INFORMATION MEMORANDUM

Private & Confidential For Private Circulation Only

(This Information Memorandum is neither a Prospectus nor a Statement in Lieu of Prospectus)

ALLAHABAD BANK
Head Office: 2, Netaji Subhas Road, Kolkata 700 001. Tel.: (033) 22423373, 22420883 Fax.: (033) 22104048, 22424048, 22107424 Website : www.allahabadbank.com. E-Mail: hoipo@allahabadbank.co.in Constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 Private Placement of Unsecured Non-Convertible Redeemable Subordinated Bonds (Tier II Bonds Series V) in the nature of promissory notes of Rs. 10,00,000/- each for cash at par aggregating to Rs. 400 crores with a green shoe option of Rs.100 crores (including Rs.100 crores as green shoe option) GENERAL RISK: Investors are advised to read the Risk Factors carefully before taking an investment decision in this offering. For taking an investment decision, the investors must rely on their own examination of the Issuer and the Offer/ Issue including the risks involved. The Offer/ Issue being made on private placement basis, this Information Memorandum has not been filed with Securities & Exchange Board of India (SEBI). The securities have not been recommended or approved by SEBI nor does SEBI guarantee the accuracy or adequacy of this document. Specific attention of the investors is invited to the summarized and detailed Risk Factors mentioned elsewhere in this Information Memorandum. ISSUERS ABSOLUTE RESPONSIBILITY: The Issuer, having made all reasonable inquiries, accepts responsibility for, and confirms that this Information Memorandum contains all information with regard to the Issuer and the Issue, which is material in the context of the Issue, that the information contained in this Information Memorandum is true and correct in all material respects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this document as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. CREDIT RATING: CARE AA+ by CARE: Credit Analysis & Research Limited (CARE) has assigned a CARE AA+ [Double A plus] rating to the present Rs. 500 crore issue of Bonds of the Bank. Instruments carrying this rating are judged to be of High Quality by all standards. They are also classified as High Investment Grade. They are rated lower than CARE AAA securities because of somewhat lower margins of protection. Change in assumptions may have a greater impact or the long-term risks may be somewhat larger. Overall, the difference with CARE AAA rated securities is marginal. AA/Stable : CRISIL Limited has assigned a AA/Stable [pronounced as AAStable] rating to the present Rs. 500 crore issue of Bonds of the Bank. This rating indicates High degree of Safety. With regard to timely payment of interest and principal on the instrument. The above ratings are not recommendation to buy, sell or hold securities and investors should take their own decision. The ratings may be subject to revision or withdrawal at any time by the assigning rating agencies and each rating should be evaluated independently of any other rating. The ratings obtained are subject to revision at any point of time in the future. The rating agencies have the right to suspend, withdraw the rating at any time on the basis of new information etc. For details, please refer to para on Credit Rating mentioned elsewhere in this Information Memorandum. LISTING: The Unsecured Non-Convertible Redeemable Subordinated Bonds (Tier II Bonds Series V) are proposed to be listed in the Wholesale Debt Segment (WDM) of the National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE). REGISTRAR TO THE ISSUE Maheshwari Datamatics Pvt. Ltd. 6, Mangoe Lane, ( Surendra Mohan Ghosh Sarani) nd 2 Floor, Kolkata-700 001 Tel- 033-2243-5809/5029 Fax- 033-2248-4787 E-mail: mdpl@cal.vsnl.net.in TRUSTEES FOR THE BONDHOLDERS IDBI Trusteeship Services Limited th Registered Office, 10 Floor, Nariman Bhavan, 227, V. K. Shah Marg, Nariman Point, Mumbai 400 021. Tel No. (022) 56311771./2/3. Fax No. 91-22-56311776. E-mail: itsl@idbitrustee.co.in

ISSUE OPENSON 13 th MARCH, 2006 , ISSUE CLOSES ON 13

th

MARCH 2006

Allahabad Bank
ARRANGERS TO THE ISSUE (in alphabetic order)

A. K. Capital Services Limited Flat No. N, Sagar Apartments, 6, Tilak Marg, New Delhi 110 001. Tel No. (011) 23385704, 23388235. Fax No. (011) -23385189.

Allianz Securities Ltd. 3,Scindia House Janpath New Delhi 110001 Tel No. (011) 41514660-64 Fax No. (011) 41514665

IDBI Capital Services Ltd 8th floor, Bakhtawar, Nariman point, Mumbai - 400 021, Tel: 22371212 Fax: 22882560/22882550

SPA Merchant Bankers Ltd. th 10A, Chandramukhi , 10 Floor Nariman Point Mumbai 400 021 Tel No. : - (022) 22801840-49 Fax No. : (022) 22871192/ 22846318

Allahabad Bank TABLE OF CONTENTS

INDEX DEFINITIONS/ ABBREVIATIONS RISK FACTORS AND MANAGEMENT PROPOSALS THEREOF HIGHLIGHTS OF THE BANK TITLE PAGE NO. 5 6 10

PART I I. II. III. IV. V. VI. VII. VIII. IX. X. XI. XII. GENERAL INFORMATION CAPITAL STRUCTURE TERMS OF THE PRESENT ISSUE PARTICULARS OF THE ISSUE BANK & MANAGEMENT SIGNIFICANT REGULATORY MATTERS RELATED TO THE BANK ORGANISATION STRUCTURE & MANAGEMENT STOCK MARKET DATA OF THE EQUITY SHARES OF THE BANK MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL PERFORMANCE BASIS FOR ISSUE PRICE OUTSTANDING LITIGATIONS, DEFAULTS AND MATERIAL DEVELOPMENTS INVESTOR GRIEVANCES & REDRESSAL SYSTEM 11 16 18 25 27 49 52 62 63 65 65 69

PART II I. II. III. IV. V. GENERAL INFORMATION FINANCIAL INFORMATION STATUTORY AND OTHER INFORMATION MAIN PROVISIONS OF THE BANK NATIONALISATION ACT MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION 70 75 118 119 123

PART III DECLARATION 124

DEFINITIONS/ ABBREVATIONS
Term ALM ABFL ALCO Act Application Form ARC/ A.R.C. Allahabad Bank/ the Bank/ the Issuer Company/ the Issuer/ Board/ BoD Bond(s) Bondholder(s) BPLR Beneficial Owner(s) bps Concerned Stock Exchanges CARE CDSL CAR CRAR CAGR CDs CDR CPs CRISIL DPGs DICGC DDA DRR DRT ECGC FY FIs FIIs FB FIMMDA GOI HRD HTM ICRA Issue/ Offer/ Offering Information Memorandum/ Offer Document IT IS Arrangers (in alphabetical order) Meaning/ Definition/ Complete Term

Allahabad Bank
Asset Liability Management All Bank Finance Limited Asset Liability Committee The Companies Act, 1956 as amended from time to time till date The form in terms of which, the investors shall apply for the Unsecured Non-Convertible Redeemable Subordinated Bonds (Tier II Bonds Series V) in the nature of promissory notes of the Bank Asset Reconstruction Corporation Allahabad Bank, constituted under the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970, and having its Head Office at 2, Netaji Subhas Road, Kolkata 700 001. Board of Directors of the Bank or a Committee thereof Unsecured Non-Convertible Redeemable Subordinated Bonds (Tier II Bonds Series V) in the nature of promissory notes of Rs. 10,00,000/- each offered through private placement route under the terms of this Information Memorandum The Holder(s) of the Bond(s) in dematerialised form Bank Prime Lending Rate Bondholder(s) holding Bond(s) in dematerialized form (Beneficial Owner of the Bond(s) as defined in clause (a) of subsection of Section 2 of the Depositories Act, 1996) basis points National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE) Credit Analysis & Research Limited Central Depository Services (India) Limited Capital Adequacy Ratio Capital to Risk weighted Assets Ratio Compounded Annual Growth Rate Certificate(s) of Deposit(s) Corporate Debt Restructuring Commercial Papers Credit Research and Information Services of India Ltd. Deferred Payment Guarantees Deposit Insurance Credit Guarantee Deemed Date of Allotment for the Bonds Debenture/ Bond Redemption Reserve Debt Recovery Tribunals Export Credit Guarantee Corporation Financial Year Financial Institutions Foreign Institutional Investors Fund Based Fixed Income Money Market & Derivatives Association of India Government of India Human Resource Development Held To Maturity ICRA Limited Private Placement of Unsecured Non-Convertible Redeemable Subordinated Bonds (Tier II Bonds Series V) in the nature of promissory notes of Rs. 10,00,000/- each for cash at par aggregating to Rs. 400 crores with a green shoe option of Rs.100 crores. Memorandum of Information dated March, 2006 for Private Placement of Unsecured Non-Convertible Redeemable Subordinated Bonds (Tier II Bonds Series V) in the nature of promissory notes of Rs. 10,00,000/- each for cash at par aggregating to Rs. 400 crores with a green shoe option of Rs.100 crores. Income Tax Information Systems 1 Allianz Securities Limited 2. Deutsche Bank 3. IDBI Capital Services Ltd. 4. SPA Merchant Bankers Ltd. 5. Standard Chartered Bank Life Insurance Corporation of India Letters of Credit Mutual Fund(s) Managerial Perception National Securities Depository Limited Non Resident Indians Non Performing Asset(s) National Stock Exchange of India Limited Non-Banking Finance Companies Non-Fund Based Overseas Corporate Bodies One Time Settlement Out-of-court Settlement Prime Lending Rate Permanent Account Number Priority Sector Credit Maheshwari Datamatics Pvt. Ltd. Reserve Bank of India Residuary Non-Banking Companies Credit Analysis & Research Limited ( CARE) and Credit Research and Information Services of India Ltd ( CRISIL) Securities and Exchange Board of India The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 Small Scale Industries Statutory Liquidity Ratio IDBI Trusteeship Services Limited Tax Deducted at Source Voluntary Retirement Scheme

LIC LCs MF/ MFs MP NSDL NRIs NPA/ NPAs NSE NBFCs NFB OCBs OTS OCS PLR PAN PSC Registrars to the Issue/ Registrars/ Registrar & Transfer Agents RBI RNBCs Rating Agencies SEBI SARFAESI SSIs SLR Trustees/ Trustees to the Bondholder(s) TDS VRS

W/O

Written Off

Allahabad Bank

RISK ENVISAGED BY MANAGEMENT AND MANAGEMENT PERCEPTION (MP) TO ADDRESS THE RISKS Following are certain issues for the investors to consider before taking an investment decision in the offer. In some of the risk factors and management proposals thereof, reference has been invited for detailed para mentioned elsewhere in this Information Memorandum, which can be used to obtain more details about the said risk. INTERNAL RISKS 1. Debenture/ Bond Redemption Reserve & Unsecured Bonds Creation of Debenture/ Bond Redemption Reserve is not envisaged for the proposed issue of bonds and the Bonds proposed to be issued are unsecured i.e. they are not proposed to be secured against any asset of the Bank. MP: Allahabad Bank is a banking company within the meaning of the Banking Regulation Act, 1949. The resources through current issue of bonds are being raised by the Bank for augmenting the Tier-II Capital for strengthening the Capital Adequacy and enhancing its long term resources. Department of Company Affairs, Ministry of Law Justice and Company Affairs, Government of India has vide general clarification no.6/3/2001-CL.V dated 18/04/2002 clarified that banks need not create Debenture Redemption Reserve as specified under section 117C of the Companies Act, 1956. Also as per extant RBI guidelines in respect of issue of Tier-II bonds issued vide its circular no. DBOD. BP.BC.5/21.01.002/98-99 dated 08-02-1999, the Tier-II bonds are to be issued as unsecured and subordinated bonds for being eligible for inclusion in Tier II capital of the Issuing Bank. Moreover since the resources raised by the Allahabad Bank are being utilised for the purpose of its business i.e. providing credit and other facilities to the industry, the assets of Allahabad Bank are mostly in form of loans and advances. Hence it is proposed that the bonds shall be unsecured in nature and that they shall not be secured against any asset of the Bank. However, the Bank has appointed a Trustee to protect the interest of the investors. 2. Credit Risk The business of lending carries the risk of default by the borrowers. MP: Any lending activity is exposed to credit risk arising from the risk of default by the borrowers. The Bank takes adequate care to minimise such risks by having a well-diversified loan portfolio and industry-wise, promoter group-wise and specific client-wise exposure limits are set to avoid concentration of lending to any specific industry segment/ promoter group/ company and to help minimise credit risk. The Bank also follows a comprehensive project/credit appraisal system and lending norms, which govern industry/client exposure. The Bank has put in place a credit rating system under which the borrowal accounts of Rs. 5.00 crores and above are rated on several parameters and the risk is priced with a suitable mark-up over BPLR based on the credit rating. The Bank has also implemented an active Risk Management Policy aimed at mitigating various credit related risks. For other details on the credit risk management process in the Bank, the investors may refer to the para Risk Management mentioned elsewhere in this Information Memorandum. 3. Market Risks Increased interest rate volatility exposes Allahabad Bank to market rate risk arising out of maturity/ rate mismatches. MP: Risks arising from interest rate volatility are inherent to the business of financial intermediation and lending. However, the Bank has put in place a system of regular review of lending and deposit rates in order to minimise the interest rate risk. The Asset Liability Management Committee of the Bank reviews the risk on a regular basis. Continuous Risk Management measures are initiated depending upon the movement in the market interest rates. The movement in the interest rates is closely monitored for appropriate action. For more details on the Risk Management procedures, investors are advised to refer to para Risk Management mentioned elsewhere in this Information Memorandum. 4. Asset Liability Mismatch A large portion of the funding of the Bank is in the form of short and medium term deposits. The asset liability position of the Bank could be affected if the depositors do not roll over the deposits. MP: As per the normal behavioral pattern and past experience, a large portion of the deposits gets rolled over. The Bank feels that in the event of these deposits not being rolled over, the fresh accretion of deposits would take care of the Asset Liability mismatches. In addition, the Bank has the cushion of investments of Rs. 3064.56 crores being excess SLR securities as on December 31, 2005, which can be utilized to correct any medium term mismatches. Moreover, the Bank has an Asset Liability Management system in place to actively monitor and manage the duration and liquidity mismatches. For more details on the Asset Liability position refer to the para Asset Liability Management mentioned elsewhere in this Information Memorandum. 5. Credit Rating Allahabad Bank has obtained credit rating of CARE AA+ from CARE for an amount of Rs. 400 crores with a green shoe option of Rs.100 crores for its current issue of Tier-II Bonds. Instruments carrying this rating are judged to be of High Quality by all standards. They are also classified as High Investment Grade. They are rated lower than CARE AAA securities because of somewhat lower margins of protection. Change in assumptions may have a greater impact or the long-term risks may be somewhat larger. Overall, the difference with CARE AAA rated securities is marginal. CRISIL Limited has assigned a AA/Stable [pronounced as AAStable] rating to the present Rs. 500 crore issue of Bonds of the Bank. This rating indicates High degree of Safety with regard to timely payment of interest and principal on the instrument. MP: Investors may please note that the above ratings are not recommendation to buy, sell or hold securities and investors should take their own decision. The ratings may be subject to revision or withdrawal at any time by the assigning rating agencies and each rating should be evaluated independently of any other rating. The ratings obtained are subject to revision at any point of time in the future. The rating agencies have the right to suspend, withdraw the rating at any time on the basis of new information etc. Credit Rating of all listed and unlisted taxable bonds/ debentures/ commercial paper issued by the Bank for the last 3 years have been disclosed under the head Credit Rating mentioned elsewhere in this Information Memorandum.

Allahabad Bank
6. Contingent Liabilities As on December 31, 2005, the contingent liabilities of the Bank were at Rs. 15541.02 crores comprising claims against the Bank not acknowledged as debts (Rs.288.13 crores), liability on account of outstanding forward exchange contracts (Rs.11702.13 crores), guarantees on behalf of constituents (Rs.1608.62 crores), acceptances, endorsements and other obligations (Rs. 1940.71 crores) and others (Rs. 1.27 crores). MP: The contingent liabilities have arisen in the normal course of business of the Bank and are according to the prudential norms prescribed by RBI. 7. Non Performing Assets (NPAs) As on December 31, 2005, the net NPAs of the Bank stood at 1.02% of its net advances amounting to Rs. 26735.18 crores in absolute terms. In the event of non-recovery of these assets, the Bank may have to provide for these NPAs, which might affect the profitability of the Bank in future. For details, investors are advised to refer to para Asset Classification, Income Recognition & Provisioning mentioned elsewhere in this Information Memorandum. MP: The Net NPAs of the Bank have consistently been declining in percentage terms, from 4.07% as on March 31, 2004 to 1.02% as on December 31., 2005 and the Bank has provided for its NPAs in conformity with RBI guidelines. The Bank is taking steps to reduce the proportion of non-performing assets through aggressive recovery drives combined with improved risk management practices. Further, there have been substantial changes in the legislative and operating environment enabling FIs and Banks to pursue recovery of overdues. Besides Debt Recovery Tribunal (DRT) set up for faster settlement of recovery litigation, GoI has enacted The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 enabling FIs and Banks to securitise and reconstruct financial assets and enforce security more effectively. Reserve Bank of India has formulated detailed guidelines for operation of the scheme. The Bank has been taking recourse to all the available methods to recover its over dues from the borrowers. 8. Asset Concentration The top 5 industries (non-food) account for 19.11% of the gross credit exposure of the Bank as on December 31, 2005. Also, the top ten borrowers of the Bank account for about 15.28 % of the gross total advances of the Bank as on December 31, 2005. The borrower specific and industry specific behavior may potentially affect the overall asset quality of the Bank. MP: The Bank has put in place a credit monitoring mechanism to monitor the performance of its borrowers, regularly perform appraisal and do the requisite follow up. The top ten borrowers of the Bank as mentioned above are Standard Assets as on December 31, 2005. As regards the industry concentration, it has been the policy of the Bank to diversify the assistance over different industry/promoter groups with a prudential cap of 10% to a single industry. Investors are advised to refer to para Industry-wise Classification mentioned elsewhere in this Information Memorandum. 9. Regional Concentration of the Bank Allahabad Bank has a regional concentration in eastern and north eastern parts of the country accounting for approximately 42% of all branches in terms of numbers. The regional presence of the Bank may compromise its competitive position vis--vis its national level competitors. MP: The regional presence of the Bank may not be a hindrance to its growth prospects. The global deposits of the Bank have grown at a CAGR of 18.23 % to Rs. 40762 crores and the global net advances have grown at a CAGR of 21.87% to Rs.22152 crores during the past 5 years. However total deposits and gross credit have further increased to Rs. 44631 Crores and Rs. 27715 crores respectively as on 31.12.2005. The Bank has 1973 branches and 151 extension counters as on December 31, 2005 with presence in all the states. The Bank is endeavoring to increase its presence in other parts of the country. Also, the Bank proposes to effectively utilise technology to increase its reach and presence. For details of geographical distribution of branches, investors are advised to refer to para Distribution of Branches mentioned elsewhere in this Information Memorandum. 10. Decline in Return Ratios Yield on Investment of the Bank (excluding profit on sale of investments) has shown a declining trend from 9.64% in FY 2003 to 7.61% in FY 2005. MP: Yield on investments has come down because of the interest rate in general coming down. The continuous downward trend in the interest rates over last one year has been the major reason for decline in Yield on Investment of the Bank. 11. Outstanding Litigations against the Bank There are outstanding litigations amounting to Rs. 261.42 crores (a total of cases) as on December 31, 2005 for Claims not acknowledged as debts. For details, please refer to the para on Litigation mentioned elsewhere in this Information Memorandum. MP: These claims are not likely to affect the operations and finances of the Bank. 12. RBIs Annual Financial Inspection Report The Annual Inspection Report of RBI on the financial position of the Bank as on March 31, 2005 has indicated both positive and critical features of the Bank. MP: The Bank would like to clarify that the inspection of the Bank by RBI is a regular exercise and is carried out periodically for all the banks and financial institutions. The reports of RBI are strictly confidential and the Bank is in dialogue with RBI in respect of observations made by RBI in their report for previous years. RBI does not allow disclosure of its inspection reports and that all the disclosures in this Information Memorandum are on the basis of management and audit reports of the Bank. 13. Utilization of Funds The utilization of the funds proposed to be raised through this private placement is entirely at the discretion of the Bank and no monitoring agency has been appointed to monitor the deployment of funds.

MP: The funds raised through this private placement are not meant for any specific project and hence a monitoring agency may not be required. The Bank is managed by professionals under the supervision of its Board of Directors. Further, the Bank is subject to a number of regulatory checks and balances as stipulated in its regulatory environment. Therefore, the management believes that the funds raised via this private placement would be utilised only towards satisfactory fulfillment of the Objects of the Issue mentioned elsewhere in this Information Memorandum. 14. Export Credit Target The Bank has not met export credit target (12% of net credit) for the last five years. For more details, refer to para Export Credit mentioned elsewhere in this Information Memorandum. MP: The non-achievement of this target has no negative impact on the working results of the Bank. However, export credit of the Bank has shown an upward trend gradually. 15. Litigation against the Banks Subsidiaries and Co-Promoted Companies

Allahabad Bank

The amount involved as on December 31, 2005 in respect of claims/suit filed against AllBank Finance Ltd., a subsidiary of the Bank was Rs. 3.46 crores. Further, Income Tax dispute aggregating Rs. 10.88 crores are pending in Appellate Courts against AllBank Finance Ltd. 16. Contingent Liabilities of Subsidiaries of the Bank As on March 31, 2005, contingent liabilities of AllBank Finance Limited, a subsidiary of the Bank aggregated Rs. 25.89 crores. MP: The above contingent liabilities have arisen in the normal course of business of the company. 17. Contingent liabilities of RRBs sponsored by the Bank As on December 31, 2005, contingent liabilities of RRBs sponsored by the Bank aggregated Rs. 0.92 crores. MP: The above contingent liabilities have arisen in the normal course of business of the RRBs. 18. Accumulated losses of Regional Rural Banks (RRBs) As on December 31, 2005, all RRBs are in profit and accumulated loss of Sharada Gramin Bank has been wiped out. MP: The losses pertain to the Sharada Gramin bank which has since been wiped out as on 31 December,2005. EXTERNAL RISKS 1. Regulatory restrictions on the Bank and limitations of the powers of shareholders of the Bank There are a number of restrictions as per the Bank Nationalization Act and Banking Regulations Act, which impede flexibility of the Banks operations and affect/restrict investors right. These are as under: (i) The Banks can carry on business/activities as specified in the Act. There is no flexibility to pursue profitable avenues if they arise, in contrast with companies under the Companies Act, where shareholders can amend the Objects Clause by a special resolution. (ii) In terms of Section 8 of The Banking Regulation Act, 1949, the Bank is prohibited from doing trading activity, which may act as an operational constraint. (iii) In terms of Section 17(1) of The Banking Regulation Act, 1949, every banking company shall create a Reserve Fund and shall, out of the balance of profit of each year as disclosed in the Profit & Loss a/c prepared under Section 29 and before any dividend is declared transfer to the Reserve Fund a sum equivalent to not less than twenty five percent of such profit. (iv) In terms of Section 19 of The Banking Regulation Act, 1949 there are some restrictions on the banking companies regarding opening of subsidiaries which may deny the Bank from exploiting emerging business opportunities. (v) In terms of Section 23 of The Banking Regulation Act, 1949 there are certain restrictions on the banking companies regarding opening of new place of business and transfer of existing place of business, which may hamper the operational flexibility of the Bank. (vi) In terms of Section 25 of The Banking Regulation Act, 1949 each banking company has to maintain assets in India which is not less than 75% of its demand and time liabilities in India which in turn may prohibit the Bank from creating overseas assets and exploiting overseas business opportunities. (vii) There are restrictions in the Banking Regulation Act regarding, a. Management of a bank including appointment of directors b. Borrowings and creation of floating charge thereby hampering leverage c. Expansion of business as the branches need to be licensed d. Disclosures in the profit & loss account and balance sheet e. Production of documents and availability of records for inspection by shareholders f. Reconstruction of banks through amalgamation g. Further issues of capital including issue of bonus shares/rights shares for which prior MoF approval is required (viii) The financial disclosures in this Information Memorandum may not be available to the investors after listing on a continuous basis. (ix) Various rights/powers of shareholders available under the Companies Act in this behalf are not available to the shareholders of the banks. These rights include rights such as calling for general meetings, inspection of minutes and other material records, application for relief in cases of oppression and mismanagement, voluntary winding up etc. (x) As per Section 3 (2E) of the Bank Nationalisation Act, no shareholder other than Central Government shall be entitled to exercise voting rights in respect of any equity shares held by him/her in excess of one per cent of the total voting rights of all the shareholders of the Bank. (xi) No banking company shall pay dividend on its shares until all its capitalised expenses (including preliminary, organisational expenses, share selling commission, brokerage, amounts of losses and any other item not represented by tangible assets) have been completely written off. The Bank has received an exemption from GoI, Ministry of Finance, th Department of Economic Affairs (Banking Division) vide gazette notification F. No. 11/34/2004-BOA dated 6 December, 2004 from the provisions of the said Section 15(1) relating to the payment of dividend, for a period of five years from the date of the notification.
st

Allahabad Bank
2. Sensitivity to the Economy and Extraneous Factors The Banks performance is highly correlated to the performance of the economy and the financial markets. The health of the economy and the financial markets in turn depends on the domestic economic growth, state of the global economy and business and consumer confidence, among other factors. Any event disturbing the dynamic balance of these diverse factors would directly or indirectly affect the performance of the Bank including the quality and growth of its assets. 3. Competition from Existing and New Commercial Banks Competition in the financial sector has increased with the entry of new players and is likely to increase further as a result of further deregulation in the financial sector. The Bank may face competition both in raising resources and in deploying them. MP: The Bank has an established broad-based presence and has been taking steps to enhance customer satisfaction by upgrading skills, systems and technology to meet such challenges. The Bank is attempting to add quality assets on competitive terms. The Bank is also taking steps to broad base its product bouquet with a special emphasis on enhancement in the non-fund based income. On the resource-raising front, the Bank is actively endeavoring to broaden its reach and raise resources through its wide distribution network of 1973 branches and 151 extension counters. 4. Changes in Regulatory Policies The operations of the Banking Industry are subject to regulations by the Government/ RBI. Major changes in Government/ RBI policies relating to banking sector may have an impact on the operations of the Bank. MP: The policy changes may provide both opportunities and challenges for the Bank. The Bank has a long presence in the banking sector, for more than 141 years and does not perceive policy changes to be a major threat. 5. Disintermediation in the Financial Markets As the financial markets mature and with growing developments in the capital markets, the trend towards disintermediation may be increasingly in evidence. In such a scenario, many companies including the current and potential borrowers of the Bank may access capital markets directly for their financing needs and reduce their dependence on the banking system. This may have an adverse impact on the level of deposits and also on the level and mix of advances portfolio and the profitability of the Banks. MP: The Bank has, in recent years, launched several retail lending schemes and value added products so as to broaden its borrower base. Further, disintermediation brings with it the opportunity for the Bank to expand its fee-based activities. The Bank has been endeavoring to develop a presence in several financial services to earn fee based income by focussing on businesses such as foreign exchange, treasury, investments, cash management, insurance, depository, debenture trustee etc., thus taking advantage of the disintermediation phenomenon. 6. Forex Risk Exchange Rate fluctuations may have an impact on the Banks financial performance. MP: As per RBI guidelines, banks are not allowed to keep open position on their foreign exchange transactions beyond prescribed limits on a daily basis. Foreign exchange transactions beyond such limits, if any, must be squared off at the end of each day. Hence, the risk from exchange rate fluctuations is minimised. The Board of Directors of the Bank has also prescribed limits for gaps or mismatches in maturities of Banks foreign currency assets and liabilities and forward transactions in foreign exchange. The Bank operates within the limits fixed for gaps or mismatches in maturities of Banks foreign currency assets and liabilities and forward transactions in foreign exchange, thus minimising the risks of mismatches in maturities and interest rates. 7. Interest Rate Risk Interest rate volatility exposes the Bank to an interest rate risk or market risk. Such interest rate risk has a potential impact on net interest income or net interest margin as well as on the market value of the fixed income securities held by the Bank in its investment portfolio. MP: These risks are inherent in the banking business. However, the Bank has put in place a system of regular review of lending and deposit rates in order to minimise the interest rate risk. The Asset Liability Management Committees of the Bank reviews the risk on a regular basis. Continuous Risk Management measures are initiated depending upon the movement in the market interest rates. The movement in the interest rates is closely monitored for appropriate action. For more details on the Risk Management procedures, investors are advised to refer to para Risk Management mentioned elsewhere in this Information Memorandum. 8. Operational Risk Operational risk is a result of failure of operating system in a bank due to certain reasons like computer break-ins, power disruptions, fraudulent activities, natural disaster, human error or omission or sabotage. MP: For mitigating and controlling the operational risk, the Bank has established a strong internal control system. Apart from that, the Bank also has a separate administrative structure to formulate, implement and monitor systems and procedures. 9. Financial Statements in the Information Memorandum The financial statements and derived ratios therefrom contained in this Information Memorandum are prepared/computed as per the permissible accounting practices. While due care has been taken to reflect the true economic reality regarding the financials of the Bank as far as possible, the investors may want to make their own adjustments to the same before arriving at an investment decision in the offer. MP: The financial statements and the derived ratios have been prepared in conformity to the extant guidelines and the same have been certified by the statutory auditors of the Bank. The Bank is also governed by the prudential norms of RBI for income recognition, NPA provisioning etc. NOTES TO RISK FACTORS Net worth (excluding revaluation reserves) of the Bank as on December 31, 2005 was Rs.3156.08 crores.

The present private placement of the Bank aggregates Rs. 400 crores with a green shoe option of Rs.100 crores. The Book Value of the share as on December 31, 2005 was Rs. 70.65 (face value of Rs. 10/-). During FY 1996-97 the Bank had adjusted accumulated losses of Rs 532 crores, from its paid-up capital as on March 31, 1997 by setting off the same against the paid-up capital as on March 31, 1997 AllBank Finance Limited a subsidiary of Allahabad Bank has not entered into any financial transactions with Allahabad Bank during the last three years:

Allahabad Bank

HIGHLIGHTS OF THE BANK Bank with 141 years of existence. Professionally managed Bank with a track record of profitability. Large network of 1973 branches and 151 extension counters spread throughout the country (as on December31, 2005). Also opened specialized branches to cater to the needs of industrial finance, trade finance, personal banking, international banking, NRIs and small-scale industries. Capital Adequacy Ratio of 12.73% as on December 31, 2005, which is above minimum of 9% prescribed by RBI. Product portfolio includes Trade finance, Consumer Loans, Loan through Internet, Demat Services, Kisan Cards etc. Net NPA to Net Advance Ratio decreased to 1.02% as on December 31, 2005 as compared to 4.07% as on March 31, 2004. Diversified loan portfolio spread over many industries with exposure not more than 10% to any single non-food industry. Set up training colleges at Lucknow and Kolkata to impart modern training to its employees. Consistent Deposits growth: Deposits have grown by a CAGR of 18.23% during FY 2000 to FY 2005. Consistent Advances growth: Gross Advances have grown by a CAGR of 21.87% during FY 2000 to FY 2005. Consistent growth in clientele base. Launching of innovative banking products on regular basis to meet the customer needs.

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PART I

Allahabad Bank

ALLAHABAD BANK
Head Office: 2, Netaji Subhas Road, Kolkata 700 001. Tel.: (033) 22423373, 22420883 Fax.: (033) 22104048, 22424048, 22107424 Website : www.allahabadbank.com. E-Mail: hoipo@allahabadbank.co.in Constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 Private Placement of Unsecured Non-Convertible Redeemable Subordinated Bonds (Tier II Bonds Series V) in the nature of promissory notes of Rs. 10,00,000/- each for cash at par aggregating to Rs. 400 crores with a green shoe option of Rs.100 crores (including Rs.100 crores of green shoe option) I. GENERAL INFORMATION

OFFER OF BONDS Allahabad Bank is seeking offer for subscription to Unsecured Non-Convertible Redeemable Subordinated Bonds (Tier II Bonds Series V) in the nature of promissory notes of Rs. 10,00,000/- each for cash at par aggregating to Rs. 400 crores with a green shoe option of Rs.100 crores AUTHORITY FOR THE PRESENT ISSUE This present issue of Bonds is being made pursuant to the resolution of the Board of Directors of the Bank, passed at its meeting held on 11-11-2005. REGISTRATION AND GOVERNMENT APPROVALS This present issue of Bonds is being made in accordance with extant RBI guidelines vide its Master Circular no. DBOD No. BP.BC.13/21.01.002 /2005-06 dated July 04, 2005 on Prudential Norms for Capital Adequacy covering norms for issue of unsecured bonds as subordinated debt by Banks for raising Tier II capital. The Bank can undertake the activities proposed by it in view of the present approvals and no further approval from any government authority(ies)/ Reserve Bank of India (RBI) is required by the Bank to undertake the proposed activities save and except those approvals which may be required to be taken in the normal course of business from time to time. DISCLAIMER CLAUSE This Information Memorandum for issue of Bonds on private placement basis has been prepared in conformity with the extant SEBI circular no. SEBI/MRD/SE/AT/36/2003/30/09 dated September 30, 2003 and SEBI circular no. SEBI/MRD/SE/AT/46/2003 dated December 22, 2003. Therefore as per the applicable provisions, copy of this Information Memorandum has not been filed or submitted to SEBI. It is to be distinctly understood that the Information Memorandum should not, in any way, be deemed or construed that the same has been cleared or vetted by SEBI. SEBI does not take any responsibility either for the financial soundness of any scheme or the project for which the Issue is proposed to be made, or for the correctness of the statements made or opinions expressed in this Information Memorandum. The Issuer Company certifies that the disclosures made in this Information Memorandum are generally adequate and are in conformity with the captioned SEBI circular. This requirement is to facilitate investors to take an informed decision for making investment in the proposed Issue. It should also be clearly understood that while the Issuer Company is primarily responsible for the correctness, adequacy and disclosure of all relevant information in this Information Memorandum. The Issuer Company herein also certifies that it has disclosed various material information including those relating to litigation like commercial disputes etc in this Information Memorandum. Further the Issuer Company confirms that: a. this Information Memorandum is in conformity with the documents, materials and papers relevant to the Issue; b. all the legal requirements connected with the said Issue as also the guidelines, instructions, etc., issued by SEBI, the government and any other competent authority in this behalf have been duly complied with; and c. the disclosures made in this Information Memorandum are true, fair and adequate to enable the investors to make a well informed decision as to the investment in the proposed Issue. d. all the intermediaries named in this Information Memorandum are registered with SEBI and that till date such registration is valid. The Issue of Bonds being made on private placement basis, filing of this Information Memorandum is not required, however the same does not absolve the Issuer Company from any liabilities under Section 63 or Section 68 of the Companies Act, 1956 or from the requirement of obtaining such statutory and other clearances as may be required for the purpose of the proposed Issue. SEBI further reserves the right to take up at any point of time, with the Issuer Company, any irregularities or lapses in this Information Memorandum. DISCLAIMER STATEMENT FROM THE ARRANGERS This Information Memorandum has been prepared by the Bank in the light of applicable provisions and guidelines issued by SEBI/RBI the Companies Act, 1956/ Banking Regulations Act and/or any other authority(ies) pertaining thereto. The disclosures made in this Information Memorandum are not vetted or independently verified by the Arrangers nor have they done any duediligence etc for authentication/ verification of contents/ adequacy of contents in this Information Memorandum. The Arrangers shall use this Information Memorandum for the limited purpose of soliciting subscription(s) from potential investor(s) strictly on private placement basis. The Arrangers or any of their directors, employees, affiliates or representatives do not accept any responsibility and/or liability for any loss or damage arising of whatever nature and extent in connection with the use of any of the information contained in this Information Memorandum.

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DISCLAIMER STATEMENT FROM THE ISSUER The Issuer Company accepts no responsibility for statements made otherwise than in the Information Memorandum or any other material issued by or at the instance of the Issuer Company and anyone placing reliance on any other source of information would be doing so at his/her/their own risk.

Allahabad Bank

FILING OF INFORMATION MEMORANDUM As per extant SEBI guidelines/ regulations, filing of this Information Memorandum is not required either with SEBI, RoC or any other regulatory authority(ies). The present issue of bonds being made on private placement basis, copy of this Information Memorandum along with the documents as specified under the head Material Contracts and Documents for Inspection required to be filed with Registrar of Companies (RoC) under Section 60 of the Companies Act, 1956 shall not be applicable and hence the same has not been delivered to RoC for registration nor has the same been filed with SEBI for vetting/ comments/ registration. DISCLAIMER CLAUSE OF THE STOCK EXCHANGES A copy of this Information Memorandum has been submitted to NSE. NSE has vide its letter no ------------------- dated -----------given permission to the Bank to use the name of their Exchange in this Information Memorandum as stock exchange on which this Issuers securities are proposed to be listed. The Exchanges have scrutinized this Information Memorandum for their limited internal purpose of deciding on the matter of granting the aforesaid permission to the Bank. It is to be distinctly understood that the aforesaid permission given by NSE should not in any way be deemed or construed that the Information Memorandum has been cleared or approved by NSE; nor do they in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this Information Memorandum; nor do they warrant that this Issuers securities will be listed or continue to be listed on the Exchanges; nor do they take responsibility for the financial or other soundness of this Issuer, its promoters, its management or any scheme or project of this Issuer. Every person who desires to apply for or otherwise acquire any securities of this Issuer may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/ acquisition whether by reason of anything stated or omitted to be stated herein or any other reason whatsoever. DISCLAIMER IN RESPECT OF JURISDICTION This offer of Bonds is made in India to Companies, Corporate Bodies, Trusts registered under the Indian Trusts Act, 1882, Societies registered under the Societies Registration Act, 1860 or any other applicable laws, provided that such Trust/ Society is authorised under constitution/ rules/ bye-laws to hold debentures in a Company, Indian Mutual Funds registered with SEBI, Indian Financial Institutions, Insurance Companies, Provident Funds, Gratuity Funds, Superannuation Funds, Commercial Banks including Regional Rural Banks and Co-operative Banks (subject to RBI Permission) as defined under Indian laws. The Information Memorandum does not, however, constitute an offer to sell or an invitation to subscribe to securities offered hereby in any other jurisdiction to any person to whom it is unlawful to make an offer or invitation in such jurisdiction. Any person into whose possession this Information Memorandum comes is required to inform himself about and to observe any such restrictions. Any disputes arising out of this issue will be subject to the exclusive jurisdiction of the courts at Kolkata (West Bengal). All information considered adequate and relevant about the Issuer and the Bank has been made available in this Information Memorandum for the use and perusal of the potential investors and no selective or additional information would be available for a section of investors in any manner whatsoever. LISTING The equity shares of the Bank are listed on the Bombay Stock Exchange Limited, Calcutta Stock Exchange and the National Stock Exchange of India Limited (NSE). The Bank has made an application to NSE to list the Bonds to be issued and allotted under this Information Memorandum. The Bank shall complete all the formalities relating to listing of the Bonds within 70 days from the Date of Closure of the Issue. If such permission is not granted within 70 days from the Date of Closure of the Issue or where such permission is refused before the expiry of the 70 days from the Date of Closure of the Issue, the Bank shall forthwith repay without interest, all monies received from the applicants in pursuance of this Information Memorandum, and if such money is not repaid within 8 days after the Bank becomes liable to repay it (i.e. from the date of refusal or 70 days from the Date of Closing of the subscription list, whichever is earlier), then the Bank and every director of the Bank who is an officer in default shall, on and from expiry of 8 days, will be jointly and severally liable to repay the money, with interest at the rate of 15 per cent per annum on application money, as prescribed under Section 73 of the Companies Act, 1956. MINIMUM SUBSCRIPTION As stated in the SEBI circular no. SEBI/MRD/SE/AT/46/2003 dated December 22, 2003, the requirement of minimum subscription shall not be applicable for the issue of Bonds on private placement basis and therefore the Bank shall not be liable to refund the issue subscription(s)/ proceed(s) in the event of the total issue collection falling short of issue size or certain percentage of issue size. CAUTIONARY NOTE Though not applicable to the issue of bonds, as a matter of abundant caution, attention of applicants is specially drawn to the provisions of sub-section (1) of Section 68A of the Act, which is reproduced below: Any person who: a) makes, in a fictitious name, an application to a company for acquiring, or subscribing for, any shares therein, or b) otherwise induces a company to allot, or register any transfer of, shares therein to him, or any other person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five years. MINIMUM-MAXIMUM TARGET The Bank proposes to make Issue of Unsecured Non-Convertible Redeemable Subordinated Bonds (Tier II Bonds Series V) in the nature of promissory notes of Rs. 10,00,000/- each for cash at par aggregating to Rs. 400 crores with a green shoe option of Rs.100 crores

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ISSUE SCHEDULE The Issue will open for subscription at the commencement of banking hours and close at the close of banking hours on the dates indicated below or earlier or on such extended date as may be decided by the Bank at its sole and absolute discretion without giving any reasons or prior notice. In such a case, investors will be intimated about the revised time schedule by the Bank. The Bank also reserves the right to keep multiple Deemed Date(s) of Allotment at its sole and absolute discretion without any notice. Issue Opening Date Issue Closing Date Deemed Date of Allotment STATUTORY AUDITORS 1.M/s T. K. Ghose & Co. Chartered Accountants, 6, Kiron Shankar Roy Road, 1st Floor, Kolkata 700 001. Tel.: (033) 22489571, 22489572. 2.M/s Ramesh C Agrawal & Co. Chartered Accountants 33, Shiv Charanlal Road, Near Manasarovar Cinema, Allahabad 211003. Tel.: (0532) 2401449, 2402178. 3.M/s Prakash & Santosh Chartered Accountants, Ronald Complex, Flat No. 8, Upper Floor, West Cott Building, 37/17, The Mall, Kanpur 208001. Tel: (0512) 2365114, 2312981. 4. M/S N. Chaudhuri & Co. Chartered Accountants 10, Old Court Post House Street, nd 2 Floor, Room No. 61 Kolkata- 700 001 5. M/S Dhamija Sukhija & Co. Chartered Accountants 913-914 Naurang House 21, Kasturba Gandhi Marg, New Delhi-10 001 ARRANGERS TO THE ISSUE SPA Merchant Bankers Ltd. th 10A, Chandramukhi , 10 Floor Nariman Point Mumbai 400 021 Tel No. : - (022) 22801840-49 Fax No. : (022) 22871192/ 22846318 Allianz Securities Ltd. 3,Scindia House Janpath New Delhi 110001 Tel No. (011) 41514660-64 Fax No. (011) 41514665 A K Capital Services Ltd Flat No. N, Sagar Apartments, 6, Tilak Marg, New Delhi 110 001. Tel No. (011) 23385704, 23388235. Fax No. (011) -23385189. IDBI Capital Services Ltd 8th floor, Bakhtawar, Nariman point, Mumbai - 400 021, Tel: 22371212 Fax: 22882560/22882550 13 March 2006 th 13 March 2006 th 13 March 2006
th

Allahabad Bank

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REGISTRAR TO THE ISSUE Maheshwari Datamatics Pvt. Ltd. 6, Mangoe Lane, ( Surendra Mohan Ghosh Sarani) nd 2 Floor, Kolkata-700 001 Tel- 033-2243-5809/5029 Fax- 033-2248-4787 E-mail:mdpl@cal.vsnl.net.in TRUSTEE FOR THE BONDHOLDERS IDBI Trusteeship Services Limited th Registered Office, 10 Floor, Nariman Bhavan, 227, V. K. Shah Marg, Nariman Point, Mumbai 400 021. Tel No. (022) 56314499. Fax No. 91-22-56311776. E-mail: itsl@idbitrustee.co.in BANKERS TO THE ISSUE Allahabad Bank Head Office, 2, Netaji Subhas Road, Kolkata 700 001. Tel.: (033) 22423373, 22420883. Fax.: (033) 22104048, 22424048. Website : www.allahabadbank.com E-Mail: hoipo@allahabadbank.co.in COMPANY SECRETARY Mr. Peter Barua Company Secretary Allahabad Bank Head Office, 2, Netaji Subhas Road, Kolkata 700 001. Tel No. (033) 2242 0878, Fax No. (033) 2210 7424. COMPLIANCE OFFICER Mr. M. M. Neogy Deputy General Manager (Finance & Accounts) Allahabad Bank Head Office, 2, Netaji Subhas Road, Kolkata 700 001. Tel No. (033) 22420899. Fax No.91-33-22107424 E-mail: hogac@allahabadbank.co.in

Allahabad Bank

The investors can contact the Compliance Officer in case of any pre-issue/ post-issue related problems such as non-credit of letter(s) of allotment/ bond certificate(s) in the demat account, non-receipt of refund order(s), interest warrant(s)/ cheque(s) etc. BROKERS TO THE ISSUE Apart from the Arrangers to the Issue appointed by the Issuer Company, there is/are no other broker(s) appointed by the Issuer Company for the purpose of marketing the Issue. Therefore no person/ firm/ company other the Arrangers to the Issue, whether member of recognised stock exchange(s) or otherwise, can act as Brokers to the Issue. CREDIT RATING Credit Analysis & Research Limited (CARE) has vide its letter no. NIL dated 06-12-2005 assigned a CARE AA+ [Double A plus] rating to the present Rs. 500 crore issue of Tier-II Subordinated Bond of the Bank. Instruments carrying this rating are judged to be of High Quality by all standards. They are also classified as High Investment Grade. They are rated lower than CARE AAA securities because of somewhat lower margins of protection. Change in assumptions may have a greater impact or the longterm risks may be somewhat larger. Overall, the difference with CARE AAA rated securities is marginal. A copy of the said credit rating letter from CARE is enclosed elsewhere in this Information Memorandum. CRISIL Limited has assigned AA/Stable ( pronounced AA rating with stable outlook vide letter no. AK/FSR/ALLHBAN/200506/1120 dated 15-02-2006 rating to the present Rs.500.00 crore. The rating reflects the Banks strong liquidity position and comfortable resource profile. Please note that, the above ratings are not recommendation to buy, sell or hold securities and investors should take their own decision. The ratings may be subject to revision or withdrawal at any time by the assigning rating agencies and each rating should be evaluated independently of any other rating. The ratings obtained are subject to revision at any point of time in the future. The rating agencies have the right to suspend, withdraw the rating at any time on the basis of new information etc.

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Allahabad Bank
Other Credit Rating Rating as on December 16,2005 March 17, 2005 April 7,2004 March 26,2004 March 26,2004 November 17,2005 December 16,2005 Security Type Unsecured Subordinated (Series-IV) Unsecured Subordinated (Series-IV) Unsecured Subordinated (SeriesI-I ) Unsecured Subordinated (Series- II ) Unsecured Subordinated (Series III) Certificate of Deposits Certificate of Deposits Amount (Rs. in crores) Bonds Bonds Bonds Bonds Bonds 200.00 200.00 125.00 95.00 100.00 2000.00 4000.00 Credit Rating Rating Agency Notes/ Remarks (redeemed/ existing) Existing Existing Existing Existing Existing Existing Existing

CARE AA+ AA(ind) AA (ind) AA (ind) AA(ind) P1+ PR1+

CARE FITCH FITCH FITCH FITCH CRISIL CARE

Other than the above credit ratings for its Bonds and Certificate of Deposits, the Bank has not received any credit rating from any other rating agency for any of its listed or unlisted debt securities in the past 3 years.

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Allahabad Bank
II. CAPITAL STRUCTURE As on September 30, 2005 1. SHARE CAPITAL a Authorized Share Capital 150,00,00,000 Equity Shares of Rs. 10/- each b Issued Share Capital 44,67,00,000 Equity Shares of Rs. 10/- each (includes 24,67,00,000 equity shares of Rs 10/each amounting to Rs. 24,670,00,000 held by the Government of India) c Subscribed & Paid-up Share Capital 44,67,00,000 Equity Shares of Rs. 10/- each (includes 24,67,00,000 equity shares of Rs 10/each amounting to Rs. 24,670,00,000 held by the Government of India) 2. 3. a. b. PAID-UP SHARE CAPITAL AFTER THE PRESENT ISSUE SHARE PREMIUM ACCOUNT Before the Issue After the Issue (Rs. in crores) Amount

1500.00 446.70 446.70 446.70

720.00 720.00

NOTES ON CAPITAL STRUCTURE PROMOTERS CONTRIBUTION AND LOCK-IN IN RESPECT OF PROMOTERS WHOSE NAME FIGURE IN THE INFORMATION MEMORANDUM AS PROMOTERS IN THE PARAGRAPH ON PROMOTERS AND THEIR BACKGROUND Sr. Name of Year of Year when made Consideration No. of shares Face % of LockNo. the Allotment fully paid-up (Cash, bonus, Value PostIn Promoter kind, etc.) Issue Period paid-up capital GOI 1995.96 1995-96 Other than Cash # 89,340,000 Rs. 10 20.% 3 Years * Apart from the shares being locked in 69,340,000. Equity shares issued in 1995-1996 are currently under lock # Contribution to capital by the Government of India through Recapitalization Bonds/Special securities. (2) SHARE CAPITAL HISTORY (since nationalisation on July 19, 1969) (Rs. in crore) Year/ Half Year ended Increase/ (Decrease) Mode Paid-Up Capital in capital December 31, 1970 Acquisition of Share Capital on Nationalisation by GoI 1.05 December 31, 1984 0.12 Contribution to Capital by GoI 1.17 December 31, 1985 14.83 Contribution to Capital by GoI 16.00 December 31, 1986 10.00 Contribution to Capital by GoI 26.00 March 31, 1989 31.50 Contribution to Capital by GoI 57.50 March 31, 1992 50.00 Contribution to Capital by GoI 107.50 March 31, 1993 65.00 Contribution to Capital by GoI 172.50 March 31, 1994 90.00 Contribution to Capital by GoI 262.50 March 31, 1995 356.20 Contribution to Capital by GoI 618.70 March 31, 1996 160.00 Contribution to Capital by GoI 778.70 March 31, 1997 (532.00) Adjustment of Accumulated losses against capital 246.70 March 31, 2003 100.00 Fresh issue of capital (public issue) 346.70 September 30, 2005 100.00 Fresh issue of capital (public issue) 446.70 (3) (4) (5) (6) The contribution of capital by the Government of India has been in form of re- capitalization bond. Adjustment of accumulated losses of Rs. 532 crores has been made with the approval of Ministry of Finance conveyed vide their letter no. F.No.12/2/96-BOA dated March 27, 1997. The Bank made its initial public issue of 10 crores equity shares of Rs.10/- each for cash at par aggregating Rs. 100 crores. The issue opened October 23, 2002 and closed on October 31, 2002. The shares are listed on NSE, BSE and Calcutta Stock Exchange. The Bank made a second public issue of 10 crores equity shares of Rs. 10/- each for cash at a premium of Rs. 72/- per share (i.e. at an issue price of Rs. 82/- per share), aggregating to Rs. 820 crores through book building route. The issue opened on April 06, 2005 and closed on April 12, 2005. The shares have been listed on NSE, BSE and Calcutta Stock Exchange. (1)

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Allahabad Bank
(7) LIST OF TOP 10 SHAREHOLDERS AND THE NUMBER OF SHARES HELD BY THEM (as on December 31, 2005): Sr. No. Name of Shareholder Number of Shares Held % Shareholding 1 President of India 246700000 55.23 2 Life Insurance Corporation of India 20519277 4.59 3 Copthal Mauritious Investment Ltd 7801943 1.75 4 Deutche Securities Mauritious Ltd 5149451 1.15 5 HSBC Global Investment 4567952 1.02 6 Sanford Bernstein and codelaware business 4386600 0.98 Trust 7 Morgan Stanley & Co. International 3977276 0.89 8 Citi Group Global Markets Mauritious Pvt. Ltd. 3797476 0.85 9 FID Funds ( Mauritious) Ltd 2799204 0.63 10 The State Teachers Retirement System of OHIO 2335900 0.52 (8) SHAREHOLDING PATTERN (as on December 31, 2005): Sr. No. Category Number of Holders Number of Shares Held % Shareholding A Promoter's Holding 1. Promoters * Directors / Relatives 1 246700000 55.23 2. Persons acting in Concert Nil Nil Sub Total 1 246700000 55.23 B. Non-Promoters Holding 3. Institutional Investors a. Banks 26 1983245 0.44 b. Indian Financial Institutions(LICI) 1 20519277 4.59 c. Mutual Funds 17 8850725 1.98 d. Insurance Companies 7 5830455 1.31 e. Foreign Institutional Investors 48 56419663 12.63 Sub Total 100 93603365 20.95 4. Others a. Bodies/ Corporate 2192 13635670 3.05 b. Non-Resident Indians 749 631397 0.14 c. Overseas Corporate Bodies 0 0 -------d. Individuals 256147 92129568 20.63 Sub Total 259088 106396635 23.82 Grand Total 259188 446700000 100.00 *as defined in Regulation 2[h] of SEBI (Substantial Acquisition of Shares and Takeover) Regulations 1997. The Promoters holding shall include all entries in the Promoters Group Individual or Body Corporates. (9) At present, the promoter group and their nominees as defined in SEBI (Disclosure & Investor Protection) Guidelines 2000 (i.e. Government of India), hold 24,670,00,000 equity shares. Save and except, that no equity shares in the promoter group have been transferred between the promoter and their nominees. There has been no trading in the equity shares held by the promoter group and their nominees during the last six months. Promoter holding and lock-in provisions: the promoter holding after this issue would remain intact at 55.23%. Further, the present issue is a debt issue and therefore the provisions if lock-in do not apply. None of the directors have, either directly or indirectly, undertaken transactions in the shares of the Bank in the last 6 months. The Issuer Company has not issued any shares or debentures or agreed to issue any shares or debentures for consideration other than cash other than that mentioned elsewhere in this Information Memorandum, within the two years preceding the date of this Information Memorandum. The number of shareholders of the Bank were 259188 as on December 31, 2005. At any given time there shall be only one denomination for the shares/ bonds of the Bank and the Bank shall comply with such disclosure and accounting norms as specified by SEBI from time to time. Reservation for small investors in allotment : The present Issue of bonds being made on private placement basis, there shall be no reservation for small/ individual investors and the allotment for bonds shall be finalized by the Bank at its sole and absolute discretion. The Issuer Company has not raised any bridge loan or any other similar financial arrangement against the proceeds of the Issue. The GoI/ Directors/ Arrangers have not entered into any standby, buy-back or similar arrangements for purchase of securities offered through this Information Memorandum. Details of revaluation reserves: As on December 31,2005, the Bank had a balance of Rs. 586.56 crores outstanding as revaluation reserves. The Bank revalued its premises located at various canters during 1991-92, 1996-97 and 2004-05 and the difference between market value and book value of the premise was credited to Capital Reserve-Fixed Asset and debited to Revalued Premise Account. The total amount credited to Capital Reserve Fixed Asset is as under: Financial Year 1991-92 1996-97 2004-05 Amount (Rs. in crores) 121.43 126.04 370.08

(10) (11) (12) (13) (14) (15) (16) (17) (18)

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III. TERMS OF THE PRESENT ISSUE Allahabad Bank is seeking offer for subscription of Unsecured Redeemable Non-Convertible Subordinated Bonds (Tier II Bonds Series V) in the nature of promissory notes of Rs. 10,00,000/- each for cash at par aggregating to Rs. 400 crores with a green shoe option of Rs.100 crores The Bonds offered are subject to provisions of the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970, the Companies Act, 1956, Securities Contract Regulation Act, 1956, terms of this Information Memorandum, Instructions contained in the Application Form and other terms and conditions as may be incorporated in the Trustee Agreement and Bond Trust Deed. Over and above such terms and conditions, the Bonds shall also be subject to the applicable provisions of the Depositories Act, 1996 and the laws as applicable, guidelines, notifications and regulations relating to the allotment & issue of capital and listing of securities issued from time to time by the Government of India (GoI), Reserve Bank of India (RBI), Securities & Exchange Board of India (SEBI), concerned Stock Exchange(s) or any other authorities and other documents that may be executed in respect of the Bonds. NATURE & STATUS OF THE BONDS The Bonds are to be issued in the form of Unsecured Redeemable Non-Convertible Subordinated Bonds (Tier II Bonds Series V) in the nature of promissory notes. The Bonds will constitute direct, unsecured and subordinated obligations of the Bank, ranking pari passu with the existing/ future subordinated debt of the Bank and subordinated to the claims of all other creditors and depositors of the Bank as regards repayment of principal and interest by the Bank. The Bonds shall be free of any restrictive clauses and shall not be redeemable at the initiative of the holder or without the consent of the Reserve Bank of India (RBI). INSTRUMENT & ISSUE DETAILS AT A GLANCE Issue Size Rs. 400 crores with a green shoe option of Rs.100 crores Issue Objects Augmenting the Tier-II Capital for strengthening the Capital Adequacy and enhancing long term resources of the Bank Instrument Unsecured Redeemable Non-Convertible Subordinated Bonds (Tier II Bonds Series V) in the nature of promissory notes Instrument Form In Dematerialised Form Credit Rating CARE AA+ by CARE, AA/Stable by CRISIL Face Value Rs. 10,00,000/- per Bond Issue Price At par (i.e. Rs. 10,00,000/- per Bond) Minimum Application 1 Bond and in multiples of 1 Bond thereafter Tenure 120 months Put & Call Option None Redemption/ At par at the end of 10 years from the Deemed Date of Allotment Maturity Coupon Rate (% 8% p.a. p.a.) * Semi Annual Interest Payment Listing Proposed on the National Stock Exchange of India Limited (NSE) Trustee IDBI Trusteeship Services Limited has been appointed by the Bank to act as Trustees for and on behalf of the holder(s) of the Bonds Interest on At the coupon rate from the date of realisation of cheque(s)/ demand draft(s) upto one day prior to the Application Money * Deemed Date of Allotment * subject to deduction of tax at source, as applicable. KEY TERMS Face Value & Issue Price Each Bond has a face value of Rs. 10,00,000/- and is issued at par i.e. for Rs. 10,00,000/-. Minimum Application The application should be for a minimum of 1 Bond (Rs. 10,00,000/-) and in multiples of 1 Bond (Rs. 10,00,000/-) thereafter.

Allahabad Bank

Interest on Application Money Interest at the coupon rate (subject to deduction of income tax under the provisions of the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof, as applicable) will be paid to all the applicants on the application money for the Bonds. Such interest shall be paid from the date of realisation of cheque(s)/ demand draft(s) upto one day prior to the Deemed Date of Allotment. The interest on application money will be computed on an Actual/ 365 day basis. Such interest would be paid on all the valid applications, including the refunds. Where the entire subscription amount has been refunded, the interest on application money will be paid alongwith the Refund Orders. Where an applicant is allotted lesser number of bonds than applied for, the excess amount paid on application will be refunded to the applicant alongwith the interest on application money. The interest cheque(s)/ demand draft(s) for interest on application money (alongwith Refund Orders, in case of refund of application money, if any) shall be dispatched by the Bank within 15 days from the Deemed Date of Allotment and the relative interest warrant(s) alongwith the Refund Order(s), as the case may be, will be dispatched by registered post/ courier to the sole/ first applicant, at the sole risk of the applicant. Interest on the Bonds The Bonds shall carry interest at the coupon rate (subject to deduction of tax at source at the rates prevailing from time to time under the provisions of the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof for which a certificate will be issued by the Bank) on the outstanding amount of the principal till final redemption. Interest will be paid annually throughout the tenure of the Bonds on the anniversary of the Deemed Date of Allotment till final redemption. The first th interest payment shall be made on 30 September 2006 and the last interest payment will be made at the time of final redemption of the Bonds on pro-rata basis. Interest on Bonds will cease on the date of final redemption in all events. In case the Deemed Date of Allotment is revised (pre-poned/ postponed) then the given interest payment date may also be revised (preponed/ postponed) accordingly by the Bank at its sole & absolute discretion.

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Allahabad Bank
If any interest payment date falls on a day which is not a Business Day (Business Day being a day on which Commercial Banks are open for Business in the city of Kolkata, West Bengal, then payment of interest will be made on the next day that is a business day but without liability for making payment of interest for the intervening period. Computation of Interest Interest for each of the interest periods shall be calculated, on 'actual/ 365 (366 in case of a leap year) days' basis, on the face value of principal outstanding on the Bonds at the coupon rate rounded off to the nearest Rupee. Deemed Date of Allotment th Interest on the Bonds shall accrue to the Bondholder(s) from 13 March 2006, which shall be the Deemed Date of Allotment. All benefits relating to the Bonds will be available to the investors from the Deemed Date of Allotment. The actual allotment of Bonds may take place on a date other than the Deemed Date of Allotment. The Bank reserves the right to keep multiple allotment date(s)/ deemed date(s) of allotment at its sole and absolute discretion without any notice. In case if the issue closing date is revised (pre-poned/ postponed), the Deemed Date of Allotment may also be revised (pre-poned/ postponed) by the Bank at its sole and absolute discretion. Depository Arrangements The Bank has appointed M/s Maheshwari Datamatics Pvt. Ltd. as Registrars & Transfer Agent for the present Bond Issue. The Bank shall make necessary depository arrangements with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) for issue and holding of Bonds in dematerialised form. In this context the Bank shall sign two tripartite agreements as under: Tripartite Agreement between Allahabad Bank, Maheshwari Datamatics Pvt Ltd. and National Securities Depository Limited for offering depository option to the investors. Tripartite Agreement between Allahabad Bank, Maheshwari Datamatics Pvt. Ltd. and Central Depository Services (India) Limited for offering depository option to the investors. Investors can hold the bonds only in dematerialised form and deal with the same as per the provisions of Depositories Act, 1996 as amended from time to time. Procedure for applying for Demat Facility 1. The applicant must have at least one beneficiary account with any of the Depository Participants (DPs) of NSDL or CDSL prior to making the application. 2. The applicant must necessarily fill in the details (including the beneficiary account number and Depository Participants ID) appearing in the Application Form under the heading Details for Issue of Bonds in Electronic/ Dematerialised Form. 3. Bonds allotted to an applicant will be credited directly to the applicants respective Beneficiary Account(s) with the DP. 4. For subscribing the bonds, names in the application form should be identical to those appearing in the account details in the depository. In case of joint holders, the names should necessarily be in the same sequence as they appear in the account details in the depository. 5. Non-transferable allotment advice/refund orders will be directly sent to the applicant by the Registrars to the Issue. 6. If incomplete/incorrect details are given under the heading Details for Issue of Bonds in Electronic/ Dematerialised Form in the application form, it will be deemed to be an incomplete application and the same may be held liable for rejection at the sole discretion of the Bank. 7. For allotment of Bonds, the address, nomination details and other details of the applicant as registered with his/her DP shall be used for all correspondence with the applicant. The Applicant is therefore responsible for the correctness of his/her demographic details given in the application form vis--vis those with his/her DP. In case the information is incorrect or insufficient, the Issuer would not be liable for losses, if any. 8. It may be noted that Bonds being issued in electronic form, the same can be traded only on the Stock Exchanges having electronic connectivity with NSDL or CDSL. NSE where the Bonds of the Bank are proposed to be listed has connectivity with NSDL and CDSL. 9. Interest or other benefits would be paid to those Bondholders whose names appear on the list of beneficial owners given by the Depositories to the Bank as on Record Date/ Book Closure Date. In case of those Bonds for which the beneficial owner is not identified by the Depository as on the Record Date/ Book Closure Date, the Bank would keep in abeyance the payment of interest or other benefits, till such time that the beneficial owner is identified by the Depository and conveyed to the Bank, whereupon the interest or benefits will be paid to the beneficiaries, as identified, within a period of 30 days. Investors may note that pursuant to circular no. SEBI/MRD/SE/AT/36/2003/30/09 dated September 30, 2003 issued by SEBI, the Bonds of the Bank would be issued and traded only in dematerialised form. Market Lot The market lot will be one Bond (Market Lot). Since the bonds are being issued only in dematerialised form, the odd lots will not arise either at the time of issuance or at the time of transfer of bonds. Letter(s) of Allotment/ Bond Certificate(s)/ Refund Order(s) Issue of Letter(s) of Allotment The beneficiary account of the investor(s) with National Securities Depository Limited (NSDL)/ Central Depository Services (India) Limited (CDSL)/ Depository Participant will be given initial credit within 15 days from the Deemed Date of Allotment. The initial credit in the account will be akin to the Letter of Allotment. On completion of the all statutory formalities, such credit in the account will be akin to a Bond Certificate. Issue of Bond Certificate(s) Subject to the completion of all legal formalities within 3 months from the Deemed Date of Allotment, or such extended period as may be approved by the Appropriate Authority(ies), the initial credit akin to a Letter of Allotment in the Beneficiary Account of the investor would be replaced with the number of Bonds allotted. The Bonds since issued in electronic (dematerialized) form, will be governed as per the provisions of The Depository Act, 1996, Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996, rules notified by NSDL/ CDSL/ Depository Participant from time to time and other applicable laws and rules notified in respect thereof. Despatch of Refund Orders The Bank shall ensure dispatch of Refund Order(s) by registered post/ courier.

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Allahabad Bank
Terms of Payment The full face value of the Bonds applied for is to be paid alongwith the Application Form. Investor(s) need to send in the Application Form and the cheque(s)/ demand draft(s) for the full face value of the Bonds applied for. Face Value per Bond Minimum Application for Amount Payable on Application per Bond Rs. 10,00,000/1 Bond Rs. 10,00,000/Payment of Interest The interest will be payable semi annually to the Bondholder(s) whose names appear in the List of Beneficial Owners given by the Depository to the Bank on the Record Date/ Book Closure Date. Payment of interest will be made by way of cheque(s)/ interest warrant(s)/ demand draft(s), which will be dispatched to the sole/ first applicant, 7 days before the due date(s) by registered post/ courier at the sole risk of the applicant. Tax Deduction at Source (TDS) Tax as applicable under the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof will be deducted at source. For seeking TDS exemption/ lower rate of TDS, relevant certificate(s)/ document(s) must be lodged at least 15 days before the payment of interest becoming due with the Company Secretary, Allahabad Bank, Head Office, 2 Netaji Subhas Road, Kolkata 700 001, West Bengal, or to such other person(s) at such other address(es) as the Bank may specify from time to time through suitable communication. Tax exemption certificate/ declaration of non-deduction of tax at source on interest on application money, should be submitted along with the Application Form. Where any deduction of Income Tax is made at source, the Bank shall send to the Bondholder(s) a Certificate of Tax Deduction at Source. Tax Benefits Under the existing provisions of the Income Tax Act, 1961 for the time being in force, the following tax benefits and deductions will be available to the Bondholders of the Bank subject to the fulfillment of the requirements of the relevant provisions. The tax benefits are given as per the prevailing tax laws and may vary from time to time in accordance with the amendments or enactment thereto. As alternate views are also possible, the Bondholder(s) are advised to consult their own tax advisers on the tax implications of the acquisition, ownership and sale of Bonds, and income arising thereon. I. To Resident Bondholders No Income Tax will be deducted at source from interest payable on Bonds in the following cases: a. In case of payment of interest to a Bondholder, who is an individual and resident in India, where the interest payment in the aggregate during the financial year does not exceeds Rs. 2,500/-; b. Tax will be deducted at a lower rate where the Assessing Officer, on an application of any Bondholder, issues a certificate for deduction of tax at such lower rate as per provisions of the Section 197(1) of the Income Tax Act. In all other situations, tax would be deducted at source on each payment as per prevailing provisions of the Income Tax Act. Details on deduction of tax at source are given under para Tax Deduction at Source (TDS) mentioned elsewhere in this Information Memorandum. No Wealth Tax is payable in respect of investments in Bonds of the Bank. II. To the other Eligible Institutions a. Mutual Funds registered under the SEBI Act or regulations made thereunder or such other mutual fund sets up by public sector bank or public financial institution or authorised by Reserve Bank of India and notified by the Central Government will, subject to the provisions of Chapter XII-E, be exempted from income tax on all their income, including from investment in Bonds under the provisions of Section 10(23D) of Income Tax Act. b. No Wealth Tax is payable in respect of investments in Bonds of the Bank. Notes: 1. All the above benefits are as per the current tax law as amended by the Finance Act, 2005. 2. The stated benefits will be available only to the sole/ first named holder in case the bonds are held by joint holders. Put & Call Option Neither Put Option shall be available to the Bondholder(s), nor Call Option would be available to the Bank to redeem the Bonds prior to maturity. The Bonds are free from restrictive clauses and are not redeemable before maturity at the instance of the holder or without the consent of the Reserve Bank of India (RBI). Redemption The face value of the Bonds will be redeemed at par, at the end of 10 years from the Deemed Date of Allotment. In terms of RBI master circular no. DBOD No. BP.BC. 13/21.01.002 /2005-06 dated July 04, 2005, these bonds are free of restrictive clauses and are not redeemable at the initiative of the holder or without the consent of the Reserve Bank of India. In case if the principal redemption date falls on a day which is not a Business Day (Business Day being a day on which Commercial Banks are open for Business in the city of Kolkata, West Bengal, then the payment due shall be made on the next Business Day together with additional interest for the intervening period. Payment on Redemption Payment on redemption will be made by cheque(s)/ warrants(s) in the name of the Bondholder whose name appears on the List of Beneficial owners given by Depository to the Bank as on the Record Date/ Book Closure Date. On the Bank dispatching the redemption warrants to such Beneficiary(ies) by registered post/ courier, the liability of the Bank shall stand extinguished. The Bonds shall be taken as discharged on payment of the redemption amount by the Bank on maturity to the list of Beneficial Owners as provided by NSDL/ CDSL/ Depository Participant. Such payment will be a legal discharge of the liability of the Bank towards the Bondholders. On such payment being made, the Bank will inform NSDL/ CDSL/ Depository Participant and accordingly the account of the Bondholders with NSDL/ CDSL/ Depository Participant will be adjusted.

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The Banks liability to the Bondholders towards all their rights including for payment or otherwise shall cease and stand extinguished from the due date of redemption in all events. Further the Bank will not be liable to pay any interest or compensation from the date of redemption. On the Bank dispatching the amount as specified above in respect of the Bonds, the liability of the Bank shall stand extinguished. Record Date/ Book Closure Date The Record Date/ Book Closure Date for the Bonds shall be 15 days prior to each interest payment and/ or principal repayment date. Effect of Holidays Should any of dates defined above or elsewhere in this Information Memorandum, excepting the Deemed Date of Allotment, fall on a Saturday, Sunday or a Public Holiday, the next working day shall be considered as the effective date(s). Mode of Transfer of Bonds Bonds shall be transferred subject to and in accordance with the rules/ procedures as prescribed by the NSDL/ CDSL/ Depository Participant of the transferor/ transferee and any other applicable laws and rules notified in respect thereof. The normal procedure followed for transfer of securities held in dematerialized form shall be followed for transfer of these bonds held in electronic form. The seller should give delivery instructions containing details of the buyers DP account to his depository participant.

Allahabad Bank

List of Beneficial Owners The Bank shall request the Depository to provide a list of Beneficial Owners as at the end of the Record Date/ Book Closure Date. This shall be the list, which shall be considered for payment of interest or repayment of principal amount, as the case may be. Trustees for the Bondholders The Bank has appointed IDBI Trusteeship Services Limited to act as Trustees for the Bondholders (Trustees). The text of letter th no.2959/TSL/A-9/2006/CL-240 dated 16 February, , 2006 from IDBI Trusteeship Services Limited conveying their consent to act as Trustees for the bondholders is reproduced elsewhere in this Information Memorandum. The Bank and the Trustees will enter into a Trustee Agreement, inter alia, specifying the powers, authorities and obligations of the Trustees and the Bank. The Bondholder(s) shall, without further act or deed, be deemed to have irrevocably given their consent to the Trustees or any of their agents or authorized officials to do all such acts, deeds, matters and things in respect of or relating to the Bonds as the Trustees may in their absolute discretion deem necessary or require to be done in the interest of the Bondholder(s). Any payment made by the Bank to the Trustees on behalf of the Bondholder(s) shall discharge the Bank pro tanto to the Bondholder(s). The Trustees will protect the interest of the Bondholders in the event of default by the Bank in regard to timely payment of interest and repayment of principal and they will take necessary action at the cost of the Bank. No Bondholder shall be entitled to proceed directly against the Bank unless the Trustees, having become so bound to proceed, fail to do so. Right to Accept or Reject Applications The Board of Directors/ Committee of Directors reserves its full, unqualified and absolute right to accept or reject any application, in part or in full, without assigning any reason thereof. The rejected applicants will be intimated along with the refund warrant, if applicable, to be sent. Interest on application money will be paid from the date of realisation of the cheque(s)/ demand drafts(s) till one day prior to the date of refund. The Application Forms that are not complete in all respects are liable to be rejected and would not be paid any interest on the application money. Application would be liable to be rejected on one or more technical grounds, including but not restricted to: 1. 2. 3. 4. 5. 6. 7. Number of bonds applied for is less than the minimum application size; Applications exceeding the issue size; Instrument Option not specified; Bank account details not given; Details for issue of bonds in electronic/ dematerialised form not given; PAN/GIR and IT Circle/Ward/District not given; In case of applications under Power of Attorney by limited companies, corporate bodies, trusts, etc. relevant documents not submitted;

In the event, if any Bond(s) applied for is/ are not allotted in full, the excess application monies of such Bonds will be refunded, as may be permitted. How to Apply This Information Memorandum is neither a prospectus nor a statement in lieu of prospectus and does not constitute an offer to the public generally to subscribe for or otherwise acquire the Bonds issued by the Bank. The document is for the exclusive use of the Institution(s) to whom it is delivered and it should not be circulated or distributed to third parties. The document would be sent specifically addressed to the institution(s) by the Issuer Bank and/ or its Arrangers. Only eligible investors as given hereunder may apply for bonds by completing the Application Form in the prescribed format in BLOCK LETTERS in English as per the instructions contained therein. Applications should be for a minimum of 1 Bond and in multiples of 1 Bond thereafter. Applications not completed in the said manner are liable to be rejected. Application Form duly completed in all respects must be submitted with any of the designated branches of the Bank. The name of the applicants bank, type of account and account number must be filled in the Application Form. This is required for the applicants own safety and these details will be printed on the refund orders and interest/ redemption warrants. The applicant must correctly and clearly specify in the relevant column in the application form The applicant or in the case of an application in joint names, each of the applicant, should mention his/her Permanent Account Number (PAN) allotted under the Income-tax Act, 1961 or where the same has not been allotted, the GIR No. and the Income tax Circle/Ward/District. As per the provision of Section 139A(5A) of the Income Tax Act, PAN/GIR No. needs to be mentioned

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on the TDS certificates. Hence, the investor should mention his PAN/GIR No. if the investor does not submit Form 15G/15AA/other evidence, as the case may be for non-deduction of tax at source. In case neither the PAN nor the GIR Number has been allotted, the applicant shall mention Applied for and in case the applicant is not assessed to income tax, the applicant shall mention Not Applicable (stating reasons for non applicability) in the appropriate box provided for the purpose. Application Forms without this information will be considered incomplete and are liable to be rejected.

Allahabad Bank

Applications may be made in single or joint names (not exceeding three). In the case of joint applications, all payments will be made out in favour of the first applicant. All communications will be addressed to the first named applicant whose name appears in the Application Form at the address mentioned therein. Unless the Issuer Company specifically agrees in writing with or without such terms or conditions it deems fit, a separate single cheque/ demand draft must accompany each Application Form. Applicants are requested to write their names and application serial number on the reverse of the instruments by which the payments are made. All applicants are requested to tick the relevant column Category of Investor in the Application Form. Application Form must be accompanied by either demand draft(s) or cheque(s) drawn or made payable in favour of Allahabad Bank and crossed Account Payee Only. Cheque(s)/ demand draft(s) may be drawn on any bank including a co-operative bank, which is a member or a sub-member of the Bankers Clearing House located at Kolkata, Chennai, Bangalore, Hyderabad, Ahmedabad, New Delhi or Mumbai. Investors in centres which do not have any bank, including a co-operative bank, which is a member or sub-member of the Bankers Clearing House located at any of the centres mentioned above, will be required to make payments only through demand drafts payable at any one of the above centres. Cash, outstation cheques, money orders, postal orders and stockinvest shall not be accepted. The Bank assumes no responsibility for any applications/ cheques/ demand drafts lost in mail. Detailed instructions for filling up the application form and list of collection centres are provided elsewhere in this Information Memorandum. No separate receipts shall be issued for the application money. However, the Bank at their Designated Branch(es) receiving the duly completed Application Forms will acknowledge the receipt of the applications by stamping and returning the acknowledgment slip to the applicant. Applications shall be deemed to have been received by the Bank only when submitted to the Bank at its designated branches or on receipt by the Registrar as detailed above and not otherwise. For further instructions, please read Application Form carefully. Who Can Apply The following categories of investors may apply for the bonds, subject to fulfilling their respective investment norms/ rules by submitting all the relevant documents alongwith the application form. 1. Scheduled Commercial Banks; 2. Financial Institutions; 3. Insurance Companies; 4. Primary/ State/ District/ Central Co-operative Banks (subject to permission from RBI); 5. Regional Rural Banks; 6. Mutual Funds; 7. Provident, Gratuity, Superannuation and Pension Funds; 8. Companies, Bodies Corporate authorised to invest in bonds; 9. Trusts, Individuals, Association of Persons, Societies registered under the applicable laws in India which are duly authorised to invest in bonds. Applicants not to be made by 1. Hindu Undivided Family (neither by the name of the Karta); 2. Partnership Firms or their nominees; 3. Overseas Corporate Bodies (OCBs); 4. Foreign Institutional Investors (FIIs). Applications under Power of Attorney A certified true copy of the power of attorney or the relevant authority as the case may be alongwith the names and specimen signature(s) of all the authorized signatories and the tax exemption certificate/ document, if any, must be lodged alongwith the submission of the completed Application Form. Further modifications/ additions in the power of attorney or authority should be notified to the Bank or to its Registrars or to such other person(s) at such other address(es) as may be specified by the Bank from time to time through a suitable communication. Application by Mutual Funds In case of applications by Mutual Funds, a separate application must be made in respect of each scheme of an Indian Mutual Fund registered with SEBI and such applications will not be treated as multiple applications, provided that the application made by the Asset Management Company/ Trustees/ Custodian clearly indicate their intention as to the scheme for which the application has been made. Future Borrowings The Bank shall be entitled to borrow/ raise loans or avail of financial assistance in whatever form as also issue Bonds/ Debentures/ Notes/ other securities in any manner with ranking as pari-passu basis or otherwise and to change its capital structure, including issue of shares of any class or redemption or reduction of any class of paid up capital, on such terms and conditions as the Bank may think appropriate, without the consent of, or intimation to, the Bondholder(s) or the Trustees in this connection.

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Bondholder not a Shareholder The Bondholders will not be entitled to any of the rights and privileges available to the shareholders.

Allahabad Bank

Rights of Bondholders 1. The Bonds shall not, except as provided in the Companies Act, 1956 confer upon the holders thereof any rights or privileges available to the members of the Bank including the right to receive Notices or Annual Reports of, or to attend and/or vote, at the General Meeting of the Bank. However, if any resolution affecting the rights attached to the Bonds is to be placed before the shareholders, the said resolution will first be placed before the concerned registered Bondholders for their consideration. In terms of Section 219(2) of the Act, holders of Bonds shall be entitled to a copy of the Balance Sheet on a specific request made to the Bank. 2. The rights, privileges and conditions attached to the Bonds may be varied, modified and/or abrogated with the consent in writing of the holders of at least three-fourths of the outstanding amount of the Bonds or with the sanction of Special Resolution passed at a meeting of the concerned Bondholders, provided that nothing in such consent or resolution shall be operative against the Bank, where such consent or resolution modifies or varies the terms and conditions governing the Bonds, if the same are not acceptable to the Bank. 3. The registered Bondholder or in case of joint-holders, the one whose name stands first in the Register of Bondholders shall be entitled to vote in respect of such Bonds, either in person or by proxy, at any meeting of the concerned Bondholders and every such holder shall be entitled to one vote on a show of hands and on a poll, his/her voting rights shall be in proportion to the outstanding nominal value of Bonds held by him/her on every resolution placed before such meeting of the Bondholders. 4. The Bonds are subject to the provisions of the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970, the Companies Act, 1956, Securities Contract Regulation Act, 1956, terms of this Information Memorandum, Instructions contained in the Application Form and other terms and conditions as may be incorporated in the Trustee Agreement and Bond Trust Deed. Over and above such terms and conditions, the Bonds shall also be subject to the applicable provisions of the Depositories Act, 1996 and the laws as applicable, guidelines, notifications and regulations relating to the allotment & issue of capital and listing of securities issued from time to time by the Government of India (GoI), Reserve Bank of India (RBI), Securities & Exchange Board of India (SEBI), concerned Stock Exchange(s) or any other authorities and other documents that may be executed in respect of the Bonds. 5. Save as otherwise provided in this Information Memorandum, the provisions contained in Annexure C and/ or Annexure D to the Companies (Central Governments) General Rules and Forms, 1956 as prevailing and to the extent applicable, will apply to any meeting of the Bondholders, in relation to matters not otherwise provided for in terms of the Issue of the Bonds. 6. A register of Bondholders will be maintained in accordance with Section 152 of the Act and all interest and principal sums becoming due and payable in respect of the Bonds will be paid to the registered holder thereof for the time being or in the case of joint-holders, to the person whose name stands first in the Register of Bondholders. 7. The Bondholders will be entitled to their Bonds free from equities and/or cross claims by the Bank against the original or any intermediate holders thereof. Succession In the event of death/ winding-up of the holder of the Bond(s), the Bank will recognize the executor or administrator of the concerned Bondholder(s), or the other legal representative as having title to the Bond(s). The Bank shall not be bound to recognize such executor or administrator or other legal representative as having title to the Bond(s), unless such executor or administrator obtains probate or letter of administration or other legal representation, as the case may be, from a Court in India having jurisdiction over the matter. The Bank may, in their absolute discretion, where they think fit, dispense with production of probate or letter of administration or other legal representation, in order to recognize such holder as being entitled to the Bond(s) standing in the name of the concerned Bondholder on production of sufficient documentary proof or indemnity. Notices All notices to the Bondholder(s) required to be given by the Bank or the Trustees shall be published in one English and one regional language daily newspaper in Kolkata, Mumbai, New Delhi and Chennai and/ or will be sent by post/ courier to the sole/ first allottee or sole/ first Beneficial Owner of the Bonds, as the case may be from time to time. All notice(s) to be given by the Bondholder(s) shall be sent by registered post or by hand delivery to the Bank or to such persons at such address as may be notified by the Bank from time to time through suitable communication. Joint-Holders Where two or more persons are holders of any Bond(s), they shall be deemed to hold the same as joint tenants with benefits of survivorship subject to other provisions contained in the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970. Sharing of Information The Bank may, at its option, use on its own, as well as exchange, share or part with any financial or other information about the Bondholders available with the Bank, and other banks, financial institutions, credit bureaus, agencies, statutory bodies, as may be required and neither the Bank nor their agents shall be liable for use of the aforesaid information. Debenture/ Bond Redemption Reserve The Government of India, Ministry of Company Affairs has vide General Circular No. 9/2002 No.6/3/2001-CL.V dated April 18, 2002 clarified that banks need not create Debenture Redemption Reserve as specified under section 117C of the Companies Act, 1956. Undertaking by the Issuer The Issuer company undertakes that: a) the complaints received in respect of the Issue shall be attended to by the issuer company expeditiously and satisfactorily; b) it shall take all steps for completion of formalities for listing and commencement of trading at the concerned stock exchanges where securities are to be listed and taken within 70 days from the date of closure of the Issue. c) no further issue of securities shall be made till the securities offered through this Information Memorandum are listed or till the application moneys are refunded on account of non-listing, under-subscription, etc;

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d)

necessary co-operation to the credit rating agencies shall be extended in providing true and adequate information till the debt obligations in respect of the instrument are outstanding.

Allahabad Bank

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Allahabad Bank
IV. PARTICULARS OF THE ISSUE OBJECTS OF THE ISSUE The present issue of bonds is being made for augmenting the Tier-II Capital of the Bank for strengthening its Capital Adequacy and for enhancing the long-term resources of the Bank. The expenses of the present issue would also be borne by the Bank. The Main Object Clause of the Memorandum of Association of the Bank enables it to undertake the activities for which the funds are being raised through the present issue and also the activities which the Bank has been carrying on till date. The proceeds of this Issue would be used by the Bank for its regular business activities. CAPITAL ADEQUACY RATIO The RBIs guidelines on Capital Adequacy Ratio (CAR) generally conform to the guidelines adopted by the Committee on Banking Regulations and Supervisory Practices of the Bank of International Settlements (BIS). The RBI requires that assets, non-funded items and other off-balance sheet exposures are assigned weights according to prescribed risk weights and that each Bank must maintain capital levels equivalent to a prescribed ratio to such risk weighted assets. Capital For the purpose of calculating the CAR, capital of a Bank is divided into two classes i.e. Tier I capital and Tier II capital. Tier I capital, also known as core capital, represents amounts readily available to support the Bank against unexpected losses. Tier-I capital consists of paid up capital, statutory reserves and other disclosed free reserves. Tier-II capital comprises elements that are less permanent in nature and thus less readily available. Tier II capital consists of subordinated debt (with a minimum maturity of five years), undisclosed reserves, cumulative perpetual preference shares, revaluation reserves (to the extent of 45% of the total amount of revaluation reserves on the Banks book), general provisions and hybrid capital. The total capital for the calculation of CAR is the sum of Tier I capital and Tier II capital and is taken, with the condition that the Tier II capital should not exceed Tier I capital. RBI vide its circular dated October 31, 1998 prescribed that banks should achieve a minimum CAR of 9% with effect from the year ending March 31, 2000. Risk Weighted Assets Each class of assets of the Bank (including off-balance sheet assets) is assigned a risk weight (following certain norms laid down by RBI). The value of risk weighted assets for each class of assets is obtained by multiplying the amount of each asset class by its risk weight. The total risk weighted assets are obtained by summing up the individual risk weighted assets. An International Committee of Banking Regulations and Supervisory Practices of the BIS released an agreed framework on international convergence of CAR for commercial Banks. The minimum CAR was set at 8%. The capital adequacy norms are to be enforced by the Banking Supervisory Authority of the respective country. RBI being the Central Bank of the country had issued guidelines and prescribed that Indian Banks should achieve CAR of 9%, by March 31, 2000. Capital Adequacy Position of the Bank The Capital Adequacy Ratio (CAR) of the Bank as on December 31 , 2005 stood at 12.60% as against the RBI stipulation of 9.00%. Details of capital vis--vis risk weighted assets are as under: (Rs. in crores) As on March 31, March 31, March 31, March 31, March 31, December 2001 2002 2003 2004 2005 31,2005 Capital Funds Tier I Capital Paid up Equity Capital 246.70 246.70 346.70 346.70 346.70 446.70 Less: Investment in Subsidiary 26.27 24.03 27.21 60.00 60.00 60.00 Less Intangible Assets ( F PO NIL NIL NIL NIL NIL 26.05 Exp.) LESS Defered Tax Asset NIL NIL NIL NIL NIL 1.99 Sub- Total 220.43 222.67 319.49 286.70 286.70 358.66 Reserves & Surplus 380.56 426.78 461.39 727.99 1000.94 2246.13 Total Tier I Capital 600.99 649.45 780.88 1014.69 1287.64 2604.79 Tier II Capital Revaluation Reserve 105.44 104.93 104.46 104.00 270.11 263.95 General Provisions 21.77 34.58 29.04 38.00 53.00 80.00 Subordinated Debt 226.61 301.29 336.97 465.08 408.32 344.32 Investment Fluctuation Reserve 12.15 41.47 123.81 330.65 429.95 463.26 Total Tier II Capital 365.96 482.28 594.28 937.73 1161.38 1151.53 Total Capital Fund 966.95 1131.73 1375.16 1952.42 2449.02 3756.32 Risk Weighted Assets 9583.25 10930.37 12413.48 15035.94 19284.34 2949 Capital Adequacy Ratio (%) 10.09 10.35 11.08 12.99 12.70 12.73 Requirement of Enhancement of Capital The Bank expects to post a growth in business in the years to come. As a result, risk weighted assets of the Bank are also expected to increase over the years. Moreover, implementation of Basel II guidelines on Capital Change for operational risk will increase the capital requirement of the Bank. Increase in Tier I capital through retained earnings alone may not be sufficient to enable the Bank to maintain an adequate capital adequacy ratio. In view of the likely expansion of loan assets, the Bank proposes to augment its capital base in order to sustain a healthy CAR. (a) Public Issue of Equity Shares The Bank went for its maiden public issue of equity shares in October 2002. The issue comprised of 10,00,00,000 equity shares of Rs. 10/- each for cash at par aggregating to Rs. 100 crores of which Rs. 10 crores was earmarked for the employees of the Bank. The issue opened for subscription on October 23, 2002 and closed on October 31, 2002. The issue was oversubscribed by 3.55 times. The shares were allotted on 25-11-2002. The despatch of share certificates and refund orders was completed on 26-11-2002 The shares were listed at NSE, BSE and CSE on 27-11-2002

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Allahabad Bank
The Bank went for its follow-on public issue of equity shares in April 2005. The issue comprised of 10 crores equity shares of Rs. 10/- each for cash at a premium of Rs. 72/- per share (i.e. at an issue price of Rs. 82/- per share) aggregating to Rs. 820 crores of which Rs. 82 crores was earmarked for the employees of the Bank. The issue opened for subscription on April 06, 2005 and closed on April 12, 2005. The issue was made through book building route in the price range of Rs. 75/- to Rs. 82/- per share and the same was oversubscribed by 9 times. The shares were allotted on 26-04-2005. The credit of shares in electronic mode and dispatch of refund orders were completed on 27-04-2005. The shares were listed at NSE, BSE and CSE on 25-04-2005 ,2804-2005 & 06-05-2005respectively. (b) Private Placement of Bonds Besides the above the Bank has raised Tier II Capital by way of private placement of Subordinated Bonds to augment capital adequacy as under: Sr. Bond Outstanding Deemed Interest Rate Credit Rating No. Series Balance Date of (% p.a., (Rs. in crs.) Allotment annually) 1. I 125.00 16.12.1999 12.30 AA(ind) by Fitch 2. II 95.00 15.10.2001 9.80 AA(ind) by Fitch 3. III 100.00 31.03.2003 7.00 AA(ind) by Fitch 4. IV 200.00 31.03.2004 5.90 CARE AA+ by CARE & AA(ind) by FITCH Unsecured Redeemable Non-Convertible Tenure (Months) 88 66 85 99 Date of Redemption 15.04.2007 14.04.2007 30.04.2010 30.06.2012 Repayment Terms Bullet Bullet Bullet Bullet

26

V.

BANK & MANAGEMENT

Allahabad Bank

HISTORY & BACKGROUND OF THE BANK Allahabad Bank, the oldest joint Stock Bank of the country, was set up in the historic town of Allahabad on April 24, 1865 by a Group of Europeans. At that juncture, in India, organised industry, trade and banking had just started taking shape. The Bank was started with a subscribed capital of Rs. 2 lacs and by the end of 19 century, it had branches at Jhansi, Kanpur, th Lucknow, Bareilly, Nainital, Kolkata and Delhi. In the early 20 century, with the start of Swadeshi Movement, Allahabad Bank witnessed a spurt in deposits and the reserves increased to over Rs. 30 lacs by 1910. In 1920, the Bank was taken over by P&O Banking Corporation at a bid price of Rs. 436 per share. The Head Office and the Registered Office of the Bank were then shifted to Kolkata in 1923 for business considerations and operational convenience. In 1927, the Bank went into the fold of Chartered Bank that acquired the controlling interest in the P&O Banking Corporation. The Bank passed through the critical period of Great Depression during the early thirties, which caused a general stagnation in the global markets, without sparing the Indian Banking Industry. The Bank dovetailed its functioning in accordance with the exigencies of the Five Year Plans, which were started in 1951. In the post independence era, Allahabad Bank maintained a th steady growth and by 1964, the Bank had opened its 100 branch. On July 19, 1969, along with 13 other major commercial banks, Allahabad Bank was nationalised. At the time of nationalisation, the Bank had a network of 151 branches, deposits of Rs. 114 crores and advances of Rs. 82 crores to its credit. With nationalisation, the Bank spread its activities in the rural, unbanked and under-banked areas. At the end of 1979, the branch network of the Bank increased to 875 with the share of rural branches being 46.40%. Deposits of the Bank grew to Rs. 735 crores at the end of 1979 while advances rose to Rs. 407 crores. In order to bolster the rural economy, a plethora of Social Banking Schemes was introduced. Thus, Lead Bank Scheme (1969), Regional Rural Banks (1975), Twenty-point Programme (1975), New 20-point Programme (1981), Integrated Rural Development Programme (1980) etc. were introduced in the Indian Banking industry. Directed lending to priority sectors, weaker sections, Scheduled Castes/ Scheduled Tribes and Other Backward Castes were given a greater thrust and the Bank responded to this initiative and increased its presence in these areas also. As on March 31, 2005 the Banks priority sector credit stood at Rs. 9947 crores, forming 45% of net bank credit and agriculture credit was over Rs. 4146 crores constituting 18.80% of net credit. The Bank opened its 1000 branch on April 03, 1982. The Bank had also started opening specialised branches such as Industrial Finance Branches, International Branches, SSI Finance Branches, Recovery Branches etc. The Bank made a foray into merchant banking activity in 1984 and subsequently transferred the merchant banking activities to AllBank Finance Limited, a wholly owned subsidiary, in 1991. AllBank Finance Limited was registered as a Category-I Merchant Banker with SEBI and undertook activities such as project advisory services, loan syndication, issue management, leasing, trusteeship and portfolio investment services. Consequent upon the SEBI Rules and Regulations notified on December 09, 1997 for segregation of Capital Market and fund based activities into separate entities, the Company surrendered its Merchant Banking registration with SEBI with effect from July 01, 1998 and got itself registered as a NBFC with RBI on August 21, 1998. In October 1989, United Industrial Bank Limited was amalgamated into Allahabad Bank. One of the major challenges faced by the Bank was the accumulated losses incurred by it for three consecutive years, i.e. from 1992-93 to 1994-95, owing to the adoption of prudential accounting norms, in line with RBI directives. To overcome this situation and to strengthen the bank in various functional areas, a major revamping exercise was initiated. The Bank put a greater thrust on areas like technological up-gradation & modernization, improvement in customer service, credit management with focus to reduce non-performing assets etc. The Bank staged a turnaround in 1995-96 with a net profit of Rs. 5.62 crores, which increased to Rs. 129.21 crores in 1997-98 and then to Rs. 135 crores in 1998-99. The Bank launched Gold Trading with the approval of Reserve Bank of India for import of gold under open general license. The Bank became the first nationalised bank in Eastern India to become a depository participant of National Securities Depository Limited (NSDL) to offer demat and related services and initiated Flexi-fix Deposit Scheme to mobilise resources. The Bank also introduced Kisan Card to facilitate agriculture related activities as well as to meet the domestic requirements of farmers. In order to boost credit off-take, the Bank has launched user-friendly and attractive products namely, consumer finance, car finance, educational loans, personal loan etc. The growth of the Bank over the years is given in the table below: Year No. of Branches Paid-up Capital 1865 1 0.02 1890 4 0.04 1910 15 0.20 1930 37 0.36 1950 58 0.46 1970 211 1.05 1989 1509 57.50 1999 1884 246.70 2000 1893 246.70 2001 1903 246.70 2002 1914 246.70 2003 1923 346.70 2004 1935 346.70 2005 1951 346.70 December,20 1973 446.70 05 Deposits 0.01 0.70 5.53 11.36 27.16 140.70 4,034.04 15,510.35 17642.10 20106.02 22665.94 25463.38 31477.00 40762.00 44631.30 (Rs. in crores) Advances 0.01 0.53 4.66 5.21 14.97 95.95 1,831.77 7,057.07 8240.06 10315.80 11815.01 13486.94 16388.00 22152.00 27714.66
th. th

27

Allahabad Bank
Present Status As on Decemberr 31, 2005, the Bank had 1973 branches, comprising 964 rural, 342 semi-urban, 398 urban and 269 metropolitan, which formed 48.86%, 17.33%, 20.17% and 13.64% of the total respectively. The branches include 46 specialised branches (i.e. 4 Industrial Finance Branches, 18 SSI Finance Branches, 6 International Branches, 6 Recovery Branches, 1 NRI Branch, 1 Industrial Finance-cum-International Branch, 2 Specialised Personal Banking Branch, 1 Specialised Savings Bank Branch,3 Quick Collection Service Branch and 2 Trading Finance Branch, 1 Specialised commercial agriculture, 1 Forex cum Treasury Management) besides 19 Service Branches. The Bank has 151 Extension Counters. A number of Banks branches and offices are housed in the Banks owned premises situated at prime locations in major cities of the country. Pursuant to organisational restructuring, the Bank is currnently operating with a 3-tier structure since June 01, 2001 which was further restructured in November, 2004 by reducing the number of Regional Offices from 48 to 44 and renaming them as Zonal Offices, on account of synergic reasons and improvement in level of efficiency, reduction in overhead cost and other operating expenditures. The Bank has been fulfilling its responsibilities under the Service Area Approach. The Bank has sponsored 7 Gramin Banks (RRBs) (6 in Uttar Pradesh and 1 in Madhya Pradesh) and has Lead Bank responsibilities in 17 Districts (13 in Uttar Pradesh, 2 in Jharkhand and one each in Madhya Pradesh and West Bengal). The Bank has been entrusted with State Level Bankers Committee (SLBC) convenership in the newly formed state of Jharkhand. The Bank is continuing its utmost endeavor for economic uplift-ment of the state through its various developmental programmes. The Bank has set up a residential institute in the name of Birsha Munda Institute of Entrepreneurship Development at Hazaribagh as a part of promotional measures for enhancement of flow of bank credit in Jharkhand State. The institute has so far imparted training to 1157 entrepreneurs, a majority of who are women, to take up various economic activities. The Bank came out with its maiden Equity IPO in the month of October 2002. The at par public issue evolved overwhelming response from the retail investors. The Bank mobilized more than Rs. 370 crores against the offer size of Rs. 100 crores. The number of applications from retail investors in the issue exceeded 2.23 lacs. After the issue, the holding of the Government of India came down to 71.16%. Capital Adequacy Ratio improved to 11.15% as on March 31, 2003 due to increase in capital through maiden equity public issue. The Bank came out with its follow-on Equity IPO in the month of April 2005 through book building route. The issue demonstrated a repeated overwhelming response from the investors. The Bank mobilized more than Rs. 7380 crores against the offer size of Rs.820 crores. After the issue, the holding of the Government of India came down to 55.23%. Capital Adequacy Ratio improved to 13.80% as on June 30, 2005 due to increase in capital through follow-on equity public issue. The Banks performance was noticeable in implementation of Kisan Credit Card launched on 01.09.1998 to ensure easy and timely supply of credit to farmers for their short-term working capital requirements for agricultural activities and also for domestic requirements e.g. education, consumable items, medical expenses etc. of its existing clients. The Bank received third prize for exceeding the disbursement target in 2000-01. During 2005-06, the Bank issued 133498 Kishan Credit Cards. The Bank has issued 721238 Kisan Credit Card upto December 31, 2005 since its inception involving a credit outlay of Rs. 2310.18 crores. With the Kisan Credit Card a new feature of Group Personal Accident Insurance cover has been provided. The Bank has been giving much importance to Human Resource Development. It has sent some Officers for overseas training also. Computerisation and automation of operations continued to receive focused attention from the Bank. The Bank has 1247 computerised branches/ extension counters which covers about 63.20% of total branches/extension counters as on December 31, 2005 in addition to 95 ATMs. The Bank launched tele-banking in 13 branches at 8 different center and Internet Banking in 5 branches. The Bank has also installed its own VSAT based INTRANET & WEBSITE. The Bank has computerised 90% of its business as at December 31, 2005. The Bank has undertaken strategic planning in order to become one of the strongest bank in the country in near future through both product and geographical diversification. For this purpose tie up arrangement have been made/ being negotiated with various insurance companies and mututal funds such as ICICI Prudential, National Insurance Company, Life Insurance Corporation, EXIM Bank and UTI Mutual Fund. As a precursor to opening overseas branches, the Bank has plan to open an Offshore Banking unit at Noida. Structure of Indian Banking Industry Reserve Bank of India

Co-operative Banks

Commercial Banks

Regional Rural Banks

Rural

Urban / Primary Scheduled Non-Scheduled

Scheduled

Non-Scheduled

SBI and Associates

Nationalized Banks

Private Sector Banks

Foreign Banks

Short Term Structure STCBs CCBs PACS

Long Term Structure SCARDBs PCARDBs

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Allahabad Bank

The formal banking system in India comprises the Reserve Bank of India, commercial banks, regional rural banks and the cooperative banks. In the recent past, private non-banking finance companies also have been active in the financial system, and are being regulated by the RBI. MAIN OBJECTS OF THE BANK The main object and business of the Bank, as laid down in the Bank Nationalisation Act is as under: The main object of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 under which the undertaking of the Bank was taken over by the Central Government is as under: An Act to provide for the acquisition and transfer of the undertakings of certain Banking Companies, having regard to their size, resources, coverage and organisation, in order to control the heights of the economy and to meet progressively, and serve better, the needs of the development of the economy, in conformity with national policy and objectives and for matters connected therewith or incidental thereto. The Main Object of the Bank enables it to undertake the activities for which the funds are being raised and the activities, which it has been carrying on till date. Business Sphere of the Bank The Bank shall carry on and transact the business of Banking as defined in Clause (b) of Section 5 of the Banking Regulation Act, 1949, and may engage in one or more of the other forms of business specified in Sub-Section (1) of Section 6 of that Act. Clause (b) of Section 5 of the Banking Regulation Act, 1949 defines Banking as "the accepting for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise." Other Business that the Bank may undertake (Section 3 (7)) Sections 3 (7) of Chapter II of the Banking Companies (Acquisition) Act 1970 provides for the Bank to act as Agent of Reserve Bank. 1. The Bank shall, if so required by the Reserve Bank of India, act as agent of the Reserve Bank at all places in India where it has a branch for: a. Paying, receiving, collecting and remitting money, bullion and securities on behalf of the Government of India b. Undertaking and transacting any other business which the Reserve Bank may from time to time entrust to it 2. The terms and conditions on which any such agency business shall be carried on by the corresponding new Bank on behalf of the Reserve Bank shall be such as may be agreed upon 3. If no agreement can be reached on any matter referred to in Clause (2) above, or if a dispute arises between the corresponding new Bank and the Reserve Bank as to the interpretation of any agreement between them, the matter shall be referred to the Central Government and the decision of the Central Government, thereon, shall be final. 4. The corresponding new Bank may transact any business or perform any function entrusted to it under Clause (1) by itself or through any agent approved by the Reserve Bank. CORPORATE STRATEGY The globalization of the economy and financial sector reforms have resulted in increased competition and thin margins. To achieve the corporate goal, the following strategies have been planned: 1. 2. 3. 4. 5. 6. 7. proliferate the Banks business increase the banks' non fund and non interest income offer affable customer service open more specialized branches and expand personal banking, quick collection service, retail banking, forex banking, small scale industrial finance etc. use technology to boost credit off-take sharpen efficiency and efficacy reduction of non-performing assets

MISSION & VISION OF THE BANK The mission of the Bank is to provide banking and allied financial services efficiently to various market segments. Thrust will be given to provide innovative tailor- made products and services at competitive prices to suit the needs of the customers through a well spread network of branches, taking advantage of the latest improvements in technology and skill. The Vision of the Bank is to become a technology driven, financially strong Bank, offering wide range of financial services with concern for customer-delight, productivity, efficiency and profitability. COMPETITIVE STRENGTHS Many new banks, both private and foreign, have entered the industry and offer new and innovative products at competitive rates. In this scenario, Allahabad Bank believes that its competitive advantages are: a) rich tradition of more than 141 years b) large and loyal customer base c) wide branch network d) specialised branches to cope with modern demand pattern e) diversified product portfolio f) committed and experienced work force g) technology

29

CORPORATE FOCUS The corporate focus of the Bank is: a) to improve efficiency to face competition especially in metropolitan and urban centres b) to increase productivity c) to augment its market share of Banking system deposits d) to develop its management information system e) to reduce NPAs f) to improve systems and control g) to upgrade products and services h) to provide adequate credit support to industry, trade and priority sector

Allahabad Bank

BUSINESS OF THE BANK & ITS PRODUCTS AND SERVICES Other than the offering traditional banking products such as corporate loans, the Bank has made its presence felt by introducing certain new products and value added services while continuing to popularize the existing products. Some of these new products are: (a) Retail Banking Boutiques: In the year 2000, Allahabad Bank came out with a unique strategy for marketing its retail loans by putting in place 57 dedicated Retail Banking Boutiques at potential centres across the country to act as exclusive delivery channels of various Retail Finance Schemes. The Bank posted young & dynamic officers in these boutiques and delegated them with adequate authority to sanction loan proposals related to the various schemes on the spot. These officers were also exposed to specialized training not only to serve the customer better but also to sell the retail products, if need be, by adopting door to door campaign. The number of Boutiques now stands at 241 with an outstanding of Rs. 3902.86 crores as on March 31, 2005. During the FY 2004-2005, the total disbursement under the various retail finance schemes was Rs. 1551.48 crores. Brief description of the Banks retail schemes is as under Sr. Scheme Details 1 Allahabad Bank Personal Loan Scheme Loan for purchase of entire range of consumer durable/ household appliances, purchase of two wheeler / personal computer/ any other tangible items, expenses in connection with any social/ religious obligations, any other purpose except for speculative purpose 2 Allahabad Bank Personal Loan Scheme Loan for meeting personal needs without assigning any specific purpose for Pensioners 3 Allahabad Bank Personal Loan Scheme Loan for any personal purpose including purpose for meeting expenses of for Doctors/ Medical Practitioners professional requirement 4 Allahabad Bank Housing Finance Loan for construction of residential house on land already owned/ to be purchased, Scheme for purchase of house/ flat, for renovation / extension of house/ flat, for purchase of land and construction of house thereon, for taking over of housing loans from other housing finance companies/ financial institutions 5 Allahabad Bank Housing Finance Loan for furnishing and/ or repairing of existing / new flats/ houses Scheme for Furnishing and / or Repairing of existing/ new flats/ houses 6 All Bank Rent Scheme Loans against rent receivables for meeting business/ personal needs but not for speculative purposes 7 Allahabad Bank Car Finance Scheme For purchase of new as well as pre owned multi utility vehicle for personal use 8 Allahabad Bank Loan against NSC/ KVP Loan against NSC/ KVP for any business/ personal purpose other than speculative ones 9 Overdraft Facility in Savings Bank A/Cs To meet immediate exigencies of salaried persons 10 Allahabad Bank Educational Loan To provide financial assistance on reasonable terms to the poor and needy to Scheme undertake basic education and to meritorious students to pursue higher/ professional / technical education 11 AllBank-Property Scheme Loan for any purpose for meeting credit needs by offering l building as security in the form of equitable mortgage 12 All Bank Mobike Schemes Loan for purchasing two wheelers by salaried persons, professionals and self employed persons, businessman and agriculturalist 13 AL Abhusan Scheme Loan is given to working and non-working woman for purchase of gold and diamond jewellery 14 AllBank Gold Loan Scheme Loan for any purpose for meeting credit needs by offering Gold ornaments as security. 15 AllBank Trade Scheme 1) Financing of Stock & other assets ( other than book debts) to be used in trade 2) Development of shop /showroom/Acquiring block/fixed assets like air conditioners, delivery vans etc. 3) Purchase of shop/showroom upto 50% of the value of the shop as per Registered sale deed or market value as assessed by Bank & valuer whichever is less ( to be secured by mortgage of registered sale deed) (b) Loans on Internet: The Bank sanctions educational loans and car loans via internet. The educational loan facility granted by the Bank was launched in 1997 and was subsequently made possible via internet during 1999. Facility to apply on internet for education loan is available to the students of leading institutions like IIMs, IITs, Indian Institute of Science, Bangalore, Jamnalal Bajaj Institute of Management Mumbai, XLRI Jamshedpur & Indian School of Mines Dhanbad. Bank has so far sanctioned 571 educational loans amounting to more than Rs. 13.88 crores through internet.

30

(d) Kisan Credit Card: The card aims to provide adequate and timely financial assistance to the farmers for their agricultural activities amongst other requirements. During the year 2005-0-64, the Bank issued 133498 cards The Bank has issued 721238 Kisan Credit Card upto December 31, 2005 since its inception involving a credit outlay of Rs. 2310.18 crores The Bank is also th providing Group/Personal Accident insurance cover to the holders of the Kisan Credit Card. Also on 140 foundation day of Bank (April 24, 2004) new scheme by name of Kisan Shakti Yojana (KSY) was launched. The scheme allowed the farmers to have flexibility and choice in regards to selection of credit for agriculture , allied activities and domestic and personnel purpose. The bank had extended credit facility under the scheme to 79130 Kisan credit card holders involving credit limit of Rs. 1030.26 crores as on December 31,2005. (e) Depository Services: The Bank has had the distinction of being the first nationalised Bank in the eastern region to be a depository participant of NSDL. An agreement was entered into with NSDL on August 01, 1998 to act as a Depository Participant of NSDL and to offer demat and related services to its customers. During the FY 2004-05, the Bank earned a commission of Rs. th 52.78 lacs from 15934 accounts. During the year 2004-05, the Bank had further spread DP services by opening its 5 DP (after Kolkata, Lucknow, Varanasi and Kanpur) at Mumbai under licence from NSDL. (f) Flexi- Fix Deposit Scheme: This scheme was launched to provide liquidity of a savings bank account and higher yield of a fixed deposit. (g) Banc-assurance: The Bank has signed a MoU with ICICI Prudential Life Insurance Corporation Limited for distribution of their life insurance products via the branches of the Bank under the referral model. The Bank has also entered into a corporate agency tie up with National Insurance Co. Limited for selling of general (non-life) insurance products through Bank Branches .The Bank is also providing Life Insurance cover to its depositors in association with Life Insurance Corporation of India to the extent of Rs. 1.00 lacs on a very nominal premium.

Allahabad Bank

BRANCH NETWORK OF THE BANK The Bank has 44 zonal offices, controlling 1973 branches and 151 extension counters as on December 31,2005, including 46 specialized branches. The population group wise break up of branches of the Bank in India is as under: Population Group Number of Branches % share to Total Rural 964 48.86 Semi-Urban 342 17.33 Urban 398 20.17 Metropolitan 269 13.64 Total 1973 100.00 Geographical distribution of the branches of the Bank is as under: State/ Union Territory Number of Branches Andhra Pradesh 23 Assam 61 Bihar 147 Chhattisgarh 25 Delhi 43 Goa 1 Gujarat 24 Haryana 29 Himachal Pradesh 3 Jammu & Kashimir 4 Jharkhand 92 Karnataka 17 Kerala 6 Madhya Pradesh 144 Maharashtra 81 Manipur 2 Meghalaya 1 Nagaland 4 Orissa 65 Punjab 41 Rajasthan Sikim Tamil Nadu Tripura Uttar Pradesh Uttaranchal West Bengal Andaman & Nicobar Island Chandigarh (U.T.) Pondicherry (U.T.) TOTAL 38 1 27 1 618 16 453 1 4 1 1973 % share of Total 1.17 3.09 7.45 1.27 2.18 0.05 1.22 1.47 0.15 0.20 4.66 0.86 0.30 7.30 4.11 0.10 0.05 0.20 3.30 2.08 1.93 0.05 1.37 0.05 31.32 0.81 22.96 0.05 0.20 0.05 100.00

For customer satisfaction and to increase the business, the Bank has given thrust to single window service by opening the specialized branches. The Bank has 46 specialized branches as on December 31, 2005 that are engaged in financing its corporate borrowers, small-scale industries, specialized trading etc. The details are as given below: Specialized Branches Number of Branches Industrial Finance 4

31

International Recovery SSI Finance Branches Industrial Finance cum International Non-Resident Indians Specialised Personal Banking Specialised Savings Bank Branch Specialised Commercial Agricultural Quick Collection Service Trading Finance Forex cum Treasury Management Total

Allahabad Bank 6
6 18 1 1 2 1 1 3 2 1 46

DETAILS OF SOURCES OF FUNDS DEPOSITS As on Deposits Annual Growth Amount Annual Growth Percent Cost of Deposits (%) March 31, 2001 20106 2464 14.0 7.44 March 31, 2002 22666 2560 12.7 7.20 March 31, 2003 25463 2797 12.3 6.79 March 31, 2004 31477 6014 23.61 5.63 March 31, 2005 40762 9285 29.49 5.00 (Rs. in crores) December 31, 2005 44631 6489 17.01 4.99

THE CATEGORY-WISE BREAK-UP OF TOTAL DEPOSITS DURING LAST 5 YEARS IS PRESENTED BELOW: (RS. IN CRORES) As on March 31, March 31, March 31, 2003 March 31, March 31, December 31,2005 2001 2002 2004 2005 Current Deposits 1845 1872 2268 2803 3297 3570 Savings Bank Deposits 6604 7701 8725 10343 12472 14047 Term Deposits 11657 13093 14470 18279 24937 27014 Total 20106 22666 25463 31425 40706 44631 The category-wise break-up of average cost of deposits during last 5 years is presented below: As on March 31, March 31, March 31, 2003 March 2001 2002 31, 2004 Current Deposits 0.04 0.10 0.03 0.00 Savings Bank Deposits 3.59 3.74 3.61 3.16 Term Deposits 11.31 11.23 10.04 7.79 Total 7.44 7.20 6.79 5.63 March 31, 2005 0.00 3.18 6.49 5.00 (in %) December 31,2005 0.00 3.08 6.56 4.99 (in %) December 31, 2005 14.59 15.49 25.67 44.25 100.00

The population group-wise break-up of aggregate Domestic deposits for the last 5 years is as under: As on March 31, March 31, 2002 March 31, March 31, March 31, 2001 2003 2004 2005 Rural 21.79 21.11 20.43 18.07 15.20 Semi-Urban 20.10 20.01 19.35 17.06 15.44 Urban 30.85 30.83 31.04 28.31 26.53 Metropolitan 27.26 28.05 29.18 36.56 42.84 Total 100.00 100.00 100.00 100.00 100.00

The region-wise distribution of deposits (In India) (as per RBIs region classification) as a percentage of aggregate Domestic deposits of the Bank is given below: (in %) Region March 31, 2001 March 31, 2002 March 31, 2003 March 31, 2004 March 31, December 2005 31,2005 Northern 11.26 11.50 11.43 11.11 10.94 12.88 North-Eastern 2.47 2.43 2.42 2.71 2.24 2.01 Eastern 37.28 36.70 36.51 34.07 31.01 29.72 Central 41.42 41.80 40.54 35.95 32.15 30.76 Western 5.15 5.11 6.13 12.60 19.10 20.54 Southern 2.42 2.46 2.97 3.55 4.57 4.09 Total 100.00 100.00 100.00 100.00 100.00 100.00 BORROWINGS As on December 31, 2005, the borrowings of Bank the were as follows: Particulars of Borrowings from Institutions, & Agencies Unsecured Redeemable Bonds Banks Borrowings Outside India Total (Rs. in crores) Amount 3.31 621.61 0.00 103.60 728.52

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The unsecured redeemable bonds (Tier II bonds) of Rs. 621.61 crores are included under Other Liabilities and Provisions in the Balance Sheet as per the guidelines of the Reserve Bank of India. The rates of interest in respect of these Bonds vary between 5.90% to 12.30%. The details are as under: Sr. No. 1. 2. 3. 4. Bond Series I II III IV Outstanding Balance (Rs. in crs.) 125.00 95.00 100.00 200.00 Deemed Date of Allotment 16.12.1999 15.10.2001 31.03.2003 31.03.2004 Interest Rate (% p.a., annually) 12.30 9.80 7.00 5.90 Credit Rating AA(ind) by fitch AA(ind) by fitch AA(ind) by fitch CARE AA+ by CARE & AA(ind) by FITCH Tenure (Months) 88 66 85 99 Date of Redemption 15.04.2007 14.04.2007 30.04.2010 30.06.2012 Repayment Terms Bullet Bullet Bullet Bullet

Allahabad Bank

Other than unsecured redeemable bonds as shown above, the Bank has availed unsecured loans in the nature of subordinate debt from World Bank aggregating to Rs. 101.61 crores at a interest rate of 5.80% (presently) on floating rate basis. Some of the details in respect of outstanding unsecured redeemable bonds (Tier II) and subordinated debts as on March 31, 2005 are as follows: (Rs. in crores) Repayment Schedule Sr. No. Name of the Lender Amount Rate of Interest Year Amount 1. Subordinated Loan from World Bank 101.61 2007 101.61 5.80 2. Tier II Bonds Series I 125.00 2007 125.00 12.30 3. Tier II Bonds Series II 95.00 2007 95.00 9.80 4. Tier II Bonds Series III 100.00 2010 100.00 7.00 5. Tier II Bonds Series IV 200.00 2012 200.00 5.90 Total 621.61 621.61 Following are the covenants governing the major borrowings of the Bank: RBI RBI provides export refinance against eligible Export Credit outstanding to banks at Bank Rate. Banks are free to avail/ repay the export refinance on any working day NABARD NABARD provides refinance to Banks against the Term lending to agriculture etc. Eligibility for claiming refinance at different rates are prescribed by NABARD and according to the repayment schedule the money are collected from the Bank SIDBI/IDBI SIDBI provides refinance to Banks against Term Lending to SSI sector etc. Eligibility for claiming refinance at different rates are prescribed by SIDBI and according to the repayment schedule the moneys are collected from the Bank Details of Top 10 Borrowings of the Bank as on December 31, 2005* Sr. No. Name of the Lender Outstanding Balance (Rs. in crores) 1. Borrowing A 200.00 2. Borrowing B 125.00 3. Borrowing C 101.61 4. Borrowing D 100.00 5. Borrowing E 95.00 6. Borrowing F 32.20 7. Borrowing G 18.40 8. Borrowing H 16.10 9. Borrowing I 13.80 10. Borrowing J 13.80 * Borrowing under Tier II Bonds in each series has been treated as single borrowing. Interest Rate (%) 5.90 12.30 5.80 7.00 9.80 LIBOR+0.44 LIBOR+0.35 LIBOR+ 0.40 LIBOR+ 0.38 LIBOR+0.44

All the above borrowings are unsecured. No directors have given any personal guarantee for collaterally securing the borrowings. None of the lenders is an affiliate/associate of the Bank. The Bank has not defaulted in repayment/ redemption of any of the borrowings or rolled over any of its borrowings. The Bank has been servicing all its principal and interest liabilities on time and there have been no defaults since inception. No consents are required from the lenders/trustees for issue of capital, creation of further charge and/or making additional borrowings. The lenders/ trustees have not nominated any directors in the Board of Directors of the Bank. RBIs nominee director is on the Board of the Bank, the details of which are shown under the section Board of Directors. The break-up of fixed and floating rate liabilities of the Bank as on December 31, 2005 is as under: FIXED RATE LIABILITIES Fixed Deposits & Savings Bank Deposit Tier II Bonds Other Unsecured Borrowings FLOATING RATE LIABILITIES Balance in Savings Bank Account Subordinated Debt (Rs. in crores) 41061.79 520.00 106.91 14047.61 101.61

The amount of Tier II Bonds and the Subordinated Debt in the table above are shown under Other Liabilities and Provisions in the Balance Sheet against Subordinated Deb. The fixed and floating rate liabilities of the Bank represent only the interest bearing liabilities. For non-interest bearing liabilities, please refer to the Balance Sheet.

33

Allahabad Bank
DETAILS OF DEPLOYMENT OF FUNDS ADVANCES The population group-wise classification of the Banks Gross Advances is as under: As on March 31, 2001 March 31, March 31, 2002 2003 Rural 1025.88 1236.24 2051.94 Semi-Urban 779.77 930.95 1536.69 Urban 1659.79 2003.80 2969.85 Metropolitan 6787.17 7543.07 6925.26 Total 10252.61 11714.06 13483.74 March 31, 2004 2440.75 1720.58 3547.87 8558.76 16267.96 (Rs. in crores) March 31, December 2005 31,2005 3169.95 3743.89 2437.78 2785.48 4523.29 5060.84 12104.50 16124.37 22235.52 27714.58

*Gross Bank Credit excludes Deposits under Rural Infrastructure Development Fund (RIDF), Advances under Provident Fund Pro Note etc. as on last Friday of March. The growth of the Banks Gross advances during the past five years, both in India and overseas is as follows: Year ended March 31, 2001 March 31, March March 31, March 2002 31, 2003 2004 31, 2005 Gross Credit 10315.76 11815.01 13486.94 16388.00 22152.00 Annual Increase (%) 16.13 14.53 14.15 21.51 35.17 (Rs. in crores) December 31, 2005 27714.66 33.33%

The region wise credit exposure of the Banks Gross Credit portfolio as on December 31, 2005 is as under: (Rs. in crores) Region Amount % of gross credit East 6194.09 22.35 West 6444.66 23.25 North 5976.33 21.56 South 2404.10 8.67 North Eastern 462.98 1.67 Central 6232.50 22.50 Total 27714.66 100.00 The sector-wise credit portfolio of the Bank (In India) as on last reporting Friday of December 31 2005 is as under: (Rs. in crores) Sr. No. Industry Amount Exposure to gross bank credit (%) Gross Bank Credit 27715 100 1 Food Credit 1077 3.89 2 Non Food Credit: 26638 96.11 2a Medium & Large Scale Industry 9233 33.31 2b Wholesale Trade 1092 3.94 2c Priority Sector 11588 41.81 2d Other Sectors incl. Export Credit 4725 17.05

Industrywise deployment of Gross Bank Credit as on December 31, 2005 was as under: Industry Total % exposure to the Gross Outstanding Industrial Credit of the Bank (Rs. in crores) Coal & Mining 4 0.037 Iron & Steel 1003 9.200 Other Metal & Metal Products 244 2.238 All Engineering including Electronics 657 6.026 Infrastructure (Power+Telecom+ Roads+Ports) 4316 39.589 Textiles (Cotton, Jute) 859 7.879 Sugar, Tea, Food Processing & Vegetable Oil 412 3.779 Tobacco & Tobacco Products 32 0.294 Paper & Paper Products 95 0.871 Rubber & Leather 17 0.156 Chemical, Dyes, Paints, Drugs & Pharma 1090 9.998 Fertilizers and Petrochemicals Cement 154 1.413 Construction 167 1.532 Petroleum 223 2.045 Automobiles (including Trucks) 52 0.477 Computer Software 1 0.009 Others 1066 9.778 Total Industrial Credit outstanding 10902

% exposure to the Gross Credit of the Bank 0.01 3.62 0.88 2.37 15.57 3.10 1.49 0.12 0.34 0.06 3.93 0.56 0.60 0.80 0.19 0.00 3.85

Top 25 Borrowers of the Bank have the following industry-wise classification in respect of advances of the Bank as on December 31, 2005: (Rs. in crores)

34

Industry Infrastructure (Power +Telecom+Roads+Ports) Chemical , Dyes, Pharma Fertilizers Petroleum & Petroleum Products Iron & Steel Construction Textiles Paper & Paper Products All Engineering including Electronics Cement Total

Total Outstanding to the Industry (Rs. in crores) 1873.57 382.39 337.10 309.80 278.57 187.84 162.32 157.36 108.25 3797.00

% exposure to the gross Industrial Credit of the Bank 17.15 3.50 3.09 2.84 2.55 1.72 1.49 1.44 0.99

% exposure to the Gross Credit of the Bank 6.76 1.38 1.22 1.12 1.01 0.68 0.59 0.57 0.39

Allahabad Bank

Exposure of the Bank to Top 10 companies of the portfolio as on December 31, 2005 was as under: Account Name Industry Outstanding Amount % of Gross Advances Funded (Rs. in crores) Borrower A Infrastructure-Power 301.47 1.088 Borrower B Petroleum 201.05 0.725 Borrower C Construction 195.00 0.704 Borrower D Infrastructure-Power 194.29 0.701 Borrower E Paper & Paper Products 162.32 0.586 Borrower F Electronics 157.36 0.568 Borrower G Chemical - Fertilizers 150.96 0.545 Borrower H Infrastructure- Telecom 150.50 0.543 Borrower I Infrastructure -Port 149.65 0.540 Borrower J Infrastructure- Power 145.78 0.526 Exposure of the Bank to Top 5 business groups as on December 31, 2005 was as under: Name of Borrower Outstanding Amount (Rs. in crores) Group A 445.92 Group B 237.11 Group C 221.11 Group D 204.97 Group E 195.00 Total 1304.11

Asset Quality Standard Asset Standard Asset Standard Asset Standard Asset Standard Asset Standard Asset Standard Asset Standard Asset Standard Asset Standard Asset % of Gross Advances 1.61 0.86 0.80 0.74 0.70 4.71 (Rs. in crores) 7696 20019 27715

The break-up of fixed & floating rate assets (domestic) of the Bank as on December 31, 2005 was as under: Fixed Rate Assets Floating Rate Assets Total

Export Credit The export credit as at the end of December 31, 2005 was Rs.1105.00 crores. The Bank, in order to improve the export credit has reduced the interest rate on pre-shipment and post shipment in the past. The position of export credit of the bank for last five years is appended below: (Rs in Crores) Year ended March 31, March 31, March 31, March 31, March 31, December 31, 2001 2002 2003 2004 2005 2005 Outstanding Balance 712.95 604.05 686.27 808.91 1107.40 1105.00 Annual Export Business Turnover 2959.37 2780.13 3058.33 3372.23 5075.28 3823.44 % of Export Credit to Net Credit 7.45 5.50 5.47 5.27 5.23 3.99 Details of the Foreign Currency Loans portfolio for the last 5 years is as follows: Year ended March 31, March 31, March 31, 2001 2002 2003 Foreign Currency Loans (USD 2.75 10.52 10.86 mln.) Foreign Currency Loans (Total in 12.65 48.25 49.95 Rs. crs.)

March 31, 2004 30.00 138.00

March 31, 2005 27.00 124.20

December 31,2005 23.00 105.80

Priority Sector Lending As per RBI norms, the Public Sector Banks credit to the Priority Sector should be 40% of the Net Bank Credit and that for agriculture should be 18% of the Net Bank Credit. The policy of the Bank with regard to financing to the Priority Sector is based upon the norms stipulated by Reserve Bank of India. As on December 31, 2005, the Priority Sector credit stood at 43.38% of the Net Bank Credit and Agricultural credit stood at 20.05% of the Net Bank Credit.

35

The Bank has disbursed Rs. 5557.75 crores to agriculture sector upto December 31, 2005. During the FY 2005-06, the Bank issued 13398 Kisan Credit Card and cumulatively the Bank so far issued 721238 Credit Cards. Upto December 2005 bank opened 28369 accounts under the scheme Kishan Sakti Yojana amounting to Rs. 380.02 crores. and cumulatively Bank issued 79130 no of accounts amounting to Rs. 1030.26 crores. Priority Sector credit is the principal business segment for a large number of the banks branches and the Banks strategy for Priority Sector Credit is focused on creating quality/high yielding loan assets in small/ medium enterprises in agriculture, SSI & services sub-sector so as to generate stable and remunerative income for the branches.

Allahabad Bank

Several policy initiatives have been taken during the last few years to substantially increase credit flow to Priority sectors and especially to the agricultural sectors. These initiatives include the following: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Financing under Kisan Credit Card Scheme. Providing multiple credit facility for crop production, irrigation and farm mechanization. Implementing area specific schemes for financing tea gardens. Financing agriculture infrastructure. Planning to finance commercial agricultural projects and agro-based projects through Commercial Agricultural Finance Branches. Promoting rural industries through KVIC-Margin Money Scheme. Executing Merchant Credit Scheme for financing trade and small businesses. Formulating Banks own Housing Finance Scheme. Providing Educational Loans to students of IITs, IIMs and other leading institutions. Implementing Banks own Model village development programme in selected villages throughout the country. Formulating and putting in place Village development credit package. Financing under Kishan Sakti Yojana (Rs. in crores) March 31, December 2005 31,2005 4145.84 5557.75 1537.64 1788.30 3722.79 4654.21 9406.27 12000.26 42.80 43.38 40.00 40.00

Details of sector-wise distribution of Gross Priority Sector Advances for the last 5 years is given below Year ended March 31, March 31, March 31, March 31, 2001 2002 2003 2004 Agriculture 1685.60 1994.07 2250.47 3063.00 Small Scale Industry 901.80 851.65 888.59 1323.00 Other Priority Sector Advances 1735.77 2039.50 2489.71 3057.00 Gross Priority Sector Advances 4323.17 4885.22 5628.77 7442.00 % to Net Bank Credit (%) 44.94 44.37 42.29 45.80 Targets (%) 40.00 40.00 40.00 40.00

Gross Bank Credit represents Gross Advances of the Bank. Net Bank Credit is arrived at after deducting FCNR(B) and NRNR deposits as these are eligible for deductions while calculating the Net Bank Credit for the purpose of priority sector advances in line with RBI Circular No. RPCD.BC.147/11.01.01/95-95 dated April 21, 1995. The calculation of Net Domestic Bank Credit as on December 31, 2005 is shown below: (Rs. in crores) Gross Domestic Bank Credit 27714.66 Less: NRNR Deposits 0.00 Less: FCNR Deposits 96.68 Less: Participation Certificates 0 Net Domestic Bank Credit 27617.98 Lead Districts As required by the GoI/ RBI, the Bank has been assigned the role of lead bank in 17 districts in 4 states, which are Uttar Pradesh, Madhya Pradesh, West Bengal and Jharkhand. The assigned lead bank responsibilities are discharged by maintaining Inter-institutional coordination in the preparation and implementation of various development programmes in each district. The role functions of a Lead Bank are as under: Development of banking facilities particularly in Rural and Backward areas. Removal of unemployment and under employment through channelising banks advances for Regional Development. Ensuring appreciable rise in the standard of living of the poorest sections of the population by providing credit for taking up self-employment ventures by them and also for some of their basic needs. Bringing about greater understanding and cooperation between banks and government departments/ agencies in implementing various programmes/ schemes. Identifying major constraints impeding the development of the districts economy and inducing the appropriate agencies to take remedial measure. Formulation of Annual District Credit Plan and its implementation. Monitoring and review of the progress made by Banks in credit deployment in general and in Priority Sector advances in particular and under Government sponsored Credit programmes. Details of branch network, resources mobilised and advances made in the lead districts as on December 31, 2005 are as under: (Rs. in crores) State No. of Lead No. of Total Total Advances Advances to Priority Percentage to Total Districts Branches Deposits (A) Sector (B) Advances (B/A) Uttar Pradesh 13 311 3054.04 1794.03 1653.89 92.19 Madhya Pradesh 1 23 339.61 159.69 144.38 90.41 West Bengal 1 64 1186.36 352.06 245.26 69.66 Jharkhand 2 11 128.81 38.14 31.89 83.61 Total 17 409 4708.82 2343.92 2075.42 88.54

36

Loan Policy The Banks lending policy conforms to various directives /instructions/guidelines issued by the Government of India/ Reserve Bank of India/ Bank's Board of Directors and the Top Management of the Bank. The purpose of the policy is to enunciate the thrust areas, risk factors, and set out credit exposure limits. The policy serves as a broad guideline for credit dispensation by the Bank. The main objective of the policy is to build up a well diversified and a quality credit portfolio with a focus on thrust areas and to optimise the return on lending and to avoid any possible negative mismatch in its ALM. The policy is flexible and intends to provide for changes in the economic scenario and also provides for any competitive element in banking as well as to include any reforms introduced from time to time. Keeping in view the diverse and changing credit needs of the people, the Bank strategically aims at segmentation of the market and offers suitable credit products. Bank is endeavouring to increasingly customize various loan products. Bank is also following prudential exposure norms relating to credit exposure to a single borrower/group within the overall norms laid down by RBI. Further, for managing concentration risk, the Bank has also laid down norms for restricting credit to a single industry to an extent of 10% of total credit of the Bank. As a further measure of dispersal of risk and improving healthy loan portfolio, thrust is also laid down on: a) b) c) d) e) f) g) h) i) Financing for exports. Agriculture including plantation and export oriented agricultural activities. SSI units Sunrise industries, such as Information Technology and Software Industry. Personal and Retail banking with finance schemes such as Consumer Loan Scheme, Personal Loan Scheme, and in particular Housing Loan Scheme Infrastructure finance. Encouraging loan delivery to women beneficiaries. Educational loans. Promoting non-fund business to boost up non-interest income.

Allahabad Bank

Credit Approval Authority and Procedures The Banks Board delegates the credit sanction authority with prudential limits to its officers working in branches and administrative Offices. The Bank has designated adequate lending powers, which are reviewed periodically. The proposals falling beyond the delegated lending powers of C&MD are considered by the Management Committee of the Bank comprising of C&MD, ED, one nominee Director of RBI and Government of India each, besides three other Directors of the Bank. The Bank has laid down detailed procedure for sanction of various types of loans/credit facilities. The proposals for project finance from prospective/existing clients are appraised by officers having technical/credit skills. A detailed viability and sensitivity analysis is carried out for each project. Similarly corporate finance /loans are extended after thorough appraisal of the projections/estimates and also after analysing economic/financial viability of the borrower/unit. In case of retail loans certain criteria have been stipulated. The retail proposals are duly scrutinized and the delegated authority accords the sanction if the proposal fulfils each of the criteria. In light of the RBI guidelines, the Bank has set up a Multi-Tier Credit Approving System, where the loan proposal be approved by an Approved Grid named as Credit Grid Committee initially at Head Office level. The Credit Grid Committee consist of Banks Senior Executives to evaluate the credit proposals in line with banks lending policy and credit risk management policy. Bank has in place a well spelt out credit rating system under which the borrowal accounts of Rs 2 lakhs and above are rated on several parameters and the risk is priced with a suitable mark over PLR based on the credit rating. Bank also has in place a welldefined Risk Management Policy aimed at mitigating credit related various risks. As a part of monitoring of credit risk, the Bank has also implemented a system of Credit Review and Audit as per RBI Guidelines. Bank also has in place a distinct and welldefined Loan Review Policy through which the entire loan portfolio of the Bank is also reviewed from time to time based on macro economic fundamentals. The Bank is continuously toning up the skills of the officers in credit appraisals by giving training both in house and outside agencies by NIBM, BTC. etc. The credit limits sanctioned by one layer of authority is being reviewed by the next higher layer authority and any comments/ observations of higher authority are taken up for rectification. INVESTMENTS The investment portfolio of the Bank stood at Rs. 18326.51 crores as on December 31, 2005. The investment portfolio of the Bank as on December 31, 2005 is furnished as below. Particulars Amount (Rs. in crores) Government Securities ( including Spl. 14297.77 Security) Other Approved Securities 508.57 Shares 111.09 Debentures/ Bonds 2662.12 Subsidiaries and Joint Ventures 87.62 Others (CP/MF/RIDF.) 659.34 Total Gross Investments 18326.51 (Rs. in crores)

37

As on Gross investments SLR Investments Held Till Maturity (HTM) Available For Sale Held For Trading % of HTM to entire portfolio (%)

March 31, 2001 8789.90 6692.26 2429.38 6318.38 42.14 17.80

March 31, 2002 10466.26 7798.45 2756.59 7687.83 26.76 18.07

March 31, 2003 12476.04 9229.08 3529.97 8854.61 91.46 21.36

March 31, 2004 15600.09 11517.69 4179.05 11421.04 NIL 26.79

March 31, 2005 19128.87 15407.25 10530.40 8593.23 5.24 55.05

Allahabad Bank December

31,2005 18326.51 14028.80 9061.39 9262.45 2.67 49.44

As on Gross Investments SLR Investments Permanent Investments Current Investments Held for trading Current investments to SLR Investments (%)

March 31, 2001 8789.90 6692.26 2429.38 6360.52 -95.04

March 31, 2002 10466.26 7798.45 2756.59 7714.59 -98.92

March 31, 2003 12476.04 9229.08 3529.97 8946.07 -96.93

March 31, 2004 15600.09 11517.69 4179.05 11421.04 NIL 99.16

(Rs. in crores) March 31, December 2005 31,2005 19128.87 18326.51 15407.25 14028.80 10530.40 9061.39 8593.23 9262.45 5.24 2.67 55.77 66.02

The break up of investments for a period of past 5 years is given in table below: Security Details 2000-2001 2001-2002 2002-2003

(Rs. in crores) 2004-2005 December 31,2005 Government Securities 5873.95 7252.47 8683.54 10981.57 14883.58 13520.22 Other Approved Securities 851.95 689.41 545.56 536.12 523.67 508.57 Shares 74.26 107.05 82.60 80.82 85.27 111.09 Debentures & Bonds 1008.36 1427.24 2198.13 2881.94 2564.79 2662.12 Subsidiaries & Joint Ventures 87.62 87.62 87.62 87.62 87.62 87.62 Others (including Spl security) 893.76 902.47 878.59 1032.02 983.94 1436.89 Total 8789.90 10466.26 12476.04 15600.09 19128.87 18326.51 The Net investment figure shown in the Balance Sheet is obtained after deducting depreciation from the figure of Gross Investments shown above. 2003-2004 Yield on investments (%) for the last 5 years is given below: For the year ended March 31, 2001 Yield including profit on sale of investments (%) 11.66 Yield excluding profit on sale of investments (%) 11.04 March 31, 2002 12.50 10.29 March 31, 2003 12.58 9.64 March 31, 2004 12.29 8.77 March 31, 2005 9.55 7.61 December 31, 2005 8.03 7.34

With the introduction of prudential norms, deregulation of interest and capital adequacy measures, there has been a gradual shift of focus to investment activities. Accordingly, the investment portfolio of the Bank has increased steadily over the years. A large proportion (more than84.60%) of the Banks total investment is held in Government and approved securities. The Bank has been able to maintain a fairly consistent portfolio yield by changing portfolio mix by regular churning without changing the portfolio risk. Domestic Portfolio Position as on March 31, 2005 shows an increase of: a) Terminal book value Rs. 17896.30 crores or 24.78% over earlier year; b) Average book value by Rs.18326.51 crore or 17.48% over earlier year; c) Investment income (including profit) by Rs. 125.94 crores as on 31-12-2005. Current yield on investment (which is measured by dividing interest income by the book value of investments) or return on investments stood at 7.34% as on December 31, 2005 as against 8.77% as on March 31, 2004 for domestic investments. This was mainly due to investment in the low coupon securities during the soft interest regime and redemption of old high coupon securities. Duration of the Central Government securities portfolio, which shows the average time in which the investment could be realised after reckoning the prevailing yield for reinvestment of coupon income remains at 5.7452 on 31-12-2005.

Valuation of the Available For Sale segment as on March 31, 2005 as per RBI norms/FIMMDA rates show the following surplus positions: 1. Govt. Securities : Rs. Nil crores 2. Other SLR securities : Rs.63.65 crores 3. Bonds and debentures : Rs. nil crores Shares and mutual funds portfolio, which suffered depreciation of Rs. 15.86 crores as on March 31, 2005, the Bank holds sufficient provision for the same. No depreciation in shares & mutual fund portfolios as on 31.12.2005 The investment made by the Bank in its subsidiary named Allbank Finance Limited which is under Held Till Maturity segment is valued at book value of subsidiary. There is investment of Rs.34.17 crores in the 6.75%of UTI-US-64 Tax free bonds , DOM : 01/06/2008

Valuation of trading segment of Rs. 2.67 crores in HFT Category as of December 31, 2005 resulted in a loss of Rs.nil crores.

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Profit on sale of securities for the period from April 01, 2005 to December 31, 2005 was Rs. 99.45 crores as against Rs. 347.43 crores for full year during 2004-05. Secondary market turnover reached Rs. 16009.71 crores (excluding inter bank Repo transactions) for the period from April 01, 2005 to December 31, 2005 as against Rs.16956.75 crores during corresponding period of last year. Bank has not made any overseas investments .

Allahabad Bank

RBI guidelines on classification and valuation of investments permit transfer between Held To Maturity and any other segment only once at the beginning of each financial year. Thus, the present formation of strategy reckons these transfers also. The potential risk is in the form of interest rate risk, against which the portfolio needs to be immunized as far as possible. So far, the approach towards Duration of the portfolio has been reactive rather than proactive for following reasons. Issue of dated Central Government securities during the year was towards medium/long term. Even secondary market trading centered on the long-term securities. State Development Loans were, as is usually the case, issued for a standard 10-year maturity. Non-SLR Securities, which are issued in all tenors, were less in numbers and thus its Duration was not annualized.

The main objective is to preserve the current yield on a few securities, while utilizing the upward movement in prices in a few other securities. A volatile yield on Government Securities has had a sobering effect on Non-SLR portfolio, as the risk premium levels, which were almost non-existent at one stage, have started rising. The predominant players have come to recognize the importance of rating and the effect of lack of rating on liquidity and valuation. ASSET CLASSIFICATION, INCOME RECOGNITION & PROVISIONING Asset Classification The Bank classifies its assets in compliance with RBI guidelines. Under these guidelines, an asset is classified as nonperforming if any amount of interest/principal remains overdue for more than 90 days in respect of term loans. In respect of overdraft/ cash credit, an asset is classified as non-performing if the account remains out of order for a period of 90 days and in respect of bills, if the account remains overdue for more than 90 days. In case of retail, the Bank classifies an asset as nonperforming where any amount of interest/ principal remains past due for more than 90 days, loans other than home loans. NPAS are further categorized into three groups i.e. Substandard, Doubtful and Loss Asset depending upon the period of delinquency and availability of tangible security. The table below gives the criteria for asset classification viz. Standard, substandard, doubtful and loss assetCategory Classification 1. Performing Standard Assets An Asset which has not posed any problem and which does not carry more than the normal business risk 2. Non-Performing a) Sub-Standard Assets An asset which has been non-performing for a period less than or equal to twelve months b) Doubtful Assets An asset, which has been non-performing for a period exceeding twelve months c) Loss Assets Asset where loss has been identified by the Bank or auditors/ RBI. The value of security is less than 10% When an account is classified as NPA, interest already debited to the account but not realised, is de-recognized and further interest accrued is collected on cash basis. Provisioning and Write-Offs As per RBI guidelines, provisions are arrived on all outstanding NPAS, as under: Sub-Standard Assets 10% of the outstanding. Loans sanctioned ab initio unsecured will attract 20% provision during Substandard category. Doubtful Assets 20% or 30% of the secured portion based on the number of years the account remained as "Doubtful Asset" (i.e. up to one year, one to three years and more than three years respectively) and at 100% of the unsecured portion of the outstanding after netting retainable or realizable amount of the guarantee claims already received/lodged with DICGC/ECGC, if any. NPAs which have been classified in Doubtful III category on or before 31-03-2004 will attract 100% provision on unsecured amount and 60%/ 75%/100% provision on secured amount as st on 31 March 2005/2006/2007 respectively . NPAs classified as Doubtful III on or after 01-042004 will attract 100% provision irrespective of security value charged to the Bank. Loss Assets 100% of the outstanding after netting retainable amount of the guarantee claims already received/lodged with DICGC/ECGC, if any Standard Assets A general provision of 0.40% other than direct agriculture & SME where provisioning requirements is 0.25%. Asset Classification of Performing and Non-Performing Assets for the last 5 years is given below: in crores) Classification of assets as March 31, March 31, March 31, March 31, on 2001 2002 2003 2004 Standard Assets 8494.45 9813.16 11645.44 14969.20 Sub Standard Assets 552.30 662.40 436.01 452.31 Doubtful Assets 1170.83 1290.97 1331.17 906.04 Loss Assets 98.18 48.48 74.32 60.11 Gross NPAs 1821.31 2001.85 1841.50 1418.46 Gross Advances 10315.76 11815.01 13486.94 16387.66 (Rs. March 31, 2005 20867.25 289.14 930.79 64.34 1284.27 22151.52 December 31, 2005 26462.42 293.94 883.74 74.56 1252.24 27714.66

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Advances given above are Gross Advances while the Balance Sheet indicates Net Advances after setting off provisions, interest suspense etc: Gross Advances (Provisions, Interest Suspense and DICGC & ECGC claims) = Net Advances. Asset Classification of Performing and Non-Performing Assets for the last 5 years is given below: (as a % of Gross Advances) Classification of assets March 31, March 31, March 31, March 31, March December 31, (%) as on 2001 2002 2003 2004 31, 2005 2005 Standard Assets 82.35 83.06 86.35 91.34 94.20 95.48 Sub Standard Assets 5.35 5.61 3.23 2.76 1.31 1.06 Doubtful Assets 11.35 10.93 9.88 5.53 4.20 3.19 Loss Assets 0.95 0.40 0.54 0.37 0.29 0.27 Total 100.00 100.00 100.00 100.00 100.00 4.52 The asset quality of the Bank has been improving considerably during the last 2 years. Gross NPA to Gross Advance dropped from 8.66% in FY04 to 5.80% in FY05, while Net NPA to Net Advance Ratio fell from 1.48% to 0.83% during the same period. General Data on Non-Performing Assets The details of Non-Performing Assets of the Bank are furnished in the various tables below: As on Gross NPA at the beginning of the year Addition during the year/period Reduction during the year/period Up-gradation Cash Recovery Compromise Write-off Gross NPA at the end of the year Provision Interest Suspense DICGC & ECGC Balance Net NPA at the end of the year March 31, 2001 1694.16 407.54 280.39 42.24 101.49 65.97 70.69 1821.31 733.05 4.01 9.60 1074.65 March 31, 2002 1821.31 530.62 350.08 15.57 83.74 86.33 164.44 2001.85 822.51 12.17 7.01 1160.16 March 31, 2003 2001.85 410.60 570.95 143.35 94.14 106.52 226.94 1841.50 943.34 10.34 0.84 886.98 March 31, 2004 1841.50 377.91 800.95 89.36 96.29 133.21 482.09 1418.46 1046.11 5.82 3.70 362.83 March 31, 2005 1418.46 351.39 485.58 104.60 106.45 198.99 75.54 1284.27 1000.70 1.96 10.91 270.70

Allahabad Bank

(Rs. in crores) December 31,2005 1284.27 149.70 181.73 45.32 71.61 62.30 2.50 1252.24 1029.38 0.00 2.10 220.76

In the Balance Sheet as on December 31, 2005 closing Balance of provision of Non-Performing Assets is Rs. 1029.38 crores which has been deducted from the Gross Advances figure to arrive at the Net Advances figure as given in the Balance Sheet. Out of Rs. 1029.38 crores, provisions made during the nine months period ending December 31,2005 amounting to Rs. 35.80 crores. This figure of Rs. 35.80 crores has been included in the Provisions & Contingencies figure, which has been charged to the Profit & Loss Account. (Rs. in crores) As on March 31, March 31, 2002 March 31, March 31, March December 2001 2003 2004 31, 2005 31,2005 Gross Advances Gross NPAs Gross NPAs to Gross Advances (%) Net Advances Net NPAs Net NPA to Net Advances (%) 10315.76 1821.31 17.66 9569.10 1074.65 11.23 11815.01 2001.85 16.94 10973.32 1160.16 10.57 13486.94 1841.50 13.65 12543.60 886.98 7.08 16387.66 1418.46 8.66 15332.03 362.83 2.37 22151.52 1284.27 5.80 21137.95 270.70 1.28 27714.66 1252.24 4.52 26683.18 220.76 0.83

The slab-wise details of the current NPA accounts as on December 31, 2005 are indicated below: Particulars Number of Accounts Below Rs. 25,000/167778 Rs. 25,000/- and above 64746 Total 232524

Gross NPA Amount 138.41 1113.83 1252.24

The industry classification of the top ten NPAs (borrower-wise classification) of the Bank as at December 31, 2005 is given hereunder: Sr. No. Industry Amount Outstanding % of the Total Gross Asset Quality as on (Rs. in Crores) Advances December 31, 2005 1. Textiles 38.53 0.14 Doubtful 2. Engineering 21.82 0.08 Doubtful 3. Others 20.05 0.07 Doubtful 4. Engineering 18.46 0.07 Doubtful 5. Electronics 15.90 0.06 Doubtful 6. Tea 15.23 0.05 Doubtful 7. Paints 11.47 0.04 Doubtful

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8. 9. 10.

Sugar Cement Metals & metal products

10.98 10.28 9.03

0.04 0.04 0.03

Allahabad Bank Doubtful

Doubtful Doubtful (Rs. in crores) Top 10 NPAs as a % of Advance given to industry (B/A) 10.44 2.25 8.14 2.47 11.10 8.27 11.15 10.39 1.94 3.11

The details of top 10 NPAs in different industry sectors as on December 31, 2005 Sr. No. Industry Total Advance to the Top ten NPA Amount in industry (A) the industry (B) 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Engineering Chemicals,Dyes,Paints,Drugs & Pharma,Fertilizer & Petrochemicals Textiles Iron & S teel Tea Cement Sugar Food Processing Gems & Jewellery Construction 657.48 1090.44 859.66 1003.25 205.10 154.32 98.46 99.06 437.18 167.00 68.67 24.56 69.94 24.83 22.77 12.76 10.98 10.29 8.49 5.20

Top 10 Impaired Credits of the Bank as on December 31, 2005 were as under: Name of the Borrower Loans & Contingent Total Advances Credit Exposure Borrower A 38.53 2.55 41.08 Borrower B 21.82 1.18 23.00 Borrower C 20.05 0.00 20.05 Borrower D 18.46 21.42 39.88 Borrower E 15.90 5.54 21.44 Borrower F 15.23 0.00 15.23 Borrower G 11.47 0.00 11.47 Borrower H 10.98 0.00 10.98 Borrower I 10.28 0.00 10.28 Borrower J 9.03 0.30 9.33 Sector-Wise analysis of Gross Non-Performing Assets March 31, 2001 March 31, 2002 Sector
Gross Advances Gross NPA
183.03 262.46 239.90 685.39 1135.92 1821.31

Risk Classification Doubtful Doubtful Doubtful Doubtful Doubtful Doubtful Doubtful Doubtful Doubtful Doubtful March 31, 2004
%
10.19 30.24 11.04 13.73 13.60 13.65

Provision Held 36.20 19.56 15.69 18.46 12.95 11.52 11.53 12.91 8.30 9.99

(Rs. in crores) Interest in Arrears 0.00 9.77 10.38 1.54 129.05 8.12 13.89 7.55 42.93 17.39 March 31, 2005

March 31, 2003

% Gross Advances
2250.47 888.59 2489.71 5628.77 7858.17 13486.94

%
10.86 29.10 13.82 15.85 18.96 17.66

Gross Advances
1994.07 851.65 2039.50 4885.22 6929.79 11815.01

Gross NPA
221.92 285.94 265.94 773.80 1228.05 2001.85

Gross NPA
229.42 268.72 274.83 772.97 1068.53 1841.50

Gross Advances
2595.30 1322.94 3056.78 6975.02 9412.68 16387.66

Gross NPA
255.14 236.52 272.53 764.19 654.27 1418.46

%
9.83 17.12 8.95 10.96 6.95 8.66

Gross Gross NPA Adva-nces

4145.85 1537.14 4088.90 9771.88 12379.64 22151.52 256.19 238.13 279.35 773.67 510.59 1284.27

%
6.18 15.49 6.83 7.92 4.12 5.80

Agriculture SSI Other PSC Total PSC Non PSC Total

1685.60 901.80 1735.77 4323.17 5992.59 10315.76

11.13 33.57 13.03 15.83 17.73 16.94

Sector
Gross Adva-nces

December 31, 2005

Gross NPA %

Agriculture SSI Other PSC Total PSC Non PSC Total

5493.04 1801.00 4744.21 12038.25 15676.41 27714.66

243.54 185.10 312.26 740.90 511.34 1252.24

4.43 10.28 6.58 6.15 3.26 4.52

NPA Management Strategy The NPA cash recovery target for the year 2005-2006 has been fixed at Rs. 450.00 crores. The Bank is utilizing the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 as an effective tool. The Bank has also opened Recovery Branches to give necessary impetus to closely monitor recovery of suit filed cases at DRT and Civil courts. Senior level executives visit the Regions to take decisions on the spot for One Time Settlement (OTS)/ Out-of-court Settlement (OCS). The Bank has been utilizing the revised guidelines of RBI for OTS/OCS. In addition to above, the Bank has also initiated following strategies for reduction of NPA. a) b) c) d) e) f) g) h) The Bank has set up committees at Head Office and Zonal Offices to guide the NPA management efforts of the Branches. The recovery and up-gradation efforts are executed through a separate Recovery and Rehabilitation Department. An elaborate strategy has been drawn-up and implemented by the bank for reduction of NPAs. Credit monitoring system has been revamped. High value NPAs are reviewed accountwise periodically. High incidence of NPA areas are directly monitored by the General Managers at H.O. An incentive scheme has been launched to better the NPA recovery. Best use of new act to recover Bank's dues.

41

Allahabad Bank
Strategies adopted a) b) c) d) e) f) g) h) i) j) k) All potential NPA accounts must be critically reviewed and monitored so as to sustain them as performing assets All potential performing asset accounts where up-gradation or cash recovery is possible should be followed up vigorously Emphatic stress should be given on all compromise settled cases for recovery of dues as per agreed terms Execution of Decrees and recovery thereof should be ensured All recovery proceedings before DRTs should be followed up for recovery of dues expeditiously Tight fencing of fresh addition Identify potential NPA accounts ( Special Mentioned Accounts) Tackle sub- standard accounts top priority basis Meet each & every NPA borrower Settlement efforts for each NPA accounts Make full use of Compromise Committee at i) Zonal Offices ii) ELBs/VLBs l) use of High Power Head Office Compromise Committee m) Separate strategy for suit filed cases n) Strategy for decreed cases o) Strategy for Rural Branches i) Recovery Camp ii) Settlement Camp iii) Effective use of NPWD p) Strong monitoring by Zonal Heads ASSET LIABILITY MANAGEMENT The maturity profile of deposits in the last three years as under: March 31, 2003 March 31, 2004 Year ended Upto 1 Year 1 Year to 3 Years 3 Year to 5 Years Over 5 Years Total Rs. in crores 4453.47 6670.81 5064.24 9274.86 25463.38 % 17.49 26.20 19.88 36.43 100 Rs. in crores 8301.9 7529.18 5597.33 10048.19 31476.60 26.37% 23.92% 17.78% 31.92% 100% March 31, 2005 Rs. in crores 11429.99 10878.12 6750.09 11703.89 40762.09 28.04% 26.69% 16.56% 28.71% 100% (Rs. in crores) December 31,2005 Rs. in crores 11796.72 12243.19 7588.01 13003.38 44631.30 (Rs. in crores) Over 5 years 446.70 3242.88 13003.38 678.26 17371.22 50596.49 26.43% 27.43% 17.00% 29.14% 100%

Maturity Profile of Assets & Liabilities as on the last reporting Friday of December 2005: Maturity 1-14 15-28 29 days 3-6 6-12 1-3 days days -3 months months months years 1. OUTFLOWS Capital Reserves & Surplus Deposits 720.82 624.09 3784.1 2078.81 4588.9 12243.19 Borrowings 15.77 87.84 3.3 Other Liability & Provision 559.2 75.96 84.96 192.16 92.92 335.02 A: Total Outflows 1280.02 715.82 3956.9 2270.97 4685.12 12578.21 B: Cumulative Outflows 1280.02 1995.84 5952.74 8223.71 12908.83 25487.04 2. INFLOWS Cash 228.86Balance with RBI 36.04 31.2 507.76 103.94 229.45 612.16 Balance with Other Banks 1067.85 40.00 50.00 50.00 92.00 Investments 39.98 39.85 602.17 70.89 1265.25 1455.03 Advances Performing 1345.89 605.24 1914.09 2298.18 1660.59 8684.27 NPAs Fixed Assets Other Assets 90.57 117 204.8 124.47 122.27 124.04 C: Total Inflows 2809.19 833.29 3278.82 2647.48 3277.56 10967.5 3. Mismatches D: Mismatch (C-A) 1529.17 117.47 -678.08 376.51 -1407.56 -1610.71 E: % Mismatch (D as a % of A) 119.46% 16.41% -17.14% 16.58% -30.04% -12.81% F: Cumulative Mismatch 1529.17 1646.64 968.56 1345.07 -62.49 -1673.2 G: % Cumulative Mismatch F 119.46% 82.50% 16.27% 16.36% -0.48% -6.56% as % of B

3-5 years

Total

7588.01 150.22 7738.23 33225.27

446.70 3242.88 44631.3 106.91 2168.7 50596.49

379.4 3356.32 3767.33 222.85 13.54 7739.44 1.21 0.02% -1671.99 -5.03%

650.17 11316.44 6186.83 726.82 162.95 19043.21 1671.99 9.63% 0 0.00%-

228.86 2550.12 1299.85 18145.93 26462.42 222.85 726.82 959.64 50596.49

ALM Policy of the Bank With the globalizations of economy and financial sector reform taking place in the country, the risks associated with the banking business have become more complex and have gone up to a large extent. As a result, the progress of integration of domestic market with the external markets has been witnessing increasing competition among the banks. Most of the interest rates have already been deregulated by RBI requiring the banks to take prompt and strategic decisions to maintain their margin and profitability. The Bank is already having its own Asset Liability Management Policy and the data coverage as on March 31, 2005 was 100%. The ALM reports regarding Structural Liquidity and Interest Rate Sensitivity are being prepared every month and the

42

short term Dynamic Liquidity Report is prepared every fortnight. The bank appointed NIBM as a consultant to establish ALM in the Bank and they delivered the package along with a decision support system.

Allahabad Bank

The ALM strategy of the Bank includes the following: 1) To maintain requisite liquidity: The day-to-day liquidity is monitored by the Treasury Department at H.O. 2) To control the cost of deposits: In this respect the bank has been emphasizing for low cost stable deposits. 3) To maintain the net interest margin: The bank strives to invest its surplus fund in investments where risk is less but the yield is better. The bank has already divided its investment portfolio in three categories viz. (a) Trading Book (b) Available for Sale and (c) Held till Maturity, as stipulated. 4) To reduce interest rate risk and default risk in the banking book: The bank has endeavored to diversify its Credit portfolio and to expand the credit portfolio in the retail segment. The Asset Liability Management Committee (ALCO) of the Bank monitors the liquidity and interest rate sensitivity position of the bank periodically. The Bank monitors its liquidity and interest rate sensitivity gaps meticulously. The Bank calculates the duration of its investment portfolio on an ongoing basis. To take quick decision on the changing market scenario the ALCO of the Bank decides the interest rates on its deposits and loans as also the Prime Lending Rate (PLR) of the Bank. The Bank sends its officers for training to various institutes of repute to update their knowledge and to acquaint them with the changes taking place on ALM and/ or Risk Management.

43

Allahabad Bank
Financial Ratios and Other Financial Information of the Bank for the Last Five Years (Rs. in crores unless stated) Ratio March 31, March 31, March 31, March 31, March 31, 2001 2002 2003 2004 2005 Average balances of interest earning 19800.06 22439.72 25711.59 29914.84 38623.90 assets Average Interest Rate (%) 10.46 10.13 9.99 8.92 8.25 Interest Income 2071.36 2272.84 2570.33 2668.67 3185.60 Average interest bearing liabilities 18199.53 20950.38 24196.99 27903.56 36130.05 Interest rate for the above / average cost 7.62 7.36 6.86 5.67 5.04 of funds (%) Interest Expenses 1386.56 1542.37 1660.56 1582.92 1821.56 Interest expenses apportioned to interest 7.00 6.87 6.45 5.29 4.71 earning assets (%) Ratio of average earning assets to 1.09 1.07 1.06 1.07 1.07 average interest bearing liabilities (%) Net Interest Income 684.80 730.47 909.77 1085.75 1364.04 Net Interest Margin (NII/Earning assets) 3.46 3.26 3.54 3.63 3.53 (%) Gross Yield (Gross Income/AWF) (%) 10.92 11.00 11.24 10.67 9.41 Yield Spread (spread/AWF) (%) 3.24 3.02 3.30 3.39 3.35 Cost of Borrowing (%) 11.84 9.35 9.47 7.61 6.97 Return on Average Assets (%) 0.39 0.38 0.70 1.73 1.24 Average share capital & reserves to 2.85 2.80 2.99 3.65 3.91 average total assets (%) Cash EPS (Rs. per share) 12.39 16.08 15.63 28.80 29.29 The above ratios have been computed on the basis of annual financial statements of the Bank for the above periods. Notes: 1. Interest earning assets consist of performing loans, investments in approved and unapproved securities, proportionate cash with Reserve Bank of India, call money/term money lent, deposits kept abroad, etc. 2. Interest bearing liabilities consist of deposits, call money borrowings, refinances, subordinate debts, Tier II bonds, etc. 3. Interest expenses apportioned to interest earning assets are calculated by multiplying total interest expenses by the ratio of average interest earning assets to average interest bearing liabilities. 4. Gross yield equals interest income divided by average interest earning assets. 5. Average cost of loan funds equals interest expenses divided by average interest bearing liabilities. 6. Yield spread represents the difference between gross yield and average cost of loan funds. 7. Return on average assets is the net profit for the year divided by average total assets. CAPITAL ADEQUACY RATIO The RBIs guidelines on Capital Adequacy Ratio (CAR) generally conform to the guidelines adopted by the Committee on Banking Regulations and Supervisory Practices of the Bank of International Settlements (BIS). The RBI requires that assets, non-funded items and other off-balance sheet exposures are assigned weights according to prescribed risk weights and that each Bank must maintain capital levels equivalent to a prescribed ratio to such risk weighted assets. Capital For the purpose of calculating the CAR, capital of a Bank is divided into two classes i.e. Tier I capital and Tier II capital. Tier I capital, also known as core capital, represents amounts readily available to support the Bank against unexpected losses. Tier-I capital consists of paid up capital, statutory reserves and other disclosed free reserves. Tier-II capital comprises elements that are less permanent in nature and thus less readily available. Tier II capital consists of subordinated debt (with a minimum maturity of five years), undisclosed reserves, cumulative perpetual preference shares, revaluation reserves (to the extent of 45% of the total amount of revaluation reserves on the Banks book), general provisions and hybrid capital. The total capital for the calculation of CAR is the sum of Tier I capital and Tier II capital and is taken, with the condition that the Tier II capital should not exceed Tier I capital. RBI vide its circular dated October 31, 1998 prescribed that banks should achieve a minimum CAR of 9% with effect from the year ending March 31, 2000. Risk Weighted Assets Each class of assets of the Bank (including off-balance sheet assets) is assigned a risk weight (following certain norms laid down by RBI). The value of risk weighted assets for each class of assets is obtained by multiplying the amount of each asset class by its risk weight. The total risk weighted assets are obtained by summing up the individual risk weighted assets. An International Committee of Banking Regulations and Supervisory Practices of the BIS released an agreed framework on international convergence of CAR for commercial Banks. The minimum CAR was set at 8%. The capital adequacy norms are to be enforced by the Banking Supervisory Authority of the respective country. RBI being the Central Bank of the country had issued guidelines and prescribed that Indian Banks should achieve CAR of 9%, by March 31, 2000. Risk Management General The Bank recognizes that management of risk is fundamental to the business of banking. The Banks approach to risk management is proactive. The primary goal of risk management is not to avoid risks inherent in business but to steer them consciously and actively. The basic objective is to strike a balance between risk and returns. For promoting a balance between risk and returns. adoption of best practices in Banking system, the Bank has set up a separate department named Risk Management Department to confront various types of financial & non-financial risks. December 31, 2005 45827.99 7.94 2729.34 42722.49 5.03 1610.61 4.69 1.07 1118.73 3.25 8.76 3.09 6.96 1.55 5.12 22.44

44

Credit Risk Management Policy A high-powered Credit Risk Management Committee headed by ED has been formed. The committee pronounces policy on standards for presentation of credit proposals, financial covenants, rating standards and benchmarks, delegation of credit approving powers, prudential limits on credit exposures, asset concentrations, risk monitoring and evaluation, pricing of loans, provisioning and regulatory/legal compliance. Risk Management policies has been framed duly approved by Board of Directors. The policy addresses various key aspects like risk management structure, roles & responsibilities of Credit Risk Management Committee, Risk Management Department, process of risk management, risk gradation system, risk management monitoring, portfolio management, MIS, risk based pricing etc. The bank also implemented risk based supervision as per directive of the Reserve bank of India. The bank has installed a customized package to assess the credit risk comprising of Industry Risk, Business Risk, Financial Risk and Management Risk. This has enabled bank to undertake Portfolio Analysis on half yearly basis.

Allahabad Bank

Credit Risk Supervision & its Preparedness The Bank has modified its MIS to capture historical data for calculating Probability of Default (PD), Loss Given Default (LGD) and exposure at default for effective Risk Based Supervision as well as to asses the adequacy of provisions. The Bank is also planning to introduce the revised inspection system based on degree of risk involved in the operation of branches & controlling offices. Knowledge and skill of Risk Management Architecture is being updated through intensive in-house training system. For Effective implementation of risk based supervision the bank has introduced credit audit in pilot basis as a part of Loan Review Mechanism. Market Risk With ongoing globalization and deregulation, the volatility of financial markets has increased substantially and its going to increase further in future. This will expose banks earnings as well as economic value to higher degree of risk. In order to cope with the challenges of free market economy, the bank has already formulated and implemented AssetLiability Management System. An Asset- Liability Management committee (ALCO) looks after the structural liquidity mismatch within the risk parameters laid down by the Bank. The committee also takes care of interest rate risk, liquidity risk, equity risk, maturity mismatch risks and other type of risks related to market variables i.e foreign exchange rate, equity pricing, commodity pricing, etc. Operational Risk Operational risk is a result of failure of operating system in a bank due to certain reasons like fraudulent activities, natural disaster, human error or omission or sabotage. For mitigating and controlling the same, bank has strong and established internal control system. Apart from that, we also have a separate department, which formulates and monitors delegation of duties and responsibilities at different level. The department also keeps on formulating rules and checkpoints for improving System and Procedures to suit the changing environment. The Bank has formed operational risk management committee to look into operational risk aspect. Forex Risk In terms of the guidelines of the Reserve Bank of India, open positions are permitted to be maintained within the levels stipulated by the Management. The Bank is maintaining such open positions within the limits so prescribed by the Banks Board of Directors. Further, the Board of Directors of the Bank has also prescribed limits for gaps or mismatches in maturities of Banks Foreign Currency assets and liabilities and forward transactions in foreign exchange. The Bank is operating within the limits so fixed, thus minimizing the risks of mismatches in maturities and interest rates. The Value at Risk model prescribed by the FEDAI has been adopted and is being monitored so as to minimize the risks. Counter-party limits have also been fixed for dealings with the other banks with which the Bank has day-to-day dealings so as to limit the risk on individual counter-party banks. INTERNAL CONTROL SYSTEM IN THE BANK Internal Inspection Branches / Offices of the Bank are subjected to Regular Inspection by internal inspecting Officials at periodical intervals of 12 / 18 months. The Inspection Reports of branches / offices under the jurisdiction of Regional Offices are scrutinized and the broad thrust areas are taken up with the R.O.s concerned for speedy rectification. In respect of Branches rated Unsatisfactory, a brief summary is placed before the higher authorities, and the observations of the higher authorities are taken up with the branches for compliance. Similar is the case with Special Reports, which the Inspecting Officials submit from the spot itself in case of some serious type of irregularity observed during the course of inspection, for which urgent remedial steps are warranted to protect the interest of the Bank. Moreover, the progress towards up-gradation of Unsatisfactory Branches is placed before the Audit Committee of executives and observations / suggestions are promptly taken up for implementation. System Audit All Branches are subjected to System Audit as on 28th February every year by the Regional Office concerned, to ensure that Banks laid down systems and procedures in vital operational areas are duly followed. Internal Inspectors/ Concurrent Auditors also point out if any deficiency is observed on this score during the course of their inspection of Branches/ Offices, so that prompt remedial measures are taken. Concurrent Audit Branches including Large Branches, ELBs, VLBs, and other critical Branches are further subjected to Concurrent Audit, that is, simultaneous checking of transactions within a few days of its occurrence, by outside Chartered Accountant Firms. It is ensured that the deficiencies / shortcomings, including revenue loss, if any, are promptly rectified by the Branches concerned. Revenue Audit Branches, which are not covered under Concurrent Audit, are subjected to Revenue Audit, also by outside C. A. Firms, so as to plug any possible revenue loss. E.D.P. Audit EDP Audit is periodically conducted in TBM/ALPM Branches to ensure safety, security and integrity of data, so as to achieve the organizational goals effectively and efficiently.

45

Dealing Room Inspection The Dealing Rooms of the Bank are subject to concurrent audit by the Chartered Accountant firms.

Allahabad Bank

Other special investigation Whenever warranted, Special Investigation is also conducted at the Branch / Office concerned, to unearth any fraud/ forgery etc. and plug the loophole. Vigilance Mechanism The Bank has a well-organised vigilance set-up to take care of the vigilance efficiently and effectively. Vigilance mechanism pursued by the Bank to contain fraud/forgery and malpractices in the Bank has been quite effective. The guidelines emanated from Central Vigilance Commission/RBI/GoI in respect of vigilance matters are promptly implemented and adhered to. Special emphasis is given to expeditious completion of disciplinary cases. Special emphasis is also laid on Preventive Vigilance and Educative Vigilance so as to ensure observance of the prescribed systems and procedures at field level and augment awareness about the need and implication of Preventive Vigilance among the Rank and File. Training programme for the employees for internal control and preventive vigilance are regularly held at the Banks training centre. Periodicals on vigilance are brought out. Apart from routine inspection/audit, Surprise Vigilance Inspection of branches is conducted on an ongoing basis. Housekeeping Housekeeping, which includes Balancing of Books, is constantly monitored and is generally satisfactory. Inter-branch reconciliation was given focused attention during the last few years and the lead-time was maintained at less than three months. The Bank has established systems and procedures for balancing of books of accounts for which specific guidelines have been provided to the field functionaries for proper house keeping. The Bank has centralised system of data processing and reconciliation of inter-branch transaction. Now with the de-centralised process, the data creation for inter-branch transaction is done at regional level. Matching reconciliation is done on a monthly/quarterly basis through IBR software at its Head Office. SUBSIDIARIES, AFFILIATES AND GROUP COMPANIES OF THE BANK Subsidiary Company Allbank Finance Ltd. is a wholly owned subsidiary of Allahabad Bank. The subsidiary was incorporated under the name of Allahabad Bank Nominees Ltd. on September 29, 1951 under the Indian Companies Act, 1913 primarily to hold the shares, debentures etc of the clients of Allahabad Bank purported to be securities against advances granted to them by the Bank to cope up with relevant provisions of the Companies Act and Banking Regulation Act. In 1957, its name was changed to Allahabad Bank Nominees Pvt. Ltd. Subsequently, the word Pvt. was deleted on April 12, 1961 in accordance with Section 43 A of Companies Act, 1956. On September 30, 1975, a fresh incorporation certificate was issued. The name of the company was changed to Allbank Finance Ltd. on February 27, 1991. The subsidiary was set up to undertake merchant banking activities and to undertake the business of leasing and all other kind of related financial services. Consequent upon the SEBI Rules and Regulations notified on December 09, 1997 for segregation of Capital Market and fund based activities into separate entities, the Company surrendered its Merchant Banking registration with SEBI with effect from July 01, 1998 and got itself registered as a NBFC with RBI on August 21, 1998. AllBank Finance Ltd. has not raised any Public Deposit and so it is not required to maintain CRR and SLR. The detailed financials of AllBank Finance Limited are as set out in the Part IX in this Information Memorandum. The Board of Directors of the Bank had earlier taken a decision to merge the subsidiary company with the Bank. But subsequently in view of emerging capital market Allahabad Bank decided to revive the Company. Accordingly, the NBFC licence held by the Company was surrendered to the RBI and the Company has registered itself as category 1 Merchant Banker with the SEBI. Regional Rural Banks sponsored by Allahabad Bank The Bank has sponsored seven Regional Rural Banks (RRB) in the States of Uttar Pradesh and Madhya Pradesh in order to provide banking services in rural areas in pursuance of GoI policies. The RRBs together have 505 branches, deposits of Rs. 2164.52 crores and advances of Rs. 1241.61 crores as on December 31, 2005. During the financial year 2005-2006, the growth of deposits and advances was 11.72% and 30.13% respectively. For the year ended December 31, 2005, RRBs sponsored by the Bank have posted combined profit of Rs. 40.47 crores (without adjusting for the combined accumulated losses). All the RRBs are covered under the restructuring programme of the Government of India. All the RRBs are in profit as on 31-12-2005 and the accumulated loss of one RRB i.e. Sharda Gramin Bank has been wiped out. Bhagirath Gramin Bank Bhagirath Gramin Bank, established on September 19, 1976 has its Head Office at Sitapur in Uttar Pradesh. The operational area of the bank covers Sitapur in Uttar Pradesh. The audited financial highlights of Bhagirath Gramin Bank for the last 5 years is as under: Particulars FY 2001 FY 2002 FY2003 FY 2004 Capital 1.00 1.00 1.00 1.00 Reserves & Surplus 71.94 89.57 107.30 126.69 Deposits 367.65 385.89 425.60 460.01 Advances 71.10 76.34 97.93 126.81 Priority sector advances 56.51 60.91 79.19 66.47 Profit/ (Loss) 19.32 17.66 18.26 21.34 Productivity Per Employee 0.89 0.79 0.89 1.01 Transactions between Bahgirath Gramin Bank and Allahabad in the past 5 years are as under: Particulars March 31, March 31, March 31, March 31, 2001 2002 2003 2004 Deposit with Allahabad Bank 278.68 292.19 230.95 76.44 Refinance Outstanding 2.97 3.47 NIL NIL FY 2005 1.00 131.65 529.37 187.24 125.76 18.05 1.24 (Rs. in crores) Dec.05 3.09 137.65 492.16 238.35 211.39 13.51 1.25 (Rs. in crores) December 31,2005 15.00 NIL

March 31, 2005 90.83 NIL

46

Allahabad Bank
Chhatrasal Gramin Bank Chhatrasal Gramin Bank, established on March 30, 1982 has its Head Office at Rath Road, Orai in Uttar Pradesh. The operational area of the bank covers district Jalaun, Hamirpur and Mahoba under Jhansi and Chitrakut dham divisions of Uttar Pradesh. The audited financial position of Chhatrasal Gramin Bank for the last 5 years is as under: Particulars FY 2001 FY 2002 FY2003 FY 2004 Capital 1.00 1.00 1.00 15.39 Reserves & Surplus 0.11 3.44 Deposits 165.50 186.31 213.60 248.73 Advances 60.85 81.42 102.78 134.53 Profit/ (Loss) 2.57 2.82 4.54 3.33 Accumulated losses 7.24 4.42 Productivity Per Employee 0.92 1.09 1.29 1.66 FY 2005 15.39 5.86 281.03 183.55 2.41 1.40 (Rs. in crores) Dec.05 15.39 9.48 281.25 217.68 3.62 1.60

Transaction between Chatrasal Gramin Bank and Allahabad Bank in the past 5 years are as under: (Rs. in crores) Particulars March 31, 2001 Marc March 31, March 31, March 31, December h 31, 2003 2004 2005 31, 2005 2002 Deposit with Allahabad Bank 91.76 78.75 63.03 53.55 31.41 30.95 Refinance Outstanding 0.59 0.78 0.94 0.01 NIL NIL Saryu Gramin Bank Sarayu Gramin Bank established on August 09, 1983 has its Head Office at L.R.P Road, Lakhimpur-Kheri, Uttar Pradesh. The operational area of the bank covers Lahimpur-Kheri district in Uttar Pradesh. The audited financial position of Sarayu Gramin Bank for the last 5 years is as under: Particulars FY 2001 FY 2002 FY2003 FY 2004 Capital 1.00 1.00 1.00 2.78 Reserves & Surplus 24.69 33.48 43.34 52.59 Deposits 142.18 153.06 154.60 189.09 Advances 55.04 75.48 94.73 88.72 Priority sector advances 51.21 69.09 87.15 86.47 Profit/ (Loss) 8.13 9.07 9.86 9.94 Productivity Per Employee 1.43 1.48 1.62 1.88 Transactions between Saryu Gramin bank and Allahabad Bank in the past 5 years are as under: Particulars March 31, March March 31, March 31, 2001 31, 2002 2003 2004 Deposit with Allahabad Bank 64.81 37.88 43.21 3.72 Refinance Outstanding 3.52 4.67 10.16 0.02 FY 2005 2.78 62.74 245.67 99.39 91.96 10.15 2.33 (Rs. in crores) Dec. 05 2.78 69.59 222.26 132.21 121.14 6.85 2.33 (Rs. in crores) December 31, 2005 35.55 0.02

March 31, 2005 7.00 0.38

Sharda Gramin Bank Sharda Gramin Bank, established on March 31, 1979 has its Head Office at Satna in Madhya Pradesh. The operational area of the bank covers Satna district in Madhya Pradesh. The financial position of Sharda Gramin Bank for the last 5 years is as under: (Rs. in crores) Particulars FY 2001 FY 2002 FY2003 FY 2004 FY 2005 Dec. 05 Capital 1.00 1.00 1.00 1.00 1.00 1.00 Reserves & Surplus 15.14 15.99 Deposits 141.81 162.27 188.03 219.04 250.35 253.30 Advances 35.46 46.47 62.45 66.02 74.90 87.35 Priority sector advances 26.02 33.56 45.61 50.99 61.67 67.74 Profit/ (Loss) 2.57 1.28 1.80 3.17 3.66 3.91 Accumulated losses 13.20 12.17 10.36 7.19 3.53 Nil Productivity Per Employee 0.74 0.89 1.08 1.24 1.43 1.47 Transactions between Sharda Gramin Bank and Allahabad Bank in the past 5 years are as under: (Rs. in crores) Particulars March March 31, March 31, March 31, March 31, 2005 December 31, 2001 2002 2003 2004 31,2005 Deposit with Allahabad Bank 75.69 73.24 45.97 58.44 75.57 82.62 Refinance Outstanding 0.04 0.04 NIL NIL NIL NIL Sravasthi Gramin Bank Sravasthi Gramin Bank, established on March 04, 1980 has its Head Office at Bahraich in Uttar Pradesh. The operational area of the bank covers two districts namely Bahraich and Sravasthi in Uttar Pradesh. The audited financial position of Sravasthi Gramin Bank for the last 5 years is as under: (Rs. in crores)

47

Particulars Capital Reserves & Surplus Deposits Advances Priority sector advances Profit/ (Loss) Accumulated losses Productivity Per Employee

FY 2001 1.00 15.60 244.25 97.49 81.94 14.24 0.99

FY 2002 1.00 17.51 252.93 101.76 86.62 6.44 1.16

FY2003 1.00 24.30 281.16 111.22 96.25 6.83 1.28

FY 2004 22.72 34.38 309.62 111.66 105.64 10.08 1.05

FY 2005 22.72 41.04 378.76 159.83 157.80 6.66 1.34

Allahabad Bank Dect. 05

22.72 49.04 369.07 206.18 187.42 8.00 1.84

Transactions between Sravasthi Gramin Bank and Allahabad Bank in the past 5 years are as under: (Rs. in crores) Particulars March March 31, March 31, 2003 March 31, March 31, 2005 December 31, 2001 2002 2004 31,2005 Deposit with Allahabad Bank 116.76 119.00 108.90 77.17 74.64 71.22 Refinance Outstanding 1.44 2.86 0.36 NIL NIL NIL Tulsi Gramin Bank Tulsi Gramin Bank, established on March 26, 1981 has its Head Office at Banda in Uttar Pradesh. The operational area of the bank covers Banda and Chitrakoot district in Uttar Pradesh. The audited financial position of Tulsi Gramin Bank for the last 5 years is as under: Particulars FY 2001 FY 2002 FY2003 Capital 1.00 1.00 1.00 Reserves & Surplus Deposits 203.93 231.49 273.54 Advances 88.50 108.23 139.74 Priority Sector Advances 28.45 Profit/ (Loss) 6.19 4.25 6.49 Accumulated losses/Profit 13.25 9.37 2.88 Productivity per Employee 0.88 0.90 1.09 FY 2004 11.00 4.33 316.12 174.27 37.68 7.21 4.32 1.72 (Rs. in crores) FY 2005 Dec. 05 11.00 11.00 0.79 3.44 362.38 351.40 220.83 239.65 58.33 194.38 -3.53 2.65 1.60 3.44 2.05 1.57 (Rs. in crores) March 31, 2005 December 31, 2005 77.53 57.97 NIL NIL

Transactions between Tulsi Gramin Bank and Allahabad Bank in the past 5 years are as under: Particulars March March 31, March 31, March 31, 31, 2001 2002 2003 2004 Deposit with Allahabad Bank 97.72 57.87 83.46 83.01 Refinance Outstanding 2.60 NIL 4.70 NIL

Vindhyavasini Gramin Bank Vindhyavasini Gramin Bank, established on March 30, 1983 has its Head Office at Mirzapur in Uttar Pradesh. The operational area of the bank covers two districts namely Mirzapur and Sonebhadra in Uttar Pradesh. The audited financial position of Vindhyavasini Gramin Bank for the last 5 years is as under: (Rs. in crores) Particulars FY 2001 FY 2002 FY2003 FY 2004 FY 2005 Dec. 05 Capital 1.00 1.00 1.00 6.94 6.94 6.94 Reserves & Surplus 2.37 Deposits 126.46 148.83 158.41 173.84 0.42 195.08 Advances 53.58 61.20 76.12 85.59 191.27 120.19 Priority sector advances 47.85 55.37 69.76 78.36 108.50 112.90 Profit/ (Loss) 2.37 0.64 1.12 0.86 101.65 1.93 Accumulated losses 1.19 1.18 1.24 0.37 0.59 Productivity Per Employee 1.19 1.18 1.32 1.47 0.42 1.80 1.70 Transactions between Vindhyavasini Gramin Bank and Allahabad Bank in the past 5 years are as under: (Rs. in crores) Particulars March March 31, March 31, March 31, March 31, 2005 December 31, 2001 2002 2003 2004 31,2005 Deposit with Allahabad Bank 97.72 57.87 47.95 44.56 34.02 24.89 Refinance Outstanding 2.60 NIL NIL NL NIL NIL

Contingent Liabilities of Regional Rural Banks As on December 31, 2005, the contingent liabilities of Regional Rural Banks sponsored by Allahabad Bank aggregated to Rs. 0.92 crores as per details given hereunder: Sr. Name of the Gramin Bank Amount of Contingent Liability (Rs. in crores) No 1. Bhagirath Gramin Bank NIL 2. Chhatrasal Gramin Bank 0.16 3. Saryu Gramin Bank NIL

48

4. 5. 6. 7.

Shravasthi Gramin Bank Sharda Gramin Bank Tulsi Gramin Bank Vindhyavasini Gramin Bank Total

Allahabad Bank 0.76 NIL 0.92

As per the RRB Act, RRBs are exempted from payment of Income Tax. They have complied with the CRR and SLR requirements. GROUP COMPANIES OF THE BANK Since the Government of India is the promoter of the Bank, it is not possible to give details of its group companies because of the large number of such undertakings. JOINT VENTURE/ AFFILIATES/ OF THE BANK/ COMPANY PROMOTED/ CO-PROMOTED BY THE BANK The Bank does not have any affiliates as on the date of this Information Memorandum.

VI.

SIGNIFICANT REGULATORY MATTERS RELATED TO THE BANK

Regulatory Framework Allahabad Bank is licensed as a Bank and is regulated and supervised by RBI and the laws, rules and regulations provided in relation thereto in the Banking Regulation Act, 1949, the RBI Act, 1934 and other related enactment such as the Bankers Books of Evidence Act, 1891. Its activities, like all other commercial banks and financial institutions, are supervised by a Board for Financial Supervision set up by RBI, under the Chairmanship of the Governor of RBI. This Board is assisted by the Department of Financial Supervision of RBI. Allahabad Bank observes the requirements and conditions applicable to a banking company on matters, inter alia, as mentioned herein below: (a) The forms of business in which Allahabad Bank and its subsidiaries may engage in is specified and regulated by the Banking Regulation Act, 1949. Pursuant to the provisions of Banking Regulation Act, 1949, Allahabad Bank cannot directly or indirectly deal in the buying, selling, bartering of goods by itself or for others except in connection with the realisation of security given to it or held by it or in connection with bills of exchange received for collection or negotiation or with such of its business entailing undertaking the administration of estates as executor, trustee or otherwise, or any such business as specified under Section 6(1)(o) of the Banking Regulation Act, 1949. Goods for this purpose means every kind of movable property, other than actionable claims, stocks, shares, money, bullion and specie and all instruments referred to in section 6(1)(a) of Banking Regulation Act, 1949. Subject to the provisions of the Banking Regulation Act, 1949, Allahabad Bank and its subsidiaries will pursue business avenues as permitted under Section 6 of the Banking Regulation Act, 1949 in contrast to companies not being a banking company under the Banking Regulation Act, 1949. Appointment or re-appointment of the Chairman and Managing Director, Executive Director and other Directors of Allahabad Bank will be subject to the approval of RBI. The Chairman & Managing Director of Allahabad Bank is required to have certain specified qualifications as per the Banking Regulation Act. RBI is empowered to remove such an appointee on the ground of public interest, interest of depositors or to ensure the proper management of Allahabad Bank. RBI may order meeting of Allahabad Banks board of directors to discuss any matter in relation to Allahabad Bank, appoint observers to such meeting and in general may make such changes to the management as it may deem necessary and can also order the convening of the general meeting of Allahabad Bank to elect new directors. Additionally, Allahabad Bank may not appoint persons as directors who are already directors on the board of another banking company. Allahabad Bank will need to obtain the prior approval of RBI to open new branches. Allahabad Bank cannot, subject to the provisions of the Banking Regulation Act, 1949, hold shares in any company (save and except its existing subsidiary) exceeding 30.0% of the paid-up share capital of such company or 30% of its own paid up share capital and reserves, whichever is less. Allahabad Bank will require the prior permission of RBI to incorporate a subsidiary.

(b)

(c) (d)

49

Allahabad Bank
Allahabad Bank and its subsidiaries will have to observe the prudential norms stipulated by RBI, from time to time, in respect of their underwriting commitments. Pursuant to such prudential norms, the underwriting commitment under any single obligation of Allahabad Bank or its subsidiaries shall not exceed 15% of an issue. (f) A shareholder of Allahabad Bank will not be able to exercise voting rights on poll in excess of 10% of the total voting rights of all the shareholders of Allahabad Bank . (g) RBI in its directive to all Indian private sector commercial banks, including Allahabad Bank , requires such banks to obtain the acknowledgement of RBI before effecting transfer of shares when the transfer makes the shareholding of the individual/ group equivalent to 5% or more of the total paid up capital of such banks. (h) For creating floating charge on Allahabad Bank s undertaking or its property, prior approval of RBI will be required. Currently, all borrowings of Allahabad Bank , as also the issue of bonds, are unsecured. (i) Allahabad Bank is required, under the Banking Regulation Act, 1949, to create a reserve fund and out of the balance of profit each year as disclosed in the profit and loss account prepared under Section 29 of the Banking Regulation Act, 1949, and before any dividend is declared, required to transfer to the reserve fund a sum equivalent to twenty percent of such profit. (j) Allahabad Bank is required under the Banking Regulation Act, 1949, to ensure at periodic intervals that the assets in India shall not be less than 75% of its demand and time liabilities in India, and submit returns to RBI in the prescribed form and manner. (k) Allahabad Bank will be required to prepare its balance sheet and profit and loss account in the forms set out in the Third Schedule to the Banking Regulation Act, 1949 or as near thereto and subject to and in accordance with the other provisions of the Banking Regulation Act, 1949 read with the Companies Act, 1956. (l) A compromise or arrangement between Allahabad Bank and its creditors or any class of them or between Allahabad Bank and its members or any class of them or any modification in any such arrangement or compromise will not be sanctioned by any High Court unless such compromise or arrangement or modification, as the case may be, is certified by RBI in writing as not being incapable of being worked and as not being detrimental to the interest of the depositors of Allahabad Bank. (m) Amalgamation of Allahabad Bank with any other banking company in future will require being sanctioned by RBI and shall be in accordance with the provisions of the Banking Regulation Act, 1949. (n) Allahabad Bank will pay dividend on its shares only after all its capitalized expenses (including preliminary expenses, organisation expenses, share-selling commission, brokerage, amounts of losses incurred and any other item of expenditure not represented by tangible assets) have been completely written off. RBIs prior approval is required for a dividend payment above 25.0% of the par value of Allahabad Banks shares or for an interim dividend payment. (o) Allahabad Bank is required to maintain books, records and registers. The Banking Regulation Act, 1949 specifically requires such companies to maintain books and records in a particular manner and file the same with the Registrar of Companies on a periodic basis. The provisions for production of documents and availability of records for inspection by shareholders would apply to Allahabad Bank as in the case of any company. (p) Allahabad Bank would have to obtain the prior permission of RBI to issue bonus shares as prescribed under the Banking Regulation Act, 1949. (q) Subject to and on account of laws governing banking companies, the financial disclosures in this Information Memorandum may not be available to investors after listing on a continuous basis. (r) The special status of banks is recognized under other statutes including the Sick Industrial Companies Act, 1985, Recovery of Debts Due to Banks and Financial Institutions Act, 1993, and Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002. As a bank, Allahabad Bank is entitled to certain benefits under various statutes including the following: The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 provides for establishment of Debt Recovery Tribunals for expeditious adjudication and recovery of debts due to any bank or Public Financial Institution or to a consortium of banks and Public Financial Institutions. Under this Act, the procedures for recoveries of debt have been simplified and time frames been fixed for speedy disposal of cases. Upon establishment of the Debt Recovery Tribunal, no court or other authority can exercise jurisdiction in relation to matters covered by this Act, except the higher courts in India in certain circumstances. The Sick Industries Companies Act, 1985, provides for reference of sick industrial companies, to the Board for Industrial and Financial Reconstruction (BIFR). Under the Act, other than the Board of Directors of the Bank, a scheduled bank (where it has an interest in the sick industrial company by any financial assistance or obligation, rendered by it or undertaken by it) may refer such company to the BIFR. The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) focuses on improving the rights of banks and financial institutions and other specified secured creditors as well as asset reconstruction companies (ARCs) by providing that such secured creditors/ARCs can take over management control of a borrower company upon default and/or sell assets without the intervention of courts, in accordance with the provisions of the SARFAESI Act. Further, the SARFAESI Act also has related features to enable securitisation of corporate debt, the establishment and functioning of ARCs and the establishment of a Central Registry. Verma Committee Recommendations The Verma Committee was set up to identify weak and potentially weak banks in the country and for making recommendations for strengthening these banks and reducing systemic risk. The Verma Committee has suggested seven parameters for assessing a banks strength/ weakness covering three major areas namely: 1. Solvency 2. Earning Capacity and 3. Profitability. These parameters are as follows: Solvency Capital Adequacy Ratio, Coverage Ratio Earning Capacity Return on Assets, Net Interest Margin Profitability Ratio Ratio of operating profit to average working funds, Ratio of cost to income, Ratio of staff cost to net interest income (NII) + all other income. The above ratios are well known parameters on which banks performance and sustainability are judged. A study of these ratios in respect of a bank, historically or in comparison with its peers, gives a view of its growing strength or weakness over a period as also its ability to compete against others in the market. The working group observed that based on the above analysis, public sector banks could be classified in terms of their strengths or weakness under three broad categories: 1. Banks where none of the seven parameters are met. (e)

50

2. 3.

Banks where all the parameters are met. Banks where some of the seven parameters are not met.

Allahabad Bank

Allahabad Bank has been placed amongst nine banks in the third category for compliance with CAR but non-compliance with five or six of the remaining efficiency parameters for financial year 1998 and financial year 1999. The Bank has put in place the required systems to bring the entire operations under the purview of Asset Liability Management. The Bank has stepped up the recovery efforts and its net NPA to net advance ration has come down to 0.83% as on December 31, 2005. The Bank has Risk Management Department in addition to a Credit Risk Management Cell. The Bank does not envisage impairment to Banks solvency, earning capacity or profitability. Inspection by RBI RBI conducts an annual inspection of the Bank based on the audited accounts. Simultaneously, RBI carries out inspection of branch/controlling offices on a selective basis. RBI also conducts offsite surveillance of the branches of the Bank on a quarterly basis. Discussions with the management of the Bank also form a part of the inspection and surveillance process. An inspection of the Bank under section 35 of the Banking Regulation Act, 1949 was conducted by the Reserve Bank of India with reference to its position as on March 31, 2005. The Annual Inspection Report of the Reserve Bank of India has indicated both positive and critical features of the Bank. The Bank has already taken action on the critical features and perceptive improvement in the area has been observed. The inspection of the Bank by RBI is a regular exercise and is carried out periodically for all the banks and Financial Institutions. The reports of RBI are strictly confidential and the Bank has informed the RBI about the actions already taken and measures that are under implementation in respect of observations made by RBI. The issues raised by RBI in the aforesaid report have been replied to by the Bank in due time.

51

Allahabad Bank
VII. ORGANISATION STRUCTURE & MANAGEMENT PROMOTERS & THEIR BACKGROUND Name Age Education & (Years) Qualification

Experience in the Business & Photograp Voter-ID Driving Business or Financial h No. License employment in the Activities No. proposed line of business Government of India N.A. N.A. N.A. N.A. N.A. N.A. N.A. [as the promoter of the Bank is the Government of India, the requirement of furnishing the above details shall not be applicable. Also the requirement of the Issuer Company to confirm that the details of all the promoters pertaining to their Permanent Account Number, Bank Account Number and Passport Number, if any, has been submitted to the concerned Stock Exchange(s), shall also not be applicable] Qualification B.Com (H), LLB., FCA, CAIIB MCom, LLB , CAIIB M.Sc(Ag) PhD, Dip. In Management M.Sc(Ag), PGD in Bank Management B.Com, ACA, CAIIB B.Com, CA, CAIIB M.Sc. (Ag) MSc(Ag), CAIIB, Cert.Exam. in Rural Banking MSc (Ag), PHd BA, CAIIB I MSc, CAIIB MBA Functional Responsibility Chairman & Managing Director Executive Director Finance & Accounts, Planning & Statistics/ MSD Inspection Recovery & Rehabilitation Credit Personnel & Administration, Information Technology PSC, Marketing ,Prem., Sty. & Security HRD & Training ZO Kolkata [Metro] Treasury & Foreign Exchange Chief Vigilance Officer ZO Mumbai Credit Monitoring, Risk Management & Dev

KEY MANAGERIAL PERSONNEL (as on Decemberr 31, 2005) Name Designation Date of Joining Experience in the Bank the Industry Shri Onkar Nath Singh Shri Subodh Kumar Goel Dr. Bikash Ghosh Shri Pankaj Mishra Shri Bijan Roy Shri R. S. Tripathi Shri Prabir Moulik Shri S. K. Katiyar Shri Deepak Palit Shri B. N. Rattan Shri S. K. Chakraborty Shri Biplab Kumar Mitra Shri Narendra Singh Shri S. Ray Chaudhuri Chairman & Managing Director Executive Director General Manager General Manager General Manager General Manager General Manager General Manager General Manager General Manager General Manager General Manager General Manager General Manager 04/12/2003 27-08-2004 02/08/1971 16/11/1972 16/08/1971 02/01/1973 16/11/1972 19/09/1974 16/11/1972 02/1219/68 19/11/1987 19/11/2004 18/03/80 15/06/70 35 Years 31 Years 33 Years 32 Years 33 Years 31 Years 32 Years 30 Years 32 Years 36 Years 33 Years 34 years 25 Years 35 Years

BSc(Hons), LLB MCom, CAIIB

Note: Except for Shri O. N. Singh, Chairman & Managing Director and Shri S. K. Goel, Executive Director & B K Mitra , Chief Vigilance Officer, all Key Managerial Personnel are working in this Bank since beginning of their career and hence experience in the Bank is equivalent to the experience in the Industry. The Key Managerial Personnel are on the roll of the Bank as permanent employees. The Key Managerial Personnel are entitled to the compensation and benefits as applicable to all the permanent employees of the Bank. All the Key managerial Personnel are of the General Manager and higher grade and hence that compensation fall in the scale of Rs.29340-32600 p.m. The other benefit includes the festival loan, housing loan, reimbursement of certain expenses etc. as per employees service rules. CHANGES IN KEY MANAGERIAL PERSONNEL IN LAST 1 YEAR (since April 01, 2004 to 31 December ,2005) Sr. No. Name & Qualification Position Held Reason for Change 1. Sri K.K.Rai Executive Director Retired w.e.f. 30-06-2004 2. Sri S.K.Goel Executive Director Appointed by the Government of India w.e.f. 27-08-2004 3. Sri Samirananda Roy General Manager & CVO Deputation term expired w.e.f.18.11.2004 4. Sri B.K.Mitra General Manager & CVO Appointed as CVO19-11-2004 5. Sri Rabindra Kisore Nath General Manager Retired w.e.f 31/01/2005 6. Sri Ajmal Saeeuddin General Manager Retired w.e.f 28-02-2005 7 Sri Narendra Singh General Manager Promoted w.e.f. 26-04-2005 8 Sri S Ray Chaudhuri General Manager Promoted w.e.f 26-04-2005
st

52

Allahabad Bank
BOARD OF DIRECTORS (as on December 31, 2005) Sr. Name & Designation Age Experience Date of No. (Year (Years) Appointment s) 1. Shri Onkar Nath 59 35 04.12.2003 Singh, Chairman & Managing Director Date of Expiry Residential Address of Current Term 31.07.2006 Permanent: B Nirala nagar Lucknow Local 1A, Ronaldshay Road, Alipore, Kolkata - 700027 31-08-09 Permanent: D-42 Sector-41 Noida201203 Local 9, Meddleton Street, Meddleton Mansion , Kolkata-700071 Until further J 7/2, M.S. Flat, Sector orders of GoI 13, R.K.Puram, New Delhi-110056 Until further A-32, Jalada, RBI orders of GoI Officers Quarter, Prabhadevi, Mumbai400025 24.11.2006 12A, Biswakosh Lane Kolkata-700003 03-01-08 No. 18 ( New No. 35), Apparswamy Koil Street, Mylapore Chennai-6000004 69/2, Nimtala Ghat Street, Kolkata-700003 504, Kanchanjunga Building, Kaushami Apartmments , Sahibabad, U.P. 201010 Bunglow No. 565, Phase-111A, Sector53, Mohali-160055 Chandigarh Flat No. 504, Bloom Fountain partment, 177, Faizabad Road 205B, Silver Beach Apartments, A.B. Dayal Road, Mumbai-400049 A-2, Sindhu Nagar, Kanpur Road, Lucknow Particulars of other Directorships Chairman 1.AllBank Finance Ltd. 2 I.I.B.I Director 1.National Insurance Co. Ltd Director, 1. AllBank Finance Ltd.

2.

Shri Subodh Kumar Goel, Executive Director

55

31

27-08-04

3.

Shri G. Bhujabal, Govt. Nominee Director

49

4.

Shri G Padmanabhan 51 RBI Nominee Director Shri Biswabandhu Bhattacharya, Officers Nominee Director Shri V. Gurumurthy, Workman Nominee Director Shri Asutosh Law, Shareholders Director Shri Deveshwar Kumar Kapila, Shareholders Director 58

23 years in Indian Economic service 25

20.03.2002

NIL

03-10-2005

NIL

5.

34

25.11.2003

-Nil-

6.

54

29

04-01-05

NIL

7.

65

8.

54

Practising lawyer in Kolkata High Court Practising Chartered Accountant

30-06-05

29-06-08

NIL

30-06-05

29-06-08

9.

Dr. Surinder P.S. 71 Pruthi, Shareholdes Director

10. Shri Shyam Bahadur 60 Kunwar, Shareholdes Director 11. Shri Mahesh Bhatt, 57 Shareholder Director 12. Shri Ram Niwas Jain, 54 Shareholdes Director CORPORATE GOVERNANCE

An Educationis t& Economist Chartered Accountant Film Maker by profession An Engineer

30-06-05

29-06-08

1. Nepa Ltd (M.P.) 2. K.M.Sugar Mills Ltd. (U.P.) 3. J.K. Cotton Spinning & Weaving Mill Co. 4. Budge Budge Co. Ltd. ( Kolkata) 1. Pruthi Consultants Pvt. Ltd. 2.Samurai Entertainment Ltd. 1. Torrento Power AEC Ltd 2. Modi Rubber Ltd. NIL 1. B.P. Engineers Pvt Ltd.

30-06-05 30-06-05 30-06-05

29-06-08 29-06-08 29-06-08

1. Corporate Governance Philosophy Allahabad Banks corporate policy is based on sound principles of Corporate Governance. It holds high the shareholders value while catering also to the need of the economy, national priorities and corporate growth. The Bank believes in high standard of ethical values, transparencies and disciplined approach to achieve excellence in all fields of activities. It is also committed to comply with the best international practices coupled with openness and fairness, which will lead the Bank to enjoy from customers and shareholders a tradition of trust. The Bank seeks to proclaim corporate excellence by Upholding the shareholders value within the principles of ethics and legal framework of the country. Extending best of services to its customers. Proclaiming a free and fair environment for its customers and employees, investors and other sections of the society at large. Ensuring a proactive management free from bias, ensuring fair justice to all sections of the society.

53

Allahabad Bank
2. Board of Directors 2.1 The constitution of Board of Directors is governed by the provisions of the Banking Regulation Act, 1949, Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and Nationalised Banks (Management & Miscellaneous Provisions) Scheme 1970. The Directors bring in wide range of expertise and experience to the Board, facilitating proficient and unbiased direction to the Bank. The Chairman & Managing Director and the Executive Director are two whole time Directors appointed by the government of India. The other Directors include the following:(a) A representative each of (i) Government of India (GOI) (ii) Reserve Bank of India (RBI) (iii) Workmen (iv) Officers Employees (v) Six Independent Shareholders Directors. 2.2 The Board has constituted various committees as mentioned hereunder which provide specific and focused governance in the important functional areas and controls the affairs of the Bank: Management Committee Audit Committee Risk Management Committee Directors Promotion Committee Shareholders/ Investors Grievances Committee Information Technology Committee Fraud Monitoring Committee Customer Service Committee HR & Compensation Committee Insurance Committee of the Board. 2.3 The responsibilities of the Board include formulation of policies, new initiatives, performance review and control and sanction of cases falling beyond the powers delegated to various functionaries of the Bank. Board has constituted various committees and delegated powers for different functional areas. The Board as well as its committees meets at periodic intervals. Date of Membership of other appointment Boards/ Committees 1. Shri O.N. Singh Chairman & Managing Director 04.12.2003 3 2. Shri S. K. Goel Executive Director 27.08.2004 1 3. Shri G. Bhujabal Nominee of the Govt. 20.03.2002 4. Shri G Padmanabhan RBI Nominee Director 03.10.2005 5. Shri Biswabandhu Bhattacharya Officer Employee Director 25.11.2003 6. Shri V. Gurumurthy Workman Employee Director 04.01.2005 7 Shri Asutosh Law Shareholders Director 30-06-2005 8 Shri Deveshwer Kumar Kapila Shareholders Director 30-06-2005 4 9 Dr. Surinder P.S Pruthi Shareholders Director 30-06-2005 1 10 Shri Shyam Bahadur Kumar Shareholders Director 30-06-2005 2 11 Shri Mahesh Bhatt Shareholders Director 30-06-2005 12 Shri Ram Niwas Jain Shareholders Director 30-06-2005 1 None of the directors on the Board is a member in more than 10 committees or acts as Chairman of more than five committees across all companies in which he/she is a director. 2.5 The profile of the directors who were appointed on the Board of the Bank and assumed office during the financial year 2004 2005 us is furnished hereunder: 2.4 The composition of the Board of Directors as on 31-12-.2005 is as under: Name Designation

2.5.1. Shri O.N.Singh

Shri Singh is a Graduate in Commerce with honours , Graduate in Law and is a Fellow member of the institute of Chartered Accountant of India. He also a CAIIB from the Indian Institute of Bankers. He has varied and all round experience in both operational and administrative fields besides handling different functions at corporate level. He started banking career in 1971 with Bank of Baroda as a direct recruited officer and rose to the rank of General Manager. He also held the position of Chief Executive Officer (CEO) of the New York Office of Bank of Baroda. He also served the Bank of Baroda as Executive Director during the period from September 25, 2000 to December 3, 2003.

2.5.2 Shri S.K. Goel, Executive Director

Shri. Goel joined the Bank of Baroda as a directly recruited officer on January 1, 1974 and worked in different branches. He joined Andhra Bank on August 1, 1980 as Grade-I officer. He held the post of General Manager from December 1,1997 to February, 1999 and has been in charge of Computer Policy and Planning Department, General Administration Department, Central Accounts Department, Economic s and Policy Department, Credit Card Division with additional Charge of Priority Sector Credit and Human Resource Development. He has also worked as the General Manager and Chief Vigilance Officer of Bank of India, Mumbai and held additional charge of inspection and audit in Bank of India from October,2000 to September,2001. Mr. Goel has visited foreign centers, such as New York, Paris, San Francisco, Singapore, Tokyo and Osaka for prevention of frauds in terms of the guidelines issued by Reserve Bank of India (RBI), GOI and the Central Vigilance Commission.

54

Allahabad Bank 2.5.3. Shri. G. Bhujabal

Shri Bhujabal was nominated as Government Nominee Director of Allahabad Bank on March 20, 2002. Shri Bhujabal is a post Graduate in Economics and joined Indian Economics Service in 1982. Subsequent to his joining his service, he has also completed his Masters Degree in Social Policy and Planning in Developing countries from London School of Economics, U.K. Shri Bhujabal also worked in different capacities in important Ministries, such as, the Ministry of Agriculture, Ministry of Industry, Ministry of Labour, Ministry of Finance, Investment Division and Planning Commission. He has also represented on the Boards of Saurastra- Kuchch Stock Exchange, Bhubaneswar tock Exchange and Mangalore Stock Exchange as Government Nominee. Apart from acting of Director of Allahabad Bank, he is also serving as Director ( Insurance, Ministry of Finance, representing the Boards of National Insurance Academy, Pune and Loss Prevention Association of India, Mumbai.

2.5.4

Shri G. Padmanabhan, RBI Nominee Director

Shri Padmanabhan is Chief General Manager in Charge,Department of Information Technology, Reserve Bank of India, Central Office, Mumbai. He is an M.A (Economics) from Kerala University with First Class & First Rank MBA from Birmingham University with distinction Associate of Indian Institute of Bankers .Mr Padmanabhan is a senior Executive in the Reserve Bank of India with 25 years experience in various capacities in RBI. Areas of work experience include bank regulation and supervision, regulation and supervision of the foreign exchange market in India and also regulation and supervision of the markets. Prior to his present position, he was Regional Director at Hyderabad Office of RBI. Earlier he worked in the Central Office at Mumbai for almost a decade and his responsibilities included suggesting policies for the foreign exchange market/ debt market in India and monitoring market on an on going basis and suggesting liberalizations in capital transactions particularly relating to outbound investments from India

2.5.5 Shri Biswabandhu Bhattacharya

Shri Bhattacharya is a Post graduate. He started his career as a teacher. He has varied interests in number of fields and specialises in Art, literature and Indian Philosophy. He is well known for his creative and innovative ideas .He authored the Vedanga Parichaya a pioneering book on the history of Vedanga in 1973. He is the General Secretary of the All India Allahabad Bank Officers Association and has rich experience in the field of banking and the trade union movement. Presently, Shri Bhattacharya is serving the Provident Fund Department at the Head Office of the Bank as a Manager. He was nominated as the Officer Employee Director on the Board of the Bank by the Central Government effective from November 25,2003

2.5.6 Shri V. Gurumurthy, Workmen Nominee Director

Shri Gurumurty is a Workman- Director on the Board of the Bank. Shri Gurumurthy is the General Secretary of the Allahabad Bank Employees Union, Tamil Nadu. He is also the Assistant General Secretary of the All India Employees Co-ordination Committee, Kolkata.

2.5.7 Shri Asutosh Law, Shareholder Director

Shri Law is a Graduate from St. Xaviers College, Kolkata, LLB from University College of Law, Kolkata . Practising lawyer of Kolkata High Court for the last 39 years. He also served as Senior Counsel on behalf of the Union of India and appointed as th Special Counsel for Central Government since 1999. Elected Member of Parliament to the 8 Lok Sabha from Dum Dum and was a member of various committees of Central Government.

2.5.8 Shri Deveshwer Kumar Kapila, Shareholder Director

Shri Kapila is a B Com (Hon) from Shri Ram College of Commerce, Delhi University in 1970. Qualified C.A. from Institute of Chartered Accountants of India in May 1975. He is a practicing Chartered Accountant since 1975. He is the senior most and founder partner of M/S Jain Kapila Associates, Chartered Accountants having experience of conducting Attestation / Audit of Extra large PSUs, PSBs, FIs and Private Sector Companies. He was Govt Nominee Director on the Board of Bank of India. He was also a BIFR nominee Director on the Board of following companies M/S J. K. Cotton Spg & Wvg Mill Co LtdM/S Budge Budge Co. M/S Srimur Sudburg Auto LtdM/S Nepa Ltd Nepa Nagar (MP) He has prepared study reports on behalf of various State / Central Govt Organisations viz Delhi Sales Tax Department, Indian Railways Finance Corporation Ltd, Ministry of Agriculture Govt of India and Reserve Bank of India.

2.5.9 Dr. Surinder P.S. Pruthi, Shareholder Director

Dr. Pruthi is an Alumni of Delhi School of Economics, London School of Economics and Harvard Business School. He is an Educationist, Economist and Management Specialist. He has been professionally involved as Advisor and Consultant with various National and International organizations like United Nations (ILO), World Bank, Indian Olympic association, various State Govts and Govt of India etc.He is the founder Professor of Economics and Management at IIM Ahmedabad and Lecturer at University of Delhi. He has been Honorary Professor at Jamnalal Bajaj Institute of Management and visiting Faculty at various International Universities and Academies viz Harvard Business School, Zagreb University, Yugoslavia, Summer School of Vocational Education, Germany etc. He has been Director of Allbank Finance Ltd, Punjab National Bank (GOI nominee) and other public sector undertakings like Heavy Engineering Corporation, Punjab State Industrial Development Corporation and various other companies.

2.5.10 Shri Mahesh Bhatt, Shareholder Director

Shri Bhatt is a graduate. He is a film maker by profession. He started his career as a director with Manzilein Aur Bhi Hain. A pioneer of Confessional Cinema, he shot into limelight by highlighting social issues through personal narratives. Mahesh Bhatt has always been known as a filmmaker who writes and re-writes the rules of Indian cinema. Films that won critical acclaim in his early career include Arth (1982), Janam (1985), Saransh (1984) and Naam (1986). He has been commercially successful with movies like Ashiqui, Dil Hain Ki Manta Nahin and Sadak.

55

Allahabad Bank 2.5.11 Shri Shyam Bahadur Kunwar, Shareholder Director

Shri Kunwar Chartered Accountant.He has retired as Zonal Manager in the rank of Executive Director of Life Insurance Corporation of India. He is having experience in Finance and Accounts, Internal Audit, Personnel and Industrial Relation, Marketing & General Administration & Investment and Treasury Management.

2.5.12 Shri Ram Niwas Jain, Shareholder Director

Shri Jain is a B. E. Mechanical in 1972 He is Director B. P. Engineers Pvt Ltd, an ancillary to Hindustan Aeronautic Ltd engaged in manufacturing of Aeronautical Components for Indian Air Force and various divisions of Hindustan Aeronautics Ltd for more than 25 years. He is also proprietor of Jain Auto Parts Mfg Co engaged in manufacturing of auto component for Scooters India Ltd and Lohia Machines Ltd for more than 30 years. Has been awarded for Excellence in Aerospace Indigenisation. He is involved in Social Work as president of Scooters India Ancillary Association.

3. Details of the Board meeting held between 01.04.2005 to 31.12.2005

3.1
During the period under review 13 Board Meetings were held on following dates as against minimum of 6 meetings prescribed under clause 12 of Nationalized Bank (Management and Miscellaneous Provisions) Scheme, 1970. Date of meeting No. of Directors on Board No. of Directors attended 26.04.2005 7 6 09.04.2005 7 7 02.06.2005 7 7 14.06.2005 7 6 28.06.2005 7 7 15.07.2005 12 12 16.08.2005 12 10 15.09.2005 12 11 17.10.2005 12 11 27.10.2005 12 11 11.11.2005 12 10 29.11.2005 12 8 26.12.2005 12 12

4.

Committees of the Board

4.1 Audit Committee of the Board (ACB): The Bank in pursuance to the directives of Reserve Bank of India and having regard to the fundamentals of corporate governance originally constituted an Audit Committee on 31.05.1994 and further reconstituted the same at regular intervals. 4.2 Composition of the Audit Committee: The member of the Audit Committee of the Board, as on 31-12-2005 were; 1. Shri Deveshwer Kumar Kapila : Shareholders Director 2. Shri S. K. Goel : Executive Director 3. Shri G. Bhujabal : Director, Government Nominee 4. Shri G Padmanabhan : Director, RBI Nominee The committee is chaired by Shri Deveshwer Kumar Kapila, Non Executive Director. 4.3 Function of Audit Committee: The main function of Audit Committee is to assess and review the financial reporting system of the Bank to ensure that the financial statements are correct, sufficient and credible. It reviews with the management the annual financial statements before their submission to the Board. The Audit Committee provides direction and oversees the operations of total audit function of the Bank including the organization, operation and quality control of internal audit and inspection within the Bank and follow up on the Statutory/External audit of the Bank and inspections of the RBI. The Committee also reviews the adequacy of internal control system, structure of internal audit department, its staffing pattern and discussion with the internal auditors/Inspectors on any significant finding and follow-up action thereon. It further reviews the financial and risk management policies of the Bank. Regarding Statutory Audit, the Audit Committee interacts with the Central Statutory Auditors before finalization of Annual/ Quarterly Financial Accounts and Reports. It also follows up on various issues raised in the Long Form Audit Report (LFAR). During the the period 01.04.2005 to 31.12.2005, 6 meetings of the Audit committee of the Board were held on the following dates:

Date of meeting 09.05.2005 06.06.2005 15.07.2005 14.08.2005 17.10.2005 25.12.2005

No. of Directors on the Audit Committee of Board 4 4 3 5 5 5

No. of Directors attended 4 3 3 4 4 5

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Allahabad Bank
5. Management Committee 5.1 Management Committee of the Board In pursuance of clause 13 of Nationalised Bank (Management & Miscellaneous Provisions) Scheme, 1970 read with the directives of the Ministry of Finance, Government of India, a Management Committee of the Board has been constituted. 5.2 Composition of the Management Committee The members of the Management Committee of the Board as on 31-12-2005 were: 1. Shri O. N. Singh : Chairman & Managing Director 2. Shri S. K. Goel : Executive Director 3. Shri G. Bhujabal : Government Nominee Director 4. Shri G Padmanabhan : RBI Nominee Director 5. Shri Asutosh Law : Shareholders Director 6. Shri V Gurumurthy : Workmen Nominee Director The Committee is chaired by Shri O. N. Singh, Chairman & Managing Director. 5.3 Function of the Management Committee The function of the Management Committee is to consider various business matters of material significance like sanction of high value proposal, compromise/write off, sanction of capital & revenue expenditure and review the exercise of delegated authority by the Chairman & Managing Director and the Executive Director. The Committee also reviews the performance of key areas like investment portfolio, non-performing assets and other important management decisions referred to the Committee by the Board. The Committee met 13 times during the the period 01.04.2005 to 31.12.2005 on following dates: Date of meeting No. of Directors on the Management No. of Directors attended Committee of Board 25.04.2005 6 5 02.06.2005 6 6 14.06.2005 6 5 28.06.2005 6 6 15.07.2005 5 5 06.08.2005 6 6 16.08.2005 6 5 15.09.2005 5 4 17.10.2005 6 5 27.10.2005 6 5 11.11.2005 6 5 29.11.2005 6 4 25.12.2005 6 5 6. Directors Promotion Committee (DPC)

6.1 Function of the Directors Promotion Committee: The Directors Promotion Committee has been constituted to review disposal of vigilance and non-vigilance disciplinary cases and other cases and other cases of strategic importance in terms of Reserve Bank of India (RBI) and Government of India (GOI) guidelines on Corporate Governance and Risk Management System. 6.2 Composition of the Directors Promotion Committee: The members of the Committee of Directors as on 31-12-2005 1. Shri O. N. Singh, Chairman & Managing Director 2. Shri G. Bhujabal, Govt. Nominee Director 3. Shri G Padmanabhan, RBI Nominee Director The Committee is chaired by Shri O. N. Singh, Chairman & Managing Director The Committee held 2 meetings during the period 01.04.2005 to 31.12.2005 on the following dates: Date of Meeting No. of Directors on the Directors No. of Directors attended Promotion Committee 14.08.2005 3 2 27.08.2005 3 3 7. Shareholders/ Investors Grievances Committee

7.1 The Bank originally constituted the Shareholders/ Investors Grievances Committee on March 4, 2003 with a purpose of redressal of shareholders; and investors; complaints and further reconstituted it. 7.2 The Composition of Shareholders/ Investors/ Grievances Committee: The members of the Committee as on 31-12-2005 were as under: 1. Shri S.K. Goel ,lExecutive Director 2. Shri Biswabhandhu Bhattacharya, Officer Employee Director 3. Shri V. Gurumurthy, Workman Employee Director 4. Dr. Surinder P.S. Pruthi, Shareholders Director The Committee is chaired by Dr. Surinder P.S. Pruthi , Non Executive Shareholders Director.

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Allahabad Bank
The Committee held 1 meeting during the period 01.04.2005 to 31.12.2005 on the following dates: Date of Meeting No. of Directors on the Shareholders/ No. of Directors attended Investors Grievances Committee 26.12.2005 4 4 7.3 Function of Shareholders/Investors Grievances Committee: The Committee ensures that all Share Certificates are issued within a period of one month of the date of lodgment for transfer, sub-division, consolidation, renewal etc. The Committee further monitors the redressal of investors complaints in a time bound manner. The Bank received 5230 number of complaints during the year under review and all the complaints have been resolved to the satisfaction of investors. Thus, no complaints were pending as on 31-03-2005 for completion of process. 23 cases of transfer involving 4900 shares were pending as on 31-03-2005, which have since been effected. 7.4 Shri M. M. Neogy, Deputy General Manager, Finance & Accounts has been designated as Compliance Officer of the Bank. Shri Peter Barua, Company Secretary, also acts as Secretary to the above Committee. 8. Risk Management Committee

8.1 Risk Management Committee of the Board: In pursuance of the directives of the Reserve Bank of India, a Risk Management Committee of the board was constituted on March 4, 2003 and it was further reconstituted. 8.2 Composition of the Risk Management Committee of the Board: The members of the Committee as on 30.09.2005 were as under: 1. Shri O. N. Singh, Chairman & Managing Director 2. Shri S. K. Goel, Executive Director 3. Shri G. Bhujabal, Government Nominee Director 4. Shri G Padmanabhan , RBI Nominee Director 5. Shri V. Gurumurthy Wokmem Nominee Director 6. Shri Mahesh Bhatt , Shareholdetrs Director 7. Shri Shyam Bahadur Kunwar, Shareholders Director 8. Dr. Surinder P.S. Pruthi, Shareholders Director The Committee is chaired by Shri O. N. Singh, Chairman & Managing Director. The Committee held its meeting on 09.10.2004. 8.3 Function of Risk Management Committee of the Board The Risk Management Committee devise the policy and strategy for integrated risk management, containing various risk exposures of the Bank including credit risk The RMC held 1 meeting during the period 01.04.2005 to 31.12.2005 Date of Meeting No. of Directors on the Risk Management Committee of Board 14.08.2005 8 9. Information Technology Sub-Committee (IT Sub-Committee) No. of Directors attended 5

9.1 The Bank constituted the IT Sub-Committee from April 24, 2003 and it was further reconstituted to monitor the implementation of various Information Technology projects of the Bank. 9.2 Composition of the IT Sub-Committee of the Board: The members of the Committee as on 31-12-2005 were as under: 1. Shri O. N. Singh, Chairman & Managing Director 2. Shri S. K. Goel, Executive Director 3. Shri G. Bhujabal, Government Nominee Director 4. Shri Asutosh Law, Shareholders Director 5. Shri Ram Niwas Jain, Shareholders Director The Committee is chaired by Shri O. N. Singh, Chairman & Managing Director. 9.3 Function of the IT Committee: This Committee was constituted to monitor the implementation of various IT projects of the Bank. This Committee held 5 meetings during the period 01.04.2005 to 31.12.2005 on the following dates: Date of meeting No. of Directors on the IT SubNo. of Directors attended Committee of Board 26.04.2005 4 4 29.07.2005 5 5 16.08.2005 5 4 28.11.2005 5 4 25.12.2005 5 5 10. Fraud Monitoring Committee 10.1 Fraud Monitoring Committee of the Board: The Bank has constituted Fraud Monitoring Committee on 28.02.2004 with a purpose to monitor and to follow up cases of frauds involving amount of Rupees One crore and above.

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10.2 Composition of the Fraud Monitoring Committee of the Board: The members of the Committee as on 31-12-2005 were as under: 1. Shri O. N. Singh, Chairman & Managing Director 2. Shri G. Bhujabal, Government Nominee Director 3. Shri V. Gurumurthy, Workman-Employee Director 4. Shri Deveshwer Kumar Kapila, Shareholders Director 5. Dr. Surinder P.S. Pruthi, Shareholders Director.

Allahabad Bank

10.3 Function of the Fraud Monitoring Committee The Fraud Monitoring Committee has been constituted exclusively for monitoring, review and following up of cases of frauds involving amount of Rs. One Crore and above, keeping in view the delay caused in various aspects of fraud like detecting, reporting to regulatory and enforcement agencies and action against perpetrators of the fraud. The Committee held its meetings on 17.04.2004 & 09.10.2004. The Fraud Monitoring Committee held 1 meeting during the period 01.04.2005 to 31.12.2005 Date of Meeting No. of Directors on the Risk No. of Directors attended Management Committee of Board 15.07.2005 3 3 11. Customer Service Committee The Board of Directors at its meeting held on September 9, 2004 constituted Customer Service Committee in compliance with RBI letter dated August 14, 2004 from Governor, Reserve Bank of India with a view to bring out improvements in the quality of customer service in the Bank on a continuous basis. 11.1 Composition of Customer Service Committee: The Customer Service Committee comprises the following Directors as on 31-12-2005. 1. Shri O. N. Singh, Chairman & Managing Director 2. Shri S. K. Goel, Executive Director 3. Shri G Bhujabal , Govt. Nominee Director 4. Shri Biswabandhu Bhattacharya, Officer Employee Director 5. Shri V. Gurumurthy, Workman-Employee Director 6. Shri Mahesh Bhatt , Shareholders Director The Committee is chaired by Shri O. N. Singh, Chairman & Managing Director. This Committee held 2 meetings during the period 01.04.2005 to 31.12.2005 on the following dates: Date of Meeting No. of Directors on the Customer No. of Directors attended Service Committee 14.06.2005 5 4 26.12.2005 6 5 11.2 Function of the Customer Service Committee: * To oversee the function of the ad hoc committee (Internal Committee of the Bank) of the Bank so long as it operates to comply with the recommendations of the committee on procedures and performance audit on public services. To innovate measures for enhancing the quality of customer service and improve the level of customer satisfaction all categories of clientele at all times.

12. HR & Compensation Committee of the Board: The Board of Director in its meeting dated 15-07-2005 constituted the Committee in accordance with the letter from Indian Banks Association vide No. CE/162 dated 06-06-2005 to review the HR policies of the bank and the compensation structure of CMD, ED and Executives of the Bank 12.1 Composition of HR & Compensation Committee: HR & Compensation Committee of the Board constituted with the following members as on 31-12-2005 1.Shri O.N. Singh, Chairman & Managing Director 2. Shri S.K.Goel, Executive Director 3. Shri G. Bhujabal, Govt. Nominee Director 4. Shri G Padmanabhan, Director RBI Nominee 5 Dr Surinder P.S. Pruthi , Shareholders Direcor. 6. Shri Shyam Bahadur Kunwar, Shareholders Director The Committee is chaired by Shri O.N. Singh, Chairman & Managing Director of the Bank The Committee held 2 meetings during the period 01.04.2005 to 31.12.2005 Date of Meeting No. of Directors on the Risk Management Committee of Board 01.09.2005 6 26.12.2005 6 13. Insurance Committee of the Board : The Board of Directors in its meeting held on 27-10-2005 constituted the committee for taking decisions regarding General Insurance joint venture of the bank. 13.1. Composition of the Committee: Insurance committee of the Board comprises of the following members 1.Shri O.N.Singh, Chairman & Managing Director 2. Shri S.K. Goel, Executive Director 3. Shri G. Bhujabal, Govt. Nominee Director No. of Directors attended 5 5

59

4. Shri Shyam Bahadur Kunwar, Shareholdfers Director 5. Dr. Surinder P.S. Pruthi, Shareholders Director. The Committee held 3 meetings during the period 01.04.2005 to 31.12.2005 Date of Meeting No. of Directors on the Risk Management Committee of Board 28.11.2005 5 04.12.2005 5 26.12.2005 5

Allahabad Bank

No. of Directors attended 5 5 5

HUMAN RESOURCE The total manpower of the Bank as on December 31, 2005 was 19102 comprising 8133 officers, 7525 clerks and 3444 substaff. The manpower position of the Bank for the last 5 years is as under: As on March 31, March 31, March 31, March 31, 2004 March 31, December 2001 2002 2003 2005 31,2006 Officer 6501 6789 6714 6891 8199 8133 Award Staff 10202 8893 9003 8732 7592 7525 Sub-Staff 4306 4178 3798 3661 3518 3444 Total Number of Employees 21009 19860 19515 19284 19309 19102 The business per employee of the Bank has been on the increasing trend. The employee productivity parameters during the last five years are depicted in the table below: (Rs. in lacs) As on March 31, March 31, March 31, March 31, March 31, 2001 2002 2003 2004 2005 Business per Employee 138.00 166.00 200.00 251.00 329.00 Net Profit per Employee 0.40 0.46 1.02 2.94 2.68 Human Resources Development The Bank has accorded high importance and given top priority to Human Resources Development and allied function in order to upgrade the knowledge, skill and concept at every level in the context of the emerging realities. In tune with the changes taking place in the Financial including the Banking Sector in the country the Bank has streamlined its HRM Policy perspective and objectives so as to enable it to respond proactively to the environmental challenges within and outside. Requisite steps and course of actions have been duly initiated to enhance the efficiency, resilience and competitive spree of the Bank in various ambits of functioning as under: 1. 2. Recruitment The Bank has strived to inject professionalism and functional expertise of the personnel in two fold e.g. by making selective recruitment in specialist cadre and probationary officer ii) by raising potential personnel from within. Career Path / Promotion In order to make the promotion process more flexible it has been contemplated to incept fast track promotions in various grades while according due importance to the aspect of seniority as well. To focus on improving skills of manpower for meeting emerging needs in this moment of change and in the context of the emerging trends and realities the Bank has accorded a high importance and given a top-slot to the HRD and allied functions like i) functional productivity, ii) managerial productivity and iii) individual productivity. Internal Training The Bank has been imparting training to its officers and staff members through 6 Internal Training Institutes out of which 2 are meant for officers and 4 for Award Staff members. In order to make the Internal Training more effective and result-oriented the measures like i) review and revision of training curricula. ii) application of training methodology comprising audio visual games and appliances, case studies, role playing, mock interviews, in basket exercise, group discussion, field visits etc. are resorted to. iii) faculty selection and developments of faculties through induction training, training in specific subjects, participation in seminars/conferences, identification of training needs, evaluation of faculty members, external and in-house training etc. Preparation Of Training Plan Preparation of perspective plan is made on the basis of the review of the past-plan, the requirement of the current and ensuing periods and the recommendations in respect of training and development coming from the demand centres as well as out of the appraisal system. Overseas Training In order to have glimpses of and exposure to the International Banking developments, Executives are deputed to various Overseas Programmes from time to time. Other HRD Activities i) inter-face with External Organisations, ii) counseling of individual grievances, iv) consideration and giving due cognizance of individual suggestions, (81) omputeriz seminar on bank marketing and going to customers, vi) conducting special training programmes on internal control, (81) imparted on-the-job training to RBI officers/Executives and students deputed by different institutions, viii) providing faculty support on HRD and allied issues, ix) communication with Government, RBI, IBA, FIB, other Banking & financial Institutions within the country and outside with other Banks and bodies in regard to HRD tools, techniques and issues are made from time to time etc. (81) performance management. xi) leadership development etc., so as to transform our Bank to a universal financial services omputerized.

December 31,2005 384.00 3.97

3.

4.

5. 6.

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INFORMATION TECHNOLOGY In the fast changing economy, banking in India gradually transformed from prudential to a liberalized and competitive banking. Technology has become a important tool for Banks to carve a niche for themselves and to have an edge over competition.

Allahabad Bank

Induction of Information Technology in Allahabad Bank started with omputerized on of two Branches, one at Mumbai and the other at New Delhi with Advance Ledger posting Machines as pilot projects in 1985. Since then, the Bank has always been in the forefront of Public Sector Banks in introducing appropriate technology in its various Offices/ Branches in line with the guidelines/ guidelines received from Government of India, RBI, IBA etc. Bank has availed of Modernisation and Institutional Development Loan of Rs 63.41 crores from World Bank with an objective to introduce latest technology for the customers. The Bank has so far computerized 1162 branches and 147 extension counters out of which 972 branches are running with Total Branch Automation (TBA) package and 190 branches/ extension counters are running with ALPMs. Work on computerized on of another 800 Branches are under progress and all 190 ALPM Branches will be converted to total branch mechanization. Bank has covered 86.61% of its business under computerized on. To comply with the CVC directives to cover 100% of Banks business through computerized on, Bank is all set ready to achieve it by March.06. In Hindi speaking areas, to facilitate the customers, the bank has so far implemented Bilingual Software in 55 Branches.. Bank has computerized all its specialized Branches including the International Business Branches, Service Branches, Industrial Finance Branches etc. The Bank also proposes to complete mechanization of all its 35 currency chests within a very short time. Apart from computerized on of the Branches, the Banks strategy towards technological up-gradation includes installation of ATM, Tele-banking, Internet banking etc. Bank has already installed 91 ATMs at important centres across the country and establishment of connectivity among the ATMs through switch in 115 branches across the country. Apart from the above , additional 108 ATMs are being installed . The process of installation is expected tol be completed by January 2006. The Bank has entered into tie p with VISA foe issuance of Debit Cards and with aggressive marketing strategies ;the Bank has already issued 80500 International ATM Debit Cards. In order to broden our customer base further and facilitate wider service coverage the bank has joined National Financial Switch ( NFS) of RBI, which gives access to around 5000 ATMs of PSBs across the country at very nominal charges. Tele-banking facilities based on Interactive Voice Response System (IVRS) is available at 13 Branches and internet banking facility is also available for the corporate customers in 5 branches. The Bank is providing various technology based customer services e.g. EFT(Electronic Fund Transfer), ECS (Electronic clearing Services), NDS ( Negotiated Dealing System) and PDO ( Public Debt Office) etc launched by RBI. The Bank is also participating in SFMS (Structured Financial Messaging Solution) and RTGS ( Real Time Gross Settlement) projects launched by RBI. The Bank has undertaken implementation of Cheque Truncation System in 52 branches in National Capital region of New Delhi. The same is expected to be implemented by March 2006 as per RBI guidelines. The Bank has installed Customer Information Facilitation Counter through Touch Screen Kiosk at two Branches another at Indira Gandhi Farmers and Entrepreneurship Development Centre, Rae Bareli .Apart from the above, the Bank is in the process of installing 50 number of touch screen kiosk in rural/semi urban areas across the country, which will be able to provide information to customers on Kisan Credit Card, information regarding Agriculture, Health care etc. beside information related to their savings account and other schemes of the Bank Installation of Video Conferencing at 16 locations across the country is under process. The facility for online Direct Tax Collection has been effected in all 168 designated branches. The Bank has initiated introduction of Centralized Banking Solution covering 900 high business branches to achieve effective control and risk management as well as provide the facility of single platform thus facilitating customer relationship management. The vendor for CBS is going to be finalized very shortly and the implementation of CBS in pilot branches is expected to be completed within June 2006. The Bank has also appointed M/S Ernst & Young as the consultants for CBS. For introduction of appropriate technology in line with the trend prevailing in the banking Industry, the Bank is going to appoint IIT, New Delhi as IT consultant. The Bank has also setup up intra-city leased line network to connect 72 major Branches and Offices in 13 cities and has plan to connect another 200 Branches in the current year. This will enable the Bank to provide better customer service. The Banks Corporate Office at Kolkata and all of its 44 Zonal Offices are omputerized. By use of its 24 VSAT installed under INFINET of IDRBT, currently connects its 380 administrative offices/ important branches across the country. The Bank has its own homepage (http://www.allahabadbank.co.in) on internet for assisting the customers to know the various products and schemes of the bank as well as application and sanction of various retail loan scheme.

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Allahabad Bank
(81) STOCK MARKET DATA OF THE EQUITY SHARES OF THE BANK The equity shares of the Bank are listed on Bombay Stock Exchange Limited (BSE), Calcutta Stock Exchange Association Limited (CSE) and National Stock Exchange of India Limited (NSE). (81) The following table shows the high and low of daily closing share prices of the Bank on BSE and NSE for the periods indicated: BSE NSE Period High (Rs.) Low (Rs.) Average * (Rs.) High (Rs.) Low (Rs.) Average * (Rs.) 2002-2003 18.30 11.00 13.94 18.75 9.00 13.54 2003-2004 34.70 13.00 21.50 34.45 13.15 21.50 2004-2005 107.00 29.40 51.49 106.95 29.25 51.57 April 2005 104.70 75.05 87.28 105.00 71.15 87.30 May 2005 88.95 77.30 83.26 89.00 77 79.68 June 2005 91.30 80.00 85.84 91.85 79.55 85.91 July 2005 99.30 81.30 89.86 99.35 81 89.94 August 2005 100.00 85.50 91.24 100.00 84.25 91.34 September 2005 96.85 87.50 92.54 96.95 87.1 92.56 October 2005 94.95 77.00 86.01 94.50 73.25 85.79 November 2005 86.40 77.55 81.21 86.00 77.15 81.29 December 2005 85.00 77.05 80.26 84.90 77.05 80.42 * Average of the daily closing share price (ii) The following table shows the number of shares traded on the days high and low prices of the Banks shares recorded on BSE and NSE for the periods indicated: BSE NSE Period High Low High Low Date Number Date Number Date Number Date Number of of shares of shares of shares shares traded traded traded traded 2002-2003 22-01-05 1069313 04-12-05 66425 22-01-03 3027735 29-11-02 2061021 2003-2004 16-01-05 957490 01-04-05 34154 15-01-04 5575651 01-04-03 168067 2004-2005 22-03-05 4190389 24-06-05 208462 22-03-05 15762401 09-07-04 376008 April 2005 04-04-05 2342602 28-04-05 1799351 04-04-05 8818320 21-04-05 1089366 May 2005 27-05-05 792571 02-05-05 653713 27-05-05 2237180 02-05-05 1955047 June 2005 09-06-05 531638 30-06-05 165143 09-06-05 1863240 30-06-05 1196889 July 2005 26-07-05 682977 01-07-05 147830 26-07-05 3217402 01-07-05 553349 August 2005 02-08-05 499814 25-08-05 112607 02-08-05 2048868 25-08-05 1601376 September 2005 14-09-05 783178 21-09-05 699911 14-09-05 1717128 01-09-05 668692 October 2005 05-10-05 294568 05-10-05 294568 05-10-05 808922 27-10-05 1410833 November 2005 17-11-05 147218 02-11-05 62016 28-11-05 3648156 01-11-05 81686 December 2005 19-12-05 744608 08-12-05 125229 19-12-05 2140889 08-12-05 664403 (iii) The market price of the share on 26-04-2005, the date of authorization of the issue by the Board of Directors, was Rs. 86.90/- on BSE and Rs. 86.90/- on NSE (since this is an issue of pure debt, the share prices mentioned above would not be relevant). (iv) The total volume of securities traded in each month on BSE and NSE during the last nine months is as follows: Total number of shares traded Period BSE NSE April 2005 25182080 85259045 May 2005 15837032 47280681 June 2005 10014585 30836845 July 2005 10843717 35645615 August 2005 7012289 25608265 September 2005 9025165 23617588 October 2005 4760444 16736575 November 2005 5048979 16570694 December 2005 9837891 31494098 The equity shares of the Bank are actively traded at all the Stock Exchanges where they are listed. Promise V/s. Performance The Bank had not given any financial projections in its Offer Document/ Prospectus at the time of taping the markets with its equity public issue. The Bank has privately placed bonds on various occasions in the past, where the Information Memorandum(s) given to investors may have provided financial projections. These projections were made only because Reserve Bank of India had advised banks to insist on such projections where the tenure of the bonds was 5 years or longer. These projections were indicative and not in the nature of any promise. In view of the same, this clause is not considered to be applicable.

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Allahabad Bank
IX. MANAGEMENT DISCUSSION & ANALYSIS OF FINANCIAL PERFORMANCE Financial highlights of the Bank for the last three financial years as per the profit & loss account of the Bank are as given in the following table: (Rs in crores) %age %age change Nine Year ended March 31, March 31, March 31, %age change from 2003 2004 2005 change from from 2004 to months arch 31,2005 2003 to 2005 ended to December December 2004 31,2005 31,2005 Total Income 3094.69 3418.48 3825.48 10.46% 11.91% 3163.68 10.26% Interest Income 2570.33 2668.67 3185.60 3.83% 19.37% 2729.34 14.24% Other Income 524.36 749.81 639.88 42.99% (14.66%) 434.34 (9.50%) Total Expenditure 2549.52 2512.87 2723.52 (1.44%) 8.38% 2414.88 18.22% Interest Expenditure 1660.55 1582.92 1821.56 (4.68%) 15.08% 1610.61 17.89% Operating Expenditure 888.97 929.95 901.96 4.61% (3.01%) 804.27 18.89% Profit Before Provisions & 545.17 905.61 1101.96 66.12% 21.68% 748.80 (9.40%) Contingencies Provisions & 360.62 423.40 541.56 17.41% 27.91% 184.63 (5.45%) Contingencies Net Profit ( before 184.55 482.21 560.40 161.29% 16.21% 564.17 34.23% Extraordinary items) Extraordinary Items 18.56 18.82 18.61 1.40% (1.12%) 8.54 (38.81%) Net Profit after 165.99 463.39 541.79 179.16% 16.92% 565.63 39.20% Extraordinary Items Adjustment ( Net of Tax) 27.91 90.79 (34.33) 225.30% (137.81%) 2.86 (111.11%) Adjusted Net Profit 193.60 554.18 507.46 186.25% 8.43% 558.49 46.74% Significant items of income and expenditure during 2004-05 (comparison of financials for the year ended March 2005 with March 2004 and comparision for nine monthes ended December 31, 2005 with full year 2004-2005) Net Profit: Net Profit of the Bank come down from Rs. 554.18 crores in 2003-04 to Rs. 507.46 crores in 2004-05 which has again increased to 558.49 crores during nine months ended December 31, 2005.The percentage increase in Profit during nine months ended December 2005 is 46.74% over 2004-2005. Interest Income: Interest income from advances increased from Rs. 1322.72 crores in 2003-04 to Rs. 1682.59 crores in 200405. Gross investments of the Bank increased by 23.01% from Rs. 15554.81 crores as on 31-03-2004 to Rs. 19128.30 crores as on 31-03-2005. Interest earned on investment also increased up to Rs. 1462.10 crores in 2004-05 from Rs. 1302.24 crores in 2003-04. The net interest income of the Bank improved from Rs. 2668.67 crores in 2003-04 to Rs. 3185.60 crores in 200405.Furthe net interest income for nine months nded December 31, 2005 reached at Rs. 1118.73 crores making percentage increase in net interest income by 9.35% over 2004-2005. Other Income: Commission and exchange income of the Bank increased from Rs.161.96 crores in 2003-04 to Rs. 183.78 crores in 2004-05. However net profit from sale of securities market profit on sale of investments decreased from Rs. 504.72 crores in 2003-04 to Rs. 347.43 crores in 2004-05. Consequently total other income of the Bank decreased from Rs. 749.81 crores in 2003-04 to Rs. 639.88 crores in 2004-05. The Bank is aware of the need to increase non-fund non-interest income in order to improve overall profitability and is exploring various avenues to increase fee-based income.However, other for the nine months ended December 31, 2005 worked at Rs.434.34 crores even there is decrease in profit on sale of investment Rs. 347.43 crores during full year 2004-2005 to Rs. 99.45 crores for nine months ended December 31,2005. Interest Expenses: Interest paid on deposits increased from Rs. 1540.80 crores in 2003-04 to Rs. 1767.44 crores in 2004-05. Interest expenses for nine months ended December 31,2005 worked out at Rs. 1566.86. The cost of deposit of the Bank has come down from Rs. 5.63% in 2003-2004 to 5% in 2004-2005 which has again decreased to 4.99% for the nine months ended December 31, 2005. Operating Expenses: Operating expenses of the Bank decreased by 3.39% mainly due to decrease in staff cost from Rs. 529.74 crores in 2003-04 to Rs. 512.36 crores in 2004-05 & decrease in other expenses by Rs. 10.61 crores, the fall due to effective cost cutting and control methodology adopted . However total staff cost expenses nine months ended December th 31,2005 increased to Rs.454.84 crores during nine months ended December 31,2005 on account of revision on 8 Bipartite Settlement/ Salary Revision of Officers in July 2005. Other operative expenses for nine months ended December 31, 2005 come at Rs. 349.43 crores. Total Income: Total income of the Bank went up by only 11.91% i.e. from Rs. 3418.47 crores in 2003-04 to Rs. 3825.48 crores in 2004-05.Further, percentage increased in total income was 10.27% during the nine month ended December 31, 2005. Total Expenditure: While the total income of the Bank increased by Rs. 407.00 crores during 2004-2005 over 2003-2004, the total expenditure excluding provisions and contingencies/VRS expenditure increased by Rs.210.64 crores during the same period. Significant items of income and expenditure during 2003-04 (comparison of financials for the year ended March 2004 with March 2003) Net Profit: Net Profit of the Bank increased from Rs. 193.90 crores in 2002-03 to Rs. 554.18 crores in 2003-04 showing a substantial growth of 285.186%. Interest Income: Interest income from advances increased from Rs. 1211.90 crores in 2002-03 to Rs. 1322.72 crores in 200304. Gross investments of the Bank increased by 25% from Rs. 12476 crores as on 31-03-2003 to Rs. 15600 crores as on 31-032004. Interest earned on investment increases from Rs. 1187.75 crores in 2002-03 to Rs. 1302.24 crores in 2003-04. Thus totalt interest income of the Bank improved from Rs. 2570.35 crores in 2002-03 to Rs. 2668.67 crores in 2003-04. Other Income: Commission and exchange income of the Bank increased from Rs. 143.21 crores in 2002-03 to Rs. 161.96 crores in 2003-04. Due to an active securities market profit on sale of investments increased from Rs. 336.94 crores in 2002-03

63

to Rs. 504.72 crores in 2003-04. Consequently total other income of the Bank increased from Rs. 524.36 crores in 2002-03 to Rs. 749.81 crores in 2003-04. The Bank is aware of the need to increase non-fund non-interest income in order to improve overall profitability and is exploring various avenues to increase fee-based income. Interest Expenses: Interest paid on deposits decreased due to low cost of deposits from Rs. 1614.89 crores in 2002-03 to Rs. 1540.80 crores in 2003-04. Operating Expenses: Operating expenses of the Bank increased by 4.46% mainly due to increase in staff cost from Rs. 484.15 crores in 2002-03 to Rs. 529.74 crores in 2003-04 & increase in rent, taxes and lighting expenses by Rs. 2.68 crores, the rise due to occupancy and infrastructure costs including cost of insurance. Total Income: Total income of the Bank went up by only10.46% i.e. from Rs. 3094.69 crores in 2002-03 to Rs. 3418.48 crores in 2003-04. Total Expenditure: While the total income of the Bank went up by10.46% crores, the total expenditure of the Bank decreased by Rs. 36.65 crores or from Rs. 2549.52 crores to Rs. 2512.87 crores. Other matters relating to the Operations of the Bank Unusual or Infrequent events and transactions: No unusual or infrequent events and transactions occurred in the last three years. Significant economic changes that materially affected or are likely to affect income from continuing operations: Changes in the interest rate structure that is any upward movement in interest rate, is likely to reduce the value of the investment portfolio.

Allahabad Bank

Future relationship between costs and revenue: While it is expected that costs and revenues as a percentage would come down simultaneously, the margin would be under pressure. The net margin may also be affected by increasing operating cost. Extent of seasonality in the business: Banks business is not likely to be affected by seasonality. Non-dependence on a few customers: The Bank has a diversified credit portfolio to prevent any concentration in exposures both industry-wise and client wise. The Bank has an adequately designed credit risk policy to ensure the prevention of excess exposure to few customers. Competitive Conditions: The Bank has 964 rural branches where it has monopoly in business. The large network of rural and semi-urban branches ensure that a huge captive business automatically flows in to the bank. In metro centres, the Bank faces a stiff competition from other Banks. But then, the Bank has been consistently making strategies to face such competition. Material Developments: There has been no material developments after the date of the last financial statements as disclosed in this Information Memorandum, which would materially and adversely affect or are likely to affect the trading or profitability of the Bank or the value of its assets, or its ability to pay its liabilities within the next twelve months, other than what has been already set out elsewhere in this Information Memorandum. Particulars Regarding Listed Companies There is no other listed company under the same management.

64

X.

BASIS FOR ISSUE PRICE

Allahabad Bank

As per RBI master circular no. DBOD No. BP.BC.13/21.01.002 /2005-06 dated July 04, 2005 on Prudential Norms for Capital Adequacy covering norms for issue of unsecured bonds as subordinated debt by Banks for raising Tier II capital, the rate of interest offered on Tier II Bonds should not exceed 200 basis points above the yield on Government of India securities of equal residual maturity at the time of issuing bonds. This issue being a debt issue, the price/ coupon rate(s) is/are determined taking market rates into consideration and the same is well within the ceiling rate of 200 basis points over yield on Government of India security of equal residual maturity, specified by RBI. XI. OUTSTANDING LITIGATIONS, DEFAULTS AND MATERIAL DEVELOPMENTS

1. Cases against the Bank As on December 31, 2005, there were 935 cases including writ petitions filed by employees/ ex-employees, suits/ writs by customers and consumer cases with aggregate claim of Rs. 261.42 crores for which no contingent liability has been provided for. Out of these cases, 242 pertain to consumer protection, 42 pertain to Banking Ombudsman, 264 pertain to Service matter compensation, 63 pertain to premises/eviction matters, 114 pertain to recovery of dues in the civil court/DRT, 126 pertain to other banking operations and 84 pertain to other money claims. Out of these, the claim amount is above Rs. 1.00 crore in 19 cases, the details of these cases are given in the table in the following section. In addition, there are following cases against the Bank. Criminal offences: There are 06 instances, wherein criminal cases have been outstanding against the officials of the Bank in connection to the transactions of the Bank. Others: There are 264 cases filed by the employees/ex-employees or family members of deceased employees against the Banks claiming service benefits such as withdrawal of VRS application and reinstatement in service/challenging order of dismissal from service/non-payment of terminal benefit like gratuity, non payment of family pension/not giving due promotion etc. which are pending before the Supreme Court/various High Courts/ Civil court/ Labour Court /Tribunals etc. None of the above claims relates to pecuniary benefits as well as not quantified. The details of 19 cases wherein the claim amount is more than Rs. 1.00 crore are given in the following table:

(Rs. In crores)
Sr. No. 1 Suit No./ Forum TS1156 of 1999, High Court, Kolkata Complainant/ Branch Claim Name Amount Lal Baba Tube Co. Pvt. Ltd. [IFB, Kolkata ] Asian Vegpro. Ind. Ltd. [Chowringhee Branch] 10.00 Subject Matter Money Claim Regional Office Kolkata (Metro) Remarks Suit filed against the Bank in June 1999, claiming a decree for damages for alleged wrongful acts, negligence etc. of Bank. The matter is not appearing in the case list of High Court for hearing The suit was filed in 1999. Company has claimed decree on the ground of loss suffered by the Co. by reason of Banks alleged delay in sanctioning credit facility specially opening of L/C. The matter is not appearing in the case list of High Court for hearing The suit was filed in 2000. Party has claimed this amount on account of alleged non payment of rent, municipal taxes & interest there on & cost of damage in furniture fixture for 24, Park Street, which Bank has already vacated. Both the parties have already filed evidence on affidavit. The matter is not appearing in the case list of High Court for further hearing. Claiming decree for Rs. 1.11 crore towards wrongful debit and deduction from the plaintiffs c/c a/c contrary to the agreement made between the Bank and the borrower. Now the case is fixed on 2702-2006 for final argument

CS No. 587/99, High Court, Kolkata

29.01

Money Claim

-do-

CS-88/2000 High Court, Kolkata

Candlewood Holding 2.84 Ltd. EZO (Previous Premises on 24, Park Street)

Money Claim

-do-

MS 11/98, Alipore Court

Plastoman Pvt. Ltd. 1.11 [Southern Avenue Branch]

Money Claim

-do-

65

Allahabad Bank
5 CS 145/2002 BCL Financial Services Ltd. [IFB, CAL ] 9.12 Suit for damages -do- For decree towards refund of excessive interest realised and loss & damages suffered for the reason of wrongful freezing of banks a/c. The matter is not appearing in the case list of High Court for further hearing. Suit filed for not returning the original shipment documents and not releasing of funds and other alleged wrongful acts etc. Written statement filed on 23-12-2003. Thereafter evidence on affidavit has been filed by both the parties. The case is still pending and not appearing in the case list of High Court The Co. filed damage suit against WBFC, WBIDC & Allahabad Bank. Bank is a performa defendant. Since amount of loan not repaid, WBFC in terms of their act sold plant & machinery. Being aggrieved the instant suit is filed. The Bank has also filed a recovery suit against the company before the DRT, Kolkata. Demon Finance had offered fixed deposit purportedly issued by our Bank Upon demand Allahabad Bank rejected the claim as the same were issued fraudulently and without consideration. As such the SBI filed th suit against Demon Finance . Bank is the 5 respondent. Now the next date is fixed on 0703-2006 for final argument. The case is for alleged issuance of FDR & SBI allowed loan against such FDR. th Allahabad Bank is 5 respondent. Now the next date is fixed on 07-03-2006 for final argument. ITC claimed Rs.2.06 crore being amount wrongfully deducted by the bank and interest @ 18% p.a. from 08-04-2000 to 29-01-2003. Matter is not appearing in case list of High Court A suit claiming compensation, interest, damages, refund of maturity value of fixed deposit, loss of goodwill etc. is filed. Bank filed a petition for dismissal of suit. Matter is not listed at High Court. These three companies have claimed damages of Rs. 3 crore each,alleged to have suffered for wrongful action on the part of the Bank. W.S filed by the Bank.The case is still pending and not appearing in the case list of High Court. Suit filed by Bhagwan Das Agarwal & Santosh Agarwal against bank claiming decree of Rs. 3.65 crore with interest at the rate of 15% per annum. Since the suit was dismissed on March 3, 2004, restoration petition is filed, and the same is pending with the High Court. Bank has filed a suit for recovery of Rs. 46.82 lacs. The borrower has filed counter claim of Rs. 1..54 crore on account of damages, losses suffered and goodwill. Next date is fixed on 07-02-2006 for final argument before the P.O.

CS Abhinandan 3.56 No.215/02(WP181/20 International Pvt. Ltd. 03 at HC, Kolkata [International Branch]

Suit for damages

-do-

CS No. 392/2000 High Court, Kolkata

Taya Mastya Super 2.46 feeds Pvt. Ltd. [International Branch]

Damage suit -do-

DRT, Kolkata OA 132/1999

SBI [Southern Avenue Branch]

2.40

Recovery suit

-do-

DRT, Kolkata OA 131/1999

SBI [Southern Avenue Branch]

1.02

Recovery suit

-do-

10

C.S No.-24/03,H.C Kolkata

ITC Ltd. Kolkata Main

2.06

Money Suit

-do-

11

12

13

Shivram Singh & 3.08 sons ( Coal sales) Ltd. ( Stephen House Branch) Civil Suit No. -329/03 Mak Engineering Ind. High Court, Calcutta Ltd., Manash 9.00 Forgings Pvt. Ltd., & Bengal General Trading Co. Pvt. Ltd. (IFB, Calcutta) C.S No. 304/98, H.C Bhagwan Das 3.65 Calcutta Agarwalla & Santosh (RCP Branch)

C.S-648/01,H.C Calcutta

Suit for -dodamages

Suit for -dodamages

Money Suit

-do-

14

TA 1114/2000, DRT Ashish Fabrics Allahabad ( Meerut Cantt. Branch)

1.54

Case stand Meerut transferred to DRT Lucknow

66

Allahabad Bank
15 155 of 1997 & 156 of 1997 National Consumer Dispute Redressal Commission, New Delhi Spl. Case No. 744/2001 83/96 Suit No. 1768/96 filed in the City Civil Court, Hyderabad Prativa Pratisthan [Juhu Ville Parle Branch & Andheri Branch] 13.82 Consumer Case Mumbai The suit was filed in 1997. As alleged that the Funds withdrawn from Trust account and transferred in current account in the name of trust. Case is pending in National Commission, New Delhi. Next date is fixed on 17-03-2006 for final argument. Counterclaim against Bank to forestall recovery Banks case . Next date is fixed on 16-01-2006 for framing issues. Subsequently, no date has been fixed by the court Suit for recovery of interest on DDP. SLP filed th on 7 November 05 before Honble Supreme Court against the order of High Court, Ranchi The Bank filed Recovery application on 0601-1997 in DRT, Hyderabad for Rs. 1549.22 lacs and is pending . Bank filed I.A before civil court for transfer of the suit of counter claim to DRT and the same is disposed favouring the bank. But the company went on appeal in High Court challenging the said order. Appeal is running on the list and still pending with High Court. M/S Sweatchem filed counter claim against the bank on 12-03-01. The Bank has filed Show cause . Next date is fixed on 10-022006 for filling reply by the defendant against show cause filed by the bank.

16

Ind Agro Synergy Ltd. C. L. Nagpur

1.86

17 18

Mecon India Doranda 5.28 Sangfroid Remedies 2. 35 Ltd.

Counter Nagpur claim against the Bank Money Suit Ranchi Counter Hyderabad claim against the Bank

19

OA No-138/99 DRTII, Delhi

Sweatchem Antibiotics Ltd. (Recovery Branch, New Delhi)

131.62

Cross suit against the New Delhi claim filed by the bank in DRT-II, Delhi

The Bank has not made any provision in this regard. These cases have been classified as claims against the Bank not acknowledged as debt. There are no material litigation filed by any of the key personnel in the top executive grade. Income Tax Matters As on December 31, 2005, there is a disputed Income Tax liability pertaining to past periods, involving a disputed amount of Rs. 44.36 crores. The Income Tax Department has filed the appeal before the Income Tax Appellate Tribunal, Kolkata. The Bank will contest the appeal and the management has every reason to believe that the order passed by CIT(A) on appeal will be confirmed by the Income Tax Appellate Tribunal. Except the provisions as mentioned above, no other provision have been made by the Bank and any adverse ruling may affect the financials of the Bank. The details of the case is as given under: (Rs. in crores) Assessment Major grounds of appeal Others Total disputed Tax amount year amount including interest Bad debts written off u/s 36(1)(vii) 2002-03 Total Prior Provision for Dis-allowance accounting bad debt u/s of expenses expenditure 36(1)(viia) u/s 14A Appeal pending before Income Tax Appellant Tribunal 1.54 122.73 -

124.27

44.36 106.45

The regular assessments for the assessment years 2003-04, 2004-05 are yet to be completed whereas assessment for the assessment year 2005-06 has not been done so far. Except as mentioned above: 1. 2. 3. 4. 5. 6. 7. No proceedings have been launched against the Bank for any of the offences under any enactment, irrespective of whether specified in Paragraph 1 of Part I of Schedule XIII to the Companies Act, 1956. No such litigation or disputes are pending as on today and there are no defaults or outstanding statutory dues. There are no pending proceedings initiated for economic offences. There are no past cases where any penalties have been imposed by the concerned authorities. No disciplinary action/ investigation has been taken by the Securities and Exchange Board of India/ Stock Exchange against the Bank and its Directors The Bank has not defaulted in meeting statutory dues, Institutional dues and has made all payments/ refunds on debentures/ fixed deposits. It has not defaulted on dues to holders of other debt Instruments and preference shareholders. No penalty has been imposed by SEBI against the Bank & its branches. There are no small-scale undertakings/ creditors to which the Bank owes any sum exceeding one lakh where payment is outstanding for a period of more than 30 days.

Servicing Behavior There has been no default in meeting statutory dues, institutional dues and dues towards payment of interest or principal on due dates to holders of Bonds and Fixed Deposits.

67

2. Cases against the Directors of the Bank There are no outstanding litigations, disputes or penalties against the directors of the Bank, including tax liabilities, economic offences, criminal or civil prosecution for any offence, irrespective of whether specified under any enactment in Paragraph 1 of Part I of Schedule XIII, of the Companies Act, 1956 or any other liability in their personal capacities or as Director/ Partner/ Sole Proprietor in the Company or any other company/firm.

Allahabad Bank

There are no litigations against the directors involving violation of statutory regulations or criminal offences. No disciplinary action has ever been taken by the Securities and Exchange Board of India or Stock Exchanges and no penalty has been imposed by any authority. There is no suit pending against the directors in capacity as director or partner or sole proprietor in any other company/firm. Other than as stated above, there are no disputes/ litigations towards tax liabilities or any criminal or civil prosecutions against the Bank for any offence economic or otherwise. No criminal proceedings have been launched against the Bank under any of the enactment irrespective of whether specified in paragraph 1 of part I of Schedule XIII of the Companies Act, 1956. 3. Cases against the Subsidiary of the Bank As on December 31, 2005 , 2 cases with an aggregate claim of Rs. 3.46 crores have been filed against Allbank Finance Ltd. Further, Income Tax disputes aggregating Rs. 10.88 crores are pending in appellate courts against All Bank Finance Limited. The details of these cases are as given in the following table: Civil Cases Sr. Name of the Plaintiff No. 1. Twinpack Industries Ltd. Date of filing the case 26-08-97 Name of the Nature of the Court case MRTP Commission, Delhi Amount involved/ Relief sought Case filed by Rs.46.55 the company lakh for the restrictive trade practices due to delay in Public Issue of the Company and the consequential loss incurred by the said Company. For not Rs.299.99 meeting the lakh underwriting commitment Latest Position As a condition precedent to the Compromise proposal with Allahabad Bank the Co. was required to withdraw its complaint against us filed before MRTP Commission. Permission has been granted by the Court to withdraw the complaint .

i) M S Shoes Ltd. 1531/1995 (now 391/2003) ADJ, Tis Hazari Court, Delhi

The last date was 07.01.2006 for certain clarification to be given by M.S.Shoes. The next date is 30-03-2006 for the same purpose On 18-02-2006 the case transfer to Karkardoma Court.

ii) M. S. Shoes Ltd.

1299/97 Joint Registrar High Court, Delhi. For not meeting the underwriting commitment The case 03.04.2006 arguments. was adjourned on 16.12.2005 to for

Income Tax Cases Name of plaintiff

Pending before Authority ITAT, Kol. A Bench

Suit No.

Nature of suit /cause of action Various benefits allowed by CIT (A) in favour of the company.

Income-tax Deptt.

615/Kol/05 Assessment Year1993-94.

Income-tax Deptt

ITAT, Kol. C Bench

70/k/03 (Intt.Tax)

Addition of notional interest of Rs.7.18 Crore rejected by CIT(A) in favour of AllBank Finance Ltd.

Monetary liability Present Status which may be incurred by the Co. In the hearing held on 10.67 04.08.2005 the case was blocked for three months at the request of the IT Deptt. as COD permission was not available. 0.21 Pending.

No proceedings have been launched against AllBank Finance Ltd. for any of the offences under any enactment, irrespective of whether specified in Paragraph 1 of Part I of Schedule XIII to the Companies Act. No such litigation or disputes are pending as on and there are no defaults or outstanding statutory dues. In the past, no penalties have been imposed by any regulatory authority.

68

AllBank Finance Ltd. has not defaulted in meeting statutory dues, institutional dues and has made all payments/refunds on debentures/fixed deposits. It has not defaulted on dues to holders of other debt instruments and preference shareholders. There are no pending proceedings initiated for economic offences. 4. Cases against the Directors of the Subsidiary of the Bank A criminal case has been filed by M/s M. S. Shoes East Limited in Delhi High Court against Allahabad Bank, All Bank Finance and one of the Ex- directors of AllBank Finance relating to attachment and sale of property of M. S. Shoes East Limited by Debt Recovery Tribunal at a price less than the fair market value of the property.

Allahabad Bank

Except as stated above, there are no outstanding litigations, disputes or penalties against the directors of the AllBank Finance Limited, including tax liabilities, economic offences, criminal or civil prosecution for any offence, irrespective of whether specified under any enactment in Paragraph 1 of Part I of Schedule XIII, of the Companies Act, 1956 or any other liability in their personal capacities or as Director/ Partner/ Sole Proprietor in the Company or any other company/firm. There are no litigations against the directors involving violation of statutory regulations or criminal offences. No disciplinary action has ever been taken by the Securities and Exchange Board of India or Stock Exchanges and no penalty has been imposed by any authority. There is no suit pending against the Directors in capacity as director or partner or sole proprietor in any other company/firm. Other than the as stated above, there are no disputes/ litigations towards tax liabilities or any criminal or civil prosecutions against the Bank for any offence economic or otherwise. No criminal proceedings have been launched against the Bank under any of the enactment irrespective of whether specified in paragraph 1 of part I of Schedule XIII of the Companies Act. 5. Cases against the Promoters and Companies/ Firms/ Ventures promoted by the Promoters of the Bank As the Government of India is the promoter of the Bank, it is not feasible to give details of pending litigations against the Government or the companies/ firms/ ventures promoted by the Government because of large number of such undertakings. Interest of Directors of the Bank The directors of the Bank are interested to the extent of shares held by them and/ or by their friends and relatives or which may be subscribed by them and/ or allotted to them by the Bank. The Directors of the Bank are interested to the extent of fees, if any, payable to them for attending meetings of the Board or Committee and reimbursement of traveling and other incidental expenses, if any, for such attendance as per the Articles of Association of the Bank. The Directors of the Bank are not interested in the appointment of or acting as arrangers, registrars, trustees or bankers to the issue or any such intermediary registered with SEBI. The directors of the Bank are not interested in any property acquired by the Bank within two years of the date of this Information Memorandum or proposed to be acquired by it. Save as stated above, no amount or benefit has been paid or given to the Banks directors or officers since its incorporation nor is intended to be paid or given to any directors or officers of the Bank except the normal remuneration and/or disbursement for services as directors, officers or employees of the Bank. XII. INVESTOR GRIEVANCE & REDRESSAL SYSTEM The Bank has constituted a Shareholders'/ Investors Grievances Committee consisting of 4 members out of which 1 is independent director of the Bank.The committee is headed by a non-executive independent director. Shri Surinder P.S Pruthi. The committee meets at least once a quarter and reviews the shareholders grievances redressal systems. The terms of reference of Shareholders'/ Investor Grievances Committee are to redress the shareholders compliant in respect of: 1. 2. 3. 4. 5. 6. Share transfers, Transmission of shares, Issue of duplicate shares, Dematerialization and dematerialization of shares, Non-receipt and revalidation of dividend warrants, Non-receipt of Annual Report etc.

As on December 31, 2005, there was no complaint from shareholder which was pending. The details of the Compliance Officer of the Bank are as follows: Mr. M. M. Neogy Deputy General Manager (Finance & Accounts) Allahabad Bank Head Office, 2, Netaji Subhas Road, Kolkata 700 001. Tel No. (033) 22420899. Fax No.91-33-22107424 E-mail: hogac@allahabadbank.co.in The investors can contact the Compliance Officer in case of any pre-issue/ post-issue related problems such as non-credit of letter(s) of allotment/ bond certificate(s) in the demat account, non-receipt of refund order(s), interest warrant(s)/ cheque(s) etc. The investors can also contact the Registrars to the Issue, M/s. M/S Maheshwari Datamatics Pvt. Ltd. 6, Mangoe Lane ( nd Surendra Mohan Ghosh Sarani), 2 Floor , Kolkata-700 001, Tel ( 033) 22435809/22435029, Fax (033) 22484787 in case of queries / complains, if any, regarding this issue.

69

PART II
I. GENERAL INFORMATION

Allahabad Bank

Consents Consents in writing from the Directors, Arrangers, Registrars, Trustees and Compliance Officer to the Issue to act in their respective capacities have been obtained by the Issuer Company and such consents have not been withdrawn upto the date of opening of the Issue. The Auditor of the Bank has given its written consent to the inclusion of their Report in the form and context in which they appear in this Information Memorandum Such consents and reports have not been withdrawn upto the date of opening of the Issue. Expert Opinion Save as stated elsewhere in this Information Memorandum, the Bank has not obtained any other expert opinion. Changes in Directors during last three years The changes that took place in the Board of Directors since April 01, 2002 upto December 31, 2005 are as follows:

Name of the Director

Dr. B Samal Mr. K.K. Rai Mr. S.K. Batra Mr. D. Choudhury Mr. V.K. Sharma Mr. Anand Sinha Mr. Surinder Kumar Mr. Ashok Kumar Mr. B. Subba Raju Mr. Ram Bishun Chaubey Ms. Deepa Gupta Mr. Amitav Kothari Mr. Zafar Obaid Mr. O.N. Singh Mr. S.K. Goel Mr. G Bhujabal Ms. Sewali Choudhury Mr. Biswabandhu Bhattacharya Mr. Nakul Sein Anand Mr. Deb Kishore Bhattacharya Mr. V. Gurumurthy Mr. Chandan Sinha Shri Asutosh Law Shri Deveshwer Kumar kapila Dr. Surinder P.S. Pruthi Shri Syam Bahadur Kunwar Shri Mahesh Bhatt Shri Ram Niwas Jain Shri G. Padmanabhan

Reasons for change

Relinquished charge as per government notification Relinquished charge as per government notification Relinquished charge as per government notification Relinquished charge as per government notification Relinquished charge as per government notification Relinquished charge as per government notification Relinquished charge as per government notification Relinquished charge as per government notification Relinquished charge as per government notification Relinquished charge as per government notification Relinquished charge as per government notification Relinquished charge as per government notification Relinquished charge as per government notification Appointed as per government notification Appointed as per government notification Appointed as per government notification Appointed as per government notification Appointed as per government notification Appointed as per government notification Appointed as per government notification Appointed as per government notification Relinquished charge as per government notification Elected as shareholders Director Elected as shareholders Director Elected as shareholders Director Elected as shareholders Director Elected as shareholders Director Elected as shareholders Director Appointed as per government notification

Date of Appointment
April 20, 2000 January 8, 2001 November 18, 1999 April 20, 2001 October 30, 2000 June 13, 2001 June 11, 2002 June 13, 2002 August 28, 2001 July 4, 2000 November 5, 2001 December 20, 2001 February 6, 2002 December 04, 2003 August 27, 2004 March 20, 2002 January 9, 2004 November 25, 2003 March 1, 2002 July 28, 2003 January 4, 2005 April 27,2005 30 June,2005 th 30 June,2005 30 June,2005 30 June,2005 30 June,2005 th 30 June,2005 th 20 March,2005
th th th th

Date of expiry / retirement / continuance

March 31, 2003 June 30, 2004 April 20, 2001 March 20, 2002 June 13, 2001 June 11, 2002 January 08, 2004 November 24, 2003 August 27, 2004 January 3, 2005 November 4, 2004 December 18, 2004 February 5, 2005 Continuing Continuing Continuing Continuing Continuing Continuing Continuing Continuing October 2, 2005 Continuing Continuing Continuing Continuing Continuing Continuing Continuing

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

70

Sr. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Name of the Auditor M/s M. K. Goswami & Co. M/s T. K. Ghose & Co. Ms Ramesh. C. Agrawal & Co. M/s Nandy Halder & Ganguli Ms Prakash & Santosh M/s N. C. Banerjee & Co. Ms Goel Garg & Co. M/s N Chaudhuri & Co. M/s Dhamija Sukhija & Co. M/s Manubhai & Co.

Year of Change 31.03.2003 31.03.2003 31.03.2003 31.03.2003 31.03.2004 31.03.2004 31.03.2004 31.03.2004 31.03.2004 31.03.2005

Added/ Retired Retired Added Added Retired Added Retired Retired Added Added Retired

Reason

Allahabad Bank

Retired As per RBI instruction As per RBI instruction Retired As per RBI instruction Completed the term Completed the term As per RBI instruction As per RBI instruction Completed the term

Authority for the Present Issue This present issue of Bonds is being made pursuant to the resolution of the Board of Directors of the Bank, passed at its meeting held on 11-11-2005. This present issue of Bonds is being made in accordance with extant RBI guidelines vide its Master Circular no. DBOD No. BP.BC.13/21.01.002 /2005-06 dated July 04, 2005 on Prudential Norms for Capital Adequacy covering norms for issue of unsecured bonds as subordinated debt by Banks for raising Tier II capital. The Bank can undertake the activities proposed by it in view of the present approvals and no further approval from any government authority(ies)/ Reserve Bank of India (RBI) is required by the Bank to undertake the proposed activities save and except those approvals which may be required to be taken in the normal course of business from time to time.

71

Disposal of Applications and Application Money The Board of Directors/ Committee of Directors of the Bank reserves its full unqualified and absolute discretion without giving any reason, the right to accept or reject any application in whole or in part. If any application is rejected in full, the whole of the application money received, and if the application is rejected in part, the excess application money, after adjustment of allotment money if any, will be refunded to the applicants by registered post/ courier only. No receipt will be issued by the Bank. However, the nominated branches of the Bank receiving the application will acknowledge the receipt of the application by stamping and returning the detachable acknowledgement slip appended to each application form. Refund (if any) will be made by cheque/ demand draft drawn on the Bank and payable at par at all the places where applications are accepted. Procedure and Time Schedule for Allotment/ Refund The beneficiary account of the investor(s) with National Securities Depository Limited (NSDL)/ Central Depository Services (India) Limited (CDSL)/ Depository Participant will be given initial credit within 15 days from the Deemed Date of Allotment. The initial credit in the account will be akin to the Letter of Allotment. On completion of the all statutory formalities, such credit in the account will be akin to a Bond Certificate. Letter(s) of Regret alongwith Refund Order(s), as the case may be, will be despatched by registered post/ courier or as per extant postal rules at the sole risk of the applicant to the sole/ first applicant within 15 days of closure of the Issue. Subject to the completion of all legal formalities within 3 months from the Deemed Date of Allotment, or such extended period as may be approved by the Appropriate Authority(ies), the initial credit akin to a Letter of Allotment in the Beneficiary Account of the investor would be replaced with the number of Bonds allotted which will be akin to a Bond Certificate. In case of joint applications, refund/ pay orders, if any, will be made out in the first name and all communications will be addressed to the person whose name appears first in the application form.

Allahabad Bank

Oversubscription and Basis of Allotment The Board of Directors/ Committee of Directors reserves its full, unqualified and absolute right to accept or reject any application, in part or in full, without assigning any reason thereof. The rejected applicants will be intimated along with the refund warrant, if applicable, to be sent. Interest on application money will be paid from the date of realisation of the cheque(s)/ demand drafts(s) till one day prior to the date of refund. The Application Forms that are not complete in all respects are liable to be rejected and would not be paid any interest on the application money. Application would be liable to be rejected on one or more technical grounds, including but not restricted to: 1. 2. 3. 4. 5. 6. 7. Number of bonds applied for is less than the minimum application size; Applications exceeding the issue size; Instrument Option not specified; Bank account details not given; Details for issue of bonds in electronic/ dematerialised form not given; PAN/GIR and IT Circle/Ward/District not given; In case of applications under Power of Attorney by limited companies, corporate bodies, trusts, etc. relevant documents not submitted;

In the event, if any Bond(s) applied for is/ are not allotted in full, the excess application monies of such Bonds will be refunded, as may be permitted. In the event of issue being oversubscribed, the Bank reserves its full, unqualified and absolute right of allotment/ rejection in full or prorata at its discretion without assigning any reason thereof. However the broad basis to be followed by the Bank would be as under: At the end of each banking day during the currency of the issue, a sum of total subscription amount realised and credited to Issuer Companys account would be ascertained by the Issuer Company and if the cumulative realised amount upto that date is less than or equal to Rs. 400 crores with a green shoe option of Rs.100 crores, then all the applicant(s) till that date would be given full and firm allotment. For the amounts credited to the Issuer Companys account on the day wherein the cumulative credit reaches/ exceeds Rs. 400 crores with a green shoe option of Rs.100 crores, allotment will be made on pro-rata basis based on balance amount available for allotment on that day. The allotment shall be subject to rounding-off to the nearest multiple of marketable lot (i.e. in multiples of 1 Bond). Interest on Application Money Interest at the respective coupon rate (i.e. @ 8% p.a. ) (subject to deduction of income tax under the provisions of the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof, as applicable) will be paid to all the applicants on the application money for the Bonds. Such interest shall be paid from the date of realisation of cheque(s)/ demand draft(s) upto one day prior to the Deemed Date of Allotment. The interest on application money will be computed on an Actual/ 365 day basis. Such interest would be paid on all the valid applications, including the refunds. Where the entire subscription amount has been refunded, the interest on application money will be paid alongwith the Refund Orders. Where an applicant is allotted lesser number of bonds than applied for, the excess amount paid on application will be refunded to the applicant alongwith the interest on application money. The interest cheque(s)/ demand draft(s) for interest on application money (alongwith Refund Orders, in case of refund of application money, if any) shall be dispatched by the Bank within 15 days from the Deemed Date of Allotment and the relative interest warrant(s) alongwith the Refund Order(s), as the case may be, will be dispatched by registered post/ courier to the sole/ first applicant, at the sole risk of the applicant.

72

STATUTORY AUDITORS 1.M/s T. K. Ghose & Co. Chartered Accountants, 6, Kiron Shankar Roy Road, 1st Floor, Kolkata 700 001. Tel.: (033) 22489571, 22489572. 2.M/s Ramesh C Agrawal & Co. Chartered Accountants 33, Shiv Charanlal Road, Near Manasarovar Cinema, Allahabad 211003. Tel.: (0532) 2401449, 2402178. 3.M/s Prakash & Santosh Chartered Accountants, Ronald complex, Flat No. 8, Upper Floor, West Cott Building, 37/17, The Mall, Kanpur 208001. Tel: (0512) 2365114, 2312981. 4. M/S N. Chaudhuri & Co. Chartered Accountants 10, Old Court Post House Street, nd 2 Floor, Room No. 61 Kolkata- 700 001 5. M/S Dhamija Sukhija & Co. Chartered Accountants 913-914 Naurang House 21, Kasturba Gandhi Marg, New Delhi-10 001 ARRANGERS TO THE ISSUE

Allahabad Bank

SPA Merchant Bankers Ltd. th 10A, Chandramukhi , 10 Floor Nariman Point Mumbai 400 021 Tel No. : - (022) 22801840-49 Fax No. : (022) 22871192/ 22846318

Allianz Securities Ltd. 3,Scindia House Janpath New Delhi 110001 Tel No. (011) 41514660-64 Fax No. (011) 41514665 A. K. Capital Services Limited Flat No. N, Sagar Apartments, 6, Tilak Marg, New Delhi 110 001. Tel No. (011) 23385704, 23388235. Fax No. (011) -23385189.

IDBI Capital Services Ltd

8th floor, Bakhtawar, Nariman point, Mumbai - 400 021, Tel:022- 22371212 Fax: 022-22882560/22882550

73

Allahabad Bank
REGISTRAR TO THE ISSUE Maheshwari Datamatics Pvt. Ltd. 6, Mangoe Lane, ( Surendra Mohan Ghosh Sarani) nd 2 Floor, Kolkata-700 001 Tel- 033-2243-5809/5029 Fax- 033-2248-4787 TRUSTEE FOR THE BONDHOLDERS IDBI Trusteeship Services Limited th Registered Office, 10 Floor, Nariman Bhavan, 227, V. K. Shah Marg, Nariman Point, Mumbai 400 021. Tel No. (022) 56314499. Fax No. 91-22-56311776. E-mail: itsl@idbitrustee.co.in BANKERS TO THE ISSUE Allahabad Bank Head Office, 2, Netaji Subhas Road, Kolkata 700 001. Tel.: (033) 22423373, 22420883. Fax.: (033) 22104048, 22424048. Website : www.allahabadbank.com E-Mail: hoipo@allahabadbank.co.in COMPANY SECRETARY Mr. Peter Barua Company Secretary Allahabad Bank Head Office, 2, Netaji Subhas Road, Kolkata 700 001. Tel No. (033) 2242 0878 Fax No. (033) 2210 7424. COMPLIANCE OFFICER Mr. M. M. Neogy Deputy General Manager (Finance & Accounts) Allahabad Bank Head Office, 2, Netaji Subhas Road, Kolkata 700 001. Tel No. (033) 22420899. Fax No.91-33-22107424 E-mail: hogac@allahabadbank.co.in The investors can contact the Compliance Officer in case of any pre-issue/ post-issue related problems such as non-credit of letter(s) of allotment/ bond certificate(s) in the demat account, non-receipt of refund order(s), interest warrant(s)/ cheque(s) etc. BROKERS TO THE ISSUE Apart from the Arrangers to the Issue appointed by the Issuer Company, there is/are no other broker(s) appointed by the Issuer Company for the purpose of marketing the Issue. Therefore no person/ firm/ company other the Arrangers to the Issue, whether member of recognised stock exchange(s) or otherwise, can act as Brokers to the Issue. CREDIT RATING AGENCIES Credit Analysis & Research Limited th 901 & 902, 9 Floor, Subham Building, 1, Sarojini Naidu Sarani, (Formerly Rawdon Street), Kolkata 700 017. Tel.: (033) 22831800, 22808472. Fax: 91-33-22831803. Website: www.careratings.com CRISIL Limited CRISIL House The Millennium, Unit No.II W (i) 235/2A, A.J.C.Bose Road, Kolkata 700 020, India Tel: (033) 2289 1949/ 1950, Fax: 91-33-22830597. Website: www.crisil.com

74

Allahabad Bank

II.

FINANCIAL INFORMATION

AUDITORS REPORT

FINANCIAL STATEMENTS
T.K. Ghose & Co Chartered Accountants N. Chaudhuri & Co. Chartered Accountants Ramesh C. Agrawal & Co Chartered Accountants Dhamija Sukhija & Co. Chartered Accountants Prakash & Santosh Chartered Accountants

The Board of Directors, Allahabad Bank, Head Office, 2, N.S. Road, Kolkata- 700001 Dear Sirs, We have been engaged to examine and report on the financial information of Allahabad Bank (The Bank), which have been prepared in accordance with Part II of Schedule II of Companies Act 1956 and Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 issued by the Securities and Exchange Board of India (SEBI). The preparation and presentation of this financial information is the responsibility of the Banks management. This financial information is supposed to be included in the Information Memorandum proposed to be issued by the bank in connection with the Private placement of 5000 Unsecured Redeemable Non Convertible Subordinated Bonds (Tier II Bonds Series V) of face value of Rs.10 Lakhs each for cash aggregating to Rs.500 crores. 1. For our examination, we have placed reliance on the following: a) The financial statements of the Bank for the financial year ended on March 31 , 2001, 2002, 2003, 2004 and 2005 which were audited and reported upon by the respective auditors for respective years, names of whom and the year covered by their audit are furnished below. Year 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 Name of the auditors M/s N. C. Banerjee & Co., De Chakraborty & Sen, Nanday Haldar & Ganguly, S. C. Vasudeva & Co, Paraikh & Jain, Goel Garg & Co. M/s N. C. Banerjee & Co., De Chakraborty & Sen, Nanday Haldar & Ganguly, Manubhai & co, M. K. Goswami & co., Goel Garg & Co. M/s N. C. Banerjee & Co., De Chakraborty & Sen, Ramesh C Agrawal & Co., Manubhai & Co, T. K. Ghose & Co., Goel Garg & Co. M/s N. C. Banerjee & Co., Prakash & Santosh, Ramesh C Agrawal & Co., Manubhai & Co, T. K. Ghose & Co., Goel Garg & Co. M/s Prakash & Santosh, Ramesh C Agrawal & Co., Manubhai & Co, T. K. Ghose & Co., Dhamija Sukhija & Co., N. Chaudhuri & Co.
st st

(b)

The financial statements of the Bank for the nine months ended December 31 2005, were subject to a limited review th by us vide our report dated 24 January, 2006. The aforesaid financial statements incorporated the relevant returns of 20 branches reviewed by us and un-reviewed returns in respect of 1953 branches. In conduct of our review, we had taken note of review reports in respect of the non-performing advances received from the concurrent auditors of 110 branches. These review reports covered i) 56.89% of advances portfolio of the Bank excluding advances portfolio of assets recovery and outstanding food credit and ii) 52.70% of the non-performing advances. The audit of the financial statement for the periods referred to in paragraph 1(a) of this report comprised of the audit test and procedures, deemed necessary by the respective auditors for the purpose of expressing an opinion on such financial statements taken as a whole in accordance with generally accepted auditing practices in India.

2)

3)

The review of the financial statements for the period referred to in paragraph 1(b) above consisted principally of applying analytical procedures to financial data and making enquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is an expression of an opinion on the financial statement as a whole. Accordingly, neither was an audit performed nor an opinion expressed.

75

Allahabad Bank
4) We have performed such tests and procedure which, in our opinion, were necessary for the purpose of our examination. These procedures mainly involved comparison of the attached financial information with the Banks audited financial statements for the years 2000-2001 to 2004-05 and unaudited financial statements for the nine months ended December st 31 2005. We report that the profits of the Bank as restated of the above period are as set out in Part - I. These profits have been arrived at after charging all operating and management expenses, including depreciation and after making such adjustments and regroupings as in our opinion are appropriate and are subject to the accounting policies and the notes there on. We report that the assets and liabilities for the Bank as restated for the above periods are also as set out in Part - II after making such adjustments and regroupings as in our opinion are appropriate and are subject to the accounting policies and notes there on. The financial statements as referred to in paragraphs 1(a) and 1(b) above consist of the following :(a) Summary statement of Profit and Loss as restated (Part I). (b) Summary statement of Assets and Liabilities as restated (Part II). st (c) Statement of Cash Flows for the years 2003 - 04 and 2004 - 05 and for nine months ended December 31 2005 as incorporated in note no 19 of Material Notes on Accounts (Part - III). st (d) Significant accounting policies as at March 31 2005 (Part - III). (e) Material notes on accounts (Part - IV). (f) Notes on adjustments carried out (Part - IV). (g) Auditors qualifications for which adjustments could not be carried out (Part - V). We have also relied upon the audited financial statements of Allbank Finance Ltd. the only one wholly owned, subsidiary company of the Bank as set out in Part XIII, for each of the five consecutive financial years ended on March 31st, 2005 being the last date upto which the accounts of the said company have been made and audited by the auditor of the st company for those respective years and in respect of financial statements for the nine months ended December 31 2005, the same have been taken as approved by the Management of the Subsidiary Company. We set out in Part XII a summary of the consolidated assets, liabilities, income and expenditure of the Bank as restated for the years 2003 2004 and 2004 2005. The consolidated financial information of the Bank for the years 2003 04 and 2004 05 are based on audited accounts regrouped/ rearranged/ reclassified, wherever considered necessary. The consolidated financial statements were audited and reported upon by the respective auditors, names of whom and the period of their audit are given below : Year 2003-2004 2004-2005 Name of Auditors M/s N. C. Banerjee & Co., Prakash & Santosh, Ramesh C Agrawal & Co., Manubhai & Co, T. K. Ghose & Co., Goel Garg & Co. M/s Prakash & Santosh, Ramesh C Agrawal & Co., Manubhai & Co, T. K. Ghose & Co., Dhamija Sukhija & Co., N. Chaudhuri & Co.

5)

6)

7)

8)

9)

10) We report that in respect of each of the five financial years, the amount of dividend transferred to Government/ paid to the Shareholders by the Bank is stated in Part VI. The subsidiary company of the Bank has not declared any dividend during the said period. 11) (a) In our opinion, the financial information of the Bank as stated in paragraph 7 above read with respective significant accounting policies and material notes on accounts in particular note no B(7), after making groupings and adjustments as were considered appropriate by us and subject to non-adjustment of certain matters as stated in Part - V, have been prepared in accordance with the SEBI Guidelines.

(b) In our opinion, the said financial information has been properly extracted from Banks audited financial statements, st reviewed financial statements for the nine months ended December 31 2005 subject to consequential effect of nonadjustment of qualifications as described in Part V. 12) We have also examined the following accompanying documents (a) Key accounting ratios as set out in part VII ; st (b) Capitalization statement as at December 31 2005 as set out in part VIII; (c) Details of outstanding unsecured liabilities as set out in part IX; (d) Statement of tax shelter as set out in part X; st st (e) Contingent Liability statement as on 31 March 2005 and 31 December 2005 as set out in Part XI and report that in our opinion the above financial information are true and correct and are in accordance with relevant requirements of clarifications XIII and XIV issued by Securities and Exchange Board of India subject to consequential effect for non-adjustment of qualifications as described in Part V.

13)

This report is intended solely for your information and for inclusion in the Information Memorandum Proposed to be issued by the bank in connection with Private placement of Unsecured Nonconvertible Subordinated Bonds (Tier II Bonds Series V) and is not to be used, referred to or distributed for any other purpose without our prior written consent.

14. This report should neither in any way be construed as a reissuance or redrafting of any of the previous audit reports issued by us or by other firms of chartered accountants nor construed as a new opinion on any financial statements referred to herein.

76

Allahabad Bank
Yours faithfully,

77

PART I PROFIT AND LOSS ACCOUNT OF ALLAHABAD BANK

Allahabad Bank

FINANCIAL YEAR ENDED

Mar 31, 2001

Mar 31, 2002

Mar 31, 2003

Mar 31, 2004

Mar 31, 2005

Rs/Crores Nine month ended Dec 2005

A INCOME Interest Earned Int. & Disc. On advance/ bills Income on Investments Interest on Balance with RBI and other inter-bank funds Interest on Income Tax Refund Others Sub-Total OTHER INCOME Commission, Exchange & Brokerage Profit on Sale of Investments (Net) Profit on Sale of Land/Bldg. & other Assets (Net) Profit on Exch. Transaction (Net) Income earned by way of dividends from subsidiaries/Companies/JVs in India Miscellaneous Income Sub-Total TOTAL INCOME B EXPENDITURE Interest Expended Interest on Deposits Interest on RBI/Inter/Bank Borrowings Others Sub-Total Operating Expenses Payment & Prov. for employees & wages Rent, Taxes and Lighting Insurance Printing & Stationery Advertisement & Publicity Postage, Telegram, Telephones, etc. Repairs & Maintenance Law Charges Directors' Fees, Allowance & Expenses Auditors' fees & expenses Other Expenditure Depreciation on Bank's properties Sub-Total TOTAL EXPENDITURE

1064.05 934.67 68.85 2.56 1.23 2071.36 142.59 48.45 (0.04) 28.96 13.29 5.75 239.00 2310.36

1117.87 1054.28 78.29 21.28 1.12 2272.84 143.47 193.03 0.03 28.73 14.90 4.76 384.92 2657.76

1211.90 1187.75 59.53 110.17 0.98 2570.33 143.21 336.94 (0.04) 26.29 10.07 7.89 524.36 3094.69

1322.72 1302.24 31.79 11.45 0.47 2668.67 161.96 504.72 0.05 43.11 19.54 20.43 749.81 3418.48

1682.59 1462.10 40.11 Nil 0.80 3185.60 183.78 347.43 0.03 43.75 26.11 38.78 639.88 3825.48

1555.16 1116.49 49.67 Nil 8.02 2729.34 156.80 99.45 11.05 40.83 23.52 102.69 434.34 3163.68

1354.18 2.22 30.16 1386.56

1508.08 1.19 33.10 1542.37

1614.89 11.25 34.41 1660.55

1540.80 1.71 40.41 1582.92

1767.44 3.67 50.45 1821.56

1566.86 4.56 39.19 1610.61

469.33 39.78 11.32 11.09 3.49 13.19 8.36 2.94 0.29 4.20 61.92 20.49 646.40 2032.96

463.10 44.59 11.97 11.13 2.90 12.41 9.11 2.78 0.36 4.22 80.49 34.99 678.05 2220.42

484.15 49.11 12.98 11.51 3.45 10.75 10.24 2.50 0.72 5.01 259.78 38.77 888.97 2549.52

529.74 51.79 15.90 11.46 4.07 11.93 13.44 2.98 0.77 6.53 246.44 34.90 929.95 2512.87

512.36 58.32 28.63 13.15 10.20 12.85 14.46 3.36 0.64 8.43 207.15 32.41 901.96 2723.52

454.84 60.76 32.79 10.35 8.25 11.04 11.82 5.45 0.80 6.12 169.48 32.57 804.27 2414.88

78

Allahabad Bank
Rs/Crores Nine month ended Dec 2005

FINANCIAL YEAR ENDED

Mar 31, 2001

Mar 31, 2002

Mar 31, 2003

Mar 31, 2004

Mar 31, 2005

Gross Profit before provisions for Income Tax and Extraordinary items Provisions and Contingencies (before extraordinary items) Net Profit/(Loss) for the year (before extraordinary items) Less : Extraordinary Items Add: Tax on Extraordinary Item Net Profit/(Loss) for the year (after extraordinary Adjustment (As per details - Part IIA) Tax on Adjustment Total Adjustment Adjusted Net Profit Amt. Recd. From Inv., Fluct. Res. Profit & Loss brought forward Profit available for appropriation APPROPRIATION Transfer to Statutory Reserve Transfer to Capital Reserve Transfer to Revenue & other Reserve Transfer to Inv. Fluct Reserves Proposed / interim Dividend. Dividend Tax Balance carried over to Balance Sheet TOTAL Break-up of Provisions & Contingencies Prov. for Inc .Tax, Int. Tax & Wealth Tax Depreciation on Investment Provision For Bad & Doubtful Debts Provision for Standard Advance Others Sub-total Less : Excess Provision Withdrawn Depreciation on Investment Income Tax/Deferred Tax Written Back Others Sub-Total Total

277.40 230.60 46.80 11.39 4.50 39.91 71.81 28.40 43.41 83.32 23.33 16.22 122.87 11.98 Nil 88.41 Nil 10.00 1.02 11.46 122.87

437.34 338.25 99.09 29.35 10.48 80.22 17.70 6.32 11.38 91.60 0.67 11.46 103.73 24.09 1.56 11.38 30.00 16.05 Nil 20.65 103.73

545.17 360.62 184.55 29.35 10.79 165.99 44.12 16.21 27.91 193.90 7.67 20.65 222.22 41.50 4.33 27.91 90.00 34.67 4.44 19.37 222.22

905.61 423.40 482.21 29.35 10.53 463.39 141.59 50.80 90.79 554.18 Nil 19.37 573.55 120.00 3.30 120.79 206.84 69.34 8.89 44.39 573.55

1101.96 541.56 560.40 29.35 10.74 541.79 (54.14) (19.81) (34.33) 507.46 47.26 44.39 599.11 140.00 32.18 85.67 146.56 119.01 16.19 59.50 599.11

748.80 184.63 564.17 13.47 4.93 555.63 4.51 1.65 2.86 558.49 Nil 59.50 617.99 Nil Nil 94.18 33.31 Nil Nil 490.50 617.99

28.83 55.64 143.32 3.27 2.39 233.45 Nil 2.85 Nil 2.85 230.60

68.21 3.82 260.06 3.29 3.94 339.32 Nil 1.07 Nil 1.07 338.25

152.43 19.43 173.13 4.51 11.12 360.62 Nil Nil Nil Nil 360.62

110.53 Nil 478.44 8.96 Nil 597.93 58.62 113.42 2.49 174.53 423.40

66.00 286.69 40.00 15.00 133.87 541.56 Nil Nil Nil Nil 541.56

51.27 39.99 35.80 27.00 41.75 195.81 Nil 11.18 Nil 11.18 184.63

79

PART II: ASSET & LIABILITY STATEMENT OF ALLAHABAD BANK

Allahabad Bank

Rs/Crores AS AT Mar 31, 2001 Mar 31, 2002 Mar 31, 2003 Mar 31, 2004 Mar 31, 2005 Dec 31, 2005

Assets 1 Cash in hand 2 Balances with RBI 3 Balances with Bank in India Balances with Bank outside India 4 Money at Call & Short Notice 5 Investments in India Investments outside India Total Investments 6 Advances in India Advances outside India Total Advances 7 Fixed Assets** 8 Other Assets Total ( A )

156.69 1959.19 269.76 92.15 NIL 8707.16 NIL 8707.16 9582.71 NIL 9582.71 125.87 884.94 21778.47

183.47 1483.55 481.32 65.15 NIL

225.35 1320.41 419.03 45.03 NIL

197.58 1958.20 394.00 29.83 16.70

220.94 2206.22 807.83 80.46 NIL 19128.30 NIL 19128.30 21225.44 NIL 21225.44 131.75 878.09 44679.03

228.86 2550.12 597.84 94.01 608.00 18285.95 NIL 18285.95 26737.27 NIL 26737.27 140.26 787.40 50029.71

10346.06 12359.74 15554.81 NIL NIL NIL 10346.06 12359.74 15554.81 11004.51 12623.60 15613.99 NIL NIL NIL 11004.51 12623.60 15613.99 134.93 125.49 121.92

799.87 718.66 759.48 24498.86 27837.31 34646.51

B.

Liabilities 1 Demand Deposits From Banks From Others 2 Savings Deposits 3 Term Deposits From Banks From Others Total Deposits (1+2+3) 4 Borrowings In India Outside India Total Borrowing

65.47 1780.13 6603.73 845.70 10810.99 20106.02

52.50 1819.10 7700.60

74.96 87.08 2192.67 2759.62 8725.18 10342.39

46.77 3251.93 12472.10 624.73 24366.55 40762.08

33.26 3536.25 14047.61 456.67 26557.51 44631.30

863.44 699.09 430.43 12230.30 13771.48 17857.09 22665.94 25463.38 31476.61

68.24 1.94 70.18

60.57 NIL 60.57

43.69 NIL 43.69

26.91 142.08 168.99

11.33 118.16 129.49 2009.87 (621.61) 42901.44 1777.59

3.31 103.61 106.92 2135.41 (621.61) 46873.63 3156.08

5 Other Liabilities & Prov. (including subordinate debts) 962.86 (Subordinate Debts) (226.61) Total ( B ) 21139.06 C. Net Assets ( C = A - B) 639.41

1057.40 1398.34 1595.58 (321.61) (421.61) (621.61) 23783.91 26905.41 33241.18 714.95 931.90 1405.33

80

Allahabad Bank
Rs/Crores AS AT Mar 31, 2001 Mar 31, 2002 Mar 31, 2003 Mar 31, 2004 Mar 31, 2005 Dec 31, 2005

Represented by : D E Share Capital Reserves & Surplus 1.Statutory Reserve 2. Share Premium 3. Capital Reserve 4. Investment Fluctuation Reserve 5. Revenue & Other Reserve 6. Balance of Profit & Loss Account . Total ( E ) Total (B+D+E) Contingent Liabilities Claims against the Bank not Acknowledged as Debts. Disputed IT demand under appeal/ refer etc. Liability for partly paid Investments Liability on account of outstanding Forward Exchange Contracts 5 Guarantees given on behalf of constituents 6 Acceptance, endorsements and other obligations 7 Other items for which Bank is contingently liable 1 2 3 4 Total (G) BILLS FOR COLLECTION 246.70 190.80 Nil 12.15 178.30 11.46 392.71 21778.47 246.70 214.89 1.56 41.47 189.68 20.65 468.25 346.70 256.39 5.89 123.81 179.74 19.37 585.20 346.70 376.39 9.19 330.65 298.01 44.39 1058.63 346.70 516.39 41.37 429.95 383.68 59.50 1430.89 44679.03 446.70 516.39 720.00 41.37 463.26 477.86 490.50 2709.38 50029.71

F G

24498.86 27837.31 34646.51

141.75 351.51 0.16 4870.66

146.71 86.58 0.16 6109.80

162.65 149.24 219.23 NIL 0.16 0.16 8470.09 10104.17

233.04 NIL 0.16 9638.56

288.13 NIL 0.16 11702.13

666.20 666.25 2.33 6698.86 939.98

636.36 777.08 2.67

788.77 696.49 1.31

981.52 1006.10 6.11

1338.31 1981.81 1.97 13193.85 1153.29

1608.62 1940.71 1.27 15541.02 1533.47

7759.36 10338.70 12247.30 893.50 831.84 975.24

Note : Revision in profits in all the years due to adjustments have been notionally adjusted in Transfer to Revenue and Other Reserves. ** Excluding Revaluation Reserve

81

Particulars of adjustments

Allahabad Bank

Particulars INCOME Depreciation on Revalued Premises Prior Year Income Total Income EXPENDITURE Prior Year Expenditure Depreciation on Revalued Premises Total Expenditure Increase (+)/Decrease (-) inProfit before provision for Income tax and extraordinary items Less Provisions & Contingencies Provision for Pension Provision for NPA Provision for depreciation on Investments Provision for Wage Revision Provision for Subsidiary Provision for Standard Advances Total Provisions Total Adjustments Appropriation Transfer to Revenue & Other reserves Net Profit as per Statement of Profit & Loss Adjustments Tax impact on Adjustments ADJUSTED NET PROFIT Increase/decrease in Assets & Liabilities Nature of adjustments ASSETS Investments Advances Fixed Assets Other Assets Increase/decrease in Assets LIABILITIES Revaluation Reserves Revenue & Other Reserves Other Liabilities Increase/decrease in Liabilities

Mar 31, 2001

Mar 31, 2002

Mar 31, 2003

Rs in Crore Mar 31, Mar 31, Dec 31, 2004 2005 2005

(1.17) (2.12) (3.29) (1.07) (1.17) (2.24) (1.05)

(1.11) (0.61) (1.72) (6.31) (1.11) (7.42) 5.70

(1.06) 2.82 1.76 1.91 (1.06) 0.85 0.91

(1.00) (1.70) (2.70) (2.91) (1.00) (3.91) 1.21

(0.95) 1.51 0.56 2.52 (0.95) 1.57 (1.01)

(8.12) (0.21) (8.33) 0.98 (8.12) (7.14) (1.19)

(72.86) NIL NIL NIL NIL NIL (72.86) 71.81 71.81 39.91 71.81 28.40 83.32

NIL (12.00) NIL NIL NIL NIL (12.00) 17.70 17.70 80.22 17.70 6.32 91.60

NIL (68.00) NIL 24.79 NIL NIL (43.21) 44.12 44.12 165.99 44.12 16.21 193.90

NIL NIL (192.45) 197.83 NIL (140.02) 64.04 (4.68) (11.97) NIL NIL NIL (140.38) 53.13 141.59 (54.14) 141.59 463.39 141.59 50.80 554.18 (54.14) 541.79 (54.14) (19.81) 507.46

NIL 22.62 NIL (45.32) NIL 17.00 (5.70) 4.51 4.51 555.63 4.51 1.65 558.49

NIL NIL 1.17 (29.45) (28.28)

NIL 12.00 1.11 (0.62) 12.49

NIL 11.97 140.02 68.00 192.45 (197.83) 1.00 1.06 0.95 (15.30) (49.59) 18.80 53.76 155.83 (38.05)

NIL (22.62) 8.12 (2.84) (17.34)

1.17 43.41 (72.86) (28.28)

1.11 11.38 NIL 12.49

1.06 27.91 24.79 53.76

1.00 90.79 64.04 155.83

0.95 (34.33) (4.68) (38.05)

8.12 2.86 (28.32) (17.34)

82

PART - III A - SIGNIFICANT ACCOUNTING POLICIES

1. General :
(a)

Allahabad Bank

The financial statements have been prepared by following going concern concept on historical cost basis unless otherwise stated and are in conformity with the statutory provisions and standard accounting practices in India. The financial statements also conform to the Reserve Bank of India (RBI) guidelines issued from time to time on income recognition, asset classification, provisioning and other related matters.

(b)

2. Transactions involving Foreign Exchange:

(a) Foreign currency balances whether of assets or liabilities [including deposits mobilized under FCNR Scheme, EEFC Scheme, RFC Scheme etc.] and outstanding forward exchange contracts are converted at year end rates as advised by Foreign Exchange Dealers Association of India (FEDAI). The resultant profit/loss on revaluation of forward exchange contracts and NOSTRO accounts is taken to revenue as per FEDAI guidelines. Income and Expenditure items relating to foreign currency are converted at the rates of exchange ruling on the date of transaction. Acceptances, endorsements and other obligations including guarantees are stated at FEDAI advised rates prevailing at the year end.

(b)

(c)

3. Investments :
(a) The investment portfolio of the Bank is classified in accordance with RBI guidelines under three categories viz. "Held to Maturity", "Available for Sale" and "Held for Trading". The disclosure of investments under all the three categories mentioned above is made under six groups viz. (a) Government securities (b) Other approved securities (c) Shares (d) Debentures & Bonds (e) Investment in Subsidiaries/joint ventures and (f) Others (commercial paper, units in Mutual Funds etc). (i) Investments classified as 'Held to Maturity' (other than in Regional Rural Banks) are carried at acquisition cost. In case the acquisition cost is higher than the face value, the excess is amortized over the period remaining to maturity and provision is made for: Depreciation in the value of debentures/bonds which are deemed to be in the nature of advances by applying the RBI prudential norms of asset classification and provisioning applicable to advances. Diminution, other than temporary, in the value of investments in subsidiaries/joint ventures.

(b)

(c)

(ii)

Investments classified as "Available for Sale" are marked to market scripwise at quarterly intervals and resultant net depreciation is recognized and net appreciation, if any, is ignored under each classification. The book value of the individual scrip is not changed with the revaluation as indicated above. Investments classified as "Held for Trading" are revalued scripwise at monthly interval and resultant net depreciation is recognized and net appreciation, if any, is ignored under each classification. The book value of the individual scrip is not changed with the revaluation as indicated above. Investments in Regional Rural Banks are valued at carrying cost.

(iii)

(iv)
(d)

In respect of non-performing securities (where interest/principal is in arrears for more than 90 days) income is not recognized and appropriate provision is made for depreciation in the value of the securities by applying prudential norms of asset classification and such depreciation is not set-off against the appreciation in respect of other performing securities.

(e) Cost of acquisition of investments: (i) is net of incentives/commission and front-end fees received in case of securities subscribed and (ii) excludes commission, brokerage and stamp duty.

83

(f)

Profit/loss on sale of investments is recognized in the Profit and Loss Account. An amount equivalent to the profit on sale of investments under "Held to Maturity" category, is first taken to the Profit and Loss Account and thereafter appropriated to the "Capital Reserve Account". For the purpose of determining market value of investments, Stock exchange quotations or rates put up by FIMMDA/PDAI are adopted. In absence of such quotations/rates, the market value is determined by applying appropriate Yield to Maturity rates as prescribed by FIMMDA / PDAI or as per norms laid down by the Reserve Bank of India. As per RBI guidelines, the different category of Swaps are valued as under:

Allahabad Bank

(g)

(h)

Hedge Swaps Interest rate Swaps which hedges interest bearing assets or liabilities are accounted for on accrual basis except the Swaps designated with an assets or liability that is carried at market value or lower of cost or market value in the financial statements. Gain or Losses on the termination of Swaps are recognized over the shorter of the remaining contractual life of the Swap or the remaining life of the assets / liabilities . Trading Swaps Trading Swap transactions are marked to market with changes recorded in the financial statements.

4. Advances:
(a) Advances are classified as performing and non-performing as per guidelines prescribed by RBI and are shown net of provisions for non-performing advances. The provision made for standard advances (performing) in terms of RBI guidelines is however included in "Other Liabilities and Provisions".

(b)

5. Fixed Assets:
(a) (b) (c) Premises including freehold and leasehold and other Fixed Assets are stated at historical cost except certain premises, which are stated at their revalued amount. Capital expenditure incurred during construction period is included under Other Assets. Depreciation is provided on diminishing balance method at the rates prescribed in Schedule XIV to the Companies Act, 1956 except that in respect of ALPMs & Computers, where depreciation is provided on straight line method @ 33.33% as per RBI guidelines. In respect of revalued assets, the amount of additional depreciation consequent to revaluation is transferred from Revaluation Reserve to the Profit & Loss Account. Premium on leasehold land is amortized over the period of the lease.

(d) (e)

84

Allahabad Bank
6. Intangible Assets (Computer Software)
(a) Software for a computer that cannot operate without that specific software is an integral part of related hardware and is treated as fixed assets. Where the software is not an integral part of the related hardware, computer software is recognised as an Intangible Asset. Computer software acquired from vendors is recognised as Intangible Asset only if the value /cost of the software is more than Rs.10 Lacs.

(b)

7. Non-Banking Assets:
Non-Banking Assets acquired in satisfaction of claims are stated at cost.

8. Retirement Benefits to Employees:

(a) Liabilities for Gratuity, Leave Encashment and Pension benefits to employees are provided for on the basis of actuarial valuation at the year end. Expenditure towards ex-gratia and additional contribution in respect of gratuity and pension under Voluntary Retirement Scheme (VRS) is treated as Deferred Revenue Expenditure amortized over a period of five years in terms of RBI guidelines.

(b)

9. Expenses on follow on Public Offer:

The expenses incurred for the Follow on Public Offer is amortised over a period of five year.

10. Recognition of Income and Expenditure:

Income and Expenditure are accounted for on accrual basis other than those stated below: (i) (ii) Interest and Other Income on advances classified as non-performing assets are recognized to the extent realized. Income from interest on refund of Income Tax and Interest Tax are accounted for in the year the order is passed by the concerned assessing officer.

11. Taxation
Provision for tax is made both current and deferred taxes. Current tax is provided on the taxable income using applicable tax rate and tax laws. Deferred Tax Assets and Liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognised using the tax rates and the tax laws that have been enacted or substantively enacted till the date of the Balance Sheet. Deferred Tax Assets are not recognised unless there is "virtual certainty" that sufficient future taxable income will be available against which such deferred tax assets will be realised.

12. Net profit :

The net profit is arrived at after accounting for the following : (i) Provisions for Income Tax (including deferred tax) and Wealth Tax in accordance with the statutory requirements. (ii) Provisions on advances / Investments. (iii) Adjustments to the value of investments. (iv) Transfer to Provisions and Contingencies. (v) Other usual and necessary provisions.

85

Allahabad Bank
B - SIGNIFICANT CHANGES IN ACCOUNTING POLICIES BETWEEN 01.04.2000 AND 31.12.2005
1. During the five consecutive financial years ended March 31, 2005, various guidelines were issued by the Reserve Bank of India on Income Recognition, Asset Classification, Provisioning in respect of standard Assets / Non-Performing Advances /Other Assets, Classification of Investment, Valuation thereof, Treatment of Depreciation on Investment, amortisation of Voluntary Retirement Scheme expenditure and Depreciation on ALPMs and Computers. Necessary changes in the accounting policies have been carried out by the bank in the relevant years, to be in conformity with the Reserve Bank of India guidelines. Acceptances, endorsements and other obligations including guarantees in transactions involving foreign exchange were st st stated at rates prevailing on the date of commitment upto 31 March 2001. In the year ended on 31 March, 2002, the same were treated at year end rate as advised by FEDAI. During the year 2002-03 the method of providing liability in respect of leave encashment was changed from cash basis to accrual basis. As a result of this change, the liability ascertained on the basis of actuarial valuation upto 31.3.2002 amounting to Rs. 41.36 crores is charged to revenue and other reserves and liability for the year 2002-03 amounting to Rs. 10.37 crores (including Rs. 5.50 crores paid during the year) is charged to Profit & Loss Account. As a result, the profit for the year was lower by Rs.4.87 crores. Income from Commission earned on Letter of Credit, Bank Guarantee, Merchant Banking, Govt. Business, Locker Rent, and Interest on matured term deposit were accounted for on accrual basis during the year 2002-03 as against cash basis st upto 31 March 2002. As a result, the profit for the year is lower by Rs.25.22 crores

3.

4.

86

PART - IV A. MATERIAL NOTES ON ACCOUNTS

1. (i) (ii)

Allahabad Bank

(iii)

Adequate provision has been made for Non-performing Advances in terms of Reserve Bank of India (RBI) guidelines. As per recent RBI guidelines, the provision requirement for Standard Advances other than Direct Advance to Agriculture and SME sector has been increased from 0.25% to 0.40%. In order to meet the requirement, the Bank has made an adhoc provision of Rs.20.00 crores during the quarter-ended 31.12.2005. The balance requirement of Rs.17.00 crores is well covered by the additional provision held against advances. Prudential floating provision of Rs.52.00 crores is held as at 31.12.2005 in respect of gross Non-Performing Advances over and above the minimum provision prescribed by RBI with a view to strengthening the financial stability of the Bank. Under Inter-Branch reconciliation, initial matching of entries has been done upto 31.12.2005. Reconciliation of unmatched entries as per IBR department with the balance in Branch Adjustment Account and transactions between Head Office and branches including branches inter-se, is in progress. In terms of RBI's circular, segregation of debit and credit entries in Inter Branch Account pertaining to the period upto 30.06.2005 and remaining outstanding as on 31.12.2005 have resulted in net credit, hence no provision is required. The reconciliation of NOSTRO / Inter-Branch Reconciliation and Balance relating to Deposits & Advances at few branches are in progress. In view of substantial progress made in this area, management is of the opinion that the impact of reconciliation, if any on the accounts of the Bank will not be material.

2.

(i)

(ii)

3. 4.

The provision for income tax aggregating to Rs 215.35 crores (Rs.178.35 crores as on 31.03.2005) held as on 31.12.2005 is considered adequate by the Bank after considering various judicial decisions on disputed issues. (i) (a) Certain premises were revalued on the basis of the reports of the approved valuers during the year-ended on 31.03.1997 and upward revision amounting to Rs. 125.99 Crores has been credited to Capital Reserve st Account. The Bank has further revalued certain Premises as on 31 March, 2005 on the basis of reports of approved valuers and upward revision amounting to Rs.370.08 crores has been credited to Capital Reserve Account. Additional depreciation of Rs.8.11 crores (Rs.0.95 crores for 2004-05) due to revaluation has been transferred from Capital Reserve Account and shown in Miscellaneous Income under the head Other Income during nine st months ended 31 December, 2005.

(b)

(ii) (iii) (iv) 5. (i)

Depreciation has been charged on composite cost of Land and Building, where cost of land is not available. Premium on leasehold lands has been amortized over the period of lease, based on cost or written down value, where original cost is not available. Premises include certain properties amounting to Rs. 1.61 crores as on 31.03.2005 (Previous year Rs.3.19 crores) for which registration formalities are yet to be completed. In terms of the RBI guidelines, provision for depreciation in the value of Investments under Available for Sale category amounting to Rs. 99.37 crores as on 31.03.2005 has been debited (Previous year Rs.23.06 crores credited) to the Profit and Loss Account under the head Expenditure-Provisions and Contingencies and an amount of Rs 47.25 crores (net of tax benefit and consequent reduction in the transfer to statutory reserve) has been transferred from Investment Fluctuation Reserve Account to Profit and Loss Account. (previous year Rs.11.09 crores, net of Tax benefit appropriated to Investment Fluctuation Reserve Account from Profit and Loss Account). For building up Investment Fluctuation Reserve, the Bank has transferred additional sum of Rs.33.31 crores (Rs.146.56 crores during 2004-05) to Investment Fluctuation Reserve from Profit and Loss Account during nine st months ended 31 December, 2005. Consequently, the total Investment Fluctuation Reserve as on 31.12.2005 is Rs.463.26 crores which is 5% of its investment in the Available for Sale and Held for Trading category. In respect of Investments of face value of Rs.15.44 crores as on 31.13.2005 (Previous year Rs.80.64 crores) the Bank is yet to receive scrips/certificates. However, out of Rs 15.44 crores, the Bank is holding Letters of Allotment in respect of securities for Rs 15.00 crores (Previous year Rs. 70.00 crores).

(ii)

(iii)

6.

Investment in shares (at book value) excluding investments considered as exempted from capital market exposure as per RBI guidelines are as under :(Rs. in Crores) As on 31.12.2005 As on 31.03.2005 (i) (ii) Investment in Equity Shares Unit of Equity oriented Mutual Funds Total 63.25 315.54 378.79
th

79.65 126.40 206.05

7.

An amount of Rs. 29.35 crores (Previous year Rs. 29.35 crores) being 1/5 of the total expenditure under Voluntary Retirement Scheme introduced during the financial year 2000-2001 is charged to the Profit and Loss Account in accordance with RBI guidelines. Further an amount of Rs13.47 crores has been charged to Profit & Loss Account during nine months ended 31.12.2005 being three twentieth of the total Expenditure relating to Voluntary Retirement Scheme and the balance amount Rs4.40 crores will be amortised over the residual period.

87

Allahabad Bank
8. The Bank enters into derivative contracts such as Interest Rate Swap (IRS) to hedge on Balance Sheet Assets and Liabilities. The notional principal value of Swaps outstanding was Rs.520.00 crores (Previous year Rs. NIL). Interest Rate Swap in Indian Rupees were undertaken for hedging Tier II Bonds and Term Deposits. The items of Swaps are either to receive fixed interest or to pay floating rate and vice versa. No collateral were required as the Swaps were entered into with Banks and there is no concentration of credit risk arising from interest rate Swaps undertaken during the year. The fair value of Swaps was (-)Rs.9.25 crores as on 31.03.2005 (Previous year Rs.NIL) No penalty has been imposed by RBI during the year on Bank.

9.

10. The Bank has not exceeded the prudential exposure limit in respect of Group Account. However, the exposure ceiling of 15% of capital fund stipulated for individual borrower has been exceeded in the following accounts : (i) Power Finance Corporation (ii) NAFED (iii) Indian Railway Finance Corporation RBI / Board permission has been obtained in exceeding the exposure limit in all the above cases. 11. The Bank has not made any financing for margin trading during the year/period and also not securitised any assets. 12. During the year/period there is no sale of financial assets to Securitisation and Reconstruction Company (SCR) for assets reconstruction. 13. (a) (b) In the month of April 2005, the Bank has made Follow-on Public Offer of 10 crores Equity Shares of Rs.10 each (Face-value) at a Bid Price of Rs. 82/- per share aggregating to Rs. 820 crores. During the year 2004-05 the bank has paid interim dividend @15% on the capital of Rs.346.70 crores and has proposed final dividend @15% on Capital of Rs.446.70 crores including capital of Rs.100.00 crores enhanced after st 31 March 2005 on account of Follow-on Public Offer.

14. Advances include an amount of Rs.100.00 crores as on 31.03.2005 on account of Inter Bank Participation Certificates. However, balance as on 31.12.2005 is nil. 15. Banks net funded exposure in respect of foreign exchange transactions as on 31.03.2005 with each country is below 1% of the total assets of the Bank. Hence, no provision and disclosure is required as per the RBI circular DBOD.BP.BC. 71/21.04.103/2002-03 dated 19.02.2003 read with circular no. DBOD.BP.BC.96/21.04.103/2003-04 dated 17.06.2004. 16. The period of 12 years for final adjustment of amalgamation of erstwhile United Industrial Bank Ltd. (UIBL) ended on 30.10.2001. The process of revaluation of Assets and Liabilities for final adjustment in consultation with RBI is in progress. 17. During the year 2004-05 as per advice of Indian Banks Association an understanding has been reached with workmen unions and officers associations on wage revision. The Bank has provided total liability towards wage Revision of Rs184.15 crores (Rs138.83 crores during 2004-05 & Rs.45.32 crores during nine months ended 31.12.2005) and the payment of arrear has been made during the financial year 2005-06. 18. There were no material prior period items of Income/ Expenditure during the year requiring disclosure as per Accounting Standard (AS) 5 Net Profit or Loss for the Period, Prior Period Items, and Changes in Accounting Policies issued by ICAI. 19. Segment Reporting Accounting Standard (AS) 17, Segment information is given in below : (Rs. In crores)
Banking Operations 31.03.2005 31.12.2005 2878.99 806.61 2597.26 682.52 Treasury 31.03.2005 31.12.2005 946.49 397.08 566.42 170.97 Total 31.12.2005 3163.68 853.49 115.30 0.00 738.19 144.54 35.16 558.49 49889.45 140.26 50029.71 46242.58 631.05 3156.08 50029.71

Business Segment Revenue Segment Revenue Segment Results Unallocated Expenses Unallocated Revenue Operating Profit Provisions & Contingencies Income Taxes Net Profit Other Information Segment Assets Unallocated Assets Total assets Segment Liabilities Unallocated Liabilities Capital & Reserves Total Liabilities

31.03.2005

3825.48 1203.69 165.41 0.00 1038.28 475.56 55.26 507.46

34686.66

42378.57

9860.62

7510.88

44547.28 131.75 44679.03

32729.53

39273.93

9316.41

6968.65

42045.94 855.50 1777.59 44679.03

88

20. Related Party Disclosures as per Accounting Standard (AS) 18. List of Related Parties and Transactions a) The names of the related parties, their relationship with the bank and transaction effected. S.No. 1 2 3 Name Shri O. N. Singh Shri S. K. Goel Shri K K Rai Designation Chairman & Managing Director Executive Director (Joined with effect from 27.08.2004) Executive Director (Retired on 30.06.2004) Remuneration 2004 - 05 (Amount in Rs.) 487967.00 272996.25 144326.26

Allahabad Bank

For Nine months ended 31.12.2005 404760.75 367561.50 NIL

b)

Regional Rural Banks sponsored by the bank as on 31.12.2005 S. No. 1 2 3 4 5 6 7 Name Bhagirath Gramin Bank Chhatrasal Gramin Bank Saravasthi Gramin Bank Sarayu Gramin Bank Sharda Gramin Bank Tulsi Gramin Bank Vindhyavasini Gramin Bank Deposits 492.16 282.59 367.59 220.96 253.30 351.48 197.12 (Rs. in crores) Advances 238.35 223.14 206.18 124.27 82.25 239.87 120.89

The transactions with the subsidiaries and associates have not been disclosed in view of para 9 of the (AS)-18 Related Party Disclosure, which exempts state controlled enterprises from making any disclosure pertaining to their transactions with other related parties which are also state controlled. 21. Earning Per Share Accounting Standard (AS) 20 : Basic and Diluted Earning Per Share Calculation of Basic and Diluted Earning Per Share Sl. Particulars No. A Net Profit for the year attributable to Equity Share holders B Weighted average number of Equity Shares C Basic Earning per Share (A/B) D Nominal Value per share * Not Annualized For the Nine Months ended 31.12.2005 Rs.12.77* For the Nine Months ended 31.12.2005 Rs.558.49 crores 43.72 crores Rs 12.77* Rs. 10/For the year 200405 Rs.14.64 For the year 2004-05 Rs. 507.46 crores 34.67 crores Rs. 14.64 Rs. 10/-

22. Accounting for Taxes on Income - Accounting Standard (AS) 22 The Bank has recognised Deferred Tax Assets / Liabilities and has accounted for net Deferred Tax of Rs.1.18 crore as on 31.12.2005 by crediting to Profit & Loss Account under the head Expenditure Provision & Contingencies. An amount of Rs.1.26 crore (net) has been debited to the Profit & Loss Account during the year 2004-05 by way of adjustment of Deferred Tax. The major components of Deferred Tax Assets / Liabilities as on 31.12.2005 are as under : Particulars Deferred Tax Assets Provision for Leave Encashment Total Deferred Tax Liabilities Depreciation of Fixed Assets Interest Accrued but not due on securities held as Investments Total Deferred Tax Assets (Net) As on 31.03.2005 7.38 7.38 5.22 11.35 16.57 9.19 Adjustment Add/(Less) 1.24 1.24 1.10 (-)11.04 (-)9.94 11.18 (Rs. in Crores) As on 31.12.2005 8.62 8.62 6.32 0.31 6.63 1.99

23. A substantial portion of the banks assets comprise of financial assets to which Accounting Standard (AS) 28 Impairment of Assets is not applicable. In the opinion of the management, there is no impairment of other assets of the Bank. 24. Disclosure in terms of Accounting Standard (AS) 29 on Provisions, Contingent Liabilities and Contingent Assets : (a) Movement of Provision for Liabilities for the nine months ended 31.12.2005 : (Rs. in Crores) Particulars st Balance as at 1 April 2005 Provided during nine months ended 31.12.2005 Amounts used during the nine months ended 31.12.2005 Arrear Salary 138.83 45.32 184.15

89

Reversed during the nine months ended 31.12.2005 Balance as at 31.12.2005 (b)

NIL NIL

Allahabad Bank

Contingent Liabilities : Contingent Liabilities amounting to Rs.15541.02 crores as on 31.12.2005 are dependent upon the outcome of court / arbitration / out of court settlement, disposal of appeals, the amount being called up, terms of contractual obligations, devolvement and raising of demand by concerned parties respectively. No reimbursement is expected in such cases.

25. Disclosure in terms of RBI guidelines: (a) (i) (ii) (iii) Significant Performance Indicators Percentage of shareholding of the Government of India Percentage of Net NPAs to Net Advances Details of Provisions and Contingencies In Profit & Loss Account: a. Provision for Standard Advances @ 0.25 % on Direct Agriculture & SME Sector and @ 0.40 % in other sector of Advances Others 31.12.2005 55.23% 1.02% 2004-05 71.16% 1.63% (Rs. in crores) 37.00 NIL 58.42 39.99 37.00 NIL ( - )11.18 18.47 Total Provisions (iv) (a) (b) (c) (d) (e) (v) Subordinated Debt raised as Tier II Capital Tier II Bonds (Series I) Rs. 125.00 crores @12.30% to mature in April 2007 Tier II Bonds (Series II) Rs. 95.00 crores @9.80% to mature in April 2007 Tier II Bonds (Series III) Rs. 100.00 crores @7.00% to mature in April 2010 Tier II Bonds (Series IV) Rs. 200.00 crores @5.90% to mature in June 2012 Subordinated Debt Rs.101.61 crores at interest on the loan of 0.5% over average GOI 364 days T-Bills to mature in March 2007. Capital Adequacy Ratio [Tier I 8.83% as on 31.12.2005 (6.68% as on 31.03.2005) Tier II 3.94% as on 31.12.2005 (5.97% as on 31.03.2005)] Business Ratios (i) (ii) (iii) (iv) (v) (vi) (c) (i) (ii) (iii) (iv) (v) (d) (i) (ii) (iii) (iv) (e) (i) (ii) Interest Income as a percentage to Working Funds Non-Interest Income as a percentage to Working Funds Operating Profit as a percentage to Working Funds Return on Assets Business (Deposits plus Advances) per employee Profit per employee Movement in Non Performing Advances Gross NPA as at beginning of the period Additions during the period Deduction during the period Gross NPA as at the end of the period Net NPA as at the end of the period Movement of provisions towards NPAs Opening Balance as at beginning of the period Add: Provision made during the period Less: Write off, write back of excess Provision during the period Closing Balance as at the end of the period Movement of provisions for depreciation for Non Performing Investments Opening Balance as at beginning of the period Add: Provision made during the period 31.12.2005 140.59 39.99 (Rs. in crores) 2004-05 45.27 95.32 7.56% 1.20% 2.07% 1.49% 384 Lacs 3.97 Lacs (Rs. in crores) 31.12.2005 1284.27 149.73 181.73 1252.24 272.76 31.12.2005 926.08 58.42 7.12 977.38 7.83% 1.57% 2.71% 1.14% 329 Lacs 2.68 Lacs 179.70 621.61 15.00 NIL 237.83 146.67 54.00 NIL 1.26 76.06 530.82 621.61

b. Provision made towards NPAs c. Provision for Depreciation on Investments d. Provision for Income Tax e. Excess Provision of Income Tax of earlier year Written back f. Provision for Deferred Tax g. Other Provisions ( net )

12.77%

12.65%

(b)

2004-05

1418.46 351.39 485.58 1284.27 345.32 (Rs. in crores) 2004-05 773.66 237.83 85.41 926.08

90

(f) No.

Less: 1. Adjustment for shifting of category. 2. Write off, Write back of excess Provision during the period (iv) (iv) Closing Balance as at the end of the period Issuer-wise composition of Non-SLR investment as on 31.12.2005. Issuer Amount Extent of private placement Extent of below investment grade securities NIL NIL NIL NIL NIL NIL NIL NIL

(iii)

Allahabad Bank
NIL NIL 180.58 Extent of unrated securities 929.74 55.38 42.77 81.34 87.62 382.34 NIL 1579.19 NIL NIL 140.59 (Rs. in Crores) Extent of unlisted securities 356.78 189.41 59.81 261.55 87.62 382.34 NIL 1337.51 (Rs. in Crores)

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

PSUs & Govt. Bonds 1963.80 930.20 FIs 547.10 519.30 Banks 185.06 151.56 Private Corporate 354.26 135.85 Subsidiaries/Joint ventures 87.62 87.62 Others 382.34 NIL Provision held towards depreciation NIL NIL Total 3520.18 1824.53 Transaction made by the bank under Repo/Reverse Repo. Minimum outstanding during the year NIL

Securities sold under repos Securities purchase under reverse 20.00 repos (h) Non Performing Non-SLR investments. (i) (ii) (iii) (iv) (v) Particulars Opening Balance Addition during the year Reduction during the year Closing Balance Total Provision held

Maximum outstanding during the year NIL 2800.00

Daily Average outstanding during the year NIL 407.44

As on 31.12.2005 NIL NIL (Rs. in Crores) 2004-05 16.99 3.00 9.03 10.96 9.48

31.12.2005 10.96 2.00 2.12 10.84 9.44

(i) (i) (ii) (iii) (j)

Lending to Sensitive Sector Advances to Capital Market Sector Advances to Real Estate Sector Advances to Commodities Sector Restructuring of Loans (a) Non Corporate Debt Restructuring cases Total amount of Loan Assets subjected to restructuring Total amount of Standard Assets subjected to restructuring Total amount of Sub-standard/Doubtful Assets subjected restructuring

(Rs. in crores) As at As at 31.12.2005 31.03.2005 37.02 9.99 901.46 166.47 150.11 79.99 (Rs. in crores) As at As at 31.12.2005 31.03.2005 170.86 133.98 94.23 81.36 76.63 52.62 (Rs. in crores) As at As at 31.12.2005 31.03.2005 450.18 542.79 534.28 8.51 Foreign Currency Assets Liabilities 90.05 29.00 140.01 22.52 3.15 0.00 0.00 0.00 84.64 0.16 104.33 2.99 42.42 45.57 3.62 0.00

(i) (ii) (iii)

to

(b) Corporate Debt Restructuring (i)

Total amount of Loan Assets subjected to restructuring under CDR (ii) Total amount of Standard Assets subjected to restructuring 441.44 (iii) Total amount of Sub-Standard/ Doubtful Assets subjected to 8.74 restructuring (k) Maturity pattern of assets and liabilities as on 31.12.2005 (Rs in Crores) Maturity Pattern Deposits Loans & Investment Borrowings (Time buckets) Advances Securities 1 to 14 days 15 to 28 days 29 days and upto 3 months Over 3 months and upto 6 months Over 6 months and upto 1 year Over 1 year and upto 3 years Over 3 years and upto 5 years Over 5 years 720.82 624.09 3784.10 2078.81 4588.90 12243.19 7588.01 13003.38 1345.89 605.24 1914.09 2298.18 1660.59 8684.27 3767.33 6461.68 39.98 39.85 602.17 70.89 1265.25 1455.03 3356.32 11456.46 0.00 15.77 87.84 0.00 3.30 0.00 0.00 0.00

91

Total

44631.30 26737.27 18285.95 106.91 284.73 284.73 The disclosures made in para 26 (k) with regard to maturity pattern of assets & liabilities as on 31.03.2005 are based on the information compiled by the bank and relied upon by the auditors.

Allahabad Bank

26. Previous year's figures have been regrouped/reclassified wherever considered necessary. 27. Cash Flow Statement

Particulars Cash Flow from Operating Activities Interest received during the year from Advances, Investments etc. Other Income Less: Interest paid during the year on Deposits Operating Expenses including Provisions & Contingencies Add: Depreciation on Fixed Assets a. Cash Profit generated from operations (prior to changes in operating assets and liabilities) b. Increase (Decrease) in Liabilities Deposits Other Liabilities & Provisions (including deferred tax adjustment) c. Decrease (Increase) in Assets Advances Investments Other Assets A Net Cash Flow from Operating Activities (a+b+c) Cash Flow from Investing Activities Sale/disposal of fixed assets Purchase of fixed assets B Net Cash Flow from Investing Activities Cash Flow from Financing Activities Borrowings Interest Paid on Borrowings Dividends (including tax) Issue of Shares (incl Premium) Tier II Bonds C Net Cash generated from Financing Activities Total Cash Flow during the year (A+B+C) D Cash and Cash equivalent at the beginning of the year Cash and Balances with RBI Balances with Banks and Money at Call and Short Notice Total E Cash and Cash equivalent at the end of the year Cash and Balances with RBI Balances with Banks and Money at Call and Short Notice Total Total Cash Flow during the year (E-D)

2003-04

2004-05

Rs in Crores Dec-05

2668.67 748.75 3417.42

3185.60 638.90 3824.50

2729.34 415.17 3144.51

1540.80

1767.44

1566.86

1372.17

2912.97 34.90

1462.13

3229.57 32.41

980.36

2547.22 32.57

539.35 6013.23 88.01 6101.24 (2990.39) (3195.07) (40.82) (6226.28) 414.31 1.46 (34.24) (32.78) 125.30 (42.12) (78.22) Nil 200.00 204.96 586.49 (39.50) (54.12) (97.91) Nil Nil 1.06 (42.31) (5611.45) (3573.49) (118.61) 9285.47 342.66

627.34 3869.22 187.45 9628.13 (5511.83) 842.35 90.69

629.86

4056.67

(9303.55) 951.92

(4578.79) 107.74

12.25 (34.17) (41.25) (22.57) (43.75) (76.12) 820.00 Nil (191.53) 719.14 677.56 763.38 (21.92)

1545.76 464.06 2009.82

2155.78 440.53 2596.31

2427.16 888.29 3315.45

2155.78 440.53 2596.31 586.49

2427.16 888.29 3315.45 719.14

2778.98 1299.85 4078.83 763.38

Note : Effects of adjustments have been included under the head Other Liabilities & Provisions.

92

Allahabad Bank
B. NOTES ON ADJUSTMENTS
1. 2. Necessary adjustments arising from Auditors qualifications wherever quantifiable and material in respect of previous years have been carried out while preparing the Statements of Profit & Loss and Assets & Liabilities (Part I & II). Necessary amendments in the Accounting policies have been made by the Bank to give effect to various guidelines issued by the RBI on Income Recognition, Assets Classification Provisioning on Standard Assets / Non performing Assets / other Assets, Classification of Investments, valuation and Treatment of depreciation thereof. Accordingly, the amounts for the respective years are based on RBI guidelines prevailing in the said years. Adjustment to Profit / Loss as well as Assets & Liabilities of Bank arising from the compliance with the guidelines issued by RBI have not been carried out as it is not practicable to give its effect in relevant years. The pension liability was actuarially determined on 31 March 1998 and the same was amortised over a period of four years. The short / excess provision in respective years have been adjusted as per the details given below: (Rs in crores) Year Adjustment in Profit & Loss A/c. 2000-2001 (-)72.86 In respect of Investment in wholly owned subsidiary, the following adjustments (short+ / Excess -) have been made on the basis of Auditors observations: (Rs. in crores) Year Adjustment in Profit & Loss A/c. 2003 - 2004 (-) 11.97 In absence of adequate information, adjustment in respect of prior period have been made in the immediately preceding period. Additional provision made on account of Non performing assets in the preceding years and subsequently utilized in next years are as follows: (Rs. in crores) Year Adjustment in Profit & Loss A/c. 2001 - 2002 ( - ) 12.00 2002 - 2003 2003 - 2004 2004 2005 Nine months ended December 2005 7. ( - ) 68.00 ( - ) 192.45 ( + ) 197.83 ( + ) 22.62
st

3.

4.

5. 6.

In terms of RBI Circular DOBD No. BP.BC 37/21.04.141/2004-05 dated 02.09.2004, the Bank in exercise of one time option transferred securities of total book value of Rs. 5779.25 crores from 'Available for Sale' to 'Held to Maturity' category. As a result thereof, a sum of Rs.187.31 crores were provided as depreciation during the year ended 31.03.2005. Had this option been not exercised, the provision requirement would have been to the extent of Rs. 47.29 crores only. Hence, the additional provision of Rs.140.02 crores is considered by the Management as extraordinary item to be adjusted against depreciation in value of the investments, if any, in future years. Liability on account of wage revision in the preceding years have been adjusted. Year 2002 - 2003 2003 - 2004 2004 - 2005 Nine months ended December 2005 (Rs. in crores) Adjustment in Profit & Loss A/c. 24.79 64.04 ( - ) 4.68 ( - ) 45.32

8.

9.

Additional provision required for Standard Advance in terms of RBI guidelines DBOD.NO.BP.BC 40/21.04.0481/205-06 th dated 4 November, 2005The adjustment to items of income and expenditure does not have material tax effect and hence the same is not considered. Period Nine months ended December 2005 (Rs. in crores) Adjustment in Profit & Loss A/c. 17.00

PART V AUDITORS QUALIFICATIONS FOR WHICH ADJUSTMENTS COULD NOT BE CARRIED OUT
1. Income on Commission earned on Letters of Credit and Bank Guarantees, Income from Merchant Banking and Government Transactions, Insurance claims and Locker rent, Interest on Matured Term deposits, Leave encashment benefits upto 31.3.2002 have been accounted for on cash basis which is not in accordance with Accounting Standard 9 issued by the Institute of Chartered Accountants of India., the impact of which is not ascertainable. However, from the year 2002-03, the Bank has followed accrual system of accounting in respect of these items. In some of the branches, reconciliation of differences between Advance Control Account and Subsidiary records is in progress. Pending such reconciliation, consequential effect on accounts is not ascertainable. The reconciliation of Inter-

2.

93

Branch Account & Balancing / Reconciliation of Accounts relating to Deposits, Advances, Bills Payable & Drafts Ex-Advice are in progress. 3.
st

Allahabad Bank

Under Inter-Branch reconciliation, initial matching of entries has been done upto December 31 , 2005. Reconciliation of unmatched entries as per IBR department with the balance in Branch Adjustment Account and transactions between Head Office and branches including branches inter-se, is in progress. In terms of RBI directives regarding the depreciation on ALPMs and Computers has been changed to straight line method from diminishing balanced method w.e.f. from 1.4.2000. The deficiency / surplus arising from retrospective re-computation of depreciation has not been worked out. The treatment as accorded is also not in consonance with AS-6 (Revised) Depreciation Accounting as issued by the Institute of Chartered Accountants of India, the impact of which is not ascertainable.
st

4.

5. The effect of observations in the foregoing paragraphs on the accounts upto the year ending 31 March 2003, as also capital adequacy ratios and other ratios/disclosures could not be determined for want of information.

PART VI STATEMENT OF DIVIDEND DECLARED BY THE BANK AND IT'S SUBSIDIARY

A. ALLAHABAD BANK Year ended March 31, 2001 2000-2001 24.67 4.05 10.00 March 31, 2002 2001-2002 24.67 6.50 16.04 March 31, 2003 2002-2003 34.67 10.00 34.67 March 31, 2004 2003-2004 34.67 20.00* 69.34 March 31, 2004 2004-2005 34.67 30.00** 119.01

For the Year Number of shares (in crores) Rate of Dividend (%) Amount of Dividend (Rs. in crores) * Includes interim dividend @10%. ** Includes interim dividend @15.00% on 34.67 crores share and final dividend of 15% on 44.67 crores share (consequent upon Follow on Public Offer) B. The Subsidiary Company AllBank Finance Limited has not declared dividend during each the of five consecutive financial st years ended on March 31 , 2005.

94

PART VII - Key Accounting Ratios

Particulars 2001 Earning Per Share (Rs.) Net Asset Value per Share (Rs.) (Excl RR) Return on Net Worth - before extraordinary items (%) Computation of the above ratios: Earning Per Share (Rs.) : Adjusted Profit (A) Weighted Avg. No. of Equity Shares (B) ** Earning Per Share (Rs.) (A / B) Net Asset Value per Share (Rs.) (Excluding Revaluation Reserve) : Net worth excl. RR (A) No of Shares (B) Net Asset Value per Share (Rs.) (Excl RR) ( A / B) 3.38 25.92 13.03 Year ended March 31st 2002 3.71 28.98 12.81 2003 6.88 26.88 20.81 2004 15.98 40.53 39.43

Allahabad Bank
Nine Months Ended December 2005 31st, 2005 14.64 *12.77 51.27 70.65 28.55 *17.70

83.32 246700000 3.38

91.60 193.90 246700000 282000000 3.71 6.88

554.18 346700000 15.98

507.46 346700000 14.64

558.49 437200000 12.77

639.41 246700000 25.92

714.95 931.90 246700000 346700000 28.98 26.88

1405.33 346700000 40.53

1777.59 346700000 51.27

3156.08 446700000 70.65

Return on Net Worth - before extraordinary items Adjusted Profit before Extraordinary Items (A) Net worth excl. RR (B) Return on Net Worth - before extraordinary items(%) ( A /B) OTHER RATIOS Net NPA to Net Advance Ratio (%) Interest Income/Working Fund (%) Non-Interest Income/Working Fund (%) Return on Assets (%) Operating Profit/Working Funds (%) Business per employee (Rs /Crores) Net Profit per employee (Rs/lacs) Capital Adequacy Ratio (%) Tier I Tier II Credit/Deposit Ratio (%) Interest Spread/Average Working Fund(%) Operating Exp. /Avg. Working Funds (%) Return on Average Net Worth (%) Yield on Advances (%) Yield on Investments (%) Cost of Deposits (%) Operating Profit per employee (Rs./ lacs) Business per Branch (Rs. / lacs) Operating Profit per Branch (Rs. / lacs) * not annulaised

83.32 639.41 13.03

91.60 714.95 12.81

193.90 931.90 20.81

554.18 1405.33 39.43

507.46 1777.59 28.55

558.49 3156.08 17.70

11.23 9.79 1.13 0.38 1.31 1.38 0.40 10.09 6.27 3.82 48.77 3.24 3.06 13.81 11.31 10.93 7.44 1.32 15.25 14.58

10.67 9.41 1.59 0.37 1.81 1.66 0.46 10.35 5.94 4.41 49.87 3.02 2.81 13.53 11.16 9.95 7.20 2.20 17.27 22.85

7.67 9.34 1.90 0.70 1.98 2.00 1.02 11.08 6.29 4.79 52.97 3.30 3.23 23.55 10.11 10.14 6.79 2.86 19.85 28.35

4.07 8.33 2.34 1.60 2.83 2.51 2.94 12.99 6.75 6.24 52.06 3.39 2.90 47.42 9.35 9.08 5.63 4.80 24.47 46.80

1.63 7.83 1.57 1.14 2.71 3.29 2.68 12.65 6.68 5.97 54.34 3.35 2.22 31.89 8.96 8.17 5.00 5.82 31.90 56.48

1.02 7.56 1.20 1.49 2.07 3.84 3.97 12.77 8.83 3.94 62.10 3.09 2.23 30.20 8.71 7.85 4.99 5.33 36.42 50.60

** On the basis of weighted average of number of equity shares as the Bank had come out with Public Issue of 10 crores shares each during October 2002 and April 2005.

95

Definitions of Key Ratios: All the Financial Ratios/ Capital Adequacy Ratios as specified in the offer document and the disclosures regarding NPAs conform to the norms as specified by RBI Credit/Deposit ratio Average Working Fund (AWF) Interest Spread/AWF (%) Operating Profit/AWF (%) Return/AWF (%) Operating Expenses/AWF (%) Cost of deposits (%) Yield on Investments (%) Yield on Advances (%) Return on Average Net Worth (%) Business per employee (Rs. lacs) Operating Profit per employee (Rs. lacs) Business per Branch (Rs. crores) Operating profit per Branch (Rs. lacs) Total Advances/Total Deposits Total Average of monthly total assets as per Form X Net Interest Earned/AWF Profit prior to provisions and contingencies/AWF Net Profit/AWF Non-interest expenditure/AWF Interest expended/Average Deposits as per Form X Interest earned on Investments/Average Investments as per Form X Interest earned on Advances/Average Advances as per Form X Net Profit/Average of Opening & Closing Net Worth

Allahabad Bank

Total Deposits excl. Bank Deposits plus Total Advances/Employee Strength Profit prior to provisions and contingencies/Employee Strength Total Deposits excl Bank Deposits and Advances/No of Branches Profit prior to provisions and contingencies/No of Branches (Rs.in crores) Post Issue as adjusted for the proposed issue of Bonds for Rs.500 crores 1124.92 103.61 1228.53 446.70 2709.38 3156.08 0.39 December 31 , 2005 621.61 3.18 0.13 624.92 103.61 March 31, 2005 46.77 3251.93 12472.10 624.73 24366.55 125.00 95.00 100.00 200.00 101.61 11.33 118.16 41513.18 (Rs. in crores) December 31, 2005 33.26 3536.25 14047.61 456.67 26557.51 125.00 95.00 100.00 200.00 101.61 3.31 103.61 45359.83
st

PART VIII - Capitalisation Statement as at December 31, 2005 Particulars A. (i) (ii) B. (i) (ii) C. Loan Funds Long Term Short Term Total Debt Shareholders Funds Share Capital Reserves and Surplus(excluding revaluation reserve) Total Equity Long Term Debt/ Equity Ratio

Pre Issue

624.92 103.61 728.53 446.70 2709.38 3156.08 0.23

Long Term Debt Tier II Bonds MIDL NABARD IDBI Total Short Term Debt Borrowing outstanding PART IX - Details of Outstanding Unsecured Liabilities As on Demand Deposits from Banks Demand Deposits from Others Saving Bank Deposits Term Deposits from Banks Term Deposits from Others Unsecured Subordinated Bonds Series I Unsecured Subordinated Bonds Series II Unsecured Subordinated Bonds Series III Unsecured Subordinated Bonds Series IV Subordinate Loans from World Bank Borrowings from Other Institutions & Agencies Miscellaneous including Borrowing Outside India Total

96

Allahabad Bank
PART X TAX SHELTER
(Rs. in crores)

For the Year/ Nine Months ended 31-Mar-01 31-Mar-02 31-Mar-03 31-Mar-04 31-Mar-05 Tax at actual rate on profit 44.19 34.96 71.26 198.79 218.46 Adjustments Permanent Differences i) Interest on Tax free bonds (3.00) (3.87) (8.32) (18.36) (22.74) ii) Dividend (exempt from tax) (13.29) (14.89) (10.07) (19.54) (26.11) iii) Others 10.88 2.17 (8.47) (11.91) (19.39) Total (5.41) (16.59) (26.86) (49.81) (68.24) Timing Difference Difference between both Depreciation IT i) (10.54) (4.01) 2.49 2.94 (6.14) Depreciation on Fixed Assets ii) Interest on securities (12.88) (55.33) (61.00) (14.50) (32.52) Provision for bad and doubtful debts/ bad 47.54 140.53 (168.96) (207.37) (291.43) iii) debts written off Difference between the profit/ loss on investment shown in Profit & Loss Account and the Income Tax Return v) Other Adjustments vi) Brought forward Losses Total Net Adjustments Tax Saving thereon Total Taxation Taxation on VRS expenses being extra ordinary Tax before Extra-Ordinary item iv)
* Tax payable under MAT U/S 115JB of Income Tax Act, 1961.

31-Dec-05 247.40

(18.00) (24.00) (10.00) (52.00) Nil Nil 345.00 (40.00) (27.00) (271.00) (683.00) (735.00) 208.15 39.25* Nil 39.25*

(31.33) 2.70 Nil (4.51) (9.92) (3.92) 40.27 4.50 44.77

(31.79) 45.88 Nil 95.28 78.69 Nil 34.96 10.48 45.44

(15.68) Nil Nil (243.15) (270.01) (99.23) (27.97) 10.79 (17.18)

12.04 Nil Nil (206.89) (256.70) (92.09) 106.70 10.53 117.23

(871.65) 60.92 Nil (1140.82) (1209.06) (218.46) Nil Nil Nil

Note: The Income Tax liability for the five consecutive financial years ended March 31, 2005 has been computed as per the relevant Income Tax returns/ communications sent to the Assessing Officer. The tax liability for nine months ended 31.12.2005 is calculated on the estimated basis.

PART XI CONTINGENT LIABILITIES

The Bank has the following contingent liabilities for which no provision has been made in the books of accounts of the Bank for the year ended March 31, 2005 and nine months ended December 31, 2005:
S l.N o. P A R T IC U LA R S 1 2 3 4 5 6 7 C laim s against the B ank not A cknowledged as D ebts. D isputed IT dem and under appeal/ refer etc. Liability for partly paid Inv estm ents Liability on account of outstanding F orward E x change C ontracts G uarantees giv en on behalf of constituents A cceptance, endorsem ents and other obligations O ther item s for which B ank is contingently liable T otal B ILLS F O R C O LLE C T IO N A s on M ar 31, 2005 233.04 N IL 0.16 9638.56 (R s. in crores) A s on D ec 31, 2005 288.13 N IL 0.16 11702.13

1338.31 1981.81 1.97 13193.85 1153.29

1608.62 1940.71 1.27 15541.02 1533.47

97

PART XI - Consolidate Financial Statement

Consolidate Profit and Loss Account

Allahabad Bank
(Rs. In crores)

P a r t ic u la r s I. In c o m e In te r e s t e a r n e d O th e r i n c o m e T o ta l E X P E N D IT U R E In te r e s t e x p e n d e d O p e r a ti n g e x p e n s e s P r o v is i o n s & C o n tin g e n c i e s T o ta l S h a r e o f e a r n i n g s /l o s s in A s s o c i a te s C o n s o li d a te d N e t p r o fi t/( l o s s ) fo r th e y e a r b e fo r e d e d u c ti n g M in o r iti e s ' In te r e s t L e s s : M in o r itie s ' In te r e s t C o n s o li d a te d p r o fi t/( lo s s ) fo r th e y e a r a ttr i b u ta b le to th e g r o u p A d d : B r o u g h t fo r w a r d c o n s o l i d a te d p r o fit/( lo s s ) a ttr ib u ta b le to th e g r o u p T o ta l A P P R O P R IA T IO N S T r a n s fe r to S ta tu to r y R e s e r v e s T r a n s fe r to O th e r R e s e r v e s In te r i m / P r o p o s e d D i v id e n d ( In c l u d i n g T a x o n D i v id e n d ) B a l a n c e c a r r ie d o v e r to c o n s o l i d a te d B a la n c e S h e e t T o ta l E a r n in g s p e r S h a r e
Consolidate Balance Sheet

S c h e d u le 13 14

Year ended 3 1 -0 3 -2 0 0 5 3 1 8 5 .5 9 6 4 1 .3 2 3 8 2 6 .9 1 1 8 2 0 .2 3 9 3 1 .7 6 5 3 0 .8 6 3 2 8 2 .8 5 1 3 .3 0

Year ended 3 1 -0 3 -2 0 0 4 2 6 6 8 .6 6 7 6 8 .7 5 3 4 3 7 .4 1 1 5 8 2 .2 0 9 6 0 .0 1 4 2 9 .9 5 2 9 7 2 .1 6 2 0 .5 7

II.

15 16

17

5 5 7 .3 6

4 8 5 .8 2

5 5 7 .3 6 8 4 .1 7 6 4 1 .5 3 1 4 0 .0 0 2 5 1 .4 6 1 3 5 .2 0 1 1 4 .8 7 6 4 1 .5 3 1 6 .0 8

4 8 5 .8 2 3 6 .8 2 5 2 2 .6 4 1 2 0 .0 0 2 4 0 .2 5 7 8 .2 2 8 4 .1 7 5 2 2 .6 4 1 4 .0 1
(Rs. In crores)

III.

P a r t ic u la r s

S c h e d u le A s o n 3 1 .0 3 .2 0 0 5

A s o n 3 1 .0 3 .2 0 0 4

C A P IT A L & L IA B IL IT IE S
C a p ita l R e s e r v e s & S u r p lu s M in o r itie s In te r e s t D e p o s its B o r r o w in g s O th e r L ia b ilitie s a n d P r o v is io n s 1 2 2A 3 4 5 3 4 6 .7 0 2 0 8 1 .0 0 N il 4 0 7 0 6 .1 2 1 2 9 .4 9 1 9 2 7 .9 6 4 5 1 9 1 .2 7 3 4 6 .7 0 1 2 8 9 .6 9 N il 3 1 4 2 4 .8 2 1 6 8 .9 9 1 5 1 4 .2 5 3 4 7 4 4 .4 5

T o ta l ASSETS
C a s h a n d B a la n c e s w ith R e s e r v e B a n k o f In d ia B a la n c e s w ith B a n k s a n d M o n e y a t C a ll a n d S h o r t N o tic e In v e s tm e n ts Loans & A dvances F ix e d A s s e ts O th e r A s s e ts G o o d w ill o n C o n s o lid a tio n D e b it B a la n c e o f P r o fit a n d L o s s A /C 6 7 8 9 10 11

2 4 2 7 .1 6 8 8 8 .2 9 1 9 0 2 5 .4 3 2 1 1 5 1 .1 0 7 3 4 .2 9 9 6 5 .0 0 N IL N IL 4 5 1 9 1 .2 7 1 3 2 1 9 .7 4 1 1 5 3 .2 9

2 1 5 5 .7 8 4 4 1 .3 4 1 5 5 7 8 .8 2 1 5 3 4 5 .0 7 3 5 5 .5 4 8 6 7 .9 0 N IL N IL 3 4 7 4 4 .4 5 1 2 2 4 7 .3 0 9 7 5 .2 4

T o ta l
C o n tin g e n t L ia b ilitie s B ills fo r C o lle c tio n 12

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Allahabad Bank
S C H E D U L E 1 - C A P IT A L
P a rtic u la rs A u th o rise d C a p ita l (1 ,5 0 ,0 0 ,0 0 ,0 0 0 S h a re s o f R s.1 0 e a ch ) Issu e d C a p ita l (3 4 ,6 7 ,0 0 ,0 0 0 S h a re s o f R s.1 0 .e a ch ) S u b scrib e d C a p ita l (3 4 ,6 7 ,0 0 ,0 0 0 S h a re s o f R s.1 0 e a ch ) C a lle d -u p C a p ita l (3 4 ,6 7 ,0 0 ,0 0 0 .S h a re s o f R s.1 0 e a ch ) L e ss: C a lls u n p a id A d d : F o rfe ite d sh a re s T o ta l A s o n 3 1 .3 .2 0 0 5 1 5 0 0 .0 0 3 4 6 .7 0 3 4 6 .7 0 3 4 6 .7 0 N IL N IL 3 4 6 .7 0 A s o n 3 1 .3 .2 0 0 4 1 5 0 0 .0 0 3 4 6 .7 0 3 4 6 .7 0 3 4 6 .7 0 N IL N IL 3 4 6 .7 0

SC H ED U LE
P a rtic u la rs

2 - R ESER VES & SU R PLU S

A s o n 3 1 .3 .2 0 0 5 5 1 6 .3 9 6 4 1 .6 2 4 4 .5 7 N il 7 6 3 .5 5 1 1 4 .8 7 2 0 8 1 .0 0 A s o n 3 1 .3 .2 0 0 4 3 7 6 .3 9 2 4 0 .3 1 4 4 .5 7 N il 5 4 4 .2 5 8 4 .1 7 1 2 8 9 .6 9

S ta tu to ry R e se rve s C a p ita l R e se rve s C a p ita l R e se rve s o n C o n so lid a tio n S h a re P re m iu m R e ve n u e a n d o th e r R e se rve s B a la n ce in P ro fit a n d L o ss A cco u n t T o ta l

SC H ED U LE

2 A - M IN O R IT IE S IN T E R E S T
A s o n 3 1 .3 .2 0 0 5 A s o n 3 1 .3 .2 0 0 4 N il N il N il

M in o rity in te re st a t th e d a te o n w h ich th e p a ra n t - su b sid ia ry re la tio n sh ip ca m e in to S u b se q u e n t in cre a se / d e cre a se M in o rity in te re st o n th e d a te o f B a la n ce Sheet

N il N il N il

S C H E D U L E 3 - D E P O S IT S
P a rtic u la rs A . I. D e m a n d D e p o sits (I) F ro m b a n ks (ii) F ro m o th e rs II. S a vin g s B a n k D e p o sits III. T e rm D e p o sits (I) F ro m b a n ks (ii) F ro m o th e rs T o ta l (I, II, III) B . (i) D e p o sits o f b ra n ch e s in In d ia (ii) D e p o sits o f b ra n ch e s o u tsid e In d ia T o ta l (I a n d II) A s o n 3 1 .3 .2 0 0 5 4 6 .7 7 3 2 5 0 .7 3 1 2 4 7 2 .1 0 6 2 4 .7 3 2 4 3 1 1 .7 9 4 0 7 0 6 .1 2 4 0 7 0 6 .1 2 N IL 4 0 7 0 6 .1 2 A s o n 3 1 .3 .2 0 0 4 8 7 .0 8 2 7 1 6 .1 9 1 0 3 4 2 .3 9 4 3 0 .4 3 1 7 8 4 8 .7 3 3 1 4 2 4 .8 2 3 1 4 2 4 .8 2 N IL 3 1 4 2 4 .8 2

99

Allahabad Bank
S C H E D U L E 4 - B O R R O W IN G S
P a rtic u la rs B o rro w in gs in In d ia (I) R e se rve B a n k o f In d ia (ii) O th e rb a n ks (iii) O th e r in stitu tio n s a n d a ge n cie s II. B o rro w in gs o u tsid e In d ia T o ta l (I a n d II) S e cu re d b o rro w in gs in clu d e d in I a n d II a b o ve I. As o n 3 1 .3 .2 0 0 5 N IL N IL 1 1 .3 3 1 1 8 .1 6 1 2 9 .4 9 N il As o n 3 1 .3 .2 0 0 4 N IL N IL 2 6 .9 1 1 4 2 .0 8 1 6 8 .9 9 N il

S C H E D U L E 5 - O T H E R L IAB IL IT IE S AN D P R O V IS IO N S
P a rtic u la rs I. B ills p a ya b le II. In te r -o ffice a d ju stm e n ts (n e t) III. In te re st a ccru e d V I. D e fe rre d T a x L ia b ilitie s V . O th e rs (in clu d in g p ro visio n s) T o ta l As o n As o n 3 1 .3 .2 0 0 4 3 1 .3 .2 0 0 5 2 4 8 .7 4 1 9 2 .0 3 8 .5 2 N il 1 9 0 .2 5 1 4 2 .3 3 9 .2 0 7 .9 3 1 4 7 1 .2 5 1 1 7 1 .9 6 1 9 2 7 .9 6 1 5 1 4 .2 5

S C H E D U L E 6 - C AS H AN D B AL AN C E S W IT H R E S E R V E B AN K O F IN D IA
P a rtic u la rs I. II. C a sh in h a n d (in clu d in g fo re ign cu rre n cy n o te s) B a la n ce s w ith R e se rve B a n k o f In d ia (i) In C u rre n t A cco u n t (ii) In O th e r A cco u n ts T o ta l (I & II) As o n As o n 3 1 .3 .2 0 0 4 3 1 .3 .2 0 0 5 2 2 0 .9 4 1 9 7 .5 8 2 2 0 6 .2 2 N il 2 4 2 7 .1 6 1 9 5 8 .2 0 N il 2 1 5 5 .7 8

S C H E D U L E 7 - B AL AN C E S W IT H B AN K S AN D M O N E Y AT C AL L & S H O R T N O T IC E
P a rtic u la rs I. In In d ia (i) B a la n ce s w ith b a n ks (a ) In C u rre n t a cco u n ts (b ) In O th e r D e p o sit a cco u n ts (ii) M o n e y a t ca ll a n d sh o rt n o tice (a ) W ith b a n ks (b ) W ith o th e r in stitu tio n s T o ta l (i & ii) II. O u tsid e In d ia As o n 3 1 .3 .2 0 0 5 4 6 2 .8 3 3 4 5 .0 0 N il N il 8 0 7 .8 3 As o n 3 1 .3 .2 0 0 4

2 0 4 .8 1 1 9 0 .0 0 N il 1 6 .7 0 4 1 1 .5 1

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Allahabad Bank
SCHEDULE 8 -INVESTM ENTS
Particulars I. Investm ent in India in (i) Government securities (ii) Other approved securities (iii) Shares (iv) Debentures and Bonds (v) Investment in Associates (vi) Others T otal II. Investm ents outside India in (i) Government securities( including local authorities) (ii) Investment in Associates (iii) O ther Investments T otal Grand T otal (I) & (II) III. Investm ent in India (i) Gross value of Investments (ii) Aggregate of Provisions for Depreciation (iii) Net Investment (i) Gross value of Investments (ii) Aggregate of Provisions for Depreciation (iii) Net Investment As on 31.3.2005 As on 31.3.2004 15629.98 512.41 86.53 2375.97 123.51 297.03 19025.43 NIL NIL NIL NIL 19025.43 11759.10 536.12 69.35 2553.45 110.21 550.59 15578.82 NIL NIL NIL NIL 15578.82

19175.04 149.61 19025.43 NIL NIL NIL

15632.96 54.14 15578.82 NIL NIL NIL

SCHEDULE 9 -ADVANCES
Particulars A. (i) Bills purchased and discounted (ii) Cash credits, overdrafts and loans repayable on demand (iii) Term loans T otal B. (i) Secured by tangible assets (includes advances against book debts) (ii) Covered by Bank/ G overnment Guarantees (iii) Unsecured T otal C. I. Advances in India (I) Priority sector (ii) Public sector (iii) Banks (iv) O thers C. II. Advances outside India (I) Due from banks (ii) Due from others (a) Bills purchased & discounted (b) Syndicated Loans (c) Others T otal As on 31.3.2005 As on 31.3.2004 1108.63 8424.68 11617.79 21151.10 16410.57 2114.74 2625.79 21151.10 9179.37 3439.42 0.00 8532.31 NIL NIL NIL NIL NIL 21151.10 641.83 6332.70 8370.54 15345.07 11617.03 1581.71 2146.33 15345.07 6432.18 2746.91 1.51 6164.47 NIL NIL NIL NIL NIL 15345.07

101

S C H E D U LE 10 - FIX E D AS S E TS
Particulars Prem ises st At cost as on 31 M arch of the preceding year Additions during the year Deductions during the year Depreciation to date Total I IA. Premises under construction II. O ther Fixed Assets (including Furniture and Fixtures) st At cost as on 31 M arch of the preceding year Additions during the year Deductions during the year Depreciation to date Total II IIA. Leased Assets st At cost as on 31 M arch of the preceding year Additions during the year including adjustments Deductions during the year including provisions Depreciation to date Total IIIA Total ( I, IA , II & IIA ) III. Capital- W ork - in - progress ( Leased Assets ) net of Provisions Total ( I, IA, II, IIA & III ) I.

Allahabad Bank

As on 31.3.2005 As on 31.3.2004 295.26 372.29 Nil 33.05 634.50 Nil 291.23 4.03 Nil 31.14 264.12 Nil

297.59 40.10 1.18 238.94 97.57 14.47 Nil 0.00 12.25 2.22 734.29 Nil 734.29

271.31 30.21 3.92 208.54 89.06 14.76 Nil 0.29 12.11 2.36 355.54 Nil 355.54

S C H E D U LE 11 - O TH E R AS S E TS
Particulars I. Inter-O ffice Adjustments (net) II. Interest accrued III. Tax paid in advance/tax deducted at source IV. Stationery and stamps V. Non-banking assets acquired in satisfaction of claims VI. Deferred Tax assets VII. O thers Total As on 31.3.2005 As on 31.3.2004 Nil 429.63 125.75 6.98 0.06 Nil 402.58 965.00 146.36 394.69 184.99 7.03 0.06 Nil 134.77 867.90

S C H E D U LE 12 - C O N TIN G E N T LIAB ILITIES

Particulars I. C laims against the bank not acknowledged as debts II. Liability for partly paid investments III. Liability on account of ourstanding forward exchange contracts IV. G uarantees given on behalf of constituents (a) In India (b) O utside India V. Acceptances, endorsements and other obligations VI. O ther items for which the Bank is contingently liable Total As on 31.3.2005 As on 31.3.2004 258.93 0.16 9638.56 149.24 0.16 10104.17

1036.23 302.08 1981.81 1.97 13219.74

950.07 31.45 1006.10 6.11 12247.30

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Allahabad Bank

SCHEDULE 13 - INTEREST AND DIVIDENDS EARNED

Particulars I. Interest/discount on advances/bills II. Income on investments III. Interest on balances with Reserve Bank of India and other inter-bank funds IV. Others Total Year ended 31.3.2005 1682.58 1462.10 40.11 0.80 3185.59 Year ended 31.3.2004 1322.71 1302.24 31.80 11.91 2668.66

SCHEDULE 14 - OTHER INCOME

Particulars I. Commission, exchange and brokerage II. Profit on sale of land, buildings and other assets Less: Loss on sale of land, buildings and other assets III. Profit on exchange transactions Less: Loss on exchange transactions IV. Profit on sale of investments(net) Less: Loss on sale of investments V. Profit on revaluation of investments Less: Loss on revaluation of investments VI. a) Lease finance income b) Lease management fee c) Overdue charges d) Interest on lease rent receivables VII. Miscellaneous income Total Year ended 31.3.2005 183.78 0.03 NIL 45.95 -2.20 361.22 -13.79 NIL NIL 0.02 NIL NIL NIL 66.31 641.32 Year ended 31.3.2004 162.15 0.06 -0.01 49.42 -6.30 508.43 -3.72 NIL NIL 0.08 NIL NIL NIL 58.64 768.75

SCHEDULE 15 - INTEREST EXPENDED

Particulars I. Interest on deposits II. Interest on Reserve Bank of India/ inter-bank borrowings III. Others Total Year ended 31.3.2005 1766.11 3.66 50.46 1820.23 Year ended 31.3.2004 1540.08 1.71 40.41 1582.20

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Allahabad Bank

SCHEDULE 16 - OPERATING EXPENSES

Year ended 31.3.2005 541.88 58.33 13.16 10.20 32.43 0.10 0.64 8.44 3.38 12.86 14.50 28.63 Nil 207.21 931.76 Year ended 31.3.2004 559.25 51.80 11.47 4.07 34.93 0.20 0.77 6.53 3.08 11.96 13.49 15.90 Nil 246.56 960.01

Particulars I. Payments to and provisions for employees II. Rent, taxes and lighting III. Printing and stationery IV. Advertisement and publicity V.(a) Depreciation on Bank's property other than Leased Assets V.(b) Depreciation on Leased Assets VI. Directors' fees, allowances and expenses VII. Auditors' fees and expenses (including branch auditors' fees and expenses) VIII. Law charges IX. Postage, telegrams, telephones, etc. X. Repairs and maintenance XI. Insurance XII. Amortisation of Goodwill, if any XIII. Other expenditure Total

SCHEDULE 17 Share of Earnings/Loss in Associates Details of Associates Name Bhagirath Gramin Bank Chhatrasal Gramin Bank Saryu Gramin Bank Sharda Gramin Bank Sravasthi Gramin Bank Tulsi Gramin Bank Vindhyavasini Gramin Bank TOTAL Allahabad Bank's share '@35%

Net Profit

2004-05 18.05 2.41 10.15 3.66 6.66 -3.53 0.59 37.99 13.30

2003-04 21.34 3.33 9.24 3.76 10.08 9.02 2.01 58.78 20.57

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Allahabad Bank
Relevant Principal Accounting Policies on the Consolidated Accounts.

1. Basis of preparation of consolidation Accounts.

The accompanying financial statements have been prepared to comply, in all material aspects, with applicable Statutory/ Regulatory provisions, Accounting standards and generally accepted accounting principles and practices prevailing in India except otherwise stated.

2. Consolidation procedure:
a. Consolidated financial statements have been prepared on the basis of audited financial statements of Allahabad Bank (Parent) and one non-banking subsidiary (referred to as non-banking entity) and after eliminating inter-group transactions, unrealised profit/ loss and making necessary adjustments wherever required. The financial statements of the subsidiary are drawn upto the same reporting date as that of the parent i.e; 31st March 2005. The difference between the cost of its investment in the sponsored banks (RRB) and the bank's portion of the equity of the RRB is recognised in the financial statements as Capital Reserve in totality.

b. 3.

General :
(a) (b) The financial statements have been prepared by following going concern concept on historical cost basis unless otherwise stated and are in conformity with the statutory provisions and standard accounting practices in India. The financial statements also conform to the Reserve Bank of India (RBI) guidelines issued from time to time on income recognition, asset classification, provisioning and other related matters.

4. Investments
(a)
Non-banking Entity: Investments are accounted for at cost or market price whichever is less. Provision for diminution in the value of investment is made for decrease in value of such investment at the end of the year. In cases where Investments are listed but market quotations are not available, the value of the investment has been taken at Re. 1/- per share. (b) Banking Entity: (i) (ii) The investment portfolio of the Bank is classified in accordance with RBI guidelines under three categories viz. "Held to Maturity", "Available for Sale" and "Held for Trading".

The disclosure of investments under all the three categories mentioned above is made under six groups viz. (a) Government securities (b) Other approved securities (c) Shares (d) Debentures & Bonds (e) Investment in Subsidiaries/joint ventures and (f) Others (commercial paper, units in Mutual Funds etc). (iii) (I) Investments classified as 'Held to Maturity' (other than in Regional Rural Banks) are carried at acquisition cost. In case the acquisition cost is higher than the face value, the excess is amortized over the period remaining to maturity, and provision is made for: o Depreciation in the value of debentures/bonds which are deemed to be in the nature of advances by applying the RBI prudential norms of asset classification and provisioning applicable to advances. o Diminution, other than temporary, in the value of investments in subsidiaries/joint ventures. (II) Investments classified as "Available for Sale" are marked to market scripwise at quarterly intervals and resultant net depreciation is recognized and net appreciation, if any, is ignored under each classification. The book value of the individual scrip is not changed with the revaluation as indicated above.

(III) Investments classified as "Held for Trading" are revalued scripwise at monthly interval and resultant net depreciation is recognized and net appreciation, if any, is ignored under each classification. The book value of the individual scrip is not changed with the revaluation as indicated above. (iv) In respect of non-performing securities (where interest/principal is in arrears for more than 90 days) income is not recognized and appropriate provision is made for depreciation in the value of the securities by applying prudential norms of asset classification and such depreciation is not set-off against the appreciation in respect of other performing securities. Cost of acquisition of investments: (I) (II) Is net of incentives/commission and front-end fees received in case of securities subscribed. Excludes commission, brokerage and stamp duty.

(v)

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Allahabad Bank
(vi) Profit/loss on sale of investments is recognized in the Profit and Loss Account. An amount equivalent to the profit on sale of investments under "Held to Maturity" category, is first taken to the Profit and Loss Account and thereafter appropriated to the "Capital Reserve Account". For the purpose of determining market value of investments, Stock exchange quotations or rates put up by FIMMDA/PDAI are adopted. In absence of such quotations/rates, the market value is determined by applying appropriate Yield to Maturity rates as prescribed by FIMMDA / PDAI or as per norms laid down by the Reserve Bank of India. As per RBI guidelines, the different category of Swaps are valued as under:

(vii)

(viii)

Hedge Swaps Interest rate Swaps which hedges interest bearing assets or liabilities are accounted for on accrual basis except the Swaps designated with an assets or liability that is carried at market value or lower of cost or market value in the financial statements. Gain or Losses on the termination of Swaps are recognized over the shorter of the remaining contractual life of the Swap or the remaining life of the assets / liabilities . Trading Swaps Trading Swap transactions are marked to market with changes recorded in the financial statements.

5. Fixed Assets / Depreciation

(a) Non-banking Entity: (i) Fixed Assets :Fixed Assets are capitalised at cost including installation cost and expenses. (ii) Leased Assets :Assets purchased are capitalised, on installation, at cost and installation expenses. (iii) Depreciation :Depreciation is provided on straight-line method at the rate prescribed in schedule-XIV of the Companies Act, 1956, in respect of assets other than leased assets. Depreciation on leased asset is provided as per guidance note on accounting for lease issued by ICAI, according to which Leased Equalisation account and Lease Adjustment account have been created. Depreciation on fixed asset (including leased asset classified as NPA) has been provided on straight line method at the rates prescribed in schedule XIV of the Companies Act, 1956.

(b)

Banking Entity:
(i) Premises including freehold and leasehold and other Fixed Assets are stated at historical cost except certain premises, which are stated at their revalued amount. (ii) Capital expenditure incurred during construction period is included under Other Assets.

(iii) Depreciation is provided on diminishing balance method at the rates prescribed in Schedule XIV to the Companies Act, 1956 except that in respect of ALPMs & Computers, where depreciation is provided on straight line method @ 33.33% as per RBI guidelines. (iv) In respect of revalued assets, the amount of additional depreciation consequent to revaluation is transferred from Revaluation Reserve to the Profit & Loss Account. (v) Premium on leasehold land is amortized over the period of the lease.

6. Intangible Assets (Computer Software) (i)

(ii) Software for a computer that cannot operate without that specific software is an intangible part of related hardware and is treated as fixed assets. Where the software is not an integral part of the related hardware, computer software is recognised as an Intangible Asset. Computer software acquired from vendors is recognised as Intangible Asset only if the value /cost of the software is more than Rs.10 Lacs.

7.

Revenue Recognition :(a)

Non-banking entity: (i) Lease rentals are considered on the due date in terms of lease agreements. (ii) Lease rentals are not considered where leased assets have been classified as Non-Performing assets (NPA) under prudential norms as prescribed by RBI.

106

(b) Banking Entity:

Income and Expenditure are accounted for on accrual basis other than those stated below: (i) (ii)

Allahabad Bank

Interest and Other Income on advances classified as non-performing assets are recognized to the extent realized. Income from interest on refund of Income Tax and Interest Tax are accounted for in the year the order is passed by the concerned assessing officer.

8. Transactions involving Foreign Exchange: (i)

Foreign currency balances whether of assets or liabilities [including deposits mobilized under FCNR Scheme, EEFC Scheme, RFC Scheme etc.] and outstanding forward exchange contracts are converted at year end rates as advised by Foreign Exchange Dealers Association of India (FEDAI). The resultant profit/loss on revaluation of forward exchange contracts and NOSTRO accounts is taken to revenue as per FEDAI guidelines. Income and Expenditure items relating to foreign currency are converted at the rates of exchange ruling on the date of transaction. Acceptances, endorsements and other obligations including guarantees are stated at FEDAI advised rates prevailing at the year end.

(ii) (iii)

9.

Advances:

(i)
(ii)

Advances are classified as performing and non-performing as per guidelines prescribed by RBI and are shown net of provisions for non-performing advances. The provision made for standard advances (performing) in terms of RBI guidelines is however included in "Other Liabilities and Provisions".

10. Non-Banking Assets:

Non-Banking Assets acquired in satisfaction of claims are stated at cost.

11. Retirement Benefits to Employees:

(i)
(ii)

Liabilities for Gratuity, Leave Encashment and Pension benefits to employees are provided for on the basis of actuarial valuation at the year end. Expenditure towards ex-gratia and additional contribution in respect of gratuity and pension under Voluntary Retirement Scheme (VRS) is treated as Deferred Revenue Expenditure amortized over a period of five years in terms of RBI guidelines.

12. Taxes on Income

Provision for tax is made both current and deferred taxes. Current tax is provided on the taxable income using applicable tax rate and tax laws. Deferred Tax Assets and Liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognised using the tax rates and the tax laws that have been enacted or substantively enacted till the date of the Balance Sheet. Deferred Tax Assets are not recognised unless there is "virtual certainty" that sufficient future taxable income will be available against which such deferred tax assets will be realised.

13. Net profit :

The net profit is arrived at after accounting for the following : (i) Provisions for Income Tax (including deferred tax) and Wealth Tax in accordance with the statutory requirements. (ii) Provisions on advances / Investments. (iii) Adjustments to the value of investments. (iv) Transfer to Provisions and Contingencies. (v) Other usual and necessary provisions.

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Allahabad Bank
Relevant Notes on Accounts to the Consolidated Accounts The individual financial statement of Allahabad Bank and its subsidiary, Allbank Finance Limited have been considered in the preparation of consolidated financial statement. Allahabad Bank holds entire equity in its subsidiary and 35% in the equity of 7 Regional Rural Banks (RRB). The bank and its subsidiary are operating in different circumstances and in different fields. It is not practicable for the bank and its subsidiary to follow an uniform accounting policy in following areas :(a) Provision in the value diminution of investment. (b) Depreciation on fixed assets. In respect of AllBank Finance Limited, following significant notes are (a) The payment of Bonus Act 1965 is not applicable. (b) Contingent liabilities not provided for considered :-

(i) Disputed Income Tax and Interest Tax liability in respect of matters pending before various appellate authorities where the Company expects to succeed (Rs. in lacs) Asst Year 1993-94 1994-95 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 Total 31.03.2005 Income Tax 1062.42 7.58 444.59 74.40 113.39 51.52 373.85 2127.75 31.03.2005 Interest Tax 29.05 37.14 24.52 24.18 114.89 31.03.2004 Income Tax 1062.42 157.84 125.94 305.44 444.59 139.55 11.04 51.52 2298.34 31.03.2004 Interest Tax 29.05 37.14 24.52 24.18 114.89

(ii)

Claims against the Company not acknowledged as Debts : Rs347.04 lacs (Previous Year Rs.347.04 lacs)

(c)

As per the order of Hon'ble Special court, the delivery of shares on 13.05.1992 by M/s V. B Desai to AllBank Finance Ltd., constituted complete transfer of property in the shares in favour of the Company. Accordingly, the Company became the owner of the shares from the date of delivery of the shares and was entitled to all accretions and rights declared thereafter. Pursuant to the above mentioned order, the acquisition of the shares has been considered as long term investment. As on 31.03.2005, Rs. 307.25 lacs have been shown as advance income tax, tax deducted at source, and income tax refund receivable. This amount is pending adjustment at various stages of assessment and appeal. In accordance with Accounting Standard 22 issued by the Institute of Chartered Accountants of India on Accounting for taxes on income, the Company has net deferred tax assets arising out of provisions made on doubtful debts. Deferred tax assets have not been recognized keeping in view the uncertainty of sufficient taxable income in future.

(d) (e)

Significant Notes considered in respect of the banking entity: (a) (i) (ii) (iii) Adequate provision has been made for Non-performing Advances in terms of Reserve Bank of India (RBI) guidelines. A general provision @ 0.25% has been made on Performing Advances in terms of RBI guidelines. Prudential floating provision of Rs.74.62 crores (previous year Rs 272.45 crores) is held as at 31.03.2005 in respect of gross Non-Performing Advances over and above the minimum provision prescribed by RBI with a view to strengthening the financial stability of the Bank. Under Inter-Branch reconciliation, initial matching of entries has been done upto 28.02.2005. Reconciliation of unmatched entries as per IBR department with the balance in Branch Adjustment Account and transactions between Head Office and branches including branches inter-se, is in progress.

(b)

(i)

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In terms of RBI's circular, segregation of debit and credit entries in Inter Branch Account pertaining to the period upto 30.09.2004 and remaining outstanding as on 31.03.2005 have resulted in net credit, hence no provision is required. (ii) At some branches, preparation of details/balancing/reconciliation of accounts relating to Deposits, Advances, Bills Payable, Drafts Payable/Drafts Paid without Advice, Funds in Transit, POB/ROB accounts, Sundry Creditors, Balances with banks and NOSTRO Accounts are in progress.

Allahabad Bank

(c)

The provision for income tax (including deferred tax) aggregating to Rs 188.28 crores (previous year Rs. 166.57 crores) held is considered adequate by the Bank after considering various judicial decisions on disputed issues. (i) Certain premises were revalued on the basis of the reports of the approved valuers during the year-ended on 31.03.1997 and upward revision amounting to Rs. 125.99 Crores has been credited to Capital Reserve Account. Additional depreciation of Rs. 0.95 crores (previous year Rs.1.00 crores) due to revaluation has been transferred from Capital Reserve Account and shown in Miscellaneous income under the head Other Income included in Schedule No. 14 item (vi) st The Bank has further revalued certain Premises as on 31 March, 2005 on the basis of reports of approved valuers and upward revision amounting to Rs.370.08 crores has been credited to Capital Reserve Account. Depreciation has been charged on composite cost of Land and Building, where cost of land is not available. Premium on leasehold lands has been amortized over the period of lease, based on cost or written down value, where original cost is not available. Premises include certain properties amounting to Rs. 1.61 crores (Previous year Rs.3.19 crores) for which registration formalities are yet to be completed.

(d)

(ii) (iii) (iv) (v)

e)

In terms of the RBI guidelines, provision for depreciation in the value of Investments under Available for Sale category amounting to Rs. 99.37 crores has been debited (Previous year Rs.23.06 crores credited) to the Profit and Loss Account under the head Expenditure-Provisions and Contingencies and an amount of Rs 47.25 crores (net of tax benefit and consequent reduction in the transfer to statutory reserve) has been transferred from Investment Fluctuation Reserve Account to Profit and Loss Account. (previous year Rs.11.83 crores, net of Tax benefit appropriated to Investment Fluctuation Reserve Account from Profit and Loss Account). (i) In terms of RBI guidelines for building up Investment Fluctuation Reserve, the Bank has transferred additional sum of Rs.146.56 crores (Previous year Rs. 195.75 crores) to Investment Fluctuation Reserve from Profit and Loss Account. Consequently, the total Investment Fluctuation Reserve as on 31.03.05 is Rs.429.92 crores which is 5% of its investment in the Available for Sale and Held for Trading category. In respect of Investments of face value of Rs.15.44 cores (Previous year Rs.80.64 crores) the Bank is yet to receive scrips/certificates. However, out of Rs 15.44 crores, the Bank is holding Letters of Allotment in respect of securities for Rs 15.00 crores (Previous year Rs. 70.00 crores). Investment in shares (at book value) excluding investments considered as exempted from capital market exposure as per RBI guidelines are as under :(Rs. in Crores) As on 31.03.2005 As on 31.03.2004 (i) (ii) Investment in Equity Shares Unit of Equity oriented Mutual Funds Total 79.65 126.40 206.05
th

(f)

(ii)

(g)

50.98 103.22 154.20

(h)

An amount of Rs. 29.35 crores (Previous year Rs. 29.35 crores) being 1/5 of the total expenditure under Voluntary Retirement Scheme introduced during the financial year 2000-2001 is charged to the Profit and Loss Account in accordance with RBI guidelines. The balance amount of Rs 17.96 crores (Previous year Rs. 47.31 crores) included in "Others" under the head "Other Assets" Schedule 11, will be amortised over the residual period. The Bank enters into derivative contracts such as Interest Rate Swap (IRS) to hedge on Balance Sheet Assets and Liabilities. The notional principal value of Swaps outstanding was Rs.520.00 crores (Previous year Rs. NIL). Interest Rate Swap in Indian Rupees were undertaken for hedging Tier II Bonds and Term Deposits. The items of Swap are either to receive fixed interest or to pay floating rate and vice versa. No collateral were required as the Swaps were entered into with Banks and there is no concentration of credit risk arising from interest rate Swaps undertaken during the year. The fair value of Swaps was (-)Rs.9.25 crores (Previous year Rs.NIL)

(i)

109

(j)

(i) (ii)

In the month of April 2005, the Bank has made Follow-on Public Offer of 10 crores Equity Shares of Rs.10 each (Face-value) at a Bid Price of Rs. 82/- per share aggregating to Rs. 820 crores. During the year the bank has paid interim dividend @15% on the capital of Rs.346.70 crores and has proposed final dividend @15% on Capital of Rs.446.70 crores including capital of Rs.100.00 crores st enhanced after 31 March 2005 on account of Follow-on Public Offer. Advances include an amount of Rs.100.00 crores on account of Inter Bank Participation Certificates.

Allahabad Bank

(k)

(l)

The period of 12 years for final adjustment of amalgamation of erstwhile United Industrial Bank Ltd. (UIBL) ended on 30.10.2001. The process of revaluation of Assets and Liabilities for final adjustment in consultation with RBI is in progress. During the year as per advice of Indian Banks Association an understanding has been reached with workmen unions and officers associations on wage revision. However, the final agreement is yet to be executed in this respect and for several other matters, which may materially effect the quantification of the liability. However, based on the best estimates of liability by the management, a provision of Rs. 138.83 crores has been made.

(m)

(n)

Accounting for Taxes on Income - Accounting Standard (AS) 22 During the year, an amount of Rs. 1.26 crores (Net) (Previous year net debit Rs.8.42 crores) has been debited to the Profit & Loss Account by way of adjustment of deferred tax. The major components of Deferred Tax Assets/ Liabilities as on Balance Sheet date are as under : (Rs. in Crores) Particulars Deferred Tax Assets Provision for Leave En-cashment Total Deferred Tax Liabilities Depreciation of Fixed Assets Interest Accrued but not due on securities held as Investments Total Deferred Tax Liability (Net) As on 31.03.2004 6.42 6.42 2.95 11.40 14.35 7.93 Adjustment Add/(Less) 0.96 0.96 2.27 (0.05) 2.22 1.26 As on 31.03.2005 7.38 7.38 5.22 11.35 16.57 9.19

(o)

A substantial portion of the banks assets comprise of financial assets to which Accounting Standard (AS) 28 Impairment of Assets is not applicable. In the opinion of the management, there is no impairment of other assets st of the Bank as at 31 March 2005 any material extent requiring recognition in terms of the said standard. Disclosure in terms of Accounting Standard (AS) 29 on Provisions, Contingent Liabilities and Contingent Assets :

(p)

(i)

Movement of Provision for Liabilities * : (Rs. in Crores) Particulars Salary arrears under Negotiation NIL 138.83 NIL NIL 138.83 On finalisation of wage settlement

Balance as at 1 April 2004 Provided during the year Amounts used during the year Reversed during the year Balance as at 31 March 2005 Timing of outflow/uncertainties
st

st

* Excluding provisions for others. (ii) Contingent Liabilities : Such liabilities as mentioned at S.No.(I) to (VI) in schedule 12 of Balance Sheet are dependent upon the outcome of court / arbitration / out of court settlement, disposal of appeals, the amount being called up, terms of contractual obligations, devolvement and raising of demand by concerned parties respectively. No reimbursement is expected in such cases.

110

Allahabad Bank
Related Party Disclosures :- AS-18
Payment to All Bank Finance Limited Wisemens Consultancy (P) Ltd Dr. Surinder. P.S.Pruthi. Allahabad Bank Shri O. N. Singh Sri K. K. Rai ( Retired on 30.06.04 ) Shri S. K. Goel ( Joined w. e. f. 27.08.04 ) hairman & M.D. xecutive Director xecutive Director Rs.487967.00 Rs.144326.26 Rs. 272996.25 Director of the bank is director Director Rs.24,000.00 Rs.2,67,329.00 Nature of relationship Amount

A profit of Rs.95.89 Crore (comprising of Rs.13.30 Crore for the current year and Rs.82.59 Crore in respect of earlier years) in respect of seven Regional Rural Banks (RRB) sponsored by Allahabad Bank, has been considered in the consolidated statement based on Equity Method of Accounts.

111

Segment Report (Consolidated) SEGMENT-WISE RESULTS, ASSETS AND LIABILITIES FOR THE YEAR ENDED 31-03-2005 Rs in Crore Description Year ended 31-03-2005 Audited a) Segment Revenue I) Treasury Operations ii) Other Banking Operations iii) Residual Total b) Segment Results I) Treasury Operations ii) Other Banking Operations iii) Residual Total Unallocated Revenue Unallocated Expenses Operating Profit Provisions & Contingencies Income Taxes Net Profit c) Other Information Segment Assets i) Treasury Operations ii) Other Banking Operations iii) Residual iv) Unallocated Assets Total Assets Segment Liabilities i) Treasury Operations ii) Other Banking Operations iii) Residual iv) Unallocated Liabilities Total Capital & Reserves Total Liabilities Notes: 1. 2. 9316.41 32645.37 46.34 885.50 42863.62 2327.65 45191.27 8111.13 24490.62 40.17 550.6 33192.52 1551.93 34744.45 9860.62 34552.31 46.34 732.00 45191.27 8546.39 25804.84 40.17 353.05 34744.45 397.08 840.95 15.60 1253.63 Nil 165.41 1088.22 475.71 55.15 557.36 442.08 624.95 39.52 1106.55 11.45 202.23 915.77 442.61 (12.66) 485.82 946.49 2878.99 1.43 3826.91 932.19 2474.83 30.39 3437.41 Year ended 31-03-2004 Audited

Allahabad Bank

3. 4. 5.

The business of the subsidiary company, a non-banking entity has been considered as residual business in consolidated segment reporting. For the purpose of segment reporting in terms of AS 17 issued by the Institute of Chartered Accountants of India and RBI guidelines thereon, the business of the bank has been classified into three segments, viz. (a) Treasury Operations, and (b) Other Banking Operations (c) Residual segment Investment in SLR securities in excess of statutory requirements and investment in non-SLR securities have been considered as investment for Treasury Operations. Since the Bank does not have any overseas branch, reporting under Geographical segment has not been made. Expenses, assets and liabilities directly attributed to particular segment are allocated to the relative segment and wherever the items are not directly attributable to specific segment the same has been allocated in proportion to business managed. Additional statutory information disclosed in separate financial statements of the parent and the subsidiaries having no bearing on the true and fair view of the consolidated financial statements and also the information pertaining to items which are not material have not been disclosed in the consolidated financial statements in view of the general clarification issued by the Institute of Chartered Accountants of India. Previous year's figures have been regrouped and reclassified where ever necessary to make them comparable with current year's figures.

6.

7.

112

Allahabad Bank
PART XIII Allbank Finance Limited Statement of Assets & Liabilities
(Rs. In crores)

As on March 31,

Particulars

2001 1 a b 2 a b Sources of Fund Shareholders' Funds Share Capital Reserves & Surplus Sub Total Loan Funds Secured Unsecured Loans Sub Total Total Application of Funds Fixed Assets Gross Block Less : depreciation Net Block Less: Lease Adjustment 4 5 a b c d Investment Current Assets, Loans & Advances Sundry debtors Cash & Bank Balance Other Current Assets Loans & Advances Total Current Assets

2002

2003

2004

2005

As on Dec 31, 2005

60.00 0.11 60.11 7.74 Nil 7.74 67.85

60.00 0.11 60.11 1.89 Nil 1.89 62.00

60.00 0.11 60.11 Nil Nil 0.00 60.11

60.00 1.87 61.87 Nil Nil 0.00 61.87

60.00 4.15 64.15 Nil Nil 0.00 64.15

60.00 6.62 66.62 Nil Nil 0.00 66.62

3 a b c

19.22 6.06 13.16 6.22 6.94 1.57 13.42 0.09 7.11 12.19 32.81

19.22 6.60 12.62 7.85 4.77 1.09 13.56 0.15 6.14 7.09 26.94

15.23 6.41 8.82 6.09 2.73 0.23 18.31 0.11 6.54 7.00 31.96

14.93 6.60 8.33 5.84 2.49 1.41 4.14 43.43 12.30 6.66 66.53

14.77 6.60 8.17 5.88 2.29 1.26 2.60 1.20 57.87 5.77 67.44

14.77 6.67 8.10 5.88 2.22 1.26 2.60 0.08 60.09 6.93 66.24

Less : Current Liabilities & Provisions a Current Liabilities (4.60) b Provision (14.67) 13.54 c Net Current Assets Profit & Loss(Debit Balance) Total : 45.80 67.85

(2.60) (16.23) 8.11 48.03 62.00

(1.60) (18.07) 12.29 44.86 60.11

(1.06) (7.50) 57.97 Nil 61.87

(0.53) (6.31) 60.60 Nil 64.15

(0.08) (6.48) 63.14 Nil 66.62

113

Allahabad Bank
Statement of Profit & Loss Account

(Rs. In crores)
For the Year ended March 31st

Particulars

2001 INCOME Lease Income Hire Purchase Income Investment Income/Interest Income from Merchant Banking activites Other income Liabilities/Provision Written Back Prior Period Adjustment 1.51 1.01 0.89 0.04 0.02 0.06 (0.29) 3.24

2002

2003

2004

2005

Nine Months ended Dec 31, 2005

0.19 1.22 0.46 0.01 0.01 0.01 NIL 1.90

0.06 0.90 0.04 0.14 0.01 5.43 NIL 6.58

0.04 0.54 0.72 0.19 0.44 17.28 17.69 36.90

0.02 0.20 1.33 1.23 NIL NIL NIL 2.78

0.04 0.05 2.61 0.06 0.23 NIL NIL 2.99

EXPENDITURE Personnel Cost Administration & Other Expenditure Interest Depreciation Provision for Doubtful Debt/Advances Provision for Shortfall in Investment Other Expenses 0.34 0.65 0.82 0.68 1.23 0.03 NIL 3.75 (0.51) NIL (0.51) 0.29 NIL (0.22) 0.24 1.06 0.49 0.55 1.47 0.33 NIL 4.14 (2.24) NIL (2.24) NIL NIL (2.24) 0.15 0.74 0.12 0.28 1.74 0.23 0.14 3.40 3.18 NIL 3.18 1.93 NIL 5.11 0.17 0.31 NIL 0.19 0.64 0.16 0.01 1.48 35.42 0.75 34.67 (1.93) 11.97 44.71 0.16 0.18 NIL 0.12 NIL 0.16 NIL 0.62 2.16 (0.11) 2.27 NIL NIL 2.27 0.10 0.35 NIL 0.07 Nil Nil Nil 0.52 2.47 NIL 2.47 NIL NIL 2.47

PROFIT /( LOSS) BEFORE TAX Provision for Income Tax NET PROFIT /( LOSS) FOR THE YEAR Prior Period Adjustments [ Add / (Less)] Provision for Investments ADJUSTED NET PROFIT (LOSS) Profit / Losses of the Subsidiary so far as it concerns the member of Allahabad Bank

(0.22)

(2.24)

5.11

44.71

2.27

2.47

114

Significant Accounting Policies: 1. SYSTEM OF ACCOUNTING :

Allahabad Bank

The Company follows the accrual basis of accounting as required by the Companies Act, 1956, unless other wise stated. 2. A. REVENUE RECOGNITION : Lease Finance : (i) The Accounting Standard 19 (AS19) on Leases came into effect in respect of all assets leased during accounting periods commencing on or after 1.4.2001. Since the Company has not sanctioned any lease on or after 1.4.2001, the AS19 is not applicable to the Company. (ii) (iii) Lease Rentals are considered on the due dates in terms of lease agreements. Lease Rentals are not considered where Leased Assets have been classified as Non Performing Assets (NPA) under the Prudential Norms announced by Reserve Bank of India. B. Fixed Assets : Fixed Assets are capitalized at cost inclusive of installation expenses as incurred by the Company. C. Leased Assets : Assets purchased and given on lease are capitalized on installation at cost and installation expenses. D. Depreciation : (a) Assets other than given on Lease : Depreciation is provided on straight line method at rates prescribed in Schedule XIV of the Companies Act, 1956. (b) Assets given on Lease : Depreciation on Leased Assets is provided as per the Guidance Note on Accounting for Leases issued by the Institute of Chartered Accountants of India. Lease Equalisation Account and Lease Adjustment Account have been created as prescribed by the Guidance Note. Depreciation on all the fixed assets (including Leased Assets classified as Non Performing Assets) has been provided on straight line method at the rates prescribed in Schedule XIV of the Companies Act, 1956. E. Investment : Long Term Investments are valued at cost. Provision for diminution in value of investment is made for decrease in value of such investments as at the end of the year. Current Investments are valued at the lower of cost and market value. In cases where Investments are listed but market quotations are not available, the value of the investment has been taken at Re. 1/- per Company. In the case of shares acquired in settlement of M/s V B Desai A/c pursuant to the Order of The Special Court, Mumbai, constituted under The Special Courts (Trial of Offences relating to Transactions in Securities) Act, 1992, the cost of acquisition of the Shares so acquired have been taken at the net amount due from M/s V B Desai, prior to such ruling. This investment has been considered as Long Term Investment. F. Prudential Norms : The directions issued by the Reserve Bank of India regarding prudential norms for Non-Banking Financial Companies for income recognition, asset classification and provisions have been followed. Notes on Accounts :

115

1.

Contingent liabilities not provided for : (a)

Allahabad Bank

Disputed Income Tax and Interest Tax liability in respect of matters pending before various Appellate authorities where the Company expects to succeed 31.03.2005 Income Tax 1062.42 7.58 444.59 74.40 113.39 51.52 373.85 2127.75 (Rs. in Lacs) 31.03.2005 Interest Tax 29.05 37.14 24.52 24.18 114.89 31.03.2004 Income Tax 1062.42 157.84 125.94 305.44 444.59 139.55 11.04 51.52 2298.34 31.03.2004 Interest Tax 29.05 37.14 24.52 24.18 114.89

Asst. Year 1993-94 1994-95 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 TOTAL (b)

Claims against the Company not acknowledged as Debts: Rs 347.04 lacs (Previous Year Rs 347.04 lacs)

As per the order of the Honble Special Court, the delivery of shares on 13.05.1992, by M/s V B Desai to AllBank Finance Ltd., constituted complete transfer of property in the shares in favour of the Company. Accordingly, the Company became the owner of the shares from the date of delivery of the shares and was entitled to all accretions and rights declared thereafter. Pursuant to the abovementioned order, the acquisition of the shares has been considered as Long Term Investment. 3.Payments where Directors are Interested Sl 1 2 Payment to Wise Mens Consultancy (P) Ltd. Dr. Surinder P.S. Pruthi Relationship Directors Co. Director Nature of transaction Consultancy Charges Travelling & Conveyance Amount (Rs.) 24,000/2,67,329/Previous Year (Rs.) 24,000/2,17,977/-

4. As on 31.03.2005, Rs.307.25 lakh have been shown as advance income tax, tax deducted at source and income tax refund receivable. This amount is pending adjustment at various stages of assessments and appeals. 5. In accordance with Accounting Standard 22 issued by the Institute of Chartered Accountants of India on Accounting for taxes on income, the Company has net deferred tax assets arising out of provisions made on doubtful debts. Deferred tax assets have not been recognised keeping in view the uncertainty of sufficient taxable income in future. 6 No provision has been made for bonus to employees as salary of all employees exceed the eligibility limit under The Payment of Bonus Act, 1965 7. Provision for diminution in the value of Current Investments for the year ended 31.03.2005, of Rs15.48 lakh (Previous year: Rs 16.06 lakh) has been charged to the Profit & Loss A/c. 8. Provision for retirement benefits, i.e. gratuity and leave encashment have been made on accrual basis.

9. The figures have been rounded off to the nearest rupee and the figures of the previous year have been rearranged or regrouped wherever necessary.

116

Allahabad Bank
STATEMENT OF DIVIDEND DECLARED BY THE BANK AND ITS SUBSIDIARY A. DIVIDEND DECLARED BY ALLAHABAD BANK Year ended March 31, March 31, March 31, March 31, March 31, December 2001 2002 2003 2004 2005 31,2005 For the Year 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-06 Number of shares ( in crores) 24.67 24.67 34.67 34.67 34.67 44.67 Rate of Dividend (%) 4.05 6.50 10.00 20.00 30% ---Amount of Dividend (Rs. in 10.00 16.04 34.67 69.34 119.01 ---crores) * Interim dividend @15% on Rs 346.70 crores and final dividend @15% on Rs 446.70 crores(i.e including the additional capital raised through follow on public issue) B. DIVIDEND DECLARED BY ALLBANK FINANCE LIMITED SUBSIDIARY OF THE BANK Year ended March 31, March 31, March 31, March 31, 2001 2002 2003 2004 For the Year 2000-2001 2001-2002 2002-2003 2003-2004 Number of shares ( in crores) 0.60 0.60 0.60 0.60 Rate of Dividend (%) ----------------Amount of Dividend (Rs. in ----------------crores) March 31, 2005 2004-2005 0.60 --------December 31,2005 2005-06 0.60 ----------

117

III.

STATUTORY AND OTHER INFORMATION

Allahabad Bank

Minimum Subscription As stated in the SEBI circular no. SEBI/MRD/SE/AT/46/2003 dated December 22, 2003, the requirement of minimum subscription shall not be applicable for the issue of Bonds on private placement basis and therefore the Bank shall not be liable to refund the issue subscription(s)/ proceed(s) in the event of the total issue collection falling short of issue size or certain percentage of issue size. Expenses of the Issue The expenses of the issue payable by the Bank such as arrangers fees, reimbursement of expenses and payments to the registrars to the Issue, printing expenses, listing fees, fees of the trustees for the Bondholders, stamp duty and other expenses will be met by the Bank. Fees Payable to the Intermediaries The fees payable and the terms of appointment of intermediaries such as arrangers to the issue, auditors, registrars to the issue, trustees for the bondholders, credit rating agencies etc are set out in the relevant appointment letters, copies of which are kept open for inspection at the Head Office of the Bank. Underwriting and Procurement Commission/ Brokerage The issue is not underwritten and hence no underwriting commission is payable. As the Bank shall not be appointing any Broker other than the arrangers to the issue, no procurement commission/ brokerage shall be payable to any other broker in addition. Previous Issues by the Bank (a) Public Issue of Equity Shares The Bank went for its maiden public issue of equity shares in October 2002. The issue comprised of 10,00,00,000 equity shares of Rs. 10/- each for cash at par aggregating to Rs. 100 crores of which Rs. 10 crores was earmarked for the employees of the Bank. The issue opened for subscription on October 23, 2002 and closed on October 31, 2002. The issue was oversubscribed by 3.55 times. The shares were allotted on 26-11-2002. The despatch of share certificates and refund orders was completed on 26-11-2002 The shares were listed at NSE, BSE and CSE on 27-11-2002. The Bank went for its follow-on public issue of equity shares in April 2005. The issue comprised of 10 crores equity shares of Rs. 10/- each for cash at a premium of Rs. 72/- per share (i.e. at an issue price of Rs. 82/- per share) aggregating to Rs. 820 crores of which Rs. 1.00 crore was earmarked for the employees of the Bank. The issue opened for subscription on April 06, 2005 and closed on April 12, 2005. The issue was made through book building route in the price range of Rs. 75/- to Rs. 82/- per share and the same was oversubscribed by 9 times. The shares were allotted on 25-04-2005. The despatch of share certificates and refund orders was completed on 27-04-2005 The shares were listed at NSE, BSE and CSE on 25-04-2005, 28-04-2005 & 0605-2005 respectively. (b) Private Placement of Bonds Besides the above the Bank has raised Tier II Capital by way of private placement of Unsecured Redeemable Non-Convertible Subordinated Bonds to augment capital adequacy as under: Deemed Interest Rate Credit Rating Tenure Date of Repayment Sr. Bond Outstanding Date of (% p.a., (Months) Redemption Terms No. Series Balance Allotment annually) (Rs. in crs.) 1. I 125.00 16.12.1999 12.30 AA(ind) by Fitch 88 15.04.2007 Bullet 2. II 95.00 15.10.2001 9.80 AA(ind) by Fitch 66 14.04.2007 Bullet 3. III 100.00 31.03.2003 7.00 AA(ind) byFfitch 85 30.04.2010 Bullet 4. IV 200.00 31.03.2004 5.90 CARE AA+ by CARE 99 30.06.2012 Bullet & AA(ind) by FITCH Except as stated elsewhere in this Information Memorandum, the Bank has not issued any shares/ debentures/ bonds or agreed to issue any shares/ debentures/ bonds for cash or otherwise within the two years preceding the date of this Information Memorandum. Offer Otherwise than for Cash There have not been any issues for consideration other than cash, save as except stated elsewhere in this Information Memorandum. Option to Subscribe Save as otherwise stated in this Information Memorandum, the Bank has not given any person nor does it propose to give any person any option to subscribe to the shares/ debentures/ bonds of the Bank. Undertaking regarding purchase of property There is no property which the Bank has purchased or acquired or proposes to purchase or acquire, which is to be paid for, wholly or partly, out of the proceeds of the present Issue or the purchase or acquisition of which has not been completed on the date of issue of this Information Memorandum, other than the property as given hereunder: a. the contracts for the purchase or acquisition whereof were entered into, or may be entered into, in the ordinary course of the Banks business, such contracts not being made in contemplation of the Issue or in consequence of the contract; or b. in respect of which the amount of the purchase consideration is not material. The Bank has not purchased any property in which any of its directors had or have any direct or indirect interest or in respect of any payment thereof. The Bank has no plans, at present, to acquire any running business out of the proceeds of the Issue. Terms of Appointment of Chairman and Managing Director In exercise of the powers conferred by clause (a) of sub-section (3) of section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, read with sub-clause (1) of clause 3, clause 6, clause 7 and sub-clause (1) of clause 8 of the Nationalised Banks (Management and Miscellaneous Provisions) Scheme 1970, the Central Government, after consultation

118

with RBI, has appointed Shri O. N. Singh as Chairman and Managing Director of the Bank upto 31.07.2006 vide Gazette Notification No. F.No. 9/14/2003-B.O.I. dated 4.12.2003. His compensation details are as follows: Salary Other benefit : : Rs. 24050 per month in the scale of Rs. 24050-650-26000/- with effect from 04.12.2003. Allowances and Perquisites such as dearness allowance, city compensatory allowance, housing, Leave Travel Allowance, Contribution to Provident Fund, Gratuity, Super-annuation, Reimbursement of medical expenses, entertainment expenses and others.

Allahabad Bank

Terms of Appointment of Executive Director In exercise of the powers conferred by clause (a) of sub-section (3) of section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, read with sub-clause (1) of clause 3 and sub-clause (1) of clause 8 of the Nationalised Banks (Management and Miscellaneous Provisions) Scheme 1970, the Central Government, after consultation with RBI, has appointed Shri S. K. Goel as Executive Director of the Bank for a period of five years from the date of taking charge until further orders, whichever is earlier. His compensation details are as follows: Salary Other benefit : : Rs. 22050/- in the scale of Rs. 22050-500-24050 with effect from 01.08.2005. Allowances and Perquisites such as dearness allowance, city compensatory allowance, housing, Leave Travel Allowance, Contribution to Provident Fund, Gratuity, Superannuation, Reimbursement of medical expenses, entertainment expenses and others.

Payment or Benefit to the Directors and Officers of the Bank No amount or benefit has been paid or given or is intended to be paid or given to any director or officer of the Bank except their normal remuneration and/or reimbursement for the services rendered to the Bank to which they are entitled to or may become entitled to under the provisions of the Bank Nationalization Act or otherwise in accordance with the Law. Except the benefits as provided under the relevant rules framed by the Government of India from time to time, the directors of the Bank are not eligible to any additional benefits upon termination of employment. The key managerial personnel are entitled to the compensation & benefits as applicable to all the permanent employees of the Bank. All the key managerial personnel, except the Chairman & MD and Executive Director, are of General Manager and higher grade and hence their compensation falls in the scale of Rs. 29340-32600. The other benefit includes the festival loan housing loan reimbursement of certain expenses etc. as per employees service rules. Nature and Interest of Directors No director of the Bank is interested in the appointment of any of the intermediaries to the issue such as Arrangers, Registrars, Rating Agencies, Trustees etc. No director of the Bank is interested in any property acquired by the Bank within two years of the date of this Information Memorandum or proposed to be acquired by it. The directors are not interested in any loan or advance given by the Bank to any person(s)/ company(ies) nor is any beneficiary of such loan or advance related to any of the directors of the Bank. Capitalisation of Reserves or Profits The Bank has not capitalised any of its reserves and/or profits since inception. Revaluation of Assets As on September 30 2005, the Bank had a balance of Rs. 594.85 crores outstanding as revaluation reserves. The Bank revalued its premises located at various canters during 1991-92 , 1996-97 & 2004-05 and the difference between market value and book value of the premise was credited to Capital Reserve-Fixed Asset and debited to Revalued Premise Account. The total amount credited to Capital Reserve Fixed Asset is as under: Financial Year 1991-92 1996-97 2004-05 Amount (Rs. in crores) 121.43 126.04 370.08

IV. MAIN PROVISIONS OF THE BANK NATIONALISATION ACT Relevant provisions of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 as amended by the Banking Companies (Acquisition and Transfer of Undertakings) Amendment Act, 1994 & Banking Companies (Acquisition and Transfer of Undertakings) Amendment Act, 1995 & 1996 hereinafter collectively referred to as the Bank Nationalization Act are: Authorised Capital As per the provisions of Section 3 (Sub-Section 2A) of the Banking Companies (Acquisition) Act, 1970 the Authorised Capital of the Bank shall be Rupees 1500 crores to be divided into 150 crore of fully paid-up equity shares of Rs.10/- each. Provided that the Central Government may, after consultation with the Reserve Bank of India and by notification in the Official Gazette, increase or reduce the authorised capital as it thinks fit, so however that after such increase or reduction, the authorised capital shall not exceed Rs. 3000 crore, or be less than Rs. 1500 Crores. Issued Capital Section 3 (Sub-Section 2B) of the Banking Companies (Acquisition) Act, 1970 provides that the paid-up capital may from time to time be increased by a. b. Such amounts as the Board of Directors of the corresponding new Bank may, after consultation with the Reserve Bank of India and with the previous sanction of the Central Government transfer from the reserve fund established by such Bank to such paid-up capital; Such amounts as the Central Government may, after consultation with the Reserve Bank, contribute to such paid-up capital;

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c.

Such amounts as the Board of Directors of the corresponding new Bank may, after consultation with the Reserve Bank and with the previous sanction of the Central Government, raise by Public Issue of shares as may be prescribed, so however, that the Central Government shall at all times hold not less than 51% of the paid-up capital of each corresponding new Bank.

Allahabad Bank

The entire paid-up capital of the corresponding new Bank, except the paid-up capital raised by public Issue under clause (c) of Sub-Section 2B shall stand vested in, and allotted to, the Central Government. Sec 3 (2BB) of Banking Companies (Acquisition) Act, 1970 provides that notwithstanding anything contained in subsection (2), the paid up capital of a corresponding new Bank constituted under subsection (1) may from time to time and before any paid up capital is raised by Public Issue under clause (c) of sub section (2B) be reduced by a. b. the Central Government after consultation with the Reserve Bank by canceling any paid up capital which is lost, or is unrepresented by available assets; the board of directors, after consultation with Reserve Bank and with the previous sanction of the Central Government, by paying off any paid up capital which is in excess of the wants of the corresponding new Bank.......

(2BBB) Notwithstanding anything contained in sub section (2BB) or sub-sub section (2BBA), the paid up capital of a corresponding new Bank shall not be reduced at any time so as to render it below twenty five percent of the paid up capital of that Bank as on date of commencement of the Banking Companies (Acquisition and Transfer of Undertakings) Amendment Act, 1995. Rights of Equity Shareholders As to Dividend Section 10(7): After making provision for bad and doubtful debts, depreciation in assets, contributions to staff and Superannuation funds and all other matters for which provision is necessary under any law, or which are usually provided for by Banking companies, a corresponding new Bank may, out of its net profits, declare a dividend and retain the surplus, if any. Voting Rights Section 3(2E): No shareholder of the corresponding new Bank, other than the Central Government, shall be entitled to exercise voting rights in respect of any shares held by him in excess of one per cent of the total voting rights of all the shareholders of the corresponding new Bank. Meeting of Shareholders Section 10A: A General Meeting (in this Act referred to as an annual general meeting) of every corresponding new Bank which has issued capital under clause (c) of sub-section (2B) of Section 3 shall be held at the place of the head office of the Bank in each year at such time as shall from time to time be specified by the Board of Directors: Provided that such annual general meeting shall be held before the expiry of six weeks from the date on which the balance sheet together with the profit and loss account and auditors' report is under sub-section (7A) of section 10, forwarded to the Central Government or to the Reserve Bank, whichever date is earlier. The shareholders present at an annual general meeting shall be entitled to discuss the balance sheet and the profit and loss account of the corresponding new Bank made up to the previous 31st day of March, the report of the Board of Directors on the working and activities of the corresponding new Bank for the period covered by the accounts and the auditor's report on the balance sheet and account. Transfer of Shares and Share Registers Section 3 (2D): The shares of every corresponding new Bank not held by the Central Government shall be freely transferable. Section 3 (2F): Every corresponding new Bank shall keep at its head office a register, in one or more books, of the shareholders (in this Act referred to as the Register) and shall enter therein the following particulars: i. ii. iii. iv. the names, addresses and occupations, if any, of the shareholders and a statement of the shares held by each shareholder, distinguishing each share by its denoting number; the date on which each person is so entered as a shareholder; the date on which any person ceases to be a shareholder and such other particulars as may be prescribed

Section 3 (2G): Notwithstanding anything contained in sub-section (2F), it shall be lawful for every, corresponding new Bank to keep the register in computer floppies or diskettes subject to such safeguards as may be prescribed. Section 3 (3): Notwithstanding anything contained in the Indian Evidence Act, 1872, a copy of, or extract from, the Register, certified to be a true copy under the hand of an officer of the corresponding new Bank authorised in this behalf by it, shall in all legal proceedings, be admissible in evidence. Section 3A: Notwithstanding anything contained in sub-section (2F) of Section 3, no notice of any trust, express, implied or constructive, shall be entered on the register, or be receivable, by the corresponding new Bank. Board of Directors and their Powers Constitutions of the Board of Directors: Section 9 (3): Every Board of Directors of a corresponding new Bank, constituted under any scheme made under Section (1), shall include: i. not more than two whole time directors to be appointed by the Central Government after consultation with the Reserve Bank;

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ii.

one director who is an official of the Central Government to be nominated by the Central Government provided that no such Director will be a Director of any other corresponding new Bank as in terms of the Banking Companies (Acquisition) Act, 1970; iii. one director who is an officer of the Reserve Bank to be nominated by the Central Government on the recommendation of the Reserve Bank. Explanation: For the purpose of this clause "an officer of the Reserve Bank" includes an officer of the Reserve Bank who is deputed by the Bank under Section 54AA of the Reserve Bank of India Act, 1934 to any institution referred to therein. iv. Not more than 2 directors to be nominated by the Central Government from amongst SEBI established under Section (3) of SEBI Act 1992 (15 of 1992), the National Bank for Agriculture & Rural Development established under section (3) NABARD Act 1981 (61 of 1981), Public financial institutions as specified in subsection (1) or notified from time to time under Sub-Section (2) of Section (4A) of Companies Act 1956 (1 of 1956) and other institutions established or constituted by or under any Central Act or incorporated under the Companies Act 1956 and having not less than 51% of the paid-up share capital held or controlled by the Central Government. v. one director, from among such of the employees of the corresponding new Bank who are workmen under clause(s) of Section 2 of the Industrial Disputes Act, 1947 to be nominated by the Central Government in such manner as may be specified in a scheme made under this section; vi. one director, from among the employees of the corresponding new Bank, who are not workmen under clause (S) of Section 2 of the Industrial Disputes Act, 1947, to be nominated by the Central Government after consultation with Reserve Bank; vii. one director who has been a Chartered Accountant for not less than 15 years to be nominated by the Central Government after consultation with the Reserve Bank; viii. subject to the provisions of clause (i), not more than six directors, to be nominated by the Central Government; ix. where the capital issued under clause (c) of sub-section (2B) of Section 3 is _ - not more than twenty per cent, of the total paid up capital, not more than two directors. - more than twenty per cent but not more than forty per cent, of the total paid-up capital, not more than four directors. - more than forty per cent, of the total paid-up capital, not more than six directors to be elected by the shareholders other than the Central Government, from amongst themselves. Provided that on the assumption of charge after election of any such directors under this clause, equal number of directors nominated under clause (h) shall retire in such manner as may be specified in the scheme. (3A): The directors to be nominated under clause (h) or to be elected under clause (i) of Sub-Section 3 shall A. have special knowledge or practical experience in respect of one or more of the following matters, namely: i. agricultural and rural economy ii. Banking iii. Co-operation iv. economics v. finance vi. law vii. small scale industry viii. any other matter the special knowledge of, and practical experience in which would in the opinion of the Reserve Bank, be useful to the corresponding new Bank; represent the interest of depositors; or represent the interests of farmers, workers and artisans.

Allahabad Bank

B. C.

Removal of Directors Section 9 (3B): Where the Reserve Bank is of the opinion that any director of a corresponding new Bank elected under clause (i) of Sub-section (3) does not fulfil the requirements of the Sub- Section (3A), it may, after giving to such director and the Bank a reasonable opportunity of being heard, by an order remove such director and on such removal, the Board of Directors shall coopt any other person fulfilling the requirements of sub-section 3(A) in place of the person so removed till a Director is duly elected by the shareholders of the corresponding new Bank in the next Annual General Meeting and the person so co-opted shall be deemed to have been duly elected by the shareholders of the corresponding new Bank as a director. Powers of Board of Directors Section 19: 1. The Board of Directors of a corresponding new Bank may, after consultation with the Reserve Bank and with the previous sanction of the Central Government by notification in the Official Gazette make the regulations, not inconsistent with the provisions of this Act or any scheme made thereunder, to provide for all matters for which provision is expedient for the purpose of giving effect to the provisions of this Act. In particular, and without prejudice to the generality of the foregoing power, the regulations may provide for all or any of the following matters, namely: i. the powers, functions and duties of local boards and restrictions, conditions or limitations, if any, subject to which they may be exercised or performed, the formation and constitution of local committees and committees of local boards (including the number of members of any such committee) the powers, functions and duties of such committees, the holding of meetings of local committees and committees of local boards and the conduct of business there at; ii. the manner in which the business of the local boards shall be transacted and the procedure in connection therewith.; (a) the nature of shares of the corresponding new Bank, the manner in which and the conditions subject to which shares may be held and transferred and generally all matters relating to the rights and duties of shareholders. (b) the maintenance of register, and the particulars to be entered in the register in addition to those specified in subsection (2F) of Section 3, the safeguards to be observed in the maintenance of register on computer, floppies or diskettes, inspection and closure of the register and all other matters connected therewith. (c) the manner in which general meetings shall be convened, the procedure to be followed thereat and the manner in which voting rights may be exercised. (d) the holding of meetings of shareholders and the business to be transacted thereat. (e) the manner in which notices may be served on behalf of the corresponding new Bank upon shareholders or other persons.

2.

121

(f) the manner in which the directors nominated under clause (g) of sub-section (3) of Section 9 shall retire. (g) the delegation of powers and functions of the Board of Directors of a corresponding new Bank to the general manager, director, or other employee of that Bank. (h) the conditions or limitations subject to which the corresponding new Bank may appoint advisors, officers or other employees and fix their remuneration and other terms and conditions of service. (i) the duties and conduct of advisors, officers or other employees of the corresponding new Bank. (j) the establishment and maintenance of Superannuation, pension, provident or other funds for the benefit of officers or other employees of the corresponding new Bank or of the dependants of such officers or other employees and the granting of Superannuation allowances, annuities and pensions payable out of such funds. (k) the conduct and defence of legal proceedings by or against the corresponding new Bank and the manner of signing and pleadings. (l) the provision of a seal for the corresponding new Bank and the manner and effect of its use. (m) the form and manner in which contracts binding on the corresponding new Bank may be executed. (n) the conditions and the requirements subject to which loans or advances may be made or bills may be discounted or purchased by the corresponding new Bank. (o) the persons or authorities who shall administer any pension, provident or other fund constituted for the benefit of officers or other employees of the corresponding new Bank or their dependants. (p) the preparation and submission of statements of programmes of activities and financial statements of the corresponding new Bank and the period for which and the time within which such statements and estimates are to be prepared and submitted; and (q) generally for the efficient conduct of the affairs of the corresponding new Bank.

Allahabad Bank

122

Allahabad Bank
V. MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION

The contracts referred to in Para (A) below (not being contracts entered into in the ordinary course of the business carried on by the Bank or entered into more than 2 years before the date of this Information Memorandum) which are or may be deemed to be material have been entered into by the Bank. Copies of these contracts together with the copies of documents referred to in Para (B) below may be inspected at the Head Office of the Bank between 10:00 am and 12:00 noon on any working day until the closing of the subscription list. A. 1. 2. 3. B. 1. 2. 3. 4. 5. 6. 7. 8. 9. Material Contracts Copy of letter(s) appointing Arrangers to the issue. Copy of letter appointing Maheshwary Datamatics P Ltd., as Registrar and Transfer Agents and copy of MoU entered into between the Bank and the Registrar. Copy of letter appointing IDBI Trusteeship Services Limited as Trustees to the Bondholders. Documents Memorandum and Articles of Association of the Bank. Copy of the resolution of Board of Directors dated 11 November 2005 authorising the current issue of Bonds. Auditors Report dated 18 February 2006 referred to in the Information Memorandum and their consent to include the same in the Information Memorandum. Consent from the Directors, Auditors, Trustees to the Bondholders, Arrangers to the Issue, Registrars to the Issue referred to in this Information Memorandum to act in their respective capacities. Copies of the initial listing applications made to NSE. Annual Reports of the Bank for Financial Years 2000-2001, 2001-2002, 2002-2003, 2003-2004 and 2004-2005. Letters received from NSE conveying their in-principle approval for listing of the Bonds. Letter from CARE conveying the credit rating for the Bonds of the Bank and the rating rationale pertaining thereto. Letter from ICRA conveying the credit rating for the Bonds of the Bank and the rating rationale pertaining thereto.
th th

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10. PART III DECLARATION

Allahabad Bank

All the relevant provisions of the Companies Act, 1956, the Banking Regulation Act, 1949, Securities and Exchange Board of India, the guidelines issued by the Government and any other competent authority have been complied with and no statement made in this Information Memorandum is contrary to the provisions of the Companies Act, 1956 and rules framed thereunder. All the legal requirements applicable till the date of this Information Memorandum have been complied with. Further it is certified that, all disclosures made in this Information Memorandum are true and correct. The Issuer Company accepts no responsibility for the statements made otherwise than in this Information Memorandum or any other material issued by or at the instance of the issuer and that any one placing reliance on any other source of information would be doing so at his own risk. Signed by Mr. O.N Singh, Chairman & Managing Director pursuant to the authority granted by the Board of Directors of the Bank at their meeting held on 11 November, 2005:
th

Dated: 10 March 2006. Place: Kolkata, West Bengal.

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124

COPY OF RATING LETTER FROM CARE

COPY OF RATING LETTER FROM CRISIL

Allahabad Bank

127

COPY OF CONSENT LETTER FROM IDBI TRUSTEESHIP SERVICES LIMITED Allahabad Bank

128

ADDRESSES OF COLLECTING BRANCHES OF THE BANK

Allahabad Bank
Head Office: 2, Netaji Subhas Road, Kolkata 700 001 Tel-(033) 22423373, 22420883 Fax.: (033) 22104048, 22424048

Centre
Kolkata New Delhi Mumbai

Address
14, India Exchange Place, Kolkata 700001 17, Sansad Marg, New Delhi - 110001 37, Samachar Marg, Mumbai - 400023

STD Code 033

011 022

Telephone Number(s) 22208992, 22205028

23743694 22655739, 2662018, 22661861

Fax Number(s) 22203015

23363694 22661935

Allahabad Bank

A. K. CAPITAL SERVICES LIMITED

Centre Mumbai Address 135/136, Free Press House, 13 Floor, Free Press Journal Marg, Nariman Point, Mumbai 400 021. Flat No. N, Sagar Apartments, 6, Tilak Marg, New Delhi - 110 001 509/510, 5 Floor, Brigade Tower, No. - 135, Brigade Road, Bangalore 560 026.
th th

Contact Person Indraneel Basu/ Rita/ Pallavi Neetan Singh/ Ajit Singh Chauhan Mahesh Chopra/ Santosh/ Chandan Jaiman Dave

STD Code Telephone No. 022 56349300 (10 lines)

Fax No. 56360977

New Delhi Bangalore

011 080 079

23385704, 23382380, 23385189 23388235 22292770, 22241931, 22292770 22270715 30910590 26400652

Ahmedabad 211, Shail Complex, 2nd Floor, Opp. Madusudan House, Shilp Char Rasta, C. G. Road, Navrangpura, Ahmedabad 380 009. Chennai Kolkata Hyderabad No. 17-A, 1st Floor, Wellington Estate, Ethiraj Salai, Egmore, Chennai - 600 006 Room No. 1408, 14 Floor, Om Towers, 32, J. L. Nehru Road, Kolkata 700 071. 5-9-93/1, Shakti Sai Complex, 2/7, 2 Floor, Chapel Road, Hyderabad 500 001.
th nd th

Madhavan Sriniwas Premanshu Sharma/ Vikramjit Sarkar Neetu Rai

044 033 040

52147213, 52145404 52145405 39529876/ 39529872 39529876 55638862 55638862

Pune

Office No. 705, 7 Floor, Sohrab Hall, 21, Sasoon Sanjeev Kumar Road, Pune 411 001.

020

56214292, 56214293 56214292, 56214293

ALLIANZ SECURITIES LIMITED

Centre Mumbai New Delhi Bangalore Chennai Kolkata Ahmedabad Pune Jaipur Baroda Lucknow Noida Address 33, 6 Floor, Vaswani Mansion, Dinsha Vachha Road, Churchgate, Mumbai 400 020 2nd Floor, 3, Scindia House, Janpath, New Delhi 110 001 S-416, 4 Floor, South Block, Manipal Centre, Dickenson Road, Bangalore 560 042 1 B First Floor, Royal Court, 41 Venkat Narayana Road Chennai 600 017 B/201, Prasad Chamber, 10-A Shakespeare Sarani, Kolkata 700 017 2nd floor, Panchratna Complex, Opp.White House, Nr. Panchvati Circle, C.G. Road, Ahmedabad - 380006 Office No.9, Tirupti Business Centre, 32, Karve Road, Pune 411 004 M3B, Mezzanine Floor, Sangam Tower, Church Road, Jaipur 302 001 134, Siddarth Complex, R. C. Dutt Road, Baroda 390 007 1st Floor, Shukla Palace, B-1 Sapru Marg Lucknow 226 001 302, Ocean Plaza, P-5, Sector 18, Noida
th th

Contact Person Sameer Apte/ Bijal Shah Manoj Arora/ Rajni Dasgupta/ Nupur Bagchi Jayshree G.D./ Prasoon Thampi Venkateswaran Arindam Biswas/ Subha Sen Roy Vaishali Seth Kamlesh Naik Sanjay Sharma Nitin Sahni Gopal Sharma U.C. Chopra

STD Code 022 011 080 044 033 079 020 0141 0265 0522 0120

Telephone No. 22870595, 22870596, 22040908 41514670, 41514671, 41514662 25092153, 25092154, 25092155 24315001, 24315002 22824582, 22824583, 22824587 26403057, 26402945 25458435, 25443162, 25443454 5116189 25581699 3944306 2515897

Fax No. 22870581 41514665 25092155 24315002 22824563 26403282 25432076 5116189 25581699

2515848

130

Allahabad Bank SPA MERCHANT BANKERS LTD

Centre Delhi Address 25, C Block, Community Centre Janak Puri, New Delhi 110 058 Contact Person Mr. Sarvesh Mr. Ashish Mr. Ravi Ms. Shweta Mr. Arun Mr. Vinay Mr .Ajay Mr .Raju Mr. Sandeep Mr. Bhavesh Mr. Manish Ms. Mona Mr. Sunil Mr. Benoy Mr. V. Sunil Mr. Rajesh Mr. Abhijeet Mr. Rakesh STD Code 011 Telephone No. 25572340 55404006-09 25517371 25515086 56373258 56373221 22843141 22801240-49 25092206-07 52071380, 52071381, 52071382 5107044, 5107144 22100818-19 Fax No. 25572763 25532644

Mumbai

10A, 10th Floor, Chandramukhi Building, Nariman Point, Mumbai-400 021

022

22846318/ 22871192

Bangalore Chennai Jaipur Kolkata

S-309, 3rd Floor Manipal Centre, South Block Dickenson Road, Bangalore-560 042 3h, 3rd Floor, East Coast Chambers, 92/34,G.N.Cheety Road, T.Nagar, Chennai-600 017 UL-15, Amber Tower Sanchar Chand Road Jaipur 302 001 4/1 Red Cross Place Kolkata 700 001

080 044 0141 033

25092008 52071379 5107144 22100819

IDBI Capital Services Ltd

Centre Mumbai Address IDBI Capital Services Ltd 8th floor, Bakhtawar, Nariman point, Mumbai - 400 021, Contact Person Siddharth Shah STD Code Telephone No. 022 22371212 Fax No. 22882560/2288 2550

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Allahabad Bank
Head Office, 2, Netaji Subhas Road, Kolkata 700 001, West Bengal. Tel.: (033) 22423373, 22420883 Fax.: (033) 22104048, 22424048.
APPLICATION FORM FOR UNSECURED REDEEMABLE NON-CONVERTIBLE SUBORDINATED BONDS The Board of Directors, Allahabad Bank, 2, Netaji Subhas Road, Kolkata 700 001, West Bengal. Dear Sirs, Having read, understood and agreed to the contents and terms and conditions of Allahabad Bank s Information Memorandum dated 10th March, 2006, I/We hereby apply for allotment to me/us, of the under mentioned Bonds (hereinafter referred to as Bonds), out of the Private Placement Issue. I/We irrevocably give my/ our authority and consent to IDBI Trusteeship Services Limited, to act as my/our Trustees and for doing such acts and signing such documents as are necessary to carry out their duties in such capacity. The amount payable on application as shown below is remitted herewith. I/We not that the Board of Directors are entitled in their absolute discretion to accept or reject this application in whole or in part without assigning any reason whatsoever. For Office Use Only Date of Receipt of Application / / 0 5 Date of Clearance of Cheque / / 0 5 Application No. ______
Application No. ______

I/We confirm that I/we have not received and will not receive any commission or brokerage or any other incentive in any form, directly or indirectly, for subscribing to the Issue. APPLICANTS DETAILS SOLE/FIRST APPLICANTS NAME IN FULL (PLEASE READ CAREFULLY THE INSTRUCTIONS ON THE NEXT PAGE BEFORE FILLING UP THIS FORM) SIGNATORY/AUTHORISED SIGNATORY

SECOND APPLICANTS NAME

THIRD APPLICANTS NAME

ADDRESS (Do not repeat name) (Post Box No. alone is not sufficient)

TEL SOLE/ FIRST APPLICANT CATEGORY (Tick one) Financial Institution Insurance Company Primary/ State/ District/ Central Co-operative Company Provident/ Gratuity/ Superannuation/ Pension Fund Regional Rural Company Mutual Fund PAYMENT DETAILS (Rs. in figures) Total Amount Payable (Rs. in words)

FAX INVESTMENT DETAILS Tenure Coupon Rate Face Value/ Issue Price Amount payable per Bond (i) No. of Bonds applied for (ii) Amount Payable (Rs.) (in fig) (i) x (ii) Cheque/ Demand Draft No. Dated Drawn on (Name of the Bank) Branch

PIN CODE

120 months 8% p.a. Rs. 10,00,000/- per Bond Rs. 10,00,000/Rs.

SOLE/ FIRST APPLICANTS BANK DETAILS (Ref. Instructions) Bank Name Branch City Account Number Type of Account Savings Current Others

INCOME TAX DETAILS (Ref. Instructions) Sole/ First Applicant P.A,N./ G.I.R. NO. I.T. Circle/ Ward/ District No.

Second Applicant

Third Applicant

TO BE FILLED IN ONLY IF THE APPLICANT IS AN INSTITUTION Name of the Authorised Signatory(ies) Designation 1. 1. 2. 2. 3. 3. 4. 4. DETAILS FOR ISSUE OF BONDS IN ELECTRONIC/ DEMATERIALISED FORM Depository Name (please tick) NSDL CDSL Depository Participant Name DP-ID Number Client-ID Beneficiary Account Number Name of the Applicant

Signature

APPLICANTS SIGNATURE(S) Sole/ First Applicant

Second Applicant Third Applicant ACKNOWLEDGEMENT SLIP Application No. ______

`-----------*----------*---------*------------*-------------*------------*-----------*-----------(Tear Here)-----------*-------------*-------------*-----------*-----------*-----------* ------------*----------*-------

Allahabad Bank
Head Office, 2, Netaji Subhas Road, Kolkata 700 001, West Bengal. Tel.: (033) 22423373, 22420883 Fax.: (033) 22104048, 22424048.
(To be filled in by the Applicant)

Received from________________________________________________________________ Address_____________________________________________________________________ an application for ____________ Bonds vide Cheque/ Demand Draft No. _________________ Drawn on__________________________________ Dated__________________ amounting to Rupees_____________________________________________________________________. Note: Cheque(s) are subject to realisation.

All future communication in connection with this application should be addressed to the Registrars, Maheshwary Datamatics P Ltd., 6 Mangoe Lane, Kolkata 700001. Tel No. 033-22435809/22435029, Fax No. 033-22484787 quoting full name of Sole/ First Applicant, Application No., Number of Bonds applied for, Date, Bank and Branch where the application was submitted and Cheque/ Demand Draft Number and Issuing Bank.

INSTRUCTIONS 1. Application forms must be completed in full in BLOCK LETTERS IN ENGLISH. A blank space must be left between two or more parts of the name. A B C D E L T D

Signatures should be made in English or in any of the Indian languages. Thumb impressions must be attested by an authorised official of a Bank or by a Magistrate/ Notary Public under his/ her official seal. 2. Application forms duly completed in all respects must be submitted with the respective Collecting Banker. Cheque(s)/ Demand Draft(s) should be drawn in favour of Allahabad Bank and crossed Account Payee Only. Cheque(s)/ Demand draft(s) may be drawn on any bank including a co-operative bank, which is a member or a sub-member of the Bankers Clearing House located at Chennai, Bangalore, Hyderabad, Ahmedabad, Kolkata, New Delhi & Mumbai. 3. 4. Outstation cheques, cash, money orders, postal orders and stock invest shall not be accepted. As a matter of precaution against possible fraudulent encashment of interest warrants due to loss/misplacement, applicants are requested to mention the full particulars to their bank account, as specified in the Application Form. Interest warrants will then be made out in favour of the company for credit to the applicants account. In case the full particulars are not given, cheques will be issued in the name of the applicant at his/ her risk.

5. Receipt of applications will be acknowledged by the respective designated branch of the Bank in the Acknowledgment Slip, appearing below the Application Form. No separate receipt will be issued. 6. All applicants should mention their Permanent Account Number or the GIR number allotted under Income-Tax Act, 1961 and the Income-Tax Circle/Ward/District. In case where neither the PAN nor GIR number has been allotted, the fact of non-allotment should be mentioned in the application form in the space provided. 7. The application would be accepted as per the terms of the scheme outlined in the Information Memorandum for Private Placement dated 10th March 2006