a) During the year, the Bank has allotted 3,60,45,243 shares of Rs10/- each for cash at a premium of Rs2,181.69 per equity share aggregating to Rs7,900.00 crores under Preferential Allotment to GOI. Out of the total subscription of Rs7,900.00 crores received from GOI, an amount of Rs36.05 crores was transferred to Share Capital Account and Rs7,863.95 crores to Share Premium Account.

b) The Bank has allotted 604 equity shares of Rs10/- each for cash at a premium of Rs1,580/- per equity share aggregating to Rs9,60,360/- out of shares kept in abeyance under Right Issue - 2008. Out of the total subscription of Rs9,60,360/- received, Rs6,040/- was transferred to Share Capital Account and Rs9,54,320/- to Share Premium Account.

c) The Bank has kept in abeyance the allotment of 83,511 (Previous Year 84,115) Equity Shares of Rs10/- each issued as a part of Rights issue, since they are subject to title disputes or are subjudice.

d) Expenses in relation to the issue of shares : Rs8.79 crores debited to Share Premium Account.

Notes:

a. Investments exclude securities utilised under Liquidity Adjustment Facility (LAF) with RBI Rs40,000 crores. (Previous Year Rs27,000 crores)

b. Investments amounting to Rs5,520.21 Crores are kept as margin with Clearing Corporation of India Limited/NSCCL/ MCX/ USEIL towards Securities Settlement. In the previous year investments amounting to Rs11,117 Crores were kept as margin with RBI/Clearing Corporation of India Limited towards Real Time Gross Settlement / Securities Settlement (RTGS/NDS).

c. In terms of RBI Circular DBOD.No.BP.BC.28/21.04.157/2011-12 dated August 11,2011 the Bank had reversed Rs93.94 crores and Rs39.00 crores from the Profit & Loss A/c to "Suspense A/c - Crystallised Receivables" and " suspense A/c - Profit MTM" respectively on account of derivative contracts.

d. During the year, the Bank has infused additional capital of Rs585.00 Crores in State Bank of Bikaner & Jaipur towards Right Issue.

D) Disclosures on Risk Exposure in Derivatives (A) Qualitative Disclosure

i. The Bank currently deals in over-the-counter (OTC) interest rate and currency derivatives as also in Interest Rate and Currency Futures. Interest Rate Derivatives dealt by the Bank are rupee interest rate swaps, foreign currency interest rate swaps and forward rate agreements. Currency derivatives dealt by the Bank are currency swaps, rupee dollar options, exchange traded options and cross-currency options. The products are offered to the Bank's customers to hedge their exposures and the Bank enters into derivatives contracts to cover such exposures. Derivatives are used by the Bank both for trading as well as hedging on balance sheet items. The Bank also deals in a mix of these generic instruments. The Bank has done Option deals and Structured Products with customers, but they have been covered on a back to back basis in inter-bank market.

ii. Derivative transactions carry market risk i.e. the probable loss the Bank may incur as a result of adverse movements in interest rates/exchange rates/equity prices and credit risk i.e. the probable loss the Bank may incur if the counterparties fail to meet their obligations. The Bank's "Policy for Derivatives" approved by the Board prescribes the market risk parameters (cut-loss triggers, open position limits, duration, modified duration, PV01 etc.) as well as customer eligibility criteria (credit rating, tenure of relationship etc.) for entering into derivative transactions. Credit risk is controlled by entering into derivative transactions only with counterparties satisfying the criteria prescribed in the Policy. Appropriate limits are set for the counterparties taking into account their ability to honour obligations and the Bank enters into ISDA agreement with each counterparty.

iii. The Asset Liability Management Committee (ALCO) of the Bank oversees efficient management of these risks. The Bank's Mid-Office and Risk Control (MORC) Department at Treasury, now Market Risk Management Department (MRMD) independently identifies, measures, monitors market risk associated with derivative transactions, assists ALCO in controlling and managing these risks and reports compliance with policy prescriptions to the Risk Management Committee of the Board (RMCB) at regular intervals.

iv. The accounting policy for derivatives has been drawn-up in accordance with RBI guidelines, the details of which are presented under Schedule 17: Significant Accounting Policies (SAP) for the financial year 2011-12.

v. Interest Rate Swaps are mainly used at Foreign Offices for hedging of the assets and liabilities.

vi. Apart from hedging swaps, swaps at Foreign Offices consist of back to back swaps done at our Foreign Offices which are done mainly for hedging of FCNR deposits at Global Markets, Kolkata.

vii. Majority of the swaps were done with First class counterparty banks.

b) Segment Reporting:

1. Segment Identification

I. Primary (Business Segment)

The following are the primary segments of the Bank:- - Treasury

- Corporate / Wholesale Banking

- Retail Banking

- Other Banking Business

The present accounting and information system of the Bank does not support capturing and extraction of the data in respect of the above segments separately. However, based on the present internal, organisational and management reporting structure and the nature of their risk and returns, the data on the primary segments have been computed as under:

i. Treasury - The Treasury Segment includes the entire investment portfolio and trading in foreign exchange contracts and derivative contracts. The revenue of the treasury segment primarily consists of fees and gains or losses from trading operations and interest income on the investment portfolio.

ii. Corporate/Wholesale Banking - The Corporate/ Wholesale Banking segment comprises the lending activities of Corporate Accounts Group, Mid Corporate Accounts Group and Stressed Assets Management Group. These include providing loans and transaction services to corporate and institutional clients and further include non-treasury operations of foreign offices.

iii. Retail Banking - The Retail Banking Segment comprises of branches in National Banking Group, which primarily includes Personal Banking activities including lending activities to corporate customers having banking relations with branches in the National Banking Group. This segment also includes agency business and ATMs.

iv. Other Banking business - Segments not classified under (i) to (iii) above are classified under this primary segment.

II. Secondary (Geographical Segment)

i) Domestic Operations - Branches/Offices having operations in India

ii) Foreign Operations - Branches/Offices having operations outside India and offshore Banking units having operations in India

III. Pricing of Inter-segmental Transfers

The Retail Banking segment is the primary resource mobilising unit. The Corporate/Wholesale Banking and Treasury segments are recipient of funds from Retail Banking. Market related Funds Transfer Pricing (MRFTP) is followed under which a separate unit called Funding Centre has been created. The Funding Centre notionally buys funds that the business units raise in the form of deposits or borrowings and notionally sell funds to business units engaged in creating assets.

IV. Allocation of Expenses, Assets and Liabilities

Expenses incurred at Corporate Centre establishments directly attributable either to Corporate / Wholesale and Retail Banking Operations or to Treasury Operations segment, are allocated accordingly. Expenses not directly attributable are allocated on the basis of the ratio of number of employees in each segment/ratio of directly attributable expenses.

The Bank has certain common assets and liabilities, which cannot be attributed to any segment, and the same are treated as unallocated.

During the year, the Bank has further refined the segmental transfer pricing mechanism in order to report more relevant segment results. This change effects the segment results inter se and has no impact on the financials of the bank. The effect of the change on the segment results is not fairly determined.

c) Related Party Disclosures:

1. Related Parties

A. SUBSIDIARIES

i. DOMESTIC BANKING SUBSIDIARIES

1. State Bank of Bikaner & Jaipur

2. State Bank of Hyderabad

3. State Bank of Mysore

4. State Bank of Patiala

5. State Bank of Travancore

6. SBI Commercial and International Bank Ltd.

(up to 28.07.2011).

ii. FOREIGN BANKING SUBSIDIARIES

1. SBI (Mauritius) Ltd.

2. State Bank of India (Canada)

3. State Bank of India (California)

4. Commercial Bank of India LLC, Moscow

5. PT Bank SBI Indonesia

6. Nepal SBI Bank Ltd.

iii. DOMESTIC NON-BANKING SUBSIDIARIES

1. SBI Capital Markets Ltd.

2. SBI DFHI Ltd.

3. SBI Mutual Funds Trustee Company Pvt. Ltd.

4. SBI CAP Securities Ltd.

5. SBI CAPS Ventures Ltd.

6. SBI CAP Trustees Company Ltd.

7. SBI Cards and Payment Services Pvt. Ltd.

8. SBI Funds Management Pvt. Ltd.

9. SBI Life Insurance Company Ltd.

10. SBI Pension Funds Pvt. Ltd.

11. SBI - SG Global Securities Services Pvt. Ltd.

12. SBI Global Factors Ltd.

13. SBI General Insurance Company Ltd

14. SBI Payment Services Pvt. Ltd.

iv. FOREIGN NON-BANKING SUBSIDIARIES

1. SBICAP (UK) Ltd.

2. SBI Funds Management (International) Pvt. Ltd.

3. SBICAP (Singapore) Ltd.

B. JOINTLY CONTROLLED ENTITIES

1. GE Capital Business Process Management Services Pvt. Ltd.

2. C-Edge Technologies Ltd.

3. Macquarie SBI Infrastructure Management Pte. Ltd.

4. Macquarie SBI Infrastructure Trustees Ltd.

5. SBI Macquarie Infrastructure Management Pvt. Ltd.

6. SBI Macquarie Infrastructure Trustees Pvt. Ltd.

7. Oman India Joint Investment Fund - Management Company Pvt. Ltd.

8. Oman India Joint Investment Fund - Trustee Company Pvt. Ltd.

C. ASSOCIATES

i. Regional Rural Banks

1. Andhra Pradesh Grameena Vikas Bank

2. Arunachal Pradesh Rural Bank

3. Cauvery Kalpatharu Grameena Bank

4. Chhattisgarh Gramin Bank

5. Deccan Grameena Bank

6. Ellaquai Dehati Bank

7. Meghalaya Rural Bank (Formerly known as Ka Bank Nongkyndong Ri Khasi Jaintia)

8. Krishna Grameena Bank

9. Langpi Dehangi Rural Bank

10. Madhya Bharat Gramin Bank

11. Malwa Gramin Bank

12. Marwar Ganganagar Bikaner Gramin Bank

13. Mizoram Rural Bank

14. Nagaland Rural Bank

15. Parvatiya Gramin Bank

16. Purvanchal Kshetriya Gramin Bank

17. Samastipur Kshetriya Gramin Bank

18. Saurashtra Gramin Bank

19. Utkal Gramya Bank

20. Uttaranchal Gramin Bank

21. Vananchal Gramin Bank

22. Vidisha Bhopal Kshetriya Gramin Bank

ii. Others

1. SBI Home Finance Ltd.

2. The Clearing Corporation of India Ltd.

3. Bank of Bhutan Ltd.

D. Key Management Personnel of the Bank

1. Shri Pratip Chaudhuri, Chairman (from 07.04.2011)

2. Shri R. Sridharan, Managing Director & Group Executive (A& S) (up to 30.06.2011)

3. Shri Hemant G. Contractor Managing Director & Group Executive (International Banking) (from 07.04.2011)

4. Shri Diwakar Gupta, Managing Director & Chief Financial Officer (from 07.04.2011)

5. Shri A. Krishna Kumar, Managing Director & Group Executive (National Banking) (from 07.04.2011)

6. Shri O. P. Bhatt, Chairman (up to 31.03.2011)

7. Shri S. K. Bhattacharyya, Managing Director (up to 31.10.2010)

2. Parties with whom transactions were entered into during the year

No disclosure is required in respect of related parties, which are "State-controlled Enterprises" as per paragraph 9 of Accounting Standard (AS) 18. Further, in terms of paragraph 5 of AS 18, transactions in the nature of Banker-Customer relationship have not been disclosed including those with Key Management Personnel and relatives of Key Management Personnel.

5. With regard to disclosures relating to Micro, Small & Medium Enterprises under the Micro, Small & Medium Enterprises Development Act, 2006, there have been no reported cases of delayed payments or of interest payments due to delay in such payments to Micro, Small & Medium Enterprises.

3. Letter of Comfort issued for Subsidiaries

The Bank has issued letters of comfort on behalf of its subsidiaries. Outstanding letters of comfort as on 31st March 2012 aggregate to Rs 2086.56 Crores (Previous Year: Rs 1,411.20 Crores). In the Bank's assessment no financial impact is likely to arise.

4. Provisioning Coverage Ratio:

The Provisioning to Gross Non-Performing Assets ratio of the Bank as on 31st March 2012 is 68.10% (Previous Year 64.95%).

5. Unamortised Gratuity Liabilities

In accordance with RBI circular no. DBOD.BP.BC.80/21.04.018/2010-11 dated February 9, 2011 the Bank has opted to amortise the additional liability on account of enhancement in Gratuity limit over a period of 5 years beginning with the financial year ended March 31, 2011. Accordingly the Bank has charged a sum of Rs 100 crores to the Profit and Loss Account, being the proportionate amount for the financial year ended March 31, 2012. The unpaid liability of Rs 300 crore as on March 31, 2012 will be amortised proportionately in accordance with the above circular.

6. Amalgamation of SBI Commercial and International Bank Limited Consequent to the notification of the "Acquisition of State Bank of India Commercial and International Bank Ltd Order, 2011" issued by the Government of India, the undertaking of State Bank of India Commercial and International Bank Ltd (SBICI) stands transferred to and vests in State Bank of India ("the Bank"), with effect from July 29, 2011, the effective date. The results for the year ended March 31, 2012 include the results of operations of the erstwhile SBICI for the period from July 29, 2011 to the year end March 31, 2012 and the results of the Bank are not comparable to that extent.

The amalgamation of State Bank of India Commercial and International Bank Ltd (SBICI) with the Bank has been accounted for under the pooling of interest method as prescribed in Accounting Standard 14 "Accounting for Amalgamations". Pursuant thereto, all assets and liabilities including reserves of SBICI as on the effective date have been transferred and vested in the Bank. The Bank held 100% of the share capital of the SBICI on the effective date, which stands cancelled. No shares were exchanged to effect the amalgamation.

The Assets and Liabilities of e SBICI Bank Limited taken over are as under:-

7. Inter Office Accounts

Inter Office Accounts between branches, controlling offices and local head offices and corporate centre establishments are being reconciled on an ongoing basis and no material effect is expected on the profit and loss account of the current year.

8. Disbursement of Special Balancing Allowance

During the year, Rs 908 cores of arrears of Special Balancing Allowance was disbursed out of the provision held for Special Balancing Allowance. An amount of Rs 41.11 crores was written back to the Profit & Loss account during the year ended 31st March 2012, being excess amount of provision held for Special Balancing Allowance.

9. Countercyclical Provisioning Buffer

In accordance with the guidelines issued by RBI vide their circular no. DBOD. No. BP.BC.87/21.04.048/2010-11 dated 21st April, 2011 and the dispensation granted to the Bank, the Bank has made an additional provision of Rs 1,100.00 crores for the half year ended September 2011 thus achieving the required Countercyclical Provisioning Buffer of Rs 3,430.00 crores as on September 30, 2011 as per the above circular.

10. Additional Provision for NPAs

During the year, the Bank has voluntarily made an additional provision of Rs 1,350 crores against certain non performing domestic advances to provide for the estimated loss in collectible amount against such advances.

11. Previous period figures have been regrouped/reclassified, wherever necessary, to conform to current period classification. In cases where disclosures have been made for the first time in terms of RBI guidelines/Accounting Standards, previous year's figures have not been mentioned.