Punjab National Bank

1-2 PROFIT

INCOME & EXPENDITURE

Note: Difference in total is due to rounding off

2. OPERATIONAL HIGHLIGHTS

• Bank leveraged on its 5180 plus branch network to build deep, enduringrelationships with its 60 million plus customers across all the segments.

• Bank’s network of 5050 ATMs along with alternate delivery channels accountfor more than 28% of transactions.

• New set of products and services like PNB Uphaar, PNB Suvidha, World TravelCard, etc were introduced during the year.

• In addition to international presence in 9 countries, Bank acquired equity stakein Dana Bank of Kazakhstan and is in the process of setting up presence in Australia andCanada.

• Under the performance management system, employee performance was recognized andincentivized.

• Strengthened pool of management talent as part of succession planning exercisewith Team 2020 initiatives.

• Streamlined CSR activities to move forward and to make a positive contributiontowards community.

3. DIVIDEND

The Board of Directors has recommended a dividend of 220% for the year 2010-11.

4. CORPORATE GOVERNANCE

The Bank is committed to best practices in corporate governance and recognizes thattransparency, ethical behavior, integrity and protection of interests of all stakeholdersform the keystones of governance. Being in the business of financial intermediation, theBank is fully aware of the risks involved. To address this, the Bank has put in placeelaborate system of risk identification, measurement and mitigation. A Risk ManagementCommittee at the Board level monitors the risk management process in the Bank. The Boardof Directors has oversight on the Bank and ensures that there is right balance betweenbusiness and risk. Further through the Audit Committee, the Board ensures strong system ofinternal control and corporate reporting including financial reporting. As a listedentity, the Bank is complying with various regulatory requirements. Disclosures are madein the financial statements in compliance with Section 29 of Banking Regulation Act, 1949,RBI guidelines, Section 49 of the Listing Agreement and Accounting Standards andGuidelines issued by the Institute of Chartered Accountants of India. These inter-alia,include segment reporting, related party disclosures, lending to sensitive sectors,restructured loan assets, key business ratios, risk management, performance of Bank’sshare price, etc.

PNB follows practices that provide its financial stakeholders a high level of assuranceon the quality of Corporate Governance. This is reflected in the ICRA Ltd’s CGR 2rating which is the highest rating assigned to a financial institution in India.

5. BOARD OF DIRECTORS

As on 31.03.2011 there were 11 Directors on the Board of the Bank including Chairmanand Managing Director and two Executive Directors.

At the time of appointment/nomination of any Director, the guidelines defining theroles and responsibilities of Directors as circulated by Government of India/ Ministry ofFinance from time to time are made available to them. A declaration of "Model Code ofConduct" is being obtained from all the Directors in April every year. Deeds ofcovenants as recommended by Ganguly Committee are being entered into with the electeddirectors on the Board of the Bank in terms of instructions of Reserve Bank of India/Government of India every year.

As per recommendations of Ganguly Committee, Directors are imparted training to makethem more responsive to the organization, the business environment and emergingdevelopments/challenges in the banking sector. As part of their training, Directors arenominated to training programmes in reputed Institutions like Centre for CorporateResearch and Training (CCRT), Navi Mumbai, Institute of Company Secretaries of India,Institute of Directors, etc.

During the Financial Year 2010-11, four Directors were nominated for various trainingprogrammes viz. "Masterclass for Directors leading to Certified CorporateDirectorship", "Conference on Corporate Compliance" and "Role ofIndependent Directors –Issues & Solutions".

6. CHANGES IN THE BOARD OF DIRECTORS

During the year 2010-11, the following changes took place in the composition of Boardof Directors of the Bank:

• Shri L.M. Fonseca, RBI Nominee Director ceased to be Director on 30.07.2010 onexpiry of his term.

• Shri Jasbir Singh, RBI Nominee Director was appointed on the Board of the Bankon 30.07.2010.

• Shri Nagesh Pydah, Executive Director, demitted the office on 31.12.2010 on hiselevation as Chairman & Managing Director of Oriental Bank of Commerce.

• Shri Rakesh Sethi was appointed as Executive Director of the Bank on 01.01.2011.

• Shri M.A. Antulay, part time non-official Director ceased to be Director w.e.f27.02.2011 on completion of his tenure.

• Shri G.P. Khandelwal, part time non-official Director ceased to be Directorw.e.f 27.02.2011 on completion of his tenure.

The Board welcomes Shri Rakesh Sethi, new Executive Director and Shri Jasbir Singh, newDirector and wishes to place on record the valuable services rendered by Sh. Nagesh Pydah,Sh. L.M. Fonseca, Sh. M.A. Antulay and Sh. G.P. Khandelwal.

BOARD COMMITTEES

The details of various meetings held up to 31st March, 2011 are as follows:

7. ACKNOWLEDGMENTS

The Board of Directors thank the Government of India, Reserve Bank of India, Securitiesand Exchange Board of India, Stock Exchanges, Bank’s customers, public and theshareholders for valuable support, continued patronage and confidence reposed in the bank.

The Board also wishes to place on record its appreciation for the valuable contributionof the members of the Bank’s staff at all levels and look forward to their continuedenthusiasm in meeting the future goals.

For and on behalf of Board of Directors CHAIRMAN AND MANAGING DIRECTOR