Dear Members, I consider it my proud privilege to welcome you all to this 96th Annual General Meeting of the Bank. The Annual Report of the Bank for the Financial Year ended March 31, 2002, is already with you and as conscientious members of the Bank, I am sure you all would have spent time perusing through the Report, which is now placed to you for adoption at this meeting.

Operating Scenario: The Bank’s operations, during the Financial Year under report, has to be viewed against the collapse of the American economy post September 11, 2001, which in turn pulled the global economy into deep recession. The terrorist attacks in New York on September 11, 2001 and later, on the Indian Parliament on December 13, 2001, combined with a collapse of the stock market the world over affected the Indian economy adversely leading to a very significant drop in inflation rates. The banking industry consequently was adversely impacted with aggregate deposits of scheduled commercial banks, recording a drop in growth rate at 14.3% against 18.4% recorded in the previous financial year. Lending rates remained soft throughout the Financial Year under report affecting spreads radically with Urban Co-operative Banks being unable to pass on the impact by lowering their own deposit rates appreciably. Besides, unlike Scheduled Commercial Banks, which in the absence of banking opportunities deployed their surplus resources remuneratively in investments and consequently were able to generate substantial trading profits due to the general softening of interest rates. Urban Co-operative Banks, on the other hand, were not able to exploit this opportunity to their advantage for a variety of reasons. The most significant of these being the absence of level playing field in their case coupled with the strictures imposed on trading by RBI. Despite these adversities, I am proud to record that your Bank has acquitted itself honourably, given it’s performance in the financial year under report.

Corporate Governance : Members are aware that your Bank has always been pro-active in adopting total transparency in disclosure of its operations. I am proud to inform you that this assertion on my part has been further endorsed by the Reserve Bank of India Inspectors during their interface with the Board of Directors recently, after conclusion of their yearly inspection of the Bank, for the period July 2001 to June 2002. I would like to take this opportunity to assure members that the Bank will always live up to the philosophy of Corporate Governance which demands a high degree of transparency, accountability and responsibility on the part of your Directors, the Management and Staff of the Bank alike. This philosophy, if I may say so, was also enshrined by Late Shri Rao Bahadur Talmaki, the founding father of the Bank.

The Agenda Ahead : The Banking Industry, as you all are aware, is in the throes of dramatic changes presently and one can clearly see that in the times to come, it will be a battle of survival of the fittest. The continued deregulation in the Banking Industry and dilution of equity by Government in Nationalised Banks, have rendered intense competition from a hitherto sleeping tigers within the banking industry. All of a sudden, co-operative banks have not only to match the competition rendered by Private and Foreign Banks to safeguard their turf but have now to contend with the aggressive marketing efforts on the part of Nationalised Banks, making the task even more difficult, than in the past. Continued dilution of banking norms, rates on deposits and loans have provided Banks the required flexibility and freedom in pricing their products in line with the prevailing marketing trends. This in turn has brought in intense competition with Banks trying to match market trends by bringing down their cost of deposits and margins on traditional banking business. The future survival of Banks, if I may say so, would be determined more by way of fee based income and operational efficiency across the Board, so that transaction costs in doing banking business are shorn to the barest minimum. Your Bank would be increasingly required to re-orient its strategic focus to ensure that it rejigs its business profile by introducing stringent cost reduction in its operations and becomes increasingly customer centric in its approach. In order to live upto the above requirements and to achieve excellence in our service standards, the Bank has re-engineered the way it conducts its business and to this end, your Board has introduced a total revamp and re-organisation of the Bank’s organisational structure, so as to bring about greater element of competition and accountability within the organisation. Increasing emphasis has also been laid by your Board in the area of risk management. To this end, the Bank’s Management has set in place the asset liability management system, as prescribed by the RBI. The necessary software to determine various risks attendant to banking business was outsourced by the Bank and is presently operational. Your Board hopes that with the synchronisation of the asset-liability management software between the Bank’s Administrative Office and its branches, the full benefits thereafter would accrue, helping the Bank to understand its risk profile better and in turn bring down operating costs appreciably.

Besides, with the changes being now contemplated within the Operations Department an element of healthy competition would accrue between our branches in achieving and surpassing their budgetary targets as part of the re-orgainsation. Lesser number of branches under the administrative control of the operating heads would ensure greater time management on their part, thereby ensuring more focused attention to the branches under their administrative control. This and several other changes, in the times to come, I sincerely believe would, put the Bank on a firm pedestal, to face the challenges that lie ahead.

Corporate Office : I had briefly touched on the Bank’s Corporate Office in the last financial year’s Annual Report. I would like to avail this opportunity to let our members know that the Bank’s Corporate Office is now ready for occupation and we expect to formally inaugurate the new building on the Dassera day i.e. October 15, 2002. This would culminate the aspirations of the Bank’s members to have a corporate edifice of its own, so that this building could reflect the hopes and aspirations of all and would help bring down operating costs significantly by housing all the Bank’s Departments at the corporate level under one roof.

Personnel : I would be failing in my duty if I do not record the Board’s sincere appreciation to the contributions made by the Management, Officers and members of the Staff. The noteworthy performance as recorded by the Bank during the financial year under review has to a large measure been due to their single minded devotion and commitment. The Employee Productivity of Rs.3.04 crores per employee as on March 31, 2002 is amongst the highest recorded by any Urban Co-operative Bank.

The Bank’s Annual Report Cover : The Annual Report cover is a continuation of the theme set out in the last year’s cover. While last year it was the symbolic clock with the caption “We are around you – through the time”, this year’s cover epitomises the Bank’s association in shaping the common man’s life over the last four generations. To my mind this records succinctly that the Bank has withstood the various upheavals and vicissitudes over these last four generations and has emerged over these years as a strong and dominant player in the Urban Co-operative Banking Movement.

Acknowledgement : Before I conclude, I take this opportunity on behalf of the Board to express our gratitude to our Shareholders, Depositors, Borrowers and Well-wishers for their valuable support.

Your Bank is obliged to the Officers of the Reserve Bank of India, especially Urban Banks Department, Central Registrar of Co-operative Societies, New Delhi, Commissioner of Co-operation, Pune, the Divisional Joint Registrar, Mumbai, and the officials of the Co-operative Departments in the State of Maharashtra, Karnataka and Goa for their invaluable guidance and assistance from time to time.

The Board is grateful to members for helping your Bank in augmenting its business and for reposing their faith in the Bank.

The Board is also thankful to the Bank’s Legal Advisors, Management and Tax Consultants, Architects, Concurrent & Statutory Auditors for their co-operation and guidance.

I take this opportunity to also convey my sincere thanks to the various authorities, institutions and individuals who have extended their support and helped your Bank to grow from strength to strength.

Suresh S. Hemmady

Chairman