14th annual report 2007-2008

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• Business turnover crossed Rs. 31,800 crores.

• Network of branches at 180 along with 183 off-site ATMs, in 147

geographical locations spread over 28 States and Union

Territories - besides 2 overseas representative offices (London and

Dubai).

• Highest A1+ rating for Certificates of Deposits from ICRA and the

highest P1+ rating for FDs from CRISIL.

• A strategic tie-up with Religare Securities for offering a value -

added “3-in-1 savings accounts” service providing the benefits of

savings account, depository services and internet trading facility.

• Clearing Bank arrangement with National Multi Commodity

Exchange Ltd. (NMCE), while continuing with successful

arrangements with MCX and NCDEX.

• Strategic partnership with Cholamandalam MS for Bancassurance.

• Bestowed with the prestigious "Corporate Excellence" award by

Amity International Business School during its 10th International

Business Summit (INBUSH) 2008. The award was presented by

H.E. Mr. Salohoddin Nasriddinov, Ambassador, Embassy of Tajikistan.

• Received recognition by BSE and NASSCOM Foundation for the

Best Corporate Social Responsibility Practice category.

• Featured in the Standard & Poor ESG India index which provided

the investors with exposure to liquid and tradable index of 50 of

the best performing stocks in the Indian market as measured by

environmental, social, and governance (ESG) parameters.

180 Branches spread over 147 locations as on March 31, 2008

Nation-wide presenceBuilding relationships through commitment

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Board of Directors

Mr. R. Seshasayee, Chairman

Mr. R. Sundararaman

Mr. T. Anantha Narayanan

Dr. T. T. Ram Mohan

Mrs. Pallavi Shroff

Mr. Premchand Godha

Mr. Ajay Hinduja

Mr. S. C. Tripathi

Mr. Ashok Kini

Mr. Romesh Sobti, Managing Director & CEO

Company Secretary

Mr. Haresh Gajwani

Auditors

M/s. M. P. Chitale & Co.

Hamam House, 1st Floor

Ambalal Doshi Marg, Fort

Mumbai – 400 001

Solicitors

M/s. Crawford Bayley & Co.

Solicitors & Advocates

State Bank Building

NGN Vaidya Marg

Mumbai – 400023

Registrar & Share Transfer Agent

Intime Spectrum Registry Ltd.

C-13, Pannalal Silk Mills Compound

L.B.S. Marg, Bhandup (West)

Mumbai – 400078

Tel: 022 25946980 / 25963838

Fax: 022 25946969

Registered Office Corporate Office Consumer Finance Division (Chennai)

2401, Gen. Thimmayya Road 701, Solitaire Corporate Park 115 - 116, G. N. Chetty Road

(Cantonment) 167, Guru Hargovindji Marg T. Nagar

Pune - 411001 Chakala, Andheri (East) Chennai – 600 017

Mumbai - 400093

Contents Page

Notice.............................................................. 4

Directors’ Report ............................................ 9

Management Discussion & Analysis ............. 13

Corporate Governance .................................. 22

Auditors’ Report ............................................. 35

Balance Sheet ................................................ 36

Profit & Loss Account ..................................... 37

Schedules ....................................................... 38

Principal Accounting Policies ........................ 44

Notes on Accounts ......................................... 48

Cash Flow Statement ..................................... 64

Balance Sheet in US Dollars ......................... 65

Subsidiary – Directors’ Report,

Auditors’ Report and Accounts ...................... 66

Branch Network .............................................. 69

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C o r e E x e c u t i v e T e a m

Mr. Romesh Sobti took charge of the Bank as Managing Director & CEO during the year. Prior to this assignment, Mr. Sobti was the Executive Vice President – Country Executive, India and Head, UAE and Sub-Continent, at ABN AMRO Bank N.V. He joined ABN AMRO Bank N.V. in November 1990 and graduated from the position of a Chief Manager to the Country Executive over a period of 18 years. In his banking career spanning 33 years, Mr. Sobti has been associated with ANZ Grindlays Bank plc (now Standard Chartered Bank) and State Bank of India in the past. He holds a Bachelors Degree (Honours) in Electrical Engineering and has also done his Diploma in Corporate Laws and Secretarial Practice.

Mr. Paul Abraham joined as Chief Operating Officer (COO) during the year. A Post Graduate Degree holder in Business Management (Finance) from IIM Ahmedabad, Mr. Abraham started his career with ANZ Grindlays Bank (now Standard Chartered Bank), way back in 1982. He joined ABN AMRO Bank N.V. in January 1993 and since then has been associated with the Bank in various capacities, both in India and abroad. Before joining IndusInd Bank, Mr. Abraham held the position of Managing Director, ABN AMRO Central Enterprise Services (ACES), for about 3 years.

Mr. K. S. Sridhar joined as Chief Risk Officer during the year. With over 17 years of specialised experience of handling bank-wide Risk Management at ABN AMRO Bank N.V., Mr. Sridhar brings with him tremendous insight into all aspects of risk management, spanning across all client segments. With a B. Sc. (Distinction) Degree from Kolkata University, Mr. Sridhar went on to complete his Masters in Financial Management from Jamnalal Bajaj Institute of Management Studies, University of Mumbai.

Mr. Sumant Kathpalia joined as Head – Consumer Banking during the year. A qualified Chartered Accountant, Mr. Kathpalia has 20 years of rich experience in banking, having worked with prestigious foreign banks like Citibank N.A. and Bank of America. Prior to joining IndusInd Bank, he was the Head – Consumer Banking at ABN AMRO Bank N.V.� He has been associated with ABN AMRO Bank for 8 years. He has had a vast variety of experience in consumer banking, project management, credit cards, bancassurance, wealth management and consumer finance.

Mr. Suhail Chander joined as Head – Corporate & Commercial Banking during the year. With 25 years of rich exposure in the banking sector, which includes 17 years in ABN AMRO Bank N.V., Mr. Chander joins the Bank with the wide experience of working in various geographical locations in India and South-East Asia. His strengths are important functions of banking like SME Financing, Wealth Management, Corporate Banking and Corporate Risk Management. He held the position of Head, Consumer & Commercial Banking, Singapore & Malaysia at ABN AMRO N.V. , prior to joining IndusInd Bank.

Mr. Ramesh Ganesan, Head – Transaction Banking, brings with him two decades of rich experience in Transaction Banking which broadly includes Cash Management, Supply Chain Financing, Payments/Remittances, Trade Services and Trade Finance Business in India for Global Clients, Large Corporates, Financial Institutions, Mid-market, SME and Retail Business banking clients. He was the Executive Director and Head Transaction Banking at ABN AMRO Bank N.V. before joining IndusInd Bank. He is an alumnus of Jamnalal Bajaj Institute of Management Studies, Mumbai.

Mr. Moses Harding, Head – Global Markets Group, is a Post Graduate from Madras University and a CAIIB with 27 years of banking experience. He started his career with State Bank of India in 1981 and held various supervisory roles in Madras Circle, Foreign Department and Central Office with specialization in Treasury, International Business and Risk Management products. He had a stint with IndusInd Bank during 1994-99, as a core member of the start-up team as Head of Forex Treasury and International Business before moving to Centurion Bank as Executive Director to set up the Wholesale Banking during 1999-2002. He had an overseas stint during 2002-03 based out of London/Dubai focusing on Wealth Management business covering all asset classes of global markets. He rejoinedthe Bank in April 2003 as Executive Vice President, in charge of Treasury, International Division and Capital & Commodity Markets.

Mr. Suresh N. Pai, Head – Corporate Services & Communication, is a MBA from Delhi University. He joined IndusInd Bank in 1996 as Vice President and now as Executive Vice President looks after branding, corporate communication, procurement, premises management and administration. Prior to joining IndusInd Bank, he worked with Corporation Bank for 25 years and had the privilege of heading the major zones like Delhi, Mumbai and Bangalore.

Mr. S. V. Zaregaonkar, CFO and Investor Relations, is a qualified Chartered Accountant and a Post Graduate in Commerce and a Law Graduate with CAIIB. He started his career as Lecturer in Commerce in 1978. He joined Dena Bank in 1980 and had various stints in Branch Management and Credit before moving into the Accounts and Finance Department of the Bank. He joined IndusInd Bank in 1995 as Assistant Vice President in the Banking Operations & Administration Department. At present, he is Executive Vice President & CFO of the Bank.

Mr. S. V. Parthasarathy, Head – Consumer Finance, is a qualified Chartered Accountant. He has 28 years of experience in the banking and finance industry. He started his career in Ashok Leyland Ltd. (ALFL) in 1980 and held varied responsibilities such as Sales, Finance, Treasury and Budget & Consolidation before moving over to Ashok Leyland Finance as Zonal Manager – South in 1991. He grew to the position of Executive Director, in charge of the Vehicle Finance business in erstwhile ALFL. He was the managing committee member of Equipment Leasing Association and Finance Industry Development Council. Currently heads Consumer Finance division of the Bank.

Mr. Zubin Mody has completed his graduation from Mumbai University with Honours in Physics and has a Management Degree in Personnel Management & Human Resources from XLRI, Jamshedpur (1993). He joined IndusInd Bank in December 2005 and currently heads the HR Function for the Bank. Prior to this, he was heading the HR function at ICICI Lombard. He joined ICICI Ltd. in 1999 as Assistant Vice President in Mumbai and was promoted to Senior Vice President in 2000. At ICICI Bank, he was responsible for Performance Management and Compensation. In 2001, he went on to head the HR function at ICICI Lombard General Insurance Co. Ltd. Before joining ICICI, he worked with well-known FMCG organizations, such as Marico Industries Ltd. and Heinz India Pvt. Ltd., handling Organization Development, Performance Management, Compensation, Recruitment and Training.

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NOTICE is hereby given that the Fourteenth Annual General Meeting of the Members of IndusInd Bank Limited will beheld at Hotel Sun-n-Sand, 262, Bund Garden Road, Pune – 411001, India, on Monday, September 22, 2008, at 2.00 p.m.to transact the following business:

Ordinary Business:

1. To consider and adopt the Profit and Loss Account for the year ended March 31, 2008 and the Balance Sheet as atMarch 31, 2008 together with the Reports of the Directors and Auditors thereon.

2. To declare Dividend for the year.

3. To appoint a Director in place of Mr. R. Sundararaman, who retires by rotation and, being eligible, offers himself for re-appointment.

4. To appoint a Director in place of Dr. T. T. Ram Mohan, who retires by rotation and, being eligible, offers himself for re-appointment.

5. To appoint a Director in place of Mrs. Pallavi Shroff, who retires by rotation and, being eligible, offers herself for re-appointment.

6. To appoint M/s. M. P. Chitale & Co., Chartered Accountants, as Statutory Central Auditors for the Bank to hold office fromthe conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting, and to authorisethe Board of Directors to fix the remuneration of the Statutory Auditors, and to appoint branch auditors in consultation withthe Statutory Auditors and to fix their remuneration.

Special Business:

7. Appointment of Mr. Ashok Kini as Director

To consider and, if thought fit, to pass with or without modification(s) the following resolution as an ordinary resolution:

“RESOLVED THAT Mr. Ashok Kini who was appointed Additional Director of the Bank on January 30, 2008 under Section260 of the Companies Act, 1956 and who holds office till the date of the 14th Annual General Meeting, and in respect ofwhom the Bank has received a notice in writing proposing his candidature for the office of Director, in accordance with theprovisions of Section 257 and all other applicable provisions, if any, of the Companies Act, 1956, be and is herebyappointed as Director of the Bank liable to retire by rotation;

RESOLVED FURTHER THAT the Company Secretary be and is hereby authorised to file the required forms with theRegistrar of Companies and to take all necessary steps for giving effect to this resolution.”

8. Appointment of Mr. Romesh Sobti as Managing Director & CEO

To consider and, if thought fit, to pass with or without modification(s) the following resolution as an ordinary resolution:

“RESOLVED THAT pursuant to the approval of Reserve Bank of India under Section 35B of the Banking Regulation Act,1949 as amended from time to time and the applicable provisions of the Companies Act, 1956, consent of members ofthe Bank be and is hereby accorded for the appointment of Mr. Romesh Sobti as Managing Director & CEO of the Bank,not subject to retirement by rotation, for a period of three years with effect from February 1, 2008 on the terms andconditions of service approved by the Board of Directors and by the Reserve Bank of India;

RESOLVED FURTHER THAT the Company Secretary be and is hereby authorised to file required forms with theRegistrar of Companies and to take all necessary steps for giving effect to this resolution.”

9. Authority for further issue/placement of securities including ADRs, GDRs, and Qualified Institutions Placement

To consider and, if thought fit, to pass with or without modification(s) the following resolution as a special resolution:

“RESOLVED THAT pursuant to the provisions of Section 81 and other applicable provisions, if any, of the CompaniesAct, 1956 (including any amendment thereto or modification(s) or re-enactment(s) thereof) and in accordance with theprovisions of the Memorandum and Articles of Association of the Bank, the Listing Agreements entered into by the Bankwith the respective Stock Exchanges where the equity shares of the Bank are listed, and subject to the Regulations/Guidelines, if any, prescribed by Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), financialinstitutions and all other concerned and relevant authorities from time to time, to the extent applicable and subject to suchapprovals, consents, permissions and sanctions of the Government of India, SEBI, RBI and all other appropriate authorities,institutions or bodies and subject to such conditions and modifications as may be prescribed by any of them whilegranting such approvals, consents, permissions and sanctions, and agreed to by the Board of Directors of the Bank(hereinafter referred to as ‘the Board’, which term shall be deemed to include any Committee(s) constituted/to beconstituted by the Board to exercise its powers including the powers conferred by this Resolution) which the Board beand is hereby authorised to accept, if it thinks fit in the interest of the Bank, the Board be and is hereby authorised, onbehalf of the Bank, to create, issue, offer and/or allot, in the course of one or more public or private offerings by way ofpublic issue, rights issue, preferential allotment including Qualified Institutional Placement pursuant to Chapter XIII-A ofthe SEBI (Disclosure and Investor Protection) Guidelines, 2000 as amended from time to time, or otherwise, in thedomestic or one or more international markets, equity shares and/or equity shares through depository receipts and/or

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convertible bonds and/or securities convertible into equity shares at the option of the Bank and/or the holder(s) of suchsecurities, American Depository Receipts (ADRs)/Global Depository Receipts (GDRs) representing equity shares orconvertible securities and/or securities with or without detachable/non-detachable warrants with a right exercisable by thewarrant-holder to subscribe for the equity shares and/or warrants with an option exercisable by the warrant-holder tosubscribe for equity shares, and/or any instrument or securities representing either equity shares and/or convertiblesecurities linked to equity shares (all of which are hereinafter collectively referred to as ‘securities’) subscribed in Indian/foreign currency(ies) to investors (whether resident and/or non-resident and/or strategic investors and/or institutions orbanks and/or incorporated bodies and/or trustees or otherwise, and whether or not such investors are Members of theBank)/Foreign Institutional Investors (FIIs)/Mutual Funds/Pension Funds/Venture Capital Funds/Banks and such otherpersons or entities excluding promoters in case of preferential allotment, whether or not such investors are members ofthe Bank, to all or any of them jointly or severally, through prospectus(es) and/or placement document(s) or offer letter(s)or circular(s) and/or on private placement basis for, (or which upon conversion of all securities so created, issued, offeredand/or allotted could give rise to the issue of) an aggregate face value of equity shares not exceeding 25 per cent of theAuthorised Equity Share Capital of the Bank at such time or times with or without voting rights in general meetings/classmeetings, at such price or prices, at such interest or additional interest, at a discount or at the premium to market priceor prices and in such form and manner and on such terms and conditions or such modifications thereto, including thenumber of Securities to be issued, face value, rate of interest, redemption period, manner of redemption, amount ofpremium on redemption/prepayment, number of equity shares, to be allotted on conversion/redemption/extinguishmentsof debt(s), exercise of rights attached to the warrants and/or any other financial instrument, period of conversion, fixing ofrecord date or book closure and all other related or incidental matters as the Board may in its absolute discretion think fitand decide in according to the directives/guidelines issued by the appropriate authority(ies) and in consultation with theMerchant Banker(s) and/or Lead Manager(s) and/or Underwriter(s) and/or Advisor(s) and/or such other person(s), butwithout requiring any further approval or consent from the shareholders and also subject to the applicable guidelines forthe time being in force;

RESOLVED FURTHER THAT, without prejudice to the generality of the above, the aforesaid issue of the securities mayhave all or any terms or combinations of terms in accordance with prevalent market practice including but not limited toterms and conditions relating to payment of interest, dividend, premium on redemption at the option of the Bank and/orholders of any securities, including terms for issue of additional equity shares or variations of the price or period ofconversion of securities into equity shares or issue of equity shares during the period of the securities or terms pertainingto voting rights or option(s) for early redemption of securities;

RESOLVED FURTHER THAT, without prejudice to the generality of the above, the preferential allotment of such securities,the relevant date on the basis of which the price of the resultant shares shall be determined, shall be thirty days prior tothe date of the General Meeting in which this resolution is passed, and that the allotment of such securities shall be madein the form of Qualified Institutional Placement to Qualified Institutional Buyers, in accordance with the provisions ofChapter XIII-A of the SEBI (Disclosure and Investor Protection) Guidelines, 2000 as amended from time to time;

RESOLVED FURTHER THAT the Board be and is hereby authorised to enter into and execute all such agreements andarrangements with any Lead Manager(s), Co-Lead Manager(s), Manager(s), Advisor(s), Underwriter(s), Guarantor(s),Depository(ies), Custodian(s) and all such agencies as may be involved or concerned in such offerings of Securities andto remunerate all such agencies by way of commission, brokerage, fees or the like, and also to seek the listing of suchSecurities in one or more Indian/International Stock Exchanges;

RESOLVED FURTHER THAT the Bank and/or any agencies or bodies authorised by the Board may issue depositoryreceipts or certificates representing the underlying equity shares in the capital of the Bank or such other securities inbearer, negotiable, or registered form with such features and attributes as may be required and are prevalent in theIndian and/or International Capital Markets for the instruments of this nature and to provide for the tradability and freetransferability thereof as per market practices and regulations (including listing on one or more stock exchange(s) in oroutside India);

RESOLVED FURTHER THAT the Board be and is hereby authorised to create, issue, offer and allot such number ofequity shares as may be required to be issued and allotted upon conversion of any securities referred to above or as maybe necessary in accordance with the terms of the offer, all such shares ranking in all respects pari passu inter se and withthe then existing equity shares of the Bank in all respects, save and except that such equity shares or securities orinstruments representing the same may be without voting rights, if permitted by law and/or, shall carry the right to receivepro rata dividend from the date of allotment, as may be decided by the Board, declared for the financial year in which theallotment of shares shall become effective;

RESOLVED FURTHER THAT the Board be and is hereby authorised to create such mortgage and/or charge on theimmovable and movable assets of the Company or on the whole or any part of the undertaking/s of the Company underSection 293(1)(a) of the Companies Act, 1956, in respect of any Security(ies) issued by the Bank pursuant to thisResolution and in the event such Security(ies) is/are required to be secured and for that purpose to accept such termsand conditions and to execute such documents and writings as the Board may consider necessary or proper;

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RESOLVED FURTHER THAT, for the purpose of giving effect to any creation, issue, offer or allotment of equity shares orsecurities or instruments representing the same, as described above, the Board be and is hereby authorised, on behalf ofthe Bank, to do all such acts, deeds, matters and things as it may, in its absolute discretion, deem necessary or desirablefor such purpose, including without limitation, entering into arrangements for managing, underwriting, marketing, listing,trading, acting as depository, custodian, registrar, paying and conversion agent, trustee and to issue any offer document(s)and sign all applications, filings, deeds, documents and writings and to pay any fees, commissions, remuneration,expenses relating thereto and with power on behalf of the Bank to settle all questions, difficulties or doubts, that mayarise in regard to such issue(s) or allotment(s) as it may, in its absolute discretion deem fit;

RESOLVED FURTHER THAT the Board be and is hereby authorised to delegate all or any of the powers hereinconferred to any Committee or any one or more whole-time directors of the Bank;

RESOLVED FURTHER THAT this resolution shall be in vogue for a period of 12 months from the date passing by themembers or till the next Annual General Meeting whichever is less.”

10. Variation in terms of options granted to employees


“RESOLVED THAT pursuant to the provisions of Section 81 and other applicable provisions, if any, of the CompaniesAct, 1956 (including any amendment thereto or modification(s) or re-enactment(s) thereof), the Listing Agreementsentered into by the Bank with the respective Stock Exchanges where the equity shares of the Bank are listed, and subjectto the provisions of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee StockPurchase Scheme) Guidelines, 1999 (the SEBI Guidelines) and all applicable laws, rules, regulations, notifications,clarifications and guidelines and subject to other statutory approvals, permissions, consents and sanctions as may berequired from any relevant authority, the approval of members of the Company be and is hereby accorded to the Boardof Directors (which term shall include any Committee constituted by the Board of Directors) and the action of the Boardof Directors in granting fresh options under the Employee Stock Options Scheme 2007, to such of those employees whohave surrendered the options granted to them in March 2008, at a price of Rs. 48 per share as determined by theCompensation Committee be and is hereby approved.”

11. Enhancement of Authorised Capital


“RESOLVED THAT the authorized share capital of the Bank be and is hereby increased from the existing Rs.400,00,00,000to Rs.500,00,00,000;

RESOLVED FURTHER THAT the existing Clause V of the Memorandum of Association of the Bank be and is herebysubstituted by the following:

Quote

The Authorised Share Capital of the Company is Rs.500,00,00,000 (Rupees Five hundred crore only) divided into50,00,00,000 equity shares of Rs.10/- each with power to increase or decrease the share capital in accordance with theprovisions of the Companies Act, 1956.

Unquote

RESOLVED FURTHER THAT the existing Article 4 of the Articles of Association of the Bank be and is hereby substitutedby the following:

Quote

Authorised Share Capital 4. The Authorised Share Capital of the Bank is Rs. 500,00,00,000 (Rupees Five Hundredcrore only) divided into 50,00,00,000 equity shares of Rs. 10/- each.

Unquote

RESOLVED FURTHER THAT Mr. Haresh Gajwani, Company Secretary, be and is hereby authorized to represent theBank before, and to file the necessary forms with, the Registrar of Companies, Maharashtra, Pune and to seek approvalsfrom any authority wherever necessary for giving effect to this resolution.”

Notes:

1. A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTEINSTEAD OF HIMSELF/HERSELF AND THE PROXY NEED NOT BE A MEMBER OF THE BANK. The proxy form shouldbe lodged with the Bank at its Registered Office at least 48 hours before the time of the meeting.

2. The relative Explanatory Statement pursuant to Section 173(2) of the Companies Act, 1956, in respect of the SpecialBusinesses is annexed hereto.

3. All documents referred to in the Notice and Explanatory Statement are open for inspection at the Registered Office of theBank during office hours on all working days except public holidays between 11.00 a.m. and 1.00 p.m. upto the date ofthe Annual General Meeting (AGM).

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4. The Register of Members and Share Transfer Books of the Bank will remain closed from Monday, September 8, 2008 toMonday, September 22, 2008 (both days inclusive) in terms of the provisions of Section 154 of the Companies Act, 1956.

5. Members/proxies should bring the attendance slip duly filled in for attending the AGM.

6. A brief profile of the Directors retiring by rotation and eligible for re-appointment is furnished in the Report on CorporateGovernance.

7. Members are requested to kindly bring their copies of the Annual Report to the AGM.

EXPLANATORY STATEMENT UNDER SECTION 173(2) OF THE COMPANIES ACT, 1956

Item No. 7

Mr. Ashok Kini, a career banker, retired as Managing Director of State Bank of India on December 31, 2005, after 37 years’

service in the Bank. During his tenure with State Bank of India, Mr. Kini had extensive exposure to the Bank’s lending

activities in the Retail, SSI, Agricultural and Industrial Finance segments and to Information Technology.

Mr. Ashok Kini was appointed Additional Director of the Bank under Section 260 of the Companies Act, 1956 on January 30,

2008 and he holds office upto the date of the Annual General Meeting. He is eligible for appointment as Director of the Bank

and the Bank has received a notice in writing along with a deposit of Rs.500/-, under Section 257 of the Companies Act, 1956

from a member proposing his candidature for the office of Director.

Members are requested to pass the resolution under Item No. 7 as an ordinary resolution.

None of the Directors of the Bank, other than Mr. Ashok Kini, is in any way concerned or interested in the passing of the

Resolution.

Item No. 8

Consequent upon the resignation from the office of Managing Director by Mr. Bhaskar Ghose, the Board of Directors

approved on December 7, 2007, the proposal for appointment of Mr. Romesh Sobti as Managing Director & CEO of the Bank,

subject to approval of Reserve Bank of India (RBI). On January 14, 2008, RBI has, vide letter No. DBOD.Appts.No.8989/

08.87.001/2007-08, approved Mr. Sobti’s appointment as Managing Director & CEO of the Bank for a period of three years.

Mr. Romesh Sobti assumed charge on February 1, 2008.

Mr. Romesh Sobti was inducted as Additional Director (to be designated as “Managing Director & CEO”) of the Bank pursuant

to Section 10A, 16 and 20 of the Banking Regulation Act, 1949 and the Articles of Association of the Bank in the Board

Meeting held on December 7, 2007. Accordingly, he shall hold office upto the date of the ensuing Annual General Meeting of

the Bank under Section 260 of the Companies Act, 1956. The Bank has received a notice in writing along with a deposit of Rs.

500/-, pursuant to Section 257 of the Companies Act, 1956 from a member proposing him as candidate for the office of

Director. Mr. Romesh Sobti has filed with the Bank his consent to act as a Director of the Bank.

Mr. Romesh Sobti was the Executive Vice President – Country Executive, India and Head, UAE and Sub-Continent, at ABN

AMRO Bank N.V. He joined ABN AMRO in November 1990 and graduated from the position of a Chief Manager to the

Country Executive over a period of 18 years. In his banking career spanning 33 years, Mr. Sobti has been associated with

ANZ Grindlays Bank plc (now Standard Chartered Bank) and State Bank of India in the past. He holds a Bachelor’s Degree

(Honours) in Electrical Engineering and has also done his Diploma in Corporate Laws and Secretarial Practice.

The details of the terms of appointment as approved by the Reserve Bank of India in respect of Mr. Romesh Sobti, Managing

Director & CEO of the Bank w.e.f. February 1, 2008, comprise the following: Salary of Rs. 100.80 lakhs p.a., Other

Allowances of Rs. 122.95 lakhs p.a., facility of company-leased and furnished accommodation, Provident Fund at 12% of

Salary, Gratuity at one month’s Salary, Pension at two months’ Salary, Medical Expenses of upto Rs. 1 lakh p.a., Personal

Accident Insurance, Performance-based Bonus, membership of two clubs and two official cars with drivers. The appointment

is for a period of 3 years commencing from February 1, 2008. Stock Options amounting to 20,00,000 shares at Rs. 50/- per

share have been offered as part of the remuneration package.

The aforesaid information is also being furnished as required under Clause 49 of the Listing Agreement.

Members are requested to pass the resolution under Item No. 8 as an ordinary resolution.

None of the Directors of the Bank, other than Mr. Romesh Sobti, is in any way concerned or interested in the passing of the

Resolution.

Item No. 9

Resolution set out in Item No. 9 is an enabling Resolution conferring authority on the Board to cover all corporate requirements

and contingencies to issue securities of appropriate nature at opportune time, including the size, structure, price and timing of

the issue(s) at the appropriate time(s). The Board will fix the detailed terms of the final size of the offering, exact timing, and

other related aspects after careful analysis and discussions with lead managers, prevailing market conditions and in line with

the extant guidelines issued by SEBI, RBI or any other statutory and/or other regulatory authorities either in India or overseas,

in this regard. The Resolution also enables the Bank to place equity capital with Qualified Institutional Buyers in accordance

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with ‘Guidelines for Qualified Institutions Placement’ forming part of SEBI (Disclosure and Investor Protection) Guidelines

2000 as amended from time to time.

Section 81 of the Companies Act, 1956 provides, inter alia, that whenever it is proposed to increase the subscribed capital of

a company by a further issue and allotment of shares, such shares shall be offered to the existing shareholders of the

company in the manner laid down in the said Section, unless the shareholders decide otherwise in a general meeting. The

listing agreement/s with the stock exchanges provide, inter alia, that a listed company in the first instance should offer all the

shares and debentures to be further issued for subscription pro rata to the equity shareholders unless the shareholders

decide otherwise in a general meeting.

Members are requested to pass the resolution under Item No. 9 as a special resolution.

None of the Directors of the Bank is in any way concerned or interested in the passing of the Resolution.

Item No. 10

Pursuant to the Resolution No.15 (Special Resolution) passed in the Thirteenth Annual General Meeting of the Bank held on

September 18, 2007, the Compensation Committee had in its discretion and pursuant to the Employee Stock Options

Scheme, granted options to employees listed hereunder at a price of Rs.50/- per share. The market price of your Bank’s

shares was Rs.71.55 as on the date of grant. The market price of the shares registered a fall in July 2008.

Names of the employees referred to above:

i) Mr. Romesh Sobti, Managing Director & CEO

ii) Mr. Paul Abraham, Chief Operating Officer

iii) Mr. Sumant Kathpalia, Head - Consumer Banking

iv) Mr. Suhail Chander, Head - Corporate & Commercial Banking

v) Mr. K. S. Sridhar, Chief Risk Officer

In accordance with Regulation 7 (5) read with Regulation 7(3) of the SEBI (Employees Stock Option Scheme and Employees

Stock Purchase Scheme) Guidelines, 1999, the Compensation Committee has, in its discretion and to minimize the loss of

benefit to these employees in view of the fall in the price of the shares, in its meeting held on July 18, 2008, granted fresh

options to the Optionholders at a price of Rs.48/- per share to such Optionholders who surrendered the options already

granted to them.

In pursuance of the above referred Special Resolution passed by the members, the Board/Compensation Committee is within

its power to vary or modify the terms of the Scheme, pursuant to and in accordance with any rules, regulations, guidelines or

directives that may be issued from time to time by any appropriate authority; and hence no approval of the members is

required for such variation/modification. However, from the point of view of good corporate governance, the matter is placed

before the members for their approval.


None of the Directors of the Bank other than the Mr. Romesh Sobti are in any way concerned or interested in the passing of

the Resolution.

Item No. 11

The present authorized capital of the Bank is Rs. 400 crore, out of which Rs.3551921000 is paid up. In view of the expanding

asset portfolio of the Bank, and in view of the capital adequacy requirements of the Basel II norms, the Bank may have to

augment its capital base in the near future. In order to facilitate further issue of equity capital, it is proposed to increase the

authorized share capital of the Bank from the existing Rs. 400 crore to Rs. 500 crore.


None of the Directors of the Bank are in any way concerned or interested in the passing of the Resolution.

By Order of the Board

Company Secretary

Mumbai, July 25, 2008

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A N N U A L R E P O R T 2 0 0 7 - 2 0 0 8

DIRECTORS’ REPORT

To all Members,

Your Directors have pleasure in presenting the Fourteenth Annual Report covering business and operations of your Bank,together with the audited accounts for the year ended March 31, 2008.

The financial performance for the year ended March 31, 2008 is summarized as under:(Rs. in crores)

As on As onMarch 31, 2008 March 31, 2007

Deposits 19037.42 17644.80

Advances 12795.31 11084.20

Operating Profit (before depreciation and provisions and contingencies) 236.35 205.67

Net Profit 75.05 68.22

The business of your Bank grew both in deposits and advances during the year. The focus during the year was on improvingearnings from core banking business and to augment the fee-based income, for which various initiatives have been taken byyour Bank.

The Operating Profit (before depreciation and provisions and contingencies) during the year under review improved toRs.236.35 crores as against Rs.205.67 crores in the previous year.

Your Bank’s Net Profit, after considering necessary provisions and contingencies and all expenses, was higher at Rs. 75.05crores as against Rs. 68.22 crores in the previous year, an increase of 10.01%.

Appropriations

Your Directors recommend appropriation of profit as under:(Rs. in crores)

Operating Profit before Depreciation and Provisions and Contingencies 236.35

Less: Depreciation on Fixed Assets 40.16

Less: Provisions and Contingencies 121.14

Net Profit 75.05

Amount available for Appropriation 75.05

Transfer to Statutory Reserve 18.76

Transfer to Capital Reserve 2.24

Proposed Dividend 19.19

Tax on Dividend 3.26

Balance carried over to Balance Sheet 31.60

Total Appropriations 75.05

Dividend

Your Directors recommend a dividend of 6% for the year ended March 31, 2008, i.e., Re.0.60 per equity share of Rs.10/-each. (Dividend for the year 2006-07 was 6%).

The Bank will be liable to pay tax on the amount of dividend paid, while it will be tax-free in the hands of the shareholders.

Future Outlook

During the year 2007-08, your Bank continued its focus on strengthening its network and infrastructure, the benefits of whichhave started materialising. In the current year, while your Bank will endeavour to retain its leadership position in vehiclefinance (wherein higher yield loans are replacing old loans of lower yields), its thrust will also be on higher growth in otherbusiness segments like Corporates and SMEs. Higher growth is being built at competitive prices, ensuring that assets arecreated at higher rates, so as to boost margins.

On the liabilities side, the strategy continues to be to broadbase the retail deposit franchise, and thus reduce the overall costof deposits. This task is being accomplished by leveraging on the expanded branch network, the pan-India marketing set-up,and alternate channels like ATMs, Internet Banking, etc. This strengthened infrastructure is being used for maximizingopportunities for cross-selling possible with the expanded customer base. For optimal realization of this potential, your Bankis introducing several new products and services in the various segments, including in the newly set up Transaction Bankingsegment, which will give impetus to Trade and Cash Management products as well as electronic services.

Your Bank’s focus on fee-based income is starting to pay dividends. Moving forward, your Bank plans to upscale non-interestincome through lucrative revenue streams like foreign exchange business, investment banking, high-end treasury products,distribution of third-party products like mutual funds and insurance, international remittances, bullion operations and transactionbanking activities, including depository business, commodity market business, etc.

10


Mr. Romesh Sobti assumed charge as Managing Director & CEO of your Bank on February 1, 2008. He has about 33 years’experience in State-owned and multinational banks in India.

Four other Top Management personnel, of proven merit and wide-ranging experience, joined the Bank along with Mr. Sobti.The new Management Team has since formulated an ambitious Business Plan for securing your Bank a position among thetop three banks in the country in 3 years, measured by the criteria of Productivity, Profitability and Efficiency.

Share Capital

As at March 31, 2008, the paid up capital of your Bank consisted of 31,98,07,936 shares of Rs.10 each. There was no changein the paid up capital of the Bank during the year under review.

Your Bank had opened for subscription on June 17, 2008, the issue of 3,51,92,064 Global Depository Receipts (GDRs) to belisted in the Luxembourg Stock Exchange, each GDR representing one equity share of the Bank of the face value of Rs. 10/-,fully paid. On the successful conclusion of the issue, your Bank’s Paid-up Capital has risen to Rs. 355.19 crores.

Tier II Capital

During the year, your Bank mobilised Rs. 50 crores through the issuance of 500 Unsecured, Non-Convertible, Redeemable,Subordinated Tier II Bonds of Rs. 10 lakhs each (Previous Year: Rs. 50 crores). These bonds qualify for classification as Tier II Capital.

No fresh issuance of Unsecured, Non-Convertible, Redeemable, Non-Cumulative, Subordinated Upper Tier II instruments of15 years’ maturity (Previous year: Rs. 208.90 crores) which qualify for classification as Upper Tier II Capital, was made, nor hasyour Bank redeemed any Unsecured, Non-convertible, Redeemable, Subordinated Tier II Bonds (Previous Year: Rs. 52 crores).

Capital Adequacy

The Capital to Risk-weighted Assets Ratio (CRAR) of your Bank as at March 31, 2008 was at a comfortable level of 11.91%,well above the regulatory minimum of 9%. Of this, Tier I CRAR was 6.70%.

Rating

Your Bank has received the highest rating “A1+” for Certificate of Deposits from ICRA Ltd. and highest rating “P1+” for FixedDeposits (upto 1 year contracted maturity) from CRISIL Ltd. Your Bank’s Tier II bonds have also been rated “LA+” and UpperTier II bonds as “LA” by ICRA Ltd. while Fitch Ratings India Pvt. Ltd. has rated them “A (ind)” and “A- (ind)” respectively.

Directors

Mrs. Kanchan Chitale joined the Board on January 31, 2003. Consequent upon the appointment of M/s. M. P. Chitale & Co.,Chartered Accountants as the Statutory Central Auditors of the Bank, Mrs. Kanchan Chitale, whose husband Mr. Uday Chitaleis a Partner in that firm, had, on ethical grounds, tendered her resignation from the Board of Directors of the Bank vide herletter dated August 14, 2007. Your Directors wish to place on record their sincere appreciation for the valuable servicerendered by Mrs. Kanchan Chitale during her tenure as Director of the Bank.

Dr. Ram Buxani joined the Board on January 14, 2000. Dr. Buxani completed his term of eight years (continuous) as Directoron January 14, 2008. Accordingly, Dr. Buxani ceased to be a Director on the Board with effect from that date. Your Directorswish to place on record their sincere appreciation for the valuable service rendered by Dr. Buxani during his tenure as Directorof the Bank.

Mr. S. Nagarajan, who joined the Bank as Joint Managing Director on August 28, 2004, submitted his resignation from theBoard on December 22, 2007. Your Directors wish to place on record their sincere appreciation for the valuable servicerendered by Mr. S. Nagarajan during his tenure as Joint Managing Director of the Bank.

Mr. Bhaskar Ghose, who took over as Managing Director on June 16, 2001, laid down the office of Managing Director w.e.f.January 31, 2008. Your Directors wish to place on record their sincere appreciation for the services rendered by Mr. BhaskarGhose and for his stewardship of the Bank during turbulent times.

Mr. Ashok Kini was appointed as an Additional Director by the Board at its meeting held on January 30, 2008, and will holdoffice as Additional Director upto the ensuing Annual General Meeting.

Mr. Romesh Sobti was appointed as an Additional Director (to be designated as Managing Director & CEO) by the Board atits meeting held on December 7, 2007, and on receipt of the requisite approval from Reserve Bank of India, has taken chargeas Managing Director & CEO on February 1, 2008 for a period of three years.

Your Bank has received notices from members pursuant to Section 257 of the Companies Act, 1956 signifying their intentionto propose the candidature of Mr. Ashok Kini and Mr. Romesh Sobti for the office of Director. Brief resumes of Mr. Ashok Kiniand Mr. Romesh Sobti are furnished in the report on Corporate Governance.

Mr. R. Sundararaman, Dr. T. T. Ram Mohan and Mrs. Pallavi Shroff, Directors, retire by rotation, and being eligible, haveoffered themselves for re-appointment.

Auditors

M/s. M. P. Chitale & Co., Chartered Accountants, the Statutory Central Auditors of the Bank, who have audited the accountsof the Bank for the year 2007-08, will retire at the ensuing Annual General Meeting and are eligible for re-appointment.Members are requested to consider their re-appointment and authorise the Board to fix their remuneration. The appointmentof the Statutory Auditors will be subject to the approval of Reserve Bank of India. The members are further requested toauthorise the Board to appoint branch auditors of the Bank in consultation with the Statutory Auditors and to fix theirremuneration.

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A N N U A L R E P O R T 2 0 0 7 - 2 0 0 8

Auditors’ Report

M/s. M. P. Chitale & Co., Chartered Accountants, the Statutory Central Auditors of the Bank, have audited the accounts of theBank for the year 2007-08 and their Report is annexed. There are no qualifications in the Auditors’ Report.

Statutory Disclosures

Information, wherever required under the Banking Regulation Act, 1949, or the Companies Act, 1956 as applicable to abanking company, has been laid out in the schedules attached and forms part of the Balance Sheet and Profit and LossAccount.

There are no material changes and commitments affecting the financial position of your Bank, which have occurred betweenthe end of the financial year 2007-08 to which the Balance Sheet relates and the date of this Report.

Considering the nature of activities as an entity in the financial services sector, the provisions of Section 217(1)(e) of theCompanies Act, 1956 relating to conservation of energy and technology absorption do not apply to your Bank. The Bank has,however, made optimum use of information technology in its operations.

The Bank had 2869 employees as on March 31, 2008. The information required under Section 217(2A) of the Companies Act,1956 and the rules made thereunder, are given in the annexure appended hereto and forms part of this Report. In terms ofsection 219(1)(b)(iv) of the Companies Act, this Report and the Accounts are being sent to the shareholders excluding theaforesaid annexure. Any shareholder interested in obtaining a copy of the said annexure may write to the Company Secretaryat the Registered Office of the Bank.

Employee Stock Option Scheme

Your Bank had instituted an Employee Stock Option Scheme to enable its employees, including Whole-time Directors, toparticipate in the future growth of the Bank. Under the scheme, options which upon exercise could give rise to the issue of anumber of shares not exceeding in the aggregate 7% of the issued equity capital of your Bank from time to time, can begranted. The Scheme is in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme andEmployee Stock Purchase Scheme) Guidelines, 1999. The eligibility and number of options to be granted to an employee isdetermined on the basis of criteria laid down in the Scheme and is approved by the Compensation Committee of the Board ofDirectors.

An aggregate of 1,00,00,000 options have been granted under the Scheme. Statutory disclosures as required by the revisedSEBI Guidelines on ESOS are given in the Annexure to this Report.

Corporate Governance

Your Bank continues its endeavour to adopt the best prevalent Corporate Governance practices. A separate report on thestatus of implementation of Corporate Governance, as required under Clause 49 (as applicable from January 1, 2006) of theListing Agreements with the relevant Stock Exchanges, is included in the section on ‘Corporate Governance’ which forms partof this Report. M/s. Bhandari & Associates, Company Secretaries, have certified that the conditions of Corporate Governanceas stipulated in Clause 49 of the Listing Agreements with the Stock Exchanges have been complied with by the Bank. A copyof their Certificate is also attached to the Section on ‘Corporate Governance’.

Directors’ Responsibility Statement

Pursuant to the provisions of section 217(2AA) of the Companies Act, 1956, your Directors hereby certify and confirm that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with properexplanation relating to material departures;

(ii) the Directors have selected such accounting policies and applied them consistently and made judgements and estimatesthat are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as at March 31, 2008and of the profit of the Bank for the year ended on that date.

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordancewith the provisions of the Companies Act, 1956 and Banking Regulation Act, 1949 for safeguarding the assets of theBank and for preventing and detecting fraud and other irregularities; and

(iv) the annual accounts have been prepared on a going concern basis.

Acknowledgement

Your Directors place on record their appreciation for the contribution made by the employees during the year towards thegrowth of your Bank.

The Directors are grateful to the shareholders of the Bank for their continued trust and confidence reposed in the Bank. TheDirectors are also grateful to the Reserve Bank of India, Stock Exchanges, the Ministry of Corporate Affairs, and Securitiesand Exchange Board of India for their guidance and support extended to the Bank.

The Board thanks its valued customers for their support and confidence, and looks forward to the continuance of this mutuallysupportive relationship in future.

For and on behalf of the Board of Directors

R. SeshasayeeMumbai, June 24, 2008 Chairman

12


ANNEXURE TO THE DIRECTORS’ REPORT

STATUTORY DISCLOSURES REGARDING ESOP (FORMING PART OF THE DIRECTORS’ REPORT FOR THE YEAR ENDED MARCH 31, 2008)

Sr. No. Particulars Key ESOP 2007

1) No. of Options granted during the year 10,000,000

2) N0. of Options issued during the year 10,000,000

3) Pricing Formula INTRINSIC VALUE

4) No. of Options vested NIL

5) No. of Options exercised NIL

6) No. of shares arising as a result of exercise of options 10,000,000

7) Options lapsed NIL

8) Variation in terms of Option NIL

9) Money realised by exercise of option NIL

10) Total number of options in force 10,000,000

11) Employee wise details of options granted to:

a) Senior Managerial Personnel 10,000,000

b) Any other employee who receives a grant in any one year of optionamounting to 5% or more of options granted during the year. NIL

c) Identified employees who were granted Options, during any one year,equal or exceeding 1% of the issued Capital (excluidng outstanding warrantsand conversions) of the company at the time of the grant. NIL

12) Diluted Earnings per share (EPS) pursuant to issue of shares on exerciseof option, calculated as per Accounting Standard (AS) 20- “Earning Per Share” 2.35

13) FAIR VALUE RELATED DISCLOSURE

Increase in the employee compensation COST computed at fair value over thecost computed using intrinsic cost method. (Rs in crore) 0.16

Net Profit, if the employee compensation cost has been computed at fair value (Rs. in crore) 74.89

Basic EPS if the employee compensation cost had been computed at fair value (Rs.) 2.34

Diluted EPS if the employee compensation cost had been computed at fair value (Rs.) 2.34

SIGNIFICANT ASSUMPTIONS USED TO ESTIMATE FAIR VALUE

Risk Free Interest Rate 7.48% TO 7.60%

Expected Life 1 YEAR TO 3 YEARS

Expected Volatility 7.80%

Dividend Yield 14.30%

Price of the underlying share in the market at the time of option grant. 71.55

Table “A” Options to Senior Managerial Personnel / Other Employees who weregranted options in excess of 5% of the total options granted during the year.

Name No. of Options

1) Mr. Romesh Sobti, Managing Director 20,00,000

2) Mr. Paul Abraham, Chief Operating Officer 20,00,000

3) Mr. Sumant Kathpalia, Head (Consumer Banking) 20,00,000

4) Mr. Suhail Chander, Head (Corporate & Commercial Banking) 20,00,000

5) Mr. K. S. Sridhar, Chief Risk Officer 20,00,000

Notes to Table A

1) Options at Sr No (1) & (2) are in excess of 5% of the total options grantedduring the year.

2) 33% of these options will vest on March 18, 2009.

33% of these options will vest on March 18, 2010.

34% of these options will vest on January 31, 2011.

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A N N U A L R E P O R T 2 0 0 7 - 2 0 0 8

MANAGEMENT DISCUSSION & ANALYSIS

Macro Economic Scenario and Banking Environment

During 2007-08, the Indian economy continued to grow at a robust pace for the fifth consecutive year, although there was

some moderation in the growth momentum during the course of the year. The real GDP growth rate moderated to an

estimated 8.7% as against 9.6% in the previous year. The moderation in growth occurred in all the three sectors, viz.,

industry, agriculture and allied activities and in services. Despite the moderation, India continued to be one of the fastest

growing economies in the world.

Agriculture and allied activities are estimated to have grown at 2.6%, industry at 8.6% and services at 10.6%. A positive

feature supporting growth has been the sharp rise in the rate of savings and investment in recent years. Despite appreciation

in the value of the Rupee, exports continued to grow at a healthy clip, rising 23% in dollar terms during 2007-08 as against

22.6% in the previous year.

Towards the close of fiscal 2007-08, inflation inched up due to the global rise in the prices of food, metals and crude oil. After

hovering around 3% in November 2007, inflation had hardened to 7.4% by end-March 2008.

The emphasis of RBI’s monetary and credit policy during the year was to ensure price stability and the stability of the financial

system, along with continuance of the growth momentum, emphasis on credit quality and credit delivery. The tight monetary

policy pursued by RBI to control inflation and money supply had a moderating influence on credit growth, which increased by

21.6% in 2007-08 as against 28.1% in the previous year. Deposit growth also moderated to 22.2% in 2007-08 as against

23.8% in the previous year.

The Indian financial markets remained largely orderly during the year 2007-08, barring the equity market which witnessed

bouts of volatility, especially from January 2008 in line with trends in major international equity markets.

During the current year, despite slowdown in the major economies of the world, the Indian economy is expected to grow at 8-

8.5%.

Global financial markets remained volatile during 2007-08 as the crises around the US sub-prime mortgage market and other

credit market exposures deepened and spread to markets for other assets. After growing at 5% in 2006 and 4.9% in 2007,

global GDP growth is estimated to have decelerated to 3.8% in 2008, following the financial crisis and continuing inflationary

pressures from volatile crude prices as well as food and commodity prices. Monetary policy authorities the world over regard

inflation as a major global risk, and remain watchful about asset prices and disturbed conditions in currency markets.

Bank’s Performance during 2007-2008

Business Performance

The salient features of your Bank’s operating performance during the year 2007-08 are summarised in the table below:

(Rs. in crores)

2007-08 2006-07 YOY growth

Interest Earned 1920.23 1500.25 27.99%

Interest Expended 1579.86 1228.85 28.56%

Net Interest Income 340.37 271.40 25.41%

Other Income:

Fee & Misc. Income 255.27 190.17 34.23%

Bad Debts Recovery 42.30 94.08 (55.04%)

HTM Securities Amortisation (39.56) (40.12) 1.40%

Total Operating Income 598.38 515.53 16.07%

Operating Expenses excluding Depreciation 362.03 309.86 16.84%

Operating Profit before depreciation and provisions 236.35 205.67 14.92%

Less : Provisions & Contingencies 121.14 103.36 17.20%

Net Profit 75.05 68.22 10.01%

14


The performance during the year reflected an improvement of 10.01% in the Net Profit of the Bank at Rs. 75.05 crores as

compared to Rs.68.22 crores last year. The Operating Profit before depreciation and provisions and contingencies was higher

at Rs.236.35 crores as compared to Rs.205.67 crores last year. The core earnings of the Bank through Net Interest Income

(NII) have shown an increase from Rs. 271.40 crores to Rs. 340.37 crores, recording a y-o-y growth of 25.41%. Interest

earnings were higher due to improvement in yield on advances by about 200 basis points over last year. Fees and miscellaneous

income [excluding Bad Debt recovery and adjustment of amortisation charge in respect of securities in the Held-To-Maturity

(HTM) category] also showed a healthy increase of 34.23% on a y-o-y basis. Operating Expenses, before depreciation,

increased to Rs.362.03 crores from Rs.309.86 crores, mainly due to the expanded branch network.

Deposits and Advances

The total Deposits of your Bank as on March 31, 2008 aggregated Rs.19037.42 crores, registering a growth of 7.89% over the

level of Deposits as on March 31, 2007. The Current and Savings account deposits of your Bank grew by 5.29% and 28.76%

respectively while Term Deposits grew by 6.91%. Although Term Deposits continue to constitute the major portion of total

deposits, the share of CASA is continuously increasing. In tune with its Retail orientation, your Bank is endeavouring to

increase the share of Current and Savings account deposits by broadening the deposit base through its wide network. The

net advances of your Bank stood at Rs.12795.31 crores as on March 31, 2008 as compared to Rs.11084.20 crores as on

March 31, 2007, recording a growth of 15.44%.

Operational / Product Performance

Retail / Consumer Banking

During 2007-2008, your Bank’s Retail (Consumer) Banking business showed 42% growth in revenue. Your Bank launched

various new products and services which were targeted at building Wealth Management capabilities as well as enhancing the

existing banking channels. With constant technology upgradation and launch of customized products and services, your Bank

was able to substantially grow the retail client base during the year.

Your Bank entered into a strategic tie-up last year with Cholamandalam MS General Insurance Co. Ltd. for bancassurance.

This tie-up will help the Bank ramp up its fee-based income significantly. Our tie-up with AVIVA helps us offer an even wider

array of Wealth Management products to our customers. Premium from bancassurance touched Rs. 15 crores during the

year. Your Bank also launched an innovative “Three-in-One” (Savings, Depository and Trading) account, along with service

enhancements in Mobile and Internet banking.

In 2007-08, your Bank achieved significant milestones in the Retail segment. The liability portfolio grew by 24% from Rs. 6594

crores to Rs. 8188 crores. Retail assets also increased by 22%, with an upward swing in the yields during the latter part of the

financial year.

In line with your Bank’s strategy of expanding banking operations to different locations in the country and into new growth

markets, the year 2007-08 saw your Bank strengthening its presence in the retail banking space with 10 new branch launches

and of 158 new ATMs.

Key initiatives last year towards better delivery were deeper focus on client engagement, compliance and operating process

management.

Consumer Finance

Consumer Finance Division (CFD) of your Bank, formerly a constituent of the erstwhile Retail Banking Group, extends asset-

backed financing for a wide range of vehicles spanning across heavy commercial vehicles, three-wheelers, cars, two-

wheelers, etc. Besides, specialty construction equipments like tippers, cranes, excavators, and loaders are also financed. The

thrust product during the year was three-wheelers, as this product line yielded higher returns.

The total disbursements made during the year 2007-08 were in excess of Rs.4358 crores to new loan accounts, numbering

over 3.38 lakhs. The focus during the year was to optimize the product mix to maximize yields and at the same time maintain

portfolio quality.

Disbursements for commercial vehicles were of the order of Rs.2521 crores as against Rs.3243 crores in 2006-07. Disbursements

in this segment were undertaken with the objective of maximization of yield and for meeting priority sector targets.

Disbursement of loans for construction equipment increased by 11% to Rs.798 crores from Rs.717 crores in the previous

year. Disbursements of two-wheeler loans showed an increase of 8% to Rs.770 crores as against Rs.711 crores in 2006-07.

Disbursements for cars were strategically kept lower in 2007-08 at Rs.269 crores as against Rs.471 crores in the previous

year, due to the lower yields obtaining in this segment.

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A N N U A L R E P O R T 2 0 0 7 - 2 0 0 8

CFD also earned fee-based income of about Rs.16.15 crores, primarily through distribution of third-party insurance products.

The operations of this Division are efficiently supported by a state-of-the-art document storage and retrieval facility at

Karapakkam unit (near Chennai) that handles loan document processing and record maintenance.

CFD’s Data Centre, also located at Karapakkam, has state-of-the-art facilities in terms of data / equipment protection

mechanisms and access rights with sensors to monitor movement within the data centre.

Priority Sector Lending

Your Bank has attained the RBI-prescribed target for total priority sector advances. Priority Sector advances aggregated

Rs.5846.84 crores at the end of March 2008, which represented 52.75% of your Bank’s Net Bank Credit (NBC) of the

previous year, as compared to 41.52% at the end of March 2007. During the year, your Bank financed over 1.22 lakh

agriculturists and direct agricultural advances represented 9.70% of your Bank’s NBC at the end of March 2008 compared to

9.36% at the end of March 2007. Other priority sector advances such as finance to Small Enterprises represented 35.56% of

your Bank’s NBC at the end of March 2008 as compared to 19.77% at the end of March 2007.

Global Markets Group (GMG)

GMG, formerly a constituent of the erstwhile Wholesale Banking Group, is a multi-task unit of your Bank comprising functions

such as: (a) support to all Business Units, including those in the corporate and consumer banking segments, in the sale of

international business products including derivatives, bullion, etc. and structured investments to high networth resident and

non-resident Indians; (b) conduct of proprietary trading in fixed income, currencies and derivative markets within the set policy

framework; and (c) management of Balance Sheet and ALM, including maintenance of SLR / CRR as well as resources of

your Bank with the objective of achieving cost reduction and yield maximization with effective control over the market and

interest rate risks.

The other tasks of GMG include coverage of relationships with domestic and foreign banks for counter-party business

support, domestic Asset Management Companies for sourcing liabilities and Development Financial Institutions for sourcing

deposits and availing of refinance for liquidity management.

During the year under review, the merchant foreign exchange business turnover shot up to Rs.35,395 crores registering a

growth of 30% over the previous year. The merchant turnover includes trade, remittances and bullion business. Revenue in

the form of commission, exchange income from cover operations and rebate amounted to Rs.38.79 crores, a growth of 38%

over the previous year.

The investment portfolio of your Bank consists of core SLR investments, non-SLR investments and RIDF bonds amounting to

Rs.7036.10 crores at an overall yield of 6.25%, while yield from SLR investments for statutory requirements was at 7.51%.

The year under review witnessed a hardening interest rate cycle with 10-year Bond yield moving in the range of 7.98% to

7.96%, thus providing limited opportunity for improving the yield through active churning of the portfolio.

Your Bank has reduced its cost of funds through accessing the Call Market with an average borrowing of Rs.521.58 crores at

5.91%. Overall, the liquidity management of your Bank was achieved with the objective of cost reduction and so as to improve

margins through deployment of surplus funds at optimal yields.

Your Bank’s proprietary trading activity covers Fixed Income Bonds, Currencies, Equity and Interest Rate Swaps. The

contribution from this activity registered a growth of 23% over the previous year. Your Bank proposes to increase the

coverage through larger flows from customers through active sale of risk management products to corporate customers.

The contribution from the Financial Institutions Group (FIG) is mainly on mobilization of liabilities and counter-party dealing in

money and foreign exchange markets. Term deposits from this segment, comprising commercial banks, co-operative banks,

asset management companies and Development Financial Institutions, amounted to Rs.3500 crores as at close of year under

review. Your Bank was able to solicit active support from these market participants for increasing its market presence.

During the year under review, your Bank increased its relationship with foreign banks by adding 10 new relationships, thus

increasing the correspondent network to 342, with 86 banks extending credit limits to your Bank under various categories of

Trade, Money Market lines and Treasury limits. Under the Rupee Drawing Arrangement and the Money Transfer Scheme,

your Bank has tied up with 22 Exchange Houses / Money Transfer Companies covering UAE, Hong Kong, Qatar and some

parts of Europe / USA. Efforts are on to expand global coverage during the current year. Through these schemes, your Bank

receives a large volume of transaction flow everyday. Your Bank also handled successfully the Haj remittance for the second

year in a row, in association with National Commercial Bank, Saudi Arabia.

Corporate & Commercial Banking (C&CB)

The Corporate & Commercial Banking Division, formerly a constituent of the erstwhile Wholesale Banking Group, caters to

the banking and financial needs of large corporates, small and medium enterprises, co-operative banks and financial institutions.

16


The division offers a wide range of banking and finance solutions to meet the needs of its clients. The objective is to build

holistic, long-term and mutually beneficial relationship through cost effective and efficient services, utilising technology

solutions and skilled manpower.

Persistent efforts to improve product quality and service standards have led to a significant increase in business of the

division. Loans and advances grew by 33% and the number of clients increased by 30% over the previous year.

The division’s focus on off-Balance Sheet products and non-funded business led to an increase in fee income by 39% over

the last financial year. Constant efforts to improve returns led to an increase in yield on advances by over 150 basis points.

Transaction Banking Group

The Transaction Banking Group has recently been created with a view to develop an efficient, world class Transaction

Banking business with consistent ‘best-in-class’ service delivery. Transaction Banking will bring together various existing

products under one umbrella and develop new innovative products to add value to the clients. It will address all client

segments within Corporate and Consumer Banking.

Transaction Banking will focus on Cash Management, Trade Services and Financing, Supply Chain, Global Remittances,

Warehouse Receipt Financing and Capital and Commodity Markets. It will also enhance electronic delivery to the client

through various channels and focus on development of technological value-added solutions to the clients with a view to

increase flow of transactions through the Bank.

The Capital and Commodity Markets Division, formerly a constituent of the erstwhile Wholesale Banking Group and now a

part of the newly constituted Transaction Banking Group, focuses on serving Capital and Commodity Exchanges and brokers

empanelled with these Exchanges. Your Bank has the unique distinction of being a Clearing-cum-Settlement Banker to all the

major Exchanges viz., NSE, BSE, NCDEX, MCX and NMCE.

Your Bank offers the entire range of products and services required by Exchanges and members. Your Bank has recently

become the Clearing Bank to the first Energy Exchange of India, the Indian Energy Exchange to cover participants in the

Energy segment. Your Bank is also a Depository Participant of NSDL, CDSL, and an empanelled DP with NCDEX and MCX,

thereby offering DP services to both securities and commodities segments. With more accreditations like Category I Merchant

Banker (with SEBI), Debenture Trusteeship, e-broking facility with select brokers and offer of on-line investment / redemption

facility with leading Mutual Funds to investors, your Bank is looking to further upgrade its presence in this critical business

segment.

Your Bank’s Capital Market Exposure which was at 31.29% of networth as on March 31, 2007 remained within the permissible

level as at March 31, 2008 at 33.20%, even after the implementation of the new RBI guidelines, which came into effect from

April 1, 2007.

Investment Banking

The Investment Banking Division had entered into alliances with investment banks in Europe and USA. These alliances have

led to cross-border transactions which are in various stages of completion.

These alliances, along with relationships with existing corporate clients of your Bank, will facilitate increased participation by

the Division in the placement of equity and debt issuances and give a fillip to its corporate advisory as well as corporate

finance activities. The Division also offers services such as valuations and investor relations.

Factors such as the increasing number of India-funds and private equity funds, the need for capital (debt and equity) by listed

and unlisted companies and the needs of the large corporate client base of your Bank are expected to boost the fee-based

income earned by the Division in the coming years.

Financial Restructuring and Reconstruction Group (FRRG)

All activities of restructuring and recovery of bad loans are now under the umbrella of FRRG, formerly known as Asset

Management Group. Your Bank has actively utilized the Securitization Act and guidelines of the Reserve Bank of India for

enforcing securities charged to your Bank as well as for sale of non- performing assets to asset reconstruction companies and

/ or other banks and financial institutions. Your Bank has recovered an amount of Rs.3841.79 lakhs in written-off accounts,

besides profit from other sale of NPAs / written-off accounts to ARCs / banks.

Net NPAs of your Bank stood at 2.27% as at March 31, 2008 as compared to 2.47% in the previous year. But for classification

as NPA of one major account, which many other banks are yet to classify as an NPA, the percentage of Net NPAs would have

been still lower at 1.50% (previous year: 1.46%). Further, owing to the inherent nature of commercial vehicle financing

business which forms a major chunk of the advances portfolio of your Bank, a substantial part of NPAs are those that continue

to be serviced post-classification as NPA, besides being secured by securities that are enforceable.

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A N N U A L R E P O R T 2 0 0 7 - 2 0 0 8

Branch Network

As at the end of financial year 2007-08, your Bank had a total of 180 branches in 147 geographical locations and 183 off-site

ATMs. Your Bank thus has presence in 28 States and Union Territories. In addition, your Bank also has representative offices

in London and Dubai. As on March 31, 2007, your Bank had a network of 170 branches spread across 141 locations and 99

off-site ATMs.

Banking Operations

Your Bank has strengthened the policy framework on “Know Your Customer” (KYC) norms and “Anti Money Laundering”

(AML) measures from time to time, in line with the policies of Reserve Bank of India. Your Bank has implemented a simplified

procedure of “Know Your Customer” which will benefit lower income group persons to open accounts with minimal documentation.

Your Bank is a member of Banking Codes and Standards Board of India (BCSBI), which was set up to ensure that banks in

India adhere to a voluntary code, which sets minimum standards for fair treatment to customers availing bank services. Your

Bank has made a commitment to adhere to all the provisions of the Code prescribed by BCSBI. The Code is displayed at all

the branches and the same is also posted on our website in thirteen languages.

The clearing process at New Delhi and Mumbai has been centralised for quicker and efficient operations. Your Bank is in the

process of centralization of inward / outward clearing at other metropolitan centers. Your Bank was in preparedness for

Cheque Truncation System (CTS) and was included in the Second Phase of ‘live run’ conducted by Reserve Bank of India.

Your Bank is now one amongst the 20 banks which have gone live on CTS at Delhi. This will facilitate faster and error-free

processing of the cheques.

Your Bank has revised and adopted a comprehensive policy, in pursuance of RBI advices, on settlement of claims in respect

of deceased depositors. The policy covers all types of deposits, and has simplified the procedure for settlement.

Your Bank has formulated and adopted the “Best Practice Code” relating to transaction processing with the objective of

documenting the procedures in line with national and international best practices, as mandated by RBI.

Your Bank has also put in place a “Deposit Policy” and a “Fair Practice Code”. While the former outlines the guiding principles

in respect of various deposit products of your Bank, the terms and conditions governing the operations of these accounts and

the rights of depositors, the Fair Practice Code is a voluntary code establishing standards to be followed by all our branches

in their dealings with the customers.

Your Bank has also framed “Citizen’s Charter” to promote fair banking practices and to give information in respect of various

activities relating to customer service.

During the year, your Bank has put in place a “Compensation Policy” as a part of commitment to our customers to

compensate them in the event of your Bank being unable to meet the service levels committed to the customers. The main

objective of the Policy is to establish a system whereby your Bank shall compensate the customer for any direct and actual

loss by way of internal loss / payment of charges by customer due to deficiency in service of your Bank, to the extent

mentioned in the policy. The policy is based on the principles of transparency and fairness in the treatment of customers.

Prompt, efficient and courteous service is a key to success for any service organisation and your Bank has recognized it and

has formulated a “Grievance Redressal Policy”. The Policy aims to minimize the instances of customer complaints through

effective service delivery and review mechanism and prompt redressal of customer grievances.

Enterprise-wide Risk Management

Your Bank, with the assistance of KPMG a leading international consultant, had established an Enterprise-wide Risk Management

Department responsible for Bank-wide risk management covering credit risk, market risk and operational risk, independent of

the business segments. The Risk Management Department focuses on identification, measurement, monitoring and controlling

of risks across various segments. Your Bank has been progressively adopting the best international practices so as to

continually reinforce its risk management functions.

Basel II – Reinforcement of Risk Management

Reserve Bank of India has issued guidelines for implementation of New Capital Adequacy Framework. Your Bank had initiated

meaningful initiatives in this regard well in advance, and is already equipped to adopt the new capital adequacy framework

under Basel II as per RBI guidelines. The New Capital Adequacy Framework will help the Bank in moving towards allocation

of capital based on risk sensitivity.

Your Bank has acquired a highly sophisticated system which supports adoption of advanced approaches under New Capital

Adequacy framework for computation of capital charge towards credit risk, market risk and operational risk. The system is

under implementation. However, the Bank has been computing capital charge as per the New Capital Adequacy Framework

18


under parallel run since June 2006. Your Bank’s CRAR under the new framework reflects improvement over the existing

norms, largely due to the retail assets portfolio.

Your Bank, in addition to compliance with Pillar I requirements under Basel II, has taken meaningful steps towards identification

and measurement of risks as defined under Pillar II and towards creation of a framework towards Internal Capital Adequacy

Assessment Process (ICAAP).

Credit Risk:

Your Bank manages credit risk comprehensively, both at ‘transaction level’ and at ‘portfolio level’. Some of the major initiatives

taken in this regard are listed below:

• Your Bank uses a robust risk rating framework for evaluating credit risk of the borrowers. Segment-specific rating models,

which are equipped with transition matrix capabilities, are used.

• Risks on various counter-parties such as corporates, banks, etc. are monitored through counter-party exposure limits,

governed by country risk exposure limits in case of international trades. Rating-based exposure limits have been defined

on counter-parties.

• Your Bank manages risk at the portfolio level through prudential exposure limits to mitigate concentration risk.

• Your Bank has a well-diversified portfolio across various industries and segments, as illustrated by the following data:

� Retail exposures (which provide the benefit of wider diversification) account for as much as 57% of the total

advances.

� Corporate exposure is widely diversified across more than 85 industries, thus insulating the portfolio from industry

cycles.

The above initiatives support qualitative business growth while managing inherent risks within the risk appetite.

Market Risk:

The key sources of market risk are liquidity risk, interest rate risk, price risk and foreign exchange risk. Your Bank has

implemented a state-of-the-art Treasury system ‘OPICS’ acquired from Misys, London, which supports robust risk management

capabilities and facilitates Straight Through Processing. OPICS also supports tailoring of products to customers’ needs.

Market risk is managed effectively through a comprehensive policy framework which provides various tools such as Mark-to-

Market, Duration analysis, Value-at-Risk, as well as through operational limits such as stop-loss limits, exposure limits, deal-

size limits, maturity ladder etc. Investment portfolio is constantly re-jigged, in line with market movements and expectations,

so as to ensure minimum risk in the portfolio.

Operational Risk:

Operational Risk is managed by addressing people risk, process risk, systems risk and risks arising out of external environment.

Your Bank has an efficient audit mechanism, involving periodical on-site audit, concurrent audits on the spot and off-site

surveillance enabled by your Bank’s advanced technology and core banking system.

Your Bank has initiated the process of putting in place Operational Risk Management Framework using sophisticated tools

such as:

• Key Risks Indicators

• Score Cards

• Risk Events

• Loss Data

• Near Miss Events

The framework would help in mitigation of operational risks and optimization of capital requirement towards operational risks

under Basel II norms.

Systems Risk:

As part of systems-related Operational Risk Management initiatives, your Bank has achieved the following:

• Implemented a comprehensive Business Continuity Plan (BCP) to ensure continuity of its critical business functions and

extension of banking services to its customers.

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A N N U A L R E P O R T 2 0 0 7 - 2 0 0 8

• Established an effective Disaster Recovery site at a distant location, with online real-time replication of data, both in

Mumbai and Hyderabad.

• Comprehensive IT security framework has been put in place to ensure complete data security and integrity.

• Housed its data center in a professionally managed environment, with sophisticated and fool-proof security features and

assured supply of utilities.

Asset Liability Management

Your Bank’s Asset Liability Management (ALM) system supports effective management of liquidity risk and interest rate risk,

covering 100% of its assets and liabilities.

• Liquidity Risk is monitored through Structural Liquidity Gaps, Dynamic Liquidity position, Liquidity Ratios analysis and

Behavioral analysis, with prudential limits for negative gaps in various time buckets.

• Interest Rate Sensitivity is monitored through prudential limits for Rate Sensitive Gaps and other risk parameters.

• Interest Rate Risk on the Investment portfolio is monitored through Modified Duration on a daily basis. Optimum risk is

assumed through duration, to balance between risk containment and profit generation from market movements.

ALCO meetings were convened frequently during FY 2007-08, wherein analytical presentations provided detailed analysis of

liquidity position, interest rate risks, product mix, business growth achieved vis-à-vis budgeted growth, interest rate outlook,

etc. which facilitated regular review of business strategies and undertaking of new initiatives.

The interest rate outlook projected in ALCO meetings during the last three years have largely been borne out by the actual

interest rate movements.

In order to adopt more advanced and sophisticated techniques of assets-liabilities management, Bank has acquired state-of-

the-art ALM system, which is in the final stages of implementation.

Your Bank is also in the process of implementing an advanced system for Funds Transfer Pricing (FTP), which shall reinforce

the pricing mechanism and enhance performance management framework.

Other Initiatives underway

With the objective of enhancing of operational efficiency and maximization of returns, your Bank has acquired the following

systems which are under implementation:

• Customer Relationship Management

• Product Profitability and Customer Profitability

• Enterprise-wide Financial Planner.

The risk management framework created in your Bank supports rapid and qualitative growth with optimization of risks and

performance management.

Internal Control Systems and their adequacy

Operational Controls

Your Bank has laid down the policy framework on “Know Your Customer” (KYC) norms and “Anti Money Laundering

Measures” (AML). The policy has been framed on the basis of recommendations of the Financial Action Task Force and the

paper issued on Customer Due Diligence for Banks by the Basel Committee on Banking Supervision. The AML software that

has been implemented effectively helps control operations risk.

In accordance with RBI’s recommendations, a Committee on Procedures and Performance Audit on Public Service in Banks

(CPPAPS), comprising senior functional heads of your Bank and a few customers has been established. Your Bank has also

constituted a Customer Service Committee of the Board of Directors (CSCB) to review the performance of the CPPAPS.

Customer Service

Your Bank has constituted a Branch Level Customer Service Committee (CSC) at all Branches comprising employees and

customers of the Branch. CSC meetings are convened every month to examine complaints / suggestions, cases of delay,

difficulties faced / reported by customers/ members of the Committee. Feedback and suggestions are submitted to CPPAPS.

CPPAPS examines and provides inputs to the Customer Service Committee of the Board for necessary policy / procedural

action.

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Grievance Redressal Mechanism

Your Bank has designed an escalation process for all customer complaints received at branches and at Corporate Office. A

quarterly report is placed before the Board of Directors on the complaints handled. Based on the recurrence of complaints in

specific areas, causative factors are identified and necessary remedial measures are initiated.

Your Bank maintains a dedicated page for lodging of complaints and complaint redressal mechanism on its website

“www.indusind.com”, where information on the escalation process and the details of the Nodal Officer to receive complaints

has been furnished. These details are also displayed at your Bank’s branches. Details of the Banking Ombudsman Scheme

2006 are also displayed at branches and hosted on the website.

Your Bank has also created a link on its website for a “Complaint Form”, which gives opportunity to all customers to convey

their grievances conveniently.

Inspection and Audit

Your Bank is expanding its footprint and growing its business volumes at an accelerating pace. In the face of this expansion

as well as in step with the changes in the regulatory environment, your Bank’s Internal Audit function is geared to ensure that

business units adhere to compliance requirements & internal guidelines on an ongoing basis.

Your Bank continually monitors its level of operational efficiency vis-à-vis internal control guidelines, through comprehensive

processes established for its Auditors to ensure that all facets of the Bank’s business operations are subjected to thorough

scrutiny.

In consonance with regulatory guidelines, your Bank has adopted a ‘Risk-Based’ Internal Audit approach, which entails the

allocation of supervisory resources and management attention calibrated in accordance with the auditee’s risk profile.

Accordingly, your Bank undertakes inspection of its business units at a frequency synchronized to the risk profile of each unit

in line with the spirit of Risk-Based Internal Audit.

To complement the Bank’s Internal Audit function, business emanating from a number of its large branches, Depository

Operations, Integrated Treasury & the Consumer Finance Division are subjected to concurrent audit, thus continuously

evaluating the health of more than 70% of the Bank’s business.

Additionally, Depository Operations at several other branches are subjected to concurrent audit to ensure a wider coverage of

its depository business by external scrutiny.

In order to effectively address business concerns and to react with speed, the Internal Audit function is decentralized, and has

been functioning as an integrated unit during the year. Auditors at different locations are equipped to evaluate all aspects of

the Bank’s business.

Your Bank’s on-line surveillance capability using its fully networked Core Banking Software, well-defined & strong internal

controls, need-based access to computer systems and clear audit trails have helped to mitigate operational risks.

To facilitate ownership of the quality control mindset, all exception reports are now available on the system, for viewing and

use by business units. There is a constant push to automate audit activities in order to enhance transparency and standardization,

as well as to speed up the availability of MIS to Top Management.

In line with Corporate Governance ‘best practices’, the Internal Audit function reports directly to the Audit Committee of the

Board, which regularly reviews the effectiveness of controls and compliance with regulatory guidelines, besides rendering

effective guidance to ensure conformity with best practices in the area of Internal Audit.

Human Resources / Industrial Relations

Human Capital is a key resource to any business entity. The Human Resource function’s focus is to ensure employee

satisfaction and retention by creating a performance-enabling work culture within the organization. The function focuses on

Manpower Planning, Recruitment & Selection, Learning & Development, Performance Management, Compensation

Management, Career Planning and Employee Relations.

In FY 2007-08, your Bank’s employee strength increased from 2613 to 2869. A rigorous selection process helped in ensuring

the right fit and alignment of relevant personal competencies to the job requirements.

Increased emphasis has been placed on imparting contemporary skills to employees through Learning and Development

activities. During the year, 340 training programs were conducted for more than 4500 participants drawn from over 120

branches countrywide. Training delivery in areas of employee induction, product training, process training, soft skills training

and specialized domain training programs exceeded 45,000 man-hours. The training delivery was managed in-house as well

as through domain experts, in a highly cost-effective manner. High performers were nominated to external training institutes

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A N N U A L R E P O R T 2 0 0 7 - 2 0 0 8

such as NIBM, IIBF, ASCI, BTC, etc., to further hone their skills and competencies and bring cutting-edge knowledge to your

Bank. Emphasis was laid on creating avenues for employee engagement by organizing get-togethers and participation in

various sports tournaments within and outside your Bank.

Employee Stock Option Scheme

Pursuant to the approval granted by you, the Compensation Committee of the Board of Directors of your Bank has granted

upto March 31, 2008, an aggregate of 1,00,00,000 options to five senior employees (including 20,00,000 options to

Mr. Romesh Sobti, Managing Director & CEO) entitling the holders to equivalent number of shares as per the provisions of the

Scheme.

Information Technology

Information Technology plays a major role in realization of the goals of excellent customer service along with increasing

profitability. Your Bank has always been at the forefront in deploying the latest, state-of-the art technology, a fact which has

been endorsed by a prestigious industry association like the IBA and by IT organizations like Misys International, IBM etc.

With earlier initiatives like the robust infrastructure with fall-back communications links running smoothly, the following new

initiatives were taken during 2007-08.

Your Bank adopted a server and storage consolidation strategy, with the latest hardware & multi-operating system deployment

to reap benefits of virtualization and on-demand technologies. This enables your Bank to improve the cost-benefit ratio in

technology implementation.

Your Bank’s core banking software was afforded a major upgrade to support new functionality, enhanced security and efficient

processing to satisfy new business requirements and to facilitate launch of new products. Internet Banking, a major customer

delivery channel, has also been upgraded with DataBase on Oracle to support new functionality and cater to a larger

customer base. Centralization and automation of TDS System, and automation of ECS processing etc. were undertaken to

improve processes and minimize manual intervention.

For enhancing customer delight, your Bank has deployed an internet payment gateway, a contact centre and introduced a 3-

in-1 account. The payment gateway enables your Bank’s customers to transact their banking business on-line with various

merchants such as IRCTC (for rail bookings), Sharekhan (for on-line trading), Bill Desk (for on-line payment of utility bills), to

name a few. The contact centre provides your Bank’s customers an automated interactive voice response system, besides

interaction with the agents, through which customers can perform transactions such as funds transfer, instruct “Stop Payment”

of their cheques, request for issue of cheque-book, make balance enquiry, request for Statement of Account, etc. The 3-in-1

account, i.e., movement account and DP account from your Bank and share trading account from Religare, has enabled your

Bank’s customers to undertake on-line equity trading with ease.

With the objective of improving customer service, more processes have been centralized. For process improvement and to

have a better operations control, several new systems have been implemented, viz. TDR Printing System, Account Opening

Data Entry System, Standing Order Processing System, Cheque Book Request / Issue System, Cheque Truncation System,

Inward Clearing Maker / Checker System etc.

With a view to augmenting fee-based income, your Bank has tied up with several insurance companies, mutual funds, etc. To

support and grow this line of business, your Bank has developed in-house systems such as AcciProtect for third party non-life

insurance and mutual fund business.

Your Bank has also developed an effective CRM system and data warehouse for better regulatory compliance as well as to

monitor Bank’s performance in various business spheres on different parameters such as efficiency, expenses, customer

profitability etc.

Corporate Communications

During the year 2007-08, your Bank carried out product-specific campaigns to disseminate information about the new

products and services. Apart from pan-India print campaign through vernacular and local dailies, this year, there was also

major focus on sponsorships with service organizations / NGOs and corporate bodies to gain effective visibility. One-off

advertisements were also released to mark special occasions and events. During the year, there was also focus on the

international market, and events were organized in the Middle East.

Some of the major events which your Bank associated with were Pravasi Bharatiya Divas, Khaleej Times - NRI Show (Dubai),

Branch specific events, and global events with Indian Merchants Chamber.

22


THE MISSION

“To position IndusInd Bank Limited as a Top 3 performer in the new private bank space in 3 years measured

by the 3 parameters of Profitability, Productivity and Efficiency.”

QUALITY POLICY

“IndusInd Bank is committed to meet and strive to exceed customer requirements through timely, error-free

and courteous service. We shall continually improve the effectiveness of our work process through

training, customer feedback and review of systems.”

CORPORATE GOVERNANCE

Certificate on Compliance with the Conditions of Corporate Governance under Clause 49 of the Listing Agreement(s)

To the members of IndusInd Bank Limited:

We have examined the compliance of conditions of Corporate Governance by INDUSIND BANK LIMITED (“the Bank”) for theyear ended on 31st March 2008 as stipulated in Clause 49 of the Listing Agreement of the said Bank with the Stock Exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limitedto procedures and implementation thereof adopted by the Bank for ensuring compliance with the conditions of CorporateGovernance. It is neither an audit nor an expression of opinion on the financials statements of the Bank.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Bank hascomplied with the conditions of Corporate Governance as stipulated in the above-mentioned Listing Agreement.

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

For Bhandari & AssociatesCompany Secretaries

S. N. BhandariProprietorC. P. 366

Mumbai, June 23, 2008

Certification by the Chief Financial Officer and the Managing Director

In terms of the revised Clause 49 of the Listing Agreement, the Certification by the Managing Director (CEO) and the ChiefFinancial Officer of the Bank, on the financial statements and the internal controls relating to financial reporting has beenobtained and submitted to the Board.

The Bank’s Philosophy on the Code of Corporate Governance

• Your Bank believes that consistent implementation of good Corporate Governance practices contributes towards developingand sustaining the best operating systems and procedures.

• The systems which have evolved allow sufficient freedom to the Board and the Management to make decisions and takeactions towards the growth of the Bank, and simultaneously remain within the framework of effective accountability. Tomaintain high standards of good Corporate Governance, your Directors have formed various Committees of the Board.The Committees meet regularly to achieve their specific objectives.

• Your Bank is committed to operate on commercial principles ensuring, at the same time, the need to remain accountable,transparent and responsive to its stakeholders.

• Your Bank acknowledges the need to uphold the integrity of every transaction it enters into and believes that honesty andintegrity in its internal conduct would be judged by its external behaviour. In this context, your Directors have adopted a‘Code of Conduct for Directors and Senior Management’. This Code attempts to set forth the guiding principles on whichthe Bank shall operate and conduct its daily business with its multitudinous stakeholders, government and regulatoryagencies, media, and anyone else with whom it is connected.

Code of Conduct for Directors and Senior Management

The Board of Directors has laid down a code of conduct for all Board Members and Senior Management1 of the Bank. Thesaid code of conduct has been uploaded on the website of the Bank (www.indusind.com) under the ‘Shareholder-relatedMatters’ section. The same is available for reference in the following URL: http://www.indusind.com/downloads/CodeOfConduct06.pdf

Declaration by the Managing Director: All members of the Board and Senior Management have affirmed to the Board, ofhaving complied with the ‘Code of Conduct’ during the year ended March 31, 2008 and no violation of the ‘Code of Conduct’has been reported during the year.

1 For this purpose, the term ‘Senior Management’ means personnel of the Bank who are members of its core management team, excluding Board of Directors.

This comprises members of management who are of the level of functional heads.

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A N N U A L R E P O R T 2 0 0 7 - 2 0 0 8

Board of Directors

i. Composition

The Board comprises Directors who have specialised knowledge and professional experience in diverse fields. Informationin respect of each Director is given below:

Name of Director Nature of Directorship Special Knowledge / OccupationPractical Experience

Mr. R. Seshasayee Part-time Finance and General Managing Director ofNon-executive Chairman Management Ashok Leyland Ltd.

Mr. R. Sundararaman Independent Banking Retired as Dy. ManagingNon-executive Director of State Bank of India

Mr. T. Anantha Narayanan Independent Agriculture & Rural Retired Executive DirectorNon-executive Economy (Practical (Finance) of Ashok

Experience), Finance Leyland Ltd.(Special Knowledge)

Dr. T.T. Ram Mohan Independent Banking & Finance Professor - Finance &Non-executive Accounting, IIM Ahmedabad

Mrs. Pallavi Shroff Independent Law Practising AdvocateNon-executive

Mr. Premchand Godha Independent Finance & SSI IndustrialistNon-executive (Practical Experience)

Mr. Ajay Hinduja Non-executive Banking & Finance Industrialist. Director,IndusInd InternationalHoldings Ltd., Mauritius,a promoter company.

Mr. S. C. Tripathi Independent Rural Economy & I.A.S. (Retd.),Non-executive Cooperation Advocate

Mr. Ashok Kini Independent Banking Retired as ManagingNon-executive Director of State Bank of India

Mr. Romesh Sobti Whole-time Director Banking Managing Director & CEO

ii. Meetings

During the year ended March 31, 2008, 8 meetings of the Board were held on, May 25, 2007, July 25, 2007, September17, 2007, October 27, 2007, November 27, 2007, December 7, 2007, January 30, 2008 and March 28, 2008. Details ofattendance at the Board Meetings and the previous Annual General Meeting, other Directorships, Membership andChairmanship of Committees pertaining to each Director are as follows:

Name of the Director No. of Board No. of other Public No. of Committees Whether attendedMeetings attended Limited Companies of the Bank in last AGM

in which Director7 which member

Mr. R. Seshasayee 7 8 4 Yes

Mr. R. Sundararaman 8 Nil 7 Yes

Mr. T. Anantha Narayanan 7 5 9 Yes

Dr. T. T. Ram Mohan 8 3 5 No

Mrs. Pallavi S. Shroff 2 5 3 No

Mr. Premchand Godha 4 3 1 Yes

Mr. Ajay Hinduja 5 1 1 Yes

Mr. S. C. Tripathi 7 8 3 No

Mr. Ashok Kini1 1 3 1 No

Mr. Romesh Sobti2 1 Nil 9 No

Mrs. Kanchan Chitale3 2 Nil 5 No

Dr. Ram Buxani4 6 Nil 3 Yes

Mr. Bhaskar Ghose5 7 1 10 Yes

Mr. S. Nagarajan6 6 1 7 Yes

1 Inducted on the Board as Additional Director w.e.f. January 30, 2008.2 Assumed charge in the Bank w.e.f. February 1, 2008. Approval of RBI received on January 14, 2008 for Mr. Sobti’s appointment as

Managing Director & CEO.3 Resigned from the Board w.e.f. August 14, 20074 Retired from the Board w.e.f. January 14, 20085 Resigned from the Board w.e.f. January 31, 20086 Resigned from the Board w.e.f. December 22, 20077 Excludes Foreign Companies, Private Limited Companies, Trusts, etc.

24


iii. Remuneration

Non-executive Directors’ compensation: The members of the Bank, at the 11th Annual General Meeting held onSeptember 3, 2005, passed a resolution authorising the Board of Directors of the Bank to fix the sitting fee payable toNon-executive Directors in accordance with Rule 10B of the Companies (Central Government’s) General Rules & Forms,1956 as amended from time to time read with section 310 of the Companies Act, 1956, or any other rule, regulation,notification issued by any competent authority from time to time as may be applicable.

Subsequently, SEBI, vide circular No SEBI/CFD/DIL/CG/1/2006/13 dated January 13, 2006 has clarified that the requirementof obtaining prior approval of shareholders at a general meeting shall not apply to the payment of sitting fees to Non-executive Directors, if made within the limits prescribed under the Companies Act, 1956.

The Bank has not granted stock options to any of the Non-executive Directors. The details of sitting fees paid to the Non-executive Directors for attending the Board and Committee meetings held during the year 2007-08 are as under:

Name of Director Salary *(including Sitting Fee (Rs.) Total (Rs.)perquisites &

allowances)

Mr. R. Seshasayee - 2,70,000 2,70,000

Dr. Ram Buxani - 1,90,000 1,90,000

Mr. R. Sundararaman - 5,10,000 5,10,000

Mrs. Kanchan Chitale - 1,50,000 1,50,000

Mr. T. Anantha Narayanan - 5,10,000 5,10,000

Dr. T. T. Ram Mohan - 3,90,000 3,90,000

Mrs. Pallavi S. Shroff - 1,10,000 1,10,000

Mr. Premchand Godha - 1,00,000 1,00,000

Mr. Ajay P. Hinduja - 1,10,000 1,10,000

Mr. S. C. Tripathi - 2,30,000 2,30,000

Mr. Ashok Kini - 40,000 40,000

The criteria for making payment of remuneration to the Non-executive Directors are as follows:

a. An amount of Rs.20,000/- per meeting is being paid towards sitting fee for attending meetings of the Board,Committee of Directors and the Audit Committee, to the Non-executive Directors in accordance with Rule 10B of theCompanies (Central Government’s) General Rules & Forms, 1956.

b. With effect from May 2, 2006, the Board has decided that an amount of Rs.10,000/- per meeting be paid as SittingFee to the Non-executive Directors for attending meetings of Committees other than those mentioned in (a) above.

Whole-time Directors’ compensation: The appointment of Whole-time Directors is made with the approval of theReserve Bank of India.

Mr. Bhaskar Ghose, former Managing Director: The remuneration paid upto January 31, 2008, excluding contributionto provident fund and gratuity, comprised the following: Salary of Rs.25.00 lakhs p.a., Other Allowances of Rs.18.99 lakhp.a. (which does not include perquisite value of Rs.14.40 lakh for the facility of company leased and furnishedaccommodation), and official car with driver. No stock options had been offered as part of the remuneration package orotherwise.

Mr. S. Nagarajan, former Joint Managing Director: The remuneration paid upto December 21, 2008, excludingcontribution to provident fund, gratuity and pension, comprised the following: Salary of Rs.24.00 lakh p.a., Other Allowancesof Rs.24.00 lakh p.a., free accommodation, and official car with driver. No stock options had been offered as part of theremuneration package or otherwise.

Mr. Romesh Sobti, Managing Director:

The details of the terms of appointment as approved by the Reserve Bank of India in respect of Mr. Romesh Sobti,Managing Director & CEO of the Bank w.e.f. February 1, 2008, comprise the following: Salary of Rs. 100.80 lakhs p.a.,Other Allowances of Rs. 122.95 lakhs p.a., facility of company-leased and furnished accommodation, Provident Fund at12% of Salary, Gratuity at one month’s Salary, Pension at two months’ Salary, Medical Expenses of upto Rs. 1 lakh p.a.,Mediclaim for self and family members, Personal Accident Insurance, Performance-based Bonus, membership of two clubsand two official cars with drivers. The appointment is for a period of 3 years commencing from February 1, 2008. StockOptions amounting to 20,00,000 shares at Rs. 50/- per share have been offered as part of the remuneration package.

iv. Shareholding

The Equity shares held by Directors as on March 31, 2008 are (i) Mr. T. Anantha Narayanan – 580 (0.0002%); (ii) Mr.Premchand Godha – 100 (0.0000%) and (iii) Mr. Ajay Hinduja – 83,900 (0.0262%). No Director of the Bank holds sharesin your Bank for other person/s on a beneficial basis. No Director holds any other security issued by the Bank.

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A N N U A L R E P O R T 2 0 0 7 - 2 0 0 8

Details of Directors to be appointed / reappointed at the AGM

Mr. Ashok Kini was appointed Additional Director (Non-executive) of your Bank by the Board of Directors at its meeting heldon January 30, 2008.

Mr. Romesh Sobti was appointed Additional Director (Whole-time Director) of your Bank on December 7, 2007 and, on receiptof the requisite approval from Reserve Bank of India, has taken charge as Managing Director & CEO on February 1, 2008. Mr.Sobti will hold office as Additional Director upto the date of the ensuing Annual General Meeting.

Your Directors welcome Mr. Ashok Kini and Mr. Romesh Sobti on the Board and look forward to valuable contributions fromthem. Your Bank has received valid notices from members for their appointment as Directors under Section 257 of theCompanies Act, 1956.

Mr. R. Sundararaman, Dr. T. T. Ram Mohan and Mrs. Pallavi Shroff, Directors, retire by rotation at the forthcoming AnnualGeneral Meeting, in accordance with Article 112 of the Articles of Association of your Bank and the applicable provisions ofthe Companies Act, 1956.

Mr. R. Sundararaman, Dr. T. T. Ram Mohan and Mrs. Pallavi Shroff, being eligible, have offered themselves for re-appointmentas Directors of the Bank.

A brief profile of the Directors seeking re-appointment / appointment is given below:

Director Qualification and Expertise in specific Date of Name of Number of Shareholding

Experience functional areas Appointment companies in Committees (No. of shares)

which Director (of other

companies in

which member)

Mr. R. Sundararaman M. Com, CAIIB Banking, including 30.10.2002 Nil Nil Nil

appraisal of credit

requirements of SSI.

Dr. T. T. Ram Mohan B-Tech (IIT, Mumbai) Banking & Finance 16.01.2006 • Brics Securities Ltd. 5 Nil

PGDM (IIM, Calcutta) • Gujarat Narmada Valley Fertilizers Company Ltd.

Ph. D (Stern • Rail Vikas Nigam Ltd.

School, NY) • International Asset Reconstruction Company Pvt. Ltd.

• SBI Pension Fund

Mrs. Pallavi Shroff B.A. (Economics Law 13.06.2006 • Abhishek Industries Ltd. 5 Nil

Hons.), M.M.S., • Juniper Hotels Ltd.

LLB • Kotak Mahindra Old Mutual Life Insurance Ltd.

• B.A.G. Films Ltd.

• Maruti Udyog Ltd.

Mr. Ashok Kini B. Sc., M.A., CAIIB Banking 30.01.2008 • UTI Asset Management Company 3 Nil

(Shareholders’ Nominee Director on Trustee Board)

• Gulf Oil Corporation Ltd.

• Financial Information Network & Operations Ltd.

Mr. Romesh Sobti, B.E. (Hons) - Banking 01.02.2008 Nil Nil Nil

Managing Director Electrical & Diploma

in Corporate Laws &

Secretarial Practice

Committees of Board

The Board has constituted several Committees of Directors to take decisions and monitor the activities falling within theirterms of reference. The Board’s Committees are as follows:

Committee of Directors

Terms of Reference The Committee of Directors exercises powers delegated to it by the Board, for managing the affairs ofyour Bank; for efficient control over operational areas; and for ensuring speedy disposal of mattersrequiring immediate approval.

Composition The Committee comprises six members viz., Mr. R. Seshasayee (Chairman) (inducted w.e.f. 25.07.2007),Mr. R. Sundararaman, Mrs. Kanchan Chitale (resigned w.e.f. 14.08.2007), Mr. T. Anantha Narayanan,Mrs. Pallavi Shroff, Dr. T. T. Ram Mohan, Mr. Bhaskar Ghose (vacated office w.e.f. 31.01.2008), Mr. S.Nagarajan (resigned w.e.f. 22.12.2007) and Mr. Romesh Sobti (inducted w.e.f. 01.02.2008).

Meetings The Committee met nine times during the financial year 2007-08, viz., on May 10, 2007 (Mr. T.Anantha Narayanan and Mr. S. Nagarajan were unable to attend), June 14, 2007 (Mr. R. Sundararamanand Mrs. Pallavi Shroff were unable to attend); August 8, 2007 (Mr. R. Seshasayee and Mrs. PallaviShroff were unable to attend), September 11, 2007 (Mr. R. Seshasayee and Mrs. Pallavi Shroff wereunable to attend), October 16, 2007 (Mrs. Pallavi Shroff was unable to attend), November 23, 2007(Mr. R. Seshasayee, Mr. T. Anantha Narayanan and Mrs. Pallavi Shroff were unable to attend),January 7, 2008 (Mrs. Pallavi Shroff was unable to attend), February 26, 2008 (Mr. R. Sundararamanwas unable to attend) and March 18, 2008 (Mr. R. Seshasayee and Mrs. Pallavi Shroff were unable toattend). Except as indicated within the brackets, all the members had attended these meetings.

26


Audit Committee of the Board

Terms of reference The role of the Audit Committee includes, inter alia, (1) Oversight of the Bank’s financial reportingprocess and the disclosure of its financial information to ensure that the financial statement is correct,sufficient and credible, (2) Recommending to the Board, the appointment / re-appointment of auditorsand fixation of audit fees, (3) Reviewing with the management, the quarterly and annual financialstatements before submission to the Board for approval, with particular reference to:-(i) Changes, if any, in accounting policies and practices and reasons for the same; (ii) Major accountingentries involving estimates based on the exercise of judgment by the management; (iii) Significantadjustments made in the financial statements arising out of audit findings; (iv) Disclosure of relatedparty transactions, if any; (v) Qualifications in the draft Audit Report; and (vi) Management discussionand analysis of financial condition and results of operations.

The specialised functions of the Audit Committee include (1) Reviewing with the management, theperformance of statutory and internal auditors, adequacy of the internal control systems, (2) Reviewingthe findings of any internal investigations by the internal auditors into matters where there is suspectedfraud or irregularity or a failure of internal control systems of a material nature.

Composition The Committee comprises four members viz., Mr. T. Anantha Narayanan (Chairman), Mrs. KanchanChitale (resigned w.e.f. 14.08.2007), Mr. R. Sundararaman, Mr. S. Nagarajan (ceased to be a memberw.e.f. 25.05.2007), Dr. Ram Buxani (inducted w.e.f. 25.05.2007 and retired w.e.f. January 14, 2008),Mr. S. C. Tripathi (inducted w.e.f. 17.09.2007) and Mr. Ashok Kini (inducted w.e.f. 30.01.2008).

Meetings The Committee met six times during the financial year 2007-08, viz., on May 24, 2007 (Mr. T. AnanthaNarayanan was unable to attend), July 10, 2007, October 27, 2007, November 28, 2007, January 29,2008 (Mr. S. C. Tripathi was unable to attend) and March 17, 2008. Except as indicated within thebrackets, all the members had attended these meetings.

Nomination Committee

Terms of reference The Committee conducts due diligence as to the credentials of any Director before his / her appointment,and makes appropriate recommendations to the Board, in consonance with the Ganguly Committeerecommendations and the requirements of RBI. The Committee also discharges the functions of theRemuneration Committee envisaged in Clause 49 of the Listing Agreement.

Composition The Committee comprises five members viz., Mr. R. Seshasayee, (Chairman) (inducted w.e.f.25.07.2007), Mr. R. Sundararaman, Mr. T. Anantha Narayanan (inducted w.e.f. 27.11.2007), Mr. AjayHinduja (inducted w.e.f. 27.11.2007), Mr. Bhaskar Ghose (vacated office w.e.f. 31.01.2008) and Mr.Romesh Sobti (inducted w.e.f. 01.02.2008).

Meetings The Committee met thrice during the financial year 2007-08 on August 8, 2007, December 7, 2007(Mr. Ajay Hinduja and Mr. Bhaskar Ghose were unable to attend), and January 30, 2008. Except asindicated within the brackets, all the members had attended these meetings.

Stakeholders Relations Committee

Terms of Reference The objective of the Stakeholders Relations Committee is the redressal of stakeholders’ complaints.The Company Secretary discharges the responsibilities of Compliance Officer.

Composition The Committee comprises two members viz., Mr. T. Anantha Narayanan, Dr. Ram Buxani (retiredw.e.f. 14.01.2008), Mr. Bhaskar Ghose (vacated office w.e.f. 31.01.2008) and Mr. Romesh Sobti(inducted w.e.f. 01.02.2008). Meetings of the Committee are chaired by a Non-executive Director.

Meetings The Committee met twice during the financial year, viz., on May 25, 2007 (Mr. T. Anantha Narayananwas unable to attend) and January 30, 2008. Except as indicated within the brackets, all the membershad attended these meetings.

Special Committee for monitoring large value frauds

Terms of Reference In accordance with the directives of Reserve Bank of India, a Special Committee has been set up formonitoring and follow-up of cases of frauds involving amounts of Rs.1 crore and above.

Composition The Committee comprises five members viz., Mr. R. Sundararaman, Mrs. Kanchan Chitale (resigned w.e.f.14.08.2007), Dr. T. T. Ram Mohan, Mrs. Pallavi Shroff, Mr. Bhaskar Ghose (vacated office w.e.f. 31.01.2008),Mr. T. Anantha Narayanan (inducted w.e.f. 17.09.2007) and Mr. Romesh Sobti (inducted w.e.f. 01.02.2008).A Non-executive Director is elected the Chairman by the members present at the meeting.

Meetings The Committee met once during the financial year, viz., on February 26, 2008 (Mr. R. Sundararaman wasunable to attend). Except as indicated within the brackets, all the members had attended the meeting.

Customer Service Committee

Terms of reference The Committee’s function is to monitor the customer service extended by your Bank and to attend tothe needs of customers.

Composition The Committee comprises three members viz., Mrs. Kanchan Chitale (resigned w.e.f. 14.08.2007), Dr. T.T. Ram Mohan, Mr. Bhaskar Ghose (vacated office w.e.f. 31.01.2008), Mr. S. Nagarajan (resigned w.e.f.22.12.2007), Mr. Premchand Godha (inducted w.e.f. 27.10.2007) and Mr. Romesh Sobti (inducted w.e.f.01.02.2008). A Non-executive Director is elected Chairman by the members present at the meeting.

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A N N U A L R E P O R T 2 0 0 7 - 2 0 0 8

Meetings The Committee met twice during the financial year, viz., on November 26, 2007 (Mr. S. Nagarajan wasunable to attend) and February 26, 2008. Except as indicated within the brackets, all the membershad attended the meetings.

Risk Management Committee

Terms of reference The Committee’s role is to examine risk policies and procedures developed by your Bank and tomonitor adherence to various risk parameters and prudential limits by the various operating departments.

Composition The Committee comprises four members viz., Mr. R. Sundararaman, Mr. T. Anantha Narayanan, Dr. T.T. Ram Mohan, Mr. Bhaskar Ghose (vacated office w.e.f. 31.01.2008), Mr. S. Nagarajan (resignedw.e.f. 22.12.2007) and Mr. Romesh Sobti (inducted w.e.f. 01.02.2008). A Non-executive Director iselected Chairman by the members present at the meeting.

Meetings The Committee met thrice during the financial year, viz., on August 14, 2007 (Dr. T. T. Ram Mohanwas unable to attend), November 26, 2007 (Mr. S. Nagarajan was unable to attend) and March 28,2008 (Dr. T. T. Ram Mohan was unable to attend). Except as indicated within the brackets, all themembers had attended these meetings.

Finance Committee

Terms of reference The Committee’s role is to decide on the appropriate mode of issue of capital; to finalise, settle,approve or agree to terms and conditions including the pricing for the capital-raising programme;finalise, settle, approve, and authorise the executing of any document, deed, writing, undertaking,guarantee or other papers (including any modification thereof) in connection with the capital-raisingprogramme and authorise the affixing of the Common Seal of the Company, if necessary thereto inaccordance with the provisions of Articles of Association of the Company; to appoint and to fix termsand conditions of merchant bankers, investment bankers, lead or other managers, advisors, solicitors,agents or such other persons or intermediaries as may be deemed necessary for the capital-raisingprogramme; to do all such things and deal with all such matters and take all such steps as may benecessary to give effect to the resolution for raising of capital and to settle / resolve any question ordifficulties that may arise with regard to the capital-raising programme.

Composition The Committee comprises four members viz., Mr. R. Seshasayee (Chairman), Mr. T. Anantha Narayanan,Mr. S. C. Tripathi and Mr. Romesh Sobti (inducted w.e.f. 01.02.2008).

Meetings The Committee met twice during the financial year, viz., on February 26, 2008 and March 28, 2008. Allthe members had attended these meetings.

Compensation Committee

The Committee was constituted on July 25, 2007.

Terms of reference The Committee’s role is to make recommendations on the issues of augmentation of capital and theissuance of the Bank’s shares to its employees under an ESOP Scheme.

Composition The Committee comprises four members viz., Mr. R. Seshasayee (Chairman), Mrs. Kanchan Chitale(resigned w.e.f. August 14, 2007), Mr. R. Sundararaman, Mr. T. Anantha Narayanan, and Mrs. PallaviShroff.

Meetings The Committee met four times during the financial year, viz., on August 8, 2007 (Mrs. Pallavi Shroffwas unable to attend), December 7, 2007 (Mrs. Pallavi Shroff was unable to attend), February 3, 2008(Mrs. Pallavi Shroff was unable to attend) and March 18, 2008 (Mr. R. Seshasayee, Chairman andMrs. Pallavi Shroff were unable to attend). Except as indicated within the brackets, all the membershad attended these meetings.

Vigilance Committee

The Committee was constituted on May 25, 2007.

Terms of reference The Committee conducts overview of cases of lapses of vigilance nature on the part of employees ofthe Bank.

Composition The Committee comprises three members viz., Dr. T. T. Ram Mohan, Mr. S. C. Tripathi and Mr.Romesh Sobti.

Meetings The Committee met once during the financial year, viz., on March 28, 2008. All members had attendedthis meeting.

Information Technology Committee

Terms of reference The Committee conducts Board-level overview of aligning Information Technology with the businessstrategy of the Bank aimed at offering better service to customers, improved risk management andsuperior performance.

Composition The Committee comprises three members viz., Mr. T. Anantha Narayanan, Mr. R. Sundararaman, Mr.S. Nagarajan (resigned w.e.f. 22.12.2007), Mr. Bhaskar Ghose (vacated office w.e.f. 31.01.2008) andMr. Romesh Sobti (inducted w.e.f. 01.02.2008).

Meetings The Committee met once during the financial year, viz., on September 12, 2007. All members hadattended this meeting.

28


Details of the three previous Annual General Meetings

AGM Day and Date Time Venue Whether SpecialResolution Passed

11th Saturday, September 3, 2005 2.30 p.m. Hotel Taj Blue Diamond11, Koregaon Road, Pune - 411 001 Yes

12th Thursday, September 28, 2006 10.30 a.m. Hotel Sun-n-Sand262 Bund Garden Road, Pune - 411 001 Yes

13th Tuesday, September 18, 2007 12.00 noon Hotel Taj Blue Diamond11, Koregaon Road, Pune - 411 001 Yes

Special Resolution

The details of Special Resolutions passed at the General Body Meetings of shareholders in the last three years is given below:

General Body Meeting Date Resolution

Eleventh Annual General Meeting September 3, 2005 • Rectification of errors of punctuation, spelling, formattingand grammar in the Articles of Association.

• Opening of currency chest(s).

• Alteration to Articles of Association to amendnomenclature of the chapter relating to capital - ‘CAPITALAND INCREASE AND REDUCTION IN CAPITAL’changed to ‘CAPITAL’.

• Approval for increase in Authorised Capital.

• Increase in foreign investments under the automatic routein Bank’s capital to seventy-four per cent of the paid-upequity capital.

• Authority to issue ADRs / GDRs.

Twelfth Annual General Meeting September 28, 2006 • Authority to create, issue, offer and / or allot equity sharesand /or equity shares through depository receipts/ ADRs/ GDRs, etc. of aggregate face value of equity sharesnot exceeding 25% of the Authorised Share Capital ofthe Bank.

Thirteenth Annual General Meeting September 18, 2007 • Alteration to Articles of Association consequent uponRBI’s directive that private sector banks have a Part-time Chairman of the Board of Directors and a separateChief Executive Officer / Managing Director who wouldbe responsible for day-to-day management.

• Authority for further issue / placement of securitiesincluding ADRs, GDRs and Qualified InstitutionsPlacement.

• Authority for Employee Stock Options Scheme (ESOS).

Postal Ballot

No Resolutions were passed through postal ballot during the last financial year.

Material Disclosures

Related Party Transactions: During the year, there were no materially significant related party transactions that could havehad any potential for conflict with the interests of your Bank at large. Details are available in para 12 of Schedule XVIII (Noteson Accounts) forming part of the Audited Financial Statements for the year.

Penalties, etc.: In the matter of irregularities observed in the opening of a demat account in October 2000, Securities andExchange Board of India (SEBI) vide its Order dated August 10, 2006, had suspended the Bank’s registration as DepositoryParticipant of NSDL for a period of fifteen days. The Bank complied with the Order, and accordingly no new depositoryaccounts were opened from August 31, 2006 to September 14, 2006.

Disqualification of Directors: As on March 31, 2008, none of the Directors of your Bank was disqualified under Section274(1)(g) of the Companies Act, 1956.

Mandatory requirements of Clause 49: Your Bank has complied with all the mandatory requirements of Corporate Governancestipulated under Clause 49 of the Listing Agreement. A certificate to this effect has been issued by M/s Bhandari & Associates,Company Secretaries, and the same has been incorporated elsewhere in this document.

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A N N U A L R E P O R T 2 0 0 7 - 2 0 0 8

Accounting Standards: In the preparation of financial statements for the year 2007-2008, the treatment prescribed in theAccounting Standards issued by the Institute of Chartered Accountants of India from time to time, has been followed by yourBank.

Non-Mandatory requirements of Clause 49 of the Listing Agreement

The status of compliance with the non-mandatory requirements of Clause 49 of the Listing Agreement is given below.

The Chairman’s Office: The Chairman (Non-executive) has been provided with an office at the Corporate Office of the Bank.

Tenure of Independent Directors: While Clause 49 puts forth a non-mandatory requirement that the tenure of a Directormay be restricted to nine years, according to Section 10A (2A) of the Banking Regulation Act, 1949 “no director of a bankingcompany, other than its chairman or whole-time director, by whatever name called, shall hold office continuously for a periodexceeding eight years.”

Remuneration Committee: In accordance with the requirements stipulated by RBI, pursuant to the Ganguly CommitteeReport, your Board of Directors has constituted a Nomination Committee comprising two Non-executive Independent Directors,two Non-executive Directors and one Whole-time Director. The Committee conducts due diligence as to the credentials of anyDirector before his appointment and makes appropriate recommendations to the Board. The Committee discharges thefunctions of the Remuneration Committee envisaged in Clause 49 of the Listing Agreement.

Shareholder Rights: All information pertaining to business and developmental activities are intimated to the Stock Exchangeson a continuous basis. The Stock Exchanges in turn announce the corporate information on their respective websites. Thequarterly financial results are published in the newspapers, apart from being reported on EDIFAR and the websites of theStock Exchanges. Therefore, your Bank does not find it expedient to send individual communications to the shareholdersregarding significant events and financial performance every half-year.

Audit qualifications: Your Bank endeavours to move towards a regime of unqualified financial statements.

Training of Board Members: Your Directors are being provided with opportunities to attend seminars and workshops in orderto equip them with relevant inputs for effective discharge of their responsibilities as Directors.

Mechanism for evaluating Non-executive Board Members: Your Bank does not have a mechanism for evaluating theperformance of Non-executive Directors.

Whistleblower Policy: In line with RBI regulations towards strengthening financial stability and enhancing public confidencein the robustness of the financial sector, your Bank has instituted the “Protected Disclosures Scheme”.

Means of Communication

Besides communicating to the Stock Exchanges on which your Bank’s shares are listed, your Bank’s financial results are alsopublished on a quarterly basis in leading newspapers (Financial Express and Loksatta) and displayed on your Bank’s website(www.indusind.com).

In accordance with the requirements of publishing financial and other data in the Electronic Data Information Filing andRetrieval (EDIFAR) database, your Bank uploads the required information on the specified website (www.sebiedifar.nic.in)maintained for Securities and Exchange Board of India.

All information relevant to investors is published on your Bank’s website, and is updated on a regular basis.

Press Releases on the performance of your Bank on various fronts are issued at appropriate times.

Presentations made to financial analysts are displayed on your Bank’s website (www.indusind.com) from time to time.

Subsidiary Company – ALF Insurance Services Private Limited

Your Bank does not have a “material non-listed Indian subsidiary” as defined in Clause 49 of the Listing Agreement. However,ALF Insurance Services Private Limited is a wholly-owned subsidiary of your Bank. The company had been incorporated withthe objective of pursuing Insurance Corporate Broking. It has applied to Insurance Regulatory and Development Authority fora licence for Insurance Corporate Broking, which is awaited.

The Audit Committee of your Bank has reviewed the financial statements and investments of the subsidiary, ALF InsuranceServices Private Limited. The minutes of the Board meetings of this subsidiary company have been placed before the Boardof your Bank.

Corporate Social Responsibility (CSR)

CSR policy has always been an intrinsic part of your Bank’s business strategy. Your Bank participated, organised andsupported various community activities revolving around Public Health and Education. During this year, your Bank’s efforts inCSR arena were recognized in the following ways:

• Received recognition by BSE and NASSCOM Foundation for the Best Corporate Social Responsibility Practice Categoryunder Social and Corporate Governance Awards.

• Your Bank featured in The Standard & Poor ESG India Index which provided investors with exposure to liquid andtradable index of 50 of the best performing stocks in the Indian market as measured by environmental, social, andgovernance (ESG) parameters.

30


General Information for Shareholders

Registration No. : 11-76333

Financial Year : 2007-2008

Board meeting for adoption of audited financial accounts : June 24, 2008

Posting of Annual Report 2007-08 : August 26, 2008

Day, Date and Time of 14th Annual General Meeting : Monday, September 22, 2008 at 2.00 p.m.

Venue : Hotel Sun-n-Sand, Pune

Financial Calendar : April 1 to March 31

Book Closure : Monday, September 8, 2008 to Monday, September 22, 2008

Dividend Payment date : September 25, 2008

Bank’s Website : www.indusind.com

Board meeting for consideration of unaudited results forfirst quarter of FY 2008- 2009 : July 25, 2008

Distribution of shareholding of IndusInd Bank as on March 31, 2008

Range - Shares No. of Folios % No. of shares %

Upto 1,000 108299 92.64 25206329 7.88

1,001 - 5,000 7201 6.16 15020499 4.70

5,001 - 10,000 734 0.63 5504742 1.72

10,001 - 50,000 515 0.44 10546905 3.30

50,001 & above 152 0.13 263529461 82.40

TOTAL 116901 100.00 319807936 100.00

Outstanding GDRs / ADRs / Warrants or any Convertible Debentures, conversion date and likely impact on equity

Your Bank has 29,490,300 GDRs (equivalent to 29,490,300 equity shares) outstanding, which constituted 9.22% of IndusIndBank’s total equity capital as at March 31, 2008.

Shareholding as on March 31, 2008

i. Distribution

Category No. of shares held % of shareholding

A. Promoters’ holding 90999984 28.45

B. Non-Promoters’ Holding 228807952 71.55

1 Institutional Investors

a Mutual Funds and UTI 4650712 1.45

b Banks, Financial Institutions, Insurance Companies(Central/State Gov. Institutions/Non-government Institutions) 3273664 1.02

c FIIs 60826228 19.02

Sub Total 68750604 21.49

2 Global Depository Receipts 29490300 9.22

3 Others

a Private Corporate Bodies 57369993 17.94

b Indian Public* 55284750 17.30

c NRIs/OCBs* 17143547 5.36

d Clearing Members 768758 0.24

Sub Total 130567048 40.84

GRAND TOTAL 319807936 100.00

* ‘Indian Public’ includes 680 shares held by Resident Independent Directors, and Category ‘NRIs/OCBs’ includes83900 shares held by NRI Directors.

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A N N U A L R E P O R T 2 0 0 7 - 2 0 0 8

ii. Major Shareholders (with more than 1 percent shareholding)

S. No. Name of Shareholder No. of shares held % of shareholding

1 IndusInd International Holdings Ltd. 68499984 21.42

2 The Bank Of New York (GDR-Depository). 29490300 9.22

3 Ashok Leyland Ltd. 28581764 8.94

4 IndusInd Limited 15500000 4.85

5 Societe Bancaire Privee Sa 12439868 3.89

6 Amam Limited A/c Invest-India (Mauritius) Limited 9877828 3.09

7 KII Limited 8306663 2.60

8 Arisaig Partners (Asia) Pte Ltd A/c Arisaig India Fund Ltd. 7870211 2.46

9 De Five (Mauritius ) Holdings Ltd. 7000000 2.19

10 Hinduja Ventures Limited 5777391 1.81

11 Sital K Motwani 5652120 1.77

12 Lotus Global Investments Ltd. 4625650 1.45

13 ICICI Lombard General Insurance Company 3600000 1.13

iii. Total foreign shareholding

No. of shares held % of shareholding

Total foreign shareholding 198460059 62.06

Of which GDR/ADR 29490300 9.22

Details of complaints received and resolved from April 1, 2007 to March 31, 2008

Complaints Received Attended to Pending

Non-Receipt of Share Certificate 169 169 0

Non-Receipt of Dividend Warrants 397 397 0

Non-Receipt of Endorsement Stickers 1 1 0

Non-Receipt of Annual Report 9 9 0

Non-Receipt of Demat Credit/ Remat Certificate 25 25 0

Non-Receipt of Rejected DRF 17 17 0

Non-Receipt of Exchanged Certificate 36 36 0

Non-Receipt of Split / Duplicate/ Replacement Certificate 9 9 0

Others 25 25 0

Total 688 688 0

Listing details of the Bank’s Equity Shares

Name of the Stock Exchange Address of the Stock Code No. Annual Listing FeeStock Exchange for 2007-2008

Bombay Stock Phiroz Jeejeebhoy Towers, 532187 Rs.2,55,000.00 paid onExchange Limited Dalal Street, Mumbai 400001. April 24, 2008

National Stock Exchange Plaza, 5th Floor, INDUSINDBK Normal – Rs.2,53,600.00Exchange of India Limited Bandra-Kurla Complex, EQ (physical)Depository – paid on

Plot No. C/1, G Block, AE (manual lots) April 15, 2008Bandra (E), Depository – BEMumbai - 400 051. (odd lots)

Luxembourg Stock Exchange Société de la Bourse de 111202 Euro 1875.00 paid on(Global Depository Receipts) Luxembourg Societe April 18, 2007

Anonyme RC Luxembourg (upto December 2008).B 6222.

32


Market Price Data of the Bank’s shares

i. National Stock Exchange of India Limited

Date Price of Shares Turnover in

Open (Rs.) High (Rs.) Low (Rs.) Close (Rs.) Rs. Lakhs Nifty Bank Nifty

2-Apr-07 40.00 40.50 38.00 38.30 569.88 3633.60 4959.653-May-07 43.75 45.75 43.45 45.45 830.11 4150.85 5693.401-Jun-07 46.30 46.90 45.75 45.90 236.54 4297.05 6404.802-Jul-07 55.30 55.30 53.45 53.75 681.15 4313.75 6718.001-Aug-07 50.20 50.75 47.60 47.90 323.10 4345.85 6637.353-Sep-07 54.70 58.00 53.25 56.70 1072.56 4474.75 6774.051-Oct-07 74.10 76.15 73.10 74.75 836.54 5068.95 7987.501-Nov-07 99.80 103.70 92.50 94.25 5980.53 5866.45 9198.603-Dec-07 121.00 123.95 119.15 119.65 2392.33 5865.00 9397.551-Jan-08 129.65 131.00 126.55 129.05 1188.70 6144.35 9905.251-Feb-08 96.00 99.35 90.65 93.35 1592.47 5317.25 9327.053-Mar-08 99.70 100.00 92.45 92.95 616.97 4953.00 8047.4531-Mar-08 81.50 82.00 78.20 78.65 346.54 4734.50 6655.00

ii. Bombay Stock Exchange Limited

Date Price of Shares Turnover in

Open (Rs.) High (Rs.) Low (Rs.) Close (Rs.) Rs. Lakhs Sensex Bankex

2-Apr-07 41.75 41.75 38.00 38.30 225.95 12455.37 6152.593-May-07 43.80 45.70 43.50 45.20 262.08 14078.21 6934.121-Jun-07 46.30 46.90 45.60 45.90 74.30 14570.75 7682.642-Jul-07 55.00 55.50 53.50 53.75 428.53 14664.26 7990.481-Aug-07 51.00 51.00 47.00 47.85 162.89 14935.77 7828.463-Sep-07 53.80 57.60 53.55 56.70 506.49 15422.05 7990.321-Oct-07 75.00 76.15 73.70 74.80 368.39 17328.62 9395.781-Nov-07 99.00 103.90 92.25 93.95 2532.79 19724.35 10851.693-Dec-07 121.00 123.90 119.00 119.45 867.72 19603.41 10865.281-Jan-08 129.00 130.60 126.70 129.25 407.45 20300.71 11510.311-Feb-08 97.70 99.50 92.00 93.50 392.85 18242.58 10890.273-Mar-08 95.60 97.50 92.50 92.95 318.73 16677.88 9434.4431-Mar-08 81.80 81.80 78.30 78.70 138.91 15644.44 7717.61

(Actual values of indices have been retained in the graph whereas the price hasbeen factored for the purpose of comparison. The price has been multiplied by 50)

(Actual volumes of trades have been retained in the graph whereas the price hasbeen factored for the purpose of comparison. The price has been multiplied by 5)

(Actual values of indices have been retained in the graph whereas the price hasbeen factored for the purpose of comparison. The price has been multiplied by 50)

0

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12000

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Nifty Bank Nifty Price

0

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3000

4000

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0

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33


A N N U A L R E P O R T 2 0 0 7 - 2 0 0 8

Dematerialisation of shares and liquidity

Your Bank’s shares are tradable (in electronic form only) at the Bombay Stock Exchange Limited and the National Stock

Exchange of India Limited. 94.29% of the Bank’s shares are dematerialised and the rest remain in physical form. The volume

of trades and share price information is provided elsewhere in this document.

In view of the numerous advantages offered by the depository system, members holding the shares of the Bank in physical

form are requested to get the same dematerialised and converted to the electronic form.

Share Transfer System

A Share Transfer Committee comprising the Bank’s executives has been formed to deal with matters relating to transfer of

shares, issue of duplicate share certificates in lieu of mutilated share certificates or those which are misplaced / lost, and

other related matters. The approvals granted by the Share Transfer Committee are confirmed at subsequent Board meetings.

With a view to expediting the process of physical share transfers, the Share Transfer Committee meets on the first and third

Friday of every month.

Trading in the Bank’s shares now takes place compulsorily in dematerialised form. However, members holding share certificates

in physical form are entitled to transfer their shareholding by forwarding the share certificates along with valid, duly executed

and stamped transfer deed signed by the member (or on his/her behalf) and the transferee to the Bank or to the Bank’s

Registrar & Share Transfer Agent, Intime Spectrum Registry Ltd.

Registrar & Share Transfer Agent

Intime Spectrum Registry Limited

C-13, Pannalal Silk Mills Compound

L.B.S. Marg, Bhandup (West)

Mumbai – 400078

Contact Person: Mr. Kirtikumar Kanchan

Tel. No.: 022 25963838 / 25946980 Fax: 022 25946969

Email: [email protected]

Redressal of Investors’ Grievances

In order to service the investors in an efficient manner and to attend to their grievances, your Bank has constituted an

‘Investor Services Cell’ at its Corporate Office at Mumbai. Members are welcome to contact:

Mr. Lalit Dalvi

Investor Services Cell

IndusInd Bank Ltd.

Solitaire Corporate Park

167, Guru Hargovindji Marg

Andheri (East), Mumbai - 400093

Tel: 022 66412487 Fax: 022 66412347


Unclaimed Dividends

In accordance with the provisions of Section 205A of the Companies Act, 1956, read with Investor Education and Protection

Fund (Awareness and Protection of Investors), Rules 2001, the dividends that remain unclaimed for a period of seven years

from the date of transfer of the dividend to ‘unpaid dividend account’, shall be transferred to the ‘Investor Education and

Protection Fund’ (IEPF). The table below gives the due dates for such transfers that are required to be effected during the

period September 2008 – October 2009. Members are requested to take note of the due dates for such transfers.

34


Year Type of dividend Date of Payment of Name of Company Due date for

Dividend transfer to IEPF

2000-01 Final 25 August 2001 IndusInd Bank Ltd. 26 September 2008

2000-01 Final 31 August 2001 IndusInd Enterprises & Finance Ltd. 2 October 2008

(18 mths)

2001-02 Interim 27 March 2002 Ashok Leyland Finance Ltd. 25 February 2009

2001-02 Interim 17 March 2002 IndusInd Enterprises & Finance Ltd. 17 April 2009

2001-02 Final 25 July 2002 Ashok Leyland Finance Ltd. 23 August 2009

2001-02 Final 28 September 2002 IndusInd Bank Ltd. 30 October 2009

Pursuant to Section 205C of the Companies Act, 1956, it is clarified that no claims shall lie against IEPF or the Bank in

respect of individual amounts which have remained unclaimed or unpaid for a period of seven years from the dates that they

first became due for payment, and no payment shall be made in respect of any such amounts.

35

Ceps-6 --- 35---Ceps3/D/Sales/Mohan/INDUSIND AR 2008/Main Accounts2008.pmd---pravin/9.8/vk29-7\vk31-7\AMD\21-8

A N N U A L R E P O R T 2 0 0 7 - 2 0 0 8

AUDITORS’ REPORT

To the Members of IndusInd Bank Limited

1. We have audited the attached Balance Sheet of IndusInd Bank Limited (the Bank) as at March 31, 2008 and also theProfit and Loss Account and Cash Flow Statement annexed thereto for the year ended on that date in which areincorporated the returns of 126 branches & 2 representative offices overseas audited by us and 54 branches audited bybranch auditors. These financial statements are the responsibility of the Bank’s management. Our responsibility is toexpress an opinion on these financial statements based on our audit.

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

3. The Balance Sheet and Profit and Loss Account have been drawn up in accordance with the provisions of Section 29 ofthe Third Schedule to the Banking Regulation Act, 1949, read with section 211 of the Companies Act, 1956 (the‘Companies Act’).

4. We report that:

a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessaryfor the purpose of our audit and have found them to be satisfactory;

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

c) The returns received from the branches of the Bank have been found adequate for the purposes of our audit.

5. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with the AccountingStandards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956, in so far they apply to the Bank.

6. We further report that:

(i) the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement withthe books of account and with the audited returns received from the branches;

(ii) in our opinion, proper books of accounts as required by law have been kept by the Bank so far as appears from ourexamination of those books;

(iii) the reports on account of the branches audited by branch auditors have been dealt with in preparing our report in themanner considered necessary by us;

(iv) on the basis of written representations received from the directors, as on March 31, 2008, and taken on record by theBoard of Directors, we report that none of the directors are disqualified from being appointed as director in terms ofclause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

7. In our opinion and to the best of our information and according to the explanations given to us, the said accounts togetherwith the notes thereon give the information required by the Banking Regulation Act, 1949 as well as the Companies Act,1956, in the manner so required for banking companies, and give a true and fair view in conformity with the accountingprinciples generally accepted in India.

(i) in case of the Balance Sheet, of the state of affairs of the Bank as at March 31, 2008;

(ii) in case of Profit and Loss Account, of the profit for the year ended on that date; and

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

For M P Chitale & Co.

Chartered Accountants

Ashutosh Pednekar

PartnerMumbai, June 24, 2008

36


BALANCE SHEET AS AT MARCH 31, 2008

Rupees in 000s

SCHEDULE As at 31.3.08 As at 31.3.07

CAPITAL AND LIABILITIES

Capital I 320,00,00 320,00,00

Employee Stock Options Outstanding XVIII (9) 50,68 -

Reserves and Surplus II 1029,20,66 736,78,81

Deposits III 19037,42,27 17644,80,48

Borrowings IV 1095,43,46 592,50,76

Other Liabilities and Provisions V 1779,31,12 1633,04,01

TOTAL 23261,88,19 20927,14,06

ASSETS

Cash and Balances with Reserve Bank of India VI 1526,26,14 1021,16,90

Balances with Banks and Money at Call and Short Notice VII 651,77,18 1574,22,80

Investments VIII 6629,69,61 5891,65,50

Advances IX 12795,30,76 11084,19,97

Fixed Assets X 625,14,84 369,56,99

Other Assets XI 1033,69,66 986,31,90

TOTAL 23261,88,19 20927,14,06

Contingent Liabilities XII 30981,93,07 20761,73,65

Bills for Collection 1761,20,60 1461,36,34

Principal Accounting Policies XVII

Notes on Accounts XVIII

The schedules referred to above form an integral part of Balance Sheet.

The Balance Sheet has been prepared in conformity with Form “A” of the Third Schedule to the Banking Regulation Act, 1949.

As per our report of even date. For INDUSIND BANK LTD.

For M. P. Chitale & Co. R. Seshasayee T. Anantha Narayanan

Chartered Accountants Chairman Director

Ashutosh Pednekar R. Sundararaman Romesh Sobti

Partner Director Managing Director

S. V. Zaregaonkar Haresh Gajwani

Executive Vice President & CFO Company SecretaryPlace : MumbaiDate : June 24, 2008

37


A N N U A L R E P O R T 2 0 0 7 - 2 0 0 8

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2008

Rupees in 000sSCHEDULE Year ended Year ended

31.3.08 31.3.07

I. INCOME

Interest Earned XIII 1920,22,54 1500,25,07

Other Income XIV 258,01,32 244,13,24

TOTAL 2178,23,86 1744,38,31

II. EXPENDITURE

Interest Expended XV 1579,85,97 1228,84,69

Operating Expenses XVI 402,19,28 343,95,62

Provisions and Contingencies 121,13,23 103,36,33

TOTAL 2103,18,48 1676,16,64

III. PROFIT 75,05,38 68,21,67

Less : Tax Adjustments of Previous years - 99,45

AMOUNT AVAILABLE FOR APPROPRIATION TOTAL 75,05,38 67,22,22

IV. APPROPRIATIONS

Transfer to

a) Statutory Reserve 18,76,35 17,05,42

b) Capital Reserve 2,24,13 2,21,99

c) Dividend (Proposed) 19,18,85 19,18,85

d) Corporate Dividend Tax 3,26,10 3,26,10

43,45,43 41,72,36

Balance transferred to Balance Sheet 31,59,95 25,49,86

TOTAL 75,05,38 67,22,22

Earnings per share (basic)(Rupees) XVIII(10.6) 2.35 2.31

Earnings per share (diluted)(Rupees) XVIII(10.6) 2.35 2.31

Principal Accounting Policies XVII

Notes on Accounts XVIII

The schedules referred to above form an integral part of Profit & Loss Account.

The Profit & Loss Account has been prepared in conformity with Form “B” of the Third Schedule to the Banking RegulationAct, 1949

As per our report of even date. For INDUSIND BANK LTD.

For M. P. Chitale & Co. R. Seshasayee T. Anantha Narayanan

Chartered Accountants Chairman Director

Ashutosh Pednekar R. Sundararaman Romesh Sobti

Partner Director Managing Director

S. V. Zaregaonkar Haresh Gajwani

Executive Vice President & CFO Company SecretaryPlace : MumbaiDate : June 24, 2008

38


SCHEDULES

Rupees in 000s

As at 31.3.08 As at 31.3.07

SCHEDULE - I CAPITAL

Authorised Capital

40,00,00,000 (Previous year 40,00,00,000) equity shares of Rs.10/- each 400,00,00 400,00,00

Issued, Subscribed and Called Up Capital


Paid up Capital


Add : Forfeited 3,84,200 (Previous year 3,84,200) equity shares of Rs. 10/- each 19,21 19,21

On March 29, 2007,Bank issued 2,94,90,300 equity shares of Rs. 10/- in the formof Global Depository Receipts each representing one share at a price of US $1.147 per GDR. Accordingly as at March 31, 2007, the paid-up share capital andshare premium account under reserves of the Bank stand increased by Rs. 29,49,03and Rs. 116,46,62 respectively.

320,00,00 320,00,00

SCHEDULE - II RESERVES AND SURPLUS

1 Statutory Reserve

Opening balance 80,04,49 62,99,07

Additions during the year 18,76,35 17,05,42

98,80,84 80,04,49

2 Capital Reserve



32,27,37 30,03,24

3 Share Premium Account


Additions during the year - 116,46,62

412,96,39 412,96,39

4 General Reserve


1,35,57 1,35,57

5 Investment Allowance Reserve


1,00,00 1,00,00

39


A N N U A L R E P O R T 2 0 0 7 - 2 0 0 8

SCHEDULES (Contd.)

Rupees in 000s

As at 31.3.08 As at 31.3.07

6 Revenue and Other Reserves

Profit and Loss account



242,99,07 211,39,12

7 Revaluation Reserve

Opening balance - -

Addition during the year 240,77,98 -

Deduction during the year 96,56 -

239,81,42 -

TOTAL(1-7) 1029,20,66 736,78,81

SCHEDULE - III DEPOSITS

A 1 Demand Deposits

i) From Banks 36,89,17 43,15,92

ii) From Others 1765,00,44 1668,13,70

2 Savings Bank Deposits 1186,42,50 921,40,67

3 Term Deposits

i) From Banks 1409,07,49 1585,74,12

ii) From Others 14640,02,67 13426,36,07

TOTAL (1, 2 & 3) 19037,42,27 17644,80,48

B Deposits of Branches

1 In India 19037,42,27 17644,80,48

2 Outside India - -

TOTAL 19037,42,27 17644,80,48

40


SCHEDULES (Contd.)

Rupees in 000sAs at 31.3.08 As at 31.3.07

SCHEDULE - IV BORROWINGS

1 Borrowings in India

i) Reserve Bank of India 19,00,00 18,00,00

ii) Other Banks 64,77,75 49,30,70

iii) Other Institutions and Agencies 562,66,01 336,34,92

2 Borrowings outside India 448,99,70 188,85,14

TOTAL (1 & 2) 1095,43,46 592,50,76

Secured borrowings included in 1 & 2 above - -

SCHEDULE - V OTHER LIABILITIES AND PROVISIONS

1 Inter-office Adjustments (Net) 2,70,60 -

2 Bills Payable 317,36,87 255,98,14

3 Interest Accrued 177,20,32 181,08,20

4 Unsecured Non-Convertible Redeemable Debentures/Bonds 587,10,00 537,10,00

(Subordinated for Tier-II Capital)

5 Unsecured Non-Convertible Redeemable Non-Cumulative Subordinated

Upper Tier II Bonds 308,90,00 308,90,00

6 Others (including Provisions and proposed dividend) 386,03,33 349,97,67

TOTAL 1779,31,12 1633,04,01

SCHEDULE - VI CASH AND BALANCES WITH RESERVE

BANKS OF INDIA

1 Cash in hand (including foreign currency notes) 108,07,79 96,85,22

2 Balances with Reserve Bank of India

i) In Current Accounts 1418,18,35 924,31,68

ii) In Other Accounts - -

TOTAL (1 & 2) 1526,26,14 1021,16,90

SCHEDULE - VII BALANCES WITH BANKS AND

MONEY AT CALL AND SHORT NOTICE

1 In India

i) Balances with Banks

a) In Current Accounts 317,52,19 364,39,11

b) In Other Deposit Accounts 216,78,46 385,31,51

ii) Money at Call and Short Notice with banks - 100,00,00

TOTAL (i & ii) 534,30,65 849,70,62

2 Outside India

i) In Current Accounts 21,97,97 25,74,16

ii) In Other Deposit Accounts 67,40,16 698,78,02

iii) Money at Call and Short Notice 28,08,40 -

TOTAL (i, ii & iii) 117,46,53 724,52,18

GRAND TOTAL (1 & 2) 651,77,18 1574,22,80

41


A N N U A L R E P O R T 2 0 0 7 - 2 0 0 8

SCHEDULES (Contd.)


SCHEDULE - VIII INVESTMENTS

1 Investments in India

Gross Value 6645,79,83 5904,43,70

Less : Provision for Depreciation 16,10,22 12,78,20

Net value of Investments in India 6629,69,61 5891,65,50

Comprising :

i) Government securities 5435,71,27 4849,32,06

ii) Other approved securities 3,76,18 5,23,10

iii) Shares 39,05,62 21,39,82

iv) Debentures and bonds 40,21,21 50,33,75

v) Subsidiaries and / or Joint Ventures 50,00 50,00

vi) Others - Deposits under RIDF scheme with NABARD 1102,51,33 897,06,77

Security Receipt and Others 7,94,00 67,80,00

2 Investments Outside India - -

TOTAL (1 & 2) 6629,69,61 5891,65,50

SCHEDULE - IX ADVANCES

A i) Bills Purchased and Discounted 446,00,55 404,25,86

ii) Cash Credits, Overdrafts and Loans Repayable on Demand 3709,98,56 2952,00,45

iii) Term Loans 8639,31,65 7727,93,66

TOTAL 12795,30,76 11084,19,97

B i) Secured by Tangible Assets (includes advances against book debts) 11687,88,04 10022,74,48

ii) Covered by Bank / Government Guarantees

(includes advances against L/Cs issued by Banks) 172,74,72 137,04,85

iii) Unsecured 934,68,00 924,40,64

TOTAL 12795,30,76 11084,19,97

C i) Advances in India

a) Priority Sector 5005,53,11 3522,05,30

b) Public Sector 138,56,76 253,16,69

c) Banks 4,89,04 18,97,56

d) Others 7646,31,85 7290,00,42

TOTAL 12795,30,76 11084,19,97

ii) Advances Outside India - -

TOTAL ( i & ii) 12795,30,76 11084,19,97

42


SCHEDULES (Contd.)


SCHEDULE - X FIXED ASSETS

1 PREMISES

i) At cost as at the beginning of the year 156,31,74 136,70,88

ii) Revaluation during the year 240,77,98 -

iii) Additions during the year 5,27,85 19,60,86

402,37,57 156,31,74

iv) Less : Deductions during the year - -

v) Less : Depreciation to date 17,05,77 14,28,89

Total 385,31,80 142,02,85

2 Other Fixed Assets (including furniture & fixtures)

i) At cost as at the beginning of the year 518,75,65 481,18,18

ii) Additions during the year 50,96,80 40,08,76

[includes Assets given on lease Rs.225,71,92 569,72,45 521,26,94

(Previous year Rs. 225,71,92)]

iii) Less : Deductions during the year 2,17,24 2,51,29

iv) Less : Depreciation to date 337,34,73 300,00,04

Total 230,20,48 218,75,61

3 Capital Work in Progress 9,62,56 8,78,53

TOTAL (1, 2 & 3) 625,14,84 369,56,99

SCHEDULE - XI OTHER ASSETS

1 Inter-office Adjustments (Net) - 11,31

2 Interest Accrued 194,44,20 168,43,59

3 Tax Paid in Advance / tax deducted at source (net of provision) 220,17,15 218,59,58

4 Stationery & Stamps 1,17,75 51,06

5 Non-banking assets acquired in satisfaction of claims 56,54,41 33,38,15

6 Others [includes Deposits with banks Rs.210,07,81 being credit enhancement 561,36,15 565,28,21

against Securitised Assets (Previous year Rs.260,18,85)]

TOTAL 1033,69,66 986,31,90

SCHEDULE - XII CONTINGENT LIABILITIES

1 Claims against the Bank not acknowledged as debts 236,62,00 221,74,14

2 Liability on account of outstanding Forward Exchange Contracts 17112,85,04 9793,88,58

3 Liability on account of outstanding Derivative Contracts 9148,99,52 7002,55,15

4 Guarantees given on behalf of constituents

a) In India 1803,13,70 1475,18,58

b) Outside India - -

5 Acceptances, Endorsements and Other Obligations 2680,32,81 2268,37,20

6 Other Items for which the Bank is contingently liable - -

TOTAL 30981,93,07 20761,73,65

43


A N N U A L R E P O R T 2 0 0 7 - 2 0 0 8

SCHEDULES (Contd.)

Rupees in 000sYear ended Year ended

31.3.08 31.3.07

SCHEDULE - XIII INTEREST EARNED

1 Interest / Discount on Advances/ Bills 1425,32,94 1044,59,97

2 Income on Investments 443,03,46 391,94,86

3 Interest on Balances with RBI and Other Inter-Bank Funds 21,91,63 30,85,52

4 Others 29,94,51 32,84,72

TOTAL 1920,22,54 1500,25,07

SCHEDULE - XIV OTHER INCOME

1 Commission, Exchange and Brokerage 84,82,96 68,72,28

2 Profit on Sale of Investments / Derivatives (Net) 19,44,23 18,65,68

3 Profit / (Loss) on Sale of Land, Buildings and Other Assets (67,09) (27,65,42)

4 Profit on exchange transactions (Net) 28,89,35 18,66,96

5 Profit on Revaluation of Investments (39,56,45) (40,11,91)

6 Income earned by way of dividend from companies in India 37,35 30,85

7 Miscellaneous Income 164,70,97 205,54,80

TOTAL 258,01,32 244,13,24

SCHEDULE - XV INTEREST EXPENDED

1 Interest on Deposits 1401,15,44 1059,89,40

2 Interest on Reserve Bank of India / Inter-Bank Borrowings 55,83,52 83,89,69

3 Others including interest on Subordinate Debts and Upper Tier II bonds 122,87,01 85,05,60

TOTAL 1579,85,97 1228,84,69

SCHEDULE - XVI OPERATING EXPENSES

1 Payments to and Provisions for Employees 121,89,66 96,28,91

2 Rent, Taxes and Lighting (includes operating lease rentals) 36,58,88 30,32,24

3 Printing and Stationery 11,23,73 10,41,24

4 Advertisement and Publicity 2,10,68 3,32,56

5 Depreciation on Bank’s Property 40,15,86 34,09,22

6 Directors’ Fees, Allowances and Expenses 60,83 39,10

7 Auditors’ Fees and Expenses (includes branch auditors) 98,39 80,90

8 Law Charges 13,16,42 11,41,49

9 Postage, Telegrams, Telephones, etc. 23,20,76 22,14,03

10 Repairs and Maintenance 30,84,84 23,92,82

11 Insurance 17,34,79 14,14,97

12 Service Provider Fees 46,35,57 40,88,40

13 Other Expenditure 57,68,87 55,79,74

TOTAL 402,19,28 343,95,62

44

44---Ceps-3 --- D:\Sales\Mohan\Indusind AR 2008/\Indusind Notes 2008./Ravi/10-7/vk29-7\vk31-7\AMD\21-8

SCHEDULES (Contd.)

Schedule No. XVII

PRINCIPAL ACCOUNTING POLICIES1) General:

1.1 The accompanying financial statements have been prepared on the historical cost convention, except where otherwisestated, and in accordance with the accounting standards referred to in Section 211(3C) of the Companies Act, 1956, andnotified by the Companies (Accounting Standards) Rules, 2006, read with guidelines issued by the Reserve Bank of India(‘RBI’) and conform to the statutory provisions and practices prevailing within the banking industry in India.

1.2 The preparation of the financial statements, in conformity with generally accepted accounting principles requiresmanagement to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expensesand disclosure of contingent liabilities in the financial statements. Management believes that the estimates used in thepreparation of the financial statements are prudent and reasonable. Any revisions to the accounting estimates are recognisedprospectively in current and future periods.

2) Transactions involving Foreign Exchange:2.1 Monetary assets and liabilities denominated in foreign currency are translated at the balance sheet date at the exchange

rates notified by the Foreign Exchange Dealers’ Association of India (‘FEDAI’) and the resulting gains or losses arerecognised in the profit and loss account.

Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using theexchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuationdenominated in a foreign currency are reported using the exchange rates that existed when the values were determined.

2.2 All Foreign Exchange contracts outstanding at the balance sheet date are revalued at the rates of exchange notified bythe FEDAI for specified maturities and the resulting gains or losses are recognised in the profit and loss account.

2.3 The Swap cost arising on account of foreign currency swap contracts to convert FCNR (B) deposits into rupee liability ischarged to profit and loss account as ‘Interest - Others’ by amortizing over the underlying swap period.

2.4 Income and Expenditure items are translated at the rates of exchange prevailing on the date of the transaction.

2.5 Contingent liability at the balance sheet date on account of outstanding forward foreign exchange contracts, guarantees,acceptances, endorsements and other obligations denominated in foreign currency is stated at the closing rates of exchangenotified by FEDAI.

3) Investments:The significant accounting policies in accordance with the RBI guidelines and subsequent circulars issued by the RBI are asfollows:

3.1 Categorisation of investments:

In accordance with the guidelines issued by RBI, the Bank classifies its investment portfolio into the following threecategories, at the time of acquisition:

i) ‘Held to Maturity’– Securities acquired by the Bank with the intention to hold till maturity.

ii) ‘Held for Trading’– Securities acquired by the Bank with the intention to trade.

iii) ‘Available for Sale’– Securities which do not fall within the above two categories are classified as ‘available for sale’.

3.2 Classification of Investments:

For the purpose of disclosure in the Balance Sheet, investments have been classified under six groups as required underRBI guidelines - Government Securities, Other Approved Securities, Shares, Debentures and Bonds, Investments inSubsidiaries/ Joint Ventures and Other Investments.

3.3 Valuation of Investments:

(i) ‘Held to Maturity’ – These investments are carried at their acquisition cost. Any premium on acquisition is amortisedover the balance period to maturity. Diminution other than temporary, if any, in the value of such investments isdetermined and provided for on each investment individually.

(ii) ‘Held for Trading’ – Each scrip in this category is revalued at the market price or fair value and the resultant depreciationof each scrip in this category is recognised in the profit and loss account. Appreciation, if any, is ignored. Market valueof government securities is determined on the basis of the prices/ YTM published by RBI or the prices/ YTM periodicallydeclared by Primary Dealers Association of India (PDAI) jointly with Fixed Income Money Market and DerivativesAssociation (FIMMDA) for valuation at year-end. In case of unquoted government securities, market price or fairvalue is determined as per the prices/ YTM published by FIMMDA.

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SCHEDULES (Contd.)

(iii) ‘Available for Sale’ – Each scrip in this category is revalued at the market price or fair value and the resultantdepreciation of each scrip in this category is recognised in the profit and loss account. Appreciation, if any, is ignored.

Market value of government securities (excluding treasury bills) is determined on the basis of the price list publishedby RBI or the prices periodically declared by Primary Dealers Association of India (PDAI) jointly with FIMMDA forvaluation at year-end. In case of unquoted government securities market price or fair value is determined as per therates published by FIMMDA.

Market value of other debt securities is determined based on the yield curve and spreads provided by FIMMDA.

Equity shares are valued at cost or the closing quotes on a recognised stock exchange, whichever is lower.

Treasury bills are valued at carrying cost, which includes discount amortised over the period to maturity.

Units of mutual funds are valued at the lower of cost and net asset value provided by the respective mutual funds.

(iv) Investments in Equity Shares held as Long-term investments by erstwhile IndusInd Enterprises & Finance Ltd. andAshok Leyland Finance Ltd. (since merged) are valued at cost. Provision towards diminution in the value of suchLong-term investments is made only if the dimunition in value is not temporary in the opinion of management.

(v) Broken period interest on debt instruments is treated as a revenue item. Brokerage, commission, etc. pertaining toinvestments paid at the time of acquisition is charged to revenue.

(vi) Repurchase (REPO) and reverse repurchase (reverse REPO) transactions are considered and accounted for on anoutright sale and purchase basis. REPO interest Income/ Expenditure is accounted based on the RBI guidelines.However, depreciation in their value, if any, compared to their original book value, incase of reverse REPO is recognisedin the Profit & Loss Account.

(vii) Profit in respect of investments sold from “HTM” category is included in Profit on Sale of Investments and equalamount is transferred out of P& L Appropriation account after tax and Statutory Reserve, to Capital Reserve account.

(viii) Security Receipts (SR) are valued at the lower of redemption value of the security or the Net Asset Value (NAV)obtained from Securitization Company/ Reconstruction Company.

(ix) Amortised amount on “HTM” category is shown as deduction in the Profit and Loss account under Profit on revaluationof investments.

4) DerivativesDerivative contracts are designated as hedging or trading and accounted for as follows:

(i) The hedging contracts comprise interest rate swaps and currency swaps undertaken to hedge interest rate risk on certainassets and liabilities. The net interest receivable/ payable is accounted on an accrual basis over the life of the swaps.However, where the hedge is designated with an asset or liability that is carried at market value or lower of cost or marketvalue in the financial statements then the hedging is also marked to market with the resulting gain or loss recorded as anadjustment to the market value of designated assets or liabilities.

(ii) The trading contracts comprise proprietary trading in interest rate swaps. The gain/ loss arising on unwinding or terminationof the contracts is accounted for in the profit and loss account. Trading contracts outstanding as at the balance sheet dateare revalued at their fair value and resulting gains / losses are recognised in the profit and loss account.

(iii) Premium paid and received on currency options is accounted up-front in the Profit and Loss account as all options areundertaken on a back-to-back basis.

(iv) Provisioning of overdue customer receivable on derivative contracts, if any, are made as per RBI guidelines.

5) Advances:5.1 Advances are classified as per the RBI guidelines into standard, sub-standard, doubtful and loss assets after considering

subsequent recoveries to date.

5.2 Provision for non-performing assets is made in conformity with the RBI guidelines.

5.3 In accordance with RBI guidelines, general provision on standard assets has been made at 0.40% of the outstandingamount on a portfolio basis except for the following categories where the general provision is made at the rates mentionedalongside such categories of loans :

for direct advances to agriculture and Small and Medium Enterprises at 0.25% of the outstanding amount,

Residential housing loans beyond Rs. 20 lacs at 1.00% of the outstanding amount,

personal loans, loans and advances qualifying as capital market exposures and commercial real estate loans at2.00% of the outstanding amount.

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SCHEDULES (Contd.)

5.4 Advances are disclosed in the Balance Sheet, net of provisions and interest suspended for non-performing advances.Provision made against standard assets is included in ‘Other Liabilities and Provisions’.

5.5 Advances include the Bank’s participation in / contributions to Pass Through Certificates (PTCs) and /or to the asset-backed assignment of loan assets of other banks / financial institutions where the Bank has participated on risk-sharingbasis.

5.6 Advances exclude derecognised securitised advances, inter-bank participation and bills rediscounted (BRDS).

5.7 Amounts recovered against bad debts written off in earlier years and, provisions no longer considered necessary incontext of the current status of the borrower are written back / recognised to the profit and loss account to the extent suchwrite-offs / provisions were charged to the profit and loss account.

5.8 For re-structured / re-scheduled assets, provision is made in accordance with the guidelines issued by RBI.

6) Securitisation Transactions:

6.1 The Bank transfers commercial and consumer loans through securitisation transactions. The Bank securitises its loanreceivables both through Bilateral Direct Assignment route as well as transfer to Special Purpose Vehicles (‘SPV’) insecuritisation transactions.

6.2 The securitisation transactions are without recourse to the Bank. The transferred loans and such securitised-out receivablesare de-recognised in the balance sheet as and when these are sold (true sale criteria being fully met) and the considerationhas been received by the Bank. Gains / losses are recognised only if the Bank surrenders the rights to the benefitsspecified in the loan contracts.

6.3 In respect of certain transactions, the Bank provides credit enhancements in the form of cash collaterals / guarantee and/or by subordination of cashflows to senior Pass Through Certificates (PTC). Retained interest and subordinated PTCs aredisclosed under “Advances” in the balance sheet.

6.4 Recognition of gain or loss arising out of Securitisation of Standard Assets :

In terms of RBI guidelines issued on February 1, 2006, profit/premium arising on account of sale of standard assets, beingthe difference between the sale consideration and book value, is amortised over the life of the securities issued by theSpecial Purpose Vehicles (‘SPV’).

Any loss arising on account of the sale is recognized in the Profit and Loss Account in the period in which the sale occurs.

Up to January 31, 2006, gains or losses from sale of loan receivables, being the difference between the sale considerationand book value, were recognized at the time of the sale.

7) Fixed Assets:

7.1 Fixed assets (including assets given on operating lease) have been stated at cost (except in the case of premises whichwere revalued based on values determined by approved valuers) less accumulated depreciation and impairment, if any.Cost includes incidental expenditure incurred on the assets before it is ready for intended use. The carrying amount of fixedassets is reviewed at each balance sheet date if there are any indications of impairment based on internal / external factors.

7.2 The appreciation on revaluation is credited to Revaluation Reserve. Depreciation relating to revaluation is adjusted againstthe Revaluation Reserve.

7.3 Depreciation has been provided pro rata for the period of use, on Straight Line Method as per the rates prescribed underSchedule XIV to the Companies Act, 1956, except in respect of computers, which are depreciated at the rate of 33.33%.These rates are reflective of management’s estimate of the useful life of the related fixed assets.

8) Revenue Recognition:

8.1 Income by way of interest and discount on performing assets is recognised on accrual basis and on non-performingassets the same is accounted for on realisation.

8.2 Interest on Government securities, debentures and other fixed income securities is recognised on accrual basis. Incomeon discounted instruments is recognised over the tenure of the instrument on a straight-line basis.

8.3 Dividend income is recognised when the right to receive payment is established.

8.4 Commission (except for commission on Deferred Payment Guarantees and insurance commission which is recognisedon accrual basis), exchange and brokerage is recognised on realisation.

8.5 Lease income and service charges earned by the Vehicle Finance Division are recognised on accrual basis.

8.6 Income from distribution of life insurance products is recognised, proportionately, on basis of the business booked.

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SCHEDULES (Contd.)

9) Operating Leases:

Lease rental obligations in respect of assets taken on operating lease are charged to profit and loss account on straight-linebasis over the lease term. Initial direct costs are charged to profit and loss account.

Assets given under leases in respect of which all the risks and benefits of ownership are effectively retained by the Bank areclassified as operating leases. Lease rentals received under operating leases are recognized in the profit and loss account onaccrual basis as per contracts.

10) Retirement and Other Employee Benefits:10.1 Payments under the Group Gratuity policies of the Bank are made to Life Insurance Corporation of India as per actuarial

contributions for the year as determined by the Corporation and are considered as a defined benefit scheme.

10.2 Payment under Group Superannuation policy to the eligible employees of the erstwhile Ashok Leyland Finance Ltd.(ALFL) is made to Life Insurance Corporation of India as per actuarial contribution for the year and is considered as adefined contribution scheme.

10.3 Provident fund contributions are made under trust separately established for the purpose and the scheme administeredby Regional Provident Fund Commissioner (RPFC), as applicable.

10.4 Provision for compensation absences has been made in the accounts on the basis of actuarial valuation as at thebalance sheet date. The actuarial valuation is carried out as per the projected unit credit method.

10.5 The Bank has applied the intrinsic value method to account for the compensation cost of ESOP to the employees of theBank. Intrinsic value is the amount by which the quoted market price of the underlying shares on the grant date exceedsthe exercise price of the options. Accordingly, the compensation cost is amortized over the vesting period.

11) Segment Reporting:In accordance with the guidelines issued by RBI, effective April 1, 2007, Bank has adopted Segment Reporting as under:

1. Treasury includes all investment portfolio, profit/ loss on sale of investments, profit/loss on foreign exchange transactions,equities, income from derivatives and money market operations. The expenses of this segment consist of interest expenseson funds borrowed from external sources as well as internal sources and depreciation / amortisation of premium on Heldto Maturity category investments.

2. Corporate/ Wholesale Banking includes lending and deposits from corporate customers and identified earnings andexpenses of the segment.

3. Retail Banking includes lending and deposits from retail customers and identified earnings and expenses of the segment.4. Other Banking Operations includes all other operations not covered under Treasury, Wholesale Banking and Retail Banking.

12) Income-tax:Tax expenses comprise current, deferred and fringe benefit taxes. Current income tax and fringe benefit tax is measured at theamount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961. Deferred income taxes reflectthe impact of current year timing differences between taxable income and accounting income for the year and reversal oftiming differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantivelyenacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty thatsufficient future taxable income will be available against which such deferred tax assets can be realized. Unrecognized deferredtax assets of earlier years are re-assessed and recognised to the extent that it has become reasonably certain that futuretaxable income will be available against which such deferred tax assets can be realized.

13) Earnings per Share:Earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (afterdeducting attributable taxes) by the weighted average number of equity shares outstanding during the period. Diluted earningsper equity share have been computed using the weighted average number of equity shares and dilutive potential equity sharesoutstanding as at end of the year.

14) Provisions:A provision is recognised when there is an obligation as a result of past event. It is probable that an outflow of resources will berequired to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to theirpresent value and are determined based on best estimate required to settle the obligation at the balance sheet date. These arereviewed at each balance sheet date and adjusted to reflect the current best estimates.

15) Others:Cash and cash equivalents in the cash flow statement comprise cash and balances with RBI (Schedule VI) and balances withbanks and money at call and short notice (Schedule VII).

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SCHEDULES (Contd.)

Schedule No. XVIII

NOTES ON ACCOUNTS

1. Capital Adequacy Ratio:Items March 31, March 31,

2008 2007

i) Capital Adequacy Ratio (CRAR) 11.91% 12.54%

ii) CRAR – Tier I Capital (%) 6.70% 7.34%

iii) CRAR – Tier II Capital (%) 5.21% 5.20%

During the year, the Bank has issued on private placement basis 500 unsecured, redeemable, non-convertible subordinatedbonds of Rupees Ten lacs each aggregating to Rs.50 crores (previous year Rs.50 crores). These bonds qualify for classificationas Tier II Capital.

2. Investments:(Rs. in crores)

2007-2008 2006-2007

(1) Value of Investments :(i) Gross Value of Investments 6645.80 5904.44

(a) In India 6645.80 5904.44(b) Outside India - -

(ii) Provision for Depreciation 16.10 12.78(a) In India 16.10 12.78(b) Outside India - -

(iii) Net Value of Investments 6629.70 5891.66(a) In India 6629.70 5891.66(b) Outside India - -

(2) Movements in provision held towardsdepreciation on Investments :(i) Opening Balance 12.78 15.95(ii) Add: Provision made during the year 6.37 2.31(iii) Less: Write-off/ write-back of excess provision during the year 3.05 5.48(iv) Closing Balance 16.10 12.78

Category wise details of Investments (Net):(Rs. in crores)

31/03/2008 31/03/2007

HTM AFS HFT HTM AFS HFT

i) Government securities 4677.88 579.39 178.44 3719.09 1080.72 49.51

ii) Other approved securities - 3.76 - 1.55 3.68 -

iii) Shares 5.35 33.71 - 5.35 16.05 -

iv) Debentures and bonds - 40.21 - 0.00 50.34 -

v) Subsidiaries and/ or Joint Ventures 0.50 - - 0.50 - -

vi) Others - Deposits under RIDF schemewith NABARD, SR/PTC, etc. 1102.52 7.94 - 897.07 67.80 -

Total 5786.25 665.01 178.44 4623.56 1218.59 49.51

A N N U A L R E P O R T 2 0 0 7 - 2 0 0 8

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SCHEDULES (Contd.)

2.1 Details of Repo/ Reverse Repo (including liquidity adjustment facility) deals done during the year ended March31, 2008:

(Rs. in crores)Minimum Maximum Daily average As on

outstanding outstanding outstanding March 31,during the year during the year during the year 2008

Securities sold under repos 0.95 430.00 53.77 390.00(1.96) (610.00) (101.97) (405.00)

Securities purchased under reverse repos 2.00 175.00 2.81 -(14.80) (1100.00) (114.29) -

Note: Amounts in brackets represent previous year figures

2.2 a) Issuer composition of Non-SLR investments as at March 31, 2008:(Rs. in crores)

No. Issuer Amount Extent of Extent of Extent of Extent of private ‘below ‘unrated’ ‘unlisted’

placement investment Securities* securities**grade’

securities

1 PSUs 0.01 - - 0.01 0.01

2 FIs *** 1103.04 0.52 - - 0.52

3 Banks 41.65 41.65 - 5.00 5.00

4 Private corporates 42.41 - - - 7.22

5 Subsidiaries / Joint Ventures 0.50 - - - 0.50

6 Others 59.34 9.30 - 1.36 1.36

7 Provision held towards depreciation (7.20) - - - -

Total 1239.75 51.47 - 6.37 14.61

b) Issuer composition of Non-SLR investments as at March 31, 2007:(Rs. in crores)

No. Issuer Amount Extent of Extent of Extent of Extent of private ‘below ‘unrated’ ‘unlisted’

placement investment Securities* securities**grade’

securities1 PSUs 0.02 - - 0.02 0.02

2 FIs *** 908.89 1.82 - - -

3 Banks 42.75 42.75 - 5.00 5.00

4 Private corporates 25.43 - - - 7.22

5 Subsidiaries / Joint Ventures 0.50 - - - 0.50

6 Others 119.20 69.16 - 1.36 1.36

7 Provision held towards depreciation (10.78) - - - -

Total 1,086.01 113.73 - 6.38 14.10

* Excludes investments in NABARD RIDF, Oil Bonds, and equity shares** Excludes investments in NABARD RIDF, and Oil Bonds.*** Includes deposits placed with NABARD RIDF.Note: 1. Security pledged with CCIL have not been considered as Non- SLR investment holding.

2. 06.96 OIL SP 09 have been considered in the above disclosure.

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SCHEDULES (Contd.)

c) Non-performing Non-SLR investments:

(Rs. in crores)

Particulars 2007-2008 2006-2007

Opening balance 3.88 3.88

Additions during the year since 1st April - -

Reductions during the above period 3.88 -

Closing balance - 3.88

Total provisions held - 3.88

3. Derivatives:

a) Forward Rate Agreement / Interest Rate Swap:

(Rs. in crores)

Items March 31, March 31,2008 2007

1) The notional principal of swap agreements 8950.00 6950.00

2) Losses which would be incurred if counter-partiesfailed to fulfill their obligations under the agreements. 83.93 122.87

3) Collateral required by the bank upon entering into swaps - -

4) Concentration of credit risk arising from the swaps (with banks) 73% 65%

5) The fair value of the swap book 0.06 (0.63)

b) Exchange Traded Interest Rate Derivatives:

The Bank has not undertaken exchange traded interest rate derivative transactions during the year.

c) Disclosures on Risk Exposure in Derivatives (Qualitative):

The Bank has entered into interest rate swap contracts to hedge on-balance sheet assets & liabilities and for tradingpurposes. The Bank has also offered currency option contracts to customers and covered it on back-to-back basis.

• The Bank’s Funds & Investments Policy and Market Risk Management Policy, approved by the Board, provides forusing derivative products in an efficient manner as tools for mitigating market risk. The Policies cover dealing guidelinesand prescribes exposure limits for derivative products.

• Risk Management Department independently monitors the derivative position of the Bank, and reports Marked toMarket position of Derivative Portfolio to top management on a daily basis.

• The Basis Present Value (PV01) of the derivative portfolio is also computed on a daily basis and reported to topmanagement.

Derivative contracts transacted during the current year were in accordance with the prescribed Market Risk Policy and theFunds & Investment Policy approved by the Board.

The Nature and Terms of the IRS is set out below:

(Rs. in crores)

Nature Nos. Notional Benchmark Terms Principal

Hedging 5 125 MIBOR Fixed receivable v/s floating payable

Trading 149 4425 MIBOR Fixed payable v/s floating receivable

Trading 150 4400 MIBOR Fixed receivable v/s floating payable

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SCHEDULES (Contd.)

Disclosure on risk exposure in derivatives (Quantitative):(Rs. in crores)

March 31, 2008 March 31, 2007SI. No Particulars Currency Interest rate Currency Interest rate

Derivatives Derivatives Derivatives Derivatives1 Derivatives (Notional Principal Amount) - 8950.00 - 6950.00

a) For hedging - 125.00 - 125.00b) For trading - 8825.00 - 6825.00

2 Marked to Market Positionsa) Asset (+) - - - 6.29b) Liability (-) - 1.43 - -

3 Credit Exposure - 83.93 - 152.874 Likely impact of one percentage change

in interest rate (100*PV01) (Note 1)a) on hedging derivatives - 1.34 - 2.40b) on trading derivatives - 0.01 - 4.53

5 Maximum and Minimum of 100*PV01observed during the year (Note 2)a) on hedging - Max: 2.41 - Max: 3.48

Min : 1.34 - Min : 2.01b) on trading - Max: 18.37 - Max: 13.62

Min : 0.00 - Min : 0.15Note 1: Based on the PV01 of the outstanding derivatives as at March 31, 2008.Note 2: Based on the absolute value of PV01 of the derivatives outstanding during the year. Derivative contracts that are

“back-to-back” have not been included herein.Note 3: Mark to Market positions above includes interest accrued on the swaps.Note 4: Forward Exchange Contracts are not included in the Currency derivates above.Foreign Currency exposure not hedged by derivative instruments Rs. (6.83) crores (Net Open position as on March 31, 2008) (previousyear Rs. 11.98 crores).

4. Asset Quality:4.1 Non-Performing Assets:

(Rs. in crores)

Items 2007-2008 2006-2007(i) Net NPAs to Net Advances (%) 2.27% 2.47%(ii) Movement in NPAs (Gross)

a) Opening Balance 342.73 268.83b) Additions during the year 155.49 237.59c) Reductions during the year 105.91 163.69d) Closing Balance 392.31 342.73

(iii) Movement in Net NPAsa) Opening Balance 273.75 194.97b) Additions during the year 102.45 189.87c) Reductions during the year 85.18 111.09d) Closing Balance 291.02 273.75

(iv) Movement in provisions for NPAs(excluding provisions on standard assets)a) Opening Balance 68.98 73.86b) Provisions made during the year 53.04 47.72c) Write-off / write-back of excess provisions 20.73 52.60d) Closing Balance 101.29 68.98

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SCHEDULES (Contd.)

4.2 Details of Loan Assets subjected to Restructuring:(Rs. in crores)

Items 2007-2008 2006-2007(i) Total Amount of loan assets subjected to restructuring,

rescheduling, renegotiation; 1.72 -

- of which under CDR - -

(ii) The Amount of Standard assets subjected to restructuring,rescheduling, renegotiation; 1.72 -


(iii) The Amount of Sub-Standard assets subjected to restructuring,rescheduling, renegotiation; - -


(iv) The Amount of Doubtful assets subjected to restructuring,rescheduling, renegotiation; - -


Note: [ (i) = (ii) + (iii) + (iv)]

4.3 Details of financial assets sold to Securitisation / Reconstruction Company for asset reconstruction:

(Rs. in crores)

Items 2007-2008 2006-20071) No. of accounts - 72) Aggregate value (net of provisions) of

accounts sold to SC / RC - 49.173) Aggregate consideration - 48.364) Additional consideration realized in respect of

accounts transferred in earlier years 10.70 -5) Aggregate gain/ (loss) over net book value - (0.81)

4.4 Bank has neither purchased nor sold any non-performing financial assets from/ to any other banks.

4.5 Assets Securitised:

Items 2007-2008 2006-20071) Number of deals concluded - -

2) Total number of loans securitised - -3) Book Value of Loans securitised (Rs. crores) - -4) Sale consideration received for the securitised assets (Rs. crores) - -5) Gain/loss on sale on account of securitisation (Rs. crores)* - -Outstanding value of services provided: (Rs. in crores) (Rs. in crores)Outstanding value of credit enhancement ** 137.25 214.40Outstanding value of First Loss Facility 62.98 74.74Outstanding value of Second Loss Facility 80.46 80.46(Guarantee) ***Outstanding value of Liquidity facility 17.13 10.15

* Net of securitisation expenses and finance charges for the month in which the assets were securitised.** Represents credit enhancement provided for securitisation deals undertaken prior to issue of RBI circular on draft guidelines on

securitisation of standard assets where bifurcation into first loss and second loss facility is not available.*** Second loss facility has been provided in the form of a Guarantee by a third party (second loss facility provider).The Bank is the servicing agent for all the securitisation deals undertaken.

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SCHEDULES (Contd.)

4.6 Provision on Standard Assets:(Rs. in crores)


Cumulative Provision held for Standard Assets 52.26 44.81

5. Business ratios:March 31, March 31,

2008 2007

i) Interest income as a percentage of working funds 8.63% 7.59%

ii) Non-interest income as a percentage of working funds 1.16% 1.23%

iii) Operating profit as a percentage of working funds 0.88% 0.87%

iv) Return on assets 0.34% 0.34%

v) Business (deposits plus advances) per employee including trainees (Rs. in lacs) 1062.67 1039.77

vi) Profit per employee including trainees (Rs. in lacs) 2.62 2.61Working funds are calculated at the average of working funds as per the Bank’s monthly returns filed with the RBI.

6. Asset Liability Management:6.1 Maturity Pattern of Rupee Denominated Assets and Liabilities:

(a) As at March 31, 2008:(Rs. in crores)

Maturity Buckets Loans & Investment Deposits BorrowingsAdvances Securities

1-14 Days 838.32 - 1053.20 64.1315-28 Days 580.21 - 350.12 11.9329 days to 3 months 1200.14 42.48 2662.17 51.70Over 3 months to 6 months 1188.17 245.74 1330.52 -Over 6 months to 12 months 3465.85 392.42 1892.25 21.47Over 1 year to 3 years 4363.34 766.38 6626.35 -Over 3 years to 5 years 416.16 1764.60 2466.02 497.21Over 5 years 290.88 3418.08 2370.79 -Total 12343.07 6629.70 18751.42 646.44

b) As at March 31, 2007:(Rs. in crores)

Maturity Buckets Loans & Investment Deposits BorrowingsAdvances Securities

1-14 Days 663.47 400.97 1485.43 67.7915-28 Days 468.58 1.31 492.21 8.9029 days to 3 months 529.31 76.01 2058.44 34.01Over 3 months to 6 months 707.10 535.90 1434.04 -Over 6 months to 12 months 1535.07 12.37 1661.33 150.00Over 1 year to 3 years 5824.01 606.09 5068.37 42.94Over 3 years to 5 years 802.39 1450.22 2464.18 100.00Over 5 years 358.81 2808.79 2393.91 -Total 10888.74 5891.66 17057.91 403.64

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SCHEDULES (Contd.)

6.2 Maturity Pattern of Foreign Currency Denominated Assets and Liabilities:a) As at March 31, 2008:

(Rs. in crores)

Maturity Buckets Loans & Deposits Borrowings Other OtherAdvances assets liabilities

1-14 Days 191.22 28.77 12.04 1.64 15.3315-28 Days 26.27 16.17 18.14 - -29 days to 3 months 153.55 37.04 103.95 - -Over 3 months to 6 months 70.17 38.69 314.87 - -Over 6 months to 12 months 10.20 103.57 - - -Over 1 year to 3 years 0.83 59.06 - - -Over 3 years to 5 years - 2.70 - - -Over 5 years - 0.00 - 37.45 -Total 452.24 286.00 449.00 39.09 15.33

b) As at March 31, 2007:(Rs. in crores)

Maturity Buckets Loans & Deposits Borrowings Other OtherAdvances assets liabilities

1-14 Days 14.77 81.39 25.43 0.51 64.3315-28 Days 15.20 5.88 - - -29 days to 3 months 55.27 16.97 46.07 - 0.15Over 3 months to 6 months 15.42 26.00 - - -Over 6 months to 12 months 0.06 70.35 117.37 - 1.17Over 1 year to 3 years 94.74 247.91 - - -Over 3 years to 5 years - 73.02 - - -Over 5 years - 65.37 - 23.87 -Total 195.46 586.89 188.87 24.38 65.65

7. Exposures:7.1 Lending to sensitive sectors:

A) Exposure to Real Estate Sector:(Rs. in crores)


a) Direct Exposure(i) Residential Mortgages

[of which individual housing loans upto Rs.15 lacs is Rs.125.87 crores(previous year Rs.117.09 crores)] 179.61 176.14

(ii) Commercial Real Estate * 153.69 78.73(iii) Investments in Mortgage Backed Securities (MBS) and other securitised

Exposures :a) Residential, - -b) Commercial Real Estate - -

b) Indirect ExposureFund based and non-fund based exposures on NationalHousing Bank (NHB) and Housing Finance Companies (HFCs) 134.72 178.64

Total Real Estate Exposure 468.02 433.51* Does not include corporate lending backed by mortgage of land and building.

A N N U A L R E P O R T 2 0 0 7 - 2 0 0 8

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SCHEDULES (Contd.)

B) Exposure to Capital Market:

(Rs. in crores)


(i) Investments made in equity shares, 11.41 25.93(ii) Investments in bonds/ convertible debentures - -(iii) Investments in units of equity- oriented mutual funds - -(iv) Advances against shares to individuals for investment in equity shares

(including IPOs/ESOPS), bonds and debentures and units of equity orientedmutual funds 93.34 34.69

(v) Secured and unsecured advances to stockbrokers and guarantees issuedon behalf of stockbrokers and market makers 246.12 270.07Total Exposure to Capital Market 350.87 330.69(i + ii + iii + iv +v)

(vi) of (v) above, the total finance extended to stockbrokers for margin trading - -

Exposure to capital market sector for the current year has been computed in terms of RBI circular DBOD No. Dir. BC. 47/13.07.05/2006-2007 dated December 15, 2006.

7.2 Single borrower limit and Group Borrower Limit:During the year the Bank has not exceeded the prudential credit exposure limit in respect of Single Borrower and GroupBorrowers.

7.3 Exposure to country risk:a) In terms of Reserve Bank of India circular No. DBOD BP.BC.72/21.04.018/ 2004-05 dated March 31, 2005, the

exposure of the Bank to country risk is as under:(Rs. in crores)

Sr.No. Risk category ECGC March 31, March 31,classification 2008 2007

1 Insignificant A1 211.09 165.98

2 Low A2 19.07 11.02

3 Moderate B1 71.63 28.80

4 High B2 7.18 4.37

5 Very High C1 2.31 3.45

6 Restricted C2 2.36 1.97

7 Off Credit D 0.27 0.00

Total 313.91 215.59

b) No provision is considered necessary against exposure to country risk.

(Information regarding Issuer composition of Non-SLR investments [Ref. items 2.2(a) and 2.2(b)], Business ratios[Ref. items 5(v) and 5(vi)], Maturity pattern of assets and liabilities [Ref. item 6] and Lending to sensitive sectors [Ref.item 7.1] have been compiled by the management and relied upon by the Auditors.)

8. Miscellaneous:

8.1 Disclosure of penalties imposed by RBI:

The Reserve Bank of India has not imposed any penalty on the Bank u/s 46(4) of the Banking Regulation Act, 1949.

8.2 Fixed Assets:

i) Cost of premises includes Rs.4.02 crores (previous year Rs. 4.02 crores) in respect of properties for which executionof documents and registration formalities are in progress. Of these properties, the Bank has not obtained full possessionof one property having WDV of Rs. 1.89 crores (previous year Rs. 1.96 crores) and has filed a suit for the same.

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SCHEDULES (Contd.)

ii) Operating leases:

Transaction – I(Rs. in crores)

Particulars 2007-08 2006-07

Description of the asset Wind Turbine Generator–37 Nos.

Gross carrying amount 25.68 25.68

Accumulated depreciation 6.79 5.43

Depreciation recognized during the current year 1.36 1.36

Contingent Rent recognized during the year 4.37 5.31

Minimum Lease Payments (MLP) MLP based on the actual consumptionof electricity at the contracted ratesby the lessee. Accordingly, futureminimum lease payments areindeterminate.

Transaction – II(Rs. in crores)

Particulars 2007-08 2006-07

Description of the asset Wind Turbine Generator – 88 Nos.

Gross carrying amount 72.45 72.45

Accumulated depreciation 14.12 10.29

Depreciation recognized during the current year 3.83 3.83

Minimum Lease Payments (MLP)

Not later than one year 12.00 11.00

Later than one year and not later than five years 36.25 48.25

Later than five years - -

iii) All premises owned by the Bank were revalued during the year and the resultant increase of Rs. 240.78 crores wascredited to Revaluation Reserve. Depreciation aggregating to Rs. 0.97 crores on revalued assets has been adjustedto Revaluation Reserve.

8.3 Other Assets:

i) ‘Non-banking assets acquired in satisfaction of claims’ includes vehicles repossessed by the Bank, which are readilysaleable, aggregating to Rs.56.54 crores (previous year Rs. 28.10 crores).

ii) Other assets include cash collateral (including liquidity facility) of Rs. 210.08 crores (previous year Rs. 260.19 crores)and stock of gold on consignment basis of Rs. 28.97 crores (previous year Rs. 16.05 crores).

8.4 Other Liabilities and Provisions:

Included in ‘Other Liabilities – Others’ are credit balances in nostro accounts aggregating Rs. 59.04 crores (previous yearRs. 50.67 crores).

8.5 Contingent Liabilities:

Claims against the Bank not acknowledged as debts comprise tax demands in respect of which the Bank is in appeal ofRs. 148.07 crores (previous year Rs. 126.56 crores) and the cases sub-judice Rs. 88.55 crores (previous year Rs. 95.18crores). The above are based on the management’s estimate, and no significant liability is expected to arise out of thesame.

8.6 Miscellaneous income includes recovery from bad debts written off Rs. 42.30 crores (previous year Rs. 96.97 crores),lease rentals Rs. 19.69 crores (previous year Rs. 19.61 crores) and others (processing charges, cheque return chargesand depository services charges, etc.) Rs. 102.72 crores (previous year Rs. 88.97 crores).

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9. Employee Stock Option Scheme (“ESOS”):

The shareholders of the Bank had approved Employee Stock Option Scheme (ESOS) on September 18, 2007, enabling theBoard and /or the Compensation Committee to grant such number of equity shares, including Options, of the Bank not exceeding7% of the aggregate number of issued and paid up equity shares of the Bank, in line with the guidelines of the Securities &Exchange Board of India (SEBI). Pursuant thereto, the Compensation Committee of the Bank granted 1,00,00,000 options.The date of grant of options is effective March 18, 2008. The ESOS scheme is equity settled where in the employees willreceive equity shares.

Activity in options outstanding under Employees Stock Option Scheme:

Particulars No. of Options

Options outstanding at the beginning of the year NIL

Options granted during the year 1,00,00,000

Options exercised during the year NIL

Options forfeited / lapsed during the year NIL

Options outstanding at the end of the year 1,00,00,000

Options exercisable NIL

The Options are vested over a period of 3 years

Fair value methodology:

The fair value of options used to compute proforma net income and earnings per equity share have been estimated using theBlack-Scholes-Merton option pricing model. The Bank estimated the volatility based on one-year historical share prices. Thevarious assumptions considered in the Pricing model for ESOSs granted during the year ended March 31, 2008 are:

Average Dividend yield 14.30%Expected Volatility 7.80%Risk free Interest Rates 7.48% to 7.60%Expected life of options 1 year to 3 yearsExpected forfeiture NIL

Impact of fair value method on net profit and EPS:

Had the compensation cost for the Bank’s Employee Stock Option Scheme (ESOS) outstanding been determined based onthe fair value approach, the Bank’s net profit and earnings per share would have been as per the proforma amounts indicatedbelow:

(Rs. in crores)

Year endedMarch 31, 2008

Profit attributable to Equity Share holders (Rs. in crores) (Net profit after tax) 75.05

Add : Stock based compensation expense accounted 0.51

Less: Stock based compensation expense determined under fair value based method (Proforma) 0.67

Net Profit (Proforma) 74.89

Weighted average number of equity shares outstanding during the year 319,807,936

Nominal value of Equity Shares (Rs.) 10

Basic Earnings per Share (Rs.) 2.35

Basic Earnings per Share (Rs.) (Proforma) 2.34

Diluted Earnings per Share (Rs.) (Reported) 2.35

Diluted Earnings per Share (Rs.) (Proforma) 2.34

SCHEDULES (Contd.)

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10. Compliance with Accounting Standard:10.1 Accounting Standard 5 – Net Profit or Loss for the period, prior period items and changes in accounting policies

(AS-5) :There has been no material change in Accounting Policies adopted during the year ended March 31, 2008 from thosefollowed for the year ended March 31, 2007.

10.2 Employee Benefits (AS-15):Gratuity:The benefit of Gratuity is funded defined benefit plan. For this purpose the company has obtained a qualifying insurancepolicy from LIC of India.

(Rs. in crores)

Particulars Gratuity (Funded)March 31, 2008

Changes in the present value of the obligation1 Present Value of obligation 01/04/2007 7.16

2 Interest Cost 0.52

3 Current Service Cost 1.69

4 Past Service Cost -

5 Benefits Paid (3.74)

6 Actuarial (gain) loss on Obligation 3.19

7 Present Value of obligation 31/03/2008 8.82

Reconciliation of opening and closing balance of the fair value of the Plan Assets1 Fair value of Plan Assets 01/04/2007 5.04

2 Expected Return on Plan assets 0.47

3 Contributions 4.24

4 Benefits Paid (3.74)

5 Actual Return on Plan Assets 0.04

6 Fair Value of Plan Assets as at March 31, 2008 6.05

Profit & Loss - Expenses1 Current Service Cost 1.69

2 Interest Cost 0.52

3 Expected Return on Plan assets (0.47)

4 Net Actuarial gain (loss) recognised in the year 3.15

5 Expenses Recognised in the statement of Profit & Loss 4.89

Actuarial Assumptions1 Discount Rate 8.00% and 7.50%*

2 Expected Rate of Return on Plan Assets 8.00%

3 Expected Rate of Salary Increase 4.00% and 3.50%*

* Pertains to the employees of Vehicle Finance Division.

Superannuation:The Bank contributed Rs. 0.04 crores to the employee’s superannuation plan for the year ended March 31, 2008.Leave Encashment:The company provides benefits to its employees under the Leave Encashment pay plan, which is a non-contributorydefined benefit plan. The employees of the company during the tenure of their employment are entitled to receive LeaveEncashment upto 180 days leave to the credit of their account as at beginning of every year.

SCHEDULES (Contd.)

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SCHEDULES (Contd.)

(Rs. in crores)

Particulars March 31, 20081 Actuarial Value of Present Value of Obligation (PVO) Opening Balance 8.142 Interest Cost 0.653 Service Cost 0.914 Benefits paid (1.43)5 Actuarial (gain) loss on Obligation 0.126 Present Value of Obligation 31/03/2008 8.39Balance Sheet Statement1 Present Value of Obligation as at 31.03.08 8.392 Un-funded Liability as at 31.03.08 8.393 Un-funded Liability recognised in Balance Sheet 8.39Profit & Loss Account1 Interest Cost 0.652 Service Cost 0.913 Gain (loss) recognised in the year 0.124 Net Gain / Loss 1.68Actuarial Assumptions1 Discount Rate 8.00% and 8.20%*2 Expected Rate of Salary Increase 5.00% and 6.00%*

* Pertains to the employees of Vehicle Finance Division.10.3 Segment Reporting (AS-17):

The Bank operates in four business segments, viz. Treasury, Corporate/ Wholesale Banking, Retail Banking and OtherBanking Operations. There are no significant residual operations carried by the Bank.Summary:a) As at 31st March 2008:

(Rs. in crores)Business Treasury Corporate/ Retail Other TotalSegments Wholesale Banking Banking

BankingParticulars 2007-08 2007-08 2007-08 2007-08 2007-08Revenue 491.09 1040.68 1244.11 24.40 2800.28Less: Inter-segment Revenue (622.04)Total Income 2178.24Result (86.67) 60.15 271.66 2.17 247.31Unallocated Expenses 51.12Operating Profit 196.19Income Taxes and Other Provisions 121.14Net Profit 75.05Other InformationSegment Assets 8242.34 3619.44 10082.15 - 21943.93Unallocated Assets 1317.95Total Assets 23261.88

Segment Liabilities 1045.66 11084.34 8435.72 - 20565.72Unallocated Liabilities 2696.16Total Liabilities 23261.88

60


b) As at 31st March 2007:(Rs. in crores)

Business Segments Treasury Other Banking TotalParticulars 2006-07 2006-07 2006-07Revenue 453.17 1612.40 2065.57Less: Inter-segment Revenue (321.18)Total Income 1744.39Result (14.19) 234.84 220.65Unallocated Expenses 49.07Operating Profit 171.58Income Taxes and Other Provisions 103.36Net Profit 68.22Tax Adjustments of Previous Years (1.00)Amount available for appropriation 67.22Other InformationSegment Assets 7756.20 12386.56 20142.76Unallocated Assets 784.38Total Assets 20927.14Segment Liabilities 616.57 18937.93 19554.50Unallocated Liabilities 1372.64Total Liabilities 20927.14

Pursuant to the guidelines issued by the Reserve Bank of India on Accounting Standard 17 (Segment Reporting) –Enhancement of disclosures dated April 18, 2007, effective March 31, 2008, the additional segments of Corporate/Wholesale Banking and Retail banking have been included for the year ended March 31, 2008.Segmental Results relating to the year ended March 31, 2007 have been disclosed based on reportable segmentsthen in force and are hence not comparable with the figures for the current year.Geographic Segments:The business operations of the Bank are largely concentrated in India. Activities outside India are restricted toresource mobilization in the international markets. Since the Bank does not have material earnings emanating fromforeign operations, the Bank is considered to operate only in domestic segment.

10.4 Related party transactions (AS-18):The following is the information on transactions with related parties:Key Management Personnel :Mr. Bhaskar Ghose, Managing Director (upto January 31, 2008),Mr. S. Nagarajan, Jt. Managing Director (upto December 22, 2007),Mr. Romesh Sobti, Managing Director (from February 1, 2008)Associates: IndusInd Information Technology Limited

IndusInd Marketing and Financial Services Private Limited(formerly known as Allfin Services & Solutions Private Limited)Allfin Marketing Services Private LimitedAllfin Distribution Private LimitedIBL Services & Solutions Private LimitedAllfin Insurance Specialities Private LimitedAllfin Insurance Services Private LimitedAlfin Wind Energy (a division of Ashok Leyland Project Services Limited)

Subsidiaries: ALF Insurance Services Private Limited

SCHEDULES (Contd.)

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SCHEDULES (Contd.)

Summarized transactions with related parties for the year ended March 31, 2008:(Rs. in crores)

Items/ Related Party Parent Subsidiaries Associates Key Relatives Total(as per Management of key

ownership Personnel Managementof control) Personnel

Deposits - 0.60 2.99 0.13 - 3.72Advances - - 5.01 - - 5.01Investments - 0.50 0.60 - - 1.10Interest paid - 0.05 0.09 0.02 - 0.16Interest received - - - - - -Rendering of services - - 17.53 - - 17.53Receiving of services - - 43.87 - 0.02 43.89Receiving of services-Capitalized - - 5.26 - - 5.26Management Contracts - - - 2.14 - 2.14Other liabilities (creditors forexpenses, securitydeposits etc) - - 15.08 - - 15.08Receivable of services - - 5.95 - - 5.95

The following balances represent the maximum balance payable to/ receivable from the related parties during the yearended March 31, 2008:

(Rs. in crores)Items/ Related Party Subsidiaries Associates Key Relatives Total

Management of keyPersonnel Management

PersonnelDeposits 0.60 11.48 1.00 - 13.08Advances - 8.55 0.15 - 8.70Investments 0.50 0.60 - - 1.10Receivable of services - 7.43 - - 7.43

Summarised Transactions with related parties for the year ended March 31, 2007:(Rs. in crores)

Items/ Related Party Parent Subsidiaries Associates Key Relatives Total(as per Management of key

ownership Personnel Managementof control) Personnel

Deposits - 0.55 6.12 0.75 - 7.42Advances - - 6.50 0.15 - 6.65Investments - 0.50 0.60 - - 1.10Interest paid - 0.04 0.09 - - 0.13Interest received - - 0.01 0.01 - 0.02Rendering of services - - 11.40 - - 11.40Receiving of services - - 35.56 - - 35.56Receiving of services-Capitalized 2.25 2.25Management Contracts - - - 1.04 - 1.04Sale of Shares 9.50 9.50Redemption of Preference Shares 3.40 3.40Profit on sale of shares - - 8.00 - - 8.00Dividend on Preference shares - - 0.03 - - 0.03Receivable of services - - 5.51 - - 5.51

62


SCHEDULES (Contd.)

The following balances represent the maximum balance payable to/ receivable from the related parties during the year endedMarch 31, 2007:

(Rs. in crores)Items/ Related Party Subsidiaries Associates Key Relatives Total

Management of keyPersonnel Management

PersonnelDeposits 1.14 20.98 0.97 0.03 23.12

Advances - 13.10 0.15 - 13.25

Investments 0.50 8.50 - - 9.00

Receivable of services - 5.51 - - 5.51

10.5 The Bank does not have any non-cancelable operating leases during the year, where it is the lessee.

10.6 Earnings per share: (AS-20):The numerators and denominators used to calculate the earning per share as per AS-20 are as under:

Year ended Year endedMarch 31, March 31,

2008 2007Net Profit as Reported (Rs. in crores) 75.05 67.22Net Profit (Proforma) 74.89Weighted average number of equity shares outstanding during the year 319,807,936 290,479,227Nominal value of Equity Shares (Rs.) 10 10Basic Earnings per Share (Rs.) 2.35 2.31Basic Earnings per Share (Rs.) (Proforma) 2.34 -Diluted Earnings per Share (Rs.) (Reported) 2.35 2.31Diluted Earnings per Share (Rs.) (Proforma) 2.34 -

10.7 ALF Insurance Services Pvt. Ltd., subsidiary of the Bank, is yet to commence operations for want of necessary regulatoryapprovals. Accordingly, no consolidated financial statements have been drawn up as per AS-21 “Consolidated FinancialStatements”.

10.8 Taxation:(a). Provision for tax has been made after considering contingency provision as admissible deduction.(b). Deferred Tax (AS-22): The major components of deferred tax assets/ liabilities as on March 31, 2008 are as under:

(Rs. in crores)

Timing difference on account of : 31.03.2008 31.03.2007Deferred Tax Deferred Tax

Assets Liabilities Assets LiabilitiesDifference between book depreciation anddepreciation under the Income Tax Act, 1961 - 34.81 - 36.16

Difference between Provisions for doubtful debtsand advances and amount allowable underSection 36(1)(viia) of the Income Tax Act, 1961 55.62 - 42.57 -

Interest on securities - 26.88 - 19.61

Income Recognition 0.01 - 0.01 -

Others 1.82 - 2.09

Sub-total 57.45 61.69 44.67 55.77Net closing balance carried to Balance Sheet(included in Sch. V – Others) 4.24 11.10

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SCHEDULES (Contd.)

10.9 “Provisions and Contingencies” as charged to Profit and Loss account for the year consist of :

(Rs. in crores)

March 31, March 31,2008 2007

i) Income Tax / Wealth Tax / Deferred Tax/ Fringe Benefit Tax 39.23 39.16

ii) Depreciation on Investments 3.63 2.31

iii) Provision for non-performing assets including bad debts written off 60.90 55.92

iv) Provision towards Standard Assets 7.45 9.80

v). Other provisions and contingencies towards write off of other assets/contingent obligations 9.93 (3.83)

Total 121.14 103.36

10.10 In the opinion of the Bank there is no impairment of its fixed Assets to any material extent as at March 31, 2008 requiringrecognition in terms of Accounting Standard 28.

11. A. Customer Complaints:

2007-08 2006-07

(a) No. of complaints pending at the beginning of the year 39 33

(b) No. of complaints received during the year 182 173

(c) No. of complaints redressed during the year 177 167

(d) No. of complaints pending at the end of the year 44 39

B. Awards passed by the Banking Ombudsman:

2007-08 2006-07

(a) No. of unimplemented Awards at the beginning of the year Nil Nil

(b) No. of Awards passed by the Banking Ombudsmen during the year Nil Nil

(c) No. of Awards implemented during the year Nil Nil

(d) No. of unimplemented Awards at the end of the year Nil Nil

(Complied by management and relied by auditors)

12. Suppliers/ service providers covered under Micro, Small Medium Enterprises Development Act, 2006, have not furnished theinformation regarding filing of necessary memorandum with the appropriate authority. Hence, information required to be disclosedunder section 22 of the said Act is not given.

13. Previous year’s figures have been regrouped/ reclassified wherever necessary.

64


CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2008

(Rs. in crores)For the year For the year

ended 31.3.2008 ended 31.3.2007A. Cash Flow from Operating Activities

Net Profit after taxes 75.05 67.22Adjustments for non-cash charges :Depreciation on Fixed Assets 40.16 34.09Provision on Investments 3.63 2.31Tax Provisions (Income Tax/ Wealth Tax/ Deferred Tax) 39.23 40.15Employees Stock Option Expenses 0.51 0Loan loss and Other Provisions 37.29 61.90Interest on Tier II / Upper Tier II bonds (treated separately) 76.58 57.29(Profit) / Loss on sale of fixed assets (14.70) 0.61Operating Profit before Working Capital changes 257.75 263.57Adjustments for :Increase in trade and Other Receivables (Advances and Other Assets) (1769.75) (1734.78)Increase in Inventories (Investments) (741.67) (484.06)Increase in Trade Payables (Deposits, Borrowings and Other Liabilities) 1991.82 2874.22Cash generated from Operations (261.85) 918.95Direct taxes paid (65.26) (34.94)Net Cash from Operating Activities (327.11) 884.01

B. Cash Flow from Investing ActivitiesPurchase of Fixed Assets (56.98) (65.40)Sale of Fixed Assets (Proceeds) 15.75 0.72Net Cash used in Investing Activities (41.23) (64.68)

C. Cash Flow from Financing ActivitiesProceeds from GDR issue - Capital - 29.49

- Premium - 116.47Dividends paid (22.45) 0Proceeds from Issue of Unsecured Non- Convertible RedeemableSubordinated Tier II Bonds 50.00 50.00Proceeds from Unsecured Non-convertible Redeemable Non-CumulativeSubordinated Upper Tier II Bonds 208.90Redemption of Sub-ordinated Tier II capital (52.00)Interest on Tier II / Upper Tier II bonds (76.58) (57.29)Net Cash used in Financing Activities (49.03) 295.57

Net increase in Cash and Cash Equivalents (417.37) 1114.90Cash and Cash Equivalents as on the first day of the year 2595.40 1480.50Cash and Cash Equivalents as on the last day of the year 2178.03 2595.40Notes :1. The above Cash Flow Statement has been prepared under the indirect method as set out in Accounting Standard 3 on Cash

Flow Statement issued by the Institute of Chartered Accountants of India (ICAI).2. Figures in brackets indicate cash outflow.3. Refer to note 15 under Schedule No. XVII.4. Previous year’s figures have been regrouped and recast to conform to the current year’s classification.As per our report of even date. For INDUSIND BANK LTD.

For M. P. Chitale & Co. R. Seshasayee T. Anantha NarayananChartered Accountants Chairman Director

Ashutosh Pednekar R. Sundararaman Romesh SobtiPartner Director Managing Director

S. V. Zaregaonkar Haresh GajwaniExecutive Vice President & CFO Company Secretary

Place : MumbaiDate : June 24, 2008

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US DOLLARS DENOMINATED BALANCE SHEET AS AT MARCH 31, 2008

(Millions of US$)1 USD = Rs. 39.985 As at 31.03.08 As at 31.03.07

CAPITAL AND LIABILITIESCapital 80.03 80.03Employee Stock Options Outstanding 0.13 0.00Reserves and Surplus 257.40 184.27Deposits 4,761.14 4,412.86Borrowings 273.96 148.18Other Liabilities & Provisions 444.99 408.41

TOTAL 5,817.65 5,233.75

ASSETSCash and Balances with Reserve Bank of India 381.71 255.39Balances with Banks and Money at Call and Short Notice 163.00 393.70Investments 1,658.04 1,473.47Advances 3,200.03 2,772.09Fixed Assets 156.35 92.43Other Assets 258.52 246.67

TOTAL 5,817.65 5,233.75

Contingent Liabilities 7,748.39 5,192.38Bills for Collection 440.47 365.48

PROFIT AND LOSS ACCOUNT FOR THE ENDED 31ST MARCH 2008(Millions of US$)

1 USD = Rs. 39.985 Year ended Year ended31.3.08 31.3.07

I INCOMEInterest Earned 480.23 375.20Other Income 64.53 61.06

TOTAL 544.76 436.26

II EXPENDITUREInterest Expended 395.11 307.33Operating Expenses 100.59 86.02Provisions and Contingencies 30.29 25.85

TOTAL 525.99 419.20

III PROFIT 18.77 17.06Less: Tax Adjustments of previous years 0.00 0.25

AMOUNT AVAILABLE FOR APPROPRIATION 18.77 16.81

IV. APPROPRIATIONSTransfer toa) Statutory Reserve 4.69 4.26b) Capital Reserve 0.56 0.55c) Dividend (Proposed) 4.80 4.80d) Corporate Dividend Tax 0.82 0.82

10.87 10.43Balance carried over to Balance Sheet 7.90 6.38

TOTAL 18.77 16.81

66

66 — Ceps-3 --- D:\Sales\Mohan\Indusind 9-7-08/\ALF Insurance 2008/pravin.9.7-skg-9-7-skg-22-7\vk31-7\AMD\21-8

DIRECTORS’ REPORTYour Directors are pleased to present the Fifth Annual Report along with the audited accounts for theyear ended March 31, 2008.

Financial Performance:(in Rupees)

Particulars Year ended Year endedMarch 31, March 31,

2008 2007

Interest Income 5,61,847 3,18,257Total Income 5,61,847 3,18,257Administrative and Other Expenses 48,324 29,588Total Expenditure 48,324 29,588Net Profit before Tax 5,13,523 2,88,669Preliminary Expenses written off 3,210 3,210Provision for Taxation 1,75,316 1,00,695Profit After Tax 3,34,997 1,84,764Profit brought forward from previous year 5,07,638 3,22,874Profit carried to Balance Sheet 8,42,635 5,07,638

Business

Your Company is in the Business of Insurance Corporate Broking.

Outlook for the future

Upon getting license from IRDA, your Company will be doing business with all the public sectorcompanies namely, New India Assurance Company Limited, Oriental Insurance Company Limited,United India Insurance Company Limited and National Insurance Company Limited.

Board of Directors

Mr. S .T. Krishnekumaar, Director, retires by rotation and he being eligible, offers himself forre-appointment.

Directors’ Responsibility Statement

a) In the preparation of annual accounts for the period ended March 31, 2008 the applicableaccounting standards have been followed by the Company.

b) The Directors have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair view ofthe state of affairs of the Company as at March 31, 2008 and the profit of the Company for theperiod ended on that date.

c) The Directors have taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act, 1956 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities.

d) The accounts of the Company have been prepared on a going concern basis.

Auditors

M/s. Prasad & Srinath, Chartered Accountants, Chennai, retire at the ensuing Annual GeneralMeeting and are eligible for re-appointment.

Secretarial Compliance Certificate

Secretarial Compliance Certificate pursuant to Section 383A of the Companies Act issued by Mr. G.Ramachandran, Company Secretary in practice is attached and the same forms part of this report.

Particulars of employees

None of the employees are covered under Section 217(2A) of the Companies Act read with Companies(Particulars of Employees) Rules, 1975.

Conservation of Energy, Technology absorption and Foreign Exchange Earning / Outgo

Your Company has no activities relating to Conservation of Energy or Technology Absorption. YourCompany did not have any foreign earnings or outgo.

Acknowledgement

Your Directors wish to place on record their deep appreciation for the whole-hearted and sincere co-operation from its Bankers. Your Directors also wish to place on record their appreciation for theunstinted co-operation and support extended by all the employees in achieving the performance ofyour Company.

On behalf of the Board of Directors

C. M. SamabsivamS. T. Krishnekumaar

DirectorsChennaiMay 26, 2008

SUBSIDIARY COMPANYALF Insurance Services Private Limited

AUDITORS’ REPORTAuditors’ Report to the members of ALF Insurance Services Private Limited

1. We have audited the attached balance sheet of ALF Insurance Services Private Limited as at31st March 2008, and the Profit and Loss Account for the year ended on that date annexedthereto. These financial statements are the responsibility of the company’s management. Ourresponsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India.Those Standards require that we plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors’ Report) Order, 2003 as amended by the Companies(Auditors’ Report) (Amendment) Order, 2004, issued by the Government of India in terms ofsub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure astatement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that:

(i) We have obtained all the information and explanations, which to the best of our knowledgeand belief were necessary for the purposes of our audit;

(ii) In our opinion, proper books of account as required by law have been kept by thecompany so far as appears from our examination of those books;

(iii) The Balance Sheet and Profit and Loss Account dealt with by this report are in agreementwith the books of account;

(iv) In our opinion, the Balance Sheet and Profit and Loss Account dealt with by this reportcomply with the accounting standards referred to in sub-section (3C) of section 211 ofthe Companies Act, 1956;

(v) On the basis of written representations received from the Directors, as on 31st March2008 and taken on record by the Board of Directors, we report that none of the Directorsis disqualified as on 31st March 2008 from being appointed as a Director in terms ofclause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

(vi) In our opinion and to the best of our information and according to the explanations givento us, the said accounts give the information required by the Companies Act, 1956, in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st

March 2008,(b) in the case of the Profit and Loss Account of the Profit for the year ended on that

date.

For PRASAD & SRINATHChartered Accountants

S.PRASADPartner

M.No.12847Place: ChennaiDate: May 26, 2008

ANNEXUREReferred to in paragraph 3 of our report of even date,1) The Company does not have any Fixed Asset and hence maintenance of register and physical

verification does not arise.2) The Company does not have any stock of inventory and hence reporting on physical verification

does not arise.3) a) The Company has neither granted nor taken any loans, secured or unsecured to/from

companies, firms, or other parties covered in the register maintained under section 301 ofthe Companies Act, 1956.

4) In our opinion and according to the information and explanations given to us, there is anadequate internal control system commensurate with the size of the company and the natureof its business. During the course of our audit, we have not observed any continuing failure tocorrect major weaknesses in internal system.

5) a) According to the information and explanations given to us, we are of the opinion that thetransactions that need to be entered into the register maintained under section 301 of theCompanies Act, 1956 have been so entered.

b) None of the said transactions have exceeded Rs.5 Lakhs in value in respect of any party inone financial year.

6) The Company has not accepted deposits from the Public during the year.7) The Company does not have separate internal audit system. However, in our opinion the

existing internal control procedures are sufficient considering the size and nature of businessof the Company.

8) The Central Government has not prescribed maintenance of any cost records under Section209 (1) (d) of the Companies Act, 1956.

9) a) The Company is regular in depositing applicable undisputed statutory dues with appropriatestatutory authorities.

b) According to the information and explanations given to us, there were no disputed amountspayable in respect of Income tax, Wealth tax, Sales tax, Customs duty, Excise duty,Service tax and Cess as at 31.03.2008 for a period of more than six months from the datethey became payable.

10) The Company does not have accumulated losses. The Company has not incurred cash lossesduring the year covered by our audit and the immediately preceding year.

11) The Company does not have any dues to a bank or to a financial institution or to Debentureholders.

12) The Company has not granted any loans and advances on the basis of security by way ofpledge of shares, debentures and other securities.

13) The Company is not a chit fund or a nidhi/ mutual benefit fund/ society. Therefore, the provisionsof clause 4(xiii) of the Companies (Auditors’ Report) Order, 2003 are not applicable to theCompany.

14) The Company is not dealing in or trading in shares, securities, debentures and other investments.Therefore, the provisions of clause 4(xiv) of the Companies (Auditors’ Report) Order, 2003 arenot applicable to the Company.

15) The Company has not given any guarantee for loans taken by others from banks or financialinstitutions.

16) The Company does not have any term loan.17) The Company has not raised funds on short-term basis.18) The Company has not made any preferential allotment of shares to parties and companies

covered in the register maintained under section 301 of the Act.19) The Company has not issued any debentures.20) The Company has not raised money by way of public issues.21) During the course of our examination of the books of account carried out in accordance with

the generally accepted auditing practices in India, we have neither come across any instanceof fraud on or by the Company, noticed or reported during the year, nor have we been informedof such case by the management.

For PRASAD & SRINATHChartered Accountants

S. PRASADPartner

M.No.12847Place: ChennaiDate: May 26, 2008

67


A N N U A L R E P O R T 2 0 0 7 - 2 0 0 8

BALANCE SHEET AS AT MARCH 31, 2008

SOURCE OF FUNDS SCH March 31, March 31,2008 2007

Rs. Rs. Rs. Rs.

Shareholders’ Funds

Share Capital 1 50,00,000 50,00,000

Reserves and Surplus 2 8,42,635 5,07,638

Total 58,42,635 55,07,638

APPLICATION OF FUNDS

Current Assets Loans and Advances 3 62,28,889 57,12,776

Less: Current Liabilities and Provisions 4 3,86,254 2,08,348

Net Current Assets 58,42,635 55,04,428

Preliminary Expenses - 3,210

Total 58,42,635 55,07,638

Schedules and Notes to the Accounts form part of this Balance Sheet

As per our report of even date

For and on behalf of For and on behalf of the BoardPRASAD & SRINATHChartered Accountants

S. PRASAD C.M.SAMBASIVAM S.T.KRISHNEKUMAARPartner Director DirectorM.NO.12847

Place : ChennaiDate : May 26, 2008

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED

MARCH 31, 2008

March 31, March 31,2008 2007

SCH Rs. Rs.INCOMEInterest On Fixed Deposit 5,61,847 3,18,257(TDS: Rs.114072; previous year Rs.86812)

TOTAL INCOME (A) 5,61,847 3,18,257

EXPENDITURE

Administration 5 48,324 29,588

Preliminary Expenses written -off 3,210 3,210

TOTAL EXPENDITURE (B) 51,534 32,798

Profit Before Tax (A-B) 5,10,313 2,85,459

Less: Provision for Taxation 1,73,454 96,157

Less: Provision for Taxation (for Prior Period) 1,862 4,538

Profit after Tax 3,34,997 1,84,764

Profit brought forward from previous year 5,07,638 3,22,874

Profit carried to Balance Sheet 8,42,635 5,07,638

Schedules and Notes to the Accounts form part of this Balance Sheet

As per our report of even date




SCHEDULES TO ACCOUNTSMarch 31, March 31,

2008 2007Rs. Rs. Rs. Rs.

1. SHARE CAPITAL

Authorised

5,00,000 Equity Shares ofRs.10/- each 50,00,000 50,00,000

Issued, Subscribed and Paid up

5,00,000 equity shares ofRs.10/- each 50,00,000 50,00,000[The entire capital is held byIndusInd Bank Ltd. and it’s nominees]

2. RESERVES AND SURPLUS

Profit and Loss Account 8,42,635 5,07,638

TOTAL 8,42,635 5,07,638

3. CURRENT ASSETS, LOANS ANDADVANCES

Interest Receivable 3,88,733 3,00,054

Tax Deducted at source 2,37,683 1,23,611

Advance Tax Paid 11,206 0

Bank Balance (with Scheduled Bank)

In Current Account 32,832 89,772

In Fixed Deposit Account 55,58,435 51,99,339

62,28,889 57,12,776

4. Current Liabilities & Provisions

a) Current liabilitiesSundry Creditors 15,303 12,713

b) ProvisionsProvision for Taxation 3,70,951 1,95,635

3,86,254 2,08,348

5. Administrative Expenses

Rates & Taxes 13,956 1,528

Professional Charges 21,766 16,836

Audit Fees(including service tax):

Statutory Audit Fees 11,236 11,224

Certification 1,124 0

Bank Charges 242 0

48,324 29,588

ACCOUNTING POLICIES

1. Revenue Recognition

1.1 Interest on Fixed Deposit is accounted on accrual basis.

1.2 Retirement Benefits

The Company does not have any employees and hence provision towards gratuity andencashment of leave has not been made in accounts.

2. The Company does not have any deferred tax liability.

3. The figures have been rounded off to nearest rupee.

4. Previous year figure have been regrouped wherever necessary.




68


1 Name of the Subsidiary Company : ALF Insurance Services Pvt. Ltd.

2 Financial Year ending : March 31, 2008

3 Holding Company’s Interest : 4,99,998 equity shares of Rs.10/- face value.

4 Extent of holding : 100%

5 Profit (Loss) for the financial year of the subsidiary so far as it concerns : Rs.3,34,997

the member of the holding company and not dealt with in the books of

accounts of the holding company

6 Profit (Loss) for the financial year of the subsidiary so far as it concerns : Rs. Nil

the member of the holding company and dealt with in the books of

accounts of the holding company

7 Profit (Loss) for the previous financial year of the subsidiary so far as it : Rs.1,84,764

concerns the member of the holding company and dealt with in the

books of accounts of the holding company

8 Profit (Loss) for the previous financial year of the subsidiary so far as it : Rs. Nil

concerns the member of the holding company and dealt with in the

books of accounts of the holding company

STATEMENT PURSUANT TO SEC.212 (1) (E) OF THE COMPANIES ACT, 1956

RELATING TO SUBSIDIARY COMPANY AS ON MARCH 31, 2008.

INDUSIND BANK - LAST 10 YEARS

(Rs. in crores)

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Deposits 5018 6546 7187 8400 8598 11200 13114 15006 17645 19037

Advances 2662 3677 4237 5574 5348 7812 9000 9310 11084 12795

Capital 159 159 159 159 219 290 291 291 320 320

Reserves & Surplus 370 374 385 403 383 510 539 576 737 1029

Borrowings 41 55 41 87 237 2310 611 535 593 1095

Investments 2095 2731 2494 2485 2535 3972 4069 5410 5892 6630

Interest Income 594 637 729 710 743 986 1134 1188 1500 1920

Other Income 83 145 116 184 258 345 251 189 244 258

Interest Expenses 479 501 569 547 558 669 719 873 1229 1580

Operating Expenses(excluding depreciation) 66 68 75 74 93 180 220 281 310 362

Operating Profit(before depreciation) 132 213 201 273 350 482 446 223 205 236

Provisions & Contingencies(including depreciation) 95 157 160 222 260 220 236 186 137 161

Net Profit 37 56 41 51 90 262 210 37 68 75

Number of branches 26 27 32 40 53 61 115 137 170 180

Number of Extn. Counters 3 4 4 7 10 12 9 8 0 0

Number of OSAs 0 0 0 30 64 80 80 83 99 183

69

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A N N U A L R E P O R T 2 0 0 7 - 2 0 0 8

Branch Network

Andhra Pradesh

Ananthapur


Tel: (08554) 244955, 249373

Banjara Hills


Tel: (040) 23545274 / 47

Chittoor


Tel: (08572) 221166, 230044

Gajuwaka


Tel: (0891) 2514125, 2758223

Gudivada


Tel: (0867) 249033, 249044

Guntur


Tel: (08674) 2331001 / 2

Hyderabad


Tel: (040) 27907660 / 64

Kadapa


Tel: (08562) 243411

Kodad


Tel: (08683) 256043

Kurnool


Tel: (08518) 223425, 325420

Miryalaguda


Tel: (08689) 243050

Nellore


Tel: (0861) 2306369, 6522208

Seethummadhara


Tel: (0891) 2707326 / 29

Vijayawada


Tel: (0866) 2492633/44

Visakhapatnam


Tel: (0891) 2702202 / 198

Warangal


Tel: (0870) 2433555

Assam

Dibrugarh


Tel: (0373) 2323756, 2323759

Guwahati


Tel: (0361) 2452864, 2463503

Jorhat


Tel: (0376) 2301408

Silchar


Tezpur


Tinsukia


Bihar

Patna


Tel: (0612) 2500938

Chandigarh

Chandgarh


Tel: (0172) 5001872 / 3

Mohali


Tel: (0172) 5020821 / 832

Chattisgarh

Ambikapur


Tel: (07774) 231802 / 3

Jagdalpur


Tel: (07782) 222039 / 6091

Raipur


Tel: (0771) 4033401 / 02

Goa

Madgaon


Tel: (0832) 2712238 – 42

Panjim


Tel: (0832) 2429044 / 46

Gujarat

Ahmedabad


Tel: (079) 26426104 – 8

Amalsad


Tel: (02634) 273006 /07 / 11

Bardoli


Tel: (02622) 229375 / 329

Baroda


Tel: (0265) 2332409, 2326113

Bhavnagar


Tel: (0278) 2512055 / 2011

Dharmaj


Tel: (02697) 245096, 245102

Gandhidham


Tel: (02836) 233541, 324789

Hazira


Tel: (0261) 2861223, 2861224

Jamnagar


Tel: (0288) 2664322 / 5760

Mehsana


Tel: (02762) 241492 / 93

Morbi


Tel: (02822) 251808 / 260

Rajkot


Tel: (0281) 2461893 / 94

Surat


Tel: (0261) 2366823 / 24

Valsad


Tel: (02632) 254665, 254666

Vapi


Tel: (0260) 2425175, 2428129

Warasia


Tel: (0265) 2512595, 2512597

Haryana

Gurgaon


Tel: (0124) 2388883 - 5

Hissar


Tel: (01662) 226340 / 2

Karnal


Tel: (0184) 2268955 /56

Panchkula


Tel: (0172) 5024380 / 4389

Rohtak


Tel: (01262) 645715, 645669

Himachal Pradesh

Shimla


Tel: (0177) 2654187, 2652217

Jammu & Kashmir

Srinagar


Tel: (0194) 2480755, 2480772

Jharkhand

Bokaro


Tel: (06542) 233418 / 20

Dhanbad


Tel: (0326) 2305700, 2309888

Hazaribagh


Tel: (06546) 224920 / 922

Jamshedpur


Tel: (0657) 3294929, 2756115

Ranchi


Tel: (0651) 2330137, 2330147

Karnataka

Bangalore

Email: [email protected].

Tel: (080) 25592318 / 19

Basavanagudi


Tel: (080) 26610251-54

Bidadi


Tel: (080) 27204805

Bommassandra


Tel: (08110) 27836556 / 6557

Hubli


Tel: (0836) 2358263 / 64

Mangalore


Tel: (0824) 2425101 / 102

Marathalli


Tel: (080) 25233405, 65358822

Mysore


Tel: (0821) 4252061, 4262899

Shimoga


Tel: (08182) 227722

Kerala

Alappuzha


Tel: (0477) 2230888 / 0997

Kakkanad


Tel: (0484) 2413252 / 3211

Kannur


Tel: (0497) 2705944, 3259660

Kattappana


Tel: (04868) 252470/71

Kazhakuttom


Tel: (0471) 2527550/1/2

Kochi


Tel: (0484) 2360888, 4422288

Kollam


Tel: (0474) 2766985 / 86

Kottayam


Tel: (0481) 2303615, 2351737

Malappuram


Tel: (0483) 2735810, 3256575

Palakkad


Tel: (0491) 2573900 / 901

Perinthalmanna


Tel: (04933) 224600 / 1

Thiruvalla


Tel: (0469) 2600241 /243

Thiruvananthapuram


Tel: (0471) 2339931, 2339932

Thrissur


Tel: (0487) 2323178, 2322762

Madhya Pradesh

Bhopal


Tel: (0755) 4228090 /91

Chhindwara


Tel: (07162) 245204, 247917

Gwalior


Tel: (0751) 2235564 / 65

Indore


Tel: (0731) 2542696 / 7 / 8

Jabalpur


Tel: (0761) 4006180, 4010100

Maharashtra

Andheri


Tel: (022) 28237636 - 40

Aurangabad


Tel: (0240) 2353760 / 56

Bandra


Tel: (022) 26457800 / 8320

Chembur


Tel: (022) 25260881/82/85

Dadar


Tel: (022) 24167911/17

Fort


Tel: (022) 66366580 - 83

Kandivali


Tel: (022) 28022079 / 80

Kolhapur


Tel: (0231) 6512007/8

Lokhandwala


Tel: (022) 66951107 -10

Mahim


Tel: (022) 24455301, 24455563

Mulund


Tel: (022) 25927080 / 6808

Nagpur


Tel: (0712) 2547456, 2534188

Nariman Point


Tel: (022) 22022404 / 415

Opera House


Tel: (022) 23857474 / 9494

Panvel


Tel: (022) 27483252

Pune


Tel: (020) 26343201 / 238

Thane


Tel: (022) 25390387 / 88

Vashi


Tel: (022) 27830026 / 1028

Mizoram

Aizawl


New Delhi

Barahkhambha


Tel: (011) 23738040 / 8408

70

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Janakpuri


Tel: (011) 41000141 – 43

Nehru Place


Tel: (011) 26481119 / 20/ 36

Preet Vihar


Tel: (011) 22051623 /32

Punjabi Bagh


Tel: (011) 25220037/38

Orissa

Balasore


Tel: (06782) 240274 / 6

Barbil


Tel: (06767) 276821

Bhubaneswar


Tel: (0674) 2536124 / 6125

Cuttack


Tel: (0671) 2321341 / 42 / 43

Guali


Tel: (06767) 244190 / 91

Joda


Punjab

Amritsar


Tel: (0183) 5066708 / 808

Banga


Tel: (01823) 263739, 501011

Bhatinda


Tel: (0164) 2213466-68

Jallandhar


Tel: (0181) 5003480 / 580

Khanna


Tel: (01628) 237924 – 25

Ludhiana


Tel: (0161) 5043801 / 06

Mansa


Tel: (01652) 500026 – 28

Phagwara


Tel: (01824) 223422 / 24 - 6

Urban Estate Focal Point


Tel: (0161) 2678600, 5042010

Rajasthan

Ajmer


Tel: (0145) 2631999, 2428239

Bhilwara


Tel: (01482) 233200 – 202

Bikaner


Tel: (0151) 2201790, 2201793

Jaipur


Tel: (0141) 2387301-05

Jhunjhunu


Tel: (01592) 236319, 236728

Jodhpur


Tel: (0291) 5102288 / 2289

Kota


Tel: (0744) 2366677 – 80

Nagaur


Tel: (01582) 247184, 247185

Nasirabad


Tel: (01491) 220452, 220456

Shahpura


Tel: (01422) 225388, 517231

Sumerpur


Tel: (02933) 258127 / 128

Udaipur


Tel: (0294) 2417294 / 295

Sikkim

Gangtok


Tel: (03592) 271157, 232571

Tamil Nadu

Adyar


Tel: (044) 42607575 - 79

Annanagar


Tel: (044) 42180927 / 28

Avinashi


Tel: (04296) 273701 – 04

Chennai


Tel: (044) 28234788 / 99

Coimbatore


Tel: (0422) 2213551 / 72

Coonoor


Tel: (0423) 2232010, 2232020

Dharmapuri


Tel: (04342) 269709, 269611

Erode


Tel: (0424) 2259073 / 75

Hosur


Tel: (04344) 240301, 240401

Karur


Tel: (04324) 231402 / 3

Madurai


Tel: (0452) 2520421, 2522850

Namakkal


Tel: (04286) 231722 / 0064

R. S. Puram


Tel: (0422) 2541409 / 29

Salem


Tel: (0427) 2443292, 2449517

Sankari


Tel: (04283) 241600

Sivakasi


Tel: (04562) 276736

Tiruchirapalli


Tel: (0431) 2412237

Tirupur


Tel: (0421) 2242875, 2242885

Vellore


Tel: (0416) 2222263 / 43

Tripura

Agartala


Tel: (0381) 2320040, 2320061

Dharmanagar


Union Territory

Pondicherry


Tel: (0413) 4210600, 4210601

Silvassa


Tel: (0260) 2641712, 2993712

Uttar Pradesh

Agra


Tel: (0562) 3018380, 3018390

Allahabad


Tel: (0532) 2260354, 2260353

Aminabad


Tel: (0522) 2614336, 2622870

Bareilly


Tel: (0581) 2572112 / 2113

Hapur


Tel: (0122) 2306085 / 86

Kanpur


Tel: (0512) 2554057-60

Lucknow


Tel: (0522) 2620166-8

Noida


Tel: (0120) 2517416 – 20

Varanasi


Tel: (0542) 2207982 -5

Uttaranchal

Dehradun


Tel: (0135) 2740411, 2740522

West Bengal

Asansol


Tel: (0341) 2215665-8

Burra Bazar


Tel: (033) 22594856, 22594819

Durgapur


Tel: (0343) 2543520/21

Gariahat


Tel: (033) 24653731 - 33

Kharagpur


Tel: (03222) 228328/30

Kolkatta


Tel: (033) 30212400 / 01

Malda


Tel: (03512) 265762 / 5769

Siliguri


Tel: (0353) 2777940/ 41

Stock Exchange


Tel: (033) 22312723 / 24

Offices Abroad

Dubai


Tel: (009714) 3978803

London

Email:[email protected]

Tel: (0044) 207 4845585

I/We ................................................... of ............................................. in the district of ............................................ being a member / members of theabove named Bank, hereby appoint .................................... of ..................................... in the district of ............................. or failing him ................................of ...................................................... in the district of ............................................ as my / our proxy to vote for me / us on my / our behalf at theFourteenth Annual General Meeting of the Bank to be held at Hotel Sun-n-Sand, 262, Bund Garden Road, Pune - 411001 on Monday,September 22, 2008 at 2.00 p.m. and at any adjournment thereof.

Signed this ..................................................... day of ............................................, 2008

Signature __________________

NOTE : This proxy form, in order to be effective and valid, should be duly stamped, completed and signed and must be deposited at the RegisteredOffice of the Bank not less than 48 hours before the time of the Meeting.

14th Annual General Meeting, Monday, September 22, 2008 at 2.00 p.m. at Hotel Sun-n-Sand, 262, Bund Garden Road, Pune - 411 001

I hereby record my presence at the 14th Annual General Meeting of the Bank to be held on Monday, September 22, 2008 at 2.00 p.m. atHotel Sun-n-Sand, 262, Bund Garden Road, Pune - 411001.

Name of the shareholder / proxy (in block letters) .....................................................................................................................................................................

Signature of the shareholder / proxy ..........................................................................................................................................................................................

NOTE : Shareholders attending the meeting in person or by proxy are requested to complete the attendance slip and hand it over to the Bankofficials at the entrance of the meeting hall.

BANK ACCOUNT PARTICULARS / ECS MANDATE FORM

Folio No. ________________________ No. of shares hled ________________

I/We ......................................................................................... do hereby authorise IndusInd Bank Limited to

* Print the following details on my / our Dividend Warrant

* Credit my dividend account directly to my Bank account by Electronic Clearing Services (ECS).

(* Strike out whichever is not applicable.)

Particulars of Bank Account:

A. Bank Name : ....................................................................................................................................................

B. Branch Name : ....................................................................................................................................................

Address with PIN code(for ECS Mandate only)

C. 9 Digit Code Number of the Bank andBranch (as appearing on the MICR Cheque) : .............................................................................................................................................

D. Account Type (Saving/Current/NRE/NRO) : .............................................................................................................................................

E. Account No. (as appearing on the cheque Book) : .............................................................................................................................................

I/We shall not hold the bank responsible if the ECS could not be implemented or the Bank discontinues the ECS, for any reason.

Intime Spectrum Registry LimitedMAIL TO Unit: IndusInd Bank Ltd., C-13, Pannalal Silk Mills Compound,

L.B.S. Marg, Bhandup (W), Mumbai 400 078 ....................................................................Signature of the Shareholder

NOTE : Please attach the photocopy of a cheque or a blank cancelled cheque issued by your Bank relating to your above account for verifying theaccuracy of the 9 digit code number.In case you are holding shares in demat form, kindly advise your Depository Participant to take note of your Bank account particulars /ECS Mandate.

RevenueStamp

Registered Office :2401, General Thimmayya Road(Cantonment), Pune 411 001

PROXY FORM Folio No. ________________________

DPID-Client ID No. ________________

No. of shares held ________________

Registered Office :2401, General Thimmayya Road(Cantonment), Pune 411 001

ATTENDANCE SLIP Folio No. ________________________

DPID-Client ID No. ________________

No. of shares held _________________

71---Ceps3\D\SALES\Mohan\INDUSIND AR 2008\Indusind Proxy 2008.pmd---vk31-7\AMD\21-8


B U S I N E S S A C H I E V E M E N T S 2 0 0 7 - 2 0 0 8

• Business turnover crossed Rs. 31,800 crores.

• Network of branches at 180 along with 183 off-site ATMs, in 147

geographical locations spread over 28 States and Union

Territories - besides 2 overseas representative offices (London and

Dubai).

• Highest A1+ rating for Certificates of Deposits from ICRA and the

highest P1+ rating for FDs from CRISIL.

• A strategic tie-up with Religare Securities for offering a value -

added “3-in-1 savings accounts” service providing the benefits of

savings account, depository services and internet trading facility.

• Clearing Bank arrangement with National Multi Commodity

Exchange Ltd. (NMCE), while continuing with successful

arrangements with MCX and NCDEX.

• Strategic partnership with Cholamandalam MS for Bancassurance.

• Bestowed with the prestigious "Corporate Excellence" award by

Amity International Business School during its 10th International

Business Summit (INBUSH) 2008. The award was presented by

H.E. Mr. Salohoddin Nasriddinov, Ambassador, Embassy of Tajikistan.

• Received recognition by BSE and NASSCOM Foundation for the

Best Corporate Social Responsibility Practice category.

• Featured in the Standard & Poor ESG India index which provided

the investors with exposure to liquid and tradable index of 50 of

the best performing stocks in the Indian market as measured by

environmental, social, and governance (ESG) parameters.

180 Branches spread over 147 locations as on March 31, 2008

Nation-wide presenceBuilding relationships through commitment


Prin

ted

at

INFO

MED

IA IN

DIA

LIM

ITED

14th annual report 2007-2008

Documents

indusind bank

abn amro bank

bank arrangement

state bank of india

standard chartered bank

anz grindlays bank plc

business management

corporate office