DENA BANK

ANNUAL REPORT 2011-2012

DIRECTOR`S REPORT

ToThe Members

1. The Board of Directors have pleasure in presenting the Annual Report along with the Audited Financial Statement of Accounts and the Cash Flow statement of the Bank for the year ended March 31, 2012.

2. Performance Highlights:

2.1 Aggregate Business Mix (Deposits + Advances) of the Bank scaled a level of Rs. 1,34,326 Crore during the financial year ended 31st March, 2012. The total Business Mix of the Bank increased by Rs. 24,953.01 Crore to Rs.1,34,326.00 Crore at the end of the year 2011-12 from Rs. 1,09,372.99 Crore as on 31st March, 2011, registering a growth of 22.81%.

2.2 Total Deposit of the Bank increased by Rs. 12,957.18 Crore from Rs.64,209.62 Crore as on 31st March, 2011 to Rs. 77,166.80 Crore as on 31st March, 2012, registering a growth of 20.18%.

2.3 Advances of the Bank increased by Rs. 11,996.43 Crore from Rs.45,163.37 Crore as on 31st March, 2011 to Rs. 57,159.20 Crore as on 31st March, 2012, registering a growth of 26.56%.

2.4 Micro, Small and Medium Enterprises (MSME) Credit posted a growth of Rs. 1,507.41 Crore from Rs. 6,783.72 Crore as on 31st March, 2011 to Rs.8291.13 Crore as on 31st March, 2012, registering a growth of 22.22%.

2.5 Retail Credit posted a growth of Rs. 1,146.91 Crore from Rs. 6,135.59 Crore as on 31st March, 2011 to Rs. 7,282.50 Crore as on 31st March, 2012, registering a growth of 18.69%.

2.6 Recovery efforts in NPA Accounts of the Bank yielded good results. Cash recovery during the year 2011-12 stood at Rs. 222.56 Crore and Upgradation to the tune of Rs. 191.47 Crore. The recovery in written off accounts during the year was Rs. 81.93 Crore including recovery of interest in written off accounts of Rs. 12.17 Crore.

(Amt in Crore)

Particulars As of March, 2011 As of March, 2012

Deposits 64,209.62 77,166.80Advances 45,163.37 57,159.20Investments 18,860.22 23,207.80Priority Sector 15,150.00 17,153.00Agriculture 6,389.38 6,989.00Retail 6,135.59 7,282.50MSME 6,783.72 8,291.13Gross NPA 842.24 956.50

Net NPA 548.95 571.73% of Gross NPA to Gross Advance 1.86 1.67% of Net NPA to Net Advance 1.22 1.01Capital Adequacy Ratio % 13.41 11.51 3. Income Analysis:

3.1 The Operating Profit of the Bank increased to Rs. 1528.43 Crore for the year from Rs. 1223.79 Crore in the previous year registering an increase of Rs. 304.64 Crore (24.89%).

3.2 The Net Profit increased to Rs. 803.14 Crore for the year from 611.63 Crore in the previous year recording an increase of Rs. 191.51 Crore (31.31%).

The financial performance of the Bank for the year 2011-2012 is summarized below:

(Amt in Rs. Crore)

Particulars As of March, 2011 As of March, 2012

Operating Profit 1,223.79 1,528.43Interest Income 5,033.53 6,794.13Interest Expenditure 3,270.16 4,693.13Net Interest Income 1,763.37 2,101.00Non Interest Income 533.84 582.17Provisions and contingencies 612.16 725.29Profit before Tax 898.59 966.17Provision for Taxes 286.96 163.03Net Profit 611.63 803.14

4. Key Financial Indicators:

Some of the Key Financial ratios are presented below:

(in %)

Particulars As of March, 2011 As of March, 2012

Net Interest Margin 3.17 3.17

Return on Assets 1.00 1.08

Cost to Income Ratio 46.73 43.04

CRAR under Basel II 13.41 11.51

NPA Coverage Ratio (Provision) as per new RBI guidelines 74.62 75.53

Cost Of Deposit 5.76 7.06

Cost of Funds 5.87 7.11

Yield on Advance 10.24 11.77

Yield on Fund 8.62 9.78

Return on Equity 26.71 20.72

Earning Per Share (Rs.) 21.26 24.08

Book Value (Rs.) 123.85 126.91

5. During the year 2011-12, the Bank opened 51 new Branches and Branch network of the Bank increased to 1342. All the branches of the Bank are covered under CBS.

6. The ATM Network of the Bank increased to 543, it includes 113 offsite ATMs. Bank`s customers have access to 90,000 ATMs in the shared network, 4.70 Lacs plus Merchant Establishments (MEs) in India. World wide, our customers have access to more than 1 million ATMs and 26 million MEs.

7. Dividend:

The Board of Directors are pleased to recommend dividend of 3.00 per share i.e., 30% on face value of Rs. 10 for 2011-12. The tax on dividend will be paid by the Bank. The total outflow on account of dividend will be Rs.122.05 Crore (including dividend tax).

8. Net Worth and CRAR:

8.1 Net Worth of the Bank improved to Rs. 4,256.14 crore as on 31.03.2012 from Rs. 3,366.43 crore as on 31.03.2011, registering a growth of Rs.889.71 Crore (26.43%).

8.2 Capital to Risk (Weighted) Asset Ratio (CRAR) as of March, 2012 works out to 11.51% as compared to 13.41% as of March, 2011.

8.3 During the year, the Bank allotted 1.66 Crore Equity Shares of face value of Rs. 10/- at a price of Rs. 90.73 (including premium of 80.73) aggregating Rs. 151.24 Crore to Life Insurance Corporation of India on preferential basis. With the above allotment, Government of India holding in the Bank stands reduced to 55.24% from 58.01%.

8.4 The Tier I capital adequacy ratio of the Bank under Basel II is 8.86% as against 9.77% as of March, 2011. The table below gives detail CRAR as per Basel-I and Basel-II.

(in %)

Basel I Basel II

March 2011 March 2012 March 2011 March 2012

CRAR Tier- I Capital 8.04 7.75 9.77 8.86CRAR Tier-II Capital 3.00 2.32 3.64 2.65

Total 11.04 10.07 13.41 11.51

9. Changes in Board of Directors:

9.1 The Board of Directors of the Bank, as on 31st March 2012, comprised of Chairperson & Managing Director and Executive Director, both being whole-time Directors and ten other directors as under:

* One Government of India Nominee Director,

* One Reserve Bank of India Nominee Director;

* One Workmen Employee Director,

* One Officer Employee Director;

* One Chartered Accountant Director,

* Two Directors appointed by Govt., of India, and

* Three Shareholders Rs. elected Directors;

9.2 Shri D. L. Rawal, Chairman & Managing Director, retired from the Board on 31st October, 2011 upon attaining superannuation. The Board of Directors places on record their appreciation for the exemplary leadership and direction provided by Shri D. L. Rawal, during his tenure as Chairman & Managing Director on the Board of the Bank.

9.3 In terms of Notification No. F.No.13/19/2011-BO.I. dated 14th October, 2011 received from Government of India, Ministry of Finance, Department of Financial Services, Smt. Nupur Mitra, Executive Director, Indian Overseas Bank and Chairperson & Managing Director designate has been appointed as Executive Director on attachment basis on the Board of the Bank w.e.f. 16th October, 2011 till 31st October, 2011.

9.4 In terms of Notification No. F.No.4/4/2010-BO.I. dated 2nd September, 2011 received from Government of India, Ministry of Finance, Department of Financial Services, Smt. Nupur Mitra has been appointed as Chairperson & Managing Director on the Board of the Bank for a period w.e.f. 1st November, 2011 till 31st December, 2012 i.e. the date of her superannuation or until further orders, whichever is earlier under Clause (a), Sub-Section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with sub-clause (1) of clause 3, clause 5, clause 6, clause 7 and sub-clause (1) of clause 8 of Nationalized Banks (Management & Miscellaneous Provisions) Scheme, 1970/1980.

9.5 Shri B. P. Vijayendra, Reserve Bank of India Nominee Director, appointed under Clause (c), Sub-Section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with sub-clause (1) of clause 3 of Nationalized Banks (Management & Miscellaneous Provisions) Scheme, 1970/1980, ceased to be a Director of the Bank w.e.f. May 29, 2011. The Board of Directors places on record their appreciation for valuable guidance provided by Shri B. P. Vijayendra, during his tenure as Director on the Board of the Bank.

9.6 In terms of Notification No. F.No.6/3/2011-BO.I. dated 30th May, 2011

received from Government of India, Ministry of Finance, Department of Financial Services, Shri N. S. Vishwanathan has been nominated as Reserve Bank of India Nominee Director on the Board of the Bank under Clause (c), Sub-Section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with sub-clause (1) of clause 3 of Nationalized Banks (Management & Miscellaneous Provisions) Scheme, 1970/1980, in place of Shri B. R Vijayendra.

9.7 In terms of Notification No. F.No.6/26/2010-BO.I. dated 30th June, 2011 received from Government of India, Ministry of Finance, Department of Financial Services, Shri J. Balasubramanian has been nominated as part-time non-official Director under Chartered Accountant Category on the Board of the Bank under Clause (g), Sub-Section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with sub*clause (b) of clause 9(2) of Nationalized Banks (Management & Miscellaneous Provisions) Scheme, 1970/1980.

9.8 In terms of Notification No. F.No.6/53/2010-BO.I. dated 2nd August, 2011 received from Government of India, Ministry of Finance, Department of Financial Services, Shri Vijay Kapoor has been nominated as part-time non-official Director on the Board of the Bank for a period of three years or until further orders, whichever is earlier, under Clause (h) and (3-A), Sub-Section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with sub-clause (1) of clause 3 of Nationalized Banks (Management & Miscellaneous Rrovisions) Scheme, 1970/1980.

9.9 In terms of Notification No. F.No.6/33/2010-BO.I. dated 12th October, 2011 received from Government of India, Ministry of Finance, Department of Financial Services, Shri Rakesh Goel has been nominated as part-time non-official Director on the Board of the Bank for a period of three years or until further orders, whichever is earlier, under Clause (h) and (3-A), Sub-Section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with sub-clause (1) of clause 3 of Nationalized Banks (Management & Miscellaneous Rrovisions) Scheme, 1970/1980.

9.10 In terms of Notification No. F.No.9/30/2009-BO.I dated 23rd November, 2011 received from Government of India, Ministry of Finance, Department of Financial Services, Shri Satya Prakash Sharma has been appointed as Workmen Employee Director on the Board of the Bank till 30th June, 2014 i.e. the date of his superannuation or till he ceases to be a workmen employee of the Bank or until further orders, whichever is earlier, under Clause (e), Sub-Section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with sub-clause (1) & (2) of clause 9 of Nationalized Banks (Management & Miscellaneous Rrovisions) Scheme, 1970/1980.

9.11 Dr. Tarsem Chand, Government Nominee Director, appointed under Clause (b) of Sub-section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 w.e.f. June 10, 2008, ceased to be a Director of the Bank from 1st December, 2011. The Board of Directors places on record their appreciation for valuable guidance provided by Dr. Tarsem Chand, during his tenure as Director on the Board of the Bank.

9.12 In terms of Notification No. F.No.6/1/2010-BO.I dated 2nd December, 2011 received from Government of India, Ministry of Finance, Department of Financial Services, Shri S. K. Jindal has been appointed as Government Nominee Director on the Board of the Bank until further orders under Clause (b), Sub-Section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with sub-clause (1) of clause 3 of Nationalized Banks (Management & Miscellaneous Rrovisions) Scheme, 1970/1980, in place of Dr. Tarsem Chand.

9.13 Dr. Sunil Gupta, Shareholder Director, elected under clause (i) of sub-section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 w.e.f. March 17, 2009, ceased to be a Director of the Bank from 16th March, 2012 on completion of his tenure. The Board of Directors places on record their appreciation for valuable guidance provided by Dr. Sunil Gupta, during his tenure as Director on the Board of the Bank.

9.14 Shri Rohit Khanna, Shareholder Director, elected under clause (i) of sub-section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 w.e.f. March 17, 2009, ceased to be a Director of the Bank from 16th March, 2012 on completion of his tenure. The Board of Directors places on record their appreciation for valuable guidance provided by Shri Rohit Khanna, during his tenure as Director on the Board of the Bank.

9.15 During the Financial Year under review, in terms of Clause (i) of sub-section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, the Bank conducted an Extraordinary General Meeting of Shareholders of the Bank other than the Central Government, for election of three Shareholder Directors, at Sir Sorabji Pochkhanwala Bankers` Training College, Mumbai, on March 9, 2012. After the successful exercise of election, Dr. Pritam Singh was re-elected and two Shareholder Directors i.e. (i) Shri Rohit M. Desai, (ii) Shri Mukesh Mohan were elected as Shareholder Directors representing shareholders other than Central Government. These Directors will hold office for three years from March 17, 2012.

10.00 Directors` Responsibility Statement:

The Directors, in preparation of the annual accounts for the year ended March 31, 2012, confirm the following:

I. That in the preparation of the annual accounts, the applicable standards have been followed along with proper explanation relating to material departures.

II. That they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit or loss of the Bank during the period.

III. That they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of applicable laws governing banks in India for preventing and detecting frauds and other

irregularities.

IV. That they have prepared the annual accounts on a going concern basis.

11. Acknowledgments:

11.1 The Board of Directors expresses its patronage and sincere thanks to the Bank`s valued customers, shareholders and well wishers for their valuable contribution towards the progress of the Bank and seek their continued support and co-operation in future.

11.2 The Board of Directors acknowledges with gratitude, the timely advice, valuable guidance and support received from Government of India and Reserve Bank of India.

11.3 The Board of Directors are also thankful to the Financial Institutions/ Banks and Correspondents for their cooperation and support to the Bank.

11.4 The Board of Directors wish to place on record, the deep appreciation of the valuable contribution made by the staff, at all levels, for the progress achieved in Bank`s business. The Directors look forward to their continued cooperation in faster business development and progress of the Bank.

For and on behalf of Board of Directors

(Nupur Mitra) Chairperson & Managing Director

Date : 17.05.2012 Place: Mumbai

MANAGEMENT DISCUSSION AND ANALYSIS

1. Global Economic Environment:

The Global Macro Economic developments have shown signs of modest recovery and concerns about the crisis have reduced to some extent in the fourth quarter mainly on account of accelerated GDP growth in US due to increase in consumer spending and reduction in unemployment rate but the concerns remain with regard to sustaining the growth. The GDP growth during the fourth quarter has declined in EURO zone in spite of injecting large scale liquidity by ECB`s through Long Term Refinancing Operations. This has been mainly on account of the fiscal corrections initiated due to the large public debt levels, tight credit conditions and high level of unemployment. The crisis in the Euro Sovereign Debt problem is far from over as can be seen in the recent developments in Spain. This will continue to weigh on the performance of the global economy.

The Emerging Market Economies world over have also registered slowdown in the growth, mainly on account of tightening of monetary conditions. GDP growth among the BRICS (Brazil, Russia, India, China and South Africa) nations registered a sharp decline in China and Brazil and moderate decline in Russia and South Africa. However, the inflationary pressures have

moderated in Brazil and Russia it has increased in China.

The increase in crude oil prices since January 2012 which are expected to persist at the current level have added to global concerns.

2. Domestic Economic Scenario:

Indian economy which had registered a GDP growth of 8.4% in the preceding two years period is, expected to grow at the rate of 6.9% during 2011-12 indicating a slowdown in growth. This has been mainly on account of slowdown in industrial growth which bottomed out to 0.8% in the third quarter of 2011-12 registering a growth of 3.3% for the nine months period up to December 2011. The growth in the agriculture sector moderated to 3.2% mainly on account of 48% below normal north east monsoon during October - December 2011. The service sector however was able to maintain relatively well growth level of 8.8% for the period up to December 2011 which was at the same level during the corresponding period last year. The slowdown in industrial sector was mainly attributed to the uncertainties in the domestic policy, cumulative impact of monetary tightening and slackening of external demand.

Although during the year Agriculture witnessed a most acute deficiency in winter monsoon in last decade its overall impact in the agriculture production is not expected to be severe. With the production of food grains being estimated to reach a record level that of oilseeds and pulses was expected to be negative.

Industrial growth declined sharply during 2011-12 which was attributed to the supply side constraints mainly in energy and mineral. Down trend in Industrial Output was on account of weak demand for consumer durables, reflecting interest rate sensitivity, deceleration in external demand and subdued investment demand due to decline in business confidence.

Services sector, which has the dominant share in GDP, has maintained its momentum but appears to be losing its momentum. The lead indicators point towards a weakening of telecom and international travel, while railway freight and domestic passenger traffic show increase. With the road tendering in the recent quarters converting in to ground activity, construction is expected to improve during the 2012-13.

The inflation continued to remain the major concern up to November 2011, however moderated during December 2011-March 2012 due to softening of food prices during December - January and non-food manufactured products during February and March 2012.

India`s exports crossed the US$300 Bn mark this year. As per the provisional data, India`s exports grew to US$ 303.7 Bn registering a growth of 21%. Top performing sectors include engineering, petroleum & oil products among others. Imports grew by 32.1% to US$488.6 Bn. Major sectors that contributed to the burgeoning imports include petroleum, oil, lubricants, gold & silver, coal among others.

The overall trade deficit stood at record US$184.9 Bn. This year`s trade deficit looks significant particularly when the trade deficit for 2010- 11 was estimated at US $ 104.82 Bn which was lower than the deficit of US $

109.62 Bn during 2009-10. The trade deficit figures may adversely impact India Rs. s current account as well as the rupee movement.

Moving into 2012-13, with no solution to euro crisis and listless growth in the US, it will be challenging year ahead for Indian exporters. However, India looks forward to double its export value of 2009 by 2014 with a mix of policy instruments and diversification of export markets.

3. Reserve Bank of India Policy Stance:

The Reserve Bank of India started its monetary tightening in this fiscal. The Reserve Bank of India gradually increased repo rates from 6.75% to 8.50% (increase by 175 bps) to contain the inflation which was hovering around double digit mark for most period of the year. The Reserve Bank of India kept the Cash Reserve Ratio (CRR) unchanged at 6% from April 2011 till January 2012. This led to liquidity deficit in the system and to reduce the liquidity deficit in the system the Reserve Bank of India reduced the Cash reserve ratio (CRR) initially by 50 bps from 6% to 5.50% on January 2012 and then to 4.75% from 5.50% in March 2012. The benchmark yields were in the range of 8% to 8.95%.

Reserve Bank of India in its policy stance of containing the inflation and anchor inflation expectations raised policy rate by 375 basis points during March 2010 October 2011. During its mid-quarter review in December 2011, RBI kept the policy rates unchanged. As the growth decelerated significantly in quarter 3 to 6.1% considering the growth-inflation dynamics Reserve Bank of India in its policy stance for 2012-2013 indicated further actions towards the lowering of the rates. Accordingly Reserve Bank of India in its major policy announcements for 2012-2013 indicated to:

- Modify policy rates conducive to the current growth moderation.

- Ensure safeguards against demand-led inflationary pressures re-emerging.

- Rrovide greater liquidity cushion to the financial system.

Reserve Bank of India reduced the repo rate by 50 basis points to 8 %and the reverse repo rate to 7% with immediate effect in April, 2012. In order to provide greater liquidity cushion to the scheduled commercial banks it raised their borrowing limits under the Marginal Standing Facility (MSF) from 1% to 2% of their net demand and time liabilities (NDTL) outstanding at the end of the second preceding fortnight with immediate effect.

4. Banking Industry Trends:

In consistency with the growth and inflationary trends the non food credit growth on Year on Year basis, has increased by 17% during 2011-12 which is above the indicative projected level of 16% by Reserve Bank of India. However the deposit growth was 13.4% by the end of March 2012 against the Reserve Bank of India projected level of 15.5%. This was despite Banks maintaining high interest rates on deposits. This has resulted in wide gap between Credit Growth and Deposit growth.

5. Business Performance of the Bank:

5.1 The composition of Total Business Mix of the Bank for the last two years is as under: (Rs. in Crs)

Particulars March 2011 March 2012

Total Deposits 64,209.62 77,166.80Total Advances 45,163.37 57,159.20Total Business Mix 1,09,372.99 1,34,326.00

5.2 Business Mix of the Bank has increased from Rs. 1,09,372.99 crore as of March 2011, to Rs. 1,34,326.00 crore as of March 2012, registering a growth of 22.81%.

5.3 Total Deposits have grown to the level of Rs. 77,166.80 crore as of March 2012 as compared to Rs. 64,209.62 crore as of March 2011, registering a growth of 20.18%.

5.4 Total Advances of the Bank stood at Rs. 57,159.20 crore as of March 2012 as compared to Rs. 45,163.37 Crore as of March 2011, registering a growth of 26.56%.

6. Deposits Mobilization:

6.1 The incremental growth in different segments of Deposit was to the extent of Rs. 12,957.18 Crore during the FY 2011-12. A comparative position of Deposits for the FY 2010-11 and 2011-12 is as under:

(Rs. in Crore)

PARAMETERS March 2011 March 2012

Current 5419 7273 (8.74%) (10.01%)

Savings 17325 19317 (27.94%) (26.60%)

Term 39241 47250 (63.31%) (65.06%)

Aggregate Deposits 61985 73840

Inter Bank Deposits 2225 3327

Total Deposits 64210 77167

(%) CASA to Total Deposits 35.42% 34.46%

(Figures in bracket indicate percentage deposits to aggregate deposits)

6.2 Share of CASA Deposits to Total Deposits during 2011-12 marginally declined to 34.46% from 35.42% in the previous year. During the year, CASA increased by 16.91% as compared to 24.15% in the previous year.

7. Credit Deployment and Delivery:

Year 2011-12 has witnessed a very challenging macroeconomic environment locally as well as globally. Domestically, we had to deal with concerns arising due to inflation being above the tolerance level, higher fiscal deficit, widening current account deficit, tight liquidity conditions, deceleration in growth, and also deteriorating asset quality. With all these challenges, the Bank has expanded its quality asset base in line with its policy on prudent credit management.

The advances of the bank increased by Rs.11995.83 crore from Rs.45163.37 crore as on 31.03.11 to Rs.57159.20 crore as on 31.03.12, registering a growth of 26.56%. During the year, focused attention was given for accelerated lending under MSME, Agriculture and Retail sectors, strategically with policy of risk diversification.

As per sectorial deployment of the Bank, lending to industry grew by 19.37% led by MSME, Retail, Agriculture etc. The growth in MSME, Retail and Agriculture advance has been 22.22%, 18.69% and 9.39% respectively. The growth in credit was achieved through intense marketing of various loan products of the bank both under retail and corporate segments. Our Bank has started Debt Syndication Cell (DSC) with effect from 10.01.2011 for mobilization of quality credit proposals, increasing fee based income besides meeting requirements of our existing clients. Apart from the Debt Syndication, Cell also carries out Techno Economic Viability Study (TEV) and vetting of TEV reports prepared by other agencies.

Bank`s various specialized credit outlets viz. Corporate Business Branches (CBBs) and Industrial Finance Branches (IFBs) at major centers viz. New Delhi, Mumbai, Chennai, Kolkata & Ahmedabad, centralized processing centre for MSME advances, Retail Asset Branches for retail products under various Regional Offices have augmented the bank Rs. s efforts of speedy disposal to meet need of customers.

With it`s commitment towards nation building, the Bank has been actively participating in infrastructure financing. During 2011-12, Infrastructure lending constituted 18.55%. The bank`s exposure to infrastructure sector decreased from Rs. 11434.89 crore as on 31.03.11 to Rs.10605.16 crore as on 31.03.12. This was on account of the fact many corporates repaid their dues under telecom sector in view of prevailing uncertainty. In power sector many short term loans were not rolled over on due dates. However, the Bank extended help to PSU distribution companies in restructuring their dues in line with other lenders. The sectoral deployment under infrastructure credit has been as under:

Credit Monitoring & Asset Quality:

The Bank has put in place robust monitoring system for ensuring good quality of assets. The Bank has put in place a system where based on Early Warning System, accounts are put on close watch, wherever required and slippage in asset category is arrested.

8. Advances to Priority Sector:

8.1 The Bank has been consistently fulfilling its social obligations in respect of priority sector lending. The Bank has adopted multi pronged strategies during the year, to augment credit flow to this sector. Priority Sector Advances of the Bank have thus increased from the level of Rs. 15150 Crore as of March, 2011 to Rs. 17153 Crore as of March, 2012, registering a growth of 13.22%. The ratio of priority sector advances to Adjusted Net Bank Credit stood at 38.54% as of March, 2012 against the regulatory guidelines of 40%.

8.2 Lending to Agriculture:

In line with the Government`s Farm Credit Package, the Bank has been continuously taking necessary measures to step up the flow of credit to agriculture.

During the year, the outstanding under agriculture credit increased from the level of Rs. 6389 Crore as of March, 2011 to Rs. 6989 Crore as of March 2012, registering a growth of 9.39%. The outstanding exposure under agriculture credit represented 15.71% of the Adjusted Net Bank Credit.

8.3 Progress under Special Agricultural Credit Plan:

The Bank has disbursed Rs. 2768 crore during the year 2011-12 under Special Agriculture Credit Plan as against the target of Rs. 2200 Crore thus registering 125.82% achievement of the target set for the Bank.

8.4 Dena Kisan Credit Cards:

The Bank has issued 56853 fresh Kisan Credit Cards (KCCs) involving credit assistance of Rs. 492.77 Crore during the year, taking the total number of KCCs to 196817 lakhs involving an outstanding credit of Rs. 2078.37 Crore, as at the end of the year.

8.5 Progress under Micro Irrigation Systems (MIS):

In order to promote Micro irrigation system, the Bank has financed 3736 farmers aggregating to Rs. 48.34 Crore for installation of Micro Irrigation System in collaboration with M/s Gujarat Green Revolution Company Ltd.

8.6 Relief to Farmers under Govt. of India`s 2% Interest Subvention Scheme:

Under the Interest Subvention Scheme of GOI, the Bank has provided Rs. 5.11

Crore under 1.5% interest subvention and Rs. 8.83 Crore under 2% additional interest subvention for the crop loans disbursed during 2011-12.

Similarly, Bank has credited Rs. 20.93 Crore under 2% interest subvention and Rs. 6.59 Crore under 3% additional interest subvention for the crop loans disbursed during 2011-12.

8.7 Formation of Farmers` Clubs:

The Bank has formed 1652 farmers` club as on March, 2012.

8.8 Financing to Self Help Groups (SHGs):

The cumulative number of SHGs credit linked by the bank increased to 23341 involving Rs. 97.11 Crore as of March 2012 against 22364 SHGs involving Rs.89.05 Crore as of March, 2011. During the year 977 new SHGs have been credit linked by the Bank.

8.9 Credit Flow to Women:

The aggregate credit flow to women has increased from a level of Rs. 2043 Crore as of March 2011 to a level of Rs. 2261 Crore as of March, 2012, registering a growth of 10.67%. The outstanding credit flow to women constituted 5.08% of the Adjusted Net Bank Credit as against a target of 5% set by the Govt. of India. With a view to create awareness on women empowerment, the Bank organized a number of events on the International Women`s Day.

8.10 Advances to weaker section:

Consistent with the growth in priority sector advances, the advances to the weaker section increased from a level of Rs. 2689 Crore as of March 2011 to Rs. 3619.52 Crore as of March 2012, registering a growth of 34.56%. The Bank advances to Weaker Section stood at 8.13% of the Adjusted Net Bank Credit.

8.11 Advances to SC / ST Communities:

The aggregate level of advances to SC/ST Communities, within the priority sector increased from a level of Rs. 753 Crore as of March, 2011 to Rs. 798 Crore as of March, 2012, registering a growth of 6%. The share of advances to SC/ST is 4.65% of the priority sector credit.

8.12 Coverage under CGTMSE scheme:

The Bank has been participating under the guarantee scheme of the Credit Guarantee Fund Trust for Small and Micro Enterprises (CGTMSE) to provide collateral free loans to small and micro-enterprises. In order to mitigate the burden on entrepreneurs, the Bank is also bearing 50% of the Guarantee fees. The total number of cases covered under the scheme stood at 6875 with a guarantee cover of Rs. 367.62 Crore, as at the end of the year registering a growth of 56%.

8.13 Golden Jubilee Rural Housing Finance Scheme (GJRHFS):

In order to promote financing of dwelling units in rural areas, the Bank has been implementing GJRHFS. Bank has granted loan to 3110 beneficiaries during the year and achieved the target to the extent of 88.85% under the scheme.

8.14 Prime Minister`s 15 point Program for the welfare of Minorities:

The credit flow to minority communities has increased from the level of Rs.1400 crore as of March 2011 to Rs. 1723 crore as of March 2012, registering a growth of 23.07% which constitutes 10.05% of Priority Sector Advances.

8.15 Government Sponsored Schemes:

The Govt. of India has introduced Prime Minister`s Employment Generation Program (PMEGP) by merging Rural Employment Generation Program (REGP) and Prime Minister`s Rozgar Yojana (PMRY) for generation of employment opportunities through establishment of micro enterprises in rural as well as in urban areas effective from 01.04.2008.

The Bank is actively implementing government sponsored schemes aimed at eradication of poverty and for generating self employment. The Bank has sanctioned loans to 18092 beneficiaries under PMEGP amounting to Rs. 106.45 Crore and 31769 beneficiaries under Swarnajayanti Gram Swarojgar Yojana amounting to Rs. 72.53 Crore and also granted loans to 11445 beneficiaries under Swarna Jayanti Shahari Rozgar Yojana (SJSRY) to the tune of Rs. 28.53 Crore.

8.16 Dena General Credit Card (DGCC) Scheme:

The Bank is providing overdraft facility upto Rs. 25,000/- under this scheme to borrowers of small means under rural and semi-urban areas. The Bank has issued 17608 DGCC Cards as of March 2012.

8.17 Dena Bhoomiheen Kisan Credit Card:

The Bank has introduced a special scheme for tenant farmers, oral lessees, share croppers, landless laborers etc. wherein credit facility up to Rs.25,000/- is granted for various agricultural and allied purposes with a provision of consumption also. Under the scheme, 2720 Bhoomiheen Kisan Credit Cards have been issued during the year.

8.18 Credit Counseling Centers/Financial Literacy:

RBI has directed the Banks to open Credit Counseling centers in the respective Lead districts to ensure 100% financial inclusion. Accordingly, in pursuance with the guidelines of RBI to set up credit counseling centres, Bank rolled out its 1st Credit Counseling centre at Himatnagar (Dist. Sabarkantha) in Gandhinagar Region on 08.08.2007. Bank has opened Credit Counselling centres at Palanpur, Mehsana, Bhuj, Himmatnagar and Gandhinagar in the state of Gujarat and Silvassa in the UT of Dadra & Nagar Haveli. The said centers are christened as Dena Mitras.

8.19 Corporate Social Responsibility:

8.19.1 Rural Self Employment Training Institutes (RSETIs):

Dena Bank has set up a Society known as Dena Rural Development Foundation (DRDF) with a corpus of Rs. 150.00 lacs. DRDF in turn has set up 12 Rural Self Employment Training Institutes (RSETIs) in its lead districts viz (i) Ahmedabad, (ii) Kutch, (iii) Mehsana, (iv) Banaskantana, (v) Sabarkanta (vi) Patan in the state of Gujarat, (vii) Durg, (viii) Dhamtari (ix) Mahasamund (x) Raipur (xi) Rajnandgaon in the state of Chattisgarh and (xii) Silvassa in the U. T. of Dadra & Nagar Haveli where bank is shouldering the responsibility of lead bank.

8.19.2 Sponsoring Education of Girl Child:

As a part of Corporate Social Responsibility, the Bank had introduced a Nobel scheme viz. Dena Laxmi Shiksha Protsahan Yojana to sponsor education of Girl students in the villages served by the Bank. The scheme aims at providing a scholarship of Rs. 2000/- and Rs. 1500/- per annum to girl student belonging to Below Poverty Line (BPL) family, selected from each of the schools based on first and second rank respectively secured in 7th Standard, from the villages under the command area of the Bank. The Bank has so far provided scholarships to 2213 girl students under the scheme.

8.20 State Level Bankers Rs. Committee (SLBC) Responsibilities:

The Bank has been discharging its responsibilities as a Convener of SLBC for the State of Gujarat and also as Convener of UTLBC for the Union Territory of Dadra & Nagar Haveli and Daman. Bank has been given Lead Bank responsibility of Union Territory of Diu. The SLBC has played catalytic role for the development of banking in the State of Gujarat and Dadra & Nagar Haveli through constant monitoring of various Rriority Sector and developmental schemes. The Bank has also been monitoring the credit flow to MSME, auto, housing sectors under the stimulus package announced by Government of India.

8.21 Lead Bank Scheme:

The Bank is successfully discharging its lead bank responsibility in 13 districts; of which 7 districts are located in Gujarat, 5 districts in Chhattisgarh and two in Union Territory of Dadra & Nagar Haveli and Daman & Diu.

8.22 Regional Rural Banks sponsored by the Bank:

The Bank has sponsored two RRBs namely Dena Gujarat Gramin Bank (DGGB) in the State of Gujarat and Durg Rajnandgaon Gramin Bank (DRGB) in the State of Chhattisgarh. Both the RRBs sponsored by Dena Bank have a network of 277 branches spread over 10 districts of Gujarat and Chhattisgargh. The total business mix of these RRBs stood at Rs. 4920.20 Crore as of March 2012. During the financial year ended 31st March, 2012, both the RRBs are profit making.

8.23 Core Banking Solution at Regional Rural Banks:

In terms of the RBI / Government of India directives, Bank has initiated the process of implementation of CBS in Bank`s both Regional Rural Banks (RRBs) i.e. Dena Gujarat Gramin Bank (DGGB) and Durg Rajnandgaon Gramin Bank (DRGB). As on 31st March, 2012, 277 branches of both the RRBs have been successfully brought under CBS platform.

9. Financial Inclusion:

The Bank has a Financial Inclusion Rlan which envisages road map for provision of banking services through banking outlet in 770 villages allocated to it by various SLBCs under Lead Bank Scheme. The number of villages allotted to Dena Bank has now been reduced from 770 to 728 after re-allocation of the villages to other Banks keeping in view the geographical areas. As per FIR, all these villages are covered by end of

March 2012.

The plan includes extension of facilities like Opening of No Frills Accounts, Inbuilt Overdraft facility in the No Frills Accounts, Entrepreneurship Credit, Remittance facilities and Micro-Insurance products.

The Bank has engaged M/s Tata Consultancy Services (M/s TCS) as the Application Service Rrovider (ASR) for implementation of FI Rlan for a period of 3 years. Bank has engaged individual Business Correspondents (BCs) in FI villages.

9.1 Progress in coverage of villages:

Bank has covered all 728 villages by March 2012.

Brick & Mortar Branch Model: Bank has covered 41 villages by opening Brick & Mortar Branches.

Ultra Small Branch Model: Bank has covered 34 villages by setting up of Ultra Small Branches.

BC Model: Bank has Covered 653 villages by engaging individual Business Correspondents.

9.2 No Frills Accounts:

Total 2.74 lakh No Frills accounts have been opened in the FI Villages by March 2012 against the target of 2.62 lakhs accounts. However, the Bank as a whole, the number of No Frills accounts is 12.60 lakhs as of March 2012.

9.3 Inbuilt OD facility in the No Frills Accounts:

All No Frills Accounts in FI villages i.e. 2.74 lakh No Frills Accounts have been extended OD facility by March 2012, against the target of 2.62 lakh accounts. However, the Bank as a whole, the number of inbuilt OD facility extended in the No Frills Accounts is 5.53 lakh.

9.4 Dena Kisan Credit Cards and Dena General Credit Cards are also issued under Financial Inclusion Plan.

9.5 Training to Individual BCs:

Training has been provided to all individual BCs. However, Bank shall provide training to BCs on continuous basis through pool of officers identified for training.

9.6 FIP for Regional Rural Banks (RRBs):

Dena Bank has sponsored two RRBs namely Dena Gujarat Gramin Bank (DGGB) in the State of Gujarat and Durg Rajnandgaon Gramin Bank (DRGB) in the State of Chhattisgarh.

DGGB has been allocated 245 villages and DRGB has been allocated 26 villages. In all, both the RRBs have been allocated 271 villages having

population above 2000.

Both the RRBs have covered all the villages allotted to it by March 2012.

9.7 FIP for the State of Gujarat:

A total of 3502 villages having population above 2000 were allotted to Banks and all have been covered by Banks by March 2012.

Banks have covered 101 villages through Brick & Mortar Branch Model, 673 villages through Ultra Small Branch Model, 16 villages through Mobile Van model and 2712 villages through BC model. Dena Bank has covered all 493 villages allotted to it in the State of Gujarat. All Banks have opened 9.99 lakh accounts under Financial Inclusion. (Dena Bank has opened 1.67 lakhs accounts.

9.8 FIP for the Union Territory of Dadra & Nagar Haveli:

30 villages having population above 2000 were allotted to Banks.

Banks have covered all 30 villages, out of which 4 through Brick & Mortar Branch model, 3 through Ultra Small Branch Model and 23 through BC model.

Dena Bank has covered all the 9 villages as proposed in FIP. Banks have opened 0.31 lakhs accounts in the Union Territory of Dadra & Nagar Haveli.

9.9 FIP for the Union Territory of Daman & Diu:

6 villages having population above 2000 were allotted to Banks.

Banks have covered all 6 villages, all through BC model. Dena Bank has covered 3 villages as proposed in FIP. Banks have opened 0.05 lakhs accounts in the Union Territory of Daman & Diu.

10. Advances to MSME Sector:

MSME sector has been identified as one of the growth engines for increasing credit portfolio of the Bank. Central Processing Cells were established at the remaining 4 centres, thus covering all the 21 Regional offices for speedy disposal of MSME loan proposals. MSME credit camps were organized at various potential centres on regular basis.

Special MSME campaign was organized form 1st November, 2011 under Mission-111 days and progress of the same were monitored on fortnightly basis. During the campaign Bank sanctioned loans to 5637 Borrowers amounting to Rs. 1695.09 Crore upto 31.03.2012.

Rate of Interest were reduced significantly for MSME borrowers and are now in the range of 12% to 14.75% as per the credit rating upto "D" rated borrowers.

Bank has entered into tie up with TVS Motor and Bajaj Motor for 3 wheelers financing and with TATA Motors for financing Commercial Vehicle to be covered under MSME sector.

Regular Training programs were conducted for officers for improving skills for processing of loan proposals.

All these measures resulted in growth of MSME credit by 22.22%. In absolute terms, the MSME advances increased from Rs. 6783.72 Crore as of 31.03.2011 to Rs. 8291.13 Crore as of 31.03.2012.

Credit to Micro Enterprises grew by 28.56% from Rs. 3214.26 Crore as of 31.03.2011 to Rs. 4132.33 Crore as of 31.03.2012. Credit to Micro and Small Enterprises sector grew by 21.02% from Rs. 6194.05 Crore as of 31.03.2011 to Rs. 7495.83 Crore as of 31.03.2012. Advances to Micro Enterprises constitutes 55.13% of Micro and Small Enterprises advances as of March, 2012. No. of accounts in Micro Enterprises grew from 100503 as of March, 2011 to 114375 as of March, 2012 showing an increase by 13.80%.

Special thrust was given to cover the eligible loan accounts under CGTMSE, which resulted in increasing the number of borrowers from 4550 as of March-2011 to 6875 as of March-2012 (Increase by 49.12%) and amount from Rs.235.66 Crore as of March, 2011 to Rs. 367.62 Crore as of March, 2012 (Increase by 56%).

11. Retail Credit:

11.1 Retail Credit has been one of the focus area for credit growth with better returns. The Bank has 11 Retail Banking Schemes catering to various needs of a customer. The schemes are modified from time to time keeping in view the market scenario, customer requirements and feed-back from field functionaries. Concerted efforts were made to popularize the retail banking schemes through wide publicity.

Giving emphasis on increasing housing loan, the Bank has approved 909 housing projects / builders. It will also ensure quality of assets under housing loan.

During the financial year, the outstanding amount under direct retail credit registered a growth of 21.48% showing an increase of Rs. 964.37 Crore to reach the level of Rs. 5453.25 Crore. The total retail credit has increased from Rs. 6135.59 Crore as of March 2011 to Rs. 7282.50 Crore as of March 2012 registering growth of Rs. 1146.91 Crore (18.69%).

11.2 Retail Asset Branches:

In order to take advantage of the potential available for enlarging Bank`s retail lending portfolio and also to ensure better quality, uniformity and speed in appraisal and sanctions, 12 Retail Asset Branches (RABs) are functioning at various centres viz. at Hyderabad, Bangalore, Chennai, Lucknow, Rune, Surat, Bhopal, Bhandup (Mumbai), Juhu Vile Rarle (Mumbai), Kolkata, Ahmedabad and New Delhi. The Retail Asset Branches carry out all the functions relating to retail advances and expected to ensure quantitative and qualitative growth of retail business and also cut down multiplicity of functions and efforts at branches. Besides, in order to maintain asset quality, Regional Managers have been empowered to link the selected branches at RAB centre, as they may deem fit, with the RAB at that centre. Such linked branch will generate lead and all the functions till first disbursement shall be carried out by RAB and thereafter by the lead

generating branch.

11.3 Refinement of Schemes:

The Bank further refined its various retail schemes like Dena Niwas Housing Finance, Dena Vidyalaxmi Education Loan, Dena Trade Finance Schemes so as to make these schemes more customer friendly.

11.4 Introduction of new schemes:

To enable our field functionaries to get one more retail product and encash the available business potential, a new retail product namely "Dena Gold Loan" has been introduced and operationalized through designated branches.

11.5 Housing Finance:

Fresh disbursements to the tune of Rs. 1374.87 Crore were made during the year towards housing loan, enabling net increase in outstanding credit from Rs. 4015.98 crore as of March 2011 to Rs. 4730.31 Crore as of March 2012, registering a growth of 17.79%.

11.6 Mortgage Loan:

The outstanding under Mortgage Loan Scheme, increased from Rs. 493.18 Crore. to Rs. 743.24 Crore as at the end of the year i.e. an increase of Rs. 250.06 Crore (50.70%).

11.7 Education Loan:

Fresh disbursements to the tune of Rs. 29.39 Crore were made during the year towards education loan. There is net increase in outstanding credit from Rs. 316.03 Crore to Rs. 327.09 Crore as at the end of the year i.e. an increase of Rs. 11.05 Crore (3.50%).

11.8 Trade Finance Scheme:

Outstanding under the Trade Finance Scheme, increased from Rs. 461.46 Crore to Rs. 592.99 Crore as at the end of the year i.e. an increase of Rs.131.53 Crore (28.50%).

12. Investment:

Aggregate gross domestic investments of the Bank grew by 23.05% to reach Rs. 23,207.80 crores as on 31.03.2012 from the level of Rs. 18,860.22 crores as on 31.03.2011.

The SLR securities have increased from Rs. 15,304.91 crores to Rs.19,504.71 crores i.e. an increase of 27.44% in line with the increase in DTL. The DTL has increased from Rs. 62,897 crores to Rs. 74,992.47 crores.

Non SLR Securities have increased from Rs. 3555.31 crores to Rs. 3703.09 crores i.e. an increase of 4.16%. The increase in Non SLR Securities is mainly due to increase in investment in RIDF / RHDF / MSME / MSRE amounting to Rs. 195 crores. The RIDF investment is mandatory investment to bridge the shortfall in Priority Sector Lending vis-a-vis RBI stipulated one and

is not subject to mark to market.

Bank continued to be an active participant in Government Securities auction. Bank concentrated in investment in Govt. Securities, PSU and Corporate Bonds to augment its income from Treasury.

The income from Treasury operations has gone up from Rs. 1246 crores for the year ended 31st March 2011 to Rs. 1635.56 crores for the year ended 31st March 2012 i.e. increase of 31.26% on YoY basis. The investments have been maintained in various maturity mixes consistent with risk perceptions and investment policies of the bank.

The average yield on investments increased from 7.06% for year ended 31.03.2011 to 7.39% for the year ended 31.03.2012 due to increase in interest income.

13. International Operations:

13.1 International Banking business of the bank:

Bank`s focus on providing support to Exporters has resulted in growth of Export Credit substantially by 45.55% to Rs.2246 crores during the year.

The bank continues to offer a variety of trade finance products to the customers. The customers are quoted very competitive exchange rates supported by the periodic review of their business turnover. The bank also makes available rupee and foreign currency pre as well as post shipment credit to cater to exporters requirements.

Bank has recruited specialist Forex officers and placed in Treasury and AD branches to provide prompt / efficient customer service to exporters / importers.

The merchant forex business turnover of the bank surpassed Rs 30200 cr during the financial year 2011-12 attaining a growth of 30.44%.

The bank maintains its focus on NRI business. NRI deposit grew by 25.02% to Rs. 1846 crores during the year. Deregulation of interest rates on NRE deposit has helped the bank increase its NRI deposit portfolio

substantially. The bank is looking forward to launch a variety of forex related products in this calendar year. The bank added two more authorized dealer (AD) branches taking the total AD branches to 41 including Treasury Branch which deals in inter bank and money market operations.

Bank has decided to introduce retail sale of gold coins during the year. Process has been initiated for opening branch/ representative office abroad.

14. Asset Quality & Recovery Management:

Bank repeated its commendable performance in maintaining asset quality and NPA Management during the year 2011-12 also irrespective of the heavy slippages experienced by the banking industry in general. The Bank`s performance in NPA management is directly attributed to the concerted

efforts made for upgradation of recently slipped NPAs and cash recovery. Action under SARFAESI Act, recovery through compromise settlements resulted in improving the cash recovery and upgradation to a considerable extent. The proactive steps taken by the Bank in NPA reduction ensured that level of NPAs is restricted to the minimum possible.

Bank has achieved the lowest gross NPA % of 1.67 during this year in the last one and half decades. The gross NPA, in absolute terms, increased by Rs. 114.26 crore from Rs. 842.24 crore as on 31st March 2011 to Rs. 956.50 crore as on 31st March 2012. Gross NPA ratio of the bank reduced to 1.67% as on 31.03.2012 from 1.86% as on 31.03.2011.

The Net NPA ratio of the Bank stood at 1.01% as on 31.03.2012 as against 1.22% as on 31.03.2011. Net NPAs in absolute terms increased by Rs. 22.78 crore from Rs. 548.95 crore as on 31st March 2011 to Rs. 571.73 crore as on 31st March 2012.

(Rs. In Crore)

March 2011 March 2012

Gross Advances 45163.37 57159.20

Gross NPA`S 842.24 956.50

% Gross NPA to Gross Advances 1.86% 1.67%

Net Advances 44833.21 56606.93

Net NPA`S 548.95 571.73

Net NPA to Net Advances 1.22% 1.01%

Provision Coverage Ratio (including prudential write off) 74.62% 75.53%

Provision coverage ratio (including prudential write off) stood at 75.53% i.e. well above the regulatory requirement of 70%.

Special attention was given to recovery in NPAs during the year through negotiated settlements. Special recovery drives were continued for recovery in written off accounts. Recovery camps and Lok Adalats were organized at Regional Offices and major centers on regular intervals. Nodal Officers were nominated for each DRT for follow up of the pending cases and to co-ordinate with the Advocates for speedy recovery.

The cash recovery during the year 2011-12 was Rs. 222.56 crore and upgradation in the accounts was Rs. 191.47 crore. Bank has recorded recovery of Rs. 81.93 crore (including interest) in written off accounts during the year 2011-12.

Bank has conducted 1461 recovery camps in various Regions during the year which were attended by 16940 borrowers. A total of 2785 accounts were settled for Rs. 32.46 crore and 864 accounts were upgraded for Rs. 21.33 crore during the year through such recovery camps. Spot recovery of

Rs.11.34 crore effected during these recovery camps.

A total of 3605 accounts were considered under compromise settlement for an amount of Rs. 68.96 crore under bank Rs. s OTS scheme during the year ended March 2012 against which a recovery of Rs. 37.49 crore was effected as against 4145 accounts with compromise amount of Rs. 93.13 crore with cash recovery of 109.88 crores effected during the year ended March 2011.

15. Legal Services/ RTI Act:

15.1 Sale of NPA amongst Banks/ FIs and ARC:

In terms of the RBI Guidelines issued on 23.04.2003 and 13.07.2005, the Bank has sold 8 NPA accounts to ARCs for a total consideration of Rs. 14.13 Crores on cash basis during 2011-12.

15.2 Recovery under SARFAESI Act, 2002:

For expediting recovery in NPA accounts under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) during the year 1006 Notices were issued in the eligible accounts involving an amount of Rs. 350.42 Crore. The Bank was successful in recovering an amount of Rs. 36.20 Crore in 1971 accounts (including those where notices were issued during previous years) during the year 2011-12.

15.3 Recovery through Lok Adalats:

For an early resolution of disputes and recoveries from its defaulters through Lok Adalats constituted under Legal Services Authorities Act. the Bank endeavors to arrange maximum Lok Adalats wherein both pre and post litigation i.e. suit filed and non suit filed accounts can be placed for settlement. The Bank has recovered Rs. 2.85 Crore during 2011-12 (inclusive of recovery made in the cases settled during previous years), in 3282 accounts.

15.4 Recovery through Suits in the Debt Recovery Tribunal/Civil Court:

As of 31-03-2012, our Bank is having 2367 Suit Filed accounts in various DRT/Civil Courts involving an amount of Rs. 1541.78 Crore and 1885 Decreed accounts in various DRTs/Civil courts involving an amount Rs. 945.93 Crore. During the year, the Bank had recovered of Rs. 39.88 Crore in the above suit filed and Decreed accounts.

15.5 BIFR Cases:

In terms of Recovery Policy approved by the Board, a Nodal Officer stationed at New Delhi, has been identified for co-coordinating the BIFR Cases. During the year, 5 cases were removed on account of closure of accounts due to compromise / rejection / abatement of reference by BIFR/ asset sold to ARCs. The Bank has recovered a sum of Rs. 10.25 Crore. 1 new case / reference was added during the year involving an amount of Rs.12.71 Crore. At the end of the year, 24 cases involving Rs. 223.10 Crores, are pending before BIFR/AAIFR

15.6 Right to Information Act:

15.6.1 Bank has designated State Public Information Officers & Central Public Information Officers for dealing with requests received from Citizen Rs. s of India under RTI Act, 2005. Bank has also designated the Executive Director as Appellate Authority to dispose the appeals received against the decision of SPIO/ CPIO. In compliance of the Guidelines Bank has also appointed Transparency Officer.

15.6.2 During the Year the Bank has received 1212 requests under RTI Act, and disposed off 1148 requests (inclusive of 33 requests carried forward from previous year) as per the norms. The Appellate Authority has received 215 Appeal and disposed off 178 Appeals (inclusive of 25 Appeals carried forward from previous year) as per norms during the year.

16. Government Business:

Government Business Department is functional at Head Office since 2006 and is dealing exclusively in Government related transactions. All types of Government business activities such as collection of Direct Taxes, Central Excise & Services Tax for the central Government, collection of commercial taxes for various state Government through e-payment as well as physical mode, doing pension payment of Central and State Government pensioners, maintaining accounts of those ministries for which our Bank is accredited, handling Treasury Business of Central and State Government in the States of Gujarat, Maharashtra and Chattisgarh, maintenance of PPF accounts, Senior Citizen Savings Scheme, RBI Bonds/ Savings Bonds,etc. on behalf of Central Government, as well as doing Franking business for Rajasthan, Gujarat & Maharashtra Government.

Bank has implemented the facility of E-payment for the following states:

1. Facility of e-payment of VAT / CST and Profession TAX for the State of Maharashtra successfully.

2. System for Virtual Treasury (under which 13 types of collections of State Government revenue such as Motor Vehicle Tax, Road Tax, Stamp Duty etc. will be covered), has been developed and launched for customers in State of Maharashtra

3. Similarly, Bank has received certificate of testing and authorization for the Cyber Treasury for state of Gujarat for collection of 13 types of Revenue items. The system is ready to launch.

4. During the year Bank has also obtained authorization to develop and launch the following modules from the concerned State Governments.

Commercial Taxes for the State of Uttar Pradesh, Delhi, West Bengal, Karnataka, Andhra Pradesh and Union Territory of Daman & Diu. Authorization of On Line collection and payment for the Chhattisgarh Treasury has also been received. This system is developed, tested and ready to launch shortly.

5. A New application software for all Government Business activities developed by M/s. Accel Front Line is procured in coordination with IT

Department. The application is interfaced with Finacle and is in process of implementation. It is expected to be implemented across all branches by September 2012. Its implementation will go a long way to smoothen the Government Business activities such as PPF, Senior Citizen Savings Scheme, Tax collection, Pension Payment, etc. and hence result in substantial rise in Net income as well as image of the Bank.

6. Bank is in process of establishing Central Pension Processing Centre (CPPC). This will aid in better service to pensioners and reduction in Administrative over heads.

7. Bank has received approval for e-franking from IGR, Pune for Maharashtra and now is in advanced stage of implementing the same.

The implementation of all the above activities not only will increase our Banks income manifold but will also enhance Banks image as well as presence in those areas / parts of the country where up till now we were not known / authorized. This will also help the Bank to increase customer base by providing all facilities under one roof.

17. Bancassurance:

17.1 Sale of Third Party Products:

The Bank has taken up the activity of distribution of third party products viz. Insurance and Mutual Funds, with a view to provide a wide range of financial services to its customers as value addition, as also to augment its non-interest income.

17.2 Distribution of Mutual Fund Products:

The Bank has strategic marketing alliance with Asset Management companies of 14 major Mutual Funds for distribution of their mutual fund products through the Bank`s branches.

17.3 Distribution of Insurance Products:

The Bank has existing Bancassurance tie up with the Life Insurance Corporation of India for distribution of their life insurance products, which enables our customer to avail of their entire range of life insurance products at all branches.

The Bank has also tied up with the United India Insurance Co. Ltd. to offer the general insurance products to customers.

18. Depository Participant Services:

Bank has been extending Depository Services to its customers since 1998 from Capital Market Branch. Bank has now extended the services from 90 branches spread over various centres. In order to create awareness among the staff officers in the Bank have been trained and are duly certified Depository Services Officers.

Bank has introduced Application Supported by Blocked Amount (ASBA) facility during the current year and started extending this service from 131

branches. Bank caters to both ASBA and Syndicate ASBA services for its customers.

Bank is in the process of implementing On-Line Trading facility for its customers.

19. Income and Expenses:

19.1 Income:

Total Income of the Bank has increased from Rs. 5567.37 cr for the year-ended 31st March 2011 to Rs. 7376.30 cr for the year ended 31st March 2012, resulting in net increase of Rs. 1808.93 cr, which represents a growth of 32.49%.

Interest income of the Bank has increased by 34.98% to record a level of Rs. 6794.13 Crore.

Growth in interest income of the Bank was achieved mainly due to an increase in the interest income from advances i.e. by 35.09%. The achievement could be attributed to the strategies adopted by the Bank by concentrating on high yielding credit viz. SME, Retail & Agriculture, etc. and re-pricing of bulk corporate loans. Interest income from investments showed an increase of 29.48% Besides this Bank has also received Interest on Income Tax Refund of Rs. 50.52 crores during the year.

Fee based Income has increased by Rs. 102.48 crore (27.31%) from Rs. 375.25 crore as of March 2011 to Rs. 477.73 crore as of March 2012.

19.2 Expenses:

Total expenses has registered an increase of 34.63 % over the previous year.

19.3 Profitability Analysis:

Bank`s net interest income (NII) has increased by 19.15% and stood at Rs.2101.00 Crore as compared to Rs. 1763.37 Crore posted during the previous year.

The Bank has continued to give thrust on recoveries in written off advances during the year, which resulted in recovery of Rs. 69.76 Crore under this segment.

19.4 Operating Profit:

Operating profit of the Bank has registered an increase of 24.89% and stood at Rs. 1528.43 Crore as compared to Rs. 1223.79 Crore posted during the previous year.

19.5 Net Profit:

With the Bank`s focus on containing interest costs, looking for opportunities of high yielding advances, the Bank is successful in posting 31.31% rise in Net Profit during the year. The Net Profit of the Bank stood

at Rs. 803.14 Crore as against Rs. 611.63 Crore posted during the previous year.

A comparison of income, expenses and provisions & contingencies with the previous year is given hereunder:

(Rs. in crore)

Particulars 2010-11 2011-12

Interest Income 5,033.53 6,794.13Non Interest Income 533.84 582.17Total Income 5,567.37 7,376.30Interest Expenses 3,270.16 4,693.13Operating Expenses 1073.42 1,154.74Total Expenses 4,343.58 5,847.87Operating Profit 1,223.79 1,528.43Provisions & Contingencies 612.16 725.29Net Profit 611.63 803.14

20. Marketing Initiatives:

20.1 During the year 2011-12, a wide publicity was given to different products & schemes of our Bank through press, electronic and outdoor media.

20.2 Pan India Advertisements were released in Major Newspapers during the year to build the Corporate Image of the Bank.

20.3 Bank`s visibility was increased in Tier II & Tier III cities through advertising on Hoardings and Glowsigns in these cities besides maintaining the level in Tier I Cities.

20.4 The Bank has also utlised other innovative mediums such as Full Train Branding of the Local Train on the Western & Central lines in Mumbai, Display Panels on Shatabdhi & EMU trains in Delhi, Punjab, Haryana, UP & Karnataka etc.

20.5 A major branding exercise was done by associating with the Future Media India Ltd. for the Annual Mega Shopping Festival of Big Bazaar & Food Bazaar "Sabse Saste 5 Din 2012" in selected stores at 18 centres in Gujarat, Delhi & Rajasthan.

20.6 A wide publicity was also given to the opening of new branches, through News Paper Ads, Hoardings, and Leaflet distribution.

20.7 Bank participated in various Social & Cultural events and Trade Fairs during the year and gained good publicity and mileage.

21. Risk Management:

21.1 The Bank has put in place structured risk management systems & architecture that is overseen by a Committee of Directors on Integrated Risk Management. Management level Committees on Asset Liability (ALCO), Credit Risk Management (CRMC) and Operational Risk Management (ORMC) constitute the core level of focused risk management architecture. The Bank

has also identified Risk Managers at all controlling offices and at Head office departments to focus on operational risk factors and arranged for their training.

21.2 The Bank reviews and updates its risk related Policies on annual basis or as and when need arises in line with the RBI Guidelines, changes in operating environment and with a view to manage credit and market risks in an effective manner. Business Continuity Plans have been formulated for all critical processes of the Bank. The Bank has also set up and operationalised Disaster Recovery Centre for its Core Banking Operations and also made use of the same during the year. Operationalisation of Near Site is also under process.

21.3 The functions of Mid-Office are broad based for an effective monitoring of market risk. Further, at Mid-office, SAS software has been implemented for effective monitoring.

21.4 The Bank has been using eleven internal Credit Rating models including 5 models for retail advances. 4 general models are applicable as per size of exposure and 2 Specific Models are applicable for infrastructure and general projects. The Bank continued with the system of comprehensive risk profiling of the Bank in line with regulatory guidelines that will facilitate integrated risk management.

21.5 A system of verification of the credit rating of borrowers has been in force and credit monitoring system was further streamlined for focused attention on improvement in asset quality.

22. Human Resource Management:

22.1 During the year, the Bank had provided training to 3954 employees in thrust areas of Credit, Forex, Soft Skills, Agriculture Lending, NPA & Recovery Management. The Bank also imparted induction training to newly recruited officers and clerks.

The Bank had also conducted pre-examination training for SC/ST candidates appearing for Promotion tests and Bank`s Probationary Officers` examinations as well as clerical recruitment. Pre-promotion training to SC/ST candidates for 10 days and to General Candidates for 4 days was also given.

The Bank also utilizes external training resources from reputed management institutes and training institutions in India and abroad, with a view to providing specialized training in newer areas of skill development as also to provide wider exposure to executives and officers. During the year, 21 executives/officers were sent abroad for attending training/conference.

22.2 The staff strength of the Bank increased from 9953 as of 31.3.2011 to 10202 at the end of the FY 2011-12. The total strength comprises of 4501 officers, 3776 clerks and 1925 subordinate staff, including 2164 women employees. The representation of Scheduled Castes, Scheduled Tribes employees in the Bank was in conformity with the prescribed level.

22.3 The Bank, to meet its requirements of personnel for increasing business levels and opening of new branches, has recruited 408 Officers

(including POs) under various scales and disciplines, 404 clerks and 17 substaff during the year.

22.4 In Bank`s pursuit for growth and career progression of its employees, Bank had initiated process for promotion from clerical cadre to officer cadre JMG Scale-I for filling up identified vacancies up to March, 2012. Accordingly, 427 clerks have been promoted to officer cadre JMG Scale I.

22.5 Grievances Redressal Mechanism for SC/ST/OBC /PH/EX-SM Employees -

The Bank has nominated a top Executive in the rank of General Manager to function as Chief Liaison Officer to oversee implementation of Reservation Policy for Scheduled Castes, Scheduled Tribes, OBCs, PH and EX-Servicemen Employees. The Quarterly Meetings with All India Dena Bank SC/ST/OBC employees Federation were held at periodic intervals at Head Office to redress problems/Grievances.

22.6 Industrial Relations:

The Industrial Relations during the year remained congenial for growth and development. As a part of the industrial relations initiative, a grievance redressal mechanism is in place in the Bank to address the grievances of individual employees.

23. IT Initiatives:

23.1 Core Banking Solution (CBS) - `DENA GARIMA`

23.1.1 The Bank had embarked upon a process of transformation through technology with a view to enhance customer satisfaction and to leverage business growth. The Bank has engaged the services of M/s Wipro, a leading service provider in IT enabled services, for providing an end-to-end solution for Core Banking Operations of the Bank. It is backed by `Finacle` software support from M/s Infosys Technologies Ltd. The Core Banking system bundles a host of customer friendly services like Internet Banking, Phone Banking, Mobile Banking and Cash Management Services etc. besides software system for Integrated Treasury operations. A number of third party software solutions are also being integrated mainly with a view to address Regulatory concerns.

23.1.2 The Project was kicked off with migration of existing operations at bank`s Mahim Branch in Mumbai on 12th March 07.

23.1.3 As of March 2012, all the 1342 branches of the bank and the entire business has been brought under CBS. This covers 867 centres and 28 states/ union territories.

23.2 Other IT Initiatives:

23.2.1 Networking:

Recognizing the significance of communication infrastructures in the Bank`s drive towards transformation through technology, the bank has connected all its branches and administrative offices through DENANET - its Wide Area Network using various connectivity media. `DENANET` is continuously being

monitored on 24X7 basis by a Network Monitoring team for ensuring more than 99% up time.

23.2.2 ATM Installations:

In keeping with the universal trend of introducing ATMs as the most popular & convenient mode of delivery channels, a total of 543 ATMs have been installed as on 31st March 2012 all over the country. Out of these ATMs, 430 are Onsite and 113 are Offsite, covering more than 270 centres. 2 of the ATMs are bio-metric to facilitate illiterate customers operating the ATM with thumb impression which is convenient for small customers and semi-literate farmers. The bio-metric ATMs also speak out instructions to the customers.

The Bank has ATM sharing arrangement through CASHTREE, VISA, CASHNET & NFS tie-ups, enabling more than 90000 ATM access points & more then 4.70 lacs Merchant Establishments (MEs) in India and more than 1 million ATMs & 26 Million MEs abroad, to Bank`s customers; Debit/ATM Card base is around 15.48 lacs. The Bank also provides Dena International Gold Debit Card to HNI customers with Visa affiliation.

The Bank has number of value added services through the ATMs viz. Mobile Pre-paid Top-ups and Post Paid Bill Payment etc. Debit Card customers can also make on-line payment for purchases of goods and services using Debit Cards on Internet

23.3 Network based Services & Applications:

23.3.1 With a view to channelise this infrastructure for customer satisfaction and maximize the ROI made in creation thereof, we have introduced the following network based products and services:

> CBS application,> Other applications viz ALM / AML, On-line Balance sheet etc.,> ATM / Debit Cards,> Data Transfer & Remote Support,> RBI Payment systems like RTGS & NEFT etc.,.> Corporate E-MAIL,> Intranet,> IP Telephony,> Video Conferencing,> Internet Banking.

23.3.2 The Bank has launched "Dena i Connect" - the internet Banking

Service for customers of its Branches. This enables the customers to access their account information through Internet in the form of (a) Balance Inquiry (b) Mini Statement (Last 9 transactions) (c) Detailed Statement of Account (d) Cheque Book inquiry (e) Funds Transfer (Self/ Third Party) (f) RTGS/NEFT transactions (g) Outward cheque status inquiry (h) E-payment of Direct Taxes and Indirect Taxes (i) On-line payment of Maharashtra Sales Tax (VAT) (j) E-payment of Commercial Taxes of Dadra & Nagar Haveli. As at the year end, 1,06,910 customers (Retail customers - 1,06,602, corporate user ids - 308) have registered for "Dena i Connect".

Our Bank has implemented "Dena MConnect" services - the convenient and secure way to conduct banking transaction using mobile handset. Customers can avail various facilities including funds transfer. The solution is compatible with RBI guidelines on Mobile Banking and about 3000 customers have started using the same.

23.3.3 Bank has started Alert facility through which customers gets SMS on occurrence of certain events -transactions of Rs.5000/-and all RTGS / NEFT and ATM transactions.

23.3.4 Bank`s Web sites:

Bank has its website with netizen friendly features like Branch Locators, Calculators, Two-click navigation system etc. The webmaster keeps the website updated and dynamic on an ongoing basis.

With robust IT infrastructure; the Bank is well poised to take the leap

forward to drive technology towards affording greater customer convenience.

23.4. Cards Management:

The popularity of Dena Debit Card is growing as witnessed by the increase in card base and number of transaction carried out per day. The Debit card base of the Bank has reached 15.48 lacs (grown by 24% Y-on-Y) and the daily transaction also has crossed 61000 mark. The convenience of the Debit Card is now well understood by the customers, as such the issuance of Debit Card across the counter (Insta Card) has also picked up. All the Visa Debit Cards of the Bank being International Card, are acceptable on all VISA ATMs and POS Terminals all over the world. In India it is valid on almost all ATMs and POS Terminals through tie up arrangements like VISA, NFS, Cashtree & Cashnet group of ATMs. Dena VISA cards issued since last two years is also valid for On-line payment as the same is supported by "verified by VISA" i.e. VbV Password.

The POS and On line payments by use of Dena Debit Card have fetched an income of Rs. 1.35 crores in the year Apr 2011 to Mar 2012, i.e. an increase of 53% over last year.

The Bank is not in the business of issuance of Credit Card after discontinuation of Bank`s own credit on 31.12.2008. The Bank has an arrangement for issuance of co-branded Credit Cards with SBICards wherein all the formalities for issuance, operations and credit risk is with SBICards.

24. Customer Service:

24.1 The Bank has concentrated on internalizing customer expectations and aspirations more intensely. During the year, the Bank has continued various measures to improve customer satisfaction.

24.2 Redressal of Customer Grievances:

The Bank is according top priority to resolve customers Rs. complaints/ grievances expeditiously. The customers of the Bank can correspond

directly, through letters, e-mails or through the web*site of the Bank and post their queries / grievances / suggestions, if any. The complaints / suggestions can be registered through Toll Free Number 1800-225740 of the Bank.

24.3 Standing Committee on Procedures & Performance Audit of Customer Service:

Standing Committee on Customer Service is headed by the Chairperson and Managing Director. Besides Executive Director, General Manager (Resource , Planning, Nodal Officer), General Manager (IT), General Manager (Forex & Treasury), General Manager (Credit) are the members of the Committee. Four/ Five customers from different branches are invited for the quarterly meetings. Four such meetings were organized during the Financial year 2011-12.

24.4 In addition to above, the Bank has formed Customer Service Committee of the Board at the apex level to advise measures for enhancing the quality of customer service and improving the level of customer satisfaction. Every Branch holds a customer meet in a month for redressal of customer complaint at the grass root level. Each Regional Office hold a customer meets once in a quarter.

24.5 Code of Bank`s Commitments to the Customers:

A voluntary Code, which sets minimum standards of banking practices for banks to follow when they are dealing with individual customers was introduced by Banking Codes and Standards Board of India constituted by RBI. It provides protection to customer and explains how banks are expected to deal with customers for their day-to-day operations. Provisions of the Code may set higher standards than what is indicated in the regulatory instructions and such higher standards will prevail as the Code represents best practices voluntarily agreed to by us as our commitment to you.

RBI has constituted Banking Codes and Standards Board of India for measuring the performance of banks against a bench mark reflecting the Best Practices (Codes & Standards). The Bank has adopted Rs. Code of Bank`s Commitments to the Customers Rs. and is fully committed to its adherence.

The Bank is a member of BCSBI and a top executive in the rank of General Manager is appointed as the Rs. Code Compliance Officer Rs. on behalf of the Bank.

25. Branch Network and Expansion:

25.1 Branch Network:

During the year 2011-12, Bank has opened 51 new branches taking the tally to 1342 in various Regions including upgradation of Sandheli Satellite Office in to full fledged branch.

The sector-wise breakup of the branch network of the Bank as on 31st March 2012 is as under:

Sector No of Branches % to Total

Rural 493* 37Semi Urban 264 20Urban 260 19Metro 325 24

Total 1342 100

* Including Satellite Branches.

During the current year, Bank propose to open 100 branches in various parts of the country. Bank has consciously included centres where Bank`s presence was negligible or hither to uncovered area.

These centres are mainly in Jharkhand, Bihar, West Bengal, Sikkim, Himachal Pradesh,Tamil Nadu, Orissa and Uttarakhand. Bank has also identified areas/ centres, mostly falling in the category of under Banked areas as well as under Minority dominated districts.

26. Inspection and Internal Audit:

The Bank has an in-built system of effective control and supervision of the functioning of its various branches scattered all over the country. In compliance with guidelines of RBI on audit of branches, Regional Offices and Departments at Head Office, the Inspection & Internal Audit Department is conducting various types of audits through internal inspectors, external Chartered Accountants firms and CISA/DISA qualified IS auditors from time to time and ensures strict adherence to the Bank`s laid down systems and procedures and timely plugging of loop holes, if any. Risk Based Internal Audit, Concurrent Audit, Management Audit, Information Systems Audit, Revenue Audit and Propriety Audit apart from Snap Audit as and when required are conducted. These activities are well documented and guided by the policies approved by Board.

In line with directives of RBI and to comply with requirement under BASEL II accord, Bank has adopted Risk Based Internal Audit (RBIA) for inspection w.e.f. 1st April, 2007. The officials inspecting the branches have been given adequate training for conducting RBIA. During the year the Bank has carried out RBIA of 773 Branches by internally trained inspectors as well as by the experienced empanelled external auditors.

To further strengthen adherence to the systems and control, the Bank geared up monitoring mechanism. Monitoring is done through concurrent audit at various branches by Inspection Department at Corporate Office. The strategic approach with special emphasis on strict adherence to systems and procedures has enabled improvement in the inspection ratings of large number of branches. The effective steps taken are monitored on an ongoing basis for timely rectification of irregularities pointed out in the inspection reports to improve the operational efficiency and regulatory rating of the Bank.

To upgrade the knowledge / audit skills training sessions are conducted for internal inspectors and concurrent auditors.

With the onset of Core Banking System in the organization and all the

branches being brought under its umbrella, Bank has introduced an off-site surveillance system for monitoring of business activities of the branches.

27. Vigilance:

The Bank has an effective set up of Vigilance at its Corporate Office headed by General Manager & Chief Vigilance Officer reporting to Chairperson & Managing Director. General Manager & Chief Vigilance Officer is supported by a team of senior and experienced officers. The role and functions of the Department are Control, Monitoring and Supervision of Vigilance Functions which are Preventive, Investigative and Punitive in nature. The function of the Department also includes reporting and monitoring of frauds.

Preventive Vigilance Committees have been formed at branch level to identify problem areas so as to tone up systems and procedures at the branch level. At each of the training courses a session on `ethical behavior` is included. Workshop for Regional Vigilance Officers is conducted every year to update them on the areas of preventive vigilance, strengthening of internal controls, bringing compliance culture, creation of ethical climate as well as off-site surveillance. Modus operand of each fraud perpetrated on the Bank is displayed on the intranet site and circulated through IBA for the benefit of member banks.

Fraud Risk Management Committee of General Managers is in place which critically evaluates the frauds perpetrated on the Bank, examines the breaches made in the system and procedures and suggests risk mitigation techniques in respect of frauds. Bank has a Board Level Committee for monitoring large value frauds.

The vigilance function in the Bank is supervised and monitored by the Board of Directors who review the pending disciplinary ad fraud cases at regular intervals. A distinction is made between the bonafide and malafide decision/intention of the employee before initiating disciplinary action.

Bank ensures strict implementation of instructions/guidelines on Vigilance functioning received from Government of India, Central Vigilance Commission and Reserve Bank of India.

28. Implementation of Official Language:

28.1 The Bank continued vigorous efforts for implementation of official language Hindi during the financial year under review. During the year Bank`s focus was on implementation of Hindi Softwares through Word Processors, Core Banking Solution and E-mail.

28.2 Awards:

During the year under review Bank was awarded IInd prize by Reserve Bank of India for it `house journal` Dena Jyoti` in bilingual category for the year 2010-11. Bank`s house journal `Dena Jyoti` was also awarded `Bronze Trophy` by the `Association of Business communicators of India` for best article in English. Bank received IInd prize in the competition organized by Maharashtra State Level Bankers` Committee(Rajbhasha), Pune for excellent performance in implementation of official language Hindi in its offices and

Branches situated in the Maharashtra State during 2010-11. Our Jaipur Branch in New Delhi Region was awarded IInd prize by TOLIC Jaipur for excellent work in implementation of Official Language.

Bank has been awarded a "Rajbhasha Award" by a socio -linguistic organization - Ashirwad. Our house journal Dena Jyoti has also been awarded by the same organization.

28.3 Hindi Training:

The Bank continued to conduct special Training Programs to promote the use of Hindi in its offices and branches. During the year Bank has organized General Banking and Hindi Software Training Program for Official Language Officers, who in turn will impart the training to officers and staff members working at various offices and branches.

28.4 During the year under review 87 Hindi Workshops and Hindi Software training programs were conducted in which 675 officers & 513 other employees were trained. In addition to these 107 Desk Training Programs were also conducted to impart practical training to the employees for doing the official work in Hindi.

28.5 Hindi Software:

Keeping pace with the technological changes, bank continued the implementation of bilingual word processing facilities on all computers in use at various administrative offices and branches through Akruti software and Unicode. Bank also reviewed the performance of Hindi Software `Script Magic` for CBS Branches. The Bank launched the revised version of Script Magic Software in July, 2011. Now the software has been placed at the intra-net site of the bank for easy access by the employees. Keeping in view the regular corrections in the finacle software, the process of corrections in the `Script Magic` software will continue during the next year. Hindi Software training programs were conducted to promote the use of these facilities at DIIT Mumbai and other STCs. All the ATMs installed by the Bank have been provided with bilingual access facilities.

28.6 Visit of Parliamentary Committee:

The Drafting and Evidence Sub-Committee of the Committee of Parliament on Official Language has reviewed the performance in implementation of Official Language at the Bank`s M.I. Road, Jaipur Branch (New Delhi Region) on 20-09-2011. The Third Sub Committee of the Committee of Parliament on Official Language has also reviewed the performance of our Kranti Chowk, Aurangabad Branch (Pune Region) on 21.01.2012. During the Review Meetings the Committees discussed with the Executives of our Bank the implementation of Official Language Hindi in the said branches and expressed satisfaction on the progress.

28.7 Use of Hindi in Publicity:

In order to popularize our various schemes among public at large and customers, pamphlets and publicity material of our various schemes were prepared and printed in Hindi.

28.8 Bank Branches / offices in all the three linguistic regions are constantly making efforts for improving level of implementation of official Language Policy of Government of India and striving to make it as a prime medium of communication to improve our customer service. In order to strengthen the specialist officers in the cadre, during the year 6 new Officers have been appointed in various regions.

28.9 Bilingual House Journal:

In order to maximize the role of Official Language Hindi in corporate communication and educating our staff members about various activities and current subjects, during the year under review Bank published all issues of its quarterly house journal `Dena Jyoti` as Special Issue on various banking subjects in bilingual form. The subjects of special issues were Thrust Areas of the Bank, Official Language, Vigilance and Women Development. Articles, news and events are published in bilingual to have its reach to every staff of the bank.

29. Opportunities and Threats:

GDP growth for 2012-13 based on estimated incremental capital - output ratios is projected to be at 7.6%. The recovery in the growth however is expected to be slow in view of slight decline in investment rate during 2011-12. With the fiscal consolidation getting back on track, savings and capital formation should begin to rise. During 2012-13 the aggregate deposits of the scheduled commercial banks are projected to grow at 16% and the non food credit is projected to grow at 17%. However, on the risk side the uncertainties in the crude and petroleum products prices recently accentuated by geo-political developments may impact the domestic growth, inflation and the fiscal and current account deficits.

Keeping in view the aforesaid opportunities and threats and at the same time following the policy guidelines by Reserve Bank of India on the augmentation of the capital and liquidity buffers in line with provisions with regard to implementation of Basel III, the Bank has initiated various measures to equip itself. The Bank by ensuring enhanced liquidity risk management, close credit monitoring to maintain asset quality and focus on enhancing CASA deposits will be able to make maximum of the available opportunities and at the same time insulate itself to any impacts of threats.

30. Outlook for FY 2012-13:

Against the backdrop of uncertain global conditions and fragile domestic demand, the recovery in the economy is expected to remain moderate. With Reserve Bank of India ensuring adequate liquidity cushion in the financial system by adjusting policy rates to sustain growth, at the same time without risking external balance or inflation by excessively fuelling demand, the projected growth for 2012-2013 being higher than 2011-2012, performance of Banking sector is expected to improve.