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Accounting Policies of IDBI Bank Ltd. Company

Mar 31, 2015

Basis of Preparation

The financial statements have been prepared in accordance with requirements prescribed under the Third Schedule of the Banking Regulation Act, 1949. The accounting policies used in the preparation of these financial statements, in all material aspects, conform to Generally Accepted Accounting Principles in India (Indian GAAP), the guidelines issued by Reserve Bank of India (RBI) from time to time, the Accounting Standards (AS) issued by the Institute of Chartered Accountants of India (ICAI) and prescribed under Section 133 Companies Act, 2013 (''Act'') read with Rule 7 of the Companies (Account) Rules, 2014, the provisions of the Act (to the extent notified) and practices generally prevalent in the banking industry in India. The Bank follows the accrual method of accounting, except where otherwise stated, and the historical cost convention.

Use of Estimates

The preparation of financial statements requires the Management to make estimates and assumptions that affect the reported amount of assets, liabilities, expenses, income and disclosure of contingent liabilities as at the date of the financial statements. The Management believes that these estimates and assumptions are reasonable and prudent. However, actual results could differ from estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

Revenue Recognition

Revenue is recognised to the extent it is probable that the economic benefits will flow to the Bank and the revenue can be reliably measured

i. Interest income is recognised on accrual basis except in the case of Non-Performing Assets where it is recognised upon realisation as per the prudential norms of the RBI.

ii. Commissions on Letter of Credit (LC)/ Bank Guarantee (BG) are accrued over the period of LC/ BG.

iii. Fee based income are accrued on certainty of receipt and is based on milestones achieved as per terms of agreement with the client.

iv. Income on discounted instruments is recognised over the tenure of the instrument on a constant yield basis.

v. Dividend is accounted on an accrual basis when the right to receive the same is established.

vi. In case of advances, recovery is appropriated as per the order of appropriation specified in the loan agreement / restructuring package.

Advances and Provisions

Advances are classified into Standard, Sub-standard, Doubtful and Loss assets and provisions are made in accordance with the prudential norms prescribed by RBI. Advances are stated net of provisions towards Non- Performing Advances.

Advances are classified as Secured by langible Assets when security of at least 10% of the advance has been stipulated/ created against tangible security including book debts. Security in the nature of escrow, guarantee, comfort letter, charge on brand, license, patent, copyright etc are not considered as ''Tangible Assets''.

Amounts recovered against debts written-off in earlier years and provisions no longer considered necessary in the context of the current status of the borrower are recognised in the Profit and Loss Account.

The Bank does not make any floating provision for bad and doubtful advances and investments.

Provision on loans and advances restructured/ rescheduled is made in accordance with the applicable RBI guidelines on restructuring of loans and advances by Banks.

The Bank makes countercyclical buffer as required by RBI guidelines, amended from time to time, with the approval of the Board and utilise the same within the limits and in the circumstances permitted by RBI.

'' Investments

In terms of extant guidelines of the RBI on investment classification and valuation, the entire investment portfolio is categorised as:

i.Held To Maturity,

ii. Available For Sale and

iii. Held For Trading.

Investments under each category are further classified as

i. Government Securities

ii. Other Approved Securities

iii. Shares

iv. Debentures and Bonds

v. Subsidiaries/ Joint Ventures

vi. Others (Commercial Paper, Mutual Fund Units, Security Receipts, Pass Through Certificates, SIDBI/ NABARD/ NHB / RIDF Deposits).

Basis of Classification

a) Investments that the Bank intends to hold till maturity are classified as ''Held to Maturity''.

b) Investments that are held principally for resale within 90 days from the date of purchase are classified as ''Held For Trading''.

c) Investments, which are not classified in the above two categories, are classified as ''Available For Sale''.

d) An investment is classified as ''Held To Maturity'', ''Available For Sale'' or ''Held For Trading'' at the time of its purchase and subsequent shifting amongst categories and its valuation is done in conformity with RBI guidelines.

e) Investments in Subsidiaries and Joint Venture are classified as ''Held To Maturity''.

Valuation

i) In determining the acquisition cost of an investment:

a) Brokerage, commission, stamp duty, and other taxes paid are included in cost of acquisition in respect of acquisition of equity instruments from the secondary market whereas in respect of other investments, including treasury investments, such expenses are charged to Profit and Loss Account.

b) Broken period interest paid/ received is excluded from the cost of acquisition/ sale and treated as interest expense/ income.

c) Cost is determined on the weighted average cost method.

ii) Investments ''Held To Maturity'' are carried at acquisition cost unless it is more than the face value, in which case the premium is amortised on straight line basis over the remaining period of maturity. Diminution, other than temporary, in the value of investments in subsidiaries/ joint venture under this category is provided for each investment individually.

iii) Investments ''Held For Trading'' and ''Available For Sale'' are marked to market scrip-wise and the resultant net depreciation, if any, in each category is recognised in the Profit and Loss Account, while the net appreciation, if any, are ignored.

a) Treasury Bills, commercial papers and certificates of deposit being discounted instruments are valued at carrying cost,

b) In respect of traded/ quoted investments, the market price is taken from the trades/ quotes available on the stock exchanges. Government Securities are valued at market prices or prices declared by Primary Dealers Association of India (PDAI) jointly with Fixed Income Money Market and Derivative Association of India (FIMMDA).

c) The unquoted shares are valued at break-up value or at Net Asset Value if the latest balance sheet is available, else, at Rs. 1/- per company and units are valued at repurchase price as per relevant RBI guidelines. The unquoted fixed income securities (other than government securities) are valued on Yield to Maturity (YTM) basis with appropriate mark-up over the YTM rates for Central Government securities of equivalent maturity. Such mark-up and YTM rates applied are as per the relevant rates published by FIMMDA.

d) Security receipts issued by Asset Reconstruction Companies are valued in accordance with the guidelines applicable to such instruments, prescribed by RBI from time to time. Accordingly, in cases where the cash flows from security receipts issued by Asset Reconstruction Companies are limited to the actual realisation of the financial assets assigned to the instruments in the concerned scheme, the Bank reckons the Net Asset Value obtained from the Asset Reconstruction Company from time to time, for valuation of such investments at each reporting period end.

e) Preference shares are valued at market rates, if quoted or on appropriate yield to maturity basis not exceeding redemption value as per RBI guidelines.

Profit or Loss on sale of investments is credited/ debited to Profit and Loss Account. However, profits on sale of investments in Held to Maturity category is first credited to Profit and Loss Account and thereafter appropriated, net of applicable taxes and amount required to be transferred to Statutory Reserves, to the Capital Reserve Account at the year/ period end. Loss on sale is recognised in the Profit and Loss Account.

Repo and Reverse Repo transactions

In accordance with the RBI guidelines, Repo and Reverse Repo transactions in Government Securities and Corporate Debt Securities (excluding transactions conducted under Liquidity Adjustment Facility (LAF) and Marginal Standing Facility (MSF) with RBI) are reflected as borrowing and lending transactions respectively. Borrowing cost on Repo transactions is accounted as interest expense and revenue on Reverse Repo transactions is accounted as interest income.

In respect of Repo transactions under LAF and MSF with RBI, amount borrowed from RBI is credited to investment account and reversed on maturity of the transaction. Costs thereon are accounted for as interest expense. In respect of Reverse Repo transactions under LAF, amount lent to RBI is debited to investment account and reversed on maturity of the transaction. Revenues thereon are accounted as interest income.

Derivative Transactions

In Transactions designated as ''Hedge'':

a) Net interest payable/ receivable on derivative transactions is accounted on accrual basis.

b) On premature termination of Hedge swaps, any profit/ losses are recognised over the remaining contractual life of the swap or the residual life of the asset/ liability whichever is lesser.

c) Re-designation of hedge swaps by change of underlying liability is accounted as the termination of one hedge and acquisition of another.

In Transactions designated as ''Trading'':

Outstanding derivative transactions designated as ''Trading'', which includes interest rate swaps, cross currency swaps, cross currency options and credit default swaps, are measured at their fair value. The resulting profits/ losses are included in the profit and loss account. Premium on options is recorded as a balance sheet item and transferred to Profit and Loss Account on maturity/ cancellation.

Derivative transactions in Exchange Traded Currency Futures (ETCF) segments designated as trading includes Currency Futures, Currency Options and Interest Rate Futures which are measured at their fair value and are cash settled on T 1 basis. The resulting profits / losses on these transactions are transferred to Profit and Loss Account on the month end settlement date stipulated by respective exchanges.

Fixed assets are carried at historical cost (inclusive of installation cost) except wherever revalued. The appreciation on revaluation, if any, is credited to the Revaluation Reserve Account. In respect of revalued assets, the additional depreciation consequent to revaluation is transferred from Revaluation Reserve to the Profit and Loss Account.

ii. Fixed assets individually costing less than Rs. 5000 are fully depreciated in the year of addition.

iii. Depreciation on tangible asset is allocated over useful life of the asset as estimated by the Management. Depreciation and amortisation methods, useful lives and residual values are reviewed periodically. If the Management''s estimate of the useful life of a fixed asset at the time of acquisition of the asset or of the remaining useful life on a subsequent review is shorter, depreciation is provided at a higher rate based on Management''s estimates of the useful life/ remaining useful life.

v. Leasehold land is amortised over the period of lease.

Computer Software (non-integral) individually costing more than Rs. 2.50 lakh is capitalised and depreciated over its useful life, not exceeding 5 years.

The useful lives for these assets are different from the useful lives as prescribed under Part C of Schedule II of the Companies Act, 2013. Based on internal assessment and technical evaluation carried out, the Management believes that the useful lives as given above best represent the period over which the Management expects to use these assets. Depreciation on additions/ sale of fixed assets during the year is provided for the period for which assets were actually held.

8 Securitisation Transactions:

Securitisation of various loans results in sale of these assets to Special Purpose Vehicles (''SPVs''), which, in turn issue securities to investors. Financial assets are partially or wholly derecognised when the control of the contractual rights in the securitised assets is lost. The Bank accounts for any loss arising on sale immediately at the time of sale and the profit/ premium arising on account of sale is amortised over the life of the securities issued or to be issued by the SPV to which the assets are sold.

9 Sale of financial assets to Securitisation Companies/ Reconstruction Companies:

Sale of financial assets to Securitisation Companies (SCs)/ Reconstruction Companies (RCs) is reckoned at the lower of the redemption value of Security Receipts (SRs)/ Pass Through Certificates (PTCs) received and the Net Book Value of the financial asset. Gains arising on such sale or realisation are not recognised in the Profit and Loss Account but earmarked as provisions for meeting the losses/ shortfall arising on sale of other financial assets to SCs/ RCs or sale/ realisation of other SRs/ PTCs. Losses arising on such sale or realisation are first set off against balance of provisions, if any, created out of earlier gains and residual amount of losses are charged to Profit and Loss Account.

Foreign Currency Transactions:

Foreign currency transactions on initial recognition are recorded at the exchange rate prevailing on the date of transaction. Monetary foreign currency assets and liabilities are translated at the closing rates prescribed by Foreign Exchange Dealers Association of India (FEDAI) and the resultant gain or loss is recognised in the Profit and Loss Account. Exchange differences arising on the settlement of monetary items are recognised as income or expense in the period in which they arise.

Premium or discount arising at the inception of Forward Exchange Contracts which are not intended for trading is amortised as expense or income over the life of the contract. Premium or discount on other Forward Exchange Contracts is not recognised.

iii. Outstanding Forward Exchange Contracts which are not intended for trading are revalued at closing Foreign Exchange Dealers Association of India (FEDAI) rates. Other outstanding Forward Exchange Contracts are valued at rates of exchange notified by FEDAI for specified maturities or at interpolated rates for in-between maturities. The resultant profit/ losses are recognised in the Profit and Loss Account.

iv. Profit/ losses arising on premature termination of Forward Exchange Contracts, together with unamortised premium or discount, if any, is recognised on the date of termination.

v. Contingent liability in respect of outstanding Forward Exchange Contracts is calculated at the contracted rates of exchange and in respect of guarantees, acceptances, endorsements and other obligations are calculated at the closing FEDAI rates.

vi. Operations of foreign branch are classified as Integral Foreign Operations. Assets and Liabilities are translated at the closing rates prescribed by FEDAI. Income and Expenditure items are translated at quarterly average closing rates. The resultant gain or loss is recognised in the Profit and Loss Account.

11 Employee Benefits

a) Payments to defined contribution schemes are charged to Profit and Loss Account of the year when contribution are due.

b) For defined benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains or losses are recognised in the Profit and Loss Account for the period in which they occur.

c) The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognised during the period when the employee renders the service.

Segment Reporting

The Bank operates in three segments - wholesale banking, retail banking and treasury services. These segments have been identified in line with Accounting Standard 17 on segment reporting after considering the nature and risk profile of the products and services, the target customer profile, the organisation structure and the internal reporting system of the Bank.

Segment revenue, results, assets, and liabilities include the amounts identifiable to each of the segments as also amounts allocated, as estimated by the Management. Assets and liabilities that cannot be allocated to identifiable segments are grouped under unallocated assets and liabilities.

13 Income Tax

i. Tax expense comprises of current and deferred tax.

Current tax is the amount of Income Tax determined to be payable (recoverable) in respect of taxable income (tax loss) for a period.

ii. Deferred tax for timing differences between the book and tax profits for the year is accounted for, using the tax rates and laws that have been substantively enacted as of the balance sheet date. Deferred tax assets arising from timing differences are recognised to the extent there is reasonable certainty that these would be realized in future.

iii. Deferred tax assets in case of unabsorbed losses are recognised only if there is virtual certainty that such deferred tax asset can be realized against future taxable profits.

Disputed taxes not provided for including departmental appeals are included under Contingent Liabilities.

14 Earnings Per Share

The Bank reports basic and diluted Earnings per share in accordance with Accounting Standard 20. Basic Earnings per Share is computed by dividing the Net Profit After Tax by the weighted average number of equity shares outstanding for the year.

Diluted Earnings per share reflect the potential dilution that could occur if securities or other contracts to issue equity shares were exercised or converted during the period. Diluted Earnings per share is computed by dividing the Net Profit After Tax by the sum of the weighted average number of equity shares and dilutive potential equity shares outstanding at the year end.

15 Impairment of Assets

Fixed Assets are reviewed for impairment whenever events or changes in circumstances warrant that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated current realisable value. If such assets are considered to be impaired, the impairment to be recognised is measured by the amount by which the carrying amount of the asset exceeds estimated current realisable value of the asset.

16 Provisions, Contingent Liabilities and Contingent Assets

In conformity with Accounting Standard 29, Provisions, Contingent Liabilities and Contingent Assets, the Bank recognises provisions only when it has a present obligation as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and when a reliable estimate of the amount of the obligation can be made.

ii. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date.

iii. Reimbursement expected in respect of expenditure required to settle a provision is recognised only when it is virtually certain that the reimbursement will be received.

Contingent Assets are not recognised.


Mar 31, 2014

1. Basis of Preparation

The financial statements have been prepared in accordance with requirements prescribed under the Third Schedule of the Banking Regulation Act, 1949. The accounting policies used in the preparation of these financial statements, in all material aspects, conform to Generally Accepted Accounting Principles in India (Indian GAAP), the guidelines issued by Reserve Bank of India (RBI) from time to time, the Accounting Standards (AS) issued by the Institute of Chartered Accountants of India (ICAI) and notified by the Companies (Accounting Standards) Rules, 2006 (as amended) to the extent applicable and practices generally prevalent in the banking industry in India. The Bank follows the accrual method of accounting, except where otherwise stated, and the historical cost convention.

2. Use of Estimates

The preparation of financial statements requires the management to make estimates and assumptions that affect the reported amount of assets, liabilities, expenses, income and disclosure of contingent liabilities as at the date of the financial statements. Management believes that these estimates and assumptions are reasonable and prudent. However, actual results could differ from estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

3. Revenue Recognition

Revenue is recognized to the extent it is probable that the economic benefits will flow to the Bank and the revenue can be reliably measured

i. Interest income is recognized on accrual basis except in the case of non-performing assets where it is recognised upon realisation as per the prudential norms of the RBI.

ii. Commissions on Letter of Credit (LC)/ Bank Guarantee (BG) are accrued over the period of LC/ BG.

iii. Fee based income are accrued on certainty of receipt and is based on milestones achieved as per terms of agreement with the client.

iv. Income on discounted instruments is recognised over the tenure of the instrument on a constant yield basis.

v. Dividend is accounted on an accrual basis when the right to receive the same is established.

vi. In case of advances, recovery is appropriated as per the order of appropriation specified in the loan agreement / restructuring package.

4. Advances and Provisions

i. Advances are classified into Standard, Sub-standard, Doubtful and Loss assets and provisions are made in accordance with the prudential norms prescribed by RBI. Advances are stated net of provisions towards nonperforming advances.

ii. Advances are classified as Secured by Tangible Assets'' when security of at least 10% of the advance has been stipulated/created against tangible security including book debts. Security in the nature of escrow, guarantee, comfort letter, charge on brand, license, patent, copyright etc are not considered as Tangible Assets''.

iii. Amounts recovered against debts written-off in earlier years and provisions no longer considered necessary in the context of the current status of the borrower are recognised in the Profit And Loss account.

iv. The Bank does not make any floating provision for bad and doubtful advances and investments.

v. Provision on loans and advances restructured/rescheduled is made in accordance with the applicable RBI guidelines on restructuring of loans and advances by Banks.

vi. The Bank makes countercyclical buffer as required by RBI guidelines, amended from time to time, with the approval of the Board and utilizes the same within the limits and in the circumstances permitted by RBI.

5. Investments

Classification

In terms of extant guidelines of the RBI on investment classification and valuation, the entire investment portfolio is categorised as Schedules to the Financial Statements

i. Held To Maturity,

ii. Available For Sale and

iii. Held For Trading.

Investments under each category are further classified as

i. Government Securities

ii. Other Approved Securities

iii. Shares

iv. Debentures and Bonds

v. Subsidiaries/ Joint Ventures

vi. Others (Commercial Paper, Mutual Fund Units, Security Receipts and Pass Through Certificate, SIDBI/NABARD/ NHB/RIDF Deposit).

Basis of Classification

a) Investments that the Bank intends to hold till maturity are classified as ''Held to Maturity''.

b) Investments that are held principally for resale within 90 days from the date of purchase are classified as ''Held For Trading''.

c) Investments, which are not classified in the above two categories, are classified as ''Available For Sale''.

d) An investment is classified as ''Held To Maturity'', ''Available For Sale'' or ''Held For Trading'' at the time of its purchase and subsequent shifting amongst categories and its valuation is done in conformity with RBI guidelines.

e) Investments in subsidiaries, joint venture are classified as ''Held To Maturity''.

Valuation

i) In determining the acquisition cost of an investment:

a) Brokerage, commission, stamp duty and other taxes paid are included in cost of acquisition in respect of acquisition of equity instruments from the secondary market whereas in respect of other investments, including treasury investments, such expenses are charged to Profit and Loss Account.

b) Broken period interest paid/ received is excluded from the acquisition cost/ sale and treated as interest expense/ income.

c) Cost is determined on the weighted average cost method.

ii) Investments ''Held To Maturity'' are carried at acquisition cost unless it is more than the face value, in which case the premium is amortised on straight line basis over the remaining period of maturity. Diminution, other than temporary, in the value of investments in subsidiaries/ joint venture under this category is provided for each investment individually.

iii) Investments ''Held For Trading'' and ''Available For Sale'' are marked to market scrip-wise and the resultant net depreciation, if any, in each category is recognized in the Profit and Loss Account, while the net appreciation, if any, are ignored.

a) Treasury Bills, commercial papers and certificates of deposit being discounted instruments are valued at carrying cost,

b) In respect of traded/ quoted investments, the market price is taken from the trades/ quotes available on the stock exchanges. Government Securities are valued at market prices or prices declared by Primary Dealers Association of India (PDAI) jointly with Fixed Income Money Market and Derivative Association of India (FIMMDA).

c) The unquoted shares are valued at break-up value or at Net Asset Value if the latest balance sheet is available, else, at Rs. 1/- per company and units are valued at repurchase price as per relevant RBI guidelines. The unquoted fixed income securities (other than government securities) are valued on Yield to Maturity (YTM) basis with appropriate mark-up over the YTM rates for Central Government securities of equivalent maturity. Such mark-up and YTM rates applied are as per the relevant rates published by FIMMDA.

d) Security receipts issued by the asset reconstruction companies are valued in accordance with the guidelines applicable to such instruments, prescribed by RBI from time to time. Accordingly, in cases where the cash flows from security receipts issued by the asset reconstruction companies are limited to the actual realisation of the financial assets assigned to the instruments in the concerned scheme, the Bank reckons the net asset value obtained from the asset reconstruction company from time to time, for valuation of such investments at each reporting period end.

e) Preference share valued at market rates, if quoted or on appropriate yield to maturity basis not exceeding redemption value as per RBI guidelines.

Profit or Loss on sale of investments is credited/ debited to Profit and Loss Account. However, profits on sale of investments in Held to Maturity category is first credited to Profit and Loss Account and thereafter appropriated, net of applicable taxes and amount required to be transferred to Statutory Reserves, to the Capital Reserve Account at the year/period end. Loss on sale is recognized in the Profit and Loss Account.

Investments are shown net of provisions.

Repo and reverse repo transactions

In accordance with the RBI guidelines repo and reverse repo transactions in government securities and corporate debt securities (excluding transactions conducted under Liquidity Adjustment Facility (''LAF'') and Marginal Standby Facility (''MSF'') with RBI) are reflected as borrowing and lending transactions respectively. Borrowing cost on repo transactions is accounted as interest expense and revenue on reverse repo transactions is accounted as interest income.

In respect of repo transactions under LAF and MSF with RBI, amount borrowed from RBI is credited to investment account and reversed on maturity of the transaction. Costs thereon are accounted for as interest expense. In respect of reverse repo transactions under LAF, amount lent to RBI is debited to investment account and reversed on maturity of the transaction. Revenues thereon are accounted as interest income.

6. Derivative Transactions

a) Net interest payable/ receivable on derivative transactions is accounted on accrual basis.

b) On premature termination of Hedge swaps, any profit/ losses are recognised over the remaining contractual life of the swap or the residual life of the asset/ liability whichever is lesser.

c) Redesignation of hedge swaps by change of underlying liability is accounted as the termination of one hedge and acquisition of another.

d) Hedge contracts are not marked to market unless the underlying is also marked to market. In respect of hedge contracts that are marked to market, changes in the market value are recognized in the profit and loss account.

Outstanding derivative transactions designated as ''Trading'', which includes interest rate swaps, cross currency swaps, cross currency options and credit default swaps, are measured at their fair value. The resulting profits/ losses are included in the profit and loss account. Premium on options is recorded as a balance sheet item and transferred to Profit and Loss Account on maturity/ cancellation.

Derivative Transactions in Exchange Traded Currency Futures (ETCF''s) segments designated as trading includes Currency Futures, Currency Options and Interest Rate Futures which are measured at their fair value and are cash settled on T 1 basis. The resulting profits / losses on these transactions are transferred to Profit & Loss Account on the month end settlement date stipulated by Respective Exchanges.

i. Fixed assets are carried at historical cost (inclusive of installation cost) except wherever revalued. The appreciation on revaluation, if any, is credited to the Revaluation Reserve'' Account. In respect of revalued assets, the additional depreciation consequent to revaluation is transferred from Revaluation Reserve to the Profit And Loss Account.

ii. Fixed assets individually costing less than Rs. 5000 are fully depreciated in the year of addition.

iii. Depreciation is provided on Straight Line Method (SLM) from the date of addition. The rates of depreciation prescribed in Schedule XIV of the Companies Act, 1956 are considered as the minimum rates. If the management''s estimate of the useful life of a fixed asset at the time of acquisition of the asset or of the remaining useful life on a subsequent review is shorter, depreciation is provided at a higher rate based on management''s estimates of the useful life/ remaining useful life. Pursuant to this policy, depreciation has been provided using the following rates:

iv. Depreciation on additions/ sale of fixed assets during the year is provided for the period for which assets were actually held.

v. Leasehold land is amortised over the period of lease.vi. Computer Software (non-integral) individually costing more than Rs. 2.50 lacs is capitalised and depreciated over its useful life, not exceeding 5 years.

8. Securitisation Transactions:

Securitisation of various loans results in sale of these assets to Special Purpose Vehicles (''SPVs''), which, in turn issue securities to investors. Financial assets are partially or wholly derecognised when the control of the contractual rights in the securitised assets is lost. The Bank accounts for any loss arising on sale immediately at the time of sale and the profit/ premium arising on account of sale is amortised over the life of the securities issued or to be issued by the SPV to which the assets are sold.

9. Sale of financial assets to Securitization Companies/ Reconstruction Companies:

Sale of financial assets to Securitisation Companies (SCs)/ Reconstruction Companies (RCs) is reckoned at the lower of the redemption value of Security Receipts (SRs)/ Pass Through Certificates (PTCs) received and the net book value of the financial asset. Gains arising on such sale or realisation are not recognised in the profit and loss account but earmarked as provisions for meeting the losses/ shortfall arising on sale of other financial assets to SCs/ RCs or sale/ realisation of other SRs/ PTCs. Losses arising on such sale or realisation are first set off against balance of provisions, if any, created out of earlier gains and residual amount of losses are charged to profit and loss account.

10. Foreign Currency Transactions:

i. Foreign currency transactions, on initial recognition are recorded at the exchange rate prevailing on the date of transaction. Monetary foreign currency assets and liabilities are translated at the closing rates prescribed by Foreign Exchange Dealers Association of India (FEDAI) and the resultant gain or loss is recognised in the Profit and Loss account. Exchange differences arising on the settlement of monetary items are recognised as income or expense in the period in which they arise.

ii. Premium or discount arising at the inception of Forward Exchange Contracts which are not intended for trading is amortised as expense or income over the life of the contract. Premium or discount on other Forward Exchange Contracts is not recognised.

iii. Outstanding Forward Exchange Contracts which are not intended for trading are revalued at closing FEDAI rates. Other outstanding Forward Exchange Contracts are valued at rates of exchange notified by FEDAI for specified maturities or at interpolated rates for in-between maturities. The resultant profit/ losses are recognised in the Profit and Loss Account.

iv. Profit/ losses arising on premature termination of Forward Exchange Contracts, together with unamortized premium or discount, if any, is recognised on the date of termination.

v. Contingent liability in respect of outstanding forward exchange contracts is calculated at the contracted rates of exchange and in respect of guarantees; acceptances, endorsements and other obligations are calculated at the closing FEDAI rates.

vi. Operations of foreign branch are classified as Integral Foreign Operations''. Assets and Liabilities are translated at the closing rates prescribed by Foreign Exchange Dealers Association of India (FEDAI). Income and Expenditure items are translated at quarterly average closing rates. The resultant gain or loss is recognised in the Profit and Loss Account.

11. Employee Benefits

a) Payments to defined contribution schemes are charged to Profit and Loss Account of the year when contribution are due.

b) For defined benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains or losses are recognized in the profit and loss account for the period in which they occur.

c) The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognized during the period when the employee renders the service.

12. Segment Reporting

The Bank operates in three segments wholesale banking, retail banking and treasury services. These segments have been identified in line with AS-17 on segment reporting after considering the nature and risk profile of the products and services, the target customer profile, the organization structure and the internal reporting system of the Bank.

Segment revenue, results, assets and liabilities include the amounts identifiable to each of the segments as also amounts allocated, as estimated by the management. Assets and liabilities that cannot be allocated to identifiable segments are grouped under unallocated assets and liabilities.

13. Income Tax

i. Tax expense comprises of current and deferred tax.

Current tax is the amount of Income tax determined to be payable (recoverable) in respect of taxable income (tax loss) for a period.

ii. Deferred tax for timing differences between the book and tax profits for the year is accounted for, using the tax rates and laws that have been substantively enacted as of the balance sheet date. Deferred tax assets arising from timing differences are recognized to the extent there is reasonable certainty that these would be realized in future.

iii. Deferred tax assets in case of unabsorbed losses are recognized only if there is virtual certainty that such deferred tax asset can be realized against future taxable profits.

iv. Disputed taxes not provided for including departmental appeals are included under Contingent Liabilities

14. Earnings Per Share

i. The Bank reports basic and diluted Earnings Per Share in accordance with AS 20. Basic Earnings Per Share is computed by dividing the net profit after tax by the weighted average number of equity shares outstanding for the year.

ii. Diluted Earnings Per Share reflect the potential dilution that could occur if securities or other contracts to issue equity shares were exercised or converted during the period. Diluted Earnings Per Share is computed by dividing the net profit after tax by the sum of the weighted average number of equity shares and dilutive potential equity shares outstanding at the year end.

15. Impairment of Assets

Fixed Assets are reviewed for impairment whenever events or changes in circumstances warrant that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated current realizable value. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds estimated current realizable value of the asset.

16. Provisions, Contingent Liabilities and Contingent Assets

i. In conformity with AS 29, Provisions, Contingent Liabilities and Contingent Assets, the Bank recognizes provisions only when it has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount of the obligation can be made.

ii. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date.

iii. Reimbursement expected in respect of expenditure required to settle a provision is recognised only when it is virtually certain that the reimbursement will be received.


Mar 31, 2013

1 Basis of Preparation

The financial statements have been prepared in accordance with requirements prescribed under the Third Schedule of the Banking Regulation Act, 1949. The accounting policies used in the preparation of these financial statements, in all material aspects, conform to Generally Accepted Accounting Principles in India (Indian GAAP), the guidelines issued by Reserve Bank of India (RBI) from time to time, the Accounting Standards (AS) issued by the Institute of Chartered Accountants of India (ICAI) and notified by the Companies (Accounting Standards) Rules, 2006 (as amended) to the extent applicable and practices generally prevalent in the banking industry in India. The Bank follows the accrual method of accounting, except where otherwise stated, and the historical cost convention.

2 Use of Estimates

The preparation of financial statements requires the management to make estimates and assumptions that affect the reported amount of assets, liabilities, expenses, income and disclosure of contingent liabilities as at the date of the financial statements. Management believes that these estimates and assumptions are reasonable and prudent. However, actual results could differ from estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

3 Revenue Recognition

Revenue is recognized to the extent it is probable that the economic benefits will flow to the Bank and the revenue can be reliably measured

i. Interest income is recognized on accrual basis except in the case of non-performing assets where it is recognised upon realisation as per the prudential norms of the RBI.

ii. Commissions on Letter of Credit (LC)/ Bank Guarantee (BG) are reckoned as accrued, upfront in cases where the commission does not exceed Rs. 1 lac and, in other cases, accrued over the period of LC/ BG.

iii. Fee based income are accrued on certainty of receipt and is based on milestones achieved as per terms of agreement with the client.

iv. Income on discounted instruments is recognised over the tenure of the instrument on a constant yield basis.

v. Dividend is accounted on an accrual basis when the right to receive the same is established.

vi. In case of advances, recovery is appropriated as per the order of appropriation specified in the loan agreement / restructuring package.

4 Advances and Provisions

i. Advances are classified into Standard, Sub- standard, Doubtful and Loss assets and provisions are made in accordance with the prudential norms prescribed by RBI. Advances are stated net of provisions towards non- performing advances.

ii. Advances are classified as ''Secured by Tangible Assets'' when security of at least 10% of the advance has been stipulated/created against tangible security including book debts. Security in the nature of escrow, guarantee, comfort letter, charge on brand, license, patent, copyright etc are not considered as ''Tangible Assets''.

iii. Amounts recovered against debts written- off in earlier years and provisions no longer considered necessary in the context of the current status of the borrower are recognised in the Profit And Loss account.

5 Investments classification

In terms of extant guidelines of the RBI on investment classification and valuation, the entire investment portfolio is categorised as

i, Held To Maturity,

ii, Available For Sale and

iii, Held For Trading,

Investments under each category are further classified as

i, Government Securities

ii, Other Approved Securities

iii, Shares

iv, Debentures and Bonds

v, Subsidiaries/ Joint Ventures

vi, Others (Commercial Paper, Mutual Fund Units, Security Receipts and Pass Through Certificate),

Basis of Classification

a) Investments that the Bank intends to hold till maturity are classified as ''Held to Maturity'',

b) Investments that are held principally for resale within 90 days from the date of purchase are classified as ''Held For Trading'',

c) Investments, which are not classified in the above two categories, are classified as ''Available For Sale'',

d) An investment is classified as ''Held To Maturity'', ''Available For Sale'' or ''Held For Trading'' at the time of its purchase and subsequent shifting amongst categories and its valuation is done in conformity with RBI guidelines,

e) Investments in subsidiaries, joint venture are classified as ''Held To Maturity'',

Valuation

i) In determining the acquisition cost of an investment:

a) Brokerage, commission, stamp duty and other taxes paid are included in cost of acquisition in respect of acquisition of equity instruments from the secondary market whereas in respect of other investments, including treasury investments, such expenses are charged to Profit and Loss Account,

b) Broken period interest paid/ received is excluded from the acquisition cost/ sale and treated as interest expense/ income,

c) Cost is determined on the weighted average cost method,

ii) Investments ''Held To Maturity'' are carried at acquisition cost unless it is more than the face value, in which case the premium is amortised on straight line basis over the remaining period of maturity, Diminution, other than temporary, in the value of investments in subsidiaries/ joint venture under this category is provided for each investment individually,

iii) Investments ''Held For Trading'' and ''Available For Sale'' are marked to market scrip-wise and the resultant net depreciation, if any, in each category is recognized in the Profit and Loss Account, while the net appreciation, if any, are ignored,

a) Treasury Bills, commercial papers and certificates of deposit being discounted instruments are valued at carrying cost,

b) In respect of traded/ quoted investments, the market price is taken from the trades/ quotes available on the stock exchanges, Government Securities are valued at market prices or prices declared by Primary Dealers Association of India (PDAI) jointly with Fixed Income Money Market and Derivative Association of India (FIMMDA),

c) The unquoted shares are valued at break- up value or at Net Asset Value if the latest balance sheet is available, else, at Rs. 1/- per company and units are valued at repurchase price as per relevant RBI guidelines. The unquoted fixed income securities (other than government securities) are valued on Yield to Maturity (YTM) basis with appropriate mark-up over the YTM rates for Central Government securities of equivalent maturity. Such mark-up and YTM rates applied are as per the relevant rates published by FIMMDA.

d) Security receipts issued by the asset reconstruction companies are valued in accordance with the guidelines applicable to such instruments, prescribed by RBI from time to time. Accordingly, in cases where the cash flows from security receipts issued by the asset reconstruction companies are limited to the actual realisation of the financial assets assigned to the instruments in the concerned scheme, the Bank reckons the net asset value obtained from the asset reconstruction company from time to time, for valuation of such investments at each reporting period end.

e) The debentures/ bonds/ preference shares deemed to be in the nature of advance, are subject to the usual prudential norms of asset classification and provisioning that are applicable to advances.

f) Preference share valued at market rates, if quoted or on appropriate yield to maturity basis not exceeding redemption value as per RBI guidelines.

Profit or Loss on sale of investments is credited/ debited to Profit and Loss Account. However, profits on sale of investments in Held to Maturity category is first credited to Profit and Loss Account and thereafter appropriated net of applicable taxes to the Capital Reserve Account at the year/period end. Loss on sale is recognized in the Profit and Loss Account.

Investments are shown net of provisions.

Repo and reverse repo transactions

In accordance with the RBI guidelines repo and reverse repo transactions in government securities and corporate debt securities (excluding transactions conducted under Liquidity Adjustment Facility (''LAF'') and Marginal Standby Facility (''MSF'') with RBI) are reflected as borrowing and lending transactions respectively. Borrowing cost on repo transactions is accounted as interest expense and revenue on reverse repo transactions is accounted as interest income.

In respect of repo transactions under LAF and MSF with RBI, amount borrowed from RBI is credited to investment account and reversed on maturity of the transaction. Costs thereon are accounted for as interest expense. In respect of reverse repo transactions under LAF, amount lent to RBI is debited to investment account and reversed on maturity of the transaction. Revenues thereon are accounted as interest income.

6 Derivative Transactions

In Transactions designated as ''hedge'':

a) Net interest payable/ receivable on derivative transactions is accounted on accrual basis.

b) On premature termination of Hedge swaps, any profit/ losses are recognised over the remaining contractual life of the swap or the residual life of the asset/ liability whichever is lesser.

c) Redesignation of hedge swaps by change of underlying liability is accounted as the termination of one hedge and acquisition of another.

d) Hedge contracts are not marked to market unless the underlying is also marked to market.

In respect of hedge contracts that are marked to market, changes in the market value are recognized in the profit and loss account.

In Transactions Designated As ''Trading'':

Outstanding derivative transactions designated as ''Trading'', which includes interest rate swaps, cross currency swaps, cross currency options and credit default swaps, are measured at their fair value. The resulting profits/ losses are included in the profit and loss account. Premium on options is recorded as a balance sheet item and transferred to Profit and Loss Account on maturity/ cancellation.

7 Fixed Assets and depreciation

i Fixed assets are carried at historical cost (inclusive of installation cost) except wherever revalued. The appreciation on revaluation, if any, is credited to the ''Revaluation Reserve'' Account. In respect of revalued assets, the additional depreciation consequent to revaluation is transferred from Revaluation Reserve to the Profit And Loss Account.

ii Fixed assets individually costing less than Rs. 5000 are fully depreciated in the year of addition.

iii Depreciation is provided on Straight Line Method (SLM) from the date of addition. The rates of depreciation prescribed in Schedule XIV of the Companies Act, 1956 are considered as the minimum rates. If the management''s estimate of the useful life of a fixed asset at the time of acquisition of the asset or of the remaining useful life on a subsequent review is shorter, depreciation is provided at a higher rate based on management''s estimates of the useful life/ remaining useful life. Pursuant to this policy, depreciation has been provided using the following rates:

iv Depreciation on additions/ sale of fixed assets during the year is provided for the period for which assets were actually held.

v Leasehold land is amortised over the period of lease.

vi Computer Software (non-integral) individually costing more than Rs. 2.50 lacs is capitalised and depreciated over its useful life, not exceeding 5 years.

8 Securitisation Transactions:

Securitisation of various loans results in sale of these assets to Special Purpose Vehicles (''SPVs''), which, in turn issue securities to investors. Financial assets are partially or wholly derecognised when the control of the contractual rights in the securitised assets is lost. The Bank accounts for any loss arising on sale immediately at the time of sale and the profit/ premium arising on account of sale is amortised over the life of the securities issued or to be issued by the SPV to which the assets are sold.

9 Sale of financial assets to Securitization Companies/ Reconstruction Companies:

Sale of financial assets to Securitisation Companies (SCs)/ Reconstruction Companies (RCs) is reckoned at the lower of the redemption value of Security Receipts (SRs)/ Pass Through Certificates (PTCs) received and the net book value of the financial asset, Gains arising on such sale or realisation are not recognised in the profit and loss account but earmarked as provisions for meeting the losses/ shortfall arising on sale of other financial assets to SCs/ RCs or sale/ realisation of other SRs/ PTCs, Losses arising on such sale or realisation are first set off against balance of provisions, if any, created out of earlier gains and residual amount of losses are charged to profit and loss account,

10 Foreign currency Transactions:

i Foreign currency transactions, on initial recognition are recorded at the exchange rate prevailing on the date of transaction, Monetary foreign currency assets and liabilities are translated at the closing rates prescribed by Foreign Exchange Dealers Association of India (FEDAI) and the resultant gain or loss is recognised in the Profit and Loss account, Exchange differences arising on the settlement of monetary items are recognised as income or expense in the period in which they arise,

ii Premium or discount arising at the inception of Forward Exchange Contracts which are not intended for trading is amortised as expense or income over the life of the contract, Premium or discount on other Forward Exchange Contracts is not recognised,

iii Outstanding Forward Exchange Contracts which are not intended for trading are revalued at closing FEDAI rates, Other outstanding Forward Exchange Contracts are valued at rates of exchange notified by FEDAI for specified maturities or at interpolated rates for in- between maturities, The resultant profit/ losses are recognised in the Profit and Loss Account,

iv Profit/ losses arising on premature termination of Forward Exchange Contracts, together with unamortized premium or discount, if any, is recognised on the date of termination,

v Contingent liability in respect of outstanding forward exchange contracts is calculated at the contracted rates of exchange and in respect of guarantees; acceptances, endorsements and other obligations are calculated at the closing FEDAI rates,

vi Operations of foreign branch are classified as ''Integral Foreign Operations'', Assets and Liabilities are translated at the closing rates prescribed by Foreign Exchange Dealers Association of India (FEDAI) Income and Expenditure items are translated at quarterly average closing rates, The resultant gain or loss is recognised in the Profit and Loss Account,

11 Employee benefits

i post-employment benefit plans

a) Payments to defined contribution schemes are charged to Profit and Loss Account of the year when contribution are due,

b) For defined benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each Balance Sheet date, Actuarial gains or losses are recognized in the profit and loss account for the period in which they occur,

Ii Short-Term Employee Benefit

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognized during the period when the employee renders the service,

12 Segment Reporting

The Bank operates in three segments wholesale banking, retail banking and treasury services, These segments have been identified in line with AS-17 on segment reporting after considering the nature and risk profile of the products and services, the target customer profile, the organization structure and the internal reporting system of the Bank.

Segment revenue, results, assets and liabilities include the amounts identifiable to each of the segments as also amounts allocated, as estimated by the management. Assets and liabilities that cannot be allocated to identifiable segments are grouped under unallocated assets and liabilities.

13 Income Tax

i Tax expense comprises of current and deferred tax.

Current tax is the amount of Income tax determined to be payable (recoverable) in respect of taxable income (tax loss) for a period.

ii Deferred tax for timing differences between the book and tax profits for the year is accounted for, using the tax rates and laws that have been substantively enacted as of the balance sheet date. Deferred tax assets arising from timing differences are recognized to the extent there is reasonable certainty that these would be realized in future.

iii Deferred tax assets in case of unabsorbed losses are recognized only if there is virtual certainty that such deferred tax asset can be realized against future taxable profits.

iv Disputed taxes not provided for including departmental appeals are included under Contingent Liabilities.

14 Earnings Per Share

i The Bank reports basic and diluted Earnings Per Share in accordance with AS 20. Basic Earnings Per Share is computed by dividing the net profit after tax by the weighted average number of equity shares outstanding for the year.

ii Diluted Earnings Per Share reflect the potential dilution that could occur if securities or other contracts to issue equity shares were exercised or converted during the period. Diluted Earnings Per Share is computed by dividing the net profit after tax by the sum of the weighted average number of equity shares and dilutive potential equity shares outstanding at the year end.

15 Impairment of Assets

Fixed Assets are reviewed for impairment whenever events or changes in circumstances warrant that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated current realizable value. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds estimated current realizable value of the asset.

16 Provisions, Contingent Liabilities and Contingent Assets

i In conformity with AS 29, Provisions, Contingent Liabilities and Contingent Assets, the Bank recognizes provisions only when it has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount of the obligation can be made.

ii Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date.

iii Reimbursement expected in respect of expenditure required to settle a provision is recognised only when it is virtually certain that the reimbursement will be received.

iv Contingent Assets are not recognized.


Mar 31, 2012

1. Basis of Preparation

The accompanying financial statements have been prepared on historical basis 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 prevailing practices in Banking industry.

2. Use of Estimates

The preparation of financial statements requires the management to make estimates and assumptions that affect the reported amount of assets, liabilities, expenses, income and disclosure of contingent liabilities as at the date of the financial statements. Management believes that these estimates and assumptions are reasonable and prudent. However, actual results could differ from estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

3. Revenue Recognition

Revenue is recognized to the extent it is probable that the economic benefits will fl ow to the Bank and the revenue can be reliably measured:

i. Interest income and lease rentals are accrued except in the case of non performing assets where it is recognised upon realisation as per the prudential norms of the RBI.

ii. Commissions on LC/ guarantee are reckoned as accrued, upfront in cases where the commission does not exceed Rs. 1 lakh and, in other cases, accrued over the period of LC/ Guarantees.

iii. Fee based income are accrued on certainty of receipt and is based on milestones achieved as per terms of agreement with the client.

iv. Income on discounted instruments is recognised over the tenure of the instrument on a constant yield basis.

v. Dividend is accounted on an accrual basis when the right to receive the same is established.

4. Advances and Provisions:

i. Advances are classified into Standard, Sub-standard, Doubtful and Loss assets and provisions are made in accordance with the prudential norms prescribed by RBI. Advances are stated net of provisions towards non- performing advances.

ii. Advances are classified as 'Secured by Tangible Assets' when security of at least 10% of the advance has been stipulated/created against tangible security including book debts. Security in the nature of escrow, guarantee, comfort letter, charge on brand, license, patent, copyright etc are not considered as 'Tangible Assets'.

5. Investments:

Classification:

In terms of extant guidelines of the RBI, the entire investment portfolio is categorized as

i. Held To Maturity,

ii. Available For Sale and

iii. Held For Trading.

Investments under each category are further classifi ed as

i. Government Securities

ii. Other Approved Securities

iii. Shares

iv. Debentures and Bonds

v. Subsidiaries/ Joint Ventures

vi. Others (Commercial Paper, Mutual Fund Units, etc.).

Basis of Classification:

a) Investments that the Bank intends to hold till maturity are classifi ed as 'Held to Maturity'.

b) Investments that are held principally for resale within 90 days from the date of purchase are classified as 'Held For Trading'.

c) Investments, which are not classified in the above two categories, are classified as 'Available For Sale'.

d) An investment is classified as 'Held To Maturity', 'Available For Sale' or 'Held For Trading' at the time of its purchase and subsequent shifting amongst categories and its valuation is done in conformity with regulatory guidelines.

e) Investments in subsidiaries and joint ventures are classified as 'Held To Maturity'.

f) The debentures/ bonds/ preference shares deemed to be in the nature of advance, are subject to the usual prudential norms of asset classifi cation and provisioning that are applicable to advances.

Valuation:

In determining the acquisition cost of an investment:

a) Brokerage, commission, stamp duty and other taxes paid are included in cost of acquisition in respect of acquisition of equity instruments from the secondary market whereas in respect of other investments, including treasury investments, such expenses are charged to revenue.

b) Upfront incentives received on subscription to securities are recognized as income.

c) Broken period interest paid/ received is excluded from the acquisition cost/ sale and treated as interest expense/ income.

d) Cost is determined on the weighted average cost method.

ii) Investments 'Held To Maturity' are carried at acquisition cost unless it is more than the face value, in which case the premium is amortised on straight line basis over the remaining period of maturity. Diminution, other than temporary, in the value of investments in subsidiaries/ joint ventures under this category is provided for each investment individually. Profits on sale of investments in this category is first credited to Profit and Loss Account and thereafter appropriated net of applicable taxes to the Capital Reserve Account at the year/period end. Loss on sale is recognized in the Profit and Loss Account.

iii) Investments 'Held For Trading' and Available For Sale' are marked to market scrip-wise and the resultant net depreciation, if any, in each category is recognized in the Profit and Loss account, while the net appreciation, if any, is ignored.

a) Treasury Bills, commercial papers and certificates of deposit being discounted instruments are valued at carrying cost,

b) In respect of traded/ quoted investments, the market price is taken from the trades/ quotes available on the stock exchanges. Government Securities are valued at market prices or prices declared by Primary Dealers Association of India (PDAI) jointly with Fixed Income Money Market and Derivative Association of India (FIMMDA)

c) The unquoted shares/ units are valued at break-up value/ repurchase price or at Net Asset Value if the latest balance sheet is available, else, at Rs. 1/- per company, as per relevant RBI guidelines. The unquoted fixed income securities (other than government securities) are valued on Yield to Maturity (YTM) basis with appropriate mark-up over the YTM rates for Central Government securities of equivalent maturity. Such mark- up and YTM rates applied are as per the relevant rates published by FIMMDA.

d) Profit or Loss on sale of investments is credited/ debited to Profi t and Loss Account (Sale of Investments).

iv) Investments are shown net of provisions.

v) Investments are shown net of securities given against borrowing and include securities received against lending under Repo/ Reverse Repo arrangements respectively.

6. Derivative Transactions:

i. In Transactions designated as 'Hedge':

a. Net interest payable/ receivable on derivative transactions is accounted on accrual basis.

b. On premature termination of Hedge swaps, any profit/ losses are recognised over the remaining contractual life of the swap or the residual life of the asset/ liability whichever is lesser.

c. Re designation of hedge swaps by change of underlying liability is accounted as the termination of one hedge and acquisition of another.

d. Hedge contracts are not marked to market unless the underlying is also marked to market. In respect of hedge contracts that are marked to market, changes in the market value are recognized in the profit and loss account.

ii. In Transactions designated as 'Trading':

Outstanding derivative transactions designated as 'Trading', which includes interest rate swaps, cross currency swaps, cross currency options and forward rate agreements, are measured at their fair value. The resulting profits/ losses are included in the profit and loss account. Premium on options is recorded as a balance sheet item and transferred to Profit and Loss Account on maturity/ cancellation.

7. Fixed Assets and depreciation:

i. Fixed assets are carried at historical cost (inclusive of installation cost) except wherever revalued. The appreciation on revaluation, if any, is credited to the 'Revaluation Reserve' Account. In respect of revalued assets, the additional depreciation consequent to revaluation is transferred from Revaluation Reserve to the Profit and Loss account.

ii. Fixed assets individually costing less than Rs. 5000 are fully depreciated in the year of addition.

iii. Depreciation is provided on Straight Line Method (SLM) from the date of addition. The rates of depreciation prescribed in Schedule XIV of the Companies Act, 1956 are considered as the minimum rates. If the management's estimate of the useful life of a fixed asset at the time of acquisition of the asset or of the remaining useful life on a subsequent review is shorter, depreciation is provided at a higher rate based on management's estimates of the useful life/ remaining useful life. Pursuant to this policy, depreciation has been provided using the following rates:

iv. Depreciation on additions/ sale of fixed assets during the year is provided for the actual period.

v. Leasehold land is amortised over the period of lease.

vi. Computer Software (non-integral) individually costing more than Rs. 2.50 lakh is capitalised and depreciated over its useful life, not exceeding 5 years.

8. Assets given on lease

Assets given on finance lease by the Bank on or before March 31, 2001 are classified as "Leased Assets" under "Fixed Assets". Depreciation thereon is provided on SLM basis at the rates prescribed under Schedule XIV of the Companies Act, 1956. The amount of "Lease Equalisation" representing the difference between the annual lease charge and the depreciation is adjusted in the Profit & Loss Account.

ii. Assets given under finance lease after March 31, 2001 are accounted in accordance with the provisions of AS 19 and included under "Advances".

9. Securitisation Transactions:

Securitisation of various loans result in sale of these assets to Special Purpose Vehicles ('SPVs'), which, in turn issue securities to investors. Financial assets are partially or wholly derecognised when the control of the contractual rights in the securitised assets is lost. The Bank accounts for any loss arising on sale immediately at the time of sale and the profit/ premium arising on account of sale is amortised over the life of the securities issued or to be issued by the SPV to which the assets are sold.

Sale of financial assets to Securitization Companies/ Reconstruction Companies:

Sale of financial assets to Securitisation Companies (SCs)/ Reconstruction Companies (RCs) is reckoned at the lower of the redemption value of Security Receipts (SRs)/ Pass Through Certificates (PTCs) received and the net book value of the financial asset. Gains arising on such sale or realisation are not recognised in the profit and loss account but earmarked as provisions for meeting the losses/ shortfall arising on sale of other financial assets to SCs/ RCs or sale/ realisation of other SRs/ PTCs. Losses arising on such sale or realisation are first set off against balance of provisions, if any, created out of earlier gains and residual amount of losses are charged to profit and loss account. The PTCs are carried at the value as determined above, till their sale or realisation. The SRs are carried, in the aggregate, at book value or at latest NAV, whichever is lower.

11. Foreign Currency Transactions:

i. Foreign currency transactions, on initial recognition are recorded at the exchange rate prevailing on the date of transaction. Monetary foreign currency assets and liabilities are translated at the closing rates prescribed by Foreign Exchange Dealers Association of India (FEDAI) and the resultant gain or loss is recognised in the profit and loss account. Exchange differences arising on the settlement of monetary items are recognised as income or expense in the period in which they arise.

Premium or discount arising at the inception of Forward Exchange Contracts which are not intended for trading or speculation is amortised as expense or income over the life of the contract. Premium or discount on other Forward Exchange Contracts is not recognised.

iii. Outstanding Forward Exchange Contracts which are not intended for trading or speculation are revalued at closing FEDAI rates. Other outstanding Forward Exchange Contracts are revalued at rates of exchange notified by FEDAI for specified maturities or at interpolated rates for in-between maturities. The resultant profit/ losses are included in the profit and loss account.

iv. Profit/ losses arising on premature termination of Forward Exchange Contracts, together with unamortized premium or discount, if any, is recognised on the date of termination.

v. Contingent liability in respect of outstanding forward exchange contracts is calculated at the contracted rates of exchange and in respect of guarantees, acceptances, endorsements and other obligations are calculated at the closing FEDAI rates.

vi. Operations of foreign branch are classified as 'Integral Foreign Operations' and are translated using the same principles and procedures as those of the bank.

12. Employee Benefits

i. Post-employment benefit plans

a) Payments to defined contribution schemes are charged as expense as they fall due.

b) For defined benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains or losses are recognized in full in the profit and loss account for the period in which they occur. Past Service cost is recognized immediately to the extent that the benefits are already vested and otherwise is amortised on a straight-line basis over the average period until the benefits become vested.

ii. Short-term employee Benefit:

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognized during the period when the employee renders the service.

iii. Transitional Liability

The Bank has adopted Accounting Standard-15 (Revised 2005), 'Employee Benefits' with effect from April 1, 2007. The transitional liability arising on such adoption is amortised over a period of five years commencing from the financial year 2007-08 in accordance with the provisions of AS-15.

iv. The intrinsic value of options under Employee Stock Option Plan (ESOP) is expensed on a straight-line basis over the vesting period of the ESOP.

13. Income Tax

Tax expense comprises of current and deferred tax.

Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the Bank will pay normal income tax during the specified period.

Deferred tax for timing differences between the book and tax profits for the year is accounted for, using the tax rates and laws that have been substantively enacted as of the balance sheet date. Deferred tax assets arising from timing differences are recognized to the extent there is reasonable certainty that these would be realized in future.

iv. Deferred tax assets in case of unabsorbed losses are recognized only if there is virtual certainty that such deferred tax asset can be realized against future taxable profits.

Disputed taxes not provided for including departmental appeals are included under Contingent Liabilities.

14. Earnings Per Share:

i. The Bank reports basic and diluted Earnings Per Share in accordance with AS 20. Basic Earnings Per Share is computed by dividing the net profit after tax by the weighted average number of equity shares outstanding for the year.

Diluted Earnings Per Share reflect the potential dilution that could occur if securities or other contracts to issue equity shares were exercised or converted during the period. Diluted Earnings Per Share is computed by dividing the net profit after tax by the sum of the weighted average number of equity shares and dilutive potential equity shares outstanding at the year end.

15. Impairment of Assets

Fixed Assets are reviewed for impairment whenever events or changes in circumstances warrant that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated current realizable value. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds estimated current realizable value of the asset.

16. Provisions, Contingent Liabilities and Contingent Assets

i. In conformity with AS 29, Provisions, Contingent Liabilities and Contingent Assets, the Bank recognizes provisions only when it has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount of the obligation can be made.

Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date.

iii. Reimbursement expected in respect of expenditure required to settle a provision is recognised only when it is virtually certain that the reimbursement will be received.

iv. Contingent Assets are not recognized.

A Disclosure Requirements as per Accounting Standards

1. PREMISES (AS-10)

Premises include Leasehold Land (revalued) of Rs. 1339,70,11 Thousand (Rs. 1339,70,11 Thousand) which was revalued in the year 2006-07.

Bank has revalued its Freehold Land & Residential/ Office building based on valuations made by independent valuers during the financial year 2006-07. The net appreciation of Rs. 2063,91,00 Thousand arising on revaluation, being the difference between the net book value of Rs. 529,02,00 Thousand and revalued amount of Rs. 2592,93,00 Thousand as on March 31, 2007, was credited to Revaluation Reserve.

2. EMPLOYEE BENEFITS (AS-15) (REVISED)

i. Transitional Liability

The transitional liability arising on account of adoption of Accounting Standard-15 (Revised 2005) on "Employee Benefits" is Rs. 63,22,00 Thousand (Pension - Rs. 31,09,00 Thousand, Gratuity - Rs. 16,41,00 Thousand, Disability Assistance - Rs. 13,28,00 Thousand and Leave encashment - Rs. 2,44,00 Thousand) (Rs. 63,22,00 Thousand) is to be charged to revenue over the period of five years. The remaining balance of Rs. 12,50,00 Thousand (Rs. 12,50,00 Thousand) has been charged to Profit & Loss Account being the fifth year.

ii. Defined Contribution Schemes

Bank's employees are covered by Provident Fund to which the Bank makes a defined contribution measured as a fixed percentage of basic salary. The Provident Fund plan is administered by the Administrators of 'IDBI Bank Employees Provident Fund Trust'. In respect of employees of erstwhile IHFL and IGL, provident fund contributions were made to Regional Provident fund commissioner up to May, 2011 and thereafter the contributions have been made to aforementioned trust. During the year an amount of Rs. 4,54,73 Thousand (Rs. 4,26,73 thousand) has been charged to Profit and Loss Account.

The Bank's employees joined after April 1, 2008 are covered by Defined Contribution Pension Scheme (DCPS) to which Bank makes a defined contribution as a fixed percentage of Pay and Dearness Allowance. During the year an amount of Rs. 3,20,476 Thousand (Rs. 1,52,526 Thousand) has been charged to Profit and Loss Account.

iii. Defined Benefit Schemes

a. The Bank makes contributions for the gratuity liability of the employees, to the 'IDBI Bank Employees Gratuity Fund Trust'. The Gratuity Fund of employees of erstwhile IHFL and erstwhile IGL is continued with LIC under Group Gratuity Scheme.

b. Some of the employees of the Bank are also eligible for Pension which is administered by the 'IDBI Pension Fund Trust'.

The present value of these defined benefit obligations and the related current service cost are measured using the Projected Unit Credit Method with actuarial valuation being carried out at each balance sheet date.

iv. Other long term benefits

Employees of the Bank are entitled to accumulate their earned/ privilege leave up to a maximum of 180 days for officers and 300 days for other staff. A maximum of 15 days leave is eligible for encashment in each year. Some of the employees are eligible for Disability Assistance and Voluntary Health Scheme which is borne by the Bank as and when the disability/liability events occur.

In respect of erstwhile IHFL the employees are entitled to accumulate leave upto maximum of 180 days/240 days based on their cadre and in respect of employees of erstwhile IGL leave upto 240 days can be accumulated.

Actuarial valuation of these benefits have been carried out using the Projected Unit Credit Method and an amount of Rs. 51,07,18 Thousand (Rs. 39,54,98 Thousand) has been charged to Profit and Loss Account during the year.


Mar 31, 2011

1. Basis of Preparation

The accompanying financial statements have been prepared on historical basis 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 prevailing practices in Banking industry.

2. Use of Estimates

The preparation of financial statements requires the management to make estimates and assumptions that affect the reported amount of assets, liabilities, expenses, income and disclosure of contingent liabilities as at the date of the financial statements. Management believes that these estimates and assumptions are reasonable and prudent. However, actual results could differ from estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

3. Revenue Recognition

Revenue is recognized to the extent it is probable that the economic benefits will flow to the Bank and the revenue can be reliably measured:

Interest income and lease rentals are accrued except in the case of non performing assets where it is recognised upon realisation as per the prudential norms of the RBI.

Commissions on LC/ guarantee are reckoned as accrued, upfront in cases where the commission does not exceed Rs 1 lakh and, in other cases, accrued over the period of LC/ Guarantees.

iii. Fee based income are accrued on certainty of receipt and is based on milestones achieved as per terms of agreement with the client.

iv. Income on discounted instruments is recognised over the tenure of the instrument on a constant yield basis.

v. Dividend is accounted on an accrual basis when the right to receive the same is established.

4. Advances and Provisions:

i. Advances are classified into Standard, Sub-standard, Doubtful and Loss assets and provisions are made in accordance with the prudential norms prescribed by RBI. Advances are stated net of provisions towards non- performing advances.

ii. Advances are classified as "Secured by Tangible Assets' when security of at least 10% of the advance has been stipulated/created against tangible security including book debts. Security in the nature of escrow, guarantee, comfort letter, charge on brand, license, patent, copyright etc are not considered as Tangible Assets'.

5. Investments:

Classification:

i. Held To Maturity,

ii. Available For Sale and

iii. Held For Trading.

Investments under each category are further classified as

i. Government Securities

ii. Other Approved Securities

iii. Shares

iv. Debentures and Bonds

v. Subsidiaries/Joint Ventures

vi. Others (Commercial Paper, Mutual Fund Units, etc.).

Basis of Classification:

a) Investments that the Bank intends to hold till maturity are classified as 'Held to Maturity'.

b) Investments that are held principally for resale within 90 days from the date of purchase are classified as 'Held F Trading'.

c) Investments, which are not classified in the above two categories, are classified as 'Available For Sale'.

d) An investment is classified as 'Held To Maturity', 'Available For Sale' or 'Held For Trading' at the time of purchase and subsequent shifting amongst categories and its valuation is done in conformity with regulat guidelines.

e) Investments in subsidiaries and joint ventures are classified as 'Held To Maturity'.

f) The debentures/ bonds/ preference shares deemed to be in the nature of advance, are subject to the usual prude norms of asset classification and provisioning that are applicable to advances.

Valuation:

i) In determining the acquisition cost of an investment:

a) Brokerage, commission, stamp duty and other taxes paid are included in cost of acquisition in r< of acquisition of equity instruments from the secondary market whereas in respect of other investments, including treasury investments, such expenses are charged to revenue.

b) Upfront incentives received on subscription to securities are recognized as income.

c) Broken period interest paid/ received is excluded from the acquisition cost/ sale and treated as interest expense/ income.

d) Cost is determined on the weighted average cost method.

ii) Investments 'Held To Maturity' are carried at acquisition cost unless it is more than the face value, in which case the premium is amortised on straight line basis over the remaining period of maturity. Diminution, other than temporary, in the value of investments in subsidiaries/ joint ventures under this category is provided for each investment individually. Profits on sale of investments in this category is first credited to Profit and Loss Account and thereafter appropriated net of applicable taxes to the Capital Reserve Account at the year/period end. Loss on sale is recognized in the Profit and Loss Account.

iii) Investments 'Held For Trading' and 'Available For Sale' are marked to market scrip-wise and the resultant net depreciation, if any, in each category is recognized in the Profit and Loss account, while the net appreciation, if any, is ignored.

a) Treasury Bills, commercial papers and certificates of deposit being discounted instruments are valued at carrying cost,

b) In respect of traded/ quoted investments, the market price is taken from the trades/ quotes available on the stock exchanges. Government Securities are valued at market prices or prices declared by Primary Dealers Association of India (PDAI) jointly with Fixed Income Money Market and Derivative Association of India (FIMMDA)

c) The unquoted shares/ units are valued at break-up value/ repurchase price or at Net Asset Value if the latest balance sheet is available, else, at Rs 1/- per company, as per relevant RBI guidelines. The unquoted fixed income securities (other than government securities) are valued on Yield to Maturity (YTM) basis with appropriate mark-up over the YTM rates for Central Government securities of equivalent maturity. Such mark-up and YTM rates applied are as per the relevant rates published by FIMMDA.

d) Profit or Loss on sale of investments is credited/ debited to Profit and Loss Account (Sale of Investments).

iv) Investments are shown net of provisions.

v) Investments are shown net of securities given against borrowing and include securities received against lending under Repo/ Reverse Repo arrangements respectively.

6. Derivative Transactions:

In Transactions designated as 'Hedge':

a. Net interest payable/ receivable on derivative transactions is accounted on accrual basis.

b. On premature termination of Hedge swaps, any profit/ losses are recognised over the remaining contractual life of the swap or the residual life of the asset/ liability whichever is lesser.

c. Redesignation of hedge swaps by change of underlying liability is accounted as the termination of one hedge and acquisition of another.

d. Hedge contracts are not marked to market unless the underlying is also marked to market. In respect of hedge contracts that are marked to market, changes in the market value are recognized in the profit and loss account.

ii. ' In Transactions designated as 'Trading':

Outstanding derivative transactions designated as 'Trading', which includes interest rate swaps, cross currency swaps, cross currency options and forward rate agreements, are measured at their fair value. The resulting profits/ losses are included in the profit and loss account. Premium on options, is recorded as a balance sheet item and transferred to Profit and Loss Account on maturity/ cancellation.

7. Fixed Assets and depreciation:

i. Fixed assets are carried at historical cost (inclusive of installation cost) except wherever revalued. The appreciation on revaluation, if any, is credited to the Revaluation Reserve' Account. In respect of revalued assets, the additional depreciation consequent to revaluation is transferred from Revaluation Reserve to the Profit and Loss account.

ii. Fixed assets individually costing less than Rs 5000 are fully depreciated in the year of addition.

iii. Depreciation is provided on Straight Line Method (SLM) from the date of addition. The rates of depreciation prescribed in Schedule XIV of the Companies Act, 1956 are considered as the minimum rates. If the management's estimate of the useful life of a fixed asset at the time of acquisition of the asset or of the remaining useful life on a subsequent review is shorter, depreciation is provided at a higher rate based on management's estimates of the useful life/ remaining useful life. Pursuant to this policy, depreciation has been provided using the following rates:

iv. Depreciation on additions/ sale of fixed assets during the year is provided for the actual period.

v. Leasehold land is amortised over the period of lease.

vi. Computer Software (non-integral) individually costing more than Rs 2.50 lakh is capitalised and depreciated over its useful life, not exceeding 5 years.

8. Assets given on lease

i. Assets given on finance lease by the Bank on or before March 31, 2001 are classified as "Leased Assets" under "Fixed Assets". Depreciation thereon is provided on SLM basis at the rates prescribed under Schedule XIV of the Companies Act, 1956. The amount of "Lease Equalisation" representing the difference between the annual lease charge and the depreciation is adjusted in the Profit & Loss Account.

ii. Assets given under finance lease after March 31, 2001 are accounted in accordance with the provisions of AS 19 and included under "Advances".

9. Securitisation Transactions:

Securitisation of various loans result in sale of these assets to Special Purpose Vehicles ('SPVs'), which, in turn issue securities to investors. Financial assets are partially or wholly derecognised when the control of the contractual rights in the securitised assets is lost. The Bank accounts for any loss arising on sale immediately at the time of sale and the profit/ premium arising on account of sale is amortised over the life of the securities issued or to be issued by the SPV to which the assets are sold.

10. Sale of financial assets to Securitization Companies/ Reconstruction Companies:

Sale of financial assets to Securitisation Companies (SCs)/ Reconstruction Companies (RCs) is reckoned at the lower of the redemption value of Security Receipts (SRs)/ Pass Through Certificates (PTCs) received and the net book value of the financial asset. Gains arising on such sale or realisation are not recognised in the profit and loss account but earmarked as provisions for meeting the losses/ shortfall arising on sale of other financial assets to SCs/ RCs or sale/ realisation of other SRs/ PTCs. Losses arising on such sale or realisation are first set off against balance of provisions, if any, created out of earlier gains and residual amount of losses are charged to profit and loss account. The PTCs are carried at the value as determined above, till their sale or realisation. The SRs are carried, in the aggregate, at book value or at latest NAV, whichever is lower.

11. Foreign Currency Transactions:

i. Foreign currency transactions, on initial recognition are recorded at the exchange rate prevailing on the date of transaction. Monetary foreign currency assets and liabilities are translated at the closing rates prescribed by Foreign Exchange Dealers Association of India (FEDAI) and the resultant gain or loss is recognised in the profit and loss account. Exchange differences arising on the settlement of monetary items are recognised as income or expense in the period in which they arise.

ii. Premium or discount arising at the inception of Forward Exchange Contracts which are not intended for trading or speculation is amortised as expense or income over the life of the contract. Premium or discount on other Forward Exchange Contracts is not recognised.

iii. Outstanding Forward Exchange Contracts which are not intended for trading or speculation are revalued at closing FEDAI rates. Other outstanding Forward Exchange Contracts are revalued at rates of exchange notified by FEDAI for specified maturities or at interpolated rates for in-between maturities. The resultant profit/ losses are included in the profit and loss account.

iv. Prof it/losses arising on premature termination of Forward Exchange Contracts, together with unamortized premium or discount, if any, is recognised on the date of termination.

V. Contingent liability in respect of outstanding forward exchange contracts is calculated at the contracted rates of exchange and in respect of guarantees, acceptances, endorsements and other obligations are calculated at the closing FEDAI rates.

vi. Operations of foreign branch are classified as integral Foreign Operations' and are translated using the same principles and procedures as those of the bank.

12. ' Employee Benefits

i. a) Payments to defined contribution schemes are charged as expense as they fall due.

b) For defined benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains or losses are recognized in full in the profit and loss account for the period in which they occur. Past Service cost is recognized immediately to the extent that the benefits are already vested and otherwise is amortised on a straight-line basis over the average period until the benefits become vested.

ii. Short-term employee Benefit:

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognized during the period when the employee renders the service.

iii. Transitional Liability

The Bank has adopted Accounting Standard-15 (Revised 2005), 'Employee Benefits' with effect from April 1, 2007. The transitional liability arising on such adoption is amortised over a period of five years commencing from the financial year 2007-08 in accordance with the provisions of AS-15.

iv. The intrinsic value of options under Employee Stock Option Plan (ESOP) is expensed on a straight-line basis over the vesting period of the ESOP.

13. Income Tax

i. Tax expense comprises of current and deferred tax.

ii. Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the Bank will pay normal income tax during the specified period.

iii. Deferred tax for timing differences between the book and tax profits for the year is accounted for, using the tax rates and laws that have been substantively enacted as of the balance sheet date. Deferred tax assets arising from timing differences are recognized to the extent there is reasonable certainty that these would be realized in future.

iv. Deferred tax assets in case of unabsorbed losses are recognized only if there is virtual certainty that such deferred tax asset can be realized against future taxable profits.

v. Disputed taxes not provided for including departmental appeals are included under Contingent Liabilities.

14. Earnings Per Share:

i. The Bank reports basic and diluted Earnings Per Share in accordance with AS 20. Basic Earnings Per Share is computed by dividing the net profit after tax by the weighted average number of equity shares outstanding for the year.

ii. Diluted Earnings Per Share reflect the potential dilution that could occur if securities or other contracts to issue equity shares were exercised or converted during the period. Diluted Earnings Per Share is computed by dividing the net profit after tax by the sum of the weighted average number of equity shares and dilutive potential equity shares outstanding at the year end.

15. Impairment of Assets

Fixed Assets are reviewed for impairment whenever events or changes in circumstances warrant that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated current realizable value. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds estimated current realizable value of the asset.

16. Provisions, Contingent Liabilities and Contingent Assets

i. In conformity with AS 29, Provisions, Contingent Liabilities and Contingent Assets, the Bank recognizes provisions only when it has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount of the obligation can be made.

ii. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date.

iii. Reimbursement expected in respect of expenditure required to settle a provision is recognised only when it is virtually certain that the reimbursement will be received.

iv. Contingent Assets are not recognized.


Mar 31, 2010

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