Ing Vy Sy a Bank 80 Th Annual Report

8/3/2019 Ing Vy Sy a Bank 80 Th Annual Report

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Year Depositsand

Accounts

TotalAdvances

Invest-ments

GrossEarnings

NetProfits

Paid upCapital

Reserves Dividend(%)

No. ofEmployees

No. ofBranches

No. ofExtensionCounters

2001-02 8068.28 4418.33 3597.20 1203.93 68.75 22.62 663.72 35 5647 380 96

2002-03 9186.62 5611.61 3640.54 1262.83 86.35 22.62 684.35 40 5334 379 64

2003-04 10478.07 6936.73 4085.24 1287.41 59.00 22.65 724.67 50 4959 373 61

2004-05 12569.31 9080.59 4195.89 1113.25 (38.18) 22.71 686.69 Nil 4963 370 56

2005-06 13335.26 10231.53 4372.34 1412.75 9.06 90.72 928.95 Nil 5312 377 56

2006-07 15418.59 11976.17 4527.81 1595.69 88.91 90.90 1012.38 6.5 5341 400 40

2007-08 20498.06 14649.55 6293.22 2099.01 156.93 102.47 1433.18 15 5852 407 39

2008-09 24889.92 16750.93 10495.54 2787.56 188.78 102.60 1600.29 20 6227 455 37

2009-10 25865.30 18507.19 10472.92 2853.11 242.22 119.97 2210.95 25 6249 482 13

2010-11 30194.25 23602.14 11020.67 3349.02 318.65 120.99 2503.30 30* 7041 511 13

Ten years at a glance(All Figures in Rs. Crore except as stated ot herw ise)

* Subject to approval of sharehold ers


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1 80th

Annual Report 2010-11

CONTENTS Page No.

1. Board of Directors 1

2. Senior Management Team 2

3. Directors Report 3

4. M anagement Discussion and Analysis Report 7

5. Non-f inancial Report 19

6. Corporat e Governance Report 21

7. Auditors Report 39

8. Fi nan ci al St at em en ts 40

9. Cash Flow Stat ement 79

10. St at ement pursuant t o Sect ion 212 80

11. ING Vysya Financial Services Limit ed 81

12. Consolidat ed Auditors Report 98

13. Consolidated Financial Statements ofING Vysya Bank Limit ed and it s Subsidiary

99

14. Consolidat ed Cash Flow St at ement 132

15. Basel II - Pillar 3 disclosures 133

80 th ANNUAL GENERAL M EETING

Venue : The Audit orium , ING Vysya House ,No. 22, M G Road,Bangalore - 560 001

Day/Date : Wedn esday, 07-Sep-2011

Time : 11.00 A.M .

BOARD OF DIRECTORS

Arun Thiagarajan

Chairman (from 09-Aug-2010)

K R Ramamoo rt hy(Chairm an up to 07-Jul-2010)

Shailendra BhandariManagin g Dir ecto r and CEO

OTHER DIRECTORS Adit ya KrishnaLars Kramer

Meleveetil DamodaranPhilippe DamasRichard CoxRyan Padget t (upt o 10-Dec-2010)Sant osh Ramesh DesaiVaughn Nigel RichtorPeter StaalVikram Talw ar (f rom 20-Dec-2010)Mark Edw in Newman (from 20-Apr-2011)

CORPORATE SECRETARYM V S Appa Rao

STATUTORY AUDITORSM/s S R Batliboi & Co.,Chartered Accountants,Kolkata

ING VYSYA BANK LIM ITEDRegistered and Corporate Office:ING Vysya Hou se, No.22, M .G.RoadBangalore - 560 001

REGISTRARS & SHARE TRANSFER (R&T) AGENTS

Karvy Comput ershare Privat e Limit edUnit : ING Vysya Bank Limit ed17-24, Vit t al Rao Nagar,Madhapur,Hyderabad 500 081.Ph : 040-4465 5000Fax : 040-2342 0814Emai l: einward.ri [email protected]


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2 ING Vysya Bank Limited

SENIOR MANAGEMENT TEAM

Shail endra BhandariManagin g Director & CEO

Ashok Rao B

Chief of St aff Legal, Comp liance & Vigil ance

Janak Desai

Country Head Wholesale Banking

Jayant Mehrotra

Chief Financial Officer

Jan Van Wellen

Chief Risk Off icer

Meenakshi A

Head Operati ons

Manju nath a M S R

Chief Audit Execut ive

Prasad C V G

Chief Information Officer

Prasad J M

Chief Human Resources

Samir Bimal

Coun t ry Head Privat e Banking

Uday Sareen

Country Head Retail Banking

M V S Appa Rao

Corporat e Secret ary


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3 80th


The Board of Directo rs have pleasure in presenti ng t he Eight ieth A nnual Report of th e Bank to gether w it h th e Audit ed Stat ements ofAccount s fo r t he year ended 31-Mar-2011, Audit ors Report th ereon and ot her document s and stat ements as are required.

Financial and Business Perf orm ance

For t he year ended 31-Mar-2011, t he Bank post ed a net prof it of Rs. 319 Cror e comp ared to Rs. 242 Crore fo r 2009-10. The pre-tax prof itimp roved t o Rs. 484 Cror e comp ared t o Rs. 372 Cror e duri ng t he previous year. The Net Int erest Income for t he year 2010-11 increasedto Rs. 1,007 Crore registering an increase of 21%.

The aggregate business of t he Bank reached Rs. 53,796 Crore as at 31-Mar-2011 comp ared t o Rs. 44,372 Crore as at 31-Mar-2010. TheTot al Deposit s of the Bank increased to Rs. 30,194 Crore registering a growth of 17%. The Net Advances increased to Rs. 23,602 Crorefo r year ended 31 March 2011 from Rs. 18,507 Crore at th e end of th e previous year recording a gr owt h of 28%.

The Bank has exceeded the r egulato ry t arget of 40% of Adjusted Net Bank Credit fo r Priori ty Secto r Lending, having achieved a levelof 43.5% (previo us year 41.8%). Export advances increased t o Rs.1,241.55 Crore f rom Rs.1,062.92 Crore at t he end of t he pr evious year.The export credit as a percentage of adjusted net b ank credit st ood at 5.26%. As of 31-Mar-2011, the out stand ing credit to ScheduledCast e /Scheduled Tribe borrow ers stood at Rs.30.06 Crore and t he percent age of recovery to demand as on 31-Mar-2011 was 63.04%(previou s year 26.31%) o f t he amou nt s f allen d ue. The Net NPA Rati o as of 31-Mar-2011 is 0.39% as against 1.20% as of 31-Mar-2010.

Paid up-capital and Capital Adequacy Ratio

The paid-up capit al of t he Bank stood at Rs. 120.99 Crore as at 31-Mar-2011 as compared t o Rs. 119.97 Crore as at 31-Mar-2010.

The Bank has adopted the New Capital Adequacy Framework (Basel II) from 31 March 2009. Under this framework, the CapitalAdequ acy Rati o (CAR) stood at 12.94% as at 31-M ar-2011 as against t he Reserve Bank of Indi as (RBI) st ipu lat ed minim um o f 9%. Of t his,Tier I Capital was 9.36% and Tier II Capit al 3.58% as compared t o 10.11% and 4.80% respect ively as at 31-Mar-2010.

The detailed discussion on financials and business performance is presented in the Management Discussion and Analysis Report,formin g part of this Annual Report.

Appropriation of Profit s and Dividend

In compliance with the requirement under the Banking Regulation Act, 1949 and the guidelines issued thereunder by the RBI, theDirecto rs propose t o t ransfer Rs.79.66 Crore (previ ous year Rs. 60.55 Crore) to St atut ory Reserve and Rs.7.56 Crore (previ ous yearRs. 7.02 Crore) to Capital Reserve for the year ended 31 March 2011. Further, Directors also propose to transfer an amount of Rs. 11.00Crore from Investment Reserve for the year ended 31 March 2011 as against transfer of Rs. 0.87 Crore to Investment Reserve duringthe previous year.

Taking int o account th e regulator y restr ictions, th e Board of Directo rs recommend t he payment of dividend at 30% on t he face valueof fully paid-up shares increasing from 25% of the previous year. The outflow on account of the proposed dividend, including thedividend tax, would be Rs. 42.19 Crore.

The dividend recommended, on approval would be paid to all those shareholders whose names appear as Beneficial Owners as att he end o f 12-Aug-2011 as per t he li st t o be f urn ished by Deposit ori es (viz., NSDL and CDSL) in r espect of t he shares held in el ect ron icfo rm and th ose shareholders whose names appear in t he Register of Memb ers of th e Bank as members aft er giving eff ect to all validtr ansfers of shares in physical f orm w hich wil l be lodg ed wi th th e Bank on or befor e 12-Aug-2011.

Consolidated Financial Statement s

As required under AS 21 issued by th e Insti tu te of Chartered Account ants of India (ICAI), the Banks consolid ated f inancial stat ementsare included in this Annual Report incorporating the accounts of its wholly owned subsidiary company viz., ING Vysya Financial ServicesLimited i n li ne wi th th e basis of consolidat ion as explained in t he Notes to t he said consolidat ed stat ements.

Employee Stock Option Scheme

During t he fi nancial year 2010-11, elig ibl e employees were grant ed 2,08,500 opt ion s und er ESOS 2007 reaching a cumu lat ive grant of77,57,476 options.

The shareholders of the Bank approved the Employee Stock Option Scheme 2010 on 01-Jul-2010 with 1,15,00,000 stock options. Underthis Scheme, during the financial year 2010-11, eligible employees were granted 36,77,500 options.

The elig ibl e empl oyees were vest ed w it h 23,17,403 opt ions under ESOS 2007 and 4,625 op t ion s under ESOS 2005.

The requisite particulars to be disclosed under the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme)Guidelines, 1999, in respect of th e opt ions granted et c., under t he existi ng and new schemes are fur nished in Annexure-I to t his report .

DIRECTORS REPORT


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Capit al Raising

The Bank obt ained Shareho lders consent t hrough a Special Resolu t ion vid e post al ballo t on 08-Jun-2011 for r aising Tier I equit y capit alby issuing up to 28,571,428 equity shares of Rs.10/- each, of which, up to 15,314,079 equity shares would be for Qualified Institution

Placement (QIP) and up t o 13,257,349 equit y shares for Preferen t ial Issue t o t he ING Group, Foreign Prom ot ers subj ect t o t he necessarystat ut ory appr ovals.

In terms of the shareholders and other regulatory approvals, your Bank completed during June, 2011 infusion of equity capital ofRs. 969.49 Crore comprising private placement of 15,000,014 equity shares to Qualified Institutional Buyers (QIBs) at Rs. 342.09 pershare and Preferent ial Al lot ment of 10,306,908 equit y shares to ING Mauri ti us Holdin gs and 29,50,441 equity shares to ING Mauri ti usInvestment s I, wh oll y ow ned subsidi aries of ING Group at Rs. 344.23 per share.

Stat ut ory Disclosures

The particulars of employees required under Section 217(2A) of the Companies Act, 1956 and the rules made thereunder, are given inth e annexure appended hereto (Annexure- II) formi ng part of t his report . In terms of Secti on 219(1)(b)(iv) of th e Act, t he Report andAccount s are being sent t o t he shareholders excludin g t he aforesaid annexure. Any shareholder int erested i n obt aining a copy of th esaid annexure may wr it e to Corpor ate Secretary at th e Registered Off ice of t he Bank.

The provisions of Sect ion 217(1)(e) of t he Comp anies Act, 1956 regard ing conservat ion o f energ y and technolo gy absorp t ion are notapplicable to t he Bank. The Bank has, how ever, used inf ormat ion t echnolo gy extensively in it s operati ons.

The Bank confir ms that th e proper systems have been in place to ensure compliance of all law s applicable to th e Bank.

Subsidiaries

The main o bject of ING Vysya Financial Services Limit ed (IVFSL), a whol ly ow ned subsidi ary of t he Bank, is to carry on bu siness of non -fu nd / f ee based acti vities of market ing and d istr ibut ion of various fi nancial prod ucts / services of IVBL apart fr om recovery of th e oldlease rentals due to the company.

Subsequent t o t ransfer of t he Wealt h M anagement Services of IVFSL to t he Bank, in Apr, 2007, IVFSL cont inues t o provide th e servicesto th e Bank, as may be required f rom ti me t o t ime on a non-exclusive cont ract basis.

Curr ent ly, t he recovery of past lease rent als is t he onl y major i ncome for IVFSL besides receipt o f r eimbursement charges on ou t sour cingof manpow er to th e Bank. IVFSL has been off ering lo w cost hirin g plat fo rm f or t he resourcing needs of th e Bank.

IVFSL has earned a n et pro f it of Rs. 0.28 Crore f or t he year 2010-11, as against Rs. 0.81 Crore dur ing t he pr evious year.

As required under Secti on 212 of t he Companies Act, 1956, th e Balance Sheet, Directors Report and ot her document s pertain ing toIVFSL, along wi th a stat ement o f int erest of th e Bank in th e subsidiary, are att ached t o t he fi nancial stat ements of t he Bank.

The affairs of the subsidiary company for the year 2010-11 have been reviewed.

Directors

Mr. Ryan Padgett, who has since completed eight continuous years as a Director of the Bank on 10-Dec-2010, relinquished from theoffice of Director effective 10-Dec-2010. The Board placed on record its appreciation for the valuable contributions rendered by himdurin g his tenure as Directo r on th e Board.

Mr. Vikram Talwar and Mr. Mark Edwin Newman were appointed as Additional Directors by the Board effective 20-Dec-2010 and

20-Apr-2011 respectively, to hold office till the 80th AGM. Notices as required under Section 257 of the Companies Act, 1956 have beenreceived by the Bank in respect of both the directors for their appointment as Directors of the Bank. Proposals to appoint them asDirecto rs, liable to reti re by rotat ion, are being pl aced before t he shareholders at t he ensuing A GM.

Part-time Chairman

In t erms of RBI Lett er DBOD No. 20390/08.57.001/2008-09 dat ed 28-May-2009, Mr. K R Ramamoo rt hy has relinq uished his of f ice as t hePart -ti me Chairman o f t he Bank eff ect ive 07-Jul-2010. Furt her, in t erms of RBI Circular vide DBOD No. BC.24/06.139.001/2002-03 dated09-Sept -2002, he has also reli nqu ished his positi on as Independent and Non-execut ive Director eff ective 07-Jul-2010. The Board p lacedon record it s appreciati on f or t he invaluable guid ance provided, services rendered by M r. Ramamoort hy duri ng almo st 14 years of hisassociation wi th th e Bank.

DIRECTORS REPORT


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5 80th


DIRECTORS REPORT

In terms of approval of Reserve Bank of India vide its letter DBOD.APPTS. 2137 /08.57.001/2010-11 dated 04-Aug-2010,Mr. Arun Thiagarajan has been appoi nt ed as th e Part-t ime Chairman o f th e Bank f or a p eriod t hree years eff ecti ve 09-Aug-2010 onthe terms and conditions specified therein. A resolution for payment of remuneration to Mr. Arun Thiagarajan is being included in theNoti ce convening t he 80th Annual General Meet ing f or approval of th e shareholders.

Retirement of Directors by rotation

Mr. Philip pe Damas and Mr. Meleveetil Damodaran are reti ring by rot atio n at th e fort hcoming AGM and are eligible for re-appoint ment .Mr. Meleveeti l Damodaran has of fered himself fo r re-appoin tm ent. A brief r esume of M r. Damodaran is fu rnished in th e Annexure toth e Notice convening t he ensuing An nual General Meeti ng.

Mr. Philippe Damas has expressed his desire not to seek re-appointment as a Director. A resolution is proposed to the members in theNotice of the current AGM to this effect and also not to fill up the vacancy caused by the retirement of Mr. Philippe Damas at themeeting or any adjournment thereof.

Registr ars and Share Transfer (R&T) Agent s

Karvy Computershare Private Limited, Hyderabad continues to be the R & T Agents for the shares of the Bank.

Auditors

The Stat ut ory Audi to rs viz. M/s. S R Batli boi & Co., Chartered A ccount ants, who w ere fir st appoint ed as audit ors of t he Bank at th e76th An nual General M eeting (AGM) held on 28-Jun-2007 and re-appoint ed at t he successive AGMs thereaft er wo uld be reti ring at t heconclusion of th e fort hcoming AGM. They have been the Stat ut ory Audit ors fo r f our consecut ive years, whi ch is th e maximum t erm f orStatutory Auditors of banking companies as per the directives issued by the Reserve Bank of India.

As approved by Reserve Bank of India vide its letter No. DBS.ARS.No. 16054/08:27:005/2010-11 dated 18-May-2011, it is proposed toappo int M/s. B S R & Co., Chart ered Accoun tant s as St atu tory Audit ors of t he Bank fo r t he f inancial year 2011-12. Shareho lder s arerequested t o approve the appoint ment o f said f irm as Stat ut ory Audit ors and author ize the Board of Directors to determi ne theremunerati on payable to t he said audit ors and also to appoint Branch audit ors and fi nalize their remun eration .

Other Report s

As required u nder Clause 49 of th e Listi ng A greement entered in to wi th th e Sto ck Exchanges, a detail ed report on Corporate Governanceis included in t his Annual Report .

Directo rs Responsibilit y Stat ement

As requ ired by Section 217(2AA) of t he Comp anies Act, 1956, the Directo rs confi rm:

(i) th at in th e preparatio n of the annual account s, th e applicable account ing standards had been fo llow ed along wit h properexplanation relating to material departures;

(ii) th at t hey had selected such account ing pol icies and applied them consistent ly and made judgement s and esti mates t hat w erereasonable and prudent so as to give a true and f air view of th e stat e of af fairs of t he Bank at t he end of t he fin ancial year andof t he profit of t he Bank for t he year under review;

(iii) th at th ey had taken proper and suff icient care fo r the maintenance of adequate accountin g records in accordance with t heprovisions of t he Companies Act, 1956 for safeguardin g t he assets of t he Bank and f or preventi ng and d etecting f raud and ot herirregularities;

(iv) th at t hey had prepared the accounts fo r the fi nancial year ended 31-Mar-2011 on a going concern basis.

Acknow ledgements

The Board of Directo rs place on record t heir grat it ude f or t he guidance and cooperat ion r eceived from th e Reserve Bank of India andother regulatory bodies. The Directors also place on record their appreciation of the encouragement and patronage received fromvalued custo mers and ot her stakehold ers like f inancial insti tu ti ons, bondhol ders etc., and look f orw ard to th eir cont inued suppor t. TheDirecto rs also take t his opport unit y to express th eir appreciati on f or t he good w ork and eff ort s put in by th e employees of t he Bank.

Finally, the Directo rs acknow ledge th e Members fo r t heir encouragement, t rust and suppor t.

For and on behalf of th e Board Place : Bangalore Arun ThiagarajanDate : 18-Jul -2011 09 Chairman


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ANNEXURE - I TO DIRECTORS REPORT

Statu tory Disclosures as of 31-Mar-2011 regarding ESOS und er Clause 12 of t he Securi t ies and Exchange Board of Indi a(Employees Stock O pt ion Scheme and Empl oyee Stock Purchase Scheme) Guidelines, 1999

Particulars

ESOS Scheme 2002(as modif ied in 2005)

ESOS Sch eme 2005 ESOS Sch em e2007

ESOS Scheme2010

Tranche 2 Tranche 1 Tranche 2(Loyalty Options)

Options Granted - Pre Right Issue 2005 160,490 - - - -

- Po st Ri gh t Issu e 2005 429,524 465,212 525,285 7,757,476 3,677,500

AGM Resolution 29-Sep-01 22-Sep-05 22-Sep-05 11-May-07 1-Jul-10

Options Vested - Pre Right Issue 28,868 - - - -

- Post Right Issue 339,536 296,582 508,100 5,241,199 -

Opti ons Exercised - Pre Right Issue 27,568 - - - -

- Post Right Issue 294,077 257,179 276,475 1,141,726 -

Total number of Shares arising as a result ofexercise of Opt ion

Pre Right Issue 27,568 - - - -

Post Right Issue 294,077 257,179 276,475 1,141,726 -

Opti ons Lapsed

Pre Right Issue 25,541 - - - -

Post Right Issue 135,447 158,044 35,380 550,750 82,000

Variation of terms of options NIL NIL NIL NIL NIL

Money realised by exercise of options (in Rs.) 28,672,507.50 31,603,331.00 51,098,109.50 227,913,195.00 -

Total numb er of opt ions in force - 49,989 213,430 6,065,000 3,595,500

Pricing Formula ESOS 2002 & ESOS 2005 Exercise price is equivalent to 75% of the average price of the shares during the past sixmonths in the Stock Exchange where the Stocks are traded in highest number.

Pricing Formula ESOS 2007 & ESOS 2010 Exercise pri ce is lat est available closing price, pri or to th e dat e ofmeeting of the bo ard of directors in w hich opti ons are granted in the Stock Exchangewh ere the Shares are traded i n th e highest numb er.

Emplo yee w ise detail s of gr ant u nder al l ESOS Schemes to Senior Manag erial Personn el

Part iculars 2010-2011 2009-10

Mr. Ashok Rao B 40,000 30,000

Mr. Janak Desai 55,000 90,000

Mr. Jan Van Wellen - -

Mr. Jayant Mehrotra 50,000 125,000

Mr. Manjunatha M S R 50,000 -

Ms. Meenakshi A 35,000 25,000

Mr. Prasad C V G 25000 25,000

Mr. Prasad J M 40,000 30,000

Mr. Samir Bimal 37,500 35,000

Mr. Shailendra Bhandari 700,000 -Mr. Uday Sareen 65,000 62,110

Mr. Appa Rao M V S - 10,000

Any ot her employee w ho received a grant in any one year of t he option s amounti ng to 5% or more of t heoptions granted during the year.

Nil Nil

Indentif ied employees w ho w ere granted opt ions during any one year, equal to or exceeding 1% of theissued capit al (exclude out standing w arrants and conversions) of the company at t he time of grant.

Nil Nil

The detail s on Emplo yees compensati on cost is given un der Emplo yee Sto ck Opti on Scheme in th e Notes on Accounts (Schedule 18) of th e Balance sheet (Page no.53)


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7 80th


MANAGEMENT DISCUSSION & ANALYSIS REPORT

MACRO ECONOMIC AND BANKING INDUSTRY DEVELOPMENTS

Real Gross Domestic Product (GDP) grow th fo r t he fourt h quart er of 2010-11 was at 7.8% and f or t he year 2010-11 was placed at 8.5%.The robust grow th moment um ref lect ed the conti nued buoyancy of services secto r and f urt her pickup in agricult ural perf ormance due

to a normal Sout h-West mo nsoon. Industr ial grow th , thou gh mod erated on account of th e base effect, remained on th e higher side.The grow th moment um seen so f ar and the lead indi cati ons th at t his perfo rmance wou ld be sustain ed in t he near fut ure are reflectedin the forward looking surveys conducted by various agencies.

Wholesale Price Index (WPI) inflation is persisting at over 8% and is expected to remain at that level in March-2011. Going forward,factors which may exert fu rt her upw ard pressure on inf lati on are: (a) higher int ernatio nal commodit y prices, especially oil , (b) increasein global food prices (c) return of pricing power to corporates, (d) improving bargaining power of both organised and unorganisedlabour, with Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) contributing to the wage pressures in thefarming and unorganised manufacturing sectors, (e) capacity constraints in several sectors, particularly farm products, (f) continuousupw ard revision i n mi nimum support prices refl ecti ng ri sing i nput costs.

In financial year 2010-11, the government has estimated fiscal deficit (in FY11) to contract to 5.1% against an initial target of 5.5%.Furt her consolidat ion to wards 4.6% o f GDP is budgeted f or 2011-12.

The Indian financial markets remained orderly, notwithstanding the impact of global developments and tight liquidity conditions indomesti c markets. Call rate fi rmed up in step w it h poli cy rates and ti ght liqui dit y condit ions. It mostly remained above th e upper boundof the Liquidity Adjustment Facility (LAF) corridor during the third quarter of 2010-11. Both commercial paper (CP) and certificateof deposit (CD) market s remain ed active as alt ernat ive sour ces of f inance. The yield curve fo r Government Securi t ies (G-Sec) shif t ed,refl ecti ng expectat ion o f policy rate changes in an in fl ation ary environm ent. The Indian Rupee appreciated mo derately against th e USdollar and stock prices rose on t he back of fo reign por tf olio inf low s. Prices in t he housing m arket in general cont inued t he rising t renddurin g t he second h alf of 2010-11.

BANKING INDUSTRY DEVELPOMENT

In financial year 2010-11, the repo and the reverse repo rates have been raised by 175 basis points and 225 basis points, respectivelyin a calibrated manner, as part of the normalization of policy. The increase in Cash Reserve Ratio (CRR) in February and April 2010contribu ted t o t he gradual t ightening of liquidit y. Liquidit y conditi ons remained ti ght during t he third quart er of 2010-11, warrantingliqui dit y easing measures by the Reserve Bank. The ti ght liqui dit y condit ions since end -Octo ber 2010 were pr imarily on account ofunusually large unspent cash balances of the government.

The divergence between the growth rates of credit and aggregate deposits of Scheduled Commercial Banks (SCBs) widened during theth ird quart er of 2010-11 (the g ap peaked at 9 percent age point s in m id- December), emerging t hereby as a str uctural source of pressureon liq uidit y. While t he year-on-year non-food credit g row th at 23% upt o February was above the indicative projection of 20%, the paceof credit expansion moderat ed since -December 2010 narrowi ng th e divergence.

OVERVIEW OF FINANCIAL AND BUSINESS PERFORMANCE

During th e f inancial year 2010-11, th e Bank has report ed health y impro vement in it s fi nancial, business and ot her operat ing parameters.

The Bank r ecorded a net Prof it Af t er Tax (PAT) of Rs. 319 Crore fo r t he year 2010-11, an increase of 32% f rom Rs.242 Cror e repor t ed inthe previous year.

Net Profit (Rs. in Crore)

88.9

156.9

188.8

242.2

318.6

-

50.0

100.0

150.0

200.0

250.0

300.0

350.0

FY 07 FY 08 FY 09 FY 10 FY 11


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The Net Total Income of the Bank for the year rose by 15% to Rs. 1,662 Crore from Rs. 1,450 Crore reported during the previous year.During this period, the Net Interest Income (NII) grew by 21% to Rs. 1007 Crore from Rs. 830 Crore reported in the previous year. Feeand Ot her Income increased by 6% to Rs. 655 Cror e f rom Rs. 620 Crore. Operat ing expenses increased by 27% to Rs. 1,026 Crore f rom

Rs. 808 Crore in th e previous year. The Cost to Income Ratio has increased f rom 56% t o 62%. Ad justi ng f or t he one-ti me addit ionalcharge of Rs. 68 Crore towards the second pension option and enhancement in gratuity limits, the Cost to Income Ratio has increasedfrom 56% to 58%.

Return on Average assets increased to 0.89% from 0.80% reported in the previous year.


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Total deposits of the Bank aggregated to Rs. 30,194 Crore, an increase of 17% over the previous year. The Bank focused on improvingthe mi x of low cost deposit s dur ing t he year. The Current and Savings Account (CASA) deposit s increased by 24% f rom Rs.8,427 Cror e atMarch 2010 to Rs.10,459 Cror e at M arch 2011. Consequent ly, CASA depo sit s as a propor t ion of t ot al depo sit s increased t o 35% against

33% in the previous year.

Deposits Growth with breakup of Current, Savings and Term Deposit

10,96114,005

18,177 17,43819,7361,894

3,329

3,314 4,092

5,107

2,564

3,123

3,398 4,335

5,352

-

5,000

10,000

15,000

20,000

25,000

30,000

FY 07 FY 08 FY 09 FY 10 FY 11

TermDeposit CurrentDeposit SavingsDeposit

Tot al asset s increased by 15% to Rs. 39,014 Crore f rom Rs. 33,880 Crore at March 2010. Net A dvances increased by 28% to Rs.23,602Cror e f rom Rs. 18,507 Crore at March 2010.

Net Advances

11,976

14,650

16,75618,507

23,602

-

5,000

10,000

15,000

20,000

FY 07 FY 08 FY 09 FY 10 FY 11

-25,000

Retai l Bank advances (includ ing SME) cont rib ut ed t o 58% of t he advances. Net Priori t y Sector Advances stood at Rs.8,045 Cror e as of31-Mar-2011 and consti tu ted 43.5% of adjusted Net Bank Credit as against th e target of 40% sti pulat ed by t he RBI.


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The net NPA of the Bank as at March 2011 stood at Rs. 92 Crore, which was 0.39% of Net Advances as against 1.20% of the previousyear.

0.0%

0.5%

1.0%

1.5%

2.0%

25

75

125

175

225

275

FY 07 FY 08 FY 09 FY 10 FY 11

91.8114.0 103.2

Net NPA Net NPA %

200.4 221.8

0.95%

0.70% 1.20%

1.20%

Net NPA

0.39%

INTERNAL CONTROL SYSTEMS

The internal control system of the Bank is reinforced through three layers of defence i.e. Business Units, Risk Management (credit,operati onal, market ri sk) & Compl iance and Internal Audi t.

The Banks internal controls have been developed to provide reasonable assurance that the organizations business objectives willbe achieved and underlying risks identified & managed effectively. The internal control of the Bank is aligned with the overallorganizati onal str ucture. Apart f rom basic operati onal control s at branch level, there are tw o addit ional levels of cont rol: t he Regional

off ice and t he Corpor ate Off ice. The Internal A udit Department acts as an independent enti ty analyzing eff ecti veness and adequacy ofthe internal controls of the Bank through periodic audit and reviews.

The Bank has an adequat e cont rol syst em, wh ich is overseen, in lin e wit h Section 292A of t he Comp anies Act 1956, by t he Audi tCommittee of the Board which reviews the working of internal auditors and statutory auditors, to ensure compliance. Appropriateaction is taken if deficiencies are reported. As a part of the plan for continuous improvement in the compliance culture of the Bankand a better understanding of the internal controls, a number of workshops and education programmes have been conducted for theBanks employees.

BUSINESS REVIEW

An overview of various business segments along with their key performance achievements in 2010-11 is presented below.

RETAIL BANKING

The growth in Retail Banking business was robust during the current financial year and the Bank witnessed a healthy growth acrosskey financial and operating parameters. The retail bank is organized to meet the needs of a wide range of customer segments. Themain verti cals are Branch Banking , Business Banking (SME), Consumer Loans and Agr icult ural & Rural Banking (ARB). The key pri ori t iesfor the Bank were acquisition of new customers, deepening customer relationship through segmentation and cross-sell, profitableexpansion o f distr ibut ion and buil ding an enhanced brand p resence to serve the t arget segment s.


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BRANCH BANKING

During the year 2010-11, the Bank opened 29 new branches across India, taking the number of branches and extension counters(excluding RCCs and ARMBs) from 481 to 510. The ATM Network touched 400, with the opening of 43 ATMs. In the process, the Bankentered eight new centers namely; Patiala in Punjab, Jammu in J&K, Bodakdev and Jamnagar in Gujarat, Al igarh & Mat hura in Utt arPradesh, Barbil in Orissa and Bhilainagar in Chatt isgarh, giving t he bank a larger nat ional f oot print .

In term s of th e mix of th e branches, th e netw ork is fairly spread across all t he populat ion g roups wit h M etro - 31%, Urban - 34%, SemiUrban - 18% and Rural - 17%.

The Bank launched new produ cts and services in 2010-11 wit h t he aim o f expanding t he produ ct suit e and catering t o t he needs ofthe consumer. ING Fortuna Trade the online trading platform for the Banks customers made trading in stocks and shares easier. TheBank ING Zwipe Savings Account aimed at t he young urb an consumer. The pro duct o ff ers rou nd-t he-year discount s across hun dreds ofbrands and m erchant out lets. For t he convent ional custo mer ING Acti ve Deposit was launched t o pro vide int erest rate of a term depositwi th f lexibilit y of Savings Account . As and when t he deposit or needs fu nds, he can wit hdraw part of t he deposit o r in f ull t hrough acheque, ATM or m obile o r int ernet b anking. In o rder t o address th e grow ing minor account segment, ING Zing Savings Account f or

child ren w as launched. ING Zing is designed b y kids and fo r ki ds everything fr om p roduct feat ures, discount off ers, user guid e and t oth e look o f th e Debit Card was selected and approved by a set of kids in the age grou p of 7-13. The produ ct provides an ideal mix ofth e independence that kids to day desire and insti ll t he fin ancial responsibil it y in th em, in a fun w ay.

The Bank continu ed to fo cus on deepening existi ng relat ionships wit h cross-selling fi nancial pro ducts. Wealth M anagement pro ductswere a k ey focus across th e netw ork, t he Bank h ad invested in t echnolo gy and p eople t o achieve this objecti ve. Custo mers were off eredprodu cts across mut ual f unds, life insurance, general in surance and ot her investm ent r elated pro ducts th rough th e fi nancial planni ngmodule. The Bank also continued to focus on increasing the usage of Internet Banking. Online Shopping was introduced, enablingpurchase of t ickets for t ravel and mo vie and ot her produ cts and services across mor e than 5,000 websit es. The Int ernet Banki ng channelwas made safer b y int roducing SMS based One Time Act ivat ion Code (OTAC) fo r f und t ransfers and on lin e shoppin g. The annual spendthrough Debit Cards by the customers for shopping increased by 44% in the current year. This was a result of sustained customereducation and promot ional off ers.

A glo bal in it iat ive by ING, the Net Prom ot er Score (NPS) progr amme w as launched durin g t he year in India. NPS is a pow erf ul customeradvocacy tool th at allow s custo mer to instant ly rate th e quality of service and give feedback to th e Bank on how to fu rt her impro ve it.This information is used to enhance our products and service and as a result enhance customer loyalty.

The Bank continu ed to invest in above the li ne advert ising w it h t he Be Good at Mo ney campaign at all leading airp ort s, TV and onlineadvertising, t his result ed on impro ved awareness of th e brand. M icro-marketing is a key fo cus area wit h mo re t han 1,200 events acrossthe country.

w ww.ki dzzbank.com aim ed at children is a virtual bank, w hich helps kids learn about fi nance and banking t hroug h int eracti ve gamesand quizzes. Kids can create t heir ow n log in, earn poin ts by winn ing g ames, redeem their point s fo r f un rew ards and post updat es totheir facebook account. The Banks website was also launched in Hindi, Kannada and Telugu.

BUSINESS BANKING (SME)

The importance of SME sector is well known and regarded as the backbone of any economy. India has a vibrant SME sector that playsan important role in sustaining economic growth, increasing trade, generating employment and creating new entrepreneurship inIndia. The Bank has tr aditi onally f ocused on M icro, Small and M edium Enterprise business, partnerin g w it h t heir grow th th roughdecades. The Business Banking segment serves t he needs of business ent erpri ses wi th annual sales t urnover of up t o Rs.150 cror e forbot h domesti c and export credit r equirement s. Apart f rom regular w orkin g capit al faciliti es, the Bank also off ers str uctured produ ctsto cater to the needs of clients. This segment has also contributed significantly towards priority sector advances of the Bank. The clearfocus, strategy, underwriting capability backed with a strong relationship and acquisitions team, has helped ensure strong growth inth is segment. The SME port fo lio g rew b y 45% and f ees grew by 30% duri ng t he year.


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CONSUM ER LOANS

Consumer Assets include Home Loans, Home Equity Loans, Loan against Commercial Property, Loans for Commercial Vehicles &Constr uction Equipm ent, Personal Loans and Aut o Loans. Home Loan consti tu tes a large part o f th e Banks consumer lo an port fo lio,with a substantial base of salaried customers. Home Equity and Loan against Commercial Property is targeted towards self employedcustomer segment and have witnessed the fastest growth. The Bank is also increasing focus on Personal Loans, primarily targeted atsalaried customer segment . The Bank al so i ncreased f ocus t ow ards higher yield segment s in Comm ercial Vehicle Loans.

The Banks fo cus area of grow th fo r t he coming year w ill cont inue t o be Home Equity Loans, Loan against Commercial Propert y andPersonal Loans.

AGRICULTURAL AND RURAL BANKING (ARB)

The Bank has a netw ork o f 85 ru ral br anches mostly spread in AP, Karnataka and Tamil Nadu. The Bank has a wid e range of pro ductslike Kisan Credit Card, Produce Loans and Gold loans. Working Capital and Agriculture Term Loans for Poultry, Dairy etc. are also beingoff ered to cater di verse needs of th e farmi ng communi ty. The Bank has accelerated ret ail agricultu ral lendin g at a few places in Nort hIndia, has plans to expand further in Central and West especially in Rajasthan, Uttarakhand, Maharashtra, Gujarat and Madhya Pradesh.

Under t he Financial Inclusion (FI) Prog ramme, bank has been all ocated w it h 296 villages. Bank has opened 90,000 No Frill savings bankaccounts so far. With two service providers / Business correspondents, Bank has issued over one lakh smart cards, (enrolled more than1.30 lakh benefi ciaries) t o t he benef iciaries under NREGP and SSP on p ilo t basis in a few vill ages of AP and Karnat aka.

The Bank has successfully implemented the Debt Waiver/Relief Scheme announced by the Government of India.

PRIVATE BANKING

In its aim to become an advising private banking platform of choice for its clients, the Bank continues to focus on a strong advice-led of ferin g across a gamut of investm ent produ cts and classes. In an environ ment whi ch saw i ncreased volati lit y due t o gl obal andlocal economic factors, the Private Banking business continue to grow in a profitable manner. All core business parameters AssetsUnder M anagement (AUM), revenues and contri but ion show ed health y increase year-on-year. New client addit ions doubled o ver theadditions in the previous year. Differentiated product initiatives were introduced during the year which were well received by theclient s. People contin ue t o be an area of fo cus and t he t eam was enhanced as well as a number o f skill enhancement i nit iati ves wereundert aken during t he year in o rder t o deliver a bespoke service proposition to clients.

WHOLESALE BANKING

The Wholesale Banking business (WSB) provides a wide range of banking products and services to Indias leading corporate and fastgrow ing businesses. The fund -based pro ducts include w orking capit al f inance, t erm f inance and structured fi nance facilit ies. The non-fu nd based prod ucts mainly consist of lett er of credit , f inancial and perf ormance guarantees etc. WSBs fee-based hig h-value addedproducts are cash management services, financial market transactions and structured hedge products, trade services, corporate financeand debt syndication advisory. WSBs advisory services focus on advising clients on mergers and acquisitions, capital restructuring andcapital raising. The Bank also accepts rupee and foreign currency deposits from our corporate customers. Wholesale fund based assetshave grown b y 28% d uring th e year, wit h emphasis on asset qu alit y and tig ht er credit cont rols.

The Wholesale Bank is organized into two overlapping groups, (i) Client Coverage and (ii) Products and Services. While the ClientCoverage group is responsible for managing relationships with identified client sub-groups, the Products and Services group isresponsibl e for p roduct and service delivery to t he ent ire Who lesale Banking client base. WSBs pri ncipal w holesale clien t coverage andrelatio nship m anagement gr oups are as fo llow s:

CORPORATE & INVESTMENT BANKING GROUP (C&IB)

The C&IB Group is responsible for managing relationships with large corporates typically with sales turnover exceeding Rs.1,000 Croreand M NC relatio nships, irrespecti ve of tu rnover. The pri mary f ocus of th e C&IB relationship managers is to market High Value Added(HVA) pro duct s viz. Debt Capit al M arket s, Corp orat e Finance, Financial Market s and Ad visory services.



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In ord er t o gi ve increased f ocus to servicing our mult inat ional client s wh o are in vesti ng i n Indi a, WSB has decided t o create a separateInternat ional Clients (IC) group, wit hin C&IB, wi th eff ect fr om Ap ril 2011. The IC group current ly services over 125 client s. Wit h t his, th eBank hopes to bring seamless servicing capability, thus helping its global clients in their business in India.

C&IB Group is also responsible for coordinating with ING Bank N.V. for offering their products and cross-selling of Retail Bankingprodu cts and services to corpor ate clients and th eir emplo yees. During th e year C&IB portf olio grew by 28%.

EMERGING CORPORATES GROUP (EC)

The Emerging Corpor ates client ele is serviced f rom ten cit ies wi th in th e Banks extensive netw ork and f ocuses on m anaging r elation shipswi th manuf act uring, p rocessing and services sector comp anies wit h an ann ual sales t urn over bet ween Rs.150 Cror e and Rs.1000 Cror e.

A w ide range of products are off ered to meet t he needs of th is business segment, w it h special f ocus on export credit , wor king capit alfinance, cash management services, term loans, non-fund based facilities like letters of credit, guarantees and structured financeproducts. In partnership with Retail and Private Banking, the EC group provides wealth management solutions, loans, advances, salaryaccounts, and alli ed services to th e employees & pr omot ers / directors of th e companies we deal w it h. Debt Capit al M arket (DCM) and

Corporate Finance (CF) were the new products launched during the last financial year. Whilst the DCM initiatives have seen reasonabletraction in the market and resultant deals flow, the CF stream is yet to stabilize. The Bank expects a considerable revenue accretion inthe DCM space during FY 12, on t he back of a f ew successes dur ing FY11.

Given the global reach of INGs global network, EC also caters to the cross border needs of its clients in supporting their businessrequirement s out side India via f undin g and advisory services. Whil st off ering complet e fi nancial services solut ions both at corporat e aswell as individu al level, the EC segment also pl ays a substant ial rol e in m eeting th e Banks export credit commi tm ents. In t he currentfi nancial year, t he Emerging Corpor ate gr oup has added about 47 new l ending relatio nships across dif ferent secto rs. During th e year,EC port fo lio gr ew by 21%.

BANKS AND FINANCIAL INSTITUTIONS GROUP

The Banks and Financial Institutions (FI) Group, is a dedicated group created to leverage the business opportunities with Private andPublic Sector Banks and financial institutions across India. The Group has primary responsibility for origination of transactions andprodu ct and service delivery t o t he Bank/FI client base including fu nding produ cts, correspondent Bank relat ionships, t reasury pr oducts,asset pur chase & sale and deposit product s.

FINANCIAL M ARKETS (FM)

The financial year ended M ar 2011 cont inued to see height ened volati lit y across markets. The dom esti c markets saw steadily ti ght ermonetary policies and liquidity conditions, resulting in a higher and more volatile rate environment. The Bank exploited marketoppor tu nit ies as and w hen t hey were available and continu ed it s fo cus on f ranchise driven f low s. The Bank made deeper inro ads int oclient segments along with expanding its offerings to new customers and counterparties. The Financial Markets unit, in line with thestrategy of the Bank, further integrated its offerings with the other products and relationships of other units so as to make it morecomprehensive client solutions.

The FM unit in t he Bank consists of fo ur key uni ts Trading & M arket M aking, Sales, Str ucturin g and A sset & Liabili ty M anagement

(ALM). The Trading & Market Making unit has continued to be an active player in the chosen asset classes. The unit has not only been an activemarket maker int ernally and externall y but has also demonstr ated agilit y and consistency in exploit ing t rading opp ort unit ies in volati lemarkets.

The Sales and Relat ion ship M anagement uni t of Financial Market s has provided sign if icant value t o our client set. Our research, analysisand disseminati on h as got wi de appreciati on and has cont ribut ed t o bot h enhancing relat ionships and fur th ering t he business. In closecoordi nati on w it h t he Str ucturin g Desk, sales desk of fers solut ions that are opt imal f or client needs.


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In a year which saw large swings in liq uidit y condit ions and volat ilit y in rat es, th e Asset & Liabili ty M anagement (ALM) Desk played apivot al role in managing t he balance sheet, bot h on l iquid it y and int erest rate risks. The ALM unit has been proacti ve in it s approachand has provided valuable feedback to Asset Liability Committee (ALCO) for timely decisions.

A large ef fo rt was undertaken t his year to str eamline processes and derive mor e benefit s fr om t he enhancement s made t o systems inthe recent years. The successful completion of this exercise has bolstered the platforms of the bank for greater efficiencies as well asfor fut ure growth.

RISK MANA GEMENT AND PORTFOLIO QUALITY

The risk management policy of th e Bank, moni to red at th e highest levels, is based on a th oroug h review of key risk areas of Credit Risk,Market Risk and Operational Risk.

CREDIT RISK

Credit Risk Management (CRM) is an important component of risk management in banks. The Bank has put in place an appropriateorganizati on structure, credit risk po licy frame w ork, pr oduct appr oval process, borro wer selecti on n orms, securit y and document atio n

requirements, monitoring and follow-up standards, asset classification norms, etc. to achieve these objectives.

The Risk Management and Review Committee of the Board is primarily responsible for owning and managing the risk policy in theBank. The Chief Risk Off icer, assist ed by ot her execut ives at Corpor ate Of f ice and Zonal / Regional Of f ices, carries out t he CRM f unct ion .

Credit is handled across different segments, viz. Corporate and Institutional Clients, Emerging Corporates, Banks and FinancialInst it ut ion s, Financial Market s, Business Banking (SME), Agri cultural and Rural Banking , Privat e Banking, and Consumer Finance. TheCredit Policy document is updated at least annually, incorporating both revised regulatory and internal guidelines on various typesof credit products and under-writing standards. The Policy also covers exposure norms, industry / sectoral exposure limits, methods ofappraisal, delegation of approval pow ers, guideli nes fo r recovery and restr ucturing , etc.

Mo st credit exposures have primary and/or collat eral securit ies, wit h approp riat e legal documentat ion. Ot her risk mit igat ing m easureslike escrowing cash-flow, electronic clearing service (ECS) mandates, financial or other covenants are stipulated depending upon the

type of borrower and facilities availed. Financial Markets products are offered to corporate clients in accordance with the Banks Board approved Client AppropriatenessPolicy. All borrower accounts are subject to periodical unit visits, security verification and review / renewal. Review of Industry Portfolios,Watch List account s, account s having o verdue / adverse M ark t o M arket exposures, or ot her ir regularit ies are carried out periodicallywith a view to identifying early warning signals, taking remedial action and minimizing delinquencies. Portfolio quality of ConsumerAssets is reviewed monthly and appropriate corrective action taken, based on trends. There are dedicated Collections and Recoveryteams. Recoveries are made by enforcement of securities, foreclosure of mortgages and other legal remedies. Asset classification andprovisioning is done in accordance with RBI guidelines.

Cont inuou s eff ort s are being made t o imp rove Credit MIS inf rastr ucture using IT resources of th e Bank, wit h a view t o gat her t imely

informat ion, bot h at individual borrower account level, group level and as a portfolio.

The Bank has taken appropri ate steps to become f ully compli ant wi th Basel II norm s.

Though t he Indian economy perf ormed reasonably w ell, some corporates sti ll f elt t he impact of th e lackluster global economy. Whileexport ers cont inued t o f ace issues in impo rt ing count ries, dom est ic businesses experienced issues due t o e.g. t he volat ili t y and increasesin raw mat erial cost , elongated payment cycles and FX flu ctuat ions, leading t o cash-f low and debt servicing stresses. The Bank cont inu edto provide support to viable businesses by part icipation in r estr ucturin g pl ans agreed under t he Corpor ate Debt Restr ucturing (CDR)Scheme. In other cases, steps had to be taken to contain exposures, improve recoveries or obtain additional collaterals.


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One parti cular segment where client s are facing serious issues is in Mi cro Finance. Follow ing th e prom ulgat ion of th e M FI Ordinanceby the St ate Governmen t o f Andr a Pradesh, collecti ons by the M FIs have fall en drastically, leading several MFIs t o seek a rest ructuri ngof their borrowings through CDR.

The Bank is conf ident th at t he robu st risk management practi ces put in p lace wi ll enable t he Bank t o manage issues arising out of suchevents.

MARKET RISK

Market Risk Management (MRM) focuses on three businesses and their risks: (1) Trading and Market Making, (2) Asset and LiabilityManagement , and (3) St ructured Products and Sales. An in-ho use developed Value at Risk mo dul e, comb ined w it h variou s cont rol s,suppor ts MRM in th e day-to-day cont rol of th e Trading acti viti es in th e Bank. For eff ecti ve Asset and Liabilit y management, an AssetLiability Committee (ALCO) has been operating in the Bank to manage inter alia the capital position, liquidity and interest rate risksof the Banks entire balance sheet. MRM provides ALCO the necessary information and various tools to manage risks, such as Value atRisk, Event Risk, Earnings at Risk and balance sheet simulations for the impact of volume growth and changes in interest margins, andmoni to rs adherence to th e several lim it s and relevant pru denti al norm s approved by th e Board. Wit h t hese too ls, MRM provides inputs

for calculat ing t he Banks Base Rate, i n li ne w it h t he rel evant circular gu idel ines fro m RBI and ALCO sets th e ING Vysya Base Rate (IVBR),ING Vysya Reference Rate (IVRR) and spreads for various products, based on the Banks strategy.

St ructu red Products and Sales main ly provide corporate client s a range of instrument s t o hedge thei r business exposures t hat ar esensitive to foreign exchange and/or interest rate fluctuations. MRM is responsible for the independent valuation, monitoring andreporting of the mark to market value of these structured products.

MRM is the overall coordinator of the support units within the Bank for Financial Markets products, and controls and monitors theacti vities of t he desk w it hin t he regulat ors fr amework. M RM i s also involved in advising t he Bank in t he risk based pricing of produ cts,and market risk awareness wit hin th e business unit s of Retail and Wholesale in respect of regulat ory requirement s and int ernation alstandard s, and to advise management on t he opt imal pro duct mi x str ategy.

OPERATIONAL RISK (ORM)

The Operational Risk Management (ORM) function manages the operational, information and security risks. The Board and seniormanagement are kept informed of operational risk issues on a regular basis. The Operational Risk Management Policy is approved bythe Risk M anagement and Review Commit t ee (RMRC). This Comm it t ee reviews the ORM Poli cy regul arly. The Count ry Operat ional RiskCommit tee (ORC) and Business Line Operati onal Risk Commit t ees meet on a perio dic basis to discuss and t ake decisions on operat ionalrisk issues pert aining t o t heir specif ic domains.

The Bank has defined operational risk as the risk of direct or indirect loss resulting from inadequate or failed internal processes, peopleand systems, or from external events including the risk of reputation loss. The Bank has clearly defined risk categories which helpto implement the operational risk framework. The Bank also uses a Non-Financial Risk Dashboard (NFRD) to provide integrated riskinf ormatio n o n compliance, operation al, inf ormati on and securit y risk, using a consistent approach and risk l anguage.

The Bank has developed a comprehensive framework supporting the process of identifying, measuring and monitoring operational,

inf ormat ion and securit y risks. The Bank appl ies scorecards to measure t he quali t y of o perat ional , inf ormation and securi ty ri sk processeswi thin t he Bank. The Banks Crisis Management Policy and Business Cont inui ty Plan p rovide a cohesive overview of it s emergency act ionplans, the crisis management governance, business continuity processes, and respective roles and responsibilities.

The Information Risk Management (IRM) function within ORM operates with the mission of ensuring confidentiality, integrity andavailability of information and associated information processing assets through the disciplined use of risk management practices. Thefunction has defined a comprehensive suite of policies, standards and guidelines, and compliance is measured and monitored on aregular basis. The function act ively measures and monit ors informat ion risk wit hin th e key IT risk areas. The result of t his process is usedby the b usiness unit s to budget, p lan, and implement appropriate ri sk mit igatio n acti ons.


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The Bank currently qualifies for the basic indicator approach for operational risk capital assessment. The capital requirement forOperati onal Risk has been comput ed as per the Basel II gu idelines prescribed by t he Reserve Bank o f India.

INFORMATION TECHNOLOGY (IT)

The IT Service Management Group (ITSMG) is the t echno log y organizat ion t hat manages the Banks IT needs. ITSMG is responsibl efor all aspects of technology, from conceptualizing technology strategy in harmony with business strategy, to running day to dayoperati ons at t he wor kplace and dat a centers. The group is playing an increasingly active role in no t just runni ng eff icient operat ions,but in assisti ng b usiness in win ning at th e marketp lace. Overall, ITSMGs technology i nit iati ves are aimed at enhancing value, off eringimp roved convenience and service to customer s wh ile op t imi zing cost s. Indeed, t he declared Mi ssion St atement for ITSMG is To be ast rat egic business part ner based on service excellence thro ugh t echnical leadership in a secure and cost eff ect ive manner.

The Bank has a technol ogy blue pri nt aligned t o t he business st rat egy. The IT st rat egy has supp ort ed business ini t iat ives by cont inuouslyupdating our technology and process platforms. Our IT infrastructure is built on a robust architecture which links our network ofbranches, marketing offices and ATMs. The Bank also has a Disaster Recovery (DR) System located in Hyderabad which replicates alldata on a real tim e basis fo r most critical applications & the same is validated and evidenced t o t he regulat or t hroug h period ic DR drill s.

Whi le t he Bank has a wi de range of customer access channels viz; Branch, ATM, Call centr e, Internet Banking and M obi le Banki ng, a keydif ferent iator is in t hat ING Vysya Bank is one of th e few banks in t he count ry who can off er th e capabilit y of d edicated Host-t o-Hostint egrat ion t o t he ERP syst ems of our Corpo rat e and Business banki ng customers. This is backed by our enhancements made to o urpayments infrastructure such that the Bank offer the fastest domestic electronic payments channels in the country. The Bank has alsoinvested in Risk management and ant i-fraud systems to prot ect th e int erests of our valued custo mers.

Over the last couple of years, the focus of technology has shifted to supporting business through specific initiatives in the areas ofvirtu alization and service orient ed archit ectu re. ING Vysya Bank is one of th e few banks wh o have implement ed key productionsystems in a virtualized environment . Large scale adopti on of service orient ed archit ectu re th rough th e implement atio n of Ent erpriseservice bus has resulted in extensive reuse leading to quicker time to market.

All these innovative initiatives have gained external recognition in the form of awards from reputed forums; the prestigious CIO 100award f or 2009-10 and CIOL special ment ion f or in novation .

OPERATIONS

Operations cont inued it s fo cus on cost qu alit y, time and f lexibilit y to wards meetin g it s custo mer obligat ions in a compl iant and costefficient manner. With stability in turn around times, regulatory reporting etc., operations focused on making processes effectiveand custo mer friend ly. A retail liabili ti es unit was set-up in Mu mbai whi ch enabled us fu rt her improvement in custo mer turn aroun dti mes. During t he year, the Bank has impl emented d igit ized archival solut ions for our consumer assets and r etail liabili ti es result ing inimp roved customer services in t hose areas. Dashboards t o give an overview to business were developed earl ier and h ave evolved overth e year to reach standards such th at business, risk and operat ions use t hem eff ecti vely to eff ect corrective / preventi ve acti on w hererequired. Changes in the regulatory environment for the wealth management business necessitated quick and large scale changesin t he area of operat ion s wh ich were don e wit h zero imp act on customer s and business. Foreign Exchange Services were launcheddur ing t he year in select branches and is an area of focus . The Banks cash managem ent services which is ISO cert if ied underw enta re-cert if icatio n pro cess dur ing t he year and th e Bank is in the process of get t ing o ur Treasury back off ice services ISO cert if ied. To

improve capabilities of our human capital, an identified group within operations underwent training in six sigma methodologies. Thefu ndament al shif t in i denti fyin g projects, was one tow ards custo mer orient atio n rather t han process impro vement. One of t he projectsnearing completion is a project for early realization of outstation cheques for collection today 90 - 95% of the outstation chequesdeposit ed by our custo mers are credit ed t o t heir account s wit hin 5 days where cheques are drawn on o ur b ank locations and w it hin RBIsti pulat ed t imelines for t he rest of th e locati ons. Operations cont inues to str ive tow ards all rou nd excellence in a responsive manner.

INTERNAL AUDIT

Operations of t he Bank including t he inf ormat ion systems function s, are subjected to audi t b y the Internal Au dit Department whi ch isan independent f unction reporting directly to t he Audit Committee of t he Board.


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The Internal Audit Department follows the Risk Based Audit approach across the Bank, wherein process and control gaps, if any, areident if ied w it h suit able recommendat ions for r emedial acti ons. The annual audi t plan of th e Bank is based on t he Risk Assessment of th evarious auditable entities identified within the Bank. Keeping in view the increased level of automation and centralization of certain

processes, separate business processes audits of support functions are performed. Audits are segregated into branch audits, businessprocess audit s, credit audit s / inspecti on, Inf ormat ion System aud it s, Management Audit of cont rolli ng of fi ces, etc wit h dedicated t eamswith the required skill sets. In addition, key functions such as Financial Markets, Retail Deposits and Investment Operations, CentralizedTrade Finance Operations, Centralized Back Office Operations of Private Banking, amongst others, are covered under concurrentaudit to strengthen the verification of controls. The audit programmes or Risk Control Matrix used for audits includes verification ofRegulato ry compli ance at t he unit s subjected to audit s. Audit to ols are used for analyzing available centrali zed data and to p rovideinput/samples for the field auditors.

Findings of Internal Audit are followed up for timely closure and effective resolution by the management.

COMPLIANCE

This year t he prim ary focus of th e Bank w as to deepen the compli ance fr amework in t he organizati on t hat has been establ ished andbring in eff iciency in pro cesses to enhance the Banks tr ansacti on m onit oring capabilit y. A new Ant i Fraud & A nt i M oney Launderingtool was successfully implemented. Special emphasis was placed on increasing the skill level of the Compliance department through,bot h str uctured and unstructured t raining courses. In addit ion as an ongoin g process to embed th e Compli ance cult ure th rough outthe Bank, Compliance Risk awareness was created through e-learning modules for specified target groups.

HUMAN CAPITAL M ANAGEMENT

During t he year, there was an improvement in t he Banks respon se rate and t he overall engagement scores in t he Empl oyee Engagem entSurvey. The scores on all the sub-parameters viz., Shared direction, Performance execution, & Human Capital have also increasedsubstantially as compared to the previous year.

A new Employer Branding init iative called Scaling Heights The ING Way has been launched. This init iati ve aims at providin g auniqu e on-boardin g experience and is focused on our key message, which is Value Based Growt h. Every touch poin t wi th prospecti veemployees, righ t fr om sourcing t o o n-boarding, reinf orces this message.

The Talent engagement init iati ve has been stepped u p t his year. Post review of th e talent list, a let ter signed by the M anaging Director,recognizin g each ind ividual w as given to all t he Talents. In addit ion, w e have outlin ed th e IDPs of all t alents and have drawn a TalentManagement calendar for implementation across the organization.

A st ructu red succession plan has been implement ed wi th ident if icatio n of planned/crisis successors for each line of business and supp ortfu nctions, covering all crit ical and one do wn roles to th e Senior Leadership Team.

A set of to p 100 managers across th e Bank got to gether t o decide th e directi on t oward s achieving t he aspirat ion of being one ofth e to p five private banks

The Bank conti nues to make a substant ive investm ent in tr aining and development . Sales, service and compli ance t raining cont inuedto be th e focus areas fo r t he year. A Training Dash Board for all stand ard roles in Retail and Operation s has been implement ed, and

all mandatory training programs are tracked.

Sales int egrit y is placed hi gh o n t he t able and in line w it h it ; a proj ect ti tl ed Custo mer Suit abilit y has been launched across ING. Theinit iati ve is roll ed out in t he form o f t wo sub programs called Promot ing Int egrit y Program (PIP) and The 5 golden rules fo r selling.A program t it led Master Class has been init iated f or all newl y joined branch heads and branch operati ons head to ali gn t hem to t hevaried policies and procedures of ING Vysya Bank. Additionally, Development Tracks, aimed at skill building for employees who aspireto t ake on higher responsibil it ies was reinf orced wit h addit ional progr ams th is year. In order to bri ng in a more scient if ic fo cus to t heway training requirements are drawn, development centers were rolled out for specific departments in line with their score cards. Ason dat e around 5000 emplo yees have undergone train ing on various modul es th rough a tot al of 240 progr ams.


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OPPORTUNITIES AND RISKS

As part of it s operati ons, th e Bank sight s a number o f opport unit ies and f aces th reats to it s str ategy.

The opportunities include:

Increasing radiu s wi th new pro duct of ferin gs, product enhancement and p ackaging on b ot h lending and fee produ cts. Leveraging and scaling up t he branch netw ork and sales str ucture to grow low cost deposits. Increasing cross sell by deepening of exist ing relat ion ship s. Continui ng to expand the distribut ion. Furt her upgrading our technology and service platf orms to support business grow th and meet custo mer expectat ions

Risks that must be managed include, amongst others:

Infl atio nary pressures and consequent hardening of int erest rates; Tight ening of Liquid it y in the Banking system and eff ecti ve management of ALM. Credi t environ ment in t he economy and increase in Non Perf orm ing Assets (NPAs).

Impact of Global events on the Indian econom y.

OUTLOOK

The Bank expects GDP grow th fo r t he year 2011-12 to be arou nd 8% wi th WPI inf lati on expected t o mod erate t o 7% y-o-y. The Bankexpects the secto r t o gr ow advances by around 20% in 2011-12 and d eposit s around 18%. The Indian Banking i ndustr y has perf ormedwell durin g t he last fi nancial year. However, concerns on inf lati on remains and could im pact grow th in next f iscal.


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19 80th


NON FINANCIAL REPORTING

CORPORATE SOCIAL AND ENVIRONMENTAL PERFORMANCE REPORT

Your Directors are pleased to present the Report for the year 2010-11 dealing with Corporate Social and EnvironmentalPerformance.

1. 0 CORPORATE SOCIAL RESPONSIBILITY (CSR) PERFORMANCE

1.1 Drusti Dhanush School Chil dren Eye Screenin g

Durin g t he year, th e Bank has donat ed an amount of Rs.12,00,000/- to B.W.Lions Superspeciali t y Eye Hospit al (BWLSEH), a Unitof Lions Club of Bangalore West Trust t ow ards annual maint enance of a Mo bile Vehicle. As part o f i ts fight against b lind nessand to provide quality ophthamological services to the poorest of the poor, the Hospital will deploy this Mobile Vehicle forScreening o f schoo l child rens eyes at t heir d oor st eps in rural ar eas and ur ban slum s under it s Prog ram called Drusti Dhanu shSchool Chil dren Eye Screening .

1.2 ING Vysya Foundat ion

ING Vysya Foundation (IVF) was incorpor ated in Octo ber 2004 to pr omot e Corporat e Social Responsibilit y of ING Group enti ti esin India. The Bank is a substantial contributor to the Foundation every year. The mandate for the Foundation is to promote primary education for underprivileged children . This approach is part of wor ldw ide Chances fo r Children program (CFC) ofING Group.

During t he year, the Foundat ion h as wo rked w it h NGO partners, who are engaged in:(a) enrollin g child ren (never been to school and out of school) back to school;(b) preparing children th rough br idge schools and pre-primary schools f or enrolli ng in f ormal schools;(c) retaini ng and cont inuin g educati on of the childr en wh o are already enrolled.

We have cont inued o ur part nership w it h 11 NGOs to achieve our goal:

S. No. Name of t he NGO Partner Locat ion Program1 Akshara Foundat ion Bangalore Community Library program2 Akshara Foundat ion Bangalore Pre-school program3 Sukrupa Bangalore Resident ial program for children w ith single parent s/orphans4 Makkala Jagrit i Bangalore Community Learning cent re for children living in slums5 Christ el House Bangalore Formal school for children living in slums6 Samarthanam Trust Bangalore Higher education for visually impaired youth7 Aurobindo Chaudhari Memorial Great

Indian Dream Foundat ion

Delhi Pre-school program for children living in slums

8 Hamari Muskaan Kolkat a Learning cent re for children in red-light area9 Pratham Vulnerable Counci l for Children Mumbai Resident ial program for former child labourers

10 Support Mumbai Residential pr ogram f or rehabilit ated drug addicted street children11 IIMPACT Lucknow Learning cent re for girl children.12 UNICEF India Chances for Children program

In th e year 2010 2011, ING Vysya Foundat ion has imp lement ed several new in it iat ives. One such prog ram was t o providefinancial education to children from low-income groups. This initiative aims at providing financial education to children fromclass V onwards in the school/NGO that ING Vysya Foundation supports and to facilitate a process by which under-servedchildren and their parents have access to basic financial products and services. The Foundation, in collaboration with theGlobal Corporate Responsibility Team of ING has supported a unique program titled Learning on w heels . This programis being impl emented in M ehboodabad, Lucknow by IIMPACT, a part ner or ganization of ING Vysya Foundat ion. This uniqueproject was started in August 2010 with the sole aim of bringing science education and knowledge of environment friendlybehaviours at t he door step of childr en. This init iati ve is prim arily f ocused on out -of-school girls, stu dying i n IIMPACT learningcenters and community at large. The objective of this program is to simplify scientific concepts for children and make themunderstand th e complex t heoreti cal scient if ic concepts of th eir t extbooks in a f un manner th rough models, games, acti vities andhands on experiments. The project is operated through a mobile van, fitted with physical models, games, learning materials,acti vity mat erials and equipm ent f or conducting experiment s. There are specialist instr uctors wh o t ravel w it h t he van to vill agesand conduct interactive sessions with children and community members. After every session, children are asked to conductexperiment s and t o un dertake small proj ects to decipher th e mysteries of science. The project as of n ow covers about 90 villageswi th over 3000 beneficiary girls, in the age group of 8-17.

Volunteer program: IVF provides opportunities to employees who want to volunteer for the development and growth ofchildr en li ving i n d iff icult circumstances, such as children li ving i n slums, child l abour, childr en never been t o school, drop-out s,orphan children and so on. Durin g t he year, several volunt eer init iati ves were organi zed under t he Hope Brigade program andaround 1700 employees volunteered 5100 hours (average 3 hours per volunteer) in various volunteer initiatives, including CFC


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NON FINANCIAL REPORTING

day involvement throughout the year. In India, ING Global Challenge Chances for Children has seen involvement of 1,100employees from the Bank, along with 1,200 children in 38 locations across India. Musical shows, painting competitions, funpicnic, cricket matches, visit to various historical sites and many more events were conducted all over India.

Annual Fund raising Campaign I believe I can Fly - 2010: IVF launched an annual fund raising campaign during the monthof November 2010. The employees of th e Bank actively part icipated in th e campaign and helped in r aising around Rs.38 Lakhto wards this cause. The amount s so collected w ill contrib ut e to educate children un der t he care of existi ng part ners.

2.0 Sustain able Developm ent

The Bank has taken t he fo llow ing i nit iati ves to wards the Sustainabl e Development:

2.1.1 The Bank runs a kids port al to educate childr en on nature, environment and saving of mo ney. On ent ering t he port al viz.ww w.kidzzbank.com, children are taken on a voyage of di scovery, hand held by t he port al pal NEO .

2.1.2 The Bank and its employees part icipated in the glob al movement called Earth Hour to show solidari ty against climatechange. In Bangalore, ING Vysya Bank, l ike i n pr evious year, parti cipated in spreading aw areness on Climat e Change and GlobalWarming, j oinin g hands wit h Wor ld W ide Fund o f Nature (WWF) and The Indus Ent repreneurs (TIE). The employees of th eBank participated in t he 60 + Earth Hour prog ram by swi tching of f l ight s fo r an hour, from 8.30 pm to 9.30 pm on 26-Mar-2011.

2.1.3. The Bank has also undert aken various Financial Inclusion init iati ves wi th t he objecti ve of providin g banking / f inancial servicesto all people in a fair, transparent and equit able manner at aff ordable cost. The Bank has put in pl ace a 3-year plan f or FinancialInclusion w it h t he objective to ensure th at all t he villages having a populat ion of above 2,000 are financially included and haveaccess to basic banking products and services.

3.0 ENVIRONMENTAL PERFORMANCE

3.1. Policies

The Bank endeavours to ensure t hat th e proj ects fin anced by it are environment ally and socially sound and sustain able. Tow ardsit s endeavor , t he Bank has adopt ed th e fol low ing po licies:

I) General Environment al and Social Risk (G-ESR) po li cy;II) Equator Principles (EP) poli cy; andIII) Specif ic Environment al and Social Risk (S-ESR) pol icy.

The Bank has int egrat ed th e fol low ing comm it ment s in it s General Enviro nmen tal and Social Risk (G-ESR) poli cy under para 2.1

l Commi tm ent t o Sustain abilit yl Commitment to Do No Harml Commi tm ent t o Responsibil it yl Commit ment t o Accountabilit yl Commitment to Transparency

The Bank has also adop ted t he Equat or Principles (EP). EP is a set o f vo lun t ary environ ment al and social gu idel ines for et hicalproject f inance. These principles commi t banks and ot her signat ories not to fi nance projects th at f ail t o meet th ese guidelin es.The EP are based on the social and environmental policies and guidelines of the International Finance Corporation (IFC)and th e World Bank. Child l abour, involuntary resett lement and p rot ecti on of natur al herit ages are examples of social andenvironment al issues covered by the EP.

3.2 Envi ronment al and Social Perf orm ance

Every year t he Bank submit s the Annu al Environm ental and Social Perfor mance Report to Internat ional Finance Corporat ion(IFC), as a confirm ation of th e Banks compl iance wit h t he Environment al M anagement System and it s Project Environm entaland Social Comp liance.

3.3 General ESR Framew ork

In its G-ESR Policy, the Bank has specified rigorous standards for providing finance and services to several segments to ensureadherence to our strict social responsibility principles. These include:- No fi nancing fo r acti vities th at would abuse human rights or violat e rules;- Zero t oler ance for cont roversial weapo ns lik e clust er bom bs, land min es;- Restr ictions on use of genetic engineering and modif icati on;- No fi nance service to secto rs like gambling, animal testi ng or porno graphy.

3.4 Specif ic ESR Principles

The S-ESR Policy reflects the Banks concern on segments like Forestry & Plantations, Natural Resources & Chemicals. Proposalsare reviewed based on Risk Filters and evaluated th rough questi onnaires, t o avoid fu nding of projects in Prot ected areas, avoidsecto rs th at are vulnerable t o Labour and Human Rights violat ions or adversely impact t he environment , and t he like.


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21 80th


CORPORATE GOVERNANCE REPORT

1. CORPORATE GOVERNANCE

1.1 Banks Phil osophy

The Corpor ate Governance philosophy of th e Bank is to p romot e corporate f airness, tr ansparency and account abilit y wit hth e object ive of m aximizing long term value for all stakehold ers. This philo sophy is realized thro ugh t he Banks endeavourto work tow ards portf olio, operational and reputational excellence.

1.2 Mi ssion of the Bank

Sett ing t he standard i n helping our custo mers manage their f inancial fut ure.

1.3 Vision of the Bank

To emerg e as a to p f ive among Foreign and Privat e Sector Banks wi th a market share in excess of 1%.

2. BOARD OF DIRECTORS

2.1 Composition

The requirement s fo r composit ion o f th e Board of Directo rs of th e Bank are mainly governed by t he relevant provisions ofthe Companies Act, 1956, the Banking Regulation Act, 1949 and Clause 49 of the Listing Agreement.

Mr. Arun Thiagarajan, Non-Execut ive and Independent Directo r is th e Chairman o f th e Bank. As of 31-Mar-2011, th e Boardhas 11 Directors out of whi ch, f our are Independent Directo rs, in compliance wit h t he requirement s under Clause 49 of t heListing Agreement.

Ten out of eleven Director s as against t he requi rement of six possess t he prescribed special knowl edge or p ractical experienceand meet t he conditi onalit ies of Secti on 10A(2) of t he Banking Regulati on Act, 1949. Out of th ese ten, t hree Directo rs asagainst the requirement of two possess special knowledge or practical experience in the areas of Agriculture and RuralEconomy, Co-operati on and Small Scale Industry.

The composition of th e Board as of 31-Mar-2011 is given below :

NAM E OF THEDIRECTOR (Mr.)

DESIGNATION CATEGORY AREA OF EXPERTISE

Arun Thiagarajan Chairman Non-Execut ive, Independent andcompliant with Sec 10A(2) Strategic Planning, Technology & Systems,Econom ics and Finan ceShai lendra Bhandar i Managing

Director and CEOExecut ive, Non- Independent #and compliant with Sec 10A(2)

Banking, Economics, Strategic Planning andTreasury Operatio ns

Vaughn Nigel Rich tor Di rector Non-Execu t ive, Non- Independen t#and compliant with Sec 10A(2)

Banking, Economics, Mark eting, Risk M anagement ,Strategic Planning, Treasury Operations andAgriculture & Rural Economy

Aditya Krishna Director NonExecut ive, Independentand compliant with Sec 10A(2)

Banking (especially Retail Bankin g) and Technology& Systems, Strategic Planning, Credit Recovery

Lars Kramer Director Non-Execut ive, Non-Independent #and compliant with Sec 10A(2)

Accountancy, Banking, Economics, Finance andStr ategic Planning

Philippe Damas Direct or Non-Execut ive, Non- Independent#and compliant with Sec 10A(2)

Banking (especially Retail & Wealt h Management).Human Resource Development , Str ategi c Plannin g,Finance

Richard Cox Director Non- Executive, Non- Independent#

and compliant with Sec 10A(2)

Banking and Risk Management

Vikram Talwar Director Non-Execut ive, Independentand compliant with Sec 10A(2)

Banking and Technology & Systems

Peter Staal Director Non- Executive, Non- Independent#and compliant with Sec 10A(2)

Banking, Finance, Economics, Risk Management,Strategic Planning, Treasury Operations, CreditRecovery and Agriculture & Rural Economy

Meleveet il Damodaran Di rector Non- Execu tive, Non- Independen t#and compliant with Sec 10A(2)

Banking, Econom ics, Finance, Law and Agricult ure& Rural Economy

Santosh Ramesh Desai Director Non-Executive and Independent Marketing, Branding and Strategic Planning

# Representing Foreign Promoter Group (ING Group)


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2.2 Changes in the Board of Directo rs durin g the year

2.2.1 The follow ing are t he changes in t he composition of Board of Directo rs durin g t he year.

Resignation/ Cessation:Name (M r.) Dat e of Cessat ion/ Ret irement

K R Ramamoort hy In terms of RBI Letter DBOD No. 20390/08.57.001/2008-09 dated 28-May-2009, Mr. K RRamamoorthy has relinquished his office as the Part-time Chairman of the Bank effective07-Jul-2010. Further, in terms of RBI Circular vide DBOD No. BC.24/06.139.001/2002-03 dated09-Sept -2002, he has also rel inq uished his posit ion as Non-Execut ive Directo r ef f ect ive07-Jul-2010.

Ryan Andrew Padgett Upon compl etion o f eight cont inuou s years as a Director of t he Bank on 10-Dec-2010,Mr. Ryan Andrew Padgett relinquished his office as Director effective 10-Dec-2010

Appointments

Name (Mr.) Date of Appointment

Lars Kramer Appointed by the Board of Directors effect ive 28-Apr-2010, in the casual vacancy ar ising

out of r esignat ion of Mr Wilf red Nagel w ho w as appoint ed at t he AGM on 04-Sep-2009 asDirector liable to reti re by rotation.

Vikram Talwar Appointed by the Board of Directors as an Additional Director effective 20-Dec-2010. Hewill hold t he office up to t he date of 80 th AGM.

Part-t ime Chairman

A ru n Th iag ar aj an In t er ms o f ap pr oval of Reser ve Ban k o f In di a vi de i t s l et t er DBOD.A PPTS.2137 /08.57.001/2010-11 dated 04-Aug-2010, Mr. Arun Thiagarajan has beenappointed as the Part-time Chairman of the Bank for a period three yearseffective 09-Aug-2010 on the terms and conditions mentioned in the saidletter. A resolution for payment of remuneration to Mr. Arun Thiagarajan isbeing included in the Notice convening the 80th Annual General Meeting forapproval of t he shareholders.

2.2.2 Criteria for appointment and renewal of appointment of Directors

a) Due dilig ence by th e Corpor ate Governance (Nominatio n) Commi tt ee to det ermine suit abilit y of t he personfor appointment as a Director and declare him as fit and proper for appointment, based upon qualification,expertise, track record, integrity and other fit and proper criteria.

b) Reference checks fr om appropriat e persons / autho rit y, wherever required.

c) Declaratio n and Undertakin g by th e person to be appoin ted as a Direct or to th e eff ect t hat he has not beenconvicted for any offence, has not come to the adverse notice of the Regulators, is not holding substantialint erest i n th e Bank, has not availed f und and non -fund f acilit ies fr om t he Bank etc.

d) Lett er of consent t o act as a Director and conf irmin g that h e is not di squalif ied under Secti on 274(1)(g) of t heComp anies Act, 1956.

e) Execut ion of d eed of covenants wi th t he Bank re-aff irmi ng his dut ies and responsibil it ies as a Directo r.

f) Declaratio n under Clause 49 of t he Listi ng Agreement in case of Independent Directo r.

2.2.3 Changes prop osed at the 80 th Annual General Meet ing (AGM)

Directors retiring by rotation and being eligible, offer t hemselves for re-appointment:

Mr. Philippe Damas and Mr. Meleveetil Damodaran are retiring by rotation at the forthcoming AGM and are eligiblefor re-appointment. Mr. Meleveetil Damodaran has offered himself for re-appointment. Mr. Philippe Damas hasexpressed his desire not to seek re-appoin tm ent as a Directo r. A resolut ion is proposed t o t he members in t he Noti ceof the current AGM to this effect and also not to fill up the vacancy caused by the retirement of Mr. Philippe Damasat t he meeting or any adjournment thereof.



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23 80th


Director seeking appointment:

Mr. Vikram Talwar, appoin ted by th e Board as an Addit ional Director ef fective 20-Dec-2010, will h old o ff ice only up t othe dat e of t he ensuin g AGM. A no t ice, as requi red und er Section 257 of t he Companies Act, 1956 has been receivedby the Bank f or appoin tm ent o f M r. Vikram Talwar as a Directo r of th e Bank. A proposal t o appoint Mr. Vikram Talwaras Directo r of th e Bank, liable t o ret ire by rot atio n, is being pl aced befor e the shareholders at t he ensuing AGM.

A bri ef r esume along wi th th e part iculars specif ied und er Clause 49 of th e Listi ng Ag reement, in respect of person(s)proposed f or appoin tm ent / re-appoint ment as Directo rs at t he ensuing A GM, is enclosed to t he Notice of t he meetingand circulat ed t o t he Shareholders.

These details are also placed on the website of the Bank viz., www.ingvysyabank.com.

2.3 Board Meeti ngs

During the year, six Board meetings were held as against four meetings required in terms of Clause 49 of the ListingAgreement and Section 285 of t he Comp anies Act, 1956. The dat es of t he Board meet ings held w ere: 29-Apr-2010,01-July-2010, 22-Jul -2010, 18-Oct-2010, 19-Oct-2010 and 18-Jan-2011.

2.4 Details of at tend ance at t he Banks Board Meeti ngs, Annual General Meeti ng, Directo rship, Membership and Chairmanshipin ot her companies fo r each Directo r are as fo llow s:

Name of t he Directo r(Mr.)

No. ofBoard

meetingsheld during

tenure

Boardmeetingsattendedin person

Board meeting sattendedthrough

Tele/ VideoConference

Attendanceat lastAGM

Directorshipin other

Indian PublicLimited

Companies

Membershipof Commit tees

of otherCompanies

Chairman-ship of

Committeesof other

Companies

Persons w ho h ave been Directo rs throu ghout th e year 2010-11

Arun Thiagarajan 6 6 0 Present 9 6 -

Shailendra Bhandari 6 6 0 Present - - -

Vaughn Nigel Richtor 6 6 0 Present - - -

Aditya Krishna 6 6 0 Present 3 - -

Philippe Damas 6 6 0 Present - - -

Richard Cox 6 5 0 Present - - -

Lars Kramer 6 4 0 Present - - -

Santosh Ramesh Desai 6 6 0 Present 2 - -

Meleveet il Damodaran 6 6 0 Present 6 4 1

Peter St aal 6 5 0 Present - - -

Vikram Talwar 1 0 0 Present 1 - -

Persons w ho ceased to be Director s dur ing t he year 2010-11

K R Ramamoorthy 2 2 0 - 1 - -

Ryan Andrew Padget t 5 4 0 - - - -

Note: The details of Directorships and Chairmanships / Memberships of Committees of other companies given above are inaccordance with the provisions of Section 275 of the Companies Act, 1956 and Clause 49 of the Listing Agreement. OnlyMembership of Audit Committee and Shareholders Grievance (Investors) Committee are considered for calculating thenumber of ot her M emberships / Chairmanships of Commi tt ees.



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3. COMMITTEES

Follo win g are t he Board Lev

Documents

Ing Vy Sy a Bank 80 Th Annual Report