Home  »  Company  »  Central Bank  »  Quotes  »  Accounting Policy
Enter the first few characters of Company and click 'Go'

Accounting Policies of Central Bank of India Company

Mar 31, 2015

1. Accounting Conventions:

The financial statements have been prepared by following the going concern concept on the historical cost basis except in respect of the Revaluation of Premises and confirm, in all material aspects, to Generally Accepted Accounting Principles (GAAP) in India, which encompasses applicable statutory provisions, regulatory norms prescribed by Reserve Bank of India (RBI), Accounting Standards (AS) and pronouncements issued by The Institute of Chartered Accountants of India (ICAI) and the prevailing practices within the Banking industry in India.

2. Transactions involving Foreign Exchange:

2.1 Monetary Assets and Liabilities in Foreign Currencies are translated at the Exchange Rates prevailing at the year end as notified by FEDAI and the resultant Profit/ Loss is recognised in Profit and Loss Account.

2.2 Income and Expenditure items are translated at the exchange rates ruling on the respective date of transactions.

2.3 Guarantees, Letters of Credit, Acceptances, Endorsements, and other obligations in Foreign Currencies are translated at the year end rates notified by FEDAI.

2.4 Outstanding Forward Contracts are translated at the year end rates notified by FEDAI and the resultant profit/loss is recognized in Profit and Loss Account.

3. Investments:

3.1 In accordance with the guidelines issued by the Reserve Bank of India, Investments are classified into "Held to Maturity", "Held for Trading" and "Available for Sale" categories. However, for disclosure in the Balance Sheet, investments are classified under the following heads :

i) Government Securities

ii) Other Approved Securities

iii) Shares

iv) Debentures and Bonds

v) Subsidiaries and sponsored institutions and

vi) Others (UTI Shares, Commercial Papers and units of Mutual Funds.)

3.2 Basis of Classification :

Classification of an Investment is done at the time of purchase into the following categories:

i) Held to Maturity

These comprise of investments, the bank intends to hold on till maturity.

ii) Held for Trading

Securities which are principally held for resale within 90 days from the date of purchase.

iii) Available for Sale

Investments that cannot be classified in the above categories.

3.3 Transfer of Securities between categories :

The transfer/ shifting of securities between the three categories of investments is accounted at the lower of acquisition cost/ book value or market value on the date of the transfer. The depreciation, if any, on such transfer is fully provided for.

3.4 Valuation :

a) Held to Maturity :

The investments classified under this category are valued at acquisition cost. The excess of acquisition cost / book value over the face value is amortised over the remaining period of maturity on day to day basis.

b) Available for sale :

Investments under this category are marked to market, scrip-wise, at quarterly intervals as under:

i) Central Government Securities

At market price as per quotation put out by Stock Exchange / FIMMDA / PDAI.

ii) State Government Securities,

Securities Guaranteed by Central / State Government, PSU Bonds

On appropriate yield to maturity basis.

iii) Treasury Bills/ Certificates of Deposits/ Commercial Paper

At carrying cost

iv) Equity Share

a)Quoted : At market price.

b)Unquoted: At book value per share, if latest (Not more

than one year old) Balance Sheet is available, or Re. 1.00 per company if latest Balance Sheet is not available.

v) Preference Share

a) Quoted : At market price.

b) Unquoted: On appropriate yield to maturity.

vi) Debentures and Bonds

a) Quoted : At market price.

b) Unquoted: On appropriate yield to maturity.

vii) Mutual Fund

a) Quoted : At market price.

b) Unquoted: At repurchase price or Net Asset Value

(where repurchase price is not available).

viii) Venture Capital

Declared NAV or break up NAV as per audited balance sheet which is not more than 18 months old. If NAV/ audited financials are not available for more than 18 months continuously then at Rs.1/- per VCF.

The net depreciation under each classification is provided for, without adjusting the book value of the securities and net appreciation, if any, is ignored.

c) Held for Trading :

Investments under this category are valued at monthly intervals at market rates, wherever available, or as per the prices declared by FIMMDA. The net depreciation under each classification is provided for, without adjusting the book value of the securities and net appreciation, if any, is ignored.

3.5 Determination of Cost :

Cost of investments is determined on the basis of Weighted Average Cost method.

3.6 Income Recognition :

i) The Profit or loss on sale/ redemption of investments is taken to the Profit and Loss Account. However, in case of profit on sale/ redemption of investments from ''Held to Maturity'' category, an equivalent amount is appropriated to the ''Capital Reserve''.

ii) In respect of securities included in any of the three categories of investments where interest/ principal is in arrears, for more than 90 days, income is not reckoned and appropriate provision for the depreciation in the value of the investments is made, as per prudential norms applicable to non-performing advances. Debentures/ Bonds in the nature of advances are subjected to usual prudential norms applicable to advances.

iii) State Government guaranteed exposures is classified as Sub Standard/ Doubtful/ Loss, as the case may be if interest and/ or principal or any other amount due to the Bank remains overdue for more than 90 days and necessary provisions are made as per Prudential Norms.

iv) Brokerage, incentive, front-end fees etc., received on purchase of securities are reduced from the cost of investments.

v) Expenses such as brokerage, fees, commission or taxes incurred at the time of acquisition of securities is charged to revenue.

vi) The broken period interest on sale or purchase of securities is treated as revenue item.

4. Derivatives

Derivatives used for hedging are accounted as under :

i) Marked to market in cases where the underlying Assets/ Liabilities are marked to market. The resultant gain/ loss is recognised in the Profit & Loss Account.

ii) Interest Rate Swaps which hedges interest bearing assets or liabilities are accounted for on accrual basis in cases where underlying Asset/ Liabilities are not marked to market.

iii) Gain or losses on the termination of Swaps are recognised over the shorter of the remaining contractual life of the Swap or the remaining life of the assets/ liabilities.

5. Advances:

5.1 Advances are classified as Standard, Sub-Standard, Doubtful or Loss Assets and Provisions required in respect thereof are made as per the Prudential Norms prescribed by the Reserve Bank of India.

5.2 Recoveries in NPA account is first appropriated towards the principal irregularity except in case of suit filed, decreed accounts and compromise cases where recovery is first appropriated towards principal or as per the terms of decree/ settlement.

5.3 Advances are shown net of provisions (in case of NPA), Unrealised Interest, amount recovered from borrowers held in Sundries and amount recovered from CGTSI/ ECGC.

Provision for Standard Assets is included in Other Liabilities and Provisions- Others.

5.4 Financial Assets sold are recognized as under:

5.4.1 In case the sale is at a price lower than the Net Book Value (NBV) the shortfall is charged to the Profit and Loss Account.

5.4.2 If the sale to SC/RC is at a price below the NBV (i.e. book value less provisions held), the shortfall is debited to the Profit and Loss account of that year.

5.4.3 In case the sale is at a price higher than the NBV on cash basis, the surplus is taken to the credit of Profit and Loss Account.

5.4.4 If the sale to SC/RC is for a value higher than the NBV the excess provision to the extent of cash recovery is credited to the Profit and Loss Account and balance excess provision is retained to be utilised to meet shortfall/loss on account of sale of other financial assets to SC/RC.

6. Fixed Assets/Depreciation:

6.1 Fixed Assets are depreciated under ''Written Down Value Method'' at the following rates (other than computers which are depreciated on Straight Line Method):

i) Premises

At varying rates based on estimated life

ii) Furniture, Lifts, Safe Vaults 10%

iii) Vehicles 20%

iv) Air conditioners, Coolers, Typewriters etc. 15%

v) Computers including Systems Software 33.33%

(Application Software is charged to the Revenue during the year of acquisition.)

6.2 In the case of assets, which have been revalued, the depreciation is provided on the revalued amount and the incremental depreciation attributable to the revalued amount is adjusted to the ''Revaluation Reserve''.

6.3 Depreciation on additions to assets, made upto 30th September is provided for the full year and on additions made thereafter, is provided for the half year. No depreciation is provided on assets sold before 30th September and depreciation is provided for the half year for assets sold after 30th September.

6.4 Cost of leasehold land is amortised over the period of lease. In the case of revaluation, the difference between the original cost and revalued amount is amortised over the remaining period of the lease and is adjusted to the ''Revaluation Reserve''.

6.5 Where it is not possible to segregate the cost of Land and Premises, Depreciation is charged on the composite cost.

7. Staff Benefits:

7.1 Annual contribution to Gratuity, Pension Funds and Leave Encashment are determined on the basis of actuarial valuation and the amount is recognized in the books of account of the Bank as per the liability estimated by the Actuary.

7.2 In respect of employees who have opted for Provident Fund Scheme, a matching contribution is made.

8. Recognition of Income and Expenditure:

8.1 Income/ Expenditure is generally accounted for on accrual basis except for income to be accounted for on cash basis as per regulatory provisions.

8.2 In accordance with the guidelines issued by the Reserve Bank of India vide circular No. DBOD.No.BP. BC.89/21.4.018/2002-03 dated 29.03.2003, prior period disclosures are made in respect of any item which exceeds one percent of the total income/total expenditure.

8.3 Provision for interest payable on overdue deposits is made as per Reserve Bank of India guidelines.

9. Income Tax:

The provision for tax for the year comprises of current tax liability computed in accordance with the applicable tax laws and the deferred tax which recognizes, timing differences between taxable income and accounting income that originate in one period and capable of reversal in one or more subsequent periods. Deferred tax assets are not recognized unless there is ''virtual certainty'' that sufficient future taxable income will be available against which such deferred tax assets will be realized. Disputed tax liabilities are accounted for in the year of finality of assessment/ appellate proceedings and till such times they are shown as contingent liability.


Mar 31, 2014

1. Accounting Conventions:

The financial statements have been prepared by following the going concern concept on the historical cost basis except in respect of the Revaluation of Premises and conform, in all material aspects, to Generally Accepted Accounting Principles (GAAP) in India, which encompasses applicable statutory provisions, regulatory norms prescribed by Reserve Bank of India (RBI), Accounting Standards (AS) and pronouncements issued by The Institute of Chartered Accountants of India (ICAI) and the prevailing practices within the Banking industry in India.

2. Transactions involving Foreign Exchange:

2.1 Monetary Assets and Liabilities in Foreign Currencies are translated at the Exchange Rates prevailing at the year end as notified by FEDAl and the resultant profit/ Loss is recognised in profit and Loss Account.

2.2 Income and Expenditure items are translated at the exchange rates ruling on the respective date of transactions.

2.3 Guarantees, Letters of Credit, Acceptances, Endorsements, and other obligations in Foreign Currencies are translated at the year end rates notified by FEDAl.

2.4 Outstanding Forward Contracts are translated at the year end rates notified by FEDAI and the resultant profit/loss is recognized in profit and Loss Account.

3. Investments:

3.1 In accordance with the guidelines issued by the Reserve Bank of India, Investments are classified into "Held to Maturity", "Held for Trading" and "Available for Sale" categories. However, for disclosure in the Balance Sheet, investments are classified under the following heads :

i) Government Securities

ii) Other Approved Securities

iii) Shares

iv) Debentures and Bonds

v) Subsidiaries and sponsored institutions and

vi) Others (UTI Shares, Commercial Papers and units of Mutual Funds.)

3.2 Basis of Classification :

Classification of an Investment is done at the time of purchase into the following categories:

i) Held to Maturity

These comprise of investments, the bank intends to hold on till maturity.

ii) Held for Trading

Securities which are principally held for resale within 90 days from the date of purchase.

iii) Available for Sale

Investments that cannot be classified in the above categories.

3.3 Transfer of Securities between categories :

The transfer/ shifting of securities between the three categories of investments is accounted at the lower of acquisition cost/ book value or market value on the date of the transfer. The depreciation, if any, on such transfer is fully provided for.

3.4 Valuation :

a) Held to Maturity :

The investments classified under this category are valued at acquisition cost. The excess of acquisition cost / book value over the face value is amortised over the remaining period of maturity on day to day basis.

The net depreciation under each classification is provided for, without adjusting the book value of the securities and net appreciation, if any, is ignored.

c) Held for Trading :

Investments under this category are valued at monthly intervals at market rates, wherever available, or as per the prices declared by FIMMDA. The net depreciation under each classification is provided for, without adjusting the book value of the securities and net appreciation, if any, is ignored.

3.5 Determination of Cost :

Cost of investments is determined on the basis of Weighted Average Cost method.

3.6 Income Recognition :

i) The profit or loss on sale/ redemption of investments is taken to the profit and Loss Account. However, in case of profit on sale/ redemption of investments from ''Held to Maturity'' category, an equivalent amount is appropriated to the ''Capital Reserve''.

ii) In respect of securities included in any of the three categories of investments where interest/ principal is in arrears, for more than 90 days, income is not reckoned and appropriate provision for the depreciation in the value of the investments is made, as per prudential norms applicable to non-performing advances. Debentures/ Bonds in the nature of advances are subjected to usual prudential norms applicable to advances.

iii) State Government guaranteed exposures is classified as Sub Standard/ Doubtful/ Loss, as the case may be if interest and/ or principal or any other amount due to the Bank remains overdue for more than 90 days and necessary provisions are made as per Prudential Norms.

iv) Brokerage, incentive, front-end fees etc., received on purchase of securities are reduced from the cost of investments.

v) Expenses such as brokerage, fees, commission or taxes incurred at the time of acquisition of securities is charged to revenue.

vi) The broken period interest on sale or purchase of securities is treated as revenue item.

4. Derivatives

Derivatives used for hedging are accounted as under :

i) Marked to market in cases where the underlying Assets/ Liabilities are marked to market. The resultant gain/ loss is recognised in the profit & Loss Account.

ii) Interest Rate Swaps which hedges interest bearing assets or liabilities are accounted for on accrual basis in cases where underlying Asset/ Liabilities are not marked to market.

iii) Gain or losses on the termination of Swaps are recognised over the shorter of the remaining contractual life of the Swap or the remaining life of the assets/ liabilities.

5. Advances:

5.1 Advances are classified as Standard, Sub-Standard, Doubtful or Loss Assets and Provisions required in respect thereof are made as per the Prudential Norms prescribed by the Reserve Bank of India.

5.2 Recoveries against Non-performing Assets (NPA) were first appropriated towards interest till June 30, 2013 and w.e.f. July 1, 2013, recovery in NPA account is first appropriated towards the principal irregularity except in case of suit fled, decreed accounts and compromise cases where recovery is first appropriated towards principal or as per the terms of decree/ settlement.

5.3 Advances are shown net of provisions (in case of NPA), Unrealised Interest, amount recovered from borrowers held in Sundries and amount recovered from CGTSI/ ECGC.

Provision for Standard Assets is included in Other Liabilities and Provisions- Others.

5.4 Financial Assets sold are recognized as under:

5.4.1 In case the sale is at a price lower than the Net Book Value (NBV) the shortfall is charged to the profit and Loss Account.

5.4.2 If the sale to SC/RC is at a price below the NBV (i.e. book value less provisions held), the shortfall is debited to the profit and Loss account of that year.

5.4.3 In case the sale is at a price higher than the NBV on cash basis, the surplus is taken to the credit of profit and Loss Account.

5.4.4 If the sale to SC/RC is for a value higher than the NBV the excess provision to the extent of cash recovery is credited to the profit and Loss Account and balance excess provision is retained to be utilised to meet shortfall/ loss on account of sale of other financial assets to SC/RC.

6. Fixed Assets/Depreciation:

6.1 Fixed Assets are depreciated under ''Written Down Value Method'' at the following rates (other than computers which are depreciated on Straight Line Method):

i) Premises At varying rates based on estimated life

ii) Furniture, Lifts, Safe Vaults 10%

iii) Vehicles 20%

iv) Air conditioners, Coolers, Typewriters etc. 15%

v) Computers including Systems Software 33.33%

(Application Software is charged to the Revenue during the year of acquisition.)

6.2 In the case of assets, which have been revalued, the depreciation is provided on the revalued amount and the incremental depreciation attributable to the revalued amount is adjusted to the ''Revaluation Reserve''.

6.3 Depreciation on additions to assets, made upto 30th September is provided for the full year and on additions made thereafter, is provided for the half year. No depreciation is provided on assets sold before 30th September and depreciation is provided for the half year for assets sold after 30th September.

6.4 Cost of leasehold land is amortised over the period of lease. In the case of revaluation, the difference between the original cost and revalued amount is amortised over the remaining period of the lease and is adjusted to the ''Revaluation Reserve''.

6.5 Where it is not possible to segregate the cost of Land and Premises, Depreciation is charged on the composite cost.

7. Staff Benefits:,

7.1 Annual contribution to Gratuity, Pension Funds and Leave Encashment are determined on the basis of actuarial valuation and the amount is recognized in the books of account of the Bank as per the liability estimated by the Actuary.

7.2 In respect of employees who have opted for Provident Fund Scheme, a matching contribution is made.

8. Recognition of Income and Expenditure:

8.1 Income/ Expenditure is generally accounted for on accrual basis except for income to be accounted for on cash basis as per regulatory provisions.

8.2 In accordance with the guidelines issued by the Reserve Bank of India vide circular No. DBOD.No.BP. BC.89/21.4.018/2002-03 dated 29.03.2003, prior period disclosures are made in respect of any item which exceeds one percent of the total income/total expenditure.

8.3 Provision for interest payable on overdue deposits is made as per Reserve Bank of India guidelines.,

9. Income Tax:,

The provision for tax for the year comprises of current tax liability computed in accordance with the applicable tax laws and the deferred tax which recognizes, timing differences between taxable income and accounting income that originate in one period and capable of reversal in one or more subsequent periods. Deferred tax assets are not recognized unless there is ''virtual certainty'' that sufficient future taxable income will be available against which such deferred tax assets will be realized. Disputed tax liabilities are accounted for in the year of finality of assessment/ appellate proceedings and till such times they are shown as contingent liability.


Mar 31, 2013

1. Accounting Conventions:

The financial statements have been prepared by following the going concern concept on the historical cost basis except as modified by the Revaluation of Premises and conform, in all material aspects, to Generally Accepted Accounting Principles (GAAP) in India, which encompasses applicable statutory provisions, regulatory norms prescribed by Reserve Bank of India (RBI), Accounting Standards (AS) and pronouncements issued by The Institute of Chartered Accountants of India (ICAI) and the prevailing practices within the Banking industry in India.

2. Transactions involving Foreign Exchange:

2.1 Monetary Assets and Liabilities in Foreign Currencies are translated at the Exchange Rates prevailing at the year end as notified by FEDAl and the resultant Profit/ Loss is recognised in Profit and Loss Account.

2.2 Income and Expenditure items are translated at the exchange rates ruling on the respective date of transactions.

2.3 Guarantees, Letters of Credit, Acceptances, Endorsements, and other obligations in Foreign Currencies are translated at the year end rates notified by FEDAl.

2.4 Outstanding Forward Contracts are translated at the year end rates notified by FEDAI and the resultant profit/ loss is recognized in Profit and Loss Account.

3. Investments:

3.1 In accordance with the guidelines issued by the Reserve Bank of India, Investments are classified into "Held to Maturity", "Held for Trading" and "Available for Sale" categories. However, for disclosure in the Balance Sheet, investments are classified under the following heads :

i) Government Securities

ii) Other Approved Securities

iii) Shares

iv) Debentures and Bonds

v) Subsidiaries and sponsored institutions and

vi) Others (UTI Shares, Commercial Papers and units of Mutual Funds.)

3.2 Basis of Classification :

Classification of an Investment is done at the time of purchase into the following categories:

i) Held to Maturity

These comprise of investments, the bank intends to hold on till maturity.

ii) Held for Trading

Securities which are principally held for resale within 90 days from the date of purchase.

iii) Available for Sale

Investments that cannot be classified in the above categories.

3.3 Transfer of Securities between categories :

The transfer/ shifting of securities between the three categories of investments is accounted at the lower of acquisition cost/ book value or market value on the date of the transfer. The depreciation, if any, on such transfer is fully provided for.

3.4 Valuation :

a) Held to Maturity :

The investments classified under this category are valued at acquisition cost. The excess of acquisition cost / book value over the face value is amortised over the remaining period of maturity on day to day basis.

The net depreciation under each classification is provided for, without adjusting the book value of the securities and net appreciation, if any, is ignored.

c) Held for Trading :

Investments under this category are valued at monthly intervals at market rates, wherever available, or as per the prices declared by FIMMDA. The net depreciation under each classification is provided for, without adjusting the book value of the securities and net appreciation, if any, is ignored.

3.5 Determination of Cost :

Cost of investments is determined on the basis of Weighted Average Cost method.

3.6 Income Recognition :

i) The Profit or loss on sale/ redemption of investments is taken to the Profit and Loss Account. However, in case of profit on sale/ redemption of investments from ''Held to Maturity'' category, an equivalent amount is appropriated to the ''Capital Reserve''.

ii) In respect of securities included in any of the three categories of investments where interest/ principal is in arrears, for more than 90 days, income is not reckoned and appropriate provision for the depreciation in the value of the investments is made, as per prudential norms applicable to non-performing advances. Debentures/ Bonds in the nature of advances are subjected to usual prudential norms applicable to advances.

iii) State Government guaranteed exposures is classified as Sub Standard/ Doubtful/ Loss, as the case may be if interest and/ or principal or any other amount due to the Bank remains overdue for more than 90 days and necessary provisions are made as per Prudential Norms.

iv) Brokerage, incentive, front-end fees etc., received on purchase of securities are reduced from the cost of investments.

v) Expenses such as brokerage, fees, commission or taxes incurred at the time of acquisition of securities is charged to revenue.

vi) The broken period interest on sale or purchase of securities is treated as revenue item.

4. Derivatives

Derivatives used for hedging are accounted as under :

i) Marked to market in cases where the underlying Assets/ Liabilities are marked to market. The resultant gain/ loss is recognised in the Profit & Loss Account.

ii) Interest Rate Swaps which hedges interest bearing assets or liabilities are accounted for on accrual basis in cases where underlying Asset/ Liabilities are not marked to market.

iii) Gain or losses on the termination of Swaps are recognised over the shorter of the remaining contractual life of the Swap or the remaining life of the Assets/ Liabilities.

5. Advances:

5.1 Advances are classified as Standard, Sub-Standard, Doubtful or Loss Assets and Provisions required in respect thereof are made as per the Prudential Norms prescribed by the Reserve Bank of India.

5.2 Recoveries against Non-performing Assets (NPA) are first appropriated towards interest. However, recovery in suit filed, decreed accounts and compromise cases, is first appropriated towards principal or as per the terms of decree/ settlement.

5.3 Advances are shown net of provisions (in case of NPA), Unrealised Interest, amount recovered from borrowers held in Sundries and amount recovered from CGTSI/ ECGC.

Provision for Standard Assets is included in Other Liabilities and Provisions- Others.

5.4 Financial Assets sold are recognized as under:

In case the sale is at a price lower than the Net Book Value (NBV) the shortfall is charged to the Profit and Loss Account.

In case the sale is at a price higher than the NBV, the surplus provision is retained to meet shortfall/loss on account of sale of other non-performing financial assets.

6. Fixed Assets/Depreciation:

6.1 Fixed Assets are depreciated under ''Written Down Value Method'' at the following rates (other than computers which are depreciated on Straight Line Method):

6.2 In the case of assets, which have been revalued, the depreciation is provided on the revalued amount and the incremental depreciation attributable to the revalued amount is adjusted to the ''Revaluation Reserve''.

6.3 Depreciation on additions to assets, made upto 30th September is provided for the full year and on additions made thereafter, is provided for the half year. No depreciation is provided on assets sold before 30th September and depreciation is provided for the half year for assets sold after 30th September.

6.4 Cost of leasehold land is amortised over the period of lease. In the case of revaluation, the difference between the original cost and revalued amount is amortised over the remaining period of the lease and is adjusted to the ''Revaluation Reserve''.

6.5 Where it is not possible to segregate the cost of Land and Premises, Depreciation is charged on the composite cost.

7. Staff Benefits:

7.1 Annual contribution to Gratuity and Pension Funds are determined on the basis of actuarial valuation. The contribution to Pension Fund is made under a defined benefit scheme.

7.2 The liability for earned leave is provided for on the basis of actuarial valuation.

7.3 In respect of employees who have opted for Provident Fund Scheme, a matching contribution is made.

7.4 The Bank recognizes in its Books of Accounts the liability arising out of Employee Benefits as the sum of the present value of obligations as reduced by fair value of Plan Assets on the Balance Sheet.

8. Recognition of Income and Expenditure:

8.1 Income/ Expenditure is generally accounted for on accrual basis unless otherwise stated.

8.2 Income on NPA is recognized on realization as per the Prudential Norms prescribed by the Reserve Bank of India.

8.3 In accordance with the guidelines issued by the Reserve Bank of India vide circular No. DBOD.No.BP. BC.89/21.4.018/2002-03 dated 29.03.2003, prior period disclosures are made in respect of any item which exceeds one percent of the total income/total expenditure.

8.4 Provision for interest payable on overdue deposits is made as per Reserve Bank of India guidelines.

9. Income Tax:

The provision for tax for the year comprises of current tax liability computed in accordance with the applicable tax laws and the deferred tax which recognizes, timing differences between taxable income and accounting income that originate in one period and capable of reversal in one or more subsequent periods. Deferred tax assets are not recognized unless there is ''virtual certainty'' that sufficient future taxable income will be available against which such deferred tax assets will be realized.


Mar 31, 2012

1. Accounting Conventions:

The financial statements have been prepared by following the going concern concept on the historical cost basis except as modified by the Revaluation of Premises and conform, in all material aspects, to Generally Accepted Accounting Principles (GAAP) in India, which encompasses applicable statutory provisions, regulatory norms prescribed by Reserve Bank of India (RBI), Accounting Standards (AS) and pronouncements issued by The Institute of Chartered Accountants of India (ICAI) and the prevailing practices within the Banking industry in India.

2. Transactions involving Foreign Exchange:

2.1 Monetary Assets and Liabilities in Foreign Currencies are translated at the Exchange Rates prevailing at the year end as notified by FEDAl and the resultant Profit/ Loss is recognised in Profit and Loss Account.

2.2 Income and Expenditure items are translated at the exchange rates ruling on the respective date of transactions.

2.3 Guarantees, Letters of Credit, Acceptances, Endorsements, and other obligations in Foreign Currencies are translated at the year end rates notified by FEDAl.

2.4 Outstanding Forward Contracts are translated at the year end rates notified by FEDAI and the resultant profit/ loss is recognized in Profit and Loss Account.

3. Investments:

3.1 In accordance with the guidelines issued by the Reserve Bank of India, Investments are classified into " Held to Maturity", "Held for Trading" and "Available for Sale" categories. However, for disclosure in the Balance Sheet, investments are classified under the following heads :

i) Government Securities

ii) Other Approved Securities

iii) Shares

iv) Debentures and Bonds

v) Subsidiaries and sponsored institutions and

vi) Others (UTI Shares, Commercial Papers and units of Mutual Funds.)

3.2 Basis of Classification :

Classification of an Investment is done at the time of purchase into the following categories:

i) Held to Maturity

These comprise of investments, the bank intends to hold on till maturity.

ii) Held for Trading

Securities which are principally held for resale within 90 days from the date of purchase.

iii) Available for Sale

Investments that cannot be classified in the above categories.

3.3 Transfer of Securities between categories :

The transfer/ shifting of securities between the three categories of investments is accounted at the lower of acquisition cost/ book value or market value on the date of the transfer. The depreciation, if any, on such transfer is fully provided for.

3.4 Valuation :

a) Held to Maturity :

The investments classified under this category are valued at acquisition cost. The excess of acquisition cost / book value over the face value is amortised over the remaining period of maturity.

c) Held for Trading :

Investments under this category are valued at monthly intervals at market rates, wherever available, or as per the prices declared by FIMMDA. The net depreciation under each classification is provided for, without adjusting the book value of the securities and net appreciation, if any, is ignored.

3.5 Determination of Cost :

Cost of investments is determined on the basis of Weighted Average Cost method.

3.6 Income Recognition :

i) The Profit or loss on sale/ redemption of investments is taken to the Profit and Loss Account. However, in case of profit on sale/ redemption of investments from 'Held to Maturity' category, an equivalent amount is appropriated to the 'Capital Reserve'.

ii) In respect of securities included in any of the three categories of investments where interest/ principal is in arrears, for more than 90 days, income is not reckoned and appropriate provision for the depreciation in the value of the investments is made, as per prudential norms applicable to non-performing advances. Debentures/ Bonds in the nature of advances are subjected to usual prudential norms applicable to advances.

iii) State Government guaranteed exposures is classified as Sub Standard/ Doubtful/ Loss, as the case may be if interest and/ or principal or any other amount due to the Bank remains overdue for more than 90 days and necessary provisions are made as per Prudential Norms.

iv) Brokerage, incentive, front-end fees etc., received on purchase of securities are reduced from the cost of investments.

v) Expenses such as brokerage, fees, commission or taxes incurred at the time of acquisition of securities is charged to revenue.

vi) The broken period interest on sale or purchase of securities is treated as revenue item.

4. Derivatives

Derivatives used for hedging are accounted as under :

i) Marked to market in cases where the underlying Assets/ Liabilities are marked to market. The resultant gain/ loss is recognised in the Profit & Loss Account.

ii) Interest Rate Swaps which hedges interest bearing assets or liabilities are accounted for on accrual basis in cases where underlying Asset/ Liabilities are not marked to market.

iii) Gain or losses on the termination of Swaps are recognised over the shorter of the remaining contractual life of the Swap or the remaining life of the assets/ liabilities.

5. Advances:

5.1 Advances are classified as Standard, Sub-Standard, Doubtful or Loss Assets and Provisions required in respect thereof are made as per the Prudential Norms prescribed by the Reserve Bank of India.

5.2 Recoveries against Non-performing Assets (NPA) are first appropriated towards interest. However, recovery in suit filed, decreed accounts and compromise cases, is first appropriated towards principal or as per the terms of decree/ settlement.

5.3 Advances are shown net of provisions (in case of NPA), Unrealised Interest and amount recovered from borrowers held in Sundries and amount recovered from CGTSI/ ECGC.

Provision for Standard Assets is included in Other Liabilities and Provisions- Others.

5.4 Financial Assets sold are recognized as under:

In case the sale is at a price lower than the Net Book Value (NBV) the shortfall is charged to the Profit and Loss Account.

In case the sale is at a price higher than the NBV, the surplus provision is retained to meet shortfall/loss on account of sale of other non-performing financial assets.

6. Fixed Assets/Depreciation:

6.1 Fixed Assets (other than computers which are depreciated on Straight Line Method) are depreciated under 'Written Down Value Method' at the following rates:

i) Premises At varying rates based on estimated life

ii) Furniture, Lifts, Safe Vaults 10%

iii) Vehicles 20%

iv) Air conditioners, Coolers, Typewriters etc. 15%

v) Computers including Systems Software 33.33%

(Application Software is charged to the Revenue during the year of acquisition.)

6.2 In the case of assets, which have been revalued, the depreciation is provided on the revalued amount and the incremental depreciation attributable to the revalued amount is adjusted to the 'Revaluation Reserve'.

6.3 Depreciation on additions to assets, made upto 30th September is provided for the full year and on additions made thereafter, is provided for the half year. No depreciation is provided on assets sold before 30th September and depreciation is provided for the half year for assets sold after 30th September.

6.4 Cost of leasehold land is amortised over the period of lease. In the case of revaluation, the difference between the original cost and revalued amount is amortised over the remaining period of the lease and is adjusted to the 'Revaluation Reserve'.

6.5 Where it is not possible to segregate the cost of Land and Premises, Depreciation is charged on the composite cost.

7. Staff Benefits:

7.1 Annual contribution to Gratuity and Pension Funds are determined on the basis of actuarial valuation. The contribution to Pension Fund is made under a defined benefit scheme.

7.2 The liability for earned leave is provided for on the basis of actuarial valuation.

7.3 In respect of employees who have opted for Provident Fund Scheme, a matching contribution is made.

7.4 The Bank recognizes in its Books of Accounts the liability arising out of Employee Benefits as the sum of the present value of obligations as reduced by fair value of Plan Assets on the Balance Sheet.

8. Recognition of Income and Expenditure:

8.1 Income/ Expenditure is generally accounted for on accrual basis unless otherwise stated.

8.2 Income on NPA is recognized on realization as per the Prudential Norms prescribed by the Reserve Bank of India.

8.3 In accordance with the guidelines issued by the Reserve Bank of India vide circular No. DBOD.No.BP. BC.89/21.4.018/2002-03 dated 29.03.2003, prior period disclosures are made in respect of any item which exceeds one percent of the total income/total expenditure.

8.4 Provision for interest payable on overdue deposits is made as per Reserve Bank of India guidelines.

8.5 Commission (excluding on Government Business), exchange, locker rent and insurance claims are accounted for on realization/settlement.

8.6 Expenses for Share Issue are amortized over a period of 5 years on quarterly basis.

9. Income Tax:

The provision for tax for the year comprises of current tax liability computed in accordance with the applicable tax laws and the deferred tax which recognizes, timing differences between taxable income and accounting income that originate in one period and capable of reversal in one or more subsequent periods. Deferred tax assets are not recognized unless there is 'virtual certainty' that sufficient future taxable income will be available against which such deferred tax assets will be realized.


Mar 31, 2010

1. Accounting Conventions:

The Financial Statements are prepared by following going concern concept on the historical cost basis except as modified by the Revaluation of Premises and conform to the statutory provisions and prevailing practices within the banking industry in India.

2. Transactions involving Foreign Exchange:

2.1 Monetary Assets and Liabilities in Foreign Currencies are translated at the Exchange Rates prevailing at the year end as notified by FEDAI and the resultant Profit/ Loss is recognised in Profit and Loss Account.

2.2 Income and Expenditure items are translated at the exchange rates ruling on the respective date of transactions.

2.3 Guarantees, Letters of Credit, Acceptances, Endorsements, and other obligations in Foreign Currencies are translated at year end rates notified by FEDAI.

2.4 Outstanding Forward Contracts are translated at the year end rates notified by FEDAI and the resultant profit/loss is recognized in Profit and Loss Account.

3. Investments:

3.1 In accordance with the guidelines issued by Reserve Bank of India, Investments are classified into" Held to Maturity", "Held for Trading" and "Available for Sale" categories. However, for disclosure in the Balance Sheet, investments are classified under the following heads:

i) Government Securities

ii) Other Approved Securities

iii) Shares

iv) Debentures and Bonds

v) Investments in Subsidiaries and sponsored institutions and

vi) Others (UTI Shares, Commercial Papers and units of Mutual Funds.)

3.2 Basis of Classification:

Classification of an Investment is done at the time of purchase into the following categories:

i) Held to Maturity

These comprise of investments, the bank intends to hold on till maturity.

ii) Held for Trading

Securities which are principally held for resale within 90 days from the date of purchase.

iii) Available for Sale

Investments that cannot be classified in the above categories.

3.3 Transfer of Securities between categories :

The transfer/ shifting of securities between the three categories of investments is accounted at the lower of acquisition cost/ book value or market value on the date of the transfer. The depreciation, if any, on such transfer is fully provided for.

3.4 Valuation:

a) Held to Maturity:

The investments classified under this category are valued at acquisition cost. The excess of acquisition cost / book value over the face value is amortised over the remaining period of maturity.

b) Available for sale:

Investments under this category are marked to market, scrip-wise, at quarterly intervals as under:

i) Central Government Securities

At market price as per quotation put out by Stock Exchange / FIMMDA / PDAI.

ii) State Government Securities, Securities Guaranteed by Central / State Government, PSU Bonds

On appropriate yield to maturity basis.

iii) Treasury Bills/ Certificates of Deposits/Commercial Paper

At carrying cost.

iv) Equity Share

a) Quoted : At market price.

b) Unquoted : At book value per share, if latest (Not more than one year

old.) Balance Sheet is available, or Re.1.00 per company if latest Balance Sheet is not available.

v) Preference Share

a) Quoted : At market price.

b) Unquoted : On appropriate yield to maturity.

vi) Debentures and Bonds

a) Quoted : At market price.

b) Unquoted : On appropriate yield to maturity.

vii) Mutual Fund

a) Quoted : At market price.

b) Unquoted : At repurchase price or Net Asset Value (where repurchase price is not available).

viii) Venture Capital

Declared NAV or break up NAV as per audited balance sheet which is not more than 18 months old. If NAV/ audited financials are not available for more than 18 months continuously then at Re.1/- per VCF.

The net depreciation under each classification is provided for, without adjusting the book value of the securities and net appreciation, if any, is ignored. »«.u..ues ana

c) Held for Trading:

Investments under this category are valued at monthly intervals at market rates, wherever available, or as per the prices declared by FIMMDA.The net depreciation value of the securities and net appreciation, if any, is ignored.

3.5 Determination of Cost:

Cost of investments is determined on the basis of Weighted average cost methed

3.6 Income Recognition:

i) The Profit or loss on sale/ redemption of investments is taken to the Profit and Loss Account. However, in case of orofit on sale/ redemption of investment: from Held to Maturity category, an equivalent amount is appropriated to the Capital Reserve.

ii) In respect of securities included in any of the three Categories of investments where interest/ principal is in arrears, for more than 90 days, income is not reckoned and appropriate provision for the depreciation in the value of the investments is made, as per prudential norms applicable to non-performing advances. Debentures/ Bonds in the nature of advances are subjected to usual prudential norms applicable to advances.

iii) State Government guaranteed exposures is classified as Sub Standard/ Doubtful/ Loss, as the case may be if interest and/ or principal or any other amount due to the 8anl remains overdue for more than 90 days and necessary provisions are made as per prudential Norms.

iv) Brokerage, incentive, front-end fees etc., received on purchase of securities are reduced from the cost of investments. Expenses such as brokerage, fees, Commission or taxes incurred at the time of acquisition of securities is charge to vi) The broken period interest on sale or purchase of securities is treated as revenue item.

4. Derivatives

Derivatives used for hedging are accounted as under:

ii) Interest Rate Swaps which hedges interest bearing assets or liabilities are accounted for on accrual basis in cases where Underiying Asset/ Liabilities are not marked to market

iii) Gain or losses on the termination of Swaps are recognised over the shorter of the remaining contractual life of the Swap or the remaining life of the assets/ liabilities.

5. Advances:

5.1 Advances are classified as Standard, Sub-Standard, Doubtful or Loss Assets and Provisions required in respect thereof are made as per the Prudential Norms prescribed by the Reserve Bank of India.

5.2 Recoveries against Non-performing Assets (NPA) are first appropriated towards interest. However, recovery in suit filed, decreed accounts and compromise cases, is first appropriated towards principal or as per the terms of decree/ settlement.

5.3 Advances are shown net of provisions, Unrealised Interest and amount recovered from borrowers held in Sundries and amount recovered from CGTSI/ ECGC.

Provision for Standard Assets is included in Other Liabilities and Provisions- Others.

6. Fixed Assets/Depreciation:

6.1 Fixed Assets (other than computers which are depreciated on Straight Line Method) are depreciated under Written Down Value Method at the following rates:

i) Premises At varying rates based on estimated life

ii) Furniture, Lifts, Safe Vau Its 10%

iii) Vehicles 20%

iv) Air conditioners, Coolers, Typewriters etc. 15%

v) Computers including Systems Software 33.33%

(Application Software is charged to the Revenue during the year of acquisition.)

6.2 In the case of assets, which have been revalued, the depreciation is provided on the revalued amount and the incremental depreciation attributable to the revalued amount is adjusted to the Revaluation Reserve.

6.3 Depreciation on additions to assets, made upto 30th September is provided for the full year and on additions made thereafter, is provided for the half year. No depreciation is provided on assets sold before 30th September and depreciation is provided for the half year for assets sold after 30th September.

6.4 Cost of leasehold land is amortised over the period of lease. In the case of revaluation, the difference between the original cost and revalued amount is amortised over the remaining period of the lease and is adjusted to the Revaluation Reserve.

6.5 Where it is not possible to segregate the cost of Land and Premises, Depreciation is charged on the composite cost.

7. Staff Benefits:

7.1 Annual contribution to Gratuity and Pension Funds are determined on the basis of actuarial valuation. The contribution to Pension Fund is made under a defined benefit scheme.

7.2 The liability for earned leave is provided for on the basis of actuarial valuation.

7.3 In respect of employees who have opted for Provident Fund Scheme, a matching contribution is made.

7.4 The Bank recognizes in its Books of Accounts the liability arising out of Employee Benefits as the sum of the present value of obligations as reduced by fair value of Plan Assets on the Balance Sheet.

As per the transition provision of AS-15 (Revised) on Accounting for Retirement Benefits in Financial statements of employer the difference in the liability (as adjusted by related deferred tax) on account of Defined Benefit Plans viz. Pension and Gratuity Plans has been adjusted against the opening balance of Revenue Reserves and Surplus.

8. Recognition of Income and Expenditure:

8.1 Income/ Expenditure is generally accounted for on accrual basis unless otherwise stated.

8.2 Income on NPA is accounted for as per the Prudential Norms prescribed by the Reserve Bank of India.

8.3 In accordance with the guidelines issued by the Reserve Bank of India, prior period disclosures are made in respect of any item which exceeds one percent of the total income/total expenditure.

8.4 Provision for interest payable on overdue deposits is made as per Reserve Bank of India guidelines.

8.5 Expenses for Share Issue are amortized over a period of 5 years on quarterly basis.

9. Income Tax:

The provision for tax for the year comprises of current tax liability computed in accordance with the applicable tax laws and the deferred tax which recognizes, timing differences between taxable income and accounting income that originate in one period and capable of reversal in one or more subsequent periods. Deferred tax assets are not recognized unless there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets will be realized.

These Financial Statements which were approved by the Board of Directors on 02nd May 2010 and authenticated by the Auditors have undergone a change by virtue of Government of India advice dated 07th May 2010 to increase the recommended dividend from 20% to 22% of the paid up equity share capital. The effect of this change on financial statements is an increase in Proposed Dividend on Equity Capital by Rs. 8.08 crore and Dividend Tax by Rs. 1.37 crore and consequent decrease in Revenue Reserves by Rs. 9.00 crore and retained Profit by Rs. 0.45 crore

 
Subscribe now to get personal finance updates in your inbox!