Bank of baroda

We may experience delays in enforcing our collateral when borrowers default on their obligations to us, which
may result in failure to recover the expected value of the collateral.
We take collateral for a large proportion of our loans, including pledge/hypothecation of inventories, receivables and
other current assets, and in some cases, charges on fixed assets and financial assets, such as marketable securities.
As of September 30, 2005, 72.66% of net advances were secured by tangible assets, such as properties, plant and
machinery, inventory, receivables, other current assets. Foreclosure of such securities generally requires court or
tribunal intervention that may cause delay leading to deterioration in the quality and value of such securities. Therefore,
we may not be able to realize the full value of securities in all cases.
In addition, the RBI has set forth guidelines on Corporate Debt Restructuring (“CDR”). The guidelines envisage that for
debt amounts of Rs. 200 million and above, lenders holding greater than 75% of such debt can decide to restructure the
debt and such a decision would be binding on the remaining lenders. In situations where we own 25% or less of the debt
of a borrower, we could be forced to agree to restructuring of debt, which may be time consuming, to reduce interest
rates, or write-off portions of outstanding amounts, in preference to foreclosure of security or a one-time settlement. As
of September 30, 2005, the total amount of loan assets under CDR was Rs. 9,801.51 million, out of which standard
assets were Rs. 8,459.53 million, sub-standard assets were Rs. 147.59 million and doubtful assets were Rs. 1,085.97
million.
Our funding is primarily through short-term and medium-term deposits and if depositors do not roll over
deposited funds on maturity or if we are unable to continue to increase our deposits, our business could be
adversely affected.
Most of our funding requirements are met through short-term and medium-term funding sources, primarily in the form
of deposits. As of September 30, 2005, 84.78% of our funding consisted of deposits of which 32.48% consisted of
current deposits and savings deposits. As of September 30, 2005, 52.30% of our total funds comprised of term
deposits. A portion of our assets have long-term maturities, creating a potential for funding mismatches. In our experience,
a substantial portion of our customer deposits have been rolled over on maturity and have been, over time, a stable
source of funding. However, in the event that a substantial number of our depositors do not roll over deposited funds on
maturity, our liquidity position and business could be adversely affected. If we are unable to maintain or increase our
base of low-cost deposits, our overall cost of funds could increase, which could have an adverse effect on our
business and our ability to grow.