors continued to guide and monitor functioning and general performance of yourBank. The matters attended by the Board included planning for all round business development of theBank, laying down policies, sanctioning of loans, monitoring recoveries, etc. The Sub-Committees of theBoard, viz. the Executive Committee, the Staff Sub-Committee, the Recovery Sub-Committee and theAudit Committee efficiently discharged the functions of monitoring and supervising the working of yourBank. During the year 166 meetings of the Board and Sub-Committees were held for conducting thebusiness of the Bank.[ii] Bank's Chairman, Shri Sitaram C. Ghandat MLA has been elected as director on the Board of MaharashtraState Urban Co.-Op. Banks Association Ltd. and Shri Sandeep S. Ghandat, Director has been elected as Vice-Chairmah of Brihan Mumbai Nagari Sahakari Banks' Association Ltd. and Director of M.D.C.C.Bank. The Board of Directors congratulates them on their election on the Board of the above mentionedInstitutions.a) Your Bank has been conferred the Best Nagari Sahakari Bank Award for the year 2007-2008 on27.10.2009 by The Maharashtra Urban Co-Op Banks' Federation Ltd., Mumbai. The award washanded over to Bank's Chairman, Shri Sitaram C. Ghandat, MLA by Registrar of Co-op. SocietiesDr. Krishna B. Lavekar, IAS and the Chairman of the Federation, Mr. Anandrao Adsul, Member of

Parliament.b) The Banking Frontier presented your bank with awards for Excellence in Marketing, Excellence inMarket Risk Management, Net Interest Margin and Deposit Ratio in the category of large banks.c) During the year 2009-2010, agreements of wage settlement took place between the Managementand Co-Operative Bank Employees Union / Abhyudaya Bank Officers' Association and substantialrise in salary was offered to the staff/ officers/Executives.

Off-site ATMs / Relocation of Branches: As per Reserve Bank of India letterdated 03.12.2008 & 02.04.2009 your Bank has opened Twelve new branches at Old Panvel [27.07.2009],Kalyan [31.07.2009], Dombivli [21.08.2009], Kankavli [17.11.2009], Nashik [23.11.2009], Mira Road[26.11.2009], Badlapur [30.11.2009]', Seawoods, Navi Mumbai [12.12.2009], Ghodbunder Road, Thane[19.12.2009], Chembur [24.12.2009], Virar [28.12.2009] and Chakan [25.03.2010]. Your Bank has relocatedKhadki branch [Pune] at Chrkop, Kandivli-West on 21.09.2009.Your bank has decided to relocate three branches of Vatva, Thaltej and Dholka from Ahmedabad area toKalwa, Antop Hill and Nallasopara respectively. The premises for branches to be opened at Nallasopara andAntop Hill have already been acquired' ' .' •"" "Your bank has received approval on ^th April, 2010, from Reserve Bank of India for opening of Nine newbranches at the following locations: Two 'branches at Nashik, One each at CBD-Navi Mumbai, Axirangabad,Nagpur, Dombivli, Nancled, Goregaon & Panvel as per Annual Business Plan for the year 2010-11.Your bank has also received approval on 5th April, 2010 from Reserve Bank of India for setting up of offsiteATM - One each at Abhyudaya Nagar, Worli, Wadala, Ghatkopar and Bhandup.{A} On 27th July, 2009 Sinhagad Road Branch was shifted to new spacious premises.Your bank has also shifted Regional office, Udupi and City branch of Udupi region to Bank's own spaciouspremisses at "Shambhavi Fortune", Behind K.S.R.T.C. Bus Stand, Udupi on 28th March. 2010.Your Eiank has also acquired a new spacious premises on rental basis for shifting of Yerwada branch at ShopNo.D-Sl, D-S2, D-S3 and Office No. D-F2, D-F3 Om Mahavir Co-Op. Hsg. Soc. Ltd., Survey No.l-A, Pune -Nagar / Airport Road, Yerwada, Pune - 411006.Personalized Cheque books are now issued to select savings and current account holders maintaining minimumbalance of Rs.25000/- during the past 3 months and to other type of accounts such as Cash Credit account,Flexible loan account, Secured overdraft account etc

dated 03.12.2008 & 02.04.2009 your Bank has opened Twelve new branches at Old Panvel [27.07.2009],Kalyan [31.07.2009], Dombivli [21.08.2009], Kankavli [17.11.2009], Nashik [23.11.2009], Mira Road[26.11.2009], Badlapur [30.11.2009]', Seawoods, Navi Mumbai [12.12.2009], Ghodbunder Road, Thane

[19.12.2009], Chembur [24.12.2009], Virar [28.12.2009] and Chakan [25.03.2010]. Your Bank has relocatedKhadki branch [Pune] at Chrkop, Kandivli-West on 21.09.2009.Your bank has decided to relocate three branches of Vatva, Thaltej and Dholka from Ahmedabad area toKalwa, Antop Hill and Nallasopara respectively. The premises for branches to be opened at Nallasopara andAntop Hill have already been acquired' ' .' •"" "Your bank has received approval on ^th April, 2010, from Reserve Bank of India for opening of Nine newbranches at the following locations: Two 'branches at Nashik, One each at CBD-Navi Mumbai, Axirangabad,Nagpur, Dombivli, Nancled, Goregaon & Panvel as per Annual Business Plan for the year 2010-11.Your bank has also received approval on 5th April, 2010 from Reserve Bank of India for setting up of offsiteATM - One each at Abhyudaya Nagar, Worli, Wadala, Ghatkopar and Bhandup.{A} On 27th July, 2009 Sinhagad Road Branch was shifted to new spacious premises.Your bank has also shifted Regional office, Udupi and City branch of Udupi region to Bank's own spaciouspremisses at "Shambhavi Fortune", Behind K.S.R.T.C. Bus Stand, Udupi on 28th March. 2010.Your Eiank has also acquired a new spacious premises on rental basis for shifting of Yerwada branch at ShopNo.D-Sl, D-S2, D-S3 and Office No. D-F2, D-F3 Om Mahavir Co-Op. Hsg. Soc. Ltd., Survey No.l-A, Pune -Nagar / Airport Road, Yerwada, Pune - 411006.Personalized Cheque books are now issued to select savings and current account holders maintaining minimumbalance of Rs.25000/- during the past 3 months and to other type of accounts such as Cash Credit account,Flexible loan account, Secured overdraft account etc.Centralized account opening has been started for Saving and Current accounts of few branches in Mumbaiand Navi Mumbai Zone with effect from 27.01.2010.

JSJ 'ifac&.m®tefor ifototedl initiatives; Your bank has been functioning under CBS successfully connecting its69 ATMs, 87 branches and all department and regional offices situated in Maharashtra, Karnataka & Gujarat.Many activities have been centralized to allow branch staff to provide better services to customers. Your bankhas made available Internet Banking facility w.e.f. 16th March, 2010 in order to meet demand from NewGeneration Techno Savvy Customers. Internet Banking facility is available for any new or existing SB, CD, CC,STCC, SOD and FLXLN account holders. Internet Banking services initially started are A) View Balance of allLinked Accounts B) Statement of Accounts C) Cheque Book request etc.

ATM operations are allowed to card holders of 15 other member.Banks in BANGS Network in our ATMs.Similarly your Bank's ATM card holders can withdraw cash from 15 other Banks in BANGS network.Your bank has introduced 15 digit CBS account number that helps customers making payments to utilityproviders. Bank has tied up with service providers like MTNL,' BSNL, Sify Technology Ltd. and Reliancecommunication for uninterrupted communication links. MPLS 'connectivity has been adopted in many placesto avoid breakdowns of MTNL lines that was hampering certain branch services and also to provide onlineservices to remote areas where MTNL/BSNL connections are not available.Your bank is adopting new softwares in the areas like 'Trade Finance' 'Intergraded Treasury Operations','Payroll', 'Legal' etc. I.T. department has enaibled centralized generation of many MIS reports so that activitiesof branches and Departments in this regard are reduced. Bank's Data Centre is managed by IBM under AMChence there is quick resolvement of problems. Facility management services are availed by the Bank fromM/s. CMS. '.'"'..Your Bank is planning to introduce VISA - Debit cum ATM Card. The later will be operational at ATMs as wellas at merchant establishments all over India in VISA POS Terminals. Up till now Bank has issued ATM Cards. to 2,55,000 account holders. Almost 42% of Bank's cash withdrawals are done through ATMs.(C) Planning & Marketing:To provide banking services to different categories of customers and for the benefit of existing customers,during the year your bank has introduced special schemes such as Zero Balance.Saving account for studentsand youth, Zero Balance Saving account for salaried persons, Cash Credit facility against salary for salariedpersons, Preferred Saving and Current account for high net worth customers, Special term deposit schemewith Monthly / Quarterly interest for senior citizens.During the year, your bank has also introduced various new products such SOD against immovableproperties / gold ornaments, Short Term Corporate Loan, Medium Term Corporate Loan, Revolving CreditLimits & SOD IMP to Builder & Developers.While opening 12 new branches concept of door to door campaigning of our schemes in the nearby area,enabled the bank to fetch more than 25,000 new customer-accounts on the day of'opening of our newbranches.

As a further step for becoming full fledged financial service provider bank has applied to become member ofCentral Depository Services Limited (CDSL) to provide Demat Services to customers.(D) Insurance Coverage:Bancassurance - Corporate Agency with L.I.C. of India; With effect from 25.02.2009 your bank has takenCorporate Agency of Life Insurance Corporation of India. During the year 2009-10 your bank has collected LIC

premium of Rs.2.84 Crores.Macro Economic outlook: 2009-10In the background of deep recession set in by the financial debacle of international US banks, since 2008September, the GOI and RBI, in an effort to reverse the trend slowing growth, avert liquidity crises unleashedvarious policy measures. Government increased expenditure under rural employment programs, outlays oninfrastructure projects, etc. to boost the demand. RBI in its turn kept ample liquidity conditions and softinterest stance and provided finance via non-conventional credit'facilities to banks, mutual funds, NBFCs, etc.in spite of the fact that economy was reeling under the high inflation due to drought/flood spoiling the crops inrotation. As the growth (GDP 6% +) seemed to be stabilizing in alTsectbrs other than export and agriculture, RBIwith a view to contain the inflation (WPI) progressively withdrew special windows of refinancing, revised upwardsCRR and SLR as also LAP rates in the latter half of the year. In spite of commercial banks almost shutting thedoors for bulk deposits, and low credit off take, due to oversupply conditions and worry on inflation, G. Secmarket remained nervous through out the year.View for 2010-11; •.! o > .

The global macroeconomic conditions look much more positive despite continued weaknesses. Several countriescautiously took steps to withdraw stimuli and hardening stance-on'liquidity. It seems that some countries willgo through hard pains and correction could possibly result in huge currency adjustments. India too can nottotally escape it though it is poised for a big leap forward. GOI has maintained the market borrowing almostat the same level as last, to anchor the growth and try to exploit the situation to enhance the growth potentialeven in the face of uncertain external sector. The Govt. will be in a position to push some of the reforms reducing the level of borrowings complemented by better revenue receipts. RBI on the other hand is retractingfrom accommodative stance to ensure that the advantage of growth is not lost by spiraling inflation. It looksquite achievable and India could climb growth target of 8%+. India seems to be coveted destination forinvestment in the disturbed world. But it will also have volatile markets as the capital flows would keepchanging direction as leading economies improve/deteriorate. We believe that given the stance of the Govt. andRBI, the inflation will be contained and despite somewhat hardening stance of RBI the debt market will showimprovement this year.

Rates on Deposits and Loans & Advances:

Interest Rates on Term Deposits were revised in June 2009, August 2009, October 2009 & December 2009.Interest Rates on bulk deposits were also revised in January 2010 and February 2010.W.e.f. 1st April 2009, there was downward revision in interest rates on advances to Educational Institutionsand also at the instance of Ministry of Finance, Government of India to provide atleast 0.50% concession inthe interest rates on Education Loan to girl students, the interest rates on Education Loan to girl studentswere also revised. The interest rates on advances were further revised in July 2009. Your bank has introducedAbhyudaya Special Housing Loan Scheme upto Rs. 20.00 Lakh @ 9.00% p.a. fixed rate of interest valid upto30th September, 2011. Interest rates on Export Credit were revised in July 2009.PsTOOsail of mew amendment to Bye-laws: The Board of Directors has proposed amendments to Bye-laws,the text for which is notified separately for consideration of the members.gmmcttoming of the Treasury Department; During the year total Investment increased from Rs. 1883.20Crores as on 31.03.2009 to Rs. 2154.82 Crores as on 31.03.2010 and Average investment increased fromRs. 1632 Crores in 2008-09 to Rs.2175 Crores in 2009-10. During this year bond market showed lot of volatility.The 10 year Govt. Security yield came down from 7.01% as on 31.03.2009 to 6.02% in the month of April 2009.It went up to 7.58% in the month December, 2009. Before end of March 2010 it crossed 8.00% but closed theyear at 7.86%. Treasury Department earned Gross interest income of Rs. 171.69 Crores and earned profit ofRs. 6.87 Crores. However, due to increase in yields additional mark - to - market provision of Rs. 19.06 Croreswas required to be made at the end of the year. After considering the amortization of premium and deferredloss amounting to Rs. 1.57 Crores, the net income of Treasury Department amounted to Rs. 157.93 Crores,resulting in 7.26% net return on investments. There was good arbitrage earning from CBLO borrowing &lending to the extent of Rs. 1.46 Crores.

FUNCTIONING OF FOREX DEPARTMENTS

The total Forex turnover grew from Rs.85.80 crores in the previous year to Rs.341.91 crores as on31st March, 2Q10. During the year, we have designated additional four branches viz. Pimpri (Pune), Mithakali-(Ahmedabad), City branch (Udupi) and Vadodara as Category 'B" branches to handle forex operations

independently and offer prompt services to our customers. We have also established our direct SWIFTconnection during the year.Your Bank has entered into a strategic tie-up with UAE Exchange and Financial Services Ltd. for facilitatingGlobal Money Transfer Services, "Xpress Money' and 'MoneyGram' under Money Transfer Service Scheme(MTSS) of Reserve Bank of India. This facility is available at all our branches.During the year 2009-10 the Bank earned income Rs.202.03 Lakh from Forex Business such as i) ExchangeProfits from Merchant / Inter Bank transactions ii) Commission on Bank Guarantee Charges iii) Commissionon Letter of Credit opened etc.g^mcfttoffling off the Clearing Department; Activities such as MICR clearing Inward and Outward, ECS (Dr.),EFT, NECS (Cr.), Return cheques processing etc. are being done through Central Clearing Dept. of the bank.For the benefit of customers, bank is now in a process of implementing ECS- outward activity very shortly. Tocope up with the increasing volume of cheques, the bank has set up Central Processing Cell (CPC) at clearingdept. and all inward clearing is being managed by CPC without sending cheques to branches. Further customersof the bank are benefited by extending the cheque collection timing so as to process the cheques received upto12.30 p.m. at branches on the same day of acceptance. Your bank has entered into an agreement withICICI / HDFC bank for issuance of upcountry cheques spread all over India. Your bank is participating in"Speed Clearing" introduced by RBI, where outstation cheques are being cleared in local clearing reducing thetime taken for realization of outstation cheques. During the recent past the usage of electronic paymentsystems has gained momentum in the clearing system. Your bank provides the facilities of electronic paymentslike RTGS / NEFT and customers of the bank should take benefit of these systems as it is economical, speedy& reduces the systemic risk involved in instrument based payment system.