Central Bank of India

PART A –ECONOMIC SCENARIO

GLOBAL DEVELOPMENTS

There have been visible signs of recovery of world output growth largely driven by therobust growth in emerging economies. The recovery is broadly divided into (i) large outputgaps in advanced economies (ii) close gaps in emerging markets. In 2010, the growth inadvanced economies has been estimated at 3% with higher unemployment. In contrast, theemerging & developing economies have seen growth above 7%, combined with lowunemployment. Overall, world real GDP growth is estimated at 5% in 2010. China & Indiacontributed about a quarter of incremental world output. The sovereign debt crises in theeuro zones, the slow real estate markets, the rise in commodity prices & crude oilprices are key downside risks to growth in advanced as well as emerging economies. IMF hasprojected 4.4% growth in 2011 & 4.5% growth in 2012 with again large contribution inworld output growth of 6.5% in both years from emerging & developing economies.

DOMESTIC ECONOMY

Indian economy is estimated to grow by 8.6% during the year 2010-11. The sign ofmoderation in GDP growth was observed during second half of the year mainly due to slowdown in capital goods production and investment spending. The high crude oil prices,rising commodity prices and anti inflationary monetary measures have significantlyimpacted growth of economy during the year 2010-11. GDP growth during 2011-12 is expectedto moderate from its pace in 2010-11, because of continued high inflation and rising inputcosts despite a prediction of normal monsoon and positive lead indicators from servicesector

Headline Inflation was the primary macroeconomic concern throughout the year. TheWPI-based inflation for the month of March 2011 rose to 8.98%, exceeding the RBI’sexpectation of 8%. It was driven by a combination of factors, both structural andtransitory. During April-July 2010 it was impacted primarily by food items and fuel,between August to November 2010 , it was largely influenced by both food and non-foodprimary articles and minerals and during December 2010 to March 2011 , the increase in WPIwas mainly driven by non-food manufactured products and fuel.

The Consumer Price Index (CPI) also remained elevated during the year 2010-11. The CPIhowever as against 13.3-15.0% in April 2010 declined to 8.8-9.1% in March 2011 because ofmoderation in food prices.

The industrial production during the year 2010-11 showed signs of slowdown. The indexof Industrial Production shown growth of only 7.8 % in FY 2010-11 as against 10.5 % duringthe previous year. The IIP for March 2011 showed a growth of 7.3 % as against 15.5 % inthe month of March 2010. The slowdown was mainly due to the high base effect & sharpdeceleration in capital & intermediate goods growth rate. The weighted contribution ofcapital & intermediate goods growth to overall IIP growth has also declined. Incontrast, the consumer durables growth has shown a high growth of 20.9% in April-March2010-11 in the back of a strong private consumption demand. During 2010-11, the index ofcapital goods grew by 9.3 % and consumer goods 7.5% as against 20.9 % and 6.2 %respectively during the same period in 2009-10.

MONETARY DEVELOPMENTS

For the FY 2010-11, Monetary Policy’s main focus was to curb inflationary pressurewithout hampering the credit growth & overall growth of the economy. RBI continues totake steps for deepening the financial markets in a calibrated manner while attempting tostrengthen the stability of the financial system in the country. Since April 2010, the RBIhas increased Repo & Reverse repo rates 9 times taking it to a pick to 7.25% &6.25% respectively. The Base rate system was introduced in a banking system with effectfrom July 1, 2010 to enhance transparency in lending rates & improve monetary policytransmission. The overall liquidity position was in severe deficit mode since May 2010.The RBI took various measures to inject liquidity in the system. Money supply (M3) growthmoderated during the year, reflecting the slower deposit growth & faster currencygrowth which reduced the money multiplier. The money supply grew by 15.9% in 2010-11against 16.8% in 2009-10.

BANKING

During the year 2010-11, Indian Banking System registered a growth of 15.8 % indeposits against 17.2 % in 2009-10. The aggregate deposits increased by Rs. 711877 croreto Rs. 5204703 crore as on March 25, 2011. The growth in deposits was skewed more infavour of term deposits due to steady hike in term deposit rate by banks specially duringthe last quarter of the year.

Bank credit during the year registered a strong growth of 21.4 % as against 16.9%during 2009-10. The bank credit increased by Rs. 693871 crore to Rs. 3938659 crore as onMarch 25, 2011. Non-food credit stood at Rs. 3874376 crore with an increase of Rs. 678077crore and food credit by Rs. 15793 crore to Rs. 64283 crore during the year 2010-11. Thegrowth in credit was primarily led by credit to telecom sector and strong demand frominfrastructure sector in the latter part of the year.

BUSINESS

As on 31^st March 2011, the total business of the Bank was Rs. 310763 crore,registering a growth of 15.43% from the previous year figure of Rs. 269225 crore. Theoperating profit reached to Rs. 2591 crore from previous year figure of Rs. 2058 crore,marking a growth of 25.90%. The Bank has posted the highest ever net profit of Rs. 1252crore, which marks an increase of 18.35% over the previous year’s net profit of Rs.1058 crore.

RESOURCE MOBILISATION

The total deposits as on March 31, 2011 stood at Rs. 179356 crore, registering a growthrate of 10.64% over previous year. All the components viz. Demand Deposits from others,Savings Bank Deposits and Term Deposits from others recorded healthy growth.

CREDIT

As on March 31, 2011 the gross credit of the Bank stood at Rs. 131407 crore as againstRs. 107118 crore in the previous year registering a growth of 22.67%.

The growth in credit is diversified in all segments with higher growth in Retail Credit(26.29%) and Corporate Credit (23.72%).

PRIORITY SECTOR CREDIT

The credit deployed under priority sector increased from Rs. 35393 crore to Rs. 41949crore in 2010-11, recording a y-o-y growth of 18.52 %. Out of this, the direct Agricultureadvance has recorded a growth of 7.46% over 2009-10 despite adjustment of the Debt Waiverand Relief claim of Rs. 495.24 crore. The performance recorded by the Bank under varioussegments of priority sector as on 31.03.2011 is as under:

AGRICULTURE

Total Agriculture credit increased by 8.08% from a level of Rs. 18309 crore as on31.03.2010 to Rs 19790 crore as on 31.03.2011. The share to adjusted net bank credit(ANBC) stood at 18.64% .

MICRO CREDIT

The Bank has extended credit of Rs. 269 crore to beneficiaries where the loan amountdoes not exceed Rs. 50000 per borrower.

MICRO & SMALL ENTERPRISES (MSE)

The advances to MSE increased to Rs. 11901 crore at the end of the current year fromRs. 9317 crore as on 31.03.2010. Sixty branches have been identified for focused attentionon MSE credit. Extensive training has been provided to Branch Managers of these branchesat our apex institute in Mumbai. These branches are now adopting cluster-based approachfor accelerated growth under the MSE. Further, the Bank is extending collateral free loansup to Rs. 100 lakh for setting up to units under Micro & Small Enterprises sector,which are also eligible for cover under CGTMSE scheme.

SELF HELP GROUPS

During the year, 11877 groups were formed under the scheme by the Bank. Out of which11159 groups have been credit-linked. Since inception of the scheme the Bank has formed138934 SHGs out of which 88348 groups are credit-linked with outstanding balance of Rs.697.14 crore at the end of the year. Out of the credit-linked groups, 71709 are women SHGswith total sanctioned limits of Rs. 553.38 crore.

PERFORMANCE UNDER LEAD BANK:

Our bank is shouldering the responsibility of Lead Bank in 48 districts of the country.The performance of the lead district for the year 2010-11 is Rs. 3540 crore against thetotal target of Rs 4607 crore for the year 2010-11.

EDUCATION LOAN

- The education loan portfolio of the bank has recorded a growth of 31.18% from Rs.1180 crore on March 2010 to Rs. 1548 crore as on March 2011.

- Our Bank has entered into tie up with 154 educational institutes across the countryfor providing education loan.

HOUSING LOAN (up to Rs. 20.00 lacs)

Bank continued to perform well in the housing sector under priority sector i.e. with aticket size of Rs. 20 lacs. The y-o-y growth under this segment was recorded at 14.41%from Rs. 6119 crore as on March 2010 to Rs. 7001 crore as on 31^ST March 2011.

AGRICULTURAL DEBT WAIVER AND DEBT RELIEF SCHEME 2008

Bank had lodged the claim under Debt Waiver and Debt Relief scheme 2008 separately withRBI for their reimbursement, the position is as under:

RBI/Government of India reimbursed the complete amount of Rs. 1126.30 crore to Bank.

STATE LEVEL BANKER’S COMMITTEE (SLBC)

Bank is convener of SLBC in the State of Madhya Pradesh. During the year 2010-11, fourSLBC meetings were held to review and monitor the progress made in the state under variousparameters including Government sponsored programmes by different development agencies.

GOVERNMENT SPONSORED PROGRAMME (2010-11)

During the year, the Bank has sanctioned loan under different Government sponsoredprogramme as under:

ADVANCES TO WEAKER SECTIONS

During the year, the Bank has extended loans of Rs. 10707.67 crore to variouscategories of weaker sections. Which constitutes 10.09% of ANBC, which is above the targetenvisaged by Government.

ADVANCE TO MINORITY COMMUNITIES

Govt. of India in its new Prime Minister’s 15 point programme for welfare ofMinorities has envisaged a target of 15% of priority sector lending to minoritycommunities. Bank has extended various loan facilities amounting to Rs. 6135.53 crore to502303 beneficiaries, belonging to different Minority communities which accounts for 14.58% of Priority Sector lending as on 31.03.2011.

ADVANCES TO WOMEN BENEFICIARIES

Credit disbursement to women beneficiaries, has improved over the past year resultingin the outstanding credit to women as on 31^st March 2011 at Rs. 5691.67 crore.This is 5.36% of ANBC as against the stipulated RBI norms of 5% of ANBC.

DIFFERENTIAL RATE OF INTEREST (DRI)

Advances under DRI scheme were Rs. 40.08 crore on 31^st March 2011.

CENTRAL KISAN CREDIT CARD (CKCC)

Bank has issued Kisan Credit Cards to 1186294 beneficiaries till 31^st March2011, amounting to Rs. 6901.24 crore.

1. JANSHREE BIMA YOJANA:

The scheme is operated in association with LIC of India to provide life insurance coverto rural and urban poor women, who are below or marginally above the poverty line and whoare members of credit linked women SHGs of our Bank. Bank has already covered 5862 womenbeneficiaries during 2010-11.

2. RASHTRIYA KRISHI BIMA YOJANA

Under the scheme, cover is extended to the farmers for the losses due tonon-preventable risks like natural calamities etc.

The above scheme is available throughout the country for cereals, oilseeds in thenotified states/areas.

3. CENT JANATA CREDIT CARDS (CJCC)

Bank has issued 7387 Cent Janata Credit Cards with the sanctioned limit of Rs. 43.98crore during the financial year 2010-11 to meet the different requirements of thebeneficiaries residing in the rural and semi-urban areas. Total outstanding under CJCC isRs. 86.18 cr. in 18080 cases.

4. RURAL GODOWNS AND WAREHOUSES / COLD STORAGES

Bank has extended advances for construction of rural godowns and warehouses / coldstorages so that farmers are not compelled to make distress sale of their produce duringpeak season. Till 31^st March 2011, Bank has extended advance for warehouse andcold storage in 408 accounts amounting to Rs. 582.12 crore.

5. "CENT SAHAYOG"- FINANCIAL LITERACY AND CREDIT COUNSELING CENTER(FLCC):

Bank has opened following FLCCs on a pilot basis :

FLCCs provide free financial literacy to the villagers on the various banking productsand counseling to distressed farmers/ borrowers, irrespective of clientele.

6. RURAL SELF EMPLOYMENT AND TRAINING INSTITUTE (RSETI)

Bank has established 45 RSETIs (44 in lead districts and one in non-lead districtallotted under SLBCs). Bank is committed to establish one additional RSETI in TinsukhiyaDistrict in Assam State, which is non-lead district allotted to our Bank.

7. INDIRA AWAS YOJANA

Bank has extended loan of Rs. 101.15 lakh to 509 beneficiaries under the scheme forconstruction of dwelling units.

FINANCIAL INCLUSION

3741 villages having population over 2000 , have been allotted to the Bank to coverunder Financial Inclusion Programme (FIP) by March 2012, Bank has covered 1776 villages byMarch 2011 with the help of 1761 Business Correspondents (BCs). A total of 5696 villageshave been covered under FIP, 2842052 customers were enrolled, 2480 BCs appointed and1318904 cards issued . In 134 district Bank has started Information & CommunicationTechnology (ICT) based Financial Inclusion projects.

Under the Brick & Mortar Model, 20596 villages have been allotted under State LevelBankers’ Committee (SLBC) Programme , out of which Bank has brought 15999 villagesunder 100% financial inclusion .

RETAIL CREDIT

Total outstanding under Retail Lending Schemes increased from Rs. 11190 crore as on31.03.2010 to Rs. 14132 crore as on 31.03.2011, registering quantum growth of Rs. 2942crore and percentage growth of 26% over March 2010.

Direct Housing Finance Scheme (DHFS), Cent Trade, Cent Vidyarthi, Cent Mortgage andCent Vehicle are top five schemes contributing 84.27% of total retail outstanding as on31.03.2011.

During the year Bank introduced following two new Retail Lending Schemes: a) CentComp-Exam: Scheme for financing coaching fee of students who desire to undergocoaching in reputed Institutes for preparing themselves to appear for competitive EntranceExam for admission on merits to Professional Courses (Engineering, MBBS, MBA and PostGraduation courses etc.) or to pay coaching fee of students/employed individuals forappearing civil services exam of UPSC for employment in Central Government Services (viz:IAS, IPS etc). Maximum loan amount available is Rs. 4 lakh.

b) Cent Mortgage for Educational Institute: Scheme for financing privateeducational institutions incorporated as Society/ Trust, and in existence for minimum 5years and affiliated to different Educational Boards/Universities recognized by

Government/UGC/ any Statutory Body like AICTE/IMC etc to meet any sort of operationalexpenses. Maximum loan amount available is Rs. 5 crore.

Bank has modified following Retail Lending Schemes to suit the borrowers:

a) Cent Mortgage

b) Cent Trade

c) Cent Vehicle

d) Cent Personal Gold Loan

e) Personal Loans to Pensioners, Corporate Employees, Non-corporate Employees andTeachers

Bank has made tie-up arrangement with following companies/institutes:

• M/s Future Capital Holdings for buyout of receivables with underlyingsecurities.

• M/s Reliance Capital for buyout of pool of receivables

• DHFL for syndication of Housing Loans on equal sharing basis

• More than 150+ Education Institutes for providing Education Loan to theirstudents.

• ESC Rennes School of Business, a reputed Business School in France. It is forthe first time that Bank has entered into an exclusive tie-up arrangement with a ForeignEducational Institute.

• University of Warwick (WMG), a reputed University in Europe for providingEducation Loan to their Indian students.

• M/s Indian Dental Association to provide selected retail loans to their members.

• Apna Paisa.com for advertisement and generation of leads for selected retaillending schemes.

Bank has approved Housing Loan Scheme for the employees of following Corporate /Govt.Departments:

a) MTNL

b) GTL Group.

c) Jaiprakash Associates Ltd.

d) NACIL

e) Border Security Force

f) Department of Posts.

g) YCMOU, Nashik

INTERNATIONAL DIVISION

Foreign Exchange Business of the Bank is carried out through 85 Authorized DealerBranches spread across the country. For operational efficiency, Bank has a centralizedDealing Room at Mumbai for attainment of better funds management and operationalconvenience. During the current Financial year, the Export Credit portfolio of the Bankincreased from Rs. 2755 crore as on 31.03.2010 to Rs. 3865 crore as on 31.03.2011, therebyrecording a growth of 40%. Bank also initiated various schemes which includes introductionof a web-based online money transfer from the USA for remittances up to USD 5,000 in thename of "CentFast2India". This product has been received very well in themarket.

Bank has obtained licenses for opening of specialized NRI Branches in Anand, Margao,Hyderabad and Bhuj to cater exclusively to the NRI clients. Bank also made a headway inefforts for expanding overseas operations and have signed two Memorandum of Understandingfor establishing Joint Venture Banks – one at Maputo, in the Republic of Mozambiqueand the other at Thimpu in Bhutan. Similarly, Bank has initiated the process for obtainingregulatory permission for opening of our representative office at Nairobi.

TREASURY, FUNDS AND INVESTMENT

The investment portfolio of the Bank has increased to Rs. 58287 crore as on 31^stMarch 2011 as against Rs. 52008 crore as on March 2010 thereby recording an increase of12.07% over the previous year. The ten year benchmark yield stood at 7.98% as on 31^stMarch 2011.

In debt market, yields hardened on account of increase of policy rates by RBI. RBI hasincreased Repo and Rev repo by 175 bps and 125 bps respectively to contain spiralinginflation. Hardening of interest rates was more pronounced in the shorter end of thecurve. Auction of new 10 year Benchmark on 03.05.2010 saw the yields move southwards dueto good demand. Ten year touched a low of 7.36% on 25.05.2010 and started moving up sincethen touched a high of 8.26% in January 2011.

Outflow from auction of 3G spectrum put pressure on liquidity and it was in deficitmode for most part of the year and deficit became pronounced after October 2010. Repotouched a high of Rs 171000 crore in December. RBI came out with OMO purchases to easemounting liquidity pressure in the system. Despite volatility in the market, the tradingprofit of Rs. 311.93 crore was recorded with strategic planning. The portfolio increasedby 12% and yield on investment increased from 6.74% to 7.22%.

In compliance with the Reserve bank of India guidelines, the Bank has transferredsecurities amounting to Rs. 1954.75 crore from AFS to HTM category. The e-Treasury of theBank was made fully operational which contributed to the efficiency of Treasuryoperations. The composition of investment portfolio of the Bank as on 31.3.2011 is asunder:

During the year, Bank has recovered an amount of Rs. 9.53 crore in written off accountsunder OTS.

DERIVATIVES:

The bank has actively traded in both interest rate and currency derivatives. Among theInterest rate derivatives Bank has traded in Overnight Indexed Swaps and interest ratefutures. Bank also traded actively in currency futures and forwards in the currencyderivative segment. Bank has also used derivatives for hedging purposes.

Integrated Risk Management System/Organizational Set Up.

Integrated Risk Management systems are now well established in the Bank. A Committee ofthe Board of Directors regularly oversees the Bank’s Risk Managementpolicies/practices under Credit, Market and Operational risks. The Committee reviews thepolicies and procedures for pricing of products and assessing the risk models relative tomarket developments and also identifies and controls new risks. The Committee alsoregularly monitors compliance of various risk parameters by the concerned Departments atthe corporate level.

Risk Management Structure

At operational level, various Committees like Asset Liability Management Committee(ALCO) for Market Risk, Credit Policy Committee (CPC) for Credit Risk and Operational RiskManagement Committee (ORCO) for Operational Risk have been constituted comprising ofmembers from the top management team. These Committees meet at regular intervalsthroughout the year to assess and monitor the level of risk under various Bank operationsand initiate appropriate mitigation measures wherever necessary.

The Bank has identified officers in the rank of Senior Managers/Managers to act as‘Risk Managers’ at all the Zonal Offices. The Risk Managers would act as the‘Extended Arms’ of the Risk Management Department of the Central Office at theZonal Level. The Bank has also identified officers at the senior level in variousfunctional departments of Central Office to act as ‘Nodal Officers’ in thematter of submission of data relating to Risk Management and support risk management inthe Bank.

Market Risk Management

The Mid Office reviews the market position, funding patterns and ensures compliance interms of exposure, duration, counter party limits and various sensitive parameters and thereports are presented at regular intervals to the top management. The tools such as VaRand Duration analysis are used on an ongoing basis to measure and manage the risk toBank’s NII in the short run and equity value in the long run. A model to estimateCapital charge on trading portfolio on ongoing basis is developed by TCS which is beingimplemented as per the Basle II guidelines on the Market Risk. The Bank has reviewed theexisting Investment and Market Risk Management Policy. Country Risk Management Policy hasbeen reviewed during the year. Counter party limits for Forex dealings have been fixed /reviewed as per their latest standing and rating in the market.

Credit Risk Management

Bank has a well-documented Credit Risk Management Policy, which was last reviewed bythe Board on 18.03.2010. The Bank has approved procurement of Facility Rating Module withRAROC, LGD and EAD assessment tools from CRISIL Ltd. The tools will be installed and madeoperational in the first quarter of 2011-12. The Bank is also developing Portfolio RatingModels for grading retail loan portfolios where ratings of individual loan entities arenot feasible on an on-going basis. The developments in credit risk management are beingreported to and monitored by the Credit Policy Committee headed by the Executive Director.

Operational Risk Management

Integrated Risk Management Structure of the Bank includes management of OperationalRisk, which is being guided by a well laid down Operational Risk Management Policy. Therisk philosophy of the Bank emphasizes imparting of knowledge at the field level foridentifying, assessing, measuring, monitoring as well as controlling of operational riskthrough training. Steps have been initiated for moving towards Advanced Approaches as perthe guidelines of RBI. The oversight of Operational Risk is being regularly carried out bythe Top Management as well as Board of Directors.

Implementation of Basel II Guidelines

Reserve Bank of India has issued updated master circular on implementation of the NewCapital Adequacy Framework in July 2010. As per the guidelines, the Bank has adopted BaselII norms with effect from 31^st March 2009 and provided capital as perStandardized Approach for Credit Risk, Basic Indicator Approach for Operational Risk andStandardized Duration method for Market Risk.

Bank has appointed a solution provider for implementation of the internationallyreputed SAS Risk Management solution through out the bank to meet Basel II norms. ReserveBank of India has set out timelines to the commercial banks for graduation to advancedapproaches. Banks were advised to undertake an internal assessment of their preparednessfor migration to advanced approaches. Our Bank is the first among all commercial banks tohave submitted its application to RBI for graduating to The Standardized Approach ( TSA)under Operational Risk. The Bank has appointed a consultant to evaluate /assess thepreparedness of the Bank in respect of all risks and to enhance / Strengthen existing RiskManagement Systems, Policies, Procedures, Process, MIS, Analytics etc and also toimplement integrated risk management system in the Bank. All necessary policies such asCredit Risk Management Policy, Operational Risk Management policy, Market Risk ManagementPolicy, Credit Risk Mitigation and Collateral Management Policy, Market Discipline andDisclosures Policy, ICAAP etc are in place duly approved by the Board.

RECOVERY

Bank has a well defined Recovery Policy containing detailed guideline for NPAManagement. It encompasses all areas of NPA management, monitoring and follow up measures,staff accountability, willful defaulters and MIS. The Policy is reviewed from time to timeto incorporate the latest changes/developments and trends in NPA Resolution.

Detailed guidelines with regard to sale of NPAs to ARC /SCs/ Banks/ NBFCs, sale ofsecured assets through E-auction, etc. have been incorporated in the Recovery Policyduring 2010-11. Bank has shown an excellent performance in terms of Cash Recovery &NPA management.

• Gross NPA level has come down from Rs. 2458 crore to Rs. 2395 crore.

• Cash Recovery has increased from Rs. 407 crore to Rs. 736 crore (includes bulksale recovery Rs. 177.74 crore )

• Gross NPA and Net NPA Ratios have improved from 2.29 % to 1.82 %, and 0.69% to0.65 % respectively.

Special OTS scheme for advances under Govt. sponsored schemes & others withsanction limits up to Rs. 1.00 lakh was extended up to 31.03.2011. An amount of Rs. 41.55crore has been recovered. DRT LOK ADALATs and District Level LOK ADALATs and otherRecovery Camps were conducted at different locations at Regional Offices / Zonal Officesforming clusters of branches during the year, where major thrust was given to recoverythrough negotiated settlements. Several cases have been settled in Lok Adalats. Recoveryefforts under SARFAESI Act were accelerated. A large number of Enforcement Agencies havebeen empanelled to assist the Authorized Officers in their recovery efforts.

Functioning of Asset Recovery Verticals established during the year 2010-11, wasstabilized during the review period. Cash Recovery of Rs. 228.39 crore has been made bythese verticals.

Branches/Regions with high concentration of NPAs in Small loans have been identified& focused attention is paid to these Branches/ Regions. Branch/Region wise action planhas been drawn for quick resolution of NPAs in these Branches/Regions.

During the year, total number of 12740 weekly/monthly recovery camps was held atBranches/ROs in which 35222 cases were settled amounting to Rs. 132.64 crore.

All these efforts have resulted in good recovery performance of the bank during theyear under review. The bank is committed to contain NPA level by concerted recoveryefforts and also by improving the assets quality during the year 2011-12.

BANCASSURANCE

Insurance service is provided by our Bank under Corporate Agency of LIC of India forlife insurance products. The performance during the year 2010-11 was:

• 38 % of bank branches were activated for bancassurance business as on31.03.2011. Each of these branches had canvassed a minimum of 12 policies or collected apremium of Rs. 2.00 lacs during the year.

• 193 branches became BIMA BANK by canvassing more than 200 policies or FPI of Rs.30.00 lacs per branch during the year.

• 20 Regions became BIMA REGION during the year.

• Four Zones (Pune ,Delhi ,Guwahati and Raipur) became BIMA ZONE during the year.

• Bank has sold 74422 policies, collected first premium income of Rs. 107.28Crores and earned commission of Rs. 10.59 crore.

• Bank has earned fees / commission income of Rs. 5.14 crore under non-lifeinsurance business.

MUTUAL FUND

In addition to the existing cross selling arrangement with Seven top mutual fundhouses, bank had tied-up with four more fund houses i.e., DSP Blackrock Mutual Fund,Principal Pnb Mutual Fund, IDFC Mutual Fund and L&T Mutual Fund during the year. Bankhas earned brokerage income of Rs. 0.76 crore by sale of mutual fund products throughidentified branches.

DEMAT SERVICES

Bank has implemented a web-based solution for demat-services. The solution for handlingback-office activities of CDSL application has been procured from CMC. Demat Services arebeing provided to 23009 account holders through 145 identified branches under CentralDepository Services Ltd.(CDSL).

E – STAMPING

Bank has tied up with Stock Holding Corporation of India (SHCIL) to provide e- stampingfacility to the customers. This facility has been made available to the public in thestates of Delhi , Karnataka and Tamil Nadu through selected branches.

CORE BANKING SOLUTION

Bank achieved 100% coverage of Core Banking, as per corporate plan envisaged. Allbranches, Extension Counters, NBOs, Regional Offices, Zonal Offices and TrainingColleges/Centres were brought under Core Banking platform, by December 2010. New branchesare opened under Core Banking Platform only.

Location-wise coverage of CBS as on March 31, 2011 is as under:

WIDE AREA NETWORK

Bank implemented MPLS technology solution for establishing connectivity for branchesbrought under Core Banking from BSNL as the network service provider. The network solutionimplemented for CBS has Leased Line (LL) as primary connectivity and CDMA/ ISDN and VSATtechnology is used as network backup in the branches. For branches which are technicallynot feasible for MPLS Leased Line, VSAT is used as primary connectivity. At the end ofMarch 2011, network links have been established at all 4032 locations.

1. Internet Banking:

Internet banking facility has been implemented in all the CBS branches providingfacility for Funds Transfer, Utility bill payment, Airlines / Movie ticketing, shopping,temple donations, fee payments, stop cheques, cheque status , account statements etc.Internet Banking facility is customized for both personal and corporate customers fortheir specific requirements.

2. On-line tax payments :

E-payment of Direct taxes, Excise, service, DGFT license fee, West Bengal StateGovernment tax, Maharashtra Government sale tax and VAT payments, U.P. State tax paymentare available through Internet Banking for on-line payment using Internet Banking.

RTGS/NEFT facility is also available through Internet Banking for corporate andpersonal customers. The total number of tax payments made by customer for CBDT/CBEC, as of31.3.2011 is 64993. The branches have been advised to encourage tax payments throughInternet Banking. User base for Internet Banking has been steadily increasing.

3. Corporate Internet Banking:

Corporate Internet Banking facility is available with additional facility customizedfor corporate customers. Funds transfer facility up to a daily limit of 15 cores withinBank as well as facility for bulk upload of NEFT available under Corporate InternetBanking.

4. SMS Banking:

SMS banking provides account information to the customers with real-time alerts onbusiness transactions carried out by them. Presently, SMS alerts are sent to customers in15 different Indian languages as per their choice for the 1) Debit / Credit in accountabove Rs. 5000/- in saving account and Rs. 50,000/- in Current/OD accounts 2) Clearingcheque is bounced 3) account balance is below the prescribed minimum level 4) Fixeddeposit maturity before 7 days .

5. Mobile Banking:

Mobile Banking is implemented using GPRS with enquiry and funds transfer operations.The transaction done through Mobile Banking is secured with end to end inscription and twofactor authentication features.

6. Phone Banking :

Phone banking solution is implemented with voice recording in English and Hindi and thefacility is available to all the customers of CBS branches.

7. Application supported by Blocked Amount (ASBA) :

Securities and Exchange Board of India has streamlined the existing process ofInitial Public offer of shares by companies and introduced a supplementary process calledas Application Supported by Blocked amount (ASBA). We have launched the ASBA software toall our customers by which an investor can subscribe to public issues (IPO) through theBank by authorizing the bank to block the application from his/her bank account andthereafter remit the allotment amount. Customers can also apply ASBA through Internetbanking application for public issue (IPO) only.

Web Site:

The Bank’s website has been upgraded to make it compatible for disabled byimplementing WCAG 2.0 guidelines as recommended by W3C and as directed by Ministry ofFinance. Website contains information on Bank’s various products and services.Customers / general public can now download various types of forms for opening accounts,obtain loans, avail internet banking / mobile banking facilities, etc. Online applicationscan also be made by customers for loans, jobs, etc. The site is secured from any sort ofhacking or intrusions by use of Firewall / Anti Virus protection. On line customercomplaint module is also in place in place facilitating speedier redress of customercomplaints.

Payments & Settlement Systems (RTGS and NEFT)

All CBS branches are enabled for RTGS and NEFT facility using the Straight ThroughProcessing (STP). As on 31^st March, 2011, 3883 Branches/ECs/NBOs/Offices havebeen enabled for RTGS and 3881 Branches/ECs/NBOs/Offices enabled for NEFT. This facilityis also available in Internet Banking system.

New RTGS and PDO-NDS systems implemented:

Reserve Bank of India planned to migrate RTGS and PDO-NDS system from old Windows 2000Server Operating System to new Windows Server 2008 Operating System. Accordingly, newHardware and Software including Oracle 11g and IBM Websphere MQ series version 7.0 wasprocured for implementing RTGS system and PDO-NDS system in Windows Server 2008 OperatingSystem. The new PDO-NDS system (Primary and Standby Sites) was implemented on 2^ndDecember, 2010. The new RTGS system (Primary and Standby Sites) was implemented on 7^thDecember, 2010 as scheduled by RBI.

Electronic Data Interchange System:

EDI was implemented at Pithampur Extension Counter (now branch) in February, 2010 forcollection of Customs Data using Centralised version of ICES 1.5. Subsequently, EDI wasimplemented at one more branch (Mandideep under Bhopal Zone). EDI is yet to be implementedby Customs at 3 identified branches namely Mill Area, Indore, Malanpur Industrial Area,Bhopal and Raipur Main branch

ATM Network:

The ATM network is being expanded on a large scale. Bank’s ATM network in year2010-11 has been expanded from 400 to 1006. Bank is also in the process of installingadditional 900 ATMs including 150 bio-metric ATMs. It is also planned to install 1000 ATMsin rural areas and 1500 off site ATMs. Bank is also in the process for having NEFT, directTax payment facility through ATMs.

Cheque Truncation System:

Cheque Truncation System (CTS) has been implemented in NCR Region, New Delhi. Bank isalso in the process of implementing the CTS at Chennai.

Single Data Repository :

Bank is in the final stages of short listing the vendor for implementing the SingleData Repository for creating the Enterprise Wide Information System catering toBank’s MIS requirement from a single database.

AUDIT AND INSPECTION IBR/HOUSE KEEPING:

Bank has given special attention to improve the various areas of house keeping whichcomprises balancing of books and reconciliation of accounts. During the Financial Year2010-11 Bank has improved the balancing of books of accounts by focused attention andregular up gradation of the system on an ongoing basis and hence has maintained asatisfactory and healthy position in this parameter. The Core Banking platform has beenimplemented in all our 3728 branches and the benefit arising out of CBS is enormous.Significant improvement has also been achieved in reconciling old entries and restrictingin increase of outstanding entries under various Impersonal Accounts viz. ClearingDifference, Inter Branch, Inter Bank (RBI/SBI/Other Banks) and other Nominal Accounts.

The Bank is persevering towards maintaining over all healthy position of House Keepingso as to keep the level of risk at minimum level. The position of outstanding entries ismaintained well within the RBI norms.

BRANCH EXPANSION

As on March 31, 2011, Bank was having network of 3728 branches. During the year 82branches were opened, 53 extension counters were upgraded into full fledged branches, 17Mid Corporate branches opened , 1 Asset Recovery Branch opened and 2 temporary branchesopened for Common Wealth Games at Delhi were closed. The demographic of 3728 branches were1416 Rural branches, 936 Semi-urban branches, 719 urban branches and 657 Metropolitanbranches.

EXTENSION COUNTERS:

In the beginning of the year there were 192 Extension Counters. After conversion of 53extension counters into full fledged branches, it remained 139 at the end of financialyear 31^st March 2011.

Customer Grievance

Many new facilities were introduced during this financial year for improving customerservice in the Bank. The Bank was migrated fully on CBS platform thereby facilitating allthe customers to have the facility of anywhere banking. The Grievance Redressal Mechanismwas strengthened further and 12827 grievances were redressed to the satisfaction of thecustomers within reasonable time. The situation improved and on an average, grievancesreceived per branch per quarter have come down to less than one, which shows the highsatisfaction level of customers.

Periodical Customer Meets were arranged in the Bank at all levels for augmentinggrass-root level feed-back directly from the customers and to formulate / amend ourpolicies accordingly.

A fresh booklet was printed regarding BCSBI codes and distributed amongst all the fieldfunctionaries to ensure implementation of standard services to the customers. Bannersabout major provisions of BCSBI codes have been displayed in all the branches for theinformation of the customers.

All schemes, services, charges, rates of interest etc were displayed on our Bank’sweb-site for the information of the customers. Applications received under RTI wereresponded to within 30 days. Special concession in Locker rent and higher rate of intereston deposits were allowed for senior citizens.

RAJBHASHA

During the financial year, Central Bank of India has been awarded with ‘IndiraGandhi Rajbhasha Shield’ in the field of Implementation of Official Language Policyof the Govt.. The Shield was received by Shri R.K. Dubey, Executive Director of the Bankfrom the Hon’ble Vice President of India Mohd. Hamid Ansari.

Bank and Financial Institutions are awarded shields/prizes by the Reserve Bank of Indiaunder the ‘Reserve Bank of India Governor Shield Competition’ for theImplementation of Official Language Policy. Reserve Bank of India had arranged a functionof Rajbhasha Prize Distribution in its Central Office Building at Mumbai to award Banksand Financial Institutions to all the three linguistic regions of the country. TheseAwards and Shields were given by the Governor Dr. D. Subbarao, Reserve Bank of India.Central Bank of India has been receiving RBI Rajbhasha Awards under the ‘RBIRajbhasha Shield Competition’ for the past many years continuously.

Besides, Maharashtra State Level Bankers Committee have Awarded First Prize to CentralBank of India for the year 2009-10 for the best performance in implementation of OfficialLanguage Policy in Maharashtra State. It is a matter of great pleasure that we arereceiving this prize for the last 8 years continuously.

During this financial year, various Town Official Language Implementation Committee(TOLIC) working under the Central Govt. of India, Ministry of Home Affairs have given manyawards/prizes to our various Regional and Zonal Offices.

Draft & Evidence Parliamentary Sub-Committee on Official Language visited ourBank’s Regional Office, Jhansi on 22nd December, 2010 and the said Committee hadappreciated the work being done by our Bank.

The Bank’s website is being updated for Hindi regularly. The branches under CBSare bilingual compliant. SMS messages are being sent to customers in Hindi as well as 7other Regional Languages.

During the centenary year of the Bank, ‘100th International Women Day’ hadbeen celebrated by Central Office, Rajbhasha Vibhag, in which Noted Hindi Women Writershave been felicitated by Worthy Chairman & Managing Director and 47 Ladies Officers/Employees have participated in the "KAVYA PAATH" competition for women employeesorganized to mark the occasion.

CORPORATE COMMUNICATIONS

During the year 2010-11, under our corporate branding exercise through national andregional newspapers in absolute terms, we have reached to a circulation of 1263.17 lacsproviding us a minimum recall value of Rs. 0.48. For creating and enforcing brand equityamong executives and segmented opinion leaders, niche publications were used as a media ofcommunications from time to time during the period ended March, 2011. Apart from above,the corporate/products and services ads were also released to souvenirs and publicationsof various social, cultural organizations in additions to the publications associated withopinion leaders/builders. For creating appropriate brand image through Electronic Media,it was decided to conceptualize the three animated corporate TVC with the concept titlesof Hare & Tortoise, Fox & Crane and Birds & the Hunter. The objective of theseTVCs is to position our

Bank as the Bank offering "Refreshing Different Ideas" to cater the diverseneeds of the customers. These TVCs have also been adopted in the existing 53 sites of thehoardings of the Bank available throughout the country. Further the CDs of these TVCsadopted in the respective Regional/Hindi/English languages have been sent to all the ZonalOffices for creating appropriate Brand image among staff members and the general publicunder their jurisdiction. Posters of these TVCs were also sent to all ZOs. TVC was shownin 320 single theatres across the country through UFO Moviez which was well received.

During the year Bank has produced and telecasted TVC showcasing a 100 years journey ofour Bank coinciding with the progress of the nation. This TVC has created buzz in themarket. It was liked by every viewer. This TVC has been adjudged the best Ad of 1^stfortnight ending January 2011 by 4Ps Business and Marketing magazine. Our branding effortsduring the year has shown a marked progress in its brand performance in BrandFinance’s Top 500 Global Financial Brands 2011 study published in the February 2011issue of UK’s "The Banker" magazine our Bank has moved up from its rankingof 471 in 2010 to 390 in 2011, a jump of 81 places in overall ranking order, highest everby any Public Sector Bank.

Bank has carried out commonwealth branding on 51 ATMs in NCR and Delhi and 50 Branchesin Delhi, Bangalore, Kolkata, Mumbai and Pune. Bank has carried out Outdoor MediaPublicity through Hoardings/Glow signs at various locations, Bus Q Shelters, Double Deckerbuses, King long Buses of different routes and Ad sites at domestic and internationalairports were carried out from time to time during the year.

VIGILANCE

The vigilance department of the bank undertakes various functions relating to vigilancemanagement and endeavours to diminish the odd features like frauds, malpractices,corruptions etc and to maximize efficiency of the bank to achieve the business goals.

The department handles complaints received from CVC/RBI/MOF/Other departments of thebank/other sources and decides the presence of vigilance angle and dispose it offaccordingly. Thus, all complaints are screened by the department and the complaints havingvigilance aspects are attended strictly through vigilance mechanism.

In order to prevent/ minimize the incidence of frauds in the system, various steps havebeen taken which have served the purpose to the significant extent. Thrust is given tomake the functionaries fully aware of necessity of adhering to the systems and procedures.As per the occurrence of frauds, larger emphasis has been accorded to sticking to KYCnorms, secrecy of passwords, checking of day end reports etc.

Various awareness programmes have been conducted at ZO/RO level highlighting thelapses/ignorance/negligence/malafides leading to frauds both in the areas of borrowal aswell as non-borrowal accounts. The frauds in payments of DDs, collection of cheques etchave come down conspicuously.

In the arena of borrowal accounts, one time exercise has been undertaken to check theassets created out of housing loans resulting in early detection of irregularitiesfollowed by remedial measures. The vigilance officers have conducted study on the pace ofsubmission of control returns and its extent of scrutiny by the controllers and creditdepartments have been given necessary suggestions to improve the system.

The vigilance officers are conducting surprise inspection of the branches and thishelps to bring the irregularities in the working of the branches to fore at the earliestand its timely rectification by branches/controllers.

The forensic audit has also been carried out to know the loopholes in the system withsuggestions for improvement in the key areas. The fraud prevention committee has beenformed at zonal office level to discuss the fraudulent activities if any in the zones andto eradicate the common irregularities observed during surprise inspection of thebranches.

Having regard to action against erring/guilty officials, all steps have been taken tocomplete the departmental action with exemplary punishment largely within the prescribedframe of time. Action has also been initiated against erring third parties like paneladvocates, architects, valuers etc as per extant guidelines.

Operation department/Credit department/IT departments etc. have been informed from timeto time to improve the system wherever warranted. The zonal authorities have also beeninformed to pay due attention towards newly emerged fraud prone areas. The functioning ofthe vigilance department is reviewed by the vigilance committee of the board every quarterand their directions are implemented. The board also reviews the quarterly/annual reportson frauds. In case of frauds of Rs. 1 crore and above, the details like modus operandi,amount involved, CBI/Police action, recovery position, staff action etc are reported tospecial committee of board on monitoring large value fraud. The committee is also informedabout preventive measures to deter such type of frauds in the systems. The attemptedfrauds are also given due importance in order to put the functionaries on alert and toavert such type of design if re-attempted.

1. MANPOWER:

At the end of March 2011 the staff strength of the Bank stood at 34,015 (includingPTSK) as against 34,826 (including PTSK) in the previous year. The category-wise break-upof staff is given below:

2. HUMAN RESOURCES DEVELOPMENT:

(i) Revamping of Performance Appraisal Formats:

Due to constant changes taking place in the Banking Sector and the competitiveatmosphere prevailing in the Banking & Finance space, the business priorities andstrategies of the bank have been changing rapidly. Having regard to changed businesspriorities and strategies, the existing single format of appraising the Annual Performanceof Officers being followed in our Bank has been revamped and in its place five differentformats applicable to various categories of officers depending upon the position held bythem were introduced. Accordingly, the revised formats are applicable for appraising thePerformance of officers for the Financial Year 2010-11 and onwards.

(ii) Enhancing the Career Path of Specialist Officers:

Considering the growing focus on the specialized skills and also to provide impetus tothe management’s endeavour to extend a fair career path for Specialist CategoryOfficers with ample promotional opportunities to Specialist Category Officers, a separatepolicy document governing career path and inter-scale promotions of Specialist CategoryOfficers with certain changes in the provisions relating to career path for SpecialistCategory Officers was formulated in which the career path of Specialist Category Officershas been extended up to Scale-V in order to motivate and retain the Specialist CategoryOfficers in the Bank.

(iii) Structured Document on Succession Plan for period 2010-14:

The Bank have been witnessing large scale retirements during the next four years withthe exit of employees joined the bank in the pre-nationalization era. Further, with thesteady emergence of new business areas, which are potential for growth, a need has beenfelt to evolve a sustained Succession Plan to ensure that business continuity plans arenot impaired. With this background, the Bank has prepared a structured document titled -‘Succession Plan for period 2010-14’ outlining the agenda which guides the HRfunction of the Bank for the next four years in the area of promotions, recruitments andother succession endeavours. The documents have been duly approved by the Board and thisforms the very basis to guide the HR functions on succession endeavours during the saidperiod.

(iv) Approach Paper on – ‘Towards meeting Human Capital Challenges –Bank’s Draft Action Agenda’:

Keeping in focus the emerging severity of competition in the Banking Sector and alsothe large scale retirements in PSBs coupled with the need to right -size/align the skillto match the present and future requirement of the Institution, Department of FinancialServices, Ministry of Finance, Government of India expressed that PSBs are likely to beconfronted with constraints and face challenges on HR front in the areas of - Manpower,acquiring right manpower, developing their skills through appropriate employeemotivational/engagement strategies, formulating robust performance management systemsetc., and suggested to all PSBs to prepare a draft action plan addressing all theseissues. In response to this suggestion, the Bank has prepared an Approach paper titled– ‘Towards meeting Human Capital Challenges: Bank’s Draft Agenda’comprehensively dwelling on the present and future plans on various major areas of HRMviz., Manpower, Recruitment, Promotions, Training, Performance Management Systems,Employee Engagement/Retention programmes etc., and the same has been duly approved by theBoard and as per the advise of Government of India, Ministry of Finance, the same has beenfurnished to Indian Banks’ Association (IBA) for formulating appropriate strategy.

3. TRAINING:

Quality training is the cornerstone for building healthy succession and to nurture asound managerial team. Accordingly, during the year 2010-11 ‘Training &Development’ function continued to be given major thrust. With this backdrop and infurtherance to the constant endeavour to transform the Bank as a ‘LearningOrganisation’, vibrant changes are brought about in the entire gamut of the trainingactivity encompassing training modules, contents and delivery systems etc.

During the year 2010-11, in order to increase the horizons of knowledge of ourexecutives/senior level officers and enhance the intellectual capital of the bank, theinteractive sessions with Dr. Gautam Vinayashil (an eminent management professional ofInternational repute) were conducted. The rich experiences of Dr. Vinayashil are sharedand contemporary business areas are discussed and deliberated. This apart, specialtraining programmes were conducted exclusively by experts/agencies of high repute onPersonal Effectiveness & Relationship Management, Corporate Etiquette, Credit RiskManagement. Exclusive Programme for senior officials of RRBs, Cash & Currency ChestManagement, Credit Appraisal, Micro Finance & Financial Inclusion, KYC & AML-Associated Risk, Financing SMEs, Attitudinal & Communication change, Sensitization ofJunior Officers & Clerical staff on Customer Service, Vigilance Administration &Disciplinary Action, Stress Management, Yoga cum Seminar etc. In order to familiarize withvarious bank functioning, Probationary Officers, appointed in 2010 & 2011 wereimparted extensive long duration training programme (both class room and on the jobtraining) which will eventually prepare them to take up higher position in the Bank. Inaddition to the above, In-company training programmes with External institutes in keyareas that are specially customized to the needs of the Bank were conducted. Around 1061classroom training programmes were conducted covering more than 21089 participants and101262 man-days by three Training Colleges and nine Zonal Training Centres. Theseprogrammes covered various topics like Risk Management, Basel II, Credit Management, NPAManagement, Recovery, Financial Inclusion, IT related programmes, Treasury/ID, Forex,Retail Banking etc. Regular training programmes, special training programmes wereconducted at SPBT College for RMs in Scale V and officers in Scale IV on ‘Leadership& Planning Control’ as also for GMs and DGMs on Simulation Risk Management,Financial Inclusion & HR Challenges. In the year 2010-11, 36 officers have been sentfor overseas training/exposure visit. Officers in various scales were sent for specializedprogrammes conducted by external training agencies like NIBM, CAB, BIRD, FEDAI, IDBRT,IIBM etc. During the year 2010-11, 6 pre-recruitment programmes were conducted covering6434 SC and 1654 ST candidates. 63 pre-promotion programmes were conducted covering1861 SCand 498 ST candidates.

4. RECRUITMENT & PROMOTIONS:

In order to inject required professionalism in the Institution, the spree of inductingMBAs in various fields has been continued during the Financial Year 2010-11 as well andaccordingly, 98 fresh MBAs in Scale II, have been recruited through campus mode from theProfessional/Management institutions like IIT, IIM, IMI etc besides the regularrecruitment processes in respect of Specialists and Mainstream posts. In order to ensure agood blend of experience and contemporary knowledge/skills, the system of campusrecruitment of MBAs will be continued in future as well.

In the year 2010-11, recruitment process was held for 3127 posts encompassing CompanySecretary, MBAs (Scale II), Flying Squad Officers, Chief Dealer (Scale IV), Chief Manager(Forensic), Chief Manager (Investigation) Defence Banking Advisor (Army), Defence BankingAdvisor (Airforce), Contractual Auditors, Faculty on Contract, Probationary Officers(Scale I), Incharge of RSETIs/FLCCs , Clerical Staff and Armed Guards (Sub-staff cadre).

The promotional exercise has been made more motivating and as such as a corporate goal,it has been resolved to hold the promotion processes as frequently as possible for allscales/categories. Accordingly, during the year 2010-11 inter-scale and inter-cadrepromotion processes were conducted and as many as 1823 employees/officers were elevated tohigher cadre/ scale, out of which 975 sub-staff were promoted to clerical cadre. Further,a fresh Promotion process from Scale I to II and II to III have been initiated for 1410& 419 vacancies respectively.

5. IMPLEMENTATION OF RESERVATION POLICY:

The Bank has been implementing the guidelines/instructions received from Government ofIndia/Indian Banks’ Association on Reservation Policy and concessions and relaxationsare extended to SCs/STs/OBCs/PWDs as admissible in the Reservation Policy. On 21.5.2010, ateam of officials of Govt. of India, Ministry of Finance, Department of Financial Servicesled by Shri. L.K. Meena, then Deputy Secretary of Financial Services, paid visit to Bankto undertake in-depth study of implementation of Reservation Policy in our Bank andexpressed their satisfaction in the report submitted to Bank.

6. BUSINESS MEETINGS WITH REPRESENTATIVES OF UNIONS / ASSOCIATIONS:

During the year under review, exclusive meeting was held on 6^th August 2010at Corporate Office level with major Unions/ Associations to discuss solely on thestrategies of business development. The Management expressed that it should be endeavourof all employees to improve the business status of the bank and exhorted the unions toprevail upon their members to give their best to the institution.

7. STAFF WELFARE SCHEMES:

‘Welfare of Staff and their families’ continues to be the committed endeavourof the management and this endeavour is always kept on the top of the HR agenda of theBank. Accordingly, during the year, an amount of Rs. 15 crore has been apportioned forexpending towards various Staff Welfare Schemes and the schemes have been thoroughlyimproved upon both in terms of ceilings and coverage. As a goodwill gesture to the retiredemployees, during the year 2010-11, Bank, while revising the existing scheme of MedicalAssistance to Retirees, has permitted reimbursement of the premium amount of MedicalPolicy in the name of the retired staff and/or spouse up to the extent of Rs. 15,000/-p.a. as an alternative to Hospitalization expenses.

8. INDUSTRIAL RELATIONS:

The Industrial Relations during the year remained generally cordial.

SUBSIDIARIES AND JOINT VENTURES

CENTBANK HOME FINANCE LIMITED

The Net Profit of the company stood at Rs. 9.39 crore as at March 2011, as against thelevel of Rs. 5.45 crore as of March 2010. The main reason for increase in profit isreduction in interest expenses. During the Financial Year, the Company had sanctioned atotal amount of Rs. 67.18 crore in 1005 accounts and disbursed an amount of Rs. 63.26crore in 977 accounts. The loan outstanding increased from Rs. 269.88 crore as on March2010 to Rs. 282.13 crore as on March 2011.

The Company has consistently improved its Net Own Fund by adding to the Reserves bysustained generation of profit. Net worth has gone up from Rs. 49.31 crore as on March2010 to Rs. 55.21 crore as on March 2011. This was due to consistent increase in profit.The installments on Term Loans of Central Bank of India are paid regularly by internalgeneration of funds through prompt recovery of installments in borrower accounts and alsorecovery of overdue amount in Non Performing Accounts. Deposits from public andinstitutions have increased from Rs. 38.04 crore as on March 2010 to Rs. 48.03 crore as onMarch 2011. The company has availed Term Loan and Overdraft facilities from Central Bankof India at competitive rates, with outstanding at the level of Rs. 166.41 crore as on 31^stMarch 2011 as against Rs. 169.50 crore as on 31^st March, 2010.

INDO-ZAMBIA BANK LTD.

The Bank’s Joint Venture in Zambia is promoted jointly by Government of Zambia andthree India Banks viz. Central Bank of India, Bank of Baroda and Bank of India. While eachof the 3 Indian Bank hold 20 percent equity, Government of Republic of Zambia holds thebalance 40 per cent equity. The Bank has been performing well in all parameters. While thetotal business of the bank stood at Rs. 1173.22 crore as on 31^st March 2011,the Bank earned a Net profit of Rs. 21.77 crore as on the said date.

CENTBANK FINANCIAL SERVICES

Centbank Financial and Custodial Services Ltd. changed its name to Centbank FinancialServices Ltd. (CFS) during the year. The business model of CFS has undergone change as itdiversified its activities.

Earlier, CFS was essentially providing Corporate Trustee Services as Debenture Trusteeand Security Trustee, as well as Executor Trustee services to individuals by becomingtrustee in helping intergenerational transfer of wealth and charitable institutions.During the year 2010-11, CFS has significantly diversified its business profile to makeCFS a full-service investment bank. CFS’ services include:

• Project Appraisal and Loan Syndication,

• Capital Market transactions, both Equity and Debt

• Corporate Advisory Services, including Mergers and Acquisitions, ProjectAdvisory, Debt Restructuring, Securitization, Risk Management, Business Valuations

• Trusteeship Services, including Debenture/Security Trustee, Executor Trustee,Managing Charitable Trusts

PERFORMANCE DURING 2010-11

In the first year of business in its newly defined role, CFS earned net revenue ofaround Rs. 35 crore from the new businesses launched during the year. CFS achieved netrevenue of Rs. 37.86 crore during the FY 2010-11 as against Rs. 7.9 crore, which mainlycomprised of mutual fund brokerage of Rs. 7.27 crore during 2009-10 (as against brokerageof Rs. 1.48 crore in FY 2010-11). Earnings before interest, depreciation, tax and royalty(to the parent i.e. Central Bank of India) was Rs. 35.70 crore which is 94% to totalrevenue. CFS achieved a growth in net profit of 124% in 2010-11 over that of 2009-10.Return on equity has increased perceptibly from 87% in 2009-10 to 194% in 2010-11.

Project Appraisal and Syndication of Debt

CFS has taken up 16 loan syndication/debt capital market mandates for which CFS earneda total fee of Rs 35.00 crores during the year 2010-11. CFS has completed a cross borderfinancing during the year.

Advisory Services

The Company has successfully completed the capital restructuring of a Navratna PublicSector Undertaking (PSU) as a ‘Sole Advisor’. CFS advised the PSU in their bonusissue of shares and simultaneous forward split of shares. As part of the assignment, CFSassisted the PSU in publishing a Management Information Circular (MIC).

Future Plans of CFS

While CFS has well established its presence in the financial market in the ProjectAppraisal and Loan Syndication business segment with a good number of projects inpipeline, CFS will be rolling out completely other business verticals which are Debt &Equity Capital Market and Corporate Advisory Services during 2011-12.

Considering the present macro-economic scenario, the pace of growth of investmentbanking business and Corporate Trusteeship Services, business is expected to improveduring 2011-12.

REGIONAL RURAL BANKs (RRBs)

Bank has 7 sponsored RRBs as on 31.03.2011 covering 55 districts in 7 states with anetwork of 1761 branches. The cumulative performance of all the 7 RRBs under majorparameters as on 31.03.2011 is as under:

A. Branch Expansion: During the year 2010-2011 the RRBs have opened 16 new branchesraising the total number of branches to 1761 as on 31.03.2011 out of that 197 branches hasbeen migrated to CBS platform.

B. Deposits: The deposits of RRBs increased from Rs. 14600.02 crore as on31.03.2010 to Rs. 15843.98 crore as on 31.03.2011, registering a growth of 8.52%.

C. Advances: The advances of RRBs have increased from Rs 6071.53 crore as on31.03.2010 to Rs. 7708.51 crore as on 31.03.2011 showing a growth of 26.96%.

D. Profitability: The RRBs have earned profit of Rs. 146.58 crore during the year2010-2011 against the previous year’s profit of Rs. 261.88 crore.

AWARDS & ACCOLADES

• Skoch Financial Inclusion Award 2011 for implementing the Bihar Rural LivelihoodProject also known as JEEVIKA Project.

• SKOCH Award for Best Business Model: 2010

• My FM stars of the Industry Retail Leadership Award in Feb. 2011.