Axis Bank Limited Annual Report 2011

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FY2011 Annual Report · Axis Bank Limited

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CONTENTS

Managing Director & CEO’s Letter to Shareholders

Board of Directors

Snap Shot of Key Financial Indicators : 2007-2011

Highlights

Directors’ Report

Management’s Discussion & Analysis

Auditors’ Report

Balance Sheet

Profit and Loss Account

Cash Flow Statement

Schedules Forming Part of Balance Sheet

Schedules Forming Part of Profit and Loss Account

Significant Accounting Policies

Notes to Accounts

Auditors’ Certificate on Corporate Governance

Corporate Governance

Auditors’ Report on Consolidated Financial Statements

Consolidated Financial Statements

Disclosures under the New Capital Adequacy Framework
(Basel II Guidelines)

Bank’s Network : List of Centres

109

110

151

169

MANAGING DIRECTOR & CEO’S LETTER
TO THE SHAREHOLDERS

The Bank has reported another successful performance, underpinned by healthy growth of both

business and revenues. We continue to have a fairly well-diversified customer base that spans

both the retail and corporate banking space. This year the Bank has expanded its reach across

the country, adding 407 new branches and 1,977 ATMs. In addition to creating infrastructural

capabilities for the future, we have launched several other initiatives to fulfill product and

service needs of our customers including the launch of an online-broking portal through our

wholly-owned subsidiary, Axis Securities and Sales Limited. The infrastructure business size has

grown well, in line with our expectations and this augurs well for the future, infrastructure

being critical to the country’s growth.

With the Axis family growing manifold over the years, a need was felt to construct a corporate

office with a distinct identity and one which would house our employees in a contemporary, yet

environment-friendly and wholesome workplace. The relocation to Axis House has fulfilled this

aspiration.

The economic outlook for the country continues to be promising despite concerns around rising

inflation. I believe the Bank is truly well-positioned to capitalize on emerging opportunities

across the economy including infrastructure, SME, retail banking and capital markets and will,

therefore, continue to deliver value to its shareholders.

Shikha Sharma

Managing Director & CEO

22nd April 2011

BOARD OF DIRECTORS*

Adarsh Kishore
Shikha Sharma
S. K. Chakrabarti
J. R. Varma
R. H. Patil
Rama Bijapurkar
R. B. L. Vaish
M. V. Subbiah
K. N. Prithviraj
V. R. Kaundinya
S. B. Mathur
S. K. Roongta
Prasad R. Menon
R. N. Bhattacharyya

P. J. Oza

THE CORE MANAGEMENT TEAM

Chairman
Managing Director and CEO
Deputy Managing Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director

Company Secretary

V. Srinivasan
Somnath Sengupta
Snehomoy Bhattacharya
S. K. Nandi
R. K. Bammi
P. Mukherjee
S. S. Bajaj
Vinod George
M. V. Subramanian
S. K. Mitra
B. Gopalakrishnan
Bapi Munshi
C. Babu Joseph
Sonu Bhasin
Sanjeev K. Gupta
V. K. Bajaj
Sidharth Rath
A. R. Gokulakrishnan
Rajendra D. Adsul
R. V. S. Sridhar
Lalit Chawla
Rajesh Kumar Dahiya
Nilesh Shah

*as on 22 April 2011

Executive Director (Corporate Banking)
Executive Director and CFO
Executive Director (Human Resources)
President & Chief Audit Executive
President and Head - Retail Banking
President - Treasury & International Banking
President & Chief Compliance Officer
President - Wholesale Banking Operations
President - Business Banking
President and Head - Distribution
President - Law
President & Chief Risk Officer
Executive Trustee & CEO - Axis Bank Foundation
President and Head - Retail Products & Sales Management
President - Finance & Accounts and Investor Relations
President - Mid Corporates
President - Infrastructure Business
President - Stressed Assets
President - SME
President (Treasury - Global Markets)
President - Corporate Credit
President - Human Resources
President - Strategic Initiatives

M/s Deloitte Haskins & Sells
Chartered Accountants

M/s Karvy Computershare Private Limited
UNIT : AXIS BANK LIMITED
Plot No. 17 to 24, Vithalrao Nagar, Madhapur, Hyderabad - 500 081
Tel. No. : 040-23420815 to 23420824 Fax No. : 040-23420814

Auditors

Registrar and Share Transfer Agent

Registered Office
‘Trishul’, 3rd Floor, Opp. Samartheshwar Temple, Law Garden, Ellisbridge, Ahmedabad - 380 006.
Tel. No. : 079-2640 9322 Fax No : 079-2640 9321 Email : p.oza@axisbank.com, rajendra.swaminarayan@axisbank.com
Web site : www.axisbank.com

Corporate Office
Axis House, Bombay Dyeing Mills Compound, Pandurang Budhkar Marg, Worli, Mumbai – 400 025
Tel. No. : 022-24252525/43252525 and Fax No. : 022-43251800

SNAP SHOT OF KEY FINANCIAL INDICATORS : 2007 - 2011

FINANCIAL HIGHLIGHTS

2006 - 2007 2007 - 2008 2008 - 2009 2009 - 2010 2010 - 2011

(` in crores)

CAGR
(5 Years)

Total Deposits

58,785.60

87,626.22

117,374.11

141,300.22 189,237.80

36.38%

- Saving Bank Deposits

12,125.88

19,982.41

25,822.12

33,861.80

40,850.31

38.33%

- Current Account Deposits

11,304.31

20,044.58

24,821.61

32,167.74

36,917.09

35.88%

Total Advances

36,876.48

59,661.14

81,556.77

104,340.95 142,407.83

44.87%

- Retail Advances

8,927.54

13,591.68

16,051.78

20,820.73

27,759.23

33.73%

Total Investments

26,897.16

33,705.10

46,330.35

55,974.82

71,991.62

27.31%

Shareholders' Funds

3,393.23

8,768.50

10,213.59

16,044.45

18,998.83

45.92%

Total Assets/Liabilities

73,257.22

109,577.85

147,722.05

180,647.85 242,713.37

37.31%

Net Interest Income

1,468.33

2,585.35

3,686.21

5,004.49

6,562.99

43.51%

Other Income

1,010.11

1,795.49

2,896.88

3,945.78

4,632.13

44.72%

Operating Revenue

2,478.44

4,380.84

6,583.09

8,950.27

11,195.12

44.00%

Operating Expenses

1,214.59

2,154.92

2,858.21

3,709.72

4,779.43

42.48%

Operating Profit

1,263.85

2,225.92

3,724.88

5,240.55

6,415.69

45.21%

Provisions and Contingencies

604.82

1,154.89

1,909.52

2,726.02

3,027.20

42.86%

Net Profit

659.03

1,071.03

1,815.36

2,514.53

3,388.49

47.52%

FINANCIAL RATIOS

2006 - 2007 2007 - 2008 2008 - 2009 2009 - 2010 2010 - 2011

Earnings Per Share (Basic) (in `)

23.50

32.15

50.61

65.78

82.95

Book Value (in `)

Return on Equity

Return on Assets

120.50

245.14

284.50

395.99

462.77

21.84%

16.09%

19.93%

19.89%

20.13%

1.10%

1.24%

1.44%

1.67%

1.68%

Capital Adequacy Ratio (CAR)

11.57%

13.73%

13.69%

15.80%

12.65%

Tier I Capital (CAR)

6.42%

10.17%

9.26%

11.18%

9.41%

Dividend Per Share (in `)

4.50

6.00

10.00

12.00

14.00

Dividend Payout Ratio

22.58%

23.49%

23.16%

22.57%

19.78%

HIGHLIGHTS

Profit after tax up 34.76% to `3,388.49 crores

Net Interest Income up 31.14% to `6,562.99 crores

Fee & Other Income up 32.39% to `4,135.16 crores

Deposits up 33.93% to `189,237.80 crores

Demand Deposits up 17.78% to `77,767.40 crores

Advances up 36.48% to `142,407.83 crores

Retail Assets up 33.32% to `27,759.23 crores

Network of branches and extension counters increased from 983 to 1,390

Total number of ATMs went up from 4,293 to 6,270

Net NPA ratio as a percentage of net customer assets down to 0.26% from 0.36%

Earnings per share (Basic) increased from `65.78 to `82.95

Proposed Dividend up from 120% to 140%

Capital Adequacy Ratio stood at 12.65% as against the minimum regulatory norm of 9%

DIRECTORS’ REPORT: 2010-11

The Board of Directors is pleased to present the Seventeenth Annual Report of the Bank together with the Audited
Statement of Accounts, Auditors’ Report and the report on business and operations of the Bank for the financial year ended
31 March, 2011.

FINANCIAL PERFORMANCE

The financial highlights for the year under review are presented below:

PARTICULARS
Deposits
Out of which
l Savings Bank Deposits
• Current Account Deposits
Advances
Out of which
• Retail Advances
• Non-retail Advances
Total Assets/Liabilities
Net Interest Income
Other Income
Out of which
• Trading Profit (1)
• Fee & other income
Operating Expenses excl. depreciation
Profit before depreciation, provisions and tax
Depreciation
Provision for Tax
Other Provisions & Write offs
Net Profit
Appropriations :
Transfer to Statutory Reserve
Transfer to/(from) Investment Reserve
Transfer to Capital Reserve
Transfer to General Reserve
Proposed Dividend
Surplus carried over to Balance Sheet
(1) Excluding Merchant Exchange Profit

2010-11
189,237.80

2009-10
141,300.22

40,850.31
36,917.09
142,407.83

27,759.23
114,648.60
242,713.37
6,562.99
4,632.13

496.97
4,135.16
4,489.84
6,705.28
289.59
1,747.17
1,280.03
3,388.49

847.12
(14.94)
4.76
338.85
670.36
1,542.34

33,861.80
32,167.74
104,340.95

20,820.73
83,520.22
180,647.85
5,004.49
3,945.78

822.38
3,123.40
3,475.40
5,474.87
234.32
1,336.83
1,389.19
2,514.53

628.63
14.88
223.92
0.31
567.45
1,079.34

(` in crores)

Growth
33.93%

20.64%
14.76%
36.48%

33.32%
37.27%
34.36%
31.14%
17.39%

(39.57%)
32.39%
29.19%
22.47%
23.59%
30.70%
(7.86%)
34.76%

34.76%
-
(97.87%)
-
18.14%
42.90%

KEY PERFORMANCE INDICATORS
Interest Income as a percentage of working funds*
Non-Interest Income as a percentage of working funds*
Net Interest Margin
Return on Average Net Worth
Operating Profit as a percentage of working funds*
Return on Average Assets
Profit per employee**
Business (Deposits less inter-bank deposits + Advances) per employee**
Net non performing assets as a percentage of net customer assets ***

* Working funds represent average total assets.
** Productivity ratios are based on average number of employees for the year.
*** Customer Assets include advances and credit substitutes.

Previous year figures have been regrouped wherever necessary.

2010-11
7.49%
2.29%
3.65%
20.13%
3.17%
1.68%
`14.35 lacs
`13.66 crores
0.26%

2009-10
7.73%
2.62%
3.75%
19.89%
3.48%
1.67%
`11.63 lacs
`11.11 crores
0.36%

In 2010-11 both business and earnings grew
strongly with the Bank reporting a net profit
of `3,388.49 crores for the year ended 31
March, 2011, rising 34.76% over the net
profit of `2,514.53 crores in the previous
year. The solid growth of business across
segments has been reflected in a set of robust
financial indicators.

(` in crores)

3,388

RISING PROFITABILITY

11,195

8,950

2,515

1,815

1,071

659

6,583

4,381

2,478

2006-07

Net Profit

2007-08 2008-09 2009-10 2010-11

The Bank’s total income increased 26.97%
to reach `19,786.94 crores during 2010-
11, compared to `15,583.80 crores last
year. Operating revenue during this period
increased 25.08% to `11,195.12 crores
while operating profit increased by 22.42%
to `6,415.69 crores. The growth in revenues may be attributed to the performance of the Bank’s core income streams: net
interest income (NII), fee and other income. NII increased by 31.14% to `6,562.99 crores from `5,004.49 crores last year,
while fee and other income increased by 17.39% to `4,632.13 crores from `3,945.78 crores last year. NII increased by
31.14% as a result of healthy growth of both assets and low-cost Current Account and Savings Bank (CASA) deposits, on
a daily average basis. During the year, total earning assets, on a daily average basis, rose 34.70% to `179,573 crores from
`133,309 crores last year. A 32.81% growth of low-cost CASA deposits, on a daily average basis, from `44,839 crores last
year to `59,551 crores, helped the Bank contain funding costs, which had risen in the last quarter of the year due to the
hardening of interest rates on term deposits.

2006-07 2007-08 2008-09 2009-10 2010-11

Operating Revenue

936

497

822

374

4,135

3,123

2,523

1,542

fees,

(` in crores)

TRADING PROFITS

income comprising

FEE & MISCELLANEOUS INCOME

Other
trading
profit and miscellaneous income also rose
17.39% to `4,632.13 crores in 2010-11
from `3,945.78 crores last year. Fee income
constituted 33.86% of the operating revenue
of the Bank and rose 29.59% to `3,790.37
crores from `2,924.96 crores last year. The
Bank earns fee income from a diverse set
of products and businesses such as client-
based merchant foreign exchange trade,
service charges from account maintenance,
cash
transaction
including
management
syndication and
placement fees, processing fees from loans
and commission on non-funded products such as letters of credit and bank guarantees, inter-change fees on ATM-sharing
arrangements and fee income from the distribution of third-party personal investment products. During the year, proprietary
trading profits fell 39.57% to `496.97 crores from `822.38 crores last year, primarily due to adverse market conditions
in the debt and equity markets. Miscellaneous income was buoyant, rising 73.75% mainly due to strong recoveries of
loans and derivative receivables written-off in previous years. During the year, such recoveries amounted to `325.22 crores
compared to `174.43 crores last year.

banking
services,

2006-07 2007-08 2008-09 2009-10 2010-11

2007-08 2008-09 2009-10 2010-11

2006-07

254

During the year, the operating revenue of the Bank increased 25.08% to `11,195.12 crores from `8,950.27 crores last
year. The core income streams (NII, fee and miscellaneous income) constituted 95.56% of the operating revenue, reflecting
the stability and sustainability of the Bank’s earnings. Operating expenses increased by 28.84% to `4,779.43 crores from
`3,709.72 crores last year, on the back of the continuing growth of the Bank’s network and infrastructure required for
supporting existing and new businesses. During the year, the Cost: Income ratio was 42.69% compared to 41.45% last
year.

During the year, the operating profit of the Bank increased 22.42% to `6,415.69 crores from `5,240.55 crores last year.
During this period, provisions (excluding provisions for tax) charged to the Profit & Loss account were `1,280.03 crores
compared to `1,389.19 crores last year. Of this, provisions for loan losses were `955.12 crores compared to `1,357.04 crores
last year, while the provision for standard assets was `166.16 crores. The Bank accelerated its provisioning requirements in
some portfolios as a measure of prudence, increasing the overall provision coverage. The Bank also provided `15.06 crores
compared to `56.47 crores last year against restructured assets. During 2010-11, the Bank restructured loans of `404

crores, significantly lower than `1,633 crores last year. The Bank continued to maintain a generally healthy asset-quality
with a ratio of Gross NPAs to gross customer assets of 1.01% compared to 1.13% last year and a Net NPA ratio (percentage
of Net NPAs as percentage of net customer assets) of 0.26% compared to 0.36% last year. With higher levels of provisions,
built over and above regulatory norms during the year, the Bank has further improved its provision-coverage to 80.90%
(after considering prudential write-offs) from 72.38% last year.

463

285

245

396

121

19.9

20.1

19.9

16.1

21.8

1.44%

1.24%

1.10%

1.67% 1.68%

RETURN ON ASSETS

SHAREHOLDER RETURNS

Due to a consistent trajectory of core
earnings, there has been an all-round
improvement in various financial
metrics. The Return on Equity (RoE)
improved to 20.13% from 19.89%
last year. Basic Earnings Per Share
(EPS) rose to `82.95 from `65.78
last year, while the Diluted Earnings
Per Share was `81.61 compared to
`64.31 last year. The Book Value
Per Share increased from `395.99
on 31 March, 2010 to `462.77 on
31 March, 2011, while Return on
Assets (RoA) improved to 1.68%
from 1.67% last year. Employee productivity has also improved with Profit per Employee increasing to `14.35 lacs from
`11.63 lacs last year and Business per Employee increasing to `13.66 crores from `11.11 crores last year. Hardening of
interest rates on Term Deposits in the final quarter of the year pushed up the cost of funds, compressing the Net interest
Margin by 10 basis points of the year to 3.65% from 3.75% last year. The quarterly NIMs during the year were as follows:
3.71% in Q1, 3.68% in Q2, 3.81% in Q3 and 3.44% in Q4.

2006-07 2007-08 2008-09 2009-10 2010-11
Return on Average Net Worth (%)

2006-07 2007-08 2008-09 2009-10 2010-11
Book value per Share (`)

2006-07 2007-08 2008-09 2009-10 2010-11

The total assets of the Bank were `242,713 crores, rising 34.36% from `180,648 crores last year. As on 31 March, 2011,
total deposits stood at `189,238 crores against `141,300 crores last year, a growth of 33.93%. Low-cost demand deposits:
Current Accounts and Savings Bank (CASA) deposits were `77,767 crores as on 31 March, 2011 against `66,030 crores
last year, constituting 41.10% of total deposits as compared to a proportion of 46.73% last year. At the end of March
2011, Savings Bank deposits increased by 20.64% to `40,850 crores, while current account deposits increased by 14.76%
to `36,917 crores. During 2010-11, the percentage share of CASA in total deposits, on a daily average basis, was 39.40%
compared to 40.39% last year. On a daily average basis, Savings Bank deposits increased by 36.03% to `36,072 crores,
while Current Account deposits increased by 28.15% to `23,479 crores. During the year, total advances increased by
36.48% to `142,408 crores. Of this, corporate advances (comprising large, infrastructure and mid-corporate accounts)
grew 44.60% to `75,922 crores. During this period, advances to the SME segment increased by 17.17% to `21,406 crores,
while agricultural lending (including lending to microfinance) stood at `17,320 crores, increasing 35.88% over the last year.
Retail loans increased 33.32% to `27,759 crores. The total investments of the Bank increased 28.61% to `71,992 crores.
Investments in government and approved securities, mainly held to meet the Bank’s SLR requirement, increased 29.25%
to `44,198 crores. Other investments, including corporate debt securities, increased 27.62% to `27,794 crores. As on
31 March, 2011, the total assets of the Bank’s overseas branches stood at `22,245 crores constituting 9.16% of the Bank’s
total assets.

INCREASING REACH
921

1,390

983

792

643

515

644

544

405

332

2,764

2,341

6,270

4,293

3,595

2006-07 2007-08 2008-09 2009-102010-11

BRANCHES + Extn. Counters

CENTRES COVERED

ATMs

to enlarge

As a conscious strategy of building
a network of branches and ATMs
the
with effective penetration,
Bank continued
its
geographical coverage of centres
with potential for growth, especially
in the areas with potential for low-
cost CASA deposits, lending to
retail, agriculture and SME segments
and the distribution of third party
products. During the year, 407 new
branches were added to the Bank’s
network taking the total number of
branches and extension counters

(ECs) to 1,390. Of these, 564 branches/ECs are in semi-urban and rural areas and 826 branches/ECs are in metropolitan
and urban areas. The Bank is present in all states and Union Territories (except Lakshadweep) covering 921 centres. The
ATM network of the Bank increased from 4,293 last year to 6,270 as on 31 March, 2011. During the year, the Bank also
opened a Representative Office in Abu Dhabi. This was in addition to the existing branches at Singapore, Hong Kong and
DIFC (Dubai International Financial Centre) and representative offices at Shanghai and Dubai.

CAPITAL & RESERVES

The Bank is well capitalised at present with an overall Capital
Adequacy Ratio (CAR) of 12.65% at the end of the year, well
above the benchmark requirement of 9% stipulated by Reserve
Bank of India. Of this, Tier I CAR was 9.41% against 11.18% a
year earlier, while the Tier II CAR was at 3.24% against 4.62%
a year earlier.

During the year under review, 5,371,724 equity shares were
allotted to employees of the Bank pursuant to the exercise of
options under its Employee Stock Option Scheme. The paid-up
capital of the Bank as on 31 March, 2011 rose to `410.55 crores
from `405.17 crores as on 31 March, 2010. The shareholding
pattern of the Bank as of 31 March, 2011 is stated below.

ENHANCING SHAREHOLDER VALUE

81.61

64.31

50.27

140

120

100

31.31

22.79

2006-07 2007-08 2008-09 2009-10 2010-11

Earning Per Share (Diluted) `

2006-07 2007-08 2008-09 2009-10 2010-11
Dividend (%)

Sr. No.
i.
ii.
iii.
iv.
v.
vi.
vii.

Name of Shareholders

Administrator of the Specified Undertaking of the Unit Trust of India (SUUTI)
Life Insurance Corporation of India
General Insurance Corporation and four PSU Insurance Companies
Overseas Investors including FIIs/OCBs/NRIs
Foreign Direct Investment (GDR issue)
Other Indian Financial Institutions/Mutual Funds/Banks
Others
Total

% of Paid Up Capital
23.68
9.56
3.97
37.89
9.19
5.12
10.59
100.00

The Bank’s shares are listed on the NSE and the BSE. The GDRs issued by the Bank are listed on the London Stock Exchange
(LSE). The Bonds issued by the Bank under the MTN programme are listed on the Singapore Stock Exchange. The listing
fees relating to all stock exchanges for the current year have been paid. With effect from 26 March, 2001, the shares of
the Bank have been included and traded in the BSE’s Group ‘A’ stocks. With effect from 27 March, 2009, the Bank’s shares
have been included and traded as part of the main NIFTY Index of the NSE. Earlier, the shares of the Bank were part of the
NIFTY Junior Index of the NSE.

DIVIDEND

In view of the overall performance of the Bank and the objective of rewarding shareholders with cash dividends while
retaining capital to maintain a healthy capital adequacy ratio to support future growth, the Board of Directors has
recommended a higher dividend of `14.00 per equity share, compared to `12.00 per equity share declared for 2009-10.
This dividend shall be subject to tax on dividend to be paid by the Bank. This increase reflects our confidence in the Bank’s
ability to consistently grow earnings over time.

BOARD OF DIRECTORS

During the year, some changes have taken place in the composition of the Board of Directors. Shri M. S. Sundara Rajan,
former Chairman and Managing Director of Indian Bank, was appointed as an Additional Independent Director with effect
from 8 June, 2010. He resigned with effect from 22 February, 2011. Shri S. K. Roongta, former Chairman of SAIL, was
appointed as an Additional Independent Director with effect from 15 July, 2010. Shri S. K. Chakrabarti, former Executive
Director (Retail Banking, SME and Agri.) of the Bank was appointed as the Deputy Managing Director of the Bank with
effect from 27 September, 2010. Shri Prasad R. Menon, former Managing Director, Tata Power Limited, was appointed
as an Additional Independent Director with effect from 9 October, 2010. Shri R. N. Bhattacharyya, former IPS officer and
nominee of the Specified Undertaking of the Unit Trust of India (SUUTI) was appointed as an Additional Director with effect
from 17 January, 2011.

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Bank, Shri R. B. L. Vaish and
Shri K. N. Prithviraj retire by rotation at the Seventeenth Annual General Meeting and, being eligible, offer themselves for

re-appointment as Directors of the Bank. Shri J. R. Varma also retires by rotation but he has expressed his desire not to be
re-appointed as his term of continuous period of eight years as Director under the provisions of Section 10-A(2-A)(i) of the
Banking Regulation Act, 1949, comes to an end with effect from 25 June, 2011.

SUBSIDIARIES

The Bank has set up six wholly-owned subsidiaries: Axis Securities and Sales Ltd., Axis Private Equity Ltd., Axis Trustee
Services Ltd., Axis Asset Management Company Ltd., Axis Mutual Fund Trustee Ltd. and Axis U.K. Ltd.

Axis Securities and Sales Ltd. is primarily in the business of marketing of credit cards and retail asset products as well as
retail broking. The objective of this subsidiary is to build a specialised force of sales personnel and optimise operational
efficiency by providing greater control over the sales functions, as compared to a Direct Sales Agent (DSA) model, as well as
undertake retail broking business. Axis Private Equity Ltd., primarily carries on the activities of managing equity investments
and provides venture capital support to businesses. Axis Trustee Services Ltd. is engaged in trusteeship activities (e.g.
acting as debenture trustee and as trustee to various securitisation trusts). Axis Asset Management Company Ltd. primarily
undertakes the activities of managing a mutual fund business and the Axis Mutual Fund Trustee Ltd. was set up to act as
the trustee for the mutual fund business. On 7 March, 2011, the Bank has incorporated a new subsidiary namely Axis U.K.
Ltd. as a private limited company registered in the United Kingdom (UK) with the main purpose of filing an application with
Financial Services Authority (FSA), UK for a banking license in the UK and for the creation of necessary infrastructure for the
subsidiary to commence banking business in the UK. As on 31 March, 2011, Axis U.K. Ltd. had not commenced operations.

In terms of an exemption received from the Ministry of Corporate Affairs, Government of India through its letter no.
47/19/2011-CL-III dated 21 January, 2011, under Section 212(8) of the Companies Act, 1956, copies of Directors’ Reports,
Auditors’ Reports and the financial statements of the five subsidiaries (Axis Securities and Sales Ltd., Axis Private Equity
Ltd., Axis Trustee Services Ltd., Axis Asset Management Company Ltd. and Axis Mutual Fund Trustee Ltd.) have not been
attached to the accounts of the Bank for the financial year ended 31 March, 2011. Any shareholder who may be interested
in obtaining a copy of the aforesaid documents may write to the Company Secretary at the Registered Office of the Bank.
These documents will also be available for examination by shareholders of the Bank at its Registered Office. Documents
related to individual subsidiaries will similarly be available for examination at the respective registered offices of the five
companies. In line with the Accounting Standard 21 (AS 21) issued by the Institute of Chartered Accountants of India, the
consolidated financial results of the Bank along with its subsidiaries for the year ended 31 March, 2011 are enclosed as an
Annexure to this report.

PROPOSED ACQUISITION OF ENAM SECURITIES PVT. LTD. BY AXIS SECURITIES AND SALES LTD.

At their meetings held on 17 November, 2010, the Board of Directors of the Bank, Enam Securities Private Limited (ESPL)
and Axis Securities and Sales Limited (ASSL), a wholly-owned subsidiary of the Bank, approved the acquisition of certain
businesses undertaken by ESPL directly and through its wholly owned subsidiaries, by ASSL by way of a demerger. It is
envisaged that these businesses will be transferred to ASSL, pursuant to a Scheme of Arrangement, as may be approved by
the relevant High Courts under Sections 391 to 394 and other relevant provisions of the Companies Act, 1956 and subject
to receipt of necessary requisite approvals. The appointed date for the purpose of the Demerger under the Scheme shall be
1 April, 2010. The valuation of ESPL business was assessed at `2,067 crores in consideration for the demerger, the Bank will
issue shares in the ratio of 5.7 equity shares of the Bank (aggregating 13,782,600 equity shares) of the face value of `10
for every 1 equity share (aggregating 2,418,000 equity shares) of `10 each held by shareholders of ESPL.

EMPLOYEE STOCK OPTION PLAN (ESOP)

The Bank has instituted an Employee Stock Option Scheme to enable its employees and the employees of its subsidiaries
including whole-time Directors, to participate in the future growth and financial success of the Bank. Under the Scheme
40,517,400 options can be granted to employees. The employee stock option scheme is in accordance with the Securities
and Exchange Board of India (Employee Stock Option and Employee Stock Purchase Scheme) Guidelines, 1999. The eligibility
and number of options to be granted to an employee is determined on the basis of the employee’s work performance and
is approved by the Board of Directors.

The Bank’s shareholders approved plans for the issuance of stock options to employees in February 2001, June 2004,
June 2006, June 2008 and June 2010. Under the first two plans and upto the grant made on 29 April, 2004, the option
conversion price was set at the average daily high-low price of the Bank’s equity shares traded during the 52 weeks
preceding the date of grant at the Stock Exchange which has had the maximum trading volume of the Bank’s equity share
during that period. Under the third plan and with effect from the grant made by the Bank on 10 June, 2005, the pricing
formula has been changed to the closing price on the day previous to the grant date. The Remuneration and Nomination
Committee granted options under these plans on ten occasions: 1,118,925 during 2000-01, 1,779,700 during 2001-02,
2,774,450 during 2003-04, 3,809,830 during 2004-05, 5,708,240 during 2005-06, 4,695,860 during 2006-07, 6,729,340
during 2007-08, 2,677,355 during 2008-09, 4,413,990 during 2009-10 and 2,915,200 during 2010-11. The options

granted, which are non-transferable, vest at rates of 30%, 30% and 40% on each of three successive anniversaries
following the grant, subject to standard vesting conditions, and must be exercised within three years of the date of vesting.
As of 31 March, 2011, 21,709,978 options had been exercised and 11,122,518 options were in force.

Other statutory disclosures as required by the revised SEBI guidelines on ESOPs are given in the Annexure to this report.

CORPORATE GOVERNANCE

The Bank is committed to achieving the highest standards of corporate governance and it aspires to benchmark itself with
international best practices in this regard. The corporate governance practices followed by the Bank are enclosed as an
Annexure to this report.

The Bank has adopted a major part of the recommendations contained in the Corporate Governance Voluntary Guidelines
2009 issued by the Ministry of Corporate Affairs and is examining the possibility of implementing the remaining
recommendations.

DIRECTORS’ RESPONSIBILITY STATEMENT

The Board of Directors hereby declares and confirms that:

The applicable accounting standards have been followed in the preparation of the annual accounts and proper
explanations have been furnished, relating to material departures.

ii. Accounting policies have been selected, and applied consistently and reasonably, and prudent judgements and
estimates have been made so as to give a true and fair view of the state of affairs of the Bank and of the Profit & Loss
of the Bank for the financial year ended 31 March, 2011.

iii. Proper and sufficient care has been taken for the maintenance of adequate accounting records, in accordance with
the provisions of the Companies (Amendment) Act, 2000, for safeguarding the assets of the Bank and for preventing
and detecting fraud and other irregularities.

iv. The annual accounts have been prepared on a going concern basis.

The Bank has in place a system to ensure compliance of all laws applicable to the Bank.

STATUTORY DISCLOSURE

Considering the nature of activities of the Bank, the provisions of Section 217(1)(e) of the Companies Act, 1956 relating to
conservation of energy and technology absorption do not apply to the Bank. The Bank is, however, constantly pursuing its
goal of technological upgradation in a cost-effective manner for delivering quality customer service.

The statement containing particulars of employees as required under Section 217(2A) of the Companies Act, 1956 and the
rules thereunder, is given in an Annexure appended hereto and forms part of this report. In terms of Section 219(1) (iv) of
the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any shareholder
interested in obtaining a copy of the Annexure may write to the Company Secretary at the Registered Office of the Bank.

AUDITORS

M/s Deloitte Haskins & Sells, Chartered Accountants, Statutory Auditors of the Bank will retire on the conclusion of the
Seventeenth Annual General Meeting and are eligible for re-appointment, subject to the approval of Reserve Bank of India
and of the shareholders. As recommended by the Audit Committee of the Board, the Board of Directors has proposed the
appointment of M/s Deloitte Haskins & Sells, Chartered Accountants as Statutory Auditors for the financial year 2011-12.
The shareholders are requested to consider their appointment on the remuneration to be decided by the Audit Committee
of the Board.

ACKNOWLEDGEMENTS

The Board of Directors places on record its gratitude to the Reserve Bank of India, other government and regulatory
authorities, financial institutions and correspondent banks for their strong support and guidance. The Board acknowledges
the support of the shareholders and also places on record its sincere thanks to its valued clients and customers for their
continued patronage. The Board also expresses its deep sense of appreciation to all employees of the Bank for their strong
work ethic, excellent performance, professionalism, team work, commitment, and initiative which has led to the Bank
making commendable progress in today’s challenging environment.

Place : Mumbai

Date : 22nd April, 2011

For and on behalf of the Board of Directors

Adarsh Kishore

Chairman

24 Feb. 2001

28 Feb. 2002

6 May 2003

29 April 2004

10 June 2005

17 April 2006

17 April 2007

21 April 2008

20 April 2009

13 July 2009

7 Sept. 2009

38.63

29.68

39.77

97.62

232.10

319.00

468.90

824.40

503.25

738.25

907.25

ANNEXURE

STATUTORY DISCLOSURES REGARDING ESOP (FORMING PART OF THE DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 MARCH, 2011)

ESOS 2000-01
(Grant date)

Exercise Price
(`)

Options
Granted

Options
Exercised
& Shares
Allotted*

Options
lapsed/
cancelled

Total Options
(in force)
As on
March 31, 2011

Options
Vested

1,118,925

1,036,969

81,956

1,779,700

1,668,835

110,865

2,774,450

2,470,907

303,543

3,809,830

3,288,363

521,467

5,708,240

4,559,337

911,259

4,695,860

3,569,590

591,788

Money
realised by
exercise of
options
(` in lacs)

400.58

495.31

982.68

3,210.10

237,644

534,482

237,644

10,582.22

534,482

11,386.99

6,729,340

3,892,682

866,182

1,970,476

18,252.79

2,677,355

4,263,990

100,000

50,000

598,327

130,973

624,968

226,361

1,948,055

3,412,661

100,000

50,000

43,000

2,680,500

3,000

10,000

178,700

987,915

703,783

30,000

15,000

4,932.61

3,145.15

36,622,890

21,709,978

3,790,394

11,122,518

4,479,300

53,388.43

20 April 2010

1,159.30

2,723,500

7 June 2010

8 June 2010

Total

1,245.45

1,214.80

10,000

181,700

* One (1) share would arise on exercise of one (1) stock option

Other details are as under:

Pricing Formula

Fixed Price i.e. The average daily high – low price of the shares of the
Bank traded during the 52 weeks preceding the date of grant at that
stock exchange which has had the maximum trading volume of the
Bank’s share during that period.

For options granted on and after 10 June, 2005, the exercise price
considered is the closing market price as on the day preceding the
date of the grant at that stock exchange which has had the maximum
trading volume of the Bank’s share.

Variation in terms of ESOP

Details of options granted:

None

•

Employee wise details of grants to Senior managerial
personnel

Managing Director & CEO : 275,000 options
Deputy Managing Director : 270,380 options

Employees who were granted, during any one year,
options amounting to 5% or more of the options granted
during the year

Managing Director & CEO : 175,000 options

Identified employees who were granted options, during
any one year, equal or exceeding 1% of the issued capital
(excluding outstanding warrants and conversions) of the
Bank under the grant

None

Diluted Earnings Per Share pursuant to issue of shares on
exercise of options calculated in accordance with Accounting
Standard (AS) 20 ‘Earnings Per Share’

`81.61 per share

Weighted average exercise price of Options whose:

•

Exercise price equals market price

Weighted average exercise price of the stock options granted during
the year is `1,163.05.

Exercise price is greater than market price

Exercise price is less than market price

Nil

Weighted average fair value of Options whose:

•

Exercise price equals market price

Weighted average fair value of the stock options granted during the
year is `485.98.

Exercise price is greater than market price

Exercise price is less than market price

Nil

Fair Value Related Disclosure

•

Increase in the employee compensation cost computed
at fair value over the cost computed using intrinsic cost
method

`107.97 crores

Net Profit, if the employee compensation cost had been
computed at fair value

`3,280.52 crores

Basic EPS, if the employee compensation cost had been
computed at fair value

`80.31 per share

Diluted EPS, if the employee compensation cost had been
computed at fair value

`79.01 per share

Significant Assumptions used to estimate fair value

•

Risk free interest rate

Expected life

Expected Volatility

Dividend Yield

5.98%-7.17%

2 - 4 years

54.72% - 61.66%

1.24%-1.32%

Price of the underlying share in the market at the time of
option grant

During the year, three grants have been made at the following prices:
`1,159.30
`1,245.45
`1,214.80

STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956
RELATING TO SUBSIDIARY COMPANIES

Sr.
No.

Name of the
Subsidiary
Company

Financial
year end
of the
subsidiary

Extent of
interest of
Axis Bank in
the capital of
the subsidiary

Number of
equity shares
held by Axis
Bank and/or
its nominees
in subsidiary
as on 31
March, 2011

Net aggregate amount
of profits/(losses) of
the subsidiary so far
as it concerns the
members of Axis Bank
Ltd. and is not dealt
with in the accounts of
Axis Bank Ltd. for the
financial year ended
31 March, 2011
(` in thousands)

Net aggregate amount
of profits/(losses) of the
subsidiary so far as it
concerns the members
of Axis Bank Ltd. and is
dealt with or provided
for in the accounts of
Axis Bank Ltd. for the
financial year ended
31 March, 2011
(` in thousands)

1. Axis Securities

31-3-2011

and Sales
Limited

Axis Private
Equity Limited

31-3-2011

Axis Trustee
Services
Limited

Axis Mutual
Fund Trustee
Limited

Axis Asset
Management
Company
Limited

80,000,000
shares of
`10.00 each
fully paid up

15,000,000
shares of
`10.00 each
fully paid up

1,500,000
shares of
`10.00 each
fully paid up

50,000 shares
of `10.00 each
fully paid up

124,000,000
shares of
`10.00 each
fully paid up

100%

(81,719)

100%

24,259

100%

81,008

100%

219

100%

(454,449)

Nil

R. H. Patil
Director

Sushil Kumar Roongta
Director

R. B. L. Vaish
Director

S. B. Mathur
Director

P. J. Oza
Company Secretary

Somnath Sengupta
Executive Director & CFO

Date : 22nd April, 2011
Place: Mumbai

For Axis Bank Ltd.

Adarsh Kishore
Chairman

Shikha Sharma
Managing Director & CEO

S. K. Chakrabarti
Deputy Managing Director

MANAGEMENT’S DISCUSSION AND ANALYSIS

MACRO-ECONOMIC ENVIRONMENT

The Indian economy has emerged rapidly from the slowdown caused by the global financial crisis of 2007-09 and remains
one of the fastest growing economies of the world. After dipping to 6.8% in 2008-09, GDP growth had recovered sharply
to 8% and is projected to remain above this level in 2010-11. Economic and financial events over the year, however, have
increased concerns about the sustainability of the growth momentum.

On the global front, although some of the developed economies seemed to have recovered quickly in the latter half of
2010, they now face growing headwinds, which will probably lead to a moderation of growth in the latter half of 2011.
Europe’s sovereign debt burden continues to remain high on investors’ minds, despite the establishment of the European
Financial Stability Facility and the fragile fiscal situation of ‘peripheral’ Europe will cast a shadow on the relatively stronger
‘core’. The US mortgage market remains weak and employment creation is still not strong enough to sustain the currently
improved growth prospects. Japan’s economic trajectory remains uncertain. China is actively working to cool down its
economy, and so are the central banks of many large emerging markets. Three concerns are likely to persist in 2011-12:
high inflation, fiscal stress and the current account deficit. The impact of each of these is likely to be felt with varying
intensity during the course of 2011-12.

High and persisting inflation has emerged as a significant risk factor in sustaining India’s growth. Initially confined to
high food prices, which had persisted despite a good monsoon, inflationary pressures are spilling over to other non-food
segments, including manufactured products. Globally, food prices had spiked in 2010 due to supply disruptions in major
crop geographies. Commodity prices had increased on prospects of higher growth in developed markets and in the latter
part of the year, so have crude prices. In general, higher global metals and commodity prices have contributed to rising
input costs for India, which may be progressively passed on to consumers.

The second stress point has been a high fiscal deficit, which had increased in the two previous years as a result of the fiscal
stimulus introduced to counter the effects of the financial crisis. Persisting high fiscal deficits have the effect of increasing
interest rates, due to the consequent market borrowings by the Government, thereby squeezing private investments. The
Budget for 2011-12 has attempted to restrain the deficit, in line with the earlier stated intention of adhering to the Fiscal
Responsibility and Budget Management agreement (FRBM).

The third concern was a high current account deficit, particularly in the context of weakening capital flows, which have
hitherto managed to compensate the rising trade deficit. The current account deficit was a manifestation of strong domestic
demand (which fuelled imports) and global weakness (which kept export performance moderate). This pressure has abated
somewhat during the past few months, with rising exports and slowing (non-oil) imports. However, a strong rebound
in India’s exports over the past couple of months has considerably reduced the pressure, but India’s overall balance of
payments remains weaker than expected, putting pressure on the Rupee.

Although capital inflows have remained strong, there have also been large outflows from India, leaving only a moderate
Balance of Payments surplus of $11 billion during April-December after offsetting the large current account deficit. Foreign
direct investments as well as portfolio investments have slowed in Q3 of fiscal 2011, offsetting the increase in banking
capital and external borrowings. In addition, it was perceived that a large part of the compensating capital flows were
portfolio flows, which are considered to be volatile.

The banking sector, which remains the primary channel of financial intermediation, has seen a slowdown in deposit
growth in 2010-11, due to multiple factors. Public holding of cash increased sharply in the early part of the year and has
subsequently remained high. As highlighted earlier, net foreign funds inflows have also remained relatively subdued, with
the large portfolio inflows early in the year being balanced by capital outflows and the high merchandise trade deficit. A
third factor was an unusually large accretion of central Government surpluses, partially due to the telecom 3G auctions,
which had remained sequestered with the RBI over much of the year.

The Reserve Bank of India (RBI) has sought to contain inflation and temper inflationary expectations with a gradual and
calibrated monetary policy tightening, beginning in early 2010. The initial intention was moving from an accommodative
phase into normalisation, but thereafter changed into a tightening phase with confidence about growth impulses remaining
robust and concerns about persisting high inflation. Combined with the tight liquidity conditions, this has resulted in a
much larger increase in banks’ cost of funds. Consequently, consistent with the desired transmission of policy signals, banks
have progressively increased their lending rates.

The higher cost of funds for borrowers is beginning to have an effect, although it is still too early to spot definitive trends
given the presumed lags in monetary policy transmission. Industrial growth has slowed, not just because of statistical base
effects, but even in seasonally adjusted month on month terms. There are reports of increasing automobile and housing
inventories.

Prospects for Fiscal 2012

The fundamental drivers of India’s medium term growth prospects remain intact. However, global developments, in
conjunction with Indian policy responses to the concerns noted above, are likely to make 2011-12 a challenging year.

3.47

3.33

3.75

3.65

2.74

2006-07

2007-08

2008-09

2009-10

2010-11

Net Interest Margins (%)

6,563

5,004

3,686

2,585

1,468

Global economic and financial conditions can be expected to
remain adverse for some time, particularly in the aftermath
of Japan’s natural disaster. Once the current financial and
commodity volatility subsides, deeper structural factors are
likely to slow down economic growth, particularly in developed
economies. Fiscal consolidation in Europe and an excess supply
overhang in the US will probably moderate growth in the second
half, together with increasing expectations of policy rate rises to
quell rising inflation.

In India inflationary pressures are likely to persist and hence
result in a further, though moderate, monetary policy tightening,
the impact of which will be increasingly visible, through rising
borrowing costs, in fiscal 2012. The fiscal deficit is budgeted
at 4.6% to GDP in fiscal 2012, in line with the FRBM. There
may be some slippage, though, as subsidy outgo (food, fertilizer,
petroleum) may rise later in the year. The magnitude of market
borrowings to fund the deficit is likely to keep longer term yields
under pressure.

Increasing savings, high interest rates, an expected lower rise in
currency driven by lower food prices, are likely to help deposits to
grow stronger in fiscal 2012. However, in light of the inflationary
pressures and rising interest rates, there is a likelihood that the
credit growth momentum might slow in 2011-12.

2006-07

2007-08

2008-09

2009-10

2010-11

Net interest Income (`. in crores)

OVERVIEW OF FINANCIAL AND BUSINESS PERFORMANCE

LOW COST OF FUNDS

During 2010-11, the Bank continued to grow its key businesses and revenues. Having laid down its key business objectives
and a common vision for its employees, it took several steps in fulfilling these goals. The Bank continued to derive benefit
from its corporate relationships and retail
liabilities franchise as well as build upon its
SME, consumer lending, agriculture and
rural banking businesses. The Bank focused
on strengthening its retail risk management
capabilities, sharpening risk appetite in the
SME business and filling product gaps in both
corporate as well as retail businesses. During
the year, the Bank partnered with Max New
York Life for marketing its life insurance
products and also launched online broking
through its subsidiary, Axis Securities and
Sales Ltd.

2006-07 2007-08 2008-09 2009-10 2010-11

Demand Deposits as % Share of Total Deposits

Cost of Funds (%)

41.10

39.86

45.68

43.15

46.73

5.20

5.60

6.02

6.50

4.96

The Bank undertook a significant organisational restructuring initiative during the year, replacing four erstwhile Zones with
twenty six Circles with a view to providing closer and more focused business and operations support to branches on the
ground. Several other initiatives taken by the Bank during the year are outlined below.

• A consumer strategy for developing consumer insights through customer research.

•

Leadership development programs aimed at providing growth opportunities to employees.

Review of processes for delivering superior quality of services to customers.

The Bank’s Corporate Office has moved to its own premises, Axis House, which houses all corporate office functions under
one roof and is designed to the highest specifications of environmental friendliness.

CAPITAL MANAGEMENT

The Bank strives for enhancement of shareholder value by efficient use of capital. Towards this end, its capital management
framework helps ensure an appropriate composition of capital and an optimal mix of businesses.

The Bank has implemented the Revised Framework of the International Convergence of Capital Measurement and Capital
Standards (or Basel II) in 2008. In terms of RBI guidelines, capital charge for credit and market risk for the financial year ended
31 March, 2011 is required to be maintained at the higher of the prudential floor prescribed by Basel II and 80% of the
level under Basel I. In terms of regulatory guidelines on Basel II, the Bank has computed capital charge for operational
risk under the Basic Indicator Approach and the capital charge for credit risk has been estimated under the Standardised
Approach. As on 31 March, 2011, the Bank’s Capital Adequacy Ratio (CAR) under Basel II was 12.65% against 15.80%
on 31 March, 2010 and the minimum regulatory requirement of 9%. Of this Tier I Capital Adequacy Ratio was 9.41%, as
against 11.18% last year, while the Tier II Capital Adequacy Ratio was 3.24%. The following table sets forth the risk-based
capital, risk-weighted assets and capital adequacy ratios computed as on 31 March, 2010 and 2011 in accordance with the
applicable RBI guidelines under Basel II.

AS ON 31 MARCH

Tier I Capital – Shareholders’ Funds

Tier II Capital
Out of which
- Bonds qualifying as Tier II capital
- Upper Tier II capital
- Other eligible for Tier II capital

Total Capital qualifying for computation of Capital Adequacy Ratio

Total Risk-Weighted Assets and Contingencies

Total Capital Adequacy Ratio (CAR)
Out of above
- Tier I Capital
- Tier II Capital

BUSINESS OVERVIEW

2011

18,503.49

6,366.86

4,587.60
1,242.80
536.46

(` in crores)

2010

15,789.42

6,518.47

4,842.70
1,248.98
426.79

24,870.35

22,307.89

196,562.61

141,169.77

12.65%

15.80%

9.41%
3.24%

11.18%
4.62%

An overview of various business segments along with the performance during 2010-11 and their future strategies is
presented below.

RETAIL BANKING

Retail banking is one of the key drivers of the Bank’s growth strategy and encompasses a wide range of products that are
delivered through multiple channels to customers who are offered a complete suite of products across deposits, loans,
investment solutions and cards.

Retail Deposits

The Bank has focused on increasing its retail deposit base,
particularly demand deposits. Within this category, Savings Bank
deposits have grown at a Compounded Annual Growth Rate
(CAGR) of 38% over the last five years. Savings Bank deposits
grew to `40,850 crores on 31 March, 2011 from `33,862 crores
as on 31 March, 2010 registering a growth of 21%. On a daily
average basis, Savings Bank deposits grew by 36% to `36,072
crores over the preceding year. Retail term deposits (defined as
term deposits upto `5 crores) grew by 25% from `26,848 crores
on 31 March, 2010 to `33,457 crores on 31 March, 2011.

RETAIL LIABILITIES

40,850

33,862

25,822

19,982

12,126

2006-07

2007-08

2008-09

2009-10

2010-11

SB Deposits (` in crores)

RETAIL ASSETS

27,759

1,514,935

20,821

992,286

899,594

1,117,734

393,344

16,052

13,592

8,928

2006-07

2007-08

2008-09

2009-10

2010-11

2006-07 2007-08

2008-09

2009-10

2010-11

Retail Assets (` in crores)

No. of Clients

risk on the retail loans portfolio continued to improve through
the year as a result of these initiatives. The gross NPA ratio in
retail assets has improved to 1.49% on 31 March, 2011 from
1.86% last year. Over the last two years, unsecured personal
loans have witnessed a slowdown across the industry and the
Bank has also witnessed a modest growth in this segment. With
prospects of an improvement in the risk environment, the Bank
is planning to develop a prudent strategy in the coming year to
re-enter the market to offer unsecured loans. The focus of the
Bank, however, continues to be on the secured loan segment,
including housing loans and auto loans.

68%

Retail Assets

The Retail Assets portfolio of the Bank rose
from `20,821 crores at the end of FY 2010 to
`27,759 crores on 31 March, 2011, registering
a 33% growth. Retail assets constituted 19%
of the Bank’s total loan portfolio on 31 March,
2011 and has a large proportion of secured
assets in the form of residential mortgages
and auto loans. These portfolios comprise
79% of the total retail assets portfolio. During
the year, the Bank focused on strengthening
its retail risk management capabilities. Credit

14%

11%

Personal loans

Cards

Non -Schematic

Auto loans

Housing loan

Investment Products

The distribution of third party products is a well-established business for the Bank, with an emphasis upon mutual funds
and Bancassurance. During the year, the Bank tied up with Max New York Life for distribution of life insurance products.
A number of new processes like 100% welcome calling and Product Suitability Matrix have been implemented to ensure a
high quality sales process for the life insurance business. During the year, the Bank has been adjudged the Best Mutual Fund
distributor for the year 2010 (Bank Distributor Category) in the recently concluded Wealth Forum Advisor Awards 2010.
Assets under Management (AUM) of the Mutual Fund of the Bank have witnessed a 41% growth over the last year with the
customer base for mutual fund products of the Bank growing by 31%. The Bank launched a perpetual SIP campaign titled
‘Sleep In Peace’ which has resulted in a substantial increase in enrolment of new SIPs during the year. The Bank has entered
into an arrangement with Axis Securities and Sales Ltd - ASSL (a 100% subsidiary of the Bank) to provide Axis Direct, an
Online Trading platform, to its customers.

Card Products

373

314

8,538

6,834

4,828

leadership position

ATM CHANNEL MIGRATION

The cards business of the Bank
comprises three product types -
prepaid cards (pay before), debit
cards (pay now), and credit cards
(pay later). The Bank has a dominant
market
in
prepaid cards. As of 31 March,
2011, the Bank has a prepaid card
base of approximately 3.4 million
dominated by payroll and gift cards.
denominated
Foreign
travel prepaid cards is an extremely
popular offering of the Bank. The
Bank is a market leader in this
business with a sales volume of USD 661 million in 2010-11 and is well positioned to benefit from the growing opportunities
for such cards. The Bank has a base of approximately 10 million debit cards as on 31 March, 2011, which places it among
the leading players in this business. With increasing merchant spends on debit cards, the Bank plans to continue to invest
in product differentiation and feature enhancement of its debit card products for individuals and small businesses in the
year ahead. The Bank also offers credit cards, with a portfolio of approximately 6.33 lac credit cards in circulation as of 31
March, 2011. The Bank proposes to build the requisite scale in this business, while containing delinquencies and expenses
incurred in operations, by leveraging its existing customer base.

2006-07 2007-08 2008-09 2009-10
No. of Transactions (in lakhs)

2008-09
Cash Withdrawals (` in crores)

2006-07 2007-08 2008-09 2009-10 2010-11 2006-07 2007-08

currency

Card Base (` in lakhs)

2010-11

2009-10

2010-11

2,728

4,124

143

203

243

100

Premium Offerings

The Bank launched the private banking business (named ‘Privee’) in the domestic market in September 2009 to cater to
ultra affluent individuals and families by offering them unique investment opportunities. Axis Bank Privee offers its client
access to a wide array of end-to-end custom-tailored financial solutions including, but not limited to banking solutions,
investment solutions and lending solutions. Axis Bank Privée offers sophisticated investment and advisory services to clients
who entrust the Bank with Assets under Management (AUM) of more than `2 crores. Privée is presently offered in seven
cities in India and follows a team-based approach for managing client relationships. A dedicated Private Banker is central
to an Axis Bank Privée relationship, and he/she is supported by a team of product specialists, investment consultants and
research experts.

The Bank launched Axis Bank Wealth in 2008-09 targeting customer with a total relationship value of between `30 lac and
`200 lacs. The value proposition aims at delivering a ‘one Bank’ experience to clients and is positioned as a holistic solution
to clients across their banking, investment and asset requirements. The proposition is delivered to clients through wealth
managers and service relationship managers at various branches.

Alternate Channels

In 2010-11, the Bank added 1,977 ATMs to reach 6,270 ATMs as of 31 March, 2011 against 4,293 ATMs as of 31 March,
2010. The Bank has emerged as a pioneer in transaction-based pricing model in total ATM outsourcing which envisages
no capital expenditure for the Bank. Under this model, payment is on a purely pay-per-use model for the Bank’s customer
transactions and a revenue sharing with the service provider (called as Independent ATM Deployer (IAD)) for other bank
transactions. Alongwith the ATM network, other channels such as internet banking, mobile banking and phone banking,
have grown well and a strong architecture of alternate channels has been created, providing higher levels of convenience
and service quality to customers. During the year, the Bank launched several innovative products to enhance the usage of
self-service channels such as full-service mobile banking, mobile refills through internet and mobile phone, mobile-based
funds transfer through IMPS (a service initiated by NPCI), funds transfer through IMT (where the beneficiary can withdraw
funds through an ATM without the use of a card), Bunch Note Acceptor (BNA) machines for instant credit in case of
cash deposit and Virtual Cards which allow customers to create a one-time usage electronic virtual card by debiting their
accounts. All these measures will enhance customer convenience and servicing quality.

CORPORATE BANKING

The Corporate Banking franchise offers a wide spectrum of products to corporate customers, including credit, trade finance,
structured finance and syndication services for debt and equity. New customer acquisition and relationship-deepening is
a two-pronged strategy for enabling growth. A Relationship Management Group has been formed to service all client
relationships within the large corporate and infrastructure segments.

A prerequisite for global competitiveness and economic growth is the creation of a sound infrastructure base in the
economy. Recognising this, the 12th Five Year Plan (2012-17) envisages an enhancement of the plan-size for infrastructure
development to USD one trillion, twice that of the 11th Five Year Plan allocation of approximately USD 500 billion. In order
to leverage the growth opportunities offered, a separate Infrastructure Business Group was created within the Corporate
Banking segment.

Meanwhile, the Bank has continued to retain its leadership position in project finance and corporate finance debt market
and syndicated an aggregate amount of `57,049 crores by way of Rupee and Foreign currency loans during the year.

CORPORATE CREDIT

During the year, corporate credit including lending to large and mid-corporates and to Infrastructure, grew by 45% to
`75,922 crores from `52,504 crores last year. This includes advances at overseas branches amounting to `19,354 crores
(equivalent to USD 4.34 billion) mainly comprising loans to Indian corporates and their subsidiaries. The advances at
overseas branches accounted for 14% of the Bank’s total advances.

The relationship model introduced during the year has worked well, enabling the Bank to attract a larger and more
diverse customer base. The Bank also focused on cross-selling of various products and services in increasing the customer’s
engagement with it. Emphasis was also given on fee based business, foreign exchange borrowings of customers and loan
syndication.

The Bank’s sectoral approach to credit achieved greater efficiency during the year due to increased focus on identifying
sector-specific opportunities and risks. Portfolio composition is continuously monitored by tracking industry, group and
company specific exposure limits. The largest exposure to any sector was 10.83% of the Bank’s total lending (17.50% last
year). Internal and external rating of the credit facilities of the customers is undertaken and monitored on ongoing basis.
56.13% of the Bank’s large corporate portfolio is externally rated. The entire portfolio is internally rated with 74.70% rated
A and above.

The mid-corporate group continues to be an important business segment of the Bank with an asset book of `15,826
crores as on 31 March, 2011, registering a growth of 38% over last year. This includes advances at overseas branches of
`2,199 crores (equivalent of USD 493 million) extended mainly to Indian corporates. The focus continues on growth across
geographies without compromising on quality of assets. During the year, the segment continued to focus on deepening of
relationship through cross-selling of products and services, both in corporate and retail banking space.

TREASURY

The Bank has an integrated Treasury, which covers both domestic and global markets and funds the balance sheet across
locations. The Bank’s treasury business has grown substantially over the years, gaining market share and is presently among
the top five banks in India in terms of forex revenues. The Bank has established a presence in emerging businesses such as
card-based forex solutions, bullion trading and currency derivatives and was also among the front runners in tapping the
overseas debt capital markets for foreign currency funds. The Bank distributes its forex and other treasury products through
195 ‘B’ category branches spread across India, one of the widest distribution networks for treasury products among Indian
banks. In addition to Mumbai, the Bank also has dealing rooms in Singapore and Hong Kong.

Debt Capital Market and Equity Trading

The Bank successfully maintained its leadership in the debt capital markets business and successfully syndicated debt of
around `83,025 crores through private placement of bonds and debentures in Rupees. The Bank was recognised as Best
Domestic Bond House in India (2010) by Asset Triple A Country Awards, Best Bond House in India (2010) by Finance Asia,
Best Debt House in India (2010) by Euro Money and Best Domestic Debt House in India (2010) by Asia Money. During the
calendar year 2010, the Bank topped the Bloomberg debt league tables as also the Prime Database league tables for the
period April 2010 to December 2010.

BUSINESS BANKING

Business Banking focuses on offering transactional banking services by leveraging the Bank’s network and technology.
The Bank continued to focus on procuring low-cost funds by offering a range of current account products and cash
management solutions to meet the needs of all business segments including companies, institutions, central and state
government ministries and undertakings, as well as small and retail business customers. Cross-selling of transactional
banking products to develop account relationships, aided by product innovation and a customer-centric approach, have
borne fruit in the form of growing current account balances and realisation of transaction banking fees.

As of 31 March, 2011, balances in current account increased by 15% and stood at `36,917 crores compared to `32,168
crores last year. On a daily average basis, however, current account deposits grew by 28% to `23,479 crores from `18,322
crores last year. In line with the Bank’s strategy of providing complete financial solutions, there was a greater focus on
acquisition of high-value current accounts, thus maintaining the pace of growth in current account balances.

The Bank’s Cash Management Services (CMS) caters to specific
corporate requirements and offers customised solutions to
clients. The combination of speedy fund transfers and structured
MIS enables customers to optimise their fund-management
capabilities. During the year, host-to-host integration was offered
to large corporate customers for collections and payments, a
feature that has brought both ease of operations and reduced
costs to clients. With a shift in the Bank’s business approach to
a customer-centric model through the creation of a Corporate
Accounts Group within Business Banking, cash management,
transactional banking and other service requirements of the
large and mid-sized corporates as well as financial institutions
are being fulfilled in a proactive manner. This has enabled the
Bank to become one of the top cash management solution
providers in the country.

8,465

CMS GROWTH

6,614

4,852

3,193

2,164

2006-07

2007-08

2008-09

2009-10

2010-11

No. of CMS Clients

The Bank acts as an agency for handling the government business of various central government ministries, departments,
state governments and union territories. The Bank presently accepts income and other direct taxes through 214 authorised
branches at 137 locations and central excise and service taxes through 56 authorised branches at 13 locations. The Bank also
handles the disbursement of civil pension through 218 authorised branches and defence pension through 151 authorised
branches. The Bank also provides collection and payment services to four central government ministries and eight state
governments and union territories.

The Bank has also strengthened its association with the e-governance initiatives of various state governments and during
the year received approval from the Punjab Government, appointing it as the nodal bank for its ‘e-Procurement Project’.
The Bank is associated with 9 state governments and other government organisations in various other initiatives including
the Electronic Benefit Transfer (EBT) Projects for disbursing government benefits [wages under MGNREGS and Social
Security Pension (SSP)] through direct credit to beneficiaries’ bank accounts under the smart card based IT enabled financial
inclusion model. The total business carried out by the Bank on behalf of the government in 2010-11 was `85,423 crores
against `71,039 crores last year.

The Bank is a SEBI registered custodian and offers custodial services to both domestic and offshore customers. It is also
a non-trading clearing member with BSE and NSE and has established connectivity with clearing corporations of the
respective exchanges. The Bank launched its foray into the merchant acquiring business in December 2003 and in the last
seven years has emerged as one of the largest acquirers in the country with an installed base of approximately 1.87 lac
point-of-sale terminals.

INVESTMENT BANKING

The Bank’s Investment Banking business comprises equity capital markets (ECM) business, mergers and acquisitions and
private equity syndication. The Bank is a SEBI-registered Category I Merchant Banker and has been fairly active in advising
Indian companies in raising equity through IPOs, QIPs and Rights issues. The Bank has built strong relationships with Indian
companies, becoming an effective bridge between such corporates and, domestic and international institutional investors.

During the year, the Bank advised over 12 companies in raising `7,625 crores from international and domestic equity
investors. M&A advisory services focus upon domestic and cross-border buy and sell mandates for Indian clients. The Private
Equity business works with the Bank’s mid-corporate and SME clients and advises them in raising capital from private equity
investors. In order to fill the gap in its equity capital markets and institutional broking capabilities, the Bank has proposed
the acquisition of the investment banking franchise from Enam in its group. The proposed acquisition of these businesses
is subject to regulatory approvals.

LENDING TO MICRO, SMALL AND MEDIUM ENTERPRISES, AGRICULTURE AND MICRO FINANCE

Lending to Small and Medium Enterprises (SMEs) including Micro, Small and Medium Enterprise (MSMEs) segment has
been identified as a thrust area for the Bank. The business approach towards this segment, which is expected to contribute
significantly to economic growth in future, is based upon building relationships and nurturing the entrepreneurial talent
available. The Bank extends working capital, project finance as well as trade finance facilities to SMEs. The relationship-
based approach enables the Bank to deliver value through the entire life cycle of SMEs, creating enormous goodwill and
stickiness. It also provides numerous cross-sell opportunities and helps the Bank fulfill its priority sector obligations. The
Bank has set up 26 dedicated SME Centres across the country to service this segment effectively.

The Bank continued to drive growth in the agriculture sector through its agriculture and rural banking initiatives. During
the year, a dedicated Agriculture and Rural Banking Strategic Business Unit (SBU) has been formed to lend greater focus
to this segment. The Bank has adopted an integrated approach covering all participants in the value chain. The Bank’s
retail agriculture business is targeted at farmers across various geographies in the country through a network of agriculture
intensive branches which are serviced through 69 agriculture clusters. The Bank also extends commodity finance against
pledge of warehouse receipts of agro commodities.

The Bank has a team of specialist agriculture officers placed at branches and agriculture clusters to ensure effective delivery
of a wide-range of products to agriculture borrowers at their doorstep. During the year, agriculture advances grew by 36%
to `17,320 crores, constituting 14% of the Bank’s domestic advances.

In order to implement its rural banking strategy, the Bank has set up a dedicated Rural Banking and Financial Inclusion team.
It is also increasing its presence in the hinterland, particularly in under-banked states and districts through a branch network
that offers banking products customised for the rural population. The Bank seeks to cover a larger catchment area around
such rural branches as part of its financial inclusion initiative through a host of business correspondents. Among other
activities, the business correspondents execute mandates for EBT received from state governments for NREGA, mandates
received through SLBC and district administration, and remittances.

INTERNATIONAL BANKING

The International operations of the Bank have generally been based upon catering to Indian corporates who have expanded
their businesses overseas. The overseas network of the Bank currently spans the major financial hubs in Asia, with branches
at Singapore, Hong Kong and DIFC – Dubai, and Representative Offices at Shanghai, Dubai and Abu Dhabi. In addition,
there are strategic alliances with banks and exchange houses in the Gulf Co-operation Council (GCC) countries. While
foreign branches primarily offer corporate banking, trade finance, treasury and risk management solutions, the Bank’s GCC
initiatives in the form of Representative Offices and alliances cater to the large Indian diaspora and promote the Bank’s
NRI products. In a year in which major global economies showed signs of stabilisation following the financial crisis, the
International operations of the Bank have reported a significant growth with overseas assets growing from USD 3.10 billion
as of 31 March, 2010 to USD 4.99 billion as of 31 March, 2011.

During the year, a new subsidiary namely Axis U.K. Limited was incorporated as a private limited company with the main
purpose of filing an application with Financial Services Authority (FSA), UK for a banking licence in the UK.

RISK MANAGEMENT

The objective of risk management is to balance the trade-off between risk and return and ensure optimum risk adjusted
return on capital. It entails the identification, measurement and management of risks across the various businesses of the
Bank. Risk is managed through a framework of policies and principles approved by the Board of Directors and supported
by an independent risk function that ensures that the Bank operates within its risk appetite. The risk management function
attempts to anticipate vulnerabilities at the transaction level or at the portfolio level, as appropriate, through quantitative or
qualitative examination of the embedded risks. The Bank continues to focus on refining and improving its risk measurement

systems. In addition to ensuring compliance with regulatory requirements, the Bank has developed robust internal systems
for assessing capital requirements keeping in view the business objectives.

The Bank’s risk management processes are guided by well-defined policies appropriate for the various risk categories viz.
credit risk, market risk, operational risk and liquidity risk supplemented by periodic validations of the methods used and
monitoring through the sub-committees of the Board. The Board sets the overall risk appetite and philosophy for the Bank.
The Risk Management Committee (RMC), which is a sub-committee of the Board, reviews various aspects of risk arising
from the businesses undertaken by the Bank. The Committee of Directors and the Audit Committee of the Board supervises
certain functions and operations of the Bank, which ultimately enhances the risk and control governance framework within
the Bank. Various senior management credit and investment committees, Credit Risk Management Committee (CRMC),
Asset-Liability Committee (ALCO), and Operational Risk Management Committee (ORMC) operate within the broad policy
framework of the Bank.

Credit Risk

Credit risk is the risk of financial loss if a client, issuer of securities that the Bank holds or any other counterparty fails to
meet its contractual obligations. Credit risk arises from all transactions that give rise to actual, contingent or potential
claims against any counterparty, borrower or obligor. The goal of the credit risk management is to maximize the Bank’s
risk-adjusted rate of return on capital by maintaining a healthy credit portfolio and managing the credit risk inherent in
individual exposures as well at the portfolio level. Emphasis is placed, both, on evaluation and containment of risk at the
individual exposures and analysis of the portfolio behaviour. The Bank has structured and standardised credit approval
processes, which include a well-established procedure of comprehensive credit appraisal. Every extension of credit or
material change to a credit facility to any counterparty requires credit approval at the appropriate authority level. Internal
risk rating remains the foundation of the credit assessment process which provides integrity, standardisation and objectivity
to the process. The sanctioning process is linked to the rating of the borrower and the level of exposure. The monitoring
frequency applicable to the exposure also depends on the rating of the exposure. Sector specific caps are laid down in the
Credit Policy to avoid concentration risk. For retail portfolio the Bank uses different product specific scorecards. Both credit
and market risk expertise are combined to manage risk arising out of traded credit products such as bonds and market
related off-balance sheet transactions.

The Bank continuously monitors portfolio concentrations by segment, borrower, groups, industry and geography, where
applicable. Portfolio level delinquency matrices are tracked at frequent intervals with focus on detection of early warning
signals of stress.

Key sectors are analysed in detail to suggest strategies for business, considering both risks and opportunities. The Risk
Management Committee of the Board periodically reviews the impact of the stress scenarios resulting from the rating
downgrades, or drop in the asset values in case of secured exposures, on the portfolio. The portfolio level risk analytics
provide insight into the capital allocation required to absorb unexpected losses at a defined confidence level.

Market Risk

The market risk management framework of the Bank aims at maximising the risk adjusted rate of return by providing inputs
regarding the extent of market risk exposures, the performance of portfolios vis-à-vis the risk exposure and comparable
benchmarks. Market Risk is the risk of losses in ‘on and off-balance sheet’ positions arising from the movements in market
prices as well as the volatilities of those changes, which may impact the Bank’s earnings and capital. The risks may pertain to
interest rate related instruments (interest rate risk), equities (equity price risk) and foreign exchange rate risk (Currency risk).
Market Risk for the Bank emanates from its trading and investment activities, which are undertaken both for customers
and on a proprietary basis. The Bank adopts a comprehensive approach to market risk management for its banking book
as well as trading book. The market risk management of the trading, investment and asset/liability portfolios of the Bank
includes laid down policies, guidelines, processes and systems for the identification, measurement, monitoring of limits set
in accordance with risk appetite of the Bank and reporting of various market risks in the banking and trading book. The
Bank uses both statistical measures and non-statistical measures for the market risk management. The statistical measures
include Value at Risk (VaR), stress tests, back tests and scenario analysis while position limits, marked-to-market (MTM),
gaps and sensitivities (duration, PVBP, option greeks) are used as non-statistical measures of market risk management.

The Bank uses historical simulation and its variants for computing VaR for its trading portfolio. VaR of a portfolio is defined
as the potential loss value such that, given a confidence level (probability), the cumulative mark-to-market loss on the

portfolio over a given time horizon does not exceed acceptable level (assuming normal market conditions and no trading
in the portfolio). VaR is calculated at a 99% confidence level for a one-day holding period. The VaR models for different
portfolios are back-tested on an ongoing basis and the results are used to maintain and improve the efficacy of the model.
The Bank supplements the VaR measure with a series of stress tests and sensitivity analysis as per a well laid out stress
testing framework.

Liquidity Risk

Liquidity is the ability of a bank to fund increases in assets and meet obligations as they become due, without incurring
unacceptable losses. Liquidity risk is the current and prospective risk to earnings or capital arising from a bank’s inability
to meet its current or future obligations on the due date. Liquidity risk is two-dimensional: risk of being unable to fund
portfolio of assets at appropriate maturity and rates (liability dimension) and the risk of being unable to liquidate assets in
a timely manner at a reasonable price (asset dimension). The Bank’s ALM policy lays down a broad framework for liquidity
risk management to ensure that the Bank is in a position to meet its daily liquidity obligations as well as withstand a period
of liquidity stress, the source of which could be bank-wide or market wide.

The liquidity profile of the Bank is analysed on a static as well as on a dynamic basis by using the gap analysis technique
supplemented by monitoring of key liquidity ratios and conduct of liquidity stress tests periodically. The liquidity position is
managed on a global basis including positions at the overseas branches. The Bank has laid down liquidity risk policies for
its overseas branches in line with host country regulations and the ALM framework as stipulated for domestic operations.
Periodical liquidity reviews and liquidity stress results of overseas branches are reviewed by the Bank’s ALCO along with
domestic positions.

Operational Risk

The Bank has put in place an operational risk management (ORM) policy to manage operational risk in an effective, efficient
and proactive manner. The primary objective of the operational risk management policy is to identify the operational risks
that the Bank is exposed to from inadequate and /or missing controls emanating from internal processes, people, systems
or from external events or a combination of all the four, assess or measure the magnitude, monitor them and control or
mitigate them by using a variety of processes. In addition to the ORM policy, operational risk management framework, loss
data collection methodology, risk and control self assessment framework, key risk indicators framework as well as role and
responsibilities of operational risk management function are approved by the Risk Management Committee (RMC). The Bank
has an Operational Risk Management Committee (ORMC), which oversees the implementation of the aforesaid framework/
policies. Within the ORM framework, new products, processes and services introduced by the Bank are subject to rigorous
risk evaluation and approval accorded by the Product Management Committee where all relevant risks are identified
and assessed by the departments independent of the risk-taking unit (product/process/service owner). Similarly, changes
proposed in the existing product/processes/services are also subject to review by the Change Management Committee.
Outsourcing arrangements are examined and approved by the Outsourcing Committee. The IT Security Committee of the
Bank provides directions for mitigating the operational risk in the information systems. The Bank has also created a focussed
group for off-site surveillance and monitoring of transactions to detect and mitigate frauds on a proactive basis.

OPERATIONS

The business model of the Bank has separated production and distribution functions within the Bank, with transaction
processing and customer databases becoming increasingly centralised and product sales and customer service being the
primary function of branches. The separation of functions has helped in reducing transaction costs, in addition to ensuring
streamlined operations. Operational processes for delivery of products and services were constantly refined during the year,
from the perspective of implementation of best practices, risk identification and containment. Operational instructions were
issued on a continual basis and efforts were made to introduce risk-free working at branches.

Retail Banking Operations

The oversight function in the Bank has been strengthened through centralised monitoring of the working of the branches
in respect of KYC, AML, other regulatory compliances, cash management, clearing operations and internal housekeeping
resulting in superior compliance and higher operational efficiencies. Control functions were reinforced through operational
guidelines issued to branches and close supervision by 26 Circle Retail Banking Operations Officers. High-end note sorting
machines have been provided to 286 cash intensive branches and 13 Cash Point Counters (CPCs) had been set up in 8 major

cities to ensure enhanced customer service and better handling of cash. Two new Currency Chests were operationalised at
Hubli and Vijayawada. Clearing activities in Mumbai and Kolkata have been automated by adopting image-based processing
of clearing instruments thereby improving efficiency of clearing operations at these high-volume centres.

Wholesale Banking Operations

Wholesale Banking Operations (WBO) is responsible for providing best in class services to non-retail customers of the Bank
through the deployment of skilled manpower and appropriate technology. The WBO group comprises four verticals -
Corporate Banking Operations, Trade and Forex Operations, Treasury Operations and Centralised Collections and Payments
Hub.

Corporate Banking Operations (CBO) involves delivery, control, monitoring and administration of credit facilities of large
and mid-corporates and SME customers. It also processes domestic trade finance and channel finance transactions. CBO
operates through Credit Management Centres (CMC) located at 8 major cities, while credit operations at Tier II cities are
administered through 50 Mini-Credit Management Centres. At Tier III cities, corporate credit services including domestic
trade finance operations are provided through dedicated officials at credit intensive centres. With a view to offer enhanced
customer services and build direct interface with the customers, three Corporate Banking Branches (CBBs) have been
opened in Chennai, Kolkata and Mumbai. The forex operations team at branches is managed by the Trade Finance Centre,
ensuring better customer services as well as meticulous compliance of regulatory and internal control guidelines.

INFORMATION TECHNOLOGY

The Bank aims to maintain a scalable computing infrastructure that delivers efficient and seamless services across
multiple channels for customer convenience. In order to retain its competitive edge, the Bank’s technology infrastructure
is continuously upgraded in alignment with business requirements. During the year, the Bank transitioned to a higher
version of the Core Banking System (CBS), which has been designed upon a Service Oriented Architecture. The upgraded
version of the CBS is capable of handling significantly higher number of concurrent users and transaction volumes and can
integrate with other surround systems and channels. It has the capability to provide round-the-clock banking. This version
also provides a unique CRM feature, and new product capabilities in areas of loans, liquidity management and workflow.
The IT initiatives of the Bank have enabled the sustained growth of banking transactions across various channels such as
Internet, ATM and Mobile Banking. During the year, the Bank has launched its retail Internet Banking portal which has been
designed keeping in view better usability and superior look and feel. The Bank has also implemented a custom-built CRM
software solution to handle both customer interaction and complaints through various customer touch points like Phone
Banking Centre, e-mail and branches.

COMPLIANCE

The compliance function of the Bank is responsible for independently ensuring that operating and business units comply
with regulatory and internal guidelines. The Compliance Department of the Bank continued to play a pivotal role in ensuring
implementation of compliance functions in accordance with the directives issued by the regulators, the Bank’s Board of
Directors and the Bank’s compliance policy. The Audit Committee of the Board reviews the performance of the Compliance
Department and the status of compliance with regulatory/internal guidelines on a periodic basis.

New Instructions/guidelines issued by the regulatory authorities were disseminated across the Bank to ensure that the
business and functional units operate within the boundaries set by regulators and that compliance risks are suitably
monitored and mitigated in course of their activities and processes. New products and processes launched during the
year were subjected to scrutiny from the compliance standpoint and proposals for outsourcing of financial services were
screened from risk control perspective.

Monitoring and identification of suspicious transaction patterns played an important role across the franchise with an
objective to check any attempt for money laundering activities. Timely steps were undertaken to meet the emerging
challenges in the area of identification of unusual transaction patterns and to report to the Financial Intelligence Unit –
India. Customer confidentiality and proper record maintenance as mandated under Prevention of Money Laundering Act,
2002, attracted due importance in all facets of operations. With the aid of the alert system, branches were trained to play
a key role in checking abnormal transactions and to avoid any compliance implications. A strong vigilance function, a well-
propagated whistleblower policy and zero tolerance policy for fraud, corruption and financial irregularities were the other
significant aspects of the Bank’s compliance culture.

INTERNAL AUDIT

The Bank’s internal audit function performs an independent and objective evaluation of the adequacy and effectiveness of
internal controls by undertaking a comprehensive risk based audit of branches, Retail Asset Centres (RAC), Service Branches
and Credit Management Centres/Mini Credit Management Centres (CMC/MCMC). This ensures that the operating and
business units adhere to systems and procedures as also regulatory and legal requirements. The effort is to continuously
benchmark against international best practices and procedures in the area of internal control systems. The internal audit
is also proactive in recommending quality enhancement measures in operational processes based on audit findings. It also
undertakes internal-cum-management audit of the Bank’s Corporate Office (CO) departments. During the year, Information
System (IS) audits were conducted in respect of 169 applications, the Bank’s Data Centre and Business Continuity Centre.
The Internal Audit Department functions independently and its activities are overseen by the Audit Committee of the Board,
which evaluates its performance and reviews effectiveness of the operational and regulatory controls laid down by the Bank
and RBI.

During the year, 810 branches, 58 RACs, 10 Service Branches, 60 CMC/MCMCs, 3 overseas branches, 41 CO departments
and back offices were subjected to internal audit. Another 47 branches, 37 CMC/MCMCs, 6 RACs, 8 Credit Decisioning
Units (covering 17 RACs) and 11 CO departments have been placed under concurrent audit.

During the year, Internal Audit Department has taken a few significant initiatives like the Improvised Control Self
Assessment (Self Audit) model aimed at introducing branches to an improved compliance culture and engaging the services
of outside consultants of international repute for review of audit policy, audit methodology and staffing in order to align
the functioning of internal audit with International Standards. During the year, Certificate under ISO 9001-2008 Standards
was successfully renewed for three more years.

CORPORATE SOCIAL RESPONSIBILITY

The Bank has set-up a Trust – the Axis Bank Foundation in 2006 to give a strategic focus to its Corporate Social Responsibility
(CSR) initiatives. The Bank has decided to contribute upto one percent of its net profit annually to the Foundation under its
CSR initiatives. The Foundation is presently partnering with 44 NGOs in the fields of education, highway trauma care, medical
relief and the creation of livelihoods and has been able to reach over 58,000 individuals, mainly underprivileged children, in
the field of education and around 2,500 accident victims. The Foundation has so far extended grants aggregating `24.47
crores relating to the various initiatives. In the next five years, it is proposed to focus primarily on providing sustainable
livelihoods. The goal of the Foundation is to provide one million sustainable livelihoods in the next five years. The Foundation
would continue to support projects in the field of education having significant social impact, especially benefiting physical
and mentally challenged children and ensure a budget allocation of 15% of annual disbursement for such projects.

During 2010-11, the Foundation has approved new grants aggregating `133.46 crores, which will be distributed in periodic
installments over the next five years. The Foundation will work with the poorest of the poor in the villages of two districts
of West Bengal, with small and marginal farmers in four districts of Tamil Nadu, with tribals and Dalits in four districts of
Orissa and school dropouts in the Vidarbha and Marathwada regions of Maharashtra. The Foundation aims at bringing
about a significant increase in the income of the beneficiaries through its intervention. Further, the beneficiaries would be
given inputs on education, health care, sanitation, financial literacy etc. The Foundation is in talks with NGOs, development
agencies and funding partners to identify new opportunities, especially in the poorest districts of the country that would
help in achieving its goal of providing one million sustainable livelihoods in the next five years.

HUMAN RESOURCES

The Bank recognises that its success is deeply embedded in the success of its human capital. During 2010-11, the Bank
continued to strengthen its HR processes in line with its objective of creating an inspired workforce. The employee
engagement initiatives included placing greater emphasis on learning and development, launching leadership development
programmes, introducing internal communication, providing opportunities to staff to seek aspirational roles through internal
job postings and periodic job rotations, streamlining the Performance Management System, making the compensation
structure more competitive and streamlining the performance-linked rewards and incentives.

The Bank believes that learning is an ongoing process. Towards this end, the Bank has built a training infrastructure which
seeks to upgrade skill levels across grades and functions through a combination of in-house and external programmes. The

0.04%

3.68%

1.82%

6.36%

INTELLECTUAL CAPITAL

flagship in-house programmes include the Induction Programme
’Swagat’ for new entrants and credit and foreign exchange
programmes for building a pool of specialists in the respective
domains. External programmes for team-building, leadership,
organisational development, management development
programmes and people management programmes have
been organised in partnership with reputed banking and
management institutions for middle management personnel.
During the year, the total training man-days have increased
from 65,378 last year to 77,983. The Bank also holds leadership
summits in association with best in class leadership trainers in
the country to nurture its existing and potential leaders. To
promote a culture of leadership development and to build a
pipeline of potential leaders within the Bank, many leadership
development processes have been introduced. Axis Leadership
Practices were defined for employees at different levels of the hierarchy to promote desired behaviour and to facilitate an
objective assessment. A leadership review for the year has been launched, as a part of which a pool of key talent will be
identified across functions.

Graduates/Post Graduate

Bankers/Law Degree

ENGG./TECHNICAL

CA/CS/ICWA/CFS

Ph.D/Doctorate

MBA/Masters

50.40%

37.70%

PROFILE BY AGE

3.51% 0.70%

24.85%

70.94%

Below 30 Years

Above 40 yrs to 50 yrs

Above 30 yrs to 40 yrs

Above 50 yrs to 60 yrs

The Bank believes that a transparent organisation structure
ensures efficient communication and also promotes a
performance-driven work culture. To keep employees abreast of
various developments, it was important to provide avenues for
knowledge sharing. Axis World, the Bank’s in-house magazine
was launched in the month of November 2010, with an
objective to create a platform for both top-down and bottom-
up communication. The Bank also launched iAxis, an intranet
portal created to offer a one-click destination to employees for
easy access of HR related information, policies and internal job
opportunities.

In order to bring about greater alignment between corporate
objectives and individual growth, the Bank’s Performance
Management System, has been streamlined this year. The

changes have helped to increase the ownership of appraiser and the reviewer in the performance management process.

The Bank has emerged as a strong employer brand in the financial services sector, especially on the campuses of the premier
business schools of the country. Axis Ahead, the Bank’s Management Trainee Programme focuses on grooming business
leaders of tommorrow through a rigorous 11 month cross-departmental and branch exposure training.

The strength of the workforce at the year-end was 26,435 as compared to 21,640 at the end of the previous year.

AUDITORS’ REPORT

TO THE MEMBERS OF
AXIS BANK LIMITED

1. We have audited the attached Balance Sheet of AXIS BANK LIMITED (“the Bank”) as at 31 March, 2011, the Profit
and Loss Account and the Cash Flow Statement of the Bank for the year ended on that date, both annexed thereto.
These financial statements are the responsibility of the Bank’s Management. Our responsibility is to express an opinion
on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts
and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the
significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We
believe that our audit provides reasonable basis for our opinion.

3. The Balance Sheet and the Profit and Loss Account are drawn up in conformity with Forms A and B (revised) of the

Third Schedule to the Banking Regulation Act, 1949, read with Section 211 of the Companies Act, 1956.

4. Without qualifying our report, we invite attention to Note 1 of Schedule 18 regarding the Scheme of Arrangement for
the demerger of Enam Securities Private Ltd. with the Bank’s subsidiary. For the reasons stated therein, no effect to the
proposed Scheme has been given in the accounts.

5. We further report as follows :

(a) we have obtained all the information and explanations which to the best of our knowledge and belief were

necessary for the purposes of our audit and have found them to be satisfactory;

(b)

in our opinion, the transactions of the Bank which have come to our notice have been within its powers;

(c)

in our opinion, proper books of account as required by law have been kept by the Bank so far as it appears from
our examination of those books;

(d) the financial accounting systems of the Bank are centralised and, therefore, accounting returns are not required

to be submitted by the Branches;

(e) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in

agreement with the books of account;

(f)

(g)

in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this
report comply with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956, insofar
as they apply to banks;

in our opinion and to the best of our information and according to the explanations given to us, the said accounts
give the information required by the Companies Act, 1956 in the manner so required for banking companies and
the Guidelines issued by the Reserve Bank of India from time to time and give a true and fair view in conformity
with the accounting principles generally accepted in India :

(i)

in the case of the Balance Sheet, of the state of the affairs of the Bank as at 31 March, 2011;

(ii)

in the case of the Profit and Loss Account, of the profit of the Bank for the year ended on that date and

(iii) in the case of Cash Flow Statement, of the cash flows of the Bank for the year ended on that date.

6. On the basis of the written representations received from the Directors as on 31 March, 2011 taken on record by the
Board of Directors, we report that none of the Directors is disqualified from being appointed as a director in terms of
Section 274(1)(g) of the Companies Act, 1956.

For DELOITTE HASKINS & SELLS
Chartered Accountants
(Registration No: 117365W)

Nalin M. Shah
Partner
(Membership No. 15860)

Place : Mumbai
Date : 22nd April, 2011

AXIS BANK LIMITED - BALANCE SHEET

BALANCE SHEET AS AT 31 MARCH, 2011

CAPITAL AND LIABILITIES

Capital

Reserves & Surplus

As at
31-03-2011
( ` in Thousands)

As at
31-03-2010
( ` in Thousands)

Schedule No.

4,105,458

4,051,741

185,882,797

156,392,749

Employees’ Stock Options Outstanding (Net)

17 (5.15)

1,734

Deposits

Borrowings

Other Liabilities and Provisions

TOTAL

ASSETS

Cash and Balances with Reserve Bank of India

Balances with Banks and Money at Call and Short Notice

Investments

Advances

Fixed Assets

Other Assets

TOTAL

Contingent liabilities

Bills for collection

1,892,378,010

1,413,002,175

262,678,824

171,695,512

82,088,627

61,334,608

2,427,133,716

1,806,478,519

138,861,630

94,820,456

75,224,929

57,218,631

719,916,208

559,748,156

1,424,078,286

1,043,409,464

22,731,456

12,224,199

46,321,207

39,057,613

2,427,133,716

1,806,478,519

4,539,973,284

3,182,812,023

324,731,072

192,928,684

Significant Accounting Policies and Notes to Accounts

17 & 18

Schedules referred to above form an integral part of the Balance Sheet

In terms of our report attached.

For Deloitte Haskins & Sells
Chartered Accountants

For Axis Bank Ltd.

Adarsh Kishore
Chairman

Nalin M. Shah
Partner

R. H. Patil
Director

R. B. L. Vaish
Director

Shikha Sharma
Managing Director & CEO

Sushil Kumar Roongta
Director

S. B. Mathur
Director

S. K. Chakrabarti
Deputy Managing Director

P. J. Oza
Company Secretary

Date : 22 April, 2011
Place: Mumbai

Somnath Sengupta
Executive Director & CFO

AXIS BANK LIMITED - PROFIT & LOSS ACCOUNT

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH, 2011

INCOME
Interest earned
Other income
TOTAL
EXPENDITURE
Interest expended
Operating expenses
Provisions and contingencies
TOTAL

III NET PROFIT FOR THE YEAR (I - II)

Balance in Profit & Loss Account brought forward
from previous year

IV AMOUNT AVAILABLE FOR APPROPRIATION
V APPROPRIATIONS :

Transfer to Statutory Reserve
Transfer to/(from) Investment Reserve
Transfer to Capital Reserve
Transfer to General Reserve
Proposed dividend (includes tax on dividend)
Balance in Profit & Loss Account carried forward
TOTAL

VI EARNINGS PER EQUITY SHARE

(Face value `10/- per share) (Rupees)
Basic
Diluted
Significant Accounting Policies and Notes to Accounts
Schedules referred to above form an integral part of the Profit and Loss Account

17 & 18

In terms of our report attached.

For Deloitte Haskins & Sells
Chartered Accountants

Year ended
31-03-2011
( ` in Thousands)

Year ended
31-03-2010
( ` in Thousands)

Schedule No.

13
14

151,548,058
46,321,338
197,869,396

116,380,215
39,457,819
155,838,034

15
16
18 (2.1.1)

85,918,230
47,794,281
30,271,979
163,984,490
33,884,906

66,335,261
37,097,223
27,260,217
130,692,701
25,145,333

18 (2.2.1)

18 (2.2.4)

18 (2.2.2)

34,274,337
68,159,243

23,480,865
48,626,198

8,471,227
(149,372)
47,630
3,388,491
6,703,560
49,697,707
68,159,243

6,286,333
148,750
2,239,176
3,109
5,674,493
34,274,337
48,626,198

82.95
81.61

65.78
64.31

For Axis Bank Ltd.

Adarsh Kishore
Chairman

Nalin M. Shah
Partner

R. H. Patil
Director

R. B. L. Vaish
Director

Shikha Sharma
Managing Director & CEO

Sushil Kumar Roongta
Director

S. B. Mathur
Director

S. K. Chakrabarti
Deputy Managing Director

P. J. Oza
Company Secretary

Date : 22 April, 2011
Place: Mumbai

Somnath Sengupta
Executive Director & CFO

AXIS BANK LIMITED - CASH FLOW STATEMENT

CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH, 2011

Cash flow from operating activities

Net profit before taxes

Adjustments for:

Depreciation on fixed assets

Depreciation on investments

Amortisation of premium on Held to Maturity Investments

Year ended
31-03-2011
( ` in Thousands)

Year ended
31-03-2010
( ` in Thousands)

51,356,592

38,513,633

2,895,872

2,343,218

992,677

605,613

(222,334)

829,739

Provision for Non Performing Advances/Investments (including bad debts)

9,551,195

13,570,445

Provision on standard assets

Provision for wealth tax

Provision for interest tax

Loss on sale of fixed assets

Provision for country risk

Provision for restructured assets

Provision for other contingencies

Amortisation of deferred employee compensation

Adjustments for:

(Increase)/Decrease in investments

(Increase)/Decrease in advances

Increase/(Decrease) in deposits

(Increase)/Decrease in other assets

Increase/(Decrease) in other liabilities & provisions

Direct taxes paid

Net cash flow from operating activities

Cash flow from investing activities

Purchase of fixed assets

(Increase)/Decrease in Held to Maturity Investments

Proceeds from sale of fixed assets

Net cash used in investing activities

1,661,564

4,558

2,879

69,762

24,500

150,615

412,205

(186)

(9,100)

3,483

38,707

(15,300)

564,722

(230)

67,727,846

55,616,983

(35,371,797)

(49,859,981)

(390,403,391)

(241,787,053)

479,375,834

239,261,124

(5,450,468)

168,828

17,664,930

13,727,672

(19,292,248)

(15,146,740)

114,250,706

1,980,833

(13,602,967)

(4,065,926)

(126,380,416)

(47,352,587)

130,076

188,676

(139,853,307)

(51,229,837)

CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH, 2011

Year ended
31-03-2011
( ` in Thousands)

Year ended
31-03-2010
( ` in Thousands)

Cash flow from financing activities

Proceeds from issue of subordinated debt, perpetual debt & upper Tier II

instruments (net of repayment)

(1,625,906)

18,214,280

Increase/(Decrease) in borrowings (excluding subordinated debt, perpetual

debt & upper Tier II instruments)

Proceeds from issue of share capital

Proceeds from share premium (net of share issue expenses)

Payment of dividend

Net cash generated from financing activities

Effect of exchange fluctuation translation reserve

Net increase in cash and cash equivalents

Cash and cash equivalents at the beginning of the year

Cash and cash equivalents at the end of the year

92,609,218

(1,717,478)

53,717

461,690

2,353,987

38,570,041

(5,694,110)

(4,205,287)

87,696,906

51,323,246

(46,833)

(204,112)

62,047,472

1,870,130

152,039,087

150,168,957

214,086,559

152,039,087

Note :
1. Cash and cash equivalents comprise of cash on hand (including foreign currency notes), balances with Reserve Bank

of India, balances with banks and money at call & short notice (refer Schedules 6 and 7 of the Balance Sheet).

In terms of our report attached.

For Deloitte Haskins & Sells
Chartered Accountants

For Axis Bank Ltd.

Adarsh Kishore
Chairman

Nalin M. Shah
Partner

R. H. Patil
Director

R. B. L. Vaish
Director

Shikha Sharma
Managing Director & CEO

Sushil Kumar Roongta
Director

S. B. Mathur
Director

S. K. Chakrabarti
Deputy Managing Director

P. J. Oza
Company Secretary

Date : 22 April, 2011
Place: Mumbai

Somnath Sengupta
Executive Director & CFO

AXIS BANK LIMITED - SCHEDULES

SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT 31 MARCH, 2011

SCHEDULE 1 - CAPITAL

Authorised Capital

500,000,000 Equity Shares of `10/- each

Issued, Subscribed and Paid-up capital

As at
31-03-2011
( ` in Thousands)

As at
31-03-2010
( ` in Thousands)

5,000,000

410,545,843 (Previous year - 405,174,119) Equity Shares of `10/-
each fully paid-up

4,105,458

4,051,741

SCHEDULE 2 - RESERVES AND SURPLUS

Statutory Reserve

Opening Balance

Additions during the year

II. Share Premium Account

Opening Balance

Additions during the year

Less: Share issue expenses

III.

Investment Reserve Account

Opening Balance

Additions during the year

Less: Deductions during the year

IV. General Reserve

Opening Balance

Additions during the year

V. Capital Reserve

Opening Balance

Additions during the year

VI. Foreign Currency Translation Reserve [refer Schedule 17 (5.5)]

Opening Balance

Additions during the year

19,349,123

13,062,790

8,471,227

6,286,333

27,820,350

19,349,123

97,695,255

2,355,535

59,115,068

39,064,364

(484,177)

100,050,790

97,695,255

149,372

(149,372)

146,109

3,388,491

3,534,600

4,858,305

47,630

4,905,935

(79,752)

(46,833)

(126,585)

622

149,372

(622)

149,372

143,000

3,109

146,109

2,619,129

2,239,176

4,858,305

124,361

(204,113)

(79,752)

VII. Balance in Profit & Loss Account

49,697,707

34,274,337

TOTAL

185,882,797

156,392,749

SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT 31 MARCH, 2011

SCHEDULE 3 - DEPOSITS

Demand Deposits

II.

III.

(i) From banks

(ii) From others

Savings Bank Deposits

Term Deposits

(i) From banks

(ii) From others

TOTAL

Deposits of branches in India

II. Deposits of branches outside India

TOTAL

SCHEDULE 4 - BORROWINGS

Borrowings in India

(i) Reserve Bank of India

(ii) Other Banks #

(iii) Other institutions & agencies **

II.

Borrowings outside India $

TOTAL

Secured borrowing included in I & II above

As at
31-03-2011
( ` in Thousands)

As at
31-03-2010
( ` in Thousands)

14,305,111

13,564,428

354,865,812

308,112,937

408,503,090

338,617,974

76,750,855

41,073,459

1,037,953,142

711,633,377

1,892,378,010

1,413,002,175

1,826,772,021

1,371,814,555

65,605,989

41,187,620

1,892,378,010

1,413,002,175

14,237,000

64,072,286

184,369,538

4,534,500

69,317,373

97,843,639

262,678,824

171,695,512

Borrowings from Other Banks include Subordinated Debt of `364.60 crores (previous year `384.45 crores) in
the nature of Non-Convertible Debentures, Perpetual Debt of `Nil (previous year `5.00 crores) and Upper Tier II
instruments of `59.10 crores (previous year `64.00 crores) [Also refer Notes 18 (2.1.2) & 18 (2.1.3)]

** Borrowings from Other institutions & agencies include Subordinated Debt of `4,966.70 crores (previous year
`5,101.85 crores) in the nature of Non-Convertible Debentures, Perpetual Debt of `214.00 crores (previous year
`209.00 crores) and Upper Tier II instruments of `248.40 crores (previous year `243.50 crores) [Also refer Notes
18 (2.1.2) & 18 (2.1.3)]

Borrowings outside India include Perpetual Debt of `205.14 crores (previous year `206.54 crores) and Upper Tier
II instruments of `935.30 crores (previous year `941.48 crores) [Also refer Notes 18 (2.1.3)]

Bills payable
Inter - office adjustments (net)
Interest accrued

SCHEDULE 5 - OTHER LIABILITIES AND PROVISIONS
I.
II.
III.
IV. Proposed dividend (includes tax on dividend)
V. Contingent provision against standard assets
VI. Others (including provisions)

TOTAL

35,843,209
-
4,143,337
6,678,836
6,296,647
29,126,598
82,088,627

29,104,011
-
3,480,104
5,669,386
4,635,084
18,446,023
61,334,608

SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT 31 MARCH, 2011

SCHEDULE 6 - CASH AND BALANCES WITH RESERVE BANK OF INDIA
I. Cash in hand (including foreign currency notes)
II. Balances with Reserve Bank of India :

in Current Account
in Other Accounts

(i)
(ii)
TOTAL

As at
31-03-2011
( ` in Thousands)

As at
31-03-2010
( ` in Thousands)

22,082,833

19,007,011

116,778,797
-
138,861,630

75,813,445
-
94,820,456

SCHEDULE 7 - BALANCES WITH BANKS AND MONEY AT CALL AND SHORT NOTICE
I.

In India
(i) Balance with Banks

(a)
(b)

in Current Accounts
in Other Deposit Accounts
(ii) Money at Call and Short Notice

(a) with banks
(b) with other institutions

TOTAL
II. Outside India

i)
in Current Accounts
in Other Deposit Accounts
ii)
iii) Money at Call & Short Notice
TOTAL
GRAND TOTAL (I+II)

SCHEDULE 8 - INVESTMENTS
Investments in India in -
I.
(i) Government Securities ##
(ii) Other approved securities
(iii) Shares
(iv) Debentures and Bonds
(v)
(vi) Others (Mutual Fund units, CD/CP, NABARD deposits, PTC etc.) @
Total Investments in India
Investments outside India in -
(i) Government Securities (including local authorities)
(ii) Subsidiaries and/or joint ventures abroad (amount less than `1,000 for

Investment in Subsidiaries/Joint Ventures

II.

4,407,510
49,184,270

7,922,165
34,401,730

29,900
-
53,621,680

4,835,529
10,658,205
6,109,515
21,603,249
75,224,929

5,000
-
42,328,895

9,078,381
5,811,355
-
14,889,736
57,218,631

441,549,553
-
6,928,717
180,704,920
2,595,500
82,405,862
714,184,552

341,958,753
-
5,295,991
138,232,582
1,535,500
65,941,255
552,964,081

429,340

current year, previous year `Nil)

(iii) Others
Total Investments outside India
GRAND TOTAL ( I + II )
##

-
6,784,075
6,784,075
559,748,156
Includes securities costing `4,424.90 crores (previous year `4,237.60 crores) pledged for availment of fund transfer
facility, clearing facility and margin requirements
Includes deposits with NABARD `4,064.71 crores (previous year `3,002.70 crores) and PTC’s `212.98 crores
(previous year `351.28 crores) net of depreciation

-
5,302,316
5,731,656
719,916,208

SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT 31 MARCH, 2011

SCHEDULE 9 - ADVANCES
A.

Bills purchased and discounted *

(i)
(ii) Cash credits, overdrafts and loans repayable on demand
(iii) Term loans #
TOTAL
(i)
(ii) Covered by Bank/Government Guarantees &&
(iii) Unsecured
TOTAL
I.

Secured by tangible assets $

Advances in India
(i) Priority Sector
(ii) Public Sector
(iii) Banks
(iv) Others

TOTAL
II.

Advances Outside India
(i) Due from banks
(ii) Due from others -

(a) Bills purchased and discounted
(b) Syndicated loans
(c) Others

TOTAL
GRAND TOTAL [ C I + C II ]

As at
31-03-2011
( ` in Thousands)

As at
31-03-2010
( ` in Thousands)

34,812,948
349,803,398
1,039,461,940
1,424,078,286
1,131,026,880
32,394,561
260,656,845
1,424,078,286

412,891,152
30,039,403
2,408,096
782,963,737
1,228,302,388

34,500,593
260,135,632
748,773,239
1,043,409,464
865,761,933
16,367,294
161,280,237
1,043,409,464

299,404,189
32,047,307
3,825,615
584,824,255
920,101,366

4,196,520

332,996

6,264,497
70,389,401
114,925,480
195,775,898
1,424,078,286

4,316,262
63,702,125
54,956,715
123,308,098
1,043,409,464

* Net of borrowings under Bills Rediscounting Scheme `1,800 crores (previous year `Nil)
# Net of borrowings under Inter Bank Participation Certificate `3,401 crores (previous year `Nil)
$
&& Includes advances against L/Cs issued by banks

Includes advances against book debts

SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT 31 MARCH, 2011

As at
31-03-2011
( ` in Thousands)

As at
31-03-2010
( ` in Thousands)

SCHEDULE 10 - FIXED ASSETS

Premises

Gross Block

At cost at the beginning of the year

Additions during the year

Deductions during the year

TOTAL

Depreciation

As at the beginning of the year

Charge for the year

Deductions during the year

Depreciation to date

Net Block

II.

III.

Other fixed assets (including furniture & fixtures)
Gross Block
At cost at the beginning of the year
Additions during the year
Deductions during the year
TOTAL
Depreciation
As at the beginning of the year
Charge for the year
Deductions during the year
Depreciation to date
Net Block
CAPITAL WORK-IN-PROGRESS (including capital advances)
GRAND TOTAL (I + II + III)

SCHEDULE 11 - OTHER ASSETS
Inter-office adjustments (net)
I.
Interest Accrued
II.
Tax paid in advance/tax deducted at source (net of provisions)
III.
Stationery and stamps
IV.
V.
Non banking assets acquired in satisfaction of claims
VI. Others #

TOTAL
# Includes deferred tax assets of `816.85 crores (previous year `611.33 crores)

891,351

8,244,785

(18,796)

9,117,340

161,989

46,669

(10,277)

198,381

8,918,959

20,188,424
5,703,660
(744,511)
25,147,573

9,265,956
2,849,203
(553,192)
11,561,967
13,585,606
226,891
22,731,456

-
17,165,984
401,429
11,794
53,174
28,688,826
46,321,207

891,351

117,422

44,567

161,989

729,362

16,527,205
4,068,383
(407,164)
20,188,424

7,147,088
2,298,651
(179,783)
9,265,956
10,922,468
572,369
12,224,199

-
12,771,048
643,504
9,698
21,724
25,611,639
39,057,613

SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT 31 MARCH, 2011

As at
31-03-2011
( ` in Thousands)

As at
31-03-2010
( ` in Thousands)

SCHEDULE 12 - CONTINGENT LIABILITIES

II.

III.

Claims against the bank not acknowledged as debts

Liability for partly paid investments

2,344,295

2,712,325

Liability on account of outstanding forward exchange and derivative contracts:

(a) Forward Contracts

1,940,496,939

1,265,355,295

(b)

Interest Rate Swaps, Currency Swaps, Forward Rate Agreement &
Interest Rate Futures

TOTAL (a + b + c)

IV. Guarantees given on behalf of constituents

In India

Outside India

Acceptances, endorsements and other obligations

VI. Other items for which the Bank is contingently liable

GRAND TOTAL (I + II + III + IV + V + VI)

1,647,016,628

1,317,574,459

141,258,629

56,162,649

3,728,772,196

2,639,092,403

464,332,544

332,315,553

76,278,216

41,767,220

249,276,960

164,634,485

18,969,073

2,290,037

4,539,973,284

3,182,812,023

SCHEDULES FORMING PART OF THE PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH, 2011

Interest/discount on advances/bills
Income on investments
Interest on balances with Reserve Bank of India and other inter-bank funds

SCHEDULE 13 - INTEREST EARNED
I.
II.
III.
IV. Others
TOTAL

SCHEDULE 14 - OTHER INCOME
I.
II.
III.
IV.
V.

Commission, exchange and brokerage
Profit/(Loss) on sale of Investments (net)
Profit/(Loss) on sale of fixed assets (net)
Profit on exchange transactions/Derivatives transactions (net)
Income earned by way of dividends etc. from
subsidiaries/companies and/or joint venture abroad/in India

VI. Miscellaneous Income

[including recoveries on account of advances/investments/derivative
receivables written off in earlier years `325.22 crores (previous year
`174.43 crores) and profit on account of portfolio sell downs/securitisation
`17.96 crores (previous year `22.45 crores)]
TOTAL

SCHEDULE 15 - INTEREST EXPENDED
I.
II.
III. Others @

Interest on deposits
Interest on Reserve Bank of India/Inter-bank borrowings

TOTAL
@ Including interest on repos & subordinated debt

SCHEDULE 16 - OPERATING EXPENSES
Payments to and provisions for employees
I.
Rent, taxes and lighting
II.
III.
Printing and stationery
IV. Advertisement and publicity
V. Depreciation on bank’s property
VI. Directors’ fees, allowance and expenses
VII. Auditors’ fees and expenses
VIII. Law charges
IX.
X.
XI.
XII. Other expenditure

Postage, telegrams, telephones, etc.
Repairs and maintenance
Insurance

TOTAL

Year ended
31-03-2011
( ` in Thousands)

Year ended
31-03-2010
( ` in Thousands)

104,031,107
44,386,841
1,826,199
1,303,911
151,548,058

79,866,040
34,283,084
1,200,049
1,031,042
116,380,215

33,574,183
3,663,189
(69,762)
5,636,045

25,651,986
7,362,439
(38,707)
4,458,991

7,500
3,510,183

1,419
2,021,691

46,321,338

39,457,819

74,985,188
1,609,768
9,323,274
85,918,230

57,145,252
1,493,646
7,696,363
66,335,261

16,139,001
6,798,464
1,095,968
790,153
2,895,872
5,758
7,500
133,752
1,984,921
3,839,337
1,849,490
12,254,065

47,794,281

12,558,219
4,960,904
831,035
472,694
2,343,218
5,109
6,800
147,406
1,756,553
3,023,309
1,414,304
9,577,672

37,097,223

17 Significant accounting policies for the year ended 31 March, 2011

Background

Axis Bank Limited (‘the Bank’) was incorporated in 1993 and provides a complete suite of corporate and retail
banking products.

Basis of preparation

The financial statements have been prepared and presented under the historical cost convention on the accrual basis
of accounting, and comply with the generally accepted accounting principles, statutory requirements prescribed
under the Banking Regulation Act, 1949, the circulars and guidelines issued by the Reserve Bank of India (‘RBI’)
from time to time and the Accounting Standards notified under the Companies (Accounting Standards) Rules,
2006, to the extent applicable and current practices prevailing within the banking industry in India.

Use of estimates

The preparation of the financial statements in conformity with the generally accepted accounting principles requires
the Management to make estimates and assumptions that affect the reported amounts of assets and liabilities,
revenues and expenses and disclosure of contingent liabilities at the date of the financial statements. Actual
results could differ from those estimates. The Management believes that the estimates used in the preparation
of the financial statements are prudent and reasonable. Any revisions to the accounting estimates are recognised
prospectively in the current and future periods.

Changes in accounting estimates

4.1

Change in estimated useful life of fixed assets

During the year, the Bank has revised the estimated useful lifes of the following types of fixed assets:

• Modems, scanners, routers, hubs and switches from 10 years to 5 years

•

Video conferencing equipment and printers from 10 years to 3 years

Racks/cabinets for IT equipment from 16 years to 5 years

• Owned premises from 20 years to 61 years

As a result of the aforesaid revisions, the net depreciation charge for the year is higher by `16.22 crores with a
corresponding decrease in the net block of fixed assets.

4.2

Change in estimate of lease term for operating leases

During the current year, the Bank has revised its estimate of lease term in the case of assets taken on operating
leases to include the secondary period of the lease involving further payment of lease rentals based on continuation
of the lease at the option of the Bank, as against the primary lease period as considered hitherto. As a result the
operating expenses for the year are higher by `93.04 crores with a consequent reduction to the profit before tax.

Significant accounting policies

5.1

Investments

Classification

In accordance with the RBI guidelines, investments are classified at the date of purchase as:

• Held for Trading (‘HFT’);

• Available for Sale (‘AFS’); and

• Held to Maturity (‘HTM’).

Investments that are held principally for sale within a short period are classified as HFT securities. As per the RBI
guidelines, HFT securities, which remain unsold for a period of 90 days are reclassified as AFS securities as on that
date.

Investments that the Bank intends to hold till maturity are classified under the HTM category.

All other investments are classified as AFS securities.

However, for disclosure in the Balance Sheet, investments in India are classified under six categories - Government
Securities, Other approved securities, Shares, Debentures and Bonds, Investment in Subsidiaries/Joint Ventures and
Others.

Investments made outside India are classified under three categories – Government Securities, Subsidiaries and/or
Joint Ventures abroad and Others.

Transfer of security between categories

Transfer of security between categories of investments is accounted as per the RBI guidelines.

Acquisition cost

Costs including brokerage, commission pertaining to investments, paid at the time of acquisition, are charged to
the Profit and Loss Account.

Broken period interest is charged to the Profit and Loss Account.

Cost of investments is computed based on the weighted average cost method.

Valuation

Investments classified under the HTM category are carried at acquisition cost. Any premium on acquisition over
face value is amortised on a constant yield to maturity basis over the remaining period to maturity. In terms of
RBI guidelines, discount on securities held under HTM category is not accrued and such securities are held at the
acquisition cost till maturity.

Investments classified under the AFS and HFT categories are marked to market. The market/fair value of quoted
investments included in the ‘Available for Sale’ and ‘Held for Trading’ categories is the market price of the scrip
as available from the trades/quotes on the stock exchanges, SGL account transactions, price list of RBI or prices
declared by Primary Dealers Association of India (‘PDAI’) jointly with Fixed Income Money Market and Derivatives
Association of India (‘FIMMDA’), periodically. Net depreciation, if any, within each category of each investment
classification is recognised in the Profit and Loss Account. The net appreciation if any, under each category of
each investment classification is ignored. The book value of individual securities is not changed consequent to the
periodic valuation of investments.

Treasury Bills, Exchange Funded Bills, Commercial Paper and Certificate of Deposits being discounted instruments,
are valued at carrying cost.

Units of mutual funds are valued at the latest repurchase price/net asset value declared by the mutual fund.

Market value of investments where current quotations are not available, is determined as per the norms prescribed
by the RBI as under:

• market value of unquoted Government Securities is derived based on the Prices/Yield to Maturity (‘YTM’) rate
for Government Securities of equivalent maturity as notified by FIMMDA jointly with the PDAI at periodic
intervals;

•

in case of Central Government Securities, which do not qualify for SLR requirement, the market price is derived
by adding the appropriate mark up to the Base Yield Curve of Central Government Securities as notified by
FIMMDA;

• market value of unquoted State Government Securities is derived by adding the appropriate mark up above
the Base Yield Curve of the Central Government Securities of equivalent maturity as notified by the FIMMDA/
PDAI at periodic intervals;

•

in case of unquoted bonds, debentures and preference shares where interest/dividend is received regularly, the
market price is derived based on the YTM for Government Securities as notified by FIMMDA/PDAI and suitably
marked up for credit risk applicable to the credit rating of the instrument. The matrix for credit risk mark-up for
each categories and credit ratings along with residual maturity issued by FIMMDA is adopted for this purpose;

in case of preference shares where dividend is not received regularly, the price derived on the basis of YTM is
discounted in accordance with the RBI guidelines;

in case of bonds and debentures (including PTCs) where interest is not received regularly, the valuation is in
accordance with prudential norms for provisioning as prescribed by RBI;

equity shares, for which current quotations are not available or where the shares are not quoted on the stock
exchanges, are valued at break-up value (without considering revaluation reserves, if any) which is ascertained
from the company’s latest Balance Sheet. In case the latest Balance Sheet is not available, the shares are valued
at Re. 1 per company;

units of Venture Capital Funds (VCF) held under AFS category where current quotations are not available are
marked to market based on the Net Asset Value (NAV) shown by VCF as per the latest audited financials of
the fund. In case the audited financials are not available for a period beyond 18 months, the investments
are valued at Re.1 per VCF. Investment in unquoted VCF after 23 August, 2006 are categorised under HTM
category for the initial period of three years and valued at cost as per RBI guidelines; and

investments in Credit Linked Notes (‘CLNs’), are valued based on current quotations where the same are
available. In the absence of quotes, the same are valued based on internal valuation methodology using
appropriate mark-up and other estimates such as price of the underlying Foreign Currency Convertible Bond
(FCCB), rating category of the CLN etc.

Investments in subsidiaries/joint ventures are categorised as HTM and assessed for impairment to determine
permanent diminution, if any, in accordance with the RBI guidelines.

Realised gains on investments under the HTM category are recognised in the Profit and Loss Account and
subsequently appropriated to Capital Reserve account in accordance with the RBI guidelines. Losses are recognised
in the Profit and Loss Account.

All investments are accounted for on settlement date except investments in equity shares which are accounted for
on trade date as the corporate actions are effected in equity on the trade date.

Repurchase and reverse repurchase transactions

Repurchase and reverse repurchase transactions [excluding those conducted under the Liquidity Adjustment Facility
(LAF) with RBI] are accounted as collateralised borrowing and lending respectively. Such transactions done under
LAF are accounted as outright sale and outright purchase respectively. However, depreciation in their value, if any,
compared to their original cost, is recognised in the Profit and Loss Account.

5.2

Advances

Advances are classified into performing and non-performing advances (‘NPAs’) as per the RBI guidelines and are
stated net of specific provisions made towards NPAs and floating provisions. Further, NPAs are classified into sub-
standard, doubtful and loss assets based on the criteria stipulated by the RBI. Provisions for NPAs are made for
sub-standard and doubtful assets at rates as prescribed by the RBI with the exception for agriculture advances and
schematic retail advances. In respect of schematic retail advances, provisions are made in terms of a bucket-wise
policy upon reaching specified stages of delinquency (90 days or more of delinquency) under each type of loan,
which satisfies the RBI prudential norms on provisioning. Provisions in respect of agriculture advances classified into
sub-standard and doubtful assets are made at rates which are higher than those prescribed by the RBI.

Loss assets and unsecured portion of doubtful assets are provided/written off as per the extant RBI guidelines. NPAs
are identified by periodic appraisals of the loan portfolio by the Management.

For restructured/rescheduled assets, provision is made in accordance with the guidelines issued by RBI, which
requires the diminution in the fair value of the assets to be provided at the time of restructuring.

A general provision @ 0.25% in case of direct advances to agricultural and SME sectors, 1% in respect of advances
classified as commercial real estate, 2% in respect of housing loans at teaser rates and 0.40% for all other advances
is made as prescribed by the RBI.

5.3

Country risk

In addition to the provisions required to be held according to the asset classification status, provisions are held for
individual country exposure (other than for home country). The countries are categorised into seven risk categories
namely insignificant, low, moderate, high, very high, restricted and off-credit and provision is made on exposures
exceeding 180 days on a graded scale ranging from 0.25% to 100%. For exposures with contractual maturity of
less than 180 days, 25% of the normal provision requirement is held. If the country exposure (net) of the Bank in
respect of each country does not exceed 1% of the total funded assets, no provision is maintained on such country
exposure.

5.4

Securtisation

The Bank enters into purchase/sale of corporate and retail loans through direct assignment/Special Purpose Vehicle
(‘SPV’). In most cases, post securtisation, the Bank continues to service the loans transferred to the assignee/SPV.
The Bank also provides credit enhancement in the form of cash collaterals and/or by subordination of cash flows to
Senior Pass Through Certificate (‘PTC’) holders. In respect of credit enhancements provided or recourse obligations
(projected delinquencies, future servicing etc.) accepted by the Bank, appropriate provision/disclosure is made at the
time of sale in accordance with AS 29, Provisions, Contingent Liabilities and Contingent Assets.

Gain on securtisation transaction is recognized over the period of the underlying securities issued by the SPV. Loss
on securtisation is immediately debited to the Profit and Loss Account.

5.5

Foreign currency transactions

In respect of domestic operations, transactions denominated in foreign currencies are accounted for at the rates
prevailing on the date of the transaction. Monetary foreign currency assets and liabilities are translated at the
Balance Sheet date at rates notified by Foreign Exchange Dealers Association of India (‘FEDAI’). All profits/losses
resulting from year end revaluations are recognised in the Profit and Loss Account.

Financial statements of foreign branches classified as non-integral foreign operations are translated as follows:

• Assets and liabilities (both monetary and non-monetary as well as contingent liabilities) are translated at closing

rates notified by FEDAI at the year end.

•

Income and expenses are translated at the rates prevailing on the date of the transactions.

• All resulting exchange differences are accumulated in a separate ‘Foreign Currency Translation Reserve’ till the

disposal of the net investments.

Outstanding forward exchange contracts (excluding currency swaps undertaken to hedge foreign currency assets/
liabilities and funding swaps which are not revalued) and spot exchange contracts are revalued at year end exchange
rates notified by FEDAI for specified maturities and at interpolated rates for contract of interim maturities. The
resulting gains or losses on revaluation are included in the Profit and Loss Account in accordance with RBI/FEDAI
guidelines. The forward exchange contracts of longer maturities where exchange rates are not notified by FEDAI
are revalued at the forward exchange rates implied by the swap curves in respective currencies. The resultant gains
or losses are recognised in the Profit and Loss Account.

Premium/discount on currency swaps undertaken to hedge foreign currency assets and liabilities and funding swaps
is recognised as interest income/expense and is amortised on a pro-rata basis over the underlying swap period.

Contingent liabilities on account of foreign exchange contracts/options, guarantees, acceptances, endorsements
and other obligations denominated in foreign currencies are disclosed at closing rates of exchange notified by
FEDAI.

5.6

Derivative transactions

Derivative transactions comprise of forward contracts, swaps and options which are disclosed as contingent liabilities.
The forwards, swaps and options are segregated as trading or hedge transactions. Trading derivative contracts are
revalued at the Balance Sheet date with the resulting unrealised gain or loss being recognised in the Profit and
Loss Account and correspondingly in other assets or other liabilities respectively. For hedge transactions, the Bank
identifies the hedged item (asset or liability) at the inception of transaction itself. The effectiveness is ascertained
at the time of inception of the hedge and periodically thereafter. Hedge derivative transactions are accounted for
pursuant to the principles of hedge accounting. The premium on option contracts is accounted for as per FEDAI
guidelines. Pursuant to the RBI guidelines any receivables under derivatives contracts which remain overdue for
more than 90 days are reversed through the Profit and Loss Account and are held in a separate Suspense Account.

5.7

Revenue recognition

Interest income is recognised on an accrual basis except interest income on non-performing assets, which is
recognised on receipt in accordance with Accounting Standard 9 and the RBI guidelines.

Fees and commission income is recognised when due, except for guarantee commission which is recognised pro-
rata over the period of the guarantee.

Dividend is accounted on an accrual basis when the right to receive the dividend is established.

Gain/loss on sell down of loans and advances through direct assignment is recognised at the time of sale.

Gain or loss arising on sale of NPAs is accounted as per the guidelines prescribed by the RBI, which require provisions
to be made for any deficit (where sale price is lower than the net book value), while surplus (where sale price is
higher than the net book value) is ignored.

Arrangership/syndication fee is accounted for on completion of the agreed service and when right to receive is
established.

5.8

Fixed assets and depreciation

Fixed assets are carried at cost of acquisition less accumulated depreciation and impairment, if any. Cost includes
freight, duties, taxes and incidental expenses related to the acquisition and installation of the asset.

Capital work-in-progress includes cost of fixed assets that are not ready for their intended use and also includes
advances paid to acquire fixed assets.

Depreciation (including on assets given on operating lease) is provided on the straight-line method from the date
of addition. The rates of depreciation prescribed in Schedule XIV to the Companies Act, 1956 are considered as
the minimum rates. If the Management’s estimate of the useful life of a fixed asset at the time of acquisition of the
asset or of the remaining useful life on a subsequent review is shorter, then depreciation is provided at a higher rate
based on the Management’s estimate of the useful life/remaining useful life. Pursuant to this policy, depreciation
has been provided using the following estimated useful lives:

Asset

Owned premises

Assets given on operating lease

Computer hardware including printers

Application software

Vehicles

Estimated useful life

61 years

20 years

3 years

5 years

4 years

Asset

EPABX, telephone instruments

CCTV and video conferencing equipment

Mobile phone

Locker cabinets/cash safe/strong room door

Modem, scanner, routers, hubs, switches, racks/cabinets for IT equipment

Assets at staff residence

All other fixed assets

Estimated useful life

8 years

3 years

2 years

16 years

5 years

3 years

10 years

All fixed assets individually costing less than `5,000 are fully depreciated in the year of installation.

Depreciation on assets sold during the year is recognised on a pro-rata basis to the Profit and Loss Account till the
date of sale.

The carrying amounts of assets are reviewed at each Balance Sheet date to ascertain if there is any indication of
impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of
an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset’s net selling price and
value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the
weighted average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the
asset over its remaining useful life.

5.9

Lease transactions

Assets given on operating lease are capitalised at cost. Rentals received by the Bank are recognised in the Profit and
Loss Account on accrual basis.

Leases where the lessor effectively retains substantially all the risks and benefits of ownership over the lease term
are classified as operating lease. Lease payments for assets taken on operating lease are recognised as an expense
in the Profit and Loss Account on a straight-line basis over the lease term.

5.10 Retirement and other employee benefits

Provident Fund

Retirement benefit in the form of provident fund is a defined contribution scheme and the contributions are
charged to the Profit and Loss Account of the year when the contributions to the fund are due. There are no other
obligations other than the contribution payable to the trust.

Gratuity

The Bank contributes towards gratuity fund (defined benefit retirement plan) administered by the Life Insurance
Corporation of India (‘LIC’), Metlife Insurance Company Limited (‘Metlife’), HDFC Standard Life Insurance Company
Limited (‘HDFC Life’) and ICICI Prudential Life Insurance Company Limited (‘ICICI Pru’) for eligible employees. Under
this scheme, the settlement obligations remain with the Bank, although LIC/Metlife/HDFC Life/ICICI Pru administer
the scheme and determine the contribution premium required to be paid by the Bank. The plan provides a lump
sum payment to vested employees at retirement or termination of employment based on the respective employee’s
salary and the years of employment with the Bank. Liability with regard to gratuity fund is accrued based on
actuarial valuation conducted by an independent actuary using the Projected Unit Credit Method as at 31 March
each year.

Leave Encashment

Short term compensated absences are provided for based on estimates. The Bank provides leave encashment
benefit (long term), which is a defined benefit scheme based on actuarial valuation conducted by an independent
actuary. The actuarial valuation is carried out as per the Projected Unit Credit Method as at 31 March each year.

Superannuation

Employees of the Bank are entitled to receive retirement benefits under the Bank’s Superannuation scheme either
under a cash-out option through salary or under a defined contribution plan. Through the defined contribution
plan, the Bank contributes annually a specified sum of 10% of the employee’s eligible annual basic salary to LIC,
which undertakes to pay the lumpsum and annuity benefit payments pursuant to the scheme. Superannuation
contributions are recognised in the Profit and Loss Account in the period in which they accrue.

Actuarial gains/losses are immediately taken to the Profit and Loss Account and are not deferred.

5.11 Debit/Credit card reward points

The Bank estimates the probable redemption of debit and credit card reward points using an actuarial method at
the Balance Sheet date by employing an independent actuary. Provision for the said reward points is then made
based on the actuarial valuation report as furnished by the said independent actuary.

5.12 Taxation

Income tax expense is the aggregate amount of current tax and deferred tax charge. Current year taxes are
determined in accordance with the Income Tax Act, 1961. Deferred income taxes reflects the impact of current year
timing differences between taxable income and accounting income for the year and reversal of timing differences
of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance
Sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off
current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the
taxes on income levied by same governing taxation laws.

Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable
income will be available against which such deferred tax assets can be realised. The impact of changes in the
deferred tax assets and liabilities is recognized in the Profit and Loss Account.

Deferred tax assets are recognized and reassessed at each reporting date, based upon the Management’s judgement
as to whether realisation is considered as reasonably certain. Deferred tax assets are recognised on carry forward of
unabsorbed depreciation and tax losses only if there is virtual certainty that such deferred tax asset can be realised
against future profits.

5.13 Share issue expenses

Share issue expenses are adjusted from share premium account.

5.14 Earnings per share

The Bank reports basic and diluted earnings per share in accordance with AS 20, Earnings per Share, as notified by
the Companies (Accounting Standards) Rules, 2006. Basic earnings per share is computed by dividing the net profit
after tax by the weighted average number of equity shares outstanding for the year.

Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue equity
shares were exercised or converted during the year. Diluted earnings per share is computed using the weighted
average number of equity shares and dilutive potential equity shares outstanding at the year end.

5.15 Employee stock option scheme

The 2001 Employee Stock Option Scheme (‘the Scheme’) provides for grant of stock options on equity shares
of the Bank to employees and Directors of the Bank and its subsidiaries. The Scheme is in accordance with the
Securities and Exchange Board of India (SEBI) (Employees Stock Option Scheme and Employee Stock Purchase
Scheme) Guidelines, 1999. The Bank follows the intrinsic value method to account for its stock based employee
compensation plans as per the Guidance Note on ‘Accounting for Employee Share-based Payments’ issued by the
ICAI. Options are granted at an exercise price, which is equal to/less than the fair market price of the underlying

equity shares. The excess of such fair market price over the exercise price of the options as at the grant date is
recognised as a deferred compensation cost and amortised on a straight-line basis over the vesting period of such
options.

The fair market price is the latest available closing price, prior to the date of grant, on the stock exchange on which
the shares of the Bank are listed. If the shares are listed on more than one stock exchange, then the stock exchange
where there is highest trading volume on the said date is considered.

5.16 Provisions, contingent liabilities and contingent assets

A provision is recognised when the Bank has a present obligation as a result of past event where it is probable that
an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made.
Provisions are not discounted to its present value and are determined based on best estimate required to settle the
obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the
current best estimates.

A disclosure of contingent liability is made when there is:

•

a possible obligation arising from a past event, the existence of which will be confirmed by occurrence or non
occurrence of one or more uncertain future events not within the control of the Bank; or

a present obligation arising from a past event which is not recognised as it is not probable that an outflow of
resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot
be made.

When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources
is remote, no provision or disclosure is made.

Contingent assets are not recognised in the financial statements. However, contingent assets are assessed continually
and if it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognised
in the period in which the change occurs.

18 Notes forming part of the financial statements for the year ended 31 March,

2011
(Currency: In Indian Rupees)

On 17 November, 2010, the Board of Directors of the Bank approved the acquisition of certain businesses
undertaken by Enam Securities Private Limited (ESPL) through its wholly-owned subsidiary, Axis Securities and Sales
Limited (ASSL), by way of a demerger. It is envisaged that these businesses will be transferred to ASSL, pursuant
to a Scheme of Arrangement, as may be approved by the relevant High Courts under Sections 391 to 394 and
other relevant provisions of the Companies Act, 1956 and subject to receipt of necessary requisite approvals. The
appointed date for the purpose of the Demerger under the Scheme shall be 1 April, 2010. The valuation of the ESPL
business was assessed at `2,067 crores and in consideration for the demerger, the Bank will issue shares in the ratio
of 5.7 equity shares of the Bank (aggregating 13,782,600 equity shares) of the face value of `10 each for every
1 equity share (aggregating 2,418,000 equity shares) of `10 each held by the shareholders of ESPL.

Statutory disclosures as per RBI

2.1.1

‘Provisions and contingencies’ recognised in the Profit and Loss Account include:

For the year ended

Provision for income tax

- Current tax for the year

- Deferred tax for the year

Provision for fringe benefit tax

Provision for wealth tax

Provision for interest tax

Provision for non performing advances & investments
(including bad debts written off and write backs)

Provision for restructured assets

Provision towards standard assets

Provision for depreciation in value of investments

Provision for country risk

Provision for other contingencies

Total

(` in crores)

31 March, 2011 31 March, 2010

1,953.03

(205.52)

(0.34)

1,492.02

(155.19)

1,747.17

1,336.83

0.46

0.29

955.12

15.06

166.16

99.27

2.45

41.22

0.35

1,357.04

56.47

(0.91)

(22.23)

(1.53)

3,027.20

2,726.02

2.1.2

In terms of its guidelines for implementation of the new capital adequacy framework issued on 27 April, 2007, RBI
directed banks with overseas branches to migrate to the revised framework for capital computation (under Basel II)
with effect from 31 March, 2008. The minimum capital to be maintained by banks under the Revised Framework
is subject to a prudential floor of 80% of the capital requirement under Basel I.

The capital adequacy ratio of the Bank, calculated as per the RBI guidelines (Basel II requirement being higher) is set
out below:

Capital adequacy

Tier I

Tier II

Total capital

Total risk weighted assets and contingents

Capital ratios

Tier I

Tier II

CRAR

Amount raised by issue of Innovative Perpetual Debt Instruments (IPDI)

Amount raised by issue of Upper Tier II instruments

Amount of Subordinated Debt raised as Tier II capital (details given below)

(` in crores)

31 March, 2011 31 March, 2010

18,503.49

6,366.86

24,870.35

15,789.42

6,518.47

22,307.89

196,562.61

141,169.77

9.41%

3.24%

12.65%

11.18%

4.62%

15.80%

`2,000 crores

The Bank has not raised any subordinated debt during the year ended 31 March, 2011.

During the year ended 31 March, 2010, the Bank raised subordinated debt of `2,000.00 crores, the details of
which are set out below:

Date of allotment

Period

16 June, 2009

120 months

Coupon

9.15%

Amount

`2,000.00 crores

During the year ended 31 March, 2011, the Bank redeemed subordinated debt of `155 crores, the details of which
are set out below:

Date of maturity

4 June, 2010

20 June, 2010

Period

72 months

93 months

Coupon

5.75%

9.05%

Amount

`150.00 crores

`5.00 crores

During the year ended 31 March, 2010, the Bank redeemed subordinated debt of `30.00 crores, the details of
which are set out below:

Date of maturity

26 April, 2009

Period

69 months

Coupon

6.50%

Amount

`30.00 crores

2.1.3 The Bank has not raised any hybrid capital during the years ended 31 March, 2011 and 31 March, 2010.

2.1.4 The key business ratios and other information is set out below:

As at

Interest income as a percentage to working funds #

Non-interest income as a percentage to working funds #

Operating profit as a percentage to working funds #

Return on assets (based on working funds)#

31 March, 2011
%

31 March, 2010
%

7.49

2.29

3.17

1.68

7.73

2.62

3.48

1.67

Business (deposits less inter bank deposits plus advances) per employee**

`13.66 crores

`11.11 crores

Profit per employee**

`0.14 crore

`0.12 crore

Net non performing assets as a percentage of net customer assets*

0.26

0.36

# Working funds represent average of total assets as reported to RBI in Form X under Section 27 of the Banking

Regulation Act, 1949 during the year

* Net Customer assets include advances and credit substitutes

** Productivity ratios are based on average employee numbers for the year

2.1.5 The provisioning coverage ratio of the Bank computed in terms of the RBI guidelines as on 31 March, 2011 was

80.90% (previous year 72.38%).

2.1.6 Asset Quality

i) Net non-performing assets to net advances is set out below:

Net non performing assets as a percentage of net advances

0.29

0.40

31 March, 2011
%

31 March, 2010
%

ii) Movement in gross non-performing assets is set out below:

Gross NPAs as at the beginning of the year

Additions (fresh NPAs) during the year

Sub-total (A)

Less:-

(i) Upgradations

(ii) Recoveries (excluding recoveries made from

upgraded accounts)

(iii) Write-offs

Sub-total (B)

Gross NPAs as at the end of the year (A-B)

Gross NPAs as at the beginning of the year

Additions (fresh NPAs) during the year

Sub-total (A)

Less:-

(i) Upgradations

(ii) Recoveries (excluding recoveries made from

upgraded accounts)

(iii) Write-offs

Sub-total (B)

Gross NPAs as at the end of the year (A-B)

31 March, 2011

Advances

Investments

1,295.42

1,448.31

2,743.73

22.58

(` in crores)

Total

1,318.00

1,448.31

2,766.31

228.59

260.23

667.92

1,156.74

1,586.99

9.90

0.25

10.15

12.43

31 March, 2010

Advances

Investments

890.48

1,784.67

2,675.15

7.29

16.03

23.32

270.13

668.17

1,166.89

1,599.42

(` in crores)

Total

897.77

1,800.70

2,698.47

201.33

147.65

1,030.75

1,379.73

1,295.42

0.74

22.58

148.39

1,030.75

1,380.47

1,318.00

iii) Movement in net non-performing assets is set out below:

Opening balance at the beginning of the year

Additions during the year

Reductions during the year

Interest Capitalisation – Restructured NPA Accounts

Closing balance at the end of the year

Opening balance at the beginning of the year

Additions during the year

Reductions during the year

Interest Capitalisation – Restructured NPA Accounts

Closing balance at the end of the year

31 March, 2011

Advances

Investments

412.60

453.05

(452.97)

(2.33)

410.35

6.40

(6.40)

31 March, 2010

Advances

Investments

327.13

420.50

(335.03)

412.60

6.99

(0.59)

6.40

iv) Movement in provisions for non-performing assets is set out below:

Opening balance at the beginning of the year

Provisions made during the year

Transfer from restructuring provision

Write-offs/(write back) of excess provisions

Closing balance at the end of the year

31 March, 2011

Advances

Investments

882.82

984.25

11.01

(703.77)

1,174.31

16.18

(3.75)

12.43

31 March, 2010

Advances

Investments

(` in crores)

Total

419.00

453.05

(459.37)

(2.33)

410.35

(` in crores)

Total

327.13

427.49

(335.62)

419.00

(` in crores)

Total

899.00

984.25

11.01

(707.52)

1,186.74

(` in crores)

Total

570.64

1,373.21

Opening balance at the beginning of the year

Provisions made during the year

Write-offs/(write back) of excess provisions

Reclassification of floating provision*

Closing balance at the end of the year

563.35

1,364.17

(1,041.45)

(3.25)

882.82

*on account of exclusion from Net NPA at the end of the year

7.29

9.04

(0.15)

(1,041.60)

16.18

(3.25)

899.00

v) Total exposure to top four non-performing assets is given below:

Total exposure to top four NPA accounts

(` in crores)

31 March, 2011

31 March, 2010

291.54

162.64

vi) Non-performing assets as percentage of total assets in that sector is set out below:

Sr. No.

Sector

Agriculture and allied activities

Industry (Micro & Small, Medium and Large)

Services*

Personal loans

31 March, 2011
%

31 March, 2010
%

2.56

1.15

0.21

1.38

2.31

0.95

0.69

1.86

* includes Nil (previous year 0.06%) NPAs in respect of commercial real estate and 0.11% (previous year
0.39%) in respect of trade segment

2.1.7 Movement in floating provision is set out below:

(` in crores)

For the year ended

31 March, 2011

31 March, 2010

Opening balance at the beginning of the year

Provisions made during the year

Draw down made during the year

Closing balance at the end of the year

3.25

The Bank has not made any draw down out of the floating provision during the current and the previous year.

2.1.8 Provision on Standard Assets:

(` in crores)

31 March, 2011

31 March, 2010

Provision towards Standard Assets [includes `16.69 crores, (previous
year `5.09 crores) of standard provision on derivative exposures]

629.66

463.51

2.1.9 Amount of provisions made for income-tax during the year:

Provision for Income Tax

a) Current tax for the year

b) Deferred tax for the year

c) Provision for fringe benefit tax

(` in crores)

31 March, 2011

31 March, 2010

1,953.03

(205.52)

(0.34)

1,747.17

1,492.02

(155.19)

1,336.83

2.1.10 Details of Investments are set out below:

i) Value of Investments:

1) Gross value of Investments

a) In India

b) Outside India

(i) Provision for Depreciation

a) In India

b) Outside India

(ii) Provision for Non-Performing Investments

a) In India

b) Outside India

3) Net value of Investments

a) In India

b) Outside India

ii) Movement of provisions held towards depreciation on investments:

Opening balance

Add: Provisions made during the year

Less: Write offs/write back of excess provisions during the year

Closing balance

2.1.11 A summary of lending to sensitive sectors is set out below:

As at
A. Exposure to Real Estate Sector
1) Direct Exposure

(i)

Residential mortgages
- of which housing loans eligible for inclusion in priority

sector advances
(ii) Commercial real estate
(iii)

Investments in Mortgage Backed Securities (MBS) and other
securtized exposures -
a. Residential
b. Commercial real estate

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

Total Exposure to Real Estate Sector

(` in crores)

31 March, 2011

31 March, 2010

71,641.51

631.99

55,401.96

759.22

210.62

58.83

12.43

71,418.46

573.16

89.37

80.81

16.18

55,296.41

678.41

(` in crores)

31 March, 2011

31 March, 2010

170.18

124.68

25.41

269.45

200.00

40.97

70.79

170.18

(` in crores)

31 March, 2011

31 March, 2010

20,646.94

15,612.74

6,978.34
9,029.16

6,050.33
6,759.51

-
-

9,725.22
39,401.32

4,302.08
26,674.33

As at
B. Exposure to Capital Market
1. Direct investments in equity shares, convertible bonds, convertible
debentures and units of equity-oriented mutual funds the corpus
of which is not exclusively invested in corporate debt

2. Advances against shares/bonds/debentures or other securities or
on clean basis to individuals for investment in shares (including
IPOs/ESOPs), convertible bonds, convertible debentures, and units
of equity-oriented mutual funds

3. Advances for any other purposes where shares or convertible
bonds or convertible debentures or units of equity-oriented
mutual funds are taken as primary security

4. Advances for any other purposes to the extent secured by the
collateral security of shares or convertible bonds or convertible
debentures or units of equity-oriented mutual funds i.e. where
primary security other than shares/ convertible bonds/convertible
debentures/units of equity-oriented mutual funds does not fully
cover the advances
Secured and unsecured advances to stockbrokers and guarantees
issued on behalf of stockbrokers and marketmakers
Loans sanctioned to corporates against the security of shares/
bonds/debentures or other securities or on clean basis for meeting
promoter’s contribution to the equity of new companies in
anticipation of raising resources
7.
Bridge loans to companies against expected equity flows/issues
8. Underwriting commitments taken up in respect of primary issue of
shares or convertible bonds or convertible debentures or units of
equity-oriented mutual funds
Financing to stock brokers for margin trading

9.
10. All exposures to Venture Capital Funds (both registered and

(` in crores)

31 March, 2011

31 March, 2010

999.71

910.98

5.67

11.11

256.75

249.31

7.55

7.82

1,966.19

1,568.64

47.44
0.31

-
-

unregistered)

Total exposure to Capital Market (Total of 1 to 10)

258.13
3,541.75

258.43
3,006.29

2.1.12 Details of loan assets subjected to restructuring during the years ended 31 March, 2011 and 31 March, 2010 are

given below:

Particulars

Standard advances No. of borrowers
restructured

Amount outstanding – Restructured facility#
Amount outstanding – Other facilities
Sacrifice (diminution in the fair value)

(` in crores)

31 March, 2011

CDR
Mechanism
2
96.55
2.89
14.18

SME Debt
Restructuring
4
47.22
5.47
3.97

Others

117
259.96
15.32
2.58

Particulars

ii)

Sub-Standard
advances
restructured

No. of borrowers
Amount outstanding – Restructured facility
Amount outstanding – Other facilities
Sacrifice (diminution in the fair value)

iii) Doubtful advances No. of borrowers

restructured

Total

Amount outstanding – Restructured facility
Amount outstanding – Other facilities
Sacrifice (diminution in the fair value)
No. of borrowers
Amount outstanding – Restructured facility
Amount outstanding – Other facilities
Sacrifice (diminution in the fair value)

(` in crores)

31 March, 2011

CDR
Mechanism
-
-
-
-
-
-
-
-
2
96.55
2.89
14.18

SME Debt
Restructuring
-
-
-
-
-
-
-
-
4
47.22
5.47
3.97

Others

-
-
-
-
-
-
-
-
117
259.96
15.32
2.58

#Amount subjected to restructuring determined as on the date of approval of restructuring proposal

Particulars

ii)

Sub-Standard
advances
restructured

Standard advances No. of borrowers
restructured

Amount outstanding – Restructured facility#
Amount outstanding – Other facilities
Sacrifice (diminution in the fair value)
No. of borrowers
Amount outstanding – Restructured facility
Amount outstanding – Other facilities
Sacrifice (diminution in the fair value)

iii) Doubtful advances No. of borrowers

restructured

Total

(` in crores)

31 March, 2010

CDR
Mechanism
10
423.67
70.04
53.39
-
-
-
-
-
-
-
-
10
423.67
70.04
53.39

SME Debt
Restructuring
37
250.85
77.30
5.33
-
-
-
-
-
-
-
-
37
250.85
77.30
5.33

Others

287
958.45
228.06
8.88
-
-
-
-
-
-
-
-
287
958.45
228.06
8.88

#Amount subjected to restructuring determined as on the date of approval of restructuring proposal

2.1.13 There are no advances as on 31 March, 2011 (previous year: Nil) for which intangible securities has been taken as

collateral by the Bank.

2.1.14 Details of Non-SLR investment portfolio are set out below:

Issuer composition as at 31 March, 2011 of non-SLR investments:

No.

Issuer

Total
Amount

Extent of
private
placement

(1)

ii.

iii.

iv.

vi.

vii.

viii.

(2)

Public Sector Units

Financial Institutions

Banks

(3)

2,107.65

7,158.12

4,087.16

(4)

1,081.31

4,946.68

1,687.67

Private Corporates

13,552.17

10,986.87

Subsidiaries/Joint Ventures

Others

Provision held towards
depreciation on investments

Provision held towards non
performing investments

259.55

901.31

(216.86)

(12.43)

259.55

847.18

Extent of
“below
investment
grade”
securities
(5)

1.00

10.00

535.10

(` in crores)

Extent of
“unrated”
securities

Extent of
“unlisted”
securities

(6)

229.85

(7)

10.00

4,114.56

3,102.52

1,226.48

259.55

407.38

Total

27,836.67

19,809.26

546.10

229.85

9,120.49

Amounts reported under columns (4), (5), (6) and (7) above are not mutually exclusive.

Issuer composition as at 31 March, 2010 of non-SLR investments:

No.

Issuer

Total
Amount

Extent of
private
placement

Extent of
“below
investment
grade”
securities

(` in crores)

Extent of
“unrated”
securities

Extent of
“unlisted”
securities

(1)

ii.

iii.

iv.

vi.

vii.

(2)

Public Sector Units

Financial Institutions

Banks

Private Corporates

Subsidiaries/Joint Ventures

Others

Provision held towards
depreciation on investments

viii.

Provision held towards non
performing investments

(3)

1,861.89

6,652.52

3,346.88

9,092.60

153.55

847.57

(159.89)

(16.18)

(4)

920.61

4,974.48

650.93

(5)

(6)

(7)

12.31

10.00

3,276.26

2,271.64

7,962.98

1,243.75

786.45

1,229.51

153.55

771.80

7.00

153.55

847.57

Total

21,778.94

15,434.35

1,273.06

786.45

7,788.53

Amounts reported under columns (4), (5), (6) and (7) above are not mutually exclusive.

ii) Non-performing non SLR investments is set out below:

Opening balance

Additions during the year

Reductions during the year

Closing balance

Total provisions held

(` in crores)

31 March, 2011

31 March, 2010

22.58

10.15

12.43

7.29

16.03

0.74

22.58

16.18

2.1.15 Details of securities sold/purchased (in face value terms) during the years ended 31 March, 2011 and 31 March,

2010 under repos/reverse repos (excluding LAF transactions):

Year ended 31 March, 2011

Minimum
outstanding
during the year

Maximum
outstanding
during the year

Daily Average
outstanding
during the year

(` in crores)

As at 31
March, 2011

Securities sold under repos

i. Government Securities

ii. Corporate debt Securities

Securities purchased under reverse repos

i. Government Securities

ii. Corporate debt Securities

Year ended 31 March, 2010

Securities sold under repos

Government Securities

ii. Corporate debt Securities

Securities purchased under reverse repos

Government Securities

ii. Corporate debt Securities

220.00

3,919.82

30.93

34.20

Minimum
outstanding
during the year

Maximum
outstanding
during the year

Daily Average
outstanding
during the year

(` in crores)

As at 31
March, 2010

335.00

14.94

27.01

0.20

2.1.16 Details of financial assets sold to Securtisation/Reconstruction companies for Asset Reconstruction:

Number of accounts*

Book value of loan asset securitised

Aggregate value (net of provisions) of accounts sold

Aggregate consideration

Additional consideration realised in respect of accounts transferred in earlier
years

Aggregate gain/loss over net book value

* Excludes accounts previously written-off

(` in crores)

31 March, 2011

31 March, 2010

13.21

9.00

2.1.17 During the years ended 31 March, 2011 and 31 March, 2010 there were no Non-Performing Financial Assets

Purchased or Sold (excluding accounts previously written off) by the Bank.

2.1.18 Details of securtisation transactions undertaken by the Bank during the year are as follows:

Number of loan accounts securtised

Book value of loan assets securitised

Sale consideration received for the securtised assets

Net gain/loss over net book value

Net gain/loss recognised in the Profit and Loss Account

(` in crores)

31 March, 2011

31 March, 2010

301.66

308.97

7.31

2,153.80

2,173.10

19.30

15.45

The information on securtisation activity of the Bank as an originator as at 31 March, 2011 and 31 March, 2010 is
given below:

Outstanding credit enchancement (cash collateral)

Outstanding liquidity facility

Outstanding servicing liability

Outstanding investment in PTCs

2.1.19 The information on concentration of deposits is given below:

Total deposits of twenty largest depositors

Percentage of deposits of twenty largest depositors to total deposits

2.1.20 The information on concentration of advances is given below:

Total advances to twenty largest borrowers*

Percentage of advances to twenty largest borrowers to total advances
of the bank

(` in crores)

31 March, 2011

31 March, 2010

5.16

(` in crores)

31 March, 2011

31 March, 2010

34,540.54

18.25

23,350.11

16.53

(` in crores)

31 March, 2011

31 March, 2010

42,170.21

33,767.20

13.63

13.39

* Advances represent credit exposure (funded and non-funded) including derivative exposure as defined by RBI

2.1.21 The information on concentration of exposure is given below:

(` in crores)

31 March, 2011

31 March, 2010

Total exposure to twenty largest borrowers/customers*

53,184.01

44,659.73

Percentage of exposures to twenty largest borrowers/customers to
total exposure on borrowers/customers

15.13

13.32

* Exposure includes credit exposure (funded and non-funded), derivative exposure and investment exposure
(including underwriting and similar commitments)

2.1.22 During the year, the Bank’s credit exposure to single borrower was within the prudential exposure limits prescribed
by RBI except in 2 cases, where the single borrower limit was exceeded upto an additional exposure of 5%, the
details of which are set out below:

Name of the
Borrower

Period

Original
Exposure
Ceiling

Limit
Sanctioned

% of excess limit
sanctioned over
original ceiling

Exposure
Ceiling as on 31
March, 2011

Exposure as
on 31 March,
2011

(` in crores)

Housing
Development
Finance
Corporation
Limited

Feb 2011
and March
2011

LIC Housing
Finance Ltd.@

March
2011

3,346.18

4,227.72

26.34

3,346.18

4,418.99#

3,346.18

3,563.85

6.51

3,346.18

3,130.77

# the excess of the limit of `4,227.72 crores over the original exposure ceiling was approved by the Committee of
Directors. However, the excess of the exposure as on 31 March, 2011 over the limit approved by the Committee is
subject to ratification of the Committee.

@ the excess of the limit of `3,563.85 crores over the original exposure ceiling is subject to ratification by the
Committee of Directors.

During the year, the Bank’s credit exposure to group borrowers was within the prudential exposure limits prescribed
by RBI.

During the year ended 31 March, 2010, the Bank’s credit exposure to single borrower was within the prudential
exposure limits prescribed by RBI except in one case, where single borrower limit was exceeded upto an additional
exposure of 5% with the approval of the Board of Directors. The details of such cases are set out below:

Name of the
Borrower

Period

Original
Exposure
Ceiling

Limit
Sanctioned

% of excess limit
sanctioned over
original ceiling

Exposure
Ceiling as on 31
March, 2010

Exposure as
on 31 March,
2010

(` in crores)

UTI Asset
Management
Company Ltd.

April 2009
and May
2009

2,254.15

2,300.00

2.03

3,119.22

3,110.00

During the year ended 31 March, 2010, the Bank’s credit exposure to group borrowers was within the prudential
exposure limits prescribed by RBI.

2.1.23 Details of Risk Category wise Country Exposure:

Risk Category

Insignificant
Low
Moderate
High
Very High
Restricted
Off-Credit
Total

Exposure (Net) as at
31 March, 2011
459.58
9,160.68
2,447.75
467.93
338.95
-
-
12,874.89

Provision Held as at
31 March, 2011
-
4.82
-
-
-
-
-
4.82

Exposure (Net) as at
31 March, 2010
597.19
7,489.89
662.80
90.86
2.88
0.85
-
8,844.47

(` in crores)

Provision Held as at
31 March, 2010
-
2.37
-
-
-
-
-
2.37

2.1.24 A maturity pattern of certain items of assets and liabilities at 31 March, 2011 and 31 March, 2010 is set out below:

Year ended 31 March, 2011

(` in crores)

1 day

2 days to

8 days to

15 days

29 days

Over 3

Over 6

Over 1

Over 3

Over 5

Total

7 days

14 days

to 28

and upto

months

year and

years and

years

days

3 months

and upto

upto 3

upto 5

6 months

1 year

years

Deposits

1,645.41

7,423.76

4,835.59

7,521.08 23,528.61 17,930.69 37,057.27 26,810.34 11,866.64 50,618.41 189,237.80

Advances

2,874.45

3,635.78

1,003.04

2,440.76

9,587.40

8,162.21 11,815.40 35,236.92 19,459.50 48,192.37 142,407.83

Investments

844.61

1,794.91

3,247.24

4,609.39 10,350.69

5,319.04

9,335.13 13,416.94

8,181.92 14,891.75

71,991.62

Borrowings

111.49

981.09

44.59

1,293.42

4,934.34

2,384.52

2,537.64

3,648.10

2,036.46

8,296.23

26,267.88

Foreign

Currency

Assets

Foreign

Currency

Liabilities

1,436.87

1,054.10

322.48

1,349.58

2,810.68

3,273.19

2,927.72

4,773.50

4,764.86

3,838.63

26,551.61

760.22

1,620.46

252.12

1,967.77

5,284.18

4,358.29

4,506.45

2,552.87

1,992.27

4,215.22

27,509.85

Year ended 31 March, 2010

(` in crores)

1 day

2 days to

8 days to

15 days

29 days

Over 3

Over 6

Over 1

Over 3

Over 5

Total

7 days

14 days

to 28

and upto

months

year and

years and

years

days

3 months

and upto

upto 3

upto 5

6 months

1 year

years

Deposits

2,699.43

4,379.36

3,059.54

4,115.54 15,647.72 19,789.86 28,357.41 23,418.07

470.04 39,363.25 141,300.22

Advances

736.72

2,413.13

1,124.78

1,057.75

5,690.32

5,557.00 11,183.25 11,861.43 12,318.65 52,397.92 104,340.95

Investments

885.57

986.17

2,562.54

3,991.38

7,724.61

6,278.44

7,873.42 11,403.71

2,436.83 11,832.15

55,974.82

Borrowings

251.44

269.40

130.91

134.70

1,119.33

1,330.88

3,409.08

2,181.89

422.34

7,919.58

17,169.55

Foreign

Currency

Assets

Foreign

Currency

Liabilities

1,487.10

376.06

117.45

395.58

2,718.83

2,275.25

2,755.24

3,412.69

2,920.96

2,170.50

18,629.66

1,054.77

1,063.29

249.42

235.13

1,718.64

2,861.58

3,503.99

2,128.75

86.37

3,502.59

16,404.53

Classification of assets and liabilities under the different maturity buckets is based on the same estimates and
assumptions as used by the Bank for compiling the return submitted to the RBI, which has been relied upon by the
auditors. Maturity profile of foreign currency assets and liabilities is excluding forward contracts.

2.1.25 Disclosure in respect of Interest Rate Swaps (IRS), Forward Rate Agreement (FRA) and Cross Currency Swaps (CCS)

outstanding is set out below:

Sr. No.

Items

(` in crores)

As at 31 March,
2011

As at 31 March,
2010

ii)

iii)

Notional principal of swap agreements

164,697.20

131,696.28

Losses which would be incurred if counterparties failed to
fulfill their obligations under the agreements

Collateral required by the Bank upon entering into swaps **

1,444.54

123.36

1,335.46

22.77

Sr. No.

Items

(` in crores)

As at 31 March,
2011

As at 31 March,
2010

iv)

Concentration of credit risk arising from the swaps

Maximum single industry exposure with Banks (previous
year with Banks)

- Interest Rate Swaps/FRAs

- Cross Currency Swaps

Fair value of the swap book (hedging & trading)

- Interest Rate Swaps/FRAs

- Currency Swaps

2,174.95

401.53

1.08

61.09

** Total cash collaterals taken from counterparties having outstanding derivative contracts

The nature and terms of the IRS as on 31 March, 2011 are set out below:

2,051.64

400.46

37.50

11.54

(` in crores)

Nature

Hedging

Trading

Nos.

Notional Principal Benchmark

Terms

1,338

1,319

118

101

108

148

2,943.27 LIBOR

Fixed receivable v/s floating payable

63,520.00 MIBOR

Fixed receivable v/s floating payable

61,967.50 MIBOR

Fixed payable v/s floating receivable

4,639.50 MIFOR

3,469.00 MIFOR

2,621.10 INBMK

4,589.00 INBMK

3,575.99 LIBOR

5,341.90 LIBOR

Fixed receivable v/s floating payable

Fixed payable v/s floating receivable

Fixed receivable v/s floating payable

Fixed payable v/s floating receivable

Fixed receivable v/s floating payable

Fixed payable v/s floating receivable

150.00 OTHERS

Fixed payable v/s fixed receivable

138.24 LIBOR

367.91 LIBOR

Floating payable v/s floating receivable

Pay Cap / receive Floor

Pay Floor / receive Cap

3,286

153,691.32

The nature and terms of the IRS as on 31 March, 2010 are set out below:

Nature

Hedging

Trading

Nos.

Notional Principal Benchmark

Terms

1,233

1,242

103

1,000.00 MIBOR

Fixed payable v/s floating receivable

100.00 MIBOR

Fixed receivable v/s floating payable

1,391.90 LIBOR

Fixed receivable v/s floating payable

51,720.00 MIBOR

Fixed receivable v/s floating payable

53,647.50 MIBOR

Fixed payable v/s floating receivable

3,045.50 MIFOR

Fixed receivable v/s floating payable

(` in crores)

Nature

Trading

Nos.

Notional Principal Benchmark

Terms

100

2,789.50 MIFOR

2,946.10 INBMK

3,464.00 INBMK

1,933.92 LIBOR

2,002.35 LIBOR

Fixed payable v/s floating receivable

Fixed receivable v/s floating payable

Fixed payable v/s floating receivable

Fixed receivable v/s floating payable

Fixed payable v/s floating receivable

89.80 LIBOR

Floating payable v/s fixed receivable

150.00 OTHERS

Fixed payable v/s fixed receivable

3,001

124,280.57

The nature and terms of the FRA’s as on 31 March, 2011 are set out below:

(` in crores)

Nature

Trading

Nos.

Notional Principal Benchmark

Terms

153

2,990.00 LIBOR

2,840.07 LIBOR

5,830.07

Fixed receivable v/s floating payable

Fixed payable v/s floating receivable

The nature and terms of the FRA’s as on 31 March, 2010 are set out below:

(` in crores)

Nature

Trading

Nos.

Notional Principal Benchmark

Terms

1,819.98 LIBOR

1,631.40 LIBOR

3,451.38

Fixed receivable v/s floating payable

Fixed payable v/s floating receivable

The nature and terms of the CCS as on 31 March, 2011 are set out below:

Nature
Trading Swaps
Trading Swaps
Hedging Swaps
Hedging Swaps

Hedging Swaps
Trading Swaps
Trading Swaps

Trading Swaps
Trading Swaps
Trading Swaps
Trading Swaps

Nos.
22
21
2
3

1
1
5

2
8
1
1
67

Notional Principal Benchmark

1,728.23 LIBOR
1,936.15 LIBOR
129.60 LIBOR
305.44 Principal &

Coupon Swap

133.79 LIBOR

40.14 LIBOR/INBMK

428.65 Principal &

Coupon Swap
97.87 Principal Only
242.16 Principal Only
66.89 Principal Only
66.89 Principal Only

5,175.81

(` in crores)

Terms
Fixed payable v/s floating receivable
Fixed receivable v/s floating payable
Fixed receivable v/s floating payable
Fixed receivable v/s fixed payable

Floating receivable v/s floating payable
Floating receivable v/s floating payable
Fixed payable v/s fixed receivable

Fixed receivable
Fixed payable
Floating receivable
Floating payable

Agreements with Banks/Financial Institutions and corporates are under approved credit lines.

The nature and terms of the CCS as on 31 March, 2010 are set out below:

(` in crores)

Nature

Trading Swaps

Hedging Swaps

Nos.

Notional Principal Benchmark

Terms

1,883.80 LIBOR

1,533.87 LIBOR

Fixed payable v/s floating receivable

Fixed receivable v/s floating payable

40.41 LIBOR/INBMK

Floating receivable v/s floating payable

67.35 Principal Only

Fixed receivable

169.51 Principal Only

Fixed payable

67.35 Principal Only

Floating receivable

67.35 Principal Only

Floating payable

134.70 LIBOR

Floating receivable v/s floating payable

3,964.34

Agreements with Banks/Financial Institutions and corporates are under approved credit lines.

Details of Exchange Traded Interest Rate Derivatives for the year ended 31 March, 2011 are set out below:

Sr. No. Particulars
i)

Notional principal amount of exchange traded interest rate
derivatives undertaken during the year
90 day Euro $ Future - June 10
10 Years 7% GOI Security - June 10

ii)

iii)

iv)

Notional principal amount of exchange traded interest rate
derivatives outstanding as on 31 March, 2011
90 Day Euro $ Futures - June 11

Notional principal amount of exchange traded interest rate
derivatives outstanding as on 31 March, 2011 and “not highly
effective”
Mark-to-market value of exchange traded interest rate derivatives
outstanding as on 31 March, 2011 and “not highly effective”

(` in crores)

As at 31 March, 2011

17.84
2.92
20.76

4.46
4.46

N.A.

Details of Exchange Traded Interest Rate Derivatives for the year ended 31 March, 2010 are set out below:

Sr. No. Particulars

Notional principal amount of exchange traded interest rate
derivatives undertaken during the year

10 Year Long Gilt Futures - June 09

10 Year Long Gilt Futures - September 09

90 Day Euro $ Futures - December 09

90 Day Euro $ Futures - June 09

90 Day Euro $ Futures - June 10

90 Day Euro $ Futures – March 10

90 Day Euro $ Futures - Septemer 09

(` in crores)

As at 31 March, 2010

167.17

190.27

53.88

116.74

35.92

53.88

130.21

Sr. No. Particulars

(` in crores)

As at 31 March, 2010

AUST 10Y Bond Futures- June 09

AUST 10Y Bond Futures- September 09

EURO-BUND Futures - June 09

EURO-BUND Futures - September 09

EURO-SCHATZ Futures - June 09

EURO-SCHATZ Futures - September 09

JPN 10Y BOND (TSE) - June 09

US 10 Years Note Future - June 09

US 10 Years Note Future - September 09

10 Years 7% GOI Security - December 09

10 Years 7% GOI Security - March 10

10 Years 7% GOI Security - June 10

ii)

Notional principal amount of exchange traded interest rate
derivatives outstanding as on 31 March, 2010

90 Day Euro $ Futures - March 11

90 Day Euro $ Futures - June 10

90 Day Euro $ Futures - June 11

90 Day Euro $ Futures - September 10

90 Day Euro $ Futures - December 10

10 years 7% GOI Security - June 10

iii)

iv)

Notional principal amount of exchange traded interest rate
derivatives outstanding as on 31 March, 2010 and “not highly
effective”

Mark-to-market value of exchange traded interest rate derivatives
outstanding as on 31 March, 2010 and “not highly effective”

2.1.26 Disclosure on risk exposure in Derivatives

Qualitative disclosures:

69.98

58.45

5,133.63

4,984.91

495.71

350.62

9.61

251.44

325.08

69.16

36.44

14.48

12,547.58

4.49

22.45

4.49

13.47

2.80

61.17

N.A.

(a) Structure and organisation for management of risk in derivatives trading, the scope and nature
of risk measurement, risk reporting and risk monitoring systems and strategies and processes for
monitoring the continuing effectiveness of hedges/mitigants:

Derivatives are financial instruments whose characteristics are derived from an underlying asset, or from interest
and exchange rates or indices. The Bank undertakes derivative transactions for Balance Sheet management
and also for proprietary trading/market making whereby the Bank offers derivative products to the customers
to enable them to hedge their earnings risks within the prevalent regulatory guidelines.

Proprietary trading includes Interest Rate Futures and Rupee Interest Rate Swaps under different benchmarks
(viz. MIBOR, MIFOR and INBMK), Currency Futures and Currency Options for USD/INR pair (both OTC and
exchange traded). The Bank also undertakes transactions in Cross Currency Swaps, Principal Only Swaps,

Coupon Only Swaps, and Long Term Forex Contracts (LTFX) for hedging its Balance Sheet and also offers them
to its customers. These transactions expose the Bank to various risks, primarily credit, market and operational
risk. The Bank has adopted the following mechanism for managing risks arising out of the derivative
transactions.

There is a functional separation between the Treasury Front Office, Risk and Treasury Back Office to undertake
derivative transactions. The derivative transactions are originated by Treasury Front Office, which ensures
compliance with the trade origination requirements as per the Bank’s policy and the RBI guidelines. The Market
Risk Group within the Bank’s Risk Department independently identifies, measures and monitors the market
risks associated with derivative transactions and appraises the Asset Liability Management Committee (ALCO)
and the Risk Management Committee of the Board (RMC) on the compliance with the risk limits. The Treasury
Back Office undertakes activities such as confirmation, settlement, ISDA documentation, accounting and other
MIS reporting.

The derivative transactions are governed by the derivative policy, hedging policy and the suitability and
appropriateness policy of the Bank as well as by the extant RBI guidelines. The Bank has also put in place
a detailed process flow for customer derivative transactions for effective management of operational risk/
reputation risk.

Various risk limits are set up and actual exposures are monitored vis-à-vis the limits. These limits are set up
taking into account market volatility, business strategy and management experience. Risk limits are in place
for risk parameters viz. PV01, VaR, stop loss, Delta, Gamma and Vega. Actual positions are monitored against
these limits on a daily basis and breaches, if any, are reported promptly. Risk assessment of the portfolio is
undertaken periodically. The Bank ensures that the Gross PV01 (Price value of a basis point) position arising out
of all non-option rupee derivative contracts are within 0.25% of net worth of the Bank as on Balance Sheet
date.

Hedging transactions are undertaken by the Bank to protect the variability in the fair value or the cash flow of
the underlying Balance Sheet item. These deals are accounted on an accrual basis except the swap designated
with an asset/liability that is carried at market value or lower of cost or market value. In that case, the swap is
marked to market with the resulting gain or loss recorded as an adjustment to the market value of designated
asset or liability. These transactions are tested for hedge effectiveness and in case any transaction fails the
test, the same is re-designated as a trading deal with the approval of the competent authority and appropriate
accounting treatment is followed.

(b) Accounting policy for recording hedge and non-hedge transactions, recognition of income, premiums

and discounts, valuation of outstanding contracts

The Hedging Policy approved by the Risk Management Committee of the Board (RMC) governs the use of
derivatives for hedging purpose. Subject to the prevailing RBI guidelines, the Bank deals in derivatives for
hedging fixed rate and floating rate coupon or foreign currency assets/liabilities. Transactions for hedging
and market making purposes are recorded separately. For hedge transactions, the Bank identifies the hedged
item (asset or liability) at the inception of the transaction itself. The effectiveness is ascertained at the time
of inception of the hedge and periodically thereafter. Hedge derivative transactions are accounted for in
accordance with the hedge accounting principles. Derivatives for market making purpose are marked to market
and the resulting gain/loss is recorded in the Profit and Loss Account. The premium on option contracts is
accounted for as per Foreign Exchange Dealers’ Association of India (FEDAI) guidelines. Derivative transactions
are covered under International Swaps and Derivatives Association (ISDA) master agreements with respective
counterparties. The exposure on account of derivative transactions is computed as per the RBI guidelines and
is marked against the credit limits approved for the respective counterparties.

Derivative transactions comprise of swaps and options which are disclosed as contingent liabilities. The swaps/
options are segregated as trading or hedging. Trading swaps/options are revalued at the Balance Sheet date
with the resulting unrealised gain or loss being recognised in the Profit and Loss Account and correspondingly
in other assets or other liabilities respectively. Hedged swaps are accounted for as per the RBI guidelines.
Pursuant to the RBI guidelines, any receivables under derivatives contracts, which remain overdue for more
than 90 days, are reversed through the Profit and Loss Account and are held in a separate suspense account.

Collateral requirements for derivative transactions are laid down as part of credit sanction terms on a case by
case basis. Such collateral requirements are determined, based on usual credit appraisal process. The Bank
retains the right to terminate transactions as a risk mitigation measure in certain cases.

The credit risk in respect of customer derivative transactions is sought to be mitigated through a laid down
policy on sanction of Loan Equivalent Risk (LER) limits, monitoring mechanism for LER limits and trigger events
for escalation/margin calls/termination.

Quantitative Disclosure:

As at 31 March, 2011

Currency Derivatives

(` in crores)

Interest rate
Derivatives

Sr. No. Particulars

CCS

Options

Derivatives (Notional Principal Amount)

a) For hedging

b) For trading

Marked to Market Positions#

a) Asset (+)

b) Liability (-)

Credit Exposure@

Likely impact of one percentage change in
interest rate (100*PV01) (as at 31 March, 2011)

a) on hedging derivatives

b) on trading derivatives

Maximum and Minimum of 100*PV01
observed during the year

a) on hedging

I) Minimum

II) Maximum

b) on trading

I) Minimum

II) Maximum

# Only on trading derivatives and represents net position

@ Includes accrued interest

568.82

2,943.27

4,606.99

13,130.44

156,578.12

35.82

760.80

(4.62)

285.87

(74.03)

2,541.95

0.27

0.38

0.06

1.83

0.08

0.92

135.82

38.56

75.82

178.55

30.31

137.59

As at 31 March, 2010

Currency Derivatives

(` in crores)

Interest rate
Derivatives

Sr. No. Particulars

CCS

Options

Derivatives (Notional Principal Amount)

a) For hedging

b) For trading

Marked to Market Positions#

a) Asset (+)

b) Liability (-)

Credit Exposure@

Likely impact of one percentage change in
interest rate (100*PV01) (as at 31 March, 2010)

a) on hedging derivatives

b) on trading derivatives

Maximum and Minimum of 100*PV01
observed during the year

a) on hedging

I) Minimum

II) Maximum

b) on trading

I) Minimum

II) Maximum

134.70

3,829.64

2,491.90

5,616.26

125,240.04

16.85

658.80

15.74

258.23

(1.03)

2,286.34

0.01

0.57

0.01

1.60

0.57

1.86

54.56

73.01

32.17

61.62

6.23

74.13

# Only on trading derivatives and represents net position

@ Includes accrued interest

The notional principal amount of forex contracts classified as hedging and funding outstanding at 31 March, 2011
amounted to `5,735.03 crores (previous year `2,359.59 crores) and `1,131.25 crores (previous year `2,432.42
crores) respectively. The notional principal amount of forex contracts classified as trading outstanding at 31 March,
2011 amounted to `160,404.84 crores (previous year `99,041.90 crores).

The net overnight open position at 31 March, 2011 is `26.39 crores (previous year `152.03 crores).

2.1.27 No penalty/strictures have been imposed on the Bank during the year or in the previous year by the Reserve Bank

of India.

2.1.28 Disclosure of Customer Complaints

No. of complaints pending at the beginning of the year

No. of complaints received during the year

No. of complaints redressed during the year

No. of complaints pending at the end of the year

31 March, 2011

31 March, 2010

12,766

12,830

4,581

4,571

The above information is as certified by the Management and relied upon by the auditors.

2.1.29 Disclosure of Awards passed by the Banking Ombudsman

a. No. of unimplemented awards at the beginning of the year

b. No. of awards passed by the Banking Ombudsman during the year

c. No. of awards implemented during the year

d. No. of unimplemented awards at the end of the year

The above information is as certified by the Management and relied upon by the auditors.

31 March, 2011

31 March, 2010

2.1.30 Draw Down from Reserves

During the year, the Bank has made a draw down out of the investment reserve account towards depreciation in
investments in AFS and HFT categories in terms of the RBI guidelines.

2.1.31 Letter of Comfort

The Bank has not issued any Letter of Comfort (LoC) on behalf of its subsidiaries.

2.1.32 Bancassurance Business

Details of income earned from bancassurance business are as under:

(` in crores)

Sr. No Nature of Income

31 March, 2011

31 March, 2010

For selling life insurance policies

For selling non-life insurance policies

For selling mutual fund products

Others (selling of online trading accounts, gold coins, wealth
advisory, RBI and other bonds)

133.27

23.04

44.34

28.72

94.89

30.20

40.12

19.48

Total

229.37

184.69

2.1.33 The Bank has not sponsored any special purpose vehicle which is required to be consolidated in the consolidated

financial statements as per accounting norms.

2.1.34 Amount of total assets, non-performing assets and revenue of overseas branches is given below:

Particulars

Total assets

Total NPAs

Total revenue

2.2

Other disclosures

(` in crores)

31 March, 2011

31 March, 2010

22,244.63

13,921.42

1,108.07

604.36

2.2.1 During the year, the Bank has appropriated `4.76 crores (previous year `223.92 crores), net of taxes and transfer
to statutory reserve to Capital Reserve, being the gain on sale of HTM investments in accordance with the RBI
guidelines.

2.2.2 Earnings Per Share (‘EPS’)

The details of EPS computation is set out below:

Basic and Diluted earnings for the year (Net profit after tax) (` in crores)

Basic weighted average no. of shares (in crores)

Add: Equity shares for no consideration arising on grant of stock
options under ESOP (in crores)

Diluted weighted average no. of shares (in crores)

Basic EPS (`)

Diluted EPS (`)

Nominal value of shares (`)

31 March, 2011

31 March, 2010

3,388.49

40.85

2,514.53

38.23

0.67

41.52

82.95

81.61

10.00

0.87

39.10

65.78

64.31

10.00

Dilution of equity is on account of 6,721,352 (previous year 8,708,581) stock options.

2.2.3 Employee Stock Options Scheme (‘the Scheme’)

In February 2001, pursuant to the approval of the shareholders at the Extraordinary General Meeting, the Bank
approved an Employee Stock Option Scheme. Under the Scheme, the Bank is authorised to issue upto 13,000,000
equity shares to eligible employees. Eligible employees are granted an option to purchase shares subject to vesting
conditions. The options vest in a graded manner over 3 years. The options can be exercised within 3 years from the
date of the vesting. Further, over the period June 2004 to June 2010, pursuant to the approval of the shareholders
at Annual General Meetings, the Bank approved an ESOP scheme for additional options aggregating 27,517,400.
Within the overall ceiling of 40,517,400 stock options approved for grant by the shareholders as stated earlier, the
Bank is also authorised to issue options to employees and directors of the subsidiary companies.

33,707,690 options have been granted under the Scheme till the previous year ended 31 March, 2010.

On 20 April, 2010, the Bank granted 2,723,500 stock options (each option representing entitlement to one equity
share of the Bank) to its employees and the MD & CEO. These options can be exercised at a price of `1,159.30
per option. Further, on 7 and 8 June, 2010, the Bank also granted 10,000 and 181,700 stock options (each option
representing entitlement to one equity share of the Bank) to an employee (on joining the Bank) and employees of
Axis Asset Management Company Limited, a subsidiary of the Bank respectively. These options can be exercised at
a price of `1,245.45 and `1,214.80 per option respectively.

Stock option activity under the Scheme for the year ended 31 March, 2011 is set out below:

Options
outstanding

Range of exercise
prices (`)

Weighted
average
exercise price
(`)

Weighted average
remaining
contractual life
(Years)

13,897,518

97.62 to 907.25

514.27

2.87

Outstanding at the beginning of
the year

Granted during the year

Forfeited during the year

Expired during the year

Exercised during the year

(5,371,724)

97.62 to 824.40

Outstanding at the end of the year

11,122,518

232.10 to 1,245.45

Exercisable at the end of the year

4,479,300

232.10 to 907.25

2,915,200 1,159.30 to 1,245.45

1,163.05

(295,348)

232.10 to 1,214.80

(23,128)

97.62 to 319.00

658.88

264.72

448.22

712.90

525.53

2.86

1.49

The weighted average share price in respect of options exercised during the year was `1,324.47

Stock option activity under the Scheme for the year ended 31 March, 2010 is set out below:

Options
outstanding

Range of
exercise prices
(`)

Outstanding at the beginning of the
year

13,852,974

39.77 to 824.40

Granted during the year

Forfeited during the year

Expired during the year

Exercised during the year

4,413,990

503.25 to 907.25

(252,757)

97.62 to 824.40

(24,320)

39.77 to 232.10

(4,092,369)

39.77 to 824.40

Outstanding at the end of the year

13,897,518

97.62 to 907.25

Weighted
average
exercise price
(`)
459.87

Weighted average
remaining
contractual life
(Years)
2.95

513.15

356.51

212.48

330.99

514.27

2.87

1.58

Exercisable at the end of the year
5,599,878
The weighted average share price in respect of options exercised during the year was `964.16

97.62 to 824.40

434.75

Fair Value Methodology

Applying the fair value based method in Guidance Note on ‘Accounting for Employee Share-based Payments’ the
impact on reported net profit and EPS would be as follows:

Net Profit (as reported) (` in crores)
Add: Stock based employee compensation expense included in net
income (` in crores)
Less: Stock based employee compensation expense determined under
fair value based method (proforma) (` in crores)
Net Profit (Proforma) (` in crores)
Earnings per share: Basic (in `)
As reported
Proforma
Earnings per share: Diluted (in `)
As reported
Proforma

31 March, 2011
3,388.49

31 March, 2010
2,514.53

(107.97)
3,280.52

(92.75)
2,421.78

82.95
80.31

81.61
79.01

65.78
63.35

64.31
61.94

The fair value of the options is estimated on the date of the grant using the Black-Scholes options pricing model,
with the following assumptions:

Dividend yield
Expected life
Risk free interest rate
Volatility

31 March, 2011
1.24% to 1.32%
2-4 years
5.98% to 7.17%

31 March, 2010
1.32%
2-4 years
3.87% to 6.80%
54.72% to 61.66% 54.00% to 67.11%

Volatility is the measure of the amount by which a price has fluctuated or is expected to fluctuate during a period.
The measure of volatility used in the Black-Scholes options pricing model is the annualised standard deviation of
the continuously compounded rates of return on the stock over a period of time. For calculating volatility, the daily
volatility of the stock prices on the National Stock Exchange, over a period prior to the date of grant, corresponding
with the expected life of the options has been considered.

The weighted average fair value of options granted during the year ended 31 March, 2011 is `485.98 (previous
year `205.72).

2.2.4 Dividend paid on shares issued on exercise of stock options

The Bank may allot shares between the Balance Sheet date and record date for the declaration of dividend pursuant
to the exercise of any employee stock options. These shares will be eligible for full dividend for the year ended 31
March, 2011, if approved at the ensuing Annual General Meeting. Dividend relating to these shares has not been
recorded in the current year.

Appropriation to proposed dividend during the year ended 31 March, 2011 includes dividend of `2.47 crores
(previous year `0.51 crores) paid pursuant to exercise of 1,766,860 employee stock options after the previous year
end and record date for declaration of dividend for the year ended 31 March, 2010.

2.2.5 Segmental reporting

The business of the Bank is divided into four segments: Treasury, Retail Banking, Corporate/Wholesale Banking and
Other Banking Business. These segments have been identified based on the RBI’s revised guidelines on Segment
Reporting issued on 18 April, 2007 vide Circular No. DBOD.No.BP.BC.81/21.04.018/2006-07. The principal activities
of these segments are as under.

Segment

Treasury

Retail Banking

Corporate/Wholesale Banking

Other Banking Business

Principal Activities

Treasury operations include investments in sovereign and corporate debt, equity
and mutual funds, trading operations, derivative trading and foreign exchange
operations on the proprietary account and for customers and central funding.

Constitutes lending to individuals/small businesses subject to the orientation,
product and granularity criterion and also includes low value individual exposures
not exceeding the threshold limit of `5 crores as defined by RBI. Retail Banking
activities also include liability products, card services, internet banking, ATM
services, depository, financial advisory services and NRI services.

Includes corporate relationships not included under Retail Banking, corporate
advisory services, placements and syndication, management of public issue,
project appraisals, capital market related services and cash management services.

Includes para banking activities* like third party product distribution and other
banking transactions not covered under any of the above three segments.

* Regrouped from retail banking segment in the previous year

Revenues of the Treasury segment primarily consist of fees and gains or losses from trading operations and interest
income on the investment portfolio. The principal expenses of the segment consist of interest expense on funds
borrowed from external sources and other internal segments, premises expenses, personnel costs, other direct
overheads and allocated expenses.

Revenues of the Corporate/Wholesale Banking segment consist of interest and fees earned on loans given to
customers falling under this segment and fees arising from transaction services and merchant banking activities such
as syndication and debenture trusteeship. Revenues of the Retail Banking segment are derived from interest earned
on loans classified under this segment and fees for banking and advisory services, ATM interchange fees and cards
products. Expenses of the Corporate/Wholesale Banking and Retail Banking segments primarily comprise interest
expense on deposits and funds borrowed from other internal segments, infrastructure and premises expenses for
operating the branch network and other delivery channels, personnel costs, other direct overheads and allocated
expenses.

Segment income includes earnings from external customers and from funds transferred to the other segments.
Segment result includes revenue as reduced by interest expense and operating expenses and provisions, if any, for
that segment. Segment-wise income and expenses include certain allocations. Inter segment interest income and
interest expense represent the transfer price received from and paid to the Central Funding Unit (CFU) respectively.
For this purpose, the funds transfer pricing mechanism presently followed by the Bank, which is based on historical
matched maturity and market-linked benchmarks, has been used. Operating expenses other than those directly
attributable to segments are allocated to the segments based on an activity-based costing methodology. All
activities in the Bank are segregated segment-wise and allocated to the respective segment.

Segmental results are set out below:

31 March, 2011

Treasury Corporate/
Wholesale
Banking

Retail
Banking

Other
Banking
Business

(` in crores)

Total

Segment Revenue

Gross interest income (external customers)

4,751.66

7,082.97

3,320.18

15,154.81

Other income

1,123.26

2,291.58

994.89

222.40

4,632.13

Total income as per Profit and Loss Account

5,874.92

9,374.55

4,315.07

222.40

19,786.94

Add/(less) inter segment interest income

19,015.50

2,378.68

4,541.98

0.48

25,936.64

Total segment revenue

24,890.42

11,753.23

8,857.05

222.88

45,723.58

Less: Interest expense (external customers)

5,746.21

147.61

2,696.37

1.63

8,591.82

Less: Inter segment interest expenses

17,832.24

5,554.07

2,550.33

25,936.64

Less: Operating expenses

Operating profit

Less: Provision for non performing assets/Others

Segment result

Less: Provision for Tax

Extraordinary profit/loss

Net Profit

Segment assets

Unallocated assets

Total assets

Segment liabilities

Unallocated liabilities

Total liabilities

Net assets

395.60

916.37

140.53

775.84

1,440.48

2,846.15

97.20

4,779.43

4,611.07

764.20

124.05

6,415.69

725.89

412.86

0.75

1,280.03

3,885.18

351.34

123.30

5,135.66

1,747.17

3,388.49

94,475.32 104,302.26

42,896.68

176.07 241,850.33

863.04

242,713.37

112,125.30

46,462.90

64,362.03

24.31 222,974.54

740.00

223,714.54

(17,649.98)

57,839.36 (21,465.35)

151.76

18,998.83

31 March, 2010

Treasury Corporate/
Wholesale
Banking

Retail
Banking

Other
Banking
Business

(` in crores)

Total

Segment Revenue

Gross interest income (external customers)

3,651.30

4,966.70

3,019.81

0.21

11,638.02

Other income

1,299.97

1,545.98

917.94

181.89

3,945.78

Total income as per Profit and Loss Account

4,951.27

6,512.68

3,937.75

182.10

15,583.80

Add/(less) inter segment interest income

13,864.92

1,401.42

3,831.19

0.19

19,097.72

Total segment revenue

18,816.19

7,914.10

7,768.94

182.29

34,681.52

Less: Interest expense (external customers)

4,228.22

2,404.35

0.96

6,633.53

Less: Inter segment interest expenses

13,271.39

3,976.06

1,850.27

19,097.72

Less: Operating expenses

Operating profit

296.27

921.75

2,409.23

1,020.31

3,016.29

1,105.09

Less: Provision for non performing assets/Others

(4.15)

626.09

1,024.46

2,390.20

766.90

338.19

82.47

98.86

3,709.72

5,240.55

0.35

1,389.19

98.51

3,851.36

1,336.83

2,514.53

72,302.52

68,816.10 38,842.95

3.39 179,964.96

682.89

180,647.85

71,959.92

35,678.15 56,331.68

2.92 163,972.67

342.60

33,137.95 (17,488.73)

0.47

16,044.45

630.73

164,603.40

(` in crores)

Segment result

Less: Provision for Tax

Extraordinary profit/loss

Net Profit

Segment assets

Unallocated assets

Total assets

Segment liabilities

Unallocated liabilities

Total liabilities

Net assets

Geographic Segments

Domestic

International

Total

31 March,
2011

18,678.87

31 March,
2010

14,979.44

31 March,
2011

1,108.07

31 March,
2010

604.36

31 March,
2011

19,786.94

31 March,
2010

15,583.80

220,468.74

166,726.43

22,244.63

13,921.42

242,713.37

180,647.85

Revenue

Assets

2.2.6 Related party disclosure

The related parties of the Bank are broadly classified as:

a) Promoters

The Bank has identified the following entities as its Promoters.

• Administrator of the Specified Undertaking of the Unit Trust of India (UTI-1)

•

Life Insurance Corporation of India (LIC)

• General Insurance Corporation and four Government-owned general insurance companies - New India
Assurance Co. Ltd., National Insurance Co. Ltd., United India Insurance Co. Ltd. and The Oriental Insurance
Co. Ltd.

b) Key Management Personnel

• Mrs. Shikha Sharma (Managing Director & Chief Executive Officer)

• Mr. M. M. Agrawal (Erstwhile Deputy Managing Director) upto 31 August, 2010

• Mr. Sisir Kumar Chakrabarti (Deputy Managing Director) with effect from 27 September, 2010

c) Relatives of Key Management Personnel

Mr. Sanjaya Sharma, Mrs. Usha Bharadwaj, Mr. Tilak Sharma, Ms. Tvisha Sharma, Dr. Sanjiv Bharadwaj,
Dr. Prashant Bharadwaj, Dr. Brevis Bharadwaj, Dr. Reena Bharadwaj, Mrs. Bharti Agrawal, Mr. Vedprakash
Agrawal, Mrs. Gayatri Devi Agrawal, Mr. Amit M. Agrawal, Mrs. Rinki Agrawal, Master Kaustubh Agrawal, Ms.
Prashasti Agrawal, Mr. Anand Agrawal, Mr. Praveen Agrawal, Mrs. Rekha Agrawal, Mrs. Renu Agrawal, Mrs.
Meenu Agrawal, Mrs. Swapna Chakraborty, Mrs. Shikha Bhattacharya, Ms. Shila Chakraborty, Mr. Hirendra
Nath Chakraborty, Mr. Rajat Chakraborty, Mrs. Devikalpa Chakraborty (Kundu), Master Ahan Chakraborty,
Mr. Nabakumar Chakraborty, Mr. Prabir Chakraborty, Mrs. Minati Chakraborty, Mrs. Krishna Chakraborty,
Mrs. Sipra Chakraborty, Mr. AsimKumar Chakraborty, Mr. Arunabha Bhattacharya

d) Subsidiary Companies

• Axis Securities and Sales Limited

• Axis Private Equity Limited

• Axis Trustee Services Limited

• Axis Asset Management Company Limited

• Axis Mutual Fund Trustee Limited

• Axis U.K. Limited

e) Associate

•

Bussan Auto Finance India Private Limited

The above investment does not fall within the definition of a Joint Venture as per AS 27, Financial
Reporting of Interest in Joint Ventures, notified under the Companies (Accounting Standards) Rules,
2006, and the said accounting standard is thus not applicable. However, pursuant to RBI guidelines, the
Bank has classified the same as investment in joint ventures in the Balance Sheet. Such investment has
been accounted as an Associate from the current year in line with AS 23, Accounting for Investment in
Associates in Consolidated Financial Statements notified under the Companies (Accounting Standards)
Rules, 2006. Based on RBI guidelines, details of transactions with Associates are not disclosed since there
is only one entity/party in this category.

The details of transactions of the Bank with its related parties during the year ended 31 March, 2011 are given
below:

Items/Related Party

Promoters

Dividend Paid

Dividend Received

Interest Paid

Interest Received

Investment of the Bank

Investment of Related Parties in the Bank

Investment in Subordinated Debt/Hybrid
Capital of the Bank

Redemption of Subordinated Debt

Purchase of investments

Sale of Investments

Management Contracts and Other
reimbursements

Purchase of Fixed Assets

Non-funded commitments

Advance granted

Advance repaid

Sale of fixed assets

Receiving of Services

Rendering of Services

Other Reimbursements to Related Parties

184.65

389.65

0.22

10.24

563.21

0.01

45.40

2.51

0.15

(` in crores)

Subsidiaries

Total

Key
Management
Personnel

Relatives
of Key
Management
Personnel

0.03

0.07

0.02

2.28

5.46*

0.12

0.04

184.68

0.75

3.23

0.01

0.75

392.99

0.25

106.00

2.28

10.24

563.21

10.34

15.80

0.01

0.12

105.33

150.73

10.88

13.39

0.54

0.69

*includes `0.70 crore subject to approval of shareholders

The balances payable to/receivable from the related parties of the Bank as on 31 March, 2011 are given below:

Items/Related Party

Promoters

Key
Management
Personnel

Borrowings from the Bank
Deposits with the Bank
Placement of Deposits
Advances
Investment of the Bank
Investment of Related Parties in the Bank
Repo Borrowings
Non-funded commitments

-
4,716.08
0.16
43.00
-
152.78
-
3.01

-
0.23
-
0.27
-
0.04
-
-

Relatives
of Key
Management
Personnel
-
0.23
-
-
-
-
-
-

(` in crores)

Subsidiaries

Total

-
71.37 4,787.91
0.16
43.27
220.55
152.82
-
3.01

-
-
220.55
-
-
-

Items/Related Party

Promoters

(` in crores)

Subsidiaries

Total

Key
Management
Personnel

Relatives
of Key
Management
Personnel

Investment in Subordinated Debt/Hybrid
Capital of the Bank
Advance for Rendering of Services
Leasing/HP arrangements availed
Leasing/HP arrangements provided
Other Receivables
Other Payables

2,825.00
-
-
-
-
-

-
-
-
-
-
-

- 2,825.00
-
-
-
-
-
-
0.57
0.57
14.27
14.27

The maximum balances payable to/receivable from the related parties of the Bank during the year ended 31 March,
2011 are given below:

Items/Related Party

Promoters

Key
Management
Personnel

Borrowings from the Bank
Deposits with the Bank
Placement of Deposits
Advances
Investment of the Bank
Investment of Related Parties in the Bank
Repo Borrowing
Investment in Subordinated Debt/Hybrid
Capital of the Bank
Advance for Rendering of Services
Leasing/HP arrangements availed
Leasing/HP arrangements provided
Other Receivables
Other Payables
Non-funded commitments

-
4,716.09
0.16
132.47
-
156.15
-

2,825.00
-
-
-
-
-
39.00

-
3.94
-
0.39
-
0.04
-

-
-
-
-
-
-
-

Relatives
of Key
Management
Personnel
-
4.96
-
-
-
-
-

(` in crores)

Subsidiaries

Total

-
81.85 4,806.84
0.16
133.17
220.55
156.19
-

-
0.31
220.55
-
-

-
-
-
-
-
-
-

- 2,825.00
-
-
-
-
-
-
7.19
7.19
16.25
16.25
39.00
-

The details of transactions of the Bank with its related parties during the year ended 31 March, 2010 are given
below:

Items/Related Party

Promoters

(` in crores)

Subsidiaries

Total

Key
Management
Personnel

Relatives
of Key
Management
Personnel

Dividend Paid

Dividend Received

Interest Paid

Interest Received

151.97

246.89

0.02

0.01

151.97

0.14

0.90

0.14

247.82

0.01

Items/Related Party

Promoters

Investment of the Bank

Investment of Related Parties in the Bank

360.56

Investment in Subordinated Debt/Hybrid
Capital of the Bank

Redemption of Subordinated Debt

Sale of Investments

Management Contracts and Other
reimbursements

Purchase of Fixed Assets

Non-funded commitments

Advance granted

Advance repaid

Sale of fixed assets

Receiving of Services

Rendering of Services

Other Reimbursements to Related Parties

1,055.00

5.00

537.48

1.82

0.05

16.11

1.92

(` in crores)

Subsidiaries

Total

Key
Management
Personnel

Relatives
of Key
Management
Personnel

2.62

55.95

360.56

- 1,055.00

5.00

537.48

3.15

0.10

0.09

7.59

0.10

0.05

0.09

94.25

110.36

7.74

9.66

The balances payable to/receivable from the related parties of the Bank as on 31 March, 2010 are given below:

Items/Related Party

Promoters

Borrowings from the Bank

Deposits with the Bank

Placement of Deposits

Advances

Investment of the Bank

3,662.04

0.16

50.17

Investment of Related Parties in the Bank

156.15

Repo Borrowings

Non-funded commitments

39.00

Investment in Subordinated Debt/Hybrid
Capital of the Bank

2,815.00

Advance for Rendering of Services

Leasing/HP arrangements availed

Leasing/HP arrangements provided

Other Receivables

Other Payables

(` in crores)

Subsidiaries

Total

Key
Management
Personnel

Relatives
of Key
Management
Personnel

1.72

0.39

0.02

0.64

21.56 3,685.96

0.16

50.56

114.55

156.17

39.00

- 2,815.00

7.19

7.97

7.19

7.97

The maximum balances payable to/receivable from the related parties of the Bank during the year ended 31 March,
2010 are given below:

Items/Related Party

Promoters

Key
Management
Personnel

Borrowings from the Bank
Deposits with the Bank
Placement of Deposits
Advances
Investment of the Bank
Investment of Related Parties in the Bank
Repo Borrowing
Non-funded commitments
Investment in Subordinated Debt/Hybrid
Capital of the Bank
Advance for Rendering of Services
Leasing/HP arrangements availed
Leasing/HP Arrangements provided
Other Receivables
Other Payables

-
3,662.04
0.16
59.36
-
156.64
-
39.05

2,815.00
-
-
-
-
-

-
10.43
-
0.40
-
0.13
-
-

-
-
-
-
-
-

2.2.7 Leases

Disclosure in respect of assets given on operating lease

The Bank has not given any assets on operating lease.

Disclosure in respect of assets taken on operating lease

Relatives
of Key
Management
Personnel
-
0.64
-
-
-
-
-
-

(` in crores)

Subsidiaries

Total

-
46.62 3,719.73
0.16
59.83
114.55
156.77
-
39.05

-
0.07
114.55
-
-
-

-
-
-
-
-
-

- 2,815.00
-
-
-
-
-
-
7.19
7.19
15.01
15.01

Operating lease comprises leasing of office premises/ATMs, staff quarters, electronic data capturing machines and
IT equipment.

(` in crores)

31 March, 2011 31 March, 2010

Future lease rentals payable as at the end of the year:
- Not later than one year
- Later than one year and not later than five years
- Later than five years

Total of minimum lease payments recognised in the Profit and Loss Account
for the year
Total of future minimum sub-lease payments expected to be received under
non-cancellable subleases
Sub-lease payments recognised in the Profit and Loss Account for the year

The Bank has sub-leased certain of its properties taken on lease.

There are no provisions relating to contingent rent.

435.35
1,222.13
671.10

405.97
1,164.36
718.94

560.07

412.99

1.21
0.91

1.15
0.61

The terms of renewal/purchase options and escalation clauses are those normally prevalent in similar agreements.

There are no undue restrictions or onerous clauses in the agreements.

2.2.8 Other Fixed Assets (including furniture & fixtures)

The movement in fixed assets capitalised as application software is given below:

Particulars

At cost at the beginning of the year

Additions during the year

Deductions during the year

Accumulated depreciation as at 31 March

Closing balance as at 31 March

Depreciation charge for the year

(` in crores)

31 March, 2011 31 March, 2010

266.73

65.23

(1.68)

(208.38)

121.90

46.87

220.20

47.11

(0.58)

(162.21)

104.52

37.26

2.2.9 The major components of deferred tax assets and deferred tax liabilities arising out of timing differences are as

under:

As at

Deferred tax assets on account of provisions for doubtful debts

Deferred tax assets on account of amortisation of HTM investments

Deferred tax assets on account of provision for employee benefits

Deferred tax liability on account of depreciation on fixed assets

Deferred tax assets on account of other contingencies

Other deferred tax assets

Net deferred tax asset

2.2.10 Employee Benefits

Provident Fund

(` in crores)

31 March, 2011 31 March, 2010

574.23

164.04

70.66

(32.67)

13.37

27.22

816.85

421.52

147.83

47.79

(32.68)

26.87

611.33

The contribution to the employee’s provident fund amounted to `41.83 crores (previous year `37.10 crores) for the
year.

The rules of the Bank’s Provident Fund administered by a Trust require that if the Board of Trustees are unable to
pay interest at the rate declared for Employees’ Provident Fund by the Government under para 60 of the Employees’
Provident Fund Scheme, 1952 for the reason that the return on investment is less or for any other reason, then
the deficiency shall be made good by the Bank. Having regard to the assets of the Fund and the return on the
investments, the Bank does not expect any deficiency in the foreseeable future. There has also been no such
deficiency since the inception of the Fund.

Superannuation

The Bank contributed `10.17 crores (previous year `9.67 crores) to the employees’ superannuation plan for the
year.

Leave Encashment

The Bank charged an amount of `70.65 crores (previous year `36.52 crores) towards leave encashment for the
year.

Gratuity

The following tables summarise the components of net benefit expenses recognised in the Profit and Loss Account
and funded status and amounts recognised in the Balance Sheet for the Gratuity benefit plan.

Profit and Loss Account

Net employee benefit expenses (recognised in payments to and provisions for employees)

Current Service Cost

Interest on Defined Benefit Obligation

Expected Return on Plan Assets

Net Actuarial Losses/(Gains) recognised in the year

Past Service Cost

Total included in “Employee Benefit Expense”

Actual Return on Plan Assets

Balance Sheet

Details of provision for gratuity

Present Value of Funded Obligations

Fair Value of Plan Assets

Net Liability

Amounts in Balance Sheet

Liabilities

Assets

Net Asset

Changes in the present value of the defined benefit obligation are as follows:

Change in Defined Benefit Obligation

Opening Defined Benefit Obligation

Current Service Cost

Interest Cost

Actuarial Losses/(Gains)

Past service cost

Benefits Paid

Closing Defined Benefit Obligation

(` in crores)

31 March, 2011 31 March, 2010

9.03

3.85

(3.34)

0.67

8.75

18.96

2.57

8.67

2.93

(2.58)

(4.11)

4.91

3.04

(` in crores)

31 March, 2011 31 March, 2010

60.65

(63.43)

(2.78)

2.78

(2.78)

42.56

(43.97)

(1.41)

1.41

(1.41)

(` in crores)

31 March, 2011 31 March, 2010

42.56

9.03

3.85

(0.11)

8.75

(3.43)

60.65

36.37

8.67

2.93

(3.65)

(1.76)

42.56

Changes in the fair value of plan assets are as follows:

(` in crores)

31 March, 2011 31 March, 2010

Change in the Fair Value of Assets

Opening Fair Value of Plan Assets

Expected Return on Plan Assets

Actuarial Gains/(Losses)

Contributions by Employer

Benefits Paid

Closing Fair Value of Plan Assets

Experience adjustments

Defined Benefit Obligations
Plan Assets
Surplus/(Deficit)
Experience Adjustments on
Plan Liabilities
Experience Adjustments on
Plan Assets

31 March,
2011
60.65
63.43
2.78

1.40

(0.78)

43.97

3.34

(0.78)

20.33

(3.43)

63.43

31 March,
2010
42.56
43.97
1.41

31 March,
2009
36.37
29.75
(6.62)

31 March,
2008
23.35
17.74
(5.61)

29.75

2.58

0.46

12.94

(1.76)

43.97

(` in crores)

31 March,
2007
14.32
11.89
(2.43)

1.16

0.46

3.38

3.56

(0.73)

(0.17)

2.29

0.13

The major categories of plan assets* as a percentage of fair
value of total plan assets – Insurer Managed Funds

*composition of plan assets is not available

Principal actuarial assumptions at the Balance Sheet date:

Discount Rate

Expected rate of Return on Plan Assets

Salary Escalation Rate

Employee Turnover

- 21 to 30 (age in years)

- 31 to 44 (age in years)

- 45 to 59 (age in years)

31 March, 2011

31 March, 2010

100

31 March, 2011

8.05% p.a.

7.50% p.a.

6.00% p.a.

16.55%

10.00%

1.00%

Principal actuarial assumptions at the Balance Sheet date:

Discount Rate

Expected rate of Return on Plan Assets

Salary Escalation Rate

Employee Turnover

- 21 to 44 (age in years)

- 45 to 64 (age in years)

31 March, 2010

7.90% p.a.

7.50% p.a.

6.00% p.a.

10.00%

1.00%

The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority,
promotion and other relevant factors.

The expected rate of return on plan assets is based on the average long-term rate of return expected on investments
of the Fund during the estimated term of the obligations.

As the contribution expected to be paid to the plan during the annual period beginning after the balance sheet date
is based on various internal/external factors, a best estimate of the contribution is not determinable.

The above information is as certified by the actuary and relied upon by the auditors.

2.2.11 Provisions and contingencies

a) Movement in provision for frauds included under other liabilities is set out below:

(` in crores)

31 March, 2011 31 March, 2010

Opening balance at the beginning of the year

Additions during the year

Reductions on account of payments during the year

Reductions on account of reversals during the year

Closing balance at the end of the year

b) Movement in provision for credit enhancements on securitised assets is set out below:

0.21

4.78

4.99

4.51

0.04

(0.27)

(4.07)

0.21

(` in crores)

Opening balance at the beginning of the year

Additions during the year

Reductions during the year

Closing balance at the end of the year

31 March, 2011 31 March, 2010

c) Movement in provision for debit/credit card reward points is set out below:

Opening provision at the beginning of the year

Provision made during the year

Reductions during the year

Closing provision at the end of the year

(` in crores)

31 March, 2011 31 March, 2010

18.41

8.25

(1.65)

25.01

9.97

9.35

(0.91)

18.41

d) Movement in provision for other contingencies (including derivatives) is set out below:

Opening provision at the beginning of the year

Provision made during the year

Reductions during the year

Closing provision at the end of the year

2.2.12 Unclaimed Shares:

Details of unclaimed shares as of 31 March, 2011 are as follows:

(` in crores)

31 March, 2011 31 March, 2010

36.44

Aggregate number of shareholders at the beginning of the year

Total outstanding shares in Unclaimed Suspense Account at the beginning of the year

Number of shareholders who approached to issuer for transfer of shares from Unclaimed
Suspense Account during the year

Number of shareholders to whom shares were transferred from Unclaimed Suspense Account
during the year

Aggregate number of shareholders at the end of the year

Total outstanding shares in Unclaimed Suspense Account at the end of the year

31 March, 2011

6,200*

11**

4,900*

* Opening of Unclaimed Suspense Account is in process

** Shares lying with Bank under postal return were re-despatched

2.2.13 Small and Micro Industries

Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from 2 October,
2006, certain disclosures are required to be made relating to Micro, Small and Medium enterprises. There have
been no reported cases of delays in payments to micro and small enterprises or of interest payments due to delays
in such payments. The above is based on the information available with the Bank which has been relied upon by
the auditors.

2.2.14 Description of contingent liabilities:

a) Claims against the Bank not acknowledged as debts

These represent claims filed against the Bank in the normal course of business relating to various legal cases
currently in progress. These also include demands raised by income tax and other statutory authorities and
disputed by the Bank.

Liability on account of forward exchange and derivative contracts

The Bank enters into foreign exchange contracts, currency options/swaps, interest rate futures and forward
rate agreements on its own account and for customers. Forward exchange contracts are commitments to buy
or sell foreign currency at a future date at the contracted rate. Currency swaps are commitments to exchange
cash flows by way of interest/principal in two currencies, based on ruling spot rates. Interest rate swaps are
commitments to exchange fixed and floating interest rate cash flows. Interest rate futures are standardised,
exchange-traded contracts that represent a pledge to undertake a certain interest rate transaction at a specified
price, on a specified future date. Forward rate agreements are agreements to pay or receive a certain sum

based on a differential interest rate on a notional amount for an agreed period. A foreign currency option is an
agreement between two parties in which one grants to the other the right to buy or sell a specified amount of
currency at a specific price within a specified time period or at a specified future time.

c) Guarantees given on behalf of constituents

As a part of its banking activities, the Bank issues guarantees on behalf of its customers to enhance their credit
standing. Guarantees represent irrevocable assurances that the Bank will make payments in the event of the
customer failing to fulfill its financial or performance obligations.

d) Acceptances, endorsements and other obligations

These include documentary credit issued by the Bank on behalf of its customers and bills drawn by the Bank’s
customers that are accepted or endorsed by the Bank.

e) Other items

Other items represent outstanding amount of bills rediscounted by the Bank, estimated amount of contracts
remaining to be executed on capital account and commitments towards underwriting and investment in equity
through bids under Initial Public Offering (IPO) of corporates as at the year end.

2.2.15 Previous year figures have been regrouped and reclassified, where necessary to conform to current year’s

presentation.

For Axis Bank Ltd.

Adarsh Kishore
Chairman

Shikha Sharma
Managing Director & CEO

S. K. Chakrabarti
Deputy Managing Director

R. H. Patil
Director

Sushil Kumar Roongta
Director

R. B. L. Vaish
Director

S. B. Mathur
Director

P. J. Oza
Company Secretary

Somnath Sengupta
Executive Director & CFO

Date : 22nd April, 2011
Place: Mumbai

AUDITORS’ CERTIFICATE

TO THE MEMBERS OF
AXIS BANK LIMITED

We have examined the compliance of conditions of corporate governance by AXIS BANK LIMITED (“the Bank”) for
the year ended 31 March, 2011, as stipulated in clause 49 of the Listing Agreement of the said Bank with the stock
exchanges.

The compliance of conditions of corporate governance is the responsibility of the Management. Our examination was
limited to procedures and implementation thereof, adopted by the Bank for ensuring the compliance of the conditions
of the corporate governance. It is neither an audit nor an expression of opinion on the financial statements of the Bank.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the
Bank has complied with the conditions of corporate governance as stipulated in the abovementioned Listing Agreement.

We further state that such compliance is neither an assurance as to the future viability of the Bank nor the efficiency or
effectiveness with which the Management has conducted the affairs of the Bank.

For DELOITTE HASKINS & SELLS
Chartered Accountants
(Registration No. 117365W)

Z. F. Billimoria
Partner
(Membership No.42791)

Place : Mumbai
Date : 22nd April, 2011

CORPORATE GOVERNANCE

(Forming Part of the Directors’ Report for the year ended 31 March, 2011)

1. Philosophy on Code of Governance

The Bank’s policy on Corporate Governance has been:

II.

To enhance the long term interest of its shareholders and to provide good management, the adoption of prudent
risk management techniques and compliance with the required standards of capital adequacy, thereby safeguarding
the interest of its other stakeholders such as depositors, creditors, customers, suppliers and employees.

To identify and recognise the Board of Directors and the Management of the Bank as the principal instruments
through which good corporate governance principles are articulated and implemented. Further, to identify and
recognise accountability, transparency and equality of treatment for all stakeholders, as central tenets of good
corporate governance.

2. Board of Directors

The composition of the Board of Directors of the Bank is governed by the Companies Act, 1956, the Banking Regulation
Act, 1949 and the Clause 49 of the Listing Agreement. The Bank’s Board comprises a combination of executive and non-
executive Directors. The Board presently consists of 14 Directors and its mix provides a combination of professionalism,
knowledge and experience required in the banking business. The Board is responsible for the management of the
Bank’s business. The functions, responsibilities, role and accountability of the Board are well defined. In addition to
monitoring corporate performance, the Board also carries out functions such as taking care of all statutory agenda,
approving the Business Plan, reviewing and approving the annual budgets and borrowing limits, and fixing exposure
limits. It ensures that the Bank keeps shareholders informed about plans, strategies and performance. The detailed
reports of the Bank’s performance are periodically placed before the Board. Shri S. B. Mathur has been appointed as
the Lead Independent Director.

The composition of the Bank’s Board includes the representatives of the Administrator of the Specified Undertaking
of the Unit Trust of India (SUUTI), and the Life Insurance Corporation of India, the Bank’s promoters. The following
members now constitute the Board:

Adarsh Kishore

Shikha Sharma
S. K. Chakrabarti
J. R. Varma
R. H. Patil
Rama Bijapurkar
R. B. L. Vaish
M. V. Subbiah
K. N. Prithviraj
V. R. Kaundinya
S. B. Mathur
S. K. Roongta
Prasad R. Menon
R. N. Bhattacharyya

Chairman
Promoter – Nominee of SUUTI
Managing Director and Chief Executive Officer
Deputy Managing Director
Independent
Independent
Independent
Promoter – Nominee of the Life Insurance Corporation of India
Independent
Promoter – Nominee of SUUTI
Independent
Independent
Independent
Independent
Promoter – Nominee of SUUTI

Of these, all Directors are independent except Dr. Adarsh Kishore, Smt. Shikha Sharma, Shri S. K. Chakrabarti,
Shri R. B. L. Vaish, Shri K. N. Prithviraj and Shri R. N. Bhattacharyya. Thus, the 8 Independent Directors constitute more
than one-half of the Board’s membership. Shri M. S. Sundara Rajan had joined the Board on 8 June, 2010 and resigned
w.e.f. 22 February, 2011. Shri M. S. Sundara Rajan could not attend any meeting of the Board or any Committee in
which he was a member as he was awaiting permission from the Ministry of Finance/RBI to join the Board of the Bank.

Dr. Adarsh Kishore, Smt. Shikha Sharma, Shri M. M. Agrawal, Shri M. V. Subbiah, Shri R. B. L. Vaish,
Shri K. N. Prithviraj, Shri J. R. Varma, Shri S. B. Mathur and Shri V. R. Kaundinya attended the last Annual General
Meeting held on 8 June, 2010 at Ahmedabad.

Shri N. C. Singhal who was the Chairman of Audit Committee retired from the Board w.e.f. 2 May, 2010. In the
absence of a permanent Chairman of the Audit Committee, Shri R. B. L. Vaish and Shri M. V. Subbiah represented
the Audit Committee at the last Annual General Meeting to respond to the queries of shareholders. Subsequently,
Shri S. B. Mathur has been appointed as the Chairman of the Audit Committee w.e.f. 10 October, 2010.

In all, 10 meetings of the Board were held during the year on the following dates:

20 April, 2010, 8 June, 2010, 15 July, 2010, 16 July, 2010, 17 September, 2010, 9 October, 2010, 14 October, 2010,
17 November, 2010, 12 December, 2010 and 17 January, 2011.

Dr. Adarsh Kishore, Smt. Shikha Sharma, Shri R. B. L. Vaish, Shri K. N. Prithviraj, Shri S. B. Mathur attended all
the ten meetings. Shri J. R. Varma attended eight meetings. Shri S. K. Roongta attended all the eight meetings for
which he was eligible. Smt. Rama Bijapurkar attended seven meetings. Shri V. R. Kaundinya attended six meetings.
Dr. R. H. Patil attended five meetings. Shri S. K. Chakrabarti attended all the five meetings for which he was eligible.
Shri M. M. Agrawal attended all the four meetings for which he was eligible. Shri M. V. Subbiah attended four
meetings. Shri Prasad R. Menon attended three meetings out of the four meetings for which he was eligible.
Shri N. C. Singhal attended one meeting for which he was eligible. Shri M. S. Sundara Rajan could not attend any
meeting.

The Directors of the Bank also hold position as directors, trustees, members and partners in other well-known and
reputed companies, trusts, associations and firms as per the details given below:

i. ADARSH KISHORE

Sr. No. Name of the Company/Institution
1.

AEGON Religare Life Insurance Company Limited

Nature of Interest
Director/Chairman - Audit Committee/Chairman
- Ethics & Compliance Committee/Member -
Nomination & Remuneration Committee/Chairman
- Policyholders Protection Committee

Havells India Limited

Director

ii. SHIKHA SHARMA

Sr. No. Name of the Company/Institution

Nature of Interest

Axis Asset Management Company Limited

Axis U.K. Limited

Axis Private Equity Limited

Chairperson

Director

iii. S. K. CHAKRABARTI

Sr. No. Name of the Company/Institution

Nature of Interest

Axis Securities and Sales Limited

Chairman

iv. J. R. VARMA

Sr. No. Name of the Company/Institution

Nature of Interest

Infosys BPO Limited

Onmobile Global Limited

v. R. H. PATIL

Director/Chairman – Compensation Committee/
Chairman – Audit Committee

Director/Chairman – Audit Committee/Member –
Share Transfers and Investor Grievance Committee

Sr. No. Name of the Company/Institution

Nature of Interest

The Clearing Corporation of India Limited

Chairman/Chairman - Bye-laws Rules & Regulations
Committee/Chairman – Investment Committee/
Chairman – HR Committee of Directors/Chairman-
Committee of Director for CSR Activities/Member
– Nomination Committee of Director

Clear Corp Dealing Systems (India) Limited

Chairman

National Securities Depository Limited

Chairman/Chairman- Nomination Committee/
Chairman – Compensation Committee/Member –
Audit Committee

NSDL Database Management Limited

Chairman/Chairman – Audit Committee

Axis Private Equity Limited

Chairman

L&T Investment Management Limited

Chairman/Member – Audit Committee

National Securities Clearing Corporation of
India Limited

National Stock Exchange of India Limited

Director/Member – Audit Committee/Member –
Committee for Declaration of Default

Director/Chairman – Audit Committee/Member
– Committee for Declaration of Default/Member
– Pricing Committee/Member – Technology
Committee/Member – Business Development
Committee/Member – Risk Assessment &
Review Committee/Member – Employee PF Trust
Committee/Member – Executive Committee for
CDS Segment/Member- Investor Protection Fund
Trust

Director/Member – Audit Committee/Member –
Remuneration Committee

Director/Chairman – Remuneration HR Committee/
Chairman – Risk Management Committee/Member
– Audit Committee/Member – Committee of
Directors

NSE.IT Limited

10.

SBI Capital Markets Limited

11.

12.

CorpBank Securities Limited

Director/Chairman – Audit Committee

L&T Infrastructure Finance Company Limited

Director/Chairman – Audit Committee/Chairman –
Risk Management Committee

13.

The Tata Power Company Limited

Director

vi. RAMA BIJAPURKAR

Sr. No. Name of the Company/Institution

Nature of Interest

CRISIL Limited

Director/Member – Compensation Committee/
Member – Allotment Committee

CRISIL Risk & Infrastructure Solutions Limited

Chairperson

Mahindra Holidays & Resorts India Limited

Mahindra & Mahindra Financial Services Limited

ICICI Prudential Life Insurance Company Limited

Director/Chairperson – Remuneration Committee/
Member – Audit Committee

Director/Member – Audit Committee/Member –
Risk Management Committee

Director/Chairperson – Board Nomination &
Compensation Committee/Member – Board Risk
Management Committee

Ambit Holdings Pvt. Limited

Janalakshmi Financial Services Pvt. Limited

Vishwas (Vision for Health Welfare & Special Needs)
(Sec. 25 Company)

Director

vii. R. B. L. VAISH

Sr. No. Name of the Company/Institution

Nature of Interest

LICHFL Asset Management Company Limited

Director

OTCEI Securities Limited

Director/Member – Remuneration Committee

viii. M. V. SUBBIAH

Sr. No. Name of the Company/Institution

Nature of Interest

National Skills Development Corporation
(Sec. 25 Company)

Lakshmi Machine Works Limited

Chennai Willingdon Corporate Foundation
(Sec. 25 Company)

Chennai Heritage (Sec. 25 Company)

Chairman

Director

SRF Limited

Murugappa & Sons

Kadamane Estates Company

Vellayan Chettiar Trust

Muna Vena Murugappan Trust

A M M Foundation

India Foundation for the Arts

Meenakshi Charitable Trust

Pallathur Nagarathar Trust

National Skill Development Trust

Advisory Board of Pari Washington Company

Advisors Private Limited, Chennai

Director/Member – Audit Committee

Partner

Trustee

Member

10.

11.

12.

13.

14.

15.

16.

ix. K. N. PRITHVIRAJ

Sr. No. Name of the Company/Institution

Nature of Interest

10.

11.

UTI Infrastructure Technology & Services Limited

Chairman

Surana Industries Limited

Director/Member – Audit Committee/Member –
Remuneration & Nomination Committee

Surana Power Limited

Director

Dwarikeshwar Sugars Industries Limited

Director/Chairman – Audit Committee

Falcon Tyres Limited

Montana Tyres Limited

Daiwa Trustees Private Limited

PNB Investment Services Limited

Director/Member – Audit Committee

Director

Brickwork Ratings (India) Pvt. Limited

Director/Member – Audit Committee

Specified Undertaking of the Unit Trust of India

Administrator & Member of Board of Advisors

Oversight Committee on Sale of Assets of IIBI
(Government of India)

Member

V. R. KAUNDINYA

Sr. No. Name of the Company/Institution

Nature of Interest

Advanta India Limited

Advanta Seeds Limited

Unicorn Seeds Private Limited

xi.

S. B. MATHUR

Managing Director & CEO

Director

Sr. No. Name of the Company/Institution

Nature of Interest

10.

11.

12.

13.

14.

15.

16.

17.

18.

Orbis Financial Corporation Limited

Chairman/Member – Audit Committee

Cholamandalam MS General Insurance Company
Limited

DCM Sriram Industries Limited

Havells India Limited

HDIL Limited

HOEC Limited

IL&FS Limited

ITC Limited

Chairman/Member – Audit Committee

Director/Member – Audit Committee

Director/Chairman – Audit Committee

Director

Director/Member – Audit Committee

Director

Director/Chairman – Audit Committee

National Collateral Management Services Co. Limited

Director

National Stock Exchange of India Limited

Ultratech Cement Limited

Janalakshmi Financial Services Pvt. Limited

Munich Re India Services Pvt. Limited

J.M. Financial Asset Reconstruction Co. Pvt. Limited

Director

General Insurance Corporation of India

Director/Chairman – Audit Committee

National Investment Fund

IDFC Trustee Co. Limited

AIG Trustee Co. Pvt. Limited

Advisor

Trustee

xii. S. K. ROONGTA

Sr. No. Name of the Company/Institution

Nature of Interest

ACC Limited

Director

Hindustan Petroleum Corporation Limited

The Shipping Corporation of India Limited

Neyveli Lignite Corporation Limited

Jindal Power Limited

Jubilant Industries Limited

Director/Member – Audit Committee/Member–
Shareholders Grievance Committee

Director

Director/Chairman – Shareholders Grievance
Committee/Member – Audit Committee

xiii. PRASAD R. MENON

Sr. No. Name of the Company/Institution

Nature of Interest

Tata Ceramics Limited

NELCO Limited

Tata Consulting Engineers Limited

Tata Chemicals Limited

Tata Projects Limited

Tata Industries Limited

Tata BP Solar India Limited

The Sanmar Group

SKF India Limited

xiv. R. N. BHATTACHARYYA

Chairman

Director

Director/Member – Remuneration Committee

Director/Member – Audit Committee

Director

Sr. No. Name of the Company/Institution

Nature of Interest

Global Coke Limited

Director

The business of the Board is also conducted through the following Committees constituted by the Board to deal with
specific matters and delegated powers for different functional areas:

a) Committee of Directors

R. H. Patil - Chairman

K. N. Prithviraj

V. R. Kaundinya

S. B. Mathur

Prasad R. Menon

Shikha Sharma

S. K. Chakrabarti

b) Audit Committee

S. B. Mathur - Chairman

R. H. Patil

R. B. L. Vaish

S. K. Roongta

c) Risk Management Committee

Adarsh Kishore - Chairman

J. R. Varma

R. B. L. Vaish

Shikha Sharma

S. K. Chakrabarti

d) Shareholders/Investors Grievance Committee

Adarsh Kishore - Chairman

K. N. Prithviraj

S. B. Mathur

e) HR and Remuneration Committee

Rama Bijapurkar - Chairperson

R. H. Patil

K. N. Prithviraj

S. K. Roongta

Prasad R. Menon

f) Nomination Committee

S. B. Mathur - Chairman

Rama Bijapurkar

R. B. L. Vaish

V. R. Kaundinya

g) Special Committee of the Board of Directors for Monitoring of Large Value Frauds

Shikha Sharma - Chairperson

R. H. Patil

V. R. Kaundinya

S. K. Roongta

S. K. Chakrabarti

h) Customer Service Committee

Adarsh Kishore - Chairman
J. R. Varma

R. B. L. Vaish

Shikha Sharma

S. K. Chakrabarti

i) Committee of Whole-Time Directors

Shikha Sharma - Chairperson

S. K. Chakrabarti

j) Special Committee of the Board for Strategic Oversight of Integration of Businesses

Rama Bijapurkar - Chairperson

J. R. Varma

R. B. L. Vaish

K. N. Prithviraj

Prasad R. Menon

The functions of the Committees are discussed below:

a) Committee of Directors

The Committee of Directors (COD) was reconstituted with effect from 10 October, 2010 and is vested with the
following functions and powers:

To provide approvals for loans above certain stipulated limits, discuss strategic issues in relation to credit
policy and deliberate on the quality of the credit portfolio.

ii.

To sanction expenditures above certain stipulated limits.

iii. To approve expansion of the location of the Bank’s network of offices, branches, extension counters, ATMs

and Currency Chests.

iv. To review investment strategy and approve investment related proposals above certain limits.

To approve proposals relating to the Bank’s operations covering all departments and business segments; and

vi. To discuss issues relating to day to day affairs and problems and to take such steps as may be deemed
necessary for the smooth functioning of the Bank. All routine matters other than the strategic matters and
review of policies other than strategic policies like Credit Policy, Investment Policy and other policies which
the COD may consider necessary or Reserve Bank of India (RBI) may specifically require to be reviewed by the
Board.

Meetings and Attendance during the year:

12 meetings of the Committee of Directors were held during the year on 21 April, 2010, 17 May, 2010,
7 June, 2010, 14 July, 2010, 23 August, 2010, 20 September, 2010, 9 October, 2010, 3 November, 2010,
7 December, 2010, 12 January, 2011, 18 February, 2011 and 21 March, 2011. Smt. Shikha Sharma attended all
the twelve meetings. Shri S. B. Mathur attended all the nine meetings for which he was eligible. Dr. R. H. Patil
attended eight meetings. Shri V. R. Kaundinya attended six meetings out of nine meetings for which he was
eligible. Shri K. N. Prithviraj and Shri M. M. Agrawal attended all the five meetings for which they were eligible.
Shri S. K. Chakrabarti attended four meetings out of six meetings for which he was eligible. Shri Prasad R. Menon
attended all the three meetings for which he was eligible. Shri N. C. Singhal attended one meeting for which he
was eligible, Shri M. V. Subbiah attended one meeting out of seven meetings for which he was eligible and Shri
M. S. Sundara Rajan could not attend any meeting out of four meetings for which he was eligible.

b) Audit Committee

The Audit Committee of the Board of Directors was reconstituted with effect from 10 October, 2010 and functions
with the following main objectives:

ii.

To provide direction and to oversee the operation of the audit functions in the Bank.

To review the internal audit and inspection systems with special emphasis on their quality and effectiveness.

iii. To review inspection and concurrent audit reports of large branches with a focus on all major areas of
housekeeping, particularly inter-branch adjustment accounts, arrears in the balancing of the books and un-
reconciled entries in inter-bank and Nostro accounts and frauds.

iv. To follow up issues raised in Long Form Audit Report and inspection reports of RBI.

To review the system of appointment and remuneration of concurrent auditors and external auditors.

vi. To recommend to the Board, the appointment, re-appointment and, if required, the replacement or removal

of the statutory auditor and the fixation of audit fees.

vii. To review the performance of statutory and internal auditors, and adequacy of the internal control systems.

viii. To oversee the Bank’s financial reporting process and the disclosure of its financial information to ensure that

the financial statements are correct, sufficient and credible.

ix. To review the annual financial statements and to recommend their adoption to the Board, with particular

reference to disclosure of any related party transactions.

To review the quarterly financial statements and recommend their adoption to the Board.

xi. To review the functioning of the Whistle Blower Mechanism; and

xii. To carry out any other function as is mentioned in the terms of reference of the Audit Committee.

As required under Section 292A of the Companies Act, 1956 and Clause 49 of the Listing Agreement, the
new ‘Terms of Reference’ of the Committee were approved by the Board of Directors at its meeting held on
23 January, 2001.

Meetings and Attendance during the year:

11 meetings of the Audit Committee were held during the year on 20 April, 2010, 23 June, 2010, 14 July,
2010, 10 August, 2010, 17 September, 2010, 14 October, 2010, 19 November, 2010, 17 December, 2010,
17 January, 2011, 28 February, 2011 and 22 March, 2011. Shri R. B. L. Vaish attended all the eleven meetings. Shri
S. B. Mathur attended nine meetings out of ten meetings for which he was eligible. Shri S. K. Roongta attended
all the six meetings for which he was eligible. Dr. R. H. Patil attended four meetings. Shri M. V. Subbiah attended
three meetings out of five meetings for which he was eligible. Shri N. C. Singhal attended one meeting for which
he was eligible. Shri M. S. Sundara Rajan could not attend any meeting out of four meetings for which he was
eligible.

c) Risk Management Committee

The Risk Management Committee of the Board of Directors was reconstituted with effect from 10 October, 2010
and functions with the following objectives:

To perform the role of Risk Management in pursuance of the Risk Management Guidelines issued periodically
by RBI and Board; and

ii. To monitor the business of the Bank periodically and also to suggest the ways and means to improve the

working and profitability of the Bank from time to time.

Meetings and Attendance during the year:

4 meetings of the Risk Management Committee were held during the year on 20 April, 2010, 15 July, 2010,
9 October, 2010 and 17 January, 2011. Dr. Adarsh Kishore and Smt. Shikha Sharma attended all the four meetings.
Shri J. R. Varma attended three meetings. Shri M. M. Agrawal attended two meetings for which he was eligible.
Shri S. K. Chakrabarti and Shri R. B. L. Vaish attended one meeting for which they were eligible.

d) Shareholders/Investors Grievance Committee

The Shareholders/Investors Grievance Committee of the Board of Directors was reconstituted with effect from
10 October, 2010. The primary objective of the Shareholders/Investors Grievance Committee is to look into
redressal of shareholders’ and investors’ grievances relating to non-receipt of dividend, refund orders, shares sent
for transfer, non-receipt of Annual Report and other similar grievances.

Meetings and Attendance during the year:

4 meetings of the Shareholders/Investors Grievance Committee were held during the year on 20 April, 2010,
15 July, 2010, 9 October, 2010 and 17 January, 2011. Dr. Adarsh Kishore and Shri K. N. Prithviraj attended all the
four meetings. Shri R. B. L. Vaish attended three meetings for which he was eligible. Shri S. B. Mathur attended
one meeting for which he was eligible. Shri M. S. Sundara Rajan could not attend one meeting for which he was
eligible.

At monthly intervals, the Bank sends to the members of the Committee, investors’ service status reports giving
the brief details of the complaints received, disposed off and pending. Details of the status of the references/
complaints received for the year are given in the following statement:

Status of the References/Complaints from 1 April, 2010 to 31 March, 2011

Sr. No.
1.
2.
3.

Nature of Reference/Complaints
Change of Address
Bank Mandates
ECS

4.
5.

6.
7.
8.
9.
10.
11.
12.
13.

Nomination
Non-receipt of Share Certificates

Correction of Names
Stock Exchange queries
NSDL/CDSL queries
SEBI
Receipt of Dividend Warrants for revalidation
Non-receipt of Dividend
Non-receipt of Annual Reports
Transfers

Received Disposed Off

453
69
409

337
72

48
4
-
8
372
678
29
601

453
69
409

337
72

48
4
-
8
372
678
29
623 **

Pending
-
-
-

-
-

-
-
-
-
-
-
-
-

**22 share transfers were received in the last week of March 2010 and were disposed off in the first week of
April 2010.

Shri P. J. Oza, Company Secretary, is the Compliance Officer for SEBI/Stock Exchange related issues.

e) HR and Remuneration Committee

The Remuneration and Nomination Committee of the Board of Directors has been split into two separate
Committees with effect from 10 October, 2010 namely, HR and Remuneration Committee and Nomination
Committee.

The HR and Remuneration Committee of the Board of Directors was constituted with effect from 10 October,
2010 and functions with the following objectives:

ii.

To decide the overall remuneration policy of the Bank, including the level and structure of fixed pay, perquisites,
the bonus pools, stock-based compensation including grant of stock options and/or recommending to the
Board, grant of stock options to employees of the Bank.

To recommend to the Board, the remuneration package for the MD & CEO, the other Whole-time Directors
and senior managers one level below the Board position including the level and structure of fixed pay,
variable pay, stock-based compensation and perquisites.

iii. To recommend to the Board, the compensation payable to the Chairman of the Bank, including fixed and

variable pay and perquisites.

iv. To examine the HR processes within the Bank.

To evaluate the process of succession planning at the level of the MD & CEO, the other Whole-time Directors,
and senior managers one level below the Board position.

vi. To be consulted on appointment of the Executive Directors in the Bank.

vii. To review the talent management and succession process to ensure business continuity.

viii. To review the annual presentation from the HR department of the Bank on the HR and remuneration

landscape.

Meeting and Attendance during the year:

1 meeting of HR and Remuneration Committee was held during the year on 3 November, 2010. Dr. R. H. Patil,
Shri K. N. Prithviraj and Shri S. K. Roongta attended the meeting. Smt. Rama Bijapurkar and Shri Prasad R. Menon
could not attend the meeting.

Meetings and Attendance during the year - Remuneration and Nomination Committee:

4 meetings of the Remuneration and Nomination Committee were held till 10 October, 2010 on 15 April, 2010,
19 May, 2010, 14 July, 2010 and 8 October, 2010. Smt. Rama Bijapurkar and Shri K. N. Prithviraj attended all the
four meetings. Dr. R. H. Patil attended two meetings. Shri N. C. Singhal attended one meeting for which he was
eligible.

Remuneration Policy

The Bank believes that to attract the right talent, the Remuneration Policy should be structured in line with other
peer group banks, and is sensitive to compensation packages in this part of the financial market. Compensation
is structured in terms of fixed pay, variable pay and employee stock options, with the last two being strongly
contingent on employee performance. The Remuneration Policy for the Chairman, Managing Director and Chief
Executive Officer and other Whole-time Directors is similarly structured and approved by the Board of Directors,
the shareholders and the RBI from time to time.

Remuneration of Directors

Smt. Shikha Sharma was appointed as the Managing Director and CEO of the Bank for a period of three years
w.e.f. 1 June, 2009.

The Bank has entered into a service agreement with Smt. Shikha Sharma for a period from 1 June, 2009 to
31 May, 2012.

The details of remuneration paid to Smt. Shikha Sharma during the year under review are given below in
sub-para vii.

Smt. Shikha Sharma was granted 1,00,000 and 1,75,000 options under the Employee Stock Option Plan
Grant IX B (13 July, 2009) and Grant X (20 April, 2010) respectively. From these two tranches, 30,000 options
were vested up to 31 March, 2011. None of these options have been exercised by Smt. Shikha Sharma till
31 March, 2011.

ii.

Shri M. M. Agrawal was appointed as an Additional Director and the Deputy Managing Director of the Bank.
RBI vide its letter dated 11 February, 2010 approved the appointment of Shri M. M. Agrawal as the Deputy
Managing Director of the Bank as also the payment of remuneration to him with effect from 10 February,
2010. The term of Shri Agrawal was up to 31 August, 2010, the last day of the month in which he attained
the age of superannuation.

The details of remuneration paid to Shri M. M. Agrawal during the year under review are given below in sub-
para vii.

Shri M. M. Agrawal was granted 3,22,280 options in total under various tranches under the Employee Stock
Option Plan (out of which 1,00,000 options were granted after he was appointed as Deputy Managing
Director). From these tranches,1,73,046 options were vested and exercised up to 31 August, 2010, while
1,49,234 options are unvested on 31 August, 2010.

iii. Shri S. K. Chakrabarti has been appointed as an Additional Director and Deputy Managing Director of the
Bank with effect from 27 September, 2010. The term of Shri Chakrabarti is up to 30 September, 2011, the
last day of the month in which he attains the age of superannuation. The approval of the shareholders to
the appointment of Shri S. K. Chakrabarti as the Deputy Managing Director and payment of remuneration is
being sought in the Annual General Meeting being held on 17 June, 2011.

The details of remuneration paid to Shri S. K. Chakrabarti during the year under review are given below in
sub-para vii.

Shri S. K. Chakrabarti was granted 2,70,380 options in total under various tranches under the Employee
Stock Option Plan (all the options were granted before he was appointed as Deputy Managing Director).
From these tranches, 1,52,046 options were vested and 1,44,546 options were exercised up to 31 March,
2011, and 7,500 options are unexercised. 1,18,334 options are unvested as on 31 March, 2011.

iv. Dr. Adarsh Kishore has been appointed as Chairman of the Bank for a period of three years w.e.f. 8 March,

2010. The details of remuneration of Dr. Adarsh Kishore during the year under review are:

Salary of `12,00,000.

Expenses for maintenance of office `8,80,480.

v. The Bank has received approval of RBI, shareholders and of the Central Government under the provisions of

Section 309(4) of the Companies Act, 1956 for payment of remuneration to Dr. Adarsh Kishore.

vi.

In accordance with the present regulations of RBI, the Bank grants no ESOPs to any Non-Executive Directors.

vii. The details of remuneration paid to the Whole-time Directors during 2010-11 are as under:

(In `)

For the Period
Salary
Fixed Allowance
Leave Fare Concession
facility
House Rent Allowance
Variable Pay
Upkeep Allowance (1)
Provident Fund

Gratuity

Smt. Shikha Sharma
1.4.2010 to 31.3.2011
1,35,41,664
Nil
8,80,000

52,00,000
26,04,165
Nil
@ 12% of pay with
equal contribution by
the Bank or as decided
by the Board of Trustees
from time to time
One month’s salary for
each completed year of
service or part thereof.

Shri M. M. Agrawal

Shri S. K. Chakrabarti
1.4.2010 to 31.8.2010 27.9.2010 to 31.3.2011
41,16,229
7,30,685
4,03,678

64,58,214
26,64,773
5,15,473

Nil
15,18,000
44,002
@ 12% of pay with
equal contribution by
the Bank or as decided
by the Board of Trustees
from time to time
One month’s salary for
each completed year of
service or part thereof
(on pro-rata basis).

Nil
Nil
Nil

@ 12% of pay with
equal contribution by
the Bank or as decided
by the Board of Trustees
from time to time
One month’s salary for
each completed year of
service or part thereof
(on pro-rata basis).

Superannuation
Leave Encashment

10% of pay
Nil

10% of pay
11,04,000

10% of pay
4,04,167

(1)Upkeep Allowance paid towards upkeep of residential accommodation provided by the Bank.

Perquisites (evaluated as per Income Tax Rules, wherever applicable, or otherwise at actual cost to the Bank)
such as the benefit of the Bank’s furnished accommodation, electricity, water and furnishings, club fees,
personal accident insurance, loans, use of car and telephone at residence, medical reimbursement, travelling
and halting allowances, newspapers and periodicals, and others were provided in accordance with the Rules
of the Bank.

viii. All Directors of the Bank, except for Smt. Shikha Sharma, Shri M. M. Agrawal and Shri S. K. Chakrabarti, were
paid sitting fees of `20,000 for every meeting of the Board and also for every meeting of the Committees
attended by them. Reimbursement of expenses, if any, for travel to and from the places of their residence
to the venue of the meeting, lodging and boarding when attending the meeting, being on actual basis, is
made directly by the Bank to the service providers. During the year, sitting fees of `42,00,000 was paid to
the Directors of the Bank.

Sitting Fees

The details of sitting fees paid to the Directors during the period from 1 April, 2010 to 31 March, 2011 are as
follows:

Sr. No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.

Name of Director
Adarsh Kishore
N. C. Singhal
J. R. Varma
R. H. Patil
Rama Bijapurkar
R. B. L. Vaish
M. V. Subbiah
K. N. Prithviraj
V. R. Kaundinya
S. B. Mathur
M. S. Sundara Rajan
S. K. Roongta
Prasad R. Menon
R. N. Bhattacharyya
Shikha Sharma
M. M. Agrawal
S. K. Chakrabarti
TOTAL

Sitting Fees (`)
4,40,000
80,000
2,80,000
4,40,000
2,80,000
6,40,000
1,60,000
5,20,000
3,00,000
6,00,000
NIL
3,20,000
1,40,000
NIL
NIL
NIL
NIL
42,00,000

The details of shares of the Bank, held by the non-whole time Directors as on 31 March, 2011 are set out in
the following table:

Name of Director
R. B. L. Vaish
S. B. Mathur

f) Nomination Committee

No. of shares held
225 equity shares
200 equity shares

The Nomination Committee of the Board of Directors was constituted on 10 October, 2010 and functions with
the following objectives:

To undertake a process of due diligence to determine the suitability of any person for appointment/continuing
to hold appointment as a director on the Board, based upon qualification, expertise, track record, integrity
and other ‘fit and proper’ criteria.

ii. To examine the vacancies that will come up at the Board on account of retirement or otherwise.

iii. To evaluate the skills that exist, and those that are absent but needed at the Board level, and search for

appropriate candidates who have the profile to provide such skill sets.

iv. To create a recommendatory list for deliberation and decision-making at the Board level.

v. To review the charter, tasks and composition of Committees of the Board, and identify and recommend to

the Board, the Directors who can best serve as members of each Board Committee.

Meeting and Attendance during the year:

1 meeting of Nomination Committee was held during the year on 12 December, 2010. Shri S. B. Mathur,
Shri V. R. Kaundinya, Shri R. B. L. Vaish and Smt. Rama Bijapurkar attended the same.

g) Special Committee of the Board of Directors for Monitoring of Large Value Frauds

The Special Committee of the Board of Directors for Monitoring of Large Value Frauds was reconstituted with
effect from 10 October, 2010 and functions with the following objectives:

To monitor and review all the frauds of `1 crore and above so as to:

Identify systemic lacunae, if any, which facilitated perpetration of the fraud and put in place measures to plug
the same.

ii.

Identify the reasons for delay in detection, if any, in reporting to top management of the Bank and RBI.

iii. Monitor progress of CBI/Police Investigation and recovery position.

iv. Ensure that staff accountability is examined at all levels in all cases of frauds and staff side action, if required,

is completed quickly without loss of time.

v. Review the efficacy of the remedial action taken to prevent recurrence of frauds, such as strengthening of

internal controls; and

vi. Put in place other measures as may be considered relevant to strengthen preventive measures against frauds.

Meetings and Attendance during the year:

4 meetings of Special Committee of the Board of Directors for Monitoring of Large Value Frauds were held during
the year on 20 May, 2010, 14 July, 2010, 3 November, 2010 and 21 March, 2011. Smt. Shikha Sharma attended
all the meetings. Dr. Adarsh Kishore, Shri V. R. Kaundinya and Shri S. K. Chakrabarti attended two meetings for
which they were eligible. Dr. R. H. Patil attended two meetings out of three meetings for which he was eligible.
Shri S. K. Roongta attended one meeting out of two meetings for which he was eligible.

h) Customer Service Committee

The Customer Service Committee of the Board of Directors was reconstituted with effect from 10 October, 2010
and functions with the following objectives:

i. Overseeing the functioning of the Bank’s internal committee set-up for customer service.

ii. To review the level of customer service in the Bank including customer complaints and the nature of their

resolution.

iii. Provide guidance in improving the customer service level.

iv. Review any award by the Banking Ombudsman to any customer on a complaint filed with the Ombudsman.

Meetings and Attendance during the year:

4 meetings of the Customer Service Committee were held during the year on 24 June, 2010, 30 September,
2010, 28 December, 2010 and 31 March, 2011. Shri R. B. L. Vaish attended all the four meetings and Shri J. R.
Varma attended three meetings. Dr. Adarsh Kishore, Smt. Shikha Sharma and Shri S. K. Chakrabarti attended two
meetings for which they were eligible.

i) Committee of Whole-time Directors

The Committee of Whole-time Directors was constituted on 15 January, 2010 and functions with the following
objectives:

i. Allotment of shares under ESOP.

ii. Grant of Powers of Attorney.

iii.

Issue of duplicate share certificates, and

iv. Any other routine administrative matters.

100

Meetings during the year:

11 meetings of the Committee of Whole-time Directors were held during the year on 21 April, 2010, 19 May,
2010, 18 June, 2010, 20 July, 2010, 23 August, 2010, 21 October, 2010, 22 November, 2010, 17 December,
2010, 18 January, 2011, 23 February, 2011 and 25 March, 2011.

j) Special Committee of the Board for Strategic Oversight of Integration of Businesses

The Special Committee of the Board for Strategic Oversight of Integration of Businesses was constituted on
17 January, 2011 and functions on behalf of the Board of Directors, to monitor and exercise oversight of the
process of integration of the businesses to be acquired from Enam Securities Private Limited with Axis Bank
Limited and its subsidiary, Axis Securities and Sales Limited.

Meetings and Attendance during the year:

2 meetings of Special Committee of the Board for Strategic Oversight of Integration of Businesses were held
during the year on 27 January, 2011 and 15 February, 2011. Smt. Rama Bijapurkar, Shri K. N. Prithviraj and
Shri R. B. L. Vaish attended both the meetings. Shri Prasad R. Menon attended one meeting. Shri J. R. Varma
participated in both the meetings through teleconference.

3. General Body Meetings:

The last three Annual General Meetings were held as follows:

Annual General
Meeting

14th

15th

16th

Date and Day

Time

Location

6.6.2008 – Friday

10.00 a.m. Bhaikaka Bhavan, Ellisbridge, Ahmedabad – 380 006

1.6.2009 – Monday

10.00 a.m. Bhaikaka Bhavan, Ellisbridge, Ahmedabad – 380 006

8.6.2010 – Tuesday

10.00 a.m. Bhaikaka Bhavan, Ellisbridge, Ahmedabad – 380 006

The special resolutions passed during the last three Annual General Meetings/Postal Ballot were as under:

Annual General
Meeting
14th

Date of Annual
General Meeting
6.6.2008 – Friday

Special Resolutions

• Resolution No. 6 - Appointment of Statutory Auditors under

Section 224A of the Companies Act, 1956.

• Resolution No. 9 - Approval of the shareholders of the Bank
pursuant to Section 81 of the Companies Act, 1956 authorising
the Board of Directors of the Bank to issue, offer and allot equity
stock options under the Employees Stock Option Scheme of the
Bank.

15th

1.6.2009 – Monday

• Resolution No. 5 - Appointment of Statutory Auditors under

Section 224A of the Companies Act, 1956.

• Resolution No. 7 - Partial modification to the approval given by
shareholders through postal ballot notice dated 9 January, 2009 to
the Articles of Association of the Bank in respect of separation of
the post of Chairman and CEO into the posts of i) Non-Executive
Chairman and ii) Managing Director. The effective date of the
alteration of Articles of Association changed to 1 June, 2009
instead of 1 August, 2009.

101

Annual General
Meeting
Resolution passed
through Postal Ballot

Date of Annual
General Meeting
Date of Scrutinizer’s
Report – 9.9.2009

16th

8.6.2010 – Monday

Special Resolutions

• Special Resolution for increasing the Number of Directors to

Fifteen*.

• Special Resolution for alteration of Articles 88 and 89(10) of the
Articles of Association of the Bank in respect of increasing the
number of Directors to fifteen and for alteration to the Articles
of Association in respect of replacing the words ‘Whole-time/
Executive Director(s)’ wherever appearing in Articles 118(2a),
118(3) and 118(4) of the Articles of Association, by the words
‘Whole-time/Executive/Joint/Deputy Managing Director(s)’**.

• Special Resolution for Raising Tier I Capital ***.
• Resolution No. 5 - Appointment of Statutory Auditors under

Section 224A of the Companies Act, 1956.

• Resolution No. 14 - Approval of the shareholders of the Bank
pursuant to Section 81 of the Companies Act, 1956 authorising
the Board of Directors of the Bank to issue, offer and allot equity
stock options under the Employees Stock Option Scheme of the
Bank.

• Resolution No. 15 - Approval of the shareholders of the Bank
pursuant to Section 81(1A) of the Companies Act, 1956
authorising the Board of Directors of the Bank to create, offer,
issue and allot equity stock options to the permanent employees
of the subsidiaries of the Bank, present and future, including any
Director of the Subsidiary Companies, under the Employees Stock
Option Scheme of the Bank.

* Resolution proposing the increase in the number of Directors to Fifteen was passed through postal ballot. Shri
Ashwin Lalbhai Shah, an Advocate of Gujarat High Court, who was appointed as Scrutinizer by the Bank, received a
total of 1,384 numbers of ballots. Out of 1,384 ballots received by Shri Shah, 1,341 were valid ballots and 43 were
invalid ballots. Out of 1,341 shareholders, 99.44% had assented for the Resolution.

** Resolution proposing the alteration to the Articles of Association was passed through postal ballot. Shri Ashwin
Lalbhai Shah, an Advocate of Gujarat High Court, who was appointed as Scrutinizer by the Bank, received a total of
1,384 numbers of ballots. Out of 1,384 ballots received by Shri Shah, 1,337 were valid ballots and 47 were invalid
ballots. Out of 1,337 shareholders, 99.99% had assented for the Resolution.

*** Resolution proposing Raising of Tier I Capital was passed through postal ballot. Shri Ashwin Lalbhai Shah, an
Advocate of Gujarat High Court, who was appointed as Scrutinizer by the Bank, received a total of 1,384 number of
ballots. Out of 1,384 ballots received by Shri Shah, 1,336 were valid ballots and 48 were invalid ballots. Out of 1,336
shareholders, 99.24% had assented for the Resolution.

No Resolution in the notice of the proposed Seventeenth Annual General Meeting is proposed to be passed by Postal
Ballot.

102

4. Dividend History of Last Five Years

Sr. No. Financial Year

Rate of Dividend

Date of Declaration (AGM) Date of Payment

1.
2.
3.
4.
5.

2005-06
2006-07
2007-08
2008-09
2009-10

Unclaimed Dividends:

35% (`3.50 per share)
45% (`4.50 per share)
60% (`6.00 per share)
100% (`10.00 per share)
120% (`12.00 per share)

(Date of Dividend
Warrant)

3.6.2006
2.6.2007
7.6.2008
2.6.2009
9.6.2010

2.6.2006
1.6.2007
6.6.2008
1.6.2009
8.6.2010

All shareholders whose dividends are unpaid have been intimated individually to claim their dividends. Under the
Transfer of Unclaimed Dividend Rules, it would not be possible to claim the dividend amount once deposited in
Investors’ Education & Protection Fund (IEPF). Shareholders are, therefore, again requested to claim their unpaid
dividend, if not already claimed.

Transfer to Investor Protection Fund:

Pursuant to Section 205C of the Companies Act, 1956, dividends that are unclaimed for a period of seven years
get transferred to the Investors’ Education and Protection Fund administered by the Central Government. Listed in
the table below are the dates of dividend declaration since 2003-04 and the corresponding dates when unclaimed
dividends are due to be transferred to the Central Government.

Year
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10

5. Disclosures

Dividend-Type
Final
Final
Final
Final
Final
Final
Final

Date of Declaration
18.6.2004
10.6.2005
2.6.2006
1.6.2007
6.6.2008
1.6.2009
8.6.2010

Due Date of Transfer
18.7.2011
10.7.2012
2.7.2013
1.7.2014
6.7.2015
1.7.2016
8.7.2017

•

There were no transactions of a material nature undertaken by the Bank with its promoters, directors or the
management, their subsidiaries or relatives that may have a potential conflict with the interests of the Bank.

There are no instances of non-compliance by the Bank, penalties and strictures imposed by Stock Exchanges and
SEBI/other statutory authorities on any matter related to capital markets during the last three years other than the
following:

(i) A penalty of `2 lacs was imposed by SEBI vide its order dated 10 March, 2011. It is an adjudication order and
is passed against the Bank with respect to the Debenture Trustee activity carried out by the Bank. The Bank
proposes to file an appeal.

(ii) SEBI has conveyed to the Bank its strong displeasure in not exercising the required level of diligence in
preventing certain errors during the IPO of Orient Green Power Company Limited wherein the Bank had
acted as a merchant banker.

(iii) During the buyback of shares by India Infoline Limited, wherein the Bank acted as a merchant banker, SEBI
has warned the Bank to be more careful in exercising due diligence while drafting public announcements in
future.

103

(iv) During the last three years, penalty of `16,050 was imposed by National Securities Depository Limited on the

Bank for its activity as Depository Participant.

• Whistleblower Policy: A central tenet in the Bank’s Policy on Corporate Governance is commitment to ethics,
integrity, accountability and transparency. To ensure that the highest standards are maintained in these aspects
on an on-going basis and to provide safeguards to various stakeholders (including shareholders, depositors and
employees) the Bank has formulated a ‘Whistleblower Policy’. The Policy provides employees with the opportunity
to address serious concerns arising from irregularities, malpractices and other misdemeanors committed by the
Bank’s personnel by approaching a Committee set up for the purpose (known as the Whistleblower Committee).
In case senior management commits the offences, the Policy enables the Bank’s staff to report the concerns
directly to the Audit Committee of the Board. The Policy is intended to encourage employees to report suspected
or actual occurrence of illegal, unethical or inappropriate actions, behaviors or practices by staff without fear of
retribution. The employees use this Policy regularly as a tool to voice their concerns on irregularities, malpractices
and other misdemeanors. The Policy also provides the facility to report wrongdoing in an anonymous manner. It
is hereby affirmed that the Bank has not denied personal access to the Audit Committee of the Board and that
the policy contains provisions protecting Whistleblowers from unfair termination and other unfair prejudicial and
employment practice. The Whistleblower Policy is required to be reviewed by the Audit Committee of the Board
at regular intervals.

•

The Bank has complied with the mandatory requirements regarding the Board of Directors, Audit Committees
and other Board Committees and other disclosures as required under the provisions of the revised Clause 49 of
the Listing Agreement effective 1 January, 2006. The Bank has also complied with non-mandatory requirements
like formation of HR & Remuneration Committee and Nomination Committee, sending half-yearly results to
each shareholder, the performance evaluation of all Directors under ‘Fit & Proper’ Criteria laid down by RBI and
establishment of a Whistle Blower Policy.

6. Means of Communication

• Quarterly/Half-yearly results are communicated through newspaper advertisements, press releases and by posting
information on the Bank’s website. Also, Half-yearly results are forwarded to each shareholder through post along
with a letter from Managing Director and Chief Executive Officer.

•

The results are generally published in the Economic Times and Gujarat Samachar or Sandesh or Divya Bhaskar.

• Address of our official website is www.axisbank.com where the information is displayed.

• Generally, after the half-yearly and the annual results are approved by the Board, formal presentations are made

to analysts by the management and the same is also placed on the Bank’s website.

•

The Management’s Discussion and Analysis Report for the year 2010-11 is part of the Annual Report.

7. General Shareholder Information

• AGM: Date, time and venue

17 June, 2011 – 10.00 A.M.

•

Financial Year/Calendar

At J. B. Auditorium, Ahmedabad Management Association, AMA
Complex, ATIRA, Dr. Vikram Sarabhai Marg, Ahmedabad – 380 015.

1 April, 2011 to 31 March, 2012. The meetings to consider quarterly
results for the quarter ending June 2011, September 2011 and
December 2011 are proposed to be held during second half of July
2011, October 2011 and January 2012. The meeting to consider
audited annual accounts and Q4 results is proposed to be held during
the second half of April 2012.

• Date of Book Closure

10 June, 2011 to 17 June, 2011 (both days inclusive)

104

• Dividend Payment Date

The dispatch of the dividend warrants/ECS credit would commence
on 18 June, 2011 and is expected to be completed on or before 27
June, 2011.

•

The Bank’s shares are listed on the following Stock Exchanges:

Bombay Stock Exchange Limited, P. J. Towers, Dalal Street, Mumbai – 400 001.

ii. National Stock Exchange of India Limited, Exchange Plaza, Plot No. C/1, “G” Block, Bandra-Kurla Complex,

Bandra (East), Mumbai – 400 051.

•

The Bank’s Global Depositary Receipts (GDRs) are listed and traded on the London Stock Exchange, 10 Paternoster
Square, London EC4M 7LS, UK.

•

Listing of equity shares/GDRs on Stock Exchanges (with stock code):

Name of Stock Exchange
Bombay Stock Exchange Limited
National Stock Exchange of India Limited
London Stock Exchange

Stock Code
532215
AXISBANK
AXB

The annual fees for FY2011-12 have been paid to all the Stock Exchanges where the shares are listed.

ISIN for equity shares

: INE 238A01026

Name of Depositories

: i. National Securities Depository Limited

ii. Central Depository Services (India) Limited

ISIN for GDRs

: US05462W1099

• Market Price Data: The price of the Bank’s Share - High, Low during each month in the last financial year on NSE

was as under:

MONTH
April 2010
May 2010
June 2010
July 2010
August 2010
September 2010
October 2010
November 2010
December 2010
January 2011
February 2011
March 2011

HIGH (`)
1,287.00
1,320.00
1,277.65
1,396.75
1,385.70
1,582.55
1,608.50
1,584.00
1,461.00
1,376.60
1,348.85
1,443.55

LOW (`)
1,128.20
1,147.15
1,168.50
1,215.05
1,150.00
1,330.65
1,427.00
1,297.00
1,229.70
1,195.00
1,150.00
1,233.45

•

The share price of the Bank’s equity share performed well on the stock exchanges with a low of `1,128.20 during
April 2010 on the National Stock Exchange. It touched a high of `1,608.50 during October 2010 on the National
Stock Exchange. It showed a 42.57% appreciation between the low of April 2010 and high of October 2010.

105

Performance in comparison to NIFTY

150

100

A pril-10

NIFTY

Axis Bank

M ay-10

June-10

February-11
January-11
D ece m ber-10
N ove m ber-10
O ctober-10
Septe m ber-10
A ugust-10
July-10

M arch-11

•

The high and low closing prices of the Bank’s GDRs traded during the last financial year on the London Stock
Exchange are given below:

MONTH
April 2010
May 2010
June 2010
July 2010
August 2010
September 2010
October 2010
November 2010
December 2010
January 2011
February 2011
March 2011

HIGH (USD)
29.11
30.00
27.63
29.96
29.70
34.65
36.30
36.12
35.10
30.44
30.75
32.99

LOW (USD)
25.31
23.94
25.08
26.00
27.71
28.70
32.00
28.45
27.44
26.40
25.31
27.40

•

Registrar and Share Transfer Agent:

M/s. Karvy Computershare Private Limited

Unit : Axis Bank Limited
Plot No. 17 to 24, Vithalrao Nagar, Madhapur, Hyderabad – 500 081.
Phone No. 040-23420815 to 23420824
Fax No. 040-23420814
Email: einward.ris@karvy.com
Contact Persons: Shri V. K. Jayaraman, GM (RIS)/Ms. Varalakshmi, Sr. Manager (RIS)

•

Share Transfer System

A Share Committee consisting of the Deputy Managing Director, President (Law) and the Company Secretary
of the Bank has been formed looking after the matters relating to the transfer of shares, issue of duplicate
share certificates in lieu of mutilated share certificates, and other related matters. The resolutions passed by the
Share Committee are confirmed at subsequent Board meetings. The Bank’s Registrar and Share Transfer Agent,
M/s Karvy Computershare Pvt. Limited, Hyderabad, looks after the work relating to transfers.

106

The Bank ensures that all transfers are effected within a period of one month from the date of their lodgment.

According to a notification of the Securities and Exchange Board of India (SEBI), the equity shares of the Bank
shall be traded compulsorily in Demat form by all investors w.e.f. 21 March, 2000. The Bank has already entered
into agreements with the National Securities Depository Limited (NSDL) and the Central Depository Services (India)
Limited (CDSL) so as to provide the members an opportunity to hold and trade shares of the Bank in electronic
form.

The number of equity shares of Axis Bank transferred/processed during the last three years (excluding electronic
transfer of shares in dematerialised form) is given below:

Number of transfer deeds
Number of shares transferred

2008-09

670
1,17,925

2009-10

599
43,000

2010-11

623
42,200

As required under Clause 47(c) of the listing agreements entered into by Axis Bank Limited with stock exchanges,
a certificate is obtained every six months from a practicing Company Secretary, with regard to, inter alia, effecting
transfer, transmission, sub-division, and consolidation of equity shares within one month of their lodgment. The
certificates are forwarded to BSE and NSE where the Bank’s equity shares are listed and also placed before the
Shareholders/Investors Grievance Committee.

As required by SEBI, a Reconciliation of Share Capital Audit is conducted on a quarterly basis by a practicing
Company Secretary, for the purpose of, inter alia, reconciliation of the total admitted equity share capital with the
depositories and in the physical form with the total issued/paid-up equity capital of Axis Bank Limited. Certificates
issued in this regard are placed before the Shareholders/Investors Grievance Committee and forwarded to BSE and
NSE, where the equity shares of Axis Bank Limited are listed.

Shareholders of Axis Bank with more than one per cent holding at 31 March, 2011

Name of Shareholder
Administrator of the Specified Undertaking of the Unit Trust
of India (SUUTI)
Life Insurance Corporation of India
The Bank of New York Mellon – as depositary for the equity
shares representing the underlying shares to the Global
Depositary Receipts (GDRs) issued to the investors overseas
HSBC Bank (Mauritius) Limited A/c HSBC IRIS Investments
(Mauritius) Limited
HSBC Bank (Mauritius) Limited A/c Cinnamon Capital Limited
Genesis Indian Investment Company Limited – General Sub
Fund
Deutsche Securities Mauritius Limited
ICICI Prudential Life Insurance Company Limited
General Insurance Corporation of India

• Distribution of shareholding as on 31 March, 2011

Total nominal value `
Nominal value of each equity share `
Total number of equity shares
Distinctive numbers

:
:
:
:

No. of Shares % to total No. of shares
23.68

9,72,24,373

3,92,62,917
3,77,12,095

1,96,09,210

1,94,39,710
1,19,75,156

99,10,195
90,51,135
75,75,000

9.56
9.19

4.78

4.74
2.92

2.41
2.20
1.85

410,54,58,430
10
41,05,45,843
1 to 41,05,45,843

107

Share Amount

Nominal Value

In `

% to total Capital

Shareholding of

Nominal Value

Shareholders

Up to

5,001

10,001

20,001

30,001

40,001

50,001

1,00,001

TOTAL

Numbers

% to total
Shareholders

5,000

10,000

20,000

30,000

40,000

50,000

1,00,000

Above

1,30,545

94.90

3,674

1,400

408

224

169

331

813

2.67

1.02

0.30

0.16

0.12

0.24

0.59

9,60,15,630

2,68,41,820

2,01,33,060

1,00,12,570

78,08,530

77,71,450

2,36,69,510

391,32,05,860

1,37,564

100.00

410,54,58,430

2.34

0.65

0.49

0.24

0.19

0.58

95.32

100.00

As on 31 March, 2011, out of total equity shares of the Bank, 40,81,90,816 shares representing 99.43% of the
total shares have been dematerialised.

•

The Bank has issued in the course of international offerings to the investors overseas, securities linked to ordinary
shares in the form of Global Depositary Receipts (GDRs) during March/April 2005, July 2007 and September 2009
and the GDRs have been listed and traded on the London Stock Exchange. The Bank has simultaneously issued
the underlying shares to the Global Depositary Receipts (GDRs) to the investors overseas. The underlying equity
shares have been listed and permitted to be traded on the NSE and BSE. The numbers of outstanding GDRs as on
31 March, 2011 were 3,77,12,095.

•

The Bank has not issued any ADRs/Warrants or any other convertible instruments, the conversion of which will
have an impact on equity shares.

•

Branch Locations – Given elsewhere

• Address for Correspondence:

The Company Secretary
Axis Bank Limited
Registered Office
‘Trishul’, 3rd Floor, Opp. Samartheshwar Temple,
Law Garden, Ellisbridge, Ahmedabad – 380 006
Phone No.
Fax No.
Email

:
:
:

079-26409322
079-26409321
p.oza@axisbank.com/rajendra.swaminarayan@axisbank.com

Compliance with the Code of Conduct

I confirm that for the year under review all Directors and members of the Senior Management have affirmed compliance
with the Code of Conduct of the Bank.

Shikha Sharma
Managing Director and CEO

22nd April, 2011

108

AXIS BANK LIMITED GROUP - AUDITORS’ REPORT

TO THE BOARD OF DIRECTORS
OF AXIS BANK LIMITED

1. We have audited the attached Consolidated Balance Sheet of AXIS BANK LIMITED (“the Bank”) and its subsidiaries
(the Bank and its subsidiaries constitute “the Group”) as at 31 March, 2011, the Consolidated Profit and Loss Account
and the Consolidated Cash Flow Statement of the Group for the year ended on that date, both annexed thereto. These
financial statements are the responsibility of the Bank’s Management and have been prepared by the Management on
the basis of separate financial statements and other financial information regarding components. Our responsibility is
to express an opinion on these statements based on our audit.

3. We did not audit the financial statements of five subsidiaries whose financial statements reflect total assets of `79.16
crores as at 31 March, 2011, total revenue of `52.03 crores and net cash flow amounting to `1.98 crores for the
year then ended as considered in the Consolidated Financial Statements. The financial statements and other financial
information of these subsidiaries have been audited by other auditors whose reports have been furnished to us and
our opinion, in so far as it relates to the amounts included in respect of these subsidiaries, is based solely on the report
of the other auditors.

4. The financial statements also include `4.77 crores being the Group’s proportionate share in the loss of an associate

which has been recognised on the basis of the unaudited financial statements available with the Bank.

5. Without qualifying our report, we invite attention to Note 1 of Schedule 18 regarding the Scheme of Arrangement for
the demerger of Enam Securities Private Ltd. with the Bank’s subsidiary. For the reasons stated therein, no effect to the
proposed Scheme has been given in the accounts.

6. We report that the consolidated financial statements have been prepared by the Bank in accordance with the
requirements of Accounting Standard 21 (Consolidated Financial Statements) and Accounting Standard 23 (Accounting
for Investments in Associates in Consolidated Financial Statements) notified under the Companies (Accounting
Standards) Rules, 2006.

7. Based on our audit and on consideration of the separate audit reports on individual financial statements of the Bank
and its subsidiaries and to the best of our information and according to the explanations given to us, subject to our
comments in paragraph 4 regarding unaudited amount of the associate, in our opinion, the Consolidated Financial
Statements give a true and fair view in conformity with the accounting principles generally accepted in India:

(a)

in the case of the Consolidated Balance Sheet, of the state of affairs of the Group as at 31 March, 2011;

(b)

in the case of the Consolidated Profit and Loss Account, of the profit of the Group for the year ended on that date and

(c)

in the case of the Consolidated Cash Flow Statement, of the cash flows of the Group for the year ended on that date.

For DELOITTE HASKINS & SELLS
Chartered Accountants
(Registration No: 117365W)

Nalin M. Shah
Partner
(Membership No. 15860)

Place : Mumbai
Date : 22nd April, 2011

109

AXIS BANK LIMITED GROUP - BALANCE SHEET

CONSOLIDATED BALANCE SHEET AS AT 31 MARCH, 2011

CAPITAL AND LIABILITIES

Capital

Reserves & Surplus

Schedule No.

As at
31-03-2011
( ` in Thousands)

As at
31-03-2010
( ` in Thousands)

4,105,458

4,051,741

184,840,608

155,837,646

Employees’ Stock Options Outstanding (Net)

17 (5.18)

1,734

Deposits

Borrowings

Other Liabilities and Provisions

TOTAL

ASSETS

Cash and Balances with Reserve Bank of India

Balances with Banks and Money at Call and Short Notice

Investments

Advances

Fixed Assets

Other Assets

TOTAL

Contingent liabilities

Bills for collection

1,891,664,314

1,412,786,587

262,678,824

171,695,512

82,377,311

61,493,489

2,425,666,515

1,805,866,709

138,861,631

94,820,469

75,224,928

57,238,431

717,875,486

558,765,456

1,424,078,286

1,043,409,464

22,929,164

12,359,927

46,697,020

39,272,962

2,425,666,515

1,805,866,709

4,539,987,592

3,182,813,800

324,731,072

192,928,684

Significant Accounting Policies and Notes to accounts

17 & 18

Schedules referred to above form an integral part of the Consolidated Balance Sheet

In terms of our report attached.

For Deloitte Haskins & Sells
Chartered Accountants

Nalin M. Shah
Partner

R. H. Patil
Director

Sushil Kumar Roongta
Director

Somnath Sengupta
Executive Director & CFO

P. J. Oza
Company Secretary

Date : 22 April, 2011
Place: Mumbai

110

For Axis Bank Ltd.

Adarsh Kishore
Chairman

Shikha Sharma
Managing Director & CEO

S. K. Chakrabarti
Deputy Managing Director

R. B. L. Vaish
Director

S. B. Mathur
Director

AXIS BANK LIMITED GROUP - PROFIT & LOSS ACCOUNT

CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH, 2011

Year ended
31-03-2011

Year ended
31-03-2010
( ` in Thousands) ( ` in Thousands)

Schedule No.

III
IV

V
VI

VII

151,548,566
46,714,492
198,263,058

85,886,082
48,604,739
30,325,512
164,816,333
(47,659)
33,399,066
33,716,338
67,115,404

13
14

15
16
18 (2.1.1)

INCOME
Interest earned
Other income
TOTAL
EXPENDITURE
Interest expended
Operating expenses
Provisions and contingencies
TOTAL
Less: Share in losses of Associate
CONSOLIDATED NET PROFIT ATTRIBUTABLE TO GROUP
Balance in Profit & Loss Account brought forward from previous year
AMOUNT AVAILABLE FOR APPROPRIATION
APPROPRIATIONS :
Transfer to Statutory Reserve
Transfer to/(from) Investment Reserve
Transfer to Capital Reserve
Transfer to General Reserve
Proposed dividend (includes tax on dividend)
Balance in Profit & Loss Account carried forward
TOTAL
EARNINGS PER EQUITY SHARE
(Face value `10/- per share) (Rupees)
Basic
Diluted
Significant Accounting Policies and Notes to accounts
Schedules referred to above form an integral part of the Consolidated Profit and Loss Account

18 (2.1.4)

18 (2.1.6)

17 & 18

8,471,227
(149,372)
47,630
3,396,591
6,704,806
48,644,522
67,115,404

81.77
80.44

116,390,540
39,642,116
156,032,656

66,326,317
37,623,901
27,301,025
131,251,243
-
24,781,413
23,289,540
48,070,953

6,286,333
148,750
2,239,176
5,622
5,674,734
33,716,338
48,070,953

64.83
63.38

In terms of our report attached.

For Deloitte Haskins & Sells
Chartered Accountants

Nalin M. Shah
Partner

R. H. Patil
Director

Sushil Kumar Roongta
Director

Somnath Sengupta
Executive Director & CFO

P. J. Oza
Company Secretary

Date : 22 April, 2011
Place: Mumbai

For Axis Bank Ltd.

Adarsh Kishore
Chairman

Shikha Sharma
Managing Director & CEO

S. K. Chakrabarti
Deputy Managing Director

R. B. L. Vaish
Director

S. B. Mathur
Director

111

AXIS BANK LIMITED GROUP - CASH FLOW STATEMENT

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH, 2011

Cash flow from operating activities

Net profit before taxes

Adjustments for:

Depreciation on fixed assets

Depreciation on investments

Amortisation of premium on Held to Maturity investments

Provision for Non Performing Advances/Investments (including bad debts)

Provision on standard assets

Provision for wealth tax

Provision for interest tax

Loss on sale of fixed assets

Provision for country risk

Provision for restructured assets

Provision for other contingencies

Amortisation of deferred employee compensation

Adjustments for:

(Increase)/Decrease in investments

(Increase)/Decrease in advances

Increase/(Decrease) in deposits

(Increase)/Decrease in other assets

Increase/(Decrease) in other liabilities & provisions

Direct taxes paid

Net cash flow from operating activities

Cash flow from investing activities

Purchase of fixed assets

(Increase)/Decrease in Held to Maturity Investments

Proceeds from sale of fixed assets

Net cash used in investing activities

Year ended
31-03-2011
( ` in Thousands)

Year ended
31-03-2010
( ` in Thousands)

50,971,944

38,190,521

2,936,884

992,677

605,614

9,551,195

1,661,564

4,558

2,879

71,485

24,500

150,615

412,204

(186)

2,378,717

(222,333)

829,739

13,570,445

(9,100)

3,483

44,859

(15,300)

564,722

(230)

67,385,933

55,335,523

(35,421,434)

(50,022,781)

(390,403,391)

(241,787,053)

478,877,727

239,210,026

(5,587,212)

52,335

17,794,733

13,780,002

(19,369,502)

(15,069,292)

113,276,854

1,498,760

(13,711,316)

(4,149,325)

(125,320,416)

(46,793,087)

133,710

189,680

(138,898,022)

(50,752,732)

112

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH, 2011

Cash flow from financing activities

Proceeds from issue of Subordinated debt, perpetual debts & Upper Tier II
instruments (net of repayment)

Increase/(Decrease) in borrowings (excluding subordinated debt, perpetual
debt & upper Tier II instruments)

Proceeds from issue of share capital

Proceeds from share premium (net of share issue expenses)

Payment of dividend

Net cash generated from financing activities

Effect of exchange fluctuation translation reserve

Net increase in cash and cash equivalents

Cash and cash equivalents at the beginning of the year

Cash and cash equivalents at the end of the year

Year ended
31-03-2011
( ` in Thousands)

Year ended
31-03-2010
( ` in Thousands)

(1,625,906)

18,214,280

92,609,218

(1,717,478)

53,717

461,690

2,353,987

38,570,041

(5,695,356)

(4,205,528)

87,695,660

51,323,005

(46,833)

62,027,659

(204,113)

1,864,920

152,058,900

150,193,980

214,086,559

152,058,900

Note :
1. Cash and cash equivalents comprise of cash on hand (including foreign currency notes), balances with Reserve Bank

of India, balances with banks and money at call & short notice (refer Schedules 6 and 7 of the Balance Sheet).

In terms of our report attached.

For Deloitte Haskins & Sells
Chartered Accountants

Nalin M. Shah
Partner

R. H. Patil
Director

Sushil Kumar Roongta
Director

Somnath Sengupta
Executive Director & CFO

P. J. Oza
Company Secretary

Date : 22 April, 2011
Place: Mumbai

For Axis Bank Ltd.

Adarsh Kishore
Chairman

Shikha Sharma
Managing Director & CEO

S. K. Chakrabarti
Deputy Managing Director

R. B. L. Vaish
Director

S. B. Mathur
Director

113

AXIS BANK LIMITED GROUP - SCHEDULES

SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT 31 MARCH, 2011

SCHEDULE 1 - CAPITAL

Authorised Capital

500,000,000 Equity Shares of `10/- each.

Issued, Subscribed and Paid-up capital

As at
31-03-2011
( ` in Thousands)

As at
31-03-2010
( ` in Thousands)

5,000,000

410,545,843 (Previous year - 405,174,119) Equity Shares of `10/-
each fully paid-up

4,105,458

4,051,741

SCHEDULE 2 - RESERVES AND SURPLUS

I. Statutory Reserve

Opening Balance

Additions during the year

II. Share Premium Account

Opening Balance

Additions during the year

Less: Share issue expenses

III.

Investment Reserve Account

Opening Balance

Additions during the year

Less: Deductions during the year

IV. General Reserve

Opening Balance

Additions during the year

V. Capital Reserve

Opening Balance

Additions during the year

VI. Foreign Currency Translation Reserve [refer Schedule 17 (5.6)]

Opening Balance

Additions during the year

19,349,123

8,471,227

27,820,350

97,695,255

2,355,535

13,062,790

6,286,333

19,349,123

59,115,068

39,064,364

(484,177)

100,050,790

97,695,255

149,372

(149,372)

149,005

3,396,591

3,545,596

4,858,305

47,630

4,905,935

(79,752)

(46,833)

(126,585)

622

149,372

(622)

149,372

143,383

5,622

149,005

2,619,129

2,239,176

4,858,305

124,361

(204,113)

(79,752)

VII. Balance in Profit & Loss Account

TOTAL

48,644,522

33,716,338

184,840,608

155,837,646

114

SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT 31 MARCH, 2011

SCHEDULE 3 - DEPOSITS

Demand Deposits

II.

III.

(i) From banks

(ii) From others

Savings Bank Deposits

Term Deposits

(i) From banks

(ii) From others

TOTAL

Deposits of branches in India

II. Deposits of branches outside India

TOTAL

SCHEDULE 4 - BORROWINGS

Borrowings in India

(i) Reserve Bank of India

(ii) Other Banks #

(iii) Other institutions & agencies **

II.

Borrowings outside India $

TOTAL

Secured borrowing included in I & II above

As at
31-03-2011
( ` in Thousands)

As at
31-03-2010
( ` in Thousands)

14,305,111

13,564,428

354,770,292

308,058,575

408,503,090

338,617,974

76,750,855

41,073,459

1,037,334,966

711,472,151

1,891,664,314

1,412,786,587

1,826,058,325

1,371,598,967

65,605,989

41,187,620

1,891,664,314

1,412,786,587

14,237,000

64,072,286

184,369,538

4,534,500

69,317,373

97,843,639

262,678,824

171,695,512

# Borrowings from Other Banks include Subordinated Debt of `364.60 crores (previous year `384.45 crores) in
the nature of Non-Convertible Debentures, Perpetual Debt of `Nil (previous year `5.00 crores) and Upper Tier II
instruments of `59.10 crores (previous year `64.00 crores) [Also refer Notes 18 (2.1.2) & 18 (2.1.3)]

$ Borrowings outside India include Perpetual Debt of `205.14 crores (previous year `206.54 crores) and Upper Tier

II instruments of `935.30 crores (previous year `941.48 crores) [Also refer Notes 18 (2.1.3)]

115

SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT 31 MARCH, 2011

SCHEDULE 5 - OTHER LIABILITIES AND PROVISIONS

II.

III.

IV.

VI.

Bills payable

Inter-office adjustments (net)

Interest accrued

Proposed dividend (includes tax on dividend)

Contingent provision against standard assets

Others (including provisions)

TOTAL

As at
31-03-2011
( ` in Thousands)

As at
31-03-2010
( ` in Thousands)

35,843,209

29,104,011

4,143,337

6,678,836

6,296,647

29,415,282

82,377,311

3,480,104

5,669,386

4,635,083

18,604,905

61,493,489

SCHEDULE 6 - CASH AND BALANCES WITH RESERVE BANK OF INDIA

II.

Cash in hand (including foreign currency notes)

22,082,834

19,007,024

Balances with Reserve Bank of India :

(i)

in Current Account

(ii) in Other Accounts

TOTAL

116,778,797

75,813,445

138,861,631

94,820,469

SCHEDULE 7 - BALANCES WITH BANKS AND MONEY AT CALL AND SHORT NOTICE

In India

(i) Balance with Banks

(a) in Current Accounts

(b) in Other Deposit Accounts

(ii) Money at Call and Short Notice

(a) With banks

(b) With other institutions

TOTAL

II.

Outside India

in Current Accounts

ii)

in Other Deposit Accounts

iii) Money at Call & Short Notice

TOTAL

GRAND TOTAL (I+II)

116

4,407,510

7,922,166

49,184,269

34,421,529

29,900

5,000

53,621,679

42,348,695

4,835,529

10,658,205

6,109,515

21,603,249

75,224,928

9,078,381

5,811,355

14,889,736

57,238,431

SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT 31 MARCH, 2011

SCHEDULE 8 - INVESTMENTS

Investments in India in -

(i) Government Securities ##

(ii) Other approved securities

(iii) Shares

(iv) Debentures and Bonds

(v) Investment in Joint Ventures

As at
31-03-2011
( ` in Thousands)

As at
31-03-2010
( ` in Thousands)

441,549,553

341,958,753

6,928,717

5,295,991

180,704,920

138,232,582

342,341

390,000

(vi) Others (Mutual Fund units, CD/CP, NABARD deposits, PTC etc.) @

82,618,299

66,104,055

Total Investments in India

II.

Investments outside India in -

(i) Government Securities (including local authorities)

(ii) Subsidiaries and/or joint ventures abroad (amount less than `1,000

for current year, previous year ` Nil)

(iii) Others

Total Investments outside India

GRAND TOTAL (I + II)

712,143,830

551,981,381

429,340

5,302,316

5,731,656

6,784,075

717,875,486

558,765,456

## Includes securities costing `4,424.90 crores (previous year `4,237.60 crores) pledged for availment of fund

transfer facility, clearing facility and margin requirements

Includes deposits with NABARD `4,064.71 crores (previous year `3,002.70 crores) and PTC’s `212.98 crores
(previous year `351.28 crores) net of depreciation

117

SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT 31 MARCH, 2011

SCHEDULE 9 - ADVANCES

(i)

Bills purchased and discounted *

34,812,948

34,500,593

(ii) Cash credits, overdrafts and loans repayable on demand

349,803,398

260,135,632

As at
31-03-2011
( ` in Thousands)

As at
31-03-2010
( ` in Thousands)

(iii) Term loans #

TOTAL

(i)

Secured by tangible assets $

(ii) Covered by Bank/Government Guarantees &&

(iii) Unsecured

TOTAL

Advances in India

(i) Priority Sector

(ii) Public Sector

(iii) Banks

(iv) Others

TOTAL

II.

Advances Outside India

(i) Due from banks

(ii) Due from others -

(a) Bills purchased and discounted

(b) Syndicated loans

TOTAL

GRAND TOTAL [C I + C II]

1,039,461,940

748,773,239

1,424,078,286

1,043,409,464

1,131,026,880

865,761,933

32,394,561

16,367,294

260,656,845

161,280,237

1,424,078,286

1,043,409,464

412,891,152

299,404,189

30,039,403

32,047,307

2,408,096

3,825,615

782,963,737

584,824,255

1,228,302,388

920,101,366

4,196,520

332,996

6,264,497

70,389,401

114,925,480

4,316,262

63,702,125

54,956,715

195,775,898

123,308,098

1,424,078,286

1,043,409,464

Net of borrowings under Bills Rediscounting Scheme `1,800 crores (previous year: ` Nil)

Net of borrowings under Inter Bank Participation Certificate `3,401 crores (previous year: ` Nil)

Includes advances against book debts

Includes advances against L/Cs issued by banks

118

SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT 31 MARCH, 2011

As at
31-03-2011
( ` in Thousands)

As at
31-03-2010
( ` in Thousands)

SCHEDULE 10 - FIXED ASSETS

Premises

Gross Block

At cost at the beginning of the year

Additions during the year

Deductions during the year

TOTAL

Depreciation

As at the beginning of the year

Charge for the year

Deductions during the year

Depreciation to date

Net Block

II.

Other fixed assets (including furniture & fixtures)

Gross Block

At cost at the beginning of the year

Additions during the year

Deductions during the year

TOTAL

Depreciation

As at the beginning of the year

Charge for the year

Deductions during the year

Depreciation to date

Net Block

III. CAPITAL WORK-IN-PROGRESS (including capital advances)

891,351

8,244,785

(18,796)

9,117,340

161,989

46,669

(10,277)

198,381

8,918,959

891,351

117,422

44,567

161,989

729,362

20,384,691

16,650,447

5,810,762

(753,351)

4,150,646

(416,402)

25,442,102

20,384,691

9,327,953

2,890,215

(556,674)

11,661,494

13,780,608

229,597

7,175,660

2,334,150

(181,857)

9,327,953

11,056,738

573,827

GRAND TOTAL (I + II + III)

22,929,164

12,359,927

SCHEDULE 11 - OTHER ASSETS

II.

III.

IV.

Inter-office adjustments (net)

Interest Accrued

Tax paid in advance/tax deducted at source (Net of Provisions)

Stationery and stamps

V. Non banking assets acquired in satisfaction of claims

VI. Others #

TOTAL

# Includes deferred tax assets of `816.87 crores (previous year `611.39 crores)

17,165,984

12,771,048

470,277

11,794

53,174

28,995,791

46,697,020

688,237

9,698

21,724

25,782,255

39,272,962

119

SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT 31 MARCH, 2011

As at
31-03-2011
( ` in Thousands)

As at
31-03-2010
( ` in Thousands)

SCHEDULE 12 - CONTINGENT LIABILITIES

II.

III.

Claims against the Group not acknowledged as debts

Liability for partly paid investments

2,344,299

2,712,757

Liability on account of outstanding forward exchange and derivative contracts:

(a) Forward Contracts

1,940,496,939

1,265,355,295

(b) Interest Rate Swaps, Currency Swaps, Forward Rate Agreement &

Interest Rate Futures

TOTAL (a + b + c)

IV. Guarantees given on behalf of constituents

In India

Outside India

Acceptances, endorsements and other obligations

VI. Other items for which the Group is contingently liable

GRAND TOTAL (I + II + III + IV + V + VI)

1,647,016,628

1,317,574,459

141,258,629

56,162,649

3,728,772,196

2,639,092,403

464,332,544

332,315,553

76,278,216

41,767,220

249,276,960

164,634,485

18,983,377

2,291,382

4,539,987,592

3,182,813,800

120

SCHEDULES FORMING PART OF THE CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH, 2011

SCHEDULE 13 - INTEREST EARNED

Interest/discount on advances/bills
Income on investments
Interest on balances with Reserve Bank of India and other inter-bank funds

I.
II.
III.
IV. Others

TOTAL

SCHEDULE 14 - OTHER INCOME
I.
II.
III.
IV.
V.

Commission, exchange and brokerage
Profit /(Loss) on sale of Investments (net)
Profit/(Loss) on sale of fixed assets (net)
Profit on exchange transactions/Derivatives transactions (net)
Income earned by way of dividends etc. from
subsidiaries/companies and/or joint venture abroad/in India

VI. Miscellaneous Income

SCHEDULE 15 - INTEREST EXPENDED
I.
II.
III.

Interest on deposits
Interest on Reserve Bank of India/Inter-bank borrowings
Others @
TOTAL
@ Including interest on repos & subordinated debt

SCHEDULE 16 - OPERATING EXPENSES
I.
II.
III.
IV.
V.
VI.
VII.
VIII.
IX.
X.
XI.
XII. Other expenditure

Payments to and provisions for employees
Rent, taxes and lighting
Printing and stationery
Advertisement and publicity
Depreciation on bank’s property
Directors’ fees, allowance and expenses
Auditors’ fees and expenses
Law charges
Postage, telegrams, telephones, etc.
Repairs and maintenance
Insurance

TOTAL

Year Ended
31-03-2011
( ` in Thousands)

Year Ended
31-03-2010
( ` in Thousands)

104,031,042
44,386,841
1,826,199
1,304,484

79,866,039
34,283,084
1,200,049
1,041,368

151,548,566

116,390,540

33,967,236
3,677,215
(71,485)
5,636,045

25,845,538
7,366,828
(44,859)
4,458,991

-
3,505,481

-
2,015,618

46,714,492

39,642,116

74,952,925
1,609,768
9,323,389
85,886,082

57,136,277
1,493,647
7,696,393
66,326,317

17,458,025
6,920,585
1,106,365
804,167
2,936,884
7,831
9,885
133,752
2,020,463
3,892,076
1,850,723
11,463,983
48,604,739

13,597,865
5,059,547
836,241
472,694
2,378,717
6,249
8,497
148,154
1,776,975
3,043,758
1,415,518
8,879,686
37,623,901

121

17 Significant accounting policies for the year ended 31 March, 2011
(Currency: In Indian Rupees)

Principles of Consolidation

The consolidated financial statements comprise the financial statements of Axis Bank Limited (‘the Bank’) and its
subsidiaries, which together constitute ‘the Group’.

The Bank consolidates its subsidiaries in accordance with AS 21, Consolidated Financial Statements notified under
the Companies (Accounting Standards) Rules, 2006, on a line-by-line basis by adding together the like items of
assets, liabilities, income and expenditure. All significant inter-company accounts and transactions are eliminated
on consolidation. Further, the Bank accounts for investments in associates in accordance with AS-23, Accounting
for Investments in Associates in Consolidated Financial Statements, notified under the Companies (Accounting
Standard) Rules, 2006, by the equity method of accounting.

Basis of preparation

The consolidated financial statements present the accounts of Axis Bank Limited with its following subsidiaries and
associates:

Name

Axis Securities and Sales Ltd.

Axis Private Equity Ltd.

Axis Trustee Services Ltd.

Axis Mutual Fund Trustee Ltd.

Axis Asset Management Company Ltd.

Bussan Auto Finance India Private Ltd.*

Relation

Subsidiary

Associate

Country of
Incorporation

Ownership Interest

India

100.00%

26.00%

The audited financial statements of the above subsidiaries and the unaudited financial statements of the associate
have been drawn up to the same reporting date as that of the Bank, i.e. 31 March, 2011.

* This investment does not fall within the definition of a Joint Venture as per AS-27, Financial Reporting of Interest
in Joint Ventures, notified under the Companies (Accounting Standards) Rules, 2006, and the said accounting
standard is thus not applicable. However, pursuant to RBI guidelines, the Bank has classified the same as investment
in joint ventures in the balance sheet. Such investment has been accounted as an Associate from the current year
in line with AS-23, Accounting for Investment in Associates in Consolidated Financial Statements notified under the
Companies (Accounting Standards) Rules, 2006.

Use of estimates

122

Changes in accounting estimates

4.1 Change in estimated useful life of fixed assets

Group

During the year, the Group has revised the estimated useful lives of the following type of fixed assets:

• Modems, scanners, routers, hubs and switches from 10 years to 5 years

•

Video conferencing equipment and printers from 10 years to 3 years

Racks/cabinets for IT equipment from 16 years to 5 years

• Owned premises from 20 years to 61 years

As a result of the aforesaid revisions, the depreciation charge for the year is higher by `16.22 crores with a
corresponding decrease in the net block of fixed assets.

4.2 Change in estimate of lease term for operating leases

Axis Bank Ltd.

During the current year, the Bank has revised its estimate of lease term in the case assets taken on operating
leases to include the secondary period of the lease involving further payment of lease rentals based on
continuation of the lease at the option of the Bank as against the primary lease period as considered hitherto.
As a result the operating expenses for the year are higher by `93.04 crores with a consequent reduction to
the profit before tax.

Significant accounting policies

5.1

Investments

Classification

In accordance with the RBI guidelines, investments are classified at the date of purchase as:

• Held for Trading (‘HFT’);

• Available for Sale (‘AFS’); and

• Held to Maturity (‘HTM’).

Investments that are held principally for sale within a short period are classified as HFT securities. As per the
RBI guidelines, HFT securities, which remain unsold for a period of 90 days are reclassified as AFS securities
as on that date.

Investments that the Bank intends to hold till maturity are classified under the HTM category.

All other investments are classified as AFS securities.

However, for disclosure in the Balance Sheet, investments in India are classified under six categories -
Government Securities, Other approved securities, Shares, Debentures and Bonds, Investment in Subsidiaries/
Joint Ventures and Others.

Investments made outside India are classified under three categories – Government Securities, Subsidiaries
and/or Joint Ventures abroad and Others.

Transfer of security between categories

Transfer of security between categories of investments is accounted as per the RBI guidelines.

123

Acquisition cost

Costs including brokerage, commission pertaining to investments, paid at the time of acquisition, are charged
to the Profit and Loss Account.

Broken period interest is charged to the Profit and Loss Account.

Cost of investments is computed based on the weighted average cost method.

Valuation

Investments classified under the HTM category are carried at acquisition cost. Any premium on acquisition
over face value is amortised on a constant yield to maturity basis over the remaining period to maturity. In
terms of RBI guidelines, discount on securities held under HTM category is not accrued and such securities
are held at the acquisition cost till maturity.

Investments classified under the AFS and HFT categories are marked to market. The market/fair value of
quoted investments included in the ‘Available for Sale’ and ‘Held for Trading’ categories is the market price
of the scrip as available from the trades/quotes on the stock exchanges, SGL account transactions, price list of
RBI or prices declared by Primary Dealers Association of India (‘PDAI’) jointly with Fixed Income Money Market
and Derivatives Association of India (‘FIMMDA’), periodically. Net depreciation, if any, within each category
of each investment classification is recognised in the Profit and Loss Account. The net appreciation if any,
under each category of each investment classification is ignored. The book value of individual securities is not
changed consequent to the periodic valuation of investments.

Treasury Bills, Exchange Funded Bills, Commercial Paper and Certificate of Deposits being discounted
instruments, are valued at carrying cost.

Units of mutual funds are valued at the latest repurchase price/net asset value declared by the mutual fund.

Market value of investments where current quotations are not available, is determined as per the norms
prescribed by the RBI as under:

• market value of unquoted Government Securities is derived based on the Prices/Yield to Maturity (‘YTM’)
rate for Government Securities of equivalent maturity as notified by FIMMDA jointly with the PDAI at
periodic intervals;

•

in case of Central Government Securities, which do not qualify for SLR requirement, the market price is
derived by adding the appropriate mark up to the Base Yield Curve of Central Government Securities as
notified by FIMMDA;

• market value of unquoted State Government Securities is derived by adding the appropriate mark up
above the Base Yield Curve of the Central Government Securities of equivalent maturity as notified by
the FIMMDA/PDAI at periodic intervals;

•

in case of unquoted bonds, debentures and preference shares where interest/dividend is received
regularly, the market price is derived based on the YTM for Government Securities as notified by
FIMMDA/PDAI and suitably marked up for credit risk applicable to the credit rating of the instrument.
The matrix for credit risk mark-up for each categories and credit ratings along with residual maturity
issued by FIMMDA is adopted for this purpose;

in case of preference shares where dividend is not received regularly, the price derived on the basis of
YTM is discounted in accordance with the RBI guidelines;

in case of bonds and debentures (including PTCs) where interest is not received regularly, the valuation
is in accordance with prudential norms for provisioning as prescribed by RBI;

equity shares, for which current quotations are not available or where the shares are not quoted on the
stock exchanges, are valued at break-up value (without considering revaluation reserves, if any) which
is ascertained from the company’s latest Balance Sheet. In case the latest Balance Sheet is not available,
the shares are valued at Re.1 per company;

124

•

units of Venture Capital Funds (VCF) held under AFS category where current quotations are not available
are marked to market based on the Net Asset Value (NAV) shown by VCF as per the latest audited
financials of the fund. In case the audited financials are not available for a period beyond 18 months,
the investments are valued at Re.1 per VCF. Investment in unquoted VCF after 23 August, 2006 are
categorised under HTM category for the initial period of three years and valued at cost as per RBI
guidelines; and

Investments in subsidiaries/joint ventures are categorised as HTM and assessed for impairment to determine
permanent diminution, if any, in accordance with the RBI guideline.

All investments are accounted for on settlement date except investments in equity shares which are accounted
for on trade date as the corporate actions are effected in equity on the trade date.

Repurchase and reverse repurchase transactions

Repurchase and reverse repurchase transactions [excluding those conducted under the Liquidity Adjustment
Facility (LAF) with RBI] are accounted as collateralised borrowing and lending respectively. Such transactions
done under LAF are accounted as outright sale and outright purchase respectively. However, depreciation in
their value, if any, compared to their original cost, is recognised in the Profit and Loss Account.

5.2 Stock in Trade

Axis Securities and Sales Ltd.

Securities acquired with the intention of holding for short-term holding and trading are classified as stock-in-
trade. The securities held as stock-in-trade are valued at lower of cost arrived at on first in first out basis or
marketable fair value.

5.3 Advances

Axis Bank Ltd.

Advances are classified into performing and non-performing advances (‘NPAs’) as per the RBI guidelines and
are stated net of specific provisions made towards NPAs and floating provisions. Further, NPAs are classified
into sub-standard, doubtful and loss assets based on the criteria stipulated by the RBI. Provisions for NPAs are
made for sub-standard and doubtful assets at rates as prescribed by the RBI with the exception for agriculture
advances and schematic retail advances. In respect of schematic retail advances, provisions are made in terms
of a bucket-wise policy upon reaching specified stages of delinquency (90 days or more of delinquency)
under each type of loan, which satisfies the RBI prudential norms on provisioning. Provisions in respect of
agriculture advances classified into sub-standard and doubtful assets are made at rates which are higher than
those prescribed by the RBI.

Loss assets and unsecured portion of doubtful assets are provided/written off as per the extant RBI guidelines.
NPAs are identified by periodic appraisals of the loan portfolio by the Management.

A general provision @ 0.25% in case of direct advances to agricultural and SME sectors, 1% in respect of
advances classified as commercial real estate, 2% in respect of housing loans at teaser rates and 0.40% for
all other advances is made as prescribed by the RBI.

125

5.4 Country risk

Axis Bank Ltd.

In addition to the provisions required to be held according to the asset classification status, provisions are
held for individual country exposure (other than for home country). The countries are categorised into seven
risk categories namely insignificant, low, moderate, high, very high, restricted and off-credit and provision is
made on exposures exceeding 180 days on a graded scale ranging from 0.25% to 100%. For exposures with
contractual maturity of less than 180 days, 25% of the normal provision requirement is held. If the country
exposure (net) of the Bank in respect of each country does not exceed 1% of the total funded assets, no
provision is maintained on such country exposure.

5.5 Securtisation

Axis Bank Ltd.

The Bank enters into purchase/sale of corporate and retail loans through direct assignment/Special Purpose
Vehicle (‘SPV’). In most cases, post securtisation, the Bank continues to service the loans transferred to
the assignee/SPV. The Bank also provides credit enhancement in the form of cash collaterals and/
or by subordination of cash flows to Senior Pass Through Certificate (‘PTC’) holders. In respect of credit
enhancements provided or recourse obligations (projected delinquencies, future servicing etc.) accepted by
the Bank, appropriate provision/disclosure is made at the time of sale in accordance with AS 29, Provisions,
Contingent Liabilities and Contingent Assets.

Gain on securtisation transaction is recognised over the period of the underlying securities issued by the SPV.
Loss on securtisation is immediately debited to the Profit and Loss Account.

5.6 Foreign currency transactions

Axis Bank Ltd.

In respect of domestic operations, transactions denominated in foreign currencies are accounted for at the
rates prevailing on the date of the transaction. Monetary foreign currency assets and liabilities are translated
at the Balance Sheet date at rates notified by Foreign Exchange Dealers Association of India (‘FEDAI’). All
profits/losses resulting from year end revaluations are recognised in the Profit and Loss Account.

Financial statements of foreign branches classified as non-integral foreign operations are translated as
follows:

• Assets and liabilities (both monetary and non-monetary as well as contingent liabilities) are translated at

closing rates notified by FEDAI at the year end.

•

Income and expenses are translated at the rates prevailing on the date of the transactions.

• All resulting exchange differences are accumulated in a separate ‘Foreign Currency Translation Reserve’

till the disposal of the net investments.

Outstanding forward exchange contracts (excluding currency swaps undertaken to hedge foreign currency
assets/liabilities and funding swaps which are not revalued) and spot exchange contracts are revalued at
year end exchange rates notified by FEDAI for specified maturities and at interpolated rates for contract of
interim maturities. The resulting gains or losses on revaluation are included in the Profit and Loss Account in
accordance with RBI/FEDAI guidelines. The forward exchange contracts of longer maturities where exchange
rates are not notified by FEDAI are revalued at the forward exchange rates implied by the swap curves in
respective currencies. The resultant gains or losses are recognised in the Profit and Loss Account.

Premium/discount on currency swaps undertaken to hedge foreign currency assets and liabilities and funding
swaps is recognised as interest income/expense and is amortised on a pro-rata basis over the underlying swap
period.

126

Contingent liabilities on account of foreign exchange contracts/options, guarantees, acceptances,
endorsements and other obligations denominated in foreign currencies are disclosed at closing rates of
exchange notified by FEDAI.

Axis Private Equity Ltd. and Axis Asset Management Company Ltd.

Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transactions.
Monetary assets and liabilities denominated in foreign currencies as at the Balance Sheet date are translated
at the closing rate on that date. The exchange differences, if any, either on settlement or translation are
recognised in Profit and Loss Account.

5.7 Derivative transactions

Axis Bank Ltd.

Derivative transactions comprise of forward contracts, swaps and options which are disclosed as contingent
liabilities. The forwards, swaps and options are segregated as trading or hedge transactions. Trading derivative
contracts are revalued at the Balance Sheet date with the resulting unrealised gain or loss being recognised
in the Profit and Loss Account and correspondingly in other assets or other liabilities respectively. For hedge
transactions, the Bank identifies the hedged item (asset or liability) at the inception of transaction itself. The
effectiveness is ascertained at the time of inception of the hedge and periodically thereafter. Hedge derivative
transactions are accounted for pursuant to the principles of hedge accounting. The premium on option
contracts is accounted for as per FEDAI guidelines. Pursuant to the RBI guidelines any receivables under
derivatives contracts which remain overdue for more than 90 days are reversed through the Profit and Loss
Account and are held in a separate Suspense Account.

5.8 Revenue recognition

Axis Bank Ltd.

Interest income is recognised on an accrual basis except interest income on non-performing assets, which is
recognised on receipt in accordance with Accounting Standard 9 and the RBI guidelines.

Fees and commission income is recognised when due, except for guarantee commission which is recognised
pro-rata over the period of the guarantee.

Dividend is accounted on an accrual basis when the right to receive the dividend is established.

Gain/loss on sell down of loans and advances through direct assignment is recognised at the time of sale.

Gain or loss arising on sale of NPAs is accounted as per the guidelines prescribed by the RBI, which require
provisions to be made for any deficit (where sale price is lower than the net book value), while surplus (where
sale price is higher than the net book value) is ignored.

Arrangership/syndication fee is accounted for on completion of the agreed service and when right to receive
is established.

Subsidiaries

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company
and the revenue can be reliably measured. Fee income is recognised on the basis of accrual when all the
services are performed. Insurance policy administration fee income is recognised based on the proportionate
completion method.

Interest Income on fixed deposits are recognised on an accrual basis.

Brokerage income in relation to stock broking activity is recognised on a trade date basis. Gains/losses
on dealing in securities are recognised on a trade date basis. Prepaid subscription fees is recognised on
completion of validity period or utilization of complementary turnover limit whichever is earlier.

127

Trusteeship fees are recognised, on a straight line basis, over the period when services are performed. Initial
acceptance fee is recognised as and when the ‘Offer letter’ for the services to be rendered is accepted by the
customer.

Management fees are recognised on accrual basis at specific rates, applied on the average daily net assets
of each scheme. The fees charged are in accordance with the terms of Scheme Information Documents of
respective schemes and are in line with the provisions of SEBI (Mutual Funds) Regulations, 1996 as amended
from time to time.

Portfolio Management Fees are recognised on an accrual basis as per the terms of the contract with the
customers.

Income from sale of Investments is determined on weighted average basis and recognised on the trade date
basis.

Marketing advisory fees are recognised on an accrual basis.

Trustee fee is recognised on accrual basis, at the specific rates/amount approved by the Board of directors
of the Company, within the limits specified under the Deed of Trust, and is applied on the net assets of each
scheme of Axis Mutual Fund.

5.9 Scheme expenses

Axis Asset Management Company Ltd.

Fund Expense

Expenses of schemes of Axis Mutual Fund in excess of the stipulated limits as per SEBI (Mutual Fund)
Regulations, 1996 and expenses incurred directly (inclusive of advertisement/brokerage expenses) on behalf
of schemes of Axis Mutual Fund are charged to the Profit and Loss Account.

New fund offer expenses

Expenses relating to new fund offer of Axis Mutual Fund are charged to the Profit and Loss Account in the
year in which they are incurred.

5.10 Fund raising expenses

Axis Private Equity Ltd.

The Company has been following the practice of recovering expenses incurred towards fund raising on
behalf of Axis Infrastructure Fund, as per the practice followed in the private equity industry. Such expenses
are recovered from the Fund after the fund raising exercise is completed and the Fund is established.

5.11 Fixed assets and depreciation

Group

Fixed assets are carried at cost of acquisition less accumulated depreciation and impairment, if any. Cost
includes freight, duties, taxes and incidental expenses related to the acquisition and installation of the asset.

Capital work-in-progress includes cost of fixed assets that are not ready for their intended use and also
includes advances paid to acquire fixed assets.

Depreciation (including on assets given on operating lease) is provided on the straight-line method from
the date of addition. The rates of depreciation prescribed in Schedule XIV to the Companies Act, 1956 are
considered as the minimum rates. If the Management’s estimate of the useful life of a fixed asset at the time
of acquisition of the asset or of the remaining useful life on a subsequent review is shorter, then depreciation
is provided at a higher rate based on the Management’s estimate of the useful life/remaining useful life.

128

Pursuant to this policy, depreciation has been provided using the following estimated useful lives:

Asset

Owned premises

Assets given on operating lease

Computer hardware including printers

Application software

Vehicles

EPABX, telephone instruments

CCTV and video conferencing equipment

Mobile phone

Locker cabinets/cash safe/strong room door

Modem, scanner, routers, hubs, switches, racks/cabinets for IT equipment

Assets at staff residence

All other fixed assets

Estimated useful life

61 years

20 years

3 years

5 years

4 years

8 years

3 years

2 years

16 years

5 years

3 years

10 years

All fixed assets individually costing less than `5,000 are fully depreciated in the year of installation.

Depreciation on assets sold during the year is recognised on a pro-rata basis to the Profit and Loss Account
till the date of sale.

The carrying amounts of assets are reviewed at each Balance Sheet date to ascertain if there is any indication
of impairment based on internal/external factors. An impairment loss is recognised wherever the carrying
amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset’s net
selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to
their present value at the weighted average cost of capital. After impairment, depreciation is provided on the
revised carrying amount of the asset over its remaining useful life.

5.12 Lease transactions

Axis Bank Ltd.

Assets given on operating lease are capitalised at cost. Rentals received by the Bank are recognised in the
Profit and Loss Account on accrual basis.

Group

Leases where the lessor effectively retains substantially all the risks and benefits of ownership over the lease
term are classified as operating lease. Lease payments for assets taken on operating lease are recognised as
an expense in the Profit and Loss Account on a straight-line basis over the lease term.

5.13 Retirement and other employee benefits

Group

Provident Fund

Retirement benefit in the form of provident fund is a defined contribution scheme and the contributions are
charged to the Profit and Loss Account of the year when the contributions to the fund are due. There are no
other obligations other than the contribution payable to the trust.

129

Axis Bank Ltd.

Gratuity

The Bank contributes towards gratuity fund (defined benefit retirement plan) administered by the Life
Insurance Corporation of India (‘LIC’), Metlife Insurance Company Limited (‘Metlife’), HDFC Standard Life
Insurance Company Limited (‘HDFC Life’) and ICICI Prudential Life Insurance Company Limited (‘ICICI Pru’)
for eligible employees. Under this scheme, the settlement obligations remain with the Bank, although LIC/
Metlife/HDFC Life/ ICICI Pru administer the scheme and determine the contribution premium required to be
paid by the Bank. The plan provides a lump sum payment to vested employees at retirement or termination of
employment based on the respective employee’s salary and the years of employment with the Bank. Liability
with regard to gratuity fund is accrued based on actuarial valuation conducted by an independent actuary
using the Projected Unit Credit Method as at 31 March each year.

Leave Encashment

Short term compensated absences are provided for based on estimates. The Bank provides leave encashment
benefit (long term), which is a defined benefit scheme based on actuarial valuation conducted by an
independent actuary. The actuarial valuation is carried out as per the Projected Unit Credit Method as at 31
March each year.

Superannuation

Employees of the Bank are entitled to receive retirement benefits under the Bank’s Superannuation scheme
either under a cash-out option through salary or under a defined contribution plan. Through the defined
contribution plan the Bank contributes annually a specified sum of 10% of the employee’s eligible annual
basic salary to LIC, which undertakes to pay the lumpsum and annuity benefit payments pursuant to the
scheme. Superannuation contributions are recognised in the Profit and Loss Account in the period in which
they accrue.

Actuarial gains/losses are immediately taken to Profit and Loss Account and are not deferred.

Axis Securities and Sales Ltd. and Axis Asset Management Company Ltd.

Gratuity

Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation using
Projected Unit Credit Method made at the end of each financial year.

Actuarial gains/losses are immediately taken to the Profit and Loss Account and are not deferred.

Axis Trustee Services Ltd.

Gratuity

Gratuity liability is computed and accrued by the Company in accordance with Payment of Gratuity Act,
1972.

Leave Encashment

The Company has made provision for leave encashment to its employee as per Company policy.

Axis Securities and Sales Ltd.

Leave Encashment

Short term compensated absences are provided for based on estimates. Long term compensated absences
are provided for based on actuarial valuation. The actuarial valuation is done at the end of each financial year,
using the Projected Unit Credit Method.

130

Actuarial gains/losses are immediately taken to the Profit and Loss Account and are not deferred.

5.14 Debit/Credit card reward points

Axis Bank Ltd.

The Bank estimates the probable redemption of debit and credit card reward points using an actuarial
method at the Balance Sheet date by employing an independent actuary. Provision for the said reward points
is then made based on the actuarial valuation report as furnished by the said independent actuary.

5.15 Taxation

Group

Income tax expense is the aggregate amount of current tax and deferred tax charge. Current year taxes
are determined in accordance with the Income tax Act, 1961. Deferred income taxes reflects the impact of
current year timing differences between taxable income and accounting income for the year and reversal of
timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the
Balance Sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right
exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax
liabilities relate to the taxes on income levied by same governing taxation laws.

Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets can be realised. The impact of changes
in the deferred tax assets and liabilities is recognised in the Profit and Loss Account.

Deferred tax assets are recognised and reassessed at each reporting date, based upon the Management’s
judgement as to whether realisation is considered as reasonably certain. Deferred tax assets are recognised
on carry forward of unabsorbed depreciation and tax losses only if there is virtual certainty that such deferred
tax asset can be realised against future profits.

5.16 Share issue expenses

Axis Bank Ltd.

Share issue expenses are adjusted from share premium account.

5.17 Earnings per share

The Group reports basic and diluted earnings per share in accordance with AS 20, Earnings per Share, as
notified by the Companies (Accounting Standards) Rules, 2006. Basic earnings per share is computed by
dividing the net profit after tax by the weighted average number of equity shares outstanding for the year.

Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to
issue equity shares were exercised or converted during the year. Diluted earnings per share is computed using
the weighted average number of equity shares and dilutive potential equity shares outstanding at the year
end.

5.18 Employee stock option scheme

Axis Bank Ltd.

131

based employee compensation plans as per the Guidance Note on ‘Accounting for Employee Share-based
Payments’ issued by the ICAI. Options are granted at an exercise price, which is equal to/less than the fair
market price of the underlying equity shares. The excess of such fair market price over the exercise price of
the options as at the grant date is recognised as a deferred compensation cost and amortised on a straight-
line basis over the vesting period of such options.

The fair market price is the latest available closing price, prior to the date of the grant, on the stock exchange
on which the shares of the Bank are listed. If the shares are listed on more than one stock exchange, then the
stock exchange where there is highest trading volume on the said date is considered.

5.19 Provisions, contingent liabilities and contingent assets

Group

A provision is recognised when the Group has a present obligation as a result of past event where it is
probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable
estimate can be made. Provisions are not discounted to its present value and are determined based on best
estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance
Sheet date and adjusted to reflect the current best estimates.

A disclosure of contingent liability is made when there is:

•

a possible obligation arising from a past event, the existence of which will be confirmed by occurrence
or non occurrence of one or more uncertain future events not within the control of the Group; or

a present obligation arising from a past event which is not recognised as it is not probable that an
outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the
obligation cannot be made.

When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made.

Contingent assets are not recognised in the financial statements. However, contingent assets are assessed
continually and if it is virtually certain that an inflow of economic benefits will arise, the asset and related
income are recognised in the period in which the change occurs.

132

18 Notes forming part of the consolidated financial statements for the year ended

31 March, 2011
(Currency: In Indian Rupees)

On 17 November, 2010, the Board of Directors of the Bank approved the acquisition of certain businesses
undertaken by Enam Securities Private Limited (ESPL) through its wholly-owned subsidiary Axis Securities and Sales
Limited (ASSL), by way of a demerger. It is envisaged that these businesses will be transferred to ASSL, pursuant
to a Scheme of Arrangement, as may be approved by the relevant High Courts under Sections 391 to 394 and
other relevant provisions of the Companies Act, 1956 and subject to receipt of necessary requisite approvals. The
appointed date for the purpose of the Demerger under the Scheme shall be 1 April, 2010. The valuation of the ESPL
business was assessed at `2,067 crores and in consideration for the demerger, the Bank will issue shares in the ratio
of 5.7 equity shares of the Bank (aggregating 13,782,600 equity shares) of the face value of `10 each for every 1
equity share (aggregating 2,418,000 equity shares) of `10 each held by the shareholders of ESPL.

Other Disclosures

2.1.1

‘Provisions and contingencies’ recognised in the Profit and Loss Account includes:

For the year ended

Provision for income tax

- Current tax for the year

- Deferred tax for the year

Provision for fringe benefit tax

Provision for wealth tax

Provision for interest tax

Provision for non performing advances & investments
(including bad debts written off and write backs)

Provision for restructured assets

Provision towards standard assets

Provision for depreciation in value of investments

Provision for country risk

Provision for other contingencies

Total

(` in crores)

31 March, 2011

31 March, 2010

1,958.34

(205.48)

(0.34)

1,752.52

0.46

0.29

955.12

15.06

166.16

99.27

2.45

41.22

1,495.27

(154.36)

1,340.91

0.35

1,357.04

56.47

(0.91)

(22.23)

(1.53)

3,032.55

2,730.10

2.1.2 The Bank has not raised any subordinated debt during the year ended 31 March, 2011.

During the year ended 31 March, 2010, the Bank raised subordinated debt of `2,000.00 crores, the details of which
are set out below:

Date of allotment

16 June, 2009

Period

120 months

Coupon

9.15%

Amount

`2,000.00 crores

During the year ended 31 March, 2011, the Bank redeemed subordinated debt of `155 crores, the details of which
are set out below:

Date of maturity
4 June, 2010
20 June, 2010

Period
72 months
93 months

Coupon
5.75%
9.05%

Amount
`150.00 crores
`5.00 crores

133

During the year ended 31 March, 2010, the Bank redeemed subordinated debt of `30.00 crores, the details of
which are set out below:

Date of maturity
26 April, 2009

Period
69 months

Coupon
6.50%

Amount
`30.00 crores

2.1.3 The Bank has not raised any hybrid capital during the year ended 31 March, 2011 and year ended 31 March, 2010.

2.1.4 Earnings Per Share (‘EPS’)

The details of EPS computation is set out below:

As at

31 March, 2011 31 March, 2010

Basic and Diluted earnings for the year (Net profit after tax) (` in crores)

3,339.91

2,478.14

Basic weighted average no. of shares (in crores)

Add: Equity shares for no consideration arising on grant of stock options
under ESOP (in crores)

Diluted weighted average no. of shares (in crores)

Basic EPS (`)

Diluted EPS (`)

Nominal value of shares (`)

40.85

0.67

41.52

81.77

80.44

10.00

38.23

0.87

39.10

64.83

63.38

10.00

Dilution of equity is on account of 6,721,352 stock options (previous year 8,708,581).

2.1.5 Employee Stock Options Scheme (‘the Scheme’)

In February 2001, pursuant to the approval of the shareholders at the Extraordinary General Meeting, the
Bank approved an Employee Stock Option Scheme. Under the Scheme, the Bank is authorized to issue upto
13,000,000 equity shares to eligible employees. Eligible employees are granted an option to purchase shares subject
to vesting conditions. The options vest in a graded manner over 3 years. The options can be exercised within 3 years
from the date of the vesting. Further, over the period from June 2004 to June 2010, pursuant to the approval of the
shareholders at Annual General Meetings, the Bank approved an ESOP scheme for additional options aggregating
to 27,517,400. Within the overall ceiling of 40,517,400 stock options approved for grant by the shareholders as
stated earlier, the Bank is also authorised to issue options to employees and directors of the subsidiary companies.

33,707,690 options have been granted under the Scheme till the previous year ended 31 March, 2010.

134

Stock option activity under the Scheme for the year ended 31 March, 2011 is set out below:

Options
outstanding

Range of exercise
prices (`)

Weighted
average
exercise
price (`)

Weighted average
remaining
contractual life
(Years)

Outstanding at the beginning of the year

13,897,518

97.62 to 907.25

514.27

2.87

Granted during the year

Forfeited during the year

Expired during the year

2,915,200 1,159.30 to 1,245.45

1,163.05

(295,348)

232.10 to 1,214.80

658.88

(23,128)

97.62 to 319.00

264.72

Exercised during the year
Outstanding at the end of the year
Exercisable at the end of the year

97.62 to 824.40
(5,371,724)
11,122,518 232.10 to 1,245.45
232.10 to 907.25

4,479,300

448.22
712.90
525.53

-
2.86
1.49

The weighted average share price in respect of options exercised during the year was `1,324.47.

Stock option activity under the Scheme for the year ended 31 March, 2010 is set out below:

Options
outstanding

Range of exercise
prices (`)

Weighted
average
exercise
price (`)

Weighted average
remaining
contractual life
(Years)

Outstanding at the beginning of the year
Granted during the year
Forfeited during the year

13,852,974
4,413,990
(252,757)

39.77 to 824.40
503.25 to 907.25
97.62 to 824.40

Expired during the year

Exercised during the year
Outstanding at the end of the year
Exercisable at the end of the year

(24,320)

39.77 to 232.10

(4,092,369)
13,897,518
5,599,878

39.77 to 824.40
97.62 to 907.25
97.62 to 824.40

459.87
513.15
356.51

212.48

330.99
514.27
434.75

The weighted average share price in respect of options exercised during the year was `964.16.

Fair Value Methodology

2.95
-
-

-
2.87
1.58

Applying the fair value based method in Guidance Note on ‘Accounting for Employee Share-based Payments’ the
impact on reported net profit and EPS would be as follows:

Net Profit (as reported) (` in crores)
Add: Stock based employee compensation expense included in net

income (` in crores)

Less: Stock based employee compensation expense determined

under fair value based method (proforma) (` in crores)

Net Profit (Proforma) (` in crores)
Earnings per share: Basic (in `)
As reported
Proforma
Earnings per share: Diluted (in `)
As reported
Proforma

31 March, 2011

31 March, 2010

3,339.91

2,478.14

(107.97)
3,231.94

(92.75)
2,385.39

81.77
79.12

80.44
77.84

64.83
62.40

63.38
61.01

135

The fair value of the options is estimated on the date of the grant using the Black-Scholes options pricing model,
with the following assumptions:

Dividend yield
Expected life
Risk free interest rate
Volatility

31 March, 2011

31 March, 2010

1.24% to 1.32%
2-4 years

1.32%
2-4 years
5.98% to 7.17% 3.87% to 6.80%
54.72% to 61.66% 54.00% to 67.11%

Volatility is the measure of the amount by which a price has fluctuated or is expected to fluctuate during a period.
The measure of volatility used in the Black-Scholes options pricing model is the annualized standard deviation of
the continuously compounded rates of return on the stock over a period of time. For calculating volatility, the daily
volatility of the stock prices on the National Stock Exchange, over a period prior to the date of grant, corresponding
with the expected life of the options has been considered.

The weighted average fair value of options granted during the year ended 31 March, 2011 is `485.98 (previous
year `205.72).

2.1.6 Dividend paid on shares issued on exercise of stock options

The Bank may allot shares between the balance sheet date and record date for the declaration of dividend pursuant
to the exercise of any employee stock options. These shares will be eligible for full dividend for the year ended 31
March, 2011, if approved at the ensuing Annual General Meeting. Dividend relating to these shares has not been
recorded in the current year.

2.1.7 Segmental reporting

The business of the Bank is divided into four segments: Treasury, Retail Banking, Corporate/Wholesale Banking, and
Other Banking Business. These segments have been identified and based on RBI’s revised guidelines on Segment
Reporting issued on 18 April 2007 vide Circular No. DBOD.No.BP.BC.81/21.04.018/2006-07. The principal activities
of these segments are as under.

Segment

Treasury

Retail Banking

Principal Activities

Treasury operations include investments in sovereign and corporate debt, equity and
mutual funds, trading operations, derivative trading and foreign exchange operations on
the proprietary account and for customers and central funding.

Constitutes lending to individuals/small businesses subject to the orientation, product
and granularity criterion and also includes low value individual exposures not exceeding
the threshold limit of `5 crores as defined by RBI. Retail Banking activities also include
liability products, card services, internet banking, ATM services, depository, financial
advisory services and NRI services.

Corporate/Wholesale
Banking

Includes corporate relationships not included under Retail Banking, corporate advisory
services, placements and syndication, management of public issue, project appraisals,
capital market related services and cash management services.

Other Banking Business

Includes para banking activities* like third party product distribution and other banking
transactions not covered under any of the above three segments.

* Regrouped from retail banking segment in the previous year

136

The operations of Axis Securities and Sales Ltd. and Axis Trustee Services Ltd. have been classified under the ‘Retail
Banking’ and ‘Corporate/Wholesale Banking’ segments respectively. The operations of Axis Private Equity Ltd., Axis
Asset Management Company Ltd. and Axis Mutual Fund Trustee Ltd. have been classified under the ‘Other Banking
Business’ segment.

Segment income includes earnings from external customers and from funds transferred to the other segments.
Segment result includes revenue as reduced by interest expense and operating expenses and provisions, if any, for
that segment. Segment-wise income and expenses include certain allocations. Inter segment interest income and
interest expense represent the transfer price received from and paid to the Central Funding Unit (CFU) respectively.
For this purpose, the funds transfer pricing mechanism presently followed by the Bank, which is based on historical
matched maturity and market-linked benchmarks, has been used. Operating expenses other than those directly
attributable to segments are allocated to the segments based on an activity-based costing methodology. All activities
in the Bank are segregated segment-wise and allocated to the respective segment.

137

Segmental results are set out below:

31 March, 2011

Treasury Corporate/
Wholesale
Banking

Retail
Banking

Other
Banking
Business

(` in crores)

Total

Segment Revenue

Gross interest income (external customers)

4,751.66

7,082.97

3,320.18

0.05

15,154.86

Other income

1,122.51

2,299.98

995.95

253.01

4,671.45

Total income as per Profit and Loss Account

5,874.17

9,382.95

4,316.13

253.06

19,826.31

Add/(less) inter segment interest income

19,015.50

2,378.68

4,541.98

0.48

25,936.64

Total segment revenue

24,889.67

11,761.63

8,858.11

253.54

45,762.95

Less: Interest expense (external customers)

5,744.36

147.61

2,694.99

1.65

8,588.61

Less: Inter segment interest expenses

17,832.24

5,554.07

2,550.33

25,936.64

395.60

1,437.94

2,863.33

163.60

4,860.47

Less: Operating expenses

Less: Unallocated expenses

Operating profit

Less: Provision for non performing assets/Others

140.53

725.89

917.47

4,622.01

776.94

3,896.12

749.46

412.86

336.60

88.29

6,377.23

0.75

1,280.03

87.54

5,097.20

1,752.52

4.77

3,339.91

94,250.01 104,305.24

42,917.49

223.61 241,696.35

870.30

242,566.65

112,085.34

46,462.76

64,345.52

38.42 222,932.04

740.00

223,672.04

(17,835.33)

57,842.48 (21,428.03)

185.19

18,894.61

Segment result

Less: Provision for Tax

Less: Share of Loss in Associate

Extraordinary profit/loss

Net Profit

Segment assets

Unallocated assets

Total assets

Segment liabilities

Unallocated liabilities

Total liabilities

Net assets

138

31 March, 2010

Treasury Corporate/
Wholesale
Banking

Retail
Banking

Other
Banking
Business

(` in crores)

Total

Segment Revenue

Gross interest income (external customers)

3,651.30

4,966.70

3,020.66

0.39

11,639.05

Other income

1,299.83

1,550.91

914.79

198.68

3,964.21

Total income as per Profit and Loss Account

4,951.13

6,517.61

3,935.45

199.07

15,603.26

Add/(less) inter segment interest income

13,864.92

1,401.42

3,831.18

0.20

19,097.72

Total segment revenue

18,816.05

7,919.03

7,766.63

199.27

34,700.98

Less: Interest expense (external customers)

4,227.93

2,403.74

0.96

6,632.63

Less: Inter segment interest expenses

13,271.39

3,976.06

1,850.27

19,097.72

Less: Operating expenses

Less: Unallocated expenses

Operating profit

296.27

923.19

2,407.39

135.54

3,762.39

1,020.46

3,019.78

1,105.23

62.77

5,208.24

Less: Provision for non performing assets/Others

(4.15)

626.09

1,024.61

2,393.69

766.90

338.33

0.35

1,389.19

62.42

3,819.05

1,340.91

2,478.14

72,181.00 68,816.74

38,855.62

45.54 179,898.90

687.77

180,586.67

71,953.65 35,677.82

56,323.03

12.49 163,966.99

227.35 33,138.92 (17,467.41)

33.05

15,988.94

630.74

164,597.73

Segment result

Less: Provision for Tax

Extraordinary profit/loss

Net Profit

Segment assets

Unallocated assets

Total assets

Segment liabilities

Unallocated liabilities

Total liabilities

Net assets

Geographic Segments

Domestic

International

Total

31 March,
2011

31 March,
2010

31 March,
2011

31 March,
2010

31 March,
2011

31 March,
2010

18,718.24

14,998.90

1,108.07

604.36

19,826.31

15,603.26

220,322.02

166,665.25

22,244.63

13,921.42

242,566.65

180,586.67

Revenue

Assets

(` in crores)

139

2.1.8 Related party disclosure

The related parties of the Bank are broadly classified as:

a) Promoters

The Bank has identified the following entities as its Promoters.

• Administrator of the Specified Undertaking of the Unit Trust of India (UTI-1)

•

Life Insurance Corporation of India (LIC)

b) Key Management Personnel

• Mrs. Shikha Sharma (Managing Director & Chief Executive Officer)

• Mr. M. M. Agrawal (Erstwhile Deputy Managing Director) upto 31 August 2010

• Mr. Sisir Kumar Chakrabarti (Deputy Managing Director) with effect from 27 September 2010

c) Relatives of Key Management Personnel

Mr. Sanjaya Sharma, Mrs. Usha Bharadwaj, Mr. Tilak Sharma, Ms. Tvisha Sharma, Dr. Sanjiv Bharadwaj,
Dr. Prashant Bharadwaj, Dr. Brevis Bharadwaj, Dr. Reena Bharadwaj, Mrs. Bharti Agrawal, Mr. Vedprakash
Agrawal, Mrs. Gayatri Devi Agrawal, Mr. Amit M. Agrawal, Mrs. Rinki Agrawal, Master Kaustubh Agrawal, Ms.
Prashasti Agrawal, Mr. Anand Agrawal, Mr. Praveen Agrawal, Mrs. Rekha Agrawal, Mrs. Renu Agrawal, Mrs.
Meenu Agrawal, Mrs. Swapna Chakraborty, Mrs. Shikha Bhattacharya, Ms. Shila Chakraborty, Mr. Hirendra
Nath Chakraborty, Mr. Rajat Chakraborty, Mrs. Devikalpa Chakraborty (Kundu), Master Ahan Chakraborty, Mr.
Nabakumar Chakraborty, Mr. Prabir Chakraborty, Mrs. Minati Chakraborty, Mrs. Krishna Chakraborty, Mrs.
Sipra Chakraborty, Mr. AsimKumar Chakraborty, Mr. Arunabha Bhattacharya

d) Associate

• Bussan Auto Finance India Private Limited

Based on RBI guidelines, details of transactions with Associates are not disclosed since there is only one
entity/party in this category. [refer Schedule 17(2)]

140

The details of transactions of the Bank with its related parties during the year ended 31 March, 2011 are given below:

Items/Related Party

Promoters

Key
Management
Personnel

Dividend Paid
Interest Paid
Interest Received
Investment of Related Parties in the Bank
Investment in Subordinated Debt/Hybrid
Capital of the Bank
Redemption of Subordinated Debt
Purchase of investments
Sale of Investments
Management Contracts and Other
reimbursements
Purchase of Fixed Assets
Non-funded commitments
Advance granted
Advance repaid
Sale of fixed assets
Receiving of Services
Rendering of Services
Other Reimbursements to Related Parties

184.65
389.65
0.22
-

-
-
10.24
563.21

-
-
0.01
-
-
-
45.40
2.51
0.15

0.03
0.07
0.02
2.28

-
-
-
-

5.46*

-
-
-
0.12
-
-
-
-

Relatives of Key
Management
Personnel
-
0.04
-
-

-
-
-
-

-
-
-
-
-
-
-
-
-

(` in crores)

Total

184.68
389.76
0.24
2.28

-
-
10.24
563.21

5.46
-
0.01
-
0.12
-
45.40
2.51
0.15

*includes `0.70 crore subject to approval of shareholders

The balances payable to/receivable from the related parties of the Bank as on 31 March, 2011 are given below:

Items/Related Party

Promoters

Borrowings from the Bank
Deposits with the Bank
Placement of Deposits
Advances
Investment of Related Parties in the Bank
Repo Borrowings
Non-funded commitments
Investment in Subordinated Debt/Hybrid
Capital of the Bank
Advance for Rendering of Services
Leasing/HP arrangements availed
Leasing/HP arrangements provided
Other Receivables
Other Payables

-
4,716.08
0.16
43.00
152.78
-
3.01

2,825.00
-
-
-
-
-

Key
Management
Personnel
-
0.23
-
0.27
0.04
-
-

Relatives of Key
Management
Personnel
-
0.23
-
-
-
-
-

-
-
-
-
-
-

(` in crores)

Total

-
4,716.54
0.16
43.27
152.82
-
3.01

2,825.00
-
-
-
-
-

141

The maximum balances payable to/receivable from the related parties of the Bank during the year ended 31 March,
2011 are given below:

Items/Related Party

Promoters

Borrowings from the Bank
Deposits with the Bank
Placement of Deposits
Advances
Investment of Related Parties in the Bank
Repo Borrowing
Non-funded commitments
Investment in Subordinated Debt/Hybrid
Capital of the Bank
Advance for Rendering of Services
Leasing/HP arrangements availed
Leasing/HP arrangements provided
Other Receivables
Other Payables

-
4,716.09
0.16
132.47
156.15
-
39.00

2,825.00
-
-
-
-
-

Key
Management
Personnel
-
3.94
-
0.39
0.04
-
-

Relatives of Key
Management
Personnel
-
4.96
-
-
-
-
-

-
-
-
-
-
-

(` in crores)

Total

-
4,724.99
0.16
132.86
156.19
-
39.00

2,825.00
-
-
-
-
-

The details of transactions of the Bank with its related parties during the year ended 31 March, 2010 are given below:

Items/Related Party

Promoters

Dividend Paid
Interest Paid
Interest Received
Investment of Related Parties in the Bank
Investment in Subordinated Debt/Hybrid
Capital of the Bank
Redemption of Subordinated Debt
Sale of Investments
Management Contracts and Other
reimbursements
Purchase of Fixed Assets
Advance granted
Advance repaid
Sale of fixed assets
Receiving of Services
Rendering of Services
Non-funded commitments
Other Reimbursements to Related Parties

151.97
246.89
-
360.56

1,055.00
5.00
537.48

1.82
-
-
-
-
16.11
1.92
0.05
-

Key
Management
Personnel
-
0.02
0.01
-

Relatives of Key
Management
Personnel
-
0.01
-
-

-
-
-

2.62
-
-
-
-
-
-
-
-

-
-
-

-
-
-
-
-
-
-
-
-

(` in crores)

Total

151.97
246.92
0.01
360.56

1,055.00
5.00
537.48

4.44
-
-
-
-
16.11
1.92
0.05
-

142

The balances payable to/receivable from the related parties of the Bank as on 31 March, 2010 are given below:

Items/Related Party

Promoters

Deposits with the Bank
Placement of Deposits
Advances
Investment of the Bank
Investment of Related Parties in the Bank
Repo Borrowing
Non-funded commitments
Investment in Subordinated Debt/Hybrid
Capital of the Bank
Advance for Rendering of Services
Leasing/HP Arrangements availed
Leasing/HP Arrangements provided
Other Receivables
Other Payables

3,662.04
0.16
50.17
-
156.15
-
39.00

2,815.00
-
-
-
-
-

Key
Management
Personnel
1.72
-
0.39
-
0.02
-
-

Relatives of Key
Management
Personnel
0.64
-
-
-
-
-
-

-
-
-
-
-
-

(` in crores)

Total

3,664.40
0.16
50.56
-
156.17
-
39.00

2,815.00
-
-
-
-
-

The maximum balances payable to/receivable from the related parties of the Bank during the year ended 31 March,
2010 are given below:

Items/Related Party

Promoters

Deposits with the Bank
Placement of Deposits
Advances
Investment of Related Parties in the Bank
Repo Borrowing
Non-funded commitments
Investment in Subordinated Debt/Hybrid
Capital of the Bank
Advance for Rendering of Services
Leasing/HP Arrangements availed
Leasing/HP arrangements provided
Other Receivables
Other Payables

3,662.04
0.16
59.36
156.64
-
39.05

2,815.00
-
-
-
-
-

Key
Management
Personnel
10.43
-
0.40
0.13
-
-

Relatives of Key
Management
Personnel
0.64
-
-
-
-
-

-
-
-
-
-
-

(` in crores)

Total

3,673.11
0.16
59.76
156.77
-
39.05

2,815.00
-
-
-
-
-

143

2.1.9 Leases

Disclosure in respect of assets given on operating lease.

The Bank has not given any asset on operating lease.

Disclosure in respect of assets taken on operating lease.

Operating lease comprises leasing of office premises/ATMs, staff quarters, electronic data capturing machines and
IT equipment.

Future lease rentals payable as at the end of the year:

- Not later than one year

- Later than one year and not later than five years

- Later than five years

Total of minimum lease payments recognised in the Profit and Loss
Account for the year

There are no provisions relating to contingent rent.

31 March, 2011

31 March, 2010

(` in crores)

445.04

1,240.33

673.79

413.79

1,180.99

723.51

571.11

421.09

The terms of renewal/purchase options and escalation clauses are those normally prevalent in similar agreements.

There are no undue restrictions or onerous clauses in the agreements.

2.1.10 Other Fixed Assets (including furniture & fixtures)

The movement in fixed assets capitalized as application software is given below:

Particulars

At cost at the beginning of the year

Additions during the year

Deductions during the year

Accumulated depreciation as at 31 March

Closing balance as at 31 March

Depreciation charge for the year

(` in crores)

31 March, 2011

31 March, 2010

268.73

74.06

(1.68)

(209.85)

131.26

47.91

220.74

48.57

(0.58)

(162.65)

106.08

37.38

2.1.11 The major components of deferred tax assets and deferred tax liabilities arising out of timing differences are as

under:

As at

Deferred tax assets on account of provisions for doubtful debts

Deferred tax assets on account of amortization of HTM investments

Deferred tax assets on account of provision for employee benefits

Deferred tax liability on account of depreciation on fixed assets

Deferred tax assets on account of other contingencies

Other deferred tax assets

Net deferred tax asset

31 March, 2011

31 March, 2010

(` in crores)

574.23

164.04

70.67

(32.66)

13.37

27.22

816.87

421.52

147.83

47.79

(32.63)

26.88

611.39

144

2.1.12 Employee Benefits

Group

Provident Fund

The contribution to the employee’s provident fund of the Group amounted to `44.94 crores for the year ended 31
March, 2011 (previous year `39.31 crores)

The rules of the Bank’s Provident Fund administered by a Trust require that if the Board of Trustees are unable to pay
interest at the rate declared for Employees’ Provident Fund by the Government under para 60 of the Employees’
Provident Fund Scheme, 1952 for the reason that the return on investment is less or for any other reason, then
the deficiency shall be made good by the Bank. Having regard to the assets of the Fund and the return on the
investments, the Bank does not expect any deficiency in the foreseeable future. There has also been no such
deficiency since the inception of the Fund.

Axis Bank Ltd.

Superannuation

The Bank contributed `10.17 crores to the employee’s superannuation plan for the year ended 31 March, 2011
(previous year `9.67 crores).

Group

Leave Encashment

The Group charged an amount of `70.66 crores towards leave encashment for the year ended 31 March, 2011
(previous year `36.95 crores).

Group

Gratuity

The following tables summarize the components of net benefit expenses recognised in the Profit and Loss Account
and the funded status and amounts recognised in the Balance Sheet for the Gratuity benefit plan.

Profit and Loss Account

Net employee benefit expenses (recognised in payments to and provisions for employees)

Current Service Cost

Interest on Defined Benefit Obligation

Expected Return on Plan Assets

Net Actuarial Losses/(Gains) recognised in the year

Past Service Cost

Total included in “Employee Benefit Expense”

Actual Return on Plan Assets

Balance Sheet

Details of provision for gratuity

Present Value of Funded Obligations

Fair Value of Plan Assets

Net Liability

31 March, 2011

31 March, 2010

(` in crores)

9.46

3.90

(3.36)

0.45

8.82

19.27

2.58

8.88

2.94

(2.59)

(3.99)

5.24

3.05

(` in crores)

31 March, 2011

31 March, 2010

61.43

(63.62)

(2.19)

43.02

(44.08)

(1.06)

145

31 March, 2011

31 March, 2010

(` in crores)

Amounts in Balance Sheet
Liabilities
Assets
Net Assets

Changes in the present value of the defined benefit obligation are as follows:

0.59
2.78
(2.19)

0.35
1.41
(1.06)

(` in crores)

Change in Defined Benefit Obligation
Opening Defined Benefit Obligation
Current Service Cost
Interest Cost
Actuarial Losses/(Gains)
Past Service Cost
Benefits Paid
Closing Defined Benefit Obligation

Changes in the fair value of plan assets are as follows:

Change in the Fair Value of Assets

Opening Fair Value of Plan Assets

Expected Return on Plan Assets

Actuarial Gains/(Losses)

Contributions by Employer

Benefits Paid

Closing Fair Value of Plan Assets

Experience adjustments

31 March, 2011

31 March, 2010

43.02
9.46
3.90
(0.34)
8.82
(3.43)
61.43

36.48
8.88
2.94
(3.52)
-
(1.76)
43.02

(` in crores)

31 March, 2011

31 March, 2010

44.08

3.36

(0.79)

20.40

(3.43)

63.62

29.83

2.59

0.46

12.96

(1.76)

44.08

(` in crores)

31 March,
2011

31 March,
2010

31 March,
2009

31 March,
2008

31 March,
2007

Defined Benefit Obligations

Plan Assets

Surplus/(Deficit)

Experience Adjustments on Plan Liabilities

Experience Adjustments on Plan Assets

61.43

63.62

2.19

1.55

(0.78)

43.02

44.08

1.06

1.27

0.46

36.49

29.83

(6.66)

3.30

(0.73)

23.42

17.78

(5.64)

3.57

(0.17)

14.33

11.93

(2.40)

2.29

0.13

Axis Bank Ltd.

The major categories of plan assets* as a percentage of fair value of
total plan assets – Insurer Managed Funds

*composition of plan assets is not available

31 March, 2011

31 March, 2010

100

146

Principal actuarial assumptions at the balance sheet date:

Discount Rate

Expected rate of Return on Plan Assets

Salary Escalation Rate

Employee Turnover
- 21 to 30 (age in years)

- 31 to 44 (age in years)

- 45 to 59 (age in years)

Principal actuarial assumptions at the balance sheet date:

Discount Rate

Expected rate of Return on Plan Assets

Salary Escalation Rate

Employee Turnover
- 21 to 44 (age in years)

- 45 to 64 (age in years)

31 March, 2011

8.05% p.a.

7.50% p.a.

6.00% p.a.

16.55%

10.00%

1.00%

31 March, 2010

7.90% p.a.

7.50% p.a.

6.00% p.a.

10.00%

1.00%

The estimates of future salary increases considered take into account the inflation, seniority, promotion and other
relevant factors.

The expected rate of return on plan assets is based on the average long-term rate of return expected on investments
of the Fund during the estimated term of the obligations.

The above information is as certified by the actuary and relied upon by the auditors.

Axis Securities and Sales Ltd.

The major categories of plan assets* as a percentage of fair value of
total plan assets – Insurer Managed Funds

*composition of plan assets is not available

Principal actuarial assumptions at the balance sheet date:

Discount Rate

Expected rate of Return on Plan Assets

Salary Escalation Rate

Employee Turnover
- 21 to 44 (age in years)

- 45 to 59 (age in years)

31 March, 2011

31 March, 2010

100.00

31 March, 2011

31 March, 2010

7.80% p.a.

7.50% p.a.

6.00% p.a.

6.55% p.a.

7.50% p.a.

6.00% p.a.

60.00% p.a.

1.00% p.a.

30.00% p.a.

1.00% p.a.

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority,
promotion and other relevant factors, such as supply and demand in the employment market.

147

The overall expected rate of return on assets is determined based on the market prices prevailing on that date,
applicable to the period over which the obligation is to be settled.

The Company expects to contribute `0.20 crores as gratuity in the year 2011-12.

Axis Asset Management Company Ltd.

Principal actuarial assumptions at the balance sheet date:
Discount Rate
Expected rate of Return on Plan Assets
Salary Escalation Rate
Employee Turnover

31 March, 2011

31 March, 2010

8.13% p.a.
N.A.
10.00% p.a.
10.00% p.a.

8.00% p.a.
N.A.
10.00% p.a.
10.00% p.a.

2.1.13 Provisions and contingencies

a) Movement in provision for frauds included under other liabilities is set out below:

Opening balance at the beginning of the year
Additions during the year
Reductions on account of payments during the year
Reductions on account of reversals during the year
Closing balance at the end of the year

31 March, 2011
0.21
4.78
-
-
4.99

b) Movement in provision for credit enhancements on securtised assets is set out below:

Opening balance at the beginning of the year
Additions during the year
Reductions during the year
Closing balance at the end of the year

31 March, 2011
-
-
-
-

c) Movement in provision for debit/credit card reward points is set out below:

Opening provision at the beginning of the year
Provision made during the year
Reductions during the year
Closing provision at the end of the year

31 March, 2011
18.41
8.25
(1.65)
25.01

d) Movement in provision for other contingencies (including derivatives) is set out below:

Opening provision at the beginning of the year
Provision made during the year
Reductions during the year
Closing provision at the end of the year

31 March, 2011
-
36.44
-
36.44

(` in crores)

31 March, 2010
4.51
0.04
(0.27)
(4.07)
0.21

(` in crores)

31 March, 2010
-
-
-
-

(` in crores)

31 March, 2010
9.97
9.35
(0.91)
18.41

(` in crores)

31 March, 2010
-
-
-
-

148

2.1.14 Small and Micro Industries

Group

Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from 2 October,
2006, certain disclosures are required to be made relating to Micro, Small and Medium enterprises. There have been
no reported cases of delays in payments to micro and small enterprises or of interest payments due to delays in
such payments. The above is based on the information available with the Bank which has been relied upon by the
auditors.

2.1.15 Description of contingent liabilities:

a) Claims against the Group not acknowledged as debts

These represent claims filed against the Group in the normal course of business relating to various legal cases
currently in progress. These also include demands raised by income tax and other statutory authorities and
disputed by the Group.

Liability on account of forward exchange and derivative contracts

The Bank enters into foreign exchange contracts, currency options/swaps, interest rate futures and forward
rate agreements on its own account and for customers. Forward exchange contracts are commitments to buy
or sell foreign currency at a future date at the contracted rate. Currency swaps are commitments to exchange
cash flows by way of interest/principal in two currencies, based on ruling spot rates. Interest rate swaps are
commitments to exchange fixed and floating interest rate cash flows. Interest rate futures are standardized,
exchange-traded contracts that represent a pledge to undertake a certain interest rate transaction at a specified
price, on a specified future date. Forward rate agreements are agreements to pay or receive a certain sum
based on a differential interest rate on a notional amount for an agreed period. A foreign currency option is an
agreement between two parties in which one grants to the other the right to buy or sell a specified amount of
currency at a specific price within a specified time period or at a specified future time.

c) Guarantees given on behalf of constituents

d) Acceptances, endorsements and other obligations

These include documentary credit issued by the Bank on behalf of its customers and bills drawn by the Bank’s
customers that are accepted or endorsed by the Bank.

e) Other items for which the Group is contingently liable

149

2.1.16 Statement pursuant to Section 212 of the Companies Act, 1956, relating to subsidiary companies

In terms of the approval u/s 212(8) of the Companies Act, 1956 granted by the Ministry of Corporate Affairs,
Government of India vide its letter no. 47/19/2011-CL-III dated 21 January, 2011

(` in crores)

For the year ended 31 March, 2011

Axis Private
Equity Ltd.

Axis Trustee
Services Ltd.

Axis Mutual
Fund Trustee
Ltd.

Axis Asset
Management
Company Ltd.

Axis
Securities
and Sales
Ltd.
80.00
(16.33)

Capital
Reserves and Surplus
Total Assets (Fixed Assets + Investments
+ Current Assets + Deferred Tax Assets)
Total Liabilities (Loans + Current
Liabilities + Provisions)
Investments
Total Income
Profit/(Loss) Before Taxation
Provision for Taxation
Profit/(Loss) After Taxation
Proposed Dividend and Tax (including
cess thereon)

15.00
2.95

1.50
8.65

84.37

21.75

16.76

20.70
-
109.77
(8.17)
-
(8.17)

3.81
-
12.46
3.74
1.31
2.43

6.61
-
15.08
12.13
4.03
8.10

1.31

0.05
0.03

0.11

0.03
0.09
0.12
0.03
0.01
0.02

124.00
(96.05)

41.78

13.83
21.16
28.05
(45.44)
-
(45.44)

2.1.17 Comparative Figures

Previous year figures have been regrouped and reclassified, where necessary to conform to current year’s
presentation.

For Axis Bank Ltd.

Adarsh Kishore
Chairman

Shikha Sharma
Managing Director & CEO

S. K. Chakrabarti
Deputy Managing Director

R. H. Patil
Director

Sushil Kumar Roongta
Director

R. B. L. Vaish
Director

S. B. Mathur
Director

P. J. Oza
Company Secretary

Somnath Sengupta
Executive Director & CFO

Date : 22nd April, 2011
Place: Mumbai

150

DISCLOSURES UNDER THE NEW CAPITAL ADEQUACY FRAMEWORK
(BASEL II GUIDELINES) FOR THE YEAR ENDED 31 MARCH, 2011

SCOPE OF APPLICATION

Axis Bank Limited (the ‘Bank’) is a commercial bank, which was incorporated on 3 December, 1993. The Bank is the
controlling entity for all group entities that include its six wholly owned subsidiaries.

The consolidated financial statements of the Bank comprise the financial statements of Axis Bank Limited and its
subsidiaries that together constitute the ‘Group’. The Bank consolidates its subsidiaries in accordance with Accounting
Standard 21 (AS 21) ‘Consolidated Financial Statements’ issued by the Institute of Chartered Accountants of India on a
line-by-line basis by adding together the like items of assets, liabilities, income and expenditure. While computing the
consolidated Bank’s Capital to Risk-weighted Assets Ratio (CRAR), the Bank’s investment in the equity capital of the
wholly-owned subsidiaries is deducted, 50% from Tier 1 Capital and 50% from Tier 2 Capital. The subsidiaries of the
Bank are not required to maintain any regulatory capital. The table below lists Axis Bank’s Subsidiaries/Associates/Joint
ventures consolidated for accounting and their treatment for capital adequacy purpose.

Sr. No. Name of the entity

Nature of Business

Holding Basis of Consolidation

Axis Securities and Sales Ltd. Marketing of credit cards and retail asset

100%

Fully consolidated

Axis Private Equity Ltd.

products and retail broking

Managing investments, venture capital
funds and off shore funds

Axis Trustee Services Ltd.

Trusteeship services

Axis Mutual Fund Trustee Ltd. Trusteeship

Asset Management

100%

Fully consolidated

100%

Fully consolidated

Axis Asset Management
Company Ltd.

Bussan Auto Finance India
Private Ltd.

Non-Banking Financial company

26%

Treated as an associate

The investment in Bussan Auto Finance India Private Ltd. is not deducted from the capital funds of the Bank but is
assigned risk-weights as an investment.

On 7 March, 2011, the Bank has incorporated a new subsidiary, namely Axis U.K. Limited as a private limited company
registered in the United Kingdom (UK) with the main purpose of filing an application with Financial Services Authority
(FSA), UK for a banking licence in the UK and for the creation of necessary infrastructure for the subsidiary to commence
banking business. As on 31 March, 2011, Axis U.K. Limited has not commenced any operations.

There is no deficiency in capital of any of the subsidiaries of the Bank as on 31 March, 2011. Axis Bank actively
monitors all its subsidiaries through their respective Boards and regular updates to the Board of Axis Bank.

As on 31 March, 2011, the Bank does not have any interest in any insurance entity.

II. CAPITAL STRUCTURE

Summary

As per RBI’s capital adequacy norms capital funds are classified into Tier-1 and Tier-2 capital. Tier-1 capital of the Bank
consists of equity capital, statutory reserves, other disclosed free reserves, capital reserves and innovative perpetual
debt instruments eligible for inclusion in Tier-1 capital that complies with requirement specified by RBI. The Tier-2
capital consists of general provision and loss reserves, upper Tier-2 instruments and subordinate debt instruments
eligible for inclusion in Tier-2 capital. Axis Bank has issued debt instruments that form a part of Tier-1 and Tier-2 capital.
The terms and conditions that are applicable for these instruments comply with the stipulated regulatory requirements.

151

Tier-1 bonds are non-cumulative and perpetual in nature with a call option after 10 years. Interest on Tier-1 bonds is
payable either annually or semi-annually. Some of the Tier-1 bonds have a step-up clause on interest payment ranging
up to 100 bps. The Upper Tier-2 bonds have an original maturity of 15 years with a call option after 10 years. The
interest on Upper Tier-2 bonds is payable either annually or semi-annually. Some of the Upper Tier-2 debt instruments
have a step-up clause on interest payment ranging up to 100 bps. The Lower Tier-2 bonds have an original maturity
between 5 to 10 years. The interest on lower Tier-2 capital instruments is payable either semi-annually or annually.

Equity Capital

The Bank has authorized share capital of `500.00 crores comprising 500,000,000 equity shares of `10/- each. As on
31 March, 2011 the Bank has issued, subscribed and paid-up equity capital of `410.55 crores, constituting 410,545,843
number of shares of `10/- each. The Bank’s shares are listed on the National Stock Exchange and the Bombay Stock
Exchange. The GDRs issued by the Bank are listed on the London Stock Exchange (LSE).

During the year, the Bank has also allotted equity shares to employees under its Employee Stock Option Plan.

The provisions of the Companies Act, 1956 and other applicable laws and regulations govern the rights and obligations
of the equity share capital of the Bank.

Debt Capital Instruments

The Bank has raised capital through Innovative Perpetual Debt Instrument (IPDI) eligible as Tier 1 Capital and Tier 2
Capital in the form of Upper Tier 2 and Subordinated bonds (unsecured redeemable non-convertible debentures),
details of which are given below.

Perpetual Debt Instrument

The Bank has raised Perpetual Debt Instruments eligible as Tier 1 Capital, the aggregate value of which as on 31 March,
2011 was `419.14 crores as stated below.

Date of Allotment

Rate of Interest

30 September, 2006

15 November, 2006

10.05%

7.167%

Period

Perpetual

Total Perpetual Debt

Amount

`214.00 crores

USD 46 million*
(`205.14 crores)

`419.14 crores

*Converted to INR @ `44.595 to a US Dollar (prevailing exchange rate as on 31.3.2011)

Upper Tier 2 Capital

The Bank has also raised Upper Tier 2 Capital, the aggregate value of which as on 31 March, 2011 was `1,242.80
crores as per the table below.

Date of Allotment

Date of Redemption

Rate of Interest

Amount

11 August, 2006

10 August, 2021

7.25%

24 November, 2006

23 November, 2021

6 February, 2007

6 February, 2022

28 June, 2007

28 June, 2022

9.35%

9.50%

7.125%

Total Upper Tier 2 Capital

USD 149.87 million*
(`668.34 crores)

`200.00 crores

`107.50 crores

USD 59.86 million*
(`266.96 crores)

`1,242.80 crores

*Converted to INR @ `44.595 to a US Dollar (prevailing exchange rate as on 31.3.2011)

152

Subordinated Debt

As on 31 March, 2011, the Bank had an outstanding Subordinated debt (unsecured redeemable non-convertible
debentures) aggregating `5,331.30 crores. Of this, `4,587.60 crores qualified as Lower Tier 2 capital, the details of
which are stated below.

Date of Allotment

Date of Redemption

Rate of Interest

9.30%

8.95%

6.70%

7.00%

6.50%

Simple average of Mid of Bid
and offer yield of the 1-year
GOI benchmark (i.e. INBMK)
plus a margin of 65 basis
points to be reset at semi
annual intervals.

8.50%

8.32%

8.75%

8.56%

8.95%

9.10%

10.10%

11.75%

9.95%

9.15%

20 September, 2002

20 June, 2012

21 December, 2002

21 September, 2012

26 July, 2003

26 April, 2011

26 April, 2013

15 January, 2004

15 October, 2013

25 July, 2005

25 July, 2012

22 March, 2006

28 June, 2006

30 March, 2007

22 June, 2013

22 March, 2016

28 September, 2013

28 June, 2016

30 March, 2017

7 November, 2008

7 November, 2018

28 March, 2019

16 June, 2019

28 March, 2009

16 June, 2009

Total

Capital Funds

Position as on 31 March, 2011

Tier 1 Capital

Of which

- Paid-up Share Capital

- Reserves and surplus (Excluding Foreign Currency Translation Reserve)

- Innovative Perpetual Debt Instruments

- Amount deducted from Tier 1 capital

- Investments in subsidiaries

- Deferred Tax Assets

(` in crores)

Amount

62.00

60.00

5.00

65.00

50.00

500.00

125.00

5.00

360.00

10.00

33.50

104.90

250.90

1,500.00

200.00

2,000.00

5,331.30

(` in crores)

Amount

18,503.49

410.55

18,600.93

419.14

(110.28)

(816.85)

153

Tier 2 Capital (net of deductions) (B.1+B.2+B.3-B.4)

Out of above
Debt Capital Instruments eligible for inclusion as Upper Tier 2 Capital
- Total amount outstanding
- Of which amount raised during the current year
- Amount eligible as capital funds
Subordinated debt eligible for inclusion in Lower Tier 2 Capital
- Total amount outstanding
- Of which amount raised during the current year
- Amount eligible as capital funds
Other Tier 2 Capital - General provisions and loss reserves
Deductions from Tier 2 Capital
- Investments in Subsidiaries
Total Eligible Capital

B.1

B.2

B.3
B.4

(` in crores)

6,366.86

1,242.80
-
1,242.80

5,331.30
-
4,587.60
646.74

(110.28)
24,870.35

III. CAPITAL ADEQUACY

Axis Bank is subject to the capital adequacy guidelines stipulated by RBI, which are based on the framework of the
Basel Committee on Banking Supervision. As per the capital adequacy guidelines under Basel I, the Bank is required to
maintain a minimum ratio of total capital to risk weighted assets (CRAR) of 9.0%, at least half of which is required to
be Tier 1 Capital. As per Basel II guidelines, Axis Bank is required to maintain a minimum CRAR of 9.0%, with minimum
Tier 1 Capital ratio of 6.0%. In terms of RBI guidelines for implementation of Basel II, capital charge for credit and
market risk for the financial year ended 31 March, 2011 will be required to be maintained at the higher levels implied
by Basel II or 80% of the minimum capital requirement computed as per the Basel I framework. For the year ended
31 March, 2011, the minimum capital required to be maintained by Axis Bank as per Basel II guidelines is higher than
that under Basel I guidelines.

An assessment of the capital requirement of the Bank is carried out through a comprehensive projection of
future businesses that takes cognizance of the strategic intent of the Bank, profitability of particular businesses
and opportunities for growth. The proper mapping of credit, operational and market risks to this projected
business growth enables assignment of capital that not only adequately covers the minimum regulatory
capital requirement but also provides headroom for growth. The calibration of risk to business is enabled by
a strong risk culture in the Bank aided by effective, technology-based risk management systems. A summary
of the Bank’s capital requirement for credit, market and operational risk and the capital adequacy ratio as on
31 March, 2011 is presented below.

Capital Requirements for various Risks
CREDIT RISK
Capital requirements for Credit Risk
- Portfolios subject to standardized approach
- Securitisation exposures
MARKET RISK
Capital requirements for Market Risk
- Standardized duration approach
- Interest rate risk
- Foreign exchange risk (including gold)
- Equity risk

154

(` in crores)

Amount

15,350.25
-

1,378.66
1,152.74
32.19
193.73

Capital Requirements for various Risks
OPERATIONAL RISK
Capital requirements for Operational risk
- Basic indicator approach
Capital Adequacy Ratio of the Bank (%)
Tier 1 CRAR (%)

(` in crores)

Amount

961.72
12.65%
9.41%

IV. RISK MANAGEMENT: OBJECTIVES AND ORGANIZATION STRUCTURE

The wide variety of businesses undertaken by the Bank requires it to identify, measure, control, monitor and report risks
effectively. The key components of the Bank’s risk management rely on the risk governance architecture, comprehensive
processes and internal control mechanism. The Bank’s risk governance architecture focuses attention on key areas of
risk such as credit, market and operational risk and quantification of these risks wherever possible for effective and
continuous monitoring.

Objectives and Policies

The Bank’s risk management processes are guided by well-defined policies appropriate for various risk categories,
independent risk oversight and periodic monitoring through the sub-committees of the Board of Directors. The
Board sets the overall risk appetite and philosophy for the Bank. The Committee of Directors, the Risk Management
Committee and the Audit Committee of the Board, which are sub-committees of the Board, review various aspects of
risk arising from the businesses of the Bank. Various senior management committees operate within the broad policy
framework as illustrated below.

The Bank has also formulated a global risk policy for overseas operations and a country specific risk policy for its
Singapore, Hong Kong and Dubai branches. The policies were drawn based on the risk dimensions of dynamic
economies and the Bank’s risk appetite.

The Bank has formulated a comprehensive Stress Testing policy to measure impact of adverse stress scenarios on the
adequacy of capital.

Structure and Organization

Risk Management Department reports to the Executive Director and CFO and the Risk Management Committee of the
Board oversees the functioning of the Department. The Department has three separate teams for Credit Risk, Market
Risk and Operational Risk and the head of each team reports to the head of the department.

155

V. CREDIT RISK

Credit Risk Management Policy

Credit risk covers the inability of a borrower or counter-party to honour commitments under an agreement and any
such failures, which have an adverse impact on the financial performance of the Bank. The Bank is exposed to credit
risk through lending and capital market activities.

The Bank’s credit risk management process integrates risk management into the business management processes,
while preserving the independence and integrity of risk assessment. The goal of credit risk management during the
year has been to maintain a healthy credit portfolio by managing risk at the portfolio level as well as at the individual
transaction level. The Board of Directors establishes the parameters for risk appetite, which are defined quantitatively
and qualitatively in accordance with the laid-down strategic business plan in the Credit Risk Management Policy. The
foundation of credit risk management rests on the internal rating system.

Credit Rating System

Internal reporting and oversight of assets is principally differentiated by the credit ratings applied. The Bank has
developed rating tools specific to market segments such as large corporates, mid-corporates, SME, financial companies
and microfinance companies to objectively assess underlying risk associated with such exposures. For retail and
schematic SME exposures, scorecards and borrower-scoring templates are used for application screening. Hence, for
these exposures, the credit risk is measured and managed at the portfolio level. The Bank is also trying to use internal
database of retail loans for building up statistical behavioural scorecards as well as for refining credit assessment at the
application sourcing level.

The credit rating tool uses a combination of quantitative inputs and qualitative inputs to arrive at a ‘point-in-time’
view of the rating of counterparty. The monitoring tool developed by the Bank helps in objectively assessing the credit
quality of the borrower taking into cognizance the actual behaviour post-disbursement. The output of the rating
model is primarily to assess the chances of delinquency over a one-year time horizon. Each internal rating grade
corresponds to a distinct probability of default. Model validation is carried out periodically by objectively assessing its
calibration accuracy and stability of ratings.

Credit Sanction and related processes

The Bank has put in place the following hierarchical committee structure for credit sanction and review:

Regional Credit Committee (RCC)

Retail Agri. Credit Committee (RACC)

•
• Central Agri. Business Credit Committee (CABCC)
•
•  Central Office Credit Committee (COCC)
•  Committee of Executives (COE)
•  Senior Management Committee (SMC)
•  Committee of Directors (COD)

The guiding principles behind the credit sanction process are as under.

‘Know your Customer’ is a leading principle for all activities.

• 
•  Sound credit approval process with well laid credit-granting criteria.
•  The acceptability of credit exposure is primarily based on the sustainability and adequacy of borrower’s normal

business operations and not based solely on the availability of security.

•  Portfolio level risk analytics and reporting to ensure optimal spread of risk across various rating classes prevent
undue risk concentration across any particular industry segments and monitor credit risk quality migration.

•  Sector specific studies are periodically undertaken to highlight risk and opportunities in those sectors.
•  Rating linked exposure norms have been adopted by the Bank.
• 

Industry-wise exposure ceilings are based on the industry performance, prospects and the competitiveness of the
sector.

156

•  Separate risk limits are set up for credit portfolios like advances to NBFC and unsecured loans that require special

monitoring.

•  With heightened activity in the real estate sector, the Bank has strengthened its risk management systems to
ensure that its advances are to borrowers having a good track record and satisfying the criterion of minimum
acceptable credit rating. Appropriate covenants are stipulated for risk containment and monitoring.

Review and Monitoring

•  All credit exposures, once approved, are monitored and reviewed periodically against the approved limits.

Borrowers with lower credit rating are subject to more frequent reviews.

•  Credit audit involves independent review of credit risk assessment, compliance with internal policies of the Bank
and with the regulatory framework, compliance of sanction terms and conditions and effectiveness of loan
administration.

•  Customers with emerging credit problems are identified early and classified accordingly. Remedial action is

initiated promptly to minimize the potential loss to the Bank.

Portfolio Management

The Bank continues to track the quality of all portfolios through appropriate risk metrics. Periodic delinquency reporting,
vintage analysis of the portfolio and rating-wise distribution of its borrowers provides insight for future course of
action.

The exposures to sectors that had been most affected by the recent downturn and have been slow to recover were
kept under control and there was an increased focus on borrowers having good and stable rating.

The Bank has been selective in choosing a growth path for retail assets. The focus has been on increasing lending to
secured portfolios (mortgage, auto), while maintaining a cautious approach to unsecured lending (personal loans and
credit card business). The Bank’s objective has been to improve the quality of incremental origination through tighter
credit underwriting standards, increased use of bureau level data and leveraging on internal customer base of the Bank
for cross sell. Account management and focus on collection are a priority to control delinquencies at the portfolio level.

Concentration Risk

The Bank controls and limits concentration risk by means of appropriate structural limits and borrower limits based on
creditworthiness. These include:

Large Exposures to Individual Clients or Group

The Bank has individual borrower-wise exposure ceilings based on the internal rating of the borrower as well as
group-wise borrowing limits. The Bank monitors the level of credit risk (Low/Moderate/High/Very High) and direction
of change in credit risk (increasing /decreasing/stable) at the portfolio level based on the following six parameters that
capture concentration risk.

•  Highest geographic concentration in a region.
•  Exposure to Top 20 accounts as a percentage of Credit Risk Exposure (CRE).
•  Percentage of term loans with residual maturity more than 3 years to total loans and advances.
•  Percentage of unsecured loans to total loan and advances.
•  Number of single borrower exposures exceeding 15% of capital funds.
•  Number of group exposures exceeding 40% of capital funds.

While determining level and direction of credit risk, parameters like percentage of low-risk credit (investment grade
and above) to credit risk exposure and migration from investment to non-investment grade (quantum as percentage
of credit risk exposure) are also considered.

157

Industries

Industry analysis plays an important part in assessing the concentration risk within the loan portfolio. Particular
attention is given to industry sectors where the Bank believes there is a high degree of risk or potential for volatility in
the future. The Bank has fixed internal limits for aggregate commitments to different sectors so that the exposures are
evenly spread over various sectors.

Policies for Hedging and Mitigating Credit Risk

Credit Risk Mitigants (CRM) like financial collateral, non-financial collateral and guarantees are used to mitigate credit
risk exposure. Availability of CRM either reduces effective exposure on the borrower (in case of collaterals) or transfers
the risk to the more creditworthy party (in case of guarantees). A major part of the eligible financial collaterals is in the
form of cash, the most liquid of assets and thus free from any market and liquidity risks. The Bank has formulated a
Collateral Management Policy as required under Basel II guidelines.

Credit Risk Asset Quality

Distribution of Credit Risk by Asset Quality

The rating scale for large and mid corporates is a 14-point granular scale that ranges from AB-AAA to AB-D. The rating
tool for SME has an 8-point rating scale, ranging from SME 1 to SME 8. There are separate rating tools for financial
companies and schematic SME and retail agricultural exposures.

Definitions of Non-Performing Assets

Advances are classified into performing and non-performing advances (NPAs) as per RBI guidelines. NPAs are further
classified into sub-standard, doubtful and loss assets based on the criteria stipulated by RBI. An asset, including a
leased asset, becomes non-performing when it ceases to generate income for the Bank.

An NPA is a loan or an advance where:

interest and/or instalment of principal remains overdue for a period of more than 90 days in respect of a term loan;

the account remains “out-of-order’’ in respect of an Overdraft or Cash Credit (OD/CC);

the bill remains overdue for a period of more than 90 days in case of bills purchased and discounted;

4. a loan granted for short duration crops will be treated as an NPA if the installments of principal or interest thereon

remain overdue for two crop seasons; and

5. a loan granted for long duration crops will be treated as an NPA if the installments of principal or interest thereon

remain overdue for one crop season.

In respect of derivative transactions, the overdue receivables representing positive mark-to-market value of a
derivative contract, if these remain unpaid for a period of 90 days from the specified due date for payment.

Definition of Impairment

At each balance sheet date, the Bank ascertains if there is any impairment in its assets. If such impairment is detected,
the Bank estimates the recoverable amount of the asset. If the recoverable amount of the asset or the cash-generating
unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is recognized in the profit and loss account.

158

CREDIT RISK EXPOSURES

Total Gross Credit Risk Exposure Including Geographic Distribution of Exposure – Position as on 31 March,
2011

Fund Based

Non Fund Based *

Total

Domestic

192,880.12

72,125.89

265,006.01

Overseas

21,832.79

8,759.79

30,592.58

(` in crores)

Total

214,712.91

80,885.68

295,598.59

* Non-fund based exposures are guarantees given on behalf of constituents and acceptances and endorsements.

Distribution of Credit Risk Exposure by Industry Sector – Position as on 31 March, 2011

Sr. No.

Industry Classification

10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

21.

22.

23.

Mining and quarrying (incl. coal)

Iron and Steel

Other Metal and Metal Products

All Engineering

- Of which Electronics

Power Generation & Distribution

Cotton Textiles

Jute Textiles

Other Textiles

Sugar

Tea

Food Processing

Edible Oils and Vanaspati

Beverages & Tobacco

Wood & wood products

Paper and Paper Products

Rubber, plastic and their products

Chemicals and chemical products

- Of which Petrochemicals

- Of which Drugs & Pharmaceuticals

Glass and glassware

Cement and cement products

Leather and Leather Products

Gems and Jewellery

Construction

Petroleum, coal products and nuclear fuels

(` in crores)

Amount

Fund Based

Non-Fund Based

798.88

6,615.02

1,167.86

3,408.43

365.52

6,234.81

2,533.45

31.09

1,597.05

1,007.85

80.64

2,919.02

1,257.48

303.92

351.28

937.60

614.61

7,817.20

2,234.07

1,938.06

128.93

1,841.52

95.20

2,245.15

695.12

340.58

328.19

4,589.93

1,738.55

6,295.54

75.56

10,875.80

387.05

0.95

350.88

91.41

1.57

123.46

2,336.21

42.66

126.00

409.88

283.68

3,841.41

1,461.80

721.00

22.05

286.08

6.79

5,824.70

1,073.41

216.37

159

Sr. No.

Industry Classification

24.

25.

26.

27.

28.

29.

Vehicles, vehicle parts and transport equipments

Computer Software

Infrastructure (excluding Power)

- Of which Roads & ports

- Of which Telecommunication

NBFCs

Trade

Other Industries

- Of which Banking & Finance

- Of which Commercial Real Estate

- Of which Shipping

- Of which Professional Services

30.

Residual exposures to balance the total exposure

Total

(` in crores)

Amount

Fund Based

Non-Fund Based

1,605.67

1,966.04

13,803.58

3,466.77

5,498.19

6,531.16

7,725.30

39,764.43

13,297.45

4,972.11

1,713.64

2,589.05

100,294.04

214,712.91

381.07

762.72

12,665.25

2,692.25

1,707.20

1,350.42

11,484.55

11,146.46

5,645.37

464.01

732.29

109.19

3,842.64

80,885.68

As on 31 March, 2011, the Bank’s exposure to the industries stated below was more than 5% of the total gross credit
exposure:

Sr. No.

Industry Classification

Percentage of the total gross credit exposure

Infrastructure

Trade

Banking & Finance

Power Generation & Distribution

Residual Contractual Maturity breakdown of Assets – Position as on 31 March, 2011

Maturity Bucket

1 day

2 days to 7 days

8 days to 14 days

15 days to 28 days

29 days and upto 3 months

Over 3 months and upto 6 months

Over 6 months and upto 1 year

Over 1 year and upto 3 years

Over 3 years and upto 5 years

Over 5 years

Total

Cash, balances
with RBI and
other banks

Investments

Advances

3,218.39

1,406.53

984.82

1,879.06

4,151.54

1,606.29

2,218.11

1,889.60

727.81

3,326.51

21,408.66

844.61

1,794.91

3,247.24

4,609.39

10,350.69

5,319.04

9,335.13

13,416.94

8,181.92

14,891.75

71,991.62

2,874.45

3,635.78

1,003.04

2,440.76

9,587.40

8,162.21

11,815.40

35,236.92

19,459.50

48,192.37

142,407.83

(` in crores)

Other assets
including
fixed assets

33.40

100.29

125.34

717.85

830.77

680.57

317.36

94.82

4,004.87

6,905.27

160

Movement of NPAs and Provision for NPAs (including NPIs) – Position as on 31 March, 2011

Amount of NPAs (Gross)

- Substandard

- Doubtful 1

- Doubtful 2

- Doubtful 3

- Loss

Net NPAs

NPA Ratios

- Gross NPAs to gross advances (%)

- Net NPAs to net advances (%)

Movement of NPAs (Gross)

- Opening balance as on 1.4.2010

- Additions

- Reductions

- Closing balance as on 31.3.2011

Movement of Provision for NPAs

- Opening balance as on 1.4.2010

- Provision made in 2010-11

- Write – offs/Write – back of excess provision

- Closing balance as on 31.3.2011

NPIs and Movement of Provision for Depreciation on NPIs – Position as on 31 March, 2011

Amount of Non-Performing Investments

Amount of Provision held for Non-performing investments

Movement of provision for depreciation on investments

- Opening balance as on 1.4.2010

- Provision made in 2010-11

- Write – offs

- Write – back of excess provision

- Closing balance as on 31.3.2011

(` in crores)

Amount

1,599.42

458.45

338.54

59.18

15.09

728.16

410.35

1.11%

0.29%

1,318.00

1,448.31

(1,166.89)

1,599.42

899.00

995.26

(707.52)

1,186.74

(` in crores)

Amount

12.43

170.18

124.68

(25.41)

269.45

Credit Risk: Use of Rating Agency under the Standardized Approach

The RBI guidelines on Basel II require banks to use ratings assigned by specified External Credit Assessment Agencies
(ECAIs) namely CRISIL, CARE, ICRA & Fitch (India) for domestic counterparties and Standard & Poor’s, Moody’s and
Fitch for foreign counterparties.

The Bank is using issuer ratings and short-term and long-term instrument/bank facilities’ ratings which are assigned
by the accredited rating agencies viz. CRISIL, ICRA, Fitch and CARE and published in the public domain to assign risk-
weights in terms of RBI guidelines. In respect of claims on non-resident corporates and foreign banks, ratings assigned

161

by international rating agencies i.e. Standard & Poor’s, Moody’s and Fitch is used. For exposures with contractual
maturity of less than one year, a short-term rating is used. For cash credit facilities and exposures with contractual
maturity of more than one year, long-term rating is used.

Issue ratings would be used if the Bank has an exposure in the rated issue and this would include fund-based and
non-fund based working capital facilities as well as loans and investments. In case the Bank does not have exposure
in a rated issue, the Bank would use the issue rating for its comparable unrated exposures to the same borrower,
provided that the Bank’s exposures are pari-passu or senior and of similar or lesser maturity as compared to the rated
issue. Structured Obligation (SO) ratings are not used unless the Bank has a direct exposure in the ‘SO’ rated issue. If an
issuer has a long-term or short-term exposure with an external rating that warrants a risk weight of 150%, all unrated
claims on the same counterparty, whether short-term or long-term, also receive 150% risk weight, unless the Bank
uses recognized credit risk mitigation techniques for such claims.

Issuer ratings provide an opinion on the general credit worthiness of the rated entities in relation to their senior
unsecured obligations. Therefore, issuer ratings would be directly used to assign risk-weight to unrated exposures of
the same borrower.

Details of Gross Credit Risk Exposure (Fund based and Non-fund based) based on Risk-Weight – Position as on
31 March, 2011

Below 100% risk weight

100% risk weight

More than 100% risk weight

Deduction from capital funds

- Investments in subsidiaries

VI. CREDIT RISK MITIGATION

(` in crores)

Amount

171,860.72

106,798.30

16,939.57

220.55

The Bank uses various collaterals both financial as well as non-financial, guarantees and credit insurance as credit
risk mitigants. The main financial collaterals include bank deposits, NSC/KVP/LIP, and gold, while main non-financial
collaterals include land and building, plant and machinery, residential and commercial mortgages. The guarantees
include guarantees given by corporate, bank and personal guarantees. This also includes loan and advances guaranteed
by Export Credit & Guarantee Corporation Limited (ECGC), Credit Guarantee Fund Trust for Small Industries (CGTSI),
Central Government and State Government.

The Bank has in place a collateral management policy, which underlines the eligibility requirements for credit risk
mitigants (CRM) for capital computation as per Basel II guidelines. The Bank reduces its credit exposure to counterparty
with the value of eligible financial collateral to take account of the risk mitigating effect of the collateral. To account
for the volatility in the value of collateral, haircut is applied based on the type, issuer, maturity, rating and remargining/
revaluation frequency of the collateral. The Bank revalues various financial collaterals at varied frequency depending on
the type of collateral. The Bank has a valuation policy that covers processes for collateral valuation and empanelment
of valuers.

Details of total credit exposure (after on or off balance sheet netting) as on 31 March, 2011

Covered by :

Eligible financial collaterals after application of haircuts

- Guarantees/credit derivatives

162

(` in crores)

Amount

16,096.19

2,506.52

VII. SECURITISATION

The primary objectives for undertaking securitisation activity by the Bank are enhancing liquidity, optimization of usage
of capital and churning of the assets as part of risk management strategy.

The securitisation of assets generally being undertaken by the Bank is on the basis of “True Sale”, which provides
100% protection to the Bank from default. All risks in the securitised portfolio are transferred to a Special Purpose
Vehicle (SPV), except where the Bank provides subordination of cash flows to Senior Pass-Through Certificate (PTC)
holders by retaining the junior tranche of the securitised pool.

The Bank enters into purchase/sale of corporate and retail loans through direct assignment/SPV. In most cases, post
securitisation, the Bank continues to service the loans transferred to the assignee/SPV. The Bank also provides credit
enhancement in the form of cash collaterals and/or by subordination of cash flows to Senior PTC holders.

The Bank follows the standardized approach prescribed by the RBI for the securitisation activities.

Gain on securitisation is recognized over the period of the underlying securities issued by the SPV. Loss on securitisation
is immediately debited to profit and loss account. In respect of credit enhancements provided or recourse obligations
(projected delinquencies, future servicing etc.) accepted by the Bank, appropriate provision/disclosure is made at the
time of sale in accordance with AS 29 ‘Provisions, contingent liabilities and contingent assets’.

The Bank uses the ratings assigned by various external credit rating agencies viz. CRISIL, ICRA, Fitch and CARE for its
securitisation exposures.

All transfers of assets under securitisation were effected on true sale basis. In the financial year ended 31 March, 2011,
the Bank has securitised `301.66 crores as an originator.

A. Banking Book

Details of Exposure Securitised by the Bank and subject to Securitisation Framework

Sr. No.
1.
2.
3.

Type of Securitisation
Total amount of exposures securitised
Losses recognised by the Bank during the current period
Amount of assets intended to be securitised within a year
Of which
- Amount of assets originated within a year before securitisation
Amount of exposures securitised
- Corporate Loans
Unrecognised gain or losses on sale
- Corporate Loans

(` in crores)

Amount
301.66
-
-

301.66

Aggregate amount of Securitisation Exposures Retained or Purchased as on 31 March, 2011 is given below

(` in crores)

Sr. No.
1.
2.
3.
4.
5.

Type of Securitisation
Retained
Securities purchased
Liquidity facility
Credit enhancement (cash collateral)
Other commitments

On Balance Sheet (Amount) Off Balance Sheet (Amount)
-
-
-
-
-

-
-
-
-
-

163

Risk-weight wise Bucket Details of the Securitisation Exposures on the Basis of Book-Value

Below 100% risk weight
100% risk weight
More than 100% risk weight
Deductions
- Entirely from Tier I capital
- Credit enhancing I/Os deducted from Total Capital
- Credit enhancement (cash collateral)

B. Trading Book

Amount
-
-
-

-
-
-

Details of Exposure Securitised by the Bank and subject to Securitisation Framework

Sr. No.

Type of Securitisation

Aggregate amount of exposures securitised by the Bank for which the Bank has
retained some exposures and which is subject to the market risk approach

(` in crores)

Capital charge
-
-
-

-
-
-

(` in crores)

Amount

NIL

Aggregate amount of Securitisation Exposures Retained or Purchased as on 31 March, 2011 is given below

(` in crores)

Sr. No.

Type of Securitisation

On Balance Sheet (Amount) Off Balance Sheet (Amount)

Retained

Securities purchased

- Corporate Loans

- Lease Rental

Liquidity facility

Credit enhancement (cash collateral)

Other commitments

52.83

167.86

Risk-weight wise Bucket Details of the Securitisation Exposures on the Basis of Book-Value

Exposures subject to Comprehensive Risk Measure for specific risk

- Retained

- Securities purchased

Exposures subject to the securitisation framework for specific risk

Below 100% risk weight

100% risk weight

More than 100% risk weight

Deductions

- Entirely from Tier I capital

- Credit enhancing I/Os deducted from Total Capital

- Credit enhancement (cash collateral)

(` in crores)

Amount Capital charge

220.69

11.97

164

VIII. MARKET RISK IN TRADING BOOK

Market risk is the risk to the Bank’s earnings and capital due to changes in the market level of interest rates, prices of
securities, foreign exchange and equities, as well as the volatilities of those changes. The Bank is exposed to market
risk through its trading activities, which are carried out both for customers and on a proprietary basis. The Bank adopts
a comprehensive approach to market risk management for its trading, investment and asset/liability portfolios. For
market risk management, the Bank uses:

• Non-statistical measures like position, gaps and sensitivities (duration, PVBP, option greeks)

•

Statistical measures like Value at risk (VaR), supplemented by Stress Tests and Scenario Analysis

Risk limits such as position, gaps and sensitivities (duration, PVBP, option greeks) are set up according to a number
of criteria including relevant market analysis, business strategy, management experience and the Bank’s risk appetite.
These limits are monitored on a daily basis and the exceptions are put up to ALCO. Risk limits are reviewed, at
least, annually or more frequently, if deemed necessary, to maintain consistency with trading strategies and material
developments in market conditions.

The Bank uses Historical Simulation and its variants for computing VaR for its trading portfolio. VaR is calculated at a
99% confidence level for a one-day holding period. The model assumes that the risk factor changes observed in the
past are a good estimate of those likely to occur in the future and is, therefore, limited by the relevance of the historical
data used. The Bank typically uses 500 days of historical data or two years of relative changes in historical rates and
prices. The method, however, does not make any assumption about the nature or type of the loss distribution. The VaR
models for different portfolios are back-tested at regular intervals and the results are used to maintain and improve
the efficacy of the model. The VaR is computed on a daily basis for the trading portfolio and reported to the senior
management of the Bank.

The VaR measure is supplemented by a series of stress tests and sensitivity analysis that estimates the likely behaviour of
a portfolio under extreme but plausible conditions and its impact on earnings and capital. The Bank undertakes stress
tests for market risks for its trading book, IRS, forex open position and forex gaps as well as for liquidity risk at the end
of each quarter.

Concentration Risk

The Bank has allocated the internal risk limits in order to avoid concentrations, wherever relevant. For example, the
Aggregate Gap Limit is allocated to various currencies and maturities as Individual Gap Limits to monitor concentrations.
Within the overall PV01 limit, a sub limit is set up which is not expected to be breached by trades linked to any
individual benchmark.

Liquidity Risk

Liquidity Risk is defined as the current and prospective risk to earnings or capital arising from a bank’s inability to meet
its current or future obligations on the due date. Liquidity risk is two-dimensional viz., risk of being unable to fund
portfolio of assets at appropriate maturity and rates (liability dimension) and the risk of being unable to liquidate an
asset in a timely manner at a reasonable price (asset dimension).

The Bank’s ALM policy defines the gap limits for its structural liquidity position. The liquidity profile of the Bank is
analyzed on a static basis by tracking all cash inflows and outflows in the maturity ladder based on the expected
occurrence of cash flows. The liquidity profile of the Bank is also estimated on a dynamic basis by considering
the growth in deposits and loans, investment obligations, etc. for a short-term period of three months. The Bank
undertakes behavioral analysis of the non-maturity products viz. savings and current deposits and cash credit/overdraft
accounts on a periodic basis, to ascertain the volatility of residual balances in those accounts. The renewal pattern and
premature withdrawals of term deposits and drawdown of unavailed credit limits are also captured through behavioral
studies. The concentration of large deposits is monitored on a periodic basis.

165

The Bank’s ability to meet its obligations and fund itself in a crisis scenario is critical and accordingly, liquidity stress tests
are conducted under different scenarios at periodical intervals to assess the impact on liquidity to withstand stressed
conditions. The liquidity positions of overseas branches are managed in line with the Bank’s internal policies and host
country regulations. Such positions are also reviewed centrally by the Bank’s ALCO along with domestic positions.

Counterparty Risk

The Bank has put in place appropriate guidelines to monitor counterparty risk covering all counterparty exposures on
banks, primary dealers and financial institutions arising out of movement in market variables. Credit exposures to issuer
of bonds, advances, etc. are monitored separately under the prudential norms for exposure to a single borrower as
per the Bank’s Corporate Credit Risk Policy or Investment Policy as applicable. Rating of counterparty banks, Primary
Dealers and NBFCs and sanctioning of limits are done as per suitable rating Model laid down by the Bank. The Bank
has also put in place the “Suitability & Appropriateness Policy” and Loan Equivalent Risk (LER) Policy to evaluate
counterparty risk arising out of all customer derivatives contracts.

Country Risk

The Bank has put in place a risk monitoring system for the management of country risk. The Bank uses the seven-
category classification i.e. insignificant, low, moderate, high, very high, restricted and off-credit followed by the Export
Credit Guarantee Corporation Ltd. (ECGC) and ratings of international rating agency Dun & Bradstreet for monitoring
the country exposures. The categorization of countries are undertaken at monthly intervals or at more frequent intervals
if the situation so warrants. Exposure to a country includes all credit-related lending, trading and investment activities,
whether cross border or locally funded. The Bank has set up exposure limits for each risk category as also per country
exposure limits and are monitored at weekly intervals. In addition exposures to high risk, very high risk, restricted and
off-credit countries are approved on a case to case basis.

Risk Management Framework for Overseas Operations

The Bank has put in place a comprehensive Risk Management Policy for its global operations, which presently includes
branches in Singapore, Hong Kong, and Dubai. It has also formulated country-specific risk policy based on the host
country regulators’ guidelines. The Asset Liability Management and all the risk exposures for the overseas operations
are monitored centrally at the Central Office.

Capital Requirement for Market Risk – Position as on 31 March, 2011

- Interest rate risk

- Equity position risk

- Foreign exchange risk (including gold)

IX. OPERATIONAL RISK

Strategies and Processes

(` in crores)

Amount of Capital Required

1,152.74

193.73

32.19

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people or systems, or from
external events. Operational risk management (ORM) framework, ORM policy, operational risk loss data collection
methodology, risk & control self-assessment framework, key risk indicator framework, roles and responsibilities of
ORM function have been approved by the Bank to ensure that operational risk within the Bank is properly identified,
assessed, monitored, controlled/mitigated and reported in a structured manner.

Based on the above policy/framework/methodologies, the Bank has initiated several measures to manage operational
risk. The Bank has put in place a hierarchical structure to effectively manage operational risk through the formation of
several internal committees viz., Operational Risk Management Committee (ORMC), Product Management Committee
(PMC), Change Management Committee (CMC), Outsourcing Committee, Software Evaluation Committee and IT

166

Security Committee. The functioning of these committees has stabilised. The Risk Department acts as the convenor
of ORMC and is a member in PMC, CMC, Outsourcing Committee, Software Evaluation Committee and IT Security
Committee.

The Bank has further enhanced its capability for effective management of operational risk with the implementation of
a software solution (OR Monitor) which creates a database on loss events experienced by the different business lines
of the Bank, identify areas which show manifestation of weak controls through Risk & Control Self Assessment (RCSA)
and Key Risk Indicator (KRI) modules, and over a period would enable the Bank to adopt sophisticated approaches for
the computation of capital for operational risk.

Structure and Organization

The Risk Management Committee (RMC) of the Board at the apex level is the policy making body. RMC is supported
by the Operational Risk Management Committee (ORMC), consisting of Senior Management personnel, which is
responsible for implementation of the Operational Risk policies of the Bank. This internal committee supervises
effective monitoring of operational risk and the implementation of software driven framework for enhanced capability
to manage operational risk. A sub-committee of ORMC (Sub-ORMC) has been constituted to assist the ORMC in
discharging its functions by deliberating the operational risk issues in detail and escalating the critical issues to ORMC.

Scope and Nature of Operational Risk Reporting and Measurement Systems

A systematic process for reporting risks, losses, “near misses” and non-compliance issues relating to operational risks
has been developed and implemented. The information gathered is being used to develop triggers to initiate corrective
actions to improve controls. All critical risks and potential loss events would be reported to the Senior Management/
ORMC/RMC as appropriate, for their directions and suggestions.

Policies for Hedging and Mitigating Operational risk

An Operational Risk Management Policy approved by the Risk Management Committee of the Board details the
framework for hedging and/or mitigating operational risk in the Bank. Business units put in place basic internal controls
as approved by the Product Management Committee to ensure appropriate controls in the operating environment
throughout the Bank. As per the policy, all new products are being vetted by the Product Management Committee to
identify and assess potential operational risks involved and suggest control measures to mitigate the risks. Each new
product or service introduced is subject to a risk review and signoff process where all relevant risks are identified and
assessed by departments independent of the risk-taking unit proposing the product. Similarly, any changes to the
existing products/processes are being vetted by the Change Management Committee. In addition to the above, the
business departments submit Action Taken Reports, after implementation of the product, to the Product Management
Committee for their review. The product is also independently reviewed by the Inspection & Audit Department of the
Bank.

Approach for Operational Risk Capital Assessment

As per the RBI guidelines, the Bank has followed the Basic Indicator Approach for the year ending 31 March, 2011. The
Bank is also ready for compilation of capital charge for operational risk under the Standardised Approach. The Bank
has put in place a structure for identifying gaps in internal controls across the entire Bank. Simultaneously, the Bank is
preparing itself for migration to the Advanced Measurement Approach. The Bank has procured a web-based solution
i.e. OpRisk Monitor from SAS for assessing/measuring and monitoring the operational risk issues.

X. INTEREST RATE RISK IN THE BANKING BOOK

The Bank assesses its exposure to interest rate risk in the banking book at the end of each quarter considering a drop
in market value of investments with 50 bps change in interest rates. Calculation of interest rate risk in the banking
book (IRRBB) is based on a present value perspective with cash flows discounted at zero coupon yields published by
National Stock Exchange (NSE) for domestic balance sheet and USD LIBOR for overseas balance sheet. Other currencies
are taken in equivalent base currencies (INR for domestic books and USD for overseas branches) as the Bank does not
have material exposures to other currencies as a percentage of the balance sheet. Cash flows are assumed to occur at

167

the middle of the regulatory buckets. Non-interest sensitive products like cash, current account, capital, volatile portion
of savings bank deposits, etc. are excluded from the computation. The Bank does not run a position on interest rate
options that might result in non-linear pay-off. Future interest cash flows from outstanding balances are included in
the analysis.

The Earnings at Risk (EaR) measures the sensitivity of net interest income to parallel movement in interest rates on the
entire balance sheet, and is reported to the senior management on a weekly basis.

Details of increase (decline) in earnings and economic value for upward and downward rate shocks based on balance
sheet as on 31 March, 2011 are given below:

Earnings Perspective

Country

India

Overseas

Total

Economic Value Perspective

Country

India

Overseas

Total

(` in crores)

Interest Rate Shock

0.50%

(67.87)

8.62

(59.25)

(-) 0.50%

67.87

(8.62)

59.25

(` in crores)

Interest Rate Shock

0.50%

310.77

35.60

346.37

(-) 0.50%

(302.66)

(36.74)

(339.40)

168

BANK’S NETWORK : LIST OF CENTRES
AS ON 31 MARCH, 2011

State/ UT
Andaman &
Nicobar UT
Andhra Pradesh

Centre

Port Blair

Adilabad
Adoni
Alamuru
Alwal
Anantapur
Bapatla
Bibinagar
Bobilli
Chevella
Chillakallu
Chinnamiram
Chirala
Chittoor
Edarapalli
Eluru
Gachibowli
Gajuwaka
Gopalapatnam
Gudivada
Guntur
Hindupur
Hyderabad
Jangareddigudem
Kadapa
Kakinada
Kamareddy
Karimnagar
Kasibugga
Khammam
Kompally
Kukatpally
Kurnool
L B Nagar
Machilipatnam
Mahbubnagar
Malkajgiri
Miryalguda
Muthukur
Nalgonda
Nandyal
Narasaraopet
Nellore

State/ UT

Centre

State/ UT

Centre

Bihar

Nizamabad
Nuzvid
Ongole
P L Puram
Paidiparru
Patancheru
Poolapalle
Proddatur
Quthbullapur
Rajahmundry
Rajam
Rajampet
Ramagundam
Repalle
Sangareddy
Sathupally
Serilingampally
Shamshabad
Srikakulam
Tadepalligudem
Tadpatri
Tenali
Tirupati
Uppal Kalan
Vijayawada
Visakhapatnam
Vizianagaram
Warangal
Zahirabad

Chandigarh UT

Chattisgarh

Arunachal Pradesh Itanagar
Assam

Barpeta Road
Biswanath Chariali
Bongaigaon
Dhubri
Dibrugarh
Duliajan
Goalpara
Golaghat
Guwahati
Jorhat
Karimganj
Khanapara
Mangaldoi
Nagaon

Nalbari
Noonmati
North Lakhimpur
Sibsagar
Silchar
Tezpur
Tinsukia
Arrah
Aurangabad
Begusarai
Bettiah
Bhagalpur
Biharsharif
Chapra
Darbhanga
Gaya
Gopalganj
Hajipur
Katihar
Kishanganj
Madhubani
Motihari
Munger
Muzaffarpur
Patna
Purnia
Saharsa
Samastipur
Sasaram
Sitamarhi
Siwan
Chandigarh
Manimajra
Abhanpur
Ambikapur
Bhatapara
Bhilai
Bilaspur
Champa
Dhamtari
Dongargarh
Durg
Jagdalpur
Kawardha

169

State/ UT

Centre

State/ UT

Centre

State/ UT

Centre

Dadra & Nagar
UT
Daman & Diu UT Daman
Delhi
Goa

Korba
Mahasamund
Manendragarh
Raigarh
Raipur
Rajim
Rajnandgaon
Sakti
Urla
Jashpurnagar
Silvassa

Delhi
Agaciam
Candolim
Mapusa
Margao
Panaji
Ponda
Vasco
Ahmedabad
Amreli
Anand
Ankleshwar
Atul
Bagasara
Bardoli
Bharuch
Bhavnagar
Bhuj
Bopal
Botad
Chandlodiya
Chhatral
Chikhli
Dahej
Dahod
Deesa
Devgad Baria
Dhoraji
Dhrangadhra
Dhrol
Dwarka
Gadhada
Gandhidham
Gandhinagar

Gujarat

170

Gariadhar
Godhra
Gondal
Halol
Harij
Himatnagar
Idar
Jamjodhpur
Jamnagar
Jetpur-Navagadh
Junagadh
Kalavad
Kalol
Keshod
Khambalia
Lathi
Madhapar
Mahuva
Manavadar
Mehsana
Metoda
Modasa
Morbi
Mundra
Nadiad
Naranpar
Navagam
Navsari
Paddhari
Palanpur
Patan
Pipavav
Porbandar
Radhanpur
Rajkot
Rajpipla
Rajula
Sanand
Surat
Surendranagar
Talaja
Tarasadi
Umbergaon
Unjha
Vadodara
Vallabh Vidyanagar
Valsad

Haryana

Vapi
Vejalpur
Veraval
Visavadar
Visnagar
Vyara
Ambala
Bahadurgarh
Bhiwani
Cheeka
Faridabad
Fatehabad
Gurgaon
Hissar
Jakhal
Jhajjar
Jind
Kaithal
Kalka
Karnal
Kundli
Kurukshetra
Manesar
Narnaul
Palwal
Panchkula
Panipat
Ratia
Rewari
Rohtak
Sadaura
Safidon
Sirsa
Sonipat
Tohana
Yamunanagar

Jammu & Kashmir

Himachal Pradesh Baddi
Shimla
Solan
Una
Jammu
Srinagar
Bokaro
Chaibasa
Daltonganj
Deoghar
Dhanbad

Jharkhand

State/ UT

Centre

State/ UT

Centre

State/ UT

Centre

Karnataka

Dumka
Gamaria
Giridih
Hazaribagh
Jamshedpur
Kodarma
Ramgarh
Ranchi
Athni
Bagalkot
Bangalore
Belgaum
Bellary
Bidadi
Bidar
Bijapur
Chamarajanagar
Chickmagalur
Chikodi
Chintamani
Chitradurga
Davangere
Devadurga
Devanahalli
Dod Ballapur
Gadag
Gangawati
Gokak
Gulbarga
Hassan
Haveri
Hoskote
Hospet
Hubli-Dharwad
Jamkhandi
Karwar
Kolar
Koppal
Kundapura
Kushalnagar
Kushtagi
Mandya
Mangalore
Manvi
Marlanhalli
Mysore
Nelamangala

Puttur
Raichur
Ranibennur
Saidapur
Sandur
Sedam
Shahpur
Shimoga
Sindhnur
Sirsi
Siruguppa
Tiptur
Tumkur
Udupi
Yadgir
Alappuzha
Aluva
Attingal
Calicut (Kozhikode)
Irinjalakuda
Kannur
Kasargod
Kazhakuttam
Kochi
Kollam
Kottakkal
Kottarakkara
Kottayam
Malappuram
Manjeri
Mavelikkara
Palai
Palakkad
Pathanamthitta
Payyannur
Perinthalmanna
Perumbavoor
Sulthanbathery
Thalassery
Thiruvananthapuram
Thodupuzha
Thrikkakara
Thrippunithura
Thrissur
Tiruvalla
Vadakara
Ashok Nagar

Kerala

Madhya Pradesh

Balaghat
Barwani
Beetul
Bhind
Bhopal
Bina
Burhanpur
Chhatarpur
Chhindwara
Damoh
Datia
Dewas
Dhar
Gawli Palasia
Guna
Gwalior
Harda
Hoshangabad
Indore
Itarsi
Jabalpur
Jhabua
Kalapipal
Katni
Khandwa
Khargone
Lasudia Mori
Mandsaur
Morena
Narsimhapur
Neemuch
Pipariya
Pithampur
Raisen
Ratlam
Rewa
Sagar
Satna
Sehore
Sendhwa
Seoni
Shahdol
Shahpura
Shajapur
Sheopur
Shivpuri
Sidhi

171

State/ UT

Centre

State/ UT

Centre

State/ UT

Centre

Maharashtra

Tikamgarh
Ujjain
Vidisha
Waidhan
Ahmednagar
Akluj
Akola
Ambernath
Amravati
Aurangabad
Badlapur
Baramati
Barshi
Beed
Bhandara
Bhiwandi
Bhusawal
Boisar
Buldhana
Chakan
Chalisgaon
Chandrapur
Chiplun
Devalali
Dhule
Dindori
Dombivali
Ghoti
Gondia
Hingna
Hinjewadi
Ichalkaranji
Islampur
Jalgaon
Jalna
Kagal
Kalyan
Karad
Khamgaon
Khed-Shivapur
Kolhapur
Lasalgaon
Latur
Malegaon
Mira-Bhayander
Miraj
Mumbai

Manipur
Meghalaya

Mizoram
Nagaland

Murbad
Nagpur
Nalasopara
Nanded
Nandurbar
Nashik
Navi Mumbai
Osmanabad
Pandharpur
Panvel
Paratwada
Parbhani
Pen
Phaltan
Pimpalgaon
Pimpri Chinchwad
Pune
Rahuri-Khurd
Ratnagiri
Sangamner
Sangli
Satara
Shikrapur
Shirdi
Shrirampur
Solapur
Tasgaon
Thane
Tuljapur
Ulhasnagar
Vasai
Virar
Wai
Waluj
Wardha
Washim
Yavatmal
Yevla
Yewat
Imphal
Jowai
Shillong
Tura
Aizawl
Dimapur
Kohima
Mokokchung

Orissa

Pondicherry UT
Punjab

Angul
Balasore
Barbil
Bargarh
Baripada
Berhampur (Ganjam)
Bhadrak
Bhanjanagar
Bhawanipatna
Bhubaneswar
Bolangir
Chandanpur
Chandikhole
Cuttack
Dhamraport
Dhenkanal
Dumuduma
Gunupur
Jagatpur
Jajpur
Jaleswar
Jatni
Jeypore
Jharsuguda
Kendrapara
Keonjhar
Nabrangpur
Nawapara (Nuapada)
Nayagarh
Nimapara
Paradip
Parlakhemundi
Puri
Rairangpur
Rajgangpur
Rayagada
Rourkela
Sambalpur
Sundargarh
Talcher
Titlagarh
Pondicherry
Abohar
Adampur
Adda Dhaka
Ajnala
Amloh

172

State/ UT

Centre

State/ UT

Centre

State/ UT

Centre

Amritsar
Bagha Purana
Banga
Barnala
Batala
Bathinda
Begowal
Bhogpur
Bikhiwind
Budhlada
Chogawan
Dasuya
Dera Baba Nanak
Derabassi
Devigarh
Dhariwal
Dhilwan
Dinanagar
Faridkot
Fatehgarh Churian
Ferozepur
Gardhiwala
Garhshankar
Gehri Mandi
Gobindgarh
Goraya
Gurdaspur
Hoshiarpur
Jagraon
Jalandhar
Jhabal Kalan
Kapurthala
Khadaur Sahib
Khanna
Kotkapura
Lambra
Landran
Ludhiana
Malerkotla
Malout
Mansa
Miani Khas
Moga
Mohali
Mukerian
Muktsar
Mundian Kalan

Rajasthan

Nabha
Nakodar
Nawanshahr
Pathankot
Patiala
Patti
Phagwara
Phillaur
Phullanwala
Qadian
Rajpura
Ramasara
Rayya
Rupnagar
Samana
Sangrur
Shahkot
Sri Hargobindpur
Sudhar
Sultanpur Lodhi
Tarn Taran
Threeke
Urmar Tanda
Abu Road
Ajmer
Alwar
Balotra
Bandikui
Banswara
Barmer
Bayana
Bharatpur
Bhilwara
Bhiwadi
Bikaner
Bilara
Bundi
Chirawa
Chittaurgarh
Churu
Dausa
Deeg
Dungarpur
Ganganagar
Hanumangarh
Jaipur
Jalore

Sikkim

Tamil Nadu

Jhalawar
Jhunjhunu
Jodhpur
Khairthal
Khandela
Khatoo Shyamji
Kherli
Kota
Lachhmangarh
Lalsot
Mahwa
Mandawa
Merta City
Mukandgarh
Nadbai
Nagar
Nagaur
Nohar
Pali
Phalodi
Pilani
Pilibanga
Pipar City
Ramgarh
Rawatbhata
Rawatsar
Reengus
Sangaria
Sawai Madhopur
Sikar
Sri Madhopur
Udaipur
Gangtok
Namchi
Rangpo
Ambattur
Ammapettai
Anthiyur
Appakudal
Aranthangi
Arni
Attur
Ayothiapatinam
Chengalpattu
Chennai
Chidambaram
Coimbatore

173

State/ UT

Centre

State/ UT

Centre

State/ UT

Centre

Cuddalore
Cumbum
Dharmapuri
Dindigul
Edanganasalai
Edappadi
Eraiyur
Erode
Hosur
Ilanji
Irungattukottai
Kallakkurichi
Kancheepuram
Kangeyam
Karaikudi
Karamadai
Karumathampatti
Karur
Kelambakkam
Kumbakonam
Labbaikudikadu
Lalgudi
Madurai
Maduranthakam
Mallasamudram
Manachanallur
Mayiladuthurai
Mecheri
Medavakkam
Mettunasuvampalayam
Mettupalayam
Mettur
Musiri
Nagapattinam
Nagercoil
Nasiyanur
Omalur
Ooty
Palladam
Pallavaram
Paramkudi
Pattukottai
Perambalur
Periasemur
Pollachi
Poonamallee
Pudukkottai

Tripura

Uttar Pradesh

Rajapalayam
Ramanathapuram
Rasipuram
Salem
Sarkarsamakulam
Sathyamangalam
Selaiyur
Sivakasi
Taramangalam
Thanjavur
Theni
Thirukarungudi
Thiruvallur
Thiruvarur
Thondamuthur
Thuraiyur
Tiruchengode
Tiruchirapalli
Tirunelveli
Tirupur
Tiruttani
Tiruvannamalai
Tuticorin
Vazhapadi
Vellakoil
Vellore
Villupuram
Virudhunagar
Agartala
Dharmanagar
Agra
Aligarh
Allahabad
Amroha
Azamgarh
Badaun
Baghpat
Bahraich
Ballia
Balrampur
Barabanki
Bareilly
Basti
Bhadohi
Bijnor
Bulandshahr
Chandausi

Uttarakhand

Deoria
Etah
Etawah
Faizabad
Farrukhabad
Fatehpur
Firozabad
Gajraula
Ghaziabad
Ghazipur
Gonda
Gorakhpur
Hapur
Hardoi
Hathras
Jaunpur
Jhansi
Kannauj
Kanpur
Khatauli
Khurja
Kosikalan
Lakhimpur-Kheri
Lucknow
Maharajganj
Mainpuri
Mathura
Meerut
Mirzapur
Moradabad
Muzaffarnagar
Najibabad
Noida
Padrauna
Pilibhit
Pratapgarh
Rae Bareli
Rampur
Saharanpur
Shahjahanpur
Sitapur
Sultanpur
Unnao
Varanasi
Vrindavan
Bazpur
Dehradun

174

State/ UT

Centre

State/ UT

Centre

West Bengal

Haridwar
Kashipur
Mussoorie
Pandri
Rishikesh
Roorkee
Rudrapur
Talli Haldwani
Alipurduar
Amtala
Andul
Arambagh
Asansol
Bagnan
Baharampur
Baidyabati
Bally
Balurghat
Bankura
Barrackpore
Baruipur
Basirhat
Belghoria
Bolpur
Bongaon
Boral
Burdwan
Chandernagore
Chinsurah
Contai
Dakshineswar
Dalkhola
Dankuni
Darjeeling
Diamond Harbour
Domjur
Dum Dum
Durgapur
Fulia
Habra
Haldia
Howrah
Jalpaiguri
Kalimpong
Kalna
Kalyani
Kanchrapara

Grand Total

Overseas

Kandi
Katwa
Kharagpur
Khardaha
Koch Bihar
Kolkata
Konnagar
Krishnanagar
Madhyamgram
Mahestala
Malda
Medinipur
Memari
Nabadwip
Nabapally
Naihati
Narendrapur
New Garia
Nimta
Panagarh
Panihati
Panskura
Puruliya
Raghunathganj
Raiganj
Rajarhat
Rajpur-Sonarpur
Rampurhat
Ranaghat
Raniganj
Rishra
Serampore
Shyamnagar
Siliguri
Singur
Suri
Tamluk
Tarakeswar
Uttarpara
921

Singapore
Hong Kong
Dubai
Shanghai
Abu Dhabi

175