BANK PROFILE OVERVIEW OF THE BANKING SECTOR A bank is a financial institution that provides banking and other financial

services to their customers. A bank is generally understood as an institution which provides fundamental banking services such as accepting deposits and providing loans. There are also nonbanking institutions that provide certain banking services without meeting the legal definition of a bank. Banks are a subset of the financial services industry. A banking system also referred as a system provided by the bank which offers cash management services for customers, reporting the transactions of their accounts and portfolios, through out the day. The banking system in India, should not only be hassle free but it should be able to meet the new challenges posed by the technology and any other external and internal factors. For the past three decades, Indias banking system has several outstanding achievements to its credit. The Banks are the main participants of the financial system in India. The Banking sector offers several facilities and opportunities to their customers. All the banks safeguards the money and valuables and provide loans, credit, and payment services, such as checking accounts, money orders, and cashiers cheques. The banks also offer investment and insurance products. As a variety of models for cooperation and integration among finance industries have emerged, some of the traditional distinctions between banks, insurance companies, and securities firms have diminished. In spite of these changes, banks continue to maintain and perform their primary roleaccepting deposits and lending funds from these deposits. EVOLUTION OF INDIAN BANKING INDUSTRY: The Indian banking industry has its foundations in the 18th century, and has had a varied evolutionary experience since then. The initial banks in India were primarily traders banks engaged only in financing activities. Banking industry in the pre-independence era developed with the Presidency Banks, which were transformed into the Imperial Bank of India and subsequently into the State Bank of India. The initial days of the industry saw a majority private ownership and a highly volatile work environment. Major strides towards public ownership and accountability were made with nationalization in 1969 and 1980 which transformed the face of

banking in India. The industry in recent times has recognized the importance of private and foreign players in a competitive scenario and has moved towards greater liberalization. STRUCTURE OF INDIAN BANKING SYSTEM:

INTRODUCTION TO MAHESH BANK Company overview: The A.P. Mahesh Co-operative Urban Bank Ltd. operates as an urban co-operative banking institution. It offers deposit schemes, such as fixed, multiplier, tax saver multiplier, automatic renewal, and recurring deposits, as well as cash certificates. The company also provides personal, consumer, business, housing, professional, gold, vehicle, educational, and industrial finance loans, as well as offers loans against NSCs, KVPs, and shares. In addition, it offers other loan facilities, such as consortium finance, issue of bank guarantees, group loans, bill discounting against LC, and issue of ILC/FLC. Further, the company provides SMS banking, foreign exchange, and money transfer services. The A.P. Mahesh Co-operative Urban Bank Ltd. was founded in 1978 and is based in Hyderabad, India. It has branches in Hyderabad, Secunderabad, Khammam, Vijayawada, Guntur, Rajahmundry, Visakhapatnam, and Warangal, as well as in Jaipur and Mumbai, India. The A.P. Mahesh Co-operative Urban Bank Limited is India's premier Urban Co-operative Banking Institution. The Bank has attained this premier position without compromising the spirit of co-operative principles, while at the same time striving to assimilate and implement newer methods of work organisation and management, with a firm commitment to its objectives.

A BRIEF HISTORY OF THE BANK REGISTRATION AND COMMENCEMENT OF OPERATIONS The A P Mahesh Co-operative Urban Bank Ltd. (popularly known as Mahesh Bank) was registered as a Primary Co-operative Society on 30th June, 1977. The Bank has commenced its operations on 9th August, 1978. The Bank was accorded SCHEDULED STATUS by Reserve Bank of India from 26th October, 1996 - the first Co-operative Bank to be accorded this status in the entire South India. Dr C. Rangarajan, the then Governor, Reserve Bank of India graced the occasion. The Bank has been registered as a Multi-State Co-operative Bank under the Multi-State Cooperative Societies Act, 1984 with effect from 30.05.2001 - again the first Co-operative Bank to achieve this coveted position in South India. BRANCH EXPANSION Mahesh Bank presently has 38 branches - 30 in the twin cities of Hyderabad and Secunderabad and one each at Khammam, Vijayawada, Guntur, Rajahmundry, Visakhapatnam, Warangal in Andhra Pradesh., Jaipur in Rajasthan and Mumbai in Maharashtra. AUTOMATION: Mahesh Bank is the first Co-operative Urban Bank in the State of Andhra Pradesh to introduce computerization at all its branches. Core Banking Solution (Anywhere Banking) introduced at all branches. FOREIGN EXCHANGE TRANSACTIONS: The Bank has been granted license to undertake money transfer business and specified non trade current account transactions by the RBI as Authorised Dealer Catageory-II. CAPITAL ADEQUACY NORMS: The Capital to Risk Weighted Assets Ratio (CRAR) of the bank stood at 21% as on 31-3-2012 as against a minimun stipulation of 9% prescribed by RBI.

VISION To make brand MAHESH BANK synonymous to trust and reliability, to be a leader amongst the Multi State Scheduled Co-operative Banks in the whole of South India, to provide excellence and personalized services and to contribute to Co-operative movement by making credit available to the customers and more particularly to Individuals and SMEs, thereby contributing to their growth, by striving to maintain Net NPAs at 0% level. MISSION By the year 2020, Mahesh Bank aims to achieve ambitious Business target of Rs. 10,000 crores, Profit of Rs. 100 crores, Low cost deposit ratio of 30%, CD ratio of 70%, Gross NPAs to be maintained below 3%, Net NPAs at '0%' and 100 Branch and ATM network. OBJECTIVES The principal object of the Bank will be to promote the interests of all its members to attain their social and economic betterment through self-help and mutual aid in accordance with the Cooperative Principles. The objects of the Bank shall be to engage in any one or more of the forms of business enumerate in Section 6 as amended by Section 56 of the Banking Regulation Act, 1949 and in particular to carry out the following forms of business: To do banking business on Co-operative Principles by accepting for the purpose of

lending or investment of deposits of money from members as well as the public, repayable on demand or otherwise and withdrawable by cheque, draft, pay order or otherwise. To raise funds by issue of shares and/or any other securities as permitted by the

Regulatory Authority. To encourage thrift, self-help and co-operation among members. To prevent members from falling into permanent indebtedness and to assist them

financially in times of difficulty and to help them to get out of debt. To engage in any one or more of the following forms of business namely:

(i) The borrowing, raising or taking up of money; (ii) The lending or advancing of money to members either upon or without security; (iii)The drawing, making, accepting, discounting, buying, selling, collecting and dealing in bills of exchange, hundies, promissory notes, coupons, drafts, bills of lading, railway receipts, warrants, certificates, scrips and other instruments and other securities whether transferable or negotiable or not; (iv)The granting and issuing of letters of credit, travellers` cheques and circular notes and to do all forms of foreign exchange business; (v) The buying, selling and dealing in bullion and species on behalf of member customers; (vi)The acquiring, holding, issuing on commission, underwriting and dealing in stock, funds, shares, debentures, debenture stock, bonds, obligations, securities and investments of all kinds; (vii)The purchasing and selling of bonds, scrips of other forms of securities on behalf of constituents or others, the negotiating of loans and advances. (viii)The receiving of all kinds of bonds, scrips and valuables on deposit or for safe custody or otherwise; (ix)The providing of safe deposit vaults; (x) The collecting and transmitting of money and securities; (xi) Acquiring and holding and generally dealing with any property or any right, title or interest in any such property which may form the security or part of the security for any loans and advances or which may be connected with any such security; (xii) Carrying on and transacting guarantee and indemnity business, on behalf of the constituents in the ordinary course of banking business and to provide necessary cash margin to facilitate such business;

(xiii) Opening Branches, Extension Counters and Sub-Officers or any Office and ATM centers or to have arrangement of ATMs of other Banks etc. as per the norms of the Reserve Bank of India. (xiv) Subject to the previous approval of the Central Registrar establishing and supporting or aiding in the establishment and support of associations, institutions, funds, trusts and conveniences calculated to benefit members, employees, ex-employees of the bank or the dependents or connections of such persons granting pensions and allowances and making payments towards insurance, subscribing to or guaranteeing monies for charitable benevolent object or for any exhibition or for any public, general or useful object; (xv)Undertaking and executing trusts, undertaking the administration of estates as an executor, trustee or otherwise, with the previous permission of the Central Registrar; (xvi)The acquisition of land/buildings, construction, maintenance and alteration of any land/building or works necessary or convenient for the purposes of the Bank; (xvii) To act as Insurance Agent as per norms of RBI and IRDA; (xviii)To promote one or more subsidiary institutions which may be registered under any law for the time being in force for the furtherance of its stated objects; (xix) Any other form of business which the Central or the State Governments may specify as a form of business in which it is lawful for a banking institution to engage; (xx) Doing all such other things as are incidental and conducive to the promotion or advancement of the business of the Bank; To amalgamate with another Bank with same or similar objects; To engage in Credit/Debit cards; To do merchant banking business; To takeover another society with similar object;

To develop market information system, logo brand promotion, quality control and

technology up gradation; To enter into participation, consortium arrangement with bank/s or financial institutions

with objects of making loans and advances; To act as agents for collection of moneys of various government quasi government and

statutory bodies.

BRANCH LOCATIONS:

The bank has various branches located over the twin cities and other states:

Branches in Hyderabad & Secunderabad

Ameerpet Branch A.S. Rao Nagar Branch Attapur Branch Balanagar Branch Banjara Hills Branch Begum Bazar Branch Champapet Branch Charminar Branch Chintal Branch Dilsukhnagar Branch Himayatnagar Branch Kachiguda Branch Karkhana Branch Khairatabad Branch Kukatpally Branch Malakpet Branch Malkajgiri Branch Mehdipatnam Branch

Monda Market Branch Moti Nagar Branch Ramanthapur Branch RTC X Roads Branch Secunderabad Branch Serilingampally Branch Shamsheergunj Branch Siddiamber Bazar Branch Seethaphalmandi Branch Sultan Bazar Branch Tarnaka Branch Vanasthalipuram Branch West Marredpally Branch

Branches in A.P. (other than Twin Cities)

Guntur Branch Khammam Branch Rajahmundry Branch Vijayawada Branch Visakapatnam Branch Warangal Branch

Branches of other States

Jaipur Branch Mumbai Branch

OWNERSHIP AND MANAGEMENT PROFILE: Management: Board of Directors: Elected 15 Directors assumed Office on 09.06.2010 and two Directors have been co-opted as Professional Directors. The Directors of the Board are successful businessmen, Industrialists, Chartered Accountants, and Legal Experts. The Directors render their services honorarily since inception. SRI RAMESH KUMAR BUNG (Chairman) He is associated with the Bank as Director, Vice-Chairman & Chairman over the past 1 decade. A well-known Social Worker associated with many organizations viz., President President : A.P. Co-op. Urban Banks & Credit Societies Association : A.P. Maheshwari Sabha

Chairman/Managing Trustee : Smt. Dhapi Bai Rampershad Bung Charitable Trust, Hyderabad Managing Trustee : Sri Maheshwari Seva Trust, Hyderabad A.P. Marwadi Shiksha Kosh Trust Managing Committee Member Trustee

: Akhil Bhartiya Maheshwari Seva Sadan (Pushkar)

: Akhil Bhartiya Maheshwari Seva Trust, Indore Sri Aditya Vikram Birla Memorial Vyapar Sahayog Kendra, Chennai

Convenor (A.P. Unit)

Convenor

: A.P. Maheshwari Sabha Trust, Hyderabad

A.P. Maheshwari Yuva Sanghatan, Rajasthani Graduates Ex-President : Association & A.P. Marwadi Yuva Manch & A.P. Marwadi Sammelan Ex-Vice President : All India Maheshwari Yuva Sanghatan. "EXCELLENCE AWARD - BANKING" by Delhi Telugu Academy (A.P.) YUVARATNA by Akhil Bharatiya Marwadi Yuva Manch Awards BHARAT GOURAV by Dharana Public Seva Trust (Udaipur). MUNDVA VIBHUTI by Marwad Mundva Nagrik Mandal (Hyd.) OTHER DIRECTORS: 1. Sri Purshotamdas Mandhana (Sr. Vice Chairman) 2. Sri Ramprakash Bhandari (Vice Chairman) 3. Sri Brijgopal Asawa (Director) 4. Sri Chainsukh Kabra (Director) 5. Sri Devender Jhawar (Director) 6. Sri Kailash Narayan Bhangadia (Director) 7. Sri Krishna Chandra Bung (Director) 8. Sri Laxminarayan Rathi (Director) 9. Smt. Pushpa Boob (Director) 10. Sri Rajgopal Partani (Director) 11. Sri Ramnivas Soni (Director) 12. Sri Rampal Attal (Director) 13. Smt. Ratnamala Saboo (Director) 14. Sri Srigopal Bung (Director) 15. C.A. Sri Kishan Gopal Maniyar (Professional Director) 16. Ca Sri Bajranglal Jhawar (Professional Director)

17. Sri Umesh Chand Asawa (M.D. & CEO) DEPARTMENTS: 1. Finance And Account Department 2. Credit Department 3. Planning And Development 4. Bancassurance 5. Law 6. Clearing 7. Shares 8. Dispatch 9. Personal Administration 10. Recovery 11. Computer 12. Audit

LOCATION: THE A.P MAHESH CO-OPERATIVE URBAN BANK LTD. Head office: 5-3-989, 3rd floor, Sherza Estate, Nizamshahi Road, Hyderabad-500095.

CUSTOMER SERVICE & INTRODUCTION OF NEW FACILITIES The Bank has been taking advantage of technology for enhancing the efficiency, increasing the productivity and thereby improving the standards of customer service. Some of the new facilities initiated during the year are as under: Reserve Bank of India has accorded license for RTGS membership and the bank commenced RTGS operations from its own platform with effect from 22.01.2011. As a result or this, funds of Rs. 2.00 lakhs and above are transferred to/received from all over the country instantly. Further, THE RBI has accorded membership for National Electronic Fund Transfer (NEFT) and operations will commence shortly from their own platform after completing the requisite formalities. This facility will enable the customers to transfer any amount at a faster pace, without any ceiling. The Bank has installed two On-site ATMs at Vanasthalipuram and Begum Bazar Branches in addition to one ATM already existing at Himayathnagar Branch. All the ATMs are interconnected so that customer gets the benefit of Any Branch ATM banking facility. Further "NPCI" has approved the membership of our Bank for ATM Sharing Network and process of testing of ATM cards by them is in advanced stage. On completion of the same, customers will have access to 78,000+ ATMs across the country. Point of Sale Terminals are being installed at various customers sale outlets. By this customers are able to receive immediate credit of sale proceeds by swiping Master/Visa credit and/or debit cards of their customers. The Bank is providing information based net banking and mobile banking facility to the customers. Further, customers can request online, for issue of cheque book and statement of account. The Bank has tied-up with M/s.Reliance Capital Asset Management Ltd., which will facilitate the customers to invest in various mutual fund products.

FINANCIAL PROGRESS (Year on Year) 2012 (Unaudited)

PERFORMANCE

2005

2006

2007

2008

2009

2010

2011

(Rs. in Crores) Business Deposits Advances Profit Before Tax Net Profit Working Funds Members Funds Per Employee Business Interest Earned Interest Expended Total Income GROWTH Business Deposits Advances PBT Net Profit Working Funds Members Funds Per Employee Business Interest Earned Total Income 513.92 570.82 690.00 842.18 1018.76 1243.10 1513.19 1907.26 366.02 395.06 432.95 515.81 639.94 785.85 907.58 1160.43 147.90 175.76 257.05 326.37 378.82 457.25 605.61 746.83 4.00 4.00 4.87 4.81 6.51 5.15 14.57 16.29 9.93 11.67 19.33 13.94 21.58 15.02 24.14 17.41

477.36 500.35 569.34 643.70 778.98 938.66 1075.69 1353.83 91.34 93.50 99.41 106.17 115.02 126.13 144.01 166.24 1.07 1.31 1.60 1.88 2.30 2.72 95.32 55.91 97.65 3.22 3.43

43.63 45.86 50.44 63.89 78.10 26.90 23.89 24.24 31.13 42.82 45.80 47.94 52.47 66.82 80.45 (In Percentages) -0.16 11.07 20.88 22.06 20.97 1.13 7.93 9.59 19.14 24.07

105.10 134.35 55.07 78.44

107.75 138.01

22.02 22.80 20.70 18.66 19.46 20.50 9.67 18.26 22.05 21.38

21.72 15.49 32.45 11.64 7.75 14.60 14.18 18.38 10.26 10.34

26.04 27.86 23.32 11.86 15.91 25.86 15.44 6.52 27.83 28.08

-3.50 18.84 46.25 26.97 16.07 -32.09 21.75 33.68 123.81 11.80 -32.09 20.25 7.07 -4.21 4.82 -0.32 2.36 8.13 92.82 17.52

13.79 13.06 21.02 6.32 6.80 8.34

18.47 22.14 17.50 22.34 9.99 9.45 26.67 22.24 27.35 20.40

-5.07 5.11 -10.63 4.67

VITAL RATIOS CRAR CD Ratio Gross NPA Net NPA Low Cost Deposits Int. expenses to Int.

(In Percentages) 44.48 39.75 35.15 36.78 31.70 40.41 44.49 59.37 63.27 59.20 14.41 9.25 0 0 4.30 0 3.77 0 2.84 0 28.35 58.19 2.56 0 21.23 58.66 22.11 66.73 2.56 22.20 52.40 21.00 64.36 2.59 0 19.93 58.38

25.06 27.78 29.69 27.76 22.91 61.65 52.07 48.04 48.87 54.82

Income Operating exp to Total Income Return on Assets

29.06 28.20 29.35 28.27 25.07 0.83 0.96 0.90 1.53 1.49

22.38 1.48

21.58 1.39

20.08 1.29

PERFORMANCE OF THE BANK The Bank undeterred by negative environment of rising inflation, tightening Monetary Policy and hardening of interest rates has performed well in all fronts. The profit before tax earned by the bank for the year stands at Rs. 21.58 crores compared to Rs. 19.33 crores in the previous year registering a growth of 11.64%. After making necessary tax provisions the profit after tax stands at Rs. 15.02 crores, compared to Rs. 13.94 crores in the previous year, registering a growth of 7.75%. The Board of Directors have recommended for a dividend of 24% for the year 2010-11. The bank has registered a significant growth in business volume in line with industry averages. The total business achieved during the year 2010-11 is Rs. 1513 crores as compared to Rs. 1243 crores last year surpassing the budgeted level of Rs. 1500 crores and registering a growth of 21.72%. This comprises of total deposits of Rs. 907.58 crores (15.49% growth over the previous year) and advances of Rs. 605.61 crores (32.45% growth over the previous year). The other areas where bank excelled are as under:

a) Owned Funds of the Bank increased to Rs. 144.01 crores compared to Rs. 126.13 crores during the previous year. b) Capital Adequacy Ratio of the bank is 22.11% as against Reserve Bank of India stipulation of 9%. c) Credit Deposit Ratio(CDR) increased to 66.73% compared to 58.19% during the previous year. d) Interest Income increased to Rs. 105.10 crores compared to Rs. 95.32 crores during the previous year. e) Per Employee business increased to Rs. 3.22 crores compared to Rs. 2.72 crores during the previous year. f) Per Employee profit increased to Rs. 3.20 lakhs compared to Rs. 3.05 lakhs during the previous year. The financial year 2011-12 is likely to be quite challenging for the Indian Banking Industry. In spite of this the bank has set current years goals as under: To achieve : 1. The business level of Rs. 1800 crores 2. Profit (before tax) of Rs. 25 crores 3. Network of 40 Branches including ATMs To maintain: 1. CD Ratio at 67% 2. Gross NPAs below 3% 3. Net NPAs at 0%

TARGET FOR THE YEAR ENDING 31.03.2013 Bank has set an ambitious target of Rs.2400 crore business by the end of March, 2013. AWARDS AND ACHIEVEMENTS: The bank has bagged 3 awards from Banking Frontiers Magazine, Mumbai in the following areas: 1. Best Data Centre 2. Excellence in Networking 3. Excellence in Customer Service. CORPORATE SOCIAL RESPONSIBILITY The Bank as a socially responsible organization is extending a helping hand to the persons in need by way of assistance in the form of donations. Further, the bank for the first time, launched a computer awareness programme free of cost for the benefit of members/customers/staff and their family members wherein they are imparted basic knowledge of computers. SERVICES PROVIDED BY THE BANK: 1. Internet banking: 2. Mobile banking: It is of two types Interbank Mobile Payment Service (IMPS)

Mahesh Bank Offers Interbank Mobile Payment Service (IMPS), a unique concept of mobile based account to account funds transfer for registered Bank account holders in collaboration with National Payments Corporation of India (NPCI). Interbank Mobile Payment Service (IMPS) is an instant interbank electronic fund transfer service through mobile phones. IMPS would facilitate Mahesh Bank Customer's to send money instantaneously to any other person registered for IMPS service in any of

participating banks, using application. All IMPS registered customers can also act as beneficiaries to receive money from any participating banks. Key Features of IMPS

Send money to anyone using their mobile number Recipient gets instant credit Receive money instantly from anyone without sharing your account number Available 24x7x365 Absolutely free of cost Simple & easy to use Safe & Secure

3. Forex services: Foreign Exchange Facility The Bank now renders Forex Serivces under A.D. - Category-II The Money Transfer business in accordance with Memorandum AMC issued vide A.P. (DIR Series) Circular No. 43/A.P. (FL Series) Circular No.1 dated November 12, 2002. To release remit foreign exchange for the following transactions in terms of A.P. (DIR Series) Circular No. 25/A.P. (FL Series) Circular No.02 dated March 6, 2006: Features:

Private Visits. Remittance by tour operators/travel agents to overseas agents/principals/hotels. Business Travels. Fees for participation in global conferences and specialized training. Remittance for participation in international events / competitions (towards training, sponsorship and prize money).

Film shooting. Medical Treatment abroad,

Disbursement of crew wages. Overseas Education. Remittance under educational tie up arrangements with universities abroad. Remittance towards fees for examinations held in India and abroad and additional score sheets for GRE, TOEFL etc.,

Employment and processing, assessment fees for overseas job applications. Emigration and Emigration Consultancy Fees. Skills / credential assessment fees for intending migrants. Visa fees. Processing fees for registration of documents as required by the Portuguese / other Governments,

Registration / Subscription / Membership fees to International Organizations.

4. Life insurance services: The Bank is a Corporate Agent of Max New York Life Insurance Company Ltd. vide Licence No. 2147260 (licence to act as a Corporate Agent under the Insurance Act, 1938 (IV of 1938)). Customers can avail this facility at any of the branches. 5. PAN Card Services: In terms of Section 206AA of Income tax Act, 1961, introduced by Finance (No. 2) Act, 2009, w.e.f. 1st April, 2010, it will be mandatory for every person including a non-resident, entitled to receive any sum or income or amount, on which TDS is deductible, to furnish his/her PAN to the Bank, failing which TDS will be deducted at the rate of 20% or rate applicable, whichever is higher. Customers can avail the services for applying PAN CARD at designated branches of the bank. 6. e-Seva Services: With this facility customers can pay their utility bills such as Electricity, Water, Property Tax and BSNL Telephone Bills at selected branches.

e-tax payment services: With this facility customers can pay their tax liability such as, incometax, Tax deducted at source etc., from any of the branches. 7. Core banking: The bank introduced Core Banking Services any where banking

facility , from which they can transact their banking operations as per their convenience.