MIRA INFORM REPORT

Report Date :

18.08.2011

IDENTIFICATION DETAILS

Name :	DEVELOPMENT CREDIT BANK LIMITED
Registered Office :	301,Delta Plaza, 414,Veer Savarkar Marg, Prabhadevi, Mumbai – 400 025, Maharashtra
Country :	India
Financials (as on) :	31.03.2011
Date of Incorporation :	31.05.1995
Com. Reg. No.:	11-89008
Capital Investment / Paid-up Capital :	Rs.2001.712 Millions
CIN No.: [Company Identification No.]	L99999MH1995PLC089008
Legal Form :	A Private Sector Bank. The Banks shares are listed on the stock exchange
Line of Business :	Investment and Financing Activity
No. of Employees :	Information declined by the management.

RATING & COMMENTS

MIRA’s Rating :

Ba (49)

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Status :	Satisfactory
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is an established private sector bank having satisfactory track. Trade relations are reported as fair. Business is active. Payments are reported be regular and as per commitments The bank can be considered normal for business dealings at usual trade terms and conditions.

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

INFORMATION DECLINED BY

Name :	Mr. Sridhar Seshadri
Designation :	Finance Controller
Date :	16.08.2011

LOCATIONS

Registered Office and Corporate Office :	301,Delta Plaza, 414,Veer Savarkar Marg, Prabhadevi, Mumbai – 400 025, Maharashtra, India
Tel No:	91-22-24387000 / 66187000
Fax No:	91-22-24231520
Website :	http://www.dcbbank.com
Branch Office :	8 Pariseema Comp. Opp Lal Bunglow, CG Road, Ahmedabad, Gujarat, India

DIRECTORS

As on 31.03.2011

Name :	Mr. Naseer Munjee
Designation :	Chairman
Name :	Mr. Murali M. Natrajan
Designation :	Managing Director and Chief Executive Officer
Name :	Ms. Nasim Devji
Designation :	Director
Name :	Mr. A. A. Sabuwala
Designation :	Director
Name :	Mr. D. E. Udwadia
Designation :	Director
Name :	Mr. Narayan K. Seshadri
Designation :	Director
Name :	Mr. R. A. Momin
Designation :	Director
Name :	Mr. Shabir Suleman Kassam
Designation :	Director
Name :	Mr. Sushil Nathani
Designation :	Director
Name :	Mr. Sukh Dev Nayyar
Designation :	Director

KEY EXECUTIVES

Name :	Mr. Bharat Sampat
Designation :	Chief Financial Officer
Name :	Mr. Abhijit Bose
Designation :	Head Retail Assets
Name :	Mr. Anoop Prabhakar
Designation :	Head Corporate Banking
Name :	Mr. J. K. Vishwanath
Designation :	Chief Credit Officer
Name :	Mr. Praveen Kutty
Designation :	Head Retail and SME Banking
Name :	Mr. Rajesh Verma
Designation :	Head Treasury, Correspondent Banking and Trade Finance
Name :	Mr. Ravi Kumar
Designation :	Chief Internal Auditor
Name :	Mr. R. Venkattesh
Designation :	Head HR, Technology and Operations
Name :	Mr. Sachin Patange
Designation :	Chief Compliance Officer
Name :	Mr. Sridhar Seshadri
Designation :	Financial Controller
Name :	Mr. H V Barve
Designation :	Company Secretary

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 30.06.2011

Names of Shareholders	No. of Shares	Total Shareholding as a % of total No. of Shares
(A) Shareholding of Promoter and Promoter Group
(1) Indian
Bodies Corporate	2450182	1.22
Sub Total	2450182	1.22
(2) Foreign
Bodies Corporate	43750052	21.85
Sub Total	43750052	21.85
Total shareholding of Promoter and Promoter Group (A)	46200234	23.08
(B) Public Shareholding
(1) Institutions
Mutual Funds / UTI	3650533	1.82
Financial Institutions / Banks	206084	0.10
Foreign Institutional Investors	23355172	11.67
Any Others (Specify)	21541	0.01
Trusts	21541	0.01
Sub Total	27233330	13.60
(2) Non-Institutions
Bodies Corporate	26766296	13.37
Individuals
Individual shareholders holding nominal share capital up to Rs.0.100 million	62480945	31.21
Individual shareholders holding nominal share capital in excess of Rs.0.100 million	16510829	8.25
Any Others (Specify)	21007475	10.49
Clearing Members	2534706	1.27
Non Resident Indians	5741370	2.87
Foreign Corporate Bodies	12692427	6.34
Directors & their Relatives & Friends	38972	0.02
Sub Total	126765545	63.32
Total Public shareholding (B)	153998875	76.92
Total (A)+(B)	200199109	100.00
(C) Shares held by Custodians and against which Depository Receipts have been issued	-	-
(1) Promoter and Promoter Group	-	-
(2) Public	-	-
Sub Total	-	-
Total (A)+(B)+(C)	200199109	-

Shareholding belonging to the category "Promoter and Promoter Group"

Sl. No.	Name of the Shareholder	Total Shares held
		No. of Shares	Total Shareholding as a % of total No. of Shares
1	Aga Khan Fund For Economic Development SA	43750052	21.85
2	Platinum Jubilee Investments Ltd	2450182	1.22
	Total	46200234	23.08

Shareholding belonging to the category "Public" and holding more than 1% of the Total No. of Shares

Sl. No.	Name of the Shareholder	No. of Shares	Shares as % of Total No. of Shares
1	Al Bateen Investment Co L L C	7390527	3.69
2	Tata Capital Limited	6587210	3.29
3	DCB Investments Limited	5301900	2.65
4	The India Fund INC	7175589	3.58
5	Housing Development Finance Corporation Limited	4047926	2.02
6	Satpal Khattar	3242296	1.62
7	Sundaram BNP Paribas Mutual Fund A/c Sundaram BNP Paribas Equity Multiplier Fund	2714293	1.36
8	Royal Bank of Scotland PLC As Depositary of First State Indian Subcontinent Fund A Subfund	2669701	1.33
9	Girdharilal V Lakhi	2467260	1.23
10	Macquarie Bank Limited	2144000	1.07
	Total	43740702	21.85

BUSINESS DETAILS

Line of Business :

Investment and Financing Activity

GENERAL INFORMATION

No. of Employees :

Information declined by the management.

Bankers :

Reserve Bank of India

Facilities :

Borrowings	As on 31.03.2011 Rs. in millions	As on 31.03.2010 Rs. in millions
I. Borrowings in India
Reserve Bank of India	1800.000	0.000
Other Banks	3750.000	0.000
Other Institutions and Agencies	1340.016	1964.130
Sub-Ordinated Debts	1010.000	1470.000
Total (I)	7900.016	3434.130
II. Borrowings outside India	707.137	1600.990
Total (I + II)	8607.153	5035.120

Banking Relations :	--
Statutory Auditors :
Name :	S R Batliboi and Company Chartered Accountant
Address :	6th Floor, Express Towers, Nariman Point, Mumbai - 400 021, Maharashtra, India
Tel No. :	91-22-66579200
Fax No. :	91-22-22876401
Associate :	Platinum Jubilee Investments Limited

CAPITAL STRUCTURE

As on 01.06.2011

Authorised Capital :

No. of Shares	Type	Value	Amount
500000000	Equity Shares	Rs.10/- each	Rs.5000.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
200222334	Equity Shares	Rs.10/- each	Rs.2002.223 Millions

As on 31.03.2011

Authorised Capital :

No. of Shares	Type	Value	Amount
500000000	Equity Shares	Rs.10/- each	Rs.5000.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
200171209	Equity Shares	Rs.10/- each	Rs.2001.712 Millions

FINANCIAL DATA

[all figures are in Rupees Millions]

SOURCES OF FUNDS :	31.03.2011	31.03.2010	31.03.2009
Capital	2001.712	1999.852	1742.989
Employee Stock Options (Grants Outstanding net of deferred cost)	28.133	21.241	26.133
Reserves and Surplus	4185.054	3989.961	4214.238
Deposits	56101.658	47873.288	46468.917
Borrowings	8607.153	5035.120	4455.176
Other Liabilities & Provisions	2799.690	2447.190	2523.043
TOTAL LIABILITIES	73723.400	61366.652	59430.496
APPLICATION OF FUNDS :
Cash and Balances with Reserve Bank of India	4045.104	2913.641	2868.775
Balances with Banks and money at Call and Short notice	825.991	409.839	3733.407
Investments	22950.448	20179.302	16217.275
Advances	42714.465	34597.101	32740.194
Fixed Assets	1275.045	1357.554	1489.253
Other Assets	1912.347	1909.215	2381.592
TOTAL ASSETS	73723.400	61366.652	59430.496

PROFIT & LOSS ACCOUNT

Particulars	31.03.2011	31.03.2010	31.03.2009
INCOME
Interest Earned	5362.624	4589.707	6452.052
Other Income	1120.986	1075.216	1200.637
TOTAL INCOME	6483.610	5664.923	7652.689
EXPENDITURE
Interest Expended	3471.241	3174.200	4479.511
Operating Expenses	2151.805	2008.052	2419.807
Provisions and Contingencies	646.273	1267.172	1634.326
TOTAL EXPENDITURE	6269.319	6449.424	8533.644
PROFIT/(LOSS)
Net Profit/(Loss) for the Period	214.291	(784.501)	(880.955)
Profit/(Loss) Brought Forward	(3783.745)	(2998.897)	(2062.013)
TOTAL PROFIT/(LOSS)	(3569.454)	(3783.398)	(2942.968)
APPROPRIATIONS
Transfer to Statutory Reserve	53.573	0.000	0.000
Transfer to Revaluation Reserve	0.000	0.000	0.000
Transfer to Capital Reserve	21.712	0.000	47.272
Transfer to Investment Reserve	0.704	0.347	8.657
Balance carried over to Balance Sheet	(3645.443)	(3783.745)	(2998.897)
TOTAL	(3569.454)	(3783.398)	(2942.968)
Earning per share
Basic	1.07	(4.25)	(5.05)
Diluted	1.06	(4.25)	(5.05)

QUARTERLY RESULTS

Particulars	30.06.2011 UnAudited
Interest Earned	1616.440
Income On Investments	373.760
Interest On Balances With Rbi Other Inter Bank Funds	14.880
Interest / Discount On Advances / Bills	1227.800
Others	0.000
Other Income	234.440
Total Income	1850.880
Interest Expended	1097.600
Operating Expenses	588.040
Total Expenditure	588.040
Operating Profit Before Provisions and Contingencies	165.240
Exceptional Items	0.000
Provisions and contingencies	76.930
Profit Before Tax	88.310
Tax	0.000
Profit After Tax	88.310
+/- Extraordinary Items	0.000
+/- Prior period items	0.000
Net Profit	88.310

LOCAL AGENCY FURTHER INFORMATION

BACKGROUND

Subject, incorporated in Mumbai, India is a publicly held banking company engaged in providing banking and financial services. Subject is a banking company governed by the Banking Regulation Act, 1949.

FINANCIAL SUMMARY

India faced many challenges during FY 2011. Tackling the problem of high inflation has been a agenda for the Government and the Reserve Bank of India (RBI). The global economy is recovering but still weak and a few countries in Europe continue to be in a precarious financial condition. In India, the year started well with adequate liquidity and low interest rates, however, by the second half the situation was very different. The IIP data was not encouraging and liquidity became tight pushing up interest rates. RBI took special steps to improve the liquidity in the system and banks started offering customers high term deposit interest rates. As cost of funds increased, banks increased the Base Rate for lending. Due to uncertain conditions, the stock markets remained volatile.

Globally, towards the end of the year, there has been massive uprising of people in many of the Middle East countries demanding change. This has already pushed up the oil price to a great extent. The situation got worse in March 2011 when Japan was hit by a massive earthquake followed by a devastating tsunami. Japan and the world is still dealing with the fall out of the unprecedented natural disaster. While the Indian economy continues to be resilient and buoyant and is expected to grow at 8.0 to 8.5% per annum, oil price increase and inflation are likely to take some shine off the growth story.

Against the above background, in FY 2011, Subject has progressed further towards improving its business and financial performance. Subject returned to profits in the 2nd quarter of FY 2011 and thereafter continued to improve step by step every quarter.

In FY 2011, Subject has posted an Operating Profit of Rs.860.600 millions (Previous year: Rs.482.700 millions) and a Net Profit of Rs.214.300 millions (Previous year: Net Loss of Rs.784.500 millions).

The Net Interest Margin (NIM) has improved from 2.79% in FY 2010 to 3.13% in FY 2011 and the CASA ratio remains high at 35.2%.

Cost to Income Ratio has decreased to 71.4% in FY 2011 from 80.6% in FY 2010.

Provisions other than tax has reduced to Rs.568.100 millions in FY 2011 from Rs.1210.100 millions in FY 2010.

Capital Adequacy Ratio (CAR) under Basel II as on 31st March 2011 stood at 13.25%.

Total Assets have increased by Rs.12356.700 millions and reached Rs.73723.400 millions as on 31st March 2011. (Rs.61366.700 millions as on 31st March 2010). Customer Deposits have increased by Rs.7216.900 millions and Advances have increased by Rs.8117.400 millions.

Gross and Net NPAs have decreased to Rs.2635.700 millions and Rs.412.300 millions respectively as on 31st March 2011 from Rs.3191.800 millions and Rs.1076.200 millions as on 31st March 2010. The overall NPA Provision Coverage Ratio was 87.64% and 100% for unsecured personal loans NPAs.

BUSINESS STRATEGY

· Grow Retail Mortgages, MSME, SME and mid Corporate advances. The emphasis will be on creating a diversified and secured portfolio.

· Focus on CASA and Retail Term Deposits to manage/improve the cost of funds. Retail Banking using branch banking and outbound sales team will be the key channels for CASA and Retail Term Deposits. Bancassurance and Trade Finance products will be actively cross sold to improve Fee income and customer loyalty.

· Treasury will be mainly responsible for liquidity and Balance Sheet management and will look for opportunities in FX and SLR trading gains within acceptable risk levels.

· Productivity across all units to be actively managed with a strong Cost discipline.

· Continue to strengthen Credit and Operational risks to support Balance Sheet growth.

· Using sophisticated process improvement techniques, at least 3 key processes to be improved every year which in turn will improve Service Quality.

· Focus on Training especially in Sales and Service to enhance frontline quality and effectiveness.

· Improve Human Resource processes to attract and retain talent.

MANAGEMENT DISCUSSION AND ANALYSIS

RETAIL, MSME AND SME BANKING

Retail Banking

Subject operates a network of 80 branches across 28 locations with a strong presence in Maharashtra, Gujarat and Andhra Pradesh. The Bank received 2 branch licenses from RBI in FY 2011. The locations are Netrang in Bharuch and Mandvi in Surat districts of the State of Gujarat. These branches are expected to be operational by June 2011. During the year, the Bank added 24 ATMs taking the tally to 134 ATMs. Subject has tie ups with the Cashnet and Infinet networks. This allows customers to access more than 35,000 ATMs across the country. Subject is a pioneer in providing free ATM access (VISA ATMs) to its customers with no limit on the number of transactions.

As per the new strategy, the main task of Retail Banking is to generate CASA balances and Retail Term Deposits through its branches and outbound sales teams. Performance of Retail Banking frontline staff is managed using scorecards that help in improving productivity. Retail CASA grew by 15.5% in FY 2011 helping mange the overall cost of funds and NIM. Similarly, Retail Term Deposits growth was 17.5% reducing the reliance on short term bulk deposits.

Subject also distributes life insurance, general insurance and mutual fund products through its tie-ups with insurance companies and mutual fund companies in the country. During the year the Bank tied up with United India Insurance Company Limited for distributing general insurance products and continued its productive partnership with Birla Sun Life Insurance (BSLI) for Bancassurance. Subject continues to rank amongst the top three Bancassurance partners of BSLI. Insurance industry had to deal with major regulatory changes in FY 2011 that had a significant impact on sales of insurance products. However, the Bank took quick actions to adjust to the new environment and bounced back within a short time. The Bank has around 200 IRDA certified Relationship Managers and this helped to reach almost the same level of Fee income from Bancassurance as last year while industry volumes were significantly down.

Wealth Management is an integral part of the strategy to grow retail business. Subject as part of its Wealth Management activities introduced free wealth management advisory with no bank charges or service fee for mutual fund investments. Subject has set-up a robust Wealth Management service that covers the full spectrum of financial planning including, risk profiling, asset allocation and portfolio selection. The Bank has tied-up with ICRA Online Limited, enabling subject customers to benefit from the quality research and financials service expertise of its partner. The Bank has around 150 Association of Mutual Funds in India (AMFI)/National Institute of Securities Market (NISM) certified Relationship Managers who provide personal service especially to High Net Worth customers. Subject also provides Smart Trade, a comprehensive 3-in-1 online share trading convenience. For this state-of-the-art offering, the Bank has tied up with India Infoline Limited and Fullerton Securities and Wealth Advisors. Subject re-launched the Retail Mortgages business in September 2009, continued to build a robust portfolio and achieved substantial growth in FY 2011. This effort was supplemented by purchase of a Retail Mortgages portfolio from a well known NBFC which helped in increasing the scale of business and the customer base.

MSME and SME

The importance of MSME and SME to India’s economy and subject’s strategy of pursuing this segment has already been mentioned earlier in this discussion. The Bank has created robust sales, underwriting and portfolio monitoring capability for growing the MSME and SME business. Subject offers a wide range of products and personalized services including Cash Management, Trade Finance, Internet Banking and Bancassurance. The MSME and SME business together grew by 70.2% in FY 2011.

CORPORATE BANKING

Corporate Banking is present across India with Regional Offices in Ahmedabad, Bangalore, Chennai, Delhi, Hyderabad, Kolkatta and Mumbai. Subject has a team of experienced Relationship Managers supported by Product Specialists in Trade Finance, Cash Management Services and Capital and Commodity Markets. The Bank has a strong underwriting and credit administration team to support all its businesses including Corporate Banking. Subject’s strategy is to selectively grow the Corporate Banking portfolio providing complete range of products and services. In FY 2011, Subject rebalanced its Corporate Bank advances replacing short term lending with Working Capital and Term Loans. The team acquired 27 new Corporate customers and deepened relationships with many existing customers.

AGRI AND INCLUSIVE BANKING (AIB)

India’s agricultural sector offers huge potential for banking opportunities. The sector plays an important role in the overall growth of GDP. In recognition of the crucial role played by agriculture in the Indian economy and in order to ensure meeting Priority Sector Lending (PSL) obligation, DCB has set up a distinct unit called AIB.

This unit is also responsible for taking numerous initiatives to ensure meeting of Financial Inclusion agenda of the Bank. As part of its PSL initiatives, Subject provides Agri commodity based finance to farmers, agri enterprises and processors against pledge of stocks mentioned in warehouses. Commodities can be stored in private warehouses, Central Warehousing Corporation and State Warehousing Corporation. The Bank has appointed dedicated Collateral Managers for regular monitoring of the stock movement and operations.

Till FY 2010, a significant chunk of sub-targets of Agri and Weaker Section within PSL was met by many private banks by lending to Micro Finance Institutions (MFIs).

However, this year, MFI opportunity was very limited as the segment went through turbulent times due to action taken by the Andhra Pradesh (AP) Government to regulate the MFI lending practices. While the regulation was well intended, it gave little time for the industry to adjust to the new realities. The State of AP is a big market for MFIs and the sudden change adversely affected recoveries, fresh disbursals and expansion plans of the entire MFI industry. Banks were reluctant to increase their exposure due to the uncertain conditions, which further led to contraction of the MFI industry. Subject had proactively reduced its exposure to MFIs in the State of AP and therefore the Bank was able to prevent major losses and restructuring. In the later part of the year as the situation started to stabilize, Subject resumed limited lending to MFIs alongside other banks. The Bank plans to continually review developments and take appropriate actions as may be necessary. Despite these challenges, in the FY 2011, AIB unit’s efforts once again ensured meeting of PSL obligations. This was made possible due to focus of attention on alternative products and diversification. Besides participation through MFIs, Subject has a dedicated Microfinance branch at Dediapada in the State of Gujarat and has been successful in growing both credit and savings in that region.

TREASURY

Treasury actively manages liquidity, Fixed Income Securities Trading, Equity Investment IPOs, FX Trading and Customer Sales. Treasury ensures compliance with regulatory requirements such as CRR and SLR.

In FY 2011, ensuring strong economic growth and at the same time containing inflation especially food inflation was the biggest task for the Government and RBI who took monetary actions and hiked rates many times during the year. The Repo rate was hiked from 5.00% to 6.75% during the year and CRR was raised once from 5.75% to 6.00%. Liquidity conditions remained tight from September 2010 onwards and bond prices were under pressure. Subject remained cautious on trading activities as G-sec yields went up from 7.90% to 8.25% before closing at 8.00% in March 2011.

Despite adverse liquidity situation in the system, the Bank’s liquidity was generally comfortable throughout the year. Taking advantage of rising yields, Treasury regularly invested in high yielding Government bonds and increased the yield from the previous year. In order to reduce the cost of funds on available excess liquidity created by funds flow mismatch, Subject deployed surplus funds in various money market instruments.

INFORMATION TECHNOLOGY AND OPERATIONS

Information Technology (IT)

Subject continues to leverage technology for supporting its business strategy and to improve the level of customer service. The application landscape consists of a blend of packaged products as well as a few internally developed

applications. The IT operations are managed with a judicious mix of ‘in-house’ and ‘outsourced’ resources.

The Bank has upgraded its network architecture to MPLS technology to provide a more reliable and expandable connectivity to branches and offices enabling the frontline to provide uninterrupted service to customers.

Information security is regularly reviewed both by internal and external expertise. Security controls are being enhanced in order to keep up with the newer challenges that are faced from time to time by the industry.

IT will continue to implement appropriate, cost-efficient technologies to support the business growth in the coming financial year.

OPERATIONS

Operations is the backbone of the Bank’s internal and external service delivery. Operations are centralized at Vikhroli in Mumbai. Operations strives to adopt an empathetic approach to drive efficiencies and best in class customer service. Internal controls are constantly reviewed to ensure that risks are well managed.

End to end process reviews are conducted periodically and automation is introduced wherever possible to reduce errors and cycle time.

INTERNAL AUDIT (IA)

Internal Audit is an independent unit that performs regular audits to evaluate the adequacy and effectiveness of internal controls and overall risk management. The Audit Committee of Board (ACB) provides direction to the audit function and monitors the effectiveness of this function. IA uses a comprehensive risk based approach taking into account the guidelines of RBI and international best practices. IA reviews include snap audits and thematic reviews of key functions or projects. IA also uses experienced audit firms for concurrent audits. As a result of the improvements initiated last year, IA is emerging as a proactive unit providing valuable inputs for improving the overall risk management and controls. During the year, further streamlining of the IA function was completed and the audit policies and procedures were documented in an Audit Manual. The IA methodology was reviewed by an external firm. Audit skill sets were enhanced by hiring subject matter experts in Technology and Credit audits. A Corrective Action Tracker (CAT) was introduced to ensure timely rectification of audit observations. IA continues to use the concept of “Heat Map” for identifying and rectifying DCB wide risks.

CUSTOMER SERVICE

The Bank believes that customer satisfaction is at the core of its existence and customers must be served proactively beyond their expectations. Subject has a dedicated Service Quality team that is supervised by the MD and CEO along with senior management. This team inter alia is responsible for – identifying problems faced by customers, coordinating speedy rectification of issues, actively looking for process improvement opportunities, scientifically tracking customer satisfaction and facilitating implementation of customer friendly automation.

The Bank has installed “Centralised Complaint Management” so that customer queries and complaints are not inadvertently missed out and also to provide uniform quality service. All complaints are tracked rigorously for timely closure and delays if any are escalated to senior management.

Subject has Personal and Corporate Internet Banking that is at par with the best in the industry. Subject mobile alerts are considered to be one of the best in the industry. On an ongoing basis more alerts are added to provide convenience that reduces the need for customers to visit a branch.

In FY 2011, a specialist process improvement resource was hired to spearhead the efforts in improving the various processes that directly impact the customer experience. A cross functional team with the MD and CEO as the sponsor has been formed to reduce the cycle time of CASA new account opening process. In the coming months, once all the recommendations of the cross functional team are implemented, the CASA new account opening process is likely to be smoother and efficient than the current process.

Subject 24 hour Customer Care has been serving customers for a long time. The idea is to eliminate the need for customers to visit the branches for their banking needs. This unit handles approximately 71,000 calls per month.

Incoming calls are monitored to provide regular feedback and training to the phone banking executives so that they can improve the quality of interaction with the customers.

CONTINGENT LIABILITIES

Particulars	As on 31.03.2011 Rs. in millions	As on 31.03.2010 Rs. in millions
I. Claims against the bank not acknowledged as debts	1230.634	1143.900
II. Liability for partly paid investments	--	--
III. Liability on account of outstanding forward exchange and derivative contracts
(a) Forward Contracts	14925.011	24883.357
(b) Interest Rate Swaps and Currency Swaps	6500.000	6500.000
(c) Foreign Currency Options	--	269.400
IV. Guarantees given on behalf of constituents
(a) In India	4903.717	4679.719
(b) Outside India	2422.357	466.866
V. Acceptances, Endorsements and other obligations	2941.660	3510.354
VI. Other items for which the bank is contingently liable	--	272.066
Total	32923.379	41725.662

WEB DETAILS

BOARD OF DIRECTORS

Mr. Nasser Munjee, Chairman

Mr. Nasser Munjee was educated at the Leys School in Cambridge UK and then went on to do his Bachelor and Masters Degrees at the London School of Economics, UK.  He spent a short while at the University of Chicago USA, before returning to India in 1977.  He joined the Chairman of one of India’s development banks – ICICI, Mr. H. T. Parekh, to establish the first housing finance company in India – the first retail institution serving customers directly for their housing needs - HDFC.  Against many odds the HDFC group, as it is known today, grew to be a financial conglomerate with assets over $50billion in banking, insurance, mutual funds as well as its prime business – housing finance.  He rose to be an executive director on the Board with wide responsibilities.

In 1997, the Finance Minister of India requested the Chairman of HDFC to consider setting up an infrastructure finance company as India faced acute challenges in this field.  Nasser was asked to think through this challenge and, as a result, Infrastructure Development Finance Company (IDFC) was born.  IDFC charted the course of private investment in infrastructure – a sector that was dominated by the public sector – with great success.  Much of the conditions for private investment in infrastructure in India was created by IDFC between 1997 and 2004.  Nasser left IDFC owing to disagreements with the Government which intended a nationalization of IDFC.

Since 2004, Nasser has been pursuing his own interests in his own way.  He sits on 15 Corporate Boards in India which include HDFC, Tata Motors, Tata Chemicals, CIBA India, Cummins India, ABB India, Ambuja Cements (now part of the HOLCIM group).  He is also Chairman of other Aga Khan institutions in India – Aga Khan Rural Support Programme (AKRSP) and Muniwar-Abad Charitable Trust (MACT).  He was the President of the Bombay Chamber of Commerce and Industry – the city’s oldest Chamber of Commerce and he has served on numerous Government Task Forces on Housing and Urban Development.

Mr. Murali M. Natrajan , Managing Director and Chief Executive Officer (CEO)

Prior to joining subject, Mr. Natrajan served as the Global Head for SME banking in Standard Chartered Bank. He was responsible for providing strategic context and business development capabilities to drive a distinctive and consistent business model across 27 markets in Asia, Africa and the Middle East. Mr. Natrajan joined Standard Chartered Bank, India to head the Mortgage and Auto Business. In November 2004, he was promoted as Head of Consumer Banking for India and Nepal overseeing business that include Mortgages, Wealth Management, Branches, ATMs, Credit Cards, Personal Loans and SME.

A Fellow Member of the Institute of Chartered Accountants of India, Mr. Natrajan started his career with American Express TRS in India where he worked for 5 years in Business Planning, Finance and Operations. In 1989, he joined Citibank where he spent 14 years in various disciplines such as Operations, Credit, Finance, Product Management and Business Management of Consumer Banking. Prior to joining Standard Chartered Bank in October 2002, he had successful stints as Cards Business Director in Citibank India, Hong Kong and Indonesia.

DIRECTORS

Ms. Nasim Devji is a Fellow of the Institute of Chartered Accountants (England and Wales) and also a member of the Institute of Taxation, U.K. She has specialised in the fields of banking and small scale industries. Ms. Devji is currently the Managing Director and Group CEO of Diamond Trust Bank in East Africa.

Mr. Shabir Suleman Kassam is a Certified Public Accountant from Australia and also a Fellow of the Association of Chartered Accountants, United Kingdom. He is a consultant with more than 10 years’ experience in Chartered Accountancy and 13 years experience in banking. He is also on the Board of Industrial Promotion and Development Company Limited, Bangladesh.

Mr. R. A. Momin holds a B.Com degree and is a Fellow of the Institute of Chartered Accountants of India. Mr. Momin has more than 30 years of experience in the field of accounting and audit. He had been on the Board of Directors of the erstwhile Development Co-operative Bank for six years.

Mr. A. A. Sabuwala is a qualified diploma holder in Mechanical Engineering and has specialised in Small Scale Industries. He has set up several small-scale industries over the past 30 years.

Mr. Narayan K. Seshadri holds a B.Sc degree and is a Chartered Accountant. He has specialised in the fields of agriculture, small scale industries, and rural economy. Mr. Seshadri is a corporate consultant and is a board member of a number of companies such as PI Industries Limited, Kalpataru Power Transmission Limited, Magma Shrachi Finance Limited, WABCO-TVS (India) Limited, Indrise Investments - Cayman Islands, DHFL Venture Capital India Private Limited, and Halcyon Resources and Management Consulting Private Limited

Mr. D. E. Udwadia M.A L.L.B. (Hons.) is a solicitor and advocate of the Bombay High Court, and solicitor of the Supreme Court of England. His area of legal practice is corporate law, foreign collaboration, joint venture, and project finance. He is a partner in Udwadia and Udeshi, a firm of solicitors and advocates. He is an independent director on the boards of several corporate entities, both listed and unlisted, including Sundaram Clayton Limited, J.M. Financial Limited, ABB Limited, ADF Foods Limited, Bombay Burmah Trading Corporation Limited, Coromandel Fertilisers Limited, Eureka Forbes Limited, ITD Cementation Limited, Macmillan India Limited, Wyeth Limited, AstraZeneca Pharma India Limited, Mechanalysis (India) Limited, and WABCO – TVS (India) Limited.

Mr. Sukh Dev Nayyar holds an M.Sc. (Physics Hons.) degree. An Associate of the Institute of Bankers, England, he is also an expert in the areas of Risk Management. He has vast experience in banking, having previously worked in various senior positions with Grindlays Bank from 1964 to 1994 and with ING Bank as CEO from 1994 to 1998. His last assignment was as Chairman and Managing Director of the ING Asset Management Company.

Mr. Suhail Nathani is a founder Partner of Economic Laws Practice, a law firm with offices in Mumbai, Delhi, Ahmedabad and Pune. His areas of specialisation include corporate and commercial matters, private equity and international trade. He has advised on several investments in the manufacturing, services and real estate sector in India. He has also represented the Government of India at the WTO (Panel and Appellate Body), most recently in the Wines and Spirits dispute against the USA. Suhail obtained an M.A. in Law from Cambridge University in England and went on to complete his LLM from Duke University in the US. Besides being enrolled as an advocate in India, he is admitted to the New York State Bar and the US Court of International Trade. He serves as an independent director on the Board of diverse public companies, the Cambridge Society of Bombay and on the India advisory Board of Duke University. He has been widely published and has been speaker at several conferences.

SENIOR MANAGEMENT

Mr. Anoop Prabhakar – Head – Corporate Banking

Mr. Prabhakar is an M Sc (Physics) from Delhi University and comes with 33 years of in-depth banking experience in Corporate and Retail Banking, Business Process Re-engineering, Stressed Assets Recovery and International Banking which also includes an international assignment of 3 years in the UK. In his last role, he was working as General Manager – Local Head Office (Chennai) at State Bank of India and was responsible for management of an extensive network of branches across Tamil Nadu and Pondicherry.

Mr. Bharat Sampat – Chief Financial Officer (CFO)

Chartered Accountant and Cost Accountant alongwith a Post Graduate Degree in Law, Mr. Sampat has over 25 years of experience in senior positions with reputed organizations such as ABN Amro Bank, ANZ Grindlays Bank, Standard Chartered Bank, Hoechst India and Larsen and Toubro. He has worked in diverse industries such as manufacturing, banking, finance and shared services with oversight for financial accounting, financial control and reporting, and management accounting both in India and abroad.

Mr. Praveen Kutty – Head – Retail and SME Banking

Mr. Kutty brings with him around 19 years of banking experience. He has worked with Citibank’s Indian and international operations where he successfully managed multiple consumer banking businesses including Credit Cards, Personal Loans, Home Loans, Branch Banking and Wealth Management. As Area Director for Bangalore for Consumer Banking, he was instrumental in scaling up the remote banking Suvidha experiment into a highly profitable customer proposition. Prior to joining subject, he was the Area Director for Citibank’s NRI Business in North America. Mr. Kutty holds a B.Com and an MBA degree.

Mr. R. Venkattesh – Head – Operations, Technology and HR

Mr. Venkattesh holds a B.Com. degree and is an MBA in Personnel Management. Prior to joining the Bank, he was with Standard Chartered Bank as Head, Human Resources - Countries. He has over 20 years of experience in the areas of Human Resource Management and Mergers and Acquisitions.

Mr. Rajesh Verma – Head – Treasury

Mr. Verma comes with 31 years of experience within Banking and Investment Banking in State Bank of India. His rich experience spans across the various functions of Treasury, Credit, Loan Syndications, Project Finance, Investment Banking, General Administrations and IT Project Management in India and UK. In his last role, he was working as a Deputy General Manager, Global Market Department for SBI in Mumbai.

Mr. Ravi Kumar - Chief Internal Auditor

Mr. Ravi has over 13 years of rich experience in a career that spans national as well as international roles. Prior to subject, he spent seven years with the Samba Financial Group (previously Citibank) and four year with Ernst and Young at Riyadh. In his last role, he was Chief Financial Officer with Samba Financial Group, Qatar. Ravi is a Chartered accountant and a Certified Information Systems Auditor as well. He has managed and led several audits across various functions and domains. He brings with him an in-depth understanding of the banking domain and its nuances. In this role he is focused on strengthening the audit function in the Bank and taking it to the next level.

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No records exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.45.37
UK Pound	1	Rs.74.55
Euro	1	Rs.65.33

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	5
PAID-UP CAPITAL	1~10	5
OPERATING SCALE	1~10	5
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	6
--PROFITABILIRY	1~10	6
--LIQUIDITY	1~10	6
--LEVERAGE	1~10	5
--RESERVES	1~10	6
--CREDIT LINES	1~10	5
--MARGINS	-5~5	--
DEMERIT POINTS
--BANK CHARGES	YES/NO	NO
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	NO
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		49

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
-	NB	New Business	-

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.