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Home , Bank of Rajasthan, Jaipur Stock Exchange

THE BANK OF LTD.

REPORT OF THE BOARD OF DIRECTORS

Esteemed Shareholders, for the previous fnancial year. In view of the loss incurred during the year 2009-10, the directors do not recommend Your Directors have great pleasure in presenting to you the any dividend. 67th Annual Report of the Bank together with the Audited accounts for the year ended 31st March 2010. CAPITAL, RESERVES AND CAPITAL ADEQUACY RATIO PERFORMANCE HIGHLIGHTS During the year, the Bank has not issued fresh shares. The The performance highlights for the fnancial year 2009-10, Bank’s Capital Adequacy Ratio as on 31st March 2010 stands as refected from the key fnancial indicators are as under: - at 7.74% as per Basel I and 7.52% as per Basel II as against (Rs. in crores) 12.00% and 11.50% respectively at the end of the previous fnancial year. FY 2009-10 FY 2008-09 LISTING AGREEMENT WITH STOCK Deposits 15062.35 15187.15 EXCHANGES Advances 8329.47 7780.75 Gross NPA 293.81 160.92 Pursuant to requirement of Listing Agreement, the Bank declares that its shares are listed on Net NPA 133.50 57.03 (BSE), (JSE) and National Stock Investments 6722.51 6809.15 Exchange(NSE). The Tier-II Bonds (Series-III, IV, V, VI Total Income 1489.48 1507.23 & VII) and Upper Tier-II Bonds are also listed at Bombay Total Expenditure 1591.61 1389.52 Stock Exchange. The Bank confrms that it has paid annual Operating Proft (27.90) 193.77 listing fees due to stock exchanges. Net Proft after tax (102.13) 117.71 Listing of 1,35,00,000 shares (90 lac shares and two bonus Proft /(Loss) brought 234.34 185.69 thereon) are pending with the Stock Exchanges. The Civil forward appeal fled by Bank in this behalf is pending before Hon’ble Appropriations Supreme Court. Transfer to Statutory Reserve -- 29.43 SHOW CAUSE NOTICE FROM JAIPUR STOCK Transfer to Capital Reserve 9.03 25.14 EXCHANGE LTD. for Investment The Bank has received a Show Cause Notice from Jaipur Transfer to Investment -- 0.71 Stock Exchange Limited for alleged violation of clause 36 Reserve Account of the Listing Agreement. The Bank has denied any such Transfer to General Reserve -- 10.00 violation and has duly replied the same. The Bank has also Proposed Dividend -- 3.23 intimated to SEBI and RBI about the correspondence with Jaipur Stock Exchange Ltd., in this matter. Dividend Tax -- 0.55 Balance Carried over to 123.18 234.34 TREASURY & INVESTMENT MANAGEMENT Balance Sheet The Bank is a member of Negotiated Dealing System Business Ratios (NDS), NDS-Call, NDS OM and Clearing Corporation of Return on Assets (ROA) (%) (0.58%) 0.74% Ltd. (CCIL). Transactions in Government Securities CRAR – Basel-I 7.74% 12.00% are carried out through scrip less electronic media with on CRAR – Basel-II 7.52% 11.50% line settlement. Net NPA 1.60% 0.73% The Bank has joined Real Time Gross Settlement (RTGS) Business per Employee 5.70 5.33 system of Reserve in June, 2004, which has Business per Branch 49.01 46.90 eliminated settlement risks and has reduced transaction cost and facilitated better funds management by the Bank. The NET PROFIT/(LOSS) & DIVIDEND Bank has also joined NEFT (National Electronic Funds The net loss for the year after provisions and taxes remained Transfer) for faster transfer of funds to & from other Banks at Rs. 102.13 crores as against net proft of Rs. 117.71 crores for customer’s account.

67th ANNUAL REPORT 2009-10 1 THE LTD.

The Bank’s net investment in SLR and Non-SLR securities permissible parameters / prudential norms. During the year has decreased to Rs. 6722.51 crores as on 31.03.2010 from under report the Bank also strengthened its credit approval Rs. 6809.15 crores as on 31.03.2009. The investment was and monitoring process, which enabled the Bank to keep the made as per the business requirement of the Bank as well as incidence of slippage of borrowal accounts under check. for complying with statutory requirement. The level of SLR PRIORITY SECTOR & RETAIL BANKING and Non-SLR net Investment remains to Rs. 4442.39 crores and Rs. 2280.11 crores respectively as on 31.03.2010. The The Bank’s advances to Priority Sector (inclusive of eligible investment portfolio enabled your Bank to achieve a yield of investments) as on 31.03.2010 stood at Rs.2747.33 crores. 5.64% on its investment. In terms of the directives from the Government of India and the , the Bank has given utmost The Bank has parked 87.34 % of its net investment under importance to lending under Priority Sector and Agriculture HTM category. Thus securities marked to market accounted Sector by introduction of new products / schemes and for 12.66 % of the net investment as at the end of March modifying the existing one for its growth. Break up of sector 2010. The investment in RIDF in the form of deposit wise outstanding under Priority Sector Advances at the end with NABARD/ SIDBI/ NHB, has increased from Rs. of the fnancial year 2009-10 is as under: 1244.57 crores as on 31.03.2009 to Rs. 2021.39 crores as on 31.03.2010, the same is classifed under HTM category as per (Rs. in crores) RBI guidelines. The yield on RIDF being low, has affected overall yield on Investment. Sector Finance year Finance year 2009-10 2008-09 The liquidity position of the Bank was comfortable Agriculture 1455.19 963.61 throughout the year. The Bank has deployed the available short term surplus funds in Call Money/ Reverse Repo Small Enterprises 904.28 800.33 Lending/ CBLO as also in the Units of Mutual Funds, Micro Credit 33.39 1.87 interbank short term Deposits, etc. Education 9.29 6.08 DEPOSITS & ADVANCES Housing 345.18 260.16 Total deposits of the Bank decreased from Rs. 15187.15 Total 2747.33 2032.05 crores to Rs. 15062.35 crores, while the core deposits The net level of Priority Sector Advances for the year ended (excluding interbank deposits) increased from Rs. 13832.25 stood at Rs. 2747.33 crores constituting 35.31% of ANBC. crores to Rs. 14204.23 crores showing a growth of 2.69 % The Direct Agriculture Advances have shown increasing over previous year. However the Bank’s average deposits trend and reached to Rs. 303.67 crores as of March, 2010 have shown rise of 10.36 % over previous year indicating compared to Rs. 155.98 crores as of March, 2009. The steady growth during the year. advances under Small Enterprises including manufacturing and service enterprises reached a level of Rs. 904.28 crores Gross advances registered an increase of 7.67 % compared and the Housing loan portfolio stood at Rs. 345.18 crores to the previous year 2008-09, and stood at Rs. 8489.78 crores whereas Education loans have increased to Rs. 9.29 crores. as on 31st March 2010. The CD Ratio at 51.92% as on 31st Under the prime product of Direct Agriculture Advances i.e. March 2009 increased as on 31st March 10 to 56.36 %. The under RBKCC/RBKGC Bank has issued 3840 fresh cards growth of advances is well spread across the sectors and aggregating Rs.36 crores. Under tie up arrangement with enterprises. The Yield on Advances decreased from 12.04% various tractor manufacturing companies Bank has disbursed to 11.68% in 2009-10 which is in line with decrease in cost Rs. 12 crores in 309 loan accounts during the year ended of deposits. The growth of average advances during the year March, 2010. has been 1.78% over previous year. The Bank has set up Rural Development and Self Bank followed policy of caution and discrimination in Employment Training Institutes (RSETIs) under the banner making advances to high risk sectors. As a result of surplus of “RAJASTHAN SWAROJGAR VIKAS SANSTHAN liquidity interest rates moved downward and the Benchmark (RSVS)” at and Jodhpur. The institute provides Prime Lending Rate (BPLR) and Retail Prime Lending Rate expert guidance and assistance to rural youths and renders (RPLR) registered decrease during the year. all possible help for obtaining credit facilities and also assists Further, Bank continued its close monitoring to contain them in setting up their ventures successfully. During the year, incidence of fresh Non Performing Assets and made sincere the two institutes have conducted 53 training programmes endeavours for up-gradation of existing assets within benefting 3639 entrepreneurs.

2 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

The State Government has allocated land at Udaipur for The Personal Loan / CCL and Home Loan (direct) portfolio development of infrastructure for RSETI on concessional of the Bank has increased by 24% and 23.24% while rate i.e. 5% of reserve price. The National Institute of Rural Mortgage Loan has decreased by 10.22% during the FY Development (NIRD) has provided grant of Rs. 1.00 crore 2009-10. for establishing infrastructure (building) at RSETI Udaipur. ASSEST QUALITY MANAGEMENT The construction work at RSETI Udaipur is nearing completion and the institute is likely to start functioning at The position of NPAs & W-Off a/cs and recoveries is given the new building soon. in the table below:- The Bank has actively participated in various Government (Rs in lacs) Sponsored Programmes and had disbursed loan of Rs.13 As on As on crores in 2797 loan accounts. The Bank has organised camps 31.03.2009 31.03.2010 for fnancing self help groups and disbursed loan of Rs.5.00 crores to 445 self help groups. Recovery in NPA 3341.45* 2982.37* Recovery in W-Off 703.28* 1050.32* OPERATIONS OF MEWAR AANCHALIK GRAMIN BANK (MAGB ) Up gradation 736.78 363.13 Bank’s sponsored RRB namely Mewar Anchalik Gramin TOTAL 4781.51 4395.82 Bank (MAGB) established on 25.01.1983 has 58 branches * Inclusive of interest in 3 districts viz Udaipur, Rajsamand & Pratapgarh. All the During the period ended 31.03.2010 the Bank pursued branches are computerised. With effective management, the its recovery drive aggressively. In case of small NPAs for MAGB has earned operating proft of Rs. 246.38 lacs during amounts below Rs 50 lacs it was the Bank’s endeavor to the year 2009-10. The deposits of MAGB has increased to recover maximum dues by organizing Recovery Camps for Rs. 435.66 crores and advances reached to the level of Rs on the spot settlements. The hard-core high value NPAs were 144.03 crores as on 31.3.2010. followed up through action against the defaulter borrowers, RETAIL BANKING: guarantors and judgment debtors through appropriate legal means. The Bank has achieved an over all growth of 16.39% under the retail assets portfolio of Home Loan, Mortgage Loan, The Bank also exercised its right under the SARFAESI, Act Vehicle Loan and Personal Loan products in the current FY 2002 in eligible cases and issued notices to the defaulting as compared to 3.22% growth achieved in the last FY : borrowers / guarantors compelling them to come forward with reasonable settlement proposals for liquidation of the ( Rs. in lacs) dues of the Bank. The Bank accordingly made a recovery of Outstanding as on Outstanding as on Rs 2982.37 lacs in 3468 NPA accounts during the fnancial 31.03.2009 31.03.2010 year 31.03.2010. The Bank also launched an extensive drive to execute decrees for enforcing recovery in hardcore Number Amount Number Amount accounts by resorting to attachment, taking possession and of of sale of properties. Accounts Accounts Home 6178 20459 6432 25214 The Bank affected signifcant recoveries amounting to Rs Loans 1050.32 lacs in 1310 written off accounts, which added to its (Direct) net proft. The Bank was able to affect recoveries to the tune Mortgage 1710 12061 1641 10828 of Rs 1132.02 lacs in high value NPAs with outstanding of Loan/ Rs 50.00 lacs and above during the year ended March 2010. OD Similarly, substantial recoveries to the tune of Rs 1850.35 Vehicle 148 216 356 886 lacs were affected in small NPAs having outstanding up to Loans Rs 50.00 lacs. Personal 23946 15233 24598 18904 During the period ended March 2010 NPAs amounting to Loans/ Rs 363.13 lacs were up graded to the category of Performing CCL Assets. There were also fresh slippages aggregating Rs. 16353 Total 31982 47969 33027 55832 lacs refecting overall situation of loan assets in the industry.

67th ANNUAL REPORT 2009-10 3 THE BANK OF RAJASTHAN LTD.

The position of Gross & Net NPAs are as under :- NEW SERVICES AND PRODUCTS (Rs in crores) The Bank has been offering following products & services to customers: As on As on 31.03.2009 31.03.2010 GENERAL INSURANCE Gross NPAs 160.92 293.81 The Bank has tie-up with United India Insurance Company Gross NPAs % 2.04% 3.46% for General Insurance as well as Mediclaim products. The Net NPAs 57.03 133.50 United India Insurance Company is one of the leading public Net NPAs % 0.73% 1.60% sector non-life insurance service providers in the country, and having a large network of its branches/divisional offces Gross NPAs and Net NPAs of Bank have increased to Rs. across the country. The Bank has also tie-up with UIICO for 293.81 crores and Rs.133.50 crores from Rs.160.92 crores selling of Group Mediclaim Policies to its customers namely and Rs.57.03 crores respectively, showing an increase of of “RAJBANK AROGYA NIDHI” which is available on 3.46% from 2.04% in Gross NPAs and 1.60% from 0.73% reasonable premium with special features. During the FY in Net NPAs. The Bank is making all out efforts to recover 2009-10 the Bank has booked Rs. 4.06 crores towards total its NPAs. premium and earned income of Rs. 0.66 crore in the form INTERNATIONAL BANKING of commission including Rs.0.30 crore received towards reimbursement of publicity expenses. The Bank is handling Foreign Exchange business at its 22 branches. During the year 2009-10, the total Forex turnover LIFE INSURANCE handled by the Bank amounted to Rs. 19129.59 crores as There is a tie-up with Aviva Life Insurance Company for compared to Rs. 23618.36 crores during the year 2008-09 life insurance products. During the FY 2009-10, the bank showing a decline of 19.01% compared to last year. The has booked Rs. 43.71 crores in respect of total annualized Bank has been continuously making arrangements with premium and earned income of Rs. 13.05 crores towards foreign banks for augmenting export /import business referral fee / commission. of its constituents. As on 31st March 2010, there were 67 correspondent banking relationship in 70 countries. Export DEMAT SERVICES credit outstanding was Rs. 145.53 crores as on 31st March 10, Since 2000, the Bank has been providing depository services whereas 8 Exporters have been allotted “Rajbank Exporters to its customers, becoming the (DP) Gold Card” under the Exporters Gold Card Scheme of the of Central Depository Services (India) Limited (CDSL). Reserve Bank of India, entitling them to various benefts Presently 221 branches are providing Demat services. under the Scheme. The rupee draft drawing arrangement with During the Financial Year 2009-10, Bank has opened 55466 M/s. Wall Street Exchange Center LLC, Dubai has picked up Depository customer accounts and earned revenue of Rs. and it is now proposed to start a “Speed remittance facility”. 2.08 crores. Similar arrangement of Rupee Draft drawing and “Speed remittance facility” will be entered with M/s Al Muzaini ON-LINE TRADING OF SECURITIES Exchange Company, Kuwait and to be started during the frst quarter of current year. A separate email Id nrihelpdesk@ In respect of On-Line Trading of Securities, the Bank has rajbank.com has been provided for use by NRIs to facilitate a tie-up with IDBI Capital Markets Limited and easy communication with the Bank. Securities Limited to provide online trading facility to its customers. As a part of the alliance, customers of the Bank FOREIGN EXCHANGE EARNING & OUTGO are provided with the facility of a 3-in-1 online investing account wherein the Savings Bank account, Demat Account Total foreign exchange earned (including income in the form and the trading account are interlinked. With this facility, the of interest, rebates, sharing of income from nostro banks, Bank’s customers can enjoy the convenience of trading and Recovery of bad debts etc.) at the end of year amounted to managing their portfolio from any part of the world. Rs 34.24 lacs ECGC Ltd. Total Foreign Exchange used (including charges on nostro accounts, SWIFT and Reuter charges, interest paid on foreign The Bank has also have Bancassurance arrangement with currency borrowings, allowances paid in foreign currency for the Export Credit Guarantee Corporation of India Ltd. traveling abroad and audit fee paid etc. ) at the end of year for soliciting and procuring business of ECGC General amounted to Rs. 18.78 lacs. Insurance business for & on behalf of them on agency basis.

4 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

MUTUAL FUNDS year to increase the card base and usage cycle. Bank is also planning for co-branding of credit cards. Considering the good returns to its valuable investors through Mutual Funds in Capital Market, Bank has selling / DEBIT CARD marketing arrangements with following Mutual Funds:- Bank has tied up with ECS for issuing of ATM-cum-Debit Cards. Bank’s Debit Card is accepted over 90,000 outlets in Sr.No. Name of Mutual Fund India and about 13 million POS globally with . 1. LIC Mutual Fund This includes over 32,000 ATMs in India and 1.15 million 2. Prudential ICICI Mutual AMC ATMs world wide. The Bank has tied up arrangements for 3. Principal PNB Mutual AMC sharing ATMs with 12 banks including State Bank Group & 4. ING Vysya AMC . 5. Reliance Mutual Fund CASH MANAGEMENT SERVICES 6. Birla Sun Life Mutual Fund Our Bank has good network of online branches, various 7. DSP Merrill Lynch Mutual Fund Banks / Financial Institutions are approaching for 8. Sundaram BNP Paribas Mutual Fund arrangements with the Bank for various arrangement like 9. Franklin Templeton Asset Management (India) collection of cheques (local and out station), draft drawing Pvt. Ltd. arrangement, cash deposit /withdrawal/remittance etc. 10. TATA Mutual Fund Accordingly, these Services are being provided to various 11. UTI Mutual Fund banks / institutions like ICICI Bank, Corporation Bank, 12. SBI Mutual Fund HDFC Bank, , City Bank, , 13. Edelweiss Mutual Fund , Tata Finance Ltd. etc. 14. Kotak Mahindra Mutual Fund. BOOKING OF RAILWAY TICKETS OVER 15. DBS Cholamandlam INTERNET During the Financial Year 2009–10, Bank has done total In our endeavour to provide our esteemed customers with business of Rs. 266.16 crores and earned commission of Rs. state of the art technology-enabled products and services 0.22 crore. to transact from the comfort and convenience of home or WESTERN UNION MONEY TRANSFER offce or transact even while on move, the Bank has signed an agreement with Indian Railway Catering & Tourism The Bank has been providing Western Union Money Corporation (IRCTC) to provide facility for booking Railway Transfer services as a sub-agent. The services are available at Tickets over internet. all branches of the Bank. The Bank has earned gross income of Rs. 0.02 crore at the end of March, 2010 from this activity. STAMP FRANKING ACTIVITY CREDIT CARD The Bank has pioneered this facility in the State of Maharashtra in the year 2004. Encouraged by response, The Bank has launched its International Credit Card in the Bank has further expanded stamp franking activity in association with VISA on 26th December 2005 with special the States of Rajasthan, Gujarat, Goa & Bihar, generating features. Upto the fnancial year 2009-10, the Bank has revenue of Rs. 2.46 crores through this activity. issued 30,609 credit cards, with 20% increase over previous year. New variants of the Card with enhanced features/ REAL TIME GROSS SETTLEMENT CHARGES benefts have been introduced and well recognised in the (RTGS) / NATIONAL ELECTRONIC FUND market. Bank is offering lifetime free credit cards. Bank TRANSFER (NEFT) has also implemented ‘ Verifed by VISA ‘ to make online Bank has been providing RTGS / NEFT Scheme based on an transactions secured and online SMS alert functionality for electronic paperless settlement system. Looking to the wide POS and internet transactions and to strengthen customer acceptability of the system with low cost per transaction, all service. Apart from this, specialized SMS alerts are also sent branches are RTGS / NEFT enabled. on regular basis to credit card holders on events like birthday, e-PAYMENT OF TAXES ON BEHALF OF THE dispatch of statement, value transaction alerts, outstanding CUSTOMERS balance reminder, due date of payment, e-statement etc. Bank has implemented ‘Disaster Recovery Management’ To facilitate e-Payment of Taxes, Bank has been providing system for Credit Cards. Bank is planning to come out with the facility through NSDL w.e.f. 01.08.2008 and the facility is various reward and loyalty programmes in this fnancial available at all our branches.

67th ANNUAL REPORT 2009-10 5 THE BANK OF RAJASTHAN LTD.

CALL CENTRE (PHONE BANKING) 7. Centralized service tax submission, e-payment of During this year, the Bank has established its Call Center at direct taxes at identifed branches. Jaipur and started Phone Banking Services. Under the Phone 8. DR Setup operational for core banking. Banking Services, customers (registered for the services) Other Customer Centric Technology Initiatives: may get several services just on a phone call. These services include enquiries on their accounts like Balance Enquiry, 1. Interface with National Financial Switch (NFS) as Transactions Enquiry relating to Banking Accounts, Credit well as VISA acquiring project are in progress and are Cards, Debit Cards, Demat accounts etc. In addition facilities expected to be operational shortly. of hot listing of debit cards & stop payment of cheques is 2. Mobile banking services will soon provide the facility also available on 24X7 basis. of fnancial transaction. INFORMATION TECHNOLOGY, 3. Corporate e-banking implementation is in the process COMPUTERISATION & TECHNOLOGY and shall be made available during the fnancial year. UPGRADATION 4. Passbook updation / Statement of Account facility Entire business of the Bank is on Core Banking with all the from any branch. 463 branches covering 287 cities in 22 States and 2 Union HUMAN RESOURCES, TRAINING & Territories are on this platform. The Bank offers convenience DEVELOPMENT of Internet Banking, Visa International Debit Card & SMS alert facilities to all the customers irrespective of branch In pursuit of Bank’s business-growth and excellence, it has location. Besides its own brand of VISA credit card, the been the endeavor of the Bank to achieve corporate goals by offers include a bouquet of technology driven products. A leveraging its human resources. 24x7 Call Centre helps enhance the customers’ satisfaction. The position of recruitment in the fnancial year 31st March, Salient Features: 2010 was as under : 1. Anywhere Banking: Covers All 463 branches covering Year Offcers / Clerks Sub- Total 287 cities in 22 States and Union Territories. Executives ordinates 2. SMS Alert facility: Bank has been providing free SMS 2009-2010 54 -- -- 54 alerts for transactions beyond a threshold limit. 2008-2009 255 14 14 283 3. Retail Internet Banking: For online statement of The staff-strength of the Bank as on 31st March, 2010 vis-à- accounts, fund transfer within the bank, DMAT vis, previous year stands as under: account enquiry. The Bank also provides payment Cadre 31/03/10 31/03/09 gateway interfaces for online booking of railway Offcers 2058 2106 tickets and internet shopping. Customers can pay their credit card dues to the Bank through Internet Clerical 1357 1354 Banking. Subordinates 513 565 Marketing Executives / Team 55 50 4. ATMs: Besides offering 127 own ATMs/ Cash Leaders Dispensers, the Bank has ATM Sharing arrangement Total 3983 4075 with and Cash Tree enabling customers to operate on more than 15000 ATMs It is aim of P&HRD to develop a new cadre of dynamic and across the country. The Bank will be in a position charged manpower by exposing them to critical function like to provide interface with majority of the Banks very marketing strategies, understanding and analyzing customer soon being member of NFS. The Bank’s ATMs needs, measuring customer satisfaction, market segmentation will similarly honour all VISA cards and select NFS and its applications, developing brand image etc. member . STAFF TRAINING COLLEGE 5. Cheque Truncation System is operating successfully Ever increasing customer expectations & introduction in National Capital Region Delhi for the past one year. of technology-based products on regular basis makes it 6. The Bank participates in debit & credit ECS and imperative for the Bank to update & develop its human encourages customers to use RTGS /NEFT for resources in order to keep them current. The Bank has its funds transfers. Staff Training College housed in owned premises with all required infrastructure & residential facilities, working with

6 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD. the mission to act as an enabling mechanism for sustaining and inter bank accounts have been undertaken at regular growth and promoting organizational excellence by intervals remaining continuously attuned to the needs of the Users. CUSTOMER SERVICES During the year under review, Staff Training College The customer service area was also closely monitored. The has conducted 90 training programmes in various areas, meetings of customer service committees were held at imparting training to 2062 participants and nominated 35 branches, Regional Offces and at Central Offce. Important staff members to various training programmes conducted by guidelines/feedback received in this regard from BCSBI, BTC / NIBM / CAB & Other reputed training institutions. RBI, IBA. Banking Ombudsman were transmitted to feld For overall development of the senior-staff, Management functionaries for implementation. It was ensured that Development Programmes were also conducted with the prompt, courteous and personalized services are provided support of eminent outside faculty. to our valued customers. The complaints/grievances of The College, in view of their importance, has been including customers were promptly attended and utmost efforts were areas like Demat, Finance, Code of Bank’s Commitment to made to redress the same to the satisfaction of complainant. Customers, KYC / AML, IS Audit and Customer Services on BRANCH EXPANSION regular basis, in most of the training programmes. Sessions on life style management with support of Doctors and eminent In terms of RBI directives, the Bank has not been permitted outside speakers have been incorporated in the curriculum. to open any new branches or establish offsite ATMs. Professional audiovisual CDs & Video conferencing facility Consequently this number of branches remained unchanged are also used during training programmes. Meditation at 463. and Gym facilities have been introduced for all round At the end of fnancial year 2009-10, the Bank’s network developments at staff training college. had 463 branches (including 6 service branches), 28 offsite HOUSE KEEPING ATMs and 99 onsite ATMs covering 22 States and 2 Union Territories across the country. The States-wise details Bank has been endeavouring to improve the house keeping (population group-wise classifcation) thereof, is given here to the best standards. Most of the old entries in suspense under : accounts have been adjusted. Reconciliation of inter branch S. No. State / U.T. Branches# Total ATMs Metro Urban S.Urban Rural Branches Onsite Offsite 1 Andhra Pradesh 3 4 - - 7 2 - 2 Assam - 3 1 - 4 3 - 3 Bihar 1 - - - 1 - - 4 Chattisgarh - 1 - - 1 - - 5 Delhi 20 - - - 20 6 - 6 Goa - - 1 - 1 1 - 7 Gujarat 5 1 3 1 10 4 - 8 Haryana 1 10 2 1 14 6 1 9 Himachal Pradesh - 1 - 1 2 1 - 10 Jammu & Kashmir - 1 - - 1 - - 11 Jharkhand - 1 - - 1 - - 12 Karnataka 2 1 - - 3 1 - 13 Kerala - 1 - - 1 - - 14 Madhya Pradesh 9 8 5 - 22 4 1 15 Maharashtra 18 12 1 1 32 9 1 16 Orissa - 2 - - 2 - - 17 Punjab 3 5 4 - 12 3 -

67th ANNUAL REPORT 2009-10 7 THE BANK OF RAJASTHAN LTD.

S. No. State / U.T. Branches# Total ATMs Metro Urban S.Urban Rural Branches Onsite Offsite 18 Rajasthan 50 77 69 98 294 50 23 19 Tamil Nadu 2 5 1 - 8 1 - 20 Uttar Pradesh 9 4 - - 13 1 1 21 Uttranchal - 1 - - 1 - - 22 West Bengal 6 2 - - 8 4 - 23 Chandigarh (UT) - 2 - - 2 - 1 24 D. Ngr. Haveli (UT) - - 3 - 3 3 - TOTAL 129 142 90 102 463 99 28 # Reclassifed as per Part-II of the Uniform Code No.(Population range wise) circulated vide RBI letter no. DESACS. BSD. 7070/03.09.62/ 2005-06 dated 12.06.2006. The population group wise classifcation is given here under :

Category# Branches (as on) * Offsite ATMs (as on) Onsite ATMs (as on) 31.03.2009 31.03.2010 31.03.2009 31.03.2010 31.03.2009 31.03.2010 Metropolitan 129 129 6 6 30 33 Urban 142 142 19 19 29 39 Semi-Urban 90 90 2 2 20 23 Rural 102 102 2 1 3 4 Total 463 463 29 28 82 99 # Reclassifed as per Part-II of the Uniform Code No.(Population range wise) circulated vide RBI letter no. DESACS. BSD.7070/03.09.62/2005-06 dated 12.06.2006. l Including six service branches (Delhi, Jaipur, Jodhpur, Kota, Mumbai & Udaipur). INSPECTION AND AUDIT Concurrent Audit Internal Control System & their Adequacy The concurrent audit system is extended to 91 branches including Treasury Branch covering 51.97 % of total deposits The Bank has put in place adequate and effective systems and 76.63 % advances and off balance sheet business viz. & controls, covering all areas in operations such as Credit, L.G. 80.50 % & L.C.98.76 % as against the requirement to Deposits, Depository and other Para-banking Products, cover minimum 50 % of the business under concurrent to ensure safety of assets, adherence to business strategy, audit stipulated by Reserve Bank of India. The concurrent economic use of resources, reliability of MIS, correctness auditors are also verifying 100 % foreign exchange business of fnancial reports, and compliance with laws & regulations. at the Forex Branches of the Bank. Certain Departments The Audit Committee of Board effectively monitors the of Central & Corporate Offce such as C.O. Administration, working and gives directions. Jaipur & Mumbai, Credit Card Management Division, Internal Inspection Treasury & Investment Department, Corporate Offce, Mumbai are also subject to concurrent audit. During the year, regular inspection of 305 Branches, 12 Controlling Offces & 24 Departments of Central / Services of qualifed frms of Chartered Accountants, most Corporate Offce including M.A.G.B. was conducted. The of them having DISA/CISA qualifcations, are being utilized inspections revealed that 66 & 333 branches were able for this work. to attain ‘Excellent’ and ‘Good’ rating respectively. Only Risk Based Supervision (RBS) one branch was found to be ‘Below Average’. Branches were evaluated on the basis of business parameters and The RBS process essentially involves continuous monitoring compliance with risk control measures. and evaluation of the Bank’s risk profle in relation to its

8 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD. business strategy and risk exposures, which is facilitated by As part of their engagement DCIPL tested controls in the construction of a Risk Matrix. various domains viz. IT Governance, Application Controls, Infosec Governance, System and Infrastructure Life Cycle The Bank has made signifcant progress in quality and Management and Record Maintenance. As per the report reliability of data, soundness of systems & technology, there are 65 high impact fndings, 106 medium impact appropriateness of risk control mechanism, etc for ensuring fndings and 25 low impact fndings. effectiveness of Risk Based Supervision in critical areas. The Bank is moving towards reorienting its organizational set The Bank is taking up necessary measures for rectifcation up towards RBS and put in place effcient risk management of the fndings. architecture and strengthened the management information PUBLICITY system. A P R agency has been appointed for image building. Besides Risk Based Internal Audit this is reinforced by the Bank’s brand ambassador Ms.Hema The Bank evaluates business risks & control risks and Malini, a high profle personality as a brand building exercise prepares a risk matrix for each business location taking into to ramp up its business. account both the business risk & control risk factors as per The Bank continued to maintain its presence on all the Risk based Audit Plan. The documented risk assessment popular entertainment, Business and News Channels methodology is approved by the Board and the risk of Radio and TV throughout the year. Besides usual assessment is undertaken annually. advertisements through hoardings on Trains, Roadways In terms of the provisions of section 30(1B) of the Banking Buses, Railway Stations, new locations were explored during Regulation Act, 1949, the Reserve Bank of India appointed the year by way of advertising in Bus Stands, Local Trains M/s Deloitte, Huskins & Sells to carry out special audit of etc. the Bank. The Auditors have pointed out in their interim Branch premises were also used for communication with report that in certain standard assets, Bank has made less customers / visitors by providing display through fex provisioning ( 0.40% as against 1.00% in commercial real banners, posters and translite scrollers with slides of bank assets sector) and also has not made required provisions products. for employees’ benefts (pension and gratuity) and payment of arrears against wage revision (w.e.f. 1.4.2007). Bank has The bank continued maintenance of wards at Swai Man initiated steps to rectify the observations while fnalizing the Singh Hospital and J.K. Loan Hospital Jaipur to demonstrate annual accounts for the year 2009-10. its commitment as a responsible corporate citizen. Information Systems (I.S.) Audit STATUTORY DISCLOSURE UNDER SEC.217 (2A) OF THE COMPANIES ACT, 1956 The I.S. Audit Cell conducts periodical risk based audit of Information Systems and monitor compliance of controls Particulars of Employees as required under the provisions to ensure safety, security & integrity of Data. This function of Section 217(2A) of the Companies Act, 1956, read with also involves identifcation of the extent to which the Bank’s the companies (Particulars of Employees) Rules 1975, are Information Technology Systems are exposed to various as under: types of operational risks. S. Name & Period Amount Remark The I.S. Audit Cell conducted I.S. Audits of 331 branches No Designation paid (Rs.) during the year covering 305 Branches & 26 Administrative Offces (Regional Offces & Central / Corporate Offce 1 Sh. P.L. Ahuja, 01.04.09 2271489 Retired on Departments besides software audit of KYC-AML, CMS MD & CEO to completion of Software & parameter audit of RIMS Software for Basel II 20.11.09 his term compliance and offsite non-intrusive Penetration Testing of 2 Sh. G. 20.11.09 1357525 Appointed by Network at Data Centre. Out of total 331 Audits, 7 Branches Padmanabhan, to RBI & Administrative Offces were assessed as “Medium Risk” MD & CEO 31.3.10 and remaining were assessed as ‘Low Risk”. STATUTORY DISCLOSURES UNDER SEC.217 (1) Reserve Bank of India appointed M/s Deloitte and Touche (e) OF THE COMPANIES ACT, 1956 Consulting India Private Ltd. (DCIPL) in terms of provisions The Bank has been making all possible attempts to reduce of section 30(1B) of the Banking regulation Act 1949 for energy consumption on its operations. The company, being a conducting IS Audit of the Bank. 67th ANNUAL REPORT 2009-10 9 THE BANK OF RAJASTHAN LTD. banking company and authorized dealer in foreign exchange, 3. Reserve Bank of India vide order dated 14th is taking all steps to augment its foreign exchange business December, 2009 appointed Shri M. Ravindra Vikram, and has computerized most of its operations. The Bank has Chartered Accountant, and Shri V. Seshadri, as also taken up adequate measures for innovation, adaptation additional directors w.e.f. 14th December 2009 in and absorption of state of the art technology in its business. exercise of powers conferred under section 36AB of the Banking Regulation Act, 1949. PROPOSED AMALGAMATION WITH ICICI BANK LIMITED 4. Shri V.P.Khurana , an independent and non executive director, has resigned from the Board w.e.f. 12th May The Board of Directors in it’s meeting held on 23.05.2010 2010. have approved Scheme of Amalgamation of the Bank with ICICI Bank Limited. The share exchange ratio has The Board places on record its appreciation for valuable been approved at 25 shares of ICICI Bank Limited for 118 contribution made by Shri P.L.Ahuja and Shri V.P.Khurana shares of The Bank of Rajasthan Limited which works out during their tenure on the Board of the Bank. to a swap ratio of 1:4.72. Extraordinary General Meeting The Board welcomes new Managing Director Shri of Shareholders has been convened on 21st June, 2010 G.Padmanabhan and new Directors Shri M.R.Vikram and to approve the amalgamation scheme in terms of Section Shri V.Seshadri and looks forward to their guidance to the 44A of Banking Regulation Act, 1949. After approval by Bank. shareholders, application for necessary approval would be submitted to RBI. REPORT ON CORPORATE GOVERNANCE STATUTORY AUDITORS A detailed report on the status of implementation of the corporate governance guidelines has been furnished as an The Statutory Auditors M/S Gokhale & Sathe, Chartered Annexure-I to this Report. Accountants, Mumbai will retire at the conclusion of the ensuing Annual General Meeting. DIRECTORS’ RESPONSIBILITY STATEMENT AUDIT COMMITTEE Pursuant to sub-section (2AA) of Section 217 of the Companies Act, 1956, the Board of Directors of the The composition of Audit Committee is given in the Report Company hereby state and confrm that: on Corporate Governance. 1. In the preparation of the Annual Accounts, the SUBSIDIARY COMPANY applicable accounting standards had been followed The name of the erstwhile subsidiary of the Bank namely along with proper explanation relating to material Rajasthan Bank Financial Service Ltd., (RBFSL) has been departures; struck off from the register of Registrar of Companies u/s 2. The Directors had selected such accounting policies 560 of the Companies Act 1956. The Subsidiary Company and applied them consistently and made judgments stands merged with the Bank. and estimates that are reasonable and prudent so as to BOARD OF DIRECTORS give a true and fair view of the state of affairs of the Company at the end of the fnancial year and of the During the period under report, following changes have proft of the Company for the period; taken place in the Board of Directors: 3. The Directors had taken proper and suffcient care 1. Reserve Bank of India vide order dated 19th for the maintenance of adequate accounting records November, 2010 appointed Shri G. Padmanabhan as in accordance with the provisions of the Companies the Managing Director & Chief Executive Offcer of Act, 1956 for safeguarding the assets of the Company the Bank w.e.f. 20th November 2009 for a period of and for preventing and detecting frauds and other two years or till further orders. irregularities and; 2. Shri P.L. Ahuja relinquished the offce of MD & CEO 4. The Directors had prepared the annual accounts on a on 19th November, 2010 after expiry of his term. going concern basis.

10 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

QUALIFICATIONS IN AUDITORS REPORT AND DIRECTORS’ EXPLANATION The Directors refer the qualifcation in the Directors’ Report and as required by section 217(3) of the Companies Act, 1956, give their explanation as under:

Auditors Qualifcations Management Reply Note No. 12.2 of schedule – 18, Notes to Accounts Base data has been provided by the Bank and the assumptions regarding provision for long term employee benefts, where, are based on these. Incidentally, they are also in line with due to variations in base data and actuarial assumptions other private sector banks. and its in signifcant impact on valuation, the loss has been overstated by Rs. 149.58 crores. Note No. 12.3 of Schedule 18, Notes to Accounts, a Advance contribution Rs.31.50 crores has been made for sum of Rs.31.50 crores refected as an asset through not purchase of annuity to Pension Fund against provision lying realisable. Accordingly, the sum of Rs.31.50 crores and under Liabilities. This is in line with existing practice being the corresponding Deferred Tax Asset is overstated to the followed by the Bank extent of Rs.10.46 crores. Note No, 13 of schedule 18, Notes to Accounts, regarding Final report of special audit is awaited. possible provisioning arising out of the special audit which cannot be presently quantifed. Note No. 40 of Schedule 18, Notes to Accounts, regarding The accounts are prepared under the going concern proposed merger of the bank and consequent preparation assumption as the business of banking is intended to be of fnancial statements under the going concern assumption. continued. MANAGEMENT DISCUSSION & ANALYSIS This has been included as a separate Annexure -II to this report. ACKNOWLEDGEMENT The Board of Directors gratefully acknowledges the continued co-operation and support of the Reserve Bank of India, Government of Rajasthan and other state governments, business associates, valued customers and shareholders. The Board also places on record its appreciation of the dedicated services rendered by the employees at all levels. Place : Mumbai . Date : 28th May, 2010 For and on behalf of the Board

(G. Padmanabhan) Managing Director

Sd/- Sd/- Sd/- Director Director Director

67th ANNUAL REPORT 2009-10 11 THE BANK OF RAJASTHAN LTD.

ANNEXURE - I TO THE DIRECTORS’ REPORT CORPORATE GOVERNANCE govern the composition of the Board of Directors. In compliance with Clause 49 of the Listing Agreement The Board consists of eminent persons with entered into with the stock exchanges, the Company submits considerable professional expertise and experience in this section on Corporate Governance, which forms part of banking, fnance and other felds as specifed in the the Report of the Directors to the Members. said Act. The points mentioned in the said Clause have been The present Board is comprised of ffteen non- incorporated as under: executive directors and one executive director (i.e. Managing Director). 1. BRIEF STATEMENT ON COMPANY’S PHILOSOPHY ON CODE OF GOVERNANCE The names of directors and their attendance at Board/ Committee meetings are given under the heading of The basic philosophy of corporate governance in the “Attendance of Directors.” Bank is to achieve business excellence and enhance shareholder value, keeping in view the interests of 3. COMMITTEE OF DIRECTORS (COD) its stakeholders and expectations of society. The The main functions of the Committee are to exercise Company is dealing with a large and diversifed powers delegated by the Board on various fnancial customer base comprising corporate, institutional and and operational matters. the COD comprises of individual entities. Our mission is to become “most S/Shri K.N. Bhandari Chairman of Committee, preferred Bank leveraging technology, to develop life V.Seshadri, V.P.Khurana, K.G. Kurian, Sanjay Kumar long relationship with the customers and create value Tayal, Shekhar Bhatnagar, A. Madhavan and Shri for the employees and stakeholders.” Our employees G.Padmanabhan, Managing Director & CEO of the are committed to offer effcient and courteous service. Bank. To promote excellence and improvement in the 4. AUDIT COMMITTEE OF THE BOARD (ACB) quality of service we value our customers’ feedback. The Audit Committee comprises of seven non- The corner stones of the Bank’s governance executive directors chaired by Shri M.Ravindra philosophy are compliance, transparency, Vikram Chartered Accountant , Chairman of accountability, control and corporate leadership. Committee. Besides, S/Shri K.G. Kurian, Nitin Goel, Thus the objectives of corporate governance in the P.N.Bhandari, V.Seshadri, Shekhar Bhatnagar and A. Company are: Madhavan are members of the Committee. The main q To comply with the directives of RBI, SEBI functions of Audit Committee are as under: and other regulatory authorities. 1. Overseeing the Bank’s fnancial reporting q To ensure transparency and integrity in process and the disclosure of its fnancial communication and to make available full, information to ensure that the fnancial accurate and clear information to all concerned. statement is correct, suffcient and credible. q To ensure accountability for performance and 2. Recommending to the Board, the to achieve excellence at all levels. appointment, re-appointment and, if required, q To prevent misuse of power, facilitate timely the replacement or removal of the statutory response to change and ensure that business auditor and the fxation of audit fees. risks are effectively controlled. 3. Approval of payment to statutory auditors for q To provide corporate leadership of highest any other services rendered by the statutory standard for others to emulate. auditors. In view of serious Corporate governance issues the 4. Reviewing, with the management, the annual MD & CEO has been appointed by Reserve Bank of fnancial statements before submission to the India. The disclosures as given in para 13 may kindly Board for approval, with particular reference be referred. to: 2. BOARD OF DIRECTORS (BOD) a. Matters required to be included in the Director’s Responsibility Statement to The provisions of the Banking Regulation Act, 1949, be included in the Board’s report in

12 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

terms of clause (2AA) of section 217 13. Carrying out any other function as is of the Companies Act, 1956. mentioned in the terms of reference of the b. Changes, if any, in accounting policies Audit Committee. and practices and reasons for the same. The Company Secretary acts as the Secretary to the c. Major accounting entries involving Audit Committee. estimates based on the exercise of 5. SHAREHOLDERS/INVESTORS GRIEVANCE judgment by management. COMMITTEE (IGC). d. Signifcant adjustments made in the The Shareholders/Investors Grievance Committee fnancial statements arising out of audit was constituted on 30.10.2001. The Committee fndings. comprises of Four non-executive directors chaired e. Compliance with listing agreement and by Shri Sanjay Kumar Tayal. Shri Nitin Goel, other legal requirements relating to Shri.V.P.Khurana & Shri Vipul D Mehta are the fnancial statements. other members of the Committee. The Company Secretary acts as the Secretary to the Committee. The f. Disclosure of any related party Committee has been constituted to specifcally look transactions. into the redressing of shareholders and investors g. Qualifcations in the draft audit report. complaints like transfer of shares, non-receipt of balance sheet, non-receipt of declared dividends etc. 5. Reviewing, with the management, the quarterly fnancial statements before submission to the To further improve the quality of investors’ services Board for approval. & to ensure better corporate governance, the Bank has adopted following Investor Servicing Standards/ 6. Reviewing, with the management, performance Norms for servicing the various requirements of of statutory and internal auditors, adequacy of investors: the internal control systems. 7. Reviewing the adequacy of internal audit Investor Request No. of Days function, if any, including the structure Stop transfer (confrmation) 2 of the internal audit department, staffng Updating change of address 5 and seniority of the offcial heading the Registration of Nomination 5 department, reporting structure coverage and Investor Query (routine) 5 frequency of internal audit. Registration of power of attorney 7 8. Discussion with internal auditors any Query on demat 7 signifcant fndings and follow up there on. Query on non-receipt of Dividend/ 5 9. Reviewing the fndings of any internal Debenture interest investigations by the internal auditors into ECS/Bank mandate updation 7 matters where there is suspected fraud or Investor query (specifc) 10 irregularity or a failure of internal control Dematerialisation of shares 10 systems of a material nature and reporting the Transfer of shares (in physical) 15 matter to the board. Issue of duplicate certifcates 30 10. Discussion with statutory auditors before the These norms have also been displayed on the Bank’s audit commences, about the nature and scope website. of audit as well as post-audit discussion to During the year, 11 complaints were received from ascertain any area of concern. the shareholders and all complaints were disposed off 11. To look into the reasons for substantial defaults to their satisfaction. No complaint was pending with in the payment to the depositors, debenture the Bank as on 31.03.2010. holders, shareholders (in case of non payment 6. COMMITTEE FOR MONITORING OF of declared dividends) and creditors. FRAUDS (CMF). 12. To review the functioning of the Whistle In terms of RBI’s directions, Special Committee for Blower mechanism. Monitoring of Frauds was constituted on 26.3.2004

67th ANNUAL REPORT 2009-10 13 THE BANK OF RAJASTHAN LTD.

for monitoring of large value frauds involving 8. CUSTOMER SERVICE COMMITTEE (CSC) amount of Rs.25 lacs and above. S/Shri , K.G. In terms of RBI’s directions, a Customer Service Kurian, Salil Kapoor, V.P.Khurana, K.N.Bhandari and Committee was constituted on 10.12.2004 to Shri G.Padmanabhan , Managing Director & CEO, strengthen the corporate governance structure and are members of the Committee. MD and CEO is the also to improve the quality of customer service Chairman of the Committee in the Bank. the Committee is chaired by Shri 7. NOMINATION COMMITTEE (NC) G.Padmanabhan, Managing Director & CEO and The Reserve Bank of India has laid down specifc three non-executive directors i.e. S/Shri Sanjay Kumar criteria for the banks in private sector to undertake a Tayal, Pran M Agrawal, Vipul Mehta are members of process of due diligence to determine the suitability the Committee. of a person for appointment / continuing to hold 9. RISK MANAGEMENT COMMITTEE (RMC) appointment as a director on the Board, based upon qualifcation, expertise, track record, integrity In terms of RBI’s directions, a Risk Management and other ‘ft and proper’ criteria and directed to Committee was constituted on 10.12.2004 to effectively constitute a nomination committee to scrutinize the co-ordinate between Credit Risk Management declarations received from the directors. In terms Committee, Asset – Liability Management Committee of RBI’s directions, a Nomination Committee and other risk management committees in the Bank. was constituted on 10.12.2004 to scrutinize the the Committee is chaired by Shri G.Padmanabhan, declarations obtained from Directors. the Committee Managing Director & CEO and four non-executive consists of fve non-executive directors, chaired by directors i.e. S/Shri V.Seshadri, M.Ravindra Vikram, Shri M.Ravindra Vikram & S/Shri Magh Raj Calla, D.K.Tayal & Nitin Goel are members of the V.P.Khurana, V.Seshadri , K.N. Bhandari are members Committee. of the Committee. REMUNERATION PAID TO DIRECTORS DURING THE YEAR ENDED 31.3.2010 (A) The Bank paid total remuneration of Rs.22,71,488.71 to Shri. P.L.Ahuja, Ex-M.D& CEO & Rs.13,57,524.81 to Shri G.Padmanabhan, Managing Director & CEO during the year 2009-10 as under:

Name Period Remuneration paid (Rs.) From To Salary & PF Perquisite P.L Total Encashment & Gratuity Shri. P.L.Ahuja 01.04.2009 20.11.2009 1405555.60 221488.65 644444.46 2271488.71 Shri G.Padmanabhan 20.11.2009 31.03.2010 1200833.32 156691.49 - 1357524.81 TOTAL 2606388.92 378180.14 644444.46 3629013.52 (B) Details of remuneration paid to non-executive directors are as under : (Amount in Rs.)

S.No. Name of Director ( S/Shri) Sitting Fee Rs. Other remuneration Total Rs. 1 Sanjay Kumar Tayal 500000 - 500000 2 K.N.Bhandari 450000 - 450000 3 M.R.Calla 170000 - 170000 4 P.N.Bhandari 80000 - 80000 5 Ved Prakash Khurana 140000 - 140000 6 Pran M Agrawal 260000 - 260000 7 Vipul D Mehta 370000 - 370000 8 K.G.Kurian 430000 - 430000 9 Dr. D.K. Tayal 80000 - 80000

14 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

S.No. Name of Director ( S/Shri) Sitting Fee Rs. Other remuneration Total Rs. 10 Salil Kapoor 100000 - 100000 11 Nitin Goel 100000 - 100000 12 M.Ravindra Vikram 40000 - 40000 13 V.Seshadri 50000 - 50000 Total 2770000 - 2770000 Non-Executive Directors of the Bank do not have any pecuniary relationship with the Bank other than the sitting fees payable to them as above. 10. Meetings of the Board of Directors and their Committees and dates of the month on which meetings were held :

Month BOD COD ACB IGC CMF NC CSC RMC CC* MC** CPC+ April 09 - 11 ------20, 29 - 17 May 09 9 14, 29 8 - 2 28 - 29 18, 29 18, - June 09 27 15, 30 26 - - - - - 3, 15 - - July 09 29 21 29 - - - - - 10 - - August 09 29 12, 25 12 29 - - 24 24 - 11 - Sept. 09 - 16 ------Oct. 09 31 6 30 - 30 - - - - 21 - Nov. 09 - 10 - - - - - 18 - 16 - Dec. 09 4 17 ------Jan. 10 30 - 9, 29 29 ------Feb. 10 13 8, 25 ------8 March 10 11 10, 22 - - 29 - 31 30 - - - Total meetings 9 16 7 2 3 1 2 4 7 4 2 *Coordination Committee (since disbanded), ** Management Committee ( since disbanded), + Committee for appointment of Part Time Chairman 11. ATTENDANCE OF DIRECTORS Details of attendance of the Directors at the meetings of the Board and its Committees, directorship and membership held in other companies for each Director of the Bank are as follows :

S. Name of Category of No. of Meetings attended during 2009 -10 AGM No. of Member No. Director director other of other ( S/Shri) BOD CPC CC MC COD ACB IGC CMF N C RMC CSC Director Com- Ship held panies Com- mittee 1 G.Padmanabhan Managing 4 - - - 5 - - 1 - 1 1 - NM NM Director $ 2 Sanjay Kumar DSHG 8 2 7 4 14 7 2 2 - 3 1 Yes 4 NM Tayal 3 V.Seshadri ** Additional 3 - - - 1 - - - - 1 - - NM NM Director appointed by RBI 4 P.N.Bhandari Independent 8 ------1 NM Non Executive

67th ANNUAL REPORT 2009-10 15 THE BANK OF RAJASTHAN LTD.

S. Name of Category of No. of Meetings attended during 2009 -10 AGM No. of Member No. Director director other of other ( S/Shri) BOD CPC CC MC COD ACB IGC CMF N C RMC CSC Director Com- Ship held panies Com- mittee 5 K.N.Bhandari Independent 9 2 7 4 14 7 - 1 1 - - Yes 10 2 Non Executive 6 Magh Raj Calla Independent 7 - - - - 6 2 1 1 - - Yes NM NM Non Executive 7 Ved Prakash Independent 8 - - - 1 - - 1 - 3 1 Yes 1 3 Khurana Non Executive 8 Pran M. Independent 9 - - - 1 4 - - 2 - - 1 Yes NM NM Aggrawal Non Executive 9 K.G.Kurian Independent 9 - - 4 15 7 - 3 1 3 1 Yes NM NM Non Executive 10 Vipul Dhiraj Independent 9 - - 3 15 7 2 - - - 1 Yes NM NM Lal Mehta Non Executive 11 M.Ravindra Additional 3 ------1 - - 13 10 Vikram ** Director appointed by RBI 12 Nitin Goel Independent 9 ------1 - Yes 3 NM Non Executive 13 Salil Kapoor Independent 7 2 - - - - - 1 - - - Yes NM NM Non Executive

14 Dr. D. K.Tayal Independent 7 ------1 - Yes 2 NM Non Executive 15 Shekhar Additional 9 - 6 - 14 7 ------NM NM Bhatnagar Director appointed by RBI 16 A. Madhavan Additional 9 - 6 - 15 7 ------NM NM Director appointed by RBI 17 P.L.Ahuja * Managing 5 - - 11 - - 2 - 3 1 Yes NM NM Director* NM- Not a Member $ Shri .G.Padmanabhan joined as Managing Director & CEO w.e.f 20.11.2009 **S/Shri M.Ravindra Vikram & V.Seshadri appointed as RBI Nominee Director w.e.f. 14.12.2009. *Shri P.L.Ahuja ceased to be Managing Director w.e.f 19.11.2009 after completion of tenure. RE-APPOINTMENT OF DIRECTORS* University from 1981 to 1985 and working as Collector in different rural districts of Rajasthan during 1971 to 1979. As required under Clause 49 (VI) of the Listing Agreement He was three times Chairman of Rajasthan State Electricity the brief resumes of the directors seeking re-appointment Board and in that capacity he has dealt with lakhs of farmers. at the ensuing Annual General Meeting are furnished Shri Bhandari has special knowledge in the sector of hereunder : Agriculture and Rural Economy in terms of Section 10A(2) Shri P.N. Bhandari born on 07.03.41, is B.A. L.L.B. He of the Banking Regulation Act, 1949. retired from Indian Administrative Service in 2001 in the He is having directorship in M/s Taurus Home Furnishing scale of Chief Secretary. Shri Bhandari has vast experience Ltd. His shareholding in the Bank is NIL. in the feld of Agriculture and Rural Economy by virtue of his having been the Vice Chancellor of Udaipur Agriculture Shri Magh Raj Calla born on 12.03.41, is M.Sc., L.L.B. Shri

16 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

Calla has rich experience in legal matters. He was judge of banking. He remained on senior position with NBFC for the High Courts of Gujrat and Rajasthan and also the Acting than 7 years. Chief Justice of Rajasthan High Court. He was the Chairman He is not having any directorship in any other company. His of the Bar Council of Rajasthan and Advocate General of shareholding in the BanK is Nil. Rajasthan and is, at present, a practicing, as designated Senior Advocate in the Supreme Court of India. He had been the Shri Vipul Dhirajlal Mehta born on 17.07.63, is Diploma elected member of the Governing Council of Indian Law in MM Textile Technology and Diploma in Management & Institute, New Delhi from Judges constituency, where only Marketing of Textile. Shri Mehta has vast experience of 26 sitting Judges of Supreme Court and High Courts were years in running and consulting to SSI industries, Marketing voters for two consecutive terms from 1997 to 2003 till Advisor, Managing Strategic Business Unit. (SBU), Overseas the date of his retirement. At present, he is also the Vice Business Promotion, Project evaluation, Liaisons acivity. President of the Association of Retired Judges of Supreme He is not having any directorship in any other company. His Court and High Courts of India in the second consecutive shareholding in the company is 630 shares and 2990 shares term. Shri Calla has special knowledge in the feld of Law in the name of his relative. in terms of section 10A(2) of the Banking Regulation Act, * Four out of above fve would retire by rotation at the 1949. ensuing AGM. The names of such four directors would He is not having any directorship in any other company. His appear in the notice of AGM. shareholding in the BanK is NIL. 12. GENERAL BODY MEETINGS Shri K.N. Bhandari born on 01.03.42, is B.A. L.L.B. The details of last three Annual General Meetings are Shri Bhandari has vast experience of 40 years in fnancial as under: and Insurance matters. He was Chairman-cum-Managing Director of United India Insurance Company Ltd.(1998- AGM No. Date Time Venue 2000) and Company Ltd. (2000- 64th AGM 3rd September 10.00 Hotel India 2002). Shri Bhandari has special knowledge in the sector of 2007 AM International, ‘Finance & Insurance’ in terms of Section 10A(2) of the Udaipur Banking Regulation Act, 1949. 65th AGM 2nd August, 10.00 Hotel India He is having directorship in M/s Hindalco Industries 2008 AM International, Limited, M/s Saurashtra Cement Ltd., M/s Andhra Cements Udaipur Limited, M/s Agriculture Insurance Co. of India, M/s Su-raj 66th AGM 29th August 10.00 Hotel India Diamonds & Jewellery Limited, M/s Shristi Infrastructure 2009 AM International, Development Corpn. Ltd, M/s Credence Logistics Ltd, M/s Udaipur Magma Fincorp Ltd and Ispat Energy Ltd. He is having Ordinary/Special resolutions were passed at the membership in various Committee of Board on other meetings by show of hands / unanimously. companies as under:- There were no special resolutions passed by the S. Name of Name of Offce Company through postal ballot at any of the above No. the Company Committee held. meetings. 13. DISCLOSURES 1. M/s Agriculture Audit Chairman Insurance Co. Committee The Company has complied with the provisions of of India law and no penalties or strictures have been imposed 2. M/s Andhra Audit Member by the Stock Exchanges or SEBI or any other Cements Ltd. Committee statutory authority, on any matter related to the capital 3. M/s Shristi Audit Member markets, during the last 3 years. However, Reserve Infrastructure Committee Bank of India vide their speaking order dated 16th Development February, 2010 have imposed penalty of Rs. 25 lacs Corp.Ltd. on the Bank in terms of provisions of section 47A (1) 4. M/s Ispat Audit Member (b) of the Banking Regulation Act, 1949 for violation Energy Ltd. Committee of RBI Directions. The Directors did not incur any disqualifcation under Section 274 (1)(g) or under any Shri K.G. Kurian born on 20.10.48, is B. Sc. L.L.M. CAIIB. other law applicable to the Bank. Shri Kurian has vast experience of 22 years of commercial

67th ANNUAL REPORT 2009-10 17 THE BANK OF RAJASTHAN LTD.

Certain transactions with Directors / other parties are Tayal, brother of Shri Sanjay Kumar Tayal disclosed hereunder as a matter of good governance, (Director of the Bank) is director. During the although these transactions do not fall within the year 2009-10 amount paid is Rs.1,32,000/- meaning of “Related Parties”, within the meaning of (previous year Rs.1,32,000/-) clause 49 of Listing Agreement. f. Following premises have been taken on lease / a. Bank has taken on lease the Branch offce purchased by the Bank from the various parties premises at Pulgaon admeasuring 600 sq.ft. who are having business relations with Krishna area on a lease rent of Rs.10000/- per month Group of Companies in which Tayal family is from Pulgaon Cotton Mills which is a 100% interested : subsidiary of Jaibharat Textile Ltd., a company i. Corporate Offce premises on lease in which Shri Saurabh Tayal, son of Dr. Pravin at Mumbai at a monthly rent of Kumar Tayal, brother of Shri Sanjay Kumar Rs.15,42,250/- from M/s Solid Vision Tayal (Director of the Bank) is director. Pvt. Ltd. During the year 2009-10 ;During the year 2009-10 amount paid is amount paid is Rs.1,85,07,000/- ( Rs.1,20,000/-( previous year Rs.1,20,000/-). previous year Rs.1,85,07,000/-). b. Bank has taken on lease the branch ii. Premises on lease at Vithalwadi, Thane offce premises at Brahmani Kalmeshwar for storage of old records at monthly admeasuring 600 sq.ft. area on a lease rent rent of Rs.3,32,090/- from M/s of Rs.10000/- per month from Kalmeshwar Satellite Consultancy Services Pvt. Textiles Mills Ltd. which is a 100% subsidiary Ltd. During the year 2009-10 amount of KSL Realties and Infrastructure Ltd., a paid is Rs.39,85,080/- ( previous year company in which Shri Saurabh Tayal, son Rs.39,85,080/-). of Dr. Pravin Kumar Tayal, brother of Shri Sanjay Kumar Tayal (Director of the Bank) is iii. Premises of Regional Offce, director. Lease deed of premises has not been Mumbai on lease (I & II portion executed. However, provision of Rs.1,20,000/- admeasuring 3000 sq.ft. each) at a has been made for the year 2009-10 ( previous monthly rent including service charges year Rs.1,20,000/-). Rs.15,00,000/- per month (at revised rent w.e.f. 08.01.2008 & 16.09.2008 c. Bank has taken on lease the branch offce respectively) from M/s Delux Polymers premises at Piparia (Silvasa) admeasuring 600 Ltd. M/s Ambika Silk Mills Company sq.ft. area on a lease rent of Rs.7500/- per Ltd. has sub-leased the premises to Shri month from M/s Eskay Kn’t (India) Ltd., a Sanjay Kumar Tayal and Dr. Praveen company in which Shri Navin Kumar Tayal, Kumar Tayal, admeasuring 3000 sq.ft. brother of Shri Sanjay Kumar Tayal (Director each which was further sub-leased to of the Bank) is director. During the year 2009- M/s Delux Polymers Pvt. Ltd. which is 10 amount paid is Rs.1,03,450/- ( previous year lessor of premises of Regional Offce, Rs.90,000/-) Mumbai. d. Bank has taken on lease the branch offce During the year total rent (including premises at Samarvani (Silvasa) admeasuring service charges) on both portions of 800 sq.ft. area on a lease rent of Rs.12000/- premises of Regional Offce, Mumbai per month from M/s Krishna Knitwear was paid Rs.1,80,00,000/- ( previous Technology Ltd., a company in which Shri year Rs.1,67,66,743/-). Tayal family Sanjay Kumar Tayal, Director of the Bank is is neither having any directorship director. During the year 2009-10 amount paid nor having shareholding in the above is Rs.1,65,600/- ( previous year Rs.1,57,055/-). metioned companies. e. Bank has taken on lease the branch offce g. Prior to Shri K.N.Bhandari became Director of premises at Umergaon (Silvasa) admeasuring the Bank, a term loan of Rs.50.00 crores was 1000 sq.ft. area on a lease rent of Rs.10,000/- sanctioned on 1st February 2005 for a period per month from M/s Krishna Lifestyle of 10 years to M/s Hindalco Industries Ltd. Technologies Ltd. in which Shri Navin Kumar

18 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

in which Shri K.N.Bhandari is also a Director. (1) Hitherto, Tayal Group holding was shown in the Shri K.N. Bhandari was appointed as Director Promoter Category. Based on the legal opinion w.e.f. 25th February 2006. The outstanding obtained, they are no longer being treated as in the account as on 31.03.2010 is Rs.45.60 Promoter of the Bank and belongs to the Dominant crores ( previous year Rs.47.48 crores) and the Shareholders group (DSHG). account is considered as Standard as on date. (2) The declared shareholding of Tayal Group is 28.60%, h. Term loan I of Rs.10.00 crores and term however as per SEBI ex-parte interim Order dated loan II of Rs.20.00 crores were sanctioned 8th March 2010, holding of Tayal Group and related on 17.11.2006 and 28.09.2007 respectively to entities are to the order of 55.01%. M/s Magma Fin Corp Ltd account at B/o CR COMPLIANCE WITH MANDATORY Kolkata in which Shri K.N.Bhandari became REQUIREMENTS Director on 22.10.2008 as per his disclosure. Term loan I of Rs.10 crores stands adjusted on The Bank has complied with the mandatory requirements of 27.03.2010 ( prevous year Rs.3.65 crores ) . The the Code of Corporate Governance as stipulated under clause outstanding in term loan II is Rs.4.99 crores as 49 of the Listing Agreement with the Stock Exchanges. The on 31.03.2010 ( previous year Rs.12.34 crores) Bank has also complied with the requirements of amended and the account is considered as Standard as clause 49 after it came into force. on date. COMPLIANCE WITH NON-MANDATORY i. Education Loan of Rs.0.60 crores (B/o REQUIREMENTS Lower Parel Mumbai) was sanctioned by 1. The Board Committee of Directors on 21.07.2009 During the year, there was no non-executive chairman to Shri Shubhashish Bhutiani and Shri in the Bank. However, The Board of Directors , in Sanjay Bhutiani who are daughter’s son their meeting held on 13th February 2010 have and son-in-law of Shri K.N.Bhandari approved appointment of Shri M.R.Calla , as Part Director on the Bank’s Board. The Time Chairman of Bank. The Bank has submitted outstanding in the account as on application to RBI for their approval in the matter. 31.03.2010 is Rs.0.10 crores and the account is considered as Standard as on 2. Remuneration Committee date.. Remuneration Committee has not been constituted Note: Facilities (funded / non funded) to Directors as remuneration and perquisites of the Managing / Firms / companies in which they have interest Director & CEO of the Bank is approved by the which are covered by 100% term deposit receipts of Reserve Bank of India. Non-Executive Directors the Bank under Bank’s lien have not been reported as were paid sitting fee of Rs.10,000 for each meeting these facilities are exempted under Section 20(1) of attended by them under Company Law . the Banking Regulation Act 1949. . 3. Shareholder Rights CEO and CFO have given necessary certifcation Half-yearly fnancial performance as on 30.09.09 was to the Board in terms of Clause 49(V) of Listing sent to the shareholders. Agreement. 4. Audit Qualifcations DIRECTORS’ SHAREHOLDING IN THEIR INDIVIDUAL NAMES AND RELATIVE/ FAMILY The Bank continues to adopt best practices to MEMBERS AS UNDER: ensure compliance with all the prescribed accounting standard. In the Audit Report the Auditors have made S.No. Name of Director Shareholding two qualifcations note and Directors have given (S/Shri) (No. of shares) their explanations thereon in the Directors Report as required u/s 217 (3) of the Companies Act, 1956 . 1. Vipul Dhirajlal Mehta 3620 5. Training of Board Members 2. Ved Prakash Khurana 2250 The Bank’s Board of Directors consists of 3. Dr. Dharinder Kumar Tayal 25507 professionals with expertise in their respective felds 4. Sanjay Kumar Tayal 450* and industry. They endeavour to keep themselves Total 31827

67th ANNUAL REPORT 2009-10 19 THE BANK OF RAJASTHAN LTD.

updated with changes in global economy and relevant 16. MEANS OF COMMUNICATION laws. The quarterly results are published in widely 6. Mechanism for evaluating non-executive Board circulating national and local dailies such as The Members Financial Express & Jai Rajasthan etc. The Bank As required by RBI, Bank has carried out an internal also displays its quarterly results on its website www. due diligence of all the non –executive Board bankofrajasthan.com. members. The Report would be placed before In terms of requirement of Clause 51 of the Listing Nomination Committee/ Board and after their Agreement, the data related to Quarterly fnancial comments/ observation, fnal report would be sent to results, shareholding pattern etc., are also posted on RBI. the special web-site www.sebiedifar.com within the 7. Whistle Blower Policy timeframe prescribed in this regard. The Bank has adopted the Whistle Blower Policy i.e. Now, in terms of Circular No. CIR/CFD/ internal policy to allow access to the Audit Committee DCR/3/2010 dated 16/04/2010, the SEBI has of Board - which permits the personnel who observe discontinued EDIFAR w.e.f. from 01/04/2010 and unethical or improper practice (not necessarily a the information will now be fled in new portal viz. violation of law) to approach the Audit Committee Corporate Filing and Dissemination System (CFDS) without necessarily informing their superiors and for put in place jointly by BSE and NSE at the URL www. providing protection to “Whistle Blowers” from unfair corpfling.co.in. termination and other unfair prejudicial employment A report on Management Discussions & Analysis has practices. No personnel have been denied access to been included as annexure-II to the Directors’ Report the Audit Committee. Moreover Bank is now in the and segment reporting has been included in Schedule process of revamping the whistle blower policy and – 18 to the Balance Sheet. would be placing note before Board for approval of a 17. GENERAL SHAREHOLDER INFORMATION revised policy. 14. CODE OF CONDUCT Day & date of AGM* The Board had laid down Code of Conduct for all Board members & senior management personnel (i.e. Time Dy. Managing Director, Executive Director, Addl. Venue Vice President, Vice Presidents, Sr. Vice President & Financial year April to March Asstt. Vice Presidents, General Managers, Dy.General Book closure Managers, Regional Heads) w.e.f. 01.01.06. The code date of conduct has been posted on the website of the Company. Dividend payment date All Board members and senior management personnel have complied with the code of conduct Internet www.bankofrajasthan.com and submitted their declaration regarding material and Website commercial transactions where they have personal E-mail [email protected] interest and have a potential confict with the interest address of the Bank, if any. Shareholders [email protected] 15. CODE FOR PREVENTION OF INSIDER complaints TRADING : Email address The Bank has adopted a share dealing code for the The AGM particulars will be communicated to the prevention of insider trading in the shares of the shareholders separately as & when decided by the Bank. The share dealing code, inter alia, prohibits Board. purchase / sale of shares of the Bank by the Directors and designated employees while in possession of unpublished price sensitive information in relation to the Bank.

20 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

FINANCIAL CALENDAR FOR THE YEAR 2010-11 LISTING ON STOCK EXCHANGES & STOCK CODE Results for the frst quarter 45 days upto ending 30th June, 2010 15.08.2010 The Bank’s shares are listed at the following three stock exchanges: Results for the second quarter 45 days upto ending 30th September, 2010 15.11.2010 Listing on Stock Exchange Stock Code No. Results for the third quarter 45 days upto 1. Jaipur Stock Exchange Ltd. 1 ending 31st December, 2010 15.02.2011 2. Bombay Stock Exchange Ltd., 500019 Results(Audited) for the fnancial By end of May, 2011 Mumbai year ending 31st March, 2011 3. National Stock Exchange of India BANKRAJAS Ltd. Annual General Meeting for the 3 months or 6 months Demat ISIN Numbers in NSDL & year ending March, 2011 30.09.2011 CDSL for Equity Shares : INE 320A01014 SHARE PRICE - MOVEMENT Share price movement at Mumbai Stock Exchange: High/low during 01.04.2009 to 31.03.2010

Month Open (Rs.) High (Rs.) Low (Rs.) Close No.of BSE Sensex shares traded April, 2009 37.60 54.70 37.60 42.65 40,91,066 11403.25 May, 2009 44.45 62.50 40.45 60.60 82,60,641 14625.25 June, 2009 62.80 70.00 49.80 59.90 2,34,44,180 14493.84 July, 2009 60.00 65.45 44.70 57.75 2,19,94,198 15670.31 August, 2009 58.15 82.20 57.55 77.05 4,57,32,508 15666.64 September, 2009 78.00 89.00 72.60 84.85 1,67,04,880 17126.84 October, 2009 84.50 98.00 78.30 79.50 1,89,17,355 15896.28 November, 2009 78.00 82.80 66.80 72.35 1,03,75,511 16926.22 December, 2009 73.00 83.00 72.05 76.60 71,40,968 17464.81 January, 2010 77.95 80.25 63.50 67.50 50,76,835 16357.96 February, 2010 67.00 68.35 58.00 61.70 29,16,026 16429.55 March, 2010 62.70 71.30 54.60 54.75 1,14,24,977 17527.77

67th ANNUAL REPORT 2009-10 21 THE BANK OF RAJASTHAN LTD.

SHAREHOLDING PATTERN AS ON 31.3.2010 (2) The declared shareholding of Tayal Group is 28.60%, however as per SEBI ex-parte interim order dated Category No.of Percentage 8th March 2010, holding of Tayal Group and related shares held Shareholding entities are to the order of 55.01%. 1. Promoter’s Holding 0 0 DISTRIBUTION SCHEDULE AS ON 31.3.2010 2. Mutual Funds, Banks, 11235565 6.96 Financial Institutions Category Number of Number of FIIs, NRIs & OCBs From To shareholders shares held 3. *Domestic 120946588 74.96 1 500 59038 8405475 Companies 501 1000 6482 4812265 4. Resident Individuals 29167940 18.08 1001 2000 2816 4041590 Total 161350093 100.00 2001 3000 868 2246845 * Notes:- 3001 4000 345 1233489 (1) Hitherto, Tayal Group holding was shown in the 4001 5000 298 1387743 Promoter Category. Based on the legal opinion 5001 10000 444 3187588 obtained, they are no longer being treated as Promoter of the Bank. In the absence of any other category 10001 50000 367 7929148 for the Dominant Shareholders group (DSHG), their 50001 Above 134 128105950 holding has been shown in the Public Category. Total : 70792 161350093

22 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

SHARE TRANSFER PROCESS The management asserts the following at para 1 of the report The Share transfer work is being carried out by Registrar on Corporate Governance forming part of the Directors’ and Transfer Agent ( RTA). The Bank has appointed M/ Report for the year 2009-2010. s Mondkar Computers Pvt Ltd as Registrar and Transfer “In view of serious corporate governance issues the MD & Agent ( RTA) for Share Regisrty Work w.e.f 1st July 2009. CEO has been appointed by Reserve Bank of India. The The details of RTA is as under: disclosures as given in para 13 may kindly be referred.” M/s Mondkar Computers Pvt Ltd, Though the above statement is indicative of serious Registrar & Transfer Agents, corporate governance issues during the year 2009-2010, the Corporate Offce,21, Shakil Niwas same have not been satisfactorily explained to us. Opp. Satya Saibaba Temple, Mahakali Caves Road, Subject to the above, in our opinion and to the best of our Andheri ( East) Mumbai- 400 093 information and according to the explanations given to us, Tel. Nos. 022 28257641, 28262920 we certify that the Bank has complied with the conditions of Fax: 022 28207207 Corporate Governance as stipulated in the above mentioned Mobile: 09820356406 ( Mr. Ravindra Utekar ) Listing Agreement. E-mail [email protected] [email protected] We state that such compliance is neither an assurance as to the future viability of the Bank nor the effciency or TRANSFER OF UNCLAIMED AMOUNT TO effectiveness with which the management has conducted the INVESTOR EDUCATION AND PROTECTION affairs of the Bank. FUND For Gokhale & Sathe The Bank had not declared dividend during the year 2001- Chartered Accountants 2002 therefore, no amount was credited to the Investor Firm Regn. No. 103264W Education and Protection Fund pursuant to Section 205C of the Companies Act, 1956 and the Investor Education and Rahul P. Joglekar Protection Fund (Awareness and Protection of Investor) Partner Rules, 2001 during the year 2009-10 Membership No.: 129389 For The Bank of Rajasthan Ltd. Place: Mumbai. Date: 16th June 2010. Place : Mumbai Sd/- Date : Managing Director DECLARATION Sd/- Sd/- Sd/- Declaration of the Managing Director and CEO Director Director Director pursuant to clause 49(II) (D) of the Listing agreement with Stock Exchanges. AUDITORS CERTIFICATE ON CORPORATE GOVERNANCE It is to declare that all the Board Members and Senior Management Personnel of the Bank have affrmed their To the Members of compliance with the Code of Conduct for the Financial Year The Bank of Rajasthan Limited Ended on 31st March 2010 in accordance with clause 49 (II) We have examined the compliance of conditions of (D) of the Listing Agreement entered into with the Stock corporate governance by The Bank Of Rajasthan Limited, Exchanges. The said Code of Conduct has been posted on for the year ended on 31st March 2010 as stipulated in clause the Bank’s website. 49 of the Listing Agreement of the said Bank with stock For the Bank of Rajasthan Limited exchanges. The compliance of conditions of corporate governance is G. Padmanabhan the responsibility of the management. Our examination was limited to procedures and implementation thereof, adopted Managing Director & CEO by the Bank for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an Place: Mumbai expression of opinion on the fnancial statements of the Date: 7th May, 2010 Bank.

67th ANNUAL REPORT 2009-10 23 THE BANK OF RAJASTHAN LTD.

ANNEXURE II TO DIRECTORS’ REPORT FOR THE YEAR 2009-10 MANAGEMENT DISCUSSION & ANALYSIS take frmer hold on the back of rising domestic and external demand. After a continuous decline for nearly a year, exports MACROECONOMIC OVERVIEW: and imports have expanded since October/November 2009. The country noticed slowdown of economic activities in Flow of resources to the commercial sector from both bank 2008-09 and economic growth decelerated to 6.7 per cent and non-bank sources has picked up. Surveys by the RBI as compared to 9 per cent in 2007-08 and 9.7 per cent in 2006- well as others suggest that business optimism has improved. 07 and despite the deepen economic crisis, Indian economy On balance, under the assumption of a normal monsoon registered an impressive growth indicating that it may expand and sustained good performance of the industry and services faster in the current fscal. sectors, for policy purposes, the Reserve Bank projects real GDP growth for 2010-11 at 8.0 per cent with an upside bias. The Indian banking system was not directly exposed to the sub-prime mortgage assets hence the public sector and the DEVELOPMENTS IN BANKING INDUSTRY private sector, remained basically fnancially sound and well In the Union Budget 2009-10, the Finance Minister had capitalized. The average capital to risk-weighted assets ratio announced as under: (CRAR) for the Indian banking system, as at end-March 2008, was 12.6 per cent, as against the regulatory minimum l To facilitate fow of credit at a reasonable rates, of nine per cent and the Basel norm of eight per cent. Even provided Rs. 4000 crore as a special fund out of Rural so, the country experienced knock-on effects of the global Infrastructure Development Fund (RIDF) to Small crisis, through the monetary, fnancial and real channels – Industrial Development Bank of India (SIDBI). This all of which came on top of the already expected cyclical will incentives Banks and State Financial Corporations moderation in growth. Our fnancial markets – equity, (SFCs) to lend to Micro and Small Enterprises (MSEs) money, forex and credit markets – came under pressure by refnancing 50% of incremental lending to MSEs mainly because of ‘the substitution effect’ of: (i) drying up during the current fnancial year. of overseas fnancing for Indian banks and Indian corporate; l Interest subvention of 2% on pre-shipment credit for (ii) constraints in raising funds in a bearish domestic capital seven employment oriented export sectors extended market; and (iii) decline in the internal accruals of the beyond the current deadline of September 2009 to corporate. All these factors added to the pressure on the March, 31st, 2010. domestic credit market. l Target for agriculture credit fow set at Rs. 325000 The up trend in industrial activity continues. The index crore for the year 2009-10 from Rs. 287000 crore in of industrial production (IIP) recorded a growth of 17.6 2008-09. per cent in December 2009, 16.7 per cent in January 2010 and 15.1 per cent in February 2010. The recovery has also l Interest subvention scheme for short-term crop become more broad-based with 14 out of 17 industry groups loans up to Rs. 3 lacs per farmer at the interest rate recording accelerated growth during April 2009-February of 7 percent per annum to be continued. Additional 2010. The sharp pick-up in the growth of the capital goods subvention to be paid from this year, as incentive to sector, in double digits since September 2009, points to the those farmers who repay short term crop loans on revival of investment activity. After a continuous decline schedule. for eleven months, imports expanded by 2.6 per cent in November 2009, 32.4 per cent in December 2009, 35.5 per l Under Debt Relief for Farmers further time given to cent in January 2010 and 66.4 per cent in February 2010. The the farmers having more than two hectares of land to acceleration in non-oil imports since November 2009 further pay 75 percent of their overdue under Debt waiver evidences recovery in domestic demand. After contracting and Debt Relief Scheme extended from 30.6.09 to for twelve straight months, exports have turned around 31.12.09. since October 2009 refecting revival of external demand. The banking sector continued to adapt itself to rapid Various lead indicators of service sector activity also suggest innovations in technology particularly on the information increased economic activity. On the whole, the economic technology front to impart effciency in providing wide recovery, which began around the second quarter of 2009- range of products & services to the public at large. Banks 10, has since shown sustained improvement. Industrial endeavored for including their branches on Core Banking recovery has become more broad-based and is expected to Solutions, which enabled anywhere banking services to

24 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD. facilitate quick transfer of funds in an effcient manner and V. To bring infation around 4.00 per cent by end of at reasonable cost. March 2010. MONETARY & CREDIT POLICY: VI. To achieve GDP growth for 2009-10 around 6.00 per cent with the assumption of a normal monsoon. The annual policy statement for 2009-10 is set in the context of a deep global economic slump and fnancial market VII. To increase deposits around 18.0 per cent and to turmoil. Governments and central banks around the world increase non-food credit around 20.0 per cent during have responded to the crisis through both conventional and 2008-09, banks with strong deposit base should unconventional fscal and monetary measures. And there is endeavour to expand credit beyond 20 per cent. unprecedented coordinated policy action globally. VIII. To increase usages of electronic system of payment Like all emerging economies, India too has been impacted and increase utilization of ATMs. by the crisis, and much more than was expected earlier. GDP IX. To strengthen rural credit RRBs were allowed to sell growth has moderated refecting lower industrial production, loan assets to other banks in excess of prescribed negative exports, deceleration in services activities, dented priority sector exposure. corporate margins and diminished business confdence. There are some comforting factors — well-functioning X. Policy measures relating to interest rate include fnancial markets, robust rural demand, low infation and constitution of a Working Group to review the comfortable foreign exchange reserves — which buffered present BPLR system to make credit pricing more us from the worst impact of the crisis. The fscal stimulus transparent. packages of the Government and monetary easing and regulatory action of the Reserve Bank have helped to arrest XI. Payment of interest on savings bank accounts on a the moderation in growth and keep our fnancial markets daily product basis with effect from April 1, 2010. functioning normally. The Reserve Bank of India continued with its policy of The thrust of the Reserve Bank’s policy stance since mid- liquidity management through open market operations September 2008 has been aimed at providing ample rupee including the market stabilization scheme, liquidity liquidity, ensuring comfortable dollar liquidity and maintaining adjustment facility, Repo, Reverse Repo and cash reserve continued credit fow to productive sectors. Taken together, ratio. Quarterly reviews of the annual policy statement were the policy measures of the Reserve Bank have ensured that undertaken to promote effective and vibrant communication the Indian fnancial markets continue to function in an with the various economic agencies. RBI had also acted orderly manner. These measures have augmented actual/ swiftly to pump out and bring liquidity in fnancial system as potential liquidity in the fnancial system by over Rs.420,000 and when required. crore. This should assure fnancial markets that the Reserve PERFORMANCE OF THE BANK DURING 2009-10 Bank will continue to maintain comfortable liquidity. FINANCIAL PERFORMANCE The main high lights of the policy statement are: The Bank has posted a net loss( after provisions & taxes) I. To ensure price stability, well-anchored infation of Rs. 102.13 crores for the year 2009-10 against a net proft expectations and orderly conditions in fnancial of Rs.117.71 crores for the previous year. The operating loss markets while sustaining the growth momentum. for the FY 2009-10 amounted to Rs. 27.90 crores as against II. To focus on credit quality and fnancial market operating proft of Rs. 193.77 crores for the Financial Year conditions to support export and investment demand 2008-09. The appropriations for the net loss have been in the economy. effected as shown in the performance highlights. III. To respond swiftly on a continuous basis to evolving The total income of the Bank remained at Rs.1489.48 crores adverse international and domestic developments as compared to an income of Rs. 1507.23 crores for the through both conventional and unconventional previous year. measures. DEPOSITS IV. To emphasis on credit quality and credit delivery while The total deposits of your Bank decreased from a level pursuing fnancial inclusion of Rs. 15187.15 crores to Rs. 15062.35 crores showing a decrease of 0.82%. The Core Deposits (excluding inter bank

67th ANNUAL REPORT 2009-10 25 THE BANK OF RAJASTHAN LTD. deposits) showed an increase from Rs. 13832.25 crores as on recognized as primary segments .As per RBI guidelines, the 31st March 09 to Rs. 14204.23 crores as on 31st March 10. Banking operations segment has further been bifurcated The Bank continued to lay emphasis on a sustained growth into three segments i.e. corporate/ wholesale banking, retail in retail deposits by expanding client base with a focus on banking and Other banking operations. The working results Savings Bank and Current Account. Saving Deposits, which in respect of the four segments are as under : constitute the core of stable retail liabilities increased by (Rs. in crores) 25% to Rs 3360.00 crores as against Rs. 2687.99 crores in the previous year. The cost of deposits decreased from 7.10% in Business Segment For the For the the previous fnancial year to 6.55 % during the year under Particular Year ended Year ended review due to the general downward movement in interest 31st March 10 31st March 09 rates and increase in savings and current deposits. Segment Revenue ADVANCES Treasury Operations 485.60 489.73 Corporate / Wholesale 591.59 564.66 The Bank continued its focus on retail loan products. As a Banking result of this strategy the retail advances grew to Rs.1014.18 crores which helped in maintaining reasonable yield and Retail Banking 392.89 435.43 spread. The average yield on advances is 11.68%. Retail Other Banking 19.60 17.51 Advances constitute 11.95 % of the Bank’s total advances as Operations on 31st March 2010. Total 1489.68 1507.33 Business Segment For the For the The focus on retail also helped the Bank in diversifying the Particular Year ended Year ended inherent risks in lending. In corporate advances the Bank 31st March 10 31st March 09 continued its policy of targeting selected borrowers of high Less: Inter Segment credit standing. Revenue The net advances of the Bank during the year under report Net Sales/ Income 1489.68 1507.33 increased to Rs.8329.47 crores as against Rs. 7780.75 crores from Operations in 2008-09. Segment Result Proft/(Loss) before PRIORITY SECTOR : Tax and Interest from In terms of the directives from the Government of India each Segment and the Reserve Bank of India, the Bank is giving utmost Treasury Operations (15.49) 57.39 importance to lending under Priority Sector and Agriculture Corporate / Wholesale (89.25) 55.71 Sector. The Bank’s advances to Priority Sector (inclusive of Banking eligible investments) as a proportion of Adjusted Net Bank Retail Banking (59.37) 42.91 Credit at the end of previous year stood at 35.31% as on 31st Other Banking 19.29 17.18 March 2010. Operations INCOME ANALYSIS : Total (144.82) 173.19 Add/(less) Other (0.20) (0.10) The interest income on advances has decreased from Rs. Unallocated Income / 917.10 crores in FY 2008-09 to Rs. 906.02 crores in FY (Expenditure) Net Off 2009-10. The total income of the Bank decreased from Rs. Total Proft Before Tax (145.02) 173.09 1507.23 crores in FY 2008-09 to Rs. 1489.48 crores in FY Capital Employed 2009-10. The percentage of non interest income excluding Treasury Operations 251.28 323.64 proft on sale of investments to total income for the year Corporate / Wholesale 215.52 225.75 worked out to 6.55 . Banking SEGMENT- WISE PERFORMANCE Retail Banking 74.28 93.71 Other Banking 0.26 0.37 The Bank operates in two segments, namely, banking Operations operations and treasury operations which have been Total 541.34 643.47

26 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

INTERNAL CONTROL SYSTEM & THEIR Disaster Recovery Plans for computerised functions / ADEQUACY : operations have been framed & circulated. The plans provide procedures to take care of interruptions and quick recovery The Bank has put in place adequate and effective systems to normal business and also defnes roles & responsibilities & controls, covering all areas in operations such as Credit, of staff posted at Branches and Administrative Offces. Deposits, Depository and other Para-banking Products, to ensure safety of assets, adherence to business strategy, Disaster Recovery Site (DRS) of Data Centre with suffcient economic use of resources, reliability of MIS, correctness capacity is functional at different seismic zone to take care of of fnancial reports, and compliance with laws & regulations. Core Banking operations at branches & other service outlets The Audit Committee of Board effectively monitors the and mock trials also conducted to assess the preparedness of working and gives appropriate directions. DRS & BCP. External Service Provider undertaking credit card transactions on our behalf is also maintaining DR Site. INSPECTION AND AUDIT : Data of critical applications running at Data Centre are The function of the internal inspection and audit comes periodically replicated to DRS and it is also ensured that at under the oversight of the Audit Committee of the the end of day complete data of the day is available at DRS. Bank’s Board with the objective of verifying adherence To create awareness related to IT Security, Business to systems and procedure, quality and value of assets/ Continuity Plans – Disaster Recovery Plans for computerised liabilities and compliance of various statutory and regulatory operations at the grass root level, training sessions for various requirements at branches which were subject to inspection. feld functionaries are arranged and instructions are issued The Bank prepares an inspection programme every year through circulars, guidelines & various communications. and the inspections are carried out in accordance with the IT Security Policy, Business Continuity Plans – Disaster programme. Besides this, the Bank conducts an IS Audit Recovery Plans for computerised operations at branches and with a view to ascertain the compliance with the security Guidelines for computerised operations are also displayed at aspect related to computerize environment. The Bank also Bank’s internal website (RajBankPortal) for ready availability has a mechanism for conducting concurrent audit to keep to the Bank personnel. Moreover, to take care of new operations of selected branches under close scrutiny. In developments in the ever changing IT Sector and to ensure addition, Revenue Audit is also conducted for checking Bank’s preparedness in IT systems, IT Security policy and revenue leakage at the branches. various plans & guidelines are also periodically reviewed and IS SECURITY circulated. Your Bank has been making extensive use of computers VIGILANCE and telecommunications systems to provide safe, secure & An elaborate and well-structured vigilance system is in place continuous best services to its customers at all the offces covering all areas of operations. The system is functioning of the Bank. It has also been our endeavour to cater needs in a proactive manner and in consonance with Reserve Bank of customers related to fnancial products which include of India’s guidelines to take appropriate steps in controlling banking services, multiple delivery channels and value added and containing fraud, forgery, malpractices etc. to minimize products by employing latest IT systems. losses arising out of such eventualities. The Bank recognizes The Bank is taking all necessary measures to minimise the vigilance as an integral managerial function. vulnerability of the Information Systems like interruption, In order to ensure meticulous compliance of the laid down disaster, error & abuse and to ensure business continuity. This system & procedures at feld level, branches are subjected is being done by deploying the industry standards Firewall, to surprise inspection and visits by controlling authorities Intrusion Detection System, Anti-virus Softwares and by on regular basis. In training sessions, due emphasis is laid putting in place IT Security Policy and various controls & on compliance of various measures of internal control and procedures related to computerized operations. Monitoring preventive vigilance. Expeditious disposal of complaints and of security status is done through IS Audits & network resultant vigilance cases are ensured at all levels by effective penetration testing to assess effectiveness & compliance of monitoring and supervision. controls & security measures. A Board level special committee has been constituted to To achieve the objective and ensure continuity / restoration review and monitor large value frauds involving Rs.25 lacs of business at Branches, Data Centre, Central Depository and above. and Administrative offces, Business Continuity Plans -

67th ANNUAL REPORT 2009-10 27 THE BANK OF RAJASTHAN LTD.

RISK BASED SUPERVISION (RBS) : System, identifying the gaps in implementation, steps being taken to bridge the gaps etc. The RBS process essentially involves continuous monitoring and evaluation of the Bank’s risk profle in relation to its Besides the quarterly progress reports, various other reports business strategy and risk exposures, which is facilitated by are also placed before the Board or RMC of Directors the construction of a Risk Matrix. periodically which keep them informed about different types of risks and the actions taken by the Bank to manage The Bank has made signifcant progress in critical areas such the same. Detailed Risk Profle of the Bank, designed by as quality and reliability of data, soundness of systems & the Reserve Bank of India for the purpose of Risk Based technology, appropriateness of risk control mechanism, etc. Supervision, is also placed before the Board / RMC of for ensuring effectiveness of Risk Based Supervision. The Directors classifying the operations of the Bank in various Bank has re-oriented its organizational set up towards RBS risk categories, to enable them to take a view about the level and put in place effcient risk management architecture and of risks and their directions. Risk Profle of the Bank is strengthened the management information system. updated quarterly. RISK MANAGEMENT : The Bank has put in place Loan Review Mechanism to The Reserve Bank of India has issued guidelines on Risk evaluate the quality of its credit portfolio through review of Management System advising banks to put in place risk sanctions made, renewal process, submission of monitoring management policies, procedures & systems duly approved reports and credit related MIS. by their Board. The guidelines require banks to evaluate risks OUTLOOK, OPPORTUNITIES AND in their portfolios and adopt systems for management of CHALLENGES risks keeping in view the size & complexity of their business operations. In compliance with the RBI guidelines the Bank OUTLOOK has put in place required risk management framework to The up trend in industrial activities continues and fow of actively manage and control risks. resources to the commercial sector from both bank and non The Bank is primarily exposed to three kinds of risks viz., bank sources will picked up, survey also suggest that business Credit Risk, Market Risk and Operational Risks and for optimism will improve. Assumption of a normal monsoon these risks the Bank has devised and implemented policies, and sustained performance of the industry and service sector procedures, organizational structure and control system. will provide opportunities, for the Indian banking system to The policies are reviewed keeping in view the developments accept challenges for the growth. taking place from time to time and experience gained by the OPPORTUNITIES Bank during the operations of the policy. The goal in risk management is to understand, identify, measure, monitor and Your Bank’s strong fundamentals, a country wide network control various risks that arise in Bank’s operations with the of 463 fully computerized, on line branches, full range of objective to strike balance between risk and rewards. fnancial products, strong customer franchise in markets served by it, around 4000 dedicated employees and services Risk Management is a Board driven function in the Bank. rendered with a traditional, yet modern touch will continue At the apex level there is a Board level Risk Management to be key drivers of performance in the coming years. Today, Committee of Directors. The Bank has put in place risk Bank is poised for a major jump in business growth and management organization structure and has set up high-level is looking at facing the challenges with greater confdence committees with participation of Top Management Team, through strategic planning and focused action. which include Risk Management Committee of Executives (RMC), Asset Liability Management Committee (ALCO), CHALLENGES Credit Policy Committee (CPC) and Information System Security Committee (ISSC), Investment Committee. With a Increasing competition both from domestic and international view to have an integrated view for all kind of risks, the Bank banks , technological upgradation to meet ever changing has set up an Integrated Risk Management Department. customer requirements, managing risk in the context of changing global fnancial markets, information security, The Bank has MIS to keep the Board / RMC of Directors / enterprise management systems , benchmarking of services, other risk committees informed about the progress achieved managing human resources, are some of the key challenges by the Bank towards implementation of Risk Management identifed by the Bank, for which effective steps have been already initiated.

28 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

BANK’S BUSINESS STRATEGY & INITIATIVES HUMAN RESOURCES & INDUSTRIAL RELATIONS The Bank has drawn plans in the existing presence to increase its clientele base and business volume and to stress more in The Bank accords top priority to the development of the the state of Rajasthan. In its attempt to enhance competitive Human Resources, which form the core strength of the capabilities, the Bank is focusing on adoption of modern organization. The Bank’s HRD strategy is centered around technology. The networking of branches and the state-of-art optimum utilization of human resources in-step with the technological platform has enabled the Bank`s customers to induction of new technology in banking operations and leverage multiple channels for their banking needs. redeployment of staff at new branches, extension counters and administrative offces. Recruitment & promotion policies With a view to showcase the rapid progress made by are accordingly reviewed allowing the individuals to remain the Bank, the competitive products and services offered motivated and excel in their job responsibilities. The HR and the national presence, the Bank had undertaken an efforts are concentrated on skill development and attitudinal aggressive advertisement campaign with Ms. Hema Malini change besides knowledge dissemination. as Brand Ambassador. The appearance has been ensured through regular adequate visibility on leading national news ****** & entertainment channels, print and other media and on various important websites dealing in fnance sectors.

67th ANNUAL REPORT 2009-10 29 THE BANK OF RAJASTHAN LTD.

BALANE SHEET AS ON 31ST ARH 2010

(Rs. in thousands) Sh A A 31.3.2010 31.3.2009 APTAL AND LABLTES Capital 1 1,61,35,01 1,61,35,01 Reserves & Surplus 2 7,75,15,80 8,84,24,09 Deposits 3 150,62,35,11 151,87,14,60 Borrowings 4 65,48 1,28,10 Other Liabilities and Provisions 5 13,00,54,65 9,90,37,71

TOTAL 173,00,06,05 172,24,39,51 ASSETS Cash and balance with Reserve Bank of India 6 10,78,70,47 7,03,45,08 Balances with banks and money at call and short notice 7 3,08,89,72 11,71,48,34 Investments 8 67,22,50,98 68,09,15,11 Advances 9 83,29,47,45 77,80,74,98 Fixed Assets 10 5,16,15,86 5,24,59,01 Other Assets 11 3,44,31,57 2,34,96,99

TOTAL 173,00,06,05 172,24,39,51

Contingent liabilities 12 12,60,70,12 13,58,13,40 Bills for collection 7,63,03,84 8,92,33,85 St At P 17 Nt t At 18

Th Sh t t t th B Sht.

For and on behalf of the Board (O.P.Gupta) (D. Saruparia) (G.Padmanabhan) Chief Financial Offcer & Addl.V.P. Dy. Managing Director Managing Director & Chief Executive Offcer

(R.K. Agrawal) DIRECTORS Company Secretary M. Ravindra Vikram Vipul Dhirajlal Mehta As per our report of even date Pran M. Agarwal For Gokhale & Sathe Chartered Accountants Firm Regn. No. 103264W (Rahul P. Joglekar) Partner Membership No.: 129389 Place : Mumbai Date : May 28, 2010

30 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

PROFT LOSS AOUNT FOR THE EAR ENDED 31ST ARH 2010 (Rs. in thousands) Schedule Year ended 31.3.2010 31.3.2009 . NOE Interest earned 13 13594886 13,75,83,96 Other income 14 1299937 1,31,38,95 TOTAL 14894823 15,07,22,91 . EPENDTURE Interest expended 15 10244764 9,98,45,27 Operating expenses 16 4929044 3,15,00,95 Provisions & contingencies 742320 76,05,50 TOTAL 15,91,61,28 . PROFTLOSS Net proft for the year 1021305 1,17,71,19 Transfer from Investment Fluctuation Reserve - - Proft / (Loss) brought forward 2343445 1,85,69,15 TOTAL 1,32,21,40 . APPROPRATONS Transfer to: Statutory Reserves - 29,43,00 Capital Reserve for Investment 90263 25,14,11 Investment Reserve Account - 71,24 General Reserve - 10,00,00 Proposed dividend - 3,22,70 Dividend Tax - 54,84 Balance carried over to balance sheet 1231877 2,34,34,45 TOTAL 1,32,21,40 Earning Per Share (Rs.) - Basic (Adjusted) 6.33 7.30 - Diluted (Adjusted) 6.33 7.30 Signifcant Accounting Policies 17 Notes forming part of Accounts 18 The Schedules referred to above form an integral part of the Proft & Loss Account For and on behalf of the Board (O.P.Gupta) (D. Saruparia) (G.Padmanabhan) Chief Financial Offcer & Addl.V.P. Dy. Managing Director Managing Director & Chief Executive Offcer

(R.K. Agrawal) DIRECTORS Company Secretary M. Ravindra Vikram Vipul Dhirajlal Mehta As per our report of even date Pran M. Agarwal For Gokhale & Sathe Chartered Accountants Firm Regn. No. 103264W (Rahul P. Joglekar) Partner Membership No.: 129389 Place : Mumbai Date : May 28, 2010

67th ANNUAL REPORT 2009-10 31 THE BANK OF RAJASTHAN LTD.

SHEDULES FORN PART OF BALANE SHEET AS ON 31ST ARH 2010 (Rs. in thousands) SHEDULE 1- APTAL A As on 31.3.2010 31.3.2009 Ath 26,50,00,000 Equity Shares of Rs.10 each 2650000 2,65,00,00 (previous year 26,50,00,000 equity shares of Rs.10 each) 16,13,97,442 Equity Shares of Rs.10 each 1613974 1,61,39,74 (previous year 16,13,97,442 equity shares of Rs.10 each) S 16,13,50,093 Equity Shares of Rs.10 each 1613501 1,61,35,01 (previous year 16,13,50,093 equity shares of Rs.10 each) - P- 16,13,50,093 Equity Shares of Rs.10 each 1613501 1,61,35,01 (previous year 16,13,50,093 equity shares of Rs.10 each including 2,68,91,682 shares issued as Bonus shares) TOTAL 1613501 1,61,35,01 Note: Issued Share Capital includes 47349 shares (previous year 47349 shares) the allotment whereof has been kept in abeyance.

(Rs. in thousands) SHEDULE 2 RESERES SURPLUS A As on 31.3.2010 31.3.2009 . Sttt R Opening Balance 2002711 1,70,84,11 Additions 29,43,00 Tt 2002711 2,00,27,11 . t R a) For premises (Revaluation Reserve) Opening Balance 4021205 4,09,07,30 Additions — Deductions Less: Depreciation on revaluation transferred to Proft & Loss Account 69524 (6,95,25) Sub-Total 3951681 4,02,12,05 b) For Investments 266237 1,48,26 Additions during the year 90263 25,14,11 Sub-Total 356500 26,62,37 Tt 4308181 4,28,74,42 . Sh P Opening Balance 10,94,97 Deductions (Utilized for Bonus shares) (10,94,97) Tt — . R Opening Balance 199791 25,92,90 Additions 10,00,00 Deductions (Utilized for Bonus Shares) (15,94,99) Tt 199791 19,97,91

32 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

SHEDULES FORN PART OF BALANE SHEET AS ON 31ST ARH 2010 (Rs. in thousands) SHEDULE 2 RESERES SURPLUS t. A As on 31.3.2010 31.3.2009 . R Oth R Opening Balance 1896 18,96 Additions — Deductions — Tt 1896 18,96 . tt R At Opening Balance 7124 — Additions 71,24 Deductions — Tt 7124 71,24 . Pt L At Balance Proft as per account Annexed 1231877 2,34,34,45 RAND TOTAL 7751580 8,84,24,09

(Rs. in thousands) SHEDULE 3 DEPOSTS A As on 31.3.2010 31.3.2009 . D Dt i) From Banks 420984 71,45,95 ii) From Others 15369918 14,03,58,35 Sub-total 15790902 14,75,04,30 . S B Dt 33599975 26,87,99,58 . T Dt i) From Banks 8160201 12,83,44,38 ii) From Others 93072433 97,40,66,34 S-tt 101232634 110,24,10,72 Tt t 150623511 151,87,14,60 Tt t t N Nil

(Rs. in thousands) SHEDULE 4 BORRONS A As on 31.3.2010 31.3.2009 . B i) Reserve Bank of India — ii) Banks (other than Reserve Bank of India) 5327 2,07 iii) Other Institutions and Agencies 1141 43,63 S-tt 6468 45,70 . B t 80 82,40 Tt 6548 1,28,10 Secured borrowings included above 2,07

67th ANNUAL REPORT 2009-10 33 THE BANK OF RAJASTHAN LTD.

SHEDULES FORN PART OF BALANE SHEET AS ON 31ST ARH 2010 (Rs. in thousands) SHEDULE 5 OTHER LABLTES AND PROSONS A As on 31.3.2010 31.3.2009 I. Bills payable 1268266 100,71,41 II. Inter-offce adjustments (net) — III. Interest accrued 77294 7,00,53 IV. Others (including provisions)* 11659905 8,82,65,77 Tt 13005465 9,90,37,71 *Includes 7.50% Unsecured Non-Convertible Redeemable Subordinated 36,00,00 36,00,00 Bonds Series III Option I redeemable at par on 15.11.2011 7.75% Unsecured Non-Convertible Redeemable Subordinated 36,00,00 36,00,00 Bonds Series III Option II redeemable at par on 15.7.2014 8.70% Unsecured Non-Convertible Redeemable Subordinated 70,00,00 70,00,00 Bonds Series IV Option I redeemable at par on 28.4.2015 9.50% Unsecured Non-Convertible Redeemable Subordinated 48,00,00 48,00,00 Bonds Series V redeemable at par on 15.1.2017 10.50% Unsecured Non-Convertible Redeemable upper 61,10,00 61,10,00 Tier II bonds redeemable at par on 22.9.2021 11.50% Unsecured Non-Convertible Redeemable Subordinated 43,80,00 43,80,00 Tier II bonds series VI redeemable at par on 5.1.2019 10.50% Unsecured Non-Convertible Redeemable Subordinated 45,00,00 — Tier II bonds series VII (option II) redeemable at par on 8.6.2019 10.25% Unsecured Non-Convertible Redeemable Subordinated 5,00,00 — Tier II bonds series VII (option I) redeemable at par on 8.4.2016

(Rs. in thousands) SHEDULE 6 ASH BALANES TH RESERE BANK OF NDA A As on 31.3.2010 31.3.2009 . h h (including foreign currency notes) 812829 1,14,45,79 . B th R B In Current Account 9974218 5,88,99,29 In Other deposit account — Tt 10787047 7,03,45,08

34 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

SHEDULES FORN PART OF BALANE SHEET AS ON 31ST ARH 2010 (Rs. in thousands) SHEDULE 7 BALANES TH BANKS ONE AT ALL AND A A SHORT NOTE 31.3.2010 31.3.2009 I. IN INDIA i) Balances with Banks a) In Current Accounts 477431 46,74,05 b) In Other Deposit Accounts 1022566 6,45,41,29 ii) Money at call and short notice a) With banks 1500000 2,00,00,00 b) With other institutions 2,14,94,86 Sub-total 2999997 11,07,10,20 II. OUTSIDE INDIA i) In Current Accounts 73862 13,66,14 ii) In other deposit accounts — iii) Money at Call and Short Notice 15113 50,72,00 Sub-total 88975 64,38,14 Total 3088972 11,71,48,34

(Rs. in thousands) SHEDULE 8 NESTENTS A As on 31.3.2010 31.3.2009 tt 67240167 68,10,65,80 Less – Provisions 15069 1,50,69 Nt 67225098 68,09,15,11 B- 1. Government securities 44038891 46,45,11,37 2. Other approved securities 385052 66,71,48 3. Shares 135907 10,55,72 4. Debentures and Bonds 2203705 2,49,12,27 5. Subsidiary/sponsored institution 3500 35,00 6. Others (i) Certifcate of Deposits 5,09,18,47 (ii) Commercial Paper 48,51,71 (iii) Units of UTI — (iv) Deposits with NABARD under RIDF 20213935 12,44,56,80 (v) Mutual Fund — (vi) Mortgage backed securities 244108 35,02,29 Tt 67225098 68,09,15,11

67th ANNUAL REPORT 2009-10 35 THE BANK OF RAJASTHAN LTD.

SHEDULES FORN PART OF BALANE SHEET AS ON 31ST ARH 2010 (Rs. in thousands) SHEDULE 9 ADANES A As on 31.3.2010 31.3.2009 A. i) Bills purchased and discounted 2163085 3,59,33,03 ii) Cash credits, overdrafts & loans repayable on demand 20644557 22,21,64,74 iii) Term Loans 60487103 51,99,77,21 Tt 83294745 77,80,74,98 B. i) Secured by tangible assets* 65938177 61,39,80,70 (*including advances against Book Debts) ii) Covered by Bank/Govt. Guarantees 5799291 5,86,90,62 iii) Unsecured 11557277 10,54,03,66 Tt 83294745 77,80,74,98 A C. i) Priority Sector 24877804 17,57,16,39 ii) Public Sector 14133090 10,93,96,06 iii) Banks 7527 15,57,54 iv) Others 44276324 49,14,04,99 Tt 83294745 77,80,74,98 A t Nil i

(Rs. in thousands) SCHEDULE 10 FIXED ASSETS A As on 31.3.2010 31.3.2009 I. Premises (including cost of land) At cost/valuation as on 31st March of the Preceding year 4,90,94,68 4,87,27,50 Additions during the year 54,69 3,67,18 Deductions during the year - - Depreciation to date* (23,86,17) (15,46,93) (*Includes Rs.8,39,24 for the year : Previous year Rs.8,39,90) Total 4,67,63,20 4,75,47,75 II. Other Fixed Assets (Including furniture and fxtures) At cost as on 31st March of the Preceding year 1,46,84,48 1,36,39,29 Additions during the year 9,84,01 11,41,42 Deductions during the year (2,23,63) (96,23) Depreciation to date* (Net) (1,05,92,20) (97,73,22) (*Includes Rs.8,18,98 for the year Previous year Rs.9,62,96) Total 48,52,66 49,11,26 III. Leased Assets - - TOTAL (I+II+III) 5,16,15,86 5,24,59,01

36 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

SHEDULES FORN PART OF BALANE SHEET AS ON 31ST ARH 2010 (Rs. in thousands) SHEDULE 11 OTHER ASSETS A As on 31.3.2010 31.3.2009 I. Interest accrued 1044857 77,48,53 II. Tax paid in advance/tax deducted at Source (Net of Provision) 200564 19,57,67 III. Stationery and stamps 30505 3,19,23 IV. Non-banking assets acquired in Satisfaction of claims 27682 2,76,82 V. Others* 2139549 1,31,94,74 Tt 3443157 2,34,96,99 *Includes deferred tax assets (net) 1401886 59,00,55

(Rs. in thousands) SCHEDULE 12 CONTINGENT LIABILITIES As on o 31.3.2010 i it te ot coee et 73,14,68 iiit o ccot o otti orr ece cotrct 6,91,44,50 rtee ie o e o cotitet i 3,71,49,96 tie i -- ccetce eoreet oter itio 1,22,55,43 ter ite or ic te i cotiet ie 2,05,55 Total 12,60,70,12

67th ANNUAL REPORT 2009-10 37 THE BANK OF RAJASTHAN LTD.

SHEDULES FORN PART OF PROFT AND LOSS AOUNT FOR THE EAR ENDED 31ST ARH 2010 (Rs. in thousands) SHEDULE 13 NTEREST EARNED A 31.3.2010 As on 31.3.2009 I. Interest/discount on advances/bills 9060168 9,17,09,90 II. Income on investments 4300904 3,66,20,94 III. Interest on balances with Reserve Bank Of India and other inter-bank funds 230196 87,51,38 IV. Others 3618 5,01,74 Tt 13594886 13,75,83,96 (Rs. in thousands) SHEDULE 14 OTHER NOE A As on 31.3.2010 31.3.2009 I. Commission, exchange and brokerage 316874 37,86,72 II. Proft on sale of investments 393026 41,97,68 Less: Loss on sale of investments 68154 (5,96,62) III. Proft on revaluation of investments — Less:Loss revaluation of investments — IV. Proft on sale of land, buildings & other assets 758 1,68 Less:Loss on sale of land, buildings & Other assets 2766 (12,21) V. Proft on exchange transactions 55827 8,66,59 Less: Loss on exchange transactions 1017 ( 8,33) VI. Income earned by way of dividends, etc. from joint ventures in India — VII. Miscellaneous Income 605389 49,03,43 Tt 1299937 1,31,38,95

(Rs. in thousands) SHEDULE 15 NTEREST EPENDED A As on 31.3.2010 31.3.2009 I. Interest on deposits 9865575 9,69,07,90 II. Interest on Reserve Bank of India/Inter- Bank Borrowings 1855 2,15,38 III. Others 377334 27,21,99 Tt 10244764 9,98,45,27

(Rs. in thousands) SHEDULE 16 - OPERATN EPENSES A As on 31.3.2010 31.3.2009 I. Payments to and provisions for employees 3821095 2,08,81,88 II. Rent, Taxes and Lighting 236316 24,49,02 III. Printing and Stationery 35050 3,55,63 IV. Advertisement and Publicity 32104 3,91,99 V. Depreciation on Bank’s property 114663 11,85,25 VI. Directors’ fees, allowances and expenses 5586 48,26 VII. Auditor’s fees and expenses (including branch auditors) 24551 62,55 VIII. Law charges 21775 1,90,93 IX. Postage, Telegrams, Telephones, etc. 68184 6,09,60 X. Repairs and Maintenance 66155 7,11,01 XI. Insurance 149105 13,66,11 XII. Other expenditure 354460 32,48,72 Tt 4929044 3,15,00,95

38 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

SHEDULE 17 BASS OF PREPARATON OF FNANAL STATEENTS The fnancial statements have been prepared on historical cost basis, unless otherwise stated, by following the going concern concept and are in accordance with statutory provisions. The accounting and reporting policies of the Bank used in the preparation of these fnancial statements conform to the statutory requirements, the Generally Accepted Accounting Practices prevailing within the banking industry in India (“Indian GAAP”), and the guidelines issued by Reserve Bank of India (“RBI”) from time to time. Where there are specifc directions from RBI in regard to issues relating to measurement (for eg. IRAC provisioning norms) or disclosure, the same are taken to supersede the Indian GAAP. The preparation of fnancial statements requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the fnancial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in the preparation of the fnancial statements are prudent and reasonable. Future results could differ from these estimates. SNFANT AOUNTN POLES 1. R Rt 1.1 Income and expenditure are generally recognised on accrual basis. In case of Non Performing Advances and Investments, overdue locker rent, interest on overdue bills, interest on tax refunds, such income is accounted for only on realization in accordance with the guidelines issued by RBI. 1.2 Till March 2008, the Bank recognised interest on matured term deposits at the time of renewal / withdrawal of the same. In pursuance of RBI circular DBOD.No.Leg.BC.34/09.07.005/2008-09, the Bank has been providing interest on outstanding matured term deposits at the savings bank rate of 3.50% p.a. 1.3 In accordance with the guidelines issued by the RBI, prior period disclosures are made in respect of any item which exceeds one percent of the total income/total expenditure as, accounted for in the proft and loss account. 2. tt 2.1 The investment portfolio of the Bank is classifed in accordance with the Reserve Bank of India (RBI) guidelines, into “Held for Trading”, “Available for Sale” and “Held to Maturity” categories. These are further identifed as Performing or Non-performing as per Income Recognition, Asset Classifcation and Provisioning norms of RBI. However, for disclosure in the balance sheet, these are classifed under six groups as follows : - Government securities - Other approved securities - Shares - Debentures and Bonds - Subsidiary/sponsored institution - Others 2.2 Basis of Classifcation: Classifcation of an Investment is done at the time of purchase into following categories: 2.2.1 Held to Maturity These comprise of Investments which the bank intends to hold till maturity. 2.2.2 Held for Trading Securities which are held for resale within 90 days from the date of purchase.

67th ANNUAL REPORT 2009-10 39 THE BANK OF RAJASTHAN LTD.

2.2.3 Available for Sale Investments which cannot be classifed in the above two categories. 2.3 Transfer of Securities between categories: The transfer / shifting of securities between the three categories of Investments is accounted at the least of acquisition cost/ book value / market value on the date of transfer and the depreciation, if any, on such transfer is fully provided for. 2.4 Valuation: The valuation of Investments is made in accordance with the RBI guidelines. 2.4.1 Held to Maturity The Investments classifed under this category are valued at acquisition cost. The excess of acquisition cost/book value over the face value is amortised equally over the remaining period of maturity. 2.4.2 Available for Sale Investments under this category are valued scrip-wise and net depreciation in each classifcation of securities is provided for, while the net appreciation in each classifcation of securities is ignored. 2.4.3 Held for Trading Investments under this category are valued scrip-wise on monthly basis and net depreciation under each classifcation is provided for, without adjusting the book value of the securities. However, unrealized gain on such valuation is ignored. 2.5 Recognition of Income & Expenditure 2.5.1 Dividend on equity and preference shares is recognised as income on receipt of the same and income from units of mutual fund is accounted on cash basis in accordance with the RBI guidelines. 2.5.2 The proft or loss on sale/redemption of Investments is taken to the Proft and Loss Account. However, in case of proft on sale / redemption of Investments from “Held to Maturity” category, an equivalent amount is appropriated to the “Capital Reserve”. 2.5.3 In respect of securities included in any of the three categories of Investments where interest/principal is in arrears for more than 90 days, income is not reckoned and appropriate provision for the depreciation in the value of the Investments is made, as per prudential norms applicable to non-performing advances. The depreciation / provision requirement in respect of non-performing Investments is not set off against the appreciation in respect of performing Investments. 2.5.4 Brokerage, incentive, front-end fees, etc. received on purchase of securities are reduced from the cost of Investments. 2.5.5 Expenses such as brokerage, fees, commission or taxes incurred at the time of acquisition of securities are charged to revenue. 2.5.6 The excess of acquisition cost/book value over the face value on “Held To Maturity” category is amortised in “Schedule 14 – Other Income under sub-head – Proft /(Loss) on Revaluation of Investment” as a deduction in conformity with RBI guidelines. The book value of the securities has been reduced to that extent. 2.6 Determination of Cost Cost of Investments is determined on the basis of weighted average cost method.

40 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

3. A P t 3.1 Advances are classifed as standard, sub-standard, doubtful or loss assets and provisions for losses are made on sub-standard, doubtful and loss assets as per the prudential norms of RBI as under : 3.1.1 Sub-standard 10%/20% of the amount outstanding as per books. 3.1.2 Doubtful 100% of the unsecured portion of the advance 20% to 100% of the secured portion depending upon the period for which advance has been considered doubtful as under : Up to 30.06.09 After 30.06.09 Upto one year 20% 20% More than one year upto two years 30% 30% More than two years upto three years 100% 30% More than three years 100% 100% 3.1.3 Loss Assets 100% of the amount outstanding as per books (net of DICGC/ ECGC claims, FDRs, Cash Margins etc. if any). Impact of change given in Notes to Accounts - schedule 18 – Note No. 11.1 3.2 Advances are net of unrealized interest on non performing advances, Bills Rediscounted, DICGC/ECGC claims received and provision made for non-performing advances. 3.3 Provision in respect of standard advances is made, as per the guidelines of RBI as under and is included under the head “Other Liabilities and Provisions” under the sub-head “Others (including provisions)” :

t t t Ut 30.09.2009 At 30.09.2009 Direct advances to agricultural and SME sectors 0.25% 0.25% Advances to commercial real estate sector * 0.40% 1.00% All other loans and advances 0.40% 0.40% * As per RBI circular DBOD No. BP.BC.58/21.04.048/2009-10 Dated 05.11.2009 4. F AtDt 4.1 Premises, (other than those which are revalued) and other fxed assets are stated at historical cost less accumulated depreciation. Cost includes incidental expenses related to the acquisition and installation of the asset. 4.2 Hitherto, the Bank provided for depreciation on immovable properties at the rates mentioned in Schedule XIV of the Companies Act, 1956. Pursuant to the revaluation carried out on 31st March 2008, there has been a revision in the estimated remaining useful life of the revalued immovable properties. For the purpose of computing depreciation on such properties over their estimated remaining useful lives, all such revalued properties have been categorised into 6 slabs based on their remaining useful lives, as given in the following table. Rates of depreciation in respect of these properties have been arrived at in a manner so as to depreciate 95% of the revalued amount over their remaining estimated useful life. R 31t h 2008 Rt Upto 30 years 4.75% 31 – 40 years 3.07% 41 – 46 years 2.32% 47 – 52 years 2.02% 53 – 58 years 1.79% Above 58 years 1.63% 4.3 In accordance with the Guidance note on treatment of Reserves created on revaluation of fxed assets issued by the Institute of Chartered Accountants of India, the additional depreciation relatable to revaluation is adjusted against Revaluation Reserve by transfer to Proft & Loss account.

67th ANNUAL REPORT 2009-10 41 THE BANK OF RAJASTHAN LTD.

4.4 Leasehold land is amortised over the period of lease. 4.5 Fixed assets are depreciated to the extent of 95% of original cost. If the book value of any asset is less than 5% of the original cost or revalued amount, as the case may be, no further depreciation is provided on such assets. 4.6 Depreciation on Fixed Assets is provided on monthly pro rata basis from the month of acquisition. Depreciation is not provided on assets sold during the year. 4.7 Depreciation on ATMs & Computers (including softwares forming integral part of hardware) is provided @ 33.33% on straight-line method basis in accordance with the guidelines of RBI. 4.8 Depreciation on all Other Fixed Assets is provided as per straight-line method basis at the rates prescribed in Schedule XIV to the Companies Act, 1956. 5. N-B At Non-Banking Assets are shown at cost or net realisable value whichever is lower and no depreciation is provided for the same. 6. F h tt 6.1 Monetary Foreign currency assets and liabilities and outstanding forward exchange contracts, guarantees, acceptances, endorsements and other obligations are translated on the Balance Sheet date at the exchange rates notifed by Foreign Exchange Dealers’ Association of India (FEDAI), as per the guidelines issued by RBI and the resultant gain/ loss is taken to the Proft and Loss account. 6.2 Foreign currency income and expenditure items are accounted at the exchange rates ruling on the date of transaction. 7. E Bt 7.1 Annual contribution to Gratuity, Pension Fund and Provision for leave encashment are determined and provided on the basis of actuarial valuation. The contributions to pension fund are made under a defned beneft scheme. As permitted by AS 15 vide para 145(b), the bank has opted for irrevocable choice to recognize the transitional liability in regard to Pension Fund, as an expense on a straight line basis over up to fve years from the date of adoption i.e. 1-4-2007. 7.2 In respect of employees who have opted for Provident fund scheme, a matching contribution is made by the Bank. 8. T The provision for tax for the year comprises of, current tax liability computed in accordance with the applicable tax laws, appellate orders in favour of the Bank though contested by the tax department in some cases, as the case may be. Taxes include Deferred Tax Adjustment on account of timing differences between taxable income and accounting income and Fringe Beneft Tax. 9. t At The bank assesses at each balance sheet date whether there is any indication that an asset may be impaired. Impairment loss, if any, is provided in the proft and loss account to the extent the carrying amount of assets exceeds their estimated recoverable amount. 10. E P Sh EPS Basic earnings per share is calculated by dividing the net proft or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. In computing the weighted average number of equity shares outstanding during the year, bonus shares issued during the year are considered for the entire period and the computation for earlier reported period is also adjusted for computing Earning Per Share as required by Accounting Standard 20 “Earning Per Share.”

42 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

11. St Rt The Reserve Bank of India vide circular number DBOD No.BP.BC.81/21.04.018/ 2006-07 dated 18 April 2007 directed banking companies to make segment related disclosures under the heads mentioned hereunder.Taking into consideration the above referred guidelines, the nature of products and services, the risks and rewards associated with each of these categories; the internal reporting and organisational structure of the bank etc. the bank has identifed the following business segments for reporting purposes; 1. T Treasury includes the entire investment portfolio and also the dealing in Government Securities and Money Market Operations. 2. th B All advances (funded and non-funded) where the limit sanctioned or the outstanding as on 31st March, 2010 exceeds Rs.5 Crores or average annual turnover of last three years is Rs.50 crores or more are classifed under Corporate / Wholesale Banking. 3. Rt B Advances not classifed under the Corporate / Wholesale Banking segment are included in the Retail Banking segment 4. Oth B B It includes items which cannot be specifcally allocated to any of the above including items pertaining to para- banking business are shown under Other Banking Business. No geographic segments Since the operations of the bank are restricted within India, and no distinct geographic segments on the basis of risk and returns or distinction in the economic environment can be said to arise within India; no distinct geographical segments have been identifed and the bank is considered to operate only in the domestic segment. P t t t Banking Operation (BO) is considered as the primary resource mobilizing unit and Treasury Operation compensates the former for funds lent by BO. Till 31.03.2009 in computing the segment results, interest expenses were allocated to the treasury and corporate / wholesale segments by applying the cost of funds to the Average Investments / Advances and the balance was allocated to the retail segment and, operating expenses on the basis of segment assets. During the present fnancial year all expenses have been apportioned in the ratio of total income of each segment. The impact of change in the said policy is given in Notes to Accounts – Schedule 18 – Point no. 11.2

At t Expenses directly attributable to particular segment are allocated to the relative segment. At At Fixed Assets are used across all segments and, therefore, treated as un-allocated assets. Revaluation Reserve related to these assets is similarly dealt with At Lt Liabilities are allocated in the ratio of segment assets.

67th ANNUAL REPORT 2009-10 43 THE BANK OF RAJASTHAN LTD.

SHEDULE 18 NOTES ON AOUNTS The following additional disclosures have been made taking into account the requirements of accounting standards and RBI guidelines in this regard. A. DSLOSURE N TERS OF AOUNTN STANDARDS APPLABLE TO THE BANK. 1. F At 1.1 The immovable properties owned by the bank (Premises & Land - referred to as immovable properties) other than properties purchased/acquired after 1st April 2007 have been revalued on 31st March 2008. The said revaluation has been carried out in accordance with the policy laid down by the Board. Accordingly, the value of all such immovable properties owned by the bank, (excluding properties where there are certain claims by third parties in regard to the said property) has been taken as valued by independent valuers as at 31st of March 2008. The net appreciation in value Rs.387.56 crores as determined by the valuers has been credited to Capital Reserves (Revaluation Reserve). 1.2 In accordance with the Guidance note on treatment of Reserves created on revaluation of fxed assets issued by the Institute of Chartered Accountants of India, the additional depreciation relatable to revaluation amounting to Rs.6.95 crores is adjusted against Revaluation Reserve by transfer to Proft & Loss account. 1.3 As a result of changes in the rates of depreciation of revalued immovable properties over their remaining estimated useful lives as stated in Schedule 17, additional depreciation of Rs.0.15 crores as compared to earlier accounting periods has been charged to the Proft & Loss account. 1.4 Registration formalities are pending in respect of properties valuing Rs4.97 crores (previous year Rs.4.97 crores) 1.5 Assets costing less than Rs.5000/- is not written off to Proft & Loss account and depreciation is charged on such assets as per bank’s policy. 1.6 While providing depreciation 5% of original cost is retained in all assets. 2. t At 2.1 In accordance with Accounting Standard (AS) 26 on “Intangible Assets” issued by the Central Government under the Companies (Accounting Standards) Rules 2006, operating and banking software, integral to banking business having book value of Rs.0.58 crores (previous year Rs.1.86 crores) is capitalized to computers subjected to depreciation and other software of non-integral nature amounting to Rs.0.01 crores (previous year Rs.0.14 crores) is charged off to Proft & Loss A/c. 3. F Eh Tt 3.1 In accordance with Accounting Standard 11 on Accounting for the effects of changes in foreign exchange rates issued by the Central Government under the Companies (Accounting Standards) Rules 2006, the Bank had translated the year end balances at Balance Sheet date at FEDAI rates. 3.2 As per paragraph 10 of AS 11, the transactions relating to foreign currency assets (PCFC/EBRD/ Loans etc.) and liabilities (FCNRB/ EEFC/ RFC etc.) are recorded at notional rates revised on monthly basis. All foreign currency assets and liabilities are revalued at weekly FEDAI rates to refect the weekly position at current rates. 4. E t In pursuance of AS 15 on Employee Benefts, issued by the Central Government under the Companies (Accounting Standards) Rules 2006, the following disclosures have been made:

44 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

4.1 tt R. Pt F 2009-10 F 2008-09 Obligation at the beginning of the year 69.77 64.72 Service Cost 3.33 2.40 Interest Cost 5.69 6.00 Actuarial (gain)/loss 4.02 0.15 Benefts paid (3.86) (3.50) Obligation at the end of the year 78.95 69.77

h t F 2009-10 F 2008-09 Plan assets at period beginning, at fair value 70.04 65.18 Expected return on plan assets 6.01 5.29 Actuarial gain / (loss) (0.24) 0.37 Contributions 7.00 2.70 Benefts paid (3.86) (3.50) Plan assets at period end, at fair value 78.95 70.04

Rt t th t th F 2009-10 F 2008-09 th t Fair value of the plan assets at the end of the period 78.95 70.04 Present Value of the defned obligations at the end of the period 78.95 69.77 Funded Status 0.27 Asset / (liability) recognised in Balance Sheet 0.27

tt t th F 2009-10 F 2008-09 Current Service Cost 3.33 2.40 Interest Cost 5.69 6.00 Expected return on plan assets (6.01) (5.29) Net Actuarial (gain) / loss recognised in the year 4.26 (0.22) Expenses recognised in statement of Proft & loss 7.27 2.89

At Rt t F 2009-10 F 2008-09 Expected Return on Plan Assets 6.01 5.29 Actuarial Gain/(Loss) on Plan Assets (0.24) 0.37 Actual Return on Plan Assets 5.77 5.66

Pt F 2009-10 F 2008-09 At Discount Rate 7.75 8.00% Rate of return on plan assets 8.00 8.00% Salary Escalation 5.00 3.00%

67th ANNUAL REPORT 2009-10 45 THE BANK OF RAJASTHAN LTD.

t At F 2009-10 F 2008-09 Government of India assets 12.82 14.45 Corporate Bonds 27.74 26.55 Special Deposit Scheme 7.66 7.66 State Government 17.50 13.57 Property — Other 13.23 7.81 Insurer Managed Funds — TOTAL 78.95 70.04 4.2 P Pursuant to the adoption of the standard, the transitional liability of the Bank amounted to Rs.97.47 crores. As permitted by para 145(b) of AS-15 on Employee Benefts, one-ffth of the transitional liability has been recognized as an expense in the statement of Proft & Loss account amounting to Rs.19.50 crores (previous year Rs.19.50 crores). Balance of unrecognized transitional liability as on 31st March 2010 is Rs.38.97 crores. At D (Rs. in crores) Pt F 2009-10 F 2008-09 Obligation at the beginning of the year 225.66 203.32 Current Service Cost 13.20 13.20 Interest Cost 19.18 17.00 Actuarial (gain)/loss 166.51 23.14 Benefts paid (37.19) (31.00) Obligation at the end of the year 387.36 225.66

h t F 2009-10 F 2008-09 Plan assets at period beginning, at fair value 5.88 22.80 Expected return on plan assets 0.47 1.58 Actuarial gain / (Loss) 1.04 0.04 Contributions 12.24 12.46 Advance contribution 31.50 — Benefts paid (37.19) (31.00) Plan assets at period end, at fair value 13.94 5.88

Rt t th t th F 2009-10 F 2008-09 th t Fair value of the plan assets at the end of the period 13.94 5.88 Present Value of the defned obligations at the end of the period 387.36 225.66 Funded Status (373.42) (219.78) Asset / (liability) recognised in Balance Sheet 334.45 161.31 Unrecognised liability as on 31st March 2010 38.97 58.47

46 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

P t th F 2009-10 F 2008-09 Service Cost 13.20 13.20 Interest Cost 19.18 17.00 Expected return on plan assets (0.47) (1.58) Net Actuarial (gain) / loss recognised in the year 165.47 23.10 Recognition of transitional liability 19.50 19.50 Expenses recognised in statement of Proft & loss 216.88 71.22

At t t F 2009-10 F 2008-09 Expected Return on Plan Assets 0.47 1.58 Actuarial Gain /(Loss) on plan assets 1.04 0.04 Actual Return on Plan Assets 1.51 1.62

Pt F 2009-10 F 2008-09 Assumptions Discount Rate 8.00 8.50% Rate of return on plan assets 8.00 8.00% Salary Escalation 5.00 3.00%

t At F 2009-10 F 2008-09 Government of India assets — Corporate Bonds — Special Deposit Scheme — State Government — Property — Other 13.94 5.88 Insurer Managed Funds — TOTAL 13.94 5.88 The estimates of future salary increases, considered in actuarial valuation, take account of infation, seniority , promotion and other related factors such as supply and demand in the employment market. 4.3 The Guidance on Implementing AS 15 on Employee Benefts issued by the Accounting Standard Board (ASB) states that beneft involving employer established provident funds, which require interest short fall to be recompensated are to be considered as defned beneft plans. Pending issuance of the guidance note from the Actuarial Society of India, the Bank is unable to reliably measure provident fund liability. Accordingly, the Bank is unable to disclose the related information.

67th ANNUAL REPORT 2009-10 47 THE BANK OF RAJASTHAN LTD.

5. St Rt Summary of operating segments of the Bank as required by AS 17 – Segment Reporting and RBI Circular DBOD.BP.BC No.81/21.04.018.2006-07 dated 18.04.2007 is given below : (Rs. in crores) F th F th 31t h 2010 31t h 2009 R Treasury Operations 485.60 Corporate / Wholesale Banking 591.59 Retail Banking 392.89 Other Banking Operations 19.60 Tt 1489.68 Rt Treasury Operations (15.49) Corporate / Wholesale Banking (89.25) Retail Banking (59.37) Other Banking Operations 19.29 Tt 144.82 173.19 Unallocated Income (0.20) Proft Before Taxes (145.02) Income Taxes (42.89) Extraordinary Proft/ Loss Nt Pt 102.13 Oth t St At Treasury Operations 7080.88 Corporate / Wholesale Banking 7102.23 Retail Banking 2449.33 Other Banking Operations 8.50 Unallocated Assets 518.93 Tt At 17159.87 St Lt Treasury Operations 7156.11 Corporate / Wholesale Banking 7139.49 Retail Banking 2460.57 Other Banking Operations 8.53 Unallocated Liabilities 395.17 Tt Lt 17159.87 6. Related Party Disclosures Lt t t (a) Key Managerial Personnel Shri P. L. Ahuja –Managing Director and Chief Executive Offcer up to 20.11.2009 Shri G. Padmanabhan — Managing Director and Chief Executive Offcer w.e.f. 20.11.2009 (i) Relatives of the Directors referred to in item (a) above. NIL (ii) List of enterprises owned by the directors referred to in item (a) above. NIL

48 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

(b) Associates Mewar Aanchalik Gramin Bank ( sponsored by Bank) (Rs. in crores) 2009-10 2008-09 Key Management Personnel :Managing Director Remuneration 0.36 0.26 (for details refer Note No.19) Associates Deposits with Bank 81.69 117.05 Investments 0.35 0.35 Other Receivables 5.07 5.07 Investments in Upper Tier II Bonds of the Bank 1.50 1.50 The above disclosures have been made in accordance with AS 18 – Related Party Transactions and RBI guidelines for related party disclosures. Further to the above, certain transactions with Directors / other parties are disclosed hereunder as a matter of good governance, although these transactions do not fall within the meaning of “Related Parties”, within the meaning of clause 49 of Listing Agreement. a. Bank has taken on lease the Branch offce premises at Pulgaon admeasuring 600 sq.ft. area on a lease rent of Rs.10000/- per month from Pulgaon Cotton Mills which is a 100% subsidiary of Jaibharat Textile Ltd., a company in which Shri Saurabh Tayal, son of Dr. Pravin Kumar Tayal, brother of Shri Sanjay Kumar Tayal (Director of the Bank) is director. ; During the year 2009-10 amount paid is Rs.1,20,000/-( previous year Rs.1,20,000/-). b. Bank has taken on lease the branch offce premises at Brahmani Kalmeshwar admeasuring 600 sq.ft. area on a lease rent of Rs.10000/- per month from Kalmeshwar Textiles Mills Ltd. which is a 100% subsidiary of KSL Realties and Infrastructure Ltd., a company in which Shri Saurabh Tayal, son of Dr. Pravin Kumar Tayal, brother of Shri Sanjay Kumar Tayal (Director of the Bank) is director. lease deed of premises has not been executed. However, provision of Rs.1,20,000/- has been made for the year 2009-10 (previous year Rs.1,20,000/-). c. Bank has taken on lease the branch offce premises at Piparia (Silvasa) admeasuring 600 sq.ft. area on a lease rent of Rs.7500/- per month from M/s Eskay Kn’t (India) Ltd., a company in which Shri Navin Kumar Tayal, brother of Shri Sanjay Kumar Tayal (Director of the Bank) is director. During the year 2009-10 amount paid is Rs.1,03,450/-( previous year Rs.90,000/-). d. Bank has taken on lease the branch offce premises at Samarvani (Silvasa) admeasuring 800 sq.ft. area on a lease rent of Rs.12000/- per month from M/s Krishna Knitwear Technology Ltd., a company in which Shri Sanjay Kumar Tayal, Director of the Bank is director. During the year 2009-10 amount paid is Rs.1,65,600/-( previous year Rs.1,57,055/-). e. Bank has taken on lease the branch offce premises at Umergaon (Silvasa) admeasuring 1000 sq.ft. area on a lease rent of Rs.10,000/- per month from M/s Krishna Lifestyle Technologies Ltd. in which Shri Navin Kumar Tayal, brother of Shri Sanjay Kumar Tayal (Director of the Bank) is director. During the year 2009-10 amount paid is Rs.1,32,000/-( previous year Rs.1,32,000/-). f. Following premises have been taken on lease / purchased by the Bank from the various parties who are having business relations with Krishna Group of Companies in which Tayal family is interested : i. Corporate Offce premises on lease at Mumbai at a monthly rent of Rs.15,42,250/- from M/s

67th ANNUAL REPORT 2009-10 49 THE BANK OF RAJASTHAN LTD.

Solid Vision Pvt. Ltd. During the year 2009-10 amount paid is Rs.1,85,07,000/-( previous year Rs.1,85,07,000/-). ii. Premises on lease at Vithalwadi, Thane for storage of old records at monthly rent of Rs.3,32,090/- from M/s Satellite Consultancy Services Pvt. Ltd. During the year 2009-10 amount paid is Rs.39,85,080/-( previous year Rs.39,85,080/-). iii. Premises of Regional Offce, Mumbai on lease (I & II portion admeasuring 3000 sq.ft. each) at a monthly rent including service charges Rs.15,00,000/- per month (at revised rent w.e.f. 08.01.2008 & 16.09.2008 respectively) from M/s Delux Polymers Ltd. M/s Ambika Silk Mills Company Ltd. has sub-leased the premises to Shri Sanjay Kumar Tayal and Dr. Praveen Kumar Tayal, admeasuring 3000 sq.ft. each which was further sub-leased to M/s Delux Polymers Pvt. Ltd. which is lessor of premises of Regional Offce, Mumbai. During the year total rent (including service charges) on both portions of premises of Regional Offce, Mumbai was paid Rs.1,80,00,000/-(previous year Rs. 1,67,66,743/-) Tayal family is neither having any directorship nor having shareholding in the above-mentioned companies. g. Prior to Shri K.N.Bhandari became Director of the Bank, a term loan of Rs.50.00 crores was sanctioned on 1st February 2005 for a period of 10 years to M/s Hindalco Industries Ltd. in which Shri K.N.Bhandari is also a Director. Shri K.N. Bhandari was appointed as Director w.e.f. 25th February 2006. The outstanding in the account as on 31.03.2010 is Rs.45.60 crores (previous year Rs 47.48 crores) and the account is considered as standard.as on date. h. Term loan I of Rs.10.00 crores and term loan II of Rs.20.00 crores were sanctioned on 17.11.2006 and 28.09.2007 respectively to M/s Magma Fin Corp Ltd account at B/o CR Kolkata in which Shri K.N.Bhandari became Director on 22.10.2008 as per his disclosure. Term loan I of Rs.10 crores stands adjusted on 27.03.2010 (previous year Rs.3.65 crores). The outstanding in term loan II is Rs.4.99 crores as on 31.03.2010 (previous year Rs.12.34 crores) and the account is considered as Standard as on date. i. Education Loan of Rs.0.60 crores (B/o Lower Parel Mumbai) was sanctioned by Committee of Directors on 21.07.2009 to Shri Shubhashish Bhutiani and Shri Sanjay Bhutiani who are daughter’s son and son-in- law of Shri K.N.Bhandari Director on the Bank’s Board. The outstanding in the account as on 31.03.2010 is Rs.0.10 crores and the account is considered as Standard as on date. Note: Facilities (funded / non funded) to Directors / Firms / companies in which they have interest which are covered by 100% term deposit receipts of the Bank under Bank’s lien have not been reported as these facilities are exempted under Section 20(1) of the Banking Regulation Act,1949. 7. E P Sh

Pt 2009-10 2008-09 Number of shares outstanding as at the beginning of the year 161350093 161350093 Number of shares outstanding as at the close of the year 161350093 161350093 Denominator used for computation of EPS 161350093 161350093 Net Proft/(Loss) after tax available for Equity Share holders (Rs. in crores) (102.13) 117.71 Basic and dilutive earnings per share of Rs. 10 each (as adjusted for bonus shares (6.33) 7.30 issued during the year) Nominal value per share (Rs.) 10.00 10.00 Note:

50 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

(1) Issued Share capital pending allotment as indicated in Schedule 1 and Bonus Shares relatable thereto have been fully considered in computation of issued equity shares in line with the approach of Accounting Standard 20 “Earnings Per Share”. Equity includes 47,349 shares paid up but allotment kept in abeyance & have no impact on dilutive potential. 8. D T 8.1 Bank in line with AS-22 on “Accounting for taxes on Income” issued by the Central Government under the Companies (Accounting Standards) Rules 2006, has accounted for debit of Net Deferred Tax Assets amounting to Rs.81.18 crores (previous year Rs.22.16 crores), which has been credited to Proft & Loss Account. The major components of Deferred Tax Assets and Deferred Tax Liabilities are as under :- (Rs. in crores) Pt A t A t 31.3.2010 31.3.2009 D T At Provision for bad and doubtful debts 2.79 — Provision for Leave Encashment 19.58 14.88 Provision for Pension 121.56 54.83 Provision for wage revision 16.43 — TOTAL 160.36 69.71 Deferred Tax Liabilities Depreciation on fxed assets 11.59 10.70 Interest accrued but not due on Investment 8.58 — TOTAL 20.17 10.70 D T At Nt 140.19 59.01 * Overstated to the extent of Rs.10.46 crores; Refer Note No.12.3 9. tt Lt 9.1 Contingent Liability of Rs.1260.70 crores (previous year Rs.1358.13 crores) disclosed in Schedule 12 includes disputed tax liability of Rs2.05 crores (previous year Rs.2.05 crores). 9.2 In accordance with Accounting Standard 29 on Provisions, Contingent Liabilities and Contingent Assets issued by the Central Government under the Companies (Accounting Standards) Rules 2006, the Bank has carried out fnancial assessment of the contingent liabilities and determination of provision for probable losses. The amount of losses estimated during the year were Rs.5.95 crores (previous year Rs.0.03 crores) which have been charged to Proft & Loss Account. Disclosures in terms of accounting standard on provisions, contingent liabilities and contingent assets. (a) Movement of provisions for liabilities*

67th ANNUAL REPORT 2009-10 51 THE BANK OF RAJASTHAN LTD.

(Rs. in crores) Particulars Legal cases/ contingencies 31.3.2010 31.3.2009 Balance at the beginning of the year 1.23 1.20 Provided during the year 5.95 0.11 Amounts used during the year Nil Nil Reversed during the year Nil 0.08 Balance at the end of the year 7.18 1.23 Timing of outfow/ uncertainties Out fow on settlement/crystalisation *excluding provisions for others (b) Refer Schedule – 12 on Contingent Liabilities Such liabilities at S.No. (I), (II), (III), (IV) and (V) are dependent upon, the outcome of court / arbitration / out of court settlement, disposal of appeals, the amount being called up, the terms of contractual obligations, development and raising of demand by concerned parties, respectively. No reimbursement is expected in such cases. 10. Et There are no material amounts of expenditure / income required to be disclosed as “Prior Period” items as per AS – 5 on “Net Proft or Loss for the period, Prior Period Items & Changes in Accounting Policies” read with RBI guidelines. 11. h At P 11.1 Hitherto, the Bank had adopted the policy of making 100% provision against the secured portion of those NPA’s which had remained in doubtful category for more than 2 years. With effect from 1st July ,2009 this provision has been made at 30% of secured portion of those advances, which have fallen into this category after 1st July, 2009 in line with RBI guidelines on provisioning requirements. Pursuant to this change, the proft for the year ended March 2010 is higher by Rs.0.91 crores. 11.2 Banking Operation (BO) is considered as the primary resource mobilizing unit and Treasury Operation compensates the former for funds lent by BO. Till 31.03.2009 in computing the segment results, interest expenses were allocated to the treasury and corporate / wholesale segments by applying the cost of funds to the Average Investments / Advances and the balance was allocated to the retail segment and, operating expenses on the basis of segment assets. During the present fnancial year all expenses have been apportioned in the ratio of total income of each segment due to which, the results for the retail segment are lower by Rs.213.32 crores and results for corporate/wholesale and treasury segment are higher by Rs.74.29 crores and Rs.139.03 crores respectively. 12.1. In the 3rd quarter results, there was a disclosure that pending validation of valuation, Rs.51.89 Crores as per an actuary had not been provided for. The validation revealed certain errors in the estimated liability as at 31.12.2009. Hence, valuations by two actuaries have been obtained as at 31.03.2010. The higher of the two valuations, arrived at as indicated in Note 12.2, has been adopted. 12.2. In view of the revision in base data and assumptions made in computing liability for employee benefts(as indicated in note no. 4), the liability has increased by Rs.149.58 crores over the amount that would have been computed if the earlier base data and assumptions had been continued. In view of the proposed merger/amalgamation (the exact impact of which cannot be presently ascertained) the earlier assumptions

52 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

may not hold good but on a conservative basis provision has been made as per revised assumptions. This has resulted in the loss being overstated by Rs. 149.58 crores. Impact of wage revision on superannuation benefts has not been considered pending payment of revised salary and giving second option to employees opting for pension. 12.3. In line with earlier practice, the sum of Rs.31.50 crores refected under the head Advance contribution to Pension Fund represents sum paid for purchase of annuity to be purchased in current period and is therefore, not refundable by the Pension Fund. Accordingly, the amount of Deferred Tax Asset is overstated to the extent of Rs. 10.46 crores besides the above referred sum of Rs.31.50 crores. 13. In exercise of its powers u/s 30(1B) of the Banking Regulation Act 1949, the RBI appointed M/s Deloitte Haskins and Sells to conduct a special audit of the bank and submit their report by 31st March 2010. The special auditors were required to look at specifc areas including inter-alia certain large value advances and their compliance with provisioning requirements etc. An interim report submitted by the special auditors has not indicated any signifcant provisioning requirement and all actions considered appropriate and necessary, arising out of the suggestions made by them are being acted upon. Financial impact if any arising out of the fnal report which is awaited cannot be presently quantifed. B. DSLOSURE N TERS OF RESERE BANK OF NDA REUREENTS 14. tt 14.1 The book value of Investments held under the three categories, viz. Held to Maturity (HTM), Held For Trading (HFT) and Available for Sale (AFS) are as under :-

A t 31.3.10 As at 31.3.09 Held to Maturity (excluding under exempted category) 87.31 52.60% Held for Trading 2.74 0.01% Available for Sale 9.94 47.38% Exempted Category 0.01 0.01% 14.2 Investments include application money in Mewar Aanchalik Gramin Bank, a Regional Rural Bank (RRB) amount to Rs.5.42 crores (previous year Rs.5.42 crores). Out of this, Rs.0.35 crores (previous year Rs.0.35 crores) is included in Investments under “Held to Maturity” category and balance of Rs.5.07 crores (previous year Rs.5.07 crores) pending allotment of shares is included under “Other Assets”. As per Reserve Bank of India (RBI) guidelines, no provision towards diminution in the value of Investment in RRB has been made in the accounts. 14.3 The Bank transfers securities, in respect of which, principal amount is due for redemption to overdue Investments. In case where principal / interest is overdue for more than 90 days, Investments is treated as NPI and provision for depreciation has been made in line with prudential norms of RBI (refer note 14.21 below). 14.4 The Bank in the past had contributed to a trust as senior contributor for purchase of benefcial interest in secured home loan receivables (mortgage backed receivables) originated by another bank. The above are continued to be redeemed and are included in Investments under “Available For Sale” category. The said amount is Rs 24.41 crores (previous year Rs.35.02 crores). 14.5 As per RBI guidelines, an amount of Rs.9.03 crores (previous year Rs.25.14 crores) being proft on sale of securities classifed under “Held to maturity” category has been transferred to “Capital Reserves”.

67th ANNUAL REPORT 2009-10 53 THE BANK OF RAJASTHAN LTD.

14.6 Investments (Rs. in crores) t A t A t 31.3.10 31.3.09 (1) Value of Investments (i) Gross Value of Investments (a) In India 6724.02 6810.66 (b) Outside India — (ii) Provisions for Depreciation (a) In India 1.51 1.51 (b) Outside India — (iii) Net Value of Investments (a) In India 6722.51 6809.15 (b) Outside India — (2) Movement of provisions held towards depreciation on investments. (i) Opening balance 1.51 6.19 (ii) Add: Provisions made during the Year (including amortizations) — (iii) Less: Write-off/ write-back of excess provisions during the year 4.68 (iv) Closing Balance 1.51 1.51 14.7 Investments in / advance against shares 14.7.1 Investment in equity shares and equity like instruments outstanding is as under : (Rs. in crores) Dt As at 31.3.10 As at 31.3.09 1 Equity shares including Investments in subsidiaries and joint 4.16 1.49 venture 2 Units of UTI — 3 Units of equity oriented Mutual Funds — 4 Convertible Debentures — 5 Regional Rural Banks 0.35 0.35 6 Venture capital fund — 7 Underwriting commitments — Total 4.51 1.84 14.8 Advance against shares : (Rs. in crores) A t 31.3.10 A t 31.3.09 Advance against shares 0.13 0.11

14.9 Aggregate of Non-promoters’ shareholding

As at 31.3.10 As at 31.3.09* Number of shares 161350093 161350093 Percentage of shareholding 100.00 100.00% *regrouped Hitherto, Tayal Group holding was shown in the promoter category. Based on the legal opinion obtained, they are no longer being treated as promoter of the Bank. In the absence of any other category for the dominant shareholders group (DSHG), their holding has been shown in the public category.

54 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

The declared shareholding of Tayal Group is 28.60%, however as per SEBI ex-parte interim order dated 8th March 2010, holding of Tayal Group and related entities are to the order of 55.01%. In the shareholding pattern disclosed as per Clause 35 of Listing Agreement for the quarter ended 31st March 2010, the Bank has shown shareholding in public category as 100% based on above referred legal opinion. 14.10 Subordinate Debts (Rs. in crores) A t 31.3.10 As at 31.3.09 Subordinate Debts Tier II Capital 283.80 233.80 Subordinate Debts Upper Tier II Capital 61.10 61.10 During the year, the Bank raised Sub-ordinated Debt to the tune of Rs.50.00 crores (previous year Rs.43.80 crores) by issue of unsecured, non-convertible, redeemable Tier-II bonds. The same is included under “Other Liabilities and Provisions” in Schedule V of the Balance Sheet, the details of which is as under :- 10.25% Unsecured, Non-convertible, Redeemable Sub-ordinated Tier II bonds Series VII redeemable at par on 8.4.2016 Rs.5.00 crores 10.50% Unsecured, Non-convertible, Redeemable Sub-ordinated Tier II bonds Series VII redeemable at par on 8.6.2019 Rs.45.00 crores 14.11 Provisions and Contingencies debited to the Proft & Loss Account (Rs. in crores) Particulars 2009-10 2008-09 Provision for NPAs 59.91 15.09 General Provision for Standard Advances 1.07 Floating Provision — Depreciation on Investments 0.72 Provision for income tax 38.15 76.53 Provision for deferred tax (81.18) (22.16) Provision for fringe beneft tax 0.11 1.00 Provision for Interest sacrifice and diminution in NPV of 1.55 2.04 restructured accounts Provision for wage revision 49.45 — Others (net) 6.24 1.76 Total 74.23 76.05 14.12 Interest Expended – Others includes interest on Subordinated Debt Rs.31.89 crores (previous year Rs.23.81 crores) 14.13 Business Ratios

A t 31.3.10 As at 31.3.09 Basel I Capital Adequacy Ratio (%) 7.74 12.00% - Tier I Capital (%) 3.87 6.45% - Tier II Capital (%) 3.87 5.55%

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Basel II A t 31.3.10 As at 31.3.09 t A Rt 7.52 11.50 - T t 3.76 6.19 - T t 3.76 5.31 Interest income as percentage to average working funds 7.70 8.71% Non-interest income as percentage to average working funds 0.74 0.78% Operating proft as percentage to average working funds (0.16) 1.22% Return on Assets (0.58) 0.74% Business per employee (Rs. in lacs) 569.77 532.93 Proft per employee (Rs. in lacs) (2.56) 2.89 Percentage of net NPAs to net advances 1.60 0.73% 14.14 Movement in Non Performing Assets (Gross) (Rs. in crores) Pt A t 31.3.10 As at 31.3.09 Gross NPAs at the beginning of the year 160.92 126.19 Addition during the year 163.53 64.39 Reduction in NPAs : — By Recoveries 25.69 17.94 — By Write off: - Regular — - Prudential — — By Upgradation 4.95 11.72 Gross NPAs at the end of the year 293.81 160.92 Less: Provision and other credit balances 160.31 103.89 Net NPAs at the end of the year 133.50 57.03 14.15 Movement in Non Performing Assets (Net) (Rs. in crores) Pt A t 31.3.10 As at 31.3.09 Net NPAs at the beginning of the year 57.03 30.90 Addition during the year 129.87 46.61 Reduction during the year 53.40 20.48 Net NPAs at the end of the year 133.50 57.03 14.16 Movement in Provision for NPAs (excluding provision for Standard Assets) (Rs in crores) Particulars A t 31.3.10 As at 31.3.09 Opening balance as at the beginning of the year 96.31 83.82 Add: Provisions made during the year (Net) 57.35 15.09 Less: Write off, write back of excess provisions 2.60 Closing balance as at the end of the year 153.66 96.31 14.17 Floating Provisions (Rs in crores) Pt A t 31.3.10 As at 31.3.09 Opening balance in the foating provisions account 0.19 0.19 The quantum of foating provisions made during the year — Purpose and amount of draw down made during the year — Closing balance in the foating provisions account 0.19 0.19

56 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

14.18 Provisions on Standard Assets (Rs in crores) Particulars A t 31.3.10 As at 31.3.09 Provisions towards Standard Assets 43.55 43.55 14.19 Issuer-wise composition of Non-SLR Investments (Rs. in crores) S. At Ett Ett Ett Ett N Pt t t Pt tt t t t (1) (2) (3) (4) (5) (6) (7) 1. PSUs 5.50 2.95 — 3.58 1.03 2. FIs 130.75 110.98 — — — 3. Banks 16.78 9.20 — 2.39 4.00 4. Private corporates 80.93 79.80 — 10.75 9.27 5. Subsidiaries/Joint ventures 0.35 0.35 — 0.35 0.35 6. Others 2047.31 2047.31 — 2021.39 2047.31 7. Provision held towards (1.51) (1.51) — — (1.51) depreciation Total 2280.11 2249.08 — 2038.46 2060.45 14.20 Details of Repo / Reverse Repo transactions done during the year including repos under Liquidity Adjustment Facility (net of margin) (Rs. in crores) Pt Ott th Ott 31.3.10 D A Securities sold under Repo — — — Nil Securities purchased under 26.25 1312.50 300.29 Nil reverse repos Repo / Reverse Repo (With other banks) (Rs. in crores) Pt Ott th Ott 31.3.10 D A Securities sold under Repo — 525.43 17.37 Nil Securities purchased under reverse — — — Nil repos 14.21 Non-Performing Non-SLR Investments (Rs. in crores) Pt A t 31.3.10 A t 31.3.09 Opening Balance as at the beginning of the year — 3.00 Additions during the year — — Reductions during the year — 3.00 Closing Balance as at the end of the year — — Total Provisions held — —

67th ANNUAL REPORT 2009-10 57 THE BANK OF RAJASTHAN LTD.

14.22 Information in respect of restructuring/rescheduling/renegotiation (Rs. in crores) A t 31.03.10 As at 31.03.09 CDR SME Debt Others CDR SME Debt Others Mechanism Restructuring Mechanism Restructuring Standard No. of 3 8 12 2 4 23 advances borrowers re-structured Amount 51.95 3.73 180.41 44.43 6.88 226.93 outstanding Sacrifce 2.20 0.08 1.96 0.47 0.23 2.12 (diminution in the fair value) Sub-standard No. of 1 2 — — — advances borrowers re-structured Amount 6.95 49.39 — — — outstanding Sacrifce 0.04 0.09 — — — (diminution in the fair value) Doubtful No. of 3 3 3 — 2 advances borrowers re-structured Amount 20.63 29.78 22.76 — 2.01 outstanding Sacrifce — — — (diminution in the fair value) Total No. of 6 9 17 5 4 25 borrowers Amount 72.58 10.68 259.58 67.19 6.88 228.94 outstanding Sacrifce 2.20 0.12 2.05 0.47 0.23 2.12 (diminution in the fair value)

58 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

14.23 Lending to Sensitive Sectors Exposure to Real Estate Sector (Rs. in crores) A t 31.3.10 As at 31.3.09 a) Direct exposure (i) Residential Mortgages – 370.84 316.52 Lendings fully secured by mortgages on residential property that is or will be occupied by the borrower or that is rented; (individual housing loans upto Rs.20 lacs are shown in brackets) (214.62) (183.16) (ii) Commercial Real Estate – a. Funded Exposure 452.77 727.05 b. Non-funded Exposure 37.40 64.16 Lendings 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.); (iii) Investments in Mortgage Backed Securities (MBS) and other securitised exposures – a. Residential 24.41 35.02 b. Commercial Real Estate - - b) Indirect Exposure (i) Fund based and non-fund based exposures on (NHB) and Housing Finance Companies (HFCs) 152.38 91.27 (ii) Investment in equity shares of real estate companies other - 0.04 than HFCs Total Exposure to Real Estate Sector (a+b) 1037.80 1234.06 14.24 Exposure to Capital Market (Rs. in crores) A t 31.3.10 As at 31.3.09 (i) Direct investments made in equity shares, convertible bonds, 4.16 1.13 convertible debentures and units of equity oriented mutual funds, the corpus of which is not exclusively invested in corporate debt (ii) Advances against shares/bonds/ debentures or other securities or on 0.13 0.11 clean basis to individuals for Investment 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 primary security (iv) Advances for any other purposes to the extent secured by the 26.90 156.67 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/convertible bonds/convertible debentures/units of equity oriented mutual funds does not fully cover the advances; (v) Secured and unsecured advances to stockbrokers and guarantees 12.19 15.87 issued on behalf of stockbrokers and market makers;

67th ANNUAL REPORT 2009-10 59 THE BANK OF RAJASTHAN LTD.

(vi) Loans sanctioned to corporate against the security of shares / - - bonds/debentures or other securities or on clean basis for meeting promoter’s contribution to the equity of new companies in anticipation of raising resources; (vii) Bridge loans to companies against expected equity fows/issues; - - (viii) Underwriting commitments taken up by the banks in respect - - of primary issue of shares or convertible bonds or convertible debentures or units of equity oriented mutual funds; (ix) Financing to stockbrokers for margin trading; - - (x) All exposures to Venture Capital Funds (both registered and - - unregistered) will be deemed to be on par with equity and hence will be reckoned for compliance with the capital market exposure ceilings (both direct and indirect) Total Exposure to Capital Market 43.38 173.78 14.25 Maturity Pattern of Assets and Liabilities (Rs. in crores)

R 1 2-7 8-14 15-28 29 O 3 O 6 O O 3 O 5 Tt tt t 3 th th 1 th t 6 t 1 t 3 t 5 th Deposits 34.79 522.09 737.44 323.96 1063.28 951.17 1962.36 4257.38 1609.82 3600.07 15062.35 Advances 328.07 30.41 87.47 404.79 657.06 521.83 959.01 3060.85 726.07 1420.41 8195.97 Investments 2.21 26.64 144.89 136.12 113.53 62.99 536.72 438.55 4837.20 425.17 6724.02 Borrowings 0.54 — — — — 0.06 0.03 36.03 36.00 272.90 345.56 Foreign 2.52 0.02 — 0.07 1.56 2.12 4.17 1.87 0.03 — 12.36 currency liabilities Foreign 15.74 0.61 0.71 0.95 2.99 4.76 — — — — 25.76 currency assets The above maturity pattern has been compiled from the information received from the branches, ratios prescribed by the RBI for determining core and volatile portion and apportionment made at Central Offce on the basis of behavioral maturity and other adjustments wherever considered necessary. The fgures in the case of foreign currency assets and liabilities are after revaluation as at the year end FEDAI rates. 14.26 Disclosure on risk exposures in Derivatives Products In compliance with RBI Circular DBOD.No.BP.BC.72/21.04.018/2004-05 dated March 3, 2005 following disclosures are made :- 14.26.1Forward Rate Agreement/Interest Rate Swap: (Rs. in crores)

t A t 31.3.10 As at 31.3.09 i) The notional principal of swap agreements Nil Nil ii) Losses which could be incurred if counterparties failed to fulfll Nil Nil their obligations during the above period 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

60 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

14.26.2 Exchange Traded Interest Rate Derivatives: (Rs. in crores)

S. Pt A t 31.3.10 A t 31.3.09 N. (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 on 31st March (instrument-wise) (iii) Notional principal amount of exchange traded interest Nil Nil rate derivatives outstanding and not “highly effective” (instrument-wise) (iv) Mark-to-market value of exchange traded interest rate Nil Nil derivatives outstanding and not “highly effective” (instrument- wise) 14.26.3 Qualitative Disclosure The Bank has in place various guidelines related to Internal Control of foreign exchange business, which covers various risk limits for FX dealing room operations. The Bank offers the facility of foreign exchange transactions and booking of forward contracts to its merchant exporters, importers and other clients to cover/hedge their foreign exchange risk. All the forward contracts are covered for respective tenors, based on market lots and available tenor swaps. The Bank undertakes interbank foreign exchange Swaps for covering the merchant forward positions as also for fund management purpose. The Bank also undertakes Swaps to avail of the arbitrage opportunities between different markets. The Bank has prescribed Gap limits (IGL and AGL) to manage Gaps and various risk limits for forex operations, in terms of RBI guidelines, which are monitored regularly. Crossovers, if any, are approved by competent authorities, as approved by the Board of Directors. All outstanding foreign exchange contracts are revalued at monthly intervals at FEDAI rates, in terms of FEDAI guidelines and resultant proft or loss is taken to proft and loss account. The Bank has not undertaken any other foreign exchange derivative product (Options, Interest Rate Swaps, Futures etc.) except foreign exchange forward contracts during the current fnancial year, hence not incurred any loss related to derivative transactions.

67th ANNUAL REPORT 2009-10 61 THE BANK OF RAJASTHAN LTD.

14.26.4 Quantitative Disclosures on Risk Exposure in Derivatives as on 31.03.2010 (Rs. in crores)

Sl. Particulars 2009-10 2008-09 No. tt t tt t Dt Dt Dt Dt 1 Forward Exchange Contracts 691.45 Nil 712.03 Nil Derivatives(Notional Principal Amount) a) For hedging 403.01 Nil 544.15 Nil b) For trading 288.44 Nil 167.88 Nil 2 Marked to Market Positions a) Asset Nil Nil Nil Nil b) Liability 12.38 Nil 108.82 Nil 3 Credit Exposure 18.50 Nil 20.87 Nil 4 Likely impact of one percentage change in interest rate (100*PV01) a) On hedging derivatives Nil Nil Nil Nil b) On trading derivatives Nil Nil Nil Nil 5 Maximum and minimum of 100*PV01 observed during the year a) On hedging Nil Nil Nil Nil b) On trading Nil Nil Nil Nil The Bank has not transacted in any exchange traded interest rate derivatives during the year. Accordingly, the disclosure required vide RBI circular No. IDMC. MSRD. 4801/06.01.03/2002-03 dated June 3, 2003 is Nil. 14.27 Details of Assets sold to Securitisation Company/ Reconstruction Company, if any (Rs. in crores)

S.N. Pt 31.03.2010 31.03.2009 1 Number of accounts Nil 1 2 Aggregate Value (net of provisions) of accounts sold to SC/RC Nil 0.00 3 Aggregate consideration Nil 8.00 4 Additional consideration realized in respect of accounts Nil Nil transferred in earlier years 5 Aggregate gain/ loss over net book value Nil 8.00 15 Details of Credit Exposures in case of single borrower or group borrower limit where the Bank had exceeded

62 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

the Prudential Exposure during the year. (Rs. in crores)

N th t P At At 5A P E BOD E 31.03.10 th BOD S B Vedanta Aluminium Ltd. 150.00 50.00 200.00 Not disbursed B RSEB 500.00 50.00 550.00 481.62 Jodhpur Vidyut Vitran Nigam Ltd. 109.99 Ajmer Vidyut Vitran Nigam Ltd. 116.64 Jaipur Vidyut Vitran Nigam Ltd. 129.99 Rajasthan Rajya Vidyut PrasaranNigam Ltd. 25.00 Rajasthan Rajya Vidyut Utpadan Nigam Ltd. 100.00 In terms of RBI guidelines the enhancement of the exposure to single borrower(Vedanta aluminium Ltd.) upto a further 5% of capital funds has been allowed in terms of Board approval dated 31.10.2009 In terms of RBI guidelines the enhancement of the exposure to group borrower (RSEB group) up to further 5% of capital funds has been allowed in terms of Board approval dated 29.08.2009. 16 The Bank has not made any fnancing for margin trading during the year and also not securitized any assets. 17 As the Bank’s net funded exposure for the year ended 31st March 2010 in respect of the foreign exchange transactions with each country is below 1% of the total assets of the Bank, no provision and disclosure are required as per RBI circular DBOD.BP.BC. 96/21.04.103/2003-04 dated 17th June 2004. 18. Tt 18.1 Provision for direct and indirect taxes has been made after due consideration of decisions of the appellate authorities, advice of the counsel and legal opinions. 18.2 Amount of provision made for Income Tax during the year (Rs. in crores)

Pt 2009-10 2008-09 Provision for Income Tax 38.15 76.53 Provision for Fringe Beneft Tax 0.11 1.00

67th ANNUAL REPORT 2009-10 63 THE BANK OF RAJASTHAN LTD.

19. A. t t

2009-10 2008-09 (a) No. of complaints pending at the beginning of the year 20 8 (b) No. of complaints received during the year 238 160 (c) No. of complaints redressed during the year 204 148 (d) No. of complaints pending at the end of the year 54 20 B. Awards passed by the Banking Ombudsman

2009-10 2008-09 (a) No. of unimplemented Awards at the beginning of the year N Nil (b) No. of Awards passed by the Banking Ombudsman during the year 3 Nil (c) No. of Awards implemented during the year 1 Nil (d) No. of unimplemented Awards at the end of the year 2 Nil *Appeal has been preferred before the Appeallate Authority. 20. During the year 2009-10 the Reserve Bank of India has imposed a penalty of Rs. 0.25 crores in terms of Section 47 A (1) (b) of the Banking Regulation Act, 1949 for (i) violation of the Reserve Bank of India’s directions issued under Section 35A of the Banking Regulation Act, 1949 in the area of acquisition of Immovable properties, (ii) Destruction of records in the Bank’s IT systems relating to share transfer, etc. and resultant violation of RBI’s extant guidelines, (iii) Non adherence to know your customer/anti money laundering guidelines in the opening and conduct of certain accounts, (iv) irregularities in the conduct of accounts of a corporate group and (v) failure to provide certain share applications forms sought by the Reserve Bank of India and misrepresenting that such documents were not available. 21. Particulars of Remuneration Relating to the Managing Director & Chief Executive Offcer : (Amount in Rs.) Pt 2009-10 2008-09 Salaries 2369444.46 20,04,062.04 Employer’s contribution to Provident Fund 236944.46 2,00,000.04 Monetary value of any other benefts or perquisites 1022624.60 3,46,667.90 Total 3629013.52 25,50,729.98 * Salary, PF, allowances, gratuity, PL encashment, paid to ex-managing director and chief executive Offcer amounts to Rs.22,71,488.71 upto 20.11.2009. 22. A ce ie to it ic e ecoe ic ici toe er ri reiittio retrctri ror oter ce cie ot or o e ee coiere ecre recoere to te etet o te etite reie e o ecrit crri rt eco cre e o eet o e o roertieet orte oter t ie it te 23. At D 23.1 The Bank has entered into an agreement with M/s Aviva Life Insurance Co. Ltd. on 5th March 2009 for the purpose of soliciting, promoting, marketing and selling the insurance products being sold by the company. The Bank is in the process of acquiring the requisite License to act as Corporate Agent of the insurance company. Pending necessary clearances from the Regulators, Aviva has agreed to compensate the Bank as per the terms of the understanding reached in this regard. In accordance with the same during the fnancial year, the Bank has received Rs 9.26 crores from the said insurance company for services rendered. This amount has been recognised as income for the year 2009-10 and included in Other Income (previous year Rs. 2.53 crores).

64 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

23.2 Owners of rented property housing the Corporate Offce have sought for rent revision in respect of property occupied by the Bank at Lower Parel, Mumbai.. This , if acceded to ,would result in a liability of Rs.15.77 crores approx.. Since this is not acceptable to the Bank, the said sum is not refected in the fnancial statements. 24. There is no draw down from reserves during the year 2009-10. 25. Details of fees/remuneration received from Bancassurance businees: (Rs. in crores)

S.N. Nt F 2009-10 For 2008-09 1. For selling life insurance policies 9.26 4.43 2. For selling non life insurance policies 0.69 0.40 3. For selling mutual fund products 0.26 0.25 4. Others - - 26. Details of Letter of Comforts : (Rs. in crores) S. PARTULARS 2009-10 2008-09 N. N. At N. At 1 Letter of comforts issued in earlier years and Nil Nil Nil Nil outstanding as on 1st April 2 Add : Letter of comforts issued during the year Nil Nil Nil Nil 3 Less : Letter of comforts expired during the year Nil Nil Nil Nil 4 Letter of comforts outstanding as on 31st March Nil Nil Nil Nil 27. tt Dt (Rs. in crores) Pt At A 31.03.2010 As on 31.03.2009 Total Deposits of twenty largest depositors 1848.86 2490.15 Percentage of Deposits of twenty largest depositors to Total 12.27 16.40% Deposits of the bank 28. tt A ( Rs. in crores) Pt At A 31.03.2010 As on 31.03.2009 Total Advances to twenty largest borrowers 2592.13 2034.66 Percentage of Advances to twenty largest borrowers to Total 28.85 24.07% Advances of the bank

67th ANNUAL REPORT 2009-10 65 THE BANK OF RAJASTHAN LTD.

29. tt E ( Rs. in crores)

Particulars At A 31.03.2010 As on 31.03.2009 Total Exposure to twenty largest borrowers/customers 2603.52 2097.94 Percentage of Exposures to twenty largest borrowers/customers to 28.17 23.85% Total Exposure of the bank on borrowers/customers 30. tt NPA ( Rs. in crores)

Pt At A 31.03.2010 As on 31.03.2009 Total Exposure to top four NPA accounts 101.37 51.55 31. St NPA ( Rs. in crores)

S.N. St NPA t tt A tht t A 31.03.2010 As on 31.03.2009 1. Agriculture & Allied activities 0.58 0.49% 2. Industry (Micro & Small, Medium & Large) 2.97 2.54% 3. Services 6.48 2.24% 4. Personal Loans 2.58 1.79% 32. O At NPA R (Rs. in crores)

Pt At Total Assets Nil Total NPAs Nil Total Revenues Nil 33. O- Sht SP hh t t t

N th SP Domestic Overseas Nil Nil 34. Dt t t Sttt t At (Rs. In lacs)

2009-10 2008-09 For audit 10.75 10.83 For others 0.41 1.10 35. An amount of Rs.49.45 crores has been provided towards estimated liability in respect of wage revision up to 31.03.2010. 36. The total amount of advances for which intangible securities such as charge over the rights, licecses, authority, etc. has been taken is Rs.270.42 crores as on 31.03.2010. The estimated value of such collaterals is not ascertainable.

66 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

37. Balancing of Books and Reconciliation : Reconciliation of transactions in interbranch accounts is completed upto 31.3.2010 and adjustment of outstanding entries is in progress. Sundry and Suspense Accounts contain entries pending adjustment to appropriate head of accounts. 39. All the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956 to the extent applicable to the Bank and mandatory in nature have been complied with. 40. The Board of Directors in it’s meeting held on 23.05.2010 have approved Scheme of Amalgamation of The Bank of Rajasthan Limited with ICICI Bank Limited. The share exchange ratio has been approved at 25 shares of ICICI Bank Limited for 118 shares of The Bank of Rajasthan Limited which works out to a swap ratio of 1:4.72. Extraordinary General meeting of Shareholders is proposed to be convened on 21st June 2010 to approve the amalgamation scheme in terms of Section 44A of Banking Regulation Act, 1949 and thereafter submission to Reserve Bank of India for necessary approval. Since the business of banking is intended to be continued , though there is a possibility of amalgamation of the Bank, the accounts are prepared on assumption of going concern. 41. Corresponding fgures of the previous year have been regrouped/rearranged to the extent necessary/practicable. For and on behalf of the Board (O.P.Gupta) (D. Saruparia) (G.Padmanabhan) Chief Financial Offcer & Addl.V.P. Dy. Managing Director Managing Director & Chief Executive Offcer r DIRECTORS Company Secretary ir ir As per our report of even date i Dir et For Gokhale & Sathe r r Chartered Accountants Firm Regn. No. 103264W (Rahul P. Joglekar) Partner Membership No.: 129389

Place : Mumbai Date : May 28, 2010

67th ANNUAL REPORT 2009-10 67 THE BANK OF RAJASTHAN LTD.

AUDTORS REPORT TO THE SHAREHOLDERS OF THE BANK OF RAJASTHAN LTED

1. We have audited the attached Balance Sheet of THE 5. We further report that: BANK OF RAJASTHAN LIMITED as at 31st (i) The Balance Sheet, Proft & Loss Account and March 2010, Proft & Loss Account and Cash Flow Cash Flow Statement dealt with by this report Statement for the year ended on that date annexed are in agreement with the books of account and thereto, in which are incorporated the returns of 11 the branch returns; branches audited by us and 452 branches audited by other Branch Auditors. These fnancial statements are (ii) In our opinion, the Balance Sheet, Proft & the responsibility of the Bank’s management. Our Loss Account and Cash Flow Statement dealt responsibility is to express an opinion on these fnancial with by this report comply with the accounting statements based on our audit. standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 in 2. We have conducted our audit in accordance with so far as they apply to Banking Companies as auditing standards generally accepted in India. Those mentioned in Schedule 17; Standards require that we plan and perform the audit to obtain reasonable assurance about whether the (iii) On the basis of written representations received fnancial statements are free of material misstatements. by the Bank from the directors which is taken An audit includes examining, on a test basis, evidence on record by the Board of Directors, we report supporting the amounts and disclosures in the fnancial that none of the Directors is disqualifed as statements. An audit also includes assessing the on 31st March 2010 from being appointed as a accounting principles used and signifcant estimates director in terms of clause (g) of sub-section made by management, as well as evaluating the overall (1) of section 274 of the Companies Act, 1956. fnancial statement presentation. We believe that our audit provides a reasonable basis for our opinion. (iv) As per information and explanations given to us the Central Government has, till date, not 3. The Balance Sheet and the Proft and Loss Account prescribed any cess payable under Section 441A have been drawn up in accordance with the provisions of the Companies Act, 1956. of Section 29 of the Banking Regulation Act, 1949 read with Section 211 of the Companies Act, 1956 to the (v) In our opinion and to the best of our information extent applicable. and according to the explanations given to us, the Balance Sheet and Proft and Loss Account 4. We report that : read with the Signifcant Accounting Policies stated in Schedule 17 and Notes to Accounts (i) We have obtained all the information and stated in Schedule 18 and subject to explanations, which to the best of our knowledge and belief were necessary for the purposes of i. Note. No. 12.2 of Schedule 18, our audit and found them to be satisfactory. Notes to accounts, regarding provision for employee benefits, where due to (ii) The transactions of the Bank which have come variations in base data and actuarial to our notice have been within the powers of assumptions and its signifcant impact on the Bank. valuation, the loss has been overstated by (iii) In our opinion, proper books of account as Rs. 149.58 crores. and; required by law have been kept by the Bank so ii. Note. No. 12.3 of Schedule 18, Notes far as appears from our examination of those to Accounts, a sum of Rs.31.50 crores books. Proper returns generally adequate for the refected as an asset though not realisable. purpose of our audit have been received from Accordingly, the sum of Rs.31.50 crores the branches of the Bank. and the corresponding Deferred Tax Asset is overstated to the extent of Rs.10.46 crores; and read with

68 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

iii. Note No.13 of Schedule 18, Notes March 2010; to Accounts, regarding possible (b) in the case of the Proft & Loss Account, provisioning arising out of the special of the Loss for the year ended on that audit which cannot be presently date; and quantifed and; (c) in the case of the Cash Flow Statement, iv. Note No.40 of Schedule 18, Notes to of the cash fows for the year ended on Accounts, regarding proposed merger that date; of the Bank and consequent preparation of fnancial statements under the going For h Sth concern assumption; Chartered Accountants give the information required by the Banking Regulation Act, 1949 and the Companies Act, Firm Regn. No. 103264W 1956 in the manner so required for Banking Rh P. J companies and give a true and fair view in conformity with the accounting principles P . Pt generally accepted in India: Dt 28th 2010 h N. 129389 (a) in the case of the Balance Sheet, of the state of affairs of the Bank as at 31st

67th ANNUAL REPORT 2009-10 69 THE BANK OF RAJASTHAN LTD.

ASH FLO STATEENT FOR THE EAR ENDED 31ST ARH 2010 i to 2009-2010 ASH FLO FRO OPERATN ATTES et rot ter t 1021305 ADJUSTENTS FOR Depreciation charged on fxed assets for the year 114663 Loss/(Proft) on sale of fxed assets (Net) 2008 Provision for taxes including deferred tax 428905 Provisions & Contingencies 1171225 Interest on long term bonds 318875 OPERATN PROFT BEFORE ORKN APTAL HANES 156561 ADJUSTENTS FOR ORKN APTAL HANES (Increase)/Decrease in investments 866413 (Increase)/Decrease in advances 5487247 Increase/(Decrease) in borrowings 6262 Increase/(Decrease) in deposits 1247949 (Increase)/Decrease in other assets 738358 Increase/(Decrease) in other liabilities 1897128 CASH USED IN OPERATIONS 4559714 Less: Income Tax paid 355100 NET ASH USED N OPERATN ATTES A 4914814 ASH FLO FRO NESTN ATTES Purchase of fxed assets 103870 e o e et 1990 NET ASH USED N NESTN ATTES B 101880 ASH FLO FRO FNANN ATTES Issue of Tier II bonds 500000 Interest on long term bonds 318875 Dividend & dividend tax paid 37754 NET ASH ENERATED N FNANN ATTES 143371 NET NREASEDEREASE N ASH ASH EUALENT AB 4873323 ASH AND ASH EUALENT AT 1ST APRL 2009 18749342 ASH ASH EUALENT AT 31ST ARH 2010 13876019 For and on behalf of the Board (O.P.Gupta) (D. Saruparia) (G.Padmanabhan) Chief Financial Offcer & Addl.V.P. Dy. Managing Director Managing Director & Chief Executive Offcer (R.K. Agrawal) DIRECTORS Company Secretary M. Ravindra Vikram Vipul Dhirajlal Mehta As per our report of even date Pran M. Agarwal For Gokhale & Sathe Chartered Accountants Firm Regn. No. 103264W (Rahul P. Joglekar) Partner Membership No.: 129389 Place : Mumbai Date : May 28, 2010

70 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

Table DF 1: Scope of Application Qualitative Disclosures 1.a Disclosures in this report pertain to The Bank of Rajasthan Ltd to which the revised capital adequacy framework applies. 1.b The Bank has no subsidiary. However, the Bank has sponsored a Regional Rural Bank viz., Mewar Anchalik Gramin Bank. Quantitative Disclosures 1.c Investment in MAGB (Mewar Anchalik Gramin Bank), sponsored by the Bank, in which the Bank has 35% stake, has been deducted from 50 % each from Tier-I and Tier-II capital. 1.d Presently, the Bank is not involved in insurance activity.

Table DF 2 : Capital Structure Qualitative Disclosures 2.a Type of Capital Features Tier-I Bank’s Tier-I Capital comprises of Equity Shares, Reserves and surplus in P&L Account. Subordinate debt instruments – Unsecured, redeemable, Non-convertible bonds with period ranging from 7 to 10 years. Date of allotment Amount Coupon Rate Tenor (in months) Date of maturity (Rs. In Crores) (% p.a. payable annually) 15.11.2004 36.00 7.50 84 15.11.2011 15.11.2004 36.00 7.75 116 15.07.2014 ier 28.12.2005 70.00 8.70 112 28.04.2015 15.01.2007 48.00 9.50 120 15.01.2017 05.01.2009 43.80 11.50 120 05.01.2019 08.06.2009 5.00 10.25 82 08.04.2016 08.06.2009 45.00 10.50 120 08.06.2019 Upper Tier-II bonds – Unsecured, redeemable, non-convertible bonds with period of 15 years. Date of allotment Amount (Rs. In Coupon Rate Tenor (in months) Redemption / Crores) (% p.a. payable Date of maturity annually) 22.09.2006 61.10 10.50 180 22.09.2021

Quantitative Disclosures (b) The amount of Tier-I capital, with separate disclosure of : (Rs. in Crores) 2.b i) Paid up share capital 161.35 ii) Reserve (excluding revaluation reserve) 379.28 iii) Innovative instruments - iv) Other capital instruments - Deductions – amount deducted from Tier-I capital, including goodwill and investment

67th ANNUAL REPORT 2009-10 71 THE BANK OF RAJASTHAN LTD.

v) 50 % equity investment in MAGB 0.18 vi) Net deferred tax assets 140.19 TOTAL TIER-I CAPITAL (i+ii+iii+iv-v-vi) 400.26 (c) The total amount of Tier II capital (net of deductions from Tier II capital). 488.87 (d) Debt capital instruments eligible for inclusion in Upper Tier II capital Total amount outstanding 61.10 Of which amount raised during the current year - Amount eligible to be reckoned as capital funds 61.10 (e) Subordinate debt eligible for inclusion in Lower Tier-II Capital Total amount outstanding 238.80 Of which amount raised during the current year 50.00 Amount eligible to be reckoned as capital funds 200.13 (f) Property revaluation Reserve (@ 55 % discount) 177.83 (g) Investment Reserve Account (IRA) 0.71 (g) General Provision 49.27 Deductions (h) 50 % equity investment in MAGB 0.17 TOTAL TIER-II CAPITAL (i) Other deductions from capital, if any 88.60 (j) Total eligible capital Tier-I Capital 400.26 Tier-II Capital 400.26 Total Capital 800.52

Table DF 3 : Capital Adequacy Qualitative disclosures 3.a The Bank has put in place an ICAAP document describing its approach towards assessing the adequacy of its capital to support current and future activities. The minimum regularity CRAR prescribed by the Reserve Bank of India is 9 %. To take care of expected business growth in near future and also to take care of certain residual risks, the Bank’s medium term plan is to ensure maintenance of minimum CRAR of 12 %. With a view to increase the level of capital funds the Bank proposes to increase Tier-I and Tier-II capital funds through various means available for the same. ICAAP document has been put in place Yes Capital requirement for current business levels and estimated future business levels (next year) has been Yes assessed CRAR has been worked out based on Base - I AND Base - II guidelines. Yes Qualitative disclosures (b) Capital requirements for credit risk: Portfolios subject to standardized approach 869.61 Securitization exposures 0.00 (c) Capital requirements for market risk:

72 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

Standardized duration approach Interest rate risk 17.07 Foreign exchange risk (including gold) 1.08 Equity risk 1.02 (d) Capital requirements for operational risk Basis indicator approach 68.37 (e) Total and Tier-I capital ratio For the top consolidated group 7.52 3.76 For signifcant bank subsidiaries (stand alone or sub-consolidated depending on how the 0.00 0.00 Framework is applied

Table DF 4: Credit Risk : General Disclosures for All Banks 4.a. 1 The Bank has adopted the defnition of the past due and impaired (for accounting purposes) as defned by the regulator for income recognition and asset classifcation norms as per Annexure 1. 4.a.2. The Bank has put in place Credit Risk Management Policy as well as Loan Policy and the same have been circulated to all the branches. These polices take into account the need for better Credit Risk Management and avoidance of Risk Concentration. The objectives of the policy are to ensure that the operations are in line with the expectations of the Management, which are translated into directions to the operational level. The policy stipulates prudential limits on large credit exposure, standards for loan collateral, portfolio management, loan review mechanism, risk concentration, risk monitoring and evaluation, provisioning and regulatory / legal compliance etc. Specifc norms and policy for appraising, sanctioning, documentation, inspections & monitoring, renewals, maintenance, rehabilitation and management of assets have been stipulated with room for innovation, deviations, fexibility with proper authority. 4.a.3 The Bank identifes the risks to which it is exposed and applies suitable techniques to measure, monitor and control these risks. 4.a.4 The Bank studies the concentration risk by (a) fxing exposure limits for single and group borrowers, (b) specifed sensitive sectors (unsecured exposure / real estate exposure / capital market exposure) limits, (c) industry-wise exposure limits and (d) analyzing the geographical distribution of credit across Regions / States. 4.a.5 The Bank considers rating of a borrowal account as an important tool to measure the credit risk associated with any borrower and for this purpose a web-based software driven credit rating / scoring system has been acquired and introduced in the Bank for different segments. Quantitative Disclosures (Rs. in Crores) Exposure Amount Loans & Advances 8489.78 e Others (Fixed Assets, Other Assets etc) 1986.41 LC / BG etc 494.05 Non-Fund Based Forward Contracts 522.43 Others 1703.83 Investments (Banking 5993.03 Book only) Grand Total of Credit 19189.53 Risk Exposure

67th ANNUAL REPORT 2009-10 73 THE BANK OF RAJASTHAN LTD.

Geographic distribution of exposure On the same basis as adopted for Segment Reporting adopted for compliance with AS 17 Fund Based 0.00 Overseas Non-Fund Based 0.00 Fund Based 16469.22 Domestic Non-Fund Based 2720.31 Grand total of credit 19189.53 exposure Industry-wise distribution of exposure (ANNEXURE 2 a and 2 b) The industries break-up is provided on the same lines as prescribed for DSB returns. The exposure of the Bank to industry more than 5 percent of the gross credit exposure is as under: 1 TEXTILES 436.87 2 INFRASTRUCTURE* 1479.77 * exposure ceiling is 25% as per board approval Residual Contractual Maturity Break down of advances and investments (Annexure 3) Same maturity bands as used for reporting positions in the ALM returns (a) Amount of NPAs (Gross) (Rs. in Crores) Substandard 100.82 Doubtful 1 50.69 Doubtful 2 19.54 Doubtful 3 34.91 Loss 87.85 Total Gross NPAs 293.81 (b) Net NPAs 133.50 (c) NPA Ratios Gross NPAs to gross advances 3.46% Net NPAs to Net Advances 1.60% (d) Movement of NPAs (Gross) Opening Balance 160.92 Additions 163.53 Reductions 30.64 Closing Balance 293.81 (e) Movement of provisions for NPAs Opening Balance 96.31 Provisions made during the period 57.35 Write-off - Write-back of excess provisions - Closing Balance 153.66 (f) Amount of Non-Performing Investments - (g) Amount of provisions held for non-performing investments. -

74 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

(h) Movement of provisions for depreciation on investment Opening Balance 1.51 Provisions made during the period - Write-off - Write-back of excess provisions - Closing Balance 1.51

Table DF 5 Credit Risk: Disclosures for Portfolios Subject to the Standardised Approach Qualitative Disclosures (a) For portfolios under the standardized approach: 5.a Under Standardized Approach the Bank accepts rating of RBI approved ECAI (External Credit Assessment Institution) viz., CARE, CRISIL, Fitch India and ICRA for domestic credit exposures. For overseas credit exposures the Bank accepts rating of Standard & Poor, Moody’s and Fitch. The Bank has entered into MOU with M/s. ICRA Ltd, a rating agency identifed / approved by RBI, to facilitate the borrower customers to solicit the ratings. The Bank encourages large corporate borrowers to solicit rating from ECAI and has used the ratings for calculating risk weighted assets, wherever such ratings are available. The ratings assigned by the above agencies are being used for all exposures subjected to rating for risk weighting purposes under the standardized approach for CRAR calculations under Basel-II Accord. For assets that have contractual maturity less than or equal to one year, short term ratings are used, while for other assets, long-term ratings are used. For Cash Credit / Overdraft and other revolving credit exposures long-term ratings are taken.

Quantitative Disclosures Particulars Below 100 RW At 100 RW More than 100 Total RW Book RWA Book RWA Book RWA Book RWA Value Value Value Value

Credit Exposure in Banking Book 9824.86 1257.18 8494.48 7360.94 870.18 1044.18 19189.52 9662.30

Table DF 6 Credit Risk Mitigation: Disclosures for Standardied Approaches Qualitative Disclosures Policies and processes for collateral valuation and management: The Bank employs various methods and techniques to reduce the impact that would serve to: # mitigate the risk by providing secondary sources of repayment in the event of borrower’s default on a credit facility due to inadequacy in expected cash fow or not # gain control on the source of repayment in the event of default # provide early warning of a borrower’s deteriorating repayment ability and # Optimize risk weighted assets and to address Residual Risks adequately Collateral Management process and practices of the Bank cover the activities comprising security and protection of collateral value, validity of collaterals and guarantees and valuation / periodical inspection.

67th ANNUAL REPORT 2009-10 75 THE BANK OF RAJASTHAN LTD.

t Both the Fixed and the Current Assets obtained to secure the loans granted by the Bank are subject to periodical valuation as per Bank’s valuation policy. Dt th t t t th B The main types of collateral commonly used by the Bank as risk mitigants compromises of Inventories, Book debts, Plant & Machineries, Land & Building, Gold Jewellery, Financial Collaterals (i.e. Bank Deposits, Government Securities issued directly by postal departments, equity shares of limited companies approved by the Bank, Life Insurance Policies, Units of Mutual Funds etc) different categories of movable and immovable assets / properties etc. t t tt th tth Whenever required the Bank obtains Personal or Corporate guarantee having adequate net worth, as an additional comfort for mitigation of Credit Risk which can be translated into a direct claim on the guarantor and are unconditional and irrevocable. The creditworthiness of the guarantor is normally not linked to or affected by borrower’s fnancial position. The Bank also accepts guarantee given by the State / Central Government as a security comfort. Such guarantees remain continually effective until the facility covered is fully repaid or settled or released. t R tt th B th t t N t A F B- The Bank has recognized Cash, Bank’s own Deposits, Gold & Gold Jewellery, securities issued by Central & State Government, National Savings Certifcate and Kisan Vikas Patras, LIC Policies, Debt Securities (rated), Debt Securities (not rated but issued by Banks) etc as Credit Risk Mitigation for the purpose of reducing capital requirement under the New Capital Adequacy Frame Work (Basel-II Norms) Guarantees issued by entities with a lower risk weight than the counterparty are accepted as credit risk mitigant. Quantitative Disclosures For disclosed credit risk portfolio under the standardized approach, the total exposure that is covered by eligible fnancial collateral (FC) after the application of haircuts. Eligible fnancial collaterals is Rs. 833.97 crores. For disclosed credit risk portfolio under the standardized approach, the total exposure that is covered by eligible Guarantees / credit derivatives after the application of haircuts. Guaranteed by Guarantee Amount (Rs. in crores) Central Govt. 241.10 State Govt. 251.94 ECGC / DICGC 76.53 Banks 48.68

Table : DF-7 Securitisation Exposures: Disclosure for Standardised Approach Not applicable. The Bank has not securitized any exposure during the Financial Year 2009-10.

Table DF- 8 : Market Risk in Trading Book tt (a) The general qualitative disclosure requirement for market risk including the portfolios covered by the standardised approach. The Bank has put in place Market Risk Management Policy and Investment Policy with prescriptions for Risk Monitoring & Mitigation measures. The Bank has constituted ALCO / Investment Committee / Risk Management Committee. Standardized Duration Approach is applied for calculation of Market risk for: l Securities under HFT Category l Securities under AFS Category l Derivatives entered into for AFS Securities l Derivatives entered into for Trading

76 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

Risk Management and reporting is based on parameters such as Modifed Duration, Exposure and Gap Limits etc., in line with the global best practices. Forex Open Position limits (Daylight / Overnight), Deal-wise cut-loss limits, stop-loss limit, proft / loss in respect of cross-currency trading are monitored and exception reporting is regularly carried out. ttt t t t th t t h (b) The capital requirements for: (Rs. in Crore) i) Interest Rate Risk 17.07 ii) Equity position risk 1.02 iii) Foreign exchange risk 1.08 Total Capital Charge for market risks under Standardized duration approach (i + ii + iii) 19.17

T DF-9 Ot R tt The bank has put in place important policies like Operational Risk Management Policy, Information System Security policy, Know Your Customer (KYC) Policy, Business Continuity Policy etc. The Operational Risk Management Policy outlines the organization structure and covers the process of identifcation, assessment / measurement and control of various operational risks. Operational Risk Capital Assessment has been worked out on the basis of Basic Indicator Approach. ttt D Capital Charge for Operational Risk in our Bank as on 31.03.2010, as per Basic Indicator Approach works out to 68.37

T DF- 10 tt Rt R th B B RRBB tt D Interest rate risk refers to fuctuations in Bank’s Net Interest Income (NII) and the value of its Assets and Liabilities arising from internal and external factors. Internal factors include the composition of the 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 the Bank, depending on Balance Sheet positioning. Interest rate risk is prevalent on both the asset as well as the liability sides of the Bank’s Balance Sheet. The Asset - Liability Management Committee (ALCO) which is responsible for evolving appropriate systems and procedures for ongoing identifcation and analysis of Balance Sheet risks and laying down parameters for effcient management of these risks through Market Risk Management Policy of the Bank. ALCO, therefore, periodically monitors and controls the risks and returns, funding and deployment, setting Bank’s lending and deposit rates, and directing the investment activities of the Bank. ALCO also develops the market risk strategy by clearly articulating the acceptable levels of exposure to specifc risk types (i.e. interest rate, liquidity etc). The Risk Management Committee of the Board of Directors (RMCB) oversees the implementation of the system for ALM and review its functioning periodically and provide direction. It reviews various decisions taken by the Asset - Liability Management Committee (ALCO) for managing market risk. Interest rate risk exposure is measured with Interest Rate Gap analysis, Duration analysis. RBI has stipulated monitoring of interest rate risk at monthly intervals through a Statement of Interest Rate Sensitivity (Repricing Gaps) to be prepared as on the last Reporting Friday of each month. Accordingly, ALCO reviews Interest Rate Sensitivity statement on monthly basis. Bank also carries out Duration Gap analysis (on quarterly basis) to estimate the impact of change in interest rates on economic value of Bank’s assets and liabilities and thus arrive at changes in Market Value of Equity (MVE). ttt D # Change in NII: At the present level of Assets and Liabilities, for a 1% movement in Interest Rate (assuming parallel change on both Assets and Liabilities) the likely impact is estimated at Rs.10.53 crore over a period of one year. # Change in MVE: At the present level of Assets and Liabilities, taking the whole Balance Sheet into account, the likely impact of 1% movement in interest rates on Market Value of Equity is estimated at around 30.04 %.

67th ANNUAL REPORT 2009-10 77 THE BANK OF RAJASTHAN LTD.

A DEFNATON OF PAST DUE PARED ASSETS AND REDT RSK Advances are classifed into performing and non-performing advances as per RBI guidelines. NPAs are further classifed into sub-standard, doubtful and loss assets based on the criteria stipulated by RBI. An asset, including a leased asset, becomes non-performing when it ceases to generate income for the Bank. A Non-Performing asset ( NPA) is a loan or an advance where: i) Interest and/or installments of principal remain overdue for a period of more than 90 days in respect of a Term Loan, ii) The account treated as Ot O if the outstanding balance remains continuously in excess of the sanctioned limit/drawing power. In cases where the outstanding balance in the principal operating account is less than the drawing power, but where there are no credits continuously for 90 days in the account or the credits are not enough to cover the interest debited during the same period, these accounts are also treated as Ot O, iii) The Bill remains ( if it is not paid on the due date fxed by the bank) for a period of more than 90 days in the case of bills purchased and discounted, iv) The installment of principal or interest thereon remains overdue for two crop seasons for short duration crops, v) The installment of principal or interest thereon remains overdue for one crop seasons for long duration crops, vi) In case of interest charged during any quarter is not serviced fully within 90 days from the end of the quarter, the account is classifed as NPA. A NFORATON FOR BASEL DSLOSURE NDUSTR SE DSTRBUTON OF EPOSURES FUND BASED 31.03.2010

(Rs. in Crore) t Tt t OS NPA St 1. Coal 0.42 0.00 0.42 2. Mining 7.77 0.05 7.72 3. Iron and Steel 177.12 9.31 167.81 4. Metal Products 121.58 8.14 113.44 5. All Engineering 176.21 0.74 175.47 5.1 Of which (005) Electronics 104.03 0.01 104.02 6. Electricity 0.00 0.00 0.00 7. Cotton Textile 332.52 14.72 317.80 8. Jute Textile 0.26 0.00 0.26 9. Other Textile 104.08 1.34 102.74 10. Sugar 97.21 0.00 97.21 11. Tea 0.00 0.00 0.00 12. Food Processing 43.22 0.40 42.82 13. Vegetable oil & Vanaspati 3.83 0.02 3.81 14. Tobacco / Tobacco Products 0.09 0.00 0.09 15. Paper / Paper Products 19.98 8.91 11.07 16. Rubber / Rubber Products 3.76 0.01 3.75 17. Chemicals / Dyes / Paints etc. 186.46 22.58 163.88

78 67th ANNUAL REPORT 2009-10 THE BANK OF RAJASTHAN LTD.

(Rs. in Crore) t Tt t OS NPA St 17.1 Of which Fertilizers 0.59 0.00 0.59 17.2 Of which Petrochemicals 2.06 0.00 2.06 17.3 Of which Drugs & Pharma 93.04 0.15 92.89 18. Cement 25.17 0.00 25.17 19. Leather & Leather Products 0.12 0.03 0.09 20. Gems & Jewellery 88.12 1.29 86.83 21. Construction 45.89 0.00 45.89 22. Petroleum 70.21 0.00 70.21 23. Automobiles & Trucks 55.79 0.00 55.79 24. Computer Software 1.29 0.04 1.25 25. Infrastructure 1479.77 9.37 1470.40 25.1 Of which Power 1041.21 9.37 1031.84 25.2 Of which Telecommunications 0.00 0.00 0.00 25.3 Of which Roads & Ports 350.51 0.00 350.51 26. Other Industries 433.52 26.76 406.76 27. NBFCs 87.75 0.34 87.41 28. Residual Advances 4927.64 189.76 4737.88 TOTAL 8489.78 293.81 8195.97

A NFORATON FOR BASEL DSLOSURE NDUSTR SE DSTRBUTON OF EPOSURES FUND BASED 31.03.2010

(Rs. in Crore) t Tt t OS NPA St 1. Coal 0.00 0.00 0.00 2. Mining 2.28 0.00 2.28 3. Iron and Steel 21.04 0.00 21.04 4. Metal Products 43.30 0.00 43.30 5. All Engineering 50.65 0.00 50.65 5.1 Of which (005) Electronics 0.00 0.00 0.00 6. Electricity 0.00 0.00 0.00 7. Cotton Textile 8.14 0.01 8.13 8. Jute Textile 0.00 0.00 0.00 9. Other Textile 32.80 0.05 32.75 10. Sugar 0.72 0.00 0.72 11. Tea 0.00 0.00 0.00 12. Food Processing 0.42 0.00 0.42 13. Vegetable oil & Vanaspati 8.62 0.00 8.62 14. Tobacco / Tobacco Products 0.20 0.00 0.20

67th ANNUAL REPORT 2009-10 79 THE BANK OF RAJASTHAN LTD.

(Rs. in Crore) t Tt t OS NPA St 15. Paper / Paper Products 0.16 0.12 0.04 16. Rubber / Rubber Products 0.26 0.06 0.20 17. Chemicals / Dyes / Paints 8.00 0.00 8.00 17.1 Of which Fertilizers 4.33 0.00 4.33 17.2 Of which Petrochemicals 0.00 0.00 0.00 17.3 Of which Drugs & Pharma 3.67 0.00 3.67 18. Cement 1.19 0.00 1.19 19. Leather & Leather Products 0.00 0.00 0.00 20. Gems & Jewellery 3.06 0.00 3.06 21. Construction 0.00 0.00 0.00 22. Petroleum 0.00 0.00 0.00 23. Automobiles & Trucks 5.15 0.00 5.15 24. Computer Software 0.00 0.00 0.00 25. Infrastructure 16.35 0.02 16.33 25.1 Of which Power 0.03 0.02 0.01 25.2 Of which Telecommunications 0.19 0.00 0.19 25.3 Of which Roads & Ports 16.13 0.00 16.13 26. Other Industries 7.47 0.00 7.47 27 NBFC 10.11 0.27 9.84 28 Residual advances 274.13 0.08 274.05 TOTAL 494.05 0.61 493.44

A RESDUAL ONTRATUAL ATURT BREAK DON OF ASSETS AS OF 31.03.2010 (Rs. in Crore) R tt A tt F Tt At t 1 day 328.07 2.21 15.74 346.02 2-7 days 30.41 26.64 0.61 57.66 8-14 days 87.47 144.89 0.71 233.07 15-28 days 404.79 136.12 0.95 541.86 29 days to 3 months 657.06 113.53 2.99 773.58 Over 3 months upto 6 months 521.83 62.99 4.76 589.58 Over 6 months upto 1 year 959.01 536.72 0 1495.73 Over 1 year upto 3 years 3060.85 438.55 0 3499.40 Over 3 years upto 5 years 726.07 4837.20 0 5563.27 Over 5 years 1420.41 425.17 0 1845.58 Tt 8195.97 6724.02 25.76 14945.75

80 67th ANNUAL REPORT 2009-10