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    Shelf Prospectus

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    hsinghal1
    This document is a shelf prospectus dated February 14, 2011 for the public issue of lower tier II bonds by State Bank of India not exceeding Rs. 100,000 million. The bonds will be issued in tranches, with each tranche issued through a tranche prospectus. This shelf prospectus along with the relevant tranche prospectus will together constitute the prospectus for that tranche issue. The bonds have been assigned the highest credit ratings by CARE and CRISIL. The bonds are proposed to be listed on the NSE and/or BSE.

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    Shelf Prospectus

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    hsinghal1
    276 views528 pages
    This document is a shelf prospectus dated February 14, 2011 for the public issue of lower tier II bonds by State Bank of India not exceeding Rs. 100,000 million. The bonds will be issued in tranches, with each tranche issued through a tranche prospectus. This shelf prospectus along with the relevant tranche prospectus will together constitute the prospectus for that tranche issue. The bonds have been assigned the highest credit ratings by CARE and CRISIL. The bonds are proposed to be listed on the NSE and/or BSE.

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    1297773987496_SHELF_PROSPECTUS

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    This document is a shelf prospectus dated February 14, 2011 for the public issue of lower tier II bonds by State Bank of India not exceeding Rs. 100,000 million. The bonds will be issued in tranches, with each tranche issued through a tranche prospectus. This shelf prospectus along with the relevant tranche prospectus will together constitute the prospectus for that tranche issue. The bonds have been assigned the highest credit ratings by CARE and CRISIL. The bonds are proposed to be listed on the NSE and/or BSE.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    276 views528 pages

    Shelf Prospectus

    Uploaded by

    hsinghal1
    This document is a shelf prospectus dated February 14, 2011 for the public issue of lower tier II bonds by State Bank of India not exceeding Rs. 100,000 million. The bonds will be issued in tranches, with each tranche issued through a tranche prospectus. This shelf prospectus along with the relevant tranche prospectus will together constitute the prospectus for that tranche issue. The bonds have been assigned the highest credit ratings by CARE and CRISIL. The bonds are proposed to be listed on the NSE and/or BSE.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
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    of 528

    SHELF PROSPECTUS

    Dated February 14, 2011

    STATE BANK OF INDIA


    (Constituted under t h e State Bank of India Act, 1955)
    Central Office: State Bank Bhavan, Madame Cama Road, Mumbai 400 021, Maharashtra
    Tel: (91 22) 2274 0000/ 2274 1000; Website: www.statebankofindia.com, www.sbi.co.in
    Contact Person: Mr. M. M. Pathak, General Manager (Shares & Bonds); Email: [email protected]
    Tel: (91 22) 2263 3462/ 63/ 64/ 65/ 66; Fax: (91 22) 22633470/71
    Compliance Officer: Mr. Shyamal Sinha, General Manager (Compliance); E-mail: [email protected]
    Tel: (91 22) 2274 1450/2202 1392; Fax: (91 22) 2284 0090

    PUBLIC ISSUE BY THE STATE BANK OF INDIA (“BANK” OR “ISSUER”) OF LOWER TIER II BONDS (THE “BONDS”) NOT EXCEEDING AN AGGREGATE AMOUNT
    OF RS. 100,000 MILLION (THE “SHELF LIMIT”) BY WAY OF ISSUANCE OF BONDS IN ONE OR MORE TRANCHES (EACH A “TRANCHE ISSUE”, AND TOGETHER
    ALL TRANCHE ISSUES UP TO THE SHELF LIMIT, THE “ISSUE”). EACH TRANCHE ISSUE WILL BE OFFERED BY WAY OF A TRANCHE PROSPECTUS
    CONTAINING, INTER ALIA, THE TERMS AND CONDITIONS OF SUCH TRANCHE ISSUE (THE “TRANCHE PROSPECTUS”), WHICH SHOULD BE READ TOGETHER
    WITH THIS SHELF PROSPECTUS OF THE ISSUE (THE “SHELF PROSPECTUS”). THIS SHELF PROSPECTUS TOGETHER WITH RELEVANT TRANCHE PROSPECTUS
    FOR A SPECIFIC TRANCHE ISSUE SHALL CONSTITUTE THE “PROSPECTUS”.

    The Issue (and, for the avoidance of doubt, each Tranche Issue) is being made pursuant to the provisions of Securities and Exchange Board of India (Issue and Listing of Debt Securities)
    Regulations, 2008, as amended (the ―SEBI Debt Regulations‖).
    GENERAL RISKS
    Investors are advised to read the Risk Factors carefully before taking an investment decision in relation to any Tranche Issue. For taking an investment decision, Investors must rely on their own
    examination of the Bank and the Tranche Issue including the risks involved. Investors are advised to refer to section “Risk Factors” in the Shelf Prospectus and “Recent Develpments” in
    the relevant Tranche Prospectus of any Tranche Issue before making an investment in such Tranche Issue.
    THE BONDS ARE CAPITAL INSTRUMENTS AND NOT DEPOSITS OF THE BANK AND THEY CAN NOT BE USED AS COLLATERAL FOR ANY
    LOAN MADE BY THE BANK OR ANY OF ITS SUBSIDIARIES OR AFFILIATES. THE BONDS ARE DIFFERENT FROM FIXED DEPOSITS AND
    ARE NOT COVERED BY DEPOSIT INSURANCE. UNLIKE THE FIXED DEPOSITS WHERE DEPOSITS ARE REPAID AT THE OPTION OF
    DEPOSIT HOLDER, THE BONDS ARE NOT REDEEMABLE AT THE OPTION OF THE BONDHOLDERS OR WITHOUT THE PRIOR CONSENT
    OF RBI.
    ISSUER’S ABSOLUTE RESPONSIBILITY
    The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Shelf Prospectus does contain and read together with the relevant Tranche Prospectus for a
    Tranche Issue, will contain all information with regard to the Issuer and the relevant Tranche Issue, which is material in the context of the relevant Tranche Issue, that the information contained
    in this Shelf Prospectus is and together with the relevant Tranche Prospectus for a Tranche Issue will be be true and correct in all material respects and is not misleading in any material respect,
    that the opinions and intentions expressed herein are honestly held and that there are no other material facts, the omission of which makes this Shelf Prospectus read with the relevant Tranche
    Prospectus as a whole or any such information or the expression of any such opinions or intentions misleading in any material respect at the time of the relevant Tranche Issue.
    CREDIT RATING
    The Bonds proposed to be issued by the Issuer have been assigned a rating of ―CARE AAA‖ by CARE vide its letter dated January 27, 2011. The instruments with this rating are considered to be
    of the best credit quality, offering highest safety for timely servicing of debt obligations. Such instruments carry minimal risk. The Bonds proposed to be issued by the Issuer have been assigned a
    rating of ―AAA/ Stable‖ by CRISIL vide its letter no. MS/FSR/SBI/2010-11/1583 and dated January 27, 2011. This rating of the Bonds indicates highest degree of safety with regard to timely
    payment of interest and principal on the instrument. The above ratings are not a recommendation to buy, sell or hold securities and investors should take their own decision. The ratings may be
    subject to revision or withdrawal at any time by the assigning rating agency and should be evaluated independently of any other ratings. Please refer to section ―General Information‖ for rationale
    for the above ratings. The above ratings will be re-affirmed by CARE and CRISIL for each Tranche Issue as set out in the relevant Tranche Prospectus if required.
    PUBLIC COMMENTS
    The Draft Shelf Prospectus was filed with the Designated Stock Exchange pursuant to the provisions of the SEBI Debt Regulations. The Draft Shelf Prospectus was open for public comments.
    The Tranche Prospectuses will not be made available for public comments pursuant to the SEBI letter IMD/DF1/OW/28586/2010 dated December 3, 2010.
    LISTING
    The Bonds are proposed to be listed on the National Stock Exchange of India Limited (―NSE‖) and/or The Bombay Stock Exchange Limited (―BSE‖). The Designated Stock Exchange for the
    Issue is BSE.
    OTHER
    This Shelf Prospectus shall be updated and replaced by a new shelf prospectus on the earlier of (a) the aggregate amount of all Tranche Issues being equal to the Shelf Limit so any subsequent
    issue of Bonds would exceed the Shelf Limit and require a new prospectus; (b) as may be required under Indian law or regulation; or (c) upon expiry of one year from the date of the Shelf
    Prospectus. Applicants should note that in the event of any conflict between the terms of this Shelf Prospectus and the Tranche Prospectus, the terms as set out in the Tranche Prospectus shall
    prevail.
    LEAD MANAGERS TO THE ISSUE REGISTRAR TO THE ISSUE

    Citigroup Global Markets India Private Kotak Mahindra Capital Company SBI Capital Markets Limited* Datamatics Financial Services Limited
    Limited Limited 202, Maker Tower ‗E‘ B 5, MIDC Part B
    12th Floor, Bakhtawar 1st Floor, Bakhtawar Cuffe Parade Crosslane, Marol
    Nariman Point 229, Nariman Point Mumbai 400 005 Andheri (East)
    Mumbai 400 021 Mumbai 400 021 Tel: (91 22) 22178300 Mumbai 400 093
    Tel: (91 22) 6631 9999 Tel.: (91 22) 6634 1100 Fax: (91 22) 2218 8332 Tel.: (91 22) 6671 2187
    Fax: (91 22) 6646 6056 Fax.: (91 22) 2284 0492 Email: [email protected] Fax.: (91 22) 6671 2204
    E-mail: [email protected] Email: [email protected] Website: www.sbicaps.com Email: [email protected]
    Website: www.citibank.co.in Website: www.kotak.com Contact Person: Mr. Ashish Sable Website: www.dfssl.com
    Contact Person: S. Ashwin Contact Person: Mr. Chandrakant Bhole Compliance Officer: Mr. Bhaskar Contact Person: Mr. R.D Kumbhar (General
    Investor Grievance ID: Investor Grievance ID: Chakraborty Manager)
    [email protected] [email protected] SEBI Registration No. INM000003531 Investor Grievance ID: [email protected]
    Compliance Officer: Mr. Vinod Patil Compliance officer: Mr. Ajay Vaidya *SBI Capital Markets Limited, being a subsidiary of the SEBI Registration No. INR000000874
    SEBI Registration No. INM000010718 SEBI Registration No. INM000008704 Issuer, shall only be involved in the marketing of the Issue
    TABLE OF CONTENTS

    DEFINITIONS AND ABBREVIATIONS .................................................................................................................1


    PRESENTATION OF FINANCIAL INFORMATION AND MARKET DATA ..................................................8
    FORWARD LOOKING STATEMENTS .................................................................................................................9
    RISK FACTORS ....................................................................................................................................................... 10
    SUMMARY OF THE ISSUE ................................................................................................................................... 29
    SUMMARY FINANCIAL INFORMATION .......................................................................................................... 31
    RECENT FINANCIAL DEVELOPMENTS ........................................................................................................... 40
    SUMMARY OF BUSINESS ..................................................................................................................................... 48
    GENERAL INFORMATION ................................................................................................................................... 53
    CAPITAL STRUCTURE .......................................................................................................................................... 57
    OBJECTS OF THE ISSUE....................................................................................................................................... 83
    STATEMENT OF TAX BENEFITS........................................................................................................................ 84
    OUR BUSINESS ........................................................................................................................................................ 86
    OUR MANAGEMENT ........................................................................................................................................... 124
    OUR PROMOTER .................................................................................................................................................. 135
    OUR SUBSIDIARIES, ASSOCIATE BANKS AND JOINT VENTURE COMPANIES ................................. 136
    AUDITOR EXAMINATION REPORT AND FINANCIAL STATEMENTS ................................................... 138
    STOCK MARKET DATA FOR EQUITY SHARES AND DEBT SECURITIES OF THE BANK ................ 141
    DESCRIPTION OF CERTAIN INDEBTEDNESS .............................................................................................. 144
    OUTSTANDING LITIGATION AND DEFAULTS ............................................................................................ 146
    OTHER REGULATORY AND STATUTORY DISCLOSURES ....................................................................... 147
    TERMS OF THE ISSUE......................................................................................................................................... 151
    PROCEDURE FOR APPLICATION .................................................................................................................... 162
    MAIN PROVISIONS OF THE STATE BANK OF INDIA ACT AND STATE BANK OF INDIA
    REGULATIONS ...................................................................................................................................................... 171
    MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ............................................................ 189
    DECLARATION ..................................................................................................................................................... 190
    ANNEXURE – CREDIT RATING LETTERS
    DEFINITIONS AND ABBREVIATIONS

    Definitions of certain capitalized terms used in this Shelf Prospectus are set forth below:

    Bank Related Terms

    Term Description
    Associate Banks The associate banks of the Bank as listed out in the section ―Our Subsidiaries,
    Associate Banks and Joint Venture Companies‖
    Capital or Share Capital Issued and paid up share capital of the Bank
    Central Board Central Board of Directors of the Bank
    Central Office Central office of the Bank located at State Bank Bhavan, Madame Cama Road,
    Mumbai 400 021, Maharashtra
    Directors The directors on the Central Board of the Bank
    ECCB Executive Committee of the Central Board of the Directors of the Bank
    Joint Venture Companies The joint venture companies of the Bank as listed out in the section ―Our
    Subsidiaries, Associate Banks and Joint Venture Companies‖
    ―SBI‖, ―Issuer‖, or ―the Unless the context otherwise requires refers to, the State Bank of India, constituted
    Bank‖ under the State Bank of India Act, 1955, having its central office at State Bank
    Bhavan, Madame Cama Road, Mumbai 400 021, Maharashtra
    Subsidiaries The subsidiaries of the Bank as listed out in the section ―Our Subsidiaries, Associate
    Banks and Joint Venture Companies‖
    The Group The Bank and its Subsidiaries, Associate Banks and other consolidated entities.
    References to specific data applicable to particular Subsidiaries, Associate Banks or
    other consolidated entities are made by reference to the name of that particular entity

    Issue related terms

    Term Description
    Adviser and Lead SBI Capital Markets Limited
    Manager to the Issue
    Allotment/Allot/Allotted Unless the context otherwise requires, the allotment of Bonds to the successful
    Applicants in relation to each Tranche Issue
    Allottee A successful Applicant to whom Bonds for each Tranche Issue have been allotted
    Applicant Any person who applies for issuance of Bonds pursuant to the terms of the
    Prospectus and Application Form for each Tranche Issue
    Application Applicant‘s offer to subscribe to Bonds and which will be considered as the
    application for issue of Bonds pursuant to the terms of the Prospectus for each
    Tranche Issue
    Application Amount The aggregate value of the Bonds indicated in the Application Form for each
    Tranche Issue
    Application Form The form in terms of which the Applicant shall make an offer to subscribe to Bonds
    and which will be considered as the application for Allotment of Bonds pursuant to
    the terms of the Prospectus for each Tranche Issue
    Auditor to the Issue Kalyaniwalla & Mistry, who have been appointed by the Bank for (a) issuance of the
    audit report dated January 31, 2011 in relation to the audited consolidated and
    unconsolidated financial statements of the Issuer for the Fiscal Years ended March
    31, 2010, March 31, 2009, March 31, 2008, March 31, 2007 and March 31, 2006, (b)
    for issuance of the limited review report dated January 31, 2011 in relation to the
    unaudited unconsolidated financial statements of the Issuer for the quarter ended
    December 31, 2010
    Auditor to the Tranche Auditors who will be appointed for the purposes of each Tranche Issue and will be
    Issue specified in the relevant Tranche Prospectus
    Bond Certificate(s) Certificate issued to the Bondholder(s) pursuant to rematerialisation of the Series of
    Bonds for the relevant Tranche Issue
    Bondholder(s) Any person holding the Bonds and whose name appears on the beneficial owners list
    provided by the Depositories or whose name appears in the SBI Register

    1
    Term Description
    Bonds All Lower Tier II Bonds issued or proposed to be issued by the Bank under a
    Tranche Issue pursuant to each Tranche Prospectus (read together with the Shelf
    Prospectus) with aggregate issuance not exceeding the Shelf Limit
    Call Option Call option on the principal amount outstanding together with accrued interest of
    relevant Series of Bonds, if applicable, as specified in the relevant Tranche
    Prospectus subject to being exercisable after at least 5 (five) years from the Deemed
    Date of Allotment of the relevant Series of Bonds and with the prior approval by
    RBI (or in accordance with applicable laws and regulations in force as at the date of
    the Tranche Prospectus)
    Call Option Date As specified in the relevant Tranche Prospectus for a particular Series of Bonds
    Capital Adequacy Reserve Bank of India Prudential Guidelines on Capital Adequacy and Market
    Guidelines Discipline – New Capital Adequacy Framework dated July 1, 2010
    Category The category of Applicants and may be either Retail Category, HNI Category or
    NII/Corporate/QIB Category
    CDSL Agreement Tripartite agreement dated March 24, 2010 between the Bank, Datamatics Financial
    Services Limited and CDSL for offering depository option to the Tranche
    Bondholders
    Consolidated Bondholder In case of Bonds rematerialised by the Bondholder in physical form, a single
    Certificate certificate that will be issued to the Bondholder for the aggregate amount for each
    Series of Bonds allotted to him under Tranche Issues.
    Debenture Trust Deed Trust deed to be entered into between the Debenture Trustee and the Bank for each
    Tranche Issue
    Debenture Trustee Trustees for the Bondholders in this case being IDBI Trusteeship Services Limited
    Deemed Date of Allotment Deemed Date of Allotment shall be the date on which the Central Board or the
    ECCB or any committee thereof approves the Allotment of the Bonds for each
    Tranche Issue
    Default Defaults as listed in the section ―Terms of the Issue‖ in the respective Tranche
    Prospectus
    Depositories Act The Depositories Act, 1996, as amended from time to time
    Depository(ies) NSDL and/ or the CDSL
    Designated Stock BSE
    Exchange/ DSE
    DP/ Depository Participant A depository participant as defined under the Depositories Act
    Draft Shelf Prospectus The draft shelf prospectus dated January 31, 2011 filed by the Bank with the
    Designated Stock Exchange in accordance with the provisions of SEBI Debt
    Regulations.
    Equity Share(s) or Share(s) The equity share(s) of the Bank having a face value of Rs. 10 each unless otherwise
    specified in the context thereof
    Equity Shareholder or A holder of the Equity Shares
    Shareholder
    Escrow Account Account opened with the Escrow Collection Bank(s) and in whose favour the
    Applicants will issue cheques or drafts in respect of the Application Amount when
    submitting an Application for each Tranche Issue
    Escrow Agreement Agreement to be entered into by the Bank, the Registrar to the Issue, the Lead
    Managers and the Escrow Collection Bank(s) for each Tranche Issue for collection
    of the Application Amounts and where applicable, refunds of the amounts collected
    from the Applicants on the terms and conditions thereof
    Escrow Collection Bank/ The banks which are clearing members and registered with SEBI as Bankers to the
    Banker to the Issue/Refund Issue with whom the Escrow Account will be opened and refund will happen in this
    Bank case being State Bank of India.
    Extraordinary Resolution A resolution passed at a meeting of the Series Bondholders with the consent of the
    Series Bondholders holding in the aggregate more than 50% in nominal value of the
    relevant Series of Bonds held and outstanding under the respective schemes from
    those present and voting
    High Net-worth Individual/ Individual Applicants who have applied for the Bonds for an aggregate amount more
    HNI than Rs. 500,000 in a Tranche Issue (including HUFs applying through their Karta)

    2
    Term Description
    Interest Payment Date As specified in the relevant Tranche Prospectus for a particular Series of Bonds
    Issue Public issue of Lower Tier II Bonds not exceeding the Shelf Limit by way of one or
    more Tranche Issues
    Lead Managers Citigroup Global Markets India Private Limited, Kotak Mahindra Capital Company
    Limited and SBI Capital Markets Limited. SBI Capital Markets Limited, being a
    subsidiary of the Issuer, shall only be involved in the marketing of the Issue
    Market Lot One Bond
    Non-allottee An unsuccessful Applicant to whom the Bonds are not allotted
    Non-Retail Applicants All Applicants other than Retail Applicants
    NSDL Agreement Tripartite agreement dated September 19, 2003 between the Bank, Datamatics
    Financial Services Limited and NSDL has been executed for offering depository
    option to the Bondholders
    Prospectus The Shelf Prospectus read with the Tranche Prospectus for the relevant Tranche
    Issue
    Qualified Institutional Includes public financial institutions, statutory corporations, commercial banks,
    Buyers/ QIBs cooperative banks and regional rural banks, provident, superannuation and gratuity
    funds, pension funds, mutual funds in India and National Investment Fund set up by
    resolution no. F. No. 2/3/2005-DDII dated November 23, 2005 of the Government of
    India published in the Gazette of India and does not include foreign institutional
    investors and overseas corporate bodies
    Record Date 15 (fifteen) days prior to the relevant Interest Payment Date, relevant Redemption
    Date or early redemption date or any other date on which interest and/ or principal is
    due and payable for such Bonds
    Redemption Date The date on which the Bonds will be redeemed at their principal amount outstanding
    together with accrued interest as specified for the Series of Bonds in the relevant
    Tranche Prospectus
    Registrar MoU Memorandum of understating to be entered into between the Bank and the Registrar
    to the Issue
    Registrar to the Issue or Datamatics Financial Services Limited
    Registrar
    Residual Shelf Limit In relation to each Tranche Issue, this shall be the Shelf Limit less the aggregate of
    all previous Tranche Issue, if any, and the reservation for each Category
    Retail Applicants Individual Applicants who have applied for the Bonds for an aggregate amount not
    more than Rs. 500,000 in a Tranche Issue (including HUFs applying through their
    Karta)
    SBI Register The register of Bondholders maintained by the Bank at its registered office (or such
    other place as permitted by law) containing the particulars of the legal owners of the
    Bonds issued by the Bank held in physical form
    Series Bondholder(s) A holder of the Bond(s) of a particular Series issued under a Tranche Issue
    Series of Bonds A series of Bonds stated to be an individual ―Series‖ in the relevant Tranche
    Prospectus
    Shelf Limit The total aggregate limit of the Issue being Rs. 100,000 million to be issued by way
    of one or more Tranche Issues
    Shelf Prospectus The shelf prospectus filed with the DSE after incorporation of the comments
    received from the public on the Draft Shelf Prospectus, pursuant to the provisions of
    the SEBI Debt Regulations
    Stock Exchange(s) The NSE and/or the BSE as specified in the Tranche Prospectus
    Subordinated Indebtedness All indebtedness of the Bank which by its terms is subordinated, in the event of the
    winding up of the Bank, in right of payment to the claims of unsubordinated
    creditors of the Bank and so that, for the purpose of this definition, indebtedness
    shall include all liabilities, whether actual or contingent, under guarantees or
    indemnities
    Tranche Bonds All Series of Bonds proposed to be issued by the Bank pursuant to a relevant
    Tranche Issue aggregating the Tranche Issue Amount
    Tranche Issue Issue of the Tranche Bonds pursuant to the Prospectus up to the Tranche Issue
    Amount

    3
    Term Description
    Tranche Issue Amount The amount of each Tranche Issue shall be the amounts as specified in the relevant
    Tranche Prospectus, including any amount in relation to over-subscription of Bonds
    and retention of over-subscription by Retail Applicants up to the Residual Shelf
    Limit
    Tranche Issue Closing Issue closing date as specified in the relevant Tranche Prospectus for the relevant
    Date Tranche Issue
    Tranche Issue Opening Issue opening date as specified in the relevant Tranche Prospectus for the relevant
    Date Tranche Issue
    Tranche Prospectus The tranche prospectus containing the terms and conditions, recent developments,
    general information, objects, procedure for application, statement of tax benefits,
    regulatory and statutory disclosures and material contracts and documents for
    inspection of the relevant Tranche Issue
    Tripartite Agreements The NSDL Agreement together with the CDSL Agreement
    Working Days All days excluding Saturday and Sundays and bank holidays in Mumbai

    4
    Technical and Industry related terms

    Term Description
    ATMs Automated Teller Machines
    BIFR Board for Industrial and Financial Reconstruction
    BPR Business Process Reengineering
    Basel II The Basel II framework which was drafted by the Basel Committee on Banking
    Supervision, which is a committee of the Bank of International Settlements. It is the
    new risk-based capital framework to be followed by banks across countries and it
    has been designed to be risk-sensitive across various types of banking assets,
    including securitization exposure.
    Basel II is based on the following three mutually reinforcing pillars that allow banks
    and supervisors to evaluate properly the various risks that banks face:
    i minimum capital requirements, which seek to refine the present measurement
    framework;
    ii supervisory review of an institution‘s capital adequacy and internal assessment
    process; and
    iii market discipline through effective disclosure to encourage safe and sound
    banking practices.
    CDR Corporate Debt Restructuring
    CRAR Capital to Risk Weighted Assets Ratio
    CRR Cash Reserve Ratio
    DGCIS Directorate General of Commercial Intelligence and Statistics
    ECS Electronic Clearing Services
    GIR Number General Index Registry Number
    IFSC Indian Financial System Code
    LIBOR London Inter Bank Offered Rate
    MICR Magnetic Ink Character Recognition
    NPAs Non-Performing Assets
    PFRDA Pension Fund Regulatory and Development Authority
    RTGS Real Time Gross Settlement
    SAMG Stressed Assets Management Group
    SLR Statutory Liquidity Ratio
    SME Small and Medium Enterprises
    Tier I capital The core capital of a bank, which provides the most permanent and readily available
    support against unexpected losses. It comprises paid-up capital and reserves
    consisting of any statutory reserves, free reserves and capital reserves as reduced by
    equity investments in subsidiaries, intangible assets, and losses in the current period
    and those brought forward from the previous periods, or any amendment thereto
    pursuant to RBI regulations from time to time
    Tier II capital The undisclosed reserves and cumulative perpetual preference shares, revaluation
    reserves (at a discount of 55.0%), general provisions and loss reserves (allowed up to
    a maximum of 1.25% of risk weighted assets), hybrid debt capital instruments
    (which combine certain features of both equity and debt securities), investment
    fluctuation reserves and subordinated debts, or any amendment thereto pursuant to
    RBI regulations from time to time

    General and Conventional terms and Abbreviations

    Term Description
    AS Indian Accounting Standard
    Applicable Law guidelines, rules, regulations, notifications and any statutory modifications or re-
    enactments relating to the issue of capital and listing of securities, or in relation to
    the Bank, issued from time to time by SEBI, the Government of India, RBI, NSE
    and/or other authorities
    Act The State Bank of India Act, 1955, as amended
    BR Act The Banking Regulation Act, 1949, as amended

    5
    Term Description
    BSE Bombay Stock Exchange Limited
    CARE Credit Analysis and Research Limited
    CDSL Central Depository Services (India) Limited
    Companies Act The Companies Act, 1956, as amended
    CRISIL CRISIL Limited
    DIN Director Identification Number
    DP ID Depository Participant‘s Identification
    Depository/(s) NSDL and CDSL
    EPS Earnings per share
    ESPS - 2008 Employees Share Purchase Scheme, 2008
    FCNR Account Foreign Currency Non Resident Account
    FDI Foreign Direct Investment
    FEDAI Foreign Exchange Dealers Association of India
    FEMA Foreign Exchange Management Act, 1999
    FI Financial Institutions
    FII(s) Foreign Institutional Investors as defined in and registered with SEBI under the
    SEBI (Foreign Institutional Investors) Regulations, 1995, as amended
    FY/ Fiscal Year Financial year ending March 31
    GDR Global Depository Receipt of the Bank
    GOI/ Government/ Central Government of India
    Government
    Indian GAAP Generally accepted accounting principles in India
    Income Tax Act The Income Tax Act, 1961 as amended
    IRDA Insurance Regulatory and Development Authority
    IT Information Technology
    ISIN International Securities Identification Number
    MAT Minimum Alternate Tax
    Mn Million
    MoU Memorandum of Understanding
    MoF Ministry of Finance, Government of India
    NAV Net Asset Value
    NBFC Non-Banking Finance Company
    NEFT National Electronic Funds Transfer
    NII(s) Non Institutional Investor other than a Retail Applicants or HNIs
    NR Non-Resident
    NRI/Non-Resident Indian A Person resident outside India, as defined under FEMA, and who is a citizen of
    India or a Person of Indian Origin and such term as defined under the Foreign
    Exchange Management (Transfer or Issue of Security by a Person Resident Outside
    India) Regulations, 2000, as amended
    NSDL National Securities Depository Limited
    NSE National Stock Exchange of India Limited
    OCB Overseas Corporate Bodies. A company, partnership, society or other corporate body
    owned directly or indirectly to the extent of at least 60% by NRIs, including overseas
    trusts in which not less than 60% of beneficial interest is irrevocably held by NRIs
    directly or indirectly as defined under Foreign Exchange Management (Deposit)
    Regulations, 2000, as amended. OCBs are not permitted to invest in this Issue
    PAN Permanent Account Number
    PAT Profit After Tax
    PBT Profit before Tax
    PFI Public Financial Institution
    PSU Public Sector Undertaking
    Rs./ Rupees Indian Rupees
    RBI The Reserve Bank of India
    RBI Act The Reserve Bank of India Act, 1934, as amended
    RBI Regultions Rules, regulations, circulars or notifications issued by RBI

    6
    Term Description
    RRB Regional Rural Bank
    RTGS Real Time Gross Settlement
    SARFAESI Securitisation and Reconstruction of Financial Assets and Enforcement of Security
    Interest Act, 2002, as amended
    SEBI Securities and Exchange Board of India
    SBI Regulations The State Bank of India General Regulations, 1955, as amended
    SCB Scheduled Commercial Banks
    SCRA The Securities Contract (Regulation) Act, 1956, as amended
    SCRR The Securities Contract (Regulation) Rules, 1957, as amended
    SEBI Act, 1992 The Securities and Exchange Board of India Act, 1992, as amended
    SEBI Debt Regulations Securities and Exchange Board of India (Issue and Listing of Debt Securities)
    Regulations, 2008
    TDS Tax Deduction at Source
    USD United States Dollar
    WDM Wholesale Debt Market

    7
    PRESENTATION OF FINANCIAL INFORMATION AND MARKET DATA

    The Bank prepares its financial statements in Rupees in accordance with Indian GAAP. Industry and market share
    data in this Shelf Prospectus are derived from data of the RBI or the DGCIS and calculated by the Bank where
    applicable. Indian economic data in this Shelf Prospectus is derived from data of the RBI, the economic surveys of
    the Government of India and other sources. Certain financial and statistical figures have been rounded to the
    nearest tenth of a decimal place.

    Unless stated otherwise, the financial information used in this Shelf Prospectus is derived from the Bank‘s
    consolidated audited financial statements as of March 31 for the years ended 2010, 2009, 2008, 2007 and 2006
    prepared in accordance with Indian GAAP and applicable regulations, included in this Shelf Prospectus.

    Market and industry data used in this Shelf Prospectus, has been obtained from industry publications and
    governmental sources. Industry publications generally state that the information contained in those publications
    has been obtained from sources believed to be reliable and that their accuracy and completeness are not guaranteed
    and their reliability cannot be assured. Although the Bank believes that market data used in this Shelf Prospectus is
    reliable, it has not been independently verified.

    Exchange Rate

    Exchange rate for the previous five Fiscal Years as on March 31 for USD into Rs. is as follows:

    Currency Exchange Rates


    (in Rs.)
    March 31, March 31, March 31, March 31, March 31,
    2010 2009 2008 2007 2006
    USD* 45.14 50.95 39.97 43.59 44.61
    * Source: www.rbi.org.in

    8
    FORWARD LOOKING STATEMENTS

    The Bank has included statements in this Shelf Prospectus which contain words or phrases such as ―will‖, ―would‖,
    ―aim‖, ―aimed‖, ―will likely result‖, ―is likely‖, ―are likely‖, ―believe‖, ―expect‖, ―expected to‖, ―will continue‖,
    ―will achieve‖, ―anticipate‖, ―estimate‖, ―estimating‖, ―intend‖, ―plan‖, ―contemplate‖, ―seek to‖, ―seeking to‖,
    ―trying to‖, ―target‖, ―propose to‖, ―future‖, ―objective‖, ―goal‖, ―project‖, ―should‖, ―can‖, ―could‖, ―may‖, ―will
    pursue‖, ―our judgment‖ and similar expressions or variations of such expressions, that are ―forward-looking
    statements‖. Actual results may differ materially from those suggested by the forward-looking statements due to
    certain risks or uncertainties associated with the Bank‘s expectations with respect to, but not limited to, the actual
    growth in demand for banking and other financial products and services, its ability to successfully implement its
    strategy, including its use of the Internet and other technology and its rural expansion, its ability to integrate recent
    or future mergers or acquisitions into its operations, its ability to manage the increased complexity of the risks the
    Bank faces following its rapid international growth, future levels of impaired loans, its growth and expansion in
    domestic and overseas markets, the adequacy of its allowance for credit and investment losses, technological
    changes, investment income, its ability to market new products, cash flow projections, the outcome of any legal,
    tax or regulatory proceedings in India and in other jurisdictions the Bank is or will become a party to, the future
    impact of new accounting standards, its ability to implement its dividend policy, the impact of changes in banking
    regulations and other regulatory changes in India and other jurisdictions on the Bank, including on the assets and
    liabilities of SBI, a former financial institution not subject to Indian banking regulations, its ability to roll over its
    short-term funding sources and its exposure to credit, market and liquidity risks. By their nature, certain of the
    market risk disclosures are only estimates and could be materially different from what actually occurs in the future.
    As a result, actual future gains, losses or impact on net interest income and net income could materially differ from
    those that have been estimated.

    In addition, other factors that could cause actual results to differ materially from those estimated by the forward-
    looking statements contained in this Shelf Prospectus include, but are not limited to, the monetary and interest rate
    policies of India and the other markets in which the Bank operates, natural calamities, general economic, financial
    or political conditions, instability or uncertainty in India, southeast Asia, or any other country, caused by any factor
    including terrorist attacks in India or elsewhere, military armament or social unrest in any part of India, inflation,
    deflation, unanticipated turbulence in interest rates, changes or volatility in the value of the rupee, instability in the
    sub prime credit market and liquidity levels in the foreign exchange rates, equity prices or other market rates or
    prices, the performance of the financial markets in general, changes in domestic and foreign laws, regulations and
    taxes, changes in the competitive and pricing environment in India, and general or regional changes in asset
    valuations. For a further discussion on the factors that could cause actual results to differ, see the discussion under
    section ―Risk Factors‖.

    9
    RISK FACTORS

    Prospective investors should carefully consider all the information in this Shelf Prospectus, including the risks and
    uncertainties described below, before making an investment decision in relation to the Bonds under any Tranche
    Issue. The occurrence of any of following risks, or other risks that are not currently known or are now deemed
    immaterial could have a material adverse effect on the Bank’s business, including its ability to grow its asset
    portfolio, the quality of its assets, its liquidity, its financial performance, its stockholders’ equity, its ability to
    implement its strategy and its ability to repay the interest or principal on the Bonds in a timely manner or at all.
    Risks relating to a specific Tranche Issue or as may be required, will be set out in the relevant Tranche Prospectus.

    Risks Relating to the Bank’s Business

    1. The Bank’s business is particularly vulnerable to interest rate risk, and volatility in interest rates could
    adversely affect its net interest margin, the value of its fixed income portfolio, its income from treasury
    operations and its financial performance.

    The Bank could be materially adversely impacted by a rise in generally prevailing interest rates on
    deposits, especially if the rise were sudden or sharp. If such a rise in interest rates were to occur, the
    Bank‘s net interest margin could be adversely affected because the interest paid by the Bank on its
    deposits could increase at a higher rate than the interest received by the Bank on its advances and other
    investments. The requirement that the Bank maintain a portion of its assets in fixed income Government
    securities could also have a negative impact on its net interest income and net interest margin because the
    Bank typically earns interest on this portion of its assets at rates that are generally less favorable than
    those typically received on its other interest-earning assets. Banks may have to invest funds in fixed
    income securities at a level greater than the stipulated requirement to avoid idle funds in situations where
    there is a lack of credit off take. An example of this was during financial year 2008-09 and financial year
    2009-10 when global economic activity slowed due to the financial crisis in 2008-09 followed by a period
    of recession. Central banks adopted accommodative monetary policies to manage the liquidity problem. In
    periods where there is a reversal of easy monetary policy stance when interest rates begin rising, it can be
    difficult liquidating securities in excess of the requirement without affecting profitability.

    The Indian financial markets remained volatile during the financial year 2009-2010. The equity market
    recovered due to an increase in risk appetite after a few major economies started showing signs of growth.
    The bond market remained under pressure as the RBI started reversing its easy monetary policy measures
    by raising policy rates. The RBI also raised CRR and SLR to absorb excess liquidity in the system in order
    to control inflation. Inflation, as measured by wholesale price index, reached a high of 11.14% for the
    month of May 2010. The RBI, in its Annual Monetary Policy on April 20, 2010, again raised CRR,
    reverse repo and repo rate by 25 basis points each to anchor inflationary expectations. In its mid quarter
    review of the annual policy statement for fiscal 2011 announced on December 16, 2010, the RBI has again
    reduced the statutory liquidity ratio from 25 percent to 24 percent.

    The Bank is also exposed to interest rate risk through its treasury operations and through one of its
    subsidiaries, SBI DFHI Limited, which is a primary dealer in Government securities. A rise in interest
    rates or greater interest rate volatility could adversely affect the Bank‘s income from treasury operations
    or the value of its fixed income securities trading portfolio. Sharp and sustained increases in the rates of
    interest charged on floating rate home loans, which are a material proportion of its loan portfolio, would
    result in extension of loan maturities and higher monthly installments due from borrowers, which could
    result in higher rates of default in this portfolio.

    2. If the Bank fails to maintain desired levels of customer deposits or loans, its business operations may be
    materially and adversely affected.

    Customer deposits are the Bank‘s primary source of funding. However, many factors affect the growth of
    deposits, some of which are beyond the Bank‘s control, such as economic and political conditions,
    availability of investment alternatives and retail customers‘ changing perceptions toward savings. For
    example, retail customers may reduce their deposits and increase their investment in securities for a higher
    return, while SME and mid-corporate customers may reduce their deposits in order to fund projects in a
    favourable economic environment. If the Bank fails to maintain its desired level of deposits, the Bank‘s
    liquidity position, financial condition and results of operations may be materially and adversely affected.

    10
    In such event, the Bank may need to seek more expensive sources of funding, and it is uncertain whether
    the Bank will be able to obtain additional funding on commercially reasonable terms as and when
    required. The Bank‘s ability to raise additional funds may be impaired by factors over which it has little or
    no control, such as deteriorating market conditions or severe disruptions in the financial markets.

    Conversely, the Bank may not be able to reduce its deposits in order to reduce surplus liquidity.
    Consumers shifted significant amounts of Rupees into India‘s state-owned banks, and above all into the
    Bank, during the recent global financial crisis, and from March 31, 2008 to March 31, 2010, the Banks
    total deposit grew from Rs. 5,374.0 billion to Rs. 8,041.2 billion. In response to this trend, the Bank
    aggressively expanded its lending, cut interest rates, promoted home loans, car loans and small business
    loans and provided lower deposit rates than private-sector banks. Nevertheless, the net interest margin of
    the Bank declined from 3.07% for the year ended March 31, 2008 to 2.66% for the year ended March 31,
    2010, primarily due to the fact that the Bank experienced significant growth in deposits over the period
    without a commensurate growth in loans and advances. If the Bank cannot secure sufficient loan volumes
    or earn sufficient interest on its lending due to economic conditions or other factors, its ability to earn
    income maintain and increase its net interest margin may be materially adversely affected.

    3. The Bank has a large portfolio of Government securities that may limit its ability to deploy funds into
    higher yielding investments.

    As a result of Indian reserve requirements, the Bank is more structurally exposed to interest rate
    risk than banks in many other countries. Under the regulation of the RBI, the Bank‘s liabilities are subject
    to the statutory liquidity ratio (―SLR‖) requirement which requires that a minimum specified percentage of
    a bank‘s demand and term liabilities be invested in approved securities, and such reserve requirements are
    subject to increases by the RBI in order to curb inflation or absorb excess liquidity. In its mid quarter
    review of the annual policy statement for fiscal 2011 announced on December 16, 2010, the RBI reduced
    the statutory liquidity ratio from 25 percent to 24 percent, with effect from December 18, 2010.
    Government securities represented 82.0% of the Bank‘s domestic investment portfolio as of March 31,
    2010, comprising 28.20% of the Bank‘s demand and term liabilities as of March 31, 2010. The Bank earns
    interest on such Government securities at rates which are less favorable than those which it typically
    receives in respect of its retail and corporate loan portfolio. In addition, the market and accounting value
    of such securities could be adversely affected by overall rising interest rates.

    Due to a period of lower credit growth during the year ended March 31, 2010, the Bank invested surplus
    capital in fixed-income Government securities. Although many of these securities are short-term in nature,
    the market value of the Bank‘s holdings could decrease if interest rates increase to higher levels. Under
    such a scenario, the Bank would face a choice either to liquidate its investments and realize a loss or to
    hold the securities and possibly be required to recognize an accounting loss, either of which outcomes
    could adversely impact its results of operations.

    4. The base rate system is a new method for pricing loans, and its impact on the future results of the Bank
    is unclear.

    As of July 1, 2010, RBI guidelines replacing the benchmark prime lending rate regime with a base rate
    regime became effective. The Bank plans to implement the new base rate regime and has declared that its
    initial base rate, the minimum benchmark lending rate that banks can charge customers, is to be set at
    7.5% per annum. Because the base rate regime is newly-enacted, its long-term effects on the lending
    practices of the Bank and other banks are unclear as of the date of this Shelf Prospectus. If the base rate
    regime is successful in promoting transparency and enhancing competition in the bank lending markets in
    India, the Bank may lose business to its competitors, who may benefit more from the new regime than the
    Bank does. As banks are unable to lend at rates below their effective base rate, regardless of the
    creditworthiness of the borrower, it is possible that the Bank will be restricted from making loans that
    would otherwise result in a profit, thereby adversely affecting the Bank‘s results of operations. It is also
    possible that the base rate regime will increase deposit rates, which would raise the Bank‘s cost of
    funding, lower the Bank‘s net interest margin and adversely affect its financial condition and results of
    operations.

    11
    5. A substantial portion of the Bank’s income is derived from its Government operations, a slowdown in
    which could adversely affect the Bank’s business.

    The Government generates significant business activity in the Indian economy. For the year ended March
    31, 2010, total Government business turnover was Rs. 20,654.3 billion. For the year ended March 31,
    2010, the Bank earned commission from Government transactions of Rs. 15.2 billion, or 17.21% of the
    Bank‘s other (non-interest) income, and handled 58.8% of the Government‘s aggregate receipts and
    payments as well as 65.1% of state governments‘ payments and receipts. In many instances, the Bank acts
    as the sole agent for certain Government transactions. While the Bank has enjoyed a strong working
    relationship with the Government in the past, there is no assurance that this relationship will continue in
    the future. The Government is not obligated to choose the Bank to conduct any of its transactions. If the
    Government does choose another bank to perform such tasks, the Bank‘s business and thereby the income
    derived from its Government operations, will be adversely affected.

    For the quarter ended June 30, 2010, the total Government business turnover was Rs. 6,019.7 billion and
    commission earned from Government transactions was Rs. 4.4 billion. During this period, the Bank
    handled 62.9% of the Government‘s aggregate receipts and payments.

    6. If the Bank is not able to control or reduce the level of NPAs in its portfolio, its business will be
    adversely affected.

    The Bank‘s net NPAs as of March 31, 2010, were Rs. 108.7 billion or 1.72% of its net advances. The
    Bank‘s NPAs can be attributed to several factors, including increased competition arising from economic
    liberalization in India, variable industrial growth, a sharp decline in commodity prices, the high level of
    debt in the financing of projects and capital structures of companies in India and the high interest rates in
    the Indian economy during the period in which a large number of projects contracted their borrowings,
    which reduced profitability for certain of the Bank‘s borrowers. Although the Bank‘s loan portfolio
    contains loans to a wide variety of businesses, financial difficulties could increase the Bank‘s level of
    NPAs and adversely affect its business, future financial performance, shareholders‘ funds and the price of
    the Bonds.

    7. Further deterioration of the Bank’s NPA portfolio and an inability to improve its provisioning coverage
    as a percentage of gross NPAs could adversely affect the price of the Bonds.

    Although the Bank believes that its total provisions made in accordance with RBI guidelines will be
    adequate to cover all known losses in its asset portfolio, there can be no assurance that there will not be a
    further deterioration in the provisioning coverage as a percentage of gross NPAs or otherwise or that the
    percentage of NPAs that the Bank will be able to recover will be similar to its past experience of
    recoveries of NPAs. Any further deterioration in its NPA portfolio could adversely affect its business, its
    future financial performance and the trading price of the Bonds.

    8. Recent Reserve Bank of India requirements that all Indian banks increase their provisioning coverage
    as a percentage of gross NPAs could adversely affect the Bank’s business.

    Indian banks are being required by a new RBI policy to increase their total provisioning coverage ratio,
    including floating provisions and prudential/technical write-offs, to 70% by September 30, 2010. The RBI
    has granted the Bank an extension of this deadline up to September 30, 2011, subject to the fulfillment of
    certain specified conditions. The Bank‘s net provisioning coverage ratio at March 31, 2010, computed as
    per the RBI guidelines was 59.2%. Increased provisioning by the Bank in order to comply with the
    recently mandated increase in provisions against the Bank‘s NPA portfolio or any future RBI-mandated
    increases or changes to its policy could lead to an adverse impact on the Bank‘s business, future financial
    performance and the price of the Bonds.

    9. The Bank’s loan portfolio contains significant advances to the agricultural sector.

    The Bank‘s loan portfolio contains significant advances to the agricultural sector, amounting to Rs. 637.23
    billion and including indirect finance to agriculture amounting to Rs. 841.51 billion. The Government‘s
    proposed agricultural lending plans may contemplate state-owned banks, including the Bank, lending at
    below market rates in the agricultural sector. The RBI guidelines stipulate that the Bank‘s agricultural

    12
    advances be 18.0% of adjusted net bank credit. The Bank has achieved 18.08% of Adjusted Net Bank
    Credit (―ANBC‖) as on March 31, 2010.

    10. The Bank may experience delays in enforcing its collateral when borrowers default on their obligations
    to the Bank, which may result in failure to recover the expected value of collateral security, exposing it
    to a potential loss.

    A substantial portion of the Bank‘s loans to corporate customers are secured by real assets, including
    property, plant and equipment. The Bank‘s loans to corporate customers also include working capital
    credit facilities that are typically secured by a first charge on inventory, receivables and other current
    assets. In some cases, the Bank may have taken further security of a first or second charge on fixed assets,
    a pledge of financial assets like marketable securities, corporate guarantees and personal guarantees. A
    substantial portion of the Bank‘s loans to retail customers is also secured by the financed assets,
    predominantly property and vehicles. Although in general the Bank‘s loans are over-collateralized, an
    economic downturn could result in a fall in relevant collateral values for the Bank.

    In India, foreclosure on immovable property generally requires a written petition to an Indian court or
    tribunal. An application, when made, may be subject to delays and administrative requirements that may
    result, or be accompanied by, a decrease in the value of the immovable property. Security created on
    shares of a borrower can be enforced without court proceedings. However, there can be delays in
    realization in the event that the borrower challenges the enforcement in an Indian court. In the event a
    corporate borrower makes a reference to a specialized quasi-judicial authority called the Board for
    Industrial and Financial Reconstruction (―BIFR‖), foreclosure and enforceability of collateral is stayed.
    The Bank may not be able to realize the full value on its collateral as a result of, among other factors,
    delays in bankruptcy and foreclosure proceedings, defects in the registration of collateral and fraudulent
    transfers by borrowers. A failure to recover the expected value of collateral security could expose the
    Bank to a potential loss. Any unexpected losses could adversely affect the Bank‘s business, its future
    financial performance and the trading price of the Bonds.

    11. The Indian banking industry is very competitive and the Bank’s growth strategy depends on its ability
    to compete effectively.

    The Bank faces competition from Indian and foreign commercial banks in all its products and services.
    The Bank also faces competition from Indian and foreign commercial banks and non-bank finance
    companies in its retail products and services. In addition, since the Bank raises funds from market sources
    and individual depositors, it will face increasing competition for such funds. Additionally, the Indian
    financial sector may experience further consolidation, resulting in fewer banks and financial institutions.
    The Government permits foreign banks to establish wholly-owned subsidiaries in India and invest up to
    74.0% in Indian private sector banks. The RBI is due to publish a discussion paper in 2011 on the
    presence of foreign banks in India. In addition, private sector financial services companies, non-bank
    finance companies and their affiliates may be entitled to commence banking operations which may further
    increase competition. In August 2010, the RBI released the discussion paper on ―Entry of New Banks in
    the Private Sector‖ which, inter alia, includes discussion on the minimum capital requirements for new
    banks and promoters contribution, foreign shareholding in the new banks, whether industrial or business
    houses should be permitted to promote banks and whether non-banking financial companies should be
    entitled to convert to banks. The Government is also actively encouraging banks and other financial
    institutions to significantly increase their lending to the agricultural sector, which will make this segment
    more competitive. Due to competitive pressures, the Bank may be unable to successfully execute its
    growth strategy and offer products and services at reasonable returns and this may adversely impact its
    business, future financial performance and the trading price of the Bonds.

    12. The Bank is subject to credit, market and liquidity risk which may have an adverse effect on its credit
    ratings and its cost of funds.

    To the extent any of the instruments and strategies the Bank uses to hedge or otherwise manage its
    exposure to market or credit risk are not effective, the Bank may not be able to mitigate effectively its risk
    exposures in particular to market environments or against particular types of risk. The Bank‘s balance
    sheet growth will be dependent upon economic conditions, as well as upon its determination to sell,
    purchase, securitize or syndicate particular loans or loan portfolios. The Bank‘s trading revenues and

    13
    interest rate risk exposure are dependent upon its ability to properly identify, and mark to market, changes
    in the value of financial instruments caused by changes in market prices or rates. The Bank‘s earnings are
    dependent upon the effectiveness of its management of migrations in credit quality and risk
    concentrations, the accuracy of its valuation models and its critical accounting estimates and the adequacy
    of its allowances for loan losses. To the extent its assessments, assumptions or estimates prove inaccurate
    or not predictive of actual results, the Bank could suffer higher than anticipated losses. The successful
    management of credit, market and operational risk is an important consideration in managing its liquidity
    risk because it affects the evaluation of its credit ratings by rating agencies. Rating agencies may reduce or
    indicate their intention to reduce the ratings at any time. The rating agencies can also decide to withdraw
    their ratings altogether, which may have the same effect as a reduction in its ratings. Any reduction in the
    Bank‘s ratings (or withdrawal of ratings) may increase its borrowing costs, limit its access to capital
    markets and adversely affect its ability to sell or market its products, engage in business transactions,
    particularly longer-term and derivatives transactions, or retain its customers. This, in turn, could reduce its
    liquidity and negatively impact its operating results and financial condition.

    13. The Bank has high concentrations of loans to certain customers and to certain sectors and if a
    substantial portion of these loans were to become non-performing, the quality of its loan portfolio could
    be adversely affected.

    As of March 31, 2010, the Bank‘s total exposure to borrowers (fund-based and non-fund based, including
    guarantees) was Rs. 9,179.1 billion (including principal outstanding, accrued interest and 100.0% of the
    nominal amount of non-fund based exposures). The ten largest individual borrowers in the aggregate
    accounted for 9.0% of the Bank‘s total exposure and its ten largest borrower groups in aggregate
    accounted for 12.9% of its total exposure. The largest borrower as of March 31, 2010 accounted for 1.6%
    of the Bank‘s total exposure and 16.1% of the Bank‘s total capital funds. The largest borrower group as of
    March 31, 2010 accounted for approximately 2.6% of the Bank‘s total exposure and for 25.9% of the
    Bank‘s total capital funds. Credit losses on these large single borrower and group exposures could
    adversely affect the Bank‘s financial performance and the trading price of the Bonds.

    The Bank has extended loans to several industrial sectors in India. The table below sets out the Bank‘s
    five largest domestic industry exposures (fund-based, excluding retail) as of March 31, 2010.

    Industry Fund-based (Rs. in millions)

    Non-banking financial companies and Trading . . . . . . . . . . . . . . . . . . . . . . . . . . ……………...…1,570,947


    Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . …………………….378,981
    Iron and Steel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ……………………278,930
    Petroleum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ……………………237,196
    Engineering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . …………………….167,054
    Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ……………………2,633,108

    These exposures, totalling Rs. 2,633.1 billion, constituted 48.4% of the Bank‘s gross domestic advances
    (excluding retail) and 41.0% of its total gross advances as of March 31, 2010. The global and domestic
    trends in these industrial sectors may have a bearing on the Bank‘s gross financial position. Although the
    Bank‘s portfolio contains loans to a wide variety of businesses, financial difficulties in these industrial
    sectors could increase the level of NPAs and restructured assets, and adversely affect the Bank‘s business,
    its future financial performance, shareholders‘ funds and the price of the Bonds.

    14. A substantial portion of the Bank’s loans have a tenor exceeding one year, exposing the Bank to risks
    associated with economic cycles and project success rates.

    As of March 31, 2010, loans with a remaining tenor exceeding one year constituted 68.0% of the Bank‘s
    total customer loans. The long tenor of these loans may expose the Bank to risks arising out of economic
    cycles. In addition, some of these loans are project finance loans. There can be no assurance that these
    projects will perform as anticipated or that such projects will be able to generate cash flows to service
    commitments under the loans. The Bank is also exposed to infrastructure projects that are still under
    development and are open to risks arising out of delay in execution, failure of borrowers to execute
    projects on time, delay in getting approvals from necessary authorities, and breach of contractual
    obligations by counterparties, all of which may adversely impact the projected cash flows. Although the

    14
    Bank has in place certain procedures to monitor its project finance borrowers, these procedures may not be
    effective, especially given the size and scope of the Bank‘s loan portfolio and the number of its borrowers.
    Risks arising out of a recession in the economy and a delay in project implementation or commissioning
    could lead to rise in delinquency rates and, in turn, adversely impact the Bank‘s future financial
    performance and the trading price of the Bonds.

    15. The Bank’s funding is primarily short-term and if depositors do not roll over deposited funds upon
    maturity the Bank’s business could be adversely affected.

    The maturity profile of the Bank‘s assets and liabilities shows a negative liquidity gap in the three months
    to one year time period. The negative gap has arisen mainly because the Bank‘s deposits and other
    liabilities are of shorter average maturity than its loans and investments. Most of the Bank‘s incremental
    funding requirements are met through short-term funding sources, primarily in the form of deposits.
    However, a large portion of the Bank‘s assets have medium- or long-term maturities, creating potential
    funding mismatches. The Bank‘s customer deposits are both demand deposits and term deposits, with
    approximately 35.8% having maturities of up to one year as of March 31, 2010. If a substantial number of
    the Bank‘s depositors do not roll over deposited funds upon maturity, its liquidity position could be
    adversely affected. The failure to obtain rollover of customer deposits upon maturity or to replace them
    with fresh deposits could have a material adverse effect on the Bank‘s business, future financial
    performance and the trading price of the Bonds.

    16. The Bank is exposed to fluctuations in foreign exchange rates.

    As a financial organization with operations in various countries, the Bank is exposed to exchange rate risk.
    The Bank complies with regulatory limits upon its unhedged foreign currency exposure by making foreign
    currency loans on terms that are generally similar to its foreign currency borrowings and thereby
    transferring the foreign exchange risk to the borrower or through active use of cross-currency swaps and
    forwards to generally match the currencies of its assets and liabilities.

    However, the Bank is exposed to fluctuations in foreign currency rates for its unhedged exposure. Adverse
    movements in foreign exchange rates may also impact the Bank‘s borrowers adversely, which may in turn
    impact the quality of its exposure to these borrowers. Volatility in foreign exchange rates could adversely
    affect the Bank‘s business, future financial performance and the price of the Bonds.

    17. The Bank’s risk management policies and procedures may leave the Bank exposed to unidentified or
    unanticipated risks, which could negatively affect its business or result in losses.

    The Bank‘s hedging strategies and other risk management techniques may not be fully effective in
    mitigating its risk exposure in all market environments or against all types of risk, including risks that are
    unidentified or unanticipated. Some methods of managing risk are based upon observed historical market
    behavior. As a result, these methods may not predict future risk exposures, which could be greater than the
    historical measures indicated. Other risk management methods depend upon an evaluation of information
    regarding markets, clients or other matters. This information may not in all cases be accurate, complete,
    up to date or properly evaluated. Management of operational, legal or regulatory risk requires, among
    other things, policies and procedures to properly record and verify a large number of transactions and
    events. Although the Bank has established these policies and procedures, they may not be fully effective.

    18. There is operational risk associated with the Bank’s industry which, when realized, may have an
    adverse impact on its business.

    The Bank, like all financial institutions, is exposed to many types of operational risk, including the risk of
    fraud or other misconduct by employees or outsiders, unauthorized transactions by employees and third
    parties (including violation of regulations for prevention of corrupt practices, and other regulations
    governing its business activities), or operational errors, including clerical or record keeping errors or
    errors resulting from faulty computer or telecommunications systems. The Bank outsources some
    functions to other agencies. Given its high volume of transactions, certain errors may be repeated or
    compounded before they are discovered and successfully rectified. In addition, its dependence upon
    automated systems to record and process transactions may further increase the risk that technical system

    15
    flaws or employee tampering or manipulation of those systems will result in losses that are difficult to
    detect. The Bank may also be subject to disruptions of its operating systems arising from events that are
    wholly or partially beyond its control (including, for example, computer viruses or electrical or
    telecommunication outages), which may give rise to a deterioration in customer service and to loss or
    liability to the Bank. The Bank is further exposed to the risk that external vendors may be unable to fulfill
    their contractual obligations to the Bank (or will be subject to the same risk of fraud or operational errors
    by their respective employees as the Bank is), and to the risk that its (or its vendors‘) business continuity
    and data security systems prove not to be sufficiently adequate. The Bank also faces the risk that the
    design of its controls and procedures may prove inadequate, or are circumvented, thereby causing delays
    in detection or errors in information. Although the Bank maintains a system of controls designed to keep
    operational risk at appropriate levels, like all banks, the Bank has suffered losses from operational risk and
    there can be no assurance that the Bank will not suffer losses from operational risks in the future that may
    be material in amount, and its reputation could be adversely affected by the occurrence of any such events
    involving its employees, customers or third parties.

    19. The Bank may not be able to detect money-laundering and other illegal or improper activities fully or
    on a timely basis, which could expose it to additional liability and harm its business or reputation.

    The Bank is required to comply with applicable anti-money-laundering and anti-terrorism laws and other
    regulations in India and in other jurisdictions where it has operations. These laws and regulations require
    the Bank, among other things, to adopt and enforce ―know-your-customer‖ policies and procedures and to
    report suspicious and large transactions to the applicable regulatory authorities in different jurisdictions.
    While the Bank has adopted policies and procedures aimed at detecting and preventing the use of its
    banking networks for money-laundering activities and by terrorists and terrorist-related organizations and
    individuals generally, such policies and procedures may not completely eliminate instances where the
    Bank may be used by other parties to engage in money-laundering and other illegal or improper activities
    due to, in part, the short history of these policies and procedures. To the extent the Bank fails to fully
    comply with applicable laws and regulations, the relevant government agencies to whom the Bank reports
    have the power and authority to impose fines and other penalties. In addition, the Bank‘s business and
    reputation could suffer if customers use the Bank for money-laundering or illegal or improper purposes.

    20. Significant security breaches could adversely impact the Bank’s business.

    The Bank seeks to protect its computer systems and network infrastructure from physical break-ins as well
    as security breaches and other disruptions caused by the Bank‘s increased use of technology including the
    internet. Computer break-ins and power disruptions could affect the security of information stored in and
    transmitted through these computer systems and network infrastructure. There may be areas in the system,
    that have not been properly protected from security breaches and other attacks. The Bank employs
    security systems, including firewalls and password encryption, designed to minimise the risk of security
    breaches. Although the Bank intends to continue to implement security technology and establish
    operational procedures to prevent break-ins, damage and failures, there can be no assurance that these
    security measures will be adequate or successful. Failed security measures could have a material adverse
    effect on the Bank‘s business, its future financial performance and the trading price of the Bonds. The
    Bank‘s business operations are based on a high volume of transactions. Although the Bank takes adequate
    measures to safeguard against system related and other fraud, there can be no assurance that it would be
    able to prevent fraud. The Bank‘s reputation could be adversely affected by significant fraud committed
    by employees, customers or outsiders.

    21. System failures could adversely impact the Bank.

    Given the increasing share of retail products and services and transaction banking services in the Bank‘s
    overall business, the importance of systems technology to the Bank‘s business has increased significantly.
    The Bank‘s principal delivery channels include ATMs, call centres and the internet. Any failure in the
    Bank‘s systems, particularly for retail products and services and transaction banking, could significantly
    affect the Bank‘s operations and the quality of its customer service and could result in business and
    financial losses and adversely affect the trading price of the Bonds.

    22. Banking is a heavily regulated industry and material changes in the regulations which govern the Bank
    could cause its business to suffer.

    16
    Banks in India are subject to detailed supervision and regulation by the RBI. In addition, banks are
    generally subject to changes in Indian law, as well as to changes in regulations, government policies and
    accounting principles. The laws and regulations governing the banking sector, including those governing
    the products and services that the Bank provides or proposes to provide, such as its life insurance or asset
    management business, or derivatives and hedging products and services, could change in the future. Any
    such changes may adversely affect the Bank‘s business, future financial performance and the price of the
    Bonds by, for example, requiring a restructuring of the Bank‘s activities or increasing its operating costs.

    The lending norms of the RBI require every scheduled commercial bank to extend 40.0% of its net bank
    credit to certain eligible sectors, such as agriculture, small-scale industries and individual housing finance
    up to Rs. 2 million (which are categorized as ―Priority Sectors‖). Economic difficulties are likely to affect
    those borrowers in Priority Sectors more severely. As of March 31, 2010, the Bank‘s lending to Priority
    Sectors accounted for 41.0% of adjusted net bank credit, with 18.1% of net credit going to the agricultural
    sector.

    23. Regulatory changes in India or other jurisdictions in which the Bank operates could adversely affect its
    business.

    The laws and regulations or the regulatory or enforcement environment in any of those jurisdictions in
    which the Bank operates may change at any time and may have an adverse effect on the products or
    services the Bank offers, the value of its assets or its business in general.

    Throughout calendar year 2007 and roughly the first half of 2008, the RBI enacted gradual increases in the
    repo rate and the cash reserve ratio (―CRR‖), respectively, from 7.75% and 6.25% in March 2007 to a
    peak of 9.0% effective August 30, 2008.

    During the second half of calendar year 2008 and the first half of 2009, in response to the economic crisis
    the RBI relaxed its reserve and provisioning requirements in order to promote activity in the lending and
    credit markets. On May 15, 2008, the risk weight on residential housing loans to individuals was reduced
    from 75.0% to 50.0%. In November 2008, the provisioning requirements for all standard assets (except for
    the agriculture and SME sectors) were reduced to a uniform level of 0.4%. With effect from November
    15, 2008 the risk weight for commercial real estate exposure was reduced from 125.0% to 100.0%. The
    repo rate was reduced incrementally until it reached a low of 4.75% from April 21, 2009. The CRR was
    reduced incrementally until it reached 5.0% effective January 17, 2009.

    In the second half of calendar year 2009, the RBI indicated that it would begin to reverse its previous
    expansionary measures in order to subdue inflationary pressures while preserving growth momentum. It
    implemented a range of measures, such as restoring the SLR to 25.0% from its previous level of 24.0%
    which has again been restored to the previous level of 24.0%, and adjusting or discontinuing special rules
    in connection with special refinance facilities for commercial banks. In the third quarter review of
    monetary policy in January 2010, the RBI increased the CRR by 75 basis points from 5.0% to 5.75% in a
    phased manner effective February 2010. On March 19, 2010, the RBI increased the repo and reverse repo
    rates by 25 basis points with immediate effect. In the annual policy review in April 2010, the RBI
    announced a 25 basis point increase in the CRR to 6.0%. The RBI, in its credit policy announcement on
    September 16, 2010, hiked repo by 25 basis points and the reverse repo by 50 basis points. The repo now
    stands at 6.50% while reverse repo stands at 5.5o% after a further hikes by RBI.

    Regulatory or legislative changes as a result of litigation involving the RBI and other Government bodies
    with respect to derivatives could affect the Bank‘s derivative business, as the Bank may be unable to
    continue to enter into certain types of income earning transactions or may incur increased administrative
    costs.

    Future changes in the stance of the RBI could have an adverse impact on the Bank‘s capital adequacy and
    profitability. Any change by the RBI to the directed lending norms may result in the Bank being unable to
    meet the Priority Sector lending requirements, as well as requiring the Bank to increase its lending to
    relatively riskier segments which could result in an increase in NPAs in the Bank‘s directed lending
    portfolio. Consequently, the Bank‘s levels of yield-generating assets may be reduced or the Bank may be

    17
    forced to recognize accounting losses, which could materially adversely affect its recognized profits,
    financial condition and results of operations.

    24. The Bank is required to maintain its capital adequacy ratio at the minimum level required by the RBI
    for domestic banks. There can be no assurance that the Bank will be able to access capital as and when
    it needs it for growth.

    The RBI requires Indian banks to maintain a minimum Tier I capital adequacy ratio of 6.0% and a
    minimum risk weighted capital adequacy ratio of 9.0%. As per Basel II norms, the Bank‘s standalone Tier
    I and total capital adequacy ratios were 9.45% and 13.39%, respectively, while the Group‘s consolidated
    Tier I and total capital adequacy ratios were 9.28% and 13.49%, respectively, as of March 31, 2010. The
    Bank is exposed to the risk of the RBI increasing the applicable risk weight for different asset classes from
    time to time. The Bank‘s current capitalization levels are in line with these requirements. However, unless
    the Bank is able to access the necessary amount of additional capital, any incremental increase in the
    capital requirement may adversely impact the Bank‘s ability to grow its business and may even require the
    Bank to withdraw from or to curtail some of its current business operations. There can also be no
    assurance that the Bank will be able to raise adequate additional capital in the future at all or on terms
    favorable to it. Moreover, if the Basel Committee on Banking Supervision releases additional or more
    stringent guidance on capital adequacy norms which are given the effect of law in India in the future, the
    Bank may be forced to raise or maintain additional capital in a manner which could materially adversely
    affect its business, financial condition and results of operations.

    25. As the Bank’s majority shareholder, the Government controls the Bank and may cause the Bank to
    take actions which are not in the interests of the Bank or of the holders of the Bonds.

    In accordance with the Act, the Government, in consultation with the RBI, has the power to appoint and/or
    nominate the Chairman, two Managing Directors and a majority of the directors of the Bank‘s Central
    Board, which determines the outcome of the actions relating to the general direction of the affairs of the
    Bank, including payment of dividends. Furthermore, under the Act, the Government, after consultation
    with the RBI and the Chairman of the Bank, may issue directives on matters of policy involving the public
    interest that may affect the conduct of the business affairs of the Bank. Further, under the Act, the Bank is
    required to obtain approval from the Government for any increase in its authorized share capital. Further
    amendments to the Act has also enabled the Bank to issue preference shares. There can be no assurance
    that the Act will not be repealed or significantly amended in the future. In addition, there can be no
    assurance that the RBI or the Government will not take action or implement policies that are adverse to
    investors in the Bonds.

    26. The legal requirement that the Government maintain a majority shareholding interest in the Bank of at
    least 51% may limit the ability of the Bank to raise appropriate levels of capital financing.

    The Act, pursuant to the State Bank of India (Amendment) Act, 2010, restricts the Government‘s
    shareholding interests in the Bank from falling below 51.0%. This requirement could result in restrictions
    in the equity capital raising efforts of the Bank as the Government may not be able to fund any further
    investments that would allow it simultaneously to maintain its stake at a minimum of 51.0% and seek
    funding from the capital markets. As the Indian economy grows, more businesses and individuals will
    require capital financing. In order to meet and sustain increasing levels of growth in capital demand, the
    Bank will need to accrete its capital base, whether through organic growth or (more likely) capital market
    financing schemes. If the Bank is unable to grow its capital base in step with demand, its business,
    financial prospects and profitability may be materially and adversely affected.

    27. If the Bank does not effectively manage its foreign operations, these operations may incur losses or
    otherwise adversely affect the Bank’s business and results of operations.

    As of March 31, 2010, the Bank had a network of 142 international offices in 32 countries and intends to
    further expand its international operations. As the Bank has such a large number of foreign branches,
    foreign subsidiaries, joint ventures and associates, it is subject to additional risks related to complying
    with a wide variety of national and local laws, restrictions on the import and export of certain
    intermediates, banking regulations, technologies and multiple and possibly overlapping tax structures. As
    a result, successful foreign expansion requires substantial capital, and it will be costly for the Bank to fund

    18
    organic growth and to conduct acquisitions of foreign businesses. Acquisitions involve various risks that
    are difficult for the Bank to control and the Bank cannot be certain that any acquired or new businesses
    will perform as anticipated.

    In addition, the Bank faces competition from banks in other countries that may have more experience and
    resources in those countries or in international operations generally. With the exception of certain
    countries, such as the Maldives, the Bank remains a small to mid-size operator in the international markets
    and many of its competitors have much greater resources.

    The Bank may also face difficulties integrating new facilities in different countries into its existing
    operations, as well as integrating employees that the Bank hires in different countries into its existing
    corporate culture or complying with unfamiliar laws and regulations. If the Bank does not effectively
    manage its foreign operations and expansion, it may lose money in these countries, which could adversely
    affect the Bank‘s business and results of operations.

    28. The Bank may not be successful in implementing its growth strategies or penetrating new markets.

    One of the Bank‘s principal business strategies is to expand into new businesses and financial services
    product offerings. To this end, the Bank has launched initiatives in general insurance, private equity funds
    and cash management services, among other businesses, in recent years. This strategy exposes the Bank to
    a number of risks and challenges including, among others, the following:

    growth will require greater marketing and compliance costs than experienced in the past,
    diverting operational, financial and managerial resources away from the existing businesses of
    the Bank;

    growth plans may not develop and materialize as the Bank anticipates and there can be no
    assurances that new product lines or businesses will become profitable;

    the Bank may fail to identify appropriate opportunities and offer attractive new products in a
    timely fashion putting its businesses at a disadvantage as compared to its competitors;

    compliance with new market standards and unfamiliar regulations will place new demands upon
    management and create new and possibly unforeseen risks to the Bank;

    the Bank will need to hire or retrain skilled personnel who are able to supervise and conduct the
    relevant new business activities, adding to the Bank‘s cost base; and

    competitors in the different business segments that the Bank operates in may have more
    experience and resources than the Bank which may affect its ability to compete.

    In addition, the Bank‘s growth strategy in the future may involve strategic acquisitions and
    reconstructions, partnerships, joint ventures and exploration of mutual interests with other parties. These
    acquisitions and investments may not necessarily contribute to business growth and the Bank‘s
    profitability or may be unsuccessful. In addition, the Bank could experience difficulty in assimilating
    personnel, integrating operations and cultures and may not realize the anticipated synergies or efficiencies
    from such transactions. These difficulties could disrupt the Bank‘s ongoing business, distract its
    management and employees and increase its expenses.

    29. If the Bank is not able to integrate any future acquisitions, the Bank’s business could be disrupted.

    The Bank may seek opportunities for growth through acquisitions or be required to undertake mergers
    mandated by RBI. Any future acquisitions or mergers may involve a number of risks, including
    deterioration of asset quality, diversion of its management‘s attention required to integrate the acquired
    business and failure to retain key acquired personnel and clients, leverage synergies, rationalise
    operations, or develop the skills required for new businesses and markets, or unknown and known
    liabilities, some or all of which could have an adverse effect on its business.

    19
    30. The Bank’s business growth, both in terms of its new businesses and financial services, may add
    complexities to its current operations, which, if not managed properly, may result in operational
    volatility whether within or across its branches and business units.

    The Bank‘s expansion into new businesses and financial services product offerings will require proper
    oversight and management. The new businesses will need to be set up and run profitably and the
    formation of new strategic business units will need to be streamlined into the Bank‘s existing operations.
    These new businesses and business units will be formed across India, as well as internationally.
    Integrating the operations, not only domestically throughout India, but also throughout the international
    offices, will increase the need for high level management. In addition, not only are the financial prospects
    of the new businesses uncertain, but they may also shift the financial and managerial resources away from
    other areas of its operations. In such a case, the Bank‘s other operations may suffer and the Bank‘s
    performance as a whole may also decline. If the Bank is unable to manage this growth process properly,
    its business prospects, financial position and profitability may be materially adversely affected.

    31. The proposed merger of the Associate Banks with the Bank may engender opposition against the Bank
    and lead to business disruptions, such as labour strikes, and adversely affect the Bank’s operations.

    The Bank is considering the merger of certain of its Associate Banks into the Bank, but has faced and may
    continue to face opposition to such consolidation by employees of the Bank or the Associate Banks. In
    2008, the merger of one such Associate Bank, the State Bank of Saurashtra, into the Bank was effected by
    a Government order and notification dated August 13, 2008. Although a settlement was signed with the
    All India State Bank Staff Federation, which represents non-officer employees, the All India State Bank
    Officers‘ Federation opposed the merger and observed a one-day strike on August 13, 2008, which
    affected the functioning of branches for one day. At the time, the union also threatened to intensify its
    opposition and impose a lengthier strike. In recent years, other one- to two-day strikes have taken place
    from time to time manifesting protests related to the proposed mergers, as well as other issues such as
    wages and employment levels. Although none of these strikes materially impacted the Bank‘s or the
    Associate Banks‘ operations, future union and popular opposition to any merger of Associate Banks into
    the Bank may harm the Bank‘s reputation and disrupt business operations and the delivery of banking
    services to customers.

    In 2010, the merger of another such Associate Bank, the State Bank of Indore, into the Bank was effected
    by a Government order and notification dated July 28, 2010 effective from August 26, 2010.

    32. If the Bank is unable to adapt to rapid technological changes, its business could suffer.

    The Bank‘s future success will depend in part on its ability to respond to technological advances and to
    emerging banking industry standards and practices on a cost-effective and timely basis. The development
    and implementation of such technology entails significant technical and business risks. There can be no
    assurance that the Bank will successfully implement new technologies effectively or adapt its transaction
    processing systems to meet customer requirements or emerging industry standards. If the Bank is unable,
    for technical, legal, financial or other reasons, to adapt in a timely manner to changing market conditions,
    customer requirements or technological changes, its business, the future financial performance of the Bank
    and the trading price of the Bonds could be materially affected.

    33. The Bank implements new information technology systems as it expands and may experience
    implementation technical difficulties.

    The Bank implemented and continues to implement new information technology systems to facilitate and
    complement its growth. As additional IT platforms are introduced and become integral to the Bank‘s
    product offering, unforeseen technical difficulties may cause disruption in the Bank‘s operations. These
    disruptions may affect customer services, internal operations and data management. As the Bank‘s risk
    management systems evolve and as its operations become more reliant upon technology to manage and
    monitor its risk, any failure or disruption could materially and adversely affect its operations and financial
    position.

    34. The Bank depends on the accuracy and completeness of information about customers and
    counterparties.

    20
    In deciding whether to extend credit or to enter into other transactions with customers and counterparties,
    the Bank may rely on information furnished to the Bank by or on behalf of customers and counterparties,
    including financial statements and other financial information. The Bank may also rely on certain
    representations as to the accuracy and completeness of that information and, with respect to financial
    statements, on reports of independent auditors. For example, in deciding whether to extend credit, the
    Bank may assume that a customer‘s audited financial statements conform to generally accepted
    accounting principles and present fairly, in all material respects, the financial condition, results of
    operations and cash flows of the customer. The Bank‘s financial condition and results of operations could
    be negatively affected by relying on financial statements that do not comply with generally accepted
    accounting principles or with other information that is materially misleading.

    35. The Bank may not be able to properly manage and gradually reduce its number of employees, which
    would negatively impact its business.

    As of June 2010, the Bank employed a total of 200,490 employees. To expand and to replace retired
    employees, the Bank plans to recruit additional employees during the current Fiscal Year. There can be no
    assurances, however, that the Bank will be able to continue the implementation of its plan to increase its
    number of employees successfully in the future to the targeted levels. If the Bank is not successful in
    recruiting sufficient numbers to execute its strategies, or training and maintaining its standards across a
    large employee population, or retaining its growing population of employees, this may have a material
    adverse effect on the future financial performance of the Bank.

    36. Any inability to attract and retain talented professionals may negatively affect the Bank.

    The Bank employs some officers on a contract basis for various purposes. The salaries offered are market
    competitive. However, the number of officers on market competitive salaries is minimal. An inability to
    attract and retain such talented professionals or the resignation or loss of key management personnel,
    especially in light of its continued expansion, may have an adverse impact on the Bank‘s business, future
    financial performance and trading price of the Bonds.

    37. The Bank’s remuneration scheme may not be as attractive as other banks with which it competes and
    may hurt the Bank’s ability to attract and maintain a skilled and committed workforce.

    The Bank‘s employee remuneration scheme is guided by industry level negotiations between bank
    management represented by the Indian Bank‘s Association, and bank workers represented by their
    respective associations. All negotiations are subject to final approval by the Government, which limits the
    Bank‘s flexibility in implementing performance linked pay. The permanent employees constitute
    approximately 97% of the total staff. Although their remuneration packages may not be comparable with
    those offered by Private Sector Banks, the Bank believes that other benefits allow it to effectively compete
    for qualified employees. The attrition rate has been less than 0.5% among permanent staff, excluding the
    outflow due to retirement upon attaining superannuation. The Bank has also been employing officers on a
    contract and on cost to company basis offering market related salaries. The attrition rate in this category is
    slightly higher than in permanent staff, but comparable with market levels for contract officers. If the
    general banking industry increasingly moves toward incentive-based pay schemes, the Bank may not be as
    competitive as other banks. This may increase the possibility that the Bank‘s skilled personnel may go
    elsewhere for more attractive employment packages. Added employment pressures may result in
    diminished profitability, especially if rates of return do not experience a commensurate rise.

    38. The Bank’s employees are highly unionised and any union action may adversely affect the Bank’s
    business.

    Approximately 98% of the Bank‘s clerical and non-officer employees belong to a union, the All India
    State Bank Staff Federation. A significant number of the Bank‘s officers belong to a separate union, the
    All India State Bank Officers‘ Federation. While the Bank believes it has a strong working relationship
    with its unions, there can be no assurance that the Bank will continue to have such a relationship in the
    future. In recent years, one- to two-day strikes by the unions have taken place from time to time to protest
    mergers of certain Associate Banks into the Bank, as well as other issues such as wages and employee
    levels. If the staff or officers‘ union was to call for a work stoppage or other similar action, the Bank may

    21
    be forced to suspend all or part of its operations until the dispute is resolved. If such a work stoppage was
    to occur, the Bank‘s business could be adversely affected.

    39. The Bank is involved in various litigation matters. Any final judgment awarding material damages
    against the Bank could have a material adverse impact on its future financial performance,
    stockholders’ equity and the price of the Bonds.

    The Bank and its subsidiaries and associates, or their directors or officers, are often involved in litigation
    matters (including civil or criminal) for a variety of reasons, which generally arise because the Bank seeks
    to recover from borrowers or because customers seek claims against it. The majority of these cases arise in
    the normal course of business. Although it is the Bank‘s policy to make provisions for probable loss, the
    Bank does not make provisions or disclosures in its financial statements where its assessment is that the
    risk is insignificant. The Bank cannot guarantee that the judgments in any of the litigation in which the
    Bank is involved would be favorable to it and if its assessment of the risk changes, its view on provisions
    will also change. Increased provisioning for such potential losses could have a material adverse effect on
    the Bank‘s results of operations and financial condition. If the Bank‘s provisioning is inadequate relative
    to actual losses on final judgment, such additional losses could have an adverse impact on the Bank‘s
    business.

    40. The Bank has contingent liabilities.

    As of March 31, 2010, the Bank had contingent liabilities of approximately Rs. 5,484.5 billion on account
    of guarantees covering its customers, letters of credit, underwriting commitments, liabilities for partly paid
    commitments, claims against the Bank not acknowledged as debt, and disputed tax and legal claims,
    compared to contingent liabilities of Rs. 7,236.9 billion in the year ended March 31, 2009. In the year
    ended March 31, 2010, the Bank saw a significant decline in its contingent liabilities on account of a
    decline in forward exchange contracts and other items for which the Bank is contingently liable. If the
    Bank‘s contingent liabilities are realized, this may have an adverse effect on the Bank‘s future financial
    performance and the trading price of the Bonds.

    41. Increased volatility or inflation of commodity prices in India could adversely affect the Bank’s
    business.

    In recent months, consumer and wholesale prices in India have exhibited marked inflationary trends, with
    particular increases in the prices of food, metals and crude oil. Inflation measured by the Wholesale Price
    Index increased from 1.31% at March 31, 2009 to 11.04% at March 31, 2010. Any increased volatility or
    rate of inflation of global commodity prices, in particular oil and steel prices, could adversely affect the
    Bank‘s borrowers and contractual counterparties. Although the RBI has enacted certain policy measures
    designed to curb inflation, these policies may not be successful. Because of the importance of its retail
    banking portfolio and the importance of its agricultural loan portfolio to its business, any slowdown in the
    growth of the housing, automobile and agricultural sectors could adversely impact the Bank‘s business,
    financial condition and results of operations.

    42. A significant increase in the price of crude oil could adversely affect the Indian economy and the
    Bank’s business.

    India imports approximately 70.0% of its requirements of crude oil, which comprised approximately
    30.6% of total imports in Fiscal Year 2010; accordingly, a significant increase from current levels in the
    price of crude oil could adversely affect the Indian economy. Since 2004, there have been several periods
    of sharp increase in global crude oil prices due to both increased demand and speculation and pressure on
    production and refinery capacity, and political and military tensions in key oil-producing regions, among
    other factors. A sharp increase in global crude oil prices during calendar year 2008 caused the Indian
    Wholesale Price Index to peak at 12.8% in August 2008. In June 2010, the Government eliminated
    subsidies on petroleum products, which will significantly increase the price of gasoline, diesel and
    kerosene. Any further increase or volatility of oil prices suffered by consumers could have a material
    adverse impact on the economy and on the banking and financial system in particular, including through a
    rise in inflation and market interest rates and a higher trade deficit.

    43. A significant change in the Government’s policies could adversely affect the Bank’s business and the

    22
    trading price of the Bonds.
    The Bank‘s assets and customers are predominantly located in India. The Government has traditionally
    exercised and continues to exercise a dominant influence over many aspects of the economy. The
    Government‘s economic policies have had and could continue to have a significant effect on public sector
    entities, including the Bank, and on market conditions and prices of Indian securities, including securities
    issued by the Bank.

    The most recent parliamentary elections were completed in May 2009, which the Indian National
    Congress Party won with Dr. Manmohan Singh as the Prime Minister of India. Although there has been no
    significant change in the Government‘s policies since May 2009, current macroeconomic conditions could
    lead to certain policy and administrative steps which in turn could result in a wider fiscal deficit and,
    consequently, a downgrade in sovereign ratings, which would adversely affect exchange rates and interest
    rates. Any significant change in the Government‘s economic liberalization and deregulation policies could
    adversely affect business and economic conditions in India and could also adversely affect the Bank‘s
    business, its future financial performance and the trading price of the Bonds.

    44. Financial instability in India, other countries where the Bank has established operations, or
    globally could adversely affect the Bank’s business and the trading price of the Bonds.
    The Indian economy is influenced by economic and market conditions in other countries,
    particularly emerging market countries in Asia. The Bank has also established operations in several other
    countries, including in the United States and certain European countries. A loss of investor confidence in
    the financial systems of other emerging markets and countries where the Bank has established operations
    or any worldwide financial instability may cause increased volatility in the Indian financial markets and,
    directly or indirectly, adversely affect the Indian economy and financial sector and its business.

    The global credit and equity markets have recently experienced substantial dislocations, liquidity
    disruptions and market corrections. The dislocation of the sub-prime mortgage loan market in the United
    States since September 2008 led to increased liquidity and credit concerns and volatility in the global
    credit and financial markets in Fiscal Years 2009 and 2010. In recent months, the European sovereign debt
    crisis has led to renewed concerns of global financial stability and increased volatility in debt and equity
    markets. These and other related events have had a significant impact on the global credit and financial
    markets as a whole, including reduced liquidity, greater volatility, widening of credit spreads and a lack of
    price transparency in the United States and global credit and financial markets.

    In response to such developments, legislators and financial regulators in the United States and other
    jurisdictions, including India, implemented a number of policy measures designed to add stability
    to the financial markets. However, the overall long-term impact of these and other legislative and
    regulatory efforts on the global financial markets is uncertain, and they may not have had the
    intended stabilizing effects. Any significant financial disruption in the future could have an adverse
    effect on the Bank‘s cost of funding, loan portfolio, business, future financial performance and the
    trading price of the Bonds. Adverse economic developments overseas in countries where the Bank has
    operations could have a material adverse impact on the Bank and the trading price of the Bonds.

    45. Natural calamities could adversely affect the Indian economy, the Bank’s business and the price of the
    Bonds.

    India has experienced natural calamities such as earthquakes, floods and drought in recent years. The
    extent and severity of these natural disasters determine their impact on the Indian economy. For example,
    in fiscal year 2003, many parts of India received significantly less than normal rainfall. As a result of the
    drought conditions during fiscal year 2003, the agricultural sector recorded a negative growth of 7.0%.
    Also, the erratic progress of the monsoon season in fiscal year 2005 adversely affected sowing operations
    for certain crops and resulted in a decline in the growth rate of the agricultural sector from 10.0% in fiscal
    year 2004 to negligible growth in fiscal year 2005. The agricultural sector grew by 5.9% in fiscal year
    2006, 3.8% in fiscal year 2007 and 4.9% in fiscal year 2008. In fiscal years 2009 and 2010, the
    agricultural sector was affected by one of the worst drought spells in the last 40 years, and grew by an
    estimated 1.6% and 0.2%, respectively. Further prolonged spells of below or above normal rainfall or
    other natural calamities could adversely affect the Indian economy and the Bank‘s business, especially in
    view of the Bank‘s sizeable exposure to agricultural borrowers.

    23
    46. If regional hostilities, terrorist attacks or social unrest in some parts of the country increase, the Bank’s
    business and the trading price of the Bonds could be adversely affected.

    India has from time to time experienced social and civil unrest and hostilities both internally and with
    neighbouring countries. Present relations between India and Pakistan continue to be fragile on the issues
    of terrorism, armament and Kashmir. In November 2008, several coordinated shooting and bombing
    attacks occurred across Mumbai, India‘s financial capital, which resulted in the loss of life, property and
    business. India has also experienced terrorist attacks in other parts of the country. These hostilities and
    tensions could lead to political or economic instability in India and a possible adverse effect on the Bank‘s
    business, its future financial performance and the trading price of the Bonds. Further, India has also
    experienced social unrest in some parts of the country. If such tensions spread and lead to overall political
    and economic instability in India, it may adversely affect the Bank‘s business, future financial
    performance and the trading price of the Bonds.

    47. Financial difficulties and other problems in certain financial institutions in India could adversely
    affect the Bank’s business and the price of the Bonds.

    The Bank is exposed to the risks inherent in the Indian financial system. These risks are driven by the
    financial difficulties faced by certain Indian financial institutions, whose commercial soundness may
    be closely interrelated as a result of credit, trading, clearing or other relationships amongst them. This risk,
    which is sometimes referred to as ―systemic risk,‖ may adversely affect financial intermediaries, such as
    clearing agencies, banks, securities firms and exchanges with whom the Bank interacts on a daily basis.
    Any such difficulties or instability of the Indian financial system in general could create an adverse market
    perception about Indian financial institutions and banks and adversely affect the Bank‘s business and the
    trading price of the Bonds. As the Indian financial system operates within an emerging market, the Bank
    faces risks of a nature and extent not typically faced in more developed economies, including the risk of
    deposit runs notwithstanding the existence of a national deposit insurance scheme.

    48. An outbreak of avian or swine influenza or other contagious diseases may adversely affect the Indian
    economy and the Bank’s business.

    Since late 2003, a number of countries in Asia, including India, as well as countries in other parts of the
    world, have had confirmed cases of the highly pathogenic H5N1 and H1N1 strains of influenza in birds
    and swine. Certain countries in Southeast Asia have reported cases of bird to human transmission
    of avian and swine influenza resulting in numerous human deaths. The World Health Organization and
    other agencies have issued warnings on a potential avian or swine influenza pandemic if there is
    sustained human to human transmission. Future outbreaks of avian or swine influenza or a similar
    contagious disease could adversely affect the Indian economy and economic activity in the region. As a
    result, any present or future outbreak of avian or swine influenza or other contagious diseases could have a
    material adverse effect on the Bank‘s business.

    49. The effects of the planned convergence with and adoption of IFRS are uncertain.
    The Institute of Chartered Accountants of India, the accounting body that regulates the accounting
    firms in India, has announced a road map for the adoption of, and convergence with IFRS. The Bank will
    be required to prepare its annual and interim financial statements under IFRS commencing from the
    fiscal period starting April 1, 2013. Because there is a significant lack of clarity on the adoption of and
    convergence with IFRS and there is not yet a significant body of established practice on which to draw in
    forming judgments regarding its implementation and application, the Bank has not determined with any
    degree of certainty the impact that such adoption will have on its financial reporting. Further, the new
    accounting standards will change its methodology for estimating allowances for probable loan losses.
    New accounting standards may require it to value its non-performing loans by reference to their
    market value (if a ready market for such loans exists), or to calculate the present value of the expected
    future cash flows realizable from its loans, including the possible liquidation of collateral (discounted
    at the loan‘s effective interest rate) in estimating allowances for probable losses. This may result in
    the Bank recognizing higher allowances for probable loan losses in the future. Therefore, there can be
    no assurance that the Bank‘s financial condition, results of operations, cash flows or changes in

    24
    shareholders‘ equity will not appear materially worse under IFRS than under Indian GAAP. In the
    Bank‘s transition to IFRS reporting, the Bank may encounter difficulties in the ongoing process of
    implementing and enhancing its management information systems. Moreover, there is increasing
    competition for the small number of IFRS-experienced accounting personnel available as more Indian
    companies begin to prepare IFRS financial statements. There can be no assurance that the Bank‘s adoption
    of IFRS will not adversely affect its reported results of operations or financial condition.

    50. Non-comparfibility of numbers due to amalagamtion of State Bank of Indore

    Consequent to the notification of the ―Acquisition of State Bank of Indore Order, 2010‖ issued by the
    Govt, of India, the undertaking of State Bank of Indore stands transferred to and vests in the Bank, with
    effect from August 26, 2010, the effective date. The results for the quarter and the nine month ended
    December 31, 2010 include the results of operations of the erstwhile State Bank of Indore for the period
    from August 26, 2010 to December 31, 2010 and the results of the Bank are not comparable to that extent.

    51. This Shelf Prospectus includes unaudited unconsolidated limited review financial statements for the
    half yearly ended September 30, 2010, which may not completely reflect the exact financial position of
    the Bank.

    The Bank being governed by the Act is required to prepare its financial statements only at the end of each
    Fiscal Year. However, in compliance with stock exchange requirements and RBI disclosure norms, the
    Bank submits its unaudited unconsolidated limited review quarterly financial results to the stock
    exchanges (the ―Limited Review Financial Statements‖). These Limited Review Financial Statements for
    the quarter and nine month ended December 31, 2010 have been included in this Shelf Prospectus. These,
    being unaudited financial statements on an unconsolidated basis, may not completely reflect the exact
    financial position of the Bank.

    Risks Relating to India

    1. Any downgrading of India’s debt rating by an international rating agency could adversely affect the
    Bank’s business and its liquidity.

    Because the Bank‘s foreign currency ratings are pegged to India‘s sovereign ceiling, any adverse revision
    to India‘s credit rating for international debt will have a corresponding effect on the Bank‘s ratings. Any
    adverse change in the Bank‘s ratings may limit its access to capital markets and decrease its liquidity.

    2. The proposed new taxation system could adversely affect the Bank’s business and the price of the
    Bonds.

    In its Union Budget for Fiscal Year 2010, the Government proposed two major reforms in Indian tax laws,
    namely the Goods and Services Tax and the Direct Taxes Code, which are proposed to be effective April
    1, 2011 and April 1, 2012 respectively. The goods and services tax would replace the indirect taxes on
    good and services such as central excise duty, service tax, customs duty, central sales tax, surcharge and
    cess currently being collected by the central and state governments. The Direct Taxes Code was released
    for public comments in August 2009. It aims to reduce distortions in tax structure, introduce moderate
    levels of taxation and expand the tax base. It seems to consolidate and amend laws relating to all direct
    taxes like income tax, dividend distribution tax, fringe benefit tax and wealth tax and facilitate voluntary
    compliance.

    Because the taxation system is going to be overhauled its long-term effects on the Bank and other banks
    are unclear as of the date of this Shelf Prospectus and it could adversely affect the Bank‘s business, future
    financial performance and the price of the Bonds.

    3. If the Bank is unable to complete the Issue, it may be required to find alternative methods of increasing
    its core Tier II capital ratio.

    The purpose of the Issue of the Bonds is to allow the Bank to strengthen its capital position and to achieve
    an increase in Tier II capital. If the Bank is unable to complete the Issue, it will need to assess its capital
    position and may be required to find alternative methods for achieving requisite capital ratios. There can

    25
    be no assurance that any of these alternative methods would be successful in increasing the Bank‘s capital
    ratios sufficiently or on the timetable currently envisaged. If the Bank is unable to increase its core Tier II
    capital ratio sufficiently, its credit ratings may drop and its cost of funding may increase, thereby affecting
    profitability.

    Risks relating to investment in Bonds

    1. The Bonds are not guaranteed by the Republic of India.

    The Bonds are not the obligations of, or guaranteed by, the Government. Although the Government owns
    59.40% of the Bank‘s issued and paid up share capital currently, the Government is not providing a
    guarantee in respect of the Bonds. In addition, the Government is under no obligation to maintain the
    solvency of the Bank. Therefore, investors should not rely on the Government ensuring that the Bank
    fulfills its obligations under the Bonds.

    2. There has been no prior public market for the Series of Bonds

    Each Tranche Issue will be a new issue of a Series of Bonds and the relevant Series of Bonds may have no
    established trading market. Although an application will be been made to list each Series of Bonds on the
    NSE or BSE, there can be no assurance that an active public market for such Series of Bonds will develop,
    and if such a market were to develop, there is no obligation on us to maintain such a market. The liquidity
    and market prices of each Series of Bonds can be expected to vary with changes in market and economic
    conditions, our financial condition and prospects and other factors that generally influence market price of
    such Series of Bonds. Such fluctuations may significantly affect the liquidity and market price of each
    Series of Bonds, which may trade at a discount to the price at which you purchase such Series of Bonds.
    There may be market making facility for each Series of Bonds, in order to enhance the liquidity of such
    Series of Bonds, provided by certain entities appointed by the Bank, however there is no assurance of such
    a market making facility or that this facility would provide any liquidity for such Series of Bonds nor that
    this would result in an active market developing for such Series of Bonds. Further, the market making
    facility may only be for a limited period.

    3. There is a risk of volatility in the price of theBonds.

    The market price of the Bonds may be affected by a variety of factors including, but not limited to, general
    market conditions, changes in sentiments regarding the Bank, variations in the Bank‘s operating results
    compared with the expectations of market analysts and investors, its business developments or those of its
    competitors, the operating performance of its competitors, speculation about the Bank‘s business in the
    press, media or investment community and the publication of research reports by analysts, or regulatory
    changes affecting the Bank‘s operations. The Bondholders should be aware that the value of the Bonds
    could fluctuate and may not always reflect the underlying asset values or prospects of the relevant Bonds.

    4. Payments made on the Bonds are subordinated to certain tax and other liabilities preferred by law.

    The Bonds will be subordinated to certain liabilities preferred by law such as to claims of the Government
    on account of taxes, and certain liabilities incurred in the ordinary course of the Bank‘s trading or banking
    transactions. In particular, in the event of bankruptcy, liquidation or winding-up, the Bank‘s assets will be
    available to pay obligations on the Bonds only after all of those liabilities that rank senior to these Bonds
    have been paid. In the event of bankruptcy, liquidation or winding-up, there may not be sufficient assets
    remaining, after paying amounts relating to these proceedings, to pay amounts due on the Bonds.

    5. The Bonds are subordinated and have only limited rights of acceleration.

    The Bonds are subordinated debt instruments of the Bank. Payments on Bonds will be subordinated in
    right of payment upon the winding-up or liquidation of the Bank to the prior payment in full of all deposits
    and other liabilities of the Bank, except those liabilities which rank equally with each of the Bonds. The
    Bonds and any amounts of interest due thereon are unsecured obligations of the Bank and, in the event of
    the winding up of the Bank, the claims of the holders of the Bonds and any relative interest pursuant
    thereto will be subordinated in right of payment to the claims of all other creditors. As a consequence of
    these subordination provisions, in the event of a winding-up of the Bank‘s operations, the holders of the

    26
    Bonds may recover proportionately less than the holders of the Bank‘s deposit liabilities or the holders of
    its other unsubordinated liabilities. As of March 31, 2010, all of the Bank‘s outstanding liabilities
    (including deposits, borrowings, call money, guarantees and acceptances and other liabilities, but
    excluding provisions), rank senior to the Bonds.

    Only those events described in the section ―Terms of the Tranche Issue – Default, Events of Default‖ as
    will be specified in the relevant Tranche Prospectus, regarding the Bank‘s winding-up or liquidation, will
    permit a holder of the Bonds to accelerate payment of such Bonds. The Bank may be wound up only by
    order of the Central Government. Accordingly, in those events described in the section ―Terms of the
    Tranche Issue – Default, Events of Default‖, the only action the holder may take in India against the Bank
    is certain actions to cause, or make a claim in, the Bank‘s liquidation or reorganisation. Furthermore, if the
    Bank‘s indebtedness were to be accelerated, its assets may be insufficient to repay in full borrowings
    under all such debt instruments, including the Bonds.

    For the avoidance of doubt, the claims of the holders of the Bonds shall be senior to the claims of holder
    of instruments that constitute the upper Tier II capital and Tier I capital.

    6. The Bonds may not qualify as Tier II capital.

    There is no guarantee that the Bonds qualify as Tier II capital under the Capital Adequacy Guidelines
    published by the RBI. The failure of the Bonds to qualify as Tier II capital due to any reason (including
    changes in law, regulations or interpretations of the RBI or other government authorities) would adversely
    affect the Bank‘s capital adequacy ratio.

    7. The Bank may pre-pay a particular Series of Bonds by exercising a call option after at least five years
    and subject to RBI approval

    The Bank may, subject to the approval of RBI, pre-pay the payments under a particular Series of Bonds
    issued by the Bank. Such pre-payment can only take place at least after five years of issuance of a Series
    of Bonds and is subject the approval of RBI. In the event the Bank decides to pre-pay the payments due on
    the Series of Bonds before the Redemption Date, and receives an RBI approval for the same, then the
    Series Bondholder may receive lesser payment on the redemption of the relevant Series of Bonds, than the
    payment that he would have received, in case the Series of Bonds would have been redeemed on the
    Redemption Date.

    8. No Debenture Redemption Reserve (“DRR”) for the Bonds.

    The Department of Company Affairs General Circular No.9/2002 No.6/3/2001-CL.V dated April 18, 2002
    specifies that ―no DRR is required for debentures issued by All India Financial Institutions (―AIFIs‖)
    regulated by RBI and banking companies for both public as well as privately placed debentures‖.
    Therefore the Bank will not be maintaining debenture redemption reserve in respect of the Bonds issued
    and the Bondholders may find it difficult to enforce their interests in the event of or to the extent of a
    default.

    9. The Bank is not prohibited from issuing further debt which ranks above the Bonds

    There is no restriction on the amount of debt securities that the Bank may issue that ranks above the
    Bonds. The issue of any such debt securities may reduce the amount recoverable by investors in the Bonds
    upon the Bank‘s bankruptcy, winding-up or liquidation. As of March 31, 2010, the Bank had Rs.
    9564104.919 millions of indebtedness outstanding that ranks above the Bonds.

    10. Any downgrading in credit rating of the Bonds may affect the value of Bonds and thus our ability to
    raise further debts.

    This Bonds have been rated by CARE as having a rating ―CARE AAA‖ and by CRISIL as having a rating
    ―AAA/ Stable‖. The Bank cannot guarantee that this rating will not be downgraded. Such a downgrade in
    the credit rating may lower the value of the Bonds and may also affect the Banks ability to raise further
    debt.

    27
    NOTES TO RISK FACTORS:

    1. For details on interests of the Bank‘s Directors, please refer to the sections titled ―Our Management‖.

    2. The Bank has entered into certain related party transactions as disclosed in the section ―Auditor
    Examination Report and Financial Statements – Related Party Disclosures‖.

    3. Any clarification or information relating to the Issue shall be made available by the Lead Managers and
    our Bank to investors at large and no selective or additional information will be available for a section of
    investors in any manner whatsoever.

    4. Investors may contact the Registrar to the Issue, the Contact Person of the Bank or the Lead Managers for
    any complaints or queries pertaining to the Issue. In case of any specific queries on allotment / refund,
    investors may contact the Registrar to the Issue.

    5. In the event of oversubscription to the Issue or the Tranche Issue, allocation of Bonds will be as per the
    Tranche Prospectus.

    6. Investors may note that this being a public issue of Bonds, as per the SEBI Debt Regulations, the Draft
    Shelf Prospectus and this Shelf Prospectus has not been submitted to SEBI for comments. However, the
    Draft Shelf Prospectus had been filed with the BSE on January 31, 2011 for receipt of public comments
    till February 8, 2011.

    7. Investors may note that:

    The Bonds are capital instruments and not deposits of the Bank and
    they can not be used as collateral for any loan made by the Bank or any
    of its subsidiaries or affiliates. The Bonds are different from fixed
    deposits and are not covered by deposit insurance.

    Unlike the fixed deposits where deposits are repaid at the option of
    deposit holder, the Bonds are not redeemable at the option of the
    Bondholders or without the prior consent of RBI.

    28
    SUMMARY OF THE ISSUE

    The following is a summary of the Issue. The summary should be read in conjunction with, and is qualified in its
    entirety by the more detailed information in the section ―Terms of the Issue‖ as well as the contents of each
    Tranche Prospectus for each Tranche Issue.

    Common Terms of the Bonds

    Issuing Bank State Bank of India


    Issue Public Issue of the Bonds not exceeding Rs. 100,000 million. The
    Bonds will be issued in one or more tranches subject to the overall
    limit of Rs. 100,000 million. . The Bank intends to deploy the Issue
    proceeds to augment its capital base in line with its growth strategy.
    Stock Exchange proposed for listing of NSE and / or BSE as specified in the Tranche Prospectus
    the Bonds
    Issuance and Trading Compulsorily in dematerialized form
    Market Lot/Trading Lot One Bond
    Depositories NSDL and CDSL
    Security Unsecured
    Rating The Bonds proposed to be rated under this Issue have been rated by
    CARE for an amount of upto Rs. 100,000 million vide their letter
    dated January 27, 2011 and by CRISIL for an amount of upto Rs.
    100,000 million vide their letter dated January 27, 2011. The above
    ratings will be re-affirmed by CARE and CRISIL respectively for
    every subsequent Tranche Issue.

    The terms of each Series of Bonds are set out below:

    Options Series of Bonds

    Frequency of Interest Payment As specified in the Tranche Prospectus for a particular Series of Bonds
    Minimum Application Size As specified in the Tranche Prospectus for a particular Series of Bonds
    Maximum Application Size As specified in the Tranche Prospectus for a particular Series of Bonds
    In Multiples of As specified in the Tranche Prospectus for a particular Series of Bonds
    Face Value (Rs./Bond) As specified in the Tranche Prospectus for a particular Series of Bonds
    Issue Price (Rs./Bond) As specified in the Tranche Prospectus for a particular Series of Bonds
    Mode of Interest Payment Through various modes available*

    Coupon (%) p.a. As specified in the Tranche Prospectus for a particular Series of Bonds
    Effective Yield (per annum) As specified in the Tranche Prospectus for a particular Series of Bonds
    Put Option There is no ‗put‘ option for the Bonds or in accordance with other criteria
    permitted by relevant RBI regulations from time to time
    Call Option As specified in the relevant Tranche Prospectus for a particular Series of
    Bonds, if applicable, subject to being at least 5 (five) years from the
    Deemed Date of Allotment of the Bonds and with the prior approval by RBI
    or in accordance with other criteria permitted by relevant RBI regulations
    from time to time
    Step Up Coupon There is no ‗step up‘ coupon for the Bonds or in accordance with other
    criteria permitted by relevant RBI regulations from time to time
    Lock-in Clause for interest As specified in the Tranche Prospectus for a particular Series of Bonds
    payments/principal payment
    Tenor As specified in the Tranche Prospectus for a particular Series of Bonds
    Redemption Date As specified in the Tranche Prospectus for a particular Series of Bonds

    These Bonds are not redeemable at the option of the Bondholders or without
    the prior consent of RBI

    29
    Options Series of Bonds

    Redemption Amount (Rs./Bond) As specified in the Tranche Prospectus for a particular Series of Bonds
    Nature of Indebtedness and In terms of the Capital Adequacy Guidelines, to be eligible for inclusion in
    Ranking Lower Tier II capital, the Bonds are fully paid up, unsecured, subordinated
    to the claims of all other creditors
    Credit Rating CARE ―AAA‖ by CARE and ―AAA‖ Stable by CRISIL for the Issue of
    Bonds up to the Shelf Limit which will be re-affirmed for every subsequent
    Tranche Issue if required

    * For various modes of interest payment, please refer to the section ―Terms of the Issue‖in this Shelf Prospectus as well as the
    ―Terms of the Tranche Issue‖ in the relevant Tranche Prospectus.

    Applicants should note that in the event of any conflict between the terms of the Shelf Prospectus and the Tranche
    Prospectus, the terms as set out in this Tranche Prospectus shall prevail.

    30
    SUMMARY FINANCIAL INFORMATION

    The following tables present the summary financial statements which are extracted from the unconsolidated and
    consolidated audited financial statements of the Bank for the years ended March 31, 2010, March 31, 2009, March
    31, 2008, March 31, 2007 and March 31, 2006. These should be read in conjunction with the audit report thereon
    issued by our Auditors and statement of significant accounting policies and notes to accounts on the financial
    statements contained in the section ―Auditor Examination Report and Financial Information‖.

    Summarised Statement of Assets and Liabilities (Unconsolidated)


    (Rs. in millions)
    As on 31-Mar-06 31-Mar-07 31-Mar-08 31-Mar-09 31-Mar-10
    Audited Audited Audited Audited Audited
    A ASSETS
    1 CASH AND BALANCES
    WITH RESERVE BANK
    OF INDIA
    Cash in hand (including
    foreign currency notes and
    I gold) 20,802.31 25,301.19 32,203.11 42,955.16 68,410.13
    Balances with Reserve Bank
    ii of India in Current Account 1,95,724.73 2,65,463.06 4,83,143.05 5,12,506.57 5,44,498.52
    Total 2,16,527.04 2,90,764.25 5,15,346.16 5,55,461.73 6,12,908.65
    BALANCES WITH
    2 BANKS
    & MONEY AT CALL &
    SHORT NOTICE
    I In India 86,836.35 74,999.73 1,04,725.13 2,48,223.77 1,21,510.69
    ii Outside India 1,42,236.61 1,53,922.91 54,592.06 2,40,352.49 2,27,419.08
    Total 2,29,072.96 2,28,922.64 1,59,317.19 4,88,576.26 3,48,929.77
    3 INVESTMENTS
    i Investments in India 15,72,862.05 14,33,363.22 18,43,301.02 26,94,710.76 27,75,684.61
    ii Investments outside India 52,480.36 58,125.61 51,711.69 64,828.81 82,216.09
    Total 16,25,342.41 14,91,488.83 18,95,012.71 27,59,539.57 28,57,900.70
    4 ADVANCES
    Bills purchased and
    i discounted 2,48,537.49 3,07,871.01 3,67,334.90 4,71,839.66 4,27,747.32
    Cash Credits, overdrafts and
    ii loans repayable on demand 9,58,567.73 12,54,761.73 15,20,000.00 22,36,799.27 27,51,504.96
    iii Term Loans 14,10,904.14 18,10,732.19 22,80,347.06 27,16,393.11 31,39,889.24
    Total 26,18,009.36 33,73,364.93 41,67,681.96 54,25,032.04 63,19,141.52
    5 FIXED ASSETS 27,529.34 28,188.67 33,734.81 38,378.47 44,129.06
    6 OTHER ASSETS 2,23,808.43 2,52,923.06 4,44,170.29 3,77,332.74 3,51,127.60
    TOTAL (A) 49,40,289.54 56,65,652.38 72,15,263.12 96,44,320.81 1,05,34,137.30
    B LIABILITIES
    1 DEPOSITS
    I Demand Deposits
    i From Banks 70,135.06 1,09,748.10 1,23,134.07 1,07,618.42 89,044.70
    ii From Others 6,09,821.44 7,10,231.64 8,58,201.23 9,99,917.34 11,36,749.63
    II Savings Bank Deposits 11,27,239.21 12,91,364.96 15,42,292.87 19,82,242.68 25,74,602.98
    III Term Deposits
    i From Banks 51,830.94 46,134.86 70,654.77 1,36,571.60 1,43,378.31
    ii From Others 19,41,433.90 21,97,731.33 27,79,756.47 41,94,381.24 40,97,386.65
    Total 38,00,460.55 43,55,210.89 53,74,039.41 74,20,731.28 80,41,162.27
    2 BORROWINGS
    i Borrowings in India 66,423.82 58,197.73 1,28,025.40 3,08,527.05 3,86,450.31
    ii Borrowings outside India 2,39,988.63 3,38,835.62 3,89,248.72 5,32,052.24 6,43,665.70

    31
    As on 31-Mar-06 31-Mar-07 31-Mar-08 31-Mar-09 31-Mar-10
    Audited Audited Audited Audited Audited
    Total 3,06,412.45 3,97,033.35 5,17,274.11 8,40,579.29 10,30,116.01

    3 OTHER LIABILITIES &


    PROVISIONS
    Other Liabilities &
    i Provisions 5,07,117.58 4,56,115.67 6,45,804.58 8,03,533.27 8,03,367.04
    ii Subordinate Debts 49,858.10 1,44,306.90 1,87,818.40 - -
    Sub Total 5,56,975.68 6,00,422.57 8,33,622.98 8,03,533.27 8,03,367.04
    TOTAL (B) 46,63,848.68 53,52,666.81 67,24,936.51 90,64,843.85 98,74,645.32
    NET ASSETS (C=A-B) 2,76,440.86 3,12,985.57 4,90,326.62 5,79,476.96 6,59,491.98
    Represented By
    SHARE CAPITAL 5,262.99 5,262.99 6,314.70 6,348.80 6,348.82
    RESERVES & SURPLUS
    I Statutory Reserves 1,70,209.24 2,03,790.37 2,52,181.09 3,07,266.89 3,71,077.77
    II Capital Reserves 4,181.05 4,181.44 4,225.84 12,673.07 13,813.62
    III Share Premium 35,105.73 35,105.73 2,00,989.68 2,06,579.25 2,06,583.08
    IV Investment Fluctuation
    Reserve - - 621.79 0 0.00
    V Foreign Currency
    Translation Reserve 2,934.00 2,686.04 1791.81 15,748.43 6,449.56
    VI Revenue and Other Reserves 58,744.46 61,955.61 24,198.31 30,857.13 55,215.74
    VII Balance in Profit and Loss
    Account 3.39 3.39 3.39 3.39 3.39

    TOTAL (E) 2,71,177.87 3,07,722.58 4,84,011.91 5,73,128.16 6,53,143.16


    TOTAL (D+E) 2,76,440.86 3,12,985.57 4,90,326.62 5,79,476.96 6,59,491.98
    CONTINGENT
    LIABILITIES
    I Claims against the bank not
    acknowledged as debts 17,048.17 38,089.88 7,997.30 21,918.16 6,554.51
    II Liability for partly paid
    investments 28.00 28.00 28.00 28.00 28.00
    III Liability on account of
    outstanding forward
    exchange contracts 13,43,502.87 19,72,853.05 31,04,575.17 28,94,292.40 24,50,314.50
    IV Guaranteed given on behalf
    of constituents 2,68,869.80 3,76,211.98 4,96,630.16 7,29,616.95 10,10,016.11
    V Acceptances, endorsements
    and other obligations 3,70,254.83 4,70,506.43 7,47,060.94 10,90,934.91 11,85,267.11
    VI Other items for which the
    banks is contingently liable 2,89,110.11 208210.83 37,51,673.24 25,00,207.15 8,32,288.62
    Total 22,88,813.78 3065900.17 81,07,964.81 72,36,997.57 54,84,468.85
    Bills for collection 2,05,929.54 2,33,675.11 1,89,468.00 4,38,705.67 4,79,223.28

    Summarised Statement of Profit and Loss Account (Unconsolidated)


    (Rs in millions)
    For the Financial Year 31-Mar-06 31-Mar-07 31-Mar-08 31-Mar-09 31-Mar-10
    Audited Audited Audited Audited Audited
    A INCOME
    1 Interest Earned
    Interest/Discount on
    1 Advances Bills 1,76,962.96 2,48,391.77 3,52,281.12 4,64,047.15 5,06,326.39
    1 Income on Investments 1,39,775.28 114929.92 1,19,441.64 1,55,741.15 1,77,362.96
    Interest on Balances with
    RBI and other Inter Bank
    1 Funds 21,217.30 27196.03 12,000.74 14,743.77 15,119.22

    32
    For the Financial Year 31-Mar-06 31-Mar-07 31-Mar-08 31-Mar-09 31-Mar-10
    Audited Audited Audited Audited Audited
    1 Others 21,840.15 4392.53 5779.58 3,352.27 11,130.61
    Total 3,59,795.69 394910.25 4,89,503.07 6,37,884.34 7,09,939.18
    2 Other Income
    2 Commission, exchange and
    brokerage 39,961.99 48,045.03 59,142.55 76,172.35 96,408.60
    2 Profit / (Loss) on sale of
    investments (Net) 5,871.71 5,677.81 16,498.39 25,672.90 21,167.92
    2 Profit / (Loss) on revaluation
    of investments (Net) - -16775.14 -7,035.01 -5.65 0.00
    2 Profit / (Loss) on sale of
    land, buildings and other
    assets (Net) including leased
    assets 19.39 121.27 110.41 -29.54 -104.56
    3 Profit on exchange
    transactions (Net) 10,012.66 3733.99 6,926.98 11,792.49 15,871.35
    3 Income by way of dividends
    from subsidiaries/companies
    and or joint ventures abroad
    or in India 3,171.83 5969.68 1,974.06 4,096.03 5,734.83
    3 Income from Financial
    Leases 1,177.91 836.34 318.64 266.70 91.85
    3 Miscellaneous income 14,136.53 10,083.50 9,013.27 8,942.61 10,511.53
    Total 74,352.02 57692.48 86,949.28 1,26,907.89 1,49,681.52
    Total Income 4,34,147.71 4,52,602.73 5,76,452.36 7,64,792.23 8,59,620.70
    B EXPENDITURE
    1 Interest Expended
    1 Interest on deposits 1,81,321.85 190835.80 2,70,725.81 3,79,368.47 4,33,342.85
    Interest on Reserve
    borrowings Bank of India/
    1 Inter-bank 13,215.58 21415.55 29,384.40 25,550.11 12,280.48
    1 Others 9,367.04 22116.86 19180.56 24,234.36 27,601.45
    Total 2,03,904.47 234368.21 3,19,290.77 4,29,152.94 4,73,224.78

    2 Operating Expenses
    2 Payments to and provisions
    for employees 81,230.44 79,325.81 77,858.69 97,473.12 127,546.46
    2 Rent, taxes and lighting 7,963.51 8,965.01 9,934.18 12,951.37 15,895.75
    2 Printing & Stationery 1,756.39 1,738.73 1,888.78 2,328.21 2,423.24
    2 Depreciation 7,291.32 6,023.92 6,799.79 7,631.41 9,326.64
    3 Directors' fees, allowances
    and expenses 12.33 10.78 12.32 9.98 6.11
    3 Auditors' fees and expenses
    (including branch auditors'
    fees and expenses) 635.6 622.83 973.46 1,036.97 1,115.98
    3 Law charges 494.86 573.60 604.51 746.12 966.19
    3 Postages, Telegrams,
    Telephones, etc. 1,022.48 1,181.69 2,165.77 2,797.33 3,215.80
    3 Repairs and maintenance 1,702.71 1,891.50 2358.27 1,605.88 3,279.07
    2 Insurance 3,407.64 3,552.86 4,158.44 5,290.19 6,838.34
    2 Other Expenditure 11,733.69 14,348.44 19,331.85 24,616.46 32,573.22
    Total 1,17,250.97 1,18,235.17 1,26,086.06 1,56,487.04 2,03,186.80
    Total Expenditure 3,21,155.44 352603.38 4,45,376.83 5,85,639.98 6,76,411.58
    Profit Before Provisions and
    taxation & extraordinary
    items 1,12,992.27 99,999.35 1,31,075.53 1,79,152.25 1,83,209.12
    Less: Extraordinary Items - - - - 0.00
    Profit Before Provisions and 1,12,992.27 99,999.35 1,31,075.53 1,79,152.25 1,83,209.12

    33
    For the Financial Year 31-Mar-06 31-Mar-07 31-Mar-08 31-Mar-09 31-Mar-10
    Audited Audited Audited Audited Audited
    taxation
    Provision &
    3 Contingencies:
    Provision for Income Tax
    3 (Current tax) 16,827.08 29793.14 38,235.03 59,715.20 61,666.20
    Provision for Income
    3 Tax(Deferred tax) 3,578.94 -198.33 -2194.26 -10,551.03 -14,077.47
    Provision for Fringe Benefit
    3 Tax 4,580.00 885.00 1050.00 1420.00 0.00
    3 Provision for other taxes 8.80 4.90 7.00 10.00 11.60
    4 Provision for NPAs 1,478.01 14,295.03 20,009.36 24749.66 51,478.53
    Provision for Standard
    4 Assets 4,051.72 5,891.90 5669.67 2348.16 800.58
    Provision for Depreciation
    4 on investments 38,984.97 3,792.20 -1,237.07 7071.72 -9,879.90
    Provision for Other Assets/
    4 Contingencies -583.96 122.44 2244.55 3176.27 1,549.05
    Total 68,925.56 54,586.29 63,784.28 87,939.98 91,548.59
    Net Profit for the year 44,066.71 45,413.07 67,291.25 91,212.27 91,660.53
    Add/ Less Adjustments - - - - 0.00
    Adjusted Net Profit for the
    year 44,066.71 45,413.07 67,291.25 91,212.27 91,660.53
    Add: Balance of Profit
    Brought forward from
    previous year 3.39 3.39 3.39 3.39 3.39
    Add: Transfer from General
    Reserve - 28.86 0.94 0.00 0.00
    Profit Available for
    Appropriation 44,070.10 45,445.32 67,295.57 91,215.66 91,663.92
    APPROPRIATIONS
    Transfer to Statutory
    Reserves 29,337.74 33,581.13 48390.72 52,917.93 63,810.89
    Transfer to Revenue and 5,175.20 3,240.40 3,000.00 3,068.93 5,295.07
    Other Reserves
    Transfer to Investment
    Reserve - 0.00 621.79 0.00 0.00
    Transfer to Capital Reserves 1,152.20 - 44.40 8,265.53 1,140.54
    Dividend 7,368.18 7,368.18 13,576.61 18,411.53 19,046.48
    Corporate Tax on Dividend 1,033.39 1,252.22 1,658.66 2,480.35 2,367.55
    Loss from State Bank of
    Saurashtra - - - 6068.00 0.00
    Balance carried to Balance
    Sheet 3.39 3.39 3.39 3.39 3.39
    Total 44,070.10 45,445.32 67,295.58 91,215.66 91,663.92
    Break up of Non-
    Recurring
    Items Included above:
    Income:
    Profit on sale of investments - - 16,498.39 2,56,72.90 21,167.92
    Interest on Income tax
    refund 16,384.60 - - 147.30 5,526.57
    Write back of Depreciation - 174.70 - - 0.00
    Write back of provisions 1,280.00 - - - 0.00
    Write back of provisions
    towards securities
    transactions - - - - 0.00
    Exchange gain on India
    Millennium Deposits 5,315.40 - - - 0.00

    34
    For the Financial Year 31-Mar-06 31-Mar-07 31-Mar-08 31-Mar-09 31-Mar-10
    Audited Audited Audited Audited Audited
    Miscellaneous Income -
    Unreconciled net credit on
    inter-branch accounts 3,166.00 - - -
    Sub-total (A) 26,146.00 174.70 16,498.39 25,672.90 26,694.49
    Expenses:
    Voluntary Retirement
    Scheme 722.4 4,783.00 - - 0.00
    Reduction in Provision for
    depreciation on investments -868.6 - - - -9,685.96
    Payments to and provisions
    for employees 3,128.70 - 4,256.70 14,690.00 25,590.00
    Interest on Income Tax - 2,647.60 - - 0.00
    Interest on India Millennium
    Deposits -5,635.20 - - - 0.00
    Provision against PV of loss
    of interest on amount
    receivable from eligible
    farmers under AGRI Debt
    Relief Scheme 2008 - - - 1400.00 0.00
    Sub-total (B) -2,652.70 7,430.60 4,256.70 16,090.00 15,904.04
    Total (A-B) 28,798.70 -7,255.90 12,241.69 9,582.90 10,790.45
    Tax impact thereon 9,650.56 -1,551.15 - 3,783.15 375.42
    Net impact on profit 19,148.14 -5,704.75 - 5,947.05 10,415.03
    · Interest on Swaps netted
    off.

    Summarised Statement of Assets and Liabilities (Consolidated)


    (Rs. in millions)
    Sr. Particulars 31-Mar-06 31-Mar-07 31-Mar-08 31-Mar-09 31-Mar-10
    No. Audited Audited Audited Audited Audited
    A Assets
    1 CASH AND
    BALANCES WITH
    RESERVE BANK OF
    INDIA
    I Cash in hand (including
    foreign currency notes
    and gold) 25,194.41 31,472.50 37,910.61 54,624.93 86,572.21
    II Balances with Reserve
    Bank of India 286,093.45 419,188.51 710,261.94 686,985.74 7,35,383.60
    Total 311,287.86 450,661.01 748,172.55 741,610.67 8,21,955.81
    2 BALANCES WITH
    BANKS & MONEY
    AT CALL & SHORT
    NOTICE
    I In India 120,803.27 98,900.98 77,881.09 257,312.23 1,57,613.05
    II Outside India 141,274.07 175,206.64 64,230.53 253,694.06 2,38,921.14
    Total 262,077.34 274,107.62 142,111.62 511,006.29 3,96,534.19
    3 INVESTMENTS
    I Investments in India 2,220,408.92 2,675,873.34
    2,098,485.65 3,652,326.11 39,39,925.23
    II Investments outside 58,901.56
    India 66,724.84 62,543.90 69,988.37 87,616.09
    Total 2,279,310.48 2,165,210.49 2,738,417.24 3,722,314.48 40,27,541.32
    4 ADVANCES
    I Bills purchased and
    discounted 328,321.31 392,073.83 506,939.97 591,749.22 5,51,867.41
    II Cash Credits, overdrafts
    and loans repayable on 36,12,148.17
    demand 1,404,644.37 1,817,496.03 2,223,464.45 3,003,534.24

    35
    Sr. Particulars 31-Mar-06 31-Mar-07 31-Mar-08 31-Mar-09 31-Mar-10
    No. Audited Audited Audited Audited Audited
    III Term Loans 45,31,000.84
    2,011,796.72 2,663,289.79 3,301,814.99 3,908,340.39
    Total 3,744,762.40 4,872,859.65 6,032,219.41 7,503,623.85 86,95,016.42
    5 Fixed Assets 39,563.14 60,138.92
    39,993.75 46,627.90 52,234.77
    6 Other Assets 332,917.01 348,911.59 565,146.47 517,467.35 5,00,252.99
    Total (A) 6,969,918.23 8,151,744.11 10,272,695.19 13,048,257.41 1,45,01,439.65
    B LIABILITIES
    1 DEPOSITS
    I Demand Deposits
    I From Banks
    80,657.61 124,082.45 144,514.30 125,865.75 1,06,163.35
    Ii From Others
    764,777.24 866,085.47 1,051,653.49 1,194,878.77 13,44,489.57
    II Savings Bank Deposits
    1,504,538.88 1,726,084.57 2,053,934.18 2,570,085.08 33,11,526.09
    III Term Deposits
    I From Banks
    54,528.76 53,870.74 70,988.92 126,004.53 1,85,928.18
    Ii From Others
    3,035,740.16 3,592,605.54 4,443,074.30 6,103,049.14 62,16,538.46
    Total
    5,440,242.65 6,362,728.77 7,764,165.19 10,119,883.27 1,11,64,645.65

    2 BORROWINGS
    I Borrowings in India 94,995.89 123,042.73 230,339.69 5,01,862.93 5,58,654.91
    II Borrowings outside 274,753.10 363,575.58 429,892.02 5,50,711.52 6,62,090.81
    India
    Total 369,748.99 486,618.31 660,231.71 10,52,574.44 12,20,745.72

    OTHER
    LIABILITIES &
    PROVISIONS
    I Other Liabilities &
    Provisions 682,848.07 657,904.74 898,954.57 1,129,613.03 12,58,379.75
    II Subordinate Debts 90,708.12 202,236.44 316,698.68 - -
    Sub Total 773,556.19 860,141.18 1,215,653.25 1,129,613.03 12,58,379.75
    Total (B) 6,583,547.83 7,709,488.26 9,640,050.15 12,302,070.75 1,36,43,771.12
    C NET ASSETS (C=A-B) 386,370.40 442,255.85 632,645.04 746,186.66 8,57,668.53

    H CONTINGENT
    LIABILITIES
    I Claims against the bank
    not acknowledged as
    debts 18,902.29 40,254.91 11,930.87 25,548.33 10,451.99
    II Liability for partly paid
    investments 373.18 34.49 30.00 31.19 31.19
    III Liability on account of
    outstanding forward
    exchange contracts 1,835,987.20 2,587,355.44 4,155,746.10 3,913,482.00 35,20,363.64
    IV Guaranteed given on
    behalf of constituents: 325,492.48 467,112.74 615,455.33 890,486.95 11,84,100.62
    (a) India 262,342.98 321,088.72 464,293.00 618,609.44 8,11,653.59
    (b) Outside India 63,149.50 146,024.02 151,162.33 271,877.51 3,72,447.03
    V Acceptances, 449,547.53 586,129.09 901,134.20 1,257,392.61 14,06,167.04

    36
    Sr. Particulars 31-Mar-06 31-Mar-07 31-Mar-08 31-Mar-09 31-Mar-10
    No. Audited Audited Audited Audited Audited
    endorsements and other
    obligations
    VI Other items for which
    the bank is contingently
    liable 300,465.48 2,436,448.29 3,773,405.58 2,519,919.74 8,51,836.72
    Total 2,930,768.16 6.117,334.96 9,457,702.08 8,606,860.82 69,72,951.21
    Bills for collection 247,807.52 283,375.37 252,259.08 499,383.53 5,64,914.29

    Summarised Statement of Profit & Loss Account (Consolidated)


    (Rs. in millions)
    A For the Financial Year/Half Year 31-Mar- 31-Mar- 31-Mar-08 31-Mar-09 31-Mar-10
    Ended 06 07 Audited Audited
    Audited Audited Audited

    INCOME
    1 INTEREST EARNED
    1.1 Interest / discount on
    advances/ bills 258,992.72 368,328.11 519,200.68 672,851.18 7,22,987.39
    1.2 Income on Investments 193,136.21 151,637.04 174,063.23 220,793.07 2,46,140.74
    1.3 Interest on balances with
    Reserve Bank of India and
    other inter-bank funds 24,402.76 21,323.52 14,425.48 17,834.98 18,265.42
    1.4 Others 22,389.48 2,345.75 7,268.77 5,190.92 13,413.77
    TOTAL 498,921.17 543,634.42 714,958.16 916,670.15 10,00,807.32
    2 OTHER INCOME
    2.1 Commission, exchange and
    brokerage 53,380.75 66,622.92 78,238.70 97,222.78 1,18,587.19
    2.2 Profit/ (Loss) on sale of
    investments (Net) 11,477.72 9,711.10 27,806.02 175,80.39 49,304.38
    2.3 Profit/ (Loss) on revaluation
    of investments (Net) 227.90 (6407.43) (8,567.54) (6,292.51) 30,229.81
    2.4 Profit/(Loss) on sale of land,
    buildings and other assets and
    Leased Assets (Net) 4.74 78.77 107.08 (42.07) (99.48)
    2.5 Profit on exchange 18,666.07
    transactions (Net) 12,181.07 5,436.55 9,514.27 14,607.34
    2.6 Dividends from
    Associates/Joint ventures in
    India/ abroad 250.42 78.91 156.25 131.04 150.87
    2.7 Income from Financial
    Leasing 1,393.82 1,104.15 425.56 313.88 104.17
    2.8 Credit Card membership/
    service fees 1,746.03 3,579.08 4,245.68 2,668.64 1,910.91
    2.9 Life Insurance Premium 10,730.93 29,234.39 56,112.05 72,023.88 99,203.94
    2.10 Share of earnings from
    associates (130.93) 1,888.55 1,953.77 (136.41) 2,144.35
    2.11 Miscellaneous income 20,477.12 16,280.01 17,238.10 16183.88 17,508.72
    TOTAL 111,739.57 127,607.00 187,229.94 214,260.84 3,37,710.95
    TOTAL INCOME 610,660.74 671,241.42 902,188.10 1,130,930.99 13,38,518.27

    B EXPENDITURE
    1 INTEREST EXPENDED

    37
    1.1 Interest on deposits 253,662.50 284,078.34 417,132.34 554,224.80 6,10,806.13
    1.2 Interest on Reserve Bank of India/
    Inter-bank borrowings 14,957.77 15,379.63 32,044.21 31,161.04 14,059.89
    1.3 Other 12,408.71 27,842.66 30263.85 40,878.81 41,509.06
    TOTAL 281,028.98 327,300.63 479,440.40 626,264.65 6,66,375.09
    2 OPERATING EXPENSES
    2.1 Payments to and provisions
    for employees 107,637.97 105,974.74 104,575.10 129,971.94 1,63,310.64
    2.2 Rent, taxes and lighting 11,169.05 12,676.73 14,084.74 17,809.25 21,361.53
    2.3 Printing & Stationery 2,398.20 2,293.13 2,565.05 3,034.49 3130.06
    2.4 Depreciation 11,334.02 9,500.70 10,383.34 9,244.62 13,215.65
    2.5 Directors' fees, allowances
    and expenses 38.38 40.80 50.32 55.95 81.04
    2.6 Auditors' fees and expenses
    (including branch auditors'
    fees and expenses) 996.64 1,039.24 1,577.69 1,622.54 1,737.89
    2.7 Law charges 672.50 759.76 815.21 1,014.21 1,298.02
    2.6 Postages, Telegrams,
    Telephones, etc. 1,700.19 2,007.08 2,979.92 3,611.00 4,085.42
    2.7 Repairs and maintenance 2,142.12 2,397.28 3,022.57 2,395.12 4,158.54
    2.8 Insurance 4,651.19 5,137.32 6,171.54 7,706.82 9,406.62
    2.9 Amortisation of deferred
    revenue expenditure 179.03 132.80 - 58.32 69.03
    2.10 Operating Expenses relating
    to Credit Card Operations 1,386.52 2,054.56 3,170.43 1,761.76 2,319.04
    2.11 Operating Expenses relating to
    Life Insurance 11,707.77 28,434.27 53,959.29 46,386.35 1,41,712.87
    2.12 Other Expenditure 19,999.45 27,569.41 36,077.14 41,044.83 58,267.58
    TOTAL 176,013.03 200,017.82 239,432.34 265,717.20 4,24,153.94
    TOTAL EXPENDITURE 457,042.01 527,318.45 718,872.74 891,981.85 10,90,529.02
    Gross Profit Before
    Provisions (including for
    income tax & extraordinary
    Items) 153,618.73 143,922.97 183,315.36 238,949.14 2,47,989.24
    Less: Extraordinary Items -
    Gross Profit Before
    Provisions (including for
    income tax) 153,618.73 143,922.97 183,315.36 238,949.14 2,47,989.24

    3 Provisions & Contingencies:


    3.1 Provision for Income Tax
    (Current tax) 21,016.76 41,112.95 51,288.29 75.982.32 79,807.5
    3.2 Provision for Income Tax
    (Deferred tax) 5,070.90 (775.60) (4,830.26) (10,759.69) (13,157.1)
    3.3 Provision for Fringe Benefit -
    Tax 6,195.96 1247.60 1,354.70 1,746.33
    3.4 Provision for other taxes 12.07 (14.53) (35.44) 248.72 33.4
    3.5 Provision for NPAs 4,140.64 17,758.92 28,040.47 36,163.02 62,287.7
    3.6 Provision for Standard Assets 5,854.43 9,454.23 7,732.10 3,048.25 1,526.7
    3.7 Provision for depreciation on
    investments 5,5395.51 8,294.86 1,531.56 13,527.67 (13,551.0)
    3.8 Provision on other assets/
    Contingencies 586.96 57.40 4132.70 513.89 9,298.87
    3.9 Other Provisions (1,269.30) 589.16 1972.90 6747.97 1,606.83
    Total 97,003.93 77,724.99 91187.02 127,218.48 1,27,852.86

    38
    Net Profit for the year 56,614.80 66,197.98 92,128.34 111,730.66 1,20,136.38
    Less: Minority Interests 1,315.60 2,554.25 2,522.23 2,177.79 2,798.06
    Group Profit 55,299.20 63,643.73 89,606.11 109,552.87 1,17,338.32
    Add: Brought forward Profit
    attributable to the group 134.16 3,863.76 1,190.17 877.42 2,159.97
    Transfer from General Reserv - 28.86 0.94 0.00 0.00
    TOTAL 55,433.36 67,536.35 90,797.22 110,430.29 1,19,498.29
    APPROPRIATIONS:
    Transfer to Statutory Reserves 34,537.00 40,062.84 55,734.38 59,869.45 71,536.15
    Transfer to Other Reserves 8,631.03 17,662.94 18,291.53 26,892.77 25,114.71
    Dividend 7,368.18 7,368.18 13,576.61 18,411.53 19,046.48
    Corporate Tax on Dividend 1,033.39 1,252.22 2,317.28 3,096.57 3,215.14
    Balance carried to Balance
    Sheet 3,863.76 1,190.17 877.42 2,159.97 585.81
    Total 55,433.36 67,536.35 90,797.22 1,10,430.29 1,19,498.29

    39
    RECENT FINANCIAL DEVELOPMENTS

    Limited Review Report on the Unaudited Financial Results for the period ended 31st December, 2010.

    To,
    The Board of Directors,
    State Bank of India,
    State Bank Bhavan,
    Madam Cama Road,
    Mumbai - 400 021

    Dear Sirs,

    Re: Proposed public issue by the State Bank of India (“Bank” or “Issuer”) of Lower Tier II bonds (the
    “Bonds”) not exceeding an aggregate amount of Rs. 100,000 million (the “Shelf Limit”) by way of issuance of
    Bonds in one or more tranches (each a “Tranche Issue” and together all Tranche Issues up to the Shelf
    Limit, the “Issue”).

    1. We have examined the attached unconsolidated unaudited financial results for the nine months ended
    December 31, 2010 and December 31, 2009 of State Bank of India (the ―Bank‖), which is proposed to be
    included in the Shelf Prospectus of the Bank in connection with the proposed issue of the Lower Tier II Bonds
    (the ―Bonds‖) aggregating to Rs. 100,000 million in one or more tranches.

    2. The Unconsolidated Interim Results were subjected to limited review and reported upon by the auditors of the
    Bank in accordance with Auditing and Assurance Standard 33 (AAS33) / Standard on Review Engagement
    (SRE) 2410, ―Review of Interim Financial Information Performed by the Independent Auditor of the Entity‖
    issued by the Institute of Chartered Accountants of India, except for the disclosures regarding ‗Public
    shareholding‘ and ‗Promoter and Promoter Group Shareholding‘ which have been traced from disclosures
    made by the management and have not been audited. The financial results are the responsibility of the Bank‘s
    Management and have been approved by the Board of Directors. The auditor‘s responsibility is to issue a
    report on these financial statements based on their review.

    3. A review of interim financial information consists of making inquiries, primarily of persons responsible for
    financial and accounting matters, and applying analytical and other review procedures. A review is
    substantially less in scope than an audit conducted in accordance with Standards on Auditing and consequently
    does not enable the auditors to obtain assurance that they would become aware of all significant matters that
    might be identified in an audit. Accordingly, the auditors do not express an audit opinion. The limited review
    for the respective periods has been carried out by the auditors as mentioned herein below:

    For the period Name of the auditors


    ended
    December 31, B. M. Chatrath & Co.; Kalyaniwalla & Mistry; Essveeyar; K. K. Soni & Co.;
    2009 Venugopal & Chenoy; V. K. Jindal & Co.; K. G. Somani & Co.; A. K. Sabat & Co.;
    M. Verma & Associates; Dutta Sarkar & Co.; Gupta & Shah; K. C. Mehta & Co.;
    Dagliya & Co.; Krishnamoorthy & Krishnamoorthy

    December 31, B. M. Chatrath & Co.; Kalyaniwalla & Mistry; Essveeyar; K. K. Soni & Co.;
    2010 Venugopal & Chenoy; K. G. Somani & Co.; M. Verma & Associates; K. C. Mehta &
    Co.; Dagliya & Co.; Krishnamoorthy & Krishnamoorthy; Todi Tulsyan & Co.; R K J
    K Khanna & Co.; Raj Bordia & Co.; SBA & Company

    4. The financial results incorporate the relevant returns of 42 (2009 – 42) branches reviewed by the Statutory
    Auditors, 79 (2009 – 65) branches reviewed by other Chartered Accountants as Concurrent Auditors of the
    Bank {including 21 (2009 – 26) Foreign Offices reviewed by local auditors specially appointed for this
    purpose}, 410 (2009 – 328) branches reviewed by Bank's own officials acting as Concurrent Auditors, the
    returns of 266 (2009 – 293) branches certified by Branch Managers as per instructions of the Bank's
    Management and un-reviewed returns in respect of 13070 (2009 – 11834) branches. In the conduct of our

    40
    review, in addition to 42 (2009 – 42) branches reviewed by the Statutory Auditors, reliance has been placed on
    the review reports received from the Bank's Concurrent Auditors, local auditors of Foreign Offices and Branch
    Managers of domestic branches, aggregating to 755 (2009 – 728) branches / offices. Apart from these review
    reports, in the conduct of such review, reliance has also been placed upon various returns received from the
    branches of the Bank. These review reports, including those of 266 (2009 – 293) branches' returns certified by
    Branch Managers as per instructions of the Bank's Management, cover 61.33% (2009 – 56.29%) of the
    advances portfolio excluding outstanding of asset recovery branches and food credit advance of the Bank.
    Further, this review also covers 65.46% (2009 – 57.36%) of Non Performing Advances (NPAs) as on
    December 31, 2010, including those certified at 266 (2009 – 293) branches by the Branch Managers as per
    instructions of the Bank's Management.

    5. The attached unconsolidated unaudited financial results have been extracted from the unconsolidated financial
    results of the Bank as reviewed by above mentioned auditors for the respective years and based on our
    examination of these results and the reports of the above mentioned auditors, we state that subject to limitation
    in scope as mentioned in para 4, nothing has come to our attention that causes us to believe that the
    accompanying statement of unaudited financial results prepared in accordance with applicable accounting
    standards and other recognised accounting practices and policies contains any material misstatement or that it
    has not been prepared in accordance with the relevant prudential norms issued by the Reserve Bank of India in
    respect of income recognition, asset classification, provisioning and other related matters.

    For and on behalf of,


    Kalyaniwalla & Mistry
    Chartered Accountants
    Firm Registration No. 104607W

    Viraf R. Mehta
    Partner
    Membership No. 32083
    Place: Mumbai
    Date: January 31, 2011

    41
    STATE BANK OF INDIA
    Central Office, Mumbai – 400 021

    UNAUDITED FINANCIAL RESULTS FOR THE PERIOD ENDED 31 ST DECEMBER 2010


    (Rs. in Crores)
    State Bank of India State Bank of India (Consolidated)
    Quarter ended 9 Month ended Quarter ended 9 Month ended Year
    Year
    31.12.2010 31.12.2009 31.12.2010 31.12.2009 31.12.20 31.12.20 31.12.201 31.12.20 ended
    ended
    Particulars (Reviewed (Reviewed (Reviewed (Reviewed) 10 09 0 09 31.03.201
    31.03.2010
    ) ) ) (Review (Review (Reviewe (Review 0
    (Audited)
    ed) ed) d) ed) (Audited)
    1 Interest Earned 21412.79 17779.69 59673.01 53028.33 70993.92 29332.32 24948.45 83564.30 74607.47 100080.73
    (a) + (b) + (c) + (d)
    (a) Interest/discount on advances / 15716.56 12639.37 43719.44 37665.32 50632.64 21580.46 17939.69 61303.62 53744.71 72298.74
    bills 5156.88 4433.30 14433.47 13283.97 17736.30 7137.93 6152.65 20465.49 18375.51 24614.07
    (b) Income on Investments 103.96 240.71 323.1 1294.26 1511.92 158.33 320.28 542.85 1577.90 1826.54
    (c) Interest on balances with 435.39 466.31 1196.39 784.78 1113.06 455.60 535.83 1252.34 909.35 1341.38
    Reserve Bank of India and
    other Inter bank funds
    (d) Others
    2 Other Income 3313.94 3365.71 11009.11 10459.62 14968.15 7634.55 7283.00 24136.07 23858.33 33771.10
    3 TOTAL INCOME (1+2) 24726.73 21145.40 70682.12 63487.95 85962.07 36966.87 32231.45 107700.37 98465.80 133851.83
    4 Interest Expended 12363.03 11463.39 35204.66 36078.33 47322.48 17026.90 16166.75 49447.57 50837.08 66637.51
    5 Operating Expenses (I)+(II) 5599.22 5063.87 16221.60 14282.59 20318.68 11016.78 9572.66 32989.90 30177.79 42415.39
    (i) Employee cost 3511.66 3117.48 10261.35 9162.89 12754.65 4715.50 4105.75 14116.14 12074.65 16331.06
    (ii) Other Operating Expenses 2087.56 1946.39 5960.25 5119.70 7564.03 6301.28 5466.91 18873.76 18103.14 26084.33
    6 TOTAL EXPENDITURE (4) + 17962.25 16527.26 51426.26 50360.92 67641.46 28043.68 25739.41 82437.47 81014.87 109052.90
    (5) (excluding Provisions and
    Contingencies)
    7 OPERATING PROFIT (3 - 6) 6764.48 4618.14 19255.86 13127.03 18320.91 8923.19 6492.04 25262.90 17450.93 24798.93
    (before Provisions and
    Contingencies)
    8 Provisions (other than tax) and 2051.51 856.61 6224.36 2045.45 4394.83 2791.24 1454.01 8874.49 3050.14 6116.91
    Contingencies (net
    of write-back)
    --- of which provisions for Non- 1632.32 514.64 5528.18 2961.08 5147.85 2300.22 991.85 7933.33 4240.40 6228.77
    performing assets
    9 Exceptional Items 0.00 0.00 0.00 0.00 0.00 0.00 0.00 470.80 0.00 0.00
    10 Profit from Ordinary Activities 4712.97 3761.53 13031.50 11081.61 13926.08 6131.95 5038.03 15917.61 14400.79 18682.02
    before tax (7-8-9)

    42
    11 Tax expenses 1884.91 1282.48 4787.86 3782.16 4760.03 2325.46 1683.09 6206.91 5060.24 6668.38
    12 Net Profit from Ordinary 2828.06 2479.05 8243.64 7299.45 9166.05 3806.49 3354.94 9710.70 9340.55 12013.64
    Activities after tax (10-11)
    13 Extraordinary Items (net of tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
    expense)
    14 Net Profit for the period (12-13) 2828.06 2479.05 8243.64 7299.45 9166.05 3806.49 3354.94 9710.70 9340.55 12013.64
    Share of Minority 0.00 0.00 0.00 0.00 0.00 96.01 50.35 271.01 226.44 279.81
    15 Net Profit after Minority Interest 2828.06 2479.05 8243.64 7299.45 9166.05 3710.48 3304.59 9439.69 9114.11 11733.83
    16 Paid-up equity share capital 635.00 634.88 635.00 634.88 634.88 635.00 634.88 635.00 634.88 634.88
    (Face Value of Rs. 10 per share)
    17 Reserves excluding Revaluation 71599.83 57312.81 71599.83 57312.81 65314.32 88263.40 71755.51 88263.40 71755.51 82500.70
    Reserves
    18 Analytical Ratios
    (I) Percentage of shares held by 59.40% 59.41% 59.40% 59.41% 59.41% 59.40% 59.41% 59.40% 59.41% 59.41%
    Government of India
    (II) Capital Adequacy Ratio
    Basel I 11.95% 12.32% 11.95% 12.32% 12.00%
    Basel II 13.16% 13.77% 13.16% 13.77% 13.39%
    (III) Earnings Per Share
    (EPS) (In Rs.)
    (a) basic and diluted EPS 44.54 39.05 129.82 114.97 144.37 58.43 52.05 148.66 143.56 184.82
    before Extraordinary
    items (net of tax expense)
    (Not annualized) (Not annualized)
    (b) basic and diluted EPS 44.54 39.05 129.82 114.97 144.37 58.43 52.05 148.66 143.56 184.82
    after Extraordinary items
    (Not annualized) (Not annualized)
    (IV) NPA Ratios
    (a) Amount of gross non- 23437.75 18861.17 23437.75 18861.17 19534.89
    performing assets
    (b) Amount of net non- 11695.14 11270.79 11695.14 11270.79 10870.17
    performing assets
    (c) % of gross NPAs 3.17% 3.11% 3.17% 3.11% 3.05%
    (d) % of net NPAs 1.61% 1.88% 1.61% 1.88% 1.72%
    (V) Return on Assets 0.94% 0.94% 0.94% 0.94% 0.88%
    (Annuallsed)
    19 Public Shareholding
    --- No. of shares 257790915 257673022 257790915 257673022 257675444
    --- Percentage of 40.60% 40.59% 40.60% 40.59% 40.59%

    43
    Shareholding
    20 Promotors and Promoter Group
    Shareholding
    (a) Pledged/Encumbered
    Number of Shares
    Percentage of Shares (as a NIL
    percentage of the tota
    shareholding of promoter and
    promoter group)
    Percentage of Shares (as a
    percentage of the tota share
    capital of the company)
    (b) Non-encumbered 377207200 377207200 377207200 377207200 377207200
    Number of Shares
    Percentage of Shares (as a 100.00% 100.00% 100.00% 100.00% 100.00%
    percentage of the total
    shareholding of promoter and
    promoter group)
    Percentage of Shares (as a 59.40% 59.41% 59.40% 59.41% 59.41%
    percentage of the total share
    capital of the company)

    UNAUDITED SEGMENT-WISE REVENUE, RESULTS AND CAPITAL EMPLOYED

    Particulars Quarter ended 9 Month ended Year ended


    31.12.2010 31.12.2009 31.12.2010 31.12.2009 31.03.2010
    (Reviewed) (Reviewed) (Reviewed) (Reviewed) (Audited)
    1 Segment Revenue (Income)
    a Treasury Operations 5590.81 5313.10 16350.26 17693.02 22054.89
    b Corporate / Wholesale 8172.83 6021.08 23269.03 18757.79 26196.28
    Banlcino Operations
    c ttetail Banking Operations, 10732.79 9442.44 30506.73 2464836 37158.24
    d Add / (less): Unallocated 230.30 368.78 556.10 368.78 552.66
    Total 24726.73 21145.40 70682.12 63407.95 85962.07
    2 Segment Results (Profit before tax)
    a Treasury Operations -724.53 -93.54 -469.94 4539.55 4666.08
    b Corporate / Wholesale 1158.47 1324.05 3593.82 3745.30 4755.35
    Banking Operations

    44
    c Retail Banking Operations 4779.66 2806.60 11419.77 4270.43 6491.25
    Total 5213.60 4037.11 14543.65 12605.28 15912.60
    Add/Less: Unallocated -500.63 -275.58 -1512.15 -1523.67 -1986.52
    Operating Profit 4712.97 3761.53 13031.50 11081.61 13926.08
    Less: Income Tax 1884.91 1282.48 4787.86 3782.16 4760.03
    Less: Extraordinary Profit / 0.00 0.00 0.00 0.00 0.00
    Loss
    Net Profit 2828.06 2479.05 8243.64 7299.45 9166.05
    3 Capital Employed (Segment Assets – Segment Liabilities)
    a Treasury Operations 21005.25 19303.77 21005.25 19303.77 19685.76
    b Corporate / Wholesale 21769.45 15672.85 21769.45 15672.85 19249.28
    Banking Operations
    c Retail Banking Operations 29460.13 22971.07 29460.13 22971.07 27014.16
    Total 72234.83 57947.69 72234.83 57947.69 65949.20

    (Capital, Resrves and Segment Assets and Liabilities for the period ended December 2009 are as on 31 st March 2009 and for the period ended December
    2010 are as on 30th September 2010)

    The above results have been approved by the Central Board of the Bank at the meeting held on 22 nd January 2011 and were subjected to “Limited
    Review” by the Bank’s Statutory Central Auditors.

    Place : New Delhi R.SRIDHARAN O. P. BHATT


    Date : 22.01.2011 MD & GE (A&S) Chairman

    45
    Notes:
    1. The working results for the quarter and nine months ended 31st December 2010 have been arrived at after
    considering necessary provisions for NPAs, Standard Assets, Standard Derivative Exposures, Provision
    Coverage Ratio and Investment Depreciation on the basis of prudential norms issued by RBI and other
    provisions made on an estimated basis for Employee Benefits, Bonus, Income Tax (after adjustment for deferred
    tax), Wealth Tax and for other items/assets.

    2. Consequent to the notification of the ―Acquisition of State Bank of Indore Order, 2010‖ issued by the Govt, of
    India, the undertaking of State Bank of Indore stands transferred to and vests in State Bank of India (―the
    Bank‖), with effect from 26th August 2010, the effective date. The results for the quarter and nine months ended
    31st December 2010 include the results of operations of the erstwhile State Bank of Indore for the period from
    26th August 2010 and the results of the Bank are not comparable to that extent.

    3. Subsequent to the disbursement of arrears of wages finalized in accordance with the ninth Bipartite Settlement,
    an amount of Rs.986.66 crores for the nine months ended 31st December 2010 (including Rs. (38.51) crores for
    the quarter) being excess provision for wage revision have been written back to the Profit & Loss account.

    4. Provision for employee benefits including pension, gratuity, compensated absences, etc. has been made
    (considering the wage revision except for pension) on the basis of an independent external actuarial valuation
    carried out as at 31st December 2010. The gratuity liability has been ascertained considering the wage revision
    and the increase in limit of the ceiling under the Payment of Gratuity Act, 1972. The incremental gratuity
    liability for the nine months ended 31st December 2010 is Rs. 1,540.00 crores (including Rs. 140.00 crores for
    the quarter). The pension liability has been estimated without considering the ninth bipartite settlement as the
    final approval from Government for revision in pension on the basis of the revised salaries is awaited.

    5. The Bank has made technical write-offs during the quarter whereby advances aggregating Rs. 1084.53 crores
    have been written off against existing provisions. Also, the balances in INCA and URIPY aggregating Rs.
    1618.02 crores have been reversed to the individual borrower accounts as stipulated by Reserve bank of India.
    Consequently, the advances and provisions as at 31st December, 201.0 are lower by Rs. 2702.55 crores,
    improving the Gross NPA Ratio.

    6. Provision Coverage Ratio as on December 31, 2010 works out to 64.07% in accordance with the quarter wise
    targets permitted by RBI, with the target of achieving 70% by September 201 I, As per RBI guidelines, the Bank
    has made a prudential provision of Rs. 1780.00 crores for the nine months ended December 31, 2010 to meet the
    Provision Coverage Ratio stipulated by RBI.

    7. The Bank has made additional infusion of capital in the following subsidiaries during the nine months:
    SBI Cards and Payment Services Pvt. Ltd. - Rs. 18.00 crores.
    SBI DFHI Ltd. - Rs. 37.64 crores
    State Bank of Mysore (rights issue) - Rs. 538.49 crores
    SBI Payrnent Services Pvt. Ltd. - Rs. 2.00 crores.

    8. Number of Investors‘ Complaints received and disposed of during the quarter ended 31st December 2010:
    (i) Pending at the beginning of the quarter – nil.
    (ii) Received during the quarter - 79
    (iii) Disposed of during the quarter - 79
    (iv) Lying unresolved at the end of the quarter – nil.

    9. The above results have been reviewed by the Audit Committee at the meeting held on January 21, 2011 and
    approved by the Board of Directors at their meeting held on January 22, 2011. The results have been subject to a
    limited review by the statutory auditors.

    10. Previous period figures have been regrouped/reclassified, wherever necessary, to conform to current period
    classification.

    46
    R. SRIDHARAN O. P. BHATT
    Managing Director and GE(A&S) Chairman

    47
    SUMMARY OF BUSINESS

    Business Overview

    The Bank is India‘s largest bank, with 12,567 branches in India, 150 international offices in 32 countries and more
    than 155 million customer accounts as of June 30, 2010. The Bank also had deposits, advances and a total assets
    base of Rs. 8,041.2 billion, Rs. 6,319.1 billion and Rs. 10,534.1 billion, respectively, as of March 31, 2010, the
    largest by each measure among banking institutions in India. The Bank‘s market share of aggregate deposits was
    16.3% and the Bank‘s market share of domestic advances was 16.3% among all RBI-scheduled commercial banks
    in India, based on the most recent RBI data as of March 31, 2010.

    The Bank organizes its client relationships, marketing and product development, as well as non-customer
    facing activities, through its principal business segment Groups. The Bank‘s Groups are as follows:

    The Corporate Banking Group provides corporate banking services to many of India‘s largest and
    most prominent corporations and institutions, including state-owned enterprises.

    The National Banking Group services the Bank‘s personal banking customers in urban and metropolitan
    areas, small-scale industries, including state-owned enterprises, and corporate customers which are not
    serviced by either the Corporate Banking Group or the Mid-Corporate Group. The National Banking
    Group also provides financial services to the Government and state governments.

    The Mid-Corporate Group services entities with an annual turnover between approximately Rs. 500
    million and Rs. 5 billion or which have credit facilities in excess of Rs. 100 million.

    The Rural Business Group services individual, agricultural and small business customers located in rural
    and semi-urban areas through the largest branch and ATM network in India, with a focus on innovative
    and effective modes of delivering banking services to such areas.

    The International Banking Group through its overseas branches and subsidiaries provides a range of
    international banking services to Indian and foreign companies with operations inside and outside India as
    well as NRIs conducting business in foreign markets and local populations.

    Global Markets operates the Bank‘s treasury functions, managing domestic liquidity, its investment
    portfolio and foreign currency exposure. Global Markets also enters into foreign exchange and risk
    hedging derivative products on behalf of the Bank‘s customers.

    The range of products and services offered by the Bank includes loans, advances, deposits and foreign exchange
    and derivatives products, retail lending and deposits, fee and commission-based products and services, as well as
    alternative payment products. The Bank is also present, through its subsidiaries and joint ventures, in diverse
    segments of the Indian financial sector, including asset management, investment banking, factoring and
    commercial services, treasury operations, credit cards, payment services and life insurance. See ―Our
    Subsidiaries, Associate Banks and Joint Venture Companies‖

    The Bank is the largest constituent part of the Group in terms of total assets and net profit, representing 72.6% of
    the consolidated Group‘s total assets as of March 31, 2010 and 78.1% of its consolidated net profit for the year
    ended March 31, 2010. The Group includes the Bank, its Associate Banks, which operate in India, and its
    subsidiaries and joint ventures, operating both within India and outside India. The Associate Banks have a domestic
    network of approximately 4,882 branches, with strong regional ties. The Bank also conducts operations outside
    India, both through branches operated by its International Banking Group and through subsidiaries, associates,
    joint ventures and investments outside India.

    As of March 31, 2010, the Group‘s consolidated deposits, advances and total assets were Rs. 11,164.6 billion, Rs.
    8,695.0 billion and Rs. 14,501.4 billion, respectively. For the three-month period ended June 30, 2010, the Group‘s

    48
    consolidated net profit amounted to Rs. 34.7 billion, an increase of Rs. 6.2 billion, or 21.5%, from the three-month
    period ended June 30, 2009.

    As of March 31, 2010, the Bank‘s unconsolidated deposits, advances and total assets were Rs. 8,041.1 billion, Rs.
    6,319.1 billion and Rs. 10,534.1 billion, respectively. For the three month perion ended June 30, 2010, the Bank‘s
    unconsolidated net profit amounted to Rs. 29.1 billion, an increase of Rs. 5.8 billion, or 25.1%, from the three
    month period ended June 30, 2009.

    History

    The origins of the State Bank of India date back to the establishment of the Bank of Calcutta (later renamed the
    Bank of Bengal) in 1806. The Bank of Bombay was created in 1840 and the Bank of Madras in 1843. These three
    banks catered mainly to the needs of the mercantile community and pioneered modern banking in India. In 1876,
    the Government transferred its shareholding in the three banks to private shareholders. However, the Government
    retained controlling powers over the banks‘ functioning and constitution. In 1921, the three banks were merged by
    an Act of the legislature to form the Imperial Bank of India. On July 1, 1955, the Imperial Bank of India was
    nationalized and the Bank was constituted under the Act with the RBI holding 92% of its share capital.

    The Bank‘s original mandate was to spread banking facilities on a large scale and make credit more readily
    available in India, especially in rural and semi-urban areas. In compliance with its mandate, it expanded its network
    of 480 offices by opening over 400 new branches within five years, and continued the rapid expansion. Over the
    subsequent decades, the Bank has become India‘s largest bank, with 12,567 branches in India, 150 international
    offices in 32 countries and more than 155 million customer accounts as of June 30, 2010. Today, the Bank
    competes in all major banking sectors while still fulfilling its original mandate.

    In accordance with Government directives, the Bank introduced liberalized lending facilities to small-scale
    industries, small businesses and the agricultural sector, which later evolved into the RBI‘s priority sector lending
    program applicable to all banks in India.

    Under the Act, the Government or government agencies are required to maintain majority ownership of the Bank.
    In Fiscal Year 1994, in compliance with regulatory reforms, the Bank completed a public offering. The Government
    currently owns 59.40% of the Bank‘s share capital, the rest being held by institutions (including foreign
    institutions) and individual investors.

    Competitive Strengths

    The following core competitive strengths have historically contributed to the Bank‘s success and record of growth
    and will continue to do so in the future:

    Relationship with the Government, state governments and state-owned enterprises

    The Bank is 59.40%-owned by the Government and believes its strong relationships with both the Government and
    state governments are key factors driving asset growth and providing a stable source of business. The Government
    generates significant business activity in the economy. For the year ended March 31, 2010, the Government‘s
    business turnover was Rs. 20,654.3 billion. For the year ended March 31, 2010, the Bank earned commissions from
    Government transactions of Rs. 15.2 billion, or 17.2% of the Bank‘s other income, and handled 58.8% of the
    Government‘s aggregate payments and receipts as well as 65.1% of state governments‘ payments and receipts.

    In many instances, the Bank acts as the sole agent for certain Government transactions. The Bank acts as the RBI‘s
    agent for certain banking businesses of the Government and state governments. The Bank also handles payment
    functions of the Government through its branches, including salary and pension payments and expenditure
    payments of various ministries. The Bank believes that this relationship with the Government is instrumental in
    attracting new customers.

    In addition, the Bank handles a significant portion of the banking requirements for India‘s public sector enterprises
    (―PSEs‖), including administering payments and loans to employees and offering life insurance and pension plans.

    49
    As of March 31, 2010, 7.7% of the Bank‘s loan portfolio consisted of loans to PSEs. The Bank believes that, as the
    Indian economy and financial markets continue to grow, the demand for the Bank‘s services from the Government,
    state governments and PSEs will also increase.

    The Bank is one of a select few banks in India with a mandate from the PFRDA to hold pension funds for the
    benefit of Government employees.

    Well known brand with the largest branch and ATM network in India and extensive portfolio of products and
    services

    With more than 50 years of operations in India, the Bank believes that it has the country‘s best known banking
    brand. The Bank is India‘s largest bank, with 12,567 branches in India, 150 international offices in 32 countries and
    more than 155 million customer accounts as of June 30, 2010. The Bank also has the largest ATM network in India
    with 16,584 ATMs as of June 30, 2010. The Bank also had deposits, advances and a total assets base of Rs. 8,041.2
    billion, Rs. 6,319.1 billion and Rs. 10,534.1 billion, respectively, as of March 31, 2010, the largest by each
    measure among banking institutions in India. As a result of its unparalleled position in India, the Bank has a leading
    market position in several of its business segments, including deposits and advances, foreign exchange trading, loan
    funding (education loans, home loans and auto-loans), credit cards and payment services. The Bank believes it is
    India‘s largest provider of education loans, home loans and car loans.

    The Bank‘s extensive branch and ATM network allows it to provide banking services to a large and growing
    customer base, including large corporations, institutions and state-owned enterprises, as well as commercial,
    agricultural, industrial and retail customers throughout India. The assets of the Bank are diversified across business
    segments, industries and groups, which gives the Bank stability. Moreover, the Bank offers a full range of banking
    products and services including short-term and long-term deposits, secured and unsecured loans, internet banking,
    mobile banking, credit cards, life insurance, merchant banking, agricultural and micro-finance banking products and
    project finance loans. As a result of its extensive network and product offerings, the Bank is able to meet the full
    range of its customers‘ banking needs throughout India. In addition, the Bank‘s comprehensive product and service
    offerings provide the Bank with numerous opportunities for cross-selling, allowing it to further grow all
    areas of its business. Finally, the Bank is increasing its emphasis on a relationship management model in order to
    provide more tailored products and services, especially for its key corporate and mid-corporate customers.

    The Bank continues to enhance its brand by making significant investments in the products and services it offers to
    its customers in and outside of India. For example, the Bank has undertaken an initiative called Business Process
    Re-engineering (―BPR‖) to transform its operating architecture with an aim to enhance the sales and service at its
    branches. The Bank believes its BPR initiatives have redefined its ability to acquire new customers, build stronger
    relationships with existing customers and provide customers with the highest quality of service across multiple
    delivery channels in the shortest time possible. Some BPR initiatives include the creation of product/customer-
    focused sales forces to aggressively promote the Bank‘s products so as to increase market penetration, strengthen
    low-cost alternative channels to improve customer service and redesign all key processes in important areas, such as
    retail, corporate and international banking.

    Strong deposit base providing stable and low-cost funding

    The Bank believes that its large distribution network has enabled it to provide convenient services to a
    broad customer base across India. The Bank has the largest deposit base among all commercial banks in India,
    amounting to Rs. 8,041.2 billion as of March 31, 2010, representing a market share of 16.3% of aggregate deposits
    among all RBI-scheduled commercial banks, according to RBI data. The Bank also has a large and growing
    percentage of relatively low-cost current and savings account deposits within its deposit mix, with the ratio of
    current and savings account deposits to its total deposits standing at 46.7% as of March 31, 2010 compared to
    39.3% as of March 31, 2009, an increase of 740 basis points. For the three months ended March 31, 2010, the
    Bank‘s average cost of deposits was 5.8%, a decrease of 50 basis points compared to the fourth quarter of Fiscal
    Year 2009.

    50
    Continuously enhanced risk management and internal control functions

    The Bank continuously strengthens its risk management and internal control capabilities by improving its policies
    and procedures and introducing advanced risk management tools. The Bank has adopted an independent risk
    management system, which addresses the risks faced in all of its banking activities. The independent risk
    management system seeks to identify and manage risks at the Bank‘s business group level, using technology to
    allow each business group to manage its risks effectively and within the Bank‘s policies. The Bank has maintained
    adequate capital reserves in accordance with Basel II and has implemented new credit risk assessment models,
    independent validation of internal ratings and plans for increased use of IT to improve the quality of loan data. The
    Bank also conducts regular stress tests which are forward looking economic assessments of the Bank‘s financial
    health based on a number of economic scenarios and will take remedial measures, if necessary, depending on the
    outcome of the tests.

    Strong financial performance and capital position

    The Bank has been able to maintain strong financial performance, as reflected in its performance ratios, such as a
    net interest margin of 2.66% for the year ended March 31, 2010. The Bank‘s quarterly net interest margin has
    demonstrated steady growth since the second quarter of Fiscal Year 2010. The Bank‘s recent financial strength has
    also come in its ability to diversify its revenue streams from its non-banking businesses. The Bank‘s non-
    interest income, including income from fees and commissions, has risen as a proportion of total income,
    over the last three Fiscal Years.

    In addition, the Bank‘s capital position, as measured by its overall and Tier I capital adequacy ratios of 13.39% and
    9.45%, respectively, as of March 31, 2010 (which are higher than mandatory levels), allows the Bank to take
    advantage of significant growth opportunities in the market.

    Experienced management team

    The Bank has an experienced management team staffed with a significant concentration of career banking
    professionals. The Bank‘s central management committee members have on average more than 25 years of banking
    and financial experience. The rest of the senior management team has strengths in key areas, including retail,
    corporate and international banking. The management team‘s extensive and diverse expertise provides the Bank
    with a broad perspective from which it can make strategic management and operational decisions. In addition, the
    Bank has several dedicated positions in departments such as Global Markets, Rural Business and Corporate
    Strategy and New Businesses. The Bank believes that its management team has created a clear, strategic direction
    for the Bank which will allow it to expand and maintain its position as the leading bank in India.

    Strategy

    The Bank‘s strategy is to enhance its position as the largest and leading provider of banking and other financial
    services in India, while remaining focused on its profitability. The Bank plans to execute this strategy in the
    following ways:

    Continue expansion of the Bank’s distribution network and banking products

    The Bank intends to increase revenues generated from its banking business by expanding its distribution network,
    growing its customer base and diversifying its banking product mix. The Bank intends to use its strong financial
    position to take advantage of increasing growth opportunities within and outside of India, recruiting new
    employees, opening new branches and establishing new ATMs. The Bank plans to increase its efforts to cross-sell a
    wide variety of banking products across its business groups and through numerous distribution channels while also
    expanding its banking product offerings. The Bank is also pursuing strategic relationships with corporate entities
    and government departments to provide financing products to their employees and customers. In addition, the Bank
    is expanding into the more rural areas of India where growth potential is significant. The Bank also intends to grow
    its business through further overseas expansion, to meet the growing needs of Indian corporates operating overseas
    and non-resident Indians living abroad.

    51
    Diversify revenue mix by increasing the Bank’s non-banking products and businesses

    The Bank plans to further diversify its revenues by expanding its products and service offerings, particularly its fee
    and commission based products and businesses, including:

    financial planning and advisory services;.

    online securities trading;

    general insurance services;

    inward and outward remittances;

    private equity and venture capital;

    custodial services; and

    pension fund management.

    Through its New Business department, the Bank will continue to look for new areas where it believes it can
    leverage its size and experience to create new and profitable products and businesses, particularly in light of the
    future opportunities presented by the relative under-penetration of the Indian financial services sector.

    Utilize technology to enhance delivery of banking products and services

    The Bank is committed to its ongoing effort to leverage new technology to maximize efficiency in its operations
    and expand the modes of delivery of its services, enabling it to increase penetration into existing customer
    segments. To achieve this, the Bank has migrated all of its branches to the core banking solution application
    platform and expanded its ATM and internet banking networks. The Bank also plans to continue offering an
    expanding suite of mobile banking, debit and prepaid card services to its customers. The Bank also plans to
    continue investing in payment systems to make them more robust and efficient, thereby improving customer service
    and enhancing its product offerings.

    Continually strengthen the Bank’s risk management and internal control capabilities

    The Bank plans to continue enhancing its risk management and internal control capabilities in order to ensure a
    sound governance structure, independent credit risk management system and strong risk management culture shared
    by all employees. The Bank continues to implement Basel II guidelines, applying advanced risk management
    tools, upgrading related information technology systems and continuously enhancing the Bank‘s risk
    identification, measurement, monitoring and control capabilities. The Bank regularly examines its internal
    control policies and procedures to enhance the effectiveness of the entire internal control system.

    Attract and develop talented and experienced professionals

    The Bank plans to recruit, retain, motivate and develop talented and experienced professionals in a number of ways,
    including enhancing the Bank‘s human resource department to meet its growth plans and business needs. The Bank
    also plans to focus on the recruitment and cultivation of a high-quality and professional workforce, provide
    training and development programs for the Bank‘s employees to enhance their professional knowledge and
    capabilities

    52
    GENERAL INFORMATION

    State Bank of India


    Constituted under the State Bank of India Act, 1955

    Central Office of the Bank


    State Bank of India
    State Bank Bhavan, Madame Cama Road
    Mumbai 400 021
    Maharashtra

    Central Board of Directors of the Bank as on the date of this Shelf Prospectus:

    Name Designation
    Mr. O.P. Bhatt Chairman
    Mr. R. Sridharan Managing Director
    Dr. Ashok Jhunjhunwala Director appointed under section 19(c) of the Act
    Mr. Dileep C. Choksi Director appointed under section 19(c) of the Act
    Mr. S. Venkatachalam Director appointed under section 19(c) of the Act
    Mr. D. Sundaram Director appointed under section 19(c) of the Act
    Dr. Vasantha Bharucha Director appointed under section 19(d) of the Act
    Dr. Rajiv Kumar Director appointed under section 19(d) of the Act
    Ms. Shyamala Gopinath Director appointed under section 19(f) of the Act
    Mr. G. D. Nadaf Director appointed under section 19(cb) of the Act

    For further details on the Bank‘s Directors, see section ―Our Management‖.

    Compliance Officer

    Mr. Shyamal Sinha


    General Manager, (Compliance)
    State Bank of India
    State Bank Bhavan, Madame Cama Road
    Mumbai 400 021
    Maharashtra, India
    Tel.: (91 22) 2274 1450/2202 1392
    Fax: (91 22) 2284 0090
    Email: [email protected]

    Contact Person

    Mr. M. M. Pathak
    General Manager, (Shares & Bonds)
    State Bank of India, Shares & Bonds Department
    Corporate Centre, 3rd Floor, Varma Chambers
    11, Homji Street, Horniman Circle
    Fort, Mumbai 400 001
    Maharashtra
    Tel.: (91 22) 2263 3462/ 63/ 64/ 65/ 66
    Fax: (91 22) (91 22) 22633470/ 71
    Email: [email protected]

    53
    Lead Managers to the Issue

    Citigroup Global Markets India Private Limited


    12th Floor, Bakhtawar
    Nariman Point
    Mumbai 400 021
    Tel: (91 22) 6631 9999
    Fax: (91 22) 6646 6056
    E-mail: [email protected]
    Website: www.citibank.co.in
    Contact Person: S. Ashwin
    Compliance Officer: Vinod Patil
    SEBI Registration No. INM000010718

    Kotak Mahindra Capital Company Limited


    1st Floor, Bakhtawar
    229 Nariman Point
    Mumbai 400 021
    Tel: (91 22) 6634 1100
    Fax: (91 22) 2284 0492
    Email: [email protected]
    Website: www.kotak.com
    Contact Person: Mr. Chandrakant Bhole
    Compliance Officer: Mr. Ajay Vaidya
    SEBI Registration No. INM000008704

    SBI Capital Markets Limited*


    202, Maker Tower ‗E‘
    Cuffe Parade
    Mumbai 400 005
    Tel: (91 22) 22178300
    Fax: (91 22) 2218 8332
    Email: [email protected]
    Website: www.sbicaps.com
    Contact Person: Mr. Ashish Sable
    Compliance Officer: Mr. Bhaskar Chakraborty
    SEBI Registration No. INM000003531
    *SBI Capital Markets Limited, which is a subsidiary of the Issuer, shall only be involved in the marketing of the Issue

    Legal Advisors to the Issue


    Amarchand & Mangaldas & Suresh A. Shroff & Co.
    Peninsula Chambers
    Peninsula Corporate Park
    Ganpatrao Kadam Marg
    Lower Parel
    Mumbai 400 013
    Tel: (91 22) 6660 4455
    Fax: (91 22) 2496 3666

    Debenture Trustee

    IDBI Trusteeship Services Limited


    Asian Building, Ground Floor
    17, R. Karnani Marg
    Ballard Estate
    Mumbai 400 001

    54
    Tel: (91 22) 4080 7000
    Fax: (91 22) 6631 1776/ 2262 5247
    Contact Person: Brinda Venkatraman/ Swati Borkar
    Email: [email protected]

    IDBI Trusteeship Services Limited by its letter dated January 24, 2011 has given its consent to act as Debenture
    Trustee to the Issue (and each Tranche Issue) and for its name to be included in this Shelf Prospectus.

    All the rights and remedies of the Series Bondholders under this Issue shall vest in and shall be exercised by the
    appointed Debenture Trustee for this Issue without having it referred to the Series Bondholders. All investors under
    this Issue are deemed to have irrevocably given their authority and consent to the Debenture Trustee so appointed by
    the Bank for this Issue to act as their trustee and for doing such acts and signing such documents to carry out their
    duty in such capacity. Any payment by the Bank to the Series Bondholders/Debenture Trustee, as the case may be,
    shall, from the time of making such payment, completely and irrevocably discharge the Bank pro tanto from any
    liability to the Series Bondholders. For further details, please see section ―Terms of the Issue‖ and the relevant
    Tranche Prospectus.

    Auditors to the Issue

    Kalyaniwalla & Mistry


    Kalpataru Heritage
    127 M G Road
    Mumbai 400 001

    For details of the Auditors to the Bank as on March 31, 2010, please refer to page 7 of the Annual Report of the
    Bank for Fiscal Year 2009-2010 available on the website of the Bank.

    Registrar to the Issue

    Datamatics Financial Services Limited


    Plot No. B-5, MIDC Area, Part B, Cross Lane
    Andheri (East)
    Mumbai 400 093
    Tel.: (91 22) 6671 2187
    Fax.: (91 22) 6671 2204
    Email: [email protected]
    Website: www.dfssl.com
    Contact Person: Mr. R.D Kumbhar (General Manager)
    Investor Grievance ID: [email protected]
    SEBI Registration No. INR000000874

    Banker to the Issue and Refund Bank

    State Bank of India,


    CMP Centre,
    31, Mahal Industrial Estate,Off Mahakali Caves Road,
    Andher (East) Mumbai - 400093Tel.: (91 22) 26874800
    Fax.: (91 22) 26875060
    Email: [email protected]

    Minimum Subscription for each Tranche

    If the Bank does not receive the minimum subscription of 75% of the base issue amount of the Tranche Issue, on or
    before the closure of the Tranche Issue, the entire subscription amount shall be refunded to the applicants within 15
    days from the date of closure of the Tranche Issue. If there is a delay in the refund of the subscription amount by

    55
    more than 8 (eight) days after the Bank becomes liable to pay the same, the Bank will pay interest for the period of
    delay, at rates prescribed under subsections (2) and (2A) of Section 73 of the Companies Act.

    Credit Rating Agency

    CARE rating

    The Bonds proposed to be issued by the Bank have been assigned a rating of ―CARE AAA‖ by CARE vide its letter
    dated January 27, 2011. The instruments with this rating are considered to be of the best credit quality, offering
    highest safety for timely servicing of debt obligations. Such instruments carry minimal risk. For rationale of the
    aforementioned credit ratings issued by CARE please see Annexure. The rating will be re-affirmed at the time of
    each Tranche Issue for each Series of Bonds and the same will be included in the Tranche Prospectus.

    CARE Disclaimer:

    CARE‘s ratings are opinions on credit quality and are not recommendations to buy sell or hold any security. CARE
    has based its ratings on information obtained from sources believed by it to be accurate and reliable. CARE does
    not, however, guarantee the accuracy, adequacy or completeness of any information and is not responsible for any
    errors or omissions or for the results obtained from the use of such information. Most issuers of securities rated by
    CARE have paid a credit rating fee, based on the amount and type of securities issued.

    CRISIL rating

    The Bonds proposed to be issued by the Bank have been assigned a rating of ―AAA/ Stable‖ by CRISIL vide its
    letter no. MS/FSR/SBI/2010-11/1583 dated January 27, 2011. This rating of the Bonds indicates highest degree of
    safety with regard to timely payment of interest and principal on the instrument. For rationale of the aforementioned
    credit ratings issued by CARE please see Annexure. The rating will be re-affirmed at the time of each Tranche Issue
    for each Series of Bonds and the same will be included in the Tranche Prospectus.

    CRISIL Disclaimer:

    A CRISIL rating reflects CRISIL‘s current opinion on the likelihood of timely payment of the obligations under the
    rated instrument, and does not constitute an audit of the rated entity by CRISIL. CRISIL ratings are based on
    information provided by the issuer or obtained by CRISIL from sources it considers reliable. CRISIL does not
    guarantee the completeness or accuracy if the information on which the rating is based. A CRISIL rating is not a
    recommendation to buy/sell or hold the rated instrument; it does not comment on the market price or suitability for a
    particular investor. CRISIL has a practice of keeping all its ratings under surveillance and ratings are revised as and
    when circumstances so warrant. CRISIL is not responsible for any errors and especially states that it has no financial
    liability whatsoever to the subscribers/users/transmitters/distributors of its ratings.

    56
    CAPITAL STRUCTURE

    Face Value (Rs. in millions)


    Authorised share capital
    Equity Shares of Rs. 10 each 50,000.00

    Issued capital*#
    635,083,106 Equity Shares of Rs. 10 each 6,350.83

    Subscribed capital**
    634,998,115 Equity Shares of Rs. 10 each 6,349.98

    Share Premium Account


    Share premium account 206,584.44

    * As required by Section 5(3) of the Act, the Central Government has, by its letter (no. F.No.11/16/2005-BOA) dated January 2, 2008,
    authorised the increase in the issued capital of the Bank from Rs. 5,260 million to Rs. 6,500 million.

    ** Out of 105,259,776 Equity Shares proposed to be issued pursuant to the rights issue undertaken by the Bank in February 2008, 88,278
    Equity Shares were subject matter of a dispute or sub-judice and were not allotted pending resolution of the disputes in accordance with the
    Bank‘s policy. These Equity Shares are held in abeyance and retained separately by the Bank. The allotment of these Equity Shares is
    subject to receipt of an order from the relevant court or authority removing the restriction thereon. Subsequently, 3,287 Equity Shares were
    issued where titles have since been cleared and dispute has been resolved.

    # As on December 31, 2010, the Bank has 9,105,094 GDRs representing 18,210,188 Equity Shares outstanding.

    Changes in the Bank’s Authorised Share Capital

    Year Authorized Share Capital


    July 1, 1955 Rs. 200,000,000
    1985 Rs. 2,000,000,000
    1990 Rs. 10,000,000,000
    2010 Rs. 50,000,000,000

    Notes to the Capital Structure

    1. The build up of the Bank’s Equity Share Capital as of December 31, 2010 is set out below:

    Date of No. of Equity Face Issue Nature of Reasons for Cumulative Cumulative
    Allotment Shares value price Consideration Allotment Number of Subscribed
    (Rs.) (Rs.) Equity share
    Shares capital
    (Rs. in
    million)
    1955 562,500 100 100 Cash Incorporation of 562,500 56.25
    the Bank
    1985 4,437,500 100 160 Cash Public issue of 5,000,000 500.00
    Equity Shares of
    Rs. 100 each for
    cash at a premium
    of Rs. 60 per
    Equity Share
    1987 10,000,000 100 160 Cash Public issue of 15,000,000 1,500.00
    Equity Shares of
    Rs. 100 each for
    cash at a premium
    of Rs. 60 per
    Equity Share
    1991 5,000,000 100 160 Cash Public issue of 20,000,000 2,000.00
    Equity Shares of

    57
    Date of No. of Equity Face Issue Nature of Reasons for Cumulative Cumulative
    Allotment Shares value price Consideration Allotment Number of Subscribed
    (Rs.) (Rs.) Equity share
    Shares capital
    (Rs. in
    million)
    Rs. 100 each for
    cash at a premium
    of Rs. 60 per
    Equity Share
    1991 180,000,000 10 - - Split in face value 200,000,000 2,000.00
    of Equity Shares
    from Rs. 100 each
    to Rs. 10 each
    1994 141,850,000 10 100 Cash Public issue of 341,850,000 3,418.5
    Equity Shares of
    Rs. 10 each for
    cash at a premium
    of Rs. 90 per
    Equity Share
    1994 131,978,726 10 60 Cash Rights issue of 473,828,726 4,738.30
    Equity Shares of
    Rs. 10 each for
    cash at a premium
    of Rs. 50 per
    Equity Share in
    the ratio of three
    new Equity
    Shares for every
    five Equity Shares
    held and also to
    employees at the
    rights issue price.
    1995 180,463 10 100 Cash Public issue of 474,009,189 4,740.09
    Equity Shares of
    Rs. 10 each for
    cash at a premium
    of Rs. 90 per
    Equity Share
    1996 683 10 100 Cash Increase in the 474,009,872 4,740.09
    issued capital
    1996 52,289,006 10 USD Cash Issue of GDR 526,298,878 5,262.99
    14.15 representing two
    Equity Shares at
    the rate of USD
    14.15 per GDR.
    (Rectification of
    994 Equity Shares
    (net) relating to
    equity issue in
    1993/94 resulted
    in reduction of
    share capital by
    Rs. 9,940 and
    share premium by
    Rs. 55,700)
    2008 105,171,498** 10 1,590 Cash Pursuant to the 631,470,376 6,314.70
    rights issue in the
    ratio of one
    Equity Share for
    every five Equity
    Shares held

    58
    Date of No. of Equity Face Issue Nature of Reasons for Cumulative Cumulative
    Allotment Shares value price Consideration Allotment Number of Subscribed
    (Rs.) (Rs.) Equity share
    Shares capital
    (Rs. in
    million)
    2008 3,409,846* 10 1,590 Cash Pursuant to ESPS- 634,880,222 6,348.80
    2008 offered to
    the employees
    2010 2,422 10 1,590 Cash Pursuant to 634,882,644 6,348.83
    resolution of
    dispute in the
    rights issue
    2010 865 10 1,590 Cash Pursuant to 634,883,509 6,348.83
    resolution of
    dispute in the
    rights issue
    2010 1,14,606 10 - - Allotment of SBI 634,998,115 6,349.98
    shares to the
    shareholders of
    State Bank of
    Indore
    * The Bank offered 8,617,500 Equity Shares as part of ESPS-2008 and it received application for 3,410,973 Equity Shares. The
    Bank accepted applications for and allotted 3,409,846 Equity Shares, out of which, 113,747 Equity Shares are held in abeyance
    due to non-submission of PAN details by the employees to whom such shares were issued.

    ** Out of 105,259,776 Equity Shares proposed to be issued pursuant to the rights issue undertaken by the Bank in February 2008,
    88,278 Equity Shares were subject matter of a dispute or sub-judice and were not allotted pending resolution of the disputes in
    accordance with the Bank‘s policy. These Equity Shares are held in abeyance and retained separately by the Bank. The allotment
    of these Equity Shares is subject to receipt of an order from the relevant court or authority removing the restriction thereon.
    Subsequently, 3,287 Equity Shares were issued where titles have since been cleared and dispute has been resolved.

    2. Shareholding pattern of the Bank as of December 31, 2010 is as follows:

    Sr. Category of Number of Total Number of Total shareholding as Shares pledged or


    No shareholder shareholders number of shares held in a percentage of total otherwise
    shares de materialized number of shares encumbered
    form % of % of Number % No.
    shares shares of shares of
    (A+B) (A+B+C) shares
    (A) Shareholding of
    Promoter and
    Promoter Group
    (1) Indian
    (a) Individuals/ Hindu 0 0 0 0.00 0.00 0 0
    Undivided Family
    (b) Central Government/ 1 377,207,200 377,207,200 61.16 59.40 0 0
    State Government(s)
    (c) Bodies Corporate 0 0 0 0.00 0.00 0 0
    (d) Financial Institutions/ 0 0 0 0.00 0.00 0 0
    Banks
    (e) Any Other (specify)
    0 0 0 0 0 0 0
    Sub-Total (A)(1) 1 377,207,200 377,207,200 61.16 59.40 0 0.00
    (2) Foreign
    (a) Individuals (Non- 0 0 0 0.00 0.00 0 0
    Resident Individuals/
    Foreign Individuals)
    (b) Bodies Corporate 0 0 0 0.00 0.00 0 0
    (c) Institutions 0 0 0 0.00 0.00 0 0
    (d) Any Other (specify)
    0 0 0 0 0 0 0
    Sub-Total (A)(2) 0 0 0 0.00 0.00 0 0.00
    Total Shareholding of 1 377,207,200 377,207,200 61.16 59.40 0 0.00
    Promoter and
    Promoter Group (A)=
    (A)(1)+(A)(2)

    59
    Sr. Category of Number of Total Number of Total shareholding as Shares pledged or
    No shareholder shareholders number of shares held in a percentage of total otherwise
    shares de materialized number of shares encumbered
    form % of % of Number % No.
    shares shares of shares of
    (A+B) (A+B+C) shares
    (B) Public shareholding
    (1) Institutions
    (a) Mutual Funds/ UTI 331 26,121,359 26,092,429 4.24 4.11 NA NA
    (b) Financial Institutions/ 80 669,099 656,309 0.11 0.11 NA NA
    Banks
    (c) Central Government/ 4 127,193 5,235 0.02 0.02 NA NA
    State Government(s)
    (d) Venture Capital Funds 0 0 0 0.00 0.00 NA NA
    (e) Insurance Companies 30 72,061,111 72,059,861 11.68 11.35 NA NA
    (f) Foreign Institutional 610 84,862,228 84,759,003 13.76 13.36 NA NA
    Investors
    (g) Foreign Venture Capital 0 0 0 0.00 0.00 NA NA
    Investors
    (h) Any Other (specify)
    0 0 0 0 0 0 0
    Sub-Total (B)(1) 1,055 183,840,990 183,572,837 29.80 28.95 NA NA
    (2) Non-institutions
    (a) Bodies Corporate 4,922 17,900,653 17,818,720 2.90 2.82 NA NA
    (b) Individuals
    (i) Individual shareholders 694,903 34,273,133 22,809,938 5.56 5.40 NA NA
    holding nominal share
    capital up to Rs. 1 lakh
    (ii) Individual shareholders 54 1,247,545 1,247,545 0.20 0.20 NA NA
    holding nominal share
    capital in excess of Rs.
    1 lakh
    (c) Any Other (specify)
    Non-Residents Indian 6,329 662,967 641,794 0.11 0.10 NA NA
    Trusts 161 368,678 339,505 0.06 0.06 NA NA
    OCB 4 1,020 620 0.00 0.00 NA NA
    Foreign National 5 303 303 0.00 0.00 NA NA
    Foreign Body 3 247,849 247,849 0.04 0.04 NA NA
    Corporates
    Clearing Member 531 1,037,589 1,037,589 0.17 0.16 NA NA
    Sub-Total(B)(2) 706,912 55,739,737 44,143,863 9.04 8.78 NA NA
    Total Public 707,967 239,580,727 227,716,700 38.84 37.73 NA NA
    Shareholding (B)=
    (B)(1)+(B)(2)
    TOTAL(A)+(B) 707,968 616,787,927 604,923,900 100.00 97.13 0 0.00
    (C) Shares held by 1 18,210,188 18,210,188 2.87 NA NA
    Custodians and
    against which
    Depository Receipts
    have been issued
    GRAND TOTAL 707,969 634,998,115 623,134,088 100.00 0 0.00
    (A)+(B)+(C)

    3. Top ten Shareholders of the Bank

    a) Top ten Shareholders of the Bank as on December 31, 2010

    S. Name of the Shareholders Address Total Equity Percentage of the


    No. Shares held shareholding (%)
    1. President of India Government of India 377,207,200 59.403
    Ministry of Finance, Jeevan Deep
    Building
    Parliament Street
    New Delhi 110001
    2. Life Insurance Corporation of Investment Department 65,885,316 10.376
    India 6th Floor, West Wing, Central Office
    Yogakshema, Jeevan Bima Marg

    60
    S. Name of the Shareholders Address Total Equity Percentage of the
    No. Shares held shareholding (%)
    Mumbai 400021
    3. The Bank of New York ICICI Bank Limited, SMS Empire 18,210,188 2.868
    Complex, 1st Floor, 414, Senapati
    Bapat Marg
    Lower Parel
    Mumbai 400013
    4. HSBC Bank (Mauritius) HSBC Securities Ltd. 6,472,431 1.019
    Limited A/C Cinnamon 2nd Floor, Shiv Plot No. 139-140B,
    Capital Limited Western Express Highway, Sahar
    Road Junction,
    Ville Parle (East), Mumbai 400057
    5. HSBC Global Investment HSBC Securities Services 6,407,822 1.009
    Funds A/C HSBC Global 2nd Floor, ―SHIV‖ Plot No. 139-140
    Investment Funds Mauritius B, Western Express Highway Sahar
    Limited Road Junction, Vile Parle (East),
    Mumbai 400057
    6. Goldman Sachs Investments Standard Chartered Bank 5,488,078 0.864
    (Mauritius) I Limited Securities Services, 23-25, M.G.
    Road, Fort
    Mumbai 400001
    7. Europacific Growth Fund JPMorgan Chase Bank N.A 4,906,336 0.773
    India Sub Custody, 6th Floor,
    Paradigm
    B Mindspace, Malad West
    Mumbai 400064
    8. Copthall Mauritius J P Morgan Chase Bank NA 4,112,057 0.648
    Investment Limited India Sub Custoty, 6th Floor,
    Paradign B, Mind Space,
    Malad (West), Mumbai 400064
    9. General Insurance Suraksha, 170, J Tata Road, 3,200,000 0.504
    Corporation of India Church Gate, Mumbai 400020
    10. Bajaj Allianz Life Insurance HSBC Securities Services 2,932,254 0.462
    Company Limited 2nd Floor, ―SHIV‖ Plot No. 39-40 B
    Western Express Highway Sahar
    Road Junction, Vile Parle East
    Mumbai 400056
    TOTAL 494,821,682 77.925

    b) Top ten Debt Holders of the Bank as on December 31, 2010

    SBI – Bonds – 9.80%:

    S. Bondholders Address Total number Percentage of


    No. of Bonds held Holding (in %)
    1. Andhra Bank Funds Forex Department 200 8.89
    82 83 Makers Towers
    8 ‗F‘ Block
    Cuffe Parade
    Mumbai – 400005
    2. National Insurance Company Royal Insurance Building 120 5.33
    Employees Pension Fund 2nd Floor 5 Netaji Subhas Road
    Kolkata 700001
    3. IFFCO Employees Provident IFFCO Employees P F Trust 100 4.44
    Fund Trust IFFCO Sadan

    61
    S. Bondholders Address Total number Percentage of
    No. of Bonds held Holding (in %)
    C 1 Distt Centre
    Saket
    New Delhi 110017
    4. State Bank of Hyderabad State Bank of Hyderabad PPG 100 4.44
    Employees Pension Fund Trust Dept Head Office
    1995 Gunfoundry
    Hyderabad 500001
    5. Coal Mines Provident Fund C/O ICICI Securities Primary 91 4.04
    Dealership Limited
    ICICI Centre
    H.T. Parekh Marg
    Churchgate
    Mumbai 400020
    6. Food Corporation of India CPF Khadya Sadan 13th Floor 80 3.56
    Trust 16 20 Barakhamba Lane
    New Delhi 110001

    7. Coal Mines Pension Fund State Bank of India Securities 58 2.58


    Services Branch
    Main Branch Building 2nd Floor
    Fort
    Mumbai 400001
    8. National Fertilizers Limited Provident Fund Section 55 2.44
    Employees Provident Fund National Fertilizer Limited
    Trust A 11 Sector 24
    Noida
    Distt Gautam Budh Nagar 201301
    9. Union Bank of India Union Bank Bhavan 50 2.22
    Employees Provident Fund P F Section
    Human Resource Management
    Department Terminal Benefit
    Division
    8th Floor
    239 Vidhan Bhavan Road
    Nariman Point
    Mumbai 400021
    10. UCO Bank (Employees) 3rd Floor 3-4 DD Block 50 2.22
    Pension Fund Sector 1
    Salt Lake
    Kolkata 700064
    TOTAL 904 40.16

    SBI – Bonds – 8.98 %:

    S. Bond Holders Address Total number of Percentage of Holding


    No. Bonds held (in %)
    1. Life Insurance Corporation Investment 15,000 100.00
    of India Department
    6th Floor West
    Wing
    Central Office
    Yogakshema
    Jeevan Bima Marg
    Mumbai 400021

    SBI Bonds – 9.37 %:

    62
    S. Bondholders Address Total number of Percentage of Holding
    No. Bonds held (in %)
    1. Life Insurance Corporation Investment 10,000 100.00
    of India Department
    6th Floor West
    Wing
    Central Office
    Yogakshema
    Jeevan Bima Marg
    Mumbai 400021

    SBI Bonds – 8.15 %:

    S. Bondholders Address Total number of Percentage of


    No. Bonds held Holding (in %)
    1. CBT EPF EPF A/C ICICI HDFC Bank Limited 2,000 100.00
    Prudential AMC Limited Custody Services
    Lodha – 1 Think Techno
    Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042

    SBI Bonds – 8.80 %:

    S. Bondholders Address Total number of Percentage of


    No. Bonds held Holding (in %)
    1. SBI Employees‘ Gratuity (9277) – State Bank of India 6,200 26.63
    Fund New Issues and Securities
    Services Division
    Mumbai Main Branch
    Mumbai 400023
    2. Sahara India Financial 25 28 Atlanta 4,457 19.15
    Corporation Limited Nariman Point
    Mumbai 400021
    3. Life Insurance Investment Department 1,255 5.39
    Corporation of India 6th Floor West Wing
    Central Office
    Yogakshema
    Jeevan Bima Marg
    Mumbai 400021
    4. State Bank of Travancore Head Office 520 2.23
    (Employees) Pension State Bank of Travancore
    Fund P.B. No. 34
    Poojapura
    Trivandrum 695 012
    5. Chattisgarh State Shed No. 7 500 2.15
    Electricity Board Executive Director (Finance)
    Gratuity and Pension Danganiya
    Fund Trust Raipur 492001
    6. State Bank of Travancore Head Office 350 1.50
    Employees Provident State Bank of Travancore
    Fund P.B. No. 34

    63
    S. Bondholders Address Total number of Percentage of
    No. Bonds held Holding (in %)
    Poojapura
    Trivandrum 695 012
    7. The Life Insurance Finance and Accounts 250 1.07
    Corporation of India Department
    Provident Fund No.1 3rd Floor West Wing
    Central Office
    Yogakshema
    Jeevan Bima Marg
    Mumbai 400021
    8. The New India New India Assurance Building 250 1.07
    Assurance Company Basement 87 M.G. Road
    Employees Pension Fund Fort
    Mumbai 400001
    9. The New India 5th Floor Gratuity Department 250 1.07
    Assurance Company 87 M.G. Road
    Limited Employees Fort
    Gratuity Fund Mumbai 400001
    10. Canara Bank, Mumbai Domestic Treasury (Back 250 1.07
    Office)
    7th Floor Maker Chamber III
    Nariman Point
    Mumbai 400021
    TOTAL 14,282 61.33

    SBI Bonds – 8.97 %:

    S. Bondholders Address Total number Percentage of


    No. of Bonds held Holding (in %)
    1. Central Board of Trustees Employees State Bank of India 1,560 25.37
    Provident Fund EES Provident Fund EPFO Securities
    Services Branch
    2nd Floor Mumbai
    Main Branch
    Mumbai samachar
    marg,
    Mumbai 400023
    2. CBT EPF EPF A/C Reliance Capital HDFC Bank Limited 950 15.45
    AMC Limited Custody Services
    Lodha – 1 Think
    Techno Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    3. Sahara India Financial Corporation 25 28 Atlanta 669 10.88
    Limited Nariman Point
    Mumbai 400021
    4. CBT EPF EPS A/C/ HSBC AMC Limited HDFC Bank Limited 440 7.15
    Custody Services
    Lodha – 1 Think
    Techno Campus
    OFF Floor 8

    64
    S. Bondholders Address Total number Percentage of
    No. of Bonds held Holding (in %)
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    5. Bochasanwasi Shriaksharpurushottam Accounts Department 364 5.92
    Swaminarayan Sanstha Dharma Sadan
    Shri Swaminarayan
    Mandir
    Shahibaug Road
    Ahmedabad 380004
    6. Bajaj Allianz Life Insurance Company Deutsche Bank AG 350 5.69
    Limited DB House
    Hazarimal Somani
    Marg
    P.B. No. 1142
    Fort
    Mumbai 400001
    7. HCL Corporation Limited 44 Friends Colony East 200 3.25
    New Delhi 110065
    8. Bajaj Allianz General Insurance Company C/O Standard 150 2.44
    Limited Chartered Bank
    Custody and Clearing
    Services
    23-25 M.G. Road
    Fort
    Mumbai 400001
    9. SBI Life Insurance Company Limited HDFC Bank Limited 150 2.44
    Custody Services
    Lodha – 1 Think
    Techno Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    10. Tata Consultancy Services Employees HDFC Bank Limited 100 1.63
    Provident Fund EES Provident Fund Custody Services
    Lodha – 1 Think
    Techno Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    TOTAL 4,933 80.22

    SBI Bonds 8.96 %:

    S. Bondholders Address Total number Percentage of


    No. of Bonds held Holding (in %)
    1. Sahara India Financial Corporation 25 28 Atlanta 1,993 33.21
    Limited Nariman Point
    Mumbai 400021

    65
    S. Bondholders Address Total number Percentage of
    No. of Bonds held Holding (in %)
    2. The Life Insurance Corporation of Finance and Accounts 500 8.33
    India Provident Fund No.1 Department
    3rd Floor West Wing
    Central Office
    Yogakshema
    Jeevan Bima Marg
    Mumbai 400021
    3. The B.E.S. And T. Undertaking Cash Department 446 7.43
    Provident Fund BEST Undertaking
    BEST Bhavan
    BEST Marg
    Colaba
    Mumbai 400 001
    4. Bochasanwasi Accounts Department 200 3.33
    Shriaksharpurushottam Dharma Sadan
    Swaminarayan Sanstha Shri Swaminarayan Mandir
    Shahibaug Road
    Ahmedabad 380004
    5. Maharashtra State Electricity Boards Estrella Batteries Expansion 193 3.22
    Contributory Provident Fund Building
    Plot No. 1
    Dharavi Road
    Matunga
    Mumbai 400019
    6. Andhra Bank Employees Pension C/O Andhra Bank Head Office 150 2.50
    Fund Dr. Pattabhi Bhavan
    Saifabad
    Hyderabad 500004
    7. Indian Overseas Bank Staff 762, Anna Salai 100 1.67
    Provident Fund Chennai 600002
    8. The New India Assurance Company New India Assurance Building 100 1.67
    Employees Pension Fund Basement
    87 M.G. Road
    Fort
    Mumbai 400001
    9. United India Insurance Company 24, Whites Road 100 1.67
    Limited Chennai 600014
    10. MTNL Employees Provident Fund MTNL Corporate Office 100 1.67
    Trust 6th Floor Mahanagar
    Doorsanchar Bhavan
    Jawaharlal Nehru Marg
    Near Zakir Hussain College
    New Delhi 110002
    TOTAL 3,882 64.70

    SBI Bonds 9.00 %:

    S. Bondholders Address Total number of Percentage of Holding


    No. Bonds held (in %)
    1. Life Insurance Corporation Investment 5,000 100.00
    of India Department
    6th Floor West Wing
    Central Office

    66
    S. Bondholders Address Total number of Percentage of Holding
    No. Bonds held (in %)
    Yogakshema
    Jeevan Bima Marg
    Mumbai 400021

    SBI Bond – 8.88 %:

    S. Bondholders Address Total number of Bonds Percentage of Holding (in


    No. held %)
    1. Life Insurance Investment Department 10,000 100.00
    Corporation of 6th Floor West Wing
    India Central Office
    Yogakshema
    Jeevan Bima Marg
    Mumbai 400021Bima
    Marg,
    Mumbai 400021

    SBI Bonds – 9.15 %:

    S. Bondholders Address Total number of Percentage of


    No. Bonds held Holding (in %)
    1. Central Board of Trustees State Bank of India EPFO 8,900 89.00
    Employees Provident Fund Securities Services Branch
    2nd Floor Mumbai Main
    Branch
    Mumbai Samachar Marg
    Mumbai 400023
    2. Coal Mines Pension Fund State Bank of India EPFO 1,000 10.00
    Securities Services Branch
    2nd Floor Mumbai Main
    Branch
    Mumbai Samachar Marg
    Mumbai 400023
    3. NPS Trustees – SBI Pension C/O SBI Pension Funds 1,00 1.00
    Fund Scheme 1 Private Limited
    No. 32 Maker Chamber –
    III Nariman Point
    Mumbai 400021
    TOTAL 10,000 100.00

    SBI Bonds – 9.15 %:

    S. Bondholders Address Total number of Percentage of Holding


    No. Bonds held (in %)
    1. Life Insurance Corporation Investment Department 15,000 75.00
    of India 6th Floor West Wing
    Central Office
    Yogakshema
    Jeevan Bima Marg
    Mumbai 400021
    2. LIC of India Money Plus Investment Department 2,000 10.00
    6th Floor West Wing
    Central Office

    67
    S. Bondholders Address Total number of Percentage of Holding
    No. Bonds held (in %)
    Yogakshema
    Jeevan Bima Marg
    Mumbai 400021
    3. LIC of India – Profit Plus HDFC Bank Limited 2,000 10.00
    Custody Services
    Lodha – 1 Think Techno
    Campus
    OFF Floor 8
    Next to Kanjurmarg Station
    Kanjurmarg (East)
    Mumbai 400042
    4. LIC of India – Market Plus Investment Department 1,000 5.00
    6th Floor West Wing
    Central Office
    Yogakshema
    Jeevan Bima Marg
    Mumbai 400021
    TOTAL 20,000 100.00

    SBI Bonds – 9.10 %:

    S. Bondholders Address Total number of Percentage of


    No. Bonds held Holding (in %)
    1. SBI Employees Pension Fund Central Account Office 5,500 55.00
    Kankaria Centre
    2/1 Russel Street
    Kolkata 700071
    2. Canara Bank, Mumbai Domestic Treasury 2,898 28.98
    (Back Office)
    Maker Chamber III 7th
    Floor
    Nariman Point
    Mumbai 400021
    3. Imperial Bank of India Employees Central Account Office 500 5.00
    Pension and Guarantee Fund Kankaria Centre
    2/1 Russel Street
    Kolkata 700071
    4. West Bengal State Co-op Bank 24 A Waterloo Street 300 3.00
    Limited Kolkata 700069
    5. Birla Sun Life Insurance Company Deutsche Bank AG 122 1.22
    Limited DB House
    Hazarimal Somani Marg
    P.B. No. 1142
    Fort
    Mumbai 400001
    6. Board of Trustees Hindustan Steel Shed No. 47 100 1.00
    Limited Bhilai Project Provident Fund Old Main Office
    Bhilai 490001
    7. Corporation Bank Employees Gratuity Corporation Bank Head 85 0.85
    Fund Office Pandeshwar
    Mangalore 575001

    68
    S. Bondholders Address Total number of Percentage of
    No. Bonds held Holding (in %)
    8. ITI Limited PF Trust C/O ITI Limited 50 0.50
    Doorbhash Nagar
    Raibareli 229010
    9. Hewett-Packard Globalsoft Limited HP Avenue 41 0.41
    provident Fund Trust 39/40 Electronics City –
    2
    Hosur Road
    Bangalore 560100
    10. Corporation Bank Employees Pension Corporation Bank Head 30 0.30
    Fund Office
    Pandeshwar
    Mangalore 575001
    TOTAL 9,626 96.26

    SBI Bonds – 8.95 %:

    S. Bondholders Address Total number of Percentage of


    No. Bonds held Holding (in %)
    1. CBT EPF EPS A/C HSBC AMC HDFC Bank Limited 7,300 73.00
    Limited Custody Services
    Lodha – 1 Think Techno
    Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    2. CBT EPF EPF A/C Reliance HDFC Bank Limited 2,500 25.00
    Capital AMC Limtied Custody Services
    Lodha – 1 Think Techno
    Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    3. CBT EPC EDLI A/C HSBC HDFC Bank Limited 200 2.00
    AMC Limited Custody Services
    Lodha – 1 Think Techno
    Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    TOTAL 10,000 100.00

    SBI Bonds – 8.40 %:

    S. Bondholders Address Total number of Percentage of


    No. Bonds held Holding (in %)
    1. CBT EPF EPF A/C ICICI Prudential HDFC Bank Limited 9,300 62.00
    AMC Limited Custody Services

    69
    S. Bondholders Address Total number of Percentage of
    No. Bonds held Holding (in %)
    Lodha – 1 Think
    Techno Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    2. CBT EPF EPS A/C HSBC AMC Limited HDFC Bank Limited 3,898 25.99
    Custody Services
    Lodha – 1 Think
    Techno Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    3. CBT EPF EPF A/C Reliance Capital HDFC Bank Limited 1,000 6.67
    AMC Limtied Custody Services
    Lodha – 1 Think
    Techno Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    4. SBI Life Insurance Company Limited HDFC Bank Limited 500 3.33
    Custody Services
    Lodha – 1 Think
    Techno Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    5. HDFC Trustee Company Limited HDFC HDFC Bank Limited 250 1.66
    MF Monthly Income Long Term Plan Custody Services
    Lodha – 1 Think
    Techno Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    6. CBT EPC EDLI A/C HSBC AMC HDFC Bank Limited 52 0.35
    Limited Custody Services
    Lodha – 1 Think
    Techno Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    TOTAL 15,000 100.00

    70
    SBI Bonds – 7.45 %:

    S. Bondholders Address Total number Percentage of


    No. of Bonds held Holding (in %)
    1. CBT EPF EPS A/C HSBC AMC HDFC Bank Limited 10,646 32.43
    Limited Custody Services
    Lodha – 1 Think Techno
    Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    2. CBT EPF EPF A/C ICICI Prudential HDFC Bank Limited 7,402 22.55
    AMC Limited Custody Services
    Lodha – 1 Think Techno
    Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    3. SBI Employees‘ Gratuity Fund (9277) – State Bank of 1,020 3.11
    India
    New Issues and Securities
    Services Division
    Mumbai Main Branch
    Mumbai 400023
    4. Coal Mines Provident Fund C/O ICICI Securities 962 2.93
    Primary Dealership
    Limited
    ICICI Centre
    H.T. Parekh Marg
    Churchgate
    Mumbai 400020
    5. West Bengal State Electricity Boards Bidyut Bhavan 685 2.09
    Employees Contributory Provident 6th Floor Block A
    Fund West Bengal State
    Electricity Board
    Bidhan Nagar
    Kolkata 700091
    6. CBT EPC EDLI A/C HSBC AMC HDFC Bank Limited 510 1.55
    Limited Custody Services
    Lodha – 1 Think Techno
    Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    7. Securities and Exchange Board of Treasury and Accounts 500 1.52
    India Division
    SEBI Bhavan
    Plot No. C – 4A

    71
    S. Bondholders Address Total number Percentage of
    No. of Bonds held Holding (in %)
    G-Block Bandra-Kurla
    Complex
    Bandra East
    Mumbai 400051
    8. Infosys Technologies Limited C/O Infosys Technologies 400 1.22
    Employees Pension Fund Trust Limited
    Plot No. 44
    Electronics City
    Hosur Road
    Bangalore 561229
    9. Life Insurance Corporation of India Investment Department 310 0.94
    6th Floor West Wing
    Central Office
    Yogakshema
    Jeevan Bima Marg
    Mumbai 400021
    10. The Peerless General Finance & 3 Esplanade East 250 0.76
    Investment Company Limited Peerless Bhavan
    Kolkata 700069
    TOTAL 22,685 69.10

    SBI Bond – 9.05 %:

    S. Bondholders Address Total number Percentage of


    No. of Bonds held Holding (in %)
    1. Bank of Baroda Specialized Integrated Treasury 1,000 10.00
    Branch
    Kalpataru Heritage Building
    6th Floor
    Nanik Motwane Marg
    Mumbai 400023
    2. HDFC Standard Life Insurance HDFC Bank Limited Custody 600 6.00
    Company Limited Services
    Lodha – 1 Think Techno Campus
    OFF Floor 8
    Next to Kanjurmarg Station
    Kanjurmarg (East)
    Mumbai 400042
    3. HDFC Trustee Company Limited HDFC Bank Limited Custody 550 5.50
    HDFC MF Monthly Income Long Services
    Term Plan Lodha – 1 Think Techno Campus
    OFF Floor 8
    Next to Kanjurmarg Station
    Kanjurmarg (East)
    Mumbai 400042
    4. Birla Sun Life Insurance Company Deutsche Bank AG 550 5.50
    Limited DB House
    Hazarimal Somani Marg
    P.B. No. 1142
    Fort
    Mumbai 400001
    5. United India Insurance Company 24 Whites Road 500 5.00
    Limited Chennai 600014

    72
    S. Bondholders Address Total number Percentage of
    No. of Bonds held Holding (in %)
    6. Reliance Life Insurance Company Deutsche Bank AG 400 4.00
    Limited DB House
    Hazarimal Somani Marg
    P.B. No. 1142
    Fort
    Mumbai 400001
    7. Kotak Mahindra Old Mutual Life Standard Chartered Bank 350 3.50
    Insurance Limited Securities Services, 23-25, M.G.
    Road, Fort
    Mumbai 400001

    8. TCS E Serve Limited 9th Floor, B-3 Nirlon Knowledge 334 3.34
    Park,
    Western Express Highway,
    Goregaon –E, Mumbai 400063
    9. ICICI Prudential Life Insurance Deutsche Bank AG 250 2.50
    Company Limited DB House
    Hazarimal Somani Marg
    P.B. No. 1142
    Fort
    Mumbai 400001
    10. Indian Oil Corporation Ltd Core 2 Scope Complex, 7 250 2.50
    (Refineries Division) Employees Institutional Area, Lodhi Road,
    Provident Fund New Delhi 110003

    TOTAL 4,784 47.84

    SBI Bond – 8.85 %:

    S. Bondholders Address Total number Percentage of


    No. of Bonds held Holding (in %)
    1. Sahara India Financial Corporation Limited 25 28 Atlanta 2,531 63.28
    Nariman Point
    Mumbai 400021
    2. CBT EPF EPS A/C Reliance Capital AMC HDFC Bank Limited 580 14.50
    Limited Custody Services
    Lodha – 1 Think
    Techno Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    3. CBT EPF EPS A/C HSBC AMC Limited HDFC Bank Limited 450 11.25
    Custody Services
    Lodha – 1 Think
    Techno Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    4. The Union Provident Fund Hindustan Unilever 129 3.23

    73
    S. Bondholders Address Total number Percentage of
    No. of Bonds held Holding (in %)
    Limited
    Unilever House
    Department HO Fund
    B1L1
    B D Sawant Marg
    Chakala
    Andheri East
    Mumbai 400099
    5. KSRTC Employees Contributory Provident Board of Tustees 50 1.25
    Fund KSRTC Employees
    CPF
    K H Road
    Bangalore 560 027
    6. Dayanand Anglo Vedic College Trust and Chitragupta Road 35 0.88
    Management Society Employees Provident Paharganj
    Fund New Delhi 110055
    7. Food Corporation of India CPF Trust Khadya Sadan 13th 34 0.85
    Floor
    16 20 Barakhamba
    Lane
    New Delhi 110001
    8. Indian Hotels Company Limited Mandlik House 20 0.50
    Employees Provident Fund 1st Floor
    Mandlik Road
    Mumbai 400001
    9. Jaiprakash Associates Private Limited JA House 20 0.50
    Employees Provident Fund 63 Basant Lok
    Vasant Vihar
    New Delhi 110057
    10. Gujarat State Fertilizers and Chemicals Fertilizer Nagar 19 0.48
    Employees Provident Fund Trust Baroda 391750
    TOTAL 3,868 96.72

    SBI Bond – 9.85 %:

    S. Bondholders Address Total number of Percentage of


    No. Bonds held Holding (in %)
    1. CBT EPF EPF A/C ICICI HDFC Bank Limited 6,212 41.41
    Prudential AMC Limited Custody Services
    Lodha – 1 Think Techno
    Campus
    OFF Floor 8
    Next to Kanjurmarg Station
    Kanjurmarg (East)
    Mumbai 400042
    2. CBT EPF EPS A/C HSBC AMC HDFC Bank Limited 3,242 21.61
    Limited Custody Services
    Lodha – 1 Think Techno
    Campus
    OFF Floor 8
    Next to Kanjurmarg Station
    Kanjurmarg (East)
    Mumbai 400042

    74
    S. Bondholders Address Total number of Percentage of
    No. Bonds held Holding (in %)
    3. SBI Employees‘ Gratuity Fund (9277) – State Bank of India 2,750 18.33
    New Issues and Securities
    Services Division
    Mumbai Main Branch
    Mumbai 400023
    4. Coal Mines Provident Fund C/O ICICI Securities 500 3.33
    Primary Dealership Limited
    ICICI Centre
    H.T. Parekh Marg
    Churchgate
    Mumbai – 400020
    5. CBT EPC EDLI A/C HSBC AMC HDFC Bank Limited 328 2.19
    Limited Custody Services
    Lodha – 1 Think Techno
    Campus
    OFF Floor 8
    Next to Kanjurmarg Station
    Kanjurmarg (East)
    Mumbai 400042
    6. The New India Assurance New India Assurance 250 1.67
    Company Employees Pension Building Basement
    Fund 87 M.G. Road
    Fort
    Mumbai 400001
    7. CBT EPF PG A/C ICICI HDFC Bank Limited 148 0.99
    Prudential AMC Limited Custody Services
    Lodha – 1 Think Techno
    Campus
    OFF Floor 8
    Next to Kanjurmarg Station
    Kanjurmarg (East)
    Mumbai 400042
    8. CESC Limited Provident Fund CESC House 140 0.93
    Chowringhee Square
    Kolkata 700001
    9. Oriental Insurance Company Pension Fund Section 100 0.66
    Employees Pension Fund Oriental House
    1st Floor
    25/27 Asajali Road
    New Delhi 110002
    10. Board of Trustees for Bokaro Old Admn. Building 100 0.66
    Steel Employees Provident Fund SAIL Bokaro Plant
    Bokaro Steel City
    Bokaro 827001
    TOTAL 13,770 91.78

    SBI Bond – 10.10 %:

    S. Bondholders Address Total number of Percentage of


    No. Bonds held Holding (in %)
    1. Life Insurance Corporation of India Investment Department 10,030 28.66
    6th Floor West Wing
    Central Office

    75
    S. Bondholders Address Total number of Percentage of
    No. Bonds held Holding (in %)
    Yogakshema
    Jeevan Bima Marg
    Mumbai 400021
    2. CBT EPF EPS A/C Reliance HDFC Bank Limited 8,574 24.50
    Capital AMC Limited Custody Services
    Lodha – 1 Think Techno
    Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    3. CBT EPF EPS A/C HSBC AMC HDFC Bank Limited 3,386 9.67
    Limited Custody Services
    Lodha – 1 Think Techno
    Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    4. Central Board of Trustees State Bank of India 1,213 3.47
    Employees Provident Fund EPFO
    Securities Services
    Branch
    2nd Floor Mumbai Main
    Branch
    Mumbai Samachar Marg
    Mumbai 400023
    5. HDFC Trustee Company Limited – Citibank N.A. 600 1.71
    HDFC Prudence Fund Custody Services
    3rd Floor Trent House
    G – Block
    Plot No. 60
    Bandra Kurla Complex
    Bandra East
    Mumbai 400051
    6. Board of Trustees G.S.R.T.C. CPF Central Office 300 0.86
    Accounts Dept.
    Gitamandir Road
    Ahmedabad 380022
    7. HDFC Standard Life Insurance HDFC Bank Limited 300 0.86
    Company Limited Custody Services
    Lodha – 1 Think Techno
    Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    8. CBT EPC EDLI A/C HSBC AMC HDFC Bank Limited 272 0.78
    Limited Custody Services
    Lodha – 1 Think Techno

    76
    S. Bondholders Address Total number of Percentage of
    No. Bonds held Holding (in %)
    Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    9. Andhra Bank Employees Pension C/O Andhra Bank Head 249 0.71
    Fund Office
    Dr. Pattabhi Bhavan
    Saifabad
    Hyderabad 500004
    10. Reliance Employees Provident HDFC Bank Limited 220 0.63
    Fund Bombay Custody Services
    Lodha – 1 Think Techno
    Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    TOTAL 25,244 71.85

    SBI Bond – 10.20 %:

    S. Bondholders Address Total number Percentage of


    No. of Bonds held Holding (in %)
    1. CBT EPF EPS A/C HSBC AMC Limited HDFC Bank Limited 6,501 25.76
    Custody Services
    Lodha – 1 Think
    Techno Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    2. Life Insurance Corporation of India Investment 5,000 19.81
    Department
    6th Floor West Wing
    Central Office
    Yogakshema
    Jeevan Bima Marg
    Mumbai 400021
    3. CBT EPF EPS A/C Reliance Capital AMC HDFC Bank Limited 4,515 17.89
    Limited Custody Services
    Lodha – 1 Think
    Techno Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    4. MTNL GPF Trust 12th Floor 414 1.64
    Jeevan Bharati Tower

    77
    S. Bondholders Address Total number Percentage of
    No. of Bonds held Holding (in %)
    I
    Connaught Circus
    New Delhi 110001
    5. Bank of India Provident Fund Terminal Benefits 400 1.59
    Dept.
    H.R. Dept.
    3rd Floor Star House
    C-5 ‗G‘
    Bandra Kurla
    Complex
    Bandra East
    Mumbai – 400051
    6. ONGC Self Contributory Post Retirement PRSB Section 300 1.19
    and Death in Service Super Annuation Basement
    Benefit Trust Old Secretariat
    Building
    ONGC
    Tel Bhavan
    Dehradun 248003
    7. CBT EPF PG A/C ICICI Prudential AMC HDFC Bank Limited 270 1.07
    Limited Custody Services
    Lodha – 1 Think
    Techno Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    8. Infosys Technologies Limited Employees C/O Infosys 228 0.90
    Pension Fund Trust Technologies Limited
    Plot No. 44
    Electronics City
    Hosur Road
    Bangalore 561229
    9. Central Board of Trustees Employees State Bank of India 210 0.83
    Provident Fund EPFO
    Securities Services
    Branch
    2nd Floor Mumbai
    Main Branch
    Mumbai Samachar
    Marg
    Mumbai 400023
    10. HPGCL Employees Pension Fund Trust Shakti Bhavan 200 0.79
    Sector 6
    Panchkula 134109
    TOTAL 18,038 71.47

    SBI Bonds – 8.90 %:

    S. Bondholders Address Total number Percentage of


    No. of Bonds held Holding (in %)
    1. CBT EPF EPS A/C HSBC AMC HDFC Bank Limited 8,490 33.97

    78
    S. Bondholders Address Total number Percentage of
    No. of Bonds held Holding (in %)
    Limited Custody Services
    Lodha – 1 Think Techno
    Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    2. CBT EPF EPF A/C ICICI Prudential HDFC Bank Limited 7,120 28.49
    AMC Limited Custody Services
    Lodha – 1 Think Techno
    Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    3. CBT EPF EPF A/C Reliance Capital HDFC Bank Limited 6,950 27.80
    AMC Limtied Custody Services
    Lodha – 1 Think Techno
    Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    4. Central Board of Trustees Employees State Bank of India EPFO 400 1.60
    Provident Fund Securities Services Branch
    2nd Floor Mumbai Main
    Branch
    Mumbai Samachar Marg
    Mumbai 400023
    5. HDFC Trustee Company Limited A/C HDFC Bank Limited 400 1.60
    HDFC Income Fund Custody Services
    Lodha – 1 Think Techno
    Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    6. SBI Life Insurance Company Limited HDFC Bank Limited 250 1.00
    Custody Services
    Lodha – 1 Think Techno
    Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    7. CBT EPF SPF A/C ICICI Prudential HDFC Bank Limited 250 1.00
    AMC Limited Custody Services
    Lodha – 1 Think Techno

    79
    S. Bondholders Address Total number Percentage of
    No. of Bonds held Holding (in %)
    Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    8. CBT EPF PG A/C ICICI Prudential HDFC Bank Limited 230 0.92
    AMC Limited Custody Services
    Lodha – 1 Think Techno
    Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    9. Bochasanwasi Shriaksharpurushottam Accounts Department 150 0.60
    Swaminarayan Sanstha Dharma Sadan
    Shri Swaminarayan
    Mandir Shahibaug Road
    Ahmedabad 380004
    10. CBT EPC EDLI A/C HSBC AMC HDFC Bank Limited 110 0.44
    Limited Custody Services
    Lodha – 1 Think Techno
    Campus
    OFF Floor 8
    Next to Kanjurmarg
    Station
    Kanjurmarg (East)
    Mumbai 400042
    TOTAL 24,350 97.42

    Series 1 Lower Tier II Bond – 9.25 %:

    S. Bondholders Address Total Percentage of


    No. number of Holding (in %)
    Bonds held
    1. Minoo Jehangir Executors of the Estate of Late Silla Bomanjee 970 0.73
    Poncha Framjee Jeejeebhoy, 10 Dr K Navarange Marg Arya
    Mahila, Samaj Building, New Gamdevi Mumbai
    400007
    2. Bharati Dubey Belle Vista Apts A/1402 Sector 15 CBD Belapur 500 0.37
    Navi Mumbai, Mumbai 400614
    3. Sachin Bansal 302 Vardhaman Plaza, Plot No. 14 Road No. 44, 385 0.29
    Pitampura Community Centre, Delhi 110034

    4. Sunita 161/B Mittal Tower, Nariman Point, Mumbai 400021 311 0.23
    Lalitkumar
    Agarwal
    5. Mohan Lal 302 Vardhaman Plaza, Plot No. 14 Road No. 44, 275 0.20
    Bansal Pitampura Community Centre, Delhi 110034

    6. Angel Broking G-1, Ground Floor, Akruti Trade Centre, Road No. 7 217 0.16
    Ltd. MIDC, Andheri (East), Mumbai 400093

    80
    S. Bondholders Address Total Percentage of
    No. number of Holding (in %)
    Bonds held
    7. Hirojirao 26, Saurabh Society, Navrangpura, Ahmedabad 216 0.16
    Ramrao Patankar 380009

    8. Niraj Amidhar 55, Pritam Society No. 1 Maktampur Road, Kasak, 200 0.15
    Surti Bharuch 392002

    9. Amisha Harish 61 Chiranjeev Gulmohar, Road No. 4, NR Club 200 0.15


    Shah Millenium JV PD Scheme, Vile Parle (West),
    Mumbai 400049

    10. Meena Khatri N/2 Jolly Highrise Apts. 168 0.13


    Pali Hill, Bandra
    Mumbai 400050
    TOTAL 3,442 2.57

    Series 2 Lower Tier II Bond – 9.50 %:

    S. Bondholders Address Total Percentage of


    No. number of Holding (in %)
    Bonds held
    1. Central Board Of Trustees State Bank of India, EPFO Securities 111,659 12.88
    Employees Provident Fund Services Branch, 2nd Floor Mumbai Main
    Branch, Samachar Marg, Mumbai
    400023

    2. The Provident Fund for the (9227) Indian Oil Bhavan, G 9 Ali Yavar 67,441 7.78
    employees Of Indian Oil Jung Marg, Bandra (East), Mumbai
    Corporation Ltd. (Marketing 400051
    Division)
    3. Punjab National Bank HSBC Securities Services, 2nd Floor 55,500 6.40
    ―Shiv‖, Plot No. 139-140 B Western
    Express Highway Sahar Road Junction,
    Vile Parle (East), Mumbai 400057

    4. Indian Provident Fund of Bharat Bhavan, 4 & 6 Currimbhoy Road, 27,294 3.15
    Bharat Petroleum Corporation Ballard Estate, Mumbai 400001
    Limited
    5. Smita Nitan Chhatwal Krishani Bungalow, Plot No. 2, East 20,204 2.33
    West Road, No. 12 JVPD Scheme,
    Mumbai 400049

    6. Bajaj Holdings And Bajaj Auto Ltd. Complex, Mumbai Pune 14,852 1.71
    Investment Ltd Road, Akurdi, Pune 411035

    7. Hindustan Instruments Limited 3 Udhyog Vihar, Phase 1, Gurgaon 14,792 1.70


    Employees Provident Fund 122016
    Trust
    8. State Bank Of India Central Account Office, Kankaria Centre, 10,500 1.21
    Employees Pension Fund 2/1, Russel Street, Kolkata 700071

    81
    S. Bondholders Address Total Percentage of
    No. number of Holding (in %)
    Bonds held
    9. Canara Bank-Mumbai Domestic Treasury (Back Office), Maker 10,500 1.21
    Chamber III, 77th Floor, Nariman Point,
    Mumbai 400021

    10. Nitan Ramprakash Chhatwal Plot No. 2, New India Co-op Soc., EW 10,102 1.17
    Road No. 2, JVPD Scheme, Juhu,
    Mumbai 400049

    TOTAL 342,844 39.54

    4. The Bank had undertaken a rights issue of 105,259,776 Equity Shares to its existing shareholders in
    February 2008 at an issue price of Rs. 1,590 per Equity Share.

    5. The Government, by its letter no. F.No.11/7/2007-BOA dated January 25, 2008, authorised the issue of the
    ESPS-2008. Pursuant to the Government authorisation, the Bank‘s Central Board, at its meeting held on
    January 24, 2008 approved the ESPS-2008. The Bank offered 8,617,500 Equity Shares at a price of Rs.
    1,590 per Equity Share to its eligible employees and received applications for 3,410,973 Equity Shares. The
    Bank accepted applications for and allotted 3,409,846 Equity Shares, out of which, 113,747 Equity Shares
    are held in abeyance due to non-submission of PAN details by the employees to whom such shares were
    issued.

    6. The terms of each Tranche Issue to the Applicants have been presented under the sections titled ―Terms of
    the Tranche Issue‖ and ―Procedure for Application‖ of the relevant Tranche Prospectus.

    7. The borrowing to equity ratio of the Bank prior to every Tranche Issue will be as specified in the relevant
    Tranche Prospectus.

    8. The Bank has not issued any debt securities issued for consideration other than cash, whether in whole or
    part to be included.

    9. The Bank has not issued any debt securities at a premium or at a discount.

    10. For details of the outstanding borrowings of the Bank, please see section ―Financial Indebtedness‖.

    82
    OBJECTS OF THE ISSUE

    The Bank has filed this Shelf Prospectus for the Issue. The Bank intends to deploy the Issue proceeds to augment its
    capital base in line with its growth strategy. The provisions of the Act enable the Bank to undertake existing
    activities and permit the utilization of funds proposed herein.

    Further, in accordance with the SEBI Debt Regulations, the Bank will not utilize the proceeds of the Issue for
    providing loans to or acquisition of shares of any person who is a part of the same group as the Bank or who is under
    the same management as the Bank.

    Utilization of the Issue Proceeds

    The Bank is subject to the capital adequacy requirements of the RBI, which, based on the guidelines of the Basel
    Committee on Banking Regulations and Supervisory Practices, 1998, currently require the Bank to maintain a
    minimum ratio of capital to risk adjusted assets and off-balance sheet items as per applicable RBI guidelines.

    The objects of the Issue are to enhance the Bank‘s capital adequacy ratio in accordance with Applicable Laws.

    The estimated expenses for each Tranche Issue will be as provided in the relevant Tranche Prospectus.

    Monitoring of Utilization of Funds

    There is no requirement for appointment of a monitoring agency in terms of the SEBI Debt Regulations. The Central
    Board of the Bank shall monitor the utilisation of the proceeds of the Issue. Further, as the Issue is being made with
    an objective to improve the capital adequacy ratio, to augment the long-term resources for increasing the business,
    no appraisal of the same is required and therefore no monitoring agency has been appointed.

    No part of the Issue proceeds will be paid by the Bank as consideration to the Directors or the Bank‘s key
    management personnel except in the usual course of business.

    83
    STATEMENT OF TAX BENEFITS

    The information provided below sets out the possible tax benefits available to the bond holders of an Indian
    company in a summary manner only and is not a complete analysis or listing of all potential tax consequences of the
    subscription, ownership and disposal of bond, under the current tax laws presently in force in India. Several of these
    benefits are dependent on the bond holders fulfilling the conditions prescribed under the relevant tax laws. Hence
    the ability of the bond holders to derive the tax benefits is dependent upon fulfilling such conditions, which based on
    business imperatives it faces in the future, it may not choose to fulfil. The following overview is not exhaustive or
    comprehensive and is not intended to be a substitute for professional advice. Investors are advised to consult their
    own tax consultant with respect to the tax implications of an investment in the bonds particularly in view of the fact
    that certain recently enacted legislation may not have a direct legal precedent or may have a different interpretation
    on the benefits, which an investor can avail. We are not liable to the Bond Holder in any manner for placing reliance
    upon the contents of this statement of tax benefits.

    To our Bond Holder

    A. INCOME-TAX

    I To the Resident Bond Holder


    1. Interest on bonds received by Bond Holders would be subject to tax at the normal rates of tax in accordance with
    and subject to the provisions of the I.T. Act. No income tax is deductible at source as per the provisions of section
    193 of the Income Tax Act (IT Act) on interest on bonds in respect of the following:

    (a) In case the payment of interest on bonds to resident individual Bond Holder in the aggregate during the financial
    year does not exceed Rs.2,500;

    (b) When the Assessing Officer issues a certificate on an application by a Bond Holder on satisfaction that the total
    income of the Bond holder justifies no/lower deduction of tax at source as per the provisions of Section 197(1) of
    the I.T. Act; and that certificate is filed with the Company BEFORE THE PRESCRIBED DATE OF
    CLOSURE OF BOOKS FOR PAYMENT OF BOND INTEREST

    (c) When the resident Bond Holder (not being a company or a firm or a senior citizen) submits a declaration in the
    prescribed Form 15G verified in the prescribed manner to the effect that the tax on his estimated total income of the
    previous year in which such income is to be included in computing his total income will be nil as per the provisions
    of section 197A (1A) of the I.T. Act. HOWEVER Under section 197A (1B) of the I.T. Act, Form 15G cannot be
    submitted nor considered for exemption from deduction from tax at source if the aggregate of income of the nature
    referred to in the said section, viz. dividend, interest, etc as prescribed therein, credited or paid or likely to be
    credited or paid during the Previous year in which such income is to be included exceeds the maximum amount
    which is not chargeable to tax, as may be prescribed in each year’s Finance Act. To illustrate, as on 01.04. 2010,
    the maximum amount of income not chargeable to tax in case of individuals (other than women assessees and senior
    citizens) and HUFs is Rs.1,60,000, in case of women assessees is Rs.1,90,000 and senior citizens is Rs. 2,40,000 for
    Previous Year 2010-11. Senior citizens, who are 65 or more years of age at any time during the financial year, enjoy
    the special privilege to submit a self-declaration in the prescribed Form 15H for non deduction of tax at source in
    accordance with the provisions of section 197A (1C) of the I.T. Act even if the aggregate income credited or paid or
    likely to be credited or paid exceeds the maximum amount not chargeable to tax i.e. Rs. 2,40,000 for FY 2010-11
    provided that the tax due on total income of the person is NIL. In all other situations, tax would be deducted at
    source as per prevailing provisions of the I.T. Act;

    (d) On any securities issued by a company in a dematerialized form and is listed on recognized stock exchange in
    India. (w.e.f. 1.06.2008).

    2. Under section 2 (29A) of the I.T. Act, read with section 2 (42A) of the I.T. Act, a listed bond is treated as a long
    term capital asset if the same is held for more than 12 months immediately preceding the date of its transfer. Under
    section 112 of the I.T. Act, capital gains arising on the transfer of long term capital assets being listed securities are
    subject to tax at the rate of 20% of capital gains calculated after reducing indexed cost of acquisition or 10% of
    capital gains without indexation of the cost of acquisition. The capital gains will be computed by deducting indexed

    84
    cost of acquisition / cost of acquisition of the bond and expenditure incurred in connection with such transfer
    from the full value of consideration.

    In case of an individual or HUF, being a resident, where the total income as reduced by the long term capital gains is
    below the maximum amount not chargeable to tax as prescribed by the Finance Act of the relevant year (i.e. as
    on 01.04.2010, such amount is Rs.1,60,000 in case of all individuals, other than Women and Senior Citizens to
    Rs.1,90,000 in case of women and to Rs.2,40,000 in case of senior citizens), the long term capital gains shall be
    reduced to the extent of the difference between the maximum amount chargeable to tax and the total income
    and only the balance long term capital gains will be subject to the flat rate of taxation in accordance with and the
    proviso to subsection (1) of section 112 of the I.T. Act read with CBDT Circular 721 dated September 13, 1995.

    In addition to the aforesaid tax, in the case of domestic companies where the income exceeds Rs. 10,000,000, a
    surcharge of 7.5% of such tax liability is also payable. A 2% EDUCATION CESS AND 1% SECONDARY
    AND HIGHER EDUCATION CESS ON THE TOTAL INCOME TAX (INCLUDING SURCHARGE) IS
    PAYABLE BY ALL CATEGORIES OF TAXPAYERS.

    3. Short-term capital gains on the transfer of listed bonds, where bonds are held for a period of not more than 12
    months would be taxed at the normal rates of tax in accordance with and subject to the provisions of the I.T. Act.
    The provisions relating to maximum amount not chargeable to tax, surcharge and education cess described at Para 2
    above would also apply to such short-term capital gains.

    4. In case the bonds are held as stock in trade, the income on transfer of bonds would be taxed as business income or
    loss in accordance with and subject to the provisions of the I.T. Act.

    5. HOWEVER, IN CASE WHERE TAX HAS TO BE DEDUCTED @ SOURCE WHILE PAYING BOND
    INTEREST, THE COMPANY IS NOT REQUIRED TO DEDUCT SURCHARGE, EDUCATION CESS;
    AND SECONDARY AND HIGHER EDUCATION CESS REFERRED TO ABOVE.

    6. Further, w.e.f April 1, 2010, as per Section 206AA of the Act, every person who is entitled to receive any
    sum or income or amount on which tax is deductible at source, is required to furnish his Permanent Account
    Number (PAN) to the person responsible for deducting such tax, failing which tax shall be deducted at the
    rates as per the Act or 20% whichever is higher.

    II. To the Other Eligible Institutions


    All mutual funds registered under Securities and Exchange Board of India or set up by public sector banks or public
    financial institutions or authorized by the Reserve Bank of India are exempt from tax on all their income, including
    income from investment in Bonds under the provisions of Section 10(23D) of the I.T. Act subject to and in
    accordance with the provisions contained therein.

    B. WEALTH TAX
    Wealth-tax is not levied on investment in bonds under section 2(ea) of the Wealth-tax Act, 1957.

    C. GIFT TAX

    Gift-tax is not levied on gift of bonds in the hands of the donor as well as the donee because the provisions of the
    Gift-tax Act, 1958 have ceased to apply in respect of gifts made on or after October 1, 1998. HOWEVER, IF ANY
    INDIVIDUAL OR HUF, RECEIVES THESE BONDS OF THE AGGREGATE VALUE OVER RS. 50,000
    FROM CERTAIN PERSON OR PERSONS WITHOUT CONSIDERATION OR RECEIVES THESE
    BONDS FOR A CONSIDERATION WHICH IS LESS THAN AGGREGATE FAIR MARKET VALUE OF
    THE BONDS BY AN AMOUNT EXCEEDING FIFTY THOUSAND RUPEES, THERE WILL BE
    LIABILITY TO INCOME TAX TO THE EXTENT PROVIDED IN SEC.56(2)(vii) OF THE INCOME TAX
    ACT. 1961 TO SUCH RECEIVER.

    85
    OUR BUSINESS

    Industry Overview

    The RBI, the central banking and monetary authority of India, is the central regulatory and supervisory authority for
    the Indian financial system. Established in 1935, the RBI manages the country‘s money supply and foreign
    exchange and also serves as the bank for the Government and for the country‘s commercial banks. In addition to
    these traditional central banking roles, the RBI undertakes certain developmental and promotional roles. A variety of
    financial intermediaries in the public and private sectors participate in India‘s financial sector, including the
    following:

    commercial banks;

    long-term lending institutions;

    non-bank finance companies, including housing finance companies;

    other specialised financial institutions and state-level financial institutions;

    insurance companies; and

    mutual funds.

    Until the early 1990s, the Indian financial system was strictly controlled. Interest rates were administered, formal
    and informal parameters governed asset allocation and strict controls limited entry into and expansion within the
    Indian financial sector. The Government‘s economic reform program, which began in 1991, encompassed the
    financial sector. The first phase of the reform process began with the implementation of the recommendations of the
    Committee on the Financial System, the Narasimham Committee I. The second phase of the reform process began in
    1999.

    The RBI issues guidelines on exposure limits, income recognition, asset classification, provisioning for non-
    performing and restructured assets, investment valuation and capital adequacy for commercial banks, long-term
    lending institutions and non-bank finance companies. The RBI requires these institutions to furnish information
    relating to their businesses to it on a regular basis.

    The Indian financial system is largely comprised of commercial banks (both scheduled commercial banks and non-
    scheduled commercial banks), public sector banks, private sector banks, foreign banks, regional rural banks,
    cooperative banks, long-term lending institutions, non bank finance companies and other financial institutions.

    Business Groups

    The Bank organizes its client relationships, marketing and product development, as well as non-customer
    facing activities, through its principal business segment Groups. The Bank‘s Groups are as follows:

    The Corporate Banking Group provides corporate banking services to many of India‘s largest and
    most prominent corporations and institutions, including state-owned enterprises.

    The National Banking Group services the Bank‘s personal banking customers in urban and metropolitan
    areas, small-scale industries, including state-owned enterprises, and corporate customers which are not
    serviced by either the Corporate Banking Group or the Mid-Corporate Group. The National Banking
    Group also provides financial services to the Government and state governments.

    The Mid-Corporate Group services entities with an annual turnover between approximately Rs. 500
    million and Rs. 5 billion or which have credit facilities in excess of Rs. 100 million.

    86
    The Rural Business Group services individual, agricultural and small business customers located in rural
    and semi-urban areas through the largest branch and ATM network in India, with a focus on innovative
    and effective modes of delivering banking services to such areas.

    The International Banking Group through its overseas branches and subsidiaries provides a range of
    international banking services to Indian and foreign companies with operations inside and outside India as
    well as NRIs conducting business in foreign markets and local populations.

    Global Markets operates the Bank‘s treasury functions, managing domestic liquidity, its investment
    portfolio and foreign currency exposure. Global Markets also enters into foreign exchange and risk
    hedging derivative products on behalf of the Bank‘s customers.

    The Bank‘s administrative services and management, including risk management, IT, inspection and audit, legal
    and human resources functions, are common to all of its Groups. Within the National Banking Group and Rural
    Business Group, which together account for the largest number of the Bank‘s branches, these common
    services are organized on the basis of administrative units, which are referred to within the Bank as ―circles,‖
    ―networks and administrative offices‖ and ―branches.‖

    The risk management department has operational risk managers and risk raters located at each circle‘s
    headquarters, as well as risk raters within the Mid-Corporate Group (who also serve the Corporate Banking
    Group) and the International Banking Group. The IT department provides support to all business groups. A senior
    officer responsible for IT coordination across the Group sits at the Bank‘s corporate headquarters to prioritize
    and coordinate IT-related issues among the various business groups, human resources and industrial relations.

    Corporate Banking Group

    The Corporate Banking Group provides corporate banking services to many of India‘s largest and most prominent
    corporations and institutions, including state-owned enterprises, and offers fund-based and non-fund-based
    products, fee and commission-based products and services, deposits, foreign exchange services and derivatives. The
    Corporate Banking Group‘s customers span the range from clients with annual turnover exceeding Rs. 5.0 billion to
    the largest corporations in India. Each customer is assigned a relationship manager, who serves as a single point of
    contact for all of the customer ‘s banking needs, including loan products, deposit accounts, international
    funding for cross-border transactions and interest rate and foreign exchange hedging products. As of March 31,
    2010, the Corporate Banking Group had a network of 79 dedicated branches. The Corporate Banking Group had a
    loan portfolio of Rs. 881.4 billion as of March 31, 2010, approximately equal to 14% of the Bank‘s total advances
    as of such date. It also had loan portfolios of Rs. 467.1 billion and Rs. 688.7 billion as of March 31, 2008 and 2009,
    respectively.

    The Corporate Banking Group endeavors to go beyond traditional lending products by exploring new growth areas
    such as cash management, offering centralized payment solutions and marketing derivatives products by taking
    advantage of the volatility in the currency markets and the consequent need by corporates to hedge their balance
    sheet risks. Relationship managers facilitate the cross-selling of products from the Bank‘s other Groups, such as
    Personal Banking services for the corporation‘s management and employees, or the International Banking Group‘s
    export finance services.

    The Corporate Banking Group comprises three strategic business groups — Corporate Accounts, Stressed Assets
    Management and Project Finance and Leasing. The Corporate Accounts group services large Indian corporations.
    The Stressed Assets Management group provides specialized internal support in managing and recovering the
    Bank‘s NPAs of Rs. 10 million and greater, while the Project Finance and Leasing group appraises and provides
    specialist support to all high value projects (with project costs exceeding Rs. 2 billion) in which the Bank is
    involved.

    Corporate Accounts Group

    The Corporate Accounts group focuses on the Bank‘s prime corporate customers across India. Through its customer

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    relationship management approach, where each client is assigned a dedicated accounts management team, headed
    by a relationship manager to coordinate its banking relationship with the Bank, the Corporate Accounts group aims
    to leverage its strong corporate relationships and increase the Bank‘s market share in fund-based, non-fund-based
    and fee-based products. Services are delivered through six branches dedicated exclusively to Corporate Accounts
    group customers in Delhi, Mumbai, Chennai, Kolkata, Ahmedabad and Hyderabad. The Bank also believes that
    separate marketing and customer service departments are necessary in order to adequately meet the demands of this
    customer base.

    Within the Corporate Accounts group, an institutional accounts unit focuses exclusively on institutional
    accounts such as mutual funds, insurance companies, other institutions and government departments, leveraging
    such relationships to maximize fee and commission income. The Bank believes that banking services in the
    form of payment and collection solutions and liquidity management have become critical requirements of
    such customers, who will continue to be a significant driver of both interest and fee- and commission-based
    income.

    Products offered to Corporate Accounts group customers include loan products, deposits, fee and commission-
    based products and services, and a broad range of foreign exchange and treasury services, including RBI-permitted
    derivatives, which are developed and provided by the International Banking Group and Global Markets Group,
    respectively.

    The Bank provides a corporate internet banking facility, with multi-level access and authorization
    controls required by corporate customers. Other delivery channels utilized by the Corporate Accounts group
    include the Bank‘s extensive branch network, credit cards, and electronic payments platforms.

    The Corporate Accounts group‘s corporate loan portfolio primarily consists of working capital finance and term
    loans for project and corporate finance. The Corporate Accounts group offers its customers both fund-based and
    non-fund-based products. The most commonly used fund-based products are cash credits, working capital demand
    loans, bill discounting, term loans, corporate loans and export credit. Interest rates on these facilities have
    historically been linked to the RBI prime lending rate or to other market related rates. From July 1, 2010 the
    Bank‘s plan is for new loan products of these types to be linked to the Bank‘s publicly declared base rate.
    Non-fund-based products such as letters of credit, bank guarantees, deferred payment guarantees, remittance
    and collection services, online tax payment, cash management services and end-to-end payment solutions are some
    of the sources of fee-based income. As of June 30, 2010, total outstanding loans to customers of the
    Corporate Accounts group were Rs. 956.0 billion in respect of fund based products and Rs. 1,383.6 billion in
    respect of non-fund-based products.

    The Bank handles bulk business for all Corporate Accounts Group customers across India by way of dividend
    warrant payments for companies, as well as bulk electronic salary payments of large corporates, public sector
    undertakings (―PSUs‖) and government departments. These activities are all processed through the Bank‘s own
    computerized network and also through the electronic payment gateways of the RBI. Additionally, the Bank
    handles bulk draft issuances for customers across the country. The Bank also acts as a refund bank for the
    Government tax authorities and is the exclusive refund bank in respect of income taxes. These activities all
    contribute to the Bank‘s fee-based income.

    Stressed Assets Management

    The Stressed Assets Management Group (―SAMG‖) focuses on the timely resolution of NPAs of Rs. 10 million
    and above incurred in the Bank‘s customer-facing units. The Bank‘s Credit Policy and Procedures
    Committeeformulates NPA policy, while the SAMG handles the NPAs in accordance with such policies. The
    SAMG operates from 12 branches throughout India exclusively dedicated to the recovery or rehabilitation of NPAs
    referred from other business groups within the Bank (for example, the Corporate Accounts Group, which will have
    booked the assets that may become NPAs). These branches report directly to a group head based in the Bank‘s
    corporate headquarters, which has enabled the Bank to centralize its efforts to improve the Bank‘s overall asset
    quality. The SAMG first examines the feasibility of restructuring debts referred to it by extending appropriate relief,
    concessions or soft repayment terms, with a view to upgrading such debts into performing assets. If the NPAs are

    88
    found ineligible for restructuring, the SAMG takes steps to recover the amounts due to the Bank either by a one-
    time settlement with the borrower or enforcing any security interests the Bank may have or by selling the NPAs to
    other banks, financial institutions or other entities or by resorting to other legal means of recovery. In addition, to
    reduce small value NPAs (below Rs. 10 million), stressed assets resolution centers have been set up in major cities
    across India.

    Enforcement of Security Interests under the SARFAESI Act

    To assist banks and financial institutions in recovering their unpaid advances and to ensure financial discipline
    among borrowers, the Government enacted the Securitization and Reconstruction of Financial Assets and
    Enforcement of Security Interest Act (the ―SARFAESI Act‖) in December 2002. The SARFAESI Act provides the
    legal framework for (i) the securitization of financial assets by setting up a Securitization Company (―SC‖) or
    Reconstruction Company (―RC‖); (ii) the foreclosure of assets through a SC or RC; and (iii) the foreclosure of NPA
    accounts.

    As at March 31, 2010, the Bank issued notices under the SARFAESI Act to 82, 286 borrowers with an aggregate
    principal outstanding of approximately Rs. 127,210 million. Of the 82, 286 borrowers on whom the Bank had
    served notice, Rs. 16,870 million has been recovered. The Bank has been applying all available methods for the
    recovery of unpaid advances, including reporting the name of wilful defaulters to the RBI together with
    commencing the necessary steps for recovery. The Bank has also initiated aggressive one-time settlement measures
    to recover unpaid loans.

    Corporate Debt Restructuring Mechanism

    In addition to the Government passing the SARFAESI Act, RBI has established the Corporate Debt Restructuring
    Mechanism (―CDRM‖). The objectives of the CDRM are (i) to ensure a timely and transparent mechanism for
    restructuring corporate debts of viable entities affected by certain internal and external factors and (ii) to minimise
    losses to creditors and other stakeholders through and orderly and coordinated restructuring program. The CDRM is
    a voluntary, non-statutory mechanism based on debtor-creditor and inter-creditor agreements and operates outside
    the authority of the BIFR, debt recovery tribunals or legal proceedings.

    The following table shows loan assets subjected to restructuring during the years ended March 31, 2008, March 31,
    2009 and March 31, 2010 and as a percentage of the Bank‘s total loans on those dates.

    Year ended March 31,


    2008 2009 2010
    Rs. % Rs. % Rs. %
    (Rs. in millions)
    Total loan assets which have been restructured 1,4214.00 0.34% 130,352.60 2.403 189,992.30 3.007
    Total sub-standard assets which have been 521.50 0.013% 1,678.40 0.031 18,384.00 0.291
    restructured
    Total Doubtful assets which have been 423.90 0.010% 748.10 0.014 3,037.4 0.0048
    restructured

    Establishment of Asset Reconstruction Company

    The SARFAESI Act provides the framework for setting up asset reconstruction companies in India. According, the
    Bank, together with other major Indian banks, has jointly promoted the Asset Reconstruction Compnay (India) Ltd.
    (―ARCIL‖). ARCIL serves as the entity that acquires the NPAs of its parent banks at a mutually acceptable price
    against the issue of security receipts. ARCIL seeks to recover outstanding debts through restructuring, settlement or
    enforcement of security interests. ARCIL then uses amounts recovered to redeem the security receipts issued to
    certain qualified institutional buyers. As at March 31, 2010, the Bank owns 19.95% of the share capital of ARCIL.

    In July 2005, the RBI issued guidelines on the sale and purchase of NPAs amongst banks, financial institutions and
    NBFCs. Pursuant to an amendment in these guidelines on October 4, 2007, the RBI has stipulated that banks should
    calculate the net present value of the estimated cash flows associated with the realisable value of the available

    89
    securities net of the cost of realisation. As a result, the sale price of an NPA should generally not be lower than the
    net present value arrived at in the manner described above.

    Sale of Assets to Asset Reconstruction Companies, Banks, Financial Institutions and NBFCs

    The Bank has sold NPAs to reconstruction companies, banks, financial institutions and NBFCs.

    The following table sets out the sales of NPAs by the Bank to reconstruction companies as on March 31, 2010

    Fiscal Year No. of NPAs sold Total Outstanding Principal Amount Consideration Received
    (Rs. in billions) (Rs. in billions)
    2006 131 8.9 2.0
    2007 90 0.8 0.3
    2008 2 0.25 0.198
    2009 5 2.89 0.93
    2010 3 0.24 0.14
    Total 231 13.08 3.918

    The following table sets out the sales of NPAs by the Bank to banks, financial institutions or NBFCs as at March
    31, 2010:

    Fiscal Year No. of NPAs sold Total outstanding Principal Amount (Rs. in billions) Consideration Received
    (Rs. in billions)
    2006 290 11.4 2.3
    2007 20 0.5 0.1
    2008 Nil Not Applicable Not Applicable
    2009 NIL Not Applicable Not Applicable
    2010 NIL Not Applicable Not Applicable
    Total 310 11.9 2.4

    Project Finance and Leasing

    The Project Finance and Leasing group provides specialist project evaluation services to the Bank‘s customers.
    This group has a particular focus on core infrastructure sectors of the Indian economy such as power,
    telecommunications, oil and gas (including transportation, pipelines, and refineries), roads, bridges, ports and
    urban infrastructure, although it has also expanded to other sectors, such as steel, and other industrial sectors,
    such as commercial real estate. The project finance team examines projects in targeted industries whose total cost is
    at least Rs. 2 billion (Rs. 3 billion in case of road or thermal power projects) with debt exposure in excess of Rs.
    500 million. Project Finance cells have been set up in two centers to tap business potential in their area. The
    thresholds for the cells are: all road projects with a project cost of Rs. 500 million and above, power projects as well
    as commercial projects with a project cost of Rs. 500 million to Rs. 5 billion and other infrastructure projects with
    a project cost between Rs. 500 million to Rs. 2 billion.The Corporate Banking Group, National Banking Group and
    Mid-Corporate Group interface with the customer in proposing project finance services, while appraisals and
    sanctioning of a project will generally be carried out by the Project Finance and Leasing group. In respect of large
    infrastructure projects, apart from appraisal, control is also maintained at this level. Once the project risk has
    passed, control of the project reverts to the originating Group. Leasing activities, which were started by the Bank in
    1995, are progressively being wound up and the Bank does not expect leasing to comprise a significant part of its
    activities in the future.

    Other Corporate Banking Services

    The Bank also offers loan syndication, corporate cash management, trade finance and funds transfer and
    settlement services to Corporate Banking Group customers.

    Loan Syndication

    Through its subsidiary, SBI Capital Markets Ltd., the Bank has developed significant syndication capabilities,

    90
    structuring and arranging the syndication of large financial transactions. The Bank seeks to leverage these
    syndication capabilities to arrange project and corporate finance for its corporate customers and earn fee income.
    By leveraging the experience of SBI Capital Markets Ltd. and the extensive customer relationships of the Bank,
    this strategic relationship has made a significant contribution to the Bank‘s ability to cross-sell the products and
    services of its various business groups and subsidiaries.

    Corporate Cash Management

    The Bank provides cash management services to corporate customers under the brand name SBI FAST, which
    stands for ―funds available in shortest time.‖ Customers can use approximately 973 branches at 680 centers
    throughout India, with pooling facilities at various branches, which are connected to the Bank‘s central
    clearing center in Mumbai. This service aims to enhance liquidity, reduce costs and provide profit opportunities for
    the Bank‘s customers by allowing for better liquidity management. Through SBI FAST, funds are transferred
    directly to the customer ‘s main account at any branch of the Bank in India from various collection centers on the
    same day that they are cleared at the collecting centers. SBI FAST also offers disbursement and payment services
    through a separate platform to facilitate payments and collections across the country at customers‘ payment centers
    and plant locations.

    Detailed management information system reports covering a variety of banking information are made available on a
    daily basis to customers‘ corporate head offices as well as to their local offices and representatives at the centers
    through automatically generated email. The Bank customizes the management information system reports to
    customers‘ needs. Monthly reports are also sent to customers through automatically generated email. Full
    reconciliation support, meaning the automatic reconciliation of payments and receipts effected by the
    customer, is provided centrally from the Bank‘s hub in Mumbai by a dedicated team.

    The payment solutions offered by the Bank as a part of corporate cash management make it possible for corporate
    customers to outsource their accounts payable and have payments processed using electronically-based as well as
    paper products. In addition to effecting payments to Bank branches, electronic payments may be made by the Bank
    on behalf of its customers to other banks‘ branches across India. As of March 31, 2010, 973 branches at 680
    centres across in India used this centralized cash management system, enabling quick, time-sensitive bulk
    payments to any beneficiary in India on behalf of the Bank‘s corporate customers.

    Trade Finance

    Trade finance services offered by the Corporate Banking Group include the issuance and advising of
    domestic and foreign letters of credit, the confirmation of export letters of credit, the issuance of guarantees on
    behalf of domestic customers in favor of domestic and foreign beneficiaries, and on behalf of foreign
    correspondent banks to beneficiaries in India, domestic and foreign bill discounting against letter of credit as well
    as non-letter of credit bills and similar services.

    Trade finance services include an IT-driven supply chain financing product developed by the National Banking
    Group. The Bank expects that supply chain financing will enable it to leverage its links with major existing
    corporate customers to offer the financing services of small- and medium-sized vendors and dealers to such
    major customers. The target vendors would typically be small- to medium-sized enterprises (―SMEs‖) or members
    of small-scale industries that are typically, although not exclusively, customers of the Bank. Supply chain
    financing is being marketed to corporates for use by their vendors. It is anticipated that this activity will bring into
    the Bank a number of new vendors who serve the Mid-Corporate and SME segments.

    Funds Transfer and Settlement

    The Bank offers real-time gross settlement (―RTGS‖) and national electronic funds transfer (―NEFT‖)
    remittance facilities for qualifying transactions in its branches, via its internet banking systems and, in the case of
    NEFT, through the Mobile Banking Service. Substantial growth in both inward and outward RTGS and NEFT
    remittances has been achieved in the last Fiscal Year, due to sustained efforts to migrate corporates and individuals
    to the facilities. The Bank has maintained its leadership position in RTGS, with a market share of 14.2% as of
    March 31, 2010 as per RBI data and registered 135.7% growth in NEFT transactions processed over the last year.

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    National Banking Group

    The National Banking Group provides a range of retail banking products to individuals, corporate banking
    products to the Bank‘s corporate, mid-corporate and small enterprise customers that are not serviced by the
    Corporate Banking Group or the Mid-Corporate Group, and banking services to the Government and state
    governments. Corporate banking products and services offered by the National Banking Group are largely the same
    as those offered by the Corporate Banking Group. The National Banking Group services customers located in urban
    and metropolitan areas, while customers in rural and semi-urban areas are serviced by the Rural Business Group
    (discussed below). Geographic areas are classified as urban, metropolitan, rural or semi-urban by the RBI based on
    population.

    The National Banking Group includes three customer-facing business groups — Personal Banking, SME and
    Government Banking — spread out over 14 administrative circles covering the Bank‘s branch network, 11
    exchange bureaus, 108 satellite offices and 206 extension counters as of June 30, 2010.

    Personal Banking

    The Bank is the largest retail bank in India, with approximately 121 million retail accounts across the largest
    branch and ATM network in India, which, as of June 30, 2010, totalled 12,567 branches, 4,125 of which were in
    urban and metropolitan areas and 8,442 of which were in rural and semi-urban areas. This represents significant
    growth in the number of branches, up from a total of 11,448 as of March 31, 2009, and 10,186 as of March 31,
    2008. The Bank‘s ATM network totalled 16,584 ATMs (inclusive of 89 foreign ATMs) as of June 30, 2010, with
    9,622 of those in urban and metropolitan areas and 6,962 in rural and semi-urban areas. This represents significant
    growth in the number of ATMs, up from a total of 8,581 as of March 31, 2009, and 5,860 as of March 31, 2008.
    The Bank plans to continue its expansion in Fiscal Year 2011 by recruiting new employees, opening new branches
    and establishing new ATMs. Together with its Associate Banks, subsidiaries and joint ventures, in both the banking
    and non-banking sectors, the Bank offers a broad range of products and services to its retail customers, including
    lending products such as home finance loans, automobile finance loans, and personal loans, deposit products, such
    as demand and term deposits and savings accounts, and credit cards. In addition, the Bank goes beyond traditional
    banking services to provide access to fee- and commission-based products such as life insurance and mutual funds
    as well as providing services tailored to NRIs.

    Specific customer segments receiving focused attention of the Bank include high net worth and mass affluent and
    salaried clients. High net worth and mass affluent customers receive a package of special facilities called SBI
    Vishesh, a priority services offering available at key branches throughout India. In addition, the Bank has
    made a concerted effort to broaden its client base of salaried employees by offering a special corporate
    salary package consisting of enhanced facilities with a reduction in fees and charges. The Bank has deployed
    over 1,075 relationship managers and customer relations executives as of June 30, 2010 to provide personalized
    service to these customers.

    The Bank‘s retail lending products include home, auto and personal loans; the Bank‘s retail loan portfolio was
    equal to approximately 25.5% of the Bank‘s total advances as of June 30, 2010. According to RBI data, the
    Bank had a 18.5% share of the home loan market as of March 31, 2010. According to data collected from car
    manufacturers, the Bank had a 16.8% market share of the auto loan market, and according to Indian Banks
    Association data it had a market share of 25.0% of the education loan market, in each case measured by amounts
    outstanding as of March 31, 2010.

    Home Loans. The Bank is the leading provider of home loans within India, both in terms of aggregate
    amount outstanding and new disbursements during Fiscal Year 2010. As of June 30, 2010, home loans
    constituted more than 53.4% of the personal banking loan portfolio of the Bank by total amounts
    outstanding. In addition to home loans for the purpose of construction, purchase and repair of personal
    residences, the Bank has also introduced more sophisticated products such as reverse mortgages and home
    equity loans.

    Auto Loans. These are loans for the purchase of new and used cars, jeeps and utility vehicles, as well as for

    92
    two-wheeled vehicles such as scooters, motorcycles and mopeds, including battery operated vehicles. The
    Bank offers a number of auto loan products to meet the requirements of various customer segments. The
    auto loans portfolio contributes approximately 11.0% of the personal banking loan portfolio of the Bank as
    of June 30, 2010.

    Education Loans. In India, the Bank is the largest provider of education loans among PSU Banks as of
    March 31, 2010, according to the Indian Banks Association. Education loans include such targeted
    products as SBI Scholar Loans, which include loans to students securing admissions in 100 elite
    institutions, such as the Indian Institute of Management and the Indian Institute of Technology, at
    concessional terms and interest rates.

    Personal Loans. The Bank offers a wide range of personal loan products targeting specific
    customer segments or funding purposes. Major personal loan products include Xpress Credit, SBI Loan to
    Pensioners, SBI Loan to Affluent Pensioners and the Rent Plus Scheme.

    The following table sets out the total amounts outstanding of home loans, education loans and auto loans in the
    Bank‘s personal banking loan portfolio for the last three Fiscal Years. (As of March 31, 2010)

    Type of Loans 2008 2009 2010 June 30, 2010


    (In Rs. billions) (In Rs. billions) (In Rs. billions) (In Rs. billions)
    Home Loans 446.3 540.6 711.9 746.7
    Education Loans 44.1 66.2 89.1 93.6
    Auto Loans 71.5 97.1 141.3 153.9

    Deposit products offered to Personal Banking customers include savings, checking, term deposits and hybrid
    accounts that combine features of savings and term deposit accounts.

    In select branches, the Bank offers advisory services to assist customers to shape their lifelong financial and
    investment goals. A tailored suite of products comprising mutual funds, fixed deposits and insurance products is
    offered. The Bank plans to introduce wealth management services in a phased manner to assist high-net worth
    clients seeking wealth preservation and capital appreciation.

    Delivery Channels

    The Bank is committed to bringing convenience and technology to its customers. In accordance with this goal,
    delivery channels available to the Bank‘s personal banking customers include:

    ATM and Debit Cards

    The Bank has the largest ATM network in the country, with a total of 16,584 ATMs as of June 30, 2010, which
    grew from 8,581 ATMs as of March 31, 2009. The Bank believes that ATMs are its most dynamic retail delivery
    channel today. The Bank had issued 59.0 million debit cards as of June 30, 2010. The Bank‘s customers can
    conduct a range of transactions free-of-charge at any one of the Bank‘s ATMs across the country, including cash
    withdrawals, balance enquiries, mini-statements, utility payments, mobile recharges, temple donations, fee
    payments and fund transfers. During Fiscal Year 2010, the Bank incurred expenditures of Rs. 7.4 billion for capital
    expenditures on information technology, compared to Rs. 5.5 billion of such expenditures in Fiscal Year 2009.

    The Bank has created a single ATM network across all of its subsidiaries and associates, for a total of 21,751 ATMs
    across the Group, with a total of 75.4 million ATM cards issued by the Group. This was a significant increase from
    11,404 ATMs across the Group as of March 31, 2009. On average, the Bank‘s ATMs transact more than 4 million
    transactions daily involving approximately Rs. 9.9 billion of cash withdrawals for the three-month period ended
    June 30, 2010. For the Group, average daily transactions are 5 million transactions per day, with cash withdrawals
    of Rs. 12.7 billion per day.

    Value-added facilities such as payment of premiums on SBI Life Insurance Policies, SBI Credit Card account

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    payments, payments of fees for selected schools and colleges, mobile phone recharges, bill payments and temple
    donations are available through the Bank‘s ATMs. Cash and check deposit facilities have been introduced at select
    ATMs.

    Credit and Prepaid Cards

    The Bank operates its credit card business through its subsidiary, SBI Cards and Payment Services Pvt. Ltd.
    (―SBICPSL‖). SBICPSL believes its estimated market share to be approximately 14% as of February 1, 2010 by
    number of credit cards issued in India.Credit cards are marketed primarily by the National Banking and Rural
    Business Groups.

    The SBI Vishwa Yatra Foreign Travel Card is a prepaid card issued in association with Visa International that can
    be used to withdraw cash from Visa-enabled ATMs and to purchase goods and services from merchants and points
    of sale displaying the Visa logo in India, Nepal and Bhutan. The card is available in U.S. dollars, sterling and euro
    currencies. For domestic use, Rupee prepaid cards are issued in association with Visa International. Periodic
    payments such as salary may be loaded onto the card at any Bank branch connected to the core banking
    solution application, with the funds available to cardholders immediately.

    Small and Medium-Sized Enterprises

    The SME Business group focuses on servicing the specific credit needs of SMEs, defined by the Bank as entities
    with an annual turnover of up to Rs. 500 million. The SME Business group had a loan portfolio of Rs. 1,106.0
    billion as of June 30, 2010, equal to approximately 16.7% of the Bank‘s total advances as of such date. It also had
    loan portfolios of Rs. 958.9 billion and Rs. 1,108.1 billion as of March 31, 2009 and 2010, respectively.

    The Bank believes that SMEs are a major driving force behind India‘s recent economic success. Accordingly, the
    Bank has dedicated specific resources to this customer segment. Because there are many SMEs but they generally
    share similar credit needs, SMEs typically require highly customized products less frequently than do large
    corporate borrowers. The Bank currently has 170 strategically located specialized SME branches, which
    maintain specially trained personnel dedicated to SME customers. Relationship managers are provided to
    high-end SMEs, as these customers generally require more specialized attention. The Bank has established 27
    regional care centers in local head offices across the country, which are responsible for the quick redress of SME
    grievances.

    Products and services offered specifically to SMEs include dedicated branch tellers, stand-by lines of credit, current
    accounts, time and other deposits, business to business payment solutions, multi-city checks, bank guarantees,
    letters of credit, specially tailored internet banking as well as working capital and term loans. Further, the Bank has
    taken initiatives, including advisory services and concessionary finance, in implementing an Energy Efficiency
    Program for its SME clients. The Energy Efficiency Program offers a subsidized energy study to energy-intensive
    SMEs, carried out by energy consultants employed by the Bank, and financing on advantageous terms of the
    implementation of energy conservation measures.

    The Bank has specialized SME branches located in the areas where there is greater potential for SME activity.
    These branches provide focused attention for SMEs through specially trained personnel whose sole responsibility is
    to look after SME customers. To provide easy quick and transparent access to banking services including day-to-
    day operations. The Bank has adopted the Code of Banks Commitment to Micro and Small Enterprises customers
    as prescribed by the Banking Code and Standard Board of India (BCSBI). Furthermore, for quick redress of
    grievances of SMEs at the network level, the Bank has established regional MSME care centres in all local head
    offices across the country.

    The Bank has simplified the credit appraisal process and reduced credit delivery time through a program called
    SME Smart Score. This program is based on a scoring model system to simplify the approval process for loans up
    to Rs. 5 million for manufacturing units and Rs. 2.5 million for trade and services. The Bank has also developed
    industry, activity, and cluster specific scoring models. As part of its BPR initiative, the Bank has begun to centralize
    credit processing for SMEs, enabling the Bank to offer greater uniformity in appraisals, quicker processing and
    better risk management. The Bank has entered into tie-up arrangements with various industry majors for dealer

    94
    financing on liberalized norms.

    In addition to traditional lending products, the Bank seeks to extend its reach to the supply chain partners of large
    corporations through supply chain financing, including the financing of selected vendors and dealers of the
    Bank‘s corporate clients. This IT-based product provides an important cross-selling opportunity, linking customers
    of the Corporate Banking Group, as industry majors, and suppliers or vendors of various sizes that comprise the
    customer base of the SME Group.

    In an effort to encourage collateral free loans to micro- and small-scale enterprises (―MSEs‖), the Bank entered into
    a memorandum of understanding with the Credit Guarantee Fund Trust for MSEs to obtain guarantees on a
    portfolio basis. In order to assist SMEs during the recent economic downturn, the Bank has offered additional
    funds on liberalized terms with low interest rates through two new programs, SME Care and SME Help.

    The SME Business group is further subdivided into Small-Scale Industries and Small Business Finance. Since its
    inception, the Bank has played and continues to play an important role in the development of small-scale
    industry enterprises and small businesses. Small-Scale Industries and Small Business Finance customers
    located in rural or semi-urban areas have access to the same products and services through the Rural Business
    Group.

    Small-Scale Industries: Small-Scale Industries customers are businesses engaged in the manufacture,
    processing or preservation of goods and whose investment in plant and machinery does not exceed
    Rs. 50 million. As part of its involvement in this sector, the Bank has prepared a charter for Small-Scale
    Industries, detailing schemes and standards for lending to this sector. The Bank also offers management
    consultancy services to small-scale industry enterprises who plan to upgrade their technology
    capabilities. Through this project, the Bank increased penetration in, among others, industries
    relating to auto components, rice mills and other industries.

    Small Business Finance: The Bank finances small business activities for a large number of its SME
    customers. Small business finance is undertaken under four broad categories: retail traders, business
    enterprises, professionals and self-employed persons and small road transport operators. For example, with
    respect to retail trade, the Bank extends loans to retail traders who act as a link between the manufacturers
    of goods or commodities and the consumer. The Bank also offers working capital products as well as loans
    for the purchase, renovation and repair of equipment.

    Government Banking

    The Bank handles government transactions as an agent of the RBI on behalf of the Government and various state
    governments. For the year ended March 31, 2010, the Bank handled approximately 58.8% of Government
    aggregate payments and receipts, and approximately 65.1% of state government payments and receipts. The Bank
    acts as agent for the receipt and payment of government transactions. The Bank collects government revenues by
    way of taxes, such as central excise and service taxes, through its branches. The Bank also handles government
    payment functions through its branches, including pension payments and expenditures payments of various
    ministries. Further, the Bank remits funds deposited by departments such as post and telecommunications, railways,
    defence and other government departments.

    The Bank earns commission income on the payment services it provides. Receipts and pension payments made by
    the Bank are subject to a fixed fee per transaction, irrespective of the transaction amount; fees for payments, other
    than pension payments, made by the Bank are calculated as a fixed percentage of the payment amount.

    Mid-Corporate Group

    The Mid-Corporate Group focuses on mid-corporate customers, which are defined by the Bank as entities with
    annual turnover between approximately Rs. 0.5 billion and Rs. 5.0 billion and/or which have been provided credit
    facilities in excess of Rs. 100 million by the Bank. The Mid-Corporate Group had a loan portfolio of Rs. 1,318.9
    billion as of June 30, 2010, equal to approximately 19.92% of the Bank‘s total advances as of such date. It also had
    loan portfolios of Rs. 1,189.7 billion and Rs. 1,334.9 billion as of March 31, 2009 and 2010, respectively. The

    95
    objectives of the Mid-Corporate Group are to:

    focus the Bank‘s attention on the overall banking requirements of mid-corporate clients;

    improve turnaround time for credit delivery;

    provide customized solutions to meet the financial requirements of mid-corporate clients; and

    develop teams well versed in credit, foreign exchange, derivatives and trade finance.

    Mid-sized corporate customers have been and continue to be an integral part of India‘s economic development. The
    Bank believes that this market segment encompasses more than 10,000 entities, many of whom are listed on a
    domestic stock exchange. High concentrations of these customers are located in 14 metropolitan centers, and are
    served by the Bank‘s extensive branch network at those centers. In addition to the branch network, the Bank
    services customers in other metropolitan centers by establishing sales hubs and centralized credit processing
    facilities. The Bank has established 61 branches that are dedicated exclusively to Mid-Corporate Group customers.
    Relationship managers provide a single point of contact for all mid-corporate customers. In addition to having
    access to a dedicated branch network, Mid-Corporate Group customers in other centers are serviced through sales
    hubs at Mid-Corporate Group regional offices located at nine main centers.

    Relationship managers are assigned to all mid-corporate customers. These relationship managers are mandated to
    attract more banking business from mid-corporate customers by building close relationships with existing
    customers, as well as reaching out to potential customers, and familiarizing customers with the various banking
    products and services offered by the Bank‘s specialized business groups. An example would be the cross-selling
    of retail banking services to the customer ‘s management or employees, or of interest rate and currency hedging
    products that are offered by Global Markets. A typical relationship manager handles approximately 30 mid-
    corporate accounts and is a customer ‘s central contact at the Bank. A relationship manager may also be
    approached by the specialized business groups within the Bank for the purposes of cross-selling banking products
    or services to the relationship manager ‘s customers.

    A precious metals department within the Mid-Corporate Group focuses on meeting the demand for precious
    metals financing by mid-corporate customers as well as serving the retail sector ‘s demands by offering
    precious metal products through the personal banking business unit. The gold banking activities of the Bank
    encompass wholesale sale of gold, retail sale of gold coins, a gold deposit scheme and loans for manufacture of
    gold jewelry to the jewelry industry to customers such as jewelry exporters and domestic jewelers. Demand for
    gold, in the form of wholesale and metal loans, has traditionally come from the Bank‘s mid-sized customers such as
    jewellery firms and traders.

    Similar to the Corporate Banking Group, the Mid-Corporate Group offers supply chain financing to leverage the
    Bank‘s customer base by offering vendor and dealer financing to link the large corporate, mid-corporate
    and SME customer segments served by the Bank. Customers of the Mid-Corporate Group can be either
    industry majors or vendors or dealers.

    Rural Business Group

    The Bank services customers located in rural and semi-urban areas through the largest branch and ATM network in
    India. The Rural Business Group focuses on developing innovative and effective modes of delivering banking
    services to all customers located in the rural and semi-urban areas of India, as defined by the RBI. As of March 31,
    2010, approximately 67% of the Bank‘s branch network was in semi-urban and rural areas. Banking products
    and services provided to customers of the Rural Business Group generally include all corporate and retail products
    and services that are provided by the National Banking Group, and are provided to the same demographic customer
    groups as are served by the National Banking Group. In addition, to a much smaller extent, the Rural Business
    Group provides sophisticated corporate products and services to mid-corporate customers that are located outside
    the geographic areas served by the Mid-Corporate Group. The Rural Business Group had a loan portfolio of
    agricultural loans of Rs. 639.4 billion as of June 30, 2010, equal to approximately 9.6% of the Bank‘s total
    advances as of such date. It also had loan portfolios of Rs. 546.8 billion and Rs. 637.2 billion as of March 31, 2009

    96
    and 2010, respectively.

    The Rural Business Group is subdivided into two business units: Rural Business (Non-farm) and Agriculture.

    Rural Business (Non-farm)

    The Bank believes that the rural areas of India are greatly underserved by the financial sector, and therefore views
    rural banking as a driver of future growth.

    The Bank serves its rural clients through an extensive network of 8,442 branches and 7,075 ATMs (including 156
    low-cost biometric ATMs) located in rural and semi-urban areas as of June 30, 2010. Rural banking requires an
    innovative approach in respect of delivery of services in remote areas, to a population with significant illiteracy
    rates, and a large number of small-value transactions. To cater to customer needs, the Bank has set up
    branches focusing on products important to rural customers such as savings and term deposits, small
    business financing, agricultural finance, life insurance and remittance services, in addition to the other corporate
    and retail products and services offered by the National Banking Group. These branches service all customer
    segments that are present in their geographic coverage area, from personal banking clients to mid-corporate
    clients (who, although serviced at a rural branch, will have their credit needs assessed by the Mid-Corporate
    Group). Branches located in rural and semi-urban areas distribute the same personal banking, SME, small-
    scale industries and small business finance products and services as those of the National Banking Group.
    Rural housing and micro finance, previously handled at the national level, have been regrouped under the Rural
    Banking Group.

    The Bank is developing alternative delivery channels for banking services and products through business
    facilitators and business correspondents (―BC/BFs‖). As of June 30, 2010, the Bank has established approximately
    27,900 customer service points catering to such BC/BFs.

    Rural banking offers a particular challenge due to the low margin transactions that typically occur at rural branches.
    The Bank seeks to overcome this challenge through IT-based initiatives targeted specifically at the rural customer.
    These initiatives include a kiosk project that will allow for access to more remote areas as well as a Smart Card
    program that allows rural customers to access basic banking services through business correspondents without
    meeting the minimum deposit requirements for accounts with the Bank.

    The Bank has moved beyond traditional banking to support grass-roots initiatives to encourage access to finance for
    the poorest of the rural population. The Bank believes that micro finance, including financing to Self Help Groups
    (―SHGs‖), has significantly contributed to the credit growth in rural areas and the improvement in the standard of
    living of the rural poor. The Bank has provided advances of Rs. 69.0 billion to approximately 1.8 million SHGs in
    India as of June 30, 2010. The Bank is a market leader in SHG lending in India. The Bank has been marketing SBI
    Life‘s micro insurance scheme ―Grameen Shakti‖ to meet the insurance needs of SHG members.

    The Bank believes that the clients it assists through micro finance initiatives will become loyal customers in the
    future. The Bank‘s micro finance initiatives are accomplished primarily through SHGs. The Bank believes that
    these groups, comprising approximately 15 to 20 families, each of which is represented by one family member
    (who is generally a woman), serve as the basis for establishing group dynamics and a culture of savings
    within the community. Given the Bank‘s extensive branch network, the Bank expects to be able to cultivate
    relationships with the SHGs and ultimately assist in the development of SHGs and their members into micro
    enterprises. The SHGs, by the nature of their activities, promote social capital and entrepreneurship at the micro-
    level. The Bank in turn lends to the SHG an amount of up to four times the SHG‘s savings, which the SHG lends
    out to its members at its sole discretion. Micro finance loans extended by the Bank form part of the Bank‘s directed
    lending obligations. With the growing role of non-governmental organizations (―NGOs‖) in extending the Bank‘s
    reach to SHGs, it has introduced a scheme for financing NGOs for lending to SHGs.

    Agriculture

    Since its inception, the Bank has played and continues to play an important role in the development of
    Indian agriculture. The Bank had 428 agricultural development branches as of June 30, 2010. These are

    97
    specialized branches located throughout India used exclusively for the development of the agriculture sector
    and its related industries.

    The Bank‘s agricultural development branches offer products such as crop financing, farm equipment
    financing, and agricultural value chain financing and serve customers involved in a wide range of agricultural
    activities such as crop production, horticulture, plantation crops, floriculture, farm mechanization, land
    development and reclamation, digging of wells, tube wells and irrigation projects, as well as activities linked to
    agriculture such as storage, trading and processing. The Bank also finances activities such as dairy production,
    fisheries, livestock management and silk worm farming. The Bank‘s focus has been on cultivating direct
    relationships with the farmers, thereby allowing them to offer more customized products to their clients.
    Initiatives aimed at strengthening ties with the farming community include attending farmers‘ meetings and events
    as well as a village adoption program, whereby each region, encompassing 40 to 45 branches, adopts one to four
    villagesin order to build banking relationships there and to support integrated development of the village.

    As in its other lending operations, the Bank uses a scoring model for credit assessment of borrowers under
    several of its programs. Lending by individual branches under certain loan programs is linked to NPA levels, so that
    NPA levels exceeding certain benchmarks will lead to a tightening of certain credit lines. In addition, recovery
    agents are increasingly being used by the Bank to address debt collection, generally by enforcing on the underlying
    collateral securing the loans.

    International Banking Group

    As of June 30, 2010, the Bank had a network of 150 overseas offices in 32 countries covering all major time zones.
    Among its other locations, it is present in New York, London, Frankfurt, Singapore, Hong Kong and the
    Maldives. It maintains correspondent relationships with 491 leading banks in 124 countries. The International
    Banking Group‘s loan portfolio was equal to approximately 15.8% of the Bank‘s total advances as of June 30,
    2010.

    The Bank‘s international banking products and services include corporate lending, loan syndications, letters
    of credit and guarantees, short-term financing, project export finance, and collection of documentary credits
    and remittances, as well as the raising of funds and other borrowings outside India. The International Banking
    Group‘s core activity is to provide these services to Indian and foreign companies with operations inside of India, as
    well as NRIs conducting business in foreign markets. The International Banking Group also seeks to service
    corporate and individual customers outside India through the Bank‘s branches and subsidiaries.

    The Bank has recently executed plans to open branches in certain select foreign jurisdictions with the aim of
    operating as a local bank, providing products and services to attract both NRI and non-Indian customers. The Bank
    holds a qualified full banking license in Singapore and is eligible to raise local currency deposits and maintain
    branches and ATMs at 25 locations. Currently seven branches and nine off-site ATMs in Singapore are operational,
    and the Bank is launching a campaign to grow its deposits and mortgage lending by offering attractive rates and
    undertaking a re-branding campaign.

    As part of the centralization of treasury activities of foreign offices, the Bank has set up central treasury hubs in
    Hong Kong and London. These hubs are intended to aggregate market risks and achieve economies of scale.
    Besides meeting the foreign exchange and money market needs of their linked branches and undertaking
    proprietary trading in currencies, it is expected that the central treasury hubs will expand their activities to
    cover interest rate, foreign exchange, credit structures and bond trading.

    Leveraging off of the Bank‘s foreign branches, the International Banking Group participates in foreign currency-
    denominated syndicated loans to large international corporations both in the primary and secondary markets. The
    Bank‘s foreign offices have had success in managing documentary credits, and have also been active in providing
    loans to Indian joint ventures or the wholly owned subsidiaries of Indian corporates which have acquired companies
    or set up new projects outside India. The Bank‘s foreign offices have also achieved significant growth in the area of
    trade finance as the import and export trade of India has increased. The Bank periodically revises its investment
    policy for foreign offices in line with international market practice and available products, emphasizing investments
    in the fixed income products of sovereign, banking and corporate issuers.

    98
    The Bank earns service fees from providing management expertise to two exchange companies in the Middle East,
    which also focus on mobilizing deposits and opening new NRI accounts for the Bank. Given the opportunities
    arising from the substantial Indian population in the region, the Bank also has arrangements with 20 other exchange
    companies and banks in the Middle East to facilitate NRI and other customer remittances to India.

    The Bank‘s emphasis on technology is a critical part of the international banking platform. A common banking
    application software, specific to the requirements of Bank‘s international branches and subsidiaries, has been
    implemented at 125 foreign offices in 23 countries, including 80 offices under 4 subsidiaries. Internet Banking
    facilities are available at all these foreign offices, and ATM facilities in 13 countries, out of which 11 countries are
    connected to the ATM switch at Belapur, and the remaining offices to their local switches for ATM operations.
    Customers at foreign offices now benefit from the instant remittance facility for credits to accounts maintained in
    Indian offices through centralised SWIFT operations. Remittances to accounts in other banks are routed through the
    National Electronic Funds Transfer scheme of the RBI. AML/OFAC monitoring is done at all foreign offices with
    advanced tools.
    Global Link Services

    The Bank‘s Global Link Services (―GLS‖) facilitates export payments, overseas collections and inward remittances.
    This service improves the efficiency of the Bank‘s foreign exchange operations. During the year ended March 31,
    2010, GLS collected proceeds from 130,059 export bills in both USD and Euros, as well as 152,951 foreign
    currency checks denominated in pound sterling, euro and USD worth approximately USD14.1 billion. The Bank
    also received 2.9 million inward remittances in the year ended March 31, 2010 worth USD 2.94 billion. For the
    three-month period ended June 30, 2010, GLS collected proceeds from 32,966 export bills in both U.S. dollars and
    euros as well as 29,501 foreign currency checks denominated in pound sterling, euro and U.S. dollars worth
    approximately U.S.$3.69 billion. The Bank has also received 0.9 million inward remittance for the three-month
    period ended June 30, 2010 worth U.S.$1.01 billion.

    Project Export Finance

    The Bank is an active participant in the financing of project export activities by Indian corporates involving the
    bidding for and execution of turnkey and civil construction contracts, the export of engineering goods on a deferred
    payment basis and service exports. The Bank can approve projects of up to USD 100 million (Rs. 4.5 billion), and
    acts as a sponsor for its customers in respect of projects exceeding USD 100 million (Rs. 4.5 billion), which need
    to be approved by a number of Indian government departments. The Bank provides bond guarantees for projects
    during the bidding stage. Once projects are approved, the Bank provides performance guarantees and other non-
    fund based products as well as construction funding if required by the customer. In the year ended March 31, 2010,
    the Bank supported 35 large projects and service export proposals aggregating Rs. 93.0 billion involving 12
    countries. During the three-month period ended June 30, 2010, the Bank supported 6 large projects and service
    export proposals aggregating to Rs. 8.4 billion involving 4 countries.

    Foreign Subsidiaries and Joint Ventures

    The following table sets out details of the Bank‘s international subsidiaries and joint ventures outside India as of and
    for the tear ended March 31, 2010.

    Name Date of Bank’s Net Total Owned Total


    Establishment Shareholding Profit Funds Assets
    (Rs. in millions, except percentages)
    Foreign Subsidiaries
    SBI (Canada)(1) May 5, 1982 100.0% (892.4) 5,451.5 33,265.1
    SBI (California)(2) Sept. 31982 100.0% 345.8 4,235.7 39,586.4
    SBI Intl. (Mauritius) Ltd(1) Oct. 12, 1989 93.4% 538.4 6,242.9 47,079.0
    PT Bank Indonesia (1) Oct. 24, 1970 76.0% 19.8 835.5 6,550.8
    Nepal SBI Bank Limited. (1) (2) July 7, 1993 55.02% 154.8 1,398.7 21,700.6
    Joint Ventures

    99
    Name Date of Bank’s Net Total Owned Total
    Establishment Shareholding Profit Funds Assets
    (Rs. in millions, except percentages)
    Bank of Bhutan * May 28, 1968 20.0% 471.6 2,043.4 26,248.4
    Commercial Bank of India LLC, December 5, 2003 60.0% 96.6 1,138.0 3,162.4
    Moscow(1)
    *Annual closing for Bank of Bhutan is December 31
    _______________________
    Notes:

    (1) For the reader ‘s convenience, foreign currency translations of Indian rupee amounts have been provided based on the
    following approximations of market exchange rates effective as of March 31, 2010: Canada CAD = Rs. 44.1800;
    United States USD = Rs. 44.9000; Mauritius MUR = Rs. 1.4650; Indonesia IDR = Rs. 0.0050; Nepal NPR = Rs. 6252;
    and Russia RUB = Rs..5250.
    (2) Nepal SBI Bank Ltd., formerly an associate of the Bank, became its subsidiary with effect from June 14, 2009 as the
    Bank acquired a 5% additional stake from Agricultural Development Bank Limited, Nepal.

    Global Markets

    The Bank‘s Global Markets Group manages its domestic liquidity and foreign currency exposure, engaging in
    proprietary trading of currencies and offering foreign exchange and risk hedging derivative instruments to the
    Bank‘s corporate customers such as forward contracts, interest rate swaps, currency swaps and foreign currency
    options. The Global Markets also handles equity trading for the Bank‘s trading and banking books.

    Through its Global Markets operations, the Bank manages its required regulatory reserves and investment
    portfolio with a view to maximising efficiency and return on capital. The Bank also seeks to optimize profits from
    its trading portfolio by taking advantage of market opportunities. The Bank‘s trading and securities portfolio
    includes its regulatory portfolio as there is no restriction on active management of the regulatory portfolio.
    Due to these regulatory reserve requirements, a substantial portion of the Bank‘s trading and securities portfolio
    consists of Government securities. As of June 30, 2010, Government securities constituted 63.92% of the Bank‘s
    total trading and available for sale securities portfolio, while the remainder included corporate debt securities and
    equity securities. The Bank has outstanding Government securities worth Rs. 436.05 billion under the Available
    for Sale (―AFS‖) and Held for Trading (―HFT‖) categories as of June 30, 2010.

    The Global Markets Group engages in domestic and foreign exchange operations from the Bank‘s corporate
    headquarters in Mumbai. As part of its treasury activities, the Bank also maintains proprietary trading portfolios in
    domestic debt and equity securities and in foreign currency assets. During the the first quarter of Fiscal Year 2010-
    2011, the Bank recorded a total turnover of Rs. 3,308.51 billion in its foreign exchange trade, representing an
    estimated 11.8% of market share calculated based on RBI data.

    The Bank undertakes foreign exchange sales and purchases on behalf of the Bank‘s corporate customers by
    engaging in back-to-back derivatives transactions. The Bank also sells RBI-permitted hedging products to the
    Bank‘s large and medium sized corporate customers through seven regional treasury marketing units which work
    in close coordination with the relationship managers in the Mid-Corporate Group and the Corporate
    AccountsGroup.

    The Bank offers all RBI-permitted derivative structures to its clients including foreign exchange forward
    contracts, options, and currency and interest rate swaps. The Bank‘s investment and market risk policies are
    approved by the Central Board.

    Subsidiaries and Joint Ventures in India

    The Bank‘s banking subsidiaries include two wholly-owned and four majority-owned Associate Banks and SBI
    Commercial & International Bank Ltd. (―SBICI‖). The Bank also provides financial services through its non-bank
    subsidiaries, including merchant banking, fund management, leasing and factoring services. In the Bank‘s financial
    statements, investment in subsidiaries and joint ventures (both in India and abroad) are valued at historical cost after
    netting of provisions, if any. The Associate Banks Department of the Bank coordinates the Bank‘s management of

    100
    the Associate Banks and subsidiaries.

    Banking Subsidiaries

    An Act of Parliament in 1959 created the banks now named State Bank of Bikaner and Jaipur, State Bank of
    Hyderabad, State Bank of Indore, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore
    (together, the ―Associate Banks‖). Originally independent regional banks, the Associate Banks are now wholly- or
    majority-owned subsidiaries of the Bank. The Associate Banks have a total of 4,841 branches located in various
    regions in India and, collectively, the Associate Banks accounted for Rs. 3,590.1 billion in aggregate assets as of
    March 31, 2010, representing 24.8% of the Group‘s total consolidated assets.

    The Bank merged one of its Associate Banks, the State Bank of Saurashtra, into itself with effect from August 13,
    2008. The Bank merged another Associate Bank, the State Bank of Indore, into itself with effect from August 26,
    2010.

    The Associate Banks generally offer the same products and services as that offered by the Bank, though they are
    allowed the freedom to initiate their own product lines where they deem it necessary to meet the specific demands
    of their clients. The Bank‘s six Associate Banks together had an estimated market share of 6.6% in deposits
    and 6.9% in advances of all scheduled banks as of March 27, 2010, calculated based on RBI data. The Bank agrees
    to a budget and a business plan with each Associate Bank annually. The Bank exercises strategic control over each
    Associate Bank through the respective boards of directors.

    The Associate Banks recorded a growth in business during the period ended March 31, 2010 with deposits and
    advances growing by 14.4% and 15.1%, respectively, over the previous year. The Associate Banks together
    reported net profit of Rs. 32.7 billion during the period ended March 31, 2010, an increase of 17.7% from the period
    ended March 31, 2009. Gross NPAs as a percentage of gross advances increased from 1.36% as of March 31, 2009
    to 1.75% as of the end of the period ended March 31, 2010. Net NPAs as a percentage of net advances increased
    from 0.61% as of March 31, 2009 to 0.87% as of the period ended March 31, 2010. Net NPA is defined as gross
    NPA (which is the aggregate of all NPAs) less provisions.

    Although there are no inter-company loans, there are customary inter-bank drawing and deposit arrangements and
    short-term inter-bank lending transactions between the Bank and the Associate Banks. During Fiscal Year
    2010, the Bank made aggregate equity infusions of Rs. 5.2 billion in the Associate Banks.

    The results of the Associate Banks are fully consolidated into the results of the Group. The Associate Banks operate
    on the same IT system as the Bank, apply the same accounting policies and are administered by senior level
    management appointed by the Bank.

    SBICI although not considered to be one of the Associate Banks for historical reasons, is a wholly-owned banking
    subsidiary of the Bank established in Mumbai on October 7, 1993. During the year ended March 31, 2010, the Bank
    announced its intent to merge SBICI into itself, to bring about further synergies and operating efficiencies. The
    proposal has been lodged with and is awaiting approval from the Government.

    The following table sets out the Bank‘s shareholding and certain financial information of the Associaate Banks and
    SBICI:

    101
    As of and for the year ended March 31, 2010
    Name of the Bank Bank’s Ownership Deposits Advances Operating Profit Net Profit
    (%) (Rs. in millions)
    State Bank of Bikaner and Jaipur 75.07% 455,090.0 355,630.0 9,037.3 4,551.6
    State Bank of Hyderabad 100.00% 752,598.1 533,440.1 17,207.9 8,227.1
    State Bank of Indore* 98.05% 300,454.6 239,435.0 6,732.3 3,077.7
    State Bank of Mysore 92.33% 384,371.7 298,739.4 9,374.0 4,457.7
    State Bank of Patiala 100.00% 640,931.4 469,896.2 13,077.1 5,508.9
    State Bank of Travancore 75.01% 494,904.9 388,905.1 10,558.6 6,842.7
    SBICI 100.0% 4,915.2 2,079.8 33.4 31.4
    * The Government of India had issued the ―Acquisition of State Bank of Indore Order, 2010‖ vide order dated July 28, 2010 (the ―Order‖). In
    terms of this Order, the entire undertaking of State Bank of Indore has been transferred to and vested in the Bank, effective August 26, 2010.

    The following table sets out certain performance highlights of the Associate Banks and SBICI:

    As of and for the year ended March 31, 2010


    Name of the Bank Return on Average Assets Return on Equity Net NPA CRAR1
    (percentages, all figures annualised)
    State Bank of Bikaner and Jaipur 0.96% 18.83% 0.77% 13.30%
    State Bank of Hyderabad 1.03% 20.08% 0.55% 14.90%
    State Bank of Indore* 0.91% 16.71% 1.13% 13.53%
    State Bank of Mysore 1.10% 16.73% 1.02% 12.42%
    State Bank of Patiala 0.79% 14.70% 1.04% 13.26%
    State Bank of Travancore 1.25% 25.65% 0.91% 13.74%
    SBICI 0.49% 2.44% 0.19% 27.31%
    ______________________
    Note:
    (1) Capital to risk asset ratio (―CRAR‖), which indicates the ratio of capital employed to the risk weighted assets of the bank
    and is computed in accordance with RBI guidelines.
    * The Government of India had issued the ―Acquisition of State Bank of Indore Order, 2010‖ vide order dated July 28, 2010 (the ―Order‖). In
    terms of this Order, the entire undertaking of State Bank of Indore has been transferred to and vested in the Bank effective August 26, 2010. The
    aforesaid Order has been issued under section 35(2) of the Act.

    Non-Bank Subsidiaries and Joint Ventures

    In addition to its banking subsidiaries, the Bank also has a network of non-bank subsidiaries and joint ventures
    engaged in businesses other than commercial banking. As of March 31, 2010, such non-bank subsidiaries and joint
    ventures accounted for Rs. 384.9 billion in total assets. In the Bank‘s financial statements, investments in
    subsidiaries and joint ventures in India and abroad are valued at historical cost net of provisions, if any.

    The following table sets forth information relating to certain of the Bank‘s non-banking subsidiaries. For a
    complete list, please refer to the consolidated financial statements included in this Shelf Prospectus

    (As of and for the year ended March 31, 2010)


    Non-Banking Banks’s Investment Assets Net Profit Business
    Subsidiaries Ownership
    (%) (Rs. in million)
    SBI Capital Markets 100.0% 2,789.6 5,949.7 1,501.0 Finance syndication; debt and equity
    Ltd. capital markets; mergers and
    acquisitions; advisory; infrastructure
    project advisory; securitisation
    SBI CAPS Securities 100.0% * 975.0 81.1 Stock brokering
    Ltd
    SBI CAPS Ventures 100.0% * 57.0 10.0 Venture capital
    Ltd
    SBI CAP Trustee Co. 100.0% * 26.4 19.4 Trusteeship
    Ltd.
    SBI CAP (UK) Ltd 100.0% * 63.1 19.2 Financial services and advisory

    102
    Non-Banking Banks’s Investment Assets Net Profit Business
    Subsidiaries Ownership
    (%) (Rs. in million)
    SBI Mutual Fund 100.0% 1.0 77.8 28.2 Trustee company
    Trustee Co Pvt. Ltd.
    SBI Global Factors 85.35% 7,401.9 31,636.5 65.8 Factoring Services
    Ltd.......................
    SBI DFHI Ltd. 66.39% 3,099.9 19,826.6 891.6 Primary dealer in securities, trustee
    services
    SBI Pension Fund Pvt. 96.85% 180.0 204.6 0.3 Managing pension funds of Central
    Ltd. Government employees
    _____________
    Note:

    (1) Shareholding amounts are the aggregate of the Bank‘s direct and indirect shareholdings.

    * Wholly owned by SBI Capital Markets Limited

    Life Insurance

    SBI Life Insurance Company (―SBI Life‖) was established in 2001 as a joint venture with Cardif SA (―Cardif‖), a
    French subsidiary of BNP Paribas, which holds a 26.0% stake. SBI Life underwrote 0.12 million insurance policies
    during the three-month period ended June 30, 2010. According to IRDA data, as of March 31, 2010, SBI Life is
    ranked second amongst private life insurers in India in terms of new business premiums, with a market share of
    14.4%. SBI Life had net premium income of Rs. 17.0 billion for the three-month period ended June 30, 2010, an
    increase of 9% compared to Rs. 15.6 billion for the three-month period ended June 30, 2009. Assets under
    management by SBI Life as of June 30, 2010 stood at Rs. 299.8 billion, an increase of 64% compared to Rs. 182.4
    billion as of June 30, 2009. SBI Life has been rated ‗AAA‘ by CRISIL (an Indian affiliate of S&P) for
    financial strength towards meeting policyholder obligations.

    SBI Life has an innovative approach to the distribution of insurance products. SBI Life‘s products are
    distributed through bank branches as the primary distribution channel, and SBI Life has employed the Bank‘s name,
    reputation and customer base to increase the sales of its life insurance products. This strategy leverages the
    combined strengths of the Group‘s extensive branch network and BNP‘s expertise in bancassurance distribution. For
    the year ended June 30, 2010, approximately 30% of SBI Life‘s insurance premiums were sourced through
    bancassurance.

    As a secondary distribution channel, SBI Life had 66,572 licensed advisors as of June 30, 2010, who sell through
    SBI Life branches. For the year ended June 30, 2010, 47% of SBI Life‘s insurance premiums were sourced through
    these advisors. During the three-month period ended June 30, 2010, 24 new branches were opened and
    approximately 1038 insurance advisors were added in the field to expand and strengthen SBI Life‘s geographical
    presence.

    SBI Life also sells to corporate customers, who accounted for approximately 23% of SBI Life‘s insurance
    premiums for the three-month ended June 30, 2010.

    General Insurance

    The Bank signed a joint venture agreement with Insurance Australia Group Limted on November 24, 2008 for the
    establishment of a general insurance business. The new company, SBI General Insurance Company Ltd., has since
    received all regulatory approvals necessary for commencement of business operations. The company launched
    limited operations on March 26, 2010 in Mumbai, and the Bank expects full scale pan-India operations to
    commence by the end of January 2011. The Bank intends to leverage its strong bancassurance channels to offer
    clients new general insurance products that will compliment SBI Life‘s existing life insurance product portfolio.
    The Bank currently owns 74% of SBI General Insurance Company Ltd.

    Custodial Services

    103
    The Bank signed a joint venture agreement with Société Générale on June 5, 2008 for the creation of SBI Custodial
    Services Pvt. Ltd. The company has since been renamed to SBI-SG Global Securities Services Pvt. Ltd. The
    company‘s clients include overseas investors such as global custodians, FIIs as well as domestic investors such as
    financial institutions, mutual funds, insurance companies, portfolio management services, private banks, corporate
    brokers and the Indian securities market. The company offers its clients custodial and securities services such as
    custody, fund accounting and fund administration services. The Bank currently holds a 65% equity stake in SBI
    Custodial Services Pvt. Ltd.

    Private Equity

    On October 24, 2008, the Bank entered into a joint venture with Macquarie Capital Group, Australia and
    IFC, Washington to establish an infrastructure fund of upto approximately USD 3 billion and other related asset
    management and trustee companies to invest in various infrastructure projects in India, for which necessary
    approvals have been obtained from the Government and the RBI.

    On November 8, 2008, the Bank signed a memorandum of understanding with the State General Reserve Fund
    (―SGRF‖) of Oman, the Omani sovereign fund, to set up a general purpose private equity fund that will invest in
    infrastructure, tourism, health, telecommunications, utility and urban infrastructure in India, for which necessary
    approvals have been obtained from the Government and the RBI.

    Regional Rural Banks

    The Bank has sponsored, in accordance with applicable legislation, 17 regional rural banks (―RRBs‖)
    covering over 124 districts in 17 states with a network of approximately 2,673 branches as of June 30, 2010.
    Following changes to the regulatory framework governing RRBs, these banks have been transformed into
    commercial banks. The Bank retains certain sponsor responsibilities. These responsibilities include approving
    annual business plans and quarterly monitoring of performance, managerial assistance through secondment of
    high-level staff, inspection and audit, planning and budgeting, training and development, prevention of fraud,
    and guidance and support through the Bank‘s Treasury and Markets Group. The Bank‘s shareholding in each
    RRB is limited to 35.0%; the Government holds 50.0% and each relevant state government holds 15.0% of the
    shares of each RRB. RRBs cater to the banking needs of customers in rural and semi-urban areas and their
    operations are concentrated in one district or a cluster of districts in each state. Their target customer group is
    agricultural, small business and retail, to whom the RRBs provide services such as deposit and time accounts,
    lending and financing. Following Government consolidation of the sector, there are 22 RRBs sponsored by the
    Group as a whole, of which 17 are sponsored by the Bank, as of June 30, 2010. On July 14, 2010 the Bank signed a
    joint venture agreement with SGRF to set up a general purpose private equity funds to invest in assets in India.

    Information Technology Systems and Infrastructure

    The Bank‘s IT infrastructure provides connectivity among the domestic and international network of
    branches. The objective of the Bank‘s IT policy is to achieve and maintain efficiency in internal operations and to
    meet customer and market expectations. In order to remain technologically competitive with peers and meet
    customer demand, the Bank is continuously developing technology-based products related to its core
    banking solution application, Internet Banking, ATMs, payment systems and trade finance, as well as other
    products, services and systems for internal infrastructure and customer-oriented uses.

    IT-Based Products and Services

    Mobile Banking Services

    The Bank‘s mobile banking service, State Bank Freedom, offers low cost, around-the-clock banking services
    to customers via their mobile phones, with an aim to maximize convenience and security. The Bank believes that its
    Mobile Banking Service has the potential to improve customer retention and reinforce the Bank‘s brand
    recognition. State Bank Freedom is available in connection with accounts at all of the Bank‘s branches. As of
    June 30, 2010, over 317,377 customers had registered for mobile banking services, representing significant

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    growth in the number of mobile banking customers from 16,060 customers as of June 30, 2009.

    Depending on the mode of access, available facilities include account balance enquiries, mini-statements,
    check book requests, trading account enquiries, fund transfer within the Bank and to other banks in India, mobile
    credit top-ups, bill payments and payments of life insurance premiums. In the future, the Bank aims to equip mobile
    banking with additional features such as rail and air ticket booking, highway toll tag top-ups and mobile wallets.

    Internet Banking

    As of June 30, 2010, all of the Bank‘s domestic branches are authorized to register customers for internet banking
    services, and approximately 4.4 million customers in the retail segment and approximately 0.3 million
    customers in the corporate segment were registered for internet banking. This represents significant growth in
    the number of total internet banking customers, up from approximately 3.2 million customers as of June 30,
    2009, and 2.9 million customers as of March 31, 2009.

    The internet banking service is accessed from the Bank‘s website: www.onlinesbi.com. The Bank‘s internet
    banking solution is a comprehensive product for both retail and corporate use. Internet banking has given the
    Bank a real-time transaction processing capability and has allowed the implementation of the Bank‘s business
    initiatives in many areas such as railway and air ticket booking, online tax payment, transfer of funds and utility
    bill payment. The Bank‘s customers can check account balances, request check books, bank drafts and bankers‘
    checks, issue standing instructions, trade stocks, invest and renew term deposits, open new accounts, donate to
    religious organizations and pay income taxes online. Customers can make inter- branch transfer of funds to their
    other accounts and also to third party accounts. Customers can also book rail tickets, pay utility bills and insurance
    premiums, invest in mutual funds, pay credit card balances and set up SMS alerts for transaction information.

    The Bank offers dedicated internet banking for its corporate customers, including SMEs, that include features
    specifically tailored to these clients, such as control and authorization features. Internet banking for
    corporate customers includes online payment of customs duty and corporate income tax, online payment of
    railway freight, vendor finance, dealer finance, corporate salary upload, corporate e-collect, issuance of online
    drafts in bulk, and transfer of funds to multiple vendors at different locations.

    Bill payment through the Bank‘s e-payment systems, a part of internet banking, allows its customers to pay
    their telephone, mobile phone, electricity, insurance and credit card bills, donations to charitable institutions and
    college tuition fees electronically. Facility of auto payment of bills is also available for customers to set up
    payments such that the bill amount is automatically paid from the customer ‘s account each month without any
    action taken by the customer.

    The Bank‘s Associate Banks use the same platform to make internet banking services available to their customers.

    Dematerialized and Online Trading

    Dematerialized or ―demat‖ trading services and online trading services under the Bank‘s eZ-trade@sbi
    platform are available at over 2,800 branches across India. As of March 31, 2010, over 200,000 customers held
    dematerialized accounts with the Bank. The Bank‘s objective is to continue to broaden its customer base, while
    streamlining its demat and online trading products with additional value-added services and features.

    eZ-trade@sbi, the Bank‘s online equities and derivatives trading facility, is offered in alliance with SBICAP
    Securities Limited and Motilal Oswal Securities Limited. The services provides access to dematerialized
    trading from home or office through www.OnlineSBI.com or through the Mobile Banking Service.

    IT Infrastructure

    Core Banking Solution

    All of the Bank‘s branches are connected to the Bank‘s core banking solution application, a fully centralized
    database that provides for online real-time transaction processing efficiently across branches, through a

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    centralized processing center. The core banking solution application includes a disaster recovery site which
    provides back-up information for the entire project and can host critical banking applications in the event of a
    disaster at the primary site. Since its implementation, the core banking solution application has been refined
    to enhance processing capabilities, improve management information systems, increase efficiencies relating to
    asset-liability management, reduce transaction costs and improve overall operating efficiency.

    State Bank Connect

    State Bank Connect is the Bank‘s principal connectivity platform, providing the foundation for the Group‘s overall
    technology infrastructure. The Bank and its Associate Banks, each with distinct internet protocol addresses, depend
    on State Bank Connect to support business-critical applications such as the core banking solution application, trade
    finance software, ATMs, payment systems, cash management software, corporate email and internet portals. As
    of June 30, 2010, all domestic branches and offices of the Bank and the Group were connected under State Bank
    Connect.

    Trade Finance Project

    The Bank runs a centralized trade finance solutions platform, CS Eximbills, which has been customized and
    extended across all of the Bank‘s branches conducting trade finance activities. CS Eximbills is a trade finance
    system designed to address the data processing requirements of the Bank‘s trade finance department. CS Eximbills
    automates the full range of trade finance activities from document preparation, calculation of commissions and
    foreign exchange to accounting, the generation of SWIFT messages and report management. The application
    supports a wide range of trade finance functions, such as letters of credit, bank guarantees, bills, pre-shipment and
    post-shipment credit, forward contracts, shipping guarantees and standby letters of credit. The software also has a
    facility for customers to access relevant services over the internet.

    CS Eximbills has been integrated with the core banking solution application and Treasury applications to
    facilitate the seamless flow of data entered across multiple systems. Major benefits include multi-currency
    accounting, faster turnaround for clients and data integrity across systems.

    Business Process Re-Engineering

    The Bank has undertaken a BPR initiative in order to transform its operating architecture with an aim to enhance the
    sales and service at its branches. The Bank believes its BPR has redefined its ability to acquire new customers, build
    stronger relationships with existing customers and provide all customers with the highest quality of service across
    multiple delivery channels in the shortest time possible.

    A large number of transactions have been transferred from branches to alternate service channels, namely ATMs,
    drop-boxes, internet banking, mobile banking and call centers. In addition, many non-customer facing back office
    activities have been centralized. The Bank‘s branches have also been redesigned to provide better service for
    customers. Customer greeting and specialized sales teams have been created and relationship managers have been
    introduced for select clients.

    As of June 30, 2010, the initial phase of BPR initiatives was completed, resulting in strengthened systems and
    procedures that enable the Bank to handle increased volumes and endeavor to maximize the output of its sales and
    other staff. Under future initiatives, the Bank anticipates that it will focus on identifying additional process and
    technology upgrades in order to create and sustain market-leading practices.

    Competition

    The Bank faces competition in all its principal areas of business. Private sector banks, foreign banks and other public
    sector banks are the Bank‘s main competitors, followed closely by finance companies, mutual funds and investment
    banks. We may also face increased competition from foreign banks if the Indian retail market is further liberalized or
    if regulations and restrictions upon branch network growth by foreign banks are simplified or reduced. The Bank
    seeks to gain a competitive advantage by offering innovative products and services, maximizing the functions of its
    extensive branch network, in particular in rural and semi-urban areas, investing in technology and building on

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    relationships with the Bank‘s key customers. See ―Risk Factors — Risks Relating to the Bank’s Business —
    The Indian banking industry is very competitive and the Bank’s growth strategy depends on its ability to compete
    effectively.‖

    Corporate Banking

    Corporate banking faces competition from foreign and private banks in such areas as pricing, rupee loans, foreign
    currency loans, foreign exchange transactions, trade finance services and cash management services. The lower
    risk rating of corporate clients, as well as the higher income generating capacity due to the volume and
    diversity of their business, attracts foreign and private banks to this sector. Foreign banks also have the advantage
    of their home country connections, with much larger resource raising abilities. However, the Bank believes its
    extensive low-cost deposit base provides it with a competitive advantage in meeting customers‘ borrowing
    expectations.

    In addition, traditional corporate banking faces competition from the disintermediation of financial products.
    Customers increasingly have multiple financing sources available to them beyond those generally provided by
    traditional banks, which in turn is putting pressure on margins. The Corporate Banking Group has been able
    to counter this competition through strong customer relationships, as well as through efficient and focused
    delivery of products and services. This has been most noticeable in the area of trade finance services, including
    letters of credit. To further counter the downward pressure on margins, the Bank intends to focus on developing
    new fee-based services, such as vendor financing and wholesale banking services such as payment and collections
    services.

    With all domestic branches of the Bank connected through the core banking solution application, the Bank is able to
    process bulk direct debits, direct credits and other centralized solutions, without having to utilize the services of any
    intermediate banks in the payment chain, ensuring a high level of data privacy for corporate clients. In addition, this
    extensive network of branches connected to the core banking solution application has increased the Bank‘s
    transaction processing capacity and efficiency, enabling customers to carry out their payments and collections
    across all of India, while centralizing their cash management in Mumbai.

    Retail Banking

    In the retail banking sector, the Bank faces competition primarily from foreign and Indian commercial
    banks and housing finance companies. Foreign banks typically focus on limited customer segments, such as high
    net worth individuals and mass affluent, and geographic locations due to limitations of their smaller branch
    networks relative to Indian commercial banks. Indian commercial banks generally have wider distribution networks
    than foreign banks, but relatively weaker technology and marketing capability. The Bank seeks to compete in
    this sector by offering a wide product portfolio through its extensive branch network and by leveraging its client
    relationships in diverse market and geographic segments. In addition, in rural banking and micro finance, the Bank
    believes it can build on the strength of its extensive geographic presence and reputation to continue to expand in
    these areas.

    The Bank has sought to capitalize on its extensive and diverse corporate relationships to gain individual customer
    accounts through payroll management products. Furthermore, it intends to continue to pursue a multi-channel
    distribution strategy using physical branches, ATMs, call centers and the internet to reach customers.

    In recent years, investment in mutual funds has become an increasingly viable alternative to traditional banking
    products, since they offer tax advantages and have the capacity to earn competitive returns. This has resulted in
    competition for the deposit base of the Bank‘s retail customers. The Bank has sought to address the competitive
    pressure by offering a wider range of mutual fund products to its customers in addition to traditional deposits.

    International Banking

    The Bank‘s international strategy is focused on India-linked opportunities, and the Bank also intends to expand its
    banking operations to serve non-resident Indians as well as local clients in its host countries. In its international
    operations, the Bank faces competition from other Indian banks with overseas operations, as well as foreign banks

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    with products and services targeted at non-resident Indians and Indian businesses and other service providers. The
    Bank intends to leverage its strong relationships with Indian corporates in its international business.

    Government Banking

    The RBI, the Bank and other public sector banks conduct Government business in India. Other public sector banks
    are the Bank‘s principal competitors in handling Government and state government payments and receipts.
    The Bank believes it has a competitive advantage in this activity due to its specially trained staff, business processes
    tailored over the course of long relationships to the unique demands of the various Government departments that the
    Bank deals with, and the depth of its funding base, which enables it to set aside sufficient funds to meet the
    remittance requirements of the Government on a recurring basis.

    Three new-generation private sector banks including Axis Bank (formerly UTI Bank), IDBI Bank, ICICI Bank and
    HDFC Bank have been authorized by the RBI to collect revenues on behalf of the Central Board of Excise and
    Customs and the Central Board of Direct Taxes of the Department of Revenue, the Ministry of Finance and the
    Government. The Bank expects to address this growing competition by emphasizing the advantages of its extensive
    branch network in providing easy access for customers and its historical association with the Government and the
    Government‘s staff, which illustrates its experience and expertise in handling such business.

    Legal and Regulatory Proceedings

    The Bank is involved in certain legal proceedings in the ordinary course of its business. However,
    currently, the Bank is not a party to any proceedings, and is not aware of any current, pending or anticipated
    proceedings by governmental authorities or third parties, which, if adversely determined, would have a material
    adverse effect on the Bank‘s financial condition or results of operations.

    Insurance

    The Bank maintains its own insurance policies and coverage that it deems to be appropriate. The Bank‘s standard
    insurance policies cover for losses of or damage to property including furniture, fixtures, computer hardware,
    ATMs and vehicles. Cash-in-transit, cash, securities and precious metals and other valuables are covered against
    theft. In addition, the Bank has also obtained a fidelity policy for employees, as well as directors‘ and officers‘
    liability insurance to cover the Bank‘s directors and other key management members. The Bank carries insurance
    coverage commensurate with its level of operations and risk perception.

    Employees

    As of June 30, 2010, the Bank had 200,490 employees. The Bank‘s employees include professionals in business
    management, accountancy, engineering, law, computer science, economics and other relevant disciplines.

    The Bank‘s management believes that it has a good relationship with its staff.

    The Bank aims to develop a collaborative culture and ongoing consultative process at various levels of
    administration within the Bank. The Bank believes that it has amicable relations with its employees and the
    management is also in constant dialogue with the Officers‘ Federation to avoid any industrial relations issues,
    including strikes.
    The computerization of branches and other IT initiatives have reduced employee workloads and allowed the Bank
    to reduce its overall workforce during the past five to six years despite growing its business. However, the
    completion of BPR initiatives, branch expansions and focused efforts for marketing has resulted in an increased
    demand for new staff. The Bank‘s human resources plan is routinely reviewed and updated in view of the
    Bank‘s growth plans and attrition arising out of retirement, death and resignation of employees. Various
    initiatives such as retraining operational staff are under way. Incentive schemes based on performance
    measurements have also been operationalised to facilitate the Bank‘s growth, as well as providing the desired
    motivation to its employees.

    The Bank believes that its employees are its most valuable asset. The Bank has implemented e-learning at the

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    State Bank Academy, Gurgaon, to provide online training and assessment. The performance management
    system in the Bank has been upgraded to focus on competency based assessments and career progression
    implications. The State Bank Staff College, State Bank Academy, State Bank Institute of Information and
    Communication Management, State Bank Institute of Rural Development and 46 Staff Learning Centers, all owned
    and operated by the Bank, are located across India and are focused on creation and skills development relevant to
    the future of banking.

    The Bank faces competition for the recruitment and retention of its employees. Poaching of qualified employees has
    been a concern for the Bank in the past and is likely to be a continuing concern for the Bank in the future. In order to
    deal with this issue, the Bank is recruiting staff for specialised functions. In addition, the Bank recruits staff at
    campuses across India. The Bank has also formulated an incentive scheme for operational employees in an effort to
    retain talented employees. Adjustments to this scheme are undertaken on a regular basis to align with market
    conditions.

    Properties

    The Bank‘s principal network consists of 12,567 branches, 206 extension counters and 16,584 ATMs as ofJune 30,
    2010. These facilities are located throughout India. In addition to the branches, extension counters and ATMs, the
    Bank maintains 14 administrative circles, 11 exchange bureaus and 108 satellite offices. Of the properties used by
    the Bank, approximately 800 are owned by the Bank. The Bank‘s corporate office is located in Mumbai. The
    Bank‘s premises and other fixed assets are accounted for on a historical cost basis in accordance with Indian
    GAAP. As such, the Bank believes the value of its properties, many of which have been in the Bank‘s possession
    for a long period, are being carried on its balance sheet at values significantly below their current fair value.

    Relationships with the Government and the RBI

    The Bank has relationships with the Government and the RBI in several contexts as described below.

    Government as Majority Stakeholder

    The Government of India purchased the RBI‘s entire shareholding in the Bank on June 29, 2007 and is the Bank‘s
    majority shareholder with a shareholding of approximately 59.40%. The Act provides that the Government shall not
    hold less than 51.0% of the Bank‘s outstanding shares. As the Bank‘s controlling shareholder, the Government has
    effective control over the affairs of the Bank.

    Statutory Powers of the Government over SBI

    Because the Bank was created by statute, it does not have articles of association. However, under the Act, the
    Government has been given rights and powers typically given to shareholders under typical corporate structures.
    For example, the Government has the power to increase or reduce the authorized capital of the Bank. The SBI Act
    also provides that no shareholder other than the Government shall be entitled to exercise voting rights in
    respect of any shares held in excess of 10.0% of the Bank‘s issued share capital.

    The Act and its related rules and regulations provide the Government and the RBI with certain additional rights
    which may be used to influence the affairs of the Bank. The Act expressly provides that the Bank shall be guided in
    matters of policy involving public interest by such direction as the Government may, in consultation with the RBI
    and the Chairman of the Bank, provide. In addition, although the Bank‘s affairs are managed by the Central Board,
    the Central Board consists of members directly appointed by the Government in consultation with the RBI as well
    as nominees from the Government and the RBI. The Government also nominates a director, on the recommendation
    of RBI, to the Central Board, under section 19(f) of the Act; the Chairman and a maximum of four Managing
    Directors are directly appointed by the Government in consultation with the RBI. The Government has the power to
    remove any director from the Central Board.

    The Government and the RBI as Regulator

    The Government and the RBI regulate the banking sector. In particular, the RBI has authority to issue instructions

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    and notifications, which are typically broad in scope, thereby giving the RBI considerable latitude over
    banks in general, including the Bank. Pursuant to such instructions and notifications, the RBI defines the scope of
    the Bank‘s activities and otherwise controls many factors affecting the Bank‘s competitive position, operations and
    financial condition. It also has the power to license new banks which may compete with the Bank.

    Government as Customer

    The Act specifically provides that the Bank shall act as the agent of the RBI for certain banking businesses of the
    Government and state governments. The Bank also transacts a significant portion of the banking needs of public
    sector enterprises (―PSEs‖). The Government, PSEs and the various state governments transact business with the
    Bank on a regular basis. As of March 31, 2010, approximately 0.73% of the Bank‘s loan portfolio consisted of food
    credit (in the form of loans to agencies of the Government and state governments for procurement and sale of food
    grains), and approximately 7.7% of the Bank‘s loan portfolio was to PSEs. It is the policy of the Bank not to enter
    into any transaction with PSEs unless the terms are no less favorable than those which would have been obtained by
    the Bank in the normal course of business.

    Brief Summary of the Regulations and Policies

    The main legislation governing commercial banks in India is the Banking Regulation Act, 1949. The provisions of
    the Banking Regulation Act are in addition to and not, except as expressly provided in the Banking Regulation Act,
    in derogation of the Companies Act, 1956 and any other law currently in force. Other important laws include the
    Reserve Bank of India Act, the Negotiable Instruments Act and the Banker‘s Books Evidence Act. Additionally, the
    RBI periodically issues guidelines to be followed by the Bank. Compliance with all regulatory requirements is
    evaluated with respect to financial statements under Indian GAAP. The Bank is also governed by the provisions of
    the State Bank of India Act, 1955. Certain provisions of the Banking Regulation Act apply in addition to the Act.
    Since the Bank is a statutory corporation, the provisions of the Companies Act, 1956 are inapplicable.

    Pursuant to guidelines issued by the RBI in April 2007, the Bank is subject to capital adequacy requirements in line
    with the Capital Adequacy Norms prescribed by Basel Committee on Banking Regulations and Supervisory
    Practices, 1998. Accordingly the RBI prescribes certain risk weights for the balance sheet assets, non-funded items
    and other off balance sheet exposures and the minimum capital funds to be maintained as ratio to the aggregate of
    the risk weighted assets and other exposures, as well as capital requirements in the trading book, on an ongoing
    basis. Further, the Bank is required to maintain a minimum capital to risk-weighted assets ratio (―CRAR‖) of 9% on
    an ongoing basis. The Bank is required to maintain capital adequacy based on the higher of minimum capital
    required under Basel II or the prudential floor specified for minimum capital required under Basel I. The prudential
    floor for Basel I for the years ending March 31, 2008, 2009 and 2010 are 100.0%, 90.0% and 80.0%, respectively.

    The object of such capital adequacy framework is that a bank should have sufficient capital to provide a stable
    resource to absorb any losses arising from the risks in its business. Capital is divided into tiers according to the
    characteristics/qualities of each qualifying instrument. For supervisory purposes capital is split into two categories:
    Tier I and Tier II. These categories represent different instruments‘ quality as capital. The loss absorption capacity
    of Tier II capital is lower than that of Tier I capital. The Bank is required to maintain, at both solo and consolidated
    level, a minimum Tier I ratio of at least 6%.

    The total capital of a bank is classified into Tier I and Tier II capital. Tier I capital, the core capital, provides the
    most permanent and readily available support against unexpected losses. It comprises paid-up equity capital,
    perpetual non-cumulative preference shares and innovative perpetual debt instruments eligible for inclusion as Tier
    I capital — subject to laws in force from time to time, reserves consisting of any statutory reserves, free reserves
    and capital reserves, any other type of instrument generally notified by the RBI or inclusion in Tier I capital, as
    reduced by intangible assets, and losses in the current period and brought forward from the previous period.

    Bank‘s deferred tax asset is to be treated as an intangible asset and accordingly eligible for deduction from its Tier I
    capital. Any gain on sale arising at the time of securitization of standard assets, if recognized should be deducted
    entirely from Tier I capital. Tier II capital consists of revaluation reserves (at a discount of 55.0% while determining
    their value), general provisions and loss reserves (allowed up to a maximum of 1.25% of the total risk-weighted
    assets), hybrid debt capital instruments (which combine certain features of both equity and debt securities and

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    include perpetual cumulative preference shares, redeemable non-cumulative preference shares and redeemable
    cumulative preference shares) subordinated debt, innovative perpetual debt instruments in excess of 15.0% of the
    Tier I capital and perpetual non cumulative preference shares in excess of the overall ceiling of 40.0% may be
    included in Tier II capital, subject to laws in force from time to time and any other instrument generally notified by
    the RBI for inclusion in Tier II capital. Any subordinated debt is subject to progressive discounts as they approach
    maturity for inclusion in Tier II capital and total subordinated debt considered as Tier II capital cannot exceed
    50.0% of Tier I capital. The guidelines also stipulate that investments above 30.0% in the paid up equity of
    subsidiaries and associates which are not consolidated for capital purposes and investments in other instruments
    eligible for regulatory capital status in those entities must be deducted to the extent of 50.0% from Tier I capital and
    50.0% from Tier II capital. Total Tier II capital cannot exceed Tier I capital.

    In accordance with the Master Circular on Capital Adequacy and Market Discipline dated July 1, 2010, banks are
    required to maintain capital charge for market risk on securities included in the ‗held for trading‘ and ‗available for
    sale‘ categories, open gold positions, open foreign exchange positions, trading positions in derivatives and
    derivatives entered into for hedging trading book exposures.

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    DESCRIPTION OF ASSETS AND LIABILITY MANAGEMENT AND RISK MANAGEMENT OF THE
    BANK

    The Bank is exposed to various risks that are an inherent part of any banking business, with the major risks being
    credit risk, market risk, liquidity risk and operational risk. The Bank has various policies and procedures in place to
    measure, manage and monitor these risks systematically across all its portfolios.

    These policies are reviewed by the Central Board (the ―Board‖) from time to time. The Board also reviews the
    progress in the implementation of risk management systems, asset liability management, risk based supervision and
    a risk based internal audit at quarterly intervals.

    The Risk Management Committee of the Board (―RMCB‖) oversees the policy and strategy for Group-wide risk
    management relating to various risk exposures of the Bank including credit, market liquidity and operational risks.

    The RMCB is supported by various Risk Committees, namely the Credit Risk Management Committee (the
    ―CRMC‖), Asset Liability Management Committee (―ALCO‖), Market Risk Management Committee
    (―MRMC‖), Operational Risk Management Committee (―ORMC‖) and Group Risk Management Committee
    (―GRMC‖). These committees are in place to address credit, liquidity, interest rate and operational risk matters.
    Critical issues and developments in their respective areas are referred to these committees.

    The Bank has a Managing Director & Chief Credit and Risk Officer (―CCRO‖) who is also the Chairman of the
    RMCB. The Credit Risk Management Department, the Market Risk Management Department, the Operational
    Risk Management Department and the Group Risk Management Department all report directly to the CCRO
    through the Chief General Manager (Risk Management). These four departments act independently but coordinate
    with the business units to implement risk management policies. ALCO is headed by the Deputy Managing Director
    and Chief Financial Officer.

    Risk Management Structure

    The Bank operates an integrated, independent risk management system, which the management believes is in line
    with international best practices, to address the risks faced in its banking activities including liquidity, interest rate,
    market, credit and operational risks. As a financial institution, the Bank is exposed to various kinds of risk, in
    particular, liquidity risk (the possibility of not having the necessary funds to meet operational and debt servicing
    requirements), interest rate risk (the risk associated with movements in interest rates), credit risk (the potential for
    loss due to the failure of a counterparty or borrower to meet its financial obligations), market risk (the possibility

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    that changes in interest rates, foreign exchange rates, prices of debt securities and other financial contracts may have
    an adverse effect on the Bank‘s financial condition) and operational risk (including risk arising from inadequate or
    failed operational processes, people and systems).

    The risk philosophy of the Bank is guided by the twin objectives of enhancement of shareholder value and optimum
    allocation of capital. Risk management is perceived as essential to business growth and strategic business
    planning, achieved by constant monitoring of the interdependencies and interfaces across business functions.

    The Bank‘s exposure norms are in line with the norms prescribed by the RBI for commercial banks and financial
    institutions. As per these norms, exposure by way of direct assistance to any single borrower may not exceed 15.0%
    (extendable to 20.0% in case of infrastructure projects) of the Bank‘s capital funds (Tier I and Tier II capital)
    although in exceptional circumstances and with the consent of the Board, the Bank could consider increasing
    exposure to a borrower up to a maximum of a further 5.0% of the Bank‘s capital funds, subject to such borrower ‘s
    consent to appropriate disclosure in the Bank‘s annual report. Exposure to any single business group may not exceed
    40.0% (extendable to 50.0% in case of infrastructure projects) of the Bank‘s capital funds.

    The Bank believes it has the policies and procedures in place to manage its risks and anticipate future risk based on
    RBI guidelines and what management believes are international best practices. The primary responsibility for the
    management of risk rests with the Board which has approved the policies and organizational structure for various
    risk management measures.

    Credit Risk Management

    The Bank is exposed to credit risk due to the possibility that a borrower or counterparty may fail to meet its
    obligations in accordance with agreed terms, principally the failure to make required payments on loans or
    other obligations due to the Bank. Credit risk management aims at building up sound asset quality and the long-term
    profitability of the institution. It involves activities such as risk identification, risk measurement, risk mitigation
    and risk-based pricing. The Bank manages its portfolio of loan assets with a view to limiting concentrations in
    terms of risk quality, geography, industry, maturity and large exposure aggregates by providing a centralized focus
    to its credit portfolio and instituting a suitable mechanism for its management.

    Credit risk management uses credit audit and inspection systems to determine and manage risk exposure levels
    across the Bank. This is an integral part of the Bank‘s risk management system and helps identify early warning
    signals of potential problems. The following exposure levels are currently prescribed by the Bank:

    Individuals as borrowers Maximum aggregate credit facilities (fund-based


    and non-fund-based) of Rs. 250 million (other
    than against specified securities for which there is no
    restriction)

    Non-corporates (Partnerships, Associations, etc.) Maximum aggregate credit facilities (fund-based and
    non-fund-based) of Rs. 1 billion (other than against
    specified securities for which there is no restriction). The
    above ceiling will also be applicable to the aggregate
    of all facilities sanctioned to partnership firms which
    have identical partners

    Corporates Maximum aggregate credit facilities in accordance


    with prudential norms of the RBI on exposures

    The Bank‘s current credit policy prescribes that the Bank‘s aggregate term loans with residual maturity of over
    three years should not in the aggregate exceed 35.0% of the total domestic advances of the Bank. The Bank‘s
    policy is to restrict fund-based exposure to a particular industry to a maximum of 15.0% of the Bank‘s total
    fund-based exposure. In addition, the Bank restricts term loan exposure to infrastructure projects to 15.0% of the
    Bank‘s total domestic advances.

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    The Bank‘s exposure to certain ―sensitive sectors,‖ including capital markets, real estate, and sensitive commodities
    (as prescribed by the RBI) are subject to the following limitations:

    • Real estate: the Bank‘s exposure shall not exceed 20.0% of the Bank‘s total domestic advances.

    • Sensitive commodities: the Bank‘s exposure shall not exceed 5.0% of the Bank‘s net worth as of the end of
    the Bank‘s previous Fiscal Year.

    • Capital markets: the Bank‘s exposure shall not exceed 40.0% of its net worth (as specified and defined by
    the RBI) as of the end of its previous fiscal year, as applied to both fund-based and non-fund-based
    exposure to all forms of capital market products.

    The Bank‘s major exposures to individual borrowers and borrower groups are consolidated and disclosed to the
    Board at their regular meetings. The Credit Risk Management Department conducts studies on various industries
    to examine the quantitative and qualitative measures that should be considered in regard to the handling of
    the Bank‘s current exposure to various industries. These studies are also meant to provide information to help
    the Bank determine the merits in taking on additional exposure to various industries.

    The Bank has credit risk assessment models in place based on the activity of the borrower including
    manufacturing, trade, non-banking financial corporations, banks and primary dealers. Although not currently
    required by the RBI, the Bank‘s risk assessment model for manufacturing entities complies with the Advanced
    Internal Ratings Based (―AIRB‖) approach.

    The Asset Liability Management Committee

    The Bank has an asset liability management policy which prescribes various prudential limits for liquidity risk and
    interest rate risk management. ALCO has the job of managing liquidity and interest rate risk. To this end, ALCO
    manages and controls the structure of assets, liabilities and interest rate sensitivity with a view to maximizing profits.
    It also ensures capital adequacy and sufficient liquidity. The Bank has made significant efforts to improve its market
    risk management capabilities and fine-tune its management information systems. These efforts have included the
    implementation of the risk management module of the Oracle financial services application, an asset liability
    management software solution for strengthening the risk management process.
    Liquidity Risk Management

    Liquidity risk comprises the risk of not being able to raise necessary funds from the market to meet operational and
    debt servicing requirements. An important objective of the Bank‘s liquidity management is to maintain an
    optimal asset to liability maturity portfolio that minimizes liquidity risk while maximizing profit. The Bank
    ensures that proactive steps are taken to meet all impending liquidity requirements. Borrowing is also timed in
    consideration of overall market liquidity and not just requirements of funds. The Bank also maintains a
    reasonable level of investment in liquid securities which can be liquidated at short notice.

    The Bank monitors its liquidity position through a structural liquidity gap analysis carried out daily in accordance
    with RBI guidelines on asset liability management. The liquidity position is also monitored every two weeks
    through a short-term dynamic liquidity analysis for the following three months based on business projections and a
    review of the contingency funding plan at the end of each quarter. Finally, certain liquidity ratios are examined as
    prescribed by the asset liability management policy to track the Bank‘s liquidity position as of a particular date.

    The Bank has an extensive branch network and therefore holds deposits from a large number of retail customers.
    These deposits provide a stable resource base. In addition, liquid assets in the form of cash, balances with other
    banks and short-term securities help to meet the liquidity requirements of the Bank.

    Interest Rate Risk Management

    Since the Bank‘s balance sheet consists predominantly of assets and liabilities denominated in Rupees, movements
    in domestic interest rates constitute the main source of interest rate risk. The Bank‘s portfolio of traded and other
    debt securities and its loan portfolio are impacted by movements in interest rates. Exposure to fluctuations in

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    interest rates is measured primarily by way of a gap analysis, providing a static view of the maturity and repricing
    characteristics of the Bank‘s balance sheet positions. An interest rate gap report is prepared by classifying all assets
    and liabilities into various time period categories according to contracted maturities or anticipated repricing dates.
    The difference in the amount of assets and liabilities maturing or being repriced in any given time period gives the
    Bank an indication of the extent of exposure to potential impact on repriced assets and liabilities. The interest rate
    gap report is prepared monthly as of the last reporting Friday of each month, in accordance with RBI
    requirements. In addition, exposure to interest rates is measured through a sensitivity analysis which examines
    the impact of interest rate movements on the Bank‘s financial condition. Further, a duration gap analysis is also
    prepared to measure the impact of interest rates on the market value of both the equity and debt portfolios.

    Market Risk Management

    Market risk refers to potential losses arising from volatility in interest rates, foreign exchange rates, equity prices
    and commodity prices. Market risk arises with respect to many types of financial instruments, including securities,
    foreign exchange contracts, equity instruments and derivative instruments, as well as balance sheet gaps. The
    objective of market risk management is to avoid excessive exposure of the Bank‘s earnings and equity to loss and
    to reduce the Bank‘s exposure to the volatility inherent in financial instruments.

    Risk measurement and monitoring entails the valuation and marking-to-market of market risk exposures, updating
    rates and models used for valuations and preparing simulations showing effects of possible changes in market
    conditions. Finally, the monitoring function extends to the examination and approval of the Bank‘s treasury group‘s
    new products. Market risks related to treasury operations are regularly and independently identified, measured, and
    monitored by the Market Risk Management Department.

    The Bank deals in over-the-counter (―OTC‖) interest rate and currency derivatives as well as exchange-traded
    interest rate futures and currency futures. Interest rate derivatives offered by the Bank are Rupee interest rate swaps,
    foreign currency interest rate swaps and forward rate agreements. Currency derivatives offered by the Bank
    include currency swaps, Rupee dollar options and cross-currency options. Derivatives are also used by the Bank
    both for trading as well as for hedging balance sheet items.

    Derivative transactions carry market risk, such as the probable loss the Bank may incur as a result of adverse
    movements in interest rates/exchange rates and credit risk or the probable loss the Bank may incur if the
    counterparties fail to meet their obligations. The Bank‘s policy for derivatives is approved by the Board and
    prescribes market risk parameters such as cut-loss triggers and open position limits as well as customer eligibility
    criteria including credit rating and length of relationship, among others, for entering into derivative transactions.
    Credit risk is controlled by entering into derivative transactions only with counterparties satisfying the criteria
    prescribed in the policy.

    The Value at Risk (―VAR‖) framework is applied on an asset class basis as well as on a diversified
    portfolio level. VAR is monitored daily and limits are revised quarterly. The model is validated monthly by back
    testing. The VAR is defined as the predicted worst-case loss at a specified confidence level over a certain period of
    time. Stress testing is conducted at regular intervals to evaluate the potential vulnerability of its portfolios to some
    unlikely but possible events or movements in financial variables such as interest rates, share prices, foreign
    exchange rates and equity prices.

    Operational Risk Management

    Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or
    from external events. Operational risk includes legal risk but excludes strategic and reputational risk and it seeks to
    identify the cause of a loss. Operational risk has four principal causes: People, Process, Systems and External
    factors. For a discussion on the Bank‘s vulnerability to operational risk, see ―Risk Factors — Risks Relating to the
    Bank‘s Business — There is operational risk associated with the banking industry which, if and when realized, may
    have an adverse impact on its business.‖

    The operational risk management policy of the Bank establishes a risk framework that guides the Bank in the
    management of operational risk and allocation of capital for potential losses. This policy requires that all functional

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    areas, departments and business units of the Bank identify, assess, measure, mitigate, monitor, control and report
    on their significant operational risks in a manner that is consistent across the Bank. This policy applies to all
    business and functional areas within the Bank. The Bank‘s operational risk management policy is supplemented by
    operational systems, procedures and guidelines, which are periodically updated by the Bank.

    The objective of the Bank‘s operational risk management policy is to improve controls and mitigate risks,
    improve capital management, create awareness of operational risk throughout the Bank, assign risk ownership,
    comply with regulations, improve the quality of products and services as well as mitigate the impact and probability
    of loss.

    The following measures are being used by the Bank to control and mitigate operational risks:

    • Internal controls and systems;

    • Training;

    • Reward systems;

    • Placement and rotation of staff;

    • Monitoring of frauds;

    • Disciplinary proceedings systems; and

    • Insurance.

    Operational Controls and Procedures in the Bank

    The Bank has issued detailed procedural guidelines for processing various banking transactions. Amendments and
    modifications to these guidelines are implemented through circulars sent to all offices. Guidelines and instructions
    are also disseminated through job cards, e-circulars, and training programs.

    The Bank has also issued necessary instructions throughout the Bank regarding the delegation of financial powers,
    which detail sanctioning powers of various levels of officials for different types of financial transactions.

    The Bank‘s inspection and management audit (―I&MA‖) department has zonal inspection offices located
    throughout the country. Inspection officials periodically monitor adherence to controls and procedures and report
    deviations to facilitate corrective action. Besides I&MA officials, each Circle is assigned an internal audit team
    and concurrent auditors are assigned to all large branches. A statutory audit is conducted by external auditors
    after the annual closing.

    Operational Controls and Procedures in Centralized Processing Cells

    In an effort to improve customer service at all centers, the Bank conducts central transaction processing. The
    centralized processing cells process clearing checks, make inter-city check collections and engage in back-office
    support for account opening, standing instructions, non-resident Indian services and automatic renewal of deposits.

    Operational Systems and Controls in Treasury

    Treasury‘s front office, back office and mid-office (market risk management department) are fully segregated.
    While the front office and the independent back offices report to the Head of Treasury, the Market Risk
    Management Department functions independently from Treasury and is under the control of the chief risk officer.

    The Bank‘s front office Treasury operations are integrated and comprise the Rupee desk, foreign exchange desk and
    the derivatives desk. The front office is supported by treasury marketing units located in seven centers across the
    country. While the Rupee desk operations consist of fixed income securities, equities and inter-bank money

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    markets, the foreign exchange desk operations consist of inter-bank, merchant and proprietary transactions. The
    derivatives operations include swaps, options and structured products. Dealers enter into trades with counterparties
    after analyzing market conditions and taking views on price movements. After completion of a deal, the deal then
    flows to the back office for validation, settlement and accounting.

    The front office regularly discusses strategies on the basis of market forecasts, liquidity conditions and publicly
    available information. Trading is conducted in strict accordance with trading policies, a dealing manual and
    regulatory guidelines.

    The Treasury back office undertakes settlement of securities and funds based on guidelines stipulated by the manual
    of operations. Procedures followed by the back office to minimize operational risks in Treasury include: validation
    of deals entered into by the front office, deal confirmations with counterparties, receipt and checking of broker
    contract notes, monitoring of receipt and payments on due dates, monitoring of transfer and receipt of securities into
    accounts where dematerialized securities are held (―demat accounts‖) and reconciliation of accounts.

    The Market Risk Management Department uses various tools for monitoring market risk. These tools include:
    exposure limits, counterparty limits, position limits, gap limits, broker transaction limits, duration and VAR limits.
    The Market Risk Management Department marks to market various positions and breaches, if any, are promptly
    reported.

    Operational Systems and Controls in Global Markets

    Global Market‘s front office, back office and mid-office and Market Risk Management Department (―MRMD‖) are
    fully segregated. While the front office, the independent back office and mid office report to the Head of
    Global Markets, the MRMD functions independently from Global Markets and is under the control of the chief risk
    officer.

    The Bank‘s front office Global Markets operations are integrated and comprise the Rupee desk, foreign exchange
    desk and the derivatives desk. The front office is supported by treasury marketing units located in seven centres
    across the country. While the Rupee desk operations consist of fixed income securities, equities and inter-bank
    money markets, the foreign exchange desk operations consist of inter-bank, merchant and proprietary transactions.
    The derivatives operations include swaps, options and structured products. Dealers enter into trades with
    counterparties after analyzing market conditions and taking views on price movements. After completion of a deal,
    the deal then flows to the back office for validation, settlement and accounting.

    The front office regularly discusses strategies on the basis of market forecasts, liquidity conditions and
    publicly available information. Trading is conducted in strict accordance with trading policies, a dealing manual
    and regulatory guidelines.

    The Global Markets back office undertakes settlement of securities and funds based on guidelines stipulated
    by the manual of operations. Procedures followed by the back office to minimize operational risks in
    Global Markets include: validation of deals entered into by the front office, deal confirmations with
    counterparties, receipt and checking of broker contract notes, monitoring of receipt and payments on due dates,
    monitoring of transfer and receipt of securities into accounts where dematerialized securities are held (―demat
    accounts‖) and reconciliation of accounts.

    The MRMD uses various tools for monitoring market risk. These tools include: exposure limits, counterparty
    limits, position limits, gap limits, broker transaction limits, modified duration and VAR limits. The MRMD
    marks to market various positions and breaches, if any, are promptly reported.

    Further, an independent mid office has been set up reporting to Head of Global Markets which supports the Risk
    Management function.

    Operational Controls and Procedures in Retail Asset Operations

    The Bank‘s retail asset operations are spread out geographically across India and the Bank has centralized

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    processing cells for retail assets in most cities across India. These centers carry out disbursement of
    approved credit facilities, accounting, reconciliation and repayment management activities of retail assets.
    All operational and other risks are identified, mitigants designed and measures of performance specified to
    ensure adherence. Internal auditors monitor adherence to controls and procedures and report deviations to facilitate
    corrective action.

    Operational Controls and Procedures for Corporate Banking

    The Bank‘s corporate accounts group operates a central functioning office at Mumbai as well as branches at
    Chennai, Mumbai, Kolkata and New Delhi. These offices are jointly responsible for operations relating to
    trade finance, cash management and other general banking operations.

    Operational Controls and Procedures for Rural Banking

    All rural branches are fully computerized. Operational risks pertaining to rural and agricultural branches are
    identified, assessed, monitored, controlled and mitigated by the respective controlling offices. Risk and control self
    assessment exercises are conducted at branch level for the purpose of identifying and assessing operational risks.
    The Bank‘s rural asset operations are spread across India. Besides the respective controllers, officials from the
    Bank‘s Inspection and Audit and circle audit departments also visit all rural branches periodically to conduct a
    detailed audit for monitoring the adherence to controls and procedures as well as report irregularities within the
    branches. A statutory audit is also conducted at branch level after the annual closing.

    Anti-Money Laundering Measures adopted by the Bank

    The Bank has established a policy implementing know your customer (―KYC‖) standards and anti-money
    laundering (―AML‖) measures. Detailed procedural guidelines on KYC and AML measures have been issued
    to all branches and offices of the Bank, incorporating the following four key elements of the policy:

    • Customer acceptance policy

    • Customer identification procedures

    • Monitoring of transactions

    • Risk management

    The Bank has acquired and implemented an AML software solution, which is being used for transaction monitoring
    purposes. Cash transaction reports are generated through the software and suspicious transactions alerts are
    generated based on parameters and thresholds fixed by the Bank. Suspicious transactions alerts are then analysed at
    KYC/AML cell for finalization and submission of suspicious transactions reports by the Principal Officer in
    appropriate cases. This solution enables automatic generation of various reports, assist branch officers with the
    identification of customers and classification of customers by risk profile as well as monitoring and reporting
    of suspicious transactions. KYC guidelines are covered as part of regular training programs for various
    staff categories by the Bank training institutes. A list of terrorist organizations, periodically updated by the United
    Nations, is circulated to all branches of the Bank. The Bank is closely monitoring the implementation of
    the KYC guidelines and AML procedures through a system of education and monitoring by utilizing various
    training forums as well as an inspection and audit process.

    Country Risk and Bank Exposure

    The Bank has a country risk management policy in accordance with RBI guidelines as well as a Board approved
    bank exposure model for foreign banks and non-banking financial intermediaries. These policies outline robust risk
    management models with prescriptions for country, bank, product and counterparty exposure limits. Considering
    the global economic turmoil, both country and bank exposure limits are monitored and reviewed on a
    regular basis. The exposure ceilings and classifications are moderated in line with the dynamics of their risk
    profiles. Corrective steps are periodically initiated to safeguard the Bank‘s interests.

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    Group Risk Management

    The Group is recognized as a major financial conglomerate and as a systemically important financial intermediary
    with significant presence in various financial markets. Accordingly, it is imperative, both from a regulatory
    perspective as well as from the Group‘s own internal control and risk management perspective, to oversee the
    functioning of individual entities within the Group and periodically assess the Group‘s overall risk level. This
    oversight allows for optimal utilization of capital resources and the adoption of a uniform set of risk practices across
    the Group.

    The Group risk management policy evolved with a view to effectively monitoring risk management practices
    amongst all Group members where the Bank holds an equity share of 30% or more and exercises control over
    management. It aims to put in place standardised risk management processes across the Group, so as to provide an
    integrated view of the range of risks the Group faces and to use risk-taking as a strategic means to strengthen
    competitive position and create value.

    The Group risk management policy applies to all Associate Banks, banking and non-banking subsidiaries and joint
    ventures of the Group under the jurisdiction of specified regulators. These entities must also comply with relevant
    accounting standards. Currently, the Group includes the Bank, six domestic banking entities, six overseas banking
    entities and nine domestic non-banking entities engaged in merchant banking, asset management, life insurance,
    general insurance, factoring, credit cards, pension funds, share brokerage and custodial services.

    The Group risk management policy focuses on (a) understanding the material risks faced by each Group member
    and the potential impact thereof and (b) devising methods of mitigating those risks effectively. The policy
    recommends formulating a risk governance structure, fixing the risk appetite of the Group, employing international
    best practices and fixing internal exposure limits.

    In order to allow entities within the Group to assess their material risks and adequacy of their risk management
    processes and capital, all Group members, including non-banking subsidiaries, are encouraged to align their policies
    and operations with the Group and in accordance with Basel prescriptions and international best practices. Further, a
    Group Risk Management Committee has also been constituted to oversee matters relating to Group risk ensuring
    periodic review of risk policy and compliance.

    A Group Risk Management Department supports the Group Risk Management Committee by periodically assessing
    and reporting the overall level of risk in the Group. The department also conducts workshops on specific risk related
    issues for risk managers across the Group and provides a forum for the sharing of risk-related practices information
    among Group members.

    The internal capital adequacy assessment process (―ICAAP‖) is carried out at the Group level annually, in
    accordance with the Basel II framework and Reserve Bank of India guidelines, and entails identification, assessment,
    measurement and control of all material risks facing the Group, of the quantum of capital allocated for each risk, and
    of the capital adequacy of the Group.

    Credit Management Policies and Procedures

    Credit Policy and Procedures Committee

    The CPPC is headed by the Chairman of the Bank and tasked with handling issues relating to credit policy and
    procedures and to analyze, manage and control credit risk on a Bank-wide basis. The CPPC formulates clear
    policies on standards for presentation of credit proposals, financial covenants, rating standards and benchmarks,
    delegations of credit approving powers, prudential limits on large credit exposures, asset concentrations,
    standards for loan collateral, portfolio management, loan review mechanisms, risk concentrations, risk
    monitoring and evaluation, pricing of loans, provisioning and regulatory and legal compliance.

    The Bank‘s credit risk management process is articulated in its credit policy, which is approved by the Board. The

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    credit policy recognizes the need for measures aimed at better risk management and avoidance of concentration of
    credit risks. With this objective, limits have been prescribed for the Bank‘s exposure to any single borrower, group
    of borrowers or specific industries or sectors.

    The credit policy embodies the Bank‘s approach to sanctioning, managing and monitoring credit risk and aims at
    making the systems and controls effective. It is guided by the best practices of commercial prudence, high
    standards of ethical norms and the requirement of national priorities. It also aims at striking a measured balance
    between underwriting assets of high quality and customer oriented selling.

    Accordingly, the credit policy sets out guidelines on the following aspects, in accordance with RBI and Government
    directives:

    • Exposure levels for industries, sectors and credit facilities

    • Credit appraisal standards

    • Documentation standards

    • Pricing policy

    • Review, renewal and takeover of advances

    • Credit monitoring and supervision

    • Credit risk assessment

    • NPA management

    • Export credit

    • Approach to lending to priority sectors and the services sector.

    All revisions in policies and procedures are carried out with the approval of the CPPC and the Board.

    Credit Approval and Monitoring

    The Bank‘s credit approval process involves multiple levels of loan approval authority, depending on the
    loan amount and other factors such as the nature of the credit, the conditions of the transaction and whether or not
    the loan is secured.

    At each level of authority, loan applications are reviewed on the basis of the feasibility of the project from a
    technical, financial and economic point of view, and to ensure that the loan application falls within the realm of fair
    banking risk according to the probability of recovery. In conducting such a review the following factors are
    considered: the borrower ‘s profile, management structure, past financial performance and credit ratings, the
    Bank‘s exposure to the company, industrial group and/or industry in light of prudential exposure norms, industry
    outlook and financial projections for the borrower company and/or project. In the case of overseas financing,
    appraisals also include an assessment of the overseas venture in terms of commercial risk, political risk,
    country risk, and currency risk, an assessment of the relevant international market, an analysis of the benefits from
    the overseas venture likely to accrue to the Indian promoter, and compliance with regulatory guidelines. The Bank
    may also conduct a sensitivity analysis which includes variables such as debt servicing ratios and internal rates of
    return, and study the likely impact of changes in, among other things, price/unit cost.

    The Bank has internal guidelines that limit the amounts of loans that can be authorized by various functionaries or
    credit committees. Loan amounts differ depending on certain factors, such as the type of borrower, rating of
    borrower or type of facilities.

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    The Bank disburses funds to a borrower in strict compliance with the terms of the sanction, after all necessary
    documentation has been executed. Specific approval is sought from the original sanctioning authority, or as
    delegated in accordance with the policy approved by the ECCB or the CPPC before deviating from the
    terms of the sanction, if any.

    Examples of the types of procedures in place for various finance divisions include:

    Corporate Finance Procedures

    As part of its corporate loan approval procedures, the Bank carries out a detailed analysis of an applicant‘s funding
    requirements including normal capital expenditure, working capital requirements and liquidity. The Bank‘s
    corporate term loans are generally available for periods of three to eight years. The Bank‘s corporate term loans
    may carry fixed or floating rates, befitting the requirements of the client and the risk profile. The repayment plan is
    generally linked to the cash flow of the company. The Bank‘s credit analysts gauge the applicant‘s particular
    funding requirements and evaluate the company‘s creditworthiness, factoring in the cash flows generated by
    it. Approved facilities will lapse within six months of the date of approval, unless they are used within that time.

    Retail Loan Procedures

    The Bank‘s retail loan customers are typically middle- or high-income, salaried or self- employed
    individuals. The Bank‘s retail credit product operations are sub-divided into various product lines. Each product
    line is further sub-divided into separate sales, marketing and credit groups. The Bank has an established process for
    giving and collecting retail credits. In most cases, the Bank requires a contribution from the borrower and the loans
    are secured by the asset financed.

    Working Capital Finance Procedures

    The Bank carries out a detailed analysis of its borrowers‘ working capital requirements. The Bank‘s dedicated
    credit team has a deep understanding of the intricacies of various industries and is experienced in evaluating the
    business potential of companies. The credit team assesses the customer ‘s specific credit requirements and
    customizes financial solutions to suit the business requirements of the customer and its risk profile. Working
    capital finance limits are normally valid for one year and repayable on demand. Approved facilities will lapse
    within three months of the date of approval unless they are used within that time.

    Project Finance and Leasing Procedures

    The Bank believes it has a strong framework for the appraisal and execution of project finance and leasing
    proposals and that this framework allows for risk identification, allocation and mitigation, and helps minimize
    residual risk. The Bank has formed a dedicated Project Finance unit to assess credit proposals and extend term loans
    for large industrial and infrastructure projects. The Project Finance unit has a particular focus on core infrastructure
    sectors of the Indian economy such as power, telecommunications, roads & bridges, ports and urban infrastructure,
    and it has also expanded to other sectors such as steel, Oil & Gases, Non-ferrous metals, Chemicals, Fertilizers, etc.
    The project finance team examines projects whose total cost is at least Rs. 2 billion (Rs. 3 billion in case of road or
    thermal power projects), with debt exposure in excess of Rs. 500 million. Project finance cells have been set up in
    two centres to tap business potential in their area. The thresholds are as under: Road – All road projects with project
    cost of Rs. 500 million to Rs. 5 billion and other infrastructure projects with project cost between Rs. 500 million to
    Rs. 2 billion.

    Apart from this, project term loans for medium sized projects and smaller clients are delivered through the
    Corporate Banking Group, Mid-Corporate Group and the National Banking Group. The loans are approved on the
    basis of in-house appraisal of the cost and viability of the venture as well as the credit standing of promoters.
    Project finance is typically structured as long-term loans. Maturity periods and repayment modes are structured in
    line with the specific aspects of each project and industry, factoring in a timeframe for the venture to generate a
    stable revenue stream.

    The Finance and Leasing unit is dedicated to lease financing for procuring equipment for projects or plants. The

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    Bank enters into lease agreements as stand-alone contracts or as part of a structured package. The Bank typically
    undertakes leasing contracts with a minimum ticket size of Rs. 50 million, generally restricted to 50.0% of
    the total net worth of the lessee. Lease contracts are usually structured for a tenor of five to seven years. The Bank,
    however, has stopped encouraging new leases due to a change in tax law that has resulted in unfavorable tax
    treatment with respect to such lease contracts. Leasing activities are progressively being wound up and the Bank
    does not expect leasing to comprise a significant part of its activities in the future.

    Internal Controls

    The Bank has internal control systems with well-defined responsibilities at each level. The Bank mainly carries out
    two streams of audits — Inspection and Audit and Management Audit, covering different facets of internal audit
    requirements. In addition, Credit Audit is conducted for units with large credit limits and Concurrent Audit is
    carried out at branches with large deposit, advances and other risk exposures and selected business process re-
    engineering (―BPR‖) outfits. The information systems audit of branches is handled by incorporating the necessary
    checklists and value statements in the audit report formats of the branches. Expenditure Audit, involving scrutiny of
    accounts and correctness of expenditure incurred, is conducted at Corporate Centre establishments, local head
    offices, zonal offices, on-locale regional offices, regional business offices and lead bank offices. To verify the
    rectification of irregularities by the Branches, audit of compliance at select branches is also undertaken. The
    Department is headed by the Deputy Managing Director who is functionally independent and reports to the
    Bank‘s Audit Committee of the Board (―ACB‖).

    Risk-Focused Internal Audit

    The inspection system plays an important and critical role in introducing international best practices to the
    internal audit function, which is regarded as a critical component of corporate governance. Inspection and
    Audit undertakes a critical review of the entire operation of audited units. Risk Focused Internal Audit, an adjunct
    to risk-based supervision as per RBI directives, has been introduced in the Bank‘s audit system.

    Inspection and Audit of Branches

    All domestic branches have been segregated into three groups on the basis of business profile and risk exposures.
    Audit of Group I branches and credit oriented BPR entities (excepting SARC) is administered by the Central
    Audit Unit (―CAU‖) at the Inspection Audit Department and headed by a General Manager (CAU). Audit of
    branches in Group II, Group III and other BPR entities are conducted by ten Zonal Inspection Offices located
    at various centers, each of which is headed by a General Manager (I&A). The audit of branches and BPR entities is
    conducted as per the periodicity approved by the ACB which is well within RBI norms. During the period from
    April 1, 2009 to March 31, 2010, 7,217 domestic branches (138 from Group I, 1,577 from Group II and 5,502 from
    Group III) were audited. During the quarter ended June 30, 2010, 1,972 domestic branches (Group I: 23, Group II:
    314 & Group III: 1,635) were audited.

    Audit of BPR Entities

    Following the implementation of various BPR initiatives, the audit process for ten BPR entities has been developed
    and introduced. Taking into account the process involved in each of the entities, exclusive Audit Report Formats,
    including appropriate audit queries, have been introduced. Entities are evaluated on a range of risk parameters.
    During the year ended March 31, 2010, 311 BPR entities (29 from Group I and 282 from Group II) were audited.
    During the quarter ended June 30, 2010, 122 BPR entities (36 from Group I and 86 from Group II) were audited.

    Management Audit

    The Bank‘s management audit focuses on the effectiveness of risk management in the Bank‘s processes and
    procedures. Management audit is comprised of Corporate Center establishments, circles, zonal offices, on-
    locale regional offices, regional branch offices, associate banks, subsidiaries (both domestic and foreign), joint
    ventures (both domestic and foreign), regional rural banks sponsored by the Bank, representative offices abroad
    and exchange companies managed by the Bank. During the year ended March 31, 2010, management audits were
    carried out at 19 domestic offices or establishments. During the quarter ended June 30, 2010, management audit of 4

    122
    domestic offices/establishments was carried out.

    Credit Audit

    The credit audit aims to achieve continuous improvement in the quality of the commercial credit portfolio of the
    Bank by critically examining individual commercial loans with exposures of Rs. 50 million and above. The audit,
    which has been aligned with the risk-focused internal audit, examines the probability of default, identifies risks and
    suggests risk mitigation measures. The Bank uses the credit audit to analyze risk and to initiate early remedial
    actions to improve the quality of the credit portfolio. During the year ended March 31, 2010, on-site credit
    audits were conducted in 426 branches, covering 4,727 accounts with aggregate exposure of Rs. 4,172.9 billion,
    and off-site credit audits were conducted in all 14 circles, (including MCROs/CAG functioning in the geographical
    area of the respective circles) covering 3,533 domestic accounts with aggregate exposure of Rs. 1,940.0 billion and
    161 foreign accounts with aggregate exposure of USD 4,363 million at the Bank‘s foreign offices. During the
    quarter ended June 30, 2010, on-site credit audit was conducted in 105 branches (1,533 accounts with aggregate
    exposures of Rs. 1,571.4 billion). Off-site credit audit was conducted in 9 circles, covering 965 domestic accounts
    with aggregate exposure of Rs. 467.5 billion.

    Information System Audit

    Since April 2006, all branches of the Bank have been subjected to an information system audit to assess the IT-
    related risks as part of the audit for each branch. A ―Handbook on Self Audit of Information Systems‖ was
    introduced to facilitate branches‘ evaluation of the efficiency level of IT systems. The information system audit of
    centralized IT establishments commenced in January 2007. During the year ended March 31, 2010, information
    system audits of 25 centralized IT establishments were completed. During the quarter ended June 30, 2010 IS audit
    of 6 centralised IT establishments was completed.

    Concurrent Audit System

    The concurrent audit system (―CAS‖) monitors the establishment of sound internal accounting functions, effective
    controls and operational oversights. The Inspection and Audit department prescribes the processes, guidelines
    and formats for the conduct of concurrent audit at branches and BPR entities. Branches covered by the CAS are
    reviewed on an ongoing basis as per RBI directives so as to cover 30-40% of the Bank‘s deposits and 60-70% of the
    Bank‘s advances and other risk exposures. As of June 30, 2010, the system covered 34.6% of deposits and 69.6% of
    advances and other risk exposures of the Bank.

    123
    OUR MANAGEMENT

    The following chart illustrates the management structure of the Bank as of December 31, 2010.

    Central Board of Directors

    The State Bank of India was constituted in 1955 when the Indian Parliament passed the Act. A Central Board was
    constituted pursuant to the Act, and the Central Board complies with the provisions of the Act.

    The Central Board is headed by the Chairman of the Bank. As of September 30, 2010, in addition to the three full-
    time Directors, i.e. the Chairman and two Managing Directors, there were eight other Directors on the Central
    Board, including eminent members of academia and the finance and accounting professions. These included

    124
    representatives of shareholders, nominees of the Government and the RBI, and directors nominated under section
    19(d) of the Act.

    The non-executive Directors who were on the Central Board of the Bank as of March 31, 2010 are:

    (a) four directors appointed under section 19(c) and elected by the shareholders;

    (b) two directors appointed under section 19(d) and nominated by the Government;

    (c) one director appointed under section 19(e) and nominated by the Government; and

    (d) one director appointed under section 19(f) and nominated by the RBI.

    Brief particulars of the Bank‘s Directors are set out below:

    Sr. Name, Designation, Address, Nationality Date of Other Directorships


    No. Occupation and Term Birth
    1. Mr. O.P. Bhatt Indian March 7, Chairman
    Chairman 1951 1. SBI Funds Management
    Appointed under Section 19(a) of the Act (Private) Limited;
    Address: No. 5, Dunedin, J.M. Mehta Road, 2. SBI Factors &
    Mumbai 400 006 Commercial Services
    Occupation: Banking Private Limited;
    Term: July 1, 2006 to March 31, 2011 3. State Bank of Patiala;
    4. State Bank of Bikaner &
    Jaipur;
    5. State Bank of Hyderabad;
    6. State Bank of Mysore;
    7. State Bank of
    Travancore;
    8. SBI (Mauritius) Ltd.;
    9. State Bank of India
    (California);
    10. State Bank of India
    (Canada);
    11. SBI Life Insurance
    Company Limited;
    12. SBI Capital Markets
    Limited;
    13. SBICAPS Ventures
    Limited;
    14. SBI Discount & Finance
    House of India Limited
    (SBIDFHI);
    15. SBI Cards and Payment
    Services Private Limited;
    16. Global Trade Finance
    Limited;
    17. SBI – SG Global
    Securities Services
    Private Limited;
    18. SBI General Insurance
    Company Limited; and
    19. SBI Pension Funds
    Private Limited.
    Director

    125
    Sr. Name, Designation, Address, Nationality Date of Other Directorships
    No. Occupation and Term Birth
    20. General Insurance
    Corporation of India;
    21. Export-Import Bank of
    India; and
    22. GE Capital Business
    Process Management
    Services Private Limited.

    2. Mr. R. Sridharan Indian July 1, 1. SBI Capital Markets


    Managing Director 1951 Limited;
    Appointed under Section 19(b) of the Act 2. SBICAP Securities
    Address: M-2 Kinellan Towers, 100 A, Napean Limited;
    Sea Road, Mumbai 400 006 3. SBICAP Ventures
    Occupation: Banking Limited;
    Term: December 5, 2008 to June 30, 2011 4. SBICAP (UK) Limited;
    5. SBI Global Factors
    Limited;
    6. SBI Life Insurance
    Company Limited;
    7. SBI DFHI Limited;
    8. SBI Pension Funds
    Private Ltd;
    9. SBI – SG Global
    Securities Services
    Private Limited;
    10. SBI General Insurance
    Company Limited;
    11. State Bank of Patiala; and
    12. State Bank of Hyderabad.

    3. Dr. Ashok Jhunjhunwala Indian June 22, 1. Polaris Software Lab


    Non-Executive Director 1953 Limited;
    Elected under Section 19(c) of the Act 2. Tejas Networks Private
    Address: Professor, Telecom & Networks Limited;
    (TeNeT) Group Department of Electrical 3. Sasken Communications
    Engineering, IIT Madras, Technologies Limited;
    Chennai 600 036 4. 3i Infotech Limited;
    Occupation: Academician 5. Tata Teleservices
    Term: June 24, 2008 to June 23, 2011 (Maharashtra) Limited;
    6. Tata Communication
    Limited; and
    7. Exicom Tele Systems
    Limited

    4. Mr. Dileep C. Choksi Indian December 1. ICICI Lombard General


    Non-Executive Director 26, 1949 Insurance Limited;
    Elected under Section 19(c) of the Act 2. NSE.IT Limited;
    Address: C-3 Advisors Private Limited, 3. ICICI Prudential AMC
    Mafatlal House, Backbay Reclamation, Limited;
    Mumbai 400 020 4. Reliance Gene Medix
    Occupation: Chartered Accountant Plc;
    Term: June 24, 2008 to June 23, 2011 5. 3i Infotech Limited;
    6. ICICI Housing Finance
    Company Ltd;

    126
    Sr. Name, Designation, Address, Nationality Date of Other Directorships
    No. Occupation and Term Birth
    7. Ahmedabad Commodity
    Exchange Limited;
    8. World Tax Service India
    Pvt. Ltd.; and
    9. Universal Trustees
    Private Ltd..

    5. Mr. S. Venkatachalam Indian November 1. Bharati AxA Trustee


    Non-Executive Director 8, 1944 Services Private Limited;
    Elected under Section 19(c) of the Act 2. I-flex Solutions Trustee
    Address: Building B-1, Flat 1-D, First Floor, Company Private
    Harbour Heights, NA Sawant Marg, Colaba, Limited; and
    Mumbai 400 005
    Occupation: Chartered Accountant
    Term: June 24, 2008 to June 23, 2011
    6. Mr. D. Sundaram Indian April 16, 1. SBI Capital Markets
    Non-Executive Director 1953 Limited;
    Elected under Section 19(c) of the Act 2. Institute of Financial
    Address: Flat No.1901, Tower A, 19th Floor, Management and
    Beaumonde Research;
    Appa Saheb Marathe Marg, Behind Siddhi 3. TVS Capital Funds
    Vinayak Temple, Prabhadevi, Mumbai 400025 Limited;
    Occupation: Vice Chairman and managing 4. TVS Electronics Limited;
    director of TVS Capital Funds Limited 5. Glaxo Smith Kline
    Term: January 13, 2009 to June 23, 2011 Pharma; and
    6. Nine Dot Nine
    Mediaworx Pvt. Ltd..

    7. Dr. (Mrs.) Vasantha Bharucha Indian October 7, 1. IC Centre for


    Non-Executive Director 1944 Governance, New Delhi;
    Director appointed under Section 19(d) of the and
    Act 2. Diamond Power
    Infrastructure Ltd..
    Address: CII-2450, Vasant Kunj, New Delhi
    110 070
    Occupation: Economist
    Term: February 25, 2008 to February 24, 2011

    8. Dr. Rajiv Kumar Indian May 6, Nil


    Non-Executive Director 1951
    Director appointed under Section 19(d) of the
    Act

    Address: Federation House, Tansen Marg, New


    Delhi 110 001
    Occupation: Director General, FICCI
    Term: September 8, 2008 to September 8, 2011

    9. Ms. Shyamala Gopinath Indian June 20, 1. Central Board, RBI;


    Non-Executive Director 1949 2. National Housing Bank;
    RBI Nominee Director, appointed under and
    Section 19(f) of the Act 3. Export Import Bank of
    Address: Deputy Governor India.
    Reserve Bank of India, Central Office, Mint

    127
    Sr. Name, Designation, Address, Nationality Date of Other Directorships
    No. Occupation and Term Birth
    Road, Mumbai 400 001

    Occupation: Central Banker

    Term: With effect from September 28, 2004


    until further orders

    10. Mr. G. D. Nadaf Indian June 1, Nil


    Non-Executive Director 1952
    Employee Director nominated by the Central
    Government u/s 19 (cb) of the Act.
    Address: 107, Chiramala Apartments,
    Jayanagar I Block (East), Byrasandra,
    Bangalore 560011

    Occupation: Bank Service

    Term: With effect from November 04, 2010 to


    May 31st, 2012.

    The Central Board meets regularly in accordance with the requirements of the Bank, with a minimum of six
    meetings per year. The Central Board meetings were held 10 times during the Fiscal Year 2010 and five times
    during the six-month period ended September 30, 2010.

    Corporate Governance

    The Central Board has established the following committees of Directors (a) to ensure compliance with the Act and
    corporate governance requirements and (b) for operational reasons.

    (1) Executive Committee of the Central Board;

    (2) Audit Committee of the Board;

    (3) Shareholders‘ and Investors‘ Grievance Committee of the Board;

    (4) Risk Management Committee of the Board;

    (5) Special Committee of Directors for Monitoring Large Value Frauds;

    (6) Customer Service Committee of the Board;

    (7) Technology Committee of the Board; and

    (8) Remuneration Committee of the Board.

    Executive Committee of the Central Board

    The ECCB is constituted pursuant to section 30 of the Act. In accordance with the Act, the ECCB exercises powers
    delegated by the Central Board and functions subject to the conditions imposed by the Central Board. Regulations
    46 and 47 of the State Bank of India General Regulations, 1955 provide that, subject to the general or special
    directions of the Central Board, the ECCB may deal with any matter within the competence of the Central Board.
    The ECCB consists of the Chairman, the Managing Directors, the Director nominated under clause (f) of section 19

    128
    of the Act, and all or any of the other Directors who are normally residents or may, for the time being, be present at
    any place within India where ECCB meetings are held. The ECCB meetings are held once every week.

    Audit Committee of the Board

    The Audit Committee of the Board (―ACB‖) functions under RBI guidelines and complies with the provisions
    of Clause 49 of the equity Listing Agreement to the extent that they do not violate the directives and guidelines
    issued by RBI. The composition and functions of the ACB are set out below:

    In accordance with RBI guidelines, the ACB has seven members, including two full time Directors, two official
    Directors (nominees of the Government and the RBI), and three non-official, non-executive Directors, one of whom
    is a Chartered Accountant. Meetings of the ACB are chaired by a non-executive Director on a rotational basis.

    Functions of the ACB

    (a) The ACB provides directions to, and oversees the operation of, the total audit function of the Bank i.e., the
    organisation, realisation and quality control of the internal audit and inspection within the Bank and follow-
    up on the statutory and external audit of the Bank and inspection by the RBI.

    (b) The ACB reviews the internal inspection and audit functions of the Bank, including the system, its quality
    and its effectiveness in terms of follow-up. It reviews the inspection reports of specialised and extra-large
    branches and branches with unsatisfactory ratings. It also focuses on the follow-up of:

    inter-branch adjustment accounts;

    unreconciled and long outstanding entries in inter-bank accounts and nostro or vostro accounts;

    arrears in the balancing of books at various branches;

    acts of fraud; and

    all other major areas of housekeeping.

    (c) The ACB obtains and reviews half-yearly reports of the Compliance Department of the Bank.

    (d) The ACB reviews the annual / quarterly working results of the Bank before these are placed before the
    Central Board.

    (e) The ACB follows up on all the issues raised in the long form audit reports of the statutory auditors. It also
    interacts with the external auditors before the finalisation of the annual/semi-annual financial accounts and
    reports.

    For the year ended March 31, 2010 and the six months ended September 30, 2010, eight and six meetings of the
    ACB, respectively, were held to review various matters connected with internal control, systems and procedures and
    other aspects as required in terms of RBI guidelines.

    Shareholders’ and Investors’ Grievance Committee of the Board

    Pursuant to Clause 49 of the equity Listing Agreement with the Stock Exchanges, the Shareholders‘ and Investors‘
    Grievance Committee of the Board (―SIGCB‖) was formed on January 30, 2001, to review shareholders‘ and
    investors‘ complaints regarding transfer of shares, non-receipt of balance sheet, non-receipt of interest on
    bonds/declared dividends, etc.

    The SIGCB held four meetings during the year ended March 31, 2010 and two meeting in the six months ended
    September 30, 2010, to inter alia reviewe complaints received. During the year ended March 31, 2010, 274

    129
    complaints and for six months ended September 30, 2010, 168 complaints were received and resolved within the
    stipulated period excepting those pending in courts and cases where duplicate Equity Shares have to be issued with
    the approval of the ECCB.

    Risk Management Committee of the Board

    The Risk Management Committee of the Board (―RMCB‖) was constituted with the approval of the Central Board
    on March 23, 2004, to oversee the policy and strategy for integrated risk management relating to credit risk, market
    risk and operational risk.

    The RMCB meets a minimum of four times per year, once in each quarter. The RMCB met four times during the
    year ended March 31, 2010 and has met twice in the six months ended September 30, 2010.

    Special Committee of Directors for Monitoring of Large Value Frauds (Rs. 10 million and above)

    At its meeting held on March 29, 2004, the ECCB approved the constitution of the Special Committee of Directors
    for monitoring of large value frauds (Rs. 10 million and above). The major functions of the Committee are to
    monitor and review all cases of fraud of Rs. 10 million and above, with a view to identifying systemic lacunae, and
    reasons for delay in detection and reporting; to monitor progress of CBI and police investigation, recovery position;
    to ensure that any staff accountability exercise is completed quickly; to review the efficacy of remedial action taken
    to prevent recurrence of fraud; and to put in place suitable preventive measures. As of March 31, 2010, the Bank did
    not detect any fraud which had any significant impact on its operating results.
    The Committee met four times during the year ended March 31, 2010 and twice in the six-month period ended
    September 30, 2010.

    Customer Service Committee of the Board

    The Customer Service Committee of the Board was constituted on August 26, 2004, to bring about ongoing
    improvements in the quality of customer service provided by the Bank.

    Four meetings of the Committee were held during the year ended March 31, 2010 and two meetings were held in the
    six months ended September 30, 2010.

    Technology Committee of the Board

    The Technology Committee of the Board was constituted on August 26, 2004, to track the progress of the Bank‘s IT
    initiatives.

    The Committee met seven times during the year ended March 31, 2010 and twice during the six months ended
    September 30, 2010.

    Remuneration Committee of the Board

    The Remuneration Committee was constituted on March 22, 2007, for evaluating the performance of
    Whole Time Directors of the Bank in connection with the payment of incentives, as per the scheme advised by
    the Government of India in March 2007. The committe approved payment of incentives to wholetime Directors
    for the year ended March 31, 2009, during 2009-10.

    Shareholdings of Directors on the Central Board

    The following table sets out information relating to the ownership of share capital by Directors of the Bank as on
    December 31, 2010:

    130
    S. Name Number of Equity Shares
    No
    1. Mr. O.P Bhatt 1,240
    (jointly with wife) 60
    2. Mr. R. Sridharan 300
    3. Dr. Ashok Jhunjhunwala 630
    4. Mr. Dileep C. Choksi 500
    5. Mr. S. Venkatachalam 500
    6. Dr.(Mrs.) Vasantha Bharucha -
    7. Mr. D. Sundaram 2640
    8. Dr. Rajiv Kumar -
    9. Ms. Shyamala Gopinath -
    10. Mr. G.D. Nadaf 80
    (jointly with wife) 150

    Compensation for Executives and the Central Board

    The salary structure for the Chairman and Managing Directors of the Bank is fixed by the Government. Dearness
    allowance is to be paid as equivalent to Group A officials of the Government. The salary and allowances of Deputy
    Managing Directors are paid according to the Bank‘s Officers‘ Service Rules.

    With respect to compensation for members of the Central Board, sitting fees are paid as decided by the Government.
    As of March 31, 2010, fees payable for Central Board meetings are Rs. 5,000 per meeting and for other Central
    Board-level Committees fees are Rs. 2,500 per meeting. All the compensation paid by the Bank to the Directors for
    the Fiscal Year ended March 31, 2010 have been set forth below.

    Terms of appointment of the Bank’s Chairman and Managing Director are as follows:

    Terms of appointment Total Perquisites for the Commission for the Fiscal
    Remuneration for Fiscal Year 2009- Year 2009-10
    the Fiscal Year 2010
    2009-10
    Mr. O.P. Bhatt
    Mr. O.P. Bhatt was appointed as a Rs. 26,51,406.00 In addition to the Mr. O.P. Bhatt is entitled to
    whole-time Director of the Bank salary, Mr. O.P. Bhatt remuneration by way of
    with effect from April 26, 2006. is entitled to certain commission, in addition to
    He was later appointed Chairman perquisites salary, perquisites and
    with effect from July 1, 2006. allowances payable.

    Mr. R. Sridharan
    Mr. R. Sridharan was appointed as Rs. 14,72,524.00 In addition to the Mr. R. Sridharan is entitled to
    a whole-time Director of the Bank salary, Mr. R. remuneration by way of
    with effect from December 5, Sridharan is entitled to commission, in addition to
    2008. certain perquisites. salary, perquisites and
    allowances payable.

    Changes in the Central Board during the last three Fiscal Years:

    Name Section Date of Date of Cessation Reason


    under the Appointment
    Act
    2007-08
    Mr. Yogesh 19 (b) October 10, July 1, 2007 Consequent upon his

    131
    Name Section Date of Date of Cessation Reason
    under the Appointment
    Act
    Agarwal 2006 appointment as Chairman of
    IDBI Limited
    Mr. S.K. 19 (b) October 8, ---- Appointed as Managing
    Bhattacharyya 2007 Director (whole-time Director)
    by the GOI
    Prof. M.S. 19 (c) August 31, Resignation w.e.f. April Prof. Swaminathan resigned
    Swaminathan 2005 11, 2007 accepted by from Bank‘s Central Board
    Central Board on May 12, consequent upon his nomination
    2007 to the Rajya Sabha
    Mr. Ajay G. 19(c) September 1, August 31, 2007 On completion of his tenure
    Piramal 2004
    Dr. Deva Nand 19 (d) July 9, 2007 September 15, 2010 – Independent Director nominated
    Balodhi consequent to the State by the GOI
    Bank of India
    (Amendment) Act, 2010
    coming into force
    Prof. Mohammed 19 (d) July 9, 2007 September 15, 2010 – Independent Director nominated
    Salahuddin Ansari consequent to the State by the GOI
    Bank of India
    (Amendment) Act, 2010
    coming into force
    Mr. Arun Singh 19 (d) July 25, 2003 July 30, 2007 Consequent upon nomination of
    new Director by the GOI
    Mr. Rajiv Pandey 19 (d) January 23, July 30, 2007 Consequent upon nomination of
    2004 new Director by the GOI
    Dr.(Mrs.) Vasantha 19(d) February 25, --- Independent Director nominated
    Bharucha 2008 by the GOI vice Mr. Piyush
    Goyal
    Mr. Piyush Goyal 19(d) January 23, February 24, 2008 Consequent upon nomination of
    2004 Dr. Vasantha BHarucha, new
    Director by GOI in his place
    Mr. Vinod Rai 19 (e) October 31, Resignation with effect Appointed as CAG
    2006 from January 06, 2008
    Mr. Arun 19 (e) January 18, --- Secretary (Financial Services)
    Ramanathan 2008 — GOI nominee, vice Mr.
    Vinod Rai
    Mr. T.S. 19(b) February 28, January 31, 2008 Consequent upon his attaining
    Bhattacharya 2005 superannuation
    Mr. Amar Pal 19(cb) August 19, March 31, 2008 Consequent upon his attaining
    2005 superannuation
    2008-2009
    Mr. Ananta 19(ca) July 15, 2003 May 31, 2008 Consequent upon
    Chandra Kalita superannuation
    Dr. Ashok 19(c) September 15, Resignation with effect Independent Director nominated
    Jhunjhunwala 2005 from June 19, 2008 by shareholders
    accepted by Central
    Board on June 21, 2008
    Mr. Suman Kumar 19(c) September 15, June 19, 2008 Resignation
    Bery 2005
    Dr. Ashok 19(c) June 24, 2008 --- Independent director elected by
    Jhunjhunwala the shareholders
    Mr. Dileep C. 19(c) June 24, 2008 --- Independent Director nominated

    132
    Name Section Date of Date of Cessation Reason
    under the Appointment
    Act
    Choksi by shareholders
    Mr. S. 19(c) June 24, 2008 --- Independent Director nominated
    Venkatachalam by shareholders
    Mr. Suman Kumar 19(c) June 24, 2008 September 18, 2008 Resignation
    Bery
    Dr. Rajiv Kumar 19(d) September 8, --- Independent Director nominated
    2008 by the GOI
    Mr. R. Sridharan 19(b) December 5, --- Appointed as Managing
    2008 Director (whole-time Director)
    by the GOI
    Mr. D. Sundaram 19(c) January 13, --- Independent Director elected by
    2009 shareholders
    2009-2010
    Mr. Arun 19(e) January 18, April 30, 2009 On attaining superannuation
    Ramanathan 2008
    Mr. Ashok Chawla 19(e) May 13, 2009 January 31, 2011 Finance Secretary appointed as
    the Government nominee Non-
    executive Director.
    2010-11
    Dr. Deva Nand 19 (d) July 9, 2007 September 15, 2010 – Independent Director nominated
    Balodhi consequent to the State by the GOI
    Bank of India
    (Amendment) Act, 2010
    coming into force
    Prof. Mohammed 19 (d) July 9, 2007 September 15, 2010 – Independent Director nominated
    Salahuddin Ansari consequent to the State by the GOI
    Bank of India
    (Amendment) Act, 2010
    coming into force
    Mr. S.K. 19(b) October 8, October 31, 2010. On attaining superannuation
    Bhattacharyya 2007
    Mr. G. D. Nadaf 19(cb) November 8, --- Appointed as officer employee
    2010 Director
    Mr. Ashok Chawla 19(e) May 13, 2009 January 31, 2011 On attaining superannuation

    Borrowing Powers of the Central Board of Directors

    133
    The Bank undertakes its borrowings in terms of the Capital Adequacy Guidelines and in accordance with limits
    provided thereunder.

    Interest of Directors

    The Non-Executive Directors of the Bank may be deemed to be interested to the extent of fees, payable to them for
    attending meetings of the Central Board or a Committee. The Chairman and Managing Director may be deemed to
    be interested to the extent of remuneration paid to them for services rendered by them as whole-time directors
    appointed by the Government. All the directors may also be deemed to be interested to the extent of commission
    paid to them and Equity Shares, if any, already held by them or their dependants and relatives in the Bank and also
    to the extent of any dividend payable to them and other distributions in respect of the Equity Shares. The Directors
    may also be regarded as interested in the Equity Shares, if any, held by or that may be subscribed by and allotted to
    the companies, firms or trusts, in which they are interested as directors, members, partners and/or trustees.

    Employee Stock Purchase Scheme

    For details of employee stock option plan see the section ―Capital Structure‖.

    134
    OUR PROMOTER

    Our Promoter is the President of India. As of December 31, 2010, our Promoter holds 59.40% of the issued capital
    of the Bank. The Act, pursuant to the notification of the State Bank of India (Amendment) Act, 2010, effective from
    September 15, 2010, restricts our Promoter‘s shareholding interests in the Bank from falling below 51.0% of the
    Bank‘s issued capital.

    135
    OUR SUBSIDIARIES, ASSOCIATE BANKS AND JOINT VENTURE COMPANIES

    The following is the list of Subsidiaries of the Bank as on December 31, 2010:

    Domestic Banking Subsidiaries:

    1. State Bank of Bikaner and Jaipur;


    2. State Bank of Hyderabad;
    3. State Bank of Mysore;
    4. State Bank of Patiala;
    5. State Bank of Travancore; and
    6. SBI Commercial & International Bank Limited.

    Foreign Banking Subsidiaries:

    1. SBI International (Mauritius) Ltd.;


    2. State Bank of India (California);
    3. State Bank of India (Canada);
    4. PT Bank SBI Indonesia;
    5. Commercial Bank of India LLC, Moscow; and
    6. Nepal SBI Bank Ltd.

    Domestic Non-Banking Subsidiaries:

    1. SBI Capital Markets Limited;


    2. SBI Mutual Fund Trustee Company Private Limited;
    3. SBI CAP Securities Limited;
    4. SBI Custodial Services Private Limited;
    5. SBI DFHI Limited;
    6. SBI CAPS Ventures Limited;
    7. SBI CAP Trustee Company Limited;
    8. SBI Cards and Payment Services Private Limited;
    9. SBI Funds Management Private Limited;
    10. SBI Life Insurance Company Limited;
    11. SBI Global Factors Limited;
    12. SBI Pension Funds Private Limited;
    13. SBI General Insurance Company Limited; and
    14. SBI Payment Services Private Limited.

    Foreign Non-Banking Subsidiaries:

    1. SBI CAP (UK) Ltd.; and


    2. SBI Funds Management (International) Pvt. Ltd.

    The following is the list of Associate Banks as on December 31, 2010:

    Regional Rural Banks

    1. Andhra Pradesh Grameena Vikas Bank;


    2. Arunachal Pradesh Rural Bank;
    3. Cauvery Kalpatharu Grameena Bank;
    4. Chhattisgarh Gramin Bank;
    5. Deccan Grameena Bank;
    6. Ellaquai Dehati Bank;
    7. Meghalaya Rural Bank;

    136
    8. Krishna Grameena Bank;
    9. Langpi Dehangi Rural Bank;
    10. Madhya Bharat Gramin Bank;
    11. Malwa Gramin Bank;
    12. Marwar Ganganagar Bikaner Gramin Bank;
    13. Mizoram Rural Bank;
    14. Nagaland Rural Bank;
    15. Parvatiya Gramin Bank;
    16. Purvanchal Kshetriya Gramin Bank;
    17. Samastipur Kshetriya Gramin Bank;
    18. Saurashtra Grameena Bank;
    19. Utkal Gramya Bank;
    20. Uttaranchal Gramin Bank;
    21. Vananchal Gramin Bank; and
    22. Vidisha Bhopal Kshetriya Gramin Bank.

    Other Associates

    1. SBI Home Finance Limited;


    2. Clearing Corporation of India Limited;
    3. Bank of Bhutan; and
    4. S.S. Ventures Services Limited.

    The following is the list of Joint Venture Companies of the Bank as on December 31, 2010:

    1. Macquarie SBI Infrastructure Management Pte. Ltd.;


    2. Macquarie SBI Infrastructure Trustee Ltd.;
    3. SBI Macquarie Infrastructure Management Private Limited;
    4. SBI Macquarie Infrastructure Trustee Private Limited;
    5. GE Capital Business Process Management Services Private Limited; and
    6. C-Edge Technologies Limited;

    137
    AUDITOR EXAMINATION REPORT AND FINANCIAL STATEMENTS

    Auditors’ report as required by Part II of Schedule II of the Companies Act, 1956

    To,
    The Board of Directors,
    State Bank of India,
    State Bank Bhavan,
    Madam Cama Road,
    Mumbai – 400 021

    Dear Sirs,

    Re: Proposed public issue by the State Bank of India (“Bank” or “Issuer”) of Lower Tier II bonds (the
    “Bonds”) not exceeding an aggregate amount of Rs. 100,000 million (the “Shelf Limit”) by way of issuance of
    Bonds in one or more tranches (each a “Tranche Issue” and together all Tranche Issues up to the Shelf Limit,
    the “Issue”).

    We have examined the attached Audited unconsolidated and consolidated summary financial statements of State
    Bank of India (the ―Bank‖), which is proposed to be included in this Shelf Prospectus of the Bank in connection
    with the proposed Issue of Lower Tier II bonds (the ―Bonds‖) not exceeding an aggregate amount of Rs. 100,000
    million (the ―Shelf Limit‖) in terms of requirement of Paragraph B, Part-II of Schedule II to the Companies Act,
    1956, the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 issued by
    the Securities and Exchange Board of India, amended from time to time and in terms of our Engagement Letter
    dated January 29, 2011. The financial statements have been prepared by the Bank.

    We have examined these financial statements taking into consideration the Guidance Note on Reports in Company
    Prospectus (Revised) issued by the Institute of Chartered Accountants of India, except that these financial statements
    have not been adjusted for the changes in accounting policies retrospectively in the respective financial years to
    reflect the same accounting treatment as per changed accounting policy for all the reporting periods and for
    adjustment of amounts pertaining to previous years in the respective financial years to which they relate.

    1. Financial Information as per Audited Unconsolidated Financial Statements of the Bank


    We have examined the following attached statements of the Bank:
    a) the ―Statement of Assets and Liabilities (Unconsolidated)‖ as at 31st March 2010, 31st March 2009, 31st
    March 2008, 31st March 2007 and 31st March 2006 and the Schedules forming part thereof;
    b) the ―Statement of Profits and Losses (Unconsolidated)‖ for the year ended 31st March 2010, 31st March
    2009, 31st March 2008, 31st March 2007 and 31st March 2006 and the Schedules forming part thereof, and
    c) the ―Statement of Cash Flows (Unconsolidated)‖ for the year ended 31st March 2010, 31st March 2009,
    31st March 2008, 31st March 2007 and 31st March 2006,

    2. Financial Information as per Audited Consolidated Financial Statements of the Bank


    We have examined the following attached statements of the Bank:
    a) the ―Statement of Assets and Liabilities (Consolidated)‖ as at 31st March 2010, 31st March 2009, 31st
    March 2008, 31st March 2007 and 31st March 2006 and the Schedules forming part thereof;
    b) the ―Statement of Profits and Losses (Consolidated)‖ for the year ended 31st March 2010, 31st March
    2009, 31st March 2008, 31st March 2007 and 31st March 2006 and the Schedules forming part thereof, and
    c) the ―Statement of Cash Flows (Consolidated)‖ for the year ended 31st March 2010, 31st March 2009, 31st
    March 2008, 31st March 2007 and 31st March 2006,
    both 1 and 2 together referred to as ―Summary Financial Statements‖.

    3. The Audited Unconsolidated Financial Statements for the years ended March 31, 2010, March 31, 2009, March
    31, 2008, March 31, 2007 and March 31, 2006 were prepared in accordance with generally accepted accounting
    standards in India and reported upon by the auditors of the Issuer for the respective years as mentioned
    hereunder:

    138
    As at/ Year ended Name of the auditors
    March 31, 2006 B. M. Chatrath & Co.; Khandelwal Jain & Co.; RGN Price & Co.; G.S. Mathur & Co.;
    Vinay Kumar & Co.; M M Nissim & Co.; Laxminiwas & Jain; Chaturvedi & Co.; S K
    Mittal & Co.; Kanwalia Co.; M Choudhury & Co.; K P Rao & Co.; Vardhaman & Co.

    Incorporated in the said financial statements are the accounts of :


    i. 8678 Indian Branches audited by other auditors
    ii. 25 Foreign Branches audited by the local auditors and
    iii. 457 other Indian Branches, the unaudited returns of which are certified by the
    Branch Mangers
    March 31, 2007 M M Nissim & Co.; Khandelwal Jain & Co.; RGN Price & Co.; S K Mittal & Co.;
    Vinay Kumar & Co.; D P Sen & Co.; Laxminiwas & Jain; Chaturvedi & Co.; Jain
    Kapila Associates; Datta Singla & Co.; M. Choudhary & Co.; G M Kapadia Co.;
    Vardhaman & Co.

    Incorporated in the said financial statements are the accounts of :


    i. 7756 Indian Branches audited by other auditors
    ii. 30 Foreign Branches audited by the local auditors and
    iii. 1719 other Indian Branches, the unaudited returns of which are certified by the
    Branch Mangers
    March 31, 2008 D P Sen & Co.; Khandelwal Jain & Co.; RGN Price & Co.; S K Mittal & Co.; Vinay
    Kumar & Co.; M M Nissim & Co.; Laxminiwas & Jain; V.K. Jindal & Co.; Jain
    Kapila Associates; A.K. Sabat and Co.; Datta Singla & Co.; Dutta Sarkar & Co.; G M
    Kapadia Co.; Vardhaman & Co.

    Incorporated in the said financial statements are the accounts of :


    i. 8171 Indian Branches audited by other auditors
    ii. 35 Foreign Branches audited by the local auditors and
    iii. 2306 other Indian Branches, the unaudited returns of which are certified by the
    Branch Mangers
    March 31, 2009 D.P. Sen & Co.; G.M. Kapadia & Co.; R.G.N. Price & Co.; S.K. Mittal & Co.;
    Vardhaman & Co.; V.K. Jindal & Co.; Jain Kapila Associates; A.K. Sabat & Co.;
    Datta Singla & Co.; Dutta Sarkar & Co.; Gupta & Shah; Guha Nandi & Co.; A.R.
    Viswanathan & Co.; Chokshi & Chokshi

    Incorporated in the said financial statements are the accounts of :


    i. 9255 Indian Branches audited by other auditors
    ii. 40 Foreign Branches audited by the local auditors and
    iii. 2504 other Indian Branches, the unaudited returns of which are certified by the
    Branch Mangers
    March 31, 2010 B. M. Chatrath & Co.; Kalyaniwalla & Mistry; Essveeyar; K. K. Soni & Co.;
    Venugopal & Chenoy; V. K. Jindal & Co.; K. G. Somani & Co.; A. K. Sabat & Co.;
    M. Verma & Associates; Dutta Sarkar & Co.;
    Gupta & Shah; K. C. Mehta & Co.; Dagliya & Co.; Krishnamoorthy &
    Krishnamoorthy

    Incorporated in the said financial statements are the accounts of :


    i. 9827 Indian Branches audited by other auditors
    ii. 44 Foreign Branches audited by the local auditors and
    iii. 2632 other Indian Branches, the unaudited returns of which are certified by the
    Branch Mangers

    4. The Audited Consolidated Financial Statements for the years ended March 31, 2010, March 31, 2009, March
    31, 2008, March 31, 2007 and March 31, 2006 were prepared in accordance with generally accepted accounting
    standards in India and reported upon by the auditors of the Issuer for the respective years as mentioned
    hereunder:

    139
    As at/ Year ended Name of the auditors
    March 31, 2006 B.M. Chatrath & Co.
    March 31, 2007 M.M Nissim & Co.
    March 31, 2008 M.M Nissim & Co.
    March 31, 2009 R.G.N. Price & Co.
    March 31, 2010 A.K. Sabat & Co.

    The aforesaid Audited Consolidated Financial Statements include figures of the subsidiaries, joint ventures and
    associates, which were audited by their respective auditors who were appointed as per the applicable statutory
    provisions.

    5. The said Summary Financial Statements have been extracted from the audited unconsolidated and audited
    consolidated financial statements of the Bank as audited by above mentioned auditors for the respective years
    and based on our examination of these Summary Statements, we state that:
    a) These Summary Financial Statements have been presented in ―Rs. Millions‖ solely for the convenience of
    readers,
    b) These Summary Financial Statements have to be read in conjunction with the relevant Accounting Policies
    of the Bank along with the notes forming part of accounts given as per Schedule 18 Notes to Accounts
    which are stated in ―Rs. Crore‖
    c) The figures of earlier years/period have been regrouped wherever necessary, to conform to the
    classification adopted for the Summary Financial Statements;
    d) There are no extra-ordinary items that need to be disclosed separately in the Summary Financial
    Statements; and
    e) There are no qualifications in the auditor‘s reports that require adjustments to the figures in the Summary
    Statements.

    6. Based on our examination of the Audited financial statements of the bank for the years ended March 31, 2010,
    March 31, 2009, March 31, 2008, March 31, 2007 and March 31, 2006 and the information and explanations
    furnished by the Bank, we report that:

    a) There have not been any material changes in the activities of the bank, which may have had a material
    effect on the statement of profit/loss for the last five years.

    b) There has not been any discontinuance in the lines of business, loss of agencies or markets.

    c) There has not been any change in the share capital since the date as of which the financial information has
    been disclosed in the Draft Offer document, except for the allotment of 1,14,606 fully paid equity shares of
    Rs. 10 each of the Bank to the non transferee bank shareholders pursuant to the amalgamation of the
    erstwhile State Bank of Indore with the Bank.

    7. Our report is intended solely for use of the management and for inclusion in the Draft Prospectus & Prospectus
    in connection with the proposed Issue by the Bank. Our report should not be used for any other purpose except
    with our consent in writing.

    For and on behalf of,


    Kalyaniwalla & Mistry
    Chartered Accountants
    Firm Registration No. 104607W

    Viraf R. Mehta
    Partner
    Membership No. 32083
    Place: Mumbai
    Date: January 31, 2011

    140
    ANNEXURE 1
    SUMMARISED STATEMENT OF ASSETS & LIABILITIES (UNCONSOLIDATED)
    (Rs. in Millions)
    CAPITAL AND LIABILITIES As on As on As on As on As on
    31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    Schedule 1 Capital 5,262.99 5,262.99 6,314.70 6,348.80 6,348.83
    Schedule 2 Reserves & Surplus 271,177.88 307,722.58 484,011.92 573,128.17 653,143.16
    Schedule 3 Deposits 3,800,460.55 4,355,210.90 5,374,039.41 7,420,731.28 8,041,162.27
    Schedule 4 Borrowings 306,412.44 397,033.35 517,274.11 840,579.29 1,030,116.01
    Schedule 5 Other Liabilities and Provisions 556,975.69 600,422.58 833,622.98 803,533.27 803,367.04
    Total 4,940,289.55 5,665,652.40 7,215,263.12 9,644,320.81 10,534,137.31
    ASSETS
    Schedule 6 Cash and balances with 216,527.04 290,764.25 515,346.16 555,461.73 612,908.65
    Reserve Bank of India
    Schedule 7 Balances with banks and money 229,072.97 228,922.65 159,317.19 488,576.26 348,929.76
    at call & short notice
    Schedule 8 Investments 1,625,342.41 1,491,488.83 1,895,012.71 2,759,539.57 2,857,900.71
    Schedule 9 Advances 2,618,009.36 3,373,364.94 4,167,681.96 5,425,032.04 6,319,141.52
    Schedule 10 Fixed Assets 27,529.34 28,188.67 33,734.81 38,378.47 44,129.07
    Schedule 11 Other Assets 223,808.43 252,923.06 444,170.29 377,332.74 351,127.60
    Total 4,940,289.55 5,665,652.40 7,215,263.12 9,644,320.81 10,534,137.31
    Schedule 12 Contingent Liabilities 2,288,813.77 3,065,900.16 8,107,964.81 7,236,997.57 5,484,468.85
    Bill for Collection 205,929.54 233,675.11 189,468.00 438,705.67 479,223.28

    F-1
    ANNEXURE - 2
    Profit and loss Account (Unconsolidated)
    (Rs. in Millions)
    31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    I. INCOME
    Interest earned (Schedule 13) 359,795.69 394,910.25 489,503.08 637,884.34 709,939.17
    Other Income (Schedule 14) 74,352.02 57,692.48 86,949.27 126,907.89 149,681.53
    Total 434,147.71 452,602.73 576,452.35 764,792.23 859,620.70
    II. EXPENDITURE
    Interest expended (Schedule 15) 203,904.47 234,368.21 319,290.77 429,152.94 473,224.78
    Operating expenses (Schedule 16) 117,250.98 118,235.17 126,086.06 156,487.04 203,186.80
    Provisions and contingencies 68,925.55 54,586.29 63,784.28 87,939.98 91,548.59
    Total 390,081.00 407,189.67 509,161.11 673,579.96 767,960.17
    III. PROFIT
    Net Profit for the year 44,066.72 45,413.06 67,291.24 91,212.27 91,660.53
    Profit brought forward 3.39 3.39 3.39 3.39 3.39
    Transfer from General Reserve - 28.86 0.94 - -
    Total 44,070.11 45,445.31 67,295.57 91,215.66 91,663.92
    APPROPRIATIONS
    Transfer to Statutory reserves 29,337.74 33,581.13 48,390.72 52,917.93 63,810.89
    Transfer to Investment reserve - - 621.79 - -
    Transfer to Capital reserve 1,152.20 0.39 44.40 8,265.53 1,140.55
    Transfer to Revenue and other reserves 5,175.20 3,240.00 3,000.00 3,068.93 5,295.06
    Dividend - - - - -
    Interim Dividend - - - - 6,348.80
    Final Dividend Proposed 7,368.18 7,368.18 13,576.61 18,411.53 12,697.68
    Tax on Dividend 1,033.39 1,252.22 1,658.66 2,480.35 2,367.55
    Loss from State Bank of Saurashtra - - - 6,068.00 -
    Balance carried over to Balance Sheet 3.39 3.39 3.39 3.39 3.39
    Total 44,070.11 45,445.31 67,295.57 91,215.66 91,663.92
    Basic Earnings per Share 83.73 86.29 126.62 143.77 144.37
    Diluted Earnigs per share 83.73 86.29 126.50 143.77 144.37

    F-2
    ANNEXURE 3
    SUMMARY STATEMENT OF CASH FLOW (UNCONSOLIDATED)
    (Rs. in millions)
    For the Year ended 31-Mar-06 31-Mar-07 31-Mar-08 31-Mar-09 31-Mar-10
    Cash flow from Operating Activities 56,023.07 -17,760.70 -8,568.65 2,94,797.29 -18,049.90
    Cash flow from Investing Activities -7,394.34 -2,845.58 -27,980.12 -16,519.30 -17,615.23
    Cash flow from Financing Activities 3,695.93 94,941.13 1,93,711.16 50,973.84 -33,596.70
    Cash flows on account of exchange fluctuations 54.36 -247.96 -2,185.94 20,581.62 -12,937.74
    Cash Received from acquision of the e-SBS - - - 19,541.19 0.00
    Net change in cash and cash equivalents 52,379.02 74,086.90 1,54,976.45 3,69,374.64 -82,199.57
    Cash and cash equivalents - Opening 3,93,220.99 4,45,600.01 5,19,686.90 6,74,663.35 10,44,037.99
    Cash and cash equivalents - Closing 4,45,600.01 5,19,686.90 6,74,663.35 10,44,037.99 9,61,838.42
    Cash flow from Operating Activities
    Net Profit before taxes 69,061.53 76,250.79 1,04,389.00 1,41,806.43 1,39,260.96
    ADJUSTMENTS FOR:
    Depreciation charge 7,291.32 6,023.92 6,799.79 7,631.41 9,326.64
    (Profit)/Loss on sale of fixed assets -19.39 -121.27 -110.41 -29.54 104.56
    Provision for NPAs 1,478.01 14,295.03 20,009.36 24,749.57 51,478.53
    Provision for Standard Assets 4,051.72 5,891.90 5,669.67 3,748.16 800.58
    Provision for Leave Encashment 781.90 850.00 880.00 -8.10 0.00
    Depreciation on Investments:
    Depreciation/Revaluation of Investments / 34,560.74 14889.52 -10350.20 32738.97 -30,853.88
    Loss on revaluation of Investments 0.00
    Provision for Subs/JVs/RRBs -1,447.48 -84.94 -350.26 0.00 0.00
    Provision on Other Assets and Other Provisions -583.96 -230.56 1364.56 1784.46 1,355.01
    Deferred Revenue Expenditure w/o during the year - - - - -
    Dividend from subsidiaries (investing activity) -3,171.83 -5,969.68 -1,974.01 -4,096.03 -5,734.83
    Interest paid on bonds (financing activity) 4,011.14 8,474.29 17,114.09 19,004.27 25,386.72
    Goodwill e-SBS Written Off - - - 6.56 0.00
    LESS: Direct Taxes -5,251.61 -42,821.25 -42,355.38 -72,794.64 -69,148.68
    Sub-Total 1,10,762.09 77447.75 1,01,086.17 1,54,541.52 1,21,975.61
    Other adjustments:
    Increase/(Decrease) in Deposits 1,29,985.29 5,54,750.34 10,18,828.52 18,89,477.65 6,20,430.99
    Increase/(Decrease) in Borrowings 1,14,569.31 90,620.91 1,20,240.76 -12,705.42 173175.60
    (Increase)/Decrease in Investments 3,62,060.75 74506.79 -3,74,636.39 -8,28,810.90 -59,338.99
    (Increase)/Decrease in Advances -5,95,742.82 -7,69,650.61 -8,14,326.39 -11,57,822.66 -9,45,588.00
    Increase/(Decrease) in Other Liabilities & Provisions -5,254.01 -33371.51 1,30,153.95 1,56,447.98 24,401.21
    (Increase)/Decrease in Other Assets -60,357.54 -12,064.37 -1,89,915.27 93,669.12 46,893.68
    Net Cash provided by Operating Activities 56,023.07 -17,760.70 -8,568.65 2,94,797.29 -18,049.90

    F-3
    (Rs. in millions)
    For the Year ended 31-Mar-06 31-Mar-07 31-Mar-08 31-Mar-09 31-Mar-10
    Cash flow from Investing Activities
    (Increase)/Decrease in Investments in
    Subsidiaries/Joint Ventures/Associates -2,741.81 -2,253.28 -17,718.65 -9,236.60 -8,168.27
    Income earned on investments in Subsidiaries/
    Joint Ventures/Associates 3,171.83 5,969.20 1,974.05 4,096.03 5,734.83
    (Increase)/Decrease in Fixed Assets -7,824.36 -6,561.98 -12,235.52 -11,378.73 -15,181.79
    Net Cash provided by Investing Activities -7,394.34 -2,845.58 -27,980.12 -16,519.30 -17,615.23
    Cash flow from Financing Activities
    Share Capital - - 1,051.71 34.10 0.02
    Share Premium - - 1,65,883.94 5,589.58 3.83
    Net proceeds/ (repayment) of bonds(including
    subordinated debts) 15,223.30 1,11,817.00 52,510.00 79,675.60 20,000.00
    Interest paid on Bonds -4,011.14 -8,474.29 -17,114.08 -19,004.27 -25,386.72
    Dividend paid -7,516.23 -8,401.58 -8,620.41 -15,321.17 -28,213.83
    Net Cash provided by Financing Activities 3,695.93 94,941.13 1,93,711.16 50,973.84 -33,596.70
    Cash flows on account of
    Exchange Fluctuation:
    Revaluation of Sub ordinate Bonds - - -1,291.72 6,625.00 -3,638.88
    Reserves of foreign subsidiaries/foreign offices 54.36 -247.96 -894.22 13956.62 -9,298.86
    Net cash flows on account of 54.36 -247.96 -2,185.94 20,581.62 -12,937.74
    Exchange Fluctuation
    Cash and Cash equivalents -Received on account
    of Acquisition of State bank of Saurashtra
    Cash in hand (including FC notes & gold) - - - 1,007.76 0.00
    Balances with Reserve Bank of India - - - 17,565.49 0.00
    Balances with Banks & MACSN - - - 967.94 0.00
    Total - - - 19,541.19 0.00
    Cash and Cash equivalents - Opening:
    Cash in hand (including FC notes & gold) 14,361.60 20,802.31 25,301.19 32,203.11 42,955.16
    Balances with Reserve Bank of India 1,53,741.70 1,95,724.73 2,65,463.06 4,83,143.05 5,12,506.57
    Balances with Banks & MACSN 2,25,117.69 2,29,072.97 2,28,922.65 1,59,317.19 4,88,576.26
    Total 3,93,220.99 4,45,600.01 5,19,686.90 6,74,663.35 10,44,037.99
    Cash and Cash equivalents - Closing:
    Cash in hand (including FC notes & gold) 20,802.31 25,301.19 32,203.11 42,955.16 68,410.13
    Balances with Reserve Bank of India 1,95,724.73 2,65,463.06 4,83,143.05 5,12,506.57 5,44,498.53
    Balances with Banks & MACSN 2,29,072.97 2,28,922.65 1,59,317.19 4,88,576.26 3,48,929.76
    Total 4,45,600.01 5,19,686.90 6,74,663.35 10,44,037.99 9,61,838.42

    F-4
    SCHEDULES - SUMMARISED STATEMENT OF ASSETS & LIABILITIES (UNCONSOLIDATED)
    Schedule 1 Capital As on As on As on As on As on
    31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    Authorised Capital - 100,00,00,000 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00
    equity shares of Rs.10/- each
    Issued Capital 5,262.99 5,262.99 6,315.59 6,349.69 6,349.69
    Subscribed and Paid up Capital 5,262.99 5,262.99 6,314.70 6,348.80 6,348.83
    5,262.99 5,262.99 6,314.70 6,348.80 6,348.83

    F-5
    Schedule 2 Reserves & Surplus As on As on As on As on As on
    31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    I. Statutory Reserves
    Opening Balance 140,871.49 170,209.24 203,790.37 252,181.09 307,266.89
    Additions during the year 29,337.75 33,581.13 48,390.72 55,085.80 63,810.89
    Deductions during the year - - - - -
    170,209.24 203,790.37 252,181.09 307,266.89 371,077.78
    II. Capital Reserves
    Opening Balance 3,028.85 4,181.05 4,181.44 4,225.84 12,673.07
    Additions during the year 1,152.20 0.39 44.40 8,447.23 1,140.55
    Deductions during the year - - - - -
    4,181.05 4,181.44 4,225.84 12,673.07 13,813.62
    III. Share Premium
    Opening Balance 35,105.73 35,105.73 35,105.73 200,989.68 206,579.25
    Additions during the year - - 166,170.97 5,601.70 3.83
    Deductions during the year - - 287.03 12.12 -
    35,105.73 35,105.73 200,989.67 206,579.26 206,583.08
    IV. Investment Reserve
    Opening Balance 52,538.94 - - 621.79 -
    Additions during the year - - 621.79 - -
    Deductions during the year 52,538.94 - - 621.79 -
    - - 621.79 - -
    V. Foreign currency Translation Reserve
    Opening Balance 2,879.64 2,934.00 2,686.04 1,791.81 15,748.43
    Additions during the year : 54.36 - - 13,956.62 -
    Deductions during the year - 247.96 894.22 - 9,298.87
    2,934.00 2,686.04 1,791.82 15,748.43 6,449.56
    VI. Revenue and Other Reserves*
    Opening Balance 1,030.33 58,744.46 61,955.61 24,198.31 30,857.13
    Additions during the year : 57,714.14 3,240.40 3,000.00 6,744.71 24,358.60
    Deductions during the year - 29.26 40,757.29 85.89 -
    58,744.47 61,955.70 24,198.32 30,857.13 55,215.73
    Balance of Profit and Loss Account 3.39 3.39 3.39 3.39 3.39
    Total 271,177.88 307,722.58 484,011.92 573,128.17 653,143.16

    F-6
    Schedule 3 Deposits As on As on As on As on As on
    31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    I. Demand Deposits
    (i) From Banks 70,135.06 109,748.10 123,134.07 107,618.42 89,044.70
    (ii) From Others 609,821.44 710,231.64 858,201.23 999,917.34 1,136,749.63
    II. Savings Bank Deposits 1,127,239.21 1,291,364.97 1,542,292.87 1,982,242.69 2,574,602.98
    III. Term Deposits
    (i) From Banks 51,830.94 46,134.86 70,654.77 136,571.60 143,378.31
    (ii) From Others 1,941,433.90 2,197,731.33 2,779,756.47 4,194,381.23 4,097,386.65
    Total 3,800,460.55 4,355,210.90 5,374,039.41 7,420,731.28 8,041,162.27
    I. Deposits of Branches in India 3,662,285.35 4,199,367.65 5,146,760.68 7,100,315.12 7,647,174.85
    II. Deposits of Branches outside India 138,175.20 155,843.25 227,278.73 320,416.16 393,987.42
    Total 3,800,460.55 4,355,210.90 5,374,039.41 7,420,731.28 8,041,162.27

    F-7
    Schedule 4 Borrowings As on As on As on As on As on
    31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    I. Borrowings in India
    (i) Reserve Bank of India - 10,000.00 13,000.00 - -
    (ii) Other Banks 10,000.00 12,548.06 78,535.84 9,199.46 81,783.36
    (iii) Other Institutions and Agencies 56,423.82 35,649.67 36,489.56 27,583.59 12,922.95
    (iv) Subordinated Debts and Bonds - - - 271,744.00 291,744.00
    TOTAL BORROWINGS IN INDIA 66,423.82 58,197.73 128,025.40 308,527.05 386,450.31
    II. Borrowings outside India
    (i) Borrowings and Refinance outside India 239,988.62 338,835.62 389,248.71 500,353.77 615,606.11
    (ii) Subordinated Debts and Bonds - - - 31,698.47 28,059.59
    TOTAL BORROWINGS OUTSIDE INDIA 239,988.62 338,835.62 389,248.71 532,052.24 643,665.70
    TOTAL BORROWINGS 306,412.44 397,033.35 517,274.11 840,579.29 1,030,116.01
    Secured borrowings included in I & II above 44,235.97 46,505.40 43,678.78 28,716.04 83,336.63

    F-8
    Schedule 5 Other Liabilities and Provisions As on As on As on As on As on
    31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    I. Bills payable 172,937.60 202,767.98 191,599.04 189,298.76 210,982.58
    II. Inter-office adjustments (net) 114,352.41 - - 57,067.16 114,748.30
    III. Interest accrued 36,879.85 39,480.69 50,922.18 69,181.55 66,051.94
    IV. Deferred Tax Liability - 4,836.75 - - -
    V. Others (including provisions) 232,805.83 353,337.16 591,101.76 487,985.80 411,584.22
    Total 556,975.69 600,422.58 833,622.98 803,533.27 803,367.04

    F-9
    Schedule 6 Cash and Balances with As on As on As on As on As on
    Reserve Bank of India 31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    I Cash in hand (including foreign 20,802.31 25,301.19 32,203.11 42,955.16 68,410.13
    currency notes and gold)
    II Balance with Reserve Bank of India
    (i) In Current Account 195,724.73 265,463.06 209,006.04 512,481.44 544,473.32
    (ii) In Other Accounts - - 274,137.01 25.13 25.20
    Total 216,527.04 290,764.25 515,346.16 555,461.73 612,908.65

    F - 10
    Schedule 7 Balances with Banks and As on As on As on As on As on
    Money at Call & Short Notice 31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    I. In India
    (i) Balances with banks
    (a) In Current Accounts 5,998.02 9,966.80 11,051.94 9,262.08 9,759.41
    (b) In Other Deposit Accounts 27.72 - 26,083.19 106,889.95 111,751.28
    (ii) Money at call and short notice - - - - -
    (a) With banks 80,810.62 65,032.94 67,590.00 132,071.74 -
    (b) With other institutions - - - - -
    Total 86,836.36 74,999.74 104,725.13 248,223.77 121,510.68
    II. Outside India
    (i) In Current Accounts 19,195.28 18,357.50 12,523.19 136,565.44 162,092.12
    (ii) In Other Deposit Accounts 32,422.26 24,109.16 7,491.53 13,269.39 6,531.05
    (iii) Money at call and short notice 90,619.07 111,456.25 34,577.34 90,517.66 58,795.91
    Total 142,236.61 153,922.91 54,592.06 240,352.49 227,419.08
    GRAND Total 229,072.97 228,922.65 159,317.19 488,576.26 348,929.76

    F - 11
    Schedule 8 Investments As on As on As on As on As on
    31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    I. Investments in India in :
    (i) Government Securities 1,346,440.56 1,177,031.11 1,407,340.37 2,262,174.70 2,267,060.16
    (ii) Other approved securities 35,351.85 33,430.59 27,382.52 18,926.80 10,351.26
    (iii) Shares 13,848.77 23,046.52 45,025.37 45,904.18 71,993.73
    (iv) Debentures and Bonds 101,004.44 86,907.13 176,287.76 148,889.78 161,274.32
    (v) Subsidiaries and/ or Joint Ventures 20,209.40 22,208.74 37,664.60 36,170.12 42,856.06
    (Including Associates)
    (vi) Others (Units of Mutual Funds, 56,007.03 90,739.13 149,600.40 182,645.18 222,149.09
    Commercial Papers etc)
    Total 1,572,862.05 1,433,363.22 1,843,301.02 2,694,710.76 2,775,684.62
    II. Investments outside India in
    (i) Government Securities 6,473.26 5,677.16 3,942.34 7,425.93 20,095.15
    (including local authorities)
    (ii) Subsidiaries and/or Joint 3,101.15 3,524.98 6,138.03 12,554.60 14,036.91
    Ventures abroad
    (iii) Other Investments (Shares, 42,905.95 48,923.47 41,631.32 44,848.28 48,084.03
    Debentures etc.)
    Total 52,480.36 58,125.61 51,711.69 64,828.81 82,216.09
    GRAND TOTAL (I+II) 1,625,342.41 1,491,488.83 1,895,012.71 2,759,539.57 2,857,900.71
    III. Investments in India
    (i) Gross Value of Investments 1,634,309.95 1,445,800.12 1,852,784.25 2,708,863.94 2,780,816.00
    (ii) Less: Aggregate of Provisions / 61,447.90 12,436.90 9,483.23 14,153.18 5,131.39
    Depreciation
    (iii) Net Investments (vide I above)
    TOTAL 1,572,862.05 1,433,363.22 1,843,301.02 2,694,710.76 2,775,684.61
    IV. Investments outside India
    (i) Gross Value of Investments 52,600.05 58,233.15 52,042.66 67,951.96 84,091.89
    (ii) Less: Aggregate of Provisions / 119.69 107.54 330.97 3,123.15 1,875.79
    Depreciation
    (iii) Net Investments (vide II above)
    TOTAL 52,480.36 58,125.61 51,711.69 64,828.81 82,216.10
    GRAND TOTAL 1,625,342.41 1,491,488.83 1,895,012.71 2,759,539.57 2,857,900.71

    F - 12
    Schedule 9 Advances As on As on As on As on As on
    31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    A I. Bills purchased and discounted 248,537.49 307,871.02 367,334.90 471,839.66 427,747.32
    II. Cash credits, overdrafts and loans 958,567.73 1,254,761.73 1,520,000.00 2,236,799.27 2,751,504.96
    repayable on demand
    III. Term loans 1,410,904.14 1,810,732.19 2,280,347.06 2,716,393.11 3,139,889.24
    Total 2,618,009.36 3,373,364.94 4,167,681.96 5,425,032.04 6,319,141.52
    B I. Secured by tangible assets 1,800,218.89 2,333,368.10 2,842,310.62 3,500,269.24 4,106,598.93
    (includes advances against
    Book Debt)
    II. Covered by Bank/Government 209,271.92 217,190.92 202,447.57 786,012.40 853,686.68
    Guarantees
    III. Unsecured 608,518.55 822,805.92 1,122,923.77 1,138,750.40 1,358,855.91
    Total 2,618,009.36 3,373,364.94 4,167,681.96 5,425,032.04 6,319,141.52
    C I. Advances in India
    (i) Priority Sectors 800,128.80 1,020,158.51 1,192,305.12 1,436,375.63 1,705,682.08
    (ii) Public Sector 228,970.12 271,649.21 230,250.03 362,415.50 489,559.23
    (iii) Banks 6,501.16 26,963.18 776.62 3,342.17 2,656.94
    (iv) Others 1,312,958.70 1,674,063.59 2,182,951.70 2,765,029.09 3,159,641.37
    Total 2,348,558.78 2,992,834.49 3,606,283.47 4,567,162.39 5,357,539.62
    II. Advances outside India
    (i) Due from banks 22,386.72 28,343.44 21,351.62 44,117.98 156,571.73
    (ii) Due from others - - - - -
    (a) Bills purchased and discounted 82,291.66 104,489.42 155,434.05 293,085.88 252,940.29
    (b) Syndicated loans 63,887.25 126,055.01 198,566.22 270,944.71 264,752.11
    (c) Others 100,884.95 121,642.58 186,046.60 249,721.08 287,337.77
    Total 269,450.58 380,530.45 561,398.49 857,869.65 961,601.90
    Grand Total 2,618,009.36 3,373,364.94 4,167,681.96 5,425,032.04 6,319,141.52

    F - 13
    Schedule 10 Fixed Assets As on As on As on As on As on
    31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    I. A. Premises
    At cost as on 31st March of the 12,144.63 13,464.60 14,486.28 14,884.46 15,910.41
    preceding year
    Additions (including adjustments*) 1,330.18 1,053.04 402.01 1,040.75 1,074.93
    during the year
    Deductions during the year 10.21 31.36 3.83 14.80 72.14
    Depreciation to date 4,413.32 4,989.29 5,573.03 6,379.06 7,020.08
    9,051.28 9,496.99 9,311.43 9,531.35 9,893.12
    II. Other Fixed Assets (including
    furniture and fixtures)
    At cost as on 31st March of the 42,750.07 49,815.65 54,931.93 65,617.33 78,865.35
    preceeding year
    Additions (including adjustments*) 8,960.66 6,350.85 11,453.49 13,457.23 14,308.28
    during the year
    Deductions during the year 1,895.08 1,234.57 768.09 209.20 299.07
    Depreciation to date 34,112.15 38,553.72 43,979.93 52,713.23 61,592.48
    15,703.50 16,378.21 21,637.40 26,152.13 31,282.08
    III. Leased Assets
    At cost as on 31st March of the 13,313.62 11,909.38 11,201.04 9,381.69 9,254.83
    preceeding year
    Additions during the year - - - - -
    Deductions during the year 1,404.24 708.34 1,819.35 126.87 726.31
    Depreciation to date including provision 8,991.83 9,608.75 8,885.41 9,217.78 8,528.52
    Sub Total 2,917.55 1,592.29 496.28 37.04 0.00
    Less : Lease Adjustment and Provisions 941.19 698.35 52.89 (23.58) (2.03)
    1,976.36 893.94 443.39 60.62 2.03
    IV. Assets under Construction 798.20 1,419.53 2,342.59 2,634.37 2,951.84
    (including premises)
    Total 27,529.34 28,188.67 33,734.81 38,378.47 44,129.07

    F - 14
    Schedule 11 Other Assets As on As on As on As on As on
    31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    (i) Inter-office adjustments (net) - 2,169.62 113,405.33 - -
    (ii) Interest accrued 47,248.45 50,203.08 62,981.45 67,295.05 76,850.09
    (iii) Tax paid in advance/tax deducted 3,526.72 21,524.36 24,778.67 36,428.12 43,910.77
    at source
    (iv) Deferred Tax Assets (net) 1,177.93 - 420.46 10,268.87 25,120.89
    (v) Stationery and stamps 823.20 786.13 956.01 956.59 1,024.52
    (vi) Non-banking assets acquired in 3.52 3.49 3.49 3.51 3.49
    satisfaction of claims
    (vii) Others 171,028.61 178,236.38 241,624.88 262,380.60 204,217.84
    Total 223,808.43 252,923.06 444,170.29 377,332.74 351,127.60

    F - 15
    Schedule 12 Contingent Liabilities As on As on As on As on As on
    31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    i) Claims against the bank not 17,048.17 38,089.88 7,997.30 21,918.16 6,554.51
    acknowledged as debts
    ii) Liability for partly paid investments 28.00 28.00 28.00 28.00 28.00
    iii) Liability on account of outstanding 1,343,502.87 1,972,853.05 3,104,575.17 2,894,292.40 2,450,314.50
    forward exchange contracts
    iv) Guarantees given on behalf of
    constituents
    (a) In India 207,708.33 237,156.32 351,591.35 465,444.04 644,797.26
    (b) Outside India 61,161.47 139,055.66 145,038.81 264,172.90 365,218.85
    v) Acceptances, endorsements and 370,254.83 470,506.43 747,060.94 1,090,934.91 1,185,267.11
    other obligations
    vi) Other items for which the bank is 289,110.10 208,210.82 3,751,673.24 2,500,207.16 832,288.62
    contingently liable
    Total 2,288,813.77 3,065,900.16 8,107,964.81 7,236,997.57 5,484,468.85

    F - 16
    SCHEDULES - SUMMARISED STATEMENT OF PROFIT AND LOSS ACCOUNT (UNCONSOLIDATED)
    Interest earned (Schedule 13) As on As on As on As on As on
    31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    I. Interest/discount on advances/bills 176,962.96 248,391.77 352,281.12 464,047.15 506,326.39
    II. Income on investments 139,775.28 114,929.92 119,441.64 155,741.15 177,362.96
    III. Interest on balances with Reserve 21,217.30 27,196.03 12,000.74 13,996.15 15,119.22
    Bank of India and other inter-bank funds
    IV. Others 21,840.15 4,392.53 5,779.58 4,099.89 11,130.60
    Total 359,795.69 394,910.25 489,503.08 637,884.34 709,939.17

    F - 17
    Other Income (Schedule 14) 31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    I. Commission, exchange and brokerage 39,961.99 48,045.03 59,142.55 76,172.35 96,408.60
    II. Profit on sale of investments ( Net ) 5,871.71 5,677.81 16,498.39 25,672.90 21,167.92
    III. Profit/(Loss) on revaluation of - (16,775.14) (7,035.01) (5.65) -
    investments ( Net )
    IV. Profit / loss on sale of land, buildings 19.39 121.27 110.41 (29.54) (104.56)
    and other assets, including leased
    Assets ( Net )
    V. Profit on exchange transactions 10,012.66 3,733.99 6,926.98 11,792.49 15,871.36
    VI. Income earned by way of dividends, etc., 3,171.83 5,969.68 1,974.06 4,096.03 5,734.83
    from subsidiaries/companies and/or
    joint ventures abroad/in India
    VII. Income from financial lease 1,177.91 836.34 318.64 266.70 91.86
    VIII. Miscellaneous Income 14,136.53 10,083.50 9,013.27 8,942.61 10,511.52
    Total 74,352.02 57,692.48 86,949.27 126,907.89 149,681.53

    F - 18
    Interest expended (Schedule 15) 31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    I. Interest on deposits 181,321.85 190,835.80 270,725.81 379,368.47 433,342.85
    II. Interest on Reserve Bank of India/ 13,215.58 21,415.55 29,384.40 25,550.10 12,280.48
    Inter-bank borrowings
    III. Others 9,367.04 22,116.86 19,180.56 24,234.37 27,601.45
    - - - - -
    Total 203,904.47 234,368.21 319,290.77 429,152.94 473,224.78

    F - 19
    Operating expenses (Schedule 16) 31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    i) Payments to and provisions for 81,230.44 79,325.81 77,858.69 97,473.12 127,546.46
    employees
    ii) Rent, taxes and lighting 7,963.51 8,965.01 9,934.18 12,951.37 15,895.75
    iii) Printing and stationery 1,756.39 1,738.73 1,888.78 2,328.21 2,423.24
    iv) Advertisement and publicity 1,094.42 884.27 1,732.32 2,512.30 2,240.45
    v) (a) Depreciation on Bank’s Property 6,280.23 5,277.48 6,510.42 7,391.24 9,291.55
    (other than Leased Assets)
    (b) Depreciation on Leased Assets 1,011.09 746.44 289.37 240.17 35.09
    vi) Directors’ fees, allowances and expenses 12.33 10.78 12.32 9.98 6.11
    vii) Auditors’ fees and expenses (including 635.60 622.83 973.46 1,036.97 1,115.98
    to branch auditors)
    viii) Law charges 494.86 573.60 604.51 746.12 966.19
    ix) Postages, telegrams, telephones, etc. 1,022.48 1,181.69 2,165.77 2,797.33 3,215.81
    x) Repairs and maintenance 1,702.71 1,891.50 2,358.27 1,605.88 3,279.07
    xi) Insurance 3,407.64 3,552.86 4,158.44 5,290.19 6,838.34
    xii) Other expenditure 10,639.28 13,464.17 17,599.53 22,104.16 30,332.76
    Total 117,250.98 118,235.17 126,086.06 156,487.04 203,186.80

    F - 20
    SCHEDULE 17 — PRINCIPAL ACCOUNTING POLICIES
    A. BASIS OF PREPARATION
    The accompanying financial statements have been prepared under the historical cost convention as modified for
    derivatives and foreign currency transactions, as enumerated in Part C below. They conform to Generally Accepted
    Accounting Principles (GAAP) in India, which comprise the statutory provisions, guidelines of regulatory authorities,
    Reserve Bank of India (RBI), accounting standards/guidance notes issued by the Institute of Chartered Accountants
    of India (ICAI), and the practices prevalent in the banking industry in India.
    B. 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 the accounting estimates is recognised prospectively in the current and future periods.
    C. PRINCIPAL ACCOUNTING POLICIES
    1. Revenue recognition
    1.1 Income and expenditure are accounted on accrual basis, except otherwise stated below. In respect of banks’ foreign
    offices, income is recognised as per the local laws of the country in which the respective foreign office is located.
    1.2 Interest income is recognised in the Profit and Loss Account as it accrues except (i) income from non-performing
    assets (NPAs), comprising of advances, leases and investments, which is recognised upon realisation, as per the
    prudential norms prescribed by the RBI/ respective country regulators (hereafter collectively referred to as
    Regulatory Authorities), (ii) interest on application money on investments (iii) overdue interest on investments
    and bills discounted, (iv) Income on Rupee Derivatives designated as “Trading”.
    1.3 Profit or loss on sale of investments is credited/debited to Profit and Loss Account (Sale of Investments). Profit
    on sale of investments in the ‘Held to Maturity’ category shall be appropriated net of applicable taxes to ‘Capital
    Reserve Account’. Loss on sale will be recognized in the Profit and Loss Account.
    1.4 Income from finance leases is calculated by applying the interest rate implicit in the lease to the net investment
    outstanding on the lease, over the primary lease period. Leases effective from April 1, 2001 are accounted as
    advances at an amount equal to the net investment in the lease. The lease rentals are apportioned between principal
    and finance income based on a pattern reflecting a constant periodic return on the net investment outstanding in
    respect of finance leases. The principal amount is utilized for reduction in balance of net investment in lease and
    finance income is reported as interest income.
    1.5 Income (other than interest) on investments in “Held to Maturity” (HTM) category acquired at a discount to the
    face value, is recognised as follows:
    a) On Interest bearing securities, it is recognised only at the time of sale/redemption.
    b) On zero-coupon securities, it is accounted for over the balance tenor of the security on a constant yield
    basis.
    1.6 Dividend is accounted on an accrual basis where the right to receive the dividend is established.
    1.7 All other commission and fee incomes are recognised on their realisation except for (i) Guarantee commission on
    deferred payment guarantees, which is spread over the period of the guarantee and (ii) Commission on Government
    Business, which is recognised as it accrues.
    1.8 One time Insurance Premium paid under Special Home Loan Scheme (December 2008 to June 2009) is amortised
    over average loan period of 15 years.
    2. Investments
    Investments are accounted for in accordance with the extant regulatory guidelines. The bank follows trade date method
    for accounting of its investments.

    F - 21
    2.1 Classification
    Investments are classified into 3 categories, viz. Held to Maturity, Available for Sale and Held for Trading categories
    (hereafter called categories). Under each of these categories, investments are further classified into the following
    six groups:
    i. Government Securities,
    ii. Other Approved Securities,
    iii. Shares,
    iv. Debentures and Bonds,
    v. Subsidiaries/Joint ventures and
    vi. Others.
    2.2 Basis of classification
    i. Investments that the Bank intends to hold till maturity are classified as Held to Maturity.
    ii. Investments that are held principally for resale within 90 days from the date of purchase are classified as
    Held for Trading.
    iii. Investments, which are not classified in the above two categories, are classified as Available for Sale.
    iv. An investment is classified as Held to Maturity, Available for Sale or Held for Trading at the time of its
    purchase and subsequent shifting amongst categories is done in conformity with regulatory guidelines.
    v. Investments in subsidiaries, joint ventures and associates are classified under Held to Maturity.
    2.3 Valuation
    i. In determining the acquisition cost of an investment:
    (a) Brokerage/commission received on subscriptions is reduced from the cost.
    (b) Brokerage, commission, securities transaction tax etc. paid in connection with acquisition of
    investments are expensed upfront and excluded from cost.
    (c) Broken period interest paid/received on debt instruments is treated as interest expense/income and is
    excluded from cost/sale consideration.
    (d) Cost is determined on the weighted average cost method.
    (e) The transfer of a security amongst the above three categories is accounted for at the least of acquisition
    cost/book value/market value on the date of transfer, and the depreciation, if any, on such transfer is
    fully provided for.
    ii. Treasury Bills and Commercial Papers are valued at carrying cost.
    iii. Held to Maturity category: Each scrip under Held to Maturity category is carried at its acquisition cost or
    at amortised cost, if acquired at a premium over the face value. Any premium on acquisition is amortised
    over the remaining maturity period of the security on constant yield basis. Such amortisation of premium is
    adjusted against income under the head “interest on investments”. A provision is made for diminution,
    other than temporary. Investments in subsidiaries, joint ventures and associates (both in India and abroad)
    are valued at historical cost except for investments in Regional Rural Banks, which are valued at carrying
    cost (i.e book value).
    iv. Available for Sale and Held for Trading categories: Each scrip in the above two categories is revalued at
    the market price or fair value determined as per Regulatory guidelines, and only the net depreciation of
    each group for each category is provided for and net appreciation, is ignored. On provision for depreciation,
    the book value of the individual securities remains unchanged after marking to market.
    v. Security receipts issued by an asset reconstruction company (ARC) are valued in accordance with the
    guidelines applicable to non-SLR instruments. Accordingly, in cases where the security receipts issued by
    the ARC are limited to the actual realisation of the financial assets assigned to the instruments in the
    concerned scheme, the Net Asset Value, obtained from the ARC, is reckoned for valuation of such
    investments.

    F - 22
    vi. Investments are classified as performing and non-performing, based on the guidelines issued by the RBI in
    case of domestic offices and respective regulators in case of foreign offices. Investments of domestic offices
    become non performing where:
    (a) Interest/installment (including maturity proceeds) is due and remains unpaid for more than 90 days.
    (b) In the case of equity shares, in the event the investment in the shares of any company is valued at
    Re. 1 per company on account of the non availability of the latest balance sheet, those equity shares
    would be reckoned as NPI.
    (c) If any credit facility availed by the issuer is NPA in the books of the bank, investment in any of the
    securities issued by the same issuer would also be treated as NPI and vice versa.
    (d) The above would apply mutatis-mutandis to preference shares where the fixed dividend is not paid.
    (e) The investments in debentures/bonds, which are deemed to be in the nature of advance, are also
    subjected to NPI norms as applicable to investments.
    (f) In respect of foreign offices, provisions for non performing investments are made as per the local
    regulations or as per the norms of RBI, whichever is higher.
    vii. The Bank has adopted the Uniform Accounting Procedure prescribed by the RBI for accounting of Repo
    and Reverse Repo transactions [other than transactions under the Liquidity Adjustment Facility (LAF) with
    the RBI]. Accordingly, the securities sold/purchased under Repo/Reverse repo are treated as outright sales/
    purchases and accounted for in the Repo/Reverse Repo Accounts, and the entries are reversed on the date
    of maturity. Costs and revenues are accounted as interest expenditure/income, as the case may be. Balance
    in Repo/Reverse Repo Account is adjusted against the balance in the Investment Account.
    viii. Securities purchased/sold under LAF with RBI are debited/credited to Investment Account and reversed
    on maturity of the transaction. Interest expended/earned thereon is accounted for as expenditure/revenue.
    3. Loans/Advances and Provisions thereon
    3.1 Loans and Advances are classified as performing and non-performing, based on the guidelines issued by the
    RBI. Loan assets become non-performing where:
    i. In respect of term loan, interest and/or instalment of principal remains overdue for a period of more than 90
    days;
    ii. In respect of an Overdraft or Cash Credit advance, the account remains “out of order”, i.e. if the outstanding
    balance exceeds the sanctioned limit/drawing power continuously for a period of 90 days, or if there are no
    credits continuously for 90 days as on the date of balance-sheet, or if the credits are not adequate to cover
    the interest due during the same period;
    iii. In respect of bills purchased/discounted, the bill remains overdue for a period of more than 90 days;
    iv. In respect of agricultural advances for short duration crops, where the instalment of principal or interest
    remains overdue for 2 crop seasons;
    v. In respect of agricultural advances for long duration crops, where the principal or interest remains overdue
    for one crop season.
    3.2 Non-Performing advances are classified into sub-standard, doubtful and loss assets, based on the following criteria
    stipulated by RBI:
    i. Sub-standard: A loan asset that has remained non-performing for a period less than or equal to 12 months.
    ii. Doubtful: A loan asset that has remained in the sub-standard category for a period of 12 months.
    iii. Loss: A loan asset where loss has been identified but the amount has not been fully written off.
    3.3 Provisions are made for NPAs as per the extant guidelines prescribed by the regulatory authorities, subject to
    minimum provisions as prescribed below by the RBI:
    Substandard Assets: i. A general provision of 10%
    ii. Additional provision of 10% for exposures which are unsecured ab-initio
    (where realisable value of security is not more than 10 percent ab-initio)

    F - 23
    Doubtful Assets:
    — Secured portion: i. Up to one year — 20%
    ii. One to three years — 30%
    iii. More than three years — 100%
    — Unsecured portion 100%
    Loss Assets: 100%
    3.4 In respect of foreign offices, provisions for non performing advances are made as per the local regulations or as
    per the norms of RBI, whichever is higher.
    3.5 The sale of NPAs is accounted as per guidelines prescribed by the RBI, which requires 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. Net book value is outstandings as reduced by specific provisions held and ECGC
    claims received.
    3.6 Advances are net of specific loan loss provisions, unrealised interest, ECGC claims received and bills rediscounted.
    3.7 For restructured/rescheduled assets, provisions are made in accordance with the guidelines issued by RBI, which
    requires that the present value of future interest due as per the original loan agreement, compared with the present
    value of the interest expected to be earned under the restructuring package, be provided in addition to provision
    for NPAs. The provision for interest sacrifice, arising out of the above, is reduced from advances.
    3.8 In the case of loan accounts classified as NPAs, an account may be reclassified as a performing account if it
    conforms to the guidelines prescribed by the regulators.
    3.9 Amounts recovered against debts written off in earlier years are recognised as revenue.
    3.10 Unrealised Interest recognised in the previous year on advances which have become non-performing during the
    current year, is provided for.
    3.11 In addition to the specific provision on NPAs, general provisions are also made for standard assets as per the
    extant guidelines prescribed by the RBI. The provisions on standard assets are not reckoned for arriving at net
    NPAs. These provisions are reflected in Schedule 5 of the balance sheet under the head “Other Liabilities &
    Provisions — Others.”
    4. Floating Provisions
    In accordance with the Reserve Bank of India guidelines, the bank has an approved policy for creation and utilisation
    of floating provisions separately for advances, investments and general purpose. The quantum of floating provisions
    to be created would be assessed at the end of each financial year. The floating provisions would be utilised only for
    contingencies under extra ordinary circumstances specified in the policy with prior permission of Reserve Bank of
    India.
    5. Provision for Country Exposure
    In addition to the specific provisions held according to the asset classification status, provisions are held for individual
    country exposures (other than the home country). Countries are categorised into seven risk categories, namely,
    insignificant, low, moderate, high, very high, restricted and off-credit, and provisioning made as per extant RBI guidelines.
    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 exposures. The provision is reflected in schedule 5 of the balance sheet under
    the “Other liabilities & Provisions — Others”.
    6. Derivatives
    6.1 The Bank enters into derivative contracts, such as foreign currency options, interest rate swaps, currency swaps,
    and cross currency interest rate swaps and forward rate agreements in order to hedge on-balance sheet/off-balance
    sheet assets and liabilities or for trading purposes. The swap contracts entered to hedge on-balance sheet assets
    and liabilities are structured in such a way that they bear an opposite and offsetting impact with the underlying
    on-balance sheet items. The impact of such derivative instruments is correlated with the movement of the underlying
    assets and accounted in accordance with the principles of hedge accounting.

    F - 24
    6.2 Derivative contracts classified as hedge are recorded on accrual basis. Hedge contracts are not marked to market
    unless the underlying Assets/Liabilities are also marked to market.
    6.3 Except as mentioned above, all other derivative contracts are marked to market as per the generally accepted
    practices prevalent in the industry. In respect of derivative contracts that are marked to market, changes in the
    market value are recognised in the profit and loss account in the period of change. Any receivable under derivatives
    contracts, which remain overdue for more than 90 days, are reversed through profit and loss account.
    6.4 Option premium paid or received is recorded in profit and loss account at the expiry of the option. The Balance in
    the premium received on options sold and premium paid on options bought have been considered to arrive at
    Mark to Market value for forex Over the Counter options.
    6.5 Exchange Traded Foreign Exchange and Interest Rate Futures entered into for trading purposes are valued at
    prevailing market rates based on quoted and observable market prices and the resultant gains and losses are
    recognized in the Profit and Loss Account.
    7. Fixed Assets and Depreciation
    7.1 Fixed assets are carried at cost less accumulated depreciation.
    7.2 Cost includes cost of purchase and all expenditure such as site preparation, installation costs and professional
    fees incurred on the asset before it is put to use. Subsequent expenditure incurred on assets put to use is
    capitalised only when it increases the future benefits from such assets or their functioning capability.
    7.3 The rates of depreciation and method of charging depreciation in respect of domestic operations are as under:
    Sr. No. Description of fixed assets Method of charging depreciation Depreciation/am ortisation rate
    1 Computers & ATM Straight Line Method 33.33% every year
    2 Computer software forming Written Down Value Method 60%
    an integral part of hardware
    3 Computer Software which Straight Line Method 100%, in the year of acquisition
    does not form an integral
    part of hardware
    4 Assets given on financial Straight Line Method At the rate prescribed under
    lease up to 31st March 2001 Companies Act 1956
    5 Other fixed assets Written Down Value Method At the rate prescribed under
    Income-tax Rules 1962
    7.4 In respect of assets acquired for domestic operations during the year, depreciation is charged for half an year in
    respect of assets used for up to 182 days and for the full year in respect of assets used for more than 182 days,
    except depreciation on computers, ATM and software, which is charged for the full year irrespective of the period
    for which the asset was put to use.
    7.5 Items costing less than Rs. 1,000 each are charged off in the year of purchase.
    7.6 In respect of leasehold premises, the lease premium, if any, is amortised over the period of lease and the lease
    rent is charged in the respective year.
    7.7 In respect of assets given on lease by the Bank on or before 31st March 2001, the value of the assets given on
    lease is disclosed as Leased Assets under fixed assets, and the difference between the annual lease charge (capital
    recovery) and the depreciation is taken to Lease Equalisation Account.
    7.8 In respect of fixed assets held at foreign offices, depreciation is provided as per the regulations/norms of the
    respective countries.
    8. Leases
    The asset classification and provisioning norms applicable to advances, as laid down in Para 3 above, are applied to
    financial leases also.
    9. Impairment of Assets
    Fixed Assets are reviewed for impairment whenever events or changes in circumstances warrant 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

    F - 25
    carrying amount of an asset to future net discounted cash flows expected to be generated by the asset. If such assets
    are considered to be impaired, the impairment to be recognised is measured by the amount by which the carrying
    amount of the asset exceeds the fair value of the asset.
    10. Effect of changes in the foreign exchange rate
    10.1 Foreign Currency Transactions
    i. Foreign currency transactions are recorded on initial recognition in the reporting currency by applying to
    the foreign currency amount the exchange rate between the reporting currency and the foreign currency on
    the date of transaction.
    ii. Foreign currency monetary items are reported using the Foreign Exchange Dealers Association of India
    (FEDAI) closing spot/forward rates.
    iii. Foreign currency non-monetary items, which are carried in terms at historical cost, are reported using the
    exchange rate at the date of the transaction.
    iv. Contingent liabilities denominated in foreign currency are reported using the FEDAI closing spot rates.
    v. Outstanding foreign exchange spot and forward contracts held for trading are revalued at the exchange
    rates notified by FEDAI for specified maturities, and the resulting profit or loss is included in the Profit and
    Loss account.
    vi. Foreign exchange forward contracts which are not intended for trading and are outstanding at the balance
    sheet date, are valued at the closing spot rate. The premium or discount arising at the inception of such a
    forward exchange contract is amortised as expense or income over the life of the contract.
    vii. Exchange differences arising on the settlement of monetary items at rates different from those at which
    they were initially recorded are recognised as income or as expense in the period in which they arise.
    viii. Gains/Losses on account of changes in exchange rates of open position in currency futures trades are
    settled with the exchange clearing house on daily basis and such gains/losses are recognised in the profit
    and loss account.
    10.2 Foreign Operations
    Foreign Branches of the Bank and Offshore Banking Units have been classified as Non-integral Operations and
    Representative Offices have been classified as Integral Operations.
    a. Non-integral Operations
    i. Both monetary and non-monetary foreign currency assets and liabilities including contingent liabilities
    of non-integral foreign operations are translated at closing exchange rates notified by FEDAI at the
    balance sheet date.
    ii. Income and expenditure of non-integral foreign operations are translated at quarterly average closing
    rates.
    iii. Exchange differences arising on net investment in non-integral foreign operations are accumulated in
    Foreign Currency Translation Reserve until the disposal of the net investment.
    iv. The Assets and Liabilities of foreign offices in foreign currency (other than local currency of the
    foreign offices) are translated into local currency using spot rates applicable to that country.
    b. Integral Operations
    i. Foreign currency transactions are recorded on initial recognition in the reporting currency by applying
    to the foreign currency amount the exchange rate between the reporting currency and the foreign
    currency on the date of transaction.
    ii. Monetary foreign currency assets and liabilities of integral foreign operations are translated at closing
    exchange rates notified by FEDAI at the balance sheet date and the resulting profit/loss is included
    in the profit and loss account.
    iii. Foreign currency non-monetary items which are carried in terms of historical cost are reported using
    the exchange rate at the date of the transaction.

    F - 26
    11. Employee Benefits
    11.1 Short Term Employee Benefits
    The undiscounted amount of short-term employee benefits, such as medical benefits, casual leave etc. which are
    expected to be paid in exchange for the services rendered by employees are recognised during the period when
    the employee renders the service.
    11.2 Post Employment Benefits
    i. Defined Benefit Plan
    a. The Bank operates a Provident Fund scheme. All eligible employees are entitled to receive benefits
    under the Bank’s Provident Fund scheme. The Bank contributes monthly at a determined rate (currently
    10% of employee’s basic pay plus eligible allowance). These contributions are remitted to a trust
    established for this purpose and are charged to Profit and Loss Account. The trust funds are retained
    as deposits in the bank. The bank is liable for annual contributions and interest on deposits held by
    the bank, which is payable at Government specified minimum rate of interest on provident fund
    balances of Government Employees. The bank recognises such annual contributions and interest as
    an expense in the year to which they relate.
    b. The bank operates gratuity and pension schemes which are defined benefit plans.
    c. The Bank provides for gratuity to all eligible employees. The benefit is in the form of lump sum
    payments to vested employees on retirement, on death while in employment, or on termination of
    employment, for an amount equivalent to 15 days basic salary payable for each completed year of
    service, subject to a maximum amount of Rs. 350,000. Vesting occurs upon completion of five years of
    service. The Bank makes annual contributions to a fund administered by trustees based on an
    independent external actuarial valuation carried out annually.
    d. The Bank provides for pension to all eligible employees. The benefit is in the form of monthly
    payments as per rules and regular payments to vested employees on retirement, on death while in
    employment, or on termination of employment. Vesting occurs at different stages as per rules. The
    pension liability is reckoned based on an independent actuarial valuation carried out annually. The
    Bank makes annual contribution to the pension fund at 10% of salary in terms of SBI Pension Fund
    Rules. The balance is retained in the special provision account to be utilised at the time of settlement.
    e. The cost of providing defined benefits is determined using the projected unit credit method, with
    actuarial valuations being carried out at each balance sheet date. Actuarial gains/losses are immediately
    recognised in the statement of profit and loss and are not deferred.
    ii. Other Long Term Employee benefits
    a. All eligible employees of the bank are eligible for compensated absences, silver jubilee award, leave
    travel concession, retirement award and resettlement allowance. The costs of such long term employee
    benefits are internally funded by the Bank.
    b. The cost of providing other long term benefits is determined using the projected unit credit method
    with actuarial valuations being carried out at each balance sheet date. Past service cost is immediately
    recognised in the statement of profit and loss and is not deferred.
    12. Provision for Taxation
    12.1 Income tax expense is the aggregate amount of current tax and deferred tax. Current year taxes are determined in
    accordance with the provisions of Accounting Standard 22 and tax laws prevailing in India after taking into account
    taxes of foreign offices, which are based on the tax laws of respective jurisdiction. Deferred tax adjustments comprise
    of changes in the deferred tax assets or liabilities during the period.
    12.2 Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantially
    enacted prior to the balance sheet date. Deferred tax assets and liabilities are recognised on a prudent basis for
    the future tax consequences of timing differences arising between the carrying values of assets and liabilities
    and their respective tax basis, and carry forward losses. The impact of changes in the deferred tax assets and
    liabilities is recognised in the profit and loss account.

    F - 27
    12.3 Deferred tax assets are recognised and reassessed at each reporting date, based upon management’s judgement
    as to whether realisation is considered 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 assets can be realised against
    future profits.
    13. Earning per Share
    13.1 The Bank reports basic and diluted earnings per share in accordance with AS 20 -‘Earnings per Share’ issued by
    the ICAI. Basic earnings per share are computed by dividing the net profit after tax by the weighted average
    number of equity shares outstanding for the year.
    13.2 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 are computed using the
    weighted average number of equity shares and dilutive potential equity shares outstanding at year end.
    14. Accounting for Provisions, Contingent Liabilities and Contingent Assets
    14.1 In conformity with AS 29, “Provisions, Contingent Liabilities and Contingent Assets”, issued by the Institute of
    Chartered Accountants of India, the Bank recognises provisions only when it has a present obligation as a result
    of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle
    the obligation, and when a reliable estimate of the amount of the obligation can be made.
    14.2 No provision is recognised for
    i. any possible obligation that arises from past events and the existence of which will be confirmed only by
    the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of
    the Bank; or
    ii. any present obligation that arises from past events but is not recognised because
    a. it is not probable that an outflow of resources embodying economic benefits will be required to settle
    the obligation; or
    b. a reliable estimate of the amount of obligation cannot be made.
    Such obligations are recorded as Contingent Liabilities. These are assessed at regular intervals and
    only that part of the obligation for which an outflow of resources embodying economic benefits is
    probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be
    made.
    14.3 Contingent Assets are not recognised in the financial statements as this may result in the recognition of income
    that may never be realised.
    15. Cash and cash equivalents
    Cash and cash equivalents include cash on hand and in ATM’s, and gold in hand, balances with RBI, balances with
    other banks, and money at call and short notice.
    16. Employee Share Purchase Scheme
    In accordance with the Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999 issued
    by the Securities and Exchange Board of India (“SEBI”), the excess of market price one day prior to the date of issue of
    the shares over the price at which they are issued is recognised as employee compensation cost.
    17. Share Issue Expenses
    Share issue expenses are charged to the Share Premium Account.

    F - 28
    SCHEDULE 18 — NOTES TO ACCOUNTS
    (Am ount in Rupees in crores)
    18.1 Capital:
    1. Capital Adequacy Ratio:
    Items As at As at
    31 Mar 2010 31 Mar 2009
    (i) Capital to Risk-weighted Assets Ratio
    (%) (Basel-I) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.00 12.97
    (ii) Capital to Risk-weighted Assets Ratio -
    Tier I capital (%) (Basel-I) . . . . . . . . . . . . . . . . . . . . 8.46 8.53
    (iii) Capital to Risk-weighted Assets Ratio -
    Tier II capital (%)(Basel-I) . . . . . . . . . . . . . . . . . . . . 3.54 4.44
    (iv) Capital to Risk-weighted Assets Ratio
    (%) (Basel-II) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.39 14.25
    (v) Capital to Risk-weighted Assets Ratio -
    Tier I capital (%) (Basel-II) . . . . . . . . . . . . . . . . . . . . 9.45 9.38
    (vi) Capital to Risk-weighted Assets Ratio -
    Tier II capital (%)(Basel-II) . . . . . . . . . . . . . . . . . . . . 3.94 4.87
    (vii) Percentage of the Shareholding of
    Government of India . . . . . . . . . . . . . . . . . . . . . . . . . 59.41 59.41
    (viii) Number of Shares held by Government
    of India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 377,207,200 377,207,200
    (ix) Amount of Subordinated Debt
    Tier-II capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rs. 27,174.40 Rs. 27,174.40
    (x) Amount raised by issue of Subordinated
    Debt Tier-II capital during the year . . . . . . . . . . . . . . Nil Rs. 8,425.00*
    (xi) Out of which ((ix), above) amount eligible
    for Upper Tier-II capital . . . . . . . . . . . . . . . . . . . . . . Rs. 19,466.40 Rs. 19,466.40
    (xii) Amount raised by issue of IPDI
    (Inclusive of Hybrid Bonds as detailed below) . . . . . . Rs. 4,805.96** Rs. 3,169.85
    * Include Rs. 425 crores which has been acquired consequent to acquisition of erstwhile State Bank of Saurashtra
    (eSBS).
    ** Includes Rs. 2,000.00 crores raised during the year, of which Rs. 550 crores invested by SBI employee Pension
    Fund, not reckoned for the purpose of Tier-I Capital as per RBI instructions.
    2. Share capital:
    a) During the year, the Bank has allotted 2,422 equity shares of Rs. 10 each for cash at a premium of Rs. 1,580
    per equity share aggregating to Rs. 3,850,980 out of 88,278 shares kept in abeyance under Right Issue —
    2008. Out of the total subscription of Rs. 3,850,980 received, Rs. 24,220 was transferred to Share Capital
    Account and Rs. 3,826,760 was transferred to Share Premium Account.
    b) The Bank has kept in abeyance the allotment of 85,856 (Previous Year 88,278) Equity Shares of Rs. 10/-
    each issued as a part of Rights Issue, since they are subject to title disputes or are subjudice.

    F - 29
    3. Hybrid Bonds:
    The details of bonds issued in foreign currency, which qualify for Hybrid Tier I Capital and outstanding are as
    under:
    Particulars Date of Issue Tenor Am ount Equivalent as Equivalent as
    on 31-03-10 on 31-03-09
    Bonds issued under 15.02.2007 Perpetual USD 400 Rs. 1,795.71 Rs. 2,028.65
    the MTN Programme- Non Call million
    12th Series 10-25 years
    Bonds issued under 25.06.2007 Perpetual USD 225 Rs. 1,010.25 Rs. 1,141.20
    the MTN Programme- Non Call million
    14th Series . . . . . . . . . . 10 years
    1 day
    Total . . . . . . . . . . . . . . USD 625 Rs. 2,805.96 Rs. 3,169.85
    million

    If the Bank does not exercise call option by 27.6.2017, the interest rate will be raised and fixed rate will be converted
    to floating rate. These bonds have been listed in Singapore stock exchange.
    18.2 Investments
    1. The Details of investments and the movement of provisions held towards depreciation on investments of the Bank
    are given below:
    1. Value of Investments
    Particulars As at As at
    31-Mar-2010 31-Mar-2009
    i) Gross value of Investments
    (a) In India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278,081.60 270,886.40
    (b) Outside India . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,409.19 6,795.19
    ii) Provisions for Depreciation
    (a) In India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513.14 1,415.32
    (b) Outside India . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187.58 312.31
    iii) Net value of Investments
    (a) In India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277,568.46 269,471.08
    (b) Outside India . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,221.61 6,482.88
    2. Movement of provisions held towards depreciation on investments
    i) Opening Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,727.63 981.42
    ii) Add: Addition on account of acquisition of eSBS . . . . 0 31.96
    iii) Add: Provisions made during the year . . . . . . . . . . . . . 359.37 1,440.18
    iv) Less: Provisions utilised during the year . . . . . . . . . . . 38.92 —
    v) Less: Write back of excess provision during the year . . 1,347.36 725.93
    vi) Closing balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 700.72 1,727.63
    Notes:
    a. Investments amounting to Rs. 11,000 Crores (Previous Year Rs. 10,725 Crores) are kept as margin with RBI/Clearing
    Corporation of India Limited towards Real Time Gross Settlement/Securities Settlement (RTGS/NDS).
    b. Other investments include deposits with NABARD under RIDF Deposit Scheme amounting to Rs. 17,833.89 Crores
    (Previous Year Rs.15,923.14 Crores).

    F - 30
    c. During the year, the Bank has infused additional capital of Rs. 865.20 Crores (Previous Year Rs.923.66 Crores) in
    Subsidiaries and Joint Ventures as follows.
    Name of the JV/Associate/RRB Am ount
    SBI Cards & Payment Services Private Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78.00
    SBI Capital Markets Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228.96
    State Bank of Hyderabad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350.00
    State Bank of Patiala . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170.00
    SBI Custodial Services Private Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.24
    Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 865.20
    d. During the year, the Bank has infused fresh investment in following companies:
    Name of the JV/Associate/RRB Am ount
    SBI General Insurance Co. Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111.00
    Macquarie SBI Infra Management Pte. Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.25
    SBI Macquarie Infra Management (P) Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.89
    SBI Macquarie Infra Trustee Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.01
    Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115.15
    e. Sale of 6.50% stake in UTI Asset Management Company Limited at a sale price of Rs. 162.50 crores and 6.50%
    stake in UTI Trustee Company Private Limited at a sale price of Rs. 0.01 crores, resulting in profit of Rs. 81.45
    crores. After sale the investment has been shown under Investment in Shares as against Investment in
    Subsidiaries and/or Joint Ventures last year.
    f. During the year one subsidiary SBI Factors & Commercial Services Private limited is merged with another
    subsidiary Global Trade Finance Limited.
    2. Repo Transactions
    The details of securities sold and purchased under repos and reverse repos during the year are given below:
    Particulars Minimum Maximum Daily Average Balance as
    Outstanding outstanding outstanding on year end
    during the year during the year during the year
    Securities sold under repos — 7,249.37 241.63 —
    (—) (31,000.71) (4,418.48) (—)
    Securities purchased under reverse repos — 74295.69 25253.38 —
    (—) (50747.57) (9517.78) (—)
    (Figures in brackets are for Previous Year)

    F - 31
    3. Non-SLR Investment Portfolio
    (a) Issuer composition of Non SLR Investments:
    The issuer composition of Non-SLR investments of the Bank is given below:
    Extent of
    ‘Below
    Extent of Investment Extent of Extent of
    Private Grade’ ‘Unrated’ ‘Unlisted’
    No. Issuer Am ount Placement Securities* Securities* Securities*
    (i) PSUs 16,024.10 3,699.26 176.61 — 27.56
    (13,945.85) (460.15) (50.00) (54.62) (54.62)
    (ii) FIs 2,957.68 2,204.78 592.59 22.61 874.50
    (1,573.83) (603.32) (496.77) (25.09) (555.27)
    (iii) Banks 4,304.04 1,897.85 30.25 56.10 146.14
    (3,219.45) (1,200.67) (122.37) (25.36) (177.78)
    (iv) Private Corporates 6,483.08 1,050.11 23.17 377.31 1,023.60
    (6,399.74) (412.83) (156.92) (1,265.41) (1,417.44)
    (v) Subsidiaries/Joint ventures** 5,692.16 — — — —
    (4,926.23) (—) (—) (—) (—)
    (vi) Others 23,026.93 392.88 81.94 1,079.50 561.61
    (19,403.40) (358.27) (137.60) (330.20) (232.02)
    (vii) Provision held towards depreciation 439.07 — 25.99 79.13 57.47
    (1,624.69) (—) (109.84) (75.75) (101.17)
    Total 58,048.92 9,244.88 878.57 1,456.39 2,575.94
    Previous Year (47,843.81) (3,035.24) (853.82) (1,624.93) (2,335.96)
    (Figures in brackets are for Previous Year)
    * Investment in equity, equity linked instruments, asset backed securitised instruments, Government securities
    and pass through certificates have not been segregated under these categories, as these are not covered
    under relevant RBI Guidelines.
    ** Investments in Subsidiaries/Joint Ventures have not been segregated into various categories as these are not
    covered under relevant RBI Guidelines.
    b) Non Performing Non-SLR Investments
    Particulars Current Year Previous Year
    Opening Balance 598.22 225.23
    Additions during the year 25.02 386.15
    Reductions during the year 290.44 13.16
    Closing balance 332.80 598.22
    Total provisions held 323.50 387.90
    18.3 Derivatives
    a) Forward Rate Agreements/Interest Rate Swaps
    Particulars As at 31-Mar-2010 As at 31-Mar-2009
    i) The notional principal of swap agreements 93,984.43 109,936.12
    ii) Losses which would be incurred if counterparties
    failed to fulfil their obligations under the agreements 1,355.92 2,131.06
    iii) Collateral required by the Bank upon entering into swaps Nil Nil
    iv) Concentration of credit risk arising from the swaps Not significant Not Significant
    v) The fair value of the swap book 266.49 47.67

    F - 32
    b) Exchange Traded Interest Rate Derivatives
    Sr. Particulars Current Previous
    No. Year Year
    1 Notional principal amount of exchange traded interest rate
    derivatives undertaken during the year
    a Interest Rate Futures 56,935.76 Nil
    b 10 Year Government of India Security 431.57 Nil
    2 Notional principal amount of exchange traded interest rate
    derivatives outstanding as on 31st March 2010
    a Interest Rate Futures Nil Nil
    b 10 Year Government of India Security Nil Nil
    3 Notional principal amount of exchange traded interest rate
    derivatives outstanding and not “highly effective” N.A. N.A.
    4 Marked-to-market value of exchange traded interest rate
    derivatives outstanding and not “highly effective” N.A. N.A.
    c) Disclosures on Risk Exposure in Derivatives
    (A) Qualitative Disclosure
    i. The Bank currently deals in over-the-counter (OTC) interest rate and currency derivatives as also in
    Interest Rate and Currency Futures. Interest Rate Derivatives dealt by the Bank are rupee interest rate
    swaps, foreign currency interest rate swaps and forward rate agreements. Currency derivatives dealt
    with by the Bank are currency swaps, rupee dollar options and cross-currency options. The products
    are offered to the Bank’s customers to hedge their exposures and the Bank enters into derivatives
    contracts to cover such exposures. Derivatives are also used by the Bank both for trading as well as
    hedging on-balance sheet items. The Bank also deals in a mix of these generic instruments. The Bank
    has done Option deals and Structured Products with customers, but they have been covered on a back
    to back basis in inter -bank market.
    ii. Derivative transactions carry market risk i.e. the probable loss the Bank may incur as a result of adverse
    movements in interest rates/exchange rates and credit risk as the probable loss the Bank may incur if
    the counterparties fail to meet their obligations. The Bank’s “Policy for Derivatives” which is duly
    approved by the Board mandates the market risk parameters (cut-loss triggers, open position limits,
    PV01 etc.) as well as customer eligibility criteria (credit rating, tenure of relationship etc.) for entering
    into derivative transactions.Credit risk is controlled by entering into derivative transactions only with
    counterparties in respect of whom appropriate limits are set for taking into account their ability to
    honour obligations.The Bank enters into ISDA agreements with such counterparties.
    iii. The Asset Liability Management Committee (ALCO) of the Bank oversees efficient management of these
    risks. Market Risk Management Department (MRMD), independently identifies measures, monitors market
    risk associated with derivative transactions, assists ALCO in controlling and managing these risks and
    reports compliance with policy prescriptions to the Risk Management Committee of the Board (RMCB)
    at regular intervals.
    iv. The accounting policy for derivatives has been drawn-up in accordance with RBI guidelines, the details
    of which are presented under Schedule 17: Principal Accounting Policy (PAP) for the financial year 2009-
    10.
    v. Interest Rate Swaps are mainly used at Foreign Offices for hedging of the assets and liabilities.
    vi. Apart from hedging swaps, swaps at Foreign Offices consist of back to back swaps done at our Foreign
    Offices which are done mainly for hedging of FCNR deposits at Global Markets, Kolkata.
    vii. Majority of our swaps were done with First class counterparty banks.

    F - 33
    B) Quantitative Disclosures
    Sr. Currency Interest Rate
    No. Particulars Derivatives Derivatives
    Current Previous Current Previous
    Year Year Year Year
    (i) Derivatives (Notional Principal Amount)
    a) For hedging 4,134.16 4,075.20 18,116.55 14,197.35
    b) For trading 52,802.42 111,307.23 75,867.88 93,493.15
    (ii) Marked to Market Positions
    a) Asset 89.91 15,041.54 59.52 1,333.78
    b) Liability 0.00 94.67 8.95 338.92
    (iii) Credit Exposure 6,030.89 20,205.45 2,510.40 3,715.10
    (iv) Likely impact of one percentage
    change in interest rate (100* PV01)
    a) on hedging derivatives 12.45 -44.74 2,104.37 -23.33
    b) on trading derivatives 171.19 -0.53 -37.35 13.51
    v) Maximum and Minimum of 100* PV 01
    observed during the year
    a) on hedging 13.39/0.07 5.23/ 2,107.30/ 12.19/
    -62.92 2,704.05 -44.57
    b) on trading 187/-0.10 -0.09/ 24.80/ 20.63/
    -0.36 -83.24 -0.40
    # The notional amount of derivatives done between Global Markets department and IBG department as on
    31st March 2010 amounted to Rs. 5,663.80 crores are not included here. Out of this, IRS/FRA amounting
    to Rs. 5,258.49 crores has been undertaken for hedging of FCNB corpus and hence also not marked to
    market.
    1. The derivatives done between SBI Foreign Offices as on 31st March 2010 amounted to Rs. 4,419.60
    crores.
    2. The Outstanding notional amount of interest rate derivatives which are not marked to market but where
    the underlying Assets/Liabilities are not marked to market as on 31st March 2010 amount to Rs. 2,0129.61
    crores.
    18.4 Asset Quality
    a) Non-Performing Asset
    Particulars As at 31-Mar-2010 As at 31-Mar-2009
    i) Net NPAs to Net Advances (%) 1.72% 1.79%
    ii) Movement of NPAs (Gross)
    (a) Opening balance 15,714.00 12,837.34
    (b) Additions (Fresh NPAs) during the year 11,842.84 11,140.21
    Sub Total (I) 27,556.84 23,977.55
    (c) Reductions due to upgradations during the year 3,972.37 3,402.20
    (d) Reductions due to recoveries (Excluding
    recoveries made from upgraded accounts) 2,059.10 2,965.85
    (e) Reductions due to Write-offs during the year 1,990.48 1,895.50
    Sub-total (II) 8,021.95 8,263.55
    (f) Closing balance (I-II) 19,534.89 15,714.00

    F - 34
    iii) Movement of Net NPAs
    (a) Opening balance 9,677.42 7,424.33
    (b) Additions during the year 6,135.24 6,696.02
    (c) Reductions during the year . . . . . . . . . . . . . 4,942.49 4,442.93
    (d) Closing balance 10,870.17 9,677.42
    iv) Movement of provisions for NPAs
    (a) Opening balance 6,036.58 5,390.20
    (b) Provisions made during the year 5,707.61 4,087.82
    (c) Written-off / write-back of excess provision 3,079.47 3,441.44
    (d) Closing balance 8,664.72 6,036.58
    b) Provisioning Coverage Ratio:
    The provisioning to Gross-Non-Performing Assets of the Bank as on 31st March 2010 is 59.23% (Previous
    Year 56.76%).
    Additional provision pursuant to RBI guidelines for augmentation to 70% coverage by 30.09.2010 (extension
    allowed upto 30.09.2011 subject to fulfillment of specified conditions) has not been made during the year.
    c) Details of Loan Assets subjected to Restructuring during the period from 01.04.2009 to 31.03.2010
    CDR SME Debt
    Particulars Particulars Mechanism Restructuring Others Total
    Standard advances No. of Borrowers . . . 30 602 3,035 3,667
    restructured (29) (6,355) (30,859) (37,423)
    Amount outstanding . 2,793.14 1,020.53 13,043.42 16,857.09
    (285.01) (1,290.50) (9,201.83) (10,777.43)
    Sacrifice (diminution 340.66 11.71 156.55 508.92
    in the fair value) (22.09) 20.87 (155.73) (198.69)
    Sub standard advances No. of Borrowers . . . 1 76 90 167
    restructured (3) (184) (1,473) (1,660)
    Amount outstanding . 72.49 10.47 1,755.44 1,838.40
    (15.06) (53.87) (81.35) (150.28)
    Sacrifice (diminution in 7.56 0.15 146.05 153.76
    the fair value) (0.00) (0.82) (2.34) (3.16)
    Doubtful advances No. of Borrowers . . . 0 15 21 36
    restructured (0) (5) (214) (219)
    Amount outstanding 0 9.44 294.30 303.74
    (0.00) (1.96) (72.17) (74.13)
    Sacrifice (diminution in the 0 0.03 12.54 12.57
    fair value) (0.00) (0.21) (3.09) (3.30)
    TOTAL No. of Borrowers . . . 31 693 3,146 3,870
    (32) (6,544) (32,546) (39,122)
    Amount outstanding . 2,865.63 1,040.44 15,093.16 18,999.23
    (300.07) (1,346.33) (9,355.35) (11,001.75)
    Sacrifice (diminution in the 348.22 11.89 315.14 675.25
    fair value) . . . . . . . . (22.09) (21.90) (161.16) (205.15)

    F - 35
    (Figures in brackets are of the previous year)
    d) Details of financial assets sold to Securitization Company (SC)/Reconstruction Company (RC) for Asset
    Reconstruction
    Particulars Current Year Previous Year
    i) No. of Accounts 3 5
    ii) Aggregate value (net of provisions) of accounts sold to SC/RC 10.40 15.20
    iii) Aggregate consideration 14.00 92.93
    iv) Additional consideration realized in respect Nil Nil
    of accounts transferred in earlier years
    v) Aggregate gain / (loss) over net book value 3.60 77.73
    e) Details of non-performing financial assets purchased:
    Particulars Current Year Previous Year
    1) (a) No. of Accounts purchased during the year . Nil Nil
    (b) Aggregate outstanding Nil Nil
    2) (a) Of these, number of accounts restructured during the year Nil Nil
    (b) Aggregate outstanding Nil Nil
    f) Details of non-performing financial assets sold:
    Particulars Current Year Previous Year
    1) No. of Accounts sold 3 5
    2) Aggregate outstanding 23.84 288.77
    3) Aggregate Price offer consideration 14.00 127.68
    3) Aggregate consideration received as per RBI Guidelines 14.00 92.93
    g) Provision on Standard Assets:
    The Provision on Standard Assets held by the Bank in accordance with RBI guidelines is as under:
    Particulars As at 31-Mar-2010 As at 31-Mar-2009
    Provision towards Standard Assets 2,292.72 2,245.14
    h) Business Ratios
    Particulars Current Year Previous Year
    i. Interest Income as a percentage to Working Funds 6.80% 7.29%
    ii. Non-interest income as a percentage to Working Funds 1.43% 1.45%
    iii. Operating Profit as a percentage to Working Funds 1.75% 2.05%
    iv. Return on Assets 0.88% 1.04%
    v. Business (Deposits plus advances) per employee (Rs. in thousands) 63,600 55,600

    F - 36
    vi. Profit per employee (Rs. in thousands) 446.03 473.77
    i) Asset Liability Management : Maturity pattern of certain items of assets and liabilities as at 31st March
    2010.
    1 day 2 to 7 8 to 14 15 to 28 29 days Over 3 Over 6 Over 1 Over 3 Over 5 TOTAL
    days days days to 3 m onths m onths year & years & years
    m onths & upto 6 & upto upto upto 5
    m onths 1 year 3 years years
    Deposits . . . . . 19,136.97 23,515.23 27,061.73 20,483.98 43,403.06 64,260.77 90,342.06 262,985.18 135,539.12 117,388.13 804,116.23
    (20,642.43) (31,451.06) (31,596.91) (14,592.93) (37,853.31) (56,627.41) (86,114.19) (181,909.61) (102,864.77) (178,420.51) (742,073.13)
    Advances . . . . 43,973.66 12,572.36 39,713.35 8,888.53 33,914.61 35,494.45 27,616.38 275,367.66 59,944.08 94,429.07 631,914.15
    (54,693.27) (1,641.65) (30,886.76) (80,26.04) (33,299.25) (26,620.89) (19,452.19) (240,706.90) (42,276.20) (84,900.05) (542,503.20)
    Investments . . . 135.56 245.22 219.58 1,802.52 10,415.07 7,991.92 6,095.10 51,770.22 59,533.46 147,581.42 285,790.07
    (—) (10,518.82) (7,505.92) (4,494.75) (21,733.42) (7,848.99) (6,777.18) (32,238.61) (60,331.76) (124,504.50) (275,953.95)
    Borrowings . . . 3,569.92 12,079.20 2,786.39 4,802.38 19,350.31 10,058.28 5,485.78 6,793.20 5,535.16 32,550.98 103,011.60
    (2,220.65) (7,155.64) (2,985.88) (5,531.82) (10,490.96) (8,523.60) (4,384.83) (9,173.88) (3,052.88) (30,537.79) (84,057.93)
    Foreign Currency 30,336.67 1,154.84 3,140.20 6,536.37 25,802.73 24,648.61 9,814.20 15,229.77 14,071.49 11,433.65 142,168.53
    Assets (22,290.34) (3,040.54) (3,609.25) (7,332.46) (29,855.55) (19,109.41) (5,943.45) (17,732.69) (11,663.61) (11,379.36) (131,956.66)
    Foreign Currency 18,796.82 5,661.65 3,980.66 6,970.08 27,311.98 20,193.38 20,468.81 15,065.98 9,552.04 946.74 128,948.14
    Liabilities . . (17,552.92) (9,415.01) (4,319.68) (9,152.31) (14,704.28) (15,303.10) (14,831.34) (17,878.41) (6,550.34) (1,677.01) (111,384.40)
    (Figures in brackets are as at 31st March 2009)
    j) Concentration of Deposits
    Total Deposits of twenty largest depositors . . . . . . . . . . . . . . 42,087.72
    Percentage of Deposits of twenty largest depositors To Total
    Deposits of the Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.24%
    k) Concentration of Advance
    Total Advance to twenty largest borrowers . . . . . . . . . . . . . . . 189,991.50
    Percentage of Advance to twenty largest borrowers to Total
    Advances of the Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.68%
    l) Concentration of Exposures
    Total Exposure to twenty largest borrowers/customers . . . . . . 191,017.34
    Percentage of Exposures to twenty largest
    borrowers/customers to Total Exposures of the Bank on
    borrowers/customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.81%
    m) Concentration of NPAs
    Total Exposures to top four NPA Accounts . . . . . . . . . . . . . . . 940.61
    n) Sector-Wise NPAs
    Sr. No. Sector Percentage of NPAs to Total Advances in that
    1 Agricultural & allied activities 2.60%
    2 Industry (Micro & small,Medium and Large) 3.89%
    3 Services 3.91%
    4 Personal Loans 2.90%
    o) Overseas Assets, NPAs And Revenue
    Sr. No. Particulars Am ount
    1 Total Assets 123,263.30
    2 Total NPAs (Gross) 1,698.59

    F - 37
    3 Total Revenue 4,717.57
    p) Off-Balance Sheet SPVs sponsored
    Name of SPV Sponsored
    Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nil
    Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nil
    18.5 Exposures
    The Bank has lending to sectors which are sensitive to asset price fluctuations. These sensitive sectors are real
    estate and capital markets.
    a) Real Estate Sector
    Particulars As at 31-Mar-2010 As at 31-Mar-2009
    Direct exposure
    i) Residential Mortgages 72,983.57 46,281.86
    - Of which individual housing loans up to Rs.20 Lakhs 47,406.27 30,146.88
    ii) Commercial Real Estate 13,440.36 16,939.71
    iii) Investments in Mortgage Backed Securities (MBS)
    and other securitised exposures:
    Residential 108.91 667.26
    Commercial Real Estate 96.43 5.25
    Indirect Exposure 12.48 662.01
    Fund based and non-fund based exposures on
    National Housing Bank
    (NHB) and Housing Finance Companies (HFCs) 592.32 216.14
    Total 87,125.16 64,104.97
    b) Capital Market
    Particulars As at 31-Mar-2010 As at 31-Mar-2009
    1) 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. 6,771.29 5,793.37
    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. 20.67 26.94
    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. 1.66 43.89
    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 the primary security other than shares/
    convertible bonds/convertible debentures/units of equity
    oriented mutual funds does not fully cover the advances. 199.07 734.26
    5) Secured and unsecured advances to stockbrokers and
    guarantees issued on behalf of stockbrokers and

    F - 38
    market makers. 442.21 17.52
    6) 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. 14.70 —
    7) Bridge loans to companies against expected equity
    flows/issues. 70.00 —
    8) 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. — —
    9) Financing to stockbrokers for margin trading. 375.73 358.27
    10) Exposures to Venture Capital Funds (both registered — 0.08
    and unregistered) 375.73 358.27
    Total Exposure to Capital Market 7,895.33 6,974.33
    c) Country-Risk Categorywise
    As per the extant RBI guidelines, the country where exposure of the Bank is categorised into various risk
    categories listed in the following table. The country exposure (net funded) of the Bank for any country does
    not exceed 1% of its total assets except to a country in insignificant risk category. Provision of Rs. 1.59 crores
    has been made in accordance with RBI guidelines.
    Risk Category Exposure (net) Provision held
    As at As at As at As at
    31-Mar-2010 31-Mar-2009 31-Mar-2010 31-Mar-2009
    Insignificant 871.65 33,980.81 Nil 37.53
    Low 47,689.14 10,859.90 39.12 Nil
    Moderate 7,286.76 6,237.82 Nil Nil
    High 4,158.92 4,783.54 Nil Nil
    Very High 2,512.50 1,022.73 Nil Nil
    Restricted / Off-Credit 11.19 765.16 Nil Nil
    Total 62,530.16 57,649.96 39.12 37.53
    d) Single Borrower and Group Borrower exposure limits exceeded by the Bank:
    The Bank had taken single borrower exposure in excess of the prudential limit in the cases given below:
    Name of the Borrower Exposure Limit Period during Outstanding
    ceiling Sanctioned which as on
    (Peak Level) limit exceeded 31.03.10
    Indian Oil Corporation Ltd 21,348.20 24,721.60 April 2009 to
    August 2009
    21,598.20 24,131.37 September 2009
    to January 2010
    21,848.20 23,603.00 February 2010 to
    March 2010 14,659.35
    Reliance Industries Limited 12,808.92 15,037.64 April 2009 to
    August 2009
    12,958.92 14,222.74 September 2009

    F - 39
    to January 2010
    13,108.92 14,304.84 February 2010 to
    March 2010 12,374.74
    Bharat Heavy Electricals Limited 12,808.92 14,070.00 July 2009 to
    August 2009
    12,958.92 14,153.80 September 2009
    to January 2010
    13,108.92 15,961.24 February 2010
    to March 2010 12,437.68
    Tata Group . . . . . . . . . . . . . 43,196.39 43,484.14 December 2009
    to January 2010
    43,696.39 44,552.64 February 2010
    to March 2010 23,530.88
    e) Unsecured Advances
    Particulars As at 31 Mar 2010
    a) Total Unsecured Advances of the bank . . . . . . . . . . . . . . 135,885.59
    i) Of which amount of advances outstanding against charge over intangible
    securities such as rights, licences, authority etc. Nil
    ii) The estimated value of such intangible securities (as in (i) above) Nil
    f) Letter of Comfort issued for Subsidiaries:
    The Bank has issued letters of comfort on behalf of its subsidiaries. Outstanding letters of comfort as on 31st
    March 2010 aggregate to Rs. 199.16 crores (Previous Year Rs. 166.45 crores.) In the Bank’s assessment no
    financial impact is likely to arise.
    18.6 Miscellaneous
    a) Withdrawal from Reserves
    During the year, the bank has withdrawn following amount from the reserves
    Particulars As at 31-Mar-2010 As at 31-Mar-2009
    Dividend on account of ESPS Shares and
    Dividend distribution tax thereon — 8.58
    b) Disclosure of Penalties imposed by RBI:
    1.45 crores (Previous year - Nil)
    c) Status of customer complaints:
    Particulars As at 31-Mar-2010 As at 31-Mar-2009
    No. of complaints pending at the beginning of the year 1,150 1,030
    Addition on account of acquisition of eSBS — 258
    No. of complaints received during the year 30,735 23,571
    No. of complaints redressed during the year 30,610 23,709
    No. of complaints pending at the end of the year 1,275 1,150
    d) Awards passed by the Banking Ombudsman:
    Particulars Current Year Previous Year
    No. of unimplemented Awards at the beginning of the year 1 4
    No. of Awards passed by the Banking Ombudsman during the year 19 19
    No. of Awards implemented during the year 16 22

    F - 40
    No. of unimplemented Awards at the end of the year 4 1
    e) With regard to disclosures relating to Micro, Small & Medium Enterprises under the Micro, Small & Medium
    Enterprises Development Act 2009 there have been no reported cases of delayed payments or of interest
    payments due to delay in such payments Micro, Small & Medium Enterprises.
    f) Fees/remuneration received in respect of the bancassurance business in 2009-10
    Name of Company Am ount
    SBI Life Insurance Co. Ltd 212.28
    The New India Assurance Co. Ltd 11.58
    Total 223.86
    18.7 Disclosure Requirements as per Accounting Standards
    a) Changes in Accounting Policy
    The Bank has implemented a special home loan scheme for the period December 2008 to June 2009 arising out
    of which one time insurance premium has been paid covering the lives of the borrowers over the tenure of the
    home loan availed. The total insurance premium paid amounting to Rs. 151.37 crores on account of such
    scheme is charged off over average loan period of 15 years and accordingly, 1/15th of the premium amount
    has been charged off during the year instead of fully charging in the accounts. Consequent to this change
    the profit after tax has gone up by Rs. 93.26 crores.
    b) Employee Benefits
    i. Defined Benefit Plans
    The following table sets out the status of the defined benefit Pension Plan and Gratuity Plan as required
    under AS 15 (Revised 2005):
    Pension Plans Gratuity
    Particulars Current Previous Current Previous
    Year Year Year Year
    Change in the present value of the defined benefit
    obligation
    Opening defined benefit obligation at 1st April 2009 19,328.72 16,810.00 3,778.18 3,544.18
    Liability acquired on acquisition of State Bank of Saurashtra 0.00 571.36 0.00 121.66
    Current Service Cost 869.21 755.83 145.25 130.20
    Interest Cost 1,564.00 1,362.00 298.82 285.00
    Actuarial losses (gains) 1,242.37 905.07 -99.38 -88.56
    Benefits paid -1,288.69 -1,075.54 -233.73 -214.30
    Closing defined benefit obligation at 31st March 2010 21,715.61 19,328.72 3,889.14 3,778.18
    Change in Plan Assets
    Opening fair value of plan assets as at 1st April 2009 13,710.13 13,084.80 3,746.73 3,544.18
    Asset acquired on acquisition of State Bank of Saurashtra 1,096.81 172.91 0.00 90.21
    Dr Paid by Bank 615.48 0.00 0.00 0.00
    Expected Return on Plan assets 0.00 1,046.78 290.39 278.88
    Contributions by employer 347.98 356.44 0.00 49.00
    Benefit Paid -1,288.69 -1,075.54 -233.73 -214.30
    Actuarial Gains 233.12 124.74 7.89 -1.24

    F - 41
    Pension Plans Gratuity
    Particulars Current Previous Current Previous
    Year Year Year Year
    Closing fair value of plan assets at 31st March 2010 14,714.83 13,710.13 3,811.28 3,746.73
    Reconciliation of present value of the obligation and
    fair value of the plan assets
    Present Value of Funded obligation at 31st March 2010 21,715.61 19,328.72 3,889.14 3,778.18
    Fair Value of Plan assets at 31st March 2010 14,714.83 13,710.13 3,811.28 3,746.73
    Deficit/(Surplus) 7,000.78 5,618.59 77.86 31.45
    Unrecognised Past Service Cost — — — —
    Net Liability/(Asset) 7,000.78 5,618.59 77.86 31.45
    Amount Recognised in the Balance Sheet
    Liabilities 21,715.61 19,328.72 3,889.14 3,778.18
    Assets 14,714.83 13,710.13 3,811.28 3,746.73
    Net Liability/(Asset) recognised in Balance Sheet 7,000.78 5,618.59 77.86 31.45
    Net Cost recognised in the profit and loss account
    Current Service Cost 869.21 755.83 145.25 130.20
    Interest Cost 1,564.00 1,362.00 298.82 285.00
    Expected return on plan assets -1,096.81 -1,046.78 -290.39 -278.88
    Net actuarial losses/(Gain) recognised during the year 1,009.25 780.33 -107.27 -87.32
    Total costs of defined benefit plans included in
    Schedule 16 “Payments to and provisions for employees” 2,345.65 1,851.38 46.41 49.00
    Reconciliation of expected return and actual return
    on Plan Assets
    Expected Return on Plan Assets 1,096.81 1,046.78 290.39 278.88
    Actuarial Gain/(loss) on Plan Assets 233.12 124.74 7.89 -1.24
    Actual Return on Plan Assets 1,329.93 1,171.52 298.28 277.64
    Reconciliation of opening and closing net liability
    /(asset) recognised in Balance Sheet
    Opening Net Liability as At 1st April 2009 5,618.59 3,725.20 31.45 0.00
    Expenses as recognised in profit and loss account 2,345.65 1,851.38 46.41 49.00
    Liabiliy on account of acquisition of eSBS 0.00 571.36 0.00 121.66
    Assets on account of acquisition of eSBS 0.00 172.91 0.00 90.21
    Dr. Paid by bank 615.48 0.00 0.00 0.00
    Employers Contribution 347.98 356.44 0.00 49.00
    Net liability/(Asset) recognised in Balance Sheet 7,000.78 5,618.59 77.86 31.45

    F - 42
    Investments under Plan Assets of Gratuity Fund & Pension Fund as on 31st March 2010 are as follows:
    Category of Assets Pension Fund Gratuity Fund
    % of Plan Assets % of Plan Assets
    Central Govt. Securities 19.87 51.68
    State Govt. Securities 0.00 0.00
    Public Sector Bonds 0.00 0.00
    Corporate Bonds 16.10 44.85
    FDR / TDR with Bank 0.00 0.00
    Bank Deposits 0.00 0.00
    Others 64.03 3.47
    Total 100 100
    Principal actuarial assumptions:
    Pension Plan Gratuity Plan
    Current Year Previous Year Current Year Previous Year
    Discount Rate 8.50% 8.00% 8.00% 7.85%
    Expected Rate of return on Plan Asset 8.00% 8.00% 8.00% 8.00%
    Salary Escalation 5.00% 5.00% 5.00% 5.00%
    The estimates of future salary growth, factored in actuarial valuation, take account of inflation, seniority,
    promotion and other relevant factors such as supply and demand in the employment market. Such estimates
    are very long term and are not based on limited past experience/immediate future. Empirical evidence also
    suggests that in very long term, consistent high salary growth rates are not possible, which has been relied
    upon by the auditors.
    ii. Employees Provident Fund
    In terms of the guidance on implementing the AS-15 (Revised 2005) issued by the Institute of the Chartered
    Accountants of India, the Employees Provident Fund set up by the Bank is treated as a defined benefit plan
    since the Bank has to meet the specified minimum rate of return. As at the year end, no shortfall remains
    unprovided for. Accordingly, other related disclosures in respect of Provident Fund have not been made and
    an amount of Rs.351.59 crores (Previous Year Rs. 337.53 crores) is recognised as an expense towards the
    Provident Fund scheme of the Bank included under the head “Payments to and provisions for employees” in
    Profit and Loss Account.
    iii. Other Long term Employee Benefits
    Amount of Rs. 151.24 crores (Previous Year write back of an amount of Rs.49.05 crores) is provided towards
    Long term Employee Benefits and is included under the head “Payments to and provisions for employees” in
    Profit and Loss account.
    Details of Provisions made for various long Term Employees’ Benefits during the year;
    Sr. No. Long Term Employees’ Benefits
    Current Year Previous Year
    1 Privilege Leave (Encashment) incl. leave encashment
    at the time of retirement 107.54 -33.58
    2 Leave Travel and Home Travel Concession 29.14 -0.81
    (Encashment/Availment)
    3 Sick Leave 12.84 -17.06
    4 Silver Jubilee Award 2.47 -6.35
    5 Resettlement Expenses on Superannuation -7.99 2.55
    6 Casual Leave 5.06 5.78
    7 Retirement Award 2.18 0.42
    Total 151.24 -49.05

    F - 43
    The bank has accounted for Rs. 100 crores for contribution to be made as initial corpus to a Trust to be
    formed in 2010-2011 under a welfare scheme to be applicable from 2010-2011 in respect of incentive scheme to
    ceiling prescribed from meritorious children pursuing specified professional courses at elite institutes in India
    pending detailed assessment and computation to be carried out actuarially in 2010-11.
    c) Segment Reporting:
    1. Segment identification
    A) Primary (Business Segment)
    The following are the primary segments of the Bank:
    — Treasury
    — Corporate/Wholesale Banking
    — Retail Banking
    — Other Banking Business
    The present accounting and information system of the Bank does not support capturing and extraction
    of the data in respect of the above segments separately. However, based on the present internal,
    organizational and management reporting structure and the nature of their risk and returns, the data on
    the primary segments have been computed as under:
    a) Treasury — The Treasury Segment includes the entire investment portfolio and trading in foreign
    exchange contracts and derivative contracts. The revenue of the treasury segment primarily consists
    of fees and gains or losses from trading operations and interest income on the investment portfolio.
    b) Corporate/Wholesale Banking — The Corporate/Wholesale Banking segment comprises the
    lending activities of Corporate Accounts Group, Mid Corporate Accounts Group and Stressed
    Assets Management Group. These include providing loans and transaction services to corporate
    and institutional clients and further include non treasury operations of foreign offices.
    c) Retail Banking — The Retail Banking Segment comprises of branches in National Banking Group,
    which primarily includes personal Banking activities including lending activities to corporate
    customers having Banking relations with branches in the National Banking Group. This segment
    also includes agency business and ATM’s
    d) Other Banking business — Segments not classified under (a) to (c) above are classified under
    this primary segment.
    B) Secondary (Geographical Segment)
    i) Domestic Operations — Branches/Offices having operations in India
    ii) Foreign Operations — Branches/Offices having operations outside India and offshore Banking
    units having operations in India
    C) Pricing of Inter-segmental transfers
    The Retail Banking segment is the primary resource mobilizing unit. The Corporate/Wholesale Banking
    and Treasury segments are recipient of funds from Retail Banking. Market related Funds Transfer Pricing
    (MRFTP) is followed under which a separate unit called Funding Centre has been created. The Funding
    Centre notionally buys funds that the business units raise in the form of deposits or borrowings and
    notionally sell funds to business units engaged in creating assets.
    D) Allocation of Expenses, Assets and liabilities
    Expenses incurred at Corporate Centre establishments directly attributable either to Corporate/Wholesale
    and Retail Banking Operations or to Treasury Operations segment, are allocated accordingly. Expenses
    not directly attributable are allocated on the basis of the ratio of number of employees in each segment/
    ratio of directly attributable expenses.
    The Bank has certain common assets and liabilities which cannot be attributed to any segment and the
    same are treated as unallocated.

    F - 44
    2) Segment Information
    Part A: Primary (Business segments)
    Business Segments Treasury Corporate/ Retail Other Elimination Total
    Wholesale Banking Banking
    Banking Operations
    Revenue # 22,054.89 26,196.28 37,158.24 85,409.41
    (19,838.88) (24,241.41) (32,398.93) (76,479.22)
    Unallocated Revenue # 552.66
    Result # 4,666.00 4,755.35 6,491.25 15,912.60
    (3,744.64) (5,071.11) (7,222.86) (16,038.61)
    Unallocated Income/(Expenses) - net # -1,986.52
    (-1,857.97)
    Operating Profit # 13,926.08
    (14,180.64)
    Tax # 4,760.03
    (5,059.41)
    Extraordinary Profit # —
    Net Profit # 9,166.05
    (9,121.23)
    Other Information :
    Segment Assets * 312,395.60 305,469.17 428,690.99 1,046,555.76
    (319,326.13) (259,269.56) (379,998.13) (958,593.82)
    Unallocated Assets * 6,857.97
    (5,838.26)
    Total Assets * 1,053,413.73
    (964,432.08)
    Segment Liabilities * 165,998.92 294,696.86 491,939.42 952,635.20
    (190,703.86) (250,717.59) (430,328.68) (871,750.13)
    Unallocated Liabilities* 34,829.33
    (34,734.25)
    Total Liabilities * 987,464.53
    (906,484.38)
    (Figures in brackets are for the Previous Year)
    Part B: Secondary (Geographic Segments)
    Domestic Foreign Total
    Current Previous Current Previous Current Previous
    Year Year Year Year Year Year
    Revenue # 81,244.50 71,563.34 4,717.57 4,915.88 85,962.07 76,479.22
    Assets * 930,150.43 856,147.58 123,263.30 108,284.50 1,053,413.73 964,432.08
    * As at 31st March 2010
    # For the year ended 31st March 2010

    F - 45
    e) Related Party Disclosures
    1. Related Parties
    A. SUBSIDIARIES
    i. DOMESTIC BANKING SUBSIDIARIES
    1. State Bank of Bikaner & Jaipur
    2. State Bank of Hyderabad
    3. State Bank of Indore
    4. State Bank of Mysore
    5. State Bank of Patiala
    6. State Bank of Travancore
    7. SBI Commercial and International Bank Ltd.
    ii. FOREIGN BANKING SUBSIDIARIES
    1. SBI (Mauritius) Ltd.
    2. State Bank of India (Canada)
    3. State Bank of India (California)
    4. Commercial Bank of India LLC, Moscow (##)
    5. PT Bank SBI Indonesia
    6. Nepal SBI Bank Ltd.
    iii. DOMESTIC NON-BANKING SUBSIDIARIES
    1. SBI Capital Markets Limited
    2. SBI DFHI Limited
    3. SBI Mutual Funds Trustee Company Pvt. Ltd
    4. SBI CAP Securities Ltd.
    5. SBI CAPS Ventures Ltd.
    6. SBI CAP Trustees Co. Ltd.
    7. SBI Cards & Payment Services Pvt. Ltd.(##)
    8. SBI Funds Management Pvt. Ltd. (##)
    9. SBI Life Insurance Company Ltd. (##)
    10. SBI Pension Fund Private Limited
    11. SBI Custodial Services Private Limited (##)
    12. SBI Global Factors Ltd.
    13. SBI General Insurance Company Ltd(##)
    14. SBI Payment services Pvt. Ltd.
    iv. FOREIGN NON-BANKING SUBSIDIARIES
    1. SBICAP (UK) Ltd.
    2. SBI Funds Management (International) Private Ltd.(##)
    ## These entities are jointly controlled.
    B. JOINTLY CONTROLLED ENTITIES
    1. GE Capital Business Process Management Services Pvt. Ltd
    2. C-Edge Technologies Ltd.
    3. Macquarie SBI Infrastructure Management Pte. Ltd.

    F - 46
    4. Macquarie SBI Infrastructure Trustees Ltd.
    5. SBI Macquarie Infrastructure Management Pvt. Ltd.
    6. SBI Macquarie Infrastructure Trustees Pvt. Ltd.
    C. ASSOCIATES
    i. Regional Rural Banks
    1. Andhra Pradesh Grameena Vikas Bank
    2. Arunachal Pradesh Rural Bank
    3. Cauvery Kalpatharu Grameena Bank
    4. Chhattisgarh Gramin Bank
    5. Deccan Grameena Bank
    6. Ellaquai Dehati Bank
    7. Meghalaya Rural Bank
    8. Krishna Grameena Bank
    9. Langpi Dehangi Rural Bank
    10. Madhya Bharat Gramin Bank
    11. Malwa Gramin Bank
    12. Marwar Ganganagar Bikaner Bank
    13. Mizoram Rural Bank
    14. Nagaland Rural Bank
    15. Parvatiya Gramin Bank
    16. Purvanchal Kshetriya Gramin Bank
    17. Samastipur Kshetriya Gramin Bank
    18. Saurashtra Gramin Bank
    19. Utkal Gramya Bank
    20. Uttaranchal Gramin Bank
    21. Vananchal Gramin Bank
    22. Vidisha Bhopal Kshetriya Gramin Bank
    ii. Others
    1. SBI Home Finance Limited
    2. Clearing Corporation of India Ltd.
    3. Bank of Bhutan
    4. UTI Asset Management Company Pvt. Ltd.(upto 19.01.2010)
    5. S S Ventures Services Ltd.
    6. Nepal SBI Bank Ltd.(upto 13.06.2009)*
    * Became a subsidiary of SBI w.e.f 14.06.2009
    D. Key Management Personnel of the Bank
    1. Shri O. P. Bhatt, Chairman
    2. Shri S. K. Bhattacharyya, Managing Director
    3. Shri R.Sridharan, Managing Director

    F - 47
    2. Parties with whom transactions were entered into during the year
    No disclosure is required in respect of related parties which are “State-controlled Enterprises” as per
    paragraph 9 of Accounting Standard (AS) 18. Further, in terms of paragraph 5 of AS 18, transactions in
    the nature of Banker-customer relationship are not required to be disclosed in respect of Key Management
    Personnel and relatives of Key Management Personnel. Other particulars are as under:
    1. C-Edge Technologies Ltd.
    2. GE Capital Business Process Management Services Pvt. Ltd.
    3. Macquarie SBI Infrastructure Management Ptv. Ltd.
    4. Macquarie SBI Infrastructure Trustees Ltd.
    5. SBI Macquarie Infrastructure Management Pvt. Ltd
    6. SBI Macquarie Infrastructure Trustees Pvt. Ltd.
    7. Bank Of Bhutan
    8. Nepal SBI Bank Ltd. (upto 13.06.2009)
    9. SBI Home Finance Ltd.
    10. S.S. Ventures Services Ltd.
    11. Shri O. P. Bhatt, Chairman
    12. Shri S. K. Bhattacharyya, Managing Director
    13. Shri R.Sridharan, Managing Director
    3. Transactions and Balances
    Particulars Associates/ Key Total
    Joint Management
    Ventures Personnel
    Deposits # 112.84 0.00 112.84
    (91.07) (0.00) (91.07)
    Other Liabilities # 0.00 0.00 0.00
    (0.03) (0.00) (0.03)
    Investments # 24.88 0.00 24.88
    (19.75) (0.00) (19.75)
    Advances # 0.00 0.00 0.00
    (0.00) 0.00 (0.00)
    Interest received* 0.00 0.00 0.00
    (0.00) 0.00 (0.00)
    Interest paid* 4.00 0.00 4.00
    (2.70) (0.00) (2.70)
    Income earned by way of dividend* 2.88 0.00 2.88
    (1.89) (0.00) (1.89)
    Other Income* 0.00 0.00 0.00
    (0.01) (0.00) (0.01)
    Other expenditure* 0.00 0.00 0.00
    (0.00) (0.00) (0.00)
    Management contracts * 0.00 0.63 0.63
    (0.00) (0.38) (0.38)
    (Figures in brackets are for Previous Year)
    # As at 31st March 2010
    * For the year ended 31st March 2010

    F - 48
    f) Lease:
    i) Financial Leases: The details are given below:
    Particulars As at 31-Mar-2010 As at 31-Mar-2009
    Gross investment in the leases __ 37.09
    Present value of minimum lease payments
    receivable Less than 1 year __ 6.48
    1 to 5 years — __
    5 years and above — —
    Total __ 6.48
    Present value of unearned finance income — 0.28
    ii) Operating Lease*
    A. Premises taken on Operating lease are given below
    Particulars As at 31-Mar-2010 As at 31-Mar-2009
    Not Later than 1 year 33.11 30.38
    Later than 1 year and not later than 5 years 69.74 100.60
    Later than 5 years 19.47 23.38
    Total 122.32 154.36
    Amount of lease payments recognized
    In P&L Account for the year 35.26 385.13
    B. Premises given on Operating lease are given below:
    Particulars As at 31-Mar-2010
    Original Cost of such premises 0.54
    Proportionate accumulated depreciation of such
    premises upto 31.03.2010 0.20
    Depreciation of such premises for the year ended 31.03.2010 0.04
    Not later than 1 year 0.00
    Later than 1 year and not later than 5 years 0.02
    Later than 5 years 0.00
    Operating leases primarily comprise office premises and staff residences, which are renewable at
    the option of the bank.
    * In respect of Non-Cancelable leases only.
    No contingent rents have been recognized in the Profit & Loss Account.
    f) Earnings per Share
    The Bank reports basic and diluted earnings per equity share in accordance with Accounting Standard 20 —
    “Earnings per Share”. “Basic earnings” per share is computed by dividing net profit after tax by the weighted
    average number of equity shares outstanding during the year.
    Particulars Current Year Previous Year
    Basic and diluted
    Weighted average no of equity shares used in computing
    basic earning per share 634,880,626 634,413,120
    Weighted average number of shares used in computing
    diluted earning per share 634,880,626 634,413,120
    Net profit 9,166.05 9,121.23
    Basic earnings per share (Rs.) 144.37 143.77
    Diluted earnings per share (Rs.) 144.37 143.77
    Nominal value per share (Rs.) 10.00 10.00

    F - 49
    g) Accounting for Taxes on Income
    i. During the year, Rs. 1,407.75 crores [Previous Year Rs. 1,055.10 crores] has been credited to Profit and
    Loss Account by way of adjustment of deferred tax.
    ii. The Bank has outstanding net deferred tax asset of Rs. 2,512.09 crores (Previous Year - Rs. 1,026.89
    crores), which has been included in other assets-others & other liabilities – others respectively. The
    break up of deferred tax assets and liabilities into major items is given below:
    Particulars As at 31-Mar-2010 As at 31-Mar-2009
    Deferred Tax Assets
    Provision for wage revision . . . . . . . . . . . . . . . . . 1,545.87 676.06
    Provision for long term employees’ benefits . . . . 1,158.61 689.21
    Ex-gratia paid under Exit option . . . . . . . . . . . . . 51.54 98.49
    Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181.71 174.00
    Net DTAs on account of FOs . . . . . . . . . . . . . . . . 117.24 *
    Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,054.97 1,637.76
    Deferred Tax Liabilities
    Depreciation on Fixed Assets . . . . . . . . . . . . . . . . 23.47 115.10
    Interest on securities . . . . . . . . . . . . . . . . . . . . . . 519.41 495.77
    Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 542.88 610.87
    Net Deferred Tax Assets/(Liabilities) . . . . . . . . 2,512.09 1,026.89
    * Net DTA of foreign offices as on 31.03.2009 was Rs. 91.25 crores
    h) Investments in jointly controlled entities
    Investments include Rs. 19.72 crores (Previous Year Rs.15.70 crores) representing Bank’s interest in the following
    jointly controlled entities.
    Sr. Name of the Company Am ount Country of
    No. Residence Holding %
    1 GE Capital Business Process Management 10.80 India 40%
    Services Pvt. Ltd. (10.80)
    2 C - Edge Technologies Ltd. . . . . . . . . 4.90 India 49%
    (4.90)
    3 Macquarie SBI Infra Management Pte Ltd 2.02 Singapore 45%
    (0.00)
    4 SBI Macquarie Infra Management (P) Ltd 1.89 India 45%
    (0.00)
    5 SBI Macquarie Infra Trustee (P) Ltd* 0.01 India 100%
    (0.00)
    6 Macquarie SBI Infra trustee Ltd# 0.10 Bermuda 45%
    (0.00)
    * JV Partner is expected to be included in the next quarter.
    # Indirect holding through Macquarie SBI Infra Management Pte. Limited
    (Figures in brackets relate to previous year)

    F - 50
    As required by AS 27, the aggregate amount of the assets, liabilities, income, expenses, contingent liabilities
    and commitments related to the Bank’s interests in jointly controlled entities are disclosed as under:
    Particulars As at 31-Mar-2010 As at 31-Mar-2009
    Liabilities
    Capital & Reserves 79.91 69.71
    Deposits — —
    Borrowings 0.40 0.26
    Other Liabilities & Provisions 62.92 28.65
    Total 143.23 98.62
    Assets
    Cash and Balances with RBI 0.06 0.01
    Balances with Banks and money at call and short notice 28.77 21.44
    Investments 1.62 3.52
    Advances — —
    Fixed Assets 9.92 10.57
    Other Assets 102.86 63.08
    Total 143.23 98.62
    Capital Commitments — —
    Other Contingent Liabilities — —
    Income
    Interest earned 3.60 0.00
    Other income 78.49 51.47
    Total 82.09 51.47
    Expenditure
    Interest expended — —
    Operating expenses 69.73 40.74
    Provisions & contingencies 6.27 4.23
    Total 76.00 44.97
    Profit 6.09 6.50
    j) Impairment of Assets
    In the opinion of the Bank’s Management, there is no impairment to the assets during the year to which
    Accounting Standard 28 — “Impairment of Assets” applies.
    k) Provisions, Contingent Liabilities & Contingent Assets
    a) Break-up of Provisions
    Particulars Current Year Previous Year
    Provision for Taxation
    Current Tax 6,166.62 5,971.52
    Fringe Benefit Tax 0.00 142.00
    Deferred Tax . -1,407.75 -1,055.10
    Other Tax 1.16 1.00
    Provision for Depreciation on Investments -987.99 707.16
    Provision on Non-Performing Assets 4,622.33 2,474.96
    Provision for Restructured Assets 525.53 0.00
    Provision for Agricultural Debt Waiver & Relief Scheme 0.00 140.00
    Provision on Standard Assets . . . . . . . . . . . . 80.06 234.82
    Provision for Other Assets 154.90 177.64
    Total 9,154.86 8,794.00

    F - 51
    b) Floating Provisions
    Particulars Current Year Previous Year
    Opening Balance Nil Nil
    Addition during the year Nil Nil
    Draw down during the year Nil Nil
    Closing Balance Nil Nil
    c) Description of Contingent Liabilities and Contingent Assets
    Sr. Particulars Brief Description
    No.
    1. Claims against the Bank not The bank is a party to various proceedings in the normal
    acknowledged as debts course of business. It 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 outstanding The Bank enters into foreign exchange contracts,
    forward exchange contracts currency options, forward rate agreements, currency
    swaps and interest rate swaps with inter-bank
    participants 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 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 that are
    recorded as contingent liabilities, are typically amounts
    used as a benchmark for the calculation of the interest
    component of the contracts.
    3. Guarantees given on behalf of As a part of its commercial banking activities, the Bank
    constituents, acceptances endorsements issues documentary credits and guarantees on behalf of
    and other obligations its customers. Documentary credits enhance the credit
    standing of the customers of the Bank. Guarantees
    generally represent irrevocable assurances that the Bank
    will make payment in the event of the customer failing to
    fulfill its financial or performance obligations.
    4. Other items for which the Group is The Bank is a party to various taxation matters in respect
    contingently liable of which appeals are pending. These are being contested
    by the Bank and not provided for. Further the Bank has
    made commitments to subscribe to shares in the normal
    course of business.
    d) The Contingent Liabilities mentioned above are dependent upon the outcome of Court/arbitration/out of
    Court settlements, disposal of appeals, the amount being called up, terms of contractual obligations,
    devolvement and raising of demand by concerned parties, as the case may be.
    e) Movement of provisions against Contingent Liabilities
    Particulars Current Year Previous Year
    Opening balance 85.54 77.44
    Additions during the year 77.69 26.48
    Reductions during the year 15.09 18.38
    Closing balance 148.14 85.54

    F - 52
    18.08Agricultural Debt Waiver and Debt Relief Scheme 2008
    As per the Agricultural Debt Waiver and Debt Relief Scheme 2008, the amount receivable from the Central Government
    on account of debt waiver is Rs. 5307 crores (net of receipts Rs. 3424 crores) and debt relief being Rs. 903.31 crores
    (net of the assets of Rs. 226.69 crores), which are treated as part of advances in accordance with the scheme read
    with circular issued by RBI.
    The Central Government has recently extended the last date of payment by “eligible farmers”, under debt relief
    scheme from 31.12.2009 to 30.06.2010 . In accordance with the scheme read with circular issued by RBI in this regard
    the dues amounting to Rs. 1068 crores by such “eligible farmers” (net of recovery of Rs. 2591 crores and write off
    of Rs. 284 crores) as of 31.03.2010 has been classified as standard advances under IRAC Norms.
    18.09 Amalgamation of State Bank of Indore
    Pursuant to a scheme of Amalgamation approved by the Central Board at its meeting on 19th June 2009, State Bank
    of Indore where SBI holds 98.05% stake, is to be merged with the bank. The Government of India has accorded
    sanctioned to the bank for entering into negotiations for acquiring the business including assets and liabilities of
    State Bank of Indore.
    18.10 Inter Office Account
    Inter Office Accounts between branches, controlling offices and local head offices and corporate centre
    establishments have been reconciled upto December 2009. Further, reconciliation is being done on an ongoing basis
    and no material effect is expected on the profit and loss account of the current year.
    18.11 Pending Wage Agreement
    The Eighth Bipartite Settlement entered into by the Indian Banks’ Association on behalf of the member Banks with
    the All India Unions of Workmen expired on 31st October 2007. Pending the execution the new agreement has been
    executed on 27th April 2010 to be effective from 1st November 2007 for workers as well as officers. Pending receipt
    of detailed circular of IBA regarding revision after due approval from the Central Government and detailed
    computations to be carried out by the Bank, a provision of Rs. 2559 crores (including Rs. 627 Crores for the period
    from 1-11-2007 to 31-3-2009 on revision of estimated % from 13.25 to 17.50) has been created during the year as
    against Rs. 1414 crores created in previous year and Rs. 575 crores during 2007-08. The total provision held on
    account of wage revision as on 31st March 2010 is Rs. 4,569.55 crores (including Rs. 21.55 crores transferred from
    eSBS).
    18.12 Provisioning for Gratuity
    The payment for Gratuity (Amendment) Bill, 2010 has been passed by the Parliament increasing the ceiling from Rs
    3.50 lakh to Rs. 10 lakh. However, pending enactment and subsequent notification by the Central Government about
    applicability, effective date and the terms thereof and the finalization of salaries and wage revision as referred in
    para 18.11 above , the provision for Gratuity has been created actuarially in line with Accounting Policy no. 11-2(i)(
    c) during the year. The impact arising out of such proposed change is not ascertainable at present.
    18.13 The figures of the current period include the working results of the branches of erstwhile State bank of Saurashtra
    (SBS), consequent to its merger with the Bank in August 2008. Hence, the figures of the previous period are strictly
    not comparable.
    18.14 In terms of RBI letter no. DBOD.BP. No. 19264/21.4.18/2009-10 Dt. 11/05/2010 , RBI has permitted to transfer entries
    in inter branch account outstanding for a period of 10 Years i.e. pertaining to the year 1999-2000. Accordingly, a net
    credit of Rs. 60.15 Crores has been transferred to Profit and Loss Account. An amount of Rs 29.51 Crores (Net of
    taxes and Statutory Reserves ) has therefore been transferred to General Reserve.
    18.15 During the year the Bank has contributed Rs 92 Crores to SBI Retired Employees’ Medical Benefit Trust.
    18.16 Previous period figures have been regrouped/reclassified wherever necessary , to conform to current period
    classification. In cases where disclosures have been made for the first time in terms of RBI guidelines/Accounting
    Standards, previous year ’s figures have not been mentioned.

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    PRINCIPAL ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (UNCONSOLIDATED) FOR THE YEAR ENDED 31ST
    MARCH 2009
    SCHEDULE 17 — PRINCIPAL ACCOUNTING POLICIES
    A. BASIS OF PREPARATION
    The accompanying financial statements have been prepared under the historical cost convention as modified for
    derivatives and foreign currency transactions, as enumerated in Part C below. They conform to Generally Accepted
    Accounting Principles (GAAP) in India, which comprise the statutory provisions, guidelines of regulatory authorities,
    Reserve Bank of India (RBI), accounting standards/guidance notes issued by the Institute of Chartered Accountants
    of India (ICAI), and the practices prevalent in the banking industry in India.
    B. 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 the accounting estimates is recognised prospectively in the current and future periods.
    C. PRINCIPAL ACCOUNTING POLICIES
    1. Revenue recognition
    1.1 Income and expenditure are accounted on accrual basis, except otherwise stated below. In respect of banks’
    foreign offices, income is recognised as per the local laws of the country in which the respective foreign
    office is located.
    1.2 Interest income is recognised in the Profit and Loss Account as it accrues except (i) income from non-
    performing assets (NPAs), comprising of advances, leases and investments, which is recognised upon
    realisation, as per the prudential norms prescribed by the RBI/ respective country regulators (hereafter
    collectively referred to as Regulatory Authorities), (ii) interest on application money on investments (iii)
    overdue interest on investments and bills discounted, (iv) Income on Rupee Derivatives designated as “Trading”
    1.3 Profit or Loss on sale of investments is credited / debited to Profit and Loss Account (Sale of Investments).
    Profit on sale of investments in the ‘Held to Maturity’ category shall be appropriated net of applicable taxes
    to ‘Capital Reserve Account’. Loss on sale will be recognised in the Profit and Loss Account.
    1.4 Income from finance leases is calculated by applying the interest rate implicit in the lease to the net investment
    outstanding on the lease, over the primary lease period. Leases effective from April 1, 2001 are accounted as
    advances at an amount equal to the net investment in the lease. The lease rentals are apportioned between
    principal and finance income based on a pattern reflecting a constant periodic return on the net investment
    outstanding in respect of finance leases. The principal amount is utilized for reduction in balance of net
    investment in lease and finance income is reported as interest income.
    1.5 Income (other than interest) on investments in “Held to Maturity” (HTM) category acquired at a discount to
    the face value, is recognised as follows:
    a) On Interest bearing securities, it is recognised only at the time of sale/ redemption.
    b) On zero-coupon securities, it is accounted for over the balance tenor of the security on a constant yield
    basis.
    1.6 Dividend is accounted on an accrual basis where the right to receive the dividend is established.
    1.7 All other commission and fee incomes are recognised on their realisation except for (i) Guarantee commission
    on deferred payment guarantees, which is spread over the period of the guarantee and (ii) Commission on
    Government Business, which is recognised as it accrues.
    2. Investments
    Investments are accounted for in accordance with the extant regulatory guidelines. The bank follows trade
    date method for accounting of its investments.

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    2.1 Classification
    Investments are classified into 3 categories, viz. Held to Maturity, Available for Sale and Held for Trading
    categories (hereafter called categories). Under each of these categories, investments are further classified into
    the following six groups:
    i. Government Securities,
    ii. Other Approved Securities,
    iii. Shares,
    iv. Debentures and Bonds,
    v. Subsidiaries/Joint ventures and
    vi. Others.
    2.2 Basis of classification:
    i. Investments that the Bank intends to hold till maturity are classified as Held to Maturity.
    ii. Investments that are held principally for resale within 90 days from the date of purchase are classified
    as Held for Trading.
    iii. Investments, which are not classified in the above two categories, are classified as Available for Sale.
    iv. An investment is classified as Held to Maturity, Available for Sale or Held for Trading at the time of its
    purchase and subsequent shifting amongst categories is done in conformity with regulatory guidelines.
    v. Investments in subsidiaries, joint ventures and associates are classified under as Held to Maturity.
    2.3 Valuation:
    i. In determining the acquisition cost of an investment:
    (a) Brokerage/commission/securities transaction tax received on subscriptions is reduced from the
    cost.
    (b) Brokerage, commission, etc. paid in connection with acquisition of investments are expensed upfront
    and excluded from cost.
    (c) Broken period interest paid / received on debt instruments is treated as interest expense/income
    and is excluded from cost/sale consideration.
    (d) Cost is determined on the weighted average cost method.
    (e) The transfer of a security amongst the above three categories is accounted for at the least of
    acquisition cost/book value/market value on the date of transfer, and the depreciation, if any, on
    such transfer is fully provided for.
    ii. Treasury Bills and Commercial Papers are valued at carrying cost.
    iii. Held to Maturity category: Each scrip under Held to Maturity category is carried at its acquisition cost
    or at amortised cost, if acquired at a premium over the face value. Any premium on acquisition is
    amortised over the remaining maturity period of the security on constant yield basis. Such amortisation
    of premium is adjusted against income under the head “interest on investments”. A provision is made
    for diminution, other than temporary. Investments in subsidiaries, joint ventures and associates (both in
    India and abroad) are valued at historical cost except for investments in Regional Rural Banks, which
    are valued at carrying cost (i.e book value).
    iv. Available for Sale and Held for Trading categories: Each scrip in the above two categories is revalued
    at the market price or fair value determined as per Regulatory guidelines, and only the net depreciation
    of each group for each category is provided for and net appreciation, is ignored. On provision for
    depreciation, the book value of the individual securities remains unchanged after marking to market.
    v. Security receipts issued by an asset reconstruction company (ARC) are valued in accordance with the
    guidelines applicable to non-SLR instruments. Accordingly, in cases where the security receipts issued
    by the ARC are limited to the actual realisation of the financial assets assigned to the instruments in the
    concerned scheme, the Net Asset Value, obtained from the ARC, is reckoned for valuation of such
    investments.

    F - 55
    vi. Investments are classified as performing and non-performing, based on the guidelines issued by the RBI
    in case of domestic offices and respective regulators in case of foreign offices. Investments of domestic
    offices become non performing where:
    a) Interest/installment (including maturity proceeds) is due and remains unpaid for more than 90
    days.
    b) In the case of equity shares, in the event the investment in the shares of any company is valued
    at Re. 1 per company on account of the non availability of the latest balance sheet, those equity
    shares would be reckoned as NPI.
    c) If any credit facility availed by the issuer is NPA in the books of the bank, investment in any of
    the securities issued by the same issuer would also be treated as NPI and vice versa.
    d) The above would apply mutatis-mutandis to preference shares where the fixed dividend is not
    paid.
    e) The investments in debentures/bonds, which are deemed to be in the nature of advance, are also
    subjected to NPI norms as applicable to investments.
    f) In respect of foreign offices, provisions for non performing investments are made as per the local
    regulations or as per the norms of RBI, whichever is higher.
    vii. The Bank has adopted the Uniform Accounting Procedure prescribed by the RBI for accounting of Repo
    and Reverse Repo transactions [other than transactions under the Liquidity Adjustment Facility (LAF)
    with the RBI]. Accordingly, the securities sold/purchased under Repo/Reverse Repo are treated as outright
    sales/purchases and accounted for in the Repo/Reverse Repo Accounts, and the entries are reversed on
    the date of maturity. Costs and revenues are accounted as interest expenditure/income, as the case may
    be. Balance in Repo/Reverse Repo Account is adjusted against the balance in the Investment Account.
    viii. Securities purchased / sold under LAF with RBI are debited / credited to Investment Account and
    reversed on maturity of the transaction. Interest expended / earned thereon is accounted for as expenditure
    / revenue.
    3. Loans /Advances and Provisions thereon
    3.1 Loans and Advances are classified as performing and non-performing, based on the guidelines issued by the
    RBI. Loan assets become non-performing where:
    i. In respect of term loan, interest and/or instalment of principal remains overdue for a period of more than
    90 days;
    ii. In respect of an Overdraft or Cash Credit advance, the account remains “out of order”, i.e. if the
    outstanding balance exceeds the sanctioned limit/drawing power continuously for a period of 90 days,
    or if there are no credits continuously for 90 days as on the date of balance-sheet, or if the credits are
    not adequate to cover the interest due during the same period;
    iii. In respect of bills purchased/discounted, the bill remains overdue for a period of more than 90 days;
    iv. In respect of agricultural advances for short duration crops, where the instalment of principal or interest
    remains overdue for 2 crop seasons;
    v. In respect of agricultural advances for long duration crops, where the principal or interest remains
    overdue for one crop season.
    3.2 Non-Performing advances are classified into sub-standard, doubtful and loss assets, based on the following
    criteria stipulated by RBI:
    i. Sub-standard: A loan asset that has remained non-performing for a period less than or equal to 12
    months.
    ii. Doubtful: A loan asset that has remained in the sub-standard category for a period of 12 months.
    iii. Loss: A loan asset where loss has been identified but the amount has not been fully written off.

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    3.3 Provisions are made for NPAs as per the extant guidelines prescribed by the regulatory authorities, subject to
    minimum provisions as prescribed below by the RBI:
    Substandard Assets: i. A general provision of 10%
    ii. Additional provision of 10% for exposures which are unsecured ab-initio (where
    realisable value of security is not more than 10 percent ab-initio)
    Doubtful Assets:
    — Secured portion: i. Upto one year — 20%
    ii. One to three years — 30%
    iii. More than three years — 100%
    — Unsecured portion 100%
    Loss Assets: 100%
    3.4 In respect of foreign offices, provisions for non performing advances are made as per the local regulations or
    as per the norms of RBI, whichever is higher.
    3.5 The sale of NPAs is accounted as per guidelines prescribed by the RBI, which requires 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. Net book value is outstandings as reduced by specific provisions held
    and ECGC claims received.
    3.6 Advances are net of specific loan loss provisions, unrealised interest, ECGC claims received and bills
    rediscounted.
    3.7 For restructured/rescheduled assets, provisions are made in accordance with the guidelines issued by RBI,
    which requires that the present value of future interest due as per the original loan agreement, compared with
    the present value of the interest expected to be earned under the restructuring package, be provided in
    addition to provision for NPAs. The provision for interest sacrifice, arising out of the above, is reduced from
    advances.
    3.8 In the case of loan accounts classified as NPAs, an account may be reclassified as a performing account if it
    conforms to the guidelines prescribed by the regulators.
    3.9 Amounts recovered against debts written off in earlier years are recognised as revenue.
    3.10 Unrealised Interest recognised in the previous year on advances which have become non-performing during
    the current year, is provided for.
    3.11 In addition to the specific provision on NPAs, general provisions are also made for standard assets as per the
    extant guidelines prescribed by the RBI. The provisions on standard assets are not reckoned for arriving at
    net NPAs. These provisions are reflected in Schedule 5 of the balance sheet under the head “Other Liabilities
    & Provisions — Others.”
    4. Floating Provisions
    In accordance with the Reserve Bank of India guidelines, the bank has an approved policy for creation and
    utilisation of floating provisions separately for advances, investments and general purpose. The quantum of
    floating provisions to be created would be assessed at the end of each financial year. The floating provisions
    would be utilised only for contingencies under extra ordinary circumstances specified in the policy with prior
    permission of Reserve Bank of India.
    5. Provision for Country Exposure
    In addition to the specific provisions held according to the asset classification status, provisions are held for
    individual country exposures (other than the home country). Countries are categorised into seven risk categories,
    namely, insignificant, low, moderate, high, very high, restricted and off-credit, and provision is made as per
    extant RBI guidelines. 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 exposures. The provision is
    reflected in schedule 5 of the balance sheet under the “Other liabilities & Provisions — Others”

    F - 57
    6. Derivatives:
    6.1 The Bank enters into derivative contracts, such as foreign currency options, interest rate swaps, currency
    swaps, and cross currency interest rate swaps and forward rate agreements in order to hedge on-balance
    sheet/off-balance sheet assets and liabilities or for trading purposes. The swap contracts entered to hedge
    on-balance sheet assets and liabilities are structured in such a way that they bear an opposite and offsetting
    impact with the underlying on-balance sheet items. The impact of such derivative instruments is correlated
    with the movement of the underlying assets and accounted in accordance with the principles of hedge
    accounting.
    6.2 All derivative instruments are recognised as assets or liabilities in the balance sheet and measured at marked
    to market.
    6.3 Derivative contracts classified as hedge are recorded on accrual basis. Hedge contracts are not marked to
    market unless the underlying Assets / Liabilities are also marked to market.
    6.4 Except as mentioned above, all other derivative contracts are marked to market as per the generally accepted
    practices prevalent in the industry. In respect of derivative contracts that are marked to market, changes in the
    market value are recognised in the profit and loss account in the period of change.
    6.5 Option premium paid or received is recorded in profit and loss account at the expiry of the option. The
    Balance in the premium received on options sold and premium paid on options bought have been considered
    to arrive at Mark to Market value for forex Over the Counter options.
    7. Fixed Assets and Depreciation
    7.1 Fixed assets are carried at cost less accumulated depreciation.
    7.2 Cost includes cost of purchase and all expenditure such as site preparation, installation costs and professional
    fees incurred on the asset before it is put to use. Subsequent expenditure incurred on assets put to use is
    capitalised only when it increases the future benefits from such assets or their functioning capability.
    7.3 The rates of depreciation and method of charging depreciation in respect of domestic operations are as under:
    Sr. Description of fixed assets Method of charging Depreciation/ am
    No. depreciation ortisation rate
    1 Computers Straight Line Method 33.33% every year
    2 Computer software forming Written Down Value Method 60%
    an integral part of hardware
    3 Computer Software which Straight Line Method 100%, in the year of
    does not form an integral
    part of hardware acquisition
    4 Assets given on financial Straight Line Method At the rate prescribed under
    lease upto 31st March 2001 Companies Act 1956
    5 Other fixed assets Written down value method At the rate prescribed under
    Income-tax Rules 1962
    7.4 In respect of assets acquired for domestic operations during the year, depreciation is charged for half an year
    in respect of assets used for upto 182 days and for the full year in respect of assets used for more than 182
    days, except depreciation on computers and software, which is charged for the full year irrespective of the
    period for which the asset was put to use.
    7.5 Items costing less than Rs. 1,000 each are charged off in the year of purchase.
    7.6 In respect of leasehold premises, the lease premium, if any, is amortised over the period of lease and the lease
    rent is charged in the respective year.
    7.7 In respect of assets given on lease by the Bank on or before 31st March 2001, the value of the assets given
    on lease is disclosed as Leased Assets under fixed assets, and the difference between the annual lease charge
    (capital recovery) and the depreciation is taken to Lease Equalisation Account.
    7.8 In respect of fixed assets held at foreign offices, depreciation is provided as per the regulations /norms of the
    respective countries.

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    8. Leases
    The asset classification and provisioning norms applicable to advances, as laid down in Para 3 above, are
    applied to financial leases also.
    9. Impairment of Assets
    Fixed Assets are reviewed for impairment whenever events or changes in circumstances warrant 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 to future net discounted cash flows expected to be
    generated by the asset. If such assets are considered to be impaired, the impairment to be recognised is
    measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset.
    10. Effect of changes in the foreign exchange rate
    10.1 Foreign Currency Transactions
    i. Foreign currency transactions are recorded on initial recognition in the reporting currency by applying
    to the foreign currency amount the exchange rate between the reporting currency and the foreign
    currency on the date of transaction.
    ii. Foreign currency monetary items are reported using the Foreign Exchange Dealers Association of India
    (FEDAI) closing spot/forward rates.
    iii. Foreign currency non-monetary items, which are carried in terms at historical cost, are reported using
    the exchange rate at the date of the transaction.
    iv. Contingent liabilities denominated in foreign currency are reported using the FEDAI closing spot rates.
    v. Outstanding foreign exchange spot and forward contracts held for trading are revalued at the exchange
    rates notified by FEDAI for specified maturities, and the resulting profit or loss is included in the Profit
    and Loss account.
    vi. Foreign exchange forward contracts which are not intended for trading and are outstanding at the
    balance sheet date, are valued at the closing spot rate. The premium or discount arising at the inception
    of such a forward exchange contract is amortised as expense or income over the life of the contract.
    vii. Exchange differences arising on the settlement of monetary items at rates different from those at which
    they were initially recorded are recognised as income or as expense in the period in which they arise.
    viii. Gains / Losses on account of changes in exchange rates of open position in currency futures trades are
    settled with the exchange clearing house on daily basis and such gains / losses are recognised in the
    profit and loss account.
    10.2 Foreign Operations
    Foreign Branches of the Bank and Offshore Banking Units have been classified as Non-integral Operations
    and Representative Offices have been classified as Integral Operations.
    a. Non-integral Operations:
    i. Both monetary and non-monetary foreign currency assets and liabilities including contingent liabilities
    of non-integral foreign operations are translated at closing exchange rates notified by FEDAI at the
    balance sheet date.
    ii. Income and expenditure of non-integral foreign operations are translated at quarterly average closing
    rates.
    iii. Exchange differences arising on net investment in non-integral foreign operations are accumulated in
    Foreign Currency Translation Reserve until the disposal of the net investment.
    iv. The Assets and Liabilities of foreign offices in foreign currency (other than local currency of the foreign
    offices) are translated into local currency using spot rates applicable to that country.
    b. Integral Operations:
    i. Foreign currency transactions are recorded on initial recognition in the reporting currency by applying
    to the foreign currency amount the exchange rate between the reporting currency and the foreign
    currency on the date of transaction.

    F - 59
    ii. Monetary foreign currency assets and liabilities of integral foreign operations are translated at closing
    exchange rates notified by FEDAI at the balance sheet date and the resulting profit/loss is included in
    the profit and loss account.
    iii. Foreign currency non-monetary items which are carried in terms of historical cost are reported using the
    exchange rate at the date of the transaction.
    11. Employee Benefits:
    11.1 Short Term Employee Benefits:
    The undiscounted amount of short-term employee benefits, such as medical benefits, casual leave etc. which
    are expected to be paid in exchange for the services rendered by employees are recognised during the period
    when the employee renders the service.
    11.2 Post Employment Benefits:
    i. Defined Benefit Plan
    a. The Bank operates a Provident Fund Scheme. All eligible employees are entitled to receive benefits
    under the Bank’s Provident Fund Scheme. The Bank contributes monthly at a determined rate (currently
    10% of employee’s basic pay plus eligible allowance). These contributions are remitted to a trust
    established for this purpose and are charged to Profit and Loss Account. The trust funds are retained
    as deposits in the bank. The bank is liable for annual contributions and interest on deposits held by the
    bank, which is payable at Government specified minimum rate of interest on provident fund balances of
    Government Employees. The bank recognises such annual contributions and interest as an expense in
    the year to which they relate.
    b. The bank operates gratuity and pension schemes which are defined benefit plans.
    c. The Bank provides for gratuity to all eligible employees. The benefit is in the form of lump sum payments
    to vested employees on retirement, on death while in employment, or on termination of employment, for
    an amount equivalent to 15 days basic salary payable for each completed year of service, subject to a
    maximum amount of Rs. 350,000. Vesting occurs upon completion of five years of service. The Bank
    makes annual contributions to a fund administered by trustees based on an independent external actuarial
    valuation carried out annually.
    d. The Bank provides for pension to all eligible employees. The benefit is in the form of monthly payments
    as per rules and regular payments to vested employees on retirement, on death while in employment, or
    on termination of employment. Vesting occurs at different stages as per rules. The pension liability is
    reckoned based on an independent actuarial valuation carried out annually. The Bank makes annual
    contribution to the pension fund at 10% of salary in terms of SBI Pension Fund Rules. The balance is
    retained in the special provision account to be utilised at the time of settlement.
    e. The cost of providing defined benefits is determined using the projected unit credit method, with
    actuarial valuations being carried out at each balance sheet date. Actuarial gains/losses are immediately
    recognised in the statement of profit and loss and are not deferred.
    ii. Other Long Term Employee benefits:
    a. All eligible employees of the bank are eligible for compensated absences, silver jubilee award, leave
    travel concession, retirement award and resettlement allowance. The costs of such long term employee
    benefits are internally funded by the Bank.
    b. The cost of providing other long term benefits is determined using the projected unit credit method with
    actuarial valuations being carried out at each balance sheet date. Past service cost is immediately
    recognised in the statement of profit and loss and is not deferred.
    12. Provision for Taxation
    12.1 Income tax expense is the aggregate amount of current tax, deferred tax and fringe benefit tax charge. Current
    year taxes are determined in accordance with the provisions of Accounting Standard 22 and tax laws prevailing
    in India after taking into account taxes of foreign offices, which are based on the tax laws of respective
    jurisdiction. Deferred tax adjustments comprise of changes in the deferred tax assets or liabilities during the
    period.

    F - 60
    12.2 Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or
    substantially enacted prior to the balance sheet date. Deferred tax assets and liabilities are recognised on a
    prudent basis for the future tax consequences of timing differences arising between the carrying values of
    assets and liabilities and their respective tax basis, and carry forward losses. The impact of changes in the
    deferred tax assets and liabilities is recognised in the profit and loss account.
    12.3 Deferred tax assets are recognised and reassessed at each reporting date, based upon management’s judgement
    as to whether realisation is considered 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 assets can be
    realised against future profits.
    13. Earning per Share
    13.1 The Bank reports basic and diluted earnings per share in accordance with AS 20 -‘Earnings per Share’ issued
    by the ICAI. Basic earnings per share are computed by dividing the net profit after tax by the weighted
    average number of equity shares outstanding for the year.
    13.2 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 are computed
    using the weighted average number of equity shares and dilutive potential equity shares outstanding at year
    end.
    14. Accounting for Provisions, Contingent Liabilities and Contingent Assets
    14.1 In conformity with AS 29, “Provisions, Contingent Liabilities and Contingent Assets”, issued by the Institute
    of Chartered Accountants of India, the Bank recognises provisions only when it has a present obligation as
    a result of a past event, it is probable that an outflow of resources embodying economic benefits will be
    required to settle the obligation, and when a reliable estimate of the amount of the obligation can be made.
    14.2 No provision is recognised for
    i. any possible obligation that arises from past events and the existence of which will be confirmed only
    by the occurrence or non-occurrence of one or more uncertain future events not wholly within the
    control of the Bank; or
    ii. any present obligation that arises from past events but is not recognised because
    a. it is not probable that an outflow of resources embodying economic benefits will be required to
    settle the obligation; or
    b. a reliable estimate of the amount of obligation cannot be made.
    Such obligations are recorded as Contingent Liabilities. These are assessed at regular intervals and only that
    part of the obligation for which an outflow of resources embodying economic benefits is probable, is provided
    for, except in the extremely rare circumstances where no reliable estimate can be made.
    14.3 Contingent Assets are not recognised in the financial statements as this may result in the recognition of
    income that may never be realised.
    15. Cash and cash equivalents
    Cash and cash equivalents include cash on hand and in ATM’s, and gold in hand, balances with RBI,
    balances with other banks, and money at call and short notice.
    16. Employee Share Purchase Scheme:
    In accordance with the Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines,
    1999 issued by the Securities and Exchange Board of India (SEBI), the excess of market price one day prior to
    the date of issue of the shares over the price at which they are issued is recognised as employee compensation
    cost.
    17. Share Issue Expenses
    Share issue expenses are charged to the Share Premium Account.

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    SCHEDULE 18 — NOTES TO ACCOUNTS
    (Am ount in Rupees in crores)
    18.1 Capital:
    1. Capital Adequacy Ratio:
    The Capital to Risk-weighted Assets Ratio (CAR) as assessed by the Bank on the basis of the financial
    statements and guidelines issued by the Reserve Bank of India (RBI) has been computed as below:
    a) As per BASEL-I:
    Items As at 31-Mar-2009 As at 31-Mar-2008
    Capital to Risk-weighted Assets Ratio - Overall (%) 12.97 13.54
    Capital to Risk-weighted Assets Ratio - Tier I (%) 8.53 9.14
    Capital to Risk-weighted Assets Ratio - Tier II (%) 4.44 4.40
    b) As per the Revised Guidelines for implementation of the New Capital Adequacy Framework (BASEL-II):
    Items As at 31-Mar-2009
    Capital to Risk-weighted Assets Ratio - Overall (%) 14.25
    Capital to Risk-weighted Assets Ratio - Tier I (%) 9.38
    Capital to Risk-weighted Assets Ratio - Tier II (%) 4.87
    2. Share capital:
    a) The bank has kept in abeyance the allotment of 88,278 Equity Shares of Rs.10/- each issued as part of Rights
    Issue last year, since they are subject matter of title disputes or are subjudice.
    b) During the year, , the Bank has issued 34,09,846 equity shares of Rs. 10/- each for cash at a premium of Rs.
    1580/- per equity share i.e. at Rs. 1590/- per equity share aggregating to Rs.542.17 crores to its employees
    under SBI Employees Share Purchase Scheme — 2008 (SBI ESPS — 2008). The issue of equity shares under
    SBI ESPS-2008 has been accounted in accordance with SEBI (Employee Stock Option Scheme and Employee
    Stock Purchase Scheme) guidelines 1999.Accordingly, an amount of Rs. 21.41 crores has been charged as
    Employee expenses and transfered to Share Premium Account.
    c) The Government of India had, during the year ended 31.3.08, subscribed to 6,28,68,000 Equity Shares of Rs.10/
    - each at a premium of Rs.1580 per share as part of Rights Offer of the bank. The Government of India has
    discharged the total consideration of Rs.9996.01 crores by issue of “8.35% SBI Rights Issue GOI Special
    Bonds 2024”. Certain restrictions have been placed by the Government on the sale of these bonds.
    d) Expenses in relation to the issue of Equity Shares under the Employees Share Purchase Scheme 2008 amounting
    to Rs.1.21 crores is debited to Share Premium Account.
    e) Shareholding of Government of India
    No. of shares Holding
    Current Year Previous Year Current Year Previous Year
    37,72,07,200 37,72,07,200 59.41% 59.73%
    18.2 Hybrid Bonds:
    The details of bonds issued in foreign currency, which qualify for Hybrid Tier I Capital and outstanding as on 31st
    March 2009 are as under:
    Particulars Date of Tenor Am ount Equivalent Equivalent as
    Issue as on 31-3-09 on 31-3-08
    Bond issued under the MTN 15.02.2007 Perpetual Non Call USD 400 Rs. 2,028.80 Rs. 1,604.80
    Programme-12th Series 10-25years million
    Bond issued under the MTN 25.06.2007 Perpetual Non Call USD 225 Rs. 1,141.20 Rs. 902.70
    Programme-14th Series 10 years 1 day million
    Total USD 625 Rs. 3,170.00 Rs. 2,507.50
    million

    F - 62
    If the Bank does not exercise call option by 27.06.2017, the interest rate will be raised and fixed rate will be
    converted to floating rate. These bonds have been listed in Singapore Stock exchange.
    18.3 Subordinated Debt:
    Items As at 31-Mar-2009 As at 31-Mar-2008
    Amount of Subordinated Debt raised as Tier-II
    capital during the year Rs. 8,000.00* Rs. 6,023.50
    * Does not include Rs. 425 crores which has been acquired consequent to acquisition of eSBS.
    i) The subordinated debts raised through private placement of Bonds are unsecured, long term, non-convertible
    and are redeemable at par. The debt is subordinated to present and future senior indebtedness of the Bank
    and qualifies for Tier II capital.
    ii) The details of such outstanding subordinated debt are given below:
    Particulars Date of Rate of Tenor Equivalent Equivalent
    issue Interest Am ount as Am ount as
    P.A. on 31.03.09 on 31.03.08
    Private Placement Bonds 2005 05.12.2005 7.45% 113 months 3283.00 3283.00
    Private Placement Bonds 2006 05.06.2006 8.80% 180 months 2327.90 2327.90
    Private Placement Bonds 2006(II) 06.07.2006 9.00% 180 months 500.00 500.00
    Private Placement Bonds 2006(III) 12.09.2006 8.96% 180 months 600.00 600.00
    Private Placement Bonds 2006(IV) 13.09.2006 8.97% 180 months 615.00 615.00
    Private Placement Bonds 2006(V) 15.09.2006 8.98% 180 months 1500.00 1500.00
    Private Placement Bonds 2006(VI) 04.10.2006 8.85% 180 months 400.00 400.00
    Private Placement Bonds 2006(VII) 16.10.2006 8.88% 180 months 1,000.00 1,000.00
    Private Placement Bonds 2006(VIII) 17.02.2007 9.37% 180 months 1,000.00 1,000.00
    Private Placement Bonds 2006(IX) 21.03.2007 9.85% 111 months 1,500.00 1,500.00
    Private Placement Bonds 2007-08(I) 07.06.2007 10.20% 180 months 2,523.50 2,523.50
    Private Placement Bonds 2007-08(II) 12.09.2007 10.10% 180 months 3,500.00 3,500.00
    Private Placement Bonds SBS(I) 09.03.2006 8.15% 111 months 200.00 —
    Private Placement Bonds SBS(II) 30.03.2007 9.80% 111 months 225.00 —
    Private Placement Bonds 2008-09(I) 19.12.2008 8.90% 180 months 2,500.00 —
    Private Placement Bonds 2008-09(II) 29.12.2008 8.40% 114 months 1,500.00 —
    Private Placement Bonds 2008-09(III) 02.03.2009 9.15% 180 months 2,000.00 —
    Private Placement Bonds 2008-09(IV) 06.03.2009 8.95% 111 months 1,000.00 —
    Private Placement Bonds 2008-09(V) 06.03.2009 9.15% 180 months 1,000.00 —
    Unsecured Loan in Foreign Currency 12.04.2000 6.50% 108 months — 32.44
    Total 27174.40 18781.84

    F - 63
    18.4 Investments
    1. The details of investments and the movement of provisions towards depreciation on investments of the Bank
    are given below:
    Particulars As at 31-Mar-2009 As at 31-Mar-2008
    I. Value of Investments
    i) Gross value of Investments
    (a) In India 270,886.40 185,278.42
    (b) Outside India 6,795.19 5,204.27
    ii) Provisions for Depreciation
    (a) In India 1,415.32 948.32
    (b) Outside India 312.31 33.10
    iii) Net value of Investments
    (a) In India 269,471.08 184,330.10
    (b) Outside India 6,482.88 5,171.17
    II. Movement of provisions held towards depreciation on investments
    i) Opening Balance 981.42 1,254.44
    ii) Add: Addition on account of acquisition of e-SBS 31.96 —
    iii) Add: Provisions made during the year 1,440.18 242.83
    iv) Less: Write off/write back of excess provision during the year 725.93 515.85
    v) Closing balance 1,727.63 981.42
    Notes:
    a. Investments exclude securities utilised under Liquidity Adjustment Facility with RBI Rs. Nil (Previous
    Year Rs. 17,000 crores) and Rs. NIL under Market Repo (Previous year Rs. 515 crores).
    b. Investment amounting to Rs. 10,725.00 crores (Previous Year Rs. 20,055 crores) are kept as margin with
    RBI/Clearing Corporation of India Limited towards Real Time Gross Settlement/Securities Settlement
    (RTGS/NDS).
    c. During the year Bank has made fresh investment of Rs. 13.76 crores and Rs. 18 crores in SBI Custodial
    Services Private Limited and SBI Pension Fund Private Limited respectively.
    d. Other investments include deposits with NABARD under RIDF Deposit Scheme amounting to Rs. 15923.14
    crores (Previous Year Rs. 12039.18 crores).
    e. During the year, the Bank has infused additional capital of Rs. 923.66 crores in subsidiaries and joint
    ventures to augment their capital.

    F - 64
    2. Repo Transactions
    The details of securities sold and purchased under repos and reverse repos during the year are given below:
    Particulars Minimum Maximum Daily Average Balance
    outstanding outstanding outstanding as on
    during the year during the year during the year year end
    Securities sold under repos 0.00 31,000.71 4,418.48 0.00
    (0.00) (17900.00) (1627.68) (17500.00)
    Securities purchased under reverse repos 0.00 50,747.57 9,517.78 0.00
    (0.00) (24480.00) (2296.11) (0.00)
    (Figures in brackets are for Previous Year)
    3. Non-SLR Investment Portfolio
    (a) Issuer composition of Non SLR Investments:
    The issuer composition of Non-SLR investments of the Bank is given below:
    Extent of
    ‘Below
    Extent of Investment Extent of Extent of
    Gross Private Grade’ ‘Unrated’ ‘Unlisted’
    No. Issuer outstanding Placement Securities* Securities* Securities*
    (i) PSUs 13,945.85 460.15 50.00 54.62 54.62
    (16,315.61) (828.16) (94.00) (137.40) (393.10)
    (ii) FIs 1,573.83 603.32 496.77 25.09 555.27
    (1,812.28) (919.29) (456.04) (199.24) (771.04)
    (iii) Banks 3,219.45 1,200.67 122.37 25.36 177.78
    (3,786.33) (2,259.57) (158.00) (19.06) (550.00)
    (iv) Private Corporates 6,399.74 412.83 156.92 1,265.41 1,417.44
    (5,131.00) (653.01) (202.60) (172.80) (92.10)
    (v) Subsidiaries/Joint ventures** 4,926.23 0.00 0.00 0.00 0.00
    (4,383.94) 0.00 0.00 0.00 0.00
    (vi) Others 19,403.40 358.27 137.60 330.20 232.02
    (15,370.55) (284.48) (141.00) (51.00) (16.00)
    (vii) Provision held towards 1,624.69 0.00 109.84 75.75 101.17
    depreciation (770.73) 0.00 (45.00) (4.00) (26.00)
    Total 47,843.81 3,035.24 853.82 1,624.93 2,335.96
    Previous Year (46,028.98) (4,944.51) (1,006.64) (575.50) (1,796.24)
    (Figures in brackets are for Previous Year)
    * Investment in equity, equity linked instruments, asset backed securitised instruments, Govt. securities and
    pass through certificates have not been segregated under these categories as these are not covered under
    relevant RBI Guidelines.
    ** Investments in Subsidiaries/Joint Ventures have not been segregated into various categories as these are
    not covered under relevant RBI Guidelines.
    b) Non Performing Non-SLR Investments
    Particulars Current Year Previous Year
    Opening Balance 225.23 238.42
    Additions during the year 386.15 24.18
    Reductions during the year 13.16 37.37
    Closing balance 598.22 225.23
    Total provisions held 387.90 201.32

    F - 65
    18.5 Derivatives
    a) Forward Rate Agreements / Interest Rate Swaps
    Particulars As at 31-Mar-2009 As at 31-Mar-2008
    i) The notional principal of swap agreements 109,936.12 155,928.42
    ii) Losses which would be incurred if counterparties failed
    to fulfil their obligations under the agreements 2,131.06 1,666.30
    iii) Collateral required by the Bank upon entering into swaps Nil Nil
    iv) Concentration of credit risk arising from the swaps Not significant Not Significant
    v) The fair value of the swap book 47.67 160.50
    b) Exchange Traded Interest Rate Derivatives
    Sr. No. Particulars Current Year Previous Year

    1 Notional principal amount of exchange traded interest rate


    derivatives undertaken during the year Nil Nil
    2 Notional principal amount of exchange traded interest rate
    derivatives outstanding as on 31st March 2009 Nil Nil
    3 Notional principal amount of exchange traded interest rate
    derivatives outstanding and not “highly effective” Nil Nil
    4 Marked-to-market value of exchange traded interest rate
    derivatives outstanding and not “highly effective” Nil Nil
    c) Disclosures on Risk Exposure in Derivatives
    (A) Qualitative Disclosure
    i. The Bank currently deals in over-the-counter (OTC) interest rate and currency derivatives. Interest rate
    derivatives dealt with by the Bank are rupee interest rate swaps, foreign currency interest rate swaps
    and forward rate agreements. Currency derivatives dealt with by the Bank are currency swaps, rupee
    dollar options and cross-currency options. The products are offered to the Bank’s customers to manage
    their exposures and the Bank enters into derivatives contracts to cover such exposures. Derivatives are
    also used by the Bank both for trading as well as hedging on-balance sheet items. The Bank also deals
    in a mix of these generic instruments.
    ii. Derivative transactions carry market risk i.e. the probable loss the Bank may incur as a result of adverse
    movements in interest rates / exchange rates and credit risk i.e. the probable loss the Bank may incur if
    the counterparties fail to meet their obligations. The Bank’s “Policy for Derivatives” approved by the
    Board prescribes the market risk parameters (cut-loss triggers, open position limits, duration, modified
    duration, PV01 etc.) as well as customer eligibility criteria (credit rating, tenure of relationship etc.) for
    entering into derivative transactions.Credit risk is controlled by entering into derivative transactions
    only with counterparties in respect of whom appropriate limits are set for taking into account their
    ability to honour obligations.The Bank enters into ISDA agreements with each counterparty.
    iii. The Asset Liability Management Committee (ALCO) of the Bank oversees efficient management of these
    risks. The Bank’s Market Risk Management Department (MRMD), independently identifies measures
    and monitors market risk associated with derivative transactions, assists ALCO in controlling and managing
    these risks and reports compliance with policy prescriptions to the Risk Management Committee of the
    Board (RMCB) at regular intervals.
    iv. The accounting policy for derivatives has been drawn-up in accordance with RBI guidelines, the details
    of which are presented under Schedule 17: Principal Accounting Policy (PAP) for the financial year 2008-
    09.

    F - 66
    B) Quantitative Disclosures:
    Currency Derivatives Interest Rate Derivatives
    Sr. Particulars Current Previous Current Previous
    No. Year Year Year Year
    (i) Derivatives (Notional Principal Amount)
    a) For hedging 4,075.20 1,631.21 14,197.35 11,201.98
    b) For trading 111,307.23 214,446.76 93,493.15 144,726.44
    (ii) Marked to Market Positions
    a) Asset 15,041.54 3,705.16 1,333.78 414.73
    b) Liability 94.67 37.43 338.92 463.89
    (iii) Credit Exposure 20,205.45 10,574.55 3,715.10 2,671.73
    (iv) Likely impact of one percentage change
    in interest rate (100* PV01)
    a) on hedging derivatives. -44.74 -11.56 -23.33 205.32
    b) on trading derivatives -0.53 63.03 13.51 20.52
    v) Maximum and Minimum of 100* PV 01
    observed during the year
    a) on hedging 5.23 & 62.92 -7.45 & 13.32 12.19 & 44.57 231.79 & 89.36
    b) on trading -0.09 & 0.36 94.57 & 3.99 20.63 & 0.40 42.65 & 1.75
    d) The Bank has suffered Marked to Market loss on the outstanding Derivative contracts to the extent of Rs.
    455.64 crores. In the same period Bank has booked exchange and other income on derivative transactions to
    the tune of Rs. 481.21 crores. Net impact on Profit & Loss of the Bank on account of derivative transactions
    is Rs. 25.57 crores as profit for the financial year 2008-09.
    e) The outstanding derivatives used for hedging where the underlying assets/liabilities have not been marked to
    market amounts to Rs. 19897.28 crores (Previous Year Rs. 12833.19 crores) and there is no loss (Previous Year
    No Loss) in the mark to market value of this derivative portfolio
    18.6 Asset Quality
    a) Non-Performing Asset
    Particulars As at 31-Mar-2009 As at 31-Mar-2008
    i) Net NPAs to Net Advances (%) . . . . . . . . . . . . . . 1.76% 1.78%
    ii) Movement of NPAs (Gross)
    (a) Opening balance . . . . . . . . . . . . . . . . . . . . . 12,837.34 9,998.22
    (b) Additions during the year. . . . . . . . . . . . . . . 11,014.81 7,899.04
    (c) Reductions during the year . . . . . . . . . . . . . 8,263.55 5,059.92
    (d) Closing balance . . . . . . . . . . . . . . . . . . . . . . 15,588.60 12,837.34
    iii) Movement of Net NPAs
    (a) Opening balance . . . . . . . . . . . . . . . . . . . . . 7,424.33 5,257.72
    (b) Additions during the year. . . . . . . . . . . . . . . 6,736.85 5,063.06
    (c) Reductions during the year . . . . . . . . . . . . . 4,609.16 2,896.45
    (d) Closing balance . . . . . . . . . . . . . . . . . . . . . . 9,552.02 7,424.33
    iv) Movement of provisions for NPAs
    (a) Opening balance . . . . . . . . . . . . . . . . . . . . . 5,413.01 4,740.50
    (b) Provisions made during the year . . . . . . . . . 4,277.96 2,835.98
    (c) Write-off/write-back of excess . . . . . . . . . . 3,654.39 2,163.47
    (d) Closing balance . . . . . . . . . . . . . . . . . . . . . . 6,036.58 5,413.01

    F - 67
    b) Details of Loan Assets subjected to Restructuring
    I. Loan Assets subjected to restructuring, rescheduling & renegotiation during the period from 1st
    April 2008 to 27th August 2008
    Particulars Under Medium CDR & SME
    Corporate Debt Enterprises Scheme (C) A+B+C
    Restructuring Scheme (B)
    (CDR) Scheme (A)
    (i) Total amount of loan assets
    subjected to restructuring, 367.01 91.83 1574.67 2033.51
    rescheduling, renegotiation (322.54) (52.89) (1045.97) (1421.40)
    (ii) The amount of Standard 352.42 91.11 1571.74 2015.27
    Assets subjected to (288.53) (18.88) (1019.45) (1326.86)
    restructuring, rescheduling,
    renegotiation
    (iii) The amount of 14.59 0.05 2.92 17.56
    Sub-Standard Assets (26.09) (0.04) (26.02) (52.15)
    subjected to restructuring,
    rescheduling, renegotiation
    (iv) The amount of Doubtful 0 0.67 0.01 0.68
    Assets subjected to (7.92) (33.97) (0.50) (42.39)
    restructuring, rescheduling,
    renegotiation
    II. (i) Loan Assets subjected to restructuring, rescheduling & renegotiation during the period from
    28th August 2008 to 31st March 2009
    CDR SME Debt Others Total
    Particulars Particulars Mechanism Restructuring
    Standard advances No. of Borrowers 29 6,355 30,859 37,243
    restructured Amount outstanding 285.01 1,290.50 9,201.83 10,777.34
    Sacrifice (diminution 22.09 20.87 155.73 198.69
    in the fair value)
    Sub standard No. of Borrowers 3 184 1473 1660
    advances Amount outstanding 15.06 53.87 81.35 150.28
    restructured Sacrifice (diminution in 0 0.82 2.34 3.16
    the fair value)
    Doubtful advances No. of Borrowers 0 5 214 219
    restructured Amount outstanding 0 1.96 72.17 74.13
    Sacrifice (diminution 0 0.21 3.09 3.30
    in the fair value)
    TOTAL No. of Borrowers 32 6544 32546 39122
    Amount outstanding 300.07 1,346.33 9,355.35 11,001.75
    Sacrifice (diminution in 22.09 21.90 161.16 205.15
    the fair value)
    (ii) Additional disclosure regarding restructured accounts*:
    Sr. Disclosures Number Am ount
    No.
    1 Application received up to March 31, 2009 for restructuring, in 43,290 21,792.86
    respect of accounts which were standard as on September 1, 2008.
    2 Of (1), proposals approved and implemented as on March 31, 2009
    and thus became eligible for special regulatory treatment and
    classified as standard assets as on the date of the balance sheet. 37,243 10,777.34

    F - 68
    3 Of (1), proposals approved and implemented as on March 31, 2009
    but could not be upgraded to the standard category. 1,128 64.36
    4 Of (1), proposals under process/ implementation which were
    standard as on March 31, 2009. 3,270 8,786.69
    5 Of (1), proposals under process/ implementation which turned NPA
    as on March 31, 2009 but are expected to be classified as standard
    assets on full implementation of the package 1,649 2,164.47
    * (as compiled by management and relied upon by the auditors)
    c) Details of financial assets sold to Securitisation Company (SC)/Reconstruction Company (RC) for Asset
    Reconstruction
    Particulars Current Year Previous Year
    i) No. of Accounts 5 2
    ii) Aggregate value (net of provisions) of accounts sold to SC/RC 15.20 16.61
    iii) Aggregate consideration 92.93* 19.87
    iv) Additional consideration realized in respect of accounts
    transferred in earlier years Nil Nil
    v) Aggregate gain / (loss) over net book value . . . . . 77.73 3.26
    d) Details of non-performing financial assets purchased:
    Particulars Current Year Previous Year
    1) (a) No. of Accounts purchased during the year . Nil 1
    (b) Aggregate outstanding Nil 6.35
    2) (a) Of these, number of accounts restructured during the year Nil Nil
    (b) Aggregate outstanding Nil Nil
    e) Details of non-performing financial assets sold:
    Particulars Current Year Previous Year
    1) No. of Accounts sold . . . . . . . . . . . . . . . . . . . . . . 5 2
    2) Aggregate outstanding . . . . . . . . . . . . . . . . . . . . 288.77 25.22
    3) Aggregate consideration received . . . . . . . . . . . . 92.93* 19.87
    * Does not include Security Receipts of Rs. 34.75 crores recognised at Re 1/- in accordance with RBI
    guidelines.
    f) Provision on Standard Assets:
    The Provision on Standard Assets held by the Bank in accordance with RBI guidelines is as under:
    Particulars As at 31-Mar-2009 As at 31-Mar-2008
    Provision towards Standard Assets . . . . . . . . . . . . . . . . 2,245.14* 1,981.62
    * Includes Rs. 59.49 crores transferred on acquisition of eSBS. Excludes Rs. 30.79 crores made for Foreign
    offices during current year.
    g) Business Ratios
    Particulars Current Year Previous Year
    i. Interest Income as a percentage to Working Funds 7.29% 7.32%
    ii. Non-interest income as a percentage to Working Funds 1.45% 1.30%
    iii. Operating Profit as a percentage to Working Funds 2.05% 1.96%
    iv. Return on Assets 1.04% 1.01%
    v. Business (Deposits plus advances) per employee (Rs. in thousands) 55,600 45,600
    vi. Profit per employee (Rs. in thousands) 473.77 372.57

    F - 69
    h) Asset Liability Management: Maturity pattern of certain items of assets and liabilities as at 31st March
    2009
    Upto 14 15 to 29 days Over 3 Over 6 Over 1 Over 3 Over 5 TOTAL
    days 28 days to m onths m onths year & years & years
    3 m onths & upto 6 & upto upto 3 upto 5
    m onths 1 year years years
    Deposits . . . . . . 83,690.40 14,592.93 37,853.31 56,627.41 86,114.19 181,909.61 102,864.77 178,420.51 742,073.13
    (66,386.15) (6,317.86) (22,983.65) (25,871.69) (36,525.64) (118,495.71) (93,357.76) (167,465.48) (537,403.94)
    Advances . . . . . 87,221.68 8,026.04 33,299.25 26,620.89 19,452.19 240,706.90 42,276.20 84,900.05 542,503.20
    (78,308.83) (12,467.60) (12,966.63) (11,380.72) (15,298.44) (168,907.79) (43,212.08) (74,226.11) (416,768.20)
    Investments . . . . 18,024.74 4,494.75 21,733.42 7,848.99 6,777.18 32,238.61 60,331.76 124,504.50 275,953.95
    (83.68) (1,325.32) (3,729.36) (5,208.98) (6,274.24) (38,455.91) (33,888.13) (100,535.65) (189,501.27)
    Borrowings . . . . 12,362.18 5,531.82 10,490.96 8,523.60 4,384.83 9,173.88 3,052.88 193.53 53,713.68
    (11,629.39) (5,726.92) (15,887.11) (4,142.76) (7,130.49) (5,860.76) (771.99) (577.99) (51,727.41)
    Foreign Currency 28,940.13 7,332.46 29,855.55 19,109.41 5,943.45 17,732.69 11,663.61 11,379.36 131,956.66
    Assets (29,826.39) (9,739.96) (4,285.54) (4,120.29) (4,406.49) (8,034.06) (7,861.81) (11,056.80) (79,331.34)
    Foreign Currency 31,287.61 9,152.31 14,704.28 15,303.09 14,831.34 17,878.41 6,550.34 1,677.01 111,384.39
    Liabilities . . . . (16,335.17) (8,157.90) (17,578.48) (7,513.62) (13,431.40) (11,628.58) (2,603.73) (1,301.36) (78,550.24)
    (Figures in brackets are as at 31st March 2008)
    18.7 Exposures
    The Bank has lending to sectors which are sensitive to asset price fluctuations. These sensitive sectors are real
    estate and capital markets.
    a) Real Estate Sector
    Direct exposure
    Particulars As at 31-Mar-2009 As at 31-Mar-2008
    i) Residential Mortgages 46,281.86 42,116.80
    Of which individual housing loans up to Rs.20 Lakhs 30,146.88 33,103.18
    ii) Commercial Real Estate 16,939.71 11,958.38
    iii) Investments in Mortgage Backed Securities (MBS)
    and other securitised exposures: 667.26 —
    Residential 5.25 —
    Commercial Real Estate 662.01 —
    Indirect Exposure Fund based and non-fund based
    exposures on National Housing Bank (NHB) and
    Housing Finance Companies (HFCs) . 216.14 3,795.36
    Total 64,104.97 57,870.54

    F - 70
    b) Capital Market
    Particulars As at 31-Mar-2009 As at 31-Mar-2008
    1) 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 5,793.37 5,352.53
    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 26.94 367.47
    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. 43.89 32.38
    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 the primary security other than
    shares/ convertible bonds/convertible debentures/units
    of equity oriented mutual funds does not fully
    cover the advances 734.26 45.68
    5) Secured and unsecured advances to stockbrokers and
    guarantees issued on behalf of stockbrokers and
    market makers 17.52 277.37
    6) 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 — 200.00
    7) Bridge loans to companies against expected equity
    flows/issues — —
    8) 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 — —
    9) Financing to stockbrokers for margin trading 0.08 0.20
    10) Exposures to Venture Capital Funds 358.27 312.72
    Total Exposure to Capital Market 6,974.33 6,588.35

    F - 71
    c) Country-Risk Categorywise
    As per the extant RBI guidelines, the country where exposure of the Bank is categorised into various risk
    categories listed in the following table. The country exposure (net funded) of the Bank for any country does
    not exceed 1% of its total assets except to a country in insignificant risk category. Provision of Rs. 25.03
    crores has been made in accordance with RBI guidelines.
    Exposure (net) Provision held
    Risk Category As at As at As at As at
    31-Mar-2009 31-Mar-2008 31-Mar-2009 31-Mar-2008
    Insignificant 33,980.08 22,208.55 25.03 12.50
    Low 10,859.90 5,185.89 Nil Nil
    Moderate 6,237.82 4,713.24 Nil Nil
    High 4,783.54 3,314.57 Nil Nil
    Very High 1,022.73 1,015.84 Nil Nil
    Restricted / Off-Credit 765.16 19.50 Nil Nil
    Total 57,649.23 36,457.59 25.03 12.50
    d) Single Borrower and Group Borrower exposure limits exceeded by the Bank:
    The Bank had taken single borrower exposure in excess of the prudential limit in the cases given below:
    Name of the Borrower Exposure Limit Period during Outstanding
    ceiling Sanctioned which limit as on 31.03.09
    (Peak Level) exceeded
    Reliance Industries Ltd 10,464.39 13,764.04 May 2008 to 11,197.65
    August 2008
    10,770.67 14,129.89 September 2008 to
    March 2009
    Indian Oil Corporation Ltd 10,464.39 10,503.72 April 2008 14,791.97
    17,440.66 20,241.17 July 2008 to
    August 2008
    17,915.13 20,533.87 September 2008 to
    March 2009
    * with the approval of the Board
    e) Letter of Comfort issued for Subsidiaries:
    The Bank has issued letters of comfort on behalf of its subsidiaries. Outstanding letters of comfort as on 31st
    March 2009 aggregate to Rs. 166.45 crores (Previous Year Rs. 341.23 crores.) In the Bank’s assessment no
    financial impact is likely to arise.
    f) Withdrawal from Reserves:
    During the year, the bank has withdrawn following amount from the Reserves:
    Particulars As at 31-Mar-2009 As at 31-Mar-2008
    Transitional liability on implementation of AS
    15 (Revised 2005) — 4,075.64
    On account of payment of Drafts under reconciliation . — 0.10
    Dividend on account of ESPS shares and dividend
    distribution tax thereon 8.58 —

    F - 72
    18.8 Miscellaneous
    a) Disclosure of Penalties imposed by RBI:
    Nil (Previous year - Nil)
    b) Status of customer complaints:
    Particulars As at 31-Mar-2009 As at 31-Mar-2008
    No. of complaints pending at the beginning of the year 1,030 454
    Addition on account of acquisition of eSBS 258 —
    No. of complaints received during the year 23,571 16,461
    No. of complaints redressed during the year 23,709 15,885
    No. of complaints pending at the end of the year 1,150 1,030
    c) Awards passed by the Banking Ombudsman:
    Particulars Current Year Previous Year
    No. of unimplemented Awards at the beginning of the year 4 0
    No. of Awards passed by the Banking Ombudsman during the year 19 22
    No. of Awards implemented during the year 22 18
    No. of unimplemented Awards at the end of the year 1 4
    d) The bank has not received any intimation from the suppliers regarding their status under the Micro, Small &
    Medium Enterprises Development Act, 2006 and hence the disclosures relating to amount unpaid as at the
    end of the year together with interest payable as required under the said act has not been furnished and
    provision for interest, if any, on delayed payment is not ascertainable at this stage
    18.9 Disclosure Requirements as per Accounting Standards
    a) Changes in Accounting Policy
    The Bank has been making annual contributions to the pension fund administered by trustees based on an
    independent actuarial valuation carried out at the year end. The Bank has decided to make its contribution to
    the Pension Fund at 10% of the basic salary in terms of SBI pension Fund Rules. The balance amount as per
    actuarial liability is fully provided for and kept in a special provision account for settlement to pensioners.
    Consequent to this change, the profit after tax has gone up by Rs. 296 crores after considering the deferred
    tax asset of Rs. 508 crores.
    b) Investments / Commitments in Subsidiaries, Joint Ventures, Associates
    1. SBI has established a wholly owned subsidiary, SBI Custodial Services Pvt. Ltd., with a capital of Rs. 13.76
    crores. A joint venture agreement has been entered with Societe Generale, France, with the bank having 65%
    stake. RBI has approved the said joint venture and the bank is awaiting approval from SEBI. The authorised
    share capital of the joint venture is envisaged at Rs. 100 crores.
    2. The Bank’s subsidiary, Indian Ocean International Bank (IOIB) amalgamated with SBI International (Mauritius)
    Ltd, another subsidiary of the Bank and the amalgamated entity’s name has been changed to SBI (Mauritius)
    Ltd. and converted as a Public Limited Company from its erstwhile status as a Private Limited Company.
    The Scheme of Merger has been sanctioned by Bank of Mauritius from 1st April 2008, being the appointed
    date. Consequently, the Bank’s stake in SBI (Mauritius) has reduced from a 98% holding (pre-merger) to
    93.40% holding as at 31st March 2009 (post-merger).
    3. The bank has incorporated SBI General Insurance Company Limited, with authorised share capital of Rs. 20
    crores, for providing General Insurance subject to regulatory approvals. The Bank has signed a joint venture
    agreement with Insurance Australia Group (IAG) for conducting the General Insurance business. The bank will
    hold 74% equity in the JV, while IAG will hold 26% equity.
    4. The bank has signed a joint venture with Macquarie Capital Group, Australia and IFC, Washington for setting
    up an Infrastructure fund of USD 3 billion for investing in various infrastructure projects in India for which
    RBI and Government approval have been received.

    F - 73
    5. The bank has signed an MOU with State General Reserve Fund (SGRF) of Oman, a Sovereign Fund of that
    country with an objective to set up a general fund to invest in various sectors in India.While the RBI
    approval has been received , the Government of India approval is awaited.
    6. The Boards of the Bank and SBI Capital Markets Ltd. (SBICAP) have approved takeover of SBICAP Securities
    Limited (SSL) by SBI as its subsidiary from SSL’s holding company — SBICAP, subject to necessary regulatory
    approval.
    c) Employee Benefits
    i. Defined Benefit Plans
    The following table sets out the status of the defined benefit Pension Plan and Gratuity Plan as required
    under AS 15 (Revised 2005)
    Pension Plans Gratuity
    Particulars Current Previous Current Previous
    Year Year Year Year
    Change in the present value of the defined benefit obligation
    Opening defined benefit obligation at 1st April 2008 16,810.00 15,929.00 3,544.18 3,527.00
    Liability acquired on acquisition of State Bank of Saurashtra 571.36 — 121.66 —
    Current Service Cost 755.83 423.14 130.20 126.15
    Interest Cost 1,362.00 1,290.00 285.00 285.00
    Actuarial losses (gains) 905.07 219.62 -88.56 -72.97
    Benefits paid -1,075.54 -1,051.76 -214.30 -321.00
    Closing defined benefit obligation at 31st March 2009 19,328.72 16,810.00 3,778.18 3,544.18
    1st April 2008 13,084.80 12,205.26 3,544.18 3,527.00
    Asset acquired on acquisition of State Bank of Saurashtra 172.91 — 90.21 —
    Expected Return on Plan assets 1,046.78 976.42 278.88 269.72
    Contributions by employer 356.44 884.14 49.00 5.00
    Benefit Paid -1,051.76 -1,075.54 -214.30 -321.00
    Actuarial Gains 124.74 70.74 -1.24 63.46
    Closing fair value of plan assets at 31st March 2009 13,710.13 13,084.80 3,746.73 3,544.18
    Reconciliation of present value of the obligation
    and fair value of the plan assets
    Present Value of Funded obligation at 31st March 2009 19,328.72 16,810.00 3,778.18 3,544.18
    Fair Value of Plan assets at 31st March 2009 13,710.13 13,084.80 3,746.73 3,544.18
    Deficit/(Surplus) 5,618.59 3,725.20 31.45 —
    Unrecognised Past Service Cost — — — —
    Net Liability/(Asset) 5,618.59 3,725.20 31.45 —
    Am ount Recognised in the Balance
    Sheet
    Liabilities 19,328.72 16,810.00 3,778.18 3,544.18
    Assets 13,710.13 13,084.80 3,746.73 3,544.18
    Net Liability / (Asset) recognised in Balance Sheet 5,618.59 3,725.20 31.45 —
    Net Cost recognised in the profit and loss account
    Current Service Cost 755.83 423.14 130.20 126.15
    Interest Cost 1,362.00 1,290.00 285.00 285.00
    Expected return on plan assets -1,046.78 -976.42 -278.88 -269.72
    Net actuarial losses (Gain) recognised during the year 780.33 148.88 -87.32 -136.43
    Total costs of defined benefit plans included in
    Schedule 16 “Payments to and provisions for employees” 1,851.38 885.60 49.00 5.00

    F - 74
    Reconciliation of expected return and actual return
    on Plan Assets
    Expected Return on Plan Assets 1,046.78 976.42 278.88 269.72
    Actuarial Gain/ (loss) on Plan Assets 124.74 70.74 -1.24 63.46
    Actual Return on Plan Assets 1,171.52 1,047.16 277.64 333.18
    Reconciliation of opening and closing net liability/ (asset)
    recognised in Balance Sheet
    Opening Net Liability as at 1st April 2008 3,725.20 3,723.74 — —
    Expenses as recognised in profit and loss account 1,851.38 885.60 49.00 5.00
    Liability on account of acquisition of eSBS 571.36 — 121.66 —
    Assets on account of acquisition of eSBS 172.91 — 90.21 —
    Employers Contribution 356.44 884.14 49.00 5.00
    Net liability/(Asset) recognised in Balance Sheet 5,618.59 3,725.20 31.45 —
    During the next financial year, the Bank expects to pay Rs. 735 crores and Rs. 45 crores in respect of defined
    benefit Pension Plan and Gratuity Plan respectively. Investments under Plan Assets of Gratuity Fund &
    Pension Fund as on 31st March 2009 are as follows:
    Category of Assets Gratuity Fund Pension Fund
    % of Plan Assets % of Plan Assets
    Central Govt. Securities . . . . . . . . . . . . . . . . . . . . 34.41
    State Govt. Securities . . . . . . . . . . . . . . . . . . . . . 23.28
    Public Sector Bonds . . . . . . . . . . . . . . . . . . . . . . . 36.60
    FDR / TDR with Bank . . . . . . . . . . . . . . . . . . . . . 1.71
    Bank Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.57 100*
    Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.43
    Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 100
    * Held with the Bank
    Principal actuarial assumptions:
    Pension Plans Gratuity Plans
    Particulars Current Previous Current Previous
    Year Year Year Year
    Discount Rate . . . . . . . . . . . . . . . . . . . . . 8.00% 8.00% 7.85% 8.00%
    Expected Rate of return on Plan Asset . . . 8.00% 8.00% 8.00% 8.00%
    Salary Escalation . . . . . . . . . . . . . . . . . . . 5.00% 5.00% 5.00% 5.00%
    The estimates of future salary growth, factored in actuarial valuation, take account of inflation, seniority,
    promotion and other relevant factors such as supply and demand in the employment market. Such estimates
    are very long term and are not based on limited past experience / immediate future. Empirical evidence also
    suggests that in very long term, consistent high salary growth rates are not possible, which has been relied
    upon by the auditors.
    ii. Employees Provident Fund
    In terms of the guidance on implementing the AS-15 (Revised 2005) issued by the Institute of the Chartered
    Accountants of India, the Employees Provident Fund set up by the Bank is treated as a defined benefit plan
    since the Bank has to meet the specified minimum rate of return. As at the year end, no shortfall remains
    unprovided for. Accordingly, other related disclosures in respect of Provident Fund have not been made and
    an amount of Rs.337.53 crores (Previous Year Rs. 344.60 crores) is recognised as an expense towards the
    Provident Fund scheme of the Bank included under the head “Payments to and provisions for employees” in
    Profit and Loss Account.

    F - 75
    iii. Other Long term Employee Benefits
    Amount of Rs. 49.05 crores (Previous Year expenditure Rs. 133.40 crores) net of payments is written back
    towards Long term Employee Benefits and is included under the head “Payments to and provisions for
    employees” in Profit and Loss account.
    Details of Provisions made for various long Term Employees’ Benefits during the year;
    Sr. Current Previous
    No. Long Term Employees’ Benefits Year Year
    1 Privilege Leave (Encashment) incl. leave encashment at the time of retirement -33.58 88.00
    2 Leave Travel and Home Travel Concession (Encashment/Availment) -0.81 25.12
    3 Sick Leave -17.06 18.40
    4 Silver Jubilee Award -6.35 1.22
    5 Resettlement Expenses on Superannuation 2.55 3.73
    6 Casual Leave 5.78 -2.02
    7 Retirement Award 0.42 -1.05
    Total -49.05 133.40
    d) Segment Reporting:
    1. Segment identification
    A) Primary (Business Segment)
    The following are the primary segments of the Bank:
    — Treasury
    — Corporate / Wholesale Banking
    — Retail Banking
    — Other Banking Business
    The present accounting and information system of the Bank does not support capturing and extraction
    of the data in respect of the above segments separately. However, based on the present internal,
    organisational and management reporting structure and the nature of their risk and returns, the data on
    the primary segments have been computed as under:
    a) Treasury - The Treasury Segment includes the entire investment portfolio and trading in foreign
    exchange contracts and derivative contracts. The revenue of the treasury segment primarily consists
    of fees and gains or losses from trading operations and interest income on the investment portfolio.
    b) Corporate / Wholesale Banking - The Corporate / Wholesale Banking segment comprises the
    lending activities of Corporate Accounts Group, Mid Corporate Accounts Group and Stressed
    Assets Management Group. These include providing loans and transaction services to corporate
    and institutional clients and further include non treasury operations of foreign offices.
    c) Retail Banking - The Retail Banking Segment comprises of branches in National Banking Group,
    which primarily includes personal Banking activities including lending activities to corporate
    customers having Banking relations with branches in the National Banking Group. This segment
    also includes agency business and ATM’s
    d) Other Banking business - Segments not classified under (a) to (c) above are classified under this
    primary segment.
    B) Secondary (Geographical Segment)
    i) Domestic Operations - Branches/Offices having operations in India
    ii) Foreign Operations - Branches/Offices having operations outside India and offshore Banking units
    having operations in India

    F - 76
    C) Pricing of Inter-segmental transfers
    The Retail Banking segment is the primary resource mobilising unit. The Corporate/Wholesale Banking and
    Treasury segments are recipient of funds from Retail Banking. Market related Funds Transfer Pricing (MRFTP)
    is followed under which a separate unit called Funding Centre has been created. The Funding Centre notionally
    buys funds that the business units raise in the form of deposits or borrowings and notionally sell funds to
    business units engaged in creating assets.
    D) Allocation of Expenses, Assets and liabilities
    Expenses incurred at Corporate Centre establishments directly attributable either to Corporate / Wholesale and
    Retail Banking Operations or to Treasury Operations segment, are allocated accordingly. Expenses not directly
    attributable are allocated on the basis of the ratio of number of employees in each segment/ratio of directly
    attributable expenses.
    The Bank has certain common assets and liabilities which cannot be attributed to any segment and the same
    are treated as unallocated.
    2. Segment Information
    Part A: Primary (Business segments)
    Corporate/ Other
    Wholesale Retail Banking
    Business Segments Treasury Banking Banking Operations Elimination Total
    Revenue # 19,838.88 24,241.41 32,398.93 76,479.22
    Result # 3,744.64 5,071.11 7,222.86 16,038.61
    Unallocated Income /
    (Expenses) - net # (1,857.97)
    Operating Profit # 14,180.64
    Tax # (5,059.41)
    Extraordinary Profit #
    — Net Profit # 9,121.23
    Other Information:
    Segment Assets * 319,326.13 262,838.92 657,26691 280,838.14 958,593.82
    Unallocated Assets * 5,838.26
    Total Assets * 964,432.08
    Segment Liabilities * 190,703.86 254,287.95 707,596.46 280,838.14 871,750.13
    Unallocated Liabilities* 34,734.25
    Total Liabilities * 906,484.38
    Part B: Secondary (Geographic Segments)
    Domestic Foreign Total
    Current Previous Current Previous Current Previous
    Year Year Year Year Year Year
    Revenue # 71,563.34 51,493.43 4,915.88 6,151.81 76,479.22 57,645.24
    Assets * 856,147.58 632,865.94 108,284.50 88,660.37 964,432.08 721,526.31
    * As at 31st March 2009
    # For the year ended 31st March 2009

    F - 77
    e) Related Party Disclosures
    1. Related Parties
    A. SUBSIDIARIES
    i. DOMESTIC BANKING SUBSIDIARIES
    1. State Bank of Bikaner & Jaipur
    2. State Bank of Hyderabad
    3. State Bank of Indore
    4. State Bank of Mysore
    5. State Bank of Patiala
    6. State Bank of Saurashtra
    (upto13th August 2008, refer note 18.11)
    7. State Bank of Travancore
    8. SBI Commercial and International Bank Ltd.
    ii. FOREIGN BANKING SUBSIDIARIES
    1. SBI (Mauritius) Ltd.
    2. State Bank of India (Canada)
    3. State Bank of India (California)
    4. Commercial Bank of India LLC, Moscow (##)
    5. PT Bank Indo Monex
    iii. DOMESTIC NON-BANKING SUBSIDIARIES
    1. SBI Factors & Commercial Services Pvt. Ltd.
    2. SBI Capital Markets Limited
    3. SBI DFHI Limited
    4. SBI Mutual Funds Trustee Company Pvt. Ltd
    5. SBI CAP Securities Ltd.
    6. SBI CAPS Ventures Ltd.
    7. SBI CAP Trustees Co. Ltd.
    8. SBI Cards & Payment Services Pvt. Ltd.(##)
    9. SBI Funds Management Pvt. Ltd. (##)
    10. SBI Life Insurance Company Ltd. (##)
    11. SBI Pension Fund Private Limited
    12. SBI Custodial Services Private Limited (##)
    13. Global Trade Finance Ltd.
    14. SBI General Insurance Company Ltd
    iv. FOREIGN NON-BANKING SUBSIDIARIES
    1. SBICAP (UK) Ltd.
    2. SBI Funds Management (International) Private Ltd.(##)
    ## These entities are jointly controlled.
    B. JOINTLY CONTROLLED ENTITIES
    1. GE Capital Business Process Management Services Pvt. Ltd
    2. C-Edge Technologies Ltd.

    F - 78
    C. ASSOCIATES
    i. Regional Rural Banks
    1. Andhra Pradesh Grameena Vikas Bank
    2. Arunachal Pradesh Rural Bank
    3. Cauvery Kalpatharu Grameena Bank
    4. Chhattisgarh Gramin Bank
    5. Deccan Grameena Bank
    6. Ellaquai Dehati Bank
    7. Meghalaya Rural Bank
    8. Krishna Grameena Bank
    9. Langpi Dehangi Rural Bank
    10. Madhya Bharat Gramin Bank
    11. Malwa Gramin Bank
    12. Marwar Ganganagar Bikaner Bank
    13. Mizoram Rural Bank
    14. Nagaland Rural Bank
    15. Parvatiya Gramin Bank
    16. Purvanchal Kshetriya Gramin Bank
    17. Samastipur Kshetriya Gramin Bank
    18. Saurashtra Gramin Bank
    19. Utkal Gramya Bank
    20. Uttaranchal Gramin Bank
    21. Vananchal Gramin Bank
    22. Vidisha Bhopal Kshetriya Gramin Bank ii.
    ii. Others
    1. SBI Home Finance Limited
    2. Clearing Corporation of India Ltd.
    3. Nepal SBI Bank Ltd.
    4. Bank of Bhutan
    5. UTI Asset Management Company Pvt. Ltd.
    6. S S Ventures Services Ltd.
    D. Key Management Personnel of the Bank
    1. Shri O. P. Bhatt, Chairman
    2. Shri S. K. Bhattacharyya, Managing Director
    3. Shri R.Sridharan, Managing Director from 5th December 2008
    2. Parties with whom transactions were entered into during the year
    No disclosure is required in respect of related parties which are “State-controlled Enterprises” as per paragraph 9 of
    Accounting Standard (AS) 18. Further, in terms of paragraph 5 of AS 18, transactions in the nature of Banker-
    customer relationship are not required to be disclosed in respect of Key Management Personnel and relatives of
    Key Management Personnel. Other particulars are as under:
    1. C-Edge Technologies Ltd.
    2. GE Capital Business Process Management Services Pvt. Ltd.
    3. Bank of Bhutan
    4. Nepal SBI Bank Ltd.
    5. SBI Home Finance Ltd.
    6. S S Ventures Services Ltd
    7. Shri O. P. Bhatt, Chairman
    8. Shri S. K. Bhattacharyya, Managing Director
    9. Shri R.Sridharan, Managing Director from 5th December 2008

    F - 79
    3. Transactions and Balances:
    Particulars Associates/ Key Management
    Joint Ventures Personnel Total
    Deposits # 91.07 0.69 91.76
    (62.56) (0.00) (62.56)
    Other Liabilities # 0.03 0.26 0.29
    (0.01) (0.00) (0.01)
    Investments # 19.75 0 19.75
    (35.45) (0.00) (35.45)
    Advances # 0.00 0.00 0.00
    0.00 00.00 0.00
    Interest received* 0.00 0.00 0.00
    0.00 0.00 0.00
    Interest paid* 2.70 0.00 2.70
    (3.16) (0.00) (3.16)
    Income earned by way of dividend* 1.89 0.00 1.89
    (2.94) (0.00) (2.94)
    Other Income* 0.01 0.00 0.01
    (0.01) (0.00) (0.01)
    Other expenditure* 0.00 0.00 0.00
    (0.00) (0.00) (0.00)
    Management contracts * . 0.00 0.38 0.38
    (0.00) (0.54) (0.54)
    (Figures in brackets are for Previous Year)
    # As at 31st March 2009
    * For the year ended 31st March 2009
    f) Lease:
    i) Assets given on Financial Lease on or after 1st April 2001: The details of finance leases are given
    below:
    Particulars As at As at
    31-Mar-2009 31-Mar-2008
    Gross investment in the leases 37.09 43.29
    Present value of minimum lease payments receivable 6.48 8.91
    Less than 1 year
    1 to 5 years — 9.67
    5 years and above — —
    Total 6.48 18.58
    Present value of unearned finance income 0.28 3.76

    F - 80
    ii) Operating Lease
    A. Operating lease comprise of Office Premises/Staff Quarters
    (Rs. in Crores)
    i. Minimum Lease Rent Payable*
    a. Payable not later than 1 year i.e. 2009-10 30.38
    b. Payable later than 1 year and not later than 5 years i.e. 2010-11 to 2013-14 100.60
    c. Payable later than 5 years i.e. after 2013-14 23.38
    * in respect of non cancellable lease only
    ii. Amount of lease charges debited to charges account during the year 385.13
    iii. The lease agreements provide for an option to the Bank to renew the lease period at the end of non-
    cancellable period. There are no exceptional/ restrictive covenants in the lease agreements.
    B. The Bank has no assets given on non cancellable Operating Leases as on 31st March 2009. No contingent
    rents have been recognised in the Profit & Loss Account. The cancellable Leases are of insignificant value.
    g) Earnings per Share
    The Bank reports basic and diluted earnings per equity share in accordance with Accounting Standard
    20 - “Earnings per Share”. “Basic earnings” per share is computed by dividing net profit after tax by the
    weighted average number of equity shares outstanding during the year.
    Particulars Current Year Previous Year
    Basic and diluted
    Weighted average no of equity shares used in computing 63,44,13,120 53,14,45,447
    basic earning per share
    Add: Potential number of equity shares that could arise on — 5,09,911
    account of ESPS scheme
    Weighted average number of shares used in computing 63,44,13,120 53,19,55,358
    diluted earning per share
    Net profit 9,121.23 6,729.12
    Basic earnings per share (Rs.) 143.77 126.62
    Diluted earnings per share (Rs.) 143.77 126.50
    Nominal value per share (Rs.) 10.00 10.00
    h) Accounting for Taxes on Income
    i. During the year, Rs. 1055.10 crores [Previous Year Rs. 219.43 crores] has been credited to Profit
    and Loss Account by way of adjustment of deferred tax.
    ii. The Bank has outstanding net deferred tax asset of Rs. 1026.89 crores (Previous Year - Rs. 42.05
    crores), which has been included in other assets-others. The break up of deferred tax assets and
    liabilities into major items is given below:
    Particulars As at As at
    31-Mar-2009 31-Mar-2008
    Deferred Tax Assets
    Provision for wage revision 676.06 195.44
    Provision for long term employees’ benefits 689.21 181.06
    Ex-gratia paid under Exit option 98.49 145.44
    Others 174.00 118.88
    Total 1,637.76 640.82

    F - 81
    Particulars As at As at
    31-Mar-2009 31-Mar-2008
    Deferred Tax Liabilities
    Depreciation on Fixed Assets . 115.10 103.00
    Interest on securities 495.77 495.77
    Total 610.87 598.77
    Net Deferred Tax Assets/(Liabilities) 1,026.89 42.05
    i) Investments in jointly controlled entities
    Investments include Rs. 15.70 crores (Previous Year Rs.15.70 crores) representing Bank’s interest in the
    following jointly controlled entities
    Sr. Country of
    No. Name of the Company Am ount Residence Holding %
    1 GE Capital Business Process
    Management Services Pvt. Ltd. 10.80 India 40% (10.80)
    2 C - Edge Technologies Ltd. 4.90 India 49% (4.90)
    (Figures in brackets relate to previous year)
    As required by AS 27, the aggregate amount of the assets, liabilities, income, expenses, contingent
    liabilities and commitments related to the Bank’s interests in jointly controlled entities are disclosed as
    under:
    Particulars As at 31-Mar-2009 As at 31-Mar-2008
    Liabilities
    Capital & Reserves 69.71 63.21
    Deposits — —
    Borrowings 0.26 0.35
    Other Liabilities & Provisions 28.65 27.05
    Total 98.62 90.61
    Assets
    Cash and Balances with RBI 0.01 0.01
    Balances with Banks and money at call and short notice 21.44 2.04
    Investments 3.52 2.62
    Advances — —
    Fixed Assets 10.57 15.03
    Other Assets 63.08 70.91
    Total 98.62 90.61
    Capital Commitments — —
    Other Contingent Liabilities — —
    Income
    Interest earned 0 5.69
    Other income 51.47 61.63
    Total 51.47 67.32
    Expenditure
    Interest expended — —
    Operating expenses 40.74 49.81
    Provisions & contingencies 4.23 6.43
    Total 44.97 56.24
    Profit 6.50 11.08

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    j) Impairment of Assets
    In the opinion of the Bank’s Management, there is no impairment to the assets during the year to which
    Accounting Standard 28 - “Impairment of Assets” applies.
    k) Provisions, Contingent Liabilities & Contingent Assets
    a) Break-up of Provisions
    Particulars Current Year Previous Year
    Provision for Taxation
    Current Tax 5971.52 3823.50
    Fringe Benefit Tax 142.00 105.00
    Deferred Tax -1055.10 -219.43
    Other Tax 1.00 0.70
    Provision for Depreciation on Investments 707.16 -88.68
    Provision on Non-Performing Assets 2,474.96 2,000.94
    Provision for Agricultural Debt Waiver & Relief Scheme 140.00 —
    Provision on Standard Assets 234.82 566.97
    Provision for Other Assets 177.64 189.43
    Total 8,794.00 6,378.43
    b) Floating Provisions
    Particulars Current Year Previous Year
    Opening Balance Nil Nil
    Addition during the year Nil Nil
    Draw down during the year Nil Nil
    Closing Balance Nil Nil
    c) Description of Contingent Liabilities and Contingent Assets
    Sr. Items Brief Description
    No.
    1, Claims against the Group not The parent and its constituents are parties to various
    acknowledged as debts proceedings in the normal course of business. It
    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 The Bank enters into foreign exchange contracts,
    contracts outstanding forward currency options, forward rate agreements, currency
    exchange contracts swaps and interest rate swaps with inter-bank
    participants 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
    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 that are
    recorded as contingent liabilities, are typically
    amounts used as a benchmark for the calculation of
    the interest component of the contracts.

    F - 83
    3. Guarantees given on As a part of its commercial banking activities, the
    behalf of constituents, Bank issues documentary credits and guarantees on
    acceptances endorsements behalf of its customers. Documentary credits enhance
    and other obligations the credit standing of the customers of the Bank.
    Guarantees generally represent irrevocable
    assurances that the Bank will make payment in the
    event of the customer failing to fulfil its financial or
    performance obligations.
    4. Other items for which the Group The Bank is a party to various taxation matters in
    is contingently liable respect of which appeals are pending. These are
    being contested by the Bank and not provided for.
    Further the Bank has made commitments to
    subscribe to shares in the normal course of
    business.
    d) The Contingent Liabilities mentioned above are dependent upon the outcome of Court/arbitration/
    out of Court settlements, disposal of appeals, the amount being called up, terms of contractual
    obligations, devolvement and raising of demand by concerned parties, as the case may be.
    e) Movement of provisions against Contingent Liabilities
    Particulars Current Year Previous Year
    Opening balance 77.44 71.90
    Additions during the year. 26.48 19.90
    Reductions during the year 18.38 14.36
    Closing balance 85.54 77.44
    18.10Agricultural Debt Waiver and Debt Relief Scheme 2008
    As per the Agricultural Debt Waiver and Debt Relief Scheme 2008, the amount receivable from the Central
    Government on account of debt waiver is Rs. 5506 crores and on account of debt relief is Rs. 322 crores,
    which is treated as part of advances and other assets respectively in accordance with the scheme. For the
    Debt Waiver, the Government of India has agreed to provide interest on the amount receivable from it from
    the date of payment of the first instalment and accordingly no provision for loss of interest on present value
    terms has been made. Further, the first instalment of Rs. 2168 crores has been received on 24 December 2008.
    In respect of Debt Relief, the Bank has made provision of Rs. 140 crores towards present value of loss of
    interest on amount receivable from eligible farmers, which is reversible to General Reserve upon complete
    settling of the account after receipt of claim from the Government. The figures of debt relief are subject to
    payment of dues by the farmers.
    18.11 Acquisition of State Bank of Saurashtra
    The Govt. of India has notified the acquisition by the Bank of the State Bank of Saurashtra (SBS), a wholly
    owned subsidiary of the Bank, with effect from 14th August 2008. Pursuant to the said notification, the entire
    undertaking of the erstwhile SBS stands acquired by the Bank. The acquisition of SBS has been accounted
    using pooling of interest method as per Accounting Standard 14. The goodwill arising on acquisition amounting
    to Rs. 0.65 crores has been charged off to the revenue during the period.
    18.12 Inter Office Account
    Inter Office Accounts between branches, controlling offices and local head offices and corporate centre
    establishments have been reconciled upto December 2008. Further, reconciliation is being done on an ongoing
    basis and no material effect is expected on the profit and loss account of the current year.
    18.13Pending Wage Agreement
    The Eighth Bipartite Settlement entered into by the Indian Banks’ Association on behalf of the member Banks
    with the All India Unions of Workmen expired on 31st October 2007. Pending the execution of a new agreement
    a provision of Rs.1414 crores (Previous Year Rs. 575 crores) has been made during the year in the accounts
    for the Bank’s estimated liability in respect of wage revision to be effective from 1st November 2007. The total

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    provision held on account of wage revision as on 31st March 2009 is Rs. 2010.55 crores (including Rs. 21.55
    crores transferred from eSBS).
    18.14Proposed Merger
    Pursuant to a Scheme of Amalgamation approved by the Central Board at its meeting held on 25th June 2008,
    SBI Commercial and International Bank Ltd, a wholly owned subsidiary of the Bank is to be merged with the
    Bank. The relevant scheme is yet to be approved by the Government of India, RBI and other authorities.
    Pending such approvals no effect has been given to the said scheme in the accounts.
    18.15 The figures of the current period include the working results of the branches of erstwhile State Bank of
    Saurashtra (SBS) for the period from 14th August 2008 consequent to merger of e-SBS with the Bank.
    Accordingly, the figures of the previous period are strictly not comparable. Previous period figures have been
    regrouped/reclassified, wherever necessary, to conform to current period classification. In cases where
    disclosures have been made for the first time in terms of RBI guidelines / Accounting Standards, previous
    year ’s figures have not been mentioned.

    F - 85
    PRINCIPAL ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (UNCONSOLIDATED) FOR THE YEAR ENDED
    31ST MARCH 2008
    SCHEDULE 17 — PRINCIPAL ACCOUNTING POLICIES
    A. BASIS OF PREPARATION
    The accompanying financial statements have been prepared under the historical cost convention as m odified for
    derivatives and foreign currency transactions, as enumerated in Part C below. They conform to Generally Accepted
    Accounting Principles (GAAP) in India, which comprise the statutory provisions, guidelines of regulatory authorities,
    Reserve Bank of India (RBI), accounting standards/guidance notes issued by the Institute of Chartered Accountants
    of India (ICAI), and the practices prevalent in the banking industry in India.
    B. 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 the accounting estimates is recognized prospectively in the current and future periods.
    C. PRINCIPAL ACCOUNTING POLICIES
    1. Revenue recognition
    1.1 Income and expenditure are accounted on accrual basis, except otherwise stated below. In respect of banks’
    foreign offices, income is recognized as per the local laws of the country in which the respective foreign
    office is located.
    1.2 Interest income is recognized in the Profit and Loss Account as it accrues except (i) income from non-
    performing assets (NPAs), comprising of advances, leases and investments, which is recognized upon realization,
    as per the prudential norms prescribed by the RBI/ respective country regulators (hereafter collectively referred
    to as Regulatory Authorities), (ii) interest on application money on investments (iii) overdue interest on
    investments and bills discounted, (iv) Income on Rupee Derivatives designated as “Trading”.
    1.3 Profit/Loss on sale of investments is credited/debited to “Profit/Loss on Sale of Investments” and thereafter
    in respect of profit on sale of investments in the Held to Maturity category is appropriated (net of applicable
    taxes and statutory reserve requirements) to Capital Reserve.
    1.4 Income from finance leases is calculated by applying the interest rate implicit in the lease to the net investment
    outstanding on the lease, over the primary lease period. Leases effective from April 1, 2001 are accounted as
    advances at an amount equal to the net investment in the lease. The lease rentals are apportioned between
    principal and finance income based on a pattern reflecting a constant periodic return on the net investment
    outstanding in respect of finance leases. The principal amount is utilized for reduction in balance of net
    investment in lease and finance income is reported as interest income.
    1.5 Income (other than interest) on investments in “Held to Maturity” (HTM) category acquired at a discount to
    the face value, is recognized as follows:
    a) On Interest bearing securities, it is recognized only at the time of sale/redemption.
    b) On zero-coupon securities, it is accounted for over the balance tenor of the security on a constant yield
    basis.
    1.6 Dividend is accounted on an accrual basis where the right to receive the dividend is established.
    1.7 All other commission and fee incomes are recognized on their realization except for (i) Guarantee commission
    on deferred payment guarantees, which is spread over the period of the guarantee and (ii) Commission on
    Government Business, which is recognized as it accrues.

    F - 86
    2. Investments
    Investments are accounted for in accordance with the extant regulatory guidelines. The bank follows trade date
    method for accounting of its investments.
    2.1 Classification
    Investments are classified into 3 categories, viz. Held to Maturity, Available for Sale and Held for Trading
    categories (hereafter called categories). Under each of these categories, investments are further classified into
    the following six groups:
    i. Government Securities,
    ii. Other Approved Securities,
    iii. Shares,
    iv. Debentures and Bonds,
    v. Subsidiaries/Joint ventures and
    vi. Others.
    2.2 Basis of classification:
    i. Investments that the Bank intends to hold till maturity are classified as Held to Maturity.
    ii. Investments that are held principally for resale within 90 days from the date of purchase are classified
    as Held for Trading.
    iii. Investments, which are not classified in the above two categories, are classified as Available for Sale.
    iv. An investment is classified as Held to Maturity, Available for Sale or Held for Trading at the time of its
    purchase and subsequent shifting amongst categories is done in conformity with regulatory guidelines.
    v. Investments in subsidiaries, joint ventures and associates are classified under as Held to Maturity.
    2.3 Valuation:
    i. In determining the acquisition cost of an investment:
    (a) Brokerage/commission received on subscriptions is reduced from the cost.
    (b) Brokerage, commission etc. paid in connection with acquisition of investments are expensed upfront
    and excluded from cost.
    (c) Broken period interest paid/received on debt instruments is treated as interest expense/income and
    is excluded from cost/sale consideration.
    (d) Cost is determined on the weighted average cost method.
    (e) The transfer of a security amongst the above three categories is accounted for at the least of
    acquisition cost/book value/market value on the date of transfer, and the depreciation, if any, on
    such transfer is fully provided for.
    ii. Treasury Bills and Commercial Papers are valued at carrying cost.
    iii. Held to Maturity category: Each scrip under Held to Maturity category is carried at its acquisition cost
    or at amortized cost, if acquired at a premium over the face value. Any premium on acquisition is
    amortized over the remaining maturity period of the security on constant yield basis. Such amortization
    of premium is adjusted against income under the head “interest on investments”. A provision is made
    for diminution, other than temporary. Investments in subsidiaries, joint ventures and associates (both in
    India and abroad) are valued at historical cost except for investments in Regional Rural Banks, which
    are valued at carrying cost (i.e book value).
    iv. Available for Sale and Held for Trading categories: Each scrip in the above two categories is revalued
    at the market price or fair value determined as per Regulatory guidelines, and only the net depreciation
    of each group for each category is provided for and net appreciation, is ignored. On provision for
    depreciation, the book value of the individual securities remains unchanged after marking to market.
    v. Security receipts issued by an asset reconstruction company (ARC) are valued in accordance with the
    guidelines applicable to non-SLR instruments. Accordingly, in cases where the security receipts issued

    F - 87
    by the ARC are limited to the actual realization of the financial assets assigned to the instruments in the
    concerned scheme, the Net Asset Value, obtained from the ARC, is reckoned for valuation of such
    investments.
    vi. Investments are classified as performing and non-performing, based on the guidelines issued by the RBI
    in case of domestic offices and respective regulators in case of foreign offices. Investments of domestic
    offices become non performing where:
    a) Interest/installment (including maturity proceeds) is due and remains unpaid for more than 90
    days.
    b) In the case of equity shares, in the event the investment in the shares of any company is valued
    at Re. 1 per company on account of the non availability of the latest balance sheet, those equity
    shares would be reckoned as NPI.
    c) If any credit facility availed by the issuer is NPA in the books of the bank, investment in any of
    the securities issued by the same issuer would also be treated as NPI and vice versa.
    d) The above would apply mutatis-mutandis to preference shares where the fixed dividend is not
    paid.
    e) The investments in debentures/bonds, which are deemed to be in the nature of advance, are also
    subjected to NPI norms as applicable to investments.
    f) In respect of foreign offices, provisions for non performing investments are made as per the local
    regulations or as per the norms of RBI, whichever is higher.
    vii. The Bank has adopted the Uniform Accounting Procedure prescribed by the RBI for accounting of Repo
    and Reverse Repo transactions [other than transactions under the Liquidity Adjustment Facility (LAF)
    with the RBI]. Accordingly, the securities sold/purchased under Repo/Reverse repo are treated as outright
    sales/purchases and accounted for in the Repo/Reverse Repo Accounts, and the entries are reversed on
    the date of maturity. Costs and revenues are accounted as interest expenditure/income, as the case may
    be. Balance in Repo/Reverse Repo Account is adjusted against the balance in the Investment Account.
    viii. Securities purchased/sold under LAF with RBI are debited/credited to Investment Account and reversed
    on maturity of the transaction. Interest expended/earned thereon is accounted for as expenditure/revenue.
    3. Loans/Advances and Provisions thereon
    3.1 Loans and Advances are classified as performing and non-performing, based on the guidelines issued by the
    RBI. Loan assets become non-performing where:
    i. In respect of term loan, interest and/or installment of principal remains overdue for a period of more
    than 90 days;
    ii. In respect of an Overdraft or Cash Credit advance, the account remains “out of order”, i.e. if the
    outstanding balance exceeds the sanctioned limit/drawing power continuously for a period of 90 days,
    or if there are no credits continuously for 90 days as on the date of balance-sheet, or if the credits are
    not adequate to cover the interest due during the same period;
    iii. In respect of bills purchased/discounted, the bill remains overdue for a period of more than 90 days;
    iv. In respect of agricultural advances for short duration crops, where the installment of principal or interest
    remains overdue for 2 crop seasons;
    v. In respect of agricultural advances for long duration crops, where the principal or interest remains
    overdue for one crop season.
    3.2 Non-Performing advances are classified into sub-standard, doubtful and loss assets, based on the following
    criteria stipulated by RBI:
    i. Sub-standard: A loan asset that has remained non-performing for a period less than or equal to 12
    months.
    ii. Doubtful: A loan asset that has remained in the sub-standard category for a period of 12 months.
    iii. Loss: A loan asset where loss has been identified but the amount has not been fully written off.

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    3.3 Provisions are made for NPAs as per the extant guidelines prescribed by the regulatory authorities, subject to
    minimum provisions as prescribed below by the RBI:
    Substandard Assets: i. A general provision of 10%
    ii. Additional provision of 10% for exposures which are unsecured ab-
    initio (where realizable value of security is not more than 10 percent
    ab-initio)
    Doubtful Assets:
    — Secured portion: i. Upto one year - 20%
    ii. One to three years - 30%
    iii. More than three years - 100%
    — Unsecured portion: 100%
    Loss Assets: 100%
    3.4 In respect of foreign offices, provisions for non performing advances are made as per the local regulations or
    as per the norms of RBI, whichever is higher.
    3.5 The sale of NPAs is accounted as per guidelines prescribed by the RBI, which requires 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. Net book value is outstandings as reduced by specific provisions held
    and ECGC claims received.
    3.6 Advances are net of specific loan loss provisions, unrealized interest, ECGC claims received and bills
    rediscounted.
    3.7 For restructured/rescheduled assets, provisions are made in accordance with the guidelines issued by RBI,
    which requires that the present value of future interest due as per the original loan agreement, compared with
    the present value of the interest expected to be earned under the restructuring package, be provided in
    addition to provision for NPAs. The provision for interest sacrifice is not reduced from advances and is
    included in the balance sheet under the head “Other Liabilities — Others”.
    3.8 In the case of loan accounts classified as NPAs, an account may be reclassified as a performing account if it
    conforms to the guidelines prescribed by the regulators.
    3.9 Amounts recovered against debts written off in earlier years are recognized as revenue.
    3.10 Unrealized Interest recognized in the previous year on advances which have become non-performing during
    the current year, is provided for.
    3.11 In addition to the specific provision on NPAs, general provisions are also made for standard assets as per the
    extant guidelines prescribed by the RBI. The provisions on standard assets are not reckoned for arriving at
    net NPAs. These provisions are reflected in Schedule 5 of the balance sheet under the head “Other Liabilities
    & Provisions — Others.”
    4. Provision for Country Exposure
    In addition to the specific provisions held according to the asset classification status, provisions are held for
    individual country exposures (other than the home country). Countries are categorized into seven risk categories,
    namely, insignificant, low, moderate, high, very high, restricted and off-credit, and provisioning made as per extant
    RBI guidelines. 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 exposures.
    5. Derivatives:
    5.1 The Bank enters into derivative contracts, such as foreign currency options, interest rate swaps, currency
    swaps, and cross currency interest rate swaps and forward rate agreements in order to hedge on-balance
    sheet/off-balance sheet assets and liabilities or for trading purposes. The swap contracts entered to hedge
    on-balance sheet assets and liabilities are structured in such a way that they bear an opposite and offsetting
    impact with the underlying on-balance sheet items. The impact of such derivative instruments is correlated
    with the movement of the underlying assets and accounted in accordance with the principles of hedge
    accounting.

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    5.2 All derivative instruments are recognized as assets or liabilities in the balance sheet and measured at marked
    to market.
    5.3 Derivative contracts classified as hedge are recorded on accrual basis. Hedge contracts are not marked to
    market unless the underlying Assets/Liabilities are also marked to market.
    5.4 Except as mentioned above, all other derivative contracts are marked to market as per the generally accepted
    practices prevalent in the industry. In respect of derivative contracts that are marked to market, changes in the
    market value are recognized in the profit and loss account in the period of change.
    5.5 Option premium paid or received is recorded in profit and loss account at the expiry of the option.
    6. Fixed Assets and Depreciation
    6.1 Fixed assets are carried at cost less accumulated depreciation.
    6.2 Cost includes cost of purchase and all expenditure such as site preparation, installation costs and professional
    fees incurred on the asset before it is put to use. Subsequent expenditure incurred on assets put to use is
    capitalized only when it increases the future benefits from such assets or their functioning capability.
    6.3 Depreciation is provided on the written down value method at the rates prescribed under the Income Tax
    Rules 1962, which are considered appropriate by the management. The rates of depreciation and method of
    charging depreciation in respect of domestic operations are as under:
    Sr. No. Description of fixed assets Method of charging Depreciation/am
    depreciation ortization rate
    1 Computers Straight Line Method 33.33% every year
    2 Computer software forming Written Down Value 60%
    an integral part of hardware Method
    3 Computer Software which Straight Line Method 100%, in the year of
    does not form an integral acquisition
    part of hardware
    4 Assets given on financial Straight Line Method At the rate prescribed
    lease up to 31st March under Companies Act 1956
    2001
    5 Other fixed assets Written down value method At the rate prescribed
    under Income-tax Rules
    1962
    6.4 In respect of assets acquired for domestic operations during the year, depreciation is charged for half an year
    in respect of assets used for upto 182 days and for the full year in respect of assets used for more than 182
    days, except depreciation on computers and software, which is charged for the full year irrespective of the
    period for which the asset was put to use.
    6.5 Items costing less than Rs.1,000 each are charged off in the year of purchase.
    6.6 In respect of leasehold premises, the lease premium, if any, is amortized over the period of lease and the lease
    rent is charged in the respective year.
    6.7 In respect of assets given on lease by the Bank on or before 31st March 2001, the value of the assets given
    on lease is disclosed as Leased Assets under fixed assets, and the difference between the annual lease charge
    (capital recovery) and the depreciation is taken to Lease Equalization Account.
    6.8 In respect of fixed assets held at foreign offices, depreciation is provided as per the regulations/norms of the
    respective countries.
    7. Leases
    7.1 Assets given on financial lease by the Bank on or after 1st April 2001 are accounted as per Accounting
    Standard 19. Such assets are included under Other Assets.
    7.2 The asset classification and provisioning norms applicable to advances, as laid down in Para 3 above, are
    applied to such financial leases.

    F - 90
    8. Impairment of Assets
    Fixed Assets are reviewed for impairment whenever events or changes in circumstances warrant 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 to future net discounted cash flows expected to be generated by the
    asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by
    which the carrying amount of the asset exceeds the fair value of the asset.
    9. Effect of Changes in the Foreign Exchange Rate
    9.1 Foreign Currency Transactions
    i. Foreign currency transactions are recorded on initial recognition in the reporting currency by applying
    to the foreign currency amount the exchange rate between the reporting currency and the foreign
    currency on the date of transaction.
    ii. Foreign currency monetary items are reported using the Foreign Exchange Dealers Association of India
    (FEDAI) closing spot rates.
    iii. Foreign currency non-monetary items, which are carried in terms at historical cost, are reported using
    the exchange rate at the date of the transaction.
    iv. Contingent liabilities denominated in foreign currency are reported using the FEDAI closing spot rates.
    v. Outstanding foreign exchange spot and forward contracts held for trading are revalued at the exchange
    rates notified by FEDAI for specified maturities, and the resulting profit or loss is included in the Profit
    or Loss account.
    vi. Foreign exchange forward contracts which are not intended for trading and are outstanding at the
    balance sheet date, are valued at the closing spot rate. The premium or discount arising at the inception
    of such a forward exchange contract is amortized as expense or income over the life of the contract.
    vii. Exchange differences arising on the settlement of monetary items at rates different from those at which
    they were initially recorded are recognized as income or as expense in the period in which they arise.
    9.2 Foreign Operations
    Foreign Branches of the Bank and Offshore Banking Units have been classified as Non-integral
    Operations and Representative Offices have been classified as Integral Operations.
    a. Non-integral Operations:
    i. Both monetary and non-monetary foreign currency assets and liabilities including contingent
    liabilities of non-integral foreign operations are translated at closing exchange rates notified by
    FEDAI at the balance sheet date.
    ii. Income and expenditure of non-integral foreign operations are translated at quarterly average
    closing rates.
    iii. Exchange differences arising on net investment in non-integral foreign operations are accumulated
    in Foreign Currency Translation Reserve until the disposal of the net investment.
    b. Integral Operations:
    i. Foreign currency transactions are recorded on initial recognition in the reporting currency by
    applying to the foreign currency amount the exchange rate between the reporting currency and
    the foreign currency on the date of transaction.
    ii. Monetary foreign currency assets and liabilities of integral foreign operations are translated at
    closing exchange rates notified by FEDAI at the balance sheet date and the resulting profit/loss is
    included in the profit and loss account.
    iii. Foreign currency non-monetary items which are carried in terms of historical cost are reported
    using the exchange rate at the date of the transaction.

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    10. Employee Benefits:
    10.1 Short Term Employee Benefits:
    The undiscounted amount of short-term employee benefits, such as medical benefits, casual leave etc. which
    are expected to be paid in exchange for the services rendered by employees are recognized during the period
    when the employee renders the service.
    10.2 Post Employment Benefits:
    i. Defined Benefit Plan
    a. The Bank operates a Provident Fund scheme. All eligible employees are entitled to receive benefits
    under the Bank’s Provident Fund scheme. The Bank contributes monthly at a determined rate
    (currently 10% of employee’s basic pay plus eligible allowance). These contributions are remitted
    to a trust established for this purpose and are charged to Profit and Loss Account. The trust
    funds are retained as deposits in the bank. The bank is liable for annual contributions and interest
    on deposits held by the bank, which is payable at Government specified minimum rate of interest
    on provident fund balances of Government Employees. The bank recognizes such annual
    contributions and interest as an expense in the year to which they relate.
    b. The bank operates gratuity and pension schemes which are defined benefit plans.
    c. The Bank provides for gratuity to all eligible employees. The benefit is in the form of lump sum
    payments to vested employees on retirement, on death while in employment, or on termination of
    employment, for an amount equivalent to 15 days basic salary payable for each completed year of
    service, subject to a maximum amount of Rs.350,000. Vesting occurs upon completion of five years
    of service. The Bank makes annual contributions to a fund administered by trustees based on an
    independent external actuarial valuation carried out annually.
    d. The Bank provides for pension to all eligible employees. The benefit is in the form of monthly
    payments as per rules and regular payments to vested employees on retirement, on death while in
    employment, or on termination of employment. Vesting occurs at different stages as per rules. The
    Bank makes annual contributions to funds administered by trustees based on an independent
    external actuarial valuation carried out annually.
    e. The cost of providing defined benefits is determined using the projected unit credit method, with
    actuarial valuations being carried out at each balance sheet date. Actuarial gains/losses are
    immediately recognized in the statement of profit and loss and are not deferred.
    ii. Other Long Term Employee benefits:
    a. All eligible employees of the bank are eligible for compensated absences, silver jubilee award,
    leave travel concession, retirement award and resettlement allowance. The costs of such long term
    employee benefits are internally funded by the Bank.
    b. The cost of providing other long term benefits is determined using the projected unit credit
    method with actuarial valuations being carried out at each balance sheet date. Past service cost is
    immediately recognized in the statement of profit and loss and is not deferred.
    11. Provision for Taxation
    11.1 Income tax expense is the aggregate amount of current tax, deferred tax and fringe benefit tax charge. Current
    year taxes are determined in accordance with the provisions of Accounting Standard 22 and tax laws prevailing
    in India after taking into account taxes of foreign offices, which are based on the tax laws of respective
    jurisdiction. Deferred tax adjustments comprise of changes in the deferred tax assets or liabilities during the
    period.
    11.2 Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or
    substantially enacted prior to the balance sheet date. Deferred tax assets and liabilities are recognized on a
    prudent basis for the future tax consequences of timing differences arising between the carrying values of
    assets and liabilities and their respective tax basis, and carry forward losses. The impact of changes in the
    deferred tax assets and liabilities is recognized in the profit and loss account.

    F - 92
    11.3 Deferred tax assets are recognized and reassessed at each reporting date, based upon management’s judgement
    as to whether realization is considered certain. Deferred tax assets are recognized on carry forward of
    unabsorbed depreciation and tax losses only if there is virtual certainty that such deferred tax assets can be
    realized against future profits.
    12. Earning per Share
    12.1 The Bank reports basic and diluted earnings per share in accordance with AS 20 - ‘Earnings per Share’ issued
    by the ICAI. 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.
    12.2 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 are computed
    using the weighted average number of equity shares and dilutive potential equity shares outstanding at year
    end.
    13. Accounting for Provisions, Contingent Liabilities and Contingent Assets
    13.1 In conformity with AS 29, “Provisions, Contingent Liabilities and Contingent Assets”, issued by the Institute
    of Chartered Accountants of India, the Bank recognizes provisions only when it has a present obligation as
    a result of a past event, it is probable that an outflow of resources embodying economic benefits will be
    required to settle the obligation, and when a reliable estimate of the amount of the obligation can be made.
    13.2 No provision is recognized for
    i. any possible obligation that arises from past events and the existence of which will be confirmed only
    by the occurrence or non-occurrence of one or more uncertain future events not wholly within the
    control of the Bank; or
    ii. any present obligation that arises from past events but is not recognized because
    a. it is not probable that an outflow of resources embodying economic benefits will be required to
    settle the obligation; or
    b. a reliable estimate of the amount of obligation cannot be made.
    Such obligations are recorded as Contingent Liabilities. These are assessed at regular intervals
    and only that part of the obligation for which an outflow of resources embodying economic
    benefits is probable, is provided for, except in the extremely rare circumstances where no reliable
    estimate can be made.
    13.3 Contingent Assets are not recognized in the financial statements as this may result in the recognition of
    income that may never be realized.
    14. Cash and cash equivalents
    Cash and cash equivalents include cash on hand and in ATM’s, and gold in hand, balances with RBI, balances with
    other banks, and money at call and short notice.
    15. Employee Share Purchase Scheme:
    In accordance with the Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999
    issued by the Securities and Exchange Board of India (SEBI), the excess of market price one day prior to the date
    of issue of the shares over the price at which they are issued is recognized as employee compensation cost.
    16. Share Issue Expenses
    Share issue expenses are charged to the Share Premium Account.

    F - 93
    SCHEDULE 18 — NOTES ON ACCOUNTS
    Am ount in Rupees in crores
    18.1 Capital:
    1. Capital Adequacy Ratio:
    The Capital to Risk-weighted Assets Ratio (CAR) as assessed by the Bank on the basis of the financial
    statements and guidelines issued by the Reserve Bank of India (RBI) has been computed as below:
    a) As per BASEL-I:
    Items As at As at
    31-Mar-2008 31-Mar-2007
    Capital to Risk-weighted Assets Ratio — Overall 13.47% 12.34%
    Capital to Risk-weighted Assets Ratio — Tier I 9.14% 8.01%
    Capital to Risk-weighted Assets Ratio — Tier II 4.33% 4.33%
    b) As per the Revised Guidelines for implementation of the New Capital Adequacy Framework (BASEL-II):
    Items As at
    31-Mar-2008
    Capital to Risk-weighted Assets Ratio — Overall 12.64%
    Capital to Risk-weighted Assets Ratio — Tier I 8.48%
    Capital to Risk-weighted Assets Ratio — Tier II 4.16%
    c) The computation of the CAR as per BASEL II is as compiled by the management and could not be
    verified by the auditors in the absence of complete details.
    2. Share capital:
    a) During the year, the RBI had transferred their entire shareholding of 31,43,39,200 shares in the Bank
    representing 59.73% of the issued capital of the Bank to the Government of India.
    b) During the year, the Bank has issued 10,52,59,776 equity shares of Rs.10 each for cash at a premium of
    Rs.1580 per equity share i.e. at Rs.1590 per equity share aggregating to Rs.16736.30 crore on right basis.
    Of the above, the Bank has allotted 10,51,71,498 fully paid equity shares to the eligible applicants,
    keeping in abeyance the allotment of 88,278 equity shares of Rs.10 each which are subject matter of title
    disputes or are subjudice.
    c) The Government of India has subscribed to 6,28,68,000 equity shares of Rs.10 each at a premium of
    Rs.1580 per share as part of rights offer of the Bank. The Government has discharged the total
    consideration of Rs.9996.01 crore by issue of “8.35% SBI Rights Issue GOI Special Bonds 2024”. Certain
    restrictions have been placed by the Government on the sale of these bonds.
    d) Expenses in relation to the issue of shares amounting to Rs.28.70 crore have been debited to the Share
    Premium Account.
    e) Shareholding of Government of India
    No. of shares Holding %
    Current Year Previous Year Current Year Previous Year
    37,72,07,200 Nil 59.73% Nil
    3. Employee Stock Purchase Scheme
    a) The Central Board of the Bank has adopted the Employees Share Purchase Scheme (the Scheme), duly
    approved by the Central Government, and accordingly has approved the offer of 86,17,500 equity shares
    of Rs.10 each at a premium of Rs.1580 as part of its rights issue to the employees of the Bank including
    the Chairman and Managing Directors. The Scheme is in accordance with the provisions of the Securities
    and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme)
    Guidelines, 1999. The said scheme has since closed on 30th April 2008.

    F - 94
    b) As on date, no equity shares have been allotted, under the Scheme, since the Bank is in the process of
    compiling the data on the number of shares to be issued pursuant to the exercise of the rights by the
    employees. The Bank has made provision of Rs.11.00 crore towards employee compensation expenses
    on an estimated basis.
    18.2 Hybrid Bonds:
    During the year, the Bank has raised USD 225 million (equivalent to Rs.902.70 crore as of 31st March 2008) by
    issuing “SBI Perpetual Non Call 10 Years + 1 day Bonds-June 2007 issue”, which qualifies for Hybrid Tier I Capital.
    These bonds carry fixed interest rate for a period of 10 years 1 day. In case the Bank does not exercise call option
    by 27th June 2017, the interest rate will be raised and fixed rate would be converted into floating rate. These bonds
    have been listed on Singapore Stock Exchange.
    The details of bonds issued in foreign currency, which qualify for Hybrid Tier I Capital and outstanding as on 31st
    March 2008 are as under:
    Particulars Date of Issue Tenor Am ount Equivalent as Equivalent as
    on 31.03.08 on 31.03.07
    Bond issued under the 15.02.2007 Perpetual Non USD 400 Rs.1604.80 Rs.1738.80
    MTN Programme — call 10.25 years million
    12th Series
    Bond issued under the 26.06.2007 Perpetual Non USD 225 Rs.902.70 —
    MTN Programme — call 10 years 1 day million
    14th Series
    Total USD 625 Rs.2507.50 Rs.1738.80
    million

    18.3 Subordinated Debt:


    Items As at As at
    31-Mar 2008 31-Mar-2007
    Amount of Subordinated Debt raised as Tier-II capital during Rs.6023.50 Rs.9442.90
    the year
    i) The subordinated debts raised through private placement of Bonds are unsecured, long term, non-convertible
    and are redeemable at par. The debt is subordinated to present and future senior indebtedness of the Bank
    and qualifies for Tier II capital.
    ii) The details of such outstanding subordinated debt are given below:
    Particulars Date of issue Rate of Tenor Equivalent Equivalent
    Interest P.A. Amount as Amount as
    on 31.03.08 on 31.03.07
    Private Placement Bonds 2001 01.01.2001 11.90% 87 months — 1675.20
    Private Placement Bonds 2005 05.12.2005 7.45% 113 months 3283.00 3283.00
    Private Placement Bonds 2006 05.06.2006 8.80% 180 months 2327.90 2327.90
    Private Placement Bonds
    2006 (II) 06.07.2006 9.00% 180 months 500.00 500.00
    Private Placement Bonds
    2006 (III) 12.09.2006 8.96% 180 months 600.00 600.00
    Private Placement Bonds
    2006 (IV) 13.09.2006 8.97% 180 months 615.00 615.00
    Private Placement Bonds
    2006 (V) 15.09.2006 8.98% 180 months 1500.00 1500.00

    F - 95
    Particulars Date of issue Rate of Tenor Equivalent Equivalent
    Interest P.A. Amount as Amount as
    on 31.03.08 on 31.03.07
    Private Placement Bonds
    2006 (VI) 04.10.2006 8.85% 180 months 400.00 400.00
    Private Placement Bonds
    2006 (VII) 16.10.2006 8.88% 180 months 1000.00 1000.00
    Private Placement Bonds
    2006 (VIII) 17.02.2007 9.37% 180 months 1000.00 1000.00
    Private Placement Bonds
    2006 (IX) 21.03.2007 9.85% 111 months 1500.00 1500.00
    Private Placement Bonds
    2007-08(I) 07.06.2007 10.20% 180 months 2523.50 —
    Private Placement Bonds
    2007-08 (II) 12.09.2007 10.10% 180 months 3500.00 —
    Unsecured Loan in Foreign
    Currency 12.04.2000 6.50% 108 months 32.44 29.59
    Total 18781.84 14430.69
    18.4 Investments
    1. The Details of investments and the movement of provisions held towards depreciation on investments of the
    Bank are given below:
    Particulars As at 31-Mar-2008 As at 31-Mar-2007
    I. Value of Investments
    i) Gross value of Investments
    (a) In India 185278.42 144580.01
    (b) Outside India 5204.27 5823.31
    ii) Provisions for Depreciation
    (a) In India 948.32 1243.69
    (b) Outside India 33.10 10.75
    iii) Net value of Investments
    (a) In India 184330.10 143336.32
    (b) Outside India 5171.17 5812.56
    2. Movement of provisions held towards depreciation on investments
    i) Opening Balance 1254.44 6156.76
    ii) Add: Provisions made during the year 242.83 477.20
    iii) Less: Write off/write back of excess provision during
    the year 515.85 5379.52
    iv) Closing balance 981.42 1254.44
    Notes:
    a) Investments exclude securities utilized under Liquidity Adjustment Facility with RBI — Rs.17000 crore (Previous
    year Rs.5000 crore) and Rs.515 crore under Market Repo (Previous year Rs. Nil).
    b) Investments amounting to Rs.20055 crore (Previous Year Rs.22755.00 crore) are kept as margin with the RBI/
    Clearing Corporation of India Ltd. towards Real Time Gross Settlement (RTGS)/NDS.
    c) Other investments include deposits with NABARD under the RIDF Deposit Scheme amounting to Rs.12039.18
    crore (Previous year Rs.7652.53 crore).

    F - 96
    d) During the year, the Bank has acquired/subscribed to 92.03% of equity of Global Trade Finance Ltd. (GTFL)
    Consequently, GTFL has become a subsidiary of the Bank.
    e) During the year, the Bank has infused additional capital of Rs.1176.30 crore in subsidiaries to augment their
    capital base.
    f) Foreign offices of the Bank take exposure on Credit Link Notes (CLN) and Collateralized Debt Obligation
    (CDO). These are acquired under investment portfolio at Foreign Offices which are governed by “Investment
    Policy for Foreign Offices” approved by the Central Board. The Bank intends to hold such instruments till its
    maturity. The aggregate value of such portfolio as on the date of the Balance Sheet is Rs.1798.88 crore
    (previous year Rs.1799.29 crore) against which the bank has made prudential provision of Rs.56 crore.
    2. Repo Transactions
    The details of securities sold and purchased under repos and reverse repos during the year are given below:
    Particulars Minimum Maximum Daily Average Balance
    outstanding outstanding outstanding as on year
    during during during end
    the year the year the year

    Securities sold under repos 0.00 17900.00 1627.68 17500.00


    (0.00) (11873.63) (325.38) (5000.00)
    Securities purchased under reverse repos 0.00 24480.00 2296.11 0.00
    (0.00) (20512.05) (3707.28) (0.00)
    (Figures in brackets are for Previous Year)
    3. Non-SLR Investment Portfolio
    a) Issuer composition of Non SLR Investments:
    The issuer composition of non-SLR investments of the Bank is given below:
    No. Gross Extent of Extent of Extent of Extent of
    outstanding Private Below ‘Unrated’ ‘Unlisted’
    Placement Investment Securities* Securities*
    Grade’
    Securities*
    (i) PSUs@ 16315.61 828.16 94.00 137.40 393.10
    (5865.49) (603.93) (132.00) (34.11) (111.11)
    (ii) FIs 1812.28 919.29 456.04 199.24 771.04
    (1401.04) (1398.36) (255.90) (108.65) (404.54)
    (iii) Banks 3786.33 2259.57 158.00 19.06 550.00
    (3507.06) (2313.53) (125.13) (0.00) (60.00)
    (iv) Private Corporates 5131.00 653.01 202.60 172.80 92.10
    (3701.90) (757.49) (143.59) (80.07) (110.27)
    (v) Subsidiaries/Joint ventures**4383.94 0.00 0.00 0.00 0.00
    (2611.26) (0.00) (0.00) (0.00) (0.00)
    (vi) Others 15370.55 284.48 141.00 51.00 16.00
    (11605.76) (8337.63) (538.82) (513.20) (1842.79)
    (vii) Provision held towards 770.73 0.00 45.00 4.00 26.00
    depreciation (589.79) NA (0.92) NA NA
    Total 46028.98 4944.51 1006.64 575.50 1796.24
    Previous Year (28102.72) (13410.94) (1194.52) (736.03) (2528.71)

    F - 97
    @ 8.35% SBI Right Issue Government of India Bonds — Rs.9481.01 crore (Previous Year — Nil) and Oil
    Bonds Rs.4967.62 crore (Previous Year Rs.4969.05 crore) are included under this category. (Figures in
    brackets are for Previous Year)
    * Investment in equity, equity linked instruments, asset backed securitized instruments, Govt. securities
    and pass through certificates have not been segregated under these categories as these are not covered
    under relevant RBI Guidelines.
    ** Investments in Subsidiaries/Joint Venture have not been segregated into various categories as these are
    not covered under relevant RBI Guidelines.
    b) Non Performing Non-SLR Investments
    Particulars Current Year Previous Year
    Opening Balance 243.42 254.57
    Additions during the year. 24.18 19.13
    Reductions during the year 37.37 30.28
    Closing balance 230.23 243.42
    Total provisions held 201.32 208.68
    18.5 Derivatives
    a) Forward Rate Agreements/Interest Rate Swaps
    Particulars As at As at
    31-Mar-2008 31-Mar-2007
    i) The notional principal of swap agreements 155,928.42 186,610.70
    ii) Losses which would be incurred if counterparties failed to 1,666.30 2,415.53
    fulfil their obligations under the agreements
    iii) Collateral required by the Bank upon entering into swaps Nil Nil
    iv) Concentration of credit risk arising from the swaps Not Not
    Significant Significant
    v) The fair value of the swap book 160.50 35.41
    b) Exchange Traded Interest Rate Derivatives
    Sr. Current Previous
    No. Particulars Year Year
    1 Notional principal amount of exchange traded interest rate Nil Nil
    derivatives undertaken during the year
    2 Notional principal amount of exchange traded interest rate Nil Nil
    derivatives outstanding as on 31st March 2008
    3 Notional principal amount of exchange traded interest rate Nil Nil
    derivatives outstanding and not “highly effective”
    4 Marked-to-market value of exchange traded interest rate Nil Nil
    derivatives outstanding and not “highly effective”
    c) Disclosures on Risk Exposure in Derivatives
    (A) Qualitative Disclosure
    i. The Bank currently deals in over-the-counter (OTC) interest rate and currency derivatives. Interest rate
    derivatives dealt with by the Bank are rupee interest rate swaps, foreign currency interest rate swaps
    and forward rate agreements. Currency derivatives dealt with by the Bank are currency swaps, rupee
    dollar options and cross-currency options. The products are offered to the Bank’s customers to manage
    their exposures and the Bank enters into derivatives contracts to cover such exposures. Derivatives are
    also used by the Bank both for trading as well as hedging on-balance sheet items. The Bank also deals
    in a mix of these generic instruments, under the portfolio of Structured Products.

    F - 98
    ii. Derivative transactions carry market risk i.e. the probable loss the Bank may incur as a result of adverse
    movements in interest rates/ exchange rates and credit risk i.e. the probable loss the Bank may incur if
    the counterparties fail to meet their obligations. The Bank’s “Policy for Derivatives” approved by the
    Board prescribes risk parameters to control and manage market risk (cut-loss triggers, open position
    limits, duration, modified duration, PV01 etc.). The policy also prescribes customer eligibility criteria
    (credit rating, tenure of relationship etc.); credit risk is controlled by entering into derivative transactions
    only with counterparties satisfying these criteria, setting appropriate counterparty exposure limits taking
    into accountability to honour obligations and entering into ISDA agreements with each counterparty.
    iii. The Asset Liability Management Committee (ALCO) of the Bank oversees efficient management of these
    risks. The Bank’s Market Risk Management Department (MRMD), independently identifies measures
    and monitors market risk associated with derivative transactions, assists ALCO in controlling and managing
    these risks and reports compliance with policy prescriptions to the Risk Management Committee of the
    Board (RMCB) at regular intervals.
    iv. The accounting policy for derivatives has been drawn-up in accordance with RBI guidelines.
    B) Quantitative Disclosures:

    Currency Interest Rate


    Derivatives Derivatives
    Sr. Current Previous Current Previous
    No. Particulars Year Year Year Year
    (i) Derivatives (Notional Principal Amount)
    a) For hedging 1631.21 — 11,201.98 7,428.99
    b) For trading 214,446.76 49,938.77 144,726.44 179,181.71
    (ii) Marked to Market Positions
    a) Asset 3,705.16 21.72 414.73 162.11
    b) Liability 37.43 — 463.89 108.79
    (iii) Credit Exposure 10,574.55 1,517.60 2,671.73 3,059.23
    (iv) Likely impact of one percentage change
    in interest rate (100* PV01)
    a) on hedging derivatives (11.56) — 205.32 141.99
    b) on trading derivatives 63.03 0.04 20.52 -3.38
    (v) Maximum and Minimum of 100* PV 01
    observed during the year
    a) on hedging (7.45) & — 231.79 & 12.85 & -
    (13.32) 89.36 0.24
    b) on trading . . . . . . . 94.57 & -0.65 &- 42.65 & 40.82 & -
    3.99 0.23 1.75 4.12
    d) The outstanding derivatives used for hedging where the underlying assets/liabilities have not been
    marked to market amounts to Rs.12833.19 crore and there is no loss in the mark to market value of this
    derivative portfolio.

    F - 99
    18.6 Asset Quality
    a) Non-Performing Asset
    Particulars As at As at
    31-Mar-2008 31-Mar-2007
    i) Net NPAs to Net Advances (%) . . . . . . . . . . . . . . 1.78% 1.56%
    ii) Movement of NPAs (Gross)
    (a) Opening balance . . . . . . . . . . . . . . . . . . . . . 9,998.22 9,628.14
    (b) Additions during the year. . . . . . . . . . . . . . . 7,899.04 4,963.87
    (c) Reductions during the year . . . . . . . . . . . . . 5,059.92 4,593.79
    (d) Closing balance . . . . . . . . . . . . . . . . . . . . . . 12,837.34 9,998.22
    iii) Movement of Net NPAs
    (a) Opening balance . . . . . . . . . . . . . . . . . . . . . 5,257.72 4,911.41
    (b) Additions during the year. . . . . . . . . . . . . . . 5,063.06 3,538.50
    (c) Reductions during the year . . . . . . . . . . . . . 2,896.45 3,192.19
    (d) Closing balance . . . . . . . . . . . . . . . . . . . . . . 7,424.33 5,257.72
    iv) Movement of provisions for NPAs
    (a) Opening balance . . . . . . . . . . . . . . . . . . . . . 4,740.50 4,716.73
    (b) Provisions made during the year . . . . . . . . . 2,835.98 1,425.37
    (c) Write-off/write-back of excess provisions . . . 2,163.47 1,401.60
    (d) Closing balance . . . . . . . . . . . . . . . . . . . . . . 5,413.01 4,740.50
    b) Details of Loan Assets subjected to Restructuring
    Particulars No. of Under Amount Under Other than Total
    A/cs. Corporate Sacrificed Small & Under CDR A+B+C
    (CDR) Debt under CDR Medium & SME
    Restructuring Enterprises Scheme (C)
    (CDR) Scheme (B)
    Scheme (A)
    (i) Total amount of loan 32 322.54 5.02 52.89 1045.97 1421.40
    assets subjected to (13) (78.52) (11.37) (327.76) (488.66) (894.94)
    restructuring,
    rescheduling,
    renegotiation
    (ii) The amount of 25 288.53 2.99 18.88 1019.45 1326.86
    Standard Assets (11) (31.35) (11.37) (267.35) (327.02) (625.72)
    subjected to
    restructuring,
    rescheduling,
    renegotiation
    (iii) The amount of 5 26.09 1.90 0.04 26.02 52.15
    Sub-Standard Assets (0) (0) (0) (30.84) (44.68) (75.52)
    subjected to
    restructuring,
    rescheduling,
    renegotiation
    (iv) The amount of 2 7.92 0.14 33.97 0.5 42.39
    Doubtful Assets (2) (47.17) (0) (29.57) (116.96) (193.7)
    subjected to
    restructuring,
    rescheduling,
    renegotiation

    F - 100
    c) Details of financial assets sold to Securitization Company (SC)/Reconstruction Company (RC) for Asset
    Reconstruction
    Particulars Current Year Previous Year
    i) No. of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . 2 90
    ii) Aggregate value (net of provisions) of accounts sold to SC/RC 16.61 19.62
    iii) Aggregate consideration 19.87 33.00
    iv) Additional consideration realized in respect of
    accounts transferred in earlier years Nil Nil
    v) Aggregate gain/(loss) over net book value 3.26 13.38
    d) Details of non-performing financial assets purchased:
    Particulars Current Year Previous Year
    1) (a) No. of Accounts purchased during the year . 1 N.A.
    (b) Aggregate outstanding 6.35 N.A.
    2) (a) Of these, number of accounts restructured during the year Nil N.A.
    (b) Aggregate outstanding Nil N.A.
    e) Details of non-performing financial assets sold:
    Particulars Current Year Previous Year
    1) No. of Accounts sold Nil 20
    2) Aggregate outstanding Nil 45.08
    3) Aggregate consideration received Nil 11.61
    f) Provision on Standard Assets:
    The Provision on Standard Assets (including provision for restructured standard assets) held by the Bank in
    accordance with RBI guidelines is as under:
    Particulars As at As at
    31-Mar-2008 31-Mar-2007
    Provision towards Standard Assets 2,252.87 1,713.93
    g) Business Ratios
    Particulars Current Year Previous Year
    i. Interest Income as a percentage to Working Funds 7.32% 7.34%
    ii. Non-interest income as a percentage to Working Funds 1.30% 1.07%
    iii. Operating Profit as a percentage to Working Funds 1.96% 1.86%
    iv. Return on Assets 1.01% 0.84%
    v. Business (Deposits plus advances) per employee 45600 35700
    (Rs. in thousands)
    vi. Profit per employee (Rs. In thousands) . . . . . . . . 372.57 236.81

    F - 101
    h) Maturity pattern of certain items of assets and liabilities as at 31st March 2008
    Upto 14 15 to 28 29 days Over 3 Over 6 Over 1 year Over 3 Over 5 TOTAL
    days days to 3 months & months & & upto 3 years & years
    months upto 6 upto 1 years upto 5
    m onths year years
    Deposits * 66,386.15 6,317.86 22,983.65 25,871.69 36,525.64 118,495.71 93,357.76 167,465.48 537,403.94
    (56,990.43) (5,231.58) (17,980.35) (18,266.34) (40,393.61) (120,010.53) (95,365.79) (81,282.46) (435,521.09)
    Advances* 78,308.83 12,467.60 12,966.63 11,380.72 15,298.44 168,907.79 43,212.08 74,226.11 416,768.20
    (56,774.22) (5,477.79) (16,079.60) (15,482.72) (13,281.92) (144,478.01) (32195.00) (53,567.23) (337336.49)
    Investments . . . . .* 83.68 1,325.32 3,729.36 5,208.98 6,274.24 38,455.91 33,888.13 100,535.65 189,501.27
    (656.34) (3,303.68) (9,569.63) (3,475.99) (2647.09) (27,142.16) (21,411.21) (80,942.78) (149,148.88)
    Borrowings . . . .* 11,629.39 5,726.92 15,887.11 4,142.76 7,130.49 5,860.76 771.99 577.99 51,727.41
    (9,466.58) (1,658.72) (8,519.72) (4,361.37) (3,579.61) (5,304.65) (5,579.20) (1,233.48) (39,703.33)
    Foreign Currency Assets*. . . . . 29,826.39 9,739.96 4,285.54 4,120.29 4,406.49 8,034.06 7,861.81 11,056.80 79,331.34
    (25,077.27) (3,495.20) (12,064.98) (10,498.96) (5345.62) (10,942.91) (7,867.62) (3,925.82) (79,218.38)
    Foreign Currency Liabilities 16,335.17 8,157.90 17,578.48 7,513.62 13,431.40 11,628.58 2,603.73 1,301.36 78,550.24
    (16643.24) (5457.66) (17742.00) (9,268.26) (10215.19) (11,007.09) (6,207.31) (1,573.32) (78114.07)
    Figures in brackets are as at 31st March 2007
    Data has not been compiled for the bucket ‘1 Day’ and ‘2 to 7 days’ and ‘8 to 14’ days separately.
    The bank has not disclosed retail deposits, saving Bank deposits, current deposits, cash credit and demand loans under different maturity buckets.

    F - 102
    18.7 Exposures
    The Bank has lending to sectors which are sensitive to asset price fluctuations. These sensitive sectors are real
    estate and capital markets.
    Particulars As at As at
    31-Mar-2008 31-Mar-2007
    a) Real Estate Sector
    Direct exposure
    i) Residential Mortgages 42,116.80 33,412.29
    — Of which individual housing loans up to Rs.15 Lakhs 33,103.18* 26,851.28
    ii) Commercial Real Estate 11,958.38 6,264.55
    iii) Investments in Mortgage Backed Securities (MBS) and other
    securitized exposures:
    Residential — —
    Commercial Real Estate — 0.08
    Indirect Exposure
    Fund based and non-fund based exposures on National
    Housing Bank (NHB) and Housing Finance Companies (HFCs) 3,795.36 1,044.21
    Total 57,870.54 40,721.13
    * The data has been reported for individual housing loan upto Rs.20 Lakhs as against Rs.15 Lakhs as
    required by the RBI guidelines.
    b) Capital Market
    Particulars As at As at
    31-Mar-2008 31-Mar-2007
    1) 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 5,352.53 2766.89
    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 367.47 317.70
    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 32.38 N.A.
    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 the primary security other than shares/convertible
    bonds/convertible debentures/units of equity oriented mutual
    funds does not fully cover the advances 45.68 N.A.
    5) Secured and unsecured advances to stockbrokers and
    guarantees issued on behalf of stockbrokers and market makers 277.37 181.90
    6) 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 2,721.45 N.A.
    7) Bridge loans to companies against expected equity flows/issues — N.A.

    F - 103
    8) Underwriting commitments taken up by the Bank in respect of
    primary issue of shares or convertible bonds or convertible
    debentures or units of equity oriented mutual funds — N.A.
    9) Financing to stockbrokers for margin trading 0.20 N.A.
    10) Exposures to Venture Capital Funds 312.72 N.A.
    Total Exposure to Capital Market 9,109.80 3266.49
    c) Country-Risk Categorywise: As compiled by the management and relied upon by the auditors.
    As per the extant RBI guidelines, the country exposure of the Bank is categorized into various risk categories
    listed in the following table. The country exposure (net funded) of the Bank for any country does not exceed
    1% of its total assets except to a country in insignificant risk category. Provision of Rs.12.50 crore has been
    made in accordance with RBI guidelines.
    Exposure (net) Provision held
    Risk Category As at As at As at As at
    31-Mar-2008 31-Mar-2007 31-Mar-2008 31-Mar-2007
    Insignificant 22208.55 17422.69 12.50 Nil
    Low 5185.89 5820.66 Nil Nil
    Moderate 4713.24 6425.83 Nil Nil
    High 3314.57 3041.29 Nil Nil
    Very High 1015.84 1340.10 Nil Nil
    Restricted/Off-Credit 19.50 19.57 Nil Nil
    Total 36457.59 34070.14 12.50 Nil
    d) Single Borrower and Group Borrower exposure limits exceeded by the Bank:
    The Bank had taken single borrower exposure in excess of the prudential limit in the cases given below:
    Name of the Borrower Exposure Limit Period during Outstanding
    ceiling Sanctioned which limit as on
    (Peak Level) exceeded 31.03.08
    Reliance Industries Ltd.* 7040.04 8728.47 July 2007 to
    August 2007
    8080.95 9422.13 September 2007
    to 30.03.2008 4360.83
    10589.29 9423.19 Within the ceiling
    on 31.03.2008
    Indian Oil Corporation Ltd.* 7040.04 8321.27 July 2007 to
    August 2007
    8080.95 10503.72 September 2007 to
    30.03.2008 9345.97
    10589.29 10503.72 Within the ceiling
    on 31.03.2008
    with the approval
    of the Board
    e) Letter of Comfort issued for Subsidiaries:
    The Bank has issued letters of comfort on behalf of its subsidiaries. Outstanding letters of comfort as on 31st
    March 2008 aggregate to Rs.341.23 crore.

    F - 104
    f) Withdrawal from Reserves:
    During the year, the bank has withdrawn following amount from the Reserves:
    Particulars As at 31-Mar-2008
    Transitional liability on implementation of AS 15 (Revised 2005) 4,075.64
    On account of payment of drafts under reconciliation 0.10
    18.8 Miscellaneous
    a) Disclosure of Penalties imposed by RBI:
    Nil (Previous year — Nil)
    b) Status of customer complaints: As compiled by the Management.
    Particulars As at As at
    31-Mar-2008 31-Mar-2007
    No. of complaints pending at the beginning of the year 454 322
    No. of complaints received during the year 16,461 16,168
    No. of complaints redressed during the year 15,885 16,036
    No. of complaints pending at the end of the year 1,030 454
    c) Awards passed by the Banking Ombudsman: As compiled by the Management
    Particulars Current Year Previous Year
    No. of unimplemented Awards at the beginning of the year 0 0
    No. of Awards passed by the Banking Ombudsman during the year 22 10
    No. of Awards implemented during the year 18 10
    No. of unimplemented Awards at the end of the year 4 0
    d) The Bank has not received any intimation from the suppliers regarding their status under the Micro, Small &
    Medium Enterprises Development Act, 2006 and hence the disclosures relating to amount unpaid as at the
    end of the year together with interest payable as required under the said act has not been furnished and
    provision for interest, if any, on delayed payment is not ascertainable at this stage.
    18.9 Disclosure Requirements as per Accounting Standards
    a) Significant changes in the principal accounting policies.
    i. Dividend Accounting
    During the year the Bank has changed its accounting policy in respect of recognition of dividend on
    shares of corporate bodies from realization basis to accrual basis where the right to receive the dividend
    is established. Consequently, the dividend income and the profit for the year are higher by Rs.4.68
    crore.
    ii. Am ortization of Premium on HTM Securities
    As required by RBI general clarification dated July 11, 2007, the Bank has deducted the amortization of
    premium on Government securities, from “Income on investments” included in “Interest earned” which
    was earlier included in “Other income” amounting to Rs.1020.22 crore for the year ended March 31, 2008
    (Rs.1036.79 crore for the year ended March 31, 2007). Prior year figures have been reclassified to conform
    to the current classification. This change in accounting procedure does not have any impact on the net
    profit for the year.
    iii. Mark-to-Market gains/losses of Forex OTC options
    The Bank has changed the accounting policy in respect of accounting of Mark-to-Mark (MTM) gains/
    losses in case of forex OTC options, where-by the balance in premium received on options sold and
    premium paid on options bought have been considered from this year to arrive at MTM value for forex
    OTC options. Consequent to this change in the accounting policy, the profit for the year is higher by

    F - 105
    Rs.133.80 crore.
    iv. Segment Reporting
    During the year, the Bank has reclassified its primary segments as Treasury, Corporate/Wholesale Banking
    and Retail Banking business in line with the directions issued by RBI. The Bank had hitherto been
    classifying Banking and Treasury operations as primary segments.
    v. Employee Benefits
    I. The Bank had hitherto been measuring the liability for employee retirement benefits as per the
    erstwhile AS 15 (1995) “Accounting for Retirement Benefits”. The Bank has adopted AS 15 (Revised
    2005) “Employee Benefits”, effective from 1st April 2007. Consequently an additional obligation of
    Rs.4,256.70 crore has accrued as on that date. Out of this, Rs.3,723.74 crore pertains to pension
    benefits and Rs.351.64 crore (Net of deferred tax assets of Rs.181.06 crore) pertains to long term
    employee benefits.
    II. The Bank has exercised the option of charging the additional obligation to Revenue & Other
    Reserves. Accordingly, the transitional liability of Rs.4075.64 crore (net of deferred tax assets of
    Rs.181.06 crore) has been set off against transfer from Revenue & Other Reserves.
    III. Consequent to the adoption of AS-15 (Revised 2005) profit before tax for the year is higher by
    Rs.192.69 crore.
    b) Prior Period Items: Domestic Offices
    Particulars Current Year Previous Year
    Depreciation 36.70 (17.47)
    Operating expenses 13.33 16.38
    Interest expended — 264.76
    Other income 3.31 2.42
    c) Employee’s Benefits
    i. Defined Benefit Plans
    The following table sets out the status of the defined benefit Pension Plan and Gratuity Plan as required
    under AS 15 (Revised 2005)
    Particulars Pension Plans Gratuity
    Change in the present value of the defined benefit obligation
    Opening defined benefit obligation at 1st April 2007 15929.00 3527.00
    Current Service Cost 423.14 126.15
    Interest Cost 1290.00 285.00
    Actuarial losses (gains) 219.62 (72.97)
    Benefits paid (1051.76) (321.00)
    Closing defined benefit obligation at 31st March 2008 16810.00 3544.18
    Change in Plan Assets
    Opening fair value of plan assets at 1st April 2007 12205.26 3527.00
    Expected Return on Plan assets 976.42 269.72
    Contributions by employer 884.14 5.00
    Benefit Paid (1051.76) (321.00)
    Actuarial Gains 70.74 63.46
    Closing fair value of plan assets at 31st March 2008 13084.80 3544.18
    Reconciliation of present value of the obligation and fair
    value of the plan assets
    Present Value of Funded obligation at 31st March 2008 16810.00 3544.18
    Fair Value of Plan assets at 31st March 2008 13084.80 3544.18

    F - 106
    Particulars Pension Plans Gratuity
    Deficit/(Surplus) 3725.20 Nil
    Unrecognized Past Service Cost Nil Nil
    Net Liability/(Asset ) 3725.20 Nil
    Am ount Recognized in the Balance Sheet Liabilities 3725.20 Nil
    Assets Nil Nil
    Net Liability/(Asset) recognized in Balance Sheet 3725.20 Nil
    Net Cost recognized in the Profit and Loss Account Current
    Service Cost 423.14 126.15
    Interest Cost 1290.00 285.00
    Expected return on plan assets (976.42) (269.72)
    Net actuarial losses (Gain) recognized during the year 148.88 (136.43)
    Total costs of defined benefit plans included in
    Schedule 16 “Payments to and provisions for employees” 885.60 5.00
    Reconciliation of expected return and actual return on
    Plan Assets
    Expected Return on Plan Assets 976.42 269.72
    Actuarial Gain/ (loss) on Plan Assets 70.74 63.46
    Actual Return on Plan Assets 1047.16 333.18
    Reconciliation of opening and closing net liability/(asset)
    recognized in Balance Sheet
    Opening Net Liability as at 1st April 2007 3723.74 Nil
    Expenses as recognized in profit and loss account 885.60 5.00
    Employers Contribution 884.14 5.00
    Net liability/(Asset) recognized in Balance Sheet 3725.20 Nil
    The Bank expects to contribute Rs.652.76 crore and Rs.43.20 crore to its defined benefit Pension Plan
    and Gratuity Plan respectively during the next financial year.
    Investments under Plan Assets of Gratuity Fund & Pension Fund as on 31st March 2008 are as follows:
    Category of Assets Gratuity Fund Pension Fund
    % of Plan Assets % of Plan Assets
    Central Govt. Securities 39.45%
    State Govt. Securities 24.59%
    Public Sector Bonds 15.11%
    FDR / TDR with Bank 16.54%
    Bank Deposits 0.94% 100.00%*
    Others 3.37%
    Total 100.00% 100.00%
    * Held with the Bank
    Principal actuarial assumptions:
    Pension and Gratuity Plans
    Particular Current year Previous year
    Discount Rate 8.00% 8.15%
    Expected Rate of return on Plan Asset 8.00% 8.00%
    Salary Escalation 5.00% 4.00%

    F - 107
    The estimates of future salary growth, factored in actuarial valuation, take account of inflation, seniority,
    promotion and other relevant factors such as supply and demand in the employment market. Such
    estimates are very long term and are not based on limited past experience / immediate future. Empirical
    evidence also suggests that in very long term, consistent high salary growth rates are not possible,
    which has been relied upon by the auditors.
    ii. Employees Provident Fund
    In terms of the guidance on implementing the AS-15 (Revised 2005) issued by the Institute of the
    Chartered Accountants of India, the Employees Provident Fund set up by the Bank is treated as a
    defined benefit plan since the Bank has to meet the specified minimum rate of return. As at the year
    end, no shortfall remains unprovided for. Accordingly, other related disclosures in respect of Provident
    Fund have not been made and an amount of Rs.344.60 crore is recognized as an expense towards the
    Provident Fund scheme of the Bank included under the head “Payments to and provisions for employees”
    in Profit and Loss Account.
    iii. Other Long term Employee Benefits
    Amount of Rs.133.40 crore is recognized as an expense towards Long term Employee Benefits included
    under the head “Payments to and provisions for employees” in Profit and Loss account.
    Details of Provisions made for various long Term Employees’ Benefits during the year;
    Sr. No. Long Term Employees’ Benefits Am ount
    1 Privilege Leave (Encashment) incl. leave encashment at the time 88.00
    of retirement
    2 Leave Travel and Home Travel Concession 25.12
    (Encashment/Availment)
    3 Sick Leave 18.40
    4 Silver Jubilee Award 1.22
    5 Resettlement Expenses on Superannuation 3.73
    6 Casual Leave (2.02)
    7 Retirement Award (1.05)
    Total 133.40
    d) Segment Reporting: As compiled by the Management and relied upon by the auditors
    1. Segment identification
    A) Primary (Business Segment)
    In compliance with the then prevailing RBI directions, the Bank had hitherto being classifying (i) Banking
    Operations and (ii) Treasury Operations as the primary segments. The RBI vide their circular no. BP.BC.81/
    21.04.018/2006-07 dated 18th April 2007, has modified its directions, requiring the Banks to identify/
    reclassify the following segments as primary segments:
    — Treasury
    — Corporate/Wholesale Banking
    — Retail Banking
    — Other Banking Business
    The present accounting and information system of the Bank does not support the capturing and extraction
    of the data in respect of the above segments separately. However, based on the present internal
    organizational and management reporting structure and the nature of their risk and returns, the existing
    primary segments have been regrouped as under:
    a) Treasury — The Treasury Segment includes the entire investment portfolio and trading in foreign
    exchange contracts and derivative contracts. The revenue of the treasury segment primarily consists
    of fees and gains or losses from trading operations and interest income on the investment portfolio.
    b) Corporate/Wholesale Banking — The Corporate/Wholesale Banking segment comprises the lending

    F - 108
    activities of Corporate Accounts Group, Mid Corporate Accounts Group and Stressed Assets
    Management Group. These include providing loans and transaction services to corporate and
    institutional clients and further include non treasury operations of foreign offices.
    c) Retail Banking — The Retail Banking Segment comprises of branches in National Banking Group,
    which primarily includes personal Banking activities including lending activities to corporate
    customers having Banking relations with branches in the National Banking Group. This segment
    also includes agency business and ATM’s
    a) Other Banking Business — Segments not classified under (a) to (c) above are classified under
    this primary segment.
    The Management is of the opinion that the above reclassification meets the requirements of the revised
    RBI guidelines and also is in compliance with the requirements of the Accounting Standard — 17 —
    “Segment Reporting” issued by the Institute of Chartered Accountants of India.
    B) Secondary (Geographical Segment)
    i) Domestic Operations — Branches/Offices having operations in India
    ii) Foreign Operations — Branches/Offices having operations outside India and Offshore Banking
    Units having operations in India
    C) Pricing of Inter-segmental transfers
    The Retail Banking segment is the primary resource mobilizing unit. The Corporate/Wholesale Banking
    and Treasury segments are recipient of funds from Retail Banking. Market related Funds Transfer Pricing
    (MRFTP) is followed under which a separate unit called Funding Centre has been created. The Funding
    Centre notionally buys funds that the business units raise in the form of deposits or borrowings and
    notionally sell funds to business units engaged in creating assets.
    D) Allocation of Expenses, Assets and Liabilities
    Expenses incurred at Corporate Centre establishments directly attributable either to Corporate/Wholesale
    and Retail Banking Operations or to Treasury Operations segment, are allocated accordingly. Expenses
    not directly attributable are allocated on the basis of the ratio of number of employees in each segment/
    ratio of directly attributable expenses.
    The Bank has certain common assets and liabilities which cannot be attributed to any segment and the
    same are treated as unallocated.
    2. Segment Results
    Part A: Primary (Business segments)
    Business Segments Treasury Corporate/ Retail Other
    Wholesale Banking Banking
    Banking Operations Total
    Revenue# 13,982.33 15,662.77 27,654.45 — 57,299.55
    Result# 1230.76 4,961.26 5,617.52 — 11,809.54
    Unallocated Income/ (Expenses) - net# — — — — (1,370.64)
    Operating Profit# — — — — 10,438.90
    Tax# — — — — (3,709.78)
    Extraordinary Profit# — — — — —
    Net Profit# — — — — 6,729.12
    Other Information:
    Segment Assets* 192,471.76 430,917.27 93,369.89 — 716,758.92
    Unallocated Assets* — — — — 4,767.39
    Total Assets* 192,471.76 430,917.27 93,369.89 — 721,526.31
    Segment Liabilities* 179,609.11 211,301.94 307,151.05 — 698,062.10
    Unallocated Liabilities* — — — — 23,464.21
    Total Liabilities* 179,609.11 211,301.94 307,151.05 — 721,526.31

    F - 109
    Part B: Secondary (Geographic Segments)
    Domestic Foreign Total
    Current Previous Current Previous Current Previous
    Year Year Year Year Year Year
    Revenue# 51493.43 40198.44 6151.81 3809.15 57645.24 44007.59
    Assets* 632865.94 513812.16 88660.37 52753.08 721526.31 566565.24
    * As at 31st March 2008
    # For the year ended 31st March 2008
    In view of the revision in the format, previous years figures have not been disclosed in view of RBI
    circular no. BP.BC.81/21.04.018/2006-07 dt. 18.04.2007.
    e) Related Party Disclosures: As identified by the Management and relied upon by the Auditors.
    1. Related Parties
    A. SUBSIDIARIES
    I. DOMESTIC BANKING SUBSIDIARIES
    1. State Bank of Bikaner & Jaipur
    2. State Bank of Hyderabad
    3. State Bank of Indore
    4. State Bank of Mysore
    5. State Bank of Patiala
    6. State Bank of Saurashtra
    7. State Bank of Travancore
    8. SBI Commercial and International Bank Ltd.
    II. FOREIGN BANKING SUBSIDIARIES
    1. SBI International (Mauritius) Ltd.
    2. State Bank of India (Canada)
    3. State Bank of India (California)
    4. Indian Ocean International Bank Ltd.
    5. Commercial Bank of India LLC, Moscow (##)
    6. PT Bank Indo Monex
    III. DOMESTIC NON-BANKING SUBSIDIARIES
    1. SBI Factors & Commercial Services Pvt. Ltd.
    2. SBI Capital Markets Limited
    3. SBI DFHI Limited
    4. SBI Mutual Funds Trustee Company Pvt. Ltd.
    5. SBI CAP Securities Ltd.
    6. SBI CAPS Ventures Ltd.
    7. SBI CAP Trustees Co. Ltd.
    8. SBI Cards & Payment Services Pvt. Ltd.(##)
    9. SBI Funds Management Pvt. Ltd. (##)
    10. SBI Life Insurance Company Ltd. (##)
    11. Global Trade Finance Ltd.

    F - 110
    IV. FOREIGN NON-BANKING SUBSIDIARIES
    1. SBICAP (UK) Ltd.
    2. SBI Funds Management (International) Ltd.(##)
    ## These entities are jointly controlled.
    B. JOINTLY CONTROLLED ENTITIES
    1. GE Capital Business Process Management Services Pvt. Ltd
    2. C-Edge Technologies Ltd.
    C. ASSOCIATES
    i. Regional Rural Banks
    1 Andhra Pradesh Grameena Vikas Bank
    2 Arunachal Pradesh Rural Bank
    3 Cauvery Kalpatharu Grameena Bank
    4 Chhattisgarh Gramin Bank
    5 Deccan Grameena Bank
    6 Ellaquai Dehati Bank
    7 Meghalaya Rural Bank (Formerly known as Ka Bank Nongkyndong Ri Khasi Jaintia)
    8 Krishna Grameena Bank
    9 Langpi Dehangi Rural Bank
    10 Madhya Bharat Gramin Bank
    11 Malwa Gramin Bank
    12 Marwar Ganganagar Bikaner Bank
    13 Mizoram Rural Bank
    14 Nagaland Rural Bank
    15 Parvatiya Gramin Bank
    16 Purvanchal Kshetriya Gramin Bank
    17 Samastipur Kshetriya Gramin Bank
    18 Saurashtra Gramin Bank
    19 Utkal Gramya Bank
    20 Uttaranchal Gramin Bank
    21 Vananchal Gramin Bank
    22 Vidisha Bhopal Kshetriya Gramin Bank
    ii. Others
    1. SBI Home Finance Limited
    2. Clearing Corporation of India Ltd.
    3. Nepal SBI Bank Ltd.
    4. Bank of Bhutan
    5. UTI Asset Management Company Pvt. Ltd.
    6. SS Ventures Services Ltd.
    D. Key Management Personnel of the Bank
    1. Shri O. P. Bhatt, Chairman
    2. Shri T. S. Bhattacharya, Managing Director upto 31st January 2008
    3. Shri Yogesh Agarwal, Managing Director upto 30th June 2007
    4. Shri S. K. Bhattacharyya, Managing Director from 8th October 2007

    F - 111
    2. Related parties with whom transactions were entered into during the year
    No disclosure is required in respect of related parties which are “State-controlled Enterprises” as per
    paragraph 9 of Accounting Standard (AS) 18. Further, in terms of paragraph 5 of AS 18, transactions in
    the nature of Banker-customer relationship are not required to be disclosed in respect of Key Management
    Personnel and relatives of Key Management Personnel. Other particulars are as under:
    1. C-Edge Technologies Ltd.
    2. GE Capital Business Process Management Services Pvt. Ltd.
    3. Bank of Bhutan
    4. Nepal SBI Bank Ltd.
    5. SBI Home Finance Ltd.
    6. S S Ventures Services Ltd.
    7. Shri O. P. Bhatt
    8. Shri T. S. Bhattacharya (upto 31.01.08)
    9. Shri Yogesh Agarwal, (upto 30.06.2007)
    10. Shri S. K. Bhattacharyya (from 08.10.2007)
    3. Transactions and Balances:
    Associates/ Joint Key Management
    ventures Personnel Total
    Deposits # 62.56 — 62.56
    (295.37) (0.00) (295.37)
    Other Liabilities # 0.01 — 0.01
    (1.76) (0.00) (10.76)
    Investments # 35.45 — 35.45
    (35.45) (0.00) (35.45)
    Interest paid * 3.16 — 3.16
    (6.59) (0.00) (6.59)
    Income earned by way of dividend* 2.94 — 2.94
    (0.50) (0.00) (0.50)
    Other Income* 0.01 — 0.01
    (0.00) (0.00) (0.00)
    Other expenditure* — — —
    (1.66) (0.00) (1.66)
    Management contracts * — 0.54 0.54
    (0.65) (0.15) (0.80)
    (Figures in brackets are for Previous Year)
    # As at 31st March 2008
    * For the year ended on 31st March 2008
    f) Leases:
    Assets given on Financial Leases on or after 1st April 2001: The details of finance leases are given below:
    Particulars As at As at
    31-Mar-2008 31-Mar-2007
    Gross investment in the leases 43.29 164.73
    Present value of minimum lease payments receivable Less than 1 year 8.91 8.91
    1 to 5 years 9.67 15.04
    5 years and above — —
    Total 18.58 23.95
    Present value of unearned finance income 3.76 5.00

    F - 112
    The Bank has not compiled the data on the operating leases taken and operating leases granted. Accordingly,
    no disclosure for the same is made.
    g) Earning per Share
    The Bank reports basic and diluted earnings per equity share in accordance with Accounting Standard 20 —
    “Earnings per Share”. “Basic earnings” per share is computed by dividing net profit after tax by the weighted
    average number of equity shares outstanding during the year.
    Basic and diluted
    Particular Current year Previous year
    Weighted average no of equity shares used in computing
    basic earning per share 53,14,45,447 52,62,98,878
    Add: Potential number of equity shares that could arise
    on account of ESPS scheme 5,09,911 —
    Weighted average number of shares used in computing
    diluted earning per share 53,19,55,358 —
    Net profit 6,729.12 4,541.31
    Basic earnings per share (Rs.) 126.62 86.10
    Diluted earnings per share (Rs.) 126.50 86.10
    Nominal value per share (Rs.) 10.00 10.00
    h) Accounting for Taxes on Income
    i. During the year, Rs.219.43 crore [Previous Year Rs.19.83 crore] has been credited to Profit and Loss
    Account by way of adjustment of deferred tax.
    ii. During the year, Rs.125.53 crore was reversed to “tax paid in advance account” by an adjustment to
    deferred tax liability in respect of taxation of interest on securities on “due” basis, as the same was
    earlier created by debit to “tax paid in advance account” based on an expert’s opinion.
    iii. During the year Rs.181.06 crore (previous year Nil) has been netted off by debit to Revenue and other
    Reserve by way of adjustment of deferred tax on Transitional Liability of Rs.532.70 crore towards long
    term employee benefits (other than pension)
    iv. The Bank has outstanding net deferred tax asset of Rs.42.05crore (Previous Year-Deferred tax liability of
    Rs.483.68 crore), which has been included in other assets-others and other liabilities- others respectively.
    The break up of deferred tax assets and liabilities into major items is given below:
    Particulars As at As at
    31-Mar-2008 31-Mar-2007
    Deferred Tax Assets
    Provision for wage revision 195.44 —
    Provision for long term employees’ benefits 181.06 —
    Ex-gratia paid under Exit option 145.44 143.38
    Others 118.88 97.51
    Total 640.82 240.89
    Deferred Tax Liabilities
    Depreciation on Fixed Assets 103.00 103.27
    Interest on securities 495.77 621.30
    Total 598.77 724.57
    Net Deferred Tax Assets/(Liabilities) 42.05 (483.68)

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    i) Investments in jointly controlled entities
    Investments include Rs.15.70 crore (Previous Year Rs.15.70 crore) representing Bank’s interest in the following
    jointly controlled entities
    Sr. Name of the Company Am ount Country of Holding %
    No. Residence
    1 GE Capital Business Process Management 10.80 India 40%
    Services Pvt. Ltd (10.80)
    2 C - Edge Technologies Ltd 4.90 India 49%
    (4.90)
    (Figures in brackets relate to previous year)
    As required by AS 27, the aggregate amount of the assets, liabilities, income and expenses related to the
    Bank’s interests in jointly controlled entities are disclosed as under:
    Particulars As at As at
    31-Mar-2008 31-Mar-2007
    Liabilities
    Capital & Reserves 63.21 52.13
    Deposits — —
    Borrowings 0.35 0.21
    Other Liabilities & Provisions 27.05 20.60
    Total 90.61 72.94
    Assets
    Cash and Balances with RBI 0.01 0.01
    Balances with Banks and money at call and short notice 2.04 3.66
    Investments 2.62 2.47
    Advances — —
    Fixed Assets 15.03 19.79
    Other Assets 70.91 47.01
    Total 90.61 72.94
    Capital Commitments Nil Nil
    Other Contingent Liabilities Nil Nil
    Income
    Interest earned 5.69 0.04
    Other income 61.63 65.85
    Total 67.32 65.89
    Expenditure
    Interest expended — —
    Operating expenses 49.81 38.25
    Provisions & contingencies 6.43 10.07
    Total 56.24 48.32
    Profit 11.08 17.57
    j) Impairment of Assets
    In the opinion of the Bank’s Management, there is no impairment to the assets during the year to which
    Accounting Standard 28 — “Impairment of Assets” applies.

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    k) Provisions, Contingent Liabilities & Contingent Assets
    a) Break-up of Provisions
    Particular Current year Previous year
    Provision for Taxation
    Current Tax 3823.50 3014.61
    Fringe Benefit Tax 105.00 88.50
    Deferred Tax (219.43) (19.83)
    Other Tax 0.70 0.49
    Provision for Depreciation on Investments (88.68) 379.23
    Provision on Non-Performing Assets 2000.94 1429.50
    Provision on Standard Assets 566.97 589.19
    Provision for Other Assets 189.43 (23.06)
    Total 6378.43 5458.63
    b) Floating Provisions
    Particular Current year Previous year
    Opening Balance Nil Nil
    Addition during the year Nil Nil
    Draw down during the year Nil Nil
    Closing Balance Nil Nil
    c) Description of Contingent Liabilities and Contingent Assets
    Sr. No. Items Brief Description
    1. Claims against the Bank not The Bank is a party to various proceedings in the
    acknowledged as debts normal course of business. The 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 outstanding The Bank enters into foreign exchange contracts,
    forward exchange contracts currency options, forward rate agreements, currency
    swaps and interest rate swaps with inter-Bank
    participants 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 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 that are recorded as contingent liabilities, are
    typically amounts used as a benchmark for the
    calculation of the interest component of the contracts.
    3. Guarantees given on behalf of As a part of its commercial Banking activities, the Bank
    constituents, acceptances, issues documentary credits and guarantees on behalf
    endorsements and other obligations of its customers. Documentary credits enhance the credit
    standing of the customers of the Bank. Guarantees
    generally represent irrevocable assurances that the Bank
    will make payment in the event of the customer failing
    to fulfil its financial or performance obligations.

    F - 115
    4. Other items for which the Bank is The Bank is a party to various taxation matters in
    contingently liable. respect of which appeals are pending. These are being
    contested by the Bank and not provided for. Further,
    the Bank has made commitments to subscribe to shares
    in the normal course of business.
    d) The contingent liabilities mentioned above are dependent upon the outcome of Court/ arbitration/out of
    Court settlements, disposal of appeals, the amount being called up, terms of contractual obligations,
    devolvement and raising of demand by concerned parties, as the case may be.
    e) Movement of provisions against contingent liabilities
    Particular Current year Previous year
    Opening balance . . . . . . . . . . . . . . . . . . . . . . . . . 71.90 63.38
    Additions during the year. . . . . . . . . . . . . . . . . . . 19.90 12.76
    Reductions during the year . . . . . . . . . . . . . . . . . 14.36 4.24
    Closing balance . . . . . . . . . . . . . . . . . . . . . . . . . . 77.44 71.90
    18.10Pending Wage Agreement
    The Eighth Bipartite Settlement entered into by the Indian Banks’ Association on behalf of the member Banks with
    the All India Unions of Workmen expired on 31st October 2007. Pending the execution of a new agreement a
    provision of Rs.575 crore has been made in the accounts for the Bank’s estimated liability in respect of wage
    revision to be effective from 1st November 2007.
    18.11 Proposed Merger
    Pursuant to a Scheme of Amalgamation approved by the Central Board at its meeting held on 25th August 2007,
    State Bank of Saurashtra, a wholly owned subsidiary of the Bank is to be merged with the Bank. The relevant
    scheme is yet to be approved by the Government of India, RBI and other authorities. Pending such approvals no
    effect has been given to the said scheme in these Accounts.
    18.12 Exit Option
    The Bank had implemented an Exit Option Scheme for its eligible employees. The ex-gratia payments under exit
    option aggregating to Rs.140.00 crore (previous year Rs.478.30 crore) have been charged to the Profit & Loss
    Account during the year.
    18.13 Inter Office Accounts/Government Accounts/Suspense Accounts
    Inter Office transactions between branches, controlling offices and local head offices and corporate centre
    establishment have been reconciled upto 31st December 2007. Further, pipeline transitions in respect of foreign
    exchange, gold, currency transactions and Government transactions are under reconciliation. Steps for adjustment/
    elimination of outstanding entries are in progress. These balances are subject to reconciliation, the ultimate effect of
    which is not expected to be material.
    18.14 Additional Contribution to Pension Fund
    The Bank’s Pension fund rules state that the bank shall contribute 10% of salary to the Pension Fund. The
    Government of India, have advised the Bank to contribute to the Pension Fund in accordance to the funds rules.
    However, in order to comply with the Accounting Standard 15 (Revised 2005), and to make adequate prudential
    provisions in accordance with the actuarial valuations, the Bank has made an additional contribution of Rs.546 crore
    (previous year Rs.864 crore) to the Pension Fund during the financial year.
    18.15 Previous year ’s figures have been regrouped and reclassified, wherever necessary and determinable, to make them
    comparable with current year ’s figures. In cases where disclosures have been made for the first time in terms of
    RBI guidelines/ Accounting Standards, previous year ’s figures have not been mentioned.

    F - 116
    SCHEDULE 17
    Principal Accounting Policies
    1. Basis of Preparation
    The accompanying financial statements have been prepared under the historical cost convention. They conform to
    Generally Accepted Accounting Principles (GAAP) in India, which comprise the statutory provisions, regulatory/
    Reserve Bank of India (RBI) guidelines, accounting standards/ guidance notes issued by the Institute of Chartered
    Accountants of India (ICAI), and the practices prevalent in the banking industry in India. In respect of foreign
    offices, statutory provisions and practices prevailing in respective countries are complied with.
    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 expenditure 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.
    2. Advances and Provisions thereon
    2.1 Advances are shown net of provisions and unrealised interest on Non-Performing Assets (NPAs).
    2.2 A general provision is required to be made on Standard Assets on the global portfolio. The provision rates
    for the different categories of Standard Assets are summarised below :-
    a. Direct advances to agricultural and
    SME Sectors 0.25%
    b. Residential housing loans beyond
    Rs.20 lakhs 1.00%
    c. Personal Loans 2.00%
    Loans and advances qualifying as capital market exposures, Commercial real estate loans, and Loans
    and advances to systemically important NBFCs - Non Deposit Taking
    d. All other loans and advances not included in (a), (b) and (c) 0.40%
    2.3 Indian Offices
    2.3.1 All advances are classified under four categories, viz. (a) Standard Assets, (b) Sub-standard Assets, (c)
    Doubtful Assets and (d) Loss Assets.
    2.3.2 Provisions are made on outstanding non-performing advances (net of interest not realized) as under :
     Substandard Assets : 10%
    : 20% In case of unsecured exposures (where realisable value of security is
    not more than 10 per cent, ab initio)
     Doubtful Assets
    a) Unsecured portion at 100 per cent after netting retainable/realisable amount of guarantee cover
    provided by Export Credit Guarantee Corporation/ Credit Guarantee Trust for Small Industries,
    wherever applicable.
    b) Secured portion
    Period for which the advance has been considered as doubtful
    Upto one year 20%
    One to three years 30%
    More than three years 100%
     Loss assets 100%
     “Financial Assets” sold are recognised as under :
    i) In case the sale is at a price lower than the Net Book Value (NBV), the difference is charged to the
    Profit & Loss Account.

    F - 117
    ii) In case the sale is at a price higher than the NBV, the surplus provision is not reversed and is
    utilised to meet the shortfall on sale of other such non-performing financial assets.
    2.3.3. Unrealised Interest recognised in the previous year on advances which have become non-performing
    during the current year, is provided for.
    2.3.4 In case of restructuring/rescheduling of advances, the difference between the present value of the
    future interest as per the original agreement and the present value of the future interest as per the
    revised agreement is provided for at the time of restructuring/rescheduling.
    2.4 Foreign Offices
    2.4.1 Advances are classified under four categories in line with those of Indian Offices.
    2.4.2 Provisions in respect of non-performing advances are made as per the local law or as per the norms of
    RBI, whichever is higher.
    3. Investments
    3.1 Investments are classified into 3 categories, viz. ‘Held for Trading’, ‘Available for Sale’ and ‘Held to Maturity’ :
    Under each of these categories, investments are further classified under following six groups :
    i) Government Securities
    ii) Other Approved Securities
    iii) Shares
    iv) Debentures and Bonds
    v) Investments in Subsidiaries/Joint Ventures and
    vi) Other Investments
    3.1.1 Investments that are acquired by the Bank with the intention to trade by taking advantage of short term
    price /interest rate movement are classified under ‘Held for Trading’. These investments are held under
    this category upto 90 days from the date of acquisition.
    3.1.2 Investments which are intended to be held up to maturity are classified as ‘Held to Maturity’.
    3.1.3 Investments which are not classified in either of the above categories are classified as ‘Available for
    Sale’.
    3.2 Valuation
    3.2.1 In determining the acquisition cost of an investment:
    (a) Brokerage/commission received on subscriptions is deducted from the cost of securities.
    (b) Brokerage, commission and stamp duty paid in connection with acquisition of securities are treated
    as revenue expenses.
    (c) Interest accrued upto the date of acquisition of securities i.e. broken-period interest, is excluded
    from the acquisition cost and recognized as interest expense. Broken-period interest received on
    sale of securities is recognized as interest income.
    (d) Cost is determined on the weighted average cost method.
    (e) The transfer of a security (from one category to another) is accounted for at the least of acquisition
    cost/book value/market value on the date of transfer and the depreciation, if any, on such transfer
    is charged to Profit and Loss Account - “Profit on Revaluation of Investments” as a deduction.
    3.2.2 Individual scrips classified under ‘Held for Trading‘ category are valued at lower of book value or
    market value. Securities are valued scrip-wise and depreciation/appreciation is aggregated for each
    classification. Net depreciation in each classification, if any, is provided for while net appreciation is
    ignored. The book value of the scrips continue to remain unchanged.
    3.2.3 Investments under ‘Held to Maturity’ (HTM) category are carried at acquisition cost. Wherever the
    book value is higher than the face value/redemption value, the premium on acquisition or on transfer
    from another category is amortised over the remaining period to maturity of the security using Constant

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    Yield Method (CYM). Amortisation loss is charged to Profit and Loss Account - “Profit on Revaluation
    of Investments” as a deduction. The book value of the security is reduced to the extent of the amount
    amortised.
    3.2.4 Investments under ‘Available for Sale’ category are valued at cost or market value, whichever is lower.
    Where market quotations are not available, market value for this purpose is arrived at on the basis of
    realizable market price computed as per the guidelines of the Fixed Income Money Market and Derivatives
    Association of India (FIMMDA) / Primary Dealers Association of India (PDAI) / RBI. Securities are
    valued scrip-wise and depreciation/appreciation is aggregated for each classification. Net depreciation in
    each classification, if any, is provided for while net appreciation is ignored. The book value of the scrips
    continues to remain unchanged.
    3.2.5 Treasury Bills and Commercial Papers are valued at cost.
    3.2.6 Investments in subsidiaries and joint ventures (both in India and abroad) are valued at historical cost
    after netting off provisions, if any.
    3.2.7 Non-Performing Investments are recognised as per RBI guidelines and provision is made as per RBI
    norms applicable to Non-Performing Advances.
    3.2.8 Investments in Regional Rural Banks (RRBs) are valued at carrying cost (i.e. book value)
    3.3 The Bank has adopted the Uniform Accounting Procedure prescribed by the RBI for accounting of Repo and
    Reverse Repo transactions [other than transactions under the Liquidity Adjustment facility (LAF) with the
    RBI]. Accordingly, the securities sold/purchased under Repo/Reverse Repo are treated as outright sales/
    purchases and accounted for in the Repo/Reverse Repo Accounts and the entries are reversed on the date of
    maturity. Costs and revenues are accounted as interest expenditure/income, as the case may be. Balance in
    Repo/Reverse Repo Account is adjusted against the balance in the Investment Account.
    Securities purchased/sold under LAF with RBI are debited/credited to Investment Account and reversed on
    maturity of the transaction. Interest expended/earned thereon is accounted for as expenditure/revenue.
    4. Derivatives :
    The Bank presently deals in Interest Rate Derivatives viz.Rupee Interest Rate Swaps, Cross Currency Interest Rate
    Swaps and Forward Rate Agreements, and Currency Derivatives viz. Options and Currency Forwards. The Bank
    also deals in a mix of these generic instruments, under the portfolio of Structured Products.
    4.1 Based on RBI guidelines, Derivatives are valued as under :
    a) Derivatives used for trading are marked to market and net appreciation/ depreciation is recognised in the
    Profit and Loss Account.
    b) Derivatives used for hedging are :
    i) Marked to market in cases where the underlying Assets/Liabilities are marked to market. The resultant
    gain/loss is recognised in the Profit & Loss Account.
    ii) Accounted on accrual basis in cases where the underlying Assets/Liabilities are not marked to market.
    The net outstanding marked to market position of each type of derivative is shown either under Asset or
    Liability, as the case may be.
    5. Fixed Assets and Depreciation
    5.1 Premises and other fixed assets are accounted on historical cost basis.
    5.2 Depreciation is provided on the written down value method at the rates prescribed under the Income Tax
    Rules, 1962, which are considered appropriate by the management. In respect of computers, depreciation is
    provided on straight line method @ 33.33% per annum, as per RBI guidelines. Computer software not forming
    an integral part of hardware is depreciated fully in the year of purchase.
    5.3 Assets costing upto Rs.1000/- are charged off to the Profit and Loss Account.
    5.4 In respect of fixed assets held at Foreign Offices, depreciation is provided as per the laws/norms of the
    respective countries.
    5.5 In respect of leasehold premises, the lease amount is amortised over the period of lease.

    F - 119
    6. Assets given on Lease
    6.1 In respect of assets given on lease by the Bank on or before 31st March 2001, the value of the assets given
    on lease and the amounts paid as advance for assets to be given on lease are disclosed as “Leased Assets’’
    and “Capital Work-in-progress (Leased Assets)’’ respectively under fixed assets. Depreciation is provided on
    straight line method as per the Companies Act, 1956, and the difference between the annual lease charge
    (capital recovery) and the depreciation is taken to Lease Equalisation Account as per the guidelines issued by
    the ICAI.
    6.2 Assets given on lease by the Bank on or after 1st April 2001 are accounted as per Accounting Standard 19
    (Leases) issued by the ICAI. Such assets are included under “Other Assets’’.
    6.3 Provisions on non-performing leased assets are made on the basis of RBI guidelines applicable to advances.
    7. Impairment of Assets
    Impairment losses (if any), are recognized in accordance with Accounting Standard-28 issued by the ICAI and
    charged off to Profit and Loss Account.
    8. Foreign Currency Transactions
    8.1 In conformity with Accounting Standard 11 (The effects of changes in foreign exchange rates) of the ICAI,
    Foreign Branches of the Bank and Offshore Banking Units (OBUs) have been classified as Non-integral
    Operations and Representative Offices classified as Integral Operations.
    8.2 a) Foreign currency transactions are recorded on initial recognition in the reporting currency by applying
    to the foreign currency amount the exchange rate between the reporting currency and the foreign
    currency on the date of transaction.
    b) Foreign currency monetary items are reported using the FEDAI closing spot rates.
    c) Exchange differences arising on the settlement of monetary items at rates different from those at which
    they were initially recorded are recognised as income or as expense in the period in which they arise.
    8.3 Non-integral Operations
    a) All monetary/non-monetary assets and liabilities as well as contingent liabilities are translated at the
    closing rate notified by FEDAI.
    b) Income and expenditure are translated using the quarterly average rate notified by FEDAI at the end of
    the respective quarter.
    c) All resulting exchange differences are accumulated in a separate “Foreign Currency Translation Reserve”
    account till the disposal of the net investment.
    8.4 Integral Operations
    a) All income and expenditure of integral operations are recorded at the rates prevalent on the date of
    transaction.
    b) All foreign currency monetary items are reported using the FEDAI closing spot rates.
    8.5 Forward Exchange Contracts
    In accordance with the guidelines of FEDAI and the provisions of AS -11, net outstanding forward exchange
    contracts in each currency are revalued at the Balance Sheet date at the corresponding forward rates for the
    residual maturity of the contracts. The difference between the revalued amount and the contracted amount is
    recognised as profit or loss, as the case may be.
    9. Revenue Recognition
    9.1 Income and expenditure are accounted on accrual basis. In case of Foreign Offices, income is recognised as
    per the local laws of the country in which the respective foreign office is located.
    9.2 The following items of income are recognised on realization basis:
    (a) Commission (other than commission on deferred payment guarantees and government transactions),
    exchange and brokerage.
    (b) Dividend on investments.

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    (c) Income on Rupee Derivatives designated as “Trading”.
    (d) Interest on application money on investments and overdue interest on investments.
    9.3 The following items of income are recognised on realisation basis, owing to significant uncertainty in collection
    thereof:
    (a) Income on non-performing advances, Overdue bills and non-performing leased assests
    (b) Interest on non-performing investments.
    9.4 Income (other than interest) on investments in “Held to Maturity” (HTM) category acquired at a discount to
    the face value, is recognised as follows :
    a) On Interest bearing securities, it is recognised only at the time of sale / redemption.
    b) On zero-coupon securities, it is accounted for over the balance tenor of the security on a constant yield
    basis.
    9.4.1 Profit on sale of investments in this category is first credited to the Profit & Loss Account and thereafter
    appropriated to the “Capital Reserve Account”. Loss on sale is recognised in the Profit & Loss Account.
    10. Retirement Benefits
    10.1 Contributions payable to the Bank’s Provident Fund Trust in terms of its Provident Fund Scheme are charged
    to Profit and Loss account on accrual basis.
    10.2 Liability for gratuity, pension and leave encashment (which are defined benefits) is determined on the basis of
    actuarial valuations carried out at the year end and the incremental liability is provided for by charging to the Profit
    and Loss Account.
    11. Provision for Taxation
    Provision for tax comprises of current tax for the period determined in accordance with the relevant laws, fringe
    benefit tax and deferred tax charge or credit reflecting the tax effects of timing differences between accounting
    income and taxable income for the period, in conformity with Accounting Standard 22 (Accounting for taxes on
    income) of the Institute of Chartered Accountants of India. The deferred tax charge or credit and the corresponding
    deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted
    by the balance sheet date. Deferred tax assets are not recognized unless there is virtual certainty that sufficient
    future taxable income will be available against which such deferred tax assets will be realized.

    F - 121
    Schedule - 18
    NOTES ON ACCOUNTS
    Amount in Rupees in Crores
    18.1. Capital :
    The Capital to Risk-weighted Assets Ratio as assessed by the Bank on the basis of the financial statements and
    guidelines issued by RBI is given below:
    Items As at As at
    31-Mar-2007 31-Mar-2006
    Capital to Risk-weighted Assets Ratio - Overall 12.34% 11.88%
    Capital to Risk-weighted Assets Ratio - Tier I 8.01% 9.36%
    Capital to Risk-weighted Assets Ratio - Tier II 4.33% 2.52%
    Shareholding of the Government of India Nil Nil
    Amount of Subordinated Debt raised as
    Tier-II capital during the year 9442.90 3283.00
    18.2. Hybrid Bonds :
    During the year, the Bank has raised USD 400 million (Rs.1738.80 crores as on 31st March 2007) by issuing “SBI
    Perpetual Non Call 10.25 Years Bonds - February 2007 issue”, which qualifies for Hybrid Tier I Capital. These bonds
    carry a fixed interest rate for a period of 10.25 years. In case the Bank does not exercise its call option by
    15.05.2017, the interest rate will be raised and the fixed rate would be converted into a floating rate. These bonds
    have been listed on the Singapore Stock Exchange.
    18.3 Subordinated Debt :
    i) The subordinated debts are unsecured, long term, non-convertible and are redeemable at par. The debt is
    subordinated to present and future senior indebtedness of the Bank and qualifies for Tier II capital.
    ii) The details of outstanding subordinated debt raised through private placement of bonds are given below :
    Particulars Date of issue Rate of Interest Tenor Equivalent
    (Per annum) Amount
    Private Placement Bonds 2000-2001 01.01.2001 11.90% 87 months 1675.20
    Private Placement Bonds 2005 05.12.2005 7.45% 113 months 3283.00
    Private Placement Bonds 2006 (I) 05.06.2006 8.80% 180 months 2327.90
    Private Placement Bonds 2006(II) 06.07.2006 9.00% 180 months 500.00
    Private Placement Bonds 2006(III) 12.09.2006 8.96% 180 months 600.00
    Private Placement Bonds 2006(IV) 13.09.2006 8.97% 180 months 615.00
    Private Placement Bonds 2006(V) 15.09.2006 8.98% 180 months 1500.00
    Private Placement Bonds 2006(VI) 04.10.2006 8.85% 180 months 400.00
    Private Placement Bonds 2006(VII) 16.10.2006 8.88% 180 months 1000.00
    Private Placement Bonds 2006(VIII) 17.02.2007 9.37% 180 months 1000.00
    Private Placement Bonds 2006(IX) 21.03.2007 9.85% 111 months 1500.00
    Unsecured Loan in Foreign Currency 12.04.2000 6.50% 108 months 29.59
    Total 14430.69

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    18.4 Investment
    The Details of investments and the movement of provisions held towards depreciation on investments of the Bank
    are given below :
    Items As at As at
    31-Mar-2007 31-Mar-2006
    I. Value of Investments
    i) Gross value of Investments
    (a) In India 144580.01 163430.99
    (b) Outside India 5823.31 5260.01
    ii) Provisions for Depreciation
    (a) In India 1243.69 6144.79
    (b) Outside India 10.75 11.97
    iii) Net value of Investments
    (a) In India 143336.32 157286.20
    (b) Outside India 5812.56 5248.04
    II. Movement of provisions held towards depreciation on investments
    i) Opening Balance 6156.76 3075.24
    ii) Add: Provisions made during the year 477.20 3925.87
    iii) Less : Write off/write back of excess provision / reclassification 5379.52 844.35
    iv) Closing balance 1254.44 6156.76
    Notes :
    1. Investments include securities utilised under Liquidity Adjustment Facility with Reserve Bank of India -
    Rs.5000.00 Crores (Previous year Rs.2000.00 Crores)
    2. Investments amounting to Rs.22755.00 Crores (Previous Year Rs.22755.00 Crores) are kept as margin with the
    Reserve Bank of India/Clearing Corporation of India Ltd. towards Real Time Gross Settlement (RTGS)/NDS.
    3. Other investments include deposits with NABARD under the RIDF Deposit Scheme amounting to Rs.7652.53
    Crores (Previous Year Rs. 4141.67 Crores).
    4. On 14.12.2006, the Bank has acquired 76% equity shares of PT Bank Indo Monex (PBIM). Consequently,
    PBIM has become a subsidiary of the Bank since that date.
    18.4.1. Repo Transactions
    The details of securities sold and purchased under repos and reverse repos during the year are given
    below :
    Items Minimum Maximum Daily Average Balance
    outstanding outstanding outstanding as on
    during the year* during the year during the year* year end
    Securities sold under repos 0.00 11873.63 325.38 5000.00
    (0.00) (9208.00) (365.87) (2100.00)
    Securities purchased under 0.00 20512.05 3707.28 0.00
    reverse repos (0.00) (18299.00) (1672.77) (0.00)

    F - 123
    Figures in brackets are for Previous Year)
    18.4.2 Ø Non-SLR Investment Portfolio
    (i) Issuer composition of Non SLR Investments
    The issuer composition of non-SLR investments of the Bank is given below :
    Issuer Gross Extent of Extent of Extent of Extent of
    No. outstanding Private ‘Below Invest- `Unrated’ `Unlisted’
    Placement ment Grade’ Securities * Securities *
    Securities *
    (i) PSUs 5865.49 603.93 132.00 34.11 111.11
    (6195.41) (1123.06) (0.00) (33.27) (299.13)
    (ii) FIs 1401.04 1398.36 255.90 108.65 404.54
    (1198.25) (1196.87) (0.00) (255.90) (255.90)
    (iii) Banks 3507.06 2313.53 125.13 0.00 60.00
    (3582.62) (2473.95) (93.72) (5.00) (45.00)
    (iv) Private Corporates 3701.90 757.49 143.59 80.07 110.27
    (3666.87) (630.46) (98.42) (601.30) (638.00)
    (v) Subsidiaries / Joint ventures ** 2611.26 0.00 0.00 0.00 0.00
    (2449.65) (0.00) (0.00) (0.00) (0.00)
    (vi) Others 11605.76 8337.63 538.82 513.20 1842.79
    (7727.33) (4518.95) (218.48) (456.54) (1391.99)
    (vii) Provision held towards 589.79 NA 0.92 NA NA
    depreciation (465.13) NA (1.38) NA NA
    Total 28102.72 13410.94 1195.44 736.03 2528.71
    Previous Year 24355.00 9943.29 410.63 1352.01 2630.02
    Figures in brackets are for Previous Year)
    * Investment in equity, equity linked instruments, asset backed securitised instruments, Govt. securities
    and pass through certificates have not been segregated under these categories as these are not covered
    under relevant RBI guidelines.
    ** Investments in Subsidiaries/Joint Venture have not been segregated into various categories as these are
    not covered under relevant RBI guidelines.
    ii) Non Performing Non-SLR Investments
    Particulars Amount Amount
    2006-07 2005-06
    Opening Balance 254.57 221.97
    Additions during the year 19.13 93.29
    Reductions during the year 30.28 60.69
    Closing balance 243.42 254.57
    Total provisions held 208.68 232.24

    F - 124
    18.5 Derivatives
    18.5.1 Forward Rate Agreement / Interest Rate Swap
    Items As at As at
    31-Mar-2007 31-Mar-2006
    i) The notional principal of swap agreements 186610.70 97967.93
    ii) Losses which would be incurred if counterparties
    failed to fulfil their obligations under the agreements 2415.53 671.59
    iii) Collateral required by the Bank upon entering into swaps Nil Nil
    iv) Concentration of credit risk arising from the swaps Not Significant Not Significant
    v) The fair value of the swap book 35.41 - 82.52
    18.5.2 Exchange Traded Interest Rate Derivatives
    Sr. No. Particulars Current Year Previous Year
    1 Notional principal amount of exchange traded interest
    rate derivatives undertaken during the year Nil Nil
    2 Notional principal amount of exchange traded interest
    rate derivatives outstanding as on 31st March 2007 Nil Nil
    3 Notional principal amount of exchange traded interest
    rate derivatives outstanding and not ‘highly effective’ Nil Nil
    4 Marked-to-market value of exchange traded interest
    rate derivatives outstanding and not ‘highly effective’. Nil Nil
    18.5.3 Disclosures on Risk Exposure in Derivatives
    A) Qualitative Disclosure
    The Bank currently deals in over-the counter (OTC) interest rate and currency derivatives. Interest rate
    derivatives dealt with by the Bank are rupee interest rate swaps, foreign currency interest rate swaps
    and forward rate agreements. Currency derivatives dealt with by the Bank are currency swaps, rupee
    dollar options and cross-currency options. The products are offered to the Bank’s customers to manage
    their exposures and the Bank enters into derivatives contracts to cover such exposures. Derivatives are
    also used by the Bank both for trading as well as hedging on-balance sheet items. The Bank also deals
    in a mix of these generic instruments, under the portfolio of Structured Products.
    Derivative transactions carry market risk i.e. the probable loss the Bank may incur as a result of adverse
    movements in interest rates/exchange rates and credit risk i.e. the probable loss the Bank may incur if
    the counterparties fail to meet their obligations. The Bank’s ‘Policy for Derivatives’ approved by the
    Board prescribes risk parameters to control and manage market risk (cut-loss triggers, open position
    limits, duration, modified duration, PV01 etc.). The policy also prescribes customer eligibility criteria
    (credit rating, tenure of relationship etc.); credit risk is controlled by entering into derivitive transactions
    only with counterparties satisfying these criteria, setting appropriate counterparty exposure limits taking
    into account ability to honour obligations, and entering into ISDA agreements with each counterparty.
    The Asset Liability Management Committee (ALCO) of the Bank oversees efficient management of these
    risks. The Bank’s Mid-Office and Risk Control (MORC) Department at Treasury, now Market Risk
    Management Department (MRMD), independently identifies, measures, and monitors market risk
    associated with derivative transactions, assists ALCO in controlling and managing these risks, and
    reports compliance with policy prescriptions to the Risk Management Committee of the Board (RMCB)
    at regular intervals.
    The accounting policy for derivatives has been drawn up in accordance with RBI guidelines.

    F - 125
    B) Quantitative Disclosures :
    Sr. No. Particulars Currency Derivatives Interest Rate Derivatives
    Current Previous Current Previous
    Year Year Year Year
    (i) Derivatives (Notional
    Principal Amount)
    a) For hedging - 3293.79 7428.99 21219.72
    b) For trading 49938.77 6377.87 179181.71 76748.21
    (ii) Marked to Market
    Positions
    a) Asset (+) 21.72 - 162.11 57.55
    b) Liability (-) - - 108.79 97.08
    (iii) Credit Exposure 1517.60 3945.84 3059.23 1135.47
    (iv) Likely impact of one
    percentage change in
    interest rate (100* PV01)
    a) on hedging derivatives - - 141.99 136.62
    b) on trading derivatives 0.04 0.82 - 3.38 70.74
    v) Maximum and Minimum
    of 100* PV 01 observed
    during the year
    a) on hedging - - 12.85 & -0.24 170.19 & 30.19
    b) on trading -0.65 & -0.23 82.06 & -13.46 40.82 & -4.12 106.80& - 35.81
    18.6 Asset Quality
    18.6.1 Non-Performing Asset
    Items As at As at
    31-Mar-2007 31-Mar-2006
    i) Net NPAs to Net Advances (%) 1.56% 1.88%
    ii) Movement of NPAs (Gross)
    (a) Opening balance 9628.14 11656.99
    (b) Additions during the year 4963.87 4327.28
    (c) Reductions during the year 4593.79 6356.13
    (d) Closing balance 9998.22 9628.14
    iii) Movement of Net NPAs
    (a) Opening balance 4911.41 6303.34
    (b) Additions during the year 3538.50 3238.78
    (c) Reductions during the year 3192.19 4630.71
    (d) Closing balance 5257.72 4911.41
    iv) Movement of provisions for NPAs
    (a) Opening balance 4716.73 5353.65
    (b) Provisions made during the year 1425.37 1088.50
    (c) Write-off/write-back of excess provisions 1401.60 1725.42
    (d) Closing balance 4740.50 4716.73

    F - 126
    18.6.2. Details of Loan Assets subjected to Restructuring
    Items No. of Under Amount Under Small Other than Total
    A/cs. Corporate sacrificed & under CDR
    (CDR) Debt under CDR Medium & SME
    Restruc- Enterprises Scheme(C)
    turing Scheme (B)
    (CDR)
    Scheme (A)
    i) Total amount of loan assets 13 78.52 11.37 327.76 488.66 906.31
    subjected to restructuring,
    rescheduling, renegotiation (108) (442.82) (31.70) (81.88) (902.17) (1458.57)
    (ii) The amount of Standard 11 31.35 11.37 267.35 327.02 637.09
    Assets subjected to
    restructuring, rescheduling,
    renegotiation (44) (98.08) (0.44) (51.52) (270.43) (420.47)
    (iii) The amount of Sub-Standard 0 0 0 30.84 44.68 75.52
    Assets subjected to
    restructuring, rescheduling,
    renegotiation (56) (210.05) (25.80) (6.86) (225.03) (467.74)
    (iv) The amount of Doubtful 2 47.17 0 29.57 116.96 193.7
    Assets subjected to
    restructuring, rescheduling,
    renegotiation (8) (134.69) (5.46) (23.50) (406.71) (570.36)
    18.6.3 Details of financial assets sold to Securitisation / Reconstruction Companies for Asset Reconstruction
    Items Current Year Previous Year
    i) No. of Accounts 90 131
    ii) Aggregate value (net of provisions) of accounts
    sold to SC/RC) 19.62 203.68
    iii) Aggregate consideration 33.00 196.78
    iv) Additional consideration realized in respect of
    accounts transferred in earlier years Nil Nil
    v) Aggregate gain / loss over net book value 13.38 -6.90
    18.6.4 Provision on Standard Assets :
    The Provision on Standard Assets (including provision for restructured standard assets) held by the
    Bank in accordance with RBI guidelines is as under :
    Items As at As at
    31-Mar-2007 31-Mar-2006
    Provision towards Standard Assets 1713.93 1123.50
    18.6.5 Business Ratios
    Items Current Year Previous Year
    i. Interest Income as a percentage to Working Funds 7.34% 7.19%
    ii. Non-interest income as a percentage to Working Funds 1.07% 1.48%
    iii. Operating Profit as a percentage to Working Funds 1.86% 2.27%
    iv. Return on Assets 0.84% 0.89%
    v. Business (Deposits plus advances) per employee (Rs. in thousands) 35700 29923
    vi. Profit per employee (Rs. in thousands) 236.81 216.76

    F - 127
    18.6.6 Asset Liability Management :
    Maturity pattern of certain items of assets and liabilities as at 31st March 2007
    Upto 15 to 29 days to Over 3 Over 6 Over 1 Over 3 Over 5 T OTA L
    14 days 28 days 3 months months months year & years & years
    & upto 6 & upto upto upto
    months 1 year 3 years 5 years
    Deposits 56990.43 5231.58 17980.35 18266.34 40393.61 120010.53 95365.78 81282.46 435521.09
    (49404.38) (4520.29) (9855.03) (11748.82) (38549.13) (108646.22) (79466.47) (77855.71) (380046.05)
    Advances 56774.22 5477.79 16079.60 15482.72 13281.92 144478.01 32195.00 53567.23 337336.49
    (42549.93) (4746.40) (13806.29) (11608.41) (10270.39) (109432.89) (22055.34) (47331.29) (261800.94)
    Investments 656.34 3303.68 9569.63 3475.99 2647.09 27142.16 21411.21 80942.78 149148.88
    (1043.92) (2244.92) (8544.31) (4806.39) (2061.02) (28351.24) (29926.36) (85556.08) (162534.24)
    Borrowings 9466.58 1658.72 8519.72 4361.37 3579.61 5304.65 5579.20 1233.48 39703.33
    (9500.71) (2902.69) (2750.27) (4883.05) (1805.31) (3860.97) (4588.16) (350.08) (30641.24)
    Foreign 25077.27 3495.20 12064.98 10498.96 5345.62 10942.91 7867.62 3925.82 79218.38
    Curency Assets * (22097.59) (4983.45) (13597.43) (7697.79) (4933.79) (9812.51) (6867.94) (2201.63) (72192.13)
    Foreign Currency 16643.24 5457.66 17742.00 9268.26 10215.19 11007.09 6207.31 1573.32 78114.07
    Liabilties (19843.98) (5688.11) (10327.21) (10645.15) (10285.82) (8414.29) (4964.48) (770.42) (70939.46)
    Figures in brackets are as at 31st March 2006
    · As compiled by the Management and relied upon by the Auditors
    8.7 Lending to Sensitive Sectors
    The Bank has lending to sectors which are sensitive to asset price fluctuations. These sensitive sectors are real
    estate and capital markets.
    18.7.1. Exposure to Real Estate Sector
    Items As at As at
    31-Mar-2007 31-Mar-2006
    A) Direct exposure
    i) Residential Mortgages 33412.29 23248.97
    Of which individual housing loans up to Rs.15 lakhs 26851.28 16704.62
    ii) Commercial Real Estate 6264.55 4574.16
    iii) Investments in Mortgage Backed Securities (MBS) and
    other securitised exposures : -
    a) Residential — 6.85
    b) Commercial Real Estate 0.08 112.09
    B) Indirect Exposure Fund based and non-fund based
    exposures on National Housing Bank (NHB) and
    Housing Finance Companies (HFCs) 1044.21 4779.27
    Total 40721.13 32721.34

    F - 128
    18.7.2 Exposure to Capital Market
    Items As at As at
    31-Mar-2007 31-Mar-2006
    i) Investments made in equity shares 1973.48 1518.02
    ii) Investments in convertible bonds / convertible debentures 142.63 105.76
    iii) Investments in units of equity-oriented mutual funds 650.78 651.06
    iv) Advances against shares to individuals for investment in
    equity shares (including IPOs/ESOPS), bonds and
    debentures, units of equity oriented mutual funds. 317.70 63.54
    v) Secured and unsecured advances to stockbrokers and
    guarantees issued on behalf of stockbrokers
    and market makers 181.90 0.32
    Total Exposure to Capital Market 3266.49 2338.70
    vi) Of (v) above, the total finance extended to
    stockbrokers for margin trading — —
    18.7.3 Risk Categorywise Country Exposure : As compiled by the management and relied upon by the auditors.
    As per the extant RBI guidelines, the country exposure of the Bank is categorised into various risk
    categories listed in the following table. The country exposure (net) of the Bank does not exceed 1% for
    any country, and hence no provision for the country exposure is required.
    Risk Category Exposure (net) Provision held
    As at As at As at As at
    31-Mar-2007 31-Mar-2006 31-Mar-2007 31-Mar-2006
    Insignificant 17422.69 11877.51 Nil Nil
    Low 5820.66 3866.53 Nil Nil
    Moderate 6425.83 4668.10 Nil Nil
    HIgh 3041.29 2759.90 Nil Nil
    Very HIgh 1340.10 427.16 Nil Nil
    Restricted / Off-Credit 19.57 – Nil Nil
    Total 34070.14 23599.20 Nil Nil
    18.7.4 Details of Single Borrower Limit, Group Borrower Limit exceeded by the Bank :
    The Bank had taken single borrower exposures in excess of the prudential limit in the cases given below :
    Name of the Borrower Exposure Limit Period during Position
    ceiling Sanctioned which limit as on
    (Peak exceeded 31.03.07
    Level) (Outsta-
    nding)
    Indian Oil Corporation Ltd.* 4793.55 7681.72 April 2006 to March 2007 7604.22
    Bharat Heavy Electricals Ltd.** 4793.55 5237.25 July 2006 to March 2007 5237.25
    Reliance Industries Ltd. ** 4793.55 5457.66 August 2006 to March 2007 5278.75
    * with the specific approval of RBI
    ** with the approval of Board

    F - 129
    18.8 Miscellaneous
    18.8.1 Disclosure of Penalties imposed by RBI Nil
    (Previous year - Nil)
    18.8.2 Status of customer complaints : As compiled by the management.
    Items As at
    31-Mar-2007
    No. of complaints pending at the beginning of the year 322
    No. of complaints received during the year 16168
    No. of complaints redressed during the year 16036
    No. of complaints pending at the end of the year 454
    18.8.3 Awards passed by the Banking Ombudsman : As compiled by the management.
    Items Current Year
    No. of unimplemented Awards at the beginning of the year
    No. of Awards passed by the Banking Ombudsman during the year 10
    No. of Awards implemented during the year 10
    No. of unimplemented Awards at the end of the year —
    18.8.4 The Bank has not received any intimation from the suppliers regarding their status under the Micro,
    Small & Medium Enterprises Development Act, 2006 and hence the disclosures relating to amount
    unpaid as at the end of the year together with interest payable as required under the said act has not
    been furnished and provision for interest, if any, on delayed payment is not ascertainable at this stage.
    18.9 Disclosure Requirements as per Accounting Standards
    18.9.1 Significant changes in the principal accounting policies.
    During the year, the Bank has changed the segmental pricing methodology, which was necessitated for
    presenting more meningful segment results. The financial effect of the change on the segmental result
    cannot be reasonably determined. However, this change does not have any impact on the financials of
    the Bank.
    18.9.2 The Bank had hitherto been following a policy of amortization of premium in respect of securities held
    in the “Held to Maturity* (HTM) category by an adjustment to the account head “Provision and
    Contingencies”. From the current financial year and in accordance with RBI directive dated 20th April
    2007, the Bank has charged the amortization amount as well as marked to market losses on transfer of
    securities from “Available for Sale” (AFS) to HTM category by an adjustment to the account head
    Other Income : “ Profit on Revaluation of Investments” as a deduction. As a result of this change in
    accounting policy, the book value of the securities is reduced by Rs.6357.06 crores being the amortization
    and marked to market losses on intercategory transfer of Rs.1677.51 crores for the current year and
    Rs.4679.55 crores for the previous year. However, there is no impact on the Net Profit for the year.
    18.9.3 Prior Period Items : Domestic Offices
    Items Current year Previous year
    Depreciation (17.47) Nil
    Operating expenses 16.38 Nil
    Interest expended 264.76 Nil
    Other income 2.42 Nil
    The Bank accounts for the interest on income tax refund on determination of interest by taxation
    authorities. Such interest is credited to profit and loss account on such determination. Any subsequent
    withdrawal of interest is being charged to profit and loss account. However, during earlier years, Interest
    of Rs.264.76 crores withdrawan by taxation authorities, was debited to the “Tax paid in advance”. This

    F - 130
    has been rectified during the year to fall in line with the rationale of opinion expressed by Expert
    Advisory Committee of the Institute of Chartered Accountants of India in similar instance.
    18.9.4 Segment Reporting
    i) Segment identification
    Primary
    i) Banking Operations : Other than treasury
    (Business Segment) operations
    ii) Treasury Operations -> Domestic rupee treasury
    Secondary
    i) Domestic Operations - Branches/Offices Geographical Segment) having operations in India
    ii) Foreign Operations - Branches/Offices having operations outside India and offshore banking units
    having operations in India
    ii) Pricing of Inter-segmental transfers
    The Banking Operations segment is the primary resource mobilising unit. The Treasury Operations
    segment is a recipient of funds from Banking Operations. From Ist April 2006; Market related
    Funds Transfer Pricing (MRFTP) has been introduced under which a separate unit called Funding
    Centre has been created. The Funding Centre notionally buys funds that the business units raise
    in the form of deposits or borrowings and notionally sell funds to business units engaged in
    creating assets.
    iii) Allocation of Expenses
     Expenses incurred at Corporate Centre establishments directly attributable either to Banking
    Operations or to Treasury Operations segment, are allocated accordingly. Expenses not directly
    attributable are allocated on the basis of the ratio of number of employees in each segment/ratio
    of directly attributable expenses.
    iv) Segment Results
    ¼Part A : Primary (Business segments)
    Business Segments Banking Operations Treasury Eliminations Total
    Particulars Current Previous Current Previous Current Previous Current Previous
    Year Year Year Year Year Year Year Year
    Revenue # 44472.16 35265.88 11464.20 17436.77 10739.92 11474.69 45196.44 41227.96
    Result # 8706.06 6042.34 117.73 -1991.32 — — 8823.79 4051.02
    Unallocated Income /
    (Expenses) - net # (1233.98) 1918.65
    Operating Profit # 7589.81 5969.67
    Income Tax # — 3048.50 2499.48
    Extraordinary Profit # 936.48 — — 936.48
    Net Profit # 4541.31 4406.67
    Other Information :
    Segment Assets * 428911.94 219714.80 206373.26 382211.31 71259.28 110480.29 564025.92 491445.82
    Unallocated Assets * 2539.32 2583.13
    Total Assets * 566565.24 494028.95
    Segment Liabilities * 401013.33 216599.31 202973.32 357682.71 86738.82 108709.24 517247.83 465572.78
    Unallocated Liabilities * 18018.85 812.08
    Total Liabilities * — 535266.68 466384.86

    F - 131
    Part B : Secondary (Geographic Segments)
    Domestic Foreign Total
    Particulars Current Previous Current Previous Current Previous
    Year Year Year Year Year Year
    Revenue # 41451.12 40726.40 3809.15 2688.37 45260.27 43414.77
    Assets * 513812.16 450482.65 52753.08 43546.30 566565.24 494028.95
    * As at 31st March For the year ended 31st March
    18.9.4 Related Party Disclosures : As identified by the management and relied upon by the auditors.
    A. Related Parties
    i. SUBSIDIARIES
    a. DOMESTIC BANKING SUBSIDIARIES
    1. State Bank of Bikaner & Jaipur
    2. State Bank of Hyderabad
    3. State Bank of Indore
    4. State Bank of Mysore
    5. State Bank of Patiala
    6. State Bank of Saurashtra
    7. State Bank of Travancore
    8. SBI Commercial and International Bank Ltd.
    b. FOREIGN BANKING SUBSIDIARIES
    1. SBI International (Mauritius) Ltd.
    2. State Bank of India (Canada)
    3. State Bank of India (California)
    4. Indian Ocean International Bank Ltd.
    5. Commercial Bank of India LLC, Moscow (##)
    6. PT Bank Indo Monex
    c. DOMESTIC NON-BANKING SUBSIDIARIES
    1. SBI Factors & Commercial Services Pvt. Ltd.
    2. SBI Capital Markets Limited
    3. SBI DFHI Limited
    4. SBI Mutual Funds Trustee Company Pvt. Ltd
    5. SBI CAP Securities Ltd.
    6. SBI CAPS Ventures Ltd.
    7. SBI CAP Trustees Co. Ltd.
    8. SBI Cards & Payment Services Pvt. Ltd.(##)
    9. SBI Funds Management Pvt. Ltd. (##)
    10. SBI Life Insurance Company Ltd. (##)

    F - 132
    d. FOREIGN NON-BANKING SUBSIDIARIES
    1. SBICAP (UK) Ltd.
    2. SBI Funds Management (International) Ltd.(##)
    ## These entities are jointly controlled.
    ii. JOINTLY CONTROLLED ENTITIES
    1. GE Capital Business Process Management Services Pvt. Ltd
    2. C-Edge Technologies Ltd.
    iii. ASSOCIATES
    a) Regional Rural Banks
    1 Andhra Pradesh Grameena Vikas Bank
    2 Arunachal Pradesh Rural Bank
    3 Cauvery Kalpatharu Grameena Bank
    4 Chhattisgarh Gramin Bank
    5 Deccan Grameena Bank
    6 Ellaquai Dehati Bank
    7 Ka Bank Nongkyndong Ri Khasi Jaintia
    8 Krishna Grameena Bank
    9 Langpi Dehangi Rural Bank
    10 Madhya Bharat Gramin Bank
    11 Malwa Gramin Bank
    12 Marwar Ganganagar Bikaner Bank
    13 Mizoram Rural Bank
    14 Nagaland Rural Bank
    15 Parvatiya Gramin Bank
    16 Purvanchal Kshetriya Gramin Bank
    17 Samastipur Kshetriya Gramin Bank
    18 Saurashtra Gramin Bank
    19 Utkal Gramya Bank
    20 Uttaranchal Gramin Bank
    21 Vananchal Gramin Bank
    22 Vidisha Bhopal Kshetriya Gramin Bank
    b. Others
    1. SBI Home Finance Limited
    2. Clearing Corporation of India Ltd.
    3. Nepal SBI Bank Ltd.
    4. Bank of Bhutan
    5. UTI Asset Management Company Pvt. Ltd.
    iv. Key Management Personnel of the Bank
    1. Shri O.P. Bhatt, Managing Director from 26.04.2006 to 29.06.2006 & Chairman from
    30th June 2006
    2. Shri A.K. Purwar, Chairman upto 31st May 2006

    F - 133
    3. Shri T. S. Bhattacharya, Managing Director
    4. Shri Yogesh Agarwal, Managing Director from 10th October 2006
    B. Related parties with whom transactions were entered into during the year
    No disclosure is required in respect of related parties which are “State-controlled Enterprises” as
    per paragraph 9 of Accounting Standard (AS) 18. Further, in terms of paragraph 5 of AS 18,
    transactions in the nature of banker-customer relationship are not required to be disclosed in
    respect of Key Management Personnel and relatives of Key Management Personnel. Other
    particulars are
    1. C-Edge Technologies Ltd.
    2. GE Capital Business Process Management Services Pvt. Ltd.
    3. Bank of Bhutan
    4. Nepal SBI Bank Ltd.
    5. SBI Home Finance Ltd.
    6. Shri A.K. Purwar, (Upto 31.05.2006)
    7. Shri O.P. Bhatt, (from 26.04.2006)
    8. Shri T.S. Bhattacharya
    9. Shri Yogesh Agarwal, (from 10.10.2006)
    C. Transactions and Balances :
    Items Outstanding Total
    Associates/ Key Management
    Joint Ventures Personnel
    Deposits # 295.37 0.00 295.37
    (1770.31) (0.00) (1770.31)
    Other Liabilities # 1.76 0.00 1.76
    (0.00) (0.00) (0.00)
    Investments # 19.75 0.00 19.75
    (39.97) (0.00) (39.97)
    Advances # (26.52) (0.00) (26.52)
    Interest paid * 6.59 0.00 6.59
    (28.23) (0.00) (28.23)
    Interest received * 0.00 0.00 0.00
    (10.88) (0.00) (10.88)
    Income earned by way of dividend* 0.50 0.00 0.50
    (0.00) (0.00) (0.00)
    Other Income* 0.00 0.00 0.00
    (3.61) (0.00) (3.61)
    Other expenditure* 1.66 0.00 1.66
    (0.00) (0.00) (0.00)
    Management contracts * 0.65 0.15 0.80
    (0.00) (0.14) (0.14)
    (Figures in brackets are for Previous Year)
    # As at 31st March 2007
    * For the year ended on 31st March 2007
    18.9.5 Leases :

    F - 134
    A. Assets given on Financial Leases on or after 1st April 2001 : The details of finance leases are
    given below :
    Items As at As at
    31-Mar-2007 31-Mar-2006
    Gross investment in the leases 164.73 164.73
    Present value of minimum lease payments receivable
    Less than 1 year 8.91 17.60
    1 to 5 years 15.04 20.49
    5 years and above — —
    Total 23.95 38.09
    Present value of unearned finance income 5.00 6.76
    18.9.6 Earning Per Share
    The Bank reportsbasic and diluted earnings per equity share in accordance with Accounting Standard
    20 - “Earnings per Share”. “Basic earnings” per share is computed by dividing net profit after tax by the
    weighted average number of equity shares outstanding during the year. There are no diluted potential
    equity shares outstanding during the year.
    Items Current Year Previous Year
    Basic and diluted
    Weighted average no. of equity shares outstanding 52,62,98,878 52,62,98,878
    Net profit 4,541.31 4,406.67
    Basic and diluted earnings per share (Rs.) 86.29 83.73
    Nominal value per share (Rs.) 10.00 10.00
    18.9.7 Accounting for Taxes on Income
    a. During the year, Rs.19.83 Crores (credit) (Previous Year Rs.357.89 Crores debit) has been credited/
    debited to Profit and Loss Account by way of adjustment of deferred tax.
    b. The bank had succeeded in appeals relating to earlier years, in respect of taxation of securities on
    due basis and refunds were credited to “Tax paid in advance” account during the year ended 31st
    March 2006. As the provision for current income tax is being made considering interest on securities
    on accrual basis, the bank, based on expert opinion, has recognized deferred tax liability of Rs.621.30
    crores, being timing difference, by a corrsesponding debit to “Tax paid in advance account”. This
    however, has no impact on the profit for the year.
    c. The Bank has outstanding net deferred tax liability of Rs.483.68 Crores (Previous Year deferred tax
    asset of Rs. 117.80 Crores), which has been included in Other Liabilities-Others and Other Assets-
    Others respectively. The break-up of deferred tax assets and liabilities into major items is given
    below:
    Items As at As at
    31-Mar-2007 31-Mar-2006
    Deferred Tax Assets
    Provision for non performing assets — 112.20
    Ex-gratia paid under Exit option 143.38 19.45
    Others 97.51 117.81
    Total 240.89 249.46
    Deferred Tax Liabilities

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    Depreciation on Fixed Assets 103.27 131.66
    Interest on securities 621.30
    Total 724.57 131.66
    Net Deferred Tax Assets/(Liabilities) (483.68) 117.80
    18.9.8 Investments in jointly controlled entities
    (a) Investments include Rs.15.70 Crores (Previous Year Rs.10.82 Crores) representing Bank’s interest
    in the following jointly controlled entities
    Sr. No. Name of the Company Amount Country of Holding
    Residence %
    1 GE Capital Business Process 10.80 India 40%
    Management Services Pvt. Ltd. (10.80)
    2 C - Edge Technologies Ltd. 4.90 India 49%
    (0.02)
    (Figures in brackets relate to previous year)
    (b) As required by AS 27, the aggregate amount of the assets, liabilities, income and expenses related
    to the Bank’s interests in jointly controlled entities are disclosed as under :
    Items As at As at
    31-Mar-2007 31-Mar-2006
    Liabilities
    Capital & Reserves 52.13 33.80
    Deposits — —
    Borrowings 0.21 0.10
    Other Liabilities & Provisions 20.60 13.55
    Total 72.94 47.45
    Assets
    Cash and Balances with Reserve Bank of India 0.01 0.04
    Balances with banks and money at call and short notice 3.66 7.20
    Investments 2.47 —
    Advances — —
    Fixed Assets 19.79 9.55
    Other Assets 47.01 30.66
    Total 72.94 47.45
    Capital Commitments Nil Nil
    Other Contingent Liabilities Nil Nil
    Items Current Year Previous Year
    Income
    Interest earned 0.04 0.25
    Other income 65.85 48.14
    Total 65.89 48.39
    Expenditure
    Interest expended — —
    Operating expenses 38.25 33.86
    Provisions & contingencies 10.07 5.26
    Total 48.32 39.12
    Profit 17.57 9.27
    18.9.9 Impairment of Assets

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    In the opinion of the Bank’s Management, there is no impairment to the assets during the year to which
    Accounting Standard 28 - “Impairment of Assets” applies.
    18.9.10 Provisions, Contingent Liabilities & Contingent Assets :
    a. Break-up of Provisions
    Items Current Year Previous Year
    Provision for Taxation
    Current Tax 3014.61 1682.71
    Fringe Benefit Tax 88.50 458.00
    Deferred Tax (19.83) 357.89
    Other Tax 0.49 0.88
    Provision for Depreciation on Investments 379.23 3898.50
    Provision on Non-Performing Assets 1428.26 147.81
    Provision on Standard Assets 589.19 405.17
    Provision for sacrifice of future interest on NPV basis 1.24 —
    Provision for Other Assets (23.06) (58.41)
    Total 5458.63 6892.55
    b Floating Provisions
    Particulars Current Year Previous Year
    Opening Balance Nil 840.00
    Addition during the year Nil Nil
    Draw down during the year Nil 840.00
    Closing Balance Nil Nil
    c Description of Contingent Liabilities and Contingent Assets
    Sr. No. Items Brief Description
    1 Claims against the Bank not The Bank is a party to various proceedings in the
    acknowledged as debts normal course of business. The 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 The Bank enters into forward exchange contracts,
    outstanding forward currency options, forward rate agreements, currency
    exchange contracts swaps and interest rate swaps with inter-bank
    participants 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 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 that are recorded as contingent liabilities, are
    typically amounts used as a benchmark for the
    calculation of the interest component of the contracts.
    3 Guarantees given on behalf As a part of its commercial banking activities, the Bank

    F - 137
    of constituents, acceptances, issues documentary credits and guarantees on behalf
    endorsements and other obligations of its customers. Documentary credits enhance the
    credit standing of the customers of the Bank.
    Guarantees generally represent irrevocable assurances
    that the Bank will make payment in the event of the
    customer failing to fulfil its financial or performance
    obligations.
    4 Other items for which the The Bank is a party to various taxation matters in
    Bank is contingently liable. respect of which appeals are pending. These are being
    contested by the Bank and not provided for. Further,
    the Bank has made commitments to subscribe to shares
    in the normal course of business.
    d. The contingent liabilities mentioned above are dependent upon the outcome of Court/ arbitration/
    out of Court settlements, disposal of appeals, the amount being called up, terms of contractual
    obligations, devolvement and raising of demand by concerned parties, as the case may be.
    e. Movement of provisions against contingent liabilities
    Particulars Current Year Previous Year
    Opening balance 63.38 23.36
    Additions during the year 12.76 48.80
    Reductions during the year 4.24 8.78
    Closing balance 71.90 63.38
    18.10 Exit Option :
    The Bank had implemented an Exit Option Scheme for its eligible employees. The ex-gratia payments under exit
    option aggregating to Rs.478.30 Crores (previous year Rs.72.24 crores) has been charged to the Profit & Loss
    account during the year.
    18.11 Previous year’s figures have been regrouped and reclassified, wherever necessary and determinable, to make them
    comparable with current year’s figures. In cases where disclosures have been made for the first time in terms of RBI
    guidelines, previous year’s figures have not been mentioned.

    F - 138
    schedule 17
    Principal Accounting Policies : 2005-2006
    1. Basis of Preparation
    The financial statements have been prepared under the historical cost convention. They conform to Generally
    Accepted Accounting Principles (GAAP) in India, which comprises statutory provisions, regulatory/Reserve Bank
    of India (RBI) guidelines, Accounting Standards/guidance notes issued by the Institute of Chartered Accountants
    of India (ICAI), and the pratices prevalent in the banking industry in India. In respect of foreign offices, statutory
    provisions and practices prevailing in respective countries are complied with.
    2. Advances and Provisions thereon
    2.1 Advances are shown net of provisions and unrealised interest on Non-Performing Assets (NPAs).
    2.2 A general provision of 0.40% is made on Standard Assets on the global loan portfolio excluding Small and
    Medium Enterprises and Direct Agriculture advances, where provision of 0.25% is made.
    2.3 Indian Offices
    2.3.1 All advances are classified under four categories, i.e.: (a) Standard Assets, (b) Sub-standard Assets, (c)
    Doubtful Assets and (d) Loss Assets.
    2.3.2 Provisions are made on all oustanding advances net of interest not realized on NPAs as under:
    l Sub-standard Assets
    (i) at 10%
    (ii) at 20%: In case of unsecured exposures (where realisable value of security is not more than 10
    percent, ab initio)
    l Doubtful Assets
    (a) Unsecured portion at 100 per cent after netting retainable/realisable amount of guarantee cover
    provided by Export Credit Guarantee Corporation/Credit Guarantee Trust for Small Industries,
    wherever applicable
    (b) Secured portion
    Period for which the advance has been considered as doubtful Percentage
    Upto one year 20%
    One to three years 30%
    More than three years
    (i) As on March 31, 2004 75%
    (Previous year 60%)
    (ii) On or after April 1, 2004 100%
    (c) Advances guaranteed by State Governments are classified as ‘sub-standard’ or ‘doubtful’ or ‘loss’,
    as the case may be, if the amount due to the bank remains overdue for more than 90 days
    (previous year 180 days) and attracts appropriate provisioning as applicable to other advances.
    l Loss Assets at 100%.
    “Financial Assets” sold are recognised as under :
    i) In case the sale is at a price lower than the Net Book Value (NBV), the difference is charged to the
    Profit & Loss Account.
    ii) In case the sale is at a price higher than the NBV, the surplus provision is not reversed and is to
    be utilised to meet shortfall on sale of other such non-performing financial assets.
    2.3.3 Unrealised Interest on advances recognized in the previous year, which have become non-performing
    during the current year, is provided for.

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    2.3.4 In case of restructuring/rescheduling of advances, the difference between the present value of the
    future interest as per the original agreement and the present value of the future interest as per the
    revised agreement is provided for at the time of restructuring/rescheduling.
    2.4 Foreign Offices
    2.4.1 Advances are classified under four categories in line with those of Indian Offices.
    2.4.2 Provisions in respect of advances are made as per the local law or as per the norms of RBI, whichever
    is higher.
    3. Investments
    3.1 Investments are classified into ‘Held for Trading’, ‘Available for Sale’ and ‘Held to Maturity’ categories.
    3.1.1 The investments that are acquired by the Bank with the intention to trade by taking advantage of the
    short term price/interest rate movements are classified under ‘Held for Trading’. These investments are
    held under this category up to 90 days from the date of acquisition.
    3.1.2 Investments which are intended to be held upto maturity are classified as ‘Held to Maturity’.
    3.1.3 Investments which are not classified in either of the above categories are classified as ‘Available for
    Sale’.
    3.2 Valuation
    3.2.1 In determining acquisition cost of an investment:
    (a) Brokerage/commission received on subscriptions is deducted from the cost of securities.
    (b) Brokerage, commission and stamp duty paid in connection with acquisition of securities are treated as
    revenue expenses.
    (c) Interest accrued up to the date of acquisition of securities i.e. broken-period interest is excluded from
    the acquisition cost and recognized as interest expense. Broken-period interest received on sale of
    securities is recognized as interest income.
    3.2.2 Individual scrips classified under ‘Held for Trading’ category are valued at lower of book value or
    market value. Securities are valued scrip-wise and depreciation/appreciation is aggregated for each
    classification. Net depreciation in each classification, if any, is provided for while net appreciation is
    ignored. The book value of the scrips continues to remain unchanged.
    3.2.3 Investments under ‘Held to Maturity’ (HTM) category are carried at acquisition cost. Wherever the
    book vlaue is higher than the face value/redemption value, the excess amount is amortised over the
    remaining period of maturity using Constant Yield Method (CYM).
    3.2.4 Investments under ‘Available for Sale’ category are valued at cost or market value, whichever is lower.
    Where market quotations are not available, market value for this purpose is arrived at on the basis of
    realisable market price computed as per the guidelines of the Fixed Income Money Market and Derivatives
    Association of India (FIMMDA)/Primary Dealers Association of India (PDAI) / RBI. Securities are valued
    scrip-wise and depreciation/appreciation is aggregated for each classification. Net depreciation in each
    classification, if any, is provided for while net appreciation is ignored. The book value of the scrips
    continues to remain unchanged.
    3.2.5 Treasury Bills and Commercial Papers are valued at cost.
    3.2.6 Investments in subsidiaries and joint ventures (both in India and abroad) are valued at historical cost
    after netting off provisions, if any.
    3.2.7 Non-Performing Non-SLR Investments are recognised as per RBI guidelines and provision is made as
    per RBI norms applicable to Non-performing Advances.
    3.2.8 Investments in Regional Rural Banks (RRBs) are valued at carrying cost (i.e. book value).
    3.3 The Bank has adopted the Uniform Accounting Procedure prescribed by the RBI for accounting of Repo and
    Reverse Repo transactions [other than transactions under the Liquidity Adjustment Facility (LAF) with the
    RBI]. Accordingly, the securities sold/purchased under Repo/Reverse Repo are treated as outright sales/
    purchases and accounted for in the Repo/Reverse Repo Accounts and the entries are reversed on the date of

    F - 140
    maturity. Costs and revenues are accounted for as interest expenditure/income, as the case may be. Balance in
    Repo/Reverse Repo Account is adjusted against the balance in the Investment Account.
    Securities purchased/sold under LAF with RBI are debited/credited to Investment Account and reversed on maturity
    of the transaction. Interest expended/earned thereon is accounted for as expenditure/revenue.
    4. Derivatives
    4.1 The Bank presently deals in Interest Rate and Currency Derivatives. The Interest Rate Derivatives dealt with
    by the Bank are Rupee Interest Rate Swaps, Cross Currency Interest Rate Swaps and Forward Rate Agreements.
    Currency Derivatives dealt with by the Bank are Options and Currency Swaps.
    4.2 Based on RBI guidlines, Derivatives are valued as under :
    a) Derivatives used for trading are marked to market and net appreciation/depreciation is recognised in the
    Profit & Loss Account.
    b) Derivatives used for hedging are :
    i) Marked to market in case where the underlying Assets/Liabilities are marked to market. The resultant
    gain/loss is recognised in the Profit & Loss Account.
    ii) Accounted for on accrual basis, in cases where the underlying Assets/Liabilities are not marked to
    market.
    The net outstanding marked to market position of each type of derivative is shown either under Asset or Liability,
    as the case may be.
    5. Fixed Assets and Depreciation
    5.1 Premises and other fixed assets are accounted for on historical cost basis.
    5.2 Depreciation is provided for on written down value method at the rates prescribed under Income Tax Rules,
    1962, which are considered appropriate by the management. In respect of computers, depreciation is provided
    for on straight-line method @ 33.33% per annum, as per RBI guidelines. Computer software not forming an
    integral part of hardware is depreciated fully during the year of purchase.
    5.3 In respect of fixed assets held at foreign offices, depreciation is provided for as per the laws/norms of the
    respective countries.
    5.4 In respect of leasehold premises, the lease amount is amortised over the period of lease.
    6. Assets given on Lease
    6.1 In respect of assets given on lease by the Bank on or before 31st March 2001, the value of the assets given
    on lease and the amounts paid as advance for assets to be given on lease are disclosed as “Leased Assets”
    and “Capital Work-in-progress (Leased Assets)” respectively under fixed assets. Depreciation is provided for
    on straight-line method as per the Companies Act, 1956, and the difference between the annual lease charge
    (capital recovery) and the depreciation is taken to Lease Equalisation Account as per the guidelines issued by
    the ICAI.
    6.2 Assets given on lease by the Bank on or after 1st April 2001 are accounted for as per Accounting Standard
    19 issued by the ICAI. Such assets are included under “Other Assets”.
    6.3 Provisions on non-performing leased assets are made on the basis of RBI guidelines applicable to advances.
    7. Impairment of Assets
    Impairment losses (if any), are recognized in accordance with the Accounting Standard-28 issued by ICAI and
    charged off to Profit and Loss Account.
    8. Foreign Currency Transactions
    8.1 As stipulated in AS 11, Foreign Branches of the Bank and Offshore Banking Units (OBUs) have been classified
    as Non-integral Operations and Representative Offices have been classified as Integral Operations.
    8.2 a) Foreign currency transactions are recorded on initial recognition in the reporting currency by applying
    to the foreign currency amount the exchange rate between the reporting currency and the foreign
    currency on the date of transaction.

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    b) Foreign currency monetary items are reported using the FEDAI closing spot rates.
    c) Exchange differences arising on the settlement of monetary items at rates different from those at which
    they were initially recorded are recognised as income or as expense in the period in which they arise.
    8.3 Non-Integral Operations
    a) All monetary/non-monetary assets and liabilities as well as contingent liabilities are translated at the
    closing rate notified by FEDAI.
    b) Income and expenses are translated using the quarterly average rate notified by FEDAI at the end of
    the respective quarter.
    c) All resulting exchange differences are accumulated in a separate account “Foreign Currency Translation
    Reserve” till the disposal of the net investment.
    8.4 Integral Operations
    a) All income and expenditure of integral operations are recorded at the rates on the date of transaction.
    b) All foreign currency monetary items are reported using the FEDAI closing spot rate.
    8.5 Forward Exchange Contracts:
    In accordance with the guidelines of FEDAI and the provisions of AS-11, net outstanding forward exchange
    contracts in each currency are revalued at the Balance Sheet date at the corresponding forward rates for the
    residual maturity of the contract. The difference between revalued amount and the contracted amount is
    recognised as profit or loss, as the case may be.
    9. Revenue Recognition
    9.1 Income and expenditure are accounted for on accrual basis. In case of Foreign Offices, income is recognised
    as per the local laws of the country in which the respective Foreign Office is located.
    9.2 The following items of income are recognised on realisation basis:
    (a) Commission (other than commission on deferred payment guarantees and government transactions),
    exchange and brokerage.
    (b) Dividend on investments.
    (c) Income on Rupee Derivatives designated at as “Trading”.
    (d) Interest on application money on investments and overdue interest on investments.
    9.3 The following items of income are recognised on realization basis, owing to significant uncertainty in collection
    thereof :
    (a) Interest and lease income on non-performing advances, including overdue bills.
    (b) Interest on non-performing investments.
    9.4 Income (other than interest) on investment in “Held to Maturity” (HTM) category, which are acquired at a
    discount to the face value, is recognised as follows :
    9.4.1 a) On interest bearing securities, it is recognised only at the time of sale/redemption.
    b) On zero-coupon securities, it is accounted for over the balance tenor of the security on a constant
    yield basis.
    9.4.2 Proift on sale of investments in this category is first credited to the Profit & Loss Account and thereafter
    appropriated to the “Capital Reserve Account”. Loss on sale is recognised in the Profit & Loss Account.
    10. Staff Benefits
    10.1 Contributions payable to Provident Fund in terms of the provident fund scheme are charged to Profit and
    Loss Account on accrual basis.
    10.2 Liability for gratuity, pension and leave encashment (which are defined benefits) is determined on the basis of
    actuarial valuations carried out at the year end and the incremental liability is provided for by charging to the Profit
    and Loss Account.

    F - 142
    11. Provision for Taxation
    Income-tax comprises current tax, Fringe Benefit Tax (amount of tax for the period determined in accordance with the
    Income Tax Act, 1961) and deferred tax charge or credit (reflecting the tax effects of timing differences between
    accounting income and taxable income for the period) as determined in accordance with Accounting Standard 22 of
    the Institute of Chartered Accountants of India. The deferred tax charge or credit and the corresponding deferred
    tax liabilities or assets are recognised using the tax rates that have been enacted or substantially enacted by the
    Balance Sheet date.

    F - 143
    Schedule 18
    NOTES TO ACCOUNTS:
    1. Investments in Regional Rural Banks (RRBs) were hitherto accounted for after netting off provisions towards losses
    incurred by RRBs in proportion to and not exceeding the Bank’s investment. From the current financial year, these
    investments have been valued at cost, which is in line with the RBI guidelines. Consequently, the profit for the year
    is higher by Rs.86.86 crore.
    2. Interest Earned-Others includes an amount of Rs.1638.46 crore, (previous year Rs.745.28crore) being interest on
    refund of Income Tax.
    3. Other Income includes an amount of Rs.531.54 crore being Exchange Gain on India Millennium Deposits (IMDs)
    redemption. Consequently, profit (net of tax) for the year is higher by Rs. 352.62 crore.
    4. An amount of Rs. 563.52 crore paid to Reserve Bank Of India for maintenance of value (MOV) by debit to Interest
    Expended Account in the years 2001 and 2002 was received back during the year on redemption of India Millennium
    Deposits (IMDs) and credited to Interest Expended account. Consequently, profit (net of tax) for the year is higher
    by Rs. 373.84 crore.
    5. Payments to and provisions for employees, under Operating Expenses includes an amount of Rs.312.87 crore, being
    arrears of salary paid for the previous financial years.
    6. An amount of Rs.128 crore, being the write back of provisions rendered surplus (other than advances, investments
    and investments in subsidiaries and joint ventures), is netted under the head Provisions and Contingencies .
    7. During the year, the Bank has invested an amount of US$11,627,895.19 (equivalent to Rs.53.40 crore) in Indo-
    Nigerian Bank Ltd. (INBL) increasing its stake from 51.59% to 72.95%. This investment was made as part of a
    scheme of merger of INBL with 4 other local banks to form Sterling Bank Plc, in compliance with Nigerian regulatory
    requirements. State Bank of India has a stake of 9.24% in Sterling Bank Plc.
    8. During the year, the Bank has invested a sum of Rs. 309.24 crore in UTI Asset Management Company Pvt. Ltd. for
    which consideration has been paid to the Government of India as per its directives. This amount has been considered
    as a premium on the shares acquired by the Bank in FY 2002-03 for a 25% stake in the Company.
    9. As a one-time measure, in terms of RBI guidelines, unreconciled net credit balances (net value of debit and credit
    entries outstanding) in the Inter Branch Accounts upto 31.03.1999, aggregating Rs. 316.58 crore, has been credited
    to Profit & Loss Account under the head Miscellaneous Income. Consequently, profit (net of tax) for the year is
    higher by Rs. 210.02 crore. Out of this, an amount of Rs.157.52 crore (net of tax and net of transfer to statutory
    reserves ) has been appropriated to Other Reserves.
    10. In accordance with RBI Circular DBOD No. BP.BC.38/21.04.141/2005-06 dated 10th October 2005, the Bank has
    transferred as on 31.03.2006 the balances outstanding in the Investment Fluctuation Reserve amounting to Rs.
    5253.89 crore to the Revenue and Other Reserves.
    11. (a) During the year 1999-2000, the Bank issued by way of private placement, unsecured, subordinated bonds of
    the face value of Rs.1,00,000/- each for cash at par at a fixed rate of 10.80% p.a., payable semi annually, for a
    period of 63 months, for an aggregate amount of Rs. 935.87 crore to augment its Tier II capital. These bonds
    were redeemed on due date i.e. 01.07.2005.
    (b) During the year 2000-2001, the Bank issued by way of structured private placement, unsecured, subordinated
    bonds of the face value of Rs.10,00,000/- each for cash at par for an aggregate amount of Rs.2500.00 crore, as
    under:
    (i) Rs.824.80 crore at a fixed rate of 11.55% p.a. payable annually, and redeemable at par at the end of 63
    months from the date of allotment, i.e. redeemed on 01.04.2006.
    (ii) Rs.1675.20 crore at a fixed rate of 11.90% p.a. payable annually, and redeemable at par at the end of 87
    months from the date of allotment, i.e. redeemable on 01.04.2008.
    (c) During the year 2000-2001, the Bank raised an unsecured, subordinated loan amounting to Euro.5.113 million,
    at a fixed rate of 6.5 % p.a. redeemable at par at the end of 108 months, i.e. redeemable on 12.4.2009. The loan
    amount outstanding as at 31st March 2006 is Euro 5.113 million (Rupee equivalent Rs.27.61crore). ( previous
    year Rupee equivalent was Rs 28.98 crore).

    F - 144
    (d) During the year 2005-2006, the Bank issued by way of private placement, unsecured, subordinated bonds of
    the face value of Rs.10,00,000/- each for cash at par at a fixed rate of 7.45% p.a., payable annually, for an
    aggregate amount of Rs.3,283 crore to augment its Tier II capital. These bonds are redeemable at par at the
    end of 113 months from the date of allotment i.e. redeemable on 05.05.2015. The face value of bonds outstanding
    as at 31st March 2006 is Rs.3,283.00 crore.
    DISCLOSURES AS PER RBI GUIDELINES
    12. The Capital Adequacy Ratio of the Bank is 11.88 % as at 31st March 2006 (12.45 % as at 31st March 2005). The
    ratio, arrived at on the basis of guidelines/directives issued by the RBI, comprises:
    31st March 2006 31st March 2005
    Tier I Capital 9.36% 8.04%
    Tier II Capital 2.52% 4.41%
    13. Net NPAs to Net Advances as at 31st March 2006 is 1.87 % (2.65% as at 31st March 2005).
    14. Break-up of the item “Provisions and Contingencies” included under the head “Expenditure” in the Profit and Loss
    Account:
    (Rs.in crore)
    2005-2006 2004-2005
    a) Provision for Income Tax (current tax) 1682.71 2447.22
    b) Provision for Income Tax (deferred tax) (Credit) 357.89 230.62
    c) Provision for Fringe Benefit Tax 458.00 —
    d) Provision for other taxes 0.88 0.48
    e) Amount of provision made against NPAs (net of write back) 147.81 1204.00
    f) General provision on Standard Assets in the global loan portfolio 405.17 115.00
    g) Depreciation in the value of Investments in India 3891.85 2326.76
    h) Depreciation in the value of Investments in Foreign Offices 6.65 11.60
    i) Others (Net of write back) -58.41 811.40
    Total 6892.55 6685.84
    15. Business Ratios:
    2005-2006 2004-2005
    i) Interest income as a percentage to Working Funds 7.19% 7.70%
    ii) Non-Interest income as a percentage to Working Funds 1.48% 1.69%
    iii) Operating Profit as a percentage to Working Funds 2.27% 2.61%
    iv Return on Assets 0.89% 0.99%
    v) Business (Deposits and Advances) per employee (Rs. in Thousand) 29923 24308
    vi) Profit per employee (Rs. in Thousand) 216.76 207.50
    16. a) Maturity Pattern of Assets & Liabilities as at 31st March 2006 (Domestic Operations):
    (Rs. in crore)
    1-14 days 15-28 days 29 days - Over 3 months Over 6 months Over 1 year Over 3 years Over 5 years Total
    3 months to 6 months to 12 months to 3 years to 5 years
    Advances 38686.27 2451.63 7455.83 7052.40 8322.99 105099.51 19084.73 46543.11 234696.47
    (46116.45) (1964.21) (5682.01) (5333.98) (6135.58) (70596.94) (18153.16) (24492.62) (178474.95)
    Investments 948.54 2171.32 8379.47 4572.46 1411.99 26478.55 28032.48 85291.39 157286.20
    (7219.46) (140.19) (2524.16) (17442.78) (2281.73) (29065.44) (34419.05) (99363.59) (192456.40)

    F - 145
    Deposits 45607.55 2635.02 7943.78 10270.57 36063.59 107904.11 78600.44 77203.47 366228.53
    (20718.37) (1596.02) (6962.35) (9257.62) (55760.17) (102493.78) (80550.33) (75460.08) (352798.72)
    Borrowings 2296.61 (—) 52.84 407.72 556.42 2523.23 573.05 233.21 6642.38
    (638.46) (—) (34.20) (133.13) (105.79) (227.59) (98.46) (4.43) (1242.06)
    Foreign currency 18138.55 2615.07 7082.13 2907.85 2337.36 3806.44 2003.46 1108.18 39999.04
    assets (17877.60) (1259.27) (3758.47) (5139.52) (3107.47) (3273.27) (2656.80) (737.43) (37809.83)
    Foreign currency 8842.95 900.15 5718.53 4691.57 6551.39 6333.74 83.34 1.31 33122.98
    liabilities (10232.90) (1558.54) (4498.59) (3629.37) (5034.57) (6249.46) (8.39) (2.96) (31214.78)
    (Figures in brackets pertain to 31st March 2005)
    (In compiling the above data, certain assumptions as per RBI guidelines and estimates have been made by the
    management and relied upon by Auditors)
    b) Maturity Pattern of Assets and Liabilities as at 31st March 2006 (Operations of Foreign Offices):
    (Rs. in crore)
    1-7 days 8-14 days 15-28 days 29 days and Over 3 Over 6 months Over 1 year Over 3 years Over 5 years Total
    upto months and and upto and upto and upto
    3 months upto 6 months 1 year 3 years 5 years
    Assets 11059.74 4301.07 6804.08 10843.15 11278.92 3734.10 7737.50 8189.96 1591.41 65539.93
    (7428.15) (1019.03) (7181.20) (11175.00) (6873.12) (2709.14) (5882.78) (5481.75) (2248.24) (49998.41)
    Liabilities 15485.40 3364.47 7472.33 12150.74 6848.41 4858.10 4019.22 8510.05 2831.21 65539.93
    (11101.92) (2201.08) (3996.18) (11773.10) (7293.14) (2270.17) (3131.56) (4282.31) (3948.95) (49998.41)
    (Figures in brackets pertain to 31st March 2005)
    17. Lending to Sensitive Sectors:
    (a) Exposure to Real Estate Sector : (Rs. in crore)
    Category 31.03.2006 31.03.2005
    a) Direct exposure 27942.07 12685.30
    i) Residential Mortgages of which individual housing loans 23248.97 9084.65
    upto Rs. 15 lakhs 16704.62 7880.63
    ii) Commercial Real Estate 4574.16 3552.87
    iii) Investments in Mortgage Backed Securities (MBS)
    and other securitiesed exposures -
    a) Residential 6.85 29.35
    b) Commercial Real Estate 112.09 18.43
    b) Indirect exposure -
    Fund based and non-fund based exposures on National
    Housing Bank (NHB) and Housing Finance Companies (HFCs) 4779.27 3865.39
    (b) Exposure to Capital Market : (Rs. in crore)
    Item 31.03.2006 31.03.2005
    i) Investments in equity shares 1518.02 1124.21
    ii) Investments in bonds/ convertable debentures 105.76 104.28
    iii) Investments in units of equity-oriented Mutual Funds 651.06 416.81
    iv) Advances against shares to individuals for investment in equity
    shares (including IPOs/ESOPS), bonds and debentures, units of
    equity oriented Mutual Funds 63.54 46.04

    F - 146
    v) Secured and unsecured advances to stock brokers and guarantees
    issued on behalf of stock brokers and market makers: 0.32 0.23
    Total Exposures to capital market (i+ii+iii+iv+v) 2338.70 1691.57
    vi) Of (v) above, the total finance extended to stock
    brokers for margin trading NIL NIL
    18. (a) Movements in NPAs: (Rs. in crore)
    2005-2006 2004-2005
    Gross NPAs as at the beginning of the year 12455.73 12667.21
    Add: Additions during the year 4366.65 4284.60
    Less: Reductions during the year (including write off of Rs. 1809.66 crore), 6446.62 4496.08
    (Rs. 1337.46 crore in the previous year)
    Gross NPAs as at the end of the year 10375.76 12455.73
    (b) Movements in Net NPAs: (Rs. in crore)
    2005-2006 2004-2005
    Net NPAs as at the beginning of the year 5348.89 5441.73
    Add: Additions during the year 4241.27 2301.97
    Less: Reductions during the year (including write off of Rs.72.76 crore), 4683.74 2394.81
    (Rs. 61.46 crore in the previous year)
    Net NPAs as at the end of the year 4906.42 5348.89
    19. Loan Assets subjected to restructuring during the year 2005-06:
    (Rs. in crore)
    Other than Under Small & Under Corporate
    under Corporate Medium Debt Total
    Debt Restructuring Enterprises Restructuring
    (CDR) (SMEs) (CDR)
    & SME Scheme Scheme Scheme
    (i) Amount of Standard Assets 270.43 51.52 98.08 420.03
    subjected to restructuring (1031.38) (2703.99) (3735.37)
    (ii) Amount of Sub-standard Assets 225.03 6.86 210.05 441.94
    subjected to restructuring (258.67) (298.04) (556.71)
    (iii) Amount of Doubtful Assets 406.70 23.50 134.69 564.89
    subjected to restructuring (137.45) (416.36) (553.81)
    Total 902.16 81.88 442.82 1426.86
    (1427.50) (3418.39) (4845.89)
    (Figures in brackets pertain to the previous year)

    F - 147
    20. i) Issuer composition of Non-SLR investments :
    (Rs. in crore)
    No. Issuer Amount Extent of Extent of Extent of Extent of
    private ‘below ‘unrated’ ‘unlisted’
    placement investment Securities Securities
    grade’
    Securities
    (1) (2) (3) (4) (5) (6) (7)
    1 PSUs 6195.41 1123.06 — 33.27 299.13
    (8700.31) (1179.42) (—) (89.38) (549.17)
    2 FIs 1198.25 1196.87 — 255.90 255.90
    (1168.53) (1167.49) (—) (255.90) (255.90)
    3 Banks 2624.38 2473.95 — 5.00 45.00
    (1834.79) (1812.66) (—) (5.00) (45.00)
    4 Private Corporates 1859.31 630.46 --— 601.30 638.00
    (2808.42) (803.56) (—) (629.81) (1647.83)
    5 Subsidiaries/Joint Ventures 2067.33 — — — —
    (1712.59) (—) (—) (—) (—)
    6 Others 5615.44 4518.95 — 25.00 —
    (1411.23) (463.66) (—) (25.00) (Nil)
    7 Provision held towards depreciation 449.96 — — — —
    (334.68) (—) (—) (—) (—)
    Total 19110.16 9943.29 — 920.47 1238.03
    (17301.19) (5426.79) (—) (1005.09) (2497.90)
    (Figures in brackets pertain to 31 March 2004)
    ii) Non-performing Non-SLR investments: (Rs. in crore)
    Particulars 2005-06 2004-05
    Opening Balance 221.97 201.77
    Additions during the year 93.29 133.08
    Reductions during the above period 60.69 112.88
    Closing Balance 254.57 221.97
    Total Provisions held 232.24 172.22

    F - 148
    (iii) Movement of provisions held towards NPAs, depreciation and provisions on investments:
    (Rs. in crore)
    Provisions for depreciation and
    NPAs (excluding provisioning
    provisions on on
    Standard Assets) investments
    2005-06 2004-05 2005-06 2004-05
    Opening Balance 6219.50 6412.39 3075.24 1699.36
    Add : Provisions made during the
    year (net of write-back of Floating
    NPA provision of Rs.840.00 cr)
    (previous year Rs. 700 cr) 173.78 1956.78 3925.87 2223.62
    Less : Write off/write-back of excess provisions 1762.88 2149.67 844.35 847.74
    Closing Balance 4630.40 6219.50 6156.76 3075.24
    (iv) Repo Transactions: (Rs. in crore)
    Minimum Maximum Daily average As at
    outstanding outstanding outstanding 31st March
    during the year during the year during the year 2006
    Securities sold under Repos
    [Liquidity Adjustment 1050.00 5250.00 110.75 2100.00
    Facility (LAF)] (1000.00) (5450.87) (115.61) (—)
    Securities purchased
    under Reverse 630.00 15750.00 1632.25 —
    Repos (LAF) (800.00) (9600.00) (646.03) (7000.00)
    Securities sold under 29.50 3958.00 255.12 —
    Repos (Market Repo) (101.00) (101.00) (0.28) (—)
    Securities purchased
    under Reverse Repos 150.00 2549.00 40.52 —
    (Market Repo) (49.45) (5441.46) (397.51) (—)
    (Previous year’s figures are given in brackets)
    (v) Risk exposures in Derivatives:
    Qualitative Disclosure:
    The Bank currently deals in over-the-counter (OTC) interest rate and currency derivatives. Interest rate derivatives
    dealt with by the Bank are rupee interest rate swaps, foreign currency interest rate swaps and forward rate
    agreements. Currency derivatives dealt with by the Bank are currency swaps, rupee dollar options and cross-
    currency options. The products are offered to the Bank’s customers to manage their exposures and the Bank
    enters into derivative contracts to cover such exposures. Derivatives are also used by the Bank both for
    trading as well as hedging on-balance sheet items.
    Derivative transactions carry market risk i.e. the probable loss the Bank may incur as a result of adverse
    movements in interest rates/exchange rates and credit risk i.e. the probable loss the Bank may incur if the
    counterparties fail to meet their obligations. The Bank’s “Policy for Derivatives” approved by the Board
    prescribes risk parameters to control and manage market risk (cut-loss triggers, open position limits, duration,
    modified duration, PV01 etc.), The Policy also prescribes customer eligibility criteria (credit rating, tenure of
    relationship etc.), credit risk is controlled by entering into derivative transactions only with counterparties
    satisfying these criteria, setting appropriate counterparty exposure limits taking into account ability to honour
    obligations and entering into ISDA agreements with each counterparty.

    F - 149
    The Asset Liability Management Committee (ALCO) of the Bank oversees efficient management of these risks.
    The Bank’s Mid-Office and Risk Control (MORC) Department at Treasury independently identifies, measures,
    monitors market risk associated with derivative transactions, assists ALCO in controlling and managing these
    risks and reports compliance with policy prescriptions to the Risk Management Committee of the Board
    (RMCB) at regular intervals.
    The accounting policy for derivatives has been drawn-up in accordance with RBI guidelines.
    Quantitative Disclosures: (Rs. in crore)
    No. Particulars Currency Interest Rate
    Derivaties Derivaties
    31.03.2006 31.03.2006
    1. Derivatives (Notional Principal Amount)
    a) For hedging 3293.79 21219.72
    (3696.80) (104393.80)
    b) For trading 6377.87 76748.21
    (3095.53) (20830.42)
    2. Marked to Market Positions
    a) Asset (+) — 57.55
    (—) (4.26)
    b) Liability (-) — -97.08
    (0.18) (19.58)
    3. Credit Exposure 3945.84 1135.47
    (1387.86) (178.43)
    4. Likely impact of one percentage change in interest rate (100* PV01)
    a) on hedging derivatives — 136.62
    (—) (1.03)
    b) on trading derivatives 0.82 70.74
    (0.34) (5.65)
    5. Maximum and Minimum of 100*PV01 observed during the year
    a) on hedging — 170.19 & 30.19
    (—) (0.04 & 3.14)
    b) on trading 82.06 & -13.46 106.80 & -35.81
    (—) (0.18 & 13.26)
    (Previous year’s figures are given in brackets)
    (vi) Exchange Traded Interest Rate Derivatives: (Rs. in crore)
    No. Particulars Amount
    i) Notional principal amount of exchange traded interest rate derivatives
    undertaken during the year (Instrument-wise) NIL
    ii) Notional principal amount of exchange traded interest
    rate derivatives outstanding as at 31st March 2006 (instrument-wise) NIL
    iii) Notional principal amount of exchange traded interest rate
    derivatives outstanding and not ‘highly effective’ (Instrument-wise) NIL
    iv) Marked-to-market value of exchange traded interest rate
    derivatives outstanding and not ‘highly effective’ (instrument-wise) NIL
    (Previous year’s figures are given in brackets)

    F - 150
    (vii) Forward Rate Agreement/Interest Rate Swap: (Rs. in crore)
    Items 31.03.2006 31.03.2005
    i) The notional principal of swap agreements 99396.32 45764.71
    ii) Losses which would be incurred if counterparties fail to fulfil
    their obligations under the agreement 38.65 79.81
    iii) Collateral required by the Bank upon entering into swaps — —
    iv) Concentration of credit risk arising from the swaps — —
    v) The fair value of the swap book -82.52 82.03
    21. Risk Category-wise Country-wise Exposure:
    As the Bank’s net funded exposure for the year ended 31st March 2006 in respect of the foreign exchange transactions
    with each country is below 1% of the total assets of the Bank, no provision and disclosure are required as per RBI
    circular.
    22. Details of credit exposures where the bank had exceeded the Prudential Exposure during the year :
    (Rs. in crore)
    No. Name of the Borrower Exposure Limit Period during which Amount Outstanding 31.03.06
    ceiling sanctioned limit exceeded when the limit was (outstanding)
    (Peak Level) sanctioned
    1. Indian Oil Corpn. Group 3791 7652 April 2005 to Mar. 2006 5041 5205
    2. Bharat Heavy Electricals 3791 4507 April 2005 to Mar. 2006 3019 3639
    3. Reliance Industries Group 3791 4269 April 2005 to Mar. 2006 3003 3771
    4. HDFC 3791 4420 April 2005 to Mar. 2006 4420 3933
    23. Penalties imposed by RBI during the year: NIL
    24. a) Assets sold to Asset Reconstruction Companies against Security Receipts/Cash:
    (Rs. in crore)
    No. Items FY 2005-06 FY 2004-05
    A. No. of accounts 131 114
    B. Aggregate value (net of provisions) of accounts sold to
    Securitization/ Reconstruction Companies *203.68 173.21
    C. Aggregate consideration **196.78 145.48
    D. Additional consideration received in respect of accounts
    transferred in earlier years NIL NIL
    E. Aggregate loss over net book value 6.90 27.73
    * Comprises Principal Outstanding of Rs.893 crore which includes Rs.330.41 crore in NPAs against which
    provision available is Rs.126.73 crore and Rs.562.59 crore in Advances Under Collection Account (AUCA)
    (written off accounts).
    ** Out of the aggregate price of Rs.262.92 crore, sale on Security Receipts (SRs) basis amounted to Rs.207.72
    crore where the sale consideration was recognised at Rs.141.58 crore, being lower of the redemption
    value (face value) of SRs and Net Book Value (NBV) as per RBI guidelines. Taken together with the
    cash sale consideration (Rs.55.20 crore), the aggregate consideration was recognised at Rs.196.78 crore.

    F - 151
    b) Assets sold to Banks/FIS/NBFCs on Cash Basis :
    (Rs. in crore)
    A. No. of accounts sold 290
    B. Aggregate outstandings #1140.77
    C. Aggregate consideration received 232.22
    # Includes written off amounts [Rs. 936.41 crore parked in Advances Under Collection Account (AUCA).]
    DISCLOSURES AS PER ACCOUNTING STANDARDS:
    25. SEGMENTAL REPORTING:
    25.1 Segment Identification :
    The following segments have been identified :
    Primary (Business Segment) Banking Operations Treasury Operations
    Secondary (Geographical Segment) Domestic Operations Foreign Operations
    25.2 Pricing of Inter-segmental transfers:
    The Banking Operations segment is the primary resource mobilising unit. The Treasury Operations segment is
    a recipient of funds from Banking Operations segment. The cost of funds lent to Treasury is computed at the
    cost of deposits of Banking Operations segment plus operating expenses incurred for mobilizing deposits.
    25.3 Allocation of Expenses:
    a) Expenses incurred at Corporate Centre establishments directly attributable either to Banking Operations
    segment or to Treasury Operations segment, are allocated accordingly.
    b) Expenses not directly attributable are allocated on the basis of the ratio of number of employees in each
    of the segments / ratio of directly attributable expenses.
    25.4 Disclosures:
    Part A: Primary Segment:
    (Rs. in crore)
    Business Segments Banking Operations Treasury Eliminations Total
    Particulars Current Previous Current Previous Current Previous Current Previous
    Year Year Year Year Year Year Year Year
    Revenue * 35265.88 32403.55 17436.77 20111.78 11474.69 14132.91 41227.96 38382.42
    Results * 6042.34 5404.63 -1991.32 1060.98 — — 4051.02 6465.61
    Un-allocated * 1918.65 55.99
    Operating Profit * 5969.67 6521.60
    Income Tax * 2499.48 2217.08
    Extraordinary items of
    profit/loss * 936.48 — — — — — 936.48 —
    Net Profit * 4406.67 4304.52
    Other Information#
    Segment Assets 382211.31 427057.00 219555.40 216956.54 110480.29 188115.00 491286.42 455898.54
    Unallocated Assets 2583.13 3984.33
    Total Assets 493869.55 459882.87
    Segment Liabilities 357682.71 404730.11 216439.91 215211.31 108709.24 184130.69 465413.38 435810.73
    Unallocated Liabilities 812.08 0.00
    Total Liabilities 466225.46 435810.73

    F - 152
    Part B: Secondary Segment:
    (Rs. in crore)
    Domestic Operations Foreign Operations Total
    Geographical Current Previous Current Previous Current Previous
    Segments Year Year Year Year Year Year
    Revenue * 38539.59 36987.61 2688.37 1394.81 41227.96 38382.42
    Assets # 450323.25 429282.13 43546.30 30600.74 493869.55 459882.87
    *: Total for the year 2005-2006 # : Balances as AT 31-03-2006
    26. Related Party Disclosures:
    A. Related Parties:
    a) subsidiaries:
    Domestic Banking Subsidiaries
    State Bank of Bikaner & Jaipur
    State Bank of Hyderabad
    State Bank of Indore
    State Bank of Mysore
    State Bank of Patiala
    State Bank of Saurashtra
    State Bank of Travancore
    SBI Commercial and International Bank Ltd.
    Domestic Non-Banking Subsidiaries
    SBI Factors & Commercial Services Pvt. Ltd.
    SBI Capital Markets Limited
    SBI DFHI Limited
    SBI Mutual Funds Trustee Company Pvt. Ltd.
    SBI CAP Securities Ltd./SBICAP (UK)Ltd./SBICAPS Ventures Ltd./SBICAP Trustees Co. Ltd.
    Foreign Subsidiaries
    SBI International (Mauritius) Ltd.
    State Bank of India (Canada)
    State Bank of India (California)
    Indian Ocean International Bank Ltd.
    b) Joint Ventures:
    SBI Cards & Payments Services Pvt. Ltd.
    SBI Life Insurance Company Limited
    GE Capital Business Process Management Services Private Limited
    Commercial Bank of India Llc, Moscow
    SBI Funds Management Pvt. Ltd.
    C-Edge Technologies Ltd.
    c) Associates:
    Alaknanda Gramin Bank
    Andhra Pradesh Grameena Bank
    Arunachal Pradesh Rural Bank
    Bastar Kshetriya Gramin Bank
    Bikaner Kshetriya Gramin Bank
    Bilaspur Raipur Kshetriya Gramin Bank
    Bolangir Anchalik Gramya Bank

    F - 153
    Bundelkhand Kshetriya Gramin Bank
    Cauvery Grameena Bank
    Damoh-Panna-Sagar Kshetriya Gramin Bank
    Deccan Grameena Bank
    Ellaquai Dehati Bank
    Ganga Yamuna Gramin Bank
    Ka Bank Nongkyndong Ri Khasi Jaintia
    Kalahandi Anchalika Gramya Bank
    Kalpatharu Grameena Bank
    Koraput Panchbati Gramya Bank
    Krishna Grameena Bank
    Langpi Dehangi Rural Bank
    Malwa Gramin Bank
    Marwar Gramin Bank
    Mizoram Rural Bank
    Nagaland Rural Bank
    Palamau Kshetriya Gramin Bank
    Parvatiya Gramin Bank
    Pithoragarh Kshetriya Gramin Bank
    Purvanchal Kshetriya Gramin Bank
    Raigarh Kshetriya Gramin Bank
    Samastipur Kshetriya Gramin Bank
    Saurashtra Grameena Bank
    Santhal Parganas Gramin Bank
    Shivpuri-Guna Kshetriya Grameena Bank
    Sriganganagar Kshetriya Gramin Bank
    Vidisha Bhopal Kshetriya Gramin Bank
    SBI Home Finance Limited
    Clearing Corporation of India Ltd.
    Nepal SBI Bank Ltd.
    Bank of Bhutan
    UTI Asset Management Company Pvt. Ltd.
    d) Key Management Personnel of the Bank:
    Shri A.K. Purwar, Chairman
    Shri Ashok K. Kini, Managing Director (upto 31.12.2005)
    Shri T. S. Bhattacharya, Managing Director
    B. Related Parties with whom transactions were entered into during the year :
    No disclosure is required in respect of related parties which are ‘State-controlled Enterprises’ as per paragraph
    9 of AS 18. Further, in terms of paragraph 5 of AS 18, transactions in the nature of banker-customer relationship
    are not required to be disclosed in respect of Key Management Personnel and relatives of Key Management
    Personnel. Other particulars are :-
    GE Capital Business Process Management Services Pvt. Ltd.
    SBI Home Finance Ltd.
    Nepal SBI Bank Ltd.
    Bank of Bhutan

    F - 154
    C-Edge Technologies Ltd.
    Shri A.K. Purwar, Chairman
    Shri Ashok K. Kini, Managing Director (upto 31.12.2005)
    Shri T. S. Bhattacharya, Managing Director
    C. Transactions/Balances:
    (Rs. in crore)
    Items Related Party Key Relatives Total
    Associates/ Management of key
    Joint Ventures Personnel @ Management
    Personnel @
    Borrowings # — (—) — (—) — (—) — (—)
    Deposits # 524.17 (1770.31) — (0.05) — (—) 524.17 (1770.36)
    Placement of deposits # — — — (—) — (—) — (—)
    Advances # — (26.52) — (—) — — — (26.52)
    Investments # 33.42 (39.97) — (—) — (—) 33.42 (39.97)
    Non-funded
    commitments # 560.08 (—) — (—) — (—) 560.08 (—)
    Leasing/HP
    arrangements availed * — (—) — (—) — (—) — (—)
    Leasing/HP
    arrangements provided * — (—) — (—) — (—) — (—)
    Purchase of fixed assets * — (—) — (—) — (—) — (—)
    Sale of fixed assets * — (—) — (—) — (—) — (—)
    Interest paid * 7.18 (28.23) — (—) — (—) 7.18 (28.23)
    Interest received * — (10.88) — (—) — (—) — (10.88)
    Rendering of services * — (3.61) — (—) — (—) — (3.61)
    Receiving of services * — (—) — (—) — (—) — (—)
    Management contracts * — (—) 0.20 (0.14) — (—) 0.20 (0.14)
    # Balances as on 31.03.2006 * For the year 2005-2006
    @ Transactions which are not in the nature of banker-customer relationship
    (Figures in brackets relate to previous year)
    The above disclosures are as identified by the management and relied upon by the Auditors.
    27. Assets given on lease with effect from 1.4.2001 accounted for as per Accounting Standard-19:
    (Rs. in crore)
    31.03.2006 31.03.2005
    Gross investment in the leases 164.73 164.73
    Present value of minimum lease payments receivable as on 31.3.2006
    Less than 1 year 17.60 31.28
    1 to 5 years 20.49 28.91
    5 years and above — —
    Total 38.09 60.19
    Present value of unearned finance income 6.76 10.28

    F - 155
    28. Earnings Per Share:
    Particulars Current Year Previous Year
    Basic (Net Profit Rs.4406,67,16,600/ 83.73 81.79
    weighted average number of equity shares 52,62,98,878)
    Diluted (There are no dilutive potential equity shares) 83.73 81.79
    29. Deferred Tax Liabilities (DTL) / Deferred Tax Assets (DTA):
    (a) During the year, Rs.357.89 crore (Rs. 230.62 crore previous year) (net) has been debited/credited to Profit and
    Loss Account by way of adjustment of deferred tax.
    (b) Components of DTL and DTA: (Rs. in crore)
    DTL As at 31.3.2006 As at 31.03.2005
    Depreciation on leased assets 126.15 174.46
    Depreciation on Fixed Assets 5.51 14.62
    Total 131.66 189.08
    DTA
    Provision made against NPAs 112.20 243.95
    Provision for wage revision — 420.81
    Others 137.26 —
    Total 249.46 664.76
    Net balance (DTA) 117.80 475.68
    30. Investments in jointly controlled entities:
    Investment includes Rs.10.82 crore (previous year Rs. 18.05 crore) representing the Bank’s interest in the following
    jointly controlled entities as at 31-03-2006:
    (Rs. in crore)
    No. Name of the Company Amount Country/ Percentage
    (Rs.) Residence Holding
    1 GE Capital Business Process Management
    Services Pvt. Ltd. 10.80 India 40%
    2 C-Edge Technologies Ltd. 0.02 India 49%
    As required by AS-27, the aggregate amount of the assets, liabilities, income and expenses related to the Bank’s
    interests in jointly controlled entities are disclosed as under:
    A: Assets & Liabilities
    (Rs. in crore)
    Capital & Liabilities 31.03.2006 31.03.2005 Assets 31.03.2006 31.03.2005
    Capital & Reserves 33.80 12.05 Cash and balances with
    Reserve Bank of India 0.04 —
    Deposits — — Balances with banks and
    money at call and short notice 7.20 4.83
    Borrowings 0.10 0.06 Investments — —
    Other Liabilities & Provisions 13.55 4.70 Advances — —
    Fixed Assets 9.55 4.19
    Other Assets 30.66 7.79
    Total 47.45 16.81 Total 47.45 16.81
    Capital Commitments — (—)
    Other Contingent Liabilities — (—)

    F - 156
    B: Income and Expenditure
    (Rs. in crore)
    FY 2006 FY 2005
    I. Income
    Interest earned 0.25 0.18
    Other income 48.14 15.49
    Total 48.39 15.67
    II. Expenditure
    Interest expended — —
    Operating expenses 33.86 10.30
    Provisions & Contingencies 5.26 2.02
    Total 39.12 12.32
    III. Profit 9.27 3.35
    31. Impairment of Assets:
    In the opinion of the Bank’s Management, there is no impairment to the assets during the year to which Accounting
    Standard 28 - “Impairment of Assets” applies.
    32. Provisions, Contingent Liabilities & Contingent Assets :
    a) Movement of provisions for contingent liabilities
    (Rs. in crore)
    Particulars Legal cases/contingencies
    Balance as on 1st April 2005 23.36
    (10.44)
    Provided during the year 48.80
    (13.83)
    Amounts used during the year 1.47
    (0.03)
    Reversed during the year 7.31
    (0.88)
    Balance as on 31st March 2006 63.38
    (23.36)
    (Figures in brackets relate to previous year)
    b) Other contingent liabilites ( Schedule-12)
    Such liabilities at Sl.No. (i), (ii), (iii), (iv), (v) and (vi) are dependent upon the outcome of Court / arbitration
    / out of Court settlements, disposal of appeals, the amount being called up, terms of contractual obligations,
    devolvement and raising of demand by concerned parties, as the case may be.
    33. Previous year’s figures have been regrouped and reclassified, wherever necessary and determinable, to make them
    comparable with current year’s figures. In cases where disclosures have been made for the first time in terms of RBI
    guidelines, previous year figures have not been mentioned.

    F - 157
    ANNEXURE 4
    Major changes in the business activities of the Bank
    The Bank is in the business of Corporate and Retail Banking, Treasury Operations and other miscellaneous banking business.
    There has not been any change in the business activities of Bank which has had any material effect on the statement of
    profit/loss for the five years, including discontinuance of lines of business, loss of agencies or markets and similar factors.

    F - 158
    ANNEXURE 5
    Statement of Dividends Declared by the Bank
    (Rs. in millions)
    For the year ending March 31 March 31, March 31 March 31 March 31
    2006 2007 2008 2009 2010
    Number of Equity Shares 52,62,98,878 52,62,98,878 63,14,70,376 63,48,80,222 63,48,82,644
    Dividend (Rs) 7,368 7,368 13,577 18,412 19,046
    Tax on Dividend (Rs) 1,033 1,252 1,659 2,480 2,368
    Dividend Rate (%) 140 140 215 290 300

    F - 159
    ANNEXURE 6
    (a) Summary Statement of Other Income (Unconsolidated)
    (Rs. in millions)
    For the Financial year/Period March 31 March 31 March 31 March 31 March 31
    Ended March 31 2006 2007 2008 2009 2010
    Other Income
    1 Commission, exchange and brokerage 39,962 48,045 59,143 76,172 96409
    2 Profit/ Loss on sale of investments (Net) *5,872 *5,678 16,498 25,673 21168
    3 Profit/ Loss on revaluation of investments (Net) - (16,775) (7,035) (6) 0
    4 Profit on Exchange Transactions (Net) 10,013 *3,734 *6,927 *11792 15871
    Notes :
    a) All items of “Other Income” are of recurring nature
    b) Those items identified with * are less than 20% of the profit before tax, however for comparison purposes, they have
    been disclosed

    F - 160
    ANNEXURE 7
    Statement of Borrowings as on March 31, 2010
    (Rs. in millions)
    S. No. Particulars Outstanding Rate of Interest Duration Date of Repayment Terms
    amount Borrowings
    Domestic Borrowings
    1 Term Borrowings - - - - -
    2 CBLO (Secured 79,254.62 3.65% to 4.90% 5 days 31.03.2010 Bullet
    Borrowing)
    3 Borrowing from Other
    Institutions/ Agencies
    a Refinancing by SIDBI 6,526.32 Various rates from 3 years to 23.01.2010 & Various from
    5.10% to 6.00% 14 years & 31.03.2010 30.06.2012 to
    6M LIBOR + 6 months 15.06.2024
    280bps
    b Refinancing by 6,396.15 0.00% to 13.00% Various Terms Various Dates Various, Half Yearly
    NABARD from 31.07.2010 to
    31.07.2019
    c Others 2,529.22 - - 31.03.2010 Adverse Clearing
    Total Domestic
    Borrowings (A) 94,706.31 - - - -
    Overseas Borrowings
    1 Bond Issues 103,979.85 Fixed 3.50% to 5 Years Various dates
    (Excluding Hybrid 4.90% from Bullet
    Tier-I Bonds) Floating 28.06.2005 to
    LIBOR+38 bps 18.12.2009
    to +73.5 bps
    2 Foreign Currency Loans 45,926.86 Floating 364 days to Various dates Bullet principal
    Various rates 5 years from repayment, interest at
    2.6.2005 to half yearly intervals
    28.9.2007
    3 Money Market 465,699.40 Various rates Term Ranging Various dates Bullet
    Borrowings from 1 day to
    1 year
    Total (Overseas
    Borrowings) (B) 615,606.11 - - - -
    Tier I Capital
    Overseas 17,957.09 Coupon Perpetual non Feb15,2007 Perpetual with call
    SBI perpetual 6.439% call 10 years option to the Issuer
    Non call after swap and 3 months after 10 years and
    10.25 years bond LIBOR + 3 months
    120 bps
    on semi
    annual
    basis
    Overseas 10,102.50 Coupon Perpetual non Jun26, 2007 Perpetual with call
    SBI perpetual 7.14% call 10 years option to the Issuer
    Non call after swap 1 Day after 10 years 1 day
    10 years bond LIBOR +
    137 bps
    on semi
    annual
    basis
    Total Tier I Capital (C) 28,059.59 - - - -

    F - 161
    Subordinate Debts
    1 Domestic 291,744.00 Fixed 111 months to Various dates from Bullet
    7.45% to10.20% 180 months 05.02.2005 to
    27.01.2010
    Overseas - - - - -
    Total Subordinate
    Debts (D) 291,744.00
    Grand Total 1,030,116.01
    (A+B+C +D)
    · Secured Borrowings.

    F - 162
    ANNEXURE 8
    Summary Statement of Accounting Ratios
    Sr. Particulars 31-Mar-06 31-Mar-07 31-Mar-08 31-Mar-09 31-Mar-10
    No.
    1 Basic Earning Per Share 83.73 86.29 126.62 143.77 144.37
    Diluted Earning Per Share 83.73 86.29 126.50 143.77 144.37
    2 Return on Avg Net Worth (%) 17.04% 15.41% 16.75% 17.05% 14.80%
    (average opening and closing
    networth)
    Other Ratios
    3 Interest Income As a percentage to 7.19% 7.34% 7.32% 7.29% 6.80%
    working Funds (%)
    4 Non Interest Income as a percentage to 1.48% 1.07% 1.30% 1.45% 1.43%
    working Funds (%)
    5 Operating Profit as percentage to 2.27% 1.86% 1.96% 2.05% 1.75%
    working Funds (%)
    6 Return on Assets (%) 0.89% 0.84% 1.01% 1.04% 0.88%
    7 Net NPAs to Net Advances (%) 1.88% 1.56% 1.78% 1.79% 1.72%
    8 Capital to Risk -weighted Assets Ratio- 11.88% 12.34% 13.54% 12.97% 12.00%
    Overall (%) BASEL I
    9 Capital to Risk -weighted Assets Ratio- 9.36% 8.01% 9.14% 8.53% 8.46%
    Tier I (%) BASEL I
    10 Capital to Risk -weighted Assets Ratio- 2.52% 4.33% 4.40% 4.44% 3.54%
    Tier II (%) BASEL I
    11 Capital to Risk -weighted Assets Ratio- - - 12.64% 14.25% 13.39%
    Overall (%) BASEL II
    12 Capital to Risk -weighted Assets Ratio- - - 8.48% 9.38% 9.45%
    Tier I (%) BASEL II
    13 Capital to Risk -weighted Assets Ratio- - - 4.16% 4.87% 3.94%
    Tier II (%) BASEL II
    14 Operating Expenses / Average 2.36% 2.20% 1.88% 1.79% 1.95%
    Working Funds (%)
    15 Business (Deposits plus Advances) per 29,923.00 35,700.00 45,600.00 55,600.00 63,600.00
    employee (Rs. in thousands)
    16 Profit per employee (Rs. in thousands) 216.76 236.81 372.57 473.77 446.03

    F - 163
    ANNEXURE 9
    Capitalisation Statement as of March 31, 2010
    (Rs. in millions)
    Particulars Pre Issue as of March 31, 2010 Post Issue
    Loan Funds
    Long Term 448,793
    Short Term 581,323
    Total Debt 1,030,116
    Shareholders’ Fund
    Share Capital 6,349
    Share Premium 206,583
    Reserve and Surplus 446,560
    Total Equity 659,492
    Long Term Debt/Equity Ratio 0.68
    Loan Funds include Subordinate Debt and perpetual bonds

    F - 164
    ANNEXURE 10
    STATEMENT OF TAX SHELTERS (UNCONSOLIDATED)
    (Rs. in millions)
    Sr. Particulars 31-Mar-06 31-Mar-07 31-Mar-08 31-Mar-09 31-Mar-10
    No.
    Profit Before Tax 64,472.73 75,360.89 103,335.04 140,376.44 139,249.36
    Tax Rate 33.66% 33.66% 33.99% 33.99% 33.99%
    Tax at actual Rate (A) 21,701.52 25,366.48 35,123.77 47,713.95 47,330.86
    Permanent Difference
    1 Income Exempt from Tax (1,886.40) (1,827.73) (1,177.80) (1,823.50) (2,992.61)
    2 Interest on Income Tax - 2,699.85 - -
    3 Others (5,921.04) 5,829.29 1,356.97 5,928.51 6,290.51
    4 Taxes including wealth tax and fringe 4,588.80 889.90 1,057.00 1,430.00 11.60
    benefit tax
    (3,218.64) 7,591.31 1,236.17 5,535.01 3,309.50
    Timing Difference
    1 Voluntary Retirement Scheme 577.90 3,782.00 18.90 (1,381.20) (1,381.20)
    2 Provision for employees benefits 781.90 850.00 880.00 14,354.20 14,891.80
    3 Provision for other assets and (1,292.70) (233.23) 1,502.77 - -
    contingencies
    4 Payment of Wage Arrears (11,500.00) - 5,750.00 14,140.00 25,590.00
    5 Depreciation on Fixed assets 1,255.40 872.70 37.70 - 2,000.10
    (10,177.50) 5,271.47 8,189.37 27,113.00 41,100.70
    (13,396.14) 12,862.78 9,425.54 32,648.01 44,410.20
    Tax Saving Thereon (B) (4,509.14) 4,329.61 3,203.74 11,097.06 15,095.03
    Tax liability on current year’s profit 17,192.38 29,696.09 38,327.51 58,811.01 62,425.89
    Tax Adjustments relating to earlier (365.30) 450.05 (92.48) 904.19 (759.69)
    years/DTAA allowable/ LTCG
    Tax liability 16,827.08 30,146.14 38,235.03 59,715.20 61,666.20

    F - 165
    ANNEXURE C-1
    SUMMARISED STATEMENT OF ASSETS AND LIABILITIES (CONSOLIDATED)
    (Rs. in millions)
    Sr. Particulars 31-Mar-06 31-Mar-07 31-Mar-08 31-Mar-09 31-Mar-10
    No. Audited Audited Audited Audited Audited
    A Assets
    1 CASH AND BALANCES WITH
    RESERVE BANK OF INDIA
    I Cash in hand (including foreign 25,194.41 31,472.50 37,910.61 54,624.93 86,572.21
    currency notes and gold)
    II Balances with Reserve Bank of India 286,093.45 419,188.51 710,261.94 686,985.74 7,35,383.60
    Total 311,287.86 450,661.01 748,172.55 741,610.67 8,21,955.81
    2 BALANCES WITH BANKS &
    MONEY AT CALL & SHORT
    NOTICE
    I In India 120,803.27 98,900.98 77,881.09 257,312.23 1,57,613.05
    II Outside India 141,274.07 175,206.64 64,230.53 253,694.06 2,38,921.14
    Total 262,077.34 274,107.62 142,111.62 511,006.29 3,96,534.19
    3 INVESTMENTS
    I Investments in India 2,220,408.92 2,098,485.65 2,675,873.34 3,652,326.11 39,39,925.23
    II Investments outside India 58,901.56 66,724.84 62,543.90 69,988.37 87,616.09
    Total 2,279,310.48 2,165,210.49 2,738,417.24 3,722,314.48 40,27,541.32
    4 ADVANCES
    I Bills purchased and discounted 328,321.31 392,073.83 506,939.97 591,749.22 5,51,867.41
    II Cash Credits, overdrafts and loans
    repayable on demand 1,404,644.37 1,817,496.03 2,223,464.45 3,003,534.24 36,12,148.17
    III Term Loans 2,011,796.72 2,663,289.79 3,301,814.99 3,908,340.39 45,31,000.84
    Total 3,744,762.40 4,872,859.65 6,032,219.41 7,503,623.85 86,95,016.42
    5 Fixed Assets 39,563.14 39,993.75 46,627.90 52,234.77 60,138.92
    6 OtherAssets 332,917.01 348,911.59 565,146.47 517,467.35 5,00,252.99
    Total (A) 6,969,918.23 8,151,744.11 10,272,695.19 13,048,257.41 1,45,01,439.65
    B LIABILITIES
    1 DEPOSITS
    I Demand Deposits
    I From Banks 80,657.61 124,082.45 144,514.30 125,865.75 1,06,163.35
    Ii From Others 764,777.24 866,085.47 1,051,653.49 1,194,878.77 13,44,489.57
    II Savings Bank Deposits 1,504,538.88 1,726,084.57 2,053,934.18 2,570,085.08 33,11,526.09
    III Term Deposits
    I From Banks 54,528.76 53,870.74 70,988.92 126,004.53 1,85,928.18
    Ii From Others 3,035,740.16 3,592,605.54 4,443,074.30 6,103,049.14 62,16,538.46
    Total 5,440,242.65 6,362,728.77 7,764,165.19 10,119,883.27 1,11,64,645.65

    F - 166
    Sr. Particulars 31-Mar-06 31-Mar-07 31-Mar-08 31-Mar-09 31-Mar-10
    No. Audited Audited Audited Audited Audited
    2 BORROWINGS
    I Borrowings in India 94,995.89 123,042.73 230,339.69 501,862.93 558,654.91
    II Borrowings outside India 274,753.10 363,575.58 429,892.02 550,711.52 662,090.81
    Total 369,748.99 486,618.31 660,231.71 1,052,574.45 1,220,745.72
    3 OTHER LIABILITIES &
    PROVISIONS
    Sr. Particulars 31-Mar-06 31-Mar-07 31-Mar-08 31-Mar-09 31-Mar-10
    No. Audited Audited Audited Audited Audited
    I Other Liabilities & Provisions 682,848.07 657,904.74 898,954.57 1,129,613.03 1,258,379.75
    II Subordinate Debts 90,708.12 202,236.44 316,698.68 - -
    Sub Total 773,556.19 860,141.18 1,215,653.25 1,129,613.03 1,258,379.75
    Total (B) 6,583,547.83 7,709,488.26 9,640,050.15 12,302,070.75 1,36,43,771.12
    C NET ASSETS (C=A-B) 386,370.40 442,255.85 632,645.04 746,186.66 8,57,668.53
    Represented By
    Sr. Particulars 31-Mar-06 31-Mar-07 31-Mar-08 31-Mar-09 31-Mar-10
    No. Audited Audited Audited Audited Audited
    D 1 Share Capital 5,262.99 5,262.99 6,314.70 6,348.80 6,348.82
    E 2 Reserve & Surplus
    I Statutory Reserves 207,026.02 247,088.86 302,823.24 362,815.10 434,432.53
    II Capital Reserves # 7,777.24 7,949.50 8,062.07 18,305.75 20,282.22
    III Share Premium 35,105.73 35,105.73 200,989.68 206,579.25 206,583.08
    IV Investment Fluctuation Reserve 5.90 - - - -
    V Investment Reserve 621.79
    V Foreign Currency Translation 3,566.18 3,178.40 2,167.04 17,476.88 7,634.78
    Reserve
    VI Revenue and Other Reserves 109,459.25 125,580.84 90,507.89 110,218.18 155,488.55
    VII Balance in Profit and 3,863.76 1,190.18 877.42 2,159.97 585.82
    Loss Account
    Total 366,804.08 420,093.51 606,049.13 717,555.13 831,355.80
    Sr. Particulars 31-Mar-06 31-Mar-07 31-Mar-08 31-Mar-09 31-Mar-10
    No. Audited Audited Audited Audited Audited
    # includes capital reserve on 1,732.90 1,732.90 1,732.90 1,640.82 1,640.82
    consolidation
    G MINORITY INTEREST 14,303.33 16,899.35 20,281.21 22,282.73 26,312.73
    Total 386,370.40 442,255.85 632,645.04 746,186.66 857,668.53

    F - 167
    H CONTINGENT LIABILITIES
    Sr. Particulars 31-Mar-06 31-Mar-07 31-Mar-08 31-Mar-09 31-Mar-10
    No. Audited Audited Audited Audited Audited
    I Claims against the bank not
    acknowledged as debts 18,902.29 40,254.91 11,930.87 25,548.33 10,451.99
    II Liability for partly paid investments 373.18 34.49 30.00 31.19 31.19
    III Liability on account of outstanding
    forward exchange contracts 1,835,987.20 2,587,355.44 4,155,746.10 3,913,482.00 35,20,363.64
    IV Guaranteed given on behalf of
    constituents: 325,492.48 467,112.74 615,455.33 890,486.95 11,84,100.62
    (a) India 262,342.98 321,088.72 464,293.00 618,609.44 8,11,653.59
    (b) Outside India 63,149.50 146,024.02 151,162.33 271,877.51 3,72,447.03
    V Acceptances, endorsements and
    other obligations 449,547.53 586,129.09 901,134.20 1,257,392.61 14,06,167.04
    VI Other items for which the bank is
    contingently liable 300,465.48 2,436,448.29 3,773,405.58 2,519,919.74 8,51,836.72
    Total 2,930,768.16 6.117,334.96 9,457,702.08 8,606,860.82 69,72,951.21
    Bills for collection 247,807.52 283,375.37 252,259.08 499,383.53 5,64,914.29

    F - 168
    ANNEXURE C-2
    SUMMARISED STATEMENT OF PROFIT & LOSS ACCOUNT (CONSOLIDATED)
    (Rs. in millions)
    A For the Financial Year/Half Year Ended 31-Mar-06 31-Mar-07 31-Mar-08 31-Mar-09 31-Mar-10
    Audited Audited Audited Audited Audited
    INCOME
    1 INTEREST EARNED
    1.1 Interest / discount on advances/ bills 258,992.72 368,328.11 519,200.68 672,851.18 7,22,987.39
    1.2 Income on Investments 193,136.21 151,637.04 174,063.23 220,793.07 2,46,140.74
    1.3 Interest on balances with Reserve Bank 24,402.76 21,323.52 14,425.48 17,087.36 18,265.42
    of India and other inter-bank funds
    1.4 Others 22,389.48 2,345.75 7,268.77 5,938.55 13,413.77
    TOTAL 498,921.17 543,634.42 714,958.16 916,670.15 10,00,807.32
    2 OTHER INCOME
    2.1 Commission, exchange and brokerage 53,380.75 66,622.92 78,238.70 97,222.78 1,18,587.19
    2.2 Profit/ (Loss) on sale of investments (Net) 11,477.72 9,711.10 27,806.02 175,80.39 49,304.38
    2.3 Profit/ (Loss) on revaluation of 227.90 (6407.43) (8,567.54) (6,292.51) 30,229.81
    investments (Net)
    2.4 Profit/(Loss) on sale of land, buildings 4.74 78.77 107.08 (42.07) (99.48)
    and other assets and Leased Assets (Net)
    2.5 Profit on exchange transactions (Net) 12,181.07 5,436.55 9,514.27 14,607.34 18,666.07
    2.6 Dividends from Associates/Joint
    ventures in India/ abroad 250.42 78.91 156.25 131.04 150.87
    2.7 Income from Financial Leasing 1,393.82 1,104.15 425.56 313.88 104.17
    2.8 Credit Card membership/ service fees 1,746.03 3,579.08 4,245.68 2,668.64 1,910.91
    2.9 Life Insurance Premium 10,730.93 29,234.39 56,112.05 72,023.88 99,203.94
    2.10 Share of earnings from associates (130.93) 1,888.55 1,953.77 (136.41) 2,144.35
    2.11 Miscellaneous income 20,477.12 16,280.01 17,238.10 16183.88 17,508.72
    TOTAL 111,739.57 127,607.00 187,229.94 214,260.84 3,37,710.95
    TOTAL INCOME 610,660.74 671,241.42 902,188.10 1,130,930.99 13,38,518.27
    B EXPENDITURE
    1 INTEREST EXPENDED
    1.1 Interest on deposits 253,662.50 284,078.34 417,132.34 554,224.80 6,10,806.13
    1.2 Interest on Reserve Bank of India/ 14,957.77 15,379.63 32,044.21 31,161.04 14,059.89
    Inter-bank borrowings
    1.3 Other 12,408.71 27,842.66 30263.85 40,878.81 41,509.06
    TOTAL 281,028.98 327,300.63 479,440.40 626,264.65 6,66,375.09
    2 OPERATING EXPENSES
    2.1 Payments to and provisions for employees 107,637.97 105,974.74 104,575.10 129,971.94 1,63,310.64
    2.2 Rent, taxes and lighting 11,169.05 12,676.73 14,084.74 17,809.25 21,361.53
    2.3 Printing & Stationery 2,398.20 2,293.13 2,565.05 3,034.49 3130.06
    2.4 Depreciation 11,334.02 9,500.70 10,383.34 9,244.62 13,215.65

    F - 169
    A For the Financial Year/Half Year Ended 31-Mar-06 31-Mar-07 31-Mar-08 31-Mar-09 31-Mar-10
    Audited Audited Audited Audited Audited
    2.5 Directors’ fees, allowances and expenses 38.38 40.80 50.32 55.95 81.04
    2.6 Auditors’ fees and expenses (including 996.64 1,039.24 1,577.69 1,622.54 1,737.89
    branch auditors’ fees and expenses)
    2.7 Law charges 672.50 759.76 815.21 1,014.21 1,298.02
    2.6 Postages, Telegrams, Telephones, etc. 1,700.19 2,007.08 2,979.92 3,611.00 4,085.42
    2.7 Repairs and maintenance 2,142.12 2,397.28 3,022.57 2,395.12 4,158.54
    2.8 Insurance 4,651.19 5,137.32 6,171.54 7,706.82 9,406.62
    2.9 Amortisation of deferred revenue 179.03 132.80 - 58.32 69.03
    expenditure
    2.10 Operating Expenses relating to 1,386.52 2,054.56 3,170.43 1,761.76 2,319.04
    Credit Card Operations
    2.11 Operating Expenses relating to 11,707.77 28,434.27 53,959.29 46,386.35 1,41,712.87
    Life Insurance
    2.12 Other Expenditure 19,999.45 27,569.41 36,077.14 41,044.83 58,267.58
    TOTAL 176,013.03 200,017.82 239,432.34 265,717.20 4,24,153.94
    TOTAL EXPENDITURE 457,042.01 527,318.45 718,872.74 891,981.85 10,90,529.02
    Gross Profit Before Provisions (including 153,618.73 143,922.97 183,315.36 238,949.14 2,47,989.24
    for income tax & extraordinary Items)
    Less: Extraordinary Items -
    Gross Profit Before Provisions (including 153,618.73 143,922.97 183,315.36 238,949.14 2,47,989.24
    for income tax)
    3 Provisions & Contingencies:
    3.1 Provision for Income Tax (Current tax) 21,016.76 41,112.95 51,288.29 75.982.32 79,807.5
    3.2 Provision for Income Tax (Deferred tax) 5,070.90 (775.60) (4,830.26) (10,759.69) (13,157.1)
    3.3 Provision for Fringe Benefit Tax 6,195.96 1247.60 1,354.70 1,746.33 -
    3.4 Provision for other taxes 12.07 (14.53) (35.44) 248.72 33.4
    3.5 Provision for NPAs 4,140.64 17,758.92 28,040.47 36,163.02 62,287.7
    3.6 Provision for Standard Assets 5,854.43 9,454.23 7,732.10 3,048.25 1,526.7
    3.7 Provision for depreciation on investments 5,5395.51 8,294.86 1,531.56 13,527.67 (13,551.0)
    3.8 Provision on other assets/ Contingencies 586.96 57.40 4132.70 513.89 9,298.87
    3.9 Other Provisions (1,269.30) 589.16 1972.90 6747.97 1,606.83
    Total 97,003.93 77,724.99 91187.02 127,218.48 1,27,852.86
    Net Profit for the year 56,614.80 66,197.98 92,128.34 111,730.66 1,20,136.38
    Less: Minority Interests 1,315.60 2,554.25 2,522.23 2,177.79 2,798.06
    Group Profit 55,299.20 63,643.73 89,606.11 109,552.87 1,17,338.32
    Add: Brought forward Profit attributable
    to the group 134.16 3,863.76 1,190.17 877.42 2,159.97
    Transfer from General Reserv - 28.86 0.94 0.00 0.00
    TOTAL 55,433.36 67,536.35 90,797.22 110,430.29 1,19,498.29
    APPROPRIATIONS:
    Transfer to Statutory Reserves 34,537.00 40,062.84 55,734.38 59,869.45 71,536.15
    Transfer to Other Reserves 8,631.03 17,662.94 18,291.53 26,892.77 25,114.71
    Dividend 7,368.18 7,368.18 13,576.61 18,411.53 19,046.48
    Corporate Tax on Dividend 1,033.39 1,252.22 2,317.28 3,096.57 3,215.14
    Balance carried to Balance Sheet 3,863.76 1,190.17 877.42 2,159.97 585.81
    Total 55,433.36 67,536.35 90,797.22 1,10,430.29 1,19,498.29

    F - 170
    ANNEXURE C-3
    SUMMARY STATEMENT OF CASH FLOW (CONSOLIDATED)
    (Rs in millions)
    For the Year ended Ended 31-Mar-06- 31-Mar-07 31-Mar-08 31-Mar-09 31-Mar-10
    Cash flow from Operating Activities 55,432.14 51,341.37 (42,094.13) 311,699.62 16,227.43
    Cash flow from Investing Activities (18,256.88) (9,653.67) (16,424.42) (16,308.93) (13,446.15)
    Cash flow from Financing Activities 26,372.23 110,103.52 226,337.16 45,007.27 (32,726.13)
    Cash flows on account of exchange fluctuation 247.30 (387.79) (2,303.08) 21,934.83 (4,182.11)
    Net change in cash and cash 63,794.79 151,403.43 165,515.53 362,332.79 (34,126.96)
    equivalents
    Cash and cash equivalents - Opening 509,570.41 573,365.20 724,768.64 890,284.17 1,252,616.96
    Cash and cash equivalents - Closing 573,365.20 724,768.63 890,284.17 1,252,616.96 1,218,489.99
    Cash flow from Operating Activities
    Net Profit before taxes 87,594.89 105,567.17 137,383.40 176,770.54 184,022.13
    ADJUSTMENTS FOR:
    Depreciation charge 11,334.02 9,500.70 10,383.34 9,244.62 13,215.65
    (Profit)/Loss on sale of fixed assets 4.75 (125.32) (107.08) 42.07 99.48
    Provision for NPAs 4,140.64 17,758.92 28,040.47 36,163.02 62,287.71
    Provision for Standard Assets 5,854.43 9,454.23 7,732.10 3,048.25 1,526.71
    Provision for Subs/JVs/RRBs (922.49) (84.94) (350.26) 0.00 0.00
    Depreciation/Revaluation of Investments / 44,612.38 5,076.12 (17,356.66) 2,239.79 (93085.22)
    Loss on revaluation of Investments
    Provision on Other Assets 586.96 (295.60) 4,132.69 513.90 1,291.31
    Other Provisions (1,269.30) 589.16 1,972.92 6,747.97 9,614.35
    DRE written off during the year 179.03 132.80 (295.27) 58.32 69.03
    Interest paid on bonds (financing activity) 5,921.23 12,221.48 23,846.21 27,970.94 35,205.44
    Dividend/Earnings from Associates (57.34) (1,955.93) (2,110.02) 5.36 (2,295.23)
    LESS: Direct Taxes (17,298.37) (54,339.55) (57,598.14) (77,648.14) (84,444.34)
    Other adjustments - - - - -
    Sub - Total 140,680.83 103,499.24 135,673.70 185,156.64 127,507.01
    Increase/(Decrease) in Deposits 379,189.87 922,486.13 1,401,436.42 2,355,718.08 1,044,762.38
    Increase/(Decrease) in Borrowings 140,454.24 116,869.32 173,613.40 (14,315.27) 140,325.53
    (Increase)/Decrease in Investments 299,610.61 110,912.42 (553,875.80) (984,727.02) (217,619.52)
    (Increase)/Decrease in Advances (877,443.47) (1,145,856.18) (1,187,400.22)(1,507,567.46)(1,253,680.29)
    Increase/(Decrease) in Other Liabilities & 70,636.37 (53,153.90) 198,709.83 219,897.28 141,317.76
    Provisions
    (Increase)/Decrease in Other Assets (97,696.31) (3,415.66) (210,251.46) 57,537.37 33,614.55
    Net Cash provided by Operating activities 55,432.14 51,341.37 (42,094.13) 311,699.62 16,227.43
    Cash flow from Investing Activities
    (Increase)/Decrease in Investments in Joint (2,990.93) (1,803.60) (1,624.04) (1,410.01) 5,477.90
    Ventures/Associates
    Income earned on such investments (99.77) 1,955.93 2,110.02 (5.36) 2,295.23
    (Increase)/Decrease in Fixed Assets (15,166.18) (9,806.00) (16,910.40) (14,893.56) (21,219.28)
    Net Cash provided by Investing Activities (18,256.88) (9,653.67) (16,424.42) (16,308.93) (13,446.15)

    F - 171
    For the Year ended Ended 31-Mar-06 31-Mar-07 31-Mar-08 31-Mar-09 31-Mar-10
    Cash flow from Financing Activities
    Share Capital - - 1,051.72 34.10 0.02
    Share Premium - - 165,883.94 5,589.58 3.83
    Net proceeds/ (repayment) of bonds 39,809.70 131,252.32 92,125.40 83,334.32 31484.63
    (including subordinated debts)
    Interest paid on Bonds (5,921.23) (12,221.49) (23.846.21) (27,970.94) (35,205.44)
    Dividend paid (7,516.24) (8,927.31) (8,877.69) (15,979.79) (29,009.17)
    Net Cash provided by Financing Activities 26,372.23 110,103.52 226,337.16 45,007.27 (32,726.13)
    Cash flows on account of Exchange Fluctuation:
    Reserves of foreign subsidiaries/foreign offices 247.30 (387.79) (1,011.36) 15309.83 (543.23)
    Others – Revaluation of Foreign Currency Bonds - - (1,291.72) 6625.00 (3,638.88)
    Net cash flows on account of Exchange Fluctuation 247.30 (387.79) (2,303.08) 21934.83 (4,182.11)
    Cash and Cash equivalents-Opening:
    Cash in hand 17,956.54 25,194.41 31,472.50 37,910.61 54,624.93
    (including FC notes & gold)
    Balances with Reserve Bank of India 238,201.72 286,093.45 419,188.51 710,261.94 686,985.74
    Balances with Banks & MACSN 253,412.15 262,077.34 274,107.63 142,111.62 511,006.29
    Total 509,570.41 573,365.20 724,768.64 890,284.17 1,252,616.96
    Cash and Cash equivalents - Closing:
    Cash in hand (including FC notes & gold) 25,194.41 31,472.50 37,910.61 54,624.93 86,572.21
    Balances with Reserve Bank of India 286,093.45 419,188.51 710,261.94 686,985.74 735,383.60
    Balances with Banks & MACSN 262,077.34 274,107.62 142,111.62 511,006.29 396,534.19
    Total 573,365.20 724,768.63 890,284.17 1,252,616.96 1,218,489.99

    F - 172
    SCHEDULE - SUMMARISED STATEMENT OF ASSETS AND LIABILITIES (CONSOLIDATED)
    Amount in Millions
    CAPITAL AND LIABILITIES As on As on As on As on As on
    31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    Schedule 1 Capital 5,262.99 5,262.99 6,314.70 6,348.80 6,348.83
    Schedule 2 Reserves & Surplus 366,804.07 420,093.51 606,049.12 717,555.13 825,006.99
    Schedule 2A Minority Interest 14,303.33 16,899.35 20,281.21 22,282.73 26,312.73
    Schedule 3 Deposits 5,440,242.65 6,362,728.77 7,764,165.19 10,119,883.26 11,164,645.65
    Schedule 4 Borrowings 369,748.99 486,618.31 660,231.71 1,052,574.44 1,220,745.72
    Schedule 5 Other Liabilities and
    Provisions 773,556.18 860,141.18 1,215,653.25 1,129,613.04 1,258,379.75
    Total 6,969,918.21 8,151,744.11 10,272,695.18 13,048,257.41 14,501,439.66
    ASSETS
    Schedule 6 Cash and balances with
    Reserve Bank of India 311,287.86 450,661.01 748,172.55 741,610.67 821,955.81
    Schedule 7 Balances with banks and
    money at call & short notice 262,077.34 274,107.62 142,111.62 511,006.29 396,534.19
    Schedule 8 Investments 2,279,310.47 2,165,210.49 2,738,417.24 3,722,314.49 4,027,541.33
    Schedule 9 Advances 3,744,762.39 4,872,859.65 6,032,219.40 7,503,623.85 8,695,016.42
    Schedule 10 Fixed Assets 39,563.14 39,993.75 46,627.90 52,234.78 60,138.92
    Schedule 11 Other Assets 332,917.01 348,911.59 565,146.47 517,467.35 500,252.99
    Total 6,969,918.21 8,151,744.11 10,272,695.18 13,048,257.41 14,501,439.66
    Schedule 12 Contingent Liabilities 2,930,768.16 6,117,334.96 9,457,702.08 8,606,860.82 6,972,951.20
    Bill for Collection 247,807.52 283,375.37 252,259.08 499,383.53 564,914.29

    F - 173
    Schedule 1 Capital As on As on As on As on As on
    31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    Authorised Capital - 100,00,00,000
    equity shares of Rs.10/- each 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00
    Issued Capital 5,262.99 5,262.99 6,315.59 6,349.69 6,349.69
    Subscribed and Paid up Capital 5,262.99 5,262.99 6,314.70 6,348.80 6,348.83
    Total 5,262.99 5,262.99 6,314.70 6,348.80 6,348.83

    F - 174
    Schedule 2 Reserves & Surplus As on As on As on As on As on
    31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    I. Statutory Reserves
    Opening Balance 172,555.65 207,026.02 247,088.86 302,823.24 362,815.11
    Additions during the year 34,537.00 40,062.84 55,734.38 59,991.87 72,033.93
    Deductions during the year 66.63 - - - 416.50
    207,026.02 247,088.86 302,823.24 362,815.11 434,432.54
    II. Capital Reserves
    Opening Balance 6,345.19 7,777.24 7,949.50 8,062.07 18,305.75
    Additions during the year 1,473.40 172.26 112.57 10,243.68 1,976.48
    Deductions during the year 41.35 - - - -
    7,777.24 7,949.50 8,062.07 18,305.75 20,282.22
    III. Share Premium
    Opening Balance 35,105.73 35,105.73 35,105.73 200,989.68 206,579.25
    Additions during the year - - 166,170.97 5,601.70 3.83
    Deductions during the year - - 287.03 12.12 -
    35,105.73 35,105.73 200,989.68 206,579.25 206,583.08
    IV. Investment Fluctuation Reserve
    Opening Balance 71,277.02 5.90 - - -
    Additions during the year - - - - -
    Deductions during the year 71,271.12 5.90 - - -
    5.90 - - - -
    V. Investment Reserve
    Opening Balance - - - - -
    Additions during the year - - 621.79 - -
    Deductions during the year - - - - -
    - - 621.79
    VI. Foreign currency Translation Reserve
    Opening Balance 3,320.62 3,566.18 3,178.40 2,167.04 17,476.87
    Additions during the year : 245.56 - - 15,309.84 -
    Deductions during the year - 387.79 1,011.36 - 9,842.10
    3,566.18 3,178.40 2,167.04 17,476.87 7,634.78
    VII. Revenue and Other Reserves*
    Opening Balance 31,516.62 109,459.25 125,580.84 90,507.90 110,218.18
    Additions during the year : 78,300.81 16,212.85 17,723.66 19,953.20 45,516.22
    Deductions during the year 358.19 91.26 52,796.60 242.91 245.85
    109,459.25 125,580.84 90,507.90 110,218.18 155,488.56
    VIII Balance of Profit and Loss Account 3,863.76 1,190.18 877.42 2,159.97 585.82
    Total 366,804.07 420,093.50 606,049.12 717,555.13 825,006.99

    F - 175
    Schedule 2A- Minority Interest As on As on As on As on As on
    31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    Share Capital 3,641.73 4,477.39 6,871.05 7,328.85 8,819.05
    Reserves & Surplus 10,661.60 12,421.96 13,410.16 14,953.88 17,493.68
    Total 14,303.33 16,899.35 20,281.21 22,282.73 26,312.73

    F - 176
    Schedule 3 Deposits As on As on As on As on As on
    31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    I. Demand Deposits
    (i) From Banks 80,657.61 124,082.45 144,514.30 125,865.75 106,163.35
    (ii) From Others 764,777.24 866,085.47 1,051,653.49 1,194,878.77 1,344,489.57
    II. Savings Bank Deposits 1,504,538.88 1,726,084.57 2,053,934.18 2,570,085.08 3,311,526.09
    III. Term Deposits
    (i) From Banks 54,528.76 53,870.74 70,988.92 126,004.53 185,928.18
    (ii) From Others 3,035,740.16 3,592,605.54 4,443,074.30 6,103,049.14 6,216,538.46
    Total 5,440,242.65 6,362,728.77 7,764,165.19 10,119,883.26 11,164,645.65
    I. Deposits of Branches in India 5,277,275.35 6,172,820.17 7,482,468.47 9,720,582.34 10,656,046.36
    II. Deposits of Branches outside India 162,967.30 189,908.60 281,696.71 399,300.92 508,599.29
    Total 5,440,242.65 6,362,728.77 7,764,165.19 10,119,883.26 11,164,645.65

    F - 177
    Schedule 4 Borrowings As on As on As on As on As on
    31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    I. Borrowings in India
    (i) Reserve Bank of India 1,650.00 24,549.00 21,270.00 7,000.00 -
    (ii) Other Banks 17,721.09 17,802.75 108,296.12 29,795.92 100,112.19
    (iii) Other Institutions and Agencies 75,624.79 80,690.99 100,773.57 90,007.48 48,359.68
    (iv) Innovative perpetual Debt Instruments (IPDI) - - - 11,751.53 36,950.00
    (v) Subordinated Debts and Bonds - - - 363,208.00 373,133.04
    (vi) Redeemable Cumulative Preferance Shares - - - 100.00 100.00
    TOTAL BORROWINGS IN INDIA 94,995.89 123,042.73 230,339.69 501,862.93 558,654.91
    II. Borrowings outside India
    i. Borrowings and Refinance outside India 274,753.10 363,575.58 429,892.02 519,013.05 634,031.22
    ii. Innovative perpetual Debt Instruments (IPDI) - - - 31,698.47 28,059.59
    TOTAL BORROWINGS 274,753.10 363,575.58 429,892.02 550,711.52 662,090.81
    OUTSIDE INDIA
    TOTAL BORROWINGS 369,748.99 486,618.31 660,231.71 1,052,574.44 1,220,745.72
    Secured borrowings included in I & II above 49,269.61 64,702.02 48,244.17 44,678.11 70,619.69

    F - 178
    Schedule 5 Other Liabilities and Provisions As on As on As on As on As on
    31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    I. Bills payable 215,941.22 248,840.27 248,534.21 241,050.20 263,543.58
    II. Inter-Bank adjustments 69.90 - - - -
    III. Inter-office adjustments (net) 134,523.10 14,227.31 9,211.79 58,478.00 118,315.23
    IV. Interest accrued 49,471.56 60,198.54 74,583.76 101,359.15 94,714.23
    V. Perprtual Bonds - Tier I - 19,724.00 36,945.00 - -
    Perprtual Bonds - Upper Tier II - 81,563.47 175,923.68 - -
    Subordinated Bonds - Tier II 90,708.12 120,672.97 103,830.00 - -
    VI. Deferred Tax Liabilty 264.28 5,260.46 1.20 0.88 1.48
    VII. Others (including provisions) 282,578.00 309,654.17 566,623.62 728,724.80 781,805.23
    Total 773,556.18 860,141.18 1,215,653.25 1,129,613.04 1,258,379.75

    F - 179
    Schedule 6 Cash and Balances with As on As on As on As on As on
    Reserve Bank of India 31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    I Cash in hand (including foreign currency 25,194.41 31,472.50 37,910.61 54,624.93 86,572.21
    notes and gold)
    II Balance with Reserve Bank of India - - - - -
    (i) In Current Account 286,093.45 419,188.51 436,124.93 686,960.61 735,358.40
    (ii) In Other Accounts - - 274,137.01 25.13 25.20
    Total 311,287.86 450,661.01 748,172.55 741,610.67 821,955.81

    F - 180
    Schedule 7 Balances with Banks and Money As on As on As on As on As on
    at Call & Short Notice 31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    I. In India
    (i) Balances with banks
    (a) In Current Accounts 4,057.29 9,418.94 9,747.43 10,489.43 14,716.86
    (b) In Other Deposit Accounts 6,727.57 10,267.81 27,382.16 115,361.19 122,155.10
    (ii) Money at call and short notice - - - - -
    (a) With banks 102,981.90 73,542.73 40,751.50 131,461.62 754.00
    (b) With other institutions 7,036.52 5,671.50 - - 19,987.10
    Total 120,803.27 98,900.98 77,881.09 257,312.23 157,613.05
    II. Outside India
    (i) In Current Accounts 22,673.37 25,408.44 21,410.24 146,153.06 175,620.80
    (ii) In Other Deposit Accounts 37,487.84 38,153.88 9,309.63 17,602.47 9,496.09
    (iii) Money at call and short notice 81,112.86 111,644.33 33,510.66 89,938.53 53,804.24
    Total 141,274.07 175,206.64 64,230.53 253,694.06 238,921.14
    GRAND Total 262,077.34 274,107.62 142,111.62 511,006.29 396,534.19

    F - 181
    Schedule 8 Investments As on As on As on As on As on
    31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    I. Investments in India in :
    (i) Government Securities 1,948,977.19 1,787,556.52 2,113,579.13 3,043,719.38 3,150,921.29
    (ii) Other approved securities 45,608.22 43,865.49 39,622.40 33,161.96 28,602.59
    (iii) Shares 20,327.51 44,202.17 97,872.97 103,574.09 200,694.27
    (iv) Debentures and Bonds 122,535.28 105,525.01 210,386.70 194,853.32 244,236.29
    (v) Subsidiaries and Joint Ventures - - - - -
    (vi) Associates 6,138.85 7,961.67 9,845.33 11,042.98 8,040.24
    (vii) Others (Units of Mutual Funds, 76,821.86 109,374.80 204,566.82 265,974.39 307,430.54
    Commercial Papers etc)
    Total 2,220,408.92 2,098,485.65 2,675,873.35 3,652,326.11 3,939,925.23
    II. Investments outside India in
    (i) Government Securities 12,443.14 14,890.75 17,089.69 21,318.27 32,834.37
    (including local authorities)
    (ii) Subsidiaries and/or Joint Ventures abroad - - - - -
    (iii) Associates 507.18 572.91 663.55 739.51 408.68
    (iv) Other Investments (Shares, Debentures etc.) 45,951.25 51,261.17 44,790.66 47,930.60 54,373.04
    Total 58,901.56 66,724.84 62,543.90 69,988.37 87,616.10
    GRAND TOTAL (I+II) 2,279,310.47 2,165,210.49 2,738,417.24 3,722,314.49 4,027,541.33
    III. Investments in India in
    (i) Gross Value of Investments 2,307,532.21 2,127,191.54 2,689,502.64 3,674,377.43 3,970,320.73
    (ii) Less: Aggregate of Provisions /Depreciation 87,123.30 28,705.89 13,629.29 22,051.32 30,395.50
    (iii) Net Investments (vide I above) TOTAL 2,220,408.92 2,098,485.65 2,675,873.35 3,652,326.11 3,939,925.23
    IV. Investments outside India in
    (i) Gross Value of Investments 59,068.54 66,877.26 62,974.95 73,331.89 89,620.36
    (ii) Less: Aggregate of Provisions /Depreciation 166.98 152.42 431.06 3,343.51 2,004.26
    (iii) Net Investments (vide II above) TOTAL 58,901.56 66,724.84 62,543.90 69,988.37 87,616.10
    GRAND TOTAL 2,279,310.47 2,165,210.49 2,738,417.24 3,722,314.49 4,027,541.33

    F - 182
    Schedule 9 Advances As on As on As on As on As on
    31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    A I. Bills purchased and discounted 328,321.31 392,073.83 506,939.97 591,749.22 551,867.41
    II. Cash credits, overdrafts and loans 1,404,646.37 1,817,496.03 2,223,464.45 3,003,534.24 3,612,148.17
    repayable on demand
    III. Term loans 2,011,796.72 2,663,289.79 3,301,814.99 3,908,340.38 4,531,000.84
    Total 3,744,764.39 4,872,859.65 6,032,219.40 7,503,623.85 8,695,016.42
    B I. Secured by tangible assets 2,676,746.12 3,527,039.22 4,318,867.80 5,174,838.26 6,058,778.69
    II. Covered by Bank/Government 258,963.85 271,701.63 270,088.29 849,087.10 910,979.30
    Guarantees
    III. Unsecured 809,052.42 1,074,118.80 1,443,263.31 1,479,698.49 1,725,258.43
    Total 3,744,762.39 4,872,859.65 6,032,219.40 7,503,623.85 8,695,016.42
    C I. Advances in India
    (i) Priority Sectors 1,250,432.67 1,550,651.92 1,801,007.66 2,131,871.53 2,509,051.97
    (ii) Public Sector 328,911.43 379,936.41 364,792.93 451,574.92 635,611.98
    (iii) Banks 11,464.13 34,057.96 12,170.32 13,579.26 12,459.52
    (iv) Others 1,867,234.45 2,503,573.91 3,258,732.48 3,990,718.91 4,501,454.48
    Total 3,458,042.68 4,468,220.21 5,436,703.39 6,587,744.63 7,658,577.94
    II. Advances outside India
    (i) Due from banks 22,670.02 29,465.10 22,200.84 43,578.87 156,613.99
    (ii) Due from others - - - - -
    (a) Bills purchased and discounted 82,441.00 105,924.41 156,542.89 294,548.50 254,322.84
    (b) Syndicated loans 64,810.22 127,085.56 205,643.41 285,372.00 281,096.82
    (c) Others 116,798.48 142,164.36 211,128.88 292,379.85 344,404.83
    Total 286,719.71 404,639.44 595,516.02 915,879.22 1,036,438.48
    Grand Total 3,744,762.39 4,872,859.65 6,032,219.40 7,503,623.85 8,695,016.42

    F - 183
    Schedule 10 Fixed Assets As on As on As on As on As on
    31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    I. A. Premises
    At cost as on 31st March of the preceding year 15,404.74 17,970.89 19,199.37 20,201.62 21,341.30
    Additions (including adjustments*) during the year 2,582.49 1,260.85 1,008.33 1,154.48 1,375.02
    Deductions during the year 23.71 32.36 6.08 14.80 74.04
    Depreciation to date 5,809.86 6,576.52 7,388.86 7,999.79 8,962.66
    12,153.66 12,622.85 12,812.76 13,341.51 13,679.62
    II. Other Fixed Assets (including furniture and
    fixtures)
    At cost as on 31st March of the preceeding year 59,387.58 72,486.84 80,546.54 95,268.40 108,380.97
    Additions (including adjustments*) during the year 15,510.46 9,694.47 16,150.22 14,215.22 19,226.81
    Deductions during the year 2,377.52 1,634.78 1,428.35 1,102.65 1,143.30
    Depreciation to date 48,214.11 55,650.74 64,352.82 72,405.84 84,867.37
    24,306.40 24,895.80 30,915.59 35,975.14 41,597.12
    III. Leased Assets
    A. At cost as on 31st March of the preceeding year 15,492.58 14,082.92 13,003.07 11,044.18 10,917.31
    Additions during the year - - - - -
    Deductions during the year 1,409.66 1,079.85 1,958.90 126.87 1,154.53
    Depreciation to date including provision 11,822.71 11,278.10 10,506.91 10,837.96 9,713.08
    Less lease adjustment and provision - 750.05 103.43 29.32 47.79
    Sub Total 2,260.21 974.92 433.84 50.03 1.92
    B. Capital Work in progress (leased assets) 43.12 49.65 122.35 - -
    net of provision
    2,303.32 925.27 311.49 50.03 1.92
    IV. Assets under Construction (including premises) 799.75 1,450.52 2,343.36 2,868.11 4,860.27
    Total 39,563.14 39,993.75 46,627.90 52,234.78 60,138.92

    F - 184
    Schedule 11 Other Assets As on As on As on As on As on
    31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    (i) Inter-Bank adjustments (net) - 47.26 200.73 1.52 59.31
    (ii) Inter-office adjustments (net) 11,671.93 18,289.64 131,923.20 34,756.11 17,841.39
    (iii) Interest accrued 66,675.57 73,200.80 89,373.06 95,633.88 106,475.11
    (iv) Tax paid in advance/tax deducted 24,236.72 39,062.27 45,393.77 55,042.55 59,072.90
    at source
    (v) Stationery and stamps 1,099.89 1,065.72 1,235.63 1,229.94 1,580.10
    (vi) Non-Banking assets acquired in 27.80 79.68 63.02 101.35 204.37
    satisfaction of claims
    (vii) Deferred Tax Assets (net) 3,245.55 2,879.56 7,785.13 20,080.90 34,337.20
    (viii) Deferred Revenue Expenditure - - - - -
    (ix) Others 225,959.56 214,286.66 289,171.92 310,621.11 280,682.63
    Total 332,917.01 348,911.59 565,146.47 517,467.35 500,252.99

    F - 185
    Schedule 12 Contingent Liabilities As on As on As on As on As on
    31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    i) Claims against the bank not 18,902.29 40,254.91 11,930.87 25,548.33 10,451.99
    acknowledged as debts
    ii) Liability for partly paid investments 373.18 34.50 30.00 31.19 31.19
    iii) Liability on account of outstanding 1,835,987.20 2,587,355.44 4,155,746.11 3,913,482.00 3,520,363.65
    forward exchange contracts
    iv) Guarantees given on behalf of - - - - -
    constituents
    (a) In India 262,342.98 321,088.72 464,292.99 618,609.45 811,653.59
    (b) Outside India 63,149.50 146,024.02 151,162.34 271,877.51 372,447.03
    v) Acceptances, endorsements and 449,547.53 586,129.09 901,134.20 1,257,392.61 1,406,167.04
    other obligations
    vi) Other items for which the bank is 300,465.48 2,436,448.28 3,773,405.57 2,519,919.74 851,836.72
    contingently liable
    Total 2,930,768.16 6,117,334.96 9,457,702.08 8,606,860.82 6,972,951.20

    F - 186
    SCHEDULE - SUMMARISED PROFIT AND LOSS ACCOUNT OF STATE BANK OF INDIA (CONSOLIDATED)
    31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    I. INCOME
    Interest earned (Schedule 13) 498,921.17 543,634.42 714,958.16 916,670.15 1,000,807.32
    Other Income (Schedule 14) 111,739.56 127,607.00 187,229.93 214,260.84 337,710.95
    Total 610,660.74 671,241.42 902,188.09 1,130,931.00 1,338,518.27
    II. EXPENDITURE
    Interest expended (Schedule 15) 281,028.98 327,300.63 479,440.40 626,264.66 666,375.09
    Operating expenses (Schedule 16) 176,013.03 200,017.82 239,432.33 265,717.20 424,153.94
    Provisions and contingencies 97,003.93 77,724.97 91,187.02 127,218.48 127,852.85
    Total 554,045.94 605,043.43 810,059.75 1,019,200.34 1,218,381.89
    III. PROFIT
    Net Profit for the year 56,614.80 66,198.00 92,128.34 111,730.66 120,136.38
    Less Minority Interest 1,315.60 2,554.24 2,522.23 2,177.80 2,798.06
    Group Profit 55,299.20 63,643.75 89,606.11 109,552.87 117,338.32
    Add Profit brought forward 134.16 3,863.76 1,190.18 877.42 2,159.97
    attributable to the group
    Transfer from General Reserve - 28.86 0.94 - -
    Total 55,433.36 67,536.36 90,797.22 110,430.29 119,498.29
    APPROPRIATIONS
    Transfer to statutory reserves 34,537.00 40,062.84 55,734.38 59,869.45 71,536.15
    Transfer to other reverse 8,631.03 17,662.94 18,291.53 26,892.77 25,114.71
    Transfer to proposed Dividend 7,368.18 7,368.18 13,576.61 18,411.53 19,046.48
    Corporate Tax on Dividend 1,033.39 1,252.22 2,317.28 3,096.58 3,215.14
    Balance carried over to Balance Sheet 3,863.76 1,190.18 877.42 2,159.97 585.82
    Total 55,433.36 67,536.36 90,797.22 110,430.29 119,498.29
    Basic Earnings per Share 105.07 120.93 168.61 172.68 184.82
    Diluted Earnings per share 105.07 120.93 168.45 172.68 184.82

    F - 187
    Interest earned (Schedule 13) 31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    I. Interest/discount on advances/bills 258,992.72 368,328.12 519,200.68 672,851.19 722,987.39
    II. Income on investments 193,136.21 151,637.04 174,063.23 220,793.07 246,140.74
    III. Interest on balances with Reserve 24,402.76 21,323.52 14,425.48 17,087.36 18,265.42
    Bank of India and other inter-bank funds
    IV. Others 22,389.48 2,345.75 7,268.77 5,938.55 13,413.77
    Total 498,921.17 543,634.43 714,958.16 916,670.15 1,000,807.32

    F - 188
    Other Income (Schedule 14) 31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    I. Commission, exchange and brokerage 53,380.75 66,622.92 78,238.70 97,222.78 118,587.19
    II. Profit on sale of investments ( Net ) 11,477.72 9,711.11 27,806.02 17,580.39 49,304.38
    III. Profit/(Loss) on revaluation of 227.90 (6,407.43) (8,567.54) (6,292.51) 30,229.81
    investments (Net)
    IV. Profit / loss on sale of land, buildings (31.17) 75.06 105.69 (42.07) (99.48)
    and other assets, (Net)
    V. Profit / loss on sale of leased Assets ( Net ) 35.91 3.72 1.40 - -
    VI. Profit on exchange transactions 12,181.07 5,436.55 9,514.27 14,607.33 18,666.07
    VII. Dividends from Associates/ 250.42 78.91 156.25 131.04 150.88
    joint ventures abroad/in India
    VIII. Lease income a. Lease management fee - - - - -
    b. Lease rentals 1,390.48 1,104.15 425.57 313.87 104.17
    c. Lease finance charges - - - - -
    d. Overdue Charges 3.34 - - - -
    IX. Credit Card membership/service fees 1,746.03 3,579.08 4,245.68 2,668.64 1,910.91
    X. Life Insurance Premium 10,730.92 29,234.39 56,112.05 72,023.89 99,203.94
    XI. Share of earning fron Associates (130.93) 1,888.55 1,953.77 (136.41) 2,144.35
    XII. Miscellaneous Income 20,477.12 16,280.05 17,238.10 16,183.88 17,508.72
    Total 111,739.56 127,607.05 187,229.93 214,260.84 337,710.95

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    Interest expended (Schedule 15) 31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    I. Interest on deposits 253,662.50 284,078.34 417,132.34 554,224.80 610,806.13
    II. Interest on Reserve Bank of India/ 14,957.77 15,379.63 32,044.21 31,161.04 14,059.89
    Inter-bank borrowings
    III. Others 12,408.71 27,842.66 30,263.85 40,878.82 41,509.07
    Total 281,028.98 327,300.63 479,440.40 626,264.66 666,375.09

    F - 190
    Operating expenses (Schedule 16) 31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010
    I) Payments to and provisions 107,637.97 105,974.61 104,575.10 129,971.94 163,310.64
    for employees
    ii) Rent, taxes and lighting 11,169.05 12,676.72 14,084.75 17,809.25 21,361.54
    iii) Printing and stationery 2,398.20 2,293.13 2,565.05 3,034.49 3,130.06
    iv) Advertisement and publicity 1,911.47 2,441.49 3,589.81 3,367.61 3,377.27
    v) (a) Depreciation (Leased Assets) 1,275.28 954.74 407.20 258.67 42.37
    (b) Depreciation on other fixed assets 10,058.74 8,545.96 9,976.14 8,985.94 13,173.28
    vi) Directors’ fees, allowances and expenses 38.38 40.80 50.32 55.95 81.04
    vii) Auditors’ fees and expenses 996.64 1,039.25 1,577.68 1,622.54 1,737.89
    (including to branch auditors)
    viii) Law charges 672.50 759.76 815.21 1,014.21 1,298.02
    ix) Postages, telegrams, telephones, etc. 1,700.19 2,007.08 2,979.91 3,611.00 4,085.42
    x) Repairs and maintenance 2,142.12 2,397.28 3,022.57 2,395.12 4,158.55
    xi) Insurance 4,651.19 5,137.32 6,171.54 7,706.82 9,406.63
    xii) Amortization of deferred revenue 179.03 132.80 - 58.32 69.03
    expenditure
    xiii) Operating Expenses relating to Credit 1,386.52 2,054.56 3,170.43 1,761.75 2,319.04
    Card operations
    xiv) Operating Expenses relating to 11,707.77 28,434.27 53,959.29 46,386.35 141,712.88
    Life Insurance
    xv) Other expenditure 18,087.98 25,128.05 32,487.34 37,677.23 54,890.31
    Total 176,013.03 200,017.82 239,432.33 265,717.20 424,153.94

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    PRINCIPAL ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (CONSOLIDATED) FOR THE YEAR
    ENDED 31ST MARCH 2010
    SCHEDULE 17 — PRINCIPAL ACCOUNTING POLICIES
    A. BASIS OF PREPARATION:
    The accompanying financial statements have been prepared under the historical cost convention as modified for
    derivatives and foreign currency transactions, as enumerated in Part C below. They conform to Generally Accepted
    Accounting Principles (GAAP) in India, which comprise of statutory provisions, guidelines of regulatory authorities,
    Reserve Bank of India (RBI), Insurance Regulatory and Development Authority, Companies Act 1956, Accounting
    Standards (AS)/Guidance Notes issued by the Institute of Chartered Accountants of India (ICAI) and the prevalent
    accounting practices in India.
    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 the accounting estimates is recognised prospectively in the current and future periods.
    B. BASIS OF CONSOLIDATION:
    1. Consolidated financial statements of the Group (comprising of 29 subsidiaries, 6 Joint
    Ventures and 26 Associates) have been prepared on the basis of:
    a. Audited accounts of State Bank of India (Parent).
    b. Line by line aggregation of each item of asset/liability/income/expense of the subsidiaries with the
    respective item of the Parent, and after eliminating all material intra-group balances/transactions, unrealised
    profit/loss, and making necessary adjustments wherever required for non-uniform accounting policies as
    per AS 21 “Consolidated Financial Statements” issued by the ICAI.
    c. Consolidation of Joint Ventures — ‘Proportionate Consolidation’ as per AS 27 “Financial Reporting of
    Interests in Joint Ventures” of the ICAI.
    d. Accounting for investment in ‘Associates’ under the ‘Equity Method’ as per AS 23 “Accounting for
    Investments in Associates in Consolidated Financial Statements” of the ICAI.
    2. The difference between cost to the group of its investment in the subsidiary entities and the group’s portion
    of the equity of the subsidiaries is recognised in the financial statements as goodwill/capital reserve.
    3. Minority interest in the net assets of the consolidated subsidiaries consists of:
    a. The amount of equity attributable to the minority at the date on which investment in a subsidiary is
    made, and
    b. The minority share of movements in revenue reserves/loss (equity) since the date the parent-subsidiary
    relationship came into existence.
    C. PRINCIPAL ACCOUNTING POLICIES
    1. Revenue recognition
    1.1 Income and expenditure are accounted on accrual basis, except otherwise stated below. In respect of foreign
    entities, income is recognised as per the local laws of the country in which the respective foreign entities are
    located.
    1.2 Interest income is recognised in the Profit and Loss Account as it accrues except (i) income from non-
    performing assets (NPAs), comprising of advances, leases and investments, which is recognised upon
    realisation, as per the prudential norms prescribed by the RBI/ respective country regulators (hereafter
    collectively referred to as Regulatory Authorities), (ii) interest on application money on investments (iii)
    overdue interest on investments and bills discounted, (iv) Income on Rupee Derivatives designated as
    “Trading”.

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    1.3 Profit/Loss on sale of investments is credited/debited to Profit and Loss Account (Sale of Investments). Profit
    on sale of investments in the ‘Held to Maturity’ category shall be appropriated net of applicable taxes to
    ‘Capital Reserve Account’. Loss on sale will be recognised in the Profit and Loss Account.
    1.4 Income from finance leases is calculated by applying the interest rate implicit in the lease to the net investment
    outstanding on the lease, over the primary lease period. Leases effective from April 1, 2001 are accounted as
    advances at an amount equal to the net investment in the lease. The lease rentals are apportioned between
    principal and finance income based on a pattern reflecting a constant periodic return on the net investment
    outstanding in respect of finance leases. The principal amount is utilized for reduction in balance of net
    investment in lease and finance income is reported as interest income.
    1.5 Income (other than interest) on investments in “Held to Maturity” (HTM) category acquired at a discount to
    the face value, is recognised as follows:
    i. On Interest bearing securities, it is recognised only at the time of sale/redemption.
    ii. On zero-coupon securities, it is accounted for over the balance tenor of the security on a constant yield
    basis.
    1.6 Dividend is accounted on an accrual basis where the right to receive the dividend is established.
    1.7 All other commission and fee incomes are recognised on their realisation except for (i) Guarantee commission
    on deferred payment guarantees, which is spread over the period of the guarantee and (ii) Commission on
    Government Business, which is recognised as it accrues.
    1.8 Non-banking entities
    Merchant Banking:
    a. Issue management and advisory fees are recognised as per the terms of agreement with the client.
    b. Fees for private placement are recognised on completion of assignment.
    c. Underwriting commission relating to public issues is accounted for on finalisation of allotment of the
    public issue.
    d. Brokerage income relating to public issues/mutual fund/other securities is accounted for based on
    mobilisation and intimation received from clients/intermediaries.
    e. Brokerage income in relation to stock broking activity is recognized on the trade date of transactions
    and includes stamp duty and transaction charges.
    Asset Management:
    a. Management fee is recognised at specific rates agreed with the relevant schemes, applied on the average
    daily net assets of each scheme (excluding inter-scheme investments, where applicable, and investments
    made by the company in the respective scheme) and are in conformity with the limits specified under
    SEBI (Mutual Funds) Regulations, 1996.
    b. Portfolio Advisory Service income is recognised on accrual basis as per the terms of the contract.
    c. Recovery from guaranteed schemes of deficit earlier recognised as expense is recognised as income in
    the year of receipt.
    d. Scheme Expenses: Expenses of schemes in excess of the stipulated rates are charged to the Profit and
    Loss Account.
    e. Recovery, if any, on realisation of devolved investments of schemes acquired by the company in terms
    of right of subrogation is accounted on the basis of receipts.
    Credit Card Operations:
    a. Joining membership fee and first annual fee have been recognised over a period of one year as they
    more closely reflects the period to which the fee relate to.
    b. Interchange income is recognised on accrual basis.
    c. All other service fees are recorded at the time of occurrence of the respective transaction.

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    Factoring:
    Factoring service charges are accounted on accrual basis except in the case of non-performing assets, where
    income is accounted on realisation. Processing charges are accrued upon acceptance of sanction of the
    factoring/financing limits by the Company.
    Life Insurance:
    a. Premium (net of service tax) is recognized as income when due from policyholders.
    Uncollected premium from lapsed policies is not recognised as income until such policies are revived. In
    respect of linked business, premium income is recognised when the associated units are allotted.
    b. Premium ceded on reinsurance is accounted in accordance with the terms of the treaty or in-principle
    arrangement with the Re-Insurer.
    c. Claims by death are accounted when intimated. Intimations up to the end of the year are considered for
    accounting of such claims. Claims by maturity are accounted on the policy maturity date. Annuity
    benefits are accounted when due. Surrenders are accounted as and when notified. Claims cost consist
    of the policy benefit amounts and claims settlement costs, where applicable. Amounts recoverable from
    re-insurers are accounted for in the same period as the related claims and are reduced from claims.
    d. Acquisition costs such as commission; medical fees etc. are costs that are primarily related to the
    acquisition of new and renewal insurance contracts and are expensed as and when incurred.
    e. Liability for life policies: The actuarial liability of all the life insurance policies has been calculated by
    the appointed actuary as per the guidelines prescribed by the Institute of Actuaries of India.
    Pension Fund Operation:
    a. Management fees is recognized at specified rates agreed with the relevant schemes calculated as per the
    Investment Management Agreement (IMA) entered into between the Company and NPS Trustees, on
    accrual basis. Revenue excludes Service Tax, wherever recovered.
    b. Profit/loss on sale of investments is recognized on trade date basis.
    Mutual Fund Trustee Operation:
    Trusteeship fees/management fees are recognised on an accrual basis in accordance with the respective terms
    of contract between the Companies.
    2. Investments
    Investments are accounted for in accordance with the extant regulatory guidelines. The bank follows trade date
    method for accounting of its investments.
    2.1 Classification:
    Investments are classified into 3 categories, viz. Held to Maturity, Available for Sale and Held for Trading
    categories (hereafter called categories). Under each of these categories, investments are further classified into
    the following six groups:
    i. Government Securities,
    ii. Other Approved Securities,
    iii. Shares,
    iv. Debentures and Bonds,
    v. Subsidiaries/Joint ventures and
    vi. Others.
    2.2 Basis of classification:
    i. Investments that the Bank intends to hold till maturity are classified as Held to Maturity.
    ii. Investments that are held principally for resale within 90 days from the date of purchase are classified
    as Held for Trading.
    iii. Investments, which are not classified in the above two categories, are classified as Available for Sale.

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    iv. An investment is classified as Held to Maturity, Available for Sale or Held for Trading at the time of its
    purchase and subsequent shifting amongst categories is done in conformity with regulatory guidelines.
    2.3 Valuation:
    i. In determining the acquisition cost of an investment:
    a. Brokerage/commission received on subscriptions is reduced from the cost.
    b. Brokerage, commission, securities transaction tax, etc. paid in connection with acquisition of
    investments are expensed upfront and excluded from cost.
    c. Broken period interest paid/received on debt instruments is treated as interest expense/income and
    is excluded from the cost/sale consideration.
    d. Cost is determined on the weighted average cost method.
    e. The transfer of a security amongst the above three categories is accounted for at the least of
    acquisition cost/book value/market value on the date of transfer, and the depreciation, if any, on
    such transfer is fully provided for.
    ii. Treasury Bills and Commercial Papers are valued at carrying cost.
    iii. Held to Maturity category: Each scrip under Held to Maturity category is carried at its acquisition cost
    or at amortised cost, if acquired at a premium over the face value. Any premium on acquisition is
    amortised over the remaining maturity period of the security on constant yield basis. Such amortisation
    of premium is adjusted against income under the head “interest on investments”. A provision is made
    for diminution, other than temporary. Investments in Regional Rural Banks (RRBs) are valued at equity
    cost determined in accordance with AS 23 of the ICAI.
    iv. Available for Sale and Held for Trading categories: Each scrip in the above two categories is revalued
    at the market price or fair value determined as per Regulatory guidelines, and only the net depreciation
    of each group for each category is provided for and net appreciation, is ignored. On provision for
    depreciation, the book value of the individual securities remains unchanged after marking to market.
    v. Security receipts issued by an asset reconstruction company (ARC) are valued in accordance with the
    guidelines applicable to non-SLR instruments. Accordingly, in cases where the security receipts issued
    by the ARC are limited to the actual realisation of the financial assets assigned to the instruments in the
    concerned scheme, the Net Asset Value, obtained from the ARC, is reckoned for valuation of such
    investments.
    vi. Investments are classified as performing and non-performing, based on the guidelines issued by the RBI
    in case of domestic offices and respective regulators in case of foreign entities. Investments of domestic
    offices become non performing where:
    a. Interest/instalment (including maturity proceeds) is due and remains unpaid for more than 90 days.
    b. In the case of equity shares, in the event the investment in the shares of any company is valued
    at Re. 1 per company on account of the non availability of the latest balance sheet, those equity
    shares would be reckoned as NPI.
    c. If any credit facility availed by the issuer is NPA in the books of the bank, investment in any of
    the securities issued by the same issuer would also be treated as NPI and vice versa.
    d. The above would apply mutatis-mutandis to preference shares where the fixed dividend is not
    paid.
    e. The investments in debentures/bonds, which are deemed to be in the nature of advance, are also
    subjected to NPI norms as applicable to investments.
    f. In respect of foreign entities, provisions for non performing investments are made as per the local
    regulations or as per the norms of RBI, whichever is higher.
    vii. The Bank has adopted the Uniform Accounting Procedure prescribed by the RBI for accounting of Repo
    and Reverse Repo transactions [other than transactions under the Liquidity Adjustment Facility (LAF)
    with the RBI]. Accordingly, the securities sold/purchased under Repo/Reverse repo are treated as outright
    sales/purchases and accounted for in the Repo/Reverse Repo Accounts, and the entries are reversed on

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    the date of maturity. Costs and revenues are accounted as interest expenditure/income, as the case may
    be. Balance in Repo/Reverse Repo Account is adjusted against the balance in the Investment Account.
    viii. Securities purchased/sold under LAF with RBI are debited/credited to Investment Account and reversed
    on maturity of the transaction. Interest expended/earned thereon is accounted for as expenditure/revenue.
    3. Loans/Advances and Provisions thereon
    3.1 Loans and Advances are classified as performing and non-performing, based on the guidelines issued by the
    RBI. Loan assets become non-performing where:
    i. In respect of term loan, interest and/or instalment of principal remains overdue for a period of more than
    90 days;
    ii. In respect of an Overdraft or Cash Credit advance, the account remains “out of order”, i.e. if the
    outstanding balance exceeds the sanctioned limit/drawing power continuously for a period of 90 days,
    or if there are no credits continuously for 90 days as on the date of balance-sheet, or if the credits are
    not adequate to cover the interest due during the same period;
    iii. In respect of bills purchased/discounted, the bill remains overdue for a period of more than 90 days;
    iv. In respect of agricultural advances for short duration crops, where the instalment of principal or interest
    remains overdue for 2 crop seasons;
    v. In respect of agricultural advances for long duration crops, where the principal or interest remains
    overdue for one crop season.
    3.2 Non-Performing advances are classified into sub-standard, doubtful and loss assets, based on the following
    criteria stipulated by RBI:
    i. Sub-standard: A loan asset that has remained non-performing for a period less than or equal to 12
    months.
    ii. Doubtful: A loan asset that has remained in the sub-standard category for a period of 12 months.
    iii. Loss: A loan asset where loss has been identified but the amount has not been fully written off.
    3.3 Provisions are made for NPAs as per the extant guidelines prescribed by the regulatory authorities, subject to
    minimum provisions as prescribed below by the RBI:
    Substandard Assets: i. A general provision of 10%
    ii. Additional provision of 10% for exposures which are unsecured ab-
    initio (where realisable value of security is not more than 10 percent
    ab-initio)
    Doubtful Assets:
    — Secured portion: i. Up to one year — 20%
    ii. One to three years — 30%
    iii. More than three years — 100%
    — Unsecured portion 100%
    Loss Assets: 100%
    3.4 In respect of foreign entities, provisions for non performing advances are made as per the local regulations or
    as per the norms of RBI, whichever is higher.
    3.5 The sale of NPAs is accounted as per guidelines prescribed by the RBI, which requires 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. Net book value is outstanding as reduced by specific provisions held
    and ECGC claims received.
    3.6 Advances are net of specific loan loss provisions, unrealised interest, ECGC claims received and bills
    rediscounted.
    3.7 For restructured/rescheduled assets, provisions are made in accordance with the guidelines issued by RBI,
    which requires that the present value of future interest due as per the original loan agreement, compared with

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    the present value of the interest expected to be earned under the restructuring package, be provided in
    addition to provision for NPAs. The provision for interest sacrifice arising out of the above, is reduced from
    advances.
    3.8 In the case of loan accounts classified as NPAs, an account may be reclassified as a performing account if it
    conforms to the guidelines prescribed by the regulators.
    3.9 Amounts recovered against debts written off in earlier years are recognised as revenue.
    3.10 Unrealised Interest recognised in the previous year on advances which have become non-performing during
    the current year, is provided for.
    3.11 In addition to the specific provision on NPAs, general provisions are also made for standard assets as per the
    extant guidelines prescribed by the RBI. The provisions on standard assets are not reckoned for arriving at
    net NPAs. These provisions are reflected in Schedule 5 of the balance sheet under the head “Other Liabilities
    & Provisions — Others.”
    4. Floating Provision
    In accordance with the Reserve Bank of India guidelines, the bank has an approved policy for creation and
    utilisation of floating provisions separately for advances, investments and general purpose. The quantum of floating
    provisions to be created would be assessed at the end of each financial year. The floating provisions would be
    utilised only for contingencies under extra ordinary circumstances specified in the policy with prior permission of
    Reserve Bank of India.
    5. Provision for Country Exposure for Banking Entities
    In addition to the specific provisions held according to the asset classification status, provisions are held for
    individual country exposures (other than the home country). Countries are categorised into seven risk categories,
    namely, insignificant, low, moderate, high, very high, restricted and off-credit, and provisioning made as per extant
    RBI guidelines. 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 exposures. The provision is reflected in schedule 5 of
    the balance sheet under the “Other liabilities & Provisions — Others”.
    6. Derivatives:
    6.1 The Bank enters into derivative contracts, such as foreign currency options, interest rate swaps, currency
    swaps, and cross currency interest rate swaps and forward rate agreements in order to hedge on-balance
    sheet/off-balance sheet assets and liabilities or for trading purposes. The swap contracts entered to hedge
    on-balance sheet assets and liabilities are structured in such a way that they bear an opposite and offsetting
    impact with the underlying on-balance sheet items. The impact of such derivative instruments is correlated
    with the movement of the underlying assets and accounted in accordance with the principles of hedge
    accounting.
    6.2 Derivative contracts classified as hedge are recorded on accrual basis. Hedge contracts are not marked to
    market unless the underlying Assets/Liabilities are also marked to market.
    6.3 Except as mentioned above, all other derivative contracts are marked to market as per the generally accepted
    practices prevalent in the industry. In respect of derivative contracts that are marked to market, changes in the
    market value are recognised in the profit and loss account in the period of change. Any receivable under
    derivatives contracts, which remain overdue for more than 90 days, are reversed through profit and loss
    account.
    6.4 Option premium paid or received is recorded in profit and loss account at the expiry of the option. The
    Balance in the premium received on options sold and premium paid on options bought have been considered
    to arrive at Mark to Market value for forex Over the Counter options.
    6.5 Exchange Traded Foreign Exchange and Interest Rate Futures entered into for trading purposes are valued at
    prevailing market rates based on quoted and observable market prices and the resultant gains and losses are
    recognized in the Profit and Loss Account.
    7. Fixed Assets and Depreciation
    7.1 Fixed assets are carried at cost less accumulated depreciation.

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    7.2 Cost includes cost of purchase and all expenditure such as site preparation, installation costs and professional
    fees incurred on the asset before it is put to use. Subsequent expenditure incurred on assets put to use is
    capitalised only when it increases the future benefits from such assets or their functioning capability.
    7.3 The rates of depreciation and method of charging depreciation in respect of domestic operations are as under:
    Sr.
    No. Description of fixed assets Method of charging Depreciation/am ortisation
    depreciation rate
    1 Computers & ATM Straight Line Method 33.33% every year
    2 Computer software forming Written Down Value Method 60%
    an integral part of hardware
    3 Computer Software which Straight Line Method 100%, in the year of
    does not form an integral part acquisition
    of hardware
    4 Assets given on financial Straight Line Method At the rate prescribed under
    lease up to 31st March 2001 Companies Act 1956
    5 Other fixed assets Written Down Value Method At the rate prescribed under
    Income-tax Rules 1962
    7.4 In respect of assets acquired for domestic operations during the year, depreciation is charged for half an year
    in respect of assets used for up to 182 days and for the full year in respect of assets used for more than 182
    days, except depreciation on computers and software, which is charged for the full year irrespective of the
    period for which the asset was put to use.
    7.5 Items costing less than Rs. 1,000 each are charged off in the year of purchase.
    7.6 In respect of leasehold premises, the lease premium, if any, is amortised over the period of lease and the lease
    rent is charged in the respective year.
    7.7 In respect of assets given on lease by the Bank on or before 31st March 2001, the value of the assets given
    on lease is disclosed as Leased Assets under fixed assets, and the difference between the annual lease charge
    (capital recovery) and the depreciation is taken to Lease Equalisation Account.
    7.8 In respect of fixed assets held at foreign branches/subsidiaries/associates, depreciation is provided as per the
    regulations/norms of the respective countries.
    8. Leases
    The asset classification and provisioning norms applicable to advances, as laid down in Para 3 above, are applied
    to financial leases also.
    9. Impairment of Assets
    Fixed Assets are reviewed for impairment whenever events or changes in circumstances warrant 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 to future net discounted cash flows expected to be generated by the
    asset. If such assets are considered to be impaired, the impairment to be recognised is measured by the amount by
    which the carrying amount of the asset exceeds the fair value of the asset.
    10. Effect of changes in the foreign exchange rate
    10.1 Foreign Currency Transactions
    i. Foreign currency transactions are recorded on initial recognition in the reporting currency by applying
    to the foreign currency amount the exchange rate between the reporting currency and the foreign
    currency on the date of transaction.
    ii. Foreign currency monetary items are reported using the Foreign Exchange Dealers Association of India
    (FEDAI) closing spot/forward rates.
    iii. Foreign currency non-monetary items, which are carried in terms at historical cost, are reported using
    the exchange rate at the date of the transaction.

    F - 198
    iv. Contingent liabilities denominated in foreign currency are reported using the FEDAI closing spot rates.
    v. Outstanding foreign exchange spot and forward contracts held for trading are revalued at the exchange
    rates notified by FEDAI for specified maturities, and the resulting profit or loss is included in the Profit
    or Loss account.
    vi. Foreign exchange forward contracts which are not intended for trading and are outstanding at the
    balance sheet date, are valued at the closing spot rate. The premium or discount arising at the inception
    of such a forward exchange contract is amortised as expense or income over the life of the contract.
    vii. Exchange differences arising on the settlement of monetary items at rates different from those at which
    they were initially recorded are recognised as income or as expense in the period in which they arise.
    viii. Gains/Losses on account of changes in exchange rates of open position in currency futures trades are
    settled with the exchange clearing house on daily basis and such gains/losses are recognised in the
    profit and loss account.
    10.2 Foreign Operations
    Foreign entities of the Bank and Offshore Banking Units have been classified as Non-integral Operations and
    Representative Offices have been classified as Integral Operations.
    a. Non-integral Operations:
    i. Both monetary and non-monetary foreign currency assets and liabilities including contingent
    liabilities of non-integral foreign operations are translated at closing exchange rates notified by
    FEDAI at the balance sheet date.
    ii. Income and expenditure of non-integral foreign operations are translated at quarterly average
    closing rates.
    iii. Exchange differences arising on net investment in non-integral foreign operations are accumulated
    in Foreign Currency Translation Reserve until the disposal of the net investment.
    iv. The Assets and Liabilities of foreign offices/subsidiaries/joint ventures in foreign currency (other
    than local currency of the foreign offices/ subsidiaries/joint ventures) are translated into local
    currency using spot rates applicable to that country.
    b. Integral Operations:
    i. Foreign currency transactions are recorded on initial recognition in the reporting currency by
    applying to the foreign currency amount the exchange rate between the reporting currency and
    the foreign currency on the date of transaction.
    ii. Monetary foreign currency assets and liabilities of integral foreign operations are translated at
    closing exchange rates notified by FEDAI at the balance sheet date and the resulting profit/loss is
    included in the profit and loss account.
    iii. Foreign currency non-monetary items which are carried in terms of historical cost are reported
    using the exchange rate at the date of the transaction.
    11. Employee Benefits:
    11.1 Short Term Employee Benefits:
    The undiscounted amount of short-term employee benefits, such as medical benefits, casual leave etc. which
    are expected to be paid in exchange for the services rendered by employees are recognised during the period
    when the employee renders the service.
    11.2 Post Employment Benefits:
    i. Defined Benefit Plan
    a. The group entities operate separate Provident Fund schemes. All eligible employees are entitled to
    receive benefits under the Provident Fund scheme. The group entities contribute monthly at a
    determined rate. These contributions are remitted to a trust established for this purpose and are
    charged to Profit and Loss Account. The group entities are liable for annual contributions and
    interests, which is payable at minimum specified rate of interest. The entities recognise such

    F - 199
    annual contributions and interest as an expense in the year to which they relate.
    b. The group entities operate separate gratuity and pension schemes, which are defined benefit
    plans.
    c. The group entities provide for gratuity to all eligible employees. The benefit is in the form of lump
    sum payments to vested employees on retirement, on death while in employment, or on termination
    of employment, for an amount equivalent to 15 days basic salary payable for each completed year
    of service, subject to a ceiling in terms of service rules. Vesting occurs upon completion of five
    years of service. The Bank makes annual contributions to a fund administered by trustees based
    on an independent external actuarial valuation carried out annually.
    d. Some group entities provide for pension to all eligible employees. The benefit is in the form of
    monthly payments as per rules and regular payments to vested employees on retirement, on death
    while in employment, or on termination of employment. Vesting occurs at different stages as per
    rules. The entities make annual contributions to funds administered by trustees based on an
    independent external actuarial valuation carried out annually.
    e. The cost of providing defined benefits is determined using the projected unit credit method, with
    actuarial valuations being carried out at each balance sheet date. Actuarial gains/losses are
    immediately recognised in the statement of profit and loss and are not deferred.
    ii. Other Long Term Employee benefits:
    a. All eligible employees of the group are eligible for compensated absences, silver jubilee award,
    leave travel concession, retirement award and resettlement allowance. The costs of such long term
    employee benefits are internally funded by the Bank.
    b. The cost of providing other long term benefits is determined using the projected unit credit
    method with actuarial valuations being carried out at each balance sheet date. Past service cost is
    immediately recognised in the statement of profit and loss and is not deferred.
    12. Provision for Taxation
    12.1 Income tax expense is the aggregate amount of current tax, deferred tax and fringe benefit tax charge. Current
    year taxes are determined in accordance with the provisions of AS 22 “Accounting for taxes on income” and
    tax laws prevailing in India after taking into account taxes of foreign subsidiaries, which are based on the tax
    laws of respective jurisdiction. Deferred tax adjustments comprise of changes in the deferred tax assets or
    liabilities during the period.
    12.2 Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or
    substantially enacted prior to the balance sheet date. Deferred tax assets and liabilities are recognised on a
    prudent basis for the future tax consequences of timing differences arising between the carrying values of
    assets and liabilities and their respective tax basis, and carry forward losses. The impact of changes in the
    deferred tax assets and liabilities is recognised in the profit and loss account.
    12.3 Deferred tax assets are recognised and reassessed at each reporting date, based upon management’s judgement
    as to whether realisation is considered 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 assets can be
    realised against future profits.
    12.4 Income tax expenses are the aggregate of the amounts of tax expense appearing in the separate financial
    statements of the parent and its subsidiaries/joint ventures, as per their applicable laws.
    13. Earning per Share
    13.1 The Bank reports basic and diluted earnings per share in accordance with AS 20 -‘Earnings per Share’ issued
    by the ICAI. Basic earnings per share are computed by dividing the net profit after tax by the weighted
    average number of equity shares outstanding for the year.
    13.2 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 year end.

    F - 200
    14. Accounting for Provisions, Contingent Liabilities and Contingent Assets
    14.1 In conformity with AS 29, “Provisions, Contingent Liabilities and Contingent Assets”, issued by the ICAI, the
    provision is recognised only when it has a present obligation as a result of a past event, it is probable that
    an outflow of resources embodying economic benefits will be required to settle the obligation, and when a
    reliable estimate of the amount of the obligation can be made.
    14.2 No provision is recognised for
    i. any possible obligation that arises from past events and the existence of which will be confirmed only
    by the occurrence or non-occurrence of one or more uncertain future events not wholly within the
    control of the Bank; or
    ii. any present obligation that arises from past events but is not recognised because
    a. it is not probable that an outflow of resources embodying economic benefits will be required to
    settle the obligation; or
    b. a reliable estimate of the amount of obligation cannot be made.
    Such obligations are recorded as Contingent Liabilities. These are assessed at regular intervals
    and only that part of the obligation for which an outflow of resources embodying economic
    benefits is probable, is provided for, except in the extremely rare circumstances where no reliable
    estimate can be made.
    14.3 Contingent Assets are not recognised in the financial statements as this may result in the recognition of
    income that may never be realised.
    15. Cash and cash equivalents
    Cash and cash equivalents include cash on hand and in ATM’s, and gold in hand, balances with RBI, balances with
    other banks, and money at call and short notice.
    16. Employee Share Purchase Scheme
    In accordance with the Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999
    issued by the Securities and Exchange Board of India (“SEBI”), the excess of market price one day prior to the date
    of issue of the shares over the price at which they are issued is recognised as employee compensation cost.
    17. Share Issue Expenses
    Share issue expenses are charged to the Share Premium Account.

    F - 201
    SCHEDULE 18 — NOTES ON ACCOUNTS (2009-2010)

    (Amount in Rupees in crore)

    1. List of Subsidiaries/Joint Ventures/Associates considered for preparation of consolidated


    financial statements:

    1.1 The 29 Subsidiaries, 6 Joint Ventures and 26 Associates (which along with State Bank of
    India, the parent, constitute the Group), considered in the preparation of the consolidated
    financial statements, are

    A) Subsidiaries

    Country of Group’s Stake


    Sr. No Name of the Subsidiary Incorporation (%)

    1) State Bank of Bikaner & Jaipur. . . . . . . . . . . . . . . . . . . India 75.07


    2) State Bank of Hyderabad. . . . . . . . . . . . . . . . . . . . . . . . India 100.00
    3) State Bank of Indore . . . . . . . . . . . . . . . . . . . . . . . . . . . India 98.05
    4) State Bank of Mysore . . . . . . . . . . . . . . . . . . . . . . . . . . India 92.33
    5) State Bank of Patiala. . . . . . . . . . . . . . . . . . . . . . . . . . . India 100.00
    6) State Bank of Travancore . . . . . . . . . . . . . . . . . . . . . . . India 75.01
    7) SBI Commercial & International Bank Ltd. . . . . . . . . . . India 100.00
    8) SBI Capital Markets Ltd. . . . . . . . . . . . . . . . . . . . . . . . India 100.00
    9) SBICAP Securities Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . India 100.00
    10) SBICAP Trustee Company Ltd. . . . . . . . . . . . . . . . . . . . India 100.00
    11) SBICAPS Ventures Ltd.. . . . . . . . . . . . . . . . . . . . . . . . . India 100.00
    12) SBI DFHI Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . India 66.39
    13) SBI Mutual Fund Trustee Company Pvt. Ltd. . . . . . . . . India 100.00
    14) SBI Global Factors Ltd. . . . . . . . . . . . . . . . . . . . . . . . . India 85.35
    15) SBI Pension Funds Pvt. Ltd. . . . . . . . . . . . . . . . . . . . . . India 96.85
    16) SBI Custodial Services Pvt. Ltd. @ . . . . . . . . . . . . . . . . . India 65.00
    17) SBI General Insurance Company Ltd. @ . . . . . . . . . . . . . India 74.00
    18) SBI Payment Services Pvt. Ltd.. . . . . . . . . . . . . . . . . . . India 100.00
    19) State Bank of India (Canada) . . . . . . . . . . . . . . . . . . . . Canada 100.00
    20) State Bank of India (California) . . . . . . . . . . . . . . . . . . USA 100.00
    21) SBI (Mauritius) Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . Mauritius 93.40
    22) PT Bank SBI Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . Indonesia 76.00
    23) SBICAP (UK) Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . U.K. 100.00
    24) SBI Cards and Payment Services Pvt. Ltd. @ . . . . . . . . . India 60.00
    25) SBI Funds Management Pvt Ltd @ . . . . . . . . . . . . . . . . . India 63.00
    26) SBI Life Insurance Company Ltd @ . . . . . . . . . . . . . . . . India 74.00
    27) Commercial Bank of India Llc @ . . . . . . . . . . . . . . . . . . Russia 60.00
    28) Nepal SBI Bank Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . Nepal 55.02
    29) SBI Funds Management (International) Private Ltd @ . . . Mauritius 63.00

    @ These entities are jointly controlled.

    F-202
    B) Joint Ventures

    Country of Group’s Stake


    Sr. No Name of the Joint Venture Incorporation (%)

    1) C Edge Technologies Ltd . . . . . . . . . . . . . . . . . . . . . . . India 49.00


    2) GE Capital Business Process Management Services
    Pvt Ltd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . India 40.00
    3) SBI Macquarie Infrastructure Management Pvt. Ltd. . . . India 45.00
    4) SBI Macquarie Infrastructure Trustee Pvt. Ltd* . . . . . . . India 100.00
    5) Macquarie SBI Infrastructure Management Pte. Ltd. . . . Singapore 45.00
    6) Macquarie SBI Infrastructure Trustee Ltd . . . . . . . . . . . Bermuda 45.00

    * JV Partner is expected to be inducted in the next quarter.

    C) Associates:

    Country of Group’s Stake


    Sr. No Name of the Associate Incorporation (%)

    1) Andhra Pradesh Grameena Vikas Bank . . . . . . . . . . . . . India 35.00


    2) Arunachal Pradesh Rural Bank . . . . . . . . . . . . . . . . . . . India 35.00
    3) Chhatisgarh Gramin Bank . . . . . . . . . . . . . . . . . . . . . . . India 35.00
    4) Ellaquai Dehati Bank . . . . . . . . . . . . . . . . . . . . . . . . . . India 35.00
    5) Meghalaya Rural Bank . . . . . . . . . . . . . . . . . . . . . . . . . India 35.00
    6) Krishna Grameena Bank . . . . . . . . . . . . . . . . . . . . . . . . India 35.00
    7) Langpi Dehangi Rural Bank . . . . . . . . . . . . . . . . . . . . . India 35.00
    8) Madhya Bharat Gramin Bank . . . . . . . . . . . . . . . . . . . . India 35.00
    9) Mizoram Rural Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . India 35.00
    10) Nagaland Rural Bank . . . . . . . . . . . . . . . . . . . . . . . . . . India 35.00
    11) Parvatiya Gramin Bank . . . . . . . . . . . . . . . . . . . . . . . . . India 35.00
    12) Purvanchal Kshetriya Gramin Bank . . . . . . . . . . . . . . . . India 35.00
    13) Samastipur Kshetriya Gramin Bank . . . . . . . . . . . . . . . . India 35.00
    14) Utkal Gramya Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . India 35.00
    15) Uttaranchal Gramin Bank . . . . . . . . . . . . . . . . . . . . . . . India 35.00
    16) Vananchal Gramin Bank . . . . . . . . . . . . . . . . . . . . . . . . India 35.00
    17) Marwar Ganganagar Bikaner Gramin Bank . . . . . . . . . . India 26.27
    18) Vidisha Bhopal Kshetriya Gramin Bank. . . . . . . . . . . . . India 34.32
    19) Deccan Grameena Bank . . . . . . . . . . . . . . . . . . . . . . . . . India 35.00
    20) Cauvery Kalpatharu Grameena Bank . . . . . . . . . . . . . . . India 32.32
    21) Malwa Gramin Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . India 35.00
    22) Saurashtra Grameena Bank . . . . . . . . . . . . . . . . . . . . . . India 35.00
    23) The Clearing Corporation of India Ltd . . . . . . . . . . . . . India 28.99
    24) Bank of Bhutan Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . Bhutan 20.00
    25) S.S. Ventures Services Ltd . . . . . . . . . . . . . . . . . . . . . . India 50.00
    26) SBI Home Finance Ltd . . . . . . . . . . . . . . . . . . . . . . . . . India 25.05

    1.2 The following changes have taken place in the consolidation process as compared to the
    previous year 2008-09.

    a. SBI’s subsidiary, SBI Factors & Commercial Services Pvt. Ltd. is amalgamated with
    Global Trade Finance Ltd., another subsidiary of SBI and the amalgamated entity’s
    name has been changed to SBI Global Factors Ltd. The Scheme of Merger has been
    approved by High Court of Bombay w.e.f 1st April 2009, being the appointed date.
    Consequently, the SBI’s stake in SBI Global Factors Ltd. has reduced from a 92.85%
    holding (pre-merger) to 83.43% holding (post-merger).

    F-203
    b. Nepal SBI Bank Ltd, an associate of SBI has become its subsidiary w.e.f 14.06.2009
    as SBI has acquired 5% additional stake from Agricultural Development Bank
    Limited, Nepal (ADBL). Consequent upon this change SBI’s stake is increased to
    55.02%.

    c. UTI Asset Management Company Pvt Ltd is considered as an associate of SBI for the
    period 01.04.2009 to 19.01.2010 as SBI has divested its 6.50% stake (out of 25%) on
    20.01.2010.

    d. SBI has acquired 13.84% stake in SBI Capital Markets Limited from Asian
    Development Bank (ADB). Thus SBI Capital Markets Limited and all its subsidiaries
    (SBICAP Securities Ltd, SBICAP Trustee Company Ltd, SBICAPS Ventures Ltd,
    SBICAP (UK) Ltd) have become wholly owned subsidiaries of SBI.

    e. The name of PT Bank IndoMonex, a subsidiary of SBI has been changed to PT Bank
    SBI Indonesia w.e.f. 6th May 2009.

    f. The Board of SBI has approved a proposal to acquire 4.69% stake in SBI DFHI Ltd
    from Asian Development Bank (ADB). However the deal was completed on 5th April
    2010.

    g. A wholly owned subsidiary, SBI Payment Services Pvt. Ltd was incorporated for
    carrying on merchant acquiring business. However the company has not commenced
    business till 31.03.2010.

    h. The winding up petition of SBI Home Finance Ltd., an associate of the bank, was filed
    with the Kolkata High Court on 23rd September 2008. The Hon’ble Court has passed
    an order on 31st March 2009 giving direction for winding up of the company.

    i. Pursuant to a scheme of Amalgamation approved by the Central Board at its meeting


    on 19th June 2009, State Bank of Indore, where SBI holds 98.05% stake, is to be
    merged with the Bank. The Government of India has accorded sanction to the Bank for
    entering into negotiations for acquiring the business, including assets and liabilities
    of State Bank of Indore.

    1.3 Bank of Bhutan Ltd, an associate of SBI follows accounting year (Gregorian Calendar Year)
    different from that of the parent. Accordingly, the financial statements of the associate are
    made as of 31st December 2009.

    2. Share Capital:

    2.1 During the year, SBI has allotted 2,422 equity shares of Rs. 10 each for cash at a premium
    of Rs. 1,580 per equity share aggregating to Rs. 3,850,980 out of 88,278 shares kept in
    abeyance under Right Issue — 2008. Out of the total subscription of Rs. 3,850,980
    received, Rs. 24,220 was transferred to Share Capital Account and Rs. 3,826,760 was
    transferred to Share Premium Account.

    2.2 SBI has kept in abeyance the allotment of 85,856 (Previous Year 88,278) Equity Shares of
    Rs. 10/- each issued as a part of Rights issue, since they are subject to title disputes or are
    subjudice.

    F-204
    3. Disclosures as per Accounting Standards:

    3.1 Change in Accounting Policy:

    SBI has implemented a special home loan scheme for the period December 2008 to June
    2009, arising out of which one time insurance premium has been paid covering the lives of
    the borrowers over the tenure of the home loan availed. The total insurance premium paid
    amounting to Rs. 151.37 crores on account of such scheme is charged off over average loan
    period of 15 years and accordingly, 1/15th of the premium amount has been charged off
    during the year.

    Consequent to this change, the profit after tax of SBI has gone up by Rs. 93.26 crores.

    3.2 Employees Benefits:

    3.2.1 Defined Benefit Plans

    The following table sets out the status of the defined benefit Pension Plan and Gratuity
    Plan as required under AS 15 (Revised 2005):

    Particulars Pension Plans Gratuity

    CY PY CY PY
    Change in the present value of the defined
    benefit obligation
    Opening defined benefit obligation at
    1st April 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,008.71 21,387.50 5,068.06 4,887.04
    Current Service Cost . . . . . . . . . . . . . . . . . . . . . . . 1,087.38 1,135.57 225.74 223.69
    Interest Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,922.46 1,684.31 399.12 380.67
    Actuarial losses (gains) . . . . . . . . . . . . . . . . . . . . . 1,537.30 1,073.85 (134.19) (138.88)
    Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,540.20) (1,272.52) (305.19) (284.46)
    Closing defined benefit obligation at
    31st March 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . 27,015.65 24,008.71 5,253.54 5,068.06
    Change in Plan Assets
    Opening fair value of plan assets at
    1st April 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,366.99 16,666.34 4,880.36 4,739.10
    Expected Return on Plan assets . . . . . . . . . . . . . . . 1,415.60 1,232.78 383.87 367.64
    Contributions by employer . . . . . . . . . . . . . . . . . . 1,650.48 508.58 130.28 41.39
    Benefit Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,540.20) (1,272.52) (305.19) (284.46)
    Actuarial Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . 454.26 231.81 37.45 16.69
    Closing fair value of plan assets at
    31st March 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . 19,347.13 17,366.99 5,126.77 4,880.36
    Reconciliation of present value of the
    obligation and fair value of the plan assets
    Present Value of Funded obligation at
    31st March 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . 27,015.65 24,008.71 5,253.54 5,068.06
    Fair Value of Plan assets at 31st March 2010 . . . . 19,347.13 17,366.99 5,126.77 4,880.36
    Deficit/(Surplus) . . . . . . . . . . . . . . . . . . . . . . . . . . 7,668.52 6,641.72 126.77 187.70
    Unrecognised Past Service Cost . . . . . . . . . . . . . . Nil Nil Nil Nil
    Net Liability/(Asset ) . . . . . . . . . . . . . . . . . . . . . . 7,668.52 6,641.72 126.77 187.70
    Amount Recognised in the Balance Sheet
    Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,015.65 24,008.71 5,253.54 5,068.06
    Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,347.13 17,366.99 5,126.77 4,880.36
    Net Liability/(Asset) recognised in Balance Sheet . 7,668.52 6,641.72 126.77 187.70

    F-205
    Particulars Pension Plans Gratuity

    CY PY CY PY
    Net Cost recognised in the profit and loss
    account
    Current Service Cost . . . . . . . . . . . . . . . . . . . . . . . 1,087.38 1,135.57 225.74 223.69
    Interest Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,922.46 1,684.31 399.12 380.67
    Expected return on plan assets . . . . . . . . . . . . . . . (1,415.60) (1,232.78) (383.87) (367.64)
    Net actuarial losses (Gain) recognised during the
    year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,083.04 842.04 (171.64) (155.57)
    Total costs of defined benefit plans included in
    Schedule 16 “Payments to and provisions for
    employees” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,677.28 2,429.14 69.35 81.15
    Reconciliation of expected return and actual
    return on Plan Assets
    Expected Return on Plan Assets . . . . . . . . . . . . . . 1,415.60 1,232.78 383.87 367.64
    Actuarial Gain/(loss) on Plan Assets . . . . . . . . . . . 454.26 231.81 37.45 16.69
    Actual Return on Plan Assets . . . . . . . . . . . . . . . . 1,869.86 1,464.59 421.32 384.33
    Reconciliation of opening and closing net
    liability/(asset) recognised in Balance Sheet
    Opening Net Liability as at 1st April 2009 . . . . . . 6,641.72 4,721.16 187.70 147.94
    Expenses as recognised in profit and loss account . 2,677.28 2,429.14 69.35 81.15
    Employers Contribution . . . . . . . . . . . . . . . . . . . . . 1,650.48 508.58 130.28 41.39
    Net liability/(Asset) recognised in Balance Sheet . 7,668.52 6,641.72 126.77 187.70

    Investments under Plan Assets of Gratuity Fund & Pension Fund as on 31st March
    2010 are as follows:

    Pension Fund Gratuity Fund

    Category of Assets % of Plan Assets % of Plan Assets

    Central Govt. Securities . . . . . . . . . . . . . . . . . . . . 21.50% 44.33%


    State Govt. Securities . . . . . . . . . . . . . . . . . . . . . 4.47% 3.69%
    Public Sector Bonds. . . . . . . . . . . . . . . . . . . . . . . 4.55% 3.66%
    FDR/TDR with Bank . . . . . . . . . . . . . . . . . . . . . . 4.88% 2.91%
    Bank Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.29% 4.32%
    Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.31% 41.09%
    Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.00% 100.00%

    Principal actuarial assumptions;

    Pension and Gratuity Plans

    Particulars Current year Previous year

    Discount Rate . . . . . . . . . . . . . . . . . . . . . . . 7% to 8.50% 7.25% to 7.75%


    Expected Rate of return on Plan Asset . . . . . 7.50% to 8% 7.50% to 8%
    Salary Escalation . . . . . . . . . . . . . . . . . . . . . 4% to 15% 5% to 13%

    F-206
    The estimates of future salary growth, factored in actuarial valuation, take account of
    inflation, seniority, promotion and other relevant factors such as supply and demand
    in the employment market. Such estimates are very long term and are not based on
    limited past experience/immediate future. Empirical evidence also suggests that in the
    very long term, consistent high salary growth rates are not possible. The auditors have
    relied upon the representation made by the Bank in this behalf.

    3.2.2 Employees Provident Fund

    In terms of the guidance on implementing the AS-15 (Revised 2005) “Employees


    Benefits” issued by the ICAI, the Employees Provident Fund set up by the Bank is
    treated as a defined benefit plan since the Bank has to meet the specified minimum
    rate of return. As at the year end, no shortfall remains unprovided for. Accordingly,
    other related disclosures in respect of Provident Fund have not been made and an
    amount of Rs. 420.19 Crore (Previous Year Rs. 394.59 Crore) is recognised as an
    expense towards the Provident Fund scheme of the group included under the head
    “Payments to and provisions for employees” in Profit and Loss Account.

    3.2.3 Other Long Term Employee Benefits

    Amount of Rs. 233.54 Crore (Previous Year Rs. 68.04 Crore) is recognised as an
    expense towards Long term Employee Benefits included under the head “Payments to
    and provisions for employees” in Profit and Loss account.

    Details of Provisions made for various long Term Employees’ Benefits during the
    year;

    Sl. No. Long Term Employees’ Benefits Current Year Previous Year

    1 Privilege Leave (Encashment) incl. leave


    encashment at the time of retirement. . . . . . . . . 162.78 35.21
    2 Leave Travel and Home Travel Concession
    (Encashment/Availment) . . . . . . . . . . . . . . . . . . 39.48 15.52
    3 Sick Leave . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.22 (3.80)
    4 Silver Jubilee Award . . . . . . . . . . . . . . . . . . . . . 3.38 (4.23)
    5 Resettlement Expenses on Superannuation . . . . . (6.95) 4.18
    6 Casual Leave . . . . . . . . . . . . . . . . . . . . . . . . . . 5.65 5.74
    7 Retirement Award . . . . . . . . . . . . . . . . . . . . . . . 5.98 15.42
    Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233.54 68.04

    3.3 Segment Reporting (As complied by management and relied upon by the auditors)

    3.3.1 Segment Identification

    A) Primary (Business Segment)

    The following are the Primary Segments of the Group:

    — Treasury

    — Corporate/Wholesale Banking

    — Retail Banking

    — Other Banking Business

    F-207
    The present accounting and information system of the Bank does not support
    capturing and extraction of the data in respect of the above segments separately.
    However, based on the present internal organisational and management reporting
    structure and the nature of their risk and returns, the data on the Primary
    Segments have been computed as under:

    a) Treasury: The Treasury Segment includes the entire investment portfolio


    and trading in foreign exchange contracts and derivative contracts. The
    revenue of the treasury segment primarily consists of fees and gains or
    losses from trading operations and interest income on the investment
    portfolio.

    b) Corporate/Wholesale Banking: The Corporate/Wholesale Banking


    segment comprises the lending activities of Corporate Accounts Group,
    Mid Corporate Accounts Group and Stressed Assets Management Group.
    These include providing loans and transaction services to corporate and
    institutional clients and further include non treasury operations of foreign
    offices.

    c) Retail Banking: The Retail Banking Segment comprises of branches in


    National Banking Group, which primarily includes personal Banking
    activities including lending activities to corporate customers having
    Banking relations with branches in the National Banking Group. This
    segment also includes agency business and ATM’s

    d) Other Banking business — Segments not classified under (a) to (c) above
    are classified under this primary segment. This segment also includes the
    operations of all the Non-Banking Subsidiaries/Joint Ventures of the group.

    In the case of Banking Subsidiaries who do not have the management reporting
    structure corresponding to the parent, all the exposures in excess of Rs. 5 Crore
    have been segregated and included in Corporate/Wholesale Banking.

    B) Secondary (Geographical Segment):

    i) Domestic operations comprise branches and subsidiaries having operations


    in India.

    ii) Foreign operations comprise branches and subsidiaries having operations


    outside India and offshore banking units having operations in India.

    C) Allocation of Expenses, Assets and Liabilities

    Expenses of parent incurred at Corporate Centre establishments directly


    attributable either to Corporate/Wholesale and Retail Banking Operations or to
    Treasury Operations segment, are allocated accordingly. Expenses not directly
    attributable are allocated on the basis of the ratio of number of employees in
    each segment/ratio of directly attributable expenses.

    3.3.2 The accounting policies adopted for segment reporting are in line with the accounting
    policies adopted in the parent’s financial statements with the following additional
    features:

    1) Pricing of inter-segment transactions between the Non Banking Operations


    segment and other segments are market led. In respect of transactions between
    treasury and other banking business, compensation for the use of funds is
    reckoned based on interest and other costs incurred by the lending segment.

    F-208
    2) Revenue and expenses have been identified to segments based on their
    relationship to the operating activities of the segment.

    3) Revenue and expenses, which relate to the enterprise as a whole and are not
    allocable to segments on a reasonable basis, have been included under
    “Unallocated Expenses”.

    3.3.3 Disclosure under segment reporting

    Part A: Primary Segments:

    Corporate/ Other
    Treasury Wholesale Retail Banking
    Operations Banking Banking Operations Elimination TOTAL

    Revenue . . . . . . . . . . . . . . . . 28,434.51 39,843.20 50,310.11 18,522.63 (3,361.01) 133,749.44


    (22,556.93) (35,007.51) (52,224.58) (7,758.79) (-4,462.57) (1,13,085.24)

    Result . . . . . . . . . . . . . . . . . 4,408.86 7,762.42 9,021.20 196.03 — 21,388.51


    (3,287.16) (7,780.35) (10,087.52) (343.96) (—) (21,498.99)

    Unallocated (Income) . . . . . . . . — — — — — 102.39


    (—) (—) (—) (—) (—) (7.85)

    Unallocated (Expenses) . . . . . . . — — — — — 2,808.87


    (—) (—) (—) (—) (—) (-3,612.00)

    Operating Profit (PBT) . . . . . . . — — — — — 18,682.03


    (—) (—) (—) (—) (—) (17,894.84)

    Taxes . . . . . . . . . . . . . . . . . . — — — — — 6,668.38
    (—) (—) (—) (—) (—) (6,721.77)

    Extraordinary Profit/Loss . . . . . . — — — — — —
    (—) (—) (—) (—) (—) (—)

    Net Profit . . . . . . . . . . . . . . . — — — — — 12,013.65


    (—) (—) (—) (—) (—) (11,173.07)

    Other Information:
    Segment Assets . . . . . . . . . . . . 4,20,007.04 4,49,429.89 5,35,117.22 36,405.72 — 14,40,959.87
    (4,18,116.72) (3,88,376.65) (4,73,650.13) (25,393.18) (-8,907.13) (12,96,629.55)

    Unallocated Assets . . . . . . . . . . — — — — — 9,184.10


    (—) (—) (—) (—) (—) (8,196.19)

    Total Assets . . . . . . . . . . . . . . — — — — — 14,50,143.97


    (—) (—) (—) (—) (—) (13,04,825.74)

    Segment Liabilities . . . . . . . . . 1,81,831.11 4,40,814.86 6,64,634.16 31,538.72 — 13,18,818.85


    (2,11,439.13) (3,72,216.04) (5,90,989.82) (21,864.52) (-8,907.13) (11,87,602.38)

    Unallocated Liabilities . . . . . . . — — — — — 48,189.54


    (—) (—) (—) (—) (—) (44,832.97)

    Total Liabilities . . . . . . . . . . . — — — — — 13,67,008.39


    (—) (—) (—) (—) (—) (12,32,435.35)

    F-209
    Part B: Secondary Segments

    Domestic Foreign
    Particulars Total Operations Operations

    Revenue . . . . . . . . . . . . . . . . . . . . . . . 128,347.46 5,504.37 133,851.83


    (107,536.61) (5,556.48) (113,093.09)
    Assets . . . . . . . . . . . . . . . . . . . . . . . . 1,311,718.84 138,425.13 1,450,143.97
    (1,185,292.32) (119,533.42) (1,304,825.74)

    i) Income/Expenses are for the whole year. Assets/Liabilities are as at 31st March 2010.

    ii) Figures within brackets are for previous year.

    3.4 Related Party Disclosures: As identified and compiled by the management and relied
    upon by the auditors

    3.4.1 Related Parties to the Group:

    A) Joint Ventures:

    1. GE Capital Business Process Management Services Private Limited.


    2. C Edge Technologies Ltd.
    3. SBI Macquarie Infrastructure Management Pvt. Ltd.
    4. SBI Macquarie Infrastructure Trustee Pvt. Ltd.
    5. Macquarie SBI Infrastructure Management Pte. Ltd.
    6. Macquarie SBI Infrastructure Trustee Ltd.

    B) Associates:

    i) Regional Rural Banks

    1. Andhra Pradesh Grameena Vikas Bank


    2. Arunachal Pradesh Rural Bank
    3. Cauvery Kalpatharu Grameena Bank
    4. Chhatisgarh Gramin Bank
    5. Deccan Grameena Bank
    6. Ellaquai Dehati Bank
    7. Meghalaya Rural Bank
    8. Krishna Grameena Bank
    9. Langpi Dehangi Rural Bank
    10. Madhya Bharat Gramin Bank
    11. Malwa Gramin Bank
    12. Marwar Ganganagar Bikaner Bank
    13. Mizoram Rural Bank
    14. Nagaland Rural Bank
    15. Parvatiya Gramin Bank
    16. Purvanchal Kshetriya Gramin Bank
    17. Samastipur Kshetriya Gramin Bank
    18. Saurashtra Grameena Bank
    19. Utkal Gramya Bank
    20. Uttaranchal Gramin Bank
    21. Vananchal Gramin Bank
    22. Vidisha Bhopal Kshetriya Gramin Bank

    F-210
    ii) Others

    23. The Clearing Corporation of India Ltd


    24. Nepal SBI Bank Ltd. (up to 13.06.2009)
    25. Bank of Bhutan Ltd
    26. UTI Asset Management Company Pvt. Ltd (up to 19.01.2010).
    27. S. S. Ventures Services Pvt Ltd
    28. SBI Home Finance Ltd

    C) Key Management Personnel of the Bank:

    1. Shri O. P. Bhatt, Chairman


    2. Shri S. K. Bhattacharyya, Managing Director
    3. Shri R. Sridharan, Managing Director

    3.4.2 Related Parties with whom transactions were entered into during the year:

    No disclosure is required in respect of transactions with related parties which are


    “state controlled enterprises” as per paragraph 9 of Accounting Standard (AS) 18.
    Further, in terms of paragraph 5 of AS 18, transactions in the nature of
    banker-customer relationship are not required to be disclosed in respect of Key
    Management Personnel. Other particulars are:

    1. C Edge Technologies Ltd.


    2. GE Capital Business Process Management Services Pvt. Ltd.
    3. SBI Macquarie Infrastructure Management Pvt. Ltd.
    4. SBI Macquarie Infrastructure Trustee Pvt. Ltd.
    5. Macquarie SBI Infrastructure Management Pte. Ltd.
    6. Macquarie SBI Infrastructure Trustee Ltd.
    7. Bank of Bhutan Ltd
    8. Nepal SBI Bank Ltd. (up to 13.06.2009)
    9. S. S. Ventures Services Ltd
    10. SBI Home Finance Ltd
    11. Shri O. P. Bhatt, Chairman
    12. Shri S. K. Bhattacharyya, Managing Director
    13. Shri R.Sridharan, Managing Director

    F-211
    3.4.3 Transactions/Balances:

    Key
    Associates/ Management
    Items Joint Ventures Personnel @ Total

    Deposit # . . . . . . . . . . . . . . . . . . . . . . . . . 112.99 — 112.99


    (92.58) (—) (92.58)
    Other Liability # . . . . . . . . . . . . . . . . . . . 21.94 — 21.94
    (50.39) (—) (50.39)
    Investments # . . . . . . . . . . . . . . . . . . . . . 26.94 — 26.94
    (21.80) (—) (21.80)
    Other Assets # . . . . . . . . . . . . . . . . . . . . . — — —
    (—) (—) (—)
    Interest paid $ . . . . . . . . . . . . . . . . . . . . . 4.00 — 4.00
    (2.71) (—) (2.71)
    Interest received $ . . . . . . . . . . . . . . . . . . — — —
    (—) (—) (—)
    Income earned by way of Dividend $ . . . 5.96 — 5.96
    (1.89) (—) (1.89)
    Rendering of services $ . . . . . . . . . . . . . . 0.05 — 0.05
    (2.61) (—) (2.61)
    Receiving of services $ . . . . . . . . . . . . . . 144.48 — 144.48
    (150.43) (—) (150.43)
    Management Contract $ . . . . . . . . . . . . . . 146.83 0.63 147.46
    (—) (0.38) (0.38)

    (Figures in brackets pertain to previous year)

    # Balances as at 31st March


    $ Transactions for the year
    @ Transactions which are not in the nature of banker-customer relationship.

    3.5 Leases:

    Finance Leases

    Assets given on Financial Leases on or after 1st April 2001: The details of financial
    leases are given below.

    Current Year Previous Year

    Total gross investment in the leases . . . . . . . . . . . . . . . — 37.09


    Present value of minimum lease payments receivable
    Less than 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 6.48
    1 to 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —
    5 years and above . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —
    Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 6.48
    Present value of unearned finance income . . . . . . . . . . — 0.28

    F-212
    Operating Lease*

    A. Office Premises/Staff Quarters taken on Operating Lease as on 31st March 2010

    (Rs. in Crore)

    i. Minimum Lease Rent Payable


    a. Payable not later than 1 year i.e. 2010-11 . . . . . . . . . . . . 73.67
    b. Payable later than 1 year and not later than
    5 years i.e. 2011-12 to 2014-15 . . . . . . . . . . . . . . . . . . . . 170.38
    c. Payable later than 5 years i.e. after 2014-15 . . . . . . . . . . 51.12
    ii. Amount of lease charges debited to charges account during
    the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78.25
    iii. The lease agreements provide for an option to the group to renew the lease period
    at the end of non-cancellable period. There are no exceptional/restrictive
    covenants in the lease agreements.

    B. Premises given on Operating Leases as on 31st March 2010

    (Rs. in Crore)

    i. Minimum Lease Rental Receivable


    a. Receivable not later than 1 year i.e. 2010-11 . . . . . . . . . . Nil
    b. Receivable later than 1 year and not later than 5 years
    i.e. 2011-12 to 2014-15 . . . . . . . . . . . . . . . . . . . . . . . . . . 0.20
    c. Receivable later than 5 years i.e. after 2014-15 . . . . . . . . Nil
    Accumulated
    Depreciation
    as on Depreciation
    Original Cost 31.03.2010 for the year

    ii. Particulars
    Premises given on lease . . . . . . . . . . 0.54 0.20 0.04

    iii. No contingent rents have been recognised in the Profit & Loss Account.

    * In respect of Non-Cancellable lease only.

    3.6 Earnings per Share:

    The Bank reports basic and diluted earnings per equity share in accordance with Accounting
    Standard 20 - “Earnings per Share”. “Basic earnings” per share is computed by dividing
    consolidated net profit after tax by the weighted average number of equity shares
    outstanding during the year.

    Particulars Current Year Previous Year

    Basic and diluted Weighted average no of equity


    shares used in computing basic earning per share .... 634,880,626 634,413,120
    Weighted average number of shares used in
    computing diluted earning per share. . . . . . . . . . . . . . . 634,880,626 634,413,120
    Net profit (Other than minority) (in Crore) . . . . . . . . . 11,733.83 10,955.29
    Basic earnings per share (Rs.) . . . . . . . . . . . . . . . . . . . 184.82 172.68
    Diluted earnings per share (Rs.) . . . . . . . . . . . . . . . . . . 184.82 172.68
    Nominal value per share (Rs.) . . . . . . . . . . . . . . . . . . . 10.00 10.00

    F-213
    3.7 Accounting for taxes on Income

    i) During the year, Rs. 1,315.71 Crore [Previous Year Rs. 1,075.97 Crore] has been
    credited to Profit and Loss Account by way of adjustment of deferred tax.

    ii) The break up of deferred tax assets and liabilities into major items is given below:

    As at As at
    Particulars 31st March 2010 31st March 2009

    Deferred Tax Assets


    Provision for non performing assets . . . . . . . . . . . . . . . 310.73 454.78
    Ex-gratia paid under Exit option . . . . . . . . . . . . . . . . . 52.57 100.21
    Wage Revision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,837.31 769.19
    Provision for Gratuity, Leave, Pension etc. . . . . . . . . . 1,462.44 1,214.24
    Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 846.56 461.39
    Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,509.61 2,999.81

    Deferred Tax Liabilities


    Depreciation on Fixed Assets . . . . . . . . . . . . . . . . . . . . 32.46 119.62
    Interest on securities . . . . . . . . . . . . . . . . . . . . . . . . . . 611.65 595.42
    OTHERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 431.92 276.76
    Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,076.03 991.80
    Net Deferred Tax Assets/(Liabilities) . . . . . . . . . . . . . 3,433.58 2,008.01

    3.8 Investments in jointly controlled entities:

    As required by AS 27, the aggregate amount of the assets, liabilities, income and expenses
    related to the group’s interests in jointly controlled entities are disclosed as under:

    As at As at
    Particulars 31st March 2010 31st March 2009

    Liabilities
    Capital & Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . 81.49 70.34
    Deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —
    Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.40 0.26
    Other Liabilities & Provisions . . . . . . . . . . . . . . . . . . . 62.92 28.65
    TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144.81 99.25
    Assets
    Cash and balances with Reserve Bank of India . . . . . . 0.05 0.01
    Balances with Banks and Money at call and
    short notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.77 21.44
    Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.62 3.52
    Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —
    Fixed Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.50 11.20
    Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102.87 63.08
    TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144.81 99.25
    Capital Commitments . . . . . .................... Nil Nil
    Other Contingent Liabilities .................... 0.04 Nil
    Income
    Interest earned . . . . . . . . . . .................... 3.60 —
    Other income . . . . . . . . . . . . .................... 78.49 51.47
    Total . . . . . . . . . . . . . . . . . . .................... 82.09 51.47
    Expenditure
    Interest expended . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —
    Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 68.77 41.31
    Provisions & contingencies . . . . . . . . . . . . . . . . . . . . . 6.28 4.23
    Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75.05 45.54
    Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.04 5.93

    F-214
    3.9 Impairment of assets:

    In the opinion of the Bank’s Management, there is no impairment to the assets to which
    Accounting Standard 28 — “Impairment of Assets” applies.

    3.10 Provisions, Contingent Liabilities & Contingent Assets

    a) Break up of provisions:

    Current Year Previous Year

    a) Provision for Income Tax (current tax). . . . . . . . . 7,980.75 7,598.23


    b) Provision for Income Tax (deferred tax asset) . . . (1,315.71) (1,075.97)
    c) Fringe Benefit Tax . . . . . . . . . . . . . . . . . . . . . . . . — 174.64
    d) Provision for other taxes . . . . . . . . . . . . . . . . . . . 3.34 24.87
    e) Amount of provision made against NPAs
    (including write back of provision) . . . . . . . . . . . 6,228.77 3,616.30
    f) General provision on Standard Assets in the
    global loan portfolio . . . . . . . . . . . . . . . . . . . . . . 152.67 304.83
    g) Depreciation in the value of Investments in India
    and Outside India . . . . . . . . . . . . . . . . . . . . . . . . . (1,355.10) 1,352.77
    h) Others (Net of write-backs) . . . . . . . . . . . . . . . . . 1,090.57 726.17
    Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,785.29 12,721.84

    (Figures in brackets indicate credit)

    b) Floating provisions:

    Current Year Previous Year

    a) Opening Balance . . . . . . . . . . . . . . . . . . . . . . . . . 514.64 685.04


    b) Addition during the year . . . . . . . . . . . . . . . . . . . 163.42 155.60
    c) Draw down during the year . . . . . . . . . . . . . . . . . 32.89 326.00
    d) Closing balance . . . . . . . . . . . . . . . . . . . . . . . . . . 645.17 514.64

    F-215
    c) Description of contingent liabilities and contingent assets:

    Sr. No Items Brief Description

    1 Claims against the Group The parent and its constituents are parties to various
    not acknowledged as debts proceedings in the normal course of business. It does
    not expect the outcome of these proceedings to have
    a material adverse effect on the Group’s financial
    conditions, results of operations or cash flows.

    2 Liability on account of The Group enters into foreign exchange contracts,


    outstanding forward currency options, forward rate agreements, currency
    exchange contracts swaps and interest rate swaps with inter-bank
    participants 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
    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 that are recorded as contingent
    liabilities, are typically amounts used as a benchmark
    for the calculation of the interest component of the
    contracts.

    3 Guarantees given on behalf As a part of its commercial banking activities, the


    of constituents, acceptances, Group issues documentary credits and guarantees on
    endorsements and other behalf of its customers. Documentary credits enhance
    obligations the credit standing of the customers of the Group.
    Guarantees generally represent irrevocable
    assurances that the Bank will make payment in the
    event of the customer failing to fulfil its financial or
    performance obligations.

    4 Other items for which the The Group is a party to various taxation matters in
    Group is contingently liable respect of which appeals are pending. These are being
    contested by the Group and not provided for. Further
    the Group has made commitments to subscribe to
    shares in the normal course of business.

    d) The contingent liabilities mentioned above are dependent upon the outcome of
    court/arbitration/out of court settlements, disposal of appeals, the amount being called
    up, terms of contractual obligations, devolvement and raising of demand by concerned
    parties, as the case may be.

    e) Movement of provisions against contingent liabilities:

    Current Year Previous Year

    a) Opening Balance. . . . . . . . . . . . . . . . . . . . . 303.95 238.34


    b) Addition during the year . . . . . . . . . . . . . . . 215.30 108.14
    c) Draw down during the year . . . . . . . . . . . . . 25.99 42.53
    d) Closing balance . . . . . . . . . . . . . . . . . . . . . 493.26 303.95

    F-216
    4. Pending Wage Agreement: The Eighth Bipartite Settlement entered into by the Indian Banks’
    Association on behalf of the member Banks with the All India Unions of Workmen expired on
    31st October 2007. The New Agreement has been executed on 27th April, 2010 to be effective
    from 1st November, 2007 for workers as well as for officers. Pending receipt of detailed Circular
    from IBA regarding revisions after due approval from the Central Government and detailed
    computations to be carried out by the Bank, a provision of Rs.3076.29 Crore has been made
    during the year (Rs. 2,372.54 Crore up to 31.03.2009). The total provision held on account of
    wage revision as on 31st March, 2010 is Rs. 5,448.83 Crore.

    5. Agricultural Debt Waiver and Debt Relief Scheme 2008

    As per the Agricultural Debt Waiver and Debt Relief Scheme 2008, the amount receivable from
    the Central Government on account of debt waiver being Rs. 5,963.44 Crore (net of receipt) and
    on account of debt relief being Rs. 1,537.04 Crore (net of receipt) are treated as part of advances
    in accordance with the scheme read with Circular issued by RBI.

    6. In accordance with RBI circular DBOD NO.BP.BC.42/21.01.02/2007-08 redeemable preference


    shares are treated as liabilities and the coupon payable thereon is treated as interest.

    7. Additional statutory information disclosed in separate financial statements of the parent and the
    subsidiaries having no bearing on the true and fair view of the consolidated financial statements
    and also the information pertaining to the items which are not material have not been disclosed
    in the consolidated financial statements in view of the general clarifications issued by ICAI.

    8. Previous year’s figures have been regrouped and reclassified, wherever necessary and
    determinable, to make them comparable with current year ’s figures. In cases where disclosures
    have been made for first time in terms of RBI guidelines/Accounting Standards, previous year
    figures have not been mentioned.

    F-217
    PRINCIPAL ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (CONSOLIDATED)
    FOR THE YEAR ENDED 31ST MARCH 2009

    SCHEDULE 17

    PRINCIPAL ACCOUNTING POLICIES:

    A. BASIS OF PREPARATION:

    The accompanying financial statements have been prepared under the historical cost convention
    as modified for derivatives and foreign currency transactions, as enumerated in Part C below.
    They conform to Generally Accepted Accounting Principles (GAAP) in India, which comprise of
    statutory provisions, guidelines of regulatory authorities, Reserve Bank of India (RBI),
    Insurance Regulatory and Development Authority, Companies Act, 1956, Accounting Standards
    (AS)/guidance notes issued by the Institute of Chartered Accountants of India (ICAI), and the
    prevalent accounting practices in India.

    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 the accounting estimates is recognised prospectively in the current and future
    periods.

    B. BASIS OF CONSOLIDATION:

    Consolidated financial statements of the Group (comprising of 29 subsidiaries, 2 Joint Ventures


    and 28 Associates) have been prepared on the basis of:

    a. Audited accounts of State Bank of India (Parent).

    b. Line by line aggregation of each item of asset/liability/income/expense of the subsidiaries


    with the respective item of the Parent, and after eliminating all material intra-group
    balances/transactions, unrealised profit/loss, and making necessary adjustments wherever
    required for non-uniform accounting policies as per Accounting Standard 21 issued by the
    Institute of Chartered Accountants of India (ICAI).

    c. Consolidation of Joint Ventures — ‘Proportionate Consolidation’ as per AS 27 of ICAI.

    d. Accounting for investment in ‘Associates’ under the ‘Equity Method’ as per the AS 23 of
    ICAI.

    The difference between cost to the group of its investment in the subsidiary entities and the
    group’s portion of the equity of the subsidiaries is recognised in the financial statements as
    goodwill / capital reserve.

    Minority interest in the net assets of the consolidated subsidiaries consists of:

    a. The amount of equity attributable to the minority at the date on which investment in a
    subsidiary is made, and

    b. The minority share of movements in revenue reserves/loss (equity) since the date the
    parent-subsidiary relationship came into existence.

    F-218
    C. PRINCIPAL ACCOUNTING POLICIES

    1. Revenue recognition

    1.1 Income and expenditure are accounted on accrual basis, except otherwise stated below. In
    respect of foreign entities, income is recognised as per the local laws of the country in
    which the respective foreign entities are located.

    1.2 Interest income is recognised in the Profit and Loss Account as it accrues except (i) income
    from non-performing assets (NPAs), comprising of advances, leases and investments, which
    is recognised upon realisation, as per the prudential norms prescribed by the RBI/
    respective country regulators (hereafter collectively referred to as Regulatory Authorities),
    (ii) interest on application money on investments (iii) overdue interest on investments and
    bills discounted, (iv) Income on Rupee Derivatives designated as “Trading”.

    1.3 Profit / Loss on sale of investments is credited / debited to “Profit / Loss on Sale of
    Investments” and thereafter in respect of profit on sale of investments in the Held to
    Maturity category is appropriated (net of applicable taxes) to Capital Reserve.

    1.4 Income from finance leases is calculated by applying the interest rate implicit in the lease
    to the net investment outstanding on the lease, over the primary lease period. Leases
    effective from April 1, 2001 are accounted as advances at an amount equal to the net
    investment in the lease. The lease rentals are apportioned between principal and finance
    income based on a pattern reflecting a constant periodic return on the net investment
    outstanding in respect of finance leases. The principal amount is utilized for reduction in
    balance of net investment in lease and finance income is reported as interest income.

    1.5 Income (other than interest) on investments in “Held to Maturity” (HTM) category acquired
    at a discount to the face value, is recognised as follows:

    i. On Interest bearing securities, it is recognised only at the time of sale/ redemption.

    ii. On zero-coupon securities, it is accounted for over the balance tenor of the security
    on a constant yield basis.

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

    1.7 All other commission and fee incomes are recognised on their realisation except for (i)
    Guarantee commission on deferred payment guarantees, which is spread over the period of
    the guarantee and (ii) Commission on Government Business, which is recognised as it
    accrues.

    1.8 Non-banking entities

    Merchant Banking:

    a. Issue management and advisory fees are recognised as per the terms of agreement with
    the client.

    b. Fees for private placement are recognised on completion of assignment.

    c. Underwriting commission relating to public issues is accounted for on finalisation of


    allotment of the public issue.

    d. Brokerage income relating to public issues/mutual fund/other securities is accounted


    for based on mobilisation and intimation received from clients/intermediaries.

    F-219
    e. Brokerage income in relation to stock broking activity is recognized on the trade date
    of transactions and includes stamp duty and transaction charges.

    Asset Management:

    a. Management fee is recognised at specific rates agreed with the relevant schemes,
    applied on the average daily net assets of each scheme (excluding inter-scheme
    investments, where applicable, and investments made by the company in the
    respective scheme) and are in conformity with the limits specified under SEBI
    (Mutual Funds) Regulations, 1996.

    b. Portfolio Advisory Service income is recognised on accrual basis as per the terms of
    the contract.

    c. Recovery from guaranteed schemes of deficit earlier recognised as expense is


    recognised as income in the year of receipt.

    d. Scheme Expenses: Expenses of schemes in excess of the stipulated rates are charged
    to the Profit and Loss Account.

    e. Recovery, if any, on realisation of devolved investments of schemes acquired by the


    company in terms of right of subrogation is accounted on the basis of receipts.

    Credit Card Operations:

    a. Joining membership fee and first annual fee have been recognised over a period of one
    year as they more closely reflects the period to which the fee relate to.

    b. Interchange income is recognised on accrual basis.

    c. All other service fees are recorded at the time of occurrence of the respective
    transaction.

    Factoring:

    Factoring service charges are accounted on accrual basis except in the case of
    non-performing assets, where income is accounted on realisation. Processing charges are
    accrued upon acceptance of sanction of the factoring /financing limits by the Company.

    Life Insurance:

    a. Premium (net of service tax) is recognized as income when due from policyholders.
    Uncollected premium from lapsed policies is not recognised as income until such
    policies are revived. In respect of linked business, premium income is recognised
    when the associated units are allotted.

    b. Premium ceded on reinsurance is accounted in accordance with the terms of the treaty
    or in-principle arrangement with the Re-Insurer.

    c. Claims by death are accounted when intimated. Intimations upto the end of the year
    are considered for accounting of such claims. Claims by maturity are accounted on the
    policy maturity date. Annuity benefits are accounted when due. Surrenders are
    accounted as and when notified. Claims cost consist of the policy benefit amounts and
    claims settlement costs, where applicable. Amounts recoverable from re-insurers are
    accounted for in the same period as the related claims and are reduced from claims.

    F-220
    d. Acquisition costs such as commission; medical fees etc. are costs that are primarily
    related to the acquisition of new and renewal insurance contracts and are expensed as
    and when incurred.

    e. Liability for life policies: The actuarial liability of all the life insurance policies has
    been calculated by the appointed actuary as per the guidelines prescribed by the
    Institute of Actuaries of India.

    Pension Fund Operation:

    a. Management fees is recognized at specified rates agreed with the relevant schemes
    calculated as per the Investment Management Agreement (IMA) entered into between
    the Company and NPS Trustees, on accrual basis. Revenue excludes Service Tax,
    wherever recovered.

    b. Profit/loss on sale of investments is recognized on trade date basis.

    Mutual Fund Trustee Operation:

    Trusteeship fees / management fees are recognised on an accrual basis in accordance with
    the respective terms of contract between the Companies.

    2. Investments

    Investments are accounted for in accordance with the extant regulatory guidelines. The bank
    follows trade date method for accounting of its investments.

    2.1 Classification

    Investments are classified into 3 categories, viz. Held to Maturity, Available for Sale and
    Held for Trading categories (hereafter called categories). Under each of these categories,
    investments are further classified into the following six groups:

    i. Government Securities,

    ii. Other Approved Securities,

    iii. Shares,

    iv. Debentures and Bonds,

    v. Subsidiaries/Joint ventures and

    vi. Others.

    2.2 Basis of classification:

    i. Investments that the Bank intends to hold till maturity are classified as Held to
    Maturity.

    ii. Investments that are held principally for resale within 90 days from the date of
    purchase are classified as Held for Trading.

    iii. Investments, which are not classified in the above two categories, are classified as
    Available for Sale.

    F-221
    iv. An investment is classified as Held to Maturity, Available for Sale or Held for Trading
    at the time of its purchase and subsequent shifting amongst categories is done in
    conformity with regulatory guidelines.

    2.3 Valuation:

    i. In determining the acquisition cost of an investment:

    a. Brokerage/commission/securities transaction tax received on subscriptions is


    reduced from the cost.

    b. Brokerage, commission etc. paid in connection with acquisition of investments


    are expensed upfront and excluded from cost.

    c. Broken period interest paid / received on debt instruments is treated as revenue


    item.

    d. Cost is determined on the weighted average cost method.

    e. The transfer of a security amongst the above three categories is accounted for at
    the least of acquisition cost/book value/market value on the date of transfer, and
    the depreciation, if any, on such transfer is fully provided for.

    ii. Treasury Bills and Commercial Papers are valued at carrying cost.

    iii. Held to Maturity category: Each scrip under Held to Maturity category is carried at
    its acquisition cost or at amortised cost, if acquired at a premium over the face value.
    Any premium on acquisition is amortised over the remaining maturity period of the
    security on constant yield basis. Such amortisation of premium is adjusted against
    income under the head “interest on investments”. A provision is made for diminution,
    other than temporary. Investments in Regional Rural Banks (RRBs) are valued at
    equity cost determined in accordance with Accounting Standard 23.

    iv. Available for Sale and Held for Trading categories: Each scrip in the above two
    categories is revalued at the market price or fair value determined as per Regulatory
    guidelines, and only the net depreciation of each group for each category is provided
    for and net appreciation, is ignored. On provision for depreciation, the book value of
    the individual securities remains unchanged after marking to market.

    v. Security receipts issued by an asset reconstruction company (ARC) are valued in


    accordance with the guidelines applicable to Non-SLR instruments. Accordingly, in
    cases where the security receipts issued by the ARC are limited to the actual
    realisation of the financial assets assigned to the instruments in the concerned scheme,
    the Net Asset Value, obtained from the ARC, is reckoned for valuation of such
    investments.

    vi. Investments are classified as performing and non-performing, based on the guidelines
    issued by the RBI in case of domestic offices and respective regulators in case of
    foreign entities. Investments of domestic offices become non performing where:

    a. Interest/instalment (including maturity proceeds) is due and remains unpaid for


    more than 90 days.

    b. In the case of equity shares, in the event the investment in the shares of any
    company is valued at Re. 1 per company on account of the non availability of the
    latest balance sheet, those equity shares would be reckoned as NPI.

    F-222
    c. If any credit facility availed by the issuer is NPA in the books of the bank,
    investment in any of the securities issued by the same issuer would also be
    treated as NPI and vice versa.

    d. The above would apply mutatis-mutandis to preference shares where the fixed
    dividend is not paid.

    e. The investments in debentures/bonds, which are deemed to be in the nature of


    advance, are also subjected to NPI norms as applicable to investments.

    f. In respect of foreign entities, provisions for non performing investments are


    made as per the local regulations or as per the norms of RBI, whichever is higher.

    vii. The Bank has adopted the Uniform Accounting Procedure prescribed by the RBI for
    accounting of Repo and Reverse Repo transactions [other than transactions under the
    Liquidity Adjustment Facility (LAF) with the RBI]. Accordingly, the securities
    sold/purchased under Repo/Reverse repo are treated as outright sales/purchases and
    accounted for in the Repo/Reverse Repo Accounts, and the entries are reversed on the
    date of maturity. Costs and revenues are accounted as interest expenditure/income, as
    the case may be. Balance in Repo/Reverse Repo Account is adjusted against the
    balance in the Investment Account.

    viii. Securities purchased / sold under LAF with RBI are debited / credited to Investment
    Account and reversed on maturity of the transaction. Interest expended / earned
    thereon is accounted for as expenditure / revenue.

    3. Loans /Advances and Provisions thereon

    3.1 Loans and Advances are classified as performing and non-performing, based on the
    guidelines issued by the RBI. Loan assets become non-performing where:

    i. In respect of term loan, interest and/or instalment of principal remains overdue for a
    period of more than 90 days;

    ii. In respect of an Overdraft or Cash Credit advance, the account remains “out of order”,
    i.e. if the outstanding balance exceeds the sanctioned limit/drawing power
    continuously for a period of 90 days, or if there are no credits continuously for 90 days
    as on the date of balance-sheet, or if the credits are not adequate to cover the interest
    due during the same period;

    iii. In respect of bills purchased/discounted, the bill remains overdue for a period of more
    than 90 days;

    iv. In respect of agricultural advances for short duration crops, where the instalment of
    principal or interest remains overdue for 2 crop seasons;

    v. In respect of agricultural advances for long duration crops, where the principal or
    interest remains overdue for one crop season.

    3.2 Non-Performing advances are classified into sub-standard, doubtful and loss assets, based
    on the following criteria stipulated by RBI:

    i. Sub-standard: A loan asset that has remained non-performing for a period less than or
    equal to 12 months.

    F-223
    ii. Doubtful: A loan asset that has remained in the sub-standard category for a period of
    12 months.

    iii. Loss: A loan asset where loss has been identified but the amount has not been fully
    written off.

    3.3 Provisions are made for NPAs as per the extant guidelines prescribed by the regulatory
    authorities, subject to minimum provisions as prescribed below by the RBI:

    Substandard Assets: i. A general provision of 10%


    ii. Additional provision of 10% for exposures which are
    unsecured ab-initio (where realisable value of security is
    not more than 10 percent ab-initio)

    Doubtful Assets:

    — Secured portion: i. Upto one year — 20%


    ii. One to three years — 30%
    iii. More than three years — 100%

    — Unsecured portion: 100%

    Loss Assets: 100%

    3.4 In respect of foreign entities, provisions for non performing advances are made as per the
    local regulations or as per the norms of RBI, whichever is higher.

    3.5 The sale of NPAs is accounted as per guidelines prescribed by the RBI, which requires
    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. Net book value
    is outstanding as reduced by specific provisions held and ECGC claims received.

    3.6 Advances are net of specific loan loss provisions, unrealised interest, ECGC claims
    received and bills rediscounted.

    3.7 For restructured/rescheduled assets, provisions are made in accordance with the guidelines
    issued by RBI, which requires that the present value of future interest due as per the
    original loan agreement, compared with the present value of the interest expected to be
    earned under the restructuring package, be provided in addition to provision for NPAs. The
    provision for interest sacrifice arising out of the above, is reduced from advances.

    3.8 In the case of loan accounts classified as NPAs, an account may be reclassified as a
    performing account if it conforms to the guidelines prescribed by the regulators.

    3.9 Amounts recovered against debts written off in earlier years are recognised as revenue.

    3.10 Unrealised Interest recognised in the previous year on advances which have become
    non-performing during the current year, is provided for.

    3.11 In addition to the specific provision on NPAs, general provisions are also made for standard
    assets as per the extant guidelines prescribed by the RBI. The provisions on standard assets
    are not reckoned for arriving at net NPAs. These provisions are reflected in Schedule 5 of
    the balance sheet under the head “Other Liabilities & Provisions — Others.”

    F-224
    4. Floating Provision

    In accordance with the Reserve Bank of India guidelines, the bank has an approved policy for
    creation and utilisation of floating provisions separately for advances, investments and general
    purpose. The quantum of floating provisions to be created would be assessed at the end of each
    financial year. The floating provisions would be utilised only for contingencies under extra
    ordinary circumstances specified in the policy with prior permission of Reserve Bank of India.

    5. Provision for Country Exposure for Banking Entities

    In addition to the specific provisions held according to the asset classification status, provisions
    are held for individual country exposures (other than the home country). Countries are
    categorised into seven risk categories, namely, insignificant, low, moderate, high, very high,
    restricted and off-credit, and provisioning made as per extant RBI guidelines. 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 exposures. The provision is reflected in
    schedule 5 of the balance sheet under the “Other liabilities & Provisions — Others”.

    6. Derivatives:

    6.1 The Bank enters into derivative contracts, such as foreign currency options, interest rate
    swaps, currency swaps, and cross currency interest rate swaps and forward rate agreements
    in order to hedge on-balance sheet/off-balance sheet assets and liabilities or for trading
    purposes. The swap contracts entered to hedge on-balance sheet assets and liabilities are
    structured in such a way that they bear an opposite and offsetting impact with the
    underlying on-balance sheet items. The impact of such derivative instruments is correlated
    with the movement of the underlying assets and accounted in accordance with the principles
    of hedge accounting.

    6.2 All derivative instruments are recognised as assets or liabilities in the balance sheet and
    measured at marked to market.

    6.3 Derivative contracts classified as hedge are recorded on accrual basis. Hedge contracts are
    not marked to market unless the underlying Assets / Liabilities are also marked to market.

    6.4 Except as mentioned above, all other derivative contracts are marked to market as per the
    generally accepted practices prevalent in the industry. In respect of derivative contracts that
    are marked to market, changes in the market value are recognised in the profit and loss
    account in the period of change.

    6.5 Option premium paid or received is recorded in profit and loss account at the expiry of the
    option. The Balance in the premium received on options sold and premium paid on options
    bought have been considered to arrive at Mark to Market value for forex Over the Counter
    options.

    7. Fixed Assets and Depreciation

    7.1 Fixed assets are carried at cost less accumulated depreciation.

    7.2 Cost includes cost of purchase and all expenditure such as site preparation, installation
    costs and professional fees incurred on the asset before it is put to use. Subsequent
    expenditure incurred on assets put to use is capitalised only when it increases the future
    benefits from such assets or their functioning capability.

    F-225
    7.3 The rates of depreciation and method of charging depreciation in respect of domestic
    operations are as under:

    Sr.
    No. Description of fixed assets Method of charging depreciation Depreciation/ amortisation rate

    1 Computers Straight Line Method 33.33% every year

    2 Computer software forming Written Down Value Method 60%


    an integral part of hardware

    3 Computer Software which Straight Line Method 100%, in the year of


    does not form an integral acquisition
    part of hardware

    4 Assets given on financial Straight Line Method At the rate prescribed under
    lease upto 31st March 2001 Companies Act 1956

    5 Other fixed assets Written down value method At the rate prescribed under
    Income-tax Rules 1962
    7.4 In respect of assets acquired for domestic operations during the year, depreciation is
    charged for half an year in respect of assets used for upto 182 days and for the full year
    in respect of assets used for more than 182 days, except depreciation on computers and
    software, which is charged for the full year irrespective of the period for which the asset
    was put to use.

    7.5 Items costing less than Rs. 1,000 each are charged off in the year of purchase.

    7.6 In respect of leasehold premises, the lease premium, if any, is amortised over the period of
    lease and the lease rent is charged in the respective year.

    7.7 In respect of assets given on lease by the Bank on or before 31st March 2001, the value of
    the assets given on lease is disclosed as Leased Assets under fixed assets, and the difference
    between the annual lease charge (capital recovery) and the depreciation is taken to Lease
    Equalisation Account.

    7.8 In respect of fixed assets held at foreign branches/ subsidiaries/associates, depreciation is


    provided as per the regulations /norms of the respective countries.

    8. Leases

    The asset classification and provisioning norms applicable to advances, as laid down in Para 3
    above, are applied to financial leases also.

    9. Impairment of Assets

    Fixed Assets are reviewed for impairment whenever events or changes in circumstances warrant
    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 to future net discounted
    cash flows expected to be generated by the asset. If such assets are considered to be impaired,
    the impairment to be recognised is measured by the amount by which the carrying amount of the
    asset exceeds the fair value of the asset.

    10. Effect of changes in the foreign exchange rate

    10.1 Foreign Currency Transactions

    i. Foreign currency transactions are recorded on initial recognition in the reporting


    currency by applying to the foreign currency amount the exchange rate between the
    reporting currency and the foreign currency on the date of transaction.

    F-226
    ii. Foreign currency monetary items are reported using the Foreign Exchange Dealers
    Association of India (FEDAI) closing spot/forward rates.

    iii. Foreign currency non-monetary items, which are carried in terms at historical cost, are
    reported using the exchange rate at the date of the transaction.

    iv. Contingent liabilities denominated in foreign currency are reported using the FEDAI
    closing spot rates.

    v. Outstanding foreign exchange spot and forward contracts held for trading are revalued
    at the exchange rates notified by FEDAI for specified maturities, and the resulting
    profit or loss is included in the Profit and Loss account.

    vi. Foreign exchange forward contracts which are not intended for trading and are
    outstanding at the balance sheet date, are valued at the closing spot rate. The premium
    or discount arising at the inception of such a forward exchange contract is amortised
    as expense or income over the life of the contract.

    vii. Exchange differences arising on the settlement of monetary items at rates different
    from those at which they were initially recorded are recognised as income or as
    expense in the period in which they arise.

    viii. Gains / Losses on account of changes in exchange rates of open position in currency
    futures trades are settled with the exchange clearing house on daily basis and such
    gains / losses are recognised in the profit and loss account.

    10.2 Foreign Operations

    Foreign entities of the Bank and Offshore Banking Units have been classified as
    Non-integral Operations and Representative Offices have been classified as Integral
    Operations.

    a. Non-integral Operations:

    i. Both monetary and non-monetary foreign currency assets and liabilities


    including contingent liabilities of non-integral foreign operations are translated
    at closing exchange rates notified by FEDAI at the balance sheet date.

    ii. Income and expenditure of non-integral foreign operations are translated at


    quarterly average closing rates.

    iii. Exchange differences arising on net investment in non-integral foreign


    operations are accumulated in Foreign Currency Translation Reserve until the
    disposal of the net investment.

    iv. The Assets and Liabilities of foreign offices/subsidiaries /joint ventures in


    foreign currency (other than local currency of the foreign
    offices/subsidiaries/joint ventures) are translated into local currency using spot
    rates applicable to that country.

    b. Integral Operations:

    i. Foreign currency transactions are recorded on initial recognition in the reporting


    currency by applying to the foreign currency amount the exchange rate between
    the reporting currency and the foreign currency on the date of transaction.

    F-227
    ii. Monetary foreign currency assets and liabilities of integral foreign operations
    are translated at closing exchange rates notified by FEDAI at the balance sheet
    date and the resulting profit/loss is included in the profit and loss account.

    iii. Foreign currency non-monetary items which are carried in terms of historical
    cost are reported using the exchange rate at the date of the transaction.

    11. Employee Benefits

    11.1 Short Term Employee Benefits:

    The undiscounted amount of short-term employee benefits, such as medical benefits, casual
    leave etc. which are expected to be paid in exchange for the services rendered by employees
    are recognised during the period when the employee renders the service.

    11.2 Post Employment Benefits:

    i. Defined Benefit Plan

    a. The group entities operate separate Provident Fund schemes. All eligible
    employees are entitled to receive benefits under the Provident Fund scheme. The
    group entities contribute monthly at a determined rate. These contributions are
    remitted to a trust established for this purpose and are charged to Profit and Loss
    Account. The group entities are liable for annual contributions and interests,
    which is payable at minimum specified rate of interest. The entities recognise
    such annual contributions and interest as an expense in the year to which they
    relate.

    b. The group entities operate separate gratuity and pension schemes, which are
    defined benefit plans.

    c. The group entities provide for gratuity to all eligible employees. The benefit is
    in the form of lump sum payments to vested employees on retirement, on death
    while in employment, or on termination of employment, for an amount
    equivalent to 15 days basic salary payable for each completed year of service,
    subject to a ceiling in terms of service rules. Vesting occurs upon completion of
    five years of service. The Bank makes annual contributions to a fund
    administered by trustees based on an independent external actuarial valuation
    carried out annually.

    d. Some group entities provide for pension to all eligible employees. The benefit is
    in the form of monthly payments as per rules and regular payments to vested
    employees on retirement, on death while in employment, or on termination of
    employment. Vesting occurs at different stages as per rules. The entities make
    annual contributions to funds administered by trustees based on an independent
    external actuarial valuation carried out annually.

    e. The cost of providing defined benefits is determined using the projected unit
    credit method, with actuarial valuations being carried out at each balance sheet
    date. Actuarial gains/losses are immediately recognised in the statement of profit
    and loss and are not deferred.

    F-228
    ii. Other Long Term Employee benefits:

    a. All eligible employees of the group are eligible for compensated absences, silver
    jubilee award, leave travel concession, retirement award and resettlement
    allowance. The costs of such long term employee benefits are internally funded
    by the Bank.

    b. The cost of providing other long term benefits is determined using the projected
    unit credit method with actuarial valuations being carried out at each balance
    sheet date. Past service cost is immediately recognised in the statement of profit
    and loss and is not deferred.

    12. Provision for Taxation

    12.1 Income tax expense is the aggregate amount of current tax, deferred tax and fringe benefit
    tax charge. Current year taxes are determined in accordance with the provisions of
    Accounting Standard 22 and tax laws prevailing in India after taking into account taxes of
    foreign subsidiaries, which are based on the tax laws of respective jurisdiction. Deferred
    tax adjustments comprise of changes in the deferred tax assets or liabilities during the
    period.

    12.2 Deferred tax assets and liabilities are measured using tax rates and tax laws that have been
    enacted or substantially enacted prior to the balance sheet date. Deferred tax assets and
    liabilities are recognised on a prudent basis for the future tax consequences of timing
    differences arising between the carrying values of assets and liabilities and their respective
    tax basis, and carry forward losses. The impact of changes in the deferred tax assets and
    liabilities is recognised in the profit and loss account.

    12.3 Deferred tax assets are recognised and reassessed at each reporting date, based upon
    management’s judgement as to whether realisation is considered 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 assets can be realised against future profits.

    12.4 Income tax expenses are the aggregate of the amounts of tax expense appearing in the
    separate financial statements of the parent and its subsidiaries/joint ventures, as per their
    applicable laws.

    13. Earning per Share

    13.1 The Bank reports basic and diluted earnings per share in accordance with AS 20 -‘Earnings
    per Share’ issued by the ICAI. Basic earnings per share are computed by dividing the net
    profit after tax by the weighted average number of equity shares outstanding for the year.

    13.2 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 year end.

    14. Accounting for Provisions, Contingent Liabilities and Contingent Assets

    14.1 In conformity with AS 29, “Provisions, Contingent Liabilities and Contingent Assets”,
    issued by the Institute of Chartered Accountants of India, the provision is recognised only
    when it has a present obligation as a result of a past event, it is probable that an outflow
    of resources embodying economic benefits will be required to settle the obligation, and
    when a reliable estimate of the amount of the obligation can be made.

    F-229
    14.2 No provision is recognised for

    i. any possible obligation that arises from past events and the existence of which will be
    confirmed only by the occurrence or non-occurrence of one or more uncertain future
    events not wholly within the control of the Bank; or

    ii. any present obligation that arises from past events but is not recognised because

    a. it is not probable that an outflow of resources embodying economic benefits will


    be required to settle the obligation; or

    b. a reliable estimate of the amount of obligation cannot be made.

    Such obligations are recorded as Contingent Liabilities. These are assessed at regular
    intervals and only that part of the obligation for which an outflow of resources
    embodying economic benefits is probable, is provided for, except in the extremely
    rare circumstances where no reliable estimate can be made.

    14.3 Contingent Assets are not recognised in the financial statements as this may result in the
    recognition of income that may never be realised.

    15. Cash and cash equivalents

    Cash and cash equivalents include cash on hand and in ATM’s, and gold in hand, balances with
    RBI, balances with other banks, and money at call and short notice.

    16. Employee Share Purchase Scheme

    In accordance with the Employee Stock Option Scheme and Employee Stock Purchase Scheme
    Guidelines, 1999 issued by the Securities and Exchange Board of India (“SEBI”), the excess of
    market price one day prior to the date of issue of the shares over the price at which they are
    issued is recognised as employee compensation cost.

    17. Share Issue Expenses

    Share issue expenses are charged to the Share Premium Account.

    F-230
    SCHEDULE 18
    NOTES ON ACCOUNTS
    (Amount in Rupees in crores)
    1. List of Subsidiaries/Joint Ventures/Associates considered for preparation of consolidated financial statements:
    1.1 The 29 Subsidiaries, 2 Joint Ventures and 28 Associates (which along with State Bank of India, the parent,
    constitute the Group), considered in the preparation of the consolidated financial statements are -
    A) Subsidiaries
    Sr. No Name of the Subsidiary Country of Group’s
    Incorporation Stake (%)
    1) State Bank of Bikaner & Jaipur India 75.07
    2) State Bank of Hyderabad India 100.00
    3) State Bank of Indore India 98.05
    4) State Bank of Mysore India 92.33
    5) State Bank of Patiala India 100.00
    6) State Bank of Saurashtra (upto 13.08.08) India 100.00
    7) State Bank of Travancore India 75.01
    8) SBI Commercial & International Bank Ltd India 100.00
    9) SBI Capital Markets Ltd India 86.16
    10) SBICAP Securities Ltd India 86.16
    11) SBICAP Trustee Company Ltd India 86.16
    12) SBICAPS Ventures Ltd India 86.16
    13) SBI DFHI Ltd India 65.95
    14) SBI Factors & Commercial Services Pvt Ltd India 69.88
    15) SBI Mutual Fund Trustee Company Pvt Ltd India 100.00
    16) Global Trade Finance Ltd India 92.85
    17) SBI Pension Funds Pvt Ltd India 96.85
    18) SBI Custodial Services Pvt Ltd India 100.00
    19) SBI General Insurance Co. Ltd India 100.00
    20) State Bank of India (Canada) Canada 100.00
    21) State Bank of India (California) USA 100.00
    22) SBI (Mauritius) Ltd Mauritius 93.40
    23) PT Bank Indomonex Indonesia 76.00
    24) SBICAP (UK) Ltd U.K. 86.16
    25) SBI Cards and Payment Services Pvt Ltd @ India 60.00
    26) SBI Funds Management Pvt Ltd@ India 63.00
    27) SBI Life Insurance Company Ltd@ India 74.00
    28) Commercial Bank of India Llc @ Russia 60.00
    29) SBI Funds Management (International) Private Ltd @ Mauritius 63.00
    @ These entities are jointly controlled.

    F - 231
    B) Joint Ventures
    Sr. No Name of the Joint Venture Country of Group’s
    Incorporation Stake (%)
    1) C Edge Technologies Ltd India 49.00
    2) GE Capital Business Process Management India 40.00
    Services Pvt Ltd

    C) Associates:
    Sr. No Name of the Associate Country of Group’s
    Incorporation Stake (%)
    1) Andhra Pradesh Grameena Vikas Bank India 35.00
    2) Arunachal Pradesh Rural Bank India 35.00
    3) Chhatisgarh Gramin Bank India 35.00
    4) Ellaquai Dehati Bank India 35.00
    5) Meghalaya Rural Bank India 35.00
    6) Krishna Grameena Bank India 35.00
    7) Langpi Dehangi Rural Bank India 35.00
    8) Madhya Bharat Gramin Bank India 35.00
    9) Mizoram Rural Bank India 35.00
    10) Nagaland Rural Bank India 35.00
    11) Parvatiya Gramin Bank India 35.00
    12) Purvanchal Kshetriya Gramin Bank India 35.00
    13) Samastipur Kshetriya Gramin Bank India 35.00
    14) Utkal Gramya Bank India 35.00
    15) Uttaranchal Gramin Bank India 35.00
    16) Vananchal Gramin Bank India 35.00
    17) Marwar Ganganagar Bikaner Gramin Bank India 26.27
    18) Vidisha Bhopal Kshetriya Gramin Bank India 34.32
    19) Deccan Grameena Bank India 35.00
    20) Cauvery Kalpatharu Grameena Bank India 32.32
    21) Malwa Gramin Bank India 35.00
    22) Saurashtra Grameena Bank India 35.00
    23) The Clearing Corporation of India Ltd India 28.97
    24) SBI Home Finance Ltd India 25.05
    25) UTI Asset Management Company Pvt Ltd India 25.00
    26) Bank of Bhutan Bhutan 20.00
    27) Nepal SBI Bank Ltd Nepal 50.00
    28) S.S. Ventures Services Ltd India 43.08
    1.2 The following changes have taken place in the consolidation process as compared to 2007-08.
    a. The Government of India has notified the acquisition of State Bank of Saurashtra (SBS), a wholly owned
    banking subsidiary of SBI, with effect from 14th August 2008. Pursuant to the said notification, the
    entire undertaking of the erstwhile SBS stands acquired by SBI. The acquisition of SBS has been
    accounted using “Pooling of Interest method” as per Accounting Standard 14. The goodwill arising on
    acquisition amounting to Rs. 0.65 crores has been charged off to the revenue during the period.
    b. SBI’s subsidiary, Indian Ocean International Bank (IOIB) amalgamated with SBI International (Mauritius)
    Ltd, another subsidiary of SBI and the amalgamated entity’s name has been changed to SBI (Mauritius)

    F - 232
    Ltd. and converted as a Public Limited Company from its erstwhile status as a Private Limited Company.
    The Scheme of Merger has been sanctioned by Bank of Mauritius from 1st April 2008, being the
    appointed date. Consequently, the SBI’s stake in SBI (Mauritius) Limited has reduced from a 98%
    holding (pre-merger) to 93.40% holding (post-merger).
    c. SBI has established a wholly owned subsidiary, SBI Custodial Services Pvt. Ltd. on 16th May 2008 and
    the capital of the company as on 31.03.09 is Rs. 13.76 crores. A joint venture agreement has been
    entered with Societe Generale, France, with the bank having 65% stake. RBI has approved the said joint
    venture and SBI is awaiting approval from SEBI. The authorised capital of this joint venture is envisaged
    at Rs. 100 crores.
    d. SBI Pension Funds Pvt. Ltd. has commenced operations on 2nd April 2008. During the year, SBI has
    divested 10% equity stake in SBI Pension Fund Pvt. Ltd at cost in favour of its subsidiaries viz. SBI
    Life Insurance Company Limited and SBI Funds Management (Pvt.) Ltd. As a result of this divestment,
    the bank’s total equity stake (including indirect stake) has come down to 96.85%.
    e. SBI has incorporated SBI General Insurance Company Ltd. on 24th February 2009 with an authorised
    share capital of Rs. 20 crores for providing general insurance subject to regulatory approvals. SBI has
    signed a Joint Venture agreement with Insurance Australia Group (IAG) for conducting the General
    Insurance Business. SBI will hold 74% equity in the JV, while IAG will hold 26% equity.
    f. Pursuant to a Scheme of Amalgamation approved by the Central Board at its meeting held on 25th June
    2008, SBI Commercial and International Bank Ltd., a wholly owned subsidiary of SBI is proposed to be
    merged with SBI. The relevant scheme is yet to be approved by the Government of India, RBI and other
    authorities. Pending such approvals no effect has been given to the said scheme in the accounts.
    g. The winding up petition of SBI Home Finance Ltd., an associate of the bank, was filed with the Kolkata
    High Court on 23rd September 2008. The Hon’ble Court has passed an order on 31st March 2009 giving
    direction for winding up of the company.
    h. SBI has signed a joint venture with Macquarie Capital Group, Australia and IFC, Washington for setting
    up an Infrastructure fund of USD 3 billion for investing in various infrastructure projects in India for
    which RBI and Government approval have been received.
    i. SBI has signed an MOU during the year with State General Reserve Fund (SGRF) of Oman, a Sovereign
    Fund of that country with an objective to set up a general fund to invest in various sectors in India.
    While the RBI approval has been received, the Government of India approval is awaited.
    j. The Boards of SBI and SBI Capital Markets Ltd. (SBICAP) have approved takeover of SBICAP Securities
    Limited (SSL) by SBI as its subsidiary from SSL’s holding company - SBICAP, subject to necessary
    regulatory approval.
    1.3 Two of the associates - Bank of Bhutan (Gregorian Calendar Year) and Nepal SBI Bank Ltd (Hindu Calendar
    Year) follow accounting years different from that of the parent. Accordingly, the financial statements of these
    associates are made as of 31st December 2008 and 15th July 2008 respectively.
    2. Share Capital:
    2.1 The parent has kept in abeyance the allotment of 88,278 Equity Shares of Rs.10/- each issued as part of
    Rights Issue last year, since they are subject matter of title disputes or are subjudice.
    2.2 During the year, the parent has issued 34,09,846 equity shares of Rs. 10/- each for cash at a premium of Rs.
    1580/- per equity share i.e. at Rs. 1590/- per equity share aggregating to Rs. 542.17 crores to its employees
    under SBI Employees Share Purchase Scheme - 2008 (SBI ESPS - 2008). The issue of equity shares under SBI
    ESPS-2008 has been accounted in accordance with SEBI (Employee Stock Option Scheme and Employee Stock
    Purchase Scheme) guidelines 1999. Accordingly, an amount of Rs 21.41 crores has been charged as employee
    expenses and transferred to Share Premium Account.
    2.3 The Government of India had, during the year ended 31.03.08, subscribed to 6,28,68,000 Equity Shares of
    Rs.10/- each at a premium of Rs.1580/- per share as part of Rights Offer of the bank. The Government of India
    has discharged the total consideration of Rs.9996.01 crores by issue of “8.35% SBI Rights Issue GOI Special
    Bonds 2024”. Certain restrictions have been placed by the Government on the sale of these bonds.

    F - 233
    2.4 Expenses in relation to the issue of Equity Shares under the Employees Share Purchase Scheme 2008 amounting
    to Rs.1.21 crores is debited to Share Premium Account.
    3. Disclosures as per Accounting Standards:
    3.1 Change in Accounting Policy:
    SBI has been making annual contribution to the pension fund administered by trustees based on an independent
    actuarial valuation carried out at the year end. SBI has decided to make its contribution to the Pension Fund
    at 10% of the basic salary in term of SBI Pension Fund Rules. The balance amount as per actuarial liability is
    fully provided for and kept in a special provision account for settlement to pensioners.
    Consequent to this change the profit after tax has gone up by Rs.296 crores after considering the deferred tax
    assets of Rs. 508 crores.
    3.2. Employee Benefits:
    3.2.1 Defined Benefit Plans
    The following table sets out the status of the defined benefit Pension Plan and Gratuity Plan as required
    under AS 15 (Revised 2005):
    Particulars Pension Plans Gratuity
    CY PY CY PY
    Change in the present value of the defined
    benefit obligation
    Opening defined benefit obligation 21,387.50 20,189.82 4,887.04 4,800.07
    at 1st April 2008
    Current Service Cost 1,135.57 654.17 223.69 195.36
    Interest Cost 1,684.31 1,637.57 380.67 387.15
    Actuarial losses (gains) 1,073.85 149.72 (138.88) (99.27)
    Benefits paid (1,272.52) (1,243.78) (284.46) (396.27)
    Closing defined benefit obligation at 24,008.71 21,387.50 5,068.06 4,887.04
    31st March 2009
    Change in Plan Assets
    Opening fair value of plan assets at 16,666.34 15,263.37 4,739.10 4,599.59
    1st April 2008
    Expected Return on Plan assets 1,232.78 1,223.28 367.64 354.87
    Contributions by employer 508.58 1,354.95 41.39 129.82
    Benefit Paid (1,272.52) (1,243.78) (284.46) (396.27)
    Actuarial Gains 231.81 68.52 16.69 51.09
    Closing fair value of plan assets at 17,366.99 16,666.34 4,880.36 4,739.10
    31st March 2009
    Reconciliation of present value of the
    obligation and fair value of the plan assets
    Present Value of Funded obligation
    at 31st March 2009 24,008.71 21,387.50 5,068.06 4,887.04
    Fair Value of Plan assets at 31st March 2009 17,366.99 16,666.34 4,880.36 4,739.10
    Deficit/(Surplus) 6,641.72 4,721.16 187.70 147.94
    Unrecognised Past Service Cost Nil Nil Nil Nil
    Net Liability/(Asset ) 6,641.72 4,721.16 187.70 147.94

    F - 234
    Amount Recognised in the Balance Sheet
    Liabilities 24,008.71 21,387.50 5,068.06 4,887.04
    Assets 17,366.99 16,666.34 4,880.36 4,739.10
    Net Liability / (Asset) recognised in
    Balance Sheet 6,641.72 4,721.16 187.70 147.94
    Net Cost recognised in the profit and
    loss account
    Current Service Cost 1,135.57 654.17 223.69 195.36
    Interest Cost 1,684.31 1,637.57 380.67 387.15
    Expected return on plan assets (1,232.78) (1,223.28) (367.64) (354.87) Net
    actuarial losses (Gain)
    recognised during the year 842.04 81.20 (155.57) (150.36)
    Total costs of defined benefit plans
    included in Schedule 16
    “Payments to and provisions for employees” 2,429.14 1,149.66 81.15 77.28

    Particulars Pension Plans Gratuity


    CY PY CY PY
    Reconciliation of expected return and
    actual return on Plan
    Assets
    Expected Return on Plan Assets 1,232.78 1,223.28 367.64 354.87
    Actuarial Gain/ (loss) on Plan Assets 231.81 68.52 16.69 51.09
    Actual Return on Plan Assets 1,464.59 1,291.80 384.33 405.96
    Reconciliation of opening and
    closing net liability/ (asset)
    recognised in Balance Sheet
    Opening Net Liability as at 1st April 2008 4,721.16 4,926.45 147.94 200.48
    Expenses as recognised in profit and
    loss account 2,429.14 1,149.66 81.15 77.28
    Employers Contribution 508.58 1,354.95 41.39 129.82
    Net liability/(Asset) recognised in
    Balance Sheet 6,641.72 4,721.16 187.70 147.94
    The Group expects to contribute Rs. 1085 crores (Previous Year Rs. 822 crores) and Rs. 130 crores
    (Previous Year Rs. 113 crores) to its defined benefit Pension Plan and Gratuity Plan respectively during
    the next financial year.

    F - 235
    Investments under Plan Assets of Gratuity Fund & Pension Fund as on 31st March 2009 are as follows:
    Pension Fund Gratuity Fund
    Category of Assets % of Plan Assets % of Plan Assets
    Central Govt. Securities 5.79 31.33
    State Govt. Securities 3.15 20.67
    Public Sector Bonds 5.18 33.37
    FDR / TDR with Bank 3.79 3.64
    Bank Deposits 80.72 6.34
    Others 1.37 4.65
    Total 100.00 100.00
    Out of the above investments following are held with the group;
    Pension Fund Gratuity Fund
    Category of Assets % of Plan Assets % of Plan Assets
    FDR / TDR with Bank & Bank Deposits 81.45% 6.45%
    Principal actuarial assumptions;
    Pension and Gratuity Plans
    Particulars Current year Previous year
    Discount Rate 7.25% to 7.75% 7.75% to 8%
    Expected Rate of return on Plan Asset 7.50% to 8% 7.50% to 8%
    Salary Escalation 5% to 13% 4% to 13%
    The estimates of future salary growth, factored in actuarial valuation, take account of inflation, seniority,
    promotion and other relevant factors such as supply and demand in the employment market. Such
    estimates are very long term and are not based on limited past experience / immediate future. Empirical
    evidence also suggests that in very long term, consistent high salary growth rates are not possible. The
    auditors have relied upon the representation made by the Bank in this behalf.
    3.2.2 Employees Provident Fund
    In terms of the guidance on implementing the AS-15 (Revised 2005) issued by the Institute of the
    Chartered Accountants of India, the Employees Provident Fund set up by the Bank is treated as a
    defined benefit plan since the Bank has to meet the specified minimum rate of return. As at the year
    end, no shortfall remains unprovided for. Accordingly, other related disclosures in respect of Provident
    Fund have not been made and an amount of Rs.394.59 crores (Previous Year Rs.546.01 crores) is recognised
    as an expense towards the Provident Fund scheme of the group included under the head “Payments to
    and provisions for employees” in Profit and Loss Account.
    3.2.3 Other Long term Employee Benefits
    Amount of Rs. 68.04 crores (Previous Year Rs.205.99 crores) is recognised as an expense towards Long
    term Employee Benefits included under the head “Payments to and provisions for employees” in Profit
    and Loss account.

    F - 236
    Details of Provisions made for various long Term Employees’ Benefits during the year;
    Sl.
    No. Long Term Employees’ Benefits Current Year Previous Year
    1 Privilege Leave (Encashment) incl. leave encashment 35.21 133.25
    at the time of retirement
    2 Leave Travel and Home Travel Concession 15.52 40.64
    (Encashment/Availment)
    3 Sick Leave (3.80) 23.74
    4 Silver Jubilee Award (4.23) 5.01
    5 Resettlement Expenses on Superannuation 4.18 5.28
    6 Casual Leave 5.74 (2.02)
    7 Retirement Award 15.42 0.09
    Total 68.04 205.99
    3.3 Segment Reporting (As complied by management and relied upon by the auditors)
    3.3.1 Segment identification
    A) Primary (Business Segment)
    The following are the Primary Segments of the Group:
    — Treasury
    — Corporate / Wholesale Banking
    — Retail Banking
    — Other Banking Business
    The present accounting and information system of the Bank does not support capturing and extraction
    of the data in respect of the above segments separately. However, based on the present internal
    organisational and management reporting structure and the nature of their risk and returns, the data on
    the Primary Segments have been computed as under:
    a) Treasury: The Treasury Segment includes the entire investment portfolio and trading in foreign
    exchange contracts and derivative contracts. The revenue of the treasury segment primarily consists
    of fees and gains or losses from trading operations and interest income on the investment portfolio.
    b) Corporate / Wholesale Banking: The Corporate / Wholesale Banking segment comprises the
    lending activities of Corporate Accounts Group, Mid Corporate Accounts Group and Stressed
    Assets Management Group. These include providing loans and transaction services to corporate
    and institutional clients and further include non treasury operations of foreign offices.
    c) Retail Banking: The Retail Banking Segment comprises of branches in National Banking Group,
    which primarily includes personal Banking activities including lending activities to corporate
    customers having Banking relations with branches in the National Banking Group. This segment
    also includes agency business and ATM’s.
    d) Other Banking business - Segments not classified under (a) to (c) above are classified under this
    primary segment. This segment also includes the operations of all the Non-Banking Subsidiaries/
    Joint Ventures of the group.
    In the case of Banking Subsidiaries who do not have the management reporting structure
    corresponding to the parent, all the exposures in excess of Rs. 5 crores have been segregated and
    included in Corporate/Wholesale Banking.
    B) Secondary (Geographical Segment):
    i) Domestic operations comprise branches and subsidiaries having operations in India.
    ii) Foreign operations comprise branches and subsidiaries having operations outside India and offshore
    banking units having operations in India.

    F - 237
    C) Allocation of Expenses, Assets and liabilities
    Expenses of parent incurred at Corporate Centre establishments directly attributable either to Corporate /
    Wholesale and Retail Banking Operations or to Treasury Operations segment, are allocated accordingly.
    Expenses not directly attributable are allocated on the basis of the ratio of number of employees in each
    segment/ratio of directly attributable expenses.
    3.3.2 The accounting policies adopted for segment reporting are in line with the accounting policies adopted
    in the parent’s financial statements with the following additional features:
    1) Pricing of inter-segment transactions between the Non Banking Operations segment and other
    segments are market led. In respect of transactions between treasury and other banking business,
    compensation for the use of funds is reckoned based on interest and other costs incurred by the
    lending segment.
    2) Revenue and expenses have been identified to segments based on their relationship to the operating
    activities of the segment.
    3) Revenue and expenses, which relate to the enterprise as a whole and are not allocable to segments
    on a reasonable basis, have been included under “Unallocated Expenses”.
    3.3.3 DISCLOSURE UNDER SEGMENT REPORTING PART A: PRIMARY SEGMENTS
    Treasury Corporate/ Retail Other
    Operations Wholesale Banking Banking
    Banking Operations Elimination TOTAL
    Revenue 22,556.93 35,007.51 52,224.58 7,758.79 -4,462.57 1,13,085.24
    Result 3,287.16 7,780.35 10,087.52 343.96 — 21,498.99
    Unallocated Income — — — — — 7.85
    Unallocated Expenses — — — — — 3,612.00
    Operating Profit (PBT) — — — — — 17,894.84
    Taxes — — — — — 6,721.77
    Extraordinary Profit/Loss — — — — — —
    Net Profit — — — — — 11,173.07
    Other Information: — — — — — —
    Segment Assets 418,116.72 391,946.01 750,918.91 25,393.18 -289,745.27 12,96,629.55
    Unallocated Assets — — — — — 8,196.19
    Total Assets — — — — — 13,04,825.74
    Segment Liabilities 211,439.13 375,786.40 868,257.60 21,864.52 -289,745.27 1,187,602.38
    Unallocated Liabilities — — — — — 44,832.97
    Total Liabilities — — — — — 12,32,435.35

    F - 238
    PART B: SECONDARY SEGMENTS
    Particulars Domestic Operations Foreign Operations Total
    Revenue 1,07,536.61 5,556.48 1,13,093.09
    (83,566.13) (6,652.68) (90,218.81)
    Assets 11,85,292.32 1,19,533.42 13,04,825.74
    (9,30,748.23) (96,521.29) (10,27,269.52)
    i) Income/Expenses are for the whole year. Assets/Liabilities are as at 31st March 2009.
    ii) Figures within brackets are for previous year
    3.4 Related Party Disclosures: As identified and compiled by the management and relied upon by the auditors
    3.4.1 Related Parties to the Group:
    A) JOINT VENTURES:
    1. GE Capital Business Process Management Services Private Limited.
    2. C Edge Technologies Ltd.
    B) ASSOCIATES:
    i Regional Rural Banks
    1. Andhra Pradesh Grameena Vikas Bank
    2. Arunachal Pradesh Rural Bank
    3. Cauvery Kalpatharu Grameena Bank
    4. Chhatisgarh Gramin Bank
    5. Deccan Grameena Bank
    6. Ellaquai Dehati Bank
    7. Meghalaya Rural Bank
    8. Krishna Grameena Bank
    9. Langpi Dehangi Rural Bank
    10. Madhya Bharat Gramin Bank
    11. Malwa Gramin Bank
    12. Marwar Ganganagar Bikaner Bank
    13. Mizoram Rural Bank
    14. Nagaland Rural Bank
    15. Parvatiya Gramin Bank
    16. Purvanchal Kshetriya Gramin Bank
    17. Samastipur Kshetriya Gramin Bank
    18. Saurashtra Grameena Bank
    19. Utkal Gramya Bank
    20. Uttaranchal Gramin Bank
    21. Vananchal Gramin Bank
    22. Vidisha Bhopal Kshetriya Gramin Bank
    ii Others
    23. SBI Home Finance Limited.
    24. The Clearing Corporation of India Ltd
    25. Nepal SBI Bank Ltd.

    F - 239
    26. Bank of Bhutan
    27. UTI Asset Management Company Pvt. Ltd.
    28. S. S. Ventures Services Pvt Ltd
    C) Key Management Personnel of the Bank:
    1. Shri O. P. Bhatt, Chairman
    2. Shri S. K. Bhattacharyya, Managing Director
    3. Shri R. Sridharan, Managing Director (from 5th December 2008)
    3.4.2 Related Parties with whom transactions were entered into during the year:
    No disclosure is required in respect of transactions with related parties which are “state controlled enterprises”
    as per paragraph 9 of Accounting Standard (AS) 18. Further, in terms of paragraph 5 of AS 18, transactions in
    the nature of banker-customer relationship are not required to be disclosed in respect of Key Management
    Personnel. Other particulars are:
    1. C Edge Technologies Ltd.
    2. GE Capital Business Process Management Services Pvt. Ltd.
    3. SBI Home Finance Ltd.
    4. Bank of Bhutan
    5. Nepal SBI Bank Ltd.
    6. S. S. Ventures Services Ltd
    7. Shri O. P. Bhatt, Chairman
    8. Shri S. K. Bhattacharyya, Managing Director
    9. Shri R. Sridharan, Managing Director (from 5th December 2008)
    3.4.3 Transactions / Balances:
    Items Associates/ Key Management Total
    Joint Ventures Personnel@
    Deposit# 92.58 0.69 93.27
    (62.56) (—) (62.56)
    Other Liability# 50.39 0.26 50.65
    (97.75) (—) (97.75)
    Investments# 21.80 — 21.80
    (21.75) (—) (21.75)
    Other Assets # — — —
    (0.08) (—) (0.08)
    Interest paid $ 2.71 — 2.71
    (3.16) (—) (3.16)
    Interest received$ — — —
    (—) (—) (—)
    Income earned by way of Dividend $ 1.89 — 1.89
    (2.94) (—) (2.94)
    Rendering of services $ 2.61 — 2.61
    (0.07) (—) (0.07)
    Receiving of services $ 150.43 — 150.43
    (—) (—) (—)
    Management contracts $ — 0.38 0.38
    (—) (0.54) (0.54)

    F - 240
    (Figures ipn brackets pertain to previous year)
    # Balances as at 31st March
    $ Transactions for the year
    @ Transactions which are not in the nature of banker-customer relationship.
    3.5 Leases:
    Financial Lease
    Assets given on Financial Lease on or after 1st April 2001: The details of financial lease are given below.
    Current Year Previous Year
    Total gross investment in the leases . . . . . . . . . . . . . . . 37.09 43.29
    Present value of minimum lease payments receivable
    Less than 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.48 8.91
    1 to 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 9.67
    5 years and above . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —
    Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.48 18.58
    Present value of unearned finance income . . . . . . . . . . 0.28 3.76
    Operating Lease
    A. Office Premises/Staff Quarters taken on Operating Lease as on 31st March 2009
    i. Minimum Lease Rent Payable*
    a. Payable not later than 1 year i.e. 2009-10 . . . . . . . . . . . . . . . 58.92
    b. Payable later than 1 year and not later than 5 years i.e. 2010-11 to 2013-14 144.78
    c. Payable later than 5 years i.e. after 2013-14 35.35
    * in respect of Non Cancellable Lease only
    ii. Amount of lease charges debited to charges account during the year 690.46
    iii. The lease agreements provide for an option to the group to renew the lease period at the end of
    non-cancellable period. There are no exceptional/restrictive covenants in the lease agreements.
    B. Premises given on Operating Leases as on 31st March 2009
    a. Payable not later than 1 year i.e. 2009-10 . . . . . . . . . . . . . . . 58.92
    i. Minimum Lease Rental Receivable
    a. Payable not later than 1 year i.e. 2009-10 0.04
    b. Payable later than 1 year and not later than 5 years i.e. 2010-11 to 2013-14 0.04
    c. Payable later than 5 years i.e. after 2013-14 . . . . . . . . . . . . . Nil
    Particulars Original Cost Accumulated Depreciation
    Depreciation as for the year
    on 31.03.2009
    Premises given on lease 0.21 0.21 Nil
    iii No contingent rents have been recognised in the Profit & Loss Account.

    F - 241
    3.6 Earnings Per Share:
    The Bank reports basic and diluted earnings per equity share in accordance with Accounting Standard 20 -
    “Earnings per Share”. “Basic earnings” per share is computed by dividing consolidated net profit after tax by
    the weighted average number of equity shares outstanding during the year.
    Particulars Current Year Previous Year
    Basic and diluted
    Weighted average No. of equity shares used in
    computing basic earning per share 63,44,13,120 53,14,45,447
    Add: Potential number of equity shares that could
    arise on account of ESPS scheme . . . . . . . . . . . . . . . — 5,09,911
    Weighted average number of shares used in computing
    diluted earning per share . . . . . . . . . . . . . . . . . . . . . 63,44,13,120 53,19,55,358
    Net profit (Other than minority) . . . . . . . . . . . . . . . . . . 10955.29 8960.61
    Basic earnings per share (Rs.) . . . . . . . . . . . . . . . . . . . 172.68 168.61
    Diluted earnings per share (Rs.) . . . . . . . . . . . . . . . . . . 172.68 168.45
    Nominal value per share (Rs.) . . . . . . . . . . . . . . . . . . . 10.00 10.00
    3.7 Accounting for taxes on Income
    i) During the year, Rs. 1075.97 crores [Previous Year Rs. 483.03 crores] has been credited to Profit and
    Loss Account by way of adjustment of deferred tax.
    ii) The break up of deferred tax assets and liabilities into major items is given below:
    Particulars As at 31-Mar 2009 As at 31-Mar 2008
    Deferred Tax Assets
    Provision for non performing assets 454.78 282.81
    Ex-gratia paid under Exit option 100.21 147.83
    Wage Revision 769.19 214.92
    Provision for Gratuity, Leave, Pension etc 1,214.24 556.73
    Others 461.39 751.68
    Total 2,999.81 1,953.97
    Deferred Tax Liabilities
    Depreciation on Fixed Assets 119.62 110.43
    Interest on securities 595.42 580.96
    Others 276.76 484.19
    Total 991.80 1,175.58
    Net Deferred Tax Assets/(Liabilities) 2,008.01 778.39
    3.8 Investments in jointly controlled entities:
    As required by AS 27, the aggregate amount of the assets, liabilities, income and expenses related to the
    group’s interests in jointly controlled entities are disclosed as under:
    Particulars As at 31-Mar 2009 As at 31-Mar 2008
    Liabilities
    Capital & Reserves 70.34 64.41
    Deposits — —
    Borrowings 0.26 0.35
    Other Liabilities & Provisions 28.65 27.05
    TOTAL 99.25 91.81

    F - 242
    Particulars As at 31-Mar 2009 As at 31-Mar 2008
    Assets
    Cash and balances with Reserve Bank of India 0.01 0.01
    Balances with Banks and Money at call and short notice 21.44 2.04
    Investments 3.52 2.62
    Advances — —
    Fixed Assets 11.20 16.23
    Other Assets 63.08 70.91
    TOTAL 99.25 91.81
    Capital Commitments Nil Nil
    Other Contingent Liabilities NiL Nil
    Income
    Interest earned — 5.69
    Other income 51.47 61.63
    Total 51.47 67.32
    Expenditure
    Interest expended — —
    Operating expenses 41.31 47.41
    Provisions & contingencies 4.23 6.44
    Total 45.54 53.85
    Profit 5.93 13.47
    3.9 Impairment of assets:
    In the opinion of the Bank’s Management, there is no impairment to the assets to which Accounting Standard
    28 - “Impairment of Assets” applies.
    3.10 Provisions, Contingent Liabilities & Contingent Assets
    a) Break up of provisions:
    Current Year Previous Year
    a) Provision for Income Tax (current tax) 7,598.23 5,128.83
    b) Provision for Income Tax (deferred tax asset) (1,075.97) (483.03)
    c) Fringe Benefit Tax 174.64 135.47
    d) Provision for other taxes 24.87 (3.54)
    e) Amount of provision made against NPAs
    (including write back of provision) 3,616.30 2,804.05
    f) General provision on Standard Assets in the
    global loan portfolio 304.83 773.21
    g) Depreciation in the value of Investments in
    India and Outside India 1352.77 153.15
    h) Others (Net of write-backs) 726.17 610.56
    Total 12,721.84 9,118.70
    (Figures in brackets indicate credit)

    F - 243
    b) Floating provisions:
    Current Year Previous Year
    a) Opening Balance 685.04 515.95
    b) Addition during the year 155.60 169.09
    c) Draw down during the year 326.00 0.00
    d) Closing balance 514.64 685.04
    c) Description of contingent liabilities and contingent assets:
    Sr. Items Brief Description
    No
    1, Claims against the Group not The parent and its constituents are parties to various
    acknowledged as debts proceedings in the normal course of business. It does not
    expect the outcome of these proceedings to have a material
    adverse effect on the Group’s financial conditions, results
    of operations or cash flows.
    2. Liability on account of The Group enters into foreign exchange contracts, currency
    contracts outstanding options, forward rate agreements, currency swaps and
    forward exchange contracts interest rate swaps with inter-bank participants 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 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 that
    are recorded as contingent liabilities, are typically amounts
    used as a benchmark for the calculation of the interest
    component of the contracts.
    3. Guarantees given on behalf of As a part of its commercial banking activities, the Group
    constituents, acceptances issues documentary credits and guarantees on behalf of its
    endorsements and other customers. Documentary credits enhance the credit standing
    obligations of the customers of the Group. Guarantees generally
    represent irrevocable assurances that the Bank will make
    payment in the event of the customer failing to fulfil its
    financial or performance obligations.
    4. Other items for which the Group The Group is a party to various taxation matters in respect
    is contingently liable of which appeals are pending. These are being contested
    by the Group and not provided for. Further the Group has
    made commitments to subscribe to shares in the normal
    course of business.
    d) The contingent liabilities mentioned above are dependent upon the outcome of court/arbitration/out of
    court settlements, disposal of appeals, the amount being called up, terms of contractual obligations,
    devolvement and raising of demand by concerned parties, as the case may be.
    e) Movement of provisions against contingent liabilities:
    Current Year Previous Year
    a) Opening Balance 238.34 142.19
    b) Addition during the year 108.14 118.33
    c) Draw down during the year 42.53 22.18
    d) Closing balance 303.95 238.34

    F - 244
    4. Pending Wage Agreement: The Eighth Bipartite Settlement entered into by the Indian Banks’ Association on behalf
    of the member Banks with the All India Unions of Workmen expired on 31st October 2007. Pending the execution of
    a new agreement, a provision of Rs. 1684.10 crores (Previous Year Rs.666.89 crores) has been made during the year
    in the accounts for the Bank’s estimated liability in respect of wage revision to be effective from 1st November
    2007. The total provision held on account of wage revision as on 31st March 2009 is Rs. 2372.54 crores (including
    Rs. 21.55 crores transferred from eSBS).
    5. Agricultural Debt Waiver and Debt Relief Scheme 2008
    As per the Agricultural Debt Waiver and Debt Relief Scheme 2008, the amount receivable from the Central Government
    on account of debt waiver is Rs. 7424.37 crores and on account of debt relief is Rs. 947.94 crores, which is treated
    as part of advances and other assets respectively in accordance with the scheme. For the Debt Waiver, the
    Government of India has agreed to provide interest on the amount receivable from it from the date of payment of
    the first instalment and accordingly no provision for loss of interest on present value terms has been made. Further,
    the instalment of Rs. 2912.61 crores has been received from Government of India. In respect of Debt Relief, the
    group has made provision of Rs. 248.28 crores towards present value of loss of interest on amount receivable from
    eligible farmers, which is reversible to General Reserve upon complete settling of the account after receipt of claim
    from the Government. The figures of debt relief are subject to payment of dues by the farmers.
    6. In accordance with RBI circular DBOD NO.BP.BC.42/21.01.02/2007-08 redeemable preference shares are treated as
    liabilities and the coupon payable thereon is treated as interest.
    7. Additional statutory information disclosed in separate financial statements of the parent and the subsidiaries having
    no bearing on the true and fair view of the consolidated financial statements and also the information pertaining to
    the items which are not material have not been disclosed in the consolidated financial statements in view of the
    general clarifications issued by ICAI.
    8. Previous year’s figures have been regrouped and reclassified, wherever necessary and determinable, to make them
    comparable with current year’s figures. In cases where disclosures have been made for first time in terms of RBI
    guidelines/Accounting Standards, previous year figures have not been mentioned
    In terms of our Review Report of even date
    For R.G.N. Price & Co.,
    Chartered Accountants
    (P.M. Veeramani)
    Partner
    M.No. 023933
    Kolkata, 9th May 2009

    F - 245
    PRINCIPAL ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (CONSOLIDATED) FOR THE YEAR ENDED
    31ST MARCH 2008
    SCHEDULE 17 — PRINCIPAL ACCOUNTING POLICIES: 2007-2008
    A. BASIS OF PREPARATION:
    The accompanying financial statements have been prepared under the historical cost convention as modified for
    derivatives and foreign currency transactions, as enumerated in Part C below. They conform to Generally Accepted
    Accounting Principles (GAAP) in India, which comprise the statutory provisions, guidelines of regulatory authorities,
    Reserve Bank of India (RBI), Insurance Regulatory and Development Authority, Companies Act, 1956, Accounting
    Standards (AS)/guidance notes issued by the Institute of Chartered Accountants of India (ICAI), and the prevalent
    practices in India.
    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 the accounting estimates is recognised prospectively in the current and future periods.
    B. BASIS OF CONSOLIDATION:
    Consolidated financial statements of the Group (comprising of 27 subsidiaries, 2 Joint Ventures and 28 Associates)
    have been prepared on the basis of:
    a) Audited accounts of State Bank of India (Parent).
    b) Line by line aggregation of each item of asset/liability/income/expense of the subsidiaries with the respective
    item of the Parent, and after eliminating all material intra-group balances/transactions, unrealised profit/loss,
    and making necessary adjustments wherever required for non-uniform accounting policies as per Accounting
    Standard 21 issued by The Institute of Chartered Accountants of India (ICAI).
    c) Consolidation of Joint Ventures — ‘Proportionate Consolidation’ as per AS 27 of ICAI.
    d) Accounting for investment in ‘Associates’ under the ‘Equity Method’ as per the AS 23 of ICAI.
    The difference between cost to the group of its investment in the subsidiary entities and the group’s portion of the
    equity of the subsidiaries is recognised in the financial statements as goodwill/capital reserve.
    Minority interest in the net assets of the consolidated subsidiaries consists of:
    a) The amount of equity attributable to the minority at the date on which investment in a subsidiary is made,
    and
    b) The minority share of movements in revenue reserves/loss (equity) since the date the parent-subsidiary
    relationship came into existence.
    C. PRINCIPAL ACCOUNTING POLICIES
    1. Revenue recognition
    1.1 Income and expenditure are accounted on accrual basis, except otherwise stated below. In respect of banks’
    foreign branches/subsidiaries, income is recognised as per the local laws of the country in which the respective
    foreign branch/subsidiary is located.
    1.2 Interest income is recognised in the Profit and Loss Account as it accrues except (i) income from non-
    performing assets (NPAs), comprising of advances, leases and investments, which is recognised upon
    realisation, as per the prudential norms prescribed by the RBI/ respective country regulators (hereafter
    collectively referred to as Regulatory Authorities), (ii) interest on application money on investments (iii)
    overdue interest on investments and bills discounted, (iv) Income on Rupee Derivatives designated as
    “Trading”.
    1.3 Profit / Loss on sale of investments is credited / debited to “Profit / Loss on Sale of Investments” and
    thereafter in respect of profit on sale of investments in the Held to Maturity category is appropriated (net of
    applicable taxes and statutory reserve requirements) to Capital Reserve.

    F - 246
    1.4 Income from finance leases is calculated by applying the interest rate implicit in the lease to the net investment
    outstanding on the lease, over the primary lease period. Leases effective from April 1, 2001 are accounted as
    advances at an amount equal to the net investment in the lease. The lease rentals are apportioned between
    principal and finance income based on a pattern reflecting a constant periodic return on the net investment
    outstanding in respect of finance leases. The principal amount is utilized for reduction in balance of net
    investment in lease and finance income is reported as interest income.
    1.5 Income (other than interest) on investments in “Held to Maturity” (HTM) category acquired at a discount to
    the face value, is recognised as follows:
    i. On Interest bearing securities, it is recognised only at the time of sale/redemption.
    ii. On zero-coupon securities, it is accounted for over the balance tenor of the security on a constant yield
    basis.
    1.6 Dividend is accounted on an accrual basis where the right to receive the dividend is established.
    1.7 All other commission and fee incomes are recognised on their realisation except for (i) Guarantee commission
    on deferred payment guarantees, which is spread over the period of the guarantee and (ii) Commission on
    Government Business, which is recognised as it accrues.
    1.8 Non-banking entities
    Merchant Banking:
    a) Issue management and advisory fees are recognised as per the terms of agreement with the client.
    b) Fees for private placement are recognised on completion of assignment.
    c) Underwriting commission relating to public issues is accounted for on finalisation of allotment of the
    public issue.
    d) Brokerage income relating to public issues/mutual fund/other securities is accounted for based on
    mobilisation and intimation received from clients/ intermediaries.
    Asset Management:
    a. Management fee is recognised at specific rates agreed with the relevant schemes, applied on the average
    daily net assets of each scheme (excluding inter-scheme investments, where applicable, and investments
    made by the company in the respective scheme) and are in conformity with the limits specified under
    SEBI (Mutual Funds) Regulations, 1996.
    b. Portfolio Advisory Service income is recognised on accrual basis as per the terms of the contract.
    c. Recovery from guaranteed schemes of deficit earlier recognised as expense is recognised as income in
    the year of receipt.
    d. Scheme Expenses: Expenses of schemes in excess of the stipulated rates are charged to the Profit and
    Loss Account.
    e. Recovery, if any, on realisation of devolved investments of schemes acquired by the company in terms
    of right of subrogation is accounted on the basis of receipts.
    Credit Card Operations:
    a. Joining membership fee and first annual fee has been recognised over a period of one year as this more
    closely reflects the period to which the fee relates to.
    b. Interchange income is recognised on accrual basis.
    c. All other service fees are recorded at the time of recording the respective transaction.
    d. Interest income on dues from credit card holders is recognised on accrual basis except for customers
    defaulting in payment of minimum amount due for a period exceeding 180 days in respect of which
    income is recognised in accordance with the prudential norms.
    Factoring:
    Factoring service charges are accounted on accrual basis except in the case of non-performing assets, where
    income is accounted on realisation. Processing charges are accrued upon acceptance of sanction of the
    factoring /financing limits by the Company.

    F - 247
    Life Insurance:
    a) Life insurance premium (net of service tax) is recognized as income when due from policyholders.
    Uncollected premium from lapsed policies is not recognised as income until such policies are revived. In
    respect of linked business, premium income is recognised when the associated units are allotted.
    b) Premium ceded on reinsurance is accounted in accordance with the terms of the treaty or in-principle
    arrangement with the Re-Insurer.
    c) Life insurance claims by death are accounted when intimated. Intimations upto the end of the year are
    considered for accounting of such claims. Claims by maturity are accounted on the policy maturity date.
    Annuity benefits are accounted when due. Surrenders are accounted as and when notified. Claims cost
    consist of the policy benefit amounts and claims settlement costs, where applicable. Amounts recoverable
    from re-insurers are accounted for in the same period as the related claims and are reduced from claims.
    d) Acquisition costs such as commission; medical fees etc. are costs that are primarily related to the
    acquisition of new and renewal insurance contracts and are expensed as and when incurred.
    e) Liability for life policies: The actuarial liability of all the life insurance policies has been calculated by
    the appointed actuary as per the guidelines prescribed by the Institute of Actuaries of India.
    2. Investments
    Investments are accounted for in accordance with the extant regulatory guidelines. The bank follows trade date
    method for accounting of its investments.
    2.1 Classification
    Investments are classified into 3 categories, viz. Held to Maturity, Available for Sale and Held for Trading
    categories (hereafter called categories). Under each of these categories, investments are further classified into
    the following six groups:
    i. Government Securities,
    ii. Other Approved Securities,
    iii. Shares,
    iv. Debentures and Bonds,
    v. Subsidiaries/Joint ventures and
    vi. Others.
    2.2 Basis of classification:
    i. Investments that the Bank intends to hold till maturity are classified as Held to Maturity.
    ii. Investments that are held principally for resale within 90 days from the date of purchase are classified
    as Held for Trading.
    iii. Investments, which are not classified in the above two categories, are classified as Available for Sale.
    iv. An investment is classified as Held to Maturity, Available for Sale or Held for Trading at the time of its
    purchase and subsequent shifting amongst categories is done in conformity with regulatory guidelines.
    2.3 Valuation:
    i. In determining the acquisition cost of an investment:
    (a) Brokerage/commission received on subscriptions is reduced from the cost.
    (b) Brokerage, commission etc. paid in connection with acquisition of investments are expensed upfront
    and excluded from cost.
    (c) Broken period interest paid / received on debt instruments is treated as interest expense/income
    and is excluded from cost/sale consideration.
    (d) Cost is determined on the weighted average cost method.
    (e) The transfer of a security amongst the above three categories is accounted for at the least of
    acquisition cost/book value/market value on the date of transfer, and the depreciation, if any, on
    such transfer is fully provided for.

    F - 248
    ii. Treasury Bills and Commercial Papers are valued at carrying cost.
    iii. Held to Maturity category: Each scrip under Held to Maturity category is carried at its acquisition cost
    or at amortised cost, if acquired at a premium over the face value. Any premium on acquisition is
    amortised over the remaining maturity period of the security on constant yield basis. Such amortisation
    of premium is adjusted against income under the head “interest on investments”. A provision is made
    for diminution, other than temporary. Investments in Regional Rural Banks (RRBs) are valued at equity
    cost determined in accordance with Accounting Standard 23.
    iv. Available for Sale and Held for Trading categories: Each scrip in the above two categories is revalued
    at the market price or fair value determined as per Regulatory guidelines, and only the net depreciation
    of each group for each category is provided for and net appreciation, is ignored. On provision for
    depreciation, the book value of the individual securities remains unchanged after marking to market.
    v. Security receipts issued by an asset reconstruction company (ARC) are valued in accordance with the
    guidelines applicable to non-SLR instruments. Accordingly, in cases where the security receipts issued
    by the ARC are limited to the actual realisation of the financial assets assigned to the instruments in the
    concerned scheme, the Net Asset Value, obtained from the ARC, is reckoned for valuation of such
    investments.
    vi. Investments are classified as performing and non-performing, based on the guidelines issued by the RBI
    in case of domestic offices and respective regulators in case of foreign branches/subsidiaries. Investments
    of domestic offices become non performing where:
    a) Interest/instalment (including maturity proceeds) is due and remains unpaid for more than 90 days.
    b) In the case of equity shares, in the event the investment in the shares of any company is valued
    at Re. 1 per company on account of the non availability of the latest balance sheet, those equity
    shares would be reckoned as NPI.
    c) If any credit facility availed by the issuer is NPA in the books of the bank, investment in any of
    the securities issued by the same issuer would also be treated as NPI and vice versa.
    d) The above would apply mutatis-mutandis to preference shares where the fixed dividend is not
    paid.
    e) The investments in debentures/ bonds, which are deemed to be in the nature of advance, are also
    subjected to NPI norms as applicable to investments.
    f) In respect of foreign branches/subsidiaries, provisions for non performing investments are made
    as per the local regulations or as per the norms of RBI, whichever is higher.
    vii. The Bank has adopted the Uniform Accounting Procedure prescribed by the RBI for accounting of Repo
    and Reverse Repo transactions [other than transactions under the Liquidity Adjustment Facility (LAF)
    with the RBI]. Accordingly, the securities sold/purchased under Repo/Reverse repo are treated as outright
    sales/purchases and accounted for in the Repo/Reverse Repo Accounts, and the entries are reversed on
    the date of maturity. Costs and revenues are accounted as interest expenditure/ income, as the case may
    be. Balance in Repo/Reverse Repo Account is adjusted against the balance in the Investment Account.
    viii. Securities purchased / sold under LAF with RBI are debited / credited to Investment Account and
    reversed on maturity of the transaction. Interest expended / earned thereon is accounted for as expenditure
    / revenue.
    3. Loans /Advances and Provisions thereon:
    3.1 Loans and Advances are classified as performing and non-performing, based on the guidelines issued by the
    RBI. Loan assets become non-performing where:
    i. In respect of term loan, interest and/or instalment of principal remains overdue for a period of more than
    90 days;
    ii. In respect of an Overdraft or Cash Credit advance, the account remains “out of order”, i.e. if the
    outstanding balance exceeds the sanctioned limit/drawing power continuously for a period of 90 days,
    or if there are no credits continuously for 90 days as on the date of balance-sheet, or if the credits are
    not adequate to cover the interest due during the same period;

    F - 249
    iii. In respect of bills purchased/ discounted, the bill remains overdue for a period of more than 90 days;
    iv. In respect of agricultural advances for short duration crops, where the instalment of principal or interest
    remains overdue for 2 crop seasons;
    v. In respect of agricultural advances for long duration crops, where the principal or interest remains
    overdue for one crop season.
    3.2 Non-Performing advances are classified into sub-standard, doubtful and loss assets, based on the following
    criteria stipulated by RBI:
    i. Sub-standard: A loan asset that has remained non-performing for a period less than or equal to 12
    months.
    ii. Doubtful: A loan asset that has remained in the sub-standard category for a period of 12 months.
    iii. Loss: A loan asset where loss has been identified but the amount has not been fully written off.
    3.3 Provisions are made for NPAs as per the extant guidelines prescribed by the regulatory authorities, subject to
    minimum provisions as prescribed below by the RBI:
    Substandard Assets:
    i. A general provision of 10%
    ii. Additional provision of 10% for exposures which are unsecured ab-initio (where realisable value of
    security is not more than 10 percent ab-initio)
    Doubtful Assets:
    Secured portion:
    i. Upto one year 20%
    ii. One to three years 30%
    iii. More than three years 100%
    Unsecured portion 100%
    Loss Assets: 100%
    3.4 In respect of foreign branches/subsidiaries, provisions for non performing advances are made as per the local
    regulations or as per the norms of RBI, whichever is higher.
    3.5 The sale of NPAs is accounted as per guidelines prescribed by the RBI, which requires 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. Net book value is outstanding as reduced by specific provisions held
    and ECGC claims received.
    3.6 Advances are net of specific loan loss provisions, unrealised interest, ECGC claims received and bills
    rediscounted.
    3.7 For restructured/rescheduled assets, provisions are made in accordance with the guidelines issued by RBI,
    which requires that the present value of future interest due as per the original loan agreement, compared with
    the present value of the interest expected to be earned under the restructuring package, be provided in
    addition to provision for NPAs. The provision for interest sacrifice is not reduced from advances and is
    included in the balance sheet under the head “Other Liabilities — Others”.
    3.8 In the case of loan accounts classified as NPAs, an account may be reclassified as a performing account if it
    conforms to the guidelines prescribed by the regulators.
    3.9 Amounts recovered against debts written off in earlier years are recognised as revenue.
    3.10 Unrealised Interest recognised in the previous year on advances which have become non-performing during
    the current year, is provided for.
    3.11 In addition to the specific provision on NPAs, general provisions are also made for standard assets as per the
    extant guidelines prescribed by the RBI. The provisions on standard assets are not reckoned for arriving at
    net NPAs. These provisions are reflected in Schedule 5 of the balance sheet under the head “Other Liabilities
    & Provisions — Others.”

    F - 250
    4. Provision for Country Exposure:
    In addition to the specific provisions held according to the asset classification status, provisions are held for
    individual country exposures (other than the home country). Countries are categorised into seven risk categories,
    namely, insignificant, low, moderate, high, very high, restricted and off-credit, and provisioning made as per extant
    RBI guidelines. 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 exposures.
    5. Derivatives:
    5.1 The Bank presently deals in Interest Rate Derivatives viz., Rupee Interest Rate Swaps, Cross Currency Interest
    Rate Swaps, Forward Rate Agreements and Currency Derivatives viz., Options and Currency Forwards and a
    mix of these generic instruments for trading and /or to cover deals done on behalf of customers and also to
    hedge on-balance sheet / off-balance sheet assets and liabilities that meet the criteria of ‘hedge-effectiveness’
    as laid down by regulators.
    5.2 Based on RBI guidelines, Derivatives are valued as under:
    a. Derivatives used for trading are marked to market and net appreciation / depreciation is recognised in
    the Profit and Loss Account.
    b. Derivatives used for hedging are:
    i. Marked to Market in cases where the underlying Asset / Liabilities are marked to market. The
    resultant gain / loss are recognised in Profit and Loss Account.
    ii. Accounted on accrual basis in cases where the underlying Assets / Liabilities are not marked to
    market.
    The net outstanding marked to market position of each type of derivative shown either under Asset or
    Liability, as the case may be.
    5.3 In case of forex OTC options the premium received on options sold and premium paid on options bought are
    recognised as income/ expenditure.
    6. Fixed Assets and Depreciation:
    6.1 Fixed assets are carried at cost less accumulated depreciation.
    6.2 Cost includes cost of purchase and all expenditure such as site preparation, installation costs and professional
    fees incurred on the asset before it is put to use. Subsequent expenditure incurred on assets put to use is
    capitalised only when it increases the future benefits from such assets or their functioning capability.
    6.3 Depreciation is provided on the written down value method at the rates prescribed under the Income Tax
    Rules 1962, which are considered appropriate by the management. The rates of depreciation and method of
    charging depreciation in respect of domestic operations are as under:
    Sr.
    No. Description of fixed assets Method of charging depreciation Depreciation/am ortization rate
    1 Computers Straight Line Method 33.33% every year
    2 Computer software forming Written Down Value
    an integral part of hardware Method 60%
    3 Computer Software which Straight Line Method 100%, in the year of
    does not form an integral part acquisition
    of hardware
    4 Assets given on financial Straight Line Method At the rate prescribed under
    lease upto 31st March 2001 Companies Act 1956
    5 Other fixed assets Written down value method At the rate prescribed under
    Income-tax Rules 1962
    6.4 In respect of assets acquired for domestic operations during the year, depreciation is charged for half an year
    in respect of assets used for upto 182 days and for the full year in respect of assets used for more than 182
    days, except depreciation on computers and software, which is charged for the full year irrespective of the
    period for which the asset was put to use.

    F - 251
    6.5 Items costing less than Rs.1,000 each are charged off in the year of purchase.
    6.6 In respect of leasehold premises, the lease premium, if any, is amortised over the period of lease and the lease
    rent is charged in the respective year.
    6.7 In respect of assets given on lease by the Bank on or before 31st March 2001, the value of the assets given
    on lease is disclosed as Leased Assets under fixed assets, and the difference between the annual lease charge
    (capital recovery) and the depreciation is taken to Lease Equalisation Account.
    6.8 In respect of fixed assets held at foreign branches/subsidiaries, depreciation is provided as per the regulations
    /norms of the respective countries.
    7. Leases:
    7.1 Assets given on financial lease by the Bank on or after 1st April 2001 are accounted as per Accounting
    Standard 19. Such assets are included under Other Assets.
    7.2 The asset classification and provisioning norms applicable to advances, as laid down in Para 3 above, are
    applied to such financial leases.
    8. Impairment of Assets:
    Fixed Assets are reviewed for impairment whenever events or changes in circumstances warrant 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 to future net discounted cash flows expected to be generated by the
    asset. If such assets are considered to be impaired, the impairment to be recognised is measured by the amount by
    which the carrying amount of the asset exceeds the fair value of the asset.
    9. Effect of changes in the foreign exchange rate:
    9.1 Foreign Currency Transactions:
    i. Foreign currency transactions are recorded on initial recognition in the reporting currency by applying
    to the foreign currency amount the exchange rate between the reporting currency and the foreign
    currency on the date of transaction.
    ii. Foreign currency monetary items are reported using the Foreign Exchange Dealers Association of India
    (FEDAI) closing spot rates.
    iii. Foreign currency non-monetary items, which are carried in terms at historical cost, are reported using
    the exchange rate at the date of the transaction.
    iv. Contingent liabilities denominated in foreign currency are reported using the FEDAI closing spot rates.
    v. Outstanding foreign exchange spot and forward contracts held for trading are revalued at the exchange
    rates notified by FEDAI for specified maturities, and the resulting profit or loss is included in the Profit
    or Loss account.
    vi. Foreign exchange forward contracts which are not intended for trading and are outstanding at the
    balance sheet date, are valued at the closing spot rate. The premium or discount arising at the inception
    of such a forward exchange contract is amortised as expense or income over the life of the contract.
    vii. Exchange differences arising on the settlement of monetary items at rates different from those at which
    they were initially recorded are recognised as income or as expense in the period in which they arise.
    9.2 Foreign Operations:
    Foreign Branches of the Bank and Offshore Banking Units have been classified as Non-integral Operations
    and Representative Offices have been classified as Integral Operations.
    a. Non-integral Operations:
    i. Both monetary and non-monetary foreign currency assets and liabilities including contingent
    liabilities of non-integral foreign operations are translated at closing exchange rates notified by
    FEDAI at the balance sheet date.
    ii. Income and expenditure of non-integral foreign operations are translated at quarterly average
    closing rates.

    F - 252
    iii. Exchange differences arising on net investment in non-integral foreign operations are accumulated
    in Foreign Currency Translation Reserve until the disposal of the net investment.
    b. Integral Operations:
    i. Foreign currency transactions are recorded on initial recognition in the reporting currency by
    applying to the foreign currency amount the exchange rate between the reporting currency and
    the foreign currency on the date of transaction.
    ii. Monetary foreign currency assets and liabilities of integral foreign operations are translated at
    closing exchange rates notified by FEDAI at the balance sheet date and the resulting profit/loss is
    included in the profit and loss account.
    iii. Foreign currency non-monetary items which are carried in terms of historical cost are reported
    using the exchange rate at the date of the transaction.
    10. Employee Benefits:
    10.1 Short Term Employee Benefits:
    The undiscounted amount of short-term employee benefits, such as medical benefits, casual leave etc. which
    are expected to be paid in exchange for the services rendered by employees are recognised during the period
    when the employee renders the service.
    10.2 Post Employment Benefits:
    i. Defined Benefit Plan:
    a. The group entities operate separate Provident Fund schemes. All eligible employees are entitled to
    receive benefits under the Provident Fund scheme. The group entities contribute monthly at a
    determined rate. These contributions are remitted to a trust established for this purpose and are
    charged to Profit and Loss Account. The group entities are liable for annual contributions and
    interests, which is payable at minimum specified rate of interest. The entities recognise such
    annual contributions and interest as an expense in the year to which they relate.
    b. The group entities operate gratuity and pension schemes, which are defined benefit plans.
    c. The group entities provide for gratuity to all eligible employees. The benefit is in the form of lump
    sum payments to vested employees on retirement, on death while in employment, or on termination
    of employment, for an amount equivalent to 15 days basic salary payable for each completed year
    of service, subject to a ceiling in terms of service rules. Vesting occurs upon completion of five
    years of service. The Bank makes annual contributions to a fund administered by trustees based
    on an independent external actuarial valuation carried out annually.
    d. Some group entities provide for pension to all eligible employees. The benefit is in the form of
    monthly payments as per rules and regular payments to vested employees on retirement, on death
    while in employment, or on termination of employment. Vesting occurs at different stages as per
    rules. The entities make annual contributions to funds administered by trustees based on an
    independent external actuarial valuation carried out annually.
    e. The cost of providing defined benefits is determined using the projected unit credit method, with
    actuarial valuations being carried out at each balance sheet date. Actuarial gains/losses are
    immediately recognised in the statement of profit and loss and are not deferred.
    ii. Other Long Term Employee benefits:
    a. All eligible employees of the group are eligible for compensated absences, silver jubilee award,
    leave travel concession, retirement award and resettlement allowance. The costs of such long term
    employee benefits are internally funded by the Bank.
    b. The cost of providing other long term benefits is determined using the projected unit credit
    method with actuarial valuations being carried out at each balance sheet date. Past service cost is
    immediately recognised in the statement of profit and loss and is not deferred.

    F - 253
    11. Provision for Taxation:
    11.1 Income tax expense is the aggregate amount of current tax, deferred tax and fringe benefit tax charge. Current
    year taxes are determined in accordance with the provisions of Accounting Standard 22 and tax laws prevailing
    in India after taking into account taxes of foreign branches/subsidiaries, which are based on the tax laws of
    respective jurisdiction. Deferred tax adjustments comprise of changes in the deferred tax assets or liabilities
    during the period.
    11.2 Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or
    substantially enacted prior to the balance sheet date. Deferred tax assets and liabilities are recognised on a
    prudent basis for the future tax consequences of timing differences arising between the carrying values of
    assets and liabilities and their respective tax basis, and carry forward losses. The impact of changes in the
    deferred tax assets and liabilities is recognised in the profit and loss account.
    11.3 Deferred tax assets are recognised and reassessed at each reporting date, based upon management’s judgement
    as to whether realisation is considered 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 assets can be
    realised against future profits.
    12. Earning per Share:
    12.1 The Bank reports basic and diluted earnings per share in accordance with AS 20 — ‘Earnings per Share’
    issued by the ICAI. Basic earnings per share are computed by dividing the net profit after tax by the
    weighted average number of equity shares outstanding for the year.
    12.2 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 are computed
    using the weighted average number of equity shares and dilutive potential equity shares outstanding at year
    end.
    13. Accounting for Provisions, Contingent Liabilities and Contingent Assets:
    13.1 In conformity with AS 29, “Provisions, Contingent Liabilities and Contingent Assets”, issued by the Institute
    of Chartered Accountants of India, the Bank recognises provisions only when it has a present obligation as
    a result of a past event, it is probable that an outflow of resources embodying economic benefits will be
    required to settle the obligation, and when a reliable estimate of the amount of the obligation can be made.
    13.2 No provision is recognised for
    i. any possible obligation that arises from past events and the existence of which will be confirmed only
    by the occurrence or non-occurrence of one or more uncertain future events not wholly within the
    control of the Bank; or
    ii. any present obligation that arises from past events but is not recognised because
    a. it is not probable that an outflow of resources embodying economic benefits will be required to
    settle the obligation; or
    b. a reliable estimate of the amount of obligation cannot be made.
    Such obligations are recorded as Contingent Liabilities. These are assessed at regular intervals and only
    that part of the obligation for which an outflow of resources embodying economic benefits is probable,
    is provided for, except in the extremely rare circumstances where no reliable estimate can be made.
    13.3 Contingent Assets are not recognised in the financial statements as this may result in the recognition of
    income that may never be realised.
    14. Cash and cash equivalents:
    Cash and cash equivalents include cash on hand and in ATM’s, and gold in hand, balances with RBI, balances with
    other banks, and money at call and short notice.

    F - 254
    15. Employee Share Purchase Scheme:
    In accordance with the Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999
    issued by the Securities and Exchange Board of India (“SEBI”), the excess of market price one day prior to the date
    of issue of the shares over the price at which they are issued is recognised as employee compensation cost.
    16. Share Issue Expenses:
    Share issue expenses are charged to the Share Premium Account.

    F - 255
    SCHEDULE 18

    NOTES ON ACCOUNTS (2007-2008)

    (Amount in Rupees in crore)

    1. List of Subsidiaries/Joint Ventures/Associates considered for preparation of consolidated


    financial statements:

    1.1 The 27 Subsidiaries, 2 Joint Ventures and 28 Associates (which along with State Bank of
    India, the parent, constitute the Group), considered in the preparation of the consolidated
    financial statements, are

    A) Subsidiaries

    Country of Group’s Stake


    Sr. No Name of the Subsidiary Incorporation (%)

    1) State Bank of Bikaner & Jaipur. . . . . . . . . . . . . . . . . . . India 75.07


    2) State Bank of Hyderabad. . . . . . . . . . . . . . . . . . . . . . . . India 100.00
    3) State Bank of Indore . . . . . . . . . . . . . . . . . . . . . . . . . . . India 98.05
    4) State Bank of Mysore . . . . . . . . . . . . . . . . . . . . . . . . . . India 92.33
    5) State Bank of Patiala . . . . . . . . . . . . . . . . . . . . . . . . . . India 100.00
    6) State Bank of Saurashtra . . . . . . . . . . . . . . . . . . . . . . . . India 100.00
    7) State Bank of Travancore . . . . . . . . . . . . . . . . . . . . . . . India 75.01
    8) SBI Commercial & International Bank Ltd . . . . . . . . . . India 100.00
    9) SBI Capital Markets Ltd . . .. . . . . . . . . . . . . . . . . . . . . India 86.16
    10) SBICAP Securities Ltd . . . . . . . . . . . . . . . . . . . . . . . . . India 86.16
    11) SBICAP Trustee Company Ltd . . . . . . . . . . . . . . . . . . . India 86.16
    12) SBICAPS Ventures Ltd . . . . . . . . . . . . . . . . . . . . . . . . . India 86.16
    13) SBI DFHI Ltd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . India 65.95
    14) SBI Factors & Commercial Services Pvt Ltd . . . . . . . . . India 69.88
    15) SBI Mutual Fund Trustee Company Pvt Ltd . . . . . . . . . India 100.00
    16) Global Trade Finance Ltd . . . . . . . . . . . . . . . . . . . . . . . India 92.03
    17) State Bank of India (Canada) . . . . . . . . . . . . . . . . . . . . Canada 100.00
    18) State Bank of India (California) . . . . . . . . . . . . . . . . . . USA 100.00
    19) SBI International (Mauritius) Ltd . . . . . . . . . . . . . . . . . Mauritius 98.00
    20) Indian Ocean International Bank Ltd . . . . . . . . . . . . . . Mauritius 62.58
    21) PT Bank Indomonex . . . . . . . . . . . . . . . . . . . . . . . . . . . Indonesia 76.00
    22) SBICAP (UK) Ltd . . . . . . . . . . . . . . . . . . . . . . . . . . . . U.K. 86.16
    23) SBI Cards and Payment Services Pvt Ltd @ . . . . . . . . . . India 60.00
    24) SBI Funds Management Pvt Ltd @ . . . . . . . . . . . . . . . . . India 63.00
    25) SBI Life Insurance Company Ltd @ . . . . . . . . . . . . . . . . India 74.00
    26) Commercial Bank of India Llc @ . . . . . . . . . . . . . . . . . . Russia 60.00
    27) SBI Funds Management (International) Private Ltd @ . . . Mauritius 63.00

    @ These entities are jointly controlled

    B) Joint Ventures

    Country of Group’s Stake


    Sr. No Name of the Joint Venture Incorporation (%)

    1) C Edge Technologies Ltd . . . . . . . . . . . . . . . . . . . . . . . India 49.00


    2) GE Capital Business Process Management India 40.00
    Services Pvt Ltd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

    F-256
    C) Associates:

    Country of Group’s Stake


    Sr. No Name of the Associate Incorporation (%)

    1) Andhra Pradesh Grameena Vikas Bank . . . . . . . . . . . . . India 35.00


    2) Arunachal Pradesh Rural Bank . . . . . . . . . . . . . . . . . . . India 35.00
    3) Chhatisgarh Gramin Bank . . . . . . . . . . . . . . . . . . . . . . . India 35.00
    4) Ellaquai Dehati Bank . . . . . . . . . . . . . . . . . . . . . . . . . . India 35.00
    5) Meghalaya Rural Bank (erstwhile Ka Bank India 35.00
    Nongkyndong Ri Khasi Jaintia) . . . . . . . . . . . . . . . . . . .
    6) Krishna Grameena Bank . . . . . . . . . . . . . . . . . . . . . . . . India 35.00
    7) Langpi Dehangi Rural Bank . . . . . . . . . . . . . . . . . . . . . India 35.00
    8) Madhya Bharat Gramin Bank . . . . . . . . . . . . . . . . . . . . India 35.00
    9) Mizoram Rural Bank . . . . . . . . . . . . . . . . . . . . . . . . . . India 35.00
    10) Nagaland Rural Bank . . . . . . . . . . . . . . . . . . . . . . . . . . India 35.00
    11) Parvatiya Gramin Bank . . . . . . . . . . . . . . . . . . . . . . . . . India 35.00
    12) Purvanchal Kshetriya Gramin Bank . . . . . . . . . . . . . . . India 35.00
    13) Samastipur Kshetriya Gramin Bank . . . . . . . . . . . . . . . India 35.00
    14) Utkal Gramya Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . India 35.00
    15) Uttaranchal Gramin Bank . . . . . . . . . . . . . . . . . . . . . . . India 35.00
    16) Vananchal Gramin Bank . . . . . . . . . . . . . . . . . . . . . . . . India 35.00
    17) Marwar Ganganagar Bikaner Gramin Bank . . . . . . . . . . India 26.27
    18) Vidisha Bhopal Kshetriya Gramin Bank . . . . . . . . . . . . India 34.32
    19) Deccan Grameena Bank . . . . . . . . . . . . . . . . . . . . . . . . . India 35.00
    20) Cauvery Kalpatharu Grameena Bank . . .. . . . . . . . . . . . India 32.32
    21) Malwa Gramin Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . India 35.00
    22) Saurashtra Grameena Bank . . . . . . . . . . . . . . . . . . . . . . India 35.00
    23) Clearing Corporation of India Ltd . . . . . . . . . . . . . . . . India 28.97
    24) SBI Home Finance Ltd . . . . . . . . . . . . . . . . . . . . . . . . . India 25.05
    25) UTI Asset Management Company Pvt Ltd . . . . . . . . . . India 25.00
    26) Bank of Bhutan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bhutan 20.00
    27) Nepal SBI Bank Ltd . . . . . . . . . . . . . . . . . . . . . . . . . . . Nepal 50.00
    28) S.S. Ventures Services Ltd . . . . . . . . . . . . . . . . . . . . . . India 43.08

    1.2 The following changes have taken place in the consolidation process as compared to
    2006-07.

    a. SBI has acquired 91.00% equity capital of Global Trade Finance Limited (GTFL), a
    factoring company incorporated in India, at a cost of Rs.520.56 Crore on 28th March
    2008 and has infused fresh equity capital of Rs.75.00 Crore thereby increasing its
    equity stake by further 1.03% on the same date. Accordingly, the financial statements
    of GTFL have been consolidated with effect from 28th March 2008. The difference of
    Rs.357.33 Crore between acquisition cost and the net equity has been recognised as
    goodwill in accordance with Accounting Standard 21 — Consolidated Financial
    Statements issued by the Institute of Chartered Accountants of India.

    b. SBICAPS Ventures Limited, a 100% subsidiary of SBI Capital Markets Limited, a


    subsidiary of SBI, has floated a 50-50 joint venture, SS Ventures Services Limited on
    15th December 2007 for setting up a knowledge sector fund. Since SBI’s indirect
    holding in the new entity is 43.08%, it has been considered as an associate and has
    been consolidated as per Accounting Standard 23 — Accounting for investment in
    Associates in Consolidated Financial Statements.

    c. During the year the group’s stake in Indian Ocean International Bank Ltd. (IOIB) has
    increased to 62.58% as against 56.84% as on 31st March 2007.

    F-257
    1.3 Two of the associates — Bank of Bhutan (Gregorian Calendar Year) and Nepal SBI Bank
    Ltd (Hindu Calendar Year) follow accounting years different from that of the parent.
    Accordingly, the financial statements of these associates are made as of 31st December
    2007 and 16th July 2007 respectively.

    2. Share Capital:

    a) During the year, the RBI has transferred their entire shareholding of 31,43,39,200 shares in
    the parent representing 59.73% of the issued capital of the parent to the Government of
    India.

    b) During the year, the parent has issued 10,52,59,776 equity shares of Rs.10 each for cash at
    a premium of Rs.1580 per equity share i.e. at Rs.1590 per equity share aggregating to
    Rs.16736.30 Crore on right basis. Of the above, the parent has allotted 10,51,71,498 fully
    paid equity shares to the eligible applicants, keeping in abeyance the allotment of 88,278
    equity shares of Rs.10 each which are subject matter of title disputes or are sub-judice.

    c) The Government of India has subscribed to 6,28,68,000 equity shares of Rs.10 each at a
    premium of Rs.1580 per share as part of rights offer of the parent. The Government has
    discharged the total consideration of Rs.9996.01 Crore by issue of “8.35% SBI Rights Issue
    GOI Special Bonds 2024”. Certain restrictions have been placed by the Government on the
    sale of these bonds.

    d) Expenses in relation to the issue of shares amounting to Rs.28.70 Crore have been debited
    to the Share Premium Account.

    3. Employee Stock Purchase Scheme:

    3.1 The Central Board of the parent has adopted the Employees Share Purchase Scheme (the
    Scheme), duly approved by the Central Government, and accordingly has approved the
    offer of 86,17,500 equity shares of Rs.10 each at a premium of Rs.1580 as part of its rights
    issue to the employees of the Parent including the Chairman and Managing Directors. The
    Scheme is in accordance with the provisions of the Securities and Exchange Board of India
    (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.
    The said scheme has since been closed on 30th April 2008.

    3.2 As on date, no equity shares have been allotted, under the Scheme, since the parent is in
    the process of compiling the data on the number of shares to be issued pursuant to the
    exercise of the rights by the employees. The parent has made provision of Rs.11.00 Crore
    towards employee compensation expenses on estimated basis.

    4. Disclosures as per Accounting Standards:-

    4.1 Significant changes in accounting policies:

    i. Dividend Accounting

    During the year the group has changed its accounting policy in respect of recognition
    of dividend on shares of corporate bodies from realisation basis to accrual basis where
    the right to receive the dividend is established. Consequently, the dividend income and
    the profit for the year are higher by Rs.4.68 Crore.

    F-258
    ii. Amortisation of Premium on HTM Securities

    As required by RBI general clarification dated July 11, 2007, the group has deducted
    the amortisation of premium on government securities, from “Income on investments”
    included in “Interest earned” which was earlier included in “Other income” amounting
    to Rs.1669.69 Crore for the year ended March 31, 2008 (Rs.1662.41 Crore for the year
    ended March 31, 2007) Prior year figures have been reclassified to conform to the
    current classification. This change in accounting procedure does not have any impact
    on the net profit for the year.

    iii. Mark-to-Market gains / losses of Forex OTC options

    The group has changed the accounting policy in respect of accounting of


    Mark-to-Market (MTM) gains / losses in case of forex OTC options, where-by the
    balance in premium received on options sold and premium paid on options bought
    have been considered from this year to arrive at MTM value for forex OTC options.
    Consequent to this change in the accounting policy, the profit for the year is higher
    by Rs.133.80 Crore.

    iv. Segment Reporting

    During the year, the group has reclassified its primary segments as Treasury,
    Corporate/Wholesale banking, retail banking business and other banking business, in
    line with the directions issued by RBI. The group had hitherto been classifying
    banking operations, treasury operations and non-banking operations as primary
    segments.

    v. Employee Benefits

    a) The group had hitherto been measuring the liability for employee retirement
    benefits as per the erstwhile AS 15 (1995) “Accounting for Retirement Benefits”.
    The Bank has adopted AS 15 (Revised 2005) “Employee Benefits”, effective
    from 1st April 2007. Consequently an additional obligation of Rs.5848.46 Crore
    has accrued as on that date. Out of this, Rs.4527.02 Crore (Net of deferred tax
    assets of Rs.281.67 Crore) and Rs.160.20 Crore (Net of deferred tax assets of
    Rs.39.18 Crore) pertains to pension benefits and gratuity respectively. Rs.578.26
    Crore (Net of deferred tax assets of Rs.262.13 Crore) pertains to long term
    employee benefits.

    b) The group has exercised the option of charging the additional obligation to
    Revenue & Other Reserves. Accordingly, the transitional liability of Rs.5265.48
    Crore (net of deferred tax assets of Rs.582.98 Crore) has been accounted with
    transfer from Revenue & Other Reserves.

    c) Consequent to the adoption of AS-15 (Revised 2005) profit before tax is higher
    by Rs.191.16 Crore.

    vi. Prior Period Items

    Particulars Current year Previous year

    Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.70 (17.47)


    Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.49 16.38
    Interest expended . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 264.76
    Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.80 2.42

    F-259
    4.2 Employee’s Benefits

    4.2.1 Defined Benefit Plans

    The following table sets out the status of the defined benefit Pension Plan and Gratuity
    Plan as required under AS 15 (Revised 2005)

    Particulars Pension Plans Gratuity

    Change in the present value of the defined benefit


    obligation
    Opening defined benefit obligation at 1st April 2007 . .. . 20189.82 4800.07
    Current Service Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . 654.17 195.36
    Interest Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1637.57 387.15
    Actuarial losses (gains) . . . . . . . . . . . . . . . . . . . . . . . . . . 149.72 (99.27)
    Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1243.78) (396.27)
    Closing defined benefit obligation at 31st March 2008 . . 21387.50 4887.04
    Change in Plan Assets
    Opening fair value of plan assets at 1st April 2007 . . . . . 15263.37 4599.59
    Expected Return on Plan assets . . . . . . . . . . . . . . . . . . . . 1223.28 354.87
    Contributions by employer . . . . . . . . . . . . . . . . . . . . . . . . 1354.95 129.82
    Benefit Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1243.78) (396.27)
    Actuarial Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68.52 51.09
    Closing fair value of plan assets at 31st March 2008 . .. . 16666.34 4739.10
    Reconciliation of present value of the obligation and
    fair value of the plan assets
    Present Value of Funded obligation at 31st March 2008 . . 21387.50 4887.04
    Fair Value of Plan assets at 31st March 2008 . . . . . . . . . 16666.34 4739.10
    Deficit/(Surplus) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4721.16 147.94
    Unrecognised Past Service Cost . . . . . . . . . . . . . . . . . . . Nil Nil
    Net Liability/(Asset) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4721.16 147.94
    Amount Recognised in the Balance Sheet
    Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21387.50 4887.04
    Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16666.34 4739.10
    Net Liability/(Asset) recognised in Balance Sheet . . . . . . 4721.16 147.94
    Net Cost recognised in the profit and loss account
    Current Service Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . 654.17 195.36
    Interest Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1637.57 387.15
    Expected return on plan assets . . . . . . . . . . . . . . . . . . . . (1223.28) (354.87)
    Net actuarial losses (Gain) recognised during the year . . . 81.20 (150.36)
    Total costs of defined benefit plans included in Schedule
    16 “Payments to and provisions for employees” . . . . . . 1149.66 77.28
    Reconciliation of expected return and actual return
    on Plan Assets
    Expected Return on Plan Assets . . . . . . . . . . . . . . . . . . . 1223.28 354.87
    Actuarial Gain/(loss) on Plan Assets . . . . . . . . . . . . . . . . 68.52 51.09
    Actual Return on Plan Assets . . . . . . . . . . . . . . . . . . . . . 1291.80 405.96
    Reconciliation of opening and closing net
    liability/(asset) recognised in Balance Sheet
    Opening Net Liability as at 1st April 2007. . . . . . . . . . . . 4926.45 200.48
    Expenses as recognised in profit and loss account . . . . . . 1149.66 77.28
    Employers Contribution . . .. . . . . . . . . . . . . . . . . . . . . . . 1354.95 129.82
    Net liability/(Asset) recognised in Balance Sheet . . . . . . . 4721.16 147.94

    The Group expects to contribute Rs.821.64 Crore and Rs.112.52 Crore to its defined
    benefit Pension Plan and Gratuity Plan respectively during the next financial year.

    F-260
    Investments under Plan Assets of Gratuity Fund & Pension Fund as on 31st March
    2008 are as follows:

    Pension Fund Gratuity Fund

    Category of Assets % of Plan Assets % of Plan Assets

    Central Govt. Securities . . . . . . . . . . . . . . . . . . . . 5.01% 34.80%


    State Govt. Securities . . . . . . . . . . . . . . . . . . . . . 2.86% 21.12%
    Public Sector Bonds. . . . . . . . . . . . . . . . . . . . . . . 4.64% 15.92%
    FDR / TDR with Bank . . . . . . . . . . . . . . . . . . . . 2.36% 13.92%
    Bank Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . 79.09% 6.61%
    Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.04% 7.63%
    Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.00% 100.00%

    Out of the above investments following are held with the group

    Pension Fund Gratuity Fund

    Category of Assets % of Plan Assets % of Plan Assets

    FDR / TDR with Bank & Bank Deposits . . . . . . . 79.86% 4.15%

    Principal actuarial assumptions;

    Pension Fund Gratuity Fund

    Particulars Current year Previous year

    Discount Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.75% to 8% 8% to 8.15%


    Expected Rate of return on Plan Asset . . . . . . . . . 7.50% to 8% 7.50% to 8%
    Salary Escalation . . . . . . . . . . . . . . . . . . . . . . . . . 4% to 13% 4% to 13%

    The estimates of future salary growth, factored in actuarial valuation, take account of
    inflation, seniority, promotion and other relevant factors such as supply and demand
    in the employment market. Such estimates are very long term and are not based on
    limited past experience / immediate future. Empirical evidence also suggests that in
    very long term, consistent high salary growth rates are not possible. The auditors have
    relied upon the representation made by the Bank in this behalf.

    4.2.2 Employees Provident Fund

    In terms of the guidance on implementing the AS-15 (Revised 2005) issued by the
    Institute of the Chartered Accountants of India, the Employees Provident Fund set up
    by the Bank is treated as a defined benefit plan since the Bank has to meet the
    specified minimum rate of return. As at the year end, no shortfall remains unprovided
    for. Accordingly, other related disclosures in respect of Provident Fund have not been
    made and an amount of Rs.546.01 Crore is recognised as an expense towards the
    Provident Fund scheme of the Bank included under the head “Payments to and
    provisions for employees” in Profit and Loss Account.

    F-261
    4.2.3 Other Long term Employee Benefits

    Amount of Rs.205.99 Crore is recognised as an expense towards Long term Employee


    Benefits included under the head “Payments to and provisions for employees” in
    Profit and Loss account.

    Details of Provisions made for various long Term Employees’ Benefits during the
    year;

    Sr.
    No. Long Term Employees’ Benefits Amount

    1 Privilege Leave (Encashment) incl. leave encashment at the time 133.25


    of retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .....
    2 Leave Travel and Home Travel Concession (Encashment/ 40.64
    Availment) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..
    3 Sick Leave . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 23.74
    4 Silver Jubilee Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 5.01
    5 Resettlement Expenses on Superannuation . . . . . . . . . . . . . . . . . .. 5.28
    6 Casual Leave . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. (2.02)
    7 Retirement Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 0.09
    Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205.99

    4.3 Segment Reporting (As complied by management and relied upon by the auditors)

    4.3.1 Segment identification

    A) Primary (Business Segment)

    In compliance with the then prevailing RBI directions, the Bank had hitherto
    being classifying (i) Banking Operations, (ii) Treasury Operations and (iii)
    Non-Banking Operations as the primary segments. The RBI vide their circular
    no. BP.BC.81/ 21.04.018/2006-07 dated 18th April 2007, has modified its
    directions, requiring the Banks to identify / reclassify the following segments as
    primary segments:

    — Treasury

    — Corporate / Wholesale Banking

    — Retail Banking

    — Other Banking Business

    The present accounting and information system of the Bank does not support the
    capturing and extraction of the data in respect of the above segments separately.
    However, based on the present internal organisational and management reporting
    structure and the nature of their risk and returns, the existing primary segments
    have been regrouped as under:

    a) Treasury: The Treasury Segment includes the entire investment portfolio


    and trading in foreign exchange contracts and derivative contracts. The
    revenue of the treasury segment primarily consists of fees and gains or
    losses from trading operations and interest income on the investment
    portfolio.

    F-262
    b) Corporate / Wholesale Banking: The Corporate / Wholesale Banking
    segment comprises the lending activities of Corporate Accounts Group,
    Mid Corporate Accounts Group and Stressed Assets Management Group.
    These include providing loans and transaction services to corporate and
    institutional clients and further include non treasury operations of foreign
    offices.

    c) Retail Banking: The Retail Banking Segment comprises of branches in


    National Banking Group, which primarily includes personal Banking
    activities including lending activities to corporate customers having
    Banking relations with branches in the National Banking Group. This
    segment also includes agency business and ATM’s.

    d) Other Banking business — Segments not classified under (a) to (c) above
    are classified under this primary segment. This segment also includes the
    operations of all the Non-Banking Subsidiaries/Joint Ventures of the group.

    In the case of Banking Subsidiaries who do not have the management


    reporting structure corresponding to the parent, all the exposures in excess
    of Rs 5 Crore have been segregated and included in Corporate/Wholesale
    Banking.

    The Management is of the opinion that the above reclassification meets the
    requirements of the revised RBI guidelines and also is in compliance with
    the requirements of the Accounting Standard-17 — “Segment Reporting”
    issued by the Institute of Chartered Accountants of India.

    B) Secondary (Geographical Segment):

    i) Domestic operations comprise branches and subsidiaries having operations


    in India.

    ii) Foreign operations comprise branches and subsidiaries having operations


    outside India and offshore banking units having operations in India.

    C) Allocation of Expenses, Assets and liabilities

    Expenses of parent incurred at Corporate Centre establishments directly


    attributable either to Corporate / Wholesale and Retail Banking Operations or to
    Treasury Operations segment, are allocated accordingly. Expenses not directly
    attributable are allocated on the basis of the ratio of number of employees in
    each segment/ratio of directly attributable expenses.

    4.3.2 The accounting policies adopted for segment reporting are in line with the

    accounting policies adopted in the parent’s financial statements with the following
    additional features:

    1) Pricing of inter-segment transactions between the Other Banking Business


    segment and other segments are market led. In respect of transactions between
    treasury and other banking business, compensation for the use of funds is
    reckoned based on interest and other costs incurred by the lending segment.

    2) Revenue and expenses have been identified to segments based on their


    relationship to the operating activities of the segment.

    F-263
    3) Revenue and expenses, which relate to the enterprise as a whole and are not
    allocable to segments on a reasonable basis, have been included under
    “Unallocated Expenses”.

    4.3.3 Disclosure under segment reporting

    Part A: Primary Segments

    Corporate/ Other
    Treasury Wholesale Retail Banking
    Operations Banking Banking Operations Elimination TOTAL

    Revenue . . . . . . . . . . . . . . . . . 19496.64 25042.17 42008.81 8130.39 (4838.35) (89839.66)


    Result . .. . . . . . . . . . . . . . . . . 1,402.17 6,752.29 7,530.82 299.40 — 15,984.68
    Unallocated Income . . . . . . . . . . — — — — — 379.15
    Unallocated Expenses . . . . . . . . . — — — — — (2,373.27)
    Operating Profit (PBT) . . . . . . . . — — — — — 13,990.56
    Taxes . . . . . . . . . . . . . . . . . . . — — — — — 4,777.73
    Extraordinary Profit/Loss . . . . . . . — — — — — —
    Net Profit . . . . . . . . . . . . . . . . — — — — — 9212.83
    Other Information: . . . . . . . . . . — — — — — —
    Segment Assets . . . . . . . . . . . . . 285635.91 534946.80 189086.86 21359.32 (10385.86) 1020643.03
    Unallocated Assets . . . . . . . . . . . — — — — — 6626.49
    Total Assets . . . . . . . . . . . . . . . — — — — — 1027269.52
    Segment Liabilities . . . . . . . . . . 210066.45 312691.37 459751.93 21403.81 (10385.86) 993527.70
    Unallocated Liabilities . . . . . . . . — — — — — 33741.82
    Total Liabilities . . . . . . . . . . . . — — — — — 1027269.52

    In view of the revision in the format, previous year’s figures have not been disclosed
    in view of RBI Circular No. BP.BC.81/21.04.018/ 2006-07 dated 18th April 2007.

    Part B: Secondary Segments

    Particulars Domestic Operations Foreign Operations Total

    Revenue . . . . . . . . . . . . 83,566.13 6,652.68 90218.81


    (62,969.73) (4,154.41) (67124.14)
    Assets . . . . . . . . . . . . . . 9,30,748.23 96,521.29 10,27,269.52
    (7,56,908.79) (58,265.62) (8,15,174.41)

    i) Income/Expenses are for the whole year. Assets/Liabilities are as at 31st March.

    ii) Figures within brackets are for previous year.

    4.4 Related Party Disclosures: As identified and compiled by the management and relied
    upon by the auditors

    4.4.1 Related Parties:

    A) JOINT VENTURES:

    1. C Edge Technologies Ltd.

    2. GE Capital Business Process Management Services Private Limited.

    F-264
    B) ASSOCIATES:

    1. Andhra Pradesh Grameena Vikas Bank

    2. Arunachal Pradesh Rural Bank

    3. Chhatisgarh Gramin Bank

    4. Cauvery Kalpatharu Grameena Bank

    5. Deccan Grameena Bank

    6. Ellaquai Dehati Bank

    7. Meghalaya Rural Bank (erstwhile Ka Bank Nongkyndong Ri Khasi Jaintia)

    8. Krishna Grameena Bank

    9. Langpi Dehangi Rural Bank

    10. Madhya Bharat Gramin Bank

    11. Malwa Gramin Bank

    12. Marwar Ganganagar Bikaner Bank

    13. Mizoram Rural Bank

    14. Nagaland Rural Bank

    15. Parvatiya Gramin Bank

    16. Purvanchal Kshetriya Gramin Bank

    17. Samastipur Kshetriya Gramin Bank

    18. Saurashtra Grameena Bank

    19. Utkal Gramya Bank

    20. Uttaranchal Gramin Bank

    21. Vananchal Gramin Bank

    22. Vidisha Bhopal Kshetriya Gramin Bank

    23. SBI Home Finance Limited.

    24. Clearing Corporation of India Ltd

    25. Nepal SBI Bank Ltd.

    26. S. S. Ventures Services Ltd

    27. Bank of Bhutan

    28. UTI Asset Management Company Pvt. Ltd.

    F-265
    C) Key Management Personnel of the Bank:

    1. Shri O. P. Bhatt, Chairman

    2. Shri T. S. Bhattacharya, Managing Director upto 31st January 2008

    3. Shri Yogesh Agarwal, Managing Director upto 30th June 2007

    4. Shri S. K. Bhattacharyya, Managing Director from 08th October 2007

    4.4.2 Related Parties with whom transactions were entered into during the year:

    No disclosure is required in respect of related parties which are “state controlled


    enterprises” as per paragraph 9 of Accounting Standard (AS) 18. Further, in terms of
    paragraph 5 of AS 18, transactions in the nature of banker-customer relationship are
    not required to be disclosed in respect of Key Management Personnel. Other
    particulars are:

    1. C Edge Technologies Ltd.

    2. GE Capital Business Process Management Services Pvt. Ltd.

    3. SBI Home Finance Ltd.

    4. Bank of Bhutan

    5. Nepal SBI Bank Ltd.

    6. S. S. Ventures Services Ltd.

    7. Shri O. P. Bhatt,

    8. Shri T. S. Bhattacharya (upto 31st January 2008)

    9. Shri Yogesh Agarwal, (upto 30th June 2007)

    10. Shri S. K. Bhattacharyya, Managing Director from 8th October 2007

    F-266
    4.4.3 Transactions / Balances:

    Associates/ Key
    Joint Management
    Items/Related Party Ventures Personnel@ Total
    #
    Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.56 — 62.56
    (295.37) (—) (295.37)
    Other Liability # . . . . . . . . . . . . . . . . . . . . . . 97.75 — 97.75
    (1.76) (—) (1.76)
    Investments # . . . . . . . . . . . . . . . . . . . . . . . . 21.75 — 21.75
    (19.75) (—) (19.75)
    Other Assets # . . . . . . . . . . . . . . . . . . . . . . . 0.08 — 0.08
    (—) (—) (—)
    Interest paid $ . . . . . . . . . . . . . . . . . . . . . . . . 3.16 — 3.16
    (6.59) (—) (6.59)
    Interest received $ . . . . . . . . . . . . . . . . . . . . . — — —
    (0.22) (—) (0.22)
    Income earned by way of Dividend $ . . . . . . 2.94 — 2.94
    (0.50) (—) (0.50)
    Rendering of services $ . . . . . . . . . . . . . . . . . 0.07 — 0.07
    (—) (—) (—)
    Receiving of services $ . . . . . . . . . . . . . . . . . — — —
    (1.66) (—) (1.66)
    Management contracts $ . . . . . . . . . . . . . . . . — 0.54 0.54
    (0.65) (0.15) (0.80)

    (Figures in brackets pertain to previous year)

    # Balances as at 31st March

    $ Transactions for the year

    @ Transactions which are not in the nature of banker-customer relationship.

    4.5 Leases:

    Assets given on Financial Leases on or after 1st April 2001: The details of financial
    leases are given below.

    2007-08 2006-07
    Particulars Current Year Previous Year

    Total gross investment in the leases . . . . . . . . . . . . . . . 43.29 164.73


    Present value of minimum lease payments receivable
    Less than 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.91 8.91
    1 to 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.67 15.04
    5 years and above . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —
    Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.58 23.95
    Present value of unearned finance . . . . . . . . . . . . . . . . 3.76 5.00

    The group has not compiled the data on operating leases taken and operating leases granted.
    Accordingly no disclosure for the same is made.

    F-267
    4.6 Earnings Per Share:

    The Bank reports basic and diluted earnings per equity share in accordance with Accounting
    Standard 20 — “Earnings per Share”. “Basic earnings” per share is computed by dividing
    net profit after tax by the weighted average number of equity shares outstanding during the
    year.

    2007-08 2006-07
    Particulars Current Year Previous Year

    Basic and diluted


    Weighted average no of equity shares used in
    computing basic earning per share . . . . . . . . . . . . . . 531,445,447 527,463,672
    Add: Potential number of equity shares that could
    arise on account of ESPS scheme . . . . . . . . . . . . . . . 509,911 —
    Weighted average number of shares used in computing
    diluted earning per share . . . . . . . . . . . . . . . . . . . . . 531,955,358 527,463,672
    Net profit (Other than minority) . . . . . . . . . . . . . . . . . 8,960.61 6,364.38
    Basic earnings per share (Rs.) . . . . . . . . . . . . . . . . . . . 168.61 120.66
    Diluted earnings per share (Rs.) . . . . . . . . . . . . . . . . . . 168.45 120.66
    Nominal value per share (Rs.) . . . . . . . . . . . . . . . . . . . 10.00 10.00

    4.7 Accounting for taxes on Income

    i) During the year, Rs.483.03 Crore (credit) [Previous Year Rs.77.56 Crore (credit)] has
    been credited to Profit and Loss Account by way of adjustment of deferred tax.

    ii) During the year Rs.582.98 Crore (previous year Nil) has been netted off by debit to
    Revenue and Other Reserve by way of adjustment of deferred tax on Transitional
    Liability of Rs.5848.46 Crore towards employee benefits.

    iii) The break up of deferred tax assets and liabilities into major items is given below:

    2007-08 2006-07
    Particulars Current Year Previous Year

    Deferred Tax Assets


    Provision for non performing assets . . . . . . . . . . . . . . . 282.81 415.18
    Ex-gratia paid under Exit option . . . . . . . . . . . . . . . . . 147.83 147.75
    Wage Revision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214.92
    Provision for Gratuity, Leave, Pension etc. . . . . . . . . . 556.73
    Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 751.68 542.72
    Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1953.97 1105.65
    Deferred Tax Liabilities
    Depreciation on Fixed Assets . . . . . . . . . . . . . . . . . . . . 110.43 116.67
    Interest on securities . . . . . . . . . . . . . . . . . . . . . . . . . . 580.96 621.41
    Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 484.19 605.66
    Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1175.58 1343.74
    Net Deferred Tax Assets/(Liabilities) . . . . . . . . . . . . . 778.39 (238.09)

    F-268
    4.8 Investments in jointly controlled entities:

    As required by AS 27, the aggregate amount of the assets, liabilities, income and expenses
    related to the Bank’s interests in jointly controlled entities are disclosed as under:

    2007-08 2006-07
    Assets and Liabilities: Current Year Previous Year

    Liabilities
    Capital & Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . 64.41 50.93
    Deposits
    Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.35 0.21
    Other Liabilities & Provisions . . . . . . . . . . . . . . . . . . . 27.05 20.60
    TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91.81 71.74
    Assets
    Cash and balances with Reserve Bank of India . . . . . . 0.01 0.01
    Balances with Banks and Money at call and short
    notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04 3.66
    Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.62 2.47
    Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —
    Fixed Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.23 18.59
    Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70.91 47.01
    TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91.81 71.74

    Capital Commitments Rs.Nil (Previous Year Rs.Nil)

    Other Contingent Liabilities Rs.Nil (Previous Year Rs.Nil)

    B. Income and Expenditure

    2007-08 2006-07
    Current Year Previous Year

    I. Income
    Interest earned . . . . . . . . . . . ........... 5.69 0.04
    Other income . . . . . . . . . . . . ........... 61.63 65.85
    Total . . . . . . . . . . . . . . . . . . . ........... 67.32 65.89
    II. Expenditure
    Interest expended . . . . . . . . . . . . . . . . . . . . 0 0
    Operating expenses . . . . . . . . . . . . . . . . . . . 47.41 41.54
    Provisions & contingencies . . . . . . . . . . . . . 6.44 10.07
    Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53.85 51.61
    III. Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.47 14.28

    4.9 Impairment of assets:

    In the opinion of the Bank’s Management, there is no impairment to the assets to which
    Accounting Standard 28 — “Impairment of Assets” applies.

    F-269
    4.10 Provisions, Contingent Liabilities & Contingent Assets

    a) Break up of provisions:

    2007-08 2006-07
    Current Year Previous Year

    a) Provision for Income Tax (current tax). . . . . 5128.83 4146.60


    b) Provision for Income Tax (deferred tax) . . . . (483.03) (77.56)
    c) Fringe Benefit Tax . . . . . . . . . . . . . . . . . . . 135.47 124.76
    c) Provision for other taxes . . . . . . . . . . . . . . . (3.54) (1.45)
    d) Amount of provision made against NPAs
    (including write back of provision) . . . . . . . 2804.05 1775.89
    e) General provision on Standard Assets in the
    global loan portfolio . . . . . . . . . . . . . . . . . . 773.21 945.42
    f) Depreciation in the value of Investments . . . 153.15 829.49
    g) Provision for contingent liabilities . . . . . . . 197.29 51.27
    h) Others (Net of write-backs) . . . . . . . . . . . . . 413.27 (21.92)
    Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9118.70 7772.50

    (Figures in brackets indicate credit)

    b) Floating provisions:

    2007-08 2006-07
    Current Year Previous Year

    a) Opening Balance . . . . . . . . . . . . . . . . . . . . 515.95 752.90


    b) Addition during the year . . . . . . . . . . . . . . . 169.09 63.05
    c) Draw down during the year . . . . . . . . . . . . . 0.00 300.00
    d) Closing balance . . . . . . . . . . . . . . . . . . . . . 685.04 515.95

    F-270
    c) Description of contingent liabilities and contingent assets:

    Sr.
    No Items Brief Description

    1 Claims against the The parent and its constituents are parties to
    Group not various proceedings in the normal course of
    acknowledged as debts business. It does not expect the outcome of these
    proceedings to have a material adverse effect on the
    Group’s financial conditions, results of operations
    or cash flows.
    2 Liability on account of The Group enters into foreign exchange contracts,
    outstanding forward currency options, forward rate agreements, currency
    exchange contracts swaps and interest rate swaps with inter-bank
    participants 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
    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 that
    are recorded as contingent liabilities, are typically
    amounts used as a benchmark for the calculation of
    the interest component of the contracts.
    3 Guarantees given on As a part of its commercial banking activities, the
    behalf of constituents, Group issues documentary credits and guarantees on
    acceptances, behalf of its customers. Documentary credits
    endorsements and other enhance the credit standing of the customers of the
    obligations Group. Guarantees generally represent irrevocable
    assurances that the Bank will make payment in the
    event of the customer failing to fulfil its financial
    or performance obligations.
    4 Other items for which The Group is a party to various taxation matters in
    the Group is respect of which appeals are pending. These are
    contingently liable being contested by the Group and not provided for.
    Further the Group has made commitments to
    subscribe to shares in the normal course of
    business.

    d) The contingent liabilities mentioned above are dependent upon the outcome of
    court/arbitration/out of court settlements, disposal of appeals, the amount being called
    up, terms of contractual obligations, devolvement and raising of demand by concerned
    parties, as the case may be.

    e) Movement of provisions against contingent liabilities:

    2007-08 2006-07
    Current Year Previous Year

    a) Opening Balance. . . . . . . . . . . . . . . . . . . . . 142.19 120.54


    b) Addition during the year . . . . . . . . . . . . . . . 118.33 37.33
    c) Draw down during the year . . . . . . . . . . . . . 22.18 15.68
    d) Closing balance . . . . . . . . . . . . . . . . . . . . . 238.34 142.19

    5. Pending Wage Agreement: The Eighth Bipartite Settlement entered into by the Indian Banks’
    Association on behalf of the member Banks with the All India Unions of Workmen expired on
    31st October 2007. Pending the execution of a new agreement a provision of Rs.666.89 Crore has
    been made in the accounts for the Bank’s estimated liability in respect of wage revision to be
    effective from 1st November 2007.

    F-271
    6. Exit Option: The Bank had implemented an Exit Option Scheme for its eligible employees. The
    ex-gratia payments under exit option aggregating to Rs.145.08 Crore (previous year Rs.483.32
    Crore) have been charged to the Profit & Loss account during the year.

    7. Inter Office Accounts / Government Accounts/ Suspense Accounts: Inter Office transactions
    between branches, controlling offices and local head offices and corporate centre establishment
    have been reconciled upto 31st December 2007. Further, pipeline transitions in respect of foreign
    exchange, gold, currency transactions and Government transactions are under reconciliations.
    Steps for adjustment / elimination of outstanding entries are in progress. These balances are
    subject to reconciliation, the ultimate effect of which is not expected to be material.

    8. Additional contribution to Pension Fund:

    The parent’s Pension Fund rules state that the parent shall contribute 10% of salary to the
    Pension Fund. The Government of India, have advised the parent to contribute to the Pension
    Fund in accordance to the Fund rules. However, in order to comply with the Accounting Standard
    15 (revised 2005) and to make adequate prudential provisions in accordance with the acturial
    valuations, the parent has made an additional contribution of Rs.546 crore (previous year Rs.864
    crore) to the Pension Fund during the financial year.

    9. Intra-group balances and transactions of interest income, interest expenses, other incomes and
    other operating expenses are eliminated in full.

    In case of following differences between the figures reported by the entities in respect of interest
    income, interest expenses, other incomes and other operating expenses, the higher of the amounts
    reported by different contracting entities are considered for elimination both from income and
    expenditure on the presumption of reporting errors by the reporting entities, without impacting
    the reported profit/loss and in respect of intra group balances, the figures reported by the
    contracting entities are considered as such and the differences are reflected as ‘Inter Bank
    Adjustments’:

    Corresponding Eliminated Difference


    items from income between
    Item reported reported by and reported
    by entities other entities expenditure figures
    Particulars (A) (B) (C) D=(C-A)

    Interest income . . . . . . . . . . . . . . . . . . . . 327 449 522 195


    Interest expenses . . . . . . . . . . . . . . . . . . . 449 327 522 73
    Other income . . . . . . . . . . . . . . . . . . . . . . 93 135 183 90
    Other expenditure . . . . . . . . . . . . . . . . . . 135 93 183 48
    Amount Eliminated as
    reported by respective Inter Bank
    Particulars contracting entities Adjustment

    Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10405 10385 20


    Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10385 10405 (20)

    10. In respect of intra group sale/purchase of investment, unrealised gains are fully eliminated.
    However, in case where such investments are classified by the transferee under ‘Held to
    Maturity’ category, the amortisation is calculated as the difference between the face value and
    cost of the transferee without considering the subsequent transfer of those securities into a
    different category. The impact of the same on the unrealised gains to be eliminated could not be
    ascertained.

    F-272
    11. No adjustments for divergent accounting policies followed by some of the subsidiaries
    have been made in respect of the following accounting policies as per their
    respective regulatory requirements:

    11.1 Recognition of interest income on accrual basis in respect of advances, when the
    advances become overdue for more than 180 days as against the bank’s policy of
    90 days

    11.2 Fees on issuance/ other transactions in respect of card business has been recognised
    as and when it become due as against the bank’s policy of recognising such income
    on realisation basis.

    The total proportion for which different accounting policies have been applied
    aggregates to Rs.239.90 Crore. The impact thereof on the assets, liabilities and
    revenues could not be unascertained.

    12. In accordance with RBI circular DBOD NO.BP.BC.42/21.01.02/2007-08 redeemable


    preference shares are treated as liabilities and the coupon payable thereon is treated as
    interest.

    13. Additional statutory information disclosed in separate financial statements of the parent
    and the subsidiaries having no bearing on the true and fair view of the consolidated
    financial statements and also the information pertaining to the items which are not
    material have not been disclosed in the consolidated financial statements in view of the
    general clarifications issued by ICAI.

    14. Previous year ’s figures have been regrouped and reclassified, wherever
    necessary and determinable, to make them comparable with current year ’s figures. In
    cases where disclosures have been made for first time in terms of RBI guidelines,
    previous year figures have not been mentioned.

    F-273
    Schedule 17
    1. Basis of Consolidation
    1.1 Consolidated financial statements of the Group (comprising of 21 subsidiaries, 7 Joint Ventures and 27
    Associates) have been prepared on the basis of :
    a) Audited accounts of State Bank of India (Parent).
    b) Line by line aggregation of each item of asset/liability/income/expense of the subsidiaries with the
    respective item of the Parent, and after eliminating all material intra-group balances / transactions, unrealized
    profit/loss , and making necessary adjustments wherever required for non-uniform accounting policies
    as per AS 21 of The Institute of Chartered Accountants of India (ICAI).
    c) Consolidation of Joint Ventures – full consolidation in respect of joint ventures which are also subsidiaries
    and ‘Proportionate Consolidation’ in respect of other Joint Ventures – as per AS 27 of ICAI.
    d) Accounting for investment in ‘Associates’ under the ‘Equity Method’ as per AS 23 of ICAI.
    e) Financial Statements of the Subsidiaries / Joint Ventures drawn up to the same reporting date as that of
    the Parent i.e. 31st March 2007.
    1.2 The difference between cost to the group of its investment in the subsidiary entities and the group’s portion
    of the equity of the subsidiaries is recognized in the financial statements as goodwill / capital reserve.
    1.3 Minority interest in the net assets of the consolidated subsidiaries consists of :
    a) The amount of equity attributable to the minority at the date on which investment in a subsidiary is
    made, and
    b) The minority share of movements in revenue reserves/loss (equity) since the date the parent-subsidiary
    relationship came into existence.
    2. PRINCIPAL ACCOUNTING POLICIES
    2.1. Basis of Preparation
    The accompanying financial statements have been prepared under the historical cost convention. They conform
    to Generally Accepted Accounting Principles (GAAP) in India, which comprise the statutory provisions,
    Regulatory/Reserve Bank of India (RBI) guidelines and Accounting Standards/guidance notes issued by the
    ICAI. In respect of foreign offices, statutory provisions and practices prevailing in respective countries are
    complied with.
    3. Advances and Provisions thereon
    3.1 Advances are shown net of provisions and unrealized interest on Non-Performing Assets (NPAs).
    3.2 A general provision is required to be made on Standard Assets on the global portfolio. The provision rates
    for the different categories of Standard Assets are summarized below :-
    a. Direct advances to agricultural and SME Sectors 0.25%
    b. Residential housing loans beyond Rs.20 lakhs 1.00%
    c. Personal Loans, Loans and advances qualifying as capital market exposures,
    Commercial real estate loans, and Loans and advances to Systemically
    important NBFCs
    – Non Deposit Taking 2.00%
    d. All other loans and advances not included in (a), (b) & (c) 0.40%
    3.3 Indian Offices
    3.3.1 All advances are classified under four categories, viz. (a) Standard Assets, (b) Sub-standard Assets, (c)
    Doubtful Assets and (d) Loss Assets.

    F - 274
    3.3.2 Provisions are made on outstanding non-performing advances (net of interest not realized) as under :-
     Sub-Standard Assets : 10%
    In case of unsecured exposures (where realizable value of security is not more
    than 10 per cent, ab initio)
     Doubtful Assets 20%
    a) Unsecured portion at 100 per cent after netting retainable/realizable amount of guarantee cover
    provided by Export Credit Guarantee Corporation / Credit Guarantee Trust for Small Industries,
    wherever applicable.
    b) Secured portion
    Period for which the advance has been considered as doubtful
    Up to one year 20%
    One to three years 30%
    More than three years 100%
     Loss Assets 100%
    Financial Assets sold are recognized as under:-
    i) In case the sale is at a price lower than the Net Book Value (NBV), the difference is charged to the
    Profit & Loss Account.
    ii) In case the sale is at a price higher than the NBV, the surplus provision is not reversed and is
    utilised to meet the shortfall on sale of other such non-performing financial assets.
    3.3.3 Unrealised Interest recognized in the previous year on advances which have become non-perfoming
    during the current year, is provided for.
    3.3.4 In case of restructuring / rescheduling of advances, the difference between the present value of the
    future interest as per the original agreement and the present value of the future interest as per the
    revised agreement is provided for at the time of restructuring / rescheduling.
    3.4 Foreign Offices
    3.4.1 Advances are classified under four categories in line with those of India Offices.
    3.4.2 Provisions in respect of non-performing advances are made as per the local law or as per the norms of
    RBI, whichever is higher.
    4 Investments
    4.1 Investments are classified into 3 categories, viz. ‘Held for Trading’, ‘Available for Sale’ and ‘Held to Maturity’.
    Under each of these categories, investments are further classified under the following six groups.
    i) Government Securities;
    ii) Other Approved Securities;
    iii) Shares;
    iv) Debentures and Bonds;
    v) Investments in Subsidiaries/Joint Ventures/Associates; and
    vi) Other Investments
    4.1.1 Investments that are acquired by the Group with the intention to trade by taking advantage of short
    term price / interest rate movement are classified under ‘Held for Trading’. These investments are held
    under this category up to 90 days from the date of acquisition.
    4.1.2 Investments which are intended to be held up to maturity are classified as ‘Held to Maturity’.
    4.1.3 Investments which are not classified in either of the above categories are classified as ‘Available for
    Sale’.

    F - 275
    4.2 Valuation
    4.2.1 In determining the acquisition cost of an investment :
    (a) Brokerage/commission received on subscriptions is deducted from the cost of securities.
    (b) Brokerage, commission and stamp duty paid in connection with acquisition of securities are treated
    as revenue expenses.
    (c) Interest accrued up to the date of acquisition of securities i.e. broken-period interest, is excluded
    from the acquisition cost and recognized as interest expense. Broken-period interest received on
    sale of securities is recognized as interest income.
    (d) Cost is determined on the weighted average cost method.
    (e) The transfer of the security (from one category to another) is accounted for at the least of
    acquisition cost / book value / market value on the date of transfer and the depreciation, if any,
    on such transfer is charged to Profit and Loss Account – “Profit on Revaluation of Investments”
    as a deduction.
    4.2.2 Individual scrips classified under ‘Held for Trading’ category are valued at lower of book value or
    market value. Securities are valued scrip-wise and depreciation / appreciation is aggregated for each
    classification. Net depreciation in each classification, if any, is provided for while net appreciation is
    ignored. The book value of the scrips continue to remain unchanged.
    4.2.3 Investments under ‘Held to Maturity’ category are carried at acquisition cost. Wherever the book value
    is higher than the face value/redemption value, the premium on acquisition or on transfer from another
    category is amortised over the remaining period to maturity of the security using Constant Yield Method
    (CYM). Amortisation loss is charged to Profit & Loss Account – “Profit on Revaluation of Investments”
    as a deduction. The book value of the security is reduced to the extent of the amount amortised.
    4.2.4 Investment under ‘Available for Sale’ category are valued at cost or market value, whichever is lower.
    Where market quotations are not available, market value for this purpose is arrived at on the basis of
    realizable market price computed as per the guidelines of the Fixed Income Money Market and Derivatives
    Association of India (FIMMDA) / Primary Dealers Association of India (PDAI) / RBI. Securities are
    valued scrip-wise and depreciation/appreciation is aggregated for each classification. Net depreciation in
    each classification, if any, is provided for while net appreciation is ignored. The book value of the scrips
    continues to remain unchanged.
    4.2.5 Treasury Bills and Commercial Papers are valued at cost.
    4.2.6 Non-Performing Investments are recognised as per RBI guidelines and provision is made as per RBI
    norms applicable to Non-Performing Advances.
    4.2.7 Investments in Regional Rural Banks (RRBs) are valued at carrying cost (i.e. book value)
    4.2.8 The Group has adopted the Uniform Accounting Procedures prescribed by the RBI for accounting of
    Repo and Reverse Repo transactions [other than transactions under the Liquidity Adjustment facility
    (LAF) with the RBI ]. Accordingly, the securities sold/purchased under Repo/Reverse Repo are treated
    as outright sales/purchases and accounted for in the Repo/Reverse Repo Accounts and the entries are
    reversed on the date of maturity. Costs and revenues are accounted as interest expenditure/income, as
    the case may be. Balance in Repo/Reverse Repo Account is adjusted against the balance in the
    Investment Account.
    Securities purchased/sold under LAF with RBI are debited/credited to Investment Account and reversed
    on maturity of the transactions. Interest expended/earned thereon is accounted for as expenditure/
    revenue.
    5. Derivatives :
    The Group presently deals in Interest Rate Derivatives viz. Rupee Interest Rate Swaps, Cross Currency Interest Rate
    Swaps and Forward Rate Agreements, and Currency Derivatives viz. Options and Currency Forwards. The Group
    also deals in a mix of these generic instruments, under the portfolio of Structured Products.

    F - 276
    5.1 Based on RBI guidelines, Derivatives are valued as under :
    a) Derivatives used for trading are marked to market and net appreciation/depreciation is recognized in the
    Profit and Loss Account.
    b) Derivatives used for hedging are :
    i) Marked to market in cases where the underlying Assets/Liabilities are marked to market. The
    resultant gain/loss is recognized in the Profit & Loss Account.
    ii) Accounted on accrual basis in cases where the underlying Assets/Liabilities are not marked to
    market.
    The net outstanding marked to market position of each type of derivative is shown either under Asset
    or Liability, as the case may be.
    6. Fixed Assets and Depreciation
    6.1 Premises and other fixed assets are accounted on historical cost basis.
    6.2 Depreciation is provided on the written down value method at the rates prescribed under the Income Tax
    Rules, 1962, which are considered appropriate by the management. In respect of computers, depreciation is
    provided on straight line method @ 33.33% per annum, as per RBI guidelines. Computer software not forming
    an integral part of hardware is depreciated fully in the year of purchase.
    6.3 Assets costing upto Rs.1000/- are charged off to the Profit and Loss Account.
    6.4 In respect of fixed assets held at Foreign Offices, depreciation is provided as per the laws/norms of the
    respective countries.
    6.5 In respect of leasehold premises, the lease amount is amortised over the period of lease.
    7. Assets given on Lease
    7.1 In respect of assets given on lease by the Group on or before 31st March 2001, the value of the assets given
    on lease and the amounts paid as advance for assets to be given on lease are disclosed as “Leased Assets”
    and “Capital Work-in-progress (Leased Assets)” respectively under fixed assets. Depreciation is provided on
    straight line method as per the Companies Act, 1956 and the difference between the annual lease charge
    (capital recovery) and the depreciation is taken to Lease Equalisation Account as per the guidelines issued by
    the ICAI.
    7.2 Assets given on lease by the Group on or after 1st April 2001 are accounted as per Accounting Standard 19
    (Leases) issued by the ICAI. Such assets are included under “Other Assets”.
    7.3 Provisions on non-performing leased assets are made on the basis of RBI guidelines applicable to advances.
    8. Impairment of Assets
    Impairment losses (if any), are recognized in accordance with Accounting Standard 28 issued by the ICAI and
    charged off to Profit and Loss Account.
    9. Foreign Currency Transactions
    9.1 In conformity with Accounting Standard 11 (The effects of changes in foreign exchange rates) of the ICAI,
    Foreign Branches of the Group and Offshore Banking Units (OBUs) have been classified as Non-integral
    Operations and Representative Offices classified as Integral Operations.
    9.2 a) Foreign currency transactions are recorded on initial recognition in the reporting currency by applying
    to the foreign currency amount the exchange rate between the reporting currency and the foreign
    currency on the date of transaction.
    b) Foreign currency monetary items are reported using the FEDAI closing spot rates.
    c) Exchange differences arising on the settlement of monetary items at rates different from those at which
    they were initially recorded are recognized as income or as expense in the period in which they arise.
    9.3 Non-integral Operations
    a) All monetary/non-monetary assets and liabilities as well as contingent liabilities are translated at the
    closing rate notified by FEDAI.

    F - 277
    b) Income and expenditure are translated using the quarterly average rate notified by FEDAI at the end of
    the respective quarter.
    c) All resulting exchange differences are accumulated in a separate “Foreign Currency Translation Reserve”
    account till the disposal of the net investment.
    9.4 Integral Operations
    a) All income and expenditure of integral operations are recorded at the rates prevalent on the date of
    transaction.
    b) All foreign currency monetary items are reported using the FEDAI closing rates.
    9.5 Forward Exchange Contracts
    In accordance with the guidelines of the FEDAI and the provisions of AS – 11, net outstanding forward
    exchange contracts in each currency are revalued at the Balance Sheet date at the corresponding forward
    rates for the residual maturity of the contracts. The difference between the revalued amount and the contracted
    amount is recognized as profit or loss, as the case may be.
    10. Revenue Recognition
    10.1 Income and Expenditure are accounted on accrual basis. In case of Foreign Offices, income is recognized as
    per the local laws of the country in which the respective foreign office is located
    10.2 The following items of income are recognized on realization basis :
    a) Commission ( other than commission on deferred payment guarantees and government transaction ),
    exchange and brokerage.
    b) Dividend on investments.
    c) Income on Rupee Derivatives designated as “Trading”.
    d) Interest on application money on investments and overdue interest on investments.
    10.3 The following items of income are recognizes on realization basis, owing to significant uncertainty in collection
    thereof.
    a) Income on non-performing advances, Overdue bills and leased assets
    b) Interest on non-performing investments.
    10.4 Income (other than interest) on investments in “Held to Maturity” (HTM) category acquired at a discount to
    the face value, is recognized as follows :
    10.4.1 a) On Interest bearing securities, it is recognized only at the time of sale.
    c) On zero-coupon securities, it is accounted for over the balance tenor of the security on a constant
    yield basis.
    10.4.2 Profit on sale of investments in this category is first credited to the Profit & Loss Account and thereafter
    appropriated to the “Capital Reserve Account”. Loss on sale is recognized in the Profit & Loss Account.
    10.5 Non-banking entities
    10.5.1Merchant Banking :
    a) Issue management and advisory fees are recognized as per the terms of agreement with the client.
    b) Fees for private placement are recognized on completion of assignment.
    c) Underwriting commission relating to public issue is accounted for on finalisation of allotment of
    the public issue. Brokerage income relating to public issues/mutual fund/other securities is
    accounted for based on mobilization and intimation received from clients/intermediaries.
    d) Brokerage income in relation to stock broking activity is recognized on settlement date of the
    transaction.

    F - 278
    10.5.2 Asset Management :
    Management fee is recognized at specific rates agreed with the relevant scheme applied on the average
    daily net assets of each scheme (including inter-scheme investments, where applicable, and investments
    made by the company in the respective scheme).
    10.5.3 Credit Card Operations :
    a) Joining membership fee and first annual fee has been recognized over a period of one year as this
    more closely reflects the period to which the fee relates to.
    b) Visa interchange income is recognized on accrual basis.
    c) All other service fees are recorded at the time of recording the respective transaction.
    10.5.4 Factoring :
    Factoring service charges are accounted on accrual basis except in the case of non-performing assets,
    where income is accounted on realization.
    10.5.5 Life Insurance :
    a) Life insurance premium (net of service tax) is recognized as income when due from policyholders.
    Uncollected premium from lapsed policies is not recognized as income until such policies are
    revived. In respect of linked business, premium income is recognized when the associated units
    are allotted.
    b) Premium ceded on reinsurance is accounted in accordance with the terms of the treaty or in-
    principle arrangement with the reinsurer.
    c) Life insurance claims by death are accounted when intimated. Intimations upto the end of the year
    are considered for accounting of such claims. Claims by maturity are accounted on the policy
    maturity date. Annuity benefits are accounted when due. Surrenders are accounted as and when
    notified. Claims cost consist of the policy benefit amounts and claims settlement costs, where
    applicable. Amounts recoverable from re-insurers are accounted for in the same period as the
    related claims are reduced from claims.
    d) The estimation of liability against life policies is determined by the Appointed Actuary pursuant to
    an annual review of the life insurance business of the company.
    10.6 Foreign Offices/Foreign Subsidiaries
    Income is recognized as per the local laws of the countries.
    11. Retirement Benefits
    11.1 Contributions payable to Bank’s Provident Fund Trust in terms of its Provident Fund Scheme are charged to
    Profit and Loss account on accrual basis.
    11.2 Liability for gratuity, pension and leave encashment (which are defined benefits) is determined on the basis of
    actuarial valuations carried out at the year end and incremental liability is provided for by charging to the
    Profit and Loss Account.
    12. Provision for Taxation
    Provision for tax comprises of current tax for the period determined in accordance with the relevant laws, fringe
    benefit tax and deferred tax charge or credit reflecting the tax effect of timing differences between accounting
    income and taxable income for the period, in conformity with Accounting Standard 22 (Accounting for Taxes on
    Income) of the Institute of Chartered Accountants of India. The deferred tax charge or credit and the corresponding
    deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted
    by the balance sheet date. Deferred tax assets are not recognized unless there is virtual certainty that sufficient
    future taxable income will be available against which such deferred tax assets will be realized.

    F - 279
    Schedule 18
    Notes on Accounts
    1. List of Subsidiaries/Joint Ventures/Associates considered for preparation of consolidated financial statements:
    1.1 The 21 Subsidiaries, 7 Joint Ventures and 27 Associates (which along with State Bank of India, the parent,
    constitute the Group), considered in the preparation of the consolidated financial statements, are:
    A) Subsidiaries
    Sr. Name of the Country of Group’s
    No Subsidiary Incorporation Stake (%)
    1) State Bank of Bikaner & Jaipur India 75.07
    2) State Bank of Hyderabad India 100.00
    3) State Bank of Indore India 98.05
    4) State Bank of Mysore India 92.33
    5) State Bank of Patiala India 100.00
    6) State Bank of Saurashtra India 100.00
    7) State Bank of Travancore India 75.01
    8) SBI Commercial & International Bank Ltd India 100.00
    9) SBI Capital Markets Ltd India 86.16
    10) SBICAP Securities Ltd India 86.16
    11) SBICAP Trustee Company Ltd India 86.16
    12) SBICAPS Ventures Ltd India 86.16
    13) SBI DFHI Ltd India 65.95
    14) SBI Factors & Commercial Services Pvt Ltd India 69.88
    15) SBI Mutual Fund Trustee Company Pvt Ltd India 100.00
    16) State Bank of India (Canada) Canada 100.00
    17) State Bank of India (California) USA 100.00
    18) SBI International (Mauritius) Ltd Mauritius 98.00
    19) Indian Ocean International Bank Ltd Mauritius 56.84
    20) PT Bank Indomonex Indonesia 76.00
    21) SBICAP (UK) Ltd U.K. 86.16
    B) Joint Ventures
    1) C Edge Technologies Ltd India 49.00
    2) GE Capital Business Process Management Services Pvt Ltd India 40.00
    3) SBI Cards and Payment Services Pvt Ltd India 60.00
    4) SBI Funds Management Pvt Ltd India 63.00
    5) SBI Life Insurance Company Ltd India 74.00
    6) Commercial Bank of India Llc Russia 60.00
    7) SBI Funds Management (International) Private Ltd Mauritius 63.00
    C) Associates:
    1) Andhra Pradesh Grameena Vikas Bank India 35.00
    2) Arunachal Pradesh Rural Bank India 35.00
    3) Chhatisgarh Gramin Bank India 35.00

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    C) Associates: (Contd.)
    Sr. Name of the Country of Group’s
    No Subsidiary Incorporation Stake (%)
    4) Ellaquai Dehati Bank India 35.00
    5) Ka Bank Nongkyndong Ri Khasi Jaintia India 35.00
    6) Krishna Grameena Bank India 35.00
    7) Langpi Dehangi Rural Bank India 35.00
    8) Madhya Bharat Gramin Bank India 35.00
    9) Mizoram Rural Bank India 35.00
    10) Nagaland Rural Bank India 35.00
    11) Parvatiya Gramin Bank India 35.00
    12) Purvanchal Kshetriya Gramin Bank India 35.00
    13) Samastipur Kshetriya Gramin Bank India 35.00
    14) Utkal Gramya Bank India 35.00
    15) Uttaranchal Gramin Bank India 35.00
    16) Vananchal Gramin Bank India 35.00
    17) Marwar Ganganagar Bikaner Gramin Bank India 26.27
    18) Vidisha Bhopal Kshetriya Gramin Bank India 34.32
    19) Deccan Grameena Bank India 35.00
    20) Cauvery Kalpatharu Grameena Bank India 32.32
    21) Malwa Gramin Bank India 35.00
    22) Saurashtra Grameena Bank India 35.00
    23) Clearing Corporation of India Ltd India 28.97
    24) SBI Home Finance Ltd India 25.05
    25) UTI Asset Management Company Pvt Ltd India 25.00
    26) Bank of Bhutan Bhutan 20.00
    27) Nepal SBI Bank Ltd Nepal 50.00
    1.2 The following changes have taken place in the consolidation process as compared to 2005-06.
    a) State Bank of India has acquired 76% stake in PT Bank Indomonex, a commercial bank incorporated and
    operating in Indonesia, at a cost of USD 5.00 million (Rs.22.31 crore) w.e.f. 14.12.2006. As such the
    assets, liabilities, income and expenses of this bank have been consolidated from 14.12.2006. A sum of
    Rs.13.05 crore has been recognized as goodwill in the consolidated financial statements.
    b) SBI Funds Management (Pvt) Ltd, a company in which SBI holds 63% stake, has promoted a new
    wholly owned subsidiary – SBI Funds Management (International) Private Limited. The new subsidiary,
    incorporated on 17th January 2006, has commenced operations on 01st April 2006.

    F - 281
    c) As at 31.03.2006, the group had 34 Regional Rural Banks (RRBs) as associates, which as at 31.03.2007
    has come down to 22 due to amalgamation of 19 RRBs into 7 new RRBs, details of which are as follows.
    Name Name of Name of the Date of merger
    of the amalgamated RRB the new RRB Sponsor bank
    1. Bastar Kshetriya Chhatisgarh State Bank of India 30.06.2006
    Gramin Bank Gramin Bank
    2. Bilaspur Raipur
    Kshetriya
    Gramin Bank
    3. Raigarh Kshetriya
    Gramin Bank
    4. Bundelkhand Madhya State Bank 30.06.2006
    Kshetriya Bharat of India
    Gramin Bank Gramin
    Bank
    5. Damoh Sagar Panna Kshetriya Gramin Bank
    6. Shivpuri Guna
    Kshetriya Gramin
    Bank
    7. Bolangir Utkal State Bank 31.07.2006
    Anchalika Gramya of India
    Gramya Bank Bank
    8. Kalahandi
    Anchalika
    Gramya Bank
    9. Koraput
    Panchbati Gramya
    Bank
    10. Palamau Vananchal State Bank 30.06.2006
    Kshetriya Gramin Gramin Bank of India
    Bank
    11. Santhal Parganas
    Gramin Bank
    12. Alaknanda Uttaranchal State Bank 30.06.2006
    Gramin Bank Gramin of India
    13. Ganga Yamuna Bank
    Gramin Bank
    14. Pithoragarh
    Kshetriya Gramin
    Bank
    15. Bikaner Kshetriya Marwar State Bank of 12.06.2006
    Gramin Bank Ganganagar Bikaner &
    Bikaner Jaipur
    Gramin Bank
    16. Marwar Gramin
    Bank

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    17. Sriganganagar
    Kshetriya Gramin
    Bank
    18. Cauvery Cauvery State Bank 24.05.2006
    Grameena Kalpatharu of Mysore
    Bank Grameena
    19. Kalpatharu Bank
    Grameena Bank
    Since the assets/liabilities of the merged RRBs have been taken over by the new entities at their
    respective book values, there is no goodwill/capital reserve on account of these mergers.
    1.3 Two of the associates – Bank of Bhutan (31st December) and Nepal SBI Bank Ltd (Hindu Calendar Year)
    follow accounting years different from that of the parent.
    2. DISCLOSURES AS PER ACCOUNTING STANDARDS:
    2.1 Significant changes in accounting policies:
    2.1.1 During the year, the parent and its constituent banks have changed the segmental pricing methodology,
    which was necessitated for presenting more meaningful segment results. The financial effect of the
    change on segmental results can not be reasonably determined. However, this change does not have
    any impact on the financials of the bank.
    2.1.2 The parent and its constituent banks had hitherto been following a policy of amortization of premium in
    respect of securities held in the ‘Held to Maturity’ (HTM) category by an adjustment to the account
    head ‘Provisions and Contingencies’. From the current financial year and in accordance with RBI directive
    dated 20th April 2007, the Group has charged the amortization amount as well as marked to market
    losses on transfer of securities from ‘Available for Sale’ (AFS) to HTM category by an adjustment to
    the account head Other Income “ Profit on revaluation of Investments” as a deduction. As a result of
    this change in accounting policy, the Operating Profit for the year stands reduced by Rs.2303.13 crores
    for the current year. However, there is no impact on the Net Profit for the year.
    2.1.3 During the year, the group has recognized diminution in the value of investments in RRBs to the extent
    of its capital contribution which hitherto was being recognized by the group without restricting to its
    capital contribution. This has resulted in the increase in the profit of the group for the year by Rs.158.23
    crore.
    2.2 Segmental Reporting:
    2.2.1 Segment Identification
    PRIMARY Treasury Operations
    (Business Segment) Banking Operations
    Non-Banking Operations
    SECONDARY Domestic Operations
    (Geographical Segment) Foreign Operations
    The accounting policies adopted for segment reporting are in line with the accounting policies adopted
    in the parent’s financial statements with the following additional features.
    Pricing of inter-segment transactions between the Non Banking Operations segment and other segments
    are market led. In respect of transactions between treasury and banking segments, compensation for the
    use of funds is reckoned based on interest and other costs incurred by the lending segment.
    Revenue and expenses have been identified to segments based on their relationship to the operating
    activities of the segment.
    Revenue and expenses, which relate to the enterprise as a whole and are not allocable to segments on
    a reasonable basis have been included under “Unallocated Expenses” net of unallocated corporate
    revenue.

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    The group reports its operations under the following geographical segments.
    a) Domestic operations comprises branches and subsidiaries having operations in India.
    b) Foreign operations comprises branches and subsidiaries having operations outside India and
    Offshore banking units having operations in India.
    2.2.2 Disclosure under segment reporting
    Part A: Primary Segments
    (Rs. in crore)
    Particulars Banking Treasury Non-Banking Elimination Total
    Operations Operations Operations
    Revenue 61551.35 15329.33 4611.55 -13209.00 68283.23
    (48193.16) (23363.06) (2187.15) (-14874.67) (58868.70)
    Result 11941.10 126.38 560.65 12628.13
    (7764.79) (-1842.94) (152.80) (6074.65)
    Unallocated (Income)/ 1851.26
    Expenses-Net (-1879.92)
    Operating Profit (PBT) 10776.87
    (7954.57)
    Income Taxes 4157.07
    (3229.57)
    Extra-ordinary Profit/Loss —
    (936.48)
    Net Profit 6619.80
    (5661.48)
    Other Information:
    Segment Assets 585649.22 285343.21 11149.23 -71259.28 810882.38
    (505817.59) (289558.57) (7765.10) (-110480.29) (692660.97)
    Unallocated Assets 4292.03
    (4330.85)
    Total Assets 815174.41
    (696991.82)
    Segment Liabilities 599792.00 224180.42 8784.02 -86971.01 745785.43
    (506592.87) (259485.80) (5696.47) (-115986.98) (655788.16)
    Unallocated Liabilities 26853.32
    (3996.95)
    Total Liabilities 772638.75
    (659785.11)
    Part B : secondary SegmentS
    Particulars Domestic Operations Foreign Operations Total
    Revenue 64222.42 4154.41 68376.83
    (58132.11) (2933.96) (61066.07)
    Assets 756908.79 58265.62 815174.41
    (649427.23) (47564.59) (696991.82)
    i) Income/Expenses are for the whole year, Assets/Liabilities are as at 31st March.
    ii) Figures within brackets relate to 2005-06.

    F - 284
    2.3 Related Party Disclosures
    As identified by the management and relied upon by the auditors.
    2.3.1 Related Parties:
    2.3.1.1 JOINT VENTURES :-
    C Edge Technologies Ltd
    GE Capital Business Process Management Services Private Limited.
    2.3.1.2 ASSOCIATES :-
    Andhra Pradesh Grameena Vikas Bank
    Arunachal Pradesh Rural Bank
    Chhatisgarh Gramin Bank
    Cauvery Kalpatharu Grameena Bank
    Deccan Grameena Bank
    Ellaquai Dehati Bank
    Ka Bank Nongkyndong Ri Khasi Jaintia
    Krishna Grameena Bank
    Langpi Dehangi Rural Bank
    Madhya Bharat Gramin Bank
    Malwa Gramin Bank
    Marwar Ganganagar Bikaner Gramin Bank
    Mizoram Rural Bank
    Nagaland Rural Bank
    Parvatiya Gramin Bank
    Purvanchal Kshetriya Gramin Bank
    Samastipur Kshetriya Gramin Bank
    Saurashtra Grameena Bank
    Utkal Gramya Bank
    Uttaranchal Gramin Bank
    Vananchal Gramin Bank
    Vidisha Bhopal Kshetriya Gramin Bank
    SBI Home Finance Limited.
    Clearing Corporation of India Ltd.
    Nepal SBI Bank Ltd.
    Bank of Bhutan
    UTI Asset Management Company Pvt. Ltd.
    2.3.1.3 Key Management Personnel of the Bank :-
    Shri O.P. Bhatt, Chairman (from 26.04.2006 to 30.06.06 as Managing Director and from 01.07.2006
    onwards as Chairman)
    Shri A.K. Purwar, Chairman (upto 31.05.2006)
    Shri T. S. Bhattacharya, Managing Director
    Shri Yogesh Agrawal, Managing Director (from 10.10.2006)

    F - 285
    2.3.2 Related Parties with whom transactions were entered into during the year :
    No disclosure is required in respect of related parties which are “state controlled enterprises” as per
    paragraph 9 of Accounting Standard (AS) 18. Further, in terms of paragraph 5 of AS 18, transactions in
    the nature of banker-customer relationship are not required to be disclosed in respect of Key Management
    Personnel. Other particulars are:
    C Edge Technologies Ltd.
    GE Capital Business Process Management Services Pvt. Ltd.
    SBI Home Finance Ltd.
    Bank of Bhutan
    Nepal SBI Bank Ltd.
    Shri O.P.Bhatt, (from 26.04.2006)
    Shri A.K. Purwar, (upto 31.05.2006)
    Shri T. S. Bhattacharya,
    Shri Yogesh Agrawal, (from 10.10.2006)
    2.3.3 Transactions / Balances :
    (Rupees in crore)
    Items/Related Associates/ Key Man- Total
    Party Joint agement
    Ventures Personnel @
    Borrowings# — — —
    (—) (—) (—)
    Deposit# 295.37 — 295.37
    (525.25) (—) (525.25)
    Other Liability# 1.76 — 1.76
    (—) (—) (—)
    Placement of — — —
    Deposits# (—) (—) (—)
    Advances# (—) (—) (—)
    Investments# 19.75 — 19.75
    (34.45) (—) (34.45)
    Non-funded — — —
    commitments# (560.08) (—) (560.08)
    Leasing/HP — — —
    arrangements availed $ (—) (—) (—)
    Leasing/HP — — —
    arrangements provided $ (—) (—) (—)
    Purchase of — — —
    fixed assets $ (—) (—) (—)
    Sale of fixed — — —
    assets $ (—) (—) (—)
    Interest paid $ 6.59 — 6.59
    (7.18) (—) (7.18)

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    Interest 0.22 — 0.22
    received $ (—) (—) (—)
    Income earned by way of 0.50 — 0.50
    Dividend (—) (—) (—)
    Rendering of — — —
    services $ (—) (—) (—)
    Receiving of 1.66 — 1.66
    services $ (85.62) (—) (85.62)
    Management 0.65 0.15 0.80
    contracts $ (—) (0.20) (0.20)
    (Figures in brackets pertain to previous year)
    # Balances as at 31.03.2007/31.03.2006.
    $ Total for FY 2006-07/2005-06.
    @ Transactions which are not in the nature of banker-customer relationship.
    The above disclosures are as identified by the management and relied upon by the Auditors.
    2.4 Leases:
    Assets given on Financial Leases on or after 1st April 2001: The details of financial leases are given below.
    (Rs. in crore)
    2006-07 2005-06
    Total gross investment in the leases 164.73 164.73
    Present value of minimum lease payments receivable as on 31.3.2007
    Less than 1 year 8.91 17.60
    1 to 5 years 15.04 20.49
    5 years and above — —
    Total 23.95 38.09
    Present value of unearned finance income 5.00 6.76
    2.5 Earnings Per Share:
    The Bank reports basic and diluted earnings per equity share in accordance with Accounting Standard 20 –
    “Earnings per Share”. “Basic earnings” per share is computed by dividing net profit after tax by the weighted
    average number of equity shares outstanding during the year. There are no diluted potential equity shares
    outstanding during the year.
    2006-07 2005-06
    a. Net Profit (Group) 6,364.38 5,529.92
    b. Weighted average number of shares 526298878 526298878
    c. Earnings Per Share (Basic and diluted) Rs.120.93 Rs.105.07
    2.6 Accounting for taxes on Income
    (Rs. in Crore)
    A. Deferred Tax Assets 2006-07 2005-06
    i) Provision for Non Performing Assets 415.18 428.63
    ii) Exgratia paid under exit option 147.75 19.45
    iii) Others 542.72 280.44
    Total 1105.65 728.52

    F - 287
    B. Deferred Tax Liabilities 2006-07 2005-06
    i) Depreciation on Fixed Assets 116.67 145.88
    ii) Interest on securities 621.41 —
    iii) Depreciation on Investments 526.27 209.31
    iv) Others 79.39 75.20
    Total 1343.74 430.39
    C. Net DTA/(DTL) [ A – B ] (238.09) 298.13
    2.7 Investments in jointly controlled entities:
    As required by AS 27 the aggregate amount of the assets, liabilities, income and expenses related to the
    Bank’s interests in jointly controlled entities are disclosed as under:
    A: Assets and Liabilities: (Rs. In crore)
    Capital & Liabilities 2006-07 2005-06 Assets / 2006-07 2005-06
    Capital & Reserves 50.93 33.80 Cash and balances with
    Reserve Bank of India 0.01 0.03
    — — Balances with banks and
    money at call and short notice 3.66 7.21
    Borrowings 0.21 0.10 Investments 2.47 —
    Other Liabilities & Provisions 20.60 13.55 Advances — —
    Fixed Assets 18.59 9.55
    Other Assets 47.01 30.66
    T OTAL 71.74 47.45 TOTAL 71.74 47.45
    Capital Commitments Rs.Nil (Previous Year Rs. Nil)
    Other Contingent Liabilities Rs.Nil (Previous Year Rs. Nil)
    B. Income and Expenditure
    (Rs. In crore)
    2006-07 2005-06
    I. Income
    Interest earned 0.04 0.25
    Other income 65.85 48.14
    Total 65.89 48.39
    II. Expenditure
    Interest expended 0 0
    Operating expenses 41.54 33.86
    Provisions & contingencies 10.07 5.26
    Total 51.61 39.12
    III. Profit 14.28 9.27
    2.8 Impairment of assets:
    In the opinion of the Bank’s Management, there is no impairment to the assets to which Accounting Standard
    28 – “Impairment of Assets” applies.

    F - 288
    2.9 Provisions, Contingent Liabilities & Contingent Assets
    a) Break up of provisions:
    (Rs. in Crore)
    2006-07 2005-06
    a) Provision for Income Tax (current tax) 4146.60 2101.68
    b) Provision for Income Tax (deferred tax) (77.56) 507.09
    c) Fringe Benefit Tax 124.76 619.60
    c) Provision for other taxes (1.45) 1.20
    d) Amount of provision made against NPAs
    (including write back of provision) 1775.89 414.06
    e) General provision on Standard Assets in the global loan portfolio 945.42 585.44
    f) Depreciation in the value of Investments 829.49 5539.55
    g) Provision for contingent liabilities 51.27 -
    h) Others (Net of write-backs) (21.92) (68.23)
    Total 7772.50 9700.39
    (Figures in brackets indicate credit)
    b) Floating provisions: (Rs. in Crore)
    2006-07 2005-06
    a) Opening Balance 752.90 1165.16
    b) Addition during the year 63.05 507.58
    c) Draw down during the year 300.00 919.84
    d) Closing balance 515.95 752.90
    c) Description of contingent liabilities and contingent assets:
    Sr. No Items Brief Description
    1 Claims against the Group not The parent and its constituents are parties to various
    proceedings in the normal acknowledged as debts
    course of business. It does not expect the outcome of
    these proceedings to have a material adverse effect on
    the Group’s financial conditions, results of operations
    or cash flows.
    2 Liability on account of The Group enters into foreign exchange contracts,
    outstanding forward exchange currency options, contracts forward rate agreements,
    currency swaps and interest rate swaps with inter-bank
    participants 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 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
    that are recorded as contingent liabilities, are typically
    amounts used as a benchmark for the calculation of
    the interest component of the contracts.

    F - 289
    3 Guarantees given on behalf As a part of its commercial banking activities, the Group
    of constituents, acceptances, issues documentary credits and guarantees on behalf
    endorsements and other of its customers. Documentary credits enhance the
    obligations credit standing of the customers of the Group.
    Guarantees generally represent irrevocable assurances
    that the Bank will make payment in the event of the
    customer failing to fulfil its financial or performance
    obligations.
    4 Other items for which the The Group is a party to various taxation matters in
    Group is contingently liable respect of which appeals are pending. These are being
    contested by the Group and not provided for. Further,
    the Group has made commitments to subscribe to
    shares in the normal course of business.
    d) The contingent liabilities mentioned above are dependent upon the outcome of court/arbitration/out of
    court settlements, disposal of appeals, the amount being called up, terms of contractual obligations,
    devolvement and raising of demand by concerned parties, as the case may be.
    e) Movement of provisions against contingent liabilities:
    (Rs. in Crore)
    2006-07 2005-06
    a) Opening Balance 120.54 200.32
    b) Addition during the year 37.33 83.14
    c) Draw down during the year 15.68 162.92
    d) Closing balance 142.19 120.54
    3. Additional statutory information disclosed in separate financial statements of the parent and the subsidiaries
    having no bearing on the true and fair view of the consolidated financial statements and also the information
    pertaining to the items which are not material have not been disclosed in the consolidated financial statements
    in view of the general clarifications issued by ICAI.
    4. Previous year’s figures have been regrouped and reclassified, wherever necessary and determinable, to make
    them comparable with current year’s figures. In cases where disclosures have been made for first time in terms
    of RBI guidelines, previous year figures have not been mentioned.

    F - 290
    Schedule 18 (2006-2007)

    NOTES ON ACCOUNTS

    1. List of Subsidiaries/Joint Ventures/Associates considered for preparation of consolidated


    financial statements:
    1.1 The 21 Subsidiaries, 7 Joint Ventures and 27 Associates (which along with State Bank of India,
    the parent, constitute the Group), considered in the preparation of the consolidated financial
    statements, are:
    A) Subsidiaries
    Sr. Name of the Country of Group’s
    No Subsidiary Incorporation Stake (%)
    1) State Bank of
    Bikaner & Jaipur India 75.07
    2) State Bank of Hyderabad India 100.00
    3) State Bank of Indore India 98.05
    4) State Bank of Mysore India 92.33
    5) State Bank of Patiala India 100.00
    6) State Bank of Saurashtra India 100.00
    7) State Bank of Travancore India 75.01
    8) SBI Commercial &
    International Bank Ltd India 100.00
    9) SBI Capital Markets Ltd India 86.16
    10) SBICAP Securities Ltd India 86.16
    11) SBICAP Trustee Company Ltd India 86.16
    12) SBICAPS Ventures Ltd India 86.16
    13) SBI DFHI Ltd India 65.95
    14) SBI Factors & Commercial
    Services Pvt Ltd India 69.88
    15) SBI Mutual Fund Trustee
    Company Pvt Ltd India 100.00
    16) State Bank of India (Canada) Canada 100.00
    17) State Bank of India
    (California) USA 100.00
    18) SBI International
    (Mauritius) Ltd Mauritius 98.00
    19) Indian Ocean
    International Bank Ltd Mauritius 56.84
    20) PT Bank Indomonex Indonesia 76.00
    21) SBICAP (UK) Ltd U.K. 86.16
    B) Joint Ventures
    Sr. Name of the Country of Group’s
    No Joint Venture Incorporation Stake (%)

    F-291
    1) C Edge Technologies
    Ltd India 49.00
    2) GE Capital Business
    Process Management
    Services Pvt Ltd India 40.00
    3) SBI Cards and Payment
    Services Pvt Ltd India 60.00
    4) SBI Funds Management
    Pvt Ltd India 63.00
    5) SBI Life Insurance
    Company Ltd India 74.00
    6) Commercial Bank of
    India Llc Russia 60.00
    7) SBI Funds Management
    (International) Private Ltd Mauritius 63.00
    C) Associates:
    Sr. Name of the Country of Group’s
    No Associate Incorporation Stake (%)
    1) Andhra Pradesh
    Grameena Vikas Bank India 35.00
    2) Arunachal Pradesh
    Rural Bank India 35.00
    3) Chhatisgarh Gramin Bank India 35.00
    4) Ellaquai Dehati Bank India 35.00
    5) Ka Bank Nongkyndong
    Ri Khasi Jaintia India 35.00
    6) Krishna Grameena Bank India 35.00
    7) Langpi Dehangi Rural Bank India 35.00
    8) Madhya Bharat Gramin Bank India 35.00
    9) Mizoram Rural Bank India 35.00
    10) Nagaland Rural Bank India 35.00
    11) Parvatiya Gramin Bank India 35.00
    12) Purvanchal Kshetriya
    Gramin Bank India 35.00
    13) Samastipur Kshetriya
    Gramin Bank India 35.00
    14) Utkal Gramya Bank India 35.00
    15) Uttaranchal Gramin Bank India 35.00
    16) Vananchal Gramin Bank India 35.00

    F-292
    17) Marwar Ganganagar Bikaner
    Gramin Bank India 26.27
    18) Vidisha Bhopal Kshetriya
    Gramin Bank India 34.32
    19) Deccan Grameena Bank India 35.00
    20) Cauvery Kalpatharu
    Grameena Bank India 32.32
    21) Malwa Gramin Bank India 35.00
    22) Saurashtra Grameena Bank India 35.00
    23) Clearing Corporation of
    India Ltd India 28.97
    24) SBI Home Finance Ltd India 25.05
    25) UTI Asset Management
    Company Pvt Ltd India 25.00
    26) Bank of Bhutan Bhutan 20.00
    27) Nepal SBI Bank Ltd Nepal 50.00
    1.2 The following changes have taken place in the consolidation process as compared to 2005-06.
    a) State Bank of India has acquired 76% stake in
    PT Bank Indomonex, a commercial bank incorporated and operating in Indonesia, at a cost of
    USD 5.00 million (Rs.22.31 crore) w.e.f. 14.12.2006. As such the assets, liabilities, income and
    expenses of this bank have been consolidated from 14.12.2006. A sum of Rs.13.05 crore has been
    recognized as goodwill in the consolidated financial statements.
    b) SBI Funds Management (Pvt) Ltd, a company in which SBI holds 63% stake, has promoted a
    new wholly owned subsidiary – SBI Funds Management (International) Private Limited. The new
    subsidiary, incorporated on 17th January 2006, has commenced operations on 01st April 2006.
    c) As at 31.03.2006, the group had 34 Regional Rural Banks (RRBs) as associates, which as at
    31.03.2007 has come down to 22 due to amalgamation of 19 RRBs into 7 new RRBs, details of
    which are as follows.

    Name of the Name of Name of the Date of


    amalgamated the new Sponsor bank merger
    RRB RRB
    1. Bastar Kshetriya Chhatisgarh StateBankof 30.06.2006
    Gramin Bank Gramin India
    2. Bilaspur Raipur Bank
    Kshetriya
    Gramin Bank
    3. Raigarh Kshetriya
    Gramin Bank
    4. Bundelkhand Madhya State Bank 30.06.2006

    F-293
    Kshetriya Bharat of India
    Gramin Bank Gramin
    Bank

    5. Damoh Sagar Panna Kshetriya


    Gramin Bank
    6. Shivpuri Guna
    Kshetriya
    Gramin
    Bank
    7. Bolangir Utkal State Bank 31.07.2006
    Anchalika Gramya of India
    Gramya Bank Bank
    8. Kalahandi
    Anchalika
    Gramya Bank
    9. Koraput
    Panchbati
    Gramya
    Bank
    10. Palamau Vananchal State Bank 30.06.2006
    Kshetriya Gramin Bank of India
    Gramin
    Bank
    11. Santhal
    Parganas
    Gramin Bank
    12. Alaknanda Uttaranchal State Bank 30.06.2006
    Gramin Bank Gramin of India
    13. Ganga Yamuna Bank
    Gramin Bank
    14. Pithoragarh
    Kshetriya
    Gramin
    Bank
    15. Bikaner Marwar State Bank of 12.06.2006
    Kshetriya
    Gramin Bank Ganganagar Bikaner &
    Bikaner Jaipur

    F-294
    Gramin Bank
    16. Marwar
    Gramin
    Bank
    17. Sriganganagar
    Kshetriya
    Gramin
    Bank
    18. Cauvery Cauvery State Bank 24.05.2006
    Grameena Kalpatharu of Mysore
    Bank Grameena
    19. Kalpatharu Bank

    Grameena
    Bank

    Since the assets/liabilities of the merged RRBs have been taken over by the new entities at their respective
    book values, there is no goodwill/capital reserve on account of these mergers.
    1.3 Two of the associates – Bank of Bhutan (31st December) and Nepal SBI Bank Ltd (Hindu Calendar
    Year) follow accounting years different from that of the parent.
    2. DISCLOSURES AS PER ACCOUNTING STANDARDS:
    2.1 Significant changes in accounting policies:
    2.1.1 During the year, the parent and its constituent banks have changed the segmental pricing
    methodology, which was necessitated for presenting more meaningful segment results. The financial
    effect of the change on segmental results can not be reasonably determined. However, this change
    does not have any impact on the financials of the bank.
    2.1.2 The parent and its constituent banks had hitherto been following a policy of amortization of premium
    in respect of securities held in the ‘Held to Maturity’ (HTM) category by an adjustment to the account
    head ‘Provisions and Contingencies’. From the current financial year and in accordance with RBI
    directive dated 20th April 2007, the Group has charged the amortization amount as well as marked to
    market losses on transfer of securities from ‘Available for Sale’ (AFS) to HTM category by an
    adjustment to the account head Other Income “ Profit on revaluation of Investments” as a deduction.
    As a result of this change in accounting policy, the Operating Profit for the year stands reduced by
    Rs.2303.13 crores for the current year. However, there is no impact on the Net Profit for the year.
    2.1.3 During the year, the group has recognized diminution in the value of investments in RRBs to the
    extent of its capital contribution which hitherto was being recognized by the group without restricting
    to its capital contribution. This has resulted in the increase in the profit of the group for the year by
    Rs.158.23 crore.
    2.2 Segmental Reporting:
    2.2.1 Segment Identification
    PRIMARY Treasury Operations
    (Business Segment) Banking Operations
    Non-Banking Operations

    F-295
    SECONDARY Domestic Operations
    (Geographical Segment) Foreign Operations

    The accounting policies adopted for segment reporting are in line with the accounting policies adopted in
    the parent’s financial statements with the following additional features.
    Pricing of inter-segment transactions between the Non Banking Operations segment and other segments are
    market led. In respect of transactions between treasury and banking segments, compensation for the use of
    funds is reckoned based on interest and other costs incurred by the lending segment.
    Revenue and expenses have been identified to segments based on their relationship to the operating
    activities of the segment.
    Revenue and expenses, which relate to the enterprise as a whole and are not allocable to segments on a
    reasonable basis have been included under “Unallocated Expenses” net of unallocated corporate revenue.
    The group reports its operations under the following geographical segments.
    a) Domestic operations comprises branches and subsidiaries having operations in India.
    b) Foreign operations comprises branches and subsidiaries having operations outside India and Offshore
    banking units having operations in India.

    2.2.2 DISCLOSURE UNDER SEGMENT REPORTING

    PART A: PRIMARY SEGMENTS

    (Rs. in crore)

    Particulars Banking Treasury OperationsNon-Banking OperationsElimination Total


    Operations
    61551.35 15329.33 4611.55 -13209.00 68283.23
    Revenue (48193.16) (23363.06) (2187.15) (-14874.67) (58868.70)

    11941.10 126.38 560.65 12628.13


    Result (7764.79) (-1842.94) (152.80) (6074.65)

    1851.26
    Unallocated (Income)/Expenses-Net (-1879.92)

    10776.87
    Operating Profit (PBT) (7954.57)

    4157.07
    Income Taxes (3229.57)

    —
    Extra-ordinary Profit/Loss (936.48)

    6619.80
    Net Profit (5661.48)

    Other Information:

    F-296
    585649.22 285343.21 11149.23 -71259.28 810882.38
    Segment Assets (505817.59) (289558.57) (7765.10) (-110480.29) (692660.97)

    4292.03
    Unallocated Assets (4330.85)

    815174.41
    Total Assets (696991.82)

    599792.00 224180.42 8784.02 -86971.01 745785.43


    Segment Liabilities (506592.87) (259485.80) (5696.47) (-115986.98) (655788.16)

    26853.32
    Unallocated Liabilities (3996.95)

    Total Liabilities 772638.75


    (659785.11)

    PART B : SECONDARY SEGMENTS

    Particulars Domestic Operations Foreign Operations Total


    64222.42 4154.41 68376.83
    Revenue (58132.11) (2933.96) (61066.07)
    756908.79 58265.62 815174.41
    Assets (649427.23) (47564.59) (696991.82)

    i) Income/Expenses are for the whole year, Assets/Liabilities are as at 31st March.
    ii)Figures within brackets relate to 2005-06.
    2.3 Related Party Disclosures
    As identified by the management and relied upon by the auditors.
    2.3.1 Related Parties:
    2.3.1.1 JOINT VENTURES :-
    C Edge Technologies Ltd
    GE Capital Business Process Management Services Private Limited.
    2.3.1.2 ASSOCIATES :-
    Andhra Pradesh Grameena Vikas Bank
    Arunachal Pradesh Rural Bank
    Chhatisgarh Gramin Bank
    Cauvery Kalpatharu Grameena Bank
    Deccan Grameena Bank
    Ellaquai Dehati Bank
    Ka Bank Nongkyndong Ri Khasi Jaintia
    Krishna Grameena Bank
    Langpi Dehangi Rural Bank
    Madhya Bharat Gramin Bank
    Malwa Gramin Bank

    F-297
    Marwar Ganganagar Bikaner Gramin Bank
    Mizoram Rural Bank
    Nagaland Rural Bank
    Parvatiya Gramin Bank
    Purvanchal Kshetriya Gramin Bank
    Samastipur Kshetriya Gramin Bank
    Saurashtra Grameena Bank
    Utkal Gramya Bank
    Uttaranchal Gramin Bank
    Vananchal Gramin Bank
    Vidisha Bhopal Kshetriya Gramin Bank
    SBI Home Finance Limited.
    Clearing Corporation of India Ltd.
    Nepal SBI Bank Ltd.
    Bank of Bhutan
    UTI Asset Management Company Pvt. Ltd.
    2.3.1.3 Key Management Personnel of the Bank :-
    Shri O.P. Bhatt, Chairman (from 26.04.2006 to 30.06.06 as Managing Director and from
    01.07.2006 onwards as Chairman)
    Shri A.K. Purwar, Chairman (upto 31.05.2006)
    Shri T. S. Bhattacharya, Managing Director
    Shri Yogesh Agrawal, Managing Director (from 10.10.2006)
    2.3.2 Related Parties with whom transactions were entered into during the year :
    No disclosure is required in respect of related parties which are “state controlled enterprises” as per
    paragraph 9 of Accounting Standard (AS) 18. Further, in terms of paragraph 5 of AS 18, transactions
    in the nature of banker-customer relationship are not required to be disclosed in respect of Key
    Management Personnel. Other particulars are:
    C Edge Technologies Ltd.
    GE Capital Business Process Management Services Pvt. Ltd.
    SBI Home Finance Ltd.
    Bank of Bhutan
    Nepal SBI Bank Ltd.
    Shri O.P.Bhatt, (from 26.04.2006)
    Shri A.K. Purwar, (upto 31.05.2006)
    Shri T. S. Bhattacharya,
    Shri Yogesh Agrawal,
    (from 10.10.2006)

    2.3.3 Transactions / Balances :


    (Rupees in crore)
    Items/Related Associates/ Key Man- Total
    Party Joint agement
    Ventures Personnel @

    F-298
    Borrowings# — — —
    (—) (—) (—)
    Deposit# 295.37 — 295.37
    (525.25) (—) (525.25)
    Other Liability# 1.76 — 1.76
    (—) (—) (—)
    Placement of — — —
    Deposits# (—) (—) (—)
    Advances# (—) (—) (—)
    Investments# 19.75 — 19.75
    (34.45) (—) (34.45)
    Non-funded — — —
    commitments# (560.08) (—) (560.08)
    Leasing/HP — — —
    arrangements
    availed $ (—) (—) (—)
    Leasing/HP — — —
    arrangements
    provided $ (—) (—) (—)
    Purchase of — — —
    fixed assets $ (—) (—) (—)
    Sale of fixed — — —
    assets $ (—) (—) (—)
    Interest paid $ 6.59 — 6.59
    (7.18) (—) (7.18)
    Interest 0.22 — 0.22
    received $ (—) (—) (—)
    Income earned
    by way of 0.50 — 0.50
    Dividend (—) (—) (—)
    Rendering of — — —
    services $ (—) (—) (—)
    Receiving of 1.66 — 1.66
    services $ (85.62) (—) (85.62)
    Management 0.65 0.15 0.80
    contracts $ (—) (0.20) (0.20)
    (Figures in brackets pertain to previous year)
    # Balances as at 31.03.2007/31.03.2006.
    $ Total for FY 2006-07/2005-06.
    @ Transactions which are not in the nature of banker-customer relationship.
    The above disclosures are as identified by the management and relied upon by the Auditors.

    F-299
    2.4 Leases:
    Assets given on Financial Leases on or after 1st April 2001: The details of financial leases are
    given below.
    (Rs. in crore)
    2006-07 2005-06
    Total gross investment in the
    leases 164.73 164.73
    Present value of minimum lease
    payments receivable as on 31.3.2007
    Less than 1 year 8.91 17.60
    1 to 5 years 15.04 20.49
    5 years and above — —
    Total 23.95 38.09
    Present value of unearned finance
    income 5.00 6.76

    2.5 Earnings Per Share:


    The Bank reports basic and diluted earnings per equity share in accordance with Accounting Standard
    20 – “Earnings per Share”. “Basic earnings” per share is computed by dividing net profit after tax by
    the weighted average number of equity shares outstanding during the year. There are no diluted
    potential equity shares outstanding during the year.
    2006-07 2005-06
    a. Net Profit (Group) 6,364.38 5,529.92
    b. Weighted average number
    of shares 526298878 526298878
    c. Earnings Per Share
    (Basic and diluted) Rs.120.93 Rs.105.07
    2.6 Accounting for taxes on Income
    (Rs. in Crore)
    A. Deferred Tax Assets 2006-07 2005-06
    i) Provision for Non Performing
    Assets 415.18 428.63
    ii) Exgratia paid under exit option 147.75 19.45
    iii) Others 542.72 280.44
    Total 1105.65 728.52
    B. Deferred Tax Liabilities 2006-07 2005-06
    i) Depreciation on Fixed Assets 116.67 145.88
    ii) Interest on securities 621.41 —
    iii) Depreciation on Investments 526.27 209.31
    iv) Others 79.39 75.20
    Total 1343.74 430.39

    F-300
    C. Net DTA/(DTL) [ A – B ] (238.09) 298.13
    2.7 Investments in jointly controlled entities:
    As required by AS 27 the aggregate amount of the assets, liabilities, income and expenses related to
    the Bank’s interests in jointly controlled entities are disclosed as under:

    A: Assets and Liabilities: (Rs. In crore)


    Capital & Liabilities 2006-07 2005-06 Assets / 2006-07 2005-06

    Capital & Reserves 50.93 33.80


    Cash and balances with
    Reserve Bank of India 0.01 0.03

    — — Balances with banks and money


    at call and short notice 3.66 7.21

    Borrowings 0.21 0.10 Investments 2.47 —

    Other Liabilities & Provisions 20.60 13.55 Advances — —

    Fixed Assets 18.59 9.55

    Other Assets 47.01 30.66


    T OTAL 71.74 47.45 TOTAL 71.74 47.45
    Capital Commitments Rs.Nil (Previous Year Rs. Nil)
    Other Contingent Liabilities Rs.Nil (Previous Year Rs. Nil)
    B. Income and Expenditure
    (Rs. In crore)
    2006-07 2005-06
    I. Income
    Interest earned 0.04 0.25
    Other income 65.85 48.14
    Total 65.89 48.39
    II. Expenditure
    Interest expended 0 0
    Operating expenses 41.54 33.86
    Provisions & contingencies 10.07 5.26
    Total 51.61 39.12
    III. Profit 14.28 9.27
    2.8 Impairment of assets:
    In the opinion of the Bank’s Management, there is no impairment to the assets to which Accounting
    Standard 28 – “Impairment of Assets” applies.

    F-301
    2.9 Provisions, Contingent Liabilities & Contingent Assets
    a) Break up of provisions:
    (Rs. in Crore)
    2006-07 2005-06
    a) Provision for Income
    Tax (current tax) 4146.60 2101.68
    b) Provision for Income
    Tax (deferred tax) (77.56) 507.09
    c) Fringe Benefit Tax 124.76 619.60
    c) Provision for other taxes (1.45) 1.20
    d) Amount of provision
    made against NPAs
    (including write back
    of provision) 1775.89 414.06
    e) General provision on
    Standard Assets in the
    global loan portfolio 945.42 585.44
    f) Depreciation in the value
    of Investments 829.49 5539.55
    g) Provision for contingent
    liabilities 51.27 -
    h) Others (Net of write-backs) (21.92) (68.23)
    Total 7772.50 9700.39
    (Figures in brackets indicate credit)
    b) Floating provisions:
    (Rs. in Crore)
    2006-07 2005-06
    a) Opening Balance 752.90 1165.16
    b) Addition during the year 63.05 507.58
    c) Draw down during the year 300.00 919.84
    d) Closing balance 515.95 752.90
    c) Description of contingent liabilities and contingent assets:
    Sr. No Items Brief Description
    1 Claims against the Group not The parent and its constituents are parties to various
    proceedings in the normal acknowledged as debts course of business. It
    does not expect the outcome of these proceedings to have a material
    adverse effect on the Group’s financial conditions, results of operations or
    cash flows.
    2 Liability on account of The Group enters into foreign
    outstanding forward exchange exchange contracts, currency options,
    contracts forward rate agreements, currency swaps and interest rate swaps with inter-
    bank participants 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 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 that are

    F-302
    recorded as contingent liabilities, are typically amounts used as a
    benchmark for the calculation of the interest component of the contracts.
    3 Guarantees given on behalf As a part of its commercial banking
    of constituents, acceptances, activities, the Group issues documentary
    endorsements and other credits and guarantees on behalf of its
    obligations customers. Documentary credits enhance the credit standing of the
    customers of the Group. Guarantees generally represent irrevocable
    assurances that the Bank will make payment in the event of the customer
    failing to fulfil its financial or performance obligations.
    4 Other items for which the The Group is a party to various taxation
    Group is contingently liable matters in respect of which appeals
    are pending. These are being contested by the Group and not provided for.
    Further, the Group has made commitments to subscribe to shares in the
    normal course of business.
    d) The contingent liabilities mentioned above are dependent upon the outcome of court/arbitration/out of
    court settlements, disposal of appeals, the amount being called up, terms of contractual obligations,
    devolvement and raising of demand by concerned parties, as the case may be.
    e) Movement of provisions against contingent liabilities:
    (Rs. in Crore)
    2006-07 2005-06
    a) Opening Balance 120.54 200.32
    b) Addition during the year 37.33 83.14
    c) Draw down during the year 15.68 162.92
    d) Closing balance 142.19 120.54

    3. Additional statutory information disclosed in separate financial statements of the parent and the
    subsidiaries having no bearing on the true and fair view of the consolidated financial statements and
    also the information pertaining to the items which are not material have not been disclosed in the
    consolidated financial statements in view of the general clarifications issued by ICAI.
    4. Previous year’s figures have been regrouped and reclassified, wherever necessary and
    determinable, to make them comparable with current year’s figures. In cases where disclosures have been
    made for first time in terms of RBI guidelines, previous year figures have not been mentioned.

    F-303
    Schedule 17
    Principal Accounting Policies
    1. Basis of preparation of accounts
    The accompanying financial statements have been prepared under historical cost convention and comply, in all
    material aspects, with applicable statutory/ regulatory provisions, Accounting Standards (AS) and generally accepted
    accounting principles and practices prevailing in India, except as otherwise stated.
    2. Consolidation Procedure
    2.1 Consolidated financial statements of the Group (comprising of 21 subsidiaries, 6 Joint Ventures and 39
    Associates) have been prepared on the basis of :
    (a) audited accounts of State Bank of India (Parent)
    (b) line by line aggregation of each item of asset/liability/income/expense of the subsidiaries with the
    respective item of the Parent, and after eliminating all material intra-group balances / transactions, unrealized
    profit/loss, and making necessary adjustments wherever required for non-uniform accounting policies as
    per AS 21 of The Institute of Chartered Accountants of India (ICAI)
    (c) Consolidation of Joint Ventures – full consolidation in respect of joint ventures which are also subsidiaries
    and ‘Proportionate Consolidation’ in respect of other Joint Ventures - as per AS 27 of ICAI.
    (d) accounting for investment in ‘Associates’ under the ‘Equity Method’ as per AS 23 of the ICAI.
    (e) Financial Statements of the Subsidiaries/Joint Ventures drawn up to the same reporting date as that of
    the Parent i.e. 31st March 2006.
    2.2 The difference between cost to the group of its investment in the subsidiary entities and the group’s portion
    of the equity of the subsidiaries is recognized in the financial statements as goodwill/capital reserve.
    2.3 Minority interest in the net assets of the consolidated subsidiaries consists of:
    a) The amount of equity attributable to the minority at the date on which investment in a subsidiary is
    made, and
    b) The minority shares of movements in revenue reserves/loss (equity) since the date the parent-subsidiary
    relationship came into existence.
    3. Foreign Exchange Transactions/Translations
    3.1 Domestic offices (other than Offshore Banking Units in India) and foreign representative offices:
    Foreign currency transactions are recorded at the rates prevalent on the date of initial recognition. Exchange
    differences arising on settlement of transactions are recognized as profit/loss during the period in which they
    arise. Foreign currency non monetary items are carried at historical cost and monetary items are reported at
    closing spot rate advised by FEDAI.
    3.2 Foreign branches, Offshore Banking Units in India and foreign subsidiaries/foreign joint venture:
    Items of income and expenditure are translated at quarterly intervals, at the quarterly average exchange rates
    advised by FEDAI. Assets/Liabilities are translated at the exchange rate prevailing at the close of the year.
    The resultant exchange difference in respect of each of the foreign branch/subsidiary/joint venture is
    accumulated in a separate account “Foreign Currency Translation Reserve” till disposal of the net investment.
    3.3 Forward Exchange Contracts outstanding at the year end:
    The net outstanding forward exchange contracts in each currency are revalued at the corresponding forward
    rates for the residual maturity of the contract and the exchange difference is recognized as profit/loss as the
    case may be.
    4. Derivatives
    Derivative transactions such as Interest Rate Swaps, Options and Currency Swaps undertaken for hedging are
    accounted for on accrual basis where the underlying assets/liabilities are not marked to market. Other derivative
    transactions outstanding as on balance sheet date are marked to market and net appreciation / depreciation is
    recognised in the Profit and Loss account. The net outstanding marked to market position of each type of derivatives
    is shown as asset/liability, as the case may be.

    F - 304
    5. Investments
    5.1 Classification:
    Investments are classified into “Held for Trading”, “Available for Sale” and “Held to Maturity” categories as
    below:
    a) Investments that are acquired with the intention to trade by taking advantage of the short term price/
    interest rate movement are classified under “Held for Trading”. These investments are held under this
    category upto 90 days from the date of acquisition.
    b) Investments which are intended to be held up to maturity are classified as “Held to Maturity.”
    c) Investments which are not classified in either of the above categories are classified as “Available for
    Sale”.
    5.2 Valuation:
    5.2.1 In determining acquisition cost of investment:
    (a) Brokerage/commission received on subscriptions is deducted from the cost of securities.
    (b) Brokerage, commission and stamp duty paid in connection with acquisition of securities are treated
    as revenue expenses.
    (c) Interest accrued up to the date of acquisition of securities (i.e. broken period interest) is excluded
    from the acquisition cost and recognized as interest expense.
    5.2.2 Individual scrips classified under “Held for Trading” category are valued at lower of book value or
    market value. Depreciation/Appreciation is aggregated for each type of security i.e. Government Securities,
    Other Approved Securities, Shares, Debentures/Bonds and Others. Net depreciation in each type of
    security, if any, is provided for, while appreciation is ignored. The book value of the individual scrip is
    not changed.
    5.2.3 Investments under “Held to Maturity” category are carried at acquisition cost. Wherever the book value
    is higher than the face value/ redemption value, the excess amount is amortized over the remaining
    period of maturity using the Constant Yield Method. Similarly, in the case of zero coupon securities that
    are acquired at a discount to the face value, the difference between the acquisition cost and face value
    is amortized over the remaining period of maturity using the Constant Yield Method.
    5.2.4 Investments under “Available for Sale” category are valued at cost or market price which ever is lower.
    Where market quotations are not available, market value for this purpose is arrived at on the basis of
    realizable price computed as per the guidelines of Fixed Income Money Market and Derivatives
    Association of India/Primary Dealers Association of India/RBI. Depreciation/Appreciation is aggregated
    for each type of security i.e. Government Securities, Other Approved Securities, Shares, Debentures/
    Bonds and Others. Net depreciation in each type of security, if any, is provided for, while appreciation
    is ignored. The book value of the individual scrip is not changed.
    5.2.5 Treasury bills and commercial paper are valued at cost.
    5.2.6 Non-SLR Non-Performing Investments are recognized as per RBI guidelines and provision is made as
    per RBI norms applicable to Non-Performing Advances.
    5.2.7 Investments in Associates (both in India and abroad) are initially recorded at cost. The carrying amount
    is increased or decreased on recognition of the group’s share of the profit/loss of the associate after the
    date of acquisition. In accounting for the share of profit/loss of the group in the associate’s profit/loss,
    all the applicable principles of consolidation of financial statements as prescribed by Accounting Standard
    21 are followed.
    5.2.8 Securities sold/purchased under Repo/Reverse Repo are treated as outright sales/purchases and accounted
    for accordingly. Cost and revenues are accounted as interest expenditure/income, as the case may be.
    6 Advances
    6.1 Advances are shown in the balance sheet net of provisions and unrealized interest on Non Performing Assets
    (NPAs).
    6.2 Advances include debts due from credit card holders and also factored debts.

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    6.3 Indian Offices
    6.3.1 All advances are classified under four categories viz a) Standard Assets, b) Sub-Standard Assets, c)
    Doubtful Assets and d) Loss Assets.
    6.3.2 Provisions are made on all outstanding advances net of interest not realized on NPAs as under:
    (a) Sub-Standard Assets at 10% (20% in the case of unsecured exposures where realizable value of
    security is not more than 10%, ab initio)
    (b) Doubtful Assets:
    i) Unsecured portion at 100% after netting retainable/realizable amount of guarantee cover provided
    by Export Credit Guarantee Corporation/Credit Guarantee Trust for small industries wherever
    applicable.
    ii) Secured portion:
    Period for which the advance has been considered as doubtful
    Up to one year 20%
    One to three years 30%
    More than three years -
    - as on 31.03.2004 75%
    - on or after 01.04.2004 100%
    (c) Loss Assets at 100%
    (d) Advances guaranteed by State Governments are classified as “sub-standard”, “doubtful” or “loss”,
    as the case may be, if the amount due to the bank remains overdue for more than 90 days and
    attracts appropriate provisioning as applicable to other advances.
    (e) In case of sale of financial assets to asset reconstruction company(ies) is at a price lower than the
    Net Book Value (NBV), the difference is charged to Profit and Loss account; if the sale price is
    higher than the NBV, the excess provision is not reversed but is utilized to meet the shortfall/loss
    on sale of other financial assets to asset reconstruction company(ies).
    6.3.3 Unrealized interest recognized in the previous year on advances, which become non-performing during
    the current year, is provided for.
    6.3.4 In case of restructuring/rescheduling of advances, the difference between the present value of the
    future interest as per the original agreement and the present value of the future interest as per the
    revised agreement is provided for at the time of restructuring/rescheduling.
    6.4 Foreign Offices
    6.4.1 Advances are classified under four categories in line with those of Indian Offices.
    6.4.2 Provisions in respect of advances are made as per IRAC norms prescribed by RBI or as per local
    requirements whichever are higher.
    6.5 General Provision on Standard Assets
    A general provision is made on the standard assets on the global loan portfolio
    - @ 0.25% on the Advances to Small & Medium Enterprises and Direct Agriculture;
    - @ 0.40% on the remaining standard assetsportfolio.
    7. Fixed Assets
    7.1 Depreciation on Fixed Assets of Domestic Offices is provided for on the written down value method at the
    rates prescribed under Income Tax Rules, 1962. In respect of computers, depreciation is provided for on the
    straight-line method @ 33.33% per annum as per RBI guidelines. Computer software not forming integral part
    of hardware is depreciated fully during the year of purchase.
    7.2 In respect of leasehold premises, the lease amount is amortised over the period of lease.
    7.3 Depreciation on the fixed assets of foreign offices of SBI and foreign subsidiaries is provided as per the local
    laws of the respective countries.

    F - 306
    8. Assets Given on Lease
    8.1 In respect of assets given on lease on or before 31st March 2001, the assets given on lease and the advance
    paid against assets given on lease are included in Fixed Assets as “Leased Assets” and “Capital Work-in-
    progress (Leased Assets)” respectively. Depreciation is provided for on straight line method as per the rates
    prescribed in Schedule XIV to the Companies Act, 1956 and the difference between the annual lease charge
    (capital recovery) and the depreciation is taken to Lease Equalisation Account as per guidelines issued by the
    ICAI.
    8.2 Assets given on lease on or after 1st April 2001 are accounted for as per Accounting Standard 19 issued by
    the ICAI. Such assets are included under “Other Assets”.
    8.3 Provisions on non-performing leased assets are made on the basis of RBI guidelines applicable to advances.
    9. Revenue/Expense Recognition
    9.1 Domestic Offices: Banking Entities
    9.1.1 Income and expenditure are accounted on accrual basis. The following items of income, however, are
    recognized on realization basis:
    (a) Interest and lease income on non-performing advances/assets, including overdue bills
    (b) Interest on non-performing investments
    (c) Commission (other than commission on deferred payment guarantees and government transactions),
    exchange and brokerage
    (d) Dividend on investments
    (e) Interest on application money on investments and overdue interest on investments.
    9.2 Non-banking entities
    9.2.1 Issue management and advisory fees are recognized as per the terms of agreement with the client.
    9.2.2 Fees for private placement are recognized on completion of assignment.
    9.2.3 Underwriting commission relating to public issues are accounted for on finalisation of allotment of
    the public issue. Brokerage income relating to public issues/mutual fund/other securities is
    accounted for based on mobilization and intimation received from clients/intermediaries.
    9.2.4 Till 31st March 2005 annual fee and “add on” card fee were recognized as income at the time of
    setting up of cardholder account and at time of renewal of card. From 1st April 2005, the policy
    has been changed to recognize the joining membership and first annual fee over a period of one
    year as this more closely reflects the period to which the fee relates. As a result of this change in
    accounting policy, profit before tax for the current year is lower by Rs.1.71 crore. Renewal fee
    continues to be recognized at the time of renewal of the card. All other card-related service fees
    are booked at the time of recording the respective transaction.
    9.2.5 Factoring service charges are accounted for on accrual basis except in the case of non-performing
    assets, where income is accounted for on realisation.
    9.2.6 Funds management fees are accounted for on accrual basis in accordance with the Investment
    Management and Advisory Agreement with the Board of Trustees or as modified thereafter.
    9.2.7 Life insurance premium (net of service tax) is recognized as income when due from policy holders.
    Uncollected premium from lapsed policies is not recognized as income until such policies are
    revived. In respect of linked business, premium income is recognized when the associated units
    are allotted.
    9.3 Foreign Offices/Foreign Subsidiaries
    Income is recognized as per the local laws of the countries.

    F - 307
    10. Staff Benefits
    Provisions are made for gratuity, pension and leave encashment benefits to staff on an actuarial valuation. For
    provident fund, contribution is made in terms of the Provident Fund Schemes of the Bank/Subsidiaries.
    11. Provision for income tax
    Provision for income tax is made in accordance with the statutory requirements with adjustments for deferred tax in
    terms of Accounting Standard 22 issued by the ICAI.

    F - 308
    Schedule 18
    Notes on Accounts
    1. List of Subsidiaries/Joint Ventures/Associates considered for preparation of consolidated financial statements.
    1.1 The 21 Subsidiaries, 6 Joint Ventures and 39 Associates (which along-with State Bank of India, the Parent,
    constitute the Group), considered in the preparation of the consolidated financial statements, are:
    A) Subsidiaries
    Sr. Name of the Country of Group’s
    No Subsidiary Incorporation Stake (%)
    1 State Bank of Bikaner & Jaipur India 75.07
    2 State Bank of Hyderabad India 100.00
    3 State Bank of Indore India 98.05
    4 State Bank of Mysore India 92.33
    5 State Bank of Patiala India 100.00
    6 State Bank of Saurashtra India 100.00
    7 State Bank of Travancore India 75.01
    8 SBI Commercial & International Bank Ltd. India 100.00
    9 SBI Capital Markets Ltd. India 86.16
    10 SBICAP Securities Ltd India 86.16
    11 SBICAPS Ventures Ltd India 86.16
    12 SBICAP Trustee Company Ltd India 86.16
    13 SBICAP (UK) Limited UK 86.16
    14 SBI DFHI Ltd India 65.95
    15 SBI Factors and Commercial Services Pvt. Ltd. India 69.88
    16 SBI Mutual Fund Trustee Company Pvt. Ltd. India 100.00
    17 State Bank of India (Canada) Canada 100.00
    18 State Bank of India (California) USA 100.00
    19 SBI International (Mauritius) Ltd. Mauritius 98.00
    20 Indian Ocean International Bank Ltd. Mauritius 51.00
    21 INMB Bank Ltd Nigeria ##
    (## up to 31.12.2005)
    B) Joint Ventures
    Sr. Name of the Country of Group’s
    No Subsidiary Incorporation Stake (%)
    1 C-Edge Technologies Ltd. India 49.00
    2 GE Capital Business Process Management Services Pvt Ltd. India 40.00
    3 SBI Cards and Payment Services Pvt. Ltd. India 60.00
    4 SBI Fund Management Pvt Ltd. India 63.00
    5 SBI Life Insurance Company Ltd. India 74.00
    6 Commercial Bank of India Llc. Russia 60.00

    F - 309
    C) Associates
    Sr. Name of the Country of Group’s
    No Subsidiary Incorporation Stake (%)
    1 Alaknanda Gramin Bank India 35.00
    2 Andhra Pradesh Grameena Vikas Bank India 35.00
    3 Arunachal Pradesh Rural Bank India 35.00
    4 Bastar Kshetriya Gramin Bank India 35.00
    5 Bilaspur Raipur Kshetriya Gramin Bank India 35.00
    6 Bolangir Anchalik Gramin Bank India 35.00
    7 Bundelkhand Kshetriya Gramin Bank India 35.00
    8 Damoh-Panna-Sagar Kshetriya India 35.00
    Gramin Bank
    9 Ellaquai Dehati Bank India 35.00
    10 Ganga Yamuna Gramin Bank India 35.00
    11 Ka Bank Nongkyndong Ri Khasi Jaintia India 35.00
    12 Kalahandi Anchalik Gramya Bank India 35.00
    13 Koraput Panchbati Gramya Bank India 35.00
    14 Krishna Grameena Bank India 35.00
    15 Langpi Dehangi Rural Bank India 35.00
    16 Mizoram Rural Bank India 35.00
    17 Nagaland Rural Bank India 35.00
    18 Palamau Kshetriya Gramin Bank India 35.00
    19 Parvatiya Gramin Bank India 35.00
    20 Pithoragarh Kshetriya Gramin Bank India 35.00
    21 Purvanchal Kshetriya Gramin Bank India 35.00
    22 Raigarh Kshetriya Gramin Bank India 35.00
    23 Samastipur Kshetriya Gramin Bank India 35.00
    24 Santhal Parganas Gramin Bank India 35.00
    25 Shivpuri-Guna Kshetriya Grameena Bank India 35.00
    26 Bikaner Kshetriya Gramin Bank India 26.27
    27 Cauvery Grameena Bank India 32.32
    28 Deccan Grameena Bank India 35.00
    29 Kalpatharu Grameena Bank India 32.32
    30 Malwa Gramin Bank India 35.00
    31 Marwar Gramin Bank India 26.27
    32 Sriganganagar Kshetriya Gramin Bank India 26.27
    33 Saurashtra Gramin Bank India 35.00
    34 Vidisha Bhopal Kshetriya Gramin Bank India 34.32
    35 Clearing Corporation of India Ltd India 28.97

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    36 SBI Home Finance Ltd India 25.05
    37 UTI Asset Management Company Pvt Ltd India 25.00
    38 Bank of Bhutan Bhutan 20.00
    39 Nepal SBI Bank Ltd Nepal 50.00
    1.2. The following changes have taken place in the consolidation process as compared to 2004-05:
    a) State Bank of India has acquired 51% stake in Indian Ocean International Bank Ltd (IOIB) at a cost of
    USD 7.35 million (Rs.32.20 crore) w.e.f. 20.04.2005. As such the assets, liabilities, income and expenses of
    IOIB have been consolidated from 20.04.2005. A sum of Rs. 0.85 crore has been recognized as goodwill
    in the consolidated financial statements.
    b) SBI Capital Market Ltd, a subsidiary of State Bank of India, has promoted four wholly owned subsidiaries
    viz. SBICAP Securities Ltd, SBICAPS Ventures Ltd, SBICAP Trustee Company Ltd and SBICAP(UK)
    Ltd. The consolidated financials of SBI Capital Markets Ltd have been used in the preparation of
    consolidated financial statements of State Bank of India.
    c) State Bank of India has promoted a new company as a joint venture - C-Edge Technologies Ltd - with
    Tata Consultancy Ltd. The company has commenced operations w.e.f. 28.03.2006.
    d) INMB Bank Ltd has ceased to be a subsidiary w.e.f. 01.01.2006 pursuant to its merger with Sterling Bank
    Plc in compliance with Nigerian Regulatory requirements. As per the merger scheme, State Bank of
    India’s stake in Sterling Bank Plc is 9.24%. As per Accounting Standard 21, a sum of Rs.6.27 crore has
    been charged off as loss on disposal of subsidiary. Income (Rupee equivalent 23.06 crore)/Expenses
    (Rupee equivalent 27.80 crore) of INMB Ltd upto 31.12.2005 have been consolidated.
    e) State Bank of India has brought down its equity stake in Credit Information Bureau of India Ltd from
    40% as at 31.03.2005 to 10% in stages starting from 17th May 2005. As Credit Information Bureau of
    India Ltd has ceased to be a joint venture it has not been consolidated for the year 2005-06. A sum of
    Rs.9.14 Crore has been recognized as profit on disposal of subsidiary/joint venture.
    f) During the year the Bank has paid Rs.309.24 crore to the Government of India, being its share (25%) of
    the consideration for purchase of UTI Asset Management Company Pvt. Ltd. As per Accounting Standard
    23, this amount has been identified as goodwill and included in the carrying amount of investment.
    g) As at 31.03.2005, the group had 44 RRBs as associates, which as at 31.03.2006 has come down to 34
    due to amalgamation of 14 RRBs details of which are as follows.
    Name of the Name of Name of the Date of
    amalgamated the new Sponsor bank merger
    RRB RRB
    1. Basti Gramin Purvanchal State Bank 12.09.05
    Bank Kshetriya of India
    2. Gorakhpur Gramin
    Kshetriya Bank
    Gramin Bank
    3. Kakathiya Andhra State Bank 31.03.06
    Grameena Bank Pradesh of India
    4. Manjira Grameena
    Grameena Bank Vikas Bank
    5. Nagarjuna
    Grameena Bank
    6. Sangameshwara
    Grameena Bank

    F - 311
    7. Sri Vishaka
    Grameena Bank
    8. Golconda Deccan State Bank of 24.03.06
    Grameena Grameena Hyderabad
    Bank Bank
    9. Sri Rama
    Grameena Bank
    10. Sri Saraswathi
    Grameena Bank
    11. Sri Sathavahana
    Grameena Bank
    12. Jamnagar Rajkot Saurashtra State Bank of 02.01.06
    Gramin Bank Gramin Saurashtra
    Bank
    13. Junagarh
    Amreli Gramin
    Bank
    14. Surendranagar
    Bhavnagar
    Gramin Bank
    Since the assets/liabilities of the merged RRBs have been taken over by the new entity at their respective
    book value, there is no goodwill/capital reserve on account of these mergers.
    1.3 Two of the associates – Bank of Bhutan (31st December) and Nepal SBI Bank Ltd (Hindu Calendar Year)
    follow accounting years different from that of the parent.
    2. Interest Earned-Others includes an amount of Rs.1701.81 crores, being interest on refund of Income Tax
    3. Other income includes an amount of Rs.531.54 crores being Exchange Gain on India Millennium Deposits (IMDs)
    redemption.
    4. An amount of Rs. 563.52 crores paid to Reserve Bank Of India for maintenance of value (MOV) by debit to Interest
    Expended Account in the years 2001 and 2002 was received back during the year on redemption of India Millennium
    Deposits (IMDs) and credited to Interest Expended account.
    5. Payments to and provisions for employees, under Operating Expenses includes an amount of Rs.408.48 crores,
    being arrears of salary paid for the previous financial years.
    6. In terms of RBI letter No.DBS.CO.SMC No. 8804/22.09.001/2005-06 dated 19.12.2005, the unreconciled net credit
    balance (net value of debit and credit entries) in Inter Branch Account upto 31.03.1999 aggregating Rs. 516.97
    crores has been credited to Profit & Loss Account.

    F - 312
    7. Break-up of the item “Provisions and Contingencies” included under the head “Expenditure” in the Profit and Loss
    Account:
    (Rs. in crore)
    2005-06 2004-05
    a) Provision for Income Tax (current tax) 2101.68 2794.19
    b) Provision for Income Tax (deferred tax) 507.09 (158.54)
    c) Provision for other taxes including Fringe Benefit Tax of
    Rs. 620.30 crore for current year 620.80 (3.87)
    d) Amount of provision made against NPA’s (including write back of provision) 414.06 1403.37
    e) General provision on Standard Assets in the global loan portfolio 585.44 (74.13)
    f) Depreciation in the value of investments in India 5529.07 4486.01
    g) Depreciation in the value of investments in Foreign Office 10.48 8.10
    h) Others (Net of write-backs)# (68.23) 1147.21
    Total 9700.39 9602.34
    (figures in brackets indicate credit)
    # figures of 2004-05 include ad hoc provision of Rs. 1160.62 crore towards wage revision.
    DISCLOSURES AS PER ACCOUNTING STANDARDS:
    8. Accounting Standard 17 (Segmental Reporting):
    8.1 Segment Identification
    The following segments have been identified:
    PRIMARY Treasury Operations
    (Business Segment) Banking Operations
    Non-Banking Operations
    SECONDARY Domestic Operations
    (Geographical Segment) Foreign Operations
    8.2 The accounting policies adopted for segment reporting are in line with the accounting policies adopted in
    consolidated financial statements with the following additional features.
    Pricing of inter-segment transactions between the Non Banking Operations segment and other segments are
    market led. In respect of transactions between treasury and banking segments, compensation for the use of
    funds is reckoned based on interest and other costs incurred by the lending segment.
    Revenue and expenses have been identified to segments based on their relationship to the operating activities
    of the segment.
    Revenue and expenses, which relate to the enterprise as a whole and are not allocable to segments on a
    reasonable basis have been included under “Unallocated Expenses” net of unallocated corporate revenue.

    F - 313
    8.3 Disclosure under segment reporting
    A. Primary Segments
    (Rs. in crore)
    Business Segments Banking Operations Treasury Non-Banking Eliminations Total
    Particulars Current Previous Current Previous Current Previous Current Previous Current Previous
    Year Year Year Year Year Year Year Year Year Year
    Revenue * 48193.16 43289.59 23363.06 26500.04 2187.15 1275.62 (14874.67) (17709.31) 58868.70 53355.94
    Result * 7764.79 7299.49 (1842.94) 866.00 152.80 99.20 – – 6074.65 8264.69
    Unallocated Expenses* (1879.92) 34.95
    Operating Profit * 7954.57 8229.74
    Income Taxes * 3229.57 2631.77
    Extra-ordinary
    Profit/Loss * 936.48 –
    Net Profit * 5661.48 5597.97
    Other Information # – –
    Segment Assets 505658.19 517165.01 289558.57 288958.17 7765.10 4936.21 (110480.29) (188115.02) 692501.57 622944.37
    Unallocated Assets 4330.85 5633.20
    Total Assets 696832.42 628577.57
    Segment Liabilities 506433.47 516586.32 259485.80 257861.01 5696.47 2983.35 (115986.98) (184130.68) 655628.76 593300.00
    Unallocated Liabilities 3996.95 2725.77
    Total Liabilities 659625.71 596025.77
    B. secondary SegmentS
    Geographical Segments Domestic Operations Foreign Operations Total
    Particulars Current Year Previous Year Current Year Previous Year Current Year Previous Year
    Revenue 55934.74 51806.32 2933.96 1549.62 58868.70 53355.94
    Assets 649267.83 594970.85 47564.59 33606.72 696832.42 628577.57
    * Total for the year 2005-06 # Balances as on 31.03.2006
    9. Accounting Standard 18 (Related Party Disclosures)
    9.1 Bank’s Related Parties:
    9.1.1 Joint Ventures :
    C-Edge Technologies Ltd
    GE Capital Business Process Management Services Private Limited.

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    9.1.2 Associates
    Alaknanda Gramin Bank
    Andhra Pradesh Grameena Vikas Bank
    Arunachal Pradesh Rural Bank
    Bastar Kshetriya Gramin Bank
    Bikaner Kshetriya Gramin Bank
    Bilaspur Raipur Kshetriya Gramin Bank
    Bolangir Anchalik Gramya Bank
    Bundelkhand Kshetriya Gramin Bank
    Cauvery Grameena Bank
    Damoh-Panna-Sagar Kshetriya Gramin Bank
    Deccan Grameena Bank
    Ellaquai Dehati Bank
    Ganga Yamuna Gramin Bank
    Ka Bank Nongkyndong Ri Khasi Jaintia
    Kalahandi Anchalik Gramya Bank
    Kalpatharu Grameena Bank
    Koraput Panchbati Gramya Bank
    Krishna Grameena Bank
    Langpi Dehangi Rural Bank
    Malwa Gramin Bank
    Marwar Gramin Bank
    Mizoram Rural Bank
    Nagaland Rural Bank
    Palamau Kshetriya Gramin Bank
    Parvatiya Gramin Bank
    Pithoragarh Kshetriya Gramin Bank
    Purvanchal Kshetriya Gramin Bank
    Raigarh Kshetriya Gramin Bank
    Samastipur Kshetriya Gramin Bank
    Santhal Parganas Gramin Bank
    Saurashtra Gramin Bank
    Shivpuri-Guna Kshetriya Grameena Bank
    Sri Ganganagar Kshetriya Gramin Bank
    Vidisha Bhopal Kshetriya Gramin Bank
    SBI Home Finance Limited.
    Clearing Corporation of India Ltd.
    Nepal SBI Bank Ltd.
    Bank of Bhutan
    UTI Asset Management Company Pvt. Ltd.
    9.1.3 Key Management Personnel of the Bank:
    Shri A.K. Purwar, Chairman
    Shri Ashok K. Kini, Managing Director (upto 31.12.2005)
    Shri T. S. Bhattacharya, Managing Director

    F - 315
    9.2 Out of above, the following are the Related Party Relationship in respect of which disclosures are required
    to be made in terms of AS-18 :
    GE Capital Business Process Management Services Pvt. Ltd.
    SBI Home Finance Ltd.
    Nepal SBI Bank Ltd.
    Bank of Bhutan
    C-Edge Technologies Ltd.
    Shri A.K. Purwar, Chairman
    Shri Ashok K. Kini, Managing Director (upto 31.12.2005)
    Shri T. S. Bhattacharya, Managing Director
    Other Related Parties are ‘State-controlled Enterprises’ and hence no disclosures are required as per paragraph
    9 of AS 18. Further, in terms of paragraph 5 of AS 18, transactions in the nature of banker-customer relationship
    are not required to be disclosed in respect of Key Management Personnel and relatives of Key Management
    Personnel.
    9.3 Transactions/Balances (Rupees in crore)
    Items/Related Associates/ Key Mana- Relatives Total
    Party Joint gement of Key
    Ventures Personnel @ Management
    Personnel @
    Borrowings # Deposits # 525.25 525.25
    (1770.31) — — (1770.31)
    Placement of — —
    Deposits # (11.65) — — (11.65)
    Advances # — —
    (26.56) — — (26.56)
    Investments # 34.45 34.45
    (39.97) — — (39.97)
    Non-funded 560.08 560.08
    commitments # — — — —
    Leasing/HP arrangements availed $ — — — —
    Leasing/HP arrangements provided $ — — — —
    Purchase of fixed assets $ — — — —
    Sale of fixed assets $ — — — —
    Interest paid $ 7.18 7.18
    (28.23) — — (28.23)
    Interest — —
    received $ (11.15) — — (11.15)
    Rendering of — —
    services $ (4.46) — — (4.46)
    Receiving of 85.62 85.62
    services $ (—) — — (—)
    Management — 0.20 0.20
    contracts $ (0.14) (—) (0.14)
    (Figures in brackets pertain to previous year)
    # Balances as at 31.03.2006 $ Total for FY 2005-06.
    @ Transactions which are not in the nature of banker-customer relationship.
    The above disclosures are as identified by the management and relied upon by the Auditors.

    F - 316
    10. Accounting Standard - 19 : (Assets given on lease with effect from 1.4.2001)
    (Rs. in crore)
    Total gross investment in the 164.73
    leases (164.73)
    Present value of minimum lease payments receivable as on 31.3.2006
    Less than 1 year 17.60
    (31.28)
    1 to 5 years 20.49
    (28.91)
    5 years and above —
    (—)
    Total 38.09
    (60.19)
    Present value of unearned 6.76
    finance income (10.28)
    (Figures in brackets relate to previous year)
    11. Accounting Standard - 20 : (Earnings per Share) Earnings per Share has been computed as under:
    (Rs. in crore)
    2005-06 2004-05
    a. Net Profit (Group) 5529.92 5463.93
    b. Weighted average number of shares 526298878 526298878
    c. Earnings per Share (Basic and Diluted) Rs. 105.07 Rs. 103.82
    12. Accounting Standard - 22 : (Accounting for Taxes on Income):
    (Rs. in crore)
    A. Deferred Tax Liability 2005-06 2004-05
    Depreciation of leased assets 126.15 174.46
    Depreciation of Fixed Assets 19.73 30.84
    Depreciation & Amortization of Investment 209.31 177.65
    Provision relating to securities transactions 66.67 66.67
    Others 8.53 0.08
    Total 430.39 449.70
    B. Deferred Tax Asset 2005-06 2004-05
    Provision made against
    NPAs 428.63 623.13
    Provision for wage revision — 474.23
    Others 299.89 157.01
    Total 728.52 1254.37
    C. Net DTA/(DTL) (B – A) 298.13 804.67

    F - 317
    13. As required by AS 27 the aggregate amount of the assets, liabilities, income and expenses related to the Bank’s
    interests in jointly controlled entities are disclosed as under:
    A: Assets and Liabilities: (Rs. In crore)
    Capital & Liabilities 2005-06 2004-05 Assets 2005-06 2004-05
    Capital & Reserves 716.84 442.19 Cash & Balances with RBI 36.67 16.23
    Deposits 1.60 7.09 Balances with Banks and
    Money at Call and Short Notice 137.46 60.43
    Borrowings 1514.95 563.30 Investments 2114.88 847.86
    Other Liabilities & Provisions 2061.77 682.24 Advances 1638.24 661.90
    Fixed Assets 41.55 15.86
    Other Assets 326.36 92.54
    Total 4295.16 1694.82 Total 4295.16 1694.82
    Capital Commitments Nil (Previous year Rs. 2.87 crore) Other Contingent Liabilities Rs. 3.76 crore (Previous
    year Rs. 0.32 crore)
    B: Income and Expenditure
    FY 2006 FY 2005
    I. Income
    Interest Earned 413.09 164.96
    Other Income 1496.11 591.84
    Total 1909.20 756.80
    II. Expenditure
    Interest Expended 73.33 22.18
    Operating expenses 1721.73 654.61
    Provisions & Contingencies 114.59 61.89
    Total 1909.65 738.68
    14. Accounting Standard 28 : (Impairment of Assets)
    In the opinion of the Bank’s Management, there is no impairment to the assets to which Accounting Standard 28 -
    “Impairment of Assets” applies requiring any recognition.
    15. Accounting Standard 29 : (Provisions, Contingent Liability & Contingent Assets)
    a) Movement of provisions for contingent liabilities
    (Rs. in crore)
    Particulars Legal cases/ contingencies
    Balance as at 1st April 2005 200.32
    (15.49)
    Provided during the year 83.14
    (185.75)
    Amounts used during the year 134.22
    (0.03)
    Reversed during the year 28.70
    (0.89)
    Balance as at 31st March 2006 120.54
    (200.32)
    (Figures in bracket relate to previous year)

    F - 318
    b) Other Contingent Liabilities (Schedule 12) :
    Such liabilities at Sl.No. (i), (ii), (iii), (iv), (v) and (vi) are dependent upon the outcome of Court / arbitration
    / out of Court settlement, disposal of appeals, the amount being called up, terms of contractual obligations,
    devolvement and raising of demand by concerned parties, respectively.
    16. Additional statutory information disclosed in separate financial statements of the parent and the subsidiaries having
    no bearing on the true and fair view of the consolidated financial statements and also the information pertaining to
    the items which are not material have not been disclosed in the consolidated financial statements in view of the
    general clarifications issued by ICAI.
    17. Previous year’s figures have been regrouped and reclassified, wherever necessary and determinable, to make them
    comparable with current year’s figures. In cases where disclosures have been made for first time in terms of RBI
    guidelines, previous year figures have not been mentioned.

    F - 319
    ANNEXURE C-4
    SUMMARY STATEMENT OF ACCOUNTING RATIOS (CONSOLIDATED)
    Sr No. For the year Ending 31-Mar-06 31-Mar-07 31-Mar-08 31-Mar-09 31-Mar-10
    1 Basic Earning Per Share 105.07 120.93 168.61 172.68 184.82
    2 Return on Average Net Worth (%) 15.85% 15.96% 17.27% 16.40% 15.09%
    3 Net Asset Value per Share 706.95 808.20 969.74 1140.22 1309.46

    F - 320
    STOCK MARKET DATA FOR EQUITY SHARES AND DEBT SECURITIES OF THE BANK

    I. EQUITY SHARES

    The Bank‘s Equity Shares are listed on the BSE and NSE. As the Bank‘s shares are actively traded on the
    BSE and NSE, stock market data has been given separately for each of these Stock Exchanges.

    1. The high and low closing prices recorded on the BSE and NSE during the last three years and the number
    of Equity Shares traded on the days the high and low prices were recorded are stated below.

    BSE

    Year ended High Date of High Volume on Low Date of Volume on Average
    March 31 (Rs.) date of high (Rs.) Low date of low price for
    (no. Of shares) (no. Of shares) the year
    (Rs.)
    2008 2,465.25 January 8 , 482,401 926.75 April 3, 621,137 1,778.55
    2008 2007
    2009 466,972 896.80 March 1,089,315 1,325.15
    1,822.15 May 2, 2008 9, 2009
    2010 2,465.25 October 20, 557,500 1,073.95 April 1, 1,273,076 1,909.00
    2009 2009
    Source: www.bseindia.com
    The average price has been computed based on the daily closing price of Equity Shares.

    NSE

    Year ended High Date of High Volume on Low Date of Volume on Average
    March 31 (Rs.) date of high (Rs.) Low date of low price for
    (no. Of shares) (no. Of shares) the year
    (Rs.)
    2008 2,464.55 January 8, 1,460,965 926.75 April 3, 1,128,332 1,775.49
    2008 2007
    2009 1,822.40 May 2, 2008 1,572,810 895.3 March 3,024,171 1,325.21
    9, 2009
    2010 2,470.85 October 20, 2,372,087 1,077.45 April 1, 4,116,277 1,909.08
    2009 2009
    Source: www.nseindia.com
    The average price has been computed based on the daily closing price of Equity Shares.

    2. The high and low prices and volume of Equity Shares traded on the respective dates during the last six
    months are as follows:

    BSE

    Month, Year High Date of High Volume on Low Date of Low Volume on Average
    (Rs.) date of high (Rs.) date of low price for
    (no. Of shares (no. Of share the
    ) s) month
    (Rs.)
    August 2010 2,865.10 August 26 517,739 2581.10 August 2 397,635 2,742.42
    September 2010 3233.20 September 30 465,579 2,758.10 September 2 230,390 3,039.86
    October 2010 3,304.90 October 13 445,049 3,094.45 October 20 331,590 3,209.87
    November 2010 3,489.55 November 5 134,633 2,826.10 November 25 899,629 3,114.94
    December 2010 3105.10 December 1 762,557 2,686.2 December 9 1,266,026 2809.51
    January 2011 2,820.85 January 3 316,334 2,502.25 January 14 838,092 2618.20
    Source: www.bseindia.com
    The average price has been computed based on the daily closing price of Equity Shares.

    141
    NSE

    Month, Year High Date of High Volume on Low Date of Low Volume on Average
    (Rs.) date of high (Rs.) date of low price for
    (no. of shares) (no. of shar the
    es) month
    (Rs.)
    August 2010 2,866.15 August 26 2,264,291 2586.35 August 2 2,058,577 2,742.21
    September 2010 3,240.45 September 30 3,080,619 2759.10 September 2 1,075,750 3,090.80
    October 2010 3,305.60 October 13 1,543,297 3,094.35 October 20 1,288,905 3,211.36
    November 2010 3,489.95 November 5 413,238 2,821.90 November 25 4,687,908 3,114.87
    December 2010 3,100.15 December 1 2,877,525 2686.90 December 9 4,313,053 2808.96
    January 2011 2822.10 January 3 1,106,007 2500.80 January 14 2,683,908 2617.95
    Source: www.nseindia.com
    The average price has been computed based on the daily closing price of Equity S hares.

    The closing price of the Equity Shares on February 11, 2011 on the BSE was Rs. 2,584.65 and on the NSE was Rs.
    2,592.60.

    II. DEBT SECURITIES

    The stock market data of the Bank‘s privately placed debt instruments that have been traded on the WDM
    segment of NSE in the last 3 years preceding the date of this Shelf Prospectus is as follows:

    ISIN Name of debt Date of last Traded Last trade Last trade Weighted
    security issued trade value price (in %) yield (%) average price
    INE 062 A SBI21 December 20, 0.10 100.55 8.70 100.55
    09056 2010
    INE 062 A SBI21B December 20, 15.00 101.30 8.76 101.30
    09072 2010
    INE 062 A SBI21C December 20, 0.10 101.34 8.76 101.34
    09080 2010
    INE 062 A SBI21E December 20, 0.10 100.83 8.72 100.83
    09106 2010
    INE 062 A SBI16 September 22, 5.00 106.28 8.41 106.28
    09130 2010
    INE 062 A SBI22A June 2, 2010 0.10 109.57 8.86 109.57
    09148
    INE 062 A SBI22B May 25, 2010 10.00 108.41 8.94 108.41
    09155
    INE 062 A SBI23 October 29, 5.00 100.47 8.82 100.47
    09163 2010
    INE 062 A SBI18 May 22, 2009 80.00 100.58 8.30 100.58
    09171
    INE 062 A SBI November 20, 5.00 101.22 8.91 101.22
    09213 2009
    INE 062 A SBIA November 16, 9.00 100.14 9.01 100.14
    09221 2010
    Source: www.nseindia.com

    The stock market data of the Bank‘s debt instruments that have been traded on the CM segment of NSE in
    the last 3 years preceding the date of this Prospectus is as follows:

    ISIN Name of debt Date of last Traded value Last trade Last trade Weighted
    security issued trade (INR Lakhs) price (in %) yield (%) average price
    SBIN N1 January 11, 7.41 103.00 8.49 102.96
    2011
    SBIN N2 January 11, 53.99 104.68 8.78 104.64
    2011

    142
    Source: www.nseindia.com

    143
    DESCRIPTION OF CERTAIN INDEBTEDNESS

    The statement of borrowings of the Bank as on March 31, 2010 is provided below:
    (Rs. in million)
    S. Particulars Outstanding Rate of Interest Duration Date of Repayment Terms
    No. amount Borrowings

    Domestic Borrowings
    1. Term Borrowings - - - - -
    2. CBLO (secured 79,254.62 3.65% to 4.90% Five days March 31, 2010 Bullet
    borrowings)
    3. Borrowings from Other Institutions/Agencies
    (a) 6,526.32 Various rates from Three years to January 23, 2010 Various, from June
    5.10% to 6.00 14 years and and March 31, 30, 2012 to June 15,
    Refinancing by 6M LIBOR + six months 2010 2024
    SIDBI 280bps
    (b) 6,396.15 0.00% to 13.00% Various terms Various dates Various, half yearly
    Refinancing by from July 31, 2010
    NABARD to July 31, 2019
    (c) Others 2,529.22 - - March 31, 2010 Adverse clearing
    Total Domestic 94,706.31 - - - -
    Borrowings (A)

    Overseas Borrowings
    1. Bond Issues 103,979.85 Fixed - 3.50% to Five years Various dates from Bullet
    (Excluding 4.90% June 28, 2005 to
    Hybrid Tier-I December 18,
    Bonds) Floating - LIBOR 2009
    +38 basis points to
    + 73.5 basis points
    2 Foreign Currency 45, 926.86 Floating 364 days to Various dates from Bullet principal
    Loans Various Rates five years June 2, 2005 to repayment, interest
    September 28, at half yearly
    2007 intervals
    3 Money Market 465,699.40 Various Rates Term ranging Various dates Bullet
    Borrowings And from one day
    others to one year
    Total Overseas 615,606.11 - - - -
    Borrowings (B)

    Tier-I Capital
    1. Overseas SBI 17,957.09 Coupon 6.439% Perpetual non February 15, 2007 Perpetual with call
    Perpetual non call after swap LIBOR call 10 years option to the issuer
    10.25 years bonds + 120 basis points and three after 10 years and
    on semi annual months three months
    basis
    2. SBI perpetual non 10,102.50 Coupon 7.14% Perpetual non June 26, 2007 Perpetual with call
    call 10 years after swap LIBOR call 10 years option to the issuer
    bonds + 137 basis points and one day after 10 years and
    on semi annual one day
    basis
    Total Tier-I Capital (C) 28,059.59 - - - -

    Subordinate Debts
    1. Domestic 291,744.00 Fixed - 7.45% to 111 months to Various dates from Bullet
    10.20% 180 months February 5, 2005

    144
    S. Particulars Outstanding Rate of Interest Duration Date of Repayment Terms
    No. amount Borrowings
    to January 27,
    2010
    2. Overseas - - - - -
    Total Subordinate 291,744.00 - - - -
    Debts (D)

    Grand Total (A + B + 1,030,116.01 - - - -


    C+ D)

    The Bank has availed certain secured borrowings in the past which are reflected in the table above.

    In addition to the above, the Bank has also issued the following bonds since March 31, 2010

    The Bank acting through its London branch has issued U.S.$ 1 billion 4.50% notes due 2015 pursuant to
    Rule144A and Regulation S of the United States Securities Act of 1933 by in July, 2010.

    The Bank made a public issue of Lower Tier II bonds aggregating to Rs. 1,000 crores and the allotment was
    completed in November, 2010.

    The Bank acting through its London Branch has issued € 750 million 4.50% notes due 2014 under the Bank‘s
    U.S.$ 5 billion Medium Term Note Programme in November, 2010.

    Servicing behaviour on existing debt securities, payment of due interest on due dates on term loans and debt
    securities

    As on the date of this Shelf Prospectus, there has been no default in payment of principle or interest on any term
    loan and debt security issued by the Bank in the past.

    The Bank is regular in servicing the debt obligations and has never defaulted / delayed payment of interest /
    redemption proceeds on due dates on term loans and other debt securities issued since inception.

    145
    OUTSTANDING LITIGATION AND DEFAULTS

    As on the date of this Shelf Prospectus, there are no defaults in meeting statutory dues, institutional dues, and
    towards holders of instrument like bonds, fixed deposits and arrears on cumulative preference shares, etc, by the
    Bank.

    There are no outstanding litigations pertaining to:

    i matters likely to affect operation and finances of the Bank including disputed tax liabilities of any nature;
    and

    ii criminal prosecution launched against the Bank and the Directors for alleged offences under the enactments
    specified in Paragraph 1 of Part I of Schedule XIII to the Companies Act.

    The Bank is involved in certain legal proceedings in the ordinary course of its business. However, currently,
    the Bank is not a party to any proceedings, and is not aware of any current, pending or anticipated proceedings by
    governmental authorities or third parties, which, if adversely determined, would have a material adverse effect
    on the Bank‘s financial condition or results of operations. To determine what litigation may be material, the
    Bank has considered a threshold of Rs. 100 crores. See ―Risk Factors — Risks Relating to the Bank’s Business —
    The Bank is involved in various litigation matters. Any final judgment awarding material damages against the Bank
    could have a material adverse impact on its future financial performance, stockholders’ equity and the price and
    interest payable on the Bonds‖.

    As on March 31, 2010, our contingent liabilities not provided for on a consolidated basis was Rs. 6,972,951.20
    million and on an unconsolidated basis was Rs. 5,484,468.85 million. For further details, please see section ―Auditor
    Examination Report and Financial Statements‖.

    146
    OTHER REGULATORY AND STATUTORY DISCLOSURES

    Consents

    Consents in writing of the Directors, the Auditor to the Issue, Lead Managers, Registrar to the Issue, Legal Advisors
    to the Issue, Credit Rating Agency and the Debenture Trustee to act in their respective capacities, have been
    obtained.

    IDBI Trusteeship Services Limited has given their consent for their appointment as Debenture Trustees under
    regulation 4(4) of the SEBI Debt Regulations for all Tranche Issues up to the Shelf Limit.

    Expert Opinion

    Except the report of CARE and CRISIL in respect of the credit rating of the Issue, furnishing the rationale for its
    rating, the Bank has not obtained any expert opinions.

    Common form of Transfer

    The Bank undertakes that there shall be a common form of transfer for the Bonds in physical form and all
    Applicable Laws shall be duly complied with in respect of all transfer of the Bonds and registration thereof.

    Minimum Subscription

    If the Bank does not receive the minimum subscription of 75% of the base issue amount of the Tranche Issue, or as
    otherwise specified in the relevant Tranche Prospectus, on or before the closure of the relevant Tranche Issue, the
    entire subscription amount shall be refunded to the applicants within 15 days from the date of closure of the Tranche
    Issue. If there is a delay in the refund of the subscription amount by more than 8 (eight) days after the Bank becomes
    liable to pay the same, the Bank will pay interest for the period of delay, at rates prescribed under subsections (2)
    and (2A) of Section 73 of the Companies Act.

    Previous Issues

    The Bank has undertaken the rights issue in February 2008 whereby it issued 105,259,776 Equity Shares of Rs. 10
    each and allotted 105,171,498, Equity Shares of Rs. 10 each at a premium of Rs. 1,580 per Equity Share aggregating
    to Rs. 167,360.94 million to the Equity Shareholders on rights basis in the ratio of one Equity Share for every five
    Equity Shares held on the record date (the ―Rights Issue‖). The issue opened on February 18, 2008 and closed on
    March 18, 2008. The date of allotment was March 29, 2008 and the date of refund was April 3, 2008.

    The Bank had also undertaken a public issue of lower tier II bonds aggregating to Rs. 10,000 million in October
    2010. The issue opened on October 18, 2010 and closed on October 23, 2010.The date of allotment was November
    4, 2010, the date of refund was November 4, 2010 and the date of listing on the stock exchange was November 12,
    2010.

    Except for the Rights Issue and the public issue of lower tier II bonds, the Bank or any of its other listed
    companies under the same management within the meaning of section 370(1B) of the Companies Act has not
    undertaken a public or rights issue during the last three years

    Commission or brokerage on previous issues

    The Company paid an aggregate amount of Rs. 66.53 million on account of fees for commission and brokerage in
    relation to its public issue of lower tier II bonds.

    Change in auditors of the Bank during the last three years

    147
    The Government of India vide its letter F.No.1/14/2004-BOA dated November 21, 2008 all the public sector banks
    (―PSBs‖) to follow the ‗Road Map for implementation of autonomy in the matter of appointment of statutory
    auditors‘ (the ―Road Map‖). As per the Road Map, one audit firm is to be appointed as statutory circle auditor for
    each of the circle offices of the Bank. Presently, the Bank has 14 circle offices. The appointment of statutory central
    auditors is made on an annual basis, subject to their fulfilling the eligibility norms prescribed by RBI from time to
    time and also subject to their suitability.

    Further, in terms of the Road Map, in order to protect the independence of the auditors/audit firms, the Bank makes
    the appointments of statutory central auditors for a continuous period of three years. The Bank does not have any
    authority to remove the audit firms during this period without the prior approval of the RBI.

    Fiscal Year 2008:

    M. Choudhary & Co. and Chaturvedi & Co. were replaced by V.K. Jindal & Co., A.K. Sabat and Co., Datta Sarkar
    & Co.

    Fiscal Year 2009:

    Khandelwal Jain & Co., Vinay Kumar & Co., M M Nissim & Co. and Laxminiwas & Jain were replaced by Jain
    Kapila Associates, Gupta & Shah, Guha Nandi & Co., A.R. Viswanathan & Co. and Chokshi & Chokshi.

    Fiscal Year 2010:

    D.P. Sen & Co., G.M. Kapadia & Co., R.G.N. Price & Co., S.K. Mittal & Co., Vardhaman & Co., Jain Kapila
    Associates, Datta Singla & Co., Guha Nandi & Co. A.R. Viswanathan & Co. and Chokshi & Chokshi were replaced
    by B. M. Chatrath & Co.; Kalyaniwalla & Mistry, Essveeyar, K. K. Soni & Co., Venugopal & Chenoy, K. G.
    Somani & Co., M. Verma & Associates, K. C. Mehta & Co., Dagliya & Co. and Krishnamoorthy &
    Krishnamoorthy.

    Revaluation of assets

    The Bank has not revalued its assets in the last five years.

    Prohibition by SEBI / Eligibility of the Bank to come out with the Issue

    The Bank has not been restrained, prohibited or debarred by SEBI from accessing the securities market or dealing in
    securities and no such order or direction is in force.

    Utilisation of Proceeds

    Statement by the Board of Directors:

    (i) All monies received out of each Tranche Issue of the Bonds to the public shall be transferred to a separate
    bank account other than the bank account referred to in sub-section (3) of section 73 of Companies Act;

    (ii) Details of all monies utilised out of each Tranche Issue referred to in sub-item (i) shall be disclosed under
    an appropriate separate head in our Balance Sheet indicating the purpose for which such monies were
    utilised; and

    (iii) Details of all unutilised monies out of each Tranche Issue referred to in sub-item (i), if any, shall be
    disclosed under an appropriate separate head in our Balance Sheet indicating the form in which such
    unutilised monies have been invested.

    The funds raised by us from previous bonds issues have been utilised for our business as stated in the respective
    offer documents.

    148
    Disclaimer clause of BSE

    BOMBAY STOCK EXCHANGE (“THE EXCHANGE”) HAS GIVEN VIDE ITS LETTER DATED
    FEBRUARY 9, 2011, PERMISSION TO THIS BANK TO USE THE EXCHANGE’S NAME IN THIS
    OFFER DOCUMENT AS ONE OF THE STOCK EXCHANGES ON WHICH THIS BANK’S SECURITIES
    ARE PROPOSED TO BE LISTED. THE EXCHANGE HAS SCRUTINUZED THIS OFFER DOCUMENT
    FOR ITS LIMITED INTERNAL PURPOSE OF DECIDING ON THE MATTER OF GRANTINIG THE
    AFORESAID PERMISSION TO THIS BANK. THE EXCHANGE DOES NOT IN ANY MANNER:

    (A) WARRANT, CERTIFY OR ENDORSE THE CORRECTNESS OR COMPLETENESS OF ANY OF


    THE CONTENTS OF THIS OFFER DOCUMENT; OR

    (B) WARRANT THAT THIS BANK’S SECURITIES WILL BE LISTED AND WILL CONTINUE TO
    BE LISTED ON THE EXCHANGE; OR

    (C) TAKE ANY RESPONSIBILITY FOR THE FINANCIAL OR OTHER SOUNDNESS OF THIS
    BANK, ITS PROMOTERS, ITS MANAGEMENT OR ANY SCHEME OR PROJECT OF THIS
    BANK,

    AND IT SHOULD NOT FOR ANY REASON BE DEEMED OR CONSTRUED THAT THIS OFFER
    DOCUMENT HAS BEEN CLEARED OR APPROVED BY THE EXCHANGE. EVERY PERSON WHO
    DESIRES TO APPLY FOR OF OTHERWISE ACQUIRES ANY SECURITIES OF THIS BANK MAY DO
    SO PURSUANT TO INDEPENDENT INQUIRY, INVESTIGATIN AND ANALYSIS AND SHALL NOT
    HAVE ANY CLAIM AGAINST THE EXCHANGE WHATSOEVER BY REASON OF ANY LOSS WHICH
    MAY BE SUFFERED BY SUCH PERSON CONSEQUENT TO OR IN CONNECTION WITH SUCH
    SUBSCRIPTION/ACQUISITION WHETHER BY REASON OF ANYTHING STATED OR OMITTED TO
    BE STATED HEREIN OF FOR ANY OTHER REASON WHATSOEVER

    Disclaimer clause of NSE

    AS REQUIRED, A COPY OF THIS OFFER DOCUMENT HAS BEEN SUBMITTED TO NATIONAL


    STOCK EXCHANGE OF INDIA LIMITED (HEREINAFTER REFERRED TO AS NSE). NSE HAS GIVEN
    VIDE ITS LETTER REF.: NSE/LIST/158222-4 DATED FEBRUARY 10, 2011 PERMISSION TO THE
    ISSUER TO USE THE EXCHANGE’S NAME IN THIS OFFER DOCUMENT AS ONE OF THE STOCK
    EXCHANGES ON WHICH THE ISSUER’S SECURITIES ARE PROPOSED TO BE LISTED. THE
    EXCHANGE HAS SCRUTINIZED THE DRAFT OFFER DOCUMENT FOR ITS LIMITED INTERNAL
    PURPOSE OF DECIDING ON THE MATTER OF GRANTING THE AFORESAID PERMISSION TO
    THE ISSUER. IT IS TO BE DISTINCTLY UNDERSTOOD THAT ANY PERMISSION GIVEN BY NSE
    SHOULD NOT IN ANY WAY BE DEEMED OR CONSTRUED THAT THE OFFER DOCUMENT HAS
    BEEN CLEARED OR APPROVED BY NSE; NOR DOES IT IN ANY MANNER WARRANT, CERTIFY
    OR ENDORSE THE CORRECTNESS OR COMPLETENESS OF ANY OF THE CONTENTS OF THIS
    OFFER DOCUMENT; NOR DOES IT WARRANT THAT THIS ISSUER’S SECURITIES WILL BE
    LISTED OR WILL CONTINUE TO BE LISTED ON THE EXCHANGE; NOR DOES IT TAKE ANY
    RESPONSIBILITY FOR THE FINANCIAL OR OTHER SOUNDNESS OF THIS ISSUER, ITS
    PROMOTERS, ITS MANAGEMENT
    OR ANY SCHEME OF PROJECT OF THIS ISSUER.

    EVERY PERSON WHO DESIRES TO APPLY FOR OR OTHERWISE ACQUIRE ANY SECURITIES OF
    THIS ISSUER MAY DO SO PURSUANT TO INDEPENDENT INQUIRY, INVESTIGATION AND
    ANALYSIS AND SHALL NOT HAVE ANY CLAIM AGAINST THE EXCHANGE WHATSOEVER BY
    REASON OF ANY LOSS WHICH MAY BE SUFFERED BY SUCH PERSON CONSEQUENT TO OR IN
    CONNECTION WITH SUCH SUBSCRIPTION/ ACQUISITION WHETHER BY REASON OF
    ANYTHING STATED OR OMITTED TO BE STATED HEREIN OR ANY OTHER
    REASONWHATSOEVER.

    149
    Listing

    Each Series of Bonds will be listed on NSE and / or BSE as specified in the Tranche Prospectus. For each Tranche
    Issue, the Bank will apply to NSE and/or BSE for in-principle approvals for listing simultaneously with the filing of
    the Tranche Prospectus.

    If the permissions to deal in and for an official quotation of the Series of Bonds under a Tranche Issue are not
    granted by the Stock Exchange(s), the Bank shall forthwith repay, without interest, all such moneys received from
    the Applicants in pursuance of the relevant Tranche Prospectus. If such money is not repaid within eight days after
    the Bank becomes liable to repay it (i.e. from the date of refusal or within seven days from the Tranche Issue
    Closing Date, whichever is earlier), then the Company and every Director of the Company who is an officer in
    default shall, on and from such expiry of eight days, be liable to repay the money, with interest at the rate of 15%
    p.a. on application money, as prescribed under Section 73 of the Companies Act.

    The Bank shall ensure that all steps for the completion of the necessary formalities for listing and commencement of
    trading at the Stock Exchange(s) mentioned above are taken within seven Working Days from the date of Allotment.

    Dividend

    The Central Board has been empowered to determine the rate of dividend under the Act. Under the SBI Regulations,
    the Central Board may from time to time declare and pay or authorize the payment of such interim dividends as
    appear to it to be justified.

    The Bank has paid the following dividend on its equity shares in the last five years:

    Year Dividend Paid


    (in Rs. per equity share)
    Fiscal Year 2010 30.00
    Fiscal Year 2009 29.00
    Fiscal Year 2008 21.50
    Fiscal Year 2007 14.00
    Fiscal Year 2006 14.00

    Mechanism for redressal of investor grievances

    Datamatics Financial Services Limited has been appointed as the Registrar to the Issue to ensure that investor
    grievances are handled expeditiously and satisfactorily and to effectively deal with investor complaints. All
    grievances relating to the Issue should be addressed to the Registrar to the Issue giving full details of the applicant,
    number of Bonds applied for, amount paid on application and the bank branch or collection centre where the
    application was submitted etc.

    150
    TERMS OF THE ISSUE

    The following are the terms and conditions of the Bonds which has to be read together with the ―Terms of the
    Tranche Issue‖as specified in the relevant Tranche Prospectus which will be incorporated into the Debenture Trust
    Deed of the relevant Tranche Issue and are subject to the provisions of the Act, the SBI Regulations, the Application
    Form of the relevant Tranche Issue and other terms and conditions as may be incorporated in the Debenture Trust
    Deed, letter(s) of Allotment of the relevant Tranche Issue and/or Bond Certificate(s) of the relevant Tranche Issue.
    In addition, the Bonds shall be subject to Applicable Laws and other documents that may be executed in respect of
    the Bonds. Applicants should note that in the event of any conflict between the terms of this Shelf Prospectus and the
    Tranche Prospectus, the terms as set out in the ―Terms of the Tranche Issue‖ section in the Tranche Prospectus
    shall prevail.

    Each Tranche Issue and Bonds issued pursuant thereto, are, in each case are constituted by a Debenture Trust Deed
    for the relevant Tranche Issue made between the Bank and the Debenture Trustee, which expression shall include its
    successor(s)) as trustee for the Series Bondholders.

    1. Authority for the Issue

    The ECCB has by its resolutions dated December 30, 2010 has approved the Issue. The ECCB will pass
    separate resolutions approving each Tranche Issue as specified in the relevant Tranche Prospectus.

    2. Reservation for each Category of Applicant

    The allotment limits (if any) for each category of Applicants for the Bonds will be as specified in the
    relevant Tranche Prospectus.

    3. Application Size

    The minimum and maximum application size for each category of Applicants for the Bonds will be as
    specified in the relevant Tranche Prospectus. The minimum number of Bonds per Application Form will be
    calculated on the basis of the total number of Bonds applied for under each such Application Form and not
    any specific option.

    4. Subscription and Related Payments

    (a) Subscription

    Each Tranche Issue Opening Date and Tranche Issue Closing Date will be set out in the relevant
    Tranche Prospectus.

    (b) Minimum Subscription

    If the Bank does not receive the minimum subscription of 75% of the base issue amount of the
    Tranche Issue as specified in the relevant Tranche Prospectus, on or before the closure of the
    relevant Tranche Issue, the entire subscription amount shall be refunded to the applicants within
    15 days from the date of closure of the Tranche Issue. If there is a delay in the refund of the
    subscription amount by more than 8 (eight) days after the Bank becomes liable to pay the same,
    the Bank will pay interest for the period of delay, at rates prescribed under subsections (2) and
    (2A) of Section 73 of the Companies Act.

    (c) Interest on Refunds

    Interest on any refund of subcription amount paid by an applicant for a particular series of Bonds
    will be paid seperately by the Bank on the amount refunded to allottees and on the amount
    refunded to Non-allottees ("Refund Interest") at the interest rates specified in the relevant Tranche

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    Prospectus. The refund interest shall be paid along with the refund of Application Money whether
    in case of total refund to Non-allotees or partial refund to Allotees, as the case maybe. The interest
    shall be payable from the third working day following the date of receipt of the Application Form
    excluding the date of receipt of such Application Form and shall be payable until one day prior to
    the Deemed Date of Allotment.

    (d) Payment

    The payment of Bonds i.e. the Application Amount will be required to be made in full with the
    Application.

    Any payment made in excess of Application Amount on Application will be refunded to the
    applicant. No additional Bonds shall be issued for this excess of Application Amount, and the
    same shall be refunded along with issuance of other Refund Orders without any interest.

    Further, in case of allotment of lesser number of Bonds than the number applied for, the excess
    amount paid on Application shall be non interest bearing and the same shall be refunded to the
    applicant in accordance with the terms of this Prospectus.

    (e) Interest on Application Money

    Interest on Application money for a particular Series of Bonds will be paid separately by the Bank
    to Allottees at the interest rates specified in the relevant Tranche Prospectus and the same should
    not be deducted from the Amount on Application. The interest shall be payable from the third
    working day following the date of receipt of the Application Form excluding the date of receipt of
    such Application Form and shall be payable until one day prior to the Deemed Date of Allotment.

    (f) Tax Deduction at Source

    Interest on Application money and Interest on Refunds taken together shall be paid with respect to
    the value of Bonds Allotted, subject to deduction of income tax at source under the Income Tax
    Act, as applicable, if it exceeds the prescribed limit of Rs. 10,000, in any Fiscal Year to any
    Applicant. The interest warrant will be dispatched along with the letter(s) of Allotment at the sole
    risk of the Applicant, to the sole/first Applicant.

    (g) Deemed Date of Allotment

    All benefits relating to the Bonds, to the extent permitted by law, will be available to the investors
    from the Deemed Date of Allotment. The actual Allotment may occur on a date other than the
    Deemed Date of Allotment.

    5. Methods of Payment

    Bonds held in dematerialised form: For payment of refunds, interest, or principal redemption, as the case
    may be, the bank details will be obtained from the Depositories for Bonds applied for/held in electronic
    form and from the Application Form for payment of refunds, interest or principal redemption as the case
    may be. Applicants who have applied for or are holding the Bonds in electronic form are advised to
    immediately update their bank account details held in the records of the Depository. Please note that a
    failure to do so could result in delays in credit of amounts to be paid to the Applicant, at the Applicant‘s
    sole risk and neither the bank, the Lead Managers, the Depositories nor the Registrar shall have any
    responsibility or liability in respect thereof.

    Bonds held in physical bond form: The bank details of the Bondholders will be obtained from the Registrar
    or the Bank for payments of interest, refunds or redemptions, as the case may be.

    The mode of payments of refunds, interest or principal shall be undertaken in any of the following ways:

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    1. Direct Credit: Payment of refunds, interest or principal redemption to Applicants having their
    bank accounts with the Escrow Collection Bank shall be directly credited to their bank accounts
    with the Escrow Collection Bank.

    2. ECS: Payment of refunds, interest or principal redemption to Applicants having an account at any
    of the following centres: Ahmedabad, Bangalore, Bhubaneshwar, Kolkata, Chandigarh, Chennai,
    Guwahati, Hyderabad, Jaipur, Kanpur, Mumbai, Nagpur, New Delhi, Patna and
    Thiruvananthapuram, or any other centres permitted by RBI and SEBI, shall be undertaken
    through ECS. This mode of payment would be subject to availability of complete bank account
    details including the MICR code as appearing on a cheque leaf, from the Depositories.

    3. NEFT: Payment of refunds, interest or principal redemption shall be undertaken through NEFT
    wherever the Applicants‘ bank has been assigned the IFSC which can be linked to MICR, if any,
    available to that particular bank branch, and where the Applicants have registered their nine-digit
    MICR number and their bank account number while opening and operating the dematerialised
    account. The IFSC of that bank branch will be obtained from the RBI‘s website as on a date
    immediately prior to the date of payment of refund, and will be duly mapped with the MICR
    numbers.

    4. RTGS: Applicants having a bank account at any of the abovementioned centres and whose
    payment of refunds, interest or principal redemption amounts exceeds Rs. 200,000 have the option
    to receive the due amounts through RTGS. Such eligible Applicants who indicate their preference
    to receive payment of refunds, interest or principal redemption through RTGS are required to
    provide the IFSC in the Application Form. In the event the same is not provided, payment of
    refunds, interest or principal redemption shall be made through ECS. Charges, if any, levied by the
    Escrow Collection Bank for the same would be borne by such Applicant opting for RTGS as a
    mode of payment of refunds, interest or principal redemption. Charges, if any, levied by the
    Applicant‘s bank receiving the credit would be borne by the Applicant.

    5. For all other Applicants, including those who have not updated their bank particulars with the
    MICR code, the interest payment/refund/redemption orders shall be dispatched under certificate of
    posting for value up to Rs. 1,500 and through speed/registered post for refund orders of above Rs.
    1,500. Such refunds will be made by cheques, pay orders or demand drafts drawn on the Escrow
    Collection Banks and payable at par at places where Applications are received. Bank charges, if
    any, for cashing such cheques, pay orders or demand drafts at other centres will be payable by the
    Applicant.

    We will not be responsible for any delay in payment of refunds, interest or principal redemption, provided
    that the process of such request has been initiated within reasonable time, as per the process detailed above.

    6. Withdrawal of the Issue

    The Bank will not withdraw Tranche Issues that are open and where Application money has already been
    collected. Investors are however, allowed to withdraw their Application any time prior to Allotment.

    7. Basis of Allotment and Underwriting

    The basis of allotment will be specified in the Tranche Prospectus for each Tranche Issue.

    No underwriters have been appointed for this Issue. The Issue or any part thereof is not being underwritten
    by the Lead Manager to the Issue or by any of its associates and affiliates.

    8. Status and Ranking of Bonds

    The Bonds are in the nature of debentures being a marketable security. The Bonds will be fully paid up,

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    direct, unsecured and subordinated obligations of the Bank. The Bonds will be free of any restrictive
    clauses. In the event of the winding up of the Bank, the claims of the Bondholders pursuant to the
    Debenture Trust Deed of the relevant Tranche Issue shall be subordinated in right of payment to the claims
    of all other creditors (other than claims of holders of Subordinated Indebtedness ranking equal to or lower
    than the claims of the holders of Bonds) of the Bank in the manner and to the extent provided in the
    Debenture Trust Deed of the relevant Tranche Issue.

    Each Series of Bonds will rank pari passu among themselves.

    For the avoidance of doubt, please note that the claims of Bondholders shall be senior to: (i) the claims of
    holders of Tier I capital (as defined in the Capital Adequacy Guidelines) of the Bank; and (ii) the claims of
    holders of upper tier II bonds (as defined in the Capital Adequacy Guidelines) of the Bank and any
    indebtedness classified as upper tier II capital by the Capital Adequacy Guidelines.

    The Bonds are not redeemable at the option of the Bondholders or without the prior consent of RBI and
    subject to compliance with conditions as set out in the Capital Adequacy Guidelines.

    The Bonds are capital instruments and not deposits of the Bank and
    they can not be used as collateral for any loan made by the Bank or any
    of its subsidiaries or affiliates. The Bonds are different from fixed
    deposits and are not covered by deposit insurance.

    Unlike the fixed deposits where deposits are repaid at the option of
    deposit holder, the Bonds are not redeemable at the option of the
    Bondholders or without the prior consent of RBI.

    9. Form, Market Lot and Trading Lot of the Bonds

    The Bonds being issued hereunder can be applied for in the dematerialised form only through a valid
    Application Form for the relevant Tranche Issue filled in by the Applicant along with attachment, as
    applicable. The Bonds will be allotted only in dematerialised form and the Bondholders represented by a
    statement issued through electronic mode shall not receive any physical Bond certificates. The Bondholders
    will hold the Bonds in dematerialised form and deal with them in accordance with the provisions of the
    Depositories Act and/or rules as notified by the Depositories from time to time.

    The Bonds will be issued in Indian Rupees only. The market lot will be one Bond (―Market Lot‖). Trading
    of theBonds shall be compulsorily in dematerialised form in Market Lot. Allotment in the Issue will be in
    electronic form in multiples of 1(one) Bond. Investors may note that the Bonds in dematerialised form can
    be traded only on the Stock Exchange having electronic connectivity with NSDL or CDSL.

    Subsequent to the issuance of the Bonds, a Bondholder may request the Depository/Bank to provide a
    physical Bond Certificate. In case of any Bonds rematerialised by a Bondholder in physical form, a single
    certificate will be issued to the Bondholder for the aggregate amount (―Consolidated Bondholder
    Certificate‖) for each Series of Bonds allotted to him under any Tranche Issue. The Applicant can also
    request for the issue of Bond Certificates in a Market Lot.

    In respect of Consolidated Bondholder Certificate, we will, only upon receipt of a request from the
    Bondholder, split such Consolidated Bondholder Certificates into smaller denominations subject to the
    minimum of the Market Lot. No fees would be charged for splitting of a Consolidated Bondholder
    Certificate into Market Lots, but stamp duty payable, if any, would be borne by the Bondholder. The
    charge for splitting into lots other than Market Lot will be borne by the Bondholder subject to the

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    maximum amount agreed upon by us with the Stock Exchange where the Bonds are proposed to be listed.
    The request for splitting is required to be accompanied by the original Consolidated Bondholder Certificate
    which would then be treated as cancelled by us.

    10. Face Value and Issue Price

    The Bonds will be issued at par or premium and denominated in an amount with a face value as specified
    in the relevant Tranche Prospectus.

    No Bond will be issued in an amount less than the face value whether in dematerialised form or upon any
    subsequent rematerialisation.

    11. Tenor and Redemption

    (a) Tenor and Redemption at Maturity

    The Bonds will be redeemed at their principal amount outstanding together with accrued interest
    on the payment date as specified for the Series of Bonds in the relevant Tranche Prospectus (the
    ―Redemption Date‖).

    (b) Call Option

    The Issuer may have the option to redeem the Bonds by way of a ―call option‖ at the principal
    amount outstanding of the Bonds together with accrued interest, if applicable, as specified in the
    relevant Tranche Prospectus for the Bonds, subject to being at least 5 (five) years from the
    Deemed Date of Allotment of the Bonds and with the prior approval of the RBI.

    In the event that such a ―call option‖ is exercised by the Bank, the Bank shall ensure that notice of
    the same is provided to the Bondholders through newspaper advertisements at least 60 days prior
    to such Call Option Date.

    There shall be no ‗put option‘ on the Bonds.

    (c) Procedure for Redemption

    The procedure for redemption is set out below:

    Bonds held in physical form: No action is ordinarily required on the part of the Bondholder at the
    time of redemption. However, the Bank may require that the Consolidated Bondholder Certificate
    duly discharged by the sole holder or all the joint-holders (signed on the reverse of the
    Consolidated Bondholder Certificate) to be surrendered for redemption on maturity and should be
    sent by the Bondholder(s) by registered post with acknowledgment due or by hand delivery to the
    Registrar / Company or to such persons at such addresses as may be notified by us from time to
    time. Bondholder(s) may be requested to surrender the Consolidated Bond Certificate(s) in the
    manner as stated above, not more than three months and not less than one month prior to the
    Redemption Date or the Call Option Date so as to facilitate timely payment. Also see the
    paragraph titled ―Payment on Redemption‖ below.

    Payment instructions in respect of the Bonds to be redeemed as per the process set forth below
    will be made on the Redemption Date or the Call Option Date within a period of 30 days from the
    date of receipt of the duly discharged Consolidated Bondholder Certificate, whichever is later.

    Bonds held in electronic form: No action is required on the part of Bondholder(s) at the time of
    redemption of the Bonds.

    (d) Payment on Redemption

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    Bonds held in dematerialised form: For Bonds held in dematerialised form, on the Redemption
    Date or the Call Option Date, redemption proceeds will be paid to those Bondholders whose
    names appear on the register of beneficial owners given by the Depositories to the Bank. These
    names will be in accordance with the Depositories‘ records on the Record Date fixed for the
    purpose of redemption. These Bonds will be simultaneously extinguished through appropriate
    debit corporate action. No action is required on the part of Bondholder(s) at the time of
    redemption of Series of Bonds held in dematerialised form.

    Bonds held in physical form: The redemption proceeds will be paid to those Bondholders whose
    names stand first in the SBI Register on the Redemption Date. Dispatch in respect of payment on
    redemption of the Bonds will be made only on the surrender of Consolidated Bondholder
    Certificate, duly discharged by the sole holder or all the joint-holders (signed on the reverse of the
    Consolidated Bondholder Certificate), sent by the Bondholder(s) by registered post with
    acknowledgment due or by hand delivery to our registered office or to the office of the Registrar
    to the Issue or to such persons at such addresses as may be notified by us from time to time, not
    more than three months and not less than one month prior to the Redemption Date or the Call
    Option Date so as to facilitate timely payment. In case the above requirement is not satisfied, no
    claim or action shall lie against us, or the Registrar to the Issue.

    We may at our discretion redeem the Bonds without the requirement of surrendering of the
    Consolidated Bondholder Certificate by the Bondholder(s). In case we decide to do so, the
    Bondholders need not submit the Consolidated Bondholder Certificate to us and the redemption
    proceeds would be paid to those Bondholders whose names stand in the register of Bondholders
    maintained by us on the Record Date. Hence, the transferees, if any, should ensure lodgement of
    the transfer documents before the Record Date. In case the transfer documents are not lodged with
    us before the Record Date and we despatch the redemption proceeds to the transferor, claims in
    respect of the redemption proceeds should be settled amongst the parties inter se and no claim or
    action shall lie against us or the Registrar.

    The Bank‘s liability to Bondholders in respect of their rights including for payment or otherwise
    shall stand extinguished from the Redemption Date or the Call Option Date, as applicable, in all
    events and when the Bank dispatches the redemption amounts to the Bondholders. Further, the
    Bank will not be liable to pay any interest, income or compensation of any kind from the
    Redemption Date or the Call Option Date, as applicable.

    If the Redemption Date or the Call Option Date falls on a Saturday, Sunday or public holiday in
    Mumbai or in any other payment centre notified in terms of the Negotiable Instruments Act, 1881,
    redemption proceeds would be paid on the next working day.

    12. Interest

    (a) Rate of Interest

    The Bonds will bear interest at a fixed rate per annum as specified for the Bonds in the relevant
    Tranche Prospectus.

    (b) Calculation of Interest

    For the purpose of calculation of interest on a per annum basis, the day count convention which
    will be used would be ―Actual/ Actual‖ basis.

    For the Fiscal Year of the Tranche Issue, the interest shall be calculated from the Deemed Date of
    Allotment of the Tranche Issue to March 31 of that Fiscal Year, both days inclusive.

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    For the subsequent Fiscal Years (except the Fiscal Year in which the Redemption Date falls), the
    interest shall be calculated from April 1 to March 31, both days inclusive.

    For the Fiscal Year in which the Redemption Date falls, the interest shall be calculated from April
    1 of the Fiscal Year to one day prior to the Redemption Date, both days inclusive.

    (b) Step-up Option

    There is no ‗step up‘ coupon for the Bonds or in accordance with other criteria permitted by
    relevant RBI regulations from time to time.

    (c) Interest Payments

    Interest amounts due will be payable on the principal amount outstanding of the Bonds from time
    to time on the applicable Interest Payment Date.

    The interest will be credited or dispatched on April 2 of every year for each Interest Payment Date.
    The last interest payment will be made along with repayment of the principal amount on the
    relevant Redemption Date.

    For the Bonds, the last interest payment will be due on the Redemption Date. If redemption of a
    the Bonds does not occur on the Redemption Date due to a lack of permission from the RBI, then
    the last interest payment for each of the Bonds shall be made on the date of maturity of such
    Bonds.

    Payment of interest will be made to the sole or first (in case of joint holders) Bondholders whose
    names appear in the register of Bondholders held with the Depository as on the Record Date.

    In case of rematerialisation of Bond Certificates or transfer of Bond Certificates held in physical


    form, for payment of interest, Bondholders are advised to send the Bond Certificate(s) and the
    duly completed transfer deeds or other suitable instrument of transfer as may be prescribed by us
    for registration of transfer of the Bond(s) to us or such other persons as may be notified by us from
    time to time, at least two days prior to the Record Date, failing which interest will be paid to the
    seller and not to the buyer. In such cases, claims in respect of interest, if any, shall be settled inter
    se amongst the parties and no claim or action shall lie against us, or the Registrar to the Issue.

    If the date of interest payment falls on a Saturday, Sunday or public holiday in Mumbai or in any
    other payment centre notified in terms of the Negotiable Instruments Act, 1881, interest would be
    paid on the next working day.

    (d) Payment Deferral in relation to Bonds

    There is no deferral of payments or lock-in provisions in relation to the Bonds.

    13. Title

    In the case of any Bonds held in (i) dematerialised form, the person for the time being appearing in the
    register of beneficial owners of the Depository and (ii) physical form, the person for the time being
    appearing in the SBI Register (as defined below) shall be treated for all purposes by the Bank, the
    Debenture Trustee, the Depositories and all other persons dealing with such person as the holder thereof
    and its absolute owner for all purposes (whether or not it is overdue and regardless of any notice of
    ownership, trust or any interest in it or any writing on, theft or loss of the Bonds) and no person will be
    liable for so treating the holder. Title to any Bond shall pass only by transfer and registration as described
    in para 27 below titled ―Transfer of the Bonds‖.

    14. Nomination

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    The sole Bondholder or first Bondholder, along with other joint Bondholders (being individual(s)) may
    nominate any one person (being individual) who, in the event of death of the sole holder or all the joint-
    holders, as the case may be, shall become entitled to the Bond. A person, being a nominee, becoming
    entitled to the Bond by reason of the death of the Bondholder(s), shall be entitled to the same rights to
    which he would be entitled if he were the registered holder of the Bond. Where the nominee is a minor, the
    Bondholder(s) may make a nomination to appoint, in the prescribed manner, any person to become entitled
    to the Bond(s), in the event of his death, during the minority. A nomination shall stand rescinded upon sale
    of a Bond by the person nominating. A buyer will be entitled to make a fresh nomination in the manner
    prescribed. When the Bond is held by two or more persons, the nominee shall become entitled to receive
    the amount only on the demise of all the holders. Fresh nominations can be made only in the prescribed
    form available on request at our Registered/Corporate Office/Registrar or such other person at such
    addresses as may be notified by us.

    Bondholder(s) are advised to provide the specimen signature of the nominee to us/Registrar to expedite the
    transmission of the Bond(s) to the nominee in the event of demise of the Bondholder(s). The signature can
    be provided in the Application Form or subsequently at the time of making fresh nominations. This facility
    of providing the specimen signature of the nominee is purely optional.

    Notwithstanding anything stated above, since the allotment of Bonds in this Issue will be made only in
    dematerialised mode, there is no need to make a separate nomination with the Bank. Nominations
    registered with the respective Depository Participant of the applicant would prevail. If the Bondholders
    require changing their nomination, they are requested to inform their respective Depository Participant.

    15. Succession

    Where a nomination has not been made or the nominee predeceases the Bondholder(s) the provisions of the
    following paragraphs will apply:

    In the event of the demise of the sole holder of the Bond, or the last survivor in case of joint-holders, we
    will recognise the executor or administrator of the deceased Bondholder, or the holder of the succession
    certificate or other legal representative as having title to the Bond(s). We shall not be bound to recognise
    such executor, administrator or holder of the succession certificate or legal representative unless such
    executor or administrator or holder of the succession certificate or legal representative obtains probate or
    letter of administration or is a holder of the succession certificate or other legal representation, as the case
    may be, from an appropriate court in India. We at our absolute discretion, may in any case, dispense with
    production of probate or letter of administration or succession certificate or other legal representation.

    16. Jurisdiction

    The Bonds, the Debenture Trust Deeds, the Tripartite Agreements, the Registrar MoUs and other relevant
    documents shall be governed by and construed in accordance with the laws of India. The Bank in the
    Debenture Trust Deeds will agree, for the exclusive benefit of the Debenture Trustee and the Bondholders,
    that the courts of Mumbai are to have jurisdiction to settle any disputes which may arise out of or in
    connection with the Debenture Trust Deeds or the Bonds (including a dispute relating to any non-
    contractual obligations arising out of or in connection with the Debenture Trust Deeds and the Bonds and
    that accordingly any suit, action or proceedings arising out of or in connection with the Debenture Trust
    Deeds and the Bonds (including any suit, action or proceedings relating to any non-contractual obligations
    arising out of or in connection with these documents) may be brought in the courts of Mumbai.

    17. Restriction on Transfer of the Bonds

    There are no restrictions on transfers and transmission of Bonds and on their consolidation/splitting except
    as per Applicable Laws.

    18. Debenture Trustee for the Bondholders

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    The Bank will appoint a Debenture Trustee to act for theBondholders. The Bank and the Debenture
    Trustees will enter into a Debenture Trust Deed for each Tranche Issue specifying, inter alia, the powers,
    authorities and obligations of the Debenture Trustees and the Bank. All Bondholders for each Series of
    Bonds shall, without further act or deed, be deemed to have irrevocably given their consent to the
    Debenture Trustee or any of its agents or authorized officials to do all such acts, deeds, matters and things
    in respect of or relating to the Bonds as the Debenture Trustee may in their absolute discretion deem
    necessary or require to be done in the interest of the Series Bondholders. Any payment made by us to the
    Debenture Trustee on behalf of the Bondholders shall discharge us pro tanto to the Bondholders.

    The Debenture Trustee will protect the interest of the Bondholders in the event of default by us in regard to
    timely payment of interest and repayment of principal and they will take necessary action at the Bank‘s
    cost.

    19. Security

    The Bonds are unsecured, which means that the Bonds are not secured against any of the Bank‘s assets.

    20. Default, Events of Default

    As specified in the Tranche Prospectus for the Bonds.

    21. Provision of Applicant’s bank details at the time of rematerialisation of the Series Bonds or transfer
    of the Bond Certificates

    As a matter of precaution against possible fraudulent encashment of Bond Certificates due to loss or
    misplacement, the particulars of the Applicant‘s bank account are mandatorily required to be provided at
    the time of rematerialisation of the Series Bonds or transfer of the Bond Certificate. Applications without
    these details are liable to be rejected. However, in relation to Applications for dematerialised Bonds, these
    particulars will be taken directly from the Depositories. In case of Bonds held in physical form either on
    account of rematerialisation or transfer, the Bondholders are advised to submit their bank account details
    with the Registrar before the Record Date failing which the amounts will be dispatched to the postal
    address of the Bondholders as held in the records of the Bank.

    22. Joint-holders

    Where two or more persons are holders of any Bond(s), they shall be deemed to hold the same as joint
    holders with benefits of survivorship subject to other provisions contained in the Act, the SBI regulations or
    laws from time to time.

    23. Loan against Bonds

    In accordance with the RBI guidelines applicable to the Bank, it shall not grant loans against the security of
    the Bonds.

    24. Lien

    The Bank shall have the right of set-off and lien, present as well as future, irrespective of any other lien or
    charge on the moneys due and payable to the Bondholder or deposits held in the account of the Bondholder,
    whether in single or joint names, to the extent of all outstanding dues by the Bondholder to the Bank.

    25. Lien on Pledge of Bonds

    The Bank, at its discretion, may note a lien on pledge of Bonds if such pledge of Bond is accepted by any
    bank/institution for any loan provided to the Bondholder against pledge of such Bonds as part of the
    funding.

    159
    26. Record Date

    The record date for payment of interest or repayment of principal shall be 15 (fifteen) days prior to the
    Interest Payment Date or the Redemption Date or the Call Option Date or early redemption date or any
    other date on which interest and/ or principal is due and payable.

    27. Transfer of the Bonds

    The Bank in case of Bonds held in physical form shall maintain at its registered office (or such other place
    as permitted by law) a register of Bondholders (the ―SBI Register‖) containing the particulars of the legal
    owners of the Bonds issued by the Bank. In respect of Bonds held in dematerialised form, the register of
    Bondholders maintained by the Depository under the Depositories Act shall be deemed to be a register of
    Bondholder for the purposes of this condition.

    The Bonds shall be transferred or transmitted in accordance with Applicable Laws. A suitable instrument of
    transfer as may be prescribed by us may also be used to effect this.

    Transfer in relation to Bonds in physical form: The Bonds are negotiable instruments and Bonds held in
    physical form may be transferred by endorsement and delivery by the Bondholder(s). All endorsements
    must be clear and vernacular endorsements must be translated into English immediately below the
    endorsement. However, buyers of the Bonds are advised to send the Bond Certificate(s) to us or to such
    persons as may be notified by us from time to time, along with a duly executed transfer deed or other
    suitable instrument of transfer as may be prescribed by us for registration of transfer of the Bond(s). No
    transfer will be valid unless and until entered on the SBI Register.

    Transfer in relation to Bonds in electronic form: The normal procedure followed for transfer of securities
    held in dematerialised form shall be followed for transfer of these Bonds held in electronic form. Transfers
    may be only effected through the Depository in accordance with the provisions of the Depositories Act
    and/or rules as notified by the Depositories from time to time. The seller is required to give delivery
    instructions containing details of the buyer‘s DP account to his depository participant. In case the transferee
    does not have a DP account, the seller can re-materialise the Bonds and thereby convert his dematerialised
    holding into physical holding. Thereafter the Bonds can be transferred in the manner as stated above. In
    case a holder of the Bonds in physical form wants to hold the Bonds in dematerialised form, he can choose
    to dematerialise the securities through his Depository Participant.

    In case of sale by or to companies, bodies corporate, societies registered under the Applicable Laws in
    India, trusts, provident funds, superannuation funds, gratuity funds, pension funds, scientific and/or
    industrial research organisations, commercial Banks, cooperative banks or regional rural banks, a certified
    true copy of the Power of Attorney or such other authority as may be acceptable to us, must be lodged
    separately at our Registered/Corporate Office or at the office of Registrar or such other person as may be
    notified by us for this purpose, at the time of registration of Bonds.

    28. Sharing of Information

    The Bank may, at its option, use on its own, as well as exchange, share or part with any financial or other
    information about the Bondholders available with it, our subsidiaries and affiliates and other banks,
    financial institutions, credit bureaus, agencies, statutory bodies, as may be required and neither the bank nor
    its subsidiaries and affiliates nor their agents shall be liable for use of the such information.

    29. Notices

    All notices to the Bondholders required to be given by the Bank or the Debenture Trustee shall be
    published in one English language newspaper having wide circulation and one regional language daily
    newspaper each in Mumbai, Chennai, Delhi, Kolkata and Ahmedabad and/or, will be sent by post/courier
    to the registered Bondholders from time to time.

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    30. Issue of Duplicate Bond Certificate(s)

    If any Bond Certificate is mutilated or defaced it may be replaced by the Bank against the surrender of such
    Bond Certificates, provided that where the Bond Certificates are mutilated or defaced, they will be replaced
    only if the certificate numbers and the distinctive numbers are legible.

    If any Bond Certificate is destroyed, stolen or lost then upon production of proof thereof to the Bank‘s
    satisfaction and upon furnishing such indemnity/security and/or documents as we may deem adequate,
    duplicate Bond Certificate(s) shall be issued.

    31. Future Borrowings

    We shall be entitled to make further issue of secured or unsecured debentures and/or raise term loans or
    raise further funds from time to time from any persons, banks, financial institutions or bodies corporate or
    any other agency without the consent of, or notification to or consultation with the Bondholders or the
    Debenture Trustee.

    32. Bondholder not a Shareholder

    The Bondholders will not be entitled to any of the rights and privileges available to the Shareholders of the
    Bank.

    33. Rights of Bondholders

    The rights of Bondholders will be as per the Debenture Trust Deed to be executed between the Bank and
    the Debenture Trustee.

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    PROCEDURE FOR APPLICATION

    The Prospectus and the Application Forms for the relevant Tranche Issue together with the Abridged Prospectus of
    the relevant Tranche Issue may be obtained from our Central Office and all our Designated Branches (a list of which
    is provided in the Application Form and which is also made available on www.sebi.gov.in), as well as from the Lead
    Managers. In addition, Application Forms would also be made available to the Stock Exchange where listing of the
    Bonds is sought, and to brokers, being members of the Stock Exchange, upon their request. We will provide the
    Abridged Prospectus for the relevant Tranche Issue along with the Application Form for the relevant Tranche Issue.

    All Applicants shall have the option of applying for the Bonds either through cheque/bank draft as advised in the
    section ―Payment Instructions for Applicants‖.

    Application Form

    Applicants are required to submit their Applications through the Bankers to Issue. All Applicants shall have the
    option to apply for any of or all categories of Bonds in the Application Form.

    WHO CAN APPLY

    The following categories of persons are eligible to apply in the Issue:

    Public financial institutions , statutory corporations, commercial banks, cooperative banks and regional
    rural banks;

    Provident, superannuation and gratuity funds;

    Pension funds;

    Mutual funds;

    The National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated November 23, 2005 of
    the Government of India published in the Gazette of India;

    Resident Indian individuals - in their own names or in the names of their minor children as natural/legal
    guardians in single or joint names (but not exceeding three);

    Hindu Undivided Families through the Karta;

    Companies, bodies corporate and societies registered under the Applicable Laws in India and authorised to
    invest in the Bonds;

    Public/private trusts (charitable/religious or otherwise) authorised to invest in the Bonds;

    Scientific and/or industrial research organisations authorised to invest in the Bonds;

    Partnership firms through a Partner; and

    Associations of persons.

    FIIs, NRIs and OCBs are not permitted to apply in this Issue.

    The Lead Managers, their associates and affiliates are permitted to subscribe in the Issue. However, the Issue or any
    part thereof is not being underwritten by the Lead Managers to the Issue or by any of its associates and affiliates.

    It may be noted that participation by any investors in the Issue, including the investment limits applicable to them,

    162
    will be subject to necessary approvals and authorisations required under the laws applicable to them as well as any
    corporate authorisations applicable to them.

    Applications by Mutual Funds

    In terms of the SEBI (Mutual Funds) Regulations, 1996, as amended, no mutual fund scheme is allowed to invest
    more than 15% of its net asset value (the ―NAV‖) in debt instruments issued by a single company, which are rated
    not below investment grade by a credit rating agency authorised to carry out such activity. Such investment limit
    may be extended to 20% of the NAV of the scheme with the prior approval of the board of trustees and the board of
    asset management company (the ―AMC‖).

    A separate Application can be made in respect of each scheme of an Indian mutual fund registered with SEBI and
    such Applications shall not be treated as multiple Applications. Applications made by the AMCs or custodians of a
    Mutual Fund shall clearly indicate the name of the concerned scheme for which Application is being made. In case
    of Applications made by Mutual Fund registered with SEBI, a certified copy of their SEBI registration certificate
    must be submitted with the Application Form. The Applications must be also accompanied by certified true copies
    of (i) Trust Deed (ii) resolution authorising investment and containing operating instructions and (iii) specimen
    signatures of authorized signatories. Failing this, the Bank reserves the right to accept or reject any Application in
    whole or in part, in either case, without assigning any reason therefor.

    Applications by Provident, Superannuation and Gratuity Funds

    Pursuant to the Ministry of Finance and Company Affairs Notification No. 5(53)/2002-ECB&PR dated January 24,
    2005 on Modified Investment Pattern for Investment of Incremental Accretions by Non-Government Provident
    Funds, non-government provident, superannuation and gratuity funds are permitted to invest up to 40% of their
    corpus in term deposit receipts up to three years issued by public sector banks provided that the instruments have an
    investment grade rating from at least two credit rating agencies.

    Application by Pension Funds

    Pension funds under the PFRDA (Registration of Intermediaries) Regulations, 2005 may invest in (i) minimum 3
    year debt securities issued by corporates, SCBs and PFIs, at least 75% of which should be invested in investment
    grade instruments; (ii) credit rated PFIs or PSU bonds; (iii) credit rated municipal bonds or infrastructure bonds; and
    (iv) State Government and Government securities.

    Applications by Banks

    It may be noted that a bank‘s investment in the Bonds will be reckoned along with the investment in other
    instruments eligible for capital status in the investee bank while computing compliance with the overall ceiling of
    10% for cross holding of capital among banks/FIs prescribed vide circular DBOD.BP.BC.No.3/ 21.01.002/ 2004-05
    dated July 6, 2004 and also subject to cross holding limits. Further, a bank's investments in the Bonds will attract a
    100% risk weight for capital adequacy purposes.

    Application by Scheduled Banks, Co-operative Banks and Regional Rural Banks

    Scheduled banks, co-operative banks and regional rural banks can apply in the Issue based upon their own
    investment limits and approvals. The Application must be accompanied by certified true copies of (i) a board
    resolution authorising the Application; (ii) a letter of authorisation. Failing this, the Bank reserves the right to accept
    or reject any Application in whole or in part, in either case, without assigning any reason therefor.

    Application by Insurance Companies

    In case of Applications made by insurance companies registered with the Insurance Regulatory and Development
    Authority, a certified true copy of certificate of registration issued by Insurance Regulatory and Development
    Authority must be attached to the Application Form. Each Application must be accompanied by certified copies of
    (i) the Applicant‘s memorandum of association and articles of association; (ii) a power of attorney; (iii) a resolution

    163
    authorising the Application and containing operating instructions; and (iv) specimen signatures of authorized
    signatories. Failing this, the Bank reserves the right to accept or reject any Application in whole or in part, in either
    case, without assigning any reason therefor.

    Application by Trusts or Societies

    In the case of Application by trusts or societies, the relevant trust or society must ensure that it is permitted to apply
    for and hold the Bonds in accordance with the laws and regulations applicable to it as well as its constitutional
    documents. The trustees of the trust or the management of the society, as the case may be, having made all
    reasonable inquiries, accepts responsibility for and confirms that it is permitted to apply for and hold the Bonds and
    the Issuer accepts no responsibility to verify the eligibility of the relevant trust or society to apply for or hold the
    Bonds.

    Applications cannot be made by:

    a) Minors without a guardian name;


    b) Non residents;
    c) NRIs;
    d) FIIs; and
    e) OCBs.

    Applicants are advised to ensure that they have obtained the necessary statutory and/or regulatory
    permissions/consents/approvals in connection with applying for, subscribing to, or seeking Allotment of
    Bonds pursuant to this Issue.

    Impersonation/Fictitious Applications

    Attention of the Applicants is specifically drawn to the provisions of sub-section (1) of section 68A of the
    Companies Act, which is reproduced below:

    Any person who –

    (a) makes, in a fictitious name, an Application to a body corporate for acquiring, or subscribing to, the Bonds,
    or

    (b) otherwise induces a body corporate to allot, or register any transfer of, bonds therein to them, or any other
    person in a fictitious name, shall be liable for legal consequences of such action.

    Application Size

    The minimum application size for each Category will be prescribed in the Tranche Prospectus for the relevant
    Tranche Issue.

    Escrow Mechanism

    We shall open Escrow Accounts with one or more Escrow Collection Bank(s) in whose favour the applicants shall
    make out the cheque or demand draft in respect of their Application. Cheques or demand drafts received for the
    Application Amount from investors would be deposited in the respective Escrow Account. The Escrow Collection
    Bank(s) will act in terms of this Prospectus and the Escrow Agreement. The Escrow Collection Bank(s) shall not
    exercise any lien whatsoever over the monies deposited therein. Payments of refund to the applicants shall also be
    made from the Escrow Accounts / refund account(s) as per the terms of the Escrow Agreement and this Prospectus

    HOW TO APPLY

    General Instructions

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    1. Applications for the Bonds must be made in the prescribed form (―Application Form‖).

    2. The Application Forms are required to be completed in block letters in English as per the instructions
    contained herein and in the Application Form, and are liable to be rejected if not so completed.

    3. Hindu Undivided Families or HUFs, in the individual name of the Karta. The Applicant should specify that
    the Applicant is being made in the name of the HUF in the Application Form as follows: ―Name of
    Sole or First Applicant: XYZ Hindu Undivided Family applying through XYZ, where XYZ is the name of
    the Karta‖. Applications by HUFs would be considered at par with those from individuals. For HUFs, PAN
    of the HUF should be provided.

    4. Thumb impressions and signatures other than in English/Hindi/Gujarati/Marathi or any of the other
    languages specified in the Eighth Schedule to the Constitution of India must be attested by a Magistrate or
    Notary Public or a Special Executive Magistrate under his official seal.

    5. Applications under Power of Attorney: Unless we specifically agree in writing, and subject to such terms
    and conditions as we may deem fit, in the case of Applications made under Power of Attorney or by limited
    companies, corporate bodies, trusts etc., a certified copy of the Power of Attorney and/or the relevant
    authority, as the case may be, and a certified copy of Memorandum and Articles of Association and/or bye-
    laws, where applicable, is required to be lodged separately, along with a copy of the Application Form at
    the office of the Registrar to the Issue simultaneously with the submission of the Application Form,
    indicating the name of the Applicant along with the address, Application number, date of submission of the
    Application Form, name of the bank and branch where it was deposited, Cheque/Demand Draft Number
    and the bank and branch on which the Cheque/Demand Draft was drawn.

    6. Permanent Account Number: Each of the Applicants is required to mention his PAN allotted under the
    Income Tax Act in the Application Form. The PAN would be the sole identification number for participants
    transacting in the securities markets, irrespective of the amount of the transaction. Any Application Form
    without the PAN is liable to be rejected. It is to be specifically noted that Applicants should not submit the
    GIR Number instead of the PAN as the Application is liable to be rejected on this ground.

    7. The Applicant must mention the DP ID in the Application Form

    8. Joint Applications: Applications may be made in single or joint names (not exceeding three). In the case of
    joint Applications, all payments will be made out in favour of the first Applicant. All communications will
    be addressed to the address available in the Depository.

    9. Multiple Applications:

    (a) In case of multiple applications, which is two or more Application Forms submitted by a single
    Applicant, the applications shall be aggregated based on the PAN of the Applicant.

    (b) In case of a Mutual Fund, a separate Application can be made in respect of each scheme of the
    mutual fund and such Applications will not be treated as multiple Applications provided that the
    Applications made clearly indicate the name of each scheme under which the Application has been
    made.

    (c) The category of the Retail Applicants will change in the event the aggregate of multiple
    Applications received from a single Applicant is more than Rs. 500,000.

    10. Applicants are requested to write their names and Application serial number on the reverse of the account
    payee cheque/ draft by which the payments are made.

    11. Applicants should ensure to make payment of the Applicant Amount by way of single cheque and not
    multiple cheques for a single Application Form.

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    12. Tax Deduction at Source: Persons (other than companies and firms) resident in India claiming receipt of
    interest on Application money or refund in case of all resident Bondholders and interest on bonds without
    deduction of tax at source are required to submit Form 15G/Form 15H at the time of submitting the
    Application Form, in accordance with and subject to the provisions of the Income Tax Act. Other
    Applicants can submit a certificate under section 197 of the Income Tax Act. For availing the exemption
    from deduction of tax at source from interest on Bonds the Applicant is required to submit Form
    15G/15H/certificate under section 197 of the Income Tax Act/valid proof of exemption, as the case may be
    along with the name of the sole/first Applicant, Bondholder number and the distinctive numbers of Bonds
    held to us/Datamatics Financial Services Limited) on confirmation of Allotment. Applicants are required to
    submit Form 15G/15H/certificate under section 197 of the Income Tax Act/valid proof of exemption each
    financial year. However, non-resident Bondholders cannot furnish Form 15G/15H.

    13. Category: All Applicants are requested to tick the relevant column ―Category of Investor‖ in the
    Application Form.

    For further instructions, please read the Application Form carefully.

    The applicants may note that in case the DP ID and PAN mentioned in the Application Form do not match
    with the DP ID and PAN available in the settlement depository database, the application is liable to be
    rejected.

    Submission of Completed Application Forms and Payment Instructions for Applicants

    The entire issue price for the Bonds applied for is payable on Application. All Applications duly completed and
    accompanied by account payee cheques/drafts shall be submitted at the Designated Branches listed in the
    Application Form or as may be specified by us in the Application Form. Applications shall be deemed to have been
    received by us only when submitted to our Designated Branches or at our specified collection centres/agents as
    detailed herein and not otherwise.

    All cheques/drafts must be made payable to the bank account specified for each Tranche Issue in the relevant
    Tranche Prospectus and crossed ―A/C PAYEE ONLY‖. Unless we specifically agree in writing with or without such
    terms or conditions as we may deem, a separate single cheque/draft must accompany each Application Form. All
    Application Forms received with outstation cheques, post-dated cheques, cheques/bank drafts drawn on banks not
    participating in the clearing process, money orders/postal orders/ stockinvest shall be rejected and we shall not be
    responsible for such rejections. Further, our Designated Branches/collection centres/agents will not accept payments
    made in cash. Payment though stockinvest would also not be allowed as the same has been discontinued by the RBI
    vide notification No. DBOD.NO.FSC.BC. 42/24.47.001/2003-04 dated November 5, 2003.

    No receipt would be issued by the Issuer for the Application money. However, our Designated Branch on receiving
    the applications will acknowledge receipt by stamping and returning the acknowledgment slip to the Applicant.

    Online Applications

    The Bank is offering the Bonds only by way of physical Application Forms and there is no online Application
    facility being offered by the Bank for the Bonds.

    Rejection of Applications

    The Board of Directors/Committee of Directors reserves its full, unqualified and absolute right to accept or reject
    any Application in whole or in part and in either case without assigning any reason thereof.

    Application would be liable to be rejected on one or more technical grounds, including but not restricted to:

    Number of Bonds applied for is less than the minimum Application size;

    Applications exceeding the maximum Application size;

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    Applications not duly signed by the sole/joint Applicants;

    Application amount paid not tallying with the number of Bonds paid for;

    Applications for a number of Bonds which is not in a multiple of one;

    Investor category not ticked;

    Applications by persons not competent to contract under the Indian Contract Act, 1872, as amended,
    including a minor without a guardian name;

    In case of Applications under Power of Attorney by limited companies, corporate bodies, trusts, etc. where
    relevant documents not submitted;

    Application by stockinvest;

    Applications accompanied by cash;

    PAN not mentioned in the Application Form;

    GIR number furnished instead of PAN;

    Applicants by ineligible entities or individuals like FIIs and NRIs; and

    In case no corresponding record is available with the Depositories that matches three parameters namely,
    names of the Applicant (including the order of names of joint holders), the DP ID and the beneficiary‘s
    account number.

    The Bank shall not be responsible for rejection of the Application on any of the technical grounds mentioned above
    and no interest will be paid on the Application Amount.

    Application Form received after the closure of the Tranche Issue shall be rejected.

    In the event, if any Bond(s) applied for is/are not allotted, the Application monies of such Bonds will be refunded.
    We shall pay interest at rates prescribed under subsections (2) and (2A) of Section 73 of the Companies Act if the
    refund orders have not been dispatched to the Applicants within 15 days from the date of the closure of the Tranche
    Issue

    Depository Arrangement

    We have made depository arrangements with NSDL and CDSL for the Issue and holding of the Bonds in
    dematerialised form.

    As per the provisions of the Depositories Act, the Bonds can be held in a dematerialised form, i.e., they shall be
    fungible and be represented by a statement issued through electronic mode. In this context:

    (i) Two tripartite agreements have been signed

    Tripartite Agreement dated September 19, 2003 between us, Datamatics Financial Services
    Limited and NSDL for offering depository option to the Bondholders.

    Tripartite Agreement dated March 24, 2010 between us, Datamatics Financial Services Limited
    and CDSL for offering depository option to the Bondholders.

    167
    We will apply to NSDL and CDSL respectively, for approval to admit these Bonds within 75 days from the
    date of issuance of the Bonds into their depository system. Bonds would be offered in dematerialised form
    subject to the receipt of approval from NSDL and CDSL.

    (ii) An Applicant shall seek the Allotment of Bonds only in electronic mode for the entire Bond; no partial
    Applications for physical mode for the Bonds shall be permitted and any such Applications are liable to be
    rejected.

    (iii) An Applicant is required to apply for Bonds in the electronic form and is required to have at least one
    beneficiary account with any of the Depository Participants (―DPs‖) of NSDL or CDSL, prior to making
    the Application.

    (iv) An Applicant seeking Allotment of Bonds is required to fill in the details (including the beneficiary account
    number and DP ID) appearing in the Application Form.

    (v) Bonds allotted to an Applicant will be credited directly to the Applicant‘s respective beneficiary account(s)
    with the DP.

    (vi) The names of the Applicants stated in the Application Forms are required to be identical to those appearing
    in the account details with the Depository. In case of joint holders, the names are required to be in the same
    sequence as they appear in the account details with the Depository.

    (vii) Non-transferable Allotment advice/refund orders will be directly sent to the Applicant by the Registrar to
    the Issue.

    (viii) In case of Allotment of Bonds, the address, nomination details and other details of the Applicant as
    registered with his DP shall be used for all correspondence with the Applicant. The Applicant is therefore
    responsible for the correctness of his demographic details given in the Application Form vis-à-vis those
    with his DP. In case the information is incorrect or insufficient, the Bank would not be liable for losses, if
    any.

    (ix) It may be noted that Bonds in electronic form can be traded only on the Stock Exchange having electronic
    connectivity with NSDL or CDSL. NSE and BSE where our Bonds are proposed to be listed has
    connectivity with NSDL and CDSL.

    (x) Interest or other benefits with respect to the Bonds held in dematerialised form would be paid to those
    Bondholders whose names appear on the list of beneficial owners given by the Depositories to us as on
    Record Date. In case of those Bonds for which the beneficial owner is not identified by the Depository as
    on the Record Date, we would keep in abeyance the payment of interest or other benefits, till such time that
    the beneficial owner is identified by the Depository and conveyed to us, whereupon the interest or benefits
    will be paid to the beneficiaries, as identified, within a period of 30 days.

    The trading of the Bonds shall be in dematerialised form only.

    Letters of Allotment/Bond Certificates/Refund Orders

    The Central Board/ECCB reserves, in its absolute and unqualified discretion and without assigning any reason
    thereof, the right to reject any Application in whole or in part. The unutilised portion of the Application money will
    be refunded to the Applicant by an A/c Payee cheque/demand draft. In case the cheque payable at par facility is not
    available, we reserve the right to adopt any other suitable mode of payment.

    We shall credit the allotted Bond to the respective beneficiary accounts/dispatch the letter(s) of Allotment or Bond
    Certificate(s)/letter(s) of regret/refund orders in excess of Rs. 1,500, as the case may be, by registered/speed post at
    the Applicant‘s sole risk, within 10 weeks from the date of closure of the Issue. Refund orders up to Rs. 1,500 will
    be sent under certificate of posting. Further,

    168
    a) as far as possible, Allotment of the Bonds shall be made within 30 days of the closure of each Tranche
    Issue;

    b) credit to dematerialised accounts will be made within two Working Days from the date of Allotment;

    c) we shall pay interest at rates prescribed under subsections (2) and (2A) of Section 73 of the Companies Act
    if the Allotment has not been made and/or the refund orders have not been dispatched to the Applicants
    within 15 days from the date of the closure of the Tranche Issue.

    We will provide adequate funds to the Registrar to the Issue, for this purpose.

    Allotment

    Letter(s) of Allotment will be dispatched at the sole risk of the Applicant, through registered/speed post, within 10
    weeks from the date of closure of each Tranche Issue, or such extended time as may be permitted under Applicable
    Laws.

    Listing

    Application will be made for listing of the Bonds on the NSE and /or the BSE as specified in the relevant Tranche
    Prospectus. We shall complete all formalities relating to the listing of the Bonds within 30 days from the date of
    closure of the Tranche Issue. If the permissions to deal in and for an official quotation of bonds are not granted by
    the NSE and / or BSE, we shall forthwith repay, without interest, all such moneys received from the applicants in
    pursuance of this Prospectus. If such money is not repaid within eight days after we becomes liable to repay it (i.e.
    from the date of refusal or within 15 days from the date of closure of the Tranche Issue, whichever is earlier), we
    will be liable to repay the application money, with interest, as prescribed under Applicable Laws.

    Utilisation of Application Money

    The sums received in respect of the Issue will be kept in the Escrow Account and we will have access to such funds
    as per Applicable Laws.

    Undertaking by the Issuer

    We undertake that:

    a) the complaints received in respect of the Issue shall be attended to by us expeditiously and satisfactorily;

    b) we shall take necessary steps for the purpose of getting the Bonds listed in the concerned stock exchange
    within the specified time;

    c) the funds required for dispatch of refund orders/Allotment letters/certificates by registered post shall be
    made available to the Registrar to the Issue by us;

    d) necessary cooperation to the credit rating agency(ies) shall be extended in providing true and adequate
    information till the debt obligations in respect of the Bonds are outstanding;

    e) we shall forward the details of utilisation of the funds raised through the Bonds duly certified by our
    auditors, to the Debenture Trustee at the end of each half year;

    f) we shall provide a compliance certificate to the Debenture Trustee on behalf of the bond holders (on yearly
    basis) in respect of compliance of with the terms and conditions of issue of Bonds as contained in this
    Prospectus.

    Communications

    169
    All future communications in connection with Applications made in each Tranche Issue should be addressed to the
    Registrar to the Issue, quoting all relevant details regarding the Applicant/Application. Applicants may address our
    Compliance Officer as well as the contact persons of the Lead Managers and the Registrar to the Issue in case of any
    Issue related problems such as non-receipt of letters of Allotment/credit of Bonds in the Depository‘s beneficiary
    account/refund orders, etc.

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    MAIN PROVISIONS OF THE STATE BANK OF INDIA ACT AND STATE BANK OF INDIA
    REGULATIONS

    The State Bank of India Act

    While the main legislation governing commercial banks in India is the BR Act and some of these provisions are
    applicable to the Bank, the Bank is mainly governed by the provisions of the Act and the SBI Regulations, 1955.
    Certain provisions of the BR Act apply in addition to the Act. Since the Bank is a statutory corporation, the
    provisions of the Companies Act are inapplicable.

    The Bank was constituted in order to extend the availability of banking facilities, particularly in rural and semi-
    urban areas, as well as for diverse public purposes. Under the Act, the Bank shall be guided by such directions in
    matters of policy involving public interest as the Central Government may, in consultation with the Governor of the
    RBI and the Chairman of the Bank, give it. The Bank is managed by a Board of Directors, which consists of the
    Chairman and Managing Directors appointed by the Central Government under the Act, elected Directors of the
    Shareholders and Directors appointed from the RBI and Government, as well as other nominees put forward by the
    Central Government from among persons having expert knowledge of cooperative institutions, rural economy and
    industry, banking, and finance.

    Under the Act, the Bank acts as an agent of the RBI. The accounts of the Bank are audited by external statutory
    auditors appointed by the RBI. If the Government desires, it may appoint additional auditors to examine and report
    on the Bank‘s accounts. In accordance with Section 45 of the Act, the provisions of law relating to the winding up of
    companies do not apply to the Bank and the Bank shall not be placed in liquidation except by order of the Central
    Government.

    The main provisions of the Act/SBI Regulations are set forth below.

    Section 4 - Authorised Capital

    Subject to the provisions of this Act, the authorised capital of the Bank shall be five thousand crores of rupees
    divided into five hundred crores of fully paid-up shares of ten rupees each:

    Provided that the Central Board may reduce the nominal or face value of the shares, and divide the authorised
    capital into such denomination as it may decide with the approval of the RBI:

    Provided further that the Central Government may, in consultation with the RBI, increase or reduce the authorised
    capital so however that the shares in all cases shall be fully paid-up shares.

    Section 5 - Issued capital

    (1) The issued capital of the Bank shall, on the appointed day, be five crores, sixty-two lakhs and fifty
    thousand rupees divided into five lakhs, sixty-two thousand and five hundred shares, all of which shall, on
    the appointed day, stand allotted to the Central Government in lieu of the shares of the Imperial Bank .

    (2) The issued capital of the Bank shall consist of equity shares or equity and preference shares:

    Provided that the issue of preference shares shall be in accordance with the guidelines framed by the RBI
    specifying the class of preference shares, the extent of issue of each class of such preference shares
    (whether perpetual or irredeemable or redeemable) and the terms and conditions subject to which, each
    class of preference shares may be issued:

    Provided further that the Central Board may from time to time increase, with the previous approval of the
    RBI and the Central Government, whether by public issue or rights issue or preferential allotment or private
    placement, in accordance with the procedure as may be prescribed, the issued capital by the issue of equity
    or preference shares:

    171
    Provided also that the Central Government shall, at all times, hold not less than fifty-one per cent, of the
    issued capital consisting of equity shares of the Bank.

    (3) No increase in the issued capital beyond twelve crores and fifty lakhs of rupees shall be made under sub-
    section (2) without the previous sanction of the Central Government.

    (4) Subject to the provisions contained in sub-section (2), the Central Board may increase from time to time, by
    way of issuing bonus shares to existing equity shareholders, the issued capital in such manner as the
    Central Government may, after consultation with the RBI, direct.

    (5) The Bank may, accept the money in respect of shares issued towards increase in the issued capital in
    instalments, make calls, forfeit unpaid shares and re-issue them, in such manner as may be prescribed.

    Section 10 - Transferability of shares

    (1) Save as otherwise provided in sub-section (2), the shares of the Bank shall be freely transferable.

    (2) Nothing contained in sub-section (1) shall entitle the Central Government to transfer any shares held by it
    in the Bank if such transfer will result in reducing the shares held by it to less than fifty-one percent of the
    issued capital consisting of equity shares of the Bank.

    Section 11 – Restrictions on voting rights

    No shareholder, other than the Central Government, shall be entitled to exercise voting rights in respect of any
    shares held by him in excess of ten percent of the issued capital:

    Provided that such shareholder shall be entitled to exercise voting rights at such higher percentage as the Central
    Government may, after consultation with the RBI, specify.

    Provided further that the shareholder holding any preference share capital in the Bank shall, in respect of such
    capital, have a right to vote only on resolutions placed before the Bank which directly affect the rights attached to
    his preference shares:

    Provided also that no preference shareholder, other than the Central Government, shall be entitled to exercise voting
    rights in respect of preference shares held by him in excess of ten per cent of total voting rights of all the
    shareholders holding preference share capital only.

    Section 12 - Shares to be approved securities

    Notwithstanding anything contained in the Acts hereinafter mentioned in this section, the shares of the Bank shall
    be deemed to be included among the securities enumerated in section 20 of the India Trusts Act, 1882 (2 of 1882),
    and also to be approved securities for the purposes of the Insurance Act, 1938 (4 of 1938), and the Banking
    Regulation Act, 1949 (10 of 1949).

    Section 17 - Management

    (1) The general superintendence and direction of the affairs and business of the Bank shall be entrusted to the
    Central Board which may exercise all powers and do all such acts and things as may be exercised or done
    by the Bank and are not by the Act expressly directed or required to be done by the Bank in general
    meeting.

    (2) The Central Board in discharging its functions shall act on business principles, regard being had to public
    interest.

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    Section 18 - Central Board to be guided by directions of Central Government

    (1) In the discharge of its functions including those relating to a subsidiary bank, the Bank shall be guided by
    such directions in matters of policy involving public interest as the Central Government may, in
    consultation with the Governor of the RBI and the chairman of the Bank, give to it.

    (2) All directions shall be given by the Central Government and, if any question arises whether a direction
    relates to a matter of policy involving public interest, the decision of the Central Government thereon shall
    be final.

    Section 19 - Composition of the Central Board

    The Central Board shall consist of the following, namely:--

    (a) a chairman to be appointed by the Central Government in consultation with the RBI;

    (b) such number of managing directors not exceeding four, as may be appointed by the Central Government in
    consultation with the RBI;

    (c) if the total amount of the holdings of the shareholders, other than the Central Government, whose names
    are on the register of shareholders three months before the date fixed for election of directors is--

    (i) not more than ten percent of the total issued capital, two directors;

    (ii) more than ten percent but not more than twenty-five percent of such capital, three directors, and

    (iii) more than twenty-five percent of such capital, four directors, to be elected in the prescribed
    manner by such shareholders;

    (ca) one director, from among the employees of the Bank, who are workmen, to be appointed by the Central
    Government in the manner provided in the rules made under the Act;

    (cb) one director, from among such of the employees of the Bank, as are not workmen, to be appointed by the
    Central Government in the manner provided in the rules made under the Act;

    (d) not less than two and not more than six directors to be nominated by the Central Government, from among
    persons having special knowledge of the working of co-operative institutions and of rural economy or
    experience in commerce, industry, banking or finance;

    (e) one director to be nominated by the Central Government; and

    (f) one director, possessing necessary expertise and experience in matters relating to regulation or supervision
    of commercial banks to be nominated by the Central Government on the recommendation of the RBI.

    Section 21 - Local Boards

    (1) There shall be constituted at each place where the Bank has a local head office, a Local Board which shall
    consist of the following members, namely:--

    (a) the chairman, ex officio or the managing director nominated by the chairman;

    (b) all such directors elected or nominated to the Central Board under clause (c) or clause (d) of
    section 19 as are ordinarily resident in the area falling within the jurisdiction of the local head
    office;

    (c) six members to be nominated by the Central Government;

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    (e) the chief general manager of the local head office, appointed by the Bank, ex-officio.

    (2) Where as a result of the establishment of any local head office (hereinafter referred to as the ―new local
    head office‖) for any area which is already falling within the jurisdiction of another local head office
    (hereinafter referred to as the ―existing local head office‖) a Local Board (hereinafter referred to as the
    ―new Local Board‖) is constituted for the new local head office, any person who is, at the time of such
    constitution, holding office as a member of a Local Board (hereinafter referred to as the ―existing Local
    Board‖) for an existing local head office under clause (c) of sub-section (1) and is ordinarily resident in the
    area falling within the jurisdiction of the new local head office, shall cease to hold office as member of the
    existing Local Board and shall become a member of the new Local Board and shall on becoming such
    member be deemed to have been nominated to the new Local Board and shall hold office as such member
    for the unexpired portion of his term of office as a member of the existing Local Board.

    (3) Any vacancy caused in the existing Local Board as a result of any member thereof becoming a member of
    the new Local Board under sub-section (2) shall be deemed to be a casual vacancy and be filled in
    accordance with the provisions of section 25.

    (4) The Central Government shall, in consultation with the chairman, appoint--

    (a) a member of a Local Board nominated under clause (c) of sub-section (1) to be the president
    thereof; and

    (b) a member of a Local Board holding office under clause (b) or nominated under clause (c) of that
    sub-section to be the vice-president thereof.

    Section 24 - Removal from office of directors, etc.

    (1) The Central Government may, after consulting the RBI, remove from office the chairman or a managing
    director.

    (2) The Central Government may remove from office any director appointed under clause (ca) or clause (cb) or
    nominated under clause (d) of section 19 or any member of a Local Board nominated under clause (c) of
    sub-section (1) of section 21 and appoint or nominate, as the case may be, in his stead another person to fill
    the vacancy.

    (3) The shareholders, other than the Central Government, may, by a resolution passed by majority of the votes
    of such shareholders holding in the aggregate not less than one-half of the share capital held by all such
    shareholders, remove any director elected under clause 8 of section 19 and elect in his stead another person
    to fill the vacancy.

    (4) No person shall be removed from his office under sub-section (1) or sub-section (3) unless he has been
    given an opportunity of showing cause against his removal.

    Section 24A – Supersession of Central Board in certain cases

    1) Where the Central Government, on the recommendation of the RBI is satisfied that in the public interest or
    for preventing the affairs of the Bank being conducted in a manner detrimental to the interest of the
    depositors or the Bank or for securing the proper management of the Bank, it is necessary so to do, the
    Central Government may, for reasons to be recorded in writing, by order, supersede the Central Board for a
    period not exceeding six months as may be specified in the order:

    Provided that the period of supersession of the Central Board may be extended from time to time, so,
    however, that the total period shall not exceed twelve months.

    (2) On supersession of the Central Board under sub-section (1), the Central Government may, in consultation

    174
    with the RBI, appoint an Administrator (not being an officer of the Central Government or a State
    Government) who has experience in law, finance, banking, economics or accountancy, for such period as it
    may determine.

    (3) The Central Government may issue such directions to the Administrator as it may consider necessary and
    the Administrator shall be bound to follow such directions.

    (4) Notwithstanding anything contained in this Act, upon making the order of supersession of the Central
    Board—

    (a) the chairman, managing director and other directors shall, as from the date of supersession, vacate
    their offices as such;

    (b) all the powers, functions and duties which may, by or under the provisions of this Act or any other
    law for the time being in force, be exercised and discharged by or on behalf of the Central Board, or
    by a resolution passed in the general meeting of the Bank, shall, until the Central Board is
    reconstituted, be exercised and discharged by the Administrator appointed under sub-section (2):

    Provided that the powers exercised by the Administrator shall be valid notwithstanding that such power is
    also exercisable by a resolution passed in the general meeting of the Bank.

    (5) The Central Government may, in consultation with the RBI, constitute a committee of three or more
    persons who have experience in law, finance, banking, economics or accountancy to assist the
    Administrator in the discharge of his duties.

    (6) The committee shall meet at such times and places and observe such rules of procedure as may be specified
    by the rules made under this Act.

    (7) The salary and allowances of the Administrator and the members of the committee shall be such as may be
    specified by the rules made under this Act and be payable by the Bank.

    (8) On and before the expiration of two months before the expiry of the period of supersession of the Central
    Board, the Administrator of the Bank shall call the general meeting of the State Bank to elect new directors
    and re-constitute the said Board.

    (9) Notwithstanding anything contained in any other law for the time being in force or in any contract, no
    person shall be entitled to claim any compensation for the loss or termination of his office on supersession
    of the Central Board.

    (10) The Administrator appointed under sub-section (2) shall vacate office immediately after the re-constitution
    of the Central Board.

    Section 27 - Powers and remuneration of chairman

    (1) The chairman shall preside at all meetings of the Central Board and, subject to such general or special
    directions as the Central Board may give, exercise all such powers and do all such acts and things as may
    be exercised or done by the Bank.

    (2) The chairman shall receive such salary, fees, allowances and perquisites as may be determined by the
    Central Government.

    Section 29 - Powers and remuneration of managing director

    (1) A managing director--

    (a) shall be a whole-time officer of the Bank;

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    (b) subject to the general control of the chairman shall exercise such powers and perform such duties
    as may be entrusted or delegated to him by the Central Board; and

    (c) when authorised by the chairman, shall preside at the meetings of the Central Board in his
    absence.

    (2) A managing director shall receive such salary and allowances as may be determined by the Central
    Government.

    Section 31 - Meetings of the Central Board

    (1) The Central Board shall meet at such time and place and shall observe such rules of procedure in regard to
    the transaction of business at its meetings as may be prescribed; and the meeting of the Central Board may
    be held by participation of the directors of the Central Board through videoconferencing or such other
    electronic means, as may be prescribed, which are capable of recording and recognising the participation of
    the directors and the proceedings of such meetings are capable of being recorded and stored:

    Provided that the Central Government may in consultation with the RBI, by notification in the Official
    Gazette, specify the matters which shall not be discussed in a meeting of the Central Board held through
    videoconferencing or such other electronic means.

    (2) All questions at the meeting shall be decided by a majority of the votes of the directors present in the
    meeting or through videoconferencing or such other electronic means and in the case of equality of votes
    the chairman or, in his absence, the managing director authorised by the chairman shall have a second or
    casting vote;

    (3) A director who is directly or indirectly concerned or interested in any contract, loan, arrangement or
    proposal entered into or proposed to be entered into by or on behalf of the Bank shall at the earliest
    possible opportunity disclose the nature of his interest to the Central Board and shall not be present at any
    meeting of the Central Board when any such contract, loan, arrangement or proposal is discussed unless his
    presence is required by the other directors for the purpose of eliciting information, and no director so
    required to be present shall vote on any such contract, loan, arrangement or proposal:

    Provided that nothing contained in this sub-section shall apply to such director by reason only of his being--

    (i) a shareholder (other than a director) holding not more than two percent of the paid-up capital in
    any public company as defined in the Companies Act, 1956 (1 of 1956), or any corporation
    established by or under any law for the time being in force in India or any co-operative society
    with which or to which the State Bank has entered into or made, or proposes to enter into or make,
    a contract, loan, arrangement or proposal; or

    (ii) a director ex officio of the Bank or a director of a subsidiary bank; or

    (iii) an officer or other employee of the Bank, if he is a director appointed under clause (ca) or clause
    (cb) of section 19.

    (4) If for any reason neither the chairman nor the managing director authorised by the chairman is able to be
    present at a meeting of the Central Board, any director, authorised by the chairman in writing in this behalf,
    and in the absence of such authorisation, elected by the directors present from amongst themselves, shall
    preside at the meeting and, in the event of equality of votes, shall have a second or casting vote.

    Section 32 - Bank to act as agent of the RBI.

    (1) The Bank shall, if so required by the RBI, act as agent of the RBI at all places in India where it has a
    branch or where there is a branch of a subsidiary bank, and where there is no branch of the banking

    176
    department of the RBI, for--

    (a) paying, receiving, collecting and remitting money, bullion and securities on behalf of any
    Government in India; and

    (b) undertaking and transacting any other business which the RBI may from time to time entrust to it.

    (2) The terms and conditions on which any such agency business shall be carried on by the Bank on behalf of
    the RBI shall be such as may be agreed upon.

    (3) If no agreement can be reached on any matter referred to in sub-section (2) or if a dispute arises between
    the Bank and the RBI as to the interpretation of any agreement between them, the matter shall be referred
    to the Central Government and the decision of the Central Government thereon shall be final.

    (4) The Bank may transact any business or perform any functions entrusted to it under sub-section (1) by itself
    or through a subsidiary bank or through an agent approved by the RBI.

    Section 33 - Other business which the Bank may transact.

    Subject to the other provisions contained in the Act, the Bank may carry on and transact the business of banking as
    defined in clause (b) of section 5 of the Banking Regulation Act,and may engage in one or more of the other forms
    of business specified in sub- section (1) of section 6 of the Banking Regulation Act.

    Section 36 - Integration and development fund

    (1) The Bank shall maintain a special fund to be known as the Integration and Development Fund into which
    shall be paid:

    (a) the dividends payable to the Central Government on such shares of the Bank held by it as do not
    exceed fifty-five percent of the total issued capital; and

    (b) such contributions as the Central Government may make from time to time.

    Provided that if the balance in the Integration and Development Fund on the date of declaration of
    any dividends by the Bank is rupees five crores or more, no amount shall be paid into that Fund
    under clause (a) and the dividends payable to the Central Government shall be paid to that
    Government and if such balance on such date is less than rupees five crores, only so much of the
    dividends then payable as will bring such balance to rupees five crores shall be paid into that Fund
    and the balance of such dividends shall be paid to the Central Government.

    (2) The amount in the said Fund shall be applied exclusively for meeting--

    (a) losses in excess of such yearly sum as may be agreed upon between the Central Government and
    the Bank and attributable to the branches established in pursuance of provisions of the Act;

    (aa) subsidies granted by the Bank to a subsidiary bank with the approval of the RBI; and

    (b) such other losses or expenditure as may be approved by the Central Government in consultation
    with the RBI.

    (3) Subject to the provisions of sub-section (2), the said Fund shall be the property of the Central Government
    and no shareholder or the Bank or any other person shall have any claim to the amount held in the said
    Fund.

    (4) No amount applied for any of the purposes specified in sub-section (2) shall, for the purposes of the Income
    Tax Act, 1961 (43 of 1961) be treated as income, profits or gains of the Bank.

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    Section 37 – Reserve Fund

    The Bank shall establish a Reserve Fund which shall consist of--

    (a) the amount held in the Reserve Fund of the Imperial Bank transferred to the Bank on the appointed day;
    and

    (b) such further sums as may be transferred to it by the Bank out of its annual net profits before declaring a
    dividend.

    Section 38 - Disposal of profits.

    (1) After making provision for bad and doubtful debts, depreciation in assets, equalisation of dividends,
    contribution to staff and superannuation funds and for all other matters for which provision is necessary by
    or under the Act or which are usually provided for by banking companies, the Bank may, out of its net
    profits, declare a dividend.

    (2) Subject to the provisions of paragraph 6 of the First Schedule of the Act, the rate of dividend shall be
    determined by the Central Board.

    Section 38A – Transfer of unpaid or unclaimed dividend

    (1) Where, after the commencement of the State Bank of India (Amendment) Act, 2010, a dividend has been
    declared by the State Bank but which has not been paid to a shareholder or claimed by any shareholder
    entitled to it, within thirty days from the date of declaration, the Bank shall, within seven days from the
    date of expiry of the said period of thirty days, transfer the total amount of dividend which remains unpaid,
    or unclaimed, to a special account to be named, the "unpaid dividend account" maintained by it.

    Explanation.— In this sub-section, the expression "dividend which remains unpaid" means any dividend
    the warrant in respect thereof has not been encashed or which has otherwise not been paid or claimed.

    (2) Where the whole or any part of any dividend, declared by the Bank before the commencement of the State
    Bank of India (Amendment) Act, 2010, remains unpaid at such commencement, the Bank shall, within a
    period of six months from such commencement, transfer such unpaid amount to the account referred to in
    sub-section (1).

    (3) Any money transferred to the unpaid dividend account of the Bank, in pursuance of this section which
    remains unpaid or unclaimed for a period of seven years from the date of such transfer shall be transferred
    by the State Bank to the Investor Education and Protection Fund established under sub-section (1) of
    section 205C of the Companies Act, 1956 (1 of 1956) for being utilised for the purpose and in the manner
    specified in that section.

    Section 42 - Balance sheet, etc., of Bank may be discussed at general meeting

    (1) An annual general meeting shall be held in each financial year at the Corporate Centre or at such other
    place in Mumbai other than the Corporate Centre or at such other place in India and at such time, as shall
    from time to time be specified by the Central Board and a general meeting other than an annual general
    meeting may be convened by the Bank at any other time and at such place in India as shall from time to
    time be specified by the Central Board:

    Provided that such annual general meeting shall be held before the expiry of six weeks from the date on
    which the balance sheet together with the profit and loss account and auditors' report is forwarded to the
    Central Government or to the RBI, whichever date is earlier.

    (2) The shareholders present at an annual general meeting shall be entitled to discuss and adopt the balance

    178
    sheet and the profit and loss account of the Bank made up to the previous 31st day of March (or any other
    date, the Central Government may by notification in the Official Gazette specify), the report of the Central
    Board on the working and activities of the State Bank for the period covered by the accounts and the
    auditors' report on the balance sheet and accounts.

    Section 45 – Bar to liquidation of the Bank

    No provision of law relating to the winding up of companies shall apply to the Bank and the Bank shall not be
    placed in liquidation save by the order of the Central Government and in such manner as it may direct.

    STATE BANK OF INDIA REGULATIONS (“SBI Regulations”)

    Shares and Share Register

    Regulation 3 – Shares, movable property

    The shares of the Bank shall be moveable property.

    Regulation 4 – Control over shares and branch registers

    (1) Subject to the provisions of the Act and the SBI Regulations and such directions as the Central Board may
    give from time to time, the register of shareholders (hereinafter referred to as ―the register‖) kept at the
    Central Office shall be maintained by, and be under control of the Central Board or its Executive
    Committee and the decision of the Central Board or its Executive Committee as to whether or not a person
    is entitled to be registered as a shareholder in respect to any share shall be final.

    (2) In particular, and without prejudice to the foregoing provision, the Central Board or its Executive
    Committee shall, as regards the entries in the register under its control have the power to examine and pass
    or refuse to pass transfers and transmissions and to approve or refuse to approve transferees of shares and
    to give certificates of shares.

    Regulation 5 – Parties who may not be registered as shareholders

    (1) Except as otherwise provided by these regulations, no minor or person who has been found by a Court of
    competent jurisdiction to be of unsound mind shall be entitled to be registered as a shareholder.

    (2) In the case of firms, shares shall be registered in the names of the individual partners, and no firm, as such,
    shall be entitled to be registered as a shareholder.

    Regulation 7 – Exercise of rights of joint holders

    If any share stands in the name of two or more persons the person first named in the register shall, as regards voting,
    receipt of dividends, service of notices and all or any other matter connected with the State Bank, except the transfer
    of the shares, be deemed the sole holder thereof.

    Regulation 9 – Inspection of registers

    (1) The register shall, except when closed under the provisions of these regulations, be open to the inspection
    of any shareholder, free of charge, at the places where they are maintained during business hours, subject to
    such reasonable restrictions as the Bank may impose, but so that not less than two hours in each working
    day shall be allowed for inspection.

    (2) A shareholder shall not have the right himself to make a copy of any entry in any such register, but may,
    except when the register is closed, require a copy of any such register or of any part thereof on prepayment
    therefore at the rate of rupees two for every hundred words or fractional part thereof required to be copied.

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    Regulation 10 – Closing of share registers

    (1) The Central Board or its Executive Committee may close the register from time to time for such periods,
    not exceeding four weeks at any one time, as shall, in its opinion, be necessary.

    (2) A notice of the closing of the register shall be published in the Gazette of India and also in not less than two
    daily newspapers having wide circulation in India.

    Regulation 11 – Form of share certificates and manner of the preparation

    (1) Every share certificate shall be issued in such form as may be specified by the Central Board or its
    Executive Committee from time to time. Each share certificate shall bear a distinctive number and denoting
    the number of shares in respect of which it is issued. Every share certificate shall bear the name(s) of the
    shareholder(s).

    (2) Every share certificate may be engraved or lithographed or printed as the Central Board or its Executive
    Committee may from time to time determine and shall be signed on behalf of the bank by two persons duly
    authorised by the Bank. Every such signature may either be autographic or may be affected by a
    mechanical method. No share certificate shall be valid unless and until it is so signed. Share certificates so
    signed shall be valid and binding notwithstanding that, before the issue thereof, any person whose signature
    appears thereon may have ceased to be a person authorised to sign share certificates on behalf of the Bank;

    Provided that should the share certificate so prepared contain the signature of an authorised person who however is
    dead at the time of issue of the certificate, the Bank may, by a method considered by it as most suitable, cancel the
    signature of such a person appearing on the certificate and have the signature of any other authorised person affixed
    to it. The share certificate so issued shall also be valid.

    Regulation 12 – Issue of share certificates free of charge

    (1) A shareholder shall be entitled to one certificate for each fifty shares or multiples thereof registered in his
    name on any one occasion and one additional share certificate for the number of shares in excess thereof
    but less than fifty.

    (2) If the number of shares to be registered is less than fifty, one certificate shall be issued for all the shares.

    (3) If any shareholder requires more certificates than the number to which he is entitled under the SBI
    Regulations, the Central Board or its Executive Committee may have such additional certificates issued, at
    its discretion.

    (4) In the case of shares held jointly by several persons, delivery of the relative certificate or certificates to one
    of such joint holders shall be sufficient delivery to all, and a receipt signed by any one of the joint holders
    shall effectually bind all the joint holders.

    Regulation 13 – Renewal of share certificates

    (1) If any share certificate is worn out or defaced or tendered for sub-division, then upon production thereof the
    Central Board or its Executive Committee, the Central Board or its Executive Committee may order the
    same to be cancelled, and have a new certificate or certificates issued in lieu thereof.

    (2) If any share certificate is alleged to be lost or destroyed, then upon production of such evidence of the loss
    or destruction thereof, as the Central Board or its Executive Committee may consider satisfactory and upon
    such indemnity with or without security as Central Board or its Executive Committee may require, and on
    payment to the Bank of its costs, charges and expenses of and incidental to the matter, a new certificate in
    lieu thereof shall be given to the party entitled to such lost or destroyed certificate.

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    Regulation 15 – Transfer of shares

    (1) Without prejudice to the provisions of the SBI Regulations, every transfer of the shares of the Bank shall be
    in writing in the form provided below or in any usual or common form which the \ Bank shall approve:.

    I/We...............................of..............................in consideration of the sum of rupees ......................


    paid to me/us by ..............................of............................hereinafter called ―transferee(s)‖] do hereby transfer
    to the transferee(s)..................... share/shares of the State Bank of India numbered......................and
    registered in the register .............................. to hold unto the transferee(s), his/their executors administrators
    and assigns, subject to the several conditions contained in the State Bank of India Act, 1955 and the rules
    and regulations made thereunder, and I/we, the transferee(s), do hereby agree to take the said share/shares
    subject to the conditions aforesaid and I/we, the transferee(s) request that I/we be ―registered in respect of
    the said share or shares in the register‖.

    Transferor................................................................... Name..........................................................................
    Address......................................................................

    Witness....................................................................... Name..........................................................................
    Address......................................................................
    Occupation.................................................................

    Transferee................................................................... Name..........................................................................
    Address......................................................................

    Witness....................................................................... Name..........................................................................
    Address......................................................................
    Occupation.................................................................

    (2) The instrument of transfer of any share shall be submitted to the Central Board or its Executive Committee
    and shall be signed by the transferor and the transferee, and the transferor shall be deemed to remain the
    holder of such shares until the name of the transferee is entered in the share register concerned in respect
    thereof. Each signature to such transfer shall be duly attested by the signature of one credible witness who
    shall add his address and occupation.

    (3) Upon receipt by the Central Board or its Executive Committee of an instrument of transfer with the request
    to register the transferee, the Central Board or its Executive Committee shall, unless it declines registration
    under Regulation 16 of the SBI Regulations cause the transfer to be registered.

    Regulation 16 – Power to refuse or suspend transfers

    (1) The Central Board or its Executive Committee may decline to register any transfer of shares unless:--

    (a) the instrument of transfer is accompanied by the certificate of the shares to which it relates, and
    such other evidence as the Bank may reasonably require to show the right of the transferor to
    make the transfer;

    (b) it is satisfied after such inquiry as it may consider necessary that the transferee is qualified to be
    registered as a shareholder of the Bank in respect of the shares covered by the instrument of
    transfer.

    (2) The Central Board or its Executive Committee may suspend the registration of transfer during any period in
    which the registers are closed.

    Regulation 19 – Transmission of shares in the event of death, insolvency, etc. of a shareholder

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    (1) The executors or administrators of a decreased sole holder of a share, or the holder of a succession
    certificate issued under Part X of the Indian Succession Act, 1925 in respect of such share, or a person in
    whose favour a valid instrument of transfer of such share was executed by such person and by the deceased
    sole holder during the latter‘s life-time shall be the only persons who may be recognised by the Bank as
    having any title to the share of the deceased shareholder. In the case of a share registered in the names of
    two or more holders, the survivor or survivors and on the death of the last survivor, his executors or
    administrators or any person who is the holder of a succession certificate in respect of such survivor‘s
    interest in the share, or a person in whose favour a valid instrument of transfer of the share was executed by
    such person and such last survivor during the latter‘s life-time, shall be the only person who may be
    recognised by the Bank as having any title to such share. The Bank shall not be bound to recognise such
    executors or administrators unless they shall have obtained probate or letters of administration or other
    legal representation as the case may be from a court of competent jurisdiction in India

    Provided nevertheless that in any case where the Central Board or its Executive Committee shall in its
    discretion think fit, it shall be lawful for the Central Board or its Executive Committee to dispense with the
    production of a succession certificate, letters of administration or such other legal representation upon such
    terms as to indemnity or otherwise as it may think fit.

    (2) Any such person becoming entitled to a share in consequence of the death of a shareholder and any person
    becoming entitled to a share in consequence of the insolvency, bankruptcy or liquidation of a shareholder
    shall upon production of such evidence, as the Central Board or its Executive Committee may require, have
    the right –

    (a) to be registered as a share holder in respect of the share upon his satisfying the Central Board or its
    Executive Committee in the same manner as if he were the proposed transferee under Regulation
    16 of the SBI Regulations that he is qualified to be registered as a shareholder , or

    (b) to make such transfer of the share as the person from whom he derives his title could have made.

    Regulation 20 – Shareholder ceasing to be qualified for registration

    (1) It shall be the duty of any person registered as a shareholder, whether alone or jointly with another or
    others, forthwith upon ceasing to be qualified to be so registered in respect of any share to give intimation
    thereof to the Central Board or its Executive Committee.

    Meetings of Shareholders

    Regulation 21 – Notice convening a general meeting

    (1) A notice convening a general meeting of the shareholders signed by the Chairman or the Vice- Chairman or
    in their absence Managing Director shall be published at least twenty-eight days before the meeting in the
    Gazette of India and also by publication in not less than two daily newspapers having wide circulation in
    India.

    (2) Every such notice shall state the time, date and place of such meeting, and also the business that shall be
    transacted at the meeting.

    Regulation 22 – Special general meeting

    (1) The Chairman or in his absence Vice-Chairman or in their absence Managing Director shall convene a
    special general meeting of shareholders, if so directed by the Central Board, or if a requisition for such a
    meeting has been received either from the RBI or from other shareholders holding shares carrying, in the
    aggregate, not less than 20 percent of the total voting rights of all the shareholders.

    (2) The requisition referred to in sub-regulation (1) shall state the purpose for which the special general

    182
    meeting is required to be convened, but may consist of several documents in like form each signed by one
    or more of the requisitions.

    (3) The time, date and place of a general meeting shall be decided by the Central Board:

    Provided that a special general meeting convened on requisition by the RBI or other shareholders shall be convened
    not later than three months of the receipt of the requisition.

    Regulation 23 – Business at general meetings

    (1) No business other than that specified in sub-section (2) of section 42 of the Act shall be transacted or
    discussed at the annual general meeting, except with the consent of the Chairman, unless not less than six
    weeks‘ notice of the same has been given to the Chairman either by the RBI or by at least ten other
    shareholders qualified to vote at the meeting. Such notice shall take the form of a definite resolution to be
    put to the meeting, and shall be included in the notice of the meeting.

    (2) Except with the consent of the Chairman, no business shall be transacted or discussed at any special general
    meeting, except the business for which the meeting has been specifically convened.

    Regulation 24 – Quorum at general meeting

    No business shall be transacted at any meeting of the shareholders whether it is the annual general meeting or any
    special general meeting, unless a quorum of at least five shareholders consisting of the RBI represented by a proxy
    or by a duly authorised representative and four other shareholders entitled to vote at such meeting in person or by
    proxy or by duly authorised representatives is present at the commencement of such business, and if within fifteen
    minutes from the time appointed for the meeting a quorum is not present the Chairman may dissolve the meeting or
    adjourn it to the same day in the following week at the same time and place, and if at such adjourned meeting a
    quorum is not present, the shareholders who are present in person or by proxy or by duly authorised representative
    shall form a quorum :

    Provided that no annual general meeting shall be adjourned to a date later than the date within which such annual
    general meeting shall be held in terms of the proviso to sub-section (1) of Section 42 of this Act and if adjournment
    of the meeting to the same day in the following week would have this effect, the annual general meeting shall not be
    adjourned but the business of the meeting shall be commenced either as soon within one hour from the time
    appointed for the meetings as a quorum may be present, or immediately after the expiry of one hour from that time
    and those shareholders who are present in person or by proxy or by duly authorised representative at such time shall
    form a quorum.

    Regulation 25 – Chairman at general meetings

    (1) The Chairman or in his absence, the Vice-Chairman or in their absence, such one of the Directors as may
    generally or in relation to a particular meeting be authorised by the Chairman in this behalf, shall be the
    Chairman of the meeting and in the absence of the Chairman, the Vice-Chairman and the person so
    authorised and failing any authorisation the meeting may elect any other Director to be the Chairman of the
    meeting.

    (2) The Chairman of the general meeting shall regulate the procedure at all general meetings, and , in
    particular, shall have power to decide the order in which shareholders may address the meeting, to fix a
    time limit for speeches, to apply the closure when, in his opinion, any matter has been sufficiently
    discussed and to adjourn the meeting.

    Regulation 26 – Persons entitled to attend general meetings

    (1) All directors, members of Local Boards or of any Local Committee and all shareholders of the Bank shall,
    subject to the provisions of sub-regulation (2), be entitled to attend a general meeting.

    183
    (2) A shareholder, not being the RBI, a director or a member of a Local Board or of a Local Committee,
    attending a general meeting shall, for the purpose of identification and to determine his voting rights, be
    required to sign and deliver to the Bank a form to be specified by the Chairman authenticated or attested by
    a person authorised by him in this behalf and containing the following particulars:

    (a) his full name and registered address;

    (b) the denoting number of his shares;

    (c) whether he is entitled to vote and the number of votes to which he is entitled in person or as proxy
    or as a duly authorised representative.

    Regulation 27 – Voting at general meetings

    (1) Save as otherwise provided in section 24 of the Act, every matter submitted to a general meeting shall be
    decided by a majority of votes.

    (2) A declaration by the Chairman of a general meeting that a resolution has been carried or rejected thereat
    upon a show of hands by those shareholders present who are entitled to vote on the resolution shall be
    conclusive, and an entry to that effect in the book of proceedings of the Bank shall be sufficient evidence of
    that fact, without proof of the number or proportion of the votes recorded in favour of, or against, such
    resolution, unless immediately on such declaration a poll be demanded in writing on behalf of the RBI or
    by at least four other shareholders present and entitled to vote at the meeting.

    (3) If a poll be duly demanded, it shall be taken either at once or at such time and place and either by open
    voting or by ballot as the Chairman of the meeting may direct, and the result of the poll shall be deemed to
    be the resolution of the meeting at which the poll was demanded. At such, poll, voting shall be either in
    person or by proxy or by duly authorised representative, and the shareholders shall exercise the voting
    rights referred to in regulation 31.

    (4) The decision of the Chairman of the meeting as to the qualification of any person to vote, and also in the
    case of a poll, as to number of votes any person is competent to exercise shall be final.

    Regulation 28 – Minutes of general meetings

    (1) The Bank shall cause the minutes of all proceedings of general meetings to be entered in books kept for that
    purpose.

    (2) Any such minute, if purporting to be signed by the Chairman of the meeting at which the proceedings were
    held, or by the Chairman of the next succeeding meeting, shall be evidence of the proceedings.

    (3) Until the contrary is proved, every general meeting in respect of the proceedings whereof minutes have
    been so made shall be deemed to have been duly called and held, and all proceedings held thereat to have
    been duly held.

    Voting rights of shareholders

    Regulation 31 – Determination of voting rights

    (1) Subject to the provisions contained in section 11 of the Act, each shareholder who has been registered as a
    shareholder for a period of not less than three months prior to the date of a general meeting shall, at such
    meeting, have one vote for each fifty shares held by him.

    (2) Every shareholder entitled to vote as a foresaid who, not being a company is present in person or by proxy
    or who being a company is present by a duly authorised representative, or by proxy shall have one vote on

    184
    a show of hands and in case of a poll shall have one vote for each fifty shares held by him for the whole
    period of three months prior to the date of such meeting.

    Regulation 32 – Voting by duly authorised representative

    (1) A shareholder, being a company, may by a resolution authorise any of its officials or any other person to
    act as its representative at any general meeting of the shareholders and the person so authorised (referred to
    as ―duly authorised representative‖ in the SBI Regulations) shall be entitled to exercise the same powers on
    behalf of the company which he represents, as if he were an individual shareholder of the Bank. The
    authorisation so given may be in favour of two persons in the alternative and in such a case any one of such
    persons may act as the duly authorised representative of the company.

    (2) A person acting in pursuance of an authorisation given under this regulation shall not be deemed to be a
    proxy.

    (3) No person may attend or vote at any meeting of shareholders of the Bank as a duly authorised
    representative of a company unless a copy of the resolution appointing him as a duly authorised
    representative certified to be a true copy by the Chairman of the meeting at which it was passed shall have
    been deposited at the Local Head Office at the place where the meeting is to be held not less than 4 clear
    days before the date fixed for the meeting.

    (4) An appointment of a duly authorised representative shall, after the deposit of a certified copy of the
    resolution as aforesaid, be irrevocable for the meeting for which it is made and shall revoke any proxy
    previously deposited for such meeting by the company.

    Regulation 33

    No shareholder, being a company, shall vote by proxy so long as resolution of its directors under Regulation 32 of
    the SBI Regulations authorising any of its officials or any other person to act as its duly authorised representative at
    any general meeting shall be in force.

    Regulation 34 – Proxies

    (1) No instrument of proxy shall be valid unless in the case of an individual shareholder it is signed by him or
    by his attorney duly authorised in writing, or in the case of joint holders, it is signed by the shareholder first
    named in the register or his attorney duly authorised in writing or in the case of a company it is executed
    under its common seal, if any, or signed by its attorney duly authorised in writing:

    Provided that an instrument of proxy shall be sufficiently signed by any shareholder, who is for any reason,
    unable to write his name, if his mark is affixed thereto and attested by a Judge, Magistrate, Justice of the
    Peace, Registrar or Sub-Registrar of Assurances, or other Government Gazetted Officer or an Officer of the
    RBI or the Bank .

    (2) No person shall be appointed as proxy unless he is entitled to attend the general meeting otherwise than as a
    proxy, provided that this sub-regulation shall not apply to proxy appointed by a company.

    (3) No proxy shall be valid unless it is duly stamped and unless, it together with the power of attorney or other
    authority (if any) under which it is signed, or a copy of that power or authority certified by a notary public
    or a magistrate, is deposited with the Central Office or other office designated from time to time by the
    Chairman or Managing Director in this behalf, not less than seven clear days before the date fixed for the
    meeting.

    (4) No instrument of proxy shall be valid unless it is in the following form and dated, namely:-

    ―STATE BANK OF INDIA

    185
    I/We ......................................of ................................ being (a) shareholder(s) of the State Bank o f
    India holding shares Nos ............................................on the register at.......................... do hereby appoint
    ....................... of..................... (or failing him ............................ of ................................ ) as may/our proxy
    to vote for me/us and my/our behalf at a meeting of the shareholders o f the State Bank to be held
    at............................... on the ..................... day of .............................. and at any adjournment t hereof.

    Dated this ............................. day of ...................................‖

    (5) An instrument of proxy so deposited shall be irrevocable –

    (i) unless on or before the last day for the deposit of proxies there shall have been deposited at the
    Local Head Office of the Bank where the meeting is to be held a notice in writing under the hand
    or common seal of the grantor specifically stating –

    (a) the name of the person in whose favour the instrument was granted; and

    (b) that such instrument is revoked; or

    (ii) unless the same is deemed to be invalid under sub-regulation (6).

    In the case of an instrument of proxy granted in favour of two grantees in the alternative, it shall not be
    necessary to mention in the notice of revocation the name of the second or alternative grantee provided that
    the notice is otherwise sufficient to identify beyond doubt the instrument of proxy which it is intended to
    revoke.

    (6) If two or more instruments of proxy in respect of the same shares shall be deposited and if on or before the
    last day for deposit of proxies all but one of such instruments of proxy shall not have been duly revoked in
    accordance with the procedure laid down in sub-regulation (5) all such instruments of proxy shall be
    deemed invalid.

    (7) The due revocation of an instrument of proxy shall in no way prohibit the deposit of another valid
    instrument of proxy within the time specified in sub-regulation (3).

    (8) The grantor of an instrument of proxy which has become irrevocable under this regulation shall not be
    entitled to vote in person at the meeting to which such instrument relates.

    Central Board and its Executive Committee

    Regulation 44 – Meetings of the Central Board

    (1) Meetings of the Central Board shall be convened by the Chairman or, in his absence, by the Vice-
    Chairman or in their absence by the Managing Director at least six times in each year and at least once in
    each quarter.

    (2) Any three directors may require the Chairman to convene a meeting of the Central Board at any time, and
    the Chairman shall, on receipt of the requisition, convene a meeting of the Central Board giving sufficient
    notice, provided that the date of the meeting so convened shall not be later than 21 days from the date of
    receipt of the requisition.

    (3) Meetings of the Central Board shall be held at the Central Office of the Bank, or at such other place as the
    Chairman, or in his absence, the Vice-Chairman or in their absence the Managing Director may decide.

    (4) Ordinarily not less than 15 days‘ notice shall be given of each meeting of the Central Board, and such
    notice shall be sent to every director at his registered address. Should it be found necessary to convene an
    emergency meeting, sufficient notice shall be given to every director in India to enable him to attend.

    186
    (5) No business other than that for which the meeting was convened shall be discussed at a meeting of the
    Central Board except with the consent of the Chairman and a majority of the directors present unless one
    weeks‘ notice has been given of the same in writing to the Chairman.

    (6) Five Directors, of whom not less than three shall be Directors holding office by virtue of clause (bb) of
    section 19 or elected under clause (c) of that section or nominated under clause (d) of the said section shall
    form a quorum for the transaction of business.

    (7) A copy of the proceedings of each Central Board meeting shall be circulated as soon as possible thereafter
    for the information of the directors, and shall be signed by the Chairman of that or the next succeeding
    meeting.

    Regulation 45 – Resolution without meeting of Central Board valid

    (1) A resolution in writing signed by a majority of the directors of the Central Board shall be valid and
    effectual, and shall be deemed to be the resolution passed by the Central Board on the date on which it is
    signed by the last signatory to the resolution:

    Provided that if any dissenting director in writing requires that any resolution so passed shall be placed
    before a meeting of the Central Board, the resolution shall not be deemed to be valid and effectual, as
    aforesaid, unless the same is passed at such meeting.

    (2) Nothing in sub-regulation (1) shall apply to a resolution in respect of any matter relating to the making of
    advances or discounting of bills by the Bank.

    Regulation 46 – Constitution and powers of the Executive Committee

    (1) There shall be an Executive Committee of the Central Board consisting of the Chairman, Vice Chairman,
    the Managing Directors, if any, the Director nominated under clause (f) of section 19 of the Act and all or
    any of the other Directors who are normally residents, or may, for the time being, be present at any place
    within India where the meeting is held.

    (2) Subject to the other provisions of these regulations and to such general or special directions as the Central
    Board may give from time to time, the Executive Committee may deal with any matter within the
    competence of the Central Board.

    Regulation 47 – Meetings of the Executive Committee

    (1) Meetings of the Executive Committee shall be held weekly, sufficient notice being given to the directors on
    the Executive Committee to attend the meeting.

    (2) Four directors, of whom not less than two are directors holding office by virtue of clause (bb) of section 19
    of the Act or elected under clause (c) or nominated under clause (d) of that section shall form a quorum for
    the transaction of business:

    Provided that where, by reason of the provisions of sub-regulation (4) read with sub-section (3) of section
    31 of the Act, any director is unable to be present and vote at a meeting of the Executive Committee, or
    while some particular business is being transacted by the Executive Committee, and in consequence thereof
    the number of directors present and eligible to vote is less than four, the quorum for such meeting or, as the
    case may be, for the transaction of that business shall be three of whom one shall be a director 2(holding
    office by virtue of clause (bb) or elected under clause (c) or nominated under clause (d) of section 19 of
    Act.

    (3) The minutes of every meeting of the Executive Committee shall be laid before the Central Board as soon as
    possible after the meeting of the Executive Committee.

    187
    (4) The provisions of the Act and, save as otherwise provided in this regulation, of these regulations shall apply
    to the meetings of the Executive Committee as if they were meetings of the Central Board.

    Miscellaneous

    Regulation 75 – Manner and form in which contracts binding on the Bank may be executed

    (1) Contracts on behalf of the Bank may be as follows:

    (i) any contracts which, if made between private persons, would be by law required to be in writing
    signed by the parties to be charged therewith, may be made on behalf of the Bank in writing
    signed by any person acting under its authority express or implied, and may in the same manner be
    varied or discharged;

    (ii) any contracts which, if made between private persons, would by law be valid although made by
    parol only and not reduced to writing may be made by parol on behalf of the Bank by any person
    acting under its authority express or implied, and may in the same manner be varied or discharged;

    (2) All contracts made according to the provisions of this regulation shall be effectual in law, and shall bind the
    State Bank and all other parties thereto and their legal representatives.

    Regulation 75 – Accounts receipts and documents of Bank by whom to be signed

    (1) The Vice Chairman, the Managing Directors, the Deputy Managing Directors, the Chief General Managers and
    such other officers and employees of the Bank as the Central Board or the Executive Committee may authorise in
    this behalf by notification in the Gazette o f India, to such extent and subject to such limitation if any, as the
    Central Board or the Executive Committee may specify or impose in so authorizing, are hereby severally
    empowered, for and on behalf o f the Bank, to sign all documents, instruments, accounts, receipts, letters and
    advices connected with the current or authorised business of the Bank and, in particular and without prejudice to
    the generality of the foregoing powers, to endorse and transfer promissory notes, stock receipts, stock debentures,
    shares, securities and documents o f title to goods, standing in the name o f or held by or on behalf of the Bank
    or, in the absence of any agreement to the contrary, standing in the name o f or held by or on behalf of any
    person, firm, company or corporation for or on behalf of which person, firm, company or corporation the Bank
    has been constituted as attorneys, to draw, accept and endorses bills of exchange and cheques, to issue, confirm
    and transfer letters o f credit and to sign guarantees and indemnities.

    (2) Without prejudice to the provisions of sub-regulation (1) all powers o f attorney and other authorisations issued
    by the Imperial Bank in favour of any officer or other employee who becomes an officer or other employee of
    the Bank by virtue of section 7 of the Act shall continue to b e in full force and effect as if instead of the Imperial
    Bank, the Bank had been a p arty to such powers of attorney or authorisations, and, accordingly, any such officer
    or other employee may exercise on behalf o f the State Bank such powers as he was exercising before the
    appointed day on behalf of the Imperial Bank.

    (3) The provisions of this regulation shall not deemed in any way to affect the provisions of the Imperial Bank of
    India Act, 1920, not the authority which any person has under that Act in relation to the Imperial Bank, and any
    such person if so authorised under this regulation and by, or under, the Imperial Bank of India Act, 1920, may act
    on behalf of the Bank as well as the Imperial Bank to the extent so authorised.

    188
    MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION

    The following contracts (not being contracts entered into in the ordinary course of business carried on by the Bank
    or entered into more than two years before the date of this Shelf Prospectus) which are or may be deemed material
    have been entered or are to be entered into by the Bank. These contracts and also the documents for inspection
    referred to hereunder, may be inspected at State Bank of India, Shares & Bonds Department, Corporate Centre, 3 rd
    Floor, Varma Chambers, 11 Homji Street, Horniman Circle, Fort, Mumbai 400 001, Maharashtra, from 10.00 a.m.
    to 1.00 p.m., from the date of this Shelf Prospectus until the date the Shelf Prospectus and from the Tranche Issue
    Opening Date to the Tranche Issue closing date of each Tranche Issue.

    MATERIAL CONTRACTS

    1. The Memorandum of Understanding between the Bank and the Lead Managers dated January 28, 2011.
    2. The Memorandum of Understanding between the Bank and the Registrar to the Issue January 28, 2011.

    MATERIAL DOCUMENTS

    1. The Act and the SBI Regulations.


    2. Copy of the ECCB resolutions dated December 30, 2010 approving the Issue.
    3. Copy of the ECCB Resolution dated January 25, 2011 approving the Draft Shelf Prospectus.
    4. Copy of the ECCB Resolution dated February 11, 2011 approving this Shelf Prospectus.
    5. Consents of the Directors, Lead Managers to the Issue, Legal Advisor, Registrars to the Issue and the
    Debenture Trustee to include their names in the Prospectus to act in their respective capacities.
    6. Consent of the Auditor to the Issue dated January 31, 2011 for inclusion of their reports in the form and
    context in which they appear in this Prospectus.
    7. Auditor‘s report on the consolidated and unconsolidated audited financial statements for financial years
    ended March 31, 2010, March 31, 2009, March 31, 2008, March 31, 2007 and March 31, 2006.
    8. Annual Report of the Bank for the last five Financial Years.
    9. Report of the CARE and CRISIL dated January 27, 2011 and January 27, 2011 respectively.
    10. Consent of CARE and CRISIL dated January 28, 2011 and January 28, 2011 respectively for inclusion of
    their rating in this Prospectus.
    11. The Issuer‘s letters to SEBI dated January 5, 2009, January 19, 2009, February 6, 2009, May 7, 2009,
    September 9, 2010 and November 25, 2010 and SEBI‘s responses through letters dated February 17, 2009,
    March 9, 2009, September 17, 2010 and December 3, 2010.
    12. The Issuer‘s letters to RBI dated January 21, 2009, March 24, 2009 and September 6, 2010 and RBI‘s
    responses through letters dated September 7, 2009 and September 9, 2010.
    13. Due Diligence Certificate from Citigroup Global Markets India Private Limited and Kotak Mahindra Capital
    Company Limited to be issued prior to filing of the Shelf Prospectus.
    14. Due Diligence Certificate from the Debenture Trustee to be issued prior to the Issue Opening.
    15. Tripartite Agreement between the NSDL, the Bank and Registrar dated September 19, 2003 and
    Tripartite Agreement between the CDSL, the Bank and the Registrar dated March 24, 2010.

    Any of the contracts or documents mentioned above may be amended or modified any time without
    reference to the Bondholders in the interest of the Bank in compliance with the Applicable Laws.

    189
    DECLARATION

    No statements made in this Shelf Prospectus contravene any of the provisions of the Act or the rules or regulations
    made thereunder or any provisions of the SEBI Debt Regulations. All the legal requirements connected with the said
    Issue as also the guidelines, instructions etc. issued by SEBI, the Government and any other competent authority in
    this behalf have been duly complied with.

    We confirm that this Shelf Prospectus which is to be read with the relevant Tranche Prospectus for each Tranche
    Issue shall not omit disclosure of any material fact which may make the statements made therein, in light of
    circumstances under which they were made, misleading and that no statements in this Shelf Prospectus are false,
    untrue or misleading, and that this Shelf Prospectus does not contain any mis-statements.

    Mr. O.P. Bhatt


    Chairman

    Mr. R. Sridharan
    Managing Director

    Dr. Ashok Jhunjhunwala


    Director

    Mr. Dileep C. Choksi


    Director

    Mr. S. Venkatachalam
    Director

    Dr. (Mrs.) Vasantha Bharucha


    Director

    Dr. Rajiv Kumar


    Director

    Mr. D. Sundaram
    Director

    Ms. Shyamala Gopinath


    Director

    Mr. G D Nadaf
    Director

    Place: Mumbai
    Dated: February 14, 2011

    190
    CRi5i
    Rating Rationale _~~ ~ R_I\T_If\4_. G_S_
    January 28, 2011
    Mumbai

    CRISIL 'AAA' for SBI's retail bonds issue

    RS.100.00Billion Lower Tier II Bonds AAA/Stable


    P1+(Reaffirmed)
    AAAlStabie
    FAAA/Stable
    AAA/Stable (Reaffirmed)
    (Assigned)
    (Reaffirmed)
    (Reaffirmed)
    rogramme
    0
    .65
    50 Billion
    Billion

    # The rating pertains only to State Bank of Indore's (SBol's) CRiSIL-rated fIXed deposit programme, which has been
    transferred to State Bank of India (SBI) following the merger of SBoI with SBI.

    CRISIL has assigned its 'AAA/Stable' rating to State Bank ofIndia's (SB!'s) retail bonds issue of
    RS.100-billion Lower Tier II bonds. The ratings on SB!' s other aforementioned debt instruments
    have been reaffirmed at 'AAA/FAAA/Stable/P"t+'. The ratings continue to reflect the SBI group's
    dominant position in the Indian banking industry, strong resource profile, and healthy capitalisation.
    These rating strengths are partially offset by the group's modest asset quality with respect to its
    rating category.

    For arriving at its ratings on SBI, CRISIL has combined the business and financial risk profiles of
    SBI and its subsidiaries, including associate banks, collectively referred to as the SBI group. This is
    because the subsidiaries and the associate banks are an integral part of SB!' s growth strategy.

    The SBI group is the largest player in the Indian banking sector, with a market share of around 25
    per cent in both deposits and advances. The group had consolidated deposits and advances of
    RS.11.16 trillion and RS.8.70 trillion, respectively, as on March 31,2010. It has a strong brand
    image and a pan-India presence, with a wide reach in rural and semi-urban areas. Apart from
    banking, the SBI group also has a strong presence in other segments of financial services, such as
    investment banking and life insurance. The SBI group has a strong resource profile, underpinned by
    a large and diversified retail deposit base; this lends stability to its resource profile and also results
    in a significantly higher proportion of low-cost current and savings account (CAS A) deposits (42.7
    per cent of the group's total deposits as on March 31, 2010) compared to the industry average (35.4
    per cent). On a standalone basis, SB!'s CASA deposits were 47.3 per cent as on March 31, 2010.
    The group's cost of deposits was 5.74 per cent in 2009-10 (refers to financial year, Apiil1 to March
    31) as against 6.2 per cent in 2008-09. On a standalone basis, SB!'s deposit cost was 5.61 per cent
    in 2009-10 and was marginally higher than the industry average because of the sizable proportion of
    high-cost deposits raised in 2008-09. While SB!'s deposit cost is likely to increase over the next
    few quarters, it is expected to be partially offset by high proportion oflow-cost CASA deposits.

    CRISIL Complexity Levels are assigned to various types of financial instruments. The CRiSIL Complexity Levels are available
    on www.crisil.com/complexity-levels. Investors are advised to refer to the CRiSIL Complexity Levels for instruments that they
    propose to invest in. Investors can also call the CRISIL Helpline at +91 22 3342 3047/ + 91 223342 3064 with queries on
    specific instruments.

    January 28,2011 www.crisil.com


    Moreover, the SBI group has a healthy capital position, marked by a large Tier I capital base
    (Rs.812.61 billion as on March 31, 2010), and demonstrated ability to raise capital whenever
    needed. The group had a comfortable Tier I capital adequacy ratio (CAR) of 9.28 per cent as on
    March 31, 2010 (as per Basel II guidelines). On a standalone basis, the bank's Tier I CAR was 9.45
    per cent as on March 31,2010 and 9.57 per cent as on December 31,2010. SBI plans to raise
    around RS.200 billion through a rights issue in the near term to support its growth plans over the
    medium tenn. The group's return on assets ratio was 0.9 per cent in 2009-10. CRISIL believes that
    the SBI group's profitability is likely to improve gradually over the medium telm with the
    improvement in its interest spreads, supported by a sustained high CASA level, and the benefits
    arising from improving operating efficiencies, supported by its expanded branch network. This is
    likely to result in adequate internal accruals and support the group's capitalisation over the medium
    term.

    The SBI group has modest asset quality with respect to its rating category, marked by higher-than-
    industry average gross non-perforn1ing assets (NPAs). The gross NPAs of SBI and its associate
    banks were 2.71 per cent of total advances as on March 31, 2010, compared with the industry
    average of2.4 per cent. The gross NPAs of SBI and its associate banks increased to 3.01 per cent as
    on December 31,2010. On a standalone basis, SBl's gross NPAs remained higher at 3.17 per cent
    as on December 31,2010 (3.05 per cent as on March 31, 2010). The slippages increased to around
    2.5 per cent (on an annualised basis) during the nine months ended December 31, 2010 as against
    2.2 per cent in 2009-10. The deterioration in the asset quality along with higher provisioning
    requirements has resulted in increased credit costs for the bank. Given the large-ticket corporate
    exposures and the relatively unseasoned retail loan book, CRISIL believes that the SBI group's
    asset quality is likely to remain average comp.ared to that of its peers over the medium term.

    Outlook: Stable
    CRISIL believes that the SBI group will maintain its dominant position in the Indian financial
    services sector over the medium term, and that SBI will remain an institution of national
    importance, given its significance to India's economy and financial system. Furthermore, the
    Government of India's (Gol's) ownership of SBI ensures that the bank continues to receive need-
    based distress support, though the necessity for the same appears remote. The outlook may be
    revised to 'Negative' if the group's asset quality deteriorates steeply, or if there is a sharp decline in
    its earnings profile.

    About the Bank


    SBI is the oldest and largest bank in India. GoI owned 59.40 per cent of the bank as on December
    31,2010. SBI offers a wide range of banking products and services. The SBI group had 17,337
    branches, and 21,485 automated teller machines, as on March 31, 2010. SBI has branches across the
    globe; through its non-banking subsidiaries, it offers a wide range of financial services such as
    merchant banking, fund management, factoring, primary dealership, broking, investment banking,
    credit cards, and life insurance.

    SBI, on a standalone basis, reported a profit after tax (PAT) of RS.91. 7 billion for 2009-10, against a
    PAT of RS.91.2 billion for 2008-09. The SBI group (including minority interest) reported a PAT of
    RS.120.1 billion for 2009-10, against a PAT of Rs.111.7 billion for 2008-09. For the nine months
    ended December 31,2010, SBI, on a standalone basis, reported a PAT of RS.82.4 billion (Rs.73.0
    billion for the corresponding period of the previous year) and the SBI group (including minority
    interest) reported a PAT of RS.97.1 billion (Rs.93.4 billion).

    January 28, 2011 2 www.crisil.com


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