Dear Shareholder,

The year we just completed had also been quite challenging as the year owing to both global and domestic economics scenarios.

Global growth, however, is expected to gain momentum in 2017 after a sluggish growth in 2016. US economic growth is likely to improve with increase in sentiments. Declining unemployment and inflation gaining strength resulted in Fed hike in rates. Anticipated fiscal stimulus by the new government should further boost growth prospects. Strengthening dollar, increasing protectionism, etc. may thwart growth to some extent in US. Euro zone should move in the path of moderate growth with continuous monetary stimulus. The growth prospect in the region also depends on the outcome of ''''Brexit'''' negotiation. Increasing production and exports are helping the Japanese economy to some extent. The Chinese economy avoided a hard landing last year as it rebalances its economy and tries to focus more on domestic consumption driven growth. Rising commodity prices should benefit some of the commodity exporting economies.

Indian economy is recovering from the ''''transitory'''' impact of demonetisation. The piled up deposits in the banking system due to demonetization should support credit growth. This coupled with positive measures announced in the Union Budget 2017-18 should fuel growth. Goods and Service Tax (GST) should further help augment the economic growth. International Monetary Fund retained its growth forecast for India at 7.2% for FY 2017-18. Also it bumped up estimated growth of India to 6.8% from 6.6% estimated previously. Inflation moderated to 4.5% in FY 2016-17 from 4.9% in FY 2015-16. Prices of pulses and sugar continued to remain high. Rising global commodity prices along with currency volatility pose significant upside risk to inflation.

Export turned positive after prolonged slackness. Imports also had increased due to rising bill for oil imports. The current account deficit as a percentage of GDP expected to be around 1% in FY 2016-17. Foreign direct investment on cumulative basis had a double digit growth between April to December 2016-17. The portfolio investment has also turned positive in recent past.

The prospect of Indian economy is bright in the medium term with stable government, policy initiatives, reform measures and demographic dividend.

Tough time continues for public sector banks. Public Sector Banks will face competition from other institutions such as payment banks and private and foreign banks. Demonetization has led to piled up of deposit in the banking industry and affected the cash intensive industries. The credit growth has stayed sluggish due to stress in corporate balance sheets.

The Financial Year 2016-17 has been a year of consolidation as well as challenges for the Bank. The Bank continued to strategize its focus on recoveries which yielded better results during the year. Cash Recovery increased to Rs. 2378 crore in the financial year ended March 31, 2017 as compared to Rs.1287 crore in the previous financial year ended March 31, 2016 registering growth of 84.77%. Further, up gradation of assets improved to Rs. 1183 crore in the financial year March 31, 2017 as compared to Rs.608 crore in the previous financial year ended March 31, 2016. The banking industry faces challenges from mounting non-performing assets and resolution thereof. The Reserve Bank of India has revised the characteristics of Prompt Corrective Action (PCA) and stressed on asset quality and profitability to monitor banks and also defined three risk thresholds. Insolvency and Bankruptcy Code 2016 is a welcome move that should speed up the recovery process.

During the Financial Year 2016-17, Business of the Bank stood at Rs. 4,49,679 crore as compared to Rs. 4,56,336 crore in the Financial Year 2015-16. The Deposit of the Bank has grown by 11.45% to Rs. 296671 crore for the financial year ended March 31, 2017. The CASA share as a percentage of Total Deposits stood at 39.20% as against 35.48% in Financial Year 2015-16. To ensure profitable growth in Business, High Cost Deposits have been shed considerably. The share of high cost deposits as a proportion of Total deposits has been reduced to 3.70% as on March 2017 from as high as 5.56% as on March 2016. This is well reflected in growth of Aggregate Core Deposits at 13.65 %.

The operating profit of the Bank increased to Rs. 3089 crore from Rs. 2642 crore in Financial Year 2015-16 registering y-o-y growth of 16.92%. However, the Bank posted Net loss of Rs. 2439 crore in the financial year 2016-17 mainly on account of higher provisioning.

The Bank''''s Cost of Deposits reduced to 6.20% in the Financial Year 2016-17 from 6.86% in the Financial Year 2015-16, the Net Interest Income of the Bank reduced to Rs. 6574 crore from Rs. 7065 crore in Financial Year 2015-16. Non-Interest Income of the Bank increased to Rs. 2876 crore for the financial year ended March 31, 2017 compared to Rs. 1938 crore for the financial year ended March 31, 2016, registering y-o-y growth of 48.38%.

Asset Quality has been the concern of the Bank for last couple of years. Gross NPA to Gross Advances increased to 17.81 % as on March 31, 2017 from 11.95 % as on March 31, 2016, which was due to sale of loan assets of Rs. 22991.22 crore through IBPC participation. Net NPA to Net Advances increased to 10.20 % as on March 31, 2017 from 7.36 % as on March 31, 2016. Your Bank has been proactive in respect of NPA Management and shall continue its effort to reduce the NPA level. Provision Coverage Ratio improved to 58.43% as on March 31, 2017 from 51.52 % as on March 31, 2016.

A Bank with 4714 branches as on March 2017, of which 2/3 rd of the Branches are in rural and semi urban areas and 3677 Ultra Small Branches shall continue to position itself as a Retail Bank. Your Bank shall be ensuring that the retail and priority sector portfolios grow much faster than they have been so far.

I am happy to present the Annual Report of the Bank for the year ended March 31, 2017.

With best wishes,

Yours sincerely,

Sd/-Rajeev Rishi

Place: Mumbai

Date: May 23, 2017

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.

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