PROSPECTUS Dated April 15, 2005 100 % Book Building Issue ALLAHABAD BANK Head Office : 2, Netaji Subhas Road, Kolkata 700 001. Tel.: (033) 22423373, 22420883 Fax.: (033) 22104048, 2242 4048 Website : www. allahabadbank.com. E-mail: [email protected] (Constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970) PUBLIC ISSUE OF 100,000,000 EQUITY SHARES OF RS.10 EACH FOR CASH AT A PRICE OF RS. 82 PER SHARE AGGREGATING RS. 8,200 MILLION (“THE ISSUE”) BY ALLAHABAD BANK (“THE BANK” OR “THE ISSUER”). THE ISSUE COMPRISES NET ISSUE TO THE PUBLIC OF UP TO 80,000,000 EQUITY SHARES OF RS. 10 EACH, A RESERVATION FOR EMPLOYEES OF UP TO 10,000,000 EQUITY SHARES OF RS. 10 EACH AND A RESERVATION FOR EXISTING SHAREHOLDERS OF UP TO 10,000,000 EQUITY SHARES OF RS. 10 EACH, AT THE ISSUE PRICE. THE ISSUE WOULD CONSTITUTE 22.38 % OF THE FULLY DILUTED POST ISSUE PAID-UP CAPITAL OF THE BANK. ISSUE PRICE OF RS. 82 PER EQUITY SHARE OF FACE VALUE OF RS. 10 EACH THE ISSUE PRICE IS 8.2 TIMES OF THE FACE VALUE OF THE EQUITY SHARES The Issue is being made through the 100% Book Building Process wherein up to 50% of the Net Issue to the public shall be allocated on a discretionary basis to Qualified Institutional Buyers. Further, not less than 15% of the Net Issue to the public shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Issue to the public shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. Up to 10,000,000 Equity Shares shall be available for allocation on a proportionate basis to the Employees, subject to valid Bids being received at or above the Issue Price and the maximum Bid in this portion is limited to 2,500 Equity Shares. Up to 10,000,000 Equity Shares shall be available for allocation on a proportionate basis to the Existing Shareholders, subject to valid Bids being received at or above the Issue Price. RISK IN RELATION TO THE ISSUE The Issue Price (as determined by Allahabad Bank in consultation with the Book Running Lead Managers on the basis of assessment of market demand for the Equity Shares by way of book-building) should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. The market price of the existing Equity Shares of Allahabad Bank could affect the price discovery through book building and vice versa. No assurance can be given regarding an active and/or sustained trading in the Equity Shares or regarding the price at which the Equity Shares will be traded after listing. GENERAL RISKS Investments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in this Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this Issue. For taking an investment decision, investors must rely on their own examination of the Bank and the Issue including the risks involved. The Equity Shares issued in the Issue have not been recommended or approved by the Securities and Exchange Board of India (“SEBI ”), nor does SEBI guarantee the accuracy or adequacy of this Prospectus. Specific attention of the investors is invited to the statements in Risk Factors beginning on page xii of this Prospectus. ISSUER’S ABSOLUTE RESPONSIBILITY The Bank having made all reasonable inquiries, accepts responsibility for and confirms that this Prospectus contains all information with regard to the Bank and the Issue, which is material in the context of the Issue, that the information contained in this Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. LISTING ARRANGEMENT The Equity Shares issued through this Prospectus are proposed to be listed on NSE BSE, and CSE. We have received in-principle approvals from these Stock Exchanges for the listing of our Equity Shares pursuant to letters dated February 23, 2005, February 24, 2005 and March 7, 2005, respectively. NSE is proposed to be the Designated Stock Exchange. BOOK RUNNING LEAD MANAGERS SBI Capital Markets Limited DSP Merrill Lynch Limited ICICI Securities Limited JM Morgan Stanley Private Limited 202, Maker Tower ‘E’ Mafatlal Centre, 10th Floor ICICI Centre 141, Maker Chambers III Cuffe Parade Nariman Point H.T. Parekh Marg, Churchgate Nariman Point Mumbai 400 005 Mumbai 400 021 Mumbai 400020 Mumbai-400 021 Tel: 91 22 2218 9166 Tel : 91 22 2262 1071 Tel: 91 22 2288 2460 Tel: 91 22 5630 3030 Fax: 91 22 2218 8332 Fax : 91 22 2262 1187 Fax: 91 22 2282 6580 Fax: 91 22 5630 1694 Email:allahabad_fpo@ sbicaps.com Email:allahabad_fpo@ ml .com Email:allahabad_fpo@ isecltd.com Email: [email protected] BOOK RUNNING LEAD MANAGERS REGISTRARS TO THE ISSUE ISSUE PROGRAMME Kotak Mahindra Capital Enam Financial Consultants MCS Limited BID / ISSUE OPENED ON : Company Limited Private Limited Sri Padmavati Bhavan, Bakhtawar, 3rd Floor 801/ 802, Dalamal Towers Plot No. 93, Road No. 16 WEDNESDAY, APRIL 6, 2005 229 Nariman Point Nariman Point MIDC Area, Andheri (East) Mumbai 400 021 Mumbai, India 400 021 Mumbai 400092 Tel : 91 22 5634 1100 Tel. : 91 22 5638 1800 Tel: 91 22 2820 1785 BID / ISSUE CLOSED ON : Fax: 91 22 2282 6632 Fax. : 91 22 2284 6824 Fax: 91 22 2820 1783 Email: allahabad_fpo@ kotak.com Email:allahabad_fpo@ enam.com Email : allahabad_fpo@mcsind .com TUESDAY, APRIL 12, 2005 TABLE OF CONTENTS DEFINITIONS AND ABBREVIATIONS ------------------------------------------------------------------------------------------------------- i CERTAIN CONVENTIONS; USE OF MARKET DATA ------------------------------------------------------------------------------------ x FORWARD-LOOKING STATEMENTS ------------------------------------------------------------------------------------------------------- xi RISK FACTORS ---------------------------------------------------------------------------------------------------------------------------------- xii SUMMARY ----------------------------------------------------------------------------------------------------------------------------------------- 1 SUMMARY FINANCIAL INFORMATION ----------------------------------------------------------------------------------------------------- 3 THE ISSUE --------------------------------------------------------------------------------------------------------------------------------------- 5 GENERAL INFORMATION --------------------------------------------------------------------------------------------------------------------- 6 CAPITAL STRUCTURE ------------------------------------------------------------------------------------------------------------------------- 19 OBJECTS OF THE ISSUE -------------------------------------------------------------------------------------------------------------------- 24 THE INDIAN BANKING SECTOR ------------------------------------------------------------------------------------------------------------ 25 BUSINESS ----------------------------------------------------------------------------------------------------------------------------------------- 45 HISTORY AND CERTAIN CORPORATE MATTERS -------------------------------------------------------------------------------------- 69 SELECTED FINANCIAL INFORMATION ---------------------------------------------------------------------------------------------------- 74 SELECTED STATISTICAL INFORMATION ------------------------------------------------------------------------------------------------- 76 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ------- 82 OUR MANAGEMENT --------------------------------------------------------------------------------------------------------------------------- 99 OUR PROMOTER, SUBSIDIARIES AND GROUP COMPANIES ---------------------------------------------------------------------- 107 RELATED PARTY TRANSACTIONS --------------------------------------------------------------------------------------------------------- 116 REGULATIONS AND POLICIES -------------------------------------------------------------------------------------------------------------- 117 GOVERNMENT APPROVALS ------------------------------------------------------------------------------------------------------------------ 145 OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS--------------------------------------------------------------------- 148 DIVIDEND POLICY ------------------------------------------------------------------------------------------------------------------------------ 166 OTHER REGULATORY DISCLOSURES ---------------------------------------------------------------------------------------------------- 167 STATEMENT OF TAX BENEFITS ------------------------------------------------------------------------------------------------------------ 168 TERMS OF THE ISSUE ------------------------------------------------------------------------------------------------------------------------ 171 ISSUE STRUCTURE ---------------------------------------------------------------------------------------------------------------------------- 173 ISSUE PROCEDURE ---------------------------------------------------------------------------------------------------------------------------