Annual Report - State Bank of Travancore - 2009-2010

STATE BANK OF TRAVANCORE

ANNUAL REPORT 2009-2010

DIRECTOR'S REPORT

1. MANAGEMENT DISCUSSIONS & ANALYSIS

1.1 Global Economy:

There has been a discernible improvement in the global economy since the
deep global economic slump and financial market turmoil in the latter half
of the previous financial year. The recovery is underpinned by output
expansion in Emerging Market Economies (EMEs), particularly in Asia. World
output has improved, manufacturing activity has picked up, trade is
recovering, financial market conditions are improving, and risk appetite is
returning. The immediate effect of the rebound in the global economy could
be seen in the financial markets, which have posted spectacular gains in a
short period of time. There are concerns, however, that the recovery is
fragile. Even as output is reviving, unemployment rate is expected to
increase to double digits. Investment is also expected to remain weak due
to ruptured balance sheets, excess capacity and financing constraints. Bank
collapses are continuing. World trade still remains below its level a year
ago. On balance, while global economic prospects have improved,
uncertainties remain about the pace and sustainability of economic
recovery.



1.2 National Economy:

The national economy continues to be among the fastest growing economies.
The rebound of the Indian economy has been quicker and surer than
anticipated. The performance of the industrial sector has Report of the
Board of Directors to the State Bank of India, the Reserve Bank of India
and the Central Government in terms of Section 43 (1) of State Bank of
India (Subsidiary Banks) Act, 1959 Period covered by the Report: 1st April
2009 to 31st March 2010 improved markedly in recent months.

Domestic and external financing conditions are on the upturn. Capital
inflows have revived. Activity in the primary capital market has picked up
and funding from non-bank domestic sources has eased. Liquidity conditions
have remained easy and interest rates remain soft in the money and credit
markets, albeit with an upward bias. India's banking and financial sector
continue to be safe and sound. Opportunities to grow and succeed remain
despite the emergence of new challenges for banks including slower credit
growth and a potentially more complex regulatory environment. The Gross
Domestic Product growth is estimated to be about 7.20% during 2009-10.
Infrastructure spending continues to be robust; the evolution of the Indian
middle class continues to offer opportunities in retail banking. At the
same time, some concerns persist. There are clear signs of rising inflation
stemming largely from the supply side, particularly from food prices.
However, there are hints that the price picture on the critical food front
is improving. The rabi harvest is reported to be more than satisfactory and
the monsoon forecast for this year is favourable. These positive factors
may lead to significant decline in consumer price inflation.

1.3 Kerala Economy:

Kerala, India's most socially developed state is well known for its lush
landscapes, sundrenched beaches and idyllic backwaters. Many of its social
indicators are on par with developed nations and it has the highest human
development index in India. However, the social development has not
translated to commensurate economic development in Kerala. The state's
economy is highly dependent on tourism and remittances from about three
million expatriate Malayalees, mostly in Gulf countries. The recession in
Middle Eastern countries, more popularly known as 'Dubai fallout', has
reduced the income of the existing work-force as well as dealt a blow to
the new job seekers from the state.

Investments in manufacturing sector are very low. The ongoing development
projects, such as Techno-*park Phase-III, Technocity project, International
Container Transshipment Terminal at Vallarpadom, Kochi LNG terminal (and
the Gail Pipeline Project and City Gas Distribution Project to be
synchronized with Kochi LNG terminal), Kannur Airport, Vizhinjam seaport
etc. are expected to increase job opportunities and give a fillip to the
state's economy. The Kerala State Budget for 2010-11 envisages investment
of Rs.412 crore to encourage fast growing industries that are suitable for
Kerala.

1.4 Banking Environment:

The resilience and stability of the domestic financial system are essential
to a country's own macroeconomic stability, particularly in an increasingly
integrated world. Indian banks have remained resilient even during the
height of the subprime crisis and the consequent financial turmoil. The
banking sector is adequately capitalised. The migration to Basel II has
resulted in an increase in the capital adequacy ratio of the banking
system. Credit quality continues to remain robust. The relatively high
share of low cost current and savings account deposits in total deposits
and SLR pre-emptions in risk free government securities take care of
liquidity and solvency issues. Public Sector Banks (PSBs) were observed to
be faring better in terms of growth in credit extended as compared to the
deceleration in private banks and decline in business of foreign banks. The
economic slowdown has decelerated growth in the balance sheet of the
banking system. This could have a lagged effect on the credit quality and
profitability of banks. Regulatory changes also have opened up newer
opportunities in areas such as financial inclusion, mobile banking and
rural banking. Some of the issues that are expected to keep the bankers
occupied in coming times include liquidity management; gainful deployment
of funds; availability of cheaper technology to serve thinly populated
unbanked areas; grooming suitable replacement for large number of the
experienced manpower retiring; IT security; advanced Risk management
approaches; and introduction of innovative products.

Aggregate deposits of All Scheduled Commercial Banks grew by Rs.6,52,464
crore during the year to reach Rs. 44,86,574 crore as at the last Friday of
March 2010 registering a growth rate of 17.00%. Gross Advances registered a
growth of 16.70% during the year and rose to Rs.32,40,399 crore. Food
Credit increased by 4.93% to Rs. 48,489 crore. Non-Food Credit grew by
14.49% and reached the level of Rs.31,91,909 crore as at the end of March
2010. The investment portfolios of banks also moved up in tandem with
resource growth, recording a growth of 18.54% (compared to the growth of
19.97% during last year), to reach a level of Rs.13,82,684 crore.

1.5 Regulatory Measures and Monetary Policy:

The Reserve Bank has pursued an accommodative monetary policy beginning
mid-September 2008 in order to mitigate the adverse impact of the global
financial crisis on the Indian economy. The measures taken instilled
confidence in market participants and helped cushion the spillover of the
global financial crisis on to the economy. However, in view of rising food
inflation and the risk of it impinging on inflationary expectations, the
Reserve Bank announced the first phase of exit from the expansionary
monetary policy by terminating some sector-specific facilities and
restoring the Statutory Liquidity Ratio (SLR) of Scheduled Commercial Banks
to its precrisis level in the Second Quarter Review in October 2009.

The monetary measures implemented during the financial year include:

* Both Repo rate and Reverse repo rate, initially reduced by 25 basis
points to 4.75% and 3.25% respectively in the first quarter, were later
restored to 5.00% and 3.50% in March 2010.

* While the Bank rate was kept unchanged at 6.00%, Cash Reserve Ratio [CRR]
was hiked by 75 basis points to 5.75% and Statutory Liquidity Ratio (SLR)
was restored to 25% during the fourth quarter.

* The limit for export credit refinance facility reduced from 50% of
eligible outstanding export credit to 15%.

* Special refinance facility and the Special term repo facility for
scheduled commercial banks (for funding mutual funds, non-banking financial
companies and housing finance companies) were discontinued from 27.10.2009.

* Liabilities of scheduled banks arising from transactions in
collateralised borrowing and lending obligations (CBLO) with Clearing
Corporation of India Ltd. (CCIL) to be subjected to maintenance of the CRR.

* Interest on savings bank accounts is to be calculated by scheduled
commercial banks on a daily product basis from April 1, 2010.

* Branch Authorisation Guidelines were liberalized - Scheduled commercial
banks (SCBs) allowed to set up off-site ATMs without prior approval subject
to reporting. SCBs also permitted to open offices in North Eastern states
and in centres with population up to 49,999 in other states without prior
approval from the RBI.

* Introduction of a new Base Rate for Indian Banks in place of the
Benchmark Prime Lending Rate [BPLR] structure, with effect from July 01,
2010,

* The increased limit for export credit refinance for banks extended up to
March 31, 2010.

* Comprehensive guidelines were issued for deepening Financial Inclusion-
all Banks were required to put in place a Board approved Financial
Inclusion Plan before March 2010, to be implemented over the next 3 years.

* Comprehensive Guidelines were issued for implementing Mobile Banking.
The daily cap on transactions was increased to Rs.50,000/- per customer for
both funds transfer and transactions involving purchase of goods/services
from the earlier separate caps of Rs.5,000/- and Rs.10,000/- respectively.

* The cap of Rs.20 lac on loans granted against the security of funds held
in NR(E)RA and FCNR (B) deposits enhanced to Rs.1 crore.

* The provisioning requirement for advances to the commercial real estate
sector classified as 'standard assets' increased from 0.4% to 1.0%.

* Banks advised to augment their provisioning cushions consisting of
specific provisions against nonperforming assets (NPAs) as well as floating
provisions so that their total provisioning coverage ratio, including
floating provisions, reaches 70% by September 2010.

2. BANK'S PERFORMANCE

2.1 Working Results and Operating Profit:

Operating profit (after staff provisions) of the Bank for 2009-10 stood at
Rs.1,055.87 crore as against Rs.1,056.27 crore for the previous year. Net
Profit for the year stood at Rs.684.27 crore as compared to Rs.607.84 crore
in 2008-09. The Earnings per share (of Rs.10 face value) improved from
Rs.121.57 to Rs.136.85.

2.2 Dividend:

The Bank declared a higher dividend of 160% to the shareholders, entailing
a total payout of Rs.93.60 crore, including dividend tax. The Pay-out Ratio
works out to 12.05% of the distributable profit (excluding dividend tax).

2.3 Capital Augmentation & Capital Adequacy:

The Bank's capital funds improved from Rs.3,843.34 crore as at the end of
March 2009 to Rs.4,397.23 crore as at the end of March 2010. The Bank has
migrated to Basel-II framework with effect from 31st March 2008. The
Capital Adequacy Ratio under Basel II stood at 13.74% in March 10 as
compared to 14.03% in March 09 against a minimum of 9% stipulated by RBI.
The Tier-I CRAR on this date is 9.24% as against 8.59% as at the end of the
previous year.

2.4 Deposits:

Total deposits of the Bank registered a growth of 21.03%, reaching the
level of Rs.50,883 crore as on 31st March 2010 as against Rs.42,041 crore
as on 31st March 2009. Personal Deposits grew by Rs.3,891 crore to reach
Rs.32,478 crore. As a consequence of economic slowdown experienced in the
Gulf countries, particularly the UAE, the NRE Deposits were subdued during
the year. Other factors like the low NRE interest rates, unfavourable
exchange rates, large scale conversion of NRI deposits to domestic deposits
and the lure of real estate sector also contributed to the subdued trend.
NRI deposits stood at Rs.10,837 crore and constituted 21.30% of the Total
deposits of the Bank as on 31st March 2010.

2.5 Advances:

Total advances of the Bank registered a growth of 17.97% during the year
and reached a level of Rs.38,461 crore as on 31st March 2010 as against
Rs.32,601 crore as on 31st March 2009. The main contributions came from the
C&I segment [growth of Rs.3,242 crore] and Personal segment [growth of
Rs.1,974 crore]. The Bank's Retail lending stood at Rs.19,688 crore and
constituted 51.19% of the credit portfolio as at the end of March 2010. The
Credit Deposit Ratio of the Bank stood at 75.59% as on 31st March 2010 as
against 77.54% as on 31st March 2009.

2.6 Business Turnover:

The business turnover of the Bank stood at Rs.89,345 crore on 31st March
2010, registering a growth of 19.70% from the level of Rs.74,642 crore as
on 31st March 2009.

2.7 Market Share:

Bank's All India market share in deposits has improved from 1.08% on 27th
March 2009 to 1.09% on 26th March 2010. In Advances the share has improved
from 1.15% to 1.18% in the same period. The Bank continued to maintain its
position as the premier bank in Kerala with a market share in business of
22.56% as at December 2009 (as per latest published Data by Reserve Bank of
India as on date of this report) with 14.23% of the total branch network in
the state.

2.8 Priority Sector Lendings:

The Bank continued to lay special emphasis on lending to the Priority
Sector in conformity with the national policies, expectations and
fulfillment of social objectives. Bank's Priority Sector Lendings increased
from Rs.13,015 crore as at the end of March 2009 to Rs.14,091 crore as at
the end of March 2010, recording a growth of Rs.1,076 crore. As at March
2010, Priority Sector advances [including eligible investments] constituted
43.87% of the Adjusted Net Bank Credit [ANBC] against the benchmark of 40%.

2.9 Agricultural and Rural Finance & Self Help Groups:

Bank has disbursed an amount of Rs.3,083 crore under agriculture segment as
at the end of March 2010 against the Special Agricultural Credit Plan
target of Rs.3,000 crore. The level of lending to Agriculture segment
(including eligible investments) stood at Rs.3,414 crore as on 31st March
2010 which represents a growth of Rs.461 crore over the previous year.
Bank's Agriculture Advances constitute 10.33% of ANBC.

An intensive Agricultural lending campaign titled 'SBT HARITOTSAVAM-2009'
was conducted during Jul-Sep 2009 with a lending target of Rs.500 crore and
70,000 new accounts under various heads in Agriculture segment. The
campaign was a grand success achieving disbursements aggregating Rs.502
crore under 94,000 new accounts. During the current fiscal 28,804 Kisan
Credit Cards (Working capital facility to farmers) and 5,311 Kisan Gold
Cards (Investment credit to farmers) were issued with an outlay of funds of
Rs.188 crore and Rs.172 crore respectively. In order to spread the message
of lending to needy farmers and to create awareness among the rural folk on
the various agricultural schemes being implemented in the Bank, a publicity
van was plied through the rural areas. The security norms were relaxed for
crop loans up to Rs.1 lac in respect of farmers having legal ownership of
agricultural land with good repayment track record for last two years to
improve the lending to agriculture and bring maximum number of farmers to
the bank's books. Under the SGSY scheme, exemption in collateral security
for individual loans was raised from Rs.50,000/- to Rs.1 lac and Group
loans from Rs.5 lac to Rs.10 lac respectively.

Bank has been committed in promoting Self Help Groups and financing them
through MFIs and NGOs. 78,677 groups were assisted so far with a financial
outlay of Rs.542 crore. Bank during the year financed 37 families with an
outlay of funds of Rs.29 lac under Bhavansree Scheme for constructing
houses to members of Self Help Groups / Neighbourhood groups living below
poverty line.

With a view to pass on the benefit of technological advancement to the
farmers, a utility has been provided for registration of applications on-
line in respect of Agricultural advances for the use of general public. The
facility is available in the internet website of the Bank.

Farmers' Meets were conducted in most of the rural and semi-urban branches
with the involvement of NABARD officials and Government Development
Departmental functionaries to create awareness among the public of the
various agricultural products. The 210 Farmers Clubs functioning in rural
and semi urban areas act as catalyst in rural transformation.

2.10 Lending to Micro, Small And Medium Enterprises (MSMEs):

Bank continued its active support to Micro, Small and Medium Enterprises
(MSMEs). Lending to this segment has recorded a growth of Rs.885 crore to
touch Rs.7,412 crore as on 31st March 2010. The impact of the economic
slowdown continued for the better part of the year, though recovery was
seen in many sectors.

Manufacturing units, especially under the traditional sectors like coir,
cashew and textiles, which have a high dependence on exports, continued to
face fewer orders. The relief measures introduced to assist the affected
units like providing of additional working capital, term loan, relaxation
in margin requirements, longer period for financing receivables, reducing
interest rates etc, helped many units survive the difficult period. Some of
the measures taken for assisting the units affected by the economic
slowdown include:

i. Additional working capital limits upto 20% of the existing working
capital facilities.

ii. New term loan facility for purchase of generator sets and also
machinery/tools/ other fixed assets.

iii. MSME Care Centres have been opened at all Zonal Offices and Regional
Offices at Mumbai and Delhi for rendering support to units. Credit
Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) - The Bank is
Member Lending Institution under the CGTMSE scheme for providing collateral
free loans. Workshops were conducted in all Regions of the Bank to improve
the awareness of the operating staff about the scheme. Meetings of
entrepreneurs were also conducted to educate them about the scheme. So far
the Bank has covered 5,914 loans amounting to Rs.146 crore under the
scheme.

2.10.4. The Bank's Technical Consultancy Cell carried out 15 project
appraisals, rehabilitation studies and industry specific studies during the
year. 3 Entrepreneurship Development Programmes (EDPs) were conducted by
the Bank during the year.

2.11 Commercial & Institutional Finance:

Despite the repercussions of global recession during the year, the Bank
performed well under the segment by tapping the potential in the market and
C&I advance of the Bank reached Rs.19,198 crore as on 31st March 2010.
Almost half of Bank's Total Advances comes under this segment, which
comprises financing Trade and Services, Industry, Infrastructure, financing
corporate customers and other institutions.

The existing loan policy of the Bank was revised comprehensively in January
2010 by incorporating latest directives from RBI/ SBI. The policy on
valuation of properties, empanelment of valuers, etc has been revised in
order to improve smooth and quick delivery of credit.

Project Finance Unit:

Project Finance Unit was formed in the Bank in order to develop project
appraisal skills in-house, and also to avoid good proposals go past the
Bank for want of Technoeconomic viability (TEV) study. The unit undertakes
Technical and Financial appraisal of small and medium sized projects, which
have not been vetted by agencies of national/international repute. During
the period ending March 2010, PFU has conducted TEV study on 43 projects
worth Rs.1,125 crore.

2.12 Personal Finance:

The Bank continued to be active in extending finance to Personal Segment,
mainly by way of Housing Loans, Car Loans and Educational Loans. The
Personal segment Advances went up to Rs.12,696 crore as at March 2010 from
Rs.10,722 crore as at the end of the previous year, recording a growth of
18%. As many as 24,517 Housing Loans aggregating Rs.2,330 crore were
extended during the period under review, taking the outstanding Housing
Loan level to Rs.6,144 crore as at 31 March 2010, an improvement of 26.47%
over March 2009 level of Rs.4,858 crore. Similarly 24,121 Car Loans
aggregating Rs.741 crore were extended during the same period, taking the
outstanding Car Loan level to Rs.1,324 crore as at 31 March 2010, which is
higher by 35% over March 2009 level of Rs.984 crore.

As in the previous year, the Bank has granted the maximum number of
education loans in the State of Kerala. The Bank extended over 30% of the
total number of the loans sanctioned in Kerala. During the year under
report, Bank sanctioned 14,611 loans amounting to Rs.416 crore for various
courses to deserving students. The total amount outstanding increased by
over 24% to Rs.1,682 crore from Rs.1,354 crore last year.

2.13 Assistance to SC/ST/Minority Community (MC):

The Bank continues to give due importance in extending financial assistance
to meet the credit requirements of the SC/ST/MC borrowers. The advance to
SC and ST borrowers under priority sector aggregated Rs.1,562 crore and
Rs.3,123 crore for MC. This works out to 10.77% of the Bank's priority
sector advances for SC/ST and 21.53% of the Bank's priority sector lending
for MC. In the previous year this was 8.48% for SC/ST and 17.55% for MC of
the Bank's priority sector lending. The non-performing asset position in
respect of SC/ST borrowers under Priority Sector stood at 2.72% of the
outstanding.

2.14 Treasury and International Operations:

Bank's total forex turnover during the year for merchant transactions
(including exchange company transactions) was Rs.32,197 crore compared to
Rs.33,582 crore during the previous year. Inter bank turnover was higher at
Rs.3,66,209 crore as against Rs.2,12,102 crore during the previous year.
The total profit from forex operations during the year was Rs.77.91 crore
as against Rs.86.64 crore as on 31st March 2009.

The Investments of the Bank stood at Rs.16,024 crore as on 31st March 2010
as against Rs.13,232 crore as on 31st March 2009 and the average
investments during 2009-10 was Rs.14,960 crore as against Rs.11,922 crore
during 2008-09. The revenue from investment operations (interest and
dividend) for the year was Rs.1,105 crore as against Rs.860 crore for the
previous year. The average yield on investments was at 6.92% during the
year as compared to 7.30% during the year ended 31st March 2009. The Bank
earned a profit of Rs.78.99 crore from Treasury Operations during the
period under report.

2.15 Government Business:

The Bank conducts Government business in 107 branches in Kerala and 2
branches in Tamil Nadu. Further, 196 branches (136 branches in Kerala and
60 outside Kerala branches) collect Direct Taxes (CBDT) and 148 branches in
Kerala collect Indirect Taxes (CBEC). Bank has launched e-payment facility
for Direct and Indirect taxes and Commercial Taxes of Governments of Kerala
and Maharashtra. As many as 2.62 lac e-payments aggregating Rs.2,360 crore
were made using the On-line Commercial Tax payment facility. 14 Non Banking
Treasuries have been converted as Banking Treasuries and linked to the
respective branches during 2009-10. The market share of the Bank in the
total turnover of Kerala State Government transactions for 2009- 10 works
out to 73.77% compared to 72% in 2008-09.

3. Marketing Initiatives and Development of New Products:

3.1 Marketing initiatives aimed at customer relationship management and
customer acquisition assumed a new dimension by organizing massive
campaigns for canvassing Agricultural Loans and other retail loans, and for
augmenting deposits. Conducting intensive drives during festive seasons was
one of the strategies adopted to enhance the business level and customer
base.

3.2 The marketing efforts were supplemented by high intensity advertising
campaigns spanning print, audio, video and web media. These efforts brought
about a palpable improvement in the image and visibility of the Bank across
the length and breadth of the country.

3.3 Aishwaryotsav- Retail Loan campaign:

Special Home loan and Car loan schemes were introduced in connection with
Onam festival from 17th August 2009 to 30th November 2009, with
differential interest rate fixed for first three years. The well received
campaign ultimately helped the Bank to bag 8,528 new Housing loan accounts
with an outlay of Rs.800 crore and 11,269 new car loans with a total outlay
of Rs.348 crore.

3.4 SBT Mahotsav deposit mobilization campaign was celebrated during the
period between 2nd November and 16th December 2009 with a specific target
to increase the share in CASA Deposits, Card rate deposits and CASA account
numbers. It helped the Bank to mop up Rs.1,872 crore of deposits and 1.58
lac new accounts.

3.5 New Products & Business Initiatives:

The following new customer friendly products were added to the impressive
bouquet of the Bank's products and schemes during the year:

* EZ Trade - 3-in-1 facility for Demat and Online Trading, highly secure
integrated platform comprising i) Savings bank/ Current/Overdraft account
ii) Demat account and iii) Trading account. This facilitates the customers
to access their Online Demat and Trading accounts from anywhere, anytime
with paperless and hassle-free processes. This facility, introduced in June
2009, is available in 58 branches.

* 'SBT BIZ' with Minimum Balance of Rs.25,000/- and 'SBT Shakthi' a special
Current Account with fee/subscription collection functionality and minimum
balance of Rs.25,000/- were launched to enhance the share of Current
Accounts in the Deposit Mix and to bring down the cost of deposits.

* Sukanya Deposit Scheme: A new deposit scheme was introduced exclusively
for girl child aged between 10 and 18 years to commemorate National Day for
the Girl Child.

* SBT Nano Car Booking Funding Scheme: After entering into a tie-up with
M/s Tata Motors Ltd. a loan scheme for booking TATA Nano car was introduced
where 100% of the booking amount is advanced on simple terms.

* 'ASBA' - Applications Supported by Blocked Amount- has been launched by
the Bank with the product name SBT e- Invest, which facilitates investors
to apply for public issues. The application money is blocked in the
investor's account till allotment is finalised and the person continues to
earn interest on the application money till the amount is transferred from
the account. The investor need not bother about refund since money remains
in the account.

* Prasanthi Elite Loan for pensioners: A loan scheme to cater to the needs
of elite group of pensioners has been introduced with a maximum limit of
Rs.5 lac.

* Swagatham-A scheme for returning nonresidents - In the backdrop of a
large number of non-resident Keralites returning due to the global
recession, the Bank introduced a scheme to provide financial assistance to
enable them to take up manufacturing, service, trade and agriculture
activities. The scheme has generated a lot of goodwill for the Bank amidst
the expatriates.

* 'XPRESS Remit', a new online remittance facility in Foreign Currency,
introduced by the Bank in association with SBI GLS, enables customers in US
and UK to make remittances from their desktop, round the clock to their
account with SBT, through Automated Clearing House (ACH) mechanism.

* Vishwa Yatra Foreign Travel Card (VYFTC)-Bank has introduced VYFTC on
13th November 2009 in association with State Bank of India and VISA to meet
the demands of customers going abroad and to provide a convenient, cost
effective and more secure alternative to carrying foreign currency /
travellers cheques.

3.6 Electronic Payment Systems:

The Bank has been able to bring about better awareness among the customers
on using electronic mode of remittances. The Payment & Settlement Group
functioning at Integrated Treasury, Mumbai, attends to electronic
remittances like RTGS/NEFT and Group Payment [GRPT] transactions and the
funds settlement between the Bank and other Banks/RBI. The total number of
outward electronic messages (RTGS/NEFT/ GRPT) emanating from branches has
increased from 74,617 to 1,49,471 registering 100.32% increase during the
year.

3.7 Other modifications/ additions in existing schemes:

Based on market studies and the feedback received from branches as well as
customers, some of the schemes were modified/ revamped during the year, to
facilitate better customer acceptance.

* Reverse Mortgage Loan Scheme extended to all branches.

* Suvidha Loan amount limit increased to Rs.1 crore.

* Maximum loan amount in Car loan enhanced to Rs. 30 lac.

* The maximum amount of deposit in Super Surplus scheme increased to
Rs.1,00,000/-..

* Interest concession of 0.25% on card rate on Housing loans, Car Loans and
Personal Loans under Corporate Salary Package.

* 'Home Appliances Dealers Plus' and 'Distributors Plus' schemes -
reduction in interest rate and relaxing the eligibility criteria. Upward
revision of limit cap to Rs.200 lac for 'Pharma Plus' scheme.

* Warehouse receipt financing for farmers and traders engaged in Produce
marketing - the maximum cap per borrower under the scheme for financial
assistance against warehouse receipt issued by National Bulk Handling
Corporation increased from Rs.2 crore to Rs.3 crore.

* Special Drought Relief Scheme to help the farmers affected by drought and
weak monsoon - Minor Irrigation Loan with reduced interest rate and
extended repayment periods.

* Special concessions to support the farmers who have been affected by weak
monsoon by extending crop loans at reduced interest rates.

* The Traders' Special scheme modified to improve the quality of assets
'Doctors' Special modified with interest rate changes and higher loan
amount.

* Interest rate and charges on Bill Discounting under Inland Letter of
Credit Scheme revised in line with the market condition to make the product
the best in the market.

* Collateral security norms for lending to RTO liberalized.

3.8 Tie-up arrangements:

The Bank has tie-up arrangements with various manufactures/dealers/
organisations for improving business levels and accelerated customer
acquisition.

* Maruti Suzuki India Ltd.: The Bank has a tie-up with Maruti Suzuki India
Ltd. as preferred financier for extending finance for purchase of Maruti
cars. The Bank has extended maximum loans for Maruti Cars among Associate
Banks. The 15,667 such loans extended by the Bank constitute 30% of such
loans extended by all the Associate Banks put together and represent an
improvement of 46% over the previous year.

* Hyundai Motors India Ltd.: The Bank entered into a tie-up with Hyundai
Motors India Ltd. as preferred financier for extending finance for purchase
of Hyundai cars.

* Mahindra & Mahindra Ltd : The Bank has entered into a tie-up with
Mahindra & Mahindra Ltd. as preferred financier for extending finance for
purchase of passenger vehicles of M&M.

* Commercial dairying is picking up as a rural enterprise in Kerala. The
farmers have to depend on professional milkers for milking, which is
costly. To mitigate the difficulty, Malabar Regional Co-operative Milk
Producers Union (MRCMPU) under MILMA has entered into an agreement with M/s
De Laval India to deliver milking machines at discounted rate to the dairy
farmers of Malabar Region. The bank has formulated a scheme for financing
of milking machine under this tie-up.

4. Cross Selling:

4.1 The Bank continues to make efforts to meet the needs of the customers
for other investment channels like Insurance, Mutual Funds etc through tie-
up arrangements. The income from such activities has also served to improve
the Non-Interest income of the Bank. Income from Cross selling has improved
by more than 27% from Rs.9.63 crore in FY 2008-09 to Rs.12.19 crore in FY
2009-10. SBI Life Insurance business improved substantially by more than
43%. General Insurance business turnover in tieup with United India
Insurance Company and income generated thereon have marginally gone up by
1.7%. The Accident Insurance policy, SBT Uni Suraksha, carrying Accident
Death Cover of Rs.5 lac, has gained more popularity. More than 37 families,
most of them poor, have benefited from settlement of claims arising out of
death of policyholders. The number of such policies issued has crossed 2
lac. Efforts are afoot to improve sourcing of applications for SBI cards
through the Branches.

4.2 During the year as many as 244 members of Bank's staff were trained and
qualified as AMFI Certified Employees (ACEs) authorised to handle Mutual
Funds, taking the total number of ACEs to 812. In order to improve the SBI
Life business, Bank trained several employees/officers. There are as many
as 902 employees qualified as Certified Insurance Facilitators (CIFs) out
of which 171 employees qualified during the FY under report. With this the
Bank has moved closer to the objective of having an ACE and a CIF each in
all branches.

4.3 Bank covered a record number of more than 15,000 Housing and Car Loans
during the year under Credit Protection facility of Dhanaraksha provided by
SBI Life which covers the loan outstanding as per repayment Schedule in the
event of unfortunate death of borrowers. The scheme effectively provides
succour to the bereaved family while preventing the loan account from
becoming a stressed/nonperforming asset.

4.4 Grameen Shakthi, a micro Insurance product, which covers the life of
SHG borrowers to the extent of Rs.50,000 at a nominal cost of Rs.601 per
annum, was also launched and marketed to benefit

5,000 Borrowers.

5. NRI Services:

5.1 SBT, the market leader in NRI business in Kerala, has been continuously
improving its products and services to NRIs. All technology based products
and services have been made available to NRIs also, so that they can bank
with their most preferred bank, SBT, from any corner of the globe. The
Representative Office in Dubai, opened in August 2008, is acting as an
interface between branches and NRIs to meet their banking needs. Bank's
extended arms are available in UAE and Sultanate of Oman, the two vibrant
and developing countries in the Gulf Cooperation Council (GCC), through the
Bank managed Exchange companies, viz., City Exchange LLC in UAE and Global
Money Exchange in Sultanate of Oman.

5.2 The recently developed product, NRI PLATINUM account, has been well
accepted by high net-worth NRIs, as the product provides special identity
to customers and a host of services free of cost. Personalized multicity
cheque payable at all branches at par and SBT Gold International Debit Card
(VISA) that provides complimentary insurance are the special features of
the product.

5.3 The MoneyTrans e-Remit, a web based fast and secure facility for
remittances from Gulf countries, introduced by the Bank is a unique product
well received by the customers and Exchange Companies. The remittances
through the scheme will reach the accounts with the bank directly,
immediately on upload and will be acknowledged by SMS/email to the
remitter. This facility has been extended to 25 exchange companies that are
having drawing arrangements with the Bank. This facility is in addition to
the existing Rupee draft drawing facility and Swift remittance. Remittances
through e-Remit numbered 24.36 lac aggregating Rs.9,826 crore during 2009-
10 as against 13.46 lac aggregating Rs.5,929 crore during 2008-09.

5.4 All credits of Rs.5,000 and all debits above Rs.25,000 are acknowledged
through SMS to NRIs. Internet banking facility offered by the bank enables
the NRIs to effect transfer of funds within the Bank as well as to other
banks in India and also third party transfers, carry out their standing
instructions for various payments, rail bookings, fee payments, and also
online shopping. It also enables them to view their accounts and
transactions.

5.5 NRI News Channel, a monthly newsletter containing important news items
and information regarding products and services, interest rates etc. useful
to NRIs, is circulated to all NRI constituents through the branches by
email.

5.6 Opening of new NRE account sourced by Exchange Companies is now
centralized at the Liability Central Processing Centre [LCPC] functioning
at Thiruvananthapuram, which facilitates immediate opening of accounts and
issuance of Multicity cheque book and pass book to the customers.

5.7 ISB Helpdesk attached to Foreign Exchange Dept., Ernakulam attends to
queries relating to various remittances made from Gulf countries. ATM
Helpdesk, Internet Banking Helpdesk and NRI Helpdesk attached to Head
Office, support the NRIs to resolve all their grievances in respect of
their accounts and transactions.

5.8 The four NRI Branches at Attingal, Mavelikkara, Thiruvalla and
Ernakulam and specialized NRI Cells in more than 50 branches in NRI centres
provide specialized and personalized services to the NRIs.

6. Business Process Re-engineering (BPR) Initiatives:

6.1 The Bank has embarked on implementation of various BPR initiatives
beginning from February, 2005, with the objective of improving performance
and enhancing customer service to global standards, by leveraging on its
core competencies, state of the art technology and redesigned operating
architecture.

6.2 Centralised Loan Processing Centres (CPCs) for appraisal, sanction and
disbursement of loans in Retail, Small & Medium Enterprises segments have
been set up at 8 major centres, resulting in improved quality of assets and
shorter turnaround time in extension of loans. Bank's Rural Central
Processing Centre functions at Palakkad covering all the branches in the
District and improving the quality of lending to this segment.

6.3 Multi Product Sales Teams [MPSTs] have been established at seven of the
loan CPC centres to target specific markets, for canvassing business.
Stressed Assets Resolution Centres (SARCs) have been rolled out at 7
centres in Kerala for more focused attention on recovery, thereby releasing
funds blocked in non-performing assets which can then be utilised for more
productive purposes.

6.4 Relationship Managers have been posted at select branches to extend
personalized services to the customers. Grahak Mitras have been positioned
at select branches to proactively guide the customers in conducting
transactions. Drop Boxes have been provided at the branches for hassle-free
and safe handling of instruments deposited. Currency administration Cells,
which facilitate Cashtransmittal between Chest and non-chest branches to
save the cost involved with idle cash, have been rolled out in 11 centres

6.5 Pension processing has been centralized at the Centralised Pension
Processing Centre set up at Thiruvananthapuram, covering all pensioners
drawing pensions from any of the branches in Kerala State, ensuring
accuracy in pension calculations, timely disbursement of pension and quick
settlement of transactions.

6.6 As a forerunner to setting up Centralised Clearing Processing Centres
at MICR centres, the outward clearing work is centralized at the MICR
centres of Thiruvananthapuram, Ernakulam and Kozhikode. With the
introduction of this initiative, the Bank is able to afford credit to the
accounts in respect of local clearing instruments on the next day of
deposit.

6.7 Trade Finance Central Processing Centres [TFCPCs], aimed to ensure
efficient and uniform handling of inland and foreign trade finance related
transactions and Bank Guarantees by experienced operations personnel, have
been rolled out at Ernakulam and Chennai.

6.8 A Liability Central Processing Centre has been established in
Thiruvananthapuram to provide back office support to branches, in opening
and servicing of liability accounts such as Savings Bank and Current
Deposit Accounts. The Centre will provide to branches pre-generated Welcome
Kits consisting of ATM cards and cheque books, facilitating the customers
to open and operate the accounts within a short span of time.

7. Information Technology - Technology Upgradation & IT Initiatives:

7.1 With the Core Banking Solutions implemented across all the branches of
the bank including the newly opened branches, IT department is playing a
key role in facilitating corporate innovation and growth. In order to
minimize damage to network equipment, several proactive actions were taken
such as installing Surge arresters in lightning prone branches.

Branches having frequent connectivity issues were provided with VSAT to
prevent branch isolation. Branches were rerouted to nearest City
Aggregation Points (CAP) to improve network performance and reduce BSNL
channel charges. The upgraded version of Antivirus named SEP is installed
in all the networked users, standalone PCs & Laptops to protect the Network
from operational risks due to the virus attacks and to ensure full
protection against virus/worms.

7.2 Alternative Delivery Channels The Bank has 726 ATMs as on 31st March
2010, including 222 offsite ATMs. The Bank's network of 611 ATMs in Kerala
is the largest in the state. All ATMs are networked with State Bank Group
ATM Network of over 21,500 ATMs. In addition to withdrawal of cash round
the clock, State Bank Group customers can transfer funds up to Rs.50,000/-
to accounts within the Group (Card to Card Transfer) using ATM. The Bank
has an ATM-cum-Debit card base of 36.75 lac as on 31st March 2010, which
represents an increase of 21.40% over the position as at the end of the
previous year. The total number of active cards constitutes 96.13% of the
total operative Savings Bank accounts.

The average number of hits of the ATMs during the period under review is
262. The Bank's ATM uptime is 94.86% during 2009-10. The total number of
ATM transactions put through during the year was 489.94 lac involving a sum
of Rs.12,280 crore. The total number of POS (Point of Sale) transactions
during the year was 4.86 lac involving a sum of Rs.106 crore. VISA Gold
Card - an International ATM cum Debit card working on VISA platform with
higher maximum limit on daily cash withdrawal - was introduced for the
benefit of High Networth customers.

Internet Banking - The Bank offers a convenient and efficient Internet
Banking [INB] facility. Existing 128 bit SSL (Secured Socket Layer)
Encryption has been enhanced to 256 bit EVSSL (Extended Validation Secured
Socket Layer) Encryption, to provide more security to INB customers. The
total number of INB customers increased from 1.60 lac as on 31st March 2009
to 2.67 lac as on 31st March 2010. The number of transactions and value of
transactions put through Internet Banking increased by 193.15% and 188.39%
respectively on year-on-year basis.

The Internet Banking facility has also enabled very significant Government
to Customer [G2C] and Business to Business [B2B] transactions. The online
payment of Commercial Tax of Kerala State Government introduced in the
month of September 2009 was a landmark event. This was followed by Online
payment of Commercial Tax of Maharashtra State Government introduced in the
month of February 2010. Supplier Payment has been enabled for Hindustan
Petroleum Corporation Ltd., [HPCL] in the month of February 2010. Corporate
customers (dealers) having accounts with the Bank can now remit online to
HPCL's selected accounts.

Mobile Banking Service (MBS), another alternative channel for banking/non-
financial transactions, was started on 25th July 2009. This helps the Bank
to provide the customers with another channel for banking transactions,
which is safe, secure, fast and convenient. The daily limit for MBS
transaction is Rs.50,000 for aggregate of funds transfer & transactions
involving purchase of goods & services within an overall calendar month
limit of Rs.2,50,000. Several value added applications were developed to
make the system more useful to the customers. These include: 'Corporate
Payment Gateway - a Web based package - is developed in-house enabling
Corporate to make payments through core banking and NEFT. Internet Web
Interface for corporate users was developed using e-token double factor
authentication.

* Auto Debit Facility, a package developed and ready for implementation to
facilitate the regular bill payments of corporates such as Kerala Water
Authority (KWA), Non Keralites Welfare Board etc. The mandates have to be
registered by the customer with the Bank to enable the payment of bills on
due date.

* Auto SMS generation through SBI gateway: The SMS Solution offered by
State Bank of India has been implemented for generating SMS Credit alerts
and other communications to NRI Customers.

Installment due intimation on loans etc are now routed through the new
channel, which is very cost effective and scalable.

* The Bank's website was revamped during the year to make it more efficient
and userfriendly. A web based online loan request package has been
developed and linked from the homepage. Customers can directly apply for
the Housing loan, Education loan, SME and Agriculture Loans through this
website. Necessary provisions are given in the software for routing the
application to Loan Cell at Head Office for preliminary scrutiny and for
forwarding it to the respective branch for further processing.

8. Lead Bank Scheme:

8.1 The Bank is shouldering Lead Bank responsibilities in three districts
of Kerala State viz. Alappuzha, Kottayam and Pathanamthitta. The District
Credit Plans for the year 2009-10 were launched in the Lead Districts well
in time. The various mandatory meetings in all the blocks of the Lead
Districts were conducted strictly in accordance with the guidelines issued
by RBI. The Bank had initiated several developmental programmes like
Entrepreneur Development Programmes, Farmers 'Meet and Planters' Meet for
different target groups in the Lead Districts.

8.2 The total outlay under Priority Sector by all financial institutions in
the three Lead Districts for 2009-10 was Rs.8,735.50 crore of which the
Bank's share was Rs.1,840.96 crore. The estimated disbursement under
Priority Sector advances in these three districts for the year 2010-11 by
all financial institutions is Rs.13,801.76 crore of which the Bank's share
is Rs.3,030.51 crore, which constitutes 22% of the outlay.

9. Financial Inclusion:

9.1 Financial Inclusion through deepening and widening of financial
services is one of the key challenges before the Indian Banking sector.
Financial inclusion is the delivery of financial services at an affordable
cost to the vast sections of disadvantaged and lowincome group. Achieving
financial inclusion is seen necessary to improve and achieve social
inclusion. In response to the RBI's directives, the Bank has formulated a
Financial Inclusion Plan to be rolled out over the next three years. This
plan for Financial Inclusion will be an integral part of the business plans
with the following key objectives:

* Effecting improvements within the existing formal credit delivery
mechanism.

* Suggesting measures for improving credit absorption capacity especially
among rural folk.

* Evolving new models for effective outreach

* Leveraging on technology based solutions.

The Bank proposes to implement this fullfledged Financial Inclusion Plan,
approved by the Board, over the next three years.

The Bank has set up a separate Financial Inclusion Department to monitor
and implement the plan, headed by an officer in Senior Management grade.

9.2 The Bank crossed the Million mark in 'Janapriya' No-frills accounts,
opening 1,98,558 such accounts during the year to reach 10,10,978 accounts.
These constitute about 45% of the total number of accounts opened by all
public sector banks in the state of Kerala. By way of mainstreaming Self
Help Groups, Joint Liability Groups, etc, the Bank has opened 80,000
accounts. Biometric Smart Card pilot project, implemented in Nedumkandam
under a Business Correspondent / Facilitator Model, will be extended to the
other centres.

9.3 Financial Literacy, Credit Counselling And Training:

The Bank has established Rural Self- Employment Training Institutes
(RSETIs) and Financial Literacy and Credit Counselling Centres (FLCCs)
during the year in its Lead Districts viz. Pathanamthitta, Alappuzha and
Kottayam. The Wayanad Rural Micro Training Institute [WRMTI] established in
2005, was converted to an RSETI. The RSETIs will support the socio-economic
development of the villages, by imparting vocational training to
disadvantaged sections of the society to enable them to take up gainful
economic activities. The RSETIs have trained 6,382 persons in Wynad and
Pathanamthitta. 95% of the beneficiaries are women. 60% of the trainees are
reported to be successful in starting self-employment ventures, with credit
assistance from the Bank. The FLCCs provide free financial
literacy/education and credit counseling, including education on
responsible borrowing, proactive and early savings. They will also extend
debt counseling to individuals who are indebted to formal and/or informal
financial sectors.

10. Industrial Rehabilitation:

10.1 Bank's approach to Asset Management includes revival of viable sick
industrial units as an important strategy. Rehabilitation/Restructuring
packages are under implementation in respect of 27 units with a total
exposure (FB+NFB) of Rs.266.30 crore. Out of these 27 units, 11 units are
under CDR scheme with exposure of Rs.194.12 crore, 15 units under BIFR
scheme with exposure of Rs.71.52 crore and 1 unit under Bank's scheme with
exposure of Rs.0.66 crore.

10.2 During the year, six accounts were referred to CDR scheme for
restructuring. Out of these six accounts, restructuring packages for two
accounts were implemented and others are under process.

11. Management of NPAs:

11.1 The Bank continues to give topmost priority to NPA management and
recovery of Non-Performing Assets (NPA) and Advance Under Collection (AUC)
accounts, with a view to improving the asset quality and profitability.
These assets have been frequently reviewed and followed up by the
management functionaries at various levels. Recoveries are also made by
constant follow-up of the DRT cases, and also by invoking the provisions of
SARFAESI Act 2002 etc. Recovery/settlement of Stressed Assets through
Compromise Scheme of the Bank, Lok Adalat and Bank Adalat was taken up
vigorously.

11.2 The percentage of Gross NPAs to Gross Advances stood at 1.65% on 31st
March 2010 with the Gross NPA level at Rs.641.98 crore. The percentage of
Net NPA to Net advances stood at 0.91% as on 31st March 2010 compared to
0.58%, a year ago.

11.3 SME OTS-2009: A scheme for one time settlement of SME accounts which
had become doubtful asset as on 31.03.2009, was introduced on September 15,
2009. The scheme was applicable to accounts with outstanding below Rs.25
lac. The recovery effected under the scheme was Rs.1.16 crore.

12. Internal Control Systems & Supervision:

12.1 Integrated Risk Management:-

The Bank has a robust Risk Management framework in place. The Board of
Directors has the overall responsibility to implement a Risk Management
System in the Bank. Under the Board, Risk Management Committee of the Board
(RMCB) is the apex body to decide appropriate policy and strategy for
internal risk management. Subordinated to RMCB, Credit Risk Management
Committee (CRMC), Market Risk Management Committee (MRMC) and Operational
Risk Management Committee (ORMC) are in placeto manage Credit Risk Market
Risk and Operational Risk respectively at the granular level. The General
Manager (P&D) is designated as the Chief Risk Offcer (CRO). The Integrated
Risk Management Department headed by Deputy General Manager is responsible
for the overall daily management of risks at micro level.

12.2 The Internal Capital Adequacy Assessment Process (ICAAP) document has
been prepared in accordance with the Pillar-II requirements and has been
submitted to RBI. The Bank has completed Risk and Control Self Assessment
(RCSA) for the management of Operational Risk, in all the branches and user
departments. As part of preparedness towards migrating to The Standardised
Approach (TSA) of Operational Risk by the next FY 2010-2011 , the Bank has
completed the mapping of income streams into eight Business Lines as
stipulated by RBI. A web based software has been installed to capture loss
data for the management of Operational Risk as required under Advanced
Measurement Approach.

12.3 Asset Liability Management:

The Asset Liability Management System implemented effective from April 1,
1999 is functioning as per the guidelines prescribed by Reserve Bank of
India. The Asset Liability Committee (ALCO) headed by Managing Director
meets regularly. The ALCO discusses in detail the statements of Structural
Liquidity and Interest Rate Sensitivity, Short Term Dynamic Liquidity,
Stress Testing on Liquidity and Interest Rate, Quarterly Review of
Contingency Funding Plan, Duration Gap Analysis, Analysis of Interest Rate
Risk by the Traditional and Duration Gap Methods. Various interest rate
revisions including the revision of the Benchmark Prime Lending Rate (BPLR)
of the Bank is discussed and decided by the ALCO.

12.4 Market Related Funds Transfer Pricing (MRFTP):

In orderto facilitate effective Asset Liability Management, the existing
Transfer Pricing Mechanism [TPM] using the Multiple Transfer Price Formulae
[MTPF], introduced in 2003 and fine-tuned in 2006, was replaced with Market
Related Funds Transfer Pricing [MRFTP] from 1st April 2009. MRFTP is a
scientific internal fund transfer price mechanism evolved to ascertain the
true profitability of operating units by bench-marking the product prices
to the market rates. Under MRFTP, the performance measurement system
reflects a consistent and fair picture about the branches' profitability.
It also improves the product pricing policy of the bank.

12.5 Inspection and Supervision:

The Inspection Department at Head Office co-ordinates the Audit and
Inspection activities of the Bank. In addition to the regular internal
inspection, IS Audit, Compliance Audit, Surprise Inspection, System Audit
of Zonal Offces and Head Office departments, etc. are conducted by the
Inspection Department.

12.6 The Bank has put in place an effective institutional mechanism for
Risk Based Supervision through RBS Cell in Inspection Department. As
envisaged by the regulator, the Bank introduced Risk Focused Internal Audit
(RFIA) under RBS w.e.f. 1st April 2003, where business parameters have been
de-linked from the Risk Parameters.

12.7 Following the migration to the CORE Banking System, RFIA was revamped
by way of revision in Audit Report Formats, rating mechanism, grouping of
branches, sampling norms and periodicity of Inspection. The Information
System Audit (IS Audit) cell was formed within the Inspection Department.

12.8 Credit Audit:

The audit of loan appraisal and administration for high value credit
accounts with the aim of improving the asset quality of the Bank is
undertaken by the Credit Audit Department. Accounts with total exposure of
Rs.2 crore and above are covered under Credit Audit. The Department
conducted audit of 933 accounts during the year, covering the presanction
and post sanction aspects. Of the 933 accounts, 42 related to accounts with
exposure below Rs.2 crore and above Rs.1 crore on a random basis. With the
integration of credit audit with RFIA, the marks awarded by the credit
auditor are normalized by the internal auditors under Credit Risk
Management, wherever necessary.

12.9 Inter-Office Reconciliation:

As per RBI guidelines, all the high value debit entries of value Rs.1 lac
and above and 99.99% of debit amount need to be reconciled within a period
of six months from the date of their origin. As against this stipulation,
the Bank had completed reconciliation of Inter-branch accounts up to
December 2009 achieving 100% reconciliation of debit entries by end-March
2010. The Bank has also reconciled all credit entries of value Rs.50,000/-
and above for the quarter ended September 2009 in Branch Clearing General
Account. The Bank aims to reconcile all entries within a shorter time frame
than the target of 3 months set by RBI.

12.10 Compliance:

The Bank ensures that GOI and RBI directives/instructions received are
being complied with promptly. Quarterly review reports on the compliance
status and performance of the Departments are regularly submitted to the
Audit Committee of the Board for information.

13. Vigilance Machinery And Frauds Monitoring:

13.1 The period under review was a year where the vigilance climate in the
Bank was quite normal. The integrity level of staff/ offcers in this Bank
is very high and hence the instances of criminal misconduct committed by
the staff/officers were minimal. Unfortunately two instances of frauds,
where staff members were involved, reported during the year have posed some
concern. Regular Departmental Action against erring offcials has been
initiated.

13.2 As part of Preventive Vigilance measures, the Vigilance Department
officials handled sessions on Preventive Vigilance through Bank's training
system highlighting the importance of adherence to systems and procedures
and probity in public life. The Bank issued circulars every quarter stating
the modus operandi of fraud cases so as to avoid recurrence of similar
instances. Surprise inspections were conduced at branches. Structured
meetings/ conferences were held by the CVO at various Zones of the Bank and
branches to propagate and ensure the implementation of Preventive Vigilance
mechanism in the Bank in its true spirit. More than 700 branches spread all
over India were covered in three months'time.

13.3 During the year the CVO was attached to Central Vigilance Commission
for a week from 9th November to 13th November 2009. The Vigilance
Department offcials attended a training programme at CBI Academy, Gaziabad
for one week One offcial attended a National Seminar on Cyber Crimes, Cyber
Law, Cyber Security at Thiruvananthapuram, conducted by Centre for
Development of Imaging Technology (C-DIT), an autonomous Centre under Govt.
of Kerala.

13.4 Vigilance Awareness Week was observed as per CVC directives with wide
publicity. An Essay Competition was held for members of the staff followed
by a quiz programme for college students. SBT Honesty Awards were conferred
on 4 students, selected from various schools in and around the city, to
inculcate the policy of honesty in the minds of young citizens and also
with an idea to catch them young' for the fight against corruption. The
Honesty Awards were given away by Shri K P Somarajan IPS, Director,
Vigilance and Anti Corruption Bureau, Kerala.

14. Human Resources Development & Industrial Relations:

14.1 Staff Resources & Recruitments:-

The Bank had on its rolls 12,192 members of staff as on 31st March 2010,
comprising 4,182 offcers, 5,784 clerical and cash department staff and
2,226 subordinate staff inclusive of 404 Part Time Sweepers. The number of
women employees and exservices personnel in the Bank was 4,348 and 1,186
constituting 35.66% and 9.73% respectively of the total workforce. Out of
the women employees, 981 were officers, 2,836 non-subordinate staff and 531
subordinate staff. The Bank also had on its rolls 117 physically
handicapped employees.

14.2 As many as 1,191 staff were recruited during the year - 70 in the
officers' cadre, 1,019 in non-subordinate and 102 in the subordinate cadre.
The recruitment of more than one thousand award staff in one batch is a
record achievement in the history of the Bank.

14.3 During the year, 64 employees were promoted from subordinate to
non-subordinate cadre, 264 RKGKs (promotees from subordinate cadre) were
converted to Computer Terminal Operators as a one-time dispensation, 136
employees were promoted from clerical cadre to the Officers' cadre, and 385
promotions effected within Officers' cadre.

14.4 Staff Productivity:-

The business per employee improved from Rs.686 lac as at the end of March
2009 to Rs.758 lac at the end of March 2010. Net profit per employee
improved from Rs.5.58 lac as at the end of March 2009 to Rs.5.80 lac at the
end of March 2010.

14.5 Training Programmes:-

A variety of Training programmes are conducted at the Learning centres to
update the knowledge, awareness and skills of the staff members on an
ongoing basis with particular reference to corporate goals/ concern areas.
During the year under review 179 training programmes were conducted
imparting training to 2,567 offcers, 1,497 non-subordinate staff and 158
subordinate staff.

14.6 In addition to in-house training programmes at Learning Centres in
Thiruvananthapuram and Ernakulam, 616 officers were deputed to other
institutions in India like the State Bank Academy, Gurgaon, State Bank
Staff College, Hyderabad, State Bank Institute of Rural Development,
Hyderabad, State Bank Institute of Information and Communication
Management, Hyderabad College of Agricultural Banking (RBI) Pune, National
Institute of Bank Management, Pune, Indian Institute of Management,
Bangalore, Administrative Staff College of India, Hyderabad, CBI Academy,
Gaziabad, etc.

14.7 In orderto nurture the future leaders ofthe Bank 30 Assistant General
Managers were given a customized Leadership & Management Training at the
prestigious Indian Institute of Management, Bengaluru, while 5 officials
were deputed for attending the following foreign trainings / Conferences:

* Advanced Management Programme at Stanford GSB, California

* Global Advanced Management Programme at Shanghai, China

* FEDAI Annual Conference at Nairobi, Kenya

* Kellogg School of Management, USA

14.8 Performance Recognition:-

Twenty two branches were selected for membership of MD's Club / CGM's Club
for the year 2008-09 and the Branch Heads and Staff Representatives were
felicitated at a glittering function held at Thiruvananthapuram. Two new
Incentive schemes - Award for Excellence in Performance of AGMs (Region)
and Performance Linked Incentive Scheme for Staff - were introduced.

14.9 Library & Knowledge Forum:-

In order to inculcate reading habit among the staff/participants, the
library at Learning Centre, Thiruvananthapuram was renovated and books on
Leadership/ innovation/marketing / personal development etc were added.
Four computers have also been installed in the Library, for viewing
educational CDs and use of e-learning modules by the participants.
Functional libraries have also been made operational in all the 7 Zonal/
Regional Offices. To impart knowledge/ skills to the staff, weekly sessions
were held by the Knowledge Forum coordinated by HR Department at Head
Office, on Fridays on various topics related to Banking, Leadership,
Personality Development, etc.

15. Staff-SC/ST/Minority:-

Community (MC)/Ex-ser./PH Cell:

The Bank has a separate Cell headed by a Chief Liaison Offcer in the rank
of General Manager assisted by Liaison Officers at the Module levels, to
take care of the welfare and interests of the SC/ST employees. Periodical
meetings of the Liaison Offcers with the Chief Liaison Offcer and of the
representatives of the SBT SC/ST Staff Welfare Association with the Top
Management, are held to understand their specifc issues, if any, and to
redress their grievances. The Welfare Association has been provided with
furnished office premises with all infrastructure. Salary check-off
facility for payment of subscription by the members to the Association is
also provided.

15.1 Reservation policy was introduced in the Bank for Scheduled Castes and
Scheduled Tribes from 1972 in direct recruitment and from 1978 in
promotions. Reservation at 15% for SCs and 7.5% for STs are provided both
in direct recruitment as well as in promotion to officers' cadre up to the
specified levels. In direct recruitment for Clerical cadre and Subordinate
staff cadre, reservation at the percentage prescribed by the respective
State Governments is provided.

Category Total SC % ST %

Officers 4,182 583 13.94 127 13.04

Clerical 5,784 800 13.83 177 3.06

Subordinate 1,822 505 27.72 83 4.56

PTS 404 120 29.70 10 2.48

Total 12,192 2,008 16.47 397 3.26

15.2 As on 31st March 2010 the percentage of SC/ST employees in the rolls
is as under:

15.3 Post based rosters as per Government of India guidelines are
maintained in the Bank.

15.4 A Concession of 5% of marks in written test for recruitment as well as
for promotion and relaxation of 5 years in upper age limit in recruitment
are allowed to candidates belonging to SCs and STs. In all the recruitment
drives, the total number of vacancies and number of vacancies reserved for
SCs and STs are advertised extensively in all the major newspapers.
Pre-examination training programmes were conducted for candidates belonging
to SC/ ST/Minority/ex-servicemen category appearing for recruitment test of
clerical staff and Probationary Officers in Associate Banks. Training
programmes were also conducted for employees belonging to SC/ ST category
appearing for promotion from non-subordinate cadre to officer cadre.

15.5 The SC/ST Cell at Head Office acts as a Liaison Office between Bank
and the Ministry of Finance, Govt. of India for supply of information,
answering questions and queries and clearing doubts in regard to matters
covered by the reservation orders. Cases of suspicious caste certificates
are referred to 3 Member Scrutiny Committee constituted by the respective
State Governments and followed up closely. In verified cases, actions as
recommended by the Scrutiny Committee are taken.

15.6 The Cell also ensures:

* Compliance by the Bank with orders and instructions pertaining to the
reservation in favour of SCs/STs in the matter of recruitment/ promotions
and other service benefits such as relaxations/ concessions admissible to
them.

* Placing of Annual Review Report on the progress of implementation of
reservation policy for SC/ST to the Board of Directors.

* De-reservation proposal has been made with the full knowledge and
concurrence of the Chief Liaison Officer, while making reference to the
Ministry of Finance (Banking Division) regarding de-reservation of reserved
vacancies,

* The Bank takes appropriate steps to implement instructions/guidelines
issued by the National Commission for SC/ST.

* GOI's directions are followed in respect of DPCs/ Selection Committees
pertaining to SC/ST/MC members.

Proper implementation of the reservation orders by conducting annual
inspection of the rosters maintained in the organization. 15.7 Apart from
SC/ST Cell, Bank has set up PH/Ex-Servicemen Cell and OBC Cell headed by
Chief Liaison Officers in the rank of General Managers and Minority
Community Cell headed by Chief Liaison Officer in the rank of Deputy
General Manager assisted by Liaison Officers at Head Office, five Zonal
offices, and two Regional Offices at Mumbai and New Delhi to take care
of the welfare and protect the interests of the employees belonging to the
respective sections. The Cell ensures:

* Compliance by the Bank with orders and instructions pertaining to the
reservation of vacancies in favour of Ex-Service and Physically Handicapped
in the matter of recruitment/promotions and other service benefits.

* Compliance by the Bank with orders and instructions pertaining to the
reservation of vacancies in favour of MC/OBC in the matter of recruitment
and other service benefits

15.8 Important Visits/Inspections:

The National Commission for Scheduled Castes headed by its Hon'ble
Chairman, Dr. Buta Singh conducted a review of implementation of
Reservation Policy in the Bank on I st July 2009. The action points that
emerged in the meeting are being implemented.

15.9 An inspecting team from the Ministry of Finance headed by Shri L K
Meena, Deputy Secretary, visited the bank on I I th September 2009. The
reservation rosters maintained by the Bank were inspected by the team which
expressed satisfaction over the level of compliances of various rules and
regulations pertaining to reservation in the bank

16. Industrial Relations:

16.1 The time tested mechanism of bilateral negotiations at various levels
of the organisation with the Employees' Union and the Officers' Association
through periodical structured meetings and redress of the issues ensured
harmonious and cordial industrial relations in the Bank throughout the
year.

16.2 Bipartite meetings were held with Employees' Union and Officers'
Association at Head Office level and Zonal Offices at periodic intervals.
The Bank hosted the Central Bipartite meeting with ABOA on 22nd February
2010 at Kumaralkom. Staff Welfare Committee and Sub-committee meetings of
Staff Welfare Fund were held 6 times during the year.

16.3 At the industry level, there were joint and separate strikes by the
employees & officers on 6th and 7th August 2009 and 16th December 2009.

16.4 The Bank has introduced many improvements/mod if cations in the staff
welfare schemes during the year, including higher reimbursement on health
check up charges for spouses of staff members and for retired staff and
their spouses, enhancement of the claim amount from Rs.3,50,000/- to
Rs.5,00,000/- for Super Suralksha Insurance scheme for staff, enhancement
of scholarship to wards of staff etc.

16.5 The Staff Literary, Sport and Cultural Festival, Bankfest, was
conducted at Thiruvananthapuram from 5th February to 7th February 2010.
More than 500 staff members participated from all the Zones

17. Security Arrangements:

This has been another year without any loss of cash or valuables to the
Bank due to security lapses. There were eight attempts / security incidents
this year compared to eleven last year, of which four were of minor nature.
The other four were fire incidents. A number of measures are in the process
to qualitatively improve the security of bank branches. Integrated fire and
security alarm systems are being installed in all branches. Many other
measures are being taken to upgrade the security of vulnerable branches.
CCTVs are being installed in all metros, large towns and vulnerable
branches. The above measures are significant steps to upgrade security.
Recruitment of more security guards, which is in progress, will further
beef up the physical security of currency chests and vulnerable branches.
Head Office security has been strengthened by installation of X-ray baggage
scanner. CCTVs would also be installed at Head Office shortly. The
availability of fire officer has enabled significant improvement in fire
safety arrangements in branches. The security arrangements in branches are
being reviewed constantly by Security Officers on their visits and
corrective measures taken, wherever warranted. The Department issued a
Handbook on Security as a ready reckoner, covering all aspects
comprehensively. Besides, a number of important circulars/letters were
issued by the Department to improve security arrangements in branches.
Training to inculcate security awareness, not only to the security guards
but also to as many members of the staff as possible, is being arranged
through regular programmes.

18. CUSTOMER SERVICE:

18.1 Customer service in the Bank is accorded top priority and every
endeavour is made to improve the quality of service to the customers and
redress their grievances. All efforts are made to improve the customer
satisfaction by offering suitable products enhanced by quality value-added
services.

18.2 A well-defined and full-fledged customer grievances redress mechanism
is functioning in the Bank. Reports on the number of complaints received /
disposed of / pending in the Bank as a whole are submitted to the Bank's
Board and the Apex Level Customer Service Committee at Head Office. The
Standing Committee on Customer Service, constituted pursuant to Tarapore
Committee recommendations, also reviews the quality of customer service
extended in the Bank at regular intervals.

18.3 A Customer Service Department headed by an Assistant General Manager
has been formed at Head Office with effect from I st January 20 10. The
main emphasis is on quick disposal of customer complaints and ensuring
maximum customer satisfaction. The Department acts as a coordinator between
the branch and the complainant and ensures quick disposal of the
complaints. Many of the complaints get resolved on the same day itself. The
average time taken for disposal of complaints at Head Office /Zonal Office
level has been reduced drastically.
18.4 The establishment of the new Customer Service Department and the
immediate response has had very positive impact. The number of complaints
has come down significantly and many complainants have conveyed their
appreciation for ]the quick response by the Bank and immediate resolution
of the complaints.

18.5 The updated version of Citizen's Charter is made available in booklet
form and also in the Bank's website, which provides customers and the
general public with the key information regarding the common areas of
customer-banker relationship. Similarly the details of service charges
levied by the Bank are also published in the Bank's website for the
information of the public.

18.6 Progress of implementation of Citizen's Charters and the Fair
Practices Code is also being monitored at Head Office and Zonal Office
level Customer Service Committee meetings. Inspecting officials are also
examining the quality of customer service rendered at the branches.

18.7 Bank has also established a Call Centre with Toll free No. I 800-425-
5566 enabling the customers/ general public to clear their doubts/
complaints expeditiously. Adequate publicity of the aforesaid facilities
available to public is in place both through print and visual media.

18.8 The importance of maintaining highest level of customer service has
been reiterated through various circulars. Bank has also launched an
innovative mechanism called SMS 'SBT CARE' for customer care. Accordingly,
the customers can send a query by sending an SMS in a particular mobile
number, if they require any information about the Bank's products and
services or if they are not satisfied with any of the services. 'Customer
Day' or 'Open House Meet' is observed at all the offices of the Bank across
the Organisation on the I 5th of every month (next day, if I 5th is a
holiday or half day), to enable the customers to voice their grievances or
offer suggestions for the betterment of customer service.

18.9 Banking Codes & Standards Board of India (BCSBI):

The Bank is a member of the Banking Codes & Standards Board of India which
is a registered society sponsored by Reserve Bank of India. The Code of
Bank's Commitment to Customers is available on the website. This is a
voluntary Code, which sets minimum standards of banking practices. The
Deputy General Manager (Compliance) is the designated Principal Code
Compliance Officer at Head Office. The relative Annual Statement of
Compliance has also been submitted by the Bank to the BCSBI.

19. Corporate Governance:

The Bank is committed to the best practices in the area of Corporate
Governance, in letter and in spirit. A detailed report on Corporate
Governance is given as annexure in the Annual Report.

20. Right To Information Act:

The Right to Information Act, 2005, was implemented in the Bank during
2005-2006. In terms of the Act, Central Public Information Officers, Asst.
Central Public Information Officers and Appellate Authorities were
nominated and a system was put in place to receive the applications
/queries from the public seeking information about the Bank and related
matters and to furnish reply promptly within the stipulated time limit. The
applications/ queries received under the Act during the year were replied
promptly. During the year, Bank received 486 applications under the Act and
all the applications were disposed of promptly and within the time frame.

21. KYC Norms & AML/CFT Measures:

21.1 The Bank has put in place a Board approved revised policy on Know Your
Customer (KYC) /Anti Money Laundering (AML) / Countering Financial
Terrorism (CFT) measures in line with the guidelines issued by Reserve Bank
of India. A dedicated KYC-AML Cell is functioning in the Head Office of the
Bank to oversee the compliance of KYC/AML/CFT measures. Deputy General
Manager (Compliance) is the designated Principal Officer for KYC/AML in the
Bank.

21.2 Monitoring of transactions is carried out for submitting the required
reports to Financial Intelligence Unit-India, (FIU-IND), as mandated by
Prevention of Money Laundering Act 2002. With a view to implementing and
supporting monitoring of transactions, the Bank has acquired appropriate
software that processes all transactions handled by all branches of the
Bank, on a day-to-day basis. The software generates Suspicious Transaction
Reports (STRs), Monthly Cash Transaction Reports (CTRs) and other alerts
for analysis by the KYC-AML Cell. Counterfeit Currency Reports (CCRs) are
being submitted to FIU-IND as and when detected.

21.3 Training on KYC/AML is being imparted on an ongoing basis in the Bank
Staff awareness programmes are conducted regularly at Zonal/ Regional
Office levels, Learning Centres and during branch visits. Data cleansing of
the existing database of customers is now undertaken to update all relevant
customer data.

22. Legal Services:

The Bank has a well-established Law Department with law officers placed at
various centres. It performs multifarious activities such as preparation of
case specific documents, examination/scrutiny of loan documents, giving
advice on legal issues etc. The Law Department plays an important role in
the matter of recovery. Suits and DRT applications for recovery against the
defaulters are initiated and followed up by the Law Department/Law
Officers. It assists the branches and other operational functionaries in
the matter of actions initiated for enforcement of security under the
SARFAESI Act, 2002. Various petitions and claims against the Banks led in
various High Courts, Tribunals, Civil Courts, Consumer Fora, Ombudsman,
Labour Courts and other authorities, emanating from the business activities
undertaken by the Bank and also those fled by employees and retired
employees are defended under the advice and guidance of the Law Department.
It advises the Central Public Information Officer and the Appellate
Authority on the applications and appeals fled under the Right to
Information Act, 2005. It is also involved in the training of the staff in
matters involving law and practice. The Law Officers are regularly and
continuously handling varied legal matters and offering legal advice and
suggestions to the branches and Administrative Offices and take steps to
safeguard the interest of the Bank in all its sphere of activities.

23. Public Relations And Publicity:

23.1 The Bank was very vibrant in all the fields of Public relations,
Publicity and Advertisement. Bank maintained very close liaison with
Government Departments, media, Commercial and Social organizations, in
particular, and Public, in general, projecting Banks corporate image in its
operating environment among public at large, Government and other
institutional bodies.

23.2 Extensive coverage is given through the newspapers, boardings,
Internet, radio and TV channels to popularize new products. The strategy of
supplementing the marketing efforts at the branches with an intensive
advertisement campaign all through the year at the corporate level yielded
impressive results. Corporate advertisements were released on opening of
Branches, and celebration of important days/occasions. Product
advertisements were regularly released in local and all India newspapers.
Advertisements relating to Internet Banking, Mobile Banking, On-line
Trading etc, were released in order to familiarize the customers with new
technology products.

23.3 The Bank was one of the main sponsors of students Pre-counseling
conducted by The Hindu, Tourism Week Celebrations of Government of Kerala,
MG University Silver Jubilee Celebrations, Flower Show 2009,Tsunami
Exhibition of Government of Kerala, All India Police Athletic Meet, Nehru
Trophy Boat Race, etc.

23.4 The Bank opened pilgrim service centre at Pampa, Extension Counter at
Sannidhanam and ATM at Pampa to cater to specific banking requirements of
the pilgrims to Sabarimala, which generated tremendous publicity and
goodwill for the Bank.

24. Progressive Use of Hindi:

24.1 The Bank complied with the provisions relating to the Official
Languages Act, Rules and instructions and directives of Government of India
and Reserve Bank of India. During the year, various competitions were held
for School/College level students in Hindi. The Hindi Fortnight / Hindi Day
was also celebrated in Head Office, Zonal Offices and Regional Offices.
Weekly Hindi Workshop on Conversation in Hindi was introduced at Zonal
Office, Thiruvananthapuram. Annual publication Swathi', the Banks Hindi
Magazine was also published. Zonal Office, Kozhilkode published Manjari' a
Hindi Magazine during the year. Hindi Workshops and Functional Hindi
Programme were conducted for the benefit of staff members to increase the
knowledge of functional Hindi. Letters received in Hindi were replied to in
Hindi. The Bank hosted meeting of the Official Language Implementation
Committee of Government of India and Reserve Bank of India at
Thiruvananthapuram. The Bank also hosted the 48th Meeting of Official
Language Committee of South Based Public Sector Banks at
Thiruvananthapuram.

24.2 The Bank has sponsored P.G. Vasudev Puraskar and 'S.B.T. Hindi Sahitya
Puraskar' for the propagandists and writers of Hindi in the state. The
awards were distributed to selected Hindi Writers of Kerala at a function
held at Thiruvanathapuram.

24.3 The Bank participated in the State Level Official Language Exhibition
instituted by Kerala Hindi Prachar Sabha and won the shield for First
Position in the implementation of Official Language Policy. Head Office,
Thiruvananthapuram and Zonal Office, Thiruvananthapuram secured shields
instituted by the Town Official Language Implementation Committee,
Thiruvananthapuram in the implementation of Official Language Policy in
Public Sector Banks situated in Thiruvananthapuram. The Kozhilkode Zonal
Office of the Bank received the Award for the implementation of Official
Language Policy from the Regional Implementation Office, Cochin.

25. Branch Network:

The Bank has a network of 748 branches and 19 Extension Counters, including
10 Service Branches, I International Service Branch, 5 Commercial Network
Branches, 5 Specialized SME Branches, 4 NRI branches, 4 Treasury Branches I
I Specialised Personal Segment Branches, 3 Asset Recovery Management
Branches, 10 Specialised Agricultural Development Branches, I Micro Credit
branch, I Specialised branch for women entrepreneurs, I Overseas branch, I
MICR branch and I Special Service branch for State Government Transactions.
22 branches have been opened this year. Three regional officers have been
relocated at Kollam, Mavelikkara and Pathanamthitta. Two Industrial Finance
Branches at Ernalkulam and Bangalore have been converted to Commercial
branches. 12 branches have been shifted during the year. The Bank has
presence in 13 states and 3 union territories. The Bank has on hand RBI
authorisation for opening 50 new branches.

26. Corporate Social Responsibility And Green Banking:

There is an increasing awareness globally about Corporate Social
Responsibility (CSR), Sustainable Development (SD) and Non-Financial
Reporting (NFR). There is a concerted effort by organizations to ensure
that sustainable development is not lost sight of, in the pursuit of their
respective goals. CSR entails the integration of social and environmental
concerns by companies in their business operations as also in interactions
with their stakeholders. SD essentially refers to the process of
maintenance of the quality of environmental and social systems in the
pursuit of economic development. NFR is basically a system of reporting by
organizations on their activities in this context, especially as regards
the triple bottom line, that is, the environmental, social and economic
accounting. The contribution of financial institutions including banks to
sustainable development is paramount, considering the crucial role they
play in financing the economic and developmental activities of the world.
In 2007-08, the Reserve Bank of India had brought out a Circular on
Corporate Social Responsibility, Sustainable Development and Non-Financial
Reporting - Role of Banks' which emphasized the need for a policy to be
brought out by respective banks for sustaining the green environment.
Consequently SBT has formulated a 'Green Banking and Sustainable
Development Policy' during the year. As per this policy, Bank will take
effective steps to reduce its own carbon footprint by adopting environment
friendly practices, including, a) Replacement of GLS Bulbs by CFLs.

b) Rainwater harvesting in own premises which are large enough

c) Use of Solar Water-heating at Learning Centres [Already implemented at
Learning Centre, Thiruvananthapuram]

d) Ensuring energy effciency for cooling and heating processes

e) Minimum printing and consumption of paper.

Bank will also extend incentive to the borrowers who go in for Green
projects i.e. those projects that reduce Carbon Emissions and promote
Renewable Energy.

26.1 Community Services Banking:

As a socially responsible corporate citizen, the Bank has undertaken
several initiatives and measures during 2009- 10 also, aimed at the welfare
of the society at large, through Social Circles functioning under its
Community Services Banking Department.

Social Circles are voluntary organizations formed by the staff members
working in branches and administrative officers for undertaking social
services. They address themselves to the requirements of their area of
operation and extend assistance which are outside the purview of banking
services. Voluntary participation by the staff members and independent
assessment of the requirements of the society under the guidance of the
parent institution are unique concepts in the functioning of the social
circles. The Bank has 564 social circles functioning at various branches
and administrative offices spread all over India. The activities of the
social circles include health related programmes, assistance to students,
poor homes, old age homes and orphanages, welfare measures for disabled
people, observance of national and international days, etc. Apart from
these programmes, the Social Circles also conduct All Kerala Quiz
Competition for High School and College Students Intel Teens Quiz
Competition (which is telecast by Doordarshan Kendra, Thiruvananthapuram),
Personality Development Programme for adolescents - Kindle Teens Programme.
During the year more than 150 programmes were conducted through social
circles for the benefit of the poor.

Observing international/ national days of relevance to banking have been
adopted as a mission for reaching out to select groups of the communities
during the year. Every celebration was with a specific aim of ensuring
reach to the respective sections of the society and each celebration has
helped the Bank to improve the visibility as well as customer acquisition.

Doctor's Day on 0 1.07.2009. To mark the occasion, a felicitation ceremony
was arranged at Head Office in which three eminent doctors in
Thiruvananthapuram, Padmasree Dr. M.Krishnan Nair, Dr. Sambasivan and
Padmasree Dr. M. Vijayaraghavan were honoured. The modified version of SBT
Doctor's Special Scheme was launched.

Foundation Day: The 64th Anniversary Foundation day of the Bank was
celebrated on I 2th Sept 2009. A grand function was arranged at Head Office
with His Highness Sree Uthradam Thirunal Marthanda Varma as the Chief
Guest. To commemorate the occasion, Bank inaugurated online 64 ATMs across
Kerala and Tamil Nadu. Bank also honoured 3 National Award winning
Teachers.

New Year Day: On the New Year day I st January 2010, a Senior Citizen Meet
was held at Thiruvananthapuram. Select senior citizen customers from
various city branches, who formed a cross section of the city, participated
in the get-together and shared their valuable suggestions. The renewal of
the relationship has helped the branches to augment their kitty.

Women's Day on 08.03.20 10: A weeklong celebration from 8th March 2010 to
13th March 2010 was held in connection with the celebration of the Women's
Day 2010. At branch level, 600 selected women SHG members were honoured
through 120 branches. At regional level, 21 successful women entrepreneurs
banking with the Bank were honoured. The women selected for the honour
belong to lower strata of society who have contributed to the upliftment
of their family by participating in SHG activities. The programme was well
received by the society. Every branch function witnessed a high level of
women participation.

Children's Day - 14th November 2009: Bank has celebrated Children's Day in
a special way by adopting girl children, to take care of their education.
Poor bright girls are selected in the age group between 6 to 14 years
studying in schools. Preference is given to orphan children with
disabilities. Maximum assistance given to one child per year is Rs.5,000/-
(as per the estimate given by the institution). Head office adopted 5 girls
and Thiruvananthapuram, Kottayam, Emakulam, Kozhilkode, Chennai Zones and
Delhi, Mumbai Regions adopted two girl children each. The projectwas
inaugurated on Children's Day.

Bank took advantage of celebration of every such occasion as an opportunity
to improve the visibility through newspaper advertisements/banners/ boards
and through one to one interactions with the participants. This has helped
the Bank to improve the reach, visibility, and nearness to society and to
develop a feel of being with them.

27. Sports And Games

27.1 The Banks Football and Cricket Teams won many matches/tournaments and
brought laurels and glory to the Bank and generated wide media coverage for
the Bank throughout the country. Many of the Bank's players are selected to
represent Kerala State in the Santhosh Trophy / Ranji Trophy matches.

27.2 The Football team participated in various All India and All Kerala
tournaments/matches during the period. This year the Bank's Football Team
won the Kerala State Club Championship completing a hat-trick of such wins.
The team has also been selected by the All India Football Federation to
participate in the 2nd Division National League.

27.3 Bank's Cricket A team participated in the various All India and All
Kerala tournaments. Out of the 32 matches played the team has won 25.
During the period the team won the All India Pooja Cricket, Capt. Jerry
Prem Raj Tournament, Celestial Cup, Coromandal Cement Trophy and reached
final in the All India KSCA Trophy tournament held at Chennai.

28. Changes in the Board of Directors:

During the course of the financial year 200910, there were five changes in
the Board of Directors.

1. Shri A K. Jagannathan, Managing Director appointed under Clause (aa) of
sub-section (I) of Section 25 of State Bank of India (Subsidiary Banks) Act
1959 with effect from 28th April 2009.

2. Shri Gyan Chand Pipara, Non - Official Director, was nominated by State
Bank of India, under clause (d) of sub-section ( I ) of Section 25 of the
State Bank of India (Subsidiary Banks) Act, 1959, with effect from 15th May
2009.

3. Shri A Thomas, Director under Clause (e) of sub-section (I) of Section
25 of State Bank of India (Subsidiary Banks) Act, 1959, retired on
attaining superannuation, as at the close of business on 31st of July 2009
and was substituted by Shri P Vinayagam with effect from 27th January 2010.

4. Shri C.T. Koshy, Director under Clause (ca) of sub-section (I) of
Section 25 of State Bank of India (Subsidiary Banks) Act, 1959, retired on
attaining superannuation, as at the close of business on 31st August 2009.

5. Shri Jiban Goswami, Director under Clause (c) of sub-section (I) of
Section 25 of State Bank of India (Subsidiary Banks) Act, 1959 resigned
from the Board on 19.09.2009 on his appointment as Chief General Manager
(Inspection & Management Audit) in SBI and was substituted by Shri B S
Gopalalkrishna with effect form 20th September 2009.

The Board of Directors place on record their appreciation and thanks for
the valuable services rendered by Shri A Thomas, Shri C T Koshy and Shri
Jiban Goswami during their tenure as Directors of the Bank.

29. Statutory Audit:

M/s. Prem Gupta & Company, New Delhi and M/s. Sodani & Company, Indore,
M/s. Ramanatham & Rao, Hyderabad, M/s. Saha Ganguli & Associates, Kollkata
and M/s Jain & Jain, Mumbai were appointed as Statutory Auditors of the
Bank for the year 2009- 10 by State Bank of India, with the approval of the
Reserve Bank of India. The Board of Directors sincerely appreciates the
valuable suggestions offered and the excellent support and cooperation
extended by the Statutory Auditors forthe completion of the audit well in
time.

30. Acknowledgements:

The Board of Directors gratefully acknowledges the valuable advice and
support extended bythe Ministry of Finance, Government of India and Reserve
Bank of India and the cooperation and support extended by the Financial
Institutions, Stock exchanges and Correspondents. The Board also wishes to
place on record its sincere appreciation of the excellent support, goodwill
and patronage received from the esteemed customers and shareholders, the
support and cooperation extended and contributions made by the members of
staff - award and supervising. The Board also places on record its
appreciation for the contribution made by the Employees' Union and
Officers' Association.

By Order of the Board

A.K. Jagannathan

Managing Director