Okay guys, found the solution and fixed the problem.
The problem was not unique to me but rather happened with quite a few people with corrupt bios chips in z77 mobos. (I am still unsure of the extent of the problem).
Actually, there were many other options also which were missing in the bios eg,
Turbo ratios, pll overvoltage.. There was no mention of the
igpu or any of its options.
There are many solutions available on the internet but I'll post the one that worked for me.
[Official] ASUS SABERTOOTH Z77 Owners Thread/Club
Glad to have avoided rma and who knows what-else.
Thanks to everyone who chipped in their suggestions.