##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 20-F
  o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
 OR
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended March 31, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 OR
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Date of event requiring this shell company report
 For the transition period from  to
 Commission file number 001-15216
 HDFC BANK LIMITED
  
 India
 HDFC Bank House,
Senapati Bapat Marg, Lower Parel, Mumbai- 400 013, India
  Title of each classAmerican Depositary Shares
    
    Name of each exchange on which registeredThe New York Stock Exchange
  
 
  313,142,408 Equity Shares
  þ o
  o þ
   þ o
  þ o o
  o þ
  o þ




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TABLE OF CONTENTS
 CROSS REFERENCE SHEET
    
    
    3EXCHANGE RATES
    
    
    5FORWARD LOOKING STATEMENTS
    
    
    7BUSINESS
    
    
    8RISK FACTORS
    
    
    29PRICE RANGE OF OUR AMERICAN DEPOSITARY SHARES AND EQUITY SHARES
    
    
    39DESCRIPTION OF EQUITY SHARES
    
    
    41DIVIDEND POLICY
    
    
    42SELECTED FINANCIAL AND OTHER DATA
    
    
    43SELECTED STATISTICAL INFORMATION
    
    
    47MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
    
    
    62MANAGEMENT
    
    
    82PRINCIPAL SHAREHOLDERS
    
    
    97RELATED PARTY TRANSACTIONS
    
    
    98TAXATION
    
    
    101SUPERVISION AND REGULATION
    
    
    108EXCHANGE CONTROLS
    
    
    122RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES
    
    
    123ADDITIONAL INFORMATION
    
    
    124EX-12.1 CERTIFICATION BY MD UNDER SECTION 302EX-12.2 CERTIFICATION OF CFO UNDER SECTION 302EX-13 CERTIFICATION OF MD & CFO UNDER SECTION 906




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3 
 CROSS REFERENCE SHEET
 1Form 20-F ItemNumber
    
    Item Caption
    
    Location
    
    PagePart IItem 1
    
    Identity of Directors, Senior
Management and Advisors
    
    Not ApplicableItem 2
    
    Offer Statistics and Expected Timetable
    
    Not ApplicableItem 3
    
    Key Information
    
    Exchange Rates
    
    
    5Risk Factors
    
    
    29Selected Financial and Other Data
    
    
    43Item 4
    
    Information on the Company
    
    Business
    
    
    8Selected Statistical Information
    
    
    47Managements Discussion and Analysis
    
    
    62Principal Shareholders
    
    
    97Related Party Transactions
    
    
    98Supervision and Regulation
    
    
    108Item 5
    
    Operating and Financial Review and
Prospects
    
    Managements Discussion and Analysis
    
    
    62Item 6
    
    Directors, Senior Management and Employees
    
    Business  Employees
    
    
    27Management
    
    
    82Principal Shareholders
    
    
    97Item 7
    
    Major Shareholders and Related
Party Transactions
    
    Principal Shareholders
    
    
    97Related Party Transactions
    
    
    98Item 8
    
    Financial Information
    
    Financial Statements
    
    
    F-1Item 9
    
    The Offer and Listing
    
    Price Range of Our American
Depositary Share and Equity Shares
    
    
    39Item 10
    
    Additional Information
    
    Management
    
    
    82Description of Equity Shares
    
    
    41Taxation
    
    
    101Supervision and Regulation
    
    
    108Exchange Controls
    
    
    122Restrictions on Foreign Ownership
of Indian Securities
    
    
    123Additional Information
    
    
    124Item 11
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    Business  Risk Management
    
    
    21Selected Statistical Information
    
    
    47Notes to Financial Statements
    
    
    F-7Item 12
    
    Description of Securities Other than
Equity Securities
    
    Not Applicable




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4 1Form 20-F ItemNumber
    
    Item Caption
    
    Location
    
    PagePart IIItem 13
    
    Defaults, Dividend Arrearages and
Delinquencies
    
    Not ApplicableItem 14
    
    Material Modifications to the Rights
of Security Holders and Use of
Proceeds
    
    Not ApplicableItem 15
    
    Controls and Procedures
    
    Management Controls and Procedures
    
    
    91Item 16A
    
    Audit Committee Financial Expert
    
    ManagementAudit Committee Financial
Expert
    
    
    92Item 16B
    
    Code of Ethics
    
    Management Code of Ethics
    
    
    92Item 16C
    
    Principal Accountant Fees and Services
    
    Management
Principal Accountant Fees and Services
    
    
    92Part IIIItem 18
    
    Financial Statements
    
    Financial Statements
    
    
    F-1Report of Independent Auditors
    
    
    F-2Item 19
    
    Exhibits
    
    Exhibits




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5 
 EXCHANGE RATES
      Fiscal Year
    
    Period End(1)
    
    
    Average(1)(2)
    
    
    High
    
    
    Low2002
    
    
    48.83
    
    
    
    47.81
    
    
    
    48.91
    
    
    
    46.582003
    
    
    47.53
    
    
    
    48.36
    
    
    
    49.07
    
    
    
    47.532004
    
    
    43.40
    
    
    
    45.78
    
    
    
    47.46
    
    
    
    43.402005
    
    
    43.62
    
    
    
    44.87
    
    
    
    46.45
    
    
    
    43.272006
    
    
    44.48
    
    
    
    44.17
    
    
    
    46.26
    
    
    
    43.05
 
 (1)
    
    The noon buying rate at each period end and the average rate for each period
differed from the exchange rates used in the preparation of our financial statements.(2)
    
    Represents the average of the noon buying rate for all days during the period.




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6  Month
    
    Period End
    
    
    Average
    
    
    High
    
    
    LowMarch
    
    
    44.48
    
    
    
    44.34
    
    
    
    44.58
    
    
    
    44.09April
    
    
    44.86
    
    
    
    44.82
    
    
    
    45.09
    
    
    
    44.39May
    
    
    46.22
    
    
    
    45.20
    
    
    
    46.22
    
    
    
    44.69June
    
    
    45.87
    
    
    
    45.89
    
    
    
    46.25
    
    
    
    45.50July
    
    
    46.52
    
    
    
    46.37
    
    
    
    46.83
    
    
    
    45.84August
    
    
    46.43
    
    
    
    46.45
    
    
    
    46.61
    
    
    
    46.32




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7 
 FORWARD LOOKING STATEMENTS




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8 
 BUSINESS
 Overview
     th
 Our Competitive Strengths
  We are a leader among Indian banks in our use of technology
  We deliver high quality service with superior execution




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9 We offer a wide range of products to our clients in order to service their banking needs.
  We have an experienced management team.
  Our Business Strategy
  Increase our market share in Indias expanding banking and financial services industry
  Maintain our current high standards for asset quality through disciplined credit risk
management
  Maintain a low cost of funds
  Focus on high earnings growth with low volatility
  Our Principal Business Activities




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10  Year ended March 31,2004
    
    
    2005
    
    
    2006
    
    
    2006(In millions, except percentage)Retail banking
    
    Rs.
    8,847.9
    
    
    Rs.
    13,037.0
    
    
    Rs.
    23,293.2
    
    
    
    75.1
    %Wholesale banking
    
    
    4,653.2
    
    
    
    7,192.4
    
    
    
    8,256.0
    
    
    
    26.6Treasury operations
    
    
    1,461.5
    
    
    
    919.6
    
    
    
    (527.1
    )
    
    
    (1.7
    )Net revenue
    
    Rs.
    14,962.6
    
    
    Rs.
    21,149.0
    
    
    Rs.
    31,022.1
    
    
    
    100.0
    %
 Retail Banking
 Overview
    Retail Loans and Other Asset Products




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11  As of March 31, 2006% of TotalNo. of Loans
    
    Value
    
    Value(In thousands)
    
    (In millions)Retail Loans:Auto loan.(1)
    
    
    117
    
    
    Rs.
    51,184.4
    
    
    US$
    1,150.8
    
    
    
    18.7
    %Commercial vehicles and construction
equipment finance.(1)
    
    
    64
    
    
    
    43,613.2
    
    
    
    980.5
    
    
    
    15.9Personal loans
    
    
    282
    
    
    
    47,775.6
    
    
    
    1,074.1
    
    
    
    17.5Loans against securities
    
    
    30
    
    
    
    17,669.8
    
    
    
    397.3
    
    
    
    6.5Two wheeler loans
    
    
    651
    
    
    
    19,661.2
    
    
    
    442.0
    
    
    
    7.2Retail business banking
    
    
    10
    
    
    
    29,291.6
    
    
    
    658.6
    
    
    
    10.7Credit cards.(2)
    
    
    2,417
    
    
    
    13,758.0
    
    
    
    309.3
    
    
    
    5.0Other retail loans
    
    
    149
    
    
    
    6,347.6
    
    
    
    142.7
    
    
    
    2.3Total retail loans
    
    
    3,720
    
    
    
    229,301.4
    
    
    
    5,155.3
    
    
    
    83.8Mortgage backed securities (home loans)(3)
    
    
    
    
    
    
    17,054.8
    
    
    
    383.4
    
    
    
    6.2Asset backed securities (3)
    
    
    
    
    
    
    27,126.1
    
    
    
    609.9
    
    
    
    10.0Total retail assets
    
    
    
    
    
    Rs.
    273,482.3
    
    
    US$
    6,148.6
    
    
    
    100.0
    %
 
 (1)
    
    Net of receivables securitized.(2)
    
    Number of cards in force.(3)
    
    Reflected at fair value. Auto Loans
  Commercial Vehicles and Construction Equipment Finance
  Personal Loans
  Loans against Securities




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12  Two Wheeler Loans
  Retail Business Banking
  Credit Cards
  Other Retail Loans
  Mortgage- Backed Securities (Home Loans )
  Asset-Backed Securities




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13 Sale/Transfer of Receivables
  Retail Deposit Products
  At March 31, 2006% of
    
    No of accountsValue ( in millions )
    
    total
    
    ( in thousands )
    
    % of totalSavings
    
    Rs.
    153,072.0
    
    
    US$
    3,441.4
    
    
    
    44.1
    %
    
    
    4,480.5
    
    
    
    78.7
    %Current
    
    
    70,781.7
    
    
    
    1,591.3
    
    
    
    20.4
    
    
    
    558.9
    
    
    
    9.8Time
    
    
    123,489.8
    
    
    
    2,776.3
    
    
    
    35.5
    
    
    
    651.9
    
    
    
    11.5Total
    
    Rs.
    347,343.5
    
    
    US$
    7,809.0
    
    
    
    100.0
    %
    
    
    5,691.3
    
    
    
    100.0
    %
  §
    
    Savings accounts, which are demand deposits in checking accounts designed primarily for individuals and trusts. These
accrue interest at a fixed rate set by the RBI (currently 3.5% per annum).§
    
    Current accounts, which are non-interest-bearing checking accounts designed primarily for small businesses. Customers
have a choice of regular and premium product offerings with different minimum average quarterly account balance
requirements.§
    
    Time deposits, which pay a fixed return over a predetermined time period.
  Debit Cards




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14 Individual Depositary Accounts
  Mutual Fund Sales
  Insurance
  Investment Advice
  Bill Payment Services
  Corporate Salary Accounts
  Non-Resident Indian Services




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15 Customers and Marketing
    Wholesale Banking
 Overview




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16 Commercial Banking Products
 Commercial Loan Products and Credit Substitutes
    As of March 31,2004
    
    2005
    
    2006
    
    2006(In millions)Gross commercial loans:Working capital
    
    Rs.
    54,104.5
    
    
    Rs.
    72,397.6
    
    
    Rs.
    78,693.4
    
    
    US$
    1,769.2Term
loans
    
    
    53,819.3
    
    
    
    76,861.8
    
    
    
    92,932.8
    
    
    
    2,089.2Total commercial
loans
    
    Rs.
    107,923.8
    
    
    Rs.
    149,259.4
    
    
    Rs.
    171,626.2
    
    
    US$
    3,858.4Credit substitutes:Commercial
paper
    
    Rs.
    906.7
    
    
    Rs.
    1,297.3
    
    
    Rs.
    
    
    
    US$
    Non-convertible
debentures
    
    
    14,852.0
    
    
    
    12,018.7
    
    
    
    9,308.1
    
    
    
    209.3Preference
shares
    
    
    799.2
    
    
    
    564.9
    
    
    
    443.2
    
    
    
    9.9Total credit
substitutes
    
    Rs.
    16,557.9
    
    
    Rs.
    13,880.9
    
    
    Rs.
    9,751.3
    
    
    US$
    219.2Customer assets
    
    Rs.
    124,481.7
    
    
    Rs.
    163,140.3
    
    
    Rs.
    181,377.5
    
    
    US$
    4,077.6




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17  Bill Collection, Documentary Credits and Guarantees
  As of March 31,
    
    As of March 31,2004
    
    2005
    
    2006
    
    2006(In millions)Bill
collection
    
    Rs.
    172,623.6
    
    
    Rs.
    359,609.0
    
    
    Rs.
    381,657.9
    
    
    US$
    8,580.4Documentary
credits
    
    
    44,030.0
    
    
    
    56,702.9
    
    
    
    46,106.1
    
    
    
    1,036.6Bank guarantees
    
    
    15,197.0
    
    
    
    14,518.2
    
    
    
    21,949.0
    
    
    
    493.5Total
    
    Rs.
    231,850.6
    
    
    Rs.
    430,830.1
    
    
    Rs.
    449,713.0
    
    
    US$
    10,110.5
 Bill collection.
 Documentary credits
 Bank guarantees.
 Foreign Exchange and Derivatives
  Precious Metals
  Wholesale Deposit Products




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18 Transactional Services
 Cash Management Services
       Clearing Bank Services for Stock and Commodity Exchanges
  Custodial Services




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19  Correspondent Banking Services
   Tax Collections
  Treasury
    Foreign Exchange




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20  Derivatives
  Domestic Money Market and Debt Securities Desk
  Equities Market
  Distribution Channels
  Branch Network
   Automated Teller Machines




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21  Telephone Banking Call Centers
  Internet Banking
  Mobile Telephone Banking
  Risk Management
  Credit Risk
  Wholesale Credit Risk




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22




















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23   Retail Credit Risk
  Foreign Exchange, Derivatives and Trading Activities
  Market Risk




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24   Asset Liability Management
         Liquidity Risk




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25   Price Risk
      Operational Risk
  §
    
    to independently evaluate the adequacy of all internal controls;§
    
    to ensure adherence to the operating guidelines, including regulatory and legal requirements; and§
    
    to recommend operation process improvements.




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26 
      Competition
  Retail Banking




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27   Wholesale Banking
  Treasury
  Employees




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28  Properties
   Legal Proceedings




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29 
 RISK FACTORS
  Risks Relating to Our Business
 If we are unable to manage our rapid growth, our business could be adversely affected.
  §
    
    recruiting, training and retaining sufficient skilled personnel;§
    
    upgrading and expanding our technology platform;§
    
    developing and improving our products and delivery channels;§
    
    preserving our asset quality as our geographical presence
increases and customer profile changes; and§
    
    maintaining high levels of customer satisfaction.
  Our business is vulnerable to volatility in interest rates.
   If the level of non-performing loans in our portfolio increases, then our business could suffer.




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30  We have high concentrations of customer exposures to certain customers and sectors and if any of
these exposures were to become non-performing, the quality of our portfolio could be adversely
affected.
    We face greater credit risks than banks in more developed countries .
  We may be unable to foreclose on collateral when borrowers default on their obligations to us,
which may result in failure to recover the expected value of collateral security .




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31   Our success depends in large part upon our management team and skilled personnel and our ability to
attract and retain such persons.
  In order to sustain our growth, we will need to maintain a minimum capital adequacy ratio. There is
no assurance that we will be able to access the capital markets when necessary to do so.
  Material changes in Indian banking regulations could harm our business.
  We compete directly with banks that are much larger than we are.




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32  Consolidation in the banking industry could adversely affect us.
  Our funding is primarily short and medium-term and if depositors do not roll over deposited funds
upon maturity, our business could be adversely affected.
  We could be subject to volatility in revenue from our treasury operations .
  We could be adversely affected by the development of a nationwide inter-bank settlement system.
  Because of our many transactions with stock market participants, our business could suffer if there
is a prolonged or significant downturn on the Indian stock exchanges.




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33  Significant fraud, system failure or calamities could adversely impact our business.
   HDFC Limited controls a significant percentage of our share capital and exercises substantial
influence over board decisions.
  We may face potential conflicts of interest relating to our principal shareholder, HDFC Limited .
  RBI guidelines relating to ownership in private banks could discourage or prevent a change of
control or other business combination involving us and could require HDFC Limited to reduce
substantially its equity interest in us.




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34  We may face increased competition as a result of recently revised guidelines that relax
restrictions on the presence of foreign banks in India.
  If we fail to comply with Section 404 of the Sarbanes-Oxley Act of 2002, our reputation and
the value of our securities may be adversely affected.
  A change in U.S. GAAP accounting standards for employee stock options is likely to have an adverse
impact on our net income.
  Risks Relating to Investments in Indian Companies
 A slowdown in economic growth in India could cause our business to suffer .




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35  Political instability or changes in the government in India could delay the liberalization of the
Indian economy and adversely affect economic conditions in India generally, which could impact our
financial results and prospects.
  Terrorist attacks, civil unrest and other acts of violence or war involving India and other
countries could adversely affect the financial markets and our business .
   Natural calamities could have a negative impact on the Indian economy and cause our business to
suffer.
  Any downgrading of Indias debt rating by an international rating agency could have a negative
impact on our business.
  We need to take prior RBI approval for opening new branches to increase our infrastructure and
expand our reach into different geographical segments. Delay in getting
approval for branches could have a negative impact on our future
financial performance.




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36 Risks Relating to the ADSs and Equity Shares
 Historically, our ADSs have traded at a significant premium to the trading prices of our underlying
equity shares, a situation which may not continue.
  ADS holder will not be able to vote.
  ADS holders ability to withdraw equity shares from the depositary facility is uncertain and may be
subject to delays.
  There is a limited market for the ADSs.
  Conditions in the Indian securities market may affect the price or liquidity of our equity
shares and ADSs.




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37




Settlement of trades of equity shares on Indian stock exchanges may be subject to delays .




ADS holder may be unable to exercise preemptive rights available to other shareholders.




Because the equity shares underlying our ADSs are quoted in rupees in India, ADS holder may be
subject to potential losses arising out of exchange rate risk on the Indian rupee and risks
associated with the conversion of rupee proceeds into foreign currency.




§
    
    the U.S. dollar equivalent of the Indian rupee trading price of
our equity shares in India and, indirectly, the U.S. dollar
trading price of our ADSs in the United States;§
    
    the U.S. dollar equivalent of the proceeds that ADS holder would
receive upon the sale in India of any equity shares that ADS
holder withdraw from the depositary; and§
    
    the U.S. dollar equivalent of cash dividends, if any, paid in
Indian rupees on the equity shares represented by our ADSs.


Financial instability in other countries, particularly emerging market countries, could disrupt our
business and affect the price of our equity shares and ADSs.






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38  ADS holder may not be able to enforce a judgment of a foreign court against us.
  There may be less company information available on Indian securities markets than securities
markets in developed countries .




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39 
 PRICE RANGE OF OUR AMERICAN DEPOSITARY SHARES AND EQUITY SHARES
  Trading Prices of Our ADSs on the New York Stock Exchange
  §
    
    the reported high and low prices for our ADSs in U.S. dollars on the New York Stock Exchange; and§
    
    the average daily trading volume for our ADSs on the New York Stock Exchange.
 Average daily ADSPrice per ADS
    
    trading volumeHigh
    
    Low
    
    (Number of ADSs)Fiscal2003
    
    US$
    16.3
    
    
    US$
    11.9
    
    
    
    42,7782004
    
    
    34.9
    
    
    
    15.4
    
    
    
    68,2282005First Quarter
    
    
    33.1
    
    
    
    19.6
    
    
    
    103,313Second Quarter
    
    
    34.0
    
    
    
    25.7
    
    
    
    37,966Third Quarter
    
    
    45.9
    
    
    
    30.5
    
    
    
    88,325Fourth Quarter
    
    
    50.0
    
    
    
    38.8
    
    
    
    194,8342006First Quarter
    
    
    48.5
    
    
    
    40.0
    
    
    
    127,761Second Quarter
    
    
    53.0
    
    
    
    45.3
    
    
    
    142,473Third Quarter
    
    
    54.8
    
    
    
    42.0
    
    
    
    205,373Fourth Quarter
    
    
    59.7
    
    
    
    51.2
    
    
    
    193,353Most Recent Six MonthsMarch 2006
    
    
    55.8
    
    
    
    52.4
    
    
    
    170,182April 2006
    
    
    62.5
    
    
    
    54.9
    
    
    
    221,937May 2006
    
    
    63.6
    
    
    
    51.6
    
    
    
    247,445June 2006
    
    
    55.8
    
    
    
    43.0
    
    
    
    368,386July 2006
    
    
    55.0
    
    
    
    47.3
    
    
    
    206,525August 2006
    
    
    58.0
    
    
    
    52.4
    
    
    
    123,052




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40 Trading Prices of Our Equity Shares on the National Stock Exchange
  §
    
    the reported high and low market prices for our equity shares in rupees on the National Stock
Exchange;§
    
    the imputed high and low closing sales prices for our equity shares translated into U.S. dollars; and§
    
    the average daily trading volume for our equity shares on the National Stock Exchange.
 Price per
    
    
    Price per
    
    
    Average dailyequity share
    
    
    equity share
    
    
    equity shareHigh
    
    
    Low
    
    
    High
    
    
    Low
    
    
    trading volumeFiscal Year2002
    
    Rs.
    255.0
    
    
    Rs.
    184.1
    
    
    US$
    5.7
    
    
    US$
    4.1
    
    
    
    85,1092003
    
    
    256.0
    
    
    
    186.0
    
    
    
    5.8
    
    
    
    4.2
    
    
    
    94,0162004
    
    
    406.8
    
    
    
    231.0
    
    
    
    9.1
    
    
    
    5.2
    
    
    
    294,0902005First Quarter
    
    
    400.0
    
    
    
    256.2
    
    
    
    9.0
    
    
    
    5.8
    
    
    
    250,044Second Quarter
    
    
    416.7
    
    
    
    341.1
    
    
    
    9.4
    
    
    
    7.7
    
    
    
    338,098Third Quarter
    
    
    530.0
    
    
    
    396.2
    
    
    
    11.9
    
    
    
    8.9
    
    
    
    346,242Fourth Quarter
    
    
    628.6
    
    
    
    475.1
    
    
    
    14.1
    
    
    
    10.7
    
    
    
    366,7942006First Quarter
    
    
    643.0
    
    
    
    448.0
    
    
    
    14.5
    
    
    
    10.1
    
    
    
    262,870Second Quarter
    
    
    765.0
    
    
    
    537.9
    
    
    
    17.2
    
    
    
    12.1
    
    
    
    438,678Third Quarter
    
    
    748.5
    
    
    
    603.0
    
    
    
    16.8
    
    
    
    13.6
    
    
    
    465,565Fourth Quarter
    
    
    812.0
    
    
    
    680.0
    
    
    
    18.3
    
    
    
    15.3
    
    
    
    526,244Most Recent Six MonthsMarch
    
    
    812.0
    
    
    
    721.0
    
    
    
    18.3
    
    
    
    16.2
    
    
    
    542,918April
    
    
    865.0
    
    
    
    740.9
    
    
    
    19.4
    
    
    
    16.7
    
    
    
    555,505May
    
    
    895.0
    
    
    
    710.0
    
    
    
    20.1
    
    
    
    16.0
    
    
    
    571,663June
    
    
    814.8
    
    
    
    615.2
    
    
    
    18.3
    
    
    
    13.8
    
    
    
    481,029July
    
    
    816.0
    
    
    
    680.0
    
    
    
    18.3
    
    
    
    15.3
    
    
    
    388,205August
    
    
    870.0
    
    
    
    764.1
    
    
    
    19.6
    
    
    
    17.2
    
    
    
    278,540




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##### Table of Contents



41 
 DESCRIPTION OF EQUITY SHARES




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##### Table of Contents



42 
 DIVIDEND POLICY
  Dividend per equity share
    
    Total amount of dividends paid(1)(in millions)Relating to Fiscal Year2002
    
    Rs.
    2.50
    
    
    US$
    0.056
    
    
    Rs.
    703.4
    
    
    US$
    15.82003
    
    
    3.00
    
    
    
    0.067
    
    
    
    850.5
    
    
    
    19.12004
    
    
    3.50
    
    
    
    0.079
    
    
    
    1,000.5
    
    
    
    22.52005
    
    
    4.50
    
    
    
    0.101
    
    
    
    1,400.7
    
    
    
    31.52006
    
    
    5.50
    
    
    
    0.124
    
    
    
    1,722.3
    
    
    
    38.7
 
 (1)
    
    Includes dividends paid on shares held by the Employees
Welfare Trust.




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##### Table of Contents



43 
 SELECTED FINANCIAL AND OTHER DATA
   Years ended March 31,2002
    
    2003
    
    2004
    
    2005
    
    2006
    
    2006(In millions, except per equity share data)Selected income statement data:Interest and dividend revenue
    
    Rs.
    16,448.0
    
    
    Rs.
    19,424.8
    
    
    Rs.
    24,591.5
    
    
    Rs.
    29,209.4
    
    
    Rs.
    43,528.0
    
    
    US$
    978.6Interest expense
    
    
    10,762.5
    
    
    
    11,779.2
    
    
    
    11,983.1
    
    
    
    13,223.7
    
    
    
    19,621.8
    
    
    
    441.1Net interest revenue
    
    
    5,685.5
    
    
    
    7,645.6
    
    
    
    12,608.4
    
    
    
    15,985.7
    
    
    
    23,906.2
    
    
    
    537.5Allowance for credit losses, net
    
    
    451.6
    
    
    
    741.5
    
    
    
    2,343.4
    
    
    
    3,048.2
    
    
    
    5,032.0
    
    
    
    113.1Net interest revenue after allowance for
credit losses
    
    
    5,233.9
    
    
    
    6,904.1
    
    
    
    10,265.0
    
    
    
    12,937.5
    
    
    
    18,874.2
    
    
    
    424.4Non-interest revenue, net
    
    
    3,215.1
    
    
    
    4,397.3
    
    
    
    4,697.6
    
    
    
    8,211.5
    
    
    
    12,147.9
    
    
    
    273.0Net revenue
    
    
    8,449.0
    
    
    
    11,301.4
    
    
    
    14,962.6
    
    
    
    21,149.0
    
    
    
    31,022.1
    
    
    
    697.4Non-interest expense
    
    
    4,196.0
    
    
    
    6,057.9
    
    
    
    8,369.3
    
    
    
    11,413.9
    
    
    
    17,846.8
    
    
    
    401.2Income before income taxes
    
    
    4,253.0
    
    
    
    5,243.5
    
    
    
    6,593.3
    
    
    
    9,735.1
    
    
    
    13,175.3
    
    
    
    296.2Income tax expense
    
    
    1,294.6
    
    
    
    1,729.7
    
    
    
    1,838.8
    
    
    
    3,125.4
    
    
    
    3,965.7
    
    
    
    89.2Net income before minority interest
    
    Rs.
    2,958.4
    
    
    Rs.
    3,513.8
    
    
    Rs.
    4,754.5
    
    
    Rs.
    6,609.7
    
    
    Rs.
    9,209.6
    
    
    US$
    207.0Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22.5
    
    
    
    0.5Net income
    
    Rs.
    2,958.4
    
    
    Rs.
    3,513.8
    
    
    Rs.
    4,754.5
    
    
    Rs.
    6,609.7
    
    
    Rs.
    9,187.1
    
    
    US$
    206.5Per equity share data:Earnings per share, basic
    
    Rs.
    11.10
    
    
    Rs.
    12.57
    
    
    Rs.
    16.87
    
    
    Rs.
    22.78
    
    
    Rs.
    29.45
    
    
    US$
    0.66Earnings per share, diluted
    
    
    11.04
    
    
    
    12.51
    
    
    
    16.70
    
    
    
    22.60
    
    
    
    29.08
    
    
    
    0.65Dividends per share
    
    
    2.50
    
    
    
    3.00
    
    
    
    3.50
    
    
    
    4.50
    
    
    
    5.50
    
    
    
    0.12Book value(1)
    
    
    79.06
    
    
    
    93.36
    
    
    
    110.36
    
    
    
    159.22
    
    
    
    176.49
    
    
    
    3.97Equity share data:Equity shares outstanding at end of period
    
    
    279.0
    
    
    
    279.7
    
    
    
    282.8
    
    
    
    309.9
    
    
    
    313.1
    
    
    
    313.1Weighted average equity shares outstanding
 basic
    
    
    266.6
    
    
    
    279.6
    
    
    
    281.9
    
    
    
    290.1
    
    
    
    311.9
    
    
    
    311.9Weighted average equity shares outstanding
 diluted
    
    
    267.9
    
    
    
    281.4
    
    
    
    284.7
    
    
    
    292.5
    
    
    
    315.9
    
    
    
    315.9




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##### Table of Contents



44 Years ended March 31,2002
    
    2003
    
    2004
    
    2005
    
    2006
    
    2006(In millions)Selected balance sheet data:Total assets
    
    Rs.
    243,032.2
    
    
    Rs.
    311,840.7
    
    
    Rs.
    426,835.6
    
    
    Rs.
    535,544.2
    
    
    Rs.
    790,969.4
    
    
    US$
    17,782.6Cash and cash equivalents
    
    
    34,590.6
    
    
    
    23,944.9
    
    
    
    33,010.4
    
    
    
    37,575.8
    
    
    
    61,194.3
    
    
    
    1,375.8Term placements (2)
    
    
    
    
    
    
    7,747.4
    
    
    
    3,565.2
    
    
    
    8,699.6
    
    
    
    10,243.7
    
    
    
    230.3Loans, net of allowance
    
    
    71,528.9
    
    
    
    118,299.9
    
    
    
    177,681.1
    
    
    
    256,486.9
    
    
    
    395,274.3
    
    
    
    8,886.5Of which:Non-performing loans, net of
specific allowances
    
    
    536.4
    
    
    
    683.3
    
    
    
    269.9
    
    
    
    591.4
    
    
    
    1,578.9
    
    
    
    35.5Investments:Investments held for trading
    
    
    3,837.6
    
    
    
    3,976.1
    
    
    
    6,233.8
    
    
    
    1,278.5
    
    
    
    2,945.6
    
    
    
    66.2Investments available for sale
    
    
    80,320.6
    
    
    
    98,929.2
    
    
    
    133,274.6
    
    
    
    204,292.8
    
    
    
    273,457.0
    
    
    
    6,147.9Investments held to maturity(3)
    
    
    35,429.9
    
    
    
    38,426.7
    
    
    
    36,368.4
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    119,588.1
    
    
    
    141,332.0
    
    
    
    175,876.8
    
    
    
    205,571.3
    
    
    
    276,402.6
    
    
    
    6,214.1Of which:Credit substitutes(4)
    
    
    35,126.0
    
    
    
    29,752.8
    
    
    
    16,557.9
    
    
    
    13,880.9
    
    
    
    9,751.3
    
    
    
    219.2Total liabilities
    
    
    220,971.3
    
    
    
    285,727.6
    
    
    
    395,619.8
    
    
    
    486,206.2
    
    
    
    735,476.6
    
    
    
    16,535.0Long-term debt
    
    
    2,157.9
    
    
    
    2,116.0
    
    
    
    6,086.0
    
    
    
    5,028.1
    
    
    
    17,028.6
    
    
    
    382.8Short-term borrowings
    
    
    21,600.3
    
    
    
    21,579.6
    
    
    
    24,064.2
    
    
    
    62,079.1
    
    
    
    75,676.7
    
    
    
    1,701.4Total deposits
    
    
    176,538.1
    
    
    
    223,760.0
    
    
    
    304,062.0
    
    
    
    363,542.5
    
    
    
    557,305.4
    
    
    
    12,529.3Minority Interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    225.3
    
    
    
    5.0Shareholders equity
    
    
    22,060.9
    
    
    
    26,113.1
    
    
    
    31,215.8
    
    
    
    49,338.0
    
    
    
    55,267.5
    
    
    
    1,242.6
 Years ended March 31,2002
    
   

    2003
    
    
    2004
    
    
    2005
    
    
    2006
    
    
    2006(In millions)Period average(5)Total assets
    
    Rs.
    202,013.2
    
    
    Rs.
    257,020.8
    
    
    Rs.
    357,123.8
    
    
    Rs.
    448,029.6
    
    
    Rs.
    621,249.5
    
    
    US$
    13,966.9Interest-earning assets
    
    
    183,488.8
    
    
    
    230,451.9
    
    
    
    327,523.4
    
    
    
    424,620.1
    
    
    
    589,311.0
    
    
    
    13,248.9Loans, net of allowance
    
    
    59,374.9
    
    
    
    82,461.2
    
    
    
    136,527.4
    
    
    
    204,919.0
    
    
    
    323,709.9
    
    
    
    7,277.7Total liabilities
    
    
    185,512.4
    
    
    
    232,933.8
    
    
    
    328,458.9
    
    
    
    407,265.5
    
    
    
    572,893.7
    
    
    
    12,879.8Interest-bearing liabilities
    
    
    137,681.1
    
    
    
    175,598.6
    
    
    
    236,551.0
    
    
    
    298,276.8
    
    
    
    419,000.5
    
    
    
    9,420.0Long-term debt
    
    
    2,159.7
    
    
    
    2,280.3
    
    
    
    2,605.9
    
    
    
    5,371.3
    
    
    
    7,345.7
    
    
    
    165.1Short-term borrowings
    
    
    18,105.9
    
    
    
    15,362.9
    
    
    
    33,040.7
    
    
    
    42,594.6
    
    
    
    73,569.3
    
    
    
    1,654.0Total deposits
    
    
    142,854.5
    
    
    
    186,847.7
    
    
    
    262,707.7
    
    
    
    342,693.5
    
    
    
    463,701.8
    
    
    
    10,425.0Of which:Interest-bearing deposits
    
    
    117,415.5
    
    
    
    157,955.4
    
    
    
    200,904.4
    
    
    
    250,310.9
    
    
    
    338,085.5
    
    
    
    7,600.8Shareholders equity
    
    
    16,500.8
    
    
    
    24,087.0
    
    
    
    28,664.9
    
    
    
    40,764.1
    
    
    
    48,355.80
    
    
    
    1,087.1




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##### Table of Contents



45 As of or for the years ended March 31,2002
    
    2003
    
    2004
    
    2005
    
    2006(In percentage)Profitability:Net income (after minority interest) as a percentage of:Average total assets
    
    
    1.5
    
    
    
    1.4
    
    
    
    1.3
    
    
    
    1.5
    
    
    
    1.5Average shareholders equity
    
    
    17.9
    
    
    
    14.6
    
    
    
    16.6
    
    
    
    16.2
    
    
    
    19.0Dividend payout ratio(6)
    
    
    23.8
    
    
    
    24.2
    
    
    
    21.0
    
    
    
    21.2
    
    
    
    18.7Spread(7)
    
    
    2.4
    
    
    
    2.7
    
    
    
    3.5
    
    
    
    3.5
    
    
    
    3.8Net interest margin(8)
    
    
    3.1
    
    
    
    3.3
    
    
    
    3.8
    
    
    
    3.8
    
    
    
    4.1Cost-to-net revenue ratio(9)
    
    
    49.7
    
    
    
    53.6
    
    
    
    55.9
    
    
    
    54.0
    
    
    
    57.2Cost-to-average assets ratio(10)
    
    
    2.1
    
    
    
    2.4
    
    
    
    2.3
    
    
    
    2.5
    
    
    
    2.9Capital:Total capital adequacy ratio(11)
    
    
    13.9
    
    
    
    11.1
    
    
    
    11.7
    
    
    
    12.2
    
    
    
    11.4Tier 1 capital adequacy ratio(11)
    
    
    10.8
    
    
    
    9.5
    
    
    
    8.0
    
    
    
    9.6
    
    
    
    8.5Tier 2 capital adequacy ratio(11)
    
    
    3.1
    
    
    
    1.6
    
    
    
    3.7
    
    
    
    2.6
    
    
    
    2.9Average shareholders equity as a percentage of average total assets
    
    
    8.2
    
    
    
    9.4
    
    
    
    8.0
    
    
    
    9.1
    
    
    
    7.8Asset quality:Gross non-performing loans as a percentage of gross loans
    
    
    2.7
    
    
    
    2.0
    
    
    
    1.7
    
    
    
    1.6
    
    
    
    1.2Gross non-performing customer assets as a percentage of gross customer assets(12)
    
    
    1.9
    
    
    
    1.6
    
    
    
    1.6
    
    
    
    1.5
    
    
    
    1.2Net non-performing loans as a percentage of net loans
    
    
    0.7
    
    
    
    0.6
    
    
    
    0.2
    
    
    
    0.2
    
    
    
    0.4Net non-performing customer assets as a percentage of net customer assets(12)
    
    
    0.5
    
    
    
    0.5
    
    
    
    0.2
    
    
    
    0.2
    
    
    
    0.4Net non-performing loans as a percentage of total assets
    
    
    0.2
    
    
    
    0.2
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.2Specific allowance for credit losses as a percentage of gross non-performing loans
    
    
    72.6
    
    
    
    71.1
    
    
    
    91.0
    
    
    
    85.5
    
    
    
    67.0Total allowance for credit losses as a percentage of gross non-performing loans
    
    
    81.9
    
    
    
    78.8
    
    
    
    116.8
    
    
    
    133.2
    
    
    
    118.2Allowance for credit losses as a percentage of gross total loans
    
    
    2.2
    
    
    
    1.6
    
    
    
    1.9
    
    
    
    2.1
    
    
    
    1.4
 
 (1)
    
    Represents the difference between total assets and total liabilities, divided by the
number of shares outstanding at the end of each reporting period.(2)
    
    Includes placements with banks and financial institutions with original maturities
of greater than three months.(3)
    
    During the year ended March 31, 2005 we transferred certain securities classified as
held to maturity to the available for sale category for reasons not permitted under U.S. GAAP.
As a result we were required to transfer all remaining securities to the available for sale
category and we are prevented from establishing a held to maturity portfolio until after March
31, 2007. See Managements Discussion and Analysis of Financial Condition and Results of
Operations.(4)
    
    Credit substitutes consist of investments in commercial paper, debentures and
preference shares issued by our corporate customers. See Business  Commercial Banking
Products  Commercial Loan Products and Credit Substitutes.(5)
    
    Average balances are the average of daily outstanding amounts. Average figures are
unaudited.(6)
    
    Represents the ratio of total dividends payable on equity shares relating to each
fiscal year, excluding the dividend distribution tax, as a percentage of net income of that
year. Dividends of each year are typically paid in the following fiscal year. See Dividend
Policy.(7)
    
    Represents the difference between yield on average interest-earning assets and cost
of average interest-bearing liabilities. Yield on average interest-earning assets is the ratio
of interest revenue to average interest-earning assets. Cost of average interest-bearing
liabilities is the ratio of interest expense to average interest-bearing liabilities. For
purposes of calculating spread, interest bearing liabilities include non-interest bearing
current accounts and cash floats from transactional services.(8)
    
    Represents the ratio of net interest revenue to average interest-earning assets. The
difference in net interest margin and spread arises due to the difference in the amount of
average interest-earning assets




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##### Table of Contents



46 and average interest bearing liabilities. If average
interest-earning assets exceed average interest-bearing liabilities, net interest margin is
greater than spread. If average interest-bearing liabilities exceed average interest-earning
assets, net interest margin is less than spread.(9)
    
    Represents the ratio of non-interest expense to the sum of net interest revenue and
non-interest revenue.(10)
    
    Represents the ratio of non-interest expense to average total assets.(11)
    
    Tier 1 and Tier 2 capital adequacy ratios are computed in accordance with the
guidelines of the Reserve Bank of India, based on financial statements prepared in accordance
with Indian GAAP. See Supervision and Regulation.(12)
    
    Customer assets consist of loans and credit substitutes.




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##### Table of Contents



SELECTED STATISTICAL INFORMATION
  Average Balance Sheet
  Years ended March 31,2004
    
    2005
    
    2006Interest
    
    Average
    
    
    
    
    
    Interest
    
    Average
    
    
    
    
    
    Interest
    
    AverageAverage
    
    revenue/
    
    yield/
    
    Average
    
    revenue/
    
    yield/
    
    Average
    
    revenue/
    
    Yield/Balance
    
    expense
    
    cost
    
    Balance
    
    expense
    
    cost
    
    balance
    
    expense
    
    cost(in millions, except percentages)Assets:Interest-earning assets:Cash equivalents
    
    Rs.
    24,370.4
    
    
    Rs.
    856.8
    
    
    
    3.5
    %
    
    Rs.
    30,541.2
    
    
    Rs.
    835.9
    
    
    
    2.7
    %
    
    Rs.
    36,720.2
    
    
    Rs.
    860.2
    
    
    
    2.3
    %Term placements
    
    
    5,104.8
    
    
    
    252.8
    
    
    
    5.0
    %
    
    
    6,132.4
    
    
    
    398.6
    
    
    
    6.5
    %
    
    
    9,471.6
    
    
    
    648.8
    
    
    
    6.9Investments available for sale:Tax free(1)
    
    
    25,286.0
    
    
    
    1,475.6
    
    
    
    5.8
    %
    
    
    19,486.5
    
    
    
    926.9
    
    
    
    4.8
    %
    
    
    10,856.0
    
    
    
    598.4
    
    
    
    5.5Taxable
    
    
    99,107.3
    
    
    
    7,129.2
    
    
    
    7.2
    %
    
    
    151,689.8
    
    
    
    9,678.8
    
    
    
    6.4
    %
    
    
    205,220.9
    
    
    
    12,371.2
    
    
    
    6.0Investments held to maturity
    
    
    31,576.2
    
    
    
    2,882.5
    
    
    
    9.1
    %
    
    
    10,001.0
    
    
    
    793.4
    
    
    
    7.9
    %
    
    
    
    
    
    
    Investments held for trading
    
    
    5,551.3
    
    
    
    289.6
    
    
    
    5.2
    %
    
    
    1,850.2
    
    
    
    144.4
    
    
    
    7.8
    %
    
    
    3,332.4
    
    
    
    195.6
    
    
    
    5.9Loans, net:Retail loans
    
    
    52,903.7
    
    
    
    4,829.9
    
    
    
    9.1
    %
    
    
    94,398.6
    
    
    
    8,304.8
    
    
    
    8.8
    %
    
    
    157,272.2
    
    
    
    14,864.4
    
    
    
    9.5Wholesale loans
    
    
    83,623.7
    
    
    
    6,875.1
    
    
    
    8.2
    %
    
    
    110,520.4
    
    
    
    8,126.6
    
    
    
    7.4
    %
    
    
    166,437.7
    
    
    
    13,989.4
    
    
    
    8.4Total interest-earning assets:
    
    Rs.
    327,523.4
    
    
    Rs.
    24,591.5
    
    
    
    7.5
    %
    
    Rs.
    424,620.1
    
    
    Rs.
    29,209.4
    
    
    
    6.9
    %
    
    Rs.
    589,311.0
    
    
    Rs.
    43,528.0
    
    
    7.4
    %Non-interest-earning assets:Cash
    
    
    1,631.4
    
    
    
    
    
    
    
    
    
    
    
    2,732.5
    
    
    
    
    
    
    
    
    
    
    
    5,116.5Property and equipment
    
    
    5,424.2
    
    
    
    
    
    
    
    
    
    
    
    6,251.2
    
    
    
    
    
    
    
    
    
    
    
    7,416.5Other assets
    
    
    22,544.8
    
    
    
    
    
    
    
    
    
    
    
    14,425.8
    
    
    
    
    
    
    
    
    
    
    
    19,405.5Total non-interest earning assets
    
    
    29,600.4
    
    
    
    
    
    
    
    
    
    
    
    23,409.5
    
    
    
    
    
    
    
    
    
    
    
    31,938.5Total assets
    
    Rs.
    357,123.8
    
    
    Rs.
    24,591.5
    
    
    
    6.9
    %
    
    Rs.
    448,029.6
    
    
    Rs.
    29,209.4
    
    
    
    6.5
    %
    
    Rs.
    621,249.5
    
    
    Rs.
    43,528.0
    
    
    
    7.0
    %Liabilities:Interest-bearing liabilities:Savings account deposits
    
    Rs.
    61,535.8
    
    
    Rs.
    1,633.9
    
    
    
    2.7
    %
    
    Rs.
    97,026.4
    
    
    Rs.
    2,539.2
    
    
    
    2.6
    %
    
    Rs.
    138,850.4
    
    
    Rs.
    3,731.6
    
    
    
    2.7Time deposits
    
    
    139,368.6
    
    
    
    8,645.3
    
    
    
    6.2
    %
    
    
    153,284.5
    
    
    
    8,534.9
    
    
    
    5.6
    %
    
    
    199,235.1
    
    
    
    11,858.5
    
    
    
    6.0Short-term borrowings(2)
    
    
    33,040.7
    
    
    
    1,435.9
    
    
    
    4.3
    %
    
    
    42,594.6
    
    
    
    1,759.4
    
    
    
    4.1
    %
    
    
    73,569.3
    
    
    
    3,497.7
    
    
    
    4.8Long-term debt
    
    
    2,605.9
    
    
    
    268.0
    
    
    
    10.3
    %
    
    
    5,371.3
    
    
    
    390.2
    
    
    
    7.3
    %
    
    
    7,345.7
    
    
    
    534.0
    
    
    
    7.3Total interest-bearing liabilities
    
    Rs.
    236,551.0
    
    
    
    11,983.1
    
    
    
    5.1
    %
    
    Rs.
    298,276.8
    
    
    Rs.
    13,223.7
    
    
    
    4.4
    %
    
    Rs.
    419,000.5
    
    
    Rs.
    19,621.8
    
    
    
    4.7
    %Non-interest-bearing liabilities:Non-interest-bearing deposits (3)
    
    
    61,803.3
    
    
    
    
    
    
    
    
    
    
    
    92,382.6
    
    
    
    
    
    
    
    
    
    
    
    125,616.3Other liabilities
    
    
    30,104.6
    
    
    
    
    
    
    
    
    
    
    
    16,606.1
    
    
    
    
    
    
    
    
    
    
    
    28,276.9Total non-interest-bearing
liabilities
    
    
    91,907.9
    
    
    
    
    
    
    
    
    
    
    
    108,988.7
    
    
    
    
    
    
    
    
    
    
    
    153,893.3Total liabilities
    
    Rs.
    328,458.9
    
    
    Rs.
    11,983.1
    
    
    
    3.6
    %
    
    Rs.
    407,265.5
    
    
    Rs.
    13,223.7
    
    
    
    3.2
    %
    
    Rs.
    572,893.7
    
    Rs.
    19,621.8
    
    
    3.4
    %Shareholders equity
    
    
    28,664.9
    
    
    
    
    
    
    
    
    
    
    
    40,764.1
    
    
    
    
    
    
    
    
    
    
    
    48,355.8Total liabilities and shareholders
equity
    
    Rs.
    357,123.8
    
    
    Rs.
    11,983.1
    
    
    
    3.4
    %
    
    Rs.
    448,029.6
    
    
    Rs.
    13,223.7
    
    
    
    3.0
    %
    
    Rs.
    621,249.5
    
    
    Rs.
    19,621.8
    
    
    
    3.2
    %
 
 (1)
    
    Yields on tax free securities are not on a tax equivalent basis.(2)
    
    Includes securities sold under repurchase agreements.(3)
    
    Includes current accounts and cash floats from transactional services.




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##### Table of Contents



48 Analysis of Changes in Interest Revenue and Interest Expense Volume and Rate
  Fiscal 2005 vs. Fiscal 2004
    
    Fiscal 2006 vs. Fiscal 2005Increase (decrease)(1) due to
    
    Increase (decrease)(1) due toChange in
    
    
    
    
    
    
    
    
    
    Change InNet
    
    average
    
    Change in
    
    Net
    
    Average
    
    Change inChange
    
    volume
    
    Average rate
    
    change
    
    Volume
    
    Average rate(in millions)Interest revenue:Cash equivalents
    
    Rs.
    (20.9
    )
    
    Rs.
    216.9
    
    
    Rs.
    (237.8
    )
    
    Rs.
    19.6
    
    
    Rs.
    169.1
    
    
    Rs.
    (149.5
    )Term placements
    
    
    145.8
    
    
    
    50.9
    
    
    
    94.9
    
    
    
    254.9
    
    
    
    217.1
    
    
    
    37.8Investments available for sale:Tax free
    
    
    (548.7
    )
    
    
    (338.4
    )
    
    
    (210.3
    )
    
    
    (328.5
    )
    
    
    (410.5
    )
    
    
    82.0Taxable
    
    
    2,549.6
    
    
    
    3,782.5
    
    
    
    (1,232.9
    )
    
    
    2,692.5
    
    
    
    3,415.6
    
    
    
    (723.1
    )Investments held to maturity
    
    
    (2,089.1
    )
    
    
    (1,969.5
    )
    
    
    (119.6
    )
    
    
    (793.4
    )
    
    
    (793.4
    )
    
    
    Investments held for trading
    
    
    (145.2
    )
    
    
    (193.1
    )
    
    
    47.9
    
    
    
    51.2
    
    
    
    115.7
    
    
    
    (64.5
    )Loans, net:Retail loans
    
    
    3,474.9
    
    
    
    3,788.3
    
    
    
    (313.4
    )
    
    
    6,559.6
    
    
    
    5,531.4
    
    
    
    1,028.2Wholesale loans
    
    
    1,251.5
    
    
    
    2,211.3
    
    
    
    (959.8
    )
    
    
    5,862.8
    
    
    
    4,111.6
    
    
    
    1,751.2Total interest-earning assets
    
    Rs.
    4,617.9
    
    
    Rs.
    7,548.9
    
    
    Rs.
    (2,931.0
    )
    
    Rs.
    14,318.7
    
    
    Rs.
    12,356.6
    
    
    Rs.
    1962.1Interest expense:Savings account deposits
    
    Rs.
    905.3
    
    
    Rs.
    942.3
    
    
    Rs.
    (37.0
    )
    
    Rs.
    1,192.4
    
    
    Rs.
    1,094.5
    
    
    Rs.
    97.9Time deposits
    
    
    (110.4
    )
    
    
    863.2
    
    
    
    (973.6
    )
    
    
    3,323.6
    
    
    
    2,558.5
    
    
    
    765.1Short-term borrowings
    
    
    323.5
    
    
    
    415.2
    
    
    
    (91.7
    )
    
    
    143.8
    
    
    
    143.4
    
    
    
    0.4Long-term debt
    
    
    122.2
    
    
    
    284.4
    
    
    
    (162.2
    )
    
    
    1,738.3
    
    
    
    1,279.4
    
    
    
    458.9Total interest-bearing liabilities
    
    Rs.
    1,240.6
    
    
    Rs.
    2,505.1
    
    
    Rs.
    (1,264.5
    )
    
    Rs.
    6,398.1
    
    
    Rs.
    5,075.8
    
    
    Rs.
    1,322.3Net interest revenue
    
    Rs.
    3,377.3
    
    
    Rs.
    5,043.8
    
    
    Rs.
    (1,666.5
    )
    
    Rs.
    7,920.6
    
    
    Rs.
    7280.8
    
    
    Rs.
    639.8
 
 (1)
    
    The changes in net interest revenue between periods have been reflected as
attributed either to volume or rate changes. For purposes of this table, changes which are due
to both volume and rate have been allocated solely to changes in rate. Yields, Spreads and Margins
  Years ended March 31,2004
    
    2005
    
    2006(in millions, except percentages)Interest revenue
    
    Rs.
    24,591.5
    
    
    Rs.
    29,209.4
    
    
    Rs.
    43,528.0Average interest-earning assets
    
    
    327,523.4
    
    
    
    424,620.1
    
    
    
    589,311.0Interest expense
    
    
    11,983.1
    
    
    
    13,223.7
    
    
    
    19,621.8Average interest-bearing liabilities
    
    
    236,551.0
    
    
    
    298,276.8
    
    
    
    419,000.5Average total assets
    
    
    357,123.8
    
    
    
    448,029.6
    
    
    
    621,249.5Average interest-earning assets as a percentage of average total assets
    
    
    91.7
    %
    
    
    94.8
    %
    
    
    94.9
    %Average interest-bearing liabilities as a percentage of average total
assets
    
    
    66.2
    %
    
    
    66.6
    %
    
    
    67.4
    %Average interest-earning assets as a percentage of average
interest-bearing liabilities
    
    
    138.5
    %
    
    
    142.4
    %
    
    
    140.6
    %Yield
    
    
    7.5
    %
    
    
    6.9
    %
    
    
    7.4
    %Cost of funds (1)
    
    
    3.6
    %
    
    
    3.2
    %
    
    
    3.4
    %Spread (2)
    
    
    3.5
    %
    
    
    3.5
    %
    
    
    3.8
    %Net interest margin (3)
    
    
    3.8
    %
    
    
    3.8
    %
    
    
    4.1
    %
 
 (1)
    
    Excludes shareholders equity.(2)
    
    Represents the difference between yield on average interest-earning assets and cost
of average interest-bearing liabilities. Yield on average interest-earning assets is the ratio
of interest revenue to average interest-earning assets. Cost of average interest-bearing
liabilities is the ratio of interest expense to




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##### Table of Contents



49 average interest-bearing liabilities. For purposes of calculating spread,
interest-bearing liabilities include non-interest bearing current accounts and
cash floats from transactional services.(3)
    
    Net interest margin is the ratio of net interest revenue to average interest-earning
assets. The difference in net interest margin and spread arises due to the difference in
amount of average interest-earning assets and average interest-bearing liabilities. If average
interest-earning assets exceed average interest-bearing liabilities, net interest margin is
greater than spread. If average interest-bearing liabilities exceed average interest-earning
assets, net interest margin is less than spread. Returns on Equity and Assets
  Years ended March 31,2004
    
    2005
    
    2006(in millions, except percentages)Net income
    
    Rs.
    4,754.5
    
    
    Rs.
    6,609.7
    
    
    Rs.
    9,187.1Average total assets
    
    
    357,123.8
    
    
    
    448,029.6
    
    
    
    621,249.5Average shareholders equity
    
    
    28,664.9
    
    
    
    40,764.1
    
    
    
    48,355.8Net income as a percentage of average total assets
    
    
    1.3
    %
    
    
    1.5
    %
    
    
    1.5
    %Net income as a percentage of average shareholders equity
    
    
    16.6
    %
    
    
    16.2
    %
    
    
    19.0
    %Average shareholders equity as a percentage of average total assets
    
    
    8.0
    %
    
    
    9.1
    %
    
    
    7.8
    %Dividend
payout ratio
    
    
    21.0
    %
    
    
    21.2
    %
    
    
    18.7
    %
 Investment Portfolio
 Available for Sale Investments
  At March 31,2004
    
    2005
    
    2006Gross
    
    Gross
    
    
    
    
    
    
    
    
    
    Gross
    
    Gross
    
    
    
    
    
    
    
    
    
    Gross
    
    GrossAmortized
    
    unrealized
    
    unrealized
    
    Fair
    
    Amortized
    
    unrealized
    
    unrealized
    
    Fair
    
    Amortized
    
    unrealized
    
    unrealized
    
    FairCost
    
    gain
    
    loss
    
    value
    
    cost
    
    gain
    
    loss
    
    value
    
    cost
    
    gain
    
    Loss
    
    Value(in millions)Government securities
    
    Rs.
    63,535.0
    
    
    Rs.
    1,426.9
    
    
    Rs.
    37.4
    
    
    Rs.
    64,924.5
    
    
    Rs.
    111,482.3
    
    
    Rs.
    1,017.4
    
    
    Rs.
    672.2
    
    
    Rs.
    111,827.5
    
    
    Rs.
    189,660.3
    
    
    Rs.
    405.2
    
    
    Rs.
    1,957.1
    
    
    Rs.
    188,108.4Other debt securities
    
    
    30,554.7
    
    
    
    2,106.7
    
    
    
    101.1
    
    
    
    32,560.3
    
    
    
    39,320.6
    
    
    
    1,171.1
    
    
    
    181.1
    
    
    
    40,310.6
    
    
    
    37,862.8
    
    
    
    282.4
    
    
    
    496.9
    
    
    
    37,648.3Total debt securities
    
    
    94,089.7
    
    
    
    3,533.6
    
    
    
    138.5
    
    
    
    97,484.8
    
    
    
    150,802.9
    
    
    
    2,188.5
    
    
    
    853.3
    
    
    
    152,138.1
    
    
    
    227,523.1
    
    
    
    687.6
    
    
    
    2,454.0
    
    
    
    225,756.7Non-debt securities
    
    
    35,083.4
    
    
    
    907.4
    
    
    
    201.0
    
    
    
    35,789.8
    
    
    
    51,930.2
    
    
    
    506.3
    
    
    
    281.8
    
    
    
    52,154.7
    
    
    
    47,959.8
    
    
    
    186.1
    
    
    
    445.6
    
    
    
    47,700.3Total
    
    Rs.
    129,173.1
    
    
    Rs.
    4,441.0
    
    
    Rs.
    339.5
    
    
    Rs.
    133,274.6
    
    
    Rs.
    202,733.1
    
    
    Rs.
    2,694.8
    
    
    Rs.
    1,135.1
    
    
    Rs.
    204,292.8
    
    
    Rs.
    275,482.9
    
    
    Rs.
    873.7
    
    
    Rs.
    2,899.6
    
    
    Rs.
    273,457.0
 Held to Maturity Investments
  At March 31,2004
    
    2005
    
    2006Gross
    
    Gross
    
    
    
    
    
    
    
    
    
    Gross
    
    Gross
    
    
    
    
    
    
    
    
    
    Gross
    
    Grossunrealized
    
    unrealized
    
    Amortized
    
    
    
    
    
    unrealized
    
    unrealized
    
    Amortized
    
    
    
    
    
    unrealized
    
    unrealized
    
    AmortizedFair Value
    
    gain
    
    loss
    
    Cost
    
    Fair Value
    
    gain
    
    loss
    
    Cost
    
    Fair Value
    
    gain
    
    loss
    
    Cost(in millions)Government securities
    
    Rs.
    28,424.2
    
    
    Rs.
    1,180.1
    
    
    Rs.
    1.1
    
    
    Rs.
    27,245.2
    
    
    Rs.
    
    
    
    Rs.
    
    
    
    Rs.
    
    
    
    Rs.
    
    
    
    Rs.
    
    
    
    Rs.
    
    
    
    Rs.
    
    
    
    Rs.
    Other debt securities
    
    
    9,633.4
    
    
    
    511.1
    
    
    
    0.9
    
    
    
    9,123.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total debt securities
    
    
    38,057.6
    
    
    
    1,691.2
    
    
    
    2.0
    
    
    
    36,368.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-debt securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    Rs.
    38,057.6
    
    
    Rs.
    1,691.2
    
    
    Rs.
    2.0
    
    
    Rs.
    36,368.4
    
    
    Rs.
    
    
    
    Rs.
    
    
    
    Rs.
    
    
    
    Rs.
    
    
    
    Rs.
    
    
    
    Rs.
    
    
    
    Rs.
    
    
    
    Rs.
    




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##### Table of Contents



50 Held for Trading Investments
  At March 31,2004
    
    2005
    
    2006Gross
    
    Gross
    
    
    
    
    
    
    
    
    
    Gross
    
    Gross
    
    
    
    
    
    
    
    
    
    Gross
    
    GrossAmortized
    
    unrealized
    
    unrealized
    
    Fair
    
    Amortized
    
    unrealized
    
    unrealized
    
    Fair
    
    Amortized
    
    unrealized
    
    unrealized
    
    Faircost
    
    gain
    
    loss
    
    value
    
    cost
    
    gain
    
    loss
    
    value
    
    Cost
    
    gain
    
    loss
    
    Value(in millions)Government
securities
    
    Rs.
    4,244.2
    
    
    Rs.
    25.0
    
    
    Rs.
    
    
    
    Rs.
    4,269.2
    
    
    Rs.
    1,278.5
    
    
    Rs.
    
    
    
    Rs.
    
    
    
    Rs.
    1,278.5
    
    
    Rs.
    2,948.1
    
    
    Rs.
    6.1
    
    
    Rs.
    8.6
    
    
    Rs.
    2,945.6Other debt
Securities
    
    
    1,986.6
    
    
    
    1.1
    
    
    
    23.1
    
    
    
    1,964.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total debt
securities
    
    
    6,230.8
    
    
    
    26.1
    
    
    
    23.1
    
    
    
    6,233.8
    
    
    
    1,278.5
    
    
    
    
    
    
    
    
    
    
    
    1,278.5
    
    
    
    2,948.1
    
    
    Rs.
    6.1
    
    
    Rs.
    8.6
    
    
    Rs.
    2,945.6Non-debt
Securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    Rs.
    6,230.8
    
    
    Rs.
    26.1
    
    
    Rs.
    23.1
    
    
    Rs.
    6,233.8
    
    
    Rs.
    1,278.5
    
    
    Rs.
    
    
    
    Rs.
    
    
    
    Rs.
    1,278.5
    
    
    Rs.
    2,948.1
    
    
    Rs.
    6.1
    
    
    Rs.
    8.6
    
    
    Rs.
    2,945.6
 Residual Maturity Profile
  At March 31, 2006Up to one year
    
    
    One to five years
    
    
    Five to ten years
    
    
    More than ten yearsAmount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield(in millions, except percentages)Government securities
    
    Rs.
    31,097.9
    
    
    
    5.85
    %
    
    Rs.
    80,546.1
    
    
    
    6.83
    %
    
    Rs.
    51,190.5
    
    
    
    6.80
    %
    
    Rs.
    25,272.1
    
    
    
    6.78
    %Other debt securities
    
    
    2,755.3
    
    
    
    7.79
    %
    
    
    27,869.1
    
    
    
    7.86
    %
    
    
    7,025.7
    
    
    
    8.07
    %
    
    
    
    
    
    
    Total debt securities, fair value
    
    
    33,853.2
    
    
    
    6.01
    %
    
    
    108,415.2
    
    
    
    7.10
    %
    
    
    58,216.2
    
    
    
    6.96
    %
    
    
    25,272.1
    
    
    
    6.78
    %Total amortized cost
    
    Rs.
    33,839.9
    
    
    
    
    
    
    Rs.
    109,395.8
    
    
    
    
    
    
    Rs.
    58,688.7
    
    
    
    
    
    
    Rs.
    25,598.7
 Funding
  Total Deposits




---



##### Table of Contents



51 Years ended March 31,2004
    
    2005
    
    2006Amount
    
    % of total
    
    Amount
    
    % of total
    
    Amount
    
    % of total(in millions, except percentages)Current
deposits(1)
    
    Rs.
    61,803.3
    
    
    
    23.5
    %
    
    Rs.
    92,382.6
    
    
    
    27.0
    %
    
    Rs.
    125,616.3
    
    
    
    27.1
    %Savings deposits
    
    
    61,535.8
    
    
    
    23.4
    
    
    
    97,026.4
    
    
    
    28.3
    
    
    
    138,850.4
    
    
    
    29.9Time deposits
    
    
    139,368.6
    
    
    
    53.1
    
    
    
    153,284.5
    
    
    
    44.7
    
    
    
    199,235.1
    
    
    
    43.0Total
    
    Rs.
    262,707.7
    
    
    
    100.0
    %
    
    Rs.
    342,693.5
    
    
    
    100.0
    %
    
    Rs.
    463,701.8
    
    
    
    100.0
    %
 
 (1)
    
    Includes current accounts and cash floats from transactional services.  At March 31, 2006Up to 3
    
    
    
    
    
    
    
    
    
    More than 1Months
    
    3 to 6 months
    
    6 to 12 Months
    
    Year(In millions)Balance to
maturity for
deposits exceeding
Rs. 0.1 million
each
    
    Rs.
    73,162.3
    
    
    Rs.
    39,403.8
    
    
    Rs.
    75,861.8
    
    
    Rs.
    38,301.9
 Short-term Borrowings
  Years ended March 31,2004
    
    2005
    
    2006(in millions, except percentages)Period end balance
    
    Rs.
    24,064.2
    
    
    Rs.
    62,079.1
    
    
    Rs.
    75,676.7Average balance during the period
    
    Rs.
    33,040.7
    
    
    Rs.
    42,594.6
    
    
    Rs.
    73,569.3Maximum outstanding
    
    Rs.
    52,274.3
    
    
    Rs.
    62,079.1
    
    
    Rs.
    100,008.2Average interest rate during the period (1)
    
    
    4.3
    %
    
    
    4.1
    %
    
    
    4.8
    %Average interest rate at period end(2)
    
    
    4.1
    %
    
    
    4.3
    %
    
    
    6.4
    %
 
 (1)
    
    Represents the ratio of interest expense on short-term borrowings to the average of
daily balances of short-term borrowings.(2)
    
    Represents the weighted average rate of short-term borrowings outstanding as of
March 31, 2004, 2005 and 2006. Subordinated Debt




---



##### Table of Contents



52 Asset Liability Gap and Interest Sensitivity Data
  As of March 31, 2006Total within
    
    
    Over 1 year
    
    
    Over 3 years0-28 Days
    
    
    29-90 days
    
    
    91-180 days
    
    
    6-12 months
    
    
    one year
    
    
    to 3 years
    
    
    to 5 years
    
    
    Over 5 years
    
    
    TotalCash and cash equivalents(2)(3)
    
    Rs.
    30,222.3
    
    
    Rs.
    5,318.6
    
    
    Rs.
    2,824.0
    
    
    Rs.
    3,047.4
    
    
    Rs.
    41,412.3
    
    
    Rs.
    17,073.2
    
    
    Rs.
    2,370.2
    
    
    Rs.
    338.6
    
    
    Rs.
    61,194.3Term placements
    
    
    185.3
    
    
    
    518.9
    
    
    
    2,104.7
    
    
    
    4,041.5
    
    
    
    6,850.4
    
    
    
    1,229.7
    
    
    
    562.7
    
    
    
    1,600.9
    
    
    
    10,243.7Investments held for trading(4)
    
    
    2,945.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,945.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,945.6Investments available for sale (5)(6)
    
    
    6,163.8
    
    
    
    3,144.0
    
    
    
    11,130.0
    
    
    
    17,483.5
    
    
    
    37,921.3
    
    
    
    63,130.0
    
    
    
    69,165.4
    
    
    
    103,240.3
    
    
    
    273,457.0Securities purchased under agreement to resell
    
    
    4,200.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,200.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,200.0Loans, net (7) (8)
    
    
    51,222.8
    
    
    
    57,688.4
    
    
    
    31,045.8
    
    
    
    46,344.2
    
    
    
    186,301.2
    
    
    
    159,487.8
    
    
    
    25,151.9
    
    
    
    24,333.4
    
    
    
    395,274.3Accrued interest receivable
    
    
    8,662.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,662.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,662.7Other assets
    
    
    21,865.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,865.1
    
    
    
    4,412.1
    
    
    
    
    
    
    
    
    
    
    
    26,277.2Total financial assets
    
    Rs.
    125,467.5
    
    
    Rs.
    66,669.9
    
    
    Rs.
    47,104.5
    
    
    Rs.
    70,916.6
    
    
    Rs.
    310,158.5
    
    
    Rs.
    245,332.8
    
    
    Rs.
    97,250.2
    
    
    Rs.
    129,513.2
    
    
    Rs.
    782,254.7Deposits (9)
    
    
    52,415.1
    
    
    
    41,390.3
    
    
    
    37,784.2
    
    
    
    58,676.8
    
    
    
    190,266.4
    
    
    
    326,889.3
    
    
    
    37,361.9
    
    
    
    2,787.8
    
    
    
    557,305.4Debt (10)
    
    
    29,074.6
    
    
    
    46,588.9
    
    
    
    150.0
    
    
    
    
    
    
    
    75,813.5
    
    
    
    525.9
    
    
    
    345.4
    
    
    
    16,020.5
    
    
    
    92,705.3Other Liabilities
    
    
    85,465.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    85,465.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    85,465.9Total financial liabilities
    
    Rs.
    166,955.6
    
    
    Rs.
    87,979.2
    
    
    Rs.
    37,934.2
    
    
    Rs.
    58,676.8
    
    
    Rs.
    351,545.8
    
    
    Rs.
    327,415.2
    
    
    Rs.
    37,707.3
    
    
    Rs.
    18,808.3
    
    
    Rs.
    735,476.6Asset/Liability Gap
    
    Rs.
    (41,488.1
    )
    
    Rs.
    (21,309.3
    )
    
    Rs.
    9,170.3
    
    
    Rs.
    12,239.8
    
    
    Rs.
    (41,387.4
    )
    
    Rs.
    (82,082.5
    )
    
    Rs.
    59,542.9
    
    
    Rs.
    110,704.9
    
    
    Rs.
    46,778.1Cumulative gap
    
    Rs.
    (41,488.1
    )
    
    Rs.
    (62,797.4
    )
    
    Rs.
    (53,627.1
    )
    
    Rs.
    (41,387.4
    )
    
    Rs.
    (41,387.4
    )
    
    Rs.
    (123,469.8
    )
    
    Rs.
    (63,926.9
    )
    
    Rs.
    46,778.1
    
    
    Rs.
    46,778.1Cumulative gap as a percentage of total
financial assets
    
    
    (33.1
    )%
    
    
    (94.2
    )%
    
    
    (113.8
    )%
    
    
    (58.4
    )%
    
    
    (13.3
    )%
    
    
    (50.3
    )%
    
    
    (65.7
    )%
    
    
    36.1
    %
    
    
    6.0
    %
 
 (1)
    
    Assets and liabilities are classified into the applicable maturity categories based
on residual maturity unless specifically mentioned.(2)
    
    Cash on hand is classified in the 0-28 days category.(3)
    
    Cash and cash equivalents include balances with the RBI to satisfy its cash reserve
ratio requirements. These balances are held in the form of overnight cash deposits but we
classify these balances to the applicable maturity categories on a basis proportionate to the
classification of related deposits.(4)
    
    Securities in the trading book are classified in the 0-28 days or 29-90 days
categories based on the expected time of realization for such investments.(5)
    
    Securities held towards satisfying the statutory liquidity requirement (SLR)
prescribed by the RBI are classified based on the applicable maturity categories on a basis
proportionate to the classification of related deposits.(6)
    
    Shares are classified in the greater than five years category and units of open
ended mutual fund are classified in the 0-28 days category.(7)
    
    Includes net non-performing loans which are classified in the greater than five
years category.




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##### Table of Contents



53 (8)
    
    Ambiguous maturity overdrafts are classified under various maturity categories based
on historical behavioral analyses that we have performed to determine the appropriate maturity
categorization of such advances.(9)
    
    Non-maturity deposits are classified under various maturity categories based on the
historical behavioral analysis that we have performed to determine the appropriate maturity
categorization of such deposits.(10)
    
    Includes short-term borrowings and long-term debt.(11)
    
    For further information on how we manage our asset liability risk, see
Business  Market Risk. Loan Portfolio and Credit Substitutes
   At March 31,2002
    
    2003
    
    2004
    
    2005
    
    2006(in millions)Retail loans
    
    Rs.
    14,301.3
    
    
    Rs.
    34,414.2
    
    
    Rs.
    73,251.6
    
    
    Rs.
    112,666.0
    
    
    Rs.
    229,301.4Wholesale loans
    
    
    58,833.5
    
    
    
    85,752.4
    
    
    
    107,923.8
    
    
    
    149,259.4
    
    
    
    171,626.2Gross loans
    
    Rs.
    73,134.8
    
    
    Rs.
    120,166.6
    
    
    Rs.
    181,175.4
    
    
    Rs.
    261,925.4
    
    
    Rs.
    400,927.6Credit substitutes (at fair value)
    
    
    35,329.9
    
    
    
    30,255.5
    
    
    
    17,041.5
    
    
    
    13,880.9
    
    
    
    9,751.3Gross loans plus credit substitutes
    
    Rs.
    108,464.7
    
    
    Rs.
    150,422.1
    
    
    Rs.
    198,216.9
    
    
    Rs.
    275,806.3
    
    
    Rs.
    410,678.9
 Maturity and Interest Rate Sensitivity of Loans and Credit Substitutes
  At March 31, 2006Due in one
    
    Due in one
    
    Due afteryear or less
    
    to five years
    
    five years(in millions)Retail loans
    
    Rs.
    88,119.4
    
    
    Rs.
    134,689.4
    
    
    Rs.
    6,492.6Wholesale loans
    
    
    98,181.8
    
    
    
    52,244.2
    
    
    
    21,200.2Gross loans
    
    Rs.
    186,301.2
    
    
    Rs.
    186,933.6
    
    
    Rs.
    27,692.8Credit Substitutes
    
    
    1,971.5
    
    
    
    4,225.2
    
    
    
    3,554.6Gross Loans plus credit substitutes
    
    Rs.
    188,272.7
    
    
    Rs.
    191,158.8
    
    
    Rs.
    31,247.4
 At March 31, 2006Due in one
    
    Due in one
    
    Due afteryear or less
    
    to five years
    
    five years(in millions)Interest rate classification of loans by maturity:Variable rates
    
    Rs.
    1,556.5
    
    
    Rs.
    7,957.8
    
    
    Rs.
    20,480.4Fixed rates
    
    
    184,744.7
    
    
    
    178,975.8
    
    
    
    7,212.4Gross loans
    
    Rs.
    186,301.2
    
    
    Rs.
    186,933.6
    
    
    Rs.
    27,692.8




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##### Table of Contents



54 At March 31, 2006Due in one
    
    Due in one
    
    Due afteryear or less
    
    to five years
    
    five years(in millions)Interest rate classification of credit substitutes by maturity:Variable rates
    
    Rs.
    
    
    
    Rs.
    
    
    
    Rs.
    Fixed rates
    
    
    1,971.5
    
    
    
    4,225.2
    
    
    
    3,554.6Gross credit substitutes
    
    Rs.
    1,971.5
    
    
    Rs.
    4,225.2
    
    
    Rs.
    3,554.6Interest rate classification of loans and credit substitutes
by maturity:Variable rates
    
    Rs.
    1,556.5
    
    
    Rs.
    7,957.8
    
    
    Rs.
    20,480.4Fixed rates
    
    
    186,716.2
    
    
    
    183,201.0
    
    
    
    10,767.0Gross loans and credit substitutes
    
    Rs.
    188,272.7
    
    
    Rs.
    191,158.8
    
    
    Rs.
    31,247.4
 Concentration of Loans and Credit Substitutes
   At March 31,2002


    
    
    2003


    
    
    2004


    
    
    2005


    

    
2006(in millions, except percentages)Automotive
manufacturers
    
    Rs.
    9,999.2
    
    
    
    9.2
    %
    
    Rs.
    13,393.2
    
    
    
    8.9
    %
    
    Rs.
    19,370.2
    
    
    
    9.8
    %
    
    Rs.
    26,100.0
    
    
    
    9.5
    %
    
    Rs.
    41,008.3
    
    
    
    10.0
    %Land transport
    
    
    1,298.5
    
    
    
    1.2
    
    
    
    5,202.9
    
    
    
    3.5
    
    
    
    15,396.2
    
    
    
    7.8
    
    
    
    29,860.5
    
    
    
    10.8
    
    
    
    36,841.6
    
    
    
    9.0Retail Traders
    
    
    316.5
    
    
    
    0.3
    
    
    
    2,734.8
    
    
    
    1.8
    
    
    
    4,379.2
    
    
    
    2.2
    
    
    
    6,857.0
    
    
    
    2.5
    
    
    
    14,396.9
    
    
    
    3.5Activities allied to agriculture
    
    
    115.1
    
    
    
    0.1
    
    
    
    216.5
    
    
    
    0.1
    
    
    
    2,778.4
    
    
    
    1.4
    
    
    
    4,501.9
    
    
    
    1.6
    
    
    
    11,559.7
    
    
    
    2.8Heavy Engineering
    
    
    3,903.4
    
    
    
    3.6
    
    
    
    3,846.1
    
    
    
    2.6
    
    
    
    6,631.0
    
    
    
    3.3
    
    
    
    4,862.3
    
    
    
    1.8
    
    
    
    10,963.5
    
    
    
    2.7NBFC / Investment Companies
    
    
    9,649.1
    
    
    
    8.9
    
    
    
    13,227.5
    
    
    
    8.8
    
    
    
    11,359.7
    
    
    
    5.7
    
    
    
    14,051.1
    
    
    
    5.1
    
    
    
    10,777.1
    
    
    
    2.6Telecommunications
    
    
    2,490.1
    
    
    
    2.3
    
    
    
    921.0
    
    
    
    0.6
    
    
    
    4,054.0
    
    
    
    2.0
    
    
    
    9,586.9
    
    
    
    3.5
    
    
    
    8,888.4
    
    
    
    2.2Others (including unclassified retail)
    
    
    80,692.8
    
    
    
    74.4
    
    
    
    110,880.1
    
    
    
    73.7
    
    
    
    134,248.20
    
    
    
    67.8
    
    
    
    179,986.60
    
    
    
    65.2
    
    
    
    276,243.40
    
    
    
    67.2Total
    
    Rs.
    108,464.7
    
    
    
    100.0
    %
    
    Rs.
    150,422.1
    
    
    
    100.0
    %
    
    Rs.
    198,216.9
    
    
    
    100.0
    %
    
    Rs.
    275,806.3
    
    
    
    100.0
    %
    
    Rs.
    410,678.9
    
    
    
    100.0
    %




---



##### Table of Contents



55 Directed Lending
    At March 31,2002
    
    2003
    
    2004
    
    2005
    
    2006(in millions)Directed lending:Agriculture
    
    Rs.
    1,493.4
    
    
    Rs.
    8,858.8
    
    
    Rs.
    13,220.2
    
    
    Rs.
    20,641.5
    
    
    Rs.
    42,747.0Small scale industries
    
    
    2,730.5
    
    
    
    2,949.6
    
    
    
    4,370.6
    
    
    
    4,013.2
    
    
    
    6,968.9Other
    
    
    3,509.2
    
    
    
    2,372.6
    
    
    
    7,633.3
    
    
    
    32,519.8
    
    
    
    59,468.8Total directed lending
    
    Rs.
    7,733.1
    
    
    Rs.
    14,181.0
    
    
    Rs.
    25,224.1
    
    
    Rs.
    57,174.5
    
    
    Rs.
    109,184.7
 Non-Performing Loans




---



##### Table of Contents



56  As of March 31,2002
    
    2003
    
    2004
    
    2005
    
    2006Non-performing loans:Retail loans
    
    Rs.
    140.7
    
    
    Rs.
    74.9
    
    
    Rs.
    403.5
    
    
    Rs.
    1,663.3
    
    
    Rs.
    3,193.5Wholesale loans
    
    
    1,819.2
    
    
    
    2,292.7
    
    
    
    2,589.1
    
    
    
    2,420.9
    
    
    
    1,590.0Gross non-performing loans
    
    Rs.
    1,959.9
    
    
    Rs.
    2,367.6
    
    
    Rs.
    2,992.6
    
    
    Rs.
    4,084.2
    
    
    Rs.
    4,783.5Specific valuation allowances
    
    Rs.
    1,423.5
    
    
    Rs.
    1,684.3
    
    
    Rs.
    2,722.7
    
    
    Rs.
    3,492.8
    
    
    Rs.
    3,204.6Unallocated valuation allowances
    
    
    182.4
    
    
    
    182.4
    
    
    
    771.6
    
    
    
    1,945.7
    
    
    
    2,448.7Non-performing loans net of specific valuation allowance
    
    
    536.4
    
    
    
    683.3
    
    
    
    269.9
    
    
    
    591.4
    
    
    
    1,578.9Gross loan assets
    
    
    73,134.8
    
    
    
    120,166.6
    
    
    
    181,175.4
    
    
    
    261,925.4
    
    
    
    400,927.6Net loan assets
    
    Rs.
    71,528.9
    
    
    Rs.
    118,229.9
    
    
    Rs.
    177,681.1
    
    
    Rs.
    256,486.9
    
    
    Rs.
    395,274.3Gross non-performing loans as a percentage of gross loans
    
    
    2.68
    %
    
    
    1.97
    %
    
    
    1.65
    %
    
    
    1.56
    %
    
    
    1.19
    %Non-performing loans net of specific valuation allowance as
a percentage of net loan assets
    
    
    0.74
    %
    
    
    0.58
    %
    
    
    0.15
    %
    
    
    0.23
    %
    
    
    0.40
    %Specific valuation allowance as a percentage of gross
non-performing loans
    
    
    72.63
    %
    
    
    71.14
    %
    
    
    90.98
    %
    
    
    85.52
    %
    
    
    66.99
    %Total valuation allowance as a percentage of gross
non-performing loans
    
    
    81.94
    %
    
    
    78.84
    %
    
    
    116.76
    %
    
    
    133.16
    %
    
    
    118.18
    %
 Recognition of Non-Performing Loans
    At March 31,2002
    
    
    2003
    
    
    2004
    
    
    2005
    
    
    2006(in millions)Performing
    
    Rs.
    71,174.9
    
    
    Rs.
    117,799.0
    
    
    Rs.
    178,182.8
    
    
    Rs.
    257,841.2
    
    
    Rs.
    396,144.1Non-performing or impaired:On accrual status
    
    
    61.6
    
    
    
    51.9
    
    
    
    
    
    
    
    
    
    
    
    On non-accrual status
    
    
    1,898.3
    
    
    
    2,315.7
    
    
    
    2,992.6
    
    
    
    4,084.2
    
    
    
    4,783.5Total non-performing or impaired
    
    
    1,959.9
    
    
    
    2,367.6
    
    
    
    2,992.6
    
    
    
    4,084.2
    
    
    
    4,783.5Total
    
    Rs.
    73,134.8
    
    
    Rs.
    120,166.6
    
    
    Rs.
    181,175.4
    
    
    Rs.
    261,925.4
    
    
    Rs.
    400,927.6




---



##### Table of Contents



57  Retail Loans
   Wholesale Loans
     Analysis of Non-Performing Loans by Industry Sector




---



##### Table of Contents



58 As of March 312002
    
    
    2003
    
    
    2004
    
    
    2005
    
    
    2006Non
    
    
    
    
    
    
    
    
    
    
    Non
    
    
    
    
    
    
    
    
    
    
    Non
    
    
    
    
    
    
    
    
    
    
    Non
    
    
    
    
    
    
    
    
    
    
    NonGross
    
    
    performing
    
    
    % of loans
    
    
    Gross
    
    
    performing
    
    
    % of loans
    
    
    Gross
    
    
    performing
    
    
    % of loans
    
    
    Gross
    
    
    performing
    
    
    % of loans
    
    
    Gross
    
    
    performing
    
    
    % of loansLoans
    
    
    loans
    
    
    in industry
    
    
    Loans
    
    
    loans
    
    
    in industry
    
    
    Loans
    
    
    loans
    
    
    in industry
    
    
    Loans
    
    
    loans
    
    
    in industry
    
    
    Loans
    
    
    loans
    
    
    in industry(Rupees in millions, except percentages)Consumer electronics
    
    Rs.
    960.8
    
    
    Rs.
    23.5
    
    
    
    2.5
    
    
    Rs.
    1,754.6
    
    
    Rs.
    207.8
    
    
    
    11.9
    
    
    Rs.
    2,261.1
    
    
    Rs.
    639.1
    
    
    
    28.3
    
    
    Rs.
    3,452.7
    
    
    Rs.
    679.4
    
    
    
    19.7
    
    
    Rs.
    2,199.4
    
    
    Rs.
    129.0
    
    
    
    5.9Diamond, gems and jewelry exports
    
    
    1,029.4
    
    
    
    131.5
    
    
    
    12.8
    
    
    
    1,343.4
    
    
    
    130.9
    
    
    
    9.8
    
    
    
    1,473.8
    
    
    
    129.1
    
    
    
    8.8
    
    
    
    1,401.7
    
    
    
    129.1
    
    
    
    9.2
    
    
    
    2,559.4
    
    
    
    129.1
    
    
    
    5.0Textiles
    
    
    457.3
    
    
    
    396.0
    
    
    
    86.6
    
    
    
    698.5
    
    
    
    372.0
    
    
    
    53.3
    
    
    
    1,327.6
    
    
    
    356.2
    
    
    
    26.8
    
    
    
    3,483.9
    
    
    
    303.4
    
    
    
    8.7
    
    
    
    6,291.4
    
    
    
    313.7
    
    
    
    5.0Automobiles
    
    
    8,856.0
    
    
    
    41.9
    
    
    
    0.5
    
    
    
    12,096.3
    
    
    
    642.9
    
    
    
    5.3
    
    
    
    18,541.1
    
    
    
    653.7
    
    
    
    3.5
    
    
    
    25,667.6
    
    
    
    913.3
    
    
    
    3.6
    
    
    
    40,970.3
    
    
    
    954.4
    
    
    
    2.3Iron and steel
    
    
    937.6
    
    
    
    440.1
    
    
    
    46.9
    
    
    
    1,141.8
    
    
    
    437.3
    
    
    
    38.3
    
    
    
    3,616.6
    
    
    
    440.4
    
    
    
    12.2
    
    
    
    4,840.2
    
    
    
    201.5
    
    
    
    4.2
    
    
    
    5,641.2
    
    
    
    118.2
    
    
    
    2.1Electricity generation
    
    
    486.0
    
    
    
    26.8
    
    
    
    5.5
    
    
    
    1,577.1
    
    
    
    26.8
    
    
    
    1.7
    
    
    
    759.5
    
    
    
    26.8
    
    
    
    3.5
    
    
    
    1,620.3
    
    
    
    26.8
    
    
    
    1.7
    
    
    
    1,599.4
    
    
    
    26.8
    
    
    
    1.7Retail advances not otherwise
classified
    
    
    14,273.1
    
    
    
    134.1
    
    
    
    0.9
    
    
    
    28,848.6
    
    
    
    74.9
    
    
    
    0.3
    
    
    
    63,207.8
    
    
    
    382.1
    
    
    
    0.6
    
    
    
    103,681.2
    
    
    
    1,134.5
    
    
    
    1.1
    
    
    
    175,780.1
    
    
    
    2,534.1
    
    
    
    1.4Engineering
    
    
    1,640.2
    
    
    
    147.9
    
    
    
    9.0
    
    
    
    2,581.3
    
    
    
    56.1
    
    
    
    2.2
    
    
    
    6,050.0
    
    
    
    56.1
    
    
    
    0.9
    
    
    
    4,862.3
    
    
    
    56.1
    
    
    
    1.2
    
    
    
    10659.7
    
    
    
    56.0
    
    
    
    0.5Other wholesale trade
    
    
    1,174.2
    
    
    
    46.2
    
    
    
    3.9
    
    
    
    1,882.2
    
    
    
    43.4
    
    
    
    2.3
    
    
    
    2,526.6
    
    
    
    40.9
    
    
    
    1.6
    
    
    
    4,465.9
    
    
    
    40.9
    
    
    
    0.9
    
    
    
    5,155.7
    
    
    
    49.5
    
    
    
    1.0Land transport
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,396.2
    
    
    
    21.4
    
    
    
    0.1
    
    
    
    29,860.5
    
    
    
    269.8
    
    
    
    0.9
    
    
    
    36,841.6
    
    
    
    347.9
    
    
    
    0.9Drugs and pharmaceuticals
    
    
    1,442.1
    
    
    
    133.8
    
    
    
    9.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,039.5
    
    
    
    40.0
    
    
    
    1.3
    
    
    
    3,917.6
    
    
    
    42.9
    
    
    
    1.1
    
    
    
    3,834.0
    
    
    
    32.3
    
    
    
    0.8Fertilizers
    
    
    1,706.2
    
    
    
    72.8
    
    
    
    4.3
    
    
    
    3,760.4
    
    
    
    30.2
    
    
    
    0.8
    
    
    
    1,974.7
    
    
    
    22.6
    
    
    
    1.2
    
    
    
    2,882.3
    
    
    
    122.9
    
    
    
    4.3
    
    
    
    5,450.9
    
    
    
    22.6
    
    
    
    0.4Miscellaneous industries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    675.7
    
    
    
    5.6
    
    
    
    0.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,221.0
    
    
    
    59.5
    
    
    
    1.4
    
    
    
    15,824.0
    
    
    
    58.7
    
    
    
    0.4Food processing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,344.1
    
    
    
    3.4
    
    
    
    0.1Traders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,484.8
    
    
    
    2.1
    
    
    
    0.1
    
    
    
    200.1
    
    
    
    3.4
    
    
    
    1.7
    
    
    
    1,738.0
    
    
    
    2.5
    
    
    
    0.1
    
    
    
    14,357.2
    
    
    
    7.8
    
    
    
    0.1Electrical machinery
    
    
    1,853.4
    
    
    
    66.2
    
    
    
    3.6
    
    
    
    1,430.8
    
    
    
    76.1
    
    
    
    5.3
    
    
    
    1,376.6
    
    
    
    76.1
    
    
    
    5.5
    
    
    
    2,428.9
    
    
    
    66.9
    
    
    
    2.8
    
    
    
    
    
    
    
    
    
    
    
    Construction
    
    
    67.6
    
    
    
    23.5
    
    
    
    34.8
    
    
    
    207.5
    
    
    
    23.4
    
    
    
    11.3
    
    
    
    27.5
    
    
    
    21.9
    
    
    
    79.6
    
    
    
    385.3
    
    
    
    10.5
    
    
    
    2.7
    
    
    
    
    
    
    
    
    
    
    
    Glass and glass products
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    135.9
    
    
    
    11.0
    
    
    
    8.1
    
    
    
    419.8
    
    
    
    9.1
    
    
    
    2.2
    
    
    
    814.5
    
    
    
    9.1
    
    
    
    1.1
    
    
    
    
    
    
    
    
    
    
    
    Paper and paper products
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    806.6
    
    
    
    70.3
    
    
    
    8.7
    
    
    
    1,701.4
    
    
    
    11.7
    
    
    
    0.7
    
    
    
    
    
    
    
    
    
    
    
    Activities allied to dairying
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,091.0
    
    
    
    3.4
    
    
    
    0.1
    
    
    
    3,144.4
    
    
    
    3.4
    
    
    
    0.1
    
    
    
    3,946.7
    
    
    
    3.4
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    Manufacture of metal products
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    897.9
    
    
    
    3.4
    
    
    
    0.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Share brokers
    
    
    639.5
    
    
    
    7.4
    
    
    
    1.2
    
    
    
    823.9
    
    
    
    6.7
    
    
    
    0.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Investment and finance and leasing
    
    
    79.2
    
    
    
    40.7
    
    
    
    51.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other chemicals
    
    
    455.2
    
    
    
    61.6
    
    
    
    13.5
    
    
    
    469.1
    
    
    
    51.9
    
    
    
    11.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Activities allied to agriculture
    
    
    15.2
    
    
    
    15.2
    
    
    
    100.0
    
    
    
    216.5
    
    
    
    16.4
    
    
    
    7.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Plastic and plastic products
    
    
    15.9
    
    
    
    3.1
    
    
    
    19.5
    
    
    
    26.9
    
    
    
    3.2
    
    
    
    11.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Distilleries
    
    
    147.6
    
    
    
    147.6
    
    
    
    100.0
    
    
    
    191.0
    
    
    
    142.1
    
    
    
    74.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    
    
    
    Rs.
    1,959.9
    
    
    
    
    
    
    
    
    
    
    Rs.
    2,367.6
    
    
    
    
    
    
    
    
    
    
    Rs.
    2,992.6
    
    
    
    
    
    
    
    
    
    
    Rs.
    4,084.2
    
    
    
    
    
    
    
    
    
    
    Rs.
    4,783.5Specific allowance for credit losses
    
    
    
    
    
    Rs.
    1,423.5
    
    
    
    
    
    
    
    
    
    
    Rs.
    1,684.3
    
    
    
    
    
    
    
    
    
    
    Rs.
    2,722.7
    
    
    
    
    
    
    
    
    
    
    Rs.
    3,492.8
    
    
    
    
    
    
    
    
    
    
    Rs.
    3,204.6Non-performing loans, net
    
    
    
    
    
    Rs.
    536.4
    
    
    
    
    
    
    
    
    
    
    Rs.
    683.3
    
    
    
    
    
    
    
    
    
    
    Rs.
    269.9
    
    
    
    
    
    
    
    
    
    
    Rs.
    591.4
    
    
    
    
    
    
    
    
    
    
    Rs.
    1,578.9




---



##### Table of Contents



59 Consumer electronics
  Diamonds, Gems and Jewelry exports
   Textiles
   Top Ten Non-Performing Loans
   At March 31, 2006Principaloutstandingnet
    
    
    
    CurrentlyType of
    
    Gross
    
    of allowance
    
    
    
    servicingbanking
    
    principal
    
    for credit
    
    Collateral-
    
    all interestIndustry
    
    arrangement
    
    outstanding
    
    losses
    
    our share
    
    payments(in millions)Borrower 1
    
    Automobiles
    
    Sole
    
    Rs.
    642.9
    
    
    Rs.
    
    Rs.
    
    NoBorrower 2
    
    Gems and Jewellery
    
    Consortium
    
    
    129.1
    
    
    
    
    
    
    NoBorrower 3
    
    Textiles
    
    Consortium
    
    
    120.8
    
    
    
    
    
    
    NoBorrower 4
    
    Iron and Steel
    
    Consortium
    
    
    108.9
    
    
    
    
    
    
    NoBorrower 5
    
    Textiles
    
    Consortium
    
    
    74.2
    
    
    
    
    
    
    NoBorrower 6
    
    Textiles
    
    Multiple
    
    
    73.0
    
    
    
    
    
    
    NoBorrower 7
    
    Consumer Electronics
    
    Consortium
    
    
    72.5
    
    
    
    
    
    
    NoBorrower 8
    
    Media- Manufacturing
    
    Sole
    
    
    49.5
    
    
    
    
    
    
    NoBorrower 9
    
    Engineering
    
    Multiple
    
    
    45.2
    
    
    
    
    
    
    NoBorrower 10
    
    Engineering
    
    Consortium
    
    
    40.3
    
    
    
    
    
    
    NoRs.
    1,356.4
    
    
    Rs.
    
    Rs.




---



##### Table of Contents



60 Interest Foregone
  Interest foregone
    
    (in millions)March 31, 2004
    
    Rs.
    274.2March 31, 2005
    
    
    216.7March 31, 2006
    
    
    208.5
 Restructuring of Non-Performing Loans
    At March 31,2002
    
    2003
    
    2004
    
    2005
    
    2006(in millions, except percentages)Gross restructured loans
    
    Rs.
    172.2
    
    
    Rs.
    2.7
    
    
    Rs.
    
    
    
    Rs.
    100.3
    
    
    Rs.
    167.9Allowance for credit losses
    
    
    119.3
    
    
    
    2.7
    
    
    
    
    
    
    
    36.1
    
    
    
    167.9Net restructured loans
    
    Rs.
    52.9
    
    
    Rs.
    
    
    
    Rs.
    
    
    
    Rs.
    64.2
    
    
    Rs.
    Gross restructured loans as a
percentage of gross
non-performing loans
    
    
    8.8
    %
    
    
    0.1
    %
    
    
    
    
    
    
    2.5
    %
    
    
    3.5
    %Net restructured loans as a
percentage of net
non-performing loans
    
    
    2.7
    %
    
    
    
    
    
    
    
    
    
    
    10.9
    %
    
    
    
  Non-Performing Loan Strategy




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##### Table of Contents



61 Allowance for Credit Losses on Loans
  For the years ended March 31,2002
    
    2003
    
    2004
    
    2005
    
    2006(in millions)Specific allowance for credit losses at the beginning of the period
    
    Rs.
    1,010.8
    
    
    Rs.
    1,423.5
    
    
    Rs.
    1,684.3
    
    
    Rs.
    2,722.7
    
    
    Rs.
    3,492.8Additions to allowance for credit losses for the period :Retail
    
    
    366.5
    
    
    
    156.3
    
    
    
    775.8
    
    
    
    2,433.9
    
    
    
    4,762.6Wholesale
    
    
    253.8
    
    
    
    786.8
    
    
    
    1,278.7
    
    
    
    221.9
    
    
    
    41.5Less allowances no longer required on account of recoveries
    
    
    (207.6
    )
    
    
    (201.6
    )
    
    
    (300.3
    )
    
    
    (781.7
    )
    
    
    (275.1
    )Net expense for additions to specific allowance for credit
    
    
    412.7
    
    
    
    741.5
    
    
    
    1,754.2
    
    
    
    1,874.1
    
    
    
    4,529.0Allowance no longer required on account of write offs
    
    
    
    
    
    
    (480.7
    )
    
    
    (715.8
    )
    
    
    (1,104.0
    )
    
    
    (4,817.2
    )Specific allowance for credit losses at the end of period
    
    Rs.
    1,423.5
    
    
    Rs.
    1,684.3
    
    
    Rs.
    2,722.7
    
    
    Rs.
    3,492.8
    
    
    Rs.
    3,204.6Unallocated allowance for credit losses at the beginning of the period
    
    Rs.
    143.5
    
    
    Rs.
    182.4
    
    
    Rs.
    182.4
    
    
    Rs.
    771.6
    
    
    Rs.
    1,945.7Additions during the period
    
    
    38.9
    
    
    
    
    
    
    
    589.2
    
    
    
    1,174.1
    
    
    
    503.0Unallocated allowance for credit losses at the end of the period
    
    Rs.
    182.4
    
    
    Rs.
    182.4
    
    
    Rs.
    771.6
    
    
    Rs.
    1,945.7
    
    
    Rs.
    2,448.7Total allowance for credit losses at the beginning of the period
    
    Rs.
    1,154.3
    
    
    Rs.
    1,605.9
    
    
    Rs.
    1,866.7
    
    
    Rs.
    3,494.3
    
    
    Rs.
    5,438.5Allowance no longer required on account of write-offs
    
    
    
    
    
    
    (480.7
    )
    
    
    (715.8
    )
    
    
    (1,104.0
    )
    
    
    (4,817.2
    )Net addition to total allowance for the period charged to expense
    
    
    451.6
    
    
    
    741.5
    
    
    
    2,343.4
    
    
    
    3,048.2
    
    
    
    5,032.0Total allowance for credit losses at the end of the period
    
    Rs.
    1,605.9
    
    
    Rs.
    1,866.7
    
    
    Rs.
    3,494.3
    
    
    Rs.
    5,438.5
    
    
    Rs.
    5,653.3
  As of March 31,2002
    
    2003
    
    2004
    
    2005
    
    2006WholesaleAllocated
    
    Rs.
    1,289.7
    
    Rs.
    1,609.4
    
    
    Rs.
    2,379.8
    
    
    Rs.
    2,285.7
    
    
    Rs.
    1,543.1Unallocated
    
    
    
    
    
    
    
    
    
    
    269.8
    
    
    
    400.9
    
    
    
    703.1Subtotal
    
    
    1,289.7
    
    
    
    1,609.4
    
    
    
    2,649.6
    
    
    
    2,686.6
    
    
    
    2,246.2RetailAllocated
    
    
    133.8
    
    
    
    74.9
    
    
    
    342.9
    
    
    
    1,207.1
    
    
    
    1,661.5Unallocated
    
    
    182.4
    
    
    
    182.4
    
    
    
    501.8
    
    
    
    1,544.8
    
    
    
    1,745.6Subtotal
    
    
    316.2
    
    
    
    257.3
    
    
    
    844.7
    
    
    
    2,751.9
    
    
    
    3,407.1Allowance for credit losses
    
    Rs.
    1,605.9
    
    
    Rs.
    1,866.7
    
    
    Rs.
    3,494.3
    
    
    Rs.
    5,438.5
    
    
    Rs.
    5,653.3




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##### Table of Contents



62 
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 You should read the following discussion and analysis of our financial condition and
results of operations together with our audited financial statements included in this report. The
following discussion is based on our audited financial statements, which have been prepared in
accordance with U.S. GAAP, and on information publicly available from the RBI and other sources.
 Introduction
 Overview




---



##### Table of Contents



63       Critical Accounting Policies
  Allowance for loan losses
  Retail Loans
  Wholesale




---



##### Table of Contents



64      Interest Accrual and Revenue Recognition
      Valuation of Investments




---



##### Table of Contents



65      New Accounting Pronouncements
 Other-Than-Temporary Impairment and Its Application to Certain Investments
  Share based payment




---



##### Table of Contents



66   Other- than- temporary impairments of securities
 , ,
 Accounting for Certain Hybrid Instruments
  Accounting for Servicing of Financial Assets
  Fair Value Measurements
  Accounting for uncertainty in Income Taxes




---



##### Table of Contents



67 Fiscal Year Ended March 31, 2006 Compared to Fiscal Year Ended March 31, 2005
 Net Interest Revenue after Allowance for Credit Losses
  Year ended March 31,Increase/
    
    % Increase/2005
    
    2006
    
    (decrease)
    
    (decrease)(in millions, except percentages)Interest on loans
    
    Rs.
    16,431.4
    
    
    Rs.
    28,853.8
    
    
    Rs.
    12,422.4
    
    
    
    75.6
    %Interest on securities, including dividends
    
    
    11,543.5
    
    
    
    13,165.2
    
    
    
    1,621.7
    
    
    
    14.1Other interest revenue
    
    
    1,234.5
    
    
    
    1,509.0
    
    
    
    274.5
    
    
    
    22.2Total interest and dividend revenue
    
    
    29,209.4
    
    
    
    43,528.0
    
    
    
    14,318.6
    
    
    
    49.0Interest on deposits
    
    
    11,074.1
    
    
    
    15,590.1
    
    
    
    4,516.0
    
    
    
    40.8Interest on short term borrowings
    
    
    1,759.4
    
    
    
    3,497.7
    
    
    
    1,738.3
    
    
    
    98.8Interest on long term debt
    
    
    390.2
    
    
    
    534.0
    
    
    
    143.8
    
    
    
    36.8Total interest expense
    
    
    13,223.7
    
    
    
    19,621.8
    
    
    
    6,398.1
    
    
    
    48.4Net interest revenue
    
    
    15,985.7
    
    
    
    23,906.2
    
    
    
    7,920.5
    
    
    
    49.6Allowance for credit losses
Retail
    
    
    2,925.5
    
    
    
    4,956.0
    
    
    
    2,030.5
    
    
    
    69.4Wholesale
    
    
    122.7
    
    
    
    76.0
    
    
    
    (46.7
    )
    
    
    (38.1
    )Total
    
    
    3,048.2
    
    
    
    5,032.0
    
    
    
    1,983.8
    
    
    
    65.1Net interest revenue after
allowance for credit losses
    
    Rs.
    12,937.5
    
    
    Rs.
    18,874.2
    
    
    Rs.
    5,936.7
    
    
    
    45.9
    %
 Interest and Dividend Revenue




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##### Table of Contents



68  Interest Expense
  Allowance for Credit Losses
  Non- Interest revenue
  Year ended March 31,Increase/
    
    % Increase/2005
    
    2006
    
    (decrease)
    
    (decrease)(in millions, except percentages)Fees and commissions
    
    Rs.
    6,124.4
    
    
    Rs.
    10,949.6
    
    
    Rs.
    4,825.2
    
    
    
    78.8
    %Realized gains (losses) on
sales of AFS securities
    
    
    194.3
    
    
    
    420.3
    
    
    
    226.0
    
    
    
    116.3Realized gains (losses) on
sales of HFT securities
    
    
    (39.3
    )
    
    
    (44.8
    )
    
    
    (5.5
    )
    
    
    (14.0
    )Foreign exchange
    
    
    911.7
    
    
    
    994.0
    
    
    
    82.3
    
    
    
    9.0Derivative transactions
    
    
    204.0
    
    
    
    (402.9
    )
    
    
    (606.9
    )
    
    
    (297.5
    )Other
    
    
    816.4
    
    
    
    231.7
    
    
    
    (584.7
    )
    
    
    (71.6
    )Total non-interest revenue
    
    Rs.
    8,211.5
    
    
    Rs.
    12,147.9
    
    
    Rs.
    3,936.4
    
    
    
    47.9
    %




---



##### Table of Contents



69     Non- Interest expense
  Year ended March 31,Increase/
    
    % Increase/
    
    2005 % of
    
    2006 % of2005
    
    2006
    
    (decrease)
    
    (decrease)
    
    net revenues
    
    net revenues(in millions except percentages)Salaries and staff benefits
    
    Rs.
    3,249.9
    
    
    Rs.
    5,420.9
    
    
    Rs.
    2,171.0
    
    
    
    66.8
    %
    
    
    15.4
    %
    
    
    17.5
    %Premises and equipment
    
    
    2,260.8
    
    
    
    3,125.9
    
    
    
    865.1
    
    
    
    38.3
    
    
    
    10.7
    
    
    
    10.1Depreciation and amortization
    
    
    1,440.7
    
    
    
    1,812.1
    
    
    
    371.4
    
    
    
    25.8
    
    
    
    6.8
    
    
    
    5.8Administrative and other
    
    
    4,462.5
    
    
    
    7,487.9
    
    
    
    3,025.4
    
    
    
    67.8
    
    
    
    21.1
    
    
    
    24.1Total non-interest expense
    
    Rs.
    11,413.9
    
    
    Rs.
    17,846.8
    
    
    Rs.
    6,432.9
    
    
    
    56.4
    %
    
    
    54.0
    %
    
    
    57.5
    %
   Income Tax




---



##### Table of Contents



70  Net Income




---



##### Table of Contents



71 Fiscal Year Ended March 31, 2005 Compared to Fiscal Year Ended March 31, 2004
 Net Interest Revenue After Allowance For Credit Losses
  Year ended March 31,Increase/
    
    
    % Increase/2004
    
    
    2005
    
    
    (decrease)
    
    
    (decrease)(in millions, except percentages)Interest on loans
    
    Rs.
    11,705.0
    
    
    Rs.
    16,431.4
    
    
    Rs.
    4,726.4
    
    
    
    40.4
    %Interest on securities, including dividends
    
    
    11,776.9
    
    
    
    11,543.5
    
    
    
    (233.4
    )
    
    
    (2.0
    )Other interest revenue
    
    
    1,109.6
    
    
    
    1,234.5
    
    
    
    124.9
    
    
    
    11.3Total interest and dividend revenue
    
    
    24,591.5
    
    
    
    29,209.4
    
    
    
    4,617.9
    
    
    
    18.8Interest on deposits
    
    
    10,279.2
    
    
    
    11,074.1
    
    
    
    794.9
    
    
    
    7.7Interest on short term borrowings
    
    
    1,435.9
    
    
    
    1,759.4
    
    
    
    323.5
    
    
    
    22.5Interest on long term debt
    
    
    268.0
    
    
    
    390.2
    
    
    
    122.2
    
    
    
    45.6Total interest expense
    
    
    11,983.1
    
    
    
    13,223.7
    
    
    
    1,240.6
    
    
    
    10.4Net interest revenue
    
    
    12,608.4
    
    
    
    15,985.7
    
    
    
    3,377.3
    
    
    
    26.8Allowance for credit lossesRetail
    
    
    918.5
    
    
    
    2,925.5
    
    
    
    2,007.0
    
    
    
    218.5Wholesale
    
    
    1,424.9
    
    
    
    122.7
    
    
    
    (1,302.2
    )
    
    
    (91.4
    )Total
    
    
    2,343.4
    
    
    
    3,048.2
    
    
    
    704.8
    
    
    
    30.1Net interest revenue after
allowance for credit losses
    
    Rs.
    10,265.0
    
    
    Rs.
    12,937.5
    
    
    Rs.
    2,672.5
    
    
    
    26.0
    %
 Interest and Dividend Revenue




---



##### Table of Contents



72  Interest Expense
   Allowance for Credit Losses
  Non
Interest revenue
  Year ended March 31,Increase/
    
    % Increase/2004
    
    2005
    
    (decrease)
    
    (decrease)(in millions, except percentages)Fees and commissions
    
    Rs.
    3,140.7
    
    
    Rs.
    6,124.4
    
    
    Rs.
    2,983.7
    
    
    
    95.0
    %Realized gains (losses) on sales of AFS securities
    
    
    (48.3
    )
    
    
    194.3
    
    
    
    242.6
    
    
    
    (502.3
    )Realized gains (losses) on sales of HFT securities
    
    
    396.8
    
    
    
    (39.3
    )
    
    
    (436.1
    )
    
    
    (109.9
    )Foreign exchange
    
    
    740.0
    
    
    
    911.7
    
    
    
    171.7
    
    
    
    23.2Derivative transactions
    
    
    443.9
    
    
    
    204.0
    
    
    
    (239.9
    )
    
    
    (54.0
    )Other
    
    
    24.5
    
    
    
    816.4
    
    
    
    791.9
    
    
    
    3,232.2Total non-interest revenue
    
    Rs.
    4,697.6
    
    
    Rs.
    8,211.5
    
    
    Rs.
    3,513.9
    
    
    
    74.8
    %




---



##### Table of Contents



73    Non-Interest Expense
  Year ended March 31,Increase/
    
    % Increase/
    
    2004 % of net
    
    2005 % of net2004
    
    2005
    
    (decrease)
    
    (decrease)
    
    revenues
    
    revenues(in millions, except percentages)Salaries and staff benefits
    
    Rs.
    2,154.0
    
    
    Rs.
    3,249.9
    
    
    Rs.
    1,095.9
    
    
    
    50.9
    %
    
    
    14.4
    %
    
    
    15.4
    %Premises and equipment
    
    
    1,828.5
    
    
    
    2,260.8
    
    
    
    432.3
    
    
    
    23.6
    
    
    
    12.2
    
    
    
    10.7Depreciation and amortization
    
    
    1,254.9
    
    
    
    1,440.7
    
    
    
    185.8
    
    
    
    14.8
    
    
    
    8.4
    
    
    
    6.8Administrative and other
    
    
    3,131.9
    
    
    
    4,462.5
    
    
    
    1,330.6
    
    
    
    42.5
    
    
    
    20.9
    
    
    
    21.1Total non-interest expense
    
    Rs.
    8,369.3
    
    
    Rs.
    11,413.9
    
    
    Rs.
    3,044.6
    
    
    
    36.4
    %
    
    
    55.9
    %
    
    
    54.0
    %
   Income Tax
  Net Income




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##### Table of Contents



74  Liquidity and Capital Resources
   Years ended March 31,2004
    
    
    2005
    
    
    2006(In millions)Cash flows from operating activities:Net income
    
    Rs.    4,754.5
        
    Rs.   6,609.7
        
    Rs. 9,187.1Non cash adjustment to net income
    
    
    4,520.0
    
    
    
    5,021.2
    
    
    
    12,144.0Subtotal
    
    
    9,274.5
    
    
    
    11,630.9
    
    
    
    21,331.1Net change in other assets and liabilities
    
    
    30,981.40
    
    
    
    (9,886.2
    )
    
    
    11,285.0Net cash provided/(used) by operating activities
    
    
    40,255.9
    
    
    
    1,744.7
    
    
    
    32,616.1Cash flows from investing activities:Net change in term placements
    
    
    4,182.2
    
    
    
    (5,134.3
    )
    
    
    (1,544.2
    )Net change in Investment
    
    
    (57,535.2
    )
    
    
    (17,516.4
    )
    
    
    (78,453.7
    )Purchase of subsidiary
    
    
    
    
    
    
    
    
    
    
    155.8Proceeds from loans securitized
    
    
    5,917.4
    
    
    
    48,234.6
    
    
    
    19,733.3Loans Purchased
    
    
    (6,180.7
    )
    
    
    (18,309.8
    )
    
    
    (8,952.3
    )Collections from Loans Purchased
    
    
    2,233.3
    
    
    
    16,621.2
    
    
    
    5,216.0Increase in loans originated, net of principal
collections
    
    
    (63,818.4
    )
    
    
    (127,777.5
    )
    
    
    (159,840.8
    )Additions to property and equipment
    
    
    (2,119.0
    )
    
    
    (2,433.3
    )
    
    
    (3,701.4
    )Net cash used in investing activities
    
    
    (117,320.4
    )
    
    
    (106,315.5
    )
    
    
    (227,387.3
    )Cash flows from financing activities:Net increase in deposits
    
    
    80,302.0
    
    
    
    59,480.5
    
    
    
    193,762.9Net increase/(decrease) in short-term borrowings
    
    
    2,484.6
    
    
    
    38,014.9
    
    
    
    13,597.6Net increase/(decrease) in long-term debt
    
    
    3,970.0
    
    
    
    (1,057.9
    )
    
    
    12,000.5Proceeds from issuance of equity shares for options exercised
    
    
    203.6
    
    
    
    659.1
    
    
    
    625.8Proceeds from issuance of ADSs
    
    
    
    
    
    
    12,747.6
    
    
    
    Proceeds from applications received for shares pending allotment
    
    
    125.5
    
    
    
    423.3
    
    
    
    Payment of dividends and dividend tax
    
    
    (955.7
    )
    
    
    (1,131.3
    )
    
    
    (1,597.1
    )Net cash provided by financing activities
    
    
    86,130.0
    
    
    
    109,136.2
    
    
    
    218,389.7Net change in cash
    
    
    9,065.5
    
    
    
    4,565.4
    
    
    
    23,618.5Cash and cash equivalents, beginning of year
    
    
    23,944.9
    
    
    
    33,010.4
    
    
    
    37,575.8Cash and cash equivalents, end of year
    
    Rs.  33,010.4
    
    
    Rs.  37,575.8
    
    
    Rs.  61,194.3




---



##### Table of Contents



75 Cash flows from operations
  Cash flows from financing activities
    Cash flows from investing activities




---



##### Table of Contents



76  Financial Condition
 Assets
  As of March 31,Increase/
    
    % Increase/2005
    
    2006
    
    (decrease)
    
    (decrease)(in millions except percentages)Cash and cash equivalents
    
    Rs.
    37,575.8
    
    
    Rs.
    61,194.3
    
    
    Rs.
    23,618.5
    
    
    
    62.9
    %Term placements
    
    
    8,699.6
    
    
    
    10,243.7
    
    
    
    1,544.1
    
    
    
    17.7Investments held for trading
    
    
    1,278.5
    
    
    
    2,945.6
    
    
    
    1,667.1
    
    
    
    130.4Investments available for sale
    
    
    204,292.8
    
    
    
    273,457.0
    
    
    
    69,164.2
    
    
    
    33.9Investments held to maturity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Securities purchased under
agreements to resell
    
    
    
    
    
    
    4,200.0
    
    
    
    4,200.0
    
    
    
    Loans, net
    
    
    256,486.9
    
    
    
    395,274.3
    
    
    
    138,787.4
    
    
    
    54.1Accrued interest receivable
    
    
    4,912.1
    
    
    
    8,662.7
    
    
    
    3,750.6
    
    
    
    76.4Property and equipment
    
    
    7,083.2
    
    
    
    8,714.6
    
    
    
    1,631.4
    
    
    
    23.0Other assets
    
    
    15,215.3
    
    
    
    26,277.2
    
    
    
    11,061.9
    
    
    
    72.7Total assets
    
    Rs.
    535,544.2
    
    
    Rs.
    790,969.4
    
    
    Rs.
    255,425.2
    
    
    
    47.7
    %
     Liabilities and Shareholders Equity




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##### Table of Contents



77 As of March 31,Increase/
    
    % Increase/2005
    
    2006
    
    (decrease)
    
    (decrease)(in millions except percentages)LiabilitiesInterest bearing deposits
    
    Rs.
    257,237.9
    
    
    Rs.
    410,181.2
    
    
    Rs.
    152,943.3
    
    
    
    59.5
    %Non-interest bearing deposits
    
    
    106,304.6
    
    
    
    147,124.2
    
    
    
    40,819.6
    
    
    
    38.4
    %Total deposits
    
    
    363,542.5
    
    
    
    557,305.4
    
    
    
    193,762.9
    
    
    
    53.3
    %Short-term borrowings
    
    
    62,079.1
    
    
    
    75,676.7
    
    
    
    13,597.6
    
    
    
    21.9
    %Accrued interest payable
    
    
    5,843.0
    
    
    
    8,264.1
    
    
    
    2,421.1
    
    
    
    41.4
    %Long-term debt
    
    
    5,028.1
    
    
    
    17,028.6
    
    
    
    12,000.5
    
    
    
    238.7
    %Accrued expenses and other liabilities
    
    
    49,713.5
    
    
    
    77,201.8
    
    
    
    27,488.3
    
    
    
    55.3
    %Total liabilities
    
    
    486,206.2
    
    
    
    735,476.6
    
    
    
    249,270.4
    
    
    
    51.3
    %Minority Interest
    
    
    
    
    
    
    225.3
    
    
    
    225.3Shareholders equity
    
    
    49,338.0
    
    
    
    55,267.5
    
    
    
    5,929.5
    
    
    
    12.0
    %Total liabilities and shareholders
equity
    
    Rs.
    535,544.2
    
    
    Rs.
    790,969.4
    
    
    Rs.
    255,425.2
    
    
    
    47.7
    %
     Capital




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##### Table of Contents



78 As of March 31,2005
    
    2006(in millions except percentages)Tier 1 capital
    
    Rs.
    39,621.6
    
    
    Rs.
    51,499.1Tier 2 capital
    
    
    10,547.3
    
    
    
    17,207.1Total capital
    
    Rs.
    50,168.9
    
    
    Rs.
    68,706.2Total risk weighted assets and contingents
    
    Rs.
    412,710.3
    
    
    Rs.
    602,176.2Capital ratiosTier 1
    
    
    9.60
    %
    
    
    8.55
    %Total capital
    
    
    12.16
    %
    
    
    11.41
    %Minimum capital ratios required by the RBI:Tier 1
    
    
    4.50
    %
    
    
    4.50
    %Total capital
    
    
    9.00
    %
    
    
    9.00
    %
      (* For transactions prior to issuance of Draft Securitization
Guidelines, credit enhancements provided as cash collateral have been
reduced from Tier 1 and Tier 2 capital)
  Capital Expenditure




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##### Table of Contents



Financial Instruments and Off-Balance Sheet Arrangements
 Foreign Exchange and Derivatives
   As of March 31,2005
    
    2006Notional
    
    Fair Value
    
    Notional
    
    Fair Value(In millions)Interest rate swaps
and forward rate
agreements
    
    Rs.
    780,211.6
    
    
    Rs.
    (79.7
    )
    
    Rs.
    1,209,102.8
    
    
    Rs.
    (593.1
    )Forward exchange
contracts, currency
swaps and currency
options
    
    Rs.
    571,445.0
    
    
    Rs.
    731.2
    
    
    Rs.
    845,329.3
    
    
    Rs.
    1,025.8
  Guarantees and Documentary Credits




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##### Table of Contents



80 As of March 31,2005
    
    2006(In millions)Bank guarantees:Financial guarantees
    
    Rs.
    14,365.4
    
    
    Rs.
    21,141.0Performance guarantees
    
    
    9,954.4
    
    
    
    12,940.9Documentary credits
    
    
    27,930.2
    
    
    
    24,103.7Total
    
    Rs.
    52,250.0
    
    
    Rs.
    58,185.6
  Loan Sanction Letters
  Contractual Obligations and Commercial Commitments
 Contractual Obligations
 Payments due by period, as of March 31,2006Less than
    
    
    
    
    
    
    
    
    
    AfterTotal
    
    1 year
    
    1-3 years
    
    3-5 years
    
    5 years(In millions)Subordinated debt
    
    Rs.
    17,020.0
    
    
    Rs.
    1,000.0
    
    
    Rs.
    
    
    
    Rs.
    
    
    
    Rs.
    16,020.0Other long term
debt(a)
    
    
    8.5
    
    
    
    3.4
    
    
    
    5.1
    
    
    
    
    
    
    
    Operating leases(b)
    
    
    10,001.7
    
    
    
    397.7
    
    
    
    322.7
    
    
    
    1,137.1
    
    
    
    8,144.2Unconditional purchase
obligations(c)
    
    
    946.8
    
    
    
    946.8
    
    
    
    
    
    
    
    
    
    
    
    Total contractual cash obligations
    
    Rs.
    27,977.0
    
    
    Rs.
    2,347.9
    
    
    Rs.
    327.8
    
    
    Rs.
    1,137.1
    
    
    Rs.
    24,164.2
 
 a)
    
    Other long term debt consists of capital lease obligations of
Rs. 0.4 million
pertaining to assets taken on leases, such as ATMs, VSATs and other equipment, and a
loan of Rs. 8.1 million from the Indian Renewable Energy Development Authority used to
finance solar equipment.b)
    
    Operating leases are principally for the lease of office, branch and ATM
premises, and
residential premises for executives.c)
    
    Unconditional purchase obligations principally constitute the capital
expenditure commitments
made as of March 31, 2006. See  Capital
Expenditures.




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##### Table of Contents



81 Commercial Commitments
    Amount of commitment expiration per periodTotal amounts
    
    Less thancommitted
    
    1 year
    
    1-3 years
    
    3-5 years
    
    Over 5 years(in millions)Documentary Credits
    
    Rs.
    24,103.7
    
    
    Rs.
    21,618.9
    
    
    Rs.
    2,246.9
    
    
    Rs.
    213.6
    
    
    Rs.
    24.3Guarantees
    
    
    34,081.9
    
    
    
    11,065.3
    
    
    
    14,921.1
    
    
    
    4,439.2
    
    
    
    3,656.3Forward exchange contracts
    
    
    734,733.7
    
    
    
    657,150.5
    
    
    
    77,517.8
    
    
    
    65.4
    
    
    
    Derivative contracts*
    
    
    1,319,698.4
    
    
    
    74,474.0
    
    
    
    559,690.9
    
    
    
    269,349.8
    
    
    
    416,183.7Total contractual cash obligations
    
    Rs.
    2,112,617.7
    
    
    Rs.
    764,308.7
    
    
    Rs.
    654,376.7
    
    
    Rs.
    274,068.0
    
    
    Rs.
    419,864.3
 
 *
    
    Denotes notional principal amounts.




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##### Table of Contents



82 
 MANAGEMENT
 Directors and Executive Officers




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##### Table of Contents



83  Name
    
    Position
    
    AgeMr. Jagdish Capoor
    
    Chairman
    
    
    67Mr. Aditya Puri
    
    Managing Director
    
    
    55Dr. V. R. Gadwal
    
    Non-Executive Director
    
    
    68Mr. Vineet Jain
    
    Non-Executive Director
    
    
    40Mr. K. M. Mistry
    
    Non-Executive Director
    
    
    52Mrs. Renu Karnad
    
    Non-Executive Director
    
    
    54Mr. Arvind Pande
    
    Non-Executive Director
    
    
    64Mr. Bobby Parikh
    
    Non-Executive Director
    
    
    42Mr. Ashim Samanta
    
    Non-Executive Director
    
    
    52
   Name
    
    Position
    
    AgeMr. Aditya Puri
    
    Managing Director
    
    
    55Mr. Vinod G. Yennemadi
    
    Head, Finance, Administration,
Legal and Secretarial
    
    
    64Mr. Samir Bhatia
    
    Head, Corporate Banking
    
    
    42Mr. Harish Engineer
    
    Head, Wholesale Banking
    
    
    57Mr. Sudhir Joshi
    
    Head, Treasury
    
    
    59Mr. C. N. Ram
    
    Head, Information Technology
    
    
    49Mr. Bharat Shah
    
    Head, Depositary Services and
Merchant Services
    
    
    59Mr. G. Subramanian
    
    Head, Audit, Compliance,
Vigilance and Service Quality
    
    
    58Mr. Paresh Sukthankar
    
    Head, Credit and Market Risk and
Human Resources
    
    
    43Mr. A. Rajan
    
    Head, Operations
    
    
    54Mr. Abhay Aima
    
    Head, Equities and Private Banking
    
    
    43
     Mr. Jagdish Capoor




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##### Table of Contents



84  Mr. Aditya Puri
 Dr. V. R. Gadwal
 Mr. Vineet Jain inter alia
 Mr. Keki Mistry
 Mrs. Renu Karnad




---



##### Table of Contents



85  Mr. Arvind Pande
 Mr. Bobby Parikh
 Mr. Ashim Samanta
  Mr. A. Rajan
 Mr. Abhay Aima
 Mr. Bharat Shah
 Mr. C. N. Ram
 Mr. G. Subramanian




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##### Table of Contents



86 Mr. Harish Engineer
 Mr. Paresh Sukthankar
 Mr. Samir Bhatia
 Mr. Sudhir Joshi
 Mr. Vinod G. Yennemadi
 Corporate Governance
 Audit And Compliance Committee:
    §
    
    Overseeing the Banks financial reporting process and ensuring correct, adequate and credible disclosure of financial
information;§
    
    Recommending appointment and removal of external auditors and fixing of their fees;§
    
    Reviewing with management the annual financial statements before submission to the Board with special emphasis on
accounting policies and practices, compliance with accounting standards and other legal requirements concerning
financial statements;§
    
    Reviewing the adequacy of the Audit and Compliance function, including their policies, procedures, techniques and other
regulatory requirements. and§
    
    Any other terms of reference as may be included from time to time in clause 49 of the listing agreement




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##### Table of Contents



87 
  Compensation Committee:
     Investors Grievance (Share) Committee:
      Risk Monitoring Committee:




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##### Table of Contents



88 Credit Approval Committee:
   Premises Committee:
   Nomination Committee:
      Fraud Monitoring Committee:
  §
    
    Identify the systems lacunae, if any, that facilitated perpetration of the fraud and put in place measures to plug the
same;§
    
    Identify the reasons for delay in detection, if any, reporting to top management of the Bank and RBI;§
    
    Monitor progress of CBI / police investigation and recovery position;§
    
    Ensure that staff accountability is examined at all levels in all the cases of frauds and staff side action, if
required, is completed quickly without loss of time;




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##### Table of Contents



89 §
    
    Review the efficacy of the remedial action taken to prevent recurrence of frauds, such as strengthening of internal
controls;§
    
    Put in place other measures as may be considered relevant to strengthen preventive measures against frauds.
   Customer Service Committee :
    Committees of Executives
  Borrowing Powers of Directors
   Compensation of Directors and Executive Officers




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##### Table of Contents



90    Loans to Executive Officers
  Largest Amount
    
    Amount
    
    Interest rateOutstanding since
    
    Outstanding as of
    
    as of MarchName
    
    March 31, 2001
    
    March 31, 2006
    
    31, 2006
    
    Nature of Loan(In Millions, expect percentages)Abhay Aima
    
    
    1.6
    
    
    
    1.6
    
    
    
    9.3
    %
    
    Housing Loan0.4
    
    
    
    
    
    
    
    
    
    
    Personal LoanAditya Puri
    
    
    5.0
    
    
    
    5.0
    
    
    
    9.3
    
    
    Housing LoanA. Rajan
    
    
    5.0
    
    
    
    4.8
    
    
    
    9.3
    
    
    Housing Loan0.5
    
    
    
    0.3
    
    
    
    5.0
    
    
    Personal LoanBharat Shah
    
    
    4.7
    
    
    
    
    
    
    
    
    
    
    Housing Loan0.1
    
    
    
    
    
    
    
    
    
    
    Personal LoanC. N. Ram
    
    
    2.0
    
    
    
    
    
    
    
    
    
    
    Housing Loan0.1
    
    
    
    
    
    
    
    
    
    
    Personal Loan1.5
    
    
    
    
    
    
    
    
    
    
    Auto LoanG. Subramanian
    
    
    5.7
    
    
    
    5.7
    
    
    
    9.3
    
    
    Housing Loan0.5
    
    
    
    0.3
    
    
    
    5.0
    
    
    Personal LoanH. Srikrishnan*
    
    
    5.0
    
    
    
    
    
    
    
    
    
    
    Housing Loan0.5
    
    
    
    
    
    
    
    
    
    
    Personal LoanHarish Engineer
    
    
    2.3
    
    
    
    2.3
    
    
    
    9.3
    
    
    Housing Loan0.3
    
    
    
    
    
    
    
    
    
    
    Personal LoanNeeraj Swaroop*
    
    
    3.2
    
    
    
    
    
    
    
    
    
    
    Housing Loan0.4
    
    
    
    
    
    
    
    
    
    
    Personal LoanParesh Sukthankar
    
    
    4.0
    
    
    
    
    
    
    
    
    
    
    Housing LoanSamir Bhatia*
    
    
    6.8
    
    
    
    6.8
    
    
    
    9.3
    
    
    Housing Loan0.4
    
    
    
    
    
    
    
    
    
    
    Personal LoanSudhir Joshi
    
    
    6.4
    
    
    
    6.4
    
    
    
    9.3
    
    
    Housing LoanUma Krishnan*
    
    
    4.1
    
    
    
    
    
    
    
    
    
    
    Housing Loan




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##### Table of Contents



91 Largest Amount
    
    Amount
    
    Interest rateOutstanding since
    
    Outstanding as of
    
    as of MarchName
    
    March 31, 2001
    
    March 31, 2006
    
    31, 2006
    
    Nature of Loan(In Millions, expect percentages)0.4
    
    
    
    
    
    
    
    
    
    
    Personal Loan0.1
    
    
    
    
    
    
    
    
    
    
    Consumer LoanVinod Yennemadi
    
    
    2.1
    
    
    
    2.1
    
    
    
    8.5
    
    
    Housing Loan0.5
    
    
    
    0.5
    
    
    
    5.0
    
    
    Personal LoanTotal
    
    
    63.6
    
    
    
    35.8
 *
    
    No longer an Executive Officer of the Bank.
 Employees Stock Option Scheme
  Other Compensation
  Controls and procedures
 Evaluation of disclosure controls and procedures




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92 Changes in internal controls
  Audit committee financial expert
  Code of ethics
   Principal Accountant Fees and Services
  Fiscal year endedType of Service
    
    March 31, 2005
    
    March 31, 2006
    
    Description of Services( in millions)Audit services
    
    Rs.
    3.9
    
    
    Rs.
    12.0
    
    
    Audit of financial statementsAudit-related
services
    
    
    1.1
    
    
    
    5.2
    
    
    Services related to review of
financial statements and due
diligenceTax services
    
    
    
    
    
    
    0.5
    
    
    Tax audit, tax returns, tax
processing, tax filing and
advisory servicesOther services
    
    
    0.2
    
    
    
    0.9
    
    
    Statutory certifications,
quality registrar, work permit
related services and other
advisory servicesRs.
    5.2
    
    
    Rs.
    18.6




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##### Table of Contents



93  Compliance with NYSE Listing Standards on Corporate Governance
    NYSE rule applicable toU.S. listed companies
    
    Indian law and HDFC Banks practiceCompanies must have a majority
of independent directors.
(NYSE Corporate Governance
Standard 303A.01)
    
    Under Indian law, if the chairman of the
Board of Directors is not an executive
officer of the company, at least one-third
of the directors should be independent. If
the chairman is an executive officer, at
least 50% of the companys directors
should be independent. The chairman of our
Board of Directors is not an executive
officer and 4 out of 9 members of the
board are independent.Certain heightened standards
apply to independent
directors (NYSE Corporate
Governance Standard 303A.02)
    
    Under Indian law, a director is
independent so long as he or she does
not have any material pecuniary
relationship or transactions (apart from
directors remuneration) with the company,
its promoters, its management or its
subsidiaries, which in the judgment of the
board may affect the independence or
judgment of the director. We apply the
Indian definition of independent.Non-management directors must
meet at regularly scheduled
executive sessions without
management. (NYSE Corporate
Governance Standard 303A.03)
    
    Under Indian law, there is no requirement
for such sessions. HDFC Bank does not
regularly hold such meetings.Companies must have a
nominating/corporate
governance committee composed
entirely of independent
directors. (NYSE Corporate
Governance Standard 303A.04)
    
    Under Indian law, a nominating/corporate
governance committee is not required.
However, HDFC Bank has a Nomination
Committee that is responsible for
recommending the appointment of
independent/non-




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##### Table of Contents



94 NYSE rule applicable toU.S. listed companies
    
    Indian law and HDFC Banks practiceexecutive directors to the Board of Directors. The Nomination
Committee during the year was composed of four non-executive directors, all of whom
were independent.The nominating/corporate
governance committee must have
a written charter that
addresses certain specific
committee purposes and
responsibilities and provides
for an annual performance
evaluation of the committee.
(NYSE Corporate Governance
Standard 303A.04)
    
    Since Indian law does not require a
nominating/corporate governance committee,
it also does not require a charter for
such a committee. As a result, we have no
such charter.Companies must have a
compensation committee
composed entirely of
independent directors. (NYSE
Corporate Governance Standard
303A.05)
    
    Under Indian law, a companys Board of
Directors sets the compensation for
non-executive directors. Non-mandatory
Indian law recommends that companies
establish a remuneration committee
composed of non-executive directors and an
independent chairman to determine the
compensation of executive directors. The
Compensation Committee during the year was
composed of four non-executive directors,
all of whom were independentThe compensation committee
must have a written charter
that addresses certain
specific purposes and
responsibilities of the
committee and provides for an
annual performance evaluation
of the committee. (NYSE
Corporate Governance Standard
303A.05)
    
    Indian law does not require that the
compensation committee have a charter.
HDFC Bank does not have such a charter.Companies must have an audit
committee that satisfies the
independence requirements of
Rule 10A-3 under the Exchange
Act and the requirements of
NYSE Corporate Governance
Standard 303A.02. (NYSE
Corporate Governance Standards
303A.06 and 303A.07)
    
    An audit committee is required under
Indian Law. The Audit Committee during the
year was composed of five non-executive
directors, all of whom were independentThe audit committee must have
a written charter that
addresses certain specific
purposes and responsibilities
of the committee, provides for
an annual performance
evaluation of the committee
and sets forth certain minimum
duties and responsibilities.
(NYSE Corporate Governance
Standard 303A.07)
    
    HDFC Bank has a written audit committee
charter that provides for specific
purposes and responsibilities.Companies must adopt and
disclose corporate governance
guidelines. (NYSE Corporate
Governance Standard 303A.09)
    
    Indian law does not require the adoption
and disclosure of corporate governance
guidelines. However, information with
respect to corporate governance can be
found in our annual report for 2005-2006
under the heading Corporate Governance.Companies must adopt and
disclose a code of
    
    As required by SEBI regulations, HDFC Bank has




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##### Table of Contents



95 NYSE rule applicable toU.S. listed companies
    
    Indian law and HDFC Banks practicebusiness
conduct and ethics for
directors, officers and
employees, and promptly
disclose any waivers of the
code for directors or
executive officers. (NYSE
Corporate Governance Standard
303A.10)
    
    adopted a code governing trading in
the companys securities by insiders. In
addition, HDFC Bank has adopted a Code of
Ethics for the Managing Director, CFO and
Senior Management of the company.
 Memorandum and Articles of Association




---



##### Table of Contents



96




---



##### Table of Contents



97 
 PRINCIPAL SHAREHOLDERS
  §
    
    each person or group of affiliated persons known by us to
beneficially own 5.0% or more of our equity shares; and
 §
    
    our individual directors and officers
   Percentage ofTotal EquityNumber of
    
    SharesEquity Shares
    
    OutstandingHDFC group
    
    
    68,861,000
    (1)
    
    
    22.0
    %Bennett Coleman group
    
    
    16,192,408
    (2)
    
    
    5.2
    %Directors and executive
officers
    
    
    
    
    
    
    *
 
 1)
    
    Includes: 38,860,000 equity shares held directly by HDFC Limited, 30,000,000 equity
shares held by HDFC Investments Limited and 1,000 equity shares held by HDFC Holdings
Limited. HDFC Investments Limited and HDFC Holdings Limited are
controlled by HDFC Limited.2)
    
    Includes: 8,849,929 equity shares held by Bennett Coleman & Company Limited,
2,486,956 equity shares held by Dharmayug Investments Limited and 4,855,523 equity shares
held by other Bennett Coleman group entities.(*)
    
    None of our directors or executive officers individually holds 1% or more of our total equity
shares outstanding.




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##### Table of Contents



98 
 RELATED PARTY TRANSACTIONS
   HDFC Securities Ltd (HSL)
   HDFC Limited
 Housing Loans
  Property
  Capital Payments




---



##### Table of Contents



99 HDFC Standard Life Insurance Company Ltd (HDFC Standard Life)
  HDFC Asset Management Company Ltd (HDFC AMC)
  HDFC Chubb General Insurance Company Ltd (HDFC Chubb)
  Atlas Documentary Facilitators Company Private Ltd (ADFC)
  HBL Global Private Ltd (HBL Global)
  Flexcel International Private Ltd (Flexcel)




---



##### Table of Contents



100 Salisbury Investments Private Ltd
  Other Strategic Investments
  HDFC Bank
    
    HDFC Bank
    
    Total HDFCCompany
    
    Type of Business
    
    Investment
    
    Ownership
    
    Group ownership(In millions)Computer Age
Management Services
Private Limited
(CAMS)
    
    Unit capital
accounting and
transfer agency
services
    
    Rs.
    6.1
    
    
    
    19.0
    %
    
    
    49.0
    %SolutionNET India
Private
Limited
    
    Information
technology
consulting and
services
    
    
    7.6
    
    
    
    19.0
    
    
    
    50.0Softcell
Technologies
Limited
(Softcell)
    
    Business-to-business
software services
    
    Rs.
    26.0
    
    
    
    12.0
    %
    
    
    26.0
    %




---



##### Table of Contents



101 
 TAXATION
 Indian Taxation of the ADSs
  EACH INVESTOR IS ADVISED TO CONSULT THEIR TAX ADVISOR ABOUT THE PARTICULAR TAX CONSEQUENCES
APPLICABLE ON INVESTMENTS IN THE ADSs.
   Taxation of Distributions
  Taxation on Acquisition of ADSs or Shares Upon Conversion or in Exchange for ADSs
  Taxation of Capital Gains




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##### Table of Contents



102      Tax Deduction at Source
  Capital Losses




---



##### Table of Contents



103  Tax Treaties
   Stamp Duty
   Other Taxes
  Service Tax
  United States Tax




---



##### Table of Contents



104  §
    
    insurance companies;§
    
    regulated investment companies and real estate investment trusts;§
    
    tax-exempt organizations;§
    
    broker-dealers;§
    
    traders in securities that elect to mark-to-market;§
    
    banks or other financial institutions;§
    
    investors whose functional currency is not the United States dollar;§
    
    United States expatriates;§
    
    investors that hold our equity shares or ADSs as part of a hedge, straddle or conversion transaction;§
    
    holders that purchase or otherwise acquire equity shares or ADSs other than through this offering; or§
    
    holders that own, directly, indirectly or constructively 10.0% or more of our total combined voting stock.
   Taxation of U.S. Holders
  §
    
    a citizen or resident of the United States;§
    
    a corporation, or any other entity taxable as a corporation,
created or organized in or under the laws of the United States or
any state thereof, including the District of Columbia;§
    
    an estate the income of which is subject to United States federal
income tax regardless of its source; or§

    a trust if a court within the United States is able to exercise
primary supervision over its administration and one or more United
States persons have the authority to control all substantial
decisions of the trust, or if the trust has made a valid election
to be treated as a United States person.




---



##### Table of Contents



105 Distributions on Equity Shares or ADSs
     Sale or Exchange of Equity Shares or ADSs




---



##### Table of Contents



106    Passive Foreign Investment Company Rules
  Taxation of Non-U.S. Holders
 Distributions on Equity Shares or ADSs
  Sale or Exchange of Equity Shares or ADSs
  
    
    such gain is considered effectively connected with the Non-U.S.
Holders conduct of a United States trade or business (and, if
required by an applicable income tax treaty, the income is
attributable to a permanent establishment maintained in the United
States); or
    
    if such Non-U.S. Holder is an individual that is present in the
United States for 183 days or more during the taxable year of the
disposition and certain other conditions are met.




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##### Table of Contents



107 
  Backup Withholding and Information Reporting
  
    
    is a corporation or other exempt recipient; or
    
    provides an accurate taxpayer identification number and
certifies that no loss of exemption from backup withholding
has occurred.




---



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108 
 SUPERVISION AND REGULATION
  RBI Regulations
   Regulations Relating to the Opening of Branches




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109 Capital Adequacy Requirements




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##### Table of Contents



§
    
    securities included under the HFT category;§
    
    securities included under the AFS category;§
    
    open positions in bullion;§
    
    open foreign exchange position limits;§
    
    trading positions in derivatives; and§
    
    derivatives entered into for hedging trading book exposures.
  Loan Loss Provisions and Non-Performing Assets
   Non-Performing Assets
  Asset Classification
  §
    
    Standard Assets.Assets that do not have any problems or do not carry more than the normal risk attached
to the business
 §
    
    Sub-Standard Assets.Assets that are non-performing assets for a period not exceeding 12 months
 §
    
    Doubtful Assets.Assets that are non-performing assets for 12 months or more and have not been written
off, either wholly or partially
 §
    
    Loss Assets.Assets that are considered uncollectible and identified as a loss by us, the RBI or our
external auditors.
  Provisioning and Write-Offs




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##### Table of Contents



111 §
    
    Standard Assets. The RBI increased the general provisioning
requirement for standard advances from 0.25% to 0.40% in November
2005. Banks direct advances to agricultural and SME sectors have
been exempted from the additional provisioning requirement. This
is up to March 2006.
 §
    
    Sub-Standard Assets. A general provision of 10% on the total
outstanding is required without any allowance for ECGC guarantee
cover and securities available. The unsecured exposures, which are
identified as sub-standard, would attract an additional provision
of 10% i.e. a total of 20% on the outstanding balance.
 §
    
    Doubtful Assets. A 100% specific provision is required to be taken
against the unsecured portion of the doubtful asset and charged
against income. The value assigned to the collateral securing a
loan is the amount reflected on the borrowers books or the
realizable value determined by third-party appraisers. In cases
where there is a secured portion of the asset, depending upon the
period for which the asset remains doubtful, an additional 20% to
50% provision of the loan outstanding is required to be made.
   Act Relating to Recovery of Non-Performing Assets
  Guidelines on Purchase/Sale of Non-Performing Assets
  Guidelines on Securitization of Standard Assets




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112 §
    
    Credit enhancements (comprising first loss and second loss facilities) given by an
originator are required to be deducted from its capital funds. The deduction from Tier 1
capital shall be capped at the amount of capital that the bank would have been required to
hold for the full value of the assets, had they not been securitized.§
    
    Securities issued by special purpose vehicles and devolved / held by banks in excess of
10 per cent of the original amount of issue, including secondary market purchases, are
also required to be deducted from capital funds.§
    
    Banks can sell assets to special purpose vehicles (SPVs) only on cash basis and the
sale consideration should be received not later than the transfer of the asset to the SPV.
Any profit or premium arising on account of sale should be amortised over the life
of the securities issued or to be issued by the SPV.
  Regulations Relating to Making Loans
  Directed Lending
 Priority Sector Lending
  §
    
    The RBI also has set forth the minimum percentage of net bank credit that banks must direct
to specific priority sectors. The minimum percentage of net bank credit that banks must direct
to the agriculture sector is 18% and to weaker sectors is 10%.
   Export Credit
  Credit Exposure Limits




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##### Table of Contents



113    §
    
    all approved fund-based limits or outstanding (whichever are higher);
 §
    
    approved non-fund-based limits, underwriting and similar commitments or outstanding, whichever is higher; and
 §
    
    foreign exchange and derivative contracts at their replacement cost value.
   Regulation Relating to Country Risk Management
  Regulation Relating to Capital Markets Exposure
  §
    
    Direct investment by a bank in equity shares, convertible bonds and debentures and
units of equity-oriented mutual funds.§
    
    Advances against shares to individuals for investments in equity shares (including
initial public offerings), bonds and debentures, units of equity-oriented mutual funds and
similar securities.§
    
    Secured and unsecured advances to stockbrokers and guarantees issued on behalf of
stockbrokers and market makers.




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114  Regulations Relating to Investments
 Exposure Limits
   Non-Performing Investments
  Restrictions on Investments in a Single Company
  Prohibition on Short Selling
  Valuation of Investments




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##### Table of Contents



115    Regulations Relating to Deposits
    §
    
    Time deposits are of Rs. 1.5 million and above; and
 §
    
    Interest is paid in accordance with a schedule of interest rates
disclosed in advance by the bank and not pursuant to negotiation
between the depositor and the bank.
   Insurance of Deposits




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116  Regulations Relating to Know Your Customer (KYC) Guidelines Anti Money Laundering Standards
   Customer Acceptance Policy (CAP)
  §
    
    No account is opened in an anonymous or a fictitious name;§
    
    Parameters of risk perception are clearly defined in terms of the nature of, among the
other things, the nature of business activity, location of customer and his clients, mode
of payments, volume of turnover, social and financial status to enable categorization of
customers into low, medium and high risk;§
    
    Documentation requirements and other information to be collected in respect of
different categories of customers; and§
    
    Application of appropriate customer-due-diligence measures.
 Customer Identification Procedure (CIP)
  Monitoring of Transactions
  Risk Management




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117   Legal Reserve Requirements
 Cash Reserve Ratio
  §
    
    inter-bank liabilities; and
 §
    
    refinancing from the RBI and other institutions permitted to offer refinancing to banks.
   Statutory Liquidity Ratio
  §
    
    any advance taken from the RBI or from certain other financial institutions; and
 §
    
    inter-bank liabilities to the extent of inter-bank assets.
 Regulations for Asset Liability Management




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118 Foreign Currency Dealership
    Statutes Governing Foreign Exchange and Cross Border Business Transactions
  Requirements of the Banking Regulation Act
 Reserve Fund
  Restrictions on Payment of Dividends




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##### Table of Contents



119 §
    
    Capital adequacy ratio must be at least 9% for the preceding two completed years and the fiscal year for which the
bank proposes to declare a dividend;
 §
    
    Net non-performing assets must be less than 7% of advances (5% of advances where the capital adequacy ratio is
less than 9% for the preceding two completed years but at least 9% for the fiscal year for which the bank proposes
to declare a dividend);
 §
    
    The bank has complied with the provisions of Sections 15 and 17 of the Banking Regulation Act;
 §
    
    The bank has complied with the prevailing regulations/guidelines issued by the RBI, including creating adequate
provisions for impairment of assets and staff retirement benefits, transfer of profits to Statutory Reserves,
etc.;
 §
    
    The dividend should be payable out of the current years profits; and
 §
    
    The RBI has not placed any explicit restrictions on the bank
for declarations of dividends.
  §
    
    The dividend payout ratio (calculated as a percentage of
dividend payable in a year (excluding dividend tax) to net
profit during the year) should not exceed 40%. The RBI has
prescribed a matrix of criteria linked to the capital
adequacy ratio and the net non-performing assets ratio in
order to ascertain the maximum permissible range of dividend
payout ratio;
 §
    
    If the financial statements for which the dividend is
declared have any audit qualifications which have an adverse
bearing on the profits, the same should be adjusted while
calculating the dividend payout ratio.
 Restriction on Voting Rights
   Restriction on Transfer of Shares
  Regulatory Reporting and Examination Procedures
  §
    
    assets, liabilities and off-balance sheet exposures;
 §
    
    the risk weighting of these exposures, the capital base and the capital adequacy ratio;
 §
    
    the unaudited balance sheet/statement of income;
 §
    
    asset quality;
 §
    
    concentration of exposures; and
 §
    
    other prudential parameters.




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##### Table of Contents



120 
    Penalties
  Assets to be Maintained in India
  Secrecy Obligations
  Guidelines for merger /amalgamation of private sector banks
  Appointment and Remuneration of Our Chairman, Managing Director and Other Directors




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121     Securities and Exchange Board of India Regulations and Guidelines




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##### Table of Contents



122 
 EXCHANGE CONTROLS
 Restrictions on Conversion of Rupees
  Restrictions on Sale of the Equity Shares Underlying the ADRs/ADSs and for Repatriation of Sale
Proceeds
   Fungibility of ADRs
  
 
 
 
 
 
 
  
 
 
 




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123 
 RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES
     Foreign Direct Investment
  
 
 
 
 
 
   §
    
    Under the Issue of Foreign Currency Convertible Bonds and Equity Shares (through
Depositary Receipt Mechanism) Scheme, 1993, foreign investors may purchase ADSs subject to
the receipt of all necessary government approvals at the time the depositary receipt
program is set up. With a view to liberalizing the operational procedures, the government
of Indias Ministry of Finance and the RBI have granted a general approval to ADS issues,
subject to certain restrictions; and§
    
    Under the portfolio investment route, foreign institutional investors, subject to
registration with SEBI and the RBI, and non-resident Indians, subject to a resolution of
the board of directors and a special resolution of the shareholders, may be permitted to
own in the aggregate up to 49% of the total issued capital of the company that are not
represented by ADSs; no single foreign institutional investor may own more than 10% of the
total issued capital of the company; a corporate/individual sub-account of the foreign
institutional investor may not hold more than 5% of the total issued capital of a company;
a broad based sub-account may not hold more than 10% of the total issued capital of a
company and no single non-resident Indian may own more than 5% of the total issued capital
of the company.




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124 
 ADDITIONAL INFORMATION




---



##### 



INDEX TO FINANCIAL STATEMENTS
 PageConsolidated
Financial Statements of HDFC Bank Limited:Report of independent registered public accounting firm
    
    
    F-2Consolidated
balance sheets as of March 31, 2005 and 2006
    
    
    F-3Consolidated
statements of income for the years ended March 31, 2004, 2005 and 2006
    
    
    F-4Consolidated
statements of cash flows for the years ended March 31, 2004, 2005 and 2006
    
    
    F-5Consolidated
statements of shareholders equity for the years ended March 31, 2004, 2005 and 2006
    
    
    F-6Notes
to consolidated financial statements
    
    
    F-7
  F-1




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




---



##### Table of Contents



HDFC
BANK LIMITED
 
 CONSOLIDATED BALANCE SHEETS
 As of March 31, 2005 and 2006
 As of March 31,2005
    
    2006
    
    2006(In millions except number of shares)ASSETS:Cash and cash equivalents
    
    Rs.
    37,575.8
    
    
    Rs.
    61,194.3
    
    
    US$
    1,375.8Term placements
    
    
    8,699.6
    
    
    
    10,243.7
    
    
    
    230.3Investments
held for trading, at fair value
    
    
    1,278.5
    
    
    
    2,945.6
    
    
    
    66.2Investments
available for sale, at fair value (includes restricted investments of Rs. 24,017.3
and Rs. 90,102.5 respectively)
    
    
    204,292.8
    
    
    
    273,457.0
    
    
    
    6,147.9Securities purchased under agreements to resell
    
    
    
    
    
    
    4,200.0
    
    
    
    94.4Loans (net
of allowance of Rs. 5,438.5 and Rs. 5,653.3 respectively)
    
    
    256,486.9
    
    
    
    395,274.3
    
    
    
    8,886.5Accrued interest receivable
    
    
    4,912.1
    
    
    
    8,662.7
    
    
    
    194.8Property and equipment, net
    
    
    7,083.2
    
    
    
    8,714.6
    
    
    
    195.9Other assets
    
    
    15,215.3
    
    
    
    26,277.2
    
    
    
    590.8Total assets
    
    Rs.
    535,544.2
    
    
    Rs.
    790,969.4
    
    
    US$
    17,782.6LIABILITIES AND SHAREHOLDERS EQUITY:LiabilitiesInterest-bearing deposits
    
    Rs.
    257,237.9
    
    
    Rs.
    410,181.2
    
    
    US$
    9,221.7Non-interest-bearing deposits
    
    
    106,304.6
    
    
    
    147,124.2
    
    
    
    3,307.6Total deposits
    
    
    363,542.5
    
    
    
    557,305.4
    
    
    
    12,529.3Short-term
borrowings
    
    
    62,079.1
    
    
    
    75,676.7
    
    
    
    1,701.4Accrued interest payable
    
    
    5,843.0
    
    
    
    8,264.1
    
    
    
    185.8Long-term debt
    
    
    5,028.1
    
    
    
    17,028.6
    
    
    
    382.8Accrued expenses and other liabilities
    
    
    49,713.5
    
    
    
    77,201.8
    
    
    
    1,735.7Total liabilities
    
    
    486,206.2
    
    
    
    735,476.6
    
    
    
    16,535.0Contingencies (See Note 26)
    
    
    
    
    
    
    
    
    
    
    Minority interest
    
    
    
    
    
    
    225.3
    
    
    
    5.0Shareholders equity:Equity
shares: par valueRs. 10 each;
authorized 450,000,000 shares; issued and
outstanding 309,875,308 shares and 313,142,408 shares, respectively
    
    
    3,098.7
    
    
    
    3,131.4
    
    
    
    70.4Additional paid in capital
    
    
    25,789.2
    
    
    
    26,805.7
    
    
    
    602.6Advance received pending allotment of shares
    
    
    423.3
    
    
    
    
    
    
    
    Retained earnings
    
    
    12,871.6
    
    
    
    18,284.6
    
    
    
    411.1Statutory reserve
    
    
    6,187.6
    
    
    
    8,364.6
    
    
    
    188.1Deferred stock-based compensation
    
    
    (66.1
    )
    
    
    (19.5
    )
    
    
    (0.4
    )Accumulated
other comprehensive income (loss)
    
    
    1,033.7
    
    
    
    (1,299.3
    )
    
    
    (29.2
    )Total shareholders equity
    
    
    49,338.0
    
    
    
    55,267.5
    
    
    
    1,242.6Total liabilities and shareholders equity
    
    Rs.
    535,544.2
    
    
    Rs.
    790,969.4
    
    
    US$
    17,782.6
  F-3




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##### Table of Contents



HDFC BANK LIMITED
 
 CONSOLIDATED STATEMENTS OF INCOME
 For each of the years ended March 31, 2004, 2005 and 2006
 Years ended March 31,2004
    
    2005
    
    2006
    
    2006(In millions, except share and per share amounts)Interest and dividend revenue:Loans
    
    Rs.
    11,705.0
    
    
    Rs.
    16,431.4
    
    
    Rs.
    28,853.8
    
    
    US$
    648.7Trading securities
    
    
    289.6
    
    
    
    144.4
    
    
    
    195.6
    
    
    
    4.4Available for sale securities, including dividend
    
    
    11,487.3
    
    
    
    11,399.1
    
    
    
    12,969.6
    
    
    
    291.7Other
    
    
    1,109.6
    
    
    
    1,234.5
    
    
    
    1,509.0
    
    
    
    33.8Total interest revenue
    
    
    24,591.5
    
    
    
    29,209.4
    
    
    
    43,528.0
    
    
    
    978.6Interest expense:Deposits
    
    
    10,279.2
    
    
    
    11,074.1
    
    
    
    15,590.1
    
    
    
    350.5Short-term borrowings
    
    
    1,435.9
    
    
    
    1,759.4
    
    
    
    3,497.7
    
    
    
    78.6Debt
    
    
    268.0
    
    
    
    390.2
    
    
    
    534.0
    
    
    
    12.0Total interest expense
    
    
    11,983.1
    
    
    
    13,223.7
    
    
    
    19,621.8
    
    
    
    441.1Net interest revenue
    
    
    12,608.4
    
    
    
    15,985.7
    
    
    
    23,906.2
    
    
    
    537.5Provision for credit losses, net
    
    
    2,343.4
    
    
    
    3,048.2
    
    
    
    5,032.0
    
    
    
    113.1Net interest revenue after provision for credit losses
    
    
    10,265.0
    
    
    
    12,937.5
    
    
    
    18,874.2
    
    
    
    424.4Non-interest revenue, net:Fees and commissions
    
    
    3,140.7
    
    
    
    6,124.4
    
    
    
    10,949.6
    
    
    
    246.2Trading securities gains (losses), net
    
    
    396.8
    
    
    
    (39.3
    )
    
    
    (44.8
    )
    
    
    (1.0
    )Realized gains (losses) on sales of available
for sale securities,
net
    
    
    (48.3
    )
    
    
    194.3
    
    
    
    420.3
    
    
    
    9.4Foreign exchange transaction gains
    
    
    740.0
    
    
    
    911.7
    
    
    
    994.0
    
    
    
    22.3Derivative
transaction gains (losses), net
    
    
    443.9
    
    
    
    204.0
    
    
    
    (402.9
    )
    
    
    (9.1
    )Other, net
    
    
    24.5
    
    
    
    816.4
    
    
    
    231.7
    
    
    
    5.2Total non-interest revenue, net
    
    
    4,697.6
    
    
    
    8,211.5
    
    
    
    12,147.9
    
    
    
    273.0Total revenue, net
    
    
    14,962.6
    
    
    
    21,149.0
    
    
    
    31,022.1
    
    
    
    697.4Non-interest expense:Salaries and staff benefits
    
    
    2,154.0
    
    
    
    3,249.9
    
    
    
    5,420.9
    
    
    
    121.9Premises and equipment
    
    
    1,828.5
    
    
    
    2,260.8
    
    
    
    3,125.9
    
    
    
    70.3Depreciation and amortization
    
    
    1,254.9
    
    
    
    1,440.7
    
    
    
    1,812.1
    
    
    
    40.7Administrative and other
    
    
    3,131.9
    
    
    
    4,462.5
    
    
    
    7,487.9
    
    
    
    168.3Total non-interest expense
    
    
    8,369.3
    
    
    
    11,413.9
    
    
    
    17,846.8
    
    
    
    401.2Income before income tax expense
    
    
    6,593.3
    
    
    
    9,735.1
    
    
    
    13,175.3
    
    
    
    296.2Income tax expense
    
    
    1,838.8
    
    
    
    3,125.4
    
    
    
    3,965.7
    
    
    
    89.2Net income before minority interest
    
    Rs.
    4,754.5
    
    
    Rs.
    6,609.7
    
    
    Rs.
    9,209.6
    
    
    US$
    207.0Minority interest
    
    
    
    
    
    
    
    
    
    
    22.5
    
    
    
    0.5Net income
    
    Rs.
    4,754.5
    
    
    Rs.
    6,609.7
    
    
    Rs.
    9,187.1
    
    
    US$
    206.5Per share information: (See Note: 29)Earnings per equity sharebasic
    
    Rs.
    16.87
    
    
    Rs.
    22.78
    
    
    Rs.
    29.45
    
    
    US$
    0.66Earnings per equity sharediluted
    
    Rs.
    16.70
    
    
    Rs.
    22.60
    
    
    Rs.
    29.08
    
    
    US$
    0.65Per ADS
information (where 1 ADS represents 3 shares): (See Note: 29)Earnings per ADSbasic
    
    Rs.
    50.61
    
    
    Rs.
    68.34
    
    
    Rs.
    88.36
    
    
    US$
    1.99Earnings per ADSdiluted
    
    Rs.
    50.10
    
    
    Rs.
    67.80
    
    
    Rs.
    87.24
    
    
    US$
    1.96
  F-4




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##### Table of Contents



HDFC BANK LIMITED
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 For each of the years ended March 31, 2004, 2005 and 2006
 Years ended March 31,2004
    
    
    2005
    
    
    2006
    
    
    2006(In millions)Cash flows from operating activities:Net income
    
    Rs.
    4,754.5
    
    
    Rs.
    6,609.7
    
    
    Rs.
    9,187.1
    
    
    US$
    206.5Adjustment to reconcile net income to net cash provided by (used in)
operating activitiesProvision for credit losses
    
    
    2,343.4
    
    
    
    3,048.2
    
    
    
    5,032.0
    
    
    
    113.1Depreciation and amortization
    
    
    1,254.9
    
    
    
    1,440.7
    
    
    
    1,812.1
    
    
    
    40.7Amortization of deferred stock based compensation
    
    
    135.1
    
    
    
    308.5
    
    
    
    46.6
    
    
    
    1.0Amortization of deferred acquisition costs
    
    
    (156.2
    )
    
    
    (496.3
    )
    
    
    1,523.2
    
    
    
    34.2Amortization of premium(discount) on investments
    
    
    1,489.6
    
    
    
    1,516.1
    
    
    
    2,462.5
    
    
    
    55.4Other than temporary impairment investment
    
    
    
    
    
    
    
    
    
    
    714.3
    
    
    
    16.1Provision for deferred income taxes
    
    
    (588.4
    )
    
    
    (213.5
    )
    
    
    455.2
    
    
    
    10.2Guarantee liabilities
    
    
    112.7
    
    
    
    50.1
    
    
    
    160.3
    
    
    
    3.6(Gain) loss on securitization of loans
    
    
    (123.8
    )
    
    
    (622.5
    )
    
    
    31.3
    
    
    
    0.7Net realized (gain) loss on sale of available for sale securities
    
    
    48.3
    
    
    
    (194.3
    )
    
    
    (420.3
    )
    
    
    (9.4
    )Gain (loss) on disposal of property and equipment, net
    
    
    4.4
    
    
    
    (2.1
    )
    
    
    (2.7
    )
    
    
    (0.1
    )Accrued leave compensation
    
    
    
    
    
    
    186.3
    
    
    
    329.5
    
    
    
    7.4Net change in:Investments held for trading
    
    
    (2,257.7
    )
    
    
    4,955.3
    
    
    
    (1,667.1
    )
    
    
    (37.5
    )Accrued interest receivable
    
    
    2,105.1
    
    
    
    (733.4
    )
    
    
    (3,750.6
    )
    
    
    (84.3
    )Other assets
    
    
    2,675.3
    
    
    
    4,033.0
    
    
    
    (12,162.5
    )
    
    
    (273.4
    )Accrued interest payable
    
    
    (2,731.9
    )
    
    
    1,677.6
    
    
    
    2,421.1
    
    
    
    54.4Accrued expense and other liabilities
    
    
    31,190.6
    
    
    
    (19,818.7
    )
    
    
    26,444.1
    
    
    
    594.6Net cash provided by operating activities
    
    
    40,255.9
    
    
    
    1,744.7
    
    
    
    32,616.1
    
    
    
    733.2Cash flows from investing activities:Net change in term placements
    
    
    4,182.2
    
    
    
    (5,134.3
    )
    
    
    (1,544.2
    )
    
    
    (34.7
    )Purchase of subsidiary
    
    
    
    
    
    
    
    
    
    
    155.8
    
    
    
    3.5Activity in available for sale securities:Purchases
    
    
    (265,970.2
    )
    
    
    (153,898.8
    )
    
    
    (170,373.4
    )
    
    
    (3,830.3
    )Proceeds from sales
    
    
    209,229.1
    
    
    
    96,986.1
    
    
    
    62,820.2
    
    
    
    1,412.3Maturities, prepayments and calls
    
    
    22,626.0
    
    
    
    20,543.1
    
    
    
    33,299.5
    
    
    
    748.6Activity in held to maturity securities:Purchases
    
    
    (78,592.0
    )
    
    
    (11,888.8
    )
    
    
    
    
    
    
    Maturities, prepayments and calls
    
    
    79,721.9
    
    
    
    10,792.0
    
    
    
    
    
    
    
    Net change in repurchase option and reverse repurchase option
    
    
    (24,550.0
    )
    
    
    19,950.0
    
    
    
    (4,200.0
    )
    
    
    (94.4
    )Proceeds from loans securitized
    
    
    5,917.4
    
    
    
    48,234.6
    
    
    
    19,733.3
    
    
    
    443.6Loans purchased
    
    
    (6,180.7
    )
    
    
    (18,309.8
    )
    
    
    (8,952.3
    )
    
    
    (201.3
    )Repayments on loans purchased
    
    
    2,233.3
    
    
    
    16,621.2
    
    
    
    5,216.0
    
    
    
    117.3Increase in loans originated, net of principal collections
    
    
    (63,818.4
    )
    
    
    (127,777.5
    )
    
    
    (159,840.8
    )
    
    
    (3,593.5
    )Additions to property and equipment
    
    
    (2,143.9
    )
    
    
    (2,442.8
    )
    
    
    (3,752.9
    )
    
    
    (84.4
    )Proceeds from sale or disposal of property and equipment
    
    
    24.9
    
    
    
    9.5
    
    
    
    51.5
    
    
    
    1.2Net cash used in investing activities
    
    
    (117,320.4
    )
    
    
    (106,315.5
    )
    
    
    (227,387.3
    )
    
    
    (5,112.1
    )Cash flows from financing activities:Net increase in deposits
    
    
    80,302.0
    
    
    
    59,480.5
    
    
    
    193,762.9
    
    
    
    4,356.2Net increase (decrease) in short-term borrowings
    
    
    2,484.6
    
    
    
    38,014.9
    
    
    
    13,597.6
    
    
    
    305.7Proceeds from issuance of debt
    
    
    4,000.0
    
    
    
    
    
    
    
    12,020.0
    
    
    
    270.2Repayments of debt
    
    
    (30.0
    )
    
    
    (1,057.9
    )
    
    
    (19.5
    )
    
    
    (0.4
    )Proceeds from issuance of equity shares for options exercised
    
    
    203.6
    
    
    
    659.1
    
    
    
    625.8
    
    
    
    14.1Proceeds from issuance of shares
    
    
    
    
    
    
    12,747.6
    
    
    
    
    
    
    
    Proceeds from applications received for shares pending allotment
    
    
    125.5
    
    
    
    423.3
    
    
    
    
    
    
    
    Payment of dividends and dividend tax
    
    
    (955.7
    )
    
    
    (1,131.3
    )
    
    
    (1,597.1
    )
    
    
    (35.9
    )Net cash provided by financing activities
    
    
    86,130.0
    
    
    
    109,136.2
    
    
    
    218,389.7
    
    
    
    4,909.9Net change in cash
    
    
    9,065.5
    
    
    
    4,565.4
    
    
    
    23,618.5
    
    
    
    531.0Cash and cash equivalents, beginning of year
    
    
    23,944.9
    
    
    
    33,010.4
    
    
    
    37,575.8
    
    
    
    844.8Cash and cash equivalents, end of year

    
    Rs.
    33,010.4
    
    
    Rs.
    37,575.8
    
    
    Rs.
    61,194.3
    
    
    US$
    1,375.8Supplementary cash flow information:Interest paid
    
    Rs.
    14,819.5
    
    
    Rs.
    11,543.9
    
    
    Rs.
    17,200.7
    
    
    US$
    386.7Income taxes paid
    
    Rs.
    2,843.9
    
    
    Rs.
    3,719.5
    
    
    Rs.
    5,421.6
    
    
    US$
    121.9Supplementary information on non cash transactions:Investments transferred from held to maturity to available for sale category
    
    Rs.
    4.9
    
    
    Rs.
    37,005.6
    
    
    Rs.
    
    
    
    US$
    
  F-5




---



##### Table of Contents



HDFC BANK LIMITED
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
For each of the years ended March 31, 2004, 2005 and 2006
 Advancereceived
    
    
    
    
    
    
    
    
    
    
    
    
    
    AccumulatedAdditional paid
    
    pending
    
    
    
    
    
    
    
    
    
    Deferred stock-
    
    other
    
    TotalNumber of
    
    Equity share
    
    in
    
    allotment of
    
    Retained
    
    Statutory
    
    based
    
    comprehensive
    
    ShareholdersEquity shares
    
    capital
    
    capital
    
    shares
    
    Earnings
    
    reserve
    
    compensation
    
    income (loss)
    
    equity(In millions, except for equity shares)Balance at March 31, 2003
    
    
    279,718,938
    
    
    Rs.
    2,797.2
    
    
    Rs.
    11,758.9
    
    
    Rs.
    146.5
    
    
    Rs.
    6,532.1
    
    
    Rs.
    3,249.9
    
    
    Rs.
    (60.2
    )
    
    Rs.
    1,688.7
    
    
    Rs.
    26,113.1Shares issued upon exercise of
options
    
    
    3,125,500
    
    
    
    31.2
    
    
    
    318.9
    
    
    
    (146.5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    203.6Stock options granted
    
    
    
    
    
    
    
    
    
    
    449.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (449.5
    )
    
    
    
    
    
    
    Dividends, including dividend
tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (955.7
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (955.7
    )Advance received pending
allotment of shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    125.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    125.5Amortization of deferred stock
based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    135.1
    
    
    
    
    
    
    
    135.1Transfer to statutory reserve
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,273.8
    )
    
    
    1,273.8
    
    
    
    
    
    
    
    
    
    
    
    Sub Total
    
    
    282,844,438
    
    
    
    2,828.4
    
    
    
    12,527.3
    
    
    
    125.5
    
    
    
    4,302.6
    
    
    
    4,523.7
    
    
    
    (374.6
    )
    
    
    1,688.7
    
    
    
    25,621.6Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,754.5
    
    
    
    
    
    
    
    
    
    
    

    
    
    
    
    4,754.5Unrealized loss reclassified
to earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (582.2
    )
    
    
    (582.2
    )Change in the unrealized gain
on available for sale
securities, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,421.9
    
    
    
    1,421.9Balance at March 31, 2004
    
    
    282,844,438
    
    
    Rs.
    2,828.4
    
    
    Rs.
    12,527.3
    
    
    Rs.
    125.5
    
    
    Rs.
    9,057.1
    
    
    Rs.
    4,523.7
    
    
    Rs.
    (374.6
    )
    
    Rs.
    2,528.4
    
    
    Rs.
    31,215.8Shares issued upon exercise of
options
    
    
    4,106,775
    
    
    
    41.1
    
    
    
    743.5
    
    
    
    (125.5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    659.1Shares issued in public
offering
    
    
    22,924,095
    
    
    
    229.2
    
    
    
    12,518.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,747.6Dividends, including dividend
tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,131.3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,131.3
    )Advance received pending
allotment of shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    423.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    423.3Amortization of deferred stock
based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    308.5
    
    
    
    
    
    
    
    308.5Transfer to statutory reserve
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,663.9
    )
    
    
    1,663.9
    
    
    
    
    
    
    
    
    
    
    
    Sub Total
    
    
    309,875,308
    
    
    
    3,098.7
    
    
    
    25,789.2
    
    
    
    423.3
    
    
    
    6,261.9
    
    
    
    6,187.6
    
    
    
    (66.1
    )
    
    
    2,528.4
    
    
    
    44,223.0Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,609.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,609.7Unrealized gains on securities
transferred from held to maturity to available for sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    558.9
    
    
    
    558.9Unrealized loss reclassified
to earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (773.4
    )
    
    
    (773.4
    )Change in the unrealized gain
on available for sale
securities, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,280.2
    )
    
    
    (1,280.2
    )Balance at March 31, 2005
    
    
    309,875,308
    
    
    Rs.
    3,098.7
    
    
    Rs.
    25,789.2
    
    
    Rs.
    423.3
    
    
    Rs.
    12,871.6
    
    
    Rs.
    6,187.6
    
    
    Rs.
    (66.1
    )
    
    Rs.
    1,033.7
    
    
    Rs.
    49,338.0Shares issued upon exercise of
options
    
    
    3,267,100
    
    
    
    32.7
    
    
    
    1,016.5
    
    
    
    (423.3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    625.9Dividends, including dividend
tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,597.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,597.1
    )Amortization of deferred stock
based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46.6
    
    
    
    
    
    
    
    46.6Transfer to statutory reserve
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,177.0
    )
    
    
    2,177.0
    
    
    
    
    
    
    
    
    
    
    
    Sub Total
    
    
    313,142,408
    
    
    
    3,131.4
    
    
    
    26,805.7
    
    
    
    
    
    
    
    9,097.5
    
    
    
    8,364.6
    
    
    
    (19.5
    )
    
    
    1,033.7
    
    
    
    48,413.4Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,187.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,187.1Unrealized gain reclassified
to earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (80.6
    )
    
    
    (80.6
    )Change in the unrealized gain
on available for sale
securities, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,252.4
    )
    
    
    (2,252.4
    )Balance at March 31, 2006
    
    
    313,142,408
    
    
    Rs.
    3,131.4
    
    
    Rs.
    26,805.7
    
    
    
    
    
    
    Rs.
    18,284.6
    
    
    Rs.
    8,364.6
    
    
    Rs.
    (19.5
    )
    
    Rs.
    (1,299.3
    )
    
    Rs.
    55,267.5Balance at March 31, 2006
    
    
    
    
    
    US$
    70.4
    
    
    US$
    602.6
    
    
    
    
    
    
    US$
    411.1
    
    
    US$
    188.1
    
    
    US$
    (0.4
    )
    
    US$
    (29.2
    )
    
    US$
    1,242.6
  F-6




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##### Table of Contents



1. The Bank
    2. Summary of Significant Accounting Policies
 a. Principles of Consolidation
  b Basis of presentation
  c Use of Estimates
  d Cash and cash equivalents
  F-7




---



##### Table of Contents



e. Customer acquisition costs
  f Investments in securities
          g. Impairment of securities
  h Loans
  F-8




---



##### Table of Contents



i Allowance for credit losses
  Retail
    F-9




---



##### Table of Contents



Wholesale
      j. Sales/Transfer of Receivables
    F-10




---



##### Table of Contents



k Property and equipment
  Type of Asset
    
    Rate of depreciationBuildings
    
    
    1.61
    %Leasehold improvements
    
    Lower of asset life or period of leaseATMs
    
    
    12.50
    %Very small aperture terminals (VSATs)
    
    
    10.00
    %Office equipment
    
    
    16.21
    %Computer equipment
    
    
    33.33
    %Motor cars
    
    
    25.00
    %Software and system development expenditure
    
    
    25.00
    %Assets at the residence of executives of the
Bank
    
    
    25.00
    %
 l Impairment or disposal of tangible long lived assets
  m Foreclosed or repossessed assets
  n Income tax
   o Revenue recognition
   F-11




---



##### Table of Contents



p. Foreign currency transactions
  q Stock-Based Compensation
   Years ended March 31,2004
    
    2005
    
    2006
    
    2006(In millions, except per share amounts)Net Income:
    
    As reported
    
    Rs.
    4,754.5
    
    
    Rs.
    6,609.7
    
    
    Rs.
    9,187.1
    
    
    US$
    206.5Add: Stock-based employee compensation expense included in
net income
    
    As reported
    
    
    135.1
    
    
    
    308.5
    
    
    
    46.6
    
    
    
    1.0Less: Stock-based compensation expense determined under
fair value based method :
    
    Pro forma
    
    
    (293.3
    )
    
    
    (1,209.4
    )
    
    
    (1,276.5
    )
    
    
    (28.7
    )Net Income:
    
    Pro forma
    
    Rs.
    4,596.3
    
    
    Rs.
    5,708.8
    
    
    Rs.
    7,957.2
    
    
    US$
    178.8Basic earnings per share
    
    As reported
    
    Rs.
    16.87
    
    
    Rs.
    22.78
    
    
    Rs.
    29.45
    
    
    US$
    0.66Pro forma
    
    
    16.31
    
    
    
    19.68
    
    
    
    25.51
    
    
    
    0.57Diluted earnings per share
    
    As reported
    
    Rs.
    16.70
    
    
    Rs.
    22.60
    
    
    Rs.
    29.08
    
    
    US$
    0.65Pro forma
    
    
    16.14
    
    
    
    19.52
    
    
    
    25.19
    
    
    
    0.57Basic earnings per ADS
    
    As reported
    
    Rs.
    50.61
    
    
    Rs.
    68.34
    
    
    Rs.
    88.36
    
    
    US$
    1.99Pro forma
    
    
    48.93
    
    
    
    59.04
    
    
    
    76.53
    
    
    
    1.72Diluted earnings per ADS
    
    As reported
    
    Rs.
    50.10
    
    
    Rs.
    67.80
    
    
    Rs.
    87.24
    
    
    US$
    1.96Pro forma
    
    
    48.42
    
    
    
    58.56
    
    
    
    75.56
    
    
    
    1.70
 F-12




---



##### Table of Contents



pro forma
 Years ended March 31,2004
    

2005*
    
    2006Dividend yield0.9
    %
    
    
    
    
    
    
    0.7
    %Expected volatility45.0
    %
    
    
    
    
    
    
    21.25
    %Riskfree interest rateESOS Plan
    

4.4%
 4.5%

    
    
    
    
    

6.1%
 6.6%EWT Plan4.5
    %
    
    
    
    
    
    
    Expected lives:ESOS PlanEWT Plan
    

7.1
years

    
    
    
    
    

1
 7 years1.2  2.2 years
    
    
    
    
    
    
    
  r Debt issuance costs
  s Earnings per share
  t Segment information
  u Derivative Financial Instruments
     F-13




---



##### Table of Contents



v New Accounting Pronouncements
        , ,


w Convenience Translation




x.  Reclassifications




3. Cash and cash equivalents




4. Term placements




F-14



---



##### Table of Contents



5. Investments, held for trading
  As of March 31, 2005Gross
    
    GrossAmortized
    
    unrealized
    
    Unrealized
    
    FairCost
    
    gains
    

    Losses
    
    Value(In millions)Government of India
securities
    
    Rs.
    1,278.5
    
    
    Rs.
    
    
    
    Rs.
    
    
    
    Rs.
    1,278.5Total
    
    Rs.
    1,278.5
    
    
    Rs.
    
    
    
    Rs.
    
    
    
    Rs.
    1,278.5
 As of March 31, 2006Gross
    
    GrossAmortized
    
    unrealized
    
    unrealized
    
    FairCost
    
    gains
    
    losses
    
    Value(In millions)Government of India
securities
    
    Rs.
    2,948.1
    
    
    Rs.
    6.1
    
    
    Rs.
    8.6
    
    
    Rs.
    2,945.6Total
    
    Rs.
    2,948.1
    
    
    Rs.
    6.1
    
    
    Rs.
    8.6
    
    
    Rs.
    2,945.6Total
    
    US$
    66.3
    
    
    US$
    0.1
    
    
    US$
    0.2
    
    
    US$
    66.2
 6. Investments, available for sale
  As of March 31, 2005Gross
    
    GrossAmortized
    
    unrealized
    
    unrealized
    
    Faircost
    
    gains
    
    losses
    
    value(In millions)Government of India
securities
    
    Rs.
    110,997.7
    
    
    Rs.
    1,015.2
    
    
    Rs.
    657.6
    
    
    Rs.
    111,355.3Securities issued
by Government of
India sponsored
institutions
    
    
    25,010.5
    
    
    
    592.7
    
    
    
    134.9
    
    
    
    25,468.3State government
securities
    
    
    484.6
    
    
    
    2.2
    
    
    
    14.6
    
    
    
    472.2Securities issued
by state government
sponsored
institutions
    
    
    349.2
    
    
    
    24.1
    
    
    
    
    
    
    
    373.3Credit substitutes
(See Note 8)
    
    
    13,372.4
    
    
    
    554.3
    
    
    
    45.8
    
    
    
    13,880.9Corporate bonds
    
    
    588.5
    
    
    
    
    
    
    
    0.4
    
    
    
    588.1Fixed
maturity
investments
    
    
    150,802.9
    
    
    
    2,188.5
    
    
    
    853.3
    
    
    
    152,138.1Mortgage-backed
securities
    
    
    11,441.0
    
    
    
    111.2
    
    
    
    70.6
    
    
    
    11,481.6Asset-backed
securities
    
    
    30,611.5
    
    
    
    329.8
    
    
    
    201.6
    
    
    
    30,739.7Equity securities
    
    
    291.4
    
    
    
    54.7
    
    
    
    7.8
    
    
    
    338.3Mutual fund units
    
    
    9,586.3
    
    
    
    10.6
    
    
    
    1.8
    
    
    
    9,595.1Total
    
    Rs.
    202,733.1
    
    
    Rs.
    2,694.8
    
    
    Rs.
    1,135.1
    
    
    Rs.
    204,292.8Securities with
gross unrealized
losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    Rs.
    103,551.3Securities with
gross unrealized
gains
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,741.5Rs.
    204,292.8
 F-15




---



##### Table of Contents



As of March 31, 2006Gross
    
    GrossAmortized
    
    unrealized
    
    unrealized
    
    Faircost
    
    gains
    
    losses
    
    value(In millions)Government of India
securities
    
    Rs.
    189,200.9
    
    
    Rs.
    405.1
    
    
    Rs.
    1,945.0
    
    
    Rs.
    187,661.0Securities issued
by Government of
India sponsored
institutions
    
    
    27,772.2
    
    
    
    105.1
    
    
    
    450.8
    
    
    
    27,426.5State government
securities
    
    
    459.4
    
    
    
    0.1
    
    
    
    12.1
    
    
    
    447.4Securities issued
by state government
sponsored
institutions
    
    
    315.0
    
    
    
    6.7
    
    
    
    0.3
    
    
    
    321.4Credit substitutes
(See Note 8)
    
    
    9,625.6
    
    
    
    170.6
    
    
    
    44.9
    
    
    
    9,751.3Corporate bonds
    
    
    150.0
    
    
    
    
    
    
    
    0.9
    
    
    
    149.1Fixed
maturity
investments
    
    
    227,523.1
    
    
    
    687.6
    
    
    
    2,454.0
    
    
    
    225,756.7Mortgage-backed
securities
    
    
    17,158.8
    
    
    
    90.7
    
    
    
    194.7
    
    
    
    17,054.8Asset-backed
securities
    
    
    27,338.6
    
    
    
    34.5
    
    
    
    247.0
    
    
    
    27,126.1Equity securities
    
    
    275.3
    
    
    
    54.1
    
    
    
    3.9
    
    
    
    325.5Mutual fund units
    
    
    3,187.1
    
    
    
    6.8
    
    
    
    
    
    
    
    3,193.9Total
    
    Rs.
    275,482.9
    
    
    Rs.
    873.7
    
    
    Rs.
    2,899.6
    
    
    Rs.
    273,457.0TOTAL
    
    US$
    6,193.5
    
    
    US$
    19.6
    
    
    US$
    65.2
    
    
    US$
    6,147.9Securities with
gross unrealized
losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    Rs.
    197,275.2Securities with
gross unrealized
gains
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    76,181.8Rs.
    273,457.0US$
    6,147.9
   
    
    identification and evaluation of investments that have indications of possible impairment;
    
    analysis of individual investments that have fair values of
less than 95% of amortized cost, including consideration of the length of time the investment has
been in an unrealized loss position;
    
    analysis of evidential matter, including an evaluation of factors or triggers that would
or could cause individual investments to have other-than temporary impairment; and
    
    documentation of the results of these analyses, as required under business policies.
 F-16




---



##### Table of Contents



As of March 31, 2006Less Than 12 months
    

12
months or greaterUnrealizedFair Value
    
    Unrealized losses
    
    Fair Value
    
    losses(In millions)Government of India securities
    
    Rs.
    134,447.6
    
    
    Rs.
    1,945.0
    
    
    Rs.
    
    
    
    Rs.
    Securities issued by Government
of India sponsored institutions
    
    
    20,926.2
    
    
    
    450.8
    
    
    
    
    
    
    
    State government securities
    
    
    386.0
    
    
    
    12.1
    
    
    
    
    
    
    
    Securities issued by state
government sponsored institutions
    
    
    4.8
    
    
    
    0.3
    
    
    
    
    
    
    
    Credit substitutes (See Note 8)
    
    
    3,556.2
    
    
    
    44.9
    
    
    
    
    
    
    
    Corporate Bonds
    
    
    149.1
    
    
    
    0.9
    
    
    
    
    
    
    
    Fixed maturity investments
    
    
    159,469.9
    
    
    
    2,454.0
    
    
    
    
    
    
    
    Mortgage-backed securities
    
    
    11,147.5
    
    
    
    194.7
    
    
    
    
    
    
    
    Asset-backed securities
    
    
    26,227.3
    
    
    
    247.0
    
    
    
    
    
    
    
    Equity securities
    
    
    47.2
    
    
    
    3.9
    
    
    
    
    
    
    
    Mutual fund units
    
    
    383.3
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    Rs.
    197,275.2
    
    
    Rs.
    2,899.6
    
    
    Rs.
    
    
    
    Rs.
    Total
    
    US$
    4,435.1
    
    
    US$
    65.2
    
    
    US$
    
    
    
    US$
    
  As of March 31, 2006Amortized cost
    
    Fair value
    
    Fair value(In millions)Within one year
    
    Rs.
    33,839.9
    
    
    Rs.
    33,853.2
    
    
    US$
    761.1Over one year through five years
    
    
    109,395.8
    
    
    
    108,415.2
    
    
    
    2,437.4Over five years through ten years
    
    
    58,688.7
    
    
    
    58,216.2
    
    
    
    1,308.8Over ten years
    
    
    25,598.7
    
    
    
    25,272.1
    
    
    
    568.2Total
    
    Rs.
    227,523.1
    
    
    Rs.
    225,756.7
    
    
    US$
    5,075.5
   F-17




---



##### Table of Contents



Year ended March 31,2004
    
    2005
    
    2006
    
    2006(In millions)Gross realized gains on sale
    
    Rs.
    710.3
    
    
    Rs.
    1,349.9
    
    
    Rs.
    694.3
    
    
    US$
    15.6Gross realized losses on sale
    
    
    (758.6
    )
    
    
    (1,155.6
    )
    
    
    (274.0
    )
    
    
    (6.2
    )Realized gains (losses), net
    
    
    (48.3
    )
    
    
    194.3
    
    
    
    420.3
    
    
    
    9.4Dividends and interest
    
    
    8,604.8
    
    
    
    10,605.7
    
    
    
    12,969.6
    
    
    
    291.7Total
    
    Rs.
    8,556.5
    
    
    Rs.
    10,800.0
    
    
    Rs.
    13,389.9
    
    
    US$
    301.1
 7. Investments, held to maturity
     8. Credit Substitutes
  As of March 31,2005
    
    2006Amortized cost
    
    Fair value
    
    Amortized cost
    
    Fair value(In millions)Available for sale credit
substitute securities:Debentures
    
    Rs.
    11,508.7
    
    
    Rs.
    12,018.7
    
    
    Rs.
    9,183.0
    
    
    Rs.
    9,308.1Preferred shares
    
    
    566.4
    
    
    
    564.9
    
    
    
    442.6
    
    
    
    443.2Commercial paper
    
    
    1,297.3
    
    
    
    1,297.3
    
    
    
    
    
    
    
    Total
    
    Rs.
    13,372.4
    
    
    Rs.
    13,880.9
    
    
    Rs.
    9,625.6
    
    
    Rs.
    9,751.3Total
    
    
    
    
    
    
    
    
    
    US$
    216.4
    
    
    US$
    219.2
 F-18




---



##### Table of Contents



As of March 31,2005
    
    2006
    
    2006(In millions)Performing
    
    Rs.
    13,845.2
    
    
    Rs.
    9,751.3
    
    
    US$
    219.2Impairedgross balance
    
    
    89.3
    
    
    
    95.4
    
    
    
    2.1Less amounts provided for other than
temporary impairments
    
    
    (53.6
    )
    
    
    (95.4
    )
    
    
    (2.1
    )Impaired credit substitutes, net
    
    
    35.7
    
    
    
    
    
    
    
    Total credit substitutes, net
    
    Rs.
    13,880.9
    
    
    Rs.
    9,751.3
    
    
    US$
    219.2
 F-19




---



##### Table of Contents



As of March 312005
    
    2006
    
    2006(In millions)Gross impaired credit substitutes:on accrual status
    
    Rs.
    
    
    
    Rs.
    
    
    
    US$
    on non-accrual status
    
    
    89.3
    
    
    
    95.4
    
    
    
    2.1Total
    
    Rs.
    89.3
    
    
    Rs.
    95.4
    
    
    US$
    2.1Gross impaired credit substitutes by industry:Electronics
    
    Rs.
    
    
    
    Rs.
    95.4
    
    
    US$
    2.1Financial institution
    
    
    89.3
    
    
    
    
    
    
    
    Total
    
    Rs.
    89.3
    
    
    Rs.
    95.4
    
    
    US$
    2.1Average impaired credit substitutes
    
    Rs.
    139.3
    
    
    Rs.
    92.4
    
    
    US$
    2.1Interest foregone on impaired credit substitutes
    
    Rs.
    
    
    
    Rs.
    
    
    
    US$
    Interest income recognized on impaired credit substitutes
    
    Rs.
    
    
    
    Rs.
    
    
    
    US$
    Interest income recognized on impaired credit
substitutes on a cash basis
    
    Rs.
    
    
    
    Rs.
    
    
    
    US$
    
  9. Securities purchased under resell agreements
  F-20




---



##### Table of Contents



10. Loans
   As of March 31,2005
    
    2006
    
    2006(In millions)Retail Loans:Auto loans
    
    Rs.
    21,055.1
    
    
    Rs.
    51,184.4
    
    
    US$
    1,150.8Commercial vehicle and construction equipment
finance
    
    
    21,924.2
    
    
    
    43,613.2
    
    
    
    980.5Personal loans
    
    
    20,518.3
    
    
    
    47,775.6
    
    
    
    1,074.1Loans against securities
    
    
    12,347.2
    
    
    
    17,669.8
    
    
    
    397.3Two-wheeler loans
    
    
    10,418.0
    
    
    
    19,661.2
    
    
    
    442.0Retail business banking
    
    
    11,050.7
    
    
    
    29,291.6
    
    
    
    658.6Credit cards
    
    
    6,892.9
    
    
    
    13,758.0
    
    
    
    309.3Other retail loans
    
    
    8,459.6
    
    
    
    6,347.6
    
    
    
    142.7Subtotal
    
    
    112,666.0
    
    
    
    229,301.4
    
    
    
    5,155.3Wholesale loans:Working capital finance
    
    Rs.
    72,397.6
    
    
    Rs.
    78,693.4
    
    
    US$
    1,769.2Term loans
    
    
    76,861.8
    
    
    
    92,932.8
    
    
    
    2,089.2Sub total
    
    Rs.
    149,259.4
    
    
    Rs.
    171,626.2
    
    
    US$
    3,858.4Gross loans
    
    
    261,925.4
    
    
    
    400,927.6
    
    
    
    9,013.7Less: Allowance for credit losses
    
    
    5,438.5
    
    
    
    5,653.3
    
    
    
    127.2Total
    
    Rs.
    256,486.9
    
    
    Rs.
    395,274.3
    
    
    US$
    8,886.5
  As of March 31, 2006WorkingCapital
    
    Term
    
    RetailFinance
    
    loans
    
    loans
    
    Total(In millions)Maturity profile of loans:Within one year
    
    Rs.
    53,124.6
    
    
    Rs.
    45,057.2
    
    
        Rs.
    88,119.4
    
    
    Rs.
    186,301.2Over one year through
five years
    
    
    25,568.8
    
    
    
    26,675.4
    
    
    
    134,689.4
    
    
    
    186,933.6After five years through
ten years
    
    
    
    
    
    
    21,200.2
    
    
    
    6,492.6
    
    
    
    27,692.8Total gross loans
    
    Rs.
    78,693.4
    
    
    Rs.
    92,932.8
    
    
    Rs.
    229,301.4
    
    
    Rs.
    400,927.6Total gross loans
    
    US$
    1,769.2
    
    
    US$
    2,089.3
    
    
    US$
    5,155.2
    
    
    US$
    9,013.7
 F-21




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##### Table of Contents



As of March 31,2005
    
    2006
    
    2006(In millions)Performing
    
    Rs.
    257,841.2
    
    
    Rs.
    396,144.1
    
    
    US$
    8,906.2Impaired
    
    
    4,084.2
    
    
    
    4,783.5
    
    
    
    107.5Total
gross
loans
    
    Rs.
    261,925.4
    
    
    Rs.
    400,927.6
    
    
    US$
    9,013.7
  As of March 31,2005
    
    2006
    
    2006(In millions)Retail loans
    
    Rs.
    1,663.3
    
    
    Rs.
    3,193.5
    
    
    US$
    71.8Wholesale loans
    
    
    2,420.9
    
    
    
    1,590.0
    
    
    
    35.7Gross impaired loans
    
    
    4,084.2
    
    
    
    4,783.5
    
    
    
    107.5Less: Specific allowance for credit losses
    
    
    3,492.8
    
    
    
    3,204.6
    
    
    
    72.0Impaired loans, net of specific allowance
    
    Rs.
    591.4
    
    
    Rs.
    1,578.9
    
    
    US$
    35.5Gross impaired loans:without valuation allowance
    
    Rs.
    591.4
    
    
    Rs.
    1,578.9
    
    
    US$
    35.5with valuation allowance
    
    
    3,492.8
    
    
    
    3,204.6
    
    
    
    72.0Total
    
    Rs.
    4,084.2
    
    
    Rs.
    4,783.5
    
    
    US$
    107.5Gross impaired loans:on accrual status
    
    Rs.
    
    
    
    Rs.
    
    
    
    US$
    on non-accrual status
    
    
    4,084.2
    
    
    
    4,783.5
    
    
    
    107.5Total
    
    Rs.
    4,084.2
    
    
    Rs.
    4,783.5
    
    
    US$
    107.5Gross impaired loans by industry:Automotive
    
    Rs.
    913.3
    
    
    Rs.
    954.4
    
    
    US$
    21.5Land transport
    
    
    269.8
    
    
    
    347.9
    
    
    
    7.8Textiles
    
    
    303.4
    
    
    
    313.7
    
    
    
    7.1Electronics
    
    
    679.4
    
    
    
    129.1
    
    
    
    2.9Others (none > than 5% of impaired loans)
    
    
    1,918.3
    
    
    
    3,038.4
    
    
    
    68.2Total
    
    Rs.
    4,084.2
    
    
    Rs.
    4,783.5
    
    
    US$
    107.5
  F-22




---



##### Table of Contents



As of March 31,2004
    
    2005
    
    2006
    
    2006(In millions)Average impaired
loans, net of
allowance
    
    Rs.
    476.6
    
    
    Rs.
    430.7
    
    
    Rs.
    1,085.1
    
    
    US$
    24.4Interest
foregone on
impaired loans
    
    
    274.2
    
    
    
    216.7
    
    
    
    208.5
    
    
    
    4.7Interest
income recognized
on impaired loans
    
    
    31.6
    
    
    
    0.6
    
    
    
    5.3
    
    
    
    0.1Interest
income recognized
on impaired loans
on a cash basis
    
    Rs.
    31.6
    
    
    Rs.
    0.6
    
    
    Rs.
    5.3
    
    
    US$
    0.1
   As of March 31,2005
    
    2006
    
    2006(In millions)Specific allowance for credit
losses, beginning of period
    
    Rs.
    2,722.7
    
    
    Rs.
    3,492.8
    
    
    US$
    78.5Gross provision for credit losses
    
    
    2,655.8
    
    
    
    4,804.1
    
    
    
    108.0Allowance no longer required due to:Cash recoveries
    
    
    (781.7
    )
    
    
    (275.1
    )
    
    
    (6.2
    )Write-offs
    
    
    (1,104.0
    )
    
    
    (4,817.2
    )
    
    
    (108.3
    )Specific allowance for credit
losses, end of period
    
    Rs.
    3,492.8
    
    
    Rs.
    3,204.6
    
    
    US$
    72.0Unallocated allowance for credit
losses, beginning of period
    
    
    771.6
    
    
    
    1,945.7
    
    
    
    43.7Additions during the period
    
    
    1,174.1
    
    
    
    503.0
    
    
    
    11.3Unallocated allowance for credit
losses, end of period
    
    
    1,945.7
    
    
    
    2,448.7
    
    
    
    55.0Total allowance for credit
losses, end of period
    
    Rs.
    5,438.5
    
    
    Rs.
    5,653.3
    
    
    US$
    127.0
  Years ended March 31,2004
    
    2005
    
    2006
    
    2006(In millions)Wholesale
    
    Rs.
    6,875.1
    
    
    Rs.
    8,126.6
    
    
    Rs.
    13,989.4
    
    
    US$
    314.5Retail loans
    
    
    4,829.9
    
    
    
    8,304.8
    
    
    
    14,864.4
    
    
    
    334.2Total
    
    Rs.
    11,705.0
    
    
    Rs.
    16,431.4
    
    
    Rs.
    28,853.8
    
    
    US$
    648.7
 F-23




---



##### Table of Contents



Sales/Transfer of loans
  Years ended March 31,2004
    
    2005
    
    2006
    
    2006(In millions)Sale consideration
from new
securitizations/transfer
    
    Rs.
    5,917.4
    
    
    Rs.
    48,660.0
    
    
    Rs.
    19,733.3
    
    
    US$
    443.6Less: Book value of
finance receivables
derecognized
    
    
    5,772.0
    
    
    
    48,022.2
    
    
    
    19,752.9
    
    
    
    444.0Less: Estimated costs
of servicing

    
    
    21.6
    
    
    
    15.3
    
    
    
    11.7
    
    
    
    0.3Pre-tax gains on
securitizations
    
    Rs.
    123.8
    
    

    Rs.
    622.5
    
    
    Rs.
    (31.3
    )
    
    US$
    (0.7
    )Cash flow informationCollections against
securitized
receivables
    
    Rs.
    682.1
    
    
    Rs.
    12,635.7
    
    
    Rs.
    28,902.8
    
    
    US$
    649.8Payments made to SPEs
    
    Rs.
    264.4
    
    

    Rs.
    10,666.2
    
    
    Rs.
    28,861.6
    
    
    US$
    648.9Cash flows
on retained interests
    
    Rs.
    21.1
    
    

    Rs.
    328.8
    
    
    Rs.
    304.7
    
    
    US$
    6.9
  For the year ended
    
    For the year endedMarch 31, 2005
    
    March 31, 2006Key assumptions: (rates per
annum)Annual prepayment rate
    
    
    6.0
    %
    
    
    6.0
    %Expected credit losses
    
    
    0.5
    %
    
    
    0.5
    %
   As of March 31,2005
    
    2006
    
    2006(In millions)Finance
receivables held by
SPEs
    
    Rs.
    60,263.3
    
    
    Rs.
    40,593.4
    
    
    US$
    912.6Delinquencies
    
    
    204.8
    
    
    
    408.2
    
    
    
    9.2Credit losses
    
    
    162.6
    
    
    
    183.5
    
    
    
    4.1Retained
interest in sold
receivables,
consisting of
subordinated
securities
    
    
    954.5
    
    
    
    669.8
    
    
    
    15.1
  As of March 31,2005
    
    2006
    
    2006(In millions)Carrying value/fair value of retained
interestsAnnual prepayment rate:Impact of 10% adverse change
    
    Rs.
    4.2
    
    
    Rs.
    0.6
    
    
    US$
    0.0Impact of 20% adverse change
    
    
    8.3
    
    
    
    1.2
    
    
    
    0.0Expected credit losses:Impact of 10% adverse change
    
    
    27.2
    
    
    
    18.4
    
    
    
    0.4Impact of 20% adverse change
    
    
    54.2
    
    
    
    36.7
    
    
    
    0.8
 F-24




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##### Table of Contents



12. Concentrations of credit risk
   As of March 31, 2005Fair values ofGross
    
    creditLoans
    
    substitutes
    
    Total
    
    %Category
    
    (In millions, except percentages)Land transport
    
    Rs.
    29,860.5
    
    
    Rs.
    
    
    
    Rs.
    29,860.5
    
    
    
    10.8
    %Automotive
manufacturers
    
    
    25,667.6
    
    
    
    432.4
    
    
    
    26,100.0
    
    
    
    9.5Telecommunications
    
    
    5,369.4
    
    
    
    4,217.5
    
    
    
    9,586.9
    
    
    
    3.5Hire purchase and
finance
    
    
    5,422.0
    
    
    
    1,470.5
    
    
    
    6,892.5
    
    
    
    2.5Iron and steel
    
    
    4,840.1
    
    
    
    910.6
    
    
    
    5,750.7
    
    
    
    2.1Others (none >
than 2%)
    
    
    190,765.8
    
    
    
    6,849.9
    
    
    
    197,615.7
    
    
    
    71.6Total
    
    Rs.
    261,925.4
    
    
    Rs.
    13,880.9
    
    
    Rs.
    275,806.3
    
    
    
    100
    %
 As of March 31, 2006Fair values ofGross loans
    
    credit substitutes
    
    Total
    
    Total
    
    %Category
    
    (In millions, except percentages)Automotive manufacturers
    
    Rs.
    40,970.3
    
    
    Rs.
    38.0
    
    
    Rs.
    41,008.3
    
    
    US$
    921.9
    
    
    
    10.0
    %Land Transport
    
    
    36,841.6
    
    
    
    
    
    
    
    36,841.6
    
    
    
    828.3
    
    
    
    9.0Retail Traders
    
    
    14,357.2
    
    
    
    39.6
    
    
    
    14,396.8
    
    
    
    323.7
    
    
    
    3.5Activities allied to Agriculture
    
    
    11,559.7
    
    
    
    
    
    
    
    11,559.7
    
    
    
    259.9
    
    
    
    2.8Heavy Engineering
    
    
    10,659.7
    
    
    
    303.7
    
    
    
    10,963.5
    
    
    
    246.5
    
    
    
    2.7NBFC / Investment Companies
    
    
    10,430.3
    
    
    
    346.8
    
    
    
    10,777.1
    
    
    
    242.3
    
    
    
    2.6Telecommunication
    
    
    5,217.1
    
    
    
    3,671.3
    
    
    
    8,888.4
    
    
    
    199.8
    
    
    
    2.2Others (none > than 2%)
    
    
    270,891.7
    
    
    
    5,351.9
    
    
    
    276,243.5
    
    
    
    6,210.5
    
    
    
    67.2Total
    
    Rs.
    400,927.6
    
    
    Rs.
    9,751.3
    
    
    Rs.
    410,678.9
    
    
    US$
    9,232.9
    
    
    
    100.0
    %
  F-25




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##### Table of Contents



As of March 31, 2005Fair values ofGross
    
    credit
    
    Totalloans
    
    substitutes
    
    exposure
    
    %Region of origination
    
    (In millions, except percentages)Mumbai
    
    Rs.
    72,690.3
    
    
    Rs.
    10,501.0
    
    
    Rs.
    83,191.3
    
    
    
    30.2
    %Western region, other than
Mumbai
    
    
    53,321.8
    
    
    
    1,795.2
    
    
    
    55,117.0
    
    
    
    20.0Northern region
    
    
    72,350.5
    
    
    
    1,304.4
    
    
    
    73,654.9
    
    
    
    26.7Eastern region
    
    
    26,732.9
    
    
    
    
    
    
    
    26,732.9
    
    
    
    9.7Southern region
    
    
    36,829.9
    
    
    
    280.3
    
    
    
    37,110.2
    
    
    
    13.4Total
    
    Rs.
    261,925.4
    
    
    Rs.
    13,880.9
    
    
    Rs.
    275,806.3
    
    
    
    100.0
    %
 As of March 31, 2006Fair values ofGross
    
    credit
    
    Total
    
    Totalloans
    
    substitutes
    
    exposure
    
    exposure
    
    %Region of origination
    
    (In millions, except percentages)Mumbai
    
    Rs.
    80,051.8
    
    
    Rs.
    7,305.6
    
    
    Rs.
    87,357.4
    
    
    US$
    1,964.0
    
    
    
    21.3
    %Western region, other than
Mumbai
    
    
    72,151.2
    
    
    
    482.8
    
    
    
    72,634.0
    
    
    
    1,633.0
    
    
    
    17.7Northern region
    
    
    97,010.2
    
    
    
    1,664.4
    
    
    
    98,674.6
    
    
    
    2,218.4
    
    
    
    24.0Eastern region
    
    
    35,416.8
    
    
    
    
    
    
    
    35,416.8
    
    
    
    796.2
    
    
    
    8.6Southern region
    
    
    116,297.6
    
    
    
    298.5
    
    
    
    116,596.1
    
    
    
    2,621.3
    
    
    
    28.4Total
    
    Rs.
    400,927.6
    
    
    Rs.
    9,751.3
    
    
    Rs.
    410,678.9
    
    
    US$
    9,232.9
    
    
    
    100.0
    %
 F-26




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##### Table of Contents



March
31, 2005
    

March
31, 2006Non-Funded
    
    Funded
    
    Total
    
    Funded
    
    Non- FundedExposure
    
    Exposure
    
    Exposure
    
    Exposure
    
    Exposure
    
    Total Exposure
    
    Total Exposure(In millions)Borrower 1
    
    Rs.
    10,646.6
    
    
    Rs.
    
    
    
    Rs.
    10,646.6
    
    
    Rs.
    11,991.4
    
    
    Rs.
    
    
    
    Rs.
    11,991.4
    
    
    US$
    269.6Borrower 2
    
    
    6,698.9
    
    
    
    
    
    
    
    6,698.9
    
    
    
    6,520.2
    
    
    
    
    
    
    
    6,520.2
    
    
    
    146.6Borrower 3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,000.0
    
    
    
    
    
    
    
    6,000.0
    
    
    
    134.9Borrower 4
    
    
    4,527.5
    
    
    
    940.2
    
    
    
    5,467.7
    
    
    
    4,500.0
    
    
    
    361.7
    
    
    
    4,861.7
    
    
    
    109.3Borrower 5
    
    
    5,297.7
    
    
    
    60.0
    
    
    
    5,357.7
    
    
    
    4,845.2
    
    
    
    
    
    
    
    4,845.2
    
    
    
    108.9Borrower 6
    
    
    743.6
    
    
    
    3,074.2
    
    
    
    3,817.8
    
    
    
    113.8
    
    
    
    4,600.7
    
    
    
    4,714.5
    
    
    
    106.0Borrower 7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,181.8
    
    
    
    1,000.0
    
    
    
    4,181.8
    
    
    
    94.0Borrower 8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,500.0
    
    
    
    
    
    
    
    3,500.0
    
    
    
    78.7Borrower 9
    
    
    3,266.0
    
    
    
    110.0
    
    
    
    3,376.0
    
    
    
    3,266.0
    
    
    
    202.0
    
    
    
    3,468.0
    
    
    
    78.0Borrower 10
    
    Rs.
    36.7
    
    
    Rs.
    3,250.0
    
    
    Rs.
    3,286.7
    
    
    Rs.
    36.7
    
    
    Rs.
    3,250.0
    
    
    Rs.
    3,286.7
    
    
    US$
    73.9
  13. Property and equipment
  As of March 31,2005
    
    2006
    
    2006(In millions)Land and premises
    
    Rs.
    2,912.2
    
    
    Rs.
    3,145.0
    
    
    US$
    70.7Software and systems
    
    
    1,586.5
    
    
    
    2,155.3
    
    
    
    48.5Equipment and furniture
    
    
    7,968.1
    
    
    
    10,472.6
    
    
    
    235.4Property and
equipment, at cost
    
    
    12,466.8
    
    
    
    15,772.9
    
    
    
    354.6Less: Accumulated
depreciation
    
    
    5,383.6
    
    
    
    7,058.3
    
    
    
    158.7Property and
equipment, net
    
    Rs.
    7,083.2
    
    
    Rs.
    8,714.6
    
    
    US$
    195.9
  F-27




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##### Table of Contents



14. Other assets
  As of March 31,2005
    
    2006
    
    2006(In millions)Checks in the
course of
collection
    
    Rs.
    76.1
    
    
    Rs.
    91.7
    
    
    US$
    2.1Security
deposits for leased
property
    
    
    911.1
    
    
    
    1,089.9
    
    
    
    24.5Sundry
accounts receivable
    
    
    1,979.8
    
    
    
    3,763.1
    
    
    
    84.6Advance tax
(net of provision
for taxes)
    
    
    1,672.0
    
    
    
    3,487.8
    
    
    
    78.4Advances
    
    
    778.1
    
    
    
    836.5
    
    
    
    18.8Prepaid
expenses
    
    
    1,360.5
    
    
    
    3,336.4
    
    
    
    75.0Restricted
cash/
securitization
margin for credit
enhancement and
securitized
transactions
    
    
    845.1
    
    
    
    443.9
    
    
    
    10.0Other
    
    
    7,592.6
    
    
    
    13,227.9
    
    
    
    297.4Total
    
    Rs.
    15,215.3
    
    
    Rs.
    26,277.2
    
    
    US$
    590.8
 15. Deposits
  As of March 31,2005
    
    2006
    
    2006(In millions)Interest-bearing:Savings deposits
    
    Rs.
    114,183.8
    
    
    Rs.
    161,857.9
    
    
    US$
    3,638.9Time deposits
    
    
    143,054.1
    
    
    
    248,323.3
    
    
    
    5,582.8Total
interest-bearing
deposits
    
    
    257,237.9
    
    
    
    410,181.2
    
    
    
    9,221.7Non-interest
bearing deposits
    
    
    106,304.6
    
    
    
    147,124.2
    
    
    
    3,307.6Total
    
    Rs.
    363,542.5
    
    
    Rs.
    557,305.4
    
    
    US$
    12,529.3
  
 F-28




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##### Table of Contents



16. Short-term borrowings
  As of March 31,2005
    
    2006
    
    2006(In millions)Borrowed in the call market
    
    Rs.
    33,215.9
    
    
    Rs.
    12,725.1
    
    
    US$
    286.1Term borrowings from
institutions/banks
    
    
    4,783.0
    
    
    
    1,374.6
    
    
    
    30.9Foreign currency borrowings
    
    
    9,890.1
    
    
    
    14,477.0
    
    
    
    325.5Bills rediscounted
    
    
    
    
    
    
    30,100.0
    
    
    
    676.7Interbank risk participation
    
    
    14,190.1
    
    
    
    17,000.0
    
    
    
    382.2Total
    
    Rs.
    62,079.1
    
    
    Rs.
    75,676.7
    
    
    US$
    1,701.4Total borrowings outstanding:Maximum amount
outstanding
    
    Rs.
    62,079.1
    
    
    Rs.
    100,008.2
    
    
    US$
    2,248.4Average amount
outstanding
    
    Rs.
    42,594.6
    
    
    Rs.
    73,569.3
    
    
    US$
    1,654.0Weighted average interest
rate
    
    
    4.1
    %
    
    
    4.8
    %
    
    
    4.8
    %
 17. Long-term debt
  As of March 31,2005
    
    2006
    
    2006(In millions)Subordinated debt
    
    Rs.
    5,000.0
    
    
    Rs.
    17,020.0
    
    
    US$
    382.6Others
    
    
    28.1
    
    
    
    8.6
    
    
    
    0.2Total
    
    Rs.
    5,028.1
    
    
    Rs.
    17,028.6
    
    
    US$
    382.8
  As of March 31,2006
    
    2006(In millions)Due in the fiscal year ending March 31:2007
    
    Rs.
    1,003.5
    
    
    US$
    22.52008
    
    
    2.9
    
    
    
    0.12009
    
    
    2.2
    
    
    
    0.12010
    
    
    
    
    
    
    2011
    
    
    
    
    
    
    Thereafter
    
    
    16,020.0
    
    
    
    360.1Total
    
    Rs.
    17,028.6
    
    
    US$
    382.8
 F-29




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##### Table of Contents



18. Accrued expenses and other liabilities
  As of March 312005
    
    2006
    
    2006(In millions)Bills payable
    
    Rs.
    15,547.3
    
    
    Rs.
    20,795.8
    
    
    US$
    467.5Remittances in
transit
    
    
    18,266.0
    
    
    
    28,206.6
    
    
    
    634.1Accrued expenses
    
    
    485.1
    
    
    
    987.2
    
    
    
    22.2New account
deposits
    
    
    3,414.7
    
    
    
    5,982.6
    
    
    
    134.5Accounts payable
    
    
    4,786.0
    
    
    
    8,640.9
    
    
    
    194.3Others
    
    
    7,214.4
    
    
    
    12,588.7
    
    
    
    283.1Total
    
    Rs.
    49,713.5
    
    
    Rs.
    77,201.8
    
    
    US$
    1,735.7
 19. Income taxes
  Years ended March 31,2004
    
    2005
    
    2006
    
    2006(In millions)Current income
tax expense
    
    Rs.
    2,427.2
    
    
    Rs.
    3,338.9
    
    
    Rs.
    3,622.2
    
    
    US$
    81.5Deferred income tax
(benefit) expense
    
    
    (588.4
    )
    
    
    (213.5
    )
    
    
    343.5
    
    
    
    7.7Income tax
expense
    
    Rs.
    1,838.8
    
    
    Rs.
    3,125.4
    
    
    Rs.
    3,965.7
    
    
    US$
    89.2
 F-30




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##### Table of Contents



Years ended March 31,2004
    
    2005
    
    2006
    
    2006(In millions)Net income before taxes
    
    Rs.
    6,593.3
    
    
    Rs.
    9,735.1
    
    
    Rs.
    13,175.3
    
    
    US$
    296.2Effective statutory income
tax rate
    
    
    35.87
    %
    
    
    36.59
    %
    
    
    33.66
    %
    
    
    33.66
    %Expected income tax expense
    
    
    2,365.4
    
    
    
    3,562.3
    
    
    
    4,434.8
    
    
    
    99.7Adjustments to reconcile
expected income tax to actual
tax expense:Permanent differences:Stock-based compensation
(net of forfeitures)
    
    
    48.5
    
    
    
    113.5
    
    
    
    15.7
    
    
    
    0.4Income exempt from
taxes
    
    
    (529.4
    )
    
    
    (504.7
    )
    
    
    (531.2
    )
    
    
    (11.9
    )Other, net
    
    
    (17.9
    )
    
    
    (66.2
    )
    
    
    39.4
    
    
    
    0.8Effect of change in
statutory tax rate
    
    
    (27.8
    )
    
    
    20.5
    
    
    
    7.0
    
    
    
    0.2Income tax expense
    
    Rs.
    1,838.8
    
    
    Rs.
    3,125.4
    
    
    Rs.
    3,965.7
    
    
    US$
    89.2
  As of March 31,2005
    
    2006
    
    2006(In millions)Tax Effect of:Deductible temporary differences:Allowance for loan losses
    
    Rs.
    1,951.8
    
    
    Rs.
    1,696.9
    
    
    US$
    38.1Unrealized loss on securities
available for sale
    
    
    23.6
    
    
    
    681.9
    
    
    
    15.3Other
    
    
    221.6
    
    
    
    607.8
    
    
    
    13.7Deferred tax asset
    
    
    2,197.0
    
    
    
    2,986.6
    
    
    
    67.1Taxable temporary differences:Property and equipment
    
    
    1,070.7
    
    
    
    822.5
    
    
    
    18.5Unrealized gain on
securities available for sale
    
    
    842.3
    
    
    
    185.9
    
    
    
    4.2Unrealized gain on
investments transferred to
held to maturity category
    
    
    
    
    
    
    
    
    
    
    Loan
origination cost
    
    
    196.6
    
    
    
    961.1
    
    
    
    21.6Deferred
tax liability
    
    
    2,109.6
    
    
    
    1,969.5
    
    
    
    44.3Net deferred tax (asset) liability
    
    Rs.
    (87.4
    )
    
    Rs.
    (1,017.1
    )
    
    US$
    (22.8
    )
   F-31




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##### Table of Contents



20. Stock-based Compensation
  Employees Stock Option Scheme:
      Options available to be grantedYears ending March 31,2004
    
    2005
    
    2006Options available to be
granted, beginning of year
    
    
    2,048,300
    
    
    
    1,585,800
    
    
    
    3,432,200Equity shares allocated for
grant under the plan
    
    
    10,000,000
    
    
    
    
    
    
    
    10,000,000Options granted
    
    
    (10,993,000
    )
    
    
    
    
    
    
    (8,097,300
    )Forfeited/lapsed
    
    
    530,500
    
    
    
    1,846,400
    
    
    
    1,542,000Options available to be
granted, end of year
    
    
    1,585,800
    
    
    
    3,432,200
    
    
    
    6,876,900
  Years ended March 31,2004
    
    
    2005
    
    
    2006Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    average
    
    
    
    
    
    
    Averageexercise
    
    
    
    
    
    
    exercise
    
    
    
    
    
    
    ExerciseOptions
    
    
    price
    
    
    Options
    
    
    price
    
    
    Options
    
    
    PriceOptions
outstanding,
beginning of year
    
    
    6,602,900
    
    
    Rs.
    193.07
    
    
    
    14,319,400
    
    
    Rs.
    325.42
    
    
    
    10,313,500
    
    
    Rs.
    344.88Granted
    
    
    10,993,000
    
    
    
    360.98
    
    
    
    
    
    
    
    
    
    
    
    8,097,300
    
    
    
    630.60Exercised
    
    
    (2,746,000
    )
    
    
    163.90
    
    
    
    (2,159,500
    )
    
    
    215.73
    
    
    
    (3,267,100
    )
    
    
    321.19Forfeited
    
    
    (530,500
    )
    
    
    251.07
    
    
    
    (1,846,400
    )
    
    
    345.01
    
    
    
    (1,542,000
    )
    
    
    499.10Options
outstanding, end of
year
    
    
    14,319,400
    
    
    Rs.
    325.42
    
    
    
    10,313,500
    
    
    Rs.
    344.88
    
    
    
    13,601,700
    
    
    Rs.
    503.18Weighted average
fair value of
options granted
during the year
    
    
    
    
    
    Rs.
    374.10
    
    
    
    
    
    
    Rs.
    
    
    
    
    
    
    
    Rs.
    630.60
 F-32




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##### Table of Contents



Employees
Welfare Trust
    Years ending March 31,2004
    
    2005
    
    2006Grants available to be allotted, beginning of year
    
    
    1,250,775
    
    
    
    276,775
    
    
    
    Grants allotted
    
    
    (974,000
    )
    
    
    (4,700
    )
    
    
    Grants sold in open market
    
    
    
    
    
    
    (272,075
    )
    
    
    Grants cancelled
    
    
    
    
    
    
    
    
    
    
    Grants available to be allotted, end of year
    
    
    276,775
    
    
    
    
    
    
    
    
  As of March 31,2004
    
    
    2005
    
    
    2006Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    exercise
    
    
    
    
    
    
    ExerciseGrants
    
    
    price
    
    
    Grants
    
    
    price
    
    
    Grants
    
    
    PriceGrants allotted beginning of year
    
    
    1,076,000
    
    
    Rs.
    38.64
    
    
    
    1,670,500
    
    
    Rs.
    42.93
    
    
    
    
    
    
    
    New grants
    
    
    974,000
    
    
    
    46.00
    
    
    
    4,700
    
    
    
    43.00
    
    
    
    
    
    
    
    Grants exercised
    
    
    (379,500
    )
    
    
    38.64
    
    
    
    (1,675,200
    )
    
    
    42.60
    
    
    
    
    
    
    
    Grants cancelled
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Grants allotted, end of year
    
    
    1,670,500
    
    
    Rs.
    42.93
    
    
    
    
    
    
    Rs.
    
    
    
    
    
    
    
    
    Weighted average fair value of grants
allotted during the year
    
    
    
    
    
    Rs.
    299.25
    
    
    
    
    
    
    Rs.
    402.00
    
    
    
    
    
    
    
    
 F-33




---



##### Table of Contents



As of March 31, 2006Number of
    
    Weighted
    
    Weightedshares arising
    
    Average
    
    averagePlan
    
    Range of exercise price
    
    out of options
    
    remaining life
    
    Exercise pricePlan A
    
    Rs. 131.33 to Rs. 226.96 (or  US$ 3.0 to  US$ 5.1)
    
    
    2,67,900
    
    
    
    
    
    
    Rs.
    217.87Plan B
    
    Rs. 358.60 to  Rs. 366.30 (or  US$ 8.1 to  US$ 8.2)
    
    
    6,027,800
    
    
    
    *0.84
    
    
    
    361.42Plan C
    
    Rs. 630.60 (US$ 14.2)
    
    
    7,306,000
    
    
    
    1.40
    
    
    
    630.60
 
 *
    
    Weighted Average remaining life is computed for non-vested share based on total no. of shares
arising out of option. 21. Share Capital
  22. Retirement benefits
 Gratuity
   As of March 31,2005
    
    2006
    
    2006(In millions)Change in benefit obligations:Projected benefit obligation (PBO), beginning of the period
    
    Rs.
    103.1
    
    
    Rs.
    142.7
    
    
    US$
    3.2Service cost
    
    
    14.2
    
    
    
    21.4
    
    
    
    0.5Interest cost
    
    
    7.4
    
    
    
    9.7
    
    
    
    0.2Actuarial loss
    
    
    24.1
    
    
    
    35.9
    
    
    
    0.8Benefits paid
    
    
    (6.1
    )
    
    
    (6.8
    )
    
    
    (0.2
    )Projected benefit obligation, end of the period
    
    
    142.7
    
    
    
    202.9
    
    
    
    4.5Change in plan assets:Fair value of plan assets, beginning of the period
    
    
    53.0
    
    
    
    66.1
    
    
    
    1.5Actual return on plan assets
    
    
    4.5
    
    
    
    7.7
    
    
    
    0.2Employer contributions
    
    
    16.1
    
    
    
    42.0
    
    
    
    0.9Benefits paid
    
    
    (6.1
    )
    
    
    (6.8
    )
    
    
    (0.2
    )Actuarial (loss) gain
    
    
    (1.4
    )
    
    
    (5.3
    )
    
    
    (0.1
    )Fair value of plan assets, end of the period
    
    
    66.1
    
    
    
    103.7
    
    
    
    2.3Accrued benefit
    
    Rs.
    (76.6
    )
    
    Rs.
    (99.2
    )
    
    US$
    (2.2
    )
 F-34




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##### Table of Contents



Years ended March 31,2004
    
    2005
    
    2006
    
    2006(In millions)Service cost
    
    Rs.
    16.7
    
    
    Rs.
    14.2
    
    
    Rs.
    21.8
    
    
    US$
    0.5Interest cost
    
    
    4.7
    
    
    
    7.4
    
    
    
    9.7
    
    
    
    0.2Expected return on plan assets
    
    
    (2.7
    )
    
    
    (4.2
    )
    
    
    (5.9
    )
    
    
    (0.1
    )Actuarial (gain) loss
    
    
    14.6
    
    
    
    26.7
    
    
    
    31.3
    
    
    
    0.7Net gratuity cost
    
    Rs.
    33.3
    
    
    Rs.
    44.1
    
    
    Rs.
    56.9
    
    
    US$
    1.3
  Years ended March 31,2004
    
    2005
    
    2006(%)Discount rate
    
    
    7.0
    
    
    
    7.0
    
    
    
    7.0Rate of increase in compensation levels
of covered employees
    
    
    10.0
    
    
    
    10.0
    
    
    
    10.0Rate of return on plan assets
    
    
    6.5
    
    
    
    6.5
    
    
    
    7.0
  Year ending March 31,
    
    (In millions)2007
    
    Rs.
    2.62008
    
    
    1.52009
    
    
    8.62010
    
    
    3.62011
    
    
    4.7
 Superannuation
  Provident fund
  F-35




---



##### Table of Contents



23. Financial instruments
 Foreign exchange and derivative contracts
      As of March 31,2005
    
    
    
    
    
    2006
    
    
    
    
    
    2006Fair
    
    
    
    
    
    Fair
    
    
    
    
    
    FairNotional
    
    value
    
    Notional
    
    Value
    
    Notional
    
    value(In millions)Interest rate swaps
and forward rate
agreements
    
    Rs.
    780,211.6
    
    
    Rs.
    (79.7
    )
    
    Rs.
    1,209,102.8
    
    
    Rs.
    (593.1
    )
    
    US$
    27,183.1
    
    
    US$
    (13.3
    )Forward exchange
contracts, currency
swaps, currency
options and
interest rate caps
and floors
    
    Rs.
    571,445.0
    
    
    Rs.
    731.2
    
    
    Rs.
    845,329.3
    
    
    Rs.
    1,025.8
    
    
    US$
    19,004.7
    
    
    US$
    23.1
  Guarantees
     F-36




---



##### Table of Contents



As of March 31,2005
    
    2006
    
    2006(In millions)Nominal values:Bank guarantees:Financial guarantees
    
    Rs.
    14,365.4
    
    
    Rs.
    21,141.0
    
    
    US$
    475.3Performance
guarantees
    
    
    9,954.4
    
    
    
    12,940.9
    
    
    
    290.9Documentary credits
    
    
    27,930.2
    
    
    
    24,103.7
    
    
    
    541.9Total
    
    Rs.
    52,250.0
    
    
    Rs.
    58,185.6
    
    
    US$
    1,308.1Estimated fair values:Guarantees
    
    Rs.
    (145.4
    )
    
    Rs.
    (171.1
    )
    
    US$
    (3.8
    )Documentary
credits
    
    
    (44.7
    )
    
    
    (38.6
    )
    
    
    (0.9
    )Total
    
    Rs.
    (190.1
    )
    
    Rs.
    (209.7
    )
    
    US$
    (4.7
    )
  Loan sanction letters
  24. Estimated fair value of financial instruments
  Financial instruments valued at carrying value:
  Trading securities:
  Available for sale securities:
  F-37




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##### Table of Contents



Held to maturity securities:
  Loans:
    Deposits:
  Long-term debt:
  Term Placements:
  F-38




---



##### Table of Contents



As of March 31,2005
    
    
    
    
    
    
    2006Carrying
    
    
    Estimated
    
    
    Carrying
    
    
    Estimated
    
    
    Estimatedvalue
    
    
    fair value
    
    
    value
    
    
    fair value
    
    
    fair value(In millions)Financial Assets:Cash and cash equivalents
    
    Rs.
    37,575.8
    
    
    Rs.
    37,575.8
    
    
    Rs.
    61,194.3
    
    
    Rs.
    61,194.3
    
    
    US$
    1,375.8Term placements
    
    
    8,699.6
    
    
    
    8,530.0
    
    
    
    10,243.7
    
    
    
    9,845.0
    
    
    
    221.3Investments held for
trading
    
    
    1,278.5
    
    
    
    1,278.5
    
    
    
    2,945.6
    
    
    
    2,945.6
    
    
    
    66.2Investments available
for sale
    
    
    204,292.8
    
    
    
    204,292.8
    
    
    
    273,457.0
    
    
    
    273,457.0
    
    
    
    6,147.9Securities purchased
under agreements to resell
    
    
    
    
    
    
    
    
    
    
    4,200.0
    
    
    
    4,200.0
    
    
    
    94.4Loans
    
    
    256,486.9
    
    
    
    255,933.0
    
    
    
    395,274.3
    
    
    
    397,162.1
    
    
    
    8,929.0Accrued interest
receivable
    
    
    4,912.1
    
    
    
    4,912.1
    
    
    
    8,662.7
    
    
    
    8,662.7
    
    
    
    194.8Financial Liabilities:Interest-bearing
deposits
    
    
    257,237.9
    
    
    
    257,819.6
    
    
    
    410,181.2
    
    
    
    409,655.9
    
    
    
    9,209.9Non-interest-bearing
deposits
    
    
    106,304.6
    
    
    
    106,304.6
    
    
    
    147,124.2
    
    
    
    147,124.2
    
    
    
    3,307.6Securities sold under
repurchase agreements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Short term borrowings
    
    
    62,079.1
    
    
    
    62,079.1
    
    
    
    75,676.7
    
    
    
    75,676.7
    
    
    
    1,701.4Accrued interest
payable
    
    
    5,843.0
    
    
    
    5,843.0
    
    
    
    8,264.1
    
    
    
    8,264.1
    
    
    
    185.8Long-term debt
    
    
    5,028.1
    
    
    
    4,582.4
    
    
    
    17,028.6
    
    
    
    16,148.2
    
    
    
    363.0Accrued expenses and
other liabilities
    
    
    43,536.1
    
    
    
    43,536.1
    
    
    
    77,201.8
    
    
    
    77,201.8
    
    
    
    1,735.7
 25. Segment Information
       F-39




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##### Table of Contents



Years ended March 31,2004
    
    
    
    
    
    
    
    
    
    2005
    
    
    
    
    
    
    
    
    
    2006Retail
    
    Wholesale
    
    Treasury
    
    
    
    
    
    Retail
    
    Wholesale
    
    Treasury
    
    
    
    
    
    Retail
    
    Wholesale
    
    TreasuryBanking
    
    Banking
    
    services
    
    Total
    
    Banking
    
    Banking
    
    Services
    
    Total
    
    banking
    
    Banking
    
    services
    
    Total
    
    Total(In millions)Net interest revenue
    
    Rs.
    7,159.7
    
    
    Rs.
    5,112.3
    
    
    Rs.
    336.4
    
    
    Rs.
    12,608.4
    
    
    Rs.
    9,728.3
    
    
    Rs.
    5,658.7
    
    
    Rs.
    598.7
    
    
    Rs.
    15,985.7
    
    
    Rs.
    18,177.4
    
    
    Rs.
    6,239.1
    
    
    Rs.
    (510.3
    )
    
    Rs.
    23,906.2
    
    
    US$
    537.5Less:
Provision for
credit.losses
    
    
    918.5
    
    
    
    1,424.9
    
    
    
    
    
    
    
    2,343.4
    
    
    
    2,925.4
    
    
    
    122.8
    
    
    
    
    
    
    
    3,048.2
    
    
    
    4,956.0
    
    
    
    76.0
    
    
    
    
    
    
    
    5,032.0
    
    
    
113.1Net interest
revenue, after provision for credit losses
    
    
    6,241.2
    
    
    
    3,687.4
    
    
    
    336.4
    
    
    
    10,265.0
    
    
    
    6,802.9
    
    
    
    5,535.9
    
    
    
    598.7
    
    
    
    12,937.5
    
    
    
    13,221.4
    
    
    
    6,163.1
    
    
    
    (510.3
    )
    
    
    18,874.2
    
    
    
424.3Non-interest
revenue
    
    
    2,606.7
    
    
    
    965.8
    
    
    
    1,125.1
    
    
    
    4,697.6
    
    
    
    6,234.1
    
    
    
    1,656.5
    
    
    
    320.9
    
    
    
    8,211.5
    
    
    
    10,071.8
    
    
    
    2,092.9
    
    
    
    (16.8
    )
    
    
    12,147.9
    
    
    
273.1Non-interest
expense
    
    
    (6,250.0
    )
    
    
    (1,521.5
    )
    
    
    (597.8
    )
    
    
    (8,369.3
    )
    
    
    (8,889.3
    )
    
    
    (1,823.7
    )
    
    
    (700.9
    )
    
    
    (11,413.9
    )
    
    
    (14,482.4
    )
    
    
    (2,802.0
    )
    
    
    (562.4
    )
    
    
    (17,846.8
    )
    
    
(401.2
    )Income before
income tax
    
    Rs.
    2,597.9
    
    
    Rs.
    3,131.7
    
    
    Rs.
    863.7
    
    
    Rs.
    6,593.3
    
    
    Rs.
    4,147.7
    
    
    Rs.
    5,368.7
    
    
    Rs.
    218.7
    
    
    Rs.
    9,735.1
    
    
    
    8,810.8
    
    
    
    5,454.0
    
    
    
    (1,089.5
    )
    
    
    13,175.3
    
    
    
296.2Segment assets:Segment average
total assets
    
    Rs.
    142,643.0
    
    
    Rs.
    178,753.3
    
    
    Rs.
    42,907.2
    
    
    Rs.
    364,303.5
    
    
    Rs.
    197,121.9
    
    
    Rs.
    224,054.3
    
    
    Rs.
    26,076.1
    
    
    Rs.
    447,252.3
    
    
    Rs.
    281,583.8
    
    
    Rs.
    313,603.1
    
    
    Rs.
    38,318.8
    
    
    Rs.
    633,505.7
    
    
    US$
14,242.5
 26. Commitments and contingent liabilities
  Capital commitments
  Contingencies
  27. Related party transactions
 F-40




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##### Table of Contents



As of March 31,2005
    
    2006
    
    2006(In millions)Balances in current account
    
    Rs.
    141.2
    
    
    Rs.
    201.6
    
    
    US$
    4.5Balances in fixed deposits
    
    
    272.1
    
    
    
    149.8
    
    
    
    3.4Accounts payable
    
    
    73.8
    
    
    
    72.5
    
    
    
    1.6Total
    
    Rs.
    487.1
    
    
    Rs.
    423.9
    
    
    US$
    9.5
  Years ended March 31,2005
    
    2006
    
    2006(In millions)Deposits to secure leased property
    
    Rs.
    23.6
    
    
    Rs.
    36.9
    
    
    US$
    0.8Loans and overdrafts
    
    
    2.5
    
    
    
    0.5
    
    
    
    0.0Loans to officers and employees
    
    
    935.2
    
    
    
    1,409.7
    
    
    
    31.7Capital advances
    
    
    
    
    
    
    2.0
    
    
    
    0.1Other deposits
    
    
    46.1
    
    
    
    130.2
    
    
    
    2.9Accounts Receivable
    
    
    18.7
    
    
    
    304.3
    
    
    
    6.8Total
    
    Rs.
    1,026.1
    
    
    Rs.
    1,883.6
    
    
    US$
    42.3
   Years ended March 31,2004
    
    
    2005
    
    
    2006
    
    
    2006(In millions)Service charges income
    
    Rs.
    118.6
    
    
    Rs.
    438.8
    
    
    Rs.
    1,441.8
    
    
    US$
    32.4Dividend Income
    
    
    5.7
    
    
    
    5.7
    
    
    
    5.8
    
    
    
    0.1Service charges expense
    
    
    (19.3
    )
    
    
    (31.3
    )
    
    
    (45.6
    )
    
    
    (1.0
    )Outsourcing charges
    
    
    (798.5
    )
    
    
    (1,561.7
    )
    
    
    (2,534.7
    )
    
    
    (57.0
    )Interest Income
    
    
    23.9
    
    
    
    0.4
    
    
    
    0.1
    
    
    
    0.0Rent and maintenance expense
    
    
    (17.0
    )
    
    
    (15.8
    )
    
    
    (12.3
    )
    
    
    (0.2
    )Net expense incurred to related parties for service provided
    
    Rs.
    (686.6
    )
    
    Rs.
    (1,163.9
    )
    
    Rs.
    (1,144.9
    )
    
    US$
    (25.7
    )
  F-41




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##### Table of Contents



28. Regulatory Capital and capital adequacy
   As of March 31,2005
    
    2006
    
    2006(In millions)Tier 1 capital
    
    Rs.
    39,621.6
    
    
    Rs.
    51,499.1
    
    
    US$
    1,157.8Tier 2 capital
    
    
    10,547.3
    
    
    
    17,207.1
    
    
    
    386.9Total capital
    
    Rs.
    50,168.9
    
    
    Rs.
    68,706.2
    
    
    US$
    1,544.7Total risk weighted assets and contingents
    
    Rs.
    412,710.3
    
    
    Rs.
    602,176.2
    
    
    US$
    13,538.1Capital ratios of the Bank:Tier 1
    
    
    9.60
    %
    
    
    8.55
    %
    
    
    8.55
    %Total capital
    
    
    12.16
    %
    
    
    11.41
    %
    
    
    11.41
    %Minimum capital ratios required by the RBI:Tier 1
    
    
    4.50
    %
    
    
    4.50
    %
    
    
    4.50
    %Total capital
    
    
    9.00
    %
    
    
    9.00
    %
    
    
    9.00
    %
 Dividends
  29. Earnings per equity share
  As of March 31,2004
    
    2005
    
    2006Weighted average number of
equity shares used in
computing basic earnings per
equity share
    
    
    281,856,152
    
    
    
    290,145,339
    
    
    
    311,939,366Effect of potential equity
shares for stock options
outstanding
    
    
    2,863,744
    
    
    
    2,317,669
    
    
    
    3,984,648Weighted average number of
equity shares used in
computing diluted earnings
per equity share
    
    
    284,719,896
    
    
    
    292,463,008
    
    
    
    315,924,014
  F-42




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##### Table of Contents



Years ended March 31,2004
    
    2005
    
    2006
    
    2006Basic earnings per share
    
    Rs.
    16.87
    
    
    Rs.
    22.78
    
    
    Rs.
    29.45
    
    
    US$
    0.7Effect of potential equity shares
for stock options outstanding
    
    
    0.17
    
    
    
    0.18
    
    
    
    0.37
    
    
    
    Diluted earnings per share
    
    Rs.
    16.70
    
    
    Rs.
    22.60
    
    
    Rs.
    29.08
    
    
    
    0.7Basic earnings per ADS
    
    Rs.
    50.61
    
    
    Rs.
    68.34
    
    
    Rs.
    88.36
    
    
    
    2.0Effect of potential equity shares
for stock options outstanding
    
    
    0.51
    
    
    
    0.54
    
    
    
    1.12
    
    
    
    Diluted earnings per ADS
    
    Rs.
    50.10
    
    
    Rs.
    67.80
    
    
    Rs.
    87.24
    
    
    US$
    2.0
 F-43




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##### Table of Contents



SIGNATURES
  HDFC Bank Limited/s/ Vinod G. YennemadiName:
    Vinod G. YennemadiTitle:
    Group Head  Finance,
Administration, Legal and Secretarial




---



##### Table of Contents



Index of Exhibits
 12.1
    
    Certification by our Managing Director pursuant to Rule 13a-14(b)12.2
    
    Certification by our Chief Financial Officer pursuant to Rule 13a-14(b)13
    
    Certifications by our Managing Director and Chief Financial Officer required by Rule
13a-14(b) and Section 1350 of Chapter 63 of Ttitle 18 of the United States Code.