Yes Bank

YES BANK - THE PROFESSIONALS’ BANK OF INDIA
AUDITORS’ REPORT ON THE FINANCIAL STATEMENTS

To the Members of YES BANK Limited
1. We have audited the attached balance sheet of YES BANK Limited (‘the Bank’) as at 31 March 2010, and the related profit and loss
account and the cash flow statement of the Bank for the year ended on that date, annexed thereto. These financial statements are the
responsibility of the Bank’s management. Our responsibility is to express our opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. The balance sheet and the profit and loss account have been drawn up in accordance with the provision of Section 29 of the Banking
Regulation Act, 1949 read with Section 211 of the Companies Act, 1956.
4. We report thereon 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) The transactions of the Bank which have come to our notice have been within the powers of the Bank;
c) In our opinion, proper books of account as required by law have been kept by the Bank in so far as it appears from our
examination of those books;
d) The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books
of account of the Bank;
e) In our opinion, the accompanying balance sheet, profit and loss account and cash flow statement dealt with by this report
comply with the Accounting Standards referred to in Sub-section (3C) of Section 211 of the Companies Act, 1956, to the
extent they are not inconsistent with the accounting policies prescribed by the Reserve Bank of India;
f) As per information and explanation given to us the Central Government has, till date, not prescribed any cess payable under
Section 441A of the Companies Act, 1956;
g) On the basis of written representations received from the Directors as on 31 March 2010, and taken on record by the Board
of Directors, we report that none of the Directors are disqualified as on 31 March 2010 from being appointed as a Director
under Section 274(1)(g) of the Companies Act, 1956; and
h) In our opinion, and to the best of our information and according to the explanations given to us, the said accounts together with
the notes thereon give the information required by the Banking Regulation Act, 1949 as well as the Companies Act, 1956 in the
manner so required for banking companies and give a true and fair view in conformity with the accounting principles generally
accepted in India:
i. in case of the balance sheet, of the state of the affairs of the Bank as at 31 March 2010;
ii. in case of the profit and loss account, of the profit for the year ended on that date; and
iii. in case of the cash flow statement, of the cash flows for the year ended on that date.
For B S R & Co.

Chartered Accountants
Akeel Master
Partner
Mumbai Membership No: 046768
27 April 2010 Firm’s Registration No: 101248W
81
Financial Statements
BALANCE SHEET AS AT MARCH 31, 2010
(Rs. in thousands)
Schedule As at As at
March 31, 2010 March 31, 2009
CAPITAL AND LIABILITIES
Capital 1 3,396,673 2,969,789
Reserves and surplus 2 27,498,830 13,272,371
Deposits 3 267,985,666 161,694,215
Borrowings 4 47,490,761 37,016,770
Other liabilities and provisions 5 17,453,177 14,054,756
TOTAL 363,825,107 229,007,901
ASSETS
Cash and balances with Reserve Bank of India 6 19,953,099 12,777,184

Balances with banks, money at call and short notice 7 6,779,384 6,449,862
Investments 8 102,099,413 71,170,194
Advances 9 221,931,232 124,030,922
Fixed assets 10 1,154,664 1,311,148
Other assets 11 11,907,315 13,268,591
TOTAL 363,825,107 229,007,901
Contingent liabilities 12 1,057,879,299 657,727,148

Bills for collection 1,534,293 1,929,344
Significant Accounting Policies and Notes to Accounts 18
forming part of financial statements
As per our report of even date attached

For B S R & Co. For and on behalf of the Board of Directors
Chartered Accountants YES BANK Limited
Akeel Master Rana Kapoor Bharat Patel S.L. Kapur

Partner Managing Director & CEO Director Non Executive Chairman
Membership No: 046768
Firm’s Registration No: 101248W
Arun K. Mago Rajat Monga Sanjeev Kapoor
Director Chief Financial Officer Company Secretary
Mumbai
April 27, 2010
82
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010
(Rs. in thousands)
Schedule Year Ended Year Ended
March 31, 2010 March 31, 2009
I. INCOME
Interest earned 13 23,697,097 20,014,348
Other income 14 5,755,320 4,369,009
TOTAL 29,452,417 24,383,357
II. EXPENDITURE
Interest expended 15 15,817,570 14,921,356
Operating expenses 16 5,001,531 4,185,452
Provisions and contingencies 17 3,855,923 2,238,129
TOTAL 24,675,024 21,344,937
III. PROFIT
Net profit for the year 4,777,393 3,038,420
Profit brought forward 4,057,754 2,450,823
TOTAL 8,835,147 5,489,243
IV. APPROPRIATIONS
Transfer to Capital Reserve 315,182 671,672
Transfer to Statutory Reserve 1,194,348 759,605
Transfer to Investment Reserve - 212
Proposed Dividend 509,501 -
Tax (including cess) on Dividend 86,590 -
Balance carried over to balance sheet 6,729,526 4,057,754
TOTAL 8,835,147 5,489,243
Significant Accounting Policies and Notes to Accounts 18

forming part of financial statements
Earning per share (Refer Sch. 18.7.6)
Basic (Rs.) 15.65 10.24
Diluted (Rs.) 14.87 10.14
(Face Value of Equity Share is Rs. 10/-)
As per our report of even date attached

Mumbai
April 27, 2010
83
Cash Flow Statements
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2010
(Rs. in thousands)
Year Ended Year Ended

March 31, 2010 March 31, 2009
Cash flow from operating activities
Net profit before taxes 7,264,854 4,659,165

Adjustment for
Depreciation for the year 302,603 301,036
Amortization of premium on investments 264,329 178,538
Provision for investments 154,103 (199,410)
Provision for standard advances 388,655 265,391
Provision/write-off of non performing advances/off balance sheet exposure 876,039 570,668
Other provisions (50,335) (19,265)
Loss from sale of fixed assets 5,917 1,574
9,206,165 5,757,697
Adjustments for :
Increase in Deposits 106,291,451 28,962,627
Increase in Borrowings 3,747,695 12,028,479
Increase/(Decrease) in Other Liabilities (374,956) 5,177,340
(Increase) in Investments (11,438,094) (3,916,648)
(Increase) in Advances (98,760,799) (30,280,932)
(Increase)/Decrease in Other Assets 3,687,663 (3,309,286)
3,152,960 8,661,580
(Payment) of direct taxes (2,757,834) (1,769,557)

Net cash generated from operating activities (A) 9,601,291 12,649,720
84
(Rs. in thousands)

March 31, 2010 March 31, 2009
Cash flow from investing activities
Purchase of Fixed Assets (146,887) (649,405)
Proceeds from sale of Fixed Assets 4,797 12,277
Changes in Capital Work-in-Progress (9,946) 35,080
Changes in Held to Maturity Investment (19,909,557) (16,295,612)
Net cash used in investing activities (B) (20,061,593) (16,897,660)
Cash flow from financing activities

Subordinated Debt raised 6,527,633 5,430,400
Innovative Perpetual Debt raised 820,000 1,754,400
Proceeds from issuance of Share Capital 426,884 11,891
Share Premium received thereon 10,191,222 2,635
Net cash generated from financing activities (C) 17,965,739 7,199,326
Net increase in cash and cash equivalents (A+B+C) 7,505,437 2,951,386
Cash and cash equivalents as at April 1 19,227,046 16,275,660

Cash and cash equivalents as at March 31 26,732,483 19,227,046
Notes to the Cash flow statement:

Cash and cash equivalents includes the following
Cash and Balances with Reserve Bank of India 19,953,099 12,777,184
Balances with Banks and Money at Call and Short Notice 6,779,384 6,449,862
Cash and cash equivalents as at March 31 26,732,483 19,227,046
As per our report of even date attached.


Mumbai
April 27, 2010
85
Schedules forming part of the Balance Sheet
(Rs. in thousands)
As at As at
March 31, 2010 March 31, 2009
SCHEDULE 1 – CAPITAL
Authorized Capital
400,000,000 equity shares of Rs. 10/- each 4,000,000 4,000,000
(March 31, 2009: 400,000,000 equity shares of Rs. 10/- each)
Issued, subscribed and paid-up capital
339,667,269 equity shares of Rs. 10/- each 3,396,673 2,969,789
(March 31, 2009 : 296,978,930 equity shares of Rs. 10/- each)
[Refer Sch 18.5.1.1]
TOTAL 3,396,673 2,969,789
SCHEDULE 2 – RESERVES AND SURPLUS
I. Statutory Reserves
Opening balance 1,633,890 874,285
Additions during the year 1,194,348 759,605
Closing balance 2,828,238 1,633,890
II. Share Premium

Opening balance 6,774,399 6,771,764
Additions during the year [Refer Sch 18.5.1.1] 10,191,222 2,635
Reduction during the year [Refer Sch 18.5.1.1] (146,065) –
Closing balance 16,819,556 6,774,399
III. Capital Reserve

Opening balance 806,116 134,444
Additions during the year [Refer Sch 18.5.1.2] 315,182 671,672
Closing balance 1,121,298 806,116
IV. Investment Reserve

Opening balance 212 –
Additions during the year [Refer Sch 18.5.1.3] – 212
Closing balance 212 212
V. Balance in Profit and Loss Account 6,729,526 4,057,754

TOTAL 27,498,830 13,272,371
86
(Rs. in thousands)
As at As at
March 31, 2010 March 31, 2009
SCHEDULE 3 – DEPOSITS
A. I. Demand Deposits
i) From banks – –
ii) From others 24,271,627 12,197,457
II. Savings Bank Deposits 3,909,904 1,920,642
III. Term Deposits
i) From banks 26,717,380 21,733,556
ii) From others 213,086,755 125,842,560
TOTAL 267,985,666 161,694,215
B. I. Deposits of branches in India 267,985,666 161,694,215
II. Deposits of branches outside India – –
TOTAL 267,985,666 161,694,215
SCHEDULE 4 – BORROWINGS
I. Innovative Perpetual Debt Instruments (IPDI) and Tier II
A. Borrowings in India
i) IPDI 2,360,000 1,540,000
ii) Upper Tier II Borrowings 5,926,000 5,926,000
iii) Lower Tier II Borrowings 8,949,000 3,349,000
TOTAL (A) 17,235,000 10,815,000
B. Borrowings outside India
i) IPDI 224,500 253,600
ii) Upper Tier II Borrowings 4,392,996 4,057,600
iii) Lower Tier II Borrowings – –
TOTAL (B) 4,617,496 4,311,200
TOTAL (A + B) 21,852,496 15,126,200
II Other Borrowings*
A. Borrowings in India
i) Reserve Bank of India – 1,000,000
ii) Other banks 6,293,000 7,450,000
iii) Other institutions and agencies** 10,717,674 8,564,587
TOTAL (A) 17,010,674 17,014,587
B. Borrowings outside India 8,627,591 4,875,983
TOTAL (A + B) 25,638,265 21,890,570
TOTAL (I + II) 47,490,761 31,016,770
*Of the above secured borrowings are Nil (March 31, 2009 : Nil)
**Comprises of refinance (borrowing) of Rs.10,717,674 thousands
(March 31, 2009: refinance (borrowing) of Rs. 8,564,587 thousands).
SCHEDULE 5 – OTHER LIABILITIES & PROVISIONS

I. Bills payable 1,240,472 3,934,431
II. Inter-office adjustments (net) – –
III. Interest accrued 2,339,734 1,959,040
IV. Proposed Dividend (including tax on dividend) 596,091 –
V. Others (including provisions)
– Provision for standard advances 1,179,863 791,208
– Others 12,097,017 7,370,077
TOTAL 17,453,177 14,054,756
87
(Rs. in thousands)
As at As at
March 31, 2010 March 31, 2009
SCHEDULE 6 – CASH AND BALANCES WITH RESERVE BANK OF INDIA
I. Cash in hand 356,647 314,503
II. Balances with Reserve Bank of India
– In current account 19,596,452 12,462,681
– In other account – –
TOTAL 19,953,099 12,777,184
SCHEDULE 7 – BALANCES WITH BANKS, MONEY AT CALL AND SHORT

NOTICE
I. In India
Balances with banks
i) in current accounts 123,184 144,722
ii) in other deposit accounts – –
Money at call and short notice
i) with banks 1,020,000 202,880
ii) with other institutions 975,464 4,250,000
TOTAL (I) 2,118,648 4,597,602
II. Outside India

i) in current accounts 1,832,036 1,852,260
ii) in other deposit accounts – –
iii) Money at call and short notice 2,828,700 –
TOTAL (II) 4,660,736 1,852,260
TOTAL (I+II) 6,779,384 6,449,862
SCHEDULE 8 – INVESTMENTS (net of provisions)

A. Investments in India
i) Government securities 67,864,767 46,801,078
ii) Other approved securities – –
iii) Shares 827,128 54,615
iv) Debentures and bonds* 8,914,521 10,241,802
v) Subsidiaries and/or joint ventures – –
vi) Others (CPs, CDs, mutual fund units etc.) 24,492,997 14,072,699
102,099,413 71,170,194
B. Investments outside India – –
TOTAL 102,099,413 71,170,194
*Includes investments in Pass Through Certificates (PTC),
Mortgage Backed Securities (MBS) and Asset Backed Securities (ABS).
88
(Rs. in thousands)
As at As at
March 31, 2010 March 31, 2009
SCHEDULE 9 – ADVANCES
A. i) Bills purchased and discounted 4,995,463 1,264,230
ii) Cash credits, overdrafts and loans repayable on demand 42,708,815 28,040,980
iii) Term loans 174,226,954 94,725,712
TOTAL 221,931,232 124,030,922
B. i) Secured by tangible assets 97,629,884 57,748,673

ii) Covered by Bank/Government guarantees 2,723,030 112,322
iii) Unsecured * 121,578,318 66,169,927
TOTAL 221,931,232 124,030,922

* includes advances of Rs. 42,143,936 thousands (March 31, 2009 Rs. 14,088,014 thousands) for
which security documentation is either being obtained or being registered and of Rs. 450,480
thousands for which intangible securities such as charge over the rights, licenses, authority etc. have
been obtained as security and estimated value of which is Rs. 7,307,300 thousands.
C. I. Advances in India
i) Priority sectors 44,916,231 33,775,504
ii) Public sector 8,429 297,559
iii) Banks 1,521,280 303,988
iv) Others 175,485,292 89,653,871
221,931,232 124,030,922
II. Advances outside India – –
TOTAL 221,931,232 124,030,922
89
(Rs. in thousands)
As at As at
March 31, 2010 March 31, 2009
SCHEDULE 10 – FIXED ASSETS
I. Premises – –
II. Other Fixed Assets (including furniture and fixtures)
At cost as on March 31 of preceding year 1,948,817 1,330,078
Additions during the year 146,887 649,405
Deductions during the year (31,675) (30,666)
Accumulated depreciation to date (923,177) (641,535)
1,140,852 1,307,282
Capital work-in-progress 13,812 3,866
TOTAL 1,154,664 1,311,148
SCHEDULE 11 – OTHER ASSETS

I. Interest accrued 2,581,825 2,256,612
II. Advance tax and tax deducted at source 6,574,976 3,817,142
III. Deferred tax asset (net) [Refer Sch 18.7.8] 652,928 463,037
IV. Others 2,097,586 6,731,800
TOTAL 11,907,315 13,268,591
SCHEDULE 12 - CONTINGENT LIABILITIES

I. Claims against the bank not acknowledged as debts – –
II. Liability for partly paid investments – –
III. Liability on account of outstanding forward exchange contracts 258,063,100 192,773,554
IV. Liability on account of outstanding derivative contracts
- Single currency Interest Rate Swaps 609,178,715 273,484,550
- Others 74,791,099 83,648,906
V. Guarantees given on behalf of constituents
- In India 44,643,647 35,755,069
- Outside India – –
VI. Acceptances, endorsements and other obligations 39,524,264 28,847,332
VII. Other items for which the bank is contingently liable
- Value dated purchase of securities 8,477,815 1,329,627
- Capital commitments 90,039 71,640
- Foreign Exchange Contracts (Tom & Spot) 23,110,620 41,816,470
TOTAL 1,057,879,299 657,727,148
90
Schedules forming part of the Proﬁt and Loss Account

(Rs. in thousands)
Year ended Year ended

March 31, 2010 March 31, 2009
SCHEDULE 13 – INTEREST EARNED
I. Interest/discount on advances/bills 17,715,013 14,878,074
II. Income on investments 5,858,892 4,995,991
III. Interest on balances with Reserve Bank of India and other inter-bank funds 86,860 115,123
IV. Others 36,332 25,160
TOTAL 23,697,097 20,014,348
SCHEDULE 14 – OTHER INCOME
I. Commission, exchange and brokerage 3,791,084 2,257,734
II. Profit on the sale of investments (net) 986,236 1,486,376
III. Profit /(Loss) on the revaluation of investments (net) – –
IV. (Loss) on sale of land, building and other assets (5,917) (1,574)
V. Profit on exchange transactions (net) 441,234 281,096
VI. Income earned by way of dividends, etc. from subsidiaries,

companies and/or joint ventures abroad/in India – –
VII. Miscellaneous income 542,683 345,377
TOTAL 5,755,320 4,369,009
91
(Rs. in thousands)

March 31, 2010 March 31, 2009
SCHEDULE 15 – INTEREST EXPENDED
I. Interest on deposits 12,534,411 12,270,501
II. Interest on Reserve Bank of India/inter-bank borrowings / Tier I and Tier II debt
instruments 3,025,744 2,531,449
III. Others 257,415 119,406
TOTAL 15,817,570 14,921,356
SCHEDULE 16 – OPERATING EXPENSES

I. Payments to and provisions for employees 2,568,885 2,180,169
II. Rent, taxes and lighting 730,495 563,421
III. Printing and stationery 39,618 43,125
IV. Advertisement and publicity 107,931 14,844
V. Depreciation on Bank's property 302,603 301,036
VI. Directors' fees, allowances and expenses 3,457 3,777
VII. Auditors' fees and expenses 4,150 3,789
VIII. Law charges 8,027 6,539
IX. Postage, telegrams, telephones, etc. 72,140 90,429
X. Repairs and maintenance 45,356 38,990
XI. Insurance 15,959 13,502
XII. Other expenditure 1,102,910 925,831
TOTAL 5,001,531 4,185,452
SCHEDULE 17 – PROVISIONS & CONTINGENCIES

I. Provision for taxation [Refer Sch 18.6.1] 2,487,461 1,620,745
II. Provision for investments 154,103 (199,410)
III. Provision for standard advances 388,655 265,391
IV. Provision/ write off for non performing advances/ off balance sheet exposures 876,039 570,668
V. Other provisions [Refer Sch 18.7.9] (50,335) (19,265)
TOTAL 3,855,923 2,238,129
92
Notes forming part of the Accounts for the year ended March 31, 2010
18.1 Background
YES BANK Limited (the ‘Bank’ or ‘YES BANK’) is a private sector Bank promoted by the late Mr. Ashok Kapur and Mr. Rana
Kapoor.YES BANK Limited is a publicly held Bank engaged in providing a wide range of banking and financial services.YES BANK
Limited is a banking company governed by the Banking Regulation Act, 1949. The Bank was incorporated as a limited company
under the Companies Act, 1956, on November 21, 2003. The Bank received the licence to commence banking operations from
the Reserve Bank of India (‘RBI’) on May 24, 2004. Further, YES BANK was included to the Second Schedule of the Reserve
Bank of India Act, 1934 with effect from August 21, 2004.
18.2 Basis of preparation
The financial statements have been prepared in accordance with requirements prescribed under the Third Schedule (Form A
and Form B) of the Banking Regulation Act, 1949. The accounting and reporting policies of the Bank used in the preparation of
these financial statements conform to Generally Accepted Accounting Principles in India (Indian GAAP), the guidelines issued by
Reserve Bank of India (RBI) from time to time, the Accounting Standards (AS) issued by the Institute of Chartered Accountants
of India (ICAI) and notified by the Companies (Accounting Standards) Rules, 2006 to the extent applicable and practices
generally prevalent in the banking industry in India. The Bank follows the accrual method of accounting, except where otherwise
stated, and the historical cost convention.
18.3 Use of estimates
The preparation of financial statements requires the management to make estimates and assumptions considered in the
reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the
reported income and expenses during the reporting period. Management believes that the estimates used in the preparation of
the financial statements are prudent and reasonable. Future results could differ from these estimates. Any revision to accounting
estimates is recognised prospectively in current and future periods.
18.4 Significant Accounting Policies
18.4.1 Revenue recognition
Revenue is recognized to the extent it is probable that the economic benefits will flow to the Bank and the revenue can be
reliably measured.
• Interest income is recognised in the profit and loss account on accrual basis, except in the case of non-performing assets.
Interest on non-performing assets is recognized upon realisation as per the prudential norms of the RBI.
• Revenue, in certain structured transactions where interest income is partially receivable in advance is recognised when due.
• Dividend income is recognised when the right to receive payment is established.
• Commission on guarantees issued by the Bank is recognised as income on yearly basis over the period of the guarantee,
except for guarantee commission not exceeding Rs. 100 thousands, which is recognised in the profit and loss account at
the time of issue of the guarantee.
• Commission on Letters of Credit (‘LC’) issued by the Bank is recognised as income at the time of issue of the LC.
• Income on discounted instruments is recognised over the tenure of the instrument on a straight-line basis.
• Revenue from financial advisory services is recognized based on milestones achieved as per terms of agreement with client.
• Other fees and commission income are recognised on accrual basis.
93
18.4.2 Investments
Classification and valuation of the Bank’s investments are carried out in accordance with RBI Circular DBOD. No. BP. BC.
3/21.04.141/2009-10 dated 1 July 2009 and Fixed Income Money Market and Derivative Association (FIMMDA) guidelines
FIMCIR/2009-10/50 dated March 17, 2010.
a) Accounting and Classification
Investments are recognised using the value date basis of accounting. In compliance with RBI guidelines, all investments, which
cover both debt and equity securities, are categorized as ‘Held for trading’ (‘HFT’), ‘Available for sale’ (‘AFS’) or “Held to
maturity” (‘HTM’) at the time of its purchase. For the purpose of disclosure in the balance sheet, investments are classified
as disclosed in Schedule 8 (‘Investments’) under six groups (a) government securities (b) other approved securities (c) shares
(d) bonds and debentures (e) subsidiaries and joint ventures and (f) others.
b) Cost of acquisition
Costs such as brokerage, commission, etc. pertaining to investments, paid at the time of acquisition are charged to the profit and
loss account.
c) Basis of classification
Securities that are held principally for resale within 90 days from the date of purchase are classified under the HFT category.
Investments that the Bank intends to hold till maturity are classified under the HTM category. Securities which are not classified
in the above categories are classified under the AFS category.
d) Transfer between categories
Reclassification of investments from one category to the other, if done, is in accordance with RBI guidelines and any such transfer
is accounted for at the acquisition cost/ book value/ market value, whichever is lower, as at the date of transfer. Depreciation, if
any, on such transfer is fully provided for.
e) Valuation
Investments categorized under AFS and HFT categories are marked to market on a periodical basis as per relevant RBI guidelines.
Net depreciation, if any, in any classification mentioned in Schedule 8 (‘Investments’) is recognised in the profit and loss account.
The net appreciation if any, under each classification is ignored, except to the extent of depreciation previously provided. The
book value of individual securities is not changed consequent to periodic valuation of investments.
Investments classified under the HTM category are carried at their acquisition cost and any premium over the face value, paid
on acquisition, is amortised on a straight-line basis over the remaining period to maturity. Amortization expense of premia on
investments in the Held to Maturity (HTM) category is deducted from interest income. Where in the opinion of management, a
diminution, other than temporary in the value of investments classified under HTM has taken place, suitable provisions are made.
Treasury Bills, Commercial Paper and Certificates of deposit being discounted instruments, are valued at carrying cost.
The market/ fair value applied for the purpose of periodical valuation 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,
Subsidiary General Ledger (‘SGL’) account transactions, the price list published by RBI or the prices periodically declared by
Primary Dealers’ Association of India jointly with Fixed Income Money Market and Derivatives Association (‘FIMMDA’).
The market/fair value of unquoted government securities included in the ‘Available for Sale’ and ‘Held for Trading’ category
is determined as per the rates published by FIMMDA. Further, in the case of unquoted fixed income securities (other than
government securities), valuation is carried out by applying an appropriate mark-up (reflecting associated credit risk) over the
Yield to Maturity (‘YTM’) rates of government securities. Such mark-up and YTM rates applied are as per the relevant rates
published by FIMMDA.
Quoted equity shares are valued at their closing price on a recognised stock exchange. Unquoted equity shares are valued at
the book value if the latest balance sheet is available, else, at Re. 1 per company, as per relevant RBI guidelines.
At the end of each reporting period, security receipts issued by the asset reconstruction company are valued in accordance
with the guidelines applicable to such instruments, prescribed by RBI from time to time. Accordingly, in cases where the cash
94
flows from security receipts issued by the asset reconstruction company are limited to the actual realization of the financial
assets assigned to the instruments in the concerned scheme, the Bank reckons the net asset value obtained from the asset
reconstruction company from time to time, for valuation of such investments at each reporting date.
Mutual Fund units are valued at their net asset value on the valuation date.
f) Accounting for repos/reverse repos
Repurchase (repos) and reverse repurchase (reverse repos) transactions are accounted for on outright sale and outright
purchase basis respectively in line with RBI guidelines. The difference between the clean price of first leg and the clean price of
the second leg is recognised as interest income/expense over the period of transaction. However, depreciation in the value, if any,
compared to the original cost, is provided for.
In respect of repo transactions under Liquidity Adjustment Facility (LAF) with RBI, money borrowed from RBI are credited to
borrowing account and reversed on maturity of the transaction. Costs thereon are accounted for as interest expense. In respect
of reverse repo transactions under LAF, money paid to RBI are debited to lending account and reversed on maturity of the
transaction. Revenues thereon are accounted as interest income.
18.4.3 Advances
Advances are classified as performing and non-performing based on the relevant RBI guidelines. Advances are stated
net of specific loan loss provisions, interest in suspense, Export Credit Guarantee Corporation of India Limited (‘ECGC’)
claims received, inter-bank participation certificates issued and bills rediscounted. Specific loan loss provisions in respect of
non-performing advances are made based on management’s assessment of the degree of impairment of the advances, subject
to the minimum provisioning level prescribed in relevant RBI guidelines.
As per the RBI guidelines a general provision is made on all standard advances based on the category of advances as prescribed
in the said guidelines. The Bank also maintains additional general provisions on standard exposure based on the internal credit
rating matrix. These provisions are included in Schedule 5 - ‘Other liabilities and provisions - Others’.
In addition to the provisions required according to the asset classification status, provisions are made for individual country
exposures (other than for home country exposure) in accordance with RBI guidelines. Countries are categorized into seven risk
categories namely insignificant, low, moderate, high, very high, restricted and off-credit and provisioning is done in respect of that
country where the net funded exposure is one per cent or more of the Bank’s total assets.
In respect of restructured standard and sub-standard assets, provision is made for the present value of principal and interest
component sacrificed at the time of restructuring the assets, based on the RBI guidelines.
Amounts recovered against debts written off in earlier years and provisions no longer considered necessary in the context of
the current status of the borrower are recognised in the profit and loss account.
18.4.4 Securitization transactions
The Bank enters into securitization transactions wherein corporate loans are sold to a Special Purpose Vehicle (‘SPV’). These
securitization transactions are accounted for in accordance with the RBI guidelines on ‘Securitization of Standard Assets’.
Securitized assets are derecognised upon sale if the Bank surrenders control over the contractual rights that comprise the
financial asset and fulfils other conditions as per the applicable extant RBI guidelines.
Gain on securitization is amortised over the life of the securities issued by the SPV. Losses are recognised immediately.
Sales and transfers that do not meet the criteria for surrender of control are accounted for as secured borrowings.
18.4.5 Transactions involving foreign exchange
Monetary foreign currency assets and liabilities are translated at the balance sheet date at rates notified by the Foreign
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Exchange Dealers’ Association of India (‘FEDAI’). Foreign exchange contracts outstanding at the balance sheet date are
marked to market at rates notified by FEDAI for specified maturities, suitably interpolated for in-between maturity contracts
as specified by FEDAI, and are stated at net present value based on LIBOR/SWAP curves of the respective currencies for
contracts of maturities over 12 months (Long Term Forex Contract). The resulting profits or losses are recognised in the
profit and loss account.
The premium or discount arising on inception of forward exchange contracts that are entered into to establish the amount of
reporting currency required or available at the settlement date of a transaction is amortised over the life of the contract. Premia/
discounts on foreign exchange swaps, that are used to cover risks arising from foreign currency assets and liabilities, are amortised
over the life of the swap.
Income and expenditure in foreign currency are accounted for at exchange rates prevalent on the date of the transaction.
In accordance with Accounting Standard 11 ‘The Effects of changes in Foreign Exchange Rates’ issued by the Institute of Chartered
Accountants of India (‘ICAI’), contingent liabilities in respect of outstanding foreign exchange forward contracts, derivatives,
guarantees, endorsements and other obligations are stated at the exchange rates notified by FEDAI corresponding to the
balance sheet date.
18.4.6 Earnings per share
The Bank reports basic and diluted earnings per equity share in accordance with (AS) 20, ‘Earnings per Share’ prescribed by the
Companies (Accounting Standards) Rules, 2006. Basic earnings per equity share have been computed by dividing net profit for
the year by the weighted average number of equity shares outstanding for the period. Diluted earnings per equity share have
been computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the
period except where the results are anti dilutive.
18.4.7 Accounting for derivative transactions
Derivative transactions comprise of forward rate agreements, swaps and option contracts. The Bank undertakes derivative
transactions for market making/trading and hedging on-balance sheet assets and liabilities. All market making/trading transactions
are marked to market on a periodic basis and the resultant unrealised gains/losses are recognised in the profit and loss account.
Derivative transactions that are undertaken for hedging are accounted for on accrual basis.
Premia received on Options transactions are recorded under Other Income. The amounts received/paid on cancellation of
Option contracts are recognised as realized gains/losses on Options. Charges receivable/ payable on cancellation/ termination
of foreign exchange forward contracts and swaps are recognised as income/ expense on the date of cancellation/ termination
under Other Income.
The requirement for collateral and credit risk mitigation on derivative contracts is assessed based on internal credit policy.
Provisions for overdues, if any, are made as per the relevant RBI guidelines.
As per the RBI guidelines on ‘Prudential Norms for Off-balance Sheet Exposures of Banks’ a general provision is made on
the current gross marked to market gain of the contract for all outstanding interest rate and foreign exchange derivative
transactions.
18.4.8 Fixed assets
Fixed assets are stated at cost less accumulated depreciation and provision for impairment. Cost comprises the purchase price
and any cost attributable for bringing the asset to its working condition for its intended use.
Fixed assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount
of an asset with future net discounted cash flows expected to be generated by the asset. If such assets are considered to be
impaired, the impairment is recognised by debiting the profit and loss account and is measured as the amount by which the
carrying amount of the assets exceeds the fair value of the assets.
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18.4.9 Depreciation
Depreciation on fixed assets is provided on straight-line method, over estimated useful lives, as determined by the management,
at the rates mentioned below which are higher than or equal to the corresponding rates prescribed in Schedule XIV to the
Companies Act, 1956:
Class of asset Rates of depreciation per annum

Office equipment 16.21%
Computer hardware 33.33%
Computer software 25.00%
Vehicles 20.00%
Furniture and Fixtures 6.33%
Leasehold improvements to premises Over the lease period.
Assets costing less than Rs. 5,000 are fully depreciated in the year of purchase.
For assets purchased/sold during the year, depreciation is being provided on pro rata basis by the Bank.
18.4.10 Retirement and employee benefits
Leave salary
The employees of the Bank are entitled to carry forward a part of their unavailed/unutilised leave subject to a maximum limit.
The employees cannot encash unavailed/unutilised leave. The Bank has computed the leave compensated absence provision as
per revised Accounting Standard 15 – Employee Benefits.
Gratuity
The Bank provides for gratuity, a defined benefit retirement plan, covering eligible employees. The plan provides for lump sum
payments to vested employees at retirement or upon death while in employment or on termination of employment for an
amount equivalent to 15 days’ eligible salary payable for each completed year of service if the service is more than 5 years.
The Bank accounts for the liability for future gratuity benefits using the projected unit cost method based on annual actuarial
valuation.
The Bank recognises the actuarial gains and losses during the year in which the same are incurred.
Provident fund
In accordance with law, all employees of the Bank are entitled to receive benefits under the provident fund, a defined contribution
plan in which both the employee and the Bank contribute monthly at a predetermined rate. The Bank has no liability for
future provident fund benefits other than its annual contribution and recognises such contributions as an expense in the year
incurred.
18.4.11 Leases
Leases where the lessor effectively retains substantially all risks and benefits of ownership are classified as operating leases.
Operating lease payments are recognized as an expense in the profit and loss account on a straight-line basis over the lease
term.
18.4.12 Income taxes
Tax expense comprises of current and deferred tax. Current income tax is measured as the amount expected to be paid to
the tax authorities in accordance with the Income Tax Act, 1961 and as per Accounting Standard 22 - Accounting for Taxes on
Income issued by the Institute of Chartered Accountants of India’. The levy of Fringe Benefit Tax is not applicable as the Finance
(No.2) Act, 2009 has abolished the tax with effect from April 1, 2009.
Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. In
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situations where the Bank has unabsorbed depreciation and carry forward tax losses, all deferred tax assets are recognised only
if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits.
The carrying amount of deferred tax assets are reassessed and reviewed at each balance sheet date. The Bank recognises
deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient
future taxable income will be available against which such deferred tax assets can be realised.
18.4.13 Provisions and Contingent Assets / Liabilities
The Bank creates a provision when there is a present obligation as a result of a past event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the obligation. A disclosure for contingent liability is made when
there is a possible obligation or a present obligation that may but probably will not require an outflow of resources. 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.
Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable
that an outflow of resources would be required to settle the obligation, the provision is reversed.
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.
18.4.14 Employee Stock Compensation Cost
Measurement and disclosure of the employee share-based payment plans is done in accordance with the Guidance Note on
Accounting for Employee Share-based Payments, issued by the ICAI.The Bank measures compensation cost relating to employee
stock options using the intrinsic value method. Compensation cost is measured by the excess, if any, of the fair market price of
the underlying stock (i.e. the last closing price on the stock exchange on the day preceding the date of grant of stock options)
over the exercise price. The exercise price of the Bank’s stock option is the last closing price on the stock exchange on the day
preceding the date of grant of stock options and accordingly there is no compensation cost under the intrinsic value method.
18.5 Statutory disclosures as per RBI
18.5.1 Capital
18.5.1.1 Equity Issue:
During the financial year 2009-10, the Bank has issued 38,362,709 equity shares of Rs. 10 each for cash pursuant to a Qualified
Institutions Placement (QIP) at Rs. 269.50 aggregating to Rs. 10,338,750 thousands. The Bank also issued 4,325,630 shares
pursuant to the exercise of stock option aggregating to Rs. 279,355 thousands. The Bank accreted Rs. 10,045,157 thousands (net
of share issue expenses of Rs. 146,065 thousands) as premium, on the QIP and stock options excercised.
In connection with the QIP issue, the Bank has incurred share issue expenses aggregating to Rs. 146,065 thousands.The proposed
payment of the issue expenses is higher than the limit prescribed under Section 13 of the Banking Regulation Act, 1949. In this
connection, the Bank has written to the Reserve Bank of India seeking its approval, which is awaited. The Bank has utilized the
share premium account for meeting the said share issue expenses.
During the financial year 2008-09, the Bank has issued 1,189,180 equity shares of Rs. 10 each for cash pursuant to the exercise
of stock options by certain employees. The Bank collected Rs. 2,635 thousands as premium on allotment of stock options.
18.5.1.2 Capital Reserve
Profit on sale of investments in the HTM category is credited to the profit and loss account and thereafter appropriated to
capital reserve (net of applicable taxes and transfer to statutory reserve requirements). During the year Rs. 315,182 thousands
(previous year: Rs. 671,672 thousands) were transferred to capital reserve.
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18.5.1.3 Investment Reserve
The Bank has transferred Rs. Nil (Previous year: Rs. 212 thousands) towards Investment Reserve on provisions credited to profit
and loss account.
18.5.1.4 Capital Adequacy Ratio
Capital Adequacy Ratio as per RBI guidelines (New Capital Adequacy Framework (NCAF) dated February 08, 2010, generally
referred to as Basel II) as at March 31, 2010 is given below:
(Rs. in thousands)
As at As at
March 31, 2010 March 31, 2009
Tier-1 capital 32,775,941 17,529,573
Tier-2 capital 19,794,338 13,144,084
Total capital 52,570,279 30,673,657
Credit Risk – Risk Weighted Assets (RWA) 234,907,519 167,742,944
Market Risk – RWA 9,991,399 9,996,677
Operational Risk – RWA 10,225,395 6,751,364
Total risk weighted assets 255,124,313 184,490,985
Tier-1 capital adequacy ratio (%) 12.9 9.5
Tier-2 capital adequacy ratio (%) 7.7 7.1
Total capital adequacy ratio (%) 20.6 16.6
Amount raised by issue of IPDI* 2,574,400 1,754,400
Amount raised by issue of Upper Tier II instruments* 10,284,033 9,356,400

*Outstanding as at March 31.
As at March 31, 2010, the Bank is required to maintain minimum capital which is higher of the minimum capital requirement under
Basel II framework or 90% (100% as at March 31, 2009 ) of the minimum capital requirement under Basel I framework. As at March
31,2010, the capital funds of the Bank are higher than the minimum capital requirement mentioned above.
18.5.1.5 Subordinated Debt
During the financial year 2009-10, the Bank has raised Tier II Debt instruments amounting to Rs. 6,527,633 thousands and
Innovative Perpetual Debt Instruments (IPDI) amounting to Rs. 820,000 thousands. Details of the same are as follows:
Tier II Debt Instruments
(Rs. in thousands)
Particulars Nature of Security Date of Issue Coupon Rate (%) Tenure Amount
Lower Tier II Debentures September 30, 2009 9.65% 10 years & 7 months 2,600,000
Upper Tier II Bonds September 30, 2009 6M EURIBOR + 15 years (With call option 927,633*
3.80% after 10 years)
Lower Tier II Debentures January 22, 2010 9.65% 10 years 3,000,000

TOTAL 6,527,633
*Borrowings in foreign currency converted at the rate prevalent on the date of borrowing.
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Innovative Perpetual Debt Instruments (IPDI)
(Rs. in thousands)
Tier I Promissory Note March 05, 2010 10.25% Perpetual (With call option 820,000
Perpetual after 10 years)
TOTAL 820,000
During the financial year 2008-09, the Bank has raised Tier II Debt instruments amounting to Rs. 5,430,400 thousands and Innovative
Perpetual Debt Instruments (IPDI) amounting to Rs. 1,754,400 thousands. Details of the same are as follows:
Tier II Debt Instruments
(Rs. in thousands)
Upper Tier II Bonds June 27, 2008 300 bps over 15 years 3,430,400*
applicable LIBOR
Upper Tier II Debentures September 15, 2008 11.75% 15 years 2,000,000
TOTAL 5,430,400
Innovative Perpetual Debt Instruments (IPDI)

(Rs. in thousands)
Tier I Perpetual Bonds June 27, 2008 450 bps over Perpetual 214,400*
applicable LIBOR
Tier I Perpetual Promissory Notes February 21, 2009 10.25% Perpetual 1,150,000
Tier I Perpetual Promissory Notes March 9, 2009 10.25% Perpetual 390,000
TOTAL 1,754,400
*Borrowings in foreign currency converted at the rate prevalent on the date of borrowing.
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18.5.2 Investments
(Rs. in thousands)
Particulars (In India) As at As at

March 31, 2010 March 31, 2009
Gross value 102,291,658 71,208,346
Less: Provision for depreciation (fair value provision) 192,245 38,142
Net value 102,099,413 71,170,194
There were no investments outside India as at March 31, 2010 and March 31, 2009.
Provision for depreciation on investments
(Rs. in thousands)
Particulars (In India) As at As at

March 31, 2010 March 31, 2009
Opening Balance 38,142 237,552
Add/(Less): Provision during the year 154,103 (199,410)
Closing Balance 192,245 38,142
There was no provision for depreciation on investments outside India as at March 31, 2010 and March 31, 2009.
18.5.3 Repo Transactions
a) The details of securities sold and purchased under repos and reverse repos (including securities under Liquidity Adjustment
Facility with RBI) during the year ended March 31, 2010:
(Rs. in thousands)
Minimum Maximum Daily average As at

outstanding outstanding outstanding March 31, 2010
during the year during the year during the year
Securities sold under repos - 250,000 13,699 -
Security purchased under - 7,160,000 1,390,419 2,002,466
reverse repo
b) The details of securities sold and purchased under repos and reverse repos (including securities under Liquidity Adjustment
Facility with RBI) during the year ended March 31, 2009:
(Rs. in thousands)
Minimum Maximum Daily average As at

outstanding outstanding outstanding March 31, 2009
during the year during the year during the year
Securities sold under repos - 4,200,000 301,368 1,000,000
Security purchased under - 4,250,000 399,877 4,250,000
reverse repo
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18.5.4 Non-SLR Investment Portfolio
a) Issuer composition of Non SLR investments as at March 31, 2010 is given below:
(Rs. in thousands)
No. Issuer Amount Extent of Extent of ‘below Extent of Extent of

private investment ‘unrated’ ‘unlisted’
placement grade’ securities securities securities*
i) PSUs 976,134 976,134 - - -
ii) Financial Institutions 5,555,513 5,555,513 - - 3,087,505
iii) Banks 21,585,477 21,545,460 - - 21,185,460
iv) Private Corporates 4,039,243 3,305,525 50,000 14,410 19,025
v) Subsidiaries / Joint ventures - - - - -
vi) Others 2,180,411 2,180,411 - - 2,180,411
vii) Provision held towards depreciation (102,132) - - - -
Total 34,234,646 33,563,043 50,000 14,410 26,472,401
*Of the investments disclosed Rs. 26,457,990 thousands are exempted from applicability of RBI prudential limit for unlisted Non-SLR securities.
b) Issuer composition of Non SLR investments as at March 31, 2009 is given below:
(Rs. in thousands)
No. Issuer Amount Extent of Extent of ‘below Extent of Extent of

private investment grade’ ‘unrated’ ‘unlisted’
placement securities securities securities*
i) PSUs 739,013 411,608 - - -
ii) Financial Institutions 3,668,284 3,646,310 - - 2,680,664
iii) Banks 10,370,397 9,303,839 - - 9,542,024
iv) Private Corporates 5,469,613 5,218,101 - - 1,883,839
v) Subsidiaries / Joint ventures - - - - -
vi) Others 4,127,337 4,127,337 - - 4,127,337
vii) Provision held towards depreciation (5,528) - - - -
Total 24,369,116 22,707,195 - - 18,233,863
*Of the investments disclosed Rs. 17,929,248 thousands are exempted from applicability of RBI prudential limit for unlisted Non-SLR securities.
The above does not include Fertilizer Bond 7.00% and FCI Bond 8.15% which is classified under Government Securities in Schedule 8 (Rs. 35,134 thousands net of
provision).
c) There were no non-performing non-SLR investments as at March 31, 2010 or during the year ended on that date (previous
year – Nil).
18.5.5 Derivatives
18.5.5.1 Forward Rate Agreement/ Interest Rate Swap
The details of Forward Rate Agreements/Interest Rate Swaps outstanding as at March 31, 2010 are provided in accordance with
the RBI guidelines on Forward Rate Agreements and Interest Rate Swaps (MPD.BC.187/07.01.279/1999-2000) as applicable to
Indian Rupee transactions:
102
(Rs. in thousands)
Sr. No. Items As at As at

March 31, 2010 March 31, 2009
i) The notional principal of swap agreements 595,120,000 265,536,300
ii) Losses which would be incurred if counterparties failed to fulfill their obligations under
the agreements 1,213,159 1,992,609
iii) Collateral required by the Bank upon entering into swaps - -
iv) Concentration of credit risk arising from the swaps [Percentage Exposure to Banks] 91.27% 87.38%
v) The fair value of the swap book 166,623 (164,408 )
18.5.5.2 Unhedged/uncovered foreign currency exposure

The Bank’s foreign currency exposures as at March 31, 2010 that are not hedged/covered by either derivative instruments or
otherwise are within the Net Overnight Position limit and the Aggregate Gap limit, as approved by the RBI. The Net Overnight
position at March 31, 2010 is Rs. 281,577 thousands (March 31, 2009: Rs. 530,727 thousands).
18.5.5.3 Exchange Traded Interest Rate Derivatives
The Bank has not dealt in exchange traded interest rate derivatives during the financial year ended March 31, 2010 (Previous
Year: Nil).
18.5.5.4 Currency Futures
The Bank had dealt in exchange traded currency Futures during the financial year ended March 31, 2010. As at March 31,
2010 the open contracts on the exchange were to the tune of EURO 6,000,000 (INR 365,535,000) and GBP 337,000
(INR 22,997,722) for April 2010 expiry (Previous Year: USD 2,968,000 (INR 150,536,930) for April 2009 expiry).
18.5.5.5 Disclosures on risk exposure in derivatives
As per RBI Master circular RBI BP.BC. No. 22/21.04.018/2009-10 dated July 1, 2009, the following disclosures are being made with
respect to risk exposure in derivatives of the Bank:
a) Structure: The Board of Directors of the Bank have constituted a Board level sub-committee, the Risk Monitoring Committee
(‘RMC’) and delegated to it all functions and responsibilities relating to the Risk Management Policy of the Bank and its supervision
thereof.
b) The Bank has adopted various policies including a Derivatives Appropriateness Policy as part of prudent business and risk
management practice. The Bank has also instituted a comprehensive limit and control structure encompassing Value-at-Risk
(VAR), Stop loss and portfolio credit limits for derivative transactions. The Bank has an elaborate internal reporting mechanism
providing regular reports to the RMC.
c) The Bank has an independent Middle Office, which is responsible for monitoring, measurement and analysis of derivative related
risks, among others. The Bank has a Credit Risk Management unit which is responsible for setting up counterparty limits and also
a treasury operation unit which is responsible for managing operational aspects of derivatives control function and settlement
of transactions. The Bank is subject to a concurrent audit for all treasury transactions, including derivatives, a monthly report of
which is periodically submitted to the top management and Audit and Compliance Committee of the Bank.
d) In addition to the above, the Bank independently evaluates the potential credit exposure on account of all derivative transactions,
wherein risk limits are specified separately for each product, in terms of both credit exposure and tenure. As mandated by the
Credit Policy of the Bank, the Bank has instituted an approval structure for all treasury/derivative related credit exposures.
e) The Bank reports all trading positions to the management on a daily basis. The Bank revalues its trading position on a daily basis
for MIS and control purposes and records the same in the books of account on a monthly basis.
f) Refer Note 18.4.7 for accounting policy on derivatives.
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g) The details of derivative transactions as at March 31, 2010 and March 31,2009 are given below:
(Rs. in thousands)
Sr. Particulars Currency derivatives1 Interest rate derivatives

No. Year ended Year ended Year ended Year ended
March 31, 2010 March 31, 2009 March 31, 2010 March 31, 2009
i) Derivatives (Notional Principal Amount)
a) For hedging 5,717,052 3,454,800 3,400,000 3,500,000
b) For trading 69,074,048 80,194,106 605,778,715 269,984,551
ii) Marked to market positions2
a) Asset (+) 282,052 404,531 150,189 -
b) Liability (-) - - - 194,509
iii) Credit exposure**3 9,407,165 14,382,636 8,798,324 9,037,553
iv) Likely impact of one percentage change

in interest rate (100*PV01) (Refer Note
2 below)
a) on hedging derivatives 269,266 367,185 56,428 10,172
b) on trading derivatives 560,034 22,416 3,795,018 167,735
v) Maximum and minimum of 100*PV01

observed during the year (Refer Note 2
below)
a) on hedging (Refer Note 1 below)
Maximum 311,642 399,923 113,925 168,682
Minimum 17,137 22,890 56,360 10,151
b) on trading
Maximum 914,202 65,229 5,204,873 286,040
Minimum 158,004 6,922 1,103,230 78,017
1
Options, cross currency swaps and currency futures are included in currency derivatives.
2
Trading portfolio includes accrued interest and represents net positions.
3
Includes accrued interest.
**The credit exposure has been calculated using the Current Exposure Method as prescribed in the RBI Circular on “Prudential Norms for Off-balance Sheet Exposures of
Banks”, DBOD.No. BP.BC.31/21.04.157/2008-09 dated August 8, 2008.
Notes:
1. PV01 for hedging derivatives is based on the position as at each month end during the financial year.
2. Denotes absolute value of loss which the Bank could suffer on account of a change in interest rates by 1%.
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18.5.6 Asset quality

18.5.6.1 Non-Performing Asset
The details of movement of gross NPAs, net NPAs and provisions during the year ended March 31, 2010 and the year ended
March 31, 2009 are given below :
(Rs. in thousands)
No. Particulars March 31, 2010 March 31, 2009

(i) Net NPA to Net Advances 0.06% 0.33%
(ii) Movement of NPAs (Gross)
(a) Opening balance 849,254 105,699
(b) Additions (Fresh NPAs during the year) 1,133,551 879,763
Sub total (A) 1,982,805 985,462
Less:
(i) Upgradations 255,563 -
(ii) Recoveries (excluding recoveries made from upgraded accounts) 298,879 -
(iii) Write-offs 826,343 136,208
Sub-total (B) 1,380,785 136,208
Gross NPAs (closing balance) (A-B) 602,020 849,254
(iii) Movement of Net NPAs
(a) Opening Balance 411,570 84,560
(b) Additions during the year (82,859) 327,010
(c) Reductions during the year 198,833 -
(d) Closing balance 129,878 411,570
(iv) Movement of provisions for NPAs
(excluding provision on standard assets)
(a) Opening balance 437,684 21,139
(b) Additions during the year 1,216,410 552,753
(c) Write-off/write back of excess provision 1,181,952 136,208
(d) Closing balance 472,142 437,684
18.5.6.2 Provsision coverage Ratio

The provision coverage ratio of the Bank as at March 31, 2010 computed as per the the RBI circular dated December 01, 2009
is 78.43% (excluding technical write-offs).
18.5.6.3 Concentration of NPAs
Exposure (Funded + Non-Funded) of the Bank to top four NPA is Rs. 473,980 thousands and the Bank has provided for
Rs. 382,114 thousands for the same.
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18.5.6.4 Sector-wise NPAs
The details of Sector-wise NPAs as at March 31, 2010 are given below:
No. Sector Percentage of gross NPAs to

gross advances in that sector
1 Agriculture & allied activities -
2 Industry (Micro & Small, Medium and Large) 0.27
3 Services 0.39
4 Personal Loans 1.23
18.5.6.5 Restructured Accounts
Details of Restructured Accounts as at March 31, 2010 are as follows -
(Rs. in thousands)
CDR SME Debt Others

Mechanism Restructuring
Standard advances restructured No. of Borrowers 3 - 46
Amount outstanding* 435,141 - 457,239
Of which amount restructured 435,141 - 360,455
Sacrifice (diminution in the fair value) 30,190 - -
Sub-standard advances restructured No. of Borrowers - - -
Amount outstanding - - -
Of which amount restructured - - -
Sacrifice (diminution in the fair value) - - -
Doubtful advances restructured No. of Borrowers - - -
Amount outstanding - - -
Of which amount restructured - - -
Sacrifice (diminution in the fair value) - - -
Total No. of Borrowers 3 - 46
Amount outstanding 435,141 - 457,239
Of which amount restructured 435,141 - 360,455
Sacrifice (diminution in the fair value) 30,190 - -
* of which amount classified as NPA during the year ended March 31, 2010 is Rs.124,271 thousands.
18.5.7 Financial assets sold to Securitization/Reconstruction Company for Asset Reconstruction

The Bank has not sold any financial assets to Securitizations/Reconstruction Company for Asset Reconstruction during year
ended March 31, 2010 and March 31, 2009.
18.5.8 Non-performing financial assets purchased/sold from/ to other Bank
The Bank has not purchased/sold any Non Performing financial assets from/to Bank during year ended March 31, 2010 and
March 31, 2009.
18.5.9 Provisions for Standard Assets
Provision on standard advances is Rs. 1,179,863 thousands and Rs. 791,208 thousands as at March 31, 2010 and 2009
respectively. The Bank has not writern back any standard asset provision pursuant to the issuance of the RBI Circular no. DBOD.
BP.BC.83/21.01.002/2008-2009 dated November 15, 2008.
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18.5.10 Business ratios
Business Ratios As at March 31, 2010 As at March 31, 2009

i) Interest income as a percentage to working funds* 8.89% 10.44%
ii) Non-interest income as a percentage to working funds* 2.16% 2.28%
iii) Operating profit as a percentage to working funds* 3.24% 2.75%
iv) Return on assets* 1.79% 1.59%
v) Business (deposits + net advances) per employee (Rs.‘000’s)** 152,670 98,836
vi) Profit per employee (Rs. ‘000’s) 1,575 1,138
* Working funds represent the average of total assets as reported in Form X to RBI under Section 27 of the Banking Regulation Act., 1949.
** For the purpose of computation of business per employee (deposits plus advances), inter bank deposits have been excluded and employee strength as at year end has
been considered.
18.5.11 Asset Liability Management

Maturity pattern of certain items of assets and liabilities;
In compiling the information of maturity pattern (refer 18.5.11 (a), (b), (c) and (d) below), certain estimates and assumptions
have been made by the management.
Assets and liabilities in foreign currency exclude off-balance sheet assets and liabilities.
a) Specified assets and liabilities as at March 31, 2010
(Rs. in thousands)
Maturity Buckets Loans & Investment Deposits Borrowings

Advances* Securities
1 day 1,640,039 - 1,077,717 -
2 days to 7 days 4,619,854 2,002,466 14,786,890 1,326,570
8 days to 14 days 9,880,639 252,003 13,745,769 224,500
15 days to 28 days 7,877,583 - 26,742,840 231,358
29 days to 3 months 37,681,166 6,553,896 45,924,060 7,243,617
Over 3 months to 6 months 17,140,176 8,806,283 48,667,950 2,502,796
Over 1 year to 3 years 73,576,291 6,530,640 43,791,239 -
Over 3 years to 5 years 17,512,039 13,638,277 939,661 2,209,050
Over 5 years 12,929,924 55,526,308 1,778,178 20,852,496
TOTAL 221,931,232 102,099,413 267,985,666 47,490,761
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b) Specified assets and liabilities as at March 31, 2009:
(Rs. in thousands)
Maturity Buckets Loans & Investment Deposits Borrowings

Advances* Securities
1 day 3,654,178 - 3,338,334 -
2 days to 7 days 6,139,381 341,747 7,283,488 1,000,000
8 days to 14 days 1,684,411 232,925 4,752,783 150,000
15 days to 28 days 7,181,424 1,248,716 11,311,250 43,494
29 days to 3 months 17,851,488 4,424,978 37,392,061 11,794,614
Over 1 year to 3 years 41,014,574 9,367,288 24,104,452 -
Over 3 years to 5 years 7,746,468 3,185,446 147,859 1,000,000
Over 5 years 3,139,415 40,055,092 125,670 14,126,200
TOTAL 124,030,922 71,170,194 161,694,215 37,016,770
*For the purpose of disclosing the maturity pattern, loans & advances that have been subject to risk participation vide Inter-Bank Participation Certificates (‘IBPCs’) have
been classified in the maturity bucket corresponding to the original maturity of such loans & advances gross of any risk participation. Correspondingly, the balances have been
reported net of IBPC maturities falling due in the respective buckets.
The aforesaid disclosure is in accordance with the revised maturity buckets pursuant to the issuance of the RBI circular No. DBOD. BP.BC.
22/21.04.018/2009-2010 dated July 1,2009.
c) Foreign currency denominated assets and liabilities as at March 31, 2010:
(Rs. in thousands)
Maturity Buckets Assets Liabilities

1 day 2,520,429 244
2 days to 7 days 2,178,379 632,325
8 days to 14 days 181,831 381,125
15 days to 28 days 279,081 287,184
29 days to 3 months 1,128,936 4,598,597
Over 3 months to 6 months 3,223,606 1,770,400
Over 6 months to 12 months - 188,416
Over 1 year to 3 years - 397,380
Over 3 years to 5 years - 1,225,640
Over 5 years 44,900 4,617,496
TOTAL 9,557,162 14,098,807
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d) Foreign currency denominated assets and liabilities as at March 31, 2009:

(Rs. in thousands)
Maturity Buckets Assets Liabilities

1 day 1,921,134 -
2 days to 7 days 9,900 27,923
8 days to 14 days 384,967 145,868
15 days to 28 days 188,723 71,417
29 days to 3 months 480,447 3,898,896
Over 3 months to 6 months 601,559 271,012
Over 6 months to 12 months - 713,724
Over 1 year to 3 years - 202,122
Over 3 years to 5 years - -
Over 5 years 38,040 4,311,200
TOTAL 3,624,770 9,642,162
18.5.12 Exposures
18.5.12.1 Exposure to Real Estate Sector
The Bank has lending to sectors, which are sensitive to asset price fluctuations. Such sectors include capital market, real estate
and commodities. The exposure, representing the higher of funded and non funded limits sanctioned or outstanding to real
estate sector, is given in the table below:
(Rs. in thousands)
Sr. Particulars As at As at
No. March 31, 2010 March 31, 2009
i) Direct exposure
Residential Mortgages 130,050 152,830
Commercial Real Estate 13,498,317 8,449,030
of which outstanding as advances 9,328,164 3,766,994
Investments in Mortgage Backed Securities (MBS) and other securitized exposures
- Residential* 801,680 1,082,710
- Commercial Real Estate** - -
ii) Indirect exposure 2,276,067 558,330
Fund based and Non-fund based exposures on National Housing Board and Housing Finance
Companies
TOTAL 16,706,114 10,242,900

*Comprises of individual mortgages (less than or equal to Rs. 15 lakhs each) on residential properties that are/will be occupied by the borrower or that are rented, qualifying
for priority sector lending.
**Commercial real estate exposure include loans given to land and building developers for construction, corporates for their real estate requirements and to individuals/ firms/
corporates against non-residential premises.
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18.5.12.2 Exposure to Capital Market
The exposure representing the higher of funded and non-funded limits sanctioned or outstanding to capital market sector is
given in the table below:
(Rs. in thousands)
Sr. Particulars As at As at
No. March 31, 2010 March 31, 2009
i) Direct investment in equity shares, convertible bonds, convertible debentures and units of
equity-oriented mutual funds the corpus of which is not exclusively invested in corporate
debt; 860,235 –
ii) 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; – –
iii) 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; – –
iv) advances for any other purposes to the extent secured by the collateral security of
shares or convertible bonds or convertible debentures or units of equity oriented mutual
funds i.e. where the primary security other than shares/convertible bonds/convertible
debentures/units of equity oriented mutual funds does not fully cover the advances; 1,086,985 866,670
v) secured and unsecured advances to stockbrokers and guarantees issued on behalf of
stockbrokers and market makers; 815,000 320,000
vi) 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; – –
vii) bridge loans to companies against expected equity flows/issues; – –
viii) underwriting commitments taken up by the banks in respect of primary issue of shares
or convertible bonds or convertible debentures or units of equity oriented mutual funds; – –
ix) financing to stockbrokers for margin trading – –
x) all exposures to Venture Capital Funds (both registered and unregistered) – –
Total Exposure to Capital Market 2,762,220 1,186,670
18.5.12.3 Risk Category wise Country Exposure

As per the extant RBI guidelines, the country exposure of the Bank is categorised into various risk categories listed in the
following table. As at March 31, 2010, the Bank’s funded exposure to any individual country did not exceed 1% of the total
funded assets of the Bank
(Rs. in thousands)
Risk Category Exposure (net) as at Provision held as at Exposure (net) as at Provision held as at
March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009
Insignificant 8,345,975 – 20,905,090 –
Low 2,256,996 – 10,819,889 –
Moderate 1,173,963 – 682,208 –
High 11,949 – – –
Very High – – – –
Restricted – – – –
Off-credit – – – –
TOTAL 11,788,883 – 32,407,187 –
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18.5.12.4 Details of Single Borrower Limit (SBL) and Group Borrower Limit (GBL)
During the year ended March 31, 2010, the Bank has not exceeded single borrower or group borrower exposure limit.
During the year ended March 31, 2009, the Bank has exceeded single borrower exposure limit of 15% (but within 25% in case of
oil companies who have been issued oil bonds and 20% for other companies) with the approval of the Board of Directors in the
case of (i) Larsen & Toubro where the sanctioned limit to capital funds was 16.89%, (ii) MMTC India Ltd where the sanctioned
limit to capital funds was 16.89%, (iii) Bharat Petroleum Corporation Limited where the sanctioned limit to capital funds was
24.63%, (iv) Hindustan Petroleum Corporation Limited where the sanctioned limit to capital funds was 24.63%, (v) Indian
Farmers Fertiliser Cooperative Limited (IFFCO) where the sanctioned limit to capital funds was 19.70%, (vi) Steel Authority of
India Limited where the sanctioned limit to capital funds was 19.70% and (vii) Punjab State Co-op. Supply and Mktg. Federation
Ltd. (MARKFED), where the sanctioned limit to percentage of capital funds was 19.70%.
18.6 Miscellaneous
18.6.1 Provisions made for Income Tax during the year
The income tax expense comprises the following:
(Rs. in thousands)
For the year ended For the year ended

March 31, 2010 March 31, 2009
Current income tax expense 2,677,352 1,830,245
Deferred income tax benefit (189,891) (226,300)
Fringe Benefit Tax (FBT) – 16,800
TOTAL 2,487,461 1,620,745
18.6.2 Disclosure of penalties imposed by RBI

No penalties have been imposed by RBI on the Bank during the financial year 2009-10 (Previous year: Rs Nil).
18.6.3 Fees/Remuneration received from bancassurance
Bank has earned Rs. 112,293 thousands from bancassurance business during year ended March 31, 2010.
18.6.4 Concentration of Deposits
As at March 31, 2010 the deposits of top 20 depositors aggregated to Rs. 50,416,139 thousands (excluding certificate of
deposits, which are tradable instruments), representing 18.81% of the total deposit base.
18.6.5 Concentration of Advances
As at March 31, 2010 the top 20 advances aggregated to Rs. 72,725,550 thousands, representing 15.91% of the total advances.
For this purpose, advance is computed as per definition of Credit Exposure in RBI Master Circular on Exposure Norms DBOD.
No. Dir. BC.15/13.03.00/2009-10 dated July 1, 2009.
18.6.6 Concentration of Exposures
As at March 31, 2010 the top 20 exposures aggregated to Rs. 72,725,550 thousands, representing 14.80% of the total exposures.
Exposure is computed as per definition of Credit and Investment Exposure in RBI Master Circular on Exposure Norms DBOD.
No. Dir. BC.15/13.03.00/2009-10 dated July 1, 2009.
18.6.7 Overseas Assets, NPAs and Revenue
For the year ended March 31, 2010, the Bank does not have any overseas revenue. The Bank does not have any overseas assets
or NPA as at March 31, 2010.
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18.6.8 Sponsored SPVs
The Bank has not sponsored any SPV and hence there is no consolidation in Bank’s books.
18.7 Disclosures as required by Accounting Standards
18.7.1 Staff retirement benefits
The following table sets out the funded status of the Gratuity Plan and the amounts recognized in the Bank’s financial statements
as of March 31, 2010:
(Rs. in thousands)
As at March 31, 2010 As at March 31, 2009

Present Value of Obligation at the beginning of the year 25,595 19,696
Interest Cost 1,791 1,576
Current Service Cost 21,519 10,548
Past Service Cost – –
Benefits Paid – –
Actuarial gain on Obligation 1,110 (6,225)
Present Value of Obligation at the end of the year 50,015 25,595
Net gratuity cost for the year ended March 31, 2010 comprises the following components:
(Rs. in thousands)

March 31, 2010 March 31, 2009
Interest Cost 1,791 1,576
Expected Return on plan assets – –
Net Actuarial gain recognised in the year 1,110 (6,225)
Expenses recognised 24,420 5,899
The assumptions used in accounting for the gratuity plan are set out below:

March 31, 2010 March 31, 2009
Discount Rate 8% 7%
Expected Return on Plan Assets - -
Mortality L.I.C. (1994-96) L.I.C. (1994-96)
Ultimate Table Ultimate Table
Future Salary Increases 10% p.a. 10% p.a.
Disability - -
Attrition 20% p.a. 20% p.a.
Retirement 60 yrs 60 yrs
Actuarial assumption on salary increase also takes into consideration the inflation, seniority, promotion and other relevant factors.
112
18.7.2 Compensated Absences

The actuarial liability of compensated absences of un-encashable accumulated privileged leave of the employees of the Bank as
of March 31, 2010 is given below:
(Rs. in thousands)
As at As at
March 31, 2010 March 31, 2009
Present Value of Obligation April 01 29,345 –
Interest Cost 2,054 –
Benefits Paid – –
Actuarial (gain)/loss on Obligation (114,887) (80,548)
Present Value of Obligation March 31 33,999 29,345
The assumptions used in accounting for the compensated absences are set out below:
As at As at
March 31, 2010 March 31, 2009
Discount Rate 8% 7%
Expected Return on Plan Assets NA NA
Mortality L.I.C. (1994-96) L.I.C. (1994-96)
Ultimate Table Ultimate Table
Future Salary Increases 10% p.a. 10% p.a.
Disability – –
Attrition 20% p.a. 20% p.a.
Retirement 60 yrs 60 yrs
18.7.3 Segment Reporting
Pursuant to the guidelines issued by RBI on Accounting Standard – 17 (Segment Reporting) – Enhancement of Disclosures dated
April 18, 2007, effective from period ending March 31, 2008, the following business segments have been reported.
• Treasury: Includes all financial markets activities undertaken on behalf of the Bank's customers, proprietary trading,
maintenance of reserve requirements and resource mobilisation from other banks and financial institutions.
• Corporate/Wholesale Banking: Includes lending, deposit taking and other services offered to corporate customers.
• Retail Banking: Includes lending, deposit taking and other services offered to retail customers.
• Other banking operations: Includes para banking activities like third party product distribution, merchant banking etc.
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a) Segmental results for the year ended March 31, 2010 are set out below:
(Rs. in thousands)
Business Segments Treasury Corporate / Retail Banking Other Banking Total

Wholesale Operations
Banking
Segment Revenue 10,333,583 20,192,764 1,482,709 162,211 32,171,267
Less: Inter-segment (2,718,850)
Revenue net of inter-segment 29,452,417
Result 5,738,460 6,112,125 (838,913) 56,678 11,068,350
Unallocated Expenses 3,803,496
Operating Profit 7,264,854
Income Taxes 2,487,461
Extra-ordinary Profit/(Loss) –
Net Profit 4,777,393
Other Information:
Segment assets 130,379,732 202,436,037 21,097,241 29,209 353,941,219
Unallocated assets 9,882,888
Total assets 363,825,107
Segment liabilities 72,932,160 213,485,353 13,796,308 568,973 300,782,794
Unallocated liabilities 63,042,313
Total liabilities 363,825,107
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b) Segmental results for the year ended March 31, 2009 are set out below:
(Rs. in thousands)
Business Segments Treasury Corporate / Retail Banking Other Banking Total

Wholesale Operations
Banking
Segment Revenue 10,205,058 15,820,511 1,272,859 236,957 27,535,385
Less: Inter-segment (3,152,028)
Revenue net of inter- segment 24,383,357
Result 5,382,242 2,932,111 (709,123) 55,039 7,660,269
Unallocated Expenses 3,001,104
Operating Profit 4,659,165
Income Taxes 1,620,745
Extra-ordinary Profit/(Loss) -
Net Profit 3,038,420
Other Information:
Segment assets 93,294,479 106,559,920 18,677,541 16,421 218,548,361
Unallocated assets 10,459,540
Total assets 229,007,901
Segment liabilities 42,601,408 130,077,898 15,564,954 18,970 188,263,230
Unallocated liabilities 40,744,671
Total liabilities 229,007,901
Notes for segment reporting:

1. The business of the Bank is concentrated in India. Accordingly, geographical segment results have not been reported.
2. In computing the above information, certain estimates and assumptions have been made by the Management.
3. Income, expense, assets and liabilities have been either specifically identified with individual segment or allocated to segments on a
systematic basis or classified as unallocated.
4. Fixed assets and related depreciation on fixed assets, Cash and non treasury related bank balances at branches, Bills payable, Tax
related accounts, Tier II instruments, Innovative Perpetual Debt instruments, share capital and reserves and relevant interest and
operating expenses which cannot be allocated to any segments have been classified as unallocated.
5. Inter-segment transactions have been generally based on transfer pricing measures as determined by the Management.
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18.7.4 Related Party Disclosures
a) As per AS 18 “Related Party Disclosures”, prescribed by the Companies (Accounting Standards) Rules, 2006, the Bank’s related
parties for the year ended March 31, 2010 are disclosed below:
Individuals having significant influence:
• Mr. Rana Kapoor, Managing Director & CEO
Key Management Personnel (‘KMP’) (Wholetime Director)
The following represents the significant transactions between the Bank and such related parties, including relatives of above mentioned
Key Management Personnel, during the year ended March 31, 2010:
(Rs. in thousands)
Items/Related Party Wholetime Directors / Maximum Balance Relatives of Wholetime Maximum Balance
Category individual having during the year Directors / individual during the year
significant influence having significant
influence
Deposit N.A.*@ N.A.@ 69,913* 92,428
Interest paid N.A.@ 3,961
Receiving of services N.A.@ -
* Represents outstanding as of March 31, 2010
@ In the Financial Year 2009-10 there was only one related party in the said category, hence the Bank has not disclosed the details
of transactions in accordance with the guidance on compliance with the accounting standards by banks issued by the RBI on
March 29, 2003 .
b) As per AS 18 “Related Party Disclosures”, prescribed by the Companies (Accounting Standards) Rules, 2006, the Bank’s related
parties for the year ended March 31, 2009 are disclosed below:
Individuals having significant influence:
• Mr. H. Srikrishnan, Executive Director ( Up to April 25, 2008)
Key Management Personnel (‘KMP’) (Wholetime Director)
• Mr. H. Srikrishnan, Executive Director ( Up to April 25, 2008)
116
The following represents the significant transactions between the Bank and such related parties, including relatives of above mentioned
Key Management Personnel, during the year ended March 31, 2009:
(Rs. in thousands)
Items/Related Party Wholetime Directors / Maximum Balance Relatives of Wholetime Maximum Balance
Category individual having during the year Directors / individual during the year
significant influence having significant
influence
Deposit N.A.*@ N.A.@ 64,466* 76,307
Interest paid 1,417 13,124
Receiving of services 17,609 -
* Represents outstanding as of March 31, 2009
@ As of March 31, 2009 there was only one related party in the said category, hence the Bank has not disclosed the details of
transactions in accordance with the guidance on compliance with the accounting standards by banks issued by the RBI on
March 29, 2003.
18.7.5 Operating Leases
Lease payments recognised in the profit and loss account for the year ended March 31, 2010 was Rs. 823,443 thousands
(Previous year: Rs. 581,105 thousands).
As at March 31, 2010 the Bank had certain non-cancellable outsourcing contracts for information technology assets and properties on rent.
The future minimum lease obligations against the same were as follows:
(Rs. in thousands)
Lease obligations As at As at
March 31, 2010 March 31, 2009
Not later than one year 603,862 542,645
Later than one year and not later than five years 2,676,943 2,650,844
Later than five years 568,791 773,339
TOTAL 3,849,596 3,512,038
18.7.6 Earnings Per Share (‘EPS’)
The Bank reports basic and diluted earnings per equity share in accordance with Accounting Standard 20, “Earnings per Share”.
The dilutive impact is mainly due to stock options granted to employees by the Bank.
117
The computation of earnings per share is given below:
Particulars Year ended Year ended

March 31, 2010 March 31, 2009
Basic (annualised)
Weighted average no. of equity shares outstanding 305,308,114 296,749,985
Net profit/(loss) (Rs.’ 000) 4,777,393 3,038,420
Basic earnings per share (Rs.) 15.65 10.24
Diluted (annualised)
Weighted average no. of equity shares outstanding 321,331,587 299,703,305
Net profit/(loss) (Rs.’ 000) 4,777,393 3,038,420
Diluted earnings per share (Rs.) 14.87 10.14
Nominal value per share (Rs.) 10.00 10.00
18.7.7 ESOP disclosures
Statutory Disclosures Regarding Joining Stock Option Scheme:
The Bank has five Employee Stock Option Schemes viz. Joining Stock Option Plan I (JSOP I), Joining Employee Stock Option
Plan II (JESOP II), Joining Employee Stock Option Plan III (JESOP III), YBL ESOP (consisting of two sub schemes) and YBL JESOP
V/ PESOP II (consisting of two sub schemes). The schemes include provisions for grant of options to eligible employees. All the
aforesaid schemes have been approved by the Board Remuneration Committee and the Board of Directors and were also
approved by the members of the Bank.
JESOP I is administered by the Board Remuneration Committee of the Bank and was in force for employees joining the Bank on
or before March 31, 2005. All the grants under JESOP I were made before the IPO of the Bank.
JESOP II and JESOP III are administered by the Board Remuneration Committee of the Bank and were in force for employees
joining the Bank up to March 31, 2006, March 31, 2007 and March 31, 2008.
YBL ESOP (JESOP IV), a sub scheme of YBL ESOP and YBL JESOP V, a sub scheme of YBL JESOP V/ PESOP II are also
administered by the Board Remuneration Committee of the Bank and are in force for employees joining the Bank from time
to time.
Under the above Plans, vesting takes place at the end of three years from the grant date for 50% of the options granted and at
the end of five years for the balance. Options under all these plans are granted for a term of 10 years (inclusive of the vesting
period) and are settled with equity shares being allotted to the beneficiary upon exercise.
YBL ESOP (PESOP I), a sub scheme of YBL ESOP and YBL PESOP II, a sub scheme of YBL JESOP V/ PESOP II are Performance
Stock Option Plans and are also administered by the Board Remuneration Committee of the Bank. Under YBL ESOP (PESOP I)
vesting takes place at the end of each year from the grant date for 25% of the options granted and are settled with equity shares
being allotted to the beneficiary upon exercise. Under YBL PESOP II, 30% of the granted options vest at the end of first year,
30 % vest at the end of second year and balance 40% vest at the end of third year.
118
A summary of the status of the Bank’s stock option plans is set out below:
Particulars JSOP – I JESOP – II JESOP –III JESOP IV YBL PESOP I YBL PESOP II JESOP V
Opening balance 2,995,570 2,267,500 3,770,000 4,286,000 4,102,750 8,165,000 722,500
Add : Option granted
during the year – – – – 843,000 7,363,000 1,282,500
Less : Options exercised
during the year 1,862,541 645,550 632,539 – 459,150 725,850 –
Less : Options lapsed
during the year 18,250 50,000 212,500 392,500 481,300 1,156,000 170,000
Closing balance 1,114,779 1,571,950 2,924,961 3,893,500 4,005,300 13,646,150 1,835,000
Approved by October 27, April 26, July 24, August 29, August 29, September 18, September
shareholders on 2004 2005 2006 2007 2007 2008 18, 2008
Options granted and
exercised during the
year – – – – – – –
Options granted and
eligible for exercising
and exercised during
the year – – – – – – –
The Bank has charged Rs. Nil, being the intrinsic value of the stock options granted for the year ended March 31, 2010. Had the Bank
adopted the Fair Value method (based on Black-Scholes pricing model), for pricing and accounting of options, net profit after tax would
have been lower by Rs. 359,079 thousands, the basic earnings per share would have been Rs. 14.47 per share instead of Rs. 15.65 per share;
and diluted earnings per share would have been Rs. 13.75 per share instead of Rs. 14.87 per share.
The following assumptions have been made for computation of the fair value:
Particulars JSOP-I JESOP-II JESOP-III JESOP-IV YBL PESOP-I YBL PESOP-II JESOP-V
Risk free interest rate 6.54% 6.73% 7.27% 7.48% 5.98% 4.96% 5.20%
~6.81% ~7.45% ~8.23% ~8.55% ~8.51% ~8.51% ~8.55%
Expected life 6.5 yrs to 6.5 yrs to 6.5 yrs to 4.5 yrs to 1.5 yrs to 1.5 yrs to 4.5 yrs to
7.5 yrs 7.5 yrs 7.5 yrs 7.5 yrs 6 yrs 4.5 yrs 7.5 yrs
Expected volatility 35.97% ~ 35.82% ~ 39.94% ~ 40.74% ~ 61.31% ~ 61.31%~
50.58% 49.92% 41.74% 64.92% 82.76% 82.76% 82.76%
Expected dividends 1.13% ~
1.44% 1.23% 1.13% 1.13% ~ 1.5% 1.13% ~ 1.5% 1.5% 1.5%
The price of the
underlying share in
market at the time of
option grant(Rs.) Not Listed 92.61 100.57 175.32 162.83 121.39 168.48
In computing the above information, certain estimates and assumptions have been made by the Management which have been relied upon
by the auditors.
119
18.7.8 Deferred Taxation
The net deferred tax asset of Rs. 652,928 thousands as at March 31, 2010, is included under other assets and the corresponding
credits have been taken to the profit and loss account.
The components that give rise to the deferred tax asset included in the balance sheet are as follows:
(Rs. in thousands)
Particulars As at As at
March 31, 2010 March 31, 2009
Deferred tax asset
Depreciation 46,610 14,662
Provision for gratuity and unutilized leave 46,699 18,674
Provision for Non-Performing Assets 64,481 41,247
Share Issue Expenses 37 11,217
Amortisation of premium on HTM securities 108,526 90,563
Other Provisions 40,046 27,476
Profit on Securitization 9,390 54,162
Deferred tax asset 652,928 463,037
18.7.9 Provisions and Contingencies
The breakup of provisions of the Bank for the year ended March 31, 2010 and March 31, 2009 are given below:
(Rs. in thousands)
Particulars March 31, 2010 March 31, 2009

Provision for taxation 2,487,461 1,620,745
Provision for investments 154,103 (199,410)
Provision made/write-off for non performing advances/off balance sheet exposure 876,039 570,668
Other provisions (50,335) (19,265)
TOTAL 3,855,923 2,238,129
18.8 Other Disclosures

18.8.1 Movement in Floating Provisions
The Bank has not created or utilised any floating provisions during the year ended March 31, 2010 and year ended March 31,
2009. The floating provision as at March 31, 2010 was Nil (Previous year: Nil).
18.8.2 Drawdown on Reserves
The Bank has utilised the share premium received from issue of shares under Qualified Institutions Placements (QIP) to meet
the share issue expenses of Rs. 146,065 thousands (Previous year: NIL).
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18.8.3 Disclosure of complaints

A. Customer Complaints
Year ended March 31, 2010

i) No. of Complaints pending at the beginning of the Year 8
ii) No. of Complaints received during the Year 3,486
iii) No. of Complaints redressed during the year 3,489
iv) No. of Complaints pending at the end of the year 5
B. Awards passed by the Banking Ombudsman
Year ended March 31, 2010

i) No. of unimplemented Awards at the beginning of the year Nil
ii) No. of Awards passed by the Banking Ombudsman during the year Nil
iii) No. of Awards implemented during the year Nil
iv) No. of unimplemented Awards at the end of the year Nil
18.8.4 Dues to Micro, Small and Medium Enterprises

Under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED) which came into force from October 02,
2006, certain disclosures are required to be made relating to Micro, Small and Medium enterprises. On the basis of information
and records available with the management and confirmation sought by the management from suppliers on their registration
with the specified authority under MSMED, there have been no reported cases of delays in payments to micro, small and medium
enterprises or of interest payments due to delays in such payments.
18.8.5 Securitization Transactions

(Rs. in thousands)
Particulars Year ended Year ended

March 31, 2010 March 31, 2009
Total number of transactions 1 40
Book value of loan assets securitized 500,000 65,240,000
Sale consideration received for the securitized assets 501,444 65,351,242
Net gain / (loss) on sale on account of securitization 1,444 111,242
Additional consideration realised in respect of accounts transferred in earlier years – –
Form and quantum (outstanding value) of services provided by way of post-securitization Form: Collection / Form: Collection /
asset servicing, etc. Payout Agent. Payout Agent.
Value of Service Value of Service
charges maximum of charges maximum of
Rs. 25,000. Rs. 25,000.
18.8.6 Letter of comfort
The Bank has not issued any letter of comfort during the year ended March 31, 2010 and March 31, 2009.
121
18.8.7 Description of contingent liabilities
Sr. No. Contingent Liabilities Brief

1. Claims against the Bank not The Bank is a party to various legal proceedings in the normal course of business. The
acknowledged as debts Bank does not expect the outcome of these proceedings to have a material adverse
effect on the Bank’s financial conditions, results of operations or cash flows.
2. Liability on account of forward The Bank enters into foreign exchange contracts, currency options, forward rate
exchange and derivative contracts agreements, currency swaps and interest rate swaps with interbank participants and
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 one currency against another,
based on predetermined rates. Interest rate swaps are commitments to exchange fixed
and floating interest rate cash flows. The notional amounts of financial instruments of
such foreign exchange contracts and derivatives provide a basis for comparison with
instruments recognised on the balance sheet but do not necessarily indicate the amounts
of future cash flows involved or the current fair value of the instruments and, therefore,
do not indicate the Bank’s exposure to credit or price risks. The derivative instruments
become favourable (assets) or unfavourable (liabilities) as a result of fluctuations in
market rates or prices relative to their terms. The aggregate contractual or notional
amount of derivative financial instruments on hand, the extent to which instruments
are favourable or unfavourable and, thus the aggregate fair values of derivative financial
assets and liabilities can fluctuate significantly.
3. Guarantees given on behalf As a part of its commercial banking activities the Bank issues documentary credit and
of constituents, acceptances, guarantees on behalf of its customers. Documentary credits such as letters of credit
endorsements and other enhance the credit standing of the customers of the Bank. Guarantees generally represent
obligations irrevocable assurances that the Bank will make payments in the event of the customer
failing to fulfil its financial or performance obligations.
4. Other items for which the Bank is - Value dated purchase of securities
contingently liable
- Capital commitments
- Foreign Exchange Contracts ( Tom & Spot)
18.8.8 Prior period comparatives
Previous period’s figures have been regrouped where necessary to conform to current year classification.
For and on behalf of the Board of Directors

YES BANK Limited
Rana Kapoor Bharat Patel S.L. Kapur

Managing Director & CEO Director Non Executive Chairman

Mumbai
27 April 2010
122

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YES BANK - THE PROFESSIONALS’ BANK OF INDIA

AUDITORS’ REPORT ON THE FINANCIAL STATEMENTS

For B S R & Co.

Cash and balances with Reserve Bank of India 6 19,953,099 12,777,184

Contingent liabilities 12 1,057,879,299 657,727,148

As per our report of even date attached

Akeel Master Rana Kapoor Bharat Patel S.L. Kapur

Significant Accounting Policies and Notes to Accounts 18

Akeel Master Rana Kapoor Bharat Patel S.L. Kapur

Year Ended Year Ended

Net profit before taxes 7,264,854 4,659,165

(Payment) of direct taxes (2,757,834) (1,769,557)

Year Ended Year Ended

Cash flow from financing activities

Cash and cash equivalents as at April 1 19,227,046 16,275,660

Notes to the Cash flow statement:

As per our report of even date attached.

Akeel Master Rana Kapoor Bharat Patel S.L. Kapur

SCHEDULE 2 – RESERVES AND SURPLUS

II. Share Premium

III. Capital Reserve

IV. Investment Reserve

V. Balance in Profit and Loss Account 6,729,526 4,057,754

SCHEDULE 5 – OTHER LIABILITIES & PROVISIONS

SCHEDULE 7 – BALANCES WITH BANKS, MONEY AT CALL AND SHORT

II. Outside India

SCHEDULE 8 – INVESTMENTS (net of provisions)

B. i) Secured by tangible assets 97,629,884 57,748,673

TOTAL 221,931,232 124,030,922

II. Advances outside India – –

TOTAL 221,931,232 124,030,922

SCHEDULE 11 – OTHER ASSETS

SCHEDULE 12 - CONTINGENT LIABILITIES

Schedules forming part of the Proﬁt and Loss Account

Year ended Year ended

SCHEDULE 13 – INTEREST EARNED

I. Interest/discount on advances/bills 17,715,013 14,878,074

II. Income on investments 5,858,892 4,995,991

IV. Others 36,332 25,160

TOTAL 23,697,097 20,014,348

SCHEDULE 14 – OTHER INCOME

I. Commission, exchange and brokerage 3,791,084 2,257,734

II. Profit on the sale of investments (net) 986,236 1,486,376

III. Profit /(Loss) on the revaluation of investments (net) – –

V. Profit on exchange transactions (net) 441,234 281,096

VI. Income earned by way of dividends, etc. from subsidiaries,

VII. Miscellaneous income 542,683 345,377

TOTAL 5,755,320 4,369,009

Year Ended Year Ended

SCHEDULE 16 – OPERATING EXPENSES

SCHEDULE 17 – PROVISIONS & CONTINGENCIES

18.4.4 Securitization transactions

18.4.5 Transactions involving foreign exchange

18.4.6 Earnings per share

18.4.7 Accounting for derivative transactions

18.4.8 Fixed assets

Class of asset Rates of depreciation per annum

18.4.14 Employee Stock Compensation Cost

18.5 Statutory disclosures as per RBI