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Accounting Policies of Haryana Financial Corporation Company

Mar 31, 2015

1 The Financial Statements of the Corporation are prepared on Accrual basis except for Interest c NPAs which has been accounted for on receipt basis as per RBI guidelines.

2 The amount received from the borrowers against bans and advances is appropriated in the folbwing orders

i) Miscellaneous Expenses

ii) Interest

iii) Principal

3 In the past, when the Corporation used to sell borrowers' assets on deferred payment basis,respecti' borrowers' loan accounts was credited by the full amount of the sale proceeds after execution of agreeme to sell. The deferred part of sale proceeds used to be treated as fresh loan to the auction purchasers ai recovered as per the terms of the sale agreements. The possession of the property was also used to be hand' over after execution of Agreement to Sell to the Auction Purchaser. The Corporation has modified its policy 1 sale of mortgaged property and as per the new policy approved by the BoD in its meeting held on 19.12.201 the units will be sold on the terms of payments by the auction purchaser within 3 months. However, in sor exceptional cases, the Managing Director may give extension in payment of sale consideration for a furtf period of 9 months @ 13% with compounding on monthly basis. As per new policy the possession of the u will be handed over to the auction purchaser only after receipt of full amount of bid.

4 The Corporation introduced settlement policies namely, the policy for Compromise Settlement Chronic Non-Performing Assets (Doubtful Loan Accounts) of Haryana Financial Corporation-2011 and the pol for Compromise Settlement of Loss Accounts of Haryana Financial Corporation - 2011 in the financial y( 2011-12 extended upto 30.09.2015 to reduce NPAs/written off portfolios.

In the normal course, the recoveries are adjusted first against the actual misc. expenses and th against the outstanding interest and thereafter, the balance amount is adjusted against outstanding princii amount. However, as per parameters of OTS Policies, the accounts are recast by appropriating the amoi realized by way of sale of mortgaged assets by the Corporation or sale by promoters/guarantors/mortgage with the permission of the Corporation or by order of any court, on the date of sale, first against actual mi expenses, then against the principal amount balance if any against the outstanding interest.

5 Retirement Benefits

i) Gratuity to employees of the Corporation is governed by u Punjab Financial Corporal Employees Group Gratuity Regulations, 1964 as applicable to employees of the Haryana Finan Corporation". The fund is being maintained by Life Insurance Corporation of India. Provision for grat liability for the existing staff as on 31.03.2015 amounting to Rs. 0.15 crore as per actuarial valuatioi Life Insurance Corporation of India ( LIC ) has been duly provided for in the books of accounts an< provision of Rs. 0.65 crore in case of retirees whose gratuity has not been released upto 31.03.2' has been made in the books of accounts.Provision for Leave Encashment liability payable to s amounting to Rs. 4.16 crore has been made in the books of accounts.

ii) Provision of Compassionate Assistance liability amounting to Rs. 0.64 crore payable to 1 legal heirs of the deceased employees on the pattern of Govt, of Haryana has been made in the be of accounts.

ii) Monthly matching contribution towards employees provident fund is remitted to the Regii Provident Fund Commissioner, Chandigarh as per provisions of the Employees Provident F and Miscellaneous Provisions Act, 1952 and is charged to profit and loss account.

6) Asset Classification and Provisioning

i) Loans and Advances have been categorised and provisioning has been made as per guidel received from Small Industries Development Bank of India (SIDBI) which are as under:

ii) As per guidelines issued by SIDBI in respect of investments in equity shares (available for sale ), evaluation has been done as per market rate, which is the price of the script available from trades / quotes on the stock exchange. Those scripts for which current quotations are not available or where the shares are not quoted on stock exchange, have been valued at book value as certained from their latest Balance Sheets. In case the latest Balance Sheet is not available, the shares have been valued at Rs. 1/- per company. In case of Investment in equity shares ( held to maturity) evaluation has been done at acquisition price.

The shares which are held to maturity are shown as non current investments. The shares which are quoted on the stock exchanges have been shown as quoted investment. Rest of the shares listed ( at the time of acquisition but now not quoted ) and un-listed have been shown as unquoted current investment.

iii) Entire lease rentals in respect of Equipment Leasing, Vehicle Leasing and Special Vehicle Leasing cases have fallen due for payment before the date of balance sheet, hence provisioning equivalent to the entire amount outstanding on this account as on 31.03.2015 has been made.

iv) The provisioning has been made without giving the effect of the amount lying in the Sundry Deposits under schedule 'D' - Other Liabilities.

7 Fixed Assets/Depreciation

The Corporation is maintaining Fixed Assets purchase register where all items of fixed assets are entered with date, amount of purchase and its location. In terms of Accounting Standard ( AS-10 ), it is required to give the gross block, addition/deletion, depreciation, and written down value of each block in the schedule attached to the balance sheet Since the Corporation has has not maintained the fixed assets register on this pattern since inception, so due to non-availability of required details, the Corporation is not in a position to maintain the fixed assets register as per the provision of AS-10. Depreciation on fixed assets has been provided on written down value method at the rates prescribed under provisions of Income Tax Rules 1962. Depreciation in respect respect of leasing portfolio is charged equivalent to principal amount out of lease rentals recovered on the basis of Capital Recovery Method. However, amount received in settled cases has been appropriated as per terms of settlement.


Mar 31, 2013

1 The Financial Statements of the Corporation are prepared on Accrual basis except for Interest on NPAs which has been accounted for on receipt basis as per RBI guidelines.

2 The amount received from the borrowers against loans and advances is appropriated in the following orders: i) Miscellaneous Expenses.

ii) Interest.

iii) Principal.

3 In cases, where the Corporation sells borrowers'' assets on deferred payment basis, respective borrowers'' loan accounts are credited by the full amount of the sale proceeds after execution of agreement to sell. The deferred part of sale proceeds is treated as fresh loans to the auction purchasers and recovered as per the terms of the sale agreements.

4 The Corporation introduced settlement policies namely, the policy for Compromise Settlement of Chronic Non-Performing Assets (Doubtful Loan Accounts) of Haryana Financial Corporation-2011 and the policy for Compromise Settlement of Loss Accounts of Haryana Financial Corporation - 2011 in the financial year 2011-12 for prompt recovery of NPAs. The Corporation has approved settlement in 194 accounts under above OTS policies upto 31-03-2013.

In the normal course, the recoveries are adjusted first against the actual misc. expenses and then against the outstanding interest and thereafter the balance amount is adjusted against outstanding principal amount. However, at the time of settlement in terms of the above policies, the accounts are recast by appropriating the amount realized by way of sale of mortgaged assets by the Corporation or sale by promoters / guarantors /mortgagers with the permission of the Corporation or by order of any court, on the date of sale, first against actual misc. expenses, then against the principal amount balance if any against the outstanding ineterst.

5 Retirement Benefits

i) Gratuity to staff is covered under the Group Gratuity Scheme of Life Insurance Corporation of

India. The Board of Directors in its meeting held on 22.12.2011 has approved the enhancement of gratuity limit payable to staff (w.e.f. 01.04.09) from Rs. 3.50 lakh to Rs. 10.00 lakh. The State Government has approved the same and issued necessary Gazette notification. Provision for gratuity for the existing staff as per revised limit amounting to Rs.3.97crore as per actuarial valuation of Life Insurance Corporation of India (LIC) has been provided in the books of account and a provision of Rs. 2.37 crore in case of retirees as on 31.03.2013 who are eligible for the enhanced gratuity has also been made. Provision for leave Encashment payable to staff amounting to Rs.4.79 crore has been provided in the books of accounts

ii) Monthly matching contribution towards employees provident fund is remitted to the Regional Provident Fund Commissioner, Chandigarh as per provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and is charged to profit and loss account.

6) Asset Classification and Provisioning

i) Loans and Advances have been categorised and provisioning has been made there against as per guidelines received from Small Industries Development Bank of India (SIDBI) which are as under:

Provision of 2.75% has been made on the standard assets which are upgraded from NPAs for the first year from the date of upgradation and on restructured accounts classified as standard assets in the first two years from the date of restructuring. In cases of moratorium of payment of interest/principal after restructuring, such advances will attract a provision of 2.75% for the period covering moratorium and two years thereafter.

ii) As per guidelines issued by SIDBI in respect of investments in equity shares (available for

sale), evaluation has been done as per market rate, which is the price of the script available from trades / quotes on the stock exchange. Those scripts for which current quotations are not available or where the shares are not quoted on stock exchange, have been valued at book value ascertained from their latest Balance Sheets. In case the latest Balance Sheet is not available, the shares have been valued at Rs. 1/- per company. In case of Investment in equity shares (held to maturity) evaluation has been done at acquisition price.

iii) Entire lease rentals in respect of Equipment Leasing, Vehicle Leasing and Special Vehicle

Leasing cases have fallen due for payment before the date of balance sheet, hence provisioning equivalent to the entire amount outstanding on this account as on 31.03.2013 has been made. Lease finance in respect of Loans for Leasing Equipments ( advance ) and Vehicle Sub Leasing cases are treated as loans, for the purpose of provisioning.

iv) The provisioning has been made without giving the effect of the amount lying in the

Sundry Deposits under schedule ''E'' - Other Liabilities.

7 Depreciation

Depreciation on fixed assets has been provided on written down value method at the rates prescribed under provisions of Income Tax Rules 1962. Depreciation in respect of leasing portfolio is charged equivalent to principal amount out of lease rentals recovered on the basis of Capital Recovery Method. However, amount received in settled cases has been appropriated as per terms of settlement.


Mar 31, 2012

A) The Financial Statements of the Corporation are prepared on Accrual basis except for Interest on NPAs which has been accounted for on receipt basis as per RBI guidelines.

b) The amount received from the borrowers against loans and advances is appropriated in the following orders :

i) Miscellaneous Expenses.

ii) Interest.

iii) Principal.

c) In cases, where the Corporation sells borrower''s assets on deferred payment basis, respective borrowers'' loan accounts are credited by the full amount of the sale proceeds. The deferred part of sale proceeds is treated as fresh loans to the auction purchasers and recovered as per the terms of the sale agreements.

d) During the year, the Corporation introduced settlement policies namely, the policy for Compromise Settlement of Chronic Non-Performing Assets (Doubtful Loan Accounts) of Haryana Financial Corporation - 2011 and the policy for Compromise Settlement of Loss Accounts of Haryana Financial Corporation-2011 for prompt recovery of NPAs. The Corporation has approved 125 cases of settlement under above policy upto 31-07-2012.

In the normal course, the recoveries are adjusted first against the actual misc. expenses and then against the outstanding interest and thereafter the balance amount is adjusted against outstanding principal amount. However, at the time of settlement in terms of the above policies, the account are recasted by appropriating the amount realized by way of sale of mortgaged assets by the Corporation or sale by promoters/guarantors/mortgagers with the permission of the Corporation or by order of any court, on the date of sa]e, first against actual misc. expenses, then against the principal amount balance if any against the outstanding ineterst.

e) Retirement Benefits

i) Gratuity to staff is covered under the Group Gratuity Scheme of Life Insurance Corporation of India. The Board of Directors in its meeting held on 22.12.2011 has approved the enhancement of gratuity limit payable to staff (w.e.f. 01.04.09) from Rs.3.50 lakh toRs.10.00 lakh. However provision for shortfall on account of enhanced gratuity limit amounting to Rs.3.11 crore as per actuarial valuation of Life Insurance Corporation of India (LIC) has not been provided in the books of account, as the same is yet to be approved by State Government. The Corporation is regularly paying the gratuity premium to LIC (on basis of present gratuity limit of Rs.3.50 lakh) and as per LIC letter dated 25.04.12, the present value of gratuity liability is Rs.4.30 crore and the fund size towards gratuity of Corporation with LIC is Rs.4.65 crore. The excess amount Rs.0.35 crore has been appropriated to relevant head and shown in balance sheet under the head ''Other Assets''. Provision for leave Encashment payable to staff amounting to Rs.5.08 crore is made in the books of accounts

ii) Monthly matching contribution towards employees provident fund is remitted to the Regional Provident Fund Commissioner, Chandigarh as per provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and is charged to profit and loss account.

Provision of 2% has been made on the standard assets which are upgraded from NPAs for the first year from the date of upgradation and on restructured accounts classified as standard assets in the first two years from the date of restructuring.

ii) As per guidelines issued by SIDBI in respect of investments in equity shares (available for sale), evaluation has been done as per market rate, which is the price of the script available from trades /quotes on the stock exchange. Those scripts for which current quotations are not available or where the shares are not quoted on stock exchange, have been valued at book value ascertained from the latest balance sheet. In case the latest balance sheet is not available, the shares have been valued at Rs. 1/- per company. In case of Investment in equity shares (held to maturity) evaluation has been done at acquisition price. ''

iii) Entire lease rentals in respect of Equipment Leasing, Vehicle Leasing and Special Vehicle Leasing cases have fallen due for payment before the date of balance sheet, hence provisioning equivalent to the entire amount outstanding on this account as on 31.03.2012 has been made. Lease finance in respect of Loans for Leasing Equipments (advance) and Vehicle Sub Leasing cases are treated as loans, for the purpose of provisioning.

iv) The provisioning has been made without giving the effect of the amount lying in the Sundry Deposits under schedule ‘E'' - Other Liabilities.

g) Depreciation

Depreciation on fixed assets has been provided on written down value method at the rates prescribed under provisions of Income Tax Rules 1962. Depreciation in respect of leasing portfolio is charged equivalent to principal amount out of lease rentals recovered on the basis of Capital Recovery Method. However, amount received in settled cases has been appropriated as per terms of settlement.


Mar 31, 2010

A) The Financial Statements of the Corporation are prepared on Accrual basis except for Interest on NPAs which has been accounted for on receipt basis as per RBI guidelines.

b) The amount received from the borrowers against loans and advances is appropriated in the following orders :

i) Miscellaneous Expenses.

ii) Interest.

iii) Principal.

c) In cases, where the Corporation sells borrowers assets on deferred payment basis, respective borrowers loan accounts are credited by the full amount of the sale proceeds. The deferred part of sale proceeds is treated as fresh loans to the auction purchasers and recovered as per the terms of the sale agreements.

d) Retirement Benefits

i) Provision for Gratuity amounting to Rs. 2.42 crore being the shortfall amount as per actuarial valuation of Life Insurance Corporation of India (LIC) and Rs. 4.72 crore being the amount of Leave Encashment payable to staff have been made in the books of accounts.

ii) Monthly matching contribution towards employees provident fund is remitted to the Regional Provident Fund Commissioner, Chandigarh as per provisions of the Employees Provident and Miscellaneous Provisions Act, 1952 and is charged to profit and loss account.

e) Asset Classification and Provisioning

ii) As per guidelines issued by SIDBI in respect of investments in equity shares (available for sale), evaluation has been done as per market rate, which is the price of the script available from trades / quotes on the stock exchange. Those scripts for which current quotations are not available or where the shares are not quoted on stock exchange, have been valued at value ascertained from the latest balance sheet. In case the latest balance sheet is not available.the shares have been valued at Rea- per company. In case of Investment in equity shares (held to maturity) evaluation has been done at acquisition price.

iii) Entire lease rentals in respect of Equipment Leasing, Vehicle Leasing and Special Vehicle leasing (except Employees Vehicle Leasing) cases have fallen due for payment before the date of balance sheet, hence provisioning equivalent to the entire amount outstanding on this account as on 31.03.2010 has been made. Since lease rentals in the case of Employees Vehicle Leasing are being recovered on due dates, hence no provisioning has beem made against the same. Lease finance in respect of Loans for Leasing Equipments (advance) and Vehicle Sub Leasing cases are treated as loans, for the purpose of provisioning.

iv) The provisioning has been made without giving the effect of the amount lying in the Sundry Deposits under Schedule E - Other Liabilities.

f) Depreciation

Depreciation on fixed assets has been provided on written down value method at the rates prescribed under provisions of Income Tax Rules 1962. Depreciation in respect leasing portfolio is charged equivalent to principal amount out of lease rentals recovered on the basis of Capital Recovery Method. However, amount received in settled cases has been appropriated as per terms of settlement.


Mar 31, 2000

1. From Its April 1983, Corporation changed its method of accounting from accrual (Mercantile) basis to cash basis. Accordingly, the Balance Sheet & Profit & Loss Account have been prepared on cash basis except.

i) Provision for Taxation

ii) Provision for Non-Performing Assets

iii) Depreciation on Assets

iv) Adjustments against/relating to balance of accounts receivable and payable as on 31st March, 1983 upto which date the system of accounting was on Mercantile Basis.

v) Public issue expenses being deferred revenue expenditure.

vi) Provision for dividend

2. Amount received in respect of loan cases, where security has been liquidated due to sale has been appropriated first towards Principal amount and balance towards interest.

3. In respect of default cases, other than the cases where legal action has been initiated, the amount recovered during the year has been first appropriated towards interest accrued and due and thereafter against principal amount due.

4. Depreciation on fixed assets has been charged at the rates prescribed under the provision of the Income Tax Act on written down value method except on leased assets where depreciation has been charged on the Capital Recovery method.

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