MIRA INFORM REPORT

Report Date :

17.08.2013

IDENTIFICATION DETAILS

Name :	UNION BANK OF INDIA LIMITED
Registered Office :	239, Vidhan Bhavan Marg, Nariman Point, Union Bank Bhavan, Mumbai – 400021, Maharashtra
Country :	India
Financials (as on) :	31.03.2013
Date of Incorporation :	11.11.1919
Com. Reg. No.:	000615
Capital Investment / Paid-up Capital :	Rs. 7077.942 Millions
CIN No.: [Company Identification No.]	U99999MH1919PTC000615
Legal Form :	Public sector commercial bank
Line of Business :	All types of banking business.
No. of Employees :	4509 (Approximately)

RATING & COMMENTS

MIRA’s Rating :

A (69)

RATING		STATUS	PROPOSED CREDIT LINE
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

Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a government owned bank. It is a well established and reputed bank. Financially company seems to be performing well. Liquidity position is good. The bank gets strong managerial and financial support from government. Trade relations are reported to be fair. Business is active. Payments are reported to be regular and as per commitment. The company can be considered normal for business dealings at usual trade terms and condition.

NOTES :

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

ECGC Country Risk Classification List – March 31^st, 2013

Country Name	Previous Rating (31.12.2012)	Current Rating (31.03.2013)
India	A1	A1

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

INDIAN ECONOMIC OVERVIEW

We are living in a world where volatility and uncertainty have become the New Normal. We saw a change of government in countries like Tunisia, Egypt, Libya and Vietnam. Once powerful countries in Europe are now fighting for bankruptcy. We have taken growth in the developing part of the world for granted but economic growth in China and India has begun to slow. Companies that were synonymous with their product categories just a few years ago are now no longer in existence. Kodak, the inventor of the digital camera had to wind up its operations, HMV, the British entertainment retailing company and Borders, once the second largest bookstore have shut down due to their inability to evolve their business models with the changing time. Readers’ Digest, Thomson Register are no more !

There is another megatrend happening. The World order is changing as economic power shifts from West to East. According to McKinsey study, it took Britain more than 100 years to double its economic output per person during its industrial revolution and the US later took more than 50 years to do the same. More than a century later, China and India have doubled their GDP per capital in 12 and 18 years respectively. By 2020, emerging Asia will become the world’s largest consuming block, overtaking North America.

The years after the outbreak of the global financial crisis, the world economy continues to remain fragile. The Indian economy demonstrated remarkable resilience in the initial years of the contagion but finally lost ground last year. GDP growth slowed down. Currency has been weakening. There is a marked deceleration in agriculture, industry and services. Dampening sentiment led to a cut-back in investment as well as private consumption expenditure.  Inflation remained at high levels fuelled by the pressure from the food and fuel sectors. The large fiscal and current account deficit s continued to cause grave concern. It is imperative that India regains its growth trajectory of 8-9 % sooner than later. This is crucially important given the need to create gainful livelihood opportunities for the millions living in poverty as also the large contingent of young people joining the job market every year.

EXTERNAL AGENCY RATING

Rating Agency Name	FITCH
Rating	Long term rating: AA+
Rating Explanation	The rating denote very low default risk. They indicate very strong capacity for payment on financial commitment.
Date	February 2013.

RBI DEFAULTERS’ LIST STATUS

Subject’s name is not enlisted as a defaulter in the publicly available RBI Defaulters’ list.

EPF (Employee Provident Fund) DEFAULTERS’ LIST STATUS

Subject’s name is not enlisted as a defaulter in the publicly available EPF (Employee Provident Fund) Defaulters’ list as of 31-03-2012.

INFORMATION DENIED BY

The Management non co-operative.

Tel No.: 91-22-22024647

LOCATIONS

Registered Office :	239, Vidhan Bhavan Marg, Nariman Point, Union Bank Bhavan, Mumbai – 400021, Maharashtra, India
Tel. No.:	91-22-22024647 / 22026049 / 22892000
Fax No.:	91-22-22881979 / 22851167/ 22043654
E-Mail :	webmaster@unionbankofindia.com ibdhelpdesk@unionbankofindia.com ubicocad@vsnl.com dealingroom@unionbankofindia.com internetbanking@unionbankofindia.com
Website :	http://www.unionbankofindia.com

DIRECTORS

As on: 31.03.2013

Name :	Dr. A. Bhattacharya
Designation :	Director
Name :	Mr. Chandan Sinha
Designation :	Director
Name :	Mr. S. K. Mishra
Designation :	Director
Name :	Mr. B. N. Bhattacharjee
Designation :	Director
Name :	Mr. N. Shankar
Designation :	Director
Name :	Dr. Atul Agarwal
Designation :	Director
Name :	Mr. D. Chatterji
Designation :	Director
Name :	Mr. G. K. Lath
Designation :	Director
Name :	Mr. Dr. R. H. Dholakia
Designation :	Director
Name :	Smt. Anusuiya Sharma
Designation :	Director

KEY EXECUTIVES

Name :	Mr. K. Subrahamanyam
Designation :	Executive Director
Date of Birth/Age :	15.07.1955
Qualification :	B.Com.(Hons), CAIIB (I)
Name :	Mr. S. K. Jain
Designation :	Executive Director
Date of Birth/Age :	05.05.1954
Qualification :	BSC (Hons), MA (Eco), CAIIB
Name :	Mr. D. Sarkar
Designation :	Chairman and Managing Director
Date of Birth/Age :	03.11.1953
Qualification :	M.Com, FCA, CAIIB
Name :	Mr. A. S. Parikh
Designation :	Asst. General Manager
Name :	Mr. Mayank Mehta
Designation :	General Manager

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on: 30.06.2013

Names of Shareholders	No. of Shares	Percentage of Holding
(A) Shareholding of Promoter Group
Indian
Central Government / State Governments	345459689	57.89
Sub Total	345459689	57.89
Foreign
Total Shareholding of Promoter and Promoter Group (A)	345459689	57.89
(B) Public shareholding
Institutions
Mutual Funds / UTI	35312414	5.92
Financial Institutions / Banks	732156	0.12
Central Government / State Governments	10595	0.00
Insurance Companies	69266477	11.61
Foreign Institutional Investors	69517895	11.65
Sub Total	174839537	29.30
Non Institutions
Bodies Corporate	27934394	4.68
Individuals
Individual shareholders holding nominal share capital up to Rs.0.100 million.	44636644	7.48
Individual shareholders holding nominal share capital in excess of Rs. 0.100 million.	3580380	0.60
Qualified Foreign Investor	200	0.00
Any Others (Specify)	343365	0.06
Non Resident Indians	340306	0.06
Overseas Corporate Bodies	3059	0.00
Sub Total	76494983	12.82
Total Public Shareholding (B)	251334520	42.11
Total (A)+(B)	596794209	100.00
(C) Shares held by Custodians and against which Depository Receipts have been issued	--	--
Total (A)+(B)+(c)	596794209	0.00

BUSINESS DETAILS

Line of Business :	All types of banking business.
Export To:	No Export
Import From:	No Import

GENERAL INFORMATION

No. of Employees :	4509 (Approximately)
Bankers :	Reserve Bank of India

Banking Relations :	--
Auditors :
Name :	Ø G.S. Mathur and Company Chartered Accountants Ø Price Patt and Company Chartered Accountants Ø Singrodia Goyal and Company Chartered Accountants Ø Jindal and Company Chartered Accountants Ø Shah Gupta and Company o Chartered Accountants Ø V. Rohatgi and Company Chartered Accountants
Subsidiaries :	Ø Union KBC Asset Management Company Private Limited Ø Union KBC Trustee Company Private Limited
Joint Venture :	Ø Star Union Dai-Ichi Life Insurance Company Limited
Associates:	Ø Regional Rural Bank sponsored by the Parent Bank viz. Ø Kashi Gomti Samyut Gramin Bank

CAPITAL STRUCTURE

As on: 31.03.2013

Authorised Capital :

No. of Shares	Type	Value	Amount
3000000000	Equity Shares	Rs.10/- each	Rs. 30000.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
345459689	Equity Shares	Rs.10/- each	Rs. 3454.597 Millions
251334520	Equity Shares	Rs.10/- each	Rs. 2513.345 Millions
111000000	Preference Shares	Rs.10/- each	Rs. 1110.000 Millions
			Rs. 7077.942 Millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS	31.03.2013	31.03.2012	31.03.2011
Capital and Liabilities
Capital	7077.942	6615.490	6353.324
Reserves and Surplus	165883.945	139715.088	121291.902
Deposits	2637615.730	2228689.457	2024612.853
Borrowings	237972.745	179094.877	133159.697
Other Liabilities & Provisions	70057.711	67999.463	74426.694
Total	3118608.073	2622114.375	2359844.470
Assets
Cash And Balances With Reserve Bank of India	107629.177	116335.607	176104.532
Balances With Banks and Money at Call And Short Notice	54474.714	40415.800	24879.906
Investments	808304.456	623635.581	583991.372
Advances	2081021.860	1778820.813	1509860.832
Fixed Assets	24790.071	23357.979	22927.842
Other Assets	42387.795	39548.595	42079.986
Total	3118608.073	2622114.375	2359844.470

PROFIT & LOSS ACCOUNT

PARTICULARS	31.03.2013	31.03.2012	31.03.2011
Income
Interest Earned	251247.007	210284.520	164526.150
Other Income	25520.269	24482.038	20387.837
Total	276767.276	234766.558	184913.987
Expenditure
Interest expended	175818.636	142353.856	102364.171
Operating Expenses	45121.646	39875.173	39499.971
Provisions and contingencies	34247.711	34666.168	22230.373
Total	255187.993	216895.197	164094.515
Net Profit For The Year	21579.283	17871.361	20819.472
Add : Profit Brought Forward	6.128	1.591	16.327
Total	21585.411	17872.952	20835.799
Appropriations
Transfer to statutory Reserves	6480.000	5370.000	6250.000
Transfer to Capital Reserves	542.320	393.205	612.007
Transfer to Revenue and Other Reserves	7040.000	5030.000	6220.000
Proposed Dividend	4774.354	4404.392	4194.659
Provision For Div. On Pncps	94.350	105.450	51.592
Dividend Tax	827.436	731.609	685.950
Div. Tax of Prev. Year Written Back	0.000	(7.832)	0.000
Transfer To Foreign Currency Translation Reserve	2.877	0.000	0.000
Transfer To Special Reserve {Sec36(I)(Viii)}	1820.000	1840.000	2820.000
Balance In Profit And Loss Account	4.074	6.128	1.591
Total	21585.411	17872.952	20835.799
Earnings Per Share (Basic And Diluted)	38.93	34.07	39.71

QUARTERLY / SUMMARISED RESULTS

PARTICULARS	30.06.2013
Audited / Unaudited	Unaudited
Interest Earned	68572.700
Income On Investments	16343.200
Interest On Balances With RBI Other Inter Bank Funds	514.900
Interest / Discount On Advances / Bills	51258.800
Others	455.800
Other Income	7562.600
Total Income	76135.300
Interest Expended	49481.700
Operating Expenses	12535.900
Total Expenditure	12535.900
Operating Profit Before Provisions and Contingencies	14117.700
Exceptional Items	0.000
Provisions and contingencies	6815.500
Profit Before Tax	7302.200
Tax	1700.000
Profit After Tax	5602.200
+/- Extraordinary Items	0.000
+/- Prior period items	0.000
Net Profit	56022.000

LOCAL AGENCY FURTHER INFORMATION

Sr. No.	Check List by Info Agents	Available in Report (Yes / No)
1]	Year of Establishment	Yes
2]	Locality of the firm	Yes
3]	Constitutions of the firm	Yes
4]	Premises details	No
5]	Type of Business	Yes
6]	Line of Business	Yes
7]	Promoter's background	Yes
8]	No. of employees	Yes
9]	Name of person contacted	Yes
10]	Designation of contact person	Yes
11]	Turnover of firm for last three years	Yes
12]	Profitability for last three years	Yes
13]	Reasons for variation <> 20%	--
14]	Estimation for coming financial year	No
15]	Capital in the business	Yes
16]	Details of sister concerns	Yes
17]	Major suppliers	No
18]	Major customers	No
19]	Payments terms	Yes
20]	Export / Import details (if applicable)	No
21]	Market information	--
22]	Litigations that the firm / promoter involved in	--
23]	Banking Details	Yes
24]	Banking facility details	No
25]	Conduct of the banking account	--
26]	Buyer visit details	--
27]	Financials, if provided	Yes
28]	Incorporation details, if applicable	Yes
29]	Last accounts filed at ROC	Yes
30]	Major Shareholders, if available	Yes
31]	Date of Birth of Proprietor/Partner/Director, if available	Yes
32]	PAN of Proprietor/Partner/Director, if available	No
33]	Voter ID No of Proprietor/Partner/Director, if available	No
34]	External Agency Rating, if available	Yes

OVERVIEW

The Bank’s focus on customer centricity has guided the Bank’s performance during the year. With focus on qualitative growth in business, lending to productive sectors and asset quality management, the Bank has once again delivered performance in key business parameters. Human Resource (HR) transformation initiatives aligning HR practices with business goals formed a key differentiator for marked productivity gains by the Bank.

The Bank has aptly focused on responding to economy wide challenges, both global and domestic. The business strategies were aimed at consolidating Bank’s business in chosen areas, focusing on core and retail business, taking steps for meaningful financial inclusion and strengthening systems and control.

The thrust areas included strategic positioning of the Bank, developing new ideas to reach client with new technology and deepening their customer relations. The Bank has taken one more step towards marking its footprint in global arena. Bank’s second overseas branch at Dubai International Financial Centre (DIFC), Dubai started its commercial operations during the last financial year.

BUSINESS

Global Business of the Bank stood at Rs. 4756730.000 millions as of 31st March 2013, registering an annual growth rate of 17.77 percent.

Total Deposits increased to Rs. 2637620.000 millions as of 31st March 2013 recording annual growth of 18.35 percent and Advances increased to Rs. 2119110.000 millions as of 31st March 2013 with annual growth of 17.06 percent.

The overseas business increased to Rs. 157800.000 millions as of 31st March 2013, recording annual growth of 51.90 percent. Deposits increased from Rs. 12070.000 millions as of 31st March 2012 to Rs. 27630.000 millions as of 31st March 2013 while advances increased from Rs. 91810.000 millions as of 31st March 2012 to Rs. 130170.000 millions as of 31st March 2013.

REVENUE

Total Income of the Bank increased from Rs. 234760.000 millions in FY 2011-12 to Rs. 276770.000 millions in FY 2012-13, recording annual growth of 17.89 percent. Yield on advances of the Bank stood at 11.05 percent whereas Yield on investments was recorded at 7.38 percent for the financial year 2012-13. Total yield on funds of the Bank stood at 9.19 percent during FY 2012-13.

Net Interest Income increased from Rs. 67930.000 millions in FY 2011-12 to Rs. 75430.000 millions in FY 2012-13, recording annual growth of 11.04 percent. Net Interest Income registered a compounded annual growth rate (CAGR) of 21.63 percent during the last three years.

Non-interest income increased from Rs. 24480.000 millions in FY 2011-12 to Rs. 25520.000 millions in FY 2012-13, recording annual growth of 4.24 percent. Recovery in written-off accounts stood at Rs. 3240.000 millions in FY 2012-13 compared to Rs. 3540.000 millions during the last financial year. Core fee based income increased from Rs. 13920.000 millions in FY 2011- 12 to Rs. 14210.000 millions in FY 2012-13.

AWARDS AND ACCOLADES

The Bank received several awards during FY 2013 for its consistent and all-round performance, superior management and dedication to excellence.

The Chairman and Managing Director of the Bank, Mr. D. Sarkar was awarded “Banker of the Year” award by the Skoch Consultancy Services as a part of their Financial Inclusion Awards 2013. Bank also received the Best Bank Award 2012 for Financial Inclusion from IBA.

Ernakulam district, one of the Bank’s lead districts in the state of Kerela, was declared by the RBI Governor, Dr. D. Subbarao as country’s first district to achieve ‘Meaningful Financial Inclusion’. Under this project, Bank focused on “need” creation rather than simply opening of accounts. With the help of community-based organizations, Bank sensitized its customers about need for savings and credit. This helped sharp increase in usage of mobile banking and number of operative accounts.

The Bank won four awards at the IBA Banking Technology Awards function held at Mumbai in the following categories:

Ø Best Financial Inclusion Initiative

Ø Best Technology Bank of the Year

Ø Best Use of Mobility Technology in Banking

Ø Best Use of Business Intelligence

The Bank received the prestigious ACI Excellence Award 2012 for implementing three remittance products viz. NEFT, IMPS and Union e-Cash on ATMs. This is a global award given by ACI Worldwide Inc. every year for innovative use of its payment system software. Bank received the award for the second year in a row.

The Bank also won the prestigious IT Innovation Award from the Computer Society of India. The Bank was given this award for launching truly accessible Talking ATMs for the visually challenged. The solution works on normal debit cards for all bank customers.

The Bank received the Best Bank in public sector category award from the NPCI for operational excellence in national financial switch. These awards are given by NPCI based on excellence in performance in operation of ATMs covering parameters like dispute management, net work uptime, control on transaction declines, DR Drills etc.

The Bank was awarded with the prestigious Indira Gandhi Rajbhasha Shield for the year 2010-11 by the Hon'ble President of India, Shri Pranab Mukherjee.

‘Union Dhara’, the Bank’s in-house journal bagged the prestigious “Champion of the Champions Trophy” at the ABCI Annual Awards 2012. Union Dhara also won 6 trophies for its internal communication viz. 1 Gold, 3 Silver and 2 Bronze under various categories such as Special Column (English), Internal Magazine, Bilingual Magazine, Features (Language), Photo Features and Photography.

MANAGEMENT DISCUSSION AND ANALYSIS

MACROECONOMIC AND BANKING SCENARIO

GLOBAL ECONOMY

The global economy witnessed gradual slowdown in the calendar year 2012 as annual growth in gross domestic product (GDP) slowed to 3.2 percent from 4.0 percent noted a year ago. Downside risks notwithstanding, the global growth recovery prospects are seen strengthening in the year 2013. The International Monetary Fund (IMF), in its latest release of the World Economic Outlook (WEO), has projected mildly better global GDP growth of 3.3 percent in 2013 and 4.0 percent in 2014. While being upbeat about emerging market and developing economies, the IMF warns of diverging growth dynamic in advanced economies. Growth in the US is expected at 1.9 percent in 2013 and 3.0 percent in 2014. In contrast, GDP in the euro area is expected to fall by 0.3 percent in 2013 and then recover by 1.1 percent in 2014. The risks to outlook mainly relate to uncertainty about the fallout from events in Cyprus, politics in Italy as well as vulnerabilities in the periphery of the euro area along with high fiscal deficit and debt in the United States as well as in Japan.

Sturdy actions by the Europe an policymakers helped improve confidence and financial conditions. Although the U.S. policymakers avoided the fiscal cliff, they have failed to find durable solutions to other short-term fiscal risks. Japan adopted more expansionary macroeconomic policies in response to a larger-than-expected slowdown. Policy easing in key emerging market economies has supported internal demand. In the euro area, periphery sovereign spreads have dropped. Low U.S. dollar and euro interest rates have prompted many companies to increase their issuance of foreign-currency-denominated debt. Low policy interest rates are the forecast for the major advanced economies. The central banks have held policy rates constant or cut them modestly in response to the 2012 slowdown.

With its ever increasing integration with the global economy, through trade and finance channels, India’s growth prospects are no more insulated from adversities of global output cycle.

OVERVIEW OF THE PERFORMANCE

RESOURCES MANAGEMENT

Towards resource mobilization, the Bank’s focus areas included improving current account and saving account (CASA) deposits and retail term deposits during FY 2012-13. Special CASA campaigns were also launched for mobilizing low cost deposits. The high cost deposits declined, both in quantum as well as percent to total deposits.

Total deposit stood at Rs. 2637620.000 millions as of 31st March 2013, recording annual growth of 18.35 percent during FY 2013. CASA deposits increased to Rs. 816350.000 millions as of 31st March 2013, recording annual growth of 17.11 percent during FY 2013. The share of CASA deposits to total deposits stood at 30.95 percent as of 31st March 2013.

OVERSEAS OPERATIONS

The Bank has opened its second foreign branch at Dubai International Financial Centre (DIFC), Dubai, UAE on 9th March 2013 to carry out normal commercial banking operations like acceptance of deposits, trade finance, external commercial borrowing (ECBs) and syndicated loans. Bank’s other overseas branch is at Hong Kong, operational since May 2008. The Bank is also in the process of opening branches at Sydney (Australia) and Antwerp (Belgium) and a subsidiary at London (UK) during the financial year 2013-14. The Bank already has representative offices at Shanghai (China), Abu Dhabi (UAE), Beijing (China), Sydney (Australia) and London (UK).

The deposits of these two overseas branches increased to USD 509 million as of 31st March 2013, registering an annual growth of 114.77 percent. Advances increased to USD 2.40 billion as of 31st March 2013 registering annual growth of 32.80 percent. The operating profit of these two overseas branches stood at USD 17 million for the year 2012-13.

CREDIT RISK

The credit risk mechanism consists of policies and practices that include mechanisms for risk identification, risk measurement, risk grading/ aggregation techniques, reporting and risk control/mitigation techniques, documentation, legal issues and management of problem loans to protect asset quality and ensure orderly growth and targeted risk adjusted return on assets.

The Credit Risk Management Policy along with Collateral Management Policy address the Credit Risk related to lending activities. Credit Approving Authority, Prudential Exposure Limits, Risk Rating System, Risk Based Pricing, Portfolio Management are the various instruments for management of Credit Risk.

The Bank has standardized and well-defined approval processes for all credit proposals to minimize the credit risk associated with them. Bank adopts Committee Approach for credit sanctions and has Credit Approval Committees at various levels from regional office onwards. Bank has also developed credit rating models for exposure above Rs. 0.200 million and scoring model for Retail lending schemes. The Bank has a system of portfolio rating for retail loans which are subjected to credit scoring and thus the entire credit portfolio of the Bank is subject to internal credit rating. Bank has credit rating migration and default probability data for more than 10 years. It continuously monitors portfolio concentrations by borrower, groups, sectors, retail schemes, industry, geography, etc and constantly strives to improve credit quality and maintain a risk profile that is diverse in terms of borrowers, products, industry types and geography.

MARKET RISK

Asset Liability Management Policy and Treasury Policy aid the management in mitigating the market risk in the banking and trading books. Overall responsibility of managing the market risk lies with the Asset Liability Committee (ALCO). The Committee meets regularly and decides on the size, mix, tenor, pricing and composition of various assets and liabilities. It primarily carries out identification, measurement, monitoring and management of liquidity and interest rate risk. It uses tools such as ratio analysis, gap analysis, Structural liquidity, Dynamic Liquidity, Interest Rate Sensitivity etc. Value at Risk, Duration Gap Analysis etc for management of liquidity and

interest rate risks. The fundamental focus is to add value both from the earnings perspective and from the economic value perspective. Bank has an independent mid-office positioned in Treasury which reports to risk management. It ensures compliance in terms of exposure analysis, limits fixed and calculation of risk sensitive parameters like Value at Risk, PVO1, Duration, Defeasance Period, etc.

OPERATIONAL RISK

Comprehensive systems and procedures, internal control system and audit are used as primary means for managing Operational Risk. Bank has in place a Board approved Operational Risk Management Policy based on Reserve Bank guidelines. All new products introduced by the Bank pass through a new product approval process to identify and address operational risk issues. Operational loss data has been captured for the last five and half years and mapped into eight business lines and seven loss events. Bank’s income is also mapped into eight business lines and Bank is in process to migrate to the Standardized Approach. It has also agreed to join external data pooling initiative of IBA.

As a good corporate governance measure, Bank has formulated a Disclosure Policy to have greater transparency in its working. It has also developed a Business Continuity Plan (BCP) and implemented the same. The BCP provides a blueprint detailing a wide range of responses under a disruptive environment to protect its staff, assets and interest of the customers. BCP contains steps to be adhered to both at the preventive as well as recovery phase when challenged with real life incidents.

OUTLOOK

Indian economy is expected to grow a percentage point higher than last fiscal year. Professional forecasters see a annual GDP growth to rise to 6 percent in fiscal year 2013-14 as against 5.0 percent estimated for fiscal year 2012-13. RBI has projected GDP growth rate of 5.7 percent for the year 2013-14. SCB’s deposits and advances are projected to grow by 14 percent and 15 percent respectively. The Bank’s financial performance has been showing improvement sequentially in key parameters since second quarter of FY 2012-13. This development along with expected revival in industry growth enhances the growth prospects in FY 2013-14 and the Bank will be able to show improved results in forthcoming years. The Bank will endeavor to capture the opportunities with specific focus on increasing low cost deposits and augmenting agriculture, retail, micro, medium and small enterprises business in the financial year 2013-14. Overall, the customer centricity will continue to be the driving force for the Bank.

CONTINGENT LIABILITIES

Particulars	As on 31.03.2013
Claims against the bank not acknowledged as debts	34912.835
Liability for partly paid investments	5.920
Liability on account of outstanding forward exchange contracts	2844077.459
Guarantees given on behalf of Constituents
1) In India	179985.613
2) Outside India	4614.139
Acceptances, endorsements and other obligations	184599.752
Other items for which the bank is contingently liable	177244.776
Disputed Tax demands under appeals	4889.100
Others	222.526
	551555.906
Total	3245952.368

NEWS

INDIA RATINGS AFFIRMS UNION BANK OF INDIA AT 'IND AA+'/STABLE

India Ratings-Mumbai-13 February 2013: India Ratings has affirmed Union Bank of India's (Union Bank) Long-Term Issuer Rating at 'IND AA+'. The Outlook is Stable. A complete list of rating actions is included at the end of this commentary.

The ratings are based on India Ratings’ continued expectation of high probability of support from the government of India (GoI), if required, in view of the bank’s systemic importance. Union Bank is the tenth-largest commercial bank and seventh-largest government bank by assets with about 3.4% of systems deposits as of Q3FY13. It has a large pan-India presence (3,395 branches). However, Union Bank is rated a notch lower than systemically more important larger government banks due to its considerable gap in franchise (assets and deposits size) and moderate credit metrics through the cycle.

Union Bank’s loan growth in FY11 and FY12 was driven by growth in wholesale advances, primarily infrastructure, non-banking finance companies (NBFCs, including housing finance companies) and metals. These segments together accounted for 65% of total loan book growth between FY11 and H1FY13, resulting in concentrated exposure. They also carry high stress given their structural issues and cyclical nature. The bank’s recent emphasis on growth in agriculture, SME and retail loans may raise vulnerability to a rapid rise in delinquencies and possibly high losses if the credit risk in not properly managed.

The bank’s gross non-performing loans (NPLs) increased to 3.3% of total loans in Q3FY13 (FY11: 2.4%) with increased restructuring (5% of total loans since FY12), mirroring the broader trend in the Indian banking system. Incremental delinquencies in the bank’s loan portfolio have been one of the highest among the large public sector banks (additions to NPLs have averaged 2.4% of average loans between (FY08 and H1FY13). While the cyclical upturn in the economy could arrest the rise in incremental delinquencies, restructuring is likely to remain elevated in view of the sizeable proportion of infrastructure loans where the underlying project is under construction.

Funding remains comfortable with matched assets and liability tenures. The share of low-cost current and savings deposits (Q3FY13: 31.3%) compares well with some large public sector banks.

The bank’s capitalisation remains weak (Tier 1 capital; Q3FY13: 7.4%; FY12: 8.4%), especially in view of its modest asset quality, low specific NPL coverage and presence of hybrids in Tier 1. In India Ratings’ estimate, the bank would require to inject INR170bn of tier 1 capital till 2018, most of which though is back ended, to comply with Basel 3. Union Bank has been receiving regular capital infusions from GoI and is likely to receive about INR11.1bn capital in Q4FY13.

Owing to high employee costs and volatile credit costs, profitability has been low and is likely to remain under pressure as margin pressure increases due to the prevailing liquidity squeeze in the system. Though improving economic growth could reduce cyclical pressures on credit costs, the new guidelines on restructuring will exert additional pressure on provision cost and thereby on return on assets (FY12: 0.7%).

The ratings on tier 1 bonds and upper and lower tier 2 bonds are based on India Ratings’ Bank Legacy Hybrids and Sub-debt Criteria.

Union Bank’s Long-Term Issuer rating is at the Support Floor, and thus unlikely to be downgraded given its systemic importance. The ratings on hybrid instruments can be downgraded if the unsupported credit profile of the bank were to deteriorate significantly. The Long-Term Issuer Rating may be upgraded if there is a sustained improvement in the bank’s financial metrics.

Union Bank’s following ratings have been affirmed:

- Long-Term Issuer rating: 'IND AA+'; Outlook Stable

- INR10bn Lower Tier 2 bonds: 'IND AA+'

- INR3bn Perpetual Tier 1 notes: 'IND AA'

- INR10bn Upper Tier 2 bonds: 'IND AA'

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 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 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. 61.81
UK Pound	1	Rs. 96.57
Euro	1	Rs. 82.45

INFORMATION DETAILS

PLK	PLK
Report Prepared by :	DPH

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	8
PAID-UP CAPITAL	1~10	8
OPERATING SCALE	1~10	7
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	7
--PROFITABILIRY	1~10	8
--LIQUIDITY	1~10	8
--LEVERAGE	1~10	8
--RESERVES	1~10	8
--CREDIT LINES	1~10	7
--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
DEFAULTER
--RBI	YES/NO	NO
--EPF	YES/NO	NO
TOTAL

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.