Bank of baroda

Banking is a heavily regulated industry and material changes in the regulations that govern us could adversely
affect our business.
Banks in India are subject to detailed supervision and regulation by RBI. In addition, banks are subject generally to
changes in Indian law, as well as to changes in regulation and government policies and accounting principles. It has
recently been indicated in the press that the laws and regulations governing the banking sector could change in the
near future and any such changes could adversely affect our business, our future financial performance, our shareholders’
funds and the price of our equity shares, by requiring a restructuring of our activities, increasing costs or otherwise.
There are a number of restrictions under the Bank Acquisition Act, the Bank Regulations, the Nationalised Bank
Scheme and various RBI notifications, press notes and circulars that affect our operating flexibility and affect or
restrict the rights of investors. These restrictions are different from those normally applying to shareholders of companies
incorporated under the Companies Act, and include the following:
We can increase our paid-up capital only with the consent of the Government and in consultation with RBI and the
shareholding of the Government cannot go below 51% of the paid-up capital.
The Government has control over policy matters relating to RBI and has the power to caution or prohibit us from
entering into any particular transaction or class of transactions.
Foreign investment is subject to an overall statutory limit of 20% of our paid up capital. RBI has fixed a cut-off point
at 18% for the purposes of effective monitoring. Once the aggregate net purchases of equity shares of the respec-
tive bank by FIIs/NRIs/PIOs reaches the cut-off point, which is 2% below the overall limit of 20%, RBI cautions all
designated bank branches so as not to purchase any more equity shares in the respective bank on behalf of NRIs/
PIOs without prior approval of RBI.
No shareholder, other than the Government, is entitled to exercise voting rights in respect of any shares held by
him in excess of 1% of the total voting rights of all our shareholders.
There are restrictions on payment of dividends and on rights relating to unclaimed dividends.
Certain restrictions on opening a new place of business and transferring an existing place of business require the
approval of RBI, which may hamper the operational flexibility of the Bank.
We have to maintain assets in India equivalent to not less than 75% of our net demand and time liabilities in India,
which in turn may restrict us from building overseas asset portfolios and exploiting overseas business opportuni-
ties.
There are no provisions for requiring us to send compulsory statutory reports to our shareholders prior to a general
meeting of the shareholders and our shareholders do not have the right to approve our accounts, the report of our

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BANK OF BARODA
Board of Directors on our activities for the period covered by the accounts and the auditors’ report on our accounts.
However, we are required by our listing agreements with the Stock Exchanges to send annual reports to our
shareholders prior to our annual general meeting.
Rights of minority shareholders statutorily available in the case of a company incorporated under the Companies
Act are not available to our shareholders.
Any change in the laws and regulations governing the banking sector in India may adversely affect our customer-
base, our revenues and our profitability.