Oriental Bank of Commerce

The Board of Directors have pleasure in presenting this Annual

Report together with the Audited Balance Sheet and Profit & Loss Account of theBank for the Year ended 31 st March, 2010.

1. BUSINESS OPERATIONS

The Business of the Bank crossed Rs. 200000 crore mark and stood at Rs. 204442 crore onMarch 31st 2010 as against Rs. 167434 crores in the previous year. Total deposits of theBank stood at Rs. 120258 crore and has shown an increase of Rs. 21889 crore depicting agrowth of 22.25%. Cost of deposit stood at 6.57%. The Bank has taken conscious decision ofshedding high cost bulk deposits and substituting the same with normal rate and lower costdeposits so as to contain the level of bulk deposits. The percentage of bulk deposits hasdeclined marginally from 21.42% as on 31.03.2009 to 21.37% as on 31.03.2010. On the otherhand, net advances as at end-March 2010 stood at Rs. 83489 crore, registering a growth ofRs. 21.88%. During the fiscal 2009-10, yield on advances has declined to 10.20% fromprevious year's level of 10.82%. The measures taken up by the bank to improve yield onadvances through lending to SME, Mid Corporate and Retail sector besides implementation ofBase Rate would enable the bank to improve yield on advances.

The credit deposit ratio of the Bank, as at end-March 2010, stood at 70.22% . The Bankensured adequate flow of credit to the productive sectors of the economy. The Loans &Advances portfolio of the bank is welldiversified Bank has ensured that its exposure tosensitive sectors such as Capital Markets, Real Estate, NBFCs etc. is well within theregulatory & prudential cap.

2. CAPITAL & RESERVES

During the year, the bank transferred a sum of Rs. 868.19 crore to Reserves (whichincludes Rs. 284.00 crore transferred to Statutory Reserves, Rs. 411.00 crore to Revenueand other Reserves, Rs. 173.19 crs. to Capital Reserves) out of the profit for the year2009-10. With this, capital & reserves as on March 31, 2010 have gone upto Rs.8237.95crore as against Rs. 7403.45 crore as at end March 2009 and the ratio of Capital &Reserves to average working funds stood at 6.61% as on 31.03.2010 as against 7.17% as on31st March 2009.

3. CAPITAL ADEQUACY RATIO

As on March 31. 2010 the Capital Adequacy Ratio of the Bank under Basel –II stoodat 12.54% as against 12.98% as on 31st March, 2009(under Basel-II). This is well above theregulatory minimum requirement of 9.0%.

4. FINANCIAL PERFORMANCE

The Bank has posted a total income of Rs. 11457.17 crore during the year as against Rs.9927.79 crore last year thus registering an increase of Rs. 1529.38 crore (a growth of15.41%) during the fiscal 2009-10. Operating Profit of the Bank went upto Rs. 2421.50crore as against Rs. 1669.98 crore last year showing a growth of 45.00%. The Bank has madea net profit of Rs. 1134.68 crore, after making all requisite provisions showing anincrease of Rs. 244.26 crore (growth of 27.43%) during the fiscal 2009-10. Appropriationfrom the Net Profit have been effected as per table given below:-

Table : Financial Performance

5. DIVIDEND

Your Bank's policy of declaring dividend is to reward the share holders as well as toplough back profit for maintaining a healthy capital adequacy ratio & for supportingfuture growth. Accordingly, your Directors are pleased to propose a total dividend of 91%(i.e Rs. 9.10 per share)for the year ended 31st March, 2010 as against 73%(i.e. Rs. 7.30per share) paid for the preceding year.

6. SECTORAL DEPLOYMENT OF CREDIT TO PRIORITY SECTOR

Bank’s advances to priority sector increased by Rs. 7068.54 crore from Rs.22315.07 crore in March 2009 to Rs. 29383.61 crore in March 2010 registering a growth of31.68%. The Priority Sector Advances constituted 42.90% of the Adjusted Net Bank Credit(ANBC) against the stipulation of 40%. The comparative position of advances under varioussegments under Priority Sector as at the end of March 2009 and March 2010 is as follows:

6.1 Agriculture Advances

Bank's advances to agriculture increased by Rs.2653.48 crore from Rs.8614.03 crore inMarch 2009 to Rs.11267.51 crore in March 2010, registering a growth of 30.80%. Theadvances to direct agriculture segment increased by Rs.1920.04 crore from Rs.4644.43 croreas on 31.3.2009 to Rs.6564.47 crore as on 31.3.2010 constituting a growth of 41.34%. TheIndirect agriculture advances increased by Rs.733.44 crore from Rs.3969.60 crore as on31.3.2009 to Rs.4703.04 crore as on 31.3.2010 showing an increase of 18.48%.

6.1.1 Flow of credit to Agriculture sector (Fresh disbursement)

During the year 2009-10, fresh flow of credit to agriculture sector amounted to Rs.4937.07 crore. During the year, a total of 207517 new agriculture loan accounts wereadded. There was an average addition of 305 new agriculture loan accounts per rural andsemi-urban branch.

6.1.2. Hi-Tech Dairy

The bank is providing credit to rural youths for their self employment under Hi Techcommercial dairy scheme in Punjab & Haryana states. Under the scheme Punjab DairyDevelopment Board / Animal Husbandry & Dairying department Haryana impart one monthtraining to unemployed youth for their skill up gradation.

As on 31.3.10, an amount of Rs. 77.32 Crore has been sanctioned to 661 units.

6.1.3. Oriental Saur Urja Dohan Scheme

The fossil fuel resources are limited in quantity and are fast depleting. The poor useKerosene as common fuel for lighting. The rural people face problem of home lighting dueto non-availability of grid electric power supply. Even if there is power supply, frequentload shedding and low voltage is a regular phenomenon in rural areas. To overcome theseproblems the bank is implementing a scheme for financing solar water heating &lighting system, for creating a viable alternate to conventional source of energy.

The scheme is open to individual, institutional, commercial and industrial users.

Bank is also providing loan for solar water heating system, under MNRE scheme of IREDA.The bank finance for Solar Water Heating

System amounted to Rs.4.78 Lac under MNRE tie up arrangement and bank claimed subsidyof Rs.0.82 Lac during the year.

6.1.4. Small and Medium Enterprises (SMEs)

Bank’s exposure to Small Enterprises sector stood at Rs.10868.80 crore at the endof March 2010 and has shown an increase of Rs..5292.47 crore, recording a growth rate of94.91%. Further, SME advances increased by Rs. 5629.96 crore to Rs.12571.29 croreregistering a growth of 81.11% against the Year on Year growth stipulation of 20%. TheTiny/ Micro sector advances increased by Rs.1962.30 crore to Rs.3366.23 crore posting agrowth of 139.77%.

Bank has entered into a MOU with NSIC for outsourcing credit proposals for lending. TheBank has entered into a tie-up arrangement with SME Rating Agency of India Ltd. (SMERA)for providing comprehensive rating services of SMEs borrowers of the Bank at subsidizedrates.

6.1.5. Oriental Green Card (Kisan Credit Card) & Oriental Kisan Gold Card (OKGC)

During the Financial Year 2009-10, Bank has issued 83,885 cards to farmers to meettheir credit requirement for crop production, repairing of agricultural machinery &equipment, working capital for allied activities, to repay their old debts taken from noninstitutional money lenders and consumption needs. The total amount of loan disbursedthrough these cards during the year was Rs.1278.47 crore. At the end of financial year2009-10, the total number of cards issued to farmers rose to 652528.

6.1.6. Oriental Bank Grameen Project ( OBGP )

Bank is providing finance to rural poor under home grown model of micro finance viz.Oriental Bank Grameen Project. It is being implemented through Joint Liability Groupconcept consisting of 5 members in each group, preferably women.

The Bank has formed 3745 Groups reaching out to 17340 poor families spread across 280villages. The cumulative amount advanced to these groups as at the end of March 2010 wasRs. 28.36 crore. Savings to the tune of Rs. 13.11 crore have been mobilized by the groups.

Bank has also participated in the Janashree Bima Yojana a social security groupinsurance scheme of Life Insurance Company of India (LIC). The JBY scheme was launchedwith the aim of providing life and accidental cover to women belonging to the un-organisedsector. The scheme was launched by Bank in the month of December 2008 and as on31.03.2010, 1706 members of 481 SHGs were covered under the scheme.

6.1.7. Advances to Weaker Sections

Advances to weaker sections, consisting of beneficiaries belonging to scheduledcastes/scheduled tribes, small and marginal farmers, landless labourers, rural artisans,beneficiaries under Govt.

Sponsored schemes (except PMRY) were of the order of Rs. 4131.25 crore as a the end ofMarch 2010 as against Rs. 3018.71 crore as at the end of March 2009.

6.1.8. Credit under Differential Rate of Interest Scheme

Credit flow at concessional rate of interest of 4% p.a. to the low-income group of thesociety both in rural having annual family income upto Rs. 18,000/- and urban havingannual family income upto Rs. 24,000/- centres was Rs. 90.06 crore as at the end of March2010.

6.1.9. Loans to SCs/STs

Bank continues its thrust in providing financial assistance to SCs/ STs beneficiaries.The advances to these beneficiaries improved to Rs.591.22 crore in March 2010 against Rs.483.03 crore as at the end of March 2009.

6.1.10. Prime Minister Employment Generation Programme (PMEGP)

The Scheme has been implemented by the Government of India by merging the two existingschemes viz. PMRY and REGP w.e.f. 1st April 2008. The scheme aims for generation ofemployment opportunities through establishment of micro enterprises in rural as well asurban areas. The bank has provided financial assistance to the tune to Rs.62.45 crores to1653 applicants under the scheme during the year 2009-10.

6.1.11. Swaran Jyanti Shahri Rojgar Yojana (SJSRY)

For providing gainful employment to urban poor (living below the urban poverty line)through setting up self employment ventures, bank is providing financial assistance underthe scheme since its inception. The bank financed to 2244 beneficiaries to the tune ofRs.6.88 crores during 2009-10.

6.1.12. Swarn Jyanti Gram Swarojgar Yojana (SGSY)

The scheme is operative in rural areas of the country and cover the aspects of selfemployment such as organization of rural poor into

Self Help Group (SHGs) training credit technology, infrastructure and marketing. Thebank is participating in the schemes. During 2009-10 bank provided financial assistance to3227 swarojgaries to the tune of 13.60 crore.

6.1.13. Credit Flow to Women Beneficiaries

Women are assuming greater responsibilities and playing an active role in the economicgrowth of the nation but remain under represented while receiving the credit delivery fromthe Financial

Institutions of the country. So for strengthening of credit flow to women, Bank hasimplemented 13-points action plan as advised by the Government of India. Bank hasdesignated 10 branches as specialized branches for women entrepreneurs.

A number of credit schemes, such as Oriental Mahila Vikas Yojana, Loan scheme forProfessional & Self Employed Women, Loan scheme for Beauty Parlour/ Boutiques/Saloons/ Tailoring, Scheme for Financing Working Women, Oriental Swaran Yojana etc. aredesigned by the bank especially for women. Besides, a special project called Oriental BankGrameen Project (OBGP) provides all types of banking assistance to the rural poor women.

As a result the Bank’s advance to women increased by Rs. 736.15 crore from Rs.2920.54 crore as on March 2009 to Rs. 3646.69 crore as on March 2010 registering a growthof 24.86%. Bank’s advances to women beneficiaries as on March 2010 was 5.32% of ANBCagainst the required stipulation of 5%.

6.1.14. Financial Inclusion

With a view to provide banking facilities to the sections of society so far deprivedfrom the formal financial sector, bank implemented financial inclusion policy. Bankadopted three pronged strategies for financial inclusion. First, rural branches of thebank adopted villages for financial inclusion. Second, both Lead Districts of the bankvolunteered for 100% financial inclusion. Third, banks branches participated in districtsidentified by the respective SLBCs.

Under village adoption scheme as on March, 2010, bank adopted 2162 villages having1426240 households. Bank has achieved 100% financial inclusion in 1958 villages covering1130942 households and opened 6,76,476 accounts under normal deposit/ loan schemes and2,16,663 accounts under no-frills savings scheme.

In Bank’s Lead District of Ferozepur, completed 100% financial inclusion in 997villages and 156 wards having 2,89,896 households and opened 68747 no-frills accounts. InSriganganagar District, Bank completed 100% financial inclusion in 3031 villages and 231wards having 3,22,270 households and opened 109,552 new accounts.

Further, Bank has started project of implementing Financial

Inclusion by providing smart cards in 7 districts initially namely

Muktsar, Delhi, Sriganganagar, Ferozpur Amritsar, Gurdaspur and Dehradun. 124283 smartcards have already been issued.

Further the project for Financial Inclusion has been extended to 6 blocks in Amritsarnamely Jandiala Guru, Harsha Chhina, Verka, Chogawan, Rayya and Tarsikka.

6.1.15. Lead Bank Responsibility

Bank is performing the functions of Lead Bank in three Districts namely Ferozpur inPunjab, Sriganganagar in Rajasthan and Palwal in Haryana.

6.1.16. OBC Rural Development Trust

Bank has set up a special purpose vehicle in the name of Oriental Bank RuralDevelopment Trust (OBCRDT) for setting up Training Centres at various places across thecountry for imparting training for capacity building in rural areas. The Trust came intobeing on the 9 December 2005 as a registered body.

The main objective of the Trust is to establish training colleges/ institutes andworkshops for providing training for farmers on modern techniques of farming, tractor/farmmachinery repair & maintenance and other aspects of agriculture/rural development;micro finance and capacity building of the rural youth and women.

Presently four OBCRSETIs (OBC Rural Self Employment Training Institutes) are functionalat Dehradun, Sriganganagar, Jaipur and Ferozepur.

We have been allotted land by the State Government in Chomu (Jaipur), Rajasthan andZira (Ferozepur), Punjab where full-fledged training centres are being constructed andconstruction work has started in full swing. Govt of India has sanctioned an amount of Rs.2 crores for constructions of these centres. Haryana and Uttar Pradesh are other twostates where the Trust plans to set up training centres in the near future.

During the Financial Year 2009-10, a total of 176 training programmes were conductedand 6694 candidates were given training on subjects like tailoring & dress designing,watershed management, phulkari embroidery, milch animal rearing, crop production, beautyparlour, medicinal plantation, etc. A total of 2323 trained persons were credit linked forpursuing/setting up of economic activities. Emphasis is also given to train candidatesfrom BPL strata of the society for which list of candidates is obtained by the centresfrom respective DRDA. Cumulatively these centres have conducted 411 training programmessince inception benefiting 15214 candidates.

6.2. Retail Credit

Retail Credit segment continues to be the Thrust area of lending. The Bank is having 10Retail Credit Scheme including Home loans to meet the requirements of various sections ofthe society.

Our Retail Credit Schemes are customer friendly, competitive and designed to suit allsections of the society. The Bank has been formulating customized schemes and is alsohaving tie-ups with various reputed builders and auto manufacturers to boost its Retailsegment.

6.3. Education Loan

The education loan portfolio of the Bank stood at Rs.971.75 crores as on 31.03.10 andshowed Y.O.Y. Growth of 23%. Bank continued its efforts for extending education loans tostudents on soft terms & conditions and competitive rates besides 0.50% concessions inrate of interest is being given to girl students. During the admission season, educationloan camps were organized in the campus of the educational institutions.

7. TREASURY OPERATIONS

The G-Sec yields hardened across the curve as the underlying market sentiment wasbearish on account of expectations of RBI reversing its easy monetary stance due toincrease in Food led

Inflation. However RBI continued its easy monetary stance during the major part of thefinancial year and reversed its monetary stance from January 2010 onwards. The equitymarket remained positive on account of economic recovery across the globe. Consequent uponthis, turnover in the secondary market has increased from Rs.28,526 crore in the year2008-09 to Rs.65,312.05 crore in the year 2009-10. The net profit from the secondarymarket operation was Rs.423.55 crore during the year 2009-10. During the Financial Year2009-10 the bank shifted Government securities having book value of Rs.1271.48 crore from‘Available For Sale’ (AFS) category to ‘Held To Maturity’ (HTM)category and booked depreciation of Rs.137.76 crore and shifted securities having bookvalue of 979.59 from HTM to AFS category ignoring the appreciation as per RBI guidelines.The aggregate investment of the Bank increased to Rs.35785.32 crore at the end of thefinancial year 2009-10 as against Rs. 28658.39 crore in the FY 2008-09, an increase of24.87%. The yield on investment has decreased to 7.08% from 7.63% as compared to last yeardue to maturing of high coupon securities and issuance of securities bearing low coupon inthe FY 2009-10. Valuation of HFT & AFS portfolio is done on daily & quarterlybasis respectively and depreciation, if any, is booked on quarterly basis.

8. MERCHANT BANKING ACTIVITIES:

The Bank has been registered as Depository Participant with both NSDL & CSDL.Nearly 78,000 customers are availing the demat services of the Bank and PAN non-complaintzero balance accounts have been closed as per SEBI directive. The number of branchesoffering demat services has gone up from 106 to 295 during the year 2009-10. The Bank isalso offering online trading services in collaboration with IDBI Capital market servicesfor its customers. During the fiscal year, the Bank raised Tier I Capital through issue ofInnovative Perpetual Debt Instrument aggregating Rs.300 crore on private placement basisat the coupon of 9.10% p.a with a step up of 50 bps after 10 years in case the call optionis not exercised. The Bonds were allotted to 27 subscribers on 17.12.2009.

8.1 Applications Supported by Blocked Amount (ASBA)

The Bank has been registered with SEBI as Self Certified Syndicate Bank (SCSB) forproviding Applications Supported by Blocked Amount (ASBA) facility to its customers. ASBAis an application containing an authorisation to block the application money in the bankaccount maintained with SCSB. Under the

ASBA facility, the application amount for subscribing to an issue (IPO/Right issue),remains in the bank account of the customer till allotment is finalized and actual amountequal to allotted shares is only debited instead of total application amount.

9. FOREIGN EXCHANGE BUSINESS

The financial year 2009-10 has witnessed remarkable turnaround in domestic as well asoverseas market activities. The impact of global meltdown started fading away in thebeginning of financial year due to various steps taken by Government. Industrialactivities also got revived in the international market and global demand was alsostrengthened giving support to exports from our country. Our country was almost untouchedby subprime crisis thankfully due to prudent actions taken by Government and RBI. Theperformance of our bank on forex front may be seen as synchronized with revival ofbusiness activities in domestic and overseas market. During fiscal the year 2009-10, Forexturnover increased to Rs.49924 Crores as on 31.03.2010 as against Rs.42500 Crore as on31.03.2009, thus registering a growth of 13.60%. The non-interest income from forexoperations also registered a growth of 21.51% over the preceding financial year. Theimpact of global meltdown which affected the growth of export during the year 2008-09, hadhowever been reversed during the financial year under review.

The export credit of the bank stood at Rs.3963 Crores as on 31.03.2010 as againstRs.3283 Crores as on 31.03.2009, thus registering a growth of 20.71%. During the yearunder review, 4 more branches were authorized to conduct foreign exchange business takingup such authorized branches to 87. Bank has also identified 37 branches for NRI businessto augment NRI deposit base. Bank is in the process of revamping the International

Banking Division at Head Office so that our Bank’s share in foreign exchangebusiness reaches the desired level. Bank has also launched speed remittance facility forNRIs in association with three exchange houses. We are also expanding exchange Houseremittance tie-ups to garner more & more NRI accounts. The bank has mobilized nonresident deposits to the tune of Rs.1665 Crores as on 31.03.2010. The operations atRepresentative Office at Dubai have also stabilized and it is expected that our nonresident portfolio may get boost by marketing non-resident accounts of Indian expatriatesat Dubai by our Representative Office. The fee-based products like Western Union MoneyTransfer have also shown growth during the preceding financial year. Bank has alsorationalised the Nostro accounts, reducing from 24 to 17 for better management of funds inNostro accounts. The balances in the mirror accounts & forward position are revaluedat FEDAI rate at every month end.

10.1 Life Insurance Business

During April 2009- March 2010 the Bank sold 38097 policies with First PremiumCollection of Rs. 121.60 Crores and has earned commission of Rs. 37.10 Crores.

10.2 General Insurance Business

Under General Insurance Business the Bank has been registering steady growth and hascollected around Rs. 22.00 Crores as Premium collections and income by way of CommissionOf Rs. 2.77 Crores.

10.3 Mutual Fund Business

The Bank has been selling the Mutual Fund products of 4 Mutual

Fund Houses. During the Financial Year 2009-10 the Bank has sold Mutual Fund Productsand collected AUM of Rs. 10.00 crores and earned income of Rs. 18 Lacs under this segment.

10.4 Demat Accounts

The Bank is a depository participant for both NSDL and CDSL. It has more than 78000accounts under this category of business and has recorded a revenue generation of Rs. 3.47crores in the Financial Year 2009-10. The Bank has tied up with the IDBI Capital MarketServices Ltd. for providing Online Trading facilities to its DEMAT Account holders through276 identified Branches.

10.5 Cash Management

The Bank provides an efficient and tailor-made CMS solution to suit the customerrequirements. The Bank is offering Collections,

Payments and Custodial Services to the Customers under the Cash Management Services.The Bank has coverage of 117 cities through its own Branches and 500 Locations throughCorrespondent arrangements offering CMS services to clients across the country. The Bankhas registered a turnover of above Rs. 858 Crore and earned non-interest income of Rs.0.97 Crore during the financial year of 2009-10.

11. BRANCH EXPANSION

During 2009-10, the Bank has opened 93 new branches besides up gradation of 14Extension Counters. As on 31/03/2010, the total number of branches stood at 1508 asagainst 1401 as on 31/03/2009. The population group-wise classification of branches as atend- March, 2010 is as under :

12. CUSTOMER SERVICE

The Bank in its endeavor to achieve excellence in customer service has started manycustomer friendly services viz. Mobile Banking (OBCmPAY) besides Internet Banking Servicesboth for individuals and corporates, SMS alert service, Cheque/Cash deposit facilitythrough some of the Bank’s ATMs. Funds transfer through ATMs (only among accountslinked to a ATM card), facility of Cheque

Status Inquiry and Stop cheque payment available 24x7 on

Bank’s ATMs, deployment of Point of Sale (POS) Terminals at the identifiedprospective Merchant Establishments, Cheque deposit machines at some of the branches tofacilitate cheque deposit with acknowledgment generated by the machine itself, onlinepayment of service taxes etc. These services are helpful for the customers to get theirtransactions done speedily and easily. For Senior Citizens customers there is provisionfor separate queue in the branches. In Saving Bank accounts the interest is now beingprovided on daily products basis with effect from 1.4.2010.

The Bank has adopted and implemented voluntary codes of BCSBI for individual customers, Fair Practice code for lenders, Micro and Small Enterprise (MSEs) code to provide fair ,transparent and quality service to all the customers and to provide greatest satisfactionto the customers. The codes are displayed on the Bank’s website for information andprinted copies are also available at branches for customers information. The updatedinformation on Bank’s Deposit Schemes, Loan Schemes, Citizen’s Charter, BankingOmbudsman, SSI Charter, Forex Remittances, Service Charges and Bank’s Policies vizFinancial Inclusion Policy, Cheque Collection and Compensation Policy, Grievance RedressalPolicy, Policy on Collection of dues & Repossession of Security etc. have beendisplayed in Public domain of Bank’s website. These are also available at branches inbooklet/pamphlet form. "Query & Suggestion" link is provided on website toget feedback from customers. Complaint/Suggestion Boxes are provided at branches where acustomer can drop his/her complaint or suggestion.

Web-based Customer Grievance Redressal system is provided for prompt redressal ofcustomers grievances. A dedicated Customer Care Centre on toll free Number 1800-180-1235has been set up for clarifying the customers account related and other queries. TheCustomer Service Meetings are being held regularly at

Branch level , Regional Office level and Head Office level. These meetings ensure theproper implementation of guidelines issued by regulatory authorities. The customers areinvited to attend these meetings and give their valuable suggestion/feedback onbank’s services and schemes. The Bank is committed to give excellent customer servicefor the customers’ maximum satisfaction.

13. KNOW YOUR CUSTOMER (KYC) NORMS AND ANTI-MONEY LAUNDERING (AML) MEASURES

To comply with the various laws and regulations, national as well as international,Govt of India and Reserve Bank of India directives / instructions & guidelines,primarily to prevent the Bank from being used, intentionally or unintentionally, bycriminal elements for money laundering activities, ‘KYC’ Policy has beenformulated.

The Policy combines four key elements viz. "Customer Acceptance Policy","Customer Identification Procedures", "Monitoring of Transactions" and"Risk Management". This will enable the Bank to know / understand the customersand their financial dealings better and shall further help in managing risks moreprudently. The detailed guidelines and subsequent instructions are being reiterated fromtime to time for strict compliance by field functionaries. The

Bank is already complying with the requirement of submission of statutory returns tothe Financial Intelligence Unit – India (FIU – IND) as a sequel to the newlegislation on prevention of Money Laundering Act – 2002. The Bank has alreadyoperationalised Anti Money Laundering Software solution for complying with KYC / AML normsand generation of alerts to detect any suspicious nature transactions. The AML Cell isscrutinizing the alerts generated by the system for detecting any suspicious type oftransaction (s) (STRs) for onward submission to FIU-IND.

14. USE OF HINDI IN THE BANK

During the year 2009-10, Bank continued its concerted efforts to further accelerate useof Hindi in its working and to implement the guidelines/directives received from Govt. ofIndia and Reserve Bank of India. Concrete and effective steps were taken to achieve theregion wise targets set by the Department of Official Language, Ministry of HomeAffairs,Govt. of India in the Annual Programme- 2009-10.

Bank was awarded Consolation prize in 'A' region under Reserve

Bank Rajbhasha Shield Competition 2008-09 for Public Sector Banks/FinancialInstitutions for its good performance in the field of Rajbhasha Hindi. Regional Office,Delhi was awarded Second prize for doing excellent work in Hindi for the year 2008-09 byRegional Implementation Office, Official Language Deptt., Ministry of Home affairs, Govt.of India. The Bank was also awarded first prize under Inter Bank Rajbhasha ShieldCompetition 2008-09 by the Bank's Town Official Language Implementation Committee, Delhi.Further, our staff members won different prizes in various

Inter Bank Competition conducted by the said committee.

During the year under review, concerted efforts were made to propagate use of Hindi oncomputers. Bilingual word processing software "Akruti Office" has been loaded inthe P.Cs installed in all the administrative offices and the branches. The necessarytraining was imparted to the staff by conducting Hindi workshops as well as otherprogrammes at regular intervals. Hindi Officers and IT Officers of Head Office andregional offices were imparted Hindi Unicode Training on computers by officials of ReserveBank of India. To provide banking facilities to customers in Hindi also by the CBSbranches, the bilingual Data Processing Software

Script Magic was installed in the branches of the Bank and IT

Officers and Hindi Officers of the Bank were imparted trainers- training regarding useof this software.

During the year, Hindi version of OBC web portal was launched and e-circulars as wellas Home page and other contents were made bilingual so that all staff members of the Bankare able to view circulars, executive's messages, policies, various job cards,deposit /loan schemes, retail schemes, branch directory,

ATM list and other contents in Hindi on the portal. Bank`s website is available inbilingual form. The option of Hindi is available on ATMs and Telebanking. IT ReadyReckoner was made available in Hindi for the convenience of the employees.

All the editions of Bank's quarterly In-House Magazine "AADHAAR" werepublished regularly in bilingual form i.e. in Hindi and English. Quarterly In-Housemagazines were published by Regional Offices at Regional Office level.

15. RECOVERY

During the Financial Year 2009-10, concerted recovery efforts continued at all levelsand consequently, the Bank could effect cash recovery of Rs.399.34 crore. Out of cashrecovery a sum of Rs.133.09 crore has added to the Revenue of the Bank. The bank haseffectively utilized the various recovery mechanism e.g. holding recovery camps, One TimeSettlement Schemes for MSE borrowers and Special One Time Settlement Scheme for NPAaccounts with outstanding upto Rs.1.00 lac, Lok Adalat, provisions of SARFAESI Act andgeneral settlement policy of the Bank.

However, due to the impact of global recession, the NPA of the Bank has increased incomparison to the previous financial year resulting in increase in Gross NPA percentage togross advances to Rs.1.74% as against 1.53% of corresponding year.

The Bank is taking all possible efforts to strengthen the recovery mechanism tominimize the higher delinquencies.

16. HUMAN RESOURCE DEVELOPMENT & TRAINING

The year 2009 -2010 has been the year of challenges for the

Banking industry. The Indian Banking adapted to the changed

Banking scenario admirably and helped in renewing the confidence levels and financialresilience in our system. The changed economic environment has necessitated up-gradationof skill sets. The Bank has endeavored to match these requirements through extensiveprocess of training. The focus of training during the year was on the following areas:-

Credit Management, Risk Management, Forex Management. Lending Strategies to SMEs, SoftSkills Development, Marketing of Bank’s Products, Induction Programmes for newlyrecruited officials, General Banking in CBS, IT enabled Products, Treasury Management,Risk Ratings, Management Development Programmes for Executives, SC/ST/OBC Reservationpolicy, Human Resources Management System etc.,

In 394 programmes 9325 employees were imparted training in the above streams and otherareas of Banking. In addition, 1337 officers were nominated in Advanced TrainingProgrammes in key operational and behavioral areas in pioneering institutions like

NIBM Pune, College of Agriculture Banking Pune, Indian Banks Association, MDI, Gurgaon,Indian Institute of Management, Ahmedabad, Administrative Staff College of India,Hyderabad, NIBSCOM, Noida etc., to quote a few. Few senior and top managementfunctionaries were deputed for overseas training to give exposure to international bestpractices and their impact in Indian Banking.

During the year 2009-10, the Bank recruited 221 Probationary Officers, 812 Clerks and243 Specialist Officers in different grades and streams such as Manager (IT), MarketingManagers, Agriculture Officers etc., Further the process for recruitment of 313Probationary Officers, 916 Clerks and 373 officers in the Specialist cadre of Marketing,Agriculture, IT, Security, Forex, Law, HRD etc., is under way. The total staff strength ason 31st March 2010 is 15358 comprising of 7989 officers, 4799 Non-subordinates and 2570subordinates.

The Bank complied with Government guidelines in respect of reservation in recruitmentand promotion for SC/ST/OBC/PWD/ Ex-servicemen besides extending concessions/relaxation asprescribed. The grievances of SC/ST/OBC employees, if any, were resolved through SC/ST andOBC cells created at all Regional Offices and at Head Office under the charge of LiaisonOfficers/ Chief Liaison Officer. The Bank also launched a Special Drive to fill up thebacklog of SC/ST vacancies in promotion as per the guidelines of the Ministry of Finance,Govt. of India.

BOARD OF DIRECTORS

During 2009-2010, 12 meetings of Board of Directors, 20 meetings of ManagementCommittee of Board & 6 meetings of Audit Committee of Board were held.

During the year, Sh.T.Y Prabhu, Chairman and Managing Director, took charge of the Bankon 27.08.09 after the elevation of Sh.Alok K Misra to the post of Chairman and ManagingDirector of Bank of India. Two Directors namely Sh.V Vijay Sai Reddy & Sh.KamalBhushan, Directors appointed under Sec 9 (3) (g ) &

Sec 9(3)(f) of the Banking Companies (Acquisition and Transfer of Undertakings) Act,1980, as per their notifications, retired from the Board of the Bank due to expiry oftheir term on 13.12.09 and 22.11.09 respectively.

DIRECTOR’S RESPONSIBILITY STATEMENT

The Directors confirm that, in the preparation of the Annual Accounts for the yearended 31st March, 2010

(a) the applicable standards have been followed along with proper explanation relatingto material departures, if any,

(b) the accounting policies framed in accordance with the guidelines of the ReserveBank of India, were consistently applied,

(c) reasonable and prudent judgment and estimates were made so as to give true and fairview of the state of affairs of the

Bank at the end of financial year and of the profits of the Bank for the year ended on31st March, 2010,

(d) proper and sufficient care was taken for the maintenance of adequate accountingrecords in accordance with the provisions of applicable laws governing banks in India andthe accounts have been prepared on a going concern basis.

ACKNOWLEDGEMENTS

The Board of Directors thanks Government of India, Ministry of Finance, Department ofEconomic Affairs and Reserve Bank of India and other Government & Regulatory Agenciesfor their valuable guidance and continued support provided to the Bank throughout theyear. The Board of Directors are also grateful to the valued customers, esteemedshareholders, stakeholders and public at large for their patronage and confidence reposedin the Bank.

The Board of directors place on record their great appreciation of the commitment,sense of involvement and dedication exhibited by each staff member in the overalldevelopment, growth and prosperity of the Bank and look forward to their continued supportand whole-hearted co-operation for realization of the corporate goals in the year ahead.