UNITED BANK of INDIA United Bank of India (“Bank”) Was Constituted Under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 on July 19, 1969

Placement Document Not for circulation Private and confidential Serial No. ___

UNITED BANK OF INDIA United Bank of India (“Bank”) was constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 on July 19, 1969. For further details with respect to constitution of our Bank, please see section “General Information” beginning on page 226.

Head Office: United Tower, 11, Hemanta Basu Sarani, Kolkata – 700 001, West Bengal, India Telephone: +91 33 2248 3857; Fax: +91 33 2248 9391; Website: www.unitedbankofindia.com; Email: [email protected]

Our Bank is issuing 54,906,211 equity shares of face of value ₹ 10 each (the “Equity Shares”) at a price of ₹ 23.22 per Equity Share, including a premium of ₹ 13.22 per Equity Share, aggregating up to ₹ 127.49 Crores (the “Issue”).

ISSUE IN ACCORDANCE WITH CHAPTER VIII OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, AS AMENDED (THE “ICDR REGULATIONS”), AND THE RULES MADE THEREUNDER

THIS ISSUE AND THE DISTRIBUTION OF THIS PLACEMENT DOCUMENT IS BEING MADE TO QUALIFIED INSTITUTIONAL BUYERS AS DEFINED UNDER THE ICDR REGULATIONS (“QIBs”) IN RELIANCE UPON CHAPTER VIII OF THE ICDR REGULATIONS. THIS PLACEMENT DOCUMENT IS PERSONAL TO EACH PROSPECTIVE INVESTOR AND DOES NOT CONSTITUTE AN OFFER OR INVITATION OR SOLICITATION OF AN OFFER TO THE PUBLIC OR TO ANY OTHER PERSON OR CLASS OF INVESTORS WITHIN OR OUTSIDE INDIA OTHER THAN TO QIBs. THIS PLACEMENT DOCUMENT WILL BE CIRCULATED ONLY TO SUCH QIBs WHOSE NAMES ARE RECORDED BY OUR BANK PRIOR TO MAKING AN INVITATION TO SUBSCRIBE TO EQUITY SHARES OFFERED IN THE ISSUE.

YOU ARE NOT AUTHORISED TO AND MAY NOT (1) DELIVER THIS PLACEMENT DOCUMENT TO ANY OTHER PERSON; (2) REPRODUCE THIS PLACEMENT DOCUMENT IN ANY MANNER WHATSOEVER; OR (3) RELEASE ANY PUBLIC ADVERTISEMENT OR UTILIZE ANY MEDIA, MARKETING OR DISTRIBUTION CHANNELS OR AGENTS TO INFORM THE PUBLIC AT LARGE ABOUT THE ISSUE. ANY DISTRIBUTION OR REPRODUCTION OF THIS PLACEMENT DOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS INSTRUCTION MAY RESULT IN A VIOLATION OF THE ICDR REGULATIONS OR OTHER APPLICABLE LAWS OF INDIA AND OTHER JURISDICTIONS.

INVESTMENTS IN EQUITY SHARES INVOLVE A DEGREE OF RISK AND PROSPECTIVE INVESTORS SHOULD NOT INVEST IN THIS ISSUE UNLESS THEY ARE PREPARED TO RISK LOSING ALL OR PART OF THEIR INVESTMENT. PROSPECTIVE INVESTORS ARE ADVISED TO CAREFULLY READ THE SECTION “RISK FACTORS” BEGINNING ON PAGE 37 BEFORE MAKING AN INVESTMENT DECISION IN THIS ISSUE. EACH PROSPECTIVE INVESTOR IS ADVISED TO CONSULT ITS OWN ADVISORS ABOUT THE PARTICULAR CONSEQUENCES TO IT OF AN INVESTMENT IN THE EQUITY SHARES PROPOSED TO BE ISSUED PURSUANT TO THE PRELIMINARY PLACEMENT DOCUMENT.

Invitations, offers and sale of the Equity Shares shall only be made pursuant to the Preliminary Placement Document, the Application Form, this Placement Document and the Confirmation of Allocation Note. See the section “Issue Procedure” beginning on page 177. The distribution of this Placement Document or the disclosure of its contents to any person other than QIBs (as defined in the ICDR Regulations) and persons retained by QIBs to advise them with respect to their purchase of the Equity Shares is unauthorized and prohibited. Each prospective investor, by accepting delivery of this Placement Document, agrees to observe the foregoing restrictions and to make no copies of this Placement Document or any documents referred to in this Placement Document. Information contained in this Placement Document is not complete and may be changed. The information on our Bank’s website or any website directly or indirectly linked to our Bank’s website does not form part of this Placement Document and prospective investors should not rely on such information contained in, or available through, such websites.

The Equity Shares of our Bank are listed on the BSE Limited (the “BSE”) and the National Stock Exchange of India Limited (the “NSE”) (the BSE and the NSE collectively the “Stock Exchanges”). The closing price of the outstanding Equity Shares on the BSE and the NSE on March 20, 2017 was ₹ 25.20 and ₹ 25.20 per Equity Share, respectively. In-principle approvals under regulation 28(1) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (“Listing Regulations”) for listing of the Equity Shares have been received from the BSE and the NSE on March 21, 2017. Applications to the Stock Exchanges will be made for the listing of the Equity Shares offered through this Placement Document. The Stock Exchanges assume no responsibility for the correctness of any statements made, opinions expressed or reports contained herein. Admission of the Equity Shares to trading on the Stock Exchanges should not be taken as an indication of the merits of the business of our Bank or the Equity Shares.

OUR BANK HAS PREPARED THIS PLACEMENT DOCUMENT SOLELY FOR PROVIDING INFORMATION IN CONNECTION WITH THE PROPOSED ISSUE.

This Placement Document has not been reviewed by SEBI, the Reserve Bank of India (the “RBI”), the Stock Exchanges, or any other regulatory or listing authority. The Equity Shares offered in the Issue have not been recommended or approved by SEBI, nor does SEBI guarantee the accuracy or adequacy of this Placement Document. This Placement Document will be circulated or distributed to Qualified Institutional Buyers (as defined in the ICDR Regulations), only and will not constitute an offer to any other class of investors in India or any other jurisdiction. The placement of Equity Shares proposed to be made pursuant to this Placement Document is meant solely for QIBs on a private placement basis and is not an offer to the public or to any other class of investors. Information on our Bank’s website or any website directly or indirectly linked to our Bank’s website does not form part of this Placement Document and prospective investors should not rely on such information contained in, or available through, such websites.

The Equity Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities laws of the United States and may not be offered, sold or delivered within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and applicable state securities laws. Accordingly, the Equity Shares are being offered and sold outside the United States in “offshore transactions” (as defined in Regulation S under the U.S. Securities Act (“Regulation S”)) in accordance with Regulation S and the applicable laws of the jurisdictions where those offers and sales are made. For further details, see “Selling Restrictions” and “Transfer Restrictions” beginning on pages 189 and 195, respectively.

This Placement Document is dated March 24, 2017. BOOK RUNNING LEAD MANAGERS

MOTILAL OSWAL INVESTMENT ADVISORS PRIVATE LIMITED SBI CAPITAL MARKETS LIMITED

TABLE OF CONTENTS NOTICE TO INVESTORS...... 2 REPRESENTATIONS BY INVESTORS ...... 4 DISCLAIMER CLAUSE OF STOCK EXCHANGES ...... 10 CERTAIN CONVENTIONS, CURRENCY OF PRESENTATION AND FINANCIAL DATA ...... 11 INDUSTRY AND MARKET DATA ...... 13 FORWARD – LOOKING STATEMENTS ...... 14 ENFORCEMENT OF CIVIL LIABILITIES ...... 15 EXCHANGE RATES ...... 16 DEFINITIONS AND ABBREVIATIONS ...... 17 SUMMARY OF THE ISSUE ...... 24 SUMMARY OF BUSINESS ...... 26 SUMMARY OF FINANCIAL INFORMATION ...... 33 RISK FACTORS ...... 37 MARKET PRICE INFORMATION ...... 60 USE OF PROCEEDS ...... 63 CAPITALIZATION STATEMENT ...... 64 CAPITAL STRUCTURE ...... 65 DIVIDEND POLICY ...... 67 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ... 68

SIGNIFICANT DIFFERENCES BETWEEN INDIAN GAAP AND IND-AS ...... 89 SELECT STATISTICAL INFORMATION ...... 95 INDUSTRY OVERVIEW ...... 107 BUSINESS ...... 122 REGULATIONS AND POLICIES ...... 149 PRINCIPAL SHAREHOLDERS ...... 174 ISSUE PROCEDURE...... 177 PLACEMENT AND LOCK UP ...... 187 SELLING RESTRICTIONS ...... 189 TRANSFER RESTRICTIONS ...... 195 THE SECURITIES MARKET OF INDIA ...... 198 DESCRIPTION OF EQUITY SHARES ...... 202 TAXATION ...... 206 LEGAL PROCEEDINGS ...... 215 INDEPENDENT ACCOUNTANTS ...... 225 GENERAL INFORMATION ...... 226 FINANCIAL STATEMENTS ...... 228 DECLARATION ...... 229

NOTICE TO INVESTORS

Our Bank has furnished and accepts full responsibility for all of the information contained in this Placement Document and confirms that to its best of knowledge and belief, having made all reasonable enquiries, this Placement Document contains all information with respect to our Bank and the Equity Shares that is material in the context of the Issue. The statements contained in this Placement Document relating to our Bank and the Equity Shares are, in all material respects, true, accurate and not misleading. The opinions and intentions expressed in this Placement Document with regard to our Bank and the Equity Shares are honestly held, have been reached after considering all relevant circumstances and are based on reasonable assumptions and information presently available to our Bank. There are no other facts in relation to our Bank and the Equity Shares, the omission of which would, in the context of the Issue, make any statement in this Placement Document misleading in any material respect. Further, our Bank has made all reasonable enquiries to ascertain such facts and to verify the accuracy of all such information and statements.

The Book Running Lead Managers (“BRLMs”) have not separately verified the information contained in this Placement Document (financial, legal or otherwise). Accordingly, neither the BRLMs, nor any of their respective shareholders, employees, counsel, officers, directors, representatives, agents or affiliates make any express or implied representation, warranty or undertaking, and no responsibility or liability is accepted by the BRLMs or any of their respective shareholders, employees, counsels, officers, directors, representatives, agents or affiliates, as to the accuracy or completeness of the information contained in this Placement Document or any other information supplied in connection with the Equity Shares or their distribution. Each person receiving this Placement Document acknowledges that such person has not relied either on the BRLMs or on any of their respective shareholders, employees, counsel, officers, directors, representatives, agents or affiliates in connection with its investigation of the accuracy of such information or its investment decision, and each such person must rely on its own examination of our Bank and the merits and risks involved in investing in the Equity Shares. Prospective investors should not construe the contents of this Placement Document as legal, tax, accounting or investment advice.

No person is authorized to give any information or to make any representation not contained in this Placement Document and any information or representation not so contained must not be relied upon as having been authorized by or on behalf of our Bank or by or on behalf of the BRLMs. The delivery of this Placement Document at any time does not imply that the information contained in it is correct as of any time subsequent to its date.

The Equity Shares have not been approved, disapproved or recommended by any other regulatory authority in any jurisdiction including the U.S. Securities and Exchange Commission, any other federal or state authorities in the United States or the securities authorities of any non-United States jurisdiction or any other United States or non-United States regulatory authority. No authority has passed on or endorsed the merits of the Issue or the accuracy or adequacy of this Placement Document. Any representation to the contrary is a criminal offense in the United States and may be a criminal offense in other jurisdictions.

The distribution of this Placement Document and the issuance of Equity Shares pursuant to this Issue may be restricted by law in certain jurisdictions. As such, this Placement Document does not constitute, and may not be used for or in connection with, an offer or solicitation by any one in any jurisdiction in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation. In particular, no action has been taken by our Bank and the BRLMs which would permit an issue of the Equity Shares or distribution of this Placement Document in any jurisdiction, other than India, where action for that purpose is required. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, and neither this Placement Document nor any other Issue- related materials in connection with the Equity Shares may be distributed or published in or from any country or jurisdiction, except under circumstances that will result in compliance with any applicable rules and regulations of any such country or jurisdiction.

The Equity Shares have not been and will not be registered under the U.S. Securities Act, or any state securities laws of the United States and unless so registered may not be offered, sold or delivered within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws. Accordingly, the Equity Shares are being offered and sold outside the United States in offshore transactions in reliance on Regulation S. The Equity Shares are only being offered and sold outside the United States in offshore transactions in reliance on Regulation S and the applicable laws of the jurisdictions where those offers and sales are made. For a description of these and certain further restrictions on offers, sales and transfers of the Equity Shares and distribution of this Placement Document, see “Selling Restrictions” and 2

“Transfer Restrictions” beginning on page 189 and 195, respectively. Purchaser of the Equity Shares will be deemed to make the representations, warranties, acknowledgments and agreements set forth in the sections “Representations by Investors”, “Selling Restrictions” and “Transfer Restrictions”.

The distribution of this Placement Document or the disclosure of its contents without the prior consent of our Bank to any person, other than QIBs whose names are recorded by our Bank prior to the invitation to subscribe to the Issue, in consultation with the BRLMs or its representatives, and those retained by QIBs to advise them with respect to their purchase of the Equity Shares is unauthorised and prohibited. Each prospective investor, by accepting delivery of this Placement Document, agrees to observe the foregoing restrictions and to make no copies of this Placement Document or any documents referred to in this Placement Document.

In making an investment decision, prospective investors must rely on their own examination of our Bank, and the terms of the Issue, including the merits and risks involved. Investors should not construe the contents of this Placement Document as legal, tax, accounting or investment advice. Investors should consult their own counsel and advisors as to business, legal, tax, accounting and related matters concerning this Issue. In addition, neither our Bank nor the BRLMs is making any representation to any offeree or purchaser of the Equity Shares regarding the legality of an investment in the Equity Shares by such offeree or purchaser under applicable legal, investment or similar laws or regulations.

Each subscriber of the Equity Shares in the Issue is deemed to have acknowledged, represented and agreed that it is eligible to invest in India and in our Bank under Indian law, including Chapter VIII of the ICDR Regulations, and that it is not prohibited by SEBI or any other statutory authority from buying, selling or dealing in the securities including the Equity Shares. Each subscriber of the Equity Shares in the Issue also acknowledges that it has been afforded an opportunity to request from our Bank and review information relating to our Bank and the Equity Shares.

This Placement Document contains a summary of some terms of certain documents, which are qualified in their entirety by the terms and conditions of such documents.

The information on our Bank’s website, www.unitedbankofindia.com, or any website directly or indirectly linked to our Bank’s website does not constitute or form part of this Placement Document. Prospective investors should not rely on the information contained in, or available through such websites.

NOTICE TO INVESTORS IN CERTAIN OTHER JURISDICTIONS

For information for investors in certain other jurisdictions, please see sections “Selling Restrictions” and “Transfer Restrictions” beginning on pages 189 and 195, respectively.

REPRESENTATIONS BY INVESTORS

All references herein to “you” or “your” is to the prospective investors in the Issue. By subscribing to any Equity Shares in the Issue, you are deemed to have represented, warranted, acknowledged and agreed to our Bank and the BRLMs, as follows:

 you (i) are a QIB as defined in Regulation 2(1)(zd) of the ICDR Regulations and are not excluded pursuant to Regulation 86(1)(b) of the ICDR Regulations except public sector undertakings; (ii) have a valid and existing registration under applicable laws and regulations of India (as applicable); and (iii) undertake to acquire, hold, manage or dispose of any Equity Shares that are Allocated to you in accordance with Chapter VIII of the ICDR Regulations and undertake to comply with the ICDR Regulations and all other applicable laws, including any reporting obligations;

 if you are not a resident of India, but a QIB, (i) you are an Eligible FPI as defined in this Placement Document including a FII (including a sub-account other than a sub-account which is a foreign corporate or a foreign individual) and have a valid and existing registration with SEBI under the applicable laws in India; or (ii) a multilateral or bilateral development financial institution or (iii) an FVCI and have a valid and existing registration with SEBI under applicable laws in India. Further, you are aware and understand that non-resident QIBs may only invest in the Issue under the portfolio investment scheme pursuant to Schedule 2 and 2A of FEMA 20. You will make all necessary filings with appropriate regulatory authorities, including the RBI, as required pursuant to applicable laws. Further, if you are a non-resident QIB, then the investment amount will be paid out of inward remittance of foreign exchange received through normal banking channels and as per RBI’s notification no. FEMA 20/2000 - RB dated May 3, 2000, as amended from time to time;

 you are eligible to invest in India under applicable laws, including the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000, as amended and any notification, circulars or clarification issued thereunder, and have not been prohibited by SEBI or any other regulatory authority from buying, selling or dealing in securities;

 if you are Allotted Equity Shares pursuant to this Issue, you shall not, for a period of one year from the date of Allotment, sell the Equity Shares so acquired except on floor of the Stock Exchanges;

 you are aware that this Placement Document has not been, and will not be, registered as a prospectus under the Companies Act, 2013 and the ICDR Regulations or under any other law in force in India. You are aware that this Placement Document has not been reviewed, verified or affirmed by SEBI, RBI or the Stock Exchanges or any other regulatory or listing authority and is intended for use only by QIBs. This Preliminary Placement Document has been filed with the Stock Exchanges for record purposes only and the Placement Document has been displayed on the websites of our Bank and the Stock Exchanges;

 you are entitled and have necessary capacity to subscribe for , and acquire the Equity Shares under the laws of all relevant jurisdictions which apply to you and that you have fully observed such laws and obtained all such governmental and other consents in each case which may be required there under and complied with all necessary formalities and have obtained all necessary consents and authorities to enable you to commit to participation in this Issue and to perform your obligations in relation thereto (including, in the case of any person on whose behalf you are acting, all necessary consents and authorisations to agree to the terms set out or referred to in this Placement Document) and will honour such obligations;

 neither our Bank nor the BRLMs nor any of their respective shareholders, directors, officers, employees, counsel, representatives, agents or affiliates is making any recommendation to you or, advising you regarding the suitability of any transactions it may enter into in connection with this Issue; your participation in this Issue is on the basis that you are not, and will not, up to Allotment, be a client of the BRLMs and that neither the BRLMs nor its respective shareholders, directors, officers, employees, counsel, representatives, agents or affiliates have any duty or responsibilities to you for providing the protection afforded to their clients or customers for providing advice in relation to this Issue and are not in any way acting in any fiduciary capacity;

 you confirm that, either: (i) you have not participated in or attended any investor meetings or presentations by us or our agents (“Bank Presentations”) with regard to us or this Issue; or (ii) if you have participated in or attended any Bank Presentations: (a) you understand and acknowledge that the BRLMs may not have knowledge of the statements that we or its agents may have made at such Bank Presentations and are therefore unable to determine whether the information provided to you at such Bank Presentations may have included any material misstatements or omissions, and, accordingly you acknowledge that the BRLMs have advised you not to rely in any way on any information that was provided to you at such Bank Presentations, and (b) confirm that you have not been provided any material information relating to our Bank and this Issue that was not publicly available;

 all statements other than statements of historical fact included in this Placement Document, including, without limitation, those regarding our financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to our products), are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding our present and future business strategies and environment in which we will operate in the future. You should not place reliance on forward looking statements, which speak only as at the date of this Placement Document. We assume no responsibility to update any of the forward-looking statements contained in this Placement Document;

 You are aware and understand that the Equity Shares are being offered only to QIBs and are not being offered to the general public, and the Allotment of the same shall be on a discretionary basis at the discretion of our Bank and the BRLMs;

 You are aware that if you are Allotted more than 5% of the Equity Shares in this Issue, our Bank shall be required to disclose your name and the number of the Equity Shares Allotted to you to the Stock Exchanges and the Stock Exchanges will make the same available on their websites and you consent to such disclosures;

 you have been provided a serially numbered copy of the Preliminary Placement Document and this Placement Document and have read in its entirety including, in particular “Risk Factors” beginning on page 37;

 in making your investment decision (i) you have relied on your own examination of our Bank and the terms of this Issue, including the merits and risks involved; (ii) you have made your own assessment of our Bank, the Equity Shares and the terms of this Issue based solely on the information contained in this Placement Document and no other disclosure or representation by us or any other party; (iii) you have consulted your own independent advisors (including tax advisors) or otherwise have satisfied yourself concerning, without limitation, the effects of local laws and taxation matters; (iv) you have relied solely on the information contained in this Placement Document and no other disclosure or representation by us or the BRLMs or any other party; (v) you have received all information that you believe is necessary or appropriate in order to make an investment decision in respect of us and the Equity Shares; and (vi) relied upon your investigation and resources in deciding to invest in this Issue. You are seeking to subscribe to/acquire the Equity shares in this Issue for your own investment and not with a view to resale or distribution;

 neither the BRLMs nor any of its respective shareholders, directors, officers, employees, counsels, advisors, representatives, agents or affiliates has provided you with any tax advice or otherwise made any representations regarding the tax consequences of purchase, ownership and disposal of the Equity Shares (including but not limited to the Issue and the use of the proceeds from the Equity Shares). You will obtain your own independent tax advice from a reputable service provider and will not rely on the BRLMs or any of their respective shareholders, directors, officers, employees, counsels, advisors, representatives, agents or affiliates when evaluating the tax consequences in relation to the Equity Shares (including but not limited to the Issue and the use of the proceeds from the Equity Shares). You waive, and agree not to assert any claim against our Bank or the BRLMs or any of their respective shareholders, directors, officers, employees, counsels, advisors, representatives, agents or affiliates with respect to the tax aspects of the Equity Shares or as a result of any tax audits by tax authorities, wherever situated;

 you are a sophisticated investor and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the investment in the Equity Shares and you and any accounts for which you are subscribing to the Equity Shares: (i) are each able to bear the economic risk of the investment in the Equity Shares; (ii) will not look to us, the BRLMs or its respective shareholders, directors, officers, employees, counsel, representatives, agents or affiliates for all or part of any such loss or losses that may be suffered including losses arising out of nonperformance by our Bank of any of its respective obligations or any breach of any representations and warranties by our Bank, whether to you or otherwise; (iii) are able to sustain a complete loss on the investment in the Equity Shares; (iv) have no need for liquidity with respect to the investment in the Equity Shares; and (v) have no reason to anticipate any change in your or their circumstances, financial or otherwise, which may cause or require any sale or distribution by you or them of all or any part of the Equity Shares. You acknowledge that an investment in the Equity Shares involves a high degree of risk and that the Equity Shares are, therefore, a speculative investment. You are seeking to subscribe to the Equity Shares in the Issue for your own investment and not with a view to resell or distribute;

 where you are acquiring the Equity Shares for one or more managed accounts, you represent and warrant that you are authorised in writing, by each such managed account to acquire the Equity Shares for each managed account and to make (and you hereby make) the representations, warranties, acknowledgements and agreements herein for and on behalf of each such account, reading the reference to “you” to include such accounts;

 you are not a Promoter and you are not related to the Promoter, except for Public Sector Enterprises, either directly or indirectly and your Bid does not directly or indirectly represent the Promoter or a person related to any of the Promoter;

 you have no rights under a shareholders’ agreement or voting agreement with the Promoter or persons related to the Promoter, no veto rights or right to appoint any nominee director on the Board of Directors of our Bank other than such rights acquired, if any, in the capacity of a lender not holding any Equity Shares of our Bank, the acquisition of which shall not deem you to be a Promoter, a person related to the Promoter;

 you have no right to withdraw your Bid after the Issue Closing Date;

 you are eligible to Bid and hold the Equity Shares so Allotted together with any Equity Shares held by you prior to this Issue. You further confirm that your aggregate holding upon this Issue of the Equity Shares shall not exceed the level permissible as per any applicable regulations including but not limited to the Banking Regulation Act, 1949, Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and in the event of your holding of our Equity Shares reaches any applicable limits may be prescribed you will make the appropriate disclosures and obtain the necessary permissions in this regard from the relevant authorities / RBI;

 the Bid submitted by you would not eventually result in triggering a tender offer under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, as amended (“Takeover Code”);

 your aggregate holding, together with other QIBs participating in this Issue that belong to the same group or are under common control as you, pursuant to the Allotment under the present Issue, shall not exceed 50% of this Issue. For the purposes of this representation:

(a) the expression “belongs to the same group” shall be interpreted by applying the concept of “companies under the same group” as provided in sub-section (11) of Section 372 of the Companies Act, 1956; and

(b) “Control” shall have the same meaning as is assigned to it under Regulation 2 (i)(e) of the Takeover Code;

 you shall not undertake any trade in the Equity Shares credited to your beneficiary account until such time that the final listing and trading approval for the Equity Shares is issued by the Stock Exchanges;  you are aware that (i) applications for in-principle approval, in terms of Regulation 28(1) of the Listing Regulations, for listing and admission of the Equity Shares and for trading on the Stock Exchanges, were made and an approval has been received from each of the Stock Exchanges, and (ii) the application for the listing and trading approval will be made only after Allotment. There can be no assurance that the approvals for listing and 6

trading in the Equity Shares will be obtained in time or at all. We shall not be responsible for any delay or non- receipt of such approvals for listing and trading or any loss arising from such delay or non-receipt;

 you are aware and understand that the BRLMs have entered into a placement agreement with our Bank (the “Placement Agreement”) whereby the BRLMs have, subject to the satisfaction of certain conditions set out therein, agreed to manage the Issue and use their reasonable endeavors to seek to procure subscriptions for the Equity Shares on the terms and conditions set forth herein;

 the contents of this Placement Document are our exclusive responsibility and neither the BRLMs nor any person acting on their behalf, nor any of its respective shareholders, directors, officers, employees, counsel, advisors, representatives, agents or affiliates has, or shall have, any liability for any information, representation or statement contained in this Placement Document or any information previously published by or on behalf of us and will not be liable for your decision to participate in this Issue based on any information, representation or statement contained in this Placement Document or otherwise. By accepting a participation in this Issue, you agree and confirm that you have neither received nor relied on any other information, representation, warranty or statement made by or on behalf of either of the BRLMs or us or any other person and neither the BRLMs, nor we or our respective directors, officers, employees, counsel, advisors, representatives, agents or affiliates or any other person will be liable for your decision to participate in this Issue based on any other information, representation, warranty or statement that you may have obtained or received;

 the only information you are entitled to rely on, and on which you have relied in committing yourself to acquire the Equity Shares, is contained in this Placement Document, such information being all that you deem necessary to make an investment decision in respect of the Equity Shares issued in pursuance of this Issue and that you have neither received nor relied on any other information given or representations, warranties or statements made by BRLMs (including any view, statement, opinion or representation expressed in any research published or distributed by the BRLMs or its respective affiliates or any view, statement, opinion or representation expressed by any staff (including research staff) of the BRLMs or its respective affiliates) or our Bank or any of their respective shareholders, directors, officers, employees, counsel, advisors, representatives, agents or affiliates and neither the BRLMs nor our Bank or any of their respective shareholders, directors, officers, employees, counsel, advisors, representatives, agents or affiliates will be liable for your decision to accept an invitation to participate in the Issue based on any other information, representation, warranty, statement or opinion;

 you understand that neither the BRLMs nor its respective affiliates have any obligation to purchase or acquire all or any part of the Equity Shares purchased by you in this Issue or to support any losses directly or indirectly sustained or incurred by you for any reason whatsoever in connection with this Issue, including non-performance by us of any of our obligations or any breach of any representations or warranties by us, whether to you or otherwise;

 you agree to indemnify and hold us and the BRLMs and its respective affiliates harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations, warranties, acknowledgements and agreements made by you in this Placement Document. You agree that the indemnity set forth in this section shall survive the resale of the Equity Shares by, or on behalf of, the managed accounts;

 you agree that any dispute arising in connection with the Issue will be governed by and construed in accordance with the laws of India, and the courts in Kolkata, West Bengal, India shall have exclusive jurisdiction to settle any disputes which may arise out of or in connection with the Preliminary Placement Document and this Placement Document;

 each of the representations, warranties, acknowledgements and agreements set out above shall continue to be true and accurate at all times up to and including the Allotment, listing and trading of the Equity Shares in the Issue;

 our Bank, the BRLMs, their respective affiliates and others will rely on the truth and accuracy of the foregoing representations, warranties, acknowledgements, undertakings and agreements which are given to the BRLMs on its own behalf and on behalf of us and are irrevocable and it is agreed that if any of such representations,

warranties, acknowledgements, undertakings and agreements are no longer accurate, you will promptly notify to the BRLMs;

 you are a sophisticated investor who is seeking to purchase the Equity Shares for your own investment and not with a view to distribution. In particular, you acknowledge that (i) an investment in the Equity Shares involves a high degree of risk and that the Equity Shares are, therefore, a speculative investment, (ii) you have sufficient knowledge, sophistication and experience in financial and business matters so as to be capable of evaluating the merits and risk of the purchase of the Equity Shares, and (iii) you are experienced in investing in private placement transactions of securities of companies in a similar stage of development and in similar jurisdictions and have such knowledge and experience in financial, business and investment matters that you are capable of evaluating the merits and risks of your investment in the Equity Shares;

 you understand that the Equity Shares have not been and will not be registered under the U.S. Securities Act or with any securities regulatory authority of any state of the United States, and accordingly, may not be offered, sold or delivered within the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act, and that the Equity Shares are only being offered and sold outside the United States in offshore transactions in reliance on Regulation S of the U.S. Securities Act;

 you have made, or been deemed to have made, as applicable, the representations, warranties, acknowledgments and agreements set forth in this section and in “Selling Restriction” and “Transfer Restrictions” beginning on pages 189 and 195, respectively.

Offshore Derivative Instruments (P-Notes)

Subject to compliance with all applicable Indian laws, rules, regulations, guidelines and approvals in terms of Regulation 22 of the Securities and Exchange Board of India (Foreign Portfolio Investors Regulations, 2014 (“SEBI FPI Regulations”), a FPI (other than a Category III foreign portfolio investors and unregulated broad based funds which are classified as Category II FPI by virtue of their investment manager being appropriately regulated), including the affiliates of the BRLM, may issue, subscribe or otherwise deal in offshore derivative instruments as defined under the SEBI (FPI) Regulations as any instrument, by whatever name called, which is issued overseas by a FPI against securities held by it that are listed or proposed to be listed on any recognised stock exchange in India, as its underlying and all such offshore derivative instruments are referred to herein as “P-Notes” for which they may receive compensation from the purchasers of such P-Notes. These P-Notes may be issued only in favour of those entities which are regulated by any appropriate foreign regulatory authorities in the countries of their incorporation or establishment subject to compliance with “know your client” requirements. An FPI must ensure that the P-Notes are issued in compliance with all applicable laws including Regulation 22 of the SEBI (FPI) Regulations and circular no. CIR/IMD/FIIC/20/2014 dated November 24, 2014 issued by SEBI. P-Notes have not been and are not being offered or sold pursuant to this Placement Document. This Placement Document does not contain any information concerning P-Notes, including, without limitation, any information regarding any risk factors relating thereto. Any P-Notes that may be issued are not securities of our Bank and do not constitute any obligations of, claim on, or interests in our Bank. Our Bank has not participated in any offer of any P-Notes, or in the establishment of the terms of any P-Notes, or in the preparation of any disclosure related to any P-Notes.

Any P-Notes that may be offered are issued by, and are solely the obligations of, third parties that are unrelated to our Bank. Our Bank and the BRLMs do not make any recommendation as to any investment in P-Notes and do not accept any responsibility whatsoever in connection with any P-Notes. Any P-Notes that may be issued are not securities of the BRLMs and do not constitute any obligations of, or claims on, the BRLMs. FPI affiliates (other than Category III FPI and unregulated broad based funds which are classified as FPI by virtue of their investment manager being appropriately regulated) of the BRLMs may purchase, to the extent permissible under law, Equity Shares in this Issue, and may issue P-Notes in respect thereof.

Prospective investors interested in purchasing any P-Notes have the responsibility to obtain adequate disclosure as to the issuer(s) of such P-Notes and the terms and conditions of any such P-Notes from the issuer(s) of such P-Notes. Neither SEBI nor any other regulatory authority has reviewed or approved any P-Notes or any disclosure related thereto. Prospective investors are urged to consult with their own financial, legal, accounting and tax advisors regarding any contemplated investment in P-Notes, including whether P-Notes are issued in compliance with applicable laws and regulations.

DISCLAIMER CLAUSE OF STOCK EXCHANGES

As required, a copy of the Preliminary Placement Document was submitted to each of the Stock Exchanges and a copy of this Placement Document has been filed with the Stock Exchanges. The Stock Exchanges do not in any manner:

(1) warrant, certify or endorse the correctness or completeness of any the contents of this Placement Document;

(2) warrant that the Equity Shares pursuant to this Issue will be listed or will continue to be listed on the Stock Exchanges; or

(3) take any responsibility for the financial or other soundness of our Bank, its Promoter, its management or any scheme or project of our Bank,

The filing of this Placement Document should not for any reason be deemed or construed to mean that this Placement Document has been cleared or approved by the Stock Exchanges. Every person who desires to apply for or otherwise acquires any Equity Shares of our Bank may do so pursuant to an independent inquiry, investigation and analysis and shall not have any claim against the Stock Exchanges whatsoever, by reason of any loss which may be suffered by such person consequent to or in connection with, such subscription or acquisition, whether by reason of anything stated or omitted to be stated herein, or for any other reason whatsoever.

CERTAIN CONVENTIONS, CURRENCY OF PRESENTATION AND FINANCIAL DATA

Certain Conventions

All references to “you”, “your”, “offeree”, “purchaser”, “subscriber”, “recipient”, “investors”, “prospective investors” and “potential investors” are to the prospective investors of the Equity Shares to be issued pursuant to this Issue. References in this Placement Document to “India” are to the Republic of India, to the “Government” or the “Central Government” are to the Government of India and to any “State Government” are to the relevant state government in India.

Currency of Presentation

All references in this Placement Document to “₹”, “Rupees”, “Rs.”, “Indian Rupees” and “INR” are to Indian Rupees, the official currency of India. All references to “US$”, “U.S. Dollars”, “U.S. Dollar”, “dollars”, “US Dollars”, “USD” or “$” are to United States Dollars, the official currency of the United States of America. All references to “euro”, “EUR” or “€” are to the single currency of the participating Member States in the Third Stage of European Economic and Monetary Union of the Treaty Establishing the European Community, as amended from time to time. All references to “British pounds” or “£” are to the lawful currency of the United Kingdom.

Financial Data

The audited financial statements of our Bank for the years ended March 31, 2016, March 31, 2015 and March 31, 2014 together with the respective reports thereon (“Audited Financial Statements”) included in this Placement Document have been prepared in accordance with the Companies Act and Indian GAAP, while the unaudited financial results for the nine months ended December 31, 2016 and selected explanatory notes, together with the limited review report (“Unaudited Financial Statements”) have been prepared and presented in accordance with Standard on Review Managements (SRE) 2410 and the requirements under the Listing Regulations with the Stock Exchanges.

Our Bank publishes its financial statements in Indian Rupees. Our Bank prepares its financial statements in accordance with Indian Generally Accepted Accounting Principles (“Indian GAAP”). Indian GAAP differs in certain significant respects from International Financial Reporting Standards (“IFRS”) and United States Generally Accepted Accounting Principles (“U.S. GAAP”). We do not provide a reconciliation of our financial statements to IFRS or U.S. GAAP. We also do not provide a summary of differences between Indian GAAP, IFRS and U.S. GAAP. Accordingly, the degree to which the financial statements prepared in accordance with Indian GAAP included in this Placement Document will provide meaningful information is entirely dependent on the reader’s level of familiarity with the respective accounting practices. Any reliance by persons not familiar with Indian accounting practices on the financial disclosures presented in this Placement Document should accordingly be limited and we urge you to consult your own advisors regarding such differences and their impact on the financial data.

Accounting policies and principles under Ind-AS differ in certain material respects from Indian GAAP. In addition, Indian GAAP and Ind-AS also differ in certain material respects from U.S. GAAP and IFRS. In pursuance to the budget announcement by the Union Finance Minister, after consultation with the Reserve Bank of India (“RBI”), Insurance Regulatory and Development Authority (“IRDA”) and Pension Fund Regulatory and Development Authority (“PFRDA”), the Ministry of Corporate Affairs (“MCA”) issued a press release on January 18, 2016, announcing the Ind-AS roadmap for scheduled commercial banks (excluding regional rural banks (“RRBs”)), insurers/ insurance companies and non-banking financial companies (“NBFCs”). Ind-AS implementation has been made mandatory for accounting periods beginning from April 1, 2018 onwards for Scheduled commercial banks (excluding RRBs). For certain qualitative information on the differences between Indian GAAP and Ind-AS, see “Significant Differences between Indian GAAP and Ind-AS” beginning on page 89. Investors are advised to avail independent financial and accounting advice to analyse the impact of the application of Ind-AS to the preparation and presentation of our financial statements. We cannot assure you that we have completed a comprehensive analysis of the effect of Ind-AS on our future financial information or that the application of Ind-AS will not result in a materially adverse effect on our future financial information.

In this Placement Document, the terms “loans”, “advances” and “loans and advances” have been used interchangeably and unless otherwise stated, “loans”, “advances” or “loans and advances” represent the amount of loans outstanding

11 net of provisions for non-performing assets. “Gross loans”, “gross advances” or “gross loans and advances” represent the amount of loans outstanding before deducting the provisions held for non-performing assets. Further, the standalone expressions “profit” and “net profit” have been used interchangeably to represent the profit earned for the period net of all provisions including provision for taxes.

In this Placement Document, certain monetary thresholds have been subjected to rounding adjustments; accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which precede them. The financial/fiscal year of our Bank commences on April 1 of each calendar year and ends on March 31 of the succeeding calendar year, so, unless otherwise specified or if the context requires otherwise, all references to a particular ‘Financial Year’, ‘fiscal year’ or ‘Fiscal’ or ‘FY’ are to the twelve month period ended on March 31 of that year.

References to the singular also refer to the plural and one gender also refers to any other gender, wherever applicable. Our Bank has presented certain numerical information in this Placement Document in the denomination of “crore” and “lakh” s. One lakh or lac represents “100 thousand” and the word “crore” means “10 million” or “100 lakh”.

INDUSTRY AND MARKET DATA

Information regarding markets, market size, market share, market position, growth rates and other industry data pertaining to our Bank's business contained in this Placement Document consists of estimates/forecasts based on data reports compiled by governmental bodies, professional organisations and analysts, on data from other external sources, and knowledge of the markets in which our Bank competes. In certain cases, there is no readily available external information (whether from trade associations, government bodies or other organisations) to validate market-related analyses and estimates, requiring us to rely on internally developed estimates.

The statistical information included in this Placement Document relating to the business of a bank has been reproduced from various trade, industry and government publications and websites. This data is subject to change and cannot be verified with complete certainty due to limits on the availability and reliability of the raw data and other limitations and uncertainties inherent in any statistical survey.

Neither our Bank nor the Book Running Lead Managers or any of their respective affiliates and advisors or any other person connected with the Issue has independently verified this information. Industry sources and publications generally state that the information contained therein has been obtained from sources believed to be reliable, but their accuracy, completeness and underlying assumptions are not guaranteed and their reliability cannot be assured and accordingly, investment decisions should not be based on such information. Industry sources and publications are also prepared based on information as of specific dates and may no longer be current or reflect current trends. Accordingly, the Book Running Lead Managers and we do not take any responsibility for the data, projections, forecasts, conclusions or any other information contained in this section. Certain information contained herein pertaining to prior years is presented in the form of estimates as they appear in the respective reports/ source documents. The actual data for those years may vary significantly and materially from the estimates so contained.

The extent to which the market and industry data used in this Placement Document is meaningful depends on the reader’s familiarity with and understanding of the methodologies used in compiling such data.

FORWARD – LOOKING STATEMENTS

Certain statements contained in this Placement Document that are not statements of historical fact constitute ‘forward looking statements’. Investors can generally identify forward-looking statements by terminology such as ‘aim’, ‘anticipate’, ‘believe’, ‘continue’, ‘can’, ‘could’, ‘estimate’, ‘expect’, ‘intend’, ‘may’, ‘objective’, ‘plan’, ‘potential’, ‘project’, ‘pursue’, ‘shall’, ‘should’, ‘will’, ‘would’, or other words or phrases of similar import. Similarly, statements that describe the strategies, objectives, plans or goals of our Bank are also forward-looking statements. However, these are not the exclusive means of identifying forward-looking statements.

Actual results may differ materially from those suggested by the forward looking statements due to risks or uncertainties associated with our expectations with respect to, but not limited to, regulatory changes pertaining to the industries in India in which we have our businesses and our ability to respond to them, our ability to successfully implement our strategy, our growth and expansion, technological changes, our exposure to market risks, general economic and political conditions in India which have an impact on our business activities or investments, the monetary and fiscal policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices, the performance of the financial markets in India and globally, changes in domestic laws, regulations and taxes and changes in competition in our industry. Important factors that could cause actual results, performance or achievements to differ materially from any of our Bank’s forward-looking statements include, among others:

 Volatility in interest rates and other market conditions;  Our ability to maintain or reduce the level of our non – performing assets and the levels of stressed assets;  Our ability to maintain our income from treasury operations;  Our ability to sustain the growth of our retail banking business;  Performance of the agricultural and MSME sectors in India;  Rate of growth of our deposits, advances and investments;  Our ability to successfully implement our strategy, growth and expansion plans;  Significant change in the Government's economic liberalization and deregulation policies;  The ability of the borrowers of our structured loans to perform as expected;  Competition in the Indian and global banking industry;  Our ability to successfully diversify our products and services; and  General economic and business conditions in India.

Additional factors that could cause actual results, performance or achievements to differ materially include, but are not limited to, those discussed under the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Industry Overview” and “Business” beginning on pages 68, 107 and 122, respectively. The forward-looking statements contained in this Placement Document are based on the beliefs of management, as well as the assumptions made by, and information currently available to, the management. Although our Bank believes that the expectations reflected in such forward-looking statements are reasonable at this time, it cannot assure investors that such expectations will prove to be correct. Given these uncertainties, investors are cautioned not to place undue reliance on such forward-looking statements. If any of these risks and uncertainties materialize, or if any of our Bank’s underlying assumptions prove to be incorrect, our Bank’s actual results of operations or financial condition could differ materially from that described herein as anticipated, believed, estimated or expected. All subsequent written and oral forward-looking statements attributable to us are expressly qualified in their entirety by reference to these cautionary statements.

ENFORCEMENT OF CIVIL LIABILITIES

United Bank of India was constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act. All of our Directors and senior management are residents of India. Further, substantially a large percentage of the assets of our Bank are located in India. As a result, it may be difficult for investors outside India to effect service of process upon us or such persons outside India, or to enforce judgments obtained against such parties outside India.

Recognition and enforcement of foreign judgments is provided for under Sections 13 and 44A of the Code of Civil Procedure, 1908, as amended (the “Civil Procedure Code”). Section 13 of the Civil Procedure Code provides that foreign judgments shall be conclusive regarding any matter directly adjudicated upon, except:

 where the judgment has not been pronounced by a court of competent jurisdiction;  where the judgment has not been given on the merits of the case;  where it appears on the face of the proceedings that the judgment is founded on an incorrect view of international law or a refusal to recognize the law of India in cases to which such law is applicable;  where the proceedings in which the judgment was obtained were opposed to natural justice;  where the judgment has been obtained by fraud; or  where the judgment sustains a claim founded on a breach of any law then in force in India.

India is not a party to any international treaty in relation to the recognition or enforcement of foreign judgments. However, Section 44A of the Civil Procedure Code provides that where a foreign judgment has been rendered by a superior court, within the meaning of such section, in any country or territory outside India which the Government has by notification declared to be a reciprocating territory, it may be enforced in India by proceedings in execution as if the judgment had been rendered by an appropriate court in India. Section 44A of the Civil Procedure Code is applicable only to monetary decrees not being in the nature of amounts payable in respect of taxes, other charges of a similar nature or fines or other penalties and does not apply to arbitration awards.

Each of the United Kingdom, Singapore and Hong Kong have been declared by the Government to be reciprocating territories for the purposes of Section 44A of the Civil Procedure Code, but the United States has not been so declared. A judgment of a court of a country which is not a reciprocating territory may be enforced only by a suit upon the judgment and not by proceedings in execution. The suit is required to be filed in India within three years from the date of such foreign judgment in the same manner as any other suit filed to enforce a civil liability in India.

It is unlikely that a court in India would award damages on the same basis as a foreign court if an action was brought in India. Furthermore, it is unlikely that an Indian court would enforce foreign judgments if it viewed the amount of damages awarded as excessive or inconsistent with Indian public policy. A party seeking to enforce a foreign judgment in India is required to obtain the prior approval of the RBI to repatriate outside India any amount recovered pursuant to the execution of such a judgment. It is uncertain as to whether an Indian court would enforce foreign judgments that would contravene or violate Indian law. In addition, any judgment denominated in a foreign currency would be converted into Indian rupees on the date of the judgment and not on the date of payment.

EXCHANGE RATES

Fluctuations in the exchange rate between the Rupee and the U.S. Dollar will affect the U.S. Dollar equivalent of the Rupee price of the Equity Shares on the Stock Exchanges. These fluctuations will also affect the conversion into U.S. Dollars of any cash dividends paid in Rupees on the Equity Shares. The exchange rate between the Rupee and the U.S. Dollar has been volatile over the past year.

The following table sets forth information concerning exchange rates between the Rupee and the U.S. dollar for the periods indicated. Exchange rates are based on the reference rates released by the RBI. No representation is made that any Rupee amounts could have been, or could be, converted into U.S. dollars at any particular rate, the rates stated below or at all. On March 20, 2017 the exchange rate (RBI reference rate) was ₹ 65.38 to US$.

(₹ per US$) Period End Average(1) High(1) Low(1) Fiscal Year Ended: March 31, 2016 66.33 65.46 68.78 62.16 March 31, 2015 62.59 61.15 63.75 58.43 March 31, 2014 60.10* 60.50 68.36 53.74

Month ended: February 28, 2017 66.74 67.08 67.65 66.72 January 31, 2017 67.81 68.08 68.23 67.79 December 31, 2016 67.95** 67.90 68.37 67.43 November 30, 2016 68.53 67.63 68.72 66.43 October 31, 2016 66.86*** 66.75 66.89 66.53 September 30, 2016 66.66 66.74 67.06 66.36

Source: www.rbi.org.in (1) Represents the high, low and average of the reference rates released by the RBI on every working day of the relevant period * Exchange rate as on March 28, 2014, as March 29, 2014 and March 30, 2014 and March 31, 2014 were non trading days **Exchange rate as on December 30, 2016, as December 31, 2016 was a non-trading day *** Exchange rate as on October 28, 2016 as October 29, 2016, October 30, 2016 and October 31, 2016 were non-trading days

Although our Bank has translated selected Indian rupee amounts in this Placement Document into U.S. dollars for convenience, this does not mean that the Indian rupee amounts referred to could have been, or could be, converted to U.S. dollars at any particular rate or, the rates stated above, or at all. There are certain restrictions on the conversion of Indian rupees into U.S. dollars.

DEFINITIONS AND ABBREVIATIONS

This Placement Document uses the definitions and abbreviations set forth below, which you should consider when reading the information contained herein. The following list of certain capitalised terms used in this Placement Document is intended for the convenience of the reader/prospective investor only and is not exhaustive

Unless otherwise defined or the context otherwise indicates or requires, certain capitalized terms used in this Placement Document have the meanings set forth below. Further any references to any statute or regulations or policies shall include amendments thereto, from time to time:

Bank Related Terms

Term Description “United Bank of India”, United Bank of India constituted under the Banking Companies (Acquisition and “UBI”, the “Bank”, “we”, Transfer of Undertakings) Act, 1970 and nationalized on July 19, 1969. The Head “us” and “our” Office of our Bank is located at United Tower, 11 Hemanta Basu Sarani, Kolkata – 700001, West Bengal, India. Auditors The Statutory Central Auditors of our Bank namely M/s. Nundi & Associates; M/s. Mookherjee, Biswas & Pathak and; M/s. Arun K. Agarwal & Associates. Board of Directors or Board of Directors of our Bank and any Committee constituted thereof. Board Constitutional Documents The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 read with the Banking Regulation Act, 1949 and the Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1970, the United Bank of India (Shares and Meetings) Regulation, 2010 Director(s) The Director(s) of our Bank. EDs Executive Directors of our Bank Equity Shares or Shares The equity shares of our Bank of face of value ₹ 10 each. Equity Shareholders Equity Shareholders of our Bank. Head Office The head office of our Bank situated at United Tower, 11 Hemanta Basu Sarani, Kolkata – 700 001, West Bengal, India. Managing Director and The Managing Director and Chief Executive Officer of our Bank Chief Executive Officer Promoter The President of India, acting through the Ministry of Finance, Government of India.

Issue Related Terms

Term Description Allocated or Allocation The allocation of Equity Shares following the determination of the Issue Price to QIBs on the basis of Application Forms submitted by such QIBs, in consultation with the Book Running Lead Managers and in compliance with Chapter VIII of the ICDR Regulations. Allottees Successful Bidders to whom Equity Shares are issued and allotted pursuant to the Issue. Allotment / Allotted The issue and allotment of Equity Shares pursuant to this Issue. Application or Bid Indication of interest from a QIB to subscribe for a specified number of Equity Shares in this Issue on the terms set out in the Application Form to our Bank. Application Form or Bid The form, including all revisions and modifications thereto, pursuant to which a QIB cum Application Form submits an Application. Bidder Any prospective investor, being a QIB, who makes a Bid pursuant to the terms of the Preliminary Placement Document and the Application Form. Bidding / Issue Period The period between the Bid/Issue Opening Date and Bid/Issue Closing Date, inclusive of both dates, during which prospective Bidders can submit Bids. Book Running Lead SBI Capital Markets Limited and Motilal Oswal Investment Advisors Private Managers / BRLMs Limited 17

Term Description CAN or Confirmation of Note or advice or intimation to successful Bidders confirming Allocation of Equity Allocation Note Shares to such successful Bidders after determination of the Issue Price and requesting payment for the entire applicable Issue Price for all Equity Shares Allocated to such successful Bidders. Category III foreign FPIs who are registered as “Category III foreign portfolio investors” under the SEBI portfolio investor(s) (FPI) Regulations Closing Date On or about March 27, 2017, the date on which the Allotment is expected to be made. Cut-off Price The Issue Price of the Equity Shares, which shall be determined by our Bank, in consultation with the Book Running Lead Managers. Designated Date The date of credit of Equity Shares to the Eligible QIB’s demat account as applicable to the respective Eligible QIBs. Eligible QIBs QIBs, as defined in regulation 2(1)(zd) of the ICDR Regulations which are not, (a) excluded pursuant to regulation 86 of the ICDR Regulations, (b) registered FPIs, FIIs, FVCIs, bilateral and multilateral financial institutions or any other QIB that is a Non-Resident or (c) ‘owned’ or ‘controlled’ by Non-Residents / persons resident outside India, as defined under FEMA, except as specifically set forth in this Placement Document who are outside of the United States acquiring Equity Shares in an offshore transaction in reliance on Regulation S Escrow Bank United Bank of India through its branch located at Fort, Mumbai. Escrow Account The non-interest bearing, no-lien, escrow bank account without any cheque or overdraft facilities opened by our Bank with the Escrow Bank under the arrangement between our Bank and the Escrow Bank. Escrow Agreement Agreement dated March 21, 2017, entered into amongst our Bank, the Escrow Bank and the Book Running Lead Managers for collection of the Bid Amounts and for remitting refunds, if any, of the amounts collected, to the Bidders Floor Price The floor price of ₹ 24.44 per Equity Share, calculated in accordance with Regulation 85 of the ICDR Regulations. Our Bank may offer a discount of not more than 5.00% on the Floor Price in terms of Regulation 85(1) of the ICDR Regulations. ICDR Regulations The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended. Issue The offer and sale of the Equity Shares to QIBs, pursuant to Chapter VIII of the ICDR Regulations. Issue Closing Date or Bid March 24, 2017, the date on which our Bank (or the Book Running Lead Managers Closing Date on behalf of our Bank) shall cease acceptance of Application Forms. Issue Opening Date or Bid March 21, 2017, the date on which our Bank (or the Book Running Lead Managers Opening Date on behalf of our Bank) shall commence acceptance of Application Forms. Issue Price The price per Equity Share of ₹ 23.22 including a premium of ₹ 13.22 per Equity Share. Under the ICDR Regulations, the Issue Price cannot be lower than the Floor Price subject to discount of not more than 5% on the Floor Price which may be considered by our Bank. Issue Size The issue of 54,906,211 Equity Shares aggregating ₹ 127.49 Crore. Listing Agreement The agreement entered into between our Bank and each of the Stock Exchanges in relation to listing of the Equity Shares on each of the Stock Exchanges pursuant to requirements of Regulation 109 of the Listing Regulations. Listing Regulations The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended Pay-in Date The last date specified in the CAN for payment of application monies by the QIBs. Placement Agreement The Placement Agreement, dated March 21, 2017, among our Bank and the Book Running Lead Managers. Placement Document This placement document issued by our Bank in accordance with Chapter VIII of the ICDR Regulations. Preliminary Placement The preliminary placement document issued in accordance with Chapter VIII of the Document ICDR Regulations. QIB or Qualified Any Qualified Institutional Buyer as defined under Regulation 2(1) (zd) of the ICDR Institutional Buyer Regulations. 18

Term Description QIP Private placement to QIBs under Chapter VIII of the ICDR Regulations. Relevant Date March 21, 2017 which is the date of the meeting of the Board of Directors or any committee duly authorised by the Board of Directors deciding to open the Issue.

Industry Related Terms

Term Description Additional Tier I capital Comprises of Innovative perpetual debt instruments and perpetual non-cumulative preference shares eligible for inclusion in Tier I Capital which comply with the specified current regulations as reduced by equity investments in subsidiaries, (under transition provisions) reciprocal investments capital of banking, financial and insurance entities, deferred tax assets (under transition provisions), intangible assets (under transition provisions Adjusted Net Bank Credit Net Bank credit plus investment made by Bank in non SLR bond held in Held to / ANBC Maturity Category AFS Available for Sale ALCO Asset and Liability Management Committee AML Anti – money laundering ATM Automated Teller Machines AUM Assets under management Base Rate Minimum lending rate set by our Bank in accordance with applicable laws and regulations. Basel Committee Basel Committee on Banking Supervision Basel II Revised framework on “International Convergence of Capital Measurement and Capital Standards” by RBI for International Settlements. Basel III A global regulatory framework for more resilient banks and banking systems (December 2010 (rev. June 2011)) published by our Bank for International Settlements. RBI issued guidelines on the implementation of Basel III capital regulations in India on May 2, 2012 and revised as per notification issued by the RBI on March 27, 2014. BPLR Benchmark Prime Lending Rate bps Basis points CAR Capital adequacy ratio. CAGR Compounded annual growth rate (calculated by taking the nth root of the total percentage growth rate, where n is the number of years in the period being considered). CASA Current Accounts (Demand Deposits) and Saving Accounts CBS Core Banking Solutions CGTMSE Credit Guarantee Fund Trust of Micro and Small Enterprises CMS Cash Management Services CTS Cheque Truncation System Director(s) Director(s) of our Bank, unless specified DRC Disaster Recovery Centre ECS Electronic Clearing Services FEDAI Foreign Exchange Dealers’ Association of India Financial Year/ Fiscal/ Any period of twelve months ended March 31 of that particular year, unless Fiscal Year/ FY otherwise stated. Gross NPA /GNPA Gross non-performing asset HFT The securities acquired by our Bank with the intention to trade by taking advantage of the short term price/ interest rate movements will be classified under Held for Trading HTM The securities acquired by our Bank with the intention to hold them up to maturity will be classified as Held to Maturity IBA Indian Banks’ Association

Term Description ICAAP Internal Capital Adequacy Assessment Process KYC Norms Know Your Customer norms stipulated by the RBI NPA Non-Performing Asset Net NPA / NNPA Net NPA means Gross NPAs less loan loss provision, Deposit Insurance and Credit Guarantee Corporation/Export Credit Guarantee Corporation claims received and held and any partial payments received and held. SARFAESI Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, as amended SLR Statutory Liquidity Ratio Tier II Bonds Unsecured subordinated non – convertible bonds issued for Tier II capital adequacy purposes. Tier I capital The core capital of a bank, which provides the most permanent and readily available support against unexpected losses. It comprises paid up capital and reserves, consisting of any statutory reserves, free reserves, capital reserves and other disclosed free reserves, revaluation reserve as reduced by equity investments and subsidiaries, intangible assets and losses in the current period and those brought forward from the previous period. Tier II capital The undisclosed reserves and cumulative perpetual preference shares, general provisions and loss reserves, hybrid debt capital instruments (which combine certain features of both equity and debt securities), investment fluctuation reserves and subordinated debts. Total Gross Credit Gross advances outstanding Exposure

General Terms / Abbreviations

Term Description AGM Annual general meeting AIF(s) Alternative investment funds, as defined and registered with SEBI under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, as amended AMC Asset management company AOP Association of persons AS Accounting Standards issued by ICAI AY Assessment year Bank Acquisition Act Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, as amended Bank Regulations United Bank of India (Officers’) Service Regulations, 1979, United Bank of India (Employees’) Pension Regulations, 1995, as amended, which have been made by the Board of Directors in the exercise of powers conferred under section 19 of the Bank Acquisition Act after consultation with the RBI and with previous sanction of the GoI, Banking Division, Government of India, Ministry of Finance, Department of Economic Affairs (Banking Division) and United Bank of India (Share and Meetings) Regulations, 2010. Banking Regulation Act The Banking Regulation Act, 1949, as amended Banking Division Government of India, Ministry of Finance, Department of Banking Services (Banking Division) Banking Ombudsman The Banking Ombudsman Scheme, 2006 Scheme Brickwork Brickwork Rating India Private Limited BSE BSE Limited CAGR Compounded Annual Growth Rate CARE Credit Analysis & Research Limited CDR Corporate Debt Restructuring

Term Description CDR System A joint forum of banks and financial institutions in India established in 2001 as an institutional mechanism for corporate debt restructuring CDSL Central Depository Services (India) Limited CPIs Consumer price indices CESTAT Central Excise and Service Tax Appellate Tribunal CRISIL Credit Rating Information Services of India Limited Depositories Act The Depositories Act, 1996, as amended Depository A depository registered with SEBI under the Securities and Exchange Board of India (Depositories and Participant) Regulations, 1996, as amended Depository Participant A depository participant as defined under the Depositories Act DICGC Deposit Insurance and Credit Guarantee Corporation of India EaR Earnings at risk EBITDA Earnings before interest, tax, depreciation and amortization ECB External commercial borrowing ECS Electronic clearing service EGM Extraordinary general meeting Eligible FPIs FPIs that are eligible to participate in this Issue and do not include qualified foreign investors and Category III Foreign Portfolio Investors who are not allowed to participate in the Issue EPS Earnings per share ETL Expected tail loss FCCBs Foreign currency convertible bonds FCNR(B) Foreign currency non-resident (bank) FEDAI Foreign Exchange Dealers’ Association of India FEMA The Foreign Exchange Management Act, 1999 read with rules and regulations promulgated there under and any amendments thereto. FEMA 20 The Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000, as amended FIIs Foreign institutional investors as defined under the SEBI FPI Regulations FIMMDA Fixed Income Money Market and Derivatives Association of India FPI Foreign portfolio investors as defined under the SEBI FPI Regulations and includes person who has been registered under the SEBI FPI Regulations. Any foreign institutional investor or qualified foreign investor who holds a valid certificate of registration is deemed to be a foreign portfolio investor till the expiry of the block of three years for which fees have been paid as per the Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995 FRA/IRS Forward rate agreements/interest rate swaps FVCI Foreign venture capital investors as defined and registered with SEBI under the Securities and Exchange Board of India (Foreign Venture Capital Investors) Regulations, 2000, as amended GAAP Generally accepted accounting principles GAAR General Anti-Avoidance Rules GDP Gross domestic product GIR General index registrar GoI/Government Government of India, unless otherwise specified GST Goods and services tax; a proposed reform to Indian tax laws relating to indirect taxes on goods and services HFCs Housing finance companies HLAC High Level Advisory Committee of the RBI HNIs High net worth individuals HUF Hindu undivided family ICRA ICRA Limited IFRS International Financial Reporting Standards of the International Accounting ITES Information Technology Enabled Services 21

Term Description Ind-AS Indian accounting standards converged with IFRS, as per the roadmap issued by the Ministry of Corporate Affairs, Government of India Indian GAAP Indian GAAP Generally accepted accounting principles in India as applicable to Banks Insolvency Code The Bankruptcy and Insolvency Code, 2016 MAT Minimum alternate tax MSEs Micro and small enterprises NEAT National Exchange for Automated Trading NEFT National electronic fund transfer New Banks Licensing Guidelines for Licensing of New Banks in the Private Sector issued by RBI on Guidelines February 22, 2013 NRE Non-resident (external) NRI Non-resident Indian NRO Non-resident Ordinary NSDL National Securities Depository Limited NSE National Stock Exchange of India Limited NABARD National Bank for Agriculture and Rural Development Nationalised Bank The Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1970 Scheme notified under section 9 of the Bank Acquisition Act OFAC Office of Foreign Assets Control of the U.S. Treasury Department PAN Permanent account number PDAI Primary Dealers Association of India PFRDA Pension Fund Regulatory and Development Authority PMLA The Prevention of Money Laundering Act, 2002, as amended Prudential Norms Prudential norms on income recognition, asset classification and provisioning issued by the RBI on July 1, 2015 PTC Pass through certificate RBI Reserve Bank of India Reserve Bank of India The Reserve Bank of India Act, 1943, as amended Act/ RBI Act RRB Regional Rural Bank RRB Act Regional Rural Banks Act, 1934, as amended RONW Return on Net Worth RWA Risk weighted assets SCBs Scheduled commercial banks SCR (SECC) Rules Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012, as amended SCRA The Securities Contracts (Regulation) Act, 1956, as amended. SCRR The Securities Contracts (Regulation) Rules, 1957, as amended. Securities Shall have the meaning given to such term under the SCRA. SEBI Securities and Exchange Board of India SEBI Act Securities and Exchange Board of India Act, 1992, as amended SEBI AIF Regulations Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, as amended SEBI FPI Regulations Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014, as amended SENSEX An index of 30 constituent stocks traded on BSE representing a sample of large, liquid and representative companies SICA Sick Industrial Companies (Special Provisions) Act, 1985, as amended. Stock Exchanges BSE and NSE STT Securities and Transaction Tax Takeover Code Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, as amended.

Term Description TDS Tax Deducted at Source. U.K. United Kingdom. U.S. or U.S.A. United States of America, its territories and its possessions and the District of Columbia. USD or US Dollar or United States Dollar U.S. Dollar U.S. GAAP Generally accepted accounting principles followed in the United States. U.S. Securities Act The U.S. Securities Act of 1933, as amended. VAT Value Added Tax VCF A venture capital fund as defined under the erstwhile Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996 WPI Wholesale Price Index

SUMMARY OF THE ISSUE

The following is a general summary of the terms of the Issue. This summary should be read in conjunction with, and is qualified in its entirety by, the more detailed information appearing elsewhere in this Placement Document, including under the sections “Risk Factors”, “Use of Proceeds”, “Placement”, “Issue Procedure” and “Description of Equity Shares”.

Issuer United Bank of India. Face value ₹ 10 per Equity Share Issue Price per Equity Share ₹ 23.22. Minimum Offer Size Minimum value of offer or invitation to subscribe to each QIB is ₹ 20,000 of the face value of the Equity Shares Issue Size The issue of up to 5,49,06,211 Equity Shares aggregating up to ₹ 127.49 Crores.

A minimum of 10 % of the Issue Size i.e. at least 54,90,621.10 Equity Shares shall be available for Allocation to Mutual Funds only, and the balance 4,94,15,589.90 Equity Shares shall be available for Allocation to all QIBs, including Mutual Funds. In case of under-subscription in the portion available for Allocation only to Mutual Funds, such portion or part thereof may be Allocated to other eligible QIBs. Date of Board Resolution January 28, 2016 authorizing the Issue Date of Shareholders’ Resolution June 28, 2016 authorizing the Issue Equity Shares issued and 1,33,94,49,372 Equity Shares at a face value of ₹ 10 per share. outstanding immediately prior to the Issue Equity Shares issued and 1,39,43,55,583 Equity Shares at a face value of ₹ 10 per share. outstanding immediately after the Issue Eligible Investors QIBs as defined in regulation 2(1)(zd) of the ICDR Regulations and Chapter VIII of the ICDR Regulations to whom the Preliminary Placement Document and the Application Form are circulated and who are eligible to bid and participate in the Issue and QIBs not excluded pursuant to Regulation 86 (1)(b) of the ICDR Regulations, except for such eligible QIBs who are Public Sector Enterprises. Only QIBs which are FIIs and Eligible FPIs are permitted to participate in this Issue. Floor Price The floor price has been calculated in accordance with Chapter VIII Regulation 85 of the ICDR Regulations. Under the ICDR Regulations, the Issue Price cannot be lower than the Floor Price subject to discount of not more than 5% on the Floor Price which may be considered by our Bank. The Floor Price, net of discount of 5% is ₹ 1.22. Listing (i) Our Bank has obtained in-principle approvals dated March 21, 2017 in terms of regulation 28(1) of the Listing Regulations with the Stock Exchanges and (ii) the application for the final listing and trading approval, for listing and admission of the Equity Shares and for trading on the Stock Exchanges, will be made only after Allotment of the Equity Shares in the Issue. Transferability Restrictions The Equity Shares being allotted pursuant to this Issue cannot be sold for a period of one year from the date of Allotment, except if sold on the floor of the Stock Exchanges. For further details, see the section “Transfer Restrictions” and “Selling Restrictions” beginning on pages 189 and 195, respectively. Closing Date The Allotment of the Equity Shares offered pursuant to the Issue is expected to be made on or about March 27, 2017 (the “Closing Date”). 24

Use of Proceeds The gross proceeds of the Issue are expected to be approximately ₹ 127.49 Crore. The net proceeds from the Issue, after deducting fees, commissions and expenses of the Issue, will be approximately ₹ 125.69 Crore and will be used to augment the Tier I Capital of our Bank that will help increase our capital adequacy ratio and provide capital for the future growth of our business. For further details, please see the section “Use of Proceeds” beginning on page 63. Pay-in Date Last date specified in the CAN sent to the successful Bidders for payment of application money. Lock - up Please see the sub-section titled “Lock-up” of “Placement Agreement” on page 187 for a description of restrictions on our Bank in relation to Equity Shares Risk Factors For a discussion of certain risks in connection with an investment in the Equity Shares, please see the section “Risk Factors” beginning on page 37. Ranking of equity shares The Equity Shares being issued shall rank pari passu in all respects with the existing Equity Shares including rights in respect of dividends. The shareholders will be entitled to participate in dividends and other corporate benefits, if any, declared by our Bank after the date of Issue. For details, see “Description of the Equity Shares” beginning on page 202. Security codes for the Equity ISIN: INE695A01019; Shares BSE Code: 533171; NSE Symbol: UNITEDBNK

SUMMARY OF BUSINESS

Overview

We are a scheduled public sector commercial bank in India offering a wide range of banking and financial products and services to both large and mid-corporates, micro, small and medium enterprises (“MSME”), retail and agricultural customers. As on January 31, 2017, we had 2,021 branches in 29 States and 5 Union Territories in India (all of them under Core Banking Solution “CBS” platform) including 180 MSME specialized branches catering to the specific clientele segment, 24 Retail Hubs, 5 specialised women branches. As of January 31, 2017, we had 2,200 ATMs, 22 E-zones, 36 regional offices, 5 extension counters and 2 representative offices in Bangladesh and Myanmar. As of January 31, 2017, we had a customer base of approximately 4.22 crore.

We provide a wide range of products and services aimed at different kinds of customers and companies across a wide range of sectors of the economy. Our business is principally divided into Retail banking, Agricultural banking, Corporate banking, International banking, MSME banking, Priority sector lending, Treasury operations and other financial services such as demat /trading services and merchant banking services, distribution of third party products such as insurance, mutual fund products, money transfer services, merchant acquiring services, pension and tax collection services.

Our retail banking business offers financial products and services including consumer lending and deposit services to our retail customers. We offer a wide range of consumer credit products, including loans and advances for housing, trade, automobiles, consumer durables, education, personal loans, mortgage loans and other retail products. We have various deposit products, such as current, savings and term deposits for our customers.

Our commercial banking business largely caters to corporate customers, including large, mid-sized and small businesses and government entities. Our loan products include term loans to finance capital expenditure of assets across various industries as well as short-term loans, cash credit, export credit and other working capital financing and bill discounting facilities. We also provide credit substitutes, such as letter of credit and letter of guarantee.

Our international banking services includes forex services, international trade finance and NRI services comprising foreign exchange operations, remittance facilities for resident Indian, foreign currency loans, lending and deposit services to non-resident Indians. We also cater to the financial requirements of Indian exporters and importers.

We offer products and services for MSME banking to our customers. The MSME banking business provides a similar range of products and services as our corporate banking unit with some differentiation following evaluation of each customer’s profile and dynamics. Our MSME customers are also important for maintaining our CASA ratio.

We offer direct financing to farmers for production and investment, as well as indirect financing for infrastructure development and credit to suppliers of agricultural inputs. We also finance tea plantation and rubber plantation. We offer various products in the rural and semi-urban areas which would also help our Bank to meet its financial inclusion targets mandated by RBI. For creating awareness among the borrower farmers about necessity of availing bank finance for agriculture operations and maintaining it in performing status, we have actively taken part in a state government assisted programme under the banner ‘Bangla Farmers’ Financial Inclusion Fortnight’ in the months of November and December 2016. We also take adequate and appropriate steps for extending various benefits to the farming community to protect them from the related uncertainties and to minimize the financial burden. Those are implementation of crop insurance scheme under Pradhan Mantri Fasal Bima Yojana (“PMFBY”) and Interest Subvention Scheme from Short Term Production Credit.

Our treasury operations being the interface with the financial markets,consist primarily of statutory reserves management, liquidity management, investment and trading activities, money market and foreign exchange related activities. We actively trade in major currencies of the world and participate in the forward market. We also offer fee based products which includes fees and charges for services such as remittance services, documentary credits, letters of credit and issuance of guarantees and collect service charges and processing fees on customer advances. Fee-based income also includes income from commissions on sale of third party products, such as insurance and mutual funds.

We also offer a wide range of general banking services to our customers including debit cards, cash management, remittance services and collection services. In addition, we have agency function for collection of Central Government Revenue viz. direct and indirect taxes through physical mode by authorized branches and through e-mode by all branches of our Bank. We also act for various state governments and the Government of India on numerous matters including the collection of state revenue and taxes, mobilization of Government deposits under PMJDY, and payment of school teacher’s salary and pension of Central Government, State Government and different autonomous organizations.

We are one of the 14 banks which were nationalized on July 19, 1969. After nationalization, we have expanded branch network pan India and actively participated in the developmental activities, particularly in the rural and semi - urban areas in conformity with the objectives of nationalization. As of March 31, 2014, March 31, 2015 and March 31, 2016, the total number of branches of our Bank were 2,001, 2,004 and 2,011, respectively and it was further increased to 2,021 as of January 31, 2017. Our total number of ATMs has also increased from 1,602 as of March 31, 2014, to 1,912 as of March 31, 2015, to 2,044 as of March 31, 2016, and further increased to 2,200 as of January 31, 2017. As of January 31, 2017, our domestic branch network of 2,021 branches comprised 772 rural, 411 semi-urban, 477 urban and 361 metropolitan branches.

We have been designated as the lead bank by RBI in 34 districts of the States of West Bengal, Assam, Manipur and Tripura. We are also the convener of the State Level Bankers' Committees (“SLBC”) for the States of West Bengal and Tripura. We have been designated as Treasury Bank in major district of Assam and Tripura by respective state governments. Further, the President of India and Ministry of Coal have accounts solely with our Bank to handle the government funds. We intend to leverage our lead bank status and brand recall, to expand our presence across select geographies in India by increasing our branch network and distribution infrastructure across India.

As of January 31, 2017, the Core Banking Solution (“CBS”), which is a suite of software applications that facilitate centralized operations through a single data base, has been implemented in all of our branches and extension counters, covering 100% of our business. In addition, we have digital banking channels including mobile banking, internet banking. We have developed micro-payment and branchless banking solutions as well as a business correspondent network to expand our customer reach beyond the traditional branch service area. We deliver our products and services through our branches, extension counters, ATMs, internet banking and mobile banking. Our Bank has adopted technology based products as a strategy and pioneered in various state of art technology driven products.

As on January 31, 2017, our Bank has installed 2,200 ATMs, 22 E-Zones, Internet Banking, Mobile Banking, E - Wallet, E- Passbook Services. Our Bank is issuing Rupay and Visa bonded debit cards including image card on Rupay Platinum Platform. Our Bank has implemented online saving account facility, POS machines, online payment of bills and taxes. Our Bank has also implemented a product wherein instant fund transfer across bank through beneficiary mobile number. Our Bank has installed Unified Payment Interface (“UPI”) from first day of its launch. Our Bank is also having direct debit facility for booking of rail ticket through debit card. We have played significant role in the spread of banking services in different parts of the country, especially in the eastern and north eastern and we have sponsored four Regional Rural Banks (“RRBs”) in collaboration with the Central Government and the state governments of West Bengal, Assam, Manipur and Tripura.

In fiscal year 2016, we made a net loss of ₹ 281.96 crore and had a total credit portfolio of ₹ 71,412 crore and a net worth of ₹ 4,685 crore. For the nine months ended December 31, 2016, we made a net profit of ₹ 145.94 crore and had a total credit portfolio of ₹ 67,866 crore and net worth of ₹ 5,473 crore. We have experienced growth in deposits and advances, with deposits growing at a compounded annual rate of 4.97 % during the last three fiscals, gross and net advances growing at a compounded annual rate of 0.81% and (0.44)% during the same period. Our total business for the third quarter of fiscal year 2017 was ₹ 195,558 crore.

COMPETITIVE STRENGTHS

We believe that our success can be attributed to a combination of the following competitive strengths:

High Current Account - Saving Account (CASA) Deposits

Wide distribution network and customer base

Our branch network, which was historically concentrated in West Bengal, Orissa, Bihar, Jharkhand, Assam, Manipur and Tripura, has now expanded across India through a growing network of branches and ATMs. As of March 31, 2014, March 31, 2015 and March 31, 2016, the total number of branches of our Bank were 2,001, 2,004 and 2,011, respectively and it further increased to 2,021 as of January 31, 2017. Our total number of ATMs has also increased from 1,602 as of March 31, 2014, to 1,912 as of March 31, 2015, to 2,044 as of March 31, 2016, and further increased to 2,200 as of January 31, 2017. As of January 31, 2017, our network of BC agents increased to 4,252. As on January 31, 2017, we had 2,021 branches in 29 States and 5 Union Territories in India (all of them under Core Banking Solution “CBS” platform). As of January 31, 2017, details of our network are as follows:

Metro Urban Semi - Urban Rural Total Total number of branches 361 477 411 772 2,021 ATMs 295 602 573 730 2,200

Further, we also have 22 E-zones, 36 regional offices, 2 representative offices in Bangladesh and Myanmar. For our agricultural customers, our Bank has, as of January 31, 2017 a network of 1,183 branches in rural and semi urban areas, constituting approximately 58.53% of our total branch network, which support agricultural development, the MSME sector and retail banking.

Multiple delivery channels and large distribution infrastructure has resulted in giving us access to a large customer base spread across the country. As of January 31, 2017, we had a customer base of approximately 4.22 crore compared to 3.93 crore customers as of March 31, 2016 and 3.60 crore customers as of March 31, 2015. We offer a user-friendly internet banking facility that allows our customers to conduct a comprehensive range of banking transactions online without visiting our branches or ATMs. We offer online saving account opening facility, POS machines, online payment of bills and taxes and instant fund transfer facility across bank through beneficiary mobile number. We have installed Unified Payment Interface (“UPI”) from first day of its launch and direct debit facility for booking of rail ticket through debit card. Our distribution network as complemented by our multi-channel electronic banking system is capable of providing a comprehensive suite of products to customers, provides us with a strong sales platform in the areas in which we operate, enables us to cross-sell products and to deliver high-quality, convenient and comprehensive services to a range of customers. Our extensive network allows us to provide banking services to a wide variety of customers, including large and small to medium corporations, institutions and state-owned enterprises, as well as commercial, agricultural, industrial and retail customers throughout India.

Diverse products and service mix

We are engaged in wide variety of banking activities such as corporate, micro, small and medium enterprises (“MSME”) and retail banking, and offer a wide range of financial products and services to corporate, SMEs and retail customers including both resident and non – resident Indians. We also provide funding to sectors identified by the Government of India as priority sector with specific focus on agriculture and MSME. We also cater to the needs of corporate and SME Banking services offering working capital, short term credit, cash management, forex loan products such as export import credit, Letter of Credit and Guarantee and buyers credit. Our treasury operations consist primarily of statutory reserves management, liquidity management, investment and trading activities, money market and foreign exchange activities. Our retail banking services include consumer lending and deposit services. We offer a wide range of consumer credit products, including personal loans, home loans, vehicle loans, education loans, mortgage loans, gold loans, etc. Our deposit products include saving accounts, time deposits, tailored deposits, products for customer in various sectors. Our other businesses include marketing of life and non-life insurance products, mutual fund products, corporate cash management services, agricultural lending etc.

28 with Lead Bank responsibility in 34 district spread across four states, 10 districts in West Bengal, 12 in Assam, 8 in Tripura and 4 in Manipur. Our Bank has also organized social camps for issuance of Kisan Credit Cards to bring in more number of new farmers under the KCC net. Our Bank jointly with Kotak Securities has launched its share trading product – U Connect Trio which enables the customer to open 3-in-1 account i.e. Bank Account, Demat Account & Share trading Account and trade seamlessly on the net from the comfort of their home. We intend to leverage our lead bank status and brand recall, to expand our presence across select geographies in India by increasing our branch network and distribution infrastructure across India.

We provide banking facilities to our customers through our various alternate delivery channel initiatives such as ATMs, internet banking, mobile banking. Further, our internet banking services can be used for online shopping, payment of utility bills, creating online term deposits, online trading, etc. We have established e – kiosks, IMPS based 24x7 funds transfer facility through internet banking, instant interbank fund transfer on the basis of mobile number named as UFT (United Fund Transfer), mobile and internet based wallet services named United Wallet, e – passbook, etc. We have also implemented innovative offering like online saving bank account opening by prospective customers and launched balance enquiry on missed call, mini statement and fixed deposit on missed call.

Scalable operating model and centralised operational structure

Our current operating model is scalable, which we expect will enable us to expand our business and services. We strongly emphasize on technology in our business as a means of improving the efficiency and competitiveness of our business operations. We have devoted substantial resources to achieve seamless integration of our people, processes, data and applications. All our branches are under CBS, covering 100% of our business to facilitate centralized operations through a central data base. It has networked our domestic branches, allowing our customers to operate their accounts from remote locations and avail banking services from any of our branches, regardless of wherever the account is maintained. We have a Disaster Recovery Centre at Vashi, Navi Mumbai, which replicates all data on a near real time basis for the critical applications. As on date, all the branches of our Bank have been migrated to the CBS (Finacle) platform. Bank has been regularly upgrading its systems for development of new products and improvising the processes for operational convenience. We believe that factors such as our scalable operating model, technology and data platform and centralized banking system shall expand our business in geographies that offer strong opportunities for us to grow further.

Professional and experienced management

We have an experienced Board and senior management and presently have a team of one chief vigilance officer and 12 General Managers. Our Bank’s executive directors and senior management have on an average more than 20 years of banking and financial experience. The expertise of our Board and management team contributes to our in-depth understanding of the sector-specific aspects of our business and each part of our operations. We have been able to build a team of professionals with relevant experience, including credit management, risk management, treasury, information technology and marketing, restructuring balance sheet and business mix, improving operating efficiency and in-depth knowledge of banking operations and management. We have inducted qualified persons, including MBAs, engineers, chartered accountants, company secretaries and cost accountants, risk managers, equity research analysts, marketing officials and credit officers. For additional details see section titled “Board of Directors and Senior Management” on page 164.

BUSINESS STRATEGIES

We intend to grow our market share, including our retail and MSME deposit base, and to continue to achieve balanced growth in our balance sheet, profitability (improving our return on assets and our return on equity) and efficiency (improving our cost to income ratio) across all segments of our operations. Our key strategies to achieve these goals are set out below:

Maintaining high CASA deposits

The presence of our branches, particularly in Eastern and North Eastern part Including, West Bengal, Orissa, Bihar, Jharkhand, Assam, Manipur, Meghalaya, Tripura of North East Region, allows us to attract interest-free current account and low cost savings account deposits. We have in the past focused our efforts on growing our CASA ratio and CASA deposits stood at ₹ 45,755.09 Crores for the fiscal year 2015 and the same increased to ₹ 48,791.04 Crores 29 for fiscal year 2016. As at December 31, 2016, our Bank’s CASA deposits were at ₹ 60,970.05 crores. Our CASA deposits as a percentage of total domestic deposits was at 42.05 % for the fiscal year 2015 and 42.00%, for the fiscal year 2016 and 47.75% as at December 31, 2016.

We seek to increase our CASA deposits in order to reduce cost of funds and improve our core deposits. In order to attract retail customers and increase our CASA deposits, we intend to introduce new products and promote our products through marketing campaigns. We believe that by leveraging CBS, internet and mobile banking systems will enable us to increase our customer base, thereby increasing CASA deposits.

Accelerate growth in loans and advances to the MSME and retail sectors

Although we have experienced significant growth in our loans and advances to the MSME sector in recent past, with growth of 2.21% and 7.16% in the fiscal year 2014, fiscal year 2015, respectively, however during the fiscal year 2016 the growth is (8.22)%. Our aim is to continue growing our loans and advances by expanding our relationship with corporates and public sector organizations. We have opened number of MSME branches and deployed specialized officers at MSME centric locations. As on January 31, 2017, we have 180 specialized MSME Branches to cater our MSME customers. We also have four corporate finance branches in four metros. We propose to strengthen, our relationship with these MSME by giving them various facilities at competitive terms and thereby expand our business. We have installed a dedicated toll free telephone connection at our head office to address all queries of entrepreneurs in the MSME sector. We have set up a MSME care centre at all of our regional offices to improve lending and to redress the grievances of our customers under this sector. We also cater to some of the banking requirements of various public sector organizations. Our goal is to leverage these relationships for mutually beneficial business growth. We also plan to introduce a central pension processing system at our corporate office to take care of pension disbursements for our retail customers.

We have identified the retail loan segment as a key area for increasing our credit portfolio. Loans and advances to the retail sector (which includes housing loans) has been increased by 16.35% in fiscal year 2014 – 2015 and further increased by 4.99% for the fiscal year 2016. However, as a share to our total (gross) loans and advances, it represented 17.72% of our total outstanding loans as of March 31, 2016. In our retail business, we intend to increase our share of higher-margin asset products, such as loans against property, personal loans and gold loans. As on January 31, 2017, we have 24 retail hubs to cater to our customers and have a centralized system for processing applications and approvals of retail loans. Our aim is to substantially increase our loans and advances portfolio to the retail sector by simplifying our current processes, launching new products and services and developing our distribution channels. We believe this will help us spread risk, increase our interest income and better efficiency in capital utilization. Further, this will enhance our customer base and provide us business opportunities through relationship banking and cross selling.

As on the date of this Placement Document, the basic banking services are being offered to approximately 88.36 lakh customers under the Financial Inclusion programme of our Bank through a robust network of 4,252 Bank Mitras spread across 12 states of the country. Since launch of PMJDY, our Bank has focused on building a self-sustaining business model of Financial Inclusion by bringing the financially excluded population under the ambit of formal banking and offering suitable banking services at their doorstep. Each Bank Mitra is equipped with an inter-operable handheld device (micro ATM) for rendering services to the customers. Today our Bank provides an array of services through our Bank Mitra network including e-KYC based SB account opening, biometric/AePS/RuPay based online cash withdrawal and deposit facilities at micro ATMs, various remittance products including IMPS and AePS, Recurring Deposits, micro insurance (PMSBY and PMJJBY) products and micro Pension product (APY) apart from micro credit facility under JLG scheme.

Grow our pan India presence and augmenting alternate delivery channels

We primarily cover the Eastern and North Eastern part of the country including West Bengal, Orissa, Bihar, Jharkhand, Assam, Manipur and Tripura. As of January 31, 2017, we had 2021 branches out of which 1,175 and 358 were located in eastern and north eastern India, respectively. We intend to increase our branch network and infrastructure across India, through a growing network of branches, ATMs, BC agents and cross sell our products at competitive costs to gain a larger pan-India market share in terms of advances and deposits. Working towards this goal, we plan to, and have received approval from our Board to open 276 new branches during the fiscal year 2017 – 2018, which will further increase our branch network. We are in the process to file an application with RBI for obtaining license for 30 opening of 276 new branches. Further we have received RBI clearance for opening of 4 link offices and we have already opened 1 link office at Pune. We will open another 3 link offices in the fiscal year 2017. We are focused on expanding our network to cover states with higher per capita income and key economic centers. In rural areas, we look to add branches in locations that complement and leverage our agricultural & development banking partners and to build our brand in rural communities. We strive to open branches in such areas which are unbanked or under- banked.

In addition to our Bank’s plan to open 276 branches in the fiscal year 2017 - 2018, our Bank also intends to strengthen its alternate delivery channels by encouraging customers from less cash to cash less environment. Our Bank has put in place robust internet banking system, mobile banking and UPI platform. Our Bank also provides facility of instant fund transfer through IMPS, utility bill payment and QR Code Based transactions and installed POS machines for merchant acquiring business with a target to install 10,000 POS machines. Our Bank will also empower its business correspondence to provide entire gamut of its services and products to the rural and unbanked population.

Increase in non – interest income

We intend to focus on increasing our fee-based income by expanding our third-party product offerings, by increasing our fee-based services and alliances and by cross-selling our offerings to our existing customers. For example, we have entered into agreements with LIC and Bajaj Allianz General Insurance Company Limited for distribution of life and other insurance policies. We also entered into an agreement with Kotak Securities Limited for the distribution of mutual fund and equity based products. We intend to increase this revenue stream by entering into additional agency and distribution agreements and by promoting certain products and services, including depository services. We have a presence in Myanmar and Bangladesh and we anticipate higher incomes from letters of credit and bank guarantees as Indo-Myanmar trade increases. We have an integrated treasury and our income from the same for fiscal years 2014, 2015, 2016 and the nine months ended December 31, 2016 was ₹ 1,206.87 Crores, ₹ 1,746.91 Crores, ₹ 1,467.53 Crores and ₹ 1,865.32 Crores, respectively representing CAGR of 17.16% from fiscal year 2014 to fiscal year 2016. We intend to increase the share of business in the emerging corporate group segment. We intend to follow a relationship based approach by providing and expanding our third party product offerings including mutual fund and insurance products, money transfer and foreign exchange services. We also intend to pursue strategic relationships with corporate entities and the Government to provide our products to their employees and customers.

Reduce our gross NPA levels and to improve quality of assets

Though the reduction of impaired assets and improvement in the quality of assets through recovery were our key focus area in recent past, we continue to endeavor to reduce our NPA level and upgrade the quality of our assets. The share of gross NPAs as a percentage of total advances increased from 9.49% as of March 31, 2015 to 13.26% as of March 31, 2016. Our gross NPA stood at ₹ 9,471.01 crore and Net NPA stood at ₹ 6,110.71 crore as on March 31, 2016. Our strategies for reducing NPAs include improving the quality of credit by ensuring that our well documented loan sanction policies and procedures are complied with and by actively monitoring our loan accounts (particularly Special Mention Accounts (SMA)) and reassessing their credit ratings at least once a year or more frequently, if required. Further, we have taken several initiatives to contain slippages and continue to take such action and speed up recovery from overdue loan accounts including identification of stressed accounts for restructuring (or rephrasing in time), regular follow-up of overdues in loan accounts, conducting e-auctions for the sale of seized assets to ARCS and initiation of stringent recovery measures against willful defaulters.

We organize recovery camps and lok adalats with the help of government officials, enter into one time settlement and we have delegated the powers to all functional heads for settlement of NPAs and written off accounts. We are also managing our NPAs by selling off stressed assets to asset reconstruction companies. We have appointed recovery agents for the expeditious recovery of NPAs and written off accounts. Our Bank will also formulate plan of action for enforcing the SARFESI, the Recovery of Debts Due to Bank and Financial Institutions Act, 1993 and the RBI’s corporate debt restructuring (“CDR”) mechanism and Bankruptcy Code more strictly and stringently and encourage OTS proposal for non – cooperative borrowers. For better recovery, our Bank started to participate in Community Based Recovery Mechanism (CBRM) with the assistance from State Rural Livelihood Mission (SRLM) which has placed Bank Sakhi/ Bank Mitras at branches. To create general awareness among the public our Bank took the initiative by putting up silent road shows and peaceful demonstrations before the establishments of defaulting borrowers.

Enhanced focus on credit monitoring

Our Bank has put in place a robust credit monitoring policy and created a dedicated department for successfully monitoring the accounts. The credit monitoring is a regular process of day to day management of the credit portfolio by the credit monitoring department. While all branch heads continue to be responsible for monitoring their respective loan portfolio, an additional layer of oversight is provided by the credit monitoring department. Our Bank will continue to follow and strengthen the practice of credit monitoring and to improve the asset quality.

SUMMARY OF FINANCIAL INFORMATION

The following summary financial information has been extracted from our Audited Financial Statements as of and for fiscal years ended March 31, 2014, 2015 and 2016 and should be read together with “Management's Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 68 and our financial statements, including the notes thereto and the reports thereon, which appear in the section “Financial Statements” beginning on page 228.

SUMMARY BALANCE SHEET INFORMATION (₹ in crores) PARTICULARS Fiscal Year 2016 Fiscal Year 2015 Fiscal Year 2014

CAPTIAL AND LIABILITIES Capital 839.52 839.52 1,354.75 Share Application Money Pending Allotment 480.00 - - Reserves & Surplus 4,999.67 4,988.52 3,927.91 Deposits 1,16,401.28 1,08,817.60 1,11,509.71 Borrowings 2,912.51 4,061.73 4,460.24 Other Liabilities and Provisions 3,798.78 4,320.21 3,852.35 TOTAL 1,29,431.75 1,23,027.58 1,25,104.95

ASSETS Cash and balances with Reserve Bank of India 6,070.45 5,815.60 6,269.78 Balances with Banks and Money at Call and 2,255.21 214.94 4,542.06 Short Notice Investments 44,723.38 43,245.49 41,813.38 Advances 68,060.20 66,763.04 65,767.51 Fixed Assets 1,210.92 877.41 938.73 Other Assets 7,111.59 6,111.09 5,773.48 TOTAL 1,29,431.75 1,23,027.58 1,25,104.95

Contingent Liabilities 11,583.91 6,450.34 9,908.33 Bills for collection 1,959.97 2,416.51 2,880.71 See accompanying notes forming part of the unaudited condensed financial statements

SUMMARY PROFIT AND LOSS STATEMENT (₹ in crores) PARTICULARS Fiscal Year 2016 Fiscal Year 2015 Fiscal Year 2014 INCOME Interest Earned 9,936.67 10,180.48 10,599.29 Other Income 1,467.53 1,746.91 1,206.87 TOTAL: 11,404.20 11,927.39 11,806.16 EXPENDITURE Interest Expended 7,656.11 7,689.82 8,036.47 Operating Expenses 2,972.78 2,438.00 2,915.46 Provisions and Contingencies 1,057.27 1,543.58 2,067.68 TOTAL: 11,686.16 11,671.40 13,019.61 PROFIT Net Profit for the year/period (281.96) 255.99 (1,213.45) TOTAL: (281.96) 255.99 (1,213.45) APPROPRIATIONS: Transfer to Statutory Reserve - 64.00 - Transfer to Capital Reserve 18.64 1.15 - Proposed Dividend: Equity - - - PNCPS - - - Tax on Dividend - - - Transfer to Revenue Reserve (300.60) 190.85 (1,213.45) Balance carried forward to Balance Sheet - - - TOTAL: (281.96) 255.99 (1,213.45) Basic & Diluted Earnings per Share (₹) (3.36) 3.78 (28.68) See accompanying notes forming part of the unaudited condensed financial statements

SUMMARY CASH FLOW INFORMATION (₹ in crores) PARTICULARS Fiscal Year 2016 Fiscal Year 2015 Fiscal Year 2014 CASH FLOW FROM OPERATING

ACTIVITIES Net Profit after Tax (281.96) 255.99 (1,213.45) Add: Income Tax - 220.00 Less: MAT Recoverable - 220.00 Add: Deferred Tax Assets (428.73) 198.11 Profit before Tax (710.69) 454.10 (1,213.45) Adjustment for Depreciation on Fixed Assets 102.76 105.72 69.19 Less: Amount drawn from Revaluation Reserve (16.08) (14.82) (15.59) Profit/Loss on Sale of Fixed Assets (Net) 0.04 0.58 (0.04) Depreciation/Provision for Investments (Net) (1.09) (70.43) 144.88 Provision for Standard Assets (423.77) 325.82 200.76 Provision for NPA Advances 1,769.17 844.87 1,908.62 Other Provisions (Net) 749.44 1,071.69 1,020.93 Interest on Subordinated Bonds 222.85 233.25 223.06 Operating Profit before changes in Operating 1,692.63 2,950.78 2,338.36 Assets and Liabilities Adjustment for net change in Operating Assets

and Liabilities Decrease/(Increase) in Investment (1,476.80) 1,701.27 (11,557.82) Decrease/(Increase) in Advances (3,066.33) (1,840.39) 1,232.53 Increase/(Decrease) in Deposits 7,583.68 (2,692.11) 10,858.17 Increase/(Decrease) in Borrowings (849.22) (398.51) (982.47) Decrease/(Increase) in Other Assets (681.76) (3,492.68) (272.08) Increase/(Decrease) in Other Liabilities & (847.10) (929.65) (334.87) Provisions Increase/(Decrease) in Revenue Reserve (37.67) - (72.03) Increase/(Decrease) in Other Reserve 0.18 4.22 Cash Generated from Operating Activities 2,317.60 - 1,209.79 Tax (Paid)/ Refund 110.00 (106.00) (41.00) Net Cash from Operating Activities (A) 2,427.60 (4,803.07) 1,168.79

CASH FLOW FROM INVESTING

ACTIVITIES Fixed Assets (Net) (89.63) (44.99) (150.83) Net Cash from Investing Activities (B) (89.63) (44.99) (150.83)

CASH FLOW FROM FINANCING

ACTIVITIES Issue of Share Capital 480.00 (515.23) 180.04 Share Premium - 815.23 519.96 Subordinate Bonds Issued (300.00) - 500.00 Interest on Subordinated Bonds (222.85) (233.25) (223.06) Dividend and tax thereon paid - - (171.62) Net Cash from Financing Activities (C) (42.85) 66.75 805.32

Net increase in Cash and Cash equivalents 2,295.12 (4,781.30) 1,823.28 (A+B+C)

Cash and Cash equivalents at the beginning 6,030.54 10,811.84 8,988.56 of the year 35

PARTICULARS Fiscal Year 2016 Fiscal Year 2015 Fiscal Year 2014 Cash in hand 503.02 433.60 357.44 Balances with Reserve Bank of India 5,312.58 5,836.18 3,489.17 Balances with Banks and Money at Call and 214.94 4,542.06 5,141.94 Short Notice Cash and Cash equivalents at the end of the 8,325.66 6,030.54 10,811.84 year Cash in hand 558.81 503.02 433.60 Balances with Reserve Bank of India 5,511.64 5,312.58 5,836.18 Balances with Banks and Money at Call and 2,255.21 214.94 4,542.06 Short Notice See accompanying notes forming part of the unaudited condensed financial statements

RISK FACTORS

An investment in equity shares involves a high degree of risk. You should carefully consider each of the following risk factors and all other information set forth in this Placement Document, including the risks and uncertainties described below, before making an investment in the Equity Shares. This section should be read together with “Industry Overview”, “Business”, “Selected Statistical Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as the financial statements, including the notes thereto, and other financial information included elsewhere in this Placement Document.

The risks and uncertainties described below are not the only risks that we currently face. Additional risks and uncertainties not presently known to us, or that we currently believe to be immaterial, may also adversely affect our business, prospects, financial condition and results of operations and cash flow. If any or some combination of the following risks, or other risks that are not currently known or believed to be material, actually occur, our business, financial condition and results of operations and cash flow could suffer, the trading price of, and the value of your investment in, Equity Shares could decline and you may lose all or part of your investment. In making an investment decision you must rely on your own examination of us and the terms of this Issue, including the merits and risks involved.

This Placement Document also contains forward-looking statements that involve risks and uncertainties. Our results could differ materially from such forward-looking statements as a result of certain factors including the considerations described below and elsewhere in this Placement Document.

1. If we are not be able to effectively manage increases in our asset portfolio and our NPA levels arising from our growth, the quality of our loan portfolio and other assets may decrease and our business and financial performance could be adversely affected.

Our quantum of gross NPA position were ₹ 7,118.01 Crore as on March 31, 2014, ₹ 6,552.91 Crore as at March 31, 2015 and ₹ 9,471.01 Crore as on March 31, 2016. However, our percentage of gross NPA has decreased from 10.47% as on March 31, 2014 to 9.49% as on March 31, 2015 and subsequently increased to 13.26% as on March 31, 2016. The restructured amount of our Bank has increased from ₹ 10,168 crores for the fiscal year 2015 to ₹ 10,334 crore for the fiscal year 2016 registering a growth of 1.63% on year on year basis. The restructured amount of our Bank has increased from ₹ 6,340 crores for the fiscal year 2014 to 10,168 crores for the fiscal year 2015 registering a growth of 60.37% on year on year basis. Out of the restructured accounts, standard restructured advances was ₹ 6,780 crore and ₹ 3,554 crore were in NPA category for the fiscal year 2016. As on March 31, 2016, the restructured accounts constituted 14.47% of total advance as compared to 14.72% as on March 31, 2015.

As of December 31, 2016, 19.49% of our standard advances were to borrowers whom we rate in the low risk category, 51.65% of our advances were to borrowers whom we rate in the moderate risk category and 28.86% of our advances were to borrowers whom we rate in the high risk category. Further, our banking advances for MSME and retail portfolio were ₹ 24,997.96 Crores, ₹ 24,537.36 Crores and ₹ 24,149.95 Crores for the fiscal year ended March 31, 2015, March 31, 2016 and nine months period ended December 31, 2016, respectively. Given the nature of the targeted borrowers, retail banking and business banking advances may carry a higher risk of delinquency if there is a prolonged recession or a sharp rise in interest rates. As a result, we may be required to increase our provision for defaulted advances. Borrowers in the high risk category could be especially vulnerable if economic conditions worsen or economic growth is slow, which could adversely affect our business, results of operations and financial conditions. We have been able to reduce our net non-performing advances through recoveries, upgrading of NPAs to “performing” categories and provisioning. Our net NPA was 9.04% of our net advances as of March 31, 2016 and was 10.62% of our net advances as of December 31, 2016. Our ability to reduce or contain the level of our gross and net NPAs may be affected by a number of factors that are beyond our control, such as increased competition, a recession in the economy, including in respect of specific industries to which we are exposed, decreases in agricultural production, decline in commodity and food grain prices, adverse fluctuations in interest and exchange rates or adverse changes in government policies, laws or regulations. In addition, the expansion of our business may also cause the level of our NPAs to increase. As of December 31, 2016, approximately 63.68% of our gross non-performing assets were concentrated in the industrial sector. Economic downturn and clean-up of stressed assets by our Bank has led to steep rise in the volume of the NPAs. Although our loan portfolio contains loans to a wide variety of businesses, adverse market conditions in the industrial sector could increase our level of NPAs. Future increases in our NPAs may have a material adverse effect on our business and financial condition. 37

Also, as of December 31, 2016, we did not have any floating provision (provision for NPAs over and above the required provisions as per RBI prudential norms). The extant guidelines of RBI on the Prudential norms on Income recognition, Asset classification and Provisioning pertaining to advances advised all commercial banks (excluding RRBs) that their board of directors should lay down approved policy regarding the level to which the floating provisions can be created. The floating provisions can be used only for contingencies under extraordinary circumstances for meeting specific contingencies after obtaining the Board’s approval and with the RBI’s prior permission. Our Bank has a Board approved policy on floating provision. We may not be able to utilize our floating provision in future, if any created to meet other contingencies unless we receive RBI’s prior permission. If we further increase our floating provision, this may affect our future profitability adversely.

2. We may not be able to maintain or grow our CASA ratio, which may result in higher cost of deposits.

We have traditionally maintained high CASA deposits because of our large retail customer base spread across India particularly in eastern and north eastern regions. As of December 31, 2016, the share of CASA deposits was at 47.75% of total deposits, out of which saving deposits accounted for 40.15% of total deposits, while current account deposits accounted for 7.60% of total deposits. Our strategy is to grow our CASA ratio, in order to reduce cost of funds and improve our core deposits. In order to attract retail customers and increase our CASA deposits, we intend to introduce new products and promote our products through marketing campaigns. We believe that by leveraging CBS, internet and mobile banking systems will enable us to increase our customer base, thereby increasing CASA deposits. However, attracting customer deposits in the Indian market is competitive. The interest rates that we must pay to attract customer deposits are determined by numerous factors such as the prevailing interest rate structure, competitive landscape, Indian monetary policy and inflation. However, there is no assurance that we will be successful in growing our CASA base. If we fail to maintain or grow our CASA ratio, our Bank’s financial condition and cash flows may be materially and adversely affected.

3. Our Bank had incurred a loss in the fiscal year 2016. In the event our net loss continues to increase, it may adversely affect our business and financial condition.

We have made net profit/ (loss) of ₹ (1,213.44) crore, ₹ 255.99 crore and ₹ (281.96) crore for the fiscal year ended March 31, 2014, March 31, 2015 and March 31, 2016, respectively. Further, our net profit has increased by 11.34% to ₹ 145.94 crore for the period of nine-months ended on December 31, 2016 from ₹ 131.08 crore for the period of nine months ended on December 31, 2015. Due to sharp increase of NPA level on the back of Asset Quality Review conducted by RBI and slippages of some bigger corporate accounts, our Bank reported net loss of ₹ 281.96 crores in the fiscal year 2016 as compared to a profit of ₹ 255.99 crores in fiscal year 2015. Further, the operating profit of our Bank came down to ₹1,812 crore for fiscal year 2016 from last years' ₹ 2,428 crore largely due to fall in treasury income and other income components. Despite consecutive rate cut announcements by the RBI, market yields persisted at an elevated level, which prevented our Bank from booking profit on its treasury portfolio. In the event of further increase of NPA level, our interest earnings and net profits will be impacted and subsequently, our financial condition would be adversely affected.

4. Our results of operations depend to a significant extent on net interest income, which in turn is sensitive to changes in interest rates. Any changes in the interest rate environment that may cause the costs on our interest- bearing liabilities to increase disproportionately to the income from our interest-earning assets may adversely impact our business and financial results.

Our results of operations depend to a significant extent on our net interest income. During the fiscal years ended March 31, 2014, March 31, 2015 and March 31, 2016, interest earned represented 89.78%, 85.35% and 87.13%, respectively, of our operating income, which includes our interest income and other income. For the period of nine months ended on December 31, 2016 our interest earned represented 78.80% of our operating income. Interest income represents the excess of interest earned from interest-bearing assets (performing assets and investments) over the interest paid on customer deposits and borrowings. Interest rates are highly sensitive to many external factors beyond our control, including growth rates in the economy, inflation, money supply, RBI’s monetary policies, deregulation of the financial sector in India, domestic and international economic and political conditions and other factors. In addition, an increase in interest expense relative to interest income may lead to a reduction in our interest income, which could materially and adversely affect our results of operations.

Changes in interest rates could affect the interest rates we charge on our interest-earning assets in a manner different from the interest rates we pay on our interest-bearing liabilities because of the different maturity periods applying to our assets and liabilities and also because of the time lag in re-pricing of our assets and liabilities. The difference could result in an increase in interest expense relative to interest income leading to a reduction in our interest income, which could materially and adversely affect our results of operations.

If the yield on our interest-earning assets does not increase at the same time or to the same extent as our cost of funds, or if our cost of funds does not decline at the same time or to the same extent as the decrease in the yield on our interest-earning assets, our net interest income and net interest margin would be adversely impacted. Any systemic decline in low-cost funding available to banks in the form of current and savings account deposits would adversely impact our net interest margin.

Any volatility or increase in interest rates or other market conditions may also adversely affect the rate of growth of certain sectors of the Indian economy and the value of our marked-to-market fixed-income securities portfolio, which may adversely impact our business and financial results. Furthermore, in the event of rising interest rates, our borrowers may not be willing to pay correspondingly higher interest rates on their borrowings and may choose to repay/pre-pay their loans with us, particularly if they are able to switch to more competitively priced loans offered by other banks. Our inability to retain customers as a result of rising interest rates may adversely impact our earnings in future periods.

5. We are regionally concentrated as majority of our branch network is located in eastern and north eastern India and therefore, dependent on the general economic conditions and activities in these region.

Our business and services are more concentrated in West Bengal, Orissa, Bihar, Jharkhand, Assam, Manipur and Tripura. As of January 31, 2017, out of our 2,021 branches, 1,175 branches are located in eastern India and 358 branches are located in north eastern India, constituting 76% of our total branch network. While our concentration in the eastern and north eastern regions facilitates our access to low cost fund, it also exposes us to any adverse economic and/or political circumstances in that region as compared to other public and private sector banks that have diversified national presence. Although our geographic concentration in eastern and north eastern India is decreasing in recent years, we remain relatively more exposed to any adverse economic, social and/or political circumstances in those regions. If there is a sustained downturn in the economies of Eastern and North Eastern India or any disruption, disturbance or breakdown in the economy of Eastern and North Eastern India, our business, financial result and operating results could be adversely affected. We may not be able to successfully manage the risks of such an expansion, which could have a material adverse effect on our business, financial condition, cash flows and results of operations.

6. Any inability to maintain the minimum capital adequacy requirements under the capital regulation framework due to change in regulations or lack of access to capital or otherwise could materially and adversely affect our reputation, results of operations and financial condition.

We are subject to regulations relating to capital adequacy of banks, which determines the minimum amount of capital we must hold as a percentage of the risk-weighted assets on our portfolio, or capital-to-risk weighted asset ratio. On July 1, 2015, the RBI issued a master circular on Basel III capital regulations, consolidating all relevant guidelines on Basel III issued up to June 30, 2015 (together, the “Basel III Guidelines”). The Basel III Guidelines came into effect on April 1, 2013, and, subject to a series of transitional arrangements to be phased in over a period of time, will be fully implemented by March 31, 2019. The Basel III Guidelines require, inter alia, improving the quantity, quality and transparency of Common Equity Tier I capital (“CET – I”), capital conservation buffers, maintenance of a minimum prescribed leverage ratio on a quarterly basis, and meeting heightened liquidity requirements. As of March 31, 2019, banks are required to maintain a common equity Tier I adequacy ratio of 5.5%, minimum Tier I capital of 7.0%, minimum total capital of 9.0% and a capital conservation buffer of 2.5%. However, the implementation of the capital conservation buffer commenced from March 31, 2016.

As of December 31, 2016, our capital adequacy ratio under the RBI Basel III Capital Regulations was 10.84% with Tier I capital adequacy ratio of 8.66% and CET I capital adequacy ratio of 8.47%. As of March 31, 2016, our capital adequacy ratio under the RBI Basel III Capital Regulations was 10.08%. In particular, our Tier I capital adequacy ratio was 7.93% and our CET I capital adequacy ratio was 7.74%.

Although we currently meet the applicable capital adequacy requirements, certain adverse developments including deterioration in our asset quality, declines in the values of our investments and changes in the minimum capital adequacy requirements could affect our ability to continue to satisfy the capital adequacy requirements,. Furthermore, our ability to support and grow our business could be limited by a declining capital adequacy ratio if we are unable to access or have difficulty accessing the capital markets or have difficulty obtaining capital in any other manner. We cannot assure you that we will be able to obtain additional capital on commercially reasonable terms in a timely manner, or at all. If we fail to meet capital adequacy requirements, the RBI may take certain actions, including restricting our lending and investment activities and the payment of dividends by us. These actions could materially and adversely affect our reputation, results of operations and financial condition.

7. Our financial performance may be materially and adversely affected by an inability to generate and sustain non-interest income.

We generated income from distribution of third party products such as insurance, mutual fund products, money transfer services, merchant acquiring services, pension and tax collection services. We earn fee-based income from corporate banking and advisory services for structured finance and loan processing fees, and are provided to large and medium-sized companies. We also earn fee-based income from our foreign exchange and treasury operations business, management of foreign currency and interest rate exposure of our corporate and business banking customers.

There can be no assurance that we will be able to sustain current levels of income from, or effectively manage the risks associated with, these businesses in the future. Further, as part of our growth strategy, we have been diversifying and expanding our product and service offerings to retail customers in order to build a more balanced portfolio. New initiatives, products and services entail a number of risks and challenges, including risks relating to execution, the failure to identify new segments, the inability to attract customers and the inability to make competitive offerings. If we are unable to successfully diversify our products and services while managing the related risks and challenges, returns on such products and services may be less than anticipated, which may materially and adversely affect our business, financial condition and results of operations.

8. The value of the collateral provided by our borrowers against advances may decrease or we may experience delays in enforcing our collateral if borrowers default on their obligations.

As on December 31, 2016, 90.63% of our advances were secured by collateral, including real estate assets, property, gold ornaments, plant, equipment, inventory, receivables, current assets and pledges or charges on fixed assets, bank deposits or financial assets such as marketable securities and guarantees provided by our borrowers based on extant rules. The value of the collateral securing our loans, including, in particular, any property and gold jewellery, may significantly fluctuate or decline due to factors beyond our control, including those affecting the Indian and global economy in general. While we ensure that there is a buffer for reduction in value, this may not be sufficient if the value of the collateral reduces dramatically. This is especially important in cases of advances that are secured by highly depreciating fixed assets such as vehicles, agricultural implements etc.

In the event our borrowers default on the repayment of loans, we may not be able to realize the full value of the collateral due to various reasons, including a possible decline in the realizable value of the collateral, defective title or pledge of spurious items as security, prolonged legal proceedings and fraudulent actions by borrowers, or we may not be able to foreclose on collateral at all. Further, certain kinds of loans that are advanced by us are not secured by any assets. In terms of the Banking Regulation Act, 1949, a banking company is not permitted to hold any immovable property (except as is required for its own use), for any period exceeding seven years, or as may be extended by RBI for a period not exceeding five years, on a case to case basis. Such restriction may force us to dispose the collateral, upon foreclosure, without realizing the full value of such collateral.

In India, foreclosure on collateral may be subject to delays and administrative requirements that may result, or be accompanied by, a decrease in the value of the collateral. Until recently, there were multiple overlapping laws and adjudicating fora dealing with financial failure and insolvency of companies and individuals in India.

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, as amended (the “SARFAESI Act”), the Recovery of Debts Due to Bank and Financial Institutions Act, 1993 and the RBI’s corporate debt restructuring (“CDR”) mechanism have strengthened the ability of lenders to resolve NPAs by granting them greater rights to enforce security and recover amounts owed from secured borrowers. In India, foreclosure on 40 collateral generally requires a written petition to an Indian court or tribunal. Although special tribunals have been set up for expeditious recovery of debts due to banks, any proceedings brought may be subject to delays and administrative requirements that may result in, or be accompanied by, a decrease in the value of the collateral. In addition, pursuant to RBI prudential guidelines on restructuring of advances by banks, we may not be allowed to initiate recovery proceedings against a corporate borrower where the borrower's aggregate total debt is ₹10 crore or more and 60.00% of the lenders by number and holding at least 75.00% or more of the borrower's debt by value decide to restructure their advances. In such a situation, we are restricted to a restructuring process only as approved by the majority lenders. If we own 25.00% or less of the debt of a borrower, we could be forced to agree to an extended restructuring of debt which may not be in our interests.

A decline in the value of the security could impair our ability to realize the secured assets upon any foreclosure, which may require us to increase our provision for loan losses. In the event of a default with respect to any of these loans, the amounts we receive upon sale of the secured assets may be insufficient to recover the outstanding principal and interest on the loan. If we are required to re-value the assets securing a loan to satisfy the debt during a period of reduced asset values or to increase our allowance for loan losses, our profitability could be adversely affected, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

9. We lend to borrowers that are engaged in varied sectors. Deterioration in the performance of any of the industry sectors where we have significant exposure may adversely impact our business.

Our credit exposure to borrowers is dispersed across various sectors including textiles (viz. cotton and jute), infrastructure, gems and jewellery, iron and steel, food and food products, chemicals and chemical products, construction and other industries. Our funded exposure in the Infrastructure sector is the largest component of our total exposure. As of December 31, 2016, this was ₹ 14,173.80 crore which constituted 20.88% of our total funded exposure. Typically, the infrastructure sector is susceptible to long gestation periods and are impacted more severely by economic downturns. Details of credit exposure to the borrowers as on December 31, 2016 are as follows:

Sr. No Sector Amount outstanding as % to total of December 31, 2016 funded exposure (₹ in Crore) 1. Infrastructure 14,173.80 20.88% 2. Basic Metal and Metal Products 4,687.20 6.91% 3. Food Processing 1,675.01 2.47% 4. All Engineering 1,284.12 1.89% 5. Textiles 1,280.86 1.89% 6. Construction 1,168.79 1.72% 7. Chemicals and Chemical Products 1,032.24 1.52% 8. Other Industries 738.70 1.09% 9. Cement and Cement Products 690.35 1.02% 10. Vehicles, Vehicle Parts and Transport 645.67 equipment 0.95% 11. Gems and Jewellery 375.71 0.55% 12. Beverage and tobacco 313.78 0.46% 13. Leather and Leather Products 200.79 0.30% 14. Rubber, Plastic & their Products 196.96 0.29% 15. Petroleum, Coal Products and Nuclear fuels 164.06 0.24% 16. Wood & Wood Products 153.28 0.23% 17. Paper & Paper Products 127.46 0.19% 18. Mining and quarrying (including Coal) 76.84 0.11% 19. Glass and Glassware 18.00 0.03% Total 29,003.62 42.74%

Any significant deterioration in the performance of a particular sector, including due to regulatory action or policy announcements by Government or State government authorities, could adversely impact the ability of borrowers in that industry to service their debt obligations owed to us.

Our Bank is also exposed to infrastructure projects which are still under development and are open to risks arising out of delay in execution, failure of borrowers to execute projects on time, delay in getting approvals from necessary authorities and breach of contractual obligations by counterparties, all of which may adversely impact the projected cash flows. There can be no assurance that these projects will perform as anticipated. Risks arising out of a recession in the economy, a delay in project implementation or commissioning could lead to rise in delinquency rates and in turn, adversely impact our Bank’s financial performance and results of operations.

10. We are involved in certain legal and other proceedings which, if determined against us, could have a material adverse impact on our financial condition.

We are currently involved in certain legal and other proceedings in India. The majority of these cases arise in the normal course of business. These legal proceedings are pending at different levels of adjudication before various courts, tribunals, statutory and regulatory authorities/ other judicial authorities. For further details of these legal proceedings, please refer to chapter titled “Legal Proceedings” beginning on page 215.

We can give no assurance that these legal proceedings will be decided in our favour and we may incur significant expenses and management time in such proceedings and may have to make provisions in our financial statements, which could increase our expenses and liabilities. If any new developments arise, for example, rulings against us by the appellate courts or tribunals, we may face losses and may have to make provisions in our financial statements, which could increase our expenses and our liabilities. If such claims are determined against us, there could be a material adverse effect on our reputation, business, financial condition and results of operations, which could adversely affect the trading price of our Equity Shares.

11. We may not be able to obtain, renew or maintain our statutory and regulatory permits and approvals required to grow or operate our business on time or at all, and may be subject to penalties pursuant to inspection and supervision by regulatory authorities including RBI and SEBI.

We have to obtain licence from the RBI and various statutory or regulatory provisions require us to comply with certain terms and conditions for us to continue our banking operations. In the event that we are unable to comply with any or all of these terms and conditions, or seek waivers or extensions of time for complying with these terms and conditions, it is possible that the RBI may revoke this license or may place stringent restrictions on our operations. This may result in the interruption of all or some of our operations and may have a material adverse effect on our business, financial condition, results and cash flow.

12. The Government will continue to hold a majority interest in our Bank following the Issue and will therefore be able to determine the outcome of shareholder voting and hence shareholders other than the Government may not be able to exercise effective control over the Bank.

Under Section 9 of the Banking Acquisition Act, the Government has the power to appoint Directors on our Board. After the completion of the Issue, the Government will continue to have a controlling interest in our Bank and will also be able to determine a majority of our Board of Directors. This requirement could result in restrictions in the equity capital raising efforts of our Bank as the Government may not be able to fund any further investments that would allow it simultaneously to maintain its stake at a minimum of 51.00% and seek funding from the capital markets. If our Bank is unable to grow its capital base in step with demand, its business, financial prospects and profitability may be materially and adversely affected

At times, the Government’s interests may conflict with our interests or those of our other shareholders. Furthermore, the Banking Acquisition Act provides that no shareholder of the corresponding new bank other than the Government shall be entitled to exercise voting rights in respect of any shares held by such person in excess of 1% of the total voting rights of all the shareholders of the corresponding new bank. Therefore, the outcome of most proposals for corporate action requiring the approval of our shareholders will be controlled by the Government unless and until such time its shareholding is diluted to below a controlling majority. For further details refer to the section titled “Regulations and Policies” at page 149.

13. Our contingent liabilities could materially and adversely affect our financial condition and results of operations.

As of March 31, 2016, we had contingent liabilities amounting to ₹ 11,583.91 crores. The table below sets forth the details of contingent liabilities: (₹ in crores) Particulars Fiscal Year 2016 Claims against our Bank not acknowledged as debts 9.02 Liability for partly paid investments 19.07 Liability on account of outstanding forward exchange contracts 5,365.95 Guarantees given on behalf of constituents (net of cash margin) : a. In India 3,157.91 b. Outside India 1,233.28 c. Bank Guarantee invoked but not paid (in India) 4.64 Acceptances, endorsements and other obligations (net of cash margin) 1,768.67 Other items for which our Bank is contingently liable 25.38 TOTAL 11,583.91

Most of the liabilities have been incurred in the normal course of business. If these contingent liabilities were to fully materialize or materialize at a level higher than we expect, it may materially and adversely impact our business, financial conditions, result of operations and prospects. If we are unable to recover payment from our customers in respect of the commitments that we are called upon to fulfill, our business, financial condition, cash flows, results of operations and prospects may be materially and adversely impacted.

14. The level of restructured/stressed advances in our portfolio may increase and the failure of such advances to perform as expected could adversely affect our financial condition and results of operations.

Our standard assets include restructured standard advances. Our standard assets of ₹ 61,941 crore as at March 31, 2016 included restructured standard loans of ₹ 6,780 crore, constituting 10.95% of our standard assets, compared to our standard assets of ₹ 62,517 crore at March 31, 2015 which included restructured standard loans of ₹ 8,476 crore, constituting 13.08% of our standard assets, at that date. However, as on December 31, 2016, our standard assets of ₹ 5,7021 crore included restructured standard loans of ₹ 5,797 crore, constituting 10.17% of our standard assets. Our borrowers’ need to restructure their loans which can be attributed to several factors, including any downturn and tightening of liquidity in the money markets, increased competition arising from economic liberalization in India, variable industrial growth, the high level of debt in the financing of projects and capital structures of companies in India and the high interest rates in the Indian economy during the period in which a large number of projects contracted their borrowings.

Resolution of large borrowal accounts which are facing severe financial difficulties may inter alia require co - ordinated deep financial restructuring under the SDR/S4A schemes of the RBI, which often involves a substantial write-down of debt and/or making of large provisions. While the ‘stand still’ clause in asset classification is permitted in both SDR/S4A process in order to provide reasonable time to lenders to review the processes involved in the resolution plan, if the account fails to get mandate and resolution within the time frame stipulated under the guidelines relating to SDR/S4A, then the asset classification will be as per the extant asset classification norms, assuming there was no such “stand still”.

The failure of these borrowers to perform as expected or a significant increase in the level of restructured loans in our portfolio could materially and adversely affect our business, results of operations and financial condition. Further, RBI has recently increased provisioning norms and any further increase may adversely affect our business, results of operations and financial condition.

15. We are exposed to fluctuation in foreign exchange rates. Volatility in foreign exchange rates could adversely affect our future financial performance and the market price of our Equity Shares.

As a financial organisation with operations in various countries, our Bank is exposed to exchange rate risk. Our Bank complies with regulatory limits upon its unhedged foreign currency exposure by making foreign currency loans on terms that are generally similar to its foreign currency borrowings and thereby transferring the foreign exchange risk

43 to the borrower or through active use of cross-currency swaps and forwards to generally match the currencies of its assets and liabilities. However, our Bank is exposed to fluctuations in foreign currency rates for its unhedged exposure.

Adverse movements in foreign exchange rates may also impact adversely the Bank’s borrowers, which may in turn impact the quality of its exposure to these borrowers. Volatility in foreign exchange rates could adversely affect our Bank’s business, future financial performance and the trading price of the Equity Shares.

16. Our risk management policies and procedures may not adequately address unanticipated risks. Inability to develop and implement effective risk management policies may adversely affect our business, financial condition and results of operations.

We have devoted significant resources to develop our risk management policies and procedures and expect to continue to do so in the future. Despite this, our policies and procedures to identify, monitor and manage risks may not be fully effective in capturing unexpected events in future. Some of our methods of managing risk are based upon the use of observed historical market behavior. As a result, these methods may not accurately predict future risk exposures which could be significantly greater than indicated by historical measures. Management of operations, legal and regulatory risk requires, among other things, policies and procedures to properly record and verify a large number of transactions and events, and these policies and procedures may not be fully effective. As we seek to expand the scope of our operations, we also face the risk that we may be unable to develop risk management policies and procedures that are properly designed for those new business areas or to manage the risks associated with the growth of our existing businesses. Implementation and monitoring may prove particularly challenging with respect to businesses that we plan on developing. Inability to develop and implement effective risk management procedures may adversely affect our business, prospects, financial condition and results of operation.

Our success will also depend, in part, on our ability to respond to new technological advances and emerging banking, capital market and other financial services industry standards and practices on a cost-effective and timely basis. The development and implementation of such technology entails significant technical and business risks. There can be no assurance that we will successfully implement new technologies or adapt our transaction processing systems to customer requirements or improving market standards.

17. Non Compliance with RBI inspection/observations may have a material adverse effect on our business, financial condition or results of operation.

We are subject to an annual financial inspection (“AFI”) by RBI under the Banking Regulation Act. In the past certain observations were made by RBI during the AFI regarding our business and operations in its AFI reports. In these reports, the RBI has identified certain deficiencies in the operations of our Bank in, inter-alia, the following areas:

 credit appraisal practices;  priority sector lending;  monitoring and detection of frauds;  KYC compliance; and  Adherence to internal policy, procedure and limits.

While we attempt to be in compliance with all regulatory provisions applicable to us, in the event we are not able to comply with the observations made by the RBI, we could be subject to penalties and restrictions which may be imposed by the RBI. Imposition of any penalty or restriction by RBI may have a material adverse effect on our reputation, financial condition and results of operations.

The RBI conducts annual on-site inspections on all matters addressing our banking operations and relating to, among other things, our Bank’s portfolio, risk management systems, credit concentration risk, counterparty credit risk, internal controls, credit allocation and regulatory compliance. During the course of finalizing this inspection, the RBI inspection team shares its findings and recommendations with us and provides us an opportunity to provide clarifications, additional information and, where necessary, justification for a different position, if any, than that observed by the RBI. The RBI incorporates such findings in its final inspection report and, upon final determination by the RBI of the inspection results, we are required to take actions specified therein by the RBI to its satisfaction,

44 including, without limitation, requiring us to make provisions, impose internal limits on lending to certain sectors and tighten controls and compliance measures and restricting our lending and investment activities.

Any significant deficiencies identified by the RBI that we are unable to rectify to the RBI’s satisfaction could lead to sanctions and penalties imposed by the RBI, as well as expose us to increased risks. Furthermore, the RBI is currently in the process of implementing risk-based supervision in a phased manner.

18. We may face labor disruptions that could interfere with our operations and we may be unable to manage our employee costs and expenses.

We are exposed to the risk of strikes and other industrial actions by our employees as well as trade unions that our employees are part of. As on January 31, 2017, out of our 16,221 employees, 8,426 workmen were members of trade unions. Majority of our employees are members of United Bank of India Employee Association, United Bank of India Employees Union, United Bank of India Sramik Karmchari Samiti, and United Bank of India Employee Congress. Our employees who are members of either of the organisations as above, participated in 3, 3 and 4 nation-wide strikes in fiscal year 2015, fiscal year 2016 and fiscal year 2017(up to February 28, 2017), respectively.

We cannot guarantee that our employees will not undertake or participate in strikes, work stoppage or other industrial action in the future. Any such employee unrest events could disrupt our operations, possibly for a significant period of time and other benefits or otherwise have a material adverse effect on our business, financial condition or results of operation.

Further, there are several cases filed against us by our former or current employees before various courts and tribunals, in relation to claims for allegedly wrongful termination of service, reinstatement along with back wages, promotions, transfers, claims pertaining to terminal benefits and disciplinary actions taken against them. If any of the cases pending are decided against us, we may be subject to payment of back-wages, compensations or may even be required to re- instate the employees, which could increase our personnel retention and administrative costs and adversely affect our financial condition and results of operation.

19. Our business is highly dependent on our information technology systems, which require significant investment for regular maintenance, upgrades and improvements. Any failure to improve or upgrade our information technology systems could materially and adversely impact our business.

Our information technology systems are a critical part of our business that help us manage, among other things, our risk management, regulatory compliance, deposit servicing and loan origination functions, as well as our increasing portfolio of products and services in all our business segments. We depend on our computer systems to process a large number of transactions on an accurate and timely basis, and to store and process substantially all of our business and operating data. We seek to protect our computer systems and network infrastructure from physical break-ins as well as security breaches and other disruptive problems. These concerns could intensify with our increased use of technology, internet based resources and advanced internet banking platform.

Computer break-ins and power disruptions could affect the security of information stored in and transmitted through these computer systems and network infrastructure. Our Bank’s computer systems and network infrastructure have achieved 100% coverage of its branches under Core Banking Solution (“CBS”) platform. Certain parts of the system may not be properly protected from security breaches and other attacks. Our Bank employs security systems including firewalls and password encryption, designed to minimise the risk of security breaches.

Although our Bank intends to continue to implement security technology and establish operational procedures to prevent break-ins, damage and failures, there can be no assurance that these security measures will be adequate or successful or be sufficient to prevent frauds, break-ins, damage and failure. A failure of security measures could have a material adverse effect on our Bank’s business, its future financial performance and the trading price of the Equity Shares. We may also be subject to disruptions of our operating systems, arising from events that are wholly or partially beyond our control (including, for example, computer viruses or electrical or telecommunication outages), which may give rise to deterioration in customer service and to loss or liability to us.

Further, we offer internet banking, mobile banking and many other technology based products and services to our customers. We are therefore directly and indirectly exposed to various cyber-threats such as phishing and data theft. 45

There is also the risk of our customers blaming us and terminating their accounts with us for a cyber-incident that might have occurred on their own system or with that of an unrelated third party. The RBI has, on June 2, 2016, issued a framework for cyber-security for banks, prescribing measures to be adopted by banks to address security risks including putting in place a cyber-security policy and requiring banks to report all unusual cyber-security incidents to the RBI. We strive to comply with the guidelines issued by RBI or any other regulatory body from time to time.

We need to regularly upgrade and improve our information technology systems, including our software, back-up systems and disaster recovery operations, at substantial cost so that we remain competitive. Our success will also depend, in part, on our ability to respond to new technological advances and emerging banking and other financial services industry standards and practices on a cost-effective and timely basis. The development and implementation of such technology entails significant technical and business risks. The high cost to upgrade and improve our information technology systems, whether to comply with changes in regulatory requirements, to remain competitive or otherwise, could be prohibitive due to the relatively small size of our Bank. There can be no assurance that we will successfully implement new technologies or adapt to our transaction processing systems to customer requirements or improving market standards. Any failure to improve or upgrade our information technology systems effectively or in a timely manner could materially and adversely affect our competitiveness, financial condition and results of operations.

20. If we do not satisfy the eligibility criteria for the opening of new branches in Tier 1 centres, the growth of our business would be adversely affected.

The opening of new branches and shifting of existing branches of banks is governed by the provisions of the Banking Regulation Act. Scheduled commercial banks are permitted to open branches in Tier 2 to Tier 6 centres without permission from the RBI, subject to reporting requirements. Further, pursuant to the RBI circulars dated September 19, 2013 and October 21, 2013, domestic scheduled commercial banks are permitted to open branches in Tier 1 centres without permission from the RBI, subject to the following conditions being satisfied:

1. At least 25.0% of the total number of branches opened during a financial year (excluding entitlement for branches in Tier 1 centres given by way of incentive), must be opened in unbanked rural (Tier 5 and Tier 6) centres (i.e. centres which do not have a brick and mortar structure of any scheduled commercial banks for customer based banking transactions); and 2. The total number of branches opened in Tier 1 centres during the financial year (excluding entitlement for branches in Tier 1 centres given by way of incentive) cannot exceed to total number of branches opened in Tier 2 to Tier 6 centres and all centres in the North Eastern States and Sikkim.

As of January 31, 2017, we had 838 branches in Tier 1 centres and 1,183 branches in Tier 2 to Tier 6 centres. If we do not satisfy the eligibility criteria for the opening of new branches in Tier 1 centres, the growth of our business would be adversely affected.

21. Our banking business entails various operational risks, including unidentified or unanticipated risks associated with the financial industry which, if materialised, may have an adverse impact on our business.

The proper functioning of our financial control, risk management, accounting or other data collection and processing systems, together with the communication networks connecting our various branches and offices is critical to our operations and ability to compete effectively. We are exposed to many types of operational risks, including:

 fraud or other misconduct by employees or outsiders;

 unauthorised transactions by employees and third parties (including violation of regulations for prevention of corrupt practices, and other regulations governing our business activities);

 misreporting or non-reporting with respect to statutory, legal or regulatory reporting and disclosure obligations; and

 operational errors, including clerical or record keeping errors or errors resulting from faulty computer or telecommunications systems.

Our growth exposes us to additional operational and control risks. The increasing size of our operations, which use automated control and recording systems as well as manual checks and recordkeeping, exposes us to the risk of errors in control and record keeping. Given our high volume of transactions, certain errors may be repeated or compounded before they are discovered and successfully rectified. In addition, our dependence upon automated systems to record and process transactions may further increase the risk that technical system flaws or employee tampering or manipulation of those systems will result in losses that are difficult to detect. As a result, we face the risk that the design of our controls and procedures prove inadequate, or are circumvented, thereby causing delays in detection or errors in information. We also outsource some functions, like collections, to other agencies. We are therefore further exposed to the risk that external vendors may be unable to fulfill their contractual obligations to us (or will be subject to the same risk of fraud or operational errors by their respective employees as we are), and to the risk that our (or our vendors’) business continuity and data security systems prove not to be sufficiently adequate.

Although we maintain a system of controls designed to keep operational risk at appropriate levels, there can be no assurance that we will not suffer losses from operational risks in the future that may be material in amount, and our reputation could be adversely affected by the occurrence of any such events involving our employees, customers or third parties.

22. Any failure or material weakness of our internal control system or any material damages caused by manifestation of any operational risks which we are subject to could adversely affect our reputation and profitability.

We are responsible for establishing and maintaining adequate internal measures commensurate with the size of our Bank and complexity of operations. Our Bank’s internal inspection/concurrent audit functions are equipped to make an independent and objective evaluation of the adequacy and effectiveness of internal controls on an ongoing basis to ensure that business units adhere to compliance requirements and internal circular guidelines.

While we continue to periodically test and update, as necessary, our internal control systems, we are exposed to operational risks arising from inadequacy or failure of internal processes or systems, and our actions may not be sufficient to result in an effective internal control environment. Given our high volume of transactions, errors may be repeated or compounded before they are discovered and rectified. Our management information systems and internal control procedures that are designed to monitor our operations and overall compliance may not be able to identify non-compliance and/or suspicious transactions in a timely manner or at all. Where internal control weaknesses are identified, our actions may not be sufficient to fully correct such internal control weakness. In addition, certain banking processes are carried out manually, which may increase the risk that human error, tampering or manipulation will result in losses that may be difficult to detect. As a result, we may suffer monetary losses.

In the ordinary course of our banking business as well, we experience numerous frauds which are committed against our Bank, by either the employees of our Bank, our customers or third parties. While our Bank is required to report to the RBI each instance of frauds committed equal to or above ₹ 0.01 Crore, in the prescribed format (Form FMR-1), we also undertake internal investigations and departmental inquiries, as well as initiate legal action against the responsible parties in certain cases. Despite such actions and insurance coverage, such frauds may not be adequately covered by our insurance and the costs incurred to deal with such frauds and legal proceedings initiated may be significant, thereby adversely affecting our profitability and results of operations. Such instances may also adversely affect our reputation. For the nine months ended December 31, 2016, we had total identified fraud cases amounting to ₹ 1,256.40 crores.

23. We may be subject to volatility in income from our treasury operations that could materially and adversely impact our financial results.

We derived ₹ 3,280 crores, ₹ 4,314 crores, ₹ 3,999 crores and ₹ 3,805 crores in the fiscal years ended March 31, 2014, March 31, 2015, March 31, 2016 and nine months period ended December 31, 2016, respectively, from interest income on investments, profit on sale of investments (net) and profit on exchange transactions (net) amounted to 27.78%, 36.17%, 35.07% and 43.24% of our total income in the fiscal years ended March 31, 2014, March 31, 2015, March 31, 2016 and nine months period ended December 31, 2016, respectively. Our income from treasury operations is sensitive to changes in government policies, interest rates, exchange rates, equity prices and other factors. Though our income from trading activities of our treasury operations has been growing over the last three years, there is no guarantee that, in the future, our Bank will not experience volatility in our income from treasury operations. Our 47 treasury operations are vulnerable to changes in interest rates and exchange rates as well as other factors, all of which are trading risks that are faced by us. Any decrease in income from our treasury operations could adversely affect our business if we are unable to offset the same by increasing returns on our loan assets. Further, any significant or sustained decline in income generated from treasury operations resulting from market volatility may adversely impact our Bank’s financial performance and the market price of the Equity Shares.

24. In the past, penalties have been imposed against us by certain regulatory authorities in relation to certain non- compliances.

Penalties have been levied against us in the past for non-compliance with the regulations applicable to us. SEBI vide its order dated September 10, 2015, imposed a penalty of ₹ 0.02 Crore on our Bank stating that our Bank has violated ILDS Regulations and did not disseminate all information and reports on debt securities including compliance reports filed by the issuers and the Debenture Trustees regarding the debt securities to the investors and the general public by placing them on their websites. Further our Bank did not comply with certain provisions of the SEBI (Debenture Trustee) Regulations, 1993.

Pursuant to the press release dated July 15, 2013, we, along with 21 other commercial banks, were subjected to a penalty by RBI for violation its instruction inter alia on KYC norms and anti-money laundering guidelines. Further, Financial Intelligence Unit – India, Ministry of Finance (“FIU”), vide its order dated April 29, 2014 imposed a penalty of ₹ 2.50 crores for non – maintenance and non – reporting of records of certain reportable transactions to the Director, FIU relating to specific cash transactions, suspicious transactions, counterfeit currency transactions and non-profit organization transaction reports thereby not complying with the provisions of PMLA and the rules made thereunder. Further, RBI also levied penalty of ₹ 0.01 Crore on our Bank for default in maintaining required percentage of CRR on daily basis on one day on February 28, 2014 during the fortnight ended on March 7, 2014. Any additional failure to meet other RBI or SEBI requirements could materially and adversely affect our reputation, business, financial condition, results of operations, pending applications or requests with RBI and our ability to obtain the regulatory permits and approvals required to expand our business. If similar penalties are levied against us in the future, it could have an adverse effect on our business and results of operations.

25. We depend on the accuracy and completeness of information provided to us about our customers and counterparties which if inaccurate and incomplete may have a negative impact on our financial condition.

In deciding whether to extend credit or enter into other transactions with customers and counterparties, we base our decisions on information furnished to us by or on behalf of customers and counterparties, including financial statements and other financial information. We may also rely on certain representations as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors. For example, in deciding whether to extend credit, we may assume that a customer’s audited financial statements conform with generally accepted accounting principles and present fairly, in all material respects, the financial condition, results of operations and cash flows of the customer. For example, in deciding whether to extend credit, our Bank may assume that a customer’s audited financial statements conform to generally accepted accounting principles and present fairly, in all material respects, the financial condition, results of operations and cash flows of the customer.

Our financial condition and results of operations could be negatively affected by relying on financial statements that do not comply with generally accepted accounting principles or other information that is materially misleading. In addition, unlike several developed economies, a nationwide credit bureau has also become operational in India. This may affect the quality of information available to us about the credit history of our borrowers, especially individuals and small businesses. As a result, our ability to effectively manage our credit risk may be adversely affected.

26. Majority of our branches are located on premises taken by us on lease or on leave and license basis. We may not be able to renew these agreements for our branches upon acceptable terms or at all which could have an adverse effect on our business and results of operations.

Majority of our branches are located on premises taken by us on lease or leave and licence basis. As of January 31, 2017, 69 of our branches/offices are situated on properties owned by our Bank and 1,992 branches/offices are under lease. In case of non-renewal of our leases for our existing branches, we will be forced to procure alternative space for our existing branches. Although we procure space that satisfies the safety, operational and financial criteria for our branches, we cannot assure you that we will be able to identify such space at commercially reasonable terms or at all. 48

Failure to identify such space can adversely affect our financial condition and results of operation. Additionally, we cannot assure you that all the lease agreements for our branches are adequately stamped as per the requirements of applicable laws. Any such irregularity may result in our inability to enforce our rights under such lease agreements, which may disrupt our operations and adversely affect our business, financial condition and result of operations.

Further, our ATMs are primarily located on leased premises. Any failure to renew lease agreements for these premises on terms and conditions favourable to our Bank may require it to shift the concerned ATMs to new premises. This might affect our business operations.

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

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

The lending norms of the RBI require every scheduled commercial bank to extend 40.0% of its net bank credit to certain eligible sectors, such as agriculture, small-scale industries and individual housing finance up to ₹ 25 lacs (which are categorised as “priority sectors”). Economic difficulties are likely to affect those borrowers in priority sectors more severely. As of December 31, 2016 and March 31, 2016, our Bank’s lending to priority sectors accounted for 38.42% and 41.16%, respectively, of adjusted net bank credit, with 15.25 % and 17.40%, respectively, of net credit going to the agricultural sector.

Our business could be directly affected by any changes in laws, regulations and policies for banks. For example, in November, 2016, in terms of Gazette Notification No 2652 dated November 8, 2016 issued by Government of India, ₹ 500 and ₹ 1,000 denominations of old bank notes of the then existing series issued by RBI ceased to be legal tender to the extent specified in the notification. Bank branches were designated to be the primary agencies through which the members of public and other entities were to exchange the Specified Bank Notes (SBN) or depositing the same for crediting to their accounts, up to and including the December 30, 2016. Any change in the laws and regulations governing the banking sector in India may materially and adversely affect our business, financial condition and results of operations.

28. We may be unable to detect money laundering and other illegal activities which may adversely affect our business, financial condition and results of operations and expose us to additional liability and harm our business and reputation.

We are required to comply with applicable AML and anti-terrorism laws, including Know Your Customer (“KYC”) policies and procedures and to report suspicious and large transactions to the applicable regulatory authorities in different jurisdictions. While we believe that we have adopted policies and procedures aimed at detecting and preventing the use of our banking networks for money laundering activities and by terrorists and terrorist related organizations and individuals generally, such policies and procedures may not completely eliminate instances where our products or services may be used by other parties to engage in money-laundering and other illegal or improper activities due to, in part, the short history of these policies and procedures. The adoption of anti-money laundering and compliance procedures in all our branches, may not be effective.

Further, there can be no assurance that attempts to launder money using us as a vehicle will not be made and that such measures will be fully successful in preventing the violation of AML and KYC procedures and consequently the adverse effects such violations would have to our business, results of operations and financial condition.

29. Any downgrade in our credit rating could materially and adversely affect our business, financial condition and results of operations.

Our debt is rated by various agencies. We obtain funds from the issuance of non-convertible subordinated debt securities, which qualify as capital under RBI guidelines for assessing capital adequacy. Details of Tier II Bond are as follows:

Sr. No. Nomenclature of the Bond Credit Rating 1. Lower Tier-II (Series-V) A+ by CARE and A+ by ICRA 2. Upper Tier-II (Series-I) Basel I A- by CARE and A- by ICRA 3. Lower Tier-II (Series-VI) Basel I A+ by CARE and A+ by ICRA 4. Lower Tier –II (Series–VII) Basel II A+ by CARE and AA- by CRISIL 5. IPDI-Tier I (Series I) Basel II A- by CARE and A by CRISIL Ltd. 6. Lower Tier-II (Series-VIII) Basel III Compliant AA- by Brickwork and AA- by CRISIL 7. AT-1 Basel III Compliant BBB by India Rating

Any downgrade in our credit ratings may negatively affect our ability to obtain funds and increase our financing costs by increasing the interest rates of our outstanding debt or the interest rates at which we are able to refinance existing debt or incur new debt, which may materially and adversely affect our business, financial condition and results of operations.

30. New product/services offered by us may not be successful which may stagnate our growth and have a material adverse effect on our business, financial condition or results of operations.

As part of our growth strategy, we have been diversifying and expanding by introducing our new products and services to explore new business opportunities on a regular basis. If we are unable to successfully diversify our products and services while managing the associated risks and challenges, our returns on such products and services may be less than anticipated, which may materially and adversely affect our liquidity, business, prospects, financial condition, and results of operations. We cannot assure you that all our new products/services will gain customer acceptance and this may result in our incurring pre-operative expenses and launch costs. For further details, see “Business” beginning on page 122.

31. Our success depends on our management team and skilled personnel and our inability to attract and retain such professionals may materially and adversely impact our business.

Our business is growing more complex as we expand our operations and our product lines. Our growth and continued success depends in part on the continued service of key members of our management team and our ability to continue to attract, train, motivate and retain professionals is a key element of our strategy and we believe it to be a significant source of competitive advantage.

The successful implementation of our strategy depends on the availability of skilled manpower, both at our head office and at each of our other offices and international locations and on our ability to attract, train and retain young professionals. As we generally pay remuneration that is lower than those paid by private sector banks, it could adversely affect our ability to hire and retain qualified employees. If we or one of our business units or other functions fail to staff their operations appropriately, or lose one or more of our key senior executives or qualified young professionals and fail to replace them in a satisfactory and timely manner, our business, future financial performance and operations, including our control and operational risks, may be adversely affected.

32. A portion of our advances are unsecured. If we are unable to recover such advances in a timely manner or at all, our financial condition and results of operations may be adversely affected.

As of March 31, 2016 and December 31, 2016, 8.79% (i.e. ₹ 6,280.88 crore) and 8.43% (i.e. ₹ 5,721.82 crore), respectively, of our net advances were unsecured.

While we have been selective in our lending policies and strive to satisfy ourselves with the credit worthiness and repayment capacities of our customers, there can be no assurance that we will be able to recover the interest and 50 principal advanced by us in a timely manner. Any failure to recover the unsecured advances given to our customers would expose us to a potential loss, which could adversely affect our financial condition and results of operations.

33. If we fail to effectively manage our growth, it may adversely impact our business.

As of March 31, 2014, March 31, 2015 and March 31, 2016, the total number of branches of our Bank were 2,001, 2,004 and 2,011, respectively and it was further increased to 2,021 as of January 31, 2017. Our total number of ATMs has also increased from 1,602 as of March 31, 2014, to 1,912 as of March 31, 2015, to 2,044 as of March 31, 2016, and further was increased to 2,200 as of January 31, 2017. Our total assets have grown from ₹ 123,027.57 crore as of March 31, 2015 to ₹ 1,29,431.75 as of March 31, 2016 and further increase to ₹ 1,41,026.21 Crore as of December 31, 2016.

In line with our business strategy, we intend to deepen our presence in pan India. Working toward this goal, we plan to, and have received approval from our Board to open 276 new branches during the fiscal year 2018 - 2019, which will further increase our branch network. We are in the process to file an application with RBI for obtaining its approval licence for opening of 276 new branches.

Our ability to effectively manage our growth depends primarily upon our ability to manage key issues, such as selecting and retaining skilled manpower, establishing additional branches, achieving cost efficiencies, maintaining an effective technology platform that can be continually upgraded, developing profitable products and services to cater to the needs of our existing and potential customers, improving our risk management systems, developing a knowledge base to face emerging challenges. Failure to effectively manage our expansion may lead to increased costs and reduced profitability and may adversely affect our growth prospects. There can be no assurance that we will be able to achieve our business strategy of expanding into existing or new territories and expanding our services.

34. We are subject to restrictions on payments of dividends under Indian law and may not be able to pay dividends without writing off capitalized expenses.

We have not paid dividend in last three preceding years and there can be no assurance that we will pay dividends in the future and, if we do, as to the level of such future dividends. If we were to raise capital in the future, the payment of any dividends would be after payment of interest on such capital. The payment of dividend is governed by Government of India and RBI guidelines and in accordance with dividend policy framed by the Board. We have dividend policy named as the United Bank of India Dividend Distribution Policy being framed per Securities and Exchange Board of India’s Notification No. SEBI/LAD-NRO/GN/2016-17/008 dated July 8, 2016. The declaration, payment and amount of any future dividends will depend upon, among other factors, our earnings, financial position, cash requirements, terms and conditions of our indebtedness, capital expenditures and availability of profits, as well as the provisions of relevant laws and regulations in India from time to time. RBI prescribed maximum permissible range of dividend payout ratio based on the level of capital adequacy ratio and net NPA ratio. Furthermore, taxes applicable to dividend payments may be subject to change from time to time and are beyond our Bank’s control.

35. The regional rural banks sponsored by us may have operations in a few locations which may be common to those branches where we have our branches resulting in conflict of interest which may adversely affect our revenues and results of operations in those places.

We have sponsored four regional rural banks in the state of West Bengal, Assam, Tripura and Manipur. The Regional Rural Banks are as follows: (i) Bangiya Gramin Vikash Bank; (ii) Assam Gramin Vikash Bank; (iii) Tripura Gramin Bank; and (iv) Manipur Rural Bank. The regional rural banks may compete with us at a few locations where we also have our branches; this may result in conflict of interest and may adversely affect our revenues and results of operations.

36. Any further issuance of Equity Shares to satisfy our capital needs may dilute your shareholding and adversely affect the trading price of the Equity Shares.

We may need to raise additional capital from time to time, depending on our business requirements. We may not be able to raise such additional capital at the time it is needed or on terms and conditions favorable to us or to the existing shareholders. Further, any issuance of Equity Shares by us may lead to dilution of the shareholding in our Bank thereby adversely affecting the trading price of our Equity Shares and our ability to raise capital through an issue of our 51 securities. In addition, any perception by investors that such issuances or sales might occur could also affect the trading price of our Equity Shares. Additionally the disposal, pledge or encumbrance of Equity Shares by any of our major shareholders, or the perception that such transactions may occur may affect the trading price of the Equity Shares. We are unable to assure you that we will not issue Equity Shares or that such shareholders will not dispose of, pledge or encumber their Equity Shares in the future.

37. Our insurance coverage may not adequately protect us against all losses. To the extent that we suffer loss or damage which is not covered by insurance or exceeds our insurance coverage our financial condition and result of operations could be adversely affected.

Our Bank has obtained insurance coverage in respect of certain risks. We maintain various insurance policies to insure our assets including buildings, furniture, office machinery, electrical fittings, ATMs, etc. In addition, we maintain Group Accident Policy to insure our permanent employees, Third Party Insurance to insure persons other than our staff and Bankers’ Indemnity Policy to insure cash holding, cash in transit and cash at ATM. While we believe that the insurance coverage we maintain would reasonably be adequate to cover all normal risks associated with the operation of our business, there can be no assurance that any claim under the insurance policies maintained by us will be honoured fully, in part or on time, nor have we taken out sufficient insurance to cover all material losses. In addition, there can be no assurance that the coverage will be available in sufficient amounts to cover one or more large claims. To the extent that we suffer loss or damage for which we do not obtain or maintain insurance or exceeds our insurance coverage, the loss would have to be borne by us and our results of operations and financial performance could be adversely affected.

38. If our existing customers and targeted customers are not receptive to any changes to our brand identity or promotional activities, our business and results of operations could be adversely affected.

To increase our business we intend to further strengthen our brand which may include changes to our brand identity. Promoting and positioning our brand will depend largely on the success of our marketing efforts and our ability to provide high quality services. Brand promotion activities may not yield increased revenues, and even if they do, any increased revenues may not offset the expenses we incur in building our brand. Further, our existing customers and targeted customers may not be receptive of our new brand. If we fail to promote and maintain our brand, our business, financial condition and results of operations could be adversely affected.

39. Any future issuance of Equity Shares may dilute your shareholding, and sales of the Equity Shares by our major shareholders may adversely affect the trading price of our Equity Shares.

Any future equity issuances by our Bank, post this Issue may lead to the dilution of your shareholding in our Bank. In addition, any sales of substantial amounts of the Equity Shares in the public market after the completion of this Issue, including by our major shareholders, or the perception that such issuance or sales may occur could adversely affect the trading price of the Equity Shares and could significantly impair our future ability to raise capital through offerings of the Equity Shares. We cannot predict the effect, if any, market sales of the Equity Shares held by the major shareholders of our Bank or the availability of these Equity Shares for future sale will have on the market price of our Equity Shares.

External Risk Factors

40. All of our revenue is derived from business in India, and a decline in economic growth in India could adversely affect our business.

We derive all of our revenue from our operations in India and so the performance and the growth of our business is dependent on the performance of the Indian economy. In the past, Indian economy has been affected by global economic uncertainties and liquidity crisis, domestic policy and political environment, volatility in interest rates, currency exchange rates, commodity and electricity prices, adverse conditions affecting agriculture, rising inflation rates and various other factors. GDP growth in the fiscal year 2016 increased to 7.6% from 7.2% in the fiscal year 2015. The World Bank has estimated the growth rate for the fiscal year 2017 will be in the region of 7.8%.

Risk management initiatives by banks in challenging economic circumstances could affect the availability of funds in the future or the withdrawal of our existing credit facilities. The Indian economy is undergoing many changes and it 52 is difficult to predict the impact of certain fundamental economic changes on our business. Conditions outside India, such as a slowdown or recession in the economic growth of other major countries, especially the United States, have an impact on the growth of the Indian economy. Additionally, an increase in trade deficit, a downgrading in India’s sovereign debt rating or a decline in India’s foreign exchange reserves could negatively affect interest rates and liquidity, which could adversely affect the Indian economy and our business.

41. We face intense competition from banks and financial institutions that are much larger than we are and have an established presence all over India. If we are unable to effectively respond to competitive pressures it may adversely affect our business and growth.

We compete with public and private sector Indian commercial banks as well as foreign commercial banks. Some of our competitors are large institutions, and may have much larger customer and deposit bases, larger branch networks and more capital than us. Some of our competitors may be better positioned to take advantage of market opportunities than us. We face competition in some or all of our products and services from Indian and foreign commercial banks, NBFCs, mutual funds and other entities operating in the Indian financial sector. In particular, private banks in India may have operational advantages in implementing new technologies, rationalising branches and recruiting employees through incentive-based compensation.

Liberalisation of the Indian financial sector could also lead to a greater presence or new entries of Indian and foreign banks offering a wider range of products and services, which could adversely affect our competitive environment. In this respect, the RBI has liberalized its licensing regulations and intends to issue licenses on an on-going basis, subject to the RBI’s qualification criteria. In 2014, the RBI has granted licenses to two applicants to set up new full scale universal banks. On February 22, 2013, the RBI issued Guidelines for Licencing New Banks in the Private Sector, which spells out a comprehensive framework for granting licences to increase the number of banks. RBI has also issued final guidelines for newer category of banks: small finance banks and payments banks. In 2015, the RBI granted “in-principle” approval to 10 applicants for a small finance bank licence and 11 applicants for a payment bank licence. The RBI has also released guidelines with respect to a continuous licensing policy for universal banks in August, 2016.

We also compete with foreign banks with operations in India. These competitors include a number of large multinational banks and financial institutions. In November 2013, the RBI released a framework for the setting up of wholly owned subsidiaries in India by foreign banks. The framework encourages foreign banks to establish a presence in India by granting rights similar to those received by Indian banks, subject to certain restrictions and safeguards. Under the current framework, wholly-owned subsidiaries of foreign banks are allowed to raise Rupee resources through issue of non-equity capital instruments. Further, wholly-owned subsidiaries of foreign banks may be allowed to open branches in Tier 1 to Tier 6 centres (except at a few locations considered sensitive on security considerations) without having the need for prior permission from RBI in each case, subject to certain reporting requirements. The guidelines may result in increased competition from foreign banks.

Increased competitive pressure may have an adverse impact on our earnings, our future financial performance and the market price of the Equity Shares. We may face attrition and difficulties in hiring at senior management and other levels due to competition from existing Indian and foreign banks, as well as new banks entering the market. Our future success will depend in large part on our ability to respond in an effective and timely manner and our ability to compete effectively.

42. The proposed new taxation system could adversely affect our business and the price of the shares.

The Government has proposed two major reforms in Indian tax laws, namely the goods and services tax (“GST”) and provisions relating to GAAR. The Government of India has proposed a comprehensive GST regime that will combine taxes and levies by the Central and State Governments into a unified rate structure. In this regard, the Constitution (101 Amendment) Act 2016, which received Presidential assent on September 8, 2016, enables the Government of India and state governments to introduce GST. While the Government of India and certain state governments have announced that all committed incentives will be protected following the implementation of the GST, given the limited availability of information in the public domain concerning the GST, we cannot provide you with any assurance as to this or any other aspect of the tax regime following implementation of the GST. The implementation of this rationalized tax structure may be affected by any disagreement between certain state governments, which may create

53 uncertainty. Any future increases or amendments may affect the overall tax efficiency of companies operating in India and may result in significant additional taxes becoming payable.

With regard to GAAR, the provisions have been introduced in the Finance Act, 2012 to come into effect from April 1, 2017. If GAAR provisions are invoked, then the tax authorities have wide powers, including denial of tax benefit. As the taxation system is intended to undergo the said overhaul, its consequent effects on our Bank cannot be determined at present and there can be no assurance that such effects would not adversely affect our business, future financial performance and the trading price of the Equity Shares.

We may incur increased costs relating to compliance with such new requirements, which may also require significant management time and other resources, and any failure to comply may adversely affect our business, results of operations and prospects. Uncertainty in the interpretation or implementation of any amendment to, or change in, governing law, regulation or policy, including by reason of an absence, or a limited body, of administrative or judicial precedent may be time consuming as well as costly for us to resolve and may impact the viability of our current business or restrict our ability to grow our business in the future.

43. Political instability or a change in economic liberalization and deregulation policies could adversely affect our business and economic conditions in India generally and our business in particular.

Our business and customers are predominantly located in India or are related to and influenced by the Indian economy. The Indian government has traditionally exercised, and continues to exercise, a dominant influence over many aspects of the economy. Government policies could adversely affect business and economic conditions in India, our ability to implement our strategy and our future financial performance. Since 1991, successive Indian governments have pursued policies of economic liberalization, including significantly relaxing restrictions on the private sector and encouraging the development of the Indian financial sector. For the past several years, coalition governments have governed India. The leadership of India and the composition of the coalition in power are subject to change and election results are sometimes not along expected lines. It is difficult to predict the economic policies that will be pursued by the Government. The rate of economic liberalization could change and specific laws and policies affecting banking and finance companies, foreign investment, currency exchange and other matters affecting investment in our securities could change as well. Any significant change in India’s economic liberalization and deregulation policies could adversely affect business and economic conditions in India generally and our business in particular.

44. We will be required to prepare financial statements under IND-AS from April 1, 2018 onwards.

The Ministry of Corporate Affairs notified the Companies (Indian Accounting Standards) Rules, 2015 on February 16, 2015 (the “IND-AS”). The Ministry of Corporate Affairs, in its press release dated January 18, 2016, issued a roadmap for implementation of IND-AS converged with IFRS for scheduled commercial banks, insurers, insurance companies and non-banking financial companies. For banking companies, non-banking finance companies and insurance companies, preparation of IND-AS based financial statements are required for the accounting periods beginning from April 1, 2018 onwards with comparatives for the periods ending March 31, 2018. The RBI, by its circular dated February 11, 2016, requires all scheduled commercial banks to comply with IND-AS for financial statements for the periods stated above. The RBI does not permit banks to adopt IND-AS earlier than the above timeline and the guidelines also state that the RBI shall issue necessary instruction, guidance, and clarification on the relevant aspects for implementation of the IND-AS as and when required. Accordingly, we will be required to report our financials as per IND-AS from April 1, 2018 onwards.

Further, the new accounting standards may change, among other things, our Bank’s methodology for estimating allowances for probable loan losses and for classifying and valuing our investment portfolio and revenue recognition policy. There can be no assurance that our Bank’s financial condition, results of operations, cash flows or changes in shareholders’ equity will not appear materially worse under IND-AS than under Indian GAAP. In our Bank’s transition to IND-AS reporting, our Bank may encounter difficulties in the ongoing process of implementing and enhancing its management information systems. Moreover, there is increasing competition for the small number of IFRS- experienced accounting personnel available as more Indian companies begin to prepare IND-AS financial statements. Further, there is no significant body of established practice on which to draw in forming judgments regarding the new system’s implementation and application. There can be no assurance that our Bank’s adoption of IND-AS will not adversely affect our reported results of operations, cash flows or financial condition and any failure to successfully adopt IND-AS could adversely affect our Bank’s business, financial condition, cash flows and results of operations. 54

45. Significant differences exist between Indian GAAP and other accounting principles with which investors may be more familiar.

Our financial statements are prepared in conformity with Indian GAAP as applicable to banks. GAAP as applied in India differs in certain significant respects from IFRS, U.S. GAAP and other accounting principles and accounting standards with which prospective investors may be familiar with in other countries. We do not provide a reconciliation of our financial statements to IFRS or U.S. GAAP or a summary of principal differences between Indian GAAP, IFRS and U.S. GAAP relevant to our business. Furthermore, we have not quantified or identified the impact of the differences between Indian GAAP and IFRS or between Indian GAAP and U.S. GAAP as applied to our financial statements. As there are significant differences between GAAP as applied in India and IFRS and between GAAP as applied in India and U.S. GAAP, there may be substantial differences in our results of operations, cash flows and financial position if we were to prepare our financial statements in accordance with IFRS or U.S. GAAP instead of Indian GAAP. Prospective investors should review the accounting policies applied in the preparation of our financial statements, and consult their own professional advisors for an understanding of the differences between Indian GAAP and IFRS.

46. Civil unrest, acts of violence including terrorism or war involving India and other countries could materially and adversely affect the financial markets and our business.

Civil unrest, acts of violence including terrorism or war, may negatively affect the Indian markets where our Equity Shares will be traded and also materially and adversely affect the worldwide financial markets. These acts may also result in a loss of business confidence, make travel and other services more difficult and ultimately materially and adversely affect our business. While the GoI has been trying to engage in conciliatory efforts any further tension or deterioration of relations might result in investor concern about stability in the region, which could materially and adversely affect the price of the Equity Shares.

India has also witnessed civil disturbances in recent years and it is possible that future civil unrest as well as other adverse social, economic and political events in India could have an adverse impact on us. Such incidents could also create a greater perception that investment in Indian companies involves a higher degree of risk and could have an adverse impact on our business, financial condition, results of operations and the price of the Equity Shares.

47. Trade deficits could materially and adversely affect our Bank’s business and the price of our Bank’s Equity Shares

India’s trade relationships with other countries and its trade deficit, driven to a major extent by global crude oil prices, may adversely affect Indian economic conditions. If trade deficits increase or are no longer manageable because of the rise in global crude oil prices or otherwise, the Indian economy, and therefore our Bank’s business, its financial performance, shareholders’ funds and the price of its Equity Shares could be materially and adversely affected.

48. Financial difficulty and other problems in certain financial institutions in India could adversely affect our business and the price of our Equity Shares.

As an Indian bank, we are exposed to the risks of the Indian financial system which may be affected by the financial difficulties faced by certain Indian financial institutions because the commercial soundness of many financial institutions may be closely related as a result of credit, trading, clearing or other relationships. This risk, which is sometimes referred to as “systemic risk”, may adversely affect financial intermediaries, such as clearing agencies, banks, securities firms and exchanges with whom we interact on a daily basis and who may default on their obligations due to bankruptcy, lack of liquidity, operational failure or other reasons. Any such difficulties or instability of the Indian financial system in general could create an adverse market perception about Indian financial institutions and banks and hence adversely affect our business. As the Indian financial system operates within an emerging market, it faces risks of a nature and extent not typically faced in more developed economies, including the risk of deposit runs notwithstanding the existence of a national deposit insurance scheme.

49. Any downgrading of India’s debt rating by an international rating agency could adversely affect our business and the price of our Equity Shares.

India's sovereign debt rating could be downgraded due to various factors, including changes in tax or financial policy or a decrease in India's foreign exchange reserves, improvement in the political climate in India. Any decline in foreign exchange reserves, changes in tax and financial policy could result in reduced liquidity that could adversely affect our future financial performance and the market price of the Equity Shares and could result in a downgrade of India's debt ratings. There is no assurance that India’s credit ratings will not be downgraded in the future. Any adverse revisions to India's credit ratings for domestic and international debt by international rating agencies may adversely impact our business and limit our access to capital markets, increase the cost of funds, adversely impact our liquidity position, our shareholders’ funds and the price of our Equity Shares.

50. Investors may not be able to enforce a judgment of a foreign court against us.

The enforcement by investors in our Equity Shares of civil liabilities, including the ability to affect service of process and to enforce judgments obtained in courts outside of India may be affected adversely by the fact that we are incorporated under the laws of the Republic of India and almost all of our executive officers and directors reside in India. Nearly all of our assets and the assets of our executive officers and directors are also located in India. As a result, it may be difficult to enforce the service of process upon us and any of these persons outside of India or to enforce outside of India, judgments obtained against us and these persons in courts outside of India.

India is not a party to any international treaty in relation to the recognition or enforcement of foreign judgments. Recognition and enforcement of foreign judgments are provided for under Section 13 and Section 44A of the Civil Procedure Code respectively. The Government of India has under Section 44A of the Civil Procedure Code notified certain countries as reciprocating countries, as discussed below. Section 13 of the Civil Procedure Code provides that a foreign judgment shall be conclusive regarding any matter directly adjudicated upon except: (i) where the judgment has not been pronounced by a court of competent jurisdiction, (ii) where the judgment has not been given on the merits of the case, (iii) where it appears on the face of the proceedings that the judgment is founded on an incorrect view of international law or a refusal to recognize the law of India in cases in which such law is applicable, (iv) where the proceedings in which the judgment was obtained were opposed to natural justice, (v) where the judgment has been obtained by fraud, or (vi) where the judgment sustains a claim founded on a breach of any law in force in India.

Section 44A of the Civil Procedure Code provides that where a foreign judgment has been rendered by a court in any country or territory outside India, which the Government has by notification declared to be a reciprocating territory, it may be enforced in India by proceedings in execution as if the judgment had been rendered by the relevant court in India. However, Section 44A of the Civil Procedure Code is applicable only to monetary decrees not being in the nature of any amounts payable in respect of taxes or other charges of a similar nature or in respect of a fine or other penalties and does not include arbitration awards. The United Kingdom and some other countries have been declared by the Government to be a reciprocating territory for the purposes of Section 44A. However, the United States has not been declared by the Government to be a reciprocating territory for the purposes of Section 44A. A judgment of a court in the United States may be enforced in India only by a suit upon the judgment, subject to Section 13 of the Civil Procedure Code and not by proceedings in execution.

The suit must be brought in India within three years from the date of the judgment in the same manner as any other suit filed to enforce a civil liability in India. Generally, there are considerable delays in the disposal of suits by Indian courts. It is unlikely that a court in India would award damages on the same basis as a foreign court if an action is brought in India. Furthermore, it is unlikely that an Indian court would enforce foreign judgments if it viewed the amount of damages awarded as excessive or inconsistent with public policy in India. A party seeking to enforce a foreign judgment in India is required to obtain prior approval from the RBI under FEMA to repatriate any amount recovered pursuant to execution and any such amount may be subject to income tax in accordance with applicable laws. Any judgment or award in a foreign currency would be converted into Indian Rupees on the date of the judgment or award and not on the date of the payment. Generally, there are considerable delays in the processing of legal actions to enforce a civil liability in India, and therefore it is uncertain whether a suit brought in an Indian court will be disposed off in a timely manner or be subject to considerable delays.

51. Applicants to the Issue are not allowed to withdraw their Bids after the Bid/Issue Closing Date.

In terms of the Regulations 86 of the ICDR Regulations, applicants in the Issue are not allowed to withdraw their Bids after the Bid/Issue Closing Date. The Allotment of the Equity Shares in this Issue and the credit of such Equity Shares to the applicant’s demat account with its depository participant could take approximately seven days and up to ten days from the Bid/Issue Closing Date. There is no assurance, however, that material adverse changes in the national and international monetary, financial, political or economic conditions or other events in the nature of force majeure, material adverse changes in our business, results of operation or financial condition, or other events affecting the applicant’s decision to invest in the Equity Shares, would not arise between the Bid/Issue Closing Date and the date of Allotment of Equity Shares in the Issue. Occurrence of any such events after the Bid/Issue Closing Date could also impact the market price of the Equity Shares. The applicants shall not have the right to withdraw their Bids in the event of any such occurrence.

52. There are restrictions on daily movements in the price of the Equity Shares, which may adversely affect a shareholder’s ability to sell, or the price at which it can sell, Equity Shares at a particular point in time.

We are subject to a daily circuit breaker imposed by all stock exchanges in India which does not allow transactions beyond a certain level of volatility in the price of the Equity Shares. This circuit breaker operates independently of the index-based market-wide circuit breakers generally imposed by SEBI on Indian stock exchanges. The percentage limit on our circuit breaker is set by the stock exchanges based on the historical volatility in the price and trading volume of the Equity Shares. The stock exchanges do not inform us of the percentage limit of the circuit breaker from time to time, and may change it without our knowledge. This circuit breaker effectively limits upward and downward movements in the price of the Equity Shares. As a result of this circuit breaker, we cannot give any assurance regarding the ability of shareholders to sell the Equity Shares or the price at which shareholders may be able to sell their Equity Shares at a particular point in time.

53. We cannot guarantee that the Equity Shares will be listed on the Stock Exchanges in a timely manner, if at all.

In accordance with Indian law and practice, after our Board or committee passes the resolution to allot the Equity Shares but prior to crediting such Equity Shares into the Depository Participant accounts of the QIBs, we are required to apply to the Stock Exchanges for listing and trading approvals. After receiving the listing and trading approvals from the Stock Exchanges, we will credit the Equity Shares into the Depository Participant accounts of the respective QIBs and apply for the final listing and trading approvals from the Stock Exchanges. There could be a delay in obtaining these approvals from the Stock Exchanges, which in turn could delay the listing of the Equity Shares on the Stock Exchanges. Any delay in obtaining these approvals would restrict your ability to dispose of your Equity Shares.

54. An investor will not be able to sell any of the Equity Shares other than on a recognized Indian stock exchange for a period of 12 months from the date of this Issue.

The Equity Shares are subject to restrictions on transfers. Pursuant to the SEBI ICDR Regulations, for a period of 12 months from the date of the issue of the Equity Shares, QIBs to whom the Equity Shares are allotted under the Issue may only sell such Equity Shares on the Stock Exchanges and may not enter into any off market trading in respect of these Equity Shares. We cannot be certain that these restrictions will not have an impact on the price and liquidity of the Equity Shares.

55. Investing in securities that carry emerging market risks can be affected generally by volatility in the emerging markets.

The markets for securities bearing emerging market risks, such as risks relating to India, are, to varying degrees, influenced by economic and securities market conditions in other emerging market countries. Although economic conditions differ in each country, investors’ reactions to developments in one country may affect securities of issuers in other countries, including India. A loss of investor confidence in the financial systems of other emerging markets may cause increased volatility in Indian financial markets and the Indian economy in general. Any worldwide financial instability could also have a negative impact on the Indian economy, including the movement of exchange rates and interest rates in India, which could adversely affect the Indian financial sector in particular. Any such disruption could have an adverse effect on our Bank’s business, future financial performance, financial condition and results of 57 operations, and affect the price of our Bank’s Equity Shares Accordingly, the price and liquidity of our Equity Shares may be subject to significant fluctuations, which may not necessarily be directly or indirectly related to our financial performance.

56. Conditions in the Indian securities market may affect the price or liquidity of the Equity Shares.

The Indian securities markets are smaller and may be more volatile than securities markets in more developed economies. The regulation and monitoring of Indian securities markets and the activities of investors, brokers and other participants differ, in some cases significantly, from those in the U.S. and Europe. Indian stock exchanges have in the past experienced substantial fluctuations in the prices of listed securities.

Indian stock exchanges have, in the past, experienced problems that have affected the market price and liquidity of the securities of Indian companies, such as temporary exchange closures, broker defaults, settlement delays and strikes by brokers. In addition, the governing bodies of the Indian stock exchanges have from time to time restricted securities from trading, limited price movements and increased margin requirements. Further, disputes have occurred on occasion between listed companies and the Indian stock exchanges and other regulatory bodies that, in some cases, have had a negative effect on market sentiment. If similar problems occur in the future, the market price and liquidity of the Equity Shares could be adversely affected. A closure of, or trading stoppage on, either the BSE or the NSE could adversely affect the trading price of the Equity Shares. Historical trading prices, therefore, may not be indicative of the prices at which the Equity Shares will trade in the future.

There can be no assurance that an active trading market for our Equity Shares will be sustained after this Issue, or that the prices at which our Equity Shares have historically traded will correspond to the price at which the Equity Shares are offered in this Issue or the prices at which our Equity Shares will trade in the market subsequent to this Issue. The Indian stock markets have witnessed significant volatility in the past and our Equity Share price may be volatile and may decline post listing.

57. You will be subject to market risks until the Equity Shares credited to your demat account are listed and permitted to trade.

You can start trading the Equity Shares allotted to you only after they have been credited to your demat account, and are listed and permitted to trade on the Stock Exchanges. Since our Equity Shares are currently traded on the BSE and the NSE, investors will be subject to market risk from the date they pay for the Equity Shares to the date when trading approval is granted for the same. Further, there can be no assurance that the Equity Shares allocated to you will be credited to your demat account or that trading in the Equity Shares will commence in a timely manner.

58. The Issue Price of our Equity Shares may not be indicative of the market price of our Equity Shares after the Issue.

The Issue Price of the Equity Share may not be indicative of the market price for our Equity Shares after the Issue. The market price of our Equity Shares could be subject to significant fluctuations after the Issue, and may decline below the Issue Price. There can be no assurance that the investor will be able to resell their shares at or above the Issue Price. Among the factors that could affect our share price are:

 quarterly variations in the rate of growth of our financial indicators, such as earnings per share, net income and revenues;  changes in revenue or earnings estimates or publication of research reports by analysts;  speculation in the press or investment community;  Domestic and international economic, legal and regulatory factors unrelated to our performance; and  general market conditions;

59. Investors may be subject to Indian taxes arising out of capital gains on the sale of the Equity Shares.

Under current Indian tax laws and regulations, capital gains arising from the sale of shares in an Indian company are generally taxable in India. Any gain realized on the sale of listed equity shares on a stock exchange held for more than 12 months will not be subject to capital gains tax in India if STT has been paid on the transaction. STT will be levied

58 on and collected by a domestic stock exchange on which the Equity Shares are sold. Any gain realized on the sale of equity shares held for more than 12 months to an Indian resident, which are sold other than on a recognized stock exchange and on which no STT has been paid, will be subject to long term capital gains tax in India. Further, any gain realized on the sale of listed equity shares held for a period of 12 months or less will be subject to short term capital gains tax in India. Capital gains arising from the sale of the Equity Shares will be exempt from taxation in India in cases where the exemption from taxation in India is provided under a treaty between India and the country of which the seller is resident. Generally, Indian tax treaties do not limit India’s ability to impose tax on capital gains. As a result, residents of other countries may be liable for tax in India as well as in their own jurisdiction on a gain upon the sale of the Equity Shares. See subsection titled “Taxation” beginning on page 206.

MARKET PRICE INFORMATION

The Equity shares of our Bank are listed on the BSE and the NSE with effect from the year 2010. Stock market data for our equity shares has been given separately for the BSE and the NSE. As our Equity shares are traded on both the BSE and the NSE, stock market data has been given separately for each of these Stock Exchanges.

The following tables set forth the reported high and low market prices, the number of Equity Shares traded and the total trading volume on the dates on which such high and low prices were recorded and the average closing prices of the Equity Shares, on the NSE and the BSE during the fiscal years ended March 31, 2016, March 31, 2015 and March 31, 2014.

NSE

No of Total No of Total Equity volume Equity volume Year Average Date of Shares traded on Shares traded ending High Low Date of low price for high traded on date of traded on on date March the year* date of high (₹ date of of low (₹ high Lacs) low Lacs) April 13, February FY 16 30.85 833,994 257.47 17.05 1,261,897 220.93 22.57 2015 11, 2016 July 4, March 25, FY 15 59.30 19,780,116 11,495 26.95 683,976 186.42 41.78 2014 2015 April 30, February FY 14 60.30 104,938 63.03 24.20 1,086,449 266.13 38.62 2013 17, 2014 (Source: www.nseindia.com)

Notes: * Average of the daily closing price (1) In case of two days with the same closing price, the date with the higher volume has been considered (2) ‘Year’ considered as ‘Financial Year’.

BSE

No of Total No of Total Equity volume Equity Average Year volume Date of Shares traded on Shares price for ending High Low Date of low traded on high traded on date of traded on the March date of low date of high (₹ date of year* (₹ Lacs) high Lacs) low April 13, February 11, FY 16 31.00 145,439 45.03 17.00 287,433 49.78 22.58 2015 2016 July 4, March 25, FY 15 59.00 3,623,366 2,097.61 26.95 93,080 25.34 41.80 2014 2015 April 22, February 18, FY 14 60.35 20,278 12.28 24.25 395,436 96.85 38.66 2013 2014 (Source: www.bseindia.com) Notes:

Notes: * Average of the daily closing price (1) In case of two days with the same closing price, the date with the higher volume has been considered (2) ‘Year’ considered as ‘Financial Year’.

The following tables set forth the reported high, low, the number of Equity Shares traded and the total trading volume on the dates on which such high and low prices were recorded and the average closing prices of the Equity Shares, on the NSE and the BSE during the last six months:

NSE

No of Total No of Total Equity volume Equity volume Averag Date of Shares traded on Shares traded on e price Month High Low Date of low high traded date of traded on date of for the on date high (₹ date of low (₹ month* of high Lacs) low Lacs) February, February 7, 69,54,66 February 1, 27.95 1,933.34 21.45 1,80,447 38.75 24.87 2017 2017 1 2017 January, January 30, January 2, 21.50 241,356 51.76 20.15 81,171 16.38 20.84 2017 2017 2017 December, December December 21.25 121,765 25.88 19.50 143,029 28.22 20.57 2016 9, 2016 26, 2016 November, November 1,053,64 November 9, 23.70 250.35 20.35 517,393 101.99 21.51 2016 15, 2016 5 2016 October, October 20, October 17, 21.90 389,636 84.49 21.10 108,340 22.87 21.36 2016 2016 2016 September, September September 22.95 730,900 168.48 20.15 446,601 92.42 21.67 2016 8, 2016 29, 2016 (Source: www.nseindia.com)

Notes: * Average of the daily closing price (1) In case of two days with the same closing price, the date with the higher volume has been considered

BSE

No of Total No of Total Equity volume Equity volume Average Date of Shares traded on Month High Low Date of low Shares traded on price for high traded on date of traded on date of low the month* date of high (₹ date of low (₹ Lacs) high Lacs) February, February February 1, 28.05 11,60,282 321.23 21.50 40,771 8.76 24.87 2017 7, 2017 2017 January, January January 2, 21.50 62,653 13.52 20.10 9,705 1.96 20.85 2017 31, 2017 2017 December, December December 21.20 16,785 3.54 19.50 18,124 3.58 20.57 2016 2, 2016 26, 2016 November November November 23.85 250,488 59.63 20.40 112,511 22.18 21.52 , 2016 15, 2016 9, 2016 October, October October 17, 21.85 53,630 11.66 21.00 22,346 4.71 21.35 2016 20, 2016 2016 September Septembe September 23.00 95,227 21.95 20.25 52,465 10.91 21.70 , 2016 r 8, 2016 29, 2016 (Source: www.bseindia.com)

Notes: * Average of the daily closing price (1) In case of two days with the same closing price, the date with the higher volume has been considered

The following table sets forth the market price on the Stock Exchanges on January 29, 2016, the first working day following the approval of the Board of Directors for the Issue:

Date NSE BSE January 29, 2016 Open High Low Close Open High Low Close Price of the Equity Shares (₹) 19.35 19.55 19.00 19.25 19.55 19.60 19.05 19.20 Number of Equity Shares Traded 1,53,226 20,518 Volume (₹ In Lacs) 29.51 3.96

Source: www.nseindia.com, www.bseindia.com

USE OF PROCEEDS

The gross proceeds from the Issue are expected to be approximately ₹ 127.49 crore.

The net proceeds from the Issue, after deducting fees and commissions for the Issue, are expected to be approximately ₹ 125.69 crore (the “Net Proceeds”). Subject to compliance with applicable laws and regulations, we intend to use the Net Proceeds of the Issue, for meeting capital requirements in accordance with the capital adequacy norms and ensuring adequate capital to support growth and expansion, including enhancing our solvency and capital adequacy ratio and general corporate purposes.

None of the Directors are making any contribution either as part of the Issue or separately in furtherance of the objects of the Issue.

CAPITALIZATION STATEMENT

The following table sets forth our Bank’s capitalisation and total debt, as on March 31, 2016, derived from our Bank’s audited financial statements for the fiscal year ended on March 31, 2016 and unaudited financials as of and nine months period ended on December 31, 2016 and as adjusted to reflect the receipt of the gross proceeds of the Issue and the application thereof.

This table should be read with the section “Summary Financial Information”, “Risk Factors” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Financial Statements” beginning on pages 33, 37, 68 and 228, respectively. (₹ in Crore) As of March 31, As of December 31, As Adjusted for the 2016 2016 Issue(1) Liabilities Deposits Demand Deposits 1. From banks 1,188.08 1,632.32 1,632.32 2. From others 6,793.34 8,065.30 8,065.30 Saving Bank Deposits 40,809.62 51,272.92 51,272.92 Term Deposits 1. From banks 1251.57 892.82 892.82 2. From others 66,358.67 65,828.87 65,828.87 Total Deposits 11,6401.28 1,27,692.23 1,27,692.23

Other Liabilities Borrowings 2,912.50 2478.22 2478.22 Total Other Liabilities and Provisions 3,798.78 3728.88 3728.88

Shareholders Fund Share capital 839.52 1,339.45 1,394.36 Share Application Money Pending 480.00 - - Allotment Reserves and Surplus 4,999.67 5,787.43 5,860.02 Total shareholder’s funds 6,319.19 7,126.88 7,254.38

Total Liabilities 1,29,431.75 1,41,026.21 1,41,153.71

Note: (1) Share capital, reserves, surplus (adjusted) and post-issue capitalisation can be determined only on the conclusion of the Issue.

CAPITAL STRUCTURE

The Equity Share capital of our Bank, as on the date of this Placement Document is set forth below:

No. Particulars Amount in ₹ Crore Aggregate nominal value

A. Authorised Share Capital 300 Crore Equity Shares of ₹ 10 each 3,000.00

B. Issued, Subscribed and Paid-up Share Capital before the Issue 1,33,94,49,372 Equity Shares of ₹ 10 each 1,339.45

C. Present Issue in terms of this Placement Document 54,906,211 Equity Shares of ₹ 10 each(1) 54.90

D. Issued, Subscribed and Paid-Up Share Capital after the Issue 1,394,355,583 Equity Shares of ₹ 10 each 1,394.36

E. Securities Premium Account Before the Issue 2,666.89 After the Issue 2,739.48 Note:

1. The Issue has been authorised by the Board of Directors vide a resolution passed at its meeting held on January 28, 2016 and by the shareholders of our Bank vide a special resolution passed at the AGM held on June 28, 2016.

NOTES TO THE CAPITAL STRUCTURE

1. History of Equity Share Capital of our Bank

The following is the history of the equity share capital of our Bank since incorporation:

Year Increase/ Decrease Cumulative Nature of Mode in Capital(₹ in Paid up Consideration Crores) Capital(₹ in Crores) At the time of - 2.69 -- Share capital acquired by the nationalization GoI on nationalisation 1984 0.12 2.81 Cash Contribution to capital by the GoI 1985 12.19 15.00 Other than Cash# Contribution to capital by the GoI 1985 10.00 25.00 Other than Cash# Contribution to capital by the GoI 1986 75.00 100.00 Other than Cash# Contribution to capital by the GoI 1989 23.00 123.00 Other than Cash# Contribution to capital by the GoI 1990 140.00 263.00 Other than Cash# Contribution to capital by the GoI 1991 100.00 363.00 Other than Cash# Contribution to capital by the GoI 1994 215.00 578.00 Other than Cash# Contribution to capital by the GoI

Year Increase/ Decrease Cumulative Nature of Mode in Capital(₹ in Paid up Consideration Crores) Capital(₹ in Crores) 1995 471.43 1,049.43 Other than Cash# Contribution to capital by the GoI 1995 67.44 1,116.87 Other than Cash# Contribution to capital by the GoI 1996 256.00 1,372.87 Other than Cash# Contribution to capital by the GoI 1997 338.00 1,710.87 Other than Cash# Contribution to capital by the GoI 1999 100.00 1,810.87 Other than Cash# Contribution to capital by the GoI 2006 (278.44) 1,532.43 - Adjustment of accumulated losses against capital## 2009 (1,266.00) 266.43 - Return of capital to GoI### 2010 50.00 316.43 Cash Initial Public Offering 2011 27.99 344.42 Cash Preferential allotment to GoI 2012 16.58 361.00 Cash Preferential allotment to Life Insurance Corporation of India 2013 13.71 374.71 Cash Preferential allotment to GoI 2013 180.04 554.75 Cash Preferential allotment to GoI 2014 77.40 632.15 Other than cash Conversion of perpetual non – cumulative preference shares held by GoI 2014 84.51 716.66 Cash Preferential allotment to Life Insurance 2015 122.86 839.52 Other than cash Conversion of perpetual non – cumulative preference shares held by GoI 2016 232.44 1,071.96 Cash Preferential allotment to GoI 2016 267.49 1,339.45 Cash Preferential allotment to GoI

# Contribution to capital by the GoI through recapitalisation Bonds/Special Securities. # # The Government of India, Ministry of Finance, Department of Economic Affairs (Banking Division) vide letter No. F.No.11/25/2005-BOA (i) dated April 27, 2006 permitted our Bank to net off of the accumulated unabsorbed losses of ₹ 278.44 crore against its equity capital of ₹ 1,810.87 crore with effect from March 31, 2006 and the capital after set off stood at ₹ 1,532.43 crore. # # # As per GoI letter no. 11/25/2005-BOA dated July 7, 2009, the Government has approved the restructuring of paid up equity capital of our Bank by returns of an amount of ₹ 1,266 crore to the GoI and simultaneously infusion of this amount in the Capital Reserve of our Bank during the year 2009 – 2010, thereby reducing the paid-up equity capital of our Bank to ₹ 266.43 crore.

2. Details of allotments made in the last one year

Except as mentioned above, our Bank has not issued any Equity Shares in the last one year preceding the date of this Placement Document.

3. Employee Stock Option Plan

Our Bank does not have an employee stock option plan.

DIVIDEND POLICY

The payment of dividend is governed by Government of India and RBI guidelines and in accordance with dividend policy framed by the Board. We have a dividend policy named as the United Bank of India Dividend Distribution Policy being framed as per Securities and Exchange Board of India’s Notification No. SEBI/LAD-NRO/GN/2016- 17/008 dated July 8, 2016 (“Dividend Policy”).

As per the Dividend Policy, our Bank may declare and pay dividend, subject to the following ceilings:

CET-1 ratio after including Minimum Capital Conservation Payment by way of dividend/bonus current year’s retained earnings Ratios 5.5% - 6.125% 100% NIL 6.125% - 6.75% 80% 20% 6.75% - 7.375% 60% 40% 7.375% - 8.0% 40% 60% >8.0% 0% 100%

In case the profit for the relevant period includes any extra-ordinary profits/income, the pay-out ratio shall be computed after excluding such extra-ordinary items for reckoning compliance with the prudential pay-out ratio. The financial statements pertaining to the financial year for which our Bank is declaring dividend should be free of any qualifications from the Statutory Auditors, which have an adverse bearing on the profit during that year. In case of any qualification to that effect, the net profit should be suitably adjusted while computing the dividend payout ratio. As per Ministry of Finance Notification F. No. 10/3/2010 – BOA, our Bank shall pay a minimum dividend of 20% of paid-up capital or 20% of post-tax profits, whichever is higher for a financial year. In case our Bank is not able to pay the minimum dividend, as stated above, our Bank shall seek special permission from the Central Government for not paying dividend at a rate lower than the minimum rate prescribed.

Our Bank has not declared any dividend in preceding three years.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our audited financial statements for the years ended March 31, 2014, March 31, 2015 and March 31, 2016 and our limited reviewed interim financial statements for the nine-month period ended December 31, 2016 included in this Placement Document. Also refer the sections “Selected Financial and Other Information” and “Selected Statistical Information” included in this Placement Document.

We prepare our financial statements in accordance with Indian GAAP. The financial statements reflect applicable statutory requirements and regulatory guidelines and accounting practices in India. These requirements, guidelines and practices change from time to time and in accordance with Indian GAAP, adjustments to reflect such changes are made on a prospective basis and the financial statements for earlier periods are not restated. For the purposes of a comparative analysis in the discussion below, previous years’ figures have been reclassified wherever necessary.

Our fiscal year ends on March 31 of each year. Accordingly, all references to a particular fiscal year are to the twelve-month period ended on March 31 of that year. Unless otherwise specified, all information regarding cost, yield and average balances are based on daily average of balances outstanding during the relevant period.

This discussion contains forward-looking statements and reflects our current views with respect to future events and financial performance. Actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under the section “Forward-Looking Statements” beginning on page 14, the section “Risk Factors” beginning on page 37 and elsewhere in this Placement Document. Certain portions of the following discussion include information publicly available from the RBI and other sources.

Overview

We are a scheduled public sector commercial bank in India offering a wide range of banking and financial products and services to both large and mid-corporates, micro, small and medium enterprises (“MSME”), retail and agricultural customers. As on January 31, 2017, we had 2,021 branches in 29 States and 5 Union Territories in India (all of them under Core Banking Solution “CBS” platform) including 180 MSME specialized branches catering to the specific clientele segment, 24 Retail Hubs, 5 specialised women branches . As of January 31, 2017, we had 2,200 ATMs, 22 E-zones, 36 regional offices, 5 extension counters and 2 representative offices in Bangladesh and Myanmar. As of January 31, 2017, we had a customer base of approximately 4.22 crore.

Our treasury operations being the interface with the financial markets, consist primarily of statutory reserves management, liquidity management, investment and trading activities, money market and foreign exchange related activities. We actively trade in major currencies of the world and participate in the forward market. We also offer fee based products which includes fees and charges for services such as remittance services, documentary credits, letters of credit and issuance of guarantees and collect service charges and processing fees on customer advances. Fee-based income also includes income from commissions on sale of third party products, such as insurance and mutual funds.

We are one of the 14 banks which were nationalized on July 19, 1969. After nationalization, we have expanded branch network pan India and actively participated in the developmental activities, particularly in the rural and semi - urban areas in conformity with the objectives of nationalization. As of March 31, 2014, March 31, 2015 and March 31, 2016, the total number of branches of our Bank were 2,001, 2,004 and 2,011, respectively and it was further increased to 2,021 as of January 31, 2017. Our total number of ATMs has also increased from 1,602 as of March 31, 2014, to 1912 as of March 31, 2015, to 2,044 as of March 31, 2016, and further increased to 2,200 as of January 31, 2017. As of January 31, 2017, our domestic branch network of 2,021 branches comprised 772 rural, 411 semi-urban, 477 urban and 361 metropolitan branches.

As on January 31, 2017, our Bank has installed 2,200 ATMs, 22 E-Zones, Internet Banking, Mobile Banking, E - Wallet, E- Passbook Services. Our Bank is issuing Rupay and Visa bonded debit cards including image card on Rupay Platinum Platform. Our Bank has implemented online saving account facility, POS machines, online payment of bills 69 and taxes. Our Bank has also implemented a product wherein instant fund transfer across bank through beneficiary mobile number. Our Bank has installed Unified Payment Interface (“UPI”) from first day of its launch. Our Bank is also having direct debit facility for booking of rail ticket through debit card. We have played significant role in the spread of banking services in different parts of the country, especially in the eastern and north eastern and we have sponsored four Regional Rural Banks (“RRBs”) in collaboration with the Central Government and the state governments of West Bengal, Assam, Manipur and Tripura.

Critical Accounting Policies

We have set forth below some of our critical accounting policies under Indian GAAP. Our audited financial statements of and for the fiscal years ended March 31, 2014, 2015 and 2016 are prepared in accordance with Indian GAAP as applicable to banks. The preparation of the financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, income and expenses as well as the disclosure of contingent liabilities. The notes to the financial statements contain a summary of our significant accounting policies. Certain of these policies are critical to the portrayal of our financial condition, since they require management to make subjective judgments, some of which may relate to matters that are inherently uncertain. Below is a discussion of these critical accounting policies. We base our estimates and judgments on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. As a result of changes in applicable statutory requirements, regulatory guidelines and accounting practices in India, our accounting policies may have undergone changes during the periods covered by this discussion. Accordingly, this discussion should be read in conjunction with our financial statements and notes as applicable during the respective fiscal year.

Set forth below are some of our critical accounting policies under Indian GAAP for the fiscal year 2016:

1. Basis of Preparation

1.1. The accompanying financial statements are prepared on historical cost basis, except as otherwise stated, following the “Going Concern” concept and conform to the Generally Accepted Accounting Principles(GAAP) in India, applicable statutory provisions, regulatory norms prescribed by the Reserve Bank of India (RBI), applicable mandatory Accounting Standards (AS)/Guidance Notes/ pronouncements issued by the Institute of Chartered Accountants of India (ICAI) and practices prevailing in the banking industry in India.

2. Use of Estimates

2.1. The preparation of financial statements requires the management to make estimates and assumptions for considering the reported assets and liabilities (including contingent liabilities) as on the date of financial statements and the income and expenses for the reporting period. We believe that the estimates used in the preparation of the financial statements are prudent and reasonable.

3. Recognition of Income and Expenditure

3.1. The Revenues and Expenses are accounted for on accrual basis unless otherwise stated.

3.2. Income from Performing Assets is recognized on accrual basis and income from Non-Performing Assets (NPAs) is recognized on realization. The amount realised/recovered during the year is appropriated first to income on Sub-standard Assets. Amounts realized /recovered in Doubtful and Loss Assets and Suit Filed and Decreed Accounts are first appropriated against outstanding balances.

3.3. Unrealized income on advances, classified as NPA, is reversed. 70

3.4. Income from Commission (except on Government Transactions and Bancassurance), exchange, brokerage, claims, locker rent and dividend on shares are accounted for on cash basis.

3.5. Performance linked incentive to whole time directors is accounted for on cash basis.

4. Foreign Currency Transactions

4.1. Monetary Assets and Liabilities, excluding outstanding Forward Exchange Contracts in each currency, are revalued at the Balance Sheet date at closing spot rates announced by the Foreign Exchange Dealers Association of India (“FEDAI”). Outstanding forward exchange contracts are revalued at the forward rates announced by FEDAI. The difference between the revalued amount and the contracted amount is recognized as profit or loss, as the case may be.

4.2. Income and expenditure items are recorded at the exchange rates prevailing on the date of transaction.

4.3. Acceptances, endorsements and other obligations including guarantees are carried at the closing spot rates announced by FEDAI.

4.4. Representative Office of our Bank has been classified as 'Integral Foreign Operation' in accordance with AS-11 on “The Effects of Changes in Foreign Exchange Rates”.

4.5. Foreign currency transactions relating to 'Integral Foreign Operation' are recorded on initial recognition in the reporting currency by applying to the foreign currency amount, the exchange rate between the reporting currency and the foreign currency on the date of transaction.

4.6. Foreign currency non-monetary items that are carried in terms of historical costs are reported using the exchange rates on the dates of transactions.

5. Investments

5.1. For the purpose of disclosure in the Financial Statements, the investments are classified into six categories as stipulated in Form A of the third schedule to the Banking Regulation Act, 1949 as under:

a. Government Securities b. Other approved securities c. Shares d. Debentures and Bonds e. Subsidiaries/Joint Ventures f. Others

5.2. The Investment portfolio is categorized, in accordance with the RBI guidelines, into:

a. “Held to Maturity” (“HTM”) comprising Investments acquired with an intention to hold till maturity b. “Held for Trading” (“HFT”) comprising Investments acquired with an intention to trade c. “Available for Sale” (“AFS”) comprising Investments not covered by (a) and (b) above.

Classification of an investment is done at the time of acquisition.

5.3. In determining acquisition cost of an investment:

a. Brokerage, Commission and Incentives received on subscription to securities, are deducted from the cost of securities, b. Brokerage, Commission etc. paid in connection with acquisition of securities are treated as revenue expenses and c. Interest accrued up to the date of acquisition/ sale of securities i.e., broken period interest is credited/ charged to Profit and Loss Account. 71

5.4. Investments are valued as per RBI/ Fixed Income Money Market & Derivatives Association (FIMMDA) guidelines, on the following basis:

a. Held to Maturity (“HTM”)

i) Investments held under this category are carried at acquisition cost. Wherever the book value is higher than the face value/redemption value, the premium is amortized over the remaining period of maturity. ii) Investments in RIDF, STC(Refinance Fund), MSME(Refinance)SIDBI, MSME(Risk Capital)SIDBI, Rural Housing Development Fund-NHB, Micro Finance Development and Equity Fund-NABARD (classified as shares) held under this category are valued at carrying cost. iii) Investments in sponsored regional rural banks held under this category and are valued at carrying cost. iv) Investment in venture capital funds held under this category is valued at carrying cost for the first 3 years from their respective disbursement dates in accordance with Prudential Guidelines issued by RBI. Thereafter the same is transferred to AFS category.

b. “Held for Trading” and “Available for Sale”

a) Govt. Securities 1. Central Govt. Securities At prices published by FIMMDA

2. State Govt. Securities On Yield to Maturity (“YTM”) basis by adding appropriate mark- up on the Base Yield Curve as per FIMMDA/RBI guidelines b) Discounted Instruments (Treasury At carrying cost Bills, Commercial Papers and Certificate of Deposit)

c) Bonds and Debentures On YTM basis by adding appropriate credit spread on the Base Yield Curve as per FIMMDA/RBI guidelines

d) Equity i) Quoted At market price

ii) Un-quoted At break-up value, as per latest Balance Sheet (not more than one year old), otherwise at Re1/- per company. e) Preference Shares At market price, if quoted or on YTM basis by adding appropriate mark-up on the Base Yield Curve as per FIMMDA/RBI guidelines f) Security Receipt/Venture Capital Fund At Net Asset Value (NAV) as per FIMMDA/RBI guidelines g) Mutual Funds At Market Price, if quoted and at re-purchase price/NAV if unquoted

5.5. Shifting of securities from and to HFT category is done in accordance with RBI guidelines with the approval of Board of Directors.

5.6. The individual scrip in the HFT and AFS category are marked to market at monthly or at more frequent intervals if required and provision for the same is made.

5.7. Income from Zero Coupon Bonds, being the difference between cost and face value, is recognized on a time proportion basis.

5.8. Profit or loss on sale of investments in any category is taken to Profit and Loss Account. In case of profit on sale of Investments in HTM category, an equivalent amount is appropriated to “Capital Reserve Account” at the end of the period. For calculating the surplus / deficit on sale of securities, weighted average method is adopted.

5.9. For the purpose of calculating holding period in case of HFT category, FIFO method is applied.

5.10. Investments are subject to appropriate provisioning/ de-recognition of income, in line with the prudential norms of RBI for NPI Classification. The depreciation/provision in respect of non-performing securities is not set off against the appreciation in respect of the other performing securities.

5.11. The derivatives transactions are undertaken for trading or hedging purposes and valuation has been done in accordance with RBI guidelines.

5.12. Our Bank has adopted the Accounting Procedure prescribed by the RBI for accounting of Repo and Reverse Repo transactions.

6. FINANCIAL ASSETS SOLD TO ASSETS RECONSTRUCTION COMPANY (ARC)/ SECURITIZATION COMPANY (SC)

6.1. In the case of financial assets sold to ARC/SC, if the sale is for a value higher than the Net Book Value (NBV), the excess provision is not reversed but utilized for meeting any shortfall on account of sale of other financial assets to ARC/SC. If the sale is at a price below the NBV the shortfall after adjusting the available surplus if any, is debited to the Profit and Loss Account.

6.2. The sale of financial assets to ARC/SC is recognized in the books of our Bank at lower of either redemption value of the Security Receipts issued by the Trust created by the ARC/SC for such sale or the net value of such financial assets.

6.3. The Security Receipts are classified as Non-SLR Investment in the books of our Bank and accordingly the valuation, classification and other norms prescribed by RBI in respect of Non-SLR Securities are applicable.

6.4. In case of written off Assets sold to ARC/ SC, the cash proceeds are recognized as income.

7. ADVANCES

7.1. Advances are classified as Performing/Non-Performing Assets and provision thereon are made in conformity with the prudential norms prescribed by RBI.

7.2. Non-performing assets are stated net of provisions and claims received from credit guarantee institutions.

7.3. Provision held for performing assets is shown under the head ‘Other Liabilities and Provisions’.

7.4. Restructuring of Advances and provisioning thereof have been made as per RBI guidelines.

8. FIXED ASSETS AND DEPRECIATION

8.1. Premises (including leasehold), other fixed assets and Capital work in progress are stated at historical cost. In case of revaluation, the same are stated at the revalued amount and the appreciation is credited to Revaluation Reserve.

8.2. Leasehold assets are amortized over the period of lease.

8.3. Depreciation on assets other than computers and Automated Teller Machines (“ATMs”) is provided for under written down value method, in the manner and as per the rates prescribed under Schedule II to the Companies Act, 2013 after retaining 5% residual value.

8.4. Depreciation on computers, ATMs and amortization of software are accounted for on straight-line method @ 33.33% on pro rata basis from the date of acquisition as per RBI guidelines.

8.5. Impairment Losses, if any, on Fixed Assets (including revalued assets) are recognized in accordance with AS - 28 on “Impairment of Assets”. 73

9. ACCOUNTING FOR GOVERNMENT GRANTS

9.1. In accordance with AS-12 Government Grants/subsidies received is presented in the Balance Sheet by showing the Grant/Subsidy as a deduction from the Gross Value of the assets concerned in arriving at the book value. The grant/subsidy is recognized in the Profit & Loss Account over the useful life of the depreciable assets by way of reduced depreciation charged.

9.2. Government Grant subsidies received, of revenue nature, is recognized in the Profit & Loss Account by reducing the related cost if received during the same financial year otherwise, the same is shown under “Other Income” if received after the close of the relevant financial year.

10. EMPLOYEE BENEFITS

10.1. Employee Benefits are recognized in accordance with AS – 15 on “Employee Benefits”.

10.2. Short Term employee benefits are measured at cost.

10.3. Long Term employee benefits and post-retirement benefits namely gratuity, pension and leave encashment are measured on a discounted basis under the Projected Unit Credit Method on the basis of annual third party actuarial valuations.

10.4. In respect of employees who have opted for Provident Fund Scheme, matching contribution is made to a recognized Trust. For others who have opted for Pension Scheme, contribution to Pension Fund is based on actuarial valuation.

10.5. Long Term employee benefits recognized in the Balance Sheet represent the present value of the obligation as adjusted for unrecognized past service cost, if any, and as reduced by the fair value of plan assets, wherever applicable and actuarial gain/loss is recognized in Profit and Loss Account.

11. TAXATION

Provision for tax is made for both current and deferred taxes in accordance with AS – 22 on “Accounting for Taxes on Income”.

12. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

In accordance with AS-29 on “Provisions Contingent Liabilities and Contingent Assets,” our Bank recognizes:

a. Provisions only when it has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and when a reliable estimate of the amount of the obligation can be made.

b. Contingent Liability is recognized/disclosed when a possible obligation from a past event, the existence of which is confirmed by the occurrence/non-occurrence of one or more uncertain future events not wholly within the control of bank. Contingent Liability is also recognized/disclosed when there is a present obligation from past events but is not recognized because of a remote possibility of outflow of resources embodying the economic benefits to settle the obligation or a reliable estimate of the amount of the obligation cannot be made

c. Contingent Assets are not recognized in the Financial Statements.

13. NET PROFIT

The Net Profit is arrived at after accounting for the following:

a) Provision for Taxation b) Provision on Standard Assets c) Provision for NPAs and Depreciation on investments as per prudential norms of RBI d) Other usual and necessary provisions.

Factors Affecting Results of Operations and Financial Condition

The world economy continues to dabble with weak growth and dwindling inflation. Global markets continue to remain sluggish with the impact of US returning to normalcy with a rate hike, lower commodity markets and a strengthening dollar. Asset classes across the board witnessed volatile movements during the year with uncertainty rising from the Chinese slowdown and US unwinding of quantitative measures. Going forward, the Chinese rebalancing from an investment led economy to one driven by consumption apart from the US Fed rate movement would be closely watched by investors across the globe. We believe next year is likely to remain a constrained year for global growth with headwinds emerging from the above mentioned factors and no or limited scope for acceleration in growth in other major economies of the world.

The Indian economy bucked the trend in 2015 when most of the emerging market economies witnessed significant external vulnerabilities owing to positive external balance and a stable public policy. Although the rising NPAs in the banking system and strong headwinds in the global economy did have an impact on Indian economy, it was largely stable when compared to its peers.

The Indian economy currently stands at a strong footing with the interest rate rolling downwards, key macro variables like Current Account Deficit and Fiscal deficit mostly under control and the governments continued push for reforms and ease of doing business. International agencies continue to remain positive on India with an expected growth for 2016 pegged at 7.50 percent.

The Indian banking industry is regulated by the RBI and operates within a framework that provides guidelines on capital adequacy, corporate governance, management, anti-money laundering and provisioning for NPAs. The framework also stipulates required levels of lending to “priority sectors,” such as agriculture, which may expose our Bank to higher levels of risk than it otherwise might face. Being the Banking Regulator, RBI is empowered to alter any of these policies at any time and can introduce new regulations to control any particular line of business. See “Regulations and Policies - The RBI and its regulations”.

The RBI responds to fluctuating levels of economic growth, concerns about banks’ liquidity position and inflationary pressures in the economy by adjusting the required Cash Reserve Ratio (“CRR”) of Indian banks. When the CRR increases, our Bank must hold more cash in its reserves, which constrains our Bank’s ability to deploy those funds by making advances to customers or investing the funds for potential gains.

Discussion on our results from operations

Our Bank’s asset portfolio, financial condition and results of operations have been, and are expected to be, influenced by numerous factors. These are expected to affect the overall growth prospects of our Bank, including its ability to expand its deposit base, the quality of its assets, the level of credit disbursed by our Bank, the value of its asset portfolio and its ability to implement its strategy.

Our total income consists of interest and dividend income as well as non-interest income. Our interest and dividend income is primarily generated by interest on loans, dividends from securities excluding dividend from associate companies, and other activities. We offer a range of loans to retail customers and working capital and term loans to corporate customers. The primary components of our investments portfolio are statutory liquidity ratio (SLR) investments, debentures and bonds and other investments. SLR investments principally consist of Government of India treasury securities. Other investments include asset-backed securities, mortgage-backed securities, deposit certificates issued by banks, placements made to comply with the extant Reserve Bank of India guidelines on shortfalls in directed lending sub-limits as well as equity and units of mutual funds. Interest income from other activities consists primarily of interest from inter-bank placements.

Our interest expense includes interest on deposits as well as on borrowings including interest expense on our interbank borrowings (including deposits taken under the credit support annex agreements), bills re-discounted (BRDS) 75 transactions, interbank participation certificate (IBPC) transactions and securities sold under repurchase agreements (repo transactions) with the RBI, such as under the RBI’s liquidity adjustment facility/marginal standing facility of the RBI. Our interest income and expense are affected by fluctuations in interest rates as well as volume of activity. Our interest expense is also affected by the extent to which we fund our activities with savings and current account deposits, and the extent to which we rely on borrowings. Our provisions and contingencies include specific provisions for non-performing assets (NPAs), general provisions on standard assets, floating provisions and provisions for legal and other contingencies.

We also use net interest margin and spread to measure our results. Net interest margin represents the ratio of net interest income to average earning assets. Spread represents the difference between yield on average interest earning assets and the cost of average interest-bearing liabilities, including current accounts which are noninterest bearing.

Components of Income and Expenditure

Income

Our income comprises of income from interest earned and other income.

Income from interest earned

Income from interest earned comprises of interest on advances and discounts on bills, income from investments, interest received from balances maintained with the RBI and other inter-bank funds and other interest income. Income from investments consists of interest on securities and other investments. Our securities portfolio consists primarily of Government securities and we meet our SLR requirements through these investments. We also hold debentures and bonds issued by public sector undertakings and other corporations, commercial paper, certificate of deposits, equity shares, preference shares, mutual fund units and security receipts.

Other Income

Other income consists of income from non-interest bearing sources including income from commission, exchange and brokerage which include fees from opening Letter of credit and negotiating bills under Letter of credit, issuance of all types of Guarantees, Loan processing fees etc., profit on sale of investments, profit on exchange transactions, and miscellaneous income. Miscellaneous income primarily includes commission received from the sales of third party products, mutual fund products and fees collected from customers like folio charges, commitment charges etc.

Expenditure

Interest Expended

Our interest expended consists of interest on deposits and interest on borrowing from the RBI and inter-bank borrowing, and interest on other borrowings. Both our interest income and expenditure are affected by fluctuations in interest rates as well as the volume of activity. Our interest expenditure is also affected to the extent we fund our activities with low interest or non interest deposits (CASA), and to the extent to which we rely on other borrowings.

Operating Expenses

Our operating expenses consist principally of employee expenses, rent, taxes and lighting expenses, printing and stationery expenses, advertisement and publicity expenses, depreciation on our Bank's property, allowances, expenses of Auditors’ fees including branch auditors, law charges, postage, telegrams, telephones expenses, repairs & maintenance, insurance expenses and other expenditure.

Provisions and Contingencies

Our provisions and contingencies predominantly comprises provision towards standard assets, provision towards non- performing assets, provision for MAT credit, provision for gratuity, provision for depreciation in market value of investments, provision for foreign currency unhedged, provision for other assets and provision for income tax.

Nine month period ended December 31, 2016 vs nine month period ended December 31, 2015 (₹ in Crore) Nine Month Period Nine Month Period Particulars Ended December 31, Ended December 31, 2016 2015 Interest Earned 6,933.41 7,557.82 Other Income 1,865.32 1,094.03 Total Income 8,798.73 8,651.85 Expenditure Interest Expended 5,650.54 5,682.71 Operating Expenses 1,854.26 2,072.86 Provisions and Contingencies 1,147.99 765.20 Total Expenditure 8,652.79 8,520.77

Net Profit (+) / Loss (-) for the period 145.94 131.08

Interest Earned

The following table sets out the components of interest earned: (₹ in Crore) As on December 31 2016 2015 % Change Interest / Discount on Advances/Bills 4,431.00 5,087.25 -12.90% Income on Investments 2,302.61 2,268.85 1.49% Interest on balances with Reserve Bank of India and other Inter-Bank Funds 49.19 25.18 95.35% Others 150.61 176.54 -14.69% TOTAL: 6,933.41 7,557.82 -8.26%

Interest Income for our Bank decreased by 8.26% to ₹ 6,933.41 crore for the nine-month period ended December 31, 2016 from ₹ 7,557.82 crore for the nine-month period ended December 31, 2015 on account of increase of NPAs and periodic revision of benchmark rates by our Bank.

Other Income

The following table sets out the components of other income: (₹ in Crore) Details of Income Earned As on December 31 2016 2015 % change Commission, Exchange and Brokerage 115.50 135.80 -14.95% Profit on sale of Investments 1,366.40 629.44 117.08% Less : Loss on sale of Investments -3.05 -1.51 101.99% Profit on revaluation of Investments Less : Loss on revaluation of Investments Profit on sale of land, buildings and other assets 0.05 0.00 - Less : Loss on sale of land, buildings and other assets -0.05 0.00 - Profit on exchange transactions 139.09 98.22 41.61% Less : Loss on exchange transactions Income earned by way of dividend etc., from subsidiaries, companies and/or joint ventures abroad/ in India Miscellaneous Income 247.38 232.08 6.59% TOTAL : 1,865.32 1,094.03 70.50%

Other income for our Bank increased by 70.50% to ₹ 1,865.32 crores for the nine-month period ended December 31, 2016 from ₹ 1,094.03 crore in fiscal year 2015 for the nine-month period ended December 31, 2015 on account of higher profit from trading income from investments, exchange transaction by our Bank as well as other income.

Interest expended

The components of our interest expended are as follows: (₹ in Crore) As on December 31 % Change 2016 2015 Interest on Deposits 5,356.65 5,336.55 0.38% Interest on Reserve Bank of India/inter-Bank borrowings 101.22 121.36 -16.60% Others 192.67 224.80 -14.29% TOTAL : 5,650.54 5,682.71 -0.57%

Interest expended for our Bank was marginally decreased by 0.57% to ₹ 5,650.54 crores for the nine-month period ended December 31, 2016 from ₹ 5,682.71 crore for the nine-month period ended December 31, 2015 due to increase in CASA and reduction in high cost term deposit rate.

Operating Expenses

The components of our operating expenses are as follows: (₹ in Crore) December 31, 2016 December 31, 2015 % Change Payments to and Provisions for Employees 1,174.54 1,472.15 -20.22% Rent, Taxes and Lighting 111.60 108.70 2.67% Printing and Stationery 19.56 16.35 19.63% Advertisement and Publicity 3.94 3.70 6.49% Depreciation on Bank's property 76.55 71.77 6.66% Less : Transfer from Revaluation Reserve 76.55 71.77 6.66% Directors' fees, allowances and expenses 0.66 1.05 -37.14% Auditors' fees and expenses 4.94 4.76 3.78% (including branch auditors' fees and expenses) Law Charges 6.49 6.28 3.34% Postage, Telegrams, Telephones etc. 24.14 26.08 -7.44% Repairs and Maintenance 18.65 18.09 3.10% Insurance 100.77 89.08 13.12% Other Expenditure 312.42 254.84 22.60% TOTAL : 1,854.26 2,072.85 -10.55%

Operating expenses for our Bank was decreased by 10.55 % to ₹ 1,854.26 crores for the nine-months period ended on December 31, 2016 from ₹ 2,072.85 crore for the nine-month period ended on December 31, 2015 primarily due to decline in provision requirement as per AS 15 from ₹ 670.19 Crore for the nine-month period ended on December 31, 2015 to ₹ 318.77 crore for the nine-month period ended December 31, 2016 and stringent cost control.

Provisions and contingencies

Due to various pressures on the sectors/businesses that our clients operate in, there were slippages for which we had to increase the provisioning for non-performing assets. Our provisions and contingencies increased by 50.02% to ₹ 1,147.99 crore for the nine-month period ended on December 31, 2016 from ₹ 765.20 crore in fiscal year 2015 for the nine-month period ended on December 31, 2015, primarily due to regulatory provision required for aging of NPAs.

Net Profit

Our Net Profit increased by 11.34% to ₹ 145.94 crore for the nine-month period ended on December 31, 2016 from ₹ 131.08 crore for the nine-month period ended on December 31, 2015 as a result of abovementioned factors.

Fiscal year ended on March 31, 2016 vs. Fiscal year ended on March 31, 2015

The table below provides the data for the fiscal years 2016 and 2015, expressed in absolute values as well as expressed as percentage of total income of the respective years.

Fiscal year ended on March 31, Particulars 2016 2015 Amount(₹ in % of Total Amount (₹ in % of Total Crore income Crore income INCOME Interest earned 9,936.67 87.13% 10,180.48 85.35% Other income 1,467.53 12.87% 1,746.91 14.65% TOTAL INCOME 11,404.20 100.00% 11,927.39 100.00%

EXPENDITURE Interest expended 7,656.11 67.13% 7,689.82 64.47% Operating expenses 2,972.78 26.07% 2,438.00 20.44% Provisions & Contingencies 1,057.27 9.27% 1,543.58 12.94% (Net) TOTAL EXPENDITURE 11,686.16 102.47% 11,671.40 97.85%

Net Profit / (Loss) for the -281.96 -2.47% 255.99 2.15% year

Interest Earned

The following table sets out the components of interest earned: (₹ in Crore) Details of Income Earned Year Ended March 31 % change 2016 2015 Interest / Discount on Advances/Bills 6,628.44 7,040.83 -5.86% Income on Investments 3,038.73 2,879.32 5.54% Interest on balances with RBI and other Inter-Bank Fund 38.44 90.17 -57.37% Others 231.06 170.16 35.79% Total 9,936.67 10,180.48 -2.39%

Owing to the challenging economic scenario in the country and the sectors that our clients operate in, our interest earned fell by 2.39% from ₹ 10,180.48 crore for the fiscal year ended March 31, 2015 to ₹ 9,936.67 crore for the fiscal year ended March 31, 2016. This was primarily on account of Asset Quality Review (“AQR”) and slippages during the period thereby reducing the interest earning assets for such period as reduction of benchmark rates from time to time.

Other Income

The components of our other income are as follows: (₹ in crore) Year Ended on Year Ended on % change March 31, 2016 March 31, 2015 Commission, exchange and brokerage 178.44 202.81 -12.02% Profit on sale of investments 825.24 1168.65 -29.39% 79

Year Ended on Year Ended on % change March 31, 2016 March 31, 2015 Less: loss on sale of investments -1.52 -0.90 68.89% Profit on revaluation of investments - - - Less: loss on revaluation of investments - - - Profit on sale of land, buildings and other assets 0.05 0.65 -92.31% Less: loss on sale of land, buildings and other assets -0.01 -0.07 -85.71% Profit on exchange transactions 136.07 97.64 39.36% Less: loss on exchange transactions - - - Income earned by way of dividend etc. from subsidiaries, companies and / or joint ventures abroad / in India - - Miscellaneous Income 329.26 278.13 18.38% Total 1,467.53 1,746.91 -15.99%

Other income of our Bank for the fiscal year 2016 reduced by 15.99% to ₹ 1,467.53 crore in the fiscal year 2016 from ₹ 1,746.91 crore in fiscal year 2015. This was primarily due to decline in profit on sale of investment.

Interest Expended

The components of our interest expended are as follows: (₹ in crore) Year Ended on Year Ended on % change March 31, 2016 March 31, 2015 Interest on deposits 7,184.18 7,253.66 -0.96% Interest on Reserve Bank of India / Inter – Bank borrowings 176.03 82.53 113.29% Others 295.90 353.63 -16.32% Total 7,656.11 7,689.82 -0.44%

The interest expended marginally decreased by 0.44% to ₹ 7,656.11 crore in the fiscal year 2016 from ₹ 7,689.82 crore in fiscal year 2015. This decrease was mainly due to non-renewal of high cost bulk deposit.

Operating expenses

The components of our operating expenses are as follows: (₹ in Crore) Year Ended on March Year Ended on March 31, % change 31, 2016 2015 Payments to and provisions for employees 2,133.91 1,666.66 28.04% Rent taxes and lighting 148.29 139.94 5.97% Printing and stationery 23.51 26.41 -10.98% Advertisement and publicity 6.23 5.62 10.85% Depreciation on bank’s property 102.76 105.72 -2.80% Less: Transfer from revaluation reserve 0 0 - 162.76 105.72 -2.80% Director’s fees, allowances and expenses 1.32 1.16 13.79% Auditor’s fees and expenses (including branch auditor’s fees and expenses) 15.71 14.60 7.60%

Year Ended on March Year Ended on March 31, % change 31, 2016 2015 Law charges 9.77 8.15 19.87% Postage, telegrams, telephones etc. 34.54 23.54 46.73% Repairs and maintenance 22.78 33.88 -32.77% Insurance 118.19 103.38 14.33% Other Expenditure 355.77 308.94 15.16% Total 2,972.78 2,438.00 21.94%

Our operating expenses increased by 21.94% to ₹ 2,972.78 crore in fiscal year 2016 from ₹ 2,438.00 crore fiscal year 2015. This rise was primarily due to increase in provision requirement as per AS 15 subsequent to the wage revision by our Bank during the year.

Provisions and contingencies

Our provisions and contingencies decreased to ₹ 1,057.27 crores for the fiscal year 2016 as compare to ₹ 1,543.58 crores for the fiscal year 2015 primarily due to reversal of provision on restructured standard assets as revised RBI Norms.

Net Profit

Due to the pressure on our business, caused by the performance of our assets, our net profit reduced by -210.14% to a loss of ₹ 281.96 crore in fiscal year 2016 from ₹ 255.99 crore in fiscal year 2015.

Fiscal year ended on March 31, 2015 vs. Fiscal year ended on March 31, 2014

The table below provides the data for the fiscal years 2015 and 2014, expressed in absolute values as well as expressed as percentage of total income of the respective years.

Fiscal year ended March 31, Particulars (₹crore) 2015 2014 Amount(₹ in % of Total Amount(₹ in % of Total Crore income Crore income INCOME Interest earned 10,180.48 85.35% 10,599.29 89.78% Other income 1,746.91 14.65% 1,206.87 10.22% TOTAL INCOME 11,927.39 100.00% 11,806.16 100.00%

EXPENDITURE Interest expended 7,689.82 64.47% 8,036.47 68.07% Operating expenses 2,438.00 20.44% 2,915.46 24.69% Provisions & Contingencies 1,543.58 12.94% 2,067.68 17.51% (Net) TOTAL EXPENDITURE 11,671.40 97.85% 13,019.61 110.28%

Net Profit / (Loss) for the 255.99 2.15% -1,213.45 -10.28% year

Interest Earned

The following table sets out the components of interest earned: (₹ in Crore)

Details of Interest Earned Year Ended on March 31 2015 2014 % change Interest / Discount on Advances/Bills 7,040.83 7,816.56 -9.92% Income on Investments 2,879.32 2,446.26 17.70% Interest on balances with RBI and other Inter-Bank Fund 90.17 141.09 -36.09% Others 170.16 195.38 -(12.91)% Total 10,180.48 10,599.29 -3.95%

Our interest income fell by 3.95% from ₹ 10,599.29 crore for the fiscal year ended March 31, 2014 to ₹ 10,180.48 crore for the fiscal year ended March 31, 2015. This was primarily on account of decrease of interest rate by our Bank and fresh slippage of NPAs.

Other Income

The components of our other income are as follows: (₹ in Crore) Year Ended on March 31, Year Ended on March 31, % change 2015 2014 Commission, exchange and brokerage 202.81 202.47 0.17% Profit on sale of investments 1,168.65 534.52 118.64% Less: loss on sale of investments -0.90 -8.54 -89.46% Profit on revaluation of investments Less: loss on revaluation of investments Profit on sale of land, buildings and other assets 0.65 0.06 983.33% Less: loss on sale of land, buildings and other assets -0.07 -0.02 250.00% Profit on exchange transactions 97.64 155.98 -37.40% Less: loss on exchange transactions - - - Miscellaneous Income 278.13 322.41 -13.73% Total 1,746.91 1,206.87 44.75%

Other income of our Bank was increased by 44.75 % to ₹ 1,746.91 crore in the fiscal year 2015 from ₹ 1,206.87 crore in fiscal year 2014 primarily due to profit on sale of investment. Profit on sale of investment was increased by 118.64% to ₹ 1,168.65 crore in the fiscal year 2015 from ₹ 534.52 crore in fiscal year 2014.

Interest Expended

The components of our interest expended are as follows: (₹ in crore) Year Ended on March 31, Year Ended on March 31, % change 2015 2014 Interest on deposits 7,253.66 7,569.14 -4.17% Interest on Reserve Bank of India / Inter – Bank borrowings 82.53 94.12 -12.31% Others 353.63 373.21 -5.25% Total 7,689.82 8,036.47 -4.31%

The interest expended decreased by 4.31% to ₹ 7,689.82 crore in the fiscal year 2015 from ₹ 8,036.47 crore in fiscal year 2014 primarily due to increase in share of CASA deposit by 507 bps from 36.98% as on March 31, 2014 to 42.05% March 31, 2015.

Operating expenses

The components of our operating expenses are as follows: (₹ in Crore) Year Ended on March 31, Year Ended on March 31, % Change 2015 2014 Payments to and provisions for employees 1,666.66 2,221.85 -24.99% Rent taxes and lighting 139.94 125.52 11.49% Printing and stationery 26.41 30.01 -12.00% Advertisement and publicity 5.62 10.45 -46.22% Depreciation on bank’s property 105.72 84.78 24.70% Less: Transfer from revaluation reserve - 15.59 -100% 105.72 69.19 52.80% Director’s fees, allowances and expenses 1.16 2.00 -42.00% Auditor’s fees and expenses (including branch auditor’s fees and expenses) 14.60 14.60 0.00% Law charges 8.15 5.25 55.24% Postage, telegrams, telephones etc. 23.54 23.20 1.47% Repairs and maintenance 33.88 17.71 91.30% Insurance 103.38 111.18 -7.02% Other Expenditure 308.94 284.50 8.59% Total 2,438.00 2,915.46 -16.38%

Our operating expenses decreased by 16.38% to ₹ 2,438.00 crore in fiscal year 2015 from ₹ 2,915.46 crore fiscal year 2014. This increase was primarily due to decline in the expenses related to employees by 25.00% and increase in profit due to decline in provision requirement as per AS 15.

Provisions and contingencies

Our provisions and contingencies decreased by 25.35% to ₹ 1,543.58 crore for fiscal year 2015 from ₹ 2,067.68 crore for fiscal year 2014. This was on account of decline in provision for NPA advances from ₹ 1,960.59 crores in the fiscal year 2014 to ₹ 844.87 crore in the fiscal year 2015 and due to creation of DTA of ₹ 339.26 crore in fiscal year 2015 against reversal of DTA of ₹ 342.77 crores in fiscal year 2014.

Net Profit

Due to the recovery and reduction of NPA, our net profit stood at ₹ 255.99 crore for the fiscal year 2015 visa viz loss of ₹ 1,213.45 crore in fiscal year 2014.

Capital

We are a banking company within the meaning of the Banking Regulation Act. We are registered with and subject to supervision by the RBI. Failure to meet minimum capital requirements could lead to regulatory actions by the RBI, which, if undertaken, could have a material effect on our financial position. The RBI issued detailed guidelines for implementation of Basel III capital regulations in May 2012. The minimum capital requirements under Basel III are being phased in as per the guidelines prescribed by the RBI. Accordingly, we were required to maintain a minimum Common Equity Tier I ratio of 6.125% including Capital Conservative Buffer (“CCB”) of 0.625%, a minimum total Tier I capital ratio of 7.625 % including CCB of 0.625% and a minimum total capital ratio of 9.625% including CCB of 0.625% as of March 31, 2016. We migrated to the new framework effective April 1, 2013. Previous year figures of regulatory capital and capital adequacy ratios were calculated under the then applicable Basel I and Basel II 83 frameworks. In May 2013, the RBI withdrew the requirement of parallel run and the prudential floor for implementation of Basel II vis-à-vis Basel I.

Our regulatory capital and capital adequacy ratios calculated under Basel III as of March 31, 2014, 2015, 2016 and as of December 31, 2016 are as follows:

(₹ in crore) As at March 31, As at December 31, Particulars 2014 2015 2016 2015 2016 Common equity tier I (CET 3,987.02 5,020.58 5659.73 5,180.20 6,318.32 I) Additional tier I capital 0 0.00 137.18 97.02 144.11 Tier I capital 3,987.02 5,020.58 5,796.91 5,277.22 6,462.43 Tier II capital 1993.51 2,034.21 1,572.54 2,072.96 1624.92 Total capital 5,980.53 7,054.79 7,369.45 7,350.18 8,087.35 Risk weighted assets 61,007.05 66,798.28 73,079.44 74,058.63 74,612.99 CET I ratio (%) 6.54% 7.52% 7.74% 6.99% 8.47% Tier I capital ratio 6.54% 7.52% 7.93% 7.12% 8.66% Tier II capital ratio 3.27% 3.05% 2.15% 2.80% 2.18% Total capital ratio 9.81% 10.57% 10.08% 9.92% 10.84%

Notes:

Tier I and Tier II capital, risk weighted assets and capital adequacy ratios for fiscal year 2013 have been calculated in accordance with RBI guidelines (New Capital Adequacy Framework, generally referred to as Basel II) and capital adequacy ratios for fiscal year 2016 and half-year ended December 31, 2016 have been calculated in accordance with RBI guidelines (Basel III Capital Regulations, generally referred to as Basel III) and therefore are not directly comparable.

We have adopted a Board-approved policy on our internal capital adequacy and assessment process, which defines and sets processes to review and improve the techniques used for identification, measurement and assessment of all material risks and resultant capital requirements.

Tier I capital consists of equity capital, statutory reserves, other disclosed free reserves, capital reserves and innovative perpetual debt instruments eligible for inclusion in Tier I capital. The Tier II capital consists of general provision and loss reserves, upper Tier II instruments and subordinate debt instruments eligible for inclusion in Tier II capital.

RBI required us to maintain a minimum CRAR of 9.625% (including capital conservation buffer) by March 31, 2016. We moved to RBI Basel III Capital Regulations as implemented by RBI from April 1, 2013. Indian banks have to comply with the regulatory limits and requirements as prescribed under RBI Basel III Capital Regulations, on an ongoing basis, with full implementation of such regulations by March 31, 2019. As per capital adequacy guidelines under Basel III, by March 31, 2019 we are required to maintain a minimum capital adequacy ratio of 9% (excluding the Capital conservation buffer of 2.50%), with minimum Common Equity Tier I (CET I) capital adequacy ratio of 5.50% (excluding capital conservation buffer of 2.50%).

As of December 31, 2016, our capital adequacy ratio under the RBI Basel III Capital Regulations was 10.84% with Tier I capital adequacy ratio of 8.66% and Common Equity Tier 1 (“CET1”) capital adequacy ratio of 8.47%. As of March 31, 2016, our capital adequacy ratio under the RBI Basel III Capital Regulations was 10.08%. In particular, our Tier I capital adequacy ratio was 7.93% and our CET I capital adequacy ratio was 7.74%.

Our current sources of funding (other than equity capital) are deposits and borrowings (which include the unsecured Tier II bonds). The cost of funds obtained is sensitive to interest rate fluctuations, which expose us to the risk that increasing interest rates will reduce our margins, if we are unable to pass on the increased rates to our customers.

Cash Flows

The table below summarizes our cash flows for the fiscal years ended on March 31, 2016, 2015 and 2014: (₹ in Crores) Fiscal Year Fiscal Year Fiscal Year 2016 2015 2014 Net cash flow from operating activities (A) 2,427.60 (4,803.07) 1,168.79 Net cash flow used in investing activities (B) (89.63) (44.98) (150.83) Net cash flow from financing activities (C) (42.85) 66.75 805.32 Net cash inflow/(outflow) (A+B+C) 2,295.12 (4,781.30) 1,823.28 Cash and Cash equivalents at the beginning of the year 6,030.54 10,811.84 8,988.56 Cash and Cash equivalents at the end of the year 8,325.66 6,030.54 10,811.84

Cash Flows from operating activities (₹ in Crores) Fiscal Year Fiscal Year Fiscal Year

2016 2015 2014 Net Cash Flow from Operating Activities 2,427.60 (4,803.07) 1,168.79 Operating Profit before changes in Operating Assets & 1,692.63 2,950.78 2,338.36 Liabilities Decrease/(Increase) in Investment (1,476.80) 1,701.27 (11,557.82) Decrease/(Increase) in Advances (3,066.33) (1,840.39) 1,232.53 Increase/(Decrease) in Deposits 7,583.68 (2,692.11) 10,858.17 Increase/(Decrease) in Borrowings (849.22) (398.51) (982.47) Decrease/(Increase) in Other Assets (681.76) (3,492.68) (272.08) Increase/(Decrease) in Other Liabilities & Provisions (847.10) (929.65) (334.87) Tax (Paid) /Refund 110.00 (106.00) (41.00)

Net cash generated from operations in fiscal year 2016 was ₹ 2,427.60 crore. Our net profit before taxes was ₹ (710.69) crore, which was primarily on account of provision and contingencies of ₹ 2,522.48 crore excluding tax expense.

Net cash generated from operations in fiscal year 2015 was ₹ (4,803.07) crore. Our net profit before taxes was ₹ 595.25 crore, which was primarily on account of provision and contingencies of ₹ 1,832.69 crore excluding tax expense.

Net cash generated from operations in fiscal year 2014 was ₹ 1,168.79 crore. Our net profit before taxes was ₹ (1,213.45) crore, which was primarily on account of provision and Contingencies of ₹ 3,617.96 crore excluding tax expense.

Cash Flows from Investing Activities

Our net cash flow from investing activities was ₹ (89.63) crore, ₹ (44.98) crore and ₹ (150.83) crore as of and at March 31, 2016, 2015 and 2014.

Our net cash flow from investing activities reflects investments consisting of the purchase and sale of fixed assets.

Cash Flows from Financing Activities

Our net cash flow from financing activities was ₹ (42.85) crore, ₹ 66.75 crore and ₹ 805.32 crore as of and at March 31, 2016, 2015 and 2014.

Assets

The following table sets forth the principal components of our assets as at March 31, 2016, March 31, 2015 and March 31, 2014: (₹ in Crore)

ASSETS Fiscal Year 2016 Fiscal Year 2015 Fiscal Year 2014 Cash and balances with Reserve Bank of 6,070.45 5,815.60 6,269.78 India Balances with Banks and Money at Call and 2,255.21 214.94 4,542.06 Short Notice Investments 44,723.38 43,245.49 41,813.38 Advances 68,060.20 66,763.04 65,767.51 Fixed Assets 1,210.92 877.41 938.73 Other Assets 7,111.59 6,111.09 5773.48 TOTAL 1,29,431.75 1,23,027.58 1,25,104.95

Our total assets marginally decreased by 1.66 % from ₹ 1,25,104.95 crore as of March 31, 2014 to ₹ 1,23,027.58 crore as of March 31, 2015, and subsequently increased by 5.21 % to ₹ 1,29,431.75 crore as of March 31, 2016. The most significant elements of these changes were increases in investments and advances as a result of a general increase in our business activities.

Our net investments increased slightly by 3.42% from ₹ 41,813.38 crore as of March 31, 2014 to ₹ 43,245.49 crore as of March 31, 2015 and subsequently increased by 3.42% to ₹ 44,723.38 crore as of March 31, 2016.

Our advances increased by 1.51% from ₹ 65,767.51 crore as of March 31, 2014 to ₹ 66,763.04 crore as of March 31, 2015, and thereafter increased by 1.94 % to ₹ 68,060.20 crore as of March 31, 2016.

Other assets, which included interest accrued, tax paid, tax deducted at source, stationery and stamps, deferred tax asset, amortization of transitional liability, amortization of liability under Accounting Standard – 15 (revised), investment in RRBs and non-banking assets acquired in satisfaction of claims, increased by 5.85% from ₹ 5,773.48 crore as of March 31, 2014 to ₹ 6,111.09 crore as of March 31, 2015, and subsequently increased by 16.37% to ₹ 7,111.59 crore as of March 31, 2016.

Financial Instruments and Off-balance sheet items

Contingent Liabilities (₹ in Crore) Fiscal Year 2016 Claims against our Bank not acknowledged as debts 9.02 Liability for partly paid investments 19.07 Liability on account of outstanding forward exchange contracts 5,365.95 Guarantees given on behalf of constituents (net of cash margin) : a. In India 3,157.91 b. Outside India 1,233.28 c. Bank Guarantee invoked but not paid (in India) 4.64 Acceptances, endorsements and other obligations (net of cash margin) 1,768.67 Other items for which our Bank is contingently liable 25.38 TOTAL 11,583.91

Risk Management Policies:

To address various risks like credit risk, market risk, operational risk, liquidity risk, forex risk and other pillar-2 risks, our Bank has formulated various risk management policies to identify, manage and mitigate such risks that our Bank is exposed to. The major policies formulated and approved by the Board of Directors of our Bank to address such risks are lending policy, policy on ICAAP, operational risk management policy, business line, mapping policy, asset liability management policy, market risk management policy, integrated treasury policy, disclosure policy, credit audit policy, stress testing policy, and policy on credit risk mitigation technique & collateral management etc.

Credit Risk:

To address the credit risk, our Bank has formulated a lending policy which lays down policy guidelines for credit management covering all areas of operation where credit risk is involved. The policy enables our Bank to enhance the risk management capabilities by undertaking lending decisions guided by the policy framework for a steady and healthy growth in its loan portfolio.

Our Bank has set various prudential limits to individual borrowers, group borrowers, entry level exposure norms, substantial exposure limits, benchmark financial ratios, borrower standards, exposure limits/ceilings to industries, sensitive sectors, rating category etc. in alignment with RBI directives. The Board of Directors of our Bank has reviewed such limits during the year. During the year, analysis of various exposure norms has been undertaken on half yearly basis to ensure Bank's various exposures are within the exposure limits/ceilings fixed by RBI/ Board of Directors of our Bank. Our Bank has made its loan appraisal function independent of risk rating function. Internal risk rating of loan accounts is carried through a software based rating model to assess the credit proposal and rating of a borrower.

During the fiscal year 2016, Bank conducted the credit portfolio analysis on quarterly interval, to study the impact of a particular industry / sector on the credit portfolio of our Bank and adopt strategies to improve the quality of credit portfolio and reduce the potential adverse impact of concentration risk. Our Bank has also undertaken the rating migration analysis of its borrowers on half yearly interval to analyze the stability rate, up-gradation rate, down - gradation rate and default rate for a one year, two years, three years and four years’ time horizons and appropriate corrective actions are initiated to protect the portfolio quality.

Market Risk:

Our Bank has in place a Board approved Market Risk Management Policy for management of market risk, which emphasises on measuring, monitoring and managing liquidity, interest rates, foreign exchange and equity risk of our Bank. The market risk in trading book is monitored and managed as per appropriate control mechanism in place. Market position, funding patterns, duration, counterparty limits and various sensitive parameters are also monitored by our Bank on regular basis. The advanced risk management tools such as Value at Risk (“VaR”), Earnings at Risk (“EaR”), Net Overnight Open Position Limits (“NOOPL”) and modified duration limits are used in managing market risk. Our Bank measures and monitors liquidity risk for all items of balance sheet through structural liquidity statements and stock ratios on regular basis.

Our Bank also monitors its Interest rate risk through interest rate sensitivity gap reports. Our Bank has formulated and reviewed its treasury policy to set operating guidelines for its treasury functions. Our Bank has also put in place an asset liability management policy to address the liquidity risk, interest rate risk etc. These policies comprise management practices, procedures, prudential risk limits, review mechanisms and reporting systems etc. These policies are reviewed periodically in line with changes in financial and market conditions.

Our Bank has an “Integrated Treasury Management System (ITMS)” software to monitor its investment and treasury portfolio on an ongoing basis along with automated computation of capital charge for Market Risk as well as strengthening the internal control system of investment portfolio of our Bank.

Operational Risk:

Operational Risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. Operational risk includes legal risk but excludes strategic and reputation risks. Our Bank has framed an operational risk management policy for managing the operational risk in an effective manner. Our Bank has also formulated business line mapping policy for mapping various products, activities, and income into different business lines. Bank's Operational Risk Management Committee (“ORMC”) has the responsibility of monitoring the operational risk of our Bank. ORMC also reviews the operational risk loss event data, new products, process and systems adopted by our Bank and provides suggestions for taking corrective/preventive measures to strengthen the internal systems and procedures.

The Operational Risk Management Policy adopted by our Bank outlines organization structure and detailed processes for management of operational risk. The basic objective of the policy is to closely integrate operational risk management system into the day-to-day risk management processes of our Bank by clearly assigning roles for effectively identifying, assessing, monitoring and controlling / mitigating operational risks and by timely reporting of 87 operational risk exposures, including material operational risk losses. Operational risks in our Bank are managed through comprehensive and well-articulated internal control frameworks.

Interest rate risk in the Banking Book

Interest rate risk refers to fluctuations in our Bank's net interest income and the value of its assets and liabilities arising from internal and external factors. Internal factors include the composition of our Bank's assets and liabilities, quality, maturity, interest rate and re-pricing period of deposits, borrowings, loans and investments. External factors cover general economic conditions. Rising or falling interest rates impact our Bank depending on Balance Sheet composition. Interest rate risk is prevalent on both the asset as well as the liability sides of our Bank's balance sheet.

The Asset-Liability Management Committee (ALCO) periodically monitors and controls the risks and returns, funding and deployment, setting Bank's lending and deposit rates and directing the investment activities of our Bank. Our Bank identifies the risks associated with the changing interest rates through earnings at risk approach and duration gap approach.

Implementation of Indian Accounting Standards (“Ind AS”)

MCA notified the Companies (Indian Accounting Standards) Rules, 2015 on February 16, 2015, pursuant to which the banking companies were exempted to comply with Ind AS for preparation of financial statements. However, in terms of the MCA press release dated January 18, 2016, the scheduled commercial banks are required to prepare Ind AS based financial statements on consolidated and standalone basis in relation to accounting period beginning from April 1, 2018 onwards, with comparatives for the period ending March 31, 2018 or thereafter and not even voluntarily before that. Further, pursuant to the notification dated February 11, 2016, RBI has advised scheduled commercial banks to inter alia, set up a Steering Committee headed by an official of the rank of an Executive Director (or equivalent) comprising members from cross-functional areas of the bank to immediately initiate the Ind AS implementation process.

Material Developments post March 31, 2016

Through notifications dated November 8, 2016 issued by the Ministry of Finance, Government of India and the RBI, ₹ 500 and ₹ 1,000 denominations of bank notes of then existing series issued by the RBI have ceased to be legal tender. Pursuant to this currency demonetisation, these high denomination notes have no value and cannot be used for transactions or exchange purposes with effect from November 9, 2016. These notes are currently being replaced with a new series of bank notes. In an effort to monitor replacement of demonetised notes, the Government of India has presently specified restrictive limits for exchange and withdrawal of currency all over India. The process of demonetisation and replacement of these high denomination notes may for the time being reduce the liquidity in the Indian economy which has significant reliance on cash.

Owing to the de-monetisation our customers may have been transacting extensively with us since the announcement. Such transactions may among others also include making deposits into the accounts maintained by our customers.

SIGNIFICANT DIFFERENCES BETWEEN INDIAN GAAP AND IND-AS

The financial information included herein is prepared and presented in accordance with Indian GAAP. Certain differences exist between Indian GAAP and Ind-AS which might be material to the financial information herein and are summarized below. Our Bank is responsible for preparing the Summary below. Our Bank has not prepared a complete reconciliation of its financial statements and related footnote disclosures between Indian GAAP and Ind-AS and has not quantified such differences. Accordingly, no assurance is provided that the following summary of differences between Indian GAAP and Ind-AS is complete. In making an investment decision, investors must rely upon their own examination of our Bank, the terms of the offering and the financial information. Potential investors should consult their own professional advisors for an understanding of the differences between Indian GAAP and Ind-AS, and how those differences might affect the financial information herein.

Sr. Particulars Indian GAAP Ind-AS No. 1. Presentation of Statement of Change in Equity: Statement of Change in Equity: Ind Financial Under Indian GAAP, a statement of AS-1 requires the presentation of a Statements changes in equity is not required. statement of changes in equity showing: Movements in share capital, retained earnings and other reserves are presented a) Transactions with owners in their in the Schedules to Financial capacity as owners, showing Statements. separately contributions by and distributions to equity holders.

b) The total comprehensive income for the period. Amounts attributable to owners of the parent and non- controlling interests are to be shown separately.

c) Effects of retrospective application or restatement on each component of equity.

d) For each component of equity, a reconciliation between the opening and closing balances separately disclosing each change.

Other Comprehensive Income: There is Other Comprehensive Income: Ind no concept of 'Other Comprehensive AS 1 introduces the concept of Other Income' under Indian GAAP. Comprehensive Income ("OCI"). Items of income and expenses that are not recognized in profit and loss as required or permitted by other Ind ASs are presented under OCI. Other disclosures: There are no specific Other disclosures: Ind AS-1 requires disclosure requirements under Indian disclosure of: GAAP for : (a) Critical judgments made by the (a) Critical judgments made by the management in applying accounting management in applying accounting policies; policies; (b) Key sources of estimation (b) Key sources of estimation uncertainty uncertainty that have a significant risk of that have a significant risk of causing a causing a material adjustment to the material adjustment to the carrying carrying amounts of assets and liabilities amounts of assets and liabilities within the within the next financial period; and next financial period; and

Sr. Particulars Indian GAAP Ind-AS No. (c) Information that enables users of its (c) Information that enables users of its financial statements to evaluate the entity’s financial statements to evaluate the objectives, policies and processes for entity’s objectives, policies and managing capita processes for managing capital. Extraordinary items: Under Indian Extraordinary items: Under Ind AS, GAAP, extraordinary items are disclosed presentation of any items of income or separately in the statement of profit and expense as extraordinary is prohibited. loss and are included in the determination of net profit or loss for the period. Items of income or expense to be disclosed as extraordinary should be distinct from the ordinary activities and are determined by the nature of the event or transaction in relation to the business ordinarily carried out by an entity. Change in Accounting Policies: Indian Change in Accounting Policies: Ind GAAP requires changes in accounting AS requires retrospective application of policies should be presented in the changes in accounting policies by financial statements on a prospective basis adjusting the opening balance of each (unless transitional provisions, if any, of an affected component of equity for the accounting standard require otherwise) earliest prior period presented and the together with a disclosure of the impact of other comparative amounts for each the same, if material. If a change in the period presented as if the new accounting policy has no material effect on accounting policy had always been the financial statements for the current applied, unless transitional provisions of period, but is expected to have a material an accounting standard require effect in the later periods, the same should otherwise. be appropriately disclosed. Dividends: Under Indian GAAP, Dividends: Ind AS requires liability for declaration of dividend is an adjusting dividends declared to holders of equity event and dividend proposed after the instruments are recognized in the period balance sheet date but before approval of in which it is declared. It is a non- the financial statements will have to be adjusting event recorded as a provision Errors: Under Indian GAAP, prior period Errors: As per Ind AS 8 material prior errors are included in determination of period errors shall be corrected profit or loss for the period in which the retrospectively in the first set of error is discovered and are separately financial statements either by restating disclosed in the statement of profit and loss the comparative amounts for the prior in a manner that the impact on current period(s) presented in which the error profit or loss can be perceived. occurred or if the error occurred before the earliest prior period presented, restating the opening balances of assets, liabilities and equity. 2 Cash Flow 1. Bank overdrafts are considered as 1. As on IND AS 7, it should be included statements financing activities. as cash and cash equivalents if they form 2. Cash flows from items disclosed as an integral part of an entity’s cash extraordinary are classified as arising management. from operating, investing or financing activities as appropriate, and 2. As presentation of items as separately disclosed. extraordinary is not permitted, the cash flow statement does not reflect any items of cash flow as extraordinary.

Sr. Particulars Indian GAAP Ind-AS No. 3 Deferred Taxes Under Indian GAAP, the Company As per Ind AS 12 Income Taxes, determines deferred tax to be recognized in deferred tax is determined with the financial statements with reference to reference to the balance sheet approach the income statement approach i.e. with i.e. based on the differences between reference to the timing differences between carrying value of the assets/ liabilities profit offered for income taxes and profit and their respective tax base. Using the as per the financial statements. balance sheet approach, there could be additional deferred tax charge/income on account of: i. All Ind AS opening balance sheet adjustments ii. Actuarial gain and losses accounted in OCI. iii. Indexation of freehold land iv. Fair valuation adjustments (employee loans, security deposits etc.) 4 Property, plant Under Indian GAAP, the Company Ind AS 16 mandates reviewing the and equipment — currently provides depreciation on straight method of depreciation, estimated useful reviewing line method and on other assets life and estimated residual value of an depreciation and depreciation under WDV method, based asset at least once in a year. The effect residual value on the useful life prescribed in Schedule II of any change in the estimated useful to the Companies Act, 2013. or as and residual value shall be taken estimated by the Management based on prospectively. Ind AS 101 allows technical evaluation current carrying value under Indian GAAP for items of property, plant and equipment to be carried forward as the cost under Ind AS. 5. Property, plant Currenly, under Indian GAAP, the Under Ind AS 16, the cost of an item of and equipment- company does not have recognises property, plant and equipment includes Provision for site provision for Site restoration expenses the initial estimate of the costs of restoration dismantling and removing the item and expenses restoring the site on which it is located, the obligation for which an entity incurs either when the item is acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period. 6. Leases Leasehold Land: Leasehold land Leasehold Land: Land lease is is recorded and classified as fixed classified as operating or finance as per assets and is excluded from lease the criteria under Ind AS 17. When a standard. lease includes both land and building elements, an entity assesses the classification of each element as a finance or operating lease separately. Operating Lease Rentals: Under Indian Operating Lease Rentals: Under Ind GAAP, lease payments under an operating AS 17, lease payments under an lease are recognized as an expense in the operating lease are recognized as an statement of profit and loss on a straight expense in the statement of profit and line basis over the lease term, unless loss on a straight line basis over the lease another systematic basis is more term unless either of the below: representative of the time pattern of the users benefit.

Sr. Particulars Indian GAAP Ind-AS No. a) another systematic basis is more representative of the time pattern of the user's benefit, or b) the payments to the lessor are structured to increase in line with expected general inflation for cost increases. Determining whether an arrangement Determining whether an arrangement contains a lease: There is no such contains a lease: An arrangement that requirement if it does not take the legal does not take the legal form of a lease form of a lease. but fulfilment of which is dependent on the use of specific assets and which conveys the right to use the assets is accounted for as a lease in accordance with Ind AS 17. 7. Accounting for Currently under Indian GAAP the Under Ind AS 19, the change in liability Employee Company recognizes all short term and is split into changes arising out of benefits long term employee benefits in the profit service, interest cost and re- and loss account as the services are measurements and the change in asset is received. For long term employee benefit, split between interest income and re- the Company uses actuarial valuation to measurements. Changes due to service determine the liability. cost and net interest cost/ income need to be recognized in the income statement and the changes arising out of re- measurements are to be recognized directly in OCI. 8. Segment Currently under Indian GAAP, segment Ind AS 108 requires segment disclosure Disclosures - information is prepared in conformity with based on the components of the entity Determination of the accounting policies adopted for that segments: preparing and presenting the financial Management monitors in making statements of the enterprise as a whole. decisions about operating matters (the Segment revenue, segment expense, 'management approach'). Such segment result, segment asset and segment components (operating segments) are liability have been defined. Disclosures are identified on the basis of internal reports required based on classification of segment that the entity's Chief Operating as primary or secondary. Disclosure Decision Maker (CODM) regularly requirements for secondary reporting reviews in allocating resources to format are less detailed than those required segments and in assessing their for primary reporting segments. performance. The term 'chief operating decision maker' identifies a function, not necessarily a manager with a specific title. That function is to allocate resources to and assess the performance of the operating segments of an entity. Often the chief operating decision maker of an entity is its chief executive officer or chief operating officer but, for example, it may be a group of executive directors or others. 9 Business Upon acquisition, any excess of the As per IND AS 103, All business combinations amount of the purchase consideration over combinations are to be accounted at fair the value of net assets of the transferor value using the "Acquisition method". company acquired by the transferee Upon acquisition, all assets acquired and company is recognized in the transferee liabilities assumed are recorded at fair

Sr. Particulars Indian GAAP Ind-AS No. company's financial statements as value on the acquisition date. goodwill on acquisition. All acquisitions Contingent consideration payable shall have been accounted in line with treatment be considered as part of total prescribed in the court approval or in case consideration while arriving at goodwill of amalgamation, as prescribed under AS or gain on acquisition, as the case may 14. be. However, common control transactions are scoped out and can be accounted for using the "book value" approach Lastly, Ind AS 101 provides exemptions for past business combinations from accounting prescribed under Ind AS 103 and the entity can elect to continue the accounting it had adopted under Indian GAAP. 10. Classification of Currently under Indian GAAP the Ind AS 109 requires all Financial assets Financial Company classifies all its financial assets to be either classified as measured at Instruments and and liabilities as short term or long term. amortized cost or measured at fair value. subsequent Long term investments are carried at cost Where assets are measured at fair value, measurement less any permanent diminution in the value gains and losses are either recognized of such investments determined on a entirely in profit or loss (FVTPL), or specific identification basis. Current recognized in other comprehensive investments are carried at lower of cost and income (FVTOCI). Financial assets fair value. Financial liabilities are carried include equity and debts investments, at their transaction values. interest free deposits, loans, trade receivables etc., There are two measurement categories for financial liabilities —FVTPL and amortized cost. Fair value adjustment on transition shall be adjusted against opening retained earnings on the date of transition. Provision for doubtful debts: Provision for doubtful debts: In Under Indian GAAP, provisions are made addition to the specific provisions under for specific receivables based on Indian GAAP, under Ind AS, at each circumstances such as credit default of reporting date, an entity shall assess customer or disputes with customers. An whether the credit risk on trade enterprise should assess the provision of receivables has increased significantly doubtful debts at each period end which, in since initial recognition. When making practice, is based on relevant information the assessment, an entity shall use the such as past experience, actual financial Expected Credit Loss model to provide position and cash flows of the debtors. for a loss allowance over and above any Different methods are used for making provision for doubtful debts in the profit provisions for bad debts, including ageing and loss statement. An entity shall analysis and individual assessment of measure expected credit losses to reflect recoverability. the following:

an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes; the time value of money; and

reasonable and supportable information that is available without undue cost or effort at the reporting date about past

Sr. Particulars Indian GAAP Ind-AS No. events, current conditions and forecasts of future economic condition Fair valuation of corporate guarantee given Under IND as 109, For a financial Under Indian GAAP. The company does guarantee contract, the entity is required not account for the Corporate Guarantee to make payments only in the event of a revenue default by the debtor in accordance with the terms of the instrument that is guaranteed. Accordingly, cash shortfalls are the expected payments to reimburse the holder for a credit loss that it incurs less any amounts that the entity expects to receive from the holder, the debtor or any other party. If the asset is fully guaranteed, the estimation of cash shortfalls for a financial guarantee contract would be consistent with the estimations of cash shortfalls for the asset subject to the guarantee. Hence, such costs are to be recorded in books Recognition and measurement of Financial Financial liabilities at amortized cost liabilities at amortized cost: Bank shall be measured at initial recognition borrowings and debentures were measured minus the principal repayments, plus or at initial recognition minus the principal minus the cumulative amortization repayments. using the effective interest method of any difference between that initial amount and the maturity amount. 11. Other income Interest income is accounted on accrual Ind AS 18 requires interest to be basis. Dividend income is accounted for recognised using effective interest rate when the right to receive it is established. method as per Ind AS 109 12. Revenues - Revenue is recognized at the nominal Revenue is recognised at fair value of Measurement: amount of consideration receivable. the consideration receivable. Fair value of revenue from sale of goods and services when the inflow of cash and cash equivalents is deferred is determined by discounting all future receipts using an imputed rate of interest. The difference between the fair value and the nominal amount of consideration is recognized as interest revenue using the effective interest method.

SELECT STATISTICAL INFORMATION

The following unaudited information should be read together with our financial statements, including the notes thereto, and the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this Placement Document. Whenever relevant, ratios for the nine-month periods are presented on an annualized basis. Footnotes appear at the end of each related section of tables where applicable.

We prepare our financial statements in accordance with Indian GAAP and all amounts presented in this section are in accordance with Indian GAAP. The financial statements reflect applicable statutory requirements and regulatory guidelines and accounting practices in India. These requirements, guidelines and practices change from time to time and, in accordance with Indian GAAP, adjustments to reflect such changes are made on a prospective basis and the financial statements for earlier periods are not restated. For the purposes of a comparative analysis in the discussion below, previous years’ figures have been reclassified wherever necessary. See “Risk Factors—Significant differences exist between Indian GAAP and other accounting principles, such as U.S. GAAP and IFRS, which investors may be more familiar with and may consider material to their assessment of our financial condition.”

Average Balance Sheet

The table below presents the average balances for interest-earning assets and interest-bearing liabilities together with the related interest income and expense amounts, resulting in the presentation of the average yields and cost for the periods indicated.

Average Balance: The average balance is the fortnightly average of balances outstanding.

Average Yield on Average Interest-Earning Assets: The average yield on average interest-earning assets is the ratio of interest income to average interest-earning assets.

Average Cost on Average Interest-Bearing Liabilities: The average cost on average interest-bearing liabilities is the ratio of interest expense to average interest-bearing liabilities. For purposes of calculating spread, interest bearing liabilities include non-interest bearing demand deposits.

Average Balance of Advances: The average balances of advances are net of average balances of bills rediscounted (“BRDS”) and bank risk participation (“IBPC”), consistent with our balance sheet presentation, as mandated by the RBI. Accordingly, interest expended on BRDS and IBPC transactions is netted off from interest income on advances for the purposes of the information on average yield/cost. The interest expended on these transactions is included under interest expense on borrowings in our financial statements for each of the periods presented.

Average Balance of Investments: The average balances of investments are net of average balances of securities sold under repurchase agreements (repo transactions) with the RBI and include average balances of securities purchased under agreements to resell (reverse repo transactions) with the RBI, consistent with our balance sheet presentation, as mandated by the RBI. Accordingly, interest expended on these repo transactions is netted off from interest income on investments, and interest income on the reverse repo transactions is included under interest income on investments for the purposes of the information on average yield/cost. The interest expended on the repo transactions is included under interest expense on borrowings and the interest income on the reverse repo transactions is included under interest income on balances with the RBI and other inter-bank funds in our financial statements for each of the periods presented.

Year ended March 31, 2014 Year ended March 31, 2015 Year ended March 31, 2016 Particulars Interest Average Interest Average Interest Average Average Average Average (All Figures in ₹ Crore) Income / yield/cost Income / yield/cost Income / yield/cost Balance Balance Balance Expense (%) Expense (%) Expense (%) Interest-earning assets: Advances 72,207.52 7,816.56 10.83 65,220.53 7,040.83 10.80 66,783.54 6,628.44 9.93 Investments 30,859.38 2,597.62 8.42 35,610.53 2,879.32 8.08 37,775.29 3,038.73 8.04 Others 10,811.83 185.11 1.71 15,126.29 260.32 1.72 8,325.66 269.50 3.24 Total interest-earning 1,13,878.73 10,599.29 9.31 1,15,957.35 10,180.48 8.78 1,12,884.49 9,936.67 8.80 assets 95

Non-interest-earning assets: Fixed assets 938.73 NA NA 877.41 NA NA 1,210.92 NA NA Other assets 2,710.52 NA NA 6,111.09 NA NA 7,111.59 NA NA Total non-interest 3,649.25 NA NA 6,988.50 NA NA 8,322.51 NA NA earning assets Total assets 1,17,527.98 10,404.68 9.14 1,22,945.85 10,180.48 8.28 1,21,207.00 9,936.67 8.20

Interest-bearing liabilities: Deposits 1,06,009.94 7,569.14 7.14 1,05,378.25 7,253.66 6.88 1,09,138.43 7,184.17 6.58 Borrowings 4,460.24 467.33 10.48 4,061.73 436.16 10.74 2,912.51 471.94 16.20 Total interest-bearing 1,10,470.18 8,036.47 7.27 1,09,439.98 7,689.82 7.03 1,12,050.94 7,656.11 6.83 liabilities

Non-interest-bearing liabilities Capital and reserves 5,282.66 NA NA 5,828.04 NA NA 6,319.19 NA NA Other liabilities 1,775.14 NA NA 7,677.83 NA NA 2,836.87 NA NA Total non-interest- 7,057.80 NA NA 13,505.87 NA NA 9,156.06 NA NA bearing liabilities Total liabilities 1,17,527.98 8,036.47 7.27 1,22,945.85 7,689.82 6.25 1,21,207.00 7,656.11 6.32

Nine Months ended December 31, 2015 Nine Months ended December 31, 2016 Interest Interest Average Particulars (All Figures in ₹ Crore) Average Average Average Income / Income / yield/cost Balance yield/cost (%) Balance Expense Expense (%) Interest-earning assets: Advances 65,353.52 5,087.25 7.78 67,601.91 4,431.00 6.55 Investments 37,627.77 2,231.36 5.93 38,719.68 2,302.61 5.95 Others 5,547.99 201.73 3.64 26,754.61 199.80 0.75 Total interest-earning assets 1,08,529.28 7,557.82 6.96 1,33,076.20 6,933.41 5.21

Non-interest-earning assets: Fixed assets 858.06 NA NA 1,183.79 NA NA Other assets 6,936.16 NA NA 12,652.00 NA NA Total non-interest earning assets 7,794.22 NA NA 13,835.79 NA NA Total assets 1,16,323.50 7,557.82 6.96 1,46,911.99 6,933.41 4.72

Interest-bearing liabilities: Deposits 1,05,770.88 5,336.55 5.05 1,16,778.62 5,356.66 4.59 Borrowings 4,562.79 346.16 7.59 2,027.20 293.89 14.50 Total interest-bearing liabilities 1,10,333.67 5,682.71 5.15 1,18,805.82 5,650.55 4.76

Non-interest-bearing liabilities Capital and reserves 5,959.12 NA NA 7,126.86 NA NA Other liabilities 30.71 NA NA 20,979.31 NA NA Total non-interest-bearing liabilities 5,989.83 NA NA 28,106.17 NA NA Total liabilities 1,16,323.50 5,682.71 5.15 1,46,911.99 5,650.55 4.76

Analysis of Changes in Interest Income and Interest Expense

The following table sets forth, for the periods indicated, the allocation of the changes in our interest income and interest expense between average balance and average rate. The changes in net interest income between periods have been reflected as attributed either to average balance or average rate changes. For purposes of the below tables, changes which are due to both average balance and average rate have been allocated solely to changes in average rate.

Fiscal year 2013 vs Fiscal year 2014 Increase Fiscal year 2014 vs Fiscal year 2015 Increase (decrease) due to (decrease) due to Particulars Change in Change in (All Figures in ₹ Crore) Change in Change in Net change average Net change average average rate average rate balance balance Interest income: Advances 917.28 11,245.13 -0.48 -775.73 -6,986.97 -0.03 Investments 332.05 4,177.53 0.01 434.33 4,751.55 0.16 Others 92.20 996.65 NA -93.67 4,315.07 NA Total Interest Income 1,347.79 1,291.89 NA -418.81 2,078.62 NA

Interest expense: Deposits 1,338.06 18,219.03 -0.06 -315.48 -631.69 -0.26 Borrowings -65.82 28,670.20 NA -31.17 -398.51 NA Total interest expense 1,272.24 46,889.23 NA -346.65 -1030.20 NA

Nine months ended December 31, 2015 vs Nine Fiscal year 2015 vs Fiscal year 2016 Increase months ended December 31, 2016 Increase (decrease) due to Particulars (Decrease) due to (All Figures in ₹ Crore) Change in Change in Change in Change in Net change average Net change average average rate average rate balance balance Interest income: Advances -412.39 1,563.00 -0.87 -656.25 2,248.39 -1.22 Investments 158.42 2,164.77 -0.04 35.80 1,091.91 -0.01 Others 178.06 52.35 NA 1.93 21,206.92 NA Total Interest Income -243.81 926.34 NA -624.40 24,546.92 NA

Interest expense: Deposits -69.49 3,760.18 -0.30 20.11 11,007.74 -0.49 Borrowings 35.78 5,845.21 NA -52.28 -2,535.59 NA Total interest expense -33.71 9,605.39 NA -32.17 8,472.15 NA

Return on Equity and Assets

The following table presents selected financial ratios for the periods indicated

Nine Month Ended Year ended March 31 Particulars December 31 (All Figures in ₹ Crore) 2014 2015 2016 2015 2016 Net profit (1,213.45) 255.99 (281.95) 131.08 145.94 Average total assets 1,22,323.85 1,20,632.38 1,24,306.15 1,24,167.02 1,33,076.20 Average total shareholders’ equity 3,412.37 4,961.05 4,691.35 3,901.19 4,053.88 Return on assets (net profit as a percentage of average total (0.99) 0.21 (0.23) 0.11 0.06 assets) Return on equity (net profit as a percentage of average total -35.56 5.16 -6.01 3.36 3.60 shareholders’ equity) Average total shareholders’ equity as a percentage of average 2.79 4.11 3.77 3.14 3.05 total assets

Investment Portfolio

The following tables set forth, as of the dates indicated, information related to our investments classified under the held to maturity (HTM), available for sale (AFS) and held for trading (HFT) categories:

Particulars At March 31, 2014 At March 31, 2015 (All figures in ₹ crore) HTM AFS HFT Total HTM AFS HFT Total Government Securities 25,962.76 9,121.29 - 35,084.05 24,166.22 10,854.23 - 35,020.45 Other Approved Securities 16.43 - - 16.43 - - - - Shares 3.85 434.96 - 438.81 3.85 339.59 - 343.44 Debentures and Bonds - 2,152.15 - 2,152.15 16.43 2,096.26 - 2,112.69

Particulars At March 31, 2014 At March 31, 2015 (All figures in ₹ crore) HTM AFS HFT Total HTM AFS HFT Total Joint Venture & Subsidiaries ------Others 3,092.09 4,343.97 - 7,436.06 25.81 5,937.66 - 5,963.47 Total 29,075.13 16,052.37 - 45,127.50 24,212.31 19,227.74 - 43,440.05

Particulars At March 31, 2016 At December 31, 2016 (All figures in ₹ crore) HTM AFS HFT Total HTM AFS HFT Total Government Securities 24,166.50 12,074.16 - 36,240.66 24,790.48 22,581.28 - 47,371.76 Other Approved Securities ------Shares 3.85 353.95 - 357.80 3.85 499.40 - 503.25 Debentures and Bonds 166.43 1,983.93 - 2,150.36 166.43 2,506.00 - 2,672.43 Joint Venture & Subsidiaries ------Others 32.16 6,153.04 - 6,185.20 26.47 10,272.46 - 10,298.93 Total 24,368.94 20,565.08 - 44,934.02 24,987.23 35,859.14 - 60,846.37

Residual Maturity Profile

The following table sets forth, for the periods indicated, an analysis of the residual maturity profile of our government and debt securities and their market yields.

Year ended March 31, 2016 Particulars Up to one year One to five years Five to ten years (All figures in ₹crore) Amount Yield (%) Amount Yield (%) Amount Yield (%) Government Securities 273.48 7.91 9,010.36 7.69 16,237.38 8.17 Other Debt Securities 230.99 8.90 785.79 9.09 787.42 8.39 Total 504.47 9,796.15 17,024.80

Nine months ended December 31, 2016 Particulars Up to one year One to five years Five to ten years (All figures in ₹crore) Amount Yield (%) Amount Yield (%) Amount Yield (%) Government Securities 1,297.44 7.77 6,816.20 7.69 23,750.95 7.65 Other Debt Securities 195.87 9.23 793.04 8.55 1,075.54 8.08 Total 1,493.31 7,609.24 24,826.49

Funding

Total Deposits All figures in ₹crore Year ended March 31 Nine months ended December 31 Particular 2014 2015 2016 2015 2016 s % of % of % of % of % of Amount Amount Amount Amount Amount Total Total Total Total Total Demand 8,077.00 7.24 8,944.00 8.22 7,981.00 6.86 6,648.00 5.91 9,697.00 7.59 deposits Savings 33,154.00 29.73 36,811.00 33.83 40,810.00 35.06 39,246.00 34.89 51,273.00 40.16 deposits Time 70,279.00 63.02 63,063.00 57.95 67,610.00 58.08 66,582.00 59.20 66,722.00 52.25 deposits Total 1,11,510.00 100.00 1,08,818.00 100.00 1,16,401.00 100.00 1,12,476.00 100.00 1,27,692.00 100.00

Short-term Borrowings

The following table sets forth, for the periods indicated, information related to our short-term borrowings, which are comprised primarily of money-market borrowings. Short-term borrowings include securities sold under repurchase agreements with market participants but exclude those with the RBI. For the purpose of the below table, short-term borrowings exclude our interbank deposits taken under the credit support annex arrangements.

Year ended March 31 Nine months ended December 31 Particulars (All figures in ₹ crore) 2014 2015 2016 2015 2016 Period end 0 0 0 250.0 0 Average balance during the period 156.14 218.87 663.33 658.33 599.77 Average interest rate during the period 8.08 7.67 7.10 7.20 6.39 Average interest rate at period end 0 0 0 6.96 0

Subordinated Debt

As at December 31, 2016 Average Interest Face Year of Year of Step-up rate Type Cur Tenor Rate Year of call Value Issue Maturity (%) (Years) (%) (₹crore) March 27, April 27, Lower Tier II (SERIES V) INR 10.08 10.10 No No 100 2007 2017 Upper Tier-II (Series-I) June 18, June 18, June 18, INR 15.00 10.65 11.15 575 Basel I 2007 2022 2017 Lower Tier -II (Series-VI) March 25, March 25, INR 10.00 9.30 No No 250 Basel I 2009 2019 Lower Tier -II (Series-VII) December December INR 10.00 9.20 No No 200 Basel II 28, 2011 28, 2021 Call option after 10 years from IPDI-Tier I(Series I) Basel December December INR Perpetual 9.27 the date of No 300 II 5, 2012 5, 2022 issue with approval of RBI Lower Tier -II (Series- June 25, June 25, INR 10.00 8.75 No No 500 VIII) Basel III Compliant 2013 2023 Call option after 05 years from September September AT-1 Basel III Compliant INR Perpetual 11.95 the date of No 150 29, 2015 29, 2020 issue with approval of RBI

Interest Coverage Ratio

Nine months ended December Particulars Year ended March 31, 31, (All figures in ₹crore) 2014 2015 2016 2015 2016 Net Profit (A) (1,213.45) 255.99 (281.95) 131.08 145.94 Depreciation on Bank's Property (B) 69.19 105.72 102.76 71.77 76.55 Interest expended (C) 8,036.47 7,689.82 7,656.11 5,682.71 5,650.54 Total (D = A+B+C) 6,892.21 8,051.53 7,476.92 5,885.56 5,873.03 Interest Coverage Ratio (D  C) 0.86 1.05 0.98 1.04 1.04

Asset Liability Gap

The following table sets forth, for the periods indicated, our asset-liability gap position:

As of December 31, 2016 Particulars (All Total Over 1 Over 3 29-90 91-180 6-12 Over 5 figures in ₹ crore) 0-28 Days within one year to 3 years to 5 Total Days Days Months years year years years Cash and balances with Reserve Bank of India 2,018.99 177.08 258.66 376.87 2,831.60 726.68 515.20 2,840.77 6,914.26 Balances with banks and money at call and short notice 407.95 0 0 0 407.95 0 0 0 407.95 Investments 23,108.32 6,044.16 2,523.52 3,355.36 35,031.36 2,641.07 1,967.67 20,967.25 60,607.35 Advances 9,954.65 4,473.48 1,969.45 3,157.23 19,554.82 9,990.41 8,544.24 25,605.84 63,695.30

As of December 31, 2016 Particulars (All Total Over 1 Over 3 29-90 91-180 6-12 Over 5 figures in ₹ crore) 0-28 Days within one year to 3 years to 5 Total Days Days Months years year years years Fixed assets 0 0 0 0 0 0 0 1,183.80 1,183.80 Other assets 1,608.22 626.33 304.09 1,541.96 4080.59 897.05 1,646.84 5,319.78 11,944.26 Total assets 37,098.13 11,321.05 5,055.72 8,431.42 61,906.32 14,255.21 12,673.95 55,917.44 1,44,752.92

Capital 0 0 0 0 0 0 0 1,339.45 1,339.45 Reserves and surplus 0 0 0 0 0 0 0 5,787.43 5,787.43 Deposits 8,749.69 4,753.72 6,324.69 9,065.04 28,893.14 17,812.11 12,783.37 68,203.61 1,27,692.23 Borrowings 1.47 134.90 100.00 86.41 322.79 422.17 208.26 1,525.00 2,478.22 Other liabilities and 1,330.28 775.91 974.63 2,349.85 5,430.66 31.2 0 1,993.73 7,455.59 provisions Total liabilities 10,081.44 5,664.53 7,399.32 11,501.30 34,646.59 18,265.48 12,991.63 78,849.22 1,44,752.92 Liquidity gap 27,016.69 5,656.52 -2,343.6 -3,069.9 27,259.73 -4,010.27 -317.68 -22,931.8 0 Cumulative Liquidity 27,016.69 32,673.20 30,329.6 27,259.7 27,259.70 23,249.46 2,2931.78 26,964.00 0 gap 1,44,752.90 Cumulative liabilities 10,081.44 15746 2,3145.3 34,646.6 34,646.60 52,912.07 65,903.7 1,44,752.9

Cumulative liquidity gap as a percentage of 267.98% 207.50% 131.04% 78.68% 78.68% 43.94% 34.80% 0.00% 0.00% cumulative liabilities (%)

Loan Portfolio

The following table sets forth, for the periods indicated, our gross loan portfolio (including loans made by our overseas branches) classified by product group. Loans are classified into retail based on the criteria of orientation, the nature of the product, granularity of the exposure and quantum thereof as laid down by the Basel committee. See the section “Supervision and Regulation”. For a description of our retail and wholesale loan products, see the “Business” section.

Gross Loans -Industry Year ended March 31, Nine month ended December 31, (All figures in ₹crore) 2014 2015 2016 2015 2016 Auto loans 648.24 513.03 518.79 496.76 577.51 Personal loans / Credit Cards 3,125.31 3,685.27 3,233.97 3,040.62 2,866.32 Retail business banking 53,575.32 53,346.47 54,053.65 53,793.11 50,615.26 Commercial vehicle and 1,435.64 1,026.62 956.13 956.16 965.59 construction equipment finance 934.66 1,027.61 1,757.28 1,738.16 1,168.79 Housing loans 4,381.50 5,092.74 5,969.67 5,618.12 6,695.97 Other retail loans 2,201.77 2,759.92 2,930.11 2,918.10 2,920.15 Gross retail loans 10,356.82 12,050.96 12,652.36 12,073.60 13,059.95 Gross wholesale loans 1,679.27 1,618.26 1,991.33 1,681.55 2,056.43 Total gross loans 67,981.71 69,069.92 71,412.00 70,242.58 67,866.02

Concentration of Domestic Loans

Pursuant to the guidelines of the RBI, our exposure to individual borrowers is limited to 15% of our capital funds (as defined by the RBI and calculated under Indian GAAP), and our exposure to a group of companies under the same management is limited to 40% of our capital funds. In the case of infrastructure projects, such as power, telecommunications, road and port projects, an additional exposure of up to 5% of capital funds is allowed in respect of individual borrowers and up to 10% in respect of group borrowers. We may, in exceptional circumstances, with the approval of our Board of Directors, consider enhancement of exposure to a borrower by a further 5% of capital funds. The following table sets forth, for the periods indicated, our gross loans outstanding by the borrower’s industry or economic activity and as a percentage of our gross loans (where such percentage exceeds 2.0% of the total). We do not consider retail loans a specific industry for this purpose.

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Particulars As at March 31, As at December 31, (All figures in ₹ crore) 2014 2015 2016 2015 2016 Wholesale Trade 1,679.27 1,618.26 1,991.33 1,681.55 2,056.43 Agriculture and Allied Activities 9,724.81 8,594.61 9,460.65 7,992.61 8,596.57 Automobile & Auto Ancilliary 648.24 513.03 518.79 496.76 577.51 Road Transportation 1,435.64 1,026.62 956.13 956.16 965.59 Retail Trade 2,651.06 2,539.47 2,866.04 2,475.76 2,403.41 Services 14,879.35 16,011.60 16,858.06 15,892.11 14,803.96 NBFC / Financial Intermediaries 5,270.12 6,128.48 6,183.99 6,106.60 5,021.79 Food & Beverage 1,216.48 1,291.70 1,766.30 1,525.81 1,675.01 Power 9,664.66 9,484.11 9,335.32 10,943.70 10,394.60 Iron & Steel 4,920.60 5,005.35 4,751.18 4,840.26 4,612.51 Coal & Petroleum Products 225.90 200.10 221.99 201.54 240.90 Others (including unclassified retail) 15,665.58 16,656.59 16,502.22 17,129.72 16,517.74 Total 67,981.71 69,069.92 71,412.00 70,242.58 67,866.02

Directed Lending

The RBI has established guidelines requiring Indian banks to lend 40% of their adjusted net bank credit (ANBC), as computed in accordance with RBI guidelines, or the credit equivalent amount of off balance sheet exposures, whichever is higher, as of March 31 of the previous fiscal to certain sectors called “priority sectors”. Priority sectors are broadly comprised of agriculture, micro and small enterprises (MSEs), including retail trade, micro credit, education and housing, subject to certain limits.

The following table sets forth, for the periods indicated, our directed lending broken down by sector:

As at March 31, As at December 31, Particulars (All figures in ₹crore) 2014 2015 2016 2015 2016 Directed lending: Agriculture 12,297.00 9,073.00 12,605.00 10,944.00 11,277.00 Micro and small enterprises 11,238.00 12,273.00 10,998.00 10,835.00 10,219.00 Other 5,415.00 7,215.00 6,206.00 5,887.00 6,918.00 Total directed lending 28,950.00 28,561.00 29,809.00 27,666.00 28,414.00

Non-Performing Assets

Recognition of Non-Performing Assets

The RBI has issued guidelines on income recognition, asset classification, provisioning standards and the valuation of investments applicable to banks, which are revised from time to time. The principal features of the RBI guidelines are set forth below.

An asset, including a leased asset, becomes non-performing once it ceases to generate income for our Bank. The RBI guidelines stipulate the criteria for determining and classifying a non-performing asset (NPA). A NPA is a loan or an advance where:

. interest and/or an installment of principal remains overdue (as defined below) for a period of more than 90 days in respect of a term loan;

. the account remains “out-of-order” (as defined below) in respect of an overdraft or cash credit for more than 90 days;

. the bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted;

101

. in the case of a loan granted for short duration crops, the installments of principal or interest thereon remain overdue for two crop seasons;

. in the case of a loan granted for long duration crops, the installments of principal or interest thereon remain overdue for one crop season;

. the amount of a liquidity facility remains outstanding for more than 90 days, in respect of securitization transactions undertaken in accordance with the RBI guidelines on securitization; or

. in respect of derivative transactions, the overdue receivables representing the positive mark-to-market value of a derivative contract, remain unpaid for a period of 90 days from the specified due date for payment.

Banks should classify an account as a NPA if the interest imposed during any quarter is not fully repaid within ninety days from the end of the relevant quarter. For additional information regarding the RBI’s guidelines regarding the classification of NPAs into categories, please refer to the section “Supervision and Regulation”.

“Overdue”

Any amount due to our Bank under any credit facility is “overdue” if it is not paid on the due date fixed by our Bank.

“Out-of-Order” Status

An account should be treated as “out-of-order” if the outstanding balance remains continuously in excess of the sanctioned limit/drawing power. In circumstances where the outstanding balance in the principal operating account is less than the sanctioned limit/drawing power, but (i) there are no credits continuously for a period of 90 days as on the date of the balance sheet of the bank or (ii) the credits are not sufficient to cover the interest debited during the same period, these accounts should be treated as “out-of-order”.

The following table sets forth, for the periods indicated, information about our NPAs:

As at March 31, As at December 31, Particulars (All figures in ₹ crore) 2014 2015 2016 2015 2016 Gross NPAs 7,118.01 6,552.91 9,471.01 6,721.53 10,845.31 Provision for NPAs 2,399.24 2,430.68 3,351.75 2,748.72 4,076.68 DICDC/ECGC Claim (unadjusted) 54.66 40.85 8.55 7.68 38.74 Net NPAs 4,664.11 4,081.38 6,110.71 3,965.13 6,729.89 Gross Advances 67,981.71 69,069.92 71,412.00 70,242.58 67,866.02

Gross NPAs as a percentage of gross advances (%) 10.47 9.49 13.26 9.57 15.98 Provisions coverage ratio 52.25 58.50 53.36 60.89 54.62

Classification of Non-Performing Assets

As per RBI guidelines, banks are required to classify their NPAs into substandard, doubtful and loss asset categories.

Substandard assets

A substandard asset is one which has remained an NPA for a period of less than or equal to 12 months. In such cases, the current net worth of the borrower / guarantor or the current market value of the security charged is not enough to ensure recovery of the dues to the banks in full. In other words, such an asset will have well defined credit weaknesses that jeopardize the liquidation of the debt and are characterized by the distinct possibility that banks will sustain some loss, if deficiencies are not corrected.

Doubtful assets

A doubtful asset is one which has remained an NPA for a period exceeding 12 months. A loan classified as doubtful has all the weaknesses inherent in assets that were classified as substandard, with the added characteristic that the

102 weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions and values, highly questionable and improbable.

Loss assets

A loss asset is one where loss has been identified by our Bank or internal or external auditors or the RBI inspection but the amount has not been written off wholly. In other words, such an asset is considered uncollectible and of such little value that its continuance as a bankable asset is not warranted although there may be some salvage or recovery value. The following table sets forth, for the periods indicated, the classification of our gross NPAs in accordance with the RBI guidelines:

Particulars As at March 31 As at December 31 All figures in ₹crore 2014 2015 2016 2015 2016 Substandard 4,161.60 2,221.07 2,506.56 1,403.92 2,214.67 Doubtful 2,809.14 4,294.31 6,931.44 5,076.00 8,490.55 Loss 147.27 37.53 33.01 241.61 140.09 Gross NPAs 7,118.01 6,552.91 9,471.01 6,721.53 10,845.31

Provisioning Policy for Non-Performing Assets

Specific loan loss provisions in respect of non-performing advances are made based on management’s assessment of the degree of impairment of wholesale and retail advances, subject to the minimum provisioning level prescribed by the RBI. The specific provision levels for retail NPAs are also based on the nature of product and delinquency levels. In relation to non-performing derivative contracts, as per the extant RBI guidelines, we make provision for the entire amount of overdue and future receivables relating to positive marked to market value of the said derivative contracts. Provisions for substandard, doubtful and loss asset categories are required to be made as per the RBI guidelines described below. These provisioning requirements are the minimum provisions that have to be made in accordance with the RBI guidelines.

Substandard assets

A general provision of 15.0% on total outstanding loans is required without making any allowance for the Export Credit Guarantee Corporation of India guarantee cover and securities available. The unsecured exposures which are identified as sub-standard are subject to an additional provision of 10.0% (i.e. a total of 25.0% on the outstanding balance). However, unsecured loans classified as substandard, where certain safeguards such as escrow accounts are available, are subject to an additional provision of only 5.0% (i.e. a total of 20.0% on the outstanding balance).

Doubtful assets

A 100.0% provision is made against the unsecured portion of the doubtful asset. The value assigned to the collateral securing a loan is the realizable value determined by third party appraisers. In cases where there is a secured portion of the asset, depending upon the period for which the asset remains doubtful, a 25.0% to 100.0% provision is required to be made against the secured asset as follows:

. Up to one year: 25.0% provision. . One to three years: 40.0% provision. . More than three years: 100.0% provision.

Loss assets

The entire asset is required to be written off or 100.0% of the outstanding amount is required to be provided for.

Analysis of Non-Performing Loans by Industry Sector

The following table sets forth, for the periods indicated, our non-performing loans by borrowers’ industry or economic activity in each of the respective periods and as a percentage of our loans in the respective industry or economic activity sector.

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Year ended March 31, 2014 Year ended March 31, 2015 Year ended March 31, 2016 NPL as a NPL as a NPL as a Non- Non- Non- Industry % of % of % of Gross Performing Gross Performing Gross Performing All figures in ₹ crore loans in loans in loans in Loans Loans Loans Loans Loans Loans the the the (NPL) (NPL) (NPL) Industry Industry Industry Information Technology 23.98 3.44 14.35 27.78 19.03 68.50 14.46 8.57 59.27 Paper, Printing and 132.22 53.52 40.48 95.64 8.49 8.88 122.91 7.50 3.10 Stationery Iron and Steel 4,920.60 1,027.81 20.89 5,005.35 758.99 15.16 4,763.47 2,063.96 43.33 Engineering 1,481.47 192.31 12.98 1,625.44 265.94 16.36 1,369.20 315.44 23.04 Mining and Minerals 81.58 18.64 22.85 66.01 29.24 44.30 208.57 86.99 41.71 Road Transportation 714.75 122.06 17.08 558.49 106.90 19.14 491.94 94.58 19.23 Retail Assets 6,426.70 304.41 4.74 6,906.93 277.12 4.01 6,654.44 285.10 4.28 Textiles & Garments 1,527.81 371.57 24.32 1,512.57 169.10 11.18 1,558.39 313.59 20.12 Gems and Jewellery 418.51 231.52 55.32 435.79 49.22 11.29 426.40 79.98 18.76 NBFC / Financial 6,270.12 - - 6,128.48 - - 6,183.99 - - Intermediaries Wholesale Trade 1,679.27 333.04 19.83 1,618.26 300.13 18.55 1,992.58 491.70 24.68 Real Estate & Property 6,569.90 324.07 4.93 6,875.81 219.31 3.19 7,913.18 284.88 3.60 Services Construction and 934.66 116.83 12.50 1,027.61 85.36 8.31 1,757.28 238.69 13.58 Developers (Infrastructure) Automobile & Auto 478.39 222.69 46.55 603.87 5.96 0.91 605.65 5.42 0.89 Ancillary Agriculture and Allied 9,724.81 1,285.45 13.22 8,594.61 1,322.96 15.39 9,461.52 1,121.48 11.85 Activities Retail Trade 2,651.06 610.26 23.02 2,539.47 487.81 19.21 Chemical and Products 824.45 308.61 37.43 599.75 133.51 22.26 473.79 2.59 0.55 Capital Market 3.61 0.38 10.53 2.61 0.62 23.75 1.65 0.63 38.18 Intermediaries Wood & Products 143.55 28.06 19.55 147.03 23.69 16.11 145.66 33.42 22.94 10,484.1 11,335.3 Power 9,664.66 25.31 0.26 - - 166.38 1.47 1 2 Plastic & Products 220.37 35.01 15.89 190.08 41.55 21.86 190.64 33.88 17.77 Services 1,320.33 257.06 19.47 1,375.73 286.40 20.82 1,625.19 354.89 21.84 Food and Beverage 1,445.96 268.30 18.56 1,630.55 314.02 19.26 1,912.06 360.35 18.85 Consumer Durables 78.62 12.90 16.41 51.29 11.20 21.84 28.25 9.55 33.81 Telecom 1,076.71 17.91 1.66 971.68 87.17 8.97 803.86 17.91 2.23 Housing Finance 2,785.44 - - 3,227.12 - - 3,272.76 - - Companies Drugs and 326.39 160.98 49.32 313.30 231.07 73.75 480.86 229.10 47.64 Pharmaceuticals Fertilisers & Pesticides 201.23 0.71 0.35 233.02 0.59 0.25 294.51 0.60 0.20 Glass & Products 6.87 0.40 5.82 6.96 1.15 16.52 5.53 1.45 26.22 Other Industries 5,847.69 784.76 13.42 6,214.58 1,316.38 21.18 7,317.94 2,862.38 39.11 Total gross non- 69,069.9 71,412.0 67,981.71 7,118.01 10.47 6,552.91 9.49 9,471.01 13.26 performing loans 2 0

Nine Months ended December 31, 2015 Nine Months ended December 31, 2016 Industry NPL as a % NPL as a % Non-Performing Non-Performing All figures in ₹ crore Gross Loans of loans in the Gross Loans of loans in the Loans (NPL) Loans (NPL) Industry Industry Information Technology 26.21 18.90 72.11 13.29 8.48 63.81 Paper, Printing and Stationery 105.49 6.69 6.34 127.46 7.43 5.83 Iron and Steel 4,840.26 1,040.75 21.50 4,612.51 3,228.18 69.99 Engineering 1,223.32 181.31 14.82 1,284.12 271.66 21.15 Mining and Minerals 89.67 17.51 19.53 76.84 5.18 6.74 Road Transportation 491.08 99.75 20.31 497.48 95.72 19.24 Retail Assets 6,422.18 293.71 4.57 6,346.58 303.02 4.77 Textiles & Garments 1,276.71 208.76 16.35 1,280.86 753.29 58.81 Gems and Jewellery 396.61 50.33 12.69 375.71 79.80 21.24 NBFC / Financial Intermediaries 6,106.60 - - 5,021.79 15.57 0.31 Wholesale Trade 1,681.55 331.80 19.73 2,056.43 794.32 38.63 Real Estate & Property Services 7,499.94 288.67 3.85 8,662.99 368.21 4.25 Construction and Developers 1,738.16 255.69 14.71 1,168.79 261.75 22.39 104

Nine Months ended December 31, 2015 Nine Months ended December 31, 2016 Industry NPL as a % NPL as a % Non-Performing Non-Performing All figures in ₹ crore Gross Loans of loans in the Gross Loans of loans in the Loans (NPL) Loans (NPL) Industry Industry (Infrastructure) Automobile & Auto Ancillary 579.48 5.78 1.00 645.67 4.78 0.74 Agriculture and Allied Activities 7,992.61 1,342.19 16.79 8,596.57 1,233.70 14.35 Retail Trade 2,475.76 492.70 19.90 2,403.41 601.83 25.04 Chemical and Products 474.05 2.59 0.55 516.50 2.55 0.49 Capital Market Intermediaries 1.73 0.34 19.65 11.97 0.76 6.35 Wood & Products 138.81 24.26 17.48 153.28 34.12 22.26 Power 10,943.70 65.86 0.60 10,394.60 282.66 2.72 Plastic & Products 182.73 31.45 17.21 196.96 33.90 17.21 Services 1,338.03 266.06 19.88 1,358.99 353.20 25.99 Food and Beverage 1,886.83 359.08 19.03 1,988.79 420.22 21.13 Consumer Durables 33.30 10.28 30.87 17.40 8.94 51.38 Telecom 922.51 17.91 1.94 769.14 17.91 2.33 Housing Finance Companies 3,381.10 - - 3,054.97 - - Drugs and Pharmaceuticals 380.02 229.31 60.34 248.86 172.24 69.21 Fertilisers & Pesticides 269.46 0.61 0.23 266.88 0.59 0.22 Glass & Products 5.85 1.18 20.17 18.00 9.04 50.22 Other Industries 7,338.83 1,077.76 14.69 5,338.96 1,460.37 27.35 Total gross non-performing loans 70,242.58 6,721.53 9.57 67,866.02 10,845.31 15.98

Remediation Strategy for Non-Performing Loans

Movement of Provisions for Non-Performing Assets

Particulars As at March 31 As at December 31 All figures in ₹crore 2014 2015 2016 2015 2016 Specific provisions at the beginning of the period 971.93 2,399.24 2,430.68 2,430.68 3,299.91 Provisions made during the period, 1,908.63 792.12 1,769.17 893.92 1,208.83 Provisions no longer required on account of write-offs 481.37 760.68 848.10 575.88 432.06 Specific provisions at the end of the period 2,399.24 2,430.68 3,351.75 2,748.72 4,076.68

General Provisions on Standard Assets and Floating Provisions

We maintain general provision for standard assets including credit exposures computed as per the current marked to market values of interest rate and foreign exchange derivative contracts, and gold at levels stipulated by the RBI from time to time. General provision for standard assets is included under Other Liabilities. Banks are required to make general provisions for standard assets for the funded outstanding on a global portfolio basis. The provisioning requirement for housing loans at teaser rates is 2.00% and will reduce to 0.40% after one year from the date on which the teaser rates are reset at higher rates if the accounts remain standard. In November 2012, the RBI increased the provisioning requirement for restructured standard assets from 2.0% to 2.75%. In May 2013, the RBI increased the provisioning requirement for all types of accounts restructured to 5.0% with effect from June 1, 2013. For the stock of restructured standard accounts as of May 31, 2013, this increase is required to be implemented in a phased manner by March 31, 2016. The provisioning requirements for other loans range from 0.25% to 1.00% on the outstanding loans based on the type of exposure. Derivative exposures, such as credit exposures computed as per the current marked to market value of the contract arising on account of the interest rate and foreign exchange derivative transactions and gold are subject to the same provisioning requirement applicable to the loan assets in the standard category of the concerned counterparties. All conditions applicable for the treatment of the provisions for standard assets would also apply to the aforesaid provisions for derivatives and gold exposures. Provisions made in excess of these regulatory requirements or provisions which are not made with respect to specific NPAs are categorized as floating provisions. Creation of floating provisions is considered by our Bank up to a level approved by the Board of Directors.

Restructured Assets

The RBI has issued prudential guidelines on the restructuring of assets by banks. The guidelines essentially deal with the norms/conditions, the fulfillment of which is required to maintain the category of the restructured account as a ‘standard asset’. Similar guidelines apply to assets categorized as substandard. Substandard accounts which have been 105 subjected to restructuring, whether in respect of principal installment or interest amount, are eligible to be upgraded to the standard category only after the specified period, i.e. a period of one year after the date when the first payment of interest or principal, whichever is earlier, falls due, subject to satisfactory performance during the period. If there is a failure to meet payment or other terms of a restructured loan, it may be considered a failed restructuring, in which case it is no longer classified as a restructured loan. We restructure assets on a case-by-case basis after our management has determined that restructuring is the best means of maximizing realization of the asset.

Capital Adequacy

The following table sets forth, for the periods indicated, our capital adequacy ratios computed as per applicable RBI guidelines:

Particulars As at March 31, As at December 31, All figures in ₹crore 2014 2015 2016 2015 2016 Common equity tier I (CET I) 3,987.02 5,020.58 5,659.73 5,180.20 6,318.32 Additional tier I capital - - 137.18 97.02 144.11 Tier I capital 3,987.02 5,020.58 5,796.91 5,277.22 6,462.43 Tier II capital 1,993.51 2,034.21 1,572.54 2,072.96 1,624.92 Total capital 5,980.53 7,054.79 7,369.45 7,350.18 8,087.35 Risk weighted assets 61,007.05 66,798.28 73,079.44 74,058.62 74,612.99 CET I ratio (%) 6.54% 7.52% 7.74% 6.99% 8.47% Tier I capital ratio 6.54% 7.52% 7.93% 7.12% 8.66% Tier II capital ratio 3.27% 3.05% 2.15% 2.80% 2.18% Total capital ratio 9.81% 10.57% 10.08% 9.92% 10.84%

The following table sets forth, for the periods indicated, our risk weighted assets (RWA) pertaining to credit risk, market risk and operational risk computed as per applicable the RBI guidelines:

As at March 31, As at December 31, Particulars 2014 2015 2016 2015 2016 All figures in ₹crore Basel III Basel III Basel III Basel III Basel III Credit risk RWA 51,652.68 54,864.02 58,044.81 58,769.65 55,554.01 Market risk RWA 4,058.17 6,092.75 7,819.76 8,074.10 11,725.22 Operational risk RWA 5,296.20 5,841.51 7,214.87 7,214.87 7,333.76 Total risk weighted assets 61,007.05 66,798.28 73,079.44 74,058.62 74,612.99

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INDUSTRY OVERVIEW

The information in this section has been extracted from publicly-available documents, including officially-prepared materials from the Government of India and its various ministries, the RBI and its publications, industry or general publications and other third-party sources as cited in this section. Industry websites and publications generally state that the information contained therein has been obtained from sources believed to be reliable, but their accuracy and completeness are not guaranteed and their reliability cannot be assured.

While we have exercised reasonable care in compiling and reproducing such official, industry, market and other data in this document, it has not been independently verified by BRLMs, us or any of our advisors, and thus should not be relied on as if it had been so verified. Statements in this section that are not statements of historical fact constitute “forward looking statements”. Such forward-looking statements are subject to various risks, assumptions and uncertainties, and certain factors could cause actual results or outcomes to differ materially.

Overview of the Indian Economy

India has emerged as the fastest growing major economy in the world as per the Central Statistics Organisation (CSO) and International Monetary Fund (IMF). (Source: http://indiainbusiness.nic.in/). The Union Budget for 2017-18 has been announced by the Union Minister for Finance, Government of India, in Parliament on February 1, 2017 and the Economic growth is expected at 6.5 per cent in 2016-17. IMF expects India to grow at 7.2 per cent in 2017 and 7.7 per cent in 2018. (Source: Union Budget for Financial Year 2017-18)

The Indian economy has emerged as a bright spot in the world economy, becoming one of the fastest growing large economies in the world. The 7.6 per cent growth in the GDP at constant market prices in 2015-16, according to the advanced estimates of the Central Statistics Office, compares favorably with growth in the previous three years; 7.2 per cent in 2014-15, 6.6 per cent in 2013-14 and 5.6 per cent in 2012-13. It is noteworthy that this growth is estimated to be achieved despite subdued global demand that dampened India's exports significantly, and two consecutive below- normal monsoons that impacted farm output and productivity. (Source: RBI, Macro-Economic Framework Statement, 2016-17).

(Source: IMF)

Indian economy at this juncture stands out amongst emerging market cohorts in terms of growth and investment potential. However, gross fixed capital formation needs a fillip while maintaining robust trends in consumption to sustain higher levels of growth. With the Government’s commitment to continue on the path of fiscal discipline, the efforts on containing the revenue deficit and rationalising subsidies need to be reinforced. India’s external sector indicators show a relatively stronger position. However, a faster growth in India’s oil import in terms of volume in recent years makes it imperative to be alert to the risks of commodity cycle reversals. (Source: RBI Financial Stability Report – June 2016)

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As at November, 2016, the CPI increased to 131.2 Index Points from 126.6 Index Points in November 2015 while the WPI increased to 183.1 Index Points from 177.5 Index Points. As at December 16, 2016, the Call Money Rate percentage was 6.09%, and the 10 year government security yields and 91 days treasury bill yield were 6.59% and 6.19%, respectively. According to the International Monetary Fund, India’s real GDP growth rate in market prices is projected to remain at 7.6% in fiscal year 2017. (Sources: RBI Weekly Statistical Supplement Vol.31 No.52 December 23, 2016 and https://www.imf.org/external/country/IND/index.htm, as available on November 11, 2016)

Indian Banking Industry

The financial sector primarily exists to serve the needs of the real economy by channelising savings towards productive purposes. As activity in the real economy expands and diversifies, the financial sector is also expected to grow, both in scale and scope, to facilitate the process of economic growth and development. While there is a significant relationship between economic growth and financial sector development, the causation may run both ways. Production and distribution of economic information, allocation of resources, monitoring and control over the use of resources, facilitating the diversification and management of risks among others have been identified as some of the key functions of the financial sector which aid economic growth. The efficiency and resilience with which a financial system carries out these vital functions define the stability of the system, which in turn is important for sustainable economic growth.

While India continues to be a bank dominated financial system, recent trends show that the flow of resources through non-bank sources is comparable to that from banks. With banks undertaking the much needed balance sheet repairs and a section of the corporate sector coming to terms with deleveraging, the onus of providing credit falls on the other actors. Amidst sluggish bank credit growth, capital markets do seem to be supporting the needs of the commercial sector. However, the increasing use of short term debt instruments and the private placement route (as against long term public issuance of debt securities) indicate that the debt markets have to go a long way before they can effectively supplement bank credit and share risks. Previous FSRs have focussed on asset quality, capital levels and profitability related challenges facing Indian banks, especially public sector banks (PSBs). While the deterioration in performance parameters of Indian banks was primarily caused by the economic downturn, other factors, such as weaknesses in governance, appraisal and risk management processes and imprudence of banks coupled with the corporate sector’s excessive leverage, and in some cases misdemeanours also played a role. With PSBs having a dominant share in the banking sector, the Government has taken some concrete steps for addressing the entire spectrum of issues for improving the governance, capital-base and performance of PSBs, including establishing the Banks Board Bureau and introducing key performance indicators (KPIs).

(Source: RBI Financial Stability Report – June 2016)

The Indian banking system consists of 27 public sector banks, 21 private sector banks, 47 foreign banks, 56 regional rural banks. As at end of March 2016, India’s co-operative banking sector comprised of 1,574 urban cooperative banks and 93,913 rural cooperative banks, including short-term and long-term credit institutions (Source: https://www.rbi.org.in/scripts/PublicationsView.aspx?id=17410). Public-sector banks control nearly 80 percent of the market, thereby leaving comparatively much smaller shares for its private peers. Banks are also encouraging their customers to manage their finances using mobile phones. Standard & Poor’s estimates that credit growth in India’s banking sector would improve to 11-13 per cent in FY17 from less than 10 per cent in the second half of CY14. Indian banking industry has recently witnessed the roll out of innovative banking models like payments and small finance banks. The central bank granted in-principle approval to 11 payments banks and 10 small finance banks in FY 2015- 16. RBI’s new measures may go a long way in helping the restructuring of the domestic banking industry.

(Source: Sectoral Report as on February, 2017 available at http://www.ibef.org/industry/banking-india.aspx)

However, Tech Mahindra, Cholamandalam Finance and Dilip Shanghvi-IDFC Bank-Telenor JV have surrendered their payment bank licence. Of the ten entities awarded in-principle SFB licenses, two entities have already commenced operations as SFBs, while various entities have applied to the RBI for their final license.

Constituents of the Indian Banking Industry

The Reserve Bank of India was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934. The Central Office of the Reserve Bank was initially established in Calcutta but was permanently moved to Mumbai in 1937. The Central Office is where the Governor sits and where policies are formulated. Though 108 originally privately owned, since nationalisation in 1949, the Reserve Bank is fully owned by the Government of India. The Reserve Bank of India performs this function under the guidance of the Board for Financial Supervision (BFS). The Board was constituted in November 1994 as a committee of the Central Board of Directors of the Reserve Bank of India.

The main functions of the RBI are as follows:

 Monetary Authority: it formulates, implements and monitors the monetary policy with the objective of maintaining price stability and ensuring adequate flow of credit to productive sectors.

 Regulator and supervisor of the financial system: Prescribes broad parameters of banking operations within which the country's banking and financial system functions with the objective of maintaining public confidence in the system, protect depositors' interest and provide cost-effective banking services to the public.

 Manager of Foreign Exchange: Manages the Foreign Exchange Management Act, 1999 with the objective of facilitating external trade and payment and promote orderly development and maintenance of foreign exchange market in India.

 Issuer of currency: Issues and exchanges or destroys currency and coins not fit for circulation to give the public adequate quantity of supplies of currency notes and coins and in good quality.

 Development role: Performs a wide range of promotional functions to support national objectives.

The related functions of the RBI are as follows:

 Banker to the Government: performs merchant banking function for the central and the state governments; also acts as their banker.

 Banker to banks: maintains banking accounts of all scheduled banks.

(Source: https://www.rbi.org.in/Scripts/AboutusDisplay.aspx)

Types of Banks i) Public Sector Banks

Government of India continued to maintain more than the statutory minimum shareholding of 51 per cent in all PSBs. The maximum non-resident shareholding during the year among PSBs was 11.9 per cent as against 72.7 per cent in the case of PVBs. (Source: RBI Report on Trend and Progress of Banking in India 2015 – 16)

The Department of Financial Services (DFS) is mainly responsible for policy issues relating to Public Sector Banks (PSBs) and Financial Institutions including their functioning. The Government had announced “Indradhanush” a plan to revamp PSBs and as part of that, a programme of capitalization to ensure that PSBs remain BASEL-III compliant was also announced under which Rs. 70,000 crore is supposed to be provided between 2015-19. It has been decided that the minimum Common Equity Tier 1 capital of 5.5% will be maintained alongwith capital conservation buffer (CCB) of 2.5% which will sum upto 8%. The minimum total capital of 9% will have to be achieved by March 31, 2019 excluding CCB. (Source: Master Circular – Basel III Capital Regulations dated July 1, 2015 issued by RBI). Further, large banks were also given growth capital to support credit needs of the growing economy. Post AQR exercise by RBI to clean the balance sheets of PSBs, the numbers are being re-looked at and a revised programme of capitalization will be issued as part of “Indradhanush 2.0”. The Government has already infused a sum of ₹ 19,950 crore in 13 PSBs during the current financial year.

Previously, Government had put in place a mechanism of Statement of Intent on Annual Goals (SOI) to monitor the performance of the PSBs on various performance parameters wherein annual targets were given to the PSBs after having detailed discussion with their top management. While fixing the target of SOI for PSBs on parameters such as deposits, advances priority sector lending, reduction in Non-Performing Assets (NPAs), recovery in written-off 109 accounts, profit, CRAR, net interest margin (NIM), return on assets (ROA), cost to- income ratio etc. various factors are taken into consideration viz. the actual performance of the bank during the preceding financial year, growth trends in the industry, future plans of the bank, acceptability of the targets by the banks etc. From 2015-16 onwards, SOI has been replaced by Key Performance Indicators (KPI) to make the targets generic rather the bank specific so that need to interact with bank authority is eliminated/ minimized.

(Source: RBI Annual Report – 2015 – 2016) ii) Private Sector Banks

Over the last two decades, the RBI licensed twelve banks in the private sector. This happened in two phases. Ten banks were licensed on the basis of guidelines issued in January 1993. The guidelines were revised in January 2001 based on the experience gained from the functioning of these banks and fresh applications were invited. Entities / groups in the private sector that are ‘owned and controlled by residents’ as defined in Department of Industrial Policy and Promotion (DIPP) Press Note 2, 3 and 4 of 2009 / FEMA Regulations as amended from time to time and entities in public sector shall be eligible to promote a bank through a wholly-owned Non-Operative Financial Holding Company (NOFHC). Promoters / Promoter Groups with an existing non-banking financial company (NBFC) will be eligible to apply for a bank license. Promoter / Promoter Group will be permitted to set up a bank only through a wholly-owned Non-Operative Financial Holding Company (NOFHC).

The minimum voting equity capital requirements for banks and shareholding by NOHFC are as follows –

 The initial minimum paid-up voting equity capital for a bank shall be ₹ 5 billion. Any additional voting equity capital to be brought in will depend on the business plan of the Promoters.  The NOFHC shall hold a minimum of 40 per cent of the paid-up voting equity capital of the bank which shall be locked in for a period of five years from the date of commencement of business of the bank.  Shareholding by NOFHC in the bank in excess of 40 per cent of the total paid-up voting equity capital shall be brought down to 40 per cent within three years from the date of commencement of business of the bank.  In the event of the bank raising further voting equity capital during the first five years from the date of commencement of business, the NOFHC should continue to hold 40 per cent of the enhanced voting equity capital of the bank for a period of five years from the date of commencement of business of the bank. Voting equity capital, other than the holding by NOFHC, could be raised through public issue or private placements.  The shareholding by NOFHC shall be brought down to 20 per cent of the paid-up voting equity capital of the bank within a period of 10 years, and to 15 per cent within 12 years from the date of commencement of business of the bank.  The capital requirements for the regulated financial services entities held by the NOFHC shall be as prescribed by the respective sectoral regulators. The bank shall be required to maintain a minimum capital adequacy ratio of 13 per cent of its risk weighted assets (RWA) for a minimum period of 3 years after the commencement of its operations subject to any higher percentage as may be prescribed by RBI from time to time. On a consolidated basis, the NOFHC and the entities held by it shall maintain a minimum capital adequacy of 13 per cent of its consolidated RWA for a minimum period of 3 years.  The bank shall get its shares listed on the stock exchanges within three years of the commencement of business by the bank.

(Source: RBI Guidelines for Licensing of New Banks in the Private Sector, February 22, 2013) iii) Foreign Banks

At present, foreign banks have presence in India only through branches. At present, foreign banks, if eligible, are allowed by the Reserve Bank of India (RBI) to set up business in India through a single mode of presence i.e. either branch mode or a wholly owned subsidiary (WOS) mode. It has been decided, as hitherto to, allow foreign banks to operate in India either through branch presence or they can set up a wholly owned subsidiary (WOS) with near national treatment. The foreign banks have to choose one of the above two modes of presence and shall be governed by the principle of single mode of presence. Subsequently, Reserve Bank, in terms of the powers conferred on it under Section 35A read with Section 44A of the Banking Regulation Act, 1949, in the public interest and in the interest of banking policy issued a ‘Scheme for Setting up of Wholly Owned Subsidiaries (WOS) by foreign banks in India’.

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The factors taken into account while considering applications for setting up WOS in India would include the following:  Economic and political relations with the country of incorporation of the parent bank,  Reciprocity with home country of the parent bank,  Financial soundness,  Ownership pattern,  International and home country ranking of the parent bank by a reputed agency,  Home country/parent bank rating by a rating agency of international repute such as Moody Investors Service, Standard & Poor’s and Fitch Ratings,  International presence of the bank,  Adequate risk management and internal control systems.

A foreign bank, which obtains an in-principle approval from the Reserve Bank for opening a WOS in India has to apply to the Registrar of Companies for registering the subsidiary as a company under the Companies Act, 1956 (Act 1 of 1956) and shall be required to comply with the provisions of that Act, to the extent they are applicable to banking companies as defined in Banking Regulation Act, 1949.

(Source: Scheme for Setting up of Wholly Owned Subsidiaries (WOS) by foreign banks in India) iv) Co-operative Banks

Cooperative banks cater to the financing needs of agriculture, small industry and self-employed businessmen in urban, semi-urban and rural areas of India. The state land development banks and the primary land development banks provide long-term credit for agriculture. The Banking Regulation (Amendment) and Miscellaneous Provisions Act, 2004, which came into effect from September 24, 2004, specifies that all multi-state cooperative banks are under the supervision and regulation of the RBI. Accordingly, the RBI is currently responsible for the supervision and regulation of urban cooperative societies, NABARD, state cooperative banks and district central cooperative banks. The wide network of co-operative banks, both rural and urban, supplements the commercial banking network for deepening financial intermediation by bringing a large number of depositors/borrowers under the formal banking network. (Source: The Banking Regulation Act, 1949)

As at end of March 2016, India’s co-operative banking sector comprised of 1,574 urban cooperative banks (UCBs) and 93,913 rural co-operative credit institutions, including short-term and long term credit institutions. The number of UCBs came down from 1,579 in 2015 to 1,574 in 2016. While the number of scheduled multi-state UCBs increased from 29 to 31, non-scheduled single-state UCBs decreased from 1,507 to 1,502 by end-March 2016. (Source: https://www.rbi.org.in/scripts/PublicationsView.aspx?id=17410)

MSME Sector

During 2015-16, efforts were directed at fostering a more conducive environment for flow of credit to priority sectors, in particular to the micro, small and medium enterprises (MSME) sector. A national programme for capacity building of bankers was launched with the sole objective of upgrading skills related to the financing of the MSME sector. In August 2015, banks were advised to review their existing lending policies to the micro and small enterprises (MSEs) sector and fine - tune them by allowing for standby credit facilities in case of term loans, additional working capital limits, mid-term review of regular working capital limits and timelines for credit decisions. (Source: RBI Annual Report – 2015 – 16)

To provide a simpler and faster mechanism to address stress in the accounts of Micro, Small and Medium Enterprises (MSMEs), in March 2016, a ‘Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises’ was issued to banks, in consultation with Government of India. Under this framework, the revival and rehabilitation of MSME units having loan limits up to ₹ 250 million would be undertaken. (Source: RBI Report on Trend and Progress of Banking in India 2015 – 16)

Priority Sector Lending

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Priority sectors refer to those sectors of the economy such as agriculture, small enterprises and housing for poor people which, though viable and creditworthy, may not get timely and adequate credit in the absence of a special dispensation. The priority sector lending policy of the Reserve Bank envisages that banks extend credit to the priority sector as part of their normal business operations and not as a corporate social responsibility. Towards this end, pricing of all credit has been made free, though with the expectation that it will not be exploitative. (Source: RBI Report on Trend and Progress of Banking in India 2015-16)

A scheme of PSLCs was introduced in April 2016. The Reserve Bank provided a platform to enable trading in the certificates through its core banking solution (CBS) portal (e-Kuber). All scheduled commercial banks (including RRBs), urban co-operative banks, small finance banks (when they become operational) and local area banks are eligible to participate in trading. Priority Sector Lending Certificates (PSLCs) were introduced as a mechanism for incentivising banks having surplus in lending to different categories of the priority sector thereby enhancing lending to these sectors.

The objective of priority sector lending is to ensure that timely and adequate credit is available to vulnerable sections of society. Priority sector loans include small value loans to farmers for agriculture and allied activities; MSMEs; loans up to ₹ 2.5 million for low cost housing and up to ₹ 1 million to students for education; social infrastructure and renewable energy; and to other low income groups and weaker sections of society.

(Source: RBI Annual Report – 2015 – 16)

Monetary Policy

Amendments to the Reserve Bank of India Act, which came into force on June 27, 2016 will empower the conduct of monetary policy in India. For the first time in its history, the RBI has been explicitly provided the legislative mandate to operate the monetary policy framework of the country. The primary objective of monetary policy has been defined explicitly for the first time – “to maintain price stability while keeping in mind the objective of growth.” The amendments also provide for the constitution of a monetary policy committee (MPC) that shall determine the policy rate required to achieve the Inflation target, another landmark in India’s monetary history. The composition of the MPC, terms of appointment, information flows and other procedural requirements such as implementation of and publication of its decisions, and failure to maintain the Inflation target as well as remedial actions have been specified and subsequently gazetted. The Government and the RBI have constituted the six member MPC. All conditions are, therefore, in place for the MPC to take its first decision on October 4 under the Reserve Bank’s fourth bi-monthly monetary policy review for 2016-17. The amended RBI Act establishes the procedures for MPC meetings.

On August 5, 2016 the Government set out the Inflation target as four per cent with upper and lower tolerance levels of six per cent and two per cent, respectively. The September round of the Reserve Bank’s survey of professional forecasters indicates a greater degree of anchoring of their Inflation expectations, relative to other agents, around the Reserve Bank’s Inflation targets. They expect Inflation to ease to 4.7 per cent by Q4 of 2016-17 and to 4.4 per cent by Q2 of 2017-18, both lying within the Reserve Bank’s Inflation target band. While their medium-term Inflation expectations (five years ahead) have remained unchanged at 5 per cent, their longer-term expectations (10 years ahead) have moved down to 4.5 per cent from 4.8 per cent polled in the immediately preceding round of the survey.

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(Source: https://www.rbi.org.in/Scripts/PublicationsView.aspx?id=17385)

Development of the Indian Banking Sector

Indian banks are increasingly focusing on adopting integrated approach to risk management. Banks have already embraced the international banking supervision accord of Basel II. According to RBI, majority of the banks already meet capital requirements of Basel III, which has a deadline of March 31, 2019. Most of the banks have put in place the framework for asset-liability match, credit and derivatives risk management.

Indian banking sector credit growth has grown at a healthy pace

 Credit off-take has been surging ahead over the past decade, aided by strong economic growth, rising disposable incomes, increasing consumerism and easier access to credit;  As on April 4, 2016 the median overnight MCLR of 26 banks, accounting for about 83 per cent of total bank credit, was 50 bps lower than the median base rate, while the median MCLR across all tenors was lower by 25 bps (Source: https://rbi.org.in/scripts/PublicationsView.aspx?id=16823);  On a year-on-year (y-o-y) basis, non-food bank credit increased by 4.0 per cent in December 2016 as compared with an increase of 9.3 per cent in December 2015. (Source: https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=39420)  Demand has grown for both corporate and retail loans.

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Rising incomes are expected to enhance the need for banking services in rural areas and therefore drive the growth of the sector; programmes like MNREGA have helped in increasing rural income aided by the recent Jan Dhan Yojana. The Reserve Bank of India (RBI) has relaxed its branch licensing policy, thereby allowing banks (which meet certain financial parameters) to set-up new branches in tier-2 to tier-6 centers, without prior approval from RBI. It has emphasised the need to focus on spreading the reach of banking services to the un-banked population of India. Deposits under Pradhan Mantri Jan Dhan Yojana (PMJDY) are growing. As on November 09, 2016, US$ 6,971.68 million were deposited, while 255.1 million accounts were opened.

During FY06–16, deposits grew at a CAGR of 11.47 per cent and reached 1.46 trillion in FY16. Strong growth in savings amid rising disposable income levels are the major factors influencing deposit growth. Deposits under Pradhan Mantri Jan Dhan Yojana (PMJDY), have also increased. As of October 2016, US$ 6,755.5 million were deposited, while 249.8 million accounts were opened.

(Source: IBEF)

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Key Trends in banking Industry

The year 2015-16 saw an increase in financial stability concerns for emerging market economies (EMEs) though such concerns eased for advanced economies. The performance of most EMEs was marked by severe domestic imbalances emanating from economic slowdown and downturn in credit growth coupled with rising stress in corporate and financial sectors making them vulnerable to the changing external financing conditions. The banking sector, however, was under stress primarily on account of the burden of non-performing assets (NPAs) which increased sharply during the year.

 Regulatory Reinforcements

As part of the framework for revitalizing distressed assets, on June 13, 2016, the Reserve Bank introduced the Scheme for Sustainable Structuring of Stressed Assets (S4A) for a deep financial restructuring of large accounts. Also, the process of selling stressed assets by banks was further streamlined to facilitate better valuation, price discovery and creation of a vibrant stressed assets market.

To complement the existing risk-based capital standards and to provide a back-stop measure to contain concentration risks, the Large Exposures Framework was issued on December 1, 2016 to limit a bank’s exposure to a single counterparty or a group of connected counter-parties. Alongside, a complementary framework for discouraging large borrowers to depend solely on banks for their funding needs was released on August 25, 2016 to contain concentration risks for the banking system as a whole.

As part of liquidity risk management, on May 28, 2015 draft guidelines for the Net Stable Funding Ratio (NSFR), measuring the funding resilience of a bank over a longer time horizon, were laid down. This is expected to limit the banks’ reliance on short-term wholesale funding and promote funding stability. The Reserve Bank issued draft guidelines on June 22, 2016 with regard to counter-party credit risks and exposures to central counter-parties in over- the-counter (OTC) derivative transactions.

The Central Repository of Information on Large Credits (CRILC) has proved to be an important tool for effective offsite supervision. Efforts were made to further improve the quality of CRILC data by modifying its reporting mechanism with respect to external ratings and industry. Additionally, the dates of assets turning into NPAs and special mention accounts (SMAs) were captured in the database for an insight into the ageing of stressed accounts.

 Measures for deepening access to finance

There were two major developments during 2015-16 which will shape the financial landscape in the years to come and will also be instrumental in furthering financial inclusion. First, in-principle approvals for setting up payments

115 banks to eleven applicants were granted on August 19, 2015 and on September 16, 2015, in-principle approvals were granted to ten applicants for setting up small finance banks (“SFBs”). However, Tech Mahindra, Cholamandalam Finance and Dilip Shanghvi-IDFC Bank-Telenor JV have surrendered their payment bank licence. Of the ten entities awarded in-principle SFB licenses, two entities have already commenced operations as SFBs, while various entities have applied to the RBI for their final license.

For providing a greater impetus to card-based retail payments, an Acceptance Development Fund (ADF) is being designed to step up the card acceptance infrastructure. Further, the Unified Payments Interface (UPI) was launched on August 25, 2016 to give a boost to mobile banking. Additionally, Bharat Interface for Money (BHIM) was launched on January 25, 2017 as a common platform across the nation for making simple, easy and quick payment transactions using UPI. (Source: Press release dated January 25, 2017 of National Payments Corporation of India). This is expected to revolutionise retail payments given the high degree of penetration of mobile phones in the country. Apart from the use of technology by the mainstream banking institutions, recent years have also witnessed the entry of several alternative nonfinancial institutions providing financial services, typically known as Fin Tech. Accordingly, on July 14, 2016 the Reserve Bank set up an inter-regulatory working group to examine various aspects related to Fin Tech innovations and the related risks and opportunities.

Further, on November 26, 2015 the Central Registry of Securitisation Asset Reconstruction and Security Interest in India (CERSAI) was notified as the Central KYC Records Registry (CKYCR) for receiving, storing and retrieving KYC records of customers in digital form. This will ensure a single KYC across all financial products and thus make financial access more convenient. The CKYCR has started its ‘live run’ with effect from July 15, 2016.

 Other measures

In recent years, a general guiding principle for the regulation of the co-operative and nonbanking financial segments has been minimizing regulatory arbitrage between banks and these segments. In pursuance of this principle, steps were taken to further harmonise the regulatory treatment of NBFCs, for instance, regulations on the framework for revitalising distressed assets, reporting frauds and options on refinancing of project loans.

The existence of unlicensed district central co-operative banks (DCCBs) has been a regulatory concern. With the implementation of the revival scheme announced by the central government, the number of unlicensed DCCBs was reduced to only three as at end-September 2016 from 23 as at end- June 2013.

(Source: RBI Report on Trend and Progress of Banking in India 2015-16)

 Marginal Cost of Funds based Lending Rate (“MCLR”)

The RBI vide its press release dated December 17, 2015 released the final guidelines on computing interest rates on advances based on the marginal cost of funds. The guidelines come into effect from April 1, 2016. Apart from helping improve the transmission of policy rates into the lending rates of banks, these measures are expected to improve transparency in the methodology followed by banks for determining interest rates on advances. The guidelines are also expected to ensure availability of bank credit at interest rates which are fair to the borrowers as well as the banks. Further, marginal cost pricing of loans will help the banks become more competitive and enhance their long run value and contribution to economic growth.

The highlights of the guidelines are as under –

(i) All rupee loans sanctioned and credit limits renewed w.e.f. April 1, 2016 will be priced with reference to the Marginal Cost of Funds based Lending Rate (MCLR) which will be the internal benchmark for such purposes. (ii) The MCLR will be a tenor linked internal benchmark. (iii) Actual lending rates will be determined by adding the components of spread to the MCLR. (iv) Banks will review and publish their MCLR of different maturities every month on a pre-announced date. (v) Banks may specify interest reset dates on their floating rate loans. They will have the option to offer loans with reset dates linked either to the date of sanction of the loan/credit limits or to the date of review of MCLR. (vi) The periodicity of reset shall be one year or lower. (vii) The MCLR prevailing on the day the loan is sanctioned will be applicable till the next reset date, irrespective of the changes in the benchmark during the interim period. 116

(viii) Existing loans and credit limits linked to the Base Rate may continue till repayment or renewal, as the case may be. Existing borrowers will also have the option to move to the Marginal Cost of Funds based Lending Rate (MCLR) linked loan at mutually acceptable terms. (ix) Banks will continue to review and publish Base Rate as hitherto.

(Source: https://rbi.org.in/SCRIPTs/BS_PressReleaseDisplay.aspx?prid=35749)

Recent Developments in Banking Industry

The Reserve Bank has since the last decade made the following policy interventions in the area of financial inclusion.

 Correspondent Banking

The Reserve Bank permitted banks to utilize the services of intermediaries in providing banking services through the use of business facilitators and Business Correspondents (BCs). The BC model allows banks to do ‘cash in-cash out’ transactions at a location much closer to the rural population, thus addressing the problems of last mile reach.

 Providing banking services in villages with population more than 2,000

In order to provide door step banking facilities in all the unbanked villages in the country, a phase wise approach has been adopted. During Phase-I (2010-13), all unbanked villages with population more than 2,000 were identified and allotted to various banks (public sector banks, private sector banks and regional rural banks) through State Level Bankers’ Committees (SLBCs) for coverage through various modes – Branch or BC or other modes such as ATMs, mobile vans, etc. During Phase-I, as reported by SLBCs, banking outlets have been opened in 74,414 unbanked villages with population more than 2,000. Such newly opened banking outlets comprised of 69,589 outlets opened through BCs and 2,332 by other modes, apart from 2,493 branches.

After the completion of the first phase of the roadmap, the second phase (2013-16) to provide banking services in unbanked villages with populations less than 2000 was rolled out. About 4,90,298 unbanked villages with population less than 2000 have been identified and allotted to various banks (public sector banks, private sector banks and regional rural banks) through SLBCs across the country for coverage in a time bound manner. As on June 30, 2016, as reported by SLBCs, 4,52,151 villages have been provided banking services; 14,976 through branches, 4,16,636 through BCs and 20,539 by other modes viz. ATMs, mobile vans, etc. thereby achieving 92.2% of the target.

 Financial Inclusion Plans

All domestic Scheduled Commercial Banks (SCBs) – both in the public sector and private sector – were advised to draw up board-approved Financial Inclusion Plans (FIPs) as an integral part of their business strategy based on their competitive advantage. FIPs are submitted to the Reserve Bank and are implemented over blocks of three years. These plans broadly include self-set targets with respect to: opening rural brick and mortar branches; Business Correspondents (BCs) employed; coverage of unbanked villages through branches/ BCs/ other modes, opening of Basic Savings bank deposit accounts (BSBDAs) including through BC-ICT; issuance of Kisan Credit Cards (KCC) and General Credit Cards (GCC) and other specific products aimed at the financially excluded segments.

 Revised priority sector lending guidelines

Drawing upon the recommendations of an Internal Working Group set up by the Reserve Bank, revised guidelines on priority sector lending were issued in April 2015. The salient features are –

(a) Separate targets of 8 per cent for small and marginal farmers (within the agriculture target of 18 per cent) and 7.5 per cent for micro enterprises to be achieved by 2017; (b) Coverage of the priority sector widened to include medium enterprises, social infrastructure and renewable energy (Bank loans of up to ₹ 150 million for solar-based power generators, biomass-based power generators, wind mills, micro-hydel plants, etc. For individual households, the loan limit is ₹ 1 million per borrower). (c) Priority sector lending compliance to be monitored on a ‘quarterly’ average basis from 2016-17

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(d) Educational loans (including loans for vocational courses) up to ₹ 1 million irrespective of the sanctioned amount made eligible for the priority sector (e) Export credit up to 32 per cent made eligible as part of the priority sector for foreign banks with less than 20 branches

 Phase III of FIP

With the conclusion of Phase II (2013-16) of FIP in March 2016 all domestic scheduled commercial banks (including RRBs) were advised to set new board approved FIP targets for the next three years, viz. 2016-19.

 Financial Inclusion Advisory Committee (FIAC)

The Reserve Bank had set up the Financial Inclusion Advisory Committee (FIAC) in 2012 to review Financial Inclusion (FI) policies on an on-going basis and to provide expert advice on additional efforts under FI. Considering the need for convergence of the FI efforts of various stakeholders, FIAC was reconstituted in July 2015 with representation from the Government of India, SEBI, IRDA, PFRDA with renewed focus on review and monitoring of FI and financial literacy (FL) policies and progress; impact evaluation and preparing a national strategy for financial inclusion (NSFI).

 Framework for the revival and rehabilitation of micro, small and medium enterprises

 Financial Literacy Initiatives

Target specific content for five target groups viz. farmers, small entrepreneurs, self-help groups (SHGs), school students and senior citizens is being designed for tailored financial literacy programmes conducted by Financial Literacy Centres (FLCs). A pilot project for setting up 100 Centres for Financial Literacy (CFL) at the block level to scale up the existing FLC infrastructure has been initiated. Guidelines for banks’ financial literacy centres and the operational guidelines for conducting camps by FLCs and rural bank branches were revised in January 2016. As on March 2016, 1,384 FLCs were operational. During 2015-16, 87,710 financial literacy activities (outdoor camps) were conducted by FLCs.

 Kiosk Project

About 100 kiosks (30 interactive kiosks and 70 non-interactive LFDs) are being set up in five states on a pilot basis in public places like banks, post offices, collector’s offices and primary health centres to promote financial awareness. The kiosks will display messages in different languages controlled from a central location.

 Scaling-up the BC model

The Reserve Bank of India has prepared the framework for graded certification/training programme for BCs. BCs with a good track record who would undergo advanced training and receive certification shall be entrusted with more complex tasks such as handling/delivery of financial products that go beyond deposits and remittances. In order to have a tracking system of BCs, a framework for a Registry of BC agents covering all BCs, both existing and new, has been created. The registry is intended to capture basic details including the identity of a BC, location of fixed point BCs and nature of operations.

(Source: RBI Report on Trend and Progress of Banking in India 2015-16)

 Strategic Debt Restructuring Scheme

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Strategic Debt Restructuring Scheme was launched with view to ensuring more stake of promoters in reviving stressed accounts and providing banks with enhanced capabilities to initiate change of ownership, where necessary, in accounts which fail to achieve the agreed critical conditions and viability milestones. Banks have been advised to consider using SDR only in cases where change in ownership is likely to improve the economic value of the loan asset and the prospects of recovery of their dues. (Source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10293&Mode=0 )

 Legislative Framework for Recovery of Debts due to Banks

In fiscal year 2003, the Indian Parliament passed the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the “SARFAESI Act”). The SARFAESI Act provides that a secured creditor may, in respect of loans classified as non-performing in accordance with RBI guidelines, give notice in writing to the borrower requiring it to discharge its liabilities within 60 days, failing which the secured creditor may take possession of the assets constituting the security for the loan, and exercise management rights in relation thereto, including the right to sell or otherwise dispose of the assets. The SARFAESI Act also provides for the setting up of asset reconstruction companies regulated by the RBI to acquire assets from banks and financial institutions. The RBI has issued guidelines for asset reconstruction companies in respect of their establishment, registration and licensing by the RBI, and operations. Asset Reconstruction Company (India) Limited, set up by the Industrial Development Bank of India, State Bank of India and certain other banks and institutions, received registration from the RBI and commenced operation in August 2003. Foreign direct investment is now permitted in the equity capital of asset reconstruction companies and investment in security receipts issued by asset reconstruction companies by foreign institutional investors registered with the SEBI is permitted, subject to certain conditions and restrictions.

Several petitions challenging the constitutional validity of the SARFAESI Act were filed before the Indian Supreme Court. The Supreme Court, in April 2004, upheld the constitutionality of the SARFAESI Act, other than the requirement originally included in the Act that the borrower deposit 75.0% of the dues with the debt recovery tribunal as a pre-condition for appeal by the borrower against the enforcement measures. In November 2004, the Government issued an ordinance amending the SARFAESI Act. The Indian Parliament has subsequently passed this ordinance as an act. This act, as amended, now provides that a borrower may make an objection or representation to a secured creditor after a notice is issued by the secured creditor to the borrower under the act demanding payment of dues. The secured creditor has to give reasons to the borrower for not accepting the objection or representation. The act also introduces a deposit requirement for borrowers if they wish to appeal the decision of the debt recovery tribunal. Further, the Act permits a lender to take over the business of a borrower under the SARFAESI Act under certain circumstances (unlike the earlier provisions under which only assets could be taken over).

Earlier, following the recommendations of the Narasimham Committee, the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 was enacted. This legislation provides for the establishment of a tribunal for speedy resolution of litigation and recovery of debts owed to banks or financial institutions. The Act created tribunals before which the banks or the financial institutions can file a suit for recovery of the amounts due to them. However, if a scheme of reconstruction is pending before the BIFR, under the Sick Industrial Companies (Special Provisions) Act, 1985, no proceeding for recovery can be initiated or continued before the tribunals. This protection from creditor action ceases if the secured creditor takes action under SARFAESI Act. While presenting its budget for fiscal year 2002, the Government announced measures for the setting up of more debt recovery tribunals and the eventual repeal of the Sick Industrial Companies (Special Provisions) Act, 1985. To date, however, this Act has not been repealed.

 Corporate Debt Restructuring Forum

The RBI has devised a corporate debt restructuring system as an institutional mechanism for the restructuring of corporate debt. The objective of this framework is to ensure a timely and transparent mechanism for the restructuring of corporate debts of viable entities facing problems, outside the purview of the BIFR, debt recovery tribunals and other legal proceedings. In particular, this framework aims to preserve viable corporations that are affected by certain internal and external factors and minimise the losses to the creditors and other stakeholders through an orderly and coordinated restructuring program. The corporate debt restructuring system is a non-statutory mechanism and a voluntary system based on debtor-creditor and inter-creditor agreements. (Source: Revised Guidelines on Corporate Debt Restructuring (CDR) Mechanism)

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 Sale of Stressed Assets

In order to further strengthen banks’ ability to resolve their stressed assets effectively, RBI has been decided to put in place an improved framework governing sale of such assets by banks to SCs/RCs/other banks/Non-Banking Financial Companies /Financial Institutions etc. The policy, inter alia, shall cover the following aspects:

(i) Financial assets to be sold; (ii) Norms and procedure for sale of such financial assets; (iii) Valuation procedure to be followed to ensure that the realisable value of financial assets is reasonably estimated; (iv) Delegation of powers of various functionaries for taking decision on the sale of the financial assets; etc.

In order to enhance he transparency in the entire process of sale of stressed assets, it is decided as under –

(i) Identification of stressed assets beyond a specified value, as may be determined by bank’s policy, for sale shall be top-down i.e., the head office/corporate office of the bank shall be actively involved in identification of stressed assets, including assets which are classified as Special Mention Account, to be put on sale. Early identification will help in low vintage and better price realisation for banks; (ii) At least once in a year, preferably at the beginning of the year, banks shall, with the approval of their Board, identify and list internally the specific financial assets identified for sale to other institutions, including SCs/RCs; (iii) At a minimum, all assets classified as ‘doubtful asset’ above a threshold amount should be reviewed by the board/board committee on periodic basis and a view, with documented rationale, is to be taken on exit or otherwise. The assets identified for exit shall be listed for the purpose of sale as indicated above; (iv) Prospective buyers need not be restricted to SCs/RCs. Banks may also offer the assets to other banks/NBFCs/FIs, etc. who have the necessary capital and expertise in resolving stressed assets. Participation of more buyers will result in better price discovery; (v) In order to attract a wide variety of buyers, the invitation for bids should preferably be publicly solicited so as to enable participation of as many prospective buyers as possible. In such cases, it would be desirable to use e-auction platforms. An open auction process, apart from attracting a larger set of borrowers, is expected to result in better price discovery.. Banks should lay down a Board approved policy in this regard; (vi) Banks must provide adequate time for due diligence by prospective buyers which may vary as per the size of the assets, with a floor of two weeks; (vii) Banks should have clear policies with regard to valuation of assets proposed to be sold. In particular it must be clearly specified as to in which cases internal valuation would be accepted and where external valuation would be needed. However, in case of exposures beyond ₹ 50 crore, banks shall obtain two external valuation reports; (viii) The cost of valuation exercise shall be borne by the bank, to ensure that the bank's interests are protected; (ix) The discount rate used by banks in the valuation exercise shall be spelt out in the policy. This may be either cost of equity or average cost of funds or opportunity cost or some other relevant rate, subject to a floor of the contracted interest rate and penalty, if any.

(Source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10588&Mode=0)

 Demonetization

Through notifications dated November 8, 2016 issued by the Ministry of Finance, the Government of India (vide Notification no. 2652) and the RBI (RBI/2016-17/1142 DCM (Plg) No. 1226/10.27.00/2016-17), ₹ 500 and ₹ 1,000 denominations of banknotes of then existing series issued by the RBI have ceased to be legal tender (the “Demonetisation of Banknotes”). According to an RBI press release, the Demonetisation of banknotes is aimed at redressing counterfeiting of Indian banknotes, reduce cash hoarding and curb funding of terrorism with counterfeit banknotes.

(Source: RBI’s press release 2016-2017/1142, dated November 8, 2016).

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 Union Budget for Financial Year 2017-18

The Union Budget for 2017-18 has been announced by the Union Minister for Finance, Government of India, in Parliament on February 1, 2017. Economic growth expected at 6.5 per cent in 2016-17. IMF expects India to grow at 7.2 per cent in 2017 and 7.7 per cent in 2018. CPI inflation has come down to 3.4 per cent in December 2016 from 6.0 per cent in July 2016. Foreign exchange reserves have reached US$ 361 billion as on January 20, 2017. Lending target under Pradhan Mantri Mudra Yojana to be set at ₹ 2.44 lakh crore (US$ 36.1 billion). Priority will be given to Dalits, Tribals, Backward Classes and Women. In line with the ‘Indradhanush’ roadmap, ₹ 10,000 crore (US$ 1.48 billion) for recapitalisation of Banks provided in 2017-18. The Union Budget has also proposed allowable provision for Non-Performing Asset of Banks increased from 7.5% to 8.5%. Interest taxable on actual receipt instead of accrual basis in respect of NPA accounts of all non-scheduled cooperative banks also to be treated at par with scheduled banks

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BUSINESS

Some of the information contained in the following discussion, including information with respect to our plans and strategies, contain forward-looking statements that involve risks and uncertainties. You should read the section “Forward-Looking Statements” for a discussion of the risks and uncertainties related to those statements and also the section “Risk Factors” for a discussion of certain factors that may affect our business, financial condition or results of operations. Our actual results may differ materially from those expressed in or implied by these forward- looking statements.

Overview

We are a scheduled public sector commercial bank in India offering a wide range of banking and financial products and services to both large and mid-corporates, micro, small and medium enterprises (“MSME”), retail and agricultural customers. As on January 31, 2017, we had 2,021 branches in 29 States and 5 Union Territories in India (all of them under Core Banking Solution “CBS” platform) including 180 MSME specialized branches catering to the specific clientele segment, 24 Retail Hubs, 5 specialised women branches . As of January 31, 2017, we had 2,200 ATMs, 22 E-zones, 36 regional offices, 5 extension counters and 2 representative offices in Bangladesh and Myanmar. As of January 31, 2017, we had a customer base of approximately 4.22 crore.

Our treasury operations being the interface with the financial markets, consist primarily of statutory reserves management, liquidity management, investment and trading activities, money market and foreign exchange related 122 activities. We actively trade in major currencies of the world and participate in the forward market. We also offer fee based products which includes fees and charges for services such as remittance services, documentary credits, letters of credit and issuance of guarantees and collect service charges and processing fees on customer advances. Fee-based income also includes income from commissions on sale of third party products, such as insurance and mutual funds.

We are one of the 14 banks which were nationalized on July 19, 1969. After nationalization, we have expanded branch network pan India and actively participated in the developmental activities, particularly in the rural and semi - urban areas in conformity with the objectives of nationalization. As of March 31, 2014, March 31, 2015 and March 31, 2016, the total number of branches of our Bank were 2,001, 2,004 and 2,011, respectively and it was further increased to 2,021 as of January 31, 2017. Our total number of ATMs has also increased from 1,602 as of March 31, 2014, to 1912 as of March 31, 2015, to 2,044 as of March 31, 2016, and further increased to 2,200 as of January 31, 2017. As of January 31, 2017, our domestic branch network of 2,021 branches comprised 772 rural, 411 semi-urban, 477 urban and 361 metropolitan branches.

We have been designated as the lead bank by RBI in 34 districts of the States of West Bengal, Assam, Manipur and Tripura. We are also the convener of the SLBC for the States of West Bengal and Tripura. We have been designated as Treasury Bank in major district of Assam and Tripura by respective state governments. Further, the President of India and Ministry of Coal have accounts solely with our Bank to handle the government funds. We intend to leverage our lead bank status and brand recall, to expand our presence across select geographies in India by increasing our branch network and distribution infrastructure across India.

As of January 31, 2017, the Core Banking Solution CBS, which is a suite of software applications that facilitate centralized operations through a single data base, has been implemented in all of our branches and extension counters, covering 100% of our business. In addition, we have digital banking channels including mobile banking, internet banking. We have developed micro-payment and branchless banking solutions as well as a business correspondent network to expand our customer reach beyond the traditional branch service area. We deliver our products and services through our branches, extension counters, ATMs, internet banking and mobile banking. Our Bank has adopted technology based products as a strategy and pioneered in various state of art technology driven products.

AWARDS

The table below set forth the details of awards received by our Bank in recent past: 123

Year Awards 2013 – Best Banker Award in Priority Sector by The Sunday Standard 2014 2014 – Award of excellence – PMJDY by Government of India 2015 2016 – Skoch order of merit for United wallet 2017 National Award under Prime Minister Employment Guarantee Programme in north east zone from the Ministry of MSME, Government of India Certificate of appreciation – MNRE by Government of India

COMPETITIVE STRENGTHS

We believe that our success can be attributed to a combination of the following competitive strengths:

High Current Account - Saving Account (CASA) Deposits

Wide distribution network and customer base

Our branch network, which was historically concentrated in West Bengal, Orissa, Bihar, Jharkhand, Assam, Manipur and Tripura, has now expanded across India through a growing network of branches and ATMs. As of March 31, 2014, March 31, 2015 and March 31, 2016, the total number of branches of our Bank were 2,001, 2004 and 2,011, respectively and it further increased to 2,021 as of January 31, 2017. Our total number of ATMs has also increased from 1,602 as of March 31, 2014, to 1,912 as of March 31, 2015, to 2,044 as of March 31, 2016, and further increased to 2,200 as of January 31, 2017. As of January 31, 2017, our network of BC agents increased to 4,252. As on January 31, 2017, we had 2,021 branches in 29 States and 5 Union Territories in India (all of them under Core Banking Solution “CBS” platform). As of January 31, 2017, details of our network are as follows:

Metro Urban Semi - Urban Rural Total Total number of branches 361 477 411 772 2,021 ATMs 295 602 573 730 2,200

124 wide variety of customers, including large and small to medium corporations, institutions and state-owned enterprises, as well as commercial, agricultural, industrial and retail customers throughout India.

Diverse products and service mix

Our Bank has set up 14 numbers of Rural Self Employment Training Institutes (“RSETIs”) in the state of West Bengal, Assam and Tripura for imparting training to the potential entrepreneurs for the financially weaker section of the society. Our Bank is the convener of the SLBC in the state of West Bengal and Tripura. Our Bank is entrusted with Lead Bank responsibility in 34 district spread across four states, 10 districts in West Bengal, 12 in Assam, 8 in Tripura and 4 in Manipur. Our Bank has also organized social camps for issuance of Kisan Credit Cards to bring in more number of new farmers under the KCC net. Our Bank jointly with Kotak Securities has launched its share trading product – U Connect Trio which enables the customer to open 3-in-1 account i.e. Bank Account, Demat Account & Share trading Account and trade seamlessly on the net from the comfort of their home. We intend to leverage our lead bank status and brand recall, to expand our presence across select geographies in India by increasing our branch network and distribution infrastructure across India.

Scalable operating model and centralised operational structure

Our current operating model is scalable, which we expect will enable us to expand our business and services. We strongly emphasize on technology in our business as a means of improving the efficiency and competitiveness of our business operations. We have devoted substantial resources to achieve seamless integration of our people, processes, data and applications. All our branches are under CBS, covering 100% of our business to facilitate centralized operations through a central data base. It has networked our domestic branches, allowing our customers to operate their accounts from remote locations and avail banking services from any of our branches, regardless of wherever the account is maintained. We have a Disaster Recovery Centre at Vashi, Navi Mumbai, which replicates all data on a near real time basis for the critical applications. As on date all the branches of our Bank have been migrated to the CBS (Finacle) platform. Bank has been regularly upgrading its systems for development of new products and improvising the processes for operational convenience. We believe that factors such as our scalable operating model, technology and data platform and centralized banking system shall expand our business in geographies that offer strong opportunities for us to grow further.

Professional and experienced management

We have an experienced Board and senior management and presently have a team of one chief vigilance officer and 12 General Managers. Our Bank’s executive directors and senior management have an average more than 20 years of banking and financial experience. The expertise of our Board and management team contributes to our in-depth 125 understanding of the sector-specific aspects of our business and each part of our operations. We have been able to build a team of professionals with relevant experience, including credit management, risk management, treasury, information technology and marketing, restructuring balance sheet and business mix, improving operating efficiency and in-depth knowledge of banking operations and management. We have inducted qualified persons, including MBAs, engineers, chartered accountants, company secretaries and cost accountants, risk managers, equity research analysts, marketing officials and credit officers. For additional details see section titled “Board of Directors and Senior Management” beginning on page 164.

BUSINESS STRATEGIES

Maintaining high CASA deposits

The presence of our branches, particularly in Eastern and North Eastern part Including, West Bengal, Orissa, Bihar, Jharkhand, Assam, Manipur, Meghalaya, Tripura of North East Region, allows us to attract interest-free current account and low cost savings account deposits. We have in the past focused our efforts on growing our CASA ratio and CASA deposits stood at ₹ 45,755.09 Crores for the fiscal year 2015 and the same increased to ₹ 48,791.04 Crores for fiscal year 2016. As at December 31, 2016, our Bank’s CASA deposits were at ₹ 60,970.05 crores. Our CASA deposits as a percentage of total domestic deposits was at 42.05 % for the fiscal year 2015 and 42.00%, for the fiscal year 2016 and 47.75% as at December 31, 2016.

Accelerate growth in loans and advances to the MSME and retail sectors

As on the date of the Preliminary Placement Document, the basic banking services are being offered to approximately 88.36 lakh customers under the Financial Inclusion programme of our Bank through a robust network of 4,252 Bank Mitras spread across 12 states of the country. Since launch of PMJDY, our Bank has focused on building a self- sustaining business model of Financial Inclusion by bringing the financially excluded population under the ambit of formal banking and offering suitable banking services at their doorstep. Each Bank Mitra is equipped with an inter- operable handheld device (micro ATM) for rendering services to the customers. Today our Bank provides an array of services through our Bank Mitra network including e-KYC based SB account opening, biometric/AePS/RuPay based online cash withdrawal and deposit facilities at micro ATMs, various remittance products including IMPS and AePS, Recurring Deposits, micro insurance (PMSBY and PMJJBY) products and micro Pension product (APY) apart from micro credit facility under JLG scheme.

Grow our pan India presence and augmenting alternate delivery channels

We primarily cover the Eastern and North Eastern part of the country including West Bengal, Orissa, Bihar, Jharkhand, Assam, Manipur and Tripura. As of January 31, 2017, we had 2,021 branches out of which 1,175 and 358 were located in eastern and north eastern India, respectively. We intend to increase our branch network and infrastructure across India, through a growing network of branches, ATMs, BC agents and cross sell our products at competitive costs to gain a larger pan-India market share in terms of advances and deposits. Working towards this goal, we plan to, and have received approval from our Board to open 276 new branches during the fiscal year 2017 - 2018, which will further increase our branch network. We are in the process to file an application with RBI for obtaining license for opening of 276 new branches. Further we have received RBI clearance for opening of 4 link offices and we have already opened 1 link office at Pune. We will open another 3 link offices in the fiscal year 2017. We are focused on expanding our network to cover states with higher per capita income and key economic centers. In rural areas, we look to add branches in locations that complement and leverage our agricultural & development banking partners and to build our brand in rural communities. We strive to open branches in such areas which are unbanked or under- banked.

In addition to our Bank’s plan to open 276 branches in the fiscal year 2017 - 2018, our Bank also intends to strengthen its alternate delivery channels by encouraging customers from less cash to cash less environment. Our Bank has put in place robust internet banking system, mobile banking and UPI platform. Our Bank also provides facility of instant fund transfer through IMPS, utility bill payment and QR Code Based transactions and installed POS machines for merchant acquiring business with a target to install 10000 POS machines. Our Bank will also empower its business correspondence to provide entire gamut of its services and products to the rural and unbanked population.

Increase in non – interest income

Reduce our gross NPA levels and to improve quality of assets

Though the reduction of impaired assets and to improve the quality of assets through recovery were our key focus area in recent past, we continue to endeavor to reduce our NPA level and upgrade the quality of our assets. The share of gross NPAs as a percentage of total advances increased from 9.49% as of March 31, 2015 to 13.26% as of March 31, 127

2016. Our gross NPA stood at ₹ 9,471.01 crore and Net NPA stood at ₹ 6,110.71 crore as on March 31, 2016. Our strategies for reducing NPAs include improving the quality of credit by ensuring that our well documented loan sanction policies and procedures are complied with and by actively monitoring our loan accounts (particularly Special Mention Accounts (SMA)) and reassessing their credit ratings at least once a year or more frequently, if required. Further, we have taken several initiatives to contain slippages and continue to take such action and speed up recovery from overdue loan accounts including identification of stressed accounts for restructuring (or rephrasing in time), regular follow-up of overdues in loan accounts, conducting e-auctions for the sale of seized assets to ARCS and initiation of stringent recovery measures against wilful defaulters.

We organize recovery camps and lok adalats with the help of government officials, enter into one time settlement and we have delegated the powers to all functional heads for settlement of NPAs and written off accounts. We are also managing our NPAs by selling off stressed assets to asset reconstruction companies. We have appointed recovery agents for the expeditious recovery of NPAs and written off accounts. Our Bank will also formulate plan of action for enforcing the SARFESI, the Recovery of Debts Due to Bank and Financial Institutions Act, 1993 and the RBI’s corporate debt restructuring (“CDR”) mechanism and Bankruptcy Code more strictly and stringently and encourage OTS proposal for non – cooperative borrowers. For better recovery, the Bank started to participate in Community Based Recovery Mechanism (“CBRM”) with the assistance from State Rural Livelihood Mission (SRLM) which has placed Bank Sakhi/ Bank Mitra at branches. To create general awareness among the public our Bank took the initiative by putting up silent road shows and peaceful demonstrations before the establishments of defaulting borrowers.

Enhanced focus on credit monitoring

Our business division

Our business units primarily consist of Retail Banking, Corporate Banking and MSME banking and treasury operations.

As of December 31, 2016, we had total (gross) outstanding loans of ₹ 67,866 crore. As of March 31, 2016, we had outstanding total (gross) loans amounting to ₹ 71,412 crore which is an increase of 3.39% compared with ₹ 69,070 crore as of March 31, 2015. The table below sets forth the composition of our loan assets by business divisions as of March 31, 2014, March 31, 2015 and March 31, 2016 and December 31, 2016:

Particulars As of March 31, As of March 31, As of March 31, As of December 2014 2015 2016 31, 2016 Amount % Amount % Amount % Amount % ( ₹ ( ₹ ( ₹ ( ₹ crore) crore) crore) crore) Retail 10,357 15.23% 12,051 17.44% 12,652 17.70% 13,060 19.24% Corporate 43,171 63.50% 43,267 62.64% 42,205 59.04% 40,169 59.19% Others (including priority 14,454 21.27% 13,752 19.92% 16,555 23.18% 14,637 21.57% sector) Total Outstanding Loans 67,982 100 69,070 100 71,412 100 67,866 100

The table below sets forth our loans and advances by product type and as a percentage of total advances for the periods indicated therein:

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Particulars As of March 31, 2014 As of March 31, 2015 As of March 31, 2016 As of December 31, 2016 Amount % of Amount % of Amount % of Amount % of Outstand Total Outstand Total Outstand Total Outstand Total ing Outstand ing Outstand ing Outstand ing Outstand (₹ crore) ing (₹ crore) ing (₹ crore) ing (₹ crore) ing Term Loans 47,754 70.24% 47,696 69.05% 49,296 69.03% 47,079 69.37% Cash 19,303 28.39% 20,974 30.37% 21,585 30.22% 20,401 30.06% Credit/Over draft and others FCNR (B) Loan Bills 925 1.37% 400 0.58% 531 0.75% 386 0.57% Purchases / Bills discounted Total 67,982 100 69,070 100 71,412 100 67,866 100 Of which 462 0.68% 417 0.60% 500 0.70% 498 0.73% Foreign currency loan under Term Loan (INR at Fedai Rate)

RETAIL BANKING

Retail banking is one of our core business activities. Our retail banking services include retail loans, including housing loans, education loans, car loans, personal loans, loan against term deposit, and debit card services and constitute a significant portion of our operating income. We offer a broad range of services to retail customers through our branch outlets as well as our multi-channel electronic banking system that includes 2,200 ATMs as of January 31, 2017 comprising 1,029 onsite and 1,171 offsite ATMs, Internet banking and mobile banking (available 24 hours a day / 7 days a week). Our retail banking business enables us to (i) reduce the cost of funds, (ii) reduce our reliance on volatile wholesale time deposits, (iii) balance our asset portfolio, (iv) increase the yield on assets and (v) increase fee income opportunities.

Our CASA ratio, comprised primarily of retail demand and savings deposits, was at 42.05% as of March 31, 2015, 41.92 % as of March 31, 2016 and then improved to 47.75 % as of December 31, 2016. As a percentage of total deposits, retail deposits accounted for 86.01%, 94.51%, 95.02% and 97.35% as of March 31, 2014, March 31, 2015, March 31, 2016 and December 31, 2016, respectively. As a percentage of total net advances, retail advances accounted for 15.75%, 18.05%, 18.59% and 20.50% as of March 31, 2014, March 31, 2015, March 31, 2016 and December 31, 2016, respectively.

Loans and Advances

We have identified the growth of our loans and advances to the retail sector as a priority initiative for the past few years. As of December 31, 2016, we had total (gross) outstanding retail loans of ₹ 13,060 crore which represented 19.24% of our total (gross) outstanding loans and advances as of that date. Our total (gross) outstanding retail loans were ₹ 12,652 crore as of March 31, 2016, compared with ₹ 12,051 crore as of March 31, 2015, which represented 17.72% and 17.44% of our total (gross) outstanding loans and advances as of March 31, 2016 and March 31, 2015, respectively.

The following table classifies our outstanding retail loans and advances for the periods indicated therein:

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Particul As of March 31, 2014 As of March 31, 2015 As of March 31, 2016 As of December 31, ars 2016 Amount % of Amount % of Amount % of Amount % of Outstand Total Outstand Total Outstand Total Outstand Total ing Outstand ing Outstand ing Outstand ing Outstand (₹ crore) ing (₹ crore) ing (₹ crore) ing (₹ crore) ing Housing 4,381 42.3% 5,093 42.26% 5,970 47.18% 6,696 51.27% Finance Personal 4,797 46.33% 5,956 49.42% 5,695 45.02% 5,333 40.84% and other loans Car Loan 648 6.25% 513 4.26% 519 4.10% 578 4.42% Educatio 531 5.12% 489 4.06% 468 3.70% 453 3.47% n Loan Total 10,357 100 12,051 100 12,652 100 13,060 100

We have introduced various retail products over the years to cater to the needs of the general public and to provide quick and easy access to us.

a. Housing finance scheme: We offer various housing finance schemes for purchase / construction / extension / repairs / renovations / furnishing of residential house / flat including the purchase of land and construction thereon. We also offer housing loan scheme for purchase of long term lease, (minimum 10 years) of house/flat from Government Organisation / PSUs (unexpired lease period should exceed at least 5 years of repayment period of loan). We also provide housing loans of up to ₹ 25 lakh to individuals for purchase/construction of dwelling unit per family and loans all given for repairs to the damaged dwelling units of families up to ₹ 1 lakh in rural and semi-urban areas and up to ₹ 2 lakh in urban and metropolitan areas. We offer a products in the name of United Affordable Housing Loan scheme under Prime Minister Awas Yojana launched with subsidy coverage for the economically weaker sections and low income groups, roof top solar lighting scheme has been launched to popularize it as a part of Housing loan.

b. Car Loan: We offer loans for the purchase of new cars, which can be up to 85% of a car’s value. We make available loans for the purchase of new and used commercial vehicles. We offer United Car Loan Scheme for our customers.

c. Education Loan: We offer financial support to those who have the minimum educational qualification, as required by the institution / organization running the course eligible under the scheme. We offer United Education Loan Scheme for vocational education and training and United Superb Education Loan Scheme for our retail customers. We provide educational loans to individuals up to ₹ 10 lakh for studies in India and ₹ 20 lakh for studies abroad.

d. Personal Loan: We offer a loan scheme for assisting individuals to meet their various family and personal needs during their service or after retirement. We offer United Personal Loan Scheme for Salaried Persons and United Personal Loan Scheme for Pensioners.

e. Other Lending services: We also offer loans for which we accept gold ornaments as security, loans for which customers may pledge securities in our favour, offer business purpose loans against residential and commercial property as collateral.

In addition to above, we offer other banking services to our retail customers such as utilities and lockers. We offer customers a means to pay their electricity and other utility bills such as mobile phone bills and credit card bills. Our lockers are available in different sizes, are protected by advanced security systems and may be nominated to others.

Retail Hub:

We have established Retail Hubs for faster appraisal and professional approach in processing of loan proposals, thereby making loan sanctioning process hassle free and reducing Turn Around Time (“TAT”). During fiscal year

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2016, 24 Retail Hubs functioning in 23 Regions of our Bank sanctioned 6,955 retail credit proposals amounting to ₹ 1,028.83 Crore as against 5,373 proposals amounting to ₹ 756.93 Crore during the fiscal year 2015.

CORPORATE BANKING

Our corporate banking business has a customer-focused approach that caters to the business needs of varied enterprises and corporate entities both in public and private sector. Our products for corporate customers include term loans and advances for the creation or improvement of assets and also working capital funding. We also provide non fund-based services such as letters of credit (“LCs”), guarantees and foreign currency conversion/remittances. We provide finance to corporates through the syndication of loans done by various financial institutions. We offer fee-based services, such as cash management and remittance services. We cross sell and distribute life insurance products, general insurance products and mutual funds to corporate customers and their owners and employees.

In order to give focused attention to corporate clients and to reduce our response time to their loan applications, we have a specialized Corporate Business Group (“CBG”) at our Head Office, Kolkata, which exclusively caters to the credit requirements of corporate clients through our Corporate Finance Branches in Mumbai, Delhi and Kolkata and through other branches at Hyderabad, Bangalore, Bhubaneswar, and various other state capitals and important centers throughout the country.

As a percentage of total deposits, corporate banking deposits accounted for 13.98%, 5.49%, 4.97% and 2.66% as of March 31, 2014, March 31, 2015, March 31, 2016 and nine months period ended on December 31, 2016, respectively.

We offer the following range of loans and advances to assist our corporate customers in meeting their financial needs under sole as well as consortium/multiple banking arrangement:

 Term Loans: Our term loans primarily finance the creation and improvement of fixed and other assets, including long term projects.

 Cash Credit and Other Working Capital Facilities: Cash credit and bill financing facilities are the most common form of working capital financing in India. We offer revolving credit facilities secured by working capital assets, such as inventory and receivables.

 Foreign Currency Loans: We provide loan facilities in foreign currencies to our customers. Foreign currency-denominated loans in India are granted out of our FCNR (B) funds or borrowing from the interbank markets pursuant to RBI guidelines.

 Export Credit: We offer both pre and post-shipment credit to Indian exporters through Rupee denominated loans as well as foreign currency loans in India.

 Import Finance: We provide various types of credit facilities and other services to importers in their import business including collecting import bills, establishing import letters of credit, arranging short-term foreign currency loans through our correspondent banks and issuing guarantees on behalf of importers.

 Letters of Credit: We provide letter of credit facilities, buyers credit / letter of comfort with our fee varying with the term of the facility and the amount of commitment, which are often partially or fully secured by assets, including cash deposits, documents of title to goods, stocks and receivables or some other form of security.

 Guarantees: We issue guarantees on behalf of our customers to guarantee their financials, performance and bid bond obligations, which are generally secured by account indemnities, counter guarantees and/or a fixed or floating charge on the assets of the borrower, including cash deposits.

OUR PERFORMANCE UNDER PRIORITY SECTOR CREDIT

We actively extend financial support and finance to sectors identified as “Priority Sectors” by the Government and the RBI to promote the development of the rural economy. Our Priority Sector advances include loans to the

131 agriculture, small-scale industries and services, loans to certain sectors targeted as requiring special assistance, such as education, food and agriculture based processing sectors, loans to the housing sector.

The RBI’s guidelines state that banks should extend at least 40% of their adjusted net bank credit to the priority sector, which includes the agriculture and MSE sector. In addition, under the RBI guidelines, banks should extend 18% of their adjusted net bank credit to the agriculture sector. In case of any shortfall, they are required to place the difference between the required lending level and the actual amount lent in the priority sector and agriculture sector in an account with the National Bank for Agriculture and Rural Development under Rural Infrastructure Development Fund Scheme, where the applicable interest rates are generally found to be lower than market rates for lending to the priority sector.

The following table presents data on our outstanding priority sector lending, including as a percentage of our adjusted net bank credit, as at the last Friday of the months indicated.

Particula As of March 31, 2014 As of March 31, 2015 As of March 31, 2016 As of December 31, rs 2016 Amount % of Amount % of Amount % of Amount % of Outstandi Adjuste Outstandi Adjuste Outstandi Adjuste Outstandi Adjuste ng d Net ng d Net ng d Net ng d Net (₹ crore) Bank (₹ crore) Bank (₹ crore) Bank (₹ crore) Bank Credit Credit Credit Credit Agricultur 12,297 13.31% 9,073 12.86% 12,605 17.40% 11,277 15.25% e Credit MSE 11,238 15.57% 12,273 17.40% 10,998 15.19% 10,219 13.82% Credit Other 5,415 7.5% 7,215 10.23% 6,206 8.57% 6,918 9.36% Priority Sector Credit(1) Total 28,950 40.11% 28,561 40.48% 29,809 41.16% 28,414 38.42% (1) Includes loans for retail trade, housing and education.

The RBI also requires commercial banks to advance at least 10.0% of adjusted net bank credit to weaker sections identified by the RBI. Under the DRI scheme, we extend loans to the lower-income sections of the community that are engaged in productive ventures at an interest rate of 4.0% per annum to meet their credit requirements.

Agriculture Sector

As of December 31, 2016, we had an outstanding loan portfolio to the agriculture sector of ₹ 11,277 crores of our total outstanding loans and advances as of that date. Further, as of March 31, 2016, we had an outstanding loan portfolio to the agriculture sector of ₹ 12,605 crores of our total outstanding loans and advances as of that date, compared with ₹ 9,073 crore as of March 31, 2015, representing year-on-year growth of 38.93%. Abolition of the concept of Direct & Indirect Agriculture removing capping of 4.5% to Indirect Agri has caused such a steep growth.

We offer a wide variety of products and schemes under agricultural financial services, including both direct and indirect advances. We have various area-specific schemes suitable to different agro-climatic conditions and agricultural practices, including credit for tea plantation, short term credit for seasonal agricultural operations and working capital limits to allied activities of agriculture. We also extend credit to set up and maintain rubber plantation thus boosting agriculture sector of the economy. We provide credit facilities to farmers for the purchase of three wheelers and four wheelers. We also lend money to small and marginal farmers for the purchase of agricultural land. In addition, we provide farmers with credit facilities for the rescheduling and rephasing of existing loans if they are unable to repay their existing loans due to various reasons, including natural calamities. To ensure hassle free, need based and timely disbursement of agriculture credit, we have simplified the forms for Kisan Credit Card Scheme (“KCC”), joint liability group scheme (“JLG”), differential rate of interest scheme (“DRI”) and other agriculture loans incorporating space on itself for certification on land holding, income, residence etc. by the appropriate authorities, which in turn has also facilitated in minimizing the turnaround time.

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In order to give a fillip to financing against pledge of warehouse receipt, which, in turn, would facilitate considerable growth in the agriculture sector, we have entered into a tie-up arrangement with M/s. Star Agri Collateral Management Limited, where in they provide risk management tools relating to commodities and inventories which, inter alia, include collateral management services, field warehousing arrangements, inventory audit services, storage and preservation services, procurement services, testing and certification services, inspection services and monitoring services.

We have revised our existing KCC scheme in accordance with the directions of the Government of India. Under the revised scheme, it is envisaged that all the KCC holders, existing as well as new, would be issued with a smart card/Debit card (biometric smart card) compatible for use in the ATMs/Hand held swipe machines and capable of storing adequate information on farmers identity, assets, land holding and credit profilers. We also launched the RuPAY based KCC scheme on a pilot basis in the districts of Murshidabad, Nadia and Hooghly in West Bengal.

We have organized several special camp for issuance of Kisan Credit Cards to bring more number of new farmers under KCC net as per revised scheme. We have issued 94,799 fresh KCCs during fiscal year 2016 with credit limits of ₹ 538 crore. Total number of outstanding KCCs as on March 31, 2016 stands at 5,59,923 with aggregate outstanding balance of ₹ 2,266.56 crore. In line with the Government guidelines on issuance of Rupay based ATM enabled cards to all the KCC holders, we have issued 3.60 lakh ATM cards to the KCC holders till March 31, 2016 which is 93% of eligible KCC holders (excluding illiterate, unwilling and NPA KCC holders).

We also take adequate and appropriate steps for extending various benefits to the farming community to protect them from the related uncertainties and to minimize the financial burden. Those are implementation of crop insurance scheme under Pradhan Mantri Fasal Bima Yojana (PMFBY) and Interest Subvention Scheme from Short Term Production Credit. We have made available the benefit of interest subvention to the tune of ₹ 13.26 crore for the fiscal years 2014, ₹ 16.67 crore for the fiscal years 201 and ₹ 13.87 crore for the fiscal years 2016. For creating awareness among the borrower farmers about necessity of availing bank finance for agriculture operations and maintaining it in performing status, we have actively taken part in a state government assisted programme under the banner ‘Bangla Farmers’ Financial Inclusion Fortnight’ in the months of November and December 2016.

Micro and Small Enterprise (MSE) Sector

With a view to enlarge our credit exposure in the MSE sector, we have initiated several sector friendly measures at highly competitive interest rates based on the enactment of the government on Micro, Small & Medium Enterprises Development (MSMED) Act, 2006.

A sizable share of our total lending is allocated to this sector. As of March 31, 2016, we had an outstanding loan portfolio of ₹ 11,885 crore, compared with ₹ 12,949 crore as of March 31, 2015. We offer a wide variety of product and schemes to cater to the needs of this sector. We believe that MSMEs are a major driving force behind India’s recent economic success. Accordingly, our Bank has dedicated specific resources to this customer segment.

We have opened number of MSME branches and deployed specialized officers at MSME centric locations. We propose to strengthen our relationship with these corporates by giving them various facilities at competitive terms and thereby expand our business. We have installed a dedicated toll free telephone connection at our head office to address all queries of entrepreneurs in the MSEE sector. We have set up a MSME care centre at all our regional offices to improve lending and to redress the grievances of our customers under this sector. We also offer loans under the schemes of Pradhan Mantri Mudra Yojana (“PMMY”) to provide funding to the non-corporate, non-farm sector income generating activities of micro and small enterprises whose credit needs are below ₹10 Lakh.

Other Priority Sector Credit

We provide micro credit (loans not exceeding ₹ 50,000 per borrower) to persons belonging to economically disadvantaged sections of the society, irrespective of the place of residence, for taking up any income generating activities, falling within the purview of the priority sector.

DEPOSITS

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We offer a range of deposit accounts with tenures normally ranging from a minimum of 14 days to a maximum of 10 years. We offer several deposit accounts to Non-Resident Indians, including deposits in foreign currencies. Our deposits are broadly classified into current (also known as demand) deposits, savings deposits and term deposits, which are briefly discussed as under: a. Current deposits are non-interest bearing deposits; b. Savings deposits are deposits on which an interest of 4% is offered; c. Term deposits are deposits on which interest is paid, either on maturity or at stipulated intervals depending upon the deposit schemes under which money is placed. Term deposits are classified as:

• Retail term deposit, where amount of deposit is below ₹ 1 crore; and

• Bulk term deposit, where amount of deposit is ₹ 1 crore and above.

Term deposits mainly include:

• Term deposits on which a fixed rate of interest is paid at fixed, regular intervals;

• Re-investment deposits, under which the interest is compounded quarterly and paid on maturity, along with the principal amount of the deposit; and

• Recurring deposits, under which a fixed amount is deposited at regular intervals for a fixed term and the repayment of principal and interest is made at the end of the term.

The average cost (interest expense divided by average of fortnightly balances) of savings deposits was 4% as of December 31, 2016, 4% in fiscal year 2016, 4% in fiscal year 2015 and 4% in fiscal year 2014. The average cost of term deposits was 8.39% as of December 31, 2016, 8.13% in fiscal year 2016, 8.80% in fiscal year 2015. The average cost of total deposits was 6.09% as of December 31, 2016, 6.58% in fiscal year 2016, 6.88% in fiscal year 2015 and 7.14% in fiscal year 2014. Current deposits do not bear interest, and are therefore carried at zero cost.

The following table sets forth our outstanding deposits and the percentage composition by each category of deposits for the periods indicated therein:

Particul As of March 31, 2014 As of March 31, 2015 As of March 31, 2016 As of December 31, ars 2016 Amount % of Amount % of Amount % of Amount % of Outstand Total Outstand Total Outstand Total Outstand Total ing Outstand ing Outstand ing Outstand ing Outstand (₹ crore) ing (₹ crore) ing (₹ crore) ing (₹ crore) ing Current 8,077 7.24% 8,944 8.22% 7,981 6.86% 9,697 7.59% deposits (A) -From 1,315 1.18% 1,261 1.16% 1,188 1.02% 1,632 1.28% banks -From 6,762 6.06% 7,683 7.06% 1,252 5.84% 8,065 6.31% others Savings 33,154 29.73% 36,811 33.83% 40,810 35.06% 51,273 40.15% deposits (B) Term 70,279 63.03% 63,063 57.95% 67,610 58.08% 66,722 52.26% deposits (C) -From 2,116 1.90% 1,761 1.62% 1,252 1.07% 893 0.70% banks

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TREASURY OPERATIONS

Our treasury operations are our interface with the financial markets. Our treasury operations consist primarily of statutory reserves management, liquidity management, investment and trading activities, money market and foreign exchange activities. Our treasury department manages our treasury operations on a day-to-day basis subject to oversight by our Investment Committee and ultimately by our Board. Through our treasury operations, we manage our funds, invest in debt and equity products and maintain required regulatory reserves. We run a proprietary trading book in debt, equity and foreign exchange within the framework of our treasury policy.

Our interest income on investments of treasury operations was ₹ 2,597.62 Crores, ₹ 2,879.32 Crores, ₹ 3,038.73 Crores, and ₹ 2,302.61 Crores for the fiscal years ended March 31, 2014, March 31, 2015, March 31, 2016 and the nine months ended December 31, 2016, respectively. Our non-interest income from our treasury operations, consisting of profit and loss from the sale of investments and foreign exchange transactions was ₹ 681.95 Crores, ₹ 1,265.39 Crores, ₹ 959.80 Crores, and ₹ 1,502.44 Crores for the fiscal years ended March 31, 2014, March 31, 2015, March 31, 2016 and the nine months ended December 31, 2016, respectively.

Our overseas presence covered two countries namely Myanmar and Bangladesh with one Representative Office each at Dhaka, Bangladesh and Yangoan, Myanmar. Substantial part of Indo-Myanmar trade is routed through our Bank. As on March 31, 2016, Twenty five (25) banks of Bangladesh maintain thirty eight (38) Vostro accounts in USD and EUR and fifteen (15) banks of Myanmar maintain Twenty three (23) Vostro accounts in EUR, USD, INR and SGD with our Bank. Further, Global IME bank Limited, Nepal is maintaining Vostro accounts in INR and USD with our Bank.

The following table sets forth the allocation of our net investment portfolio for the periods indicated therein:

Securities As of March 31, As of March 31, As of March 31, As of December 31, 2014 2015 2016 2016 Amount % Amount % Amount % Amount % (₹ crore) (₹ crore) (₹ crore) (₹ crore) SLR Government 35,084 77.74% 35,021 74.83% 36,009 80.14% 47,092 77.40% securities Other approved 16 0.04% 0 0 0 0 0 0 Securities Sub total 35,100 77.78% 35,021 74.83% 36,009 80.14% 47,092 77.40% Non-SLR Subsidiaries and Joint – – – – – – – – Ventures Debentures and 2,152 4.77% 2,113 4.52% 2,150 4.78% 2,672 4.39% Bonds Re-cap bonds – – – – – – – – (including Special Securities ) Shares 439 0.97% 343 0.73% 358 0.80% 503 0.83% 135

Securities As of March 31, As of March 31, As of March 31, As of December 31, 2014 2015 2016 2016 Amount % Amount % Amount % Amount % (₹ crore) (₹ crore) (₹ crore) (₹ crore) Other 7,437 16.48% 9,321 19.92% 6,417 14.28% 10,579 17.38% Sub total 10,028 22.22% 11,777 25.17% 8,925 19.86% 13,754 22.60% Total 45,128 100 46,798 100 44,934 100 60,846 100

The following table sets forth the category wise allocation of our investment portfolio for the periods indicated therein:

Securities As of March 31, As of March 31, As of March 31, As of December 31, 2014 2015 2016 2016 Amount % Amount % Amount % Amount % (₹ crore) (₹ crore) (₹ crore) (₹ crore) Held to Maturity 29,075 64.43% 27,570 58.91% 24,369 54.23% 24,987 41.07% (HTM) Available for Sale 16,053 35.57% 19,228 41.09% 20,565 45.77% 35,859 58.93% (AFS) Held for Trading 0 0 0 0 0 0 0 0 (HFT) Total 45,128 100 46,798 100 44,934 100 60,846 100 Yield 8.00 8.04 8.02 7.67 Modified Duration 0 0 0 0 HFT Modified Duration 5.47 5.42 5.41 5.58 HTM Modified Duration 1.96 3.59 3.73 3.21 AFS

GENERAL BANKING SERVICES

We offer a wide range of general banking services to our retail, corporate and priority sector customers, including those services described below.

Debit Cards

We offer debit cards which may be used for cash-less transactions in India and abroad. Our debit cards include ATM Debit Card, United VISA Debit Card, United EMV Debit Card, United RuPay Debit Card, United RuPay Kisan Debit Card, Rupay EMV Card, Rupay Platinum EMV card. United International ATM cum debit card enables instant access to the money in your account anywhere anytime avoiding the hassles of carrying cash. These cards support the financial inclusion of the urban un-banked population and disbursal of small loans to semi-urban and rural unbanked population. Our debit cards can also be used at point of sale.

Integrated Cash Management Services

We had introduced Integrated Cash Management Services under United Global Cash Management Services. United Global Cash Management Services is a software application that facilitates management of customer’s fund, particularly, of corporate customers. United Global Cash Management Services is based on robust technology capable of collection/receivables, Payment/Payable, Liquidity Management, Public Issues Collection & Payments and Fund Distribution requirement of –

 Government Departments and Ministries  Large Corporate  Small and Medium Enterprises

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All of our above services provide our customers with enhanced liquidity and better cash management and help them in reducing their operational and administrative costs. This advanced technology helps us in delivering superior products and services. Our income from service charges under Integrated Cash Management Services were ₹ 1.89 Crores, ₹ 3.13 Crores, ₹ 3.90 Crores, and ₹ 3.35 Crores for the fiscal years ended March 31, 2014, March 31, 2015, March 31, 2016 and the nine months ended December 31, 2016, respectively.

Depository and Trading Services

We are registered as a Depository Participant with the CDSL and NSDL and provides depository services to our Bank’s customers under the umbrella of “United Demat”, which aims at providing hassle-free, fast and accurate transactions under depository environment. We also facilitates share trading for our customers through two products under the umbrella “U-Connect” - in association with Kotak Securities Limited by the brand name ‘Trio’ which enables the customer to open 3-in-1 account i.e. bank account, demat account and share trading account and trade seamlessly on the net from the comfort of their home.

These products are feature-rich with facilities of investment, trading, exposure, margin trading, funding, IPO applications through ASBA, systematic investment, placing aftermarket orders and future orders valid for 365 days, all being made available at an extremely competitive pricing. Our income from depository service were ₹ 0.28 Crores, ₹ 0.16 Crores, ₹ 0.18 Crores, and ₹ 0.25 Crores for the fiscal years ended March 31, 2014, March 31, 2015, March 31, 2016 and the nine months ended December 31, 2016 respectively.

DISTRIBUTION OF THIRD PARTY PRODUCTS

Bancassurance

We distribute life insurance products and general insurance products through our branches. We have entered into corporate agency agreements with LIC and Bajaj Allianz General Insurance Company Limited to distribute their various insurance products, for which we are paid a commission. Our income from bancassurance business was ₹ 10.01 Crores, ₹ 6.16 Crores, ₹ 5.87 Crores, and ₹ 4.63 Crores for the fiscal years ended March 31, 2014, March 31, 2015, March 31, 2016 and the nine months ended December 31, 2016, respectively

Mutual Funds

We have entered into agreements with various entities including, UTI Mutual Fund, HDFC Mutual Fund, Franklin Templeton Investments, ICICI Prudential Mutual Fund, Reliance Mutual Fund, Kotak Mahindra Mutual Fund, SBI mutual Fund, PNB Principal Mutual Fund and Peerless Mutual Funds for marketing their mutual fund units.

Inward Money Remittance

We offer services for receipt of funds acquired either locally or from offshore locations and use the platform of UAE Exchange and Financial Services Limited for inward money remittance.

DELIVERY CHANNELS AND ACCESSIBILITY

Our customers in metropolitan and rural areas can access a range of delivery methods to take advantage of our products and services. These include access to physical branches and extension counters. Round the clock access to select banking services are offered through ATMs, internet banking and mobile banking. As on January 31, 2017, we had 2,021 branches in 29 States and 5 Union Territories in India (all of them under CBS platform). As of January 31, 2017, we had 2,200 ATMs, 36 regional offices, 5 extension counters and 2 representative offices in Bangladesh and Myanmar. As of January 31, 2017, we had a customer base of approximately 4.22 crore.

The following table sets out details of our branches as of January 31, 2017:

State and Union Territories Metro Urban Semi - Rural Total Number of Ext. Urban district Counter Andaman & Nicobar – 1 1 – 2 1

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State and Union Territories Metro Urban Semi - Rural Total Number of Ext. Urban district Counter Andhra Pradesh 2 12 1 1 16 10 Arunachal Pradesh – – 3 1 4 2 Assam – 35 68 144 247 27 1 Bihar 11 24 25 34 94 31 Chandigarh – 4 0 0 4 1 Chattisgarh 3 11 12 1 27 14 Dadra & NH 0 – 1 – 1 1 Delhi 35 – – – 35 1 1 Goa – 1 3 – 4 2 Gujarat 10 13 5 2 30 21 1 Haryana 2 18 4 2 26 19 Himachal Pradesh – 1 3 – 4 3 Jammu & Kashmir – 1 – – 1 1 Jharkhand 11 19 21 27 78 21 1 Karnataka 15 15 2 – 32 17 Kerala – 10 6 – 16 9 Madhya Pradesh 7 6 – – 13 10 Maharashtra 38 9 2 – 49 13 Manipur – 7 8 4 19 9 Meghalaya – 4 4 8 16 5 Mizoram – 3 4 – 7 1 Nagaland – 2 1 – 3 2 Orissa – 32 38 68 138 30 – Pondicherry – 2 – – 2 1 – Punjab 3 9 7 – 19 14 – Rajasthan 7 15 3 10 35 17 – Sikkim – 1 2 – 3 2 – Tamil Nadu 18 11 7 4 40 16 – Telangana 12 6 1 – 19 8 – Tripura – 14 17 33 64 8 – Uttar Pradesh 42 35 9 20 106 44 – Uttarakhand – 7 1 – 8 4 – West Bengal 145 149 152 413 859 19 1 TOTAL 361 477 411 772 2,021 384 5

Population group-wise composition of total branch network:

Number of Branches (% of total) March 31, 2014 March 31, 2015 March 31, 2016 January 31, 2017 Metropolitan 332 (16.59%) 330 (16.47%) 330 (16.41%) 361(17.86) Urban 461 (23.04%) 463 (23.10%) 466 (23.17%) 477(23.60) Semi-Urban 409 (20.44%) 411 (20.51%) 415 (20.64%) 411(20.34) Rural 799 (39.93%) 800 (39.92%) 800 (39.78%) 772(38.20) Total 2,001 2,004 2,011 2,021

Population group-wise composition of total branch network:

Number of Branches (% of total) March 31, 2014 March 31, 2015 March 31, 2016 January 31, 2017 Eastern Region 1,168 (58.37%) 1,169 (58.33%) 1,169 (58.13%) 1,175 (58.13%) North Eastern 351(17.54%) 352 (17.56%) 356 (17.70%) 358 (17.71%) Region

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Number of Branches (% of total) March 31, 2014 March 31, 2015 March 31, 2016 January 31, 2017 85 (4.25%) 85 (4.24%) 85 (4.23%) 86 (4.26%) Western Region

Northern Region 125 (6.25%) 123 (6.14%) 123 (6.12%) 123 (6.09%) Southern Region 118 (5.90%) 121 (6.05%) 124 (6.16%) 125 (6.19%) Central Region 154 (7.69%) 154 (7.68%) 154 (7.66%) 154 (7.62%) Total 2,001 2,004 2,011 2,021

As on January 31, 2017, our Bank has 247 specialized branches, catering to the specific clientele segment;

Sr. No. Specialized Branches No. of branch 1. MSME Branch 186 2. Retail Hub 24 3. Service Branch 19 4. Women Branch 5 5. Corporate Finance Branch 4 6. Asset Recovery Management 4 7. Overseas Banking Business Branch 3 8. MSME Loan Processing Cell 1 9. Treasury Branch 1 Total 247

As on January 31, 2017, our Bank has 2,200 ATMs including 295 ATMs in Metros, 602 ATMs in Urban region, 573 ATMs in Semi Urban region and 730 ATMs in Rural region. The following table sets out details of our ATMs, state wise, both onsite and offsite, as of January 31, 2017:

State ATMs State ATMs Andaman & Nicobar 1 Maharashtra 40 Andhra Pradesh 16 Manipur 21 Arunachal Pradesh 1 Meghalaya 9 Assam 298 Mizoram 9 Bihar 87 Nagaland 3 Chandigarh 3 Orissa 197 Chhattisgarh 21 Pondicherry 2 Dadra & Nagar Haveli 1 Punjab 14 Delhi 51 Rajasthan 36 Goa 4 Sikkim 3 Gujarat 28 Tamil Nadu 35 Haryana 21 Telangana 16 Himachal Pradesh 3 Tripura 81 Jharkhand 64 Uttar Pradesh 93 Karnataka 14 Uttarakhand 11 Kerala 14 West Bengal 979 Madhya Pradesh 24

We offer a user-friendly internet banking facility that allows our customers to conduct a comprehensive range of banking transactions online without visiting our branches or ATMs. These transactions include account management, money transfer and settlement and fee payment. We seek to provide a competitive, functional and usable internet banking platform that meets our customer expectations of banking without paperwork. We offer services 24 hours a day, seven days a week through internet banking and mobile phone account services. The Bank also provides facility of instant fund transfer through IMPS, utility bill payment and QR Code Based transaction.

Subordinated Debt (Lower Tier II Capital)

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We obtain funds from the issuance of unsecured non-convertible subordinated debt securities, which qualify as Tier II capital under RBI guidelines for assessing capital adequacy. Details of Tier II Bond are as follows:

Sr. Name of the Bond Date of Coupon Rate (%) Date of Credit Rating No. Issue Maturity 1. Lower Tier-II (Series-V) March 27, 10.10 (annual) April 27, A+ by CARE and A+ by 2007 2017 ICRA 2. Upper Tier-II (Series-I) June 18, 10.65 (annual)* June 18, A- by CARE and A- by Basel I 2007 2022 ICRA 3. Lower Tier-II (Series- March 25, 9.30 (annual) March 25, A+ by CARE and A+ by VI) Basel I 2009 2019 ICRA 4. Lower Tier –II (Series– December 9.20 (annual) *** December A+ by CARE and AA- by VII) Basel II 28, 2011 28, 2021 CRISIL 5. IPDI-Tier I (Series I) December 9.27 (annual) December A- by CARE and A by Basel II 5, 2012 5, 2022** CRISIL Ltd. 6. Lower Tier-II (Series- June 25, 8.75 (annual) June 25, AA- by Brickwork and AA- VIII) Basel III 2013 2023 by CRISIL Compliant 7. AT-1 Basel III September 11.95% (annual) September BBB by India Rating Compliant 29, 2015 29, 2020* * * Step up to 11.15 after 10 years, if Call Option is not exercised **With prior approval of RBI ***Tier II (Series VII) - Simple interest at the rate of 9.20% p.a. for the broken period from the Deemed Date of Allotment i.e., December 28, 2011 till March 31, 2012 was paid initially. Thereafter, simple interest at the rate of 9.20% p.a. will be payable annually on the first working day of April of each subsequent year till March 31, 2021. Interest from April 1, 2021 to December 27, 2021 shall be paid on the date of redemption.

Regional Rural Banks

We have sponsored four Regional Rural Banks (“RRBs”) in collaboration with the Central Government and the state governments of West Bengal, Assam, Manipur and Tripura. We have sponsored Bangiya Gramin Vikash Bank in West Bengal, Assam Gramin Vikash Bank in Assam, Tripura Gramin Bank in Tripura and Manipur Rural Bank in Manipur (“MRB”). As on March 31, 2016, the total network of branches of these RRBs stands at 1169 (including 8 non-functional Branches). As on March 31, 2016, the total business of these RRBs was ₹ 35,213 crore with total Deposit of ₹ 23,678 Crore and advance of ₹ 11,535 crore. Total profit earned by these RRBs were ₹ 97.56 crore after adjusting ₹ 3.23 crore loss increased by MRB. Average Gross NPA was 13.61 %.

RISK MANAGEMENT

Our risk management system comprises policies, procedures, organizational structures and control systems for the identification, measurement, monitoring and control of various risks. Our risk management policy documents are in line with RBI requirements and have evolved over time to meet the changing needs of our business.

The three main risk exposures we face are credit risk, market risk and operational risk. We have implemented the Basel – III framework for computation of capital requirements under Pillar-I risks like credit risk, market risk and operational risk as well as Pillar-II risks like credit concentration risk, liability concentration risk, liquidity risk etc. We are making disclosures under Pillar-III in conformity with Basel – III guidelines. Also, in keeping with the said guidelines our risk management system is subjected to assessment, both offsite and onsite by the regulator.

Credit Risk

Lending Policy

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We have a credit risk management system, as a part of our lending policy, which is reviewed from time to time and circulated to all our branches, regional offices and head office (including all its departments). The policy and procedures under this system have been prepared on the basis of and in compliance with Basel – III guidelines.

The main objective of the policy is to ensure that the operations are in line with the business strategies of the top management within the regulatory framework and government directives. The policy aims at ensuring that there is no excessive concentration in particular segment of individual assets within the portfolio. It also aims at continued improvement of the overall quality of assets at the portfolio level, by establishing a commonality of approach regarding credit basics, appraisal skills, documentation standards and awareness of institutional concerns and strategies, while leaving enough room for flexibility and innovation.

Credit Risk Management

For the identification and assessment of credit risk, in addition to relying on rating by external agencies, we have developed and refined our own internal credit risk rating models to assess counterparty risk, by taking into account various risks categorized broadly into financial, business, industry, project and management risks. The credit concentration risk of our Bank is monitored through the prudential exposure ceiling limit fixed by our Bank. However, to internally monitor the management of the concentration risk, Bank assesses its risk appetite for industry prioritization and concerned risk.

The management of credit risk includes, inter-alia, setting up exposure limits to achieve a well-diversified portfolio across dimensions such as companies, group companies, industries as well as appraisal, pricing, deciding credit approval authority, documentation, reporting and monitoring, review and renewal of credit facilities, managing of problem loans, credit monitoring and loan review mechanism.

For better risk management and avoidance of credit concentration risks, internal guidelines on prudential exposure norms in respect of individual and group borrower, industry-wise exposure limit, sensitive sectors including capital markets and real estate are in place. We have an elaborate credit appraisal format to take care of different parameters/aspects of credit risk. We have a credit rating based pricing system and have systems and procedures in place to take care of both standard and non-standard documentation involving borrowal accounts. We have a system of reporting sanction, documentation, disbursement, operation and status of borrowal accounts as well as periodic monitoring of the same. We also have a system for the review and renewal of credit facilities as well as managing of stressed accounts by taking suitable measures including restructuring and rehabilitation. We follow a multi layered discretionary power structure backed by a committee approach for sanction of credit facilities.

Our Bank provides capital based on regulatory guidelines using the standardized Approach for estimation of minimum capital requirement for its Credit Risk.

Loan Review Mechanism

We have a credit audit policy and a document audit system as a part of loan review mechanism. On-site credit audit is conducted by visiting the branches, scrutiny of the processed notes and other documents, operation in the account and verification of fulfillment of the terms of sanction as per policy. We also have a system in place for identification of credit weaknesses including tracking early warning signals of credit weaknesses and for the surveillance and monitoring of procedures adopted at various stages of our lending operations. Document audit is undertaken for both standard as well as non-standard documents immediately after execution of documents.

Stress Testing Policy and Analysis

Stress Test refers to a range of techniques used to assess the vulnerability of a portfolio. Stress test techniques provide a way to quantify the impact of changes in a number of risk factors on the assets and liabilities of our Bank. Stress Testing has become an integral part of Bank’s Risk Management system and is used to evaluate its potential vulnerability to certain unlikely but plausible events or movements in financial variables. Our Bank formulated its Policy on Stress Testing and the same is reviewed annually. Our Bank also undertakes Stress Testing Analysis on quarterly basis and places the same before the Board of Directors for noting.

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The choice of test depends on our Bank’s portfolio, complexity of its operation, the risk factor to be stressed and the technical ability to collect and process data at required intervals. In the scope of application of Internal Capital Adequacy Assessment Policy (“ICAAP”), it is considered that the business operation of our Bank is “Simple.” There are broadly two categories of stress tests used in banks viz. sensitivity tests and scenario tests.

Sensitivity test estimates the impact on a bank’s financial position due to predefined movements in a single risk factor like interest rate, foreign exchange rate or equity prices, shift in probabilities of defaults (PDs), etc. Scenario Tests include simultaneous changes in a number of variables based on a single event experienced in the past and assessment of their impact on our Bank’s financial position. Accordingly, our Bank has adopted the Sensitivity test at individual portfolio level & Scenario test method at aggregate portfolio level of our Bank and analyzed impact under various stress scenarios as per our Bank’s policy.

Macro Level Analysis of Credit Portfolio

The macro level analysis of the whole credit portfolio is done at quarterly intervals to assess the quality of the credit portfolio as per segmentation by industries/ sectors, interest rates (in relation to MCLR/Base Rate/ BPLR). Portfolio analysis of major industries or sectors at regular intervals is being undertaken to study the impact of the prevalent market scenario of a particular industry or sector on our credit portfolio.

Risk Rating Migration Analysis

We are conducting analysis on risk rating migration for large borrowal accounts. The findings of the analysis are being utilized to decide and implement appropriate strategies to maintain ratings of better rated accounts, improve the ratings of inferior rated accounts and arrest migration to inferior rated accounts.

Credit Risk Mitigation Techniques and Collateral Management

We have a policy on credit risk mitigation techniques and collateral management describing various mitigants of credit risks and appropriate collaterals taking into account the spirit of Basel III or RBI guidelines and measures to be adopted to optimize their benefit in credit risk mitigation as well as in computation of capital charge as per rules and regulations laid down in Basel III or RBI guidelines.

Market Risk

We have formulated Market Risk Management Policy, Asset Liability Management Policy and Integrated Treasury Policy for management of market risk, liquidity risk, interest rate risk and forex risk. Risk Management and reporting is based on various parameters including modified duration, maximum permissible exposures, net open position limits, gap limits and Value at Risk (VaR) in line with the industry practices.

Our market risks are essentially managed by our treasury department, which handles our treasury operations. The treasury department has clear-cut demarcations between its front office functions, and back office functions. The mid office, which is independent from treasury and reports directly to our senior management and also to the ALCO, is also responsible for implementation of our market management system including interest rate risk.

Interest Rate Risk

Interest rate risk refers to fluctuations in our net interest income, net worth and the value of our assets due to changes in market rate of interest arising out of internal and external factors. Internal factors include the composition of our assets and liabilities, quality, maturity, interest rate and re-pricing period of deposits, borrowings, loans and investments. Among external factors rising or falling interest rates impact us depending on our balance sheet positioning. Interest rate risk is prevalent on both the asset as well as the liability sides of our balance sheet. We assess the interest rate risk to which we are exposed through traditional gap analysis, duration gap analysis and stress tests.

Asset - Liability Management

The Asset - Liability Management Committee (“ALCO”) periodically monitors and controls the risks and returns, mobilization and deployment of funds, setting our lending and deposit rates, and directing our investment activities. 142

We identify the risks associated with the changing interest rates from earnings at risk perspective, which is computed based on the traditional gap analysis on a static position as well as economic value perspective which is done based on computing the changes in the modified duration of different rate sensitive assets and liabilities.

For financing liquidity gap in an adverse situation, we have adequate contingency plan including, liquid mutual fund, liquid money market securities, easily marketable securities, surplus SLR securities, export refinance and special refinance / repo etc.

The RBI has stipulated monitoring of interest rate risk at monthly intervals through a statement of interest rate sensitivity to be prepared as the last reporting day of each month. ALCO reviews interest rate sensitivity statement on monthly basis.

Computation of capital charge for Market Risk on an ongoing basis

We use a software to compute capital charge for market risk under Standardised Duration Approach (“SDA”). It can compute the capital charge on an ongoing basis and have the scope of switching over to Internal Model Approach with necessary customization.

Operational Risk

We have formulated an operational risk management policy and Business Line Mapping Policy in line with RBI guidelines. The operational risk management policy adopted by us outlines organization structure and detailed processes for management of operational risk. The basic objective of the policy is to closely integrate operational risk management system into our day-to-day risk management processes by clearly assigning roles for effectively identifying, assessing, monitoring and controlling, mitigating operational risks and by timely reporting of operational risk exposures, including material operational losses. Our operational risks are managed through internal control frameworks.

Our Bank provides capital based on regulatory guidelines using the Basic Indicator Approach (“BIA”) for estimation of minimum capital requirement for Operational Risk. For migration to Advance Measurement Approach (“AMA”), we have initiated the process of identifying the loss events and collecting the necessary data on such events.

The Business Line Mapping Policy addresses various activities of Bank into different business lines as per RBI guidelines.

Other Information

We have an ICAAP and ICCAP Document to evaluate and document different risks and substantiate appropriate capital allocation. Apart from maintaining regulatory capital for Pillar-I risks and also capital for Pillar-II risks, we maintain additional capital as cushion so as to protect our Bank as well as depositors and general creditors against unforeseen losses.

The capital requirement is affected by the economic environment, the regulatory requirement and by the risk arising from our activities. The purpose of our capital planning is to ensure the adequacy of capital at the times of changing economic conditions, even at times of economic recession. Our capital planning process reviews:

 Our current capital requirement  The targeted and sustainable capital in terms of business strategy and risk appetite.  The future capital planning is done on a three-year outlook.

The capital plan is revised on an annual basis. We have a policy to maintain capital to take care of the future growth in business so that the minimum capital required is maintained on continuous basis. On the basis of the estimation, we raise capital in Tier-1 or Tier-2 with the approval of our Board. Our capital adequacy position is reviewed by our Board on quarterly basis.

Interest Rate Risk in the Banking Book

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The earnings or economic value changes are the main focus of the banking book. We currently have in place measurement systems to assess the effect of rate changes on both earnings and economic value such as gap analysis for addressing changes in net interest income and duration gap analysis for addressing changes in economic value.

Liquidity Risk

Liquidity risk is the current and prospective risk to earnings or capital arising from a Bank’s inability to meet its obligations when they become due without incurring unacceptable losses. Liquidity risk includes the inability to manage unplanned decreases or changes in funding sources. Liquidity risk also arises from the failure to recognize or address changes in market conditions that affect the ability to liquidate assets quickly and with minimal loss in value.

Our liquidity risk management system includes:

 Analysis of liquidity by tracking cash flow mismatches.  Establishment of limits for mismatches and cumulative gaps for all other time buckets, limits for prudential liquidity ratios and monitoring as per the RBI’s requirements.  Measuring and managing our net funding requirements by the use of a maturity ladder and the calculation of cumulative surplus or deficit of funds at different maturity dates, as recommended by the RBI.  Estimating the liquidity profile on a dynamic basis by giving due recognition to seasonal patterns of deposits and loans and the potential liquidity needs for meeting loan commitments.

Foreign Exchange Risk

Foreign exchange rate risk is the risk that we may suffer losses as a result of adverse foreign exchange rate movements during a period in which we have an open position, either spot or forward or a combination of both in an individual currency. Foreign exchange rate risk can arise out of changes on foreign exchange spot and forward rates. Foreign exchange open positions are managed through limits fixed at the individual currency level as well as aggregate currencies as follows: (a) Intra-day limit, (b) overnight limit and (c) stop loss limits for our trading book.

Foreign exchange forward rate risk caused due to gaps or mismatches in merchant trading transactions and the corresponding cover operations in respect of maturities and quantum is managed by individual gap limits, aggregate gap limits and by assessing the value at risk on a daily basis. Foreign exchange sensitive gaps are measured using the value at risk model developed by Foreign Exchange Dealers’ Association of India (FEDAI) and is monitored on a daily basis. Besides setting appropriate limits for both open positions and gaps, we monitor our foreign risk exposures through maturity pattern statements and interest rate sensitivity statements, which are prepared and submitted to the RBI on a monthly basis.

Commodity Risk

At present, we are not facing any commodity price risk as we are not dealing in any commodity directly. We may face commodity risk indirectly through our borrowers who deal in commodities like metal, gold, etc. Such risks are mitigated by fixing prudential limits on exposure.

Equity Price Risk

Exposure to capital market automatically attracts equity price risk. We periodically review the exposure in capital market in the light of changing circumstances and its expectations about future movements in prices. We monitor the movement in prices on a daily basis.

TECHNOLOGY

As on date of this Placement Document, the CBS had been implemented at all our branches and extension counters, covering 100% of our business. We have implemented CBS through an application called FINACLE that has the capability to connect all our multiple delivery channels to a common platform. CBS facilitates networking of branches,

144 which enables customers to operate their accounts, and avail banking services from any of our branches on CBS network, regardless of where that customer maintains their account.

We have a dedicated data centre at our head office in Kolkata and a Disaster Recovery Centre, at Vashi, Navi Mumbai. We have implemented several RBI-led technology projects designated to facilitate greater inter-bank connectivity and faster clearing and settlement. We have implemented Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) in all of our branches. We have implemented the image based Cheque Truncation System (CTS) in all three grids viz. Delhi, Chennai Mumbai as a part of RBI CTS Project Guidelines. We have also implemented NACH and APBS within our integrated payment Hub solution.

As on January 31, 2017, we have installed 22 E-Zones, Internet Banking, Mobile Banking, E - Wallet, E- Passbook Services. Our Bank is issuing Rupay and Visa bonded debit cards including image card on Rupay Platinum Platform. With an aim to leverage technology, our Bank has introduced electronic Passbook (United ePassbook) facility for the customers as a mobile application to view account transactions. Our Bank has implemented online saving account facility, POS machines, online payment of bills and taxes. Our Bank has also implemented a product wherein instant fund transfer across bank through beneficiary mobile number.

Our Bank has installed Unified Payment Interface (“UPI”) from first day of its launch. Our Bank is also having direct debit facility for booking rail tickets through debit card. We use the Aadhaar Enabled Payment System (AEPS) which allows banks to authenticate customers using biometric verification with UIDAI. To be able to service customers who do not have accounts with us, we launched a remittance engine. We use this application to initiate interbank electronic fund transfer services via mobile phones, Immediate Mobile Payment Service, or IMPS and NEFT transactions for such customers at a nominal fee.

As on date of this Placement Document, the basic banking services are being offered to approximately 90 lakh customers under the Financial Inclusion Programme of our Bank through a robust network of 4,252 Bank Mitras spread across 12 states of the country. Since launch of PMJDY, our Bank has focused on building a self-sustaining business model of Financial Inclusion by bringing the financially excluded population under the ambit of formal banking and offering suitable banking services at their doorstep. Each Bank Mitra is equipped with an inter-operable handheld device (micro ATM) for rendering services to the customers. Today our Bank provides an array of services through the Bank Mitras network including e-KYC based SB account opening, biometric/AePS/RuPay based online cash withdrawal and deposit facilities at micro ATMs, various remittance products including IMPS and AePS, Recurring Deposits, micro insurance (PMSBY and PMJJBY) products and micro Pension product (“APY”) apart from micro credit facility under JLG scheme.

Connectivity Infrastructure

All our branches and extension counters are connected through Multiprotocol Label Switching (“MPLS”) based on Virtual Private Network (“VPN”). Last mile connectivity in the branches is provided through leased lines, Integrated Services Digital Networks (“ISDNs”), Very Small Aperture Terminals (“VSATs”), Radio Frequency (“RF”) and CDMA links. As part of Wide Area Network (“WAN”) infrastructure, we have implemented Voice over IP (VOIP) for all of our offices and branches in India excluding Branches where only VSAT link is present. Our offices and branches are having LAN in place which is integrated with our WAN.

Our WAN is interfaced with RBI INFINET, customs and Internet for running of applications, requiring these networks.

System Controls

We have initiated suitable control measures to protect our IT assets. As mentioned above, we have set up a data centre in Kolkata with access card control technology. We have a Disaster Recovery Centre at Vashi, Navi Mumbai. Our information technology security policy takes into account our CBS and ATM network. A suitable disaster recovery mechanism and business continuity plan is also in place. Information system audit of our IT systems are carried out on regular basis. We have also implemented onsite Security Operations Centre (SOC). Our Bank is in process of implementing DDoS preventive system to secure our public facing application from DDoS attacks. Our Bank is also in the process of implementing Application Delivery Control (“ADC”) module comprising Link Load Balancer, Web Application Firewall, Server Load Balancing, Reverse Proxy, IPVS to IPV4 Convertor, SSL – VPN, SSL – Off Loader 145 etc. which will strengthen the Perimeter Information Security of our Bank. We also have in place appropriate provisions for backing-up data at offsite locations in case of loss at a primary location.

INTERNAL CONTROL SYSTEM

We have a separate Audit and Inspection Department which subjects all the branches including international division, investment cell, service branches and every department of the administrative office to regular inspection. Audit Committee of the Board (ACB) has been constituted in line with the RBI guidelines. Our Audit Committee reviews the adequacy of the audit and compliance function, including the policies, procedures, techniques and other regulatory requirements as prescribed by RBI.

In compliance with RBI guidelines, we do a Risk Based Internal Audit (RBIA) of all our branches to promote effective operations, reliable reporting and safeguarding of assets, ensure compliance with regulations and policies and assess and measure various risks and their direction on an ongoing basis.

Concurrent Audit, Revenue Audit and Information System Audit are also conducted at the Branches/Offices through out the year.

Inspection / Audit function also ensures timely compliance of all comments / observations of Annual Financial Inspection (AFI) conducted by RBI.

We have a compliance function which ensures observance to statutory and regulatory guidelines, internal procedures and policies. The compliance function is overseen by the ACB.

CUSTOMER CARE AND RELATIONSHIP MANAGEMENT

As directed by the RBI, we have constituted a Board Level Committee chaired by our Managing Director and Chief Executive Officer and a Standing Committee on Customer Services chaired by our Executive Director. These committees assess the complaints from our customers, and provide necessary directions, from time to time, to improve our customer services. We have introduced a number of customer service initiatives in order to maintain a high standard of customer service.

Citizens’ Charter

We have a citizens’ charter in place that outlines our code of conduct in relation to our customers and provides information on our various activities. This document is available at our branches and on our website.

Customer Education Material

We have created a range of materials in booklet and brochure format that outline the salient features of our products and delivery channels.

Fair Practice Code

We have adopted the Fair Practice Code drafted by the IBA and intended to be followed by the entire banking system in dealing with individual customers. Important characteristics of the code include standards for fair banking practices. Copies of the Fair Practice Code are available at our branches.

CORPORATE AND SOCIAL RESPONSIBILITY

We have set up a trust named United Bank Rural Development and Self Employment Trust (“UBRSETI”) with an objective to set up rural development and self-employment training institute for training the weaker section of society to enable them to take up self-employment. As of December 31, 2016, we had 14 Rural Development and Self- Employment Training Institutes – 6 in West Bengal, 6 in Assam and 2 in Tripura, to impart skill and entrepreneurship development training to unemployed youth, women and people belonging to weaker sections of the society to enable them to set up their own venture for self-employment. We are providing loans to the trained entrepreneurs for setting up their units. 146

We have set up a trust named United Bank Socio-Economic Development Foundation (“UBSEDF”) Trust with a corpus of ₹ 5 crore with an objective of improving the standard of living of the weaker section of the society with an emphasis on distressed women and children through augmenting their income level and improving health, hygiene and education facility.

We have also taken initiatives such as the installation of water hand pumps in remote villages of Manipur, construction of concrete roof of the class rooms in the remotest parts of 24 Parganas (South) district and construction of Residential Farmers' Training Centre in 24 Parganas (North) district in West Bengal. Additionally, we have also supplied small electronic weighing machines to farmers of Sabji Mandi Berhampore, Murshidabad, dug tube well and supplied 50 pairs of benches to Joynagar Institute, Joynagar, installed street lights in Darjeeling and constructed toilets in Siliguri Municipal Area and Barbaruah / Moran. Our obligation towards protection of environmental hazards remain in our resolve in not taking exposure in any ozone depleting industry, providing credit to industrial units only after obtaining environmental clearance and our commitment to the green initiatives of government. We believe in working for the benefit of different segments of society and, in particular, in taking care of deprived, underprivileged persons and persons with limited abilities. Our initiatives include those aimed at promoting education, preventive healthcare, women empowerment and sustainable livelihood.

LEAD BANK RESPONSIBILITY

The RBI has assigned us with “lead bank” responsibility in 34 districts, which are located in the economically backward areas of West Bengal (10 districts), Assam (12 Districts), Tripura (8 districts) and Manipur (4 districts). We are the Convenor of the State Level Bankers’ Committee for West Bengal and Tripura. Our assigned lead bank responsibilities are discharged by maintaining inter-institutional coordination in the preparation and implementation of various development programmes in each district.

HUMAN RESOURCES

As of December 31, 2016, we had 16,221 employees of whom 49.37% were officers, 28.70% were clerical staff and 21.93% were subordinate staff. Our Bank’s employees include professionals in business management, accountancy, engineering, law, computer science, economics and other relevant disciplines. Further, we have tie-up with NIIT Institute of Finance Banking & Insurance Training Limited to conduct training programmes in the areas of banking, finance, insurance and other related areas for the prospective employees of our Bank. We have conducted several training programmes for the employees of our Bank through Administrative Staff College of India, Indian Institute of Corporate Affairs, Centre for Advanced Financial Research and Learning, National Institute of Bank Management and others. For continuously updating the knowledge base of existing officers and providing them with a platform for exchange of views on various aspects of banking and finance, our Bank has also initiated an online training module by the name “Quest”. As of March 31, 2014, March 31, 2015 and March 31, 2016, business per employee (i.e. the sum of advances and deposits divided by the number of employees) amounted to ₹ 10.67 Crore, ₹11.51 Crore and ₹ 12.37 Crore, respectively.

COMPETITION

We face strong competition in all our principal lines of business from other commercial banks and other financial institutions in India. Our primary competitors are other public sector banks, major private sector banks, foreign banks with operations in India and, for certain products, non-banking financial institutions. Our competition with other commercial banks and financial institutions primarily focuses on the variety, pricing and quality of products and services, convenience of banking facilities, reach of distribution network and brand recognition, as well as information technology capabilities.

For more information on competition, please refer to “Risk Factors – We face intense competition from banks and financial institutions that are much larger than we are and have an established presence all over India. If we are unable to effectively respond to competitive pressures it may adversely affect our business and growth”.

SYSTEMS AND PROCEDURES

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We have adopted certain policies and procedures for our day-to-day functioning. The corporate directives are periodically brought to the notice of the branches and staff through circulars. These circulars are also posted on our intranet for ready reference by our staff.

We prepare manuals on various subjects such as deposits, agriculture, collection and remittance as reference material for branch-level employees, which are revised periodically. These manuals define the jobs to be carried out for the various activities described therein. The prescribed systems and procedures are subject to audit checks during inspection. We are in the continuous process of reviewing and updating our existing systems and procedures through procedures in terms of instructions/guidelines issued by IBA, RBI and Government Departments.

SECURITY

We have a security mechanism synergized with our operational risk management. We have instituted modern security systems to protect our assets, confidential information and property. We train our staff on security procedures and conduct awareness programme on a regular basis.

INTELLECTUAL PROPERTY

Our corporate logo “ ” and trade name is registered with the Trade Marks Registry, Kolkata under class 36. We also have copyright “UBI” registered with the Copyright Office, Government of India.

PROPERTIES

Our head office (central office) is located at United Tower, 11, Hemanta Basu Sarani, Kolkata – 700 001, West Bengal, India. As of January 31, 2017, 69 of our branches/offices are situated on properties owned by our Bank and 1,992 branches/offices are under lease. Our ATMs are primarily located on leased premises beside some of them at owned premises. In addition, we operate out of certain owned and leased premises for other business requirements of our Bank.

INSURANCE

We maintain various insurance policies to insure our assets including buildings, furniture, office machinery, electrical fittings, ATMs, computers, motor car, printing kiosk, cheque book kiosk, computers and printing and stationery. In addition, we maintain (i) Group Accident Policy and group mediclaim policy to insure our permanent employees, (ii) Third Party Insurance to insure persons other than our staff iii) Public liability policy to insure third party legal liability, (iv) Burglary and House Breaking Policy to insure various branch offices and ATMs, (v) Directors and officers liability policy to protect from professional hazardous while discharging duties in the capacity of directors and officers of our Bank, (vi) Special contingency insurance for insuring the laptops, i-pad, i-phone, e-book reader and (vii) Bankers’ Indemnity Policy to insure cash holding, cash in transit and cash at ATM. We believe our insurance coverage is sufficient to protect us from material loss in light of the activities we conduct.

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REGULATIONS AND POLICIES

The main legislation governing commercial banks, the Banking Regulation Act, applies to public sector banks such as United Bank of India, only to a limited extent. Sections 34A, 36AD and section 51 of the Banking Regulation Act are applicable to corresponding new banks constituted under the Bank Acquisition Act. In turn, section 51 of the Banking Regulation Act makes some of its sections applicable to corresponding new banks. The Bank, as a corresponding new bank, is governed primarily by the provisions of the Bank Acquisition Act, 1970. The Nationalised Bank Scheme and the Bank Regulations also governs our operations. Other important laws include the Reserve Bank of India Act, 1934, the Negotiable Instruments Act and the Bankers’ Books Evidence Act. Additionally, the RBI, from time to time, issues guidelines, regulations, policies, notifications, press releases, circulars, etc. to be followed by us and supervises our compliance with these guidelines. Our Bank is listed on a stock exchange in India and therefore, our Bank will be governed by various regulations of the SEBI.

We are regulated and supervised by RBI. RBI requires us to furnish statements, information and certain details relating to our business. It has issued guidelines on several matters including recognition of income, classification of assets, valuation of investments, maintenance of capital adequacy and provisioning for impaired assets. The RBI has set up a Board for Financial Supervision (BFS), under the chairmanship of the Governor of the RBI. The primary objective of the BFS is to undertake consolidated supervision of the financial sector comprising commercial banks, financial institutions and non-banking finance companies. The appointment of the auditors of banks is subject to the approval of the RBI.

The description of laws and regulations set out below are not exhaustive, and are only intended to provide general information to investors and is neither designed nor intended to be a substitute for professional legal advice. The statements below are based on the current provisions of Indian law, and the judicial and administrative interpretations thereof, which are subject to change or modification by subsequent legislative, regulatory, administrative or judicial decisions.

Reserve Bank of India Act, 1934

As per section 2(e) of the Reserve Bank of India Act, 1934, (“RBI Act”) our Bank is a scheduled bank included in the Second Schedule.

According to the said act, RBI shall regulate the issue to Bank notes and keeping reserves with a view to securing monetary stability in the country. Scheduled banks like our Bank are required to maintain cash reserves with the RBI. In this regard, RBI may stipulate an average daily balance requirement to be complied with by such banks and may direct that such banks regard a transaction or class of transactions as a liability. Further, RBI may direct any banking company to submit returns for the collection of credit information and may also furnish such information to a banking company upon an application by such company. RBI has the power to impose penalties against any person for inter- alia failure to produce any book, account or other document or furnish any statement, information or particulars which such person is duty-bound to produce or furnish under the RBI Act, or any order, regulation or direction thereunder.

Banking Regulation Act, 1949

Commercial banks in India are required to obtain a license from the RBI to carry on banking business in India. Such license is granted to the bank subject to compliance with certain conditions including (i) that the bank has the ability to pay its present and future depositors in full as their claims accrue; (ii) that the affairs of the bank will not be or are not likely to be conducted in a manner detrimental to the interests of present or future depositors; (iii) that the general character of the proposed management of the bank will not be prejudicial to the public interest or the interest of its depositors (iv) that the bank has adequate capital and earnings prospects; and (v) that public interest will be served if such license is granted to the bank. The RBI may cancel the license if the bank fails to meet the qualifications or if the bank ceases to carry on banking operations in India.

We have obtained a banking license from the RBI and are regulated and supervised by the RBI. The RBI requires us to furnish statements, information and certain details relating to our business and it has issued guidelines for commercial banks on recognition of income, classification of assets, valuation of investments, maintenance of capital adequacy and provisioning for non-performing and restructured assets. The RBI has set up a Board for Financial Supervision (“BFS”), under the chairmanship of the Governor of the RBI. The primary objective of the BFS is to 149 undertake consolidated supervision of the financial sector comprising commercial banks, financial institutions and non-banking finance companies. The appointment of the auditors of the banks is subject to the approval of the RBI. The RBI can direct a special audit in the interest of the depositors or in the public interest.

The Banking Regulation Act confers power on the RBI (in consultation with the central government) to supersede the board of directors of a banking company for a period not exceeding a total period of 12 months, in public interest or for preventing the affairs of the bank from being conducted in a manner detrimental to the interest of the depositors or any banking company or for securing the proper management of any banking company.

When a bank fails to or omits to comply with the provisions of the Banking Regulation Act, the RBI may impose fine within prescribed limits on banks and its officers or punish with imprisonment for the term provided in the law, on the basis of the nature of the violation.

Regulatory reporting and examination procedures

The RBI is empowered under the Banking Regulation Act to call for certain information from a bank as well as to inspect a bank. The RBI monitors prudential parameters at quarterly intervals. RBI has introduced a system of off-site monitoring and surveillance, with the primary objective of monitoring the financial condition of banks in between onsite examinations. To this end and to enable off-site monitoring and surveillance by the RBI, banks are required to report to the RBI on various aspects of their business. This system of off-site monitoring and surveillance has been migrated to a secured Online Returns Filing System (“ORFS”) in which data collection and consolidation has been streamlined. The RBI also conducts on-site super vision of selected branches with respect of their general operations and foreign exchange related transactions.

The RBI also conducts periodical on-site inspections on matters relating to the bank's portfolio, risk management systems, internal controls, credit allocation and regulatory compliance, at intervals ranging from one to three years.

Maintenance of records

The Banking Regulation Act requires banks to maintain books and records in the manner specified therein and file the same with the Registrar of Companies on a periodic basis. The provisions for production of documents and availability of records for inspection by shareholders as stipulated under the Companies Act and the rules thereunder would apply to our Bank as in the case of any company. The “Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016” issued by the RBI dated February 25, 2016 also provide for certain records to be maintained for a minimum period of five years from the business relationships have ended.

Regulations relating to the opening of branches

Under Section 23 of the Banking Regulation Act, banks are required to obtain the prior approval of the RBI to open new branches. Permission is granted based on factors such as overall financial position of the bank, the history of the bank the general character of its management, the adequacy of its capital structure, its earning prospects and public interest.

As per the “Relaxations in Branch Authorization Policy” dated August 6, 2015 read with circulars dated September 19, 2013 and October 21, 2013, domestic scheduled commercial banks may open branches in Tier 1 to Tier 6 centres without prior permission from RBI. Further, such banks may also shift, merge or close all branches except rural branches and sole semi-urban branches, subject to certain conditions The RBI has further stated that, under the annual branch expansion plan, banks are required to allocate at least 25.00% of the total number of branches proposed to be opened during a year in unbanked rural centres and that, total number of branches opened by a bank in Tier 1 centres during the fiscal year cannot exceed the total number of branches opened in Tier 2 to Tier 6 centres and all centres in the North Eastern States and Sikkim.

Further, RBI has permitted installation of off-site ATMs at centres identified by banks, without the need for permission from the RBI in each case.

Capital adequacy requirements

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The RBI has set out minimum capital adequacy standards for banks based on the guidelines of the Basel Committee on Banking Supervision. Under the “Master Circular – on BASEL – III Capital Regulations dated July 1, 2015, a bank is required to maintain a minimum CRAR of 9.00% with Tier – I Ratio at a minimum of 7% and Common Equity Ratio (“CET I”) of 5.50%. Apart from this, the Bank is required to maintain Capital Conservation Buffer (“CCB”) of 2.50% in the form of Common Equity Capital by March 31, 2019.

With effect from the fiscal year 2015, banks are also required to quantify incurred credit valuation adjustment losses and standard credit valuation adjustment capital charge on their derivatives portfolio. Further, to the notification dated March 1, 2016, the Master Circular on Basel III Capital Regulations has been revised by the RBI to the effect that treatment of certain balance sheet items viz., revaluation reserves, foreign currency translation reserve and deferred tax assets, have been aligned to some extent, with the conditions prescribed by the Basel Committee on Banking Supervision (BCBS) guidelines.

The transitional arrangements for the implementation of Basel III capital regulations in India began from April 1, 2013 and the guidelines will be fully implemented by March 31, 2019. In view of the gradual phase-in of regulatory adjustments to the common equity component of Tier I capital under Basel III, certain specific prescriptions of the Basel II capital adequacy framework (e.g. rules relating to deductions from regulatory capital, risk weighting of investments in other financial entities etc.) will also continue to apply until March 31, 2017 on the remainder of regulatory adjustments not treated in terms of Basel III rules.

Liquidity coverage ratio

The Basel III framework on ‘Liquidity Standards’ includes ‘Liquidity Coverage Ratio’, ‘Net Stable Funding Ratio’ (‘NSFR”) and liquidity risk monitoring tools. In June 2014, the RBI issued guidelines in relation to liquidity coverage ratio (“LCR”), liquidity risk monitoring tools and LCR disclosure standards pursuant to the publication of the ‘Basel III: The Liquidity Coverage Ratio and liquidity risk monitoring tools’ in January 2013 and the ‘Liquidity Coverage Ratio Disclosure Standards’ in January 2014 by the Basel Committee On Banking Supervision. The objective of the LCR standard is to ensure that a bank maintains an adequate level of unencumbered high quality liquid assets (“HQLA”) that can be converted into cash to meet its liquidity needs for a 30 calendar day period under significantly severe liquidity stress. The LCR is defined under the guidelines as the stock of HQLAs, divided by the net cash outflows over the next 30 calendar days. Pursuant to the guidelines, banks are required to maintain an LCR of 60.00%, 70.00%, 80.00%, 90.00% and 100.00% with effect from January 1, 2015, January 1, 2016, January 1, 2017, January 1, 2018 and January 1, 2019, respectively.

The Basel Committee on Banking Supervision issued the final rules on ‘Net Stable Funding Ratio’ in October 2014. RBI has issued draft guidelines on NFSR on May 28, 2015. RBI proposes to make NSFR applicable to banks in India from January 1, 2018.

Master Circular on Prudential Norms on Income Recognition, Asset Classification and Provisioning Pertaining to Advances dated July 1, 2015 (“Prudential Norms”)

An asset, including a leased asset, becomes nonperforming when it ceases to generate income for the bank. The Prudential Norms further, specify the timeline within which specific assets are to be considered non-performing. Once the account has been classified as a non-performing asset, the unrealized interest and other income already debited to the account is derecognized and further interest is not recognized or credited to the income account unless collected in cash.

The Prudential Norms require banks to further classify NPAs into the following three categories based on the period for which the asset has remained nonperforming and the realisability of the dues (i) sub-standard assets; (ii) doubtful assets; and (iii) loss assets. These norms also specify provisioning requirements specific to the classification of the assets.

In July 2005, the RBI issued guidelines on sales and purchases of NPAs between banks, financial institutions and NBFCs. These guidelines require that the board of directors of a bank must establish a policy for purchases and sales of NPAs. An asset must have been classified as non-performing for at least two years by the seller bank to be eligible for sale. In October 2007, the RBI issued guidelines regarding valuation of NPAs being put up for sale. Further, the

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RBI pursuant to the circular on Prudential Norms has decided that banks should maintain provisioning coverage ratio, including floating provisions, of at least 70.00%.

The RBI issued revised “Prudential Guidelines on Restructuring of Advances by Banks and Financial Institutions” on May 30, 2013. Pursuant to those guidelines, from April 1, 2015 advances that are restructured (other than due to extension in Date of commencement of commercial operation (DCCO) of Infrastructure and non-Infrastructure project) would be immediately classified as sub-standard on restructuring and the nonperforming assets, upon restructuring, would continue to have the same asset classification as prior to restructuring and slip into further lower asset classification categories as per the extant asset classification norms with reference to the pre restructuring repayment schedule. The general provision required on restructured standard accounts would be increased to 3.50% from 31 March 2014 and further to 4.25% from 31 March 2015 and 5.00% from 31 March 2016

Corporate debt restructuring mechanism (“CDR system”)

The institutional mechanism for restructuring has been set up through establishment of the CDR system in 2001. It is a joint forum of all banks and financial institutions and operates as a non-judicial body. The CDR system operates on the principle of super-majority amongst the participating banks and financial institutions for a particular advance. Our Bank has signed the inter-se agreement (amongst the banks and financial institutions) and is accordingly a member of the CDR system. The Prudential Norms as mentioned above equally apply to the accounts restructured under the CDR system.

Scheme for Sustainable Structuring of Stressed Assets (“Scheme for Stressed Assets”)

The RBI has formulated the Scheme for Stressed Assets as an optional framework for the resolution of large stressed accounts. The Scheme for Stressed Assets envisages determination of the sustainable debt level for a stressed borrower, and bifurcation of the outstanding debt into sustainable debt and equity/quasi-equity instruments.

The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (“RDDBFI Act”)

The RDDBFI Act was enacted for adjudication of disputes pertaining to debts due to banks and financial institutions exceeding Rupees One Crore. The RDDBFI Act provides for the constitution of debt recovery tribunals, before which banks and financial institutions may file applications for recovery of debts. Further, no court or other authority, except the Supreme Court or a High Court exercising jurisdiction under Articles 226 and 227 of the Constitution of India, shall have, or is entitled to exercise, any jurisdiction, powers or authority in relation to the aforementioned matter. The tribunals may pass orders for directions including inter- alia recovery of such dues by the bank as may be deemed fit along with a recovery certificate to such effect from the presiding officer of the respective tribunal; attachment of the secured properties towards the dues to the bank: injunctive orders restraining the debtors from alienating, transferring or disposing of such secured properties; appointment of receivers and/or local commissioners with respect to such secured properties and distribution of proceeds from sale of such secured properties towards dues. Pursuant to the recovery certificate being issued, the recovery officer of the respective debt recovery tribunal shall effectuate the final orders of the debt recovery tribunal in the application. Unless such final orders of the debt recovery tribunal have been passed with the consent of the parties to an application, an appeal may be filed against such final orders of the debt recovery tribunal before the debt recovery appellate tribunal, which is the appellate authority constituted under the RDDBFI Act.

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”)

The SARFAESI Act provides for sale of financial assets by banks and financial institutions to asset reconstruction companies. The SARFAESI Act provides for measures in relation to enforcement of security interests and rights of the secured creditor in case of default. The Prudential Norms issued by the RBI describe the process to be followed for sales of financial assets to asset reconstruction companies. The banks may not sell financial assets at a contingent price with an agreement to bear a part of the shortfall on ultimate realization.

However, banks may sell specific financial assets with an agreement to share in any surplus realised by the asset reconstruction company in the future. Consideration for the sale may be in the form of cash, bonds or debentures or

152 security receipts or pass through certificates issued by the asset reconstruction company or trusts set up by it to acquire the financial assets.

Banks and financial institutions are empowered to accept immovable property in full or partial satisfaction of the bank’s claim against the defaulting borrower in times when they cannot find a buyer for the securities. Further, banks and financial institutions can enter into settlement or compromise with the borrower and empowers Debt Recovery Tribunals to pass an order acknowledging any such settlement or compromise. Certain amendments have been proposed to the SARFAESI Act, inter alia, to streamline the recovery process for banks, to enable the sponsor of an asset reconstruction company to hold up to 100.00% stake in the company and permit non-institutional investors to invest in securitization receipts.

Priority sector lending

The “Reserve Bank of India (Priority Sector Lending – Targets and Classification) Directions, 2016” dated July 7, 2016 sets out the broad policy in relation to priority sector lending. In accordance with this circular, the priority sectors for all scheduled banks include (i) agriculture; (ii) micro, small and medium enterprises (“MSMEs”); (iii) export credit; (iv) education; (v) housing; (vi) social infrastructure; (vii) renewable energy and (viii) others. Under the Master Circular, the priority sector lending targets are linked to adjusted net bank credit as defined (“ANBC”) or credit equivalent amount of off-balance sheet exposure, whichever is higher, as on the corresponding date of the preceding year. Currently, the total priority sector lending target for domestic banks is 40.00% of ANBC or credit equivalent amount of off-balance sheet exposure, whichever is higher.

Exposure norms

As a prudent measure aimed at better risk management and avoidance of concentration of credit risk, the RBI has prescribed credit exposure limits for banks and long-term lending institutions in respect of their lending to individual borrowers and to all companies in a single group (or sponsor group). The RBI has prescribed exposure ceiling for a single borrower as 15.00% of capital funds and group exposure limit as 40% of capital funds comprising of Tier I and Tier II capital. Relaxations are permitted in exceptional circumstances and lending to infrastructure sector. The total exposure to a single NBFC has been limited to 10.00% of the bank’s capital funds while exposure to non-banking asset finance company has been restricted to 15.00% of the bank’s capital funds. The limit may be increased to 15.00% and 20.00%, respectively, provided that the excess exposure is on account of funds on-lent by the NBFC to the infrastructure sector.

The aggregate exposure of a bank to the capital markets in all forms (both fund based and non-fund based) should not exceed 40.00% of its net worth, on both standalone and consolidated basis as on March 31 of the previous year. Within this overall ceiling, the bank’s direct investment in shares, convertible bonds / debentures, units of equity-oriented mutual funds and all exposures to Venture Capital Funds (VCFs) (both registered and unregistered) should not exceed 20 per cent of its net worth.

Short-selling of Government securities

As per the “Master Circular on Prudential Norms for Classification, Valuation and Operation of Investment Portfolio by Banks” dated July 1, 2015, banks and primary dealers are allowed to undertake short sale of Government dated securities, subject to the short position being covered within a maximum period of three months, including the day of trade and in accordance with the conditions prescribed, therein. Further, such short positions shall be covered only by outright purchase of an equivalent amount of the same security or through a long position in the ‘when issued’ market or allotment in primary auction.

Regulations relating to interest rates on deposits and advances

The RBI has issued “Reserve Bank of India - Interest rate on Deposits Directions, 2016” dated March 3, 2016. Scheduled commercial banks are required to pay interest on deposits of money (other than current account deposits accepted by them or renewed by them in their domestic, ordinary non-resident, non-resident (external) accounts and foreign currency (non-resident) accounts (banks) scheme deposit account), subject to certain conditions prescribed by the directions. Further, certain additional restrictions have been prescribed to determine interest rates for savings

153 deposits and term deposits. Additionally, interest rates offered by banks on NRO and NRE deposits cannot be higher than those offered by them on comparable domestic rupee term deposits.

Deposit insurance

Demand and time deposits of up to ₹ 100,000 accepted by Indian banks (other than primary co-operative societies) have to be mandatorily insured with the Deposit Insurance and Credit Guarantee Corporation, a wholly-owned subsidiary of the RBI. Banks are required to pay the insurance premium for the eligible amount to the Deposit Insurance and Credit Guarantee Corporation on a half yearly basis. The cost of the insurance premium cannot be passed on to the customer.

Prevention of Money Laundering Act, 2002 (“PMLA”)

In order to prevent money laundering activities, the Government enacted the PMLA which seeks to prevent money laundering and to provide for confiscation of property derived from, or involved in money laundering, and for incidental matters connected therewith. Section 12 of the PMLA casts certain obligations on, inter alia, banking companies in regard to preservation and reporting of customer account information.

The RBI has advised all banks to go through the provisions of the PMLA and the rules notified thereunder and to take all steps considered necessary to ensure compliance with the requirements of Section 12 of the PMLA.

Regulations relating to Know Your Customer (“KYC”) and anti-money laundering

The RBI issued the “Reserve Bank of India (Know Your Customer (KYC) Directions, 2016” on February 25, 2016 prescribing the guidelines for KYC and anti-money laundering procedures. Banks are required to formulate a KYC policy which shall include (i) customer acceptance policy, (ii) customer identification procedures, (iii) monitoring of transactions and (iv) risk management. In relation to each of the above, the master direction also specifies minimum procedures required to be followed by banks. Banks are not permitted to make payment of cheques/drafts/pay orders/banker’s cheques bearing that date or any subsequent date, if they are presented beyond the period of three months from the date of such instrument.

Regulations relating to maintenance of statutory reserves

A bank is required to maintain, on a daily basis, CRR, which is a specified percentage of its NDTL, excluding interbank deposits, by way of a balance in a current account with the RBI. At present the required CRR is 4%. The RBI does not pay any interest on CRR balances. The CRR has to be maintained on an average basis for a fortnightly period and the minimum daily maintenance of the CRR should be 90.00% effective from the fortnight beginning April 16, 2016. The RBI may impose penal interest at the rate of 3% above the bank rate on the amount by which the reserve falls short of the CRR required to be maintained on a particular day and if the shortfall continues further the penal interest charged shall be increased to a rate of 5% above the bank rate in respect of each subsequent day during which the default continues.

In addition to the CRR, a bank is required to maintain SLR, a specified percentage of its NDTL by way of liquid assets like cash, gold or approved unencumbered securities. The percentage of this liquidity ratio is fixed by the RBI from time to time, pursuant to Section 24 of the Banking Regulation Act. At present, the RBI requires banks to maintain SLR of 21.00%. Further, in December 2011, the RBI has permitted banks to avail funds from the RBI on an overnight basis, under the Marginal Standing Facility, against their excess SLR holdings. Additionally, they can also avail themselves of funds, on an overnight basis below the stipulated SLR, up to 1.00% of their respective NDTL outstanding at the end of the second preceding fortnight.

Further, the RBI requires the banks to create a reserve fund to which it must transfer not less than 20.00% of the profits of each year before dividends. If there is an appropriation from this account, the bank is required to report the same to the RBI within 21 days, explaining the circumstances leading to such appropriation.

Regulations relating to authorised dealers for foreign exchange and cross-border business transactions

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The foreign exchange and cross border transactions undertaken by banks are subject to the provisions of the Foreign Exchange Management Act. All branches should monitor all non-resident accounts to prevent money laundering. The RBI master direction on External Commercial Borrowings, dated January 1, 2016, states that no financial intermediary, including banks, will be permitted to raise external commercial borrowings or provide guarantees in favour of overseas lenders for external commercial borrowings.

The “Master Direction on Risk Management and Interbank Dealings”, dated July 5, 2016 and as amended from time to time, states that all categories of overseas foreign currency borrowings of AD Category I banks, including existing external commercial borrowings and loans or overdrafts from their head office, overseas branches and correspondents outside India, international/ multilateral financial institutions or any other entity as permitted by RBI and overdrafts in nostro accounts (not adjusted within five days), shall not exceed 100.00% of their unimpaired Tier I capital or U.S. Dollar 10 million (or its equivalent), whichever is higher. Overseas borrowings for the purpose of financing export credit, subordinated debt placed by head offices of foreign banks with their branches in India as Tier II capital, capital funds raised/augmented by the issue of innovative perpetual debt instruments and any other overseas borrowings with the specific approval of the RBI would continue to be outside the limit of 100.00%.

Secrecy obligations

A bank’s obligations relating to maintaining secrecy arise out of Section 13 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (for public sector banks specifically) and common law principles governing its relationship with its customers. Subject to certain exceptions, a bank cannot disclose any information to third parties. Further, the RBI may, in the public interest, publish the information obtained from the bank.

Foreign ownership restrictions

Presently, 20% foreign investment is allowed in Public Sector Banks subject to Government approval and provisions of Banking Companies (Acquisition & Transfer of Undertakings) Acts 1970.

As per Basel III guidelines to Annex 4, the following provision is made: i) Investment by FIIs in instruments raised in Indian Rupees shall be outside the ECB limit for rupee denominated corporate debt, as fixed by the Govt. of India from time to time, for investment by FIIs in corporate debt instruments. Investment in these instruments by FIIs and NRIs shall be within an overall limit of 49% and 24% of the issue, respectively, subject to the investment by each FII not exceeding 10% of the issue and investment by each NRI not exceeding 5% of the issue. ii) Subject to the terms and conditions, if any, stipulated by SEBI / other regulatory authorities in regard to issue of the instruments.

Guidelines on management of intra-group transactions and exposures

The RBI issued the “Guidelines on Management of Intra-Group Transactions and Exposures on February 11, 2014”. Pursuant to the said guidelines, RBI has prescribed quantitative limits on financial intra-group transactions and exposures and prudential measures for the non-financial intra-group transactions and exposures. The objective of these guidelines is to ensure that banks engage in intra-group transactions and exposures in safe and sound manner in order to contain concentration and contagion risks arising out of such transactions.

Capital and provisioning requirements for exposures to entities with unhedged foreign currency exposure

RBI issued a circular relating to “Capital and Provisioning Requirements for Exposures to entities with unhedged Foreign Currency Exposure” on January 15, 2014. Pursuant to these guidelines, RBI has introduced incremental provisioning and capital requirements for bank exposures to entities with unhedged foreign currency exposures. The circular also lays down the method of calculating the incremental provisioning and capital requirements. The banks will be required to calculate the incremental provisioning and capital requirements at least on a quarterly basis.

Framework for revitalizing distressed assets in the economy

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RBI issued the “Framework for Revitalizing Distressed Assets in the Economy” on January 30, 2014 which lays down the corrective action plan that will incentivize early identification of problem cases, timely restructuring of accounts which are considered to be viable, and taking prompt steps by banks for recovery or sale of unviable accounts. The salient features of this framework include, inter alia, (i) early formation of a lenders’ committee with timelines to agree to a plan for resolution, (ii) incentives for lenders to agree collectively and quickly to a plan - better regulatory treatment of stressed assets if a resolution plan is underway, accelerated provisioning if no agreement can be reached, and (iii) independent evaluation of large value restructurings mandated, with a focus on viable plans and a fair sharing of losses (and future possible upside) between promoters and creditors.

This framework became fully effective from April 1, 2014. In this regard, the RBI issued Guidelines on a joint lenders’ forum and a corrective action plan detailing guidelines on formation of the joint lenders’ forum and adoption of the corrective action plan for operational sing the aforementioned framework. Following the notification dated February 25, 2016, the prudential guidelines on revitalizing stressed assets in the economy, have been partially revised in relation to inter alia, strategic debt restructuring scheme, joint lenders’ forum empowered group, restructuring of advances, structuring of project loans and sale of financial assets to securitization company/ reconstruction company.

The Banking Ombudsman Scheme, 2006

The Banking Ombudsman Scheme, 2006 provides the extent and scope of the authority and functions of the Banking Ombudsman for redressal of grievances against deficiency in banking services, concerning loans and advances and other specified matters. On February 3, 2009, the said scheme was amended to provide for revised procedures for redressal of grievances by a complainant under the scheme.

Declaration of dividend by banks

The payment of dividends by banks is subject to restrictions under the Banking Regulation Act. Section 15(1) of the Banking Regulation Act states that no banking company may pay any dividend on its shares until all its capitalised expenses (including preliminary expenses, organisation expenses, share-selling commissions, brokerage, amounts of losses incurred and any other item of expenditure not represented by tangible assets) have been completely written off. In addition, Section 17(1) of the Banking Regulation Act requires every banking company to create a reserve fund and, out of the balance of the profit of each year as disclosed in the profit and loss account, transfer a sum equivalent to not less than 20.00% of such profit to the reserve fund before declaring any dividend. Further, in May 2005, the RBI issued guidelines on Declaration of Dividends by Banks, which prescribed certain conditions for declaration of dividends by banks.

Regulations governing International Operations

The Bank’s international operations are governed by regulations in the countries in which the Bank has a presence.

Consolidated Supervision Guidelines

In 2003, the RBI issued guidelines for consolidated accounting and consolidated supervision for banks. These guidelines became effective on August 1, 2003. The principal features of these guidelines are:

 Consolidated financial statements: Banks are required to annually prepare consolidated financial statements intended for public disclosure.  Consolidated prudential returns: Banks are required to submit to the RBI, at periodic intervals, consolidated prudential returns reporting their compliance with various prudential norms on a consolidated basis, excluding insurance subsidiaries.

Regulations relating to making loans

The provisions of the Banking Regulation Act govern the making of loans by banks in India. In addition, the RBI also issues directions in relation to the loan activities of banks. Some of the major requirements that banks are to observe are as follows:

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The RBI has prescribed norms for banks’ lending to non-bank financial companies and the financing of public sector disinvestment. RBI introduced the ‘Base Rate’ in place of the ‘Benchmark Prime Lending Rate’ with effect from July 1, 2010. For loans sanctioned up to June 30, 2010, BPLR would be applicable. However, for those loans sanctioned up to June 30, 2010 which come up for renewal from July 1, 2010 onwards, Base Rate would be applicable. Section 21A of the Banking Regulation Act provides that the rate of interest charged by a bank shall not be reopened by any court on the ground that the rate of interest charged by a bank is excessive. The Banking Regulation Act provides for protection to banks for interest rates charged by them. Section 20 of the Banking Regulation Act provides that banks shall not grant loans on the security of their own shares. Further, banks cannot grant loans or advances to or on behalf of their directors.

Classification and Reporting of Fraud Cases

The RBI issued a master direction on July 1, 2016 on the classification and reporting of fraud cases. The fraud cases have been classified into misappropriation and criminal breach of trust, fraudulent encashment through forged instruments, manipulation of books of account or through fictitious accounts and conversion of property, unauthorised credit facilities extended for reward or for illegal gratification, negligence and cash shortages, cheating and forgery, fraudulent transactions involving foreign exchange and any other type of fraud not coming under the specific heads as above. Cash shortages resulting from negligence and fraudulent forex transactions involving irregularities / violation of regulations have also to be reported as fraud if the intention to cheat/defraud is suspected or proved. Information relating to frauds for the quarters ending June, September and December may be placed before the audit committee of the board of directors during the month following the quarter to which it pertains. Banks are also required to conduct an annual review of the frauds and place a note before the board of directors for information. The reviews for the year-ended March may be put up to the Board before the end of the next quarter i.e. for the quarter ended June 30th and such reviews need not be sent to RBI.

These may be preserved for verification by the Reserve Bank’s inspecting officers. Additionally, Banks have to constitute a special committee for monitoring and follow up of cases of frauds involving amounts of ₹ 10 million and above exclusively. Such committee is required to meet and review as and when a fraud involving an amount of ₹ 10 million and above comes to light. Pursuant to the RBI notification dated January 21, 2016, the RBI, has inter alia, increased the limits in relation to flash reporting to RBI of fraud cases to ₹ 50 million as against the earlier limit of ₹ 10 million and above.

Liquidity Adjustment Facility

Liquidity Adjustment Facility (“LAF”) is a facility extended by RBI to scheduled commercial banks (excluding Regional Rural Banks) and primary dealers to avail of liquidity in case of requirement or park excess funds with the RBI in case of excess liquidity on an overnight basis against government securities as collateral. Therefore, LAF enables liquidity management on a day to day basis and enables RBI to transmit interest rate signals to the market. The operations of LAF are conducted by way of repurchase agreements with RBI being the counter-party to all the transactions. The interest rate in LAF is fixed by the RBI from time to time. LAF is an important tool of monetary policy.

Collateralized Borrowing and Lending Obligation

Collateralized Borrowing and Lending Obligation (“CBLO”) is a money market instrument operated by the Clearing Corporation of India Limited (“CCIL”), for entities that either have no access to inter-bank call money market or have restricted access due to ceilings on call borrowing and lending transactions. By participating in the CBLO market, CCIL members can borrow or lend funds against the collateral of eligible securities. Eligible securities include central government securities including treasury bills, and such other securities as specified by CCIL from time to time. Borrowers under CBLO have to deposit the required amount of eligible securities with the CCIL based on which CCIL fixes the borrowing limits. CCIL matches the borrowing and lending orders submitted by the members and notifies them. While the securities held as collateral are in custody of the CCIL, the beneficial interest of the lender on the securities is recognized through proper documentation.

Moratorium, reconstruction and amalgamation of banks

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A high court may, upon the application by a banking company which is temporarily unable to meet its obligations, make an order staying the commencement or continuance of all actions and proceedings against a bank for a fixed period of time on such terms and conditions as it shall think fit and proper, and may from time to time extend it for a total moratorium period not exceeding six months. The said application is required to be accompanied by a report by the RBI that, in its opinion, the said banking company will be able to pay its debts if the application is granted. Further, the RBI may also make an application to the central government for an order of moratorium. During the said moratorium, the RBI may prepare a scheme for the reconstruction of a banking company or for the amalgamation of the banking company with any other banking institution if it is satisfied that it is necessary: a) in public interest, b) in interests of depositors, c) to secure the proper management of the banking company, d) in interests of the banking system of the country as a whole. The RBI may make modifications to the draft scheme pursuant to receipt of suggestions and objections from the banking company, the transferee bank or any other banking company concerned in the amalgamation, and from any members, depositors or other creditors of each of the banks concerned. The central government may sanction the scheme with or without such modifications.

Submission of credit information

According to the Credit Information (Companies) Regulation Act, 2005 (“CICRA”), a “credit institution” means a banking company and every credit institution shall become a member of at least one Credit Information Company (“CIC”). A CIC, may, by notice in writing, require its members to furnish such credit information as it may deem necessary. Further, RBI, through its notification dated January 15, 2015, has directed that: a) all credit institutions shall become members of all CICs and submit data, including historical data, to them, b) credit institutions shall keep the credit information collected/ maintained by them, updated regularly on a monthly basis or at such shorter intervals as may be mutually agreed upon between the credit institution and the CIC under the CICRA.

Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970

The act applies to acquisition and transfer of undertaking of banking companies which shall not include foreign companies. It caters to the developmental needs of the economy in conformity with the national policy and objectives for the connected thereto. The Act paved way for constitution of corresponding new banks and established our Bank, i.e. United Bank of India from the earlier corresponding United Bank of India as per Schedule I. The acts vide section 6, schedule II paid an amount of ₹ 420 lakhs compensation was paid to our Bank.

This act provided for the constitution of Board of Directors, which vests with the Central Government after consultation with the RBI. The Central Government gives timely directions on discharge of banking functions and matters of policy involving public interest. However, the power for appointment of Additional Directors to the bank shall vest entirely with RBI.

Nationalized Banks (Management and Miscellaneous Provisions) Scheme, 1970

The scheme is in exercise of Power of Central Government under Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970. The scheme provides for the constitution of Board by the Central Government. The director of the bank shall be nominated by the central government from the panel of three employees furnished by the representative union. The manner of retirement of the nominee director by rotation basis, appointment of chairman, Managing Director is listed out in the scheme. A whole-time director can hold office for a period of maximum five years and shall then be eligible for reappointment. The Central Government shall exercise the power for remuneration, termination, salary, allowances after due consultation with the RBI. A director is disqualified for being appointed, if he has at any time been adjudicated as insolvent/suspended payment/compounded its creditors; or found to be of unsound mind and stands so declared by a competent Court; or has been convicted by a Criminal Court of an offence which involves moral turpitude holds any office of profit under any nationalized bank or State Bank of India constituted under sub-section (1) of section 3 of the State Bank of India Act, 1955 or subsidiary bank as per the mentioned act. The meeting of the board shall be held at least six times in a year and at least once in each quarter. Notice of at least 15 days to be given and such notice shall be sent to all the directors at the specified address. This Act provides that the Board of a nationalized bank must form the following committees:

i) Management Committee ii) Advisory Committees iii) Regional Consultative Committees 158

The paid-up capital of nationalized bank can be increased from time to time. The Board in consultation with RBI and previous sanction of Central Government transfer a specified amount of reserve fund or make a contribution of any specified amount to the paid-up capital of Nationalized Bank or raise the paid-up capital by public issue of shares in manner prescribed, however Central Government shall at all times hold not less than 51% of paid-up capital of the bank.

Law relating to Recovery of NPAs

As a part of the financial sector reforms, the Government of India promulgated SARFAESI Act. SARFAESI Act provides banks and other lenders increased powers in the recovery of the collateral underlying NPAs.

Regulations relating to sale of assets to Asset Reconstruction Companies (ARC)

The SARFAESI Act provides for sale of financial assets by banks and financial institutions to asset reconstruction companies. The RBI has issued guidelines to banks on the process to be followed for sale of the financial assets to the asset reconstruction companies. These guidelines provide that a bank may sell financial assets to an asset reconstruction company provided the asset is a non performing asset. These assets are to be sold on a ‗without recourse‘basis only. A bank may sell a standard asset only if the borrower has a consortium or multiple banking arrangements and at least 75% by value of the total loans to the borrower are classified as non-performing and at least 75% by the value of the banks and financial institutions in the consortium or multiple banking arrangement agree to the sale. The banks selling financial assets should ensure that there is no known liability devolving on them and they do not assume any operational, legal or any other type of risks relating to the financial assets sold. Further banks may not sell financial assets at a contingent price with an agreement to bear a part of the shortfall on ultimate realisation. However, banks may sell specific financial assets with an agreement to share in any surplus realised by the asset reconstruction company in the future. No credit for expected profit will be taken until profit materializes on actual sale. Whilst each bank is required to make its own assessment of the value offered in the sale before accepting or rejecting an offer for purchase of financial assets by an asset reconstruction company, in consortium or multiple banking arrangement where more than 75% by values of the banks or financial intuitions accept the offer, the remaining banks or financial institutions are obliged to accept the offer. Consideration for the sale may be in the form of cash, bonds or debentures or security receipts or pass through certificates issued by the asset reconstruction company or trusts set up by it to acquire the financial assets.

The RBI has issued guidelines on the securitisation of standard assets with effect from February 1, 2006. The guidelines provide that for a transaction to be treated as a securitisation, a two stage process must be followed. In the first stage there should be a pooling and transferring of assets to a bankruptcy remote vehicle i.e. a SPV and in the second stage repackaging and selling the security interests representing claims on incoming cash flows from the pool of assets to the third party investors should be effected. Further, for enabling the transferred assets to be removed from the balance sheet of the seller in securitisation structure, the isolation of assets or ―true sale‖ from the seller or originator to the SPV is an essential prerequisite. Also, an arm’s length relation shall be maintained between the originator or seller and the SPV.

The SARFAESI Act allows acquisition of financial assets by SC/RC from any bank/ FI on such terms and conditions as may be agreed upon between them. This provides for sale of the financial assets on ’without recourse’ basis, i.e., with the entire credit risk associated with the financial assets being transferred to SC/ RC, as well as on ‗with recourse‘ basis, i.e., subject to unrealized part of the asset reverting to the seller bank/ FI. Banks/ FIs are, however, directed to ensure that the effect of the sale of the financial assets should be such that the asset is taken off the books of the bank/ FI and after the sale there should not be any known liability devolving on the banks/ FIs. Certain regulatory norms for capital adequacy, valuation, profit and loss on sale of assets, income recognition and prudential norms for investment in securities issued by the SPV, provisioning for originators and service providers like credit enhancers, liquidity support providers, underwriters, as well as investors and also the accounting treatment for securitisation transactions and disclosure norms have been prescribed. Quarterly reporting to the audit sub-committee of the board by originating banks of the securitisation transactions has also been prescribed. Apart from banks, these guidelines are also applicable to financial institutions and non-banking financial institutions.

Guidelines on Sale and Purchase of NPAs

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In July 2005, the RBI issued guidelines on sale and purchase of non-performing assets between banks, financial institutions and non-bank finance companies. These guidelines require the board of directors of the bank to establish a policy for purchase and sale of NPAs. Purchase and sale of NPAs must be without recourse to the seller and on cash basis and, with the entire consideration being paid up-front. An asset must have been classified as non-performing for at least two years by the seller to be eligible for sale. The purchasing bank must hold the NPA on its books for at least 15 months before it can sell the assets to another bank. The asset cannot be sold back to the original seller.

Regulations relating to Making Loans

The provisions of the Banking Regulation Act govern the making of loans by banks in India. RBI issues directions covering the loan activities of banks. Some of the major guidelines of RBI, which are now in effect, are as follows:

The RBI has prescribed norms for bank lending to non-bank financial companies and financing of public sector disinvestment. The banks should charge interest on loans/advances/cash credits/overdrafts or any other financial accommodation granted/provided/renewed by them or discount usance bills in accordance with the directives on interest rates on advances issued by RBI from time to time. Banks are free to determine their own lending rates but each bank must declare its benchmark prime lending rate as approved by its board of directors. Benchmark prime lending rate is determined on the basis of various parameters, which inter alia, include actual cost of funds, operating expenses, a minimum margin to cover the regulatory requirement of provisioning, capital charge and profit margin. Each bank should also indicate the maximum spread over the benchmark prime lending rate for all credit exposures other than retail loans over ₹ 200,000. The interest charged by banks on advances up to ₹ 200,000 to any one entity (other than most retail loans) must not exceed the benchmark prime lending rate. Banks are also given freedom to lend at a rate below the prime lending rate in respect of creditworthy borrowers and exporters on the basis of a transparent and objective policy approved by their boards. Interest rates for certain categories of advances are regulated by the RBI. Banks are also free to stipulate lending rates without reference to their own benchmark prime lending rates in respect of certain specified categories of loans.

In terms of Section 20(1) of the Banking Regulation Act, a bank cannot grant any loans and advances on the security of its own shares. A bank is also prohibited from entering into any commitment for granting any loans or advances to or on behalf of any of its directors, or any firm in which any of its directors is interested as partner, manager, employee or guarantor, or any company (not being a subsidiary of the banking company or a company registered under Section 25 of the Companies Act, or a Government company) of which, or the subsidiary or the holding company of which any of the directors of the bank is a director, managing agent, manager, employee or guarantor or in which he holds substantial interest, or any individual in respect of whom any of its directors is a partner or guarantor. There are certain exemptions in this regard as the explanation to the Section provides that ‗loans or advances’ shall not include any transaction which the RBI may specify by general or special order as not being a loan or advance for the purpose of such Section. We are in compliance of this requirement.

Legislation introduced in the Indian Parliament to amend the Banking Regulation Act has proposed to prohibit lending to relatives of directors and to non-subsidiary companies that are under the same management as the banking company, joint ventures, associates or the holding company of the banking company. There are guidelines on loans secured by shares, debentures and bonds, money market mutual funds, fixed deposits receipts issued by other banks, gold/silver bullion etc. in respect of amount, margin requirement and purpose.

Issue of Long Term Bonds by Banks - Financing of Infrastructure and Affordable Housing

In order to ensure adequate credit flow to infrastructure sector also towards the affordable housing needs of the country RBI issued guidelines on issue of long term bonds by banks on June 1, 2015. Banks can issue long-term bonds with a minimum maturity of seven years to raise resources for lending to (i) long term projects in infrastructure sub-sectors, and (ii) affordable housing. As a regulatory incentive these bonds exempted from computation of net demand and time liabilities and would therefore not be subjected to CRR / SLR requirements subject to certain conditions. Eligible bonds will also get exemption in computation of Adjusted Net Bank Credit (ANBC) for the purpose of Priority Sector Lending (PSL).

Banker Books Evidence Act, 1891

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The act amends the law of evidence with respect to Banker’s Books. It applies to any company or corporation carrying on the business activity. A certified copy of any entries in the banker’s books shall in all legal proceeding be received as the prima facie evidence of the existence of such entry and shall be admitted as evidence in matters, transactions and accounts pertaining to the books. The officer of the bank cannot be compelled to produce the entries in any case where he is not a party to the case. The books can be made available for inspection to any party on application made to the court. The Judge or the court may order the bank to make available such copies to the party.

Guidelines on Sale of Stressed Assets by Banks

The RBI’s circular dated September 1, 2016 on Guidelines on Sale of Stressed Assets by Banks amended the existing guidelines relating to sale of non- performing assets (NPA) by banks to securitization companies, reconstruction companies notified vide RBI's earlier circular dated February 26, 2014 and issued revised framework governing sale of NPAs by banks to securitization companies/ reconstruction companies, non-banking financial companies and financial institutions etc. The policy shall cover the aspects related to financial assets to be sold, Norms and procedure for sale of such financial assets, Valuation procedure to be followed to ensure that the realisable value of financial assets is reasonably estimated and Delegation of powers of various functionaries for taking decision on the sale of the financial assets; etc. The salient features of the revised Circular are as follows:

i. At least once a year (preferably at the beginning of the year) banks with the approval of its board are required to identify the stressed assets of a specified value, which could be determined as NPAs as per the bank’s policy (including special mention account), and need to be offered for sale to other banks, securitization companies, reconstruction companies, non-banking financial companies and financial institutions etc.;

ii. At a minimum, all assets classified as 'doubtful assets' above a threshold amount need to be reviewed by the board/board committee of banks on a periodic basis and take a view on them with the documented rationale;

iii. Invitation for bids for sale of NPAs needs to be preferably publicly solicited and banks may use e-auction platforms;

iv. Banks are required to set in place clear policies pertaining to: a. valuation of the stressed assets that are proposed to be sold; b. external or internal valuation of stressed assets, provided however where asset size is beyond ₹ 50 crores, then two external valuation reports are required;

v. To ensure sale of stressed assets as 'true sale' and vibrant assets market, banks need to have progressive reduction in its investment in the security receipts backed by their own assets;

vi. To aggregate the debt faster and bring down the vintage of NPAs sold by banks:

a. Bank offering the stressed asset for sale need to offer first right of refusal to a securitization companies / reconstruction companies which have already acquired the highest and significant share (25%-30%) of the asset for acquiring the asset by matching the highest bid; b. The banks to put in place a board approved policy for adoption of the Swiss Challenge Method for sale of their stressed assets to securitization companies / reconstruction companies /non-banking financial companies/financial institutions etc. The broad contour of the Swiss Challenge Method is also provided in the circular.

Lending to Micro, Small & Medium Enterprises (MSME) Sector

With a view to enlarge our credit exposure in the MSME sector, we have initiated several sector friendly measures at highly competitive interest rates based on the enactment of the government on Micro, Small & Medium Enterprises Development Act, 2006. The RBI has from time to time, issued a number of guidelines / instructions / circulars / directives to banks in the matters relating to lending to Micro, Small & Medium Enterprises Sector. The updated guidelines// instructions / circulars dated July 21, 2016 given the importance of the micro, small and medium enterprises for India’s economy, the financing needs of this sector will continue to command special attention. The

161 provisions shall apply to every Scheduled Commercial Bank (excluding Regional Rural Banks (RRBs)) licensed to operate in India by the RBI.

A typical role for banks in mature markets is to originate loans and then distribute them to other willing players. In this context, it is necessary to overcome the post-crisis securitization-stigma. In view of the inherent heterogeneity of MSMEs and relatively constrained availability of credit information, it may be more difficult to achieve a necessary level of disintermediation in the case of MSME financing. A centralized and shared database of MSMEs capturing all available data resolving inherent information asymmetry problems associated with MSME lending, enabling efficiency in assessing the creditworthiness of the underlying MSME loans in securitization.

The Insolvency and Bankruptcy Code, 2016

On May 5, 2016, ‘The Insolvency and Bankruptcy Code, 2016’ (IBC) was enacted and notified in the Gazette of India. The IBC became a single law that deals with insolvency and bankruptcy - consolidating and amending various laws relating to reorganization and insolvency resolution. The IBC covers individuals, companies, limited liability partnerships, partnership firms and other legal entities as may be notified, except the financial service providers and is aimed at creating an overarching framework to make it easier for sick companies to either wind up their businesses or engineer a turnaround, and for investors to exit. The salient features of the Insolvency and Bankruptcy Code states that: a. The IBC provides for a clear, coherent and speedy process for early identification of financial distress and resolution of companies and limited liability entities if the underlying business is found to be viable. Under the provisions of the IBC, insolvency resolution can be triggered at the first instance of default and the process of insolvency resolution has to be completed within stipulated time limit.

b. For individuals, the IBC provides for two distinct processes, namely – “Fresh Start” and “Insolvency Resolution” and lays down the eligibility criteria for the debtor for the purposes of making an application for a “fresh start” process.

c. The National Company Law Tribunal (NCLT) and the Debt Recovery Tribunal (DRT) are designated as the adjudicating authorities for corporate persons and firms and individuals, respectively, for resolution of insolvency, liquidation and bankruptcy.

d. The IBC also provides for establishing the Insolvency and Bankruptcy Board of India for regulation of insolvency professionals, insolvency professional agencies and information utilities.

e. Insolvency professionals will assist in the completion of insolvency resolution, liquidation and bankruptcy proceedings envisaged in the IBC. Insolvency professional agencies will develop professional standards, code of ethics and will be first level regulators for insolvency professionals leading to the development of a competitive industry for such professionals. Information utilities will collect, collate, authenticate and disseminate financial information to facilitate such proceedings.

f. The IBC also proposes to establish a fund (the Insolvency and Bankruptcy Fund of India) for the purposes of insolvency resolution, liquidation and bankruptcy of persons.

Implementation of Indian Accounting Standards (“Ind AS”)

RBI vide circular DBR.BP.BC.No.76/21.07.001t2015-16 dated February 11,2016 directed scheduled commercial banks to be in preparedness to submit Proforma lnd AS Financial Statements to the Reserve Bank from the half-year ended September 30, 2016, onwards. Scheduled Commercial Banks are required to comply with lnd AS for accounting periods commencing from April 1, 2018 onwards, with comparatives for periods ending on or after March 31, 2018.

On 23 June 2016 Reserve Bank of India vide Circular No. BR.BP.BC.No.1OGl21.O7.001l2015-16 has directed all Scheduled Commerciat Banks (excluding Regional Rural Banks) to submit Proforma lnd AS Financial Statements, for the half year ended September 30, 2016 latest by November 30, 2016 to the Principal Chief General Manager, Department of Banking Regulation, Central Office, Reserve Bank of India, Mumbai. Banks shall be guided by the lnd ASs notified by the Ministry of Corporate Affairs, Government of India under the Companies (Indian Accounting Standards) Rules, 201 5 and Companies (Indian Accounting Standards) (Amendment) Rules, 2016, as amended from 162 time to time, in this regard. Banks shall submit Proforma lnd AS Financial Statements,for the half year ended September 30,2016 latest by November 30, 2016. The formats are solely for the preparation and submission of Proforma lnd AS financial statements to the Reserve Bank. The formats for the lnd AS financial statements for the accounting periods beginning April 1, 2018 shall be notified separately by RBl.

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BOARD OF DIRECTORS AND SENIOR MANAGEMENT

Overview

The Board of Directors (“Board of Directors”) is constituted in accordance with the Banking Companies Act, the Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1970.

As per sub-section 3 of section 9 of the Banking Acquisition Act, there should be up to 4 Whole Time Directors, one director who is an officer of Central Government and nominated by Central Government, one director nominated by Central Government upon recommendation by RBI, one Director from the employees of bank who is a workman nominated by Central Government, one director from employees of our Bank who is not a workman nominated by Central Government, one Director who has been a Chartered Accountant nominated by Government of India, subject to not more than 6 directors nominated by Central Government on the Board of a Bank.

As on date of this Placement Document, we have six Directors on the Board including:

1. Three Whole Time Directors; 2. One Government Nominated Director; 3. One RBI Nominee Director; and 4. One Shareholder Director

Directors

The following table sets forth details regarding the Board as on the date of this Placement Document:

Name, Designation, Occupation, Term and Age Address: Nationality Pawan Kumar Bajaj 58 UBI House, 73E, Purna Das road, Kolkata – 700029, India Designation: Managing Director and Chief Executive Officer

Occupation: Service

Term: With effect from August 9, 2016 up to September 30, 2018 or until further orders, whichever is earlier

Nationality: Indian

K.V. Rama Moorthy 58 Flat – 7G, 7th Floor, 28-B, Shakespeare Sarani, Nilambar Apartment, Kolkata – 700017, West Designation: Executive Director Bengal, India

Occupation: Service

Term: With effect from August 29, 2015 up to January 31, 2019 or until further orders, whichever is earlier

Nationality: Indian

Ashok Kumar Pradhan 56 HIG – 116, BDA Colony / Phase – 1, near DAV School, Pokhariput, Aerodrome area, Designation: Executive Director Khordha – 751020, Orissa, India

Occupation: Service

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Name, Designation, Occupation, Term and Age Address: Nationality Term: With effect from February 18, 2017 up to February 17, 2020 or until further orders, whichever is earlier

Nationality: Indian

Ashok Kumar Dogra 54 32, Shiv Shakti Apartments, GH – 15, SEC- 21C-II, Faridabad – 121001, Haryana, India Designation: Government Nominee Director

Occupation: Service

Term: With effect from November 25, 2014 until further orders.

Nationality: Indian

Arnab Roy 58 House No. C – 39/ 40, First Floor, Jangpura Extension, South Delhi, Delhi – 110 014, Designation: RBI Nominee Director India

Occupation: Service

Term: With effect from June 18, 2015 until further orders.

Nationality: Indian

Suryanarayana Sumayajula 64 5 – 1 – 66 / 101, Veeranjaneya Colony, Vanasthalipuram, Hyderabad – 500 070, Designation: Shareholder Director Telangana, India

Occupation: Professional

Term: For a period of three years with effect from June 11, 2015

Nationality: Indian

Brief Profiles of the Directors

Pawan Kumar Bajaj, aged 58 years, is the Managing Director and Chief Executive Officer of our Bank. He holds a Bachelor’s degree in Law and a Master’s degree in Science from University of Delhi. He is a certified associate of the Indian Institute of Bankers. He has vast experience in the field of banking sector, working in various capacities in different places in India and abroad. He started his career with Bank of India in the year 1982 and then joined Indian Overseas Bank as an executive director. He was also the chief executive in Bank of India’s Singapore Centre covering operations in Indonesia, Vietnam and Cambodia.

K.V. Rama Moorthy, aged 58 years, is an Executive Director of our Bank. He holds a Bachelor’s degree in Agriculture from Andhra Pradesh Agricultural University. He is a certified associate of the Indian Institute of Bankers. He has over 35 years of experience in banking. Prior to joining our Bank, he was associated with the Bank of Baroda in various capacities including as an executive director.

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Ashok Kumar Pradhan, aged 56 years, is an Executive Director of our Bank. He holds a Master’s degree in Commerce from Utkal University and is a certified associate from the Indian Institute of Bankers. He has over 31 years of experience in credit and branch banking. Prior to joining our Bank, he was associated with the State Bank of Travancore and State Bank of Bikaner & Jaipur.

Ashok Kumar Dogra, aged 54 years, is the Government of India Nominee Director of our Bank. He holds a Bachelor’s degree in Science from University of Jammu and a Master’s degree in Business Administration in Finance from United Business Institute, Brussels, Belgium. He has over 26 years of experience and has worked in various departments and on various projects of Government of India covering establishment and accounts matters, auditing of accounts, general administration, purchases, vigilance matters, etc. Prior to joining our Bank, he was on the board of the State Bank of Hyderabad. Presently, he is working as a Deputy Secretary in Ministry of Finance.

Arnab Roy, aged 58 years, is Reserve Bank of India Nominee Director of our Bank. He holds a Master’s degree in Business Administration and Master’s degree in Arts from University of Delhi. He has over 35 years of experience in various departments of RBI. Prior to joining our Bank, he was on the board of National Housing Bank, Jammu and Kashmir Bank Limited and India Mortgage Guarantee Corporation Private Limited. Presently, he is a regional director of RBI in Rajasthan.

Suryanarayana Sumayajula, aged 64 years, is the Shareholder Director of our Bank. He holds a Bachelor’s degree in Commerce from Andhra University and is a fellow member of the Institute of Chartered Accountants of India. He has over 36 years of experience in banking sector covering areas like credit, risk management, information technology, branch banking, human resources, internal audit, investor relations etc. Prior to joining our Bank, he served as the Chief General Manager of Andhra Bank until June 30, 2012.

Relationship between Directors

None of the Directors are related to each other.

Shareholding of Directors

As per the Banking Regulation Act, the Directors are not required to hold any qualification shares of our Bank. As on December 31, 2016, except for the following Director, none of the Directors hold Equity Shares in our Bank:

Name of the Director Number of Equity Shares Percentage shareholding in our Bank Suryanarayana Sumayajula 200 Negligible

Remuneration of the Directors

The following table sets forth the details of remuneration paid by our Bank to the present Executive Directors of our Bank for the 11 month period ended February 28, 2017 and fiscal years 2016, 2015 and 2014: (₹ in crores) Salary and Perquisites Name of Director April 1, 2016 upto Fiscal year 2016 Fiscal year Fiscal year February 28, 2017 2015 2014 Pawan Kumar Bajaj* 0.14 Nil Nil Nil K.V. Rama Moorthy** 0.35 0.10 Nil Nil Ashok Kumar Pradhan*** 0.0064 Nil Nil Nil Total 0.50 0.10 Nil Nil *Appointed as the Managing Director and Chief Executive Officer of our Bank with effect from August 9, 2016 ** Appointed as an Executive Director of our Bank with effect from August 29, 2015 ***Appointed as an Executive Director of our Bank with effect from February 18, 2017

As per Government of India’s letter F. No. 15/1/2011-BO.I dated July 20, 2015, all the directors other than the whole- time Directors, Government Nominee Director and RBI Nominee Director, are paid sitting fees of ₹ 20,000 for attending each meeting of the Board and ₹ 10,000 for attending each meeting of the committee of the Board.

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The following table sets forth all sitting fees paid by our Bank for 11 month period ended February 28, 2017 and fiscal years 2016, 2015, 2014: (₹ in crores) Name of Directors April 1, 2016 up to Fiscal year Fiscal year Fiscal year February 28, 2017 2016 2015 2014 Ashok Kumar Dogra* Nil Nil Nil Nil Arnab Roy* Nil Nil Nil Nil Suryanarayana Sumayajula 0.05 0.04 Nil Nil * Directors being “Official Director” are not entitled to draw any sitting fees from our Bank.

Bonus or profit sharing plan of the Directors

Pursuant to the notification No. 16/65/2011-BO-I dated May 29, 2012 from the Government of India, Ministry of Finance, Department of Financial Services has set out broad parameters for performance linked incentives to whole time directors on the boards of public sector banks. The performance linked incentive is given according to scores obtained as per the performance evaluation matrix prescribed in the notification. The performance evaluation matrix consists of qualitative and quantitative parameters. The evaluation of performance would be done by a sub-committee of the Board that is Remuneration Committee consisting of (i) Government nominee director (ii) RBI nominee director and (iii) two other directors.

Interest of Directors

Our Executive Directors may be deemed to be interested to the extent of salary and remuneration received by them, perquisites and reimbursement of expenses allowed to them in the ordinary course of business in terms of Central Government guidelines and RBI guidelines as may be applicable and to the extent of shares held by them in our Bank and dividend payable to them, if any.

Our Non-Executive Directors may be deemed to be interested to the extent of the Sitting Fees received by them for attending the meetings of the Board of Directors or Committees thereof, reimbursement of expenses allowed in terms of the Government and RBI guidelines, and to the extent of shares held by them in our Bank and dividend payable to them, if any.

Except as disclosed in this Placement Document, and except to the extent of shareholding in our Bank, our Directors do not have any financial or other material interest in the Issue and there is no effect of such interest in so far as it is different from the interests of other persons.

Our Bank has not entered into any contract, agreement or arrangement during the preceding two years from the date of this Placement Document in which any of the Directors are interested, directly or indirectly, and no payments have been made to them in respect of any such contracts, agreements, arrangements which are proposed to be made with them.

For details of related party transactions entered into by our Bank during the two years preceding the date of this Placement Document, the nature of transactions and the cumulative value of transactions, see “Related Party Transactions” in the section “Financial Statements” beginning on page 228.

Corporate Governance

Our Bank has in place processes and systems and has been complying with the requirements of corporate governance under applicable law, including the Listing Regulations and RBI guidelines, in respect of corporate governance including constitution of the Board of Directors and committees thereof. The Board meets regularly in accordance with the requirements of our Bank, with a minimum of six meetings per year. The Board has established the following committees of Directors to ensure compliance with the Act and corporate governance requirements and for operational reasons to facilitate the decision making process.

The committees constituted in accordance with the relevant provisions of the Chapter IV the Listing Regulations and RBI Guidelines includes (i) Audit Committee, (ii) Nomination Committee, (iii) Remuneration Committee, (iv) Stakeholders Relationship Committee and v) Risk Management Committee. 167

The details pertaining to the abovementioned committees of our Bank as of the date of this Placement Document are as follows:

i) Audit Committee

The Audit Committee of the Board of Directors of our Bank is constituted in terms of the RBI guidelines and the roles and responsibilities of the Audit Committee are prescribed by the RBI.

The functions of Audit Committee include the following:

 Oversight of the financial reporting process and ensuring correct, adequate and credible disclosure of financial information;  Reviewing with the Management, Periodic and Annual Financial Statements.  Reviewing efficacy of internal control system and internal audit and inspection functions;  Reviewing the findings of investigation by the concurrent auditors, revenue auditors, internal inspectors in matters where fraud / irregularity is suspected or failure of internal control systems is observed and suggesting means to strengthen control mechanisms.  Interaction and Analysis of Bank's performance with the Statutory Central Auditors before the finalization of the periodic accounts and reports, focusing on the changes in accounting policies and practices, discussion on Audit Report and audit qualifications if any, LFAR etc;  Monitoring Auditors' independence and performance;  Detailed analysis of the findings in the Annual Financial Inspection (AFI) conducted by RBI, Special Audit, if any, conducted by RBI or other agency assigned by RBI.  Review of various audit & inspection reports;  Reviewing with the management, the performance of statutory auditors, concurrent and revenue auditors and adequacy of internal control system, discussing with the auditors significant findings and follow up thereon.  Giving special focus on the follow up on: a) Inter Branch Adjustment Accounts b) Un-reconciled long standing entries in Inter Branch Accounts & NOSTRO Accounts. c) Arrears in balancing of books at various branches. d) Frauds e) Major areas of housekeeping

The constitution of Audit Committee is as follows -

Committee Members Designation Audit Committee Suryanarayana Sumayajula Chairman K. V. Rama Moorthy Member Ashok Kumar Dogra Member Arnab Roy Member

ii) Nomination Committee

The Committee is constituted in terms of RBI guidelines for the purpose of determination of the prescribed ‘Fit & Proper’ status of the candidates elected by the requisite number of shareholders for the Directorship on the Board of our Bank as representative of the shareholders.

The Nomination Committee in Public Sector Banks is formed solely for the purpose of determining ‘fit and proper’ status in terms of the RBI guidelines of the shareholders contesting election for directorship under section 9 (3)(i) of the Banking Acquisition Act. Our Bank will reconstitute the committee in terms of RBI guidelines close to the next election process.

iii) Remuneration Committee

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The Remuneration Committee has been formed in terms of Ministry of Finance Notification F. No. 20/1/2005 – BO- I dated March 9, 2007 to deliberate on the Performance Linked incentives of whole-time directors of Public Sector Banks, subject to achievement of broad quantitative parameters fixed under performance evaluation matrix based on the statement of intent on goals and qualitative parameters and benchmarks based on various compliance reports during the previous year.

The functions of Remuneration Committee include evaluating performance of the whole time directors of our Bank in respect of broad quantitative parameters and qualitative parameters for determining eligibility of the whole-time directors to performance linked incentive in respect of concerned previous year.

The constitution of Remuneration Committee is as follows –

Committee Members Designation Remuneration Committee Ashok Kumar Dogra Chairman Arnab Roy Member Suryanarayana Sumayajula Member

iv) Stakeholders Relationship Committee

The Stakeholders Relationship Committee was formed, as prescribed under Regulation 20 of the Listing Regulations, with a view to uphold the principles of corporate governance and to safeguard the interest of all the shareholders of our Bank, particularly the minority shareholders post the initial public offer.

The functions of the Stakeholders Relationship Committee include the following:  Speedy disposal of transfer, sub-division, rematerialisation and consolidation of shares and revalidation of warrants;  Monitoring investor grievance mechanism and ensuring redressal thereof in a time-bound manner

The constitution of Stakeholders Relationship Committee is as follows –

Committee Members Designation Stakeholders Relationship Committee Suryanarayana Sumayajula Chairman K.V. Rama Moorthy Member Ashok Kumar Pradhan Member Ashok Kumar Dogra Member

v) Risk Management Committee

The Risk Management Committee was formed pursuant to RBI directive with the objective of devising a robust risk management policy and gradually advancing to the integrated risk management environment.

The functions of Risk Management Committee include the following:

 Devising a robust Risk Management Policy and developing a comprehensive strategy for integrated risk management and to co-ordinate with the different risk management committees of executives of our Bank;  Framing guidelines for risk measurement;  Managing and reporting all the areas of risk;  Ensuring that risk management process encompassing people, systems, operations, limits and controls is consistent with our Bank’s overall policy;  Ensuring implementation of strong financial models and the effectiveness of all systems used to calculate the risk.

The constitution of Risk Management Committee is as follows –

Committee Members Designation

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Risk Management Committee Pawan Kumar Bajaj Chairman K.V. Rama Moorthy Member Ashok Kumar Pradhan Member Suryanarayana Sumayajula Member Ashok Kumar Dogra Member

In addition there are other Board Committees which are Management Committee, Committee for reviewing services of officers above 55 years, High Powered Committee, Recovery Committee, Special Committee to Monitor High Value Frauds, Review Committee on Identification of Willful Defaulters, Directors’ Promotion Committee, Customer Service Committee, IT Sub-Committee, HR Steering Committee, Credit Approval Committee, Election Committee and Asset Liability Management Committee constituted for the smooth and supervision of various aspects of business.

ORGANIZATION STRUCTURE

Senior Managerial Personnel In addition to the Managing Director and Chief Executive Officer and Executive Directors of our Bank following are the Senior Managerial Personnel of our Bank.

Arun Kumar Verma, aged 58 years, is the Chief Vigilance Officer of our Bank. He holds a Master’s degree of Science in Agriculture (Honours) from Himachal Pradesh Krishi Vishwa Vidyalaya. He is also a certified associate of Indian Institute of Banking. Prior to joining our Bank, he was working with Canara Bank. Further, he has been assigned an additional charge of Chief Vigilance Officer, Allahabad Bank. He joined our Bank on March 1, 2016.

Debashish Mukherjee, aged 52 years, is the General Manager Recovery, Monitoring, Legal and Corporate Client Management of our Bank. He holds a Bachelor’s degree in Science with Honours and Master’s degree in business administration from University of Calcutta. He is also an associate of the Indian Institute of Banking and Finance. Prior to joining our Bank, he was associated with Punjab National Bank. He joined our Bank on September 8, 2006

Naresh Kapoor, aged 58 years, is the Chief Financial Officer of our Bank. He holds a Master’s degree in Science from University of Allahabad. He joined our Bank on July 28, 1981 and is presently in-charge of the Corporate Accounts, Government transactions, and MSME.

Vikas Khutwad, aged 59 years, is the Chief Risk Officer and Chief Information Security Officer of our Bank. He holds a Bachelor’s degree of Commerce from University of Bombay and is an associate of the Indian Institute of

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Bankers. He joined our Bank on February 23, 1997and is presently in-charge of the Risk Management, Planning and Development departments.

Sanjay Kumar, aged 55 years, is the General Manager (Treasury and Credit) of our Bank. He holds a Master’s Degree in Science from Magadh University, Bodh Gaya. He joined our Bank on December 16, 1985 and is presently in-charge of the Credit, Treasury and International Banking department.

Manash Dhar, aged 58 years, is the General Manager (Priority Sector and Financial Inclusion) of our Bank. He holds a Bachelor’s degree in Science (Agriculture) Honours from Bidhan Chandra Krishi Viswa Vidyalaya. He joined our Bank on June 3, 1981.

Mohammed Abdul Wahid, aged 58 years, is the General Manager (Retail Banking, Marketing and Publicity) of our Bank. He holds a Bachelor’s degree in Science (Agriculture) with Honours from Bidhan Chandra Krishi Viswa Vidyalaya and is an associate of the Indian Institute of Bankers. He joined our Bank on August 24, 1983.

Umesh Kumar Roy, aged 57 years, is the Head (Human Resource Management and Training) of our Bank. He holds a Master’s degree of Science in Chemistry (Honours) from Patna University. He is also a law graduate from Patna University. He also holds a Master’s degree in Business Administration from Babasaheb Bhimrao Ambedkar Bihar University and is an associate of the Indian Institute of Bankers. He joined our Bank on December 17, 1985.

Sunanda Basu, aged 58 years, is the General Manager (Premises and Branch Expansion) of our Bank. She holds a Master’s degree of Arts in History from Jadavpur University. She is also an associate of the Indian Institute of Bankers. She has been associated with our Bank since December 27, 1985.

Kuntilla Bala Raju, aged 58 years, is the General Manager (Audit and Inspection) of our Bank. He holds a Diploma in Management from Indira Gandhi National Open University and a Bachelor’s degree of Arts from Berhampur University. He is also an associate of the Indian Institute of Bankers. He joined our Bank on January 25, 1984.

Vinay Gandotra, aged 56 years, is the General Manager (Operations and Services) of our Bank. He holds a Master’s degree of science in agriculture from Himachal Pradesh Krishi Vishwa Vidyalaya. He has also been awarded with the certificate of honour from Himachal Pradesh Krishi Vishwa Vidyalaya. Further, he is an associate of the Indian Institute of Bankers. He has been awarded certificate of honour from Himachal Pradesh Krishi Vishwa Vidyalaya. He joined our Bank on October 27, 1983.

Gauri Prosad Sarma, aged 54 years, is the General Manager – Information Technology of our Bank. He holds a Master’s degree of Science in Zoology from University of Gauhati and has participated in a number of training programmes held by RBI. He joined our Bank on December 17, 1985.

Alahari Seshu Babu, aged 59 years, is the Chief Compliance Officer of our Bank. He holds a Bachelor’s degree in Science and is a law graduate from Sri Venkateswara University. He also holds a Master’s degree in Financial Management from Jamnalal Bajaj Institute of Management Studies and is an associate of the Indian Institute of Bankers. He joined our Bank on December 16, 1985.

Manish Agrawal, aged 43 years, is the in – charge of Alternate Delivery Channel of our Bank. He holds a Bachelor’s degree in electronics engineering from The Aligarh Muslim University and a post graduate diploma in operations management from Indira Gandhi National Open University. He is also an associate of the Indian Institute of Banking and Finance. Prior to joining our Bank, he was working with State Bank of Saurashtra. He joined our Bank on December 1, 2006.

Bikramjit Shom, aged 43 years, is the Company Secretary and Compliance Officer of our Bank. He is a fellow member from the Institute of Company Secretaries of India and an associate from Chartered Institute for Securities and Investment. Further, he also holds certificate from National Institute of Securities Market. Prior to joining our Bank, he was working with Stock Holding Corporation of India Limited, Dalmia Securities Private Limited, ABN Amro Bank N.V. Further, he was working as a trainee in Hindustan Copper Limited. He joined our Bank on September 14, 2009.

All the Senior Managerial Personnel are permanent employees of our Bank. 171

Relationship with the Directors and other Senior Managerial Personnel

None of our Senior Managerial Personnel are related to the directors or with each other.

Shareholding of Senior Managerial Personnel

Except as stated below, none of our senior managerial personnel are holding any shares in our Bank as on December 31, 2016:

Name of Senior Managerial Personnel Number of Equity Shares Debashish Mukherjee 1,000 Naresh Kapoor 5,00 Vikas Khutwad 1,500 Sanjay Kumar 500 Manash Dhar 1,000 Mohammad Abdul Wahid 800 Umesh Kumar Roy 500 Sunanda Basu 1,000 Kuntilla Bala Raju 500 Vinay Gandotra 500 Gauri Prosad Sarma 500 Alahari Seshu Babu 500 Bikramjit Shom 100

Bonus or a profit sharing plan to the Senior Managerial Personnel

Presently, we do not have a performance linked bonus or a profit sharing plan for the Senior Managerial Personnel.

Interests of Senior Managerial Personnel

The Senior Managerial Personnel may be deemed to be interested to the extent of the salary and remuneration received by them, perquisites and reimbursements allowed to them for services rendered by them in the ordinary course of business of our Bank and to the extent of the shares held by them and dividend payable to them in our Bank, if any, and loans taken at preferential rates or otherwise, principal thereof and interest thereon.

Other than as disclosed in this Placement Document, there were no outstanding transactions other than in the ordinary course of business undertaken by our Bank in which the Senior Managerial Personnel were the interested parties.

Related Party Transactions

For details in relation to the related party transactions entered by our Bank during the last three Fiscal Years immediately preceding the date of this Placement Document, as per the Accounting Standard 18 issued by the Institute of Chartered Accountants in India, see “Related Party Transactions” in the section “Financial Statements” beginning on page 228.

Employees’ Stock Option Plan

Our Bank does not have any Employee Stock Option Scheme.

Loans to Directors and Senior Managerial Personnel

Except as mentioned herein below, none of the Directors / Senior Managerial Personnel have taken loans from us as on January 31, 2017. (₹ in crores)

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Name of Senior Managerial Personnel Amount Outstanding Debashish Mukherjee 0.45 Naresh Kapoor 0.04 Vikas Khutwad 0.10 Sanjay Kumar 0.09 Manash Dhar 0.52 Mohammed Abdul Wahid 0.31 Umesh Kumar Roy 0.37 Sunanda Basu 0.0019 Kuntilla Bala Raju 0.16 Vinay Gandotra 0.48 Gauri Prosad Sarma 0.11 Alahari Sesu Babu 0.11 Manish Agarwal 0.47 Bikramjit Shom 0.31

Policy on disclosure and internal procedure for prevention of insider trading

Regulation 9(1) of the Insider Trading Regulations applies to us and our employees and mandates implementation of a code of internal procedures and conduct for the prevention of insider trading. Our Bank is in compliance with the same and has implemented a code of conduct for prevention of insider trading and procedure for fair disclosure of unpublished price sensitive information in accordance with the Insider Trading Regulations. The Company Secretary acts as the Compliance Officer of our Bank under the aforesaid code of conduct.

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PRINCIPAL SHAREHOLDERS

Our Promoter is the President of India. Our Promoter currently holds 88.72% of the paid-up Equity Share capital of our Bank.

The table below represents the shareholding pattern of our Bank in accordance with Regulation 31 of the Listing Regulations, as on December 31, 2016:

Summary statement holding of Equity Shares

Category of Nos. of No. of fully Total nos. Shareho Number of Locked in Number of Shares Number of equity shareholder shareh paid up equity shares held lding as shares pledged or otherwise shares held in olders shares held a % of encumbered dematerialized total no. form of shares No.(a) As a N As a % of total (calculat % o.( Shares held(b) ed as of a) per total SCRR, Sha 1957)As res a % of held (A+B+C (b) 2 (A) Promoter & 1 1,18,83,64,031 1,18,83,64,03 88.72 1,18,83,64,031 100. 0.00 1,18,83,64,031 Promoter Group 1 00 (B) Public 82,350 15,10,85,341 15,10,85,341 11.28 0.00 0.00 15,10,62,033

(C1) Shares 0.00 0.00 0.00 underlying DRs (C2) Shares 0.00 0.00 0.00 held by Employee Trust (C) Non 0.00 0.00 0.00 Promoter-Non Public Grand Total 82,351 1,33,94,49,372 1,33,94,49,37 100.00 1,18,83,64,031 88.7 0.00 1,33,94,26,064 2 2

Note: C=C1+C2 Grand Total=A+B+C

Statement showing shareholding pattern of the Promoter and Promoter Group

Category of Nos. No. of fully Total nos. Shareho Number of Locked in Number of Number of shareholder of paid up equity shares held lding as shares Shares equity shares share shares held a % of pledged or held in holder total no. otherwise dematerialized s of encumbere form shares d (calculat No.(a) As a N As a ed as % of o. % of per total (a total SCRR, Share ) Shares 1957)As s held(b) a % of held(b (A+B+C ) 2) A1) Indian 0.00 0.00 Central 88.72 Government/ 1 1,18,83,64,031 1,18,83,64,031 1,18,83,64,031 100.00 0.00 1,18,83,64,031

State

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Category of Nos. No. of fully Total nos. Shareho Number of Locked in Number of Number of shareholder of paid up equity shares held lding as shares Shares equity shares share shares held a % of pledged or held in holder total no. otherwise dematerialized s of encumbere form shares d (calculat No.(a) As a N As a ed as % of o. % of per total (a total SCRR, Share ) Shares 1957)As s held(b) a % of held(b (A+B+C ) 2) Government( s) President of 1 1,18,83,64,031 1,18,83,64,031 88.72 1,18,83,64,031 100.00 0.00 1,18,83,64,031 India Sub Total A1 1 1,18,83,64,031 1,18,83,64,031 88.72 1,18,83,64,031 100.00 0.00 1,18,83,64,031

A2) Foreign 0.00 0.00 0.00

A=A1+A2 1 1,18,83,64,031 1,18,83,64,031 88.72 1,18,83,64,031 100.00 0.00 1,18,83,64,031

Statement showing shareholding pattern of the Public shareholders

Category & No. of No. of fully Total no. Sharehol No. of Total Number of Number of Name of the sharehol paid up shares held ding % Voting as a Locked in equity Shareholders der equity calculate Rights % of shares shares held shares held d as per Total As a in SCRR, Voti No. % of dematerializ 1957 As a ng (a) total ed form(Not % of right Share Applicable) (A+B+C2 s ) held( b) B1) 0 0 0.00 0.00 0.00 Institutions Mutual 1 3,36,000 3,36,000 0.03 3,36,000 0.03 0.00 3,36,000 Funds/ Financial Institutions/ 4 1,47,038 1,47,038 0.01 1,47,038 0.01 0.00 1,47,038 Banks Insurance 4 10,17,34,227 10,17,34,227 7.60 10,17,34,227 7.60 0.00 10,17,34,227 Companies Life Insurance Corporation 1 10,17,28,073 10,17,28,073 7.59 10,17,28,073 7.59 0.00 10,17,28,073 of India Sub Total B1 9 10,22,17,265 10,22,17,265 7.63 10,22,17,265 7.63 0.00 10,22,17,265 B2) Central Government/ State 0 0 0.00 0.00 0.00 Government( s)/ President of India B3) Non- 0 0 0.00 0.00 0.00 Institutions Individual share capital 75973 3,22,90,387 3,22,90,387 2.41 3,22,90,387 2.41 0.00 3,22,90,387 upto ₹ 2 Lacs Individual 145 69,15,032 69,15,032 0.52 69,15,032 0.52 0.00 69,15,032 share capital

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Category & No. of No. of fully Total no. Sharehol No. of Total Number of Number of Name of the sharehol paid up shares held ding % Voting as a Locked in equity Shareholders der equity calculate Rights % of shares shares held shares held d as per Total As a in SCRR, Voti No. % of dematerializ 1957 As a ng (a) total ed form(Not % of right Share Applicable) (A+B+C2 s ) held( b) in excess of ₹ 2 Lacs Any Other 6223 96,62,657 96,62,657 0.72 96,62,657 0.72 0.00 96,62,657 (specify) Office 3002 11,60,576 11,60,576 0.09 11,60,576 0.09 0.00 11,60,576 Bearers Bodies 495 42,71,818 42,71,818 0.32 42,71,818 0.32 0.00 42,71,818 Corporate Clearing 11,05,469 11,05,469 11,05,469 11,05,469 212 0.08 0.08 0.00 Members NRI – Repat 416 13,87,043 13,87,043 0.10 13,87,043 0.10 0.00 13,87,043 NRI – Non- 3,78,854 3,78,854 3,78,854 3,78,854 176 0.03 0.03 0.00 Repat HUF 1915 13,11,636 13,11,636 0.10 13,11,636 0.10 0.00 13,11,636 Trusts 7 47,261 47,261 0.00 47,261 0.00 0.00 47,261 Sub Total B3 82,341 4,88,68,076 4,88,68,076 3.65 4,88,68,076 3.65 0.00 4,88,68,076 B=B1+B2+B 82,350 15,10,85,341 15,10,85,341 11.28 15,10,85,341 11.28 0.00 15,10,85,341 3

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ISSUE PROCEDURE

The following is a summary intended to present a general outline of the procedure relating to the application, payment, Allocation and Allotment of the Equity Shares to be issued pursuant to the Issue. The procedure followed in the Issue may differ from the one mentioned below, and investors are presumed to have apprised themselves of the same from our Bank or the Book Running Lead Managers. Investor is advised to inform themselves of any restrictions or limitations that may be applicable to them. See the sections “Selling Restrictions” and “Transfer Restrictions” beginning on pages 189 and 195, respectively.

Qualified Institutions Placement

The Issue is being made to QIBs in reliance upon Chapter VIII of the ICDR Regulations, through the mechanism of a QIP. Under Chapter VIII of the ICDR Regulations, a listed company in India may issue equity shares, fully convertible debentures, partly convertible debentures, non-convertible debentures with warrants or any other security (other than warrants), which are convertible into or exchangeable with equity shares of the issuer at a later date in a qualified institutions placement to QIBs, provided that:

 a special resolution approving the QIP has been passed by our Bank’s shareholders. Such special resolution must specify (a) that the allotment of the Equity Shares is proposed to be made pursuant to the qualified institutions placement, and (b) the relevant date;

 equity shares of the same class of such issuer, which are proposed to be allotted through the QIP, are listed on a recognised stock exchange in India having nation-wide trading terminals for a period of at least one year prior to the date of issuance of notice to its shareholders for convening the meeting to pass the abovementioned special resolution;

 the aggregate of the proposed issue and all previous QIPs made by the issuer in the same fiscal year does not exceed five times the net worth (as defined in the ICDR Regulations) of the issuer as per the audited balance sheet of the previous fiscal year;

 the issuer shall be in compliance with the minimum public shareholding requirements set out in the SCRR. However, our Bank has received an exemption from SEBI in respect of compliance with minimum public shareholding as specified under the SCRR and Listing Agreement for present issue vide their letter dated April 5, 2016;

 the issuer shall have completed allotments with respect to any prior offer or invitation made by the issuer or shall have withdrawn or abandoned any prior invitation or offer made by the issuer;

 the offering of securities by issue of public advertisements or utilisation of any media, marketing or distribution channels or agents to inform the public about the issue is prohibited

At least 10% of the equity shares issued to QIBs must be allotted to Mutual Funds, provided that, if this portion or any part thereof to be allotted to mutual funds remains unsubscribed, it may be allotted to other QIBs.

Prospective purchasers will be deemed to have represented to us and the Book Running Lead Managers in order to participate in the Issue that they are outside the United States and purchasing the Equity Shares in an offshore transaction in accordance with Regulation S under the Securities Act and the applicable laws of the jurisdictions where those offers and sales are made.

Bidders are not allowed to withdraw their Bids after the Issue Closing Date.

Additionally, there is a minimum pricing requirement under the ICDR Regulations. The Floor Price shall not be less than the average of the weekly high and low of the closing prices of the Equity Shares of the same class of the Equity Shares of the Issuer quoted on the stock exchange during the two weeks preceding the Relevant Date. However, a discount of up to 5% of the Floor Price is permitted in accordance with the provisions of the ICDR Regulations.

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The “Relevant Date” referred to above, for Floor Price, will be the date of the meeting in which the Board of Directors or the Committee thereof decides to open the Issue and “stock exchange” means any of the recognised stock exchanges in India on which the equity shares of the issuer of the same class are listed and on which the highest trading volume in such equity shares has been recorded during the two weeks immediately preceding the Relevant Date.

Our Bank has applied for and received the in-principle approval of the Stock Exchanges under regulation 28(1) of the Listing Regulations for the listing of the proposed Equity Shares on the Stock Exchanges. Our Bank has also delivered a copy of the Preliminary Placement Document and this Placement Document to the Stock Exchanges and hosted on our Bank’s website.

The Issue has been authorized by (i) the Board of Directors pursuant to a resolution passed on January 28, 2016, and (ii) the shareholders, pursuant to a resolution passed at the AGM held on June 28, 2016.

The Equity Shares will be Allotted within 12 months from the date of the shareholders’ resolution approving the QIP and within 60 days from the date of receipt of subscription money from the successful Bidders. For details of refund of application money, please see the section “Issue Procedure – Pricing and Allocation – Designated Date and Allotment of Equity Shares” beginning on page 185.

The Equity Shares issued pursuant to the QIP must be issued on the basis of the Preliminary Placement Document and this Placement Document that shall contain all material information including the information specified in Schedule XVIII of the ICDR Regulations. The Preliminary Placement Document and this Placement Document are private documents provided to only select investors through serially numbered copies and are required to be placed on the website of the concerned Stock Exchanges and of our Bank with a disclaimer to the effect that it is in connection with an issue to QIBs and no offer is being made to the public or to any other category of investors.

The minimum number of allottees for each QIP shall not be less than: two, where the issue size is less than or equal to ₹ 250 Crore; and five, where the issue size is greater than ₹ 250 Crore

No single allottee shall be allotted more than 50% of the issue size.

QIBs that belong to the same group or that are under common control shall be deemed to be a single allottee. For details of what constitutes “same group” or “common control”, please see the section “Issue Procedure—Application Process—Application Form” beginning on page 182.

Securities allotted to a QIB pursuant to a QIP shall not be sold for a period of one year from the date of allotment except on the floor of a recognised stock exchange in India. Allotments made to VCFs and AIFs in the Issue are subject to the rules and regulations that are applicable to them, including in relation to lock-in requirements.

The Equity Shares offered hereby have not been and will not be registered under the U.S. Securities Act or any state securities laws in the United States and may not be offered, sold or delivered within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and applicable state securities laws. Accordingly, the Equity Shares are being offered and sold outside the United States in offshore transactions in reliance on Regulation S under the U.S. Securities Act and the applicable laws of the jurisdictions where those offers and sales are made. For a description of certain restrictions on transfer of the Equity Shares, please see “Transfer Restrictions”.

The Equity Shares have not been and will not be registered, listed or otherwise qualified in any other jurisdiction outside India and may not be offered or sold, and Bids may not be made by persons in any such jurisdiction, except in compliance with the applicable laws of such jurisdiction.

Issue Procedure

1. Our Bank and the BRLMs has circulated serially numbered copies of the Preliminary Placement Document and the serially numbered Application Form, either in electronic or physical form, to the QIBs and the Application 178

Form has been specifically addressed to such QIBs. Bank shall maintain complete records of Eligible QIBs to whom the Preliminary Placement Document and the serially numbered Application Form have been dispatched.

2. Unless a serially numbered Preliminary Placement Document along with the serially numbered Application Form is addressed to a particular QIB, no invitation to subscribe shall be deemed to have been made to such QIB. Even if such documentation were to come into the possession of any person other than the intended recipient, no offer or invitation to offer shall be deemed to have been made to such person and any application that does not comply with this requirement shall be treated as invalid.

3. QIBs may submit an Application Form, including any revisions thereof, during the Bidding Period to the BRLMs.

4. QIBs will be required to indicate the following in the Application Form:

 Complete official name of the QIB to whom Equity Shares are to be Allotted;

 number of Equity Shares Bid for;

 price at which they are agreeable to subscribe for the Equity Shares, provided that QIBs may also indicate that they are agreeable to submit a Bid at “Cut-off Price”; which shall be any price as may be determined by our Bank in consultation with the Book Running Lead Managers at or above the Floor Price or a price with not more than 5% discount on the Floor Price in terms of Regulation 85 of the ICDR Regulations, which for the issue is ₹ 23.22;

 details of the depository participant account to which the Equity Shares should be credited; and

 a representation that it is outside the United States, at the time it places its buy order for the Equity Shares, it is acquiring the Equity Shares in an offshore transaction in reliance on Regulation S and it has agreed to certain other representations set forth in “Representation by Investors” and “Transfer Restrictions” beginning on pages 4 and 195, respectively and certain other representations made in the Application Form.

Note: Each sub-account of an FII other than a sub-account which is a foreign corporate or a foreign individual will be considered as an individual QIB and separate Application Forms would be required from each such sub-account for submitting Bids. FIIs or sub-accounts of FIIs are required to indicate SEBI FII/ sub-account registration number in the Application Form.

5. Once a duly completed Application Form is submitted by a QIB, such Application Form constitutes an irrevocable offer and cannot be withdrawn after the Issue Closing Date. The Issue Closing Date shall be notified to the Stock Exchanges and the QIBs shall be deemed to have been given notice of such date after receipt of the Application Form.

6. The Bids made by asset management companies or custodians of Mutual Funds shall specifically state the names of the concerned schemes for which the Bids are made. In case of a Mutual Fund, a separate Bid can be made in respect of each scheme of the Mutual Fund registered with SEBI. Upon receipt of the duly completed Application Form, after the Issue Closing Date, our Bank shall determine the final terms, including the Issue Price of the Equity Shares to be issued pursuant to the Issue in consultation with the Book Running Lead Managers. Upon determination of the final terms of the Equity Shares, the Book Running Lead Managers will send the serially numbered CAN along with this Placement Document, either in electronic form or through physical delivery, to the QIBs who have been Allocated the Equity Shares pursuant to this Issue. The dispatch of a CAN shall be deemed a valid, binding and irrevocable contract for the QIBs to pay the entire Issue Price for all the Equity Shares Allocated to such QIB. The CAN shall contain details such as the number of Equity Shares Allocated to the QIB and payment instructions including the details of the amounts payable by the QIB for Allotment of the Equity Shares in its name and the Pay-In Date as applicable to the respective QIB. Please note that the Allocation will be at the absolute discretion of our Bank and will be based on the recommendation of the Book Running Lead Managers and may not be proportionate to the number of Equity Shares applied for.

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7. Pursuant to receiving a CAN, each successful Bidder shall be required to make the payment of the entire application monies for the Equity Shares indicated in the CAN at the Issue Price, only through electronic transfer to our Bank’s designated bank account by the Pay-In Date as specified in the CAN sent to the respective successful Bidder. No payment shall be made by successful Bidder in cash. Please note that any payment of application money for the Equity Shares shall be made from the bank accounts of the relevant QIBs applying for the Equity Shares. Pending Allotment, all monies received for subscription of the Equity Shares shall be kept by our Bank in a separate bank account with a scheduled bank and shall be utilised only for the purposes permitted under the applicable laws and mentioned in this Placement Document.

8. Upon receipt of the application monies from the QIBs, Board of Directors of our Bank or the Committee thereof shall approve Allotment of the Equity Shares as per the details in the CANs sent to the successful Bidder.

9. After passing the resolution for Allotment and prior to crediting the Equity Shares into the depository participant accounts of the successful Bidders, our Bank shall apply to the Stock Exchanges for listing approvals. Our Bank will intimate to the Stock Exchanges the details of the Allotment.

10. After receipt of the listing approvals of the Stock Exchanges, our Bank shall credit the Equity Shares Allotted pursuant to this Issue into the Depository Participant accounts of the respective Allottees.

11. Our Bank will then apply for the final trading approvals from the Stock Exchanges.

12. The Equity Shares that would have been credited to the beneficiary account with the Depository Participant of the QIBs shall be eligible for trading on the Stock Exchanges only upon the receipt of final listing and trading approvals from the Stock Exchanges.

13. Upon receipt of intimation of final listing and trading approval from the Stock Exchanges, our Bank shall inform the Allottees of the receipt of such approval. Our Bank and the Book Running Lead Managers shall not be responsible for any delay or non-receipt of the communication of the final trading and listing permissions from the Stock Exchanges or any loss arising from such delay or non-receipt. Final listing and trading approvals granted by the Stock Exchanges will also be placed on their respective websites. QIBs are advised to apprise themselves of the status of the receipt of the permissions from the Stock Exchanges or our Bank.

Qualified Institutional Buyers

Only QIBs as defined in Regulation 2(1)(zd) of the ICDR Regulations and not otherwise excluded pursuant to Regulation 86(1)(b) of the ICDR Regulations are eligible to invest. Currently, under Regulation 2(1) (zd) of the ICDR Regulations, a QIB means:

 alternate investment funds registered with SEBI  Eligible FPIs including FIIs and eligible sub-accounts registered with SEBI;  foreign venture capital investors registered with SEBI;  insurance companies registered with Insurance Regulatory and Development Authority;  insurance funds set up and managed by army, navy or air force of the Union of India;  insurance funds set up and managed by the Department of Posts, India;  multilateral and bilateral development financial institutions;  Mutual Funds registered with SEBI;  pension funds with minimum corpus of ₹ 25 Crore;  provident funds with minimum corpus of ₹ 25 Crore;  public financial institutions as defined in Section 4A of the Companies Act, 1956 (Section 2(72) of the Companies Act, 2013);  scheduled commercial banks;  state industrial development corporations;  the National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated November 23, 2005 of the Government published in the Gazette of India; and  foreign venture capital funds registered with SEBI;

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FIIs (other than a sub-account which is a foreign corporate or a foreign individual) and Eligible FPIs are permitted to participate through the portfolio investment scheme under Schedule 2 and Schedule 2A of FEMA 20 respectively, in this Issue. FIIs and Eligible FPIs are permitted to participate in the Issue subject to compliance with all applicable laws and such that the shareholding of the FPIs do not exceed specified limits as prescribed under applicable laws in this regard.

In terms of the SEBI FPI Regulations, the issue of Equity Shares to a single FPI or an investor group (which means the same set of ultimate beneficial owner(s) investing through multiple entities) is not permitted to exceed 10% of our post-Issue Equity Share capital. Further, in terms of the FEMA 20, the total holding by each FPI shall be below 10% of the total paid-up Equity Share capital of our Bank and the total holdings of all FPIs put together shall not exceed 24% of the paid-up Equity Share capital of our Bank. The aggregate limit of 24% may be increased up to the sectoral cap by way of a resolution passed by the Board of Directors followed by a special resolution passed by the shareholders of our Bank. The existing limit for FIIs and FPIs in our Bank is 24% of the paid up capital of our Bank.

Eligible FPIs are permitted to participate in the Issue subject to compliance with conditions and restrictions which may be specified by the Government from time to time.

An FII who holds a valid certificate of registration from SEBI shall be deemed to be an FPI until the expiry of the block of three years for which fees have been paid as per the SEBI FII Regulations. An FII or sub-account (other than a sub-account which is a foreign corporate or a foreign individual) may participate in the Issue, until the expiry of its registration as a FII or sub-account, or until it obtains a certificate of registration as FPI, whichever is earlier. If the registration of an FII or sub-account has expired or is about to expire, such FII or sub-account may, subject to payment of conversion fees under the SEBI FPI Regulations, participate in the Issue. An FII or sub-account shall not be eligible to invest as an FII after registering as an FPI under the SEBI FPI Regulations.

In terms of the FEMA 20, for calculating the aggregate holding of FPIs in a Bank, holding of all registered FPIs as well as holding of FIIs (being deemed FPIs) shall be included.

The FPI regime has recently come into effect from June 1, 2014. FPI’s investing in this Issue should ensure that they are eligible under the applicable law or regulation to apply in this Issue.

Allotments made to FVCIs, VCFs and AIFs are subject to the rules and regulations that are applicable to them, including in relation to lock-in requirements.

Under Regulation 86(1)(b) of the ICDR Regulations, no allotment shall be made pursuant to the Issue, either directly or indirectly, to our Promoter or any person related to our Promoter, except for such Eligible QIBs who are Public Sector Enterprises. Eligible QIBs, other than in case of Eligible QIBs who are Public Sector Enterprise who have all or any of the following rights shall be deemed to be a person related to Promoter:

 rights under a shareholders’ agreement or voting agreement entered into with the Promoter or persons related to the Promoter;  veto rights; or  right to appoint any nominee director on the Board.

Provided, however, that a QIB which does not hold any shares in our Bank and which has acquired the aforesaid rights in the capacity of a lender shall not be deemed to be related to the Promoter.

Our Bank and the Book Running Lead Managers are not liable for any amendment or modification or change to applicable laws or regulations, which may occur after the date of this Placement Document. QIBs are advised to make their independent investigations and satisfy themselves that they are eligible to apply. QIBs are advised to ensure that any single application from them does not exceed the investment limits or maximum number of Equity Shares that can be held by them under applicable law or regulation or as specified in this Placement Document. Further, QIBs are required to satisfy themselves that their Bids would not eventually result in triggering a tender offer under the Takeover Code.

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Note: Affiliates or associates of the Book Running Lead Managers who are QIBs may participate in the Issue in compliance with applicable laws.

Application Process

Application Form

QIBs shall only use the serially numbered Application Forms (which are addressed to them) supplied by our Bank and the Book Running Lead Managers in either electronic form or by physical delivery for the purpose of making a Bid (including revision of a Bid) in terms of this Placement Document.

By making a Bid (including the revision thereof) for Equity Shares through Application Forms and pursuant to the terms of this Placement Document, the QIB will be deemed to have made the following representations and warranties and the representations, warranties and agreements made under the sections “Notice to Investors”, “Representations by Investors”, “Selling Restrictions” and “Transfer Restrictions” beginning on pages 2, 4, 189 and 195, respectively:

1. The QIB confirms that it is a QIB in terms of Regulation 2(1)(zd) of the ICDR Regulations and is not excluded under Regulation 86 of the ICDR Regulations, except public sector undertakings, has a valid and existing registration under the applicable laws in India and is eligible to participate in this Issue;

2. The QIB confirms that it is not a Promoter and is not a person related to the Promoter, either directly or indirectly and its Application Form does not directly or indirectly represent the Promoter or Promoter Group or persons related to the Promoter, except for such Eligible QIBs who are Public Sector Enterprises;

3. The QIB confirms that it has no rights under a shareholders’ agreement or voting agreement with the Promoter or persons related to the Promoter, neither veto rights nor rights to appoint any nominee director on the Board other than those acquired in the capacity of a lender which shall not be deemed to be a person related to the Promoter;

4. The QIB acknowledges that it has no right to withdraw its Application after the Issue Closing Date;

5. The QIB confirms that if Equity Shares are Allotted through this Issue, it shall not, for a period of one year from Allotment, sell such Equity Shares otherwise than on the Stock Exchanges;

6. The QIB confirms that the QIB is eligible to Bid and hold Equity Shares so Allotted. The QIB further confirms that the holding of the QIB, does not and shall not, exceed the level permissible as per any applicable regulations applicable to the QIB;

7. The QIB confirms that its Bids would not eventually result in triggering a tender offer under the Takeover Code;

8. The QIB confirms that to the best of its knowledge and belief, the number of Equity Shares Allotted to it pursuant to the Issue, together with other Allottees that belong to the same group or are under common control, shall not exceed 50% of the Issue Size. For the purposes of this representation:

 The expression ‘belong to the same group’ shall derive meaning from the concept of ‘companies under the same group’ as provided in sub-section (11) of Section 372 of the Companies Act, 1956; and  ‘Control’ shall have the same meaning as is assigned to it by Regulation 2(1)(e) of the Takeover Code;

9. The QIBs shall not undertake any trade in the Equity Shares credited to its beneficiary account maintained with the Depository Participant until such time that the final listing and trading approvals for the Equity Shares are issued by the Stock Exchanges.

10. The QIB represents that it is outside the United States and is acquiring the Equity Shares in an offshore transaction in reliance on Regulation S and it has agreed to certain other representations set forth in the Application Form. 11. The QIBs are aware of, acknowledge, represent and agree to the following in respect of their shareholding in our Bank that if their aggregate holding in the paid-up share capital of our Bank, whether direct or indirect, beneficial 182

or otherwise held by them, their relatives, associate enterprises and persons acting in concert exceeds 5.00% of the total paid-up share capital of our Bank or entitles them to exercise 5.00% or more of the total voting rights of our Bank, they shall seek prior approval of the RBI, in accordance with the terms of the Reserve Bank of India (Prior approval for acquisition of shares or voting rights in private sector banks) Directions, 2015.

QIBS MUST PROVIDE THEIR DEPOSITORY ACCOUNT DETAILS, PAN, THEIR DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE APPLICATION FORM. QIBS MUST ENSURE THAT THE NAME GIVEN IN THE APPLICATION FORM IS EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. FOR THIS PURPOSE, ELIGIBLE SUB ACCOUNTS OF AN FII WOULD BE CONSIDERED AS AN INDEPENDENT QIB.

Demographic details such as address and bank account will be obtained from the Depositories as per the Depository Participant account details given above.

The submission of an Application Form by a QIB shall be deemed a valid, binding and irrevocable offer for the QIB to pay the entire Issue Price for the Equity Shares (as indicated by the CAN) and becomes a binding contract on the QIB upon issuance of the CAN by our Bank in favour of the QIB.

Submission of Application Form

All Application Forms must be duly completed with information including the number of Equity Shares applied for. All Application Forms duly completed along with payment and a copy of the PAN card or PAN allotment letter shall be submitted to the Book Running Lead Managers either through electronic form or through physical delivery at the following address:

SBI Capital Markets Limited 202, Maker Tower E, Cuffe Parade Mumbai 400 005 Contact: Sunita Kumari Email: victoria @sbicaps.com Telephone: + 91 22-22178300

Motilal Oswal Investment Advisors Private Limited 12th Floor, Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel S.T. Bus Dept. Prabhadevi Mumbai – 400 025 Contact: Subodh Mallya Email:[email protected] Telephone: +91 22 3078 5300

The Book Running Lead Managers shall not be required to provide any written acknowledgement of receipt of the Application Form.

Permanent Account Number or PAN

Each QIB should mention its PAN allotted under the IT Act in the Application Form. The copy of the PAN card or PAN allotment letter is required to be submitted with the Application Form. Applications without this information will be considered incomplete and are liable to be rejected. QIBs should not submit the GIR number instead of the PAN as the Application Form is liable to be rejected on this ground.

Pricing and Allocation

Build-up of the Book

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The QIBs shall submit their Bids (including the revision of bids) within the Bidding Period to the Book Running Lead Manager(s). Such Bids cannot be withdrawn after the Issue Closing Date. The book shall be maintained by the Book Running Lead Managers.

Price Discovery and Allocation

Our Bank, in consultation with the Book Running Lead Managers, shall determine the Issue Price, which shall be at or above the Floor Price. However, our Bank may offer a discount of not more than 5 % on the Floor Price in terms of Regulation 85 of the ICDR Regulations.

After finalization of the Issue Price, our Bank has updated the Preliminary Placement Document with the Issue details and filed the same with the Stock Exchanges as this Placement Document and uploaded on our Bank’s website.

Method of Allocation

Our Bank shall determine the Allocation in consultation with the Book Running Lead Managers on a discretionary basis and in compliance with Chapter VIII of the ICDR Regulations. Bids received from the QIBs at or above the Issue Price shall be grouped together to determine the total demand.

The Allocation to all such QIBs will be made at the Issue Price. Allocation to Mutual Funds for up to a minimum of 10 % of the Issue Size shall be undertaken subject to valid Bids being received at or above the Issue Price.

THE DECISION OF OUR BANK IN CONSULTATION WITH THE BOOK RUNNING LEAD MANAGERS IN RESPECT OF ALLOCATION SHALL BE FINAL AND BINDING ON ALL QIBS. QIBS MAY NOTE THAT ALLOCATION OF EQUITY SHARES IS AT THE SOLE AND ABSOLUTE DISCRETION OF OUR BANK IN CONSULTATION WITH THE BOOK RUNNING LEAD MANAGERS AND QIBS MAY NOT RECEIVE ANY ALLOCATION EVEN IF THEY HAVE SUBMITTED VALID APPLICATION FORMS AT OR ABOVE THE ISSUE PRICE. NEITHER OUR BANK NOR THE BOOK RUNNING LEAD MANAGERS IS OBLIGED TO ASSIGN ANY REASON FOR ANY NON-ALLOCATION.

CAN

Based on the Application Forms received, our Bank, in consultation with the Book Running Lead Managers, in their sole and absolute discretion, shall decide the successful Bidder to whom the serially numbered CAN shall be sent, pursuant to which the details of the Equity Shares Allocated to them and the details of the amounts payable for Allotment of such Equity Shares in their respective names shall be notified to such successful Bidder. Additionally, a CAN will include details of the relevant Escrow Account into which such payments would need to be made, address where the application money needs to be sent, Pay-In Date as well as the probable designated date, being the date of credit of the Equity Shares to the respective successful Bidder’s account.

The successful Bidders would also be sent a serially numbered Placement Document either in electronic form or by physical delivery along with the serially numbered CAN. The dispatch of the serially numbered Placement Document and the serially numbered CAN to the QIBs shall be deemed a valid, binding and irrevocable contract for the QIB to furnish all details that may be required by Bank and the Book Running Lead Managers and to pay the entire Issue Price for all the Equity Shares Allocated to such QIB.

QIBS ARE ADVISED TO INSTRUCT THEIR DEPOSITORY PARTICIPANT TO ACCEPT THE EQUITY SHARES THAT MAY BE ALLOTTED TO THEM PURSUANT TO THE ISSUE.

Bank Account for Payment of Application Money

Our Bank has opened the “United Bank of India – QIP Escrow Account” with Fort Branch of United Bank of India located at Mumbai in terms of the arrangement among our Bank, the Book Running Lead Managers and Fort Branch of United Bank of the Escrow Bank. The QIB will be required to deposit the entire amount payable for the Equity Shares Allocated to it by the Pay-In Date as mentioned in, and in accordance with, the respective CAN.

Payments are to be made only through electronic fund transfer. 184

Note: Payments through cheques are liable to be rejected.

If the payment is not made favoring “United Bank of India – QIP Escrow Account” within the time stipulated in the CAN, the Application Form and the CAN of the QIB are liable to be cancelled. Pending Allotment, our Bank undertakes to utilise the amount deposited in “United Bank of India – QIP Escrow Account” only for the purposes of (i) adjustment against Allotment of Equity Shares in the Issue; or (ii) repayment of application money if our Bank is not able to Allot Equity Shares in the Issue.

In case of cancellations or default by the QIBs, our Bank, the Book Running Lead Managers has the right to reallocate the Equity Shares at the Issue Price among existing or new QIBs at their sole and absolute discretion.

Designated Date and Allotment of Equity Shares

1. The Equity Shares will not be Allotted unless the QIBs pay the Issue Price to the Escrow Account as stated above.

2. Subject to the satisfaction of the terms and conditions of the Placement Agreement, our Bank will ensure that the Allotment of the Equity Shares is completed by the Designated Date provided in the CAN for the QIBs who have paid the aggregate subscription amounts as stipulated in the CAN.

3. In accordance with the ICDR Regulations, Equity Shares will be issued and Allotment shall be made only in the dematerialised form to the Allottees. Allottees will have the option to re-materialise the Equity Shares, if they so desire, as per the provisions of the Depositories Act.

4. Our Bank reserves the right to cancel this Issue at any time up to Allotment without assigning any reasons whatsoever.

5. Post receipt of the listing approval of the Stock Exchanges, the Issuer shall credit the Equity Shares into the Depository Participant account of the QIBs.

6. Following the Allotment and credit of Equity Shares into the QIBs Depository Participant account, our Bank will apply for final listing and trading approval from the Stock Exchanges. In the case of QIBs who have been Allotted more than five % of the Equity Shares in the Issue, our Bank shall disclose the name and the number of the Equity Shares Allotted to such QIB to the Stock Exchanges and the Stock Exchanges will make the same available on their website. The Escrow Bank shall release the monies lying to the credit of the Escrow Bank Account to our Bank after the receipt of the final listing and trading approval from the Stock Exchanges.

7. In the event that we are unable to issue and Allot the Equity Shares offered in the Issue or on cancellation of the Issue, within 60 days from the date of receipt of application money, we shall repay the application money within15 days from expiry of 60 days, failing which we shall repay that money with interest at the rate of 12% per annum from expiry of the sixtieth day. The application money to be refunded by us shall be refunded to the same bank account from which application money was remitted by the Eligible QIBs.

Other Instructions

Right to Reject Applications

Our Bank, in consultation with the Book Running Lead Managers, may reject Bids, in part or in full, without assigning any reason whatsoever. The decision of our Bank and the Book Running Lead Managers in relation to the rejection of Bids shall be final and binding.

Equity Shares in Dematerialized form with NSDL or CDSL

1. The Allotment of the Equity Shares in this Issue shall be only in dematerialised form, (i.e., not in the form of physical certificates but be fungible and be represented by the statement issued through the electronic mode). 185

2. A QIB applying for Equity Shares must have at least one beneficiary account with a Depository Participant of either NSDL or CDSL prior to making the Bid.

3. Allotment to a successful QIB will be credited in electronic form directly to the beneficiary account (with the Depository Participant) of the QIB.

4. Equity Shares in electronic form can be traded only on the stock exchanges having electronic connectivity with NSDL and CDSL. The Stock Exchange have electronic connectivity with NSDL and CDSL. The trading of the Equity Shares to be issued pursuant to the Issue would be in dematerialised form only for all QIBs in the demat segment of the respective Stock Exchanges.

5. Our Bank will not be responsible or liable for the delay in the credit of the Equity Shares due to errors in the Application Forms or on part of the QIBs.

Release of funds to our Bank

The Escrow Bank shall not release the monies lying to the credit of the Escrow Account till such time, that it receives an instruction in pursuance to the Escrow Agreement, along with the listing and trading approval of the Stock Exchanges for the Equity Shares offered in the Issue.

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PLACEMENT AND LOCK UP

Placement Agreement

The Book Running Lead Managers have entered into a placement agreement with us (the “Placement Agreement”), pursuant to which the Book Running Lead Managers have agreed to use best efforts, to place the Equity Shares with QIBs, pursuant to chapter VIII of the ICDR Regulations and our Bank has agreed to Allot the Equity Shares to such QIBs as may be determined in consultation with the Book Running Lead Managers, pursuant to the receipt of Application Forms and application monies from such QIBs.

This Placement Agreement contains customary representations and warranties, as well as indemnities from us and is subject to termination in accordance with the terms contained therein.

Applications shall be made to list the Equity Shares issued pursuant to the Issue and admit them to trading on the Stock Exchanges. No assurance can be given as to the liquidity or sustainability of the trading market for such Equity Shares, the ability of holders of the Equity Shares to sell their Equity Shares or the price at which holders of the Equity Shares will be able to sell their Equity Shares.

This Placement Document has not been, and will not be, registered as a prospectus with the Registrar of Companies and, no Equity Shares will be offered in India or overseas to the public or any members of the public in India or any other class of investors, other than QIBs. No assurance can be given on liquidity or sustainability of trading market for the Equity Shares (including the Equity Shares) post the Issue.

The Equity Shares have not been and will not be registered under the U.S. Securities Act or any state securities laws in the United States and may not be offered or sold within the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of U.S. Securities Act and applicable state securities law. Accordingly, the Equity Shares are offered and sold outside the United States in offshore transactions in reliance on Regulation S under the U.S. Securities Act and the applicable laws of the jurisdictions where those offers and sales are made. The Equity Shares are transferable only in accordance with the restrictions described under the sections “Selling Restrictions” and “Transfer Restrictions” on pages 189 and 195 respectively.

In connection with the Issue, the Book Running Lead Managers (or their affiliates) may, for their own accounts, enter into asset swaps, credit derivatives or other derivative transactions relating to the Equity Shares at the same time as the offer and sale of the Equity Shares, or in secondary market transactions. As a result of such transactions, the Book Running Lead Managers may hold long or short positions in such Equity Shares. These transactions may comprise a substantial portion of the Issue and no specific disclosure will be made of such positions. Affiliates of the Book Running Lead Managers may purchase Equity Shares and be allocated Equity Shares for proprietary purposes and not with a view to distribution or in connection with the issuance of P-Notes. See the section titled “Representations by Investors - Offshore Derivative Instruments”.

From time to time, the Book Running Lead Managers and certain of their affiliates have provided and continue to provide commercial and investment banking services, particularly acting as an underwriter or Book Running Lead Managers, to us or our affiliates for which they have received and may in the future receive compensation.

Lock up

The Bank undertakes that it will not for a period commencing from the date of execution of the Placement Agreement and ending 90 days from the date of Allotment, without the prior written consent of the Book Running Lead Managers, directly or indirectly:

a. purchase, offer, issue, lend, sell, grant any option or contract to purchase, purchase any option or contract to offer, issue, lend, sell, grant any option, right or warrant to purchase, any Equity Shares or any securities convertible into or exercisable for Equity Shares (including, without limitation, securities convertible into or exercisable or exchangeable for Equity Shares which may be deemed to be beneficially owned by the undersigned) or file any registration statement under the U.S. Securities Act, with respect to any of the foregoing, or

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b. enter into any swap or other agreement or any transaction that transfers, in whole or in part, directly or indirectly, any of the economic consequences associated with the ownership of any of the Equity Shares or any securities convertible into or exercisable or exchangeable for Equity Shares (regardless of whether any of the transactions described in clause (a) or (b) is to be settled by the delivery of Equity Shares or such other securities, in cash or otherwise), or c. deposit Equity Shares with any other depository in connection with a depository receipt facility, or d. enter into any transaction (including a transaction involving derivatives) having an economic effect similar to that of a sale or deposit of the Equity Shares in any depository receipt facility; or e. publicly announce any intention to enter into any transaction falling within (a) to (d) above or enter into any transaction falling within (a) to (d) above.

Provided, however, that the foregoing restrictions do not apply to (i) the issuance of any Issue Shares, and (ii) any issue or offer of Equity Shares by our Bank to the extent issue or offer is (a) required by Indian law and/or (b) undertaken pursuant the instructions order or such other guidelines as maybe issued by the RBI, Central Government of India or such other authority acting on its behalf.

Further, in accordance with Regulation 88 of the ICDR Regulations, our Bank shall not undertake a subsequent QIP until the expiry of six months from the date of the Issue.

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SELLING RESTRICTIONS

The distribution of this Placement Document and the offer, sale or delivery of the Equity Shares is restricted by law in certain jurisdictions. Persons who come into possession of this Placement Document are advised to take legal advice with regard to any restrictions that may be applicable to them and to observe such restrictions. This Placement Document may not be used for the purpose of an offer or sale in any circumstances in which such offer or sale is not authorized or permitted.

General

No action has been taken or will be taken in any jurisdiction by our Bank or the Lead Managers that would permit a public offering of the Equity Shares or the possession, circulation or distribution of this Placement Document or any other material relating to our Bank or the Equity Shares in any jurisdiction where action for such purpose is required. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, and neither this Placement Document nor any offering materials or advertisements in connection with the Equity Shares may be distributed or published in or from any country or jurisdiction except under circumstances that will result in compliance with any applicable rules and regulations of any such country or jurisdiction. The Issue will be made in compliance with the applicable ICDR Regulations. Each purchaser of the Equity Shares in this Issue will be deemed to have made acknowledgments and agreements as described under “Notice to Investors – Representation by Investors”, “Distribution and Solicitation Restrictions” and “Transfer Restrictions”.

India

This Placement Document may not be distributed, directly or indirectly, in India or to residents of India and any Equity Shares may not be offered or sold, directly or indirectly, in India to, or for the account or benefit of, any resident of India except as permitted by applicable Indian laws and regulations, under which an offer is strictly on a private and confidential basis and is limited to eligible QIBs. This Placement Document is neither a public issue nor a prospectus under the Companies Act or an advertisement and should not be circulated to any person other than to whom the offer is made.

Australia

This Placement Document is not a disclosure document under Chapter 6D of the Corporations Act 2001 (the “Australian Corporations Act”), and has not been lodged with the Australian Securities & Investments Commission and does not purport to include the information required of a disclosure document under the Australian Corporations Act. (i) The offer of the Equity Shares under this Placement Document is only made to persons to whom it is lawful to offer the Equity Shares without disclosure to investors under Chapter 6D of the Australian Corporations Act under one or more exemptions set out in Section 708 of the Australian Corporations Act; (ii) this Placement Document is made available in Australia to persons as set forth in clause (i) above; and (iii) by accepting this offer, the offeree represents that the offeree is such a person as set forth in clause (ii) above and agrees not to sell or offer for sale within Australia any Equity Share sold to the offeree within 12 months after their issue or transfer to the offeree under this Placement Document.

Cayman Islands

No offer or invitation to purchase Equity Shares may be made to the public in the Cayman Islands.

Dubai International Financial Centre

This Placement Document relates to an exempt offer (an “Exempt Offer”) in accordance with the Offered Securities Rules of the Dubai Financial Services Authority (the “DFSA”). This Placement Document is intended for distribution only to persons of a type specified in those rules. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this Placement Document nor taken steps to verify the information set out in it, and has no responsibility for it. The Equity Shares to which this Placement Document relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the Equity Shares offered in the Issue should conduct their own due diligence on the Equity Shares. If you do not understand the contents of this Placement Document, you should 189 consult an authorised financial adviser. For the avoidance of doubt, the Equity Shares are not interests in a ‘‘fund’’ or a ‘‘collective investment scheme’’ within the meaning of either the Collective Investment Law (DIFC Law No. 2 of 2010) or the Collective Investment Rules Module of the Dubai Financial Services Authority Rulebook.

European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each a “Relevant Member State”), an offer may not be made to the public in that Relevant Member State prior to the publication of a prospectus in relation to the Equity Shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”), make an offer of Equity Shares to the public in that Relevant Member State at any time:

 to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

 to any legal entity which has two or more of (i) an average of at least 250 employees during the last Financial Year, (ii) a total balance sheet of more than €50,000,000, as show in its last annual consolidated accounts;

 to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the Book Running Lead Managers for any such offer; or

 in any other circumstances which do not require the publication of a prospectus pursuant to Article 3(2) of the Prospectus Directive. provided that no such offer of Equity Shares shall result in a requirement for the publication by our Bank or the Book Running Lead Managers of a prospectus pursuant to Article 3 of the Prospectus Directive. For the purposes of this provision, the expression an “offer of Equity Shares to the public” in relation to any of the Equity Shares in any Relevant Member States means the communication in any form and by any means, of sufficient information on the terms of the offer and the Equity Shares to be offered so as to enable an investor to decide to purchase or subscribe for the Equity Shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State.

Hong Kong

No Equity Shares have been offered or sold, and no Equity Shares may be offered or sold, in Hong Kong by means of any document, other than to persons whose ordinary business is to buy or sell shares or debentures, whether as principal agent; or to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance; or in other circumstances which do not result in the document being a “prospectus” as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32) of Hong Kong. No document, invitation or advertisement relating to the Equity Shares has been issued or may be issued, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted under the securities laws of Hong Kong) other than with respect to the Equity Shares which are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance. Japan

The offering of the Equity Shares has not been and will not be registered under the Financial Instruments and Exchange Law of Japan, as amended (the “Financial Instruments and Exchange Law”). No Equity Shares have been offered or sold, and will not be offered or sold, directly or in directly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan) or to others for reoffering or re-sale, directly or indirectly in Japan or to, or for the benefit of,

190 any resident of Japan except pursuant to an exemption from the registration requirements of the Financial Instruments and Exchange Law and otherwise in compliance with the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial ordinances of Japan. Korea

The Equity Shares have not been registered under the Korean Securities and Exchange Law, and the Equity Shares acquired in connection with the distribution contemplated hereby may not be offered or sold, directly or indirectly, in Korea or to or for the account of any resident thereof, except as otherwise permitted by applicable Korean laws and regulations, including, without limitation, the Korean Securities and Exchange Law and the Foreign Exchange Transaction Laws.

Kuwait

The Equity Shares have not been authorized or licensed for offering, marketing or sale in the State of Kuwait. The distribution of this Placement Document and the offering and sale of the Equity Shares in the State of Kuwait is restricted by law unless a license is obtained from the Kuwaiti Ministry of Commerce and Industry in accordance with Law 31 of 1990.

Malaysia

No approval of the Securities Commission of Malaysia has been or will be obtained in connection with the offer and sale of the Equity Shares in Malaysia nor will any prospectus or other offering material or document in connection with the offer and sale of the Equity Shares be registered with the Securities Commission of Malaysia. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, nor may any document or other material in connection therewith be distributed in Malaysia.

Mauritius

Our shares may not be offered, distributed or sold, directly or indirectly, in Mauritius or to any resident of Mauritius, except as permitted by applicable Mauritius securities law. No offer or distribution of securities will be made to the public in Mauritius.

New Zealand

This Placement Document is not a prospectus. It has not been prepared or registered in accordance with the Securities Act 1978 of New Zealand (the “New Zealand Securities Act”). This Placement Document is being distributed in New Zealand only to persons whose principal business is the investment of money or who, in the course of and for the purposes of their business, habitually invest money, within the meaning of section 3(2)(a)(ii) of the New Zealand Securities Act (“Habitual Investors”). By accepting this Placement Document, each investor represents and warrants that if they receive this Placement Document in New Zealand they are a Habitual Investor and they will not disclose this Placement Document to any person who is not also a Habitual Investor.

Oman

By receiving this Placement Document, the person or entity to whom it has been issued understands, acknowledges and agrees that this Placement Document has not been approved by the Capital Market Authority of Oman (the “CMA”) or any other regulatory body or authority in the Sultanate of Oman (“Oman”), nor have the Book Running Lead Managers or any placement agent acting on their behalf received authorisation, licensing or approval from the CMA or any other regulatory authority in Oman, to market, offer, sell, or distribute interests in the Equity Shares within Oman.

No marketing, offering, selling or distribution of any interests in the Equity Shares has been or will be made from within Oman and no subscription for any interests in the Equity Shares may or will be consummated within Oman. Neither the Book Running Lead Managers nor any placement agent acting on their behalf is a company licensed by the CMA to provide investment advisory, brokerage, or portfolio management services in Oman, nor a bank licensed by the Central Bank of Oman to provide investment banking services in Oman. Neither the Book Running Lead 191

Managers nor any placement agent acting on their behalf advise persons or entities resident or based in Oman as to the appropriateness of investing in or purchasing or selling securities or other financial products.

Nothing contained in this Placement Document is intended to constitute Omani investment, legal, tax, accounting or other professional advice. This Placement Document is for your information only, and nothing herein is intended to endorse or recommend a particular course of action. You should consult with an appropriate professional for specific advice on the basis of your situation.

Qatar

The Equity Shares have not been offered, sold or delivered, and will not be offered, sold or delivered at any time, directly or indirectly, in the state of Qatar in a manner that would constitute a public offering. This Placement Document has not been reviewed or registered with Qatari Government Authorities, whether under Law No. 25 (2002) concerning investment funds, Central Bank resolution No. 15 (1997), as amended, or any associated regulations. Therefore, this Placement Document is strictly private and confidential, and is being issued to a limited number of sophisticated investors, and may not be reproduced or used for any other purposes, nor provided to any person other than recipient thereof.

Saudi Arabia

This Placement Document may not be distributed in the Kingdom of Saudi Arabia except to such persons as are permitted under the Offers of Securities Regulations issued by the Capital Market Authority in the Kingdom of Saudi Arabia.

The Capital Market Authority does not make any representation as to the accuracy or completeness of this Placement Document, and expressly disclaims any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this Placement Document. Prospective purchasers of the Equity Shares offered hereby should conduct their own due diligence on the accuracy of the information relating to the Equity Shares. If you do not understand the contents of this Placement Document you should consult an authorised financial adviser.

Singapore

The Book Running Lead Managers have acknowledged that this Placement Document has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, the Book Running Lead Managers have represented and agreed that it has not offered or sold any Equity Shares issued pursuant to the Issue or caused such Equity Shares to be made the subject of an invitation for subscription or purchase and will not offer or sell such Equity Shares issued pursuant to the Issue or cause such Equity Shares to be made the subject of an invitation for subscription or purchase, and have not circulated or distributed, nor will they circulate or distribute, this Placement Document or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of such Equity Shares issued pursuant to the Issue, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (“SFA”), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the Equity Shares are subscribed or purchased under Section 275 by a relevant person which is:

 a corporation (which is not an accredited investor) (as defined in Section 4A of the SFA) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or

 a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor,

192 securities (as defined in Section 239(1) of the SFA) of that corporation to the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within 6 months after that corporation or that trust has acquired the Equity Shares pursuant to an offer made under Section 275 except:

 to an institutional investor under Section 274 of the SFA or to a relevant person defined in Section 275(2) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;

 where no consideration is or will be given for the transfer;

 where the transfer is by operation of law; or

 as specified in Section 276(7) of the SFA.

United Arab Emirates (excluding the Dubai International Financial Centre)

This Placement Document is not intended to constitute an offer, sale or delivery of shares or other securities under the laws of the United Arab Emirates (the “UAE”). The Equity Shares have not been and will not be registered under Federal Law No. 4 of 2000 Concerning the Emirates Securities and Commodities Authority and the Emirates Security and Commodity Exchange, or with the UAE Central Bank, the Dubai Financial Market, the Abu Dhabi Securities market or with any other UAE exchange. the Issue, the Equity Shares and interests therein do not constitute a public offer of securities in the UAE in accordance with the Commercial Companies Law, Federal Law No. 8 of 1984 (as amended) or otherwise. This Placement Document is strictly private and confidential and is being distributed to a limited number of investors and must not be provided to any person other than the original recipient, and may not be reproduced or used for any other purpose. The interests in the Equity Shares may not be offered or sold directly or indirectly to the public in the UAE.

By receiving this Placement Document, the person or entity to whom this Placement Document has been issued understands, acknowledges and agrees that the Equity Shares have not been and will not be offered, sold or publicly promoted or advertised in the Dubai International Financial Centre other than in compliance with laws applicable in the Dubai International Financial Centre, governing the issue, offering or sale of securities. The Dubai Financial Services Authority has not approved this Placement Document nor taken steps to verify the information set out in it, and has no responsibility for it.

United Kingdom

Each Book Running Lead Manager has represented and agreed that it:

 is a person who is a qualified investor within the meaning of Section 86(7) of the Financial Services and Markets Act 2000 (the “FSMA”), being an investor whose ordinary activities involve it in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of its business;

 has not offered or sold and will not offer or sell the Equity Shares other than to persons who are qualified investors within the meaning of Section 86(7) of the FSMA or who it reasonably expects will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses where the issue of the Equity Shares would otherwise constitute a contravention of Section 19 of the FSMA by us;

 has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the Equity Shares in circumstances in which Section 21(1) of the FSMA does not apply to it; and

193 has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Equity Shares in, from or otherwise involving the United Kingdom. United States of America

The Equity Shares offered in the Issue have not been and will not be registered under the U.S. Securities Act or any state securities laws in the United States and may not be offered, sold or delivered in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and in accordance with any applicable state securities laws. The Equity Shares are being offered and sold in the Issue only outside the United States in accordance with Regulation S in accordance with Regulation S and the applicable laws of the jurisdictions where those offers and sales are made. To help ensure that the offer and sale of the Equity Shares in the Issue was made in compliance with Regulation S, each purchaser of Equity Shares in the Issue will be deemed to have made the representations, warranties, acknowledgements and undertakings set forth in “Transfer Restrictions” beginning on page 195.

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TRANSFER RESTRICTIONS

Allottees are not permitted to sell the Equity Shares for a period of one year from the date of Allotment except through the Stock Exchanges. In addition to the above, allotments made to QIBs, including FVCIs, VCFs and AIFs in the Issue, may be subject to lock-in requirements, if any, under the rules and regulations that are applicable to them. Accordingly, purchasers are advised to consult their own legal counsel prior to making any offer, re-sale, pledge or transfer of the Equity Shares.

Due to the following restrictions, investors are advised to consult legal counsel prior to making any resale, pledge or transfer of the Equity Shares.

The Equity Shares have not been and will not be registered under the U.S. Securities Act and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and applicable United States state securities laws. The Equity Shares are being offered and sold only outside the United States in offshore transactions in reliance on Regulation S, in each case in compliance with the applicable laws of the jurisdictions where those offers and sales are made.

If you purchase the Equity Shares in this Issue, by accepting delivery of this Placement Document, submitting a bid to purchase the Equity Shares and accepting delivery of the Equity Shares, you will be deemed to have represented to and agreed with our Bank and the Book Running Lead Managers as follows:

 you have received a copy of the Placement Document and such other information as you deem necessary to make an informed decision and that you are not relying on any other information or the representation concerning the Bank or the Equity Shares and neither the Bank nor any other person responsible for this document or any part of it or the Book Running Lead Managers will have any liability for any such other information or representation;

 you are authorised to consummate the purchase of the Equity Shares in compliance with all applicable laws and regulations;

 you will comply with all laws, regulations and restrictions (including the selling restrictions contained in this Placement Document) which may be applicable in your jurisdiction and you have obtained or will obtain any consent, approval or authorization required for you to purchase and accept delivery of the Equity Shares, and you acknowledge and agree that none of our Bank, the Book Running Lead Managers or any of their respective affiliates shall have any responsibility in this regard;

 you acknowledge (or if you are a broker-dealer acting on behalf of a customer, your customer has confirmed to you that such customer acknowledges) that such Equity Shares have not been and will not be registered under the U.S. Securities Act, or with any securities regulatory authority of any state of the United States, and are subject to restrictions on transfer;

 you and the person, if any, for whose account or benefit you are acquiring the Equity Shares, were located outside the United States at the time the buy order for the Equity Shares was originated and continue to be located outside the United States and have not purchased the Equity Shares for the account or benefit of any person in the United States or entered into any arrangement for the transfer of the Equity Shares or any economic interest therein to any person in the United States;

 you are not an affiliate (as defined in Rule 405 of the U.S. Securities Act) of our Bank or a person acting on behalf of such affiliate; and you are not in the business of buying and selling securities or, if you are in such business, you did not acquire the Equity Shares from our Bank or an affiliate (as defined in Rule 405 of the U.S. Securities Act) thereof in the initial distribution of the Equity Shares;

 you certify that either (A) you are, or at the time the Equity Shares are purchased will be, the beneficial owner of the Equity Shares and are located outside the United States (within the meaning of Regulation S) or (B) you are a broker-dealer acting on behalf of your customer and your customer has confirmed to you that (i) such

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customer is, or at the time the Equity Shares are purchased will be, the beneficial owner of the Equity Shares, and (ii) such customer is located outside the United States (within the meaning of Regulation S);

 you are aware of the restrictions on the offer and sale of the Equity Shares pursuant to Regulation S described in this Placement Document and that neither the BSE nor the NSE is a “designated offshore securities market” within the meaning of Regulation S of the U.S. Securities Act;

 the Equity Shares have not been offered to you by means of any “directed selling efforts” as defined in Regulation S; and

 you acknowledge that our Bank, the Book Running Lead Managers and their respective affiliates (as defined in Rule 405 of the U.S. Securities Act), and others will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements and agrees that, if any of such acknowledgements, representations and agreements deemed to have been made by virtue of its purchase of the Equity Shares are no longer accurate, you will promptly notify our Bank and the Book Running Lead Managers, and if you are acquiring any of the Equity Shares as a fiduciary or agent for one or more accounts, you represent that you have sole investment discretion with respect to each such account and that you have full power to make the foregoing acknowledgements, representations and agreements on behalf of such accounts.  you acknowledge that the Equity Shares have not been and will not be registered under the U.S. Securities Act or the securities law of any state of the United States and warrant to our Bank, the BRLMs and its respective affiliates that it will not offer, sell, pledge or otherwise transfer the Equity Shares except in an offshore transaction complying with Rule 903 or Rule 904 of Regulation S or pursuant to any other available exemption from registration under the U.S. Securities Act and in accordance with all applicable securities laws of the states of the United States and any other jurisdiction, including India.

 you represent and warrant to our Bank, the Book Running Lead Managers and their respective affiliates that if it acquired any of the Equity Shares as fiduciary or agent for one or more investor accounts, it has sole investment discretion with respect to each such account and that it has full power to make the foregoing acknowledgments, representations and agreements on behalf of each such account.

 the Bank, the Book Running Lead Managers, their respective affiliates and others will rely upon the truth and accuracy of your representations, warranties, acknowledgements and undertakings set out in this document, each of which is given to (a) the Book Running Lead Manager on their own behalf and on behalf of the Bank, and (b) to the Bank, and each of which is irrevocable and, if any of such representations, warranties, acknowledgements or undertakings deemed to have been made by virtue of your purchase of the Equity Shares are no longer accurate, you will promptly notify the Bank.

 you and any accounts for which you are subscribing to the Equity Shares (i) are each able to bear the economic risk of the investment in the Equity Shares, (ii) will not look to the Bank or the Book Running Lead Managers or their respective affiliates for all or part of any such loss or losses that may be suffered, (iii) are able to sustain a complete loss on the investment in the Equity Shares, (iv) have no need for liquidity with respect to the investment in the Equity Shares, and (v) have no reason to anticipate any change in its or their circumstances, financial or otherwise, which may cause or require any sale or distribution by it or them of all or any part of the Equity Shares. You acknowledge that an investment in the Equity Shares involves a high degree of risk and that the Equity Shares are, therefore, a speculative investment. You are seeking to subscribe to the Equity Shares in this Issue for your own investment and not with a view to distribution;

 you have been provided access to this Placement Document which you have read in its entirety;

 you are aware of the restrictions of the offer, sale and resale of the Equity Shares pursuant to Regulation S;

 you agree to indemnify and hold the Bank and the Book Running Lead Managers and their respective affiliates harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of these representations and warranties. You will not hold any of the Bank

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or the Book Running Lead Managers and their respective affiliates liable with respect to its investment in the Equity Shares. You agree that the indemnity set forth in this paragraph shall survive the resale of the Equity Shares; and

 Any resale or other transfer, or attempted resale or other transfer, of the Equity Shares made other than in compliance with the above-stated restrictions will not be recognized by our Bank.

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THE SECURITIES MARKET OF INDIA

The information in this section has been extracted from documents available on the website of SEBI and the Stock Exchange and has not been prepared or independently verified by our Bank or the BRLMs or any of its respective affiliates or advisors.

The Indian Securities Market

India has a long history of organised securities trading. In 1875, the first stock exchange was established in Mumbai. The BSE and the NSE are the significant stock exchanges in terms of the number of listed companies, market capitalisation and trading activity.

Indian Stock Exchanges

Indian stock exchanges are regulated primarily by SEBI, as well as by the Government acting through the Ministry of Finance, Capital Markets Division, under the Securities Contracts (Regulation) Act, 1956 (the “SCRA”) and the Securities Contracts (Regulation) Rules, 1957 (the “SCRR”). On June 20, 2012, SEBI, in exercise of its powers under the SCRA and the Securities and Exchange Board of India Act, 1992, as amended from time to time (the “SEBI Act”), notified the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012 (the “SCR (SECC) Rules”), which regulate inter alia the recognition, ownership and internal governance of stock exchanges and clearing corporations in India together with providing for minimum capitalisation requirements for stock exchanges. The SCRA, the SCRR and the SCR (SECC) Rules along with various rules, bye-laws and regulations of the respective stock exchanges, regulate the recognition of stock exchanges, the qualifications for membership thereof and the manner, in which contracts are entered into, settled and enforced between members of the stock exchanges.

The SEBI Act empowers SEBI to regulate the Indian securities markets, including stock exchanges and intermediaries in the capital markets, promote and monitor self-regulatory organisations and prohibit fraudulent and unfair trade practices. Regulations and guidelines concerning minimum disclosure requirements by public companies, investor protection, insider trading, substantial acquisitions of shares and takeover of companies, buy-backs of securities, employee stock option schemes, stockbrokers, merchant bankers, underwriters, mutual funds, FIIs, FPIs, credit rating agencies and other capital market participants have been notified by the relevant regulatory authority.

Listing of Securities

The listing of securities on a recognised Indian stock exchange is regulated by the applicable Indian laws including the Companies Act, the SCRA, the SCRR, the SEBI Act and various guidelines and regulations issued by SEBI and the Listing Regulations. The SCRA empowers the governing body of each recognised stock exchange to suspend trading of or withdraw admission to dealings in a listed security for breach of or noncompliance with any conditions or breach of a company’s obligations under the Listing Regulations or for any reason, subject to the issuer receiving prior written notice of the intent of the exchange and upon granting of a hearing in the matter. SEBI also has the power to amend the Listing Regulations and bye-laws of the stock exchanges in India, to overrule a stock exchange’s governing body and withdraw recognition of a recognized stock exchange.

All listed companies are required to ensure a minimum public shareholding at 25%. Further, where the public shareholding in a listed company falls below 25% at any time, such company is required to bring the public shareholding to 25% within a maximum period of 12 months from the date of such fall. Consequently, a listed company may be delisted from the stock exchanges for not complying with the above-mentioned requirement. As on December 31, 2016, the public shareholding in our Bank is 11.28% and our Bank has received an exemption from SEBI in respect of compliance with minimum public shareholding as specified under the SCRR and Listing Regulations for present issue vide their letter dated April 5, 2016.

Delisting

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SEBI has notified the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 in relation to the voluntary and compulsory delisting of equity shares from the stock exchanges which were significantly modified in 2015. In addition, certain amendments to the SCRR have also been notified in relation to delisting.

Disclosures under SEBI Listing Regulations

Public limited companies are required under SEBI Listing Regulations to prepare and circulate to their shareholders audited annual accounts which comply with the disclosure requirements and regulations governing their manner of presentation and which include provisions relating to corporate governance, related party transactions and management’s discussion and analysis as required under the SEBI Listing Regulations. In addition, a listed company is subject to continuing disclosure requirements pursuant to the terms of the SEBI Listing Regulations.

Index-Based Market-Wide Circuit Breaker System

In order to restrict abnormal price volatility in any particular stock, SEBI has instructed stock exchanges to apply daily circuit breakers which do not allow transactions beyond a certain level of price volatility. The index based market- wide circuit breaker system (equity and equity derivatives) applies at three stages of the index movement, at 10%, 15% and 20%. These circuit breakers, when triggered, bring about a co-ordinated trading halt in all equity and equity derivative markets nationwide. The market-wide circuit breakers are triggered by movement of either the SENSEX of the BSE or the S&P CNX NIFTY of the NSE, whichever is breached earlier.

In addition to the market-wide index-based circuit breakers, there are currently in place individual scrip-wise price bands of up to 20% movements either up or down. However, no price bands are applicable on scrips on which derivative products are available or scrips included in indices on which derivative products are available.

The stock exchanges in India can also exercise the power to suspend trading during periods of market volatility. Margin requirements are imposed by stock exchanges that are required to be paid by the stockbrokers.

BSE

Established in 1875, the BSE is the oldest stock exchange in India. In 1956, it became the first stock exchange in India to obtain permanent recognition from the Government under the SCRA. It has evolved over the years into its present status as one of the premier stock exchanges of India. Pursuant to the BSE (Corporatisation and Demutualisation) Scheme 2005 of the SEBI, with effect from August 19, 2005, the BSE was incorporated and is now a company under the Companies Act.

NSE

The NSE was established by financial institutions and banks to provide nationwide online, satellite-linked, screen- based trading facilities with market-makers and electronic clearing and settlement for securities including government securities, debentures, public sector bonds and units. The NSE was recognised as a stock exchange under the SCRA in April 1993 and commenced operations in the wholesale debt market segment in June 1994. The capital market (equities) segment commenced operations in November 1994 and operations in the derivatives segment commenced in June 2000.

Internet-based Securities Trading and Services

Internet trading takes place through order routing systems, which route client orders to exchange trading systems for execution. Stockbrokers interested in providing this service are required to apply for permission to the relevant stock exchange and also have to comply with certain minimum conditions stipulated under applicable law. The NSE became the first exchange to grant approval to its members for providing internet based trading services. Internet trading is possible on both the “equities” as well as the “derivatives” segments of the NSE. The NSE became the first exchange to grant approval to its members for providing internet-based trading services. Internet trading is possible on both the “equities” and the “derivatives” segments of the NSE.

Trading Hours

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Trading on both the NSE and the BSE occurs from Monday to Friday, between 9:15 a.m. and 3:30 p.m. IST (excluding the 15 minutes pre-open session from 9:00 a.m. to 9:15 a.m.). The BSE and the NSE are closed on public holidays. The recognised stock exchanges have been permitted to set their own trading hours (in the cash and derivatives segments) subject to the condition that (i) the trading hours are between 9.00 a.m. and 5.00 p.m.; and (ii) the stock exchange has in place a risk management system and infrastructure commensurate to the trading hours.

Trading Procedure

In order to facilitate smooth transactions, the BSE replaced its open outcry system with BSE On-line Trading (or “BOLT”) facility in 1995. This totally automated screen based trading in securities was put into practice nationwide. This has enhanced transparency in dealings and has assisted considerably in smoothening settlement cycles and improving efficiency in back-office work.

The NSE has introduced a fully automated trading system called National Exchange for Automated Trading (or “NEAT”), which operates on strict time/price priority besides enabling efficient trade. NEAT has provided depth in the market by enabling large number of members all over India to trade simultaneously, narrowing the spreads.

Takeover Code

Disclosure and mandatory bid obligations for listed Indian companies under Indian law are governed by the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, as amended (“Takeover Code”), which provides specific regulations in relation to substantial acquisition of shares and takeover. The Takeover Code came into effect on October 22, 2011 and replaced the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (“Takeover Code 1997”). Once the equity shares of a company are listed on a stock exchange in India, the provisions of the Takeover Code will apply to any acquisition of the company’s shares/voting rights/control. The Takeover Code prescribe certain thresholds or trigger points in the shareholding a person or entity has in the listed Indian company, which give rise to certain obligations on part of the acquirer. Acquisitions up to a certain threshold prescribed under the Takeover Code mandate specific disclosure requirements, while acquisitions crossing particular thresholds may result in the acquirer having to make an open offer of the shares of the target company. The Takeover Code also provides for the possibility of indirect acquisitions, imposing specific obligations on the acquirer in case of such indirect acquisition.

The key changes from the Takeover Code 1997 under the Takeover Code include:

 the trigger for making a public offer upon acquisition of shares or voting rights has been increased from 15% to 25%;  every public offer has to be made for at least 26% of all the shares held by other shareholders;  creeping acquisition of up to 5% is permitted up to a limit of 75% of the shares or voting rights of a company;  acquisition of control in a target company triggers the requirement to make a public offer regardless of the level of shareholding and the acquisition of shares; and  if the indirect acquisition of a target company is a predominant part of the business or entity being acquired, it would be treated as a direct acquisition.

Insider Trading Regulations

The SEBI (Prohibition of Insider Trading) Regulations, 2015 have been notified by SEBI to prohibit and penalise insider trading in India. An “insider” is defined to include any person who has received or has access to unpublished price sensitive information (“UPSI”) or a “Connected Person”. A “Connected Person” includes, inter alia, any person who is or has directly or indirectly, been associated with the company in any capacity whether contractual, fiduciary or employment or has any professional or business relationship with the company whether permanent or temporary, during the six months prior to the concerned act which would allow or reasonably expect to allow access, directly or indirectly, to UPSI.

The Insider Trading Regulations also provide disclosure obligations for promoters, employees and directors, with respect to their shareholding in our Bank, and the changes therein. An insider is, inter alia, prohibited from trading in securities of a listed or proposed to be listed company when in possession of UPSI and to provide access to any person

200 including other insiders to the above referred UPSI except where such communication is for legitimate purposes, performance of duties or discharge of legal obligations. UPSI shall include any information, relating to a company or its securities, directly or indirectly, that is not generally available which upon becoming generally available, is likely to materially affect the price of the securities. The Insider Trading Regulations also provide disclosure obligations for shareholders holding more than 5% of equity shares or voting rights, and the changes therein. Initial disclosures are required from promoters, key managerial personnel, directors as well as continual disclosures by every promoter, employee or director in case value of trade exceed monetary threshold of ten lacs rupees over a calendar quarter, within two days of reaching such threshold. The board of directors of all listed companies are required to formulate and publish on the company’s website a code of procedure for fair disclosure of UPSI along with a code of conduct for its employees for compliances with the Insider Trading Regulations.

Depositories

The Depositories Act provides a legal framework for the establishment of depositories to record ownership details and effect transfers in book-entry form. Further, SEBI framed regulations in relation to, among other things, the formation and registration of such depositories, the registration of participants as well as the rights and obligations of the depositories, participants, companies and beneficial owners. The depository system has significantly improved the operation of the Indian securities markets.

Derivatives (Futures and Options)

Trading in derivatives is governed by the SCRA, the SCRR and the SEBI Act. The SCRA was amended in February 2000 and derivatives contracts were included within the term “securities”, as defined by the SCRA. Trading in derivatives in India takes place either on separate and independent derivatives exchanges or on a separate segment of an existing stock exchange. The derivatives exchange or derivatives segment of a stock exchange functions as a self- regulatory organisation under the supervision of the SEBI.

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DESCRIPTION OF EQUITY SHARES

Set forth below are some of the relevant regulations including United Bank of India (Shares and Meetings) Regulations, 2010 applicable and with respect to the Equity Shares of our Bank. Our Bank was constituted as a “corresponding new bank” in 1970 under the provisions of our Bank Acquisition Act. The Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1970 was made by S.O. 3793 dated November 16, 1970 by the Central Government in consultation with the Reserve Bank of India in exercise of the powers conferred by section 9 of the Bank Acquisition Act. The Bank Acquisition Act amended section 34A, 36AD and section 51 of the Banking Regulation Act, 1949 and made these sections applicable to corresponding new banks constituted under the Bank Acquisition Act. Our Bank follows RBI Dividend Circular relating to declaration of dividends.

General

The authorised share capital of our Bank is ₹ 3,000 crore. The Equity Shares are listed on the BSE and the NSE. As on date of the Preliminary Placement Document, the issued, subscribed and paid up share capital of our Bank is ₹ 1,339.45 crores. For further details please see section “Capital Structure” beginning on page 65.

Dividend

After making provision for bad and doubtful debts, depreciation in assets, contributions to staff and superannuation funds and all other matters for which provision is necessary under any law, or which are usually provided for by banking companies, a corresponding new bank may out of its net profits declare a dividend and retain the surplus if any. Where, a dividend has been declared by a corresponding new bank but has not been paid or claimed within thirty days from the date of declaration, to, or by, any shareholder entitled to the payment of the dividend, the corresponding new bank shall, within seven days from the date of the expiry of such period of thirty days, transfer the total amount of dividend which remains unpaid or unclaimed within the said period of thirty days, to a special unpaid dividend account.

Any money transferred to the unpaid dividend account of a corresponding new bank which remains unpaid or unclaimed for a period of seven years from the date of such transfer, shall be transferred by the corresponding new bank to the Investor Education and Protection Fund established under sub-section (1) of section 205C of the Companies Act, 1956. The money transferred under sub-section (3) to the Investor Education and Protection Fund shall be utilised for the purposes and in the manner specified in section 205C of the Companies Act, 1956.

Further, as per regulation 43 of the Listing Regulations, a listed company shall declare and disclose the dividend on per share basis only and shall not forfeit unclaimed dividends before the claim becomes barred by law and such forfeiture, if effected, shall be annulled in appropriate cases. The listed company shall recommend or declare all dividend and/or cash bonuses at least five working days (excluding the date of intimation and the record date) before the record date fixed for the purpose.

The Equity Shares issued pursuant to the Issue shall rank pari passu with the existing Equity Shares in all respects including entitlements to any dividends declared by our Bank.

General Meetings of Shareholders

There are two types of general meetings of the shareholders, namely, AGM and EGM. A general meeting of every corresponding new bank which has issued capital under clause (c) of sub-section (2B) of section 3 shall be held at the place of the head office of our Bank in each year at such time as shall from time to time be specified by the Board of directors. Provided that such annual general meeting shall be held before the expiry of six weeks from the date on which the balance sheet, together with the profit and loss account and Auditor’s report is under sub-section (7A) of section 10, forwarded to the Central Government or to the Reserve Bank whichever date is earlier. The shareholders present at an annual general meeting shall be entitled to discuss, approve and adopt the balance-sheet and the profit and loss account of the corresponding new bank made up to the previous 31st day of March, the report of the Board of directors on the working and activities of the corresponding new bank for the period covered by the accounts and the Auditor’s report on the balance-sheet and counts. Nothing contained in this section shall apply during the period for which the Board of directors of a corresponding new bank had been superseded under sub-section (1) of section

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18A. Provided that the Administrator may, if he considers it appropriate in the interest of the corresponding new bank whose Board of directors had been superseded, call annual general meeting in accordance with the provisions of this section.

Directors

The director referred to in Clause (e) of sub-section (3) of Section 9 of the Act, shall be nominated by the Central Government from out of a panel of three such employees furnished to it by the representative union, within a date to be specified by the Central Government, which date shall not be more than six weeks from the date of communication made by the Central Government, requiring the representative union to furnish the panel of names:

Provided that where the Central Government is of the opinion that owing to the delay which is likely to occur in the verification and certification of any union or federation as a representative union it is necessary in the interest of the Nationalised Bank so to do, it may nominate any employee of the Nationalised Bank, who is a workman, to be a director of that bank.

Where any arrangement entered into by a corresponding new bank with a company provides for the appointment by the corresponding new bank of one or more directors of such company, such appointment of directors made in pursuance thereof shall be valid and effective notwithstanding anything to the contrary contained in the Companies Act, 1956 (1 of 1956) or in any other law for the time being in force or in the memorandum, articles of association or any other instrument relating to the company, and any provision regarding share qualification, age limit, number of directorship, removal from office of directors and such like conditions contained in any such law or instrument aforesaid, shall not apply to any director appointed by the corresponding new bank in pursuance of the arrangement as aforesaid.

Any director appointed as aforesaid shall—

a. hold office during the pleasure of the corresponding new bank and may be removed or substituted by any person by order in writing of the corresponding new bank; b. incur any obligation or liability by reason only of his being a director or for anything done or omitted to be done in good faith in the discharge of his duties as a director or anything in relation thereto; c. not be liable to retirement by rotation and shall not be taken into account for computing the number of directors liable to such retirement;

The Central Government may constitute, in consultation with the Reserve Bank, a committee of three or more persons who have experience in law, finance, banking, economics or accountancy to assist the Administrator in the discharge of his duties.

i. Each share certificate shall bear share certificate number, a distinctive number, the number of shares in respect of which it is issued and the name of the Shareholder to whom it is issued and his folio number and it shall be in such form as may be specified by the Board. ii. Every share certificate shall be issued under the common seal of our Bank in pursuance of a resolution of the Board and shall be signed by two directors and Company Secretary or some other officer not below the rank of Scale-III appointed by the Board for the purpose.

Provided that the signature of the directors may be printed, engraved, lithographed or impressed by such other mechanical process as the Board may direct.

iii. A signature so printed, engraved, lithographed or otherwise impressed shall be as valid as a signature in the proper handwriting of the signatory himself.

iv. No share certificate shall be valid unless and until it is so signed. Share Certificates so signed shall be valid and binding notwithstanding that, before the issue thereof, any person whose signature appears thereon may have ceased to be a person authorised to sign share certificates on behalf of our Bank.

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Issue of Share Certificates

While issuing share certificates to any Shareholder, it shall be competent for the Board to issue the certificates on the basis of one certificate for every hundred shares or multiples thereof registered in the name of a Shareholder on any one occasion and one additional share certificate for the number of shares in excess thereof but which are less than hundred. If the number of shares to be registered is less than hundred, one certificate shall be issued for all the shares. In respect of any share or shares held jointly by several persons, our Bank shall not be bound to issue more than one certificate, and delivery of a certificate for a share to the person whose name appears first in the joint holding shall be sufficient delivery to all such holders.

Issue of new or duplicate share certificate

If any share certificate is worn out or defaced, the Board or the Committee designated by it on production of such certificate may order the same to be cancelled and have a new certificate issued in lieu thereof. If any share certificate is alleged to be lost or destroyed, the Board or the Committee designated by it on such indemnity with or without surety as the Board or the Committee thinks fit, and on publication in two newspapers and on payment to our Bank of its costs, charges and expenses, issue a duplicate certificate in lieu thereof to the person entitled to such lost or destroyed certificate.

Consolidation and sub-division of shares

On a written application made by the Shareholder(s), the Board or the Committee designated by it may consolidate or sub-divide the shares submitted to it for consolidation / sub-division as the case may be and issue a new certificate (s) in lieu thereof on payment to our Bank of its costs, charges and expenses of and incidental to the matter.

Transfer and Transmission of shares

Every transfer of the share of our Bank shall be by an instrument of transfer in form A annexed hereto or in any other form as may be approved by our Bank from time to time and shall be duly stamped, dated and executed by or on behalf of the transferor and transferee along with the relative share certificate. The instrument of transfer along with the share certificate shall be submitted to our Bank at its head office and the transferor shall be deemed to remain holder of the share until the name of the transferee is entered in share register in respect thereof. Upon receipt, the Board or the Committee of the Board designated for the purpose shall forward the instrument of transfer along with the share certificate to the Registrar or Share Transfer Agent for the purpose of verification that the technical requirements are complied with. The Registrar shall return the instrument and the share certificate to the transferee unless the instrument of transfer is duly stamped, properly executed and is accompanied by the certificate of shares to which it relates as such other evidence as the Board may require to show the title of the transferor to make such transfer.

Transmission of shares in the event of death, insolvency, etc.

 The executors or administrators of a deceased shareholder in respect of a share, or the holder of letter of probate or letters of administration with or without the will annexed or a succession certificate issued under Part X of the Indian Succession Act, 1925, or the holder of any legal representation or a person in whose favour a valid, instrument of transfer was executed by the deceased sole holder during the latter’s lifetime shall be the only person who may be recognised by our Bank as having any title to such share.

 In the case of shares registered in the name of two or more Shareholders, the survivor or survivors and on the death of the last survivor, his executors or administrators or any person who is the holder of letters of probate or letters of administration with or without will annexed or a succession certificate or any other legal representation in respect of such survivor’s interest in the share or a person in whose favour a valid instrument of transfer of share was executed by such person and such last survivor during the latter’s lifetime, shall be the only person who may be recognised by our Bank as having any title to such share.

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 Our Bank shall not be bound to recognise such executors or administrators unless they shall have obtained probate or letters of administration or succession certificate, as the case may be, from a court of competent jurisdiction.

Provided, however, that in a case where the Board in its discretion thinks fit, it shall be lawful for the Board to dispense with the production of letters of probate or letters of administration or succession certificate or such other legal representation, upon such terms as to indemnity or otherwise as it may think fit.

Pursuant to the Listing Regulations, in the event our Bank has not effected the transfer of shares within 15 days or where our Bank has failed to communicate to the transferee any valid objection to the transfer within the stipulated time period of 15 days, our Bank is required to compensate the aggrieved party for the opportunity loss caused during the period of the delay.

Shares held through depositories are transferred in the form of book entries or in electronic form in accordance with applicable SEBI regulations. These regulations provide the regime for the functioning of the depositories and their participants and set out the manner in which the records are to be kept and maintained and the safeguards to be followed in this system. Transfers of beneficial ownerships of shares held through a depository are exempt from stamp duty.

A transfer may also be by transmission. Subject to the provisions of the Articles, any person becoming entitled to shares in consequence of the death or insolvency of any member may, upon producing such evidence as may from time to time properly be required by the Board, be registered as a member in respect of such shares, or may, subject to the regulations as to transfer contained in the Articles, transfer such shares. The Articles of Association provide that our Bank shall charge no fee for registration of transfer, transmission, probate, succession certificate and letters of administration, certificate of death or marriage, power of attorney or other similar document.

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TAXATION

The information provided below sets out the possible tax benefits available to the shareholders in a summary manner only and is not a complete analysis or listing of all potential tax consequences of the purchase, ownership and disposal of equity shares under the current tax laws presently in force in India. Several of these benefits are dependent on us or our shareholders fulfilling conditions prescribed under relevant tax laws. We may not choose to fulfill such conditions. This information is not exhaustive or comprehensive and is not intended to be a substitute for professional advice. Investors are advised to consult their own tax consultant with respect to the tax implications of an investment in the Equity Shares.

STATEMENT OF POSSIBLE TAX BENEFITS AVAILABLE TO THE BANK AND ITS SHAREHOLDERS UNDER THE APPLICABLE LAWS IN INDIA

To, The Board of Directors United Bank of India 11, Hemanta Basu Sarani Kolkata – 700 001 West Bengal, India

Sub: Statement of Possible Tax Benefits

Dear Sir,

We, the statutory auditors of the Bank, hereby confirm that the possible special tax benefits available to the Bank and the shareholders of the Bank, under the Income Tax Act, 1961, as amended (the “IT Act”), as enclosed at Annexure A to be accurate based on the extant laws. Several of these tax benefits/consequences are dependent on the Bank or its shareholders fulfilling the conditions prescribed under the relevant tax laws. Therefore, the ability of the Bank or its shareholders to derive the tax benefits is dependent on fulfilling such conditions.

Annexure A is for your information and for inclusion in the preliminary placement document and the placement document (together, the “Issue Documents), as amended or supplemented thereto or any other written material in connection with the proposed Issue and is neither designed nor intended to be a substitute for professional tax advice.

This certificate has been issued at the request of the Bank for use in connection with the Issue and may accordingly be furnished as required to the stock exchanges or any other regulatory authorities as required.

Sincerely,

For M/s Nundi & Associates For Mookherjee Biswas & Pathak For M/s Arun K. Agarwal & Chartered Accountants Chartered Accountants Associates FRN 309090E FRN 301138E Chartered Accountants FRN 003917N

Soumen Nandi Aryabir Chatterjee Rajesh Surolia Partner Partner Partner Chartered Accountant Chartered Accountant Chartered Accountant Membership No. 059828 Membership No. 061551 Membership No. 088008

Place: Kolkata Date: March 20, 2017

Enclosed: Statement of Tax Benefits (Annexure ‘A’)

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ANNEXURE A

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

INVESTORS ARE ADVISED TO CONSULT THEIR OWN TAX CONSULTANT WITH RESPECT TO THE INDIAN TAX IMPLICATIONS AND CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF EQUITY SHARES IN YOUR SITUATION.

A. STATEMENT OF POSSIBLE TAX BENEFITS AVAILABLE TO THE BANK UNDER THE INCOME TAX ACT, 1961, (“ACT”):

1. According to Section 43D of the Act, in the case of a scheduled bank, the income by way of interest in relation to such categories of bad or doubtful debts as may be prescribed having regard to the guidelines issued by the Reserve Bank of India in relation to such debts shall be chargeable to tax in the previous year in which it is credited by the scheduled bank to its profit and loss account for that year or, as the case may be, in which it is actually received by that bank, whichever is earlier.

2. Subject to fulfillment of conditions, the Bank will be eligible, inter alia, for the following specified deductions in computing its business income:

i. According to Section 36(1)(viia)(a) of the Act, deduction in respect of any provision for bad and doubtful debts made by the Bank will be allowed not exceeding 7.5% of the total income (computed before making any deduction under this clause and Chapter VIA) and an amount not exceeding ten per cent of the aggregate average advances made by the rural branches of such bank computed in the prescribed manner.

Finance Bill 2017 has proposed to enhance above percentage from 7.5% to 8.5% of total income.

ii. According to Section 36(1)(viii) of the Act, in respect of special reserve created and maintained, by a banking Company in the business of providing long term finance for the development of housing, infrastructure facility, industrial or agricultural development in India , will be eligible for deduction not exceeding 20% of the profits derived from the aforesaid business computed under the head “Profit & Gains of Business or Profession” (before making any deduction under this clause) carried to such reserve account. Provided that where the aggregate of the amount carried to such reserve account from time to time exceeds twice the amount of the Paid up share capital and general reserves, no allowance under this clause shall be made in respect of such excess.

Any amount subsequently withdrawn from such a Special reserve account will be chargeable to income tax in the year of withdrawal, in accordance with the provisions of Section 41(4A) of the Act.

3. According to Section 72AA,subject to certain conditions, where there has been an amalgamation of a banking company with any other banking institution under a scheme sanctioned and brought into force by the Central Government under sub-section (7) of section 45 of the Banking Regulation Act, 1949 (10 of 1949), the accumulated loss and the unabsorbed depreciation of such banking company shall be deemed to be the loss or, as the case may be, allowance for depreciation of such banking institution for the previous year in which the scheme of amalgamation was brought into force and other provisions of this Act relating to set-off and carry forward of loss and allowance for depreciation shall apply accordingly.

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B. STATEMENT OF POSSIBLE TAX BENEFITS AVAILABLE TO Bank’s SHAREHOLDERS UNDER THE INCOME TAX ACT, 1961, (“IT ACT”) AND OTHER DIRECT TAX LAWS PRESENTLY IN FORCE IN INDIA

1. This statement sets out below the possible tax benefits available to Bank’s shareholders under the current tax laws presently in force in India. Several of these benefits are dependent on such shareholders fulfilling the conditions prescribed under the relevant tax laws. Hence, the ability of bank’s shareholders to derive the tax benefits is dependent upon fulfilling such conditions, which based on the business imperatives, the shareholders may or may not choose to fulfill;

2. This statement sets out below the provisions of law in a summary manner only and is not a complete analysis or listing of all potential tax consequences of the subscription, ownership and disposal of Shares. This statement is only intended to provide general information to the investors and is neither designed nor intended to be a substitute for a professional tax advice. In view of the individual nature of tax consequences and the changing tax laws, each investor is advised to consult his or her or their own tax consultant with respect to the specific tax implications arising out of their participation in the issue.;

3. In respect of non-residents, the tax rates and the consequent taxation, mentioned in this section shall be further subject to any benefits available under the Double Taxation Avoidance Agreement, if any, between India and the country in which the non-resident has fiscal domicile.

4. The under-mentioned tax benefits will be available only to the sole/first-named holder in case the Equity Shares are held by joint shareholders.

5. The law stated below is as per the Income-tax Act, 1961 as amended by time to time.

I. RESIDENT SHAREHOLDERS:

1. Bank is required to pay a Dividend Distribution Tax currently at the rate of 20.358% (including applicable surcharge and education cess) on the total amount distributed or declared or paid as dividend. Under Section 10(34) of the IT Act, income by way of dividends referred to in Section 115O of IT Act received on shares is exempt from income tax in the hands of shareholders. However, as per Section 115BBDA of the IT Act, in case of an Individual, Hindu Undivided Family (“HUF”) or a firm, resident in India, if aggregate of dividend income during the year is in excess of ten lakh rupees, then such dividend shall be chargeable to tax at the rate of 10% (plus applicable surcharge and education cess) in the hands of recipient. Finance Bill 2017 has proposed to extend to provision of section 115BBDA of the IT Act to Private Trust also.

As per section 94(7) of the IT Act, losses arising from sale/transfer of shares, where such shares are purchased within three months prior to the record date and sold within three months from the record date, will be disallowed to the extent such loss does not exceed the amount of dividend claimed exempt.

2. The characterization of gains/losses, arising from sale of shares, as Capital Gains or Business Income would depend on the nature of holding in the hands of the shareholder and various other factors.

3. Section 48 of the IT Act, which prescribes the mode of computation of capital gains, provides for deduction of cost of acquisition/improvement and expenses incurred wholly and exclusively in connection with the transfer of a capital asset, from the sale consideration to arrive at the amount of capital gains. However, in respect of Long Term Capital Gains, (“LTCG”) i.e. gains from bank’s shares being transfer of shares of Indian company held for a period exceeding twelve months, the second proviso to Section 48 of the IT Act, substitute cost of acquisition/improvement with the indexed cost of acquisition/improvement, which adjusts the cost of acquisition/improvement by a cost inflation index, as prescribed from time to time.

4. Under Section 10(38) of the IT Act, LTCG arising to a shareholder on transfer of equity shares would be exempt from tax where the sale transaction has been entered into on a recognised stock exchange of India and is chargeable to Securities Transaction Tax (“STT”).

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As per section 115JB of the Act income received by way of dividend whether interim of final which is exempt u/s 10(34) of the IT Act by a company to which section 115JB is applicable will be reduced while computing book profit. Further any LTCG exempt u/s 10(38) will be subject to book profit.

5. Under Section 112 of the IT Act and other relevant provisions of the IT Act, LTCG, (other than those exempt under Section 10(38) of the IT Act) arising on transfer of shares would be subject to tax at the rate of 20% (plus applicable surcharge and education cess) after indexation. The amount of such tax shall, however, be limited to 10% (plus applicable surcharge and education cess) without indexation, at the option of the shareholder in case the shares are listed.

6. Under Section 54EC of the IT Act and subject to the conditions and to the extent specified therein, long-term capital gains (other than those exempt under Section 10(38) of the IT Act) arising on the transfer of bank’s shares would be exempt from tax if such capital gain is invested within 6 months after the date of such transfer in the bonds (long term specified assets) issued by:

i. National Highway Authority of India constituted under Section 3 of The National Highway Authority of India Act, 1988;

ii. Rural Electrification Corporation Limited, the company formed and registered under the Companies Act, 1956.

iii. Other institutions notified by central government

The investment in the long term specified assets is eligible for such deduction to the extent of ₹ 5 million whether invested during the fiscal year in which the asset is transferred or subsequent fiscal year.

If only part of the capital gain is so reinvested, the exemption available shall be in the same proportion as the cost of long term specified assets bears to the whole of the capital gain. However, in case the long term specified asset is transferred or converted into money within three years from the date of its acquisition, the amount of capital gains so exempted shall be chargeable to tax as LTCG during the year of such transfer or conversion. For this purpose, if any loans or advance is taken as against such specified securities, than such person shall be deemed to have converted such specified securities into money. The cost of the long term specified assets, which has been considered under Section 54EC for calculating capital gain, shall not be allowed as a deduction from the income under Section 80C of the IT Act.

7. As per Section 111A of the IT Act, Short Term Capital Gains (“STCG”), i.e., gains from shares held for a period not exceeding twelve months) arising on transfer of bank’s equity share would be taxable at a rate of 15% (plus applicable surcharge and education cess) where such transaction of sale is entered on a recognised stock exchange in India and is liable to STT. STCG arising from transfer of bank’s shares, other than those covered by Section 111A of the IT Act, would be subject to tax as calculated under the normal provisions of the IT Act.

8. As per Section 74 of the IT Act, Short Term Capital Loss computed for the given year is allowed to be set off against Short Term as well as Long Term Gains computed for the said year. The balance loss, which is not set off, is allowed to be carried forward for subsequent eight assessment years for being set off against subsequent years’ Short Term as well as Long Term Gains. However, the Long Term capital Loss computed for a given year is allowed to be set off only against the LTCG. The balance loss, which is not set off, is allowed to be carried forward for subsequent eight assessment years for being set off only against subsequent years’ LTCG.

9. In terms of Section 36(1)(xv) of the IT Act, the STT paid by the shareholder in respect of the taxable securities transactions entered into in the course of his business of transactions/trading in shares would be eligible for deduction from the amount of income chargeable under the head “Profit and gains of business or profession” ” if the income arising from taxable securities transaction is included in such income. As such, no deduction will be allowed in computing the income chargeable to tax as capital gains of such amount paid on account of STT.

II. NON-RESIDENT SHAREHOLDERS OTHER THAN FOREIGN INSTITUTIONAL INVESTOR (“FII”S):

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1. Banks are required to pay a Dividend Distribution Tax currently at the rate of 20.358% (including applicable surcharge and education cess) on the total amount distributed or declared or paid as dividend. Under Section 10(34) of the IT Act, income by way of dividends (whether interim or final) referred to in Section 115-O of the IT Act, received on bank’s shares is exempt from income tax in the hands of shareholders. However it is pertinent to note that Section 14A of the IT Act restricts claims for deduction of expenses incurred in relation to exempt income. Thus, any expense incurred to earn the dividend income is not allowable expenditure. As per section 94(7) of the IT Act, losses arising from sale/transfer of shares, where such shares are purchased within three months prior to the record date and sold within three months from the record date, will be disallowed to the extent such loss does not exceed the amount of dividend claimed exempt.

2. The characterisation of gains/losses, arising from sale of shares, as Capital Gains/loss or Business Income/loss would depend on the nature of holding in the hands of the shareholder and various other factors.

3. Under the first proviso to Section 48 of the IT Act, in case of a non-resident shareholder, in computing the capital gains arising from transfer of shares of the Bank acquired in convertible foreign exchange (as per exchange control regulations) (in cases not covered by Section 115E of the IT Act, discussed hereunder), protection is provided from fluctuations in the value of rupee in terms of foreign currency in which the original investment was made. Cost indexation benefits will not be available in such a case. The capital gains/loss in such a case is computed by converting the cost of acquisition, sales consideration and expenditure incurred wholly and exclusively in connection with such transfer into the same foreign currency which was utilised in the purchase of the shares.

4. Under Section 10(38) of the IT Act, LTCG arising to a shareholder, being a non-resident, on sale of equity shares would be exempt from tax where the sale transaction has been entered into on a recognised stock exchange of India and is chargeable to STT.

5. Under Section 112 of the IT Act and other relevant provisions of the IT Act, LTCG, (other than those exempt under Section 10(38) of the IT Act) arising on transfer of our shares not being subject to STT, would be subject to tax at a rate of 20% (plus applicable surcharge and education cess).

6. As per section 115JB of the Act, income received by way of dividend (whether interim or final) which is exempt u/s. 10(34) of the IT Act, by a foreign company to which section 115JB is applicable, will be reduced while computing book profits. Further, any LTCG exempt u/s. 10(38) will be subject to book profits.

7. Under Section 54EC of the IT Act and subject to the conditions and to the extent specified therein, long-term capital gains (other than those exempt under Section 10(38) of the IT Act) arising on the transfer of our shares would be exempt from tax if such capital gain is invested within 6 months after the date of such transfer in the bonds (long term specified assets) issued by:

i. National Highway Authority of India constituted under Section 3 of the National Highway Authority of India Act, 1988;

ii. Rural Electrification Corporation Limited, the company formed and registered under the Companies Act, 1956.

iii. Other institutions notified by central government

If only part of the capital gain is so reinvested, the exemption available shall be in the same proportion asthe cost of long term specified assets bears to the whole of the capital gain. However, in case the long term specified asset is transferred or converted into money within three years from the date of its acquisition, the amount so exempted shall be chargeable to tax during the year such transfer or conversion. For this purpose, if any loans or advance is taken as against such specified securities, then such person shall be deemed to have converted such specified securities into money. The cost of the long term specified assets, which has been considered under this Section for calculating capital gain, shall not be allowed as a deduction from the income under Section 80C of the IT Act.

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8. Under Section 111A of the IT Act and other relevant provisions of the IT Act, STCG (i.e., if shares are held for a period not exceeding 12 months) arising on transfer of bank’s equity share would be taxable at a rate of 15% (plus applicable surcharge and education cess) where such transaction of sale is entered on a recognised stock exchange in India and is chargeable to STT. STCG arising from transfer of the shares, other than those covered by Section 111A of the IT Act, would be subject to tax as calculated under the normal provisions of the IT Act.

9. As per Section 74 of the IT Act, Short Term Capital Loss computed for the given year is allowed to be set off against Short Term as well as Long Term Gains computed for the said year. The balance loss, which is not set off, is allowed to be carried forward for subsequent eight assessment years for being set off against subsequent years’ Short Term as well as Long Term Gains. However, the Long Term capital Loss computed for a given year is allowed to be set off only against the LTCG. The balance loss, which is not set off, is allowed to be carried forward for subsequent eight assessment years for being set off only against subsequent years’ LTCG.

10. Where the shares have been subscribed in convertible foreign exchange, Non Resident Indians (“NRI”), i.e. an individual being a citizen of India or person of Indian origin who is not a resident, have the option of being governed by the provisions of Chapter XII-A of the IT Act, which inter alia entitles them to the following benefits:

i. Under section 115E of the IT Act, where shares of the company are subscribed to in convertible foreign exchange by a NRI, the LTCG arising to the NRI shall be taxable at the rate of 10% (plus applicable surcharge and education cess). The benefit of indexation of cost would not be available.

ii. Under Section 115F of the IT Act, LTCG (in cases not covered under Section 10(38) of the IT Act) arising to an NRI from the transfer of the shares subscribed to in convertible foreign exchange shall be exempt from Income tax, if the net consideration is reinvested in specified assets within six months of the date of transfer. If only part of the net consideration is sore invested, the exemption shall be proportionately reduced. The amount so exempted shall be chargeable to tax subsequently, if the specified assets are transferred or converted into money within three years from the date of their acquisition.

iii. Under Section 115G of the IT Act, it shall not be necessary for an NRI to furnish his return of income under Section 139(1) of the IT Act if his income chargeable under the IT Act consists of only investment income or LTCG or both; arising out of assets acquired, purchased or subscribed in convertible foreign exchange and tax deductible at source has been deducted there from as per the provisions of Chapter XVII-B of the IT Act.

iv. In accordance with the provisions of Section 115H of the IT Act, where an NRI becomes assessable as a resident in India, he may furnish a declaration in writing to the Assessing Officer along with his return of income for that year under Section 139 of the IT Act to the effect that the provisions of Chapter XII-A of the IT Act shall continue to apply to him in relation to such investment income derived from the specified assets (which do not include shares in an Indian company) for that year and subsequent assessment years until such assets are converted into money.

v. As per provisions of Section 115-I of the IT Act, an NRI may elect not to be governed by provisions of Chapter XII-A and compute his total income as per other provisions of the IT Act.

11. In terms of Section 36(1)(xv) of the IT Act, the STT paid by the shareholder in respect of the taxable securities transactions entered into in the course of his business of transactions/trading in shares would be eligible for deduction from the amount of income chargeable under the head “Profit and gains of business or profession” if income arising from taxable securities transaction.is included in such income. As such, no deduction will be allowed in computing the income chargeable to tax as capital gains, such amount paid on account of STT.

12. As per section 90(2) of the IT Act, the provisions of the IT Act would prevail over the provisions of the Double Tax Avoidance Agreement (“DTAA”)entered between India and the country of fiscal domicile of the non- resident, if any, to the extent they are more beneficial to the non-resident. Thus, a non-resident (including NRIs) can opt to be governed by the provisions of the IT Act or the applicable tax treaty, whichever is more beneficial. However, the non-resident investor will have to furnish a certificate of his being a resident in a country outside India, to get the benefit of the applicable DTAA and such other document as may be prescribed as per the provision of section 90(4) of IT Act.

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13. With effect from April 1, 2017, the benefit of the DTAA will not be available to a non-resident investor if the Tax department declares any arrangement to be an impermissible avoidance arrangement

III. NON-RESIDENT SHAREHOLDERS – FIIS:

1. Bank is required to pay a Dividend Distribution Tax currently at the rate of 20.358% (including applicable surcharge and education cess) on the total amount distributed or declared or paid as dividend. Under Section 10(34) of the IT Act, income by way of dividends (whether interim or final) referred to in Section 115-O of the IT Act received on Bank’s shares is exempt from income tax in the hands of shareholders. However it is pertinent to note that Section 14A of the IT Act restricts claims for deduction of expenses incurred in relation to exempt income. As per section 94(7) of the IT Act, losses arising from sale/transfer of shares, where such shares are purchased within three months prior to the record date and sold within three months from the record date, will be disallowed to the extent such loss does not exceed the amount of dividend claimed exempt.

2. Section 2(14) of IT Act defining capital asset, specifically includes any securities held by an FII which has invested in such securities in accordance with the SEBI Regulations.

3. Under the first proviso to Section 48 of the IT Act, in case of a non-resident shareholder, in computing the capital gains arising from transfer of shares of the company acquired in convertible foreign exchange (as per exchange control regulations), protection is provided from fluctuations in the value of rupee in terms of foreign currency in which the original investment was made. Cost indexation benefits will not be available in such a case. The capital gains/loss in such a case is computed by converting the cost of acquisition, sales consideration and expenditure incurred wholly and exclusively in connection with such transfer into the same foreign currency which was utilised in the purchase of the shares.

4. Under Section 10(38) of the IT Act, Long Term Capital Gains arising to a shareholder on transfer of equity shares would be exempt from tax where the sale transaction has been entered into on a recognised stock exchange of India and is liable to STT.

5. As per section 115JB of the Act, income received by way of dividend (whether interim or final) which is exempt u/s. 10(34) of the IT Act, by a FII to which section 115JB is applicable, will be reduced while computing book profits. Further, any LTCG exempt u/s. 10(38) will be subject to book profits.

6. Under Section 54EC of the IT Act and subject to the conditions and to the extent specified therein, LTCG (other than those exempt under Section 10(38) of the IT Act) arising on the transfer of the shares would be exempt from tax if such capital gain is invested within six months after the date of such transfer in the bonds (long term specified assets) issued by:

i. National Highway Authority of India constituted under Section 3 of the National Highway Authority of India Act, 1988;

ii. Rural Electrification Corporation Limited, the company formed and registered under the Companies Act, 1956.

iii. Other institutions notified by central government

If only part of the capital gain is so reinvested, the exemption available shall be in the same proportion as the cost of long term specified assets bears to the whole of the capital gain. However, in case the long term specified asset is transferred or converted into money within three years from the date of its acquisition, the amount of LTCG so exempted shall be chargeable to tax during the year such transfer or conversion. For this purpose, if any loans or advance is taken as against such specified securities, than such person shall be deemed to have converted such specified securities into money.

7. Under Section 115AD (1)(ii) of the IT Act, STCG arising to an FII on transfer of shares shall be chargeable at a rate of 30%, where such transactions are not subjected to STT, and at the rate of 15% if such transaction of sale 212

is entered on a recognised stock exchange in India and is chargeable to STT. The above rates are to be increased by applicable surcharge and education cess.

Under Section 115AD (1)(iii) of the IT Act income by way of LTCG arising from the transfer of shares (in cases not covered under Section 10(38) of the IT Act) held in the company will be taxable at the rate of 10% (plus applicable surcharge and education cess). The benefits of indexation of cost and of foreign currency fluctuations are not available to FIIs.

8. As per section 90(2) of the IT Act, the provisions of the IT Act would prevail over the provisions of the DTAA entered between India and the country of fiscal domicile of the non-resident, if any, to the extent they are more beneficial to the non-resident. Thus, a non-resident (including NRIs) can opt to be governed by the provisions of the IT Act or the applicable tax treaty, whichever is more beneficial. However, the non-resident investor will have to furnish a certificate of his being a resident in a country outside India, to get the benefit of the applicable DTAA and such other document as may be prescribed as per the provision of section 90(4) of IT Act.

9. In terms of Section 36(1)(xv) of the IT Act, the STT paid by the shareholder in respect of the taxable securities transactions entered into in the course of his business of transactions/trading in shares would be eligible for deduction from the amount of income chargeable under the head “Profit and gains of business or profession” arising from taxable securities transactions. As such, no deduction will be allowed in computing the income chargeable to tax as capital gains, such amount paid on account of STT.

10. With effect from April 1, 2017, the benefit of the DTAA will not be available to a non-resident investor if the Tax department declares any arrangement to be an impermissible avoidance arrangement

11. As per Section 196D of IT Act, no tax is to be deducted from any income, by way of Capital Gains arising to an FII from the transfer of securities referred to in section 115AD of the IT Act.

IV. TAX DEDUCTION AT SOURCE:

No income tax is deductible at source from income by way of capital gains arising to a resident shareholder under the present provisions of the IT Act. However, as per the provisions of Section 195 of the IT Act, any income by way of capital gains payable to non-residents (other than LTCG exempt u/s 10(38)) may be subject to withholding of tax at the rate under the domestic tax laws or under the tax laws or under the DTAA, whichever is beneficial to the assessee unless a lower withholding tax certificate is obtained from the tax authorities. However, the non- resident investor will have to furnish a certificate of his being a resident in a country outside India, to get the benefit of the applicable DTAA and such other document as may be prescribed as per the provision of section 90(4) of IT Act. The withholding tax rates are subject to the recipients of income obtaining and furnishing a permanent account number (PAN) to the payer, in the absence of which the applicable withholding tax rate would be the higher of the applicable rates or 20%, under section 206AA of the IT Act. The provisions of section 206AA will not apply if the non- resident shareholder furnishes the prescribed documents to the payer.

Notes:

1. The above benefits are as per the current tax law as amended by time to time.

2. The above statement of possible direct tax benefits sets out the provisions of law in a summary manner only and is not a complete analysis or listing of all potential tax consequences of the purchase, ownership and disposal of Shares.

3. The stated benefits will be available only to the sole/first named holder in case the shares are held by the joint holders.

4. In respect of Non-residents, the tax rates and the consequent taxation mentioned above shall be further subject to any benefits available under the DTAA, if any, between India and the country in which the Non-resident has fiscal domicile.

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5. This statement is intended only to provide general information to the investors and is neither designed nor intended to be substituted for professional tax advice. In view of the individual nature of tax consequences, each investor is advised to consult his/her own tax advisor with respect to specific tax consequences of his/her participation in the scheme.

6. No assurance is given that the revenue authorities/courts will concur with the views expressed herein. Our views are based on the existing provisions of law and its interpretation, which are subject to changes from time to time. We do not assume responsibility to update the views consequent to such changes.

7. The above statement of possible Direct-tax Benefits sets out the possible tax benefits available to the Bank and its shareholders under the current tax laws presently in force in India. Several of these benefits available are dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant tax laws.

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LEGAL PROCEEDINGS

Except as described below, there is no outstanding litigation, suits or civil proceedings, or criminal proceedings, or prosecutions, statutory and other notices or tax liabilities by or against our Bank or our Directors, or our Associates, and there are no defaults, non-payment or overdues of statutory dues, overdues to banks / financial institutions, defaults against banks / financial institutions, defaults in dues payable to holders of any debentures, bonds, or fixed deposits, and arrears on preference shares issued by our Bank, defaults in creation of full security as per terms of issue/ other liabilities, proceedings initiated for economic/ civil/ and other offences (including past cases where penalty may or may not have been awarded) that would result in a material adverse effect on our business. A materiality threshold of ₹ 46 crore that is approximately 1% of the networth of the Bank as on March 31, 2016, has been adopted for civil cases filed by/against the Bank. None of the aforesaid persons/ companies/ banks is on RBI’s list of willful defaulters.

A. Cases filed against our Bank

(i) Criminal Cases:

Nil

(ii) Civil Cases:

Zoom Developers Private Limited (“Plaintiff”) has filed a suit bearing number 2001 of 2011 before the Bombay High Court against the consortium of banks including our Bank demanding ₹ 11,000 crore under the head of damages, loss of estimated future profits and loss of goodwill. The Plaintiff has alleged that it established bank guarantees issued by the consortium banks which were confirmed by the foreign intermediary banks upon aggregator’s bank and received advance payments equivalent to the bank guarantees and executed its project. As per the Plaintiff, the bank guarantees were required to be maintained till the completion of the liability period of the contracts entered into by the Plaintiff for various projects. The consortium banks retained 25% of the advance received against the bank guarantees towards margin money. The Plaintiff has alleged that after the economic crisis of 2008, most of the foreign intermediary banks decided to reduce their exposure and decided to cut down on the risks arising out of bank guarantees and hence foreign banks declined to renew the bank guarantees and asked the consortium banks to shift the bank guarantees to some other banks. The Plaintiff alleges that due to failure of the consortium banks to find new banks for shifting the bank guarantees and releasing the margin money, the Plaintiff suffered loss and defaulted in payment of statutory and other dues. The case is pending for hearing and as on date, we cannot ascertain the exact monetary liability of the Bank.

(iii) Banking Ombudsman Complaints:

As on January 31, 2017, details of the complaints received by the Bank and status of the complaints are as follows:

Resolution Total complaints Number of Total complaints received complaints resolved pending Head Office 131 126 5 Regional Offices 75 75 - Total 206 201 5

(iv) Tax Cases:

Nil

(v) Other cases

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An eviction suit bearing CS number 246 of 2012 has been filed against the Bank by India Automobiles (1960) Limited (“Plaintiff”) before the Hon’ble High Court, Calcutta (“Court”). The Court has passed an order dated September 11, 2015, directing the Bank to continue to occupy the premises for a period of one year until October, 2016 subject to the payment of rent. The Court has also granted liberty to the parties to renegotiate the continuation of occupation. Presently, the Bank is still occupying the premises and negotiation of the terms is ongoing.

B. Cases filed by the Bank

(i) Criminal cases:

Criminal complaints initiated by our Bank against Fraud

In 2013, our Bank, in order to deal with cases pertaining to fraud, formed a Fraud Monitoring Cell (“FMC”) which monitors and reviews frauds committed against the Bank. On the scrutiny of accounts based on any complaint received from a customer or a government agency or whistle blowers, the branch or regional office of the Bank reports fraud/irregularities to the Vigilance Department which conducts an internal investigation and after deciding the issue of occurrence of fraud, it will be forwarded to FCM which in turn reports the fraud to RBI and also initiates necessary action, after getting due approval of the competent authority, for filing FIR with CBI/police, depending on the amount involved.

If the amount involved in the fraud is more than ₹ 10,000 but less than or equal to ₹ 0.01 crore, the matter is reported to the police. If the amount involved in the fraud is more than ₹ 0.01 crore but less than ₹ 3 crore, the matter is reported to the higher authority of the state police department. Based on such investigation, a charge sheet is filed and criminal proceedings are initiated against the person against whom the complaint is filed by the Bank. If the amount involved in the fraud is more than ₹3 crore and above, the matter is reported to the Central Bureau of Investigation (“CBI”). CBI then investigates the mater and accordingly initiates criminal proceedings. However, though these are instances of criminal fraud which has been committed against the Bank by its borrowers or employees, the Bank is not added as a party to the criminal proceedings and eventually the parties to the criminal proceedings are the State and the accused borrower or employee.

The following are the details of the complaints made by the Bank regarding fraud against its borrowers or employees.

A. Details of complaints made by the Bank against borrowers for fraud:

Year Number of complaints Amount involved (₹ in crore) 2013-2014 164 349.02 2014-2015 138 680.14 2015-2016 168 143.12 2016- January 26 81.89 31, 2017 Total 496 1,254.17

B. Details of complaints made by the Bank against its employees for fraud:

Year Number of complaints Amount involved (₹ in crore) 2013-2014 6 0.17 2014-2015 73 0.60 2015-2016 3 0.12 2016- January 7 1.34 31, 2017 Total 89 2.23

(ii) Civil Cases:

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1. Our Bank has filed an Original Application bearing number 216 of 2001 (“OA”) against BTW Industries Limited & others (“Defendants”) before the Debts Recovery Tribunal Kolkata (“DRT”) for recovery of outstanding amounts due to the Bank, claiming a sum of ₹ 53.10 crore. A Receiver has been appointed for the sale of assets for recovery of the outstanding monies due to the Bank and the Bank has recovered a sum of ₹ 1.93 crore, recovery of the balance amount of monies due is pending execution before the Recovery Officer. Since other properties of the defendants have not been found in spite of various efforts of the bank for attachment and sale of the same, the matters have been adjourned sine die with liberty to reopen the same.

2. Our Bank has filed an Original Application bearing number No. 55 of 2005 (“OA”) against Mining and Allied Machinery Corporation Limited, Department of Heavy Industry, Ministry of Heavy Industries and Public Enterprises, Government of India and the State Bank of India (“Defendants”) before the Debts Recovery Tribunal, Kolkata (“DRT”), for recovery of outstanding amounts due to the Bank, claiming a sum of ₹ 48. 28 crore. DRT vide its order dated December 28, 2015 have allowed the application and stated (i) Defendant liable to pay 342.18 crore with interest at the rate of 17.5% per annum with quarterly rests from June 25, 2003 till payment of realisation (ii) the amount of claim is secured by the mortgage to the immovable and movable properties of the Defendant. The same may be sold for satisfaction of the dues. (iii) certificate to be issued. The Borrower earlier became sick and was referred to BIFR, an appeal was referred to AAIFR against the order of the BIFR, and subsequent to the order of the AAIFR dated November 13, 2003 the Borrower was directed to be wound up. An appeal was filed by the employee association of the Borrower with the High Court against the order of the AIFR. The High Court upheld the order of the AAIFR and ordered the Borrower to be wound up. The Official Liquidator took over the possession of the assets and properties of the Borrower. The Bank has received ₹ 5.53 Crore from the Official Liquidator, Calcutta High Court out of the sale proceeds of the assets of the company (in liquidation) residual amount to be received by the bank form the Official Liquidator is pending with Official Liquidator.

3. The Bank has filed an Original Application bearing number 42 of 2009 (“OA”) against Vishal Exports Overseas Limited & others before the Debts Recovery Tribunal, Ahmadabad (“DRT”), for recovery of its dues under the term loan, amounting to ₹ 64.82 crore. DRT vide order dated February 5, 2015 have allowed the application and have stated that (i) Bank to receive the above amount along with interest at the rate of 12% per annum for the period of pendent lite and future, till realization of the debt (ii) Bank to deduct any amount, if received from selling the secured properties of the Defendant (iii) certificate of recovery (iv) recovery officer shall realise the amount as per the certificate of recovery. The recovery proceedings are initiated and are pending for further proceedings.

4. Our Bank has filed an Original Application bearing number 01 of 2011 (“OA”) against M/s Zoom Developers Private Limited & others (“Defendants”) before the Debts Recovery Tribunal – II, Mumbai (“DRT”). Our Bank being one of the lenders in consortium of banks has filed OA for recovery of certain dues arising out of various credit facilities sanctioned by the Bank to the Defendants. The OA has been filed inter alia seeking relief / interim relief that (a) the Defendants be, jointly and severally be directed to pay a sum of ₹ 241.65 crore as on September 30, 2011 with further interest applicable rate from October 1, 2011; (b) the mortgaged immovable properties to be sold either by public auction or private treaty and the net sales proceeds thereof be paid; (c) ) injunction restraining the Defendants, their servants, agents and representatives from alienating, dealing with, disposing off and/or creating their party rights in their assets;. The said OA is pending before the DRT.

5. Our Bank has filed an Original Application bearing number 416 of 2012 (“OA”) in Debts Recovery Tribunal I, Kolkata (“DRT”) against Ramsarup Industries Limited and its guarantor(s), Mr. Ashish Jhunjhunwala and Ramsarup Investment Limited (together referred to as the “Defendants”) for recovery of dues amounting to ₹ 242.33 crore including the interest by (a) sale of the hypothecated movable and immovable assets of the Defendants, (b) order for restraining the Defendants from disposing off or alienating the properties and (c) appointment of receiver to take physical possession of the assets of the Defendants. The DRT vide its order dated December 03, 2012 issued an injunction against the Defendants from transferring their personal assets. In the meanwhile, Ramsarup Industries Limited has filed a reference on November 06, 2012 before the BIFR for declaring it as a sick company and for rehabilitation. The said OA is currently pending before the DRT.

6. The Bank along with other banks has filed an Original Application bearing number 766 of 2013 (“OA”) against Kingfisher Airlines Limited and others (“Defendants”) before the Debt Recovery Tribunal, 217

Bangalore (“DRT”) for recover of various credit facilities granted to the Defendants. In the OA, the Bank has claimed recovery of various credit facilities granted to the Defendants aggregating to ₹ 379.59 crore. The OA has been filed inter alia seeking relief / interim relief that (a) Defendants be directed to pay to the Bank the said sum of ₹ 379.59 crore with interest at the rate of 15.20% p.a. from June 01, 2013 until payment (b) restraining the Defendants, their servants, agents, employees, officers from disposing off, transferring, alienating, encumbering, parting with possession, creating third party rights/title/interest/claim in any of the movable, immovable, tangible and intangible properties (c) order an inquiry, investigation, examination, attachment and realization of assets and properties (d) attachment and sale of current and fixed assets charged (e) order and declare sale of secured hypothecated assets, remaining pledged shares, immovable properties equitably mortgaged and appropriation of the net sale proceeds towards satisfaction of the amounts order appointment of a commissioner to take inventory of the assets. The said OA is presently pending before the DRT.

7. Our Bank has filed an Original Application bearing number 253 of 2013 (“OA”) in Debts Recovery Tribunal – II, Chennai (“DRT”) against Good Earth Maritime Limited and others (“Defendants”) for recovery of dues amounting to ₹ 58.25 crore including interest. The OA has been filed inter alia, seeking relief / interim relief for (a) order for declaration of hypothecated property in favour of the Bank, (b) appoint advocate commissioner to take inventory, possession of goods, stocks and materials and (c) order for injunction restraining the Defendants from selling of machineries, equipments or raw materials. The said OA is currently pending before the DRT.

8. Our Bank has filed an Original Application bearing number 243 of 2013 (“OA”) against M/s Temptation Foods Limited & others (“Defendants”) before the Debts Recovery Tribunal – II, Mumbai (“DRT”). Our Bank has filed OA for recovery of various credit facilities sanctioned by it. The OA has been filed inter alia seeking relief / interim relief that (a) the Defendants be, jointly and severally be directed to pay a sum of ₹ 49.80 crore inclusive of interest upto June 11, 2013 and further interest of 15.60% per annum plus penal interest till realisation; (b) sale of movable and immovable properties and adjust the sale proceeds for the dues, in case of failure to pay the above amount; (c) appointment of receiver/ commissioner of the immovable property with all powers to take possession of the properties. The said OA is pending before the DRT.

9. Our Bank and others have filed an Original Application bearing number 131 of 2013 (“OA”) against M/s Varun Industries Limited & others (“Defendants”) before the Debts Recovery Tribunal – I, Mumbai (“DRT”). Our Bank being one of the lenders in consortium of banks has filed OA for recovery of certain dues arising out of various credit facilities sanctioned by the Bank to the Defendants. The OA has been filed inter alia seeking relief / interim relief that (a) the Defendants be, jointly and severally be directed to pay a sum of ₹ 348.77 crore with further interest of 15.75% per annum compounded at monthly rests and penal interest @ 2% per annum from August 1, 2013 till realisation of payment; (b) injunction restraining the Defendants, their servants, agents and representatives from alienating, dealing with, disposing off and/or creating their party rights in its properties; (c) holding and declaring the hypothecated assets are validly hypothecated by the Defendants in favour of banks. The said OA is pending before the DRT.

10. Our Bank has filed an Original Application bearing number188 of 2013 (“OA”) against M/s. Vikash Metal & Power Limited and others (“Defendants”) before the Debt Recovery Tribunal – 1, Kolkata (“DRT”).The OA has been filed by the Bank for recovery of credit facilities provided to the Defendant from time to time sanctioned by it aggregating to ₹57.19 crore. The OA has been filed praying for an order (a) directing payment of ₹ 57.19 crore with interest at the rate of 15.75% per annum with monthly rests calculated up to March 20, 2013 together with future interest at the rate of 15.75% per annum with monthly rests from March 21, 2013 till realisation, (b) certificate be issued for payment of ₹ 57.19 crore with interest at the rate of 15.75% per annum with monthly rests calculated up to March 20, 2013 together with future interest at the rate of 15.75% per annum with monthly rests from March 21, 2013 till realisation (c) attachment and sale of the hypothecated assets and mortgaged properties of the Defendants (d) injunction restraining the Defendants, their servants, agents and representatives from alienating, dealing with, disposing off and/or creating their party rights in its properties (e) interim certificate for payment of admitted amount (f) direction upon the Defendant to disclose their personal assets and further reliefs as the court deems fit and proper. The said OA is pending for hearing before the DRT.

11. Our Bank has filed an Original Application bearing number 181 of 2013 (“OA”) against M/s. Varun Jewels 218

Private Limited and others (“Defendants”) before the Mumbai Debt Recovery Tribunal – II, (“DRT”).The OA has been filed by the Bank for recovery of a sum aggregating to ₹ 72.05 crore granted under various credit facilities provided to the Defendant from time to time. The OA has been filed praying for an order (a) directing payment of ₹ 72.05 crore together with interest from April 4, 2013 together with further interest at the rate of 18.1% per annum along with penal interest at the rate of 1% per annum from April 1, 2013 till realisation, (b) declare that the dues of the Bank as set out are fully secured by a valid and subsisting hypothecation of movable assets (c) on failure of payment, for declaration of assets, owned by the Defendant with a direction to sell the same and adjust the sale proceeds thereof, (d) cost of application (e) injunction restraining the Defendants, their servants, agents and representatives from alienating, dealing with, disposing off and/or creating their party rights in its properties (f) attachment and sale of the immovable properties of the Defendants (g) appointment of a fit and proper person to be appointed as a receiver/commissioner for the properties of the Defendants (h) the defendant to disclose their personal assets (i) appointment of a fit and proper person to be appointed as commissioner for taking inventory and submitting report of the Properties (j) pending hearing, the Defendants be ordered to insure all properties, assets and securities charged to the Bank (k) such further reliefs as the court deems fit and proper. The said OA is pending for hearing before the DRT.

12. Our Bank and others have filed an Original Application bearing number 158 of 2014 (“OA”) against Kingfisher Airlines Limited and others (“Defendants”) before the Debt Recovery Tribunal, Bangalore (“DRT”) for recover of various credit facilities granted to the Defendants under a consortium. In the OA, the Bank has claimed recovery of credit facility granted to the Defendants aggregating to ₹ 63.18 crore. The OA has been filed inter alia seeking relief / interim relief that (a) a recovery certificate be issued directing the Defendants to jointly and severally pay a sum of ₹ 63.18 crore along with pendent lite and future interest at the rate of SBI’s base rate plus 3.50% presently and 13.50% p.a. plus 2% p.a. penal interest until realization (b) Defendants and their servants, agents, employees etc. by way of an interim order of injunction ex-parte be restrained from alienating, transferring or otherwise dealing with or disposing off in any manner the movable and immovable properties without the prior permission of DRT (c) in the event of Defendants’ failure to so furnish the security within the stipulated time, to order and direct attachment of the movable and immovable properties of the Defendants. The said OA is presently pending before the DRT.

13. Our Bank and others have filed an Original Application bearing number 349 of 2014 (“OA”) against M/s Jain Infraprojects Limited & others (“Defendants”) before the Debts Recovery Tribunal – I, Kolkata (“DRT”). Our Bank being one of the lenders in consortium of banks has filed OA for recovery of working capital loan sanctioned by it aggregating to ₹ 77.55 crore. The OA has been filed inter alia seeking relief / interim relief that (a) issues a joint recovery certificate of a sum aggregating to ₹ 76.55 crore and further interest thereon; (b) certificate for enforcement of securities; (c) sale of movable and immovable properties towards satisfaction of the claims; (d) appointment of a fit and proper person to be appointed as a receiver for the immovable and movable properties and (e) hypothecated goods and mortgaged assets be ordered to be sold and proceeds be permitted to be appropriated towards dues. The said OA is pending before the DRT.

14. Our Bank has filed an Original Application bearing number 156 of 2014 (“OA”) against M/s Hind Buildtec Private Limited and others (“Defendants”) before the Debts Recovery Tribunal, Lucknow (“DRT”). The OA has been filed by the Bank for recovery of certain dues arising out of various credit facilities sanctioned by the Bank to the Defendants. The OA has been filed inter alia seeking relief / interim relief that (a) the Defendants be, jointly and severally be directed to pay debt aggregating to ₹ 61.87 crore and future interest at the rate of 15.70% per annum with monthly rests till the date of payment and to draw recovery certificate; (b) sale of hypothecated movable assets on the failure to pay the said outstanding amount; (c) injunction restraining the Defendants, their servants, agents and representatives from alienating, dealing with, disposing off and/or creating their party rights in its properties. The said OA is pending before the DRT.

15. Our Bank has filed an Original Application bearing number 206 of 2014 (“OA”) against M/s Bengal India Global Infrastructure Limited & others (“Defendants”) before the Debts Recovery Tribunal – I, Kolkata (“DRT”). Our Bank has filed OA for recovery of short term corporate loan sanctioned by it aggregating to ₹ 50.00 crore. The OA has been filed inter alia seeking relief / interim relief that (a) the Defendants be, jointly and severally be directed to pay a sum of ₹ 56.53 crore inclusive of interest upto May 30, 2014 and further interest of 13.15% per annum with monthly rests till realisation; (b) injunction restraining the Defendants from disposing of / or alienating their assets till OA in pending; (c) appointment of receiver and for inventory 219

and sale of hypothecated and mortgaged properties. The said OA is pending before the DRT.

16. Our Bank has filed an Original Application bearing number 526 of 2014 (“OA”) against M/s Xenitis Infotech Private Limited and others (“Defendants”) before the Debts Recovery Tribunal – I, Kolkata (“DRT”). Our Bank has filed OA for recovery of facilities sanctioned by it. The OA has been filed inter alia seeking relief / interim relief that (a) certificate of ₹ 118.97 crore as on December 15, 2014 with further interest of 15.10% per annum with monthly rest till realisation; (b) injunction restraining the Defendants, their servants, agents and representatives from alienating, dealing with, disposing off and/or creating their party rights in their assets; (c) appointment of receiver and for inventory and sale of the hypothecated and mortgaged properties. The said OA is pending before the DRT.

17. Our Bank has filed an Original Application as Applicant No. 4 along with others jointly bearing number 29 of 2014 (“OA”) against M/s. Surya Vinayak Industries Limited and others (“Defendants”) before the Debt Recovery Tribunal, Sanskriti Bhawan, Keshav Kunj, New Delhi(“DRT”).The OA has been filed by the Bank under the consortium for recovery of working capital credit facilities provided to the Defendant sanctioned by it and the total outstanding due to the Bank as Applicant No. 4 as on December 31, 2013 is ₹ 136.34 crore. The OA has been filed praying for an order (a) to issue recovery certificate in favor of Bank against the Defendants, jointly and severally for the sum of ₹136.34 crore with further interest at the rate of 18% per annum with monthly rests plus 2% penal Interest from January 1, 2014 till realisation, (b) attachment and sale of the hypothecated assets and mortgaged properties of the Defendants (c) injunction restraining the Defendants, their servants, agents and representatives from alienating, dealing with, disposing off and/or creating their party rights in its properties (d) local commissioner be appointed to prepare an inventory of all assets mentioned in the Joint Deed of Hypothecation, (e) appointment of a fit and proper person to be appointed as a receiver for the properties of the Defendants, (f) direction upon the Defendants to disclose their personal assets and further reliefs as the court deems fit and proper. The said OA is pending for hearing before the DRT.

18. Our Bank has filed an Original Application bearing number 490 of 2015 (“OA”) against Vikash Smelters & Alloys Ltd. and others, represented through the Official Liquidator (“Defendants”) before the Debt Recovery Tribunal -1, Kolkata (“DRT”). The OA has been filed for recovery of term loan aggregating to ₹ 81.26 crore. The OA has been filed inter alia seeking relief / interim relief that (a) to issue a certificate of recovery of a sum of ₹ 81.26 crore with interest charged upto September 13, 2015 at the rate of 13.7% p.a. to be paid jointly and severally by the Defendants and also pendent lite and future interest from September 14, 2015 at the rate of 13.7% p.a. (b) to order sale of hypothecated assets and mortgaged properties and adjust the sale proceeds toward satisfaction of the said amount (c) to pass an order of injunction directing all Defendants not to alienate their personal movable and immovable properties (d) to appoint a receiver /special officer to make an inventory of all movable and immovable properties. The said OA is presently pending before the DRT. Further, please confirm whether any interim order has been passed by DRT as on date.

19. Our Bank has filed an Original Application bearing number 724 of 2015 (“OA”) against Mallikarjun Cold Storage Private Ltd and others (“Defendants 1”) and M/s. Prafullya Cold Storage and others (“Defendants 2”) before the Debt Recovery Tribunal - , Kolkata (“DRT”). The OA has been filed for recovery of various credit facilities sanctioned to Defendants 1 and Defendants 2 amounting to ₹ 51.38 crore and 33.12 crore respectively. The OA has been filed inter alia seeking relief / interim relief that (a) Defendants 1 be directed to jointly and severally pay to the Bank a sum of ₹ 51. 38 crore inclusive of interest calculated upto July 31, 2015 with further interest from August 01, 2015 at the rate of 12% p.a. till realization (b) Defendants 2 be directed to jointly and severally pay to the Bank a sum of ₹ 33.12 crore inclusive of interest calculated upto July 31, 2015 with further interest from August 01, 2015 at the rate of 12% p.a. till realization (c) a certificate be issued for enforcement of securities of Defendants 1 and 2 for realization of the amount (d) an order for injunction restraining Defendants 1 and 2 from dealing with or disposing off and or otherwise encumbering or transferring movable and immovable properties without the leave of DRT (e) receiver be appointed to make an inventory of the properties and take possession of the same. The said OA is presently pending before the DRT.

20. Our Bank has filed an Original Application bearing number 315 of 2015 (“OA”) in Debts Recovery Tribunal I, Kolkata (“DRT”) against S.P.S. Rolling Mills Limited and others (“Defendants”) for recovery of dues amounting to ₹ 103.97crore including interest. The OA has been filed inter alia, seeking relief / interim relief 220

for (a) order for restraining the Defendants from disposing off or alienating the properties, (b) appointment of receiver for taking possession of hypothecated goods and (c) for inventory and sale of the hypothecated properties of the Defendants. The said OA is currently pending.

21. Our Bank and others have filed an Original Application bearing number 522 of 2015 (“OA”) against M/s REI Agro Limited & others (“Defendants”) before the Debts Recovery Tribunal – I, Kolkata (“DRT”). Our Bank being one of the lenders in consortium of banks has filed OA for recovery of cash credit facility and packing credit facility sanctioned by it aggregating to ₹ 200.00 crore for cash credit facility and 10.50 crore for packing credit facility. The OA has been filed inter alia seeking relief / interim relief that (a) issues a recovery certificate of a sum aggregating to ₹ 237.99 crore along with interest at the rate of 13% per annum for cash credit facility and at the rate of 17.50% per annum for packing credit account from April 1, 2015 till realization thereon; (b) certificate of sale relating to the properties for realisation of the dues; (c) interim recovery certificate to be issued for admitted liabilities. The said OA is pending before the DRT.

22. Our Bank and others have filed an Original Application bearing number 298 of 2016 (“OA”) against M/s Arvind Remedies Limited & others (“Defendants”) before the Debts Recovery Tribunal – II, Chennai (“DRT”). Our Bank being one of the lenders in consortium of banks has filed OA for recovery of various facilities sanctioned by it aggregating to ₹129.39 crore. The OA has been filed inter alia seeking relief / interim relief that (a) the Defendants be, jointly and severally be directed to pay debt aggregating to ₹ 56.00 crore with interest thereon at the rate of 11.90% per annum plus penal interest at the rate of 3% (simple) per annum, with monthly rests for the cash credit facility; (b) to issue recovery certificate for the amount ordered and to be paid with pendentelite and further interest; (c) interim injunction restraining Defendants from transferring or creating any encumbrance over the properties in favour of third parties and also direct sub registrar not to effect any registration without knowledge and information of the Banks pending disposal of this OA. The said OA is pending before the DRT.

23. Our Bank has filed an Original Application bearing number 384 of 2015 (“OA”) against M/s JSB Cement LLP & others (“Defendants”) before the Debts Recovery Tribunal – II, Mumbai (“DRT”). Our Bank has filed OA for recovery of various credit facilities sanctioned by it. The OA has been filed inter alia seeking relief / interim relief that (a) the Defendants be, jointly and severally be directed to pay a sum of ₹ 46.45 crore together with pendentelite and future interest of 15.90% per annum with monthly rest till realisation plus all costs; (b) properties mortgaged and hypothecated be attached and sold towards realization of the debts; (c) appointment of receiver. The said OA is pending before the DRT.

24. Our Bank and others have filed an Original Application bearing number 840 of2015 (“OA”) against M/s. Milk Specialties Limited and others (“Defendants”) before the Debts Recovery Tribunal -I, Chandigarh (“DRT”). The OA has been filed by the Bank for recovery of credit facilities provided to the Defendant sanctioned by it aggregating to ₹ 32.25 crore. The OA has been filed praying for an order of (a) grant of recovery certificate of payment of ₹ 32.25 crore (b) appropriate recovery certificate / order to the effect that the aforesaid amount may kindly be recovered besides from the Defendants personally, simultaneously from the sale of the mortgaged property/ hypothecated assets (c) appointment of a fit and proper person to be appointed as a receiver for the properties of the Defendants,(d) injunction restraining the Defendants, their servants, agents and representatives from alienating, dealing with, disposing off and/or creating their party rights in its properties (e) Defendants be directed to provide solvency to the extent of banks claim to the Hon’ble court (f) direction upon the Defendant to disclose their personal assets and further reliefs as the court deems fit and proper. The said OA is pending for hearing before the DRT. Subsequently the Bank has filed an Interim application in OA before the DRT, praying for an interim order and relief in the nature of (a) appointment of a receiver to manage the affairs/business of the firm and to take custody of the movable and mortgaged properties, (b) attachment before Judgment and (c) pending that an interim injection restraining the alienation /parting with possession of the mortgaged properties during the pendency of the OA be passed as there is an apprehension that the Defendants are likely to sell with malafide intention the mortgaged/hypothecated properties in order to defeat the recovery certificate which is likely to be granted in favor of the Bank.

25. The Bank has filed an Original Application bearing number 221 of 2016 (“OA”) against M/s. Reacon Engineer (India) Private Limited and others (“Defendants”) before the Debt Recovery Tribunal – 1, Kolkata (“DRT”). The OA has been filed by the Bank for recovery of credit facilities provided to the Defendant 221

sanctioned by it aggregating to ₹ 37.66 crore. The OA has been filed praying for an order of (a) grant of certificate of payment of ₹ 37.66 crore with interest at the rate of 13.20% per annum together with future interest starting from March 1, 2016 until full and final payment/ realisation, (b) leave to amend the plaint towards its claim against the contingent liability of Defendants, when crystallized (c) receiver be directed to attach and sell the hypothecated assets and mortgaged properties of the Defendants as also other assets of the Defendants in the manner permissible with direction to pay the net sales proceeds thereof to the applicant for appropriation in protanto satisfaction of the applicants claim (d) appointment of a fit and proper person to be appointed as a receiver for the properties of the Defendants,(e) injunction restraining the Defendants, their servants, agents and representatives from alienating, dealing with, disposing off and/or creating their party rights in its properties (f) interim certificate for payment of ₹ 37.66 crore with interest from March 1, 2016 (g) direction upon the Defendant to disclose their personal assets and deposit of passport as well as further reliefs as the court deems fit and proper. The said OA is pending for hearing before the DRT.

26. Our Bank and others have filed an Original Application bearing number 540 of 2015 (“OA”) against M/s. KMP Expressways Limited and others (“Defendants”) before the Hon’ble Debt Recovery Tribunal – II, Delhi (“DRT”). The OA has been filed by the Bank under the consortium for recovery of credit facilities provided to the Defendant under the common rupee term Loan sanctioned by it and the total outstanding due to the Bank as Applicant No. 8 as on September 30, 2015 is ₹ 72.44 crore. The OA has been filed praying for an order (a) to issue recovery certificate in favor of Bank against the Defendants, jointly and severally for the sum of ₹ 72.44 crore due as on September 30, 2015 with further interest and other charges thereon till realisation, (b) attachment and sale of the charged, hypothecated, mortgaged properties of the Defendants and proceeds thereof be appropriated toward the satisfaction of the of dues under the recovery certificate (c) restrained from receiving any amount from the Government of Haryana or any other party/ entity in respect of refund/ transfer of project without the permission of the DRT (d) restrain the Defendants from receiving any book debt or receivables and direct the Defendants to issue instructions to its Debtors to make payments directly to the DRT or to the Bank (e) injunction restraining the Defendants, their servants, agents and representatives from alienating, dealing with, disposing off and/or creating their party rights in its properties (f) the Defendants to disclose their personal properties and assets and further reliefs as the court deems fit and proper. The said OA is pending for hearing before the DRT.

27. Our Bank has filed an Original Application bearing number 30 of 2016 (“OA”) against Arch Pharmalabs Limited and others (“Defendants”) before the Debt Recovery Tribunal – 1, Mumbai. (“DRT”). The OA has been filed by the Bank for recovery of term loan and corporate loan sanctioned by it aggregating to ₹ 85.01 crore. The OA has been filed inter alia seeking relief / interim relief that (a) the Defendants be, jointly and severally be directed to pay the entire outstanding amount of ₹ 85.01 crore together with further interest plus penal interest at the rate of 2% starting from December 31, 2015 until full and final payment/ realisation (b) on the failure to pay the said outstanding amount, to order for attachment and sale of the secured assets of the Defendants (c) injunction restraining the Defendants, their servants, agents and representatives from alienating, dealing with, disposing off and/or creating their party rights in its properties (d) appointment of a fit and proper person to be appointed as a receiver for the immovable and movable properties and (e) appointment of a commissioner for taking inventory and submitting report of the properties. The said OA is pending for hearing before the DRT.

28. Our Bank has filed an Original Application bearing number 461 of 2016 (“OA”) against Jogeshwari Breweries Private Limited and others (“Defendants”) before the Debt Recovery Tribunal, Pune (“DRT”). The OA has been filed for recovery of loan sanctioned aggregating to ₹ 61.98 crore. The OA has been filed inter alia seeking relief / interim relief that (a) The Defendants be ordered to pay jointly and severally ₹ 61.98 crore plus accrued interest from December 01, 2015 together with future interest plus other charges whatsoever (b) immovable property mentioned in the loan agreement be ordered to be attached and seized and ordered to be sold and appropriate the proceeds towards satisfaction of the Banks claims and (c) order of injunction restraining the Defendants from alienating or transferring the movable/immovable properties owned by them. The said OA is pending for hearing before the DRT.

29. Our Bank has filed an Original Application bearing number 79 of 2016 (“OA”) in Debts Recovery Tribunal I, Mumbai (“DRT”) against P.K. International Exports Limited and others (“Defendants”) for recovery of dues amounting to ₹ 53.31 crore including interest. The OA has been filed inter alia¸ seeking relief / interim relief for (a) order for restraining the Defendants from disposing off or alienating the properties, (b) 222

appointment of receiver / commissioner to take possession of hypothecated goods, (c) order of attachment in respect of hypothecated assets and (d) appointment of court commissioner for taking inventory and submitting report of hypothecated goods. The said OA is currently pending.

30. Our Bank has filed an Original Application bearing number 456 of 2016 (“OA”) in Debts Recovery Tribunal, Pune (“DRT”) against Bilcare Limited and others for recovery of dues amounting to ₹ 75.24 crore including interest. The OA has been filed inter alia¸ seeking relief / interim relief for (a) declaring valid and subsisting charge on immovable property and (b) attachment and seizure of the hypothecated assets. The said OA is currently pending.

31. Our Bank has filed an Original Application bearing number 130 of 2016 (“OA”) in Debts Recovery Tribunal – I, Kolkata (“DRT”) against Shree Ganesh Jewellery House (I) Limited and others (“Defendants”) for recovery of dues amounting to ₹ 96.37crore including interest under a consortium arrangement. The OA has been filed inter alia, seeking relief / interim relief for (a) order of injunction for restraining the Defendants from disposing off or alienating the assets, (b) appointment of receiver and (c) order for inventory and sale of hypothecated properties. The said OA is currently pending.

(iii) Tax cases

A. Direct Tax

Below are the details of Income tax cases pending before CIT(A):

Sr. No. Assessment Year Amount involved (In Crore) 1. 2004 – 2005 22.19 2. 2006 – 2007 14.19 3. 2007 – 2008 15.67 4. 2008 – 2009 - 5. 2010 – 2011 44.08 6. 2011 – 2012 127.11 7. 2012 – 2013 246.45 TOTAL 469.69

B. Indirect Tax

Below are the details of indirect tax cases pending before CESTAT and CIT(A):

Sr. No. Period under dispute Forum Tax Involved (In Penalty involved Crore) (In Crore) 1. July 1, 2003 to September 30, 2007 CESTAT 0.1888 0.1888 2. September 10, 2004 to September 30, 2008 CESTAT 10.43 10.43 3. August 1, 2006 to March 31, Commissioner 2008 (Appeals-I) 0.006 0.006 4. April 1, 2006 to March 31, 2009 CESTAT 2.16 2.09 5. May 16, 2008 to July 6, 2009 CESTAT 132.38 132.39 6. June 16,2005 to March Commissioner 31,2010 (Appeals-I) 0.098 0.098 7. April 1, 2012 to November 30, 2104 CESTAT 24.11 24.11 TOTAL 169.38 169.32

C. Cases against our Directors

223

There is no litigation or legal action pending or taken by any ministry or department of the Government or any statutory authority against our Directors.

D. Material Developments

There are no material developments, since the date of the last financial statements disclosed in this Placement Document.

E. Penalties imposed on our Bank in the past

1. SEBI vide order dated September 10, 2015 had imposed a penalty of ₹ 2 lacs on our Bank in connection with alleged violation of SEBI (Debenture Trustee) Regulations, 1993. Our Bank has paid the said penalty amount on October 09, 2015.

2. FIU vide its order dated April 29, 2014 had imposed a penalty of ₹ 0.05 crore on our Bank for not filing Cash Transaction Report, violating section 12 of Prevention of Money Laundering Act, 2002. Our Bank has paid the said penalty amount.

3. RBI vide its press release dated July 15, 2013 had imposed a penalty of ₹ 2.50 crore on our Bank for non compliance of RBI instructions on KYC/AML system. Our Bank has paid the said penalty amount.

4. RBI vide its letter dated March 24, 2014 had imposed a penalty as per section 42 of RBI Act of ₹ 0.01 crore on our Bank for not maintaining CRR balance. Our Bank has paid the said penalty amount.

F. Actions taken by regulatory authorities in past

1. RBI vide its letter dated February 14, 2014 had imposed certain Prompt Corrective Actions (“PCA”) with respect to structured and discretionary actions which were to be taken by our Bank. Thereafter, vide RBI letter dated March 25, 2015 the PCA was removed for restriction on sanction of advances, participation in restructuring proposal etc. However, relaxations for credit growth were subject to fulfilment of certain conditions.

224

INDEPENDENT ACCOUNTANTS

The present statutory auditors of our Bank, M/s. Nundi & Associates, M/s. Mookherjee, Biswas & Pathak and M/s. Arun K. Agarwal & Associates, are independent auditors in accordance with the guidelines issued by the ICAI. Further, the audited financial statements as of and for the years ended March 31, 2016 and March 31, 2015 have been audited by M/s. Ramamoorthy (N) & Co., M/s. Nundi & Associates, M/s. P C Bindal & Co., and M/s. S P M R & Associates, and for year ended March 31, 2014 has been audited by M/s Dinesh Mehta & Co., M/s. Ramamoorthy (N) & Co., M/s. P C Bindal & Co., and M/s. S P M R & Associates, whose audit reports are included in this Placement Document. The unaudited financial results of the Bank as of and for the nine months ended December 31, 2016, included in this Placement Document have been subjected to limited review by M/s. Nundi & Associates, M/s. Mookherjee, Biswas & Pathak and M/s. Arun K. Agarwal & Associates.

225

GENERAL INFORMATION

1. Our Bank was constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 on July 19, 1969. Our Bank is one of the 14 banks which were nationalised on July 19, 1969. On October 12, 1950, the name of Bengal Central Bank Limited (established in 1918 as Bengal Central Loan Company Limited) was changed to United Bank of India Limited for the purpose of amalgamation and on December 18, 1950, Comilla Banking Corporation Limited (established in 1914), the Comilla Union Bank Limited (established in 1922), the Hooghly Bank (established 1932) stood amalgamated with the Bank. Subsequently, other banks namely, Cuttack Bank Limited, Tezpur Industrial Bank Limited, Hindusthan Mercantile Bank Limited and Narang Bank of India Limited were merged with the Bank.

2. Our authorized capital is ₹ 3,000.00 crore divided into 300 crore Equity Shares of ₹ 10 each. Prior to the Issue, the issued, subscribed and paid-up share capital of our Bank is ₹ 1,339.44 crore comprising of 1,33,94,49,372 Equity Shares of ₹ 10 each. For further details please see section “Capital Structure” beginning on page 65.

3. The Head Office of the Bank is located at United Tower, 11 Hemanta Basu Sarani, Kolkata – 700001, West Bengal, India.

4. The Issue was authorized and approved by our Board of Directors by resolutions dated January 28, 2016 and approved by our shareholders, pursuant to a resolution passed at the AGM held on June 28, 2016.

5. We have obtained all consents, approvals and authorizations required in connection with this Issue including RBI recommendation dated November 29, 2016 received on December 3, 2016 and GoI Letter dated December 14, 2016 in respect of offering our equity share.

6. The Bank has received an exemption from SEBI in respect of compliance with minimum public shareholding as specified under the SCRR and Listing Agreement for present issue vide their letter dated April 5, 2016.

7. We have applied for in-principle approvals from the Stock Exchanges under regulation 28(1) of the Listing Regulations with the Stock Exchanges for the issue of the Equity Shares. We will apply for in-principle and final approvals to list our Equity Shares to be issued in the Issue on the BSE and the NSE.

8. Except as disclosed in this Placement Document, we are not involved in any material legal proceedings and we are not aware of any threatened legal proceedings, which, if determined adversely, could result in a material adverse effect on our business, financial condition or results of operations.

9. There has been no material change in our financial or trading position since December 31, 2016, the date of the Unaudited Financial Statements of our Bank prepared in accordance with in accordance with Standard on Review Managements (SRE) 2410 and March 31, 2016, the date of the last audited financial statements of our Bank prepared in accordance with Indian GAAP included in this Placement Document, except as disclosed herein.

10. M/s. Nundi & Associates; M/s. Mookherjee, Biswas & Pathak and M/s. Arun K. Agarwal & Associates, Chartered Accountants have consented to the inclusion of their certificate on the statement of tax benefits dated March 20, 2017 in connection with the Issue.

11. The financial statements of our Bank included herein have been prepared in accordance with Indian GAAP as applicable to companies in India. Unless the context otherwise requires, all financial data in this Placement Document are derived from our Financial Statements and Interim Financial Statements. Indian GAAP differs in certain significant respects from IFRS and U.S. GAAP.

12. Our Bank and the BRLMs accept no responsibility for statements made otherwise than in this Placement Document and anyone placing reliance on any other source of information, including our website www.unitedbankofindia.com, would be doing so at his or her own risk.

226

13. The Floor Price for the Issue is ₹ 24.44 per Equity Share calculated in accordance with Regulation 85 of the ICDR Regulations as certified by M/s. Nundi & Associates; M/s. Mookherjee, Biswas & Pathak and M/s. Arun K. Agarwal & Associates, Chartered Accountants. Our Bank offered a discount of 5% on the Floor Price in terms of Regulation 85 of the ICDR Regulations.

14. Details of Compliance Officer:

Shri Bikramjit Shom

Company Secretary and Compliance Officer

United Tower 11 Hemanta Basu Sarani Kolkata – 700 001 West Bengal, India Tel: +91 33 22487472 Fax: +91 33 2248 5852 Email: [email protected]

227

FINANCIAL STATEMENTS

Financial Statements Page No Unaudited financial results as of and for nine months period ended December 31, 2016 F – 1 Audited financial statements for the Fiscal Year ended March 31, 2016 F – 17 Audited financial statements for the Fiscal Year ended March 31, 2015 F – 62 Audited financial statements for the Fiscal Year ended March 31, 2014 F – 112

228

The Board of Directors Bank of lndia 2016 United ENDED 31't December, NINE^,rrrr MONTnnoNTlls THE QUARTER AND REPORT FOR LIMITED REVIEW lndia for of united Bank of financial resurts statement of unaudited the accompanying we have reviewed :r"'"""'0"" 2016' rhis'*:*lJl':::ffi:;'iJ ltJ':iJ: the quarter and nine,:ilHi by the Board of Dire n* been approved Managemenr rno Bank,s based on our review' these financ"i'l"ut"rnt'nts report on -:,1"r:,:J:1?"il:Tiili',lrt"U:"# with the standard "i our review in accordance we conducted performed by the lndependentrTl, perform the review Financial rntor.otiun requirel *" o'rnand of lnterim of lndra' This Standard ' -' *'+ori2l misstatement' of cr,'arter"o o"..or-.',0"r, lnstitute : : ; r ; x':Til 1; "'' ",1 : :r1 : nilt** an audit and accordingly' i';; il: iliJl* Wet.=:H,ffi n"" Jti"'n1"o r ;:il T:iffi tnu-n-'n audit ""t p'o'iae'-lu" data and trl's """ntt an audit t'plnion' we do not express i :1 i: li i[Iil :i::::$ ] "#; fiT:; ff i :' :: :, "i : ;:T : : ffi * ", ilir;o,,*-(*,o,);yil,,[;l.T',,;,; :::'J:Tff ol)iit.oi rlon-p"..t"..,^* retu o1 .n" ,,,nt relied upon Various advance, po,.ttotlo ^a we have"':i also rn-trre corrduct December, zoro. ", "",,",i"*, of the bank' the branches tha:::uses us to believe has come: ou'attention as above' nothing on our review condrcted Based * n, n,, n f ,,,,, rh at rh e u..o,,, " ", ::,IiT:J:ffi f 1*[ Itfl 1[X*,1:'-il'i:lI':l:& Discrosure .tht:r ir'sr iLi,ting obrigations accounrinB ,,,n0ur0,"& '"'"*"'i::-1'::i:::[,iJ::;:1 i r' ;. il r:::r rr :: ilr : : lryi*: : : : ** ** ffi ffi :"* i:gi: preparediilj lHin acco ffi provisioning and o"ttut it has not been ctassification'ry* material of income ,"."r;;;;;asset ''"t""'i.r"nt Bant. of rndia in ,"r*o issued by the Reserve other related matters

Biswas & For M/s Mookherjee' Arun K' Agarwal ; For M/s & Pathak For Nundi & Associate: Associates Cha a nts Cha ntants FRN Charte FRN FRN Chatured

Charte'?d

rwaI CA' Sanka CA Mukherjee CA P a rtner Partner M.No 010807 Partner tvl No 082899 M.No.05987-8

Place: New Delhi Date: 7'h FebruarY, 2017

F - 1 i,- BANK OF INDIA IIEAD OFFICE:KOLKATA

UNAUDITED FINANCIAL RESULTS (REVIEWED) FOR THE QUARTER AND NINE MONTHS ENDED 31St DECEMBER 2016. (Rs. in lacs) Quarter Ended Nine Months Ended Year Edded 31.12.2016 30.09.2016 31.12.2015 31.12.2016 31.12.2015 31.03.2015 (Reviewed) (Reviewcd) (Rcviewed) (Reviewed) (Rcviewed) (Audited)

993667 I lntercst Earncd (r+b+c+d) 227198 223211 247070 593342 755782 s08725 662844 a) Interest/Discount on advanceVbills 140349 142369 164980 443100 303873 b) lncome on Investment 80057 74f34 7585 I 230261 22688s 2518 3844 c) Interest on balance with RBUOther interbank fund 2016 1500 962 4919 23106 d) Others 4776 5008 s27't 15062 t'l654 2 Other Incomc E1408 66120 3572t 1E6532 109403 146753 t140420 3 Totrl Incomc (1+2) 308506 28933r 282791 879874 8651E5 76s6tt 4 Intcrest Expended r91100 185571 186261 565054 568271 r85426 2072E6 297278 5 Opcreting Expcnses (i+ii) 64491 60101 73061 117454 t47215 2t3391 i) Payments to and provisions for employees 40s66 38400 51797 67972 600'n 83887 ii) Other operating experu;es 23925 2t70t 2tz$ 6 Totrl Expenditure (4)+(5) (Excluding Provision rnd Contingencies) 255591 245672 259322 7504E0 775557 1062889 7 Operrting Profit beforc Provisions and Contingencies (3)-(6) 53015 43659 23469 129394 E962E 71531 22250 1264E3 67E81 r48600 8 Provisions (Other thon tax) & Contingcncies 5E854 40103 0 0 0 9 Exceptionel Items 0 0 0 29rl 21741 (71069) l0 Profit (+yloss(-) from Ordinary Activitics before tax (7-8-9) (s839) 3556 t2l9 (11584) 8633 (42813) ll Tax Erpcnsc (122491 (7e7) (48r) tar (10-l 4353 1700 r4595 1310E (2Er96) 12 Net Prolit (+)/LossC) from Ordinrry Activities after l) 5410 0 0 0 0 13 Extmordinary Items (tret of ter expenscs) 0 0 r4595 r3108 (281e6) 14 Net Profit (+)/LossG) for the period (12-13) 6410 4353 r700 83952 133945 83952 83952 15 Paid-up equity share capital (Face Value of each share Rs. l0) I 33945 107196 439441 407501 439441 40750 I 16 Reserves excldg. Revaluation reserves (As per Balance sheet ofprevious 40'7501 407501 financial year) l7 Analyticol Rrtios 8872% 82.00% 8200% (i) Percentage of Shares held by G.O.L 88.72% 85.91% 82.00% 10.84% 9.92% 10.08% (ii) Capital Adequacy Ratio % 10.84% 10.88% 9.92% 6.99% 8.47% 6.99% 7.'14% (a) CET 1 Ratio 8.4'7% 8.s6% 0.13% 0.19o/o (b) Additional Tier I Ratio 0.19o/o 0.20% 0.13% o.t9% (iii) Eaming per Share (EPS) a) Basic and diluted EPS before Extraordinary items (net oftax expense) 0.48 0.41 0.20 t29 1.56 (3.36) for the quarter,period and for the year (not annualised) b) Basic and diluted EPS after Extraordinary items (net oflax expense) 0.48 041 0.20 t.29 1.56 (3.36) for the quarter,period and for the year (not annualised) (iv) NPA Ratio 672153 947101 (a) Amount of Gross NPAs 108453 | lL13447 672153 108453 I I 3 6 I l07l (b) Amount ofNet NPAs 672989 718521 396513 6't2989 3965 15.98o/o 9.57o/o 1126% (c) Percentage ofGross NPA 15.98% 1626% 9.57o/o 5.91% 9.04% (d) Percentage ofNet NPA t0.62% 11.t9% 5.91% 1062% 0.16% 0 14% -0.22% Retum on Assets 0.2r% 0.13% 00s%

Chartered ls

F - 2 Part A:BuFlness Segmentsl

Rs. ln

Ended Ended Year Ended ended ended 31.12.2015 31.03.2016 3t.lz.20L 30.09,2016 31.L2.20L5 31.L2.2016 Jflevibwed) L -(Reviewed) 3,85,424 6 2 a 3,05,560 82 4,64,865 , -iji 766 ' ' 70,889 7 159 7 ,729 57,125 5 ! !r , 555 ;,---;- ; ' : t47 L94 d)Other Banking operation L7 740 - 5,011 5,284 t5,o76 Ut I 185 1 0 1 2,82,791 8,79,874

'4 5 1 3 791 Total

8 153 L.24,296 50,343 5 a 0 77L 1 2 t7 38 522 8 684 1 161 3 7 2 73 953 194 55s on L47 119 901 3 9 69 ,7 Total net (2,47,988) 254 +t I unallocable income 89,628 531 5 3,469 Total 67, 87 103 3 cies 1 Provision& L,ZLg ll 2 Tax Profit Before L 8.633 - 87 L 95 13 108 z 1 10 700 L' PAT

3 058 2 0 96 76 2,54,807 8 a 622 ,615 877 749 olesale 749 b 98,09q 92 93,361 0 610 902 Banki L,40,972 7 '5 1,23,970 ,972 247 75 7 87 72 918 7 7 79 s.9s,912

Note :- i.e Domestic The Bank has on one

( C h arle,e C

Chartered

F - 3 UNITED BANK OF INDIA KOLKATA

as on.31st l)ecember '2016 Statement of Assets & Liabilities (Rs. in lacs)

31'03'2016 on 31'12'2015 As on As on 31.12.2016 As CAPITAL & LIABILITIES 83952 83952 1 33945 48000 Caoital 499967 Allotmr:nt 51 1 960 IiStJ c"pltrl Monev Pending 578743 11247594 11640127 Reserves & SurPlus 12769222 456280 291251 DePosits 247822 379878 383651 Borrowings 372889 12683437 12943175 Oit',er t-ia uirities and t t"*t':,".: 14102621 31'03'2016 on 31'12'2015 As on As on 31.12.2016 As ASSETS 607045 691426 544724 of lndia 225521 with Reserve Bank 1 0075 Cash and balances 140795 4472338 ftf"""V at Call and Short Notice 6060735 4599830 6749386 6806020 lnvestments 6369530 85806 121092 Advances 1 1 8380 711159 69361 6 Fixed Assets 721755 12683437 12943175 Other Assets 14102621 Total .l

n Clarle-erl Charlered iJ Acc is ,t * a\a

F - 4 REstrLrs FoR rr{r:

NorEs oN AccouNr;r'-?i',T:i"rrrll'::.:,ut:'?,'l[?u''*o*'rAL NINE-N/ QUAIITER AND ;'":'ff il i1i': :: n a n c a b ove r a ('errtral 1 r h e "':'i:: J;fi::"il':xli:ii statutorv :;;;;' .,"tl-::l:,"^:'d J:t J1"."J rcviewillil: bv the ')o17 ar' have been sublect"j'tl"l''u',,. 7in Fcbri'arY, Auditors of thc llank

b*en no ctrarrg'e in thc.Acc'ou:]'iil;:::: 2 rhere has as co l'J'"ff'1til'[il" ':'i;:'Jl::":':; 3Lst December' 2016 :.,;;;r;";;Jed 2016' ;;r":':' vt" t"ouo :i1" March' ., j, rhe f n a n c a': il::;:!i1irft 3 "' I:J,ll:,ffi: l::::[iliil".rion ff,#riHolo,,,r=touli, * ffiTi arrived at, after .cor for lnvestrnents lor Assc'ts and Depreciation/Provtstu"*u"r"""-t'nk of^ ur"",rion o"rirra,""O usual an. guidelines ittu"d.!y^.:..n ottiot:.,'-t:::J:X,:'"t;r,besides othcr norms and specific currency Exposure iiili"'"ii",-:;='::i:r:f ::::::il';l::L::i;:::'1"- nffi;i#|:::**;ffLrasis of actuarial on the "',''i:l esttmated basis' ;..ilril t'^ t*'" O"tn made on provision f or income

a R B c r cu lJ 4 n'i e r nr s'f : :J ?:lH- :i Xii'ii".:1,^,J':r* * : ii ;:f, ;;i: ff ;; io * tliiiliiff :::::, Ii'Jilli : ::::1.0"il",,n.- 0,',, 1'T'.T,'liilil.11 II, ;ff :; m'l c d ' o o'[' :: I ;'";"-" n' i;;r:n m;ll:l;#'l[''T: iililriiand the ;; ui sffi "1' "' ..0"""'il'Ule o:r llank's websitc Central Auditors' review by Statutory *t'l; s n accordanc" value ot llll,s;l;:T:,jt":"'-"),,l,tilli:i:#iiL+:j:'"'^"Jl'YlJil:nt.1o'1-i","^"^t during having face value Ksrffi;';;:oi"*'tt'Rs.2633 crore) 2575 60 crore tBook "r'r" rest face value of Rs impact on finar.rcial 1,,"*.ver, there is no 31,,December. ,0r,,

6 prov s on or Rs 1 yil"Ji;inlil:!:::t"frs":i:,l#illni:i? lll,,'j"lxj"L':';l,)"t:i,::l: t constituents has 1', I"r*'tt 01.2014 1he Iiabilitv 2ool2013-14 dated''-l.l;;;;;tn BP Bc 85/ 2106 tn., o'nn No statcments a\ ;;r;;t'; data and tinanr'ial 2016 is 54 62 Ilatio as at 3l"December 7. The Provision Covtlral3e quarter blilffi,:i::iiil#i*11:'.,m*rnliil During 1511 r 11e'r 8 (rovernment'n". o.rooo,. 2016 to "t ':l,',t-";J'rrlo,.ot determin.d lls 12 73 tt P'l'll'. t including' approval ,n"" rcceipt of requisite Regulations' 'non'aft"' g.lncompliancetol{Blletterno.DBR.No'8P.13018/21.04'048/201516dated12,04.2.016,8ank 14 i"'"*"i#ot'n" u ot Rs s2 "'otiilf::*X''1'1"1';"il,itl'bv has provrded '"'' ""'"the food credit' availed till t'" crore "iitrn# '"'ioluunder

C f,arl e,e i ,l cc

F - 5 tht: v.ar Companies during lO.lnaccordancewithUt-lAY(UiwalDiscomAssuranceYojna)Schcmeofcol,Ministryof[)owerDistributron ,"0",i.r'"iL'i ,lrnnro-a'oi"Oo*"' for operarionr, to uo'''iLn-soL UonA banr h;r'l'u",.it.'"0 :l :":ff["lill,tl1j::1;t:l]; 201s-16, the u' u :i :J'::i'l'ili:"J*l. if ],':ryi{',' l?l;i' * Tx, TJ, :i #;r ;;, ry rr. u. * il* : #rl on uv .,,., r rr,,io " I :,::ii::t'r'"lr1ij bs e qu ; ;;;;;i a nd su " ", errect i,;^i::irrom the Mav ro'u, ffi:il;;o':'li""o:"fii'J:'.il:1il'Ti' -;;il 11'n 'nl"'" these b 2017.1n case of non ':onverslon' * O" provided accordingly' date of restructurlng '^t' standard accounts) as 11'Resultsforninemorrthsended3lst.December,20l.6includeincrementalprovisionoflls,. restructured oi the outstandi",,;;;; 78.95 crore t,t z'sJz" ',0 instruction' Per RBI ended 31" off during the quartt:r received and disposed invcstors' co mplaints 12, I he number of is a:; under Decembe r,2016

201 6 er-rclecl l)ecernber l)r.r rin11 thtl Qtrartt:r

(-los it-r l) isPtlstl ci o{f 11 o r'll l)o Iit:t:t'ivccl NiI \ 14 14, I I It__

13 Thefiguresofprt:viousperiodhavebeenregiouped/rcclassifiedwhereverconsrdered to make thcm comparable' necessary in order

wan Baiai Officcr & Chief Executive lVlanaging Director

K.V.Ra ma moorttrY Executivc Director N.K.KaPoor Gencral Manager (ACCIS,GT,MSME) & CFC'

Biswas & For M/s Mookheriee' For M/s Arun K' Agarwal For Nundi & Associates & Pathak Associates Chartered Char Chartered Accountants FRN:301 t FRN FRN Chadered Accountanls

CA. Sank CA CA Mukheriee Partner Partner Partner M.No 010807 M No 082899 M No.059828

Place: New Delhi Date: 7'h FebruarY, 2017

F - 6 ,INDEPENDENT AUDITOR'S REPORT

To The Members of United Bank of India

Report on the Financial Statemente

1. We have audited the accompanying financial statements of UNITED BANK OF INDIA as at 31"t March, 2016, which comprise the Balance Sheet as at March 37,2076, and Profit and Loss Account and the cash flow statement for the year ended on that date, and a summary of significant accounting policies and other explanatory information. Incorporated in these financial statements are the returns of 20 branches and treasury operations audited by us and 670 branches/retail hubs audited by branch auditors. The branches audited by us and those audited by other auditors have been selected by the Bank in accordance with the guidelines issued to the Bank by the Reserve Bank of India. Also incorporated in the Balance Sheet and the Statement of Profit and Loss Account are the returns from 35 Regional Offices, 1319 branches, 1 Staff Training Colleges, 1 Cash Management System and L Central Pension Processing Cenhe, which have not been subjected to audit. These unaudited branches account for 9.87% of gross advances, 36.55"/" of deposits, 8.95% of interest income and 36.26o/" of interest expenses.

Management's Responsibility for the Financ ial Statements 2. Management is responsible for the preparation of these financial statements in accordance with Banking Regulation Act 7949, Reserve Bank of India guidelines from time to time and accounting standards generally accepted in India. This responsibility includes the design, implementation and maintenance of internal conkol relevant to the preparation of the financial statemenb that are free from material misstatement, whether due to fraud or error.

Auditor/s Responsibility 3. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted out audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement,

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement in the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal conhol relevant to the Bank's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstance$, but not for the purpose of expressing an opinion on the effectiveness of the bank's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

5, We believe that the audit evidence we have obtained is sufficient and appropriatd to provide a basis for our audit opinion.

Opinion 6. In our opinion, as shown by the books of the bank and to the best of our information and according to the explanation given to us:

(t) The Ba lance Sheet r ead with the notes thereon is a full and fair Balance Sheet of the Bank containing all the necessary particulars is properly drawn up so as to exhibit a true and fair view of

Charlered red.

F - 7 state of affairs of the Bank as at 31rt Mar ch, 2016 in conformity with accounting principles generally accepted in India;

(ii) The Profit and Loss Account, read with the notes thereon shows a true balance of Loss, in conformity with accounting principles generally accepted in India, for the year covered by the accoun! and

(iii) The Cash Flow Statement gives a true and fair view of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements 7. The Balance Sheet and the Profit and Loss Account have been drawn up in accordance with the provisions of section 29 of the Banking Regulation Act, 1949.

8. Subject to the limitations of the audit indicated in paragraph 1 to 5 above and as required by the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, and subject also to the limitations of disclosure required therein, we report that:

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

(b) The transactions of the Bank, which have come to our notice, have been within the powers of the Bank; and

(c) The returns received from the offices and branches of the Bank have been found adequate for the purposes of our aud it.

10. We further report that: a) The Balance Sheet and Profit and Loss account dealt with by this report are in agreement with the books of account and returns; b) The reports on the accounts of the branch offices audited by branch auditors of the Bank under section 29 of the Banking Regulation Act,'1.949 have been sent to us and have been properly dealt with by us in preparing this repor0 c) In our opinion, the Balance Sheet, Profit and Loss Account and Cash FIow Statement comply with the applicable Accounting Standards.

For Ramamoorthy(N) & Nundi & Aseociates. PCBindal&Co. SPMR&Associates. Co. Chartered AccountanB r/ Chartered Accountants Chartered Accountants Chartered Accountants FRN:002r4FG'rI ,/ FRN:30e0ffiffi FRN:003ffi fRN:OOZSZSIJ- ),,1;,.

€fdffi \46-m -'-\ c) ce.surl(pffifi3ffiathi CA.Soum\!$ffia-/ (e.saffi,!/ CA.Pramd{fra}ffi 1$'tlfari \-- \:7 \El#t/ Partner Partner Y Partner Partner M.No:023837 M.No:059828 M.No:093783 M.No:085362

Date: 17s May 2016 Place: Kolkata

F - 8 ST MARCII 2I (R9, lr ltg!) Ycar Ended

3r.03.201s !t:or?-ol6 . t !.03.?015 (Au{!at) I (A$l!ed) (AP4ltctt) | 1018048 xs7l86 I ?e]667 ?04083 I fi86521 662844 303873 i1tst2 3844 e9l7 21106 170t6 146753 17 4691 ll9z739 2 3t5312 I 140420 768982 3 t8608! 763611 180963 4 50034 193629 103829 5 26741 109742 17134 23293 E3887

939240! 949943 6 236 t9

and Contlngencles (3)-(6) 242794 Operollng Proflt beforG Provlslons 47gqq 79193 21s33 197!84 l17t4l 45781 67610 than l8x) & Conllngencles q I Provlslons (Other 0 0 0 4s410 9 Exceptlonal llens I t5E3 (7-&9) (e2Eto) tzlg fronr Ordlnary Acllvltles before tax l98l I l0 prrnliilll,.$tl (5I s06) (4Er) ll3li il Tax DxPense I afler te r (10''l l) (28 25599 from Ordlnory Activltles r o4s2 ! le6) t2 ll.il,-rrnr tiyL*s(-) (41 304) 1700 . i. 0 0 0 0 oi llems (nel of lax erptnses) (28le6) 25599 l3 Exlr0ordlnory. (4llo4) 1790 10452 i for lhe perlod (l2rI3) E3952 83952 t4 Nel Proflt (+)/Losst) . 83952 83ss2i Rs lu) 83952 capilal (Face Value ofeach share 419441tl 40750 439441 l5 Paid-up equity sltare 407501 439441 rcscrvcs (Aq per Balancc shccl of I l6 i.."*';t li.ra, oevaluation I previous financial Year) .tI 82.O)voi 82.00o/o 1 Analyllcsl Ratlos 82.00% 82.00% 82.00%i (i) Percentage ofshares held by G'O L I AdequacY Ratio % rc.46%:4 ll.42Yol (ii) Capihl 10.46% t0j|% r.42%l Basel-ll t0.08%; to.51% a) 10.08% 992% 10.51%i b) Basel-lll I (EPS) (iii) Eanring Share J Per I uerore Extraordinary items (net of tax. (3 36)! 3.78 i ii6"rl. ipi (4.e2) o.2oi l.4l ",iairr,"a for lhe year (trot afl*:lOt1l *p.rr.ii"t,ft" qrarter,period and I i cxpense)-^- EPS afler Extraorfinqry itcnrs (rrct oftax 378 i Uj nrri. ,rta diluied (4.e2) 0.20 l.4l (3.36) I (notannuallseq,1 rlre qtrarter,period and for lltc year 947101t. 655291i foi 947101 672153 6s52gl 408r381 of Gross NPAs I 6ll07ll (iv) (a) Anrourlt 6l l07l 3e65 I I 408 38 (b) Amourrl of Net NPAs g.4g% it.zou"i s.As%l t3.26% 9.57.Vo (c) ofCross NPA 9.04%l 6.22%.1 Percentagc 9.04% 5.9t% 6.22Yo ofNet NPA -0.22% 0.2lo/o\ (rl) Percentagc -1.28% 0.05% 0.!50/o (%) i (v) Relum ort Assels (tutnualised) I I 5 1,085,34 I 151,085,341i t8 Public ShareholdinC I 5 1,085,34 I I 51,08t,34 I l8 00%! i No. ofshares 18.00% 18.00o/o l8.00Yo I Percenlage of shareholding I i promoter group Shareholding t9 Pronrorers and i i Nil i a) Pledged/Encurnbcrcd Niri Nil! NiII Nil I No.ofshares Nil Nirl Nil and Nili a % ofllp total shareholding ofprornoter I i t.t".'rrt";rr,res(as I I Nil ipronroter grouP) Nili Nil Niti Nil shue capilal oflhe company) l (as i % ofthp lotal I i'p.t..rirt. I "rrirre 'i I I I 688,430,610 Non-encurnbered I 0 688,430,6 b) 688,430,6101 688,430,610 68S,430,6 i I 009; No. ofshates 100% t00%t promol€r and lOOY,I I a oZ oflhe lotal shareholding of p","ilr"g" i I "f.f,.es(as ,t 82.00% prornoler grouP) 82.00% 82.Ol%oi 82.00%l 't"rLr"t-t oflhe comPany) 82.00%l ..1 (es a % oftlto lolal share capilal "l i "ftit"re i

'Charlered. Charlered o) Accountants Charlered o .o *

F - 9 UNITED BANK OF INDIA KOLKATA l Statement of Assets & Liabilities as on 31st Marc 2016

(Rs. ln lacs)

PITAL & LIABIL'TIES As on 31.03.2016 As on 31.03.2015

83952 83952 Share Capital Money Pendi ng-Allotmgrt! 48000

Re 9.eryes _q 9_s.fP-lvl 499967 498852 its 11640127 1 0881 760 B_oJgwjn"s-9- 291251 406173 Other Liabilities and Provisions 379878 432021 Total 12943175 12302758

ASSETS As on t1 03.2016 As on 31.03.2015

Cash and balances with Reserve Bank of lndia 607045 581560 Mon-ey a! Shqrt.Notice 225521 21494 -C_al!gnd lnvestmenls 4472338 4324549 nces 6806020 6676304 Fixed Assets 121092 87741 Assets 7 11159 61 11 10 Total 12943175 12302758

Charlered ' Chartered Accounlanls

F - 10 I

Segment RePortlng:

Part A:Business Segments:

Rs. ln Lacs

Quarter Quarter Quarter Year Ended Year Ended ended ended ended 31.o3.2016 3l.o3.zo15 31.03.201 gl.l2.2o15 3 1.03.2015 I nt 42 i0 L 6 7l L77 a reasu 5 50 L 71 65 ,lesale 1 7 b Co o Banki 66 2 ,99L 7B 7 934 Retail Banki 953 ,767 0 232 895 0ther Ban o 77, 84 591 74L e nallocated Income 1 1 192 739 36 282 79L 3 312 Total 2 nt Revenue Less: I n ters 312 l 192 739 2 36 282 79L 3 Total 0 0 0 0 2 ent Results:P t 13 29, 1L 3 a asu rations 6 I 740 17 555 2 1 L1 olesale Banl

3.Ca 965 t9 1 ?.0 965 2t I 199,06L a 0ns 21 700 2L 2L 700 z2 lesal e Banl

Note:- nt i.e Dornestic S ent e Bank ltas one Geo ical

ChartereC ChartereJ titants \

F - 11 NOTES ON ACCOUNTS FORMING PART OF AUDITED TINANCIAL RESULTS FOR THE QUARTER AND YEAR ENDED 31STMARCH,2076

1,. The above financial results have been reviewed by the Audit Committee of the Board and approved and taken on record by the Board of Directors of the Bank in.its meeting held on 77u May,2016 and have been subjected to audit by the Statutory Central Auditors of the Bank.

2. There has been no change in the Accounting Policies followed during the quarter / year ended 31't March, 20'1.6 as compared to those followed in the preceding financial year ended 3L't March 2015.

3. The figures of quarter ended 31st March 20'1.6 are the balancing figures between audited figures in respect of the full financial year and year-to-date figures upto the period ended 31st December 2015.

4. The financial results for the Quarter and year ended 31't March, 2015 have been arrived at, after considering provisions for Non-Performing Assets, Standard Assets, Restructured Assets and Depreciation/Provision for Investments on the basis of prudential norms and specific guidelines issued by the Reserve Bank of India (RBI), provision for exposure to entities with Unhedged Foreign Currency Exposure besides other usual and necessary provisions. Provision for Employee Benefits pertaining to gratuity and pension has been made on the basis of actuarial valuation during the current quarter and year ended 3L't March,2016.

5. Pursuant to RBI circular DBOD.NO.BP.BC./21.06.207/2013-14 dated July 01, 2013 covering guidelines on pillar 3 disclosures under Basel III capital requirements with effect from 30th September 2013, the disclosures are being made available on bank's website. These disclosures have not been subjected to limited review.

6. Provision of Rs.1.11 Crores towards Unhedged Foreign Currency Exposure (UFCE) has been made as on 31't March, 20'1,6 in terms of RBI Circular DBOD No.BP.BC.85/2'1.06.200 /2013-1.4 dated 15.01.2014. The liability has been estimated based on available data, and financial statements available with the bank.

7. Pursuant to RBI circular DBR.BP.BC.No.31/21.04.018/201.5-16 dated 16tt July 2015, effective quarter ended 30th June 2075, the Bank has included its deposits placed with NABARD/SIDBI/NHB on account of shortfall in priority sector targets under schedule 11- "Other Assets". Hitherto these were included under "Investments". Interest income on these deposits has been included under "Interest Earned-Others". Earlier such interest income was included under "Interest Earned-Income on Investment". The above change in classification has no impact on the profit of the Bank for the quarter and year ended 31.t March, 2016 or the previous period presented.

8. During the quarter, as a part of Assets Quality Review (AQR), RBI has advised the bank to revise asset classification/provision in respect of certain advances over two quarters ending 37.72.2015 and 31.03.2016. The Bank has accordingly classified the advances and made the requisite provisions.

9. The Provision Coverage Ratio as at 31't March, 2016 is53.36y"

Chartered Chartered l1t \ (:: J, F - 12 L0. The bank received Rs. 480.00 crores from Government of India towards capital contribution on 30.03.20L5 and the same has been reflected under Share Application Money Pending Allotment. Bank has treated the same as a part of CET-1 capital fund as per permission obtained from Reserve Bank of tndia on 06.04.2016. On 04.05.2016 bank allotted 23,24,45,520 equity shares to Government of India on preferential basis at an issue price of Rs.20.65 per share ( including Rs,10.65 as premium per share) determined in accordance with SEBI ICDR Regulations , 2009.

11. The bank has recognized Deferred Tax Assets of Rs.333.82 Cr., Rs 747.W Cr and Rs.14.24 Cr on account of timing difference arising out of excess provision over & above the deduction for bad and doubtful debts, Funded Interest Term Loan and provision on Food Credit respectively under the provision of Income Tax acts 1961. Hitherto the same was not recognized.

12. During the year bank has revalued fixed assets forming part of its Fixed Assets Schedule on the basis of report of external independent Valuers and surplus of Rs. 346.67 Crores has been transferred to Revaluation Reserve during the current year.

13. In compliance to RBI letter no. DBR.NO.BP.730L8/27.04.048/2075-15 dated 72.04.2076.,Bank has provided a sum of Rs.41.14/- crores being 7.5% of the existing outstanding of Rs.548.6,0/- crores as on 31.03.2016 under the food credit availed by State Government of Punjab.

14. ln accordance with UDAY(Ujwal Discom Assurance Yojna) scheme of GOI, Ministry of Power for operational and financial turnaround of Power Distribution companies during the year 207t76, the bank has subscribed to Non SLR SDL bond of Govt of Rajasthan of Rs231.78 crores and DISCOM Bond of Jaipur and |odhpur Vidyut Vitran Nigam of Rs.150 Crore. As per RBI circular dated DRB.BP.BC.No.17637/27.04.732/2075-1.6 dated 17tt' March 20'1.6 and subsequent clarification by circular No DRB.BP.BC.No.14185/27.04.732/2075-1.6 dated 11h May 20'1.6, those DISCOM bond will be converted into Non SLR SDL bond by 31't March 2017.In case of non conversion, these bond will be classified as NPA with effect from the date of restructuring and to be provided accordingly.

15. Pursuant to RBI circular DBR.NO.BP.BC.27/27.04.078/2075-L6 dated 2na |uly 201.5, the method of calculating discount rate for computing net present value of future cash flows for determination of erosion in fair value of advances, on restrucfuring was changed. Accordingly, there is a reduction in provisioning for diminution in fair value by Rs.467.6'1, Crores for the year ended 31't March, 2016.

16. Persuant to RBI Circular No RBI/2014-75/535 DBR.No.BP.BC.83/27.04.048/201,4-15 dated 07.04.2075, the Bank has made a provison of Rs.62.38Crores (PY Rs,2.09 Crores) during the year ended 31't March 2076 n respect of frauds/suspected frauds and balance unprovided amount of Rs.53.74 Crores has been debited to Revenues & Other Reserves in terms of RBI circular No. RBI/2075-16/376DBR No.BP.BC.92.27/04.048/2075-76 dated 18m April2016.The same will be reversed by debit to the Profit and Loss account in subsequent quarters in the next financial year.

17. ln terms of clause 6.5(A)(a)(ii) of Reserve Bank of India's (RBI's) Master Circular No.DBR.No.BP.z/27.04.048/2015-1,6 dated 1't Jt1y,201,5, the Bank has utilized its countercyclical/floating provisions held as at 1st April,2015 of Rs.52.76 crores for adjustment

Chartered Chartered tan

F - 13 l1

of loss arising out of sale of assets, below the net book value, to Assets Reconstruction Company.

18. The number of investors' complaints received and disposed off during the quarter ended 31't Marctu 2016 and FY 2075-16 is as under: DURING QTR MARCH 16 FY 2075-76

Opening Received Disposed Closing Opening Received Disposed Closing off off Nil 1.4 1.4 Nil Nil 73 73 Nil

19. The figures of previous period have been regrouped/ reclassified wherever considered necessary in order to make them comparable.

P. Srinivas Managing Director & Chief Executive Officer

/ t4 flln I Sanjaf)(umar-. K.V. Ramamoorthy General M6nager & CFO Director Executive Director

As per our separate report of even date annexed.

M/s. Ramamoorthy(N) & Co M/s. Nundi & Associates. M/s. P.C. Bindal & Co. M/s. SPMR & Associates Chartered Accountants Chartered Accountants Chartered Accountanb Chartered Accountants FRN:0028995 FRN:003824N FRN:007578N \.\\y Bharathi Nandi CA.6itGupta CA. Pramod Maheehwari Partner Parbrer Partner Partner M.No: M.No:059828 M.No:093783 M.No:085362

Date:17h l&flay 2016 Place: Kolkata

Chartered Chartered

F - 14 i- a

UNITED BANK OF INDIA KOLKATA

Balance Sheetas on 31st MARGH 2016

(Rs ln thousand)

i CAPITAL & LIABILITIES Schedule As on 31.03.2016 As on 31.03.2015 (Audlted) (Audlted) I lCapital I 839 ,51 ,60 839 ,51 ,60

nOOrlcation Money Pendlng Allotment 1A 480 ,00 ,00 lsnare & Surplus 2 4999 ,66 ,90 4988 ,52 ,34 lReserves 3 116401 108817 ,89 lDeposits ,27 ,64 ,59 Borrowings 4 2912 ,50 ,65 4061 ,72 ,g8

Other Liabilities and Provisions 5 3798 ,78 ,25 4320 .21 .101

Total : 129431 75 04 123027 1

ASSETS Schedule As on 31.03.2016 i As on 31.03.2015

I (Audlted) I lCash and balances with Reserve Bank of lndia 6 6070 ,44 ,66 5815 ,60 ,12

I lBalances with Banks and

I lMoney at Call and Shorl Notice 7 2255 ,21 ,23 214 ,94 ,02 ltnvesrments 8 44723 ,38 ,34 43245 ,49 ,49

Advances I 68060 ,20 ,04 66763 ,03 ,55

Fixed Assets 10 1210 ,92 ,00 877 ,41 ,32

Other Assets 11 7 111 58 77 6111 1

Total : 129431 76 123027

Contingent Liabilities 12 1t583 ,90 ,97 6450 ,33 ,61

Bills for collection 1959 ,97 ,05 2416 ,50 ,60 Pl1

CDarlered Charlcred Charlerecl tan

F - 15 a

'i'-'"i I SCHEDULE 1 - CAPITAL ln thouoa As on 31.03.2016 As on 31.03.2015 (Audltedl

I I l AUTHORISED CAPITAL 3q0-g i 3000 ,00 1 ,q0 i I Equity Share Capltal I j

tPerpetual Non Cummulatlve Preference Shares(PNCPS) ; I ;ISSUED, SUBScRIBED AND PAID- UP CAPITAL I 839515951 (Previous Year 839515951) Eqgity 1 of Rs. 1 0/- each[(includilg 68843061 0 iShares I (Previous Year 688430610) held by GOll i 839

, ! 1 g3g Total i 839 ,51 ,60 t'

SCHEDULE 1A - SHARE APPLICATION MONEY PENDING ALLOTMENT

As on 31.03.2016 As on 31.03.2015

' SHARE APPLICATION MONEY PENDING ALLOTMENT" 4SO ,OO ,0ol

Total : 480 ,00 00

j jl ! "Share application money pending allolmenl represents application received from Govt. of lndia which comprise of 232445520 Equity ri shares of face value of 101 each fully paid up proposed to be issued at a premium of Rs, 10.65 /share.

'-Equity shares are expecled to be allotted against the share application money within 60days from the dale of passing special resolution. The Bank has sufficient authorised capital to cover the share capilal amount on allotment of above shares. il '.i rl ti

Pt2

Chartered Chartered

F - 16 1* -i

SCHEDULE 2. RESERVES & SURPLUS

As on 31 016 As on 31.03.2015 dited l. Statutory Reserves Opening Balance 777 ,51 J2_ 713 ,51 ,31

Add: Transfer from Profit & Loss Account 63 1 SUB-TOTAL: 777 51 12 777 12 ll. Capital Reserves a) Revaluation Reserve .t Opening Balance 591 97.,14j 608 ,89 ,37 Addition during the period/year 346 ,66 ,971 Add/(Less): Adjustment during the year I Less : Transfer to Profit & Loss Account (1.6 r07. (14 ,82 924 ,66 sbq 4 b)Others Opening Balance 1509 ,64 ,20i 1508 ,49 ,53 Add:Transfer from Profit & Loss Account . 19 163 r8 7 1 ,14 ,67 Add/(Less): Adjustment during the year 18 .12 1528 ,46 ,19 1509 ,64 ,20 suB-ToTAL [(a) + (b)] 2453 12 2103 71 34

lll. Share Premium ; : I Opening Balance 2078 ,82 ,02i 1263 ,58 ,81 ! year -i t Addition during the .I 815 ,23 ,21 SUB TOTAL 2078 ,82 ,02 2078 82 02 lV. Revenue and Other Reserves a). Special Reserve l.T. Opaning Balance 220 ,00 ,o0 220 ,00 ,00 Less: Draw down Add:Transfer from Profit & Loss Account 't SUB TOTAL (a) , 220 ,00 ,00! 220 00 00

b). Revenue Reserve I i Opening Balance -191 ,52 ,14 -386 ,58 ,41 Add: Transfer from revaluation reserve 16 ,07 ,86 14 ,82 ,23 Less: Draw down for adjustment for Assets (93 ,74 p-9) " -\"" (10 ,60 ,70) Adj:Transfer from Profil & Loss Account -300 ,59 ,75 190 ,84 ,74 suB ToTAL (b) -529 78 I -191 14 SUB-TOTAL [(a) + (b)] -3og ,79 ,69 28 ,47 ,86 V. Balance in Profit & Loss Account TOTAL l+ll+lll+ 52

Chartered

F - 17 -a

SCHEDULE 3 . DEPOSITS

A3 on As on 31.03.2015 (Audltedl

Al. Demand Deposlts

i) From Banks 1188,08,43 1261 ,2s ii) From Others 6793 ,33 ,56 7082 ,69

[. Savlngs Bank Deposltg 40E09 ,62 ,35 36811 ,10

I[. Tsrm Deposlts

i) From Banks 1251 .56 ,48i 176.1 ,02 ,1 ii) From Others 66358 61 301

TOTAL : I 1 6401 108817

i) Deposits of branches in lndia 116401 ,27 ,44 108817,59 ii) Deposits ot branches outside lndia 116401 108817

SCHEDULE 4. BORROWINGS

r As on 31.03.2016 A3 on 31.03.2015 (Audlted)

t. Borrowlngs ln lndla

i) Reserve Bank of lndia 584 ,00 ,00

ii) Other Banks 85 ,53 4 ,91

iii) Other lnstitutions & Agencies # 29 ,65 3472 ,81

ll. Borrowlngs outslde lndla

TOTAL 2912 4061 f2

l Secured borrowings included in l&ll abov6 'l 584 .00

# lncludlng Subordinated Oebts tor Tler ll Capltal. 1925 ,OO ,OOI 2225 ,00 ,00

# lncluding lPDl lor Ti6r I Capltal. 450 ,OO ,OOi 300 ,00

Chartered

F - 18 \t

SCHEOULE 5. OTHER LIABILITIES ANO PROVISIONS

tu on 31.03.2016 As on 3r.03.2015 (Audlted)

t. Bills Payable 374 ,59 ,30 348 ,79

lnter-Oflice Adjustments (net) 121 ,10 67 ,81

ilt. lnleresl accrued 917 ,33 ,76 1022 ,35 |

tv. Contingent Provisions againsl Standard Assets 636 ,32 ,00 1060 ,09 ,00 Deferred Tax Liability (net) vt. Proposed Dividend (including Dividend Tax)

v[. Others (including provisions) 1749 1821 11 TOTAL:

SCHEOULE 6. CASH E BALANCES WITH RESERVE BANK OF INOIA

iAs .03.2015 As on 31.03.2015 (Audlted)

L Cash in hand (including loreign currency notes) 558 ,80 , 503 ,02 ll Balances wilh Reserve Bank ol lndia

i) ln Currenl Account 5511 ,63 ,73 5312 ,58 ,12 ii) ln Other Accounts

TOTAL : 6070 581 5 1

SCHEDULE 7 . BALANCES WITH BANKS AND MONEY AT CALL AND SHORT NOTICE

As on 31.03.2016 As on 31.03.2015 (Audltedl

t. ln lndla - i) Balances with Banks

a) ln Current Accounts 49 ,49 b) ln Other Deposit Accounts I ii) Money at Call and Short Notice

a) With Banks 2100 ,00 ,001 140 ,00 ,00 b) Wilh other lnstitutions

SUB.TOTAL: 2193 189 [. Outsldo lndla i) Balances with Banks

a) in Current Accounts 91 ,40 ,821 25 ,44 b) in Other Deposit Accounts -l ii) Money at Call and Short Nolice

SUB-TOTAL : 25 TOTAL: 2255 214

Charlered Chartered Accountants

F - 19 .r.

SCHEDULE 8 . INVESTMENTS

As on 3l.03.20to A8 on 31.03.2015 (Audltod)

t. lnvestmente ln lndla (Gross) 44934 ,02 ,73 43470 ,o4 p4 Less : Provision ,or NPl, depreclatlon / amortisation 10 (194,54,8s)

NET 44723 13245 ,15 ,49

i Broak-up I

I i) GovernmentSecurities 36240 ,65 ,99i 319?9 ,14

I li) Olher Approved Securities 'I I iii) Shares 222 ,71 ,O1i 201 ,56 ,82

iv) Debentures and Bonds 2087 ,88 ,41 207? p3 ,e2 v) Subsidiaries and/or Joint Ventures vi) Others (Mutual Fund, CP,CD. etc.)## 12 SUB-TOTAL:.

: ll. lnvestmentr outslde lndla (GrosB) I Less : Provision for depreciation NET

I Broak-up I

i i) GovernmentSecurities 'l (including local authorities) ii) Subsidlaries and/or Joint Ventures abroad 1 iii) Other invdstments -i

SUB-TOTAL : TOTAL(r&[] 44723 43245

#f, A! ps, RBI circular no.DBR.BP.BC.No.3l/21 04.018/201t16 dalod July lO.20l5, d.posit! placed wilh NABiRD/S|DBI/NHB tor meering shorllall ln Pdonty leclor Lending by Should bo includgd undsr Schsduls 'l liotho, A!!el!' undar lhe sub hoEd 'olh.ar' ot lh€ Balsnca 3he9t

Chartered Accountants

F - 20 SCHEDULE 9 . ADVANCES

As on 31.03.2016 As on 31.03.20t5 lAudltedl

i) Bills Purchased and Discounted 520 ,61 ,2sl 399 ,48 , ii) Cash Credits, Overdratls and Loans repayable

on demand 21569,41 21567 ,02 ,91 iii) Term Loans 45970 17 44796 52 TOTAL

i) Secured by tangible assets 61133 38

(includes advances against Book Debt) I

15 p-1 ii) Covered by Bank / Governmgnt.GJlelallee_g .. 2724 2419 iii) Unsecured 4202 4852 70 TOTAL 68060 66763

c. t. ,Advances in lndia i i) Priority Sector 2129_1_7.1 ,.001 _ ?p?9_t_,?9 pl ii) Public Sector 9Ii5 ,r-3 ,qgl 5580 ,52 iii) Banks 8 52 00! 28 iv) Others

SUB.TOTAL : [. Advances outside lndia i) Due from Banks ii) Due rrom Others

a) Bills Purchased and Discounted b) Syndicated Loans c) Others

SUB-TOTAL :

TOTAL(t&il) 66763

Chartered

F - 21 .|

SCHEDULE 10. FIXEO ASSETS

3't.03.2016 As on 31.03,2015 (Audlted) l. Premlses (lncludhg Lea3aholdl

At cosu Revalued as on 31 st March of precedlng year 979.,'18 ,?1; 858 .21

Revaluation during the period/year 916 ,qQ ,ql Additions during the period/ year 5 12

Less:Deduclions during the pe(iodlyeat

Depreciation to date 32 SUB-TOTAL:

ll. Capltal Workln-Progress

lll. Other Fired Assob (lncludlng Furnlture & Flxture)

Al cosl as on 31st March ol preceding year 806,10 7.83 ,20

Addilrons during the periodlyear 76 11

Less:Deductions during the petiodlyeat (2 ,85 ,96) (34,10,08) Depreciation to dale 19

SUB.TOTAL : 189 ,94 176

tv lntanglble Assets Software

At cost as on 31 st March ol preceding year 96,07,9tl .94.,27 Additions during the period/ year

Less:Deductions during the period/year

Amortrsation to dale SUB.TOTAL

TOTAL: ( l+ll+lll +lV) 1210

Chartered Chartered

Accountanls

F - 22 t r

SCHEOULE 11 . OTHER ASSETS

As on 31.03.2016 A! on 31.03.2015 (Audlted)

L lnter-Oflice Adjustments (n6t) '!094 [. lnterest accrued 1032 ,48 ,35 ,1 1

lt t. Tax Paid in advance/Tax deducted al source 825 ,29 ,71 713 ,14 ,91 tv. Stalionery and Stamps I ,06 ,08 I ,80 ,63 Non-banklng assets acquired ln satlsfaction of claims vt. Deferred Tax Assets (net) 620_,30 191,58 v[, Others #f 711',l ,77

B Ar p.r RBr ckc1i., no.oai.BP.8i.t'io.Sl/2r.aji.orttztit:-to ortia,l ry ic,iorr, ocpornr pric"J *h llAainorstoawna tq rirorttal tr Priotty rcctor L.ndlng by Sould b. lncbd.d od.r Sch.dd. I l.roh., AarGr!' undrr lhc aub hcld blh.[' o, S. ollDhc. aha!|.

SCHEDULE 12 - CONTINGENT LIABILITIES

As on 31.03.2016 As on 31.03.2015 (Audlted)

Claims against the bank not acknowledged as debts e t: ,91 ,s9 I I ,78 ,9q I [. Liability for parlly paid lnvestmenls 19,06 ,81 ! 30 .45 ,-28

t flt. Liability on accounl of outstanding forward exchange conlracts 5365 ,94 ,84 t. 2163 ,68

I lv. Guarantees given on behall of constituents (nei of cash margin) i i a) ln lndia 3157 ,91 ,27'. 2670 ,14 ..10

b) Outside lndla 1233 ,27 ,67tj 1?2 ,77

c) BG invoked but not paid (ln lndia) 4 ,63 ,g3l 4 V. '69 ' Acceptances, endorsements and other obligations (net ot cash margin) ; 1768 ,67 ,31 1089 ,68 ,07

Vl. Other items for which the Bank is contingently llable 25 37 60 17

TOTAL 1'1583 6450

Chartered ntants

F - 23 I

This is a part of Balance Sheet as on 31.03.2016.

Managing Director & Chief Executive Officer

K.V. Ramamoorthy Executive Director

)

Arnab Roy Sinha Director Director

Renuka Muttoo S. Suryanarayana Director Director ,^{w General Manager & CFO

As per our separate report of even date attached.

M/s.Ramamoorthy(N) & Co M/s.Nundl & Assoclates. M/s.PCBlndal&Co. M/s.SPMR&Assoclates Chartered Accountants Chartered Accountants Chartered Chartered Accountants FRN FRN:309090E FRN FRN:

Chartered Charlered \

thl CA. eshwarl Parlner Partner Partner Partner M.lJo:023837 M.No M.No:093783 M.No:085362

Place:Kolkata Date :17'h Mayr20l6.

Page32

F - 24 l.

UNITED BANK OF INDIA KOLKATA

Profit & Loss Account for the year ended 31st March, 2016

ln thousan Year Ended Year Ended : Schedule 31.03.2016 3't.03.2016

I t. INCOME I

lnlerest Earned 13 9936 .67 .091 191-8_9 17 ,. Other lncome 14 1467 1746 91 't5

TOTAL: 11404 1, 11927

il. EXPENDITURE

lnterest Expended 15 7656 .11 .36i ...7,6q9. ,-81 !q-9

Operating Expenses 1936 ,29 ,44 1809 ,62 ,82

Provisions and Contingencies j.. 75 49 217 1

TOTAL: 1 1686 16 ,29 1167 1 39 ilt. PROFIT

Net Profit for the period/year -281 255

TOTAL: -281 95 266 IV. APPROPRIATIONS:

Transfer to Statutory Reserve 63 ,99 ,81

Transfer to Capital Reserve 18 ,63 ,87 1 ,14 .67

Proposed Dividend :

Equity -t PNCPS

Tax on Dividend l : Transfer to Revenue Reserve -300 ,59 ,75 190 ,84 i75 Balance carried forward to Balance Sheet

TOTAL: -281 255

Basic & Diluted Earning per Share (Rs.) -3.36 3.78

Chartered Chartered Chartered ntants

F - 25 SCHEDULE 13 - INTEREST EARNED II (Fe, ln thousa nd

Year Ended Year Ended 31.03.2016 31.03.201 5

88 lnterest / Discount on Advances/Bills _ __ 6928_a13 96 79!9-9?

I il. lncome on lnvestments 303.q rz3 ,1.4 _ - 2819 ,32 ,?9 il. lnterest on balances with Reserve Bank of I ! i lndia and other lnter-Bank Funds 39 ,4-3_,qq_ 9_g,JQ,7g IV Others 231 06 170 15 82

TOTAL : 9936 67 10180 7 77

SCHEDULE 14. OTHER INCOME

Year Ended Year Ended

-l I

l. Commission, Exchang_e and Brokerage 178 44 202 ,q,1

Profit on sale of lnvestments _p?9 ??..7_5i 116p ,6! ,7? I Less : Loss on sale of lnvestments (90 --l ____ [:!_51 ,4_q) _ ,9q)

I I

lll. Profit on revaluation of lnvestments I I Less : Loss on revaluation of lnvestments .t:

lV. Profit on sale of land, buildings and other assets 5 08 65 ,25 Less : Loss on of lan!,_bqi!{lng_q and.glher assgls 9_a!-e I _ 17 ,23, t--

-,', .,'-.-' l

V Profit on exchange transactions I 136 ,06 ,64 97 ,64 ,10 l- I Less : Loss.on exchange transacfio_ns -t I t

L --. -..- -....t,.-- - i vl. lncome earned b)rwey of dividend etc., from subsiqiarieg, : i joint i companies and/or ventures abroad/ in lndia _.t_. vil. Miscellaneous lncome 329 26 278 ,13 ,56

TOTAL: 1467 1746 91 15

Pt11

Chartered Chartered Acco ntants

F - 26 SCHEDULE 15 - INTEREST EXPENDED

ln thousa Year Ended 3'l.03 6

l. lnterest on Deposits 7181 ,17 ,17 _ 7?53195 ,7_9 ll. lnterest on Reserve Bank of lndia/inter-Bank borrowings_ 7-9--' 03 82 52 lll. Others 295 51 353 11

TOTAL 7656 11 36 7689 1 55

SCHEDULE 16 - OPERATING EXPENSES I

Year Ended Year Ended 3 2016

Payments t9 a1d Provqsions Emplgyq ,1L,13 ,51 lr. for _s _ t. _1097 lq38,29 il. Rent, Taxes and Lighting I 148 '29-,19 _139 ,94 \44

I 26 ilt. Printing and Stationery ) ?3 ,51 ,q9[ ,41 ,21 i I 2 tv. Advertisement and Publicity _6_ r2-3 5 ,.61 i. __ r1q I _ ,! I V. Depreciation op Bank's prgpgrty i 102 ,75 ,7 5; 05 ,.7 1 _ L. -..- -'a- ' _ I I Less : Transfer from Revaluation Reserve

105 96 19?,79 ,77 171 ' Vl. .Directors' fees, a_llowances and exp_enses_ p? z5-l 1 5 14 Vll. Auditors' fees and expenses .. _ 1_5_lo ,60 ,23 (including branch auditors' fees and expenses) ! l. Law Charges 9 J7 ,95 P '1? '?1 tx. Postage, Telegrams, Telephones etc. 34 53 23 ,53 ,71 x. Repairs and Maintenance 2?,77 ,59 33 ,8 7 74 xt. lnsurance 118.19.331 10q ,38 .1 1 xil. Other Expenditure 355 76 308 94

TOTAL: 1 936 29 1 809 62

Pt12

a ae Cha(ered *

F - 27 This is a part of Profit & Loss Account as on 31.03.2016.

Managing Director & Chief Executive Officer le,< K.V. Ramamoorthy Executive Director

D Arnab Roy Sinha Director Director Director

Qtap*e< Renuka Muttoo s. Suffinarayana Director Dir.ector ,^fu, General ilIanager & CFO

As per our sepirate report of even date attached.

M/s.Ramamoorthy(N) & Co M/s.Nundl & Assoclates. M/s.PCBlndal&Co. M/s.SPMR&Associates Chartered Accountants Chartered Accountants Chartered Chartered Accountants FRN FRN:3 FRN FRN

C harlered

CA.SU CA.Sa rt Partner Partner Partner Partner M.No:023837 M.No:059828 M.No:093783 M.No:085362

Place:Kolkata Date :17'h May,20l6.

Page 33

F - 28 '$chedule -17

SIGNIFICAI{T ACCOUNTING POLICIES FOR THE YEAR ENDED 31't MARCH,2OI6

1. BASIS OF PREPARATION OF FINAI\CIAL STATEMENTS

The accompanying financial statements are prepared on historical cost basis, except as otherwise stated, following the "Going Concern" concept and conform to the Generally Accepted Accounting Principles(GMP) in India, applicable statutory provisions, regulatory noflns prescribed by the Reserve Bank of India (RBI), applicable mandatory Accounting Standards (AS)/Guidance Notes/ pronouncements issued by the Institute of Chartered Accountants of India (ICAD and practices prevailing in the banking industry in India.

2, USE OFESTIMATES

The preparation of financial statements requires the management to make estimates and assumptions for considering the reported assets and liabilities (including contingent liabilities) as on the date of financial statements and the income and expenses for the reporting period. Management believes that the estimates used in the preparation of the furancial statements are prudent and reasonable.

3. RECOGNITION OF INCOME AI\ID EXPEI\DITT'RE

3.1 The Revenues and Expenses are accounted for on accrual basis unless otherwise stated.

3.2 Income from Performing Assets is recogrized on accrual basis and income from Non-Performing Assets (NPAs) is recognized on realisation. The amount realised/recovered during the year is appropriated first to income on Sub-standard Assets. Amounts realized /recovered in Doubtful and Loss Assets and Suit Filed and Decreed Accounts are first appropriated against outstanding balances.

3.3 Uwealized income on advances, classified as NPA, is reversed.

3.4 Income from Commission (except on Govemment Transactions and Bancassurance), exchange, brokerage, claims, locker rent and dividend on shares are accounted for on cash basis.

3.5 Performance linked incentive to whole time directors is accounted for on cash basis

4. TRANSACTIONS IIWOLVING FOREIGN EXCHANGE

4.1. Monetary Assets and Liabilities, excluding outstanding Forward Exchange Contracts in each curency, are revalued at the Balance Sheet date at closing spot rates announced by the Foreigr Exchange Dealers Association of India (FEDAI). Outstanding forward exchange contacts are revalued at the forward rates announced by FEDAL The difference between the revalued amount and the confracted amount is recogrized as profit or loss, as the case may be.

4.2. lncome and expendinre items are recorded at the exchange rates prevailing on the date of transaction.

4.3. Acceptances, endorsements and other obligations including guarantees are carried at the closing spot rates announced by FEDAL

4.4. Representative Office of the Bank has been classified as 'Integral Foreigr Operation' in accordance with AS-11 on "The Effects of Changes in Foreign Exchange Rates".

4.5. Foreign currency transactions relating to 'Integral Foreign Operation' are recorded on initialrecognition in the reporting currency by applying to the foreign cunency amount, the exchange rate between the reporting currency and ttre foreign currency on the date oftransaction.

4.6- Foreign culrency non-monetary items that are carried in terms of historical costs are reported using the exchange rates on the dates oftansactions.

Page

Chartered Accou F - 29 5. INVESTMENTS

5.1 Forthepurpose of disclosure in the Financial Statements, the investments are classified into six categories as stipulated in Form A of the third schedule to the Banking Regulation Act,1949 as under: a) GovemmentSecurities b) Other approved securities - c) Shares d) Debentures and Bonds e) Subsidiaries/JointVentures 0 Others 5.2 The Investment portfolio of ttre Bank is categorized, in accordance with the RBI guidelines, into: a) "Held to Maturity" comprising Inveshnents acquired with an intention to hold till maturity; b) "Held for Trading" comprising Investments acquired with an intention to trade; c) "Available for Sale" comprising Invesfrnents not covered by (a) and (b) above.

Classification of an invesfinent is done at the time of acquisition.

5.3 In determining acquisition cost of an investment: a) Brokerage, Commission and lncentives received on subscription to securities, are deducted from the cost of securities; b) Brokerage, Commission etc. paid in connection with acquisition of securities are teated as revenue expenses; c) Interest accrued upto the date of acquisition/ sale of securities i.e., broken period interest is credited/ charged to Profit and l.oss Account.

5.4. The Bank follows "Settlement Date" for accounting of investment transactions. Investments are valued as per RBV Fixed lncome Money Market & Derivatives Association (FIMMDA) guidelines, on the following basis: a) "Held to Maturity" (HTM) i) Investnents under "HTM" category are carried at acquisition cost. Wherever the book value is higher than the face value/redemption value, the premium is amortized over the remaining period to maturitY. iD Invesfrnents in Rural lnfrastucture Development Fund, Short Term Co-operative Rural Credit Refmance Fund, Medium Small Micro Enterprise Refurance Fund - Small lndushies Development Bank of India Limited, Medium Small Micro Enterprise Risk Capital Fund - Small Industries Development Bank of India Limited, Rural Housing Development Fund-National Housing Bank Limited, Micro Finance Development and Equiff Fund - National Agricultural and Rural Development Bank Limited (classified as shares) are valued at carrying cost. iiD Invesfrnents in sponsored Regional Rural Banks are valued at canying cost. iv) lnvestnent in venture capital is valued at carrying cost.

b) "Held for Tradihg" and "Available for Sale"

a) Govt. Securities 1. Central Govt. Securities At prices published by FIMMDA 2. State Govt. Securities On Yield to Maturity (YTM) basis by adding appropriate mark-up on the Base Yield Curve as per FIMMDA/RBI guidelines. b) Discounted Instuments (Treasury At carrying cost Bills, Commercial Paper and Certifi cate of Deposits) c) Bonds and Debenhrres On YTM basis by adding appropriate Credit Spread on the Base Yield curve as per FIMMDA/RBI guidelines. d) Equity D Quoted At market price ii) Un-quoted At break-up value as per latest Balance Sheet (not more than one year old), otherwise atfJ l/- per company. e) Preference Shares At market price, if quoted or YTM basis by adding appropriate mark-up on the base yield curve as per FIMMDA/RBI guidelines. 0 Security Receipt/Venture Capital Fund At Net Asset Value (NAV) as per FIMMDA/RBI guidelines. Page2

Chartered

F - 30 t t g) Mutual Funds At Market Price, if quoted and at re-purchase priceA.lAV if unquoted.

5.5. Shifting of securities from and to "HFT" category is done in accordance with RBI guidelines with the approval of Board of Directors.

5.6. The individual scrip in the "HFT" and "AFS" category are marked to market at monthly oi at more frequent intervals, if required. Under each category, net depreciation, if any, is provided for while net appreciation, if any, is igrored.

5.7. lncome from Zero Coupon Bonds, being the differenbe between cost and face value, is recognized on a time proportion basis.

5.8. Profit or Loss on sale of investments in any category is taken to Profit and Loss Account. ln case of profit on sale of lnvestnents in "HTM" category, an equivalent amount is appropriated to "Capital Reserve Account" at the end of the year. For calculating the surplus I deficit on sale of securities, weighted average method is adopted.

5.9. For the purpose of calculating holding period in case of "HFT" category, First in First out (FIFO) method is applied.

5.10. Investments are subject to appropriate provisioning/ de-recoguition of income, in line wittr the prudential norrns of RBI for "Non Performing Investment" (NPI) Classification. The depreciation/provision in respect of non- performing securities is not set off against the appreciation in respect of the other performing securities in accordance with RBI guidelines.

5.11. The derivatives transactions are undertaken for trading or hedging purposes and valuation has been done in accordance wittt RBI guidelines.

5.12. The Bank has adopted the Accounting Procedure prescribed by the RBI for accounting of Repo and Reverse Repo tansactions.

6 FINAI\CIAL ASSETS SOLD TO ASSETS RECONSTRUCTION COMPAIYY (ARCY SECTJRITIZATION COMPAIYY (SC)

6.1 In the case of furancial assets sold to ARC / SC, if the sale is for a value higher than the Net Book Value OIBV), the excess provision is not reversed but utilized for meeting any shortfall on account of sale of other financial assets to ARC/SC. If the sale is at a price below the NBI the shortfall after adjusting the available surplus if any, is debited to the Profit and Loss Account.

6.2 The sale of furancial assets to ARC/SC is recognized in the books of 0re Bank at lower of either redemption value of the Security Receipts issued by ttre Trust created by the ARC/SC for such sale or the net value of such financial assets.

6.3 The Security Receipts are classified as Non-SLR lnvestment in ttre books of the Bank and accordingly the valuation, classification and other nonns prescribed by RBI in respect of Non-SLR Securities are applicable.

6.4 ln case of written off Assets sold to ARC/ SC, the cash proceeds are recognized as income.

7, ADVAI\CES

7.1. Advances are classified as Performing / Non-Performing Assets and provisions thereon are made in conformity with ttre prudentialnorrns prescribed by RBL

7.2. Non-performing assets are stated net of provisions and claims received from credit guarantee institutions.

7.3 Provision held forperforming assets is shown under the head "Other Liabilities and Provisions"

7.4. Restructuring of Advances and provisioning thereof have been made as per RBI guidelines.

Page 3

Chartered

F - 31 8. FIXED ASSETS AND DEPRECIATION

8.1. Premises (including leasehold), other fxed assets and Capital work in progress are stated at historical cost or amount substituted for historical cost. In case of revaluation, the same are stated at the revalued amount and the appreciation is credited to "Revaluation Reserve".

8.2 Leasehold assets are amortized over the period of lease.

8.3 Depreciation on assets other ttran computers and Automated Teller Machines (ATM$ is provided for under written down value method, in the manner and as per the rates prescribed under Schedule II to the Companies Act,20l3 after retaining 5% residual value.

Equivalent amount of depreciation on the revalued portion of the asset is hansfened to General Reserves from Revaluation Reserve each year.

8.4. Depreciation on computers, ATMs and amortization of software are accounted for on staighrline method @33.33% on pro rata basis from the date of acquisition as per RBI guidelines.

8.5. Impairment Losses, if any, on Fixed Assets (including revalued assets) are recognized in accordance with AS - 28 on "Impairment of Assets".

9. ACCOUNTING FOR GOVERNMENT GRANTS

In accordance with AS-12 Govemment Grants/subsidies received is presented in the Balance Sheet by showing the Grant/Subsidy as a deduction from the Gross Value of the assets concemed in arriving at the book value. The grant/subsidy is recognized in the Profit & Loss Account over the useful life of the depreciable assets by way of reduced depreciation charged.

Govemment Grant subsidies received, of revenue nature, is recogrized in the Profit & loss Account by reducing the related cost if received during the same financial year otherwise, the same is shown under "Other Income" if received after the close of the relevant furancial year.

IO. EMPLOYEE BENEFITS

10.1 Employee Benefits are recognized in accordance with AS-15 on "Employee Benefrts"

10.2 Short term employee benefits namely Leave Fare Concession and Medical Aid are measured at cost.

10.3 Long term employee benefits and post-retirement benefits namely gratuity, pension and leave encashment are measured on a discounted basis under the Projected Unit Credit Method on the basis of annual third party actuarial valuations.

10.4 ln respect of employees who have opted for Provident Fund Scheme, matching contribution is made to a recognized Trust. For others who have opted for Pension Scheme, contribution to Pension Fund is based on actuarial valuation.

10.5 [,ong Term employee benefig recognized in the Balance Sheet represent the present value of the obligation as adjusted for unrecognized past service cost, if any, and as reduced by the fair value ofplan assets, wherever applicable and actuarial gain / loss to the extent recognized in Profit and Loss Account.

10.6 The transitional liability in respect of long term employee benefits, including pension benefits, is recognized as an expense on straight line basis over a period offive years.

10.7 In terms of RBI circular, expenditure on "Re-opening of Pension option to employees of Public Sector Banks and enhancement of Gratuity limits-Prudential Regulatory Treatment" is being amortized over a period of five years.

Page 4

Accountanls unla nts

F - 32 .1I. TAXATION

Provision for tax'is made for both current and deferred taxes in accordance wittr AS-22 on "Accounting for Taxes on Income".

12, PROVISIONS. CONTINGENT LIABILITIES AND CONTINGENT ASSETS

In accordance wittr AS-29 on "Provisions Contingent Liabilities and Contingent Assets," the Bank recognizes:

a) Provisions only when it has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and when a reliable estimate of the amount of the obligation can be made.

b) Contingent Liability is recognized/disclosed when a possible obligation from a past event, the existence of which is confirmed by the occurrence/non-occurrencd of one or more uncertain future events not wholly within the control of bank. Contingent Liability is also recognized/disclosed when there is a present obligation from past events but is not recognized because of a remote possibility of outflow of resources embodying tlrc economic benefits to settle the obligation or a reliable estimate of the amount of the obligation cannot be made

c) Contingent Assets are not recognized in the Financial Statemens.

13. IYET PROI'IT

The Net Profit is arrived at after accounting for the following:

a) Provision for Taxation b) Provision on Standard Assets c) Provision for NPAs and Depreciation on investments as per prudential norms of RBI d) Other usual and necessary provisions.

Chartered

Page 5

F - 33 Schedule - 18: Notes Forming Part of the Financial Statement for the Year Ended 31't March 2016

1 Confirmation/reconciliation of balances with foreign branches, SBI and other Banks, NOSTRO Accounts, Drafts Payable, Clearing Difference, Inter office adjustrnents, etc. are in progress on an on-going basis. Pending final clearance/adjustment of the above, the overall impact, if any, on the Financial Statements, in the opinion of the management, is not likely to be significant.

2.1 Capital a) ( ( in Crores)

31.03.16 31.03.15 3r.03.16 31.03.15 I Common EquiW Tierl Ratio (%) 7.74 7.52 NA NA 2 Tier I Capital Ratio (%) 7.93 7.52 7.23 7.77 3 Tier 2 Capital Ratio (%o) 2.15 3.05 3.23 3.6s 4 Total Capital Ratio (CRAR) (%) 10.08 10.57 10.46 rt.42 5 Percentage of the shareholding of the 82.00% 82.00% 82.00% 82.00% Government of India in the Bank's equity capital 6 Amount of equity capital raised 0 300 0 300 (' in Crores) 7 Amount of Additional Tier 1 Capital raised; of 150 NIL 150 NIL which

7.1 PNCPS NIL NIL NIL NIL 7.2 PDI 150 NIL 150 NIL 8 Amount of Tier 2 capital raised; of which: (' NIL NIL NIL NIL in Crores) 8.1 Debt capital instrument NIL NIL NIL NIL 8.2 Preference Share Capital Instruments NIL NIL NIL NIL b) During the Financial year 2015-16, the Bank received an amount of Rs.480 Crores from Government of lndia on 30.03.2016 towards capital infusion. The bank is maintaining the same as "Share Application Money pending allotment" as on 31.03.2016. Bank has considered the same amount as pafi of Common Equity Tierl (CET-I) capital fund as on 31.03.2016 as per the permission of Reserve Bank of India vide letter no: DBR.No.BP .l27 I 6 I 2l .01.002 I 201 5 -l 6, dated 06.04.20 16. c) During the Financial Year 2015-16, Bank raised Additional Tier-l capital of '150.00 Crores through issuance of Basel-I[ compliant Non Convertible Perpetual Bonds (1500 nos.) having face value of '10.00 lacs each in September,20l5.

Page 6

Chailered

F - 34 2.2 Investments (ln

(l) Value of trnvestments 44934.03 43440.04 (i) Gross Value of Investments (a) In India 44934.03 43440.04 (b) Outside India 0.00 0.00

(ii) Provision for Depreciation 210.64 194.55 (a) In India 210.64 t94.55 (b) Outside krdia 0.00 0.00

(iii) Net Value of Investments 44723.38 43245.49 (a) In India 44723.38 43245.49 (b) Outside India. 0.00 0.00

(2) Movement of provision held towards depreciation on investments (i) Opening balance 194.55 251.16 (ii) Add: Provisions made during the Year 123.49 69.98 (iii) Less :Write- offl Write -back of excess provision during the 107.40 126.59 Year (iii)Closing balance 210.64 194.55

a).As per RBI circular no.DBR.BP.BC.No.3ll21.04.01812015-16 dated July 16, 2015, deposits placed with NABARD/SIDBIAIHB for meeting shortfall in priority sector Lending amounting to Rs.3819.02 Cr(P.Y Rs. Rs.3357.62 Cr) has been excluded from investment and included under Schedule I I - " Other Assets" under the sub head "others" of the Balance Sheet. Hitherto these were included under "lnvestments". Interest income on these deposits has been included under "Interest Eamed-Others". Earlier such interest income was included under "lnterest Eamed-Income on Investment". The above change in classification has no impact on the profit of the Bank for the quarter and year ended 31" March, 2016 or the previous period presented. b) In accordance with UDAY(Ujwal Discom Assurance Yojna) scheme of GOI, Ministry of Power for operational and financial tumaround of Power Distribution companies during the year 2015-16, the bank has subscribed to Non SLR SDL bond of Govt of Rajasthan of Rs231.78 Crores and DISCOM Bond of Jaipur and Jodhpur Vidyut Vitran Nigam of Rs.150 Crores. As per RBI circular dated DRB.BP.BC.No.ll637l2l.O4.l32/2015-16 dated 17ft March 2016 and subsequent clarification by circular No DRts.BP.BC.No.l4l86/21.04.13212015-16 dated llm May 2016, those DISCOM bond will be converted into Non SLR SDL bond by 31" March 2017.In case of non conversion those will be classified as NPA with effect from the date ofrestructuring and to be provided accordingly.

2.2.1 Repo transactions (ln face value terms) ( in Crores

Securities sold under Repo i) Government securities 84.94 251.64 22.70 0.00 (15.00) (1e2e.00) (262.78) (584.00)

ii)Corporate Debt Securities 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) Securities purchased under Reverse Repo i) Government securities 36.48 37 t.96 6.86 0.00 (25.00) (8700.00) (474.77) (r40.00)

ii)Corporate Debt Securities 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00)

PageT

Charlered Acco F - 35 Figures in brackets represent Previous Year'sfigures.

2.2.2 Non-SLR Investment Portfolio (i) Issuer composition of Non-SLR Investments (( in Crores) Extent of of Extent of Extent of'Private 'Below Extent Sl.No. Issuer Amount Investment Grade' sUnllsted' Placement' 'Unrated' Securities Securltles Securltles (1) (21 (3) (4) (5) (6) 0l I PSUs ll00.l7 I 100. t7 0.00 150.00 168. l I (1282.7s) (t282.7s) (0.00) (0.00) (14.66) 2 FIs 383.82 383.82 0.00 0.00 9.63 (3357.62) (3357.62) (0.00) (0.00) (3357.62) 3 Banks 5789.19 57E9.19 0.00 64.30 68.15 (s570.s4) 6s70.s4) (0.00) (36.97) (40.82) 4 Private Corporate 1096.01 1096.01 0.00 0.00 104.31 (t491.s2) (1491.s2) (0.00) (20.00) (53.70) 5 Subsidiaries / 0.00 0.00 0.00 0.00. 0.00 Joint Ventures (0.00) (0.00) (0.00) (0.00) (0.00) 6 Others (MF/CP/CD) 555.96 555.96 0.00 231.78 550.96 (74.78\ 04.78\ (0.00) (0.00) (5e.38) Provision held towards 210.64 0.00 0.00 0.00 0.00 Depreciation / NPI ( 194.55) (0.00) (0.00) (0.00) (0.00) Total (l to 6) - (7) 87t4.st 892s.15 0.oo 446.08 901.16 (l1582.60 (11777.211 (0.00) (56.971 (3s26.1 8)

Figures in brackets represent Previous Year's figures.

Non-SLR Investments in Crores

Opening balance 199.55 181.70 Addition during the Year 35.90 59.28 Reduction during the Year 68.75 4t.M Closing balance 166.69 199.54 Total provlsion held 128.s5 110.63

2.2.3 Sale and Transfers to/from Held to Maturity GffM) Category

(a) Securities having book value of Rs.499.49 Crores (Previous year: Rs.257.48 Crores) were sold during the year from HTM Category. (b) At the beginning of the year (i.e on13.04.2015), the Bank has shifted Cenhal Govt. Securities having face value of Rs.1859.05 Crores ( Book Value Rs.186I.73 Cr) and State Govt. Securities having face value of Rs.1260.90 Crores ( Book Value Rs.1264.72 Cr) scrip wise from Held to Maturity (HTM) to Available For Sale (AFS) Category and Similarly the bank has shifted State Govt. Securities having Face value of Rs.1585.79 (Book Value of Rs.1680.75 Cr ) from AFS to HTM category. This was with the approval of the Board of Directors.

(c) The value of sales and transfer of securities to/from HTM Category (excluding the exempted transfer) did not exceed 5% ofbook value ofthe Investrnent in HTM Category at the beginning ofthe year.

2.2.4 T ransactions involvlng Forelgn Exchange

Monetary Assets and liabilities, excluding outstanding Forward Exchange Contracts in each currency, except currency of Bangladesh (BDT 23,03,236.26 equivalent INR 15.80lacs) which is valued at notional value due to non availability of spot rates, are revalued at the balance Sheet date at closing spot rates announced by the Foreign Exchange Dealers Association of India (FEDAD.

Page 8

Charlered

F - 36 2.3 Derivatives

2.3.1 Forward Rate Agreement/Interest Rate Swap ( in Crores

i) The notional principal of swap agreements NIL NIL ii) Losses which would be incurred if counterparties failed to fulfill their obligations under ttre agreements NIL NIL iii) Collateral required by the Bank upon entering into swaps NIL NIL iv) Concentration of credit risk arising from the swaps NIL NIL v) The fair value of the swap book NIL NIL

2.3.2 Exchange Traded Interest Rate Derivatives (ln

(D Notional principal amount of exchange traded interest rate NIL NIL derivatives undertaken during the Year (instrument-wise) (ii) Notional principal amount of exchange traded interest rate NIL NIL derivatives outstanding as at 31" March (instrumenrwise) (iii) Notional principal amount of exchange traded interest rate NIL NIL derivatives outstanding and not "highly effective" (instrument-wise) (iv) Mark-to-market value exchange traded interest rate of NIL NIL derivatives outstanding and not "higtrly effective" (instrument-wise)

2.3.3 Disclosures on risk exposure in derivatives A) OualitativeDisclosures a) The Bank has undertaken derivative transactions in currency futures for trading (arbitrage) & hedging purposes.

b) fusk management of derivative transactions has been segregated into three functional areas namely, i) Front-Office for undertaking transaction; ii) Mid-Office for risk firanagement and reporting; and iii)Back-Offi ce for settlement, reconciliation and accounting.

c) The risk measurement, reporting and monitoring function is undertaken by the mid-office. The Board of Directors is the apex body to oversee the overall risk measurement, monitoring and reporting functions of the Bank including derivative transactions through Risk Management Committee of the Board (RMCBOD). The bank also internally monitors risk management through in-house Nsk management Committee, Asset Liability Committee (ALCO), Operational Risk Management Committee (ORMC) and htemal Committee on Investrnent (ICI).

d) Identification of underlying hedge items for hedging / rnitigating credit risk, operational risk and market risk arising out of derivative transactions is done in accordance with the Board approved Integrated Treasury Policy. The customer related derivative transactions are covered with counter party banks, on back to back basis for identical amounts and tenure and the bank does not carry market risk for such tansactions. However, during the year under review, bank has not used any derivative product to hedge its own portfolio.

Page 9

Chadered Charlorcd o t F - 37 e) The Integrated Treasury Policy prescribes accounting for hedge and non-hedge transactions, , income recognition and valuation procedure for outstanding contracts. The income recognition is done as per AS-11 on "The Effects of changes in Foreign exchange Rates" and the guidelines issued by RBI / FEDAI from time to time. The integrated Treasury Policy also prescribes various limits such as Client Level Limits, Trading Member Level Limits, Net Open Position Limits for credit risk mitigation.

B) OuantitativeDisclosures in Crores'

(i) Derivatives (Notional Principal Amount) NIL NIL NIL NIL a) For hedging NIL NIL NIL NIL b) For trading NIL NIL NIL NIL (ii) Marked to Market Positions (l) NIL NIL NIL NIL a) Asset (+) NIL NIL NIL NIL b) Liabilitv G) NIL NIL NIL NIL (i ii) Credit Exposure (2) NIL NIL NIL NIL (iv) impact of one percentage change in Likely NIL NIL NIL NIL interest rate ( 100*PV0l) a) on hedging derivatives NIL NIL NIL NIL b) on trading derivatives NIL NIL NIL NIL (v) and Minimum 100*PV0l Maximum of NIL NIL NIL NIL observed during the Year a) on hedging NIL NIL NIL NIL b) on trading NIL NIL NIL NIL

2.4 Asset Quality 2.4.1 Non-Performlng Assets ( in Crores

i) Net NPAs to Net Advances (7o) 9.04 6.22 iD Movement of NPAs (Gross) a) Opening Balance 6552.91 7l18.01 b) Addition durine the Year s011.05 4087.17 c) Reduction during the Year 2092.95 4652.27 d) Closing Balance 9471.01 6552.91 iii) Movement of Net NPAs a) Opening Balance 4081.38 466/.tt b) Addition during the Year 2919.68 3308.86 c) Reduction during the Year 890.35 3891.59 d) Closine Balance 6lt0.7l 4081.38 iv) Movement of Provisions for NPAs (excluding provisions on standard assets) a) Opening Balance 2430.68 2399.24 b) Addition durine the Year 1769.17 792.12 c) Reduction durine the Year 848.10 760.68 d) Closine Balance 3351.75 2410.68

Page 10

o Charlered o F - 38 * *. * .4.2 Particulars of Accounts Restructured

lfr

No. ofborrowen 43 5 6 0 52 342 1920 2 23t5 2063 201 6012 5 8281 2448 255 7938 ? 10648 Restuctured 5l AccounB as on April of Amount 64.8 108. 284.2 4s3.6 4626. 8475. 866. 0.1 10168. l I 4583.3 I 307-22 366.66 0.00 5257.18 111-26 0.0t 37E1.40 391.s8 0.10 825.74 the FY ortstanding 9 08 4 1 '71 97 32 4 (Opening figures)t Provision 116.2 527.0 11.2 0.0 319.59 23.14 I1.70 0.00 414.63 3.59 2.16 1.41 0.00 7.16 143.84 28.27 4.18 0.00 53.71 598.08 theteon 9 ) 9 0

No. ofborrowers 0 0 0 93 4 0 0 97 4 I 0 0 5 97 ) 0 0 102 Fresh resfucturing Amount 384-2 1321. 960.1 0.0 2 0.00 0.00 0.00 0.00 0.00 ))

No. ofborrowers 0 0 0 0 0 8 4 4 0 0 83 -26 -57 0 0 9l -30 {l 0 0

to rrstructued Amount 0.0 0.00 0.00 0.00 0.00 0.00 2r.20 20.7 0.00 0.00 2.90 -1.21 -1.69 0.00 0.00 24.tO -21.97 a.l1 0.00 3 standard outstanding 0.4 0 6 category during the FY Provision 0.0 0.00 0.00 0.00 0.00 0.00 1.07 0.00 0.00 0.15 {.06 4.09 0.00 0.00 1.22 -t.l I {.ll 0.00 thereon 1.05 0.02 0

Restructured sundard advances 4 which cease No. ofbormwers 0 0 0 0 0 0 0 0 to attact higher provisioning

Page 11

F - 39 and / or additional .. -.,].,:l]:,.; t weight . ". - l-.. ! risk "il ': rli 1., : t. ... ;, :.,,li"it\ttl; at the end Amost of 0.00 0.00 0.@ i.,:i:,,,i,,i.i 0.00 o00 o00 0.00 0.00 the FY and outstaldi[g hence need :pay"' : not be shown rcstrucntred standsd advances at Provision tbaou o00 0.00 000 0.00 o@ 000 o.s o.00 fte beginning of the next FY

No.ofbomm -18 t2 6 o 0 -3E -l 39 0 o -93 63 30 0 o lil9 74 75 0 o Dow gradatioE Amout of .1631.65 956.93 674.71 0.@ 0.m -2237 35.41 o@ 0.00 {3E.54 @1.37 3t.17 0.00 om 1551.26 741.D 0.00 0.00 5 IBtruCUrcd outstaodbg 13.04 ?,9256 ac@uts duing thc FY

Prcvisim&mn -27.88 D.a7 5.01 o.@ o00 -1.t4 0.36 0.78 0.m o.00 -3.51 3.Ot 0.53 0.00 0:m -3263 26.31 6.32 o00 0.00

No. ofbomwas I I 4 0 6 4t ll 395 2 450 v9 lt3 loll I 1474 39r LT l4ll 3 1930

Writmft of rcsltutuEd Amort 6 0.00 N.70 31241 o.o 33t.lI 5.27 10.24 18.75 0.ol 34.21 381.9r 26t.32 t58.62 o03 807.EE 3t7.18 3c8.26 ,lt9.7E o04 I lEO.25 a@unas outsaoding dEing ttc FY

Provisionthm !?i.2t a.o3 I 1.70 om 3t.94 oll 0.59 o2l 0.00 o9l E0.92 27.t9 t.g2 o00 1(D.t3 M.24 51.51 1293 o00 ,l5E.5t

No. ofborrom u l4 8 0 6 4 39 1559 0 1952 l70E t26 4974 4 6tl2 2495 t79 5541 4 tt20 Rcstuctuod Accouts c onMrch 3l AmoEt t24.3 1u5.7 7 29st.6 123E.45 728.96 o@ 4919.07 127.36 22.v 0.00 n4.20 3701.4t t176.72 262.44 o07 514071 6780.50 2437.71 o07 10333.98 ofrtc FY outst4dirg 0 0 (closing frgres)+ hovisionthron 2r.50 23.18 5.Ot 0.00 56.69 441 0.96 1.96 0.00 ?11 59.$ 3.40 3.60 o00 6.45 9L37 n.54 10.57 o00 r30.48

* Excluding the figures ofstandrd Resfiucnued Advances which do not attract higherprovisioning or risk weight (ifapplicable)

1 . Thc abovc dilclo6ltrls, including sadifice, dc as coryiLd ad c€rtified by thc Brnk's Meagmt 2. The quaurm of ecednic sacritrcr dEing lhc ),Ed m the Estnrct@d rssc8 bas be€a cal@laEd by the NPV M€lhod as m 31.032016 for Stsodsd Assets of

Page 12

Clurtered F - 40 * 2.4.3 Details of financlal assets sold to Securitization / Reconstruction Company for Asset Reconstruction (ln

(i) No. of accounts 10 NIL (ii) Aggregate value (net of provisions) of accounts sold to SC/RC 357.35 NIL

(iii) Aggregate consideration 386.90 NIL

(iv) Additional consideration realized in respect of accounts 3.40 NIL transferred in earlier years (v) Ag$egate eair/(loss) over net book value ft\32.9s NIL (ln

Book value of investments in security 255.77 Nil Nil Nil 255.77 Nil receipts

2.4.4 Details of Non-performing financial assets purchased / sold A) Details of Non-performing financial assets purchased (ln

I (ta) No. of accounts purchased during the Year NIL NIL

(b) Aggregate Outstanding NIL NIL

2. (a) Of these, number of accounts restructured during the Year NIL NIL

(b) Aggregate Outstanding NIL NIL

B) Details ofNon-performing financial assets sold (ln-.

I No. of accounts sold 10 Nil

2 Aggregate Outstanding 608.56 Nil

3 Aggregate consideration received 386.90 Nil

2.4.5 Provision on Standard Assets (in

Provision towards Standard Assets 636.32 1060.09

Page 13

Charlered

F - 41 2.4.6 ln compliance with RBI directives on the Assets Quality Review(AQR) for their classification over the two quarters ending December 31,2015 and March 31,2016, the Bank has macle the classification of Advances and provisioning as per directives of RBI and IRAC nonns.

2.4.7 ln compliance to RBI letter no. DBR.NO.BP.1301812l.04.04812015-16 dated 12.04.2016., Bank has provided a sum of Rs.41.14 Crores beng7.5%o of the existing outstanding exposure of Rs.548.60 Crores as on 31.03.2016 under the food credit availed by State Government of Punjab.

2.5 Business Ratios

(D Interest Income as a percentage to Working Funds 7.92% 8.430/o

(iD Non-interest income as a percentage to Working Funds l.t 7% 1.42%

(iiD Operating Profit as a percentage to Working Funds 1.44o/o r.99%

(iv) Retum on Assets -0.22% 0.21%

(v) Business (Deposits plus advances) per employee (( in Crores) 12.37 I 1.53

(vi) Gross Profit/(Loss) per employee ( ( in Lacs) 12.09 15.98

Page 14

Charlered Chartered F - 42 * 2.6 Asset Liabitity Management of certain iterns of Assets and Liabilities* (rn

2122.18 3055.03 211022 1709.77 6019.23 763331 I l r74.80 20771.50 I 1930.87 4987438 11640128 Deposits (1413.r7) (207e.s3) (142s33) (1674.73) (56ss.58) (s914.02) (9876.22) (21s26.62) (l l 192.06) (48060.3' (r08t17.60)

632.06 409.8s 303.43 732.s8 3743.80 4930.84 4362.13 12822.v 10486.72 29636.24 68060.20 Advances (337.70) ( 3e81.69) ( 204.s0) (171.10 ) Q892.0s) ( 305e.6e) (39s2.02) (273M.7s) ( 9684.68) ( 15134.86) (66763.rM )

2.62 74.01 tu.82 302.23 3333.09 1598.75 1618.34 4430.78 5384.02 278t4.72 447233t Invesfuents (2.e4) (133.76 ) (4e.14) (262.9r) ( 4584.55) ( 1il1.40) (1924.7s) (2697.77) (7223.08) (28612.81 ) ( [email protected])

0.86 0.00 0.00 0.00 100.00 334.90 134.90 604.31 12.53 1725.00 2912St Borrowings (4.e2) (260.00 ) ( 324.00) (0.00 ) (300.00 ) ( 210.41) (200.76) (812.le ) (36e.6i) (157e.84 ) ( 4061.73)

Foreign 213.48 223522 34.47 88.17 1073.18 l145.81 954.26 3il.26 0.00 19.02 6t2747 Currenqr Assets (160.0r ) (923.32) (r 13.90 ) (84.62) Q2e.87 ) (8e2.90 ) (1036.89 ) (0.00 ) ( 0.00) (17.94',) (39s9.4s )

Foreign 188.09 1289.80 466.81 25.s9 1704.81 l108.49 941.55 387.10 14.03 0.00 612627 Currency Liabilities ( 185.88) ( 40r.9r) ( l11.75) (33.0e ) (1337.73 ) (874.8e ) ( e84.08) ( r7.8e) ( 11.92) ( 0.00) ( 39s9.r4)

*The above dkclosures are as compiled and cettfi.ed by the Bar*'s Management. Figures in braclret represent Previous Year'sfigures.

Page 15

Charlered

F - 43 2.7 Exposures 2.7.1 to Real Estate Sector* (rn ffil,.";.;i.#H ffi ffiffitffiuffi l#EHifiHlr0l&T I U Resldentlal Mortgages - Lending fully secured by mortgages on residential property that is or will be I I I I occupied by the borrower or that is rented; 7$2.e e+sa.st | -of which, individual housing loans eligible for inclusion in priority sector | I I advances 4495.48 3845.73 iD Commercial Real Estate - Lending secured by mortgages on commercial real estates (office buildings, retail space, multi-purpose commercial premises, multi-family residential buildings, multi-tenanted commercial premises, industrial or warehouse space, hotels, land acquisition, development and construction, etc., including 272.40 376.88 non-fund based (NFB) limits) iii) Investments in Mortgage Backed Securities (MBS) and other securitized exposures - NIL a. Residential, NIL b. Commercial Real Estate. b) Indirect Exposure 3322.76 3227.r2 Fund based and non-fund based exposures on National Housing Bank (NHB) and Housing Finance Companies (IIFCs) | Total Exposure to Real Estate Sector 11227.80 10102.93 (*The above disclosures are as compiled and certified by the Bank's Management.)

2.7.2 Exposure to Capital Market* (m

(i)Direct Investments in equity shares, convertible bonds, convertible debentures and units of equity-oriented mutual funds the corpus of which is not t21.52 14t.65 exclusively invested in corporate debts (ii) Advances against shares / bonds / debentures or other securities or on clean NIL NIL basis to individuals for investments in shares (including IPOs /ESOPs), convertible bonds, convertible debentures and units of equity-oriented mutual funds (iii)Advances for any other purposes where shares or convertible bonds or 1.65 2.61 convertible debentures or units of equity oriented mutual funds are taken as primary security (iv) Advances for any other purposes to the extent secured by the collateral NIL NIL security of shares or convertible bonds or convertible debentures or units of equity-oriented mutual funds i.e. where the primary security other than shares/ convertible bonds/ convertible debentures/units of equity-oriented mutual funds does not fully cover the advances (v)Secured and unsecured advances to stock brokers and guarantees issued on NIL 11.25 behalf of stock brokers and market makers (vi)Loans sanctioned corporate against the security shares/bonds/ to of NIL NIL debentures or other securities or on clean basis for meeting promoters' contibution to the equity of new companies in anticipation of raising

Page 16

Charlered Chaflered tan

F - 44 resources (vii) Bridge loans to companies against expected equity flows / issues NIL NIL (viii) Underwriting commitments taken up by the Bank in respect of primary NIL NIL issue of shares or convertible bonds or convertible debentures or units of equity oriented mutual funds (ix) Financing to stock brokers for margin trading NIL NIL (x) All exposures to venture capital funds (both registered and un registered) 68.68 72.66

Total Exposure to Capital Market 191.85 228.17 (*Ihe above are as compiled and certilied by the Bank's Managanent.)

Bank has acquired shares of two companies amounting to Rs.19.97 Crores by conversion of debt into equity as part of a strategic debt restructuring which are exempt from Capital Market Exposure limits.

2.7.3 Risk Category-wise Country Exposure The Bank has analyzed its risk exposure to various counkies as on 31" March, 2016 and such exposure is less than the threshold limit of l%o of the total assets of the Bank. In terms of RBI guidelines, no provision is required for this exposure.

The position of risk category-wise country exposure is given below: ( in Crores

Insimificant 159.31 0.00 129.33 0.00 Low 15.02 0.00 29.55 0.00 Moderate 3.32 0.00 6.59 0.00 Hich 0.00 0.00 0.00 0.00 Verv Hiph 0.00 0.00 0.00 0.00 Restricted 0.00 0.00 0.00 0.00 Off Credit 0.00 0.00 0.00 0.00 Total 177.65 0.00 t65.47 0.00

2.7.4 Details of Single Borrower Lintit (SBLy Group Borrower Limits (GBL) exceeded by the Bank ln

Simplex 942.08 ,025.00 782.81 Infrastructure Ltd

*In line with Bank's extant Lending Policy, the above breach of exposure ceiling was approved by the Board of Directors' at its meetingheld on 30.05.2014.

2.7.5 UnsecuredAdvances in Crores

Total amount of advances outstanding against charge over intangible I 33.3 I 141.83 securities such as the rights, licenses, authority, etc.

PageLT

Charlered

F - 45 Estimated value of such intangible collateral securities 186.65 200.47

2.8 Penalty Imposed by RBI

a) RBI under Sec 35 A of Banking Regulation Act 1949 and RBI Directive No 3158/09.39.00 (Policy) 2009-10 dated l9l1112009 a penalty of Rs.0.05 Crores imposed on United Bank of India for the FY 2015-16.

3. Disclosures as per Accounting Standards (AS) in terms of RBI guidelines:

3.1. AS 5 - Net Proflt or Loss for the period, prior period ltems and changes in the Accounting Policies - There is no change in accounting policy during the year. The impact of prior period items is immaterial in the opinion of the management.

3.2 AS 9 - Revenue Recognition

Revenue is recognized as per the Accounting Policies disclosed in Schedule 17

3.3 AS 10 - Accounting for f,'lxed Assets

3.3.1 Accounting for Fixed Assets is done as per the Accounting Policies disclosed in Schedule 17.

3.3.2 During the year Bank has revalued the premises forming part of its Fixed Assets Schedule based on the reports of external independent Valuers. The surplus arising from the revaluation amounting to Rs. 346.67 Crores is credited to " Revaluation Reserve" under " Reserves and surplus" and 45% of the same has been reckoned in Tier 1 capital as per RBI guidelines.

3.4 AS- 12 Government Grants

During the year Rs.0.45 Crores has been received in the form of subsidies/grants/incentives from RBI and State Government as below: in Crores

Govemment 0.45 0.00 0.62 0.1s

3.5 AS - 15 Employee Benefits Disclosure on accounting of employee benelits [as per AS-15 (revised)l ( in Crores

Present value of obligation as at the beginning of the Year 3s43.16 466.66 159.1 l lnterest cost 263.75 34.20 12.45 Current Service cost 428.75 27.84 42.51 Benefits Paid 492.s4 78.25 6.96 Actuarial Loss(Gain) on Obligation 698.09 14.40 44.79 Present value of Obligations at the end of the Year 4441.21 464.84 162.32

Fair Value of Plan assets at the beginning of the Year 344s.40 476.59 157.69 Expected Retum on Plan Asset 306.il 42.32 14.00 Employer' s confribution 967.68 34.10 l.6l Benefits Paid 492.54 78.25 6.96 Actuarial Loss(Gain) on Obligations 27.3t -33.51 0.0031

Page 18

Charlered * na F - 46 Fair Vhlue of Obligations at the end of the Year 4254.49 Mt.24 166.35

Fair Value of Plan Assets at the end of the Year 4254.49 441.24 166.35 Unfrrnded Net Liability recognized in Balance Sheet -186.72 -23.60 4.03

Current Service Cost 428.75 27.84 42.51 lnterest Cost 263.75 34.20 12.45 Expected retum on Plan Asset 306.64 42.32 14.00 Net Actuarial (Gain/Loss recognized in the Year 670.78 47.91 44.79 Total Expenses recognized inProfit and Loss Account t056.64 67.63 -3.83

Discount Rate 8.00% 8.00% 8.00% Expected rate of retum on Plan qqets 8.90% 8.88% 8.88% Method Used Proiected Unit Credit Method *Other Benetits include Privilege Leave, Casual leave, Sick Leave and LFC/LTC. Ir{ote: The above statement is based on the report of the Actuary.

3.6 AS 17 - Segment Reporting

The Banks operations are classified into two primary business segments viz. "Treasury Operations" and "Banking Operations". The relevant information is given hereunder in the prescribed format:

A: Buslness ( in Crores

,rt1;03i15

Revenue 4037 4235 4649 5064 2468 2439 l9 l8 lll73 11756

Result t243 l30l I 106 t427 887 909 l9 l8 3255 3655

Unallocated t443 1227 expcnses Operating l8l2 2428 ProIit

Income Taxes (42e) r98

Extraordlnary proliU loss

Net (282) 2s6 ProIiU(Loss) 0ther Informatlon Segment 46823 43385 47059 46986 21001 19771 I 14883 I 10148 Assets Unallocated t4548 12879 Assets Total Assets 12943t r23027

Page 19

q Charlered !; o Chartered :q F - 47 Segmeht 44764 41395 44973 44829 20067 l 8869 Liabilities 109804 I 05093 Unallocated Liabilities I 3308 9521 Total Liabilities t23tt2 123026

Part B: Geographical Segment - Since the Bank does not have any overseas branch, reporting under geographical segment is not applicable.

3.7 Related Party Disclosures (A$18) (As Compiled by the management)

3.7.1 Names of the related parties and their relationship with the Bank: Associates:

1 Assam Gramin Vikash Bank Regional Rural Bank 2 Bangiya Gramin Vikash Bank Regional Rural Bank

3. Manipur Rural Bank Regional Rural Bank 4. Tripura Gramin Bank Regional Rural Bank

Kev Manasement Personnel:

I Mr.P.Srinivas Managing Director & Chief Executive Officer

3 Mr. Sanjay Arya Executive Director 4. Mr. K. Venkata Rama Executive DirectorQoin on 29.08.2015) Moorthy 5 Mr.DeepakNarang Executive Director ( retired on 31.03.2015) 6. Mr. Sanjib Pati Director

7 Mr. A.K. Dogra Director

8. Smt.Renuka Mutto Director

9 Mr. S. Suryanarayana Director

10. Mr. Amab Roy Director

Rehttves of Kev Manasement Personnel:

I Smt. Neera Arya Wife of Mr. Sanjay Arya

Page 20

Chartered Chartered

F - 48 3.7.2 Related Party Disclosures (rn

Borrowings 2053.00 1470.00 0.410 Nil NIL Nil 2053.41 1470.00 Deposit 1197.48 4348.42 0.34 0.76 0.04 0.30 5546.28 4349.48 Placement of deposits NIL NIL NIL Nil NIL Nil Nit Nil Advances 2053.00 1470.00 NIL 0.11 NIL Nil 2053.00 t470.tt Investnents : Equity Shares NIL NIL 400 Nos 200 Nos NIL 100Nos 400 Nos 200 Nos Equity Shares 100Nos Shares of RRB 3.85 3.85 NIL NIL NIL NIL 3.8s 3.8s Bonds 64.30 36.97 NIL NIL NIL NIL 64.30 36.97 Non-funded NIL NIL NIL NIL NIL Nil NIL Nil commitments Leasing/HP NIL NIL NIL NIL NIL Nil NIL Nil arTangements availed LeasingAIP NIL NIL NIL NIL NIL Nil NIL Nil arrangements provided Purchase of fixed NIL NIL NIL NIL NIL Nil NIL Nil assets Sale of fxed assets NIL NIL NIL NIL NIL Nil NIL Nil Interest paid 1s0.66 316.70 0.00 0.03 NIL Nil 1s0.66 316.73 Interest received 50.49 150.s0 0.02 0.00 NIL 0.03 60.51 150.53 Rendering ofservices NIL NIL NIL Nil NIL Nil NIL Nil Receiving of services : - Rernuneration# NIL NIL 0.63 0.89 NIL Nil 0.63 0.89 - Sittinq Fees 0.15 0.06 0.15 0.06 Management contracts NIL NIL NIL Nil NIL Nil NIL Nil

Page 21

Chartered

Chartered \

F - 49 #Remuneratlon Pald to Key Management Personnel:

Mr.P.Srinivas Managing Director Salary and & Chief Executive emoluments 22,03,783.15 5,06,301.00 Officer , Mr. Sanjay Arya Executive Director Salary and 24,58,617.85 21,16,054.00 emoluments 3. Mr. K.V. Ramamoorthy Executive Director Salary and emoluments 10,04,250.00 0.00

4. Mr.DeepakNarang Retired Executive Incentive Director 5,50,000.00 21,94,130.00

5. Sanjib Pati Director Salary and emoluments 7,80,822.38 6,52,171.00

# Including performance linked incentive on cash basis.

Note: (a) No amount has been written offlwritten back in respect of dues from/to related parties.

(b) No provision is required in respect of dues to related parties.

3.8 Leases (A$19) (As compiled by the Managemen) a) Lease rent paid for operating leases are recogrrized as an expense in the Profit & Loss Account in the year to which it relates.

b) Future Lease Rent Payable for operating lease: (As compiled and certified by Management) ln

a. Not later than 1 year 66.98 58.92 b. Later than I year but not later than 5 years 228.20 201.66 c. Later than 5 years 182.84 t82.16 Total 478.01 442.74 Amount charged to Profit & Loss Account 83.37 76.85

i) Future lease rents and escalation in the rent are determined on the basis of agreed terms. ii) At the explry of the initial lease term, generally the bank has an option to extend the lease for a further pre-determined period.

3.9 AS 20 - Earnlngs per Share

Net ProfiV(Loss) after tax available for Equity Share Holders ({ in Crores) (28 l.e6) 255.95

Weighted Average number of Equity Shares 83,95,15,951 67,77,93,389

Basic and Diluted Earnings per Share(() (3.36) 3.78

Nominal Value per Share(?) 10.00 10.00

Page22

Chartered

F - 50 3.10 AS 21 - Consolidated Financial Statements/AS-23-Accounting for Investments in Associates in Consolidated Financial Statements

The Bank does not have any subsidiary and as such, AS-21 and AS-23 are not applicable.

3.11 AS22 - Accountlng for Taxes on Income

(a) Provision for Tax during the year is given below: (( in Crores)

Provision for Tax 339.26

(b) The major components of Deferred Tax Assets/Liabilities are as follows: ( in Crores)

Deferred Tax Assets 705.36 263.61 Employees benefits 0.78 143.03 Other items 355.51 120.58 Depreciation on Fixed Assets 15.25 Nil Provision on NPA 333.82 Nil Deferred Tax Liablllties 85.05 72.03 Depreciation on fixed assets Nit Nil Special Reserve u/s.36(1)(viii) of 76.r4 72.03 the Income Tax Act, 1961 Loss on Sale of Assets to ARC 8.91 Nil

(c) The bank has recognized Deferred Tax Assets of Rs.333.82 Cr., Rs 147.09 Cr and Rs.14.24 Cr on account of timing difference arising out of excess provision over & above the deduction for bad and doubtful debts, Funded Interest Term Loan and provision on Food Credit respectively under the provision of Income Tax acts 1961. Hitherto the same was not recogrized. 3.12 AS 28 - Impairment of Assets

kr the opinion of the Bank, there is no indication of any material impairment of fixed assets and consequently no provision is required.

3.13 AS 29 - Provisions, Contlngent Llabilities and Contingent Assets

Movements in significant Provisions and Contingent Liabilities have been disclosed at ttre appropriate places in the Notes forming part of the accounts.

4. Additional Dlsclosures

4.1 Provisions and Contingencies The break-up of'Provisions and Contingencies' shown under the head "Expenditures in Profit and Loss Account is as under: (m

Provisions for depreciation on Investment (r.09) 00.43) Provision towards NPA(Loans and Advances) 1769.17 8M.87 Provision towards Standard Assets including Restructured Standard (423.771 325.82

Page 23

F - 51 ,

Asset *339.26 Provision made towards Income Tea{nqldAg Deferred Tax) (428.73) Other Provisions and Contingencies - Provision for Employee Benefit (AS-15) 9r3.74 628.37 - Provision for Non-Performing Investrnents M.0t 20.11 - Floating Provision (s2.76) (s2.7s) - Provision for Others 273.t8 136.70 Total 2093.75 217t.95 *Provision made towards lncome Tax during the year includes reversal of excess provision of <78.85 Crores relating to previous years.

Persuant to RBI Circular No RBV2OI4-151535 DBR.No.BP.Bc.83l2l.04.048l20l4-15 dated 01.04.2015, the Bank has made a provison of Rs.62.38Crores (PY Rs.2.09 Crores) during the year ended 31" March 2016 in respect of frauds/suspected frauds and balance unprovided amount of Rs.53.74 Crores has been debited to Revenues & Other Reserves in terms of RBI circular No. RBV20I5-16/376DBR No.BP.BC.92.2llO4.O48l20l5-16 dated 18n April 2016.The same will be reversed by debit to the Prof,rt and Loss account in subsequent quarters in the next financial year.

4.2 Floating Provisions (Countercyclical provlsloning buffer) ln

a) Opening Balance in the floating provisions account 52.76 105.51 b) The quantum of floating provisions nE4g 4UriltgJear 0.00 0.00 c) Accounting for draw down made duri4glhqJeq{ 52.76 52.75 d) Closing balance in the floating provisions account 0.00 52.76

In terms of clause 6.5(AXa)(ii) of Reserve Bank of India's (RBI's) Master Circular No.DBR.No.BP.2/21.04.04812015-16 dated l't Ju1y,2015, the Bank has utilized its countercyclical/floating provisions held as at I 'r April,20l 5 of Rs.52.76 Crores for adjustment of loss arising out of sale of assets, below the net book value, to Assets Reconstuction Company.

4.3 Draw Down from Reserves

Persuant to RBI Circular No RBV2014-15/535 DBRNo.BP.BC.83l2l.04.048l20l4-15 dated 01.04.2015, the Bank has drawn Rs.53.74 from Revenue Reserve against provision for Fraud/suspected fraud. 4.4 Disclosure of complalnts a) Customer Complaints

(a) Complaints pending at the beginning of the Year 517 (b) Complaints received during the Year 47131 (c) Complaints redressed during the Year 47176 (d) Complaints pending at the end of the Year 472

b) Awards passed by the Banking Ombudsman

(a) Unimplemented Awards at the begiming of the Year 0 (b) Awards passed by the Banking Ombudsman during the Year 2 (c) Awards implemented during the Year I (d) Unimplemented Awards at the end of the Year I

Page24

F - 52 4.5 'Disclostrre of Lctter of Comforts (LoCs) issued by the Bank

a) During the current financial year the Bank has issued 510 nos LoCs (Previous Year 378) amounting to Rs.827.25 Crores (Previous Year Rs.5187.84 Crores) for providing Buyers Credit facility.

b) There are237 nos (Previous Year 212) of outstanding LoCs as on 31.03.2016 amounting to Rs.388.46 Crores (Previous year Rs.312.71 Crores).

4.6 Provision Coverage Ratio @CR)

The provision coverage ratio (PCR) for the Bank as on 3l't March 2016 is 53.36%.

4.7 BancassuranceBusiness { in Crores

Life Insurance Business 2.87 2.62 Non-Life Insurance Business 3.29 3.25 Mutual Funds Nil NIL Others 0.06 0.l l

4.8 Concentration of deposits, Advances, Exposures and NPAs 4.8.1 Concentration of Deposits ( in Crores

Total Deposits of twenty largest depositors 4923.14 5380.65

Percentage of Deposits oftwenty largest depositors to Total 4.23% 4.94o/o Deposits of the Bank

4.8.2 Concentration of Advances -.(ln

Total Advances to twenty largest borrowers fi662.22 1t767.46 Percentage of Advances to twenty largest borrowers to Total 16.33% t7.04% Advances ofthe Bank

4.8.3 Concentration of Exposures (ln

Total Exposure to twenty largest borrowers/ Customers 15262.61 16225.8t

Percentage of Exposure to twenty largest borrowers/ customers t9.48% 15.08% to Total Exposure of the Bank on bonowers/ customers

Page 25

Charlered

F - 53 a

4.8.4 Concentration of NPAs ( ( in Crores)

Total Exposure to top fourNPA accounts 1713.79 933.79 4.9 Sector - wise NPAs (ln

:t1,,; tjful

A. Prlorlty Sector Agriculture and I 9460.65 fi26.96 I l.9l 8594.61 1322.96 15.39 Allied activities Advances to industries sector ) eligible as 4428.16 989.71 22.35 5962.15 862.28 t4.46 priority sector lendinc 3 Services 6044.90 881 . l8 t4.57 6381.97 883.43 13,84 - Retail Trade 2866.04 567.28 19.79 2539.47 487.8 I 19.2r - Others 3l7E.E6 3 r3.90 9.87 3842.50 395.62 10.30

4. Personal Loans 6074.33 188.68 3.1 I 5478.72 162.54 2.97

Sub-Totol(A) 2600E.04 3186.53 12.25 26417.45 32i 1.21 12.23

B. Non-Priorlty Sector Agriculture and l. Nil Nil Nil Nil Nil Nil Allied activities 2.

Industry 24020.93 2627.r7 10.93 25690.72 5 r 80.25 20.16 - Iron & Steel 5005.35 758.99 15. l6 475t.18 2413.21 50.79 - Power 9484.1 I 9335.32 166.38 1.78 - Others 9531.47 1 868.1 8 19.60 t1604.22 2600.66 22.41

Services n769.29 883. l5 7.50 10656.21 460.82 4.32 . NBFC 6183.99 0.00 6010.0E - Banking & 3293.34 3255.86 2.10 7.31 3 Finance Other than NBFC - Others 2291.96 883. l5 38.53 1420.27 458.72 32.30

4 Personal Loans 6578.03 221.08 3.36 6572.24 233.54 3.55

Sub-Total(B) 4403E.04 6284.48 14.27 41249.i8 3321.5i 8.05 Food C. 1365,92 Nlt Nll 1403.05 Nit Nit Credlt(FCI) Sub-Total(C) ri65.92 Nil Nil 140i,05 Nil Nit

Total (A+B+C) 71412.00 9471.01 12.63 69069.8E 6552.74 9.49

Page 26

Chartered Charlered

F - 54 4.10 Movement bf NPAs (ln

Gross NPAs as on l't Apt',l,20l5l20l4 6552.91 7118.01

Additions (Fresh NPAs )during the Year 5011.05 4087.t7 Sub-total (A) 11s63.96 I 1205.18 Less: (i) Up gradations 348.93 2655.01

(ii) Recoveries (excluding recoveries made from upgraded a/cs) s41.42 1236.58

(iii) TechnicaUPrudential Write-offs 586.56 708.99 (iv)Write-offs other than those under (iii) above 62.86 51.69

(v) Sale of Assets upto 31't March 2016 553.18

Sub-total (B) 2092.95 4652.27

Gross NPAs as on 3l't March,201612015 (A-B) 9471.01 6552.91

4.ll Stock of technical write-offs and recoveries made thereon

( in Crores

Opening balance of Technical/?rudential written-off accounts as at 3281.48 2650.10 April 1,2015 Add: TechnicaVPrudential write-offs during the year 586.56 708.99 Subtotal (A) 3868.04 3359.09 Less: Recoveries made from previously technicaUprudential written- 1s4.37 77.8r offaccounts during the year (B) Closing balance as at March 31,201612015 3713,67 3281.48

4.12 Overseas Assets, NPAs and Revenue (ln

Total Assets (Nostro balance) 61.93 25.45 Total NPAs NIL NIL Total Revenue 7.49 2.47

4.13 Off-Balance Sheet SPVs sponsored (which are required to be consolidated as per accounting norms)

NIL NIL NIL

4.14. Unamqrtlsed Penslon and Gratuity Llabilities

The bank does not havb any Unamortised Pension and Gratuity Liabilities

Page27

q Chartered unla ol * F - 55 , 4.15 Credit llel:rult Swans

The Bank has not undertaken any Credit Default Swaps in the year 2015-16 as well as in the year 2014-15

4.15 Intra-Groun Exposures ln

1 Total amount of intra-proup exposures Nil Nil 2 Total amount of top-20 intra-group exposures Nil Nit Percentage of intra-group exposures to total Nil Nil 3 exposure of the bank on borrowers / customers Details of breach of limits on intra-group Nil Nil 4 exposures and regulatory action thereon. ifany

4.16 Transfer of Denosltor Education and Awareness Fund(DEAF)

Opening balance of amounts transferred to DEAF 43.73 Add : Amounts trarsferred to DEAF during the year 43.73 14.16 Less : Amounts reimbursed by DEAF towards claims

Closing balance of amounts transferred to DEAF 43.73 57.89

4.17 Unhedsed Foreien Currencv Exnosure

The incremental provision/Capital requirement is arrived by considering likely loss & EBID of the borrowers as per RBI guidelines.The Unhedged Foreign Currency Exposures, Incremental provisions and capital requirements that are provided by the bank as on 3l Mar 2016 are given below:

ln Incremental Provisioning (over and above Incremental Capital requirement extant standard asset provisioning) for Unhedged foreigr currency exposures ofborrowers 1.11 0.32

4.18 Liquiditv Coverase Ratio*

4.18.1 Disclosure (lnt. 3 Total Total Weightea Welghted Va!ue Yalue

I Total Hlgh Quallty Llquld Assets 21762.03 19542.76

2 Retail deposlts and deposlts from 89599.63 5251.08 82700.08 4880.35 small buslness of

Page 28

0hlttuort Chartered untants

F - 56 whicii: (i) Stabic 4eposits 74177.73 3708.89 67793.25 3389.66 (ii) Less stable deposits 15421.90 1542.19 14906.83 1490.69

(i) Operational deposits (all 142.37 35.59 Nil Nil counterparties) (ii) Non-operational deposits (all 11436.20 1t436.20 7t4t.t5 6602.90 counterparties) (iiD Unsecured debt 0.00 0.00 Nil Nil ':_4;: .l{1:r.* Bffi ffi rT[($InJft{mrItljrJ$ffiifiii3, li f, EAEt3.[f]:;.j rcffi},?&Nih'r-" , .tT,F. ffi ffiffi ffiEffiffi {rffiipidffitsP,r riii (D Outflows related to derivative exposures and other collateral 0.00 0.00 Nil Nil requirements (iD Outflows related to loss of funding 0.00 0.00 Nil Nit on debt products (iii) Credit and liquidity facilities 6049.59 1160.28 3312.61 587.83

',; ; r' . t''. !it;;)' );;:!:::;!;';t1t.i 9. Secured lending (e.g. reverse repos) Iilil'T 0.00 3l 1.33 Nil 10. Inflows from fully performing 4719.22 4418.t7 560.25 280. l3 exposures 11. Other cash inflows 1415.48 827.63 2714.35 24t4.35 ffis ffiffip.mffiffi Total AdJusted Value

LCR as on last four quarters of the FY: 2015-16 Quarter Ended on LcR (%) June,2015 210.63 September,2015 209.56 December,2015 212.44 March,2016 242.26

* The above disclosures are as compiled and certi/ied by the Bank's Management.

4.18.2 Oualitatlve Dlsclosure around LCR The Liquidity Coverage Ratio (LCR) standard aims to ensure that a Bank maintains an adequate level of unencumbered High Quality Liquid Assets (HQLAS) that can be converted into cash to meet its liquidity needs for a 30 calendar day time horizon under a significantly severe liquidity stress scenario specified by supervisor. Bank has implemented and is computing LCR since 1" January,2015. LCR is calculated as a ratio of HQLA to net cash outflow under stress scenario over the next 30 calendar days. As per RBI guideline, Bank is required to maintain minimum 70% LCRas on 31.03.2016.

Page29

Chartered o

F - 57 t

i CR of the Bank is assessed at242.26% which is well above the minimum requirement as prescribed by d:e regulator.

4.19 a) Registation formalities are pending in case of two properties consisting of Rs.2.57 Crores, WDV as on 31.03.2016 Rs.2.37 Crores (Previous Year Rs.2.l lCrores).

b) Premises include leased properties amounting to Rs.76.90 Crores (net of amortization) as at 3lst March 2016(Previous Year Rs.75.87Crores).

5. Based on information available with the bank, there are few suppliers/services who are registered as Micro,small or Medium Enterprise under the Micro,Small and Medium Enterprise development act 2006 (MSMED ACT, 2006)information in respect of micro and small enterprises as required by MSMED.

Sr. Particulars Current Previous No. Year Year 31.03.2016 31.03.2015 I Principal amount and interest due thereon remaining unpaid to any supplier as at the end ofeach accounting year: Principal : NIL NIL lnterest : NIL NIL

2 The amount of interest paid by the buyer in terms of section 16 of MSMED Act,2006 along with the amount of the payment made NIL NIL to the supplier beyond the appointed day during each accounting year. 3 The amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed NIL NIL day during the year) but without adding the interest specified underMSMED Act,2006. 4 The amount of interest accrued and remaining unpaid at the end of each accounting year. NIL NIL 5 The amount of further interest remaining due and payable even in the succeeding years, until such date, when the interest dues as NIL NIL above are actually paid to the small enterprise for the purpose of disallowance as deductible expenditure under section 23 of the MSMED Act 2006.

6. Previous Year's figures have been regrouped / rearranged wherever considered necessary to make them comparable with those of the current year.

Page 30

Charteted Chrnercd nlan

F - 58 l

This is a part of Schedule l8 as on 31.03.2016.

ffi Managing Director & Chief Executive Officer

K.V. Ramamoorthy Executive Director

Arnab Roy Pratyush Sinha Director Director Director

Renuka Muttoo S.Sfrryanarayana Director v Dtrector

,4n ,z SanJaffumar General Vlanager & CFO

As per our separate report of even date attached.

M/s.Ramamoorthy(N) & Co M/s.Nundl & Assoclates. M/s.PCBlndal&Co. M/s.SPMR&Assoclates Chartered Accountants Accountants Chartered Accountants Chartered FRN FRN: FRN

Chartered Ac \ nI

CA.Su Partner Partner Partner Partner M.No:023837 M.No:059828 M.No:093783 M.No:085362

Place:Kolkata Date :17'h Mayr20l6.

Page 31

F - 59 .

BANK

ENDED TIST

3l.t M rTch 2016 31Bt lrch 2016 CASH FLOW FROM OPERATING ACTIVITIES

IO T:,/T'] I II;I i FTI (2.819.588) 2.559-922 Add: lncome Tax'TI 2-200-ooo Less: MAT Recoverable 2.200.000 Add: O€tre,ed Tax Assots 14.2A7 3001 1,981,100 Prollt before Tax (7.106.888) 4.541.022

Adlullment for Doproclaton on Flx6d Assets 1,027 .675 r.057.1S0 Lsss: Amount drawn from Re\/aluafon Rosarvg (160.786) n4a. ProfrULoss on Sals of Flx6d Arsets (Netl 380 5.802 Deprgclaton/Provlslon for lnvastmonts (Net) (10.892) (704,252 Provlslon 4.257.7001 3.258.200 Pmvl3lon for NPA Advencsg I 7.691.700 aa{,a.700 Other Provlslon8 (Nel) f ,4s1,111 10.710.805 lntereot on Subordlnat€d Bonds 2.228.461 2.332.475

oDoratlno Proflt betore chlnse! ln ODo,lllno Asseil rnd Llabllluo! 18,920281 29.507.E06

Adlurlment for net chanoe ln ODeretlno A.Beh and Lhblllllas

Decrease/(lncrea3el ln lnveslrnEnt fi4.767.9551 17.012.716 Decr6a16/(lncreasel ln Advanc€s fi8.403.94'tI lncreaso/(Decroar6) ln DaDosltr 75,030,775 (26,921,097) lncr6ase/(Decroase) ln Bonowlnos (8.492.233) (3.985.063) Decreas6/(lncraase) ln Other A8sals (6.817.636 lncrease/(Decrea8e) ln Other Llablll0os & Provlslons (8,471.026) (9.296,488) lncrease/(Decr€ass) ln Revenue Roserve (370.679) 12,163 lncr6ase/(Dscroasa) ln Other Resot.o 1,012 2t.176.942 Carh Genoraled fom Operltlns Actlvltl.! Tax (Paldy Refund 1,100,000 (1.060,000) Nel Calh trom Ooeratlno Actlvllle3 (Al 24.276.982 G8.030.7321

I CASH FLOW FROM INVESTING ACT]VITIES

Flxed Arsgts (Notl (896.326) (449.783)

Net C!.h from lnveltlns Acllvltlot (Bl (808.326 (,1/t0.783)

CASH FLOW FROM FINANCING ACTIVITIES

lssua of Share Caoltal 4.800.000 6.152.3211 Share Prgmlum 8.152.321 Subordlnated Bon& lssued (3.000.000! lnt6ro3t on Subordlnatod Q,228,4611 t2.332.1761

Net cmh ftom Flnanclno Acllvlllca lCl /.420,46',t1 6A7,525

D Net lnc.oale ln Cs.h and Caih equlvalontt (A+B+CI 22.951.175 (47.812.990)

Ca6h lnd Ca.h oqulvalenb rt lhc beglnnlng ot th9 y9!, Cash ln hand 5.030.200 4.336.0U Balance! wltr Reservo Bank of lndla 53,125,812 50.361,760 Balances wlh Banks end Monsy at Call and Short Noflco 2.149.402 00.305.414 46.420.632 108,r 1 8.404

Garh rnd Cash equlvllontr rt tho end o, the yerr Cash ln hand 5,588,093 5,030,200 Balanco! wlh R$orvo Bank of lndla 55,1 16,373 55,125,812 Balanco8 wlth Banks and Money at Call and Shfrt Nodca 22,552,123 2.'145.102 60.305.414

Nolr : The above cash tlow ltataEifnt har bgen DreDlred on lho brtl3 o, ln(

Charlered Chartered CharEred

F - 60 iV

This is a part of Cash Flow Statement as on 31.03.2016.

Managing ----EDrtnlvFDirector & Chief Executive Officer

K.V. Ramamoorthy Executive Director

Arnab Roy Sinha Director Director Director

Renuka Muttoo s. Director Zt,/ sant$Kumar GeneralManager & CFO

As per our separate report of even date attached.

M/s.Ramamoorthy(N) & Co M/s.Nundi & Associates. M/s.PCBlndal&Co. M/s.SPMR&Associates Chartered Accountants Chartered Accountants Chartered Accountants Chartered Accountants FRN FRN:3 FRN: FRN:

Chartered Charle -----\

Partner Partner Partner Partner M.No:023837 M.No:059828 M.No:093783 M.No:085362

Place:Kolkata Date :l7th May,2016.

Page 34

F - 61 I , INDEPENDENT AUDITOR'S REPORT

To The President of lndia Report On The Financial Statements

7. We have audited the accompanying financial statements of UNTTED BANK OF INDIA as at 31't March, 2015, which comprises the Balance Sheet as at March 37,2015, and Profit and Loss Account and the cash flow statement for the year ended on that date, and a summary of significant accounting policies and other explanatory information. lncorporated in these financial statements are the returns of 20 branches and treasury operations audited by us and 705 branches/retail hubs audited by branch auditors. The branches audited by us and those audited by other auditors have been selected by the Bank in accordance with the guidelines issued by the Reserve Bank of lndia. Also incorporated in the Balance Sheet, the Profit and Loss Account and the Cash Flow statement are the returns from 35 Regional Offices, !275 branches, 2 Staff Training Colleges, 1 Cash Management System and L Central Pension Processing Centre, which have not been subjected to audit. These unaudited branches account for 9.30% of gross advances, 35.45% of deposits, 5.47o/o of interest income and 34.70% of interest expense.

Monagement's Responsibility for the Financial Statements 2. Management is responsible for the preparation of these financial statements in accordance with the provisions of Section 29 of the Banking Regulation Act, 1949 and to disclose the information as may be necessary to conform to forms'A & B'respectively of the Third Schedule to the Banking Regulation Act, 1949. These financial statements comply with the applicable Accounting Standards issued by the lnstitute of Chartered Accountants of lndia. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsi bi lity 3. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued bythe lnstitute of Chartered Accountants of lndia. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement in the financial statements, whether due to fraud or error. ln making those risk assessments, the auditor considers internal control relevant to the Bank's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the bank's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

6, Emphasis of Matter

5.1 ln accordance with Standard of Audit (SA) 706 "Emphasis of Matter Paragraph", without qualifying our opinion, we draw attention to Note No.3.5 in Schedule 18 regarding deferment of pension and gratuity liability of the Bank to the extent of (89.46 crores pursuant to the exemption granted by the Reserve Bank of lndia from application of the provisions of Accounting Standard (AS)-15 on "Employee Benefits". 4

aha4e'rd 0tanlt I'ct r.,;r;3;15 , De

F - 62 a We I draw attention to Note 3.5 to the financial statements, pending settlement of the proposed wage revision effective from November 2072, an adhoc provision of ?290 crores is held as at 31't March 2015,

Opinion 7. Subject to what is stated above, in our opinion, and to the best of our information and according to the explanation given to us and as shown by the books of the bank, and read with the Accounting policies and the Notes on the Accounts, we report that:

(i) The Balance Sheet, is a full and fair Balance Sheet of the Bank containing all the necessary particulars, as required by the Banking Regulation Act 1949 and is properly drawn up so as to exhibit a true and fair view of state of affairs of the Bank as at 31sr March, 2015 and is in conformity with accounting principles generally accepted in lndia;

(ii) The Profit and Loss Account, shows a true balance of Profit, in conformity with accounting principles generally accepted in lndia, for the year covered by the account; and

(iii) The Cash Flow Statement gives a true and fair view of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements 8. ln our opinion, the Balance Sheet and the Profit and Loss Account have been drawn up in Forms "A" and "8" respectively of the Third Schedule to the Banking Regulation Act, L949 and is in accordance with the provisions of section 29 of the Banking Regulation Act, 1949.

9. Subject to the limitations of the audit indicated in paragraph 1 to 5 above and as required by the Banking Companies (Acquisition and Transfer of Undertakings) Act, L970, and subject also to the limitations of disclosure required therein, we report that:

(a) We have obtained all the information and explanations which to the best of our knowledge and belief, were necessary for the purposes of our audit and have found them to be satisfactory.

(b) The transactions of the Bank, which have come to our notice have been within the powers of the Bank.

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

10. ln our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with the applica ble Accounting Standards.

For Ramamoorthy(N) & Co. Nundi & Associates. PCBindal&Co. SPMR&Associates.

Ch a rtered-A€€ollIt ta nts Chartereglrf,ftNents Charterefii@{pts Ch a rtered-AecqUnta n ts rnrrr:offi}aopN Jnru:39ft#HN rnru:0ffififfig\ rnru:946?*fitsN o Clha o o o )t * CA,SU ca.r'qaruffiT CA.Vire cA. \::::- Pa rtner ffrtner Pa rtn er Parrner MRN;023837 MRN;016359 MRN:088730 MRN:085362

Date : 7th May 2015 Place: Kolkata

F - 63 ; a BANK OF INDIA OFFICE:KOLKATA "t" AUplrEP FrNANc!4|! FOR TIIE --1 YEAR (Rs. !n Paralculsrt rtcr Ended Yprr rn{e{ ._tLo.l.?-ql!_ 31.12.2014 3t.0t.20t4 3 .ll'9-3'?ol1 {Aslleq) lnlcrcsl - -(Berlqre!) I Eerncd (s+b+c+d) vs7-6 l0lE04t lgf222? a) Intcrcst/Discount on advanccVbills t78652 172018 199723 704083 781 b) lncome on Invcshcnt 77467 c) Infl. on balancc wirh RBUOthAB;ks t063 939 5876 901 d) Othcrs 0 t736 t27i Oahcr lncome 22127 17469t Tollllncomc(l+2) ---- 3153t2 29t331 t92739 E06 6 lnlc16a Erpcndcd - ii6.bbs I 206169 EO3647 Opcratlng Erpcnscs (t+ii) 5 5003/t 44576 te7 I 70795 i) Paymcnts to and provisions for cmplo_yc9s.. , . .._.-.. . .-_., 26741 25852 26570 103829 ii) Olhcr opcrating cxpcnscs t8724 771 6936 ' 23293 20t44 6 Totsl Erpcnditurc 14y(5) (Eicluding Piovirton end ConllngGnclcrl 233189i . .?4ee_!5: "- .-.. 7 Opcrrling Profit (tH6) (Proftt bcforc Provblons and Contlngcncics) 242794 2p4174 E Provlslons & Contlngcnc_ics (O-rLq gf) 676t0 26670 !h.j " " " _ ._ . !q1?6 9 Erccptlon.l Itcm! 0 0 0 l0 Pront (+yl.orsc) from Ordlnary Activltlcs bcforc tar (7-&9) I l5t3 8235i 27675 454 (tss622

I I Tar Expcnscs I 13l 4037 (19312) l2 Nel Prollt (+)il-ossc) from Ordlnary Actlvltle sfter tar (10., Ir) 4l 46937 , , l)21 l.l Ertrrordinary lt€m! (nct of.lr: -clPltlqg) 0 0 0 l4 Nct Prorir (+)/Loss(-) for rhc pc.jgd 46937 2-1??e ( 12 .194]1? 4t7E, : 134!) I 5 Paid-up cquity share capital (Face lglpc ofggch glqqc R1 !0) qief? E.let?l 11471 15 Rcscwes excldg. Rcvaluation rcscwcs 439441 33 l90l 33 190 439441 331901 l7 Anrlyticrl Ratios (i) Pcrccntagc of Sharcs hcld by GO.I. 82.00% 78.92o/o 82.00%i (ii) Capital Adequacy Ratio % a) Bascl-ll ll.42o/t ll tt.46yo II b) Bescl-lll 9.81o/o 10.5 (iii) Eaming pcr Sharc (EPS) a) Basic and dilutcd EPS beforc Extraordinary itcms (nct oftax expcnsc) for thc quartcr and for thc ycar (not annualiscd) l.4l 039i__ 3.78 ' _ __ b) Basic and diluted EPS ancr Extraoidinary iicms lnir oftax expensc) for the quarter and for rhc ylg 1.4 I 0.39 3.78 Oglglu?lisg) __ (rv) 7l (a) Amount of Gross NPAs 65529t 7q0919.. _ _ _?uE9t 655291 l80l (b) Amount ofNcl NPAS luibira 524032 4664n 46641t (c) Pcrccntagc ofGross NPA 12.03%: 10.470/o 9 49%l 7.18o/o 1d) Pcrcentagi ofNct NPA ---.?. (v) Rctum on Asscts (Annualiscd) (7o) o.tAyoi l.52Yo 0.21o/o, 'l l8 Public Sharcholding No. ofsharcs l5l 66,578,299 66;7q,2ee Perccntagc of shucholding lE. 21.08%i l9 Promotcrs and promotcr group ShgglrgldiqS a) Plcdgcd/Encumbercd No.of shares Nit NiI - Percenragc ofsharcs(as a y. ofitri iotat itr.rit oUi"! oipro;orer Nil Nil NiI and promotcr group) - Perccntagc ofshare (as a % ofthJ iomr itruc capiiar oftii. Nil Nil Nilr company) ..------+-. -. b) Non-cncumbcrcd No. ofshares _qqqJ-l ,q19 Jtss,sqt, 7921 4E8,1 ,792 _q8pJ?g.qp: _ _4qp,t Perccntagc ofshares(as a % ofthe total sharcholding of promoter t00% I00%: l00Vol and promoter group) Perccnlagc ofshare (as a % ofthe total sharc capital ofthc t2 78.92o/o; 82.00%,

c I ccc '9

F - 64 D a

Segrnent Reportlng;

Part A:Business Segments;

Rs. in Lacs

Quarter ended Quarter ended Quarter ended Year Ended Year Ended 31.03.2015 3t.12.20t4 31.03.2014 31.03.2015 3L.O3.20t4

l.Segment Revenue: (Audited) (Revlewed) (Revlewed) (Audited) (Audlted) a)Treasury Operations 1 16,395 110,730 463L6 430,6L2 326,464 b)Corporate/Wholesale Banking t23,7tS 124,373 tza32s 505,398 s77,605 C)Retail Banking 70,934 56,460 85,916 243,991 254,s86 dlOrher Banking operation 4,257 \a97 s,o72 tt,s3t 17,717 e)Unallocated Income 11 7 t,749 207 4,440 Total 3LS,3L2 293,467 307,378 1,792,739 r,tao,6t6 Less; lntersegment Revenue Total 315,312 293,467 3073?A 1,192,739 t,7ao,6t6 2,Segment Results:Pront/(Loss) a)Treasury Operations 61,912 26,746 (20,s08) t37,ta4 9,409 b)Corporate/Wholesale Banking 2t,ztt 4+,274 47,4A6 t42,740 211,362 C)Retail Banking 34,432 18,593 44,670 90,922 95,449 d)Other Banking operation 4,257 LAg7 5,O73 1 1,53 1 t7,7t7

Total 122,272 90,950 tt6,72t 342377 333,937 Less: Unallocable Expenses net off unallocable income 143,O191 130,673) (62,4261 (139,583) (127,7631 Total 79,193 60,277 s4,295 242,794 206,174 Provision& Contingencies 67,6LO sz,o+2 26,670 197344 361,796 Profit Before Tax 1 1,583 a,235 27,625 4S,410 Itss,622l Tax Expense 1,13 1 +,os7 (te,3t2) 19,811 (34.2771 PAT to,4s2 4,174 46,937 25,599 (t2t,34Sl 3.Capital Employed a)Treasury ODerations 2L4,A69 224,964 189,561 2t4,869 tag,s61 b)Corporate/Wholesale Banking 215,700 t99,257 t77,273 zts,7bo 177,273 c) Retail Banking 90,809 49,731 76,455 90,809 76,455 d)U nallocated 61,426 58,400 43,774 61,426 a4,976 Total sa2,ao+ s72,352 s27,067 582,804 sza,265

Note:- The Bank has only one Geographical Segment i.e Domestic Segment

(r 0. n ,:etec tu ,) o * * t , o k e

F - 65 I -

NOTES

The above financial results have been reviewed by the Audit Committee of the Board and approved by the Board of Directors of the Bank in their meetings held on 7th May 2015 and have been subjected to audit by the Statutory Central Auditors'of the Bank.

2 There has been no material change in the Accounting Policies followed during the quarter/year ended 31't March 2015 as compared to those followed in the preceding financial year ended 31't March 2014 except as stated in note no.5 hereunder.

3. The figures of quarter ended 31'r March 2015 are the balancing figures between audited figures in respect of the full financial year and year-to-date figures upto the period ended 31't December 2014.

4. The financial results for the Quarter and year ended 31't March 2015 have been arrived at after considering provisions for Non-Performing Assets, Standard Assets, Restructured Assets and Depreciation/Provision for lnvestments on the basis of prudential norms and specific guidelines issued by the Reserve Bank of tndia (RBt), provision for exposure to entities with Unhedged Foreign Currency Exposure besides other usual and necessary provisions. Provision for Employee Benefits pertaining to Gratuity and pension has been made on the basis of actuarial valuation during the current quarter and year ended 31't March 2015,

5. The Bank has identified useful life of fixed assets as per the requirements of Schedule ll of the Companies Act, 2013, and has provided depreciation on Fixed Assets accord.ingly.

Further, the additional depreciation of '10,60 crores arising due to adjustment of impact arising on the f irst-time

application of transitional provision to schedule ll has bee n charged to General Reserve.

The additional depreciation of' 14.82 crores on revalued assets has been charged to P&L account and an amount equivalent to the additional depreciation has been transferred from revaluation reserve to General Reserve as per Companies Act, 2013.

6. The bank has written back excess income tax provision amounting to ' 78.85 crores during the year ended 31't March 2015.

7. ln terms of the provisions of RBI Circular no.DBOD.BP.BC.8Ol2t.O4.Otllz17}-Lldated 9th February, 2011 on Re- opening of Pension Option to Employees of Public Sector Banks and Enhancement in Gratuity Limits,'447.37

crore was to be amortized over a period of five years with effect from Financial Year 2010-11. Accordingly '89.46 crore has been charged to the Profit and Loss account being the proportionate amount for the year ended 31" March, 2015 ('89.46 crore for the previous year). The unamortized liability as at 31't March, 2015 stands at Nil (Previous Year '89.47 crore).

8. Pending settlement of the proposed wage revision effective from November 2012, an adhoc provision of . 290 crores is held as at 31't March ZOiS. tn addition '124.75 crore provision has been made for incremental pension liability due to wage revision on estimation basis.

9. During the year, with the approval of its shareholders by the resolution at the Annual General Meeting held on 18th August 2014, Bank allotted 7,74,00,000 (Seven Crore Seventy Four Lacs) equity shares of .10/-(Rupees Ten only) each at a premium of . 25.50 (Rupees Twenty Five and Paisa Fifty only) per share to the Government of lndiabyconversion of 27,477(IwentySevenThousandFourHundredSeventySeven) numberof Perpetual Non- cumulative Preference Shares (PNCPS) out of total 80,000 (PNCPS) of " 1,00,000/- each held by the Government of lndia attregating to . 274.77 crore through preferential allotment under Chapter Vll of the SEBI ICDR Regulation 2009, as amended.

10. During the year the Eank has allotted 8,45,07,042 (Eight Crore Forty Five Lac Seven Thousand Forty Two) of Equity Shares of . 10/- (Rupees Ten only) each um of . 25.50 Five and .1

.fe:ed i)) a t t Oe

F - 66 w I t

UNITED BANK OF"* INDIA KciLKATA j, 'i Audlted Balanca Sheet as on 31st March 2015 i i

I t I I (Rs ,{ ln thousand)l

I { I 1 I CAPITAL & LIABILITIES Schedule As on 31.03.2015 ; As on 31.03.2014 (4sdllso) (Audlted) i Capital I 839 1354 1 -'9-1.'90 ; ,74 ,81 I I I Reserves & Surplus 2 ,34 : 3927,90 ,61 i .-.. ." .4-9pq,52 3, I 108817 111509 ,59 ,89 i'' ,70 i I l ._ . 4Q61.",72 p8 i. 4460,23,61

I Other Liabilities and Provisions 3852 1 .,. J, , Total 123027 ,57 125101

ASSETS I schedule i As on 31.03.2015 As on 31.03.2014 (Audlted) . , (4rdilefl :

Cash and balances with Reserve Bg$ of 6 6269 , tndia -5915 ,60 r12 ,77 Balances with Banks and

Money at Call and Short Notice 7 _ ?11!94 ,02i 4542,06,32

lnvestments q 46603 ,11 ,41 : 44876 ,34 ,13

I 06763 ,03 ,5s 65767 ,51 ,14

ixed Assets 10 877 ,41 ,32 938,73 ,47

Other Assets 11 2753 2710

Total 123027 125104

Contingent Liabilities 12 6450,33 ,61 9908,33 ,01

Bills for collection 2416 ,50,60 2880 ,71 ,07 Pl1

'%.

F - 67 f .._i- SCHEOULE 1

I . - .j .(Rs.!nthousand) on 31 I ,Qg,-29_15 -. i As on 31.03.201/t (Audlted, - AUTHORISED CAPITAL .oQ 00 3000 ,00

Equity Share Capital

Perpetua I No n c.umm u la t|ve- s !99f 9 1en-99- l!?I9;€ l!-c"-Pg) _ __

ISSUED, SUBSCRIBE O AND PAID. UP CAPITAL (Previous 83e51 s951 Yeat 55-4.7_a899_l )_.ECy!!y* Shares of Rs. 1 0/- each[(includr.Ig."6_1.1999qp " (PreviousYear488169792)t'-e.F_-qy_-G9!1.-- '!_,Q0 839 _- --"- 151 ,7a ,81

0 (Prevlous Year 80000) Non-Cumulative Preference. Sh,argg (Pl!g.q.S) Rs. 1,00,0001 held of each _ .q00 r00 Total 839 1354 ,71 ,81

SCHEDULE 2. & SURPLUS

As on 31.03.2015 As on 31.03.2014

l. Statutory Reserves

Opening Balance 71 9-.91-.9t! 713 ,51 ,31 Add: Transfer from Profit & Loss Account 63 SUB.TOTAL 777 713 ll. Capital Reserves a) Revaluatlon Resorve

Opening Balance 90E_:E9-r97 624 .48 ,61 Addition during the period/year

Add/(Less): Adiustment during ,0 1le".pg-I.o*qlye?{_ .- -. .. -. Less : Transfer to Profit & Loss Account 4 . .fl9,5e 594 14 608 b) Others Balance s08 1508 Opening t.-- ,49 ,53 Add:Transfer from Profit & Loss Account 't- -'.1 509 1508 ,49 * '9-a 2117 suB-rorAL [(") lbll 2103 ,71 lll. Share Premlum Opening Balance 1263 ,qq ,.ql 743 ,62 ,93 519 Addition during the - _--_ 'ol:5 .,95 , 2078 1263 su8_.Iorl!-. .. lV. Revenue and Other Roserves a). Specall Reserve l.T. Opening Balance 220.00 220 .00 .00

Less. Draw down .-t-,,Q

Add :Transfer f rom Profil & g,Agg9gll_-... -L9"s -,9 sUB TOTAL (a) 220 220 b). Revenue.Roserve

Opening Balance -386 ,56 ,4't 898 :q8 r77 Add: Transfer from revalualio,n rgggrvg 14 ,8? Less: Draw down for for Assels (_-0_, -.__ _ _ - .._ Q-9_, l!2,02 Add:Transfer from Profit & Loss Account __ ...__.1 90 \12-13 ||4 suB ToTAL (b) 14 - suB-roTAL t(al+ Qll ?9",!,7 -(166 ,58 ,41) Balance ln Profit & Loss Account TOTAL l+ll + 4988 3927 ,90 ,61 PN

F - 68 I I

SCHEDULE l -_gEPggl_rg t

4s.9r -9'!'ql,?9:!! i 4" on 31'03.2014

I l. Demand Deposits From Banks i) 1261 ?9 1315 ,00 ,

ii) From Others 7_982- ps p7l 6261 ,67 !33 I I ll. Savlngs Bank PppSgltg 36811 ,',10 - .,-'i ,93; 331

I I rilt. iTerm Deposlts I I i)lFrom Banks 1761 ,02 ,83't 2116 ,02 .,07 I ii) jFrom Others 91391 ,17 ,p3{ . q819? ,7e TOTAL: 108817 1fi509 ,70 I

B i)jDeposits of branghps in tnoia 't08q!7 ,9e ,89t, 111909,70,86 I ii) iDeposits of branches outside lndia I i 1088t7 111s09

SCHEDULE 4. BORROWNGS (Ri: ln

As on 3'1.03.2015 As on 31.03.2014

I t. . Borrowlngs ln lndla

i) ;Reserve Bank of lndla 584 ,OO ,OOl ii) Banks 4,v ,a2i .Other -- - I iii) iOther lnstitutions & Aggngies # 3472 ,81 ,36' 4040,83,11 I

I ll. Borrowlngs outslde lndla ,01 41.9 ,!O TOTAL 4061 ,72 4460

I Secured borowings included in l&ll above -t

# lncluding Subordlnate"q D9plg l"9r Tier ll Capilal. 22?5 ,OO ,OOI, 2225 ,OO

# lncluding lPOl for Tier I Capital. 3oo ,oo ,ool 300 ,00 t

oorl &

rlered c.1 o a

a raD l')

F - 69 -t f,

SCHEDULE 5 . OTHER LIABILITIES AND PROVTSTONS (R8. ln thousand) Ai gn 3r:01.?0'tl As on 31.03.2014

.t. Bills Payable 348 ,79 ,90' 372 ,98 ,77 lnter-Otfice Adiustments (net) .ll, _ 67 ,81 ,5-81 169 ,1? Iil. lnterest accrued 102?.s-s pll 9s9 ,,78

tv. Contingent Provislons against Sl?ndard Agggls 1060 ,oql 734 !27 'Deferred , Tax Liabllity (net) I 'vr. lProposed Dividend (including Oividend Tax) '!590 vil. Others (including provislons) 7821 11 !57 !91 TOTAL:

scHEouLE Q : CASH & BALAICE9 WlrH BANI_( o-F- rNptA

, (Rsl !n As on 3{.03.2015 I Ae on 31.03.201.1

)

Cash in hand (including loreign currency notes) 433 l. -soq ro2 , ,60 ll. Balances with Reserve Bank of lndia I i) ln Current Account 5312 ,58 ,12" 5E36 ,17 t ii) ln Other Accounts .; TOTAL:

SCHEOUL-E 7. BA.LANCES WTH BANKS AND MONEY AT CALL AND SHORT NOTTCE

.(R9: !0!h,oq3indl As 04 9l:03.2015 As on 31.03.2014

ln Indla . i) Balances wilh Banks

a) ln Current Accounts 49 ,49,48; 99 ,82 b) ln Other Deposit Accounts -j

ii) Money at Call and Short Notice

a) With Banks 140 ,00 ,00 4133,39,17

b) With other lnstitutions -i SUB.TOTAL: il. Outside lndia - i) Balances with Banks

a) in Current Accounts 25 ,44 348 ,84 ,61

b) in Other Deposit Accounts i ii) Money at Call and Short Notice :l SUB.TQTAL: TOTAL:

Acc luntt

F - 70 I

SCHEDULE 8. i (Rg, tn At.9q 3!:91:?015 I As on 31.03.2014

I lnvestments '.,66..,-261 ln lndla (Gross) 46757 {9 27 ,50 Less : Provision for NPl, depreciation / amortisatio_n- (1 94 ,54 ,s5)i (?s1 o NET

I Break-up t i) GovernmentSecurities 9s92q 14 9s094- !9{ ,l !

li) Other Approved Securities- 16 r43 , ,iii) 56"r". ?101 ,59 ?80 ,2 _2 iv) 'Debentures and Bgldg 20.72,39 2_077 ,921 . ,79 ,72 v) rSubsidiaries and/or Joint Ventures -l (Mutual vi) Others Fund, CP,9P, g!9,) 9308 ,79 ,7{1 7417 !8:4 SUB.TOTAL:

il. lnvestments outslde lndla (Grossl

Less : Provision, fol dqpregielion

NET

Break-up I i) GovernmentSecurities -t

(includlng local authorities) I ii) Subsidiaries and/or Joint Ventures abroad -l

iii) . Other investments SUB.TOTAL: I rorAL(!&[)

SCHEOULE 9 - ADVANC-ES t (Rs: in thggs4nd) As on 31.03.2015 i Ir on 31.03.2014

i) Bills Purchased and Discounted 399 ,48 ,52j 908 ,09

Cash Credits, Overdrafts and Loans repayable I ii) t

I 21567 19450 , on demand I ,O2 ,g1l ,14

I t iii) Term Loans $|pa ,sz Jll 45409 ,26 ,95 I TOTAL: 66763

F - 71 9CHEDULE 10

_A! on 31.03.2014

Premises (tnclHqltg l. "LfpgSllgldl . .

At cosu Revalued ag.glr"91i!MqFh.g!pte!9glg.ygel 899 891 _ ._ ?1 J3i . _.. . , Revaluation dUfit]g !h9

Additions during the- ye_ar ...... 1?,q-6-,s:!t" , q?.'o -. ..-- ljiq,?11-- .- -- ..95.3 ,?1 Less: Deductions_qqfllg lhe yg?f: to',datq. y.,L? .Depreciation . . Ltg, suB-TgTAL 683 688 ll. Capital.Work-ln-Progrese__..-

Flxed Assets lll. ;Other t .._. ..1-. _. *._...... ,._-".., . Flxture)

At cost as on 91 9! Mefqh 9! pfg"9pql4g yeCt

Additions during lhe yg?l 9956 ,93 9-,01 79'! .ee

' Less: Deductions. qvlfng thg y-ee( ltg-,-9 Deprecialion to date ,.._ (6?9 ,1e",33-);. . (971.16Z ,96) SUB.TOTAL:

I I lV. lntanglble Assets I --- * 1 I Software t-.., p-r9q9q!-19 At cost as on 9 !tt l!4?r9h_ 9f ypal _. ..20_,96, Additions during the year ,9q,qql__ .-?4 "1 '?0 96 911 . "9! ,?7 Less:Deductions qy.nng"ltrg ygef

Amortisation to qq!9._...... G"3-,?7 .170 ,_24 SUB.TOTAL: 1? .24 p2_ 'QQ

I r-qT4L i (l+ll+lll +lvl 8f7 i-

t re0 Acc ianls

F - 72 SCHEOULE 11 . OTHER ASSETS

,.(Ri, ln

As on 31.03.2015 Ap on 3'!:09:?0-1_4

l. lnter-Omce Adjustmentg (!e!) -t ll. lnterest accrued 1094,35,11, 978 ,15 ,82 m. Paid in advance/Tax deducted at (Net) 713 557 .Tax sourc4 ,14 ,s1l 14 !78 tv. Stationery and Stamps I ,qo,69f 11 .12 B0 .t , Non-banking ?ssets acqlliIgO in satisfactlon of claims

vt. Deferred Tax Assets (net) :!s1 ,9q ,gol 481 ,72 |

v[. Others 745 ,58 | 841 702 ,37 ,07

SCHEDULE 12 (Rs. ln

A9_ 94 _31,Qp.20!! AE on 31.03.2014

l. Claims against the bant( no! acknowledged as debts 0.,18 ,9p1 9- ,q7 . 33 ll. Liability ,or partly paid investments I so ,ls ,za! ,20 ,99 I lll. Liability on account of outstanding foMard ! I exchange contraclg ?163 ,68 ,30l 5012 ,06 I lV. Guarantees given on behalf of constiluents (net of cash margin) t t ; a) ln lndia 422 ,77 ,0,; 2517 ,93 I b) Outside lndia 2670 ,14 ,10t 109q,89 I BG invoked but not paid (ln lndia) ,83; 4 ,70 c) i ,63 V. Acceptances, endorsements and otherobligations (net ofcash i i 1089 1276 margin) l ,68 .07 ,54 ,07

i t Vl. Other items for the Bank is

contingenlly 21 ,11

TOTAL 9908

c) Acco :ridnls a * 'l

F - 73 This is part of the Balance Sheet as on 31.03.20

P.Srinivas Managing Director & Chief Executive Officer

Executive

\^^1 Parvathy V Sundram A.K.Dogra Sinha Director Director Yp ,1[ Renuka Muttoo Sanjib Director Director ,^fu^, GenerafManager & CFO

As per our separate report ofeven date annexed.

M/s.Ramam oorthy(N) & Co IWs.P C & Co. Associates C

q chartered a; * C Bharathi CA. tnr Maheshwari er Partner Partner MRN:023837 MRN:016369 MRN:088730 MRN:085362

Place :Kolkata Date :7th May,20l5.

F - 74 UNITED BANK OF INDIA KOLKATA Profit & Loss Account for the ended 31st March, 2015

I (Rs in thousand) Schedule Year Ended 31.03.2015 Year Ended 31.03.2014 l. INCOME

lnterest Earned 13 10180 ,47 ,77 10599 ,29 ,03

Other lncome 14 1746 ,91 ,15 1206 ,87 ,10

TOTAL: 11927 ,38 ,92 11806,16,13 EXPENDITURE

lnterest 15 7689 ,81 ,55 8036 ,47 ,12

Operating Expenses 16 1809 ,62,82 1707 ,94 ,61

Provisions and Contingencies 2171 ,95 ,33 3275 ,18 ,80 TOTAL: 11671 .39 .70 13019 ,60 ,53 PROFIT ,F

i Net Profit for the 255 ,99 .22 -(1213 ,44 ,40\

-- l- I TOTAL: 255 ,gg ,22 -(1213 ,44 ,40l APPROPRIAT]ONS:

Transfer to Reserve 63 .99 .81

Transfer lo Reserve I ,14 ,67 Dividend

I I Eq,y.!v i prucps Tax on Dividend

Transfer to Revenue Reserve 190 ,84 ,75 -1213 ,44 ,40 Balance carried forward to Balance Sheet

TOTAL: 255 ,99 ,22 -1213 ,U,40

& Diluted Share Rs. 3.78 (28.68) -t9es-tc_ Annualised Pt8 -lCIe!

F - 75 SCHEDULE 13. INTEREST EARNED ln

I I

Year Ended Year Ended 31.03.2015 31.03.2014

I lnterest / Discount on Advances/Bills 7040 .82 .88 7816 ,56 ,02

ll. lncome on lnvestments 3048 ,20 ,72 2597 ,61 ,73

1lt. lnterest on balances with Reserve Bank of

lndia and other lnter-Bank Funds 90 ,16 ,79 141 ,08 ,58

!Y, Others 1 44 70 TOTAL 10180 77 10599 03

SCHEDULE 14. OTHER INCOME

I Year Ended Year Ended

L Commission Excha and 202 81 202 46 ,55

il. on sale of lnvestments 1 168 72 534 1 54

Less : Loss on sale of lnvestments 90 53 7

I ilt. Profit on revaluation of lnvestments

Less . Loss on revaluation of lnvestments

lV. tProfit on sale of land. buildinqs and other assets ,65 ,25 ,5 ,97

(7 ,23) ( 1 ,81)

97 ,64 ,10 155 ,97 ,93

278 ,13 ,56 322 ,40 ,62

1746 ,91 ,15 1206 ,87 ,10

P/9

rlered lan

) F - 76 SCHEDULE 15. INTEREST EXPENDED

(Rs ln thousand)

Year Ended Year Ended 31.03.2015 31.03.2014

L lnterest on Deposits 7253 ,65 ,70 7569 ,14 ,43

il lnterest on Reserve Bank of lndia/inter-Bank borrowinqs 82.52 ,74 94 ,12,18

ill Others 353 11 373 1

TOTAL 7589 8036 12

. j.._

--.--t-_.___ SCHEDULE 16. OPERATING EXPENSES

I Year Ended Year Ended I

i 31.03.2015 31.O3.2014

l. lPayments to and Provisions for Employees 1038 ,28 .51 1014 ,34 ,35 il. Taxes and 139 ,94 ,44 125 ,52 ,25

il. and 26 ,41 ,21 30 ,00 ,85

tv. Advertisement and 5 .61 ,73 10 ,45 ,15

i property V. _ iDe_preciation on Bank's 105 ,71 ,96 84 ,77 ,90 Less : Transfer from Revaluation Reserve (15 ,59 ,24\

105 ,71 ,96 69 ,18 ,66 vl. Directors' fees, allowances and expenses 1 ,15 ,69 1 ,99 ,92

Vll. iAuditors'fees and expenses 14 ,60 ,23 14 ,59 ,54 (includino branch auditors' fees and exoenses) vrll. Law Charoes 8 ,15 ,21 5 ,25 ,20

23 ,53 ,71 23 ,19 ,99

33 74 17 ,70 ,59

103 38 11 111 ,18 ,22

308 94 284 ,49 ,89

1809 1707 ,94 ,61 Pt10

F - 77 This is paft of the Profit & Loss Account as on 3 l5

P.Srinivas Managing Director & Chief Executive Officer

Executive ilA ParUathy V Sundrarn A.K.Dogra Pratyush Sinha irector Director

Renuka Muttoo Sanjib Director D 4rr./ Sanif(Kumar General fdlanager & CFO

As per our separate report ofeven date annexed.

M/s.Ra & Co M/s.N M/s.P C Bindal & Co. lWs.S P Associates

q Cha rte.eC n t CA.S arathi tnl aheshwari Partner er Partner Partner MRN:023837 MRN:016369 MRN:088730 MRN:085362

Place :Kolkata Date :7'h May,2015.

F - 78 UNITED BANK OF INDIA KOLKATA

Statement of Assets & Liabilities as on 3lst March 2015

Rs. in lacs) (Rs. in lacs)

CAPITAL & As on 31.03.2015 As on 31.03.2014

Ca 83952 135475 Reserves & US 498852 392790 Depq-s1!-s-____. 10881760 11150971 Borrowings-. 406173 446024 Other Liabilities and Provisions 432021 385235 Total : 12302758 12510495

ASSETS As on 31.03.2015 As on 31.03.2014

and balances with Reserve Bank of lndia 581 560 626978 Balances with Banks and at I and Short Notice 21494 454206 lnvestments 466031 1 4487634 nces 6676304 6576751 Fixed Assets 87741 93874 Other Assets 275348 271052 Total : 12302758 12510495

0 0

oorl

9o o o o * )t rab

J F - 79 Schedule -17

SIGNIFICANT ACCOUNTING POLICTES FOR THE YEAR ENDED 3l't MARCH,2LL1

I. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The accompanying financial statements are prepared on historical cost basis, except as otherwise stated, following the "Coing Concern" concept and conform to the Generally Accepted Accounting Principles(GAAP) in Indi4 applicable statutory provisions, regulatory norrns prescribed by the Reserve Bank of India (RBI), applicable mandatory Accounting Standards (AS)/Guidance Notes/ pronouncements issued by the Institute of Chartered Accountants of India (ICAI) and practices prevailing in the banking industry in India.

2. USE OF ESTIMATES

3. RECOGNITION OF INCOME AND EXPENDITURE

3.1 The Revenues and Expenses are accounted for on accrual basis unless otherwise stated.

J.J Unrealized income on advances, classified as NPA, is reversed.

3.4 Incorne from Commission (except on Govemment Transactions and Bancassurance), exchange, brokerage, claims, locker rent and dividend on shares are accounted for on cash basis.

3.5 Performance linked incentive to whole time directors is accounted for on cash basis

4. TRANSACTIONS INTVOLVING FOREIGN EXCHANGE

4.1. Monetary Assets and Liabilities, excluding outstanding Forward Exchange Contracts in each currency, are revalued at the Balance Sheet date at closing spot rates announced by the Foreign Exchange Dealers Association of India (FEDAI). Outstanding forward exchange contracts are revalued at the forward rates announced by FEDAI. The difference between the revalued amount and the contracted amount is recognized as profit or loss, as the case may be.

4.2. Income and expenditure items are recorded at the exchange rates prevailing on the date of transaction

4.3. Acceptances, endorsements and other obligations including guarantees are carried at the closing spot rates announced by FEDAI.

4.4. Representative Office of the Bank has been classified as'lntegralForeign Operation' in accordance with AS-l I on "The Effects of Changes in Foreign Exchange Rates".

4.5. Foreign currency transactions relatingto'lntegral Foreign Operation'are recorded on initial recognition in the reporting currency by applying to the foreign currency amount, the exchange rate between the reporting currency and the foreign currency on the date oftransaction.

4.6. Foreign currency non-monetary items that are carried in terms of historical costs are reported on the dates of I

:anls

F - 80 5. INVESTMENTS

5.1 Forthe purpose of disclosure in the Financial Statements, the investments are classified into six categories as stipulated in Form A of the third schedule to the Banking Regulation Act, 1949 as under: a) GovemmentSecurities b) Other approved securities c) Shares d) Debentures and Bonds e) Subsidiaries/Joint Ventures 0 Others 5.2 The Investment portfolio of the Bank is categorized, in accordance with the RBI guidelines, into: a) "Held to Maturity" comprising Investments acquired with an intention to hold till maturity; b) "Held for Trading" comprising Investments acquired with an intention to trade; c) "Available for Sale" comprising Investments not covered by (a) and (b) above.

Classification of an investment is done at the time of acquisition.

5.3 In determining acquisition cost of an investment: a) Brokerage, Commission and Incentives received on subscription to securities, are deducted from the cost of securities; b) Brokerage, Commission etc. paid in connection with acquisition of securities are treated as revenue expenses; c) Interest accrued upto the date of acquisition/ sale of securities i.e., broken period interest is credited/ charged to Profit and Loss Account.

5.4. The Bank follows "Settlement Date" for accounting of investment transactions. Investments are valued as per RBI/ Fixed Income Money Market & Derivatives Association (FIMMDA) guidelines, on the following basis: a) "Held to Maturiry" GTM) i) Investments under "HTM" category are carried at acquisition cost. Wherever the book value is higher than the face value/redemption value, the premium is amortized over the remaining period to rnaturity. ii) lnvestments in Rural Infrastructure Development Fund, Short Term Co-operative Rural Credit Refinance Fund, Medium Small Micro Enterprise Refinance Fund - Small Industries Development Bank of India Limited, Medium Small Micro Enterprise Risk Capital Fund - Small Industries Development Bank of India Limited, Rural Housing Development Fund-National Housing Bank Limited, Micro Finance Development and Equity Fund - National Agricultural and Rural Development Bank Limited (classified as shares) are valued at carrying cost. iii) Investments in sponsored Regional Rural Banks are valued at carrying cost. iv) Investment in venture capital is valued at carrying cost.

b) "Held for Trading" and "Available for Sale"

a) Govt. Securities l. Central Govt. Securities At prices published by FIMMDA 2. State Govt. Securities On Yield to Maturity (YTM) basis by adding appropriate mark-up on the Base Yield Curve as per FIMMDA/RBI guidelines. b) Discounted Instruments (Treasury At carrying cost Bills, Commercial Paper and Certifi cate of Deposits). c) Bonds and Debentures On YTM basis by adding appropriate Credit Spread on the Base Yield curve as per FIMMDA/RBI guidelines. d) Equity i) Quoted At market price ii) Un-quoted At break-up value as per latest Balance Sheet (not more than one year old), otherwise at ' l/- per company. e) Preference Shares At market price, if quoted or YTM basis by adding appropriate mark-up on the base yield curve as per FMMDA/RBI guidelines- f) Security Receipt/Venture Capital Fund AtLNeLAsset Value (NAV) as per DffiBl euideline$K#

-= Accounta nts

F - 81 c) MLrtual Funds At Market Price, if quoted and at re-purchase priceAlAV if unquoted.

5.5 Shifting of securities from and to "HFT' category is done in accordance with RBI guidelines with the approval of Board of Directors.

5.6. The individual scrip in the "HFT'and "AFS" category are marked to market at monthly or at more frequent intervals, if required. Under each category, net depreciation, if any, is provided for while net apprecialion, if any, is ignored.

5.7. Income from Zero Coupon Boncls, being the difference between cost and face value, is recognized on a time proportion basis.

5.8. Profit or Loss on sale of investments in any category is taken to Profit and Loss Account. In case of profit on sale of Investments in "HTM" category, an equivalent amount is appropriated to "Capital Reserve Account" at the end of the year. For calculating the surplus / deficit on sale of securities, weighted average method is adopted.

5.9. For the purpose of calculating holding period in case of "HFT' category, First in First out (FIFO) method is applied.

5.1 0. Investments are subject to appropriate provisioning/ de-recognition of income, in line with the prudential norms of RBI for "Non Performing Investment" (NPI) Classification. The depreciation/provision in respect of non- performing securities is not set off against the appreciation in respect of the other performing securities in accordance with RBI guidelines.

5.1 l. The derivatives transactions are undertaken for trading or hedging purposes and valuation has been done in accordance with RBI guidelines.

5.12. The Bank has adopted the Accounting Procedure prescribed by the RBI for accounting of Repo and Reverse Repo transactions.

6. FINANCIAL ASSETS SOLD TO ASSETS RECONSTRUCTION COMPANY (ARCY SECURITIZATION COMPANY (SC)

6.I In the case of financial assets sold to ARC / SC, if the sale is for a value higher than the Net Book Value (NBV), the excess provision is not reversed but utilized for meeting any shortfall on account of sale of other financial assets to ARC/SC. If the sale is at a price below the NBV the shortfall after adjusting the available surplus if any, is debited to the Profit and Loss Account.

6.2 The sale of financial assets to ARC/SC is recognized in the books of the Bank at lower of either redemption value of the Security Receipts issued by the Trust created by the ARC/SC for such sale or the net value of such financial assets.

6.3 The Security Receipts are classified as Non-SLR Investment in the books of the Bank and accordingly the valuation, classification and other norms prescribed by RBI in respect of Non-SLR Securities are applicable.

6.4 In case of written off Assets sold to ARC/ SC, the cash proceeds are recognized as income

7. ADVANCES

7.1 Advances are classified as Performing / Non-Performing Assets and provisions thereon are made in conformity with the prudential norms prescribed by RBI.

7.2. Non-performing assets are stated net of provisions and claims received from credit guarantee institutions

7 .3 Provision held for perforrning assets is shown under the head "Other Liabilities and Provisions"

1.4. Restructuring of Advances and provisioning thereof have been made as per RBI tnes.

q o 0) to u; o iants o * I * * o k 3\ e F - 82 8. FIXED ASSETS AND DEPRECIATION

8.r Premises (including leasehold), other fixed assets and Capital work in progress are stated at historical cost or amount substituted for historical cost. In case of revaluation, the same are stated at the revalued amount and the appreciation is credited to "Revaluation Reserve".

8.2 Leasehold assets are amortized over the period of lease.

8.3. Depreciation on assets other than computers and Automated Teller Machines (ATMs) is provided for under written down value method, in the manner and as per the rates prescribed under Schedule II to the Companies Act,2013 after retaining 5% residual value.

Equivalent amount of depreciation on the revalued portion of the asset is transferred to General Reserves from Revaluation Reserve each year.

8.4. Depreciation on computers, ATMs and amortization of software are accounted for on straight-line method @33.33% on pro rata basis from the date of acquisition as per RBI guidelines.

8.5. Impairment Losses, if any, on Fixed Assets (includingrevalued assets) are recognized in accordance with AS - 28 on "lmpainnent of Assets".

9. ACCOUNTING FOR GOVERNMENT GRANTS

In accordance with AS-12 Govemment Grants/subsidies received is presented in the Balance Sheet by showing the Grant/Subsidy as a deduction from the Gross Value of the assets concerned in arriving at the book value. The grant/subsidy is recognized in the Profit & Loss Account over the useful life of the depreciable assets by way of reduced depreciation charged.

Govemment Grant subsidies received, of revenue nature, is recognized in the Profit & Loss Account by reducing the related cost if received during the same financialyear otherwise, the same is shown under "Other Income" if received after the close of the relevant financial year.

IO. EMPLOYEE BENEFITS

I 0. I Ernployee Benefits are recognized in accordance with AS- l5 on "Employee Benefits"

10.2 Shorl term employee benefits namely Leave Fare Concession and Medical Aid are measured at cost.

10.4 In respect of employees who trave opted for Provident Fund Scheme, matching contribution is made to a recognized Trust. For others who have opted for Pension Scheme, contribution to Pension Fund is based on actuarial valuation.

10.5 Long Term employee benefits recognized in the Balance Sheet represent the present value of the obligation as adjusted for unrecognized past service cost, if any, and as reduced by the fair value of plan assets, wherever applicable and actuarial gain / loss to the extent recognized in Profit and Loss Account.

10.6 The transitional liability in respect of long term employee benefits, including pension benefits, is recognized as an expense on straight line basis over a period offive years.

10.7 In terms of RBI circular, expenditure on "Re-opening of Pension option to employees of Public Sector Banks and enhancernent of Gratuity lirnits-Prudential Regulatory Treatment" is being amortized over a period of five years.

F - 83 I I. TAXATION

Provision for tax is made for both current and deferred taxes in accordance with AS-22 on "Accounting for Taxes on Income".

12. PROVISIONS. CONTINGENT LIABILITIES AND CONTINGENT ASSETS

In accordance with AS-29 on "Provisions Contingent Liabilities and Contingent Assets," the Bank recognizes:

b) Contingent Liability is recognized/disclosed when a possible obligation from a past event, the existence of which is confirmed by the occurrence/non-occurrence of one or more uncertain future events not wholly within the control of bank. Contingent Liability is also recognized/disclosed when there is a present obligation from past events but is not recognized because of a remote possibility of outflow of resources embodying the economic benefits to settle the obligation or a reliable estimate of the amount of the obligation cannot be made

c) Contingent Assets are not recognized in the Financial Statements.

I3. NET PROFIT

The Net Profit is arrived at after accounting for the following:

a) Provision for Taxation b) Provision on Standard Assets c) Provision for NPAs and Depreciation on investments as per prudential norms of RBI d) Other usual and necessary provisions.

Page 5

F - 84 Schedule - I8: Notes Forming Part of the Accounts for the Year Ended 31't March 2015

1. Confirmation/reconciliation of balances with foreign branches, SBI and other Banks, NOSTRO Accounts, Drafts Payable, Clearing Difference, Inter office adjusfrnents, etc. are in progress on an on-going basis. Pending final clearance/adjustment of the above, the overall impact, if any, on the Financial Statements, in the opinion of the management, is not likely to be significant.

2.1 Capital

p-ided I:ri-i;;iri i:" 1... ,_ i : 3l;03,2015;r .i;:3l.i -1.?0l i.rlitiii0$rw',lEffiil i) Common Equity Tier I Capital Ratio (%) 7.52 6.54 NA NA

ii) Tier I Capital Ratio (%) 7.52 6.54 7.77 7.26

iii) Tier 2 Capital Ratio (%) 3.05 3.27 3.65 4.20

ir) Total Capital Ratio (CRAR) (%) 10.s7 9.81 11.42 I1.46

v) Percentage of the shareholding of the Government of India in the Bank's equity 82.00% 88.00% 82.00o/o 88.00% capital

vi) Amount capital raised in of equity (' 300.00 700.00 300.00 700.00 Crores) vii) Amount of Additional Tier I capital Nil Nil Nil Nil raised; of which -PNCPS: .PDI

(viii) Amount of Tier 2 capital raised; of which (' in Crores) s00.00 Nil Nil 500.00 -Debt capital instrument: Nil 500.00 Nil 500.00 Nil Nil -Preference Share Capital Instruments: Nil Nit

b) During the year, with the approval of its shareholders by the resolution at the Annual General Meeting held on lSth August 2014, Bank allotted 7,74,00,000 (Seven Crore Seventy Four Lacs) equity shares of '10/-(Rupees Ten only) each at a premium of ' 25.50 (Rupees Twenty Five and Paisa Fifty only) per share to the Govemment of India by conversion of 27,47l(Twenty Seven Thousand Four Hundred Seventy Seven) number of Perpetual Non-cumulative Preference Shares (PNCPS) out of total 80,000 (PNCPS) of ' 1,00,000/- each held by the Govemment of India aggregating to'274.77 crore through preferential allotment under Chapter VII of the SEBI ICDR Regulation 2009, as amended.

c) During the year the Bank has allotted 8,45,07,042 (Eight Crore Forty Five Lac Seven Thousand Forfy Two) number of Equity Shares of ' l0l- (Rupees Ten only) each at a premium of ' 25.50 (Rupees Twenty Five and Paisa Fifty only) per share aggregating to 300 crore (Three Hundred Crore only) on preferential basis to Life Insurance Corporation of India (LIC of India) under Chapter VII of the SEBI ICDR Regulation 2009, as amended.

d) During the year, with the approval of its shareholders by the resolution at the Extra-ordinary General Meeting held on l3'n March 2015, Bank has allotted to the Govemment of lndia 12,28,60,818 (Twelve Crore Twenty Eight Lac Sixty Thousand Eight Hundred Eighteen) number of Equity Shares of ' I0l- (Rupees Ten only) each at a premium of ' 32.75 (Rupees Thirty Two and Paisa Sevenry Five only) per

t t /k at F - 85 share aggregating to ' 525,22,99,969.50 (Five Hundred Twenty Five Crore Twenty Two Lacs Ninety Nine Thousand Nine Hundred Sixty Nine and paise Fifly only) by conversion of 52,523 units of PNCPS of ' 1,00,000/- each under Chapter VII of the SEBI ICDR Regulation 2O09,as amended.

2.2 lnvestments ( ' in crore)

I ir.os:ou ( I ) Value of Investments 4679?.66 45t27.50 (i) Gross Value of Investments (a) In India 46797.66 45127.50 (b) Outside India Nil Nil

(ii) Provision for Depreciation 194.55 25t.t6 (a) In India 194.5s 251.16 (b) Outside India Nil Nil

(iii) Net Value of Investments (a) In India 46603.11 44876.34 (b) Outside India. Nil Nil

(2) Movement of provision held towards depreciation on investments (i) Opening balance 251.16 195.28 (ii) Add: Provisions made during the Year 69.98 122.04 (iii) Less :Write- off/ Write -back of excess provision during the 126.59 66.16 Year (iii) Closing balance 194.5s 251.16

2.2.1 Repo transactions (in face value terms) ( ' in crore)

Mlnlmum: ,,t 1,, Outstanding Particulars outsta!{int :: ,:l during es on Auripglt? Y..e.C1",r. 31.03. 2015

Securities sold under Repo i) Government securities 15.00 t929.00 262.78 584.00 (200.00) (t 500.00) (327.95) (0.00)

ii)Corporate Debt Securities 0.00 0.00 0.00 0.00 (0 00) (0.00) (0.00) (0 00) Securities purchased under Reverse Repo i) Government securities 25.00 8700.00 474.77 r 40.00 (1.00) (478 t .00) (680.2 t) (1 t 33.0 t)

ii)Corporate Debt Securities 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) Figures in brackets represent Previous Year's figures

2.2.2 Non-SLR Investment Portfolio (i) Issuer composition of Non-SLR Investments (' in crore)

st. Extent of Issuer Amount tUn No.

F - 86 (1) (21 (3) (A',) (s) (6) (71 1282.75 1282.75 0.00 0.00 14.66 PSUs (t 280.06) (1280.06) (0.00) (0.00) o.00) 3357.62 3357.62 0.00 0.00 3357.62 ) FIs (3062.e6) (3062.e6) (0.00) (0.00) (0.00) 5570.54 5570.54 0.00 36.97 40.82 J Banks (4021.80) (4021.80) (0.00) (36.97) (0.00) 149l.52 1491.52 0.00 20.00 53.70 4 Private Corporates (1ss8.27) (1ss8.27) (0.00) (0.00) (0.00) Subsidiaries / 0.00 0.00 0.00 0.00 0.00 5 Joint Ventures (0.00) (0.00) (0.00) (0.00) (0.00) 74.78 74.78 0.00 0.00 59.38 6 Others (MF/CPICD) 003.92) (103.92) (0.00) (0.00) (0.00) Provision held 194.55 194.55 0.00 0.00 0.00 7 towards (2st.r6) (2s1.16) (0.00) (0.00) (0.00) Depreciation / NPI 11582.66 11777.21 0.00 56.97 3526.18 to 6) (7) Total (l - (977s.8s) (10027.01) (0.00) (36.e7) (0.00) Figures in brackets represent Previous Year's figures.

(ii) Non-performingNon-SLR Investments (' in crore) Particula rs,';.'

Opening balance r 8r.70 60.0r Addition during the Year 59.28 121.79 Reduction during the Year 41.44 0.10 Closing balance 199.s4 181.70 Total provision held 110.63 96.E2

2.2.3 Sale and Transfers tolfrom Held to Maturity (HTIVD Category

(a) Securities having book value of ' 257.48 Crores (Previous year:'47.12 Crores) were sold during the year from HTM Category. (b) At the beginning of the year (02.06.2014} with the approval of the Board of Directors, the Bank has shifted securities having face value of ' 325.00 Crores (Book Value ' 324.72 crore) zurd State Govemment Securities having face value of ' 325.00 crore (Book Value ' 327.07 crore) from Held to Maturity (HTM) Category to Available For Sale (AFS) scrip wise in accordance with RBI Guidelines. (c) The value of sales and transfer of securities to/from HTM Category (excluding the exempted transfer) did not exceed 5% of book value of the Investment in HTM Category at the beginning of ttre year.

2.2.4 Transactions involving Foreign Exchange

Monetary Assets and Liabilities, excluding outstanding Forward Exchange Contracts in each currency, except currency of Bangladesh (BDT 23,04,536.20 equivalent INR 15.81 lacs) which is valued at notional value due to non-availability of spot rates, are revalued at the Balance Sheet date at closing spot rates announced by the Foreign Exchange Dealers Association of India (FEDAI).

2.3 Derivatives

2.3.1 Forward Rate AgreemenUlnterest Rate Swap (' in crore) SI.No 1.03,2014 i) The notional principal of swap agreements NIL NIL oorl

q Ilered U;

* * I ab F - 87 ii) Losses which would be incurred if counterparties failed to fulfill their obligations under the agreements NIL NIL iii) Collateral required by the Bank upon entering into swaps NIL NIL iv) Concentration of credit risk arising from the swaps NIL NIL v) The fair value of the swap book NIL NIL

2.3.2 Exchange Traded Interest Rate Derivatives ( ' in crore) ehdbd SI.No. ,.31.03;2014 (i) Notional principal amount of exchange traded interest rate NIL NIL derivatives undertaken during the Year (instrument-wise) (ii) Notional principal amount of exchange traded interest rate NIL NIL derivatives outstanding as at 3l$ March (instrument-wise) (iii) Notional principal amount of exchange traded interest rate NIL NIL derivatives outstanding and not "highly effective" (instrument-wise)

( I Mark-to-market value exchange traded interest rate ) of NIL NIL derivatives outstanding and not "highly effective" (instrument-wise)

2.3.3 Disclosures on risk exposure in derivatives A) QualitativeDisclosures a) The Bank has undertaken derivative transactions in currency futures for trading (arbitrage) & hedging purposes.

b) Risk management of derivative transactions has been segregatsd into three functional areas namely, i) Front-Office for undertaking transaction; ii) Mid-Office for risk management and reporting; and i i i)Back-Offi ce for settlement, reconcil iation and accounting.

c) The risk measurement, reporting and monitoring function is undertaken by the mid-office. The Board of Directors is the apex body to oversee the overall risk measurement, monitoring and reporting functions of the Bank including derivative transactions through Risk Management Committee of the Board (RMCBOD). The bank also intemally monitors risk management through in-house Risk management Committee, Asset Liability Committee (ALCO), Operational Risk Management Committee (ORMC) and Intemal Commiftee on Investment (ICI).

d) Identification of underlying hedge items for hedging / mitigating credit risk, operational risk and market risk arising out of derivative transactions is done in accordance with the Board approved Integrated Treasury Policy. The customer related derivative transactions are covered with counter party banks, on back to back basis for identical amounts and tenure and the bank does not carry market risk for such transactions. However, during the year under review, bank has not used any derivative product to hedge its own portfolio.

e) The Integrated Treasury Policy prescribes accounting for hedge and non-hedge transactions, income recognition and valuation procedure for outstanding contracts. The income recognition is done as per AS-l I on "The Effects of changes in Foreign exchange Rates" and the guidelines issued by RBI / FEDAI from time to time. The integrated Treasury Policy also prescribes various limits such as Client Level Limits, Trading Member Level Limits, Net Open Position Limir for credit risk mitigation.

B) OuantitativeDisclosures 4

q) o q a4 iants * t u; t t l * * olka F - 88 ('in crore) 4 st. ;'$trrency ,Interest rate No. ,.,Deitvatives :derivatives (i) Derivatives (Notional Principal Amount) NIL NIL NIL NIL a) For hedging NIL NIL NIL NIL b) For trading NIL NIL NIL NIL ( ii) Marked to Market Positions (l ) NIL NIL NIL NIL a) Asset (+) NIL NIL NIL NIL b) Liability (-) NIL NIL NIL NIL (iii) Credit Exposure (2) NIL NIL NIL NIL (iv) Likely impact of one percentage change in NIL NIL NIL NIL interest rate ( I 00iPV0l ) a) on hedging derivatives NIL NIL NIL NIL b) on trading derivatives NIL NIL NIL NIL (v) Maximum and Minimum 100*PV0l of NIL NIL NIL NIL observed during the Year a) on hedging NIL NIL NIL NIL b) on trading NIL NIL NIL NIL

2.4 Asset Quality 2.4. I Non-Performing Assets ( ' in crore)

Particdlars ;. ir:.'i;,,:'r',1 i) Net NPAs to Net Advances (7") 6.220h 7.18Yo ii) Movement of NPAs (Gross) a) Opening Balance 7118.01 2963.82 b) Addition during the Year 4087.17 8007.30 c) Reduction during the Year 46s2.27 3853.1 1 d) Closing Balance 6s52.91 7l 18.01 iii) Movement of Net NPAs a) Opening Balance 4664.11 1969.98 b) Addition durins the Year 3308.86 6065.87 c) Reduction during the Year 389r.59 3371.74 d) Closing Balance 4081.38 4664.11 iu) Movement of Provisions for NPAs (excluding provisions on standard assets) a) Opening Balance 2399.24 971.93 b) Addition during the Year 792.12 1908.68 c) Reduction during the Year 760.68 481.37 d) Closing Balance 2430.68 2399.24

Page 10

+ F - 89 4.2 Particulars of Accounts Restructured

Disclosure of Restructured Accounts (As on 31.03.2015)

ln crort Under SME Debt Restructuring Type of Restructuring -> Under CDR Mechanism Others Total Mechanism

Asset Classification -> Sub- Sub- 6 Doubt- € Stand- Loss Stand- ,0 Losg Total tr 6 ard afd o ar) i... a

No. of 2t 9 0 33 94 493 r829 2 2718 239t r805 5599 9t08 2813 230 l 7437 t 12559 bomwcs Rcstructurcd Accounts as on AmNnt 2473.9t 503.08 206.20 0 3 r83. t9 t23.20 50.20 103.25 0.0r 216.66 2259.44 72.40 505.20 43.26 2t80.30 4856.55 625.68 814.65 43.27 6340.1: April ofthe FY outstilding (Opening figurcs)' Prcvision 243.42 60. l4 7.67 0 3 r 1.23 2.23 0.56 1.68 0 4.47 ll7.l5 5.24 3.84 0 126.59 363. l6 65.94 13. t9 0 442.29 thscon /S .J No. of 0 0 21 29 0 0 32 32 0 0 33 84 0 0 E9 bomwrs 23

Fr6h restructuring AmNt 2209.7E 71.33 l.4t 0 22E2.59 51.31 20.t2 0_l I 0 71.54 1966.20 1o2.28 o.42 0 2068.t7 4227.30 193.73 2.01 0 u23.0t during 0re yu oulstmding

Provision thsm 150. I I 13.08 0 0 163. l9 r.4E 1.07 0 0 2.55 73.39 7.01 0 0 t0.l() 224.98 2r. I6 0 0 2{6.t4

No. of -t -2 0 0 29 -23 -6 0 0 r87 -109 -78 0 0 219 -133 -86 0 bonows

Upgmdarion to Amout rcsEucturcd 222.95 - 155.80 -67. l5 0 0 0.76 -0.36 4.40 0 0 28.52 -5.03 -23.49 0 0 2s2.23 -16 t. t9 -91.04 0 0 outstilding stsded catcgory during thc FY

Provision 30.73 -24.42 4.31 0 0 0.04 4.02 4.02 0 0 2.28 -0.25 -2.03 0 0 33.05 -24.69 -t.36 0 0 thcrcon

Rcstrucrurcd advmces *trich ea* to lo attract highcr No. of 4 0 0 0 0 0 0 0 0 provisioning md / bonorers or additional risk weight at the ad of the FY md hence

Page 11

F - 90 need not [E shown restructured standard advances at the be8tnning of Amount the next FY 0 0 0 0 0 0 0 out$andinB

Provision 0 0 0 0 0 0 0 0 N thcrcon No. of -5 3 1 0 0 44 38 6 0 0 -t76 170 6 0 0 -225 2ll t4 0 0 ( bonowrs Dom-gradations Amout of rstructurcd -3 l8_66 238.73 79.93 0 0 -49.05 45.21 3.84 0 0 -355.89 351 .20 4.69 0 0 773.60 625.t4 8E.,+6 0 0 5 outsteding acomts dwing thc FY Provision -2t.96 r0.26 I 1.70 0 0 1.07 1.07 0 0 0 -21. l9 21.t9 0 0 0 44.22 32.s2 I t.70 0 0 thcrcon

No. of I I 3 0 5 1t 76 2tE 0 435 414 32'1 819 I 156 l 486 404 llt0 I 2000 ,/s N bomrcrs r Writcoffs of f, ,csm.m-,i funout 71.51 100. l0 15.42 0 250.03 15.42 2.35 46.62 0 u.39 67.00 10.78 r59.69 43.14 280.6t 156.93 tr3.23 2tt.73 43. 14 595.03 oummding

Prcvision tr"*,'#***" 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 thseon

No. of bomm l4 4 8 0 52 342 5l r920 2 23 15 2063 201 60t2 5 828r 24/5 256 7910 7 1064t Restruciurcd Accouts as on Amomt 7 4583.3 I 307.22 365.6 0 5257.19 I I 1.26 64.E9 108.0t 0.01 2U.24 378t.40 453.63 391.5E 0. t3 4626.71 u75.94 825.14 t65.32 0.14 t0l6t. t. Much 3 I of thc FY ourstanding (closing figurcs)r Provisio 319.59 23.34 I 1.70 0 4 14.63 3.59 2.t6 l.4 t 0 7.16 143.84 2t.27 4.1t 0 t76.29 521.O2 53.'17 t7.29 0 drmon 598.0E ' Excluding tu fituEs of $ddrd RBhElut d Adv B $tdch do mt dr&r hislEr provilioniq o. risk wight (if qplic{bl.)

l. The abov€ disclosures, including serilice, arc as compiled ard certified by the Bank's Management.

2. The quantum ofeconomic sac fice during the yes on the resuuctfcd assets has bcen calculated by {re NPV Method as on 31.03.2015 for Standard AssEE of '10 lacs and above and for NPA of 'l crore and above. For 0le rcmaining ass€b, e&nomic sacdfice has b€€n Fovidcd @ 5% ofoutstarding baldrc€.

Page 12

F - 91 2.4.3 Details of financial assets sold to Securitization / Reconstruction Company for Asset Reconstruction (' in crore)

;rri.jli iiit :rY, ea en ded SI. .,., rrt,, ... r No. ln+1Q$,zo1s ,31;03.2014 (i) No. of accounts NIL NIL (i i) Aggregate value (net of provisions) of accounts sold to SC/RC NIL NIL (iii) Aggregate consideration NIL NIL (iv) Additional consideration realized in respect of accounts NIL NIL transferred in earlier years (v) Aggregate gain(loss) over net book value NIL NIL

(' in crore)

Total Particulars ,3L03.2015 31.03.2014

Book value of investments in security Nil Nil Nir Nil Nil Nil receipts

2.4 .4 Details of Non-performing financial assets purchased / sold A) Details of Non-performing financial assets purchased ( ' in crore)

ended SI No. 31.03.2014

I (a) No. of accounts purchased during the Year NIL NIL

(b) Aggegate Outstanding NIL NIL

2 (a) Of these, number of accounts restructured during the Year NIL NIL (b) Aggregate Outstanding NIL NIL

B) Details of Non-performing financial assets sold ('in crore) sI. ended Particulars ;' No. .31;03t2074

I No. of accounts sold Nil Nil 2. Aggegate Outstanding Nil Nil

3 Aggregate consideration received Nit Nil

2.4.5 Provision on Standard Assets ( ' in crore) Particulars

le.ed

2' o t t ork a t? F - 92 ;$tl ori: Provision towards Standard Assets r 060.09 734.27

2.5 Business Ratios

(i) lnterest Income as a percentage to Working Funds 8.43% 8.66%

(i i) Non-interest income as a percentage to Working Fturds 1.42% 099%

(iii) Operating Profit as a percentage to Working Furds 1.99% 1.69%

(iv) Retum on Assets 0.21% (0.ee%)

10.67 ( ) Business (Deposits plus advances) per employee (' in Crore) l l.5l

(7.3s) (vi) Profit(Loss) per employee ( ' in Lacs) 1s.98

oo.l i& q o, u; o o e) * * * o lka o

PageL4

F - 93 2.6 Asset Liability Management Maturity pattem of certain items of Assets and Liabilities* ( in crore)

Ovcr 3 Over 6 Over I Year Over 3 Years Assets/ Eto14 15 to 28 29 days to months and months and Over 5 Day I 2 to 7 days and up to 3 and up to 5 Total days days 3 months upto6 uptol Years Liabilities Years Years months Year

l4l 3. l7 2079.53 1425.33 t6'74.73 5655.58 5914.02 9876.22 21526.62 r r t92.06 48060.3s r08817.60 Deposits (1 088.96) (t7s6.68) (2361.t7) ( t 642.60) (9629.99) (10t74.61) (t 337s.27) (232ss.53) (t t216.t9) (37008.7 t) (r t ts09.7t)

337.70 3981.69 2M.50 l7l.l0 2892.0s 3059.69 3952.02 27344.75 9684.68 l5l 34.86 66763.04 Advances (456.1 s) (3828.s4) (1 66.60) (266.8s) (2564.28) (442 t .24) (2902.27) (264 t 4.20) ( I I s76.72) ( I 3 170.25) (6s767.10)

2.94 133.76 49.14 262.91 4584.55 llll.40 1924.75 2697.77 7223.08 286 12.81 46603.t I Investments (0.00) (269.48) (0.00) (t 322.89) (3s86.98) (3982.28) (4833.66) (6845.t t) (4394.7 t ) (1 964 t.22) (4487634)

4.92 260.00 324.00 0.00 300.00 210.41 200.'76 8 t 2.19 369.62 1579.84 4061.73 Borrowings D (0.00) (2.21 ) (0.00) (0.00) (0.00) (629.82) (3ss.4 t ) (1 280.96) (604.3 t) (t 587.5 3) (1460.21)

Foreign 160.0r 923.32 I13.90 84.62 729.87 892.90 l 036.89 0.00 0.00 17.94 3959.45 Currenqr Assets (272.83) (t 2 I 6.4s) (230.47) (89.72) (971.51) (7s2.34) 0e.34) (r 7.9s) (4.70) (0.00) (363s.sr)

Foreign 185.88 40t.91 I I 1.75 33.09 1337.73 874.89 984.08 r7.89 1.92 0.00 3959.r4 Currency Liebilities (s73.44) (789.s4) (326.87) (t 24.43) (t0t8.42) (722.02) (64.54) (0.00) (0.00) (17.20) (3636.46)

*The above disclosures are as compiled and certified by the Bank's Management. Figures in bracket represent Previous Year'sfigures.

Page 15

F - 94 2.7 Exposures 2.1 .l Exposure to Real Estate Sector* ( ' in crore) ended ,:91:03.2015 31.03.20t4 a) Direct Exposure i) Residential Mortgages - Lending fully secured by mortgages on residential property that is or will be occupied by the borrower or that is rented; 6498.93 5390;78 -of which, individual housing loans eligible for inclusion in priority sector advances 3845.73 3768.67 ii) Commercial Real Estate - Lending secured by mortgages on commercial real estates (office buildings, retail space, multi-purpose commercial premises, multi-farnily residential buildings, multi-tenanted commercial premises, industrial or warehouse space, hotels, land acquisition, development and construction, etc., including 3',t6.88 679.12 non-fund based (NFB) limits) iii) Investments in Mortgage Backed Securities (N{BS) and other securitized exposures - . a. Residential, NIL NIL b. Commercial Real Estate. NIL NIL b) Indirect Exposure Fund based and non-fund based exposures on National Housing Bank 3227.12 2185.44 (NHB) and Housing Finance Companies (HFCs) Total Exposure to Real Estate Sector 10r02.93 8855.34 (*The above disclosures are as compiled and certified by lhe Bank's lulanagement.)

2.7.2 Exposure to Capital Market* ( ' in crore) Year , 31,03.2015 31.03.20L4 (i)Direct Investments in equity shares, convertible bonds, convertible debentures and units of equity-oriented mutual funds the corpus of which is not 141.65 275.90 exclusively invested in corporate debts (ii) Advances against shares / bonds / debentures or other securities or on clean NIL NIL basis to individuals for investments in shares (including IPOs /ESOPs), convertible bonds, convertible debentures and units of equity-oriented mutual funds (iii)Advances for any other purposes where shares or convertible bonds or convertible debentures or units of equity oriented mutual funds are taken as 2.61 3.61 primary security ] (iv) Advances for any other purposes to the extent secured by the collaterd I securiry of shares or convertible bonds or convertible debentures or units of equity-oriented mutual funds i.e. where the primary security other than shares/ NIL NIL convertible bonds/ convertible debentures/units of equity-oriented mutual funds does not fully cover the advances (v)Secured and unsecured advances to stock brokers and guarantees issued on t1.25 16.42 behalf of stock brokers and market makers (vi)Loans sanctioned to corporates against the security of shares/bonds/ debentures or other securities or on clean basis for meeting promoters' NIL. NIL contribution to the equity of new companies in anticipation of raising

a :an ls O) t

F - 95 resoUrces (vii) Bridge loans to companies against expected equity flows / issues (viii) Underwriting commitments taken up by the Bank in respect of primary NIL NIL issue of shares or convertible bonds or convertible debentures or units of NIL NIL equity oriented mutual funds (ix) Financing to stock brokers for margin trading NIL NIL (x) All exposures to venture capital funds (both registered and un registered) 72.66 76.91 Total Exposure to Capital Market 228.17 372.84 (*The above disclosures are as compiled certified by the Bank's Management.)

2.7.3 Risk Category-wise Country Exposure The Bank has analyzed its risk exposure to various countries as on 31" March,2015 and such exposure is less than the threshold limit of 1%o of the total assets of the Bank. In terms of RBI guidelines, no provision is required for this exposure.

The position of risk category-wise country exposure is given below: ('in crore) .,I ,i.,.,Pi'hviiion. ,. j,;{l',ffigo5gfs,r' Prorision :,,,ii,p5[.0!$,igg l ..i.i'1,'' r."l:.' ''i" ', jr,1[=pf8ig$" held as at Risk Category ' ' ,(rtet) ar:gti'lr al r.', : i,, il , "(n.epa*4tr, ' 3l;0320f,S:r;!, rirl,:Strt Urrrtt ., . ,3tri0$;2014,i 31.03.2014 Insignificant 129.33 0.00 455.08 0.00 Low 29.5s 0.00 36.32 0.00 Moderate 6.59 0.00 56.98 0.00 High 0.00 0.00 0.00 0.00 Very Hieh 0.00 0,00 0.00 0.00 Restricted 0.00 0.00 0.00 0.00 Off Credit 0.00 0.00 0.00 0.00 Total 165.47 0.00 548.38 0.00

2,7.4 Details of Single Borrower Limit (SBL)/ Group Borrower Limits (GBL) exceeded by the Bank (' in crore) Sr. Name as on No Benower 31 31.03.20tr 5 3r 4

Simplex 942.08 t09t.94 1,025.00 1,175.00 782.81 740.23 Infrastructure Ltd

Nil Nil Nil Nil Nil Nil NiI *ln line with Bank's extant Lending Policy, the above breach of exposure ceiling was approved by the Board of Directors' at its meeting held on 30.05.2014.

2.7.5 UnsecuredAdvances (' in crore)

j,'''i'' i 1 i ' .'',',,P,riifitr$iaifliii ;i;i:ilrit ii' "''', i, u. i,,, . , ?A1./".ls 2Qt3-t4 Total amount of advances outstanding against charge over intangible r4 r .83 108.53 securities such as the rights, licenses, authoriry, etc. Estimated value of such intangible collateral securities 200.47 172.06

2.8 Penalty Imposed by RBI

oorth

o o * lL

F - 96 a) RBIiFIU levied penalty of '0.06 crores under section 13 of Prevention of Money Laundering Act (PMLA),2002.

3. Disclosures as per Accounting Standards (AS) in terms of RBI guidelines:

3.1 . AS 5 - Net Profit or Loss for the period, prior period items and changes in the Accounting Policies

'2.93 3. I . I The depreciation includes uore for prior period charged to Profit and Loss for the year.

3.t.2 The Bank has identified useful life of fixed assets as per the requirements of Schedule II of the Companies Act,2013, and has provided depreciation on Fixed Assets accordingly.

Further, the additional depreciation of '10.60 crores arising due to adjustment of impact arising on the first-time application of transitional provision to schedule II has been charged to General Reserve.

3.1.3 The additional depreciation of' 14.82 crores on revalued assets has been charged to P&L account and an amount equivalent to the additional depreciation has been transferred from revaluation reserve to General Reserve as per Companies Act,20l3.

3.2 AS 9 - Revenue Recognition

Revenue is recognized as per the Accounting Policies disclosed in Schedule 17.

3.3 AS l0 - Accounting for Fixed Assets

3.3.1 Accounting for Fixed Assets is done as per the Accounting Policies disclosed in Schedule 17.

3.3.2 As per the transitionalprovisions under Schedule II ofCompanies Act 2013 with effect from 01.04.2014:

a) Carrying amount of the existing assets will be amortized or depreciated over the remaining useful life of the assets keeping residual value as 5olo.

b) Where the remaining useful life of the assets is nil, may be recogtized in the opening balance of retained earnings.

3.4 AS - 12 Government Grants

During the year '0.76 crore has been received in the form of subsidies/grants/incentives from RBI and State Govemment as below: (' in crore)

Sn Particulars Revenue.' Gdpitaii, ;Revbniie , Gapitalr I Govemment Grants/Subsidy 0.62 0.r5 NIL 0.48

3.5 AS - 15 Employee Benefits

In terms of the provisions of RBI Circular no.DBOD.BP.BC.80/21.04.018/2010-l ldated 9m February, 201 I on Re-opening of Pension Option to Employees of Public Sector Banks and Enhancement in Gratuity Limits, '447.3luore was to be amortized over a period of five years with effect from Financial Year 2010-ll. Accordingly '89.46 crore has been charged to the Profit and Loss account being the proportionate amount for

F - 97 i

the year ended 3 I " March, 2015 ('89.46 crore for the previous year). The unamortized liabilify as at 31" March, 2015 stands at 'Nil crore (Previous Year '89.47 crore).

Pending settlement of the proposed wage revision effective from November 2012, an adhoc provision of ' 290 crores is held as at 31't March 2015.ln addition ' 124.75 crore provision has been made for incremental pension liability due to wage revision on estimation basis. ( 'in crore) l a) Chanse in the present. valu'o o'f:therbbliE'6'ti6iis . ;;:r1; i ;:r P.eiision' ; Gratuity Other Benefits * Present value of obligation as at the beginning ofthe Year 3 148.70 477.94 173.49 Interest cost 238.05 34.13 t2.63 Current Service cost 303.99 22.58 40.00 Benefits Paid 346.06 102.70 31.31 Actuarial Loss/(Gain) on Obligation 198.49 34.7 t (35.70)

Present value of Obligations at the end of the Year 3543.16 466.66 1 59.1 I

b) ChangeinFairValue:ofPIanAssd0:j,I'i",:; ri'iriil'" :' ],' 1'' a l'. Fair Value of Plan assets at the beeinnine of the Year 2890.41 451.56 173.39 Expected Return on Plan Asset 267.36 42.99 16.5t Empl oyer's contribution 620.87 87.40 00.06 Benefits Paid 346.06 t02.70 3r.3r Actuarial Loss(Gain) on Obligations 12.8 r (2.67\ (0.es) Fair Value of Oblieations at the end of the Year 3445.40 476.59 t57.69

Es tim ated Prese nt,vahte of Ob[g1tigp i a.q,.at;i[ e:itdioiiihii,i. ;,: c) PreviousYear '.,.,:;. - 'r : Fair Value of Plan Assets at the end of the Year 3445.40 476.59 157.69 Unfunded Net Liability recognized in Balance Sheet (971.68) 9.93 (t.42)

d) Expenses Recognized in Profit and Loss Current Service Cost 303.99 22.58 40.00 lnterest Cost 238.05 34.13 12.63 Expected return on Plan Asset 267.36 42.99 I 6.51 Net Actuarial (Gain)/Loss recosnized in the Year r 85.68 37.37 (34.7s) Total Expenses recognized in Profit and Loss Account 460.35 5l .09 r.38

e) Principal actuarial ggsumptions ;,qt,the. ,p1ianc.p .Q-.hopt :Dat9 (expressed as weighted, trverage) 'l ,l '. 'i'...' :,i', Discount Rate 8.00o/o 8.00o/o 8.00% Expected rate of return on Plan Assets 9.25o/o 9.52% 9.52% Method Used Projected Unit Credit Method *Other Benefits include Privilege Leave, Casual leave, Sick Leave and LFC/LTC. Note: The above stalement is based on lhe report of the Actuary.

3.6 AS f7- SegmentReporting

The Banks operations are classified into two primary business segments viz. "Treasury Operations" and "Banking Operations". The relevant information is given hereunder in the prescribed format:

Part A: Business Segments ( ' in crore)

Business Treasury Operations,, Total Segments

0) Cha a 01 * * * tv De orka\

F - 98 yeer Year Year Year Ycar , r I Year ; ,.r.Ycar Year Year . Particulars ended ended . enrled e4ded. :.endcd ,:' ended ended cnded ;1 l:- : , ,,qlgtd 31.03.r5 31.0114 , 3r.03.rs 3L03.1'l i ;ii.or;,rs'i l1 3r;03.15 31:03.14 31.03.15 31.03.14

Reven ue 4306 3265 5064 5776 2440 2544 lt5 177 n925 11762

Result 1372 94 t427 2n4 909 954 il5 177 3824 3339 tlnallocated t396 t278 expenses Operating 2428 206t Profit

Income Taxes 198 (3428)

Extraordinary profit/ loss Net 2560 (1213) Prolit/(Loss) Other I nformation Segment 46743 40426 46985 504 l9 19777 I 8490 I 13505 114777 Assets Unallocated 9521 10328 Assets Total Assets 123026 t25105 Segment 46743 40426 46985 50419 197',77 r 8490 r I 3505 |4777 Liabilities Unallocated 9521 10328 Liabilities Total 123026 125r05 Liabilities

Part B: Geographical Segment - Since the Bank does not have any overseas branch, reporting under geographical segment is not applicable.

3.7 Related Party Disclosures (AS-18) (As Compiled by the management)

3.7.1 Names of the related parties and their relationship with the Bank: A$$a!!q!e;:

st. Name No I Assam Gramin Vikash Bank Regional Rural Bank ') Bangiya Gramin Vikash Bank Regional Rural Bank

J Manipur Rural Bank Regional Rural Bank 4 Tripura Gramin Bank Regional Rural Bank

Kev Monogement Personnel:

sl.

Name Designation , No I Mr.P.Srinivas Managing Director & Chief Executive Officer ') Mrs. Archana Bhargava Ex-Chairperson & Managing Director *(Up to 20.02.2014) 3 Mr. Deepak Narang Executive Director 4 Mr. Sanjay Arya Executive Director

G) 2 :Jn ls o * I 9/kat o

F - 99 5 Pratyush Sinha Director 6 Mihir Kumar Director

7 Kiran B.Vadodaria Director

8 Pijush KantiGhosh Director

9 Sanjib Pati Director

10. Parvathy V Sundram Director

ll Sanjay Kumar CFO

t2 Bikramjit Shorn Company Secretary

Relilives of Kev Manopement Personnel:

sl. Name No I Uma Ghosh Pijush KantiGhosh 2. Anupa Ghosh Pijush KantiGhosh J Amarrya Ghosh Pijush KantiGhosh

3.7.2 Related Party Disclosures ( ' in crore) , BelifiJ,is,ri'f:16pi; :, ; j:.,[-{s4pgi4H$rf., : : ; Parsqiiiipll'. '' Borrowings Nit NiI NiI Deposit 0.76 Nil 0.76 Placement ol deposits Nil Nil Nil Advances 0.1 I Nit 0.1 I Investments 200 Nos Nil 200 Nos Equity Shares Equity Shares Non-funded commitments Nil Nil Nil Leasin g/HP arrangements availed Nil Nil Nil Leasing/HP arrangements provided Nit Nil Nit Purchase offixed assets Nit Nil NiI Sale of fixed assets Nit Nil Nil Interest paid 0.03 Nil 0.03 lnterest recei ved 0.0032 Nil 0.0032 Rendering of services Nil Nil Nil Receiving ofservices : Nil - Remuneration# 0.88 0.88 - Sitting Fees 0.06 0.06 Management contracts NiI Nil Nil

#Remuneration Paid to Key Management Personnel:

: Yearended st. Name Designation 31.03.2014 No (in') I Mr.P.Srinivas Managing Director Salary and 4,73,896.00 Nil & Chief Executive emoluments Officer

1 o q c Acr U; o * \ /,

F - 100 2. Mrs. Archana Bhargava Ex-Chairperson & Salary and Nil r 8,2 r,802.00 *(Up ro 20.02.20t4) Managing Director emoluments J Mr. Deepak Narang Executive Director Salary and 2t,62,594.00 t 5,88,334.00 emoluments 4 Mr. Sanjay Arya Executive Director Salary and 20,77,1t5.00 t5,95,737.00 emoluments

). Mr.Pijush Kanti Ghosh Director Salary and 10,62,700.00 8,66,457.00 emoluments

6. Sanjib Pati Director Salary and 6,52,171.00 7,70,245.00 emoluments 6. Mr.Sanjay Kumar CFO Salary and 13,79,618.70 12,56,473.15 emoluments

7 Bikramjit Shom Company Secretary Salary and 9,95,429.25 9,07,767.60 emoluments

# lncluding performance linked incentive on cash basis.

Note: (a) The transactions with Associates have not been disclosed in view of Para 9 of AS-18, which exempts State Controlled Enterprises from making any disclosure pertaining to their transactions with other related parties, which are State Controlled Enterprises.

(b) No amount has been written off/written back in respect of dues from/to related parties.

(c) No provision is required in respect of dues to related pafties.

3.8 Leases (AS-fg) (As compiled by the Management)

a) Lease rent paid for operating leases are recognized as an expense in the Profit & Loss Account in the year to which it relates.

b) Future Lease Rent Payable for operating lease: (As compiled and certified by Management) ('in crore) sl. Particulars No. :ir3I.0310I5 31:03:2014 a. Not later than 1 year 58.92 56.46 b Later than 1 year but not later than 5 years 201.66 205.92 c. Later than 5 years 182.16 201.62 Total 442.74 464.04 Amount charged to Profit & Loss Account 76.85 60.75

i) Future lease rents and escalation in the rent are determined on the basis of agreed terms. ii) At the expiry of the initial lease term, generally the bank has an option to extend the lease for a further pre-determined period.

3.9 AS 20 - Earnings per Share

,Year ended Particulars 31.03.2014

2s5.95 (t2t3.44) Net Profit/(Loss) after tax available for Equity Share Holders (' in crore)

Weighted Average number of Equity Shares 67,77,93,389 42,30,46,755

r8d :a4ls

F - 101 Basic and Diluted Earnings per Share(') 3.78 (28.68)

10.00 10.00 Nom inal Value per S hare(') -

3. l0 AS 21 - Consolidated Financial Statements/AS-23-Accounting for Investments in Associates in Consolidated Financial Statements

The Bank does not have any subsidiary and as such, AS-21 and AS-23 are not applicable.

3.'l I AS 22 - Accounting for Taxes on Income

(a) Provision for Tax during the year is given below: (' in crore)

Provision for Tax 339.26 NIL

(b) The major components of Deferred Tax Assets/Liabilities are as follows: (' in crore)

Particulars

Deferred Tax Assets 263.61 461.72 Employees benefits 143.03 82.51 Other items 120.58 379.21 Depreciation on Fixed Assets Nil Nit

Deferred Tax Liabilities 72.03 72.03 Depreciation on fixed assets Nil Nil Special Reserve u/s.36(lXviii) of 220.00 220.00 the lncome Tax Act, l96l

3.l2- AS 28 - Impairment of Assets

In the opinion of the Bank, there is no indication of any material impairment of fixed assets and consequently no provision is required.

3.13 AS 29 - Provisions, Contingent Liabilities and Contingent Assets

Movements in significant Provisions and Contingent Liabilities have been disclosed at the appropriate places in the Notes forming part of the accounts.

4. AdditionalDisclosures

4.1 Provisions and Contingencies The break-up of 'Provisions and Contingencies' shown under the head "Expenditures in Profit and Loss Account is as under: ( ' in crore)

3r.u3:201,5 31.03.2014 Provisions for depreciation on Investment (70.43) 88.52 Provision towards NPA(Loans and Advances) 844.87 t960.s9

F - 102 Provision towards Standard Assets 325;82 200.76 Provision made towards Income Tax (Including Deferred Tax) *339.26 (342.77) Other Provisions and Contingencies - Provision for Employee Benefit (AS-15) 628.37 1207.51 - Provision for Non-Performing Investments 20.11 56.36 - Floating Provision (s2.ts) (st.e7) - Provision for Others 136.70 r56.r9 Total 2171.95 3275.19 * Provision made towards Income Tax during the year includes reversal of excess provision of '78.85 crore relatipg to previous years i

4.2 Floating Provisions (Countercyclical provisioning buffer) (' in crore) ffi:Gfffii,,,,:L:,r1f,i'YeAE. a) Opening Balance in the floating provisions account 105.51 157.48 b) The quantum of floating provisions made during year NIL NIL c) Accounting for draw down made during the year 52.75 51.97 d) Closine balance in the floating provisions account 52.76 105.51

Prrrsuant to Reserve Bank of India's (RBI's) Circular No.DBR.No.BP.BC.79l2l.04.048/2014-15 dated 30'h March 2015, the Bank has utilized 50% of its countercyclical/floating provisions held as at 3l't December 2014. As per the said RBI Circular, an amount of ' 52.75 crores out of floating provision of '105.51 crores held as at 3l'' December 2014 has been utilized for making specific provisions for non-performing assets, as per the policy approved by the Board.

4.3 Draw Down from Reserves

There was no Draw Down from Reserves during the year.

4.4 Disclosure of complaints a) Customer Complaints

SI No ,,, (a) Complaints pending at the beginning of the Year 521 (b) Complaints received during the Year 35186 (c) Complaints redressed during the Year 35190 (d) Complaints pending at the end of the Year 517

b) Awards passed by the Banking Ombudsman

SI.No. (a) Unimplemented Awards at the beginning of the Year 0 (b) Awards passed by the Banking Ombudsman during the Year 2 (c) Awards implemented during the Year ) (d) Unimplemented Awards at the end of the Year 0

4.5 Disclosure of Letter of Comforts (LoCs) issued by the Bank

a) During the current financial year the Bank has issued 378 nos LoCs (Previous Year 458) amounting to '51 87.84 crore (Previous Year '3122.00 crore) for providing Buyers Credit facility.

F - 103 I

b) There are 794 nos (Previous Year 204) of outstanding LoCs as on 31.03.2015 amounting to '300.47 crore (Previous year ' 1043.28 crore).

4.6 Provision Coverage Ratio (PCR)

The provision coverage ratio (PCR) for the Bank as on 3lsr March 2015 is 58.50 yo, which is calculated taking into account the total technical write offs made by the Bank.

4.7 BancassuranceBusiness ( ' in crore)

Life Insurance Business 0.87 6.23 Non-Life I nsurance Business 0.99 3.78 Mutual Funds NIL NIL Others NIL NIL

4.8 Concentration of deposits, Advances, Exposures and NPAs 4.8.1 Concentration of Deposits ( ' in crore)

Total Deposits of twenty largest depositors 5380.65 r 0633

Percentage of Deposits of twenty largest depositors to Total 4.94% 9.54% its of the Bank

4.8.2 Concentration of Advances ( ' in crore) diiaeq

i.:,ii$;f iQ3,20t5-.iiii ,i; :lli03i20r4

Total Advances to twenty largest borrowers n767.46 r2t95.52 Percentage of Advances to twenty largest borrowers to Total 17.04o/o 18.54% Advances of the Bank

4.8.3 Concentration of Exposures ( ' in crore) Particulars l, , , ,,:..\.' iri{pf,",,; ,,i 31103:20r5. ,l TffiiT FI Total Exposure to twenty largest borrowers/ Customers 16225.8t 18977.46

Percentage of Exposure to twenty largest borrowers/ customers r5.08% t6.65% to Total Exposure ofthe Bank on borrowerV customers

4.8.4 Concentration of NPAs ('in crore)

& 4{'

0) i3nls a O) t

F - 104 Total Exposure to top four NPA accounts 933.79 103 r .04

4.9 Sector - wise NPAs ( ' in crore)

st. Sector No.

A. Priority Sector Agriculture and I 8s94.61 t322.96 1s.39 9724.81 t285.45 t3.22 Allied activities Advances to industries sector 2. eligible as 5962.15 862.28 14.46 5476.89 88s.27 16. t6 priority sector lending 3 Selvices 638t.97 883.43 r 3.84 5760.66 914.56 15.88 - Retail Trade 2s39.47 487.81 19.2t 2651.06 6t0.26 23.02 - Others 3842.50 395.62 10.30 3109.60 304.30 9.79

4. Personal Loans 5478.72 162.54 2.97 5333.31 208.t7 3.90

Sub-Totol(A) 26417.45 323 t.2t 12.23 26295.67 329i.45 12.52

B Non-Priority Sector Agriculture and Nil Nil Nit Nil Nil NiI Allied activities 2. Industry 24020.93 2627.t7 r 0.93 24606.39 2995.54 12.17 - lron & Steel 5005.35 758.99 t5.16 4920.60 t027.81 20.89 - Power 9484.t1 9664.66 25.31 0.26

- Others 953t.47 1 868.1 8 19.60 I 0021. r 3 1942.42 t 9.38 Services 10656.21 460.82 4.32 10554.33 569.97 5.40 - NBFC 6010.08 5270.12 - Banking & 3255.86 2.10 7.31 2785.44 3 Finance Other than NBFC - Others t420.27 458.72 32.30 2498.77 569.97 22.81

4. Personal Loans 6572.24 233.54 3.5 5 5023.51 259.0s 5.l6

sub-Total(B) 4 1249.38 3321.s3 E.05 40184.23 3824.56 9.52 Food C. 1403.05 Nit Nit r50r.El Nit Nil Credit(FCI) Sub-Total(C) 1403.05 Nil Nit t501.8r Nil Nil

Total (A+B+C) 69069.88 6s52.74 9.49 67981.71 7l lE.0l t0.47

4.l0 Movement of NPAs (' in crore)

': . :li.'. ti : r:i . d, ,03.2014

F - 105 Cross NPAs as on l" April,20l4l20l3 7r 18.0r 2963.82

Additions (Fresh NPAs )during the Year 4087.17 8007.30

Sub-total(A) I 1205.18 10971.12 Less (i) Up gradations 2655.0t 2287.53

(ii) Recoveries (excluding recoveries made from upgraded a/cs) 1236.s8 1084.21

(ii i) Technical/Prudential Write-offs 708.99 428.61 (iv)Write-offs other than those under (iii) above 51.69 52;76

Subrotal(B) 4652.27 3853.r r

Gross NPAs as on 31" March,20l5/2014 (A-B) 6552.9t 7118.01

4.1 I Stock of technical write-offs and recoveries made thereon

(' in crore)

3l;03;2014 Opening balance of Technical/Prudential written-off accounts as at 2650.10 2347.22 April 1,201412013 Add: Technical/Prudential write-offs during the year 708.99 428.6t Sub-total(A) 3359.09 2775.83 Less: Recoveries made from previously technical/prudential written- 77.81 125.73 off accounts during the year (B) Closing balance as at March 31,201512014 3281.48 2650.r0

4.12 Overseas Assets, NPAs and Revenue ( ' in crore)

L,t00;?;0.l,5iri r:ls;{i0P ?0-1,{,i Total Assets (Nostro balance) 25.4s 348.85 TotalNPAs NIL NIL Total Revenue 2.47 6.t6

4.13 Off-Balance Sheet SPVs sponsored (which are required to be consolidated as per accounting norms)

Year , , ..t0Cr-Ender !3it03.20f# Name -'---I,...--I,Nlffir.ififi iPVlnoiiioiGd : j. Domestic gyslseas' i ,,:, .,l;-l)OIIlQstl9 .: , , l,':iiji.if NIL NIL NIL NIL

4.14. Unamortised Pension and Gratuity Liabilities

ln terms of the provisions of RBI Circular no.DBOD.BP.BC.8O121.O4.0l8/2010-l ldated 9s February, 2011 on Re-opening of Pension Option to Employees of Public Sector Banks- and Enhancement in Gratuity Limits, '447.3lcrore was to be amortized over a period of five years with effect from Financial Year 2010-ll. The

unamortized liability as at 31" March,2015 stands NIL (Previous Year'89.47 crore).

C^a ,rnft

F - 106 4.15 Credit Default Swaps

The Bank has not undertaken any Credit Default Swaps in the year 2014-15 as well as in the year 2013-14

4.15 Intra-Group Exposures (' in crore) ... ,. " 'r:;:j(1.:::': il;, j r',., SI ii1,,,,.,1 ri ;.lliIl0ll* ". Pa rti c ula rs o f In t ra' io'up No. G ExpoSU Ees ;*'li ti . 3jffi +i3"1i03;2014 I Total amount of intra-group exposures 30755.33 34585.28 2 Total amount of top-20 intra-group exposures 201 10.68 21019.40 Percentage ofintra-group exposures to total J 2855% 3034% exposure of the bank on bonowers / customers Details of breach of limits on intra-group 4 Nil Nit exposures and regulatory action thereon, ifany

4.16 Transfer of Denositor Education and Awareness Fund(DEAF)

('in Crore)

ii",. lJl.H. .?r-P:$$:' Opening balance of amounts transferred to DEAF

Add : Amounts transferred to DEAF during the year 43;13

Less : Amounts reimbursed by DEAF towards claims 0.29

Closing balance of amounts transfened to DEAF 43.44

4.1'7 Unhedged Foreisn Currency Exposure

Provision made for incremental provisioning under Unhedged Foreign Cunency Exposure (UFCE) to the tune of '24,82,831.00 in March 2015 as per RBI Circular No.DBDO.No.BP.BC.85/21.062002001314 dated 15.01.2014. This approach of UFCE came to force first in June 2014. Capital held towards UFCE Risk in March 2015 is Nil as there is not a single instance where an exposure has become eligible for computing incremental capital requirement.

4.18 Liquidity Coverase Ratio*

4.18.1 Disclosure ('in Crore) 31.03.2015 31.03.2014 Total Total Total Total Unweighted Weighted Unweighted Weighted Value Value Value Value

I High Liquid Assets Total Quality 19542.76 NA

., Retail from 82700.08 NA NA

ootl

o ,* *

F - 107 small business customers, of which: (i) Stable deposits 67793.25 3389.66 NA NA (ii) Less stable deposits r4906.83 1490.69 NA NA ' ;:':.',;;'ii",i rj rr)!:ri-i 1 3 Unsecured wholesale fqnfli4grr of. "' . , f,i ..,. trl "1 t0'4i15t7-fl.::,:,. .'.r,, 6602.90. :' ' NA .:, .l . i.'iit....,1".i., ia\. -:'i:.'..'r, .. r:,,. 1i.i.,, ''$a (i) Operational deposits (all Nil Nil NA NA counterparties) (i i) Non-operational deposits (all t0475.77 6602.90 NA NA counterparties) ( iii) Unsecured debt Nil Nit NA NA 4. Securid, d,H iiieirilp,funAirie,iilii;.*;lr. 5. Additiondl iiqiiiementsitltrihi6hi, iliii;r:iiNdr" I ' ', NA (i) Outflows related to derivative

exposures andi other collateral Nil Nil NA NA requirements ( ii) Outflows related to loss of funding Nil Nil NA NA on debt products ( iii) Credit and liquidity facilities 33t2.61 587.83 NA NA Other 6. idiii iti ri,":,:irr,,NA NA i iNA,,: ,NA 7, Othercontingentfunilingtib-ligii-r.onstf ". 8. Total Cash, Oritho*i,,i ,,' i l,'ir|l-*ic

9. Secured lending (e.g. reverse repos) 3 l 1.33 Nil NA NA 10. Inflows from fully performing 560.25 280. I 3 NA NA exposures ll Other cash inflows 2714.35 2694.48 NA NA 12. Totat Caih Inflows ,,1:rJS,8!i$!: ;lti: i';:j.i,,2694148i't,il .. NA NA Total Total Adjusted Adjusted Value Value 2t. TOTAL HOLA NA 22. Total Net Cash Outftois'. l'. .'tt:r.r-i:r'., A ;T,i 23. Liqu id ity,Coierage Rati6,(r7o)'i :' :'.. + iiiJ tI96,62j;ii NA

* The above disclosures are as compiled and certified by lhe Bank's Management,

4.18.2 Oualitative Disclosure around LCR Bank maintained adequate liquidity during the quarter ended March 2015 which is evident from the Bank's average Liquidity Coverage Ratio (LCR) was 196.62yo as against regulatory requirement of 600/o. The co*fortuble liquidity position was on account of substantial level of High Quality Liquid Assets (HeLA). HQLA could be mainly attributed to high level of excess SLR. Bank did not have any exposure to derivatives; hence there was no liquidity risk on account of the same. Since Bank's exposure to any6 foreign currency was less than 5%o of total business of the Bank, there was no significant risk of currency wise liquidity mismatch. Bank mainly depended on diversified base of retail deposits for its funding requirements thus there was no risk of concentration of funding sources.

'3.01 '2. 4.19 a) Registration formalities are pending in case of two properties costing crore, WDV as on 3 I .03 '20 I 5 I I crore (Previous Year '1.12 crore).

b) Premises include leased properties amounting to ' 75.87 crore (net of amortization) as at 3l't March 2015(Previous Year'76.71 crore). 5 Previous Year's figures have been regrouped / rearranged wherever considered necessary to make them comparable with those of the current year.

q) * { ,./ Ce

F - 108 !

This is part of the Schedule l8 as on 31.03.2015

Managing Director & Chief Executive Officer

,-A

thy V Sundram h Sinha D Director [--r Renuka Muttoo Sanjib Director Director ,^{ffi General Manager & CFO

As per our separate report ofeven date annexed.

M/s.Ram & Co M/s.N M/s.P C Co. M/s.SPM R& Associates C FRN C h a,iered U' A:,;

C CA. rl Partner Partner Partner MRN:023837 MRN:016369 MRN:088730 MRN:085362

Place :Kolkata Date :7th May,2015.

Page 30

F - 109 I UNITEO BANK OF INDIA

a'ln'

31st Marc I 2015 31st efch 2014 CASH FLOW FROM OFERATING ACTIVITIES

Net Profit afl6r Tax 2,559,92? (12.134.440 Add. lncome Tax 2,200.000 Less: MAT Recoverable 2.2@,W Add: Oeffered Tax Assets 1.981.100 Profit before Tax 4.541.O22 n2134.440

Adlustment for Depreciation on Fixed Assets 1.057.196 691.666 Less: Amount drawn From Revaluation ReseNe (148.: (155 Pront/Loss on Sale of Fixed Assets (Net) 5,802 u Deoreciation/Provision ror lnvestments (Net) (7U.252 1,448,817 Provision for Standard Assets 3.258,200 2.OO7 600 Provision for NPA Advances 8.448,7N 19,086,200 Other Provisions (Net) 10.716.885 10,209.263 lnterest on Subordinated Bonds 2.332.475 2.230,591

operatlno Proflt before changes ln Operatlno Assets and Liabllltles 29.507.E05 23.383.557

Adlustment for net chanoo ln Opsratlnq Assets and Llabllltias

Decrease(IncrEse) in lnveslmenl fi6.563.47€ Decrease/(lncrease) in Advances (18.403.941 ) 12.325.n7 lncrease/(Decrease) in Oeoosits t26.921.@7 108.581.652 lncrease/(Decrease) in Borroflinos 18.264.937 (9.824.669) Decrease/(lncrease) in Other Assets (1.350.625) (2.720,8311 lncrease/(Decrease) in Other Liabilities I Provisions (9.296.488) (3.348.651 ) lncrease/(Decrease) in Revenue Rese,ve 42.153 020.278\ (24.t20.1321 12,097,874 cash cenerated from Operatlnc Actlvltles Tax (Paid)/ Refund (1.060.000) (410.000) Net Cash from Ooeratlno Actlvlties {Al 11.681 .414

CASH FLOW FROM INVESTINC ACTIVITIES

Fixed Assets (Net) (449.783) (1.fi8.27

Net Cash from lnvestlng Actlvltles (B) (449.1 (1.508.279)

c CASH FLOW FROM FINANCINO ACTIVITIES

lssue of Share Caoital (5.152.321) 1.W.412 Share Premium 8.152.321 5,199,588 Subordinated Bonds lssued (22,tau,t_xu) lssue of innovative Perpetual Debt lnstrumenl (lPDl) CaDital from Government(PNCPS) subordinated Bonds lssued 5 000.ooo lnlerest on Subordinated Bonds Q.332.474 (2.2T.591 Dividend and tax thereon paid 6.716.1621

Net cash from Financlno Actlvlties {C) 4.o53.22t

D Net lncrease ln Cash and Cash equlvalsnts (A+B+C) 18.232.822

Cash and Cash equlvalants at the beglnnlng oI ths year Cash in hand 4,336,O22 3.574.428 Balances wlth Reserve Bank of lndia 58.361.750 34.891.708 alances with Banks and Monev at Call and Short Notice 45.420.632 1 08.1 I 8.404 51.419.446 89.885,582

Cash and Cash equlvalents at the end of the year Cash in hand 5,030.200 4.3ffi.022 Balances with Reserve Bank of lndia 53.125.812 54.361.750 Balances with Banks and Money at Call and Short Notice 2.149.4r']2 tro.3,5.414 45,420,632 106,1 1E,404

otl, q !; 0) t * faD *

F - 110 I

This is part of the Cash FIow Statement as on 3 I 2015

P.Srinivas Managing Director & Chief Executive Officer

Arya Executive Director

\^A Parvathy V Sundram A.K.Dogra Sinha irector Director

Renuka Muttoo Sa ti Director Director ,^ffi General Manager & CFO

As per our separate report ofeven date annexed.

M/s.Ramamoorthy(N) & Co M/s. ates. M/s.P C Co. M/s.SP MR& Associates Ch F q 3 h art ereO ALc Charte-ed U;

C rathi C n Paftner Partner Partner Partner MRN:023837 MRN:016369 MRN:088730 MRN:085362

Place :Kolkata Date :7th May,2015.

F - 111 INDEPENDENT AUDITOR'S REPORT

To The President of lndia Report On The Financial Statements

1. We have audited the accompanying financial statements of UNITED BANK OF INDIA as at 31't March, 2014, which comprises the Balance Sheet as at March 3t,2Ot4, and Profit and Loss Account and the cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information. lncorporated in these financial statements are the returns of 20 branches and treasury operations audited by us and 621 branches/retail hub audited by branch auditors. The branches audited by us and those audited by other auditors have been selected by the Bank in accordance with the guidelines issued to the Bank by the Reserve Bank of lndia. Also incorporated in the Balance Sheet, the Profit and Loss Account and the Cash Flow statement are the returns from 35 Regional Offices. 1354 branches; 1 Staff Training College, 1 Cash Management System and 1 Central Pension Processing Centre which have not been subjected to audit. These unaudited branches account tor 7.73% of gross advances, 35.42% of deposits,4.94% of interest income and 33.6L% of interest expense.

M a no g e m e nt's Respo nsi bi lity fo r th e Fi na n ci a I State m e nts 2. Management is responsible for the preparation of these financial statements in accordance with the provisions of Section 29 of the Banking Regulation Act, 1949 and to disclose the information as may be necessary to conform to forms 'A & B' respectively of the Third Schedule to the Banking Regulation Act, 1949. These financial statements comply with the applicable Accounting Standards issued by the lnstitute of Chartered Accountants of lndia. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.

Aud itotrs Responsibi lity 3. our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the lnstitute of Chartered Accountants of lndia. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures 4. to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor/s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. ln making those risk assessments, the auditor considers internat control relevant to the Company's preparation presentation and fair of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaiuating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

5' we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

6. Emphasis of Matter 6.7 ln accordance with Standard Audit (SA) of 706 "Emphasis of Matter paragraph,,, without qualifying our opinion, we draw attention to Note 4,3 to the financial statements, which describes the accounting treatment of the expenditure on creation of Deferred Tax Liability on Special Reserve under section 36(lXviii) of the lncome Tax Act, 1961 as at 31st March 2013, pursuant to Bl's Circular No.DB BP.BC .77/27.O4. 3-74 dated 20th 2073

* F - 112 a Pending settlement of the proposed wage revision effective from November 2072, an adhoc f provision of {170 crores is held as at 31't March 2014.

6.2 ln accordance with Standard of Audit (SA) 706 "Emphasis of Matter Paragraph", without qualifying our opinion, we draw attention to Note No.3.4 in Schedule 18 regarding deferment of pension and gratuity liabitity of the Bank to the extent of t89.47 crores pursuant to the exemption granted by the Reserve Bank of lndia from application of the provisions of Accounting Standard (AS)-15 on "Employee Benefits".

Opinion 7. Subject to what is stated above, in our opinion, and to the best of our information and according to the explanation given to us and as shown by the books of the bank, and read with the Accounting Policies and the Notes on the Accounts, we have to report that:

(i) The Balance Sheet, is a full and fair Balance Sheet of the Bank containing all the necessary particulars, as required by the Banking Regulation Act 1949 and is properly drawn up so as to exhibit a true and fair view of state of affairs of the Bank as at 31't March, 2014 in conformity with accounting principles generally accepted in lndia;

(ii) The Profit and Loss Account, shows a true balance of Loss, in conformity with accounting principles generally accepted in lndia, for the year covered by the account; and

(iii) The Cash Flow Statement gives a true and fair view of the cash flows for the year ended on that date.

Report on Other legal and Regulatory Requirements 8. ln our opinion, the Balance Sheet and the Profit and Loss Account have been drawn up in Forms "A" and "8" respectively of the Third Schedule to the Banking Regulation Act, 1949 and is in accordance with the provisions of section 29 of the Banking Regulation Act, 1949.

9. Subject to the limitations of the audit indicated in paragraph 1 to 5 above and as required by the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, and subject also to the limitations of disclosure required therein, we report that:

(a) We have obtained all the information and explanations which to the best of our knowledge and belief, were necessary for the purposes of our audit and have found them to be satisfactory.

(b) The transactions of the Bank, which have come to our notice have been within the powers of the Bank.

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

10. ln our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with the applicable Accounting Standards.

For Ramamoorthy(N) & Co. Dinesh Mehta & Co. P C Bindal& Co. SPMR&Associates. Chartered Accountants Chartered Accountants Cha rtered Accounta nts Chartered Accountants FRN:002899t ) FRN:OQR FRN:00182a\ FRN:OO.4'm\ o

Charlered o o M o hwari Pa t PartnN7 Partn Partner tv|.Mo.023837 M.Mo.502386 M.No.082683 M.No.085362

Date:5th MayZOL4 Place: Kolkata

F - 113 UNITED BANK INDIA HEAD :KOLKATA

,IEW FOR AND 3lst 2014. (Rs. in lacs) Particulan Ouarter Endcd Year Ended 3t.03.2014 31.12.2013 31.03.2013 31.03.2014 31.03.2013 (Audited) (Revicwed) (Audited) (Audited) (Audited) I Interest Earned (a+b+crd) 276204I 275ss3 2336! 1059929 925149 a) Interest/Discount on advances/bills t99723 208284 171876 7El656 689927 b) Income on Investment 68869 6601 9 580s6 259762 22s931 c) Intt. on balance with RBVOther Banks 5876 2232 1420 l4l 08 6349 d) Others t736 l8 2258 4403 2942 ., Other Income 3t174 22127 35108 120687 106657 3 Total Income (l+2) 30737E 2986E0 26E7tE 1180616 103t806 -'-- 4 Interest Erpended 206169 200477 t77232 80116,47 676423 5 Operating Expetrses (l+ii) 46714 43695 40413 170795 1s0392 i) Payments to and provisions for employees 26570 26318 24253 101434 93252 ii) Other operating expenses 20144 17377 16160 69361 57 t40 6 Total Expenditure (4)r(5) (Exciuding Provision and Contingencies) 2s3083 244172 217645 974442 82681s 7 Opemting Profit (3F(6) (Protit before Provisions and Contingencies) s4295 54508 51073 206174 20499t E Provisions & Continsencics (Other thatr tax) 26610 185783 75rE0 361796 175939 9 ExceDtionrl Itcms 0 0 0 0 0 l0 Prolit (+yt ssc) from Ordinary Activities before tax (7-&9) (t3t27s) (24807) (lss622) 29052 27625 ll Tax Expenses (re312) (7467',) (2792s',) (34277) (l0l3E) l2 Net Profit (+)/Loss(-) from Ordinary Activities after tax (10- ll) 46937 (r23808) 3l t8 (l2r34s) 39190 l3 Extraordinary ltems (net oftaI erpenses) 0 0 0 0 0 l4 Net Prolit (+yloss() for the period 46937 (123808) 3118 (r2l34s) 3919{) l5 Paid-up equity share capital (Face Value ofeach share Rs. I 0) 55475 55475 37471 55475 3747 I

l5 Reserves excldg. Revaluation reserves 33190r 0 408453 331901 408453 t7 Anolyticsl Ratios

(i) Percentage ofShares held by G.O.l. 88.00% 88 00% 82.23% 88 00% 82.23o/o (ii) Capital Adequacy Ratio % a) Basel-l N. A. N. A. 9.77% N.A. 9.77% b) Basel-ll [.46% 9.93o/o 1.66% n.46% 11.660/0 c) Basel-lll 9.81o/o 9 0lo/o N. A. 9.81o/o N.A. (iii) Earning per Share (EPS) a) Basic and diluted EPS before Extraordinary items (net oftax expense) for the quarter (not annualised) 8.46 (32.2s) 0.32 (28.68) 8.64 b) Basic and diluted EPS after items (net of tax expense) for the.quarter (not annualised) 8.46 (32.2s) 0.32 (28.6E) 8.64 (iv) (a) Amount of Gross NPAs 7l l80l 854550 296382 7l I 801 296382 (b) Amount ofNet NPAs 4664fi 562996 196998 466411 196998 (c) Percentage ofGross NPA 10.47% 10.82o/o 4.25o/o 10.47o/o 4.25o/o ofNet NPA 7.18% 7.44o/o 2.87% 7.tE% 2.87% Return on Assets 1.52% -3.92% 0.12o/o -0.99o/o 0.38o/o 1t Public Shareholding No. ofshares 66,578,299 66.578.299 66,578,299 66,578,299 66,578,299 Percentage of t2.N% 12.00o/o 17.77o/o 12.00% 17 .77o/o l9 Promoters and

No.ofshares Nil NiI Nit Nil Nil Percentage a % ofthe total of promoter Nil Nit Nil NiI Nit promoter

Percentage ofshare (as a ofthe total share ofthe Nil NiI Nil Nil Nit

b) Non-encumbered No. of 488,t69,792 488,t69,792 308, l 28,640 488,169,792 308, I 28,640 Percentage shares(as a 7o total shareholding promoter t00% 100% l00o/o t00% 100% promoter group) Percentage ofshare (asa%ofthetotal capitrl of the 88.00% 8E.00% 82.23% 88,00% 8223% company)

Accountanh

F - 114 UNITED BANK OF INDIA KOLKATA

Statement of Assets & Liabilities as on 31st March,z0l4

(Rs. in lacs)

CAPITAL & LIABILITIES As on 31.03.2014 As on 31.03.2013

Capital 135475 117471

Reserves & Surplus 392791 470901

Deposits 11150971 1 00651 54

Borrowings 446023 494270

Other Liabilities and Provisions 385235 313715

Total: 12510495 11461511

ASSETS As on 31.03.2014 As on 31.03.2013

Cash and balances with Reserve Bank of lndia 626978 384661 Balances with Banks and

Money at Call and Short Notice 454206 514195 lnvestments 4487634 3346340

Advances 6576751 6890866

Fixed Assets 93874 85705

Other Assets 271052 239744 Total : 12510495 11461511

F - 115 Part A: Business Segments

Quarter Ended Year Ended

31.03.2014 31.12.2013 31.03.2013 3,^.o3.20L4 31.03.2013

l.Segment Revenue:

al r reasury upe 86316 75880 75845 326468 27899L b) Corporate/Wholesale Banking L28325 165100 L2696L 577605 510149 _clRetail Bglking 85916 52907 58416 254386 226672 oioitrei sankins operation s072 4766 4215 L7777 t2927 e)Unallocated lncome L749 26 2280 4440 3067 Total 307378 298679 268717 1180516 1031806 Rgy-en9e 0 0 0 0 0 Total 307378 29A679 268717 1180616 1031806 2.Sesment Results:Profi t/(Loss) a)Treasury Operations -20508 2368 28360 9409 39115 b)Corporate/Wholesale Banking 87486 50363 28072 2L7362 L43426 c)Retail Banking 44670 21971 9147 95449 92L55 d)Other Banking operation 5073 4765 4275 177L7 12927 Total tL672t 79467 69794 333937 287623 Less:Unallocable Expenses net offunallocable income (624261 (24esel (t87ztl (1277631 __.G3q1A Total s4295 54508 sto73 206174 204991 ProyigiqQ!o4t!nge4cies 26670 185783 75880 361796 175939 Profit Before Tax 27625 (t3tz7s) (2+8tU7) (1SS62Z) 29052 Tax Expense (te312) (7467) (27e25') (34277') (10138) PAT 46937 (123808) 3118 (t2t34s) 39190 3.Capital Employed a)Treasury Operations 189561 217153 203279 189561 203279 b)Corporate/Wholesale Banking 177273 262030 254445 L77273 254445 c)Retail Banking 76455 93370 92966 76455 92966 d)Unallocated 84976 20275 37682 84976 37682 Total 528265 592A28 sa8372 52A265 5AA372

Note:- The Bank has only one Geographical Segmcnt i.e Domestic Segment

F - 116 NOTES

7. The above financial results have been reviewed by the Audit Commlttee of the Board and approved by'the Board of Directors of the Bank in their meetings held on sth May 2014 and have been subjected to audit by the Statutory Central Auditors'ofthe Bank.

2. There has been no material change in the Accounting Policies followed during the quarter/year ended 31't March 2Ol4 as compared to those followed in the preceding financial year ended 31st March 2013.

3. The figures of quarter ended 31't March 2OL4 are the balancing figures between audited figures in respect of the full financial year and year-to-date figures upto the period ended 31't December 2013.

4. The financial results for the quarter/year ended 31't March 2014 have been arrived at after considering provisions for Non-Performing Assets(Loans), Standard Assets, Restructured Advances and Depreciation on lnvestments on the basis of prudential norms issued by the Reserve Bank of lndia(RBl).

5. ln terms of the provisions of circular DBOD.No.BP.BC.8O|2L.4.O78/2OLO-L1 dated 9th February 2011 issued by RBI on reopening of Pension Option to employees of Public Sector Banks and enhancement in Gratuity Limits, <447.30 crores is being amortised over a period of 5 years with effect from financial year 2010-11. Accordingly, and amount of 722.37 crores for the quarter ended 31't March 2014 (<89.46 crores for the whole year) has been charged to Profit and Loss Account. The unamortised liability as at 31't March 2014 stands at {89.46 crores.

6. Pending settlement of the proposed wage revision effective from November 2072, an adhoc provision of T170 crores is held as at 31't March 2014, which includes {30 crores for the quarter ended 31't March 2014.

7 ln terms of RBI circular DBOD.No.BP.Bc.88/27.06.2o7.2072-13 dated 2g.03.2013 Banks have been advised to disclose capital Adequacy Ratio computed under Basel ill regulations from the quarter ended 3oth June 2013. Accordingly, corresponding details for the pr"riou, year/periods are not furnished.

8. During the year, Government of lndia has su[scribed to 1g00 ,4L,752 Equity shares of t10/- each of the Bank at a price of t38.88 (including (2g.gg) a premium of per'share aggregating to {700'00 crore through preferential allotment in accordance with regulation 76(1) of sEBl (lcDR) Regulations, 2009' The shareholders approved the issue by a special resolution at the Extraordinary General Meeting of the Bank convened for the purpose on 23d oecemier, The zorg. Bank completed the allotment on 24th December 2013.

9 During the year, the Bank has raised {5oo.o0 crores through Basel lll comptiant rier-2 bonds.

10. Pursuant to Reserve Bank of lndia's (RBl,s) Circular No.DBDO.No.Bp.BC. 77/2L.04.0L8/20t3-74 dated 20th December 2013, the Bank has created Deferred Tax Liability under on the Special Reserve section 36(1)(viii) of the tncome Tax Act, 1961. As required by the said RBt Circular, the expenditure, amo unting to {72.03 due to the creation of DTL on Special Reserve of {220.00 Crores as at 31't March 2013, previously not charged to Profit and Loss adjusted Accoun! has now been directly from the Reserves. Had this amount been charged to the profit and Loss Account in with the generally accepted principles in lnd Loss for the unt of been higher by such

AocountantE

F - 117 d 11. Pursuant to Reserve Bank of lndia's (RBl's) Circular No.DBDO.No.BP.95l2l.O4.O48/2OL3-74 dated 7th February 2014, the Bank has utilized 33% of its countercyclical/floating provisions held as at 31't March 2013. As per the said RBI Circular, an amount ot$St.Sl crores out of floating provision ofhtSl.qS crores held as at 31't March 2013 has been utilized for making specific provisions for non-performing assets, as per the poliry approved by the Board.

12. The Provision Coverage Ratio as at 31't March,2OL4is52.25o/o.

13. The number of investors' complaint received and disposed-off during the quarter ended 31't March 20L4is as under:

14. Previous period/year figures have been regrouped/reclassified wherever considered necessary.

Deepak Narang Executive Director Exec

,ffK^", General Manager & CFO

ln terms of our separate review report of even date.

M/s.Ramamoorthy(N) & Co M/s.Dinesh Mehta & Co. M/s.PCBindal&Co. M/s.SPMR&Associates Chartered Accountants. Cha rtered Accountants. Chartered Accountants. Cha rtered Accountants. FRN:002899S FRN:000220N FRN:003824N FRN:007578N

o Charteted Accountant8

Bharathi CA.Deepak --a Malhotra CA.P.C.Bindal CA.Pra . Maheshwari Partner Partner Partner Partner M.No.023837 M.No.502385 M.Nb.082683 M.No.085352

Place:Kolkata Date :5s May,2OL4.

F - 118 UNITED BANK OF INDIA KOLKATA

as 31st f,larch 2014

(Rs ln thousand)

CAPITAL & LIAB]LITIES Schedule As on 31.03.2014 As on 31.03.2013 (Audlted) (Audlted)

Capital 1 1354 ,74 ,81 1174 ,70 ,69

Reserves & Surplus 2 3927,90,61 4709,01 ,15

Deposits 3 111509,70,86 100651 ,54 ,34

Borrowinos 4 4460 ,23.61 4942,70 ,30

Other Liabilities and Provisions 5 3852 ,35,13 3137 ,14 ,83

Total : 1251U.95 .02 fi46ls.tt .31

ASSETS Schedule As on 31.03.2014 As on 31.03.2013 l: (Audited) (Audited) -- Cash and balances with Reserve Bank of lndia 6 ".':''eil6s ,tt ,tz 3846 ,61 ,36 Balances with Banks and'

Money at Call and Short Notice 7 4542,06 ,32 5141 ,94 ,46

lnvestments 8 44876,34 ,13 33/]63,40 ,17

Advances 9 65767 ,51 ,14 68908,66 ,21

Fixed Assets 10 938,73,47 857,05 ,18

Other Assets 11 2710 ,s2 ,24 2397 .43 .93

Total 125104,95 ,02 114615 ,1',| ,3',i.

Continqent Liabilities 12 9908 33 1 13137

Bills for collection 2880 71 3309 08

Pt1

F - 119 -

) This is the part of Balance Sheet as on 31.03.2014

o"fueI Executive Director 0-4 NL/^* Parvathy V Sundaram Mihir Kumar Sinha Director Director Director

lc,uvar,ry^ Renuka Muttoo Kiran B. Vadodaria Sunil Goyal Director Director Director

Pijush Kanti Ghosh Sa Pati Director Director

6h"-", GeneraPfulanager & CFO

As per our separate report of even date annexed

tt'l/s.Ramamoorthy(N)& Co M/s.Dinesh Mehta & Co. M/s.P C Bindal& Co. M/s.SPMR&Associates CharteredAccountants. CharteredAccountants. Cha rtered Accountants. Chartered Accountants. 899S N 24N 007578N

Charteted Accounlants

Bharathi lhotra dal r. Maheshwari Partn er rtn er Pa rtn er Pa rtn er M.No.023837 M.No.502386 M.No.082683 M.No.085362

Place: Kolkata Date: 5th May,2074

F - 120 r

As on 31.03.201 4 i As on 31103.2013 (Audltedl (Audlted) AUTHORISED CAPITAL' 3000 ,00 ,00 3000 .00 .00

Equity Share capltal

Porpetual Non Cummulatlve Pr€terence Sharas(PNCPS)

ISSUEO, SUBSCRIBED AND PAIO- UP CAPITAL 554748091 (Previous Year 374706939) Equity Shares of Rs. 10/- each[(including 488169792 (Prevlous Year 308126640) held by GOll 5U4 .74 .81 374 ,70 ,69

80000 (Previous Year E0000) Porpetual Non-Cumulative Preference Shares (PNCPS) of Rs. 1,00,000/- each held by GOl. 800 .00 .00 800 .00 .00 Total: 1354 ,71 ,81 1174,70 ,89

SCHEDULE 2. RESERVES A SURPLUS

As on 31.03.2014 As on 31.03.2013 (Auditedl (Auditedl t. Statutory Reaervet Opening Balance 713 ,51 ,31 615 ,53 ,70 Add: Transt€r from Profit & Loss A@ount 97 ,57 ,61 SUB.TOTAL 713 ,61 ,31 713 ,51 ,31 il. Capltal RoEerves a) Rovaluagon Reserve ODenino Balancs 624 .46 .61 640 ,73 ,89 Addition during the period/year Add/(Less): Adiustrnent during the period/year 21 75 Less : Transfer to Profit & Los3 Account (15 .59.24) (16 .47 .03) 60E .E9 .37 624 ,48 ,61 b) Ohers Op€ning Balance 1506 .49 .53 1495 ,44 ,73 Add:Transfer from Profit & Loss Account 13,04 ,80 1508,4S,53 1508 ,49 ,53 SUB-ToTAL t(a) + (b)l 2117 ,3E ,90 2132 ,9E ,14 ilt. share Premlum Opening Balance 743 .62 ,93 657 ,33 ,73 Addation during the periodrrear 519 ,95 ,88 86 ,29 ,20 SUB TOTAL 1263 ,58 ,81 743 ,62 ,93 tv. a). Revenus and Othor Rsserves Revenue Regewe Opening Balance 1118 ,88 ,77 ___!oqe_f? .s8 Less: Draw do$rn (72 ,O2,781 Add:Transfer from Profit & Loss Account (1213 ,44 ,40\ 109 ,26 ,19 SUB TOTAL (a) (166 ,58 ,41) 111E ,88 ,77 b). lnvestmont Reserva Account Opening Balance Less: Ad.iustment during the period/year suB ToTAL (b) SUB-TOTAL I(a) + (bl fi66 ,5E ,4r) 1118 ,88 ,77 v. Balance ln Proflt & Los! Account TOIAL(l+ll+lll+lv+v) 3927 ,90 ,61 4709,01 ,15 Pt2

F - 121 'j'

SCHEDULE 3. DEPOSITS --r T I I I As on 31.03.2014 As on 31.03.2013 (Audltedl (Audltod)

A t. Demand Oepostts

D From Banks 1315 .00 .93 1203 .70 .46

iD From Others 6761 .67 .33 8329.64.42

[. Savlngs Bank Dcposlts 331il,20,87 30372 ,0E ,60

l[. Term Deposlts

i) From Banks 2116 ,O2 ,07 1450 ,33 ,67 iD From Oihers 68162 ,79 ,66 59295 ,76 ,59 TOTAL 1fi509 .70 ,86 100651 .54.34

B i) Deposits of branches ln lndia 111509.70,86 't00651 .54 .34

ii) Deposits of branches outside lndia

tt1509 ,70 ,86 ,00651 ,54,34

SCHEDULE 4 - BORROWNGS lRs. ln thousand) As on 31.03.2014 As on 31.03.2013 (Audited) {Audited}

t. Borrowlnos ln lndla

i) Reserve Bank of lndia 326 ,57 ,00 ii) Other Banks

iii) Olher lnstitutions & Agencies # 4040 .83 .11 3365 .18 .64

[. Borrowlngs outslde lndla 419 ,40 ,50 1250 ,94 ,66

TOTAL 4/60,23,61 4942 ,70 ,30

Secured borrowinqs induded in l&ll above 326 .57 .00

f hduding Subordinated Debts for T16, ll Capital. 2225,OO,OO 1725 ,00 ,00

f lncludlng lPDl for Tler I Caplal. 300 .00 .00 300 .00 .00

Amottfibtill

F - 122 SCHEDULE 5 - OTHER LIABILITIES AND PROVISIONS (Rs. ln thousandl As on 3r.03.2014 As on 31.03.2013 I I (Audltedl (Auditedl

t. Bills Payable 372 .98 .77 394 .27 .24 [. lnter-Offi ce Adlustments (net) 160 .72 .56 20 .19 .55 llt. lnterest accrued 993 ,78 ,E9 470 ,17 ,30 tv Continoenl Provisions against Strandard Assets 7U.27 .OO 533 .51 .00 v, Defened Tax Liability (net) vl. Proposed Dividend (indudins Dividend Tax) 't71 .61 .82 vlr. Others (including provisions) 1590 .57 .91 1547 .37 .92

TOTAL 3852 ,35 ,13 3137 .14 .E3

SCHEDULE 6. CASH & BALANCES WTH RESERVE BANK OF INOIA (Rs. ln thousand) As on 31.03.2014 As on 31.03.2013 (Audltedl {Audltedl t. Cash in hand (including loreign cuflency notos) 433 ,60 ,22 357 ,44 ,28 il. Balances with Reserve Bank of lndia

i) ln Curent Account 5836 .17 .50 3489 ,17 .08

iD ln Other Accounts

TOTAL: 6269 ,77 ,72 38,t6 .61 .38 SCHEDULE 7. BAI-ANCES WTH BANKS AND IIONEY AT CALL AND SHORT NOTICE (Rs. in thousand) As on 31.03.2014 As on 31.03.2013 (Audlted) (Auditedl t ln lndia -

i) Balances with Banks

a) ln Cunent Accounts 59 ,82 ,54 56 ,78 ,36

b) ln Other Deposit Accounts

iD Money at Call and Short Notice

a) Wilh Banks 4133 .39 .17 3473 ,27 ,40 b) With other lnstitutions

SUB.TOTAL 4193 ,21 ,71 3530 ,05 ,76 [. OutsidE lndla -

i) Balances with Banks

a) in Cunent Accounts 348 ,84 ,61 161't ,88 ,70

b) in Other Deposit Accounts

ii) Money at Call and Short Notice

SUB.TOTAL: 3.18 ,84,61 16'fi ,8E ,70 TOTAL 4il2,06 ,32 5141 ,94.$

Pt4

€ i )t

F - 123 i

8 . INVESTiIENTS (Rs. ln thousand) As on 31.03.2014 Ason 31.03.20{3 (Audlted) (Audlted)

t. lnvestments ln lndla (Gross) 45127 ,50 ,19 33658 .67 .75 Less : Provision for NPl, depreciation / amortisation (2s1 .16.00) n95 .27 .581 NET 1,4676.U.13 3#3,4,17

Break-up

i) Govemment Securities 35084 .(X .51 25639 .25 .61 ii) Oth6r Approved Securities 16 .43 .13 26 .38 .72

iii) Shares 280 ,22 ,20 297 .71 .97

iv) Debentures and Bonds 2077 .79 .72 2222.93 .11 v) Subsidhries and/or Joint Ventures

vi) Others (Mutual Fund, CP,CO, etc.) 7417 .E4 .57 5277 ,10 ,76 SUB.TOTAL 4E76 ,34,13 3fi3,4,17

[. tnvestment outslde lndla (GrGs) 71 Less : Provision for depreciatlon /71\ NET

Break-up

i) Govemment Securities

(includins local atthorities)

ii) Subsidiaries and/or Joint Ventures abroad

iii) Other inveslrnents

SUB-TOTAL TOrAL(r&[] M76,34,13 33&3.4,17 Pt5

F - 124 SCHEDULE 9 . ADVANCES (R!. ln thousand) A3 on 31.03.2014 As on 31.03.2013 (Audlted) (Audlted)

A i) Bills Purchased and Discounted 908 ,09 ,84 1674 ,84 ,06

ii) Cash Crsdits, Overdrafts and Loans repayable

on demand 19450 ,14 ,35 't9043.,70 ,03

iiD Term Loans 45409 .26 .S5 4E190 .12 .12

TOTAL 65767 .51 ,14 68908 ,66 .21

B. D Secured by tangible assets 59136 ,0E ,29 57582 ,70 .74 (includes advances against Book Debt)

iD Covered by Bank / Govemment Guarantees 2270 ,72 ,71 2149 ,21 .69 iii) Unsecured 4360 .80 .14 9136 .73 .78

TOTAL: 65767,6t ,14 68908 ,66 ,21

c. t. Advances in lndia

t) Priority Sector 24907 ,42 ,OO 25147 ,58 ,28

ii) Public Sec{or 5130 .45 ,00 6947 ,85 ,07

iiD Banks 327 ,21 ,00 898 ,14 .06 iv) Others 35402 ,13 ,14 35e15 ,08 ,80

SUB.TOTAL 65767 ,6't ,14 6890E ,66 ,21

[. Advances outside lndia

i) Due from Banks

ii) Due from Others

a) Bills Purchased dhd Oiscounted

b) Svndicated Loans c) Others SUB.TOTAL

roTAL(r&[) 65767 ,61 ,14 6E908 ,66 ,2r

P/6

Chrrtcrd

F - 125 SCHEOULE 10. FIXED ASSETS

As on 31.03.2014 As on 31.03.2013 (Audltedl (Auditod)

t. Preml3es (lncludlng Leasehold)

At cosu Revalued as on 31st March of preceding year 804 ,74 ,23 786 .37 .69 Revaluation during the year

Additions durino the year 53 .47 .50 19 .80 .25

EiE ,21 ,73 E06 .17 .94 Less:Oeductions durins the year ( .0) fi .43 .71\ Depreciation to dale (170 .19 ,56) fiu.41 .751 SUB.TOTAL 68E .02 .17 650 '32 ',|8 il. Capttal Work.ln-P.ogress t5 .16 .08 36 ,28 .87

[]. other Fked Asset! (lncludlng Fumlture & Flxture)

At cost as on 31st March of preceding year 675 ,S5 .15 613 ,83.10 Additions during the year 116 .04 .58 69 .70 .'t1

791 .99 .73 683 .53 .21

Less:Deduclions during the year (8 ,79 ,1e) (7 ,58 ,06)

Depreciation to date (571 .67 .96) (521 .2s .15) SUB.TOTAL 217 ,s2,s8 15{.70 .00 tv, lntanglble Assets

Software

At cost as on 31 st March of preceding year 70,06,u 51 ,30 ,33

Additions during the year 24 ,20 ,49 1E ,76 ,51

94.27 .33 70 .06 .84 Less:Deduclions dudng lhe year

Amortisation to date (70 .24 .69) (54 .33 ,01)

SUB.TOTAL 24,O2,64 't5 ,73 ,83

TOTAL:(l+ll+lll+lV) 938 ,73 ,47 857 ,05 ,1E

F - 126 i

SCHEDULE II . OTHER ASSETS

I in

As on 31.03.20{4 As on 31.03.2013 (Audlted) (Audlted)

t. lnter€ffice Adjustments (net)

lt. lnlerest accrued s78 .15 .82 788 ,16 ,73

l[. Tax Paid in advanc€y'Tax deduded at source (Net) 557 ,14 ,78 733 .63 ,55 lV. Stationery and Stamos 11 ,12 ,60 5 ,60 ,42 v. Non-bankinq assets acauired in satisfaclion ot claims vt. Defened Tax Assets (net) 461 .72 .00 118 .95 .00

vll. Others 702 .37 .04 751 .O8 .23 2710 .52.24 2397 .43.93

SCHEOULE 12. CONTINGENT LIABIUTIES (Rs, ln thoGandl

As on 31.03.20{4 AE oa 3{.03.2013 (Audlted) (Audltsdl

L Claims aoainst the bank not ackno,vledoed as debts 3 .87 .15 5 .51 .12

t1. Liability for paruy paid investrnents 33 ,20 ,9E 44 ,32 ,63 il. Liability on account of o{Jtslanding forward exchanoe contracts 5012 .06 .27 7180 .52 .37 tv. Guarantees givefl on behalf of constituents (net of cash margin)

a) ln lndia 2517 .93 .87 1E15 ,61 ,76

b) Outside lndia 1038 .EE .69 2119 .75 ,U

c) BG invoked but not paid (ln lndia) 4 ,70 ,26 4 ,77 ,18 v Acceptances, endorsements and other obligations (net of cash marqin) 1276 .t4 .07 1908 ,24 ,E2

vl. Other items for which the Bank ls

contingenuy liable 21 .11 .72 58 ,91 ,86

TOTAL: 9908 ,33 ,01 13137 .67 .38

PIE

F - 127 UNITED BANK OF INDIA KOLKATA Profit & Loss Account for the ended 31st March 2014

(Rs ln thousandl Schedule Year Ended 31.03.2014 Year Ended 31.03.2013

t. INCOME

lnterest Earned 13 10599 ,29 ,03 9251 ,49 ,',t5 Other lncome 14 1206 ,87 ,',to 1066 ,56 ,55

TOTAL: 11806 ,16 ,13 10318 ,05 ,70

[. EXPENDITURE

lnterest Expended 15 8036 ,47 ,',tz 67U,22,86

Operating Expenses 16 1707 .94 .61 1503 .91 ,52 Provisions and Contingencies 3275 ,18 ,80 1658 ,00 ,90

TOTAL 13019 ,60 ,53 9926 ,15 ,28 il. PROFIT

Net Profit for the yearlperiod (1213 ,44 ,4O) 391 ,90 ,42

TOTAL: (1213 ,44,4O1 391 ,go ,42 lv APPROPRIATIONS:

Transfer to Statutory Reserve 97 ,97 ,61

Transfer to Capital Reserve 13 ,04 ,80

Proposed Dividend :

Equity 78 ,68 ,85

PNCPS 68 ,00 ,00

Tax on Dividend 24 ,92 ,97

Transfer to Revenue Reserve (1213 .44 .40\ 109,26,19 Balance carried forward to Balance Sheet

TOTAL: (1213 ,4,401 391 ,90 ,42

Basic & Diluted Earning per Share (Rs.) (28.68) 8.64 Pt8

F - 128 SCHEDULE 13. INTEREST EARNED tn

Year Ended 31.O3.2O14 Year Ended 31.03.2013

t. lnterest / Discount on Advances/Bills 7816 ,56 ,02 6899 ,27,50 !t. lncome on lnvestments 2597 ,61 ,73 2259 ,30,65 il. lnterest on balances with Reserve Bank of

lndia and other lnter-Bank Funds 141 ,08.58 63 ,48 ,69 tv. Others 44 .02.70 29 .42.31

TOTAL : 10599,29,03 92s1 ,49.15

SCHEDULE 14. OTHER INCOME

Year Ended 31.03.2014 Year Ended 31.03.2013

l. Commission, Exchanqe and Brokerage 202,46,55 195 ,07 ,53

[. Profit on sale of lnvestments 534,51 ,54 478 .17 .12

Less : Loss on-sale of lnvestments (8 53 ,70) (11 05 ,88)

Iil. Profit on revaluation of lnvestments

Less : Loss on revaluation of lnvestments

tv Profit on sale of land, buildings and other assets ,5 ,97 108,42

Less : Loss on sale of land, buildings and other assets ( 1 ,81) (16 ,20)

v Profit on exchange transactions 1s5 ,97 ,93 107 ,97 ,56

Less : Loss on exchange transactions

vt. lncome earned by way of dividend etc., from subsidiaries,

companies and/or joint ventures abroadl in lndia vlr. Miscellaneous lncome 322,40 ,62 295,48,00

TOTAL: I 1206,87 ,10 1066 ,56 ,55 Pt9

F - 129 SCHEDULE 15 - INTEREST EXPENDED

Year Ended 31.03.2014 Year Ended 31.03.2013

t. lnterest on Deposits 7569 ,14 ,43 6231 ,O7 ,51 il. lnterest on Reserve Bank of lndia/inter-Bank borrowings 94 ,12,18 149 ,69,14

ilt. Others 373 ,20 ,51 383 ,46 ,21 TOTAL: 8036,47 ,12 6764,22,86

SCHEDULE 16 . OPERATING EXPENSES

Year Ended 31.03.20,14 Year Ended 31.03.2013

t. Payments to and Provisions for Employees 1014,U,35 932 ,51 ,84

[. Rent, Taxes and Lighting 125,52.25 109 ,23 ,69

I ll. Printinq and Stationery 30,00,85 23,44 .90 tv. Advertisement and Publicity 10,45,15 14 ,38 ,82 v Depreciation on Bank's property 84 ,77 ,90 77 ,29 ,08

Less : Transfer from Revaluation Reserve (15 ,59 ,24\ (16 ,47 ,03)

69.18 ,66 60 ,82 ,05 vt. Directors' fees, allowances and expenses 1 ,99 ,92 1 ,64 ,49 vil. 14 ,59 ,54 '13 ,19 ,29 (including branch auditors' fees and expenses) vill. Law Charges 5,25 ,20 5 ,01 ,13 tx. Postage, Telegrams, Telephones etc. 23 ,19 ,99 18 ,27 ,14 x. Repairs and Maintenance 17 ,70 ,59 15 ,58 ,38 xt. lnsurance 'l't1 ,18 ,22 82 ,16 ,30 xil. qqq_efpglq,trr"_ 284 ,49,89 227 ,63,49 TOTAL: 1707 ,94,61 1503 ,91 ,52 Pt10

F - 130 This is the part of Profit and Loss Account as on 3L.O3.2O14

D arang Executive Director

U,^, l*- l^.-'- Parvathy V Sundaram Mihir Kumar Sinha Director Director Director

lc"*"'* Renuka Muttoo Kiran B. Vadodl6-ila Sunil Goyal Director Director Director

Pijush KantiGhosh Sanjib ti Director Director fu^,t General Manager & CFO

As per our separate report of even date annexed

M/s.Ramamoorthy(N)& Co M/s.Dinesh Mehta & Co. M/s.P C Bindal& Co. M/s.SPMR&Associates Chartered Accountants. Chartered Accountants. Chartered Accountants. Cha rtered Accoun ta nts. 002899S 220N 24N 578N

Chadeted

nath Bharathi Malhotra Bindal Maheshwari Partner Partner Partn er Pa rtn er M.No.023837 M.No.502385 M.No.082683 M.No.085362

Place: Kolkata Date: 5th May,20L4

F - 131 Schedule -17

SIGNIFICANT ACCOUNTING POLICIES FOR THE YEAR ENDED 31't MARCH,2OI4

1. BASIS 9F PREPARATTON OF FTNANCTAL STATEMENTS F

The accompanying financial statements are prepared on historical cofiSasis, except as otherwise stated, following the "Going Concern" concept and conform to the Generally,lpepted Accounting Principles(GAAP) in Indig applicable statutory provisions, regulatory norrns prescribed'By the Reserve Bank of India (RBI), applicable mandatory Accounting Standards (AS/Guidance Notes/ pronouncements issued by the Institute of Chartered Accountants of India (ICAD and practices prevailing in the banking industry in India.

2. USE OF ESTIMATES

3. RECOGMTION OF INCOME AI\D DPENDITTIRE

3.1 The Revenues and Expenses are accounted for on accrual basis unless otherwise stated

3.2 Income from Performing Assets is recognized on accrual basis and income from Non-Performing Assets (NPAs) is recognized on realisation. The amount realised/recovered during the year is appropriated first to income on Sub-standard Assets. Amounts realiz.edlrecovered in Doubtful and Loss Assets and Suit Filed and Decreed Accounts are first appropriated against outstanding balances.

3.3 Unrealized income on advances, classified as NPA, is reyersed.

3.4 Income from Commission (except on Government Transactions and Bancassurance), exchange, brokerage, claims, locker rent and dividend on shares are accounted for on cash basis.

3.5 Performance linked incentive to whole time directors is accounted for on cash basis.

4, TRANSACTIONS INVOLVING FOREIGN EXCHANGE

4.1. MonetaryAssets.and Liabilities, excluding outstanding Forward Exchange Conhacts in eactr currency, are revalued at the Balance Sheet date at closing spot rates announced by the Foreign Exchange Dealers Association of India (FEDAI). Outstanding forward exchange contracts are revalued at the forward rates announced by FEDAI. The difference between the revalued amount and the contracted amount is recognized as profit or loss, as the case may be.

4.2. Income and expenditure items are recorded at the exchange rates prevailing on the date of transaction.

Acceptances, endorsements 4.3. and other obligations including guarantees are carried at the closing spot rates announced by FEDAI.

4'4' Representative Office of the Bank has been classified as 'Integral Foreign Operation, in accordance with AS- I I on "The Effects of Changes in Foreign Exchange Rates,,.

4.5. Foreign currency transactions relating to 'Integral Foreign Operation, are recorded on initial recognition in the reporting currency by applying to the foreign currency amoun! the exchange rate betweon the reporling currency and the foreign currency on the date of hansaction.

Page 1

F - 132 ,4.6. Foreign currency non-monetary items that are carried in terms of historical costs are reported using the exchange rates on the dates oftransactions.

5. NYVESTMENTS 5.1 For the purpose of disclosure in the Financial Statements, the investments are classified into six categories as stipulated in Form A of the third schedule to the Banking Regulation Act, 1949 as under: a) bovernmentSecurities b) Other approved securities c) Shares d) Debentures and Bonds e) Subsidiaries/JointVentures 0 Others 5.2 The Investment portfolio of the Bank is categorized, in accordance with the RBI guidelines, into: a) "Held to Maturity" comprising lnvestments acquired with an intention to hold till maturity; b) "Held for Trading" comprising Investments acquired with an intention to hade; c) "Available for Sale" comprising Investments not covered by (a) and (b) above.

Classification of an investment is done at the time of acquisition.

5.4. The Bank follows "settlement Date" for accounting of investment transactions. Investments are valued as per RBV Fixed Income Money Market & Derivatives Association (FIMMDA) guidelines, on the following basis: a) "Held to Maturity" (HTM) i) Investments under "HTM" category are carried at acquisition cost. Wherever the book value is higher than the face value/redemption value, the premium is amortized over the remaining period to maturity. ii) Investments in Rural Infrastructure Development Fund, Short Term Co-operative Rural Credit Refinance Fund, Medium Small Micro Enterprise Refinance Fund - Small Industries Development Bank of India Limited, Medium Small Micro Enterprise Risk Capital Fund - Small Industries Development Bank of India Limited, Rural Housing Development Fund-National Housing Bank Limited, Micro Finance Development and Equity Fund - National Agricultural and Rural Development Bank Limited (classified as shares) are valued at carrying cost. iii) Investments in sponsored Regional Rural Banks are valued at carrying cost. iv) Investment in venture capital is valued at carrying cost.

b) "Held for Trading" and "Available for Sale"

a) Govt. Securities l. Central Govt. Securities At prices published by FIMMDA 2. State Govt. Securities On Yield to Maturity (YTM) basis by adding appropriate mark- u on the Base Yield Curve as FIMMDA/RBI elines b) Discounted Instruments (Treasury At carrying cost Bills, Commercial Paper and Qqlifigate of Deposits) c) Bonds and Debentures On YTM basis by adding appropriate Credit Spread on the Base Y curve as FMMDA/RBI d) At market lt ffi.*ffi than one Page2

F - 133 year old), otherwise at Rel/- per company e) Preference Shares At market price, if quoted or YTM basis by adding appropriate mark-up on the base yield curve as per FIMMDA/RBI guidelines. 0 Security Receipt/Venture Capital At Net Asset Value (NAV) as per FIMMDA/RBI guidelines Fund i s) Mutual Funds At Market Price, if Ouote&and at re-purchase priceAIAV if unquoted.

(6LlFrT" 5.5. Shifting of securities from and to category is done in u""#run"" with RBI guidelines with the approval of Board of Directors.

5.6. The individual scrip in the "[IFT" and "AFS" category are marked to market at monthly or at more frequent intervals, if required. Under each category, net depreciation, if any, is provided for while net appreciation, if any, is ignored.

5.7 . lncome from Zerc Coupon Bonds, being the difference between cost and face value, is recognized on a time proportion basis.

5.8. Profit or Loss on sale of investments in any category is taken to Profit and Loss Account. In case of profit on *Capital sale of lnvestments in "HTM" category, an equivalent amount is appropriated to Reserve Accounf' at the end of the year. For calculating the surplus / deficit on sale of securities, weighted average method is adopted.

5.9. For the purpose of calculating holding period in case of "HFT" category, First in First out G[FO) method is applied.

5.10. Investments are subject to appropriate provisioning/ de-recognition of income, in line with the prudential norms of RBI for "Non Performing Investment" (NPI) Classification. The depreciatior/provision in respect of non-performing securities is not set off against the appreciation in respect of the other performing securities in accordance with RBI guidelines.

5.1 l. The derivatives transactions are undertaken for hading or hedging purposes and valuation has been done in accordanc'e with RBI guidelines.

5.12. The Bank has adopted the Accounting Procedure prescribed by the RBI for accounting of Repo and Reverse Repo transactions.

6. CIAL TS COMP

6.1 In the case of financial assets sold to ARC / SC, if the sale is for a value higher than the Net Book Value O[BV), the excess provision is not reversed but utilized for meeting any shortfall on account of sale of other financial assets to ARC/SC. If the sale is at a price below the NBV the shortfall after adjusting the available surplus if any, is debited to the Profit and Loss Account.

6.3 Th-e Security Receipts are classified as Non-SLR Investment in the books of the Bank and accordingly the valuation, classification and other norms prescribed by RBI in respect of Non-SLR Securities ur. upptiiuUl".

6.4 case In of written off Assets sold to ARC/ SC, the cash proceeds are recognized as income.

Page 3

F - 134 I 7 ADVANCES

Advances are classified as Performing / Non-Performing Assets and provisions thereon are made in ccnformity with the prudential norrns prescribed by RBI.

7.2 Ncn-performing assets are stated net of provisions and claims received fgm credit guarantee irltitotionr.

7.3 Provision held for performing assets is shown under the head "Other and Provisions". lpbilities 7.4. R-ostructuring of Advances and provisioning thereof have been made as per RBI guidelines.

8. FIXED ASSETS AND DEPRECIATION

8.2 Leasehold assets are amortized over the period of lease

8.3. Depreciation on assets other than computers and Automated Teller Machines (ATMs) is provided for under written down value method, in the manner and as per the rates prescribed under Schedule XIV to the Companies Act, 1956 after rounding offto next absolute number. Depreciation on the revalued portion of the assets is adjusted from "Revaluation Reserye".

8.4. Depreciation on computers, ATMs and amortization of software are accounted for on straightJine method @ 33.33% on pro rata basis from the date of acquisition as per RBI guidelines.

8.5. Impairment Losses, if any, on Fixed Assets (including revalued assets) are recognized in accordance with AS -28 on "Impairment of Assets".

9. ACCOT'NTING FOR GOVERNMENT GRANTS

In accordance with AS-12 Government GrantVsubsidies received is presented in the Balance Sheet by showing the Grant/Subsidy as a deduction from the Gross Value of the assets concerned in arriving at the book value. The granVsubsidy is recognized in the Profit & Loss Account over the useful life of the depreciable assets by way of reduced depreciation charged.

Government Grant subsidies received, of revenue nature, is recognized in the Profit & Loss Account by :educing the related cost if received during the same financial year otherwise, the same is shown under "Other Income" if received after the close of the relevant financial year.

10. EMPLOYEE BENEFITS l0.l Employee Benefits are recognized in accordance with AS-15 on "Employee Benef,rts"

10.2 Short term employee benefits namely Leave Fare Concession and Medical Aid are measured at cost.

10.3 Long term employee benefits and post retirement benefits namely gratuity, pension and leave encashment are measured on a discounted basis under the Projected Unit Credit Method on the basis of annual third party actuarial valuations.

10.4 In respect of employees who have opted for Provident Fund Scheme, matching contribution is made to a recognized Trust. For others who have opted for Pension Scheme, contribution to Pension Fund is based on actuarial valuation.

10.5 Long Term employee benefits in the Balance the present the obligation for cost, if any, by the assets, and to the and

Page 4

F - 135 -- b**..-**m*'.**;==q+:; : :::''

!i '

benefits' is recognized including pension term employee benefits' in resPect of long The transitional liabilitY period offive Years i line basis over a expense on straight ,lic tector Banks as an to emPloYees of Pub of Pension oPtion over a period of exPenditure on "Re-oPening amortlzeo In terms of RBI circular, Regulatory Tredtment" .lgbeing 10.7 GratuitY limits-Prudential enhancement of and li* five Years' a# for 11. TAXATION AS-22 on "Accounting tn accordance with and deferred taxes made for both current Provision for tax is Taxes on Income"'

l3 NET PROFIT for the following: arrived at after accounting The Net Prpfit is

Provision for Taxation a) Assets r--+i^l n^ffis of RBI ;i ;;;;i;i." on Standard -:^l:^1on investments as pe ;iProvisionfo'UiesandDepreci"ll:l*investmentsasperprudentialnormsofprovistons' :i tji#""tr and necessary

Page 5

F - 136 Schedule - 18:

Notes Forming Part of the Accounts for the Year Ended 31"t March2Ll4

1. Confirmation/reconciliation of balances with foreign branches, SBI and other Banks, NOSTRO Accounts, Drafts Payable, Clearing Difference, Inter office adiustments, etc. is in progress on an on-going basis. Pending final clearance/adjustment of the above, the overall impact, if any, on the Financial Statements, in the opinion of the management, is not likely to be significant. ,

2.1 Capital

i) Common Equity Tier I Capital Ratio (7o) 6.54 NA NA ii) Tier I capital ratro (%) 6.54 7.26 8.40

iii) Tier 2 Capital (%o) 3.27 4.20 3.26 iv) Total Capial ratio (CRAR) (7d 9.81 lt.46 I1.66 v) Percentage of the shareholding of the Government of 88.00% 88.007o 82.23% India in the Bank's equity capital

vi) Amount of equity capital raised(( in Crores) 700.00 700.00 NIL

vii)Amount of Additional Tier I capital raised; of which Nil Nil 300 -PNCPS: .PDI

viii)Arnount of Tier 2 capital raised; of which: (( in Crores) 500.00 500.00 NIL 500.00 -Debt capital instrument: 500.00 Nil -Preference Share Capial Instruments: NiI

b) During the year, Government of India has subscribed to 1800,41,152 Equity Shares of (10/- each of the Barrk at a price of (38.88 (including a premium of {28.88) per share aggregating to (700.00 crore tluough preferential allotment in accordance with regulation 76(l) of SEBI (ICDR) Regulations, 2009. The shareholders approved the issue by a special resolution at the Extraordinary General Meeting of the Bank convened for the purpose on 23'd December, 2013. The Bank completed the allotment on 24'h December 2013.

c) During the year, the Bank has raised (500.00 Crores through Basel III compliant Tier-2 bonds

'.-'...... Page 6

F - 137 L2 Investments (ln

(l) Value of Investments 45127.50 33658.69 (i) Gross Value of Investments (a) In India 45t27.50 33658.68 (b) Outside India Nil 0.01

(ii) Provision for Depreciation 251.16 t95.28 (a) In India 251.16 t95.27 @) Outside India Nil 0.01

(iii) Net Value of Investments (a) In India 44876.34 33463.40 (b) Outside India. Nil Nil

(2) Movement of provision held towards depreciation on investments (i) Opening balance 195.28 187.91 (ii) Add: Provisions made during the Year r22.04 t32.08 (iii) Less :Write- ofl Write -back of excess provision during the 66.16 r24.71 Year (iii)Closing balance 25t.16 195.28*

*Previous year figure has been restated to include NPI provision

2.2.1 Repo transactions (in face valuc terms) (ln

Securities sold under Repo i) Government securities 200.00 1500.00 327.95 0.00 (s0.00) (2600.00) (50e.1 5) (0.00)

ii)Corporate Debt Securi ties 0.00 0.00 0.00 0.00 (0 00) (0.00) (0.00) (0 00) Securities purchased under Reverse Repo i) Government securities 1.00 4781.00 680.21 1133.01 (25.00) (2600.00) (62.s3) (1 900.00)

ii)Corporate Debt Securi ties 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0 00)

Figures in brackets represent Previous Year's figures.

PageT

F - 138 2. 2.2'Npn-SLR Investment Portfolio (i) Issuer composition of Non-SLR Investments ( in crore)

(1) QI (3) @l (s) (6) fft I PSUs 1280.06 1280.06 0.00 0.00 0.00 (946.23) (946.2i) (0.00) (0.00) (0.00) 2 FIs 3062.96 3062.96 0.00 0.00 0.00 (2e6.02) (296.02) (0.00) (0.00) (0.00) J Banks 4021.80 4021.80 0.00 0.00 0.00 (170t.05) 0701.05) (0.00) (0.00) (0.00) 4 Private Corporates 1558.27 1558.27 0.00 0.00 0.00 (2085.59) (2085.59) (0.00) (0.00) (0.00) 5 Subsidiaries / 0.00 0.00 0.00 0.00 0.00 Joint Ventures (0.00) (0.00) (0.00) (0.00) (0.00) 6 Others (MF/CP/CD) t03.92 t03.92 0.00 0.00 0.00 (2957.66) (29s7.66) (0.00) (0.00) (0.00) 7 Provision held 251.16 0.00 0.00 0.00 towards (t95.28)* (0.00) (0.00) (0.00) Depreciation / NPI Total (1 to 6) - (7) 9775.85 t0027.0t 0.00 , 36.97 0.00 (779t.26) (7986.54) (0.00) (0.00) (0.00) *Previous figure has been restated to include MTM depreciation Figures in brackets represent Previous Year's figures.

Non- Non-SLR Invesfments T in crore'

Opening balance' 60.01 60.01 Addition during the Year t21.79 0.00 Reduction during the Year 0. l0 0.00 Closing balance r81.70 60.01 Total provision held 96.82 40.46

2.2.3 Sale and Transfers tolfrom Ileld to Maturity (HTivt) Category

(a) Securities having book value of 7 47.12 Crores @revious year: 568.33 Crores) rvas sold during the year from HTM Category.

(b) At the beginning of the year (20.04.2013), rvith the approval of the Board of Direoors, the Bauk has shifted securities having face value of( 453.15 Crores (Previous year { 1476.00) at lower ofbook value or ntarket value, scrip wise, from Available For Sale (AFS) to Held to Maturity (HTM) Category and securities having face value of (1919.25 Crores @revious year ( 319.79) from HTM to AFS in accordance with RBI Guidelines in this regard.

(c) On the basis of special dispensation being allowed by the reserve Bank of India vide its circular No. DBOD/BP.BC.No.4|.2I.04.l4Ll20l3-14 dated 23.08.2013, the Bank also undertook shifting of Securities for the second time on 18.09.2013 having face value of ? 6172.66 crore from AFS to HTM Category. In order to shift these securifies at market value, ( 89.00 crore was reduced frdm the Book value being the MTM loss on the date shifting.

(d) The value of sales and transfer of securities to/from HTM Category (excluding the exempted transfer) did not exceed 5% of book value of the Investment in HTM Category at the beginning of the year.

Page 8

F - 139 2.i.4 fnnsactions invotving Foreign Exchange

Monetary Assets and Liabilities, excluding outstanding Forward Exchange Contracts in each currency except currency of Bangladesh (BDT 23,05,806 equivalent INR 15.81 lacs) which is valued at notional value due to non-availability of spot rates, are revalued at the Balance Sheet date at closing spot rates announced by the Foreign Exchange Dealers Association of India (FEDAD.

2.3 Derivatives

2.3.1 Forward Rate Agreement/Interest Rate Swap T in crore

i) The notional principal of swap agreements NIL NIL ii) Losses which would be incurred if counterparties failed to fulfill their obligations under the agreements NIL NIL iii) Collateral required by the Bank upon entering into swaps iv) Concenhation of credit risk arising from the swaps NIL NIL v) The fair value of the swap book NIL NIL

23.2 Exchange Traded Interest Rate Derivatives ( in crore ,qr?&fi{{mHii-{1 i#"tffi"1.{,,}ii ,'

-i.-9+.{:u32.#rLll mrditu{a-xil (i) Notional principal amount of exchange traded interest rate NIL NIL derivatives undertaken during the Year (instrument-wise) (ii) Notional principal amount of exchange traded interest rate NIL NIL derivatives outstanding (instrument-wise) (ii i) Notional principal amount of exchange traded interest rate NIL NIL derivatives outstanding and not "highly effective" (instrument-wise) (tv Mark-to-market value of exchange traded interest rate ) NIL NIL derivatives outstanding and not "highly effective" (instrument-wise)

2.3.3 Disclosures on risk exposure in derivatives A) Oualitative Disclosures a) The Bank has undertaken derivative transactions in currency futures for trading (arbirrage) & hedging purposes.

b) Risk management organization of derivative transactions has been segregated into three functional areas namely, i) Front-Office for undertaking transaction; ii) Mid-Office for risk management and reporting; and i ii)Back-Offi ce for settlement, reconcil iation and accounting.

c) The risk measurement, reporting and monitoring function is undertaken by the mid-office. The Board of Directors is the apex body to oversee the overall risk measurement, monitoring and reporting functions of the Bank including derivative transactions through Risk Management Committee of the Board (RMCBOD). The bank also internally monitors risk management through in-house Risk management Committee, Asset Liability Committee (ALCO), Operational Risk Management Committee (ORMC) and lnternal Commiffee on Investment (IC[).

d) of under hedge items for mitigating risk derivative ln Board Policy. are

9 F - 140 covered with counter party banks, on back to back basis for identical amounts and tenure and the bank does not carry rnarket risk for such transactions. However, during the year under review, bank has not used any derivative product to hedge its own portfolio.

e) The Integrated Treasury Policy prescribes accounting for hedge and non-hedge transactions, income recogrrition and valuation procedure for outstanding contracts. The income reoognition is done as per AS-II ou "The Effects of changes in Foreign exchange Rates" and the guidelines issued by RBI / FEDAI from time to time. The integrated Treasury Policy also prescribes various limits such as Client Level Linrits, Trading Member Level Limits, Net Open Position Limits for credit risk mitigation.

B) Quantitative Disclosures tn crore

(i) Derivatives (Notional Principal Amount) NIL NIL NIL NIL a) For hedging NIL NIL NIL ML b) For trading NIL NIL NIL ML (ii) lv{arked to ldarket Positions (l) NIL NIL NIL NIL a) Asset (+) NIL ML NIL NIL b) Liability (-) NIL NIL NIL NIL (iii) Credit Exposure (2) NIL NIL NIL NIL (iv) Likely impact ofone percentage change in NIL ML NIL NIL interest rate (100*PV0l ) a) on hedging derivatives NIL NIL NIL ML b) on trading derivatives NIL ML NIL NIL (v) lv{aximum and Minimum of 100*PV0l NIL NIL NIL NIL observed during the Year a) on hedging NIL ML NIL NIL b) on trading NIL ML NIL NIL

2.4 Asset Quality 2.4. I Non-Performing Assets (rn

i) Net NPAs to Net Advances (%) 7.18% 2.87% ii) Movement of NPAs (Gross) a) Operung Balance 2963.82 2t76.42 b) Addition during the Year 8007.30 2484.84 c) Reduction during the Year 3853. I I t697.44 d) Closing Balance 7l 18.01 2963.82 iii) Movement of Net NPAs

a) Opening Balance r 969.98 l 075.55 b) Addidon during the Year 6065.87 1497.88 c) Reduction during the Year 337t.74 603.45 d) Closing Balance 46r,4.n I 969.98

iv) Movernent of provisions for NpAs (excluding provisions on standard assets) a) Opening Balance 971.93 1055.47 year b) hovisions made during the 1908.68 10r 0.45 c) Write offlwrite back of excess provision 481.37 1093.99', d) Closing Balance 2399.24 97t.93

"" Page 1.0

F - 141 .4.2 Particulars of Accounts Restr.uctuled

No. of 20 3 2 U 25 1086 419 Yt62 0 3267 565 r I 186 4852 0 t 1689 6757 1608 66 16 0 14981 Restrucilred borrowers Accounts as on Amount I April of the 53 6 0 72 I 435 2026 0 3672 6158 1223 6087 0 13468 7422 t67 | 8l 19 0 t72r2 FY outstanding l3 l2l (Opening figures)* Provision thereon 1550.3 6.82 27.31 0 t64.46 t54.il r1.72 72.48 0 238.U 2212.13 334.73 124.49 0 2671.35 39 17. I 413.27 224.28 0 4554.65 No. of t28.42 6.31 0 0 t34.73 1.55 0.34 3.91 0 5.8 '12.73 1.05 3.46 0 77.24 202.7 7.7 7.37 0 borrowers 2t7.77

Fresh Amount 9 I I U ll 35 I 2 0 38 35 3 5 I 44 79 5 8 I 93 2 restructuring outstanding during the year 0 0 Provision 1530.73 31.65 27.67 0 r590.05 66.55 10.4I 2.& 0 79.36 567.02 10.01 26.25 @3.3r 2164.30 52.07 56.32 2272.72 thereon 0 0 3 3 No. of 174.08 borrowers 0 0 0 174.08 t.7 t 0.0s 0.02 0 1.78 1.68 0.05 0.01 0 r.74 177 A7 0.t 0.03 0 177.60 Upgradation to restructured Amount 0 0 0 0 0 -8 -6 0 0 92 47 45 0 0 106 -55 -51 0 0 3 standard outstanding l4 category during the FY Provision 0 0 0 -0.08 -2.31 thereon 0 0 0.7 4.62" 0 0 8.51 4.2 0 0 9.21 4.82 -2.39 0 0

Restrucurred standard advances which 4 No. of n cease to attract borrowers 0 0 0 I I I I higher provisioning

Page 11 F - 142 and / or additional risk weight at the Amount end ofthe FY 0 0 lt 0 73.8 r 73.81 73.8I 73.81 o!tstanding and hence need not be shown restrucfured standard advances at the Provision 0 0 0 0 I 1.52 I r.52 r1.52 11.52 beginning of the thereon next FY No. of -9 5 6 0 0 -595 485 108 2 0 -2638 l75l 886 I 0 -3242 2239 1000 3 0 borrowers Down- 0 0 0 gradations of Amount 493.8 -600.76 106,9 0 0 -70.26 4t.82 28.43 0 - 181.63 63.58 r r8.02 0 -852.65 599.26 253.35 0 5 restructured outstanding 6 0 0 0 accounts during I 3 4 the FY Provision 44.42 24.42 0 0 -5.67 5. 13 0.54 0 0 -30.62 30.05 0.57 0 0 thereon 0 0 {.53 0.5 0.03 0

No. of J 0 I 0 4 83 344 0 608 950 23t 736 0 19r7 I 134 314 l08l 0 2529 borrowers l8t Write-offs of 0 0 0 0 rcstructurcd Amount 6 26.79 7.32 26.s3 60.64 r6.04 4.64 8.05 28.74 278.78 10.4r 34.77 324.01 32t.61 22.37 69.35 4t3.39 accounts during outstanding 0 0 0 0 the FY 0 I 5 6 Provision 0.12 0 0 0 0.12 0.08 0.1 0.14 0 0.33 0.06 0.32 0 0.65 0.26 0.38 0.46 0 Ll thereon I 0.n No. of 2l J 9 0 33 493 2 2718 2398 1805 5599 6 9808 2813 2301 7437 8 12559 borrowers 394 r829 Rcstnrctured 4 4 0 0 Accounts.as on 3 3 Amount 503.0 103.2 7 March 3l of the 2473.91 206.20 3 r83. 19 t23.20 50.20 276.6 2259.44 72.40 50520 2880.30 4856.55 625.68 814.65 6340. l5 outstanding 8 0 5 0 FY (closing 2 ) 0 I frgures)* 6 7 Provision 243.42 60.14 7.67 0 2.23 1.68 0 4.47 r r7.51 3.M 0 t26.59 363.16 65.94 13.19 0 442.29 thereon 3r 123 0.56 5.4

+ Eeluding th. figw€ of St a&rd Rc6tructur.

[. The abovc disclosures, including sacrifice, are as coopilcd atrd csd.6cd by fte Balt's MaDagement

2. Thc qurntum of€cononio sdorificr during thc ycar @ the testructuted assats has be€n calortrted by th€NPV Mdl|od as on 31.8.2014 for Standard Assets of {10 lscs and above and for NPA of {t crore atrd abo\rc. For 6e remaidng asscs, €conomic sa.|Ific€ hss bee! plovided @ 5% of ousl8nding balance.

Page 12 F - 143 t t 2.4.3 Details of financial assets sold to Securitization I Reconstruction Com;rany for Asset Reconstruction { in crore

(i) No. of accounts NIL NIL (ii) Aggregate value (net of provisions) of accounts sold to SC/RC NIL NIL (iii) Aggre gate consideration NIL NIL (iv) Additional consideration realized in respect of accounts transferred in earlier years NIL NIL (v) Aggregate gairl(oss) over net book value NIL NIL

2.4.4 Details of Non-performing financial assets purchased / sold A) Details ofNon-performing financial assets purchased (ln

l. (a) No. of accounts purchased during the Year NIL NIL (b) Aggregate Outstanding NIL NIL

2. (a) Of these, number of accounts restructured during the Year NIL NIL

(b) Aggregate Outstanding NIL NIL

B) Details ofNon-performing financial assets sold (ln

L No. of accounts sold Nil T6

2. Aggr egate Outstandin g Nil 39. l8

3. Aggregate consideration received Nil 24.4t

2.4.5 Provision on Standard Assets ( in crore'

Provision towards Standard Assets 734.27 533.51

..... page 13

F - 144 2.5 Business Ratios

(D Interest Income as a percentage to Working Funds 8.66yo 8.89Y"

(ii) Non-interest income as a percentage to Working Funds 0.99% t.03%

(iii) Operating Profit as a percentage to Working Funds 1.69% l.97Yo

(iv) Return on Assets (0.99y,) 0.38Yo

(v) Business (Deposits plus advances) per employee (( in Crore) t0.67% 10.83

(vi) Profit/(Loss) per employee ( ( in Lacs) (7.3s) 2.53

""'.'.-... Page 14

F - 145 2.6 Asset Liability Management of ccrtsin of Assets and Liabilities ( t in crore

1088.% 1756.68 236t.t7 1642.60 9529.99 10174.61 t3375.27 232s5.s3 I l2l6.l9 37008.71 1115(D.71 Deposits (e4e.20) (r72t.74) (19s6.64) (2076.s3) (10349.ss) (s479.16) (10s89.65) (18449.62) (10414.98) - (38664.46) (1006s1.s4)

456. I 5 3828.54 166.60 266.85 25&.28 442t.24 2%2.2'l 26414.20 tt576.72 13170.25 65767.L0 Advances (289.62) (4233.96) (7s8.74) (1r4r.42) (s988.72) (s138.2s) (40e3.96) (261 86. l3) (9692.07) (l 138s.80) (68908.6A

0.00 269.48 0.00 1322.89 3586.98 3982.28 4833.65 6845.1 I 4394.71 rgut.22 44876.34 Investments (0.00) (279.7s) (1 3 1 .41) (l80.er ) (16s0.82) (1468.3s) (777.79) (4s93.30) (3016.4s) (2t362.62) (33463.40)

0.00 2.21 0.00 0.00 0.00 629.82 355.4I 1280.% 604.31 1587.53 4450.U Borrowings (0.00) (0.3s) (0.00) (0.00) (1167.70) (436.5s) (296.42) (1078.19) (613.4r) (13s0.08) (4e42.70)

Foreign 272.83 1216.45 230.47 89.72 971.5t 752.34 79.34 t7.95 4.70 0.00 3635.31 Currency Assets (1694.70) (s46.2s) (36.00) (e6.2 r) (6303.74) (3112.77) (1088.81) (0.00) (0.00) (1s.47) (l28e3.eo

Foreign 573.44 789.54 326.87 t24.43 1018.42 722.02 u.54 0.00 0.00 r7.20 3636.46 Curreucy Liabilities (6.es) (r972.6s) ( r 8e.22) (s7.01) (6472.21) (30s6.6s) (r l 19.13) (l4.el) (3.e4) (0.00) (12892.67)

The above disclosures are as compiled and certified by the Bank's Management. Figures in bracket represent Previous Year'sfigures.

Page 15

F - 146 2.7 Exposures 2.7.1 ure to Real Estate Sector { in crore a) Direct Exposure i) Residential Moftgages - Lending fully secured by mortgages on residential property that is or will be , occupied by the borrower or that is rented; 5390.78 3901.58 -of which, individual housing loans eligible for inclusion in priority sector advances 3768.67 2848.64 ii) Commercial Real Estate - Lending secured by mortgages on commercial real estates (office buildings, retail space, multi-purpose comrnercial premises, multi-family residential buildings, multi-tenanted commercial premises, industrial or warehouse space, hotels, land acquisitiorq development and construction, etc., including 679.t2 850.32 non-fund based (NFB) limits) iii) Investments in Mortgage Backed Securities (MBS) and other securitized exposures - a. Residential, b. Commercial Real Estate. NIL NIL b) Indirect Exposure NIL NIL Fund based and non-fund based exposures on National Housing Bank and Finance 2785.44 3444.40 Total Exposure to Real Estate Sector 8855.34 8196.30 (The above disclosures are as compiled and certiJied by the Bank's Management.)

2.7.2 Exposure to Capital Market (ln

(i)Direct Investments in equiry shares, bonds, convertible debenrures and units of equity-oriented mutual funds the corpus of which is not 275.90 282.33 exchsively invested in corporate debts (ii) Advances against shares / bonds / debentures or other securities or on clean NIL NIL basis to individuals for investments in shares (including IPOs IESOPs), convertible bonds, convertible debentures and units of equity-oriented mutual funds (iii)Advances for any other purposes where shares or convertible bonds or convertible debentures or ruits of equity oriented nrufual fiutds are taken as 3.6t 4.91 prinrary security (iv) Advances for any other purposes to the extent secured by the collateral security of shares or convertible bonds or convertible debentures or units of equity-oriented mutual funds i.e. where the primary security other than shares/ NIL 4.40 convertible bonds/ convertible debentures/units of equity-oriented mutual funds does not firlly cover the advances (v)Secured and unsecured advances to stock brokers and guarantees issued on behalf of stock brokers and market makers 16.42 21.57 (vi)Loans sanctioned to corporates against the security of shares/bonds/ debentures or other securities or on crean basis for meeting promoters' NIL NIL contribution to the equity of new companies in anticipation of raising

reSOUfCeS I

--.. Page 1.G

F - 147 (r,ii) Bridge loans to companies against expected equiry flows / issues (viii) Underwriting comrnitments taken up by the Bank in respect of primary NIL NIL issue of shares or convertible bonds or convertible debentures or units of NIL NIL equity oriented mutual funds (ix) Financing to stock brokers for rnargin trading NIL NIL (x) All exposures to venture capital funds (both registered and un registered) 76.9t 80.54

Total Exposure to Capital Market 372.84 393.75 (The above are as compiled and certilied by the Bank's Management.)

2.7.3 Risk Category-wise Country Exposure The Bank has analyzed its risk exposure to various countries as on 31" March, 2014 and such exposure is less than the tkeshold limit of l%o of the total assets of the Bank. ln terms of RBI guidelines, no provision is required for this exposure.

The position of risk category-wise country exposure is given below: (m

lnsignificant 455.08 0.00 2281.96 0.00 Low 36.32 0.00 722.62 0.00 Moderate 56.98 0.00 275'.94 0.00 High 0.00 0.00 0.00 0.00 Very High 0.00 0.00 0.00 0.00 Restricted 0.00 0.00 0.00 0.00 OffCredit 0.00 0.00 0.00 0.00 Total 548.38 0.00 3280.52 0.00

2.7.4 Details of Slngle Borrower Limit (SBL)/ Group Borrower Limits (GBL) exceederl by the Bank ln

lnfrastructue Ltd I ,091.94 I 175.00* 740.23

*In line with Bank's extant Lending Policy, the above breach of exposrue cei ng rvas approved by the Board of Directors' at its meeting held on 26.07.2013

2.7.5 UnsecuredAdvances in crore

Total amount of advances outstanding against charge over intangible .securities such as the 108.53 1369.78 riglrts, licenses, authority, etc. Estimated value of such intangible collateral 772.06 securities 1684.83

2.8 Penalty Imposed by RBI a) RBI levied penally of 71,27,465l- for default in maintaining required percentage of- CRR on daily basis on one day on 28e February ,2Ol4 during the fortnight endei on 7* f"fji.t, ZO1Z.

page L7

F - 148 ' b) RBI levied penalty of (2.50 crores for violatron of instnrctions in "Know Your Customer/Anti Money Laundering" norns.

3. Disclosures as per Accounting Standards (AS) in terms of RBI guidelines:

3.1. AS 5 - Net Profit or Loss for the period, prior period items and changes in the Accounting Policies

There were no material prior period income/expenditure items requiring disclosure under AS-5.

3.2 AS 9 - Revenue Recognition

Revenue is recognized as per the Accounting Policies disclosed in Schedule 17.

3.3 AS - 12 Government Grants l

During the year <48,03,480.00 has been received in the form of subsidies/grants/incentives from RBI and State Gqvernment as below: in crore

NIL 0.48

3.4 AS - 15 Employee Benefits

ln terms of the provisions of RBI Circular no.DBOD.BP.BC.80/21.04.018/2010-lldated 9ft February, 2011 on Re-opening of Pension Option to Employees of Public Sector Banks and Enhancement in Cnatuity Limits, 744?.3lcrore is being amortized over a period of five years with effect from Financial Year 2010-ll. Accordingly (89.46 crore has been charged to the Profit and Loss account bein! the proportionate amount for the year ended 3l't March, 2Ot4 K89.46 crore for the previous year). The unamortized liability as at 3l"t March, 2014 stands at<89.47 crore @revious Year (178.93 crore).

Pending settlement of the proposed wage revision effective from Novemb er 2012, an adhoc provision of Rs. I 70 crores is held as at 3l't March 2014. (ln

Present value of obligation as at the beginning of the Year 2317.55 527.00 tst.57 Interest cost l 9l .53 42.9t 13.60 Ctrrent Service cost 386.66 21.47 48.24 Benehts Paid 301.79 97.34 0.00 Actuarial LosV(Gain) on Obligation 554.7 5 (r 6.09) (39.92) Present value of Obligations at the end of the Year 3148.10 471.94 173.49

Fair Value of Plan assets at the beginning of the Year 1790.33 434.90 152.40 Expected Retum on Plan Asset 165.61 40.66 t4.25 Employer's contribution t294.28 120.79 4.55 Benefits Paid 301.79 97.34 0.00 Actuarial Loss(Gain) on Obligations (s8.02) (47.4s\ 2.18 Fair Value of Obligations at the end of the Year 2890.41 451.56 173.39

Page 18

Ctd.nd

F - 149 Fair Value of Plan Assets at the end of the Year 2890.4t 451.56 173.39 Unfturded Net LiabiliW recognized in Balance Sheet 258.29 26.38 0.09

:,4I,:::: Current Service Cost 386.66 21.47 48.24 Interest Cost 191 .53 42.91 13.60 Expected retum on Plan Asset 165.61 40.66 14.25 Net Actuarial (Gain/Loss recogtized in the Year 612.76 31 .35 (42.11') Total Expenses recognized in Profit and [.oss Account 1025.35 55.07 5.48

Discowrt Rate 8.84o/o 8.97 % 8.97 Yo Expected rate of return on Plan Assets 9.25Yo 9.35% 9.35% Method Used Projected Unit Credit Method *Other Bene/its include Privilege Leave, Casual lem'e, Sick Leave and LFC/LTC, Note: The above statement is based on the report of the Actuary.

3.5 AS l7 - Segment Reporting

The Banks operations are classified into two primary business segments viz. "Treasury Operations" and "Bankiug Operations". The relevant information is given hereunder in the prescribed format:

Part A: Business ( in crore

Revenue 326s 27e0 5776 5l0l 2544 2267 t77 t29 lr762 t0287

Result 94 391 2n4 t434 954 922 177 t29 3339 2876 Unallocated t278 826 experuies Operating Profit 2061 2050

Income Taxes (3428) ( r0l)

Extraordinary profiU loss Nct Plofit/(Loss) (12r3) 392 Other Information Segment 40426 30159 Assets 504 l9 47307 18490 t5736 n4'177 109335 Una.llocated Assets t0328 5281 Total Assets r25105 lt46t6 Segment 40426 30159 Liabilities 504t9 47307 18490 t5'136 1t4777 109335 Unallocated Liabilities 10328 528 I

.. ',',,,' ,,,.,,: :':,: : i: : : : l: Liabilities i':,'l,',,',,,,,',,, l, 125105 ii::a:::ii::aar:::r,.1' lt46t6

Page 19

F - 150 ?art B: Geographical Segment - Since the Bank does not have any overseas lrranch, reporting under geographical -segnient is not applicable.

3.6 Rclated Party Disclosures (AS-18) (As Compiled by the management)

3.6.1 Names of the related parties and their relationship with the Bank: Associates (Regional Rural Bank) i. fusam Gramin Vikash Bank ' ii. Bangiya Gramin Vikash Bank iii. Manipur Rural Bank iv. Tripura Gramin Bank

3.6.2 Key Management Personnel

(i) Mr. Deepak Narang - Executive Director (ii) Mr. Sanjay Arya- Executive Director (iiD Mrs. ArchanaBhargava - Ex Chairperson & Managing Director

Remuneration Paid to Key Management Personnel:

I IvIr. Deepak Narang Executive Salary and emoluments 15,88,334.00 #14,42,756.00 Director

2 Mr. Sanjay Arya Executive Salary and emoluments t5,95,737.00 I I,r 1,826.00 Director

J Mrs. Archana Bhargava Ex-Chairperson & Salary and emoluments 18,21,802.00 NIL Managing *(Up to 28.02.2012) Director

# Including performance linked incentive on cash basis.

(b) TIte balance payable to/receivable from Key Management Personnel is given below: (rn

Payable NIL NIL Receivable NIL NIL

(c) No amount has been written off/written back in respect of dues from/to related parties. (d) No provision is required in respect ofdues to related parties.

3.7. Leases (AS-19)

a) Lease rent paid for operating leases are recognized as an expense in the Profit & Loss Account in the year to which it relates.

Funre b) Lease Rent Payable for operating lease: (As compiled and certified by Management)

Page 20

F - 151 ln

a. Not later than I year 56.46 49.34 b Later than I year but not later than 5 years 205.92 l8l. l3 c. Later than 5 years 20t.62 180.54 Total 464.04 4l1.03 Arnount charged to Profit & Loss Account 60.75 58.07

i) Future lease rents and escalation in the rent are determined on the basis of agreed terms. ii) At the expry of the initial lease term, generally the bank has an option to extend the lease for a further pre determined period.

3.8 AS 20 - Earnings per Share

Net Profit/(Loss) after tax available for Equity (1213.44) 3t2.35 Share Holders (( in crore)

Weighted Average number of Equity Shares 42,30,46,755 36,17,12,488

Basic and Diluted Earnings per Share(() (28.68) 8.64

Norninal Value per Share(() 10.00 10.00

3.9 AS 2l - Consolidated Financial Statements/AS-23-Accounting for Inyestments in Associates in Consoli dated Financi aI Statements

The Bank does not have any subsidiary and as such, AS-21 and AS-23 are not applicable.

3. I 0 AS 22 - Accounting for Taxes on Income (a) Provision for Income Tax during the year is given below: ({ in crore)

Provision for Income Tax NIL 99.00

(b) The rnajor components of Defened Tax Assets/Liabilities are as follows: (( in crore)

DglferredTax Assets 461.72 I t8.95 Employees benefits 82.5t t6.22 Other items 379.2t 97.t7 Depreciation on Fixed Assets 5.56

Deferyed Tax Liabilities 72.03 on on fixed assets Special Reserve n/s.36(l)(viii) of 72.03 the Income Tax Act, 196l

Page 27

F - 152 ' 3.1I AS 28 - Impairment of Assets - [n the opinion of the Bank, there is no indication of any material irnpairment of fixed assets and consequently no provision is required.

3.12 AS 29 - Provisions, Contingent Liabilities and Contingent Assets Movements in significant Provisions and Contingent Liabilities have been disclosed at the appropriate places in the Notes forming part of the accounts.

4. Additional Disclosures

4.1 Provisions and Contingencies The break-up of'Provisions and Contingencies' shown under the head "Expenditures in Profit and Loss Account is as under: (in

Provisions for depreciation on Investment 88.52 27.52

Provision towards NPA(Loans and Advances) 1960.59 1010.45

Provision towards Standard Assets 200.76 181.65

Provision made towards Income Tax (Including Deferred Tax) (342.77\ (101.38) Other Provisions and Contingencies - Provision for Employee Benefit (AS-15) 1207.51 490.37 - Provision for Non-Performing Investments 56.36 10.63 - Floating Provision (st.e7) - Provision for Others 156.19 (38.76) Total 3275.19 r658.00

4.2 Floating Provisions (Countercyclical provisioning buffer) ln

a) Opening Balance ir! the floating provisions account 157.48 t57.48 b) The quantum of floating provisions made during year NIL NIL c) Accounting for draw down made during the year 51.97 NIL Closin balance in the fl oating provisions account l 05.5 I 157.48

Pursuant to Reserve Bank of India's @BI's) Circular No.DBDO.No.BP.95/21.04.04812013-14 dated 7th February 2014, the Bank has utilized 33Y, of its countercyclical/floating provisions held as at 3l't March 2013. As per the said RBI Circular, an arnount of t 51.97 crores out of floating provision of t157.48 crores leld as at 3l't March 2013 has been utilized for making specific provisions for non-performiug assets, as per the policy approved by the Board.

4.3 Drarv Doryn from Reserves

Pursuant to Reserve Bank of India's (RBI's) circular No.DBDo.No.BP.BC.77l2l.o4.olsl2o13-14 dated 20h December 2013' the Bank has created Deferred Tax Liability on the Special Reserve uader section 36(l)(viii) of the Income Tax Act, 1961. As required by the said RBI Circular, the expenditure, amountingtorTz-.oi due to the creatiott of DTL on Special Reserve (220.00 of Crores as at 3l't ilarch 201:,;;;;eviously charged to Profit and Loss Account, has now been adjusted directly from the Reserves. Had this aniount been charged to the Profit and Loss Account in accordance yith the generally accepted accounting prlnciptes in I1dia, the arnourt of Loss for the year would have been higher by irch u,nlunt.'

F - 153 ' + 4 Disclosure of complaints a) Customer Complaints

(a) No. of complaints pending at the beginning of the Year t57 o) No. of complaints received during the Year 2676 (c) No. of complaints redressed during the Year 2619 (d) No. of complaints pendins at the end of the Year 214

b) Arvards passed by the Banking Ombudsman

(a) No. of unimplemented Awards at the beginning of the Year I o) No. of Awards passed by the Banking Ombudsman during the Year 0 (c) No. of Awards implemented during the Year I (d) No. of unimplemented Awards at the end of the Year 0

4.5 Disclosure of Letter of Comforts (LoCs) issued by the Bank

a) During the current financial year the Bank has issued 458 nos LoCs @revious Year ll8) amounting to <3122.00 crore @revious Year (3168.00 crore) for providing Buyers Credit facility.

b) There are204 nos @revious Year 231) of outstanding LoCs as on 31.03.2014 amounting to ( 1043.28 crore (Previous yeatT 2299.91 crore).

4.6 Provision Coverage Ratio (PCR)

The provision coverage ratio (PCR) for the Bank as on 31" March 2014 is 52.25 yo,which is calculated taking into account the total technical write offs made by the Bank.

4.7 BancassuranceBusiness ( in crore

Life Insurance Business 6.23 7.45 Non-Life Insumnce Business 3.78 3.25 Mutual Funds NIL 0.01 Others NIL NIL

4.8 Concentration of deposits, Advances, Exposures and NPAs 4.8.1 Concentration of Deposits (ln

Total Deposits of twenty largest depositors 10633 7036

Percentage of Deposits of twenty largest depositors to Total 9.54% Deposits of the Bank 6.99%

"'-' Page 23

F - 154 '.t.8.2 Concentration of Advances { in crore

Total Advances to twenfy largest borrowers t2t95.52 tt73t.t2

Percentage of Advances to twenty largest borrowers to 18.540/0 16.83 Yo Total Advances of the Bank

4.8.3 Concentration of Exposures (in

Total Exposure to twenty largest borrowers/ Customers 18977.46 13465.01

Perceutage of Exposure to twenty largest borrowers/ customers to Total E4posure of the Bank on borrowers/ t6.6s% ts.68% customers

4.8.4 Concentration of NPAs ( ( in crore)

Total Exposure to top fourNPA accounts 1031.04 539.72

4.9 Sector - rvise NPAs

I Agricultue and Allied activities 13.71% 4.24% Industry(Micro and Small, 2 t2.44% 5.72% Medium and Large) 3 Services 12.23% 3.46%

4. Personal Loans 6.41% r.87 %

4.10 Movement of NPAs (ln

Gross NPAs as on l" April,2013 2963.82 2t76.42

Additions (Fresh NPAs )during the Year 8007.30 2484.84 Sub+otal (A) 10971.t2 466t.26 Less (i) gradations Up 2287.53 228.14 (ii) Recoveries (excluding recoveries made from upgraded a/cs) 1084.21 375.31

Page 24

Accomhnb

F - 155 (iii) Technical/Prudential Write-offs 428.61 1041.77 (iv)Write-offs other than those under (iii) above 52.76 52.22

Sub-total (B) 3853. l l 1697.44

Gross NPAs as on 3 I't March,20 I 4 (A-B) 7l18.01 2963.82

4.ll Stock of technical write-offs and recoveries made thereon { in crore

t-'L-. ), -t .4,-{":., : : : :t ,t,l ur!E'.*r! lf !r11, .1.+*X Opening balance of Technical/Prudential written-off accounts as at 2347.22 t4s7.69 April 1,2013 Add: TechnicaL/Prudential write-offs during the year 428.61 r04t.77 Subrotal (A) 2775.83 2499.46 Less: Recoveries made from previously technicaUprudential written- 95.28 t03.49 off accounts during the year (B) Closing balance as at March 31,2014 2650.10 2347.22

4.12 Overseas Assetsr IIPAs and Revenue (rn crore

Total Assets (Nostro balance) 348.85 l6ll.89 Total NPAs NIL NIL Total Revenue 6.16 3.32

4.13 Off-Balance Sheet SPVs sponsored (which are required to be consolidated as per accounting norms)

NIL NIL NIL NIL

4.14 a'; Registration formalities are pending in case of one property costing T1.88 crore, WDV as bn 3l.O3.ZOl4

b) Premises include leased properties amounting to 776.71 crore (net of amortization) as at 3l't March 20 l4(Previous Year: <29.49 crore).

Previous 5' Year's figures have been regrouped / reananged wherever considered necessary to make them comparable with those of the curentyear.

Accountants

Page 25

F - 156 This is the part of Schedule - 18 as on 31'03.2014

Deepak Narang Executive Director D

l,rD h,u l,^- Parvathy V-Sundaram Mihir Kumar Pratyush Sinha Director Director Director

[-w'o^-^, Renuka Muttoo Kiran B. Vatf6tldria Goyal Director Director Dlrector

PiJush Kanti Ghosh ,"r"^WY Director Director

"*"r"fur!.,o As per our separate report of even date annexed

M/s.Ramamoorthy(N) & Co M/s.Dinesh Mehta & Co. M/s.P C Bindal& Co. M/s.SPMR&Associates Chartered Accountants. Chartered Accountants. Cha rtered Accountants, Chartered Accountants. 899S ON 824N : 007578N

Ghartsred

nath Bharathi Malhotra ndal Maheshwari Partn er Partn er ner ner M.No.023837 M.No.502386 M.No.082683 M.No.085362

Place: Kolkata Date: 5th May,2OL4

F - 157 UNITED BANK OF INDIA

lRs.ln ?000)

3lst Marc t 2014 3lst Marc ! 2013 CASH FLOW FROM OPERAT]NG ACTIVITIES

Net ProfiU(Lossl after Tar nziu.440\ 3.919.O42 Add: lncome Tax 990.000 Prolit before Tax n2.1U.4401 4,909,042

Adluslment for Deorecialion on Fixed Assets 691,866 608,205 -ess: Amount drawn from Revaluation Reserve (155,924) (a2.52E1 ProriuLoss on Sale of Flxed Assets (Net) (416 p.2221 Deoreclation/Provision for lnvestments (Net) 1.448.817 381,579 Provision for Strandard Assets 2.007.600. 1.E16.500 Provision for NPA Advances 19.0E6.200 10.104.500 Other Provisions (Net) 10.209.263 3.287.511 lnterest on Subordinaled Bonds 2.2fi.551 1.702.691

Operatlng Proflt belore changes ln Operatlng Asseb and Llabllltes 23.3E3.557 22.63E.278

Adlustment tor not chanEB ln Operatlng Assets and Llablllues

Decreas€/(lncr6asE) in lnvestment (1 15,578,21 3) (u,321,N. Decrease/(lncrease) in Advances 12.325.W {68.758.18: ln 108,5E1,652 1't5,352,E10 lncreasey'(Oecrease) in Bonofl ings (9,824.669) Q.774.8551 Decreascy'(lncrease) in Olher Assets e.7n.8311 (4.503,889) lncreasey'(Decreaoo) in Other Liabililies & Provisions (3.348,6s1) 2.392.677 Draw dor rn from Revenue Reserve (720.278\

Cash Generatad from Ooeratinq Actlvltles 12,097,E74 20,o25,494 Tax (PaidV Refund (410,000) (2.200,000) N6t Cash from Operatlng Activitles (A) 11.687 .874 17.E25.494

CASH FLOW FROM INVESTING ACTIVITIES

Fixed Assets (Net) (1,50E,279) (1.119.491)

Net Cash from lnvesllng Actlvltles (B) n.508.275 (1.119,491)

CASH FLOW FROM FINANCING ACTIVITIES

lssue of Share Capilal 1.800.412 137,080 Share Premium 5.199.588 862,920 lssue of lnnovative Perpetual Debt lnstruments (lPDl) 3,000.000 Subordinale Bonds lssued 5,000.000 lnterest on Subordinated Bonds Q.230.591 DiVide@ and talthepo4 paid n.71A182 (1,890.240)

Net Cash from Financlng Acllvities (C) 8.O53,227 407,069

D Net lncrease ln 18.232.822 17,113,072

of the Cash in hand 3.574.428 3,481.635 Balances with Reserve Bank of lndia 34.891.708 47.436.259 qall Balances wilh Banks and Monev at and Short Notico 51,419,U6 E9.885.582 21.854.616 72,772,510

ln hand 433A.O22 3.574.420 58,361,750 34,E91,708 at 45,420.632 't06, t 1E,404 51.419,,146 89,885,582

on irect melhod.

F - 158 This is the part of Cash Flow statement as on 31.03.2014

Deepak Narang Executive Director

\^a t-'t,ta /n* Parvathy V Sundaram Mihir Kumar sh Sinha Director Dlrector Director

l\/o,r,,'*, Renuka Muttoo Kiran B. va?o-daiia I Goyal Director Director Director

\^* Pijush Kanti Ghosh Sanjib Pati Director Director

,"finru^,, General/Manager & CFO

As per our separate ,report of even date annexed

M/s.Ramamoorthy(N) & Co M/s.Dinesh Mehta & Co. M/s.PCBindal&Co. M/s.SPMR&Associates CharteredAccountants. CharteredAccountants. Chartered Accountants. Chartered Accountants. 899S 24N : 007578N o 'ti q rtered Charlered U;

Bharathi Malhotra Bindal Maheshwari Partner Partn er Partnef Fartner M.No.023837 M.No.502386 M.No.082683 M.No.085362

Place: Kolkata Date: 5th May,2OL4

F - 159 CERTIFICATE

We certify that the guidelines issued by the Reserve Bank of India, from time to time, in respect of Income Recognition, Asset Classification and Provisioning have been complied with by United Bank of India for the year ended 31't March,2014.

IWs Dinesh Mehta & Co. Iv{,/s. Ramarnoorthy (N) & Co C ants

(CA (CA

Membership No 502386 Membership No. 023837

iWs. SPMR&Associates N{/s.PC Bindal&Co

(CA ) (

Membership No. 085362 Membership No. 082683

Place: Kolkata Date: 05.05.2014

F - 160 t , t.

CERTIF'ICATE

This is to certiflz that the Net Worth of United Bank of India having its Head Office at 11, Hemanta Basu Sarani, Kolkata-700001 as on 3l't March,2014 was Rs.4188.02 crores (Rupees four thousand one hundred eighty eight crore and two lac onl;r) as per computation shown below : in crore SI. Particulars Current Previous No Year Year 31.03.2014 31.03.2013

1 Paid-up Capital + Free Reserve- Share Application Money (Total 4673.77 5259.23 Reserves less Revaluation Reserves and Specified Reserves) Less A Receivable (more than 6 months old) B. Receivable from Group Companies C. Intangible Assets 485.75 134.69 D Preliminary and Preoperative expenses not written off E Value of Stock Exchange Card F Loan in excess of value of pledged securities G Loan in excess of value of pledged assets H -nvestments in Group Companies I. Net worth required for other depositors J Loans & advances to Group Companies K Statutory Contingent Liabilities 2 Sub Total 485.75 t34.69 (A+B+C+D+E+FtG+H+I+J+K) Net Worth 4188.02 5124.54

Mehta & Co M/s. (N) & Co. Accountants Accountants 000220N 99S AccounlenlE ( Chartered @ * (CA Malhotra) Bharathi) Partner Partner Membership No. 502386 Membership No. 023837

R & Associates Bindal & Co Accountants 7578N Accountanlr

Kr. Maheswari ) Bindal) Partner Partner Membership No. 085362 Membership No. 082683

Place: Kolkata Date: 05.05.2014

F - 161 CERTIFICATE

We certify that no serious irregularities came to our notice in the Bank's working while conducting audit of United Bank of India for the year 2013-2014 which requires immediate attention.

IWs Dinesh Mehta & Co IWs. Ramamoorthy (N) & Co Accountants Chartered Accountants . 000220N Chailusd

Malhotra) (CA Partner Membership No. 502386 Membership No. 023837

IWs. SPMR&Associates C Bindal & Co Chartered Accountants Accountants 824N

(CA ) (CA P.C. Bindal) Partner Membership No. 085362 Membership No. 082683

Place: Kolkata Date: 05.05.2014

F - 162 CERTIFICATE ON COMPULSORY DEPOSIT flNCOME TAX PAYERS) SCHEME. 1%

We hereby certifli that we have conducted sample audit of the deposit under the Compulsory Deposit (Income Tax Payers) Scheme, 1974 of United Bank of India for the accounting year ended 3l't Marchz}l4.

There was no repayment of the installments during the year.

M/s Dinesh Mehta & Co. M/s. Ramamoorthy (N) & Co Chartered Accountants Chartered Accountants 000220N 002899S

alhotra)

Membership No. 502386 Membership No. 023837

M/s.SPMR&Associates M/s.PC Bindal&Co. Chartered Accountants Chartered Accountants 578N 824N

Chadeted Chartered

Maheswari ) Bindal)

Membership No. 085362 Membership No. 082683

Place: Kolkata Date: 05.05.2014

F - 163 DECLARATION

Our Bank certifies that all relevant provisions of Chapter VIII read with Schedule XVIII of the ICDR Regulations have been complied with and no statement made in this Placement Document is contrary to the provisions of Chapter VIII and Schedule XVIII of the ICDR Regulations and that all approvals and permissions required to carry on our business have been obtained, are currently valid and have been complied with. Our Bank further certifies that all the statements in this Preliminary Placement Document are true and correct.

Signed by

Sd/-

______Shri Pawan Kumar Bajaj Managing Director and Chief Executive Officer

Date: March 24, 2017 Place: Kolkata

I am authorized by the Board of Directors of our Bank vide resolution dated March 24, 2017 to sign this form and declare that all the requirements of the Applicable Law and the rules made thereunder in respect of the subject matter of this form and matters incidental thereto have been complied with. Whatever is stated in this form and in the attachments thereto is true, correct and complete and no information material to the subject matter of this form has been suppressed or concealed and is as per the original records maintained by our Bank.

It is further declared and verified that all the required attachments have been completely, correctly and legibly attached to this form.

Signed by

Sd/-

______Shri Pawan Kumar Bajaj Managing Director and Chief Executive Officer

Date: March 24, 2017 Place: Kolkata

229

ISSUER

UNITED BANK OF INDIA

HEAD OFFICE OF THE BANK United Bank of India United Tower 11 Hemanta Basu Sarani Kolkata – 700001 Tel: +91 33 2248 3857; Fax: +91 33 2248 9391 Website: www.unitedbankofindia.co.in, Email: [email protected]

ADDRESS OF THE COMPLIANCE OFFICER

Shri Bikramjit Shom

United Tower 11 Hemanta Basu Sarani Kolkata – 700001 Tel: +91 33 22487472; Fax: +91 33 2248 5852 Email: [email protected]

BOOK RUNNING LEAD MANAGERS

SBI Capital Markets Limited Motilal Oswal Investment Advisors Private Limited 202, Maker Tower E, Cuffe Parade, Motilal Oswal Tower, Rahimtullah Sayani Road Mumbai 400 005 Opposite Parel ST Depot, Prabhadevi Maharashtra, India Mumbai 400 025, Tel: + 91 22-2217 8300 Maharashtra, India Fax: +91 22-2218 8332 Tel: +91 22 3980 4380 Fax: +91 22 3980 4315

DOMESTIC LEGAL ADVISOR TO THE ISSUE INTERNATIONAL LEGAL ADVISOR WITH RESPECT TO INTERNATIONAL SELLING AND TRANSFER RESTRICTIONS

M/s. Crawford Bayley & Co. Squire Patton Boggs Singapore LLP State Bank Buildings, 4th Floor 10 Collyer Quay, #03-01/03 N.G.N. Vaidya Marg, Fort Ocean Financial Centre Mumbai 400 023 Singapore 049315 Maharashtra, India

AUDITORS TO OUR BANK FOR THE ISSUE

M/s. Nundi & Associates M/s. Arun K. Agarwal & M/s. Mookherjee, Biswas & Chartered Accountants Associates Pathak Hastings Chamber, Chartered Accountants Chartered Accountants 7C, Kiran Shankar Roy Road, 105, First Floor, South Extension 5 and 6 Fancy Lane, 3rd Floor, Plaza-I, 389, Masjid Moth, Kolkata – 700001, West Bengal, Kolkata – 700001, West Bengal, South Extensions PT – II, India India New Delhi – 110049, India

230