board of directors - lakshmi vilas bank1 annual report 2013 - 2014board of directors sarvashree...

BOARD OF DIRECTORS

Shri RAGHURAJ GUJJARNon Executive Chairman

Shri RAKESH SHARMAManaging Director & CEO

Shri D.L.N. RAO Shri B.K. MANJUNATH

Shri ASHOK NARAINRBI Nominee

Shri R.RAVIKUMARRBI Nominee

Shri K.R. PRADEEP Shri S.G. PRABHAKHARAN

Shri S. DATTATHREYAN Shri A. SATISH KUMAR Shri P.A. SHANKAR Shri N. MALAYALARAMAMIRTHAM

Shri PRAKASH P MALLYAShri PANKAJ VAISH

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ANNUAL REPORT 2013 - 2014

BOARD OF DIRECTORSSarvashree

Raghuraj Gujjar - Non Executive Chairman

Rakesh Sharma - Managing Director & CEO - (From 07.03.2014)

K.S.R. Anjaneyulu - Managing Director & CEO - (Till 07.03.2014)

N. Saiprasad - (Till 05.03.2014)

Kusuma R Muniraju - (Till 20.09.2013)

D.L.N. Rao

B.K. Manjunath

K.R. Pradeep

S.G. Prabhakharan

S. Dattathreyan

R. Sharan - (Till 23.08.2014)

A. Satish Kumar

P.A. Shankar - (From 06.08.2013)

N. Malayalaramamirtham - (From 07.03.2014)

Pankaj Vaish - (From 23.08.2014)

Prakash P Mallya - (From 23.08.2014)

R. Ravikumar - RBI Nominee

Ashok Narain - RBI Nominee

CHIEF FINANCIAL OFFICER

M. Palaniappan

CHIEF GENERAL MANAGER

A.J. Vidyasagar

GENERAL MANAGERS

R.V. Raman

RM. Kumarappan

S. Ramanathan

R. Kamalasekaran

A. Shankar

R.K. Gurumurthy

Peeush Jain

P. Premkumar

Ashok Kumar Pareek

COMPANY SECRETARYN. Ramanathan

REGISTERED OFFICESalem Road, Kathaparai, Karur-639 006, TamilnaduPhone: 04324-220051 to 220060 (10 lines)Website: www.lvbank.comE.Mail: [email protected]

ADMINISTRATIVE OFFICE“LVB HOUSE”, No. 4, Sardar Patel Road,Guindy, Chennai - 600 032Phone: 044 - 22205306

AUDITORM/s. Sagar & Associates,Chartered Accountants,Hyderabad.

REGISTRAR AND SHARE TRANSFER AGENTM/s. Integrated Enterprises (I) LimitedII Floor, "Kences Towers",No.1, Ramakrishna Street,North Usman Road, T.Nagar,Chennai - 600 017.Phone: 044-28140801/2/3 Fax: 28142479Email: [email protected]

FINAL LVB ar 2014.pmd 24/08/2014, 10:51 AM1

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CONTENTS Page No.

Report of Directors 3

Report of Auditors 14

Balance Sheet 16

Profit & Loss Account 17

Schedules 18

BASEL III - Pillar 3 Disclosures 49

Cash Flow Statement 75

Auditor’s Certificate 76

Balance Sheet Abstract 77

A Decade of Progress 96


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DIRECTORS’ 87th ANNUAL REPORTTO

THE MEMBERS

The Directors of your Bank have great pleasure in presenting this 87th Annual Report on the business and operations ofyour Bank together with the Audited Accounts for the year ended 31st March, 2014 (FY 2013-2014).

1. FINANCIAL PERFORMANCE

The highlights of the financial performance of your Bank for the year ended 31st March, 2014 are as under:

(` in crore)For the year ended

31st March 2014 31st March 2013

Deposits 18,572.88 15,618.98

Advances ( Net) 12,889.19 11,702.80

Investments ( Net) 5,688.68 4,324.55

Total Income 2,201.94 1,957.61

Operating profit 309.00 251.15

Provisions and contingencies 249.34 159.57

Net Profit 59.66 91.57

Your bank registered reasonable growth in business volumes that compares well with the industry average. TheBank attained total business of ` 31,462.07 crore in FY 2013-2014 a growth of 15.15% over ` 27,321.78 crore inFY 2012-2013.

Deposits grew at 18.91% from ` 15,618.98 crore as at 31st March 2013 to ` 18,572.88 crore as at 31st March 2014 andtotal advances expanded by 10.14%, from ` 11,702.80 crore to ` 12,889.19 crore in FY 2013-2014. Of this, lending topriority sector rose from ` 4,565.54 crore in the previous year to ` 5,216.52 crore as on 31st March 2014. Agriculturaladvances increased to ` 2,462.00 crore from ` 2,286.35 crore and advances to weaker section recorded a significantgrowth from ` 1,582.68 crore to ` 1,730.71 crore.

The Bank's exposures to sensitive sectors including Real Estate and Capital Market were well within the regulatorylimits.

As at the end of the year under review, the total investments of the Bank stood at ` 5731.96 crore as against ` 4,347.93crore as on 31st March 2013.

Your Bank’s Treasury continues to focus on sound Asset - Liability Management and on servicing clients withappropriate treasury products and was managed well in a systematic way in a challenging year when yields wereconstantly rising.

2. PROFIT

The Bank has posted an operating profit of ` 309.00 crore in FY 2013-2014 as against ` 251.15 crore in the previousyear FY 2012-13 registering a growth of 23.03%. The net profit for the year, after provisions and taxes, amounts to` 59.66 crore as against ` 91.57 crore recorded in FY 2012-13.


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3. APPROPRIATIONS

(` in crore)For the year ended

31.03.2014 31.03.2013

Profit brought forward 0.09 0.09

Amount available for appropriation 59.74 91.66

Transfer to:

Statutory Reserve 15.00 29.00

Capital Reserve 0.11 3.44

Other Reserve 24.00 16.40

Transfer to Special Reserve U/s 36(1) (viii) of the IT Act, 1961. 9.15 8.50

Proposed Dividend 9.75 29.26

Corporate Dividend Tax 1.66 4.97

Balance of Profit carried forward 0.07 0.09

4. DIVIDEND

Your Board of Directors are pleased to recommend a dividend of ` 1.00 (10%) per share for the year ended 31st March,2014 as against ` 3.00 (30%) per share for previous year ended 31st March, 2013. The total out go in the form ofdividend, including taxes, will be ` 11.41 Crore.

5. EPS / BOOK VALUE

Earnings per Share stood at ` 6.11 for the year ended 31st March, 2014 as compared to ` 9.39 as on 31st March, 2013.

Book Value of the share, after reckoning payment of dividend, grew to ` 100.16 on 31st March, 2014 as compared to` 92.88 as on 31st March, 2013

6. NET OWNED FUNDS / CAPITAL ADEQUACY RATIO

Net Owned Funds (NOF) of the Bank increased from ` 936.55 crore as at the end of FY 2012-2013 to ` 977.17 crore asat the end of FY 2013-2014, reflecting a growth of 4.34%.

The Capital Adequacy Ratio (CAR) as on 31st March 2014 as per BASEL III is 10.90%. The bank has been consistentlymaintaining Capital Adequacy Ratio well above the regulatory minimum of 9% stipulated by the Reserve Bank of India.

The Tier-I and Tier-II components of Capital Adequacy Ratio were comfortable at 7.87% and 3.03% respectively.

7. NON PERFORMING ASSETS (NPA’s)

Your bank’s gross & net NPA has increased to 4.19% and 3.44% as on 31st March 2014 as against 3.87 % & 2.43% ason 31st March 2013.

Your bank is taking effective steps to control accretion to NPA portfolio. In this regard, we have an effective creditmonitoring system in place, which ensures early remedial action whenever incipient symptoms of sickness are noticed.By addressing the problem of NPA, the bank is working to turn back the stressed assets into performing assets. Further,credit appraisal process and credit disbursement is being constantly improved to take care of the changing economicdynamics.

Particulars


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Thus, your bank continues to address the NPA problem through a combination of recovery process improvement,technology solutions for early alerts and strict credit delivery. However, bank’s performance is closely linked to externalfactors also such as domestic and international economic performance. Bank is not insulated from cyclical performanceof the economy as well. As we are all aware, the present economic situation is fraught with uncertainties. The economyis yet to recover from the contracting growth in GDP and industrial output besides high inflationary pressure. Under thecircumstances, the performance of the bank also got affected to a certain extent, as some of the high value accounts intextiles, infrastructure and other core sectors slipped to NPA category.

However a major chunk of this portfolio is expected to be nursed back to performing category during the current financialyear. Besides, the economy is expected to pick up this year, helping the industries in core sector to recover. Therefore,we are confident of registering a better recovery performance during the ensuing FY 2014-15.

8. BRANCH AND ATM NETWORK

The bank has a network of 361 branches, 1 satellite branch and 8 extension counters, spread over 15 states and theunion territory of Puducherry. The Bank’s focus is on customer delight, by maintaining high standards of customerservice. LVB has a strong and wide base in the State of Tamil Nadu, one of the progressive States in the country. LVBhas been focusing on retail banking, corporate banking and bancassurance, by rendering high-tech services.

The Bank has an ATM network of 688 (208 Onsite & 480 offsite), in vital / major locations for better service to thecustomers; customers can access over 100000 + ATMs across the country.

9. FINANCIAL INCLUSION

Financial inclusion may be defined as the process of ensuring access to Financial Services to vulnerable groups such asweaker sections and low income groups at an affordable cost and providing timely and adequate credit where needed.The essence of financial inclusion is to ensure that a range of appropriate Basic financial services are made available toevery individual and enabling them to understand and access those services.

The bank has implemented the Financial Inclusion Plan in 131 villages allotted by SLBC in Tamil Nadu. The bank hasopened 77426 Basic Savings Bank Deposit Accounts (BSBDA) to improve its penetration in rural areas.

10. INTERNATIONAL BUSINESS

It continued to be a challenging year for India as the country faced sluggish global demand on account of recessionacross the globe. US started showing signs of recovery over the past six months. Amidst such scenario of mildimprovement, the bank has achieved a foreign exchange turnover of ̀ 4,310.08 crore as against previous year’s turnoverof ` 4,239.03 crore. Lending to export sector has increased from ` 214.01 crore to ` 250.36 crore. As the overallprospects for global economy in FY 2014-15 appears to be moderately brighter, we expect to have a sustained growthin foreign exchange business by the branches.

11. BANK TRANSFORMATION EXERCISE

With the aim of transforming various aspects of the bank's functioning, both strategic and operational, LVB embarked on‘Project Lakshya’. The project is aimed at changing the overall functioning of the bank to make it a more dynamic andvibrant organization. The project will draw a strategic roadmap for re-aligning the banks’ operating model to support thestrategic growth objectives and delivering superior value to its customers.

To achieve these objectives, Ernst & Young has been appointed as a strategy partner to assist the Bank in designingand implementing a bank-wide business transformation program.

The aim of the Project is to assess the current state of the bank across the above functional areas and identify gaps inthe current operations. The projects have been segregated into pilot projects which should be implemented at selectbranches to improve the branch operations, followed by a national roll out to the remaining branches and HO projectswhich should be implemented from the HO to improve operations and support functions.

12. LISTING AGREEMENT WITH STOCK EXCHANGE

The Equity Shares of the bank are listed with the National Stock Exchange of India Ltd., Mumbai and Bombay StockExchange Ltd., Mumbai which is enhancing the liquidity of your equity shares.


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13. ALIGNING TECHNOLOGY WITH BUSINESS OBJECTIVE

Your bank has introduced the following Technology products and Services:

1. Centralised Processing Centre was operationalized to open all the new Current and Savings accounts in a centralizedlocation to improve efficiency and accuracy in the operations.

2. Expansion of Cheque Truncation System (Image Based Clearing) to Western Grid in addition to 169 branches inSouthern Grid, which facilitates speedy clearance of cheques.

3. Implementation of various software tools and applications to meet business and compliance requirements.

4. Your bank has introduced Chennai Corporation tax collection facility at all Chennai branches.

5. Your Bank has enabled APBS (Aadhar Payment Bridge System) of NPCI - for linking Aadhar number with Bankaccount number and getting Government subsidies to the credit of customer accounts.

6. Your Bank has implemented NPCI's MMS (Mandate Management System) and ACH (Automatic Clearing House)systems which is equivalent to current ECS.

Your Bank has bagged Best CIO - Network Pioneer Award 2013 given by IDG Media India Pvt Ltd in this financial year.

14. WEALTH MANAGEMENT / PARABANKING ACTIVITIES

i. Life Insurance: Bank has entered into a tie up with the Giant in the Life Insurance sector - LIC of India for solicitingLife Insurance policies for the customers. All the products of LIC are available through the branches. It opens up areliable and trustworthy investment avenue, making LVB a one stop shop for all financial requirements.

ii. General Insurance: Bank has tie-up with M/s. Bajaj Allianz General Insurance Company to market the GeneralInsurance products.

iii. Mutual Funds & PMS: The Bank is presently having tie-up with thirteen leading Asset Management Companies forpromoting various Mutual Fund schemes. In addition, we are promoting Portfolio Management Services (PMS)through UTI, Reliance and Sundaram Asset Management Company.

iv. Money Transfer through Branch Channels: Foreign inward remittances arrangement with M/s. Weizmann ForexLtd. for extending Western Union Money Transfer facility, in addition, tied-up with M/s. UAE Exchange & FinancialServices Ltd., for offering Global Money Transfer services through Xpress Money and Moneygram.

v. Money Transfer through Direct Remittances: Tied up with Times of Money - Remit 2 India, for Inward remittancefrom Abroad which enables the NRIs to directly remit the amount to their account / residents.

vi. Investment & Infrastructure Bonds: Bank empanelled with M/s Bajaj Capital Ltd. for promoting Investment &Infrastructure Bonds.

vii. PAN Card Services: Bank has tied up with M/s. UTI Infrastructure & Technology Services Ltd., (UTIITSL) as PANService Agent (PSA) for collecting the PAN Application across the country through Branches.

viii. Depository Participant Services: Registered as Depository Participant with NSDL and with necessary clearances,this product is offered to our customers

ix. Online Trading Services: Bank has tied up with M/s. IDBI Capital Market Services Ltd. for offering Online TradingServices (OLT) to the customers.

x. New Pension System (NPS): Bank has registered with PFRDA and NSDL-CRA as Point of Presence (PoP) foroffering NPS services for all Indian citizens except Government Employees already covered by NPS.

xi. ASBA: As Bankers to the issue, the Bank can now receive applications under ASBA mode thus enabling theinvestors to earn interest till allotment of securities.


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15. RISK

Risk and Return are two sides of the same coin in the activities of any bank. Risk Management is critical in the way modernbusiness is operational because of dynamic business environment to which businesses are exposed. It is not only arequirement under several voluntary codes and statutes but also makes business sense to identify the probability of notachieving strategic and business goals. Risk Management has to be embedded in business processes to ensure that it isbeing practiced and made part of the culture of the organization. With this in mind, the bank has established systems andpolicies ensuring an ongoing assessment of relevant risk types on an individual basis and in the aggregate as well.

The Board of Directors effectively oversee the risk management and a Board Level Committee monitors the implementationof Credit risk, Market Risk and Operational Risk policy prescriptions. The Asset Liability Management Committee (ALCO)looks into the management of Liquidity and Market risks and ensure adherence to the prudential limits. At ExecutiveLevel also, a committee consisting of Top Executives periodically reviews Liquidity Risk, Credit Risk & Market risk totake stock of the current situation. At the organization level, an Integrated Risk Management Department is functioningat Head office to identify the measures, to monitor and to reduce risk; to optimize returns and to assess the requiredcapital level. Bank has already automated the process of capital calculation and Base rate as per RBI Guidelines. Bankhas a well defined credit risk assessment system to ascribe borrower risk grades. This facilitates data collection andanalysis for moving towards Advanced Approaches. Bank has in place a well-defined frame work for managing MarketRisk. Basic Indicator Approach has been adopted for computation of capital charge for Operational Risk.

The Bank has since migrated to Basel II - New Capital Adequacy Framework (NCAP) - from March 2009 and Basel IIIfrom April 2013 and is preparing ICAAP document to assess its inherent risk and capital requirements. Bank uses StressTesting and Scenario Analysis in various risks as required under Pillar II for enhancing risk assessment and to providethe bank a better understanding of the likely impact even in extreme circumstances. Technology is extensively used inmeasuring and discussing market risk using statistical tools including stress testing.

16. INTERNAL CONTROL

Bank has a separate Audit and Inspection Department which subjects all the branches besides the Treasury, CurrencyChests, Service Branches, Regional Offices and every department of the Administrative Office through Regular Inspections.Key functional areas including Integrated Treasury at Mumbai and Central Processing Cells at Chennai and Karur areunder concurrent Audit which covers 57.00% of the total Deposits and 77.00% of the total Advances of the Bank. All thecomputerized Branches are subjected to regular IS Audit.

Audit Committee of the Board has been constituted in line with RBI guidelines and as per the requirements of clause 49of the Listing Agreement, the Audit Committee reviews the adequacy of the audit and compliance function, including thepolicies, procedures and techniques.

17. HUMAN RESOURCE

Staff strength of the Bank was augmented during the year 2013-14 with the recruitment of 15 Executives, 93 Officers,160 Clerks & 78 Sub staff. We have also engaged 457 Sales Personnel to promote sales. Bank has effected promotionto higher cadre and 194 staff were promoted. Total number of employees as on 31.03.2014 was 3292 as against 3149 ason 31.03.2013. Business per employee has gone up from ̀ 7.75 Crore as on 31.03.2013 to ̀ 8.59 Crore as on 31.03.2014.

The Bank’s focus on training the human resources on a continual basis gained momentum with introduction of onlinee-learning duly leveraging technology. Bank has trained the executives and officers by deputing to various programmesoffered by reputed external institutions such as RBI, CAB, SIBSTC, IDRBT, NIBM, ISB, IIFB and other specializedorganization.

18. SOCIAL INITIATIVES

Social initiative is a strategic plan of action born from beyond the call of duty, realized through passion, diligence anda genuine concern for the enrichment of communities and the common good. It has emerged as an important way todevelop standards for financial, social and environmental areas of organizational work and also to promote positivesocial and environmental change. In this regard, your bank had pioneered in various social initiatives by donating a sumof ` 37.02 lakhs for FY 2013-14 and the breakups are given below:


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• Donated a sum of ` 1,32,000/- to Armed Reserve Force towards building a shed in their armed squad campus atKarur.

• Donated a sum of ` 25,00,000/- towards Prime Minister's National Relief Fund for providing assistance to thevictims of cloudburst and floods in Uttarakhand.

• Donated a sum of ` 50,000/- to M/s. Lions Eye Donor's Forum of Karur (Lions Club of Karur) towards short filmpreparation on awareness of Eye Donation

• Donated a sum of ̀ 20,000/- to Mr. Ammaiyappan towards the Surgery for Cleft lip correction of Mr. V. Dinesh, Karurthrough M/s. Amaravathi Hospital.

• Donated a sum of ̀ 10,00,000/- to M/s. Karnataka Arya Vysya Charitable Trust, Bengaluru towards scholarships tothe deserving poor meritorious students for their higher studies.

19. CORPORATE GOVERNANCE

Corporate Governance of the Bank continues to rest on the fundamental pillar of high ethical values, designed to enhanceand protect the interest of all the stakeholders. The Bank has complied with the code of corporate governance asenumerated in Clause 49 of the Listing Agreement. All the Directors on the Board have executed deed of covenant andundertaking individually in line with the recommendations of Dr. Ganguly Committee Report.

Pursuant to Clause 49 of the Listing Agreement, a Management Discussion and Analysis is presented in Annexure-A,Report on Board Committees is furnished in Annexure-B. Composition of the Board of Directors together with theattendance of Directors at various meetings of the Board, its Committees and Annual General Meeting and the numberof directorships held by them along with the details of Audit Committee and Share Transfer & Investors' GrievancesCommittee are furnished in Annexure-D.

20. CHANGES IN THE BOARD OF DIRECTORS

Mr. K. Ravindrakumar, Director, resigned from the Board w.e.f 26.04.2013 after having served on the Board for morethan 7 years. Mr. Kusuma R Muniraju, Director resigned from the Board w.e.f 20.09.2013 after having served on theBoard for more than 6 years. Mr. N. Saiprasad resigned from the Board w.e.f 05.03.2014 having served on the Board for8 years. Mr. R. Sharan resigned from the Board w.e.f. 23.08.2014 after having served on the Board for more than2 years.

Mr. K.S.R. Anjaneyulu, interim MD & CEO of the Bank resigned from the Board on 07.03.2014 upon joining ofShri Rakesh Sharma as the new MD & CEO of the bank.

Mr. K.R. Pradeep, Director will be retiring by rotation at the ensuing Annual General Meeting and being eligible, offershimself for reappointment.

Mr. Raghuraj Gujjar was appointed as an Additional Director and Non-Executive Chairman of the Board with effect from26.04.2013 pursuant to the provisions of Section 260 of the Companies Act, 1956 and in pursuance of approval of RBIvide Ref. DBOD.10135/08.44.001/2012-13 dated 14.01.2013.

Mr. P.A. Shankar was appointed as an Additional Director on 06.08.2013 pursuant to the provisions of Section 260 of theCompanies Act, 1956 and classified under Independent Director in terms of Clause 49 of the Listing Agreement andrepresent Agriculture under majority sector as per Banking Regulation Act.

Mr. N. Malayalaramamirtham was appointed as an Additional Director on 07.03.2014 pursuant to the provisions ofSection 260 of the Companies Act, 1956 and classified under Non-Independent Director in terms of Clause 49 of theListing Agreement and represent Business under minority sector as per Banking Regulation Act.

Mr. Rakesh Sharma was appointed as MD & CEO of the Bank on 07.03.2014 as per the Approval of RBI vide DBOD.10731/08.44.001/2013-14 dated 02.12.2013 for a period of 2 years.

Mr. Pankaj Vaish was appointed as an Additional Director on 23.08.2014 pursuant to the provisions of Section 161 of theCompanies Act, 2013 and classified as a Non-Executive Independent Director as per Section 149 of the Act and in termsof Clause 49 of the Listing Agreement and under majority sector representing Information Technology Category as perprovisions of Section 10A (2) (a) of the Banking Regulation Act, 1949.


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Mr. Prakash P. Mallya was appointed as an Additional Director on 23.08.2014 pursuant to the provisions of Section 161of the Companies Act, 2013 and classified as a Non-Executive Independent Director as per Section 149 of the Act andin terms of Clause 49 of the Listing Agreement and under majority sector representing Small Scale Industry Category(special knowledge) and Banking Category (practical experience) as per provisions of Section 10A (2) (a) of the BankingRegulation Act,1949.

21. DIRECTORS’ RESPONSIBILITY STATEMENT PURSUANT TO SEC 217 (2AA) OF THE COMPANIES ACT, 1956

The Board of Directors of your Bank confirms that in the preparation of the annual accounts for the year ended March 31,2014:

• The applicable accounting standards have been followed along with proper explanation relating to material departures,if any.

• The accounting policies framed in accordance with the guidelines of the Reserve Bank of India were applied consistently.

• Reasonable and prudent judgment and estimates were made wherever required so as to present a true and fair viewof the state of affairs of the Bank as at the end of the financial year and the profit of the Bank for the year ended31st March, 2014.

• Proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with theprovisions of applicable laws governing banks in India; and

• Accounts have been prepared on a ‘going concern’ basis.

22. EMPLOYEES STOCK OPTION SCHEME

In the year 2010, the shareholders of the Bank have approved the issue of shares through Stock Option Scheme.Statutory disclosures regarding ESOS as per Clause 12 of Securities and Exchange Board of India (Employees StockOption Scheme and Employees Stock Purchase Scheme) Guidelines, 1999 has been furnished in Annexure formingpart of this report. No further option was granted during the year 2013-14.

23. STATUTORY DISCLOSURE

1. The provisions of Section 217(1) (e) of the Companies Act, 1956 relating to conservation of energy and technologyabsorption do not apply to your Bank. The Bank has, however, used Information Technology extensively in itsoperations.

2. The Bank continues to encourage the country’s exports and will endeavor to enlarge its export financing.

3. The information required under Section 217(2A) of the Companies Act, 1956 and the rules made there under, isannexed elsewhere in this report.

4. The report on the Corporate Governance is annexed and forms part of this report.

24. OUTLOOK 2014-15• Since the January 2014 monetary policy statement, global growth outlook remains broadly unchanged though weaker

initial data to some extent cloud optimism. Global economic activity had strengthened in HY2 of 2013. On the currentreckoning, global growth is likely to be in the vicinity of 3½ per cent in 2014, about half-percentage higher than in2013. The expansion in global output is expected to be led by advanced economies (AEs), especially the US. However,downside risks to growth trajectory arise from on-going tapering of quantitative easing (QE) in the US, continuingdeflation concerns and weak balance sheets in the euro area and, inflationary pressures in the emerging market anddeveloping economies (EMDEs). Weakening growth and financial fragilities in China that have arisen from rapidcredit in recent years pose a large risk to global trade and growth.

• Growth also picked up in the EMDEs during H2 of 2013, but the momentum looks weaker than in the AEs and it facesnew risks. Improved EMDE growth emanated largely from external demand on the back of currency depreciation inthese countries. Going forward, drag on its sustainability may emerge from tightening monetary and financial conditionsthat can intensify further in case of a faster than-anticipated withdrawal of monetary accommodation by the AEs.Recent sovereign rating downgrade for Brazil and downward revision in rating outlook for Russia has also added tothe growth risks for EMDEs.


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• Global inflation remains benign with activity levels staying below potential in the AEs as well as in some large EMDEsand a softer bias for global commodity prices continuing into 2014. However, inflation in many EMDEs remains high,though actions in tightening monetary policy and slack in output are expected to help generate some disinflationarymomentum. The divergent trends in inflation between AEs and EMDEs pose an added risk to global growth.

• After the unexpected shock from the May 2013 tapering indication by the US Fed, global financial markets haveweathered the initial dose of actual tapering of the quantitative easing (QE) quite well. However, the global interestrate cycle has just begun to turn. Moreover, a large part of the withdrawal of monetary accommodation by AEsremains to play out. Consequently, capital flows to EMDEs could remain volatile, even if they do not retrench. Also,with corporate leverage rising in many EMDEs, capital flow volatility could translate into liquidity shocks impactingasset prices.

The Indian economy is set on a disinflationary path, but more efforts may be needed to secure recovery.

• While the global environment remains challenging, policy action in India has rebuilt buffers to cushion it againstpossible spillovers. These buffers effectively bulwarked the Indian economy against the two recent occasions ofspillovers to EMDEs - the first, when the US Fed started the withdrawal of its large scale asset purchase programmeand the second, which followed escalation of the Ukraine crisis. On both these occasions, Indian markets were lessvolatile than most of its emerging market peers. With the narrowing of the twin deficits - both current account andfiscal - as well as the replenishment of foreign exchange reserves, adjustment of the rupee exchange rate, and moreimportantly, setting in motion disinflationary impulses, the risks of near-term macro instability have diminished. However,this in itself constitutes only a necessary, but not a sufficient, condition for ensuring economic recovery. Much moreefforts in terms of removing structural impediments, building business confidence and creating fiscal space to supportinvestments will be needed to secure growth.

• Annual average CPI inflation has touched double digits or stayed just below for the last six years. This had a debilitatingeffect on macro-financial stability through several channels and has resulted in a rise in inflation expectations andcontributed to financial disintermediation, lower financial and overall savings, a wider current account gap and aweaker currency. A weaker currency was an inevitable outcome given the large inflation differential with not just theAEs, but also EMDEs. High inflation also had adverse consequences for growth. With the benefit of hindsight, itappears that the monetary policy tightening cycle started somewhat late in March 2010 and was blunted by a seriesof supply-side disruptions that raised inflation expectations and resulted in its persistence. Also, the withdrawal of thefiscal stimulus following the global financial crisis was delayed considerably longer than necessary and may havecontributed to structural increases in wage inflation through inadequately targeted subsidies and safety net programmes.

• Since H2 of 2012-13, demand management through monetary and fiscal policies has been brought in better syncwith each other with deficit targets being largely met. Monetary policy had effectively raised operational policy ratesby 525 basis points (bps) during March 2010 to October 2011. Thereafter, pausing till April 2012, the Reserve Bankcut policy rates by 75 bps during April 2012 and May 2013 for supporting growth. The easing course of monetarypolicy was disrupted by 'tapering' fears in May 2013 that caused capital outflows and exchange rate pressures amidunsustainable CAD, as also renewed inflationary pressures on the back of the rupee depreciation and a vegetablerice shock. The Reserve Bank resorted to exceptional policy measures for further tightening the monetary policy. Asa first line of defence, short term interest rates were raised by increasing the marginal standing facility (MSF) rate by200 bps and curtailing liquidity available under the liquidity adjustment facility (LAF) since July 2013. As orderlyconditions were restored in the currency market by September 2013, the Reserve Bank quickly moved to normalisethe exceptional liquidity and monetary measures by lowering the MSF rate by 150 bps in three steps. However, witha view to containing inflation that was once again rising, the policy repo rate was hiked by 75 bps in three steps.

• Recent tightening, especially the last round of hike in January 2014, was aimed at containing the second roundeffects of the food price pressures felt during June-November 2013. Since then, inflation expectations have somewhatmoderated and the temporary relative price shock from higher vegetable prices has substantially corrected alongwith a seasonal fall in these prices, without further escalation in ex-food and fuel CPI inflation. While headline CPIinflation receded over the last three months from 11.2 per cent in November 2013 to 8.1 per cent in February 2014,the persistence of ex-food and fuel CPI inflation at around 8 per cent for the last 20 months poses difficult challengesto monetary policy.

• Against this background there are three important considerations for the monetary policy ahead. First, the disinflationaryprocess is already underway with the headline inflation trending down in line with the glide path envisaged by the Urjit


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Patel Committee, though inflation stays well above comfort levels. Second, growth concerns remain significant withGDP growth staying sub-5 per cent for seven successive quarters and index of industrial production (IIP) growthstagnating for two successive years. Third, though a negative output gap has prevailed for long, there is clear evidencethat potential growth has fallen considerably with high inflation and low growth. This means that monetary policyneeds to be conscious of the impact of supply side constraints on long-run growth, recognising that the negativeoutput gap may be minimal at this stage.

25. AUDITORSThe Statutory audit of the Bank was carried out by M/s. Sagar & Associates, Chartered Accountants, Hyderabad whosereport is annexed and forms part of this report. The Statutory Central and Branch Auditors have audited all the branchesand other offices of the Bank.

26. ACKNOWLEDGMENTYour Directors would like to thank the shareholders and customers for their continued goodwill and support. The Boardalso gratefully acknowledges the guidance and co-operation received from the Reserve Bank of India and other regulatoryand government authorities like SEBI, NSE, BSE, Depositories and Department of Income Tax.

Your Directors would also like to express their sincere appreciation of the contribution made by the management andstaff including the Staff Union and Officers' Association for their support in delivering the present performance and lookforward to a more evolved relationship as steps are taken to re-orient the bank for the future.

For and on behalf of the Board of Directors

Place : Chennai (RAGHURAJ GUJJAR)Date : 23.08.2014 Chairman

Information as per Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees)Rules, 1975 and forming part of the Directors' Report for the year ended 31st March 2014.

ANNEXURE TO THE DIRECTORS’ REPORT

Name Age Designation Gross Qualification Experience Employment PreviousIncome (Years) Date Employment

(`.)

- NIL -


12


Statement as at March 31, 2014, pursuant to clause 12 (Disclosure in the Directors’ Report) of the SEBI (EmployeesStock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999.

A. Summary of Status of ESOPs Granted:

The position of the existing schemes is summarized as under -

Sl. No. Particulars ESOS 2010

1 Details of the Meeting Authorised by the shareholders of thecompany in the Annual General Meeting

dated 4th August 2010

2 Approved* 50,00,000 shares

3 The Pricing Formula Discount of 50% to the closing market priceon the day preceeding the date of grant

4 Options Granted 16,85,238

5 Options Vested and Exercisable 3,73,332

6 Options Exercised 20,000

7 Options Cancelled 12,75,238

8 Options Lapsed 0

9 Total Number of Options in force 3,90,000

10 Variation in terms of ESOP Not applicable

11 Total number of shares arising as a result of exercise of options 20,000

12 Money realised by exercise of options (` In Lakhs) 12.25

B. Employee-wise details of options granted during the financial year 2013-14 to:

(i) Senior managerial personnel The Bank has not granted options duringthe current financial year

(ii) Employees who were granted, during any one The Bank has not granted options duringyear, options amounting to 5% or more of the the current financial yearoptions granted during the year

(iii) Identified employees who were granted option, The Bank has not granted options duringduring any one year equal to or exceeding 1% the current financial yearof the issued capital (excluding outstandingwarrants and conversions) of the companyat the time of grant.

C. Weighted average Fair Value of Options granted during the year whose:

(a) Exercise price equals market price

(b) Exercise price is greater than market price

(c) Exercise price is less than market price

DIRECTORS REPORT DISCLOSURES

The Bank has not granted options duringthe current financial year


13


Weighted average Exercise price of options granted during the year whose

(a) Exercise price equals market price

(b) Exercise price is greater than market price

(c) Exercise price is less than market price (`)

D. The stock-based compensation cost calculated as per the intrinsic value method for the financial year 2013-14 is` 37,52,234. If the stock-based compensation cost was calculated as per the fair value method, the total cost to berecognised in the financial statements for the year 2013-14 would be ̀ 48,30,738. The effect of adopting the fair valuemethod on the net income and earnings per share is presented below:

Pro Forma Adjusted Net Income and Earning Per Share

Particulars `̀̀̀̀

Net Income as reported 596,554,944.00

Add: Intrinsic Value Compensation Cost 3,752,234.04

Less: Fair Value Compensation Cost 4,830,737.90

Adjusted Pro Forma Net Income 595,476,439.78

Earning Per Share: Basic

As Reported 6.11

Adjusted Pro Forma 6.10

Earning Per Share: Diluted

As Reported 6.12

Adjusted Pro Forma 6.11

E. Method and Assumptions used to estimate the fair value of options granted during the year:

The Bank has not granted options during the current financial year

The Bank has not granted options duringthe current financial year


14


REPORT OF AUDITORS TO THE MEMBERSOF

THE LAKSHMI VILAS BANK LIMITED, KARUR

Report on the Financial Statements1. We have audited the accompanying financial statements of THE LAKSHMI VILAS BANK LTD, KARUR as at

31st March, 2014, which comprise the Balance Sheet as at March 31, 2014, and the Statement of Profit and Loss andthe Cash Flow Statement for the year then ended and a summary of significant Accounting Policies and otherexplanatory information. Incorporated in these financial statements are the returns of 17 Branches, 8 RegionalOffices and other support service units audited by us as well as the remaining 344 Branches and 6 Service Branchesaudited by other branch auditors. The branches audited by us and those audited by other auditors have beenselected by Bank in accordance with the guidelines issued by the Reserve Bank of India.

Management’s Responsibility for the Financial Statements2. Management of the Bank is responsible for the preparation of these financial statements that give true and fair view

of the financial position and financial performance of the Bank in accordance with Banking Regulation Act, 1949 andcomplying with Reserve Bank of India Guidelines issued from time to time. This responsibility includes the design,implementation and maintenance of internal control relevant to the preparation and presentation of the financialstatements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility3. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit

in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. ThoseStandards require that we comply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether the financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financialstatements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks ofmaterial misstatement of the financial statements, whether due to fraud or error. In making those risk assessments,the auditor considers internal control relevant to the Bank’s preparation and fair presentation of the financial statementsin order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of the accounting estimates made bymanagement, as well as evaluating the overall presentation of the financial statements.

5. The financial information as at and for the year ended 31st March 2014 of 344 Branches and 6 Service Brancheshave been audited by other auditors whose reports have been furnished to us and our opinion is based solely on thereports of such other auditors.

6. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion.

Opinion7. Without qualifying our opinion, we draw attention to

(a) Note No. 3.10 of the Schedule 18 to the financial statements, regarding deferment of pension liability and gratuityliability of the Bank, pursuant to the exemption granted by the Reserve Bank of India to the Lakshmi Vilas Bankfrom application of the provisions of Accounting Standard (AS) 15, Employees Benefits vide circular no.DBOD.BP.BC/80/21.04.018/2010-11, dated 09-02-2011 on “Re-opening of Pension Option to the employeesand Enhancement in Gratuity Limits- Prudential Regulatory Treatment.” Accordingly, out of the unamortizedamount of ̀ 37.24 crore as on 01/04/20l3, the Bank has amortized ̀ 15.56 crore for Pension and ̀ 3.06 crore forGratuity being proportionate amount for the year ended March 31, 2014 and balance amount to be amortized infuture periods for Pension is ` 15.56 crore and for Gratuity is ` 3.06 crore.

(b) Note No. 3.10 of the Schedule 18 to the financial statements, which states that, pending receipt of opinion fromthe Expert Advisory Committee of the Institute of Chartered Accountants of India, the provision for pensionliability as on 31st March 2014 has been made based on the actuarial valuation.


15


For SAGAR & ASSOCIATESChartered Accountants

FR No. 003510S

(V. VIDYASAGAR BABU)Place : Bangalore PartnerDate : 14th May 2014 Membership No. 027357

(c) Note No. 7 of the Schedule 18 to the financial statements, which describes creation of Deferred Tax Liability(DTL) on Special Reserve under section 36 (1) (viii) of the Income Tax Act, 1961 pursuant to RBI’s Circular No.DBOD. No. BP.BC. 77 / 21.04.018 / 2013-14 dated December 20, 2013, whereby the DTL of ` 7.87 crorepertaining to periods upto March 31, 2013 has been adjusted to the general reserve of the Bank and DTL of` 3.11 crore on the Special reserve created during the financial year ended March 31, 2014 has been chargedto the profit and loss account in accordance with the accounting treatment prescribed by the Reserve Bank ofIndia.

8. In our opinion and to the best of our information and according to the explanations given to us, the said accountstogether with the notes thereon give the information required by the Banking Regulation Act, 1949 as well as theCompanies Act, 1956 in the manner so required for the banking companies and give a true and fair view in conformitywith the accounting principles generally accepted in India:

i. in the case of the Balance Sheet, of the state of affairs of the Bank as at 31st March, 2014;

ii. in the case of the Profit and Loss Account, of the profit for the year ended on that date; and

iii. in the case of the Cash Flow Statement, of cash flows for the year ended on that date.

Report on Other Legal and Regulatory Matters9. The Balance Sheet and the Profit and Loss Account have been drawn up in accordance with the provisions of

Section 29 of the Banking Regulation Act, 1949 read with Section 211 of the Companies Act, 1956.

10. Subject to the limitations of the audit indicated in paragraphs 1 to 6 above and as required by the Banking Companies(Acquisition & Transfer of Undertakings) Act, 1970 and subject also to the limitations of disclosure required therein,we report that;

(a) We have obtained all the information and explanations which to the best of our knowledge and belief, werenecessary for the purpose of our audit and have found them to be satisfactory.

(b) The transactions of the Bank, which have come to our notice, have been within the powers of the Bank.

(c) The returns received from the Offices and Branches of the Bank, as supplemented with the information furnishedby the Management, have been found adequate for the purposes of our audit.

11. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with the applicableAccounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

12. We further report that:

i. The Balance Sheet and Profit and Loss Account dealt with by this report, are in agreement with the books ofaccount and the returns.

ii. In our opinion, proper books of account as required by law have been kept by the Bank so far as appears fromour examination of those books.

iii. The reports on the accounts of the branches have been dealt with in preparing our report in the manner considerednecessary by us.

iv. As per information and explanation given to us, the Central Government has, till date, not prescribed any cesspayable under section 441A of the Companies Act, 1956,

v. On the basis of the written representation received from the directors and taken on record by the Board ofDirectors, none of the directors is disqualified as on 31st March 2014 from being appointed as a director in termsof clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.


16


(` 000’s)

As at As atSchedule 31-03-2014 31-03-2013

I. CAPITAL & LIABILITIES

a. Capital 1 97,56,07 97,54,07

b. Reserves & Surplus 2 956,03,85 916,80,38

c. Deposits 3 18572,88,21 15618,97,79

d. Borrowings 4 458,10,00 480,00,00

e. Other Liabilities & Provisions 5 568,47,59 553,35,79

TOTAL 20653,05,72 17666,68,03

II. ASSETS

a. Cash & Balances with Reserve Bank of India 6 1192,08,25 728,15,07

b. Balances with Banks and Money at Call & Short Notice 7 119,60,44 143,79,91

c. Investments 8 5688,67,76 4324,54,68

d. Advances 9 12889,18,96 11702,79,56

e. Fixed Assets 10 200,50,82 189,82,02

f. Other Assets 11 562,99,49 577,56,79

TOTAL 20653,05,72 17666,68,03

Contingent Liabilities 12 2763,50,89 2846,75,67

Bills for collection 404,52,09 376,60,40

Significant Accounting Policies 17

Notes on Accounts 18

BALANCE SHEET as on 31st March 2014

Schedules 1 to 12 and 17 to 18 form part of this Balance Sheet.

As per our Report of Date annexed

For M/s. SAGAR & ASSOCIATES RAGHURAJ GUJJARChartered Accountants ChairmanFRN. 003510S

V. VIDYASAGAR BABU RAKESH SHARMAPartner Managing Director & CEOM. No. 027357

Bangalore M. PALANIAPPAN14th May 2014 Chief Financial Officer

B.K. MANJUNATHK.R. PRADEEPS.G. PRABHAKHARANS. DATTATHREYANR. SHARANA. SATISHKUMARDr. P.A. SHANKARN. MALAYALARAMAMIRTHAMR. RAVIKUMARDirectors


17


PROFIT AND LOSS ACCOUNT for the year ended 31st March 2014

I. INCOMEa. Interest Earned 13 1983,95,00 1760,54,81

b. Other Income 14 217,99,21 197,06,63

TOTAL 2201,94,21 1957,61,44

II. EXPENDITUREa. Interest Expended 15 1497,93,95 1368,54,98

b. Operating Expenses 16 395,00,54 337,91,77

c. Provisions & Contingencies 249,34,17 159,57,24

TOTAL 2142,28,66 1866,03,99

III. NET PROFIT FOR THE YEAR 59,65,55 91,57,45

a. Excess Dividend Provided - Reversed 0 0

b. Profit brought forward 8,83 8,84

TOTAL 59,74,38 91,66,29

IV. APPROPRIATIONSa. Transfer to Statutory Reserve 15,00,00 29,00,00

b. Transfer to Capital Reserve 11,19 3,43,93

c. Transfer to Other Reserves 24,00,00 16,40,00

d. Transfer to Special Reserve u/s 36(1)(viii) of the IT Act, 1961 9,15,00 8,50,00

e. Proposed Dividend 9,75,61 29,26,22

f. Tax on Proposed Dividend 1,65,80 4,97,31

g. Balance carried over to Balance Sheet 6,78 8,83

TOTAL 597438 91,66,29

Previous year figures are regrouped wherever necessary

Earnings Per Share - Basic (`) 6.11 9.39

(` 000’s)

Year ended Year endedSchedule 31-03-2014 31-03-2013

Schedules 13 to 16 and 17 to 18 form part of this Profit & Loss Account.

As per our Report of Date annexed






18


(` 000’s)

As at As at31-03-2014 31-03-2013

SCHEDULE 1 - CAPITALAUTHORISED CAPITAL(30,00,00,000 equity shares of ` 10/- each) 300,00,00 150,00,00

ISSUED CAPITAL(9,83,72,564 equity shares of ` 10/- each)(20,000 shares issued through “LVB ESOS-2010” 98,37,26 98,35,25

Subscribed, Called-up and Paid Up Capital(9,75,60,690 equity shares of ` 10/- each) 97,56,07 97,54,07i) 9,75,60,690 Paid-up Capital (Previous year 9,75,40,690

shares 20,000 shares issued under “LVB ESOS-2010”)ii) 1,26,42,131 Bonus Shares allotted (Previous year

1,26,42,131 shares)iii) 20,000 shares issued under “LVB ESOS -2010”

(Previous year NIL)iv) Shares kept in abeyance 7,88,216 (Previous year

7,88,216 shares)v) Shares Forfeited and lapsed 23,658 (Previous year

23,658 shares)TOTAL 97,56,07 97,54,07

SCHEDULE 2 - RESERVES & SURPLUSI. STATUTORY RESERVE

Opening Balance 323,90,46 294,90,46Additions during the yearTransfer from current year’s Profit 15,00,00 338,90,46 29,00,00 323,90,46

II. CAPITAL RESERVEOpening Balance 52,16,75 48,72,82Additions during the year 11,19 52,27,94 3,43,93 52,16,75

III. SHARE PREMIUMOpening Balance 330,47,74 330,47,74Additions during the year 2249 0

330,70,23 330,47,74Deductions during the year 0 330,70,23 0 330,47,74

IV. REVENUE & OTHER RESERVESOpening Balance 109,22,65 92,82,65Additions during the year 24,00,00 16,40,00

133,22,65 109,22,65Deductions during the year 7,87,00 125,35,65 0 109,22,65

V. Special Reserve u/s 36(1)(viii) of IT Act, 1961Opening Balance 23,15,00 14,65,00Additions during the year 9,15,00 32,30,00 8,50,00 23,15,00

VI. REVALUATION RESERVEOpening Balance 81,50,52 81,50,52Additions during the year 0 0

81,50,52 81,50,52Depreciation on Revalued Asset 5,07,73 76,42,79 3,71,57 77,78,95

VII. BALANCE IN PROFIT & LOSS ACCOUNT 6,78 8,83TOTAL 956,03,85 916,80,38


19


SCHEDULE 3 - DEPOSITS

A. I. DEMAND DEPOSITS1. From Banks 1,34,90 83,28

2. From Others 911,16,33 912,51,23 737,66,59 738,49,87

II. SAVINGS BANK DEPOSITS 1729,73,26 1524,07,44

III. TERM DEPOSITS1. From Banks 1220,40,56 326,61,53

2. From Others 14710,23,16 15930,63,72 13029,78,95 13356,40,48

18572,88,21 15618,97,79

B. (I) DEPOSITS OF BRANCHES IN INDIA 18572,88,21 15618,97,79

(II) DEPOSITS OF BRANCHES OUTSIDE INDIA NIL NIL

TOTAL 18572,88,21 15618,97,79

SCHEDULE 4 - BORROWINGS I. BORROWINGS IN INDIA

1. Reserve Bank of India 0 02. Other Banks 0 03. Other Institutions & Agencies* 458,10,00 458,10,00 480,00,00 480,00,00

II. BORROWINGS OUTSIDE INDIA 0 0* Includes unsecured Tier II bonds of ` 458.10 Crs(Previous year ` 380.00 Crs) 458,10,00 480,00,00SECURED BORROWINGSINCLUDED IN I & II ABOVE 0 0

SCHEDULE 5 - OTHER LIABILITIES AND PROVISIONSI. Bills payable 70,82,92 62,15,92II. Inter-office adjustments (net) 8,68,31 0III. Interest accrued 190,30,44 170,02,21IV. (i) Others - (including Provisions) 233,74,67 265,22,41

(ii) Contingent Provisions against StandardAssets 44,71,00 38,84,00

(iii) Deferred Tax Liabilities 20,20,25 17,11,25TOTAL 568,47,59 553,35,79

SCHEDULE 6 - CASH AND BALANCES WITH RESERVEBANK OF INDIACash in Hand (including foreign Currency Notes) 226,50,96 184,60,10Balances with Reserve Bank of IndiaI) in current account 965,57,29 543,54,97II) in other accounts 0 0

TOTAL 1192,08,25 728,15,07

(` 000’s)

As at As at31-03-2014 31-03-2013


20


SCHEDULE 7 - BALANCES WITH BANKS & MONEYAT CALL AND SHORT NOTICE

I. IN INDIA

(i) Balance with Banks

a. in current accounts 24,72,86 26,57,15

b. in other deposit accounts 6,25 100,25,24

24,79,11 126,82,39

(ii) Money at call and short notice

a. with banks 0 0

b. with other institutions 79,92,03 0

104,71,14 126,82,39

II. OUTSIDE INDIA

(i) Balance with Banks

a. in current accounts 14,89,30 16,97,52

b. in other accounts 0 0

14,89,30 16,97,52

TOTAL 119,60,44 143,79,91

SCHEDULE 8 - INVESTMENTS

I. INVESTMENTS IN INDIA

I. Government Securities (incl. treasury bills &zero coupon bonds) 4774,09,73 3801,32,98

II. Other approved securities 0 0

III. Shares 38,80,05 27,14,87

IV. Debentures & Bonds 265,35,60 133,13,44

V. Subsidiaries and Joint Ventures 0 0

VI Others (including Commercial Paper, Mutual Funds,NSC, Security Receipt, Units, etc.) 610,42,38 362,93,39

5688,67,76 4324,54,68

GROSS INVESTMENTS IN INDIA 5731,95,67 4347,93,23

LESS: DEPRECIATION 43,27,91 23,38,55

NET INVESTMENTS IN INDIA 5688,67,76 4324,54,68

II. INVESTMENTS OUTSIDE INDIA NIL NIL

TOTAL 5688,67,76 4324,54,68

(` 000’s)

As at As at31-03-2014 31-03-2013


21


SCHEDULE 9 - ADVANCES

A. I. Bills purchased & discounted 861,78,20 470,11,36

II. Cash credits, overdrafts & loans repayableon demand 8176,29,33 7753,31,80

III. Term loans 3851,11,43 3479,36,40

12889,18,96 11702,79,56

B. PARTICULARS OF ADVANCES

I. Secured by tangible assets [incl. advancesagainst Book Debts] 12108,26,17 10712,76,50

II. Covered by Bank / Govt. Guarantees 20,03,91 44,11,33

III. Unsecured 760,88,88 945,91,73

12889,18,96 11702,79,56

C. SECTORAL CLASSIFICATION OF ADVANCES

I. Priority Sector 5254,86,93 4450,96,25

II. Public Sector 1,02,80 15,37,34

III. Banks 10,25,41 11,79

IV. Others 7623,03,82 7236,34,18

TOTAL 12889,18,96 11702,79,56

SCHEDULE 10 - FIXED ASSETS

I. PREMISESAt Revaluation Value 138,67,31 138,67,31

Additions during the year 1,67,99 0

140,35,30 138,67,31

Deductions during the year 0 0

140,35,30 138,67,31

Depreciation to date 18,25,96 122,09,34 15,90,25 122,77,06

II. OTHER FIXED ASSETS (INCLUDINGFURNITURE & FIXTURES)At Cost 219,75,84 193,35,75

Additions during the year 34,24,57 27,75,14

254,00,41 221,10,89

Deductions during the year 2,43,06 1,35,05

251,57,35 219,75,84

Depreciation to date 173,15,87 78,41,48 152,70,88 67,04,96

TOTAL 200,50,82 189,82,02

(` 000’s)

As at As at31-03-2014 31-03-2013


22


SCHEDULE 11 - OTHER ASSETS

I. Inter-Office Adjustments (Net) 0 10,26,20

II. Interest Accrued 124,40,54 88,90,31

III. Tax Paid in Advance and Tax Deducted at Source (Net) 155,45,20 147,42,80

IV. Deferred Tax Asset 81,32,41 43,92,41

V. Stationery & Stamps 2,57,59 1,91,12

VI. Non Banking Assets acquired in satisfaction of claims 66,93,55 4,58,25

VII. Others 132,30,20 280,55,70

TOTAL 562,99,49 577,56,79

SCHEDULE 12 - CONTINGENT LIABILITIES

I. Claims against the Bank not acknowledged as debts 126,81,98 153,74,90

II. Liability for partly paid Investments 0 0

III. Liability on account of outstanding forward exchangecontracts 968,91,18 1185,74,33

IV. Guarantees given on behalf of constituents

in India 484,09,41 495,63,95

outside India 112,77,88 81,88,96

V. Acceptances, Endorsements & Other Obligations 1070,90,44 929,73,53

VI. Other items for which the Bank is contingently liable 0 0

TOTAL 2763,50,89 2846,75,67

Year ended Year ended31-03-2014 31-03-2013

SCHEDULE 13 - INTEREST EARNED

I. Interest / discount on advances / bills 1591,61,24 1393,45,44

II. Income on Investments 382,66,81 340,78,20

III. Interest on balance with Reserve Bank of India &other inter-bank Funds 3,65,78 78,48

IV Others 6,01,17 25,52,69

TOTAL 1983,95,00 1760,54,81

(` 000’s)

As at As at31-03-2014 31-03-2013


23


SCHEDULE 14 - OTHER INCOME

I. Commission, Exchange and Brokerage 98,04,47 79,75,02

II. Profit on sale of Investments 35,68,76 31,10,10

Less: Loss on sale of Investments 15,14,37 20,54,39 5,91,51 25,18,59

III. Profit on sale of land, Buildings & Other Assets 11,31 12,65

Less: Loss on sale of land, Buildings &Other Assets 7,49 3,82 10,42 2,23

IV. Profit on Exchange Transactions 14,34,33 10,65,55

Less: Loss on Exchange Transactions 0 14,34,33 0 10,65,55

V. Income earned by way of Dividends fromCompanies in India. 43,87 43,87 38,13 38,13

VI. Miscellaneous Income 84,58,33 81,07,11

TOTAL 217,99,21 197,06,63

SCHEDULE 15 - INTEREST EXPENDED

I. Interest on Deposits 1431,43,78 1299,13,31

II. Interest on Reserve Bank of India /Inter-Bank Borrowings 66,50,17 69,41,67

TOTA L 1497,93,95 1368,54,98

SCHEDULE 16 - OPERATING EXPENSES

I. Payments to and Provision for Employees 187,87,65 157,61,95

II. Rent, Taxes & Lighting 38,87,25 38,30,35

III. Printing & Stationery 4,74,26 3,29,09

IV. Advertisement & Publicity 1,97,31 4,30,57

V. Depreciation on Bank's Property 23,58,34 25,44,48

VI. Director’s fees, allowances 62,85 59,40

VII. Auditors’ fees & Expenses (incl. BranchAuditors) 92,24 80,71

VIII. Law Charges 1,74,32 1,01,20

IX. Postage, Telegrams, Telephones, etc. 8,29,55 7,44,67

X. Repairs & Maintenance 2,45,85 2,19,04

XI. Insurance 16,21,01 14,76,37

XII. Other Expenditure 107,69,91 82,13,94

TOTAL 395,00,54 337,91,77

(` 000’s)

Year ended Year ended31-03-2014 31-03-2013


24


SCHEDULE 17

SIGNIFICANT ACCOUNTING POLICIES

1. BASIS OF ACCOUNTING:The financial statements have been prepared in accordance with the historical cost convention exceptwhere otherwise stated and conform to the statutory provisions and practices prevailing within the bankingindustry in India and the guidelines / instructions of Reserve Bank of India issued from time to time.

2. TRANSACTIONS INVOLVING FOREIGN EXCHANGE:(a) Foreign Currency Assets and Liabilities have been translated at the exchange rates prevailing at the

close of the year as per the guidelines issued by FEDAI. The resultant profit or loss is accounted for.

(b) Income and Expenditure in foreign currency are translated at the exchange rates prevailing on thedate of the respective transaction.

(c) Forward Exchange Contracts:

In accordance with the guidelines of FEDAI and the provisions of AS-11, outstanding forward exchangecontracts in each currency are revalued at the Balance Sheet date at the corresponding forwardrates for the residual maturity of the contract. The difference between revalued amount and thecontracted amount is recognized as profit or loss, as the case may be.

(d) Contingent liabilities on guarantees, letters of credit, acceptances and endorsements are reportedat the rates prevailing on the Balance Sheet date.

3. INVESTMENTS:Investments are categorized under the heads ‘Held to Maturity’, Available for Sale, and ‘Held for Trading’and are valued category wise, in accordance with the guidelines of the Reserve Bank of India.

(i) Brokerage / commission etc, paid in connection with the acquisition of investments is charged torevenue and not included in cost.

(ii) Broken period interest paid / received on debt instruments is treated as interest expended / income.

(iii) Security receipts are valued at NAV as declared by Securitisation Companies.

4. ADVANCES:4.1 In accordance with the prudential norms issued by RBI:

(i) Advances are classified into standard, sub-standard, doubtful and loss assets borrower-wise;

(ii) Provisions are made for loan losses, and

(iii) General provision for standard advances is made.

4.2 Advances disclosed are net of provisions made for non-performing assets, ECGC claims settled, partrecovery towards NPA accounts receipts held under sundries, and provision made for sacrifice of interest/diminution in the value of restructured advances measured in present value terms as per RBI guidelines.

5. FIXED ASSETS AND DEPRECIATION:(a) Fixed assets (Premises portfolio) have been accounted for at their revalued cost. Fixed assets other

than premises portfolio have been accounted for at their historical cost.

(b) Depreciation on assets other than computers has been provided for on the diminishing balancemethod at the rates specified in Schedule XIV to the Companies Act, 1956.

(c) Depreciation on computers has been provided for on straight-line method at the rate of 33.33% asper the guidelines issued by the Reserve Bank of India.

(d) In view of fast changing technology and obsolescence, iPad communication device is depreciated in full.

(e) Operating Software, which is an integral part of hardware, is capitalized and depreciation is providedfor at the rate of 33.33% on straight-line method.

(f) For premises, in which land cost and construction cost could not be ascertained separately,depreciation is provided for on the total cost.


25


6. EMPLOYEE BENEFITS:(a) Annual contributions to the approved Employees’ Gratuity Fund, Approved Pension Fund and Provision

for Leave Encashment benefits have been made on actuarial basis. Contribution to Provident Fund isaccounted for on actual basis.

(b) Consequent to reopening of pension option to Employees and enhancement in Gratuity limits, theadditional liability have been amortised over a period of 5 years and 1/5th of the additional liabilityhave been charged to the current year Profit & loss account vide RBI circular DBOD. No. BP.BC.15896/21.04.018/2010-11 dated 08.04.2011.

(c) The Employee Stock Option Scheme provides for grant of equity stock options to top executives ofthe bank that vest in a graded manner. The Bank follows the intrinsic value method to account for itsemployee compensation costs arising from grant of such options. The excess of fair market price overthe exercise price shall be accounted as employee compensation cost over the respective period ofvesting. The fair market price is the latest closing price of the shares on the stock exchanges in whichshares of the bank are largely traded immediately prior to the date of meeting of the compensationcommittee in which the options are granted.

7. PROVISION FOR TAXATION:Provision for taxation is made on the basis of the estimated tax liability with adjustment for deferred tax interms of the Accounting Standard 22 (Accounting for Taxes on Income) formulated by the Institute ofChartered Accountants of India.

8. REVENUE RECOGNITION:(a) Income and expenditure are accounted for on accrual basis.

(b) The following items of income are recognized on realization basis, owing to the significant uncertaintyin collection thereof:

(i) Interest on non-performing advances, including overdue bills.

(ii) Interest on non-performing investments.

(c) Interest on tax refund from Income Tax Department based on assessment orders received.

(d) Dividend Income on Investments on declaration basis.

9. NET PROFIT:The net profit as per the Profit & Loss account is arrived at after necessary provisions towards: –

a) Taxation.

b) Advances and other assets.

c) Shortfall in the value of investments.

d) Staff Retirement benefits.

e) Other usual and necessary provisions.

10. ACCOUNTING STANDARDS:Accounting Standards as specified in section 211(3C) of the Companies Act 1956, to the extent they areapplicable to Banking Companies and as per directions issued by the RBI from time to time, have beenfollowed.

11. SEGMENT INFORMATION:The reportable business segments have been classified in accordance with the guidelines issued by ReserveBank of India. The directly attributable income and assets are considered under respective segmentsand other income, expenses, other assets & liabilities are considered on appropriate basis.


26


12. EARNING PER SHARE:Basic and Diluted earnings per equity share are reported in accordance with the AccountingStandard 20 “Earnings per share” issued by the Institute of Chartered Accountants of India. Basic earningsper equity share are computed by dividing net profit by the weighted average number of equity sharesoutstanding for the period. Diluted earnings per equity share are computed using the weighted averagenumber of equity shares and dilutive potential equity shares outstanding during the period.

13. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:As per the Accounting Standard 29 “Provisions, Contingent Liabilities and Contingent Assets” issued byThe Institute of Chartered Accountants of India, the Bank recognises provisions only when it has a presentobligation as a result of a past event and it is probable that an outflow of resources embodying economicbenefits will be required to settle the obligation and when a reliable estimate of the amount of theobligation can be made.

Contingent Assets are not recognized in the financial statements since this may result in the recognition ofincome that may never be realised.

SCHEDULE 18NOTES ON ACCOUNTS1. The reconciliation of inter branch transactions has been completed upto 31.03.2014 and tallying of

balances is ensured on an ongoing basis.

2. (a) Provision for income tax for the year is arrived at after due consideration of the various favourablejudicial decisions on disputed issues.

(b) The disputed Income Tax demand outstanding as on 31.03.2014 amounts to ` 109.91 crore (previousyear ` 138.10 crore) and is included under Item I of Schedule 12 (Contingent Liabilities). No provisionis considered necessary in respect of the disputed liabilities in view of favourable decisions by variousappellate authorities on similar issues.

(c) In the current year, ` 6.01 crore being the interest on Income Tax refund is accounted based onassessment orders received.

3. DISCLOSURE REQUIREMENTS3.1 Capital (` in crore)

Items 2013-14 2012-13

i) CRAR (%)

(Basel II) 10.93 12.32

(Basel III) 10.90 NA

ii) CRAR - Tier I Capital (%)

(Basel II) 7.94 9.15

(Basel III) 7.87 NA

iii) CRAR - Tier II Capital (%)

(Basel II) 2.99 3.17

(Basel III) 3.03 NA

iv) Percentage of the shareholding of the Government of India in nationalized banks NA NA

v) Amount raised by issue of IPDI NA NA

vi) Amount raised by issue of Tier II Instruments during the year 78.10 NIL


27


(` in crore)

Raised during Nature Amount Reckoned for the purposethe year of CRAR computation

(as per RBI guidelines)

2006-07 Lower Tier II 30.00 12.00

2009-10 Lower Tier II 100.00 20.00

2011-12 Lower Tier II 250.00 131.00

2013-14 Lower Tier II* 78.10 78.10

* Basel III compliant.

3.2.1 In respect of securities held under HTM category premium of ` 7.55 crore (previous year ` 3.81 crore) hasbeen amortized during the year and debited under interest received on Government Securities.

3.2.2 Investments (` In crore)

Particulars 2013-14 2012-13

(1) Value of Investments(i) Gross Value of Investments

(a) In India 5731.96 4347.93(b) Outside India NIL NIL

(ii) Provisions for Depreciation(a) In India 43.28 23.39(b) Outside India NIL NIL

(iii) Net Value of Investments(a) In India 5688.68 4324.54(b) Outside India. NIL NIL

(2) Movement of provisions held towards Depreciation on investments(i) Opening balance 23.39 15.39(ii) Add: Provisions made during the year 27.46 9.24(iii) Less: Write-off / write-back of excess provisions during the year 7.57 1.24(iv) Closing balance 43.28 23.39

RBI vide its circular No.DBOD.BP.BC.No.41/21.04.141/2013-14 dated 23.08.2013 has allowed banks to distributethe net depreciation on the entire AFS and HFT portfolio on the valuation date over the current financial yearin equal instalments. The Bank had amortised such depreciation during the quarters ended September 2013and December 2013. Bank has provided ` 10.37 crore in the current quarter and thus the depreciation on theentire AFS and HFT portfolio is fully recognised as at 31.03.2014.3.2.3 Repo Transactions (In face value terms) (` In crore)

Minimum Maximum Daily Average Outstandingoutstanding outstanding outstanding As on

during during during March 31, the year the year the year 2014

Securities sold under repoI. Government Securities 5.00 250.00 109.70 38.48

(10.00) (225.00) (41.78) (150.00)II. Corporate debt Securities Nil Nil Nil NilSecurities purchased under reverse repoI. Government Securities 5.00 100.00 3.25 Nil

(10.00) (150.00) (0.96) NilII. Corporate debt Securities Nil Nil Nil Nil

(Figures in bracket indicates in previous year)


28


3.2.4. Non-SLR Investment Portfolioi) Issuer composition of Non-SLR investments : (` In crore)

No. Issuer Amount Extent of Extent of Extent of Extent ofPrivate ‘Below ‘Unrated’ ‘Unlisted’

Placement Investment Securities SecuritiesGrade’

Securities

(1) (2) (3) (4) (5) (6) (7)

1 PSUs 26.23 26.17 – – –

2 FIs 60.12 11.00 – – –

3 Banks 461.23 31.99 – – –

4 Private Corporate 186.42 116.18 18.64 18.64 18.64

5 Subsidiaries / Joint Ventures 0.00 0.00 – – –

6 Others** 209.43 148.01 – – –

7 Less: Provision held towardsdepreciation 28.86 – – – –

Total 914.58 333.35 18.64 18.64 18.64

** Others include RIDF investments of ` 58.31 crore, Mutual Fund of ` 3.11 crore and ARCs security receipts of` 148.01 crore.

ii) Non-performing Non-SLR investments : (` In crore)

Particulars 2013-14

(i) Net NPIs to Net Investment (%) –

(ii) Movement of NPIs (Gross)

Opening balance 7.82

Additions during the year since 1st April 2013 0.92

Reductions during the above period –

Closing balance 8.74

(iii) Movement of Net NPIs

Opening balance –

Additions during the year since 1st April 2013 –


Closing balance –

(iv) Movement of provision for NPIs


Additions during the year since 1st April 2013 0.92


Closing balance 7.10*

* An amount of ` 1.64 crore received towards part settlement is parked under sundries account.


29


3.2.5 Sale and transfers to / from HTM categoryDuring the year, the value of sales and transfers of securities to / from HTM category has not exceeded 5% ofbook value of the investment held in HTM category at the beginning of the year.

3.3 Derivatives :3.3.1 Forward Rate Agreement / Interest Rate Swap (` in crore)


i) The notional principle of swap agreements NIL NIL

ii) Losses which would be incurred if counter parties failed to fulfillobligations under the agreements NIL NIL

iii) Collateral required by the bank upon entering into swaps NIL NIL

iv) Concentration of credit risk arising from the swaps NIL NIL

v) The fair value of the swap book NIL NIL

3.3.2 Exchange Traded Interest Rate Derivatives : (` in crore)

S.No. Particulars 2013-14

(i) Notional principal amount of exchange traded interest rate derivatives undertakenduring the year (instrument-wise) NA

(ii) Notional principal amount of exchange traded interest rate derivatives outstandingas on 31st March 2014 (instrument-wise) NA

(iii) Notional principal amount of exchange traded interest rate derivatives outstandingand not “highly effective” (instrument-wise) NA

(iv) Mark-to-market value of exchange traded interest rate derivatives outstanding andnot “highly effective” (instrument-wise) NA

3.3.3 Disclosures on risk exposure in derivatives

Qualitative Disclosure

The structure and organization for management of risk in derivatives trading:

The Bank deals with the primary level of currency derivatives in the form of basic forward contracts/swaps.These forward contracts are OTC traded through CCIL and they are for the Export oriented or Import orientedclients and subsequently hedged with other banks. The monitoring of foreign currency derivatives trading ismonitored by Bank’s mid - office reporting to the IRMD. The trading and dealing foreign currency derivativesare part of the foreign exchange risk management policy, as per RBI guidelines and that is approved byBoard. Some of the risk management methods are:

i. Setting limits for various types of activities in forex operations, depending upon the business requirements,setting stop limits for each deal, maintaining single deal size, measuring individual and aggregate gap limitsfor each currency etc.,

ii. Bank also measures the counterparty credit exposures for each counterparty on the basis of MTM valuesand potential future exposure values.


30


3.3.4 Shifting of securities:For the year ended 31.03.2014, Bank has shifted securities amounting to ` 642.76 crore (face value) (previousyear ` 190.58 crore) from HTM to AFS category and loss arose on such transfer amounting to ` 0.48 crore hasbeen provided during the year. Further, Bank has shifted securities amounting to ` 569.21 crore (Face Value)(Previous year ` 169.64 crore) from AFS to HTM category and loss which arose on such transfer amounting to` 7.09 crore has been provided during the year (previous year ̀ 1.24 crore). Total loss on account of shifting ofsecurities is ` 7.57 crore during the year.3.3.5 SLR Securities (` in crore)

As at 31.03.2014 As at 31.03.2013

Particulars Book Market Book MarketValue Value Value Value

Government Securities SLR (CG, SG, TB) 4788.52 4453.14 3801.33* 3771.18*

Approved securities - SLR 0.00 0.00 0.00 0.00

* Net of securities pledged under REPO ` 38.48 crore (PY ` 157.50 crore).

3.4 Asset Quality3.4.1 Non-Performing Asset (` in crore)


(i) Net NPAs to Net Advances (%) 3.44% 2.43%(ii) Movement of NPAs (Gross)

(a) Opening balance 459.91 307.73(b) Additions during the year 668.69 400.15(c) Reductions during the year 582.14 247.97(d) Closing balance 546.46 459.91

(iii) Movement of Net NPAs(a) Opening balance 283.81 177.09(b) Additions during the year 322.43 277.53(c) Reductions during the year 162.85 170.81(d) Closing balance 443.39 283.81

(iv) Movement of provisions for NPAs (excluding provisions on standard assets)(a) Opening balance 100.30 67.71(b) Provisions made during the year 247.92 76.14(c) Write-off / write-back of excess provisions 294.99 43.55(d) Closing balance 53.23 100.30

The provision coverage ratio of the Bank as on 31.03.2014 is 53.16%.In respect of certain non-performing advances related to the previous year, bank has obtained dispensation fromReserve Bank of India vide RBI letter DBS.CO.PvtSBMD.No.2116/15.01.067/2013-14 dated 08.08.2013 and accordinglythe bank has provided ` 81.45 crore during the year in respect of such advances, as permitted by RBI.

Quantitative Disclosures (` in crore)

Sl.No. Particular Currency Interest rateDerivatives Derivatives

(i) Derivatives (Notional Principal Amount) NA NAa) For hedging NA NAb) For trading NA NA

(ii) Marked to Market Positions [1] NA NAa) Asset (+) NA NAb) Liability (-) NA NA

(iii) Credit Exposure [2] NA NA(iv) Likely impact of one percentage change in interest rate (100*PV01) NA NA

a) On hedging derivatives NA NAb) On trading derivatives NA NA

(v) Maximum and Minimum of 100*PV01 observed during the year NA NAa) On hedging NA NAb) On trading NA NA


31

ANNUAL REPORT 2013 - 2014D

isc

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Ac

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32

ANNUAL REPORT 2013 - 2014D

isc

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(C

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(`in

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33


3.4.3 Details of financial assets sold to Securitization / Reconstruction Company for Asset Reconstruction

(` in crore)


(i) No. of accounts* 7 14

(ii) Aggregate value (net of provisions) of accounts sold to SC/RC 34.17 16.32

(iii) Aggregate consideration 45.59 19.52

(iv) Additional consideration realized in respect of accounts transferred in earlier years 0.00 0.00

(v) Aggregate profit/(loss) over net book value. 11.42 3.20

* NPA accounts only.

3.4.4. Details of non-performing financial assets purchased / soldA. Details of non-performing financial assets purchased: (` in crore)


1 (a) No. of accounts purchased during the year NIL NIL

(b) Aggregate outstanding NIL NIL

2 (a) Of these, number of accounts restructured during the year NIL NIL

(b) Aggregate outstanding NIL NIL

B. Details of non-performing financial assets sold: (` in crore)


1. No. of accounts sold 7 14

2. Aggregate outstanding 44.13 22.73

3. Aggregate consideration received 45.59 19.52

3.4.5 Provisions on Standard Assets (` in crore)


Provisions towards Standard Assets 44.71 38.84

3.5. Business Ratios


(i) Interest Income as a percentage to Working Funds 10.46 10.41

(ii) Non-interest income as a percentage to Working Funds 1.15 1.16

(iii) Operating Profit as a percentage to Working Funds 1.63 1.48

(iv) Return on Assets 0.32 0.54

(v) Business (Deposits plus advances) per employee (` in crore) 9.23 8.63

(vi) Profit per employee (` in lakhs) 1.81 2.91


34


3.6 Asset Liability Management

Maturity pattern of certain items of assets and liabilities (` in crore)

1 Day 2 to 7 8 to 14 15 to 28 29 days Over 3 Over 6 Over 1 year & Over 3 Over 5 TotalItems days days days to 3 months months & months & upto 3 years years & upto years

upto 6 months upto 1 year 5 years

Deposits 154.36 351.18 325.88 664.93 2192.47 2718.56 3916.85 4978.74 980.98 2288.93 18572.88

(132.39) (225.29) (251.41) (247.99) (1205.85) (1808.86) (3705.49) (5297.24) (781.08) (1963.38) (15618.98)

Advances (Net) 161.19 367.71 392.46 666.95 2469.82 655.56 1649.95 5083.78 605.96 835.80 12889.19

(127.95) (291.80) (292.72) (537.14) (1930.97) (717.03) (2076.75) (4456.67) (610.44) (661.33) (11702.80)

Investments (Net) 9.97 180.97 0.00 152.64 92.17 48.19 95.63 314.64 720.55 4073.92 5688.68

(15.55) (77.35) (49.79) (74.37) (29.82) (39.57) (56.00) (267.29) (464.29) (3250.51) (4324.54)

Borrowings 0.00 0.00 0.00 0.00 0.00 0.00 0.00 130.00 199.50 128.60 458.10

(0.00) (0.00) (0.00) (0.00) (100.00) (0.00) (0.00) (100.00) (229.50) (50.50) (480.00)

Foreign Currency 35.85 0.00 0.00 1.03 28.15 24.96 5.79 0.00 0.00 0.00 95.78

Assets (26.99) (0.00) (0.46) (2.28) (12.90) (6.83) (9.04) (0.00) (0.00) (0.00) (58.50)

Foreign Currency 19.86 0.00 0.13 0.35 0.44 1.60 9.70 3.51 4.95 0.00 40.54

Liabilities (17.09) (0.00) (0.00) (0.13) (1.94) (2.52) (7.57) (2.17) (0.63) (0.00) (32.05)

(Figures in brackets indicates in previous year).

The above data has been compiled on the basis of the guidelines of RBI which have been relied upon by Auditors.

3.7 Exposures3.7.1 Exposure to Real Estate Sector (` in crore)

Category 2013-14 2012-13

a) Direct exposure

(i) Residential Mortgages – 284.00 263.33

Lending fully secured by mortgages on residential property that is or will beoccupied by the borrower or that is rented; (Individual housing loans eligiblefor inclusion in priority sector advances may be shown separately).

(ii) Commercial Real Estate – 312.35 161.94

Lending secured by mortgages on commercial real estates (office buildings,retail space, multi-purpose commercial premises, multi-family residentialbuildings, multi-tenanted commercial premises, industrial or warehouse space,hotels, land acquisition, development and construction, etc.). Exposurewould also include non-fund based (NFB) limits;

(iii) Investments in Mortgage Backed Securities (MBS) and other securitisedexposures -

(a) Residential 0.00 0.00

(b) Commercial Real Estate 0.00 0.00

b) Indirect Exposure

Fund based and non-fund based exposures on National Housing Bank (NHB) andHousing Finance Companies (HFCs). 3.56 4.54

Total Exposure to Real Estate Sector 599.91 429.81


35


3.7.2 Exposure to Capital Market (` in crore)


(i) Direct investment in equity shares, convertible bonds, convertible debentures andunits of equity-oriented mutual funds the corpus of which is not exclusively investedin corporate debt; 33.94 32.84

(ii) Advances against shares / bonds / debentures or other securities or on clean basisto individuals for investment in shares (including IPOs / ESOPs), convertible bonds,convertible debentures, and units of equity-oriented mutual funds; 2.41 3.29

(iii) Advances for any other purposes where shares or convertible bonds or convertibledebentures or units of equity oriented mutual funds are taken as primary security; 0.51 0.59

(iv) Advances for any other purposes to the extent secured by the collateral securityof shares or convertible bonds or convertible debentures or units of equity orientedmutual funds i.e. where the primary security other than shares/convertible bonds/convertible debentures/units of equity oriented mutual funds `does not fully coverthe advances; NIL NIL

(v) Secured and unsecured advances to stockbrokers and guarantees issued onbehalf of stockbrokers and market makers; 5.60 81.47

(vi) Loans sanctioned to corporates against the security of shares / bonds/debenturesor other securities or on clean basis for meeting promoter's contribution to theequity of new companies in anticipation of raising resources; NIL NIL

(vii) Bridge loans to companies against expected equity flows / issues; NIL NIL

(viii) Underwriting commitments taken up by the banks in respect of primary issue ofshares or convertible bonds or convertible debentures or units of equity orientedmutual funds; NIL NIL

(ix) Financing to stockbrokers for margin trading; NIL NIL

(x) All exposures to Venture Capital Funds (both registered and unregistered) NIL NIL

Total Exposure to Capital Market 42.46 118.19

The exposure to capital market of ` 42.46 crore is within the limit of ` 362.38 crore (i.e. 40% of Bank’s Net Worth` 905.94 crore as on 31.03.2013). The direct exposure to capital market is ` 33.94 crore and is within 20% ofbank’s Net Worth amounting to ` 181.19 crore (i.e. 20% of Banks Net worth ` 905.94 crore as on 31.03.2013).

3.7.3 Risk Category wise Country Exposure (As compiled by Management) (` in crore)

Risk Category Exposure (net) as at Provision held as at Exposure (net) as at Provision held as at31.3.2014 31.3.2014 31.3.2013 31.3.2013

Insignificant 83.70 NIL 43.89 NIL

Low 61.94 NIL 69.04 NIL

Moderate 19.09 NIL 7.52 NIL

High 1.03 NIL 8.31 NIL

Very High 1.05 NIL – NIL

Restricted 1.48 NIL – NIL

Off-credit 0.00 NIL – NIL

Total 168.29 NIL 128.76 NIL

As the bank’s exposure for the year in respect of risk category wise country exposure (Foreign exchangetransactions) is less than 1% of total assets of the bank, no provision is considered necessary.


36


3.7.4 Details of Single Borrower Limit (SBL) / Group Borrower Limit (GBL) exceeded by the bank.(As compiled by management)A. SBL exceeded by the Bank for the period 01.04.2013 to 31.03.2014 ........................................... NIL

B. GBL exceeded by the Bank for the period from 01.04.2013 to 31.03.2014 ................................. NIL

3.7.5. Unsecured Advances (Amount of advances for which, intangible securities has been taken) (` In crore)

As on As onParticulars 31-3-2014 31-3-2013

The total amount of Advances for which intangible Securities such as chargeover the rights, licenses, Authority, etc. has been taken. 47.96 54.69

Estimated value of such intangible collaterals 123.86 141.08

3.7.6 Letter of Comforts issued by the bank (As compiled by management)Particulars (` In crore)

Letter of comfort issued in earlier years and outstanding as on 01.04.2013 118.32

Add: Letter of comfort issued during the FY 2013-14 368.13

Less: Letter of comfort expired during the FY 2013-14 418.04

Letter of comforts outstanding as on 31/03/2014 68.41

3.8 Miscellaneous3.8.1 Amount of Provisions made for Income-tax during the year: (` In crore)


Provision for Income Tax 22.93 58.43

Provision for Deferred Tax (net) (42.18) (12.23)

Current tax provision is made as applicable under Minimum Alternate Tax (MAT). Credit entitlement u/s 115JAAof the Income Tax Act 1961 is availed and considered as other asset.

3.8.2 Disclosure of Penalties imposed by RBIPenalty charges of ` 2.50 crore was imposed by RBI during the year for non-compliance of RBI instructions onKYC/AML systems.

3.9. Disclosure in terms of Accounting Standards:Accounting Standard 15 - Employee BenefitsPayments to and provision for employees include provision made during the year towards pension, gratuityand leave encashment etc., in accordance with Revised Accounting Standard AS-15.

Retirement benefits to employeesa) The summarized position of Post employment benefits and long term employee benefits recognized in the

profit and loss account and balance sheet as required in accordance with the Accounting Standard -15(Revised) are as under.

I) Principal Actuarial Assumptions at the Balance Sheet Date

Particulars Gratuity Pension Privilege Leave

Discount Rate 9.10% 9.10% 9.10%

Expected return on assets 9.50% 9.50% 0.00%

Salary Escalation Rate 5.00% 5.00% 5.00%

Attrition Rate 4.00% 4.00% 4.00%


37


II. Change in Defined Benefit Obligation (` in lacs)


DBO at beginning of the period 5910.00 18626.00 2712.00

Service Cost 578.89 1116.11 321.98

Interest Cost 507.83 1540.54 234.33

Curtailment Cost / (Credit) - - -

Settlement Cost / (Credit) - - -

Plan Amendments - - -

Acquisitions - - -

Actuarial Losses / (Gains) 235.35 5016.45 385.62

Benefit Payments (659.00) (3394.00) (274.00)

DBO at end of the period 6573.07 22905.10 3379.92

III. Change in Fair Value of Plan Asset (` in lacs)


Fair Value of Plan Assets at beginning of the period 5528.00 17291.00 -

Acquisition adjustment - - -

Expected return on plan assets 538.51 1781.77 -

Actual Company contributions 430.00 2101.00 274.00

Actuarial Gain / (Loss) (28.51) 2440.23 -

Benefits payments (659.00) (3394.00) (274.00)

Fair Value of Plan assets at the end of period 5809.00 20220.00 -

IV. Actual Return on Plan Assets (` in lacs)


Expected return on plan assets 538.51 1781.77 -

Actuarial gain/(loss) on plan assets (28.51) 2440.23 -

Actual return on plan assets 510.00 4222.00 -

V. Actuarial Gain / Loss recognized (` in lacs)


Actuarial gain/(loss) for the Period - Obligation (235.35) (5016.15) (385.62)

Actuarial gain/(loss) for the Period - Plan Assets (28.51) 2440.23 -

Total gain/(loss) for the period (263.86) (2576.22) (385.62)

Actuarial gain/(loss) recognized in the period (263.86) (2576.22) (385.62)

Unrecognized actuarial (gain)/loss at the end of the year - - -


38


VI. Net asset / liability recognized in Balance Sheet (` in lacs)


Present value of Defined Benefit Obligation 6573.07 22905.10 3379.92

Fair Value of Plan Assets (5809.00) (20220.00) 0.00

Funded status [Surplus/(Deficit)] 764.07 2685.10 3379.92

Unrecognized Transition Liability - - -

Unrecognized Past Service Costs 307.00 1555.00 0.00

Net Asset / (Liability) recognized in the Balance Sheet 1071.07 4240.10 3379.92

VII. Expenses recognized in P&L account: (` in lacs)


Current Service cost (including risk premiums for fullyinsured benefits) 578.89 1116.11 321.98

Interest Cost 507.83 1540.54 234.33

Expected Return on Plan Assets (538.51) (1781.77) -

Curtailment Cost / (Credit) - - -

Settlement Cost / (Credit) - - -

Past Service Cost 457.00 1115.00 -

Transition Liability - - -

Actuarial Losses / (Gains) 263.86 2579.22 385.62

Total employer expense recognized in P&L 1269.07 4566.10 941.92

VIII. Reconciliation of Net Asset / Liability Recognized in the balance Sheet (` in lacs)


Net Asset / (Liability) at beginning of period 232.00 1776.00 2712.00

Employer Expense 1269.07 4566.10 941.92

Employer Contributions (430.00) (2101.00) (274.00)

Acquisitions / Business Combinations - - -

Net Asset / (Liability) at end of period 1071.07 4241.10 3379.92

IX. Experience History (` in lacs)


Defined Benefit Obligation at end of the period 6573.07 22905.10 3379.92

Plan Assets at end of the period 5809.00 20220.00 -

Balance Sheet liability / (Assets) 1071.07 4240.10 3379.92

P&L - (Income)/ Expenses 1269.07 4566.10 941.92

Experience adjustments on plan liabilities 192.24 3891.26 184.30

Experience adjustments on plan assets (28.51) 2440.23 -


39


X. Major categories of Plan Assets

Particulars Gratuity Pension

Government of India Securities 9.89% 7.56%

State Government Securities 41.55% 30.50%

Other Securities 29.02% 23.15%

Special Deposits 1.62% 0.00%

Balance with Bank Accounts 3.36% 0.98%

Balance in LIC running accounts 0.00% 3.14%

Annuity under Return of purchase price 0.00% 20.99%

Amount receivable from Bank 12.09% 12.01%

Others (Interest Receivables) 2.47% 1.67%

Total 100.00% 100.00%

XI. Enterprises Best Estimate (` in lacs)


Enterprise’s Best Estimate of Contribution during next year 600.00 2200.00 450.00

3.10 Prudential regulatory treatment prescribed by RBI in respect of pension and Gratuity liability.Reserve Bank of India issued guidelines vide their Circular No. DBOD.BP.BC.80 / 21.04.018/2010-11 dated09.02.2011 and letter DBOD. No. BP.BC. 15896 / 21.04.018 / 2010-11 dated 08.04.2011. Accordingly, the liabilityon account of employee benefits of ` 93.11 crore (towards Pension ` 77.79 crore and towards gratuity` 15.32 crore) is amortised over a period of 5 years from FY 2010-11. Accordingly, Bank has charged to Profit& Loss Account a sum of ` 18.62 crore, (representing 1/5th of the total amount) during the FY 2013-14.Unamortized amount of ` 15.56 crore in respect of pension liability and ` 3.06 crore, in respect of gratuityliability, are carried forward to be charged to P&L account in FY 2014-15.

Pending receipt of opinion from Expert Advisory Committee of Institute of Chartered Accountants of India asadvised by RBI vide their letter dated 28.04.2014, The Lakshmi Vilas Bank Limited (Employees’) Pension Fundhas valued at cost annuities purchased from LIC under Return of Capital (ROC) scheme for certain pensionersbased on an expert opinion obtained as against the valuation made at Net Present Value (NPV) during theprevious year. Bank has provided for the pension liability as per actuarial valuation accordingly.

3.11 Employee Stock Option SchemeThe Compensation Committee of the Board of Directors has granted in aggregate 1685238 stock options,grant date being 21.07.2011 to top Executives of the Bank under the Lakshmi Vilas Bank Employees StockOption Scheme 2010 - LVB ESOS 2010 at an exercise price of ` 61.25 per share. As on 31st March, 2014, theoptions in force are 390000. These options would vest over a period of 2 to 3 years and the Bank has provided` 2.50 crore being the proportionate compensation expenses for the period upto 31st March 2014.


40


4. Accounting Standard 17 - Segment ReportingPART A : BUSINESS SEGMENTS (` in crore)

Quarter Quarter Quarter Year Yearended ended ended ended ended

31-3-2014 31-12-2013 31-3-2013 31-3-2014 31-3-2013 (Audited) (Reviewed) (Audited) (Audited) (Audited)

1. SEGMENT REVENUE : a. Treasury operations 104.62 98.28 94.14 403.65 366.35b. Corporate/wholesale banking

operations 182.44 177.40 186.20 715.29 690.08c. Retail banking operations 287.06 278.69 224.63 1074.23 873.04d. Other banking operations 1.35 2.89 15.84 8.77 28.14TOTAL 575.47 557.25 520.81 2201.94 1957.61

2. SEGMENT RESULTS (Profit/lossbefore Tax) a. Treasury operations (7.63) (9.64) 3.71 (9.17) 20.39b. Corporate/wholesale Banking

operations 0.85 5.46 4.66 7.33 38.82c. Retail banking operations 8.46 10.18 10.47 38.13 53.42d. Other banking operations 0.10 1.43 14.46 4.11 25.14TOTAL 1.78 7.43 33.30 40.41 137.77PROFIT BEFORE TAX 1.78 7.43 33.30 40.41 137.77Less : Tax expenses (19.25) 0.00 16.20 (19.25) 46.20NET PROFIT 21.03 7.43 17.10 59.66 91.57

3. SEGMENT ASSETS : a. Treasury operations 5814.38 5064.11 4414.14 5814.38 4414.14b. Corporate/wholesale banking

operations 5286.10 5012.58 5512.07 5286.10 5512.07c. Retail banking operations 8486.06 8213.65 6709.21 8486.06 6709.21d. Other banking operations 1066.52 1243.47 1031.26 1066.52 1031.26TOTAL 20653.06 19533.81 17666.68 20653.06 17666.68

4. SEGMENT LIABILITIES: a. Treasury operations 24.46 20.35 20.35 24.46 20.35b. Corporate/wholesale banking

operations 5982.87 4819.18 3570.94 5982.87 3570.94c. Retail banking operations 13178.22 13177.22 12630.17 13178.22 12630.17d. Other banking operations 413.90 463.85 430.88 413.90 430.88TOTAL 19599.46 18480.60 16652.34 19599.46 16652.34CAPITAL AND RESERVES 1053.60 1053.21 1014.34 1053.60 1014.34TOTAL 20653.06 19533.81 17666.68 20653.06 17666.68

PART B - GEOGRAPHICAL SEGMENTS : Since the Bank is having domestic operations only, no reporting is madeunder international segment.

Particulars


41


5. Accounting Standard 18 - Related Party Disclosures

Payment to and Provision for Employees’ includes remuneration paid to Managing Director and CEO of theBank as detailed below:

Managing Director & CEO Managing Director & CEOK.S.R. Anjaneyulu Rakesh Sharma

(01.04.2013 to 06.03.2014) (07.03.2014 to 31.03.2014)

Consolidated Pay 5149032.25 322580.65

Employers’ contribution to Provident Fund 335806.00 32258.00

Drivers Salary, petrol & Office expenses 156286.75 8740.57

Others 1802227.00 606654.00

Total 7443352.00 970233.22

6. Accounting Standard 20 - Earnings per Share (EPS):EPS calculation in accordance with the AS-20 issued by the ICAI is as under: (` in lacs)


Net profit after Tax 5965.55 9157.45

Weighted Average No. of Equity shares 97560690 97540690

Weighted Average No. of Diluted Equity shares 97404902 97525768

Earnings per share - Basic (`) 6.11 9.39

Earnings per share - Diluted (`) 6.12 9.39

7. Accounting Standard 22 - Accounting for Taxes on IncomeThe bank has accounted for Income Tax in compliance with AS 22. Accordingly, Deferred Tax Assets &Liabilities are recognized. The major components of DTA / DTL are furnished as under: (` in crore)

Components Deferred Tax Assets Deferred Tax Liabilities

2013-14 2012-13 2013-14 2012-13

Provision for leave encashment 11.48 7.03 0.00 0.00

Provision for other assets 1.17 1.17 0.00 0.00

Provision for advances (incl. restructured) 41.26 25.85 0.00 0.00

Employee benefits 0.00 0.00 0.00 0.30

Special Reserve u/s 36(i)(viii) - CY 0.00 0.00 3.11 0.00

Carried forward loss 27.08 0.00 0.00 0.00

Others 0.33 9.87 9.23 16.81

Sub Total 81.32 43.92 12.34 17.11

Special Reserve u/s 36(i)(viii) - withdrawalfrom reserve 0.00 0.00 7.87 0.00

CLOSING BALANCE 81.32 43.92 20.21 17.11

Net DTA 61.11 26.81

Particulars


42


The income tax expense comprises current tax and deferred tax. Current tax is measured at the amountexpected to be paid in respect of taxable income for the year in accordance with the Income Tax Act.Deferred tax assets and liabilities are recognised for the future tax consequences of timing differences beingthe difference between the taxable income and the accounting income that originate in one period andare capable of reversal in one or more subsequent periods. Deferred tax asset is recognized subject to prudenceand judgment that realization is more likely than not. Deferred tax assets and liabilities are measured using taxrates and tax laws that have been enacted or substantially enacted before the balance sheet date. Changesin deferred tax assets / liabilities on account of changes in enacted tax rates are given effect to in the profitand loss account in the period of the change.

The computation of income as per provisions of the Income Tax Act, 1961 results in a loss for the year underconsideration. In this computation, the bank has considered certain deductions based on judicialpronouncements and legal opinion. Hence, while no provision for taxation is considered necessary, a deferredtax asset of ` 42.18 crore has been recognized by credit to P&L account to comply with the provisions ofAccounting Standards 22 issued by Institute of Chartered Accountants of India. The management is of theopinion that it is in order in recognizing the Deferred Tax Asset as above.

Special Reserve u/s 36(1)(viii) of Income Tax Act, 1961:Pursuant to RBI circular no. DBOD.No.BP.BC.77/21.04.018/ 2013-14 dated 20.12.2013, bank has created DeferredTax Liability (DTL) of ` 7.87 crore on special reserve created u/s 36(1)(viii) of the Income Tax Act, 1961, not fullycharged to profit and loss account in earlier years, has now been adjusted directly from general reserve.

Had this amount been charged to the profit and loss account in accordance with Generally AcceptedAccounting Principles (GAAP), the amount of profit for the year would have been lower by such amount.Further, as required by aforesaid RBI circular, the bank has created a DTL of ` 3.11 crore in respect of theamount transferred to special reserve for the year ended March 31, 2014, and the same is charged to profitand loss account for the year.

Had the bank continued with its policy of not creating a DTL on such special reserve, the reserves and theprofit of the Bank as at/for the year ended 31/03/2014 would have been higher by ` 7.87 crore and ` 3.11crore respectively.

8. Intangible Assets AS 26:The Bank has followed AS 26 - Intangible asset issued by ICAI and the guidelines issued by the RBI in thisregard.

9. Accounting Standard 28 - Impairment of Assets:A substantial portion of the bank's assets comprises financial assets to which Accounting Standard 28 is notapplicable. In the opinion of the bank, there is no impairment of other assets to any material extent as at31st March 2014 requiring recognition in terms of the said standard.


43


10. Additional Disclosures10.1 Provisions and Contingencies: Break up of ‘Provisions & Contingencies’ shown under the head in Profit &Loss Account:

(` in crore)


Provision towards Standard Asset 5.87 1.85

Provision towards NPA 178.32 64.52

Provision for MAT Credit (22.93) 0.00

Provisions for depreciation in market value of Investments 27.46 9.24

Provision for Sick Leave 0.00 (15.92)

Provision for leave encashment 9.41 3.27

Provision for Gratuity (Amortised) 3.06 3.06

Provision for Pension (Amortised) 15.56 15.56

Provision for wage arrears 0.00 5.30

Provision for superannuation fund 15.00 0.00

Provision for Restructured Advances (Economic sacrifice) 36.83 26.49

Sub Total 268.59 113.37

Provision for Income Tax - Current Tax 22.93 58.43

- Deferred Tax (42.18) (12.23)

TOTAL 249.34 159.57

Adhoc Provision for wage revision pending settlement:9th Bi-partite settlement ended with October 2012 and next wage revision has fallen due from Nov 2012. In theprevious year ended 31.03.2013, bank has made a provision of ` 5.30 crore on adhoc basis for the proposedrevision in pay. As on 31.03.2014, provision for the proposed wage revision with 10% load, is estimated at` 18.32 crore and the same has been either paid/ provided. Of the ̀ 18.32 crore, Bank has paid ̀ 3.60 crore asadhoc payment during July ’13 - Oct ’13 and additional provision of ` 9.42 crore is made besides ` 5.30 croreof provision made in the previous year.


44


10.2 Details of movement in provisions in accordance with Accounting Standard 29: (` in crore)

Opening Provision Provision Closingas on made during reversed / as on

01.04.2013 the year adjusted 31.03.2014

Prov. for Standard Assets 38.84 5.87 0.00 44.71

Prov. for Bad and Doubtful debts 100.30 178.32 225.39 53.23

Prov. for Income Tax (net of deferred tax) 137.31 22.93 1.31 158.93

Prov. for depreciation in market value ofInvestments 23.39 27.46 7.57 43.28

Prov. for Leave encashment (includingTransitional Liability) 27.12 9.41 2.73 33.80

Prov. for Other assets 3.50 4.38 4.43 3.45

Prov. For Other Liabilities (NLD agents gratuity) 0.49 0.00 0.00 0.49

Counter cyclical buffer 43.92 0.00 14.49 29.43

Prov. for Interest Tax 0.10 0.00 0.00 0.10

Prov. for Fringe Benefit Tax 1.90 0.00 0.00 1.90

Prov. for Dividend (incl. Div. Tax) 34.24 11.41 34.24 11.41

Prov. for Restructured Advances & FITL 39.85 41.92 5.09 76.68

Others:

Prov. For Bonus. 0.18 0.28 0.20 0.26

Prov. For pension. (including Transitional Liability) 15.89 27.61 15.89 27.61

Prov. For Gratuity. (including Transitional Liability) 4.30 7.99 4.30 7.99

Prov. For Contingency /

Wage arrears 5.30 9.42 0.00 14.72

10.3 Movement of Counter Cyclical Provisioning Buffer (` in crore)


(a) Opening balance in the account 43.92 43.92

(b) Provisions made in the accounting year 0.00 0.00

(c) Amount of drawdown made during the accounting year 14.49 0.00

(d) Closing balance in the account 29.43 43.92

Utilization of Floating provision / Counter Cyclical Provisioning Buffer:RBI vide circular DBOD. No. BP.95/21.04.048/2013-14 dated 07.02.2014 has permitted the banks to utilize upto33% of countercyclical provisioning buffer/floating provisions held by them as on March 31, 2013 during periodsof system wide downturn, for making specific provisions for non-performing assets, as per the policy approvedby their Board of Directors. Taking into account the present economic downturn causing a huge rise in theNPA position, out of the total provision of ` 43.92 crore held by the bank as on 31.03.2013, a sum of ` 14.49crore being 33% of the provision held was utilized in the quarter ended December 2013 for making specificprovision for non-performing assets.

Particulars


45


11. Disclosure of complaints (As compiled by Management)A. Customer Complaints:

(a) No. of complaints pending at the Beginning of the year 4

(b) No. of complaints received during the year 177

(c) No. of complaints redressed during the year 170

(d) No. of complaints pending at the end of the year 11

(ATM complaints are also included in the above data)

B. Awards passed by the Banking Ombudsman:

(a) No. of unimplemented Awards at the beginning of the year 0

(b) No. of Awards Passed by the Banking Ombudsmen during the year 0

(c) No. of Awards implemented during the year 0

(d) No. of unimplemented Awards at the end of the year 0

12. Concentration of Deposits, Advances, Exposures and NPAs12.1 Concentration of Deposits (` in crore)

Total Deposits of twenty largest depositors 3331.27

Percentage of Deposits of twenty largest depositors to Total Deposits of the bank 17.94%

12.2 Concentration of Advances (` in crore)

Total Advances to twenty largest borrowers 2065.86

Percentage of Advances to twenty largest borrowers to Total Advances of the bank 14.05%

12.3 Concentration of Exposures (` in crore)

Total Exposure to twenty largest borrowers/customers 2163.61

Percentage of Exposures to twenty largest borrowers/customers toTotal Exposure of the bank on borrowers/customers 13.83%

12.4 Concentration of NPAs (As compiled by Management) (` in crore)

Total Exposure to top four NPA accounts 194.98

12.5 Sector-wise NPAs (As compiled by Management)

Sl.No. Sector Percentage of NPAs toTotal Advances in that sector

1 Agriculture & allied activities 0.53

2 Industry (Micro & small, Medium and Large) 8.76

3 Services 3.84

4 Personal Loans 1.55


46


12.6 Movement of NPAs (As compiled by Management)

Particulars (` in crore)

Gross NPAs as on 1st April of particular year (Opening Balance) 459.91

Additions (Fresh NPAs) during the year 668.69

Sub-total (A) 1128.60

Less:-

(i) Up gradations 188.01

(ii) Recoveries (excluding recoveries made from upgraded accounts) 162.67

(iii) Technical / Prudential write offs 229.76

(iv) Write-offs other than those under (iii) above 1.70

Sub-total (B) 582.14

Gross NPAs as on 31st March of following year (closing balance) (A-B) 546.46

Details of Technical write -offs and recoveries made:


Opening balance of Technical / Prudential written off accounts as atApril 1, 2013 163.64 149.48

Add: Technical / Prudential write offs during the FY2013-14 229.76 25.18

Sub Total (A) 393.40 174.66

Less: Recoveries made from previously technical / prudential written - offaccounts during the FY 2013-14 (B) 7.55 11.01

Closing balance as at March 31, 2014 (A-B) 385.85 163.65

12.7 Overseas Assets, NPAs and Revenue

Particulars (` in crore)

Total Assets NIL

Total NPAs NIL

Total Revenue NIL

12.8 Off-balance Sheet SPVs sponsored

Name of the SPV sponsored

Domestic Overseas

NA NA

13. Bancassurance Business:Fees, remuneration received from Bancassurance business:For the year ended 31.03.2014, the bank received income of ` 3.41 crore (Gross commission) fromBancassurance business, of which ` 1.84 crore from life insurance segment and ` 1.57 crore from generalinsurance segment.


47


14. Disclosure on Remuneration:a. Qualitative disclosures:

(a) Information relating to the composition and mandateof the Remuneration Committee.

(b) Information relating to the design and structure ofremuneration processes and the key features andobjectives of remuneration policy.

(c) Description of the ways in which current and futurerisks are taken into account in the remunerationprocesses. It should include the nature and type of thekey measures used to take account of these risks.

(d) Description of the ways in which the bank seeks to linkperformance during a performance measurementperiod with level of remuneration.

(e) A discussion of the bank’s policy on deferral and vestingof variable remuneration and a discussion of the bank’spolicy and criteria for adjusting deferred remunerationbefore vesting and after vesting

(f) Description of the different forms of variableremuneration (i.e. cash, shares, ESOPs and other forms)that the bank utilizes and the rationale for using thesedifferent forms.

b. Quantitative disclosures:

Compensation Policy on the guidelinesof Reserve Bank of India approved byBoard on 03.03.2012.

ESOS options granted during the financialyear ` Nil.

The members of the said committee ason 31st March 2014 are 5.

Subsequent amendments were alsoapproved by the Board in the meetingheld on 20.09.2013 & 13.11.2013.


(g) Number of meeting held by the remunerationcommittee during the financial year and remunerationpaid its members.

(h) (i) Number of employees having received a variableremuneration award during the financial year. 4 1

(ii) Number and total amount sign-on awards madeduring the financial year. NIL NIL

(iii) Details of guaranteed bonus, if any, paid asjoining / Sign on bonus. NIL NIL

(iv) Details of severance pay, in addition to accruedbenefits, if any. NIL NIL

(i) (i) Total amount of outstanding deferred remuneration,split into cash, shares and shares - linked instrumentsand other forms. NIL NIL

(ii) Total amount of deferred remuneration paid out in thefinancial year.

(j) Breakdown of amount remuneration awards for thefinancial year to show fixed and variable, deferred andnon-deferred.

(k) (i) Total amount of outstanding deferred remunerationand retained remuneration exposed to ex-postexplicit and/or implicit adjustments. NIL NIL

(ii) Total amount of reductions during the financial yeardue to ex-post explicit adjustments. NIL NIL

(iii) Total amount of reductions during the financial yeardue to ex-post implicit adjustments. NIL NIL

CRCB having 5members Meetings

held is 6 andRemuneration paid

` 1.35 lacs.

CCB having 3Members Meetings

held - 2 andRemuneration paid

` 1.05 lacs.

Variable pay ` 8.57lacs (4 members)No deferred and

non-deferredremuneration.

Variable pay` 1.50 lacs

No deferred andnon-deferredremuneration.


48


15. Disclosures relating to securitization: NA

16. Credit Default Swaps: NIL

17. Previous year’s figures have been regrouped / reclassified wherever considered necessary to conform tothe current year’s classification.






49


DISCLOSURE UNDER PILLAR III OF BASEL III NORMS AS ON 31.03.2014I. SCOPE OF APPLICATION AND CAPITAL ADEQUACY

Table DF - 1

Scope of application

The Lakshmi Vilas Bank Ltd, an old private sector bank incorporated in 1926 at Karur. Since the bank doesn’thave any subsidiaries under its Management. Hence the CRAR is computed in standalone basis.

(i) Qualitative Disclosures:a. List of group entities considered for consolidation.b. List of group entities not considered for consolidation both under the accounting and regulatory scope

of consolidation.No group affiliation

(ii) Quantitative Disclosures:c. List of group entities considered for consolidation.

Not applicabled. The aggregate amount of capital deficiencies in all subsidiaries which are not included in the regulatory

scope of consolidation i.e. that are deducted:Not applicable

e. The aggregate amounts (e.g.current book value) of the bank’s total interests in insurance entities, whichare risk-weighted:

Not applicablef. Any restrictions or impediments on transfer of funds or regulatory capital within the banking group:

Not applicable

Table DF - 2

Capital AdequacyQualitative Disclosuresa) A summary discussion of the bank’s approach for assessing the adequacy of its capital to support current

and future activities.The Bank is exposed to Credit risk, market risk, Operational risk and other Pillar II risks. Based on the scale ofbusiness operations approaches have been put in place to compute the required capital of the bank andcontrols that are commensurate the risk profile of the bank. The bank has adopted the following approachesfor the computing the capital charge.Credit Risk – Standardized ApproachMarket Risk – Standardized duration ApproachOperational Risk – Basic Indicator Approach

• The Business projections, capital requirement, Assessment methodology, controlling mechanism, etc., havebeen discussed in ICAAP document and it has been reviewed on yearly basis.

• CRAR has been computed based on the Basel III guidelines and it is well above the regulatory minimumlevel of 9% (other than capital conservation buffer and Countercyclical Capital buffer etc.)

Quantitative Disclosures:Capital Requirements: (Amount in `)

Particulars No of Equity Shares Face Value Per share Amount

Authorized Capital 150000000 10 1500000000

Issued Capital 98372564 10 983725640

Subscribed Capital 97560690 10 975606900

Called up/paid up Capital 97560690 10 975606900


50


The Bank’s shares are listed on the National Stock Exchange Limited and Bombay Stock Exchange Limited.

As on March 31, 2014 the bank does not have Additional Tier I Capital.

Tier 1 capital includes Equity share capital, Reserves comprising of statutory reserves, capital and other revenuereserves, share premium and Balance in profit and loss account and less intangible assets

Tier 2 Capital consists of the general provisions, Tier II bonds – subordinated Debt (Discounted value), andRevaluation reserves as on 31.03.2014.

a) Break up of capital funds:The Tier I Capital of the Bank comprises of (` in lacs)

Paid up capital 9756.07

Reserves & surplus 87236.06

Less: Intangible Assets 9539.56

Total 87452.57

The Tier II Capital of the Bank comprises of (` in lacs)

General Provisions and Loss Reserve 6150.03

Subordinated debts 24110.00

Revaluation Reserves 3439.26

Total 33699.29

The Total Capital comprises of (` in lacs)

Tier I Capital 87452.57

Tier II Capital 33699.29

Risk Type

b) Capital requirements for Credit Risk (` In lacs)

Portfolios subject to standardized approach 86287.89

Cash & Bank 255.50

Loans and Advances 82144.31

Fixed Assets 1676.39

Other Assets 2211.69

Securitization exposures -

c) Capital requirements for Market Risk 6187.87

Standardized Duration approach

Interest Rate Risk 5219.97

Foreign Exchange Risk (including gold) 131.79

Equity Risk 836.11

d) Capital requirements for Operational Risk 7569.39

Basic Indicator approach 7569.39

Total Risk weight Assets (b+c+d)*100/9 1111612.77

Total Capital funds 121151.86

CRAR (Basel III) 10.90%


51


e) Common Equity Tier 1, Tier I and Total Capital ratios:For the top consolidated group; and for significant bank subsidiaries (stand alone or sub-consolidateddepending on how the framework is applied)

Not applicable

II. Risk Exposure and Assessment

General Qualitative Disclosure requirement:

Credit Risk:

The objectives of Credit risk management practices in the bank are the following:

To ensure business continuity with growth and stability.

To ensure that the bank holds adequate capital in alignment with risks undertaken as well as the regulatoryrequirements from time to time.

To optimize risk-return profile by providing a framework for risk-based pricing.

To provide decision support for entry / exit strategies.

To provide a framework for monitoring risk profile of the bank through structured reports.

To facilitate the identification of risks in various activities undertaken by the bank through its operatingunits.

To provide guidance on measurement of risks and their quantification for assessing the level of risk underportfolio management.

To provide guidance on risk mitigation for ensuring customer retention while promoting risk-rewardconsciousness at all levels of operation.

To set / monitor prudential risk limits in tune with the business strategy, capital adequacy and regulatoryprescriptions.

To ensure the adherence to these risk limits through defining the reporting structures and systems.

To ensure compliance with other regulatory prescriptions.

The bank proposes to keep its overall risk profile as moderate and stable for the medium term.

Risk appetite and risk-return profile, credit risk strategy shall also include a statement of the banks willingnessto grant credit based on:

• exposure type (for example, commercial, consumer, real estate, etc.),

• economic sector (e.g. textile, iron etc.),

• geographical location,

• currency,

• maturity,

• anticipated profitability,

• identification of target markets / business sectors (like priority sector lending) and

• the overall credit portfolio composition

• preferred levels of diversification & concentration tolerances.

Credit risk strategy of the bank shall provide continuity in approach considering cyclical approach of theeconomy and the resulting shifts in the composition and quality of the overall credit portfolio.

Strategy is being reviewed yearly in CRM policy.


52


Organization Structure:

Comprehensive Risk Management Policy put in place and the same has been approved by Board. Thehierarchy of the IRMD starts from Board of Directors. Board is responsible for approving & reviewing on aperiodical basis credit risk related policies, strategy & limits. Further Board has sub level committee (IRMCB) toreview the risk limits, monitor the functioning of the IRMC-E and issue necessary directions if require.

The Scope and nature of risk reporting and / or measurement systems.

Risk-rating model is an important tool and is an integral part of the Credit Risk Management. The benefits of arobust system based rating model.

Serves as a single point indicator of diverse risks of a borrower

Enables banks to take informed credit decisions in a consistent manner.

Facilitates adoption of risk-based pricing.

Arriving at Facility Risk rating for the particular facility/product based on the comforts of securities/guarantors.

Internal credit rating models / systems are an important tool in monitoring the quality of individual credits, aswell as the total portfolio. A well-structured internal risk rating system is a good means of differentiating thedegree of credit risk in the different credit exposures of the bank. This will allow more accurate determinationof the overall characteristics of the credit portfolio, concentrations, problem credits, and the adequacy ofloan loss reserves.

Internal credit rating framework enables the Bank to standardize and uniformly communicate the “judgment”in credit selection procedures but is not a substitute to the vast lending experience accumulated by thebank’s professional staff.

In order to make the credit risk assessment more consistent and effective, a two dimensional approach tomeasure risk comprising borrower risk (Obligor Rating) and transaction risk (Facility Rating) has beenimplemented.

Board of Directors

Integrated Risk Mgt. Committee -Board

Integrated Risk Mgt. Committee -Executives(Credit Risk Mgt. Committee / ALCO /

Operational Risk Mgt. Committee)

Integrated Risk Mgt. Deptt. (IRMD)

Credit Risk Mgt. Deptt.

Operational Risk Mgt. Deptt.

Market Risk Mgt. / Asset Liability Mgt. Deptt.

Internal Audit

Independent Evaluation

Business Units

Organization Structure IRMD-Credit Risk Management


53


Use of Risk Rating Models / Systems• Individual credit selection, wherein a borrower or a particular exposure/ facility is rated.

• Pricing of the facility / loan

• Deciding the limits & tenure of the proposed credit assistance.

• Portfolio-level analysis and portfolio management

• Frequency and intensity of monitoring of the exposures.

• Internal MIS

• General provision “reasonable over provisioning” in addition to statutory prescribed provision.

• Assessing the aggregate risk profile of bank.

The Bank has a multi-tier structure for sanction of credit proposals, with proper delegation of lending powersat various levels of officers & executives, duly approved by Board.

The powers vested at each level depend on the quantum and type of the loan facility and the overallexposure to the borrower/group.

The Bank has a system under which the lending powers exercised by delegated authority are reported to andreviewed by a higher authority under the Internal Loan Review Mechanism.

A two dimensional approach to measure risk comprising borrower risk (Obligor Rating) and transaction risk(Facility Rating) has been implemented. The Credit Risk Assessment System (CRAS) operated through the riskrating models shall form the fulcrum of credit risk management.

Policies for hedging and / or mitigating risk and strategies and processes for monitoring the continuingeffectiveness of hedges/mitigantsAs per the RBI guidelines, eligible financial collaterals have been taken into account for Risk mitigation purpose.

Bank is having a system in place to monitor compliance with country exposure limits. Exceptions are reported,approved and rectified as per laid down procedures.

Bank is having an effective system in place to generate management reports which are detailed enough forthe senior management review and to identify exceptions in a timely manner.

Market Risk:Strategies and processesThe Bank has policies like Asset Liability Management Policy, Investment & Forex Risk Policy to address theliquidity risk and market risk respectively arising out of its banking book and trading book of investmentportfolio.

Mid office is functioning independent of treasury and it monitors limits, trigger of investments, cut (stop) losslimit, Open position limit etc., Further it assess various limits set out by RBI and as stipulated in Investment/trading book Policy, and keeps track on rating migration of rated securities on a daily basis. It fixes the overallcounter-party exposure limits (Banks & FIs).

The structure and organization of the relevant risk management functionThe Asset Liability Committee (ALCO) is responsible for

Managing Interest Rate Risk and Liquidity Risk of the Banking Books.

Pricing of Assets and Liabilities.

Monitor and control the quality of the Balance Sheet


54


Review and control of limits, procedures, reports, ratios & market trends, which impact bank’s BalanceSheet.

Review the treasury operations including trading.

Differential pricing of wholesale deposits be delegated to Planning & Development

The scope and nature of risk reporting and/or measurement systemsThe ALM Policy will be operated through the Integrated Risk Management Department (IRMD) which isresponsible for evolving appropriate systems & procedures for ongoing identification & analysis of BalanceSheet risks and laying down parameters for management of these risks. IRMD will, therefore, have theresponsibilities of periodic monitoring and control of the risks and the same has been reported to IRMC-E &IRMC-B.

Policies for hedging and/or mitigating and strategies and processes for monitoring the continuing effectivenessof hedges/mitigants.Board approved Investment and Forex policy put in place. Policies for hedging/ mitigating risk and strategiesand processes for monitoring the continuing effectiveness of hedges / mitigants are discussed in ALCO.

The Structural liquidity statement is prepared on a daily basis to analyze the liquidity profile of the bank in astatic manner. Exchange risk is managed by fixing limits on position limits – Day light and Overnight limits,single deal limit, stop loss limit and Overall Overnight Open Exchange position limit. Additional liquidity ratiosreviewed on a quarterly basis against the limits set under stock approach.

Interest rate risk is analyzed from earnings perspective using Traditional Gap analysis and Economic valueperspective using Duration Gap analysis on a Quaterly basis. Further stress testing process conducted underscenario as well as stock approach to estimate the impact on various conditions.

Operational RiskStrategies and processesThe strategy for the overall management of operational risk is in alignment with the business objectives & riskappetite of the bank considering the size, nature and complexities of the bank’s activities.

The strategy towards operational risk management shall focus on:

The Structure and organization of the relevant risk management functionOperational Risk Management is organized within the IRMD and will report to the head of the risk. The hierarchyof ORM within the organizational chart for governance purposes is presented below. These roles andresponsibilities relate only to the activities relating to operational risk management.ent Department

Integrated Risk Mgt. Committee-E

CFO (Chief Financial Officer)

Operational Risk Management Department

Audit Committee of Board

Business Head Audit Department

Operational Risk Coordinators from Business/Support Line

Board of Directors


55


A well defined Operational risk Management policy is put in place. The role of Board vests in setting businessstrategy, risk appetite, policies, governance, management framework, methodology of measurement andassessment, internal audit, report to stakeholders on risk management, etc.

The Scope and nature of risk reporting and/or measurement systemsThe scope of risk reporting is to establish an explicit operational risk management process that results in theidentification, evaluation, assessment, measurement, analysis, monitoring, control, mitigation and reportingof operational risks. This process also includes independent evaluation of operational risk management functionby the Internal Audit Department and to report its findings to the Board / Senior Management as an assurancefor the effective discharge of responsibilities with respect to management of operational risk.

Policies for hedging and/or mitigating and strategies and processes for monitoring the continuing effectivenessof hedges/mitigantsPolicies and procedures are put in place for control / mitigate material operational risks to adjust the riskappetite / tolerance level based on its risk control and mitigation strategies. For those risks that cannot becontrolled, the bank decides whether to accept these risks, reduce the level of business activity involved, orwithdraw from this activity completely. Some major control/mitigation techniques like sound internal controlsystem, Insurance, Standards for Insurance Recognition, retention/self insurance, Business Continuity andDisaster Recovery Plan, Outsourcing of financial services, Information Technology security, Internal Audit,External Audit, Reporting are deployed in the framework.

Interest Rate Risk in Banking BookStrategies and ProcessesInterest Rate Risk is measured in two different ways. Earnings perspective using Traditional Gap Analysis is toassess the impact of adverse movement in interest rate on the Net Interest Income (Earnings at Risk) andeconomic value perspective using Duration Gap Analysis to assess the impact of adverse movement in interestrate on the market value of Bank’s equity.

Structure and Organization of Risk Management FunctionALM policy will manage and monitor the limits / guidance values/target set on interest rate risk of the BankingBook. IRMC-B and ALCO at the executive level are responsible for efficient and effective management ofInterest rate risk in Banks business.

Scope and nature of risk reporting / measurement systemsThe Duration/ Modified duration mainly depends on coupon, maturity and periodicity of payment ofinstallments. Since the modified duration of the liabilities is less compared to the modified duration of assets,there is fall in the equity value under major stress. Modified duration of Equity is calculated on a quarterlybasis. The capital charge for Interest rate risk in banking book is assessed based on drop in the Market valueof equity under 200 bps changes in interest rate. The results of Traditional Gap analysis and Duration Gapanalysis including the adherence to tolerance limit set in this regard is monitored and the same has beenplaced before ALCO/IRMC-B level.

Policies for hedging / mitigating risk and strategies and processes for monitoring the continuing effectivenessof hedges / mitigantsInvestment policy, Forex policy, ALM policy, Stress testing policy, Credit Risk Management Policy are put inplace to measure, mitigate / hedge the various risks.


56


Table DF - 3 Credit Risk

Credit Risk: General Disclosures For All Banks

Qualitative Disclosures:a) The general Qualitative disclosure requirement with respect to credit risk, Includes the definitions of Past

Due, NPA of a loan or a advance and impaired assets (For Accounting Purposes), Out of order and Overdue.These definitions are as per the extant guidelines of Reserve Bank of India.

Credit RiskCredit risk in simple terms is the potential that bank’s borrower or counterparty will fail to meet its obligationsin accordance with agreed terms.Credit risk is defined as the possibility of losses associated with default in repayment or diminution in thecredit quality of borrowers or counterparties or diminution in the value of primary and/or collateral assets.In a bank’s portfolio, losses stem from outright default due to inability or unwillingness of a customer orcounterparty to meet commitments in relation to lending, trading, settlement and other financialtransactions.

Discussion Of the Bank’s Credit risk management policyThe Board level approved Credit Risk Management Policy is put in place. The goal of the policy is to ensurethat it is within the acceptable risk appetite and tolerance limit set by the bank. It manages the credit riskinherent in the entire portfolio as well as the risk in individual credits or transactions and it encompassesidentification, measurement, monitoring and control of the credit risk exposures. Further it deals the structure,governance, framework, processes for effective and efficient management of the Credit risk.

Quantitative Disclosures:b) Total gross credit risk exposures, Fund based and Non-fund based separately.

Credit Risk Exposures (` in lacs)

Fund Based* 1906883.51

Non Fund Based 166779.98

Total Fund & Non Fund Based 2073663.49

* It includes loans/advances; fixed assets, other assets, cash, bank balances, balance with RBI and investments.

c) Geographic distribution of exposures, Fund based and Non-fund based separately (` in lacs)

STATE NAME FUNDED NON-FUNDED TOTALTAMIL NADU 674072.42 51680.54 725752.96MAHARASHTRA 228007.13 49278.11 277285.24ANDHRA PRADESH 157487.94 40830.05 198317.99KARNATAKA 138615.82 4910.63 143526.45GUJARAT 15290.85 604.86 15895.71CHATTISGARH 526.77 0.00 526.77DELHI 47023.87 12843.52 59867.39HARYANA 1335.64 372.98 1708.62JHARKHAND 114.66 0.00 114.66KERALA 12232.52 51.87 12284.39MADHYA PRADESH 688.23 120.63 808.86ORISSA 526.15 10.48 536.63PUDUCHERRY 8768.16 335.24 9103.4RAJASTHAN 2963.43 5.00 2968.43UTTAR PRADESH 377.99 7.00 384.99WEST BENGAL 15738.57 5726.82 21465.39GRAND TOTAL 1303770.15 166777.73 1470547.88


57


d) Industry Wise distribution of Exposures, Fund based and Non fund based (` In lacs)

S. Industry Name Funded Non-funded Total % grossNo. credit1 Mining and Quarrying 19186.86 124.06 19310.92 1.31

2 Food Processing 40906.76 10384.08 51290.84 3.49

3 Beverages (excluding Tea & Coffee)and Tobacco 4021.21 125.38 4146.59 0.28

4 Textiles 80479.31 6700.77 87180.08 5.93

5 Leather and Leather products 1033.00 27.13 1060.13 0.07

6 Wood and Wood Products 7960.34 14025.74 21986.08 1.50

7 Paper and Paper Products 7812.49 747.05 8559.54 0.58

8 Petroleum (non-infra), Coal Products(non-mining) and Nuclear Fuels 41.12 0.00 41.12 0.00

9 Chemicals and Chemical Products(Dyes, Paints, etc.) 20082.45 15552.16 35634.61 2.42

10 Rubber, Plastic and their Products 5207.99 178.85 5386.84 0.37

11 Glass & Glassware 2229.86 0.00 2229.86 0.15

12 Cement and Cement Products 15750.82 1.00 15751.82 1.07

13 Basic Metal and Metal Products 66487.79 35627.97 102115.76 6.94

14 All Engineering 22442.35 8683.78 31126.13 2.12

15 Vehicles, Vehicle Parts and TransportEquipments 6016.00 8.06 6024.06 0.41

16 Gems and Jwellery 9571.65 780.00 10351.65 0.70

17 Construction 1684.24 1013.30 2697.54 0.18

18 Infrastructure 116842.57 21985.73 138828.3 9.44

Other Industries 876013.34 50812.67 926828.26 63.03

Total Loans and Advances 1303770.15 166777.73 1470547.88Note: The industries break-up given on the same lines as prescribed for DSB returns. Residual advances areeducational loans, aviation sector, Housing loans, Gold loans, Loan against deposits, Personnel loan, staffloan, consumer loans, vehicle loans, etc. The Industries which has crossed 5% of gross credit exposure.a) Textiles – 5.93%b) Basic Metal and Metal Products – 6.94%c) Infrastructure – 9.44%e) Residual Contractual maturity breakdown of assets (` in lacs)

Cash Balance Balance Invest- Call Advances Fixed Otherwith RBI with other ments Money Assets Assets

Banks PlacementsOverdue to1 Day 22650.96 1136.68 2034.43 9275.79 7992.04 16036.50 0.00 1790.082-7 Days 0.00 1783.10 0.00 19691.98 0.00 36846.56 0.00 317.268-14 Days 0.00 1267.15 0.00 5811.89 0.00 39332.73 0.00 369.5015-28 Days 0.00 3412.87 0.00 28063.87 0.00 66883.28 0.00 738.0529 Days to 3 Months 0.00 10954.66 0.00 56978.61 0.00 247325.92 0.00 3271.363-6 Months 0.00 14132.54 0.00 69639.11 0.00 66165.02 0.00 4749.376 Months-1 Year 0.00 19641.52 0.00 99650.35 0.00 167050.90 0.00 0.001-3 Years 0.00 26070.49 444.03 133789.89 0.00 508496.34 0.00 59492.743-5 Years 0.00 6025.72 0.00 44330.09 0.00 59018.13 0.00 4.94Over 5 Years 0.00 12132.57 0.00 107437.94 0.00 81927.92 20050.82 3147.73Total 22650.96 96557.29 2478.47 574669.51 7992.04 1289083.30 20050.82 73881.03


58


Asset Quality

f) Amount of NPAs (Gross) (` in lacs)

Substandard 32905.19

Doubtful 1 11045.25

Doubtful 2 9751.86

Doubtful 3 103.69

Loss 840.46

Total 54646.45

g) Net NPAs ` 44339.15 Lacs

h) NPA Ratios:

Gross NPAs to gross advances 4.19%

Net NPAs to net advances 3.44%

i) Movement of NPAs (Gross) (` in. lacs)


Additions 66868.84

Reductions 58213.17


j) Movement of provisions for NPAs (` in. lacs)


Provisions made during the period 24792.00

Write-back/Write -Off of excess provisions 29499.06


k) Amount of Non-performing investments ` 874.55 lacs

l) Amount of provisions held for non-performing investments ` 710.55 lacs

m)Movement of provisions for depreciation on investments (` in. lacs)


Provisions made during the period 2746.07

Write-off/ Write-back of excess provisions 756.72



59


Table DF - 4

Credit Risk: Disclosures for portfolios subject to the standardized approach

Quantitative Disclosuresa) For exposure amounts after risk mitigation subject to the standardized approach, amount of a bank’s

outstanding (rated and unrated) in the following three major risk buckets as well as those that are deducted:

Particulars Below 100% 100% Risk More than 100% Grand TotalRisk Weight Weight Risk Weight

BV** RWA** BV RWA BV RWA BV RWA

Fund Based

Loans & Advances 824495.47 284575.20 265486.92 262316.28 213790.25 305673.68 1303772.64 852565.16

Investments 387372.28 0.00 0.00 0.00 0.00 0.00 387372.28 0.00

Other Assets* 195546.89 27441.92 20191.70 18626.20 0.00 0.00 215738.59 46068.12

Loans & AdvancesDeducted (Taken forMitigation purpose) 378642.35 0.00 4735.74 0.00 0.00 0.00 381812.99 0.00

Total Fund Based 1407414.64 312017.12 285678.62 280942.88 213790.25 305673.68 1906883.51 898633.68

Non Fund Based inc.Contingent credit 43617.83 10557.78 56871.41 16875.54 66290.78 32687.57 166780.02 60120.89

Total Credit RiskExposures 1451032.47 322574.9 342550.03 297818.42 280081.03 338361.25 2073663.53 958754.57

* Other assets includes cash, balance with RBI, balance with other banks, fixed assets and others.

** BV : Book Value; RWA : Risk Weighted Assets.


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Table DF - 5

Credit Risk Mitigation: Disclosures for Standardized Approaches

Quantitative Disclosuresa) The general qualitative disclosure requirement with respect to credit risk mitigation including

Policies and process for and an indication of the extent to which the bank makes use of, on and off balancesheet netting;

• Policies and processes for collateral valuation and management

Bank has a policy and procedure for the management of collateral and guarantees.

Valuation should be based on the current market value of the collateral and should not be biased in orderto enable the bank, to grant a higher credit limit to the borrower or improve its internal credit rating, makea smaller amount of provision or continue interest accrual for a problem credit.

Collateral should be revalued on a regular basis, though the frequency may vary with the type of collateralinvolved and the nature & the internal credit rating of the underlying credit e.g. frequency for shares andproperties as collateral would be different.

Collaterals & guarantees are properly evaluated with respect to legal validity, enforceability in all relevantjurisdictions, etc., for the purpose of netting as credit risk mitigants as per the policy.

A more conservative approach should be adopted for valuing the collateral of problem credits becausethe forced-sale value, rather than the open market value, is likely to be closer to what eventually may berealized from an asset sale when the market conditions are un-favorable. Therefore, a discount to theestimated market value should be applied where appropriate.

• Description of the main types of collateral taken by the bank

Under Standardized approach, the following collateral instruments used as risk mitigants for the capitalcomputation.

1. Cash and fixed deposits of the Borrower with the Bank.

2. Gold ( The value of the gold arrived after notionally converting into 99.99% purity)

3. Securities issued by Central and State Governments.

4. Kisan Vikas Patra and National Savings Certificates (with no lock-in period)

5. Life insurance policies with a declared surrender value of an insurance company which is regulated byan insurance sector regulator.

6. Debt Securities issued by Public Sector Entities and other entities (including banks and other primarydealers) rated by chosen rating agency attracting 100% risk weight or lesser risk weight. (i.e. rated atleastBBB(-) or A3 for short-term debt instruments)

7. Debt Securities not rated by a chosen Credit Rating Agency in respect of which banks should be sufficientlyconfident about the market liquidity where these are

a) Issued by a bank

b) Listed on a recognized stock exchange,

c) Classified as senior debt and

d) All the rated issues of the same senior by the issuing bank are rated atleast BBB (-) or A3 by a chosenCredit Rating Agency.

e) The bank has no information to suggest that the issue justifies a rating below BBB (-) or A3 by a chosenCredit Rating Agency


61


8. Units of Mutual Funds regulated by the securities regulator of the jurisdiction of the Bank's operation andmutual funds where

a. A price for the units is publicly quoted daily i.e. where the daily NAV is available in public domain.

b. Mutual fund is limited to investing in the permitted instruments listed.

• The main types of guarantor counterparty and their credit worthiness;

The guarantees are direct, explicit, irrevocable and unconditional. These types of collateral used forcredit protection as well as capital protection.

The guarantors counterparties are

a) Sovereign, sovereign entities like ECGC, CGTSI & CRGFTLIH, banks and primary dealers with a lowerrisk weight than the counterparty.

b) Other entities externally rated as BBB(-) or A(-) or better. This would include credit protection providedby parent, subsidiary and affiliate companies when they have a lower risk weight than the obligor.

• Information about (market or credit ) risk concentrations within the mitigation taken

Majority of the exposures are retail exposures and insulated with adequate liquid collateral by way ofcash margin, KVP, fixed deposits, National Savings Certificate, Life Insurance Policies etc for reducingthe capital buffer after applying applicable haircuts in the respective securities.

Quantitative Disclosuresc) For each separately disclosed credit risk portfolio the total exposure (after, where applicable, on -or off

balance sheet netting) that is covered by eligible financial collateral after the application of haircuts.

(` in Lacs)

Collateral Type Exposure Financial Net ExposureCollateral

Amount

Deposits 108319.07 108319.07 0.00

Gold 256358.41 301598.13 0.00

Securities 0.00 0.00 0.00

KVP / NSC 313.27 641.46 0.00

Life Insurance Policies 362.17 391.81 0.00

Debt Securities 0.00 0.00 0.00

Mutual Funds 0.00 0.00 0.00

Cash Margin - Term Deposit 18518.49 18518.49 0.00

d) For each separately disclosed portfolio the total exposure (after, where applicable, on- or off-balance

sheet netting) that is covered by guarantees/credit derivatives (whenever specifically permitted by RBI) :

NIL.


62


Table DF - 6

Credit Risk Mitigation: Securitization Exposures: Disclosure for Standardised

Quantitative Disclosuresa) The general qualitative disclosure requirement with respect to securitisation including a discussion of:

the bank’s objectives in relation to securitisation activity, including the extent to which these activitiestransfer credit risk of the underlying securitised exposures away from the bank to other entities.

the nature of other risks (e.g. liquidity risk) inherent in securitised assets;

the various roles played by the bank in the securitization process (For example: originator, investor,servicer, provider of credit enhancement, liquidity provider, swap provider@, protection provider#) andan indication processes in place to monitor changes in the credit and market risk of securitizationexposures (for example, how the behavior of the underlying assets impacts securitization exposures asdefined in paragraph 5.16.1 of Basel III Capital Regulations).

A description of the bank’s policy governing the use of credit risk mitigation to mitigate the risks retainedthrough securitization exposures;@ A bank may have provided support to a securitization structure in the form of an interest rate swap orcurrency swap to mitigate the interest rate/currency risk of the underlying assets, if permitted as perregulatory rules.

# A bank may provide credit protection to a securitization transaction through guarantees, creditderivatives or any other similar product, if permitted as per regulatory rules of the extent of the bank’sinvolvement in each of them;

Not applicable

b) Summary of the bank’s accounting policies for securitisation activities, including:Whether the transactions are treated as sales or financings;

methods and key assumptions (including inputs) applied in valuing positions retained or purchased

changes in methods and key assumptions from the previous period and impact of the changes;

policies for recognising liabilities on the balance sheet for arrangements that could require the bank toprovide financial support for securitised assets;

c) In the banking book, the names of ECAIs used for securitisations and the types of securitisation exposure forwhich each agency is used.

Not applicable

Quantitative Disclosures-Banking Bookd) The total amount of exposures securitised by the bank.

e) For exposures securitised losses recognised by the bank during the current period broken by the exposuretype (e.g. Credit cards, housing loans, auto loans etc. detailed by underlying security)

f) Amount of assets intended to be securitised within a year

g) Of (f), amount of assets originated within a year before securitisation

h) The total amount of exposures securitised (by exposure type) and unrecognised gain or losses on sale byexposure type.

i) Aggregate amount of:

• on-balance sheet securitization exposures retained or purchased broken down by exposure type and

• off-balance sheet securitization exposures broken down by exposure type

j) Aggregate amount of securitization exposures retained or purchased and the associated capital charges,broken down between exposures and further broken down into different risk weight bands for each regulatorycapital approach


63


Exposures that have been deducted entirely from Tier 1 capital, credit enhancing I/Os deducted from totalcapital, and other exposures deducted from total capital (by exposure type).

Not applicable

Quantitative Disclosures: Trading book

k) Aggregate amount of exposures securitized by the bank for which the bank has retained some exposuresand which is subject to the market risk approach, by exposure type.

m)Aggregate amount of securitization exposures retained or purchased separately for:

• securitization exposures retained or purchased subject to Comprehensive Risk Measure for specific risk;and

• securitization exposures subject to the securitization framework for specific risk into different risk weightbands.

n) Aggregate amount of:

• the capital requirements for the securitization exposures, subject to the securitization framework brokendown into different risk weight bands.

• securitisation exposures that are deducted entirely from Tier 1 capital, credit enhancing I/Os deductedfrom total capital, and other exposures deducted from total capital(by exposure type).

Not applicable

Table DF - 7

Market risk in Trading Book

Qualitative disclosuresa) Approach for Computation of Capital charge for Market Risk

Standardized Duration Approach is used for calculating Capital charge for Market Risk. Components underMarket risk are

a) Specific Risk – Capital Charge for market risk is computed based on risk weights prescribed by theregulator.

b) General Market Risk is calculated for

Securities under HFT category

Securities under AFS category

Open foreign exchange position limits

Trading Positions in Derivatives

The total Capital charge for market risk is equal to greater of Specific Capital charge plus GeneralMarket Risk Capital Charge or Alternative total capital charge.

Quantitative Disclosuresa) The capital requirements for:·

• Interest rate risk ` 5219.97 Lacs

• Equity position risk ` 836.11 Lacs

• Foreign exchange risk ` 131.79 Lacs


64


Table DF - 8Operational Risk

The Bank has put in place important policies like Operational Risk Management, Information System Security,Know your Customer (KYC) and Anti Money Laundering (AML), Business Continuity and Disaster RecoveryManagement. The updated manuals on all important functional areas have been circulated to the branches.Risk Based Internal Audit is introduced in all branches in our Bank.

The Operational Risk Management Policy outlines the Organisation structure and covers the process ofidentification, assessment / measurement and control of various operational risks. Internal control mechanismis in place to control and minimize the operational risks.

Capital charge for operational risk is computed as per the Basic Indicator Approach. The average of thegross income, as defined in the New Capital Adequacy Framework guidelines, for the previous 3 years i.e2012-13, 2011-12, 2010-11 is considered for computing the capital charge. The required capital is ` 7569.39Lacs.

Table DF - 9Interest Rate Risk in the Banking Book (IRRBB)

Interest Rate Risk in Banking Book (IRRBB) refers to the risk of loss in earnings and economic value of the Bank’sBanking Book as a consequence of movement in interest rates. The Bank has significant portion of its assetsand liabilities portfolio not marked to market and is carried on the books of the Bank at historical values. Thus,the economic value of such assets and liabilities is generally not ascertained on a regular basis and can be asignificant source of risk if the asset or liability is not held till maturity.

IRRBB Earnings PerspectiveThe immediate impact of changes in interest rates in the market is on bank’s earnings by changing the NetInterest Income (NII). The interest rate risk when viewed from this perspective is known as ‘Earnings Perspective’.

The asset liability profile up to 6 months is ‘asset sensitive’. The positive mismatches in the near term timebuckets (up to 6 months) will be beneficial to the bank if the interest rates increases in the economy.

Considering the impact of cost of reserves, sizable share of deposits with differential interest rates and thesignificant share of fixed interest rate instruments (mainly SLR investments), any adjustment to BPLR/Base Rateis to be made without much delay from the changes made for term deposits interest rates.

Interest Rate Risk - Economic Value PerspectiveThe long-term impact of changes in interest rates in the economy will be on bank’s Market Value of Equity(MVE) since the economic value of the bank’s assets, liabilities and off-balance sheet positions get affecteddue to variations in market interest rates.

Duration Gap Analysis (DGA) for IRR management is a simple approach to measure the volatility of marketvalue of equity (MVE) in response to the changes in interest rates in the economy.

Since the modified duration of the liabilities are less compared to the modified duration of assets, there wasfall in the equity value under major stress. In order to bring down the percentage of fall in market value ofequity and earnings at risk under major stress, we have to mobilize term deposits with longer tenure i.e., 3-5years and over 5 years. As longer the tenure of liabilities, higher will be the modified duration.

The level of IRRBB (Earnings Perspective & Economic Value Perspective) is being measured and monitored ona quarterly basis aiming at managing it within the limit over a period and minimizes the impact of interest ratemovement on near term profitability.

Quantitative DisclosuresLimits have been fixed for changes in Earnings at Risk and Market Value of Equity for 200bps shock in theinterest rates. The impact in EaR and MVE is assessed in the following six different scenarios.


65


Impact on Stress test Scenarios: (` In lacs)

Stress Test Scenario Impact on Profit Impact on Equity

Scenario 1 276.23 -3,318.03

Scenario 2 -6,151.58 7,829.27

Scenario 3 1,778.38 -87.08

Scenario 4 4,936.42 -18,153.65

Scenario 5 -9,389.43 30,500.74

Scenario 6 552.46 -6,636.06

For a parallel shift of 200 bps, rise of NII is at ` 552.46 lakhs and fall of EVE by ` 6636.06 lakhs.

Scenario 1 Assets 1% 1% 1% 1% 1% 1% 1%

Liabilities 1% 1% 1% 1% 1% 1% 1%

Scenario 2 Assets 1% 1% 1% 1% -1% -1% -1%

Liabilities 1% 1% 1% 1% -1% -1% -1%

Scenario 3 Assets 2% 2% 2% -1% -1% -1% -1%

Liabilities 2% 2% 2% -1% -1% -1% -1%

Scenario 4 Assets 1% 1% 1% 1% 1% 1% 1%

Liabilities 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5%

Scenario 5 Assets -0.25% -0.25% -0.25% -0.25% -0.25% -0.25% -0.25%

Liabilities 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75%

Scenario 6 Assets 2% 2% 2% 2% 2% 2% 2%

Liabilities 2% 2% 2% 2% 2% 2% 2%

Stress Scenarios - Change in Rate of Interest

Bucket 8Bucket 7Bucket 6Bucket 5Bucket 4Bucket 3Bucket 1> 5 years>3 to 5

years>1 to 3years

>6 monthsto 1 year

>3 to 6months

29 days -3 months

Upto 1Month

Stress TestScenario

Assets /Liabilities

Table DF - 10General Disclosure for Exposures related to Counterparty Credit Risk

Counterparty exposures for other entities are assessed subject to exposure ceilings as per the policy of thebank. Capital for Counterparty Credit Risk exposure is assessed based on the Standardized approach.

Bank does not have bilateral netting. The Credit equivalent amount of the derivative exposure is assessedbased on the Current Exposure method.

Credit Exposure as on 31.03.2014 (` in lacs)

Notional Gross Positive Potential Future Total CreditAmount fair value of Exposure Exposure

contracts

Forward Contracts 96891.18 1815.53 1937.82 3753.35


66


Table DF - 11Composition of Capital (` in lacs)

1 Directly issued qualifying common share capital plus related stock surplus (sharepremium) 42826.30

2 Retained earnings 54165.83

3 Accumulated other comprehensive income (and other reserves)

4 Directly issued capital subject to phase out from CET1 (only applicable to non-jointstock companies)

Public sector capital injections grandfathered until January 1, 20185 Common share capital issued by subsidiaries and held by third parties (amount

allowed in group CET1)

6 Common Equity Tier 1 capital before regulatory adjustments 96992.13

Common Equity Tier 1 capital: regulatory adjustments7 Prudential valuation adjustments

8 Goodwill (net of related tax liability)

9 Intangibles other than mortgage-servicing rights (net of related tax liability) 1565.10

10 Deferred tax assets 6112.16

11 Cash-flow hedge reserve

12 Shortfall of provisions to expected losses

13 Securitisation gain on sale

14 Gains and losses due to changes in own credit risk on fair valued liabilities

15 Defined-benefit pension fund net assets 1862.30

16 Investments in own shares (if not already netted off paid-in capital on reported balance sheet)

17 Reciprocal cross-holdings in common equity

18 Investments in the capital of banking, financial and insurance entities that areoutside the cope of regulatory consolidation, net of eligible short positions,where the bank does not own more than 10% of the issued share capital (amountabove 10% threshold)

19 Significant investments in the common stock of banking, financial and insuranceentities that are outside the scope of regulatory consolidation, net of eligible shortpositions (amount above 10% threshold)

20 Mortgage servicing rights (amount above 10% threshold)

21 Deferred tax assets arising from temporary differences (amount above 10%threshold, net of related tax liability)

22 Amount exceeding the 15% threshold

23 of which: significant investments in the common stock of financial entities

24 of which: mortgage servicing rights

25 of which: deferred tax assets arising from temporary differences

26 National specific regulatory adjustments (26a+26b+26c+26d)

26 a of which: Investments in the equity capital of the unconsolidated insurancesubsidiaries

Basel III common disclosure template to be used during the transition of regulatory adjustments(i.e. from April 1, 2013 to December 31, 2017)

Common Equity Tier 1 capital: instruments and reserves


67


26 b of which: Investments in the equity capital of unconsolidated non-financialsubsidiaries

26 c of which: Shortfall in the equity capital of majority owned financial entities whichhave not been consolidated with the bank

26 d of which: Unamortized pension funds expenditures

Regulatory Adjustments Applied to Common Equity Tier 1 in respect of AmountsSubject to Pre-Basel III Treatment

of which: [INSERT TYPE OF ADJUSTMENT]

For example: filtering out of unrealized losses on AFS debt

securities (not relevant in Indian context)



27 Regulatory adjustments applied to Common Equity Tier 1 due to insufficientAdditional Tier 1 and Tier 2 to cover deductions

28 Total regulatory adjustments to Common equity Tier 1 9539.56

29 Common Equity Tier 1 capital (CET1) 87452.56

Additional Tier 1 Capital : Instruments 0.00

30 Directly issued qualifying Additional Tier 1 instruments plus related stocksurplus (31+32)

31 of which: classified as equity under applicable accounting standards (PerpetualNon-Cumulative Preference Shares)

32 of which: classified as liabilities under applicable accounting standards(Perpetual debt Instruments)

33 Directly issued capital instruments subject to phase out from Additional Tier 1

34 Additional Tier 1 instruments (and CET1 instruments not included in row 5) issued bysubsidiaries and held by third parties (amount allowed in group AT1)

35 of which: instruments issued by subsidiaries subject to phase out

36 Additional Tier 1 capital before regulatory adjustmentsAdditional Tier 1 Capital: regulatory adjustments

37 Investments in own Additional Tier 1 instruments

38 Reciprocal cross-holdings in Additional Tier 1 instruments

39 Investments in the capital of banking, financial and insurance entities that areoutside the scope of regulatory consolidation, net of eligible short positions, wherethe bank does not own more than 10% of the issued common share capital of theentity (amount above 10% threshold)

40 Significant investments in the capital of banking, financial and insurance entities thatare outside the scope of regulatory consolidation (net of eligible short positions)

41 National specific regulatory adjustments (41a+41b)

41 a Investments in the Additional Tier 1 capital of unconsolidated insurance subsidiaries

41 b Shortfall in the Additional Tier 1 capital of majority owned financial entities whichhave not been consolidated with the bank

Regulatory Adjustments Applied to Additional Tier 1 in respect of Amounts Subject toPre-Basel III Treatment

of which: [INSERT TYPE OF ADJUSTMENT e.g. DTAs]

of which: [INSERT TYPE OF ADJUSTMENT e.g. existing adjustments which are deductedfrom Tier 1 at 50%]


68



42 Regulatory adjustments applied to Additional Tier 1 due to insufficient Tier 2 tocover deductions

43 Total regulatory adjustments to Additional Tier 1 capital44 Additional Tier 1 Capital (AT1)44 a Additional Tier 1 capital reckoned for capital adequacy45 Tier 1 capital (T1 = CET1 + AT1) (29 + 44a) 87452.56

Tier 2 Capital : Instruments and provisions46 Directly issued qualifying Tier 2 instruments plus related stock surplus 24110.00

47 Directly issued capital instruments subject to phase out from Tier 2

48 Tier 2 instruments (and CET1 and AT1 instruments not included in rows 5 or 34) issuedby subsidiaries and held by third parties (amount allowed in group Tier 2)

49 of which: instruments issued by subsidiaries subject to phase out

50 Provisions 9589.29

51 Tier 2 capital before regulatory adjustments 33699.29

Tier 2 Capital : regulatory adjustments52 Investments in own Tier 2 instruments 0.00

53 Reciprocal cross-holdings in Tier 2 instruments

54 Investments in the capital of banking, financial and insurance entities that areoutside the scope of regulatory consolidation, net of eligible short positions, wherethe bank does not own more than 10% of the issued common share capital of theentity (amount above the 10% threshold)

55 Significant investments13 in the capital banking, financial and insurance entitiesthat are outside the scope of regulatory consolidation (net of eligible short positions)

56 National specific regulatory adjustments (56a+56b)

56 a of which: Investments in the Tier 2 capital of unconsolidated subsidiaries

56 b of which: Shortfall in the Tier 2 capital of majority owned financial entities whichhave not been consolidated with the bank

Regulatory Adjustments Applied To Tier 2 in respect of Amounts Subject toPre-Basel III Treatment

of which: [INSERT TYPE OF ADJUSTMENT e.g. existing adjustments which arededucted from Tier 2 at 50%]

of which: [INSERT TYPE OF ADJUSTMENT

57 Total regulatory adjustments to Tier 2 capital58 Tier 2 capital (T2)58 a Tier 2 capital reckoned for capital adequacy 33699.29

58 b Excess Additional Tier 1 capital reckoned as Tier 2 capital58 c Total Tier 2 capital admissible for capital adequacy (58a+58b)59 Total capital (TC=T1+T2) (45+58C) 121151.85

Risk Weighted Assets in respect of Amounts Subject to Pre-Basel III Treatment


of which: ...

60 Total risk weighted assets (60a+60b+60c)60 a of which: total credit risk weighted assets 958754.38


69


60 b of which: total market risk weighted assets 68754.14

60 c of which: total operational risk weighted assets 84104.28

Capital ratios61 Common Equity Tier 1 (as a percentage of risk weighted assets)

62 Tier 1 (as a percentage of risk weighted assets) 7.87

63 Total capital (as a percentage of risk weighted assets) 3.03

64 Institution specific buffer requirement (minimum CET1requirement plus capitalconservation and countercyclical buffer requirements, expressed as a percentageof risk weighted assets)

65 of which: capital conservation buffer requirement

66 of which: bank specific countercyclical buffer requirement

67 of which: G-SIB buffer requirement

68 Common Equity Tier 1 available to meet buffers (as a percentage of riskweighted Assets)

National minima (if different from Basel III)69 National Common Equity Tier 1 minimum ratio (if different from Basel III minimum) 5.50

70 National Tier 1 minimum ratio (if different from Basel III minimum) 7.00

71 National total capital minimum ratio (if different from Basel III minimum) 9.00

Amounts below the thresholds for deduction (before risk weighting)72 Non-significant investments in the capital of other financial entities

73 Significant investments in the common stock of financial entities

74 Mortgage servicing rights (net of related tax liability)

75 Deferred tax assets arising from temporary differences (net of related tax liability)

Applicable caps on the inclusion of provisions in Tier 276 Provisions eligible for inclusion in Tier 2 in respect of exposures subject to

standardized approach (prior to application of cap) 4305.87

77 Cap on inclusion of provisions in Tier 2 under standardized approach 1281.73

78 Provisions eligible for inclusion in Tier 2 in respect of exposures subject to internalratings-based approach (prior to application of cap)

79 Cap for inclusion of provisions in Tier 2 under internal ratings-based approach

Capital instruments subject to phase-out arrangements (only applicable betweenMarch 31, 2017 and March 31, 2022)

80 Current cap on CET1 instruments subject to phase out arrangements

81 Amount excluded from CET1 due to cap (excess over cap after redemptions andmaturities)

82 Current cap on AT1 instruments subject to phase out arrangements

83 Amount excluded from AT1 due to cap (excess over cap after redemptions andmaturities

84 Current cap on T2 instruments subject to phase out arrangements

85 Amount excluded from T2 due to cap (excess over cap after redemptions andmaturities)


70


Row No.of the Particular ` in lacs

template

10 Deferred tax assets associated with accumulated losses

Deferred tax assets (excluding those associated with accumulated losses) netof Deferred tax liability 6112.16

Total as indicated in row 10 6112.16

19 If investments in insurance subsidiaries are not deducted fully from capital andinstead considered under 10% threshold for deduction, the resultant increase inthe capital of bank

of which: Increase in Common Equity Tier I Capital

of which: Increase in Additional Tier I Capital

of which: Increase in Tier 2 Capital

26b If investments in the equity capital of unconsolidated non-financial subsidiariesare not deducted and hence, risk weighted then:

(i) Increase in Common Equity Tier I Capital

(ii) Increase in risk weighted assets

44a Excess Additional Tier I capital not reckoned for capital adequacy (differencebetween Additional Tier I capital as reported in row 44 and admissibleAdditional Tier I capital as reported in 44a)

of which: Excess Additional Tier I capital which is considered as Tier 2 capitalunder row 58b

50 Eligible Provisions included in Tier 2 capital 6150.03

Eligible Revaluation Reserves included in Tier 2 capital 3439.26

Total of row 50

58a Excess Tier 2 capital not reckoned for capital adequacy (difference betweenTier 2 capital as reported in row 58 and T2 as reported in 58a)

Notes to the Template


71

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73


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74


Table DF - 14

Full Terms and Conditions of Regulatory Capital Instruments

Instruments Series-V Series - VI Series -VII (A) Series - VII (B) Series-VIII

Date of Allotment 30.09.2006 25.11.2009 10.02.2012 10.02.2012 24.03.2014

Date of Redemption 30.04.2016 25.11.2015 10.02.2018 10.02.2022 24.03.2024

Rate of Interest 9.95% 10.80% 11.40% 11.40% 11.80%

Amount 3000.00 lacs 10000.00 lacs 19950.00 lacs 5050.00 lacs 7810.00 lacs

Nature of Instrument Bonds in nature Bonds in nature Bonds in nature Bonds in nature Bonds in natureof Debentures / of Debentures / of Debentures / of Debentures / of Debentures /promisory Bonds promisory Bonds promisory Bonds promisory Bonds promisory Bonds

Amount Subscribed 3000.00 lacs 10000.00 lacs 19950.00 lacs 5050.00 lacs 7810.00 lacs

Face Value of the Bond 10.00 lacs 10.00 lacs 10.00 lacs 10.00 lacs 10.00 lacs

Issuance, Trading and NSE NSE NSE NSE NSEListing

Details of Tier II Capital (Banks - Regulatory Capital instruments) raised by the Bankand the position as on 31.03.2014


75


CASH FLOW FROM OPERATING ACTIVITIES:Net Profit as per Profit & Loss Account 596555 915745ADJUSTMENTS FOR:

Provisions & Contingencies 2493417 1595725Depreciation 235834 254448Loss on sale of assets (382) (223)Income Tax / T D S paid (285291) (490000)

Net cash flow before changes in Working Capital 3040133 2275695CHANGES IN WORKING CAPITAL :LIABILITIES : Increase/Decrease in

Deposits 29539042 15048380Refinances (219000) (1000000)Other Liabilities (2246209) (354908)

27073833 13693472ASSETS : Increase/Decrease in

Investments 13641308 (705711)Advances 11863940 15141159Leased-out Assets 0 0Other Assets (431022) 671628

(25074226) (15107076)CASH FLOW FROM INVESTING ACTIVITIES :

Purchase of Fixed Assets (359256) (277514)Sale of Fixed Assets 3307 (355949) 2282 (275232)

CASH FLOW FROM FINANCING ACTIVITIES:Share issue including share premium net offorfeited shares 2449 149Tier II Bonds 0 0Dividends paid (288869) (286420) (334950) (334801)

Cash flow for the year 4397371 252058Cash & Cash equivalents at the beginning of the year 8719498 8467440Cash & Cash equivalents at the year of end 13116869 8719498

Note: Cash, Balances with Other Banks, Balances with R B I, and Money at Call and Short Notice have beenconsidered as cash and cash equivalents.

CASH FLOW STATEMENT FOR THE YEAR ENDED 31st MARCH, 2014(` in 000’s)

For SAGAR & ASSOCIATES,Chartered AccountantsFRN: 003510S

(V. VIDYASAGAR BABU)PartnerMembership No. : 027357

Place : BangaloreDate : 14th May, 2014

31.03.2014 31.03.2013

AUDITORS’ CERTIFICATEWe have verified the Cash Flow Statement of The Lakshmi Vilas Bank Limited, Karur for the year ended March31,2014. This cash flow statement is the responsibility of the Management of the Bank in accordance withclause 32 of the listing agreement entered into with the Stock Exchange and is in agreement with the BalanceSheet as at March 31, 2014 and the Profit & Loss Account for the year ended March 31, 2014 dealt with in ourreport dated 14.05.2014 to the members of The Lakshmi Vilas Bank Limited.


76


To,

The MembersThe Lakshmi Vilas Bank LimitedKarur

We have examined the compliance of conditions of Corporate Governance by The Lakshmi Vilas Bank Limited for the

year ended 31st March, 2014 as stipulated in clause 49 of the Listing Agreement of the said Bank with Stock Exchanges.

The compliance of the conditions of Corporate Governance is the responsibility of the management. Our examination

was limited to procedures and implementation thereof, adopted by the Bank for ensuring the compliance of the conditions

of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Bank.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Bank

has compiled with the conditions of Corporate Governance as stipulated in the above-mentioned Listing Agreement.

As required by the Guidance Notes issued by the Institute of Chartered Accountants of India, we have to state that no

investor grievance is pending for a period exceeding one month against the Bank and as per the records maintained by

the Share Transfer and Investors Grievance Committee.

We further state that such compliance is neither an assurance as to the future viability of the Bank nor the efficiency or

effectiveness with which the management has conducted the affairs of the Bank.

Auditor’s Certificate on Corporate Governance

For SAGAR & ASSOCIATES,Chartered AccountantsFRN: 003510S

(D. MANOHAR))PartnerMembership No. : 029644

Place : BangaloreDate : 14th May, 2014

AUDITORS’ CERTIFICATE ON ESOS

This is to certify that M/s.The Lakshmi Vilas Bank Ltd., Karur has implemented the Employees Stock Option Scheme2010 (ESOS-2010) in accordance with resolution passed by the Shareholders on 04th August, 2010 and as per theSecurities and Exchange Board of India (Employees Stock Option Scheme and Employees Stock Purchase Scheme)Guidelines 1999.

For SAGAR & ASSOCIATESChartered Accountants

FR No. 003510S

(D. MANOHAR)Place : Chennai PartnerDate : 17.07.2014 Membership No. 029644


77


BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILEAS PER SCHEDULE VI, PART IV OF THE COMPANIES ACT, 1956

(` in 000’s)A REGISTRATION DETAILS

Registration 1377

State 18

Balance Sheet Date 31.03.2014

B CAPITAL RAISED DURING THE YEARPublic Issue NIL

Bonus Issue NIL

Rights Issue NIL

ESOS-2010 200

Private Placement NIL

C POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDSTotal Liabilities 206530572

Total Assets 206530572

SOURCES OF FUNDSPaid up capital 975607

Reserves and Surplus 9560385

Secured Loans 0

Deposits 185728821

Unsecured Loans 4581000

Other Liabilities & Provisions 5684759

D APPLICATION OF FUNDSNet Fixed Assets 2005082

Advances 128891896

Investment 56886776

Other Assets 5629949

Miscellaneous Expenses NIL

Accumulated Losses NIL

PERFORMANCE OF THE COMPANYTotal Income 22019421

Total Expenditure 18929449

Profit Before Tax 404055

Profit After Tax 596555

Earnings per share (`) 6.11

Dividend Rate 10%

GENERAL NAMES OF THREE PRINCIPAL PRODUCTS OF THE COMPANY(AS PER MONETARY TERMS)Items Code N.A.

Product Description Banking Company


78


Annexure A

MANAGEMENT DISCUSSIONS AND ANALYSIS

Industry Structure and DevelopmentsThe Index of Industrial Production (IIP) showed no increase during April-January 2013-14, compared with 1% growth inthe corresponding period of the previous year. This stagnation in growth reflects subdued investment and consumptiondemand. This has resulted in contraction in production of capital goods and consumer durables in the current year.Output of basic metals, fabricated metal products, machinery and equipment, motor vehicles, food products, gems andjewellery and communication equipment recorded a decline. Growth of core industries, which provide key inputs to theindustrial sector, remained sluggish at 2.4 per cent during April-January 2013-14 compared to a growth of 6.9 per centin the corresponding period a year ago. This sluggishness, in part, reflects contraction in natural gas and crude oilproduction and slow growth in all other infrastructure industries, except electricity.

Various surveys conducted around January 2014 had indicated that business confidence improved significantly for Q4of 2013-14. The Reserve Bank's 65th round of Industrial Outlook Survey (http://www.rbi.org. in/IOS65) conductedduring February-March 2014 reaffirmed that in terms of assessment, the Business Expectations Index improved in Q4of 2013-14 as compared to the previous quarter. However, based on expectations, it moderated marginally for Q1 of2014-15

Opportunities and ThreatsThe outlook for the Indian economy has improved over the past two months with cautiously positive business sentiments,improved consumer confidence, expectations of a modest recovery in growth and decline in inflation expectations.The challenge for maintaining disinflationary momentum over the medium term, however, remains. GDP growth at4.7 per cent in Q3 of 2013-14, was slightly higher than that in the corresponding quarter of the previous year, but ithas not been enough to suggest that the advanced estimates of 4.9 per cent during 2013-14 could be realised. Theeconomy will now have to record a 5.5 per cent growth in Q4 to realise that growth, which on current assessment looksdifficult.

A moderate recovery is likely to set in 2014-15 broadly in line with the Reserve Bank’s indicated projections in January2014. However, data revisions for previous quarters and the consequent changes in base effects impart uncertainty tothe growth trajectory ahead. The pace of recovery, nevertheless, is likely to be modest. The recovery is likely to besupported by investment activity picking up due to part resolution of stalled projects and improved business and consumerconfidence. Manufacturing PMI, for the month of February 2014, touched a year's high on the back of higher output andnew orders. The rural demand base is likely to shore up demand following record agricultural output. In addition, externaldemand is expected to improve further during 2014-15 stemming from encouraging prospects for global growth,notwithstanding some recent loss in export growth momentum.

Downside risks to growth have increased marginally since January 2014 taking into account the continued weakperformance of industry and increase in risks to agriculture from the El Nino phenomenon, though the actual outcome onthe monsoon depends on several other weather parameters. Tighter global financial and monetary conditions, in additionto continued fiscal adjustment in some countries can also drag recovery. To a large part, the recovery remains contingenton improvements in the investment climate.

Going forward, while the global commodity price scenario provides some comfort, the pace of deceleration in inflationmay decline from what has been witnessed in recent months. This is because of the seasonal correction in vegetableprices likely having played out and supply-side responses remaining weak. In addition, significant month to monthchanges in base effect have a propensity to distort the underlying inflationary trajectory ahead. After some rise in thenear months, headline inflation is expected to trend down aided by favourable base effects. It may bottom out in Q3 of2014-15 before large adverse base effects and expected improved activity take inflation back to around the currentlevels.

Risks to inflation are more on the upside. They largely emanate from any adverse outcome on the monsoon, resurfacingof geopolitical risks that could lift commodity prices, sharper-than-anticipated tapering that could lead to exchange ratepass-through pressures and return of pricing power as the output gap narrows.


79


Business Segmentation

Deposits ` in crore % Advances ` in crore %

Demand Deposit 912.51 4.91 Bills purchased & discounted 861.78 6.69

Savings Deposit 1,729.73 9.31 Cash Credits, Overdrafts & loans 8,176.30 63.44repayable on demand

Term Deposit 15,930.64 85.78 Term Loan 3,851.11 29.87

Total 18,572.88 100.00 Total 12,889.19 100.00

OutlookEnvisaging profitable growth is the prime vision of any organization and a bank is no exception. Study on profitabilityfrom all varied angles ultimately reaches to a common consensus that reduction in cost of deposits and operatingexpenses is the need of the hour.

Banking industry, in its attempt to guard against high cost funds, have been focusing on CASA to save profit margins.High proportion of low-cost deposits builds a bank's ability to reduce its cost of funds. In the present stringent competitiveenvironment, CASA deposits assume greater importance and are also affordable and profitable resources of the Bank.

Hence, growth in CASA deposits would be a key factor to decide the pricing of our products and services, which is veryvital for the overall Business Growth and profitability of the Bank. In this backdrop, the bank has launched severalinitiatives to make the branch as one-stop shop with many financial services. Promoting CASA business is one suchprogressive measure adopted by retaining the existing customers and pulling new customers in to our fold.

With the above focus, our bank's Business Plan for the fiscal 2014-15 had been re-aligned to get into the higher growthorbit, to capture the key position and to stay in front in the competitive environment with the following strategies /objectives:

• The total branch network is planned at 437 as of March 2015, by opening another 76 new branches in prime locations.

• For better visibility and enhancing the brand image, the network of ATM is aimed to be increased to the level of 750as at March 2015.

• No slippage has been projected for any big ticket loans during the next financial year.

• Thrust and focus shall be given for achieving the CASA quantum in the whole period of FY15.

• Frequent Customer meeting / survey at major locations.

• Strong Customer franchise across different business segments.

• Leveraging the technological platform to deliver more products / services on customer expectation and reduceexpenditure.

• Maintain high standards for asset quality.

• Invest on talent pool and to improve training aimed at better sales orientation at the branch level.

• More familiarization and publicity activities through both print and electronic Media, besides outdoor activities andlead generation process.

• Periodical launching of market friendly schemes and services.

• Image Building & Lead Generation activities.

• Focus for Enhancing Fee Based Income Mainly through LG / LC Business & Para Banking Activities.

Risk and ConcernThe bank has adopted suitable risk management practices for managing market risk, credit risk and operational risktaking into consideration, the volume and nature of business activities and Regulatory Compliances.


80


The Integrated Risk Management Committee of the Board ensures that risk is appropriately managed in the Bank. Thepolicies put in by the Bank help to meet the dynamic challenges in the external and internal environments in which thebank operates and also to comply with the regulatory requirements. The present capital adequacy ratio placed the bankin a satisfactory level as per BASEL III norms.

Higher levels of NPA, as in the case of many other banks, is a cause of concern. The bank has taken necessary stepsto address this issue. Strain on profitability was a consequential event as a result of higher levels of NPA and this will getimproved with marked improvement in the overall economy.

The Bank is, maintaining CRAR at 10.90% (Basel III), well above the minimum level of 9% with Tier I at 7.87% and TierII at 3.03%. The Bank will examine the need and timing of raising further capital (Tier I and / or Tier II) to meet Basel IIIrequirements within the Policy framework with the approval of shareholders and regulators.

Internal ControlThe Bank has put in place well articulated internal control measures in tune with the complexity of business operations,organization's size and supervisory compliance standards. There is continuous review of the efficacy of the systems andthe following audit & inspections are carried out:

• Regular comprehensive transaction based inspection by trained internal Inspectors of Branches;

• Risk based Internal Audit to measure the risk in branches and work out the mitigating techniques;

• Pre-disbursement Credit Audit;

• Credit Audit (Post Disbursement);

• Revenue Audit/Income leakage Audit and various snap audits to review specific areas of operation including complianceto inspection observations;

• Concurrent Audit by Empanelled Chartered Accountant Firms;

• Information System Audit by specialized and trained Inspectors/external Auditors;

• Statutory Audit of branches and Controlling offices by Chartered Accountant Firms in terms of guidelines of theReserve Bank of India;

• Management Audit of Controlling offices / Departments at Administrative Office (AO) by trained Internal Inspectors ofBranches;

The Inspection Committee of the Executives review the inspection of Branches carried out by the Internal Inspectors.The Audit Committee of the Board (ACB) is supervising the entire Audit functions of the Bank and the compliancethereof, as per the guidelines laid in the Listing Agreement entered with NSE & BSE. Budgets are agreed on variousparameters including Revenue, Costs and progress measured for appropriate mid-term corrective measures at theBoard Level.

Discussions on Financial parameters with respect to performance

• Operating Profit for the year up by 23.03%, Y-o-Y.

• Net Profit down by 34.84%.

• Total income for FY14 was at ` 2,201.94 crore, with a growth of 12.48% over the previous year ` 1,957.61 crore.

• Interest Income improved by 12.69% over the last fiscal.

• Cost of Deposit of the bank has come down from 8.96% to 8.74%, Y-o-Y.

• Yield on Advances improved from 13.00% to 13.21%, Y-o-Y.

• Total Deposits rose from ` 15,618.98 crore in FY13 to ` 18,572.88 crore, registering Y-o-Y growth of 18.91%.

• CASA grown from ` 2,261.74 crore to ` 2,640.90 crore, registering Y-o-Y growth of 16.76%.


81


• Gross Credit expanded from ` 11,892.25 crore to ` 13,037.70 crore registering Y-O-Y growth of 9.63%.

• Total Business of the bank reached ` 31,610.58 crore, showing an increase of 14.90% on a Y-o-Y basis.

• NIM improved from 2.62% to 2.87%, Y-o-Y.

Staff / Industrial RelationsThe Bank has increased its manpower to 3292 at the end of the financial year 2013-14. Specialist Officers in Marketing,Credit Appraisal and specialized function were recruited during the year to have focus in mobilization of business. TheBank has been continuously assessing manpower needs. 100 Officers and Executives were promoted to higher scales.94 Clerks were promoted to Officer Cadre. By recruiting 457 Sales Personnel as Sales Executive thrust is being givenfor CASA mobilization. The bank maintains cordial relationship with the Staff Union and Officer's Association, both ofwhich are affiliated at All India level and truly believes in bilateral relationship that is poised to accelerate the growth ofthe bank and enhance the productivity among peer levels.

Training is commensurate with requirements of updating the knowledge so as to compete with emerging challenges andnewer forms of risk that are technology driven, Credit skills enhancement, KYC compliance and treating customers fairlyare being emphasized by nominating the resources to reputed external training institutions.

The bank has given its mandate to IBA for the proposed wage revision in the ongoing 12th Bi-Partite Settlement.


82


Annexure B

BOARD OF DIRECTORS AND COMMITTEES

The composition of the Board of Directors is governed by the provisions of the Companies Act, 1956, Banking RegulationAct, 1949 and Listing Agreement entered with National Stock Exchange of India Limited, Mumbai and Bombay StockExchange Limited, Mumbai. The Board consists of 13 Directors as on 31.03.2014 including two nominee Directorsappointed by Reserve Bank of India. On 06.08.2013 & 07.03.2014, additional Directors were co-opted by the Board andthe Managing Director was appointed on 07.03.2014. Further on 05.03.2014 a Director resigned from the Board, thus thestrength of the Board was 13 Directors as on 31.03.2014. The Board consists of eminent persons with considerableprofessional expertise and experience in Banking, Law, Accountancy, Consultancy, Engineering, Finance, Agriculture,Small Scale Industry and Business. Details of the names of the Directors, number of meetings held and attendanceduring the year are provided in Annexure C.

The Bank has not entered into any materially significant transaction which could have a potential conflict of interest withits promoters, directors, management or relatives etc., except the transactions entered into in the normal course ofbanking business.

The Board met 18 times during the year 2013-14 and the dates on which the meetings were held are given below:

26.04.2013, 27.05.2013, 20.06.2013, 10.07.2013, 05.08.2013, 06.08.2013, 10.08.2013, 11.09.2013, 20.09.2013,28.10.2013, 13.11.2013, 28.11.2013, 03.01.2014, 30.01.2014, 14.02.2014, 28.02.2014, 07.03.2014 and 26.03.2014.

Committees of Directors

The Board has constituted various Committees of Directors to deal with matters, which need special and continuedfocus and timely monitoring of the activities falling within the terms of reference of the Committees. The details of suchspecialized Board Committees are as under:

Audit Committee

Audit Committee of the Board is chaired by Shri B.K. Manjunath, an Independent Director who is a Chartered Accountantby profession. Audit Committee provides direction and oversees the operation of total audit function in the Bank as perRBI guidelines. Details of the names of the members and chairman, meetings and attendance during the year underreview, are provided in Annexure C. The terms of reference of Audit are in accordance with RBI guidelines and clause 49of listing agreement and include the following:

• Overseeing the Bank's financial reporting process and ensuring correct, adequate and credible disclosure of financialinformation.

• Recommending appointment and removal of external auditors and fixing of their fees.

• Reviewing with management the annual financial statements before submission to the Board with special emphasison accounting policies and practices, compliance with accounting standards and other legal requirements concerningfinancial statements and

• Reviewing the adequacy of the Audit and Compliance function, including their policies, procedures, techniques andother regulatory requirements in 2013-14.

Share Transfer and Investors' Grievances Committee

The Share Transfer and Investors’ Grievances Committee approves and monitors share transfers, transmission, issueof duplicate shares, requests from shareholders for conversion of demat shares into physical shares, etc. The Committeemonitors the redressal of complaints of investors like Complaints on Share transfer, non-receipt of dividend declared,non-receipt of annual report & other related matters. Details of name of the Chairman & members of the Committee,Compliance Officer, meetings and attendance during the year are provided elsewhere in the Report.

Integrated Risk Management Committee

The Integrated Risk Management Committee constituted as per RBI guidelines, formulates Bank's credit and Marketrisk policies and reviews the Assets and Liabilities of the Bank based on periodical structural liquidity and dynamicliquidity statements on outflows and inflows and also analyses the interest rate sensitivity of assets and liabilities.


83


Fraud Monitoring CommitteePursuant to the Directions of the Reserve Bank of India, the Bank has constituted a Fraud Monitoring Committee,exclusively dedicated to the monitoring and following up of cases of fraud involving amounts of ` 1 crore and more. Theobjective of this Committee is the effective detection of frauds and ensuring prompt reporting thereof to regulatory andenforcement agencies.

Customer Service CommitteePursuant to the Directions of the Reserve Bank of India, the Bank has constituted a Customer Service Committeeexclusively dedicated to bring about improvement in the quality of customer service provided by the bank.

Management CommitteePursuant to the Directions of the Reserve Bank of India, the Bank has constituted a Management Committee of theBoard which is vested with full powers for sanction / ratification of all kinds of loans and advances normally falling withinthe purview of the lending policies framed by the Board from time to time and full powers for approving compromiseproposals in respect of loans and advances normally falling within the purview of the compromise policy framed by thebank from time to time and approval of capital and revenue expenditure, acquisition and hiring of premises, filing suits /appeals, investments, donations and any other matter referred to / delegated to the Committee by the Board.

Nomination CommitteePursuant to the Directions of the Reserve Bank of India, the Bank has constituted a Nomination Committee of the Boardfor conducting due diligence process to determine the suitability and other fit and proper criteria before inducting anyindividual to the Board.

Business Strategy Advisory CommitteeBusiness Strategy Advisory Committee has been constituted by the Board to bring about paradigm shift in businessprocess / operations / marketing technique and also to explore the avenues for carrying out varied financial services ina focused manner.

IT Strategy CommitteePursuant to the Directions of the Reserve Bank of India, the Bank has constituted an IT Strategy Committee of the Boardand the roles and responsibilities of this Committee includes oversight of the IT strategy and policy documents, measuringthe contribution of IT to business and ensuring that the IT organizational structure complements the business model.

Compensation & Remuneration CommitteeConstituted as per Regulation 5 of Securities and Exchange Board of India (Employees Stock Option Scheme andEmployees Stock Purchase Scheme) Guidelines, 1999 with majority of independent Directors for formulating the detailedterms and conditions of ESOS and compliance with the regulatory guidelines issued by Reserve Bank of India. And tooversee the framing, review and implementation of compensation policy of the bank on behalf of the Board as laid downin the Reserve Bank of India circular No.BC 75/29.67.001/2011-12 dated January 13, 2012 being the guidelines issuedon the compensation of Whole Time Directors / Chief Executive Officers / Risk takers and Control function staff, etc.

HR CommitteeWhich shall have the role of laying down policies, having oversight and supervision on all aspects of employmentincluding feet-on-street staff, viz., framing of policy for recruitment, compensation, incentives, training, promotion, transfer,service conditions, disciplinary proceedings, performance appraisal, seeking assistance / consultation from internal andexternal sources and incurring expenditure as may be required.

Infrastructure Development CommitteeThe committee approves purchase of computer software & hardware and also maintenance & services thereto.

DisclosureRBI imposed a penalty of ` 2.50 crore for non-compliance of KYC norms. Other than the above, there was no penalty orstrictures passed on the bank by any regulatory authority for non-compliance of any laws.


84

ANNUAL REPORT 2013 - 2014A

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Custo

mer

Servi

ce

Comm

ittee

(CSC

)

( 3

mee

tings

)

Fraud

Mo

nitori

ng

Comm

ittee

(FMC)

( 5

meeti

ngs)

Comp

ensa

tion

& Re

mune

ration

Co

mmitte

e (6

meeti

ngs)

Busin

ess

Strate

gy

Advis

ory

Comm

ittee

( 6

mee

tings

)

IT Str

ategy

Co

mmitte

e (3

meeti

ngs)

HR

Comm

ittee

(7 me

eting

s)

Annu

al Ge

neral

Me

eting

No. o

f Othe

r Dir

ector

-ships

he

ld

Othe

r Com

panie

s Nam

e in w

hich h

e was

a Dir

ector

as on

31.03

.2014

Othe

r Co

mpan

ies in

wh

ich he

is the

Ch

airma

n of a

ny

Comm

ittee

Mr. R

aghu

raj G

ujjar

Non-E

xecu

tive Ch

airma

n

(No.

of Sh

ares:

Nil )

(From

26.04

.2013

)

Board

Mino

rity -

Acco

untan

cyNo

n- Ind

epen

dent

/ No

n-exe

cutive

14NA

NANA

NANA

NANA

NANA

NANA

No2

M/s.

Kare

Powe

r Res

ource

s (P)

LtdM/

s. Pra

nava

Inter

natio

nal P

te Ltd

.Nil

Mr. R

akes

h Sha

rma

Ma

nagin

g Dire

ctor

(No.

of Sh

ares:

300)

(From

07.03

.2014

)

IRMC,

FMC,

CSC,

MCB,

Gratu

ity, PF

& Pe

nsion

Major

ity -

Bank

ingNo

n- Ind

epen

dent

/ Ex

ecuti

ve

2NA

NA2

NANA

NANA

NANA

NA1

NANil

NilNil

Mr. K

.S.R.

Anjan

eyulu

(Ti

ll 07.0

3.201

4)IRM

C, FM

C, CS

C, MC

B, Gr

atuity,

PF &

Pens

ion

Major

ity -

Bank

ingNo

n- Ind

epen

dent

/ Ex

ecuti

ve

16NA

NA16

32

14

6NA

36

YES

NANA

NA

Mr. N

. Saip

rasad

(Till 0

5.03.2

014)

Mino

rity-

Busin

ess

Non-

Indep

ende

nt /

Non-e

xecu

tive

156

2NA

1NA

1NA

NANA

1NA

YES

NANA

NA

Mr. K

. Rav

indrak

umar

(Ti

ll 26.0

4.201

3)Mi

nority

-Bu

sines

sNo

n- Ind

epen

dent

/ No

n-exe

cutive

1NA

NA1

NANA

NANA

NANA

NANA

YES

NANA

NA

Mr. K

usum

a R M

unira

ju

(Ti

ll 20.0

9.201

3)Ma

jority

-Law

Indep

ende

nt /

Non-e

xecu

tive6

5NA

61

NANA

2NA

NA1

NAYE

SNA

NANA

Mr. D

.L.N.

Rao

(No.

of sh

are: 5

188 )

Major

ity - L

awInd

epen

dent

/ No

n-exe

cutive

16NA

NA15

NA1

NA4

NANA

NA7

YES

NilNil

Nil

Mr. B

.K. M

anjun

ath

(N

o. of

share

s: 61

130)

ACB &

CRC

Major

ity -

Acco

untan

cyInd

epen

dent

/ No

n-exe

cutive

189

NANA

13

NANA

6NA

NANA

YES

2M/

s. So

uth St

ar Dis

tillerie

s And

Brew

eries

(P)

Ltd.,

M/

s. Bh

ramap

utra P

ower

Priva

te Ltd

.,

Nil

Mr. K

.R. Pr

adee

p

(N

o. of

Share

s : 18

8216

6)ST

GC, B

SAC,

NC

B & HR

Co

mmitte

e

Mino

rity -

Cons

ultan

cyNo

n- Ind

epen

dent

/ No

n-exe

cutive

18NA

410

21

24

NA6

37

YES

7M/

s. Pra

nava

Elec

tronic

s (P)

Ltd.,

M/s.

Kare

Electr

onics

And

Deve

lopme

nts (P

) Ltd.

,

M/

s. Ka

re Po

wer R

esou

ces (

P) Lts

., M/

s.Visio

n E1-T

ech a

nd Se

rvice

s (P)

Ltd.

M/s.

Celes

tial T

echs

oft an

d Serv

ices (

P) Ltd

.M/

s. Gr

eenB

anya

n Pow

er (P)

Ltd.,

M/s.

Prana

va In

terna

tiona

l Pte

Ltd.

Nil

Mr. S

.G. P

rabha

khara

n

(N

o. of

Share

s : 20

02)

Mino

rity

-Busin

ess

Non-

Indep

ende

nt /

Non-e

xecu

tive

8NA

NA2

2NA

NANA

NA4

NA3

No3

M/s.

Roya

lsoft S

ervice

s Ltd.

M/

s. XS

Real

Prope

rties P

rivate

Ltd.

M/s.

Aristo

n Cap

ital A

sset H

olding

s Priv

ate Lt

d.

Refer

Anne

xure

D

Mr. S

. Datt

athrey

an

(N

o. of

Share

s: 94

860)

Major

ity -

Small

Busin

ess

Enter

prise

s

Indep

ende

nt /

Non-e

xecu

tive17

NA2

121

13

NANA

5NA

NAYE

S1

M/s.

Vaibh

av Po

licot (P

) Ltd.

Nil

Mr. R

. Sha

ran

(N

o. of

Share

s: 16

0 )Ma

jority

- Fin

ance

Indep

ende

nt /

Non-e

xecu

tive9

42

NA1

NANA

NANA

NA1

NAYE

S1

M/s.

BMW

Indus

tires L

td.Nil

Mr. A

. Sati

shku

mar

(No.o

f Sha

res: 1

00 )

IDC, IT

Str

ategy

Major

ity - S

SIInd

epen

dent

/ No

n-exe

cutive

189

NA11

NA3

13

2NA

3NA

YES

2M/

s. Ro

yalso

ft Serv

ices L

td.

M/

s. Am

rutan

jan He

alth C

are Lt

d.Re

fer An

nexu

re D

Mr. P

.A. Sh

anka

r(N

o. of

Share

s: 10

0)(Fr

om 06

.08.20

13)

Major

ity -

Agric

ulatur

e and

Ru

ral Ec

onom

y

Indep

ende

nt /

Non-e

xecu

tive12

4NA

NANA

NANA

41

NANA

NANA

NilNil

Nil

Mr. N

. Mala

yalar

amam

irtham

(N

o. of

Share

s: 42

088)

(Fr

om 07

.03.20

14)

Mino

rity -

Bu

sines

sNo

n- Ind

epen

dent

/ No

n-exe

cutive

1NA

NANA

NANA

NANA

NANA

NANA

NANil

NilNil

Mr. R

. Rav

ikuma

r

(N

o. of

Share

s: Nil

)RB

I Nom

inee

Non-

Indep

ende

nt /

Non-e

xecu

tive

188

NA17

NANA

NANA

NANA

NANA

NANil

NilNil

Mr. A

shok

Narai

n

(No.

of Sh

ares:

Nil )

RBI N

omine

eNo

n-Ind

epen

dent

/ No

n-exe

cutive

157

NA17

NANA

NANA

NANA

NANA

NANil

NilNil


85


B.K. Manjunath Chairman - NED/Independent 9 9 100% YES

N. Saiprasad NED/Non-Independent 9 6 67% YES

Kusuma R. Muniraju NED/Independent 6 5 83% YES

R. Sharan NED/Independent 5 4 80% YES

A. Satishkumar NED/Independent 9 9 100% YES

P.A. Shankar NED/Independent 4 4 100% NA

R.Ravikumar -RBI Nominee NED/Non-Independent 9 8 89% NA

Ashok Narain -RBI Nominee NED/Non-Independent 9 7 78% NA

ATTENDANCE AT AUDIT COMMITTEE MEETINGS FOR FY 2013-14

Name of the Committee Category of Director Meeting details Whether attendedMembers (Sarvashree) last AGM (Y/N)

Held Attended % of totalduring thetenure ofdirector /invitee

Description of Full Address of Telephone Fax E-Mails IDdelegated authority delegated authority Numbers Numbers

Name and designation N. Ramanathan 04324 - 220051-60 04324 - 223607 [email protected] officer of the Company Company Secretary /

Compliance OfficerLakshmi Vilas Bank LimitedRegd. Office,Salem Road,Kathaparai, Karur - 639 006

Name of Board Committee Share Transfer & Investors’ 080 - 23434990 04324 - 223607 [email protected] Chairman’s Name Grievances Committee

Mr.Raghuraj Gujjar,Lakshmi Vilas Bank LimitedRegd. Office,Salem Road,Kathaparai, Karur - 639 006

The Registrar and Share M/s. Integrated Enterprises 044 - 28140801 044 - 28142479 [email protected] Agents (India) Ltd., 28140802 28143378

II Floor, “Kences Towers” 28140803No.1, Ramakrishna Street,North Usman Road,T.Nagar, Chennai - 600 017

INFORMATION ABOUT SHARE TRANSFER WORK TO A DELEGATED AUTHORITY


86


Annexure D

GENERAL SHAREHOLDERS’ INFORMATION

Means of CommunicationThe Bank published its financial - quarterly and annual results in English language in “Business Line” newspaper and invernacular language in “Dinamani”newspaper. The results are displayed on the Bank’s website at www.lvbank.com.

Management discussion and analysis forms part of the Annual Report, which has been sent to the shareholders of theBank.

Financial Calendar 2013-2014:87th Annual General MeetingDate & Time: 26th September, 2014 at 10.00 a.m.

Venue : Registered Office, Salem Road, Kathaparai, Karur - 639 006, Tamilnadu.

Information of last three Annual General Meetings heldThe 84th, 85th and 86th AGM were held on 14th September 2011, 14th September 2012 and 06th August, 2013 respectively.

Special Resolution passed during the last three AGMs.

84th AGM - 14-09-2011 - 10.00 a.m. - Registered Office, Karur

Special Resolution passed:

Item No. 9 - Pursuant to the provisions of Section 81 (1A) and other applicable provisions, if any, of the Companies Act,1956 (the Act) (including any statutory modification(s) or re-enactment thereof, for the time being in force), and inaccordance with the provisions of Memorandum & Articles of Association of the Bank, the Listing Agreement enteredinto with the Stock Exchanges (Stock Exchanges), the provisions of Securities and Exchange Board of India (SEBI),Foreign Exchange Management Act (FEMA), and any other statutory guidelines/regulations, if any, prescribed by theSEBI, Reserve Bank of India (RBI), the Stock Exchanges, the Government of India (GOI) or any other relevant authorityfrom time to time, to the extent applicable, and subject to such approvals, consents, permissions, and sanctions as maybe required and subject to such conditions and modifications as may be prescribed while granting such approvals,consents, permissions and sanctions and which may be agreed to by the Board of Directors of the Bank (herein afterreferred to as “Board” which term shall be deemed to include any Committee(s) constituted / to be constituted by theBoard to exercise its powers including the powers conferred by this Resolution), the consent of the Bank be and ishereby accorded to the Board to create, issue, offer and allot, upto 1,50,00,000 Equity Shares of Rs.10/- each or hybridinstruments / securities resulting in, upto 1,50,00,000 Equity shares of Rs.10/- each (including the provisions for reservationon firm and /or competitive basis, of such part of issue and for such categories of persons as may be permitted) in thecourse of one or more public or private offerings in domestic and/or international market(s), either in the form of QualifiedInstitutional Placement (QIPs) to Qualified Institutional Buyers (QIBs) and / or Equity Shares through Depository Receipts,including in the form of Global Depository Receipts (GDRs) and /or American Depository Receipts (ADRs) to eligibleinvestors (whether residents and/or non-residents and/or strategic investors and/or institutions/banks and/or incorporatedbodies and/or individuals and/or trustees and/ or stabilization agents and/or mutual funds and/or venture capital funds,and/or Indian and/ or multi-lateral financial institutions or otherwise, and irrespective of whether or not such investors aremembers of the Bank, through prospectus and/or letter of offer or circular and /or on public and/or private , such issueand allotment to be made at such time(s) in one or more tranches, at such price or prices, in such manner, on such termsand conditions as the Board, may in its absolute discretion, decide at the time of issue of the aforesaid Securities.

For the purpose of giving effect to the above, the Board be and is hereby authorized to determine the Mode of Issue vizQIPs, Public Offerings, Private Placements, GDRs, ADRs etc under the respective guidelines and fix the quantum ofIssue, terms of the Issue(s), including the class of Investors, to whom the Securities are to be allotted, number ofSecurities to be allotted in one or more tranches, issue price, face value, premium amount on issue/conversion ofSecurities etc in respect of each Mode of Issue within the overall limit of 1,50,00,000 Equity Shares of Rs.10/- each,subject to the applicable guidelines for each Mode of Issue.


87


Without prejudice to the generality of the above, the aforesaid issue of the Securities may have all or any terms orconditions or combination of terms in accordance with applicable regulations, prevalent market practices etc. The Bankand/or any agency or body or persons authorized by the Board, may issue Equity Shares and/or Depository Receiptsrepresenting the underlying Equity Shares in the Capital of the Bank or such other Securities in negotiable, registered orbearer form (as may be permissible) with such features and attributes as may be required and to provide for the tradabilityand free transferability thereof as per market practices and regulations (including listing on one or more stock exchangesin and/ or outside India).

The relevant date for the determination of applicable price for the issue Equity Shares and/or Depository Receipts shallbe as per the applicable guidelines of Securities and Exchange Board of India.

The Board be and is hereby authorized to create, issue offer and allot such number of Equity Shares as may be requiredto be issued and allotted upon conversion of any Securities referred to above and as may be necessary in accordancewith the terms of the offer, subject to the provisions of Memorandum and Articles of Association of the Bank and shallrank pari passu inter se with the then existing equity shares of the Bank in all respects including as to dividend.

For the purpose of giving effect to the above Resolutions, the Board be and is hereby authorized on behalf of the Bank,to do all such acts, deeds, matters and things as it may, in its absolute discretion, deem necessary or desirable, and withpower on behalf of the Bank to settle all questions, difficulties or doubts that may arise in this regard in its absolutediscretion and deem fit.

The Board be and is hereby authorized to delegate all or any of the powers herein conferred to any Committee ofDirectors or any one or more Executives of the Bank.

All the Directors were present in the last AGM.

No special resolutions were passed through postal ballot in the last AGM.


No Special Resolution was passed.


Special Resolution was passed.

Item No. 11 - Pursuant to the provisions of Section 81 (1A) and other applicable provisions, if any, of the Companies Act,1956 (the Act) (including any statutory modification(s) or re-enactment thereof, for the time being in force), and inaccordance with the provisions of Memorandum & Articles of Association of the Bank, the Listing Agreement enteredinto with the Stock Exchanges (Stock Exchanges), the provisions of Securities and Exchange Board of India (SEBI),Foreign Exchange Management Act (FEMA), and any other statutory guidelines/regulations, if any, prescribed by theSEBI, Reserve Bank of India (RBI), the Stock Exchanges, the Government of India (GOI) or any other relevant authorityfrom time to time, to the extent applicable, and subject to such approvals, consents, permissions, and sanctions as maybe required and subject to such conditions and modifications as may be prescribed while granting such approvals,consents, permissions and sanctions and which may be agreed to by the Board of Directors of the Bank (herein afterreferred to as "Board" which term shall be deemed to include any Committee(s) constituted / to be constituted by theBoard to exercise its powers including the powers conferred by this Resolution), the consent of the Bank be and ishereby accorded to the Board to create, issue, offer and allot, upto 2,50,00,000 Equity Shares of Rs.10/- each or hybridinstruments / securities resulting in, upto 2,50,00,000 Equity shares of Rs.10/- each (including the provisions for reservationon firm and /or competitive basis, of such part of issue and for such categories of persons as may be permitted) in thecourse of one or more public or private offerings in domestic and/ or international market(s), either in the form of QualifiedInstitutional Placement (QIPs) to Qualified Institutional Buyers (QIBs) and / or Equity Shares through Depository Receipts,including in the form of Global Depository Receipts (GDRs) and / or American Depository Receipts (ADRs) to eligibleinvestors (whether residents and / or non-residents and/or strategic investors and/or institutions/banks and/or incorporatedbodies and/or individuals and/or trustees and/ or stabilization agents and/or mutual funds and/or venture capital funds,and / or Indian and / or multi-lateral financial institutions or otherwise, and irrespective of whether or not such investorsare members of the Bank, through prospectus and / or letter of offer or circular and / or on public and/or private, suchissue and allotment to be made at such time(s) in one or more tranches, at such price or prices, in such manner, on suchterms and conditions as the Board, may in its absolute discretion, decide at the time of issue of the aforesaid Securities.


88


RESOLVED FURTHER THAT for the purpose of giving effect to the above, the Board be and is hereby authorized todetermine the Mode of Issue viz QIPs, Public Offerings, Private Placements, GDRs, ADRs etc under the respectiveguidelines and fix the quantum of Issue, terms of the Issue(s), including the class of Investors, to whom the Securitiesare to be allotted, number of Securities to be allotted in one or more tranches, issue price, face value, premium amounton issue/conversion of Securities etc in respect of each Mode of Issue within the overall limit of 2,50,00,000 EquityShares of Rs.10/- each, subject to the applicable guidelines for each Mode of Issue.

RESOLVED FURTHER THAT without prejudice to the generality of the above, the aforesaid issue of the Securities mayhave all or any terms or conditions or combination of terms in accordance with applicable regulations, prevalent marketpractices etc.

RESOLVED FURTHER THAT the Bank and/or any agency or body or persons authorised by the Board, may issueEquity Shares and/or Depository Receipts representing the underlying Equity Shares in the Capital of the Bank or suchother Securities in negotiable, registered or bearer form (as may be permissible) with such features and attributes asmay be required and to provide for the tradability and free transferability thereof as per market practices and regulations(including listing on one or more stock exchanges in and/ or outside India).

RESOLVED FURTHER THAT the relevant date for the determination of applicable price for the issue Equity Sharesand / or Depository Receipts shall be as per the applicable guidelines of Securities and Exchange Board of India.

RESOLVED FURTHER THAT the Board be and is hereby authorised to create, issue offer and allot such number ofEquity Shares as may be required to be issued and allotted upon conversion of any Securities referred to above and asmay be necessary in accordance with the terms of the offer, subject to the provisions of Memorandum and Articles ofAssociation of the Bank and shall rank pari passu inter se with the then existing equity shares of the Bank in all respectsincluding as to dividend.

RESOLVED FURTHER THAT for the purpose of giving effect to the above Resolutions, the Board be and is herebyauthorised on behalf of the Bank, to do all such acts, deeds, matters and things as it may, in its absolute discretion, deemnecessary or desirable, and with power on behalf of the Bank to settle all questions, difficulties or doubts that may arisein this regard in its absolute discretion and deem fit.

RESOLVED FURTHER THAT the Board be and is hereby authorised to delegate all or any of the powers herein conferredto any Committee of Directors or any one or more Executives of the Bank."

Shri.Raghuraj Gujjar, Non-Executive Chairman, Shri.S.G.Prabhakharan, Director, RBI Nominee DirectorsShri.R.Ravikumar and Shri.Ashok Narain did not attend the last AGM (i.e. 06.08.2013) and remaining all Directorsattended.

No special resolutions were passed through postal ballot in the last AGM.

The following Special Resolution passed through Postal Ballot on 17.12.2013:1. To Increase the Authorized Capital

RESOLVED THAT pursuant to the provisions of Section 94 and all other applicable provisions, if any, containedunder the Companies Act, 1956, the Authorized Capital of the Bank be increased from Rs.150,00,00,000 (RupeesOne Hundred and Fifty Crores Only) divided into 15,00,00,000 equity shares of Rs.10/- each to Rs.300,00,00,000(Rupees Three Hundred Crores Only) divided into 30,00,00,000 equity shares of Rs.10/ each, ranking pari passu inall respect with the existing Equity Shares of the Company.

2. Amendment of Capital Clause of Memorandum of AssociationRESOLVED THAT the existing Clause 6 of the Memorandum of Association of the Bank be amended and shall standsubstituted as follows:

6. The liability of the members is limited. The authorized capital of the Bank is Rs.300,00,00,000 (Rupees ThreeHundred Crores Only) divided into 30,00,00,000 equity shares of Rs.10/- each. The authorized capital can beincreased, reduced, sub-divided or modified by the Board of Directors with the consent of the General Body.

3. Amendment of Article 3 of the Articles of AssociationRESOLVED THAT the existing Article 3 of the Articles of the Association of the Bank, be amended and shall standsubstituted as follows:


89


3. The authorized share capital of the Bank is Rs.300,00,00,000 (Rupees Three Hundred Crores Only) divided into30,00,00,000 (Thirty crores only) equity shares of Rs.10/- each.

4. Amendment of various Clauses of Articles of Association to enable appointment of Whole Time Director andVice-Chairman

Pursuant to the provisions of Section 31 and other applicable provisions, if any, of the Companies Act, 1956 (includingany statutory modifications or re-enactment thereof) the following Articles of Association of the Bank be and is herebyamended to enable the appointment of Whole-Time Director and Vice-Chairman as follows:

RESOLVED THAT in Article 2 after sub-clause (f) the following sub-clause (g) and (h) shall be inserted:

(g) “Non-Executive Vice Chairman” means a Non-Executive Vice Chairman appointed by the Board under Article 14as Non-Executive Vice Chairman.

(h) “Whole Time Director” includes a director in the whole-time employment of the bank.

RESOLVED FURTHER THAT the existing clause 10 (e) of the Articles of the Association of the Bank, be amendedand shall be substituted as under:

“10 (e) The Executive or Non-Executive Chairman or in his absence, the Non-Executive Vice- Chairman, if any, of theBoard shall preside as Chairman at every general meeting of the company. If there is no such Executive or Non-Executive Chairman or Non-Executive Vice Chairman, or they are not present within fifteen minutes after the timeappointed for holding the meeting or is unwilling or not able to attend and act as Chairman of the meeting, theDirectors present shall elect any one of them to be the Chairman of the meeting.”

RESOLVED FURTHER THAT the existing clause 14 of the Articles of the Association of the Bank, be amended andshall be substituted as under:

“14. Subject to the provisions of the Companies Act, 1956 (including any statutory modifications or re-enactmentthereof) and the Banking Regulation Act, 1949 the Board of Directors of the Bank shall elect or appoint a Whole timeChairman and Chief Executive Officer of its Board. The Whole time Chairman and Chief Executive Officer shall beentrusted with the Management of the whole of the affairs of the Bank subject to the superintendence, control anddirection of the Board of Directors.

Alternatively, the Board of Directors may subject to the prior approval of RBI, appoint or re-appoint one of them to bethe Non-Executive Chairman of the Bank for such a period and subject to such conditions as the RBI may specify,while giving such approval, and that in such event the management of the whole of the affairs of the Bank shall beentrusted to a Managing Director who will be the Chief Executive Officer of the Bank and who shall exercise hispowers subject to the superintendence, control and direction of the Board of Directors.

The Board of Directors may appoint one of them, subject to the prior approval of RBI, as a Whole Time Director of thebank, who shall be in the whole-time employment of the bank and receive such remuneration as approved by theBoard of Directors under the applicable provisions of the Companies Act. The Whole Time Director shall exercisesuch powers as prescribed by the Board from time to time and subject to the superintendence, control and directionof the Board of Directors including the Managing Director.

The Chairman (whether Executive or Non-Executive Chairman) shall preside over the meeting of the Board of Directorsand the General Meeting of the Bank and he shall have the second or casting vote. In his absence or non-availability,the Non-Executive Vice Chairman, if any, shall preside over the meeting of the Board of Directors and the GeneralMeeting of the Bank and shall exercise the powers of the Chairman including the second or casting vote.”

RESOLVED FURTHER THAT the existing clause 15 of the Article of the Association of the Bank, be amended andshall be substituted as under:

“15. Every Whole Time Chairman and Chief Executive Officer or alternatively Non-Executive Chairman or ManagingDirector & CEO or Non-Executive Vice Chairman or the Whole Time Director of the Bank shall hold office for suchperiod, not exceeding five years, as the Board of Directors may fix and on such remuneration as may be determinedby General Body and shall subject to the provisions of the Act or the Banking Regulation Act, be eligible forre-election or re-appointment but shall not be liable to retirement by rotation.”


90


RESOLVED FURTHER THAT the third proviso to the existing clause 16 of the Articles of the Association of the Bank,be amended and shall be substituted as under:

“16. Third proviso: Provided further that the Executive or Non-Executive Chairman or Non-Executive Vice Chairmanor Managing Director & CEO or the Whole Time Director shall not be required to hold any qualification shares.”

RESOLVED FURTHER THAT the existing clause 26 of the Articles of the Association of the Bank, be amended andshall be substituted as under:

“26. The Board may pay such remuneration, as it considers proper to a Director other than Executive or Non-ExecutiveChairman or Non-Executive Vice Chairman or the Whole Time Director or Managing Director & CEO who is calledupon to render any special or extra work to the bank, subject to the provisions of the Banking Regulation Act.”

RESOLVED FURTHER THAT the existing clause 28 (b) & (c) of the Articles of the Association of the Bank, beamended and shall be substituted as under:

“28 (b): To have the superintendence, control and direction over the Executive or Non-Executive Chairman or Non-Executive Vice Chairman or the Whole Time Director or Managing Director & CEO, Secretary, Managers, Officersand all other employees of the Bank.

28 (c): To delegate, subject to the provisions of Section 292 of the Act, by a resolution passed at a meeting to anyCommittee of Directors or Executive or Non-Executive Chairman or Non-Executive Vice Chairman or the WholeTime Director or Managing Director & CEO of the Bank or other Executives / Officers of the Bank or to a Committeeof such Executives / Officers:

(i) The power to borrow money otherwise than on debentures.

(ii) The power to invest the funds of the bank.

(iii) The power to make loans.”

(iv)

Annual General Meeting (Next Year) on or before September 30, 2015

Board Meetings

Results for the quarter ending June 2014 - The results are to be declared on or before 14th August, 2014. The Bank haddeclared the results for the QE 30.06.2014 on 16.07.2014.

Sl. No.

Particulars

Total Valid Votes Polled

Votes cast in favour of the resolution

Votes cast against the resolution

No. of Equity Shares

Percentage No. of Equity Shares

Percentage No. of Equity shares

Percentage

1 To Increase the Authorized Capital

21167594 100 21110457 99.73 57137 0.27

2 Amendment of Capital Clause of Memorandum of Association

21105678 100 21044526 99.71 61152 0.29

3 Amendment of Article 3 of the Articles of Association

21110667 100 21043299 99.68 67368 0.32

4 Amendment of various Clauses of Articles of association to enable appointment of Whole Time Director and Vice-Chairman

21107459 100 21002333 99.50 105126 0.50


91


Results for the quarter ending September 2014 - On or before 14th November, 2014.

Results for the quarter ending December 2014 - On or before 14th February, 2015.

Results for the quarter ending March 2015 - On or before 30th May, 2015.

Code of ConductThe Board of Directors at its meeting held on 15.04.2005, approved the Code of Conduct for all the Directors and SeniorManagement Personnel. The said Code of Conduct has been placed on the website of the Company www.lvbank.com.The Annual Report contains a declaration signed by CEO.

DisclosureDuring the financial year reported, the bank did not enter into any materially significant transactions with its Directors,promoters or their relatives that would potentially conflict with and / or adversely affect the interest of the Bank at large.

The Non-Executive Directors were paid ` 15,000/- as sitting fees for each Board / Committee meetings which is withinthe limits prescribed under the Companies Act 1956.

Director Shri.K.R.Pradeep is retiring by rotation and being eligible, offers himself for reappointment. Pursuant to theListing Agreement pertaining to Corporate Governance a brief resume about the retiring director seeking re-election isfurnished in the Notice to the Shareholders.

Director Shri. S.G. Prabhakharan is the Chairman of Shareholders/Investors Grievances Committee of M/s. RoyalSoftServices Limited. Director Shri. A. Satish Kumar is a member of the Audit Committees of M/s. Amrutanjan Health CareLtd. & M/s. Royalsoft Services Ltd.

The Bank has complied with all mandatory recommendations prescribed in Clause 49 of the Listing Agreement.A Certificate to this effect from the Bank's Statutory Auditors is annexed.

The Bank has at present adopted the following non-mandatory requirement:

Whistle Blower Policy: The Bank has laid down a Whistle Blower Policy, which is a mechanism for the employees toreport to the management, concerns about unethical behavior, actual or suspected fraud or violation of the bank’s codeof conduct or ethics policy.

CEO/CFO CertificationCEO/CFO Certification under the Corporate Governance Guidelines prescribed by SEBI has been submitted to theBoard by CEO and CFO.

Unclaimed Dividend:Information in respect of unclaimed dividend and last date for making claim is given below:

Financial Year Date of Declaration Amount as on 31.03.2014 in `̀̀̀̀ Last date for claim

2006-07 26.09.2007 773716.11 25.09.2014

2007-08 14.08.2008 1524546.13 13.08.2015

2008-09 28.08.2009 2315389.70 27.08.2016

2009-10 04.08.2010 1026988.80 03.08.2017

2010-11 14.09.2011 3673032.00 13.09.2018

2011-12 14.09.2012 5335792.00 13.09.2019

2012-13 06.08.2013 5543178.00 05.08.2020


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Compliance with clause 32 of the Listing AgreementNames and addresses of the Stock Exchanges where equity shares of Lakshmi Vilas Bank Limited are listed are as below:

The National Stock Exchange of India Limited The Bombay Stock Exchange LimitedExchange Plaza, 5th floor, Plot No.C/1, G Block, Floor 25, PJ Towers,Bandra - Kurla Complex, Dalal Street,Bandra (E), Mumbai - 400 051 Mumbai - 400 001.

Bank confirms that the Annual Listing Fees have been paid to the National Stock Exchange & Bombay Stock Exchange.

Compliance with Clause 47 (f) of the Listing AgreementSEBI has advised the listed companies to designate an exclusive email ID for Redressal of Investor Complaints. Pursuantto clause 47(f) of the listing agreement, a separate e-mail id viz., [email protected] is designated exclusivelyfor redressal of investors' complaints.

Contact details of Debenture Trustees of the Bank for Tier-II Bonds (Debentures):IDBI Trusteeship Services LimitedRegd. Office:Asian Building, Ground Floor, 17, R. Kamani Marg, Ballard Estate, Mumbai - 400 001Phone: 022-4080700 / Fax: 022-66311776 / E-mail: [email protected]

DematerializationBank has 61922 shareholders as on 31.03.2014, being fully paid shares of ̀ 10/- each. Of this 42058 folios representing8,85,58,046 (90.77%) shares are in Demat Form.

Bank’s ISIN No.: INE694C01018

CIN No.: L65110TN1926PLC001377

Trading Code with Stock Exchanges: LAKSHVILAS

The shares of the Bank are admitted under demat mode with both the depositories of the country i.e., National SecuritiesDepository Limited and Central Depository Services (India) Limited.

Stock Market Data

High Low No. of Shares High Low No. of SharesTraded Traded

April - 2013 93.20 80.00 3197783 93.30 79.95 1788416

May 90.40 77.40 3049780 90.45 77.50 821564

June 81.00 68.25 2139737 80.55 68.30 447206

July 75.00 64.00 1501933 74.80 63.50 506242

August 68.50 59.05 1270625 68.80 59.00 436024

September 70.90 59.80 2051334 70.80 60.00 478203

October 81.00 60.55 6144244 81.05 60.50 1421757

November 80.40 67.60 4834965 80.45 67.10 1036089

December 73.25 66.60 2393224 74.00 65.55 508450

January - 2014 77.30 60.80 3307897 77.25 61.00 683089

February 66.75 58.60 1550346 66.95 57.50 356521

March 74.95 62.10 3623345 74.00 62.20 868696

Month

Listed with NSE on 21.06.2000 Listed with BSE on 24.09.2012


93


Distribution of Shareholding in break up as on 31.03.2014 is given below.

CATEGORY NUMBERS % SHARES % TO CAPITAL

Upto 500 45971 74.24 6611050 6.78

501 - 1000 6896 11.14 5220854 5.35

1001 - 2000 4379 7.07 6356730 6.52

2001 - 3000 1638 2.65 4031847 4.13

3001 - 4000 882 1.42 3108567 3.19

4001 - 5000 553 0.89 2514420 2.58

5001 - 10000 910 1.47 6345005 6.49

Above 10001 693 1.12 63372217 64.96

Total 61922 100.00 97560690 100.00

Nomination FacilityShareholders may avail of the Nomination Facility as prescribed under Section 72 of the Companies Act, 2013.

Bank Account DetailsIn order to avoid fraudulent encashment of dividend warrants, the members holding shares in physical form are requestedto write their Bank Account details to the Office of our Registrar and Share Transfer Agent.

Shares held in Electronic formAll instructions regarding bank account details, which the shareholders wish to be incorporated in their dividend warrantwill have to be submitted to their depository participants. Instructions already given by them in respect of shares held inphysical form will not be automatically applicable to the dividend paid on shares held in electronic form and the Bank orSTA will not entertain any request for deletion / change of Bank details already printed on dividend warrants as perinformation received from both the depositories.

All instructions regarding change of address, nomination, power of attorney etc., shall be given directly to their Depositoryparticipants and the bank or STA will not entertain any such requests directly. Shareholders having the holdings partly indemat form and partly in physical form, should follow the steps narrated above separately.

Share Transfer ProcessBank ensures physical shares are processed by the Registrar and Share Transfer Agent - M/s. Integrated Enterprises(India) Limited and approved by Share Transfer & Investor's Grievances Committee / Board and the certificates aredispatched to the transferees with in a maximum period of 15 days from the date of receipt of the transfer documents byM/s. Integrated Enterprises (India) Limited, provided if the share documents are valid in all respects. Share transfers,dividend payments, demat requests and all other investor related activities are attended to and processed at the office ofour Registrar and Share Transfer Agent.

Shareholders’ Correspondence should be addressed to:M/s. Integrated Enterprises (India) Limited

II floor, “Kences Towers” No.1 Ramakrishna StreetNorth Usman Road, T.Nagar, Chennai - 600 017Ph: 044-28140801/2/3 Fax: 28142479/28143378

Email: [email protected]

DECLARATION BY MD & CEOThe Board of Directors and the Senior Management Personnel of the Bank have affirmed confirming to the Code ofConduct of the Bank for the year ended 31.03.2014.

Rakesh SharmaManaging Director & CEO


94


INTEGRATED TREASURY

25/31, Aban House, 4th Floor, Saibaba Marg,Kalaghoda, Fort Mumbai - 400 023

MaharashtraE-mail: [email protected]

Phone: 022 - 22822811, 22883149, 22040746, 22883261Fax No. : 022 - 22822812

Our Swift Code - LAVBINBB

BENGALURUNo. 93, 2nd Floor, T.K.N. Mansion, K.H. Road(Double Road), Opp. to KSRTC Head Office,Bengaluru - 560 027.KarnatakaEmail : [email protected] : 080 - 22631300, 22631303

COIMBATORELVB Platinum Jubilee Building,68, Oppanakara Street, IInd Floor,Coimbatore - 641 001Tamil NaduEmail : [email protected] : 0422 - 2304997, 2384001Fax : 0422 - 2304997

DELHIFlat No. 406-410,B Block, 4th Floor,21, K.G. Marg,Naurang House,New Delhi-110 001.Email : [email protected] : 011 - 45753400 - 45753411

KARURNo. 150, Kumaran Complex,Kovai Road,Karur - 639 002Tamil NaduEmail : [email protected] : 04324 - 241046, 241048Fax : 04324 - 248644

REGIONAL OFFICES

CHENNAI189, Ist Floor, Anna Salai, Aarthi Chambers,Chennai - 600 006Tamil NaduEmail : [email protected] : 044 - 28411711, 28411712Fax : 044 - 28547529

MUMBAISterling Centre, 2nd Floor,Andheri-Kurla Road, Chakala,Mumbai - 400 093MaharashtraEmail : [email protected] : 022 - 28270236, 28270237Fax : 022 - 28270234

MADURAI1st Floor, D.No. 49A, Bharathi Ula Road,Race Course, Thallakulam,Madurai - 625 002.Tamil NaduEmail : [email protected] : 0452 - 2545900 - 2545910Fax : 0452 - 2545917

HYDERABADNo. 2B & 2C, Ground Floor, Aditya Trade Centre,Lane Adjacent to Huda Mythrivanam,Ameerpet, Hyderabad - 500 038Andhra PradeshEmail : [email protected] : 040 - 23759206, 23759211Fax : 040 - 23759211


95


USA & Canada:

1 HSBC Bank, New York

2 Standard Chartered Bank, New York

3 Toronto Dominion Bank, Toronto

4 Royal Bank of Canada, Toronto

5 Wachovia Bank NA

Europe:

6 HSBC Bank PLC, London

7 Standard Chartered Bank, Frankfurt

8 Commerz Bank AG, Frankfurt

9 Deutsche Bank, Germany

10 Intesa Sanpaolo Spa, Milan

11 UBS AG, Zurich

12 Fortis Bank, Brussels

13 Danske Bank, Copenhagen

14 Svenska Handlesbanken, Stockholm

Asia Pacific:

15 HSBC Bank, Hongkong, Singapore, Colombo, Kuala Lumpur and Sydney

16 Standard Chartered Bank, Tokyo

17 National Australia Bank, Melbourne

18 Korea Exchange Bank, Beijing, Seoul

19 Woori Bank, Dhaka

Gulf:

20 HSBC Bank Middle East, UAE

21 Habib Bank AG, Dubai

22 Saudi Hollandi Bank, Riyadh

23 Doha Bank, Qatar

LIST OF OVERSEAS CORRESPONDENTS / AGENCY BANKS


96


Year 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

Paid-up Capital 1150.89 1953.46 4780.51 4877.22 4877.62 9750.87 9752.58 9752.58 9754.07 9756.07

Reserve & Surplus 21847.83 27151.90 34828.36 36890.54 40493.97 64148.86 79490.91 86083.93 91680.38 95603.85

Deposits 349592.51 433638.00 501987.23 561848.82 736090.00 907537.77 1114951.07 1411414.00 1561897.79 1857288.21

Advances 231771.14 295281.97 361270.30 385878.75 524583.00 627749.52 809442.28 1018867.97 1170279.56 1288918.96

Investments 118086.14 127986.68 130930.24 169367.77 186306.00 298322.23 351885.03 439511.80 432454.68 568867.76

Net Profit 334.44 2247.02 1758.43 2526.91 5030.00 3066.80 10113.68 10702.22 9157.45 5965.55

Number of

Branches 225 227 236 239 251 271 274 290 291 361

Staff Position 1928 1873 1926 2078 2433 2655 2626 3054 3149 3292

Earning Per

Share (`) 2.91 11.50 3.60 5.18 10.31 4.95 10.37 10.97 9.39 6.11

Book

Value (`) 199.83 149.00 81.18 85.63 93.02 75.79 83.23 90.14 92.88 100.16

Market

Price (`) 138.20 105.16 77.70 97.95 63.50 79.21 98.00 85.05 81.35 71.15

Dividend Per

Share (`) Nil 2.50 0.70 1.50 2.50 0.60 2.50 3.50 3.00 1.00

A DECADE OF PROGRESS(Amount given in Lacs)


ANDHRA PRADESH1 Adilabad2 Adoni3 Ananthapur4 Angalakuduru5 Asifabad6 Banjara Hills7 Bhimavaram8 Chittoor9 C.Kothapeta10 Doddavaram11 Eluru12 Guntur13 Hanumakonda14 Hyderabad-Ameerpet15 Hyderabad-Hubsiguda16 Hyderabad-Kothapeta17 Hyderabad-Kukatpalli18 Hyderabad-Main19 Hyderbad-Madhapur20 Hyderabad-Malkajgiri21 Hyderabad-Secunderabad22 Kadapa23 Kadiam24 Kakinada25 Karimnagar26 Khammam27 Kompally28 Krishnapatnam29 Kurnool30 Lakshmipuram-Guntur (II)31 Miryalguda32 Nandiyal33 Narasaraopet34 Nellore35 Ongole36 Ponnur37 Proddattur38 Punjagutta39 Rajamundri40 Ramachandrapuram41 Suryapet42 Tadepalli43 Tanuku44 Tirupathi45 Vijayawada46 Vijayawada II47 Vinukonda48 Visakapatnam-Gajuwaka49 Visakapatnam-Gopalpatnam50 Visakapatnam-Main51 Warangal52 West Maredpally

CHHATTISGARH53 Raipur

GUJARAT54 Ahmedabad55 Anand56 Gandhidham57 Gandhinagar58 Jamnagar59 Navsari60 Rajkot61 Surat - I62 Surat - II63 Vadodara

HARYANA64 Faridabad65 Gurgaon66 Panipat

JHARKHAND67 Ranchi

KARNATAKA68 Bangalore-Banashankari69 Bangalore-BTM Layout

70 Bangalore -Cantonment71 Bangalore-Citimarket72 Bangalore-HSR Layout73 Bangalore-Jalahalli74 Bangalore-Jayanagar75 Bangalore-Koramangala76 Bangalore-Main77 Bangalore-Malleshwaram78 Bangalore-RT Nagar79 Bangalore-Ulsoor80 Bangarpet81 Basavanagudi82 Belgaum83 Bellary84 Chitradurga85 Davangere86 Devanahalli87 Gadag88 Hassan89 Hospet90 Hubli91 Kengeri92 Kollegal93 Mandya94 Mangalore95 Mysore96 Puttur97 Raichur98 Ranebennur99 Shimoga100 Sirsi101 Thippasandra102 Tumkur103 Visveshwarapuram

KERALA104 Calicut105 Ernakulam (Cochin)106 Guruvayoor107 Kottayam108 Palakkad109 Thrissur110 Triruvananthapuram111 Vavvakavu

MADHYAPRADESH112 Indore

MAHARASHTRA113 Mumbai-Andheri114 Mumbai-Borivali115 Mumbai-Chembur116 Mumbai-Fort117 Mumbai-Ghatkopar118 Mumbai-Kalyan119 Mumbai-Kharghar120 Mumbai-Matunga121 Mumbai-Vashi122 Nagpur123 Nasik124 Pune125 Thane

NEW DELHI126 Jamshedpur127 Krishnanagar128 New Delhi -Janpath129 New Delhi -Karol Bagh130 New Delhi-Rohini

ODISHA131 Bhubaneshwar

PONDICHERRY132 Ambagarathur133 Karaikal134 Puducherry

RAJASTHAN135 Bhilwara

TAMILNADU136 Alathur137 Ambilikkai138 Ambur139 Anbil140 Anna Nagar (Madurai)141 Arakandanallur142 Arantangi143 Arasappapillaipatti144 Ariyalur145 Arni146 Attur147 Avalpoondurai148 Balasamudram149 Bargur150 Batlagundu151 Bhuvanagiri152 Bye Pass Road (Madurai)153 C.Pudupatti154 Chengalpattu155 Chennai-Adyar156 Chennai-Annanagar157 Chennai-Cathedal Road158 Chennai-G.N.Street159 Chennai-Guduvancheri160 Chennai-Karanodai161 Chennai-Kodambakkam162 Chennai-K K Nagar163 Chennai-Main164 Chennai-Moulivakkam165 Chennai -Mount Road166 Chennai -Mylapore167 Chennai -Nungambakkam168 Chennai - Perungalathur169 Chennai -Purasawalkam170 Chennai-Royapuram171 Chennai-Selaiyur172 Chennai-T.Nagar173 Chennai-Triplicane174 Chennai-Valasaravakkam175 Chennai-Velacherry176 Chennai-West Tambaram177 Chinnadharapuram178 Chinnasalem179 Chinthalavadi180 Chittode181 Coimbatore-Eachanari182 Coimbatore-Ganapathy183 Coimbatore-Gandhipuram184 Coimbatore-

Koundampalayam185 Coimbatore-Kovaipudur186 Coimbatore-Main187 Coimbatore-Puliakulam188 Coimbatore-

Ramanathapuram189 Coimbatore-R.S.Puram190 Coimbatore-Uppilipalayam191 Cuddalore192 Cumbum193 Dharmapuri194 Dharapuram195 Dindigul196 Erode197 Gandhigramam198 Gobichettipalayam199 Gopalpatti200 Hosur201 Idayakottai202 Iyyampalayam203 Jalakandapuram204 Kadambuliyur205 Kallakurichi206 Kalangani207 Kallalangudy208 Kambarasampettai209 Kancheepuram210 Kandili

Statewise Branch List211 Kangayam212 Kanjampatti213 Kanmai soorangudi214 Karaikudi215 Karur-Kathaparai216 Karur-Main217 Karur-Vengamedu218 Karur- West219 Kattugudalur220 Kattuputhur221 Kaveripattinam222 Kolappakam223 Kondamanaickenpatty224 Kondikulam225 Kottivakkam226 Kovilpatti227 Krishnagiri228 kulithalai229 Kumbakonam230 Kurumbapatti231 Lakkapuram232 Lalgudi233 Madukkur North234 Madurai-Main235 Madurai-Thallakulam236 Mahadhanapuram237 Manamedu238 Mangarai239 Mannargudi240 Marandahalli241 Markampatti242 Mathur243 Mayiladuthurai244 Mecheri245 Melur246 Mettupalayam247 Mettur Dam248 Michealpatti249 M.N.Palayam250 Mogappair251 Moolangudi252 Mudhugampatti253 Muthugapatti254 Muthupet255 Muthur256 M.Puthur257 Nagapattinam258 Nagercoil259 Namakkal260 Nathakadaiyur261 Nathamedu262 Nerinjipettai263 Neyveli264 Nidur265 Oddanchatram266 Olapalayam267 Othakadai268 P.Ayeepalayam269 Palacode270 Palani271 Pallipalayam272 Panruti273 Papanad274 Papanasam275 Pattukkottai276 Pennagaram277 Perambalur278 Perambur279 Peravurani280 Periyakulam281 Podakudy282 Pollachi283 Pudukottai284 Pugalur285 R.Pudupatti286 Rajapalayam287 Rajendram288 Ramapuram

289 Rasipuram290 Rayakotta291 Saidapet292 Salem-Ayothiyapatnam293 Salem-C.K.Street294 Salem-Gugai295 Salem-Kondalampatti296 Salem-Shevapet297 Salem-Swarnapuri298 Salem-Town299 Sankarapuram300 Sankari301 Sathyamangalam302 Sattur303 Sendarapatti304 Siddhapudur305 Sikkal306 Sindalapatti307 Sirumayangudi308 Sivakasi309 Sriperumbudur310 Srivilliputhur311 Sundarapandiyam312 Tanjore313 Tenkasi314 Theni315 Thimmanandal316 Thindal(Erode)317 Thirukkattupalli318 Thirumangalam319 Thiruvaiyaru320 Thiruvallur321 Thiruvarur322 Thittagudi323 Thokkavadi324 Thottiyam325 Tindivanam326 Tiruchengode327 Tirukadaiyur328 Tirukoilur329 Tirunelveli Town330 Tirupur331 Tiruthuraipoondi332 Tiruvannamalai333 Thiruvidaikazhi334 Trichy-Main335 Trichy-Srirangam336 Trichy-Thillainagar337 Turaiyur338 Tuticorin339 Udumalpet340 Ulipuram341 Unjalur342 Uthamarkoil343 Vadavalli344 Vadugapalayam345 Vellakoil346 Velliyanai347 Vellore348 Velur (Namakkal)349 Venkatakrishnapuram350 Vengaivasal351 Vettavalam352 Vilangudi353 Villupuram354 Virdhachalam355 Virudhunagar356 Yethapur

UTTARPRADESH357 Ghaziabad358 Noida

WEST BENGAL359 Garia360 Kolkata361 Kolkata-New Alipur

1

NOTICE TO THE MEMBERS

CIN No. L65110TN1926PLC001377Registered Office: Salem Road, Kathaparai, Karur - 639 006.

Administrative Office: "LVB House", No.4, Sardar Patel Road, Guindy, Chennai - 600 032.Website: www.lvbank.com, Tele No: 044-22205306, Email: [email protected]

THE LAKSHMI VILAS BANK LIMITED

Notice is hereby given that the 87th Annual General Meeting of the Members of The Lakshmi Vilas Bank Limited will beheld at the Registered Office of the Bank, Salem Road, Kathaparai, Karur-639 006 on 26.09.2014 at 10.00 a.m. totransact the following business.

ORDINARY BUSINESS1. To receive, consider and adopt the Audited Balance Sheet as on 31st March, 2014 and the Profit and Loss Account

for the year ended 31st March 2014 and the Cash flow Statement and the Report of the Directors’ and the Auditors’thereon.

2. To declare dividend.

3. To appoint a Director in the place of Shri. K.R. Pradeep, (DIN. 00153097) who retires by rotation and being eligible,offers himself for re-appointment.

4. To appoint auditors and if thought fit to pass with or without modification(s) the following resolution as an ORDINARYRESOLUTION.

“RESOLVED THAT pursuant to the provisions of Section 139 and other applicable provisions, if any, of the CompaniesAct, 2013 read with Companies (Audit and Auditors) Rules, 2014, the applicable provisions of Banking RegulationAct, 1949, including statutory modifications(s) or re-enactment thereof for the time in force, and rules, circular,guidelines issued by the Reserve Bank of India as applicable, M/s. R K Kumar & Co, Chartered Accountants,Chennai, Firm Registration No.001595S be and are hereby appointed as Statutory Auditors of the Bank to holdoffice from the conclusion of this meeting till the conclusion of the next Annual General Meeting, as per the approvalobtained from Reserve Bank of India vide their letter DBS.ARS.No.1847/08.14.005/2014-15 dated August 7, 2014on such remuneration and reimbursement of out-of-pocket expenses, if any, as may be fixed by the Board ofDirectors on the recommendation of the Audit Committee of the Board.”

SPECIAL BUSINESS5. To consider and if thought fit, to pass with or without modification(s), the following resolution as an ORDINARY

RESOLUTION.

“RESOLVED THAT the Board of Directors of the Bank be and is hereby authorised to appoint, in consultation withStatutory Auditors, the Branch Auditors who are qualified to act as Auditors, including Statutory Auditors pursuant tothe provisions of Section 143(8) and other applicable provisions of the Companies Act, 2013 for the purpose of auditof the Branches of the Bank and to decide the Branch Offices to be audited by such Branch Auditors and to fix theirremuneration and reimbursement of out of pocket expenses incurred, if any in connection with the Audit, based onthe recommendation of the Audit Committee of the Board.”

6. To consider and if thought fit, to pass with or without modification(s), the following resolution as an ORDINARYRESOLUTION.

“RESOLVED THAT consent of members of bank be and is hereby accorded for the appointment of Shri. RakeshSharma, holding DIN 06846594, as the Managing Director & CEO (MD & CEO) of the Bank, and as approved by theReserve Bank of India under Section 35B of the Banking Regulation Act, 1949 for a period of 2 years from the dateof letter of RBI on the terms and conditions as set out in the explanatory statement annexed to this notice, who willbe a director of the bank not liable to retirement by rotation.

NEW Notice 2014.pmd 25/08/2014, 6:31 PM1

2

RESOLVED FURTHER THAT the consent of the members of the bank be and is hereby accorded to the Board ofDirectors to revise the remuneration and perquisites payable to Shri. Rakesh Sharma, DIN 06846594 as MD & CEOof the Bank from time to time subject to approval, as may be required from the Reserve Bank of India in terms of theprovisions of Section 35 of the Banking Regulation Act, 1949.”


“RESOLVED THAT consent of the members of the Bank be and is hereby accorded for extension of appointmentof Shri. Raghuraj Gujjar, DIN 02734451, as the Non-Executive Chairman of the Bank as per the terms as approvedby Reserve Bank of India under Section 10-B of the Banking Regulation Act, 1949, and other applicable provisionsof the Companies Act, 2013 and / or the Companies Act, 1956, who will be a Director of the Bank not liable to retireby rotation.

RESOLVED FURTHER THAT consent of the members of the Bank be and is hereby accorded for payment ofremuneration to Shri. Raghuraj Gujjar as Non-Executive Chairman of the Bank as per the terms and conditions whichare set out in the explanatory statement attached to the notice convening this Annual General Meeting, and as approvedby Reserve Bank of India in terms of the provisions of the Section 10-B of the Banking Regulations Act, 1949.

RESOLVED FURTHER THAT consent of the members of the Bank be and is hereby accorded to the Board ofdirectors to revise the remuneration and perquisites payable to Shri. Raghuraj Gujjar as Non-Executive Chairman ofthe Bank from time to time as approved by Reserve Bank of India in terms of the provisions of the Section 10-B ofthe Banking Regulation Act, 1949.”


“RESOLVED THAT Shri. N. Malayalaramamirtham, DIN 06846587 who was appointed as an Additional Directorof the Bank with effect from 07.03.2014 pursuant to the provisions of Article 17(b) of the Bank and Section 161 ofthe Companies Act, 2013 and holds office up to the date of 87th Annual General Meeting and in respect of whom theBank has received a notice in writing along with deposit as prescribed under the provisions of Section 160 of theCompanies Act, 2013 proposing his candidature for the office of director in terms of Article 17(c) of the Articles ofAssociation of the Bank, be and is hereby appointed as a director liable to retire by rotation.”


“RESOLVED THAT Shri. P.A. Shankar, DIN 06658477 who was appointed as an Additional Director of the Bankwith effect from 06.08.2013 pursuant to the provisions of Article 17(b) of the Bank and Section 260 of the CompaniesAct, 1956 and holds office up to the date of 87th Annual General Meeting, be and is hereby appointed as an IndependentDirector of the Bank, pursuant to the provisions of Sections 149, 152 and other applicable provisions, if any, of theCompanies Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014, ScheduleIV to the Companies Act, 2013 and Section 10A (2) (a) of the Banking Regulation Act, 1949, and he shall hold officeup to a period of two years or such other period as prescribed by the extant regulations / circulars of RBI, whicheveris earlier and the provisions of Sec.152 (6) and (7) in respect of retirement of directors by rotation shall not beapplicable to appointment of independent director.”


“RESOLVED THAT pursuant to the provisions of Sections 149, 152 and other applicable provisions, if any, of theCompanies Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014 read withSchedule IV to the Companies Act, 2013 and pursuant to the Section 10A (2) (a) of the Banking Regulation Act,1949, Shri. D.L.N. Rao, DIN 02305079 be and is hereby appointed as an Independent Director of the Bank andshall hold office up to a period of two years or such other period as prescribed by the Banking Regulation Act,whichever is earlier and the provisions of Sec.152 (6) and (7) in respect of retirement of directors by rotation shallnot be applicable to appointment of independent director.”

NEW Notice 2014.pmd 25/08/2014, 6:31 PM2

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“RESOLVED THAT pursuant to the provisions of Sections 149, 152 and other applicable provisions, if any, of theCompanies Act, 2013 read with the Companies ( Appointment and Qualification of Directors) Rules, 2014 read withSchedule IV to the Companies Act, 2013 and pursuant to the Section 10A (2) (a) of the Banking Regulation Act,1949, Shri. B.K. Manjunath, DIN 00319891 be and is hereby appointed as an Independent Director of the Bank andshall hold office up to a period of two years or such other period as prescribed by the Banking Regulation Act,whichever is earlier and the provisions of Sec.152 (6) and (7) in respect of retirement of directors by rotation shallnot be applicable to appointment of independent director.”


“RESOLVED THAT pursuant to the provisions of Sections 149, 152 and other applicable provisions, if any, of theCompanies Act, 2013 read with the Companies ( Appointment and Qualification of Directors) Rules, 2014 read withSchedule IV to the Companies Act, 2013 and pursuant to the Section 10A (2) (a) of the Banking Regulation Act,1949, Shri. S. Dattathreyan, DIN 00724456 be and is hereby appointed as an Independent Director of the Bankand shall hold office up to a period of three years and the provisions of Sec.152 (6) and (7) in respect of retirementof directors by rotation shall not be applicable to appointment of independent director.”


“RESOLVED THAT pursuant to the provisions of Sections 149, 152 and other applicable provisions, if any, of theCompanies Act, 2013 read with the Companies ( Appointment and Qualification of Directors) Rules, 2014 read withSchedule IV to the Companies Act, 2013 and pursuant to the Section 10A (2) (a) of the Banking Regulation Act,1949, Shri. Pankaj Vaish, DIN 00367424 be and is hereby appointed as an Independent Director of the Bank andshall hold office up to a period of two years and the provisions of Sec.152 (6) and (7) in respect of retirement ofdirectors by rotation shall not be applicable to appointment of independent director.”


“RESOLVED THAT pursuant to the provisions of Sections 149, 152 and other applicable provisions, if any, of theCompanies Act, 2013 read with the Companies ( Appointment and Qualification of Directors) Rules, 2014 read withSchedule IV to the Companies Act, 2013 and pursuant to the Section 10A (2) (a) of the Banking Regulation Act,1949, Shri. Prakash P. Mallya, DIN 02412404 be and is hereby appointed as an Independent Director of the Bankand shall hold office up to a period of two years and the provisions of Sec.152 (6) and (7) in respect of retirement ofdirectors by rotation shall not be applicable to appointment of independent director.”

15. To consider and if thought fit, to pass the following resolution as a SPECIAL RESOLUTION.

“RESOLVED THAT pursuant to the provisions of Section 62 (1) (c) and other applicable provisions, if any, of theCompanies Act, 2013 (the Act) (including any statutory modification(s) or re-enactment thereof, for the time being inforce), and in accordance with the provisions of Memorandum & Articles of Association of the Bank, the ListingAgreement entered into with the Stock Exchanges (Stock Exchanges), the provisions of Securities and ExchangeBoard of India (SEBI) Act 1999 as amended from time to time, Foreign Exchange Management Act (FEMA) 1999 asamended from time to time, and any other statutory guidelines/regulations, if any, prescribed by the SEBI, ReserveBank of India (RBI), the Stock Exchanges, the Government of India (GOI) or any other relevant authority from timeto time, to the extent applicable, and subject to such approvals, consents, permissions, and sanctions as may berequired and subject to such conditions and modifications as may be prescribed while granting such approvals,consents, permissions and sanctions and which may be agreed to by the Board of Directors of the Bank (hereinafter referred to as “Board” which term shall be deemed to include any Committee(s) constituted / to be constitutedby the Board to exercise its powers including the powers conferred by this Resolution), the consent of the Bank beand is hereby accorded to the Board to create, issue, offer and allot, up to 4,25,00,000 Equity Shares of Rs.10/-each or hybrid instruments / securities resulting in, up to 4,25,00,000 Equity shares of Rs.10/- each (including theprovisions for reservation on firm and /or competitive basis, of such part of issue and for such categories of persons

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as may be permitted) in the course of one or more public or private offerings in domestic and/or internationalmarket(s), either in the form of Qualified Institutional Placement (QIPs) to Qualified Institutional Buyers (QIBs) and/or Equity Shares through Depository Receipts, including in the form of Global Depository Receipts (GDRs) and /orAmerican Depository Receipts (ADRs) to eligible investors (whether residents and/or non-residents and/or strategicinvestors and/or institutions/banks and/or incorporated bodies and/or individuals and/or trustees and/ or stabilizationagents and/or mutual funds and/or venture capital funds, and/or Indian and/ or multi-lateral financial institutions orotherwise, and irrespective of whether or not such investors are members of the Bank, through prospectus and/orletter of offer or circular and /or on public and/or private, such issue and allotment to be made at such time(s) in oneor more tranches, at such price or prices, in such manner, on such terms and conditions as the Board, may in itsabsolute discretion, decide at the time of issue of the aforesaid Securities.

RESOLVED FURTHER THAT for the purpose of giving effect to the above, the Board be and is hereby authorizedto determine the Mode of Issue viz QIPs, Public Offerings, Private Placements, GDRs, ADRs etc under the respectiveguidelines and fix the quantum of Issue, terms of the Issue(s), including the class of Investors, to whom the Securitiesare to be allotted, number of Securities to be allotted in one or more tranches, issue price, face value, premiumamount on issue/conversion of Securities etc in respect of each Mode of Issue within the overall limit of 4,25,00,000Equity Shares of Rs.10/- each, subject to the applicable guidelines for each Mode of Issue.

RESOLVED FURTHER THAT without prejudice to the generality of the above, the aforesaid issue of the Securitiesmay have all or any terms or conditions or combination of terms in accordance with applicable regulations, prevalentmarket practices etc.

RESOLVED FURTHER THAT the Bank and/or any agency or body or persons authorised by the Board, may issueEquity Shares and/or Depository Receipts representing the underlying Equity Shares in the Capital of the Bank orsuch other Securities in negotiable, registered or bearer form (as may be permissible) with such features andattributes as may be required and to provide for the tradability and free transferability thereof as per market practicesand regulations (including listing on one or more stock exchanges in and/ or outside India).

RESOLVED FURTHER THAT the relevant date for the determination of applicable price for the issue of EquityShares and/or Depository Receipts shall be as per the applicable guidelines of Securities and Exchange Board ofIndia.

RESOLVED FURTHER THAT the Board be and is hereby authorised to create, issue offer and allot such numberof Equity Shares as may be required to be issued and allotted upon conversion of any Securities referred to aboveand as may be necessary in accordance with the terms of the offer, subject to the provisions of Memorandum andArticles of Association of the Bank and shall rank pari passu inter se with the then existing equity shares of the Bankin all respects including as to dividend.

RESOLVED FURTHER THAT for the purpose of giving effect to the above Resolutions, the Board be and is herebyauthorised on behalf of the Bank, to do all such acts, deeds, matters and things as it may, in its absolute discretion,deem necessary or desirable, and with power on behalf of the Bank to settle all questions, difficulties or doubts thatmay arise in this regard in its absolute discretion and deem fit.

RESOLVED FURTHER THAT the Board be and is hereby authorised to delegate all or any of the powers hereinconferred to any Committee of Directors or any one or more Executives of the Bank.”

16. To consider and if thought fit, to pass the following resolution as a SPECIAL RESOLUTION.

“RESOLVED THAT in supersession of the resolution passed at the 81st Annual General Meeting held on 14th August2008, subject to the applicable provisions of the Foreign Exchange Management Act, 1999 (FEMA), the CompaniesAct, 2013 and all other applicable laws, rules, guidelines (including any statutory modification or re-enactmentthereof for the time being in force) and subject to all applicable approvals and permissions and sanctions andsubject to such conditions as may be prescribed by the concerned authorities while granting such approvals,permissions and sanctions which may be agreed to by the Board of Directors of the Bank, consent of the Bank be

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accorded for acquiring shares of the bank by permitted foreign investors including FII’s, FDI’s and NRI’s by purchaseor acquisition on the recognized Stock Exchanges, subject to the condition that the individual holding of the aboveinvestors shall not exceed 5% of the paid up capital which is subject to the regulatory approval and the total holdingof all the Foreign Investors together shall not exceed 49% of the paid up equity share capital of the Bank withinwhich the aggregate NRI holding shall not exceed 24% or both increased to such other maximum limit as may beprescribed from time to time.

RESOLVED FURTHER THAT the Board be and is hereby authorized to do all such acts, matters, deeds and thingsnecessary or desirable in connection with or incidental to giving effect to the object of the above resolution.”

BY ORDER OF THE BOARDFor THE LAKSHMI VILAS BANK LIMITED

Place : Chennai N. RAMANATHANDate : 23.08.2014 Company Secretary

ACS No. 28366

Notes:

1. An Explanatory Statement as required under Section 102 of the Companies Act, 2013, pertaining to the specialbusiness contained in Item No.5 to 16 above is annexed herewith.

2. The Additional information pursuant to Clause 49 of the Listing Agreement entered into with the Stock Exchanges inrespect of the Director seeking re-election vide Item No.3 are detailed in the Explanatory Statement. The Directorhas furnished the requisite declaration for his appointment/re-appointment.

3. All relevant documents referred to in the Notice are open for inspection at the Registered Office of the Bank on allworking days between 11.00 a.m. to 01.00 p.m. upto the date of the Annual General Meeting.

4. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY/PROXIES TO ATTEND AND VOTE INSTEAD OF HIM/HER. SUCH A PROXY/ PROXIES NEED NOT BE A MEMBEROF THE BANK. A PERSON CAN ACT AS PROXY ON BEHALF OF MEMBERS NOT EXCEEDING FIFTY (50)AND HOLDING IN THE AGGREGATE NOT MORE THAN TEN PERCENT OF THE TOTAL SHARE CAPITAL OFTHE BANK. THE INSTRUMENT OF PROXY IN ORDER TO BE EFFECTIVE, SHOULD BE DEPOSITED AT THEREGISTERED OFFICE OF THE BANK, DULY COMPLETED AND SIGNED, NOT LESS THAN 48 HOURS BEFORETHE COMMENCEMENT OF THE MEETING. A PROXY FORM IS SENT HEREWITH. PROXIES SUBMITTED ONBEHALF OF THE COMPANIES, SOCIETIES ETC., MUST BE SUPPORTED BY AN APPROPRIATE RESOLUTION/AUTHORITY, AS APPLICABLE.

5. The Register of Members and the Share Transfer Books of the Bank will remain closed from 22.09.2014 to 26.09.2014(both days inclusive).

6. The Dividend, if declared, will be paid to those members whose names stand on the Register of Members of theBank as on 28.07.2014 (Record Date).

7. In compliance of SEBI direction to all listed companies to maintain all works relating to share registry – both physicaland electronic at single point i.e. either in house or by SEBI Registered “Registrar & Transfer Agent (RTA)”, Bankhad appointed M/s. Integrated Enterprises (India) Limited, Chennai-600 017 as Share Transfer Agent for bothphysical and demat segments with effect from 30.01.2003.

Address of Share Transfer Agent:M/s Integrated Enterprises (India) LimitedII floor, “Kences Towers”, No.1 Ramakrishna Street,North Usman Road, T.Nagar, Chennai – 600 017Ph: 044-28140801/2/3 Fax: 28142479/28143378Email: [email protected]

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8. Members are requested to notify any change in their address along with the pin code immediately to Share TransferAgent and in case their shares are held in demat form; this information should be sent to the concerned DepositoryParticipant.

9. With a view to provide protection against fraudulent encashment of dividend warrants, members holding shares inphysical form are requested to provide, if not already provided earlier, their bank account numbers, name andaddress of the bank and branch, to Share Transfer Agent, M/s.Integrated Enterprises (India) Limited, Chennai-600017 to incorporate the said details on the dividend warrants. Members will appreciate that the bank will not beresponsible for any loss arising out of fraudulent encashment of the dividend warrants.

10. Unclaimed Dividends

a) Shareholders and Beneficial owners who have not so far encashed/claimed the dividends for the last7 years i.e. from 2006-2007 to 2012-2013 have to submit the dividend warrant(s) if any available with them forrevalidation to the Registrar & Share Transfer Agent, M/s. Integrated Enterprises (India) Ltd, II Floor, “KencesTowers”, No. 1 Ramakrishna Street, North Usman Road, T. Nagar, Chennai – 600 017. Shareholderswho have lost the dividend warrants are advised to execute the indemnity bond and send to the Registrar.

b) In terms of Section 205C of the Companies Act, 1956 or the corresponding provision under Section 125 of theCompanies Act, 2013 the dividend which are unclaimed for a period of seven years have to be transferred to“Investor Education and Protection Fund” maintained with Central Government and the Shareholders/ BeneficialOwners cannot make any claim for the dividends once the unclaimed dividend(s) are transferred to such fund.The details of the unclaimed dividend of the shareholders are also uploaded on the website of Investor Educationand Protection Fund as well as the website of the Bank and the shareholders can verify their details from thesaid websites.

11. The Securities and Exchange Board of India (SEBI) has mandated the submission of Permanent Account Number(PAN) by every participant in securities market. Members holding shares in electronic form are, therefore, requestedto submit the PAN to their Depository Participants with whom they are maintaining their demat accounts. Membersholding shares in physical form can submit their PAN details to the Bank.

12. Green Initiatives in Corporate Governance – Shareholders who have not registered their email address so far arerequested to register their email address (for demat holders - with their respective DPs and for holders in physicalform - with our Registrar & Transfer Agent, M/s. Integrated Enterprises (India) Ltd, Chennai).

13. Electronic copy of the Annual Report for 2013-2014 is being sent to all the members whose email IDs are registeredwith the Bank/Depository Participants(s) for communication purposes unless any member has requested for a hardcopy of the same. For members who have not registered their email address, physical copies of the Annual Reportfor 2013-2014 is being sent in the permitted mode.

14. Electronic copy of the Notice of the 87th Annual General Meeting of the Bank inter alia indicating the process andmanner of e-voting along with Attendance Slip and Proxy Form is being sent to all the members whose email IDs areregistered with the Bank/Depository Participant(s) for communication purposes unless any member has requestedfor a hard copy of the same. For members who have not registered their email address, physical copies of theNotice of the 87th Annual General Meeting of the Bank inter alia indicating the process and manner of e-voting alongwith Attendance Slip and Proxy Form is being sent in the permitted mode.

15. Members may also note that the Notice of the 87th Annual General Meeting and the Annual Report for 2013-2014will also be available on the Bank’s website www.lvbank.com for their download. The physical copies of the aforesaiddocuments will also be available at the Bank’s Registered Office for inspection during normal business hours onworking days. Even after registering for e-communication, members are entitled to receive such communication inphysical form, upon making a request for the same, by post free of cost. For any communication, the shareholdersmay also send requests to the Bank’s investor email id: [email protected]

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16. Voting through electronic means

In compliance with provisions of Section 108 of the Companies Act, 2013 and Rule 20 of the Companies (Managementand Administration) Rules, 2014, read with Clause 35B of the Listing Agreement entered with the Stock Exchanges,the Bank is pleased to provide members facility to exercise their right to vote at the 87th Annual General Meeting(AGM) by electronic means and the business may be transacted through e-Voting Services provided by CentralDepository Services Limited (CDSL). The instructions for e-voting are given at the end of this notice. Consequently,as per the applicable statutory provisions, voting by show of hands will not be available to the shareholders at the87th Annual General Meeting.

17. By virtue of clause 31 of the Articles of Association of the bank, no suit or other proceeding by or at the instance ofany Member of the Bank relating to any General Meeting of the Bank, whether Annual General Meeting or ExtraordinaryGeneral Meeting or meetings of Board or Committee of Directors, seeking any direction with reference to suchmeeting or to restrain any proceedings thereat or the passing of any resolution or the transaction of any businessshall be instituted in any Court other than the Courts in Karur which is the place of residence of the Bank for thispurpose by reason of location of its Registered Office.

18. The bank’s shares are traded in demat form in the stock exchanges. For your own safety and other benefits indemat form, the shareholders holding shares in physical form are requested to dematerialize their shares and getthe benefits by holding the shares in demat form.

Additional information pursuant to Clause 49 of the Listing Agreement with National StockExchange Limited, Mumbai & Bombay Stock Exchange Ltd, Mumbai in respect of the Directors’seeking re-election.

Item No. 3

Shri. K.R. Pradeep is a Chartered Accountant in Practice with more than 29 years of standing and having specializationin the areas of Direct Taxes. He is a Consultant and advisor to various groups of Industries and Multinational Companiesin India. He represents Minority Sector as per Section 10A (2) of Banking Regulation Act, 1949. He is classified as aNon-Independent, Non-Executive Director in compliance of Clause 49 of Listing Agreement. He holds 1890157 EquityShares of the bank.

None of the directors other than Shri. K.R. Pradeep is concerned or interested in this resolution.

Note on appointment of Statutory Central Auditors:

Item No. 4

According to Section 139 of the Companies Act, 2013 every company shall, at the first Annual General Meeting, appointan individual or a firm as an Auditor who shall hold office from the conclusion of that meeting till the conclusion of its sixthAnnual General Meeting (AGM) and thereafter till the conclusion of every sixth meeting. However, in terms of the extantRBI guidelines issued on the Appointment of Statutory Central Auditors for the private sector banks, an audit firm cancontinue as the Statutory Central Auditor for a period of four years and thereafter the said firm should be compulsorilyrested for two years. The retiring Statutory Auditor, M/s. Sagar & Associates will be completing the term of four (4) yearswith the conclusion of this Annual General Meeting and are to be rested as per the extant guidelines. The Audit Committeeof the Board and the Board of Directors have recommended the appointment of M/s. R K Kumar & Co, CharteredAccountants, Chennai, as the Statutory Central Auditors of the bank to audit the accounts for the financial year 2014-15including Tax Audit and also to conduct “Limited Reviews” occurring between ensuing Annual General Body Meetingand Next Annual General Meeting. Necessary approval as per applicable provisions of the Banking Regulation Act,1949, has been obtained from Reserve Bank of India vide their letter DBS.ARS.No.1847/08.14.005/2014-15 datedAugust 7, 2014 for the above appointment.

Accordingly your Bank proposes to appoint M/s. R K Kumar & Co, Chartered Accountants, Chennai, Firm RegistrationNo.001595S to hold office from the conclusion of this AGM till the conclusion of next AGM as set out in item No.4 of theNotice.

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Explanatory Statement pursuant to Section 102 of the Companies Act, 2013

Item No. 5

In terms of Section 143(8) of the Companies Act, 2013, the Branch Offices of the Bank have to be audited either byStatutory Auditors or other qualified Auditors. Bank intends to entrust the Audit of Branch Offices either to the StatutoryAuditors or to other qualified Auditors in consultation with Statutory Auditors on such remuneration and on such terms andconditions as the Board deems fit based on the recommendations of the Audit Committee of the Board.

None of the Directors of the bank and Key Managerial Personnel of the bank and their relatives is interested in thisresolution.

Item No. 6

Terms of remuneration payable to Shri. Rakesh Sharma, Managing Director & CEO of the Bank.

The Board of Directors of the Bank at their meeting held on 07.03.2014 took on record the letter No. Ref/DBOD.10731/08.44.001/2013-14 dated 02.12.2013 received from DBOD, RBI, Mumbai on the appointment of Managing Director &CEO of the Bank and co - opted Shri. Rakesh Sharma as Additional Director of the Bank and also appointed him asManaging Director & CEO of the Bank for a period of two years.

Abstract of the terms and conditions of appointment together with memorandum of concern or interest of the directors,had been sent to shareholders on 27.03.2014 as required under section 302 of the Companies Act, 1956.

Further the Bank had approached RBI for certain modifications in the terms of appointment. RBI vide their letterno.Ref.DBOD.16257/08.44.001/2013-14 dated 26.03.2014 and letter no.Ref.DBOD.Appt.No.1759/08.44.001/2014-15 dated30.07.2014 has approved certain modifications to the original terms of appointment and the present terms and conditionsof appointment is as given below:

Abstract of Terms & Conditions of Appointment

S.No. Particulars Amount in Rs.

Remuneration

1. Salary Rs.48,00,000 p.a.

2. DA / HRA / Conveyance Allowance Not applicable

3. Entertainment Allowance Reimbursement of actuals not exceedingRs. 2 lakh p.a.

4. Other allowance -

Share/Stock Option With prior approval of RBI.

Performance Bonus As may be approved by Board, subject to RBIapproval.

Perquisites

1. Free Furnished house Free furnished residential accommodation withwater, gas and electricity.

2. Free use of bank’s car for -

- official purpose Bank's Car with chauffeur with fuel at Bank's cost.

- private purpose on compensating the bank with

suitable amount.

For private purpose, the car/ chauffer can beutilized by compensating the bank with actualexpenditure.

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3. Provident Fund PF - 12% on salary / pay on contributory basis.

Gratuity Gratuity - 1 month’s salary and pay for everycompleted year of service.

Pension Pension - Contribution to any appropriate pensionpolicy of any IRDA approved Insurer, up toRs.5.00 lakh p.a. (This should be as per thebank’s policy as applicable to the otherexecutives of the bank).

4. TA and HA Halting Allowance at the rate of Rs.1500/- per dayfor metro cities and Rs.1200/- per day for otherplaces.

5. Medical benefits Actual for self and family members for treatmentin India.

6. Other benefits

a. Communicative Modes - Free Use

b. Insurance Coverage - Rs.25.00 lacs for travel by air / train / road.Rs.50.00 lacs for Life Insurance.

c. Sitting Fees - Not Eligible.

d. Club Membership Only Subscription to two Service clubs.

e. Child’s education - For 2 children (as per family) not exceedingRs.5 lakhs p.a on aggregate.

7. Leave Fare Concession Once in a year to any place in India for self andfamily. Single return fare by the highest availableclass including incidentals.

S.No. Particulars Amount in Rs.

Further the bank has paid an amount of Rs.1,98,538/- towards reimbursement for the shortfall in his notice period to SBI.

Memorandum of interest: None of the directors of the bank and Key Managerial Personnel of the bank and their relativesis interested or concerned except Shri. Rakesh Sharma as it relates to him.

Item No. 7

The Board of Directors of the Bank in the meeting held on 26.04.2013 had appointed Shri. Raghuraj Gujjar, as Non-Executive Chairman of the Bank for one year and also fixed his remuneration as approved by the Reserve Bank of Indiavide their letter No.Ref.DBOD.10135/08.44.001/2012-13 dated 14.01.2013 in terms of Section 10-B of the BankingRegulation Act. In the 86th Annual General Meeting of the bank held on 06.08.2013, the shareholders had approved thesame.

The Board had requested RBI to permit Shri. Raghuraj Gujjar to continue as the Non-Executive Chairman of the Bank fora further period of one year totaling two years, taking into account Shri. Raghuraj Gujjar's availability and willingness tocontinue as the Non-Executive Chairman, as per the RBI Order dated 14.01.2013.

The Abstract of the terms and conditions of the appointment is appended below:

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S.No. Items Remuneration

1 Salary / Pay Honorarium of Re.1 per annum

Other Allowances ( DA, House Rent, Conveyance, Not Applicableentertainment, etc)

Perquisite

1 Free Furnished House Not Applicable

2 Free use of bank’s car for official purpose Bank’s car with chauffer, fuel at Bank’s cost.

3 Provident Fund/ Gratuity/ Pension Not Applicable

4 Travelling & Halting Allowance Travel – A single return fare by Train in ACI Class or business class / I class by Air

Stay – In business class hotel.

Halting Allowance – As applicable to Whole TimeDirector

5 Medical benefits Not Applicable

6 Other benefits Communicative Models: Free use

Insurance: Rs.25,00,000 for travel by air/train/road.

Sitting Fees - He will be paid sitting fees forattending board meetings and other committeemeetings of the Board as applicable to other non-executive directors of the bank.

Bonus – Not applicable

Club membership – Any two business club.

7 Leave Not applicable

None of the directors of the bank and Key Managerial Personnel of the bank and their relatives is interested or concernedexcept Shri. Raghuraj Gujjar as it relates to his appointment.

Item No. 8Shri. N. Malayalaramamirtham was appointed as an Additional Director with effect from 07.03.2014 pursuant to theprovisions of Section 260 of the Companies Act, 1956 or as amended by Companies Act, 2013 and Article 17(b) and shallhold office up to the date of the Annual General Meeting of the bank. He is one of the promoter directors, Non-executiveDirector and having more than 36 years' experience in textile business. Previously he had been in the Board for the periodfrom 28.09.1983 to 26.06.1990 and from 26.03.1998 to 18.03.2006 respectively. Bank has received a notice in writingalong with deposit as prescribed under Section 160 of the Companies Act, 2013 proposing his candidature for the officeof director in terms of Article 17(c) of the Articles of Association of the Bank. He holds 42088 Equity Shares of the Bank.

None of the directors of the bank and Key Managerial Personnel of the bank and their relatives is interested or concernedexcept Shri. N. Malayalaramamirtham as it relates to his appointment.

Appointment of Independent Directors – Item 9 to 14:Pursuant to provisions of Sections 149 and 152 of the Companies Act, 2013 read with the Companies (Appointment andQualification of Directors) Rules, 2014 every listed public company needs to have at least one-third of the total number ofdirectors as Independent Directors. In terms of Section 149 (10) of the Companies Act, 2013, an Independent Directorshall hold office for a term up to five consecutive years on the Board of a Company but shall be eligible for appointment onpassing a special resolution by the company for a further period of up to five years. Further pursuant to Section 10A (2-A)

Abstract of Terms and Conditions of Appointment

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of the Banking Regulation Act,1949 and the Rules and Circulars and Guidelines issued by the Reserve Bank of India, nodirector (other than Managing or Whole Time Director) of a Banking Company can continuously hold office for a periodexceeding eight years from the date of appointment. Accordingly it is proposed to appoint the following Directors asindependent Directors of the Bank to hold Office up to the period mentioned against their names.

Item No. 9Shri. P.A. Shankar was first appointed as an Additional Director on 06.08.2013 pursuant to the provisions of Article 17(b)of the Bank and Section 260 of the Companies Act, 1956 and holds office up to the date of 87th Annual General Meeting.On approval of the resolution, Shri. P.A. Shankar will be serving as an Independent Director of the Bank up to a period oftwo years.

He holds a degree of Doctor of Philosophy from The University of Reading, United Kingdom. He also holds a bachelor'sdegree in Veterinary Science, and a Master of Science in Dairying (Dairy Microbiology) from the Dairy Science College,National Dairy Research Institute, Karnal. He started his career as an Instructor at the Veterinary College, University ofAgricultural Sciences, Bangalore. He is presently a Member of Research Advisory Committee, National Dairy ResearchInstitute constituted by Indian Council of Agricultural Research. He does not hold any directorship in other companies inIndia/Abroad.

In the opinion of the Board, Shri. P.A. Shankar fulfils the conditions specified in the Companies Act, 2013 and rules madethereunder for his appointment as an Independent Director of the bank and is independent of the management. The Boardconsiders that his continued association would be of immense benefit to the Bank and it is desirable to continue to availservices of Shri. P.A. Shankar as an Independent Director. Accordingly, the Board recommends the resolution in relationto appointment of Shri. P.A. Shankar as an Independent Director, for the approval by the shareholders of the Bank.

Except Shri. P.A. Shankar being an appointee, none of the Directors and Key Managerial Personnel of the bank and theirrelatives is concerned or interested, financial or otherwise, in the resolution set out at Item No.9. This Explanatory Statementmay also be regarded as a disclosure under Clause 49 of the Listing agreement with the Stock Exchange.

Item No. 10The shareholders appointed Shri. D.L.N. Rao as a Director on 14.08.2008. On approval of the resolution, Shri. D.L.N. Raowill be serving as an Independent Director of the Bank up to a period of two years.

He holds degree in Bachelors of Law. He is a practicing senior advocate in the High Court of Karnataka with about fourdecades of experience in the areas of civil law, constitutional law, mining law and taxation. He does not hold any directorshipin other companies in India/Abroad.

In the opinion of the Board, Shri. D.L.N. Rao fulfills the conditions specified in the Companies Act, 2013 and rules madethereunder for his appointment as an Independent Director of the bank and is independent of the management. The Boardconsiders that his continued association would be of immense benefit to the Bank and it is desirable to continue to availservices of Shri.D.L.N. Rao as an Independent Director. Accordingly, the Board recommends the resolution in relation toappointment of Shri.D.L.N. Rao as an Independent Director, for the approval by the shareholders of the Bank.

Except Shri. D.L.N. Rao being an appointee, none of the Directors and Key Managerial Personnel of the bank and theirrelatives is concerned or interested, financial or otherwise, in the resolution set out at Item No.10. This ExplanatoryStatement may also be regarded as a disclosure under Clause 49 of the Listing agreement with the Stock Exchange.

Item No. 11The shareholders appointed Shri. B.K. Manjunath as a Director on 14.08.2008. On approval of the resolution, Shri. B.K.Manjunath will be serving as an Independent Director of the Bank up to a period of two years.

He is a practicing Chartered Accountant with experience in the areas of audit, accountancy, taxation and finance. He is adirector in M/s. South Star Distilleries and Breweries Pvt Ltd and M/s. Bhramputra Power Pvt Ltd.

In the opinion of the Board, Shri. B.K. Manjunath fulfils the conditions specified in the Companies Act, 2013 and rules madethereunder for his appointment as an Independent Director of the bank and is independent of the management. The Boardconsiders that his continued association would be of immense benefit to the Bank and it is desirable to continue to availservices of Shri. B.K. Manjunath as an Independent Director. Accordingly, the Board recommends the resolution in relationto appointment of Shri. B.K. Manjunath as an Independent Director, for the approval by the shareholders of the Bank.

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Except Shri. B.K. Manjunath being an appointee, none of the Directors and Key Managerial Personnel of the bank andtheir relatives is concerned or interested, financial or otherwise, in the resolution set out at Item No.11. This ExplanatoryStatement may also be regarded as a disclosure under Clause 49 of the Listing agreement with the Stock Exchange.

Item No. 12Shri. S. Dattathreyan was appointed as an Additional Director on 08.03.2010.Thereafter the shareholders have confirmedthe appointment of Shri. S. Dattathreyan as a Director on 04.08.2010. He had also served earlier on the Board of the Bankfrom 05.03.1992 to 23.04.1994. On approval of the resolution, Shri. S. Dattathreyan will be serving as an IndependentDirector of the Bank up to a period of two years.

He holds a Bachelor's degree in Mechanical Engineering. He is a director in M/s. Vaibhav Polycot Private Limited.

In the opinion of the Board, Shri. S. Dattathreyan fulfils the conditions specified in the Companies Act, 2013 and rulesmade thereunder for his appointment as an Independent Director of the bank and is independent of the management. TheBoard considers that his continued association would be of immense benefit to the Bank and it is desirable to continue toavail services of Shri. S. Dattathreyan as an Independent Director. Accordingly, the Board recommends the resolution inrelation to appointment of Shri. S. Dattathreyan as an Independent Director, for the approval by the shareholders of theBank.

Except Shri. S. Dattathreyan being an appointee, none of the Directors and Key Managerial Personnel of the bank andtheir relatives is concerned or interested, financial or otherwise, in the resolution set out at Item No.12. This ExplanatoryStatement may also be regarded as a disclosure under Clause 49 of the Listing agreement with the Stock Exchange.

Item No. 13Shri. Pankaj Vaish was first appointed as an Additional Director on 23.08.2014 pursuant to the provisions of Section 149(5), Section 161 of the Companies Act, 2013 and in terms of Article 17(b) of Articles of Association and holds office up tothe date of 87th Annual General Meeting. On approval of the resolution, Shri. Pankaj Vaish will be serving as an IndependentDirector of the Bank up to a period of two years.

He holds a bachelor's degree in Mechanical Engineering, from IIT, Varanasi and Masters of Business Administration fromUniversity of Minnesota, USA. He has more than 28 years of experience in his career with Accenture, a multinationalcompany and he is one of the founding members of Accenture's consulting practice in India. He has hands on experiencein the professional services industry across consulting, out sourcing, BPO, large/complex deals, emerging markets, M&Aetc. He does not hold any directorship in other companies in India/Abroad.

In the opinion of the Board, Shri. Pankaj Vaish fulfils the conditions specified in the Companies Act, 2013 and rules madethere under for his appointment as an Independent Director of the bank and is independent of the management. TheBoard considers that his continued association would be of immense benefit to the Bank and it is desirable to continue toavail services of Shri. Pankaj Vaish as an Independent Director. Accordingly, the Board recommends the resolution inrelation to appointment of Shri. Pankaj Vaish as an Independent Director, for the approval by the shareholders of theBank.

Except Shri. Pankaj Vaish being an appointee, none of the Directors and Key Managerial Personnel of the bank and theirrelatives is concerned or interested, financial or otherwise, in the resolution set out at Item No.13. This ExplanatoryStatement may also be regarded as a disclosure under Clause 49 of the Listing agreement with the Stock Exchange.

Item No.14Shri. Prakash P. Mallya was first appointed as an Additional Director on 23.08.2014 pursuant to the provisions of Section149 (5), Section 161 of the Companies Act, 2013 and in terms of Article 17(b) of Articles of Association and holds office upto the date of 87th Annual General Meeting. On approval of the resolution, Shri. Prakash P. Mallya will be serving as anIndependent Director of the Bank up to a period of two years.

He holds Masters Degree in M.A. (Economics). He started his banking career in 1973 with Canara Bank and rose to therank of General Manager. Then he joined Syndicate Bank as Executive Director and later was appointed as Chairman &Managing Director of Vijaya Bank for the period from April 2006 to July 2008. He has attended various training programmeon banking and related activities in India and Abroad and also recipient of various awards in Banking. He is presently adirector on the Board of M/s. Stock Holding Corporation of India and M/s. Lanco Solar Energy Pvt Ltd.

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In the opinion of the Board, Shri. Prakash P. Mallya fulfils the conditions specified in the Companies Act, 2013 and rulesmade there under for his appointment as an Independent Director of the bank and is independent of the management. TheBoard considers that his continued association would be of immense benefit to the Bank and it is desirable to continue toavail services of Shri. Prakash P. Mallya as an Independent Director. Accordingly, the Board recommends the resolutionin relation to appointment of Shri. Prakash P. Mallya as an Independent Director, for the approval by the shareholders ofthe Bank.

Except Shri. Prakash P. Mallya being an appointee, none of the Directors and Key Managerial Personnel of the bank andtheir relatives is concerned or interested, financial or otherwise, in the resolution set out at Item No.14. This ExplanatoryStatement may also be regarded as a disclosure under Clause 49 of the Listing agreement with the Stock Exchange.

Item No. 15The Bank intends to raise long term funds for its expanding business requirements by issue of securities in the domestic/international markets. The proposed resolution at Item no.15 seeks the enabling authorization to the Board of Directors ofthe Bank, to raise additional long term funds through the issue of Equity Shares in the domestic and/or internationalmarkets in one or more tranches, in such form, on such terms, in such manner, at such price and at such time as may beconsidered appropriate by the Board, to the various categories of investors. In the best interest of the Bank, the aboveenabling resolution is being proposed to be passed to give adequate flexibility and discretion to the Board to finalise theterms of the issues.

As per the provisions of Section 62 of the Companies Act, 2013 and such other provisions as may be applicable, theabove proposal requires the approval of the members by way of Special Resolution.

The Board of Directors accordingly recommends the resolution set out at Item No. 15 of the accompanying notice for theapproval of members.

The directors or the Key Managerial Personnel or their relatives of the bank may be deemed to be concerned or interestedin the resolution to the extent of securities that may be subscribed to by the companies/institutions of which they aredirectors or members.

Item No. 16In terms of the amended Foreign Direct Investment policy, the aggregate of foreign investments in a private bank from allsources are subject to a ceiling of 74% of the paid up capital of the Bank. It also permits the permissible limits underportfolio investment scheme to FII's, FPIs and NRI's can be raised to 49% of the total paid up capital of the Bank subjectto approval of shareholders passed the special resolution to this effect. The previous limit approved by the shareholdersat the 81st Annual General Meeting held on 14.08.2008 was 26%.

The Bank in its Articles of Association stipulated that notwithstanding anything contained in any articles of association ofthe Bank to the contrary, no single person/group shall acquire equity shares of the bank which would take his/its holdingto a level of 5% or more the total paid-up capital of the Bank (or such other percentages as may be prescribed by the RBIfrom time to time) without the prior approval of the Reserve Bank of India.

The Board of Directors of the Bank at their meeting held on 23.08.2014 interalia, approved, Foreign Investment bypermitted foreign investors, including FII's, FDI's and NRI's up to 49% of the paid up capital of the bank within which theaggregate NRI holding shall not exceed 24% subject to individual limit of 5%.

Your Directors recommend this resolution for the approval of members. None of the Directors of the Bank and the keymanagerial personnel and their relatives is interested in this resolution.

BY ORDER OF THE BOARDFor THE LAKSHMI VILAS BANK LIMITED

Place : Chennai N. RAMANATHANDate : 23.08.2014 Company Secretary

ACS No. 28366

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E – Voting

Dear Shareholders,

In terms of Sections 107 and 108 of the Companies Act, 2013 read with Rule 20 of the Companies (Management andAdministration) Rules, 2014, the Bank is providing the e-voting facility to its members holding shares in physical ordematerialized form as on 22.08.2014, to exercise their right to vote by electronic means on any or all of the businessspecified in the accompanying notice. The Bank has appointed Dr. B.Ravi, Practicing Company Secretary (CP No. 3318)as the scrutinizer for conducting the e-voting process in a fair and transparent manner. The Scrutinizer shall within aperiod not exceeding three (3) working days from the conclusion of e-voting period unblock the votes in the presence ofatleast two witnesses not in the employment of the Bank and make a scrutinizer's report of the votes cast in favour oragainst, if any forthwith to the Chairman. The results shall be declared on or after the AGM of the Bank. The resultsdeclared along with the Srutinizer's Report shall be available on the Bank's website within two (2) days of passing of theresolution at the AGM of the Bank and communicated to the Stock Exchange/s.

The Bank has engaged the services of CDSL as the authorized agency to provide the e-voting facilities.

The instructions for shareholders voting electronically are as under:(i) The voting period begins on 20.09.2014 at 10.00 A.M and ends on 22.09.2014 at 05.00 P.M. During this period

shareholders' of the Bank, holding shares either in physical form or in dematerialized form, as on the cut-off date22.08.2014 may cast their vote electronically. The e-voting module shall be disabled by CDSL for voting thereafter.

(ii) The shareholders should log on to the e-voting website www.evotingindia.com.

(iii) Click on Shareholders.

(iv) Now Enter your User ID

a. For CDSL: 16 digits beneficiary ID,

b. For NSDL: 8 Character DP ID followed by 8 Digits Client ID,

c. Members holding shares in Physical Form should enter Folio Number registered with the Bank.

(v) Next enter the Image Verification as displayed and Click on Login.

(vi) If you are holding shares in demat form and had logged on to www.evotingindia.com and voted on an earlier votingof any company, then your existing password is to be used.

(vii) If you are a first time user follow the steps given below:

For Members holding shares in Demat Form and Physical Form

PAN Enter your 10 digit alpha-numeric PAN issued by Income Tax Department (Applicable for both dematshareholders as well as physical shareholders)

• Members who have not updated their PAN with the Bank/Depository Participant are requested touse the first two letters of their name and the 8 digits of the sequence number in the PAN field.

• In case the sequence number is less than 8 digits enter the applicable number of 0's before thenumber after the first two characters of the name in CAPITAL letters. Eg. If your name is RameshKumar with sequence number 1 then enter RA00000001 in the PAN Field.

DOB Enter the Date of Birth as recorded in your demat account or in the Bank records for the said demataccount or folio in dd/mm/yyyy format.

DividendBankDetails

Enter the Dividend Bank Details as recorded in your demat account or in the bank records for thesaid demat account or folio.

• Please enter the DOB or Dividend Bank Details in order to login. If the details are not recordedwith the depository or bank records please enter the member id / folio number in the DividendBank details field as mentioned in instruction (iv).

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(viii) After entering these details appropriately, click on "SUBMIT" tab.

(ix) Members holding shares in physical form will then directly reach the Bank selection screen. However, membersholding shares in demat form will now reach 'Password Creation' menu wherein they are required to mandatorilyenter their login password in the new password field. Kindly note that this password is to be also used by the dematholders for voting for resolutions of any other bank/company on which they are eligible to vote, provided that bank/company opts for e-voting through CDSL platform. It is strongly recommended not to share your password with anyother person and take utmost care to keep your password confidential.

(x) For Members holding shares in physical form, the details can be used only for e-voting on the resolutions containedin this Notice.

(xi) Click on the EVSN -THE LAKSHMI VILAS BANK LTD on which you choose to vote.

(xii) On the voting page, you will see "RESOLUTION DESCRIPTION" and against the same the option "YES/NO" forvoting. Select the option YES or NO as desired. The option YES implies that you assent to the Resolution andoption NO implies that you dissent to the Resolution.

(xiii) Click on the "RESOLUTIONS FILE LINK" if you wish to view the entire Resolution details.

(xiv) After selecting the resolution you have decided to vote on, click on "SUBMIT". A confirmation box will be displayed.If you wish to confirm your vote, click on "OK", else to change your vote, click on "CANCEL" and accordingly modifyyour vote.

(xv) Once you "CONFIRM" your vote on the resolution, you will not be allowed to modify your vote.

(xvi) You can also take out print of the voting done by you by clicking on "Click here to print" option on the Voting page.

(xvii) If Demat account holder has forgotten the same password then Enter the User ID and the image verification codeand click on Forgot Password & enter the details as prompted by the system.

(xviii) Note for Non - Individual Shareholders and Custodians

• Non-Individual shareholders (i.e. other than Individuals, HUF, NRI etc.) and Custodian are required to log on towww.evotingindia.com and register themselves as Corporates.

• A scanned copy of the Registration Form bearing the stamp and sign of the entity should be emailed [email protected].

• After receiving the login details they have to create a compliance user should be created using the admin loginand password. The Compliance user would be able to link the account(s) for which they wish to vote on.

• The list of accounts should be mailed to [email protected] and on approval of the accounts theywould be able to cast their vote.

• A scanned copy of the Board Resolution and Power of Attorney (POA) which they have issued in favour of theCustodian, if any, should be uploaded in PDF format in the system for the scrutinizer to verify the same.

(xix) In case you have any queries or issues regarding e-voting, you may refer the Frequently Asked Questions ("FAQs")and e-voting manual available at www.evotingindia.com, under help section or write an email [email protected].

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THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK

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Administrative Office: "LVB House", No. 4, Sardar Patel Road, Guindy, Chennai - 600 032.Website: www.lvbank.com, Tele No.: 044-22205306, Email: [email protected]


POSTAL BALLOT FORM (In lieu of E-Voting at the Annual General Meeting)

1 Name of Sole / First Member

2 Name(s) of Joint Member(s), if any

3 Registered Folio No. / DPID No. / Client ID No.

4 No. of Shares held

Item Description Type of No. of I / We I / WeNo. resolution Shares assent to dissent from

( Ordinary / the resolution the resolutionSpecial) (FOR) (AGAINST)

1 Adoption of audited Balance Sheet and Profit & Loss Account Ordinaryfor the year ended March 31, 2014 and the Cash FlowStatement and the Report of the Directors and the Auditorsthereon.

2 Declaration of Dividend on equity shares. Ordinary

3 Appointment of Director in place of Shri. K.R. Pradeep who Ordinaryretires by rotation and being eligible, offers himself forre-appointment.

4 Appointment of Auditors. Ordinary

5 Appointment of Branch Auditors. Ordinary

6 Appointment of Shri. Rakesh Sharma as MD & CEO of the Bank. Ordinary

7 Re-Appointment of Shri. Raghuraj Gujjar as Non-Executive OrdinaryChairman.

8 Appointment of Shri. N. Malayalaramamirtham as Director liable Ordinaryto retire by rotation.

9 Appointment of Shri. P.A. Shankar as an Independent Director Ordinaryof the Bank.

10 Appointment of Shri. D.L.N Rao as an Independent Director of Ordinarythe Bank.

11 Appointment of Shri. B.K. Manjunath as an Independent OrdinaryDirector of the Bank.

12 Appointment of Shri. S. Dattathreyan as an Independent OrdinaryDirector of the Bank.

13 Appointment of Shri. Pankaj Vaish as an Independent OrdinaryDirector of the Bank.

14 Appointment of Shri. Prakash P. Mallya as an Independent OrdinaryDirector of the Bank.

15 Raising of capital through QIPs, QIBs, DRs, GDR, ADR etc. Special

16 Increasing of investment limit of FIIs, NRIs in the Bank. Special

Place :

Date :(Signature of Member)

Note : Kindly read instruction printed overleaf before filling the form.

Last date for receipt of postal ballot forms by Scrutinizer is Monday, the September 22, 2014 not later than 5.00 P.M.

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1. In terms of Clause 35B of the Listing Agreement, thosemembers, who do not have access to e-voting facilityprovided by the Bank for the AGM in terms of Section108 of the Companies Act, 2013 read with Rule 20 ofthe Companies (Management and Administration)Rules, 2014, may send their assent or dissent in writingon the Postal Ballot Form. Accordingly, this Postal BallotForm is being provided under Clause 35 B of the ListingAgreement to facilitate e-voting provided under Section108 of the Companies Act, 2013.

2. A member desiring to exercise his/her vote by PostalBallot Form should complete this Postal Ballot Form,signed and send in the enclosed self-addressedpostage pre-paid envelope so as to reach theScrutinizer as per instruction below at the addressDr.B.Ravi (Scrutinizer), C/o. M/s Integrated Enterprises(India) Limited, II floor, "Kences Towers" No.1Ramakrishna Street, North Usman Road, T.Nagar,Chennai - 600 017. Postage will be borne and paid bythe Bank. Envelopes containing Postal Ballots, ifdeposited in person or sent by courier at the expensesof the Members will also be accepted.

3. The self-addressed envelope bears the name of theScrutinizer appointed by the Board of the Bank and theaddress at which the Postal Ballot Form is to be sent.

4. The Postal Ballot form should be completed and signedby the Members. In the case of joint shareholding, thisform should be completed and signed by the first namedMember and in his absence; by the next namedMember. Unsigned Postal Ballot forms will be rejected.The signature on the Postal Ballot Form must tally withthe specimen signature registered with the Bank.

5. For the votes to be considered valid, the institutionalshareholders (i.e, other than individuals, HUF, NRI. etc.)are required to send certified copy of the relevantauthorization/board resolution along with Postal BallotForm. A member may sign the Form through anAttorney appointed specifically for this purpose, in whichcase an attested true copy of the Power of Attorneyshould be attached to the Postal Ballot Form.

POSTAL BALLOT INSTRUCTION

6. Duly completed Postal Ballot Forms should reach theScrutinizer not later than 05.00 P.M., on 22.09.2014.Any Postal Ballot Form received after this time and datewill be treated as if the reply from the Member has notbeen received.

7. A member may request for a duplicate Postal BallotForm, if so required. However the duly filled in duplicatePostal Ballot Form should reach the Scrutinizer not laterthan the time and date specified at Sl No. 6 above.

8. Voting rights will be reckoned on the paid-up value ofshares registered in the name of the Member on22.08.2014, which is the cutoff date fixed for thispurpose.

9. Members are requested not to send any other paperalong with the Postal Ballot Form in the enclosed self-addressed postage pre-paid envelope in as much asall such envelopes will be sent to the Scrutinizer andany extra paper found in such envelope would bedestroyed by the Scrutinizer.

10. There will be one Postal Ballot Form for every folioirrespective of the number of joint members(s).

11. A member need not use all the votes nor does he needto cast all the votes in the same way.

12. The Scrutinizer's decision on the validity of a PostalBallot will be final and binding.

13. Incomplete, unsigned or incorrect Postal Ballot Formswill be rejected.

14. The date of AGM will be the deemed date of passingresolution(s) through e-voting/Postal ballot. It may alsobe noted that, in terms of Section 114 of the CompaniesAct, 2013, the resolutions contained in the AGM Noticewill be deemed to have been passed through the e-voting and Postal ballot Form. The results shall bedeclared in terms of Rules 20 of the Companies(Management and Administration) Rules, 2014, as thecase may be.

15. The right of e-voting and Postal Ballot Form shall notbe exercised by a Proxy.

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Administrative Office: "LVB House", No. 4, Sardar Patel Road, Guindy, Chennai - 600 032.Website: www.lvbank.com, Tele No.: 044-22205306, Email: [email protected]


Form No. MGT-11PROXY FORM

(Pursuant to Section 105(6) of the Companies Act, 2013 and Rule 19(3) of the Companies (Management and Administration) Rules, 2014CIN L65110TN1926PLC001377

Name of the Company The Lakshmi Vilas Bank Ltd

Registered Office Salem Road, Kathaparai, Karur – 639 006.

Name of the member(s)

Registered Address

E-mail ID

Folio No. / DP ID and Client ID

I / We, being the member(s) of M/s. Lakshmi Vilas Bank, hereby appoint

1 Name of the member(s)

Address

E-mail ID

Signature Failing him


Address

E-mail ID

Signature Failing him


Address

E-mail ID

Signature

as my/our proxy to attend and vote (on poll) for me/us and on my/our behalf at the 87th Annual General Meeting of the bank, to be held on the26th September 2014 at 10.00 A.M. at the Registered Office, Salem Road, Kathaparai, Karur- 639 006 and at any adjournment thereof in respectof such resolution as indicated below:

ResResolutionNo.

1 Adoption of audited Balance Sheet and Profit & Loss Account for the year ended March 31, 2014 and the Cash Flow Statement andthe Report of the Directors and the Auditors thereon.

2 Declaration of Dividend on equity shares.

3 Appointment of Director in place of Shri. K.R. Pradeep who retires by rotation and being eligible, offers himself for re-appointment.

4 Appointment of Auditors.

5 Appointment of Branch Auditors.

6 Appointment of Shri. Rakesh Sharma as MD & CEO of the Bank.

7 Re- Appointment of Shri. Raghuraj Gujjar as Non-Executive Chairman.

8 Appointment of Shri. N. Malayalaramamirtham as Director liable to retire by rotation.

9 Appointment of Shri. P.A. Shankar as an Independent Director of the Bank.

10 Appointment of Shri. D.L.N Rao as an Independent Director of the Bank.

11 Appointment of Shri. B.K. Manjunath as an Independent Director of the Bank.

12 Appointment of Shri. S. Dattathreyan as an Independent Director of the Bank.

13 Appointment of Shri. Pankaj Vaish as an Independent Director of the Bank.

14 Appointment of Shri. Prakash P. Mallya as an Independent Director of the Bank.

15 Raising of capital through QIPs, QIBs, DRs, GDR, ADR etc.

16 Increasing of investment limit of FIIs, NRIs in the Bank.

Affix` 1/-

RevenueStamp

Signed this……………………………………………… day of …………………………………….. 2014.

Signature of Shareholder: ……………………………………….........................................……………

Signature of Proxy holder(s): ……………………………..........................................………………….

Note : This form of proxy in order to be effective should be duly completed and deposited at the Registered Office of the Bank, not lessthan 48 hours before the commencement of the meeting.

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