Registered Office: 2401, General Thimmayya Road (Cantonment), Pune - 411 001. Corporate Office: 701/801 Solitaire Corporate Park, 167 Andheri-Ghatkopar Link Road,

Andheri (E), Mumbai – 400 093 Tel No: (022) 56412200; Fax No: 91-22-56412347; E-Mail: mbd@indusind.com

Website: www.indusind.com (A banking company incorporated under the Companies Act, 1956, within the meaning of the Banking Regulation Act, 1949)

Private Placement of Unsecured Redeemable Non-Convertible Upper Tier II Bonds in the nature of Promissory Notes/ Debentures of Rs. 10,00,000/- each for cash at par amounting to Rs. 165 crores

including a green shoe option of Rs. 65 crores GENERAL RISK: Investors are advised to read the Risk Factors carefully before taking an investment decision in this offering. For taking an investment decision, the investors must rely on their own examination of the Issuer and the Offer/ Issue including the risks involved. The Offer/ Issue being made on private placement basis, this Information Memorandum has not been filed with Securities & Exchange Board of India (SEBI). The Securities have not been recommended or approved by SEBI nor does SEBI guarantee the accuracy or adequacy of this document. Specific attention of the investors is invited to the summarized and detailed Risk Factors mentioned elsewhere in this Information Memorandum. ISSUER’S ABSOLUTE RESPONSIBILITY: The Issuer, having made all reasonable inquiries, accepts responsibility for, and confirms that this Information Memorandum contains all information with regard to the Issuer and the Issue, which is material in the context of the Issue, that the information contained in this Information Memorandum is true and correct in all material respects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this document as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. CREDIT RATING: A (ind) by FITCH: This rating indicates adequate credit quality and that there is currently a low expectation of credit risk. The capacity for timely payment of financial commitments is considered adequate. The capacity may, nevertheless be more vulnerable to changes in circumstances or in economic conditions than in the case for higher ratings. The Bank has also obtained a second rating being LA by ICRA, which indicates adequate credit quality and carries average credit risk. The rating is not a recommendation to buy, sell or hold securities and investors should take their own decision. The rating may be subject to revision or withdrawal at any time by the assigning rating agency and each rating should be evaluated independently of any other rating. The ratings obtained are subject to revision at any point of time in the future. The Rating agency has the right to suspend, withdraw the rating at any time on the basis of new information etc. For details, please refer to para on Credit Rating mentioned elsewhere in this Information Memorandum. LISTING: The Unsecured Redeemable Non—Convertible Upper Tier II Bonds are proposed to be listed on The National Stock Exchange of India Limited (NSE).

ARRANGERS TO THE ISSUE SPA Merchant Bankers Ltd. 10-A, Chandermukhi, Nariman Point, Mumbai 400 021. Tel No. (022) 56349946-49 Fax No. 91-22-22871192 / 22846318 Email : ajay.manglunia@spasecurities.com

A. K. Capital Services Ltd. 135 & 136, Free Press House, 13th Floor, Free Press Journal Marg, 215, Nariman Point, Mumbai – 400 021 Tel No. (022) 66100413 Fax No. 91-22- 66360977 E-Mail: shailesh@akgrouponline.com

Allianz Securities Ltd. 33, Vaswani Mansion, 6th Floor, K. C. College, Dinshaw Vachha Raod, Mumbai 400 020 Tel No. (022) 22040908 Fax No. 91-22- 22870581 E-Mail: sameerapte@aslfinancial.com

DEBENTURE TRUSTEE IDBI Trusteeship Services Ltd. Asian Building, Ground Floor 17 R Kamani Marg, Ballard Estate Mumbai- 400 001, Tel No. (022) 56311771/ 2 / 3, Fax No. (022) 56311776, E-mail: itsl@idbitrustee.co.in REGISTRAR TO THE ISSUE Intime Spectrum Registry Ltd. C-13, Pannalal Silk Mills Compound, LBS Marg, Bhandup (W), Mumbai – 400 078. Tel No. (022) 25963838 Fax No. 91-22- 25946969 E-Mail: isrl@intimespectrum.com

Private & Confidential – For Private Circulation Only (This Information Memorandum is neither a Prospectus

nor a Statement in Lieu of Prospectus)

INFORMATION MEMORANDUM

1

TABLE OF CONTENTS

INDEX TITLE PAGE NO.

DEFINITIONS/ ABBREVIATIONS 2

RISK FACTORS AND MANAGEMENT PROPOSALS THEREOF 3

HIGHLIGHTS OF THE BANK 10

PART I

I. GENERAL INFORMATION 11

II. CAPITAL STRUCTURE 14

III. TERMS OF THE PRESENT ISSUE 16

IV. PARTICULARS OF THE ISSUE 22

V. BANK & MANAGEMENT 23

VI. SIGNIFICANT REGULATORY MATTERS RELATED TO THE BANK 38

VII. ORGANISATION STRUCTURE & MANAGEMENT 39

VIII. STOCK MARKET DATA OF THE EQUITY SHARES OF THE BANK 43

IX. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL PERFORMANCE

44

X. BASIS FOR ISSUE PRICE 45

XI. OUTSTANDING LITIGATIONS, DEFAULTS AND MATERIAL DEVELOPMENTS 45

XI. INVESTOR GRIEVANCES & REDRESSAL SYSTEM 46

PART II

I. GENERAL INFORMATION 47

II. FINANCIAL INFORMATION 50

III. STATUTORY AND OTHER INFORMATION 71

IV. MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION 73

V. MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION 79

PART III

DECLARATION 80

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DEFINITIONS/ ABBREVATIONS

Term Meaning/ Definition/ Complete Term Articles Articles of Association of the Bank ALM Asset Liability Management ALCO Asset Liability Committee ALFL Ashok Leyland Finance Ltd. Act The Companies Act, 1956 as amended from time to time till date Application Form The form in terms of which, the investors shall apply for the Unsecured Redeemable Non-Convertible Upper Tier II

Bonds in the nature of Promissory Notes/ Debentures of the Bank ARC/ A.R.C. Asset Reconstruction Corporation The Bank/ The Issuer Company/ the Issuer/ IndusInd Bank

IndusInd Bank Limited, a company incorporated under the Companies Act, 1956 and a banking company within the meaning of the Banking Regulation Act, 1949, and having its Registered Office at 2401, General Thimmayya Road (Cantonment), Pune - 411 001 and Corporate Office at 701/801 Solitaire Corporate Park, 167 Andheri-Ghatkopar Link Road, Andheri (E), Mumbai – 400 093

Board/ BoD/ BOD Board of Directors of the Bank or a Committee thereof Bond(s) Unsecured Redeemable Non-Convertible Upper Tier II Bonds in the nature of Promissory Notes/ Debentures of Rs.

10,00,000/- each offered through private placement route under the terms of this Information Memorandum Bondholder(s) The Holder(s) of the Bond(s) in dematerialised form Beneficial Owner(s) Bondholder(s) holding Bond(s) in dematerialized form (Beneficial Owner of the Bond(s) as defined in clause (a) of sub-

section of Section 2 of the Depositories Act, 1996) BGs Bank Guarantees BIS Bank of International Settlements BSE The Stock Exchange, Mumbai Bps Basis points CDSL Central Depository Services (India) Limited CAR Capital Adequacy Ratio CRAR Capital to Risk weighted Assets Ratio CAGR Compounded Annual Growth Rate CIBIL Credit Information Bureau (India) Ltd. CDs Certificate(s) of Deposit(s) CDR Corporate Debt Restructuring CPs Commercial Papers DPGs Deferred Payment Guarantees DICGC Deposit Insurance & Credit Guarantee Corporation DDA Deemed Date of Allotment for the Bonds DRR Debenture/ Bond Redemption Reserve DRT Debt Recovery Tribunals ECGC Export Credit Guarantee Corporation FITCH FITCH Ratings India Private Limited FY/ F.Y. Financial Year FIs Financial Institutions FIIs Foreign Institutional Investors FB Fund Based FIMMDA Fixed Income Money Market & Derivatives Association of India GOI/ GoI Government of India HRD Human Resource Development HTM Held Till Maturity ICRA ICRA Limited. Issue/ Offer/ Offering Private Placement of Unsecured Redeemable Non-Convertible Upper Tier II Bonds in the nature of Promissory Notes/

Debentures of Rs. 10,00,000/- each for cash at par amounting to Rs. 165 crores including a green shoe option of Rs. 65 crores offered under the terms of this Information Memorandum

Information Memorandum/ Offer Document

Memorandum of Information dated 30th November, 2006 for Private Placement of Unsecured Redeemable Non-Convertible Upper Tier II Bonds in the nature of Promissory Notes/ Debentures of Rs. 10,00,000/- each for cash at par amounting to Rs. 165 crores including a green shoe option of Rs. 65 crores to be issued by IndusInd Bank Limited

IT Income Tax IS Information Systems LIC Life Insurance Corporation of India LCs Letters of Credit Memorandum Memorandum of Association of the Bank MF/ MFs Mutual Fund(s) NSDL National Securities Depository Limited NRIs Non-Resident Indians NPA/ NPAs Non Performing Asset(s) NSE/ concerned Stock Exchange National Stock Exchange of India Limited NBFCs Non-Banking Finance Companies NCLT National Company Law Tribunal NFB Non-Fund Based OCBs Overseas Corporate Bodies OTS One Time Settlement OCS Out-of-court Settlement PLR Prime Lending Rate PAN Permanent Account Number PSC Priority Sector Credit Registrars to the Issue/ Registrars/ Registrar & Transfer Agents

Intime Spectrum Registry Limited

RBI Reserve Bank of India ROC/ RoC Registrar of Companies, Maharashtra at Mumbai RNBCs Residuary Non-Banking Companies Rating Agency FITCH Ratings India Private Limited and ICRA Limited SEBI Securities and Exchange Board of India SARFAESI The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 SSIs Small Scale Industries SLR Statutory Liquidity Ratio Trustees/ Trustees to the Bondholder(s)

IDBI Trusteeship Services Ltd.

TDS Tax Deducted at Source VRS Voluntary Retirement Scheme W/O Written Off I.I.T.L. IndusInd Information Technology Limited

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RISK ENVISAGED BY MANAGEMENT AND MANAGEMENT PROPOSALS (MP) TO ADDRESS THE RISKS Following are certain issues for the investors to consider before taking an investment decision in the offer. In some of the risk factors and management proposals thereof, reference has been invited for detailed para mentioned elsewhere in this Information Memorandum, which can be used to obtain more details about the said risk. INTERNAL RISKS 1. Redemption Reserve & Unsecured Bonds Creation of Redemption Reserve is not envisaged for the proposed issue of bonds and the Bonds proposed to be issued are unsecured i.e. they are not proposed to be secured against any asset of the Bank. MP: IndusInd Bank is a banking company within the meaning of the Banking Regulation Act, 1949. The resources through current issue of bonds are being raised by the Bank for augmenting the Tier-II Capital for strengthening the Capital Adequacy and enhancing its long-term resources. Department of Company Affairs, Ministry of Law Justice and Company Affairs, Government of India has vide general clarification no.6/3/2001-CL.V dated 18/04/2002 clarified that banks need not create Debenture Redemption Reserve as specified under section 117C of the Companies Act, 1956. Also as per extant RBI guidelines in respect of issue of upper Tier-II bonds issued vide its circular no. DBOD. BP.BC.57/21.01.002/2005-06 dated 25-01-2006; the Tier-II bonds are to be issued as unsecured non-convertible and non-convertible bonds for being eligible for inclusion in Tier II capital of the Issuing Bank. Moreover since the resources raised by IndusInd Bank are being utilised for the purpose of its business i.e. providing credit and other facilities to the industry, the assets of IndusInd Bank are mostly in form of loans and advances. Hence it is proposed that the bonds shall be unsecured in nature and that they shall not be secured against any asset of the Bank. The Bank has appointed a Trustee to protect the interest of the investors. 2. Credit Risk The business of lending carries the risk of default by the borrowers.

MP: Any lending activity is exposed to credit risk arising from the risk of default by the borrowers. The Bank takes adequate care to minimise such risks by having a well-diversified loan portfolio, in terms of industry, business segments, products, size, group etc. Industry-wise, product-wise, promoter group-wise, individual client-wise and credit rating-wise exposure limits are set to avoid concentration of lending to any specific section of the borrowers / industries and to help minimise credit risk. The Bank follows a comprehensive credit / project appraisal system and lending norms. The Bank has put in place a system based and sophisticated credit rating system acquired from Crisil that enables objective and comprehensive assessment of risks. The borrowal accounts are rated on several parameters classified under Industry risk, Business risk, Financial risk, Management risk and Project risk. To assist informed and objective risk assessment, the Bank has subscribed to Industry Research reports, Industry Risk Scores, Business Risk factors from Crisil and also maintains active industry research desk, which rolls out well-researched reports on various industries. Credit risk assessment is also aided by automated computation of financials, accurately generating comprehensive set of ratios. All the exposures proposed are screened thoroughly and approved by Committees comprising of senior officials with rich past experience. The Bank has significantly enhanced its credit appraisal and monitoring system infrastructure which are aimed at mitigating various credit related risks. For other details on the credit risk management process in the Bank, the investors may refer to the para ‘Risk Management’ mentioned elsewhere in this Self Information Memorandum. 3. Market Risks Increased interest rate volatility exposes IndusInd Bank to market rate risk arising out of maturity/ rate mismatches. MP: Risks arising from interest rate volatility are inherent to the business of financial intermediation and lending. However, the Bank has put in place a system of regular review of lending and deposit rates in order to minimise the interest rate risk. The Asset Liability Management Committee of the Bank reviews the risk on a regular basis. Continuous risk management measures are initiated depending upon the movement in the market interest rates. Movements in interest rates are closely monitored for appropriate action. For more

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details on the Risk Management procedures, investors are advised to refer to para ‘Risk Management’ mentioned elsewhere in this Information Memorandum. 4. Asset Liability Mismatch A large portion of the funding of the Bank is in the form of short and medium term deposits. The asset liability position of the Bank could be affected if the depositors do not roll over the deposits. MP: As per the behavioral analysis carried out, a large portion of the deposits gets rolled over. The Bank feels that in the event of these deposits not being rolled over, the fresh accretion of deposits would take care of the Asset Liability mismatches. In addition, the Bank has the cushion of investments in the long-term (over 5 years) category, which can be utilized to correct any medium term mismatches. The Bank has an Asset Liability Management system in place, which actively monitors and manages the duration and liquidity mismatches. For more details on the Asset Liability position refer to the para ‘Asset Liability Management’ mentioned elsewhere in this Information Memorandum. 5. Credit Rating IndusInd Bank has obtained credit rating of ‘A (Ind)’ from FITCH and LA BY ICRA for an amount of Rs. 165 crores for its current issue of upper Tier-II Bonds. This rating indicates adequate credit quality and that there is currently a low expectation of credit risk and average credit risk respectively. The capacity for timely payment of financial commitments is considered adequate. The capacity may, nevertheless be more vulnerable to changes in circumstances or in economic conditions than in the case for higher ratings. Short-term debt instruments of the Bank were assigned highest ratings as follows – Fixed Deposits = P1+ in September 2004, Certificate of Deposits of Rs. 700 crores = P1+ in February 2005, Short Term FD = P1+ and Certificate of Deposits of Rs. 700 crores = P1+ in June 2006 by CRISIL & Certificate of Deposits of Rs. 50 crs = F1+ (Ind) in December 2003, Certificate of Deposits of Rs. 250 crores = F1+ in December 2004, Certificate of Deposits of Rs. 250 crores = F1+ in December 2004 and Certificate of Deposits = Rs. 250 crores in January 2006 by FITCH and Certificate of Deposits = Rs. 2000 crores from ICRA in November 2006. MP: Investors may please note that, the rating is not a recommendation to buy, sell or hold securities and investors should take their own decision. The rating may be subject to revision, suspension or withdrawal at any time by the assigning rating agency and each rating should be evaluated independently of any other rating. The ratings obtained are subject to revision at any point of time in the future. The Rating agency has the right to suspend, withdraw or revise the rating at any time on the basis of new information etc. Credit Rating of all listed and unlisted taxable bonds/ debentures/ commercial paper issued by the IndusInd Bank for the last 3 years have been disclosed under the head ‘Credit Rating’ mentioned elsewhere in this Information Memorandum. 6. Contingent Liabilities As on March 31, 2006 and September 30, 2006 the contingent liabilities of the Bank were at Rs 16836.46 crores and Rs. 16908.92 respectively comprising claims against the Bank not acknowledged as debts (Rs. 184.65 crores on both the dates) liability on account of outstanding forward exchange contracts (Rs. 7277.01 crores and Rs. 7628.30 crores respectively), guarantees on behalf of constituents (Rs.1021.45 crores and Rs. 1077.55 crores respectively), acceptances, endorsements and other obligations (Rs. 1578.36 crores and Rs. 1535.07 crores respectively) and liability on account of outstanding derivative contracts (Rs.6775.00 crores and Rs. 6475.00 crores). MP: The contingent liabilities have arisen in the normal course of business of the Bank and are according to the prudential norms prescribed by RBI. 7. Requests / Pending Grievances As on 30.09.2006 no shareholders’ complaints was pending. Total complaints received from shareholders and disposed of during the period 01.04.2006 to 30.09.2006 were 1875. MP: IndusInd Bank has set up a Stakeholders Relation Committee, which consists of three members out of which two are independent directors of the Bank. A non-executive director is elected as chairman for the meeting by the members present. The Company Secretary discharges the responsibilities of a Compliance officer for this purpose. The committee meets generally every half-year and reviews the stakeholders’ relations. Share transfers, dividend payment and all other investor related activities are attended to and processed at the office of the Registrar & Transfer Agent, Intime Spectrum Registry Limited. No shareholders’ complaint has been pending against the Bank. With respect to the current issue of bonds, the Bank has designated Mr. Haresh Gajwani as the Compliance Officer, who can be contacted by the investors in case of any pre-issue/ post-issue related problems such as non-credit of letter(s) of allotment/ bond certificate(s) in the demat account, non-receipt of refund order(s), interest warrant(s)/ cheque(s) etc.

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8. Income Tax Proceedings Various proceedings against the Bank relating to Income Tax amounting to Rs. 99.20 crores and Interest Tax amounting to Rs. 0.72 crores are pending in appeal with the Income Tax authorities. The Bank has not made any provision in this regard and adverse ruling, if any, shall affect the financials of the Bank. MP: Appeals have been preferred to concerned Tax authorities in respect of the above. 9. Non Performing Assets (NPAs) As on 31.03.2006 and 30.09.2006, the net NPAs of the Bank stood at 2.09% and 1.71% of its net advances amounting to Rs. 9310.46 crores and Rs. 10723.61 crores respectively in absolute terms. In the event of non-recovery of these assets, the Bank may have to provide for these NPAs, which might affect the profitability of the Bank in future. For details, investors are advised to refer to para ‘Asset Classification, Income Recognition & Provisioning’ mentioned elsewhere in this Information Memorandum. MP: The Bank has provided for its NPAs in conformity with RBI guidelines and is taking steps to reduce the proportion of non-performing assets through aggressive recovery drives combined with improved risk management practices. Further, there have been substantial changes in the legislative and operating environment enabling FIs and Banks to pursue recovery of overdues. Besides Debt Recovery Tribunal (DRT) set up for faster settlement of recovery litigation, GoI has enacted ‘The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002’ enabling FIs and Banks to securities and reconstruct financial assets and enforce security more effectively. Reserve Bank of India has formulated detailed guidelines for operation of the scheme. 10. Profits of the Bank The decreased in net profits of the Bank from Rs. 210.15 crores in FY 2004-05 to Rs. 36.82 crores in FY 2005-06 can be mainly attributed to lower treasury profits and lower income on securitisation. The Bank made a profit of Rs.57.95 crores during FY2004-05 as against Rs. 13.26 crores during FY2005-06 from sale of investments (treasury income) and securitisation income declined from Rs.104.93 crores to Rs. 41.84 crores. The profit for the half-year ended September 30, 2006 stood at Rs. 25.20 crs as against Rs. 71.85 crs for period ended September 30, 2005 MP:. It is true that the Bank made profit from sale of investment and securitisation of assets in FY 2004-05, which was not possible during FY 2005-06 and fore the half-year ended September 30, 2006. The recent trend has however been reversed and the operating profit of the Bank has come from diversified income steams comprising of interest income. 11. Outstanding Litigations against the Bank There are outstanding litigations amounting to Rs. 85.44 crores (a total of 49 cases) for “Claims not acknowledged as debts” as on 31st March, 2006. For details, please refer to the para on Litigation mentioned elsewhere in this Information Memorandum. MP: The claim amount stands reduced by Rs.243.03 crores as suit filed by one of the parties stands withdrawn. These claims are not likely to affect the operations and finances of the Bank. 12. Utilization of Funds The utilization of the funds proposed to be raised through this private placement is entirely at the discretion of the Bank and no monitoring agency has been appointed to monitor the deployment of funds. MP: The funds raised through this private placement are not meant for any specific project and hence a monitoring agency may not be required. The Bank is managed by professionals under the supervision of its Board of Directors. Further, the Bank is subject to a number of regulatory checks and balances as stipulated in its regulatory environment. Therefore, the management believes that the funds raised via this private placement would be utilised only towards satisfactory fulfillment of the ‘Objects of the Issue’ mentioned elsewhere in this Information Memorandum. EXTERNAL RISKS 1. Regulatory restrictions on the Bank and limitations of the powers of bondholders of the Bank There are a number of restrictions as per the Banking Regulation Act, 1949 (Amended), which impede flexibility of the operations of the Bank and affect/restrict investors’ rights. These are as under: i. The Bank can carry on business/activities as specified in the Act. There is no flexibility to pursue profitable avenues if they arise, in contrast with companies under the Companies Act, where shareholders can amend the Objects Clause by a special resolution. ii. In terms of Section 8 of the Banking Regulation Act, 1949, the Bank is prohibited from trading in goods, which may act as an operational constraint.

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iii. In terms of Section 17(1) of the Banking Regulation Act, 1949, every banking company shall create a Reserve Fund and shall, out of the balance of profit of each year as disclosed in the Profit & Loss a/c prepared under Section 29 and before any dividend is declared, transfer to the Reserve Fund a sum equivalent to not less than twenty five percent of such profit. iv. In terms of Section 19 of the Banking Regulation Act, 1949 there are some restrictions on the banking companies regarding opening of subsidiaries which may deny the Bank from exploiting emerging business opportunities. v. In terms of Section 23 of the Banking Regulation Act, 1949 there are certain restrictions on the banking companies regarding opening of new place of business and transfer of existing place of business, which may hamper the operational flexibility of the Bank. vi. In terms of Section 25 of the Banking Regulation Act, 1949 each banking company has to maintain assets in India which is not less than 75% of its demand and time liabilities in India which in turn may prohibit the Bank from creating overseas assets and exploiting overseas business opportunities. vii. There are restrictions in the Banking Regulation Act regarding, • Management of a Bank including appointment of directors. • Borrowings and creation of floating charge thereby hampering leverage. • Expansion of business, as the branches needs to be licensed. • Disclosures in the profit & loss account and balance sheet. • Production of documents and availability of records for inspection by shareholders. • Reconstruction of banks through amalgamation. • Further issues of capital including issue of bonus shares/rights shares. 2. Sensitivity to the Economy and Extraneous Factors The Bank’s performance is highly correlated to the performance of the economy and the financial markets. The health of the economy and the financial markets in turn depends on the domestic economic growth, state of the global economy and business and consumer confidence, among other factors. Any event disturbing the dynamic balance of these diverse factors would directly or indirectly affect the performance of the Bank including the quality and growth of its assets. 3. Competition from Existing and New Commercial Banks Competition in the financial sector has increased with the entry of new players and is likely to increase further as a result of further deregulation in the financial sector. The Bank may face competition both in raising resources and in deploying them. MP: The Bank has an established broad-based presence and has been taking steps to enhance customer satisfaction by upgrading skills, systems and technology to meet such challenges. The Bank is attempting to add quality assets on competitive terms. The Bank is also taking steps to broad base its product bouquet with a special emphasis on enhancement in the non-fund based income. On the resource-raising front, the Bank is actively endeavoring to broaden its reach and raise resources through its wide distribution network of 147 branches. For more details on the business environment of the Bank, investors are advised to refer to the para ‘Management Discussion and Analysis of Financial Results’ mentioned elsewhere in this Information Memorandum. 4. Disintermediation in the Financial Markets As the financial markets mature and with growing developments in the capital markets, the trend towards disintermediation may be increasingly in evidence. In such a scenario, many companies including the current and potential borrowers of the Bank may access capital markets directly for their financing needs and reduce their dependence on the banking system. This may have an adverse impact on the level of deposits and also on the level and mix of advances portfolio and the profitability of the Banks. MP: The Bank has, in recent years, launched several retail lending schemes and value added products so as to broaden its borrower base. Further, disintermediation brings with it the opportunity for the Bank to expand its fee-based activities. The Bank has been endeavoring to develop a presence in several financial services to earn fee based income by focusing on businesses such as foreign exchange, treasury, investments, cash management, depository services, debenture trustee etc., thus taking advantage of the disintermediation phenomenon. 5. Forex Risk Exchange Rate fluctuations may have an impact on the Bank’s financial performance. MP: As per RBI guidelines, banks are not allowed to keep open position on their foreign exchange transactions beyond prescribed limits on a daily basis. Foreign exchange transactions beyond such limits, if any, must be squared off at the end of each day. Hence, the risk from exchange rate fluctuations is minimised. The Board of Directors of the Bank has also prescribed limits for gaps or mismatches in maturities of Bank’s foreign currency assets and liabilities and forward transactions in foreign exchange. The Bank operates within the limits fixed for gaps or mismatches in maturities of Bank’s foreign currency assets

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and liabilities and forward transactions in foreign exchange, thus minimising the risks of mismatches in maturities and interest rates. 6. Interest Rate Risk Present interest rates on deposits and advances are based on so many micro and macro economic factors including the directives of the Reserve Bank of India which are likely to be market driven due to deregulation and thereby may result in increasing pressure on spreads and affect profitability. Interest rate volatility exposes the Bank to an interest rate risk or market risk. Such interest rate risk has a potential impact on net interest income or net interest margin as well as on the market value of the fixed income securities held by the Bank in its investment portfolio. MP: These risks are inherent in the banking business. However, the Bank has put in place a system of regular review of lending and deposit rates in order to minimise the interest rate risk. The Asset Liability Management Committees of the Bank reviews the risk on a regular basis. Continuous Risk Management measures are initiated depending upon the movement in the market interest rates. The movement in the interest rates is closely monitored for appropriate action. 7. Operational Risk Operational risk is the risk of losses resulting from failure or inadequacy of operating system in a bank due to disruptions of systems, fraudulent activities, natural disaster, human error or omission or sabotage or faulty / ineffective processes. The failure or inadequacy may relate to Systems, Processes, People or external events. MP: The Bank has mitigated its operational risk by taking the following steps: • The Bank has acquired state-of-the-art-software solutions, which are suitably customized for the Bank

and are operating in fully automated environment, which reduces the scope for human commissions and omissions.

• Recognizing the fact that its operations are fully automated, the Bank has given a great thrust to IT

infrastructure. Comprehensive IT Security Policy has been implemented and the Bank has acquired a fully secured and sophisticated data centre with state-of-the-art infrastructure. The Bank has also put in place a hot-site Disaster Recovery Plan at a distant centre.

• The Bank has documented Standard Operating Procedures and has been updating the same

periodically. The Bank has also received ISO–9001:2000 certification for banking operations at all its branches. The Bank has an integrated and independent Audit Dept, which ensures effective compliance through independent full-time internal audit staff stationed in major branches, inspection carried out periodically and through remote scrutiny on an on-going basis.

• The Bank has a sound HR policy and infrastructure, which ensures that the staff remain motivated,

adequately skilled, trained & updated continuously. The above measures significantly help mitigate Operational risk.

Over and above the above initiatives, the integrated Risk Management Dept at Corporate office has a separate Operational Risk Management Cell, which manages Operational risk. 8. Financial Statements in the Information Memorandum The financial statements and derived ratios there from contained in the Information Memorandum are prepared/computed as per the permissible accounting practices. While due care has been taken to reflect the true economic reality regarding the financials of the Bank as far as possible, the investors may want to make their own adjustments to the same before arriving at an investment decision in the offer. MP: The financial statements and the derived ratios have been prepared in conformity to the extant guidelines and the same have been compiled from the published audited Final Accounts of the Bank for the respective years ended on March 31, (last such being Year ended March 31,2005) duly certified by the auditors of the Bank. The last published Final Accounts of the Bank for the year ended March 31,2005 along with Auditors’ Report have been reproduced elsewhere in this Information Memorandum. 10. Banking is a heavily regulated industry and material changes in the regulations, which govern us could cause our business to suffer Banks in India are subject to detailed supervision and regulation by the RBI. Banks are in general subject to the risk of changes in Indian law, changes in regulations and government policies as well as changes in accounting principles. The laws and regulations governing the banking sector could change in the future

8

and any such changes could adversely affect our business, our future financial performance and our shareholders’ funds, by requiring a restructuring of our activities, increasing costs or otherwise. The directed lending norms of the RBI require that every bank should extend 40% of its net bank credit to certain eligible sectors, such as agriculture, smallscale industries and housing finance up to certain limits, which are categorised as “priority sectors”. The bank may experience a significant increase in non performing loans in its directed lending portfolio, particularly loans to the agriculture sector and smallscale industries, since economic difficulties are likely to affect those borrowers more severely and the bank would be less able to control the quality of this portfolio. There are a number of restrictions under the BR Act, which impede our operating flexibility and affect investors’ rights. These include the following: a. Section 15(1) of the BR Act, states that “no banking company shall pay any dividend on its shares until

all its capitalised expenses (including preliminary expenses, organisation expenses, share-selling commission, brokerage, amounts of losses incurred and any other item of expenditure not represented by tangible assets) have been completely written off.” Recently, RBI vide its circular no. DBOD.NO.BP.BC.80/ 21.02.067/2003-04 dated April 23, 2004 has revised the guidelines for payment of dividend by shifting regulatory focus with regard to payment of dividend by banks from ‘quantum of dividend’ to ‘dividend payout ratio’. Only those banks, which comply with the minimum prudential requirements in terms of the circular would be eligible to declare dividends without prior approval of RBI.

b. Section 12(2) of the BR Act, states that “no person holding shares in a banking company shall exercise voting rights on poll in excess of 10% of the total voting rights of all the shareholders of the banking company”.

The forms of business in which our subsidiaries and we may engage are specified and regulated by the BR Act. Pursuant to the provisions of section 8 of the BR Act, we cannot directly or indirectly deal in the buying, selling or bartering of goods by ourselves or for others, except in connection with the realisation of security given to us or held by us, or in connection with bills of exchange received for collection or negotiation, or in connection with the administration of estates as executor, trustee or otherwise, or in connection with any business specified under section 6(1)(o) of the BR Act. Goods for this purpose means every kind of movable property, other than actionable claims, stocks, shares, money, bullion and specie and all instruments referred to in section 6(1)(a) of the BR Act. Unlike a company incorporated under the Act, which may amend the objects clause of its Memorandum to commence a new business activity, banking companies may only carry on business activities permitted by Section 6 of the BR Act or specifically permitted by the RBI. This may restrict our ability to pursue profitable business opportunities as they arise.

c. Section 17(1) of the BR Act requires every banking company to create a Reserve Fund and out of the balance of the profit of each year as disclosed in the profit & loss account transfer a sum equivalent to not less than 25% of such profit before paying any dividend.

d. Section 19 of the BR Act restricts the opening of subsidiaries by banks, which may prevent us from exploiting emerging business opportunities. Similarly, section 23 of the BR Act contains certain restrictions on banking companies regarding the opening of new places of business and transfers of existing places of business, which may hamper our operational flexibility.

e. Section 25 of the BR Act requires each banking company to maintain assets in India equivalent to not less than 75% of its demand and time liabilities in India, which in turn may restrict us from building overseas asset portfolios and exploiting overseas business opportunities.

f. We are required to obtain approval of the RBI for the appointment and remuneration of our Chairman, Managing Director and other whole time Directors. We are also required to obtain approval of the RBI for the creation of floating charges for our borrowings, thereby hampering leverage. Banks may have to resort to unsecured debt instruments for borrowings The BR Act also contains provisions regarding production of documents and availability of records for inspection.

g. In addition to the above, various rights/powers of the shareholders available under the Act are not available to the shareholders of the Banks. Shareholders Rights like requisition of general meetings, inspection of minutes and other material records, application by members for investigation of affairs of a company, application for relief in cases of oppression and mismanagement, voluntary winding up, right to receive dividend within 42 days, etc. are not available to shareholders of a Bank.

Other restrictions, which inter-alia include disclosures in the profit and loss account and balance sheet to be made as per the format prescribed under the BR Act, reconstruction of banks through amalgamations etc., issuance of further capital including issue of bonus shares/right shares only with prior approval of RBI. NOTES TO RISK FACTORS • Net worth (excluding revaluation reserves) of the Bank as on 31.03.2005 and 31.03.2006 was

Rs. 829.24 crores and Rs. 866.06 crores respectively. As on September 30, 2006, the net worth stood at Rs. 891.25 crs

• The Book Value of the share as on March 31, 2006 is Rs. 29.83 and September 30, 2006 is Rs. 30.70 respectively (face value of Rs. 10/-).

• The financial information for March 31, 2006 as contained in PART II under para I to para IX including the notes to accounts, significant accounting policies as well as auditors’ qualifications has been duly certified by the statutory auditors of the Bank. As far as possible, these audited numbers have been

9

used for computation or derivation of other financial information contained in the Information Memorandum. However, such other financial information contained in the Information Memorandum except as contained in PART II under para I to para IX has been certified by the management of the Bank.

• In terms of recommendations of RBI Working Group on ‘Consolidated Accounting and Other Quantitative Methods to Facilitate Consolidated Supervision’ (December 2001), all banks, whether listed or unlisted, should prepare and disclose Consolidated Financial Statement (CFS) from the financial year commencing from 1.04.2002 in addition to solo financial statements at present.

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HIGHLIGHTS OF THE BANK • Bank with 12 years of existence. • The Bank is professionally managed • The Bank is professionally managed with an uninterrupted track record of profitability. • The Bank has a large network of branches spread throughout the country that may enable it to raise

funds competitively. The domestic network of the Bank stood at 147 offices as on 30.09.2006, • The Bank has also opened specialised branches to cater to the needs of industrial finance, trade

finance, personal banking, international banking, NRIs and small-scale industries. • Capital Adequacy Ratio of 10.54% as on 31.03.2006, which is above minimum of 9% prescribed by RBI.

As of 30.09.2006, the Capital Adequacy ratio was 10.31% • Product portfolio includes Trade finance, Consumer Loans, Agri-Business Consultancy Services,

Insurance Marketing Services, Demat Services, Credit Cards, Kisan Cards etc. • Consistent Deposits growth: Deposits have grown by a CAGR of 15.61% during the last 5 years. • Consistent Advances growth: Net Advances have grown by a CAGR of 13.68% during the last 5 years

11

PART I

INDUSIND BANK LIMITED (A company incorporated under the Companies Act, 1956 and a banking company within the meaning of the Banking Regulation Act, 1949)

Registered Office: 2401, General Thimmayya Road (Cantonment), Pune - 411 001. Corporate Office: 701/801 Solitaire Corporate Park, 167 Andheri-Ghatkopar Link Road, Andheri (E), Mumbai – 400 093.

Tel No: (022) 56412200; Fax No: 91-22-56412347; E-Mail: mbd@indusind.com Website: www.indusind.com

Private Placement of Unsecured Redeemable Non-Convertible Upper Tier II Sub-ordinated Bonds of Rs. 10,00,000/- each for cash at par amounting to Rs. 165 crores including green shoe option of Rs. 65 crores. CCMD I. GENERAL INFORMATION OFFER OF BONDS IndusInd Bank is seeking offer for subscription of Unsecured Redeemable Non-Convertible Upper Tier II Subordinated Bonds of Rs. 10,00,000/- each for cash at par amounting to Rs. 50 crores with a green shoe option of Rs. 50 crores. AUTHORITY FOR THE PRESENT ISSUE This present issue of Bonds is being made pursuant to the Resolutions of the Committee of Directors of the Bank, passed at its meeting held on 8th February, 2006. The Board of Directors in its meeting held on April 07, 1994 have delegated all its powers to the Committee of Directors. REGISTRATION AND GOVERNMENT APPROVALS This present issue of Bonds is being made in accordance with extant RBI guidelines vide its circular no. DBOD. BP.BC.57/21.01.002/2005-06 dated 25-01-2006 for issue of upper Tier-II Bonds. The Bank can undertake the activities proposed by it in view of the present approvals and no further approval from any government authority(ies)/ Reserve Bank of India (RBI) is required by the Bank to undertake the proposed activities save and except those approvals which may be required to be taken in the normal course of business from time to time. DISCLAIMER CLAUSE This Information Memorandum (“Memorandum”) is neither a prospectus nor a statement in lieu of prospectus and does not constitute an offer to the public generally to subscribe for or otherwise acquire the Bonds to be issued by IndusInd Bank Limited (IndusInd Bank)/ the Issuer/ the Bank/ the Company). The Memorandum is for the exclusive use of the investors to whom it is delivered and it should not be circulated or distributed to third parties. This Information Memorandum is not intended to be circulated to more than 49 parties. This Information Memorandum for issue of Bonds on private placement basis has been prepared in conformity with the extant SEBI circular no. SEBI/MRD/SE/AT/36/2003/30/09 dated September 30, 2003 and SEBI circular no. SEBI/MRD/SE/AT/46/2003 dated December 22, 2003. Therefore as per the applicable provisions, copy of this Information Memorandum has not been filed or submitted to SEBI. It is to be distinctly understood that the Information Memorandum should not, in any way, be deemed or construed that the same has been cleared or vetted by SEBI. SEBI does not take any responsibility either for the financial soundness of any scheme or the project for which the Issue is proposed to be made, or for the correctness of the statements made or opinions expressed in the Information Memorandum. The Issuer Company certifies that the disclosures made in this Information Memorandum are generally adequate and are in conformity with the captioned SEBI circular. This requirement is to facilitate investors to take an informed decision for making investment in the proposed Issue. It should also be clearly understood that while the Issuer Company is primarily responsible for the correctness, adequacy and disclosure of all relevant information in the Information Memorandum. The Issuer Company herein also certifies that it has disclosed various material information in the Information Memorandum for the said Issue. Further the Issuer Company confirms that: a. this Information Memorandum is in conformity with the documents, materials and papers relevant to the Issue; b. all the legal requirements connected with the said Issue as also the guidelines, instructions, etc., issued by SEBI, the government

and any other competent authority in this behalf have been duly complied with; and c. the disclosures made in this Information Memorandum are true, fair and adequate to enable the investors to make a well-

informed decision as to the investment in the proposed Issue. d. all the intermediaries named in this Information Memorandum are registered with SEBI and that till date such registration is valid. The Issue of Bonds being made on private placement basis, filing of this Information Memorandum is not required, however the same does not absolve the Issuer Company from any liabilities under Section 63 or Section 68 of the Companies Act, 1956 or from the requirement of obtaining such statutory and other clearances as may be required for the purpose of the proposed Issue. SEBI further reserves the right to take up at any point of time, with the Issuer Company, any irregularities or lapses in this Information Memorandum. DISCLAIMER STATEMENT FROM THE ARRANGERS In light of SEBI circular no. SEBI/MRD/SE/AT/36/2003/30/09 dated September 30, 2003 and SEBI circular no. SEBI/MRD/SE/AT/46/2003 dated December 22, 2003; it is advised that the Issuer Company has exercised self due-diligence to ensure complete compliance of prescribed disclosure norms etc in this Memorandum. The role of the Arrangers in the assignment is confined to marketing and placement of the bonds on the basis of this Memorandum as prepared by the Issuer Company. The Arrangers has neither scrutinized nor vetted nor has it done any due-diligence for verification of the contents of this Memorandum. The Arrangers shall use this Memorandum for the purpose of soliciting subscription(s) from qualified institutional investor(s) in the bonds to be issued by the Issuer Company on private placement basis. It is to be distinctly understood that the aforesaid use of this Memorandum by the Arrangers should not in any way be deemed or construed that the Memorandum has been prepared, cleared, approved or vetted by the Arrangers; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this Memorandum; nor does it take responsibility for the financial or other soundness of this Issuer, its promoters, its management or any scheme or project of this Issuer. The Arrangers or any of its directors, employees, affiliates or representatives do not accept any responsibility and/or liability for any loss or damage arising of whatever nature and extent in connection with the use of any of the information contained in this Memorandum.

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DISCLAIMER STATEMENT FROM THE ISSUER The Issuer Company accepts no responsibility for statements made otherwise than in the Information Memorandum or any other material issued by or at the instance of the Issuer Company and anyone placing reliance on any other source of information would be doing so at his/her/their own risk. FILING OF INFORMATION MEMORANDUM As per extant SEBI guidelines/ regulations, filing of this Information Memorandum is not required either with SEBI, RoC or any other regulatory authority(ies). The present issue of bonds being made on private placement basis, copy of this Information Memorandum along with the documents as specified under the head “Material Contracts and Documents for Inspection” required to be filed with Registrar of Companies (RoC) under Section 60 of the Companies Act, 1956 shall not be applicable and hence the same has not been delivered to RoC for registration nor has the same been filed with SEBI for vetting/ comments/ registration. DISCLAIMER CLAUSE OF THE STOCK EXCHANGE As required, a copy of this Information Memorandum has been submitted to The National Stock Exchange of India Limited (hereinafter referred to as NSE) for hosting the same on its web site. It is to be distinctly understood that such submission of the Information Memorandum to NSE or hosting the same on its web site should not in any way be deemed or construed that the Information Memorandum has been cleared or approved by NSE nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this Information Memorandum; nor do it warrant that this Issuer’s securities will be listed or continue to be listed on the Exchange; nor does it take responsibility for the financial or other soundness of this Issuer, its promoters, its management or any scheme or project of this Issuer. Every person who desires to apply for or otherwise acquire any securities of this Issuer may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/ acquisition whether by reason of anything stated or omitted to be stated herein or any other reason whatsoever. DISCLAIMER IN RESPECT OF JURISDICTION This offer of Bonds is made in India to Companies, Corporate Bodies, Trusts registered under the Indian Trusts Act, 1882, Societies registered under the Societies Registration Act, 1860 or any other applicable laws, provided that such Trust/ Society is authorised under constitution/ rules/ bye-laws to hold debentures in a Company, Indian Mutual Funds registered with SEBI, Indian Financial Institutions, Insurance Companies, Commercial Banks including Regional Rural Banks and Co-operative Banks (subject to RBI Permission) as defined under Indian laws). The Information Memorandum does not, however, constitute an offer to sell or an invitation to subscribe to securities offered hereby in any other jurisdiction to any person to whom it is unlawful to make an offer or invitation in such jurisdiction. Any person into whose possession this Information Memorandum comes is required to inform himself about and to observe any such restrictions. Any disputes arising out of this issue will be subject to the exclusive jurisdiction of the courts at Mumbai (Maharashtra). All information considered adequate and relevant about the Issuer and the Issuer Company has been made available in this Information Memorandum for the use and perusal of the potential investors and no selective or additional information would be available for a section of investors in any manner whatsoever. LISTING The equity shares of the Bank are listed on The Stock Exchange, Mumbai (BSE) and The National Stock Exchange of India Limited (NSE). The Bank has made / will make an application to the National Stock Exchange of India Limited (NSE) to list the Bonds to be issued and allotted under this Information Memorandum. The Bank shall complete all the formalities relating to listing of the Bonds within 90 days from the date of closure of the Issue. MINIMUM SUBSCRIPTION As the Issue of Bonds is being made on private placement basis, the requirement of minimum subscription shall not be applicable. MINIMUM-MAXIMUM TARGET The Bank proposes to make Issue of Unsecured Redeemable Non-Convertible Upper Tier II Bonds in the nature of Promissory Notes/ Debentures aggregating Rs. 165 crores including the option to retain over subscription of Rs.65 crores. ISSUE SCHEDULE The Issue opening, closing and deemed date of allotment will be informed to the investors separately. The bank reserves the right to close the issue earlier from the aforesaid dates or change the issue time table including the Deemed date of allotment at its sole discretion without giving any reasons or prior notice. The Bank also reserves the right to keep multiple Deemed Date(s) of Allotment at its sole and absolute discretion without any notice. STATUTORY AUDITORS M/s S. R. Batliboi & Co. Chartered Accountants 6th Floor, Express Towers Nariman Point Mumbai – 400 021 Tel No. (022) 22876485 Fax No. 91-22-22876401 ARRANGERS TO THE ISSUE SPA Merchant Bankers Ltd. 10-A, Chandermukhi, Nariman Point, Mumbai 400 021. Tel No. (022) 56349946-49 Fax No. 91-22-22871192 / 22846318 Email : ajay.manglunia@spasecurities.com A. K. Capital Services Ltd. 135 & 136, Free Press House, 13th Floor, Free Press Journal Marg, 215, Nariman Point,

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Mumbai – 400 021 Tel No. (022) 66100413 Fax No. 91-22- 66360977 E-Mail: shailesh@akgrouponline.com Allianz Securities Ltd. 33, Vaswani Mansion, 6th Floor, K. C. College, Dinshaw Vachha Raod, Mumbai 400 020 Tel No. (022) 22040908 Fax No. 91-22- 22870581 E-Mail: sameerapte@aslfinancial.com REGISTRAR TO THE ISSUE Intime Spectrum Registry Limited, C-13, Pannalal Silk Mills Compound, LBS Marg, Bhandup (W), Mumbai – 400 078. Tel No. (022) 25963838 Fax No. 91-22- 25946969 E-Mail: isrl@intimespectrum.com TRUSTEES FOR THE BONDHOLDERS IDBI Trusteeship Services Ltd. Asian Building, Ground Floor 17 R Kamani Marg Ballard Estate, Mumbai- 400 001 Tel No. (022) 56311771/ 2 / 3 Fax No. (022) 56311776 E-mail: itsl@idbitrustee.co.in BANKERS TO THE ISSUE IndusInd Bank Limited Corporate Office, ‘IndusInd House’, 701/801 Solitaire Corporate Park, 167 Andheri-Ghatkopar Link Road, Andheri (E), Mumbai – 400 093. Tel No: (022) 56412200; Fax No: 91-22-23808543; E-Mail: mbd@indusind.com COMPANY SECRETARY & COMPLIANCE OFFICER Mr. Haresh Gajwani Company Secretary IndusInd Bank Limited Corporate Office, 701/801 Solitaire Corporate Park, 167 Andheri-Ghatkopar Link Road, Andheri (E), Mumbai – 400 093 Tel No: (022) 56412485; Fax No: 91-22-56412347 E-mail: companysecretary@indusind.com The investors can contact the Compliance Officer in case of any pre-issue/ post-issue related problems such as non-credit of letter(s) of allotment/ bond certificate(s) in the demat account, non-receipt of refund order(s), interest warrant(s)/ cheque(s) etc. CREDIT RATING FITCH Ratings India Private Limited (hereinafter referred to as ‘FITCH’) has assigned a ‘A (Ind)’ rating and ICRA Ltd. (hereinafter referred as ‘ICRA’) has assigned a ‘LA’ to the Rs. 165 crores Upper Tier-II Bond Issue of the Bank vide their letters November 16, 2006 and November 15, 2006 respectively. These ratings indicate adequate credit quality and that there is currently a low expectation of credit risk and carries average credit risk. The capacity for timely payment of financial commitments is considered adequate. The capacity may, nevertheless be more vulnerable to changes in circumstances or in economic conditions than in the case for higher ratings. The text of the rating letter from FITCH and ICRA are reproduced elsewhere in this Information Memorandum. Please note that, the rating is not a recommendation to buy, sell or hold securities and investors should take their own decision. The rating may be subject to revision or withdrawal at any time by the assigning rating agency and each rating should be evaluated independently of any other rating. The ratings obtained are subject to revision at any point of time in the future. The Rating agency has the right to suspend, withdraw the rating at any time on the basis of new information etc. Other Credit Rating

Rating as on Security Type Amount Rating Symbol Name of the Rating Agency December 2003 CD Rs. 50.00 crores F1+ (ind) FITCH December 2003 Bonds Rs. 50.00 crores A+(ind) FITCH December 2003 Bonds Rs. 52.00 crores A+(ind) FITCH December 2003 Bonds Rs. 35.50 crores A+(ind) FITCH March 2004 Bonds Rs. 100.00 crores A+(ind) FITCH April 2004 Bonds Rs. 70.00 crores A+(ind) FITCH September 2004 FD ---------------------- P1+ CRISIL

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December 2004 CD Rs. 250.00 crores F1+ FITCH February 2005 CD Rs. 700.00 crores P1+ CRISIL February 2005 Bonds Rs. 172.10 crores A+(Ind)

LA+ FITCH ICRA

December 2005 Bonds Rs. 115 crores A+(Ind) LA+

FITCH ICRA

January 2006 CD Rs. 250 crores P1+ FITCH March 2006 Bonds Rs. 100 crores A(Ind)

LA FITCH ICRA

June 2006 Short Term FD ------------ P1+ CRISIL June 2006 CD Rs. 700 crores P1+ CRISIL September 2006 Bonds Rs. 100 crores A(Ind)

LA FITCH ICRA

November 2006 CD Rs. 2000 crores A1+ ICRA November 2006 Bonds Rs. 165 crores A(Ind)

LA FITCH ICRA

Other than the above credit ratings for its Bonds, Fixed deposits and CDs, the Bank has not sought any credit rating from any rating agency for any of its listed or unlisted debt securities in the past 3 years. UNDERWRITING The present Issue of Bonds on private placement basis has not been underwritten.

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II. CAPITAL STRUCTURE (Rs. in crores)

As on September 30, 2006 (Rs.) 1. SHARE CAPITAL a Authorised Equity Share Capital 40,00,00,000 (Previous year 30,00,00,000) equity shares of Rs.10/- each1~ 400.00 b Issued, Subscribed & called-up Equity Share Capital 29,07,01,836 (Previous year 22,02,26,983) equity shares of Rs.10/- each 290.32 c Paid-up Equity Share Capital 290.32 d. Forfeited 3,84,200 equity shares of Rs. 10/- each 0.19

NOTES ON CAPITAL STRUCTURE (1) PROMOTERS CONTRIBUTION (AS ON November 17, 2006) (AND LOCK-IN – NOT APPLICABLE) IN RESPECT OF

PROMOTERS WHOSE NAME FIGURE IN THE SHELF INFORMATION MEMORANDUM AS PROMOTERS IN THE PARAGRAPH ON “PROMOTERS AND THEIR BACKGROUND”

Sr.No.

Name of the Promoter No. of shares Face Value % with respect to the equity capital

1. IndusInd International Holdings Ltd. 68499984 Rs.10/- 23.5948 2. IndusInd Limited 15500000 Rs.10/- 5.3390 3. De Five (Mauritius) Holdings Ltd. 7000000 Rs.10/- 2.4112

(2) LIST OF TOP 10 SHAREHOLDERS AND THE NUMBER OF SHARES HELD BY THEM (as on the date of filing of

Information Memorandum)

Sr. No. Name of Shareholder Number of Shares Held % Shareholding1 IndusInd International Holdings Ltd 68499984 23.59482 Ashok Leyland Limited 29031764 10.00003 IndusInd Limited 15500000 5.3394 Amam Limited A/c Invest - India (Mauritius) Ltd 14377828 4.95245 KII Limited 8306663 2.86126 AMAM Limited 7939868 2.73497 De Five (Mauritius) Holdings Ltd 7000000 2.41128 Sital K. Motwani / Raj S. Motwani 5652120 1.94699 Lotus Global Investments Ltd 4840653 1.6674

10 IDL Industries Limited 4314323 1.4861

(3) LIST OF TOP 10 SHAREHOLDERS AND THE NUMBER OF SHARES HELD BY THEM (two years prior to the date of filing of Information Memorandum):

Sr. No. Name of Shareholder Number of Shares Held % Shareholding1. IndusInd International Holdings Ltd 68499984 23.56372. Ashok Leyland Limited 46682626 16.05863. Invest - India (Mauritius) Ltd 16744328 5.76004. IndusInd Ltd. 15500000 5.33195. De Five (Mauritius) Holdings Ltd. 7000000 2.40806. Sital K. Motwani 5901122 2.03007. IDL Industries Ltd. 3714323 1.27778. Lotus Global Investments Ltd. 3500000 1.20409. Hinduja TMT Ltd. 2856261 0.982510. Sahara India Financial Corporation Ltd. 1906631 0.6559

(4) LIST OF TOP 10 SHAREHOLDERS AND THE NUMBER OF SHARES HELD BY THEM (10 days prior to the date of filing of

Information Memorandum):

Sr. No. Name of Shareholder Number of Shares Held % Shareholding1 IndusInd International Holdings Ltd 68499984 23.59482 Ashok Leyland Limited 29031764 10.00003 IndusInd Limited 15500000 5.3394 Amam Limited A/c Invest - India (Mauritius) Ltd 14377828 4.95245 KII Limited 8306663 2.86126 Amam Limited 7939868 2.73497 De Five( Mauritius) Holdings Ltd 7000000 2.41128 Lotus Global Investments Ltd 6365653 2.19279 Sital K. Motwani / Raj S. Motwani 5652120 1.9469

10 IDL Industries Limited 4314323 1.4861 (5) SHAREHOLDING PATTERN (as on September 30, 2006):

Category No. of shares held % of shareholding A. Promoters holding 1 Promoters* a Indian Promoters b Foreign Promoters 90999984 31.34 2 Persons acting in Concert #

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Sub Total 90999984 31.34 B. Non-Promoters Holding 3 Institutional Investors a Mutual Funds and UTI 1924825 0.66

b Banks, Financial Institutions, Insurance Companies (Central/State Gov. Institutions/Non-government Institutions)

4370697 1.51

c FIIs 40290956 13.88 Sub Total 46586478 16.05 4 Others a Private Corporate Bodies 52882077 18.22 b Indian Public** 71380017 24.59 c NRIs/OCBs** 18002607 6.20 d Any other (please specify) Clearing Members 10466473 3.60 Sub Total 152731174 52.61 GRAND TOTAL 290317636 100.00 *

as defined in Regulation 2(h) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. The Promoters' holding shall include all entities in the promoters' group - individual or body corporates.

# as defined in Regulation 2(e) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. ** Category B(4)(b) 'Indian Public' includes 28138 shares held by Resident Independent Directors, and Category

B(4)(c) 'NRIs/OCBs' includes 171902 shares held by Non-Resident Independent Directors.

6. At present, the promoter group and their nominees (including subscribers to the Memorandum & Articles of Association) as

defined in SEBI (Disclosure & Investor Protection) Guidelines 2000, hold 31.34% of the total issued equity shares. 7. Promoter holding and lock-in provisions: the present issue is a debt issue and therefore the provisions if lock-in do not apply. 8. The Issuer Company has not issued (Except that, the Bank has allotted on July 29, 2003, 10,00,00,000 Equity shares for

consideration other than cash to the shareholders of erstwhile IndusInd Enterprises & Finance Ltd. on sanction of scheme of amalgamation by the Bombay High Court and allotted on July 28, 2004 7,04,74,853 Equity Shares for consideration other than cash to the shareholders of erstwhile Ashok Leyland Finance Ltd. on sanction of the Scheme of Arrangement by the Bombay High Court). any shares or debentures or agreed to issue any shares or debentures for consideration other than cash other than that mentioned in this clause, within the two years preceding the date of this Information Memorandum. A brief note on the present status of Scheme of Arrangement is given elsewhere in the Information Memorandum.

9. The number of shareholders of the Issuer Company as on September 30, 2006 was 131237 10. At any given time there shall be only one denomination for the shares of the Bank and the Bank shall comply with such

disclosure and accounting norms as specified by SEBI from time to time. 11. Reservation for small investors in allotment: The present Issue of bonds being made on private placement basis, there shall

be no reservation for small/ individual investors and the allotment for bonds shall be finalized by the Bank at its sole and absolute discretion.

12. The Issuer Company has not raised any bridge loan or any other similar financial arrangement against the proceeds of the Issue.

13. Revaluation Reserves: Nil III. TERMS OF THE PRESENT ISSUE IndusInd Bank is seeking offer for subscription of Unsecured Redeemable Non-Convertible Upper Tier II Bonds in the nature of Promissory Notes/ Debentures of Rs. 10,00,000/- each for cash at par amounting to Rs. 165 crores including green shoe option of Rs. 65 crores. The Bonds offered are subject to provisions of the Companies Act, 1956, Securities Contract Regulation Act, 1956, Memorandum and Articles of Association of the Bank, Terms of this Information Memorandum, Instructions contained in the Application Form and other terms and conditions as may be incorporated in the Trustee Agreement and Trust Deed. Over and above such terms and conditions, the Bonds shall also be subject to the applicable provisions of the Depositories Act 1996 and the laws as applicable, guidelines, notifications and regulations relating to the allotment & issue of capital and listing of securities issued from time to time by the Government of India (GoI), Reserve Bank of India (RBI), Securities & Exchange Board of India (SEBI), concerned Stock Exchange(s) or any other authorities and other documents that may be executed in respect of the Bonds. NATURE & STATUS OF THE BONDS The Bonds are to be issued in the form of Unsecured Redeemable Non-Convertible Upper Tier II Bonds in the nature of Promissory Notes or Debentures. The Bonds will constitute direct, unsecured and subordinated obligations of the Bank, ranking pari passu with the existing/ future subordinated debt of the Bank and subordinated to the claims of all other creditors and depositors of the Bank as regards repayment of principal and interest by the Bank. Depending on the category of the investors, the Bank will have the option to issue either Promissory Notes or Debentures. The Bonds shall be free from any restrictive clauses and shall not be redeemable before maturity at the initiative of the holder OBJECTS OF THE ISSUE The object of the issue is to augment the Tier-II Capital for strengthening the Capital Adequacy of the bank and enhancing its long -term resources. KEY TERMS Face Value & Issue Price Each Bond has a face value of Rs. 10,00,000/- and is issued at par i.e. for Rs. 10,00,000/-. Minimum Application The application should be for a minimum of 1 Bond (Rs. 10,00,000/-) and in multiples of 1 Bond (Rs. 10,00,000/-) thereafter. Interest on Application Money Interest on application money (subject to deduction of income tax under the provisions of the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof, as applicable) will be informed to the investors separately. Such interest (for Fixed rate

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option only) shall be paid from the date of realisation of cheque(s)/ demand draft(s) upto one day prior to the Deemed Date of Allotment. The interest on application money will be computed on a 365-day basis. Such interest (for Fixed rate option only) would be paid on all the valid applications, including the refunds. Where the entire subscription amount has been refunded, the interest on application money will be paid along with the Refund Orders. Where an applicant is allotted lesser number of bonds than applied for, the excess amount paid on application will be refunded to the applicant along with the interest on refunded money. Please note that for investors choosing the Floating rate option, the interest on application money would be paid along with the first interest payment whenever it becomes due. The interest cheque(s)/ demand draft(s) for interest on application money (along with Refund Orders, in case of refund of application money, if any) shall be dispatched by the Bank within 15 days from the Deemed Date of Allotment and the relative interest warrant(s) along with the Refund Order(s), as the case may be, will be dispatched by registered post to the sole/ first applicant, at the sole risk of the applicant. Interest on the Bonds The Bonds shall carry interest coupon at the rate of 9.75% p. a. payable for first 10 years and in case if the call option is not exercised, then the interest rate on the bond will be step up by 0.50% p. a after 10th year from the deem date of allotment and the bonds will carry interest rate of 10.25% p. a. from the beginning of 11th year of deem date of allotment payable semi-annually till the date of redemption of the bonds (subject to deduction of tax at source at the rates prevailing from time to time under the provisions of the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof for which a certificate will be issued by the Bank). The first interest payment shall commence from deemed date of allotment to March 31, 2007 and the last interest payment for the broken period will be made at the time of final redemption of the Bonds on pro-rata basis, if any. Interest on Bonds will cease on the date of final redemption in all events. The interest warrant/cheque, payable at Mumbai, shall be dispatched to the sole/ first applicant/bondholder, within 15 days from the due date of interest payment, by hand-delivery/courier/registered post at the sole risk of the applicant. (In case the Deemed Date of Allotment is revised (preponed/ postponed) then the above interest payment date may also be revised (preponed/ postponed) accordingly by the Bank at its sole & absolute discretion). The interest payment dates will 1st April and 1st October. If any interest payment date falls on a day which is not a Business Day (‘Business Day’ being a day on which Commercial Banks are open for Business in the city of Mumbai, Maharashtra, then payment of interest will be made on the next day that is a business day but without liability for making payment of interest for the intervening period. Computation of Interest Interest for each of the interest periods shall be calculated, on ‘365 days' basis, on the face value of principal outstanding on the Bonds at the respective coupon rate rounded off to the nearest Rupee. Deemed Date of Allotment Interest on the Bonds shall accrue to the Bondholder(s) from the Deemed Date of Allotment. All benefits relating to the Bonds will be available to the investors from the Deemed Date of Allotment. The actual allotment of Bonds may take place on a date other than the Deemed Date of Allotment. The Bank reserves the right to keep multiple allotment date(s)/ deemed date(s) of allotment at its sole and absolute discretion without any notice. In case if the issue closing date is changed (preponed/ postponed), the Deemed Date of Allotment may also be changed (preponed/ postponed) by the Bank at its sole and absolute discretion. Private Placement of Unsecured Non-convertible Redeemable Non-Cumulative Subordinated Upper Tier II Bonds of Rs. 165 crore with a green shoe option of Rs. 65 crores ISSUE TIME TABLE Issue Opening Date November 30, 2006 Issue Closing Date December 22, 2006 Deemed Date of Allotment December 23, 2006 ISSUE TERMS Credit Rating ‘A (Ind)’ by FITCH and ‘LA’ by ICRA Issue Size Rs. 165 crores including green-shoe option of Rs. 65 crores Instrument Unsecured Redeemable Non-Convertible Non-Cumulative Subordinated Upper

Tier II Bonds in the nature of Promissory Notes/ Debentures Instrument Form Only in Dematerialized form Face Value/ Issue Price Rs. 10,00,000/- per Bond Minimum Application 1 Bond and in multiples of 1 Bond thereafter Tenor 180 months Put & Call Option No Put Option shall be available to the Bondholder(s), However, Call Option is

available to the Bank to redeem the Bonds prior to maturity subject to the following conditions by issuing one month notice.

Call option will be exercised only if the instrument has run for at least ten years.

Call option shall be exercised only with the prior approval of RBI. Redemption/ Maturity At par at the end of 180 Months from the Deemed Date of Allotment Coupon Rate 9.75% p. a. for first 10 years & 10.25% p.a. from 11th year until redemption Interest Payment Semi-annual. First interest would be payable from deem date of allotment to March

31, 2007. Interest payment would be payable on 1st April and 1st October Seniority of claim The claims of the investors in Upper Tier 2 instruments shall be

(a) Superior to the claims of investors in instruments eligible for inclusion in Tier 1 capital; and

(b) Subordinate to the claims of all other creditors. Redemption Upper Tier 2 instruments shall not be redeemable at the initiative of the holder. All

redemptions shall be made only with the prior approval of the Reserve Bank of India (Department of Banking Operations & Development).

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Lock-in Clause a) The Bank shall not be liable to pay either interest or principal, even at maturity, if

1. the Bank’s CRAR is below the minimum regulatory requirement prescribed by RBI

or

2. the impact of such payment results in Bank’s capital to risk assets ratio (CRAR) falling below or remaining below the minimum regulatory requirement prescribed by Reserve Bank of India.

b) However, Banks may pay interest with the prior approval of RBI when the impact of such payment may result in net loss or increase the net loss provided CRAR remains above the regulatory norm.

c) The interest amount due and remaining unpaid may be allowed to be paid in the later years in cash / cheque subject to the bank complying with the above regulatory requirement.

Listing Proposed on the National Stock Exchange of India Limited (NSE) Trustees to the Bondholders IDBI Trusteeship Services Limited Interest on Application Money 9.75% p. a. (subject to deduction of tax at source, as applicable) from the date of

realisation of cheque(s)/ demand draft(s) upto one day prior to the Deemed Date of Allotment.

Eligible Investors Scheduled Commercial Banks, Financial Institutions, Insurance Companies, Provident / Pension/ Gratuity/ Superannuation Funds, Primary/ State/ District/ Central Co-operative Banks, Regional Rural Banks, Mutual Funds, Companies, Bodies Corporate authorised to invest in bonds, Trusts, Association of Persons, Societies registered under the applicable laws in India which are duly authorised to invest in bonds, etc.)

Depository Arrangements The Bank has appointed Intime Spectrum Registry Limited” (Address: C-13, Pannalal Silk Mills Compound, LBS Marg, Bhandup (W), Mumbai 400 078, Phone: 25963838, Fax: 25946969, E-Mail: isrl@intimespectrum.com) as Registrars & Transfer Agent for the present bond issue. The Bank has made necessary depository arrangements with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) for issue and holding of Bonds in dematerialised form. In this context the Bank has signed / will sign two tripartite agreements as under: • Tripartite Agreement has been / will be entered between IndusInd Bank, Intime Spectrum Registry Limited and National Securities

Depository Limited (NSDL) for offering depository option to the investors. • Tripartite Agreement has been / will be entered between IndusInd Bank, Intime Spectrum Registry Limited and Central Depository

Services (India) Limited (CDSL) for offering depository option to the investors. Investors can hold the bonds only in dematerialised form and deal with the same as per the provisions of Depositories Act, 1996 as amended from time to time. Procedure for applying for Demat Facility 1. The applicant must have at least one beneficiary account with any of the Depository Participants (DPs) of NSDL or CDSL prior to

making the application. 2. The applicant must necessarily fill in the details (including the beneficiary account number and Depository Participant’s ID)

appearing in the Application Form under the heading ‘Details for Issue of Bonds in Electronic/ Dematerialised Form’. 3. Bonds allotted to an applicant will be credited directly to the applicant’s respective Beneficiary Account(s) with the DP. 4. For subscribing the bonds, names in the application form should be identical to those appearing in the account details in the

depository. In case of joint holders, the names should necessarily be in the same sequence as they appear in the account details in the depository.

5. Non-transferable allotment advice/refund orders will be directly sent to the applicant by the Registrars to the Issue. 6. If incomplete/incorrect details are given under the heading ‘Details for Issue of Bonds in Electronic/ Dematerialised Form’ in the

application form, it will be deemed to be an incomplete application and the same may be held liable for rejection at the sole discretion of the Bank.

7. For allotment of Bonds, the address, nomination details and other details of the applicant as registered with his/her DP shall be used for all correspondence with the applicant. The Applicant is therefore responsible for the correctness of his/her demographic details given in the application form vis-à-vis those with his/her DP. In case the information is incorrect or insufficient, the Issuer would not be liable for losses, if any.

8. It may be noted that Bonds being issued in electronic form, the same can be traded only on the Stock Exchanges having electronic connectivity with NSDL or CDSL. NSE where the Bonds of the Bank are proposed to be listed has connectivity with NSDL and CDSL.

9. Interest or other benefits would be paid to those Bondholders whose names appear on the list of beneficial owners given by the Depositories to the Bank as on Record Date/ Book Closure Date. In case of those Bonds for which the beneficial owner is not identified by the Depository as on the Record Date/ Book Closure Date, the Bank would keep in abeyance the payment of interest or other benefits, till such time that the beneficial owner is identified by the Depository and conveyed to the Bank, whereupon the interest or benefits will be paid to the beneficiaries, as identified, within a period of 30 days.

Investors may note that pursuant to circular no. SEBI/MRD/SE/AT/36/2003/30/09 dated September 30, 2003 issued by SEBI, the Bonds of the Bank would be issued and traded only in dematerialised form. Market Lot The market lot will be one Bond (“Market Lot”). Since the bonds are being issued only in dematerialised form, the odd lots will not arise either at the time of issuance or at the time of transfer of bonds. Letter(s) of Allotment/ Bond Certificate(s)/ Refund Order(s) Issue of Letter(s) of Allotment The beneficiary account of the investor(s) with National Securities Depository Limited (NSDL)/ Central Depository Services (India) Limited (CDSL)/ Depository Participant will be given initial credit within 90 days from the Deemed Date of Allotment. The initial credit in the account will be akin to the Letter of Allotment. On completion of the all statutory formalities, such credit in the account will be akin to a Bond Certificate.

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Issue of Bond Certificate(s) Subject to the completion of all legal formalities within 3 months from the Deemed Date of Allotment, or such extended period as may be approved by the Appropriate Authorities, the initial credit akin to a Letter of Allotment in the Beneficiary Account of the investor would be replaced with the number of Bonds allotted. The Bonds since issued in electronic (dematerialized) form, will be governed as per the provisions of The Depository Act, 1996, Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996, rules notified by NSDL/ CDSL/ Depository Participant from time to time and other applicable laws and rules notified in respect thereof. Dispatch of Refund Orders The Bank shall ensure dispatch of Refund Order(s) of over Rs. 1500/- by Registered Post only and adequate funds for the purpose shall be made available to the Registrar to the Issue by the bank. Terms of Payment The full face value of the Bonds applied for is to be paid along with the Application Form. Investor(s) need to send in the Application Form and the cheque(s)/ demand draft(s) for the full face value of the Bonds applied for.

Face Value per Bond Minimum Application for Amount Payable on Application per Bond Rs. 10,00,000/- 1 Bond and in multiples of 1 Bond thereafter Rs. 10,00,000/-

Tax Deduction at Source (TDS) Tax as applicable under the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof will be deducted at source. For seeking TDS exemption/ lower rate of TDS, relevant certificate(s)/ document(s) must be lodged at least 15 days before the payment of interest becoming due with the Company Secretary, IndusInd Bank Limited, Corporate Office, 701/801 Solitaire Corporate Park, 167 Andheri-Ghatkopar Link Road, Andheri (E), Mumbai – 400 093, or to such other person(s) at such other address(es) as the Bank may specify from time to time through suitable communication.

Tax exemption certificate/ declaration of non-deduction of tax at source on interest on application money, should be submitted along with the Application Form. Where any deduction of Income Tax is made at source, the Bank shall send to the Bondholder(s) a Certificate of Tax Deduction at Source. Bondholder(s) should also consult their own tax advisers on the tax implications of the acquisition, ownership and sale of Bonds, and income arising thereon. Put & Call Option No Put Option shall be available to the Bondholder(s), However Call Option is available to the Bank to redeem the Bonds prior to maturity subject to the following conditions by issuing one month notice.

Call option will be exercised only if the instrument has run for at least ten years. Call option shall be exercised only with the prior approval of RBI (Department of Banking Operations & Development)

In case if the Bank does not exercise the call option, then the interest rate on the bond will be step up by 0.50% p. a after 10th year from the deem date of allotment and the bonds will carry interest rate of 10.25% p. a. from the beginning of 11th year of deem date of allotment payable semi-annually till the date of redemption of the bonds. Seniority of claim The claims of the investors in Upper Tier 2 instruments shall be (a) Superior to the claims of investors in instruments eligible for inclusion in Tier 1 capital; and (b) Subordinate to the claims of all other creditors. Lock-in Clause a) The Bank shall not be liable to pay either interest or principal, even at maturity, if

2. the Bank’s CRAR is below the minimum regulatory requirement prescribed by RBI or

2. the impact of such payment results in Bank’s capital to risk assets ratio (CRAR) falling below or remaining below the minimum regulatory requirement prescribed by Reserve Bank of India.

b) However, Banks may pay interest with the prior approval of RBI when the impact of such payment may result in net loss or increase the net loss provided CRAR remains above the regulatory norm.

c) The interest amount due and remaining unpaid may be allowed to be paid in the later years in cash / cheque subject to the bank complying with the above regulatory requirement.

Redemption The face value of the Bonds will be redeemed at par, at the end of the tenor from the Deemed Date of Allotment. However, the bonds shall not be redeemable before maturity at the initiative of the holder or without the consent of the RBI in terms of the Circular DBOD No. BP.BC.57/ 21.01.002/ 2005-06 dated 25-01-2006 issued by RBI. In case if the principal redemption date falls on a day which is not a Business Day (‘Business Day’ being a day on which Commercial Banks are open for Business in the city of Mumbai, Maharashtra), then the payment due shall be made on the next Business Day together with additional interest for the intervening period. Payment on Redemption Payment on redemption will be made by cheque(s) in the name of the Bondholder whose name appears on the List of Beneficial owners given by Depository to the Bank as on the Record Date. On the Bank dispatching the redemption cheque(s) to such Beneficiary(ies) by registered post/ courier, the liability of the Bank shall stand extinguished. The Bonds shall be taken as discharged on payment of the redemption amount by the Bank on maturity to the list of Beneficial Owners as provided by NSDL/ CDSL/ Depository Participant. Such payment will be a legal discharge of the liability of the Bank towards the Bondholders. On such payment being made, the Bank will inform NSDL/ CDSL/ Depository Participant and accordingly the account of the Bondholders with NSDL/ CDSL/ Depository Participant will be adjusted.

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The Bank’s liability to the Bondholders towards all their rights including for payment or otherwise shall cease and stand extinguished from the due date of redemption in all events. Further the Bank will not be liable to pay any interest or compensation from the date of redemption. On the Bank dispatching the amount as specified above in respect of the Bonds, the liability of the Bank shall stand extinguished. Record Date The ‘Record Date’ for the Bonds shall be 15 days prior to each interest payment and/ or principal repayment date. Effect of Holidays Should any of dates defined above or elsewhere in the Information Memorandum, excepting the Deemed Date of Allotment, fall on a Saturday, Sunday or a Public Holiday, the next working day shall be considered as the effective date(s). Mode of Transfer of Bonds Bonds shall be transferred subject to and in accordance with the rules/ procedures as prescribed by the NSDL/ CDSL/ Depository Participant of the transferor/ transferee and any other applicable laws and rules notified in respect thereof. The normal procedure followed for transfer of securities held in dematerialized form shall be followed for transfer of these bonds held in electronic form. The seller should give delivery instructions containing details of the buyer’s DP account to his depository participant. List of Beneficial Owners The Bank shall request the Depository to provide a list of Beneficial Owners as at the end of the Record Date. This shall be the list, which shall be considered for payment of interest or repayment of principal amount, as the case may be. Trustees for the Bondholders The Bank has appointed IDBI Trusteeship Services Ltd. to act as Trustees for the Bondholders (“Trustees”). A copy of letter from IDBI Trusteeship Services Ltd. conveying their consent to act as Trustees for the bondholders is enclosed elsewhere in this Information Memorandum. The Bank and the Trustees will enter into a Trustee Agreement, inter alia, specifying the powers, authorities and obligations of the Trustees and the Bank. The Bondholder(s) shall, without further act or deed, be deemed to have irrevocably given their consent to the Trustees or any of their agents or authorized officials to do all such acts, deeds, matters and things in respect of or relating to the Bonds as the Trustees may in their absolute discretion deem necessary or require to be done in the interest of the Bondholder(s). Any payment made by the Bank to the Trustees on behalf of the Bondholder(s) shall discharge the Bank pro tanto to the Bondholder(s). The Trustees will protect the interest of the Bondholders in the event of default by the Bank in regard to timely payment of interest and repayment of principal and they will take necessary action at the cost of the Bank. No Bondholder shall be entitled to proceed directly against the Bank unless the Trustees, having become so bound to proceed, fail to do so. Right to Accept or Reject Applications The Bank reserves its full, unqualified and absolute right to accept or reject any application, in part or in full, without assigning any reason thereof. The rejected applicants will be intimated along with the refund warrant, if applicable, to be sent. Interest on application money will be paid from the date of realisation of the cheque(s)/ demand drafts(s) till one day prior to the date of refund. The Application Forms that are not complete in all respects are liable to be rejected and would not be paid any interest on the application money. Application would be liable to be rejected on one or more technical grounds, including but not restricted to: a. Number of bonds applied for is less than the minimum application size; b. Applications exceeding the issue size; c. Bank account details not given; d. Details for issue of bonds in electronic/ dematerialised form not given; e. PAN/GIR and IT Circle/Ward/District not given; f. In case of applications under Power of Attorney by limited companies, corporate bodies, trusts, etc. relevant documents not

submitted; g. In the event, if any Bond(s) applied for is/ are not allotted in full, the excess application monies of such Bonds will be refunded, as

may be permitted. How to Apply This Information Memorandum is neither a prospectus nor a statement in lieu of prospectus and does not constitute an offer to the public generally to subscribe for or otherwise acquire the Bonds issued by the Bank. The document is for the exclusive use of the Institution(s) to whom it is delivered and it should not be circulated or distributed to third parties. The document would be sent specifically addressed to the institution(s) by the Issuer Bank and/ or its Arrangers. Only eligible investors as given hereunder may apply for bonds by completing the Application Form in the prescribed format in BLOCK LETTERS in English as per the instructions contained therein. Applications should be for a minimum of 1 Bond and in multiples of 1 Bond thereafter. Applications not completed in the said manner are liable to be rejected. Application Form duly completed in all respects must be submitted with any of the designated branches of the Bankers to the Issue. The name of the applicant’s bank, type of account and account number must be filled in the Application Form. This is required for the applicant’s own safety and these details will be printed on the refund orders and interest/ redemption warrants. The applicant or in the case of an application in joint names, each of the applicant, should mention his/her Permanent Account Number (PAN) allotted under the Income-tax Act, 1961 or where the same has not been allotted, the GIR No. and the Income tax Circle/Ward/District. As per the provision of Section 139A(5A) of the Income Tax Act, PAN/GIR No. needs to be mentioned on the TDS certificates. Hence, the investor should mention his PAN/GIR No. it the investor does not submit Form 15G/15AA/other evidence, as the case may be for non-deduction of tax at source. In case neither the PAN nor the GIR Number has been allotted, the applicant shall mention “Applied for” and in case the applicant is not assessed to income tax, the applicant shall mention ‘Not Applicable’ (stating reasons for non applicability) in the appropriate box provided for the purpose. Application Forms without this information will be considered incomplete and are liable to be rejected. Applications may be made in single or joint names (not exceeding three). In the case of joint applications, all payments will be made out in favour of the first applicant. All communications will be addressed to the first named applicant whose name appears in the Application Form at the address mentioned therein. Unless the Issuer Company specifically agrees in writing with or without such terms or conditions it deems fit, a separate single cheque/ demand draft must accompany each Application Form. Applicants are requested to write their names and application serial number on the reverse of the instruments by which the payments are made.

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All applicants are requested to tick the relevant column “Category of Investor” in the Application Form. Public/ Private/ Religious/ Charitable Trusts, Provident Funds and Other Superannuation Trusts and other investors requiring “approved security” status for making investments. Investors are advised to exercise due caution in selecting the appropriate option for which they wish to apply. Application Form must be accompanied by either demand draft(s) or cheque(s) drawn or made payable in favour of ‘IndusInd Bank Limited’ and crossed ‘Account Payee Only’. Cheque(s)/ demand draft(s) may be drawn on any bank including a co-operative bank, which is a member or a sub-member of the Bankers Clearing House located at Chennai, Bangalore, Hyderabad, Ahmedabad, Kolkata, New Delhi or Mumbai. Investors in centres which do not have any bank, including a co-operative bank, which is a member or sub-member of the Banker’s Clearing House located at any of the centres mentioned above, will be required to make payments only through demand drafts payable at any one of the above centres. Cash, outstation cheques, money orders, postal orders and stockinvest shall not be accepted. The Bank assumes no responsibility for any applications/ cheques/ demand drafts lost in mail. Detailed instructions for filling up the application form and list of collection centres are provided elsewhere in this Information Memorandum. No separate receipts shall be issued for the application money. However, Bankers to the Issue at their Designated Branch(es) receiving the duly completed Application Forms will acknowledge the receipt of the applications by stamping and returning the acknowledgment slip to the applicant. Applications shall be deemed to have been received by the Issuer Company only when submitted to Bankers to the Issue at their designated branches or on receipt by the Registrar as detailed above and not otherwise. For further instructions, please read Application Form carefully. Who Can Apply The following categories of investors may apply for the bonds, subject to fulfilling their respective investment norms/ rules by submitting all the relevant documents along with the application form. 1. Scheduled Commercial Banks; 2. Financial Institutions; 3. Insurance Companies; 4. Primary/ State/ District/ Central Co-operative Banks (subject to permission from RBI); 5. Regional Rural Banks; 6. Mutual Funds; 7. Companies, Bodies Corporate authorised to invest in bonds; 8. Trusts, Individuals, Association of Persons, Societies registered under the applicable laws in India, which are duly authorised to

invest in bonds; 9. Provident/ Pension/ Gratuity/ Superannuation Funds. Applications not to be made by 1. Individuals (Non-Residents of India) and Minors; 2. Hindu Undivided Family (neither by the name of the Karta); 3. Partnership Firms or their nominees; 4. Overseas Corporate Bodies (OCBs); 5. Foreign Institutional Investors (FIIs).

Applications under Power of Attorney A certified true copy of the power of attorney or the relevant authority as the case may be along with the names and specimen signature(s) of all the authorized signatories and the tax exemption certificate/ document, if any, must be lodged along with the submission of the completed Application Form. Further modifications/ additions in the power of attorney or authority should be notified to the Bank or to its Registrars or to such other person(s) at such other address(es) as may be specified by the Bank from time to time through a suitable communication. Application by Mutual Funds In case of applications by Mutual Funds, a separate application must be made in respect of each scheme of an Indian Mutual Fund registered with SEBI and such applications will not be treated as multiple applications, provided that the application made by the Asset Management Company/ Trustees/ Custodian clearly indicate their intention as to the scheme for which the application has been made. Future Borrowings The Bank shall be entitled to borrow/ raise loans or avail of financial assistance in whatever form as also issue Bonds/ Debentures/ Notes/ other securities in any manner with ranking as pari-passu basis or otherwise and to change its capital structure, including issue of shares of any class or redemption or reduction of any class of paid up capital, on such terms and conditions as the Bank may think appropriate, without the consent of, or intimation to, the Bondholder(s) or the Trustees in this connection. Bondholder not a Shareholder The Bondholders will not be entitled to any of the rights and privileges available to the Shareholders. Rights of Bondholders 1. The Bonds shall not, except as provided in the Companies Act, 1956 confer upon the holders thereof any rights or privileges

available to the members of the Bank including the right to receive Notices or Annual Reports of, or to attend and/or vote, at the General Meeting of the Bank. However, if any resolution affecting the rights attached to the Bonds is to be placed before the shareholders, the said resolution will first be placed before the concerned registered Bondholders for their consideration. In terms of Section 219(2) of the Act, holders of Bonds shall be entitled to a copy of the Balance Sheet on a specific request made to the Bank.

2. The rights, privileges and conditions attached to the Bonds may be varied, modified and/or abrogated with the consent in writing of the holders of at least three-fourths of the outstanding amount of the Bonds or with the sanction of Special Resolution passed at a meeting of the concerned Bondholders, provided that nothing in such consent or resolution shall be operative against the Bank, where such consent or resolution modifies or varies the terms and conditions governing the Bonds, if the same are not acceptable to the Bank.

3. The registered Bondholder or in case of joint-holders, the one whose name stands first in the Register of Bondholders shall be entitled to vote in respect of such Bonds, either in person or by proxy, at any meeting of the concerned Bondholders and every such holder shall be entitled to one vote on a show of hands and on a poll, his/her voting rights shall be in proportion to the outstanding nominal value of Bonds held by him/her on every resolution placed before such meeting of the Bondholders.

4. The quorum for such meetings shall be at least five Bondholders present in person. 5. The Bonds are subject to the provisions of the Companies Act, 1956, the Memorandum and Articles, the terms of this Information

Memorandum and Application Form. Over and above such terms and conditions, the Bonds shall also be subject to other terms

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and conditions as may be incorporated in the Trustee Agreement/ Letters of Allotment/ Bond Certificates, guidelines, notifications and regulations relating to the issue of capital and listing of securities issued from time to time by the Government of India and/or other authorities and other documents that may be executed in respect of the Bonds.

6. Save as otherwise provided in this Information Memorandum, the provisions contained in Annexure C and/ or Annexure D to the Companies (Central Government’s) General Rules and Forms, 1956 as prevailing and to the extent applicable, will apply to any meeting of the Bondholders, in relation to matters not otherwise provided for in terms of the Issue of the Bonds.

7. A register of Bondholders will be maintained in accordance with Section 152 of the Act and all interest and principal sums becoming due and payable in respect of the Bonds will be paid to the registered holder thereof for the time being or in the case of joint-holders, to the person whose name stands first in the Register of Bondholders.

8. The Bondholders will be entitled to their Bonds free from equities and/or cross claims by the Bank against the original or any intermediate holders thereof.

Succession In the event of winding-up of the holder of the Bond(s), the Bank will recognize the executor or administrator of the concerned Bondholder(s), or the other legal representative as having title to the Bond(s). The Bank shall not be bound to recognize such executor or administrator or other legal representative as having title to the Bond(s), unless such executor or administrator obtains probate or letter of administration or other legal representation, as the case may be, from a Court in India having jurisdiction over the matter. The Bank may, in their absolute discretion, where they think fit, dispense with production of probate or letter of administration or other legal representation, in order to recognize such holder as being entitled to the Bond(s) standing in the name of the concerned Bondholder on production of sufficient documentary proof or indemnity. Notices All notices to the Bondholder(s) required to be given by the Bank or the Trustees shall be published in one English and one regional language daily newspaper in Mumbai, New Delhi, Chennai and Kolkata and/ or, will be sent by post/ courier to the sole/ first allottee or sole/ first Beneficial Owner of the Bonds, as the case may be from time to time. All notice(s) to be given by the Bondholder(s) shall be sent by registered post or by hand delivery to the Bank or to such persons at such address as may be notified by the Bank from time to time through suitable communication. Joint-Holders Where two or more persons are holders of any Bond(s), they shall be deemed to hold the same as joint holders with benefits of survivorship subject to other provisions contained in the Articles. Sharing of Information The Bank may, at its option, use on its own, as well as exchange, share or part with any financial or other information about the Bondholders available with the Bank, with its subsidiaries and affiliates and other banks, financial institutions, credit bureaus, agencies, statutory bodies, as may be required and neither the Bank or its subsidiaries and affiliates nor their agents shall be liable for use of the aforesaid information. Debenture/ Bond Redemption Reserve The Government of India, Ministry of Company Affairs has vide General Circular No. 9/2002 No.6/3/2001-CL.V dated April 18, 2002 clarified that banks need not create Debenture Redemption Reserve as specified under section 117C of the Companies Act, 1956. Undertaking by the Issuer The Issuer Company undertakes that: a) the complaints received in respect of the Issue shall be attended to by the issuer company expeditiously and satisfactorily; b) no further issue of securities shall be made till the securities offered through this offer document are listed or till the application

moneys are refunded on account of non-listing, under-subscription, etc; c) necessary co-operation to the credit rating agency(ies) shall be extended in providing true and adequate information till the debt

obligations in respect of the instrument are outstanding. IV. PARTICULARS OF THE ISSUE OBJECTS OF THE ISSUE The present issue of bonds is being made for augmenting the Tier-II Capital of the Bank for strengthening its Capital Adequacy and for enhancing the long-term resources of the Bank. The expenses of the present issue would also be met from the proceeds of the Issue. The Main Object Clause of the Memorandum of Association of the Bank enables it to undertake the activities for which the funds are being raised through the present issue and also the activities, which the Bank has been carrying on till date. The proceeds of this Issue after meeting all expenses of the Issue will be used by the Bank for its regular business activities. Capital Adequacy Position of the Bank The Capital Adequacy Ratio (“CAR”) of the Bank as on March 31, 2006 and September 30, 2006 was 10.54% and 10.31% respectively as against the RBI stipulation of 9.00%. Details of capital vis-à-vis risk weighted assets are as under:

(Rs. in crores) As on March 31, 2003 March 31, 2004 March 31, 2005 March 31, 2006 Sept 30, 2006 Capital Funds Tier I Capital Paid up Equity Capital 219.27 290.42 290.51 290.51 290.51 Less Investment in Subsidiary - (0.50) (0.50) (0.50) Reserves & Surplus 359.69 437.02 459.83 575.55 600.75 Less : Credit Enhancement on Securitisation

(103.53) (74.85)

Total Tier I Capital 578.96 727.44 749.84 762.03 815.91 Tier II Capital Revaluation Reserve - General Provisions 13.03 20.83 21.93 35.01 41.76 Subordinated Debt 86.70 222.70 352.90 381.02 360.80 Upper Tier II 100.00 180.20 Investment Fluctuation Reserve 19.87 69.87 78.90 - Less : Credit Enhancement on Securitisation

(103.53) (74.85)

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Total Tier II Capital 119.60 313.40 453.73 412.50 507.91 Total Capital Fund 698.56 1040.84 1203.57 1174.53 1323.82 Risk Weighted Assets 5761.19 8163.82 10360.48 11138.69 12846.31 Capital Adequacy Ratio (%) 12.13 12.75 11.62 10.54 10.31

Requirement of Enhancement of Capital The Bank expects to post a growth in business in the years to come. As a result, Risk weighted assets of the Bank are also expected to increase over the years. Increase in Tier I capital through retained earnings alone may not be sufficient to enable the Bank to maintain an adequate capital adequacy ratio. In view of the likely expansion of loan assets, the Bank proposes to augment its capital base in order to sustain a healthy CAR. The Bank came out with a public issue of equity shares in November 1997, details of which are given elsewhere in the Information Memorandum. The Bank has also raised Tier II Capital by way of Private Placement of unsecured, redeemable bonds in the nature of Promissory Notes/ Debentures to augment capital adequacy as under:

Issue Series Year of Placement

Deemed Date of Allotment

Issue Amount (Rs. in Crores)

Tenure (in months)

Credit Rating

Coupon Rate (% p.a.,

annually)

Redemption Date

Series II 2001 01.03.2001 52.00 63 A+ (ind) by Fitch

12.00 31.05.2006

Series III 2003 31.03.2003 35.50 63 A+ (ind) by Fitch

8.00 30.06.2008

Series IV 2004 31.03.2004 66.50 63 A+ (ind) by Fitch

7.00 30.06.2009

Series V 2004 30.06.2004 98.00 70 / 118 A+ (ind) by Fitch

6.80 / 7.00 30.04.2010 / 30.04.2014

Series VI 2005 31.03.2005 & 11.04.2005

172.10 63 / 111 A+ (ind) by Fitch and LA+ by ICRA

8.10 / 8.50 / 190 bps over

and above Reuter 1 yr

G Sec INBMK

30.06.2010 and

30.06.2014

Series VII 2005 30.12.2006 115.00 113 A+ (ind) by Fitch and LA+ by ICRA

8.40 30.05.2014

Series VIII 2006 31.03.2006 100.00 180 A (ind) by Fitch and LA by ICRA

9.60% Semi-annual

30.03.2021

Series IX 2006 30.09.2006 80.20 180 A (ind) by Fitch and LA by ICRA

Semi-annual 10.25% p.a.

for first 10 years and

10.75% p. a. from 11th year

30.09.2021

V. BANK & MANAGEMENT HISTORY & BACKGROUND OF THE BANK Roots Conceptualised by eminent Non Resident Indians in the year 1994, IndusInd Bank Ltd. was the first new generation private sector scheduled commercial bank to commence operations in the post liberalisation era. IndusInd Bank derives its name and inspiration from the Indus Valley Civilisation, which exemplifies sound business sense and spirit of innovation. IndusInd Bank is the first private sector bank to be opened in the post liberalisation era in India. The Bank was formally inaugurated by the then Finance Minister, Dr. Manmohan Singh on 11th April 1994, commenced commercial operations with effect from 12th April 1994, with initial capital base of Rs. 1000.0 mn. A Financial Express – BRIS survey of banks rated the Bank as the No. 1 Bank in 1995-96, while Business Today – KPMG Peat Marwick rated the Bank as the No. 2 Bank. In 1996-97, Business Today – KPMG Peat Marwick rated the Bank as No. 2. The Bank emerged the best among the top 10 private sector banks and the Most Efficient Bank according to Banking Annual of Business Standard, November 2005 issue. Information Technology The Bank operates in a fully computerised environment. The Bank has implemented a network comprising of VSAT technology, leased lines , MPLS Lines and latest state-of-art computer systems. All branches of the Bank are connected on-line. The Bank is one of the first private sector banks to cut over live on the SWIFT network, thereby reducing transaction turnaround time. Equation/3, the core banking software, most tried and tested international software developed by Misys PLC, U.K., runs off an IBM hardware, iSeries System . The Bank host s a secondary iSeries as Disaster Recovery Site at another location. All the branches are facilitated with ATMs and with the implementation of Base-24 ATM switch, the Bank has enhanced its retail reach by setting up off-site ATMs. The bank has also introduced prepaid debit cards. With a central database, wherein End of Day (EOD) process is carried out at Corporate Office, Mumbai, the Bank has been able to develop sophisticated products like ‘Anywhere Banking’ and make available expeditious clearance and payment facilities. The bank is among the pioneers in offering RTGS services across the branches from day one of operations. The bank is having arrangements with Exchange Houses in the middle east regions for remittance facilities for NRI clients using RTGS mechanism.The bank offer mobile banking facilities to its customers.

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The Bank being a Depository Participant of National Securities Depository Limited (NSDL) offers on-line Depository Services across the country to all its branches. The Bank has introduced Internet Banking services, for which licence is procured from CR2, an Ireland based company. The new technology initiatives of the Bank include upgrading of its net bank product to offer payment and settlement capabilities, utilities bills payment and other features with true ‘on-line to host’ features and make indusind.com into a very interactive site. Dividend Bank has a consistent record of dividend payment to its shareholders except for the FY 2005-06. Dividend was paid to the shareholders out of the profits of the respective years after transfer to Statutory Reserve in conformity with the provision of Banking Regulation Act, 1949 and Reserve Bank of India guidelines from time to time. The dividend payout was as under: Year 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 % 12.5% 13% 14% 14% 22.5% 18% Nil MAIN OBJECTS OF THE BANK The main objects of the Bank as contained in the Memorandum of Association are:

1. To do all kinds of banking business 2. To engage in any one or more of the following forms of business:

a) The borrowing, raising or taking up of money b) the lending or advancing of money either upon or without upon or without security c) the drawing, making, accepting, discounting, buying, selling, collecting and dealing in bills of exchange, hundis, promissory

notes, coupons, drafts, railway receipts, warrants, debentures, certificates, scrips and other instruments, and securities whether transferable or negotiable or not.

d) The granting and issuing of letters of credit, traveler’s cheques and circular notes. e) The buying and selling and dealing in bullion and specie f) The buying and selling of foreign exchange including foreign bank notes g) The acquiring, holding, issuing on commission, undertaking and dealing in stocks, funds shares, debentures, debenture

stock, bonds, obligations, securities and investments of all kinds. h) The purchasing and selling of bonds, scrips or other forms of securities on behalf of constituents or others. i) The negotiating of loans and advances. j) The receiving of all kinds of bonds, scrips or valuables for deposit or for safe custody or otherwise. k) The providing of safe deposit vaults. l) The collecting and transmitting of money and securities.

3. Acting as agents for any government or local authority or any other person or persons, the carrying on of agency business of any description including the clearing and forwarding of goods, giving of receipts and discharges and otherwise acting as an attorney on behalf of customers, but excluding the business of (Managing agent or secretary and treasurer) of a company.

4. Contracting for public and private loans and negotiating and issuing the same. 5. Effecting, insuring, guaranteeing, underwriting, participating in managing and carrying out of any issue, public or private of state,

municipal or other loans or of shares, stock debentures or debenture stock of any company, corporation or association and the lending of money for the purpose of any such issue.

6. Carrying on and transacting every kind of guarantee and indemnity business. 7. Managing, selling and realising any property, which may come into the possession of the company in satisfaction or part

satisfaction of any of its claims. 8. Acquiring and holding and generally dealing with any property or any right, title or interest in any such property which may form

the security or part of the security for any loans or advances or which may be connected with any such security. 9. Undertaking and executing trusts. 10. Undertaking and administration of estates as executor, trustee or otherwise. 11. Establishing and supporting or aiding in the establishment and support of associations, institutions, funds, trusts and

conveniences calculated to benefit employees or ex-employees of the company or the dependents or connections of such persons, granting pensions and allowances and making payments towards insurance, subscribing to or guaranteeing moneys for charitable or for any public, general or useful objects.

12. The acquisition, construction, maintenance and alteration of any building or works necessary or convenient for the purpose of the company.

13. Selling, improving, managing, developing, ex-changing, leasing, mortgaging, depositing of or turning into account or otherwise dealing with all or any part of the property and rights of the company.

14. Acquiring and undertaking whole or any part of the business of any part of the business of any person or company, when such business is of a nature enumerated or described in this sub-section.

15. Doing all such other things as are incidental or conducive to the promotion or advancement of the business of the company. 16. To take or concur in taking all such steps calculated to uphold and support the credit of the Company/ Bank and to obtain and

justify public confidence and to obtain and justify public confidence and to avert or minimise financial disturbance, which may affect the Company/ Bank.

17. Any other form of business which the Central Government or Reserve Bank of India may specify as a form of business in which it is lawful for the Company to engage.

18. To encourage thrift and to encourage social and economic betterment of the members of the company. The objects incidental or ancillary to the attainment of the above objects are: 1. To open branch and other offices. 2. To create funds to be lent out at moderate rates of interest to those persons found fit by the Company. 3. To form, establish, promote, subsidies, aid, acquire, organise or be interested in any other company or companies having similar

objects as that of the Company. 4. To take part in the formation, management, supervision or control of the business or operation of any company or organisation. 5. To act as investment consultants and advisers to firms and companies and for that purpose to keep records and statistics of

other Companies. 6. To undertake and execute the work of acceptance of application and other moneys due on shares, debentures, stocks, bonds,

securities, by whatever name called, on behalf of companies, corporations and government and local authorities. 7. To undertake the work of share, debenture and deposit registrars. 8. To enter into partnership or any arrangement for sharing profits with any person, firm or company carrying on or about to carry on

any business which this Company is authorised to carry on. 9. To donate, contribute, subscribe, promotes, support or aid or otherwise assist or grant money to charitable, benevolent, religious,

scientific, national, public or other institutions, funds, exhibitions or for any public, general or other objects.

25

10. To become members of any business, trade, commercial and/ or industrial association, institution or organisation for promoting the Company’s interest or otherwise.

11. To undertake, carry out, promote or assist directly or in any other manner any programme for promoting social an economic welfare in any rural area.

12. To undertake, carry out, promote or assist directly or in any other manner any activities for promotion and growth of the national economy and national welfare.

CORPORATE STRATERGY IndusInd Bank is on the fast track of growth. The merger of ALFIN with the Bank has hastened the speed of growth The Bank has attached great importance to the retail business, which will result in bringing low cost deposits and thus increase the spread and profits. The corporate base has shown significant increase due to the structured products and services. The Bank is in complete readiness to launch RTGS for the greater advantage of corporates. The Branch expansion activity has received a shot in the arm with the merger of ALFL. BUSINESS OF THE BANK & ITS PRODUCTS AND SERVICES Retail Banking Business Account / Business Plus Account / Business Premium Account Free Demand Drafts Free Outstation Cheque Collection Discounted Rates on Foreign Currency Drafts Cheque Return Protection Delivery at your Doorstep Cash-Pick up at your Doorstep Bank by Phone Internet Banking Foreign Currency Traveler’s Cheques Demand Drafts through Correspondent Banking Arrangement Network at convenient and strategic locations Anywhere Banking Multi-City Cheques Electronic Funds Transfers - Instant Remittances Courier pick-up and delivery Preferential Pricing Options on statement frequency, personalized cheque books, flexible loans against your fixed deposits. Business Account / Business Plus Account / Business Premium Account Fixed Deposits / Recurring Deposits Young Saver Deposits Senior Citizen Scheme Sweep In & Sweep Out Deposit Cash Certificates No frill account FIXED DEPOSITS Flexible range of tenures to suit your investment plans Choice of various Fixed Deposit schemes Interest payable monthly, quarterly, half yearly, annually or at maturity as per your convenience Interest is payable by cheque or by credit to your Savings / Current account Competitive interest rates Nomination facility available Partial withdrawals permitted Auto Renewal facility Advances available against your deposits up to 90% of the deposit value Special rates for Senior Citizens The Recurring Deposit encourages savings and there is no TDS Indus Tax Saving Term Deposit. Schemes Short Deposits: Periods ranging from 15 days to 180 days. Interest is payable at maturity.

Monthly Fixed Deposit: A deposit ranging from 12 months and above. Interest is payable monthly at a discounted rate. (As per IBA guidelines) Simple Fixed Deposit: A deposit ranging from 6 months and above. Interest is payable quarterly at simple rate. Re-investment Deposit: A deposit ranging from 6 months and above. Interest is compounded quarterly and payable on maturity. Recurring Deposit: A deposit ranging from 12 months and above. A pre-determined amount (minimum of INR 500.00) is debited every month from your Savings / Current account and accumulated in the deposit. The entire amount + interest is payable at maturity. Cluster Deposit: A deposit, which can be kept in pre-decided units. Hence, one can withdraw only a part as and when required. Un-Fixed Deposit/Flexible Term Deposit: A deposit, which allows you to partially, withdraw your funds in units of Re.1.00 as and when one requires his money. The balance retained in the deposit continues at the same contracted interest rate. A penalty of 1% on the eligible rate is levied on the units withdrawn. Hence, he earns the high interest rate of a fixed deposit and still have the flexibility of a Savings account. Senior Citizen Deposit: A deposit for senior citizens who are 60 years of age and above. The deposit can range from 15 days to 10 years. Additional interest of 0.50% to 0.75% is payable depending on the tenure of the deposit

26

Indus Tax Saving Term Deposit: An individual and HUF can invest upto Rs.1 lac per year for a minimum period of 5 years and get tax exemption upto Rs.1 lac under section 80C. Suvarna Mudra : A pure Gold Investment. Pure Gold coins and Gold biscuits are sold at select branches Indus Easy Savings Account: Customers can open bank account with as low as Rs.1/- . No annual charges and ATM Card issued to all customers without annual charges. On the retail asset side the bank offers the following products: - Personal Loans - Auto Loans - Housing Loans - Educational Loans - Loan against Shares - Gold Loan - Advance against warehouse receipts -Home Loans - Purchase , Extension, Improvement -Personal Loans -Two Wheeler Loans -Auto Loans -Loan Against Property for business -Traders Advances - Cash Credit / Working Capital / Short Term Loan -Rental Discounting -Loan Against Shares / Mutual Funds & other Specified Securities ( NSC, KVP , LIC , Bonds ) BRANCH NETWORK OF THE BANK As on September 30, 2006 the Bank had 147 Branches and 84 Off-Site ATMs. DISTRIBUTION OF BRANCH NETWORK The population group wise break up of branches as on September 30, 2006 as follows:

Class No of branches % share of totalMetro 48 32.65% Urban 79 53.74% Semi Urban 18 12.24% Rural 2 1.36% Total 147 100.00%

Geographical Distribution of Branches as on September 30, 2006 are as under:

State No. of branches % share of total Region Andhra Pradesh 14 9.52 South Region Assam 1 0.68 East Region Bihar 1 0.68 East Region Chandigarh 1 0.68 North Region Chhattisgarh 2 1.36 East Region Delhi 5 3.40 North Region Goa 2 1.36 West Region Gujarat 14 9.52 West Region Haryana 5 3.40 North Region Himachal Pradesh 1 0.68 North Region Jharkhand 5 3.40 East Region Karnataka 6 4.08 South Region Kerala 12 8.16 South Region Madhya Pradesh 5 3.40 Central Region Maharashtra 18 12.24 West Region Orissa 4 2.72 East Region Pondicherry 1 0.68 South Region Punjab 9 6.12 North Region Rajasthan 8 5.44 West Region Sikkim 1 0.68 East Region Tamil Nadu 13 8.84 South Region Uttar Pradesh 9 6.12 North Region Uttaranchal 1 0.68 East Region West Bengal 9 6.12 East Region Total 147 100.00 DETAILS OF SOURCES OF FUNDS TOTAL DEPOSIT

(Rs. in crores) As on March 31, 2002 March 31, 2003 March 31, 2004 March 31, 2005 March 31, 2006 September 30, 2006

Total Deposits 8400.12 8597.87 11200.26 13114.27 15006.30 15986.48 Growth – Amount 1212.99 197.75 2602.39 1914.01 1892.02 980.18

27

Annual Growth – Percent 16.88 2.35 30.26 17.08 14.43 13.06 Cost of Deposits (Global) (%) 9.15 7.77 6.34 5.39 5.87 6.51

The category-wise break-up of total deposits during last 5 years is presented below:

(Rs. in crores) As on March 31, 2002 March 31, 2003 March 31, 2004 March 31, 2005 March 31, 2006 September 30, 2006

Current Deposits 916.28 822.37 856.78 893.43 1201.38 1447.08 Savings Bank Deposits 172.33 224.98 394.74 508.62 729.24 794.30 Term Deposits 7311.51 7550.52 9948.74 11712.21 13075.68 13745.10 Total Deposits 8400.12 8597.87 11200.26 13114.26 15006.30 15986.48

The category-wise break-up of average cost of deposits during last 5 years is presented below:

(in %) Year/ Period ended March 31, 2002 March 31, 2003 March 31, 2004 March 31, 2005 March 31, 2006 September 30, 2006

Current Deposits 0 0 0 0 0 0 Savings Bank Deposits 3.25 3.10 2.87 2.54 2.62 2.64 Term Deposits 9.61 7.98 6.42 5.88 7.15 7.31 Total 9.15 7.77 6.34 5.39 5.87 6.51

Distribution of Deposits The population group-wise break-up of aggregate deposits for the last three years & as on September 30, 2006 is as given in the table below:

(Rs. in crores) As on March 31, 2004 March 31, 2005 March 31, 2006 September 30, 2006

Rural - 15.53 10.12 30.60 Semi-Urban 690.22 797.87 1065.36 400.53 Urban 3,316.88 3736.30 4784.19 3106.31 Metropolitan 7193.16 8564.56 9146.63 12449.04 Total 11200.26 13114.26 15006.30 15986.48

Region-wise distribution of deposits (In India) The region-wise distribution of deposits (In India) (as per RBI’s region classification) as a percentage of aggregate deposits of the Bank is given below:

(Rs. in crores) Region March 31, 2003 March 31, 2004 March 31, 2005 March 31, 2006 September 30, 2006

Northern 1866.35 2403.2 3198.54 3959.94 3929.25 Eastern /North Eastern 416.18 656.54 611.17 851.29 977.55 Central 5551.22 989.46 725.49 860.66 283.40 Western 3457.50 4764.32 6141.21 6142.72 7449.92 Southern 2306.61 2386.74 2424.55 3191.69 3346.36 Total 8597.87 11200.26 13114.26 15006.30 15986.48

BORROWINGS* As on March 31, 2006 and September 30, 2006 the borrowings of the Bank are as follows:

(Rs. in crores) Particulars of Borrowings from March 31, 2006 September 30, 2006 Banks 72.08 600.60 Unsecured Redeemable Bonds - Borrowings from Others 150.00 273.91 Borrowings Outside India 312.87 399.34

The unsecured redeemable bonds (Tier II bonds) of Rs. 667.30 crs. as on 30.09.2006 are included under Other Liabilities and Provisions in the Balance Sheet as per the guidelines of the Reserve Bank of India. The rates of interest in respect of the Tier II Bonds vary between 10.25% to 6.80%. The details are as under: Tier II Series III for Rs. 35.50 crores @ 8.00% p.a. Tier II Series IV for Rs. 66.50 crores @ 7.00% p.a. Tier II Series V for Rs. 98.00 crores @ 6.80% / 7.00% p.a. Tier II series VI for Rs. 172.10 crores @ 8.10% / 8.50% / 190 bps over and above 1 year G-Sec Reuter’s INBMK Tier II series VII for Rs. 115 crores @ 8.40% Upper Tier II Series VIII for Rs. 100 cores @ 9.60% p. a. (semi-annual) Upper Tier II Series IX for Rs. 80.20 crores @ 10.25% p.a. for first 10 years & 10.75% p. a. from 11th year (semi-annual) Fixed and Floating Rate Liabilities of the Bank The break-up of fixed and floating rate liabilities of the Bank as on March 31, 2006 and September 30, 2006 is furnished in the following table:

(Rs. in crores) Fixed Rate Liabilities March 31, 2006 September 30, 2006 Fixed Deposits 13075.68 13745.10 Tier II Bonds 624.10 652.30 Other secured Borrowings 55.00 20.10 Floating Rate Liabilities Balance in Savings Bank Account Nil Subordinated Debt 15.00 15.00

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The amount of Tier II Bonds and the Subordinated Debt in the table above are shown under Other Liabilities and Provisions in the Balance Sheet against Subordinated Debt. The fixed and floating rate liabilities of the Bank represent only the interest bearing liabilities. For non-interest bearing liabilities, please refer to the Balance Sheet. DETAILS OF DEPLOYMENT OF FUNDS DETAILS OF ADVANCES Corporate Banking Corporate Banking Division forms part of Wholesale Banking Group. The division caters to banking and financial needs of Corporate & Institutions, Small & Medium Enterprises, Co-operative Banks, and Financial Institutions. The objective is to enlarge, broad base and build granular relationships to mitigate business and liquidity risks associated with high value relationships. The Bank’s Credit Department at Corporate Office facilitates sanctions and supervises credit management function. In compliance with RBI guidelines, the Bank has established an integrated Risk Management Department, responsible for bank-wide risk management encompassing credit risk, independent of business segments. 2. Population group wise classification of Gross Advances 2.1 Growth of Advances The growth of the Bank’s Gross advances during the past five years is as follows: (Rs. in crores)

Year/ Period ended March 31, 2002 March 31, 2003 March 31, 2004 March 31, 2005 March 31, 2006 September 30, 2006 Gross Credit 5574.20 5347.85 7812.23 8999.75 9310.46 10792.91 Annual Increase (%) 26.20 (4.06) 46.08 15.20 3.45 31.84

2.2 Sector wise Credit Portfolio (Domestic) The sector-wise credit portfolio of the Bank (In India) as on March 31, 2006 and September 30, 2006 are as under: (Rs. in crores)

Sr. No. Industry 31/3/2006 Exposure to gross bank credit (%) 30/9/2006 Exposure to gross bank credit (%) Gross Bank Credit 9310.46 10792.91 1 Food Credit 100.00 1.05 100.00 0.92 2 Non Food Credit: 9210.46 10692.91 2 a Medium & Large

Scale Industry 1554.41 16.88 1367.35 12.67

2 b Wholesale Trade 269.15 2.92 129.71 1.20 2 c Priority Sector 2493.35 27.07 3087.47 28.60 2 d Other Sectors incl.

Export Credit 4893.55 52.08 6108.30 56.60

Average Balances and Interest Rates The following table shows Average balances and Interest Rates of interest earning assets and interest bearing liabilities for the last three financial years: Year/ Period Ended March 31 2003 March 31 2004 March 31 2005

Average Balance Interest Average Rate Average Balance Interest Average Rate Average Balance Interest Average RateAverage Interest earning assets

10523 986 9.37 12095 1134 9.38 13563 1188 8.76

Average Interest bearing liabilities

9890 669 6.77 12757 719 5.64 14664 873 5.95

Export Credit The export credit as at the end of March 31, 2006 and September 30, 2006 are as under

Year/ Period ended March 31, 2004 March 31, 2005 March 31, 2006 September 30, 2006 Achieved (in crores) 345 294.40 390.54 416.38 % of Export Credit to Net Credit 7.25 3.68 4.23 3.96

Priority Sector Lending As per RBI norms, the Private Sector Banks’ credit to the Priority Sector should be 40% of the Net Bank Credit and that for agriculture should be 18% of the Net Bank Credit. The policy of the Bank with regard to financing to the Priority Sector is based upon the norms stipulated by Reserve Bank of India. As on September 30, 2006 the Priority Sector credit stood at 36.09% of the Net Bank Credit. Details of Sector-wise distribution of Gross Priority Sector Advances for the last five years is given below (Rs. in crores)

Year/ Period ended March 31, 2002

March 31, 2003

March 31, 2004

March 31, 2005

March 31, 2006

September 30, 2006

Agriculture 377.55 211.73 238.36 548.46 773.37 910.58 Small Scale Industry 521.40 468.67 240.44 259.04 249.48 247.23 Other Priority Sector Advances

95.23 266.33 1217.53 1307.60 1470.50 1929.65

Gross Priority Sector Advances

1098.77 946.73 1696.33 2115.10 2493.35 3087.46

RIDF 504.75 679.81 700.34 % to Net Bank Credit 27.68 26.46 32.61 29.11 35.13 36.09 Targets (%) 40 40 40 40 40 40

The calculation of Net Domestic Bank Credit as on March 31, 2006 and September 30, 2006 as shown below:

(Rs. in crores) Particulars March 31, 2006 September 30, 2006 Gross Domestic Bank Credit 9310.46 10792.91 Less: NRNR Deposits 0.02 0.02

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Less: FCNR Deposits 276.91 269.76 Less: Participation Certificates Net Domestic Bank Credit 9033.53 10523.13

Loan Policy The bank has well-defined Credit Policy as also Credit Risk Policy. These policies lay down various parameters within overall RBI directives, inter alia, covering exposure ceilings for individual borrower, group and industries. Credit Approval Authority and Procedures The Bank adopts stringent standards of appraisal for its advances. The various levels of authorities are vested with discretionary powers to sanction credit limits. In line with the recommendation of Reserve Bank Of India on Risk Management Systems in banks, the bank has adopted a multi-tier credit approving system where loan proposals are approved by an Approval Grid or a Committee comprising of at least 3 or 4 Executives and invariably one of them being a representative from Risk Management Department, who has no volume and profit targets to achieve. Detailed guidelines have been formulated to appraise and sanction credit proposals. The Bank’s Executives are well trained to appraise credit proposals in an efficient and skillful manner. The Bank is continuously toning up the skills of the Executives for credit appraisals by giving training both in house and outside institutions like NIBM, BTC, etc. Capital and Commodity Markets Division The bank is registered with SEBI as a category-I Merchant Banker, Debenture Trustee, depository participant and Banker to the Issues. In order to provide focused services to the Capital Market Segment a specialised branch at Fort, Mumbai was opened in February 2003 to reactivate capital and commodity markets products. The Bank is providing Depository Services as a Depository Participant of both NSDL & CDSL. The bank is poised for growth in this segment both organic and otherwise. The bank has also plans to further develop its Debenture trusteeship and Dividend Warrant businesses. The bank is also providing clearing bank services to the members of BSE, NSE, MCX & NCDEX. Bank’s Capital Market Exposure The Bank has been maintaining its exposure to capital market well within the ceiling of 5% of its Advances including CPs and 40% of the net worth, as per the RBI guidelines. The position as on March 31, 2006 & September 30, 2006 is given as under:

(Rs. in crores) Exposure to Capital Market As on 31.03.2006 As on 30.09.2006

A Direct Investment of Bank

1 Investment in equity shares 3.79 14.65

2 Investment in Institutions/Associate company 14.27 5.85

3 Investment in Convertible Debentures/Preference shares 0.48

Total Direct Investment of Bank 18.06 20.50B Fund Based Credit

1 Overdraft against shares/ Equity MF to individuals - Investment 13.20 10.87

2 IPO - Financing to individuals 0.07 0.02

3 Overdraft to corporates against investment in shares 0.15 0.06

4 Overdraft against shares / Equity MF to Stock Brokers 24.99 32.12

5 Dues from stock brokers for invoked BGs. 0.11 0.10

Total Fund Based Credit 38.52 43.17C Non-Fund Based Credit

1 Bank Guarantees for stock brokers 108.54 108.61

Capital Market Exposure as per RBI Guideline (A+B+C) 165.12 172.27

(Exposure as a percentage of total net worth) 19.07% 19.89%

Net worth as on 31.03.2006 866.06

Permissible Total exposure to Capital Market (40% of Net Worth) 346.42

(Exposure as a percentage of total advances) 1.77% 1.85%

Advances as on 31.03.2006 9310.46

Permissible Total exposure to Capital Market (5% of Advances) 465.52 INVESTMENTS Investment Portfolio The investment portfolio of the Bank stood at Rs. 5409.90 crores and Rs. 5659.78 crores as on March 31, 2006 and September 30, 2006 respectively. The same is furnished as below.

Amount Rs. in crores Particulars March 31, 2006 September 30, 2006 Government Securities 4583.14 4851.47 Other Approved Securities 2.55 2.55 Shares 13.23 15.93 Debentures/ Bonds 145.69 159.79 Subsidiaries and Joint Ventures 0.50 Others 664.79 700.33 Total Net Investments ** 5409.90 5730.07

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Investment Strategy The Bank has been able to maintain a fairly consistent portfolio yield by changing portfolio mix by regular churning without changing the portfolio risk. The Bank earned total income on investments by way of interest earnings of Rs.310.99 Crs during the FY2005-06 and Rs. 172.71 crores for the half year ended September 30, 2006. Accordingly, the average return on investments works out to 6.73% and 6.56%. Profit on sale of investments / IRS was Rs.13.26 Crs for the year ended March 31, 2006 and Rs. 11.80 crores for the half year ended September 30, 2006. Investment Strategy for 2006-07 Keeping in view the hardening interest rate scenario, RBI relaxed the norm on shifting of securities to HTM. Accordingly, the Bank shifted a major portion of its AFS portfolio to HTM category of investments thereby protecting the yield whilst insulating the portfolio against depreciation. Investments by the Bank (Rs. in crores)

As on March 31, 2003 March 31, 2004 March 31, 2005 March 31, 2006 September 30, 2006 Gross investments 2554.33 3986.15 4093.78 5476.71 5730.08 SLR Investments 2055.00 3805.33 3445.07 4615.51 4783.73 Held Till Maturity (HTM) 551.31 940.58 2507.49 3623.84 4005.26 Available For Sale 1743.76 2765.62 937.58 991.67 778.46 Held For Trading 259.26 99.14 0.00 0 % of HTM to entire portfolio 21.58% 24.72% 61.25% 66.17% 69.90%

The break up of investments for a period of three years is given in table below: (Rs. in crores)

Security Details March 31, 2003 March 31, 2004 March 31, 2005 March 31, 2006 September 30, 2006Government Securities 2029.00 3777.70 3420.59 4612.96 4851.48 Other Approved Securities 26.00 27.63 24.48 2.55 2.55 Shares 13.68 14.21 25.28 17.56 15.93 Debentures & Bonds 420.65 163.50 118.19 178.35 159.79 Subsidiaries & Joint Ventures 0.00 3.11 0.50 0.50 Others 65.00 0 504.74 664.79 700.33 Total 2554.33 3986.15 4093.78 5476.71 5730.08

The Net investment figure shown in the Balance Sheet is obtained after deducting depreciation from the figure of Gross Investments shown above.

International Division International Division is performing the task of Foreign Exchange business control and compliance; business development, maintainance of Correspondent Banking relationship, setting up of business relationship with overseas Banks and Exchange Houses for inward remittance originating from NRI’s. In addition International Division also controls and monitors Country Risk and Bank Risk portfolio of bank on account of exposures assumed by Branches during day-to-day operations. Control, monitoring and liasioning of Representative offices and Foreign offices also forms the part of International Business attached to International Division. Apart from business control and compliance of ‘B’ category branches, all ‘C’ category branches Foreign Exchange business is also centralized at International Division-Forex Service Cell and turnover achieved by all ‘C’ category branches during the year 2005-2006 is more than Rs 105 Crs. The year under review, witnessed excellent growth in International Business as under which is controlled and monitored by International Division:

1. Total Merchant Foreign Exchange Business turnover shoot up to Rs 22,605 Crs. as on March 31, 2006 as against the budget of Rs. 22,490 Crs. registering the growth of 52 % more than the last year achievement of Rs.14,883 Crs. Further, the turnover for 3 months ended was Rs. 19,615.47 crs.

2. Fee based income earned from Merchant Foreign Exchange business is Rs 11.11 Crs. as on March 31, 2006 which is 26 %

more than previous year and Rs. 11.28 crs for half year ended September 30, 2006.

3. At the beginning of the year bank had Rupee Drawing Arrangement (RDA) with only one Exchange House. During this year International Division received more than 30 proposals from Exchange Houses located in GGC Counties for RDA arrangement with bank. Out of which 16 Exchange Houses has commenced the remittances. During the year 2005-06 Bank received Foreign Inward Remittances of Rs. 325.63 Crs in equivalent USD under RDA arrangement and earned the fee-based income of Rs 18.84 lacs. The figures for the half year ended was Rs. 550 crs. and Rs. 44.62 lacs respectively.

4. Bank has also arrangements with 3 Money Transfer companies under MTSS scheme and during the year 2005-06 Bank

received Foreign Inward Remittance of Rs.54.77 Crs in equivalent USD under this arrangement and earned fee based income of Rs 66.55 lacs and Rs. 51 lacs for the half year ended 30/9/2006. In addition, during the year bank has also appointed 3 sub-agent and accepted sub-agency under MTSS of one more Money Transfer company, which facilitated increase in flow of Inward Remittances. The Indus-Fast-Remit product launched by the bank in last year to receive US Dollar funds from USA is well accepted by NRI’s based in USA and we received good amount of Foreign inward remittances through this route also.

5. During the year, bank earned income of Rs. 1.38 Crs. as Rebate from overseas correspondent banks for the Forex Business

routed through them. This figure for the half year ended was Rs. 96 lacs. 6. Bank entered into strategic alliance with one of the Government owned bank in UAE. With this, your bank has vostro (INR)

account relationship with 4 overseas banks this will also increase flow of foreign inward remittances.

31

7. International Division has developed two new products during the year under Gold Banking -“Suvarna Mudra”- a Retail sale of Gold Coins and Gold loan product developed and offered to domestic gold trader as well as to jewellery exporter. Now your bank’s almost all branches are selling the gold coins to the customers as well as non-customers too. Within 6 months of launch of Suvarna Mudra branches have sold 88 kg of gold coins and earned commission of Rs.40.78 lacs. During the half year ended 30/9/2006, the Bank sold amounting to Rs. 1379.29 crs. and income earned is Rs. 97.97 lacs.

8. Bank has global network of 325 overseas correspondent banks. Bank has exchanged bilateral key exchanged with them to

undertake the International Business. ASSET CLASSIFICATION, INCOME RECOGNITION & PROVISIONING Asset Classification The Bank classifies its assets in compliance with RBI guidelines. Under these guidelines, an asset is classified as non-performing if any amount of interest/principal remains overdue for more than 90 days in respect of term loans. In respect of overdraft/ cash credit, an asset is classified as non-performing if the account remains out of order for a period of 90 days and in respect of bills, if the account remains overdue for more than 90 days. In case of retail assets, the Bank classifies an asset as non-performing where any amount of interest/ principal remains past due for more than 90 days, in respect of all loans. NPAs are further categorized into three groups i.e. Substandard, Doubtful and Loss Asset depending upon the period of delinquency and availability of tangible security. The table below gives the criteria for asset classification viz. standard, sub-standard, doubtful and loss asset-

Category Classification 1. Performing Standard

Assets Assets which are not non-performing as per RBI prudential norms are considered as Standard Assets

2. Non-Performing a) Sub-Standard Assets An asset which has remained NPA for a period less than or equal to 12 months b) Doubtful Assets An asset would be classified as doubtful if it has remained in the sub-standard category for a

period of 12 months. c) Loss Assets Asset where loss has been identified by the Bank or auditors/ RBI and where the value of

security is negligible. When an account is classified as NPA, interest already debited to the account but not realised, is de-recognised. Provisioning and Write-Offs As per RBI guidelines, provisions are arrived on all outstanding NPAs, as under:

Sub-Standard Assets 10% of the outstanding. The 'unsecured exposures' which are identified as 'substandard' would attract additional provision of 10 per cent.

Doubtful Assets 20% or 30% or 100%of the secured portion based on the number of years the account remained as "Doubtful Asset" (i.e. up to one year, one to three years and more than three years respectively) and at 100% of the unsecured portion of the outstanding. In case of outstanding stock of NPA (for more than 3 years) as on 31.03.04, the provisioning requirement is stipulated at 60% (w.e.f.31.03.2005), 75% (w.e.f. 31.03.2006) and 100%(w.e.f. 31.03.2007)

Loss Assets 100% of the outstanding. Standard Assets General provision on standard assets has been made at 0.40% of the outstanding amount on a

portfolio basis except for direct advances to Agriculture and Small and Medium Enterprises at 0.25%.

Asset Classification of Performing and Non-Performing Assets for the last 5 years is given below: (Rs. in crores)

Classification of assets as on March 31, 2002 March 31, 2003 March 31, 2004 March 31, 2005 March 31, 2006 September 30, 2006

Standard Assets 5207.07 5120.53 7599.91 8755.48 9115.49 10540.55 Sub Standard Assets 333.23 174.60 154.92 88.02 38.23 61.59 Doubtful Assets 33.89 52.72 57.40 156.25 156.74 190.77 Loss Assets - - - - - - Net NPAs 367.12 227.32 212.32 244.27 194.97 183.06 Net Advances 5574.20 5347.85 7812.23 8999.75 9310.46 10723.61

Asset Classification of Performing and Non-Performing Assets for the last 5 years are given below: (as a % of Net Advances)

Classification of assets (%) as on

March 31, 2002

March 31, 2003 March 31, 2004 March 31, 2005 March 31, 2006 September 30, 2006

Standard Assets 93.41% 95.75% 97.28% 97.28% 97.91 98.29% Sub Standard Assets 5.98% 3.26% 1.98% 0.99% 0.41% 0.51% Doubtful Assets 0.61% 0.99% 0.73% 1.73% 1.68% 1.19% Loss Assets - - - - - - Total 100.00% 100.00% 100.00% 100% 100% 100%

General Data on Non-Performing Assets The details of Non-Performing Assets of the Bank are furnished in the various tables below:(Rs. in crores)

As on March 31, 2002 March 31, 2003 March 31, 2004 March 31, 2005 March 31, 2006 September 30, 2006 Gross NPA at the beginning of the year

262.31 417.00 266.28 259.36 320.53 268.83

Addition during the year 366.27 209.42 498.34 288.63 108.96 93.85 Reduction during the year 211.58 360.14 505.26 227.46 160.66 110.32 Gross NPA at the end of the year 417.00 266.28 259.36 320.53 268.83 252.36 Provision 49.88 38.96 47.04 76.26 73.86 69.30

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Net NPA at the end of the year 367.12 227.32 212.32 244.27 194.97 183.06 (Rs. in crores)

As on March 31, 2002 March 31, 2003 March 31, 2004 March 31, 2005 March 31, 2006 Sep 30, 2006 Gross Advances 5624.08 5386.81 7859.27 9076.01 9384.32 10792.91 Gross NPAs 417.00 266.28 259.36 320.53 268.83 252.36 Gross NPAs to Gross Advances (%)

7.41 4.94 3.30 3.53 2.86 2.34

Net Advances 5574.20 5347.85 7812.23 8999.75 9310.46 10723.61 Net NPAs 367.12 227.32 212.32 244.27 194.97 183.06 Net NPA to Net Advances (%) 6.59 4.25 2.72 2.71 2.09 1.71

NPA Management Strategy Bank has been concentrating on recovery of bad loans for which a separate department headed by Senior functionary of the Bank has been set up. Apart from the normal legal recourses available, Bank is also relying on actions under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, criminal action and insolvency as effective tools for recovery from NPAs. The Corporate office is closely monitoring the recovery of suit filed cases at DRT and Civil courts. Senior level executives visit the branches to take decisions on the spot for One Time Settlement (OTS)/ Out-of-court Settlement (OCS). Recovery & Compromise Policy of the Bank The bank has a well documented recovery and compromise policy since 1998, which is updated from time to time. The policy cover at length the process of identification, symptoms of potential NPAs and reporting system, setting up of credit monitoring cells, co-ordination with branches for identification of stress loan accounts and preparing strategies for recovery/ rehabilitation/ restructuring or exit route. The policy also deals with loan review mechanism at branch level and at corporate level, monitoring of sick loan accounts, approach to legal action, write off, recovery through external agencies, etc. The bank has in place an effective scheme of delegated powers for write off and compromise settlement. Asset Liability Management The maturity profile of global deposits as on March 31, 2006 and September 30, 2006 are as under:

Maturity Buckets 31/03/2006 30/09/2006

1 - 14 Days 1,413.66 1,923.35

14 Days - 28 Days 1,238.03 782.39

28 Days - 3 Months 3,204.10 2,211.25

3 Months - 6 Months 1,230.73 1,392.29

6 Months - 12 Months 1,388.28 1,971.65

12 Months - 3 Years 4,018.32 4,107.39

3 Years - 5 Years 1,421.32 1,849.22

Over - 5 Years 1,091.86 1,748.95

Total 15,006.30 15,986.49 The maturity profile of deposits in the last three years (including Forex deposits) and as on September 30, 2006 are as under: Year/ Period ended March 31, 2004 March 31, 2005 March 31, 2006 September 30, 2006

Rs. in crores % Rs. In crores % Rs. in crores % Rs. in crores %

Upto 1 Year 6296.95 55 9134.41 70 8474.8 56 8280.93 52

1 Year to 3 Years 3416.46 31 2603.06 20 4018.32 27 4107.39 26

3 Year to 5 Years 975.54 9 804.72 6 1421.32 10 1849.22 12

Over 5 Years 511.31 5 572.08 4 1091.86 7 1748.95 10

Total 11200.26 100 13114.27 100 15006.30 100 15986.49 100 Category-wise break up of domestic deposits as on March 31, 2006 and as on September 30, 2006 are as under: (Rs. in crores)

As on March 31, 2006 As on September 30, 2006

Maturity Retail Wholesale Total Retail Wholesale Total

1-14 days 176.63 1,178.31 1,354.94 142.24 1,781.11 1,923.35

15-28 days 224.44 947.95 1,172.39 108.55 673.85 782.39

29 days-3 months 395.03 2,775.47 3,170.50 201.90 2,009.35 2,211.25

3-6 months 335.93 844.47 1,180.40 331.99 1,060.30 1,392.29

6-12 months 594.53 699.20 1,293.73 701.33 1,270.31 1,971.65

1-3 years 912.28 2,965.53 3,877.81 1,096.97 3,010.43 4,107.39

3-5 years 474.50 940.55 1,415.05 602.86 1,246.37 1,849.22

Over 5 years 378.59 713.15 1,091.73 529.03 1,219.92 1,748.95

Total 3,491.94 11,064.62 14,556.56 3,714.86 12,271.63 15,986.49

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Maturity Profile of the Asset Liability as on the last reporting Friday of Sep 30, 2006:

Outflows 1 to 15 to 29 days 3 - 6m 6-12m 1-3yrs 3 - 5 yrs Over 5 Total 14 days 28 days to 3 mnth years

1. Capital 290.51 290.51 2. Reserves & Surplus 595.92 595.92 3. Deposits 1,799.76 777.16 2,191.97 1,337.81 1,830.14 3,972.63 1,841.72 1,748.95 15,500.14 4. Borrowings 726.79 100.00 50.00 876.79

5. Other Liabilities & Provisions 437.53 0.73 45.20 211.50 472.07 1,167.02 6.Lines of Credit committed to : 7. Unavailed portion of Cash credit / Overdraft / Demand Loan component of Working Capital 24.00 25.00 27.00 - 76.00 8. Letters of Credit/Guarantees 3.30 3.25 3.35 6.85 16.75 9. Repos 10. Bills Rediscounted (DUPN) 50.00 50.00 11. Swaps (Buy/Sell)/ maturing forwards 380.16 177.50 1,045.15 613.08 1,164.50 3,380.39

12. Interest Payable 4.14 2.15 26.09 33.83 56.85 29.33 4.84 3.32 160.55 13. Others (specify) 470.00 470.00 A. TOTAL OUTFLOWS 3,425.68 985.06 3,863.57 1,991.57 2,959.46 4,097.16 2,058.05 3,110.77 22,491.32 Inflows 1 to 15 to 29 days 3 - 6m 6-12m 1-3yrs 3 - 5 yrs Over 5 Total 14 days 28 days to 3 mnth years 1. Cash 134.62 134.62

2. Balances with RBI 95.22 29.52 72.42 43.35 79.29 208.12 186.10 714.02 3.Balances with other Banks 449.98 49.35 135.62 0.07 635.02

4. Investments 10.26 9.54 628.70 199.99 1,643.02 3,027.85 5,519.36

5. Advances (Performing) 1,385.96 699.37 2,402.63 1,235.60 822.11 1,859.66 1,168.48 1,251.43 10,825.25 6. NPAs (Advances & Investments) * 32.98 135.96 168.94 7. Fixed Assets 341.13 341.13

8. Other Assets 508.59 14.79 29.85 39.89 70.01 275.74 58.16 997.02 9. Reverse Repos 150.00 150.00 10. Swaps (Sell/Buy) maturing forwards 313.91 300.51 914.11 495.77 1,171.59 3,195.88 11. Bills Rediscounted (DUPN) 12. Interest receivable 132.28 132.28

B. TOTAL INFLOWS 3,075.34 1,159.24 3,521.99 1,853.29 2,735.75 2,414.68 3,052.61 5,000.63 22,813.52 C. MISMATCH (B-A) -350.34 174.18 -341.59 -138.28 -223.71 -1,682.48 994.55 1,889.86 322.20 D. CUMULATIVE MISMATCH 350.34 -176.16 -517.75 -656.03 -879.74 -2,562.21 -1,567.66 322.20 E. C as % to A 10.23 17.68 8.84 6.94 7.56 41.06 48.32 60.75

Maturity Profile of the Asset Liability as on the last reporting Friday of March 31, 2006: (Rs. in crores) Outflows 1 to 15 to 29 days 3 - 6m 6-12m 1-3yrs 3 - 5 yrs Over 5 Total 14 days 28 days to 3 mnth years 1. Capital 0.00 0.00 0.00 0.00 0.00 0.00 0.00 290.51 290.51 2. Reserves & Surplus 0.00 0.00 0.00 0.00 0.00 0.00 0.00 575.55 575.55 3. Deposits 1354.94 1172.39 3170.50 1180.40 1293.73 3877.81 1415.05 1091.73 14556.56 4. Borrowings 17.07 0.00 100.00 35.00 20.00 50.00 0.00 0.00 222.07 5. Other Liabilities & Provisions 343.03 0.00 0.00 0.00 52.00 35.50 211.50 462.29 1104.32 6.Lines of Credit committed to : 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 7. Unavailed portion of Cash 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Credit/Overdraft/Demand Loan 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 component of Working Capital 17.00 17.10 14.25 0.00 0.00 -48.35 0.00 0.00 0.00 8. Letters of Credit/Guarantees 3.30 3.25 3.35 6.85 0.00 -16.75 0.00 0.00 0.00 9. Repos 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 10. Bills Rediscounted (DUPN) 45.00 115.00 0.00 0.00 0.00 0.00 0.00 0.00 160.00 11. Swaps (Buy/Sell)/ maturing 200.27 480.09 380.05 648.46 697.28 0.68 0.00 0.00 2406.83

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forwards 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 12. Interest Payable 2.07 1.08 13.03 16.90 28.40 14.65 2.42 1.66 80.21 A. TOTAL OUTFLOWS 1982.68 1788.91 3681.18 1887.61 2091.41 3913.54 1628.97 2421.74 19396.04 Inflows 1 to 15 to 29 days 3 - 6m 6-12m 1-3yrs 3 - 5 yrs Over 5 Total 14 days 28 days to 3 mnth years 1. Cash 83.14 0.00 0.00 0.00 0.00 0.00 0.00 0.00 83.14 2. Balances with RBI 43.58 24.00 66.55 40.99 52.03 179.04 114.76 520.95 3.Balances with other Banks 338.97 49.22 370.89 0.07 0.00 0.00 0.00 11.58 770.73 4. Investments 22.85 43.29 29.79 151.15 12.39 267.27 747.93 3627.04 4901.71 5. Advances (Performing) 612.85 1151.64 1313.38 868.19 1021.64 2054.14 1260.14 857.46 9139.44 6. NPAs (Advances & Investments) * 0.00 0.00 0.00 0.00 0.00 0.00 36.96 158.00 194.97 7. Fixed Assets 0.00 0.00 0.00 0.00 0.00 0.00 0.00 339.59 339.59 8. Other Assets 398.71 6.01 24.04 36.05 72.10 309.44 0.00 73.68 920.03 9. Reverse Repos 574.99 0.00 0.00 0.00 0.00 0.00 0.00 0.00 574.99 10. Swaps (Sell/Buy) maturing forwards 98.14 372.41 827.56 548.91 994.55 0.00 0.00 0.00 2841.56 11. Bills Rediscounted (DUPN) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 12. Interest receivable 162.02 0.00 0.00 0.00 0.00 0.00 0.00 0.00 162.02 B. TOTAL INFLOWS 2291.67 1666.15 2589.66 1670.92 2141.67 2682.88 2224.08 5182.11 20449.12 C. MISMATCH (B-A) 308.98 -122.76 -1091.51 -216.69 50.26 -1230.66 595.10 2760.36 1053.08 D. CUMULATIVE MISMATCH 308.98 186.22 -905.29 -1121.98 -1071.72 -2302.39 -1707.28 1053.08 E. C as % to A 15.58 -6.86 -29.65 -11.48 2.40 -31.45 36.53 113.98 Maturity Profile of the Asset Liability as on the last reporting Friday of March 31, 2005: (Rs. in crores) Maturity

1-14 days

15-28 days

29 days -3 months

3-6 months

6-12 months

1-3 years

3-5 years

Over 5 years

Total

1 Outflows Capital 290.51 290.51 Reserves & Surplus 538.73 538.73 Deposits 1,953.45 845.87 2,589.24 1,610.87 1,911.78 2,495.55 804.66 572.08 12,783.50 Borrowings (Incl Repos) 58.75 23.52 116.28 52.50 15.00 55.00 321.05 Other Liability & Provision 496.12 50.00 89.69 114.50 236.40 986.71 Unavailed portion of

CC/OD/Demand Loan Component/LC/BG

20.40 20.40 17.50 3.25 3.30 64.85

Swaps 163.72 87.19 949.88 454.34 481.92 8.56 2,145.61 Interest Payable 9.43 6.15 19.12 18.09 16.67 10.94 0.52 0.23 81.15 A: Total Outflows 2,701.87 983.13 3,692.02 2,189.05 2,428.67 2,594.89 919.68 1,637.95 17,147.26 B: Cumulative Outflows 2,701.87 3,685.00 7,377.02 9,566.07 11,994.74 14,589.63 15,509.31 17,147.26

2 Inflows Cash 44.47 44.47 Balance with RBI 90.26 26.10 83.33 70.65 102.40 143.31 75.57 591.62 Balance with Other Banks 467.54 0.07 20.65 14.48 502.74 Investments 59.81 23.04 915.33 19.47 309.91 688.51 2,053.10 4,069.17 Advances Performing 1,543.86 648.53 1,927.05 645.24 1,651.34 1,289.82 514.33 328.67 8,548.83 NPAs 88.02 156.25 244.27 Fixed Assets 320.70 320.70 Other Assets 938.86 3.80 12.05 34.75 989.46 Reverse Repos Swaps 44.32 60.26 1,011.81 500.49 626.32 2,243.20 Interest Receivable 88.34 88.34 C: Total Inflows 3,127.39 858.86 2,988.07 2,165.04 2,371.58 1,702.13 1,446.22 2,983.52 17,642.80

3 Mismatches D: Mismatch (C-A) 425.52 -124.27 -703.95 -24.01 -57.09 -892.76 526.54 1,345.57 495.54 E: % Mismatch (D as a % of

A) 15.75 12.64 19.07 1.10 2.35 34.40 57.25 82.15 2.89

F: Cumulative Mismatch 425.52 301.25 -402.70 -426.72 -483.81 -1,376.57 -850.03 495.54 991.07 G: % Cumulative Mismatch F

as % of B 15.75 8.17 5.46 4.46 4.03 9.44 5.48 2.89

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Maturity Profile of the Asset Liability as on the last reporting Friday of March 31, 2004: (Rs. in crores) Maturity 1-14

days 15-28 days

29 days -3 months

3-6 months

6-12 months

1-3 years

3-5 years

Over 5 years

Total

1 Outflows Capital 290.42 290.42 Reserves & Surplus 509.99 509.99 Deposits 708.00 362.50 1217.64 825.46 3069.51 3326.35 975.34 511.31 10996.11 Borrowings (Incl Repos) 180.45 151.80 650.81 261.34 391.40 380.82 0.00 0.00 2016.62 Other Liability & Provision 397.29 0.00 0.00 0.00 0.00 102.80 35.50 162.53 698.12 Unavailed portion of

CC/OD/Demand Loan Component20.85 17.15 16.70 3.55 3.60 -61.85 0.00

Swaps 203.09 48.88 398.95 496.46 389.11 9.16 1545.65 Interest Payable 4.31 2.15 7.24 5.00 18.49 20.17 5.76 3.02 66.14 A: Total Outflows 1513.99 582.48 2291.34 1591.81 3872.11 3777.45 1016.60 1477.27 16123.05 B: Cumulative Outflows 1513.99 2096.47 4387.81 5979.62 9851.73 13629.18 14645.78 16123.05

2 Inflows Cash 24.06 24.06 Balance with RBI 56.92 33.33 56.69 102.30 427.13 411.55 222.66 1310.58 Balance with Other Banks 739.54 0.00 52.00 50.05 0.00 0.20 0.00 14.48 856.27 Investments 137.99 71.04 458.74 224.90 576.72 60.11 281.83 2160.36 3971.69 Advances Performing 676.15 453.60 525.84 553.37 2087.61 2367.38 398.85 614.78 7677.58 NPAs 154.92 57.40 212.32 Fixed Assets 289.41 289.41 Other Assets 635.66 0.00 0.00 0.00 3.80 16.53 35.03 691.02 Reverse Repos 0.00 0.00 Swaps 173.40 6.78 464.52 506.48 389.63 14.15 1554.96 Interest Receivable 68.50 68.50 C: Total Inflows 2455.30 588.34 1534.43 1391.49 3160.06 2868.97 1263.68 3394.12 16656.39

3 Mismatches D: Mismatch (C-A) 941.31 5.86 -756.91 -200.32 -712.05 -908.48 247.08 1916.85 533.34 E: % Mismatch (D as a % of A) 62.17 1.01 -33.03 -12.58 -18.39 -24.05 24.30 129.76 F: Cumulative Mismatch 941.31 947.17 190.26 -10.06 -722.11 -1630.59 -1383.51 533.34 G: % Cumulative Mismatch F as %

of B 62.17 45.18 4.34 -0.17 -7.33 -11.96 -9.45 3.31

Asset Liability Mismatch for last three years and as on September 30, 2006: (Rs. in crores) Year/ Period ending 1-14 days 15-28 days 29 days -

3 months 3-6 months 6-12 months1-3 years 3-5 years Over 5

years Total

September 30, 2006 -350.34 174.18 -341.59 -138.28 -223.71 -1,682.48 994.55 1,889.86 322.20

March 31, 2006 308.98 - 122.76 - 1,091.51 - 216.69 50.26 - 1,230.66 595.10 2,760.36 1,053.08

March 31, 2005 425.52 124.27 703.95 24.01 57.09 892.76 526.54 1,345.57 495.54

March 31, 2004 941.31 5.86 756.91 200.32 712.05 908.48 247.08 1,916.85 533.34 Structural Liquidity for last three years and as on September 30, 2006

Maturity TOTAL INFLOW TOTAL OUTFLOW MISMATCH

March 31, 2004

March 31, 2005

March 31, 2006

Sep 30, 2006

March 31,2004

March 31, 2005

March 31, 2006

Sep 30,2006

March 31, 2004

March 31, 2005

March 31, 2006

Sep 30,2006

1-14 days 2455.3 3,127.39 2,291.67 3,075.34, 1513.99 2,701.87 1,982.68 3,425.68 941.31 425.52 308.98 -350.34

15-28 days 588.34 858.86 1666.1459 1,159.24 582.48 983.13 1788.9092 985.06 5.86 -124.27 -122.76 174.18

29 days - 3 months

1534.43 2,988.07 2,589.66 3,521.99 2291.34 3,692.02 3,681.18 3,863.57 -756.91 -703.95 -1,091.51 -341.59

3-6 months 1391.49 2,165.04 1,670.92 1,853.29 1591.81 2,189.05 1,887.61 1,991.57 -200.32 -24.01 -216.69 -138.28

6-12 months 3160.06 2,371.58 2,141.67 2,735.75 3872.11 2,428.67 2,091.41 2,959.46 -712.05 -57.09 50.26 -223.71

1-3 years 2868.97 1,702.13 2,682.88 2,414.68 3777.45 2,594.89 3,913.54 4,097.16 -908.48 -892.76 -1,230.66 -1,682.48

3-5 years 1263.68 1,446.22 2,224.08 3,052.61 1016.6 919.68 1,628.97 2,058.05 247.08 526.54 595.10 994.55

Over 5 years 3394.12 2,983.52 5,182.11 5,000.63 1477.27 1,637.95 2,421.74 3,110.77 1916.85 -1,345.57 2,760.36 1,889.86

Total 16656.39 17,642.80 20,449.12 22,813.52 16123.05 17,147.26 19,396.04 22,491.32 533.34 495.54 1,053.08 322.20

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Maturity Pattern of Assets & Liabilities as on Sep 30, 2006:

Particulars 1-14 days 15-28 days 29 days -3 months

3-6 months 6-12 months 1-3 years 3-5 years Over 5 years Total

Loans & Advances 1,651.35 703.50 2,448.57 1,245.49 822.11 1,859.73 1,201.46 1,387.39 11,319.60Deposits 1,923.35 782.39 2,211.25 1,392.29 1,971.65 4,107.39 1,849.22 1,748.95 15,986.49Borrowings 726.79 73.46 274.54 151.33 0.00 50.00 0.00 0.00 1,276.13

Maturity Pattern of Assets & Liabilities as on March 31, 2006: (Rs. in crores) Particulars 1-14

days 15-28 days

29 days 3 months

3-6 months 6-12 months

1-3 years

3-5 years

Over 5 years

Total

Loans & Advances 773.18 1,107.04 1,350.72 886.07 1,021.64 2,054.21 1,260.14 857.46 9,310.46

Deposits 1,413.66 1,238.03 3,204.10 1,230.73 1,388.28 4,018.32 1,421.32 1,091.86 15,006.30

Borrowings 88.46 48.80 204.47 123.22 20.00 50.00 0.00 0.00 534.95

Maturity Pattern of Assets & Liabilities as on March 31, 2005: (Rs. in crores) Particulars 1-14

days 15-28 days

29 days -3 months

3-6 months 6-12 months

1-3 years

3-5 years

Over 5 years

Total

Loans & Advances 1,543.86 648.53 1,927.05 645.24 1,651.34 1,289.82 514.33 328.67 8,548.83

Deposits 1,953.45 845.87 2,589.24 1,610.87 1,911.78 2,495.55 804.66 572.08 12,783.50

Borrowings 58.75 23.52 116.28 52.50 15.00 55.00 321.05

(Rs. in crores) Gross Bank Credit March 31, 2003 March 31, 2004 March 31, 2005 September 30, 2006

Semi-Urban 75.74 81.86 147.66 166.48 Urban 832.59 1400.34 995.07 1033.24 Metropolitan 4439.52 6333.03 7852.20 7872.98 Rural - - 4.81 9.60 Total 5347.85 7812.23 8999.75 9082.30

ALM Policy of the Bank - 1. Objectives of the ALM Policy (A) Liquidity Risk Management

- Provide adequate liquidity to the Bank by pro-actively managing maturity mismatches between assets and liabilities within the manageable levels.

- Ensure that the current and potential demands for funds are supported by cash and liquid assets. - Maintain adequate liquidity under all circumstances. The possible requirements of liquidity are measured keeping in view: - Need to replace the net outflow of funds – Funding Risk - Need to compensate for non-receipt of expected inflows – Time Risk. - Need to meet contingent liabilities when they become due – Call Risk.

(B) Interest Rate Risk Management

- Proper pricing of assets and liabilities - Portfolio review of both assets and liabilities - Regular review of interest rate outlook - Keep the level of interest rate risk within the manageable levels - Maximization of net interest margin - Application of various techniques like Gap Analysis, Net Income Simulation Duration Analysis, Behavioral Analysis, etc.

(C) Foreign Exchange Risk Management

Measurement and Control of Foreign Exchange Risk through appropriate limit structure and other risk management tools. (D) Profit Planning

Budgeting, strategic planning and monitoring of net profit, interest rate and other balance sheet ratios. 2. Asset Liability Management Committee (ALCO) comprising of Top officials of the Bank monitors the following:

- Liquidity Risks & Interest Rate Risks - Profit planning and growth projection - Interest rate forecasting and movement of interest rates - Ensuring adherence to the prescribed tolerance limits - Deciding the business strategy of the Bank in line with the budgeted growth - Decisions on sources of funds mix of liabilities and their maturity profiles - Product pricing of both assets and liabilities. - Set up framework for `Transfer Pricing’ of Assets and Liabilities to evaluate profitability of business units of the Bank. - Monitor activities of the Bank’s treasury and lay down broad return objectives and set targets to monitor performance.

3. Market Risk Policy - The objective of this policy document is to lay down risk management policies for the Treasury operations of

the Bank. It serves to outline Bank’s risk appetite and risk philosophy in respect of Treasury, and the controls that are considered essential for the management of Treasury risks. The policy defines

− Risks and specify appropriate limits/controls;

37

− Roles and responsibilities with clear segregation of duties;

− Control policies; and

− Outline the delegation of authority Risk Monitoring and Exception Reporting Processes

4. Investment Policy – A detailed Investment Policy with operational guidelines and appropriate exposure limit structure in force.

5. Capital

The capital position of the Bank at no time will be less than the required regulatory minimum. The Bank will strive to maintain a capital position necessary for its long-term financial health through earnings performance and the ability to issue Tier 2 subordinated debt. The Bank will attempt to enhance shareholder wealth by maximising value, improving the Return on Assets (ROA) and Return on Equity (ROE).

6. Contingency plans under alternative scenarios Given the dynamic market condition, it will be the endeavor of the Bank to react positively to the conditions of certainty as also to conditions of uncertainty. Bank has drawn a contingency plan to meet any unforeseen eventualities.

ALM Strategy of the Bank ALM system of the Bank has been strengthened with full computerization. During the year 2003-04, the Bank could cover 100% of the Bank’s business under ALM.

CAPITAL ADEQUACY RATIO The RBI’s guidelines on Capital Adequacy Ratios (CAR) generally conform to the guidelines adopted by the Committee on Banking Regulations and Supervisory Practices of the Bank of International Settlements (“BIS”). The RBI requires that assets, non-funded items and other off-balance sheet exposures are assigned weights according to prescribed risk weights and that each Bank must maintain capital levels equivalent to a prescribed ratio to such risk weighted assets. All financial ratios and capital adequacy ratios confirm to RBI norms. Capital For the purpose of calculating the CAR, capital of a Bank is divided into two classes i.e. Tier I capital and Tier II capital. Tier I capital, also known as core capital, represents amounts readily available to support the Bank against unexpected losses. Tier-I capital consists of paid up capital, statutory reserves and other disclosed free reserves. Tier-II capital comprises elements that are less permanent in nature and thus less readily available. Tier II capital consists of subordinated debt (with a minimum maturity of five years), undisclosed reserves, cumulative perpetual preference shares, revaluation reserves (to the extent of 45% of the total amount of revaluation reserves on the Bank’s book), general provisions and hybrid capital. The total capital for the calculation of CAR is the sum of Tier I capital and Tier II capital and is taken, with the condition that the Tier II capital should not exceed Tier I capital. RBI vide its circular dated October 31, 1998 prescribed that banks should achieve a minimum CAR of 9% with effect from the year ending March 31, 2000. Risk Weighted Assets Each class of assets of the Bank (including off-balance sheet assets) is assigned a risk weight (following certain norms laid down by RBI). The value of risk weighted assets for each class of assets is obtained by multiplying the amount of each asset class by its risk weight. The total risk weighted assets are obtained by summing up the individual risk weighted assets. An International Committee of Banking Regulations and Supervisory Practices of the BIS released an agreed framework on international convergence of CAR for commercial Banks. The minimum CAR was set at 8%. The capital adequacy norms are to be enforced by the Banking Supervisory Authority of the respective country. RBI being the Central Bank of the country had issued guidelines and prescribed that Indian Banks should have minimum CAR of 9%. Risk Management The Bank has an integrated Risk Management Dept responsible for Enterprise-wide risk management. The Risk Management Dept has been pro-actively managing risks across all business segments through Credit Risk Group, Market Risk Group (exchange risk, price risk, liquidity risk and interest rate risk) and Operational Risk Group (including systems risk). Each group is assigned with specific responsibilities but at the same time the whole department functions in an integrated manner. The Bank has set for itself an ambitious goal of benchmarking its Risk Management practices with the international standards. Pursuing that objective, the Bank had engaged ‘KPMG Consulting’ to assist in establishment of Enterprise-wide Risk Management framework, covering various risks across all functional streams. KPMG benchmarked our existing Risk Management practices against regulatory requirements as well as International best practices. Under the project, several far-reaching initiatives have been undertaken. These measures have enabled the Bank to put in place risk identification, measurement, monitoring mechanisms. The Bank has acquired and implemented robust Credit Rating & Appraisal Models (from CRISIL). Bank has acquired a state-of-the-art Treasury system, OPICS from Misys London, which is in the final stage of implementation. Bank has enhanced its Asset–Liability Management capabilities by acquiring upgraded ALM system. The present risk management infrastructure enables the Bank to effectively manage substantially higher business volumes with the desired risk return trade off.

Most of the above-mentioned initiatives have already been implemented and the rest are under implementation. These initiatives will help creation of sophisticated and pro-active Risk Management framework in the Bank and shall also help adoption Basel II norms. The Bank plans to leverage the advanced Risk Management architecture to reduce the volatility in earnings and enhance shareholder value. Internal Control System and the Adequacy The bank has put in place a strong system for internal control by designing appropriate operational manuals and guidelines. The bank also has put in place back office framework through the support of appropriate technology systems, to ensure highest standards of customer service and the product delivery, whilst ensuring full compliance with internal and regulatory guidelines. The bank is following the best practices with in the legal/Regulatory framework. The bank has been awarded quality certification ISO 9001: 2000 making it the first among the Indian Commercial banks to achieve such certification for all its branches.

38

1. SUBSIDIARIES OF THE BANK A) ALF Insurance Services Pvt. Ltd. (AISPL) History ALF Insurance Services Pvt Ltd (AISPL) was incorporated in the year 2003 as a wholly owned subsidiary of erstwhile Ashok Leyland Finance Ltd (AFL). Consequent to the merger of AFL with IndusInd Bank Ltd, this company has now become a wholly owned subsidiary of the bank Business The company is in the business of Insurance Corporate Broking. It has applied for license to IRDA and the license is awaited. Bank has also applied to Reserve Bank of India for necessary permission, which is awaited. Upon getting license from IRDA, it will be doing business with all the Public Sector Insurance Companies namely, New India Assurance Company Ltd., Oriental Insurance Company Limited, United India, National Insurance Company Ltd. Board of Directors - Mr. C. M. Sambasivan, Director - Mr. T. Krishnakumar, Director Financials (Rs in crores.)

Particulars March 31, 2006 Total Revenues 0.03 Profit/Loss Before Tax 0.03 Net Profit 0.02

Brief Financials

Particulars Year ended March 31, 2006

Total Sales - Total Income 0.03 Total Expenditure .00 Profit Before Tax (PBT) 0.03 Profit After Tax (PAT) 0.02 Share Capital 0.50 Reserves & Surplus 0.03 Dividend (%) - Net Asset Value/ Book Value per Share (Rs.) **

10.65

Earning Per Share (Rs.) 0.39 * Excluding revaluation reserves and after deducting miscellaneous expenditure not written-off or adjusted) ** Net Asset Value is calculated as Total Assets less deferred tax liability The shares of AISPL are not listed on any stock exchange. Contingent Liabilities of AISPL a) As on March 31, 2006: Nil Transactions of the Bank with ALF Insurance Services Pvt Ltd. There has been no transaction of the bank with ALF Insurance Services Pvt Ltd. 2. AFFILIATES AND GROUP COMPANIES OF THE BANK The bank has the following affiliates (with the extent of shareholding mentioned in the brackets) as on March 31, 2006 is given below: 1. Ashley Investments Ltd (30%)* 2. Ashley Holdings Ltd (30%)* 3. Ashley Transport Services Ltd. (30%) 4. Alfin Services & Solutions Pvt. Ltd (30%) 5. IndusInd Information Technology Ltd. (30%) * The Bank has divested its holdings in Ashley Investments Ltd. and Ashley Holdings Ltd during the half year ended Sptember 30, 2006. VI. SIGNIFICANT REGULATORY MATTERS RELATED TO THE BANK REGULATORY FRAMEWORK IndusInd Bank is licensed as a Bank and is regulated and supervised by RBI and the laws, rules and regulations provided in relation thereto in the Banking Regulation Act, 1949, the RBI Act, 1934 and other related enactment such as the Banker’s Books of Evidence Act, 1891. The IndusInd Bank observes the requirements and conditions applicable to a banking company on matters, inter alia, as mentioned herein below: (a) The forms of business in which IndusInd Bank and its subsidiaries may engage in is specified and regulated by the Banking

Regulation Act, 1949. Pursuant to the provisions of Banking Regulation Act, 1949, IndusInd Bank cannot directly or indirectly deal in the buying, selling, bartering of goods by itself or for others except in connection with the realisation of security given to it or

39

held by it or in connection with bills of exchange received for collection or negotiation or with such of its business entailing undertaking the administration of estates as executor, trustee or otherwise, or any such business as specified under Section 6(1)(o) of the Banking Regulation Act, 1949. Goods for this purpose means every kind of movable property, other than actionable claims, stocks, shares, money, bullion and specie and all instruments referred to in section 6(1)(a) of Banking Regulation Act, 1949. Subject to the provisions of the Banking Regulation Act, 1949, IndusInd Bank and its subsidiaries will pursue business avenues as permitted under Section 6 of the Banking Regulation Act, 1949 in contrast to companies not being a banking company under the Banking Regulation Act, 1949.

(b) Appointment or re-appointment of the Chairman and MD of IndusInd Bank will be subject to the approval of RBI. The majority of directors of the Bank are required to have certain specified qualifications as per the Banking Regulation Act. RBI is empowered to remove such an appointee on the ground of public interest, interest of depositors or to ensure the proper management of IndusInd Bank. RBI may order meeting of IndusInd Bank’s board of directors to discuss any matter in relation to IndusInd Bank, appoint observers to such meeting and in general may make such changes to the management as it may deem necessary and can also order the convening of the general meeting of IndusInd Bank to elect new directors. Additionally, IndusInd Bank may not appoint persons as directors who are already directors on the board of another banking company.

(c) IndusInd Bank will need to obtain the prior approval of RBI to open new branches. (d) IndusInd Bank cannot, subject to the provisions of the Banking Regulation Act, 1949, hold shares in any company (save and

except its existing subsidiary) exceeding 30.0% of the paid-up share capital of such company or 30% of its own paid up share capital and reserves, whichever is less. IndusInd Bank will require the prior permission of RBI to incorporate a subsidiary.

(e) IndusInd Bank and its subsidiaries will have to observe the prudential norms stipulated by RBI, from time to time, in respect of their underwriting commitments. Pursuant to such prudential norms, the underwriting commitment under any single obligation of IndusInd Bank or its subsidiaries shall not exceed 15% of an issue.

(f) A shareholder of IndusInd Bank will not be able to exercise voting rights on poll in excess of 10% of the total voting rights of all the shareholders of IndusInd Bank.

(g) RBI in its directive to all Indian private sector commercial banks, including IndusInd Bank, requires such banks to obtain the acknowledgement of RBI before effecting transfer of shares when the transfer makes the shareholding of the individual/ group equivalent to 5% or more of the total paid up capital of such banks.

(h) For creating floating charge on IndusInd Bank’s undertaking or its property, prior approval of RBI will be required. Currently, all borrowings of IndusInd Bank, as also the issue of bonds, are unsecured.

(i) IndusInd Bank is required, under the Banking Regulation Act, 1949, to create a reserve fund and out of the balance of profit each year as disclosed in the profit and loss account prepared under Section 29 of the Banking Regulation Act, 1949, and before any dividend is declared, required to transfer to the reserve fund a sum equivalent to 25% of such profit.

(j) IndusInd Bank is required under the Banking Regulation Act, 1949, to ensure at periodic intervals that the assets in India shall not be less than 75% of its demand and time liabilities in India, and submit returns to RBI in the prescribed form and manner.

(k) IndusInd Bank will be required to prepare its balance sheet and profit and loss account in the forms set out in the Third Schedule to the Banking Regulation Act, 1949 or as near thereto and subject to and in accordance with the other provisions of the Banking Regulation Act, 1949 read with the Companies Act, 1956.

(l) A compromise or arrangement between IndusInd Bank and its creditors or any class of them or between IndusInd Bank and its members or any class of them or any modification in any such arrangement or compromise will not be sanctioned by any High Court unless such compromise or arrangement or modification, as the case may be, is certified by RBI as not being incapable of being worked and as not being detrimental to the interest of the depositors of IndusInd Bank Amalgamation of IndusInd Bank with any other banking company in future will require being sanctioned by RBI and shall be in accordance with the provisions of the Banking Regulation Act, 1949.

(m) IndusInd Bank will pay dividend on its shares only after all its capitalized expenses (including preliminary expenses, organisation expenses, share-selling commission, brokerage, amounts of losses incurred and any other item of expenditure not represented by tangible assets) have been completely written off. RBI’s prior approval is required for a dividend payment above 25.0% of the par value of IndusInd Bank’s shares or for an interim dividend payment.

(n) IndusInd Bank is required to maintain books, records and registers. The Banking Regulation Act, 1949 specifically requires such companies to maintain books and records in a particular manner and file the same with the RBI on a periodic basis. The provisions for production of documents and availability of records for inspection by shareholders would apply to IndusInd Bank as in the case of any company.

(o) IndusInd Bank would have to obtain the prior permission of RBI to issue bonus shares as prescribed under the Banking Regulation Act, 1949.

(p) Subject to and on account of laws governing banking companies, the financial disclosures in the Information Memorandum may not be available to investors after listing on a continuous basis.

(q) The special status of banks is recognized under other statutes including the Sick Industrial Companies Act, 1985, Recovery of Debts Due to Banks and Financial Institutions Act, 1993, and Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002. As a bank, IndusInd Bank is entitled to certain benefits under various statutes including the following: • The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 provides for establishment of Debt Recovery

Tribunals for expeditious adjudication and recovery of debts due to any bank or Public Financial Institution or to a consortium of banks and Public Financial Institutions. Under this Act, the procedures for recoveries of debt have been simplified and time frames been fixed for speedy disposal of cases. Upon establishment of the Debt Recovery Tribunal, no court or other authority can exercise jurisdiction in relation to matters covered by this Act, except the higher courts in India in certain circumstances.

• The Sick Industries Companies Act, 1985, provides for reference of sick industrial companies, to the Board for Industrial and Financial Reconstruction (BIFR). Under the Act, other than the Board of Directors of the Bank, a scheduled bank (where it has an interest in the sick industrial company by any financial assistance or obligation, rendered by it or undertaken by it) may refer such company to the BIFR.

• The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”) focuses on improving the rights of banks and financial institutions and other specified secured creditors as well as asset reconstruction companies (ARCs) by providing that such secured creditors/ARCs can take over management control of a borrower company upon default and/or sell assets without the intervention of courts, in accordance with the provisions of the SARFAESI Act. Further, the SARFAESI Act also has related features to enable securitisation of corporate debt, the establishment and functioning of ARCs and the establishment of a Central Registry.

VII. ORGANISATION STRUCTURE & MANAGEMENT PROMOTERS

Sr. No.

Name of the Promoter No. of shares Face Value Issue Price % of Post- Issue paid-up capital

1. IndusInd International Holdings Ltd. 68499984 Rs.10/- 10/- 23.5948

40

2. IndusInd Limited 15500000 Rs.10/- 10/- 5.3390 3. De Five (Mauritius) Holdings Ltd. 7000000 Rs.10/- 10/- 2.4112

KEY MANAGERIAL PERSONNEL

Name Age (Years)

Date of Joining

Designation Qualification Details of previous employment

Work Experience

Bhaskar Ghose 52 03-Oct-00 Managing Director B.Com, MBA The Bank of New

York 27

S Nagarajan 58 28-Aug-04 Joint Managing Director B.Com, ACA, ACS Ashok Leyland

Finance Ltd 32

S.V. Zaregaonkar 24-Sep-95 EVP & CFO M.Com, CA, CAIIB, LLB Dena Bank

Suresh Pai 04-Mar-96 EVP - NFSS B.Sc., MBA, CAIIB-I, B ED, FCIS Corporation Bank

J Moses Harding 01-April-03 EVP – Wholesale Banking Group

MA, CAIIB State Bank of India / Centurion Bank

N. Sampath Kumar 28-Aug-04 EVP –Finance B. Com., ACA Ashok Leyland Finance Ltd

S. V. Parthasarathy

28-Aug-04 EVP – Operations

B. Sc., ACA Ashok Leyland Finance Ltd

BOARD OF DIRECTORS (as on September 30, 2006)

Sr. No.

Name & Designation

Age (Years)

Qualification & Experience

Date of Appointment

Address Particulars of other Directorships

1. Dr. Ram Buxani 65 Graduate 14/01/2000 --do-- Sanjay Gulf Industries (P) Ltd., Cosmos Sanjay Textiles Mills Ltd.

2. Mr. R. Sundraraman

64 M Com., CAIIB 30/10/2002 --do-- Bangalore Stock Exchange

3. Mrs. Kanchan U. Chitale

54 B. Com., C.A. 31/01/2003 --do-- Harkan Management Consultancy Services Pvt. Ltd.

4. Mr. T. Anantha Narayanan

61 B.Com., A.C.A., A.I.C.W.A.

18/03/2004 --do-- Hinduja TMT Ltd., Irizar TVS Ltd., Ashley Holdings Ltd., Ashley Investments Ltd., Ashok Leyland Projects Services Ltd., Ashok Leyland Properties Ltd.

5. Dr. T. T. Ram Mohan

50 B-Tech (IIT, Mumbai), PGDM (IIM Calcutta), Ph. D (Stern School, New York)

16/01/2006 --do-- Brics Securities Limited, Gujarat Narmada Valley Fertilizers Company Limited, Marwar Hotels Limited, Rail Vikas Nigam Limited, International Asset Reconstruction Company Pvt. Ltd.

6. Mrs. Pallavi S. Shroff

50 B.A. (Economics Hons.), M.M.S., LLB

13/06/2006 --do-- Abhishek Industries Ltd., Juniper Hotels Ltd., Kotak Mahindra Old Mutual Life Insurance Ltd., BAG Films Ltd., Maruti Udyog Limited

7. Mr. Bhaskar Ghose- Managing Director

52 B. A., MBA (Fin & Mktg)

16/06/2004 --do-- None

8. Mr. S. Nagarajan Jt. Managing Director

58 B. Com, ACA, ACS

28/08/2004 --do-- IndusInd Information Technology Ltd.

The directors of the Bank together hold 406720 shares in the Bank. CORPORATE GOVERNANCE 1. The Bank’s philosophy on the code of Corporate Governance:

The Bank firmly believes that consistent implementation of good Corporate Governance contributes towards developing and sustaining the best operating procedures and systems.

The systems, which have been evolved, allow sufficient freedom to the Board and the management to make decisions and take actions towards the growth of the Bank, and simultaneously remain within the framework of effective accountability. To maintain high standards of good Corporate Governance, your Directors have formed various committees of the Board. The Committees meet regularly to achieve their specific objectives. The Bank is committee to operate on commercial principles, ensuring at the same time, the need to remain accountable, transparent and responsive to its stakeholders.

41

The Bank acknowledges the need to uphold the integrity of every transaction it enters into and believes that honesty and integrity in its internal conduct would be judged by its external behaviour. In this context, your Directors have adopted a ‘Code of Conduct for Directors and Senior Management’. This code attempts to set forth the guiding principles on which the Bank shall operate and conduct its daily business with its multitudinous stakeholders, government and regulatory agencies, media, and anyone else with whom it is connected.

2. Board of Directors (BOD) - Constitution

The Board comprises 8 members who have specialised knowledge and professional experience in diverse fields such as Agriculture, Accounting, Banking, Economics, Finance, Law, Small Scale Industry, etc.

Name of Director Nature of

Directorship Special Knowledge / practical experience

Remarks

(1) (2) (4) (5)

Dr. Ram Buxani Independent Non-executive

International Business NRI Businessman

Mr. R. Sundararaman Independent Non-executive

Banking, with special knowledge of small scale industry

Former Dy. Managing Director of SBI

Mrs. Kanchan Chitale Independent Non-executive

Accountancy Practising Chartered Accountant

Mr. T. Anantha Narayanan Independent Non-executive

Agriculture & Rural Economy (Special Knowledge), Finance (Practical experience)

ACA & AICWA, Retired Executive Director (Finance) of Ashok Leyland

Dr. T.T. Ram Mohan Independent Non-executive

Banking & Finance B. Tech (IIT Mumbai), PGDM (IIM Calcutta) Ph. D (Sterns School, New York. Professor, Finance & Accounting, IIM Ahmedabad

Mrs Pallavi S. Shroff Independent Non-executive

Law Practicing Advocate B.A. (Economics Hons.) M.M.S. (Jamnalal Bajaj Institute of Management Studies, Bombay University)LLB (Govt. Law College, Bombay University)

Mr. Bhaskar Ghose Whole-time Banking Managing Director (MBA - IIM Calcutta)

Mr. S. Nagarajan Whole-time Banking Jt. Managing Director (ACA & ACS)

3. Committees of Directors:

Keeping in view the additions to the Board of Directors, the Committee of Directors was reconstituted to exercise powers delegated to it by the Board, for managing the affairs of the Bank; for efficient control over operational areas; and for ensuring speedy disposal of matters requiring immediate approval. The Committee of Directors comprises the Managing Director, Joint Managing Director and three non-executive Independent Directors – namely, Mr. R. Sundararaman, Mrs. Kanchan U. Chitale and Mr. T. Anantha Narayanan.

4. Audit Committee:

The Audit Committee is chaired by Mrs. Kanchan Chitale, a leading Chartered Accountant in practice. Mrs. Chitale is supported by two other non- executive independent Directors namely Mr. R. Sundararaman and Mr. T. Anantha Narayanan and the Joint Managing Director, Mr. S. Nagarajan in discharging the responsibilities assigned to the Audit Committee. The Committee was re-organized in line with existing statutory provisions.

The role of the Audit Committee includes, inter alia, (1) Overseeing of the Bank’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible, (2) Recommending to the Board, the appointment, re-appointment of auditors and fixation of audit fees, (3) Reviewing with the management, the quarterly and annual financial statements before submission to the Board for approval, with particular reference to: i. Changes, if any, in accounting policies and practices and reasons for the same; ii. Major accounting entries involving estimates based on the exercise of judgment by the management; iii. Significant adjustments made in the financial statements arising out of audit findings; iv. Disclosure of related party transactions, if any; v. Qualifications in the draft Audit Report; and vi. Management discussion and analysis of financial condition and results of operations;

The specialised functions of the Audit Committee include (1) Reviewing with the management, the performance of statutory and internal auditors, adequacy of the internal control systems, (2) Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature. In addition to the above, the Audit Committee discharges such additional functions as envisaged under Section 292A of the Companies Act, 1956.

5. Nomination Committee The Committee comprises Mr. R. Sundararaman (non-executive Independent Director) and Mr. Bhaskar Ghose (Managing Director). The Committee conducts due diligence as to the credentials of any Director before his appointment and makes appropriate recommendations to the Board, in consonance with the Ganguly Committee recommendations and the requirements of RBI. The Committee also discharges the functions of the Remuneration Committee envisaged in Clause 49 of the Listing Agreement.

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6. Stakeholders Relation Committee:

The Committee comprises two non-executive Independent Directors, viz., Dr. Ram Buxani and Mr. T. Anantha Narayanan and Mr. Bhaskar Ghose (Managing Director). The non-executive Director is elected the Chairman by the members present at the meeting. The objective of the Stakeholders Relation Committee is the redressal of stakeholders’ complaints. The Company Secretary discharges the responsibilities of a compliance officer.

7. Special Committee of the Board to monitor large value frauds: The Committee comprises Mr. R. Sundararaman, Mrs. Kanchan Chitale, Dr. T. T. Ram Mohan, Mrs. Pallavi Shroff and Mr. Bhaskar Ghose. A non-executive Independent Director is elected the Chairman by the members present at the meeting. In accordance with the directives of Reserve Bank of India, a Special Committee has been set up for monitoring and follow up of cases of frauds involving amounts of Rs.1 crore and above

8. Customer Service Committee of the Board of Directors: The Committee comprises two non-executive Independent Directors, Mrs. Kanchan Chitale, Dr. T. T. Ram Mohan, Mr. Bhaskar Ghose (Managing Director) and Mr. S. Nagarajan (Joint Managing Director). A non-executive Independent Director is elected as the Chairman by the members present at the meeting. The Committee’s function is to monitor the customer service extended by the Bank and to attend to the needs of customers.

9. Risk Management Committee: The Committee comprises three non-executive Independent Directors, viz., Mr. R. Sundararaman, Mr. T. Anantha Narayanan, Dr. T. T. Ram Mohan, and Mr. Bhaskar Ghose (Managing Director) and Mr. S. Nagarajan (Joint Managing Director). A non-executive Independent Director is elected as the Chairman by the members present at the meeting. The Committee’s role is to examine risk policies and procedures developed by your Bank and to monitor adherence to various risk parameters and prudential limits by the various operating departments.

10. Details of the three previous Annual General Meetings: The details of last three Annual General Meetings are as follows:

Annual General Meeting

Day, Date and Time Venue Whether special resolution passed

10th AGM Friday August 13, 2004 2.30 p.m.

Hotel Taj Blue Diamond, 11, Koregaon Road, Pune – 411 001

Yes

11th AGM Saturday September 3, 2005 2.30 p.m.

Hotel Taj Blue Diamond, 11, Koregaon Road, Pune – 411 001

Yes

12th AGM Thursday September 28, 2006 11:30 a.m.

Hotel Sun-n-Sand 262 Bund Garden Road Pune - 411001

Yes

Postal Ballot was conducted, the result of which was announced at the 11th Annual General Meeting held on September 3, 2005.

11. Disclosures:

- During the year, there was no materially-significant related-party transaction that could have had any potential for conflict with the interests of the Bank at large, and - Neither of the stock exchanges on which the Bank’s shares are listed imposed any penalty or stricture on the Bank. However, Securities and Exchange Board of India vide their Order dated August 10, 2006 had suspended the Depository Participant registration of the Bank for a period of 15 days. - As on March 31, 2006 none of the directors of the bank was disqualified under Sec 274 (1) (g) of the Companies Act, 1956.

12. Means of Communication:

Besides communicating to the stock exchanges on which the Bank’s shares are listed, the Bank’s financial results are also published on a quarterly basis in leading newspapers (Financial Express and Loksatta) and displayed on the Bank’s website (www.IndusInd.com). In accordance with the requirements of publishing financial and other data in the Electronic Data Information Filing and Retrieval (EDIFAR) database, the Bank loads the required information on the specified website (www.sebiedifar.nic.in) maintained for Securities and Exchange Board of India. All information relevant to the investors is published on the Bank’s website, and it is updated on a regular basis. Press releases on the performance of your bank on various fronts are issued at appropriate times. Presentations made to financial analysts are displayed on the Bank‘s website (www.IndusInd.com) from time to time.

13. General Shareholder Information:

Day, Date and Time of AGM Thursday, September 28, 2006 at 11:30 a.m. Venue Hotel Sun-n-Sand

262 Bund Garden Road Pune - 41100111, Goregaon Road Pune – 411 001

Financial Calendar April 1 to March 31 Book Closure Dates September 18, 2006 to September 28, 2006 (both days

inclusive) Dividend Payment Date Dividend not declared Registrars & Share Transfer Agents’ and their address for correspondence

Intime Spectrum Registry Ltd. C-13, Pannalal Silk Mills Compound, L. B. S. Marg, Bhandup (West),

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Mumbai – 400 078 Telephone: (022) 25963838 Fax: (022) 25946969 E-mail: isrl@intimespectrum.com

Bank’s website www.indusind.com

Share Transfer System: Trading in the Bank’s shares now takes place compulsorily in dematerialised form. However, members with share certificates in physical form can transfer their shareholding by sending the share certificates – along with a valid, duly-executed and stamped transfer deed signed by the member (or on his/her behalf) and the transferee – to the Bank or to the Bank’s Registrar & Share Transfer Agent, Intime Spectrum Registry Ltd. (address mentioned at serial no. 10 above). Dematerialization of Shares: With effect from January 4, 1999, trading in the Bank’s shares on the stock exchanges are compulsorily required to be settled only in dematerialised form. The equity shares of the Bank have been allotted International Securities Identification Number (ISIN) INE 095A01012. Members who seek further details may establish contact with NSDL and CDSL at the following addresses: National Securities Depository Ltd. Central Depository Services (India) Ltd. Trade World, 4th Floor, 28th Floor, Kamla Mills Compound, Phiroze Jeejeebhoy Towers, Senapati Bapat Marg, Stock Exchange Building, Lower Parel, Dalal Street, Mumbai – 400013 Mumbai – 400023

13. Compliance status of clause 49 of the Listing Agreement:

The Bank has complied with all the mandatory requirements prescribed in clause 49 of the Listing Agreement. The Bank has obtained a separate certificate from a Practicing Company Secretary, for the year ended March 31, 2006, on its compliance with the requirements of Corporate Governance under Clause 49.

HUMAN RESOURCES The Bank reviews and refines from time to time its HR practices and policies. The total manpower of the Bank as on September 30, 2006 was 2470, comprising of Post Graduates, Chartered Accountants, MBAs & experienced professionals. The bank has its own training center to improve knowledge and skills. To evolve the culture of the organization and make it more dynamic and vibrant, programmes are also conducted with the support of reputed external consultants The business per employee of the Bank has been on the increasing trend. The employee productivity parameters during the last five years are depicted in the table below: (Rs. in lacs)

As on March 31, 2002 March 31, 2003 March 31, 2004 March 31, 2005 March 31, 2006 September 30, 2006Business per Employee (Excluding interbank deposits)

1587.91 1284.06 1080.00 926 880 971

Net Profit per Employee 6.88 9.50 14.98 10.12 1.56 1.02

VIII. STOCK MARKET DATA OF THE EQUITY SHARES OF THE BANK The Bank’s shares are listed on the following stock exchanges in India:

Name of the Stock Exchange

Address of the Stock Exchange

Stock Code No. Annual Listing Fee for 2006-2007

Bombay Stock Exchange Limited

Phiroz Jeejeebhoy Towers, Dalal Street, Mumbai 400001

532187

Rs.2,33,250/- paid on May 3, 2006.

National Stock Exchange of India Limited

Exchange Plaza 5th Floor, Plot No. C/1 G Block, Bandra-Kurla Complex, Bandra (E) Mumbai - 400 051

INDUSINDBK Normal- EQ (physical) Depository-AE (manual lots) Depository-BE (odd lots)

Rs.1,38,600/- paid on May 3, 2006.

The shares have been delisted from Pune Stock Exchange. (i) The following table shows the high and low of daily closing share prices of the Bank on The Stock Exchange, Mumbai (BSE) and the National Stock Exchange of India Limited (NSE) for the periods indicated:

BSE NSE Period

High (Rs.) Low (Rs.) Average (Rs.) High (Rs.) Low (Rs.) Average * (Rs.)

2001-2002 18 9 13.5 ̂ 18 8.5 12.05 *

2002-2003 19.85 12.6 16.22 ̂ 19.9 12.6 16 *

2003-2004 50.35 15.75 33.05 ̂ 50.5 15.5 28.83 *

2004-05 64.7 36 50.35 ̂ 69 36.05 52.53 *

2005-06 75 27.90 51.45 ̂ 80 27.25 53.62 *

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April 2006 58.10 47.95 53.02 ̂ 60.2 47.2 52.97 *

May-06 61.60 42.40 52.00 ̂ 64.0 39.1 51.85 *

Jun-06 44.70 27.90 36.30 ̂ 47.6 27.3 36.32 *

Jul-06 34.80 30.35 32.57 ̂ 36.0 29.5 32.6 *

Aug-06 40.17 32.50 36.33 ̂ 49.5 32.0 40.17 *

Sep-06 50.50 42.40 46.45 ̂ 50.55 42.25 46.40 *

Oct-06 49.75 44.25 47.00 ̂ 49.80 44.15 46.97 * ^ Average of the monthly closing share price during the year * Average of the daily closing share price (ii) The following table shows the number of shares traded on the days High and Low prices of the Bank’s shares recorded on The Stock Exchange, Mumbai (BSE) and the National Stock Exchange of India Limited (NSE) for the last five months:

BSE NSE High Low High Low

Period

Date Number of shares traded

Date Number of shares traded

Date Number of shares traded

Date Number of shares traded

April 2006 5/4/2006 1559380 20/04/2006 121486 5/4/2006 1559300 20/04/2006 121400 May 2006 15/05/2006 1501811 9/5/2006 248640 15/05/2006 1501800 9/5/2006 248600 June 2006 13/06/2006 1537851 5/6/2006 165647 13/06/2006 1537800 5/6/2006 165600 July 2006 6/7/2006 430254 13/07/2006 57231 6/7/2006 430200 13/07/2006 57200 August 2006 18/08/2006 2313150 7/8/2006 76080 18/08/2006 2313100 7/8/2006 76000 September 2006 28/09/2006 1167404 11/09/2006 596633 29/09/2006 6196976 11/09/2006 1610256 October 2006 03/10/2006 714603 31/10/2006 346158 03/10/2006 1614027 31/10/2006 1060234

(iii) The market price of the share on February 8, 2006, the day the Board of Directors approved this issue, was Rs. 51.20 (NSE) (since this is an issue of pure debt, the share prices mentioned above would not be relevant). (iv)The total volume of securities traded in each month on The Stock Exchange, Mumbai (BSE) and the National Stock Exchange of India Limited (NSE) during the last ten months is as follows:

Total number of shares traded Period BSE NSE

April 2006 8715049 26555687 May 2006 12677612 33088221 June 2006 9686532 24623484 July 2006 3966967 11730342 August 2006 7467015 22215589 September 2006 28939287 32939570 October 2006 9867116 13711735

The equity shares of the Bank are actively traded at all the Stock Exchanges where they are listed. IX. MANAGEMENT DISCUSSION & ANALYSIS OF FINANCIAL PERFORMANCE Financial Highlights of the Bank for the last three financial years as per the audited balance sheets of the Bank (latest audited Final Accounts being for the year ended March 31,2006) and for the half year ended September 30, 2006 are as given in the following table:

Year/ Period ended March 31, 2004 March 31, 2005 March 31, 2006 September 30. 2006 annualized % change from 31/3/06 to 30/9/06

Total Income 1331.08 1385.14 1414.39 819.95 15.94 Interest Income 986.14 1134.39 1188.29 694.42 16.88 Other Income 344.94 250.75 226.10 125.53 11.04 Total Expenditure 886.39 983.90 1189.82 733.10 23.22 Interest Expenditure 669.25 718.89 873.19 571.63 30.93 Operating Expenditure 217.14 265.01 316.63 161.47 19.93 Profit Before Provisions & Contingencies

444.69 401.24 224.57 86.05 (23.37)

Provisions & Contingencies

182.62 191.09 187.75 60.85 (35.18)

Net Profit 262.07 210.15 36.82 25.20 36.89 Significant items of income and expenditure during 2005-06 (comparison of financials for the year ended March 2006 with March 2005) and for the half year ended September 30, 2006 with March 31, 2006 Net Profit: Net Profit of the Bank decreased from Rs. 210.15 Crores in 2004-05 to Rs.36.82 Crores in 2005-06 showing a fall of 82.47% whereas for the half year ended there was growth of 36.89% Interest Income: Interest income from advances improved from Rs. 811.36 Crores in 2004-05 to Rs. 855.30 Crores in 2005-06 and for the half year ended September 30, 2006 same was Rs. 476.15 crs. resulting in 11.34% annualized growth. Advances of the Bank increased by 3.45 % from Rs. 8999.75 Crores as on 31-03-2005 to Rs.9310.46 Crores as on 31-03-2006 and for the half year ended September 30, 2006 the growth was 30.36%. The other income of the Bank decreased from Rs. 250.75 Crores in 2004-05 to Rs.226.10 Crores in 2005-06 and for the half year ended September 30, 2006 same was Rs. 125.53 crs. resulting in annualized growth of 11.04%

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Other Income: The trading income from treasury operations decreased from Rs. 57.95 Crores in 2004-05 to Rs.13.26 Crores in 2005-06 due to higher interest regime. Consequently, the other income of the Bank decreased from Rs 250.75 Crores in 2004-05 to Rs.26.10 Crores in 2005-06. However, for the half-year ended September 30, 2006 same was Rs. 19.56 crs. resulting in annulaised growth of 195%. Interest Expenses: Interest paid on deposits increased from Rs. 570.24 Crores in 2004-05 to Rs. 777.78 Crores in 2005-06 due to growth in the deposits by 14.43%. and upward revision of rate during the year. For the half year ended September 30, 2006 same was Rs. 499.37 crs. resulting in annualized growth of 28.40%. 3. Details of the Disputed Tax Liabilities as on 31.03.2006 are as under: The Disputed Tax Liability of the bank as on 31/03/2006 was Rs.99.20 of which the disputed tax liability on account of Interest tax was Rs.0.72 Cr & Income tax was Rs. 98.48 Cr. Other matters relating to the Operations of the Bank Unusual or Infrequent events and transactions: No unusual or infrequent events and transactions occurred in the last three years except for the fact that Securities and Exchange Board of India vide their Order dated August 10, 2006 had suspended the Depository Participant registration of the Bank for a period of 15 days. Significant economic changes that materially affected or are likely to affect income from continuing operations: Changes in the interest rate structure that is any upward movement in interest rate, is going to reduce the value of the investment portfolio. Future relationship between costs and revenue: While it is expected that costs and revenues as a percentage would come down simultaneously, the margin would be under pressure. The net margin may also be affected by increasing operating cost. Extent of seasonality in the business: Bank’s business is not likely to be affected by seasonality. Non-dependence on a few customers: The Bank has a diversified credit portfolio to prevent any concentration in exposures both industry-wise and client wise. The Bank has an adequately designed credit risk policy to ensure the prevention of excess exposure to few customers. Servicing Behaviour: The Bank has been servicing all its principal and interest liabilities on time and there have been no defaults. Material Developments: In the opinion of the Directors of the Bank, there have been no material developments after the date of the last financial statements as disclosed in the Information Memorandum, which would materially and adversely affect or are likely to affect the trading or profitability of the Bank or the value of its assets, or its ability to pay its liabilities within the next twelve months, other than what has been already set out elsewhere in this Information Memorandum. Particulars Regarding Listed Companies There is no other listed company under the same management. X. BASIS FOR ISSUE PRICE This issue is being a debt issue the price has been determined taking market rate and cost of funds involved into consideration. Also the price has been ascertained keeping view, the extant RBI guidelines vide its circular no. DBOD. BP.BC.57/21.01.002/2005-06 dated 25-01-2006 for issue of Upper Tier-II Bonds, which specify that the rate of interest offered on Upper Tier II Bonds should be either fixed rate or a floating rate referenced to a market determined rupee interest benchmark rate. XI. OUTSTANDING LITIGATIONS, DEFAULTS AND MATERIAL DEVELOPMENTS The litigation in which the Bank and or its subsidiaries and sponsored institutions involved are classified into 3 categories:

1. Cases filed against the Bank; 2. Cases filed against the Bank’s subsidiaries, directors, promoters, companies/ firms/ ventures promoted by the promoters of

the Bank; 3. Disputed Tax Liabilities.

1. The details of the cases filed against the Bank as on 31.03.2006 and which are outstanding as on date: There are 100 cases against the Bank with monetary relief amounting to Rs.115.16 crores claimed therein against the Bank. 2. Details of the cases filed against Bank’s subsidiaries as on 31.03.2006 and which are outstanding as on date: There is only one subsidiary of the bank named ALF Insurance Services Pvt. Ltd, which is yet to commence business, & there is no outstanding litigation against the same. Details of the cases filed against Bank’s promoter companies as on 31.03.2006 and which are outstanding as on date: There are no identifiable core domestic promoters; hence there is no outstanding litigations. 3. Details of the Disputed Tax Liabilities as on 31.03.2006 are as under: The Disputed Tax Liability of the bank as on 31/03/2006 was Rs. 68.87 of which the disputed tax liability on account of Interest tax was Rs.0.72 Cr & Income tax was Rs. 68.15 Cr. AGAINST THE DIRECTORS OF THE BANK There are no outstanding litigations, disputes or penalties against the Directors of the Bank, including tax liabilities, economic offences, criminal or civil prosecution for any offence, irrespective of whether specified under any enactment in Paragraph 1 of Part I of Schedule XIII, of the Companies Act, 1956 or any other liability in their personal capacities or as Director/Partner/Sole Proprietor in the Company or any other company/firm except for the following two cases. There are no litigations against the Directors involving violation of statutory regulations or criminal offences except for the following two cases. No disciplinary action has ever been taken by the Securities and Exchange Board of India or Stock Exchanges and no penalty has been imposed by any authority. There is no suit pending against the Directors in capacity as director or partner or sole proprietor in any other company/firm. Other than as stated above, there are no disputes/ litigations towards tax liabilities or any criminal or civil prosecutions against the Bank for any offence – economic or otherwise. No criminal proceedings have been launched against the Bank under any of the enactment irrespective of whether specified in paragraph 1 of part I of Schedule XIII of the Companies Act. As regards, the criminal cases filed and pending against the Directors of the Bank as on September 30, 2006 are as under. 1. Criminal case No. 17/S/ 2002 pending before Chief Metropolitan Magistrate 18th Court, Mumbai filed by M/s Eldorado Guarantee

Limited (guarantor) against the Bank, Mr. Bhaskar Ghose, Managing Director and two other Executives (now resigned) of the

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Bank by alleging the criminal breach of trust by sale of pledged shares towards the dues payable by Dil Vikas Finance Limited, the Borrower under section 406 & 409 of I.P.C. . The bank and all accused have moved an application before M.M. for recall of process which is pending for filing of reply by complainant and hearing. Next date of hearing is fixed on December 21, 2006.

2. Criminal case against ex Managing Director Mr. K. R. Maheswari and 2 executives of the Bank filed before Chief Judicial Magistrate, Chandigarh filed by M/s Glass palace through its partner Ajay gupta for misapplication by non-payment of the price of the 19 chairs purchased under section 420, 506 & 120 B of Indian Penal Code. The criminal case has been filed after Mr. Maheswari left the bank. The High Court, Chandigarh has been moved for Quashing of the process, which is admitted on Oct. 26, 2006 and proceedings before CMM are stayed against Mr. maheshwari and one other executive. Now the Petition before High Court will come for final hearing in due course.

Interest of Directors of the Bank The Directors of the Bank are interested to the extent of shares held by them and/or by there friends and relatives or which may be subscribed by them and/or allotted to them by the Bank. The Directors of the Bank are interested to the extent of fees, if any, payable to them for attending meetings of the Board or Committee and reimbursement of traveling and other incidental expenses, if any, for such attendance as per the Articles of Association of the Bank. The Directors of the Bank are not interested in the appointment of or acting as Underwriters, Registrars and Bankers to the Issue or any such intermediary registered with SEBI. The Directors of the Bank are not interested in any property acquired by the Bank within two years of the date of Information Memorandum or proposed to be acquired by it. Save as stated above, no amount or benefit has been paid or given to the Bank’s Directors or Officers since its incorporation nor is intended to be paid or given to any Directors or Officers of the Bank except the normal remuneration and/or disbursement for services as Directors, Officers or Employees of the Bank. XII. INVESTOR GRIEVANCE & REDRESSAL SYSTEM The Stakeholders Relations Committee comprises Dr. Ram Buxani, Mr. T. Anantha Narayanan and Mr. Bhaskar Ghose. A non-executive Director is elected the Chairman by the members present at the meeting. The objective of the Stakeholders Relation Committee is the redressal of stakeholders’ complaints. The Company Secretary discharges the responsibilities of a compliance officer. The committee meets generally every half-year and reviews the stakeholders’ relations. The objective of the Committee is the redressal of stakeholders’ complaints. During the year 2005-06, the Bank received 1875 requests / grievances from shareholders, all of which were resolved. There were no requests / grievances pending for share transfer as on September 30, 2006. The investors can contact the Registrars to the Issue for any queries/grievance in respect of share transfers, dividend payment and all other investor related activities with the Bank’s Registrar & Transfer Agent, Intime Spectrum Registry Limited at C-13, Pannalal Silk Mills Compound, L. B. S. Marg, Bhandup (w), Mumbai – 400 078. Tel No. (022) 25963838. Fax No. 91-22- 25946969. E-mail: isrl@intimespectrum.com. The investors can also contact the Banks Registrar’s & Transfer Agent in case of any pre-issue/ post-issue related problems such as non-credit of letter(s) of allotment/ bond certificate(s) in the demat account, non-receipt of refund order(s), interest warrant(s)/ cheque(s) etc The details of the Compliance Officer of the current issue of Bonds is as under: Mr. Haresh Gajwani Company Secretary IndusInd Bank Limited Corporate Office, 701/801 Solitaire Corporate Park, 167 Andheri-Ghatkopar Link Road, Andheri (E), Mumbai – 400 093 Tel No: (022) 56412485 Fax No: (022)-56412347 E-mail: companysecretary@indusind.com

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PART II

I. GENERAL INFORMATION Consents Consents in writing from the Registrars, and Trustees to the Issue, Arrangers to act in their respective capacities have been obtained by the Issuer Company and such consents have not been withdrawn upto the date of opening of the Issue. Such consents and reports have not been withdrawn upto the date of opening of the issue. Expert Opinion Save as stated elsewhere in this Information Memorandum, the Bank has not obtained any other expert opinion. Changes in Directors during last three years The changes that took place in the Board of Directors since April 01, 2003 are as follows:

Sr. No. Name Date of change Reason for change and position held 1 Mr. T. Anantha Narayanan 18/03/2004 Inducted 2 Mr. R. Ramakrishnan 23/03/2004 Ceased to be a Director on completion of 8 years 3 Mr. Lal Tolani 13/08/2004 Ceased to be a Director on completion of 8 years 4 Mr. S. Nagarajan 28/08/2004 Inducted 5 Mr. O P Sodhani 03/09/2005 Ceased to be a Director on completion of 8 years 6 Mr. Vijay Vaid 10/06/2006 Ceased to be a Director on completion of 8 years 7 Mr. Anil Harish 21/07/2006 Ceased to be a Director on completion of 8 years 8 Dr. T. T. Ram Mohan 16/01/2006 Inducted 9 Mrs. Pallavi Shroff 13.06.2006 Inducted 10 Mr. R. J. Shahaney 28.09.2006 Demitted office at the last AGM as per RBI approval

Changes in Auditors during last three years Given below are the changes in the Bank’s Auditors during the past 3 years. Since the RBI appoints the auditors each year these changes have been effected as per RBI’s approval:

Sr. No.

Name of the Auditor Year of Change Added/ Retired Reason

1. M. P. Chitale & Co. 2002-03 Retired Completion of 4 yrs as per RBI guidelines 2. Price Waterhouse & Co. 2002-03 Appointed - 3. Price Waterhouse & Co. 2004-05 Changed Under RBI Directions 4. S. R. Batliboi & Co. 2004-05 Appointed -

Authority for the Present Issue This present issue of Bonds is being made pursuant to the Resolutions of the Board of Directors of the Bank, passed at its meeting held on February 8, 2006 The present issue of Bonds is being made in accordance with extant RBI guidelines vide its circular no. DBOD. BP.BC.57/21.01.002/2005-06 dated 25-01.2006 for issue of Upper Tier-II Bonds. The Bank can undertake the activities proposed by it in view of the present approvals and no further approval from any government authority (ies)/ Reserve Bank of India (RBI) is required by the Bank to undertake the proposed activities save and except those approvals which may be required to be taken in the normal course of business from time to time. Disposal of Applications and Application Money The Bank reserves its full unqualified and absolute discretion without giving any reason, the right to accept or reject any application in whole or in part. If any application is rejected in full, the whole of the application money received, and if the application is rejected in part, the excess application money, after adjustment of allotment money if any, will be refunded to the applicants by hand delivery/Courier/Registered post. No receipt will be issued by the Bank. However, the nominated branches of the Bankers to the Issue receiving the application will acknowledge the receipt of the application by stamping and returning the detachable acknowledgement slip appended to each application form. Refund (if any) will be made by cheque/ demand draft drawn on the Bank at Mumbai . Procedure and Time Schedule for Allotment/ Refund The beneficiary account of the investor(s) with National Securities Depository Limited (NSDL)/ Central Depository Services (India) Limited (CDSL)/ Depository Participant will be given initial credit within 30 days from the Deemed Date of Allotment. The initial credit in the account will be akin to the Letter of Allotment. On completion of the all statutory formalities, such credit in the account will be akin to a Bond Certificate. Letter(s) of Regret along with Refund Order(s), as the case may be, will be dispatched by Registered Post or as per extant postal rules at the sole risk of the applicant to the sole/ first applicant within 30 days of closer of the Issue. Subject to the completion of all legal formalities within 3 months from the Deemed Date of Allotment, or such extended period as may be approved by the Appropriate Authorities, the initial credit akin to a Letter of Allotment in the Beneficiary Account of the investor would be replaced with the number of Bonds allotted which will be akin to a Bond Certificate. Over subscription and Basis of Allotment The Bank reserves its full, unqualified and absolute right to accept or reject any application, in part or in full, without assigning any reason thereof. The rejected applicants will be intimated along with the refund warrant, if applicable, to be sent. Interest on application money will be paid from the date of realisation of the cheque(s)/ demand drafts(s) till one day prior to the date of refund. The Application Forms that are not complete in all respects are liable to be rejected and would not be paid any interest on the application money. Application would be liable to be rejected on one or more technical grounds, including but not restricted to: a. Number of bonds applied for is less than the minimum application size; b. Applications exceeding the issue size; c. Bank account details not given; d. Details for issue of bonds in electronic/ dematerialised form not given; e. PAN/GIR and IT Circle/Ward/District not given;

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f. In case of applications under Power of Attorney by limited companies, corporate bodies, trusts, etc. relevant documents not submitted;

g. In the event, if any Bond(s) applied for is/ are not allotted in full, the excess application monies of such Bonds will be refunded, as may be permitted.

In the event of issue being oversubscribed, the Bank reserves its full, unqualified and absolute right of allotment/ rejection in full or prorata at its discretion without assigning any reason thereof. However the broad basis to be followed by the Bank would be as under: At the end of each banking day during the currency of the issue, a sum of total subscription amount realised and credited to Issuer Company’s account would be ascertained by the Issuer Company and if the cumulative realised amount upto that date is less than or equal to Rs. 165 crores, then all the applicant(s) till that date would be given full and firm allotment. For the amounts credited to the Issuer Company’s account on the day wherein the cumulative credit exceeds Rs. 165 crores, allotment will be made on pro-rata basis based on balance amount available for allotment on that day. The allotment shall be subject to rounding-off to the nearest multiple of marketable lot (i.e. in multiples of 1 Bond). Interest on Application Money Interest at the coupon rate (subject to deduction of income tax under the provisions of the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof, as applicable) will be paid to all the applicants on the application money for the Bonds. Such interest shall be paid from the date of realisation of cheque(s)/ demand draft(s) upto one day prior to the Deemed Date of Allotment. The interest on application money will be computed on an Actual/ 365 day basis. Such interest would be paid on all the valid applications, including the refunds. Where the entire subscription amount has been refunded, the interest on application money will be paid along with the Refund Orders. Where an applicant is allotted lesser number of bonds than applied for, the excess amount paid on application will be refunded to the applicant along with the interest on refunded money. The interest cheque(s) for interest on application money (along with Refund cheque(s), in case of refund of application money, if any) shall be dispatched by the Bank within 30 days from the Deemed Date of Allotment and the relative interest cheque(s) along with the Refund cheque(s), as the case may be, will be dispatched by registered post to the sole/ first applicant, at the sole risk of the applicant. STATUTORY AUDITORS M/s S. R. Batliboi & Co. Chartered Accountants 6th Floor, Express Towers Nariman Point Mumbai – 400 021 Tel No. (022) 22876485 Fax No. 91-22-22876401 REGISTRAR TO THE ISSUE Intime Spectrum Registry Limited C-13, Pannalal Silk Mills Compound, LBS Marg, Bhandup (W), Mumbai – 400 078. Tel No. (022) 25963838 Fax No. 91-22- 25646969 E-Mail: isrl@intimespectrum.com TRUSTEES FOR THE BONDHOLDERS IDBI Trusteeship Services Ltd. Asian Building, Ground Floor 17 R Kamani Marg Ballard Estate, Mumbai- 400 001 Tel No. (022) 56311771/ 2 / 3 Fax No. (022) 56311776 E-mail: itsl@idbitrustee.co.in BANKERS TO THE ISSUE IndusInd Bank Limited ‘IndusInd House’, 425, Dadasaheb Bhadkamkar Marg, Mumbai - 400 004. Tel No: (022) 23809935. Fax No: 91-22-23808543. E-Mail: mbd@indusind.com COMPANY SECRETARY & COMPLIANCE OFFICER Mr. Haresh Gajwani Company Secretary IndusInd Bank Limited Corporate Office, 701/801 Solitaire Corporate Park, 167 Andheri-Ghatkopar Link Road, Andheri (E), Mumbai – 400 093 Tel No: (022) 56412485; Fax No: 91-22-56412347 E-mail: companysecretary@indusind.com The investors can contact the Compliance Officer in case of any pre-issue/ post-issue related problems such as non-credit of letter(s) of allotment/ bond certificate(s) in the demat account, non-receipt of refund order(s), interest warrant(s)/ cheque(s) etc.

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BROKERS TO THE ISSUE Apart from Arrangers to the Issue appointed by the Issuer Company, there is/are no other broker(s) appointed by the Issuer Company for the purpose of marketing the Issue. Therefore no person/ firm/ company other than the Arrangers to the Issue, whether member of recognised stock exchange(s) or otherwise, can act as Brokers to the Issue. CREDIT RATING AGENCY FITCH Ratings India Private Limited 15th Floor, Nirmal, Nariman Point, Mumbai 400 021. Tel: (022) 5637 0920. Fax: +91-22-5637 0924. ICRA Limited Electric Mansion, 3rd Floor, Appasaheb Marg, Prabhadevi, Mumbai 400 025 Tel: (022) 2433 1046. Fax: +91-22-2433 1390 ARRANGERS TO THE ISSUE SPA Merchant Bankers Ltd. 10-A, Chandermukhi, Nariman Point, Mumbai 400 021. Tel No. (022) 56349946-49 Fax No. 91-22-22871192 / 22846318 Email : ajay.manglunia@spasecurities.com A. K. Capital Services Ltd. 135 & 136, Free Press House, 13th Floor, Free Press Journal Marg, 215, Nariman Point, Mumbai – 400 021 Tel No. (022) 66100413 Fax No. 91-22- 66360977 E-Mail: shailesh@akgrouponline.com Allianz Securities Ltd. 33, Vaswani Mansion, 6th Floor, K. C. College, Dinshaw Vachha Raod, Mumbai 400 020 Tel No. (022) 22040908 Fax No. 91-22- 22870581 E-Mail: sameerapte@aslfinancial.com

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II. FINANCIAL INFORMATION

PART I – STATEMENT OF PROFIT AND LOSS as per Audited Final Accounts published by Bank (Rs. in Crores)

For the Year/ Period ended 31-Mar-02 31-Mar-03 31-Mar-04 31-Mar-05 31-Mar-06 30-Sep-06 Income

1 Interest Earned

1.1 Interest/ Discount on Advances/ Bills

428.48 467.03 696.94 811.36 855.30 476.15

1.2 Income on Investments 254.71 244.05 260.34 306.36 311.00 189.10

1.3 Interest on Balances with RBI and other Inter-Bank Funds

26.87 31.4 28.48 11.89 14.18 14.14

1.4 Others 0.48 0.39 4.79 7.80 15.03

2 Other Income

Commission, Exchange & Brokerage

26.3 23.41 21.03 31.53 40.51 30.03

Profit on Sale of Investments (Net)

120.76 192.79 226.83 57.95 13.26 19.56

Profit on Revaluation of Investments (Net)

Profit on Sale of Land, Buildings & Other Assets (Net)

0 -0.12 -6.45 -6.33 -4.34 -14.57

Profit on Exchange Transactions (Net)

13.66 14.15 11.13 14.31 10.54 781

Income from Dividends 0.67 6.58 2.01 0.81 0.43

Miscellaneous Income 22.98 20.93 90.37 152.48 165.70 81.87

Total Income 894.43 1,000.70 1,331.07 1,385.15 1,414.38 819.95

Expenditure

1 Interest Expended

1.1 Interest on Deposits 469.96 510.78 499.92 570.24 777.78 499.37

1.2 Income on Balances with RBI/ Inter-Bank Borrowings

29.24 11.19 93.31 111 49.90 34.32

1.3 Others 48.03 36.51 76.02 37.65 45.51 37.94

2 Operating Expenses

2.1 Payment to and Provisions for Employees

20.29 28.27 50.37 60.16 84.79 45.22

2.2 Rent, Taxes & Lighting 19.15 15.84 20.78 24.88 28.53 15.34

2.3 Printing & Stationery 2.25 2.95 5.48 7.55 9.99 4.76

2.4 Advertisements & Publicity 1.7 4.95 5.95 5.81 8.15 1.83

2.5 Depreciation on Bank’s Properties

20.68 25.25 36.72 44.87 35.99 17.68

2.6 Directors’ Fees, Allowances and Expenses

0.29 0.17 0.53 0.47 0.42 0.21

2.7 Auditor’s Fees and Expenses 0.42 0.53 0.84 0.67 0.84 0.12

2.8 Law Charges 1.39 2.67 11.24 9.13 10.72 5.45

2.9 Postage, Telegrams and Telephones

6.03 7.21 14.64 19.03 20.61 10.69

2.10 Repairs and Maintenance 5.31 6.83 14.55 18.85 19.97 11.26

2.11 Insurance 3.35 4.03 5.06 9.21 12.71 7.12

2.12 Other Expenditure 13.86 19.22 50.97 64.39 83.90 41.77

Total Expenditure 641.95 676.4 886.38 983.91 1189.81 733.10

Profit Before Provision for Tax & Extraordinary Items

252.48 324.3 444.69 401.24 224.57 86.05

Less: Extraordinary Items Gross Profit Before Provision for Tax 252.48 324.3 444.69 401.24 224.57 86.05

Provisions & Contingencies * 201.73 234.13 182.62 191.09 187.75 60.85

Net Profit/ (Loss) For The Year 50.75 90.17 262.07 210.15 36.82 25.20

Add: Balance of Profit/ (Loss) Brought Forward

21.45 13.33 5.4 53.75 80.81 185.90

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Add: Transfer from Reserves 77.83 275.91 64.27 78.89

Add: Profit from Amalgamation 1.04 Less: Provision for contingencies 92.2 275.91 118.02 -

Less: Tax Adjustments of Previous Year

4.63 -

Prior Period Adjustment Profit Available for Appropriation 72.2 90.17 267.47 205.52 196.52 211.10

APPROPRIATIONS

Transfer to Statutory Reserve 12.69 22.54 65.52 52.54 9.20

Transfer to Revenue Reserve Transfer to Capital Reserve 4.51 7.58 14.75 4.05 1.42

Transfer to/ (from) Investment Fluctuation Reserve

19.27 19.87 50 9.03 -

Proposed Dividend 22.4 30.83 73.97 52.26 -

Tax on Dividend 3.95 9.48 6.83 -

Balance Carried Over to Balance Sheet

13.33 5.4 53.75 80.81 185.90 211.10

*Details of provisions and contingencies debited to profit and loss account during the said years:

Rs. in Crores Particulars 31.03.02 31.03.03 31.03.04 31.03.05 31.03.06 30.09.06

Income Tax/ Wealth Tax/ Deferred Tax 27.3 -0.41 8.61 50.39 22.37 15.56

Depreciation on investments 8.17 4.81 -2.99 62.95 44.89 19.93

Provision for NPAs including Write offs 162.3 229.69 160.72 66.4 90.29 18.82

Others 3.96 0.04 16.28 11.35 30.2 6.54

Total Provisions 201.73 234.13 182.62 191.09 187.75 60.85 PART II – STATEMENTS OF ASSETS AND LIABILITIES as per Audited Final Accounts published by Bank

Rs. in Crores As on 31-Mar-02 31-Mar-03 31-Mar-04 31-Mar-05 31-Mar-06 30-SEP-06

A Assets

1 Cash in Hand 19.1 20.95 24.06 44.47 83.14 134.62

2 Balance with RBI 490.77 553.82 1310.58 591.62 520.95 714.02

3 Balances with Bank in India 403.99 313.78 855.57 502.73 770.72 650.25

Balances with Bank outside India 579.11 262.17 62.7 15.78 105.69 119.03

4 Money at Call & Short Notice 0.7 0 0 0

5 Investments in India 2484.89 2535.07 3971.69 4069.17 5409.90 5653.95

Investments outside India - - - - - -

Total Investments 2484.89 2535.07 3,971.69 4,069.17 5,409.90 5653.95

Advances

6 Advances in India 5574.2 5347.85 7812.23 8999.75 9310.46 10723.61

Advances outside India - - - - -

Total Advances 5574.2 5347.85 7,812.23 8,999.75 9,310.46 10723.61

7 Fixed Assets 86.61 110.1 298.39 324.5 339.59 341.74

8 Other Assets 565.87 757.31 750.53 1073.99 1082.07 1152.89

TOTAL (A) 10204.54 9901.05 15086.45 15,622.01 17,622.52 19490.11

B Liabilities

Demand Deposits

From Banks 47.52 57.64 53.82 38.68 68.25 35.4

From Others 868.76 764.73 802.96 854.76 1133.13 1411.68

Savings Deposits 172.34 224.98 394.74 508.62 729.24 794.3

Term Deposits

From Banks 2325.51 1810.05 2247.55 2923.26 3506.08 2719

From Others 4985.99 5740.47 7701.19 8788.96 9569.60 11026.10

Total Deposits (1+2+3) 8400.12 8597.87 11200.26 13114.28 15006.30 15986.48

Borrowings

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In India 859.4 236.79 2150.6 366.04 222.08 874.52

Outside India - - 159.75 244.58 312.87 399.34

Total Borrowings 859.4 236.79 2310.35 610.62 534.95 1273.86 Other Liabilities & Provisions

Other Liabilities & Provisions 281.09 326.63 571.43 595.87 576.11 671.22

Subordinate Debts 102 137.5 204 472 539.10 487.1

Upper Tier II 100.00 180.2

Sub-total 383.09 464.13 775.43 1067.87 1215.21 1338.52

TOTAL (B) 9,642.61 9,298.79 14286.04 14792.77 16756.46 18598.86

C NET ASSETS (C = A–B) 561.93 602.26 800.41 829.24 866.06 891.25

Represented by:

D Share Capital 159.03 219.27 290.42 290.51 290.51 290.51

E Reserve & Surplus

1 Statutory Reserve 110.95 133.49 65.52 53.78 62.99 62.98

2 Capital Reserve 4.51 7.58 22.33 26.39 27.81 27.81

3 Investment Fluctuation Reserve 21.32 19.86 69.87 78.9 0 0

4 Share Premium 216.58 216.66 296.17 296.5 296.5 296.5

5 Revenue & other Reserves 36.21 2.35 2.35 2.35 2.35

6 Balance of Profit and Loss Account (Adjusted) 13.33 5.4 53.75 80.81 185.9 211.10

TOTAL (E) 402.9 382.99 509.99 538.73 575.55 600.74

F TOTAL (D+E) 561.93 602.26 800.41 829.24 866.06 891.25

G Contingent Liabilities

Claims against the Bank not acknowledged as debts

66.75 101.05 140.2 397.34 184.65 184.65

Liability for partly paid Investments Liability on account of forward exchange

contracts 1663.05 2473.58 4143.86 5181.8 7277.01 8284.5

Liability on account of outstanding Derivatives contracts

3675 6775.00 8675

Guarantees given on behalf of constituents 567.81 470.36 288.21 337.73 1021.45 1199.6

Acceptances, endorsements and other obligations

401.08 484.09 678.44 1157.7 1578.35 1784.27

Other items for which the Bank is contingently liable

12.86 0 32.88 2.7 0 0

Total (G) 2711.55 3529.08 5,283.59 10,752.27 16,836.46 20,128.02

BILLS FOR COLLECTION 629.89 783.23 1010.93 1620.38 1758.71 1426.44

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PART IV A. SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS WITH REFERENCE TO LAST AUDITED FINAL ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2006

PRINCIPAL ACCOUNTING POLICIES 1) General :

The accompanying financial statements have been prepared on the historical cost convention, except where otherwise stated, and in accordance with the accounting standards referred to in Section 211(3C) of the Companies Act, 1956, read with guidelines issued by the Reserve Bank of India (‘RBI’) and conform to the statutory provisions and practices prevailing within the banking industry in India.

2) Transactions involving Foreign Exchange:

2.1 Monetary assets and liabilities denominated in foreign currency are translated at the balance sheet date at the exchange rates notified by the Foreign Exchange Dealers’ Association of India (‘FEDAI’) and the resulting profits or losses are recognised in the profit and loss account.

Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are

reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.

2.2 All Foreign Exchange contracts outstanding at the balance sheet date are revalued at the rates of

exchange notified by the FEDAI for specified maturities and the resulting profits or losses are recognised in the profit and loss account.

2.3 The Swap cost arising on account of foreign currency swap contracts to convert FCNR (B) deposits into

rupee liability is charged to profit and loss account as ‘Interest - Others’. 2.4 Income and Expenditure items are translated at the rates of exchange prevailing on the date of the

transaction. 2.5 Contingent liability at the balance sheet date on account of outstanding forward exchange contracts,

guarantees, acceptances, endorsements and other obligations and foreign exchange and derivative contracts are stated at the closing rates of exchange notified by FEDAI. In the previous year contingent liability on account of outstanding forward foreign exchange contracts was stated at the contracted rates of exchange.

3) Investments:

The significant accounting policies in accordance with the RBI guidelines and subsequent circulars issued by the RBI are as follows : 3.1 Categorisation of investments:

In accordance with the guidelines issued by RBI, the Bank classifies its investment portfolio into the following three categories, at the time of acquisition :

i) ‘Held to Maturity’ - Securities acquired by the Bank with the intention to hold till maturity. iii) ‘Held for Trading’ – Securities acquired by the Bank with the intention to trade. iv) ‘Available for Sale’ – Securities which do not fall within the above two categories are classified as

available for sale. 3.2 Classification of investments:

For the purpose of disclosure in the Balance Sheet, investments are classified under six groups - Government Securities, Other Approved Securities, Shares, Debentures and Bonds, Investments in Subsidiaries/ Joint Ventures and Other Investments.

3.3 Valuation of Investments:

(i) ‘Held to Maturity’ – These investments are carried at their acquisition cost. Any premium on acquisition is amortised over the balance period to maturity. Diminution other than temporary, if any, in the value of such investments is determined and provided for on each investment individually.

(ii) ‘Held for Trading’ – Each scrip in this category is revalued at the market price or fair value and the

resultant depreciation of each scrip in this category is recognised in the profit and loss account. Appreciation, if any, is ignored. Market value of government securities is determined on the basis of the price list published by RBI or the prices periodically declared by Primary Dealers Association of India jointly with Fixed Income Money Market and Derivatives Association (FIMMDA) for valuation at year-end. In case of unquoted government securities market price or fair value is determined as per the rates published by FIMMDA.

(iii) ‘Available for Sale’ – Each scrip in this category is revalued at the market price or fair value and

the resultant depreciation of each scrip in this category is recognised in the profit and loss account. Appreciation, if any, is ignored.

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Market value of government securities (excluding treasury bills) is determined on the basis of the price list published by RBI or the prices periodically declared by Primary Dealers Association of India jointly with Fixed Income Money Market and Derivatives Association (FIMMDA) for valuation at year-end. In case of unquoted government securities market price or fair value is determined as per the rates published by FIMMDA. Market value of other debt securities is determined based on the yield curve and spreads provided by FIMMDA. Equity shares are valued at cost or the closing quotes on a recognised stock exchange, whichever is lower. Treasury bills are valued at carrying cost, which includes discount amortised over the period to maturity. Units of mutual funds are valued at the lower of cost and net asset value provided by the respective mutual funds.

(iv) Investments in Equity Shares held as Long-term investments by erstwhile IndusInd Enterprises & Finance Ltd. and Ashok Leyland Finance Ltd. (since merged) are valued at cost. Provision towards diminution in the value of such Long-term investments is made only if the diminution in value is not temporary in the opinion of management.

(v) Broken period interest on debt instruments is treated as a revenue item. Brokerage, commission, etc. pertaining to investments paid at the time of acquisition is charged to revenue.

(vi) Repurchase and reverse repurchase transactions are considered as separate sale and purchase

contracts. Commitments under these transactions are recorded at contracted rates and excess of contracted rates over market value is recorded in the profit and loss account.

4) Derivatives

Derivative contracts are designated as hedging and trading and accounted for as follows : (i) The hedging contracts comprise interest rate swaps and currency options undertaken to hedge interest

rate risk on certain assets and liabilities. The net interest receivable/ payable is accounted on an accrual basis over the life of the swaps. However, where the hedge is designated with an asset or liability that is carried at market value or lower of cost or market value in the financial statements then the hedging is also marked to market with the resulting gain or loss recorded as an adjustment to the market value of designated assets or liabilities.

(ii) The trading contracts comprise proprietary trading in interest rate swaps. The gain/ loss arising on

unwinding or termination of the contracts is accounted for in the profit and loss account. Trading contracts outstanding as at the balance sheet date are measured at their fair value and resulting gains / losses are recognised in the profit and loss account.

(iii) Premium paid and received on currency options is accounted up-front in the Profit and Loss account as

all options are undertaken on a back-to-back basis. (iv) Provisioning of overdue customer receivable on derivative contracts, if any, are made as per RBI

guidelines. 5) Advances:

5.1 Advances are classified as per the RBI guidelines into standard, sub-standard, doubtful and loss assets

after considering subsequent recoveries to date. 5.2 Provision for non-performing assets is made in conformity with the RBI guidelines.

5.3 General provision on standard assets has been made at 0.40% of the outstanding amount on a portfolio

basis except for direct advances to Agriculture and Small and Medium Enterprises at 0.25% in accordance with RBI guidelines.

5.4 Advances are disclosed in the Balance Sheet, net of provisions and interest suspended for

non-performing advances. Provision made against standard assets is included in ‘Other Liabilities and Provisions’.

5.5 Advances include the Bank’s participation in / contributions to the asset-backed assignment of loan

assets of other banks / financial institutions where the Bank has participated on risk-sharing basis. 5.6 Advances exclude derecognised securitised advances, inter-bank participation and bills rediscounted

(BRDS).

5.7 Amounts recovered against bad debts written off in earlier years and, provisions no longer considered necessary in context of the current status of the borrower are written back / recognised to the profit and loss account to the extent such write-offs / provisions were charged to the profit and loss account.

5.8 For re-structured / re-scheduled assets, provision is made in accordance with the guidelines issued by

RBI.

6) Securitisation Transactions:

6.1 The Bank transfers commercial and consumer loans through securitisation transactions. The Bank securitises its loan receivables both through Bilateral Direct Assignment route as well as transfer to Special Purpose Vehicles (‘SPV’) in securitisation transactions.

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6.2 The securitisation transactions are without recourse to the Bank. The transferred loans and such securitised-

out receivables are de-recognised in the balance sheet as and when these are sold (true sale criteria being fully met) and the consideration has been received by the Bank. Gains / losses are recognised only if the Bank surrenders the rights to the benefits specified in the loan contracts.

6.3 In respect of certain transactions, the Bank provides credit enhancements in the form of cash collaterals /

guarantee and/or by subordination of cashflows to senior Pass Through Certificates (PTC). Retained interest and subordinated PTCs are disclosed under “Advances” in the balance sheet.

6.4 Recognition of gain or loss arising out of Securitisation of Standard Assets :

In terms of RBI guidelines issued on February 1, 2006, profit/premium arising on account of sale of standard assets, being the difference between the sale consideration and book value, is amortised over the life of the securities issued by the Special Purpose Vehicles (‘SPV’). Any loss arising on account of the sale is recognized in the Profit and Loss Account in the period in which the sale occurs. Upto January 31, 2006, gains or losses from sale of loan receivables, being the difference between the sale consideration and book value, were recognized at the time of the sale.

7) Fixed Assets:

7.1 Fixed assets (including assets given on operating lease) have been stated at cost less accumulated

depreciation and impairment. Cost includes incidental expenditure incurred on the assets before it is ready for intended use. The carrying amount of fixed assets is reviewed at each balance sheet date if there are any indications of impairment based on internal / external factors.

7.2 Depreciation has been provided for pro rata for the period of use, on Straight Line Method as per the rates

prescribed under Schedule XIV to the Companies Act, 1956, except in respect of computers, which are depreciated at the rate of 33.33%. These rates are reflective of management’s estimate of the useful life of the related fixed assets.

8) Revenue Recognition:

8.1 Income by way of interest and discount on performing assets is recognised on accrual basis and on non-

performing assets the same is accounted for on realisation. Further income not realised on non-performing assets is provided for.

8.2 Interest on Government securities, debentures and other fixed income securities is recognised on accrual basis.

Income on discounted instruments is recognised over the tenure of the instrument on a straight-line basis.

8.3 Dividend income is recognised when the right to receive payment is established.

8.4 Commission (except for Deferred Payment Guarantees and insurance commission which is recognised on accrual basis), exchange and brokerage is recognised on realisation.

8.5 Lease income and service charges earned by the Vehicle Finance Division are recognised on accrual basis.

9) Operating Leases:

Lease rental obligations in respect of assets taken on operating lease are charged to profit and loss account on straight-line basis over the lease term. Initial direct costs are charged to profit and loss account. Assets given under operating leases in respect of which all the risks and benefits of ownership are effectively retained by the Bank are classified as operating leases. Lease rentals received under operating leases are recognized in the profit and loss account on accrual basis as per contracts.

10) Retirement and Other Employee Benefits:

10.1 Payments under the Group Gratuity policies of the Bank are made to Life Insurance Corporation of India as per actuarial contributions for the year as determined by the Corporation.

10.2 Payment under Group Superannuation policy to the eligible employees of the erstwhile Ashok Leyland

Finance Ltd. (ALFL) is made to Life Insurance Corporation of India as per actuarial contribution for the year.

10.3 Provident fund contributions are made under trust separately established for the purpose and the scheme

administered by Regional Provident Fund Commissioner (RPFC), as applicable. 10.4 Provision for leave encashment has been made in the accounts on the basis of actuarial valuation as at

the balance sheet date.

11) Segment Reporting:

The Bank operates in two segments of business: ‘Treasury’ and ‘Other Banking Operations’. The segments have been identified and reported taking into account the nature, returns and risks involved. The organization structure and the internal reporting structure are taken into account for the purpose of determining segment results.

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The revenues reported under ‘Treasury’ segment include interest income on investment portfolio, profit/ loss on sale of investments, profit/loss on foreign exchange transactions, equities, income from derivatives and money market operations. The expenses of this segment consist of interest expenses on funds borrowed from external sources as well as internal sources. The revenues of ‘Other Banking Operations’ segment consist of interest earned on loans and advances and other fee based income. The expenses mainly comprise interest paid on deposits and other infrastructure expenses. Certain expenses have been classified as unallocated expenses, which comprise common expenses of both the segments, which are not specifically allocated to the segments. Segment results include revenue as reduced by interest expenses and operating expenses for that segment. For this purpose, the fund transfer pricing mechanism followed is based on the cost of funds incurred.

12) Income-tax

Tax expenses comprise current, deferred and fringe benefit taxes. Current income tax and fringe benefit tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961. Deferred income taxes reflect the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Unrecognized deferred tax assets of earlier years are re-assessed and recognised to the extent that it has become reasonably certain that future taxable income will be available against which such deferred tax assets can be realized.

13) Earnings per Share

Earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period.

14) Provisions A provision is recognised when there is an obligation as a result of past event. It is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

15) Others

Cash and cash equivalents in the cash flow statement comprise cash and balances with RBI (Schedule VI) and balances with banks and money at call and short notice (Schedule VII).

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NOTES ON ACCOUNTS 1. Fixed Assets:

i) Cost of premises includes Rs.4.02 crores (previous year Rs. 4.02 crores) in respect of properties for which execution of documents and registration formalities are in progress. Of these properties, the Bank has not obtained full possession of one property having WDV of Rs. 1.96 crores (previous year Rs. 2.00 crores) and has filed a suit for the same.

ii) Operating leases: Transaction – I

(Rs. in crores) Particulars 2005-06 2004-05 Description of the asset Wind Turbine Generator–37 Nos. Gross carrying amount 25.68 25.68 Accumulated depreciation 4.07 2.71 Depreciation recognized during the current year

1.36 1.36

Contingent Rent recognized during the year

4.65 5.25

Minimum Lease Payments (MLP)

MLP based on the actual consumption of electricity at the contracted rates by the lessee. Accordingly, future minimum lease payments are indeterminate.

Transaction – II

(Rs. in crores) Particulars 2005-06 2004-05 Description of the asset Wind Turbine Generator – 88 Nos. Gross carrying amount 72.45 72.45 Accumulated depreciation 6.46 2.63 Depreciation recognized during the current year

3.83 2.54

Minimum Lease Payments (MLP) Not later than one year Later than one year and not later than

five years Later than five years

11.50 47.50

13.00

11.50 47.00

25.00

2. Other Assets:

i) ‘Non-banking assets acquired in satisfaction of claims’ include properties acquired in satisfaction of debts of Rs.5.27 crores (previous year Rs. 37.84 crores) in respect of which the Bank has entered into MOUs / settlement agreements. The stamp duty, registration charges, etc., will be accounted for on completion of legal formalities. ‘Non-banking assets acquired in satisfaction of claims’ also includes vehicles repossessed by the Bank, which are readily saleable, aggregating to Rs.57.40 crores (previous year Rs.41.20 crores).

ii) Other assets include advances given to dealers against vehicle financing schemes to the extent of Rs.18.59 crores (previous year Rs. 37.48 crores), cash collateral (including liquidity facility) of Rs. 294.77 crores (previous year Rs. 229.04 crores) and stock of gold on consignment basis of Rs. 34.33 crores (previous year Rs. Nil crores).

3. Other Liabilities and Provisions:

i) During the year, the Bank has issued on private placement basis 1171 unsecured redeemable, non-convertible subordinated bonds of Rupees Ten lacs each aggregating to Rs. 117.10 crores (previous year Rs.268.00 crores). These bonds qualify for classification as Tier II Capital.

ii) During the year, the Bank has issued on private placement basis 1000 unsecured non-convertible redeemable non-cumulative subordinated Upper - Tier II instruments of Rupees Ten lacs each aggregating to Rs. 100.00 crores of 15 years maturity. These bonds qualify for classification as Upper - Tier II Capital.

iii) Included in ‘Other Liabilities – Others’ are credit balances in nostro accounts aggregating Rs. 97.60 crores (previous year Rs. 14.26 crores).

4. Contingent Liability:

Claims against the Bank not acknowledged as debts include tax demands in respect of which the Bank is in appeal of Rs. 99.20 crores (previous year Rs. 68.87 crores) and the cases sub-judice Rs. 85.45 crores (previous year Rs. 328.47 crores). The above are based on the management’s estimate and no significant liability is expected to arise out of the same.

5. Miscellaneous income includes recovery from bad debts written off Rs. 86.30 crores (previous year Rs. 90.97

crores), lease rentals Rs.23.83 crores (previous year Rs. 21.77 crores) and others (processing charges, cheque return charges and depository services charges, etc.) Rs. 55.57 crores (previous year Rs. 39.73 crores).

6. In the case of one borrower, classified as a standard asset as per the extant income recognition, asset

classification and provisioning guidelines of the RBI, the Bank is contesting the restructuring package approved by the Corporate Debt Restructuring (CDR) Cell. The Bank has been legally advised that it has good chances of winning this case. Further, as the borrower has not renewed the security documents, the Bank, out of abundant caution, has filed a recovery suit against the borrower, which, based on legal advice, does not affect its asset classification. The Bank, on a prudential basis, has written off a portion of this standard asset. The

61

amount written off (Rs. 48.71 crores) has been included under “Provisions and Contingencies” in the profit and loss account.

7. In line with RBI guidelines vide circular No. DBOD. No. BP.BC. 38/21.04.141/2005-06 dated October 10, 2005,

Bank has transferred Rs. 78.90 crores from Investment Fluctuation Reserve (IFR) to Revenue and Other Reserves - Balance in Profit and Loss account.

8. Additional disclosures as per Reserve Bank of India guidelines are as under:

i). Capital Adequacy Ratio : Items 2005-2006 2004-2005 i) Capital Adequacy Ratio (CRAR) ii) CRAR – Tier I Capital (%) iii) CRAR – Tier II Capital (%)

10.54% 6.84% 3.70%

11.62% 7.24% 4.38%

ii). “Provisions and Contingencies” as charged to Profit and Loss account for the year consist of :

(Rs. in crores) 2005-2006 2004-2005

i) Income Tax / Wealth Tax / Deferred Tax/ Fringe Benefit Tax

22.37 50.38

ii) Depreciation on Investments (including premium amortized on Held to Maturity investments)

44.89 62.95

iii) Provision for non performing assets including bad debts written off

90.29

66.40

iv) Provision towards Standard Asset 13.08 1.10

iv). Other provision and contingencies towards write off of other assets/contingent obligations

17.12 10.25

Total 187.75 191.08

iii). Investments : (Rs. in crores)

2005-2006 2004-2005 (1) Value of Investments (i) Gross Value of Investments

i. In India ii. Outside India

(ii) Provision for Depreciation (a) In India (b) Outside India

(iii) Net Value of Investments (a) In India (b) Outside India

5476.715476.71

-66.8166.81

-5409.905409.90

-

4093.77 4093.77

- 24.60 24.60

- 4069.17 4069.17

- (2) Movements in provision held towards depreciation on

Investments : (i) Opening Balance

(ii) Add: Provision made during the year (iii) Less: Write-off/ write-back of excess provision

during the year (iv) Closing Balance

24.60 44.89 (2.68)

66.81

14.46 11.99 (1.85)

24.60

iv) Business ratios:

March 31, 2006

March 31, 2005

i) Interest income as a percentage of working funds 7.21% 8.11% ii) Non-interest income as a percentage of working funds 1.37% 1.79% iii) Operating profit as a percentage of working funds 1.36% 2.87% iv) Return on assets 0.22% 1.50% v) Business (deposits plus advances) per employee

including trainees (Rs. in lacs) 880.18 925.78

vi) Profit per employee including trainees (Rs. in lacs) 1.56 10.12 Working funds are calculated at the average of working funds as per the Bank’s monthly returns filed with the RBI.

v) (a) Maturity Pattern of rupee denominated assets and liabilities as at March 31, 2006:

(Rs. in crores) Maturity Buckets Loans &

Advances Investment Securities

Deposits Borrowings

1-14 Days 567.85 597.84 1353.86 17.07 15-28 Days 1036.63 43.28 880.58 - 29 days to 3 months 1313.37 29.79 3170.50 100.00 Over 3 months to 6 months 868.19 151.15 1180.40 35.00 Over 6 months to 12 months 1021.63 12.39 1293.73 20.00 Over 1 year to 3 years 2054.13 267.27 3877.81 50.00 Over 3 years to 5 years 1259.56 747.93 1415.05 - Over 5 years 858.05 3560.25 1384.62 -

Total 8979.41 5409.90 14556.55 222.07

62

b) Maturity Pattern of rupee denominated assets and liabilities as at March 31, 2005: (Rs. in crores)

Maturity Buckets Loans & Advances

Investment Securities

Deposits Borrowings

1-14 Days 1543.86 - 1953.45 58.75 15-28 Days 648.52 59.81 845.86 23.52 29 days to 3 months 1927.04 23.04 2589.24 116.28 Over 3 months to 6 months 645.24 915.33 1610.87 52.50 Over 6 months to 12 months 1651.33 19.47 1911.78 15.00 Over 1 year to 3 years 1289.81 309.91 2495.55 55.00 Over 3 years to 5 years 514.33 688.51 804.66 - Over 5 years 328.67 2053.10 572.08 -

Total 8548.80 4069.17 12783.49 321.05 vi) a) Maturity Pattern of foreign currency denominated assets and liabilities as at March 31, 2006:

(Rs. in crores) Maturity Buckets Loans &

Advances Deposits Borrowings Other

assets Other

liabilities 1-14 Days 205.34 58.72 71.39 1.32 97.48 15-28 Days 70.41 65.64 48.80 - - 29 days to 3 months 37.35 33.60 104.47 - - Over 3 months to 6 months 17.88 50.33 88.22 - - Over 6 months to 12 months - 94.55 - - - Over 1 year to 3 years 0.07 140.51 - - - Over 3 years to 5 years - 6.27 - - - Over 5 years - 0.13 - 8.03 -

Total 331.05 449.75 312.88 9.35 97.48

b) Maturity Pattern of foreign currency denominated assets and liabilities as at March 31, 2005: (Rs. in crores)

Maturity Buckets Loans & Advances

Deposits Borrowings Other assets

Other liabilities

1-14 Days 298.88 10.85 144.45 - - 15-28 Days 48.27 113.95 - - - 29 days to 3 months 55.30 30.36 122.62 - - Over 3 months to 6 months 28.00 21.73 22.50 - - Over 6 months to 12 months 20.44 46.32 - - - Over 1 year to 3 years 0.06 107.51 - - - Over 3 years to 5 years - 0.06 - - - Over 5 years - - - - -

Total 450.95 330.78 289.57 - -

vii). Lending to sensitive sectors: A) Exposure to Real Estate Sector:

(Rs. in crores) Items 31/3/2005 31/3/2006 a) Direct Exposure

(i) Residential Mortgages

(ii) Commercial Real Estate *

(iii) Investments in Mortgage Backed Securities (MBS) and other securitised Exposures : a) Residential, b) Commercial Real Estate

b) Indirect Exposure

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

Total Real Estate Exposure

144.26

145.43

- -

415.49

705.18

47.45

145.26

- -

526.91

719.62 *It does not include corporate lending backed by mortgage of land and building.

B) Exposure to Capital Market :

(Rs. in crores) Items 2005-2006 2004-2005 (i) Investments made in equity shares, (ii) Investments in bonds/ convertible debentures (iii) Investments in units of equity- oriented mutual funds (iv) Advances against shares to individuals for investment in

equity shares (including IPOs/ESOPS), bonds and debentures, units of equity oriented mutual funds

(v) Secured and unsecured advances to stockbrokers and guarantees issued on behalf of stockbrokers and market makers

Total Exposure to Capital Market (i + ii + iii + iv +v) (vi) of (v) above, the total finance extended to stockbrokers

for margin trading

18.06 -

-

13.27

133.79

165.12

21.90 -

-

17.32

90.52

129.74-

63

Lending to capital market sector represents fund and non-fund based facilities. Recoverability of the debts is sensitive to capital market fluctuations. The above does not include advances to individuals against pledge of equity shares for personal purposes of Rs.36.81 crores (previous year Rs. 11.33 crores) in line with the guidelines issued by RBI vide its circular No. DBOD BP.BC.119/21.04.137/2000-01 dated May 11, 2001.

viii) Single borrower limit and Group Borrower Limit : During the year the Bank has not exceeded the prudential credit exposure limit in respect of Single

Borrower and Group Borrowers.

ix) Exposure to country risk : a) In terms of Reserve Bank of India circular No. DBOD BP.BC.96/21.04.103/ 2003-2004 dated June 17,

2004 the exposure of the Bank to country risk is as under : (Rs. in crores)

Sr. Risk category ECGC classification

2005-2006

2004-2005

1 Insignificant A1 129.61 166.39 2 Low A2 36.10 76.85 3 Moderate B1 84.35 4.75 4 High B2 12.20 3.54 5 Very High C1 3.85 0.53 6 Restricted C2 2.44 - 7 Off Credit D 0.89 -

Total 269.44 252.06 b) No provision is considered necessary against exposure to country risk.

x) Provision on Standard Assets:

(Rs. in crores) Items 2005-2006 2004-2005 Cumulative Provision held for Standard Assets 35.01 21.93

xi) Non-Performing Assets:

(Rs. in crores) Items 2005-2006 2004-2005 (i) Net NPAs to Net Advances (%) (ii) Movement in NPAs (Gross)

a) Opening Balance b) Additions during the year c) Reductions during the year d) Closing Balance

(iii) Movement in Net NPAs a) Opening Balance b) Additions during the year c) Reductions during the year d) Closing Balance

(iv) Movement in provisions for NPAs

(excluding provisions on standard assets) a) Opening Balance b) Provisions made during the year c) Write-off/write back of excess provisions d) Closing Balance

2.09%

320.53 108.96 160.66 268.83

244.27 67.38

116.68 194.97

76.26 41.58 43.98 73.86

2.71%

259.36 288.64 227.47 320.53

212.32 103.35 71.40

244.27

47.04 185.29 156.07 76.26

xii) a) Issuer composition of Non-SLR investments as at March 31, 2006:

(Rs. in crores) No. Issuer

Amount

Extent of private placement

Extent of ‘below investment grade’ securities

Extent of ‘unrated’ Securities

Extent of ‘unlisted’ securities

1 PSUs 1.86 - - 0.04 0.04 2 FIs 19.58 - - - - 3 Banks 48.75 48.75 - 11.00 11.00 4 Private corporates 47.72 12.27 - - 45.21 5 Subsidiaries/ Joint

Ventures 0.50 0.50 - 0.50 0.50

6 Others 715.84 - - - 1.00 7 Provision held

towards depreciation 10.03 - - - -

Total 824.22 61.52 - 11.54 57.75

64

b) Issuer composition of Non-SLR investments as at March 31, 2005: (Rs. in crores)

No. Issuer

Amount

Extent of private placement

Extent of ‘below investment grade’ securities

Extent of ‘unrated’ Securities

Extent of ‘unlisted’ securities

1 PSUs 18.79 - - 0.05 0.05 2 FIs 24.62 - - - 3 Banks 68.75 68.75 - 11.00 11.00 4 Private corporates 30.31 12.75 - - 20.63 5 Subsidiaries/ Joint

Ventures 0.50 0.50 - 0.50 0.50

6 Others 505.74 - - - 1.00 7 Provision held

towards depreciation

8.32 - - - -

Total 640.39 82.00 - 11.55 33.18

Information regarding maturity pattern of assets and liabilities [Ref. items 8(v), 8(vi)], lending to sensitive sectors [Ref. item 8 (vii)] and Issuer composition of Non-SLR investments [Ref item 8 (xii)] has been compiled by the management and relied upon by the Auditors.

xiii) Non-performing Non-SLR investments:

(Rs. in crores) Particulars 2005-2006 2004-2005 Opening balance 1.36 1.36 Additions during the year since 1st April

0.50 -

Reductions during the above period

0.09 -

Closing balance 1.77 1.36 Total provisions held 1.77 1.36

xiv) Details of Repo/Reverse Repo (including liquidity adjustment facility) deals done during the year ended

March 31, 2006 : (Rs. in crores)

Minimum outstanding

during the year

Maximum outstanding during the

year

Daily average outstanding

during the year

As on March 31,

2006

Securities sold under repos

- (-)

356.33 (1447.15)

17.07 (151.41)

- (-)

Securities purchased under reverse repo

- (-)

575.00 (1700.00)

9.65 (121.87)

575.00 (-)

Note : Amounts in brackets represent previous year figures

xv) Details of Loan Assets subjected to Restructuring : (Rs. in crores)

Items 2005-2006 2004-2005 (i) Total Amount of loan assets subjected to restructuring,

rescheduling, renegotiation; -of which under CDR

(ii) The amount of Standard assets subjected to restructuring,

rescheduling, renegotiation; -of which under CDR

(iii) The Amount of Sub-Standard assets subjected to

restructuring, rescheduling, renegotiation; -of which under CDR

(iv) The Amount of Doubtful assets subjected to restructuring,

rescheduling, renegotiation; -of which under CDR

Note: [ (i) = (ii) + (iii) + (iv)]

62.07

-

62.07 -

- -

-

30.73 21.81

21.81 -

8.92 -

xvi) Details of financial assets sold to Securitisation / Reconstruction Company for asset reconstruction :

(Rs. in crores) Items 2005-2006 2004-2005 (i) No of accounts (ii) Aggregate value (net of provisions) of accounts sold

to SC/RC (iii) Aggregate consideration (iv) Additional consideration realized in respect of

accounts transferred in earlier years (v) Aggregate gain/(loss) over net book value

7 28.38

29.80 0.19

1.42

1 -

4.64 -

-

65

xvii) Assets Securitised :

Items 2005-2006 2004-2005 (i) Number of deals concluded (ii) Total number of loans securitised (iii) Book Value of Loans securitised (Rs. crores) (iv) Sale consideration received for the securitised assets (Rs.

crores) (v) Gain/loss on sale on account of securitisation (Rs. crores)* Outstanding value of services provided : Outstanding value of credit enhancement Outstanding value of composite Cash collateral Outstanding value of First Loss Facility Outstanding value of Second Loss Facility (Guarantee) ** Outstanding value of Liquidity facility

6 95827

1425.16

1487.50

41.84

(Rs. in crores) 141.63 185.94 80.46 80.46

28.36

15 278657

3275.85

3410.76

104.94

(Rs. in crores) 315.91 229.04

- -

- * Net of securitisation expenses and finance charges for the month in which the assets were securitised. ** Second loss facility has been provided in the form of a Guarantee by a third party (second loss facility provider)

xviii) a) Forward Rate Agreement/Interest Rate Swap :

(Rs. in crores) Items 2005-2006 2004-2005

i) The notional principal of swap agreements ii) Losses, which would be incurred if counter-

parties failed to fulfill their obligations under the agreements.

iii) Collateral required by the bank upon entering into swaps

iv) Concentration of credit risk arising from the swaps (with banks)

v) The fair value of the swap book

6775.00

45.77

-

62%

(5.25)

3675.00

7.08

-

56%

0.16

b) Exchange Traded Interest Rate Derivatives:

The Bank has not undertaken exchange traded interest rate derivative transactions during the year.

c) Disclosures on risk exposure in Derivatives:

The Bank has entered into interest rate swap contracts to hedge on-balance sheet assets & liabilities and for trading purposes.

The Bank’s Market Risk Management Policy, approved by the Board of Directors, covers both on and

off–balance sheet positions including derivatives. The Bank has framed the policy for using derivative products in an efficient manner as tools for mitigating market risk, which covers dealing guidelines and prescribes exposure limits for derivative products.

Risk Management Department independently monitors the derivative position of the Bank, and reports Marked to Market position to top management on a daily basis.

Effectiveness of the hedge portfolio is reviewed periodically. The Basis Present Value (BPV) of the entire portfolio is also computed on a daily basis.

Derivative contracts transacted during the current year were in accordance with the prescribed Market Risk Policy and the Funds & Investment Policy approved by the Board.

d) Disclosure on risk exposure in derivatives: (Rs. in crores)

SI. No

Particulars Currency Derivatives

Interest rate Derivatives

1 Derivatives (Notional Principal Amount) - a) For hedging - 125.00 b) For trading - 6650.00 2 Marked to Market Positions - a) Asset (+) - - b) Liability (-) - (-)0.72 3 Credit Exposure - 74.14 4 Likely impact of one percentage change in interest rate

(100*PV01) (Note 1) -

a) on hedging derivatives - 0.03 b) on trading derivatives - 0.04 5 Maximum and Minimum of 100*PV01 observed during the year

(Note 2) -

a) on hedging - Max: 0.05

66

Min :0.03 b) on trading - Max: 0.05

Min :0.26 Note 1: Based on the PV01 of the outstanding derivatives as at March 31, 2006. Note 2: Based on the absolute value of PV01 of the derivatives outstanding during the year.

Derivative contracts that are “back-to-back” have not been included herein. Foreign Currency exposure not hedged by derivative instruments Rs.11.10 crores (Net Open position as

on March 31, 2006). 9. Disclosure of penalties imposed by RBI

The Reserve Bank of India has not imposed any penalty on the Bank u/s 46(4) of the Banking Regulation Act, 1949.

10. There has been no material change in Accounting Policies adopted during the year ended March 31, 2006

from those followed for the year ended March 31, 2005, except change in valuation of investments on weighted average basis instead of FIFO (First In First Out) basis, resulting in income being higher by Rs. 1.02 crores.

11. Segment Reporting (AS-17):

The Bank operates in two business segments, viz. Treasury and Other Banking Operations. There are no significant residual operations carried by the Bank.

Summary (Rs. in crores)

Business Segments Treasury

Other Banking Operations Total

Particulars 05-06

04-05 05-06

04-05 05-06 04-05

Revenue 357.20 408.62 1293.05 1178.09

1650.25 1586.71Less : Inter-segment revenue

(235.86) (201.56)

Total Income

1414.39 1385.15

Result 8.05 92.17 261.97 343.04 270.02 435.21

Unallocated Expenses

45.45 33.97

Operating Profit

224.57 401.24Income Taxes and otherprovisions

187.75 191.09

Net Profit

36.82 210.15

Other Information

Segment Assets 6468.65 4750.37 10298.83 9965.45 16767.48 14715.82

Unallocated Assets

855.04 906.19

Total Assets

17622.52 15622.01

Segment Liabilities 1059.74 791.31 15358.73 13591.26 16418.47 14382.57

Unallocated liabilities

1204.05 1239.44

Total Liabilities

17622.52 15622.01

Geographic Segments: The business operations of the Bank are largely concentrated in India. Activities outside India are restricted to resource mobilization in the international markets. Since the Bank does not have material earnings emanating from foreign operations, the Bank is considered to operate only in domestic segment.

12. Related party transactions (AS-18):

The following is the information on transactions with related parties. Key Management Personnel: Mr. Bhaskar Ghose, Managing Director

Mr. S. Nagarajan, Jt. Managing Director Associates: Ashley Holdings Limited

Ashley Investments Limited IndusInd Information Technology Limited. Allfin Services & Solutions Private Limited Ashley Transport Services Private Limited Allfin Marketing Services Private Limited Allfin Insurance Specialities Private Limited Allfin Distribution Private Limited

IBL Services & Solutions Private Limited Subsidiaries: ALF Insurance Services Private Limited

67

Summarised transactions with related parties for the year ended March 31, 2006 : (Rs. in crores)

Items/ Related Party

Parent (as per ownership of

control)

Subsidiaries

Associates

Key Management

personnel

Relatives of key Management

Personnel

Total

Borrowings - - - - - -

Deposits - - 0.70 0.08 0.03 0.81

Placement of deposits

- - - - - -

Advances - - 3.15 - - 3.15

Investments - 0.50 8.50 - - 9.00

Non-funded commitments

- - - - - -

Leasing/HP arrangements availed

Leasing/HP arrangements provided

- - - - - -

Purchase of fixed assets

- - - - - -

Sale of fixed assets - - 7.50 - - 7.50

Interest paid - - 0.15 0.02 0.01 0.18

Interest received - - 0.23 - - 0.23

Rendering of services - - 12.37 - - 12.37

Receiving of Services - - 22.93 - - 22.93

Management Contracts

- - - 1.05 - 1.05

The following balances represent the maximum balance payable to / receivable from the related parties during the year ended March 31, 2006 :

(Rs. in crores)

Items/ Related Party

Subsidiaries

Associates Key

Management personnel

Relatives of key Management

Personnel

Total

Borrowings - - - - -

Deposits - 3.51 0.18 0.06 3.75

Placement of deposits - - - - -

Advances - 4.15 - - 4.15

Investments 0.50 8.50 - - 9.00

Non-funded commitments

- - - - -

Leasing/HP arrangements availed

- - - - -

Leasing/HP arrangements provided

- - - - -

Summarised Transactions with related parties for the year ended March 31, 2005: (Rs. in crores)

Items/ Related Party Subsidiaries Associates Key Management

Personnel

Relatives of Key Management

Personnel

Total

Borrowings - - - - -

Deposits 3.21 0.24 0.03 3.48

Placement of Deposits

- - - - -

Advances - 4.15 - - 4.15

Investments 0.50 8.50 - - 9.00

Non-funded commitments

- - - - -

Leasing/HP arrangements availed

- - - - -

68

Leasing/HP arrangements provided

- - - - -

Purchase of fixed assets

- - - - -

Sale of fixed assets - - - - -

Interest Paid - 0.14 0.03 - 0.17

Interest Received - 0.20 - - 0.20

Receiving of Services - 13.89 - - 13.89

Rendering of Services

- 4.50 - - 4.50

Management Contracts

- - 0.89 - 0.89

The following balances represent the maximum balance payable to / receivable from the related parties during the year ended March 31, 2005 :

(Rs. in crores)

Items/ Related Party

Subsidiaries

Associates Key

Management personnel

Relatives of key Management

Personnel

Total

Borrowings - - - - -

Deposits 6.26 3.21 0.39 0.07 9.93

Placement of deposits - - - - -

Advances - 6.15 - - 6.15

Investments 0.50 9.50 - - 10.00

Non-funded commitments

- - - - -

Leasing/HP arrangements availed

- - - - -

Leasing/HP arrangements provided

- - - - -

13. Earning per share: (AS-20):

The numerators and denominators used to calculate the earning per share as per AS-20 are as under:

Year ended March 31, 2006

Year ended March 31, 2005

Profit attributable to Equity Share holders (Rs. in crores)

36.82 205.52

Weighted average number of equity shares outstanding during the year

290,317,636 290,693,415

Nominal value of Equity Shares (Rs.) 10 10 Basic / Diluted Earnings per Share (Rs.) 1.27 7.07

14. ALF Insurance Services Pvt. Ltd., subsidiary of the Bank is yet to commence operations for want of

necessary regulatory approvals. Accordingly, no consolidated financial statements have been drawn up as per AS-21 “Consolidated Financial Statements”.

15. Taxation:

(a). Provision for tax has been made after considering contingency provision as admissible deduction. (b). Deferred tax (AS-22): The major components of deferred tax assets/ liabilities as on March 31, 2006

are as under: (Rs. in crores)

31.03.2006 Deferred Tax

31.03.2005 Deferred Tax

Timing difference on account of : Assets Liabilities Assets Liabilities Difference between book depreciation and depreciation under the Income Tax Act, 1961

- 41.62 - 36.94

Difference between Provisions for doubtful debts and advances and amount allowable under Section 36(1)(viia) of the Income Tax Act 1961

43.31 - 35.20 -

Interest on securities - 14.69 1.22 - Income Recognition 0.01 - - 13.42 Others 2.12 - 1.96

Net closing balance carried to Balance Sheet - 10.87 11.98 16. In the opinion of the Bank there is no impairment of its fixed Assets to any material extent as at 31st March 2006

requiring recognition in terms of Accounting Standard 28.

17. The Bank does not have any non-cancelable operating leases during the year, where it is the lessee.

69

18. Previous year’s figures have been regrouped / reclassified wherever necessary.

IndusInd Bank Limited

Cash Flow Statement for the year ended March 31, 2006 (Rs. in crores)

For the year ended 31.3.2006

For the year ended 31.3.2005

A. Cash Flow from Operating Activities Net Profit after taxes 36.82 210.15 Adjustments for non-cash charges : Depreciation 35.99 44.87 Investments 44.89 62.95 Tax Provisions (Income Tax/ Wealth Tax/ Deferred Tax) 22.37 50.38 Loan loss and Other Provisions 120.49 77.75 Others (7.53) (0.61) Operating Profit before Working Capital changes 253.03 445.49 Adjustments for : Increase in trade and Other Receivables (416.31) (2123.12) Increase in Inventories (Investments) (1385.62) 350.63 Increase in Trade Payables 1855.68 351.52 Others - - Cash generated from Operations 306.78 (975.48) Direct taxes paid (45.33) (69.65) Cash flow before Extraordinary items 261.45 (1045.13) Extraordinary items - - Net Cash from Operating Activities 261.45 (1045.13) B. Cash Flow from Investing Activities Purchase of Fixed Assets (58.93) (69.73) Sale of Fixed Assets 15.38 1.92 Net Cash used in Investing Activities (43.55) (67.81) C. Cash Flow from Financing Activities Proceeds from unpaid Share Capital - 0.42 Dividends paid (59.09) (74.88) Proceeds from Issue of Unsecured Non- Convertible

Redeemable Subordinate Tier II Bonds 117.10 268.00

Proceeds from Unsecured Non-convertible Redeemable Non-Cumulative subordinated Upper Tier II Bonds

100.00

Redemption of Sub-ordinate Tier II capital (50.00) - Redemption of NCRCPS - (97.00) Net Cash used in Financing Activities 108.01 96.54 Net increase in Cash and Cash Equivalents 325.91 (1016.40) Cash and Cash Equivalents as on the first day of the year 1154.59 2170.99 Cash and Cash Equivalents as on the last day of the year 1480.50 1154.59

Notes : 1. The above Cash Flow Statement has been prepared under the indirect method as set out in Accounting Standard 3 on Cash Flow

Statement issued by the Institute of Chartered Accountants of India (ICAI). 2. Figures in brackets indicate cash outflow. 3. Refer to note 15 under Schedule No. XVII. 4. Previous year’s figures have been regrouped and recast to conform to the current year’s classification. Key Accounting Ratios

For the Year/ Half Year ended March 31, 2002

March 31, 2003

March 31, 2004

March 31, 2005

March 31, 2006

Earnings per Share (EPS) (Rs.) 3.17 4.09 9.02 7.07 1.27Book Value per Share/ Net Asset value per share (Rs.)

35.11 27.35 27.53 28.56 29.83

Return on Net worth (%) 9.03 14.97 32.74 25.34 4.25OTHER RATIOS Net NPA to Net Advances Ratio (%) 6.59 4.25 2.72 2.71 2.09Interest Income/ Working Funds (%) 10.15 9.17 8.29 8.11 7.21Non-Interest Income/ Working Funds (%) 2.63 3.18 2.9 1.79 1.37Return on Assets (%) 0.5 0.91 1.74 1.50 0.22Business per Employee (Rs. in lacs) 1587.91 1284.06 1079.95 925.78 880.18Net Profit per Employee (Rs. in lacs) 6.88 9.5 14.98 10.12 1.56Capital Adequacy Ratio (%) Tier I 10.45 10.06 8.91 7.24 6.84Tier II 2.06 2.07 3.84 4.38 3.70Credit/ Deposit Ratio (%) (net) 66.95 62.65 69.75 68.63 62.04Gross Profit/ Average Working Funds (%) 3.61 4 3.74 2.87 1.36Return on Average Networth (%) 9.17 15.49 37.36 25.79 4.34Yield on Advances (%) 12.45 11.71 11.64 11.87 9.66Yield on Investments (%) 10.9 8.52 6.46 5.91 6.73Cost of Deposits (%) 9.15 7.77 6.31 5.39 5.87

All the Financial Ratios/ Capital Adequacy Ratios as specified in the offer document and the disclosures regarding NPA’s conform to the norms as specified by RBI

70

PART VI STATEMENT OF DIVIDEND DECLARED BY THE BANK AND ITS SUBSIDIARIES A. HOLDING COMPANY INDUSIND BANK LIMITED Year ended March 31,

2002March 31,

2003March 31,

2004March 31,

2005March 31,

2006Number of shares (in crores) 16 22.02 29.07 29.03 29.03Rate of Dividend (%) 14% 14% 22.50% 18.00% -Amount of Dividend (Rs. in crores) 22.4 30.83 65.41 52.26 - B. SUBSIDIARIES M/s ALF Insurance Services Pvt. Ltd.

Year ended March 31, 2006

Number of shares (in crores) 0.05 Rate of Dividend (%) Nil Amount of Dividend (in Rs.) Nil

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III. STATUTORY AND OTHER INFORMATION Minimum Subscription As the Issue of Bonds is being made on private placement basis, the requirement of minimum subscription shall not be applicable. Expenses of the Issue The expenses of the Issue payable by the Bank such as fees to the Arrangers, reimbursement of expenses and payments to the Registrars to the Issue, printing expenses, listing fees, fees of the Trustees for the Bondholders, stamp duty and other expenses will be met out of the proceeds of the Issue. Fees Payable to the Intermediaries The fees payable and the terms of appointment of intermediaries such as Arrangers to the issue, Registrars to the issue, trustees for the bondholders, credit rating agency(ies) etc are set out in the relevant appointment letters, copies of which are kept open for inspection at the Registered Office of the Bank. Underwriting and Procurement Commission/ Brokerage The issue is not underwritten and hence no underwriting commission is payable. Previous Issues by the Bank The Bank went for its maiden equity issue of 4,00,00,000 shares of Rs. 10/- each, for cash at a premium of Rs. 35/- per share aggregating to Rs. 180.00 crores. The issue opened on November 25, 1997 and closed on December 02, 1997. The issue was oversubscribed by 2.56 times. The shares were allotted on December 24, 1997. The dispatch of share certificates and refund orders was completed on January 16, 1998 and January 01, 1998 respectively. The shares have been listed at Mumbai and National Stock Exchanges on January 29, 1998 and January 29, 1998 respectively. Besides the above the Bank has raised Tier II Capital by way of private placement of unsecured subordinated bonds to augment capital adequacy as under:

Issue Series Year of Placement

Deemed Date of Allotment

Issue Amount (Rs. in Crores)

Tenure (in months)

Credit Rating

Coupon Rate (% p.a.,

annually)

Redemption Date

Series I 2000 31.03.2000 50.00 63 A+ (ind) by Fitch

12.20 30.06.2005

Series II 2001 15.02.2001 52.00 63 A+ (ind) by Fitch

12.00 15.05.2006

Series III 2003 31.03.2003 35.50 63 A+ (ind) by Fitch

8.00 30.06.2008

Series IV 2004 31.03.2004 66.50 63 A+ (ind) by Fitch

7.00 30.06.2009

Series V 2004 30.06.2004 98.00 70 / 118 A+ (ind) by Fitch

6.80 / 7.00 30.04.2010 / 30.04.2014

Series VI 2005 31/3/2005 172.10 63 / 111 A+ (ind) by Fitch and LA+ by ICRA Ltd.

8.10 / 8.50 / 190 bps over

and above 1 yr G-Sec Reuter

INBMK

30/6/2010 and

30/6/2014

Series VII 2005 30/12/2005 115.00 113 A+ (ind) by Fitch and LA+ by ICRA Ltd.

8.40 30/05/2014

Series VIII 2006 31.03.2006 100.00 180 A (ind) by Fitch and LA by ICRA

9.60% Semi-annual

30.03.2021

Series IX 2006 30.09.2006 80.20 180 A (ind) by Fitch and LA by ICRA

Semi-annual 10.25% p.a.

for first 10 years and

10.75% p. a. from 11th year

30.09.2021

Except as stated elsewhere in the Information Memorandum, the Bank has not issued any shares/ debentures/ bonds or agreed to issue any shares/ debentures/ bonds for cash or otherwise within the two years preceding the date of this Information Memorandum. Offer Otherwise than for Cash IndusInd Enterprises and Finance Ltd (IEFL) and Ashok Leyland Finance Ltd (ALFL) have merged with the Bank in 2002-03and 2003-04 respectively. The shareholders of IEFL and ALFL were offered shares in the Bank for the shares held by them in the erstwhile companies in the ratio of 1:1 and 9:4 respectively. There have not been any issues for consideration other than cash, save as except stated elsewhere in the Information Memorandum. Option to Subscribe Save as otherwise stated in the Information Memorandum, the Bank has not given any person nor does it propose to give any person any option to subscribe to the shares/ debentures/ bonds of the Bank. Terms of Appointment of Chairman In exercise of the powers conferred by section 10B (1A) of the Banking Regulation Act, 1949, the Reserve Bank of India, had approved appointment of Mr. R. J. Shahaney as Chairman (Non-Executive) of the Bank. He was getting sitting fees of every meeting of Board of Directors or Committees thereof attended by him.

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Terms of Appointment of Managing Director In exercise of the powers conferred by section 35B of the Banking Regulation Act, 1949, the Reserve Bank of India, has approved appointment of Mr. Bhaskar Ghose as Managing Director of the Bank. He is being paid remuneration as approved by the Reserve Bank of India. Terms of Appointment of Joint Managing Director In exercise of the powers conferred by section 35B of the Banking Regulation Act, 1949, the Reserve Bank of India, has approved appointment of Mr. S.Nagrajan as Joint Managing Director of the Bank. Payment or Benefit to the Directors and Officers of the Bank Except the benefits as provided under the relevant rules framed by the Board of Directors of the Bank and the Reserve Bank of India from time to time, the directors of the Bank are not eligible to any additional benefits upon termination of employment. Revaluation of Assets Nil

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IV. MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION The main provisions of the Articles of Association of the Bank (hereinafter referred to as the Article(s) are reproduced below. Share Certificates (Article 15 (a)) 15 (a). Every member shall be entitled, without payment, to one or more certificates in marketable lots, for all the shares of each

class or denomination registered in his name, or if the Board may from time to time determine) to several certificates, each for one or more of such shares and the Bank shall complete and have ready for delivery such certificates within three months from the date of allotment, unless the conditions of issue thereof otherwise provide, or within one month of the receipt of application of registration of transfer, transmission, sub-division, consolidation or renewal of any of its shares as the case may be. Such certificate shall be issued only in pursuance of a resolution passed by the Board and on surrender to the Bank its letter of allotment or its fractional coupons or requisite value save in cases of issues against letters of acceptance or renunciation or in cases of issue of bonus shares. Every such certificate of shares shall specify the number and distinctive numbers of shares in respect of which it is issued and the amount paid-up thereon and shall be in such form as the Board may prescribe or approve and shall be under the seal of the Bank. Every such certificate shall be issued under the seal of the Bank, which shall be affixed in the presence of two Directors or persons acting on behalf of the Directors or persons acting on behalf of the Directors under a duly registered power of attorney, and the Secretary or some other person appointed by the Board for the purpose; and two directors or their attorney, and the Secretary or other person shall sign the share certificate, provided that if the composition of the Board permits it, at least one of the aforesaid two Directors shall be a person other than a Managing or Whole-time Director. Particulars of every share Certificate issued shall be entered in the Register of Members against the name of the person to whom it has been issued, indicating the date of issue.

15 (b). Any two or more joint allottees of a share shall for the purpose of this Article, be treated as a single member, and the certificate of any share, which may be the subject of joint ownership, if delivered to the person first named as such joint owners, shall be sufficient delivery to all of them.

15 (c). A Director may sign a share certificate affixing his signature thereon by means of any machine, equipment or other mechanical means, such as engraving in metal or lithography, but not by means of a rubber stamp, provided that the Director shall be responsible for the safe custody of such machine, equipment or other material used for the purpose.

Issue of new certificate in place of one defaced, lost or destroyed (Article 16 (a)) 16 (a). If any certificate be worn out, defaced, mutilated or torn or if there be no further space on the back thereof for endorsement

of transfer, then upon production and surrender thereof to the Bank, a new Certificate may be issued in lieu thereof, and if any certificate be lost or destroyed then upon proof thereof to the satisfaction of the Bank and on execution of such indemnity as the Bank deems adequate, being given, a new Certificate in lieu thereof shall be given to the party entitled to such lost or destroyed certificate. Every Certificate under the Articles shall be issued without payment of fees if the Board so decides, or on payment of such fees (not exceeding Rs. 2/- for each certificate) as the Board shall prescribe. Provided that no fee shall be charged for issue of new certificates in replacement of those which are old, defaced or worn out or where there is no further space on the back thereof for endorsement of transfer; Provided that notwithstanding what is stated above the Board shall comply with such Rules or Regulations or requirements of any Stock Exchange or the Rules made under the Act or the rules made under the Securities Contracts (Regulation) Act, 1956 or any other Act, or rules applicable in this behalf.

16 (b). When a new share certificate has been issued in pursuance of clause (a) of this Article, it shall state on the face of it and

against the stub or counterfoil to the effect that it is issued in lieu of Share Certificate No………Sub-divided/ replaced/ on consolidation of shares.

16 (c). If a share certificate is lost or destroyed, a new certificate in lieu thereof shall be issued only with the prior consent of the

Board. 16 (d). When a new share certificate has been issued in pursuance of clause © of this Article, it shall state on the face of it and

against the stub or counterfoil to the effect that it is “duplicate issued in lieu of share certificate No…..” The word “Duplicate” shall be stamped or punched in both letters across the face of the share certificate.

16 (e). Where a new share certificate has been issued in pursuance of clause (a) or clause (c) of the Article, particulars of every

such share certificate shall be entered in a Register of Renewed and Duplicate Certificate indicating against the names of the persons to whom the certificate is issued, the number and date of issue of the share certificate in lieu o which the new certificate is issued, and necessary changes be indicated in the Register of Members by suitable cross reference in the ‘Remarks” column.

16 (f). All blank forms to be issued for issue of share certificate shall be printed and the printing shall be done only on the authority

of a resolution of the Board. The blank forms shall be consecutively machine numbered and the forms and the blocks and engravings relating to the printing of such forms shall be kept in the custody of the Secretary or of such other person as the Bank may appoint for the purpose, and the Secretary or the other person as aforesaid shall be responsible for rendering an account of these forms to the Board.

16 (g). The Managing Director of the Bank for the time being or if the Bank has no Managing Director, every Director of the Bank

shall be responsible for the maintenance, preservation and safe custody of all books and documents relating to the issue of share certificates except the blank forms of share certificates referred to in sub-Article (f).

16 (h). All books referred to in sub-Article (g) shall be preserved in good order permanently. 16 (i). The Provisions of the Article shall mutatis mutandis apply to bonds/ debentures of the Bank. The first named or joint holder deemed sole holder (Article 17) 17. If any share stands in the names of two or more persons, the person first named in the register shall as regards receipts of

dividends or bonus or service of notice and all or any other matter connected with the Bank, except voting, at meetings, and the share, deemed the sole holder thereof, but the joint holders of a share shall be severally as well as jointly liable for the payment of all installments and calls due in respect of such shares for all incidents thereof according to the Bank regulations.

74

Forfeiture of Shares If call or installment not paid, notice may given (Article 36) 36. If any member fails to pay any call or installment on or before the day appointed for the payment of the same the Board may

at any time thereafter issue notice to such member requiring him to pay the same, together with any interest that may have accrued and all expenses that may have been incurred by the Bank by reason of such non payment.

Form of Notice (Article 37) 37. The notice shall name a day (not being less than Thirty days from the date of the notice) and a place or places on and at

which such call or installment and such interest and expenses as aforesaid are to be paid. The notice shall also state that in the event of non payment at or before the time, and at the place appointed the shares in respect of which such call was made or installment is payable will be liable to be forfeited.

If notice not complied with shares may be forfeited (Article 38) 38. If the requisitions of any such notice as aforesaid be not complied with be not complied with any shares in respect of which

such notice has been given may, at any time thereafter, before payment of all calls or installments, interest and expenses, due in respect thereof, be forfeited by a resolution of the Board to that effect. Such forfeiture shall include all dividends declared in respect of the forfeited shares and not actually paid before the forfeiture.

Notice of forfeiture to a Member (Article 39) 39. When any shares shall have been so forfeited, notice of the forfeiture shall be given to the member in whose name it stood

immediately prior to the forfeiture, and an entry of the forfeiture, with the date thereof, shall forthwith be made in the Register of Members, but no forfeiture shall forthwith be made in the Register of Members, but no forfeiture shall be in any manner invalidated, by any omission or neglect to give such notice or to make any such entry as aforesaid.

Forfeited Share to become property of the Bank (Article 40) 40. Any share so forfeited shall be deemed to be the property of the Bank, and the Board may sell, re-allot or otherwise dispose

of the same in such manner as it thinks fit. Power to annual forfeiture (Article 41) 41. The Board may at any time before any share so forfeited shall have been sold, re-allotted or otherwise disposed of, annual

the forfeiture thereof upon such conditions as it think fit. Liability on Forfeiture (Article 42) 42. A person whose share has been forfeited shall cease to be a member in respect of the forfeited share, but shall

notwithstanding, remain liable to pay, and shall forthwith pay to the Bank, all calls, or installments, interest and expenses, owing upon or in respect of such share at the time of the forfeiture, together with interest thereon, from the time of forfeiture, together with interest thereon, from the time of forfeiture until payment, at such rate as the Board may determine and the Board may enforce the payment thereof or any carry thereof, without any deduction or allowance for the value of the shares at the time of forfeiture, but shall not be under any obligation to do so.

Effect of Forfeiture (Article 43) 43. The forfeiture of a share involves extinction, at the time of the forfeiture, of all interest in all claims and demands against the

Bank in respect of the share and all other rights, incidental to the share except only such of those rights as by these Articles are expressly saved.

Evidence of Forfeiture (Article 44) 44. A duly verified declaration in writing that the declarant is a Director of the Bank, and that certain shares in the Bank have

been duly forfeited on a date stated in the declaration shall be conclusive evidence of the facts therein stated as against, all persons claiming to be entitled to the shares and such declaration and the receipt of the Bank for the consideration, if any given for the shares on the sale or disposition thereof shall constitute a good title to such shares; and the person to whom any such share is sold shall be registered as the member in respect of such share and shall not be bound to see to the application of the purchase money, nor shall his title to such share be affected by any irregularity or invalidity in the proceedings in reference to such forfeiture, sale or disposition.

Cancellation of Share Certificate in respect of forfeited share (Article 45) 45. Upon any sale, re-allotment or other under the provisions of the preceding Articles, the certificate or certificates originally

issued in respect of the relative shares shall (unless the same shall on demand by the Bank have been previously surrendered to it by the defaulting member) stand cancelled and become null and void and of no effect, and the Directors shall be entitled to issue a duplicate certificate or certificates in respects of the said shares to the person or persons, entitled thereto.

Transfer and Transmission of Shares Register of Transfer (Article 46) 46. The Bank shall keep a book to be called the “Register of Transfer”, and therein shall be fairly and directly entered particulars

of every transfer or transmission of any share. Instruments of transfer (Article 47) 47. The instrument of Transfer shall be in writing and all provisions of Section 108 of the Act *and statutory modifications thereof

for the time being, shall be duly complied with in respect of all transfers of shares and the registration thereof. To be executed by transferor and transferee (Article 48) 48. Every such instrument of transfer shall be executed both by transferor and the transferee and attested, and the transferor

shall be deemed to remain the holder of such share until the name of the transferee shall have been entered in the Register of Members in respect thereof.

Directors may refuse to Register transfer (Article 50) 50. ***Subject to the provisions of Section 111A of the Act, the Board may, at its own absolute and uncontrolled discretion and

by giving reasons, decline to register or acknowledge any transfer of shares whether fully paid or not and the right of refusal, shall not be affected by the circumstances that the proposed transferee is already a member of the Bank but in such cases, the Board shall within one month from the date on which the instrument of transfer was lodged with the Bank, send to the transferee and the transferor, notice of the refusal to register such transfer provided that registration of transfer shall not be refused on the ground of the transferor being either alone or jointly with any other person or persons indebted to the Bank on any account whatsoever except when the Bank has a lien on the shares. Transfer of shares/ debentures in whatever lot shall

75

not be refused. Transfer of shares shall however, be refused if not acknowledged by Reserve Bank of India, wherever such acknowledgement is required.

Title to Shares of deceased member (Article 52) 52. The executors or administrators or holders of a Succession Certificate or the legal representatives of a deceased member

(not being one or two or more joint holders) shall be the only persons recognised by the Bank as having any title to the shares registered in the name of such member, and the Band shall not be bound to recognize such executors or administrators or holders of a Succession Certificate of the legal representatives unless such executors or administrators or holders of a Succession Certificate of the legal representatives unless such executors or administrators or legal representatives shall have first obtained probate or Letters of Administration or Succession Certificate as the case may be, from a duly constituted Court in the Union of India, provided that in any case where the Board of Directors in its absolute discretion thinks fit, may dispense with production of Probate or letters of Administration by person, who claims to be absolutely entitled to the shares standing in the name of a deceased member as a member.

No transfer to infant etc. (Article 53) 53. No share shall under any circumstances be transferred to any infant, insolvent or persons of unsound mind. No fee on Transfer or Transmission (Article 58) 58. “No fee shall be charged for registration of transfer, transmission, Probate, Succession Certificate and Letters of

administration, Certificate of Death or Marriage, Power of Attorney or similar other document. Directors (Article 97) 97 (1). Until otherwise determined by a General Meeting of the Bank and subject to the provisions of Section 252 of the Act, the

number of Directors (excluding Debenture and Alternate, Directors (if any) shall not be less than three nor more than twelve. 97 (2). Number of members of the Board of Directors of the Bank shall consist of persons, who shall have special knowledge or

practical experience in any of the nine matters mentioned in Section 10-A (2) (a) of the Banking Regulation Act, 1949, provided further that not less than two of them shall be persons who have special knowledge or practical experience, in respect of agriculture and rural economy, co-operation or small scale industry and who do not suffer from any of the disqualifications mentioned in sub-section 2 (b) of that section.

Appointment of Alternate Directors (Article 99) 99. The Board may appoint an Alternate Director to act for a Director (hereinafter called “The Original Director”) during his

absence for a period of not less than three months from the State in which the meetings of the Board are ordinarily held. An Alternate Director appointed under this Article shall not hold office for a period longer than that permissible to the original director in whose place he has been appointed and shall vacate the office of the Original Director when he returns to that State. If the terms of office of the Original Director are determined before he so returns to that state, any provisions in the Act or in these Articles for the Automatic re-appointment of any retiring Director in default of another appointment shall apply to the Original Director and not to the Alternate Director.

Remuneration of Directors (Article 102) 102 (1). Subject to the provision of the Act a Chairman, a Managing Director or Managing Directors, who is/ are in the whole-time

employment of the Bank may be paid remuneration either by way of a monthly payment or at a specified percentage of the net profits of the Bank or partly by one way partly by the other.

102 (2). Subject to the provisions of the Act, a Director who is neither in the whole-time employment but a Managing Director, may be

paid remuneration either, (i) by way of monthly, quarterly or annual payment with the approval of the Central Government, or (ii) by way of commission if the Bank by a special resolution authorised such payment. 102(3). The fees payable to a Director (including a Managing or whole-time Director, if any), for attending a meeting of the Board or

committee thereof shall be as permitted under law for the time being. Vacation of office of Director (Article 105) 105. The office of a Director shall ipso facto be vacated if:- 105 (1)(a). he fails to obtain within the time specified in sub-section (1) of Section 260 of the Act, or at any time thereafter ceases to

hold, the share qualification, if any necessary for his appointment; or (b). he is found to be of unsound min by a Court of competent jurisdiction; or (c). he applies to be adjudicated an insolvent; or (d). he is adjudged insolvent; or (e). he is convicted by a Court in India for any offence and is sentenced in respect thereof to imprisonment for not less than six

months, or (f). he fails to pay any calls in respect of shares of the Bank held by him, whether along or jointly with others, within six months

from the last date fixed for the payment of the call; or (g). he absents from three consecutive meetings of the Board or from all meetings of the Board for a continuous period of three

months, whichever is the longer, without obtaining leave of absence from the Board; or (h). he or any firm of which he is a partner or any private company of which he is a director, accepts a loan, or any guarantee or

security for a loan, from the Bank in contravention of Section 295 of the Act; or (i). he acts in contravention of Section 299 of the Act; or (j). he be removed from office in pursuance of Section 203 of the Act; or (k). by notice in writing to the Bank that he resigns his office; or (l). any office or place of profit under the Bank or under any subsidiary of the Bank is held in contravention of Section 314 of the

Act and by operation of that Section he is deemed to vacate the office. (m). he is Director of any other Banking company.

The eligibility and the appointment of directors shall be governed by the provisions of the Banking Regulation Act, 1949. 105 (2). Notwithstanding any matter or thing in sub-clauses (d), (e) and (j) of clause (1) the disqualification referred to in those sub-

clauses shall not take effect: - 105 (2)(a). For thirty days from the date of adjudication of sentence or order, or (b). Where an appeal or petition is preferred within the thirty days aforesaid against the adjudication, sentence or conviction

resulting in the sentence, or order until the expiry of seven days from the date on which such appeal or petition is disposed of, or

76

(c). Where within the seven days aforesaid any further appeal or petition is preferred in respect of the adjudication, sentence, conviction or order, and the appeal or petition, if allowed, would result in the removal of the disqualification until such further appeal or petition is disposed of.

Directors may contract with Bank (Article 106) 106 (1). A Director or his relative, a firm in which such Director or relative is a partner, or any other partner in such firm or a private

company of which the director is a member or a private company of which the Bank is member or director, may enter into any contract with the Bank for the sale, purchase or supply of any goods, materials, or services or for underwriting the subscription of any shares in, or debentures of the Bank, provided that the sanction of the Board is obtained before or within three months of the date on which the contract is entered into in accordance with Section 297 of the Act.

Directors may be Directors of companies promoted by the Bank (Article 111) 111. A Director may be or become a director of any company promoted by the Bank or in which it may be interested as Vendor,

Shareholder, or otherwise, and no such director shall be accountable for any benefits received as director or shareholder of such company except in so far as Section 209 (6) or Section 314 of the Act may be applicable.

Retirement and rotation of Directors (Article 112) 112. At every Annual General Meeting of the Bank, one-third of such of the Directors for the time being as are liable to retire by

rotation or if their number is not three or a multiple of three, the number nearest to one third retire from office. Ascertainment of Directors retiring by rotation and filling of vacancies (Article 113) 113. Subject to Section 256 (2) of Act, the Directors to retire by rotation under Article 112 at every Annual General Meeting shall

be those who have been longest in the office since their last appointment, but as between persons who became directors on the same day, those who are to retire shall, in default of, and subject to any agreement among themselves, be determined by lot.

Bank may increase of reduce the number of Directors (Article 117) 117. Subject to Section 259 of the Act, the Bank may, by Ordinary Resolution, from time to time, increase or reduce the number of

directors, and may after their disqualification if any (subject to the provisions of Section 284 of the Act) remove any Director before the expiration of his period of office and appoint another qualified person in his stead. The person so appointed shall hold office during such time as the director in whose place he is appointed would have held the same if he had not been removed.

Chairman (Article 121) 121 (a)(1). The directors may, from time to time, appoint or re-appoint one of their member to be the Whole time-Chairman and Chief

Executive Officer for such period not exceeding five years at any one time and may remove or dismiss him from office and appoint another in his place.

(2). The Chairman shall not while he continues to hold that office be subject to retirement by rotation. But he shall be subject to the same provisions as to resignation and removal as the other directors, subject however to the approval of the Reserve Bank of India and he shall ipso facto and immediately cease to be the Chairman if he ceases to hold the office of Director for any reason whatsoever.

(3) (i). The whole time chairman shall be entrusted with the Management of the whole of the affairs of the Banking company. (ii). Without prejudice to the generality of sub-clause (I).

The Directors may, from time to time, entrust to and confer upon the Chairman for the time being such of the powers exercisable by law or under these presents by the Director, as they think it except such as or by any law required to be exercised by the Board of Director, as they think it except such as or by any law required to be exercised by the Board of Directors and may confer such powers for such objects and purposes and upon such terms and conditions and with such restriction as they think expedient and they may confer such powers either collaterally with or to the exclusion of or in substitution of all or any of the powers of the directors in that behalf and may from time to time revoke, withdraw, alter or vary all or any such powers.

(4). The remuneration of the Chairman shall be fixed in accordance with the provisions of section 309 and other relevant provisions of the Companies Act, 1956 and the Banking Regulation Act, 1949 and such remuneration may be by way of salary, allowance, etc. Such Chairman shall not be entitled to receive any fees for attending meetings of the Board or of any Committee of the Directors.

Managing Director Board may appoint Managing Director or Managing Directors (Article 122) 122. Subject to the provisions of the Act and these Articles, the Board shall have power to appoint from time to time any of its

member or members as Managing Director or Managing Directors of the Bank for fixed term not exceeding five years at a time and upon such terms and conditions as the Board thinks fit and subject to the provisions of Article 123 the Board may be resolution vest in such Managing Director or Managing Directors such of the powers hereby vested in the Board generally as it thinks fit, and such powers may be made exercisable for such period or periods and upon such conditions and subject to such restrictions as it may determine.

The remuneration of a managing Director may be by way of monthly payment, fee for each meeting or participation in profits, or by any or all these modes, or any other mode not expressly prohibited by the Act.

Proceedings of the Board of Directors Meeting of Directors (Article 126) 126. The Directors may meet together as a Board for the despatch of business from time to time, and shall so meet atleast once

in every three months and atleast four such meetings hall be held in every year. The Directors may adjourn and otherwise regulate their meetings as they think fit.

Notice of Meeting (Article 127) 127. Notice of every meeting of the Board shall be given in writing to every Director for the time being in India, and at his usual

address in India, to every other Director. When meeting to be convened (Article 128) 128. The Secretary shall, as and when directed by the Directors to do so convene a meeting of the Board by giving a notice in

writing to every other Director.

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Chairman (Article 129) 129. The Board shall appoint a Chairman of its meeting and determine the period for which he is to hold office. If no Chairman is

appointed, or if at any meeting of the Board the Chairman be not present within five minutes after the time appointed for holding the same, the Directors present shall choose some one of their member to be the Chairman of such meeting.

Quorum (Article 130) 130. The quorum for a meeting of the Board shall be determined from time to time in accordance with the provisions of Section

287 of the Act. If a quorum shall not be present within fifteen minutes from the time appointed for holding a meeting of the Board it shall be adjourned until such date and time as the Chairman of the Board shall appoint.

Powers of Quorum (Article 131) 131. A Meeting of the Board of which a quorum be present shall be competent to exercise all or any of the authorities, powers and

discretion by or under these Articles for the time being vested in or exercisable by the Board. How Questions to be decided (Article 132) 132. Subject to the provision of Section 316, 372 (4) and 386 of the Act, question arising at any meeting shall be decided by a

majority of votes, and in case of any equality of votes, the Chairman shall have a second or casting vote. Power to Appoint committee and to delegate (Article 133) 133. The Board may subject to the provisions of the Act, from time to time and at any time delegate any of its powers to a

committee consisting of such Director or Directors as if thinks fit, and may from time to time revoke such delegation. Any committee so formed shall, in the exercise of the powers so delegated, conform to any regulation that may from time to time be imposed on it by the Board.

Proceedings of committee (Article 134) 134. The meetings and the proceedings of any such Committee consisting of two or more members shall be governed by the

provisions herein contained for regulating the meetings and proceedings of the Board so far as the same are applicable thereto, and are not superseded by any regulations made by the Board under the Article 150.

Resolution without Board meeting (Article 135) 135. Save in those cases where a resolution is required by Section 262, 292, 297, 316, 372 (4) and 386 of the Act, to be passed

at a meeting of the Board, a resolution shall be as valid and effectual as if it had been passed at a meeting of the Board or Committee of the Board as the case may be, duly called and constituted, if a draft thereof in writing is circulate, together with the necessary papers, if any, to all the Director, or to all the members of the Committee of the Board, as the case may be, then in India (not being less in number than the quorum fixed for a meeting of the Board or Committee, as the case may be) and to all other Directors, or members of the Committee, at their usual address in India, and has been approved by such of them as are then in India, or by a majority of them as are entitled to vote on the resolution.

Express Powers of Directors (Article 138) 138. Without prejudice to the General Powers conferred by the last proceedings clause and of other powers conferred by the

articles, it is hereby expressly declared that the Directors shall have the following powers that is to say, power: (a). to purchase or otherwise acquire for the Bank any property, rights or privileges which the Bank is authorised to acquire at

such price and generally on such terms and conditions as they thing fit. (b). at their discretion to pay for any property, rights or privileges acquired by or services rendered to the Bank either wholly or

partially in cash or in shares, bonds, debentures, or other securities of the Bank and any such share may be issued either as fully paid up or with such amounts credited as paid up thereon as may be agreed upon; and any such bond or debentures or other securities may either be specifically charged upon all or any part of the property of the Bank or not so charged;

(c). to secure the fulfillment of any contracts or engagements entered into by the Bank by mortgage or charge of all or any of the property of the Bank or in such other manner as they may think fit.

(d). to nominate and appoint and to remove or suspend, as the Directors deem best for the management of the business of the Bank, any of the employees and other officers, to require securities in such instances and of such amounts as they deem fit and to fix salary or remuneration to be paid to them by the Bank and to demand from all or any of such persons such securities for the due performance of the duties assigned to them as deemed fit and to establish a provident, gratuity or any other fund for their benefit or for any other purpose;

(e). to authorise or empower the Chairman or other officers or employees for the time being of the Bank either any one of them or all of them jointly or some of them jointly to exercise and perform all or any of the powers or authorities and duties conferred by articles of Association subject to such restrictions and conditions if any as the Board may thing proper;

(f). to raise or borrow money from time to time by bonds, debentures, or promissory notes or by opening current account, or by receiving advances with or without securities, mortgaging any lands, buildings, machinery, goods and or other property of the Bank or by such other means as the Directors may deem expedient;

(g). to buy, sell and deal in drafts, hundis, bills of exchange, bills of lading, railway receipts, and Government bonds, etc., to negotiate with and secure from any recognised Banks, institutions or corporations cash credits, loans or overdrafts on pledge of Government securities or otherwise;

(h). to draw, accept, endorse, negotiate and sell Bills of Exchange, and other negotiable instruments with or without securities. (i). to undertake on behalf of the Bank the payment of all rents and performance of all covenants, conditions and agreements

contained in or reserved by any lease that may be granted to be assigned to or otherwise acquired by the Bank; (j). to insure or keep insured, if deemed expedient, all or any of the books, stores, buildings, or other property or any securities

of the Bank separately or conjointly or for such period and to such extent as the Directors may think proper and to sell, assign, surrender or discontinue any policies of assurance, effected in pursuance of this power and to incur incidental charges thereto;

(k). from time to time to provide for the Management of the affairs of the Band in such manner as they think fit and in particular appoint any person to be Attorney or Agents of the Bank with such powers (including the powers to sub-delegate) and upon such terms as may be thought fit;

(l). to pay and to charge to capital accounts of the Bank any item of expenditure which may in fairness be distributed over several years and has been incurred in any one year but the whole amount shall be stated in the Annual Report giving reasons why only a portion of such expenditure is charged against the income of the period for which the accounts are rendered.

(m). to act on behalf of the Bank in all matters relating to its customers or other persons. (n)(i). to deposit in any Bank, they may from time to time approve of, and to invest any funds of the Bank not immediately required

for the purposes thereof upon such securities other than shares of this Bank and in such manner as they may think fit and from time to time vary or realize such investments;

(ii). to make arrangements for the safe custody of the moneys, title deeds, bonds, jewels and other valuable properties of the Bank.

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(o). to accept from any member so far as may be permissible by law, a surrender of his share or any part thereof on such terms and conditions as shall be agreed upon.

(p). to execute all deeds, agreements, contracts, receipts and other documents, that may be necessary or may be expedient for the purpose of the Bank;

(q). to commence, institute, prosecute, withdraw, defend, compromise, and refer to arbitration, all such actions and suits as the Directors may think necessary or proper.

(r). to compromise any debt or any claim or debt or to give time to any debtor for repayment of his debts or refer any matter or disputes to arbitration or arrive at any arrangement incidental to any transactions in respect of any claim, right, title or interest in favour of the Bank subject to the provisions of section 293 of the Companies Act.

(s)(i). to open and establish branches, currency chests and other agencies for the conduct of the business of the Bank from time to time, to appoint Managers and Agents and other employees and to fix their salary or remuneration as the Directors, may think it expedient to do, and to close such Braches, Currency Chests or other agencies;

(ii). to authorise or arrange for the inspection and or checking of the business, investments and or checking of the business, investment and or assets or affairs of the Head Office, Branch or Branches, or Agency or Agencies in such manner as the Board of Directors deems fit;

(t). to grant pensions, allowances, gratuities and bonuses to employees of the Bank, their present and future dependents and to support or subscribe to any charitable or other institutions, clubs, societies or funds;

(u) (i). to set aside from time to time out of the net profits of the Bank such sums as they think proper and to place the same to any one or more of the following or other accounts (a) Statutory Reserve Fund; (b) Contingent Fund; (c) Reserve for Bad and Doubtful Debts; (d) Dividend Equalization Fund and (e) any other funds;

(ii). Any fund other than the statutory Reserve Fund may be applied from time to time in such manner as the Directors shall determine for meeting depreciation or contingencies, or for equalising dividends or for special dividends, or for writing off bad or doubtful debts or claims, or for repairing, improving or maintaining and property of the Bank, or for such other purposes as the Directors shall in their absolute discretion think conducive to the interests of the Bank;

(iii). the Directors may divide any fund (other than the Statutory Reserve Fund) into such special funds as they think fit, and may consolidate into one fund any special fund or any parts of any special funds into which the funds may have been divided as they think fit, with full power to employ or invest the whole or any part of the assets constituting such funds in the business of the Bank or upon such other investments as they may think fit, and from time to time deal with or vary such investments and dispose off or utilise all or any part thereof in any manner the Directors may deem fit in their absolute discretion to keep the same separate from the other assets of the Bank.

(iv). the Directors may appropriate the Statutory Reserve Fund as may be permitted by law; (v). to make advance and to lend money and to open cash credits and generally to give credit or deal upon credit with any

persons, to such amount upon such terms and conditions as they shall think fit; (v). Provided however that no Directors shall vote on any question respecting a loan or advance of money or cash credit account

or otherwise giving credit to or for the benefit of himself or of the Joint Hindu Family of which he is a member or unregistered company or firm in which such Director is a partner.

(w). for or in relation to any of the matters aforesaid or otherwise for the purpose of the Bank to enter into all such negotiations and contracts and rescind and vary all such contracts, and execute and do all such acts, deeds and things in the name and on behalf of the Bank as they may consider expedient.

(x). from time to time to make, vary and repeat by-laws for the regulation of the business of the Bank, its Officers and servants or the employees of any section thereof or for any matter pertaining to the Bank;

(y). to pay remuneration including traveling expenses and halting expenses to any Director or Directors or any other person for any service in the interests of the Bank rendered by such Director or Directors or such other person;

(z). to propose a dividend and/ or bonus etc. to the shareholders to be adopted at the General Meeting. (aa). to purchase all furniture, utensils and other things necessary for the Bank; (bb). And generally to do, sanction and authorise all such matters and things as may be deemed necessary or expedient to be

done, authorised or sanctioned in or about the general business or affairs of the Bank or in or about the execution of all or any of the powers hereinbefore conferred on the Directors.

Winding Up Liquidator may divide assets in specie (Article 174) 174. The Liquidator on any winding-up (whether voluntary, under supervision or compulsory) may, with the sanction of a Special

Resolution but subject to the rights attached to any preference share capital divide among the contributories in specie any part of the assets of the Bank and may with the like sanction, vest any part of the assets of the Bank in trust for the benefit of the contributories as the Liquidator, with the like sanction shall think fit.

Indemnity and Responsibility (Article 175) 175. Every Officer or Agent for the time being of the Bank shall be indemnified out of the assets of the Bank against all liability

incurred by him in defending any proceedings, whether civil or criminal in which judgment is given in favour or in which he is acquitted or discharged or in connection with any application under Section 633 of the Act, in which relief is granted to him by the court.

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V. MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION The contracts referred to in Para (A) below (not being contracts entered into in the ordinary course of the business carried on by the Bank or entered into more than 2 years before the date of the Information Memorandum) which are or may be deemed to be material have been entered into by the Bank. Copies of these contracts together with the copies of documents referred to in Para (B) below have been attached to the copy of the Information Memorandum and the same may be inspected at the Registered Office of the Bank between 10:00 am and 12:00 noon on any working day until the closing of the subscription list.

A. Material Contracts

1. Copy of letter appointing Intime Spectrum Registry Limited as Registrar and Transfer Agents and copy of MoU entered into between the Bank and the Registrar.

2. Copy of letter appointing IDBI Trusteeship Services Ltd. as Trustees to the Bondholders.

B. Documents 1. Memorandum and Articles of Association of the Bank. 2. Certificate of Incorporation dated January 31,1994. 3. Copy of the Resolution of Board of Directors dated February 8, 2006 authorizing the current issue of Bonds. 4. Consent from the Trustees to the Bondholders, Arrangers to the Issue, Registrars to the Issue referred to in this Information

Memorandum to act in their respective capacities. 5. Annual Reports of the Bank for Financial Years 1998-1999, 1999-2000, 2000-2001, 2001-2002 and 2002-2003, 2003-04,

2004-05 and 2005-06. 6. Letter dated November 16, 2006 and November 15, 2006 from FITCH Ratings India (P) Limited and ICRA Ltd. respectively

conveying the credit rating for the Bonds of the Bank.

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PART III

DECLARATION All the relevant provisions of the Companies Act, 1956, the Banking Regulation Act, 1949, Securities and Exchange Board of India, the guidelines issued by the Government and any other competent authority have been complied with and no statement made in this Information Memorandum is contrary to the provisions of the Companies Act, 1956 and rules framed hereunder. All the legal requirements applicable till the date of this Information Memorandum have been complied with. Further it is certified that, all disclosures made in this Information Memorandum are true and correct. The Issuer Company accepts no responsibility for the statements made otherwise than in this Information Memorandum or any other material issued by or at the instance of the issuer and that any one placing reliance on any other source of information would be doing so at his own risk. Signed by Mr. Yogesh V. Adke Asst. Vice President of the Bank, pursuant to the authority granted by the Board / Committee of Directors of the Bank to the Joint Managing Director or Managing Director, to do all acts and sign necessary documents and further delegate such powers to the other officials of the bank, in connection with the issue of Tier II Capital, at their meeting held on February 08, 2006. Yogesh V. Adke Asst. Vice President Dated: 30/11/2006 Place: Mumbai.

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ADDRESSES OF COLLECTING BRANCHES OF THE BANK

Corporate Office: 701/801 Solitaire Corporate Park, 167 Andheri-Ghatkopar Link Road, Andheri (E), Mumbai – 400 093 Tel No: (022) 56412200; Fax No: 91-22-5641 2376; E-Mail: mbd@indusind.com

Center Address STD Code Telephone Number(s)

Fax Number(s)

Chennai No.3 Village Road, Nungambakkam, Madras- 600 034

044 28234788/99, 28235471/80

2823 5489

Bangalore Du Parc Trinity, 1st Floor, West Wing, No. 17, M. G. Rd, Bangalore – 560 001

080 25592318 / 19 25592309

Hyderabad 1-8-448, Sardar Patel Rd, Begumpet, Secunderabad – 500 003

040 27907660 / 63 / 64 2790 7673

Ahmedabad World Business House, M. G. Road, Nr. Parimal Garden Ellis Bridge, Ahmedabad – 380 015

079 26426104/5/6/7/8 2656 0401

Delhi Dr. Gopal Das Bhawan, 28, Barakhamba Rd, New Delhi – 600 034

011 23738040 / 8408 / 8407

23738041/ 371 5895

Mumbai Sonawala Bldg, Opposite Bombay Stock Exchange, 57, Mumbai Samachar Marg, Fort, Mumbai

022 56366580/1/2/3 56366590

Kolkata 24, Park Street, Calcutta – 700 016 033 22492984/ 85/ 86 22492984

INDUSIND BANK LIMITED

Corporate Office: 701/801 Solitaire Corporate Park, 167 Andheri-Ghatkopar Link Road, Andheri (E), Mumbai – 400 093. Tel No: (022) 56412200; Fax No: 91-22-56412347; E-Mail: mbd@indusind.com

APPLICATION FORM FOR UNSECURED REDEEMABLE NON-CONVERTIBLE SUBORDINATED UPPER TIER II BONDS

The Board of Directors, IndusInd Bank, 701/801 Solitaire Corporate Park, 167 Andheri-Ghatkopar Link Road, Andheri (E), Mumbai – 400 093. Dear Sirs,

Having read, understood and agreed to the contents and terms and conditions of IndusInd Bank’s Information Memorandum dated 30/11/2006, I/We hereby apply for allotment to me/us, of the under mentioned Bonds (hereinafter referred to as “Bonds”), out of the Private Placement Issue. I/We irrevocably give my/ our authority and consent to IDBI Trusteeship Services Limited, to act as my/our Trustees and for doing such acts and signing such documents as are necessary to carry out their duties in such capacity. The amount payable on application as shown below is remitted herewith. I/We not that the Board of Directors are entitled in their absolute discretion to accept or reject this application in whole or in part without assigning any reason whatsoever.

I/We confirm that I/we have not received and will not receive any commission or brokerage or any other incentive in any form, directly or indirectly, for subscribing to the Issue.

APPLICANT’S DETAILS

SOLE/FIRST APPLICANT’S NAME IN FULL SIGNATORY/AUTHORISED SIGNATORY

SECOND APPLICANT’S NAME

THIRD APPLICANT’S NAME

ADDRESS (Do not repeat name) (Post Box No. alone is not sufficient)

TEL FAX PIN CODE

SOLE/ FIRST APPLICANT CATEGORY (Tick one) INVESTMENT DETAILS

Scheduled Commercial Bank Face Value/ Issue Price Rs. 10,00,000/- (Rupees Ten Lacs Only) per Bond Financial Institution Minimum Application 1 Bond and in multiples of 1 Bond thereafter Insurance Company Tenure 180 Months Primary/ State/ District/ Central Co-operative Bank Coupon Rate 9.75 % p.a. for first 10 years & 10.25% p.a. from 11th year Regional Rural Bank Interest Payment Semi-Annual Mutual Fund Amount payable per Bond (i) Rs. 10,00,000/- Company/ Body Corporate No. of Bonds Applied For (ii) Provident / Pension / Gratuity/ Superannuation Fund Total Amount Payable (Rs.)

(in fig) (i) x (ii)

Others (please specify) – PAYMENT DETAILS

Cheque/ Demand Draft No. (Rs. in figures) (Rs. in words) Dated Drawn on (IndusInd Bank) Branch

SOLE/ FIRST APPLICANT’S BANK DETAILS (Ref. Instructions) INCOME TAX DETAILS (Ref. Instructions)

Bank Name Sole/ First Applicant Second Applicant Third ApplicantBranch City

P.A.N. / G.I.R. NO.

Account Number Type of Account Savings Current Others

I.T. Circle/ Ward/ District No.

TO BE FILLED IN ONLY IF THE APPLICANT IS AN INSTITUTION

Name of the Authorised Signatory(ies) Designation Signature 1. 1. 2. 2. 3. 3. 4. 4.

DETAILS FOR ISSUE OF BONDS IN ELECTRONIC/ DEMATERIALISED FORM APPLICANT’S SIGNATURE (S) Depository Name (please tick) NSDL CDSL Depository Participant Name DP-ID Number

Sole/ First Applicant

Client-ID Beneficiary Account Number

Second Applicant

Name of the Applicant

Third Applicant

-------------*-------------*-----------*-----------*-------------*------------*-----------*-----------(Tear Here)-----------*-------------*-------------*-----------*-----------*-----------* -------------*-------------*--

INDUSIND BANK LIMITED Corporate Office: 701/801 Solitaire Corporate Park, 167 Andheri-Ghatkopar Link Road, Andheri (E), Mumbai – 400 093.

(To be filled in by the Applicant)

Received from_________________________________________________________________ Address_________________________________________________________________ an application for ___________ Bonds vide Cheque/ Demand Draft No. _____________Drawn on _____________________________ Dated____________ amounting to Rs. ________________ ____________________________ Note: Cheque(s) are subject to realisation.

Private & Confidential Not for Circulation

All future communication in connection with this application should be addressed to the Registrars, Intime Spectrum Registry Limited, [C-13, Pannalal Silk Mills Compound, LBS Marg, Bhandup (W), Mumbai – 400 078.Tel No. (022) 2569-3838 Fax No. 91-22- 2594 6969 quoting full name of Sole/ First Applicant, Application No., Number of Bonds applied for, Date, Bank and Branch where the application was submitted and Cheque/ Demand Draft Number and Issuing Bank.

Application No. ______

For Office Use Only

Date of Receipt of Application / / 0 6

Date of Clearance of Cheque / / 0 6

(PLEASE READ CAREFULLY THE INSTRUCTIONS ON THE NEXT PAGE BEFORE FILLING UP THIS FORM)

Application No. ______

ACKNOWLEDGEMENT SLIP

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INSTRUCTIONS 1. Application forms must be completed in full in BLOCK LETTERS IN ENGLISH.

A blank space must be left between two or more parts of the name.

A B C D E L T D

Signatures should be made in English or in any of the Indian languages. Thumb impressions must be attested by an authorised official of a Bank or by a Magistrate/ Notary Public under his/ her official seal.

2. Application forms duly completed in all respects must be submitted with the

respective Collecting Banker. Cheque(s)/ Demand Draft(s) should be drawn in favour of “IndusInd Bank Limited” and crossed “Account Payee Only”. Cheque(s)/ Demand draft(s) may be drawn on any bank including a co-operative bank, which is a member or a sub-member of the Banker’s Clearing House located at Chennai, Bangalore, Hyderabad, Ahmedabad, Kolkata, New Delhi or Mumbai.

3. Outstation cheques, cash, money orders, postal orders and stockinvest shall

not be accepted. 4. As a matter of precaution against possible fraudulent encashment of interest

warrants due to loss/misplacement, applicants are requested to mention the full particulars to their bank account, as specified in the Application Form. Interest warrants will then be made out in favour of the bank for credit to the applicant’s account. In case the full particulars are not given, cheques will be issued in the name of the applicant at his/ her risk.

5. Receipt of applications will be acknowledged by the respective Collecting

Branch of the Bank in the “Acknowledgment Slip”, appearing below the Application Form. No separate receipt will be issued.

6. All applicants should mention their Permanent Account Number or the GIR

number allotted under Income-Tax Act, 1961 and the Income-Tax Circle/Ward/District. In case where neither the PAN nor GIR number has been allotted, the fact of non-allotment should be mentioned in the application form in the space provided.

7. The application would be accepted as per the terms of the Scheme outlined in

the Information Memorandum for Private Placement dated 29th September, 2006