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

Accounting Policies of Oriental Bank of Commerce Company

Mar 31, 2017

SCHEDULE -17 SIGNIFICANT ACCOUNTING POLICIES 1. BASIS OF PREPARATION

The financial statements are prepared under the historical cost convention, on accrual basis of accounting on going concern basis, unless otherwise stated and in conformity with statutory provisions and generally accepted accounting principles. They conform to Generally Accepted Accounting Principles (GAAP) in India, which comprise applicable statutory provisions, regulatory/ Reserve Bank of India (RBI) guidelines, Banking Regulation Act, 1949, Accounting Standards/ Guidance Notes issued by the Institute of Chartered Accountants of India (ICAI) and the practices prevalent in the banking industry in India.

2. USE OF ESTIMATES

The preparation of financial statements requires the management to make estimates and assumptions considered in the reported amount of assets and liabilities (including contingent liabilities) as on date of the financial statements and the reported income and expenses for the reporting period. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates. Any revision to the accounting estimates is recognized prospectively in the current and future periods.

3. REVENUE RECOGNITION

3.1 Income and expenses are accounted for on accrual basis except commission received / paid, legal expenses for suit filed accounts and recoveries there against, interest on overdue bills, insurance premium paid on Housing Loans and interest on tax refunds are accounted for on realisation/payment basis. Dividend is accounted when the right to receive the same is established.

3.2 In view of uncertainty of collection of income in cases of Nonperforming Assets/Investments, such income is accounted for only on realisation in terms of the RBI guidelines.

3.3 Interest on overdue deposits is provided for at the Saving Bank Deposit Rate and the balance is accounted for at the time of renewal.

4. INVESTMENTS

4.1 In accordance with RBI guidelines, investments are classified into three categories.

i) Held to Maturity (Investments intended to be held till maturity)

ii) Held for Trading (Investments held for sale within 90 days from the date of acquisition )

iii) Available for Sale (Investments not classified in (i) and (ii) above)

However, for disclosure in the Balance Sheet, Investments are classified under the six heads. (a) Government Securities (b) Other Approved Securities (c) Shares (d) Debentures and Bonds (e) Subsidiaries / Joint Ventures and (f) Others.

4.2 Valuation:

i) Held to Maturity: -

a. Investments under “Held to Maturity” category are carried at acquisition cost or amortized cost if acquired at a premium over face value. Wherever the book value is higher than the face value / redemption value, the premium is amortized over the remaining period of maturity.

b. Investments in joint venture are valued at carrying cost less diminution, in value, if any, other than temporary in nature.

c. Investment in venture capital is valued at carrying cost

The above valuation in category of Available for Sale and Held for Trading are done scrip wise and depreciation /appreciation is aggregated for each classification. Net depreciation for each classification, if any, is provided for while net appreciation is ignored.

4.3 Transfer of securities from one category to another is done in conformity with the RBI guidelines. Such transfers are accounted at the lower of the acquisition cost / book value / market value on the date of transfer. The depreciation, if any, on such transfer is fully provided for.

4.4 Securities purchased/sold under Liquidity Adjustment Facility (LAF)/ Marginal Standby Facility (MSF) with RBI are debited/ credited to Investment Account and reversed on maturity of the transaction. Interest expanded/earned thereon is accounted for as expenditure/revenue. Subsequent to the change in RBI guidelines repo and reverse repo transactions in government securities and corporate debt securities (including transactions conducted under LAF and Marginal Standby Facility (''MSF'') with RBI) are reflected as borrowing and lending transactions respectively. Borrowing cost on repo transactions are accounted for as interest expense and revenue on reverse repo transactions are accounted for as interest income.

4.5 Others:

i) Brokerage/commission received on subscription is booked in Profit and Loss Account.

ii) Brokerage. Commission, securities transaction tax etc. paid in connection with acquisition of investments are expensed upfront and excluded from cost

iii) Broken period interest paid / received on purchase /sale of securities is recognized as interest expense / income.

iv) Prudential norms of RBI for non performing investment Classification are applied to Investments and appropriate provisions are made in respect of non performing securities.

v) Profit/Loss on sale of any Investment in any category is taken to Profit and Loss Account, However, in case of profit on sale of Investments under Held to Maturity’ category, the residual amount after taxes and amount transferred to statutory reserve is appropriated to Capital Reserve Account.

vi) Valuation of HFT and AFS portfolio is done on daily basis and depreciation if any is provided on monthly and quarterly basis respectively

vii) In line with RBI Master Circular on "Prudential norms for classification, Valuation and Operation of Investment Portfolio by Banks”, bank has followed “Settlement date” accounting for recording purchase and sale of transactions in Investment book.

viii) In case of investment in Non-SLR securities, till the allotment of security in the Demat account, the amount of investment is shown under “Suspense Investment”

4.5 The derivatives transactions are undertaken for trading or hedging purposes. Trading transactions are marked to market. As per RBI guidelines, different categories of swaps are valued as under:

i) Hedge swaps: Interest rate swaps which hedges interest bearing asset or liability is accounted for on accrual basis except the swap designated with an asset or liability that is carried at market value or lower of cost in the financial statement.

Gain or losses on the termination of swaps are recognized over the shorter of the remaining contractual life of the swap or the remaining life of the asset/liability.

ii) Trading swaps: Trading swap transactions are marked to market with changes recorded in the financial statements,

5. ADVANCES / Provisions / RECOVERIES

5.1 Advances are classified as performing/ non-performing assets and provisions are made in accordance with prudential norms prescribed by the RBI.

5.2 Advances are net of provisions and technical write-offs made for Non-Performing Assets (NPAs).

5.3 Provision for performing assets is shown under the head “Other Liabilities and Provisions” in terms of RBI guidelines.

5.4 Recoveries in NPAs are appropriated first towards principal and thereafter towards interest.

6. FIXED ASSETS DEPRECIATION AND AMORTISATION

6.1 Premises and other Fixed Assets are stated at historical cost except revalued premises which are stated at revalued amount. The appreciation on revaluation is credited to Revaluation Reserve and the incremental depreciation attributable to the revalued amount is deducted there from. Cost of fixed assets includes cost of purchase and relevant expenditure incurred thereon till the time it is put to use.

6.2 Premises include cost of land and building

6.3 Depreciation on Fixed Asset is charged on Straight Line Method (SLM) basis as per useful life of asset as given here under:-

NOTE:-

1. In case where leasehold Premises is purchased or Building constructed on leasehold land having lease period less than 60 years, the period of lease is taken as useful life and is amortized as per Note 6.5 below.

2. In case of Premises where the value of land is not separable, the depreciation is being charged or amortization is made on the composite value as per the useful life of Premises.

6.4 No depreciation is provided in the year of sale/disposal. Depreciation on additions to Fixed Assets during the financial year is provided at 100% of the prescribed rate of depreciation, if asset is put to use for 180 days or more during the financial year and at 50% of the prescribed rate of depreciation, if the asset is put to use for less than 180 days during the year.

6.5 Premium paid on leasehold land (other than those referred in para 9 given below) is amortized on SLM basis over the period of lease.

6.6 Residual value of Re.1 (Rupee one) is taken for the purpose of calculating depreciation on all types of fixed assets.

6.7 Computers Software not forming an integral part of Computer Hardware is charged directly to Profit and Loss account.

7. FOREIGN EXCHANGE TRANSACTIONS

7.1 Monetary assets and liabilities are revalued at exchange rates advised by Foreign Exchange Dealers Association of India (FEDAI) at the close of the financial year and the resultant gain/ loss is taken to revenue.

7.2 Income and expenditure items are accounted for at the exchange rates prevailing on the date of the transaction.

7.3 Forward exchange contracts and bills are translated at the exchange rates prevailing on the date of commitment. Outstanding foreign exchange contracts and bills are revalued as per FEDAI rates and the resultant gain/loss is taken to revenue.

7.4 Foreign currency guarantees, acceptances, endorsements and other obligations are stated at FEDAI rates at the close of the financial year for the purpose of balance sheet exposure.

7.5 In case of Hedge swap to cover the foreign currency borrowing to raise Rupee fund as per eligibility under 100% of Unimpaired Tier-I capital, the premium paid to cover the foreign currency swap is amortized on monthly basis.

8. EMPLOYEE BENEFITS

8.1 Provident fund is a defined contribution as the bank pays fixed contribution at predetermined rates .The obligation of the bank is limited to such fixed contribution. The contributions are charged to Profit and Loss account.

8.2 Gratuity and pension liability are defined benefit obligation and are provided for on the basis of Actuarial Valuation made at the end of the financial year .The schemes are funded by the Bank and are managed by separate trusts. New Pension Scheme which is applicable to employees who have joined bank on or after 01.04.2010 is a defined contribution scheme. Bank pays fixed contribution at pre determined rate. The obligation of the bank is limited to such fixed contribution. The contribution is charged to Profit and Loss Account.

8.3 Other Employee benefits such as leave encashment leave fare concessions are provided for based on actuarial valuation.

8.4 Short term employee benefits are recognized as an expense in the profit and loss account of the year in which the related services are rendered.

9. LEASES

Lease payments for assets taken on operating lease are recognized as an expense in the profit and loss account over the lease term.

10. TAXES ON INCOME

10.1 Income tax expense is the aggregate amount of current tax (including Minimum Alternate Tax (MAT), wherever applicable) and deferred tax.

10.2 Current tax is determined as the amount of tax payable for the year and accordingly provision for tax is made

10.3 Deferred Tax Assets and Liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognized using the tax rates and the tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognized only if there is virtual certainty of realization of such assets in future,

10.4 MAT credit is recognized as an asset only when and to the extent there is convincing evidence that there will be payment of Norma! income tax during the period specified under the Income Tax Act, 1961

11. IMPAIRMENT OF ASSETS

Impairment losses, if any, on Fixed Assets including Revalued Assets are recognized in accordance with Accounting Standard 28 “Impairment of Assets” issued by the Institute of Chartered Accountants of India and charged to Profit and Loss Account.

12. PROVISIONS,CONTINGENT LIABILITIES AND CONTINGENT ASSETS

12.1 In conformity with Accounting Standard 29 “Provisions, Contingent Liabilities and Contingent Assets” issued by the Institute of Chartered Accountants of India, 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,

12.2 Contingent Assets are not recognized in the financial statements since this may result in the recognition of income that may never be realized.

13. EARNINGS PER SHARE

The bank reports basic and diluted earnings per equity share in accordance with the Accounting Standard 20 “Earnings Per Share" issued by the Institute of Chartered Accountants of India. Basic earnings per equity share has been computed by dividing net income by the weighted average number of equity shares outstanding for the period Diluted earnings per equity share has been computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the period

18.1.2 Share Capital/ Share Application Money

The Bank on 06th May, 2016 allotted 2,47,72,914 Crore equity shares of '' 10 each amounting to Rs, 24.77 Crore out of share application money of Rs, 300 Crore received on 30th March, 2016 at an issue price of Rs, 121.10 per share, including premium of Rs, 111.10 per share, to Government of India on preferential basis.

18.1.3 Tier II Bonds

* Further, depreciation amounting to Rs, 6.04 Crore on interportfolio shifting of various securities during 2016-17, has been appropriated in Book Value of respective securities.

# Valuation of Non-performing Investments and Investments made in Equity/ Preference shares & Bonds/Debentures allotted under restructuring of advances, is being done separately without clubbing MTM gain/(loss) with standard investment portfolio as per RBI directions. On account of this Bank has to provide depreciation to the extent of Rs, 36.23 Crore on Non-performing Investments and Rs, 211.29 Crore on Investments allotted under restructuring of advances (Rs, 197.43 Crore on Shares & Rs, 13.86 Crore on Bonds & Debentures)

18.2.2 Repo Transactions

The details of securities sold and purchased under Repo and Reverse Repo and Term Repo at Face Value are given below:-(Figures in brackets are for the previous year)

* including Liquidity Adjustment Facility (LAF), Marginal Standing Facility (MSF) and Term Repo of RBI.

i. *Total under column 3 should tally with the total of investments included under the following categories in Schedule 8 to the Balance Sheet:

a) Shares

b) Debentures & Bonds

c) Subsidiaries/ Joint Ventures

d) Others

ii. Amounts reported under columns 4, 5, 6 and 7 are not mutually exclusive.

iii. ** Out of total investment of Rs, 2797.90 Crore in Unrated securities, Rs, 2657.17 Crore is in exempted investment consisting of equity shares Rs, 1195.60 Crore, venture fund Rs, 207.88 Crore, Security Receipt (SR) Rs, 19.81 Crore, JV-INS Rs, 218.50 Crore, NCDs Rs, 72.96 Crore, Preference Shares Rs,

122.20 Crore, PSU bonds Rs, 812.93 Crore and Special Bonds Rs, 7.29 Crore.

Therefore, unrated investment is Rs, 140.73 Crore (Rs, 49.17 Crore Preference Share, Rs, 84.92 Crore in Bonds & Debenture and Rs, 6.64 Crore in Security Receipts)

iv. *** Out of total investment in unlisted securities Rs, 4274.17 Crore, Rs, 4215.00 Crore includes exempted investments in CD Rs, 673.48 Crore, CP Rs, 696.40 Crore, NCDs Rs, 76.59 Crore, PSU Bonds Rs, 1444.71 Crore, JV Rs, 218.50 Crore, VCF Rs, 207.88 Crore, SR Rs,399.64 Crore and Shares Rs, 497.80 Crore (Rs, 375.60 Crore in Equity shares and Rs,122.20 Crore in Preference Shares).

Hence, investment in unlisted securities is Rs, 59.17 Crore (Rs,

49.17 Crore Preference Share & Rs, 10.00 Crore in Bonds & Debenture).

v # Others include Investment in Mutual Fund, Venture Fund, Security Receipt, State Govt. Special Bonds.

18.2.5 Categorization of Investments

In accordance with Reserve Bank of India guidelines and as stated in Accounting Policy No. 4, investment portfolio has been categorized as under:

HTM - Held to Maturity; HFT - Held for Trading; AFS - Available for Sale

i. In respect of investments under Held to Maturity category, the premium amount amortized during the year is Rs, 91.64 Crore (previous year Rs, 81.44 Crore) and the same has been accounted for in Schedule No.13 under the head ''Interest Earned'' as deduction from ''Income on Investments''.

ii. Provision for Depreciation on Investments:

Provision for depreciation on investments under ''Available for Sale'' and ''Held for Trading'' categories as on March 31, 2017, is Rs, 251.35 Crore (previous year Rs, 147.16 Crore).

iii. The Bank has transferred Securities amounting to Rs, 14792.18 Crore (Previous year Rs, 10907.64 Crore), from ''Held to Maturity'' category to ''Available for Sale'' category and Rs, 1388.413 Crore (Previous year 1946.83 Crore) from ''Available for Sale'' to ''Held to Maturity'' category during the year which is in accordance with RBI guidelines. The total

Mark to Market depreciation on shifting of above mentioned securities was Rs, 6.04 Crore (previous year Rs, 12.16 Crore), and the same has been debited to Profit and Loss Account.

iv. Investment towards capital contribution in Joint Venture Company for Life Insurance Business with Canara Bank and HSBC under the name and style of “Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited” as on 31st March, 2017 is Rs, 218.50 Crore, which amounts to 23% capital contribution by the Bank. Further there is no investment in the current year as well as in previous year.

The said investment made by the Bank has been classified under ''Held to Maturity'' category under the head investment in joint ventures, as the intention is to hold as joint venture investment although the holding is less than 25% as required under RBI norms. The Bank has obtained permission of RBI to classify the same under HTM category. In the opinion of the management the impact in the value of the said investment on account of initial losses is not permanent in nature and hence no provision is considered necessary.

v. Unquoted and unrated NCDs created out of restructuring of advances, carrying ballooning rate of interest and staggered redemption schedule, redeemable at premium, have been valued using FIMMDA valuation methodology, as per RBI Guidelines, by taking into account the IRR of the security

18.2.6 Repo/Reverse Repo Transactions with RBI

RBI vide its circular no. RBI/2015-2016/403 FMRD.DIRD.10 /14.03.002/2015-16 dated 19th May, 2016 on “Repo/Reverse Repo Transactions with RBI” (effective from 3rd October 2016) has decided to align the accounting norms to be followed by market participants for repo/reverse repo transactions under LAF and the Marginal Standing Facility (MSF) of RBI with the accounting guidelines prescribed for market repo transactions. Accordingly, all repo/ reverse repo transactions are required to be accounted as lending and borrowing transactions with effect from 3rd October 2016.

In view of the above stated change as per the RBI circular, Bank has classified the balances for 2015-16 in Repo A/c under Schedule 4 (I)(i) Borrowing from Reserve Bank of India amounting to Rs, 2,226.46 Crore. Similarly, the balances for 201516 in Reverse Repo A/c is classified under Schedule 7 (I)(ii)(b) -Money at call and short notice with other institution amounting to Rs,.1,650 Crore respectively.

In view of above circular, Interest expenditure on Repo

transactions amounting to Rs,. 109.79 Crore have been regrouped under Schedule 15.II- Interest on Reserve Bank of India which was being netted off under schedule 13 (ii)- Income on Investment in year ending 31st March, 2016. Further Interest earned on Reverse Repo transaction with RBI amounting to Rs,. 23.81 Crore has been now regrouped from income on investment to interest on balances with Reserve Bank of India and inter-bank funds under schedule 13 (iii).

18.3 Derivatives

The Bank has not undertaken any Derivative Transactions in Currency Futures in the Financial Year 2016-17. The outstanding position in Currency Future as on 31st March, 2017 is NIL. No transaction is undertaken in Currency Options, Interest Rate Swap/OIS and Credit Default Swap. Also, transactions under Foreign Exchange Forward Contracts have been undertaken on behalf of various clients and total outstanding Forward Contracts as on 31st March, 2017 is Rs, 11944.08 Crore (previous year Rs, 9895.15 Crore). The Bank has undertaken Interest Rate Futures (IRF) transactions amounting to Rs,571.84 Crore (Notional Principal) during the Current Year (Previous Year 634.60). The outstanding position of IRF as on 31st March, 2017 is NIL.

18.4 Disclosures on risk exposure in Derivatives

18.4.1 Qualitative Disclosure

i) Operations in the Treasury Department are segregated into three functional areas, i.e. Front Office, Mid Office and Back Office equipped with necessary infrastructure and trained Officers, whose responsibilities are well defined.

ii) The Treasury Policy of the Bank clearly lays down the types of financial derivative instruments, scope of usage, approval process. Derivative transactions contain interest rate risk, counterparty risk, market risk, currency risk, settlement risk, open position risk and operational risk. Treasury Policy specifies the internal control limits like open position limits, deal size limits, stop-loss limits, deal initiating authority for trading/hedging in approved instruments to contain the risk and maximize return on the derivative transactions.

iii) The mid office monitors the transactions in the trading books and also measures the financial risks for the transactions in the trading book on a daily basis by way of calculating Mark to Market (MTM) of positions. The Mid Office is monitored and controlled by Risk Management Department.

iv) The Bank also has a policy for hedging its balance sheet exposures. The treasury policy of the Bank spells out the approval process for hedging the exposures.

v) The hedging/trading transactions are recorded separately. The hedge transactions are accounted for on accrual basis. All trading contracts are marked to market and resultant gross loss is accounted for ignoring the gain on a prudence basis.

The Bank is Trading Member of National Stock Exchange (NSE). The Bank undertakes proprietary trading in currency futures/ IRF. The Bank has set up the necessary infrastructure for Front, Mid and Back Office operations, daily mark to market (MTM) and margin obligations are settled with the exchanges as per guidelines issued by the regulators.

Treasury Policy has been drawn up in accordance with RBI guidelines.

(The movement of Provision for NPAs as on 31st March, 2017 includes the effect of floating provision of Rs, 24.12 Crore made by the Bank towards NPA portfolio.)

The provisioning coverage ratio (PCR) for the Bank as on 31st March, 2017 is 53.61% (As on 31st Mar, 2016 51.16%), which is calculated taking into account the total technical write offs.

*Gross NPAs as per item 2 of Annex to DBOD Circular DBOD. BP.BC.No.46/21.04.048/ 2009-10 dated 24th September, 2009 which specified a uniform method to compute Gross Advances, Net Advances, Gross NPAs and Net NPAs.

** Technical or prudential write-off is the amount of non-performing loans which are outstanding in the book of the branches, but have been written-off (fully or partially) at Head Office level. (DBOD No. BP.BC.6421.04.048/2009-10 dated 1st December, 2009 on Provisioning Coverage for Advances)

Pursuant to RBI circular no. DBR. NO.BP.BC.2/21.04.048/2015-16 dated 01st July, 2015, the shortfall on account of sale of assets to Reconstruction Companies during the Financial Year 2015-16 is being amortized over a period of 2 years. Consequently, Rs, 26.88 Crore has been amortized during the year ended 31st March, 2017 and charged to Profit & loss Account. The unamortized amount related to these accounts as on 31st March, 2017 is Rs, 13.45 Crore.

Bank''s net funded exposure for risk category-wise country exposures for each country is less than 1% of Bank''s total assets as on 31st March, 2016 and as such no provision is required in terms of RBI guidelines.

18.6.8 Unhedged Foreign Currency Exposure

Bank has laid down Board approved policy for managing and monitoring Un-hedged Foreign Currency Exposure of corporate including SMEs. Based on the available data and financial statements and the declaration from borrowers, the Bank has estimated the liability of Rs, 25.81 Crore (as on 31st March, 2017) on unhedged Foreign Currency Exposure to their constituents in terms of RBI circular DBOD. NO. BP.BC.85/21.06.200/2013-14 dated 15th January, 2014 and subsequent clarification vide circular No. DBOD.No. BP.BC.116/21.06.200/2013-14 dated 3rd June 2014. The outstanding provision on Unhedged Exposure as on 31st March, 2017 is Rs, 25.81 Crore. (Previous Year Rs, 23.85 Crore).

18.6.9 Advances- Secured by Tangible Assets

Advances-secured by tangible assets as per Schedule 9 include Rs, 6054.87 Crore (Previous Year Rs, 4898.17 Crore) being the amount of advances for which intangible securities such as charge over the rights, licenses, authority etc. have been taken.

18.7 Miscellaneous Disclosures

18.7.1 Disclosure of Penalties imposed by RBI under Banking Regulation Act, 1949:

During the year 2016-17, no penalty has been imposed by the RBI on the Bank under the provisions of Section 46(4) of the Banking Regulation Act 1949.

18.7.2 In compliance of RBI letter No. DBR. No. BP. 13018/21.04.048/2015-16 dated 12th April, 2016 and further in compliance with RBI letter No. 3992/21.04.048/2016-17, Bank has retained a provision of Rs, 94.12 Crore being 15 % of the existing outstanding of Rs, 627.46 Crore as on 31st March, 2017 under food credit availed by State Government of Punjab.

18.7.3 In respect of two premises costing Rs, 0.25 Crore (Previous year three premises Rs, 0.26 Crore), registration/sale/title deeds in favour of the Bank are pending.

18.8 Disclosure in terms of Accounting Standards issued by the Institute of Chartered Accountants of India.

18.8.1 Accounting Standard AS-5 - Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies:

Prior period expenses included in “Other Expenditure” under Schedule 16 is Rs, 0.61 Crore (previous year Rs, 0.17 Crore).

For change in accounting policy in respect of depreciation, refer note No. 18.8.2.

18.8.2 Accounting Standard AS-6 - Depreciation Accounting

Breakup of Total Depreciation for the year for each class of assets

Effect of changes in Accounting Policies - Depreciation policy on Fixed Assets

During the year the method of charging depreciation on Fixed Assets has been changed to Straight Line Method (SLM), on the basis of useful life determined by management, as against WDV method being used hitherto. This is done to make more appropriate presentation of the financial statements. The Bank has also adopted to follow the policy of charging depreciation on Computers and ATM in the year of capitalisation at 100% of the normal rate for assets put to use for 180 days or more and at 50% of the normal rate for assets put to use for less than 180 days during that financial year, and that no depreciation is provided in the year of sale/disposal.

Consequent to the above change, depreciation of prior period amounting to Rs, 116.59 Crore has been found to be in excess and hence written back and credited to Profit and loss account for the year ended 31st March 2017.

Change in Accounting Estimates

During the year, useful life for some of the assets has been changed. The useful lives of Server, Hardware, Network equipments and Automated Teller Machines (ATMs) have been changed to five years ( as against three years determined earlier) because these are no longer considered to be part of computers.

18.8.3 Accounting Standard AS-9 - Revenue Recognition:

As per Accounting Policy No. 3.1, certain items of income are recognized on realization basis on account of statutory requirements or materiality.

18.8.4 Accounting Standard AS-15 - Employee Benefits:

The Bank is following AS-15 (Revised 2005) ''Employee Benefits''. The defined employee contribution/ benefit schemes are as under:-

a) Provident Fund

The Bank pays fixed contribution to Provident Fund at predetermined rates to a separate Trust, which invests the funds in permitted securities. The contribution to the fund for the period is recognized as expense and is charged to the profit & loss account. The obligation of the Bank is limited to such fixed contribution.

b) Gratuity

The Bank has defined benefit gratuity plans for Officers who have joined / became Officer before 01st January, 1983. Every Officer / workman who have rendered continuous services of five years or more is eligible for Gratuity, subject to a maximum of 20 months on superannuation, resignation, termination, disablement or on death. The scheme is funded by the Bank and is managed by a separate Trust. The liability for the same is recognized on the basis of actuarial valuation.

c) Pension.

The Bank has a defined benefit pension scheme. The Scheme applies to existing employees of the Bank as on 29th September, 1995 who have opted for the pension scheme and to all the employees joining, thereafter but before 01st April, 2010. The scheme is managed by a separate Trust and the liability for the same is recognized on the basis of actuarial valuation.

d) Sick leave

The Bank has reversed the provision of Rs, 6.45 Crore towards sick leaves during the year ended 31st March, 2017 out of outstanding provision of Rs, 73.19 Crore as on 31st March, 2016.

e) Other Defined Retirement Benefits (ODRB)

Other Defined Retirement Benefits (ODRB) include leave encashment, settlement at home town for employees and dependents and post-retirement medical benefit for CMD & ED. These are unfunded and are recognized on the basis of actuarial valuation.

The summarized position of various defined benefits recognized in the profit and loss account and balance sheet along with the funded status are as under:


Mar 31, 2015

1. BASIS OF PREPARATION

The fnancial statements have been prepared under the historical cost convention unless otherwise stated. They conform to Generally Accepted Accounting Principles(GAAP) in India, which comprises statutory provisions, regulatory/ Reserve Bank of India (RBI) guidelines, Accounting Standards/ guidance notes issued by the Institute of Chartered Accountants of India (ICAI) and the practices prevalent in the banking industry in India.

2. USE OF ESTIMATES

The preparation of fnancial statements requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of date of the fnancial statements and the reported income and expenses for the reporting period. Management believes that the estimates used in the preparation of the fnancial statements are prudent and reasonable. Future results could differ from these estimates. Any revision to the accounting estimates is recognised prospectively in the current and future periods.

3. REVENUE RECOGNITION

3.1 Income and expenditure are accounted for on accrual basis except commission received / paid, locker rent, legal expenses for suit fled accounts and recoveries there against, dividend on investments, interest on overdue bills, insurance premium paid on Housing Loans and interest on tax refunds are accounted for on realisation/payment basis.

3.2 In view of uncertainty of collection of income in cases of Non-performing Assets/Investments, such income is accounted for only on realisation in terms of the RBI guidelines.

3.3 Interest on overdue deposits is provided for at the Saving Bank Deposit Rate and the balance is accounted for at the time of renewal.

4. INVESTMENTS

4.1 In accordance with RBI guidelines, investments are classifed into three categories.

i) Held to Maturity (Investments intended to be held till maturity)

ii) Held for Trading (Investments held for sale within 90 days from the date of acquisition)

iii) Available for Sale (Investments not classifed in (i) and (ii) above)

However, for disclosure in the Balance Sheet, Investments are classifed under the following heads. (a) Government Securities (b) Other Approved Securities

(c) Shares (d) Debentures and Bonds (e) Subsidiaries / Joint Ventures and (f) Others.

4.2 Valuation:

i) Held to Maturity: -

a. Investments under "Held to Maturity" category are carried at acquisition cost or amortized cost if acquired at a premium over face value. Wherever the book value is higher than the face value / redemption value, the premium is amortized over the remaining period of maturity.

b. Investments in joint venture are valued at carrying cost less diminution, in value, if any, other than temporary in nature.

c. Investment in venture capital is valued at carrying cost

The above valuation in category of Available for Sale and Held for Trading are done scrip wise and depreciation / appreciation is aggregated for each classifcation. Net depreciation for each classification, if any, is provided for while net appreciation is ignored.

4.3 Transfer of securities from one category to another is accounted for at the least of acquisition cost / book value / market value on the date of transfer. The Depreciation, if any, on such transfer is fully provided for.

4.4 Securities purchased/sold under Liquidity Adjustment Facility (LAF) with RBI are debited/credited to Investment Account and reversed on maturity of the transaction. Interest expanded/earned thereon is accounted for as expenditure/revenue.

4.5 Others:

i) Brokerage/commission received on subscription is booked in Profit and Loss Account.

ii) Brokerage, Commission, securities transaction tax etc. paid in connection with acquisition of investments are expensed upfront and excluded from cost.

iii) Broken period interest paid / received on purchase /sale of securities is recognised as interest expense / income.

iv) Prudential norms of RBI for non performing investment Classifcation are applied to Investments and appropriate provisions are made in respect of non performing securities.

v) Profit/Loss on sale of any Investment in any category is taken to Profit and Loss Account. However, in case of Profit on sale of Investments under ''Held to Maturity'' category, the residual amount after taxes and amount transferred to statutory reserve is appropriated to Capital Reserve Account.

vi) Valuation of HFT and AFS portfolio is done on daily basis and depreciation if any is provided on monthly and quarterly basis respectively.

vii) In line with RBI Master Circular on "Prudential norms for classifcation, Valuation and Operation of Investment Portfolio by Banks", bank has followed "Settlement date" accounting for recording purchase and sale of transactions in Investment book.

viii) In case of investment in Non-SLR securities, till the allotment of security in the Demat account, the amount of investment is shown under "Suspense Investment".

4.6 The derivatives transactions are undertaken for trading or hedging purposes. Trading transactions are marked to market. As per RBI guidelines, different categories of swaps are valued as under:

i) Hedge swaps: Interest rate swaps which hedges interest bearing asset or liability is accounted for on accrual basis except the swap designated with an asset or liability that is carried at market value or lower of cost in the fnancial statement.

Gain or losses on the termination of swaps are recognized over the shorter of the remaining contractual life of the swap or the remaining life of the asset/liability.

ii) Trading swaps: Trading swap transactions are marked to market with changes recorded in the fnancial statements.

5. ADVANCES / PROVISIONS / RECOVERIES

5.1 Advances are classifed as performing/ non- performing assets and provisions are made in accordance with prudential norms prescribed by the Reserve Bank of India.

5.2 Advances are net of provisions and technical write- offs made for non-performing Assets.

5.3 Provision for performing Assets is shown under the head "Other Liabilities and Provisions" in terms of RBI guidelines.

5.4 Recoveries in Non-Performing Assets are appropriated frst towards principal and thereafter towards interest.

6. FIXED ASSETS AND DEPRECIATION

6.1 Premises and other Fixed Assets are stated at historical cost except revalued premises which are stated at revalued amount. The appreciation on revaluation is credited to Revaluation Reserve and the incremental depreciation attributable to the revalued amount is deducted therefrom.

6.2 Premises include cost of land.

6.3 Fixtures and fttings in rented premises are treated as Temporary Erection.

6.4 Depreciation on Fixed assets including premises where value of land is not separable (other than those referred in para 6.5 given below) , is provided on the Written Down Value at the rates prescribed in the Income Tax Rules, 1962;

6.5 Depreciation on Computers and ATMs is provided on Straight line Method at the rate of 33.33% per annum as per the guidelines of RBI Computers softwares not forming an integral part of hardware is charged directly to Profit and Loss account.

6.6 No depreciation is provided in the year of sale/ disposal. Depreciation on additions to Fixed Assets during the fnancial year is provided at 100% of the prescribed rate of depreciation, if asset is put to use for 180 days or more during the fnancial year and at 50% of the prescribed rate of depreciation, if the asset is put to use for less than 180 days during the year.

6.7 Premium paid on leasehold land is amortised over the period of lease.

7. FOREIGN EXCHANGE TRANSACTIONS

7.1 Monetary assets and liabilities are revalued at exchange rates advised by Foreign Exchange Dealers Association of India (FEDAI) at the close of the fnancial year and the resultant gain/loss is taken to revenue.

7.2 Income and expenditure items are accounted for at the exchange rates prevailing on the date of the transaction.

7.3 Forward exchange contracts and bills are translated at the exchange rates prevailing on the date of commitment. Outstanding foreign exchange contracts and bills are revalued as per FEDAI rates and the resultant gain/loss is taken to revenue.

7.4 Foreign currency guarantees, acceptances, endorsements and other obligations are stated at FEDAI rates at the close of the fnancial year.

7.5 In case of Hedge swap to cover the foreign currency borrowing to raise Rupee fund as per eligibility under 100% of Un-impaired Tier-I capital, the premium paid to cover the foreign currency swap is amortised on monthly basis.

8. EMPLOYEE BENEFITS

8.1 Provident fund is a defned contribution as the bank pays fxed contribution at predetermined rates .The obligation of the bank is limited to such fxed contribution .The Contributions are charged to Profit and Loss account.

8.2 Gratuity and pension liability are defned benefit obligation and are provided for on the basis of Actuarial Valuation made at the end of the fnancial year .The schemes are funded by the Bank and are managed by separate trusts. New Pension Scheme which is applicable to employees who have joined bank on or after 01.04.2010 is a defned contribution scheme. Bank pays fxed contribution at pre determined rate. The obligation of the bank is limited to such fxed contribution. The contribution is charged to Profit and Loss Account.

8.3 Other Employee benefits such as leave

encashments, leave fare concessions are provided for based on actuarial valuation.

8.4 Short term employee benefits are recognized as an expense in the Profit and loss account of the year in which the related services are rendered.

9. TAXES ON INCOME

Income tax expense is the aggregate amount of current tax and deferred tax.

Current tax is determined on the amount of tax payable in respect of taxable income for the year and accordingly provision for tax is made.

Deferred Tax Assets and Liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognized using the tax rates and the tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognised only if there is virtual certainty of realisation of such assets in future.

10. IMPAIRMENT OF ASSETS

Impairment losses, if any, on Fixed Assets including Revalued Assets, are recognized in accordance with Accounting Standard 28 "Impairment of Assets" issued in this regard by the Institute of Chartered Accountants of India and charged to Profit and Loss Account.

11. PROVISIONS,CONTINGENT LIABILITIES AND CONTINGENT ASSETS

11.1 In conformity with Accounting Standard 29 "Provisions, Contingent Liabilities and Contingent Assets" issued by the Institute of Chartered Accountants of India, 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.

11.2 Contingent Assets are not recognized in the fnancial statements since this may result in the recognition of income that may never be realized.

12. EARNINGS PER SHARE

The bank reports basic and diluted earnings per equity share in accordance with the AS 20 (Earnings Per Share) issued by the ICAI. Basic earnings per equity share has been computed by dividing net income by the weighted average number of equity shares outstanding for the period. Diluted earnings per equity share has been computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the period.


Mar 31, 2014

1. BASIS OF PREPARATION

The financial statements have been prepared under the historical cost convention unless otherwise stated. They conform to Generally Accepted Accounting Principles(GAAP) in India, which comprises statutory provisions, regulatory/ Reserve Bank of India (RBI) guidelines, Accounting Standards/ guidance notes issued by the Institute of Chartered Accountants of India (ICAI) and the practices prevalent in the banking industry in India.

2. USE OF ESTIMATES

The preparation of financial statements requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of date of the financial statements and the reported income and expenses for the reporting period. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates. Any revision to the accounting estimates is recognised prospectively in the current and future periods .

3. REVENUE RECOGNITION

3.1 Income and expenditure are accounted for on accrual basis except , commission received / paid, locker rent, legal expenses for suit fled accounts and recoveries there against, dividend on investments, interest on overdue bills, insurance premium paid on Housing Loans and interest on tax refunds are accounted for on realisation/ payment basis.

3.2 In view of uncertainty of collection of income in cases of Non performing Assets/Investments, such income is accounted for only on realisation in terms of the RBI guidelines .

3.3 Interest on overdue deposits is provided for at the Saving Bank Deposit Rate and the balance is accounted for at the time of renewal.

4. INVESTMENTS

4.1 In accordance with RBI guidelines, investments are classified into three categories.

(i) Held to Maturity (Investments intended to be held till maturity)

(ii) Held for Trading (Investments held for sale within 90 days from the date of acquisition )

(iii) Available for Sale: (Investments not classified in (i) and (ii), above.)

However, for disclosure in the Balance Sheet, Investments are classified under the following heads. (a) Government Securities (b) Other Approved Securities (c) Shares (d) Debentures and Bonds (e) Subsidiaries / Joint Ventures and (f) Others.

4.2 Valuation:

i) Held to Maturity: -

a. Investments under "Held to Maturity" category are carried at acquisition cost or amortized cost if acquired at a premium over face value. Wherever the book value is higher than the face value / redemption value , the premium is amortized over the remaining period of maturity.

b. Investments in joint venture are valued at carrying cost less diminution in value, if any, other than temporary in nature.

c. Investment in venture capital is valued at carrying cost.

The above valuation in category of Available for Sale and Held for Trading are done scrip wise and depreciation / appreciation is aggregated for each classification. Net depreciation for each classification, if any, is provided for while net appreciation is ignored.

4.3 Transfer of securities from one category to another is accounted for at the least of acquisition cost / book value / market value on the date of transfer. The Depreciation, if any, on such transfer is fully provided for.

4.4 Securities purchased/sold under Liquidity Adjustment Facility (LAF) with RBI are debited/ credited to Investment Account and reversed on maturity of the transaction. Interest expended/ earned thereon is accounted for as expenditure/ revenue.

4.5 Others:

i) Brokerage/commission received on subscription is booked in Proft and Loss Account.

ii) Brokerage, Commission, securities transaction tax etc. paid in connection with acquisition of investments are expensed upfront and excluded from cost .

iii) Broken period interest paid / received on purchase /sale of securities is recognised as interest expense / income.

iv) Prudential norms of RBI for non-performing investment Classification are applied to Investments and appropriate provisions are made in respect of non-performing securities.

v) Profit/Loss on sale of any Investment in any category is taken to Profit and Loss Account. However, in case of profit on sale of Investments under ''Held to Maturity'' category, an equal amount net of taxes and amount transferred to statutory reserve is appropriated to Capital Reserve Account.

vi) Valuation of HFT and AFS portfolio is done on daily and quarterly basis respectively and depreciation if any is provided on quarterly basis

vii) In line with RBI Master Circular on "Prudential norms for Classification, Valuation and Operation of Investment Portfolio by Banks", bank has followed "Settlement date" accounting for recording purchase and sale of transactions in Investment book.

viii) In case of investment in Non-SLR securities, till the allotment of security in the Demat account, the amount of investment is shown under "Suspense Investment".

4.6 The derivatives transactions are undertaken for trading or hedging purposes. Trading transactions are marked to market. As per RBI guidelines, different categories of swaps are valued as under:

i) Hedge swaps: Interest rate swaps which hedges interest bearing asset or liability is accounted for on accrual basis except the swap designated with an asset or liability that is carried at market value or lower of cost in the financial statement.

Gain or losses on the termination of swaps are recognized over the shorter of the remaining contractual life of the swap or the remaining life of the asset/liability.

ii) Trading swaps: Trading swap transactions are marked to market with changes recorded in the financial statements.

5. ADVANCES / PROVISIONS / RECOVERIES

5.1 Advances are classified as performing/ non- performing assets and provisions are made in accordance with prudential norms prescribed by the Reserve Bank of India.

5.2 Advances are net of provisions and technical write- offs made for non-performing Assets.

5.3 Provision for performing Assets is shown under the head "Other Liabilities and Provisions" in terms of RBI guidelines.

5.4 Recoveries in Non-Performing Assets are appropriated frst towards principal and thereafter towards interest.

6. FIXED ASSETS AND DEPRECIATION

6.1 Premises and other Fixed Assets are stated at historical cost except revalued premises which are stated at revalued amount. The appreciation on revaluation is credited to Revaluation Reserve and the incremental depreciation attributable to the revalued amount is deducted there from .

6.2 Premises include cost of land.

6.3 Fixtures and fittings in rented premises are treated as Temporary Erection.

6.4 Depreciation on Fixed assets including premises where value of land is not separable (other than those referred in para 6.5 given below) , is provided on the Written Down Value at the rates prescribed in the Income Tax Rules, 1962;

6.5 Depreciation on Computers and ATMs is provided on Straight line Method at the rate of 33.33% per annum as per the guidelines of RBI Computers software’s not forming an integral part of hardware is charged directly to Profit and Loss account.

6.6 No depreciation is provided in the year of sale/ disposal. Depreciation on additions during the period up to 180 days is provided for full year otherwise for half year.

6.7 Premium paid on leasehold land is amortised over the period of lease.

7. FOREIGN EXCHANGE TRANSACTIONS

7.1 Monetary assets and liabilities are revalued at exchange rates advised by Foreign Exchange Dealers Association of India (FEDAI) at the close of the financial year and the resultant gain/loss is taken to revenue.

7.2 Income and expenditure items are accounted for at the exchange rates prevailing on the date of the transaction.

7.3 Forward exchange contracts and bills are translated at the exchange rates prevailing on the date of commitment. Outstanding foreign exchange contracts and bills are revalued as per FEDAI rates and the resultant gain/loss is taken to revenue.

7.4 Foreign currency guarantees, acceptances, endorsements and other obligations are stated at FEDAI rates at the close of the financial year.

7.5 In case of Hedge swap to cover the foreign currency borrowing to raise Rupee fund as per eligibility under 100% of Un-impaired Tier-I capital, the premium paid to cover the foreign currency swap is amortised on monthly basis..

8. EMPLOYEE BENEFITS

8.1 Provident fund is a defend contribution as the bank pays fixed contribution at predetermined rates. The obligation of the bank is limited to such fixed contribution. The Contributions are charged to Profit and Loss account.

8.2 Gratuity and pension liability are defend benefit obligation and are provided for on the basis of Actuarial Valuation made at the end of the financial year. The schemes are funded by the Bank and are managed by separate trusts. New Pension Scheme which is applicable to employees who have joined bank on or after 01.04.2010 is a defend contribution scheme. Bank pays fixed contribution at pre-determined rate. The obligation of the bank is limited to such fixed contribution. The contribution is charged to Profit and Loss Account.

8.3 Other Employee benefits such as leave encashment, leave fare concessions and sick leave are provided for based on actuarial valuation.

8.4 Short term employee benefits are recognized as an expense in the Profit and Loss account of the year in which the related services are rendered.

9. TAXES ON INCOME

Income tax expense is the aggregate amount of current tax and deferred tax .

Current tax is determined on the amount of tax payable in respect of taxable income for the year and accordingly provision for tax is made .

Deferred Tax Assets and Liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognized using the tax rates and the tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognised only if there is virtual certainty of realisation of such assets in future.

10. IMPAIRMENT OF ASSETS

Impairment losses, if any, on Fixed Assets including Revalued Assets, are recognized in accordance with Accounting Standard 28 "Impairment of Assets" issued in this regard by the Institute of Chartered Accountants of India and charged to Profit and Loss Account.

11. PROVISIONS,CONTINGENT LIABILITIES AND CONTINGENT ASSETS

11.1 In conformity with Accounting Standard 29 "Provisions, Contingent Liabilities and Contingent Assets" issued by the Institute of Chartered Accountants of India, the Bank recognizes provisions only when it has a present obligation as a result of a past event, it is probable that an outfow 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.

11.2 Contingent Assets are not recognized in the financial statements since this may result in the recognition of income that may never be realized.

12. EARNINGS PER SHARE

The bank reports basic and diluted earnings per equity share in accordance with the AS 20 (Earnings Per Share) issued by the ICAI. Basic earnings per equity share has been computed by dividing net income by the weighted average number of equity shares outstanding for the period. Diluted earnings per equity share has been computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the period.


Mar 31, 2013

1. BASIS OF PREPARATION

The financial statements have been prepared under the historical cost convention unless otherwise stated. They conform to Generally Accepted Accounting Principles (GAAP) in India, which comprises statutory provisions, regulatory/ Reserve Bank of India (RBI) guidelines, Accounting Standards/ guidance notes issued by the Institute of Chartered Accountants of India (ICAI) and the practices prevalent in the banking industry in India.

2. USE OF ESTIMATES

The preparation of financial statements requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of date of the financial statements and the reported income and expenses for the reporting period. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates. Any revision to the accounting estimates is recognised prospectively in the current and future periods .

3. REVENUE RECOGNITION

3.1 Income and expenditure are accounted for on accrual basis except , commission received / paid, locker rent, legal expenses for suit filed accounts and recoveries there against, dividend on investments, interest on overdue bills, insurance premium paid on Housing Loans and interest on tax refunds are accounted for on realisation/ payment basis.

3.2 In view of uncertainity of collection of income in cases of Non performing Assets/Investments , such income is accounted for only on realisation in terms of the RBI guidelines.

3.3 Interest on overdue deposits is provided for at the Saving Bank Deposit Rate and the balance is accounted for at the time of renewal.

4. INVESTMENTS

4.1 In accordance with RBI guidelines, investments are classified into three categories.

i. Held to Maturity (Investments intended to be held till maturity)

ii. Held for Trading (Investments held for sale within 90 days from the date of acquisition )

iii. Available for Sale: (Investments not classified in (i) and (ii), above.)

However, for disclosure in the Balance Sheet, Investments are classified under the following heads. (a) Government Securities (b) Other Approved Securities (c) Shares (d) Debentures and Bonds (e) Subsidiaries / Joint Ventures and (f) Others.

4.2 Valuation:

i) Held to Maturity: -

a. Investments under "Held to Maturity" category are carried at acquisition cost or amortized cost if acquired at a premium over face value. Wherever the book value is higher than the face value / redemption value, the premium is amortized over the remaining period of maturity.

b. Investments in joint venture are valued at carrying cost less diminution, in value, if any, other than temporary in nature.

c. Investment in venture capital is valued at carrying cost

The above valuation in category of Available for Sale and Held for Trading are done scrip wise and depreciation / appreciation is aggregated for each classification. Net depreciation for each classification, if any, is provided for while net appreciation is ignored.

4.3 Transfer of securities from one category to another is accounted for at the least of acquisition cost / book value / market value on the date of transfer. The Depreciation, if any, on such transfer is fully provided for.

4.4 Securities purchased/sold under Liquidity Adjustment Facility (LAF) with RBI are debited/credited to Investment Account and reversed on maturity of the transaction. Interest expended/earned thereon is accounted for as expenditure/revenue.

4.5 Others:

i. Brokerage/commission received on subscription is booked in Profit and Loss Account.

ii. Brokerage, Commission, securities transaction tax etc. paid in connection with acquisition of investments are expensed upfront and excluded from cost .

iii. Broken period interest paid / received on purchase / sale of securities is recognised as interest expense / income.

iv. Prudential norms of RBI for non performing investment Classification are applied to Investments and appropriate provisions are made in respect of non performing securities.

v. Profit/Loss on sale of any Investment in any category is taken to Profit and Loss Account. However, in case of profit on sale of Investments under ''Held to Maturity'' category, an equal amount is appropriated to Capital Reserve Account.

vi. Valuation of HFT and AFS portfolio is done on daily and quarterly basis respectively and depreciation, if any, is provided on quarterly basis

4.6 The derivatives transactions are undertaken for trading or hedging purposes. Trading transactions are marked to market. As per RBI guidelines, different categories of swaps are valued as under:

i. Hedge swaps: Interest rate swaps which hedges interest bearing asset or liability is accounted for on accrual basis except the swap designated with an asset or liability that is carried at market value or lower of cost in the financial statement.

Gain or losses on the termination of swaps are recognized over the shorter of the remaining contractual life of the swap or the remaining life of the asset/liability.

ii. Trading swaps: Trading swap transactions are marked to market with changes recorded in the financial statements.

5. ADVANCES / PROVISIONS / RECOVERIES

5.1 Advances are classified as performing/ non performing assets and provisions are made in accordance with prudential norms prescribed by the Reserve Bank of India.

5.2 Advances are net of provisions and technical write-offs made for non-performing Assets.

5.3 Provision for performing Assets is shown under the head "Other Liabilities and Provisions" in terms of RBI guidelines.

5.4 Recoveries in Non-Performing Assets are appropriated first towards principal and thereafter towards interest.

6. FIXED ASSETS AND DEPRECIATION

6.1 Premises and other Fixed Assets are stated at historical cost except revalued premises which are stated at revalued amount. The appreciation on revaluation is credited to Revaluation Reserve and the incremental depreciation attributable to the revalued amount is deducted therefrom.

6.2 Premises include cost of land.

6.3 Fixtures and fittings in rented premises are treated as Temporary Erection.

6.4 Depreciation on Fixed assets including premises where value of land is not separable (other than those referred in para 6.5 given below) , is provided on the Written Down Value at the rates prescribed in the Income Tax Rules, 1962;

6.5 Depreciation on Computers and ATMs is provided on Straight line Method at the rate of 33.33% per annum as per the guidelines of RBI .Computers softwares not forming an integral part of hardware is charged directly to Profit and Loss account.

6.6. No depreciation is provided in the year of sale/disposal. Depreciation on additions during the period upto 180 days is provided for full year otherwise for half year.

6.7 Premium paid on leasehold land is amortised over the period of lease.

7. FOREIGN EXCHANGE TRANSACTIONS

7.1 Monetary assets and liabilities are revalued at exchange rates advised by Foreign Exchange Dealers Association of India (FEDAI) at the close of the financial year and the resultant gain/loss is taken to revenue.

7.2 Income and expenditure items are accounted for at the exchange rates prevailing on the date of the transaction.

7.3 Forward exchange contracts and bills are translated at the exchange rates prevailing on the date of commitment. Outstanding foreign exchange contracts and bills are revalued as per FEDAI rates and the resultant gain/loss is taken to revenue.

7.4 Foreign currency guarantees, acceptances, endorsements and other obligations are stated at FEDAI rates at the close of the financial year.

8. EMPLOYEE BENEFITS

8.1 Provident fund is a defined contribution as the bank pays fixed contribution at predetermined rates. The obligation of the bank is limited to such fixed contribution.The Contributions are charged to Profit and Loss account.

8.2 Gratuity and pension liability are defined benefit obligation and are provided for on the basis of Actuarial Valuation made at the end of the financial year. The schemes are funded by the Bank and are managed by separate trusts. New Pension Scheme which is applicable to employees who have joined bank on or after 01.04.2010 is a defined contribution scheme. Bank pays fixed contribution at pre determined rate. The obligation of the bank is limited to such fixed contribution. The contribution is charged to Profit and Loss Account.

8.3 Other Employee benefits such as leave encashments, leave fare concessions and sick leave are provided for based on actuarial valuation .

8.4 Short term employee benefits are recognized as an expense in the profit and loss account of the year in which the related services are rendered.

9. TAXES ON INCOME

Income tax expense is the aggregate amount of current tax and deferred tax.

Current tax is determined on the amount of tax payable in respect of taxable income for the year and accordingly provision for tax is made.

Deferred Tax Assets and Liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognized using the tax rates and the tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognised only if there is virtual certainty of realisation of such assets in future.

10. IMPAIRMENT OF ASSETS

Impairment losses, if any, on Fixed Assets including Revalued Assets, are recognized in accordance with Accounting Standard 28 "Impairment of Assets" issued in this regard by the Institute of Chartered Accountants of India and charged to Profit and Loss Account.

11. PROVISIONS,CONTINGENT LIABILITIES AND CONTINGENT ASSETS

11.1 In conformity with Accounting Standard 29 "Provisions, Contingent Liabilities and Contingent Assets" issued by the Institute of Chartered Accountants of India, 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.

11.2 Contingent Assets are not recognized in the financial statements since this may result in the recognition of income that may never be realized.

12. EARNINGS PER SHARE

The bank reports basic and diluted earnings per equity share in accordance with the AS 20 (Earnings Per Share) issued by the ICAI. Basic earnings per equity share has been computed by dividing net income by the weighted average number of equity shares outstanding for the period. Diluted earnings per equity share has been computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the period.


Mar 31, 2012

1) GENERAL

a) The financial statements are prepared under historical cost convention, on a going concern basis and conform to the statutory provisions and practices prevailing in the country except as otherwise stated.

b) Revenue and expenses have generally been accounted for on accrual basis. However, commission received / paid, locker rent, legal expenses for suit filed accounts and recoveries there against, income on non- performing assets, dividend on investments, interest on overdue bills, insurance premium paid on Housing Loans and interest on tax refunds are accounted for on cash basis.

c) The interest on overdue deposits is provided for at the Saving Bank Deposit Rate and the balance is accounted for at the time of renewal.

2) FOREIGN EXCHANGE TRANSACTIONS

a) Monetary assets and liabilities are revalued at exchange rates advised by Foreign Exchange Dealers Association of India (FEDAI) at the close of the financial year and the resultant gain/loss is taken to revenue.

b) Income and expenditure items are accounted for at the exchange rates prevailing on the date of the transaction.

c) Forward exchange contracts and bills are translated at the exchange rates prevailing on the date of commitment. Outstanding foreign exchange contracts and bills are revalued as per FEDAI rates and the resultant gain/loss is taken to revenue.

d) Foreign currency guarantees, acceptances, endorsements and other obligations are stated at FEDAI rates at the close of the financial year.

3) INVESTMENTS

a) Classification:-

In accordance with RBI guidelines, investments are classified into three categories.

i) Held to Maturity (Investments intended to be held till maturity)

ii) Held for Trading (Investments held for sale within 90 days from the date of acquisition )

iii) Available for Sale: (Investments not classified in (i) and (ii), above.)

However, for disclosure in the Balance Sheet, Investments are classified under the following heads.

(a) Government Securities

(b) Other Approved Securities

(c) Shares

(d) Debentures and Bonds

(e) Subsidiaries / Joint Ventures and

(f) Others.

a) Valuation:

Held to Maturity: -

i. Investments under "Held to Maturity" category are carried at acquisition cost. Wherever the book value is higher than the face value / redemption value , the premium is amortized over the remaining period of maturity.

ii. Investments in joint venture are valued at carrying cost less diminution, in value, if any, other than temporary in nature.

iii. Investment in venture capital is valued at carrying cost.

The above valuation in category of Available for Sale and Held for Trading are done scrip wise and depreciation / appreciation is aggregated for each classification. Net depreciation for each classification, if any, is provided for while net appreciation is ignored

c) Transfer of securities from one category to another is accounted for at the least of acquisition cost / book value / market value on the date of transfer. The Depreciation, if any, on such transfer is fully provided for.

d) Securities purchased/sold under Liquidity Adjustment Facility (LAF) with RBI are debited/credited to Investment Account and reversed on maturity of the transaction. Interest expended/earned thereon is accounted for as expenditure/revenue.

b) Others:

i) Brokerage/commission received on subscription is booked in Profit & Loss Account.

ii) Broken period interest paid / received on purchase /sale of securities is recognised as interest expense / income.

iii) Prudential norms of RBI for non performing investment Classification are applied to Investments and appropriate provisions are made in respect of non performing securities.

iv) Profit/Loss on sale of any Investment in any category is taken to Profit & Loss Account. However, in case of profit on Sale of Investments under 'Held to Maturity' category, an equal amount is appropriated to Capital Reserve Account.

v) Valuation of HFT and AFS portfolio is done on daily and quarterly basis respectively and depreciation if any is provided on quarterly basis

c) The derivatives transactions are undertaken for trading or hedging purposes. Trading transactions are marked to market. As per RBI guidelines, different categories of swaps are valued as under:

i) Hedge swaps: Interest rate swaps which hedges interest bearing asset or liability is accounted for on accrual basis except the swap designated with an asset or liability that is carried at market value or lower of cost in the financial statement.

Gain or losses on the termination of swaps are recognized over the shorter of the remaining contractual life of the swap or the remaining life of the asset/liability.

ii) Trading swaps: Trading swap transactions are marked to market with changes recorded in the financial statements.

4) ADVANCES / PROVISIONS / RECOVERIES

a) Classification of Advances into performing / non-performing assets and provisions thereon are made as per the Prudential Norms Prescribed by the Reserve Bank of India.

b) Advances are net of provisions and technical write-offs made for non-performing Assets.

c) Provision for performing Assets is shown under the head "Other Liabilities & Provisions".

d) Recoveries in Non-Performing Assets are appropriated first towards principal and thereafter towards interest.

5. a) FIXED ASSETS

(i) Fixed Assets are stated at historical cost less accumulated depreciation except in the case of assets which have been revalued. The appreciation on account of revaluation is credited to Revaluation Reserve.

(ii) Premises include cost of land.

(iii) Fixtures and fittings in rented premises are treated as Temporary Erection.

b) DEPRECIATION ON FIXED ASSETS:

(i) Depreciation:

- on assets (including revalued assets), is charged on the Written Down Value at the rates prescribed by the Income Tax Rules, 1962; except in respect of computers on which depreciation is provided on Straight Line Method @ 33.33% as per RBI guidelines;

- is not provided in the year of sale/disposal of asset;

- on the revalued portion of assets, is adjusted against the Revaluation Reserve

(ii) Wherever the cost of land cannot be separately segregated, from buildings depreciation is provided on the composite amount, at the rate applicable to buildings.

(iii) Premium paid on leasehold land is amortised over the period of lease.

(iv) Software expenditure is charged to Revenue in the year of incurrence.

6) LEASE TRANSACTIONS:

a) i) Accounting for assets given under finance lease before April 1, 2001, has been done as per the Guidance Note issued by the Institute of Chartered Accountants of India. Such assets are included under Other Fixed Assets and depreciation thereon is provided equally over the lease period.

ii) Finance leases are classified as performing and non- performing in accordance with prudential norms issued by RBI and accordingly provisions are made.

b) Assets taken under financial lease are recognized at the lower of the fair value of the leased assets and the present value of the minimum lease payments and included under Other Fixed Assets.

The lease payments are apportioned between finance charge and the outstanding liability so as to account for the finance charge at the constant periodic rate of interest over the lease period.

c) Lease other than financial lease is classified as operating lease.

d) Lease rental and depreciation are accounted for as per Accounting Standard (AS-19) issued by the Institute of Chartered Accountants of India.

7) STAFF RETIREMENT BENEFITS

a) The Bank has applied Accounting Standard 15 (Revised) - Employees Benefits, issued by the Institute of Chartered Accountants of India, for recognition of its liabilities in respect of employee benefits.

b) Liability towards long term defined employee benefits - gratuity, pension, leave encashment, leave fare concession and sick leave are determined on actuarial valuation by independent actuaries at the year end by using Projected Unit Cost method. Liability so determined is funded, to the approved trusts of the bank, in the case of gratuity and pension and provided for in other cases.

c) In respect of Pension scheme opted by existing employees who had not opted for Pension earlier, the Pension liability is amortized minimum one-fifth starting from financial year 2010-11 as permitted by RBI.

d) In respect of Provident Fund, the contribution for the period is recognized as expense and charged to profit and loss account.

e) Short term employee benefits are recognized as an expense at an undiscounted amount in the profit and loss account of the year in which the related services are rendered.

8) INCOME TAX

a) Provision for Tax is made for both current and deferred taxes.

b) Current tax is provided on the taxable income using applicable tax rates and tax laws.

c) Minimum Alternative Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the Bank will pay income tax higher than that computed under MAT, during the period that MAT is permitted to be set off under the Income Tax Act, 1961 (specified period). In the year, in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in the guidance note issued by the Institute of Chartered Accountants of India (ICAI), the said asset is created by way of a credit to the profit and loss account and shown as mAt credit entitlement. The Bank reviews the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that the Bank will pay income tax higher than MAT during the specified period.

d) Deferred Tax Assets and Liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognized using the tax rates and the tax laws that have been enacted or substantively enacted till the date of the Balance Sheet.

e) Deferred Tax Assets are not recognized unless there is 'virtual certainty' that sufficient future taxable income will be available against which such deferred tax assets will be realized.

9) IMPAIRMENT OF ASSETS

Impairment losses, if any, on Fixed Assets including Revalued Assets, are recognized in accordance with Accounting Standard 28 "Impairment of Assets" issued in this regard by the Institute of Chartered Accountants of India and charged to Profit and Loss Account.

10) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

As per the Accounting Standard 29 "Provisions, Contingent Liabilities and Contingent Assets" issued by the Institute of Chartered Accountants of India, 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. Contingent Assets are not recognized in the financial statements since this may result in the recognition of income that may never be realized.

11) NET PROFIT:

The Net Profit is arrived at after accounting for the following "Provisions and Contingencies":

a) Provision for taxes on income and wealth tax in accordance with statutory requirements.

b) Provision on Standard Assets.

c) Provision for Non Performing Advances and depreciation on Investments.

d) Bad debts written off.

e) Other usual and necessary provisions.


Mar 31, 2011

1) GENERAL

a) The financial statements are prepared on historical cost convention, on a going concern basis and conform to the statutory provisions and practices prevailing in the country except as otherwise stated.

b) Revenue and expenses have generally been accounted for on accrual basis. However, commission received / paid, locker rent, legal expenses for suit filed accounts and recoveries there against, income on non- performing assets, dividend on investments, interest on overdue bills, insurance premium paid on Housing Loans and interest on tax refunds are accounted for on cash basis.

c) The interest on overdue deposits is provided for at the Saving Bank Deposit Rate and the balance is accounted for at the time of renewal.

2) FOREIGN EXCHANGE TRANSACTIONS

a) Monetary assets and liabilities are revalued at exchange rates advised by Foreign Exchange Dealers Association of India (FEDAI) at the close of the financial year and the resultant gain/loss is taken to revenue.

b) Income and expenditure items are accounted for at the exchange rates prevailing on the date of the transaction.

c) Forward exchange contracts and bills are translated at the exchange rates prevailing on the date of commitment. Outstanding foreign exchange contracts and bills are revalued as per FEDAI rates and the- resultant gain/loss is taken to revenue.

d) Foreign currency guarantees, acceptances, endorsements and other obligations are stated at FEDAI rates as at the close of the financial year.

3) INVESTMENTS

a) Classification:-

In accordance with RBI guidelines, investments are classified into three categories. i) Held to Maturity (Investments intended to be held till maturity)

ii) Held for Trading (Investments held for sale within 90 days from the date of acquisition) iii) Available for Sale: (Investments not classified in (i) and (ii), above.) However, for disclosure in the Balance Sheet, Investments are classified under the following heads, (a) Government Securities (b) Other Approved Securities (c) Shares (d) Debentures and Bonds (e) Subsidiaries/ Joint Ventures and (f) Others. b) Valuation:

Held to Maturity: -

i. Investments under "Held to Maturity" category are carried at acquisition cost. Wherever the book value is higher than the face value / redemption value , the premium is amortized over the remaining period of maturity.

ii. Investments in joint venture ere valued at carrying cost less diminution, in vaiue, if any, other than temporary in nature.

iii. Investment in venture capital is valued at carrying cost. Available for Sale and Held for Trading

1. Government of India Securities

At market prices as per quotations published by Fixed Income Money Market and Derivatives Association (FIMMDA).

2. State Development Loans /Other Approved Securities

At appropriate yield to maturity basis as per FIMMDAguidelines.

3- Treasury Bills, Commercial Papers and Certificate of Deposits

At carrying cost.

4- Equity Shares

(i) Quoted: At market price.

(ii) Unquoted: At break up value, where latest balance sheet is available (not more than one year old), otherwise at Re. 1 /- per companv.

5. Preference Shares

(i) Quoted: At market price.

(ii) Unquoted: On appropriate yield to maturity.

6. Debentures / Bonds

(i) Quoted: At market price.

(ii) Unquoted: At appropriate yield to maturity based on rating assigned by Rating Agencies.

1 Units of Mutual Funds

(i) Quoted: At market price.

(ii) Unquoted: At repurchase price/ Net Asset Value.

8. Security receipts of Asset

Reconstruction Company of _ India Ltd. (ARCIL)

At net asset value of the asset as declared by ARCIL.

The above valuation in category of Available for Sale and Held for Trading are done scrip wise and depreciation / appreciation is aggregated for each classification. Net depreciation for each classification, if any, is provided for while net appreciation is ignored.

c) Transfer of securities from one category to another is accounted for at the least of acquisition cost / book value / market value on the date of transfer. The Depreciation, if any, on such transfer is fully provided for.

d) Securities purchased/sold under Liquidity Adjustment Facility (LAF) with RBI are debited/credited to Investment Account and reversed on maturity of the transaction. Interest expended/earned thereon is accounted for as expenditure/revenue.

e) Others:

i) Brokerage/commission received on subscription is deducted from cost of acquisition.

ii) Broken period interest paid / received on purchase /sale of securities is recognised as interest expense / income.

iii) Prudential norms of RBI for non performing investment Classification are applied to Investments and appropriate provisions are made in respect of non performing securities.

iv) Profit/Loss on sale of any Investment in any category is taken to Profit & Loss Account. However, in case of profit on Sale of Investments under Held to Maturity category, an equal amount is appropriated to Capital Reserve Account.

v) Valuation of HFT and AFS portfolio is done on daily and quarterly basis respectively and depreciation if any is booked on quarterly basis.

f) The derivatives transactions are undertaken for trading or hedging purposes. Trading transactions are marked to market. As per RBI guidelines, different categories of swaps are valued as under:

i) Hedge swaps: Interest rate swaps which hedges interest bearing asset or liability is accounted for on accrual basis except the swap designated with an asset or liability that is carried at market value or lower of cost in the financial statement.

Gain or losses on the termination of swaps are recognized over the shorter of the remaining contractual life of the swap or the remaining life of the asset/liability. ii) Trading swaps: Trading swap transactions are marked to market with changes recorded in the financial statements.

4) ADVANCES / PROVISIONS / RECOVERIES

a) Classification of Advances into performing / non-performing assets and provisions thereon are made as per the Prudential Norms Prescribed by the Reserve Bank of India.

b) Advances are net of provisions and technical write-offs made for non-performing Assets.

c) Provision for performing Assets is shown under the head "Other Liabilities & Provisions".

d) Recoveries in Non-Performing Assets are appropriated first towards principal and thereafter towards interest.

5. a) FIXED ASSETS

(i) Fixed Assets are stated at historical cost less accumulated depreciation except in the case of assets which have been revalued. The appreciation on account of revaluation is credited to Revaluation Reserve.

(ii) Premises include cost of land.

(iii) Fixtures and fittings in rented premises are treated as Temporary Erection.

b) DEPRECIATION ON FIXED ASSETS:

(i) Depreciation:

O on assets (including revalued assets), is charged on the Written Down Value at the rates prescribed by the Income Tax Rules, 1962; except in respect of computers on which depreciation is provided on Straight Line Method @ 33.33% as per RBI guidelines;

O is not provided in the year of sale/djsposal of asset;

O on the revalued portion of assets, is adjusted against the Revaluation Reserve

(ii) Wherever the cost of land cannot be separately segregated, from buildings depreciation is provided on the composite amount, at the rate applicable to buildings.

(iii) Premium paid on leasehold land is amortised over the period of lease.

(iv) Software expenditure is charged to Revenue in the year of incurrence.

6) LEASE TRANSACTIONS:

a) i) Accounting for assets given under finance lease before

April 1, 2001, has been done as per the Guidance Note issued by the Institute of Chartered Accountants of India. Such assets are included under Other Fixed Assets and depreciation thereon is provided equally over the lease period. ii) In accordance with prudential norms issued by RBI, finance leases are classified as performing and non- performing and accordingly provisions are made.

b) Assets taken under financial lease are recognized at the lower of the fair value of the leased assets and the present value of the minimum lease payments are included under Other Fixed Assets.

The lease payments are apportioned between finance charge and the outstanding liability so as to account for the finance charge at the constant periodic rate of interest ever the lease period.

c) Lease other than financial lease is classified as operating lease.

d) Lease rental and depreciation are accounted for as per Accounting Standard (AS-19) issued by the Institute of Chartered Accountants of India.

7) STAFF RETIREMENT BENEFITS

a) The Bank has applied Accounting Standard 15 (Revised) - Employees Benefits, issued by the Institute of Chartered Accountants of India, for recognition of its liabilities in respect of employee benefits.

b) Liability towards long term defined employee benefits - gratuity, pension, leave encashment, leave fare concession and sick leave are determined on actuarial valuation by independent actuaries at the year end by using Projected Unit Cost method. Liability so determined is funded, to the approved trusts of the bank, in the case of gratuity and pension and provided for in other cases.

c) In respect of Pension scheme opted by existing employees who had not opted for Pension earlier, the Pension liability is amortized minimum one-fifth starting from financial year 2010-11 as permitted by RBI.

d) In respect of Provident Fund, the contribution for the period is recognized as expense and charged to profit and loss account.

e) Short term employee benefits are recognized as an expense at an undiscounted amount in the profit and loss account of the year in which the related services are rendered.

8) INCOME TAX

a) Provision for Tax is made for both current and deferred taxes.

b) Current tax is provided on the taxable income using applicable tax rates and tax laws.

c) Deferred Tax Assets and Liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognized using the tax rates and the tax laws that have been enacted or substantively enacted till the date of the Balance Sheet.

d) Deferred Tax Assets are not recognized unless there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets will be realized.

9) IMPAIRMENT OF ASSETS

Impairment losses, if any, on Fixed Assets including Revalued Assets, are recognized in accordance with Accounting Standard 28 "Impairment of Assets" issued in this regard by the Institute of Chartered Accountants of India and charged to Profit and Loss Account.

10) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

As per the Accounting Standard 29 "Provisions, Contingent Liabilities and Contingent Assets" issued by the Institute of Chartered Accountants of India, 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. Contingent Assets are not recognized in the financial statements since this may result in the recognition of income that may never be realized.

11) NET PROFIT:

The Net Profit is arrived at after accounting for the following "Provisions and Contingencies":

a) Provision for taxes on income and wealth tax in accordance with statutory requirements.

b) Provision on Standard Assets.

c) Provision for Non Performing Advances and depreciation on Investments.

d) Bad debts written off.

e) Other usual and necessary provisions.


Mar 31, 2010

1. GENERAL

a) The financial statements are prepared on historical cost convention, on a going concern basis and conform to the statutory provisions and practices prevailing in the country except as otherwise stated.

b) Revenue and expenses have generally been accounted for on accrual basis. However, commission received / paid, locker rent, legal expenses for suit filed accounts and recoveries there against, income on non-performing assets, dividend on investments, interest on overdue bills, insurance premium paid on Housing Loans and interest on tax refunds are accounted for on cash basis.

c) The interest on overdue deposits is provided for at the Saving Bank Deposit Rate and the balance is accounted for at the time of renewal.

2. FOREIGN EXCHANGE TRANSACTIONS

a) Monetary assets and liabilities are revalued at exchange rates advised by Foreign Exchange Dealers Association of India (FEDAI) at the close of the financial year and the resultant gain/loss is taken to revenue.

b) Income and expenditure items are accounted for at the exchange rates prevailing on the date of the transaction.

c) Forward exchange contracts and bills are translated at the exchange rates prevailing on the date of commitment. Outstanding foreign exchange contracts and bills are revalued as per FEDAI rates and the resultant gain/loss is taken to revenue.

d) Foreign currency guarantees, acceptances, endorsements and other obligations are stated at FEDAI rates as at the close of the financial year.

3. INVESTMENTS

a) Classification :-

In accordance with RBI guidelines, investments are classified into three categories.

i) Held to Maturity (Investments intended to be held till maturity)

ii) Held for Trading (Investments held for sale within 90 days from the date of acquisition )

iii) Available for Sale: (Investments not classified in (i) and (ii), above.) However, for disclosure in the Balance Sheet, Investments are classified under the following heads, (a) Government Securities (b) Other Approved Securities (c) Shares (d) Debentures and Bonds (e) Subsidiaries / Joint Ventures and (f) Others.

b) Valuation:

Held to Maturity: -

i. Investments under "Held to Maturity" category are carried at

acquisition cost. Wherever the book value is higher than the face value / redemption value , the premium is amortized over the remaining period of maturity.

ii. Investments in joint venture are valued at carrying cost less diminution, in value, if any, other than temporary in nature.

iii. Investment in venture capital is valued at carrying cost.

c) Transfer of securities from one category to another is accounted for at the least of acquisition cost / book value/ market value on the date of transfer. The Depreciation, if any, on such transfer is fully provided for.

d) Securities purchased/sold under Liquidity Adjustment Facility (LAF) with RBI are debited/credited to Investment Account and reversed on maturity of the transaction. Interest expended/earned thereon is accounted for as expenditure/ revenue.

e) Others:

i) Brokerage/commission received on subscription is deducted from Cost of acquisition.

ii) Broken period interest paid / received on purchase /sale of securities is recognised as interest expense / income.

iii) Prudential norms of RBI for non performing investment classification are applied to Investments and appropriate provisions are made in respect of non performing securities.

iv) Profit/Loss on sale of any Investment in any category is taken to Profit & Loss Account. However, in case of profit on Sale of Investments under Held to Maturity category, an equal amount is appropriated to Capital Reserve Account.

4. ADVANCES / PROVISIONS / RECOVERIES

a) Classification of Advances into performing / non-performing assets and provisions thereon are made as per the Prudential Norms Prescribed by the Reserve Bank of India.

b) Advances are net of provisions and technical write-offs made for non-performing Assets.

c) Provision for performing Assets is shown under the head "Other Liabilities & Provisions".

d) Recoveries in Non-Performing Assets are appropriated first towards principal and thereafter towards interest.

5. a) FIXED ASSETS

(i) Fixed Assets are stated at historical cost less accumulated depreciation except in the case of assets which have been - revalued. The appreciation on account of revaluation is credited to Revaluation Reserve.

(ii) Premises include cost of land.

(iii) Fixtures and fittings in rented premises are treated as Temporary Erection.

b) DEPRECIATION ON FIXED ASSETS:

(i) Depreciation:

- on assets (including revalued assets), is charged on the Written Down Value at the rates prescribed by the Income Tax Rules, 1962; except in respect of computers on which depreciation is provided on Straight Line Method @ 33.33% as per RBI guidelines;

- is not provided in the year of sale/disposal of asset;

- on the revalued portion of assets, is adjusted against the Revaluation Reserve

(ii) Wherever the cost of land cannot be separately segregated, from buildings depreciation is provided on the composite amount, at the rate applicable to buildings.

(iii) Premium paid on leasehold land is amortised over the period of lease.

(iv) Software expenditure is charged to Revenue in the year of incurrence.

6. LEASE TRANSACTIONS:

a) i) Accounting for assets given under finance lease before April 1, 2001, has been done as per the Guidance Note issued by the Institute of Chartered Accountants of India. Such assets are included under Other Fixed Assets and depreciation thereon is provided equally over the lease period.

ii) In accordance with prudential norms issued by RBI, finance leases are classified as performing and non- performing and accordingly provisions are made.

b) Assets taken under financial lease are recognized at the lower of the fair value of the leased assets and the present value of the minimum lease payments and included under Other Fixed Assets.

The lease payments are apportioned between finance charge and theoutstanding liability so as toaccountforthe finance charge at the constant periodic rate of interest over the lease period.

c) Lease other than financial lease is classified as operating lease.

d) Lease rental and depreciation are accounted for as per Accounting Standard (AS-19) issued by the Institute of Chartered Accountants of India.

7. STAFF RETIREMENT BENEFITS

a) The Bank has applied Accounting Standard 15 (Revised) - Employees Benefits, issued by the Institute of Chartered Accountants of India, for recognition of its liabilities in respect of employee benefits.

b) Liability towards long term defined employee benefits - gratuity, pension, leave encashment, leave fare concession and sick leave are determined on actuarial valuation by independent actuaries at the year end by using Projected Unit Cost method. Liability so determined is funded, to the approved trusts of the bank, in the case of gratuity and pension and provided for in other cases.

c) In respect of Provident Fund, the contribution for the period is recognized as expense and charged to profit and loss account.

d) Short term employee benefits are recognized as an expense at an undiscounted amount in the profit and loss account of the year in which the related services are rendered.

8. INCOME TAX

a) Provision for Tax is made for both current and deferred taxes.

b) Current tax is provided on the taxable income using applicable tax rates and tax laws.

c) Deferred Tax Assets and Liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognized using the tax rates and the tax laws that have been enacted or substantively enacted till the date of the Balance Sheet.

d) Deferred Tax Assets are not recognized unless there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets will be realized.

9. IMPAIRMENT OF ASSETS

Impairment losses, if any, on Fixed Assets including Revalued Assets, are recognized in accordance with Accounting Standard 28 "Impairment of Assets" issued in this regard by the Institute of Chartered Accountants of India and charged to Profit and Loss Account.

10. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

As per the Accounting Standard 29 "Provisions, Contingent Liabilities and Contingent Assets" issued by the Institute of Chartered Accountants of India, 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. Contingent Assets are not recognized in the financial statements since this may result in the recognition of income that may never be realized.

11. NET PROFIT:

The Net Profit is arrived at after accounting for the following "Provisions and Contingencies":

a) Provision for taxes on income and wealth tax in accordance with statutory requirements.

b) Provision on Standard Assets.

c) Provision for Non Performing Advances and depreciation on Investments.

d) Bad debts written off.

e) Other usual and necessary provisions.

Find IFSC