Mar 31, 2023
SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared and presented under historical cost convention on accrual basis of accounting unless otherwise stated and comply with Generally accepted accounting principles, statutory requirements prescribed under Banking Regulation Act, 1949, circulars and guidelines issued by Reserve Bank of India from time to time and notified accounting standards by Companies (Accounting Standards) Rules, 2006 to the extent applicable and current practices in Banking Industry in India.
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.
2.1 All the Monetary assets and liabilities in foreign currencies are translated in Indian rupees at the exchange rates prevailing at the Balance Sheet date as notified by Foreign Exchange Dealers Association of India (FEDAI). The resultant gain / loss is accounted for in the Profit & Loss account.
2.2 The outstanding foreign exchange contracts are stated at the prevailing exchange rate on the date of commitment. Profit or loss on such contracts is accounted for as per rates advised by FEDAI as on 31.03.2023 and in accordance with FEDAI guidelines and provisions of para 38 of AS-11.
2.3 Items of Income and expenditure relating to foreign exchange transactions are recorded at exchange rates prevailing on the date of the transactions.
2.4 Contingent liabilities on account of acceptances, endorsements and other obligations including guarantees & letter of credits in foreign currencies are valued as per rates published by FEDAI as on 31.03.2023 except Bills for Collection which are accounted for at the notional rates at the time of lodgment.
3.1 Classification and valuation of investments are made in accordance with the prudential norms prescribed by Reserve Bank of India read with clarifications / directions given by RBI.1
3.2 The entire investment portfolio is classified into three categories, viz, Held to Maturity, Available for Sale and Held for Trading in line with the guidelines / directions of Reserve Bank of India. Disclosure of the investments under the three categories mentioned above is made under six classifications viz.,
I. Government Securities
ii. Other approved securities
iii. Shares
iv. Debentures
v. Subsidiaries / Joint Ventures and
vi. Others
i. Investments that the Bank intends to hold till maturity are classified as Held to Maturity.
ii. Investments that are held principally for resale within 90 Days from the date of purchase are classified as Held for Trading.
iii. Investments which are not classified in the above two categories, are classified as Available for Sale.
iv. An investment is classified under the above three categories at the time of its purchase. Shifting of securities from one category to another is done with the approval of the Board normally once in a year. Shifting is effected at the lower of acquisition cost / book value / market value on the date of transfer and the depreciation, if any, on such shifting is fully provided for and the book value of securities is changed accordingly.
3.4 Securities under ''Held to Maturity'' are stated at acquisition costs unless such costs are higher than the face value, in which case the premium is amortized over the remaining period of maturity. Such amortization is shown under "Income on Investments- Schedule 13 item II as a nettng item. In case, the cost is less than the redemption value, the difference being the unrealized gain, is ignored. Any diminution in value of investments in subsidiaries and joint venture, other than temporary in nature, is provided for each investment individually.
3.5 Securities under ''Available for sale'' are valued scrip wise and depreciation/ appreciation is segregated category wise. While net appreciation is ignored, net depreciation under each category is provided for.
3.6 Securities under ''Held for Trading'' are valued at market price and the net depreciation under each category is provided for and the net appreciation, if any, is ignored.
3.7 Cost of investment is based on the weighted average cost method category wise.
Settlement date accounting refers to (a) the recognition of an asset on the day it is received by the entity, and (b) the derecognition of an asset and recognition of any gain or loss on disposal on the day it is delivered by the entity.
Accordingly, Bank follows settlement date accounting for the whole portfolio, SLR as well as Non SLR. Cost of investment is based on the weighted average cost method category wise.
3.9 The ''market value'' for the purpose of valuation of investments included in the ''Available for Sale'' and ''Held for Trading'' categories is the market price of the scrip as available from the trades/quotes on the stock exchanges, price list of RBI, prices declared by Primary Dealers Association of India (PDAI) jointly with the Fixed Income Money Market and Derivatives Association of India (FIMMDA).
In respect of unquoted securities, the procedure adopted is as below
a. |
Government of India Securities: and State Government securities. |
At rates put out by FIMMDA/PDAI/FBIL |
|
b. |
Other approved Securities, Preference Shares, Debentures and PSU Bonds: |
On yield to maturity (YTM) basis at the rate prescribed by FIMMDA/ PDAI/FBIL with such mark ups as laid down by RBI or FIMMDA/ PDAI /FBIL |
|
c. |
Equity Shares: |
At market price taken from NSE and BSE for quoted share. For unquoted at Break-up Value (without considering revaluation reserve) based on the latest Balance Sheet, which are not older than one year on the date of valuation is considered. In cases where latest Balance Sheets are not available, the shares are valued at Rs.1 per company |
|
d. |
Mutual Fund Units, Venture Capital Funds and Security Receipt: |
At re-purchase price or Net Assets Value |
|
e. |
Treasury Bills, Cash Management Bill, Commercial Papers, Certificate of deposits, Recapitalization Bonds, Subsidiaries, Joint Ventures and Sponsored Institutions: |
At carrying cost. |
a. Incentive received on subscription is deducted from the cost of securities;
b. Brokerage / commission/ stamp duty paid in connection with acquisition of securities are treated as revenue expenditure;
c. Broken period interest, if any, paid on acquisition of investment is debited to profit & loss account. Broken period interest
received on sale of securities is recognized as Interest Income.
3.11 Profit/ Loss on sale of investments is taken to profit and loss account. However, in case of profit on sale of investments in ''Held to Maturity'' category, an equivalent amount of profit is appropriated to Capital Reserve.
In respect of Non-Performing Securities, income is not recognized and appropriate provision is made for depreciation in the value of such securities as per Reserve Bank of India guidelines.
3.13 Dividend Income on shares and units of mutual funds is booked on receipt basis.
3.14 In the event, depreciation booked on account of MTM in the ''AFS'' or ''HFT'' categories are found to be in excess of the required amount in any year, the excess is credited to the Profit & Loss Account and an equivalent amount is appropriated to an Investment Reserve Account in Schedule 2 - "Reserve & Surplus" under the head "Revenue and Other Reserves"
4.1 Advances are classified into "Performing" and "Non-Performing" assets and provisions are made as per the prudential norms prescribed by the Reserve Bank of India. Bank has made provisions on Non-Performing Assets as per the prudential norms prescribed by the RBI as under:
Category of Assets |
Provision norms |
Sub-Standard |
15% on Secured Exposure. 25% on Unsecured Exposure* 20% on Unsecured Exposure* in respect of Infrastructure loan accounts where certain safeguards such as escrow accounts are available |
Doubtful-I |
25% on Secured 100% on Unsecured |
Doubtful-II |
40% on Secured 100% on Unsecured |
Doubtful-III |
100% on Secured 100% on Unsecured |
Loss |
100% of Book Outstanding |
* Unsecured exposure is defined as an exposure where the realizable value of the security, as assessed by the bank/ approved valuers/ Reserve Bank''s Inspecting Officers, is not more than 10 per cent, ab-initio, of the outstanding exposure.
4.2 Advances are stated net of de-recognized interest and provisions/ Technical write off made in respect of non-performing advances. Claims received from DICGC/ CGTMSE/ ECGC are not reduced from such advances till adjusted/ technically written-off whereas part recovery in all NPA accounts is reduced from advances.
4.3 Provisions on standard advances are made and are included under "Other Liabilities and Provisions" as per RBI''s guidelines.
4.4 For restructured/ rescheduled advances, provisions are made in accordance with the guidelines issued by RBI.
4.5 The sale of NPA is accounted for as per guidelines prescribed by RBI:-
i) . When the bank sells its financial assets to Securitization Company (SC)/ Reconstruction Company (RC), the same is
removed from the books.
ii) . If the sale is at a price below the net book value (NBV) (i.e. book value less provisions held), the shortfall is debited to
the Profit & Loss account of the year of sale.
iii) . If the sale is for a value higher than the NBV, the excess provision is reversed in the year the amounts are received.
In accordance with the RBI guidelines, the bank has an approved policy for creation and utilization of floating provisions separately for advances and investments. The quantum of floating provisions to be created would be assessed, at the end of each financial year. The floating provisions would be utilized only for contingencies under extra ordinary circumstances specified in the policy with prior permission of Reserve Bank of India.
6.1 Premises and other Fixed Assets are stated at historical cost/revalued amount. In respect of premises, where segregation is
not possible between land and superstructure, are considered in the value of superstructure.
6.2 Premises taken on perpetual lease are considered as freehold premises and are not amortized.
7.1 Depreciation is provided for on -
7.1.1 Computers at 33.33%, on straight-line method; additions are depreciated for the full year irrespective of the date of addition as per RBI guidelines.
7.1.2 Depreciation on fixed Assets is charged on Straight Line Method (SLM) basis as per useful life of assets, considering residual value at 5% of original cost. Additions during the year are depreciated for the full year irrespective of its date of addition. The useful life and depreciation rate are given hereunder:
S. No. |
Particulars |
Useful life |
Depreciation Rate |
1 |
Premises |
60 |
1.58% |
2 |
Furniture and fixtures |
10 |
9.50% |
3 |
Plant & Machinery |
15 |
6.33% |
4 |
Vehicles |
8 |
11.88% |
7.1.3 Cost of premises is taken composite, wherever it is not possible to segregate the cost of land from the cost of the superstructure.
7.2 No depreciation is provided on assets sold/disposed of during the year.
7.3 Depreciation attributable to revalued portion of the assets is charged to Profit & Loss Account and equivalent amount is transferred from Revaluation Reserve Account to Revenue Reserve Account.
8.1 Income and expenditure are accounted for on accrual basis unless otherwise stated.
8.2 Income on non-performing assets is recognized on realization basis in accordance with the prudential norms prescribed by Reserve Bank of India.
8.3 Partial recovery in non-performing assets is appropriated first towards principal and thereafter towards interest.
8.4 For cases covered under special schemes introduced by RBI viz. Scheme for Sustainable Structuring of Stressed Assets (S4A), Strategic Debt Restructuring, Flexible Structuring of Long Term Project Loans (5/25), Change in Ownership of Borrowing Entities (Outside Strategic Debt Restructuring Scheme), where subsequently the account turns NPA, any recovery shall be first credited to Interest on loans & Advances. Thereafter, the recovery shall be appropriated towards principal amount outstanding in the account. The accounting procedure shall be uniform and consistent in all accounts falling under above schemes.
8.5 Income on guarantees and letters of credit issued, locker rent, income from merchant banking transactions, money transfer
services, dividend on shares, Interest on refund of income tax, commission on credit card, interest on overdue bills, processing fee, Government business including distribution of pension and income from units of mutual fund products and income from ATM operations are accounted for on receipt basis.
8.6 Rebate on compromised accounts is accounted for at the time of full and final adjustment of the account.
8.7 Interest on overdue Term Deposits is provided at the rate of interest applicable to Savings Bank Deposits.
8.8 Liability in respect of incremental lease rent on renewal of lease agreement is accounted for at the time of renewal of the lease.
8.9 Bond Issue Expenses incurred in connection with raising Tier-II Capital are treated as Deferred Revenue Expenditure to be written off over a period of five years.
8.10 Share Issue Expenses are adjusted against the Share Premium Account
9.1 Annual contribution to Gratuity Fund, Pension Fund and Leave Encashment Fund, Silver Jubilee Bonus and Retirement Gifts are provided for on the basis of an actuarial valuation.
9.2 The Employees joining on or after 01.04.2010 are being covered under the New Pension Scheme.
Impairment losses (if any) on Fixed Assets (including revalued assets) are recognized in accordance with AS 28 (Impairment of Assets) issued by the ICAI and charged off to Profit and Loss Account.
11.1 Current Income Tax is measured at the amount expected to be paid considering the applicable tax rates and favorable judicial pronouncement/ legal opinions.
11.2 In accordance with AS-22 Deferred Tax comprising of tax effect of timing differences between taxable and accounting income for the period, is recognized keeping in view the consideration of prudence in respect of Deferred Tax Assets/Liabiliti''es.
Mar 31, 2022
1. GENERAL
The financial statements have been prepared and presented under historical cost convention on accrual basis of accounting unless otherwise stated and comply with Generally accepted accounting principles, statutory equirements prescribed under Banking Regulation Act, 1949, circulars and guidelines issued by Reserve Bank of India from time to time and notified accounting standards by companies (Accounting Standards) Rules, 2006 to the extent applicable and current practices in Banking Industry in India.
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 statementsare prudent and reasonable.
2. FOREIGN EXCHANGE TRANSACTIONS
2.1 All the Monetary assets and liabilities in foreign currencies are translated in Indian rupees at the exchange rates prevailing at the Balance Sheet date as notified by Foreign Exchange Dealers Association of India (FEDAI). The resultant gain / loss is accounted forin the Profit & Loss account.
2.2 The outstanding foreign exchange contracts are stated at the prevailing exchange rate on the date of commitment. Profit or loss on such contracts is accounted for as per rates advised by FEDAI as on 31.03.2022 and in accordance with FEDAI guidelines and provisions of para 38 of AS-11.
2.3 Items of Income and expenditure relating to foreign exchange transactions are recorded at exchange rates prevailing on the date ofthetransactions.
2.4 Contingent liabilities on account of acceptances, endorsements and other obligations including guarantees & letter of credits in foreign currencies are valued as per rates published by FEDAI as on 31.03.2022 except Bills for Collection which are accounted for at thenotional rates at the time oflodgment.
3. INVESTMENTS
3.1 Classification and valuation of investments are made in accordance with the prudential norms prescribed by Reserve Bank of India read with clarifications/directions given by RBI.
3.2 The entire investment portfolio is classified into three categories, viz, Held to Maturity, Available for Sale and Held for Trading in line with the guidelines / directions of Reserve Bank of India. Disclosure of the investments under the three categories mentioned above is made under six classifications viz.,
i. Government Securities
ii. Otherapprovedsecurities
iii. Shares
iv. Debentures
v. Subsidiaries/JointVenturesand
vi. Others
3.3 BASIS OF CLASSIFICATION:
i. Investments that the Bankintendsto hold till maturity are classified as Heldto Maturity.
ii. Investments that are held principally for resale within 90 Days from the date of purchase are classified as Held for Trading.
iii. Investments which are not classified in the above two categories, are classified as Available for Sale.
iv. An investment is classified under the above three categories at the time of its purchase. Shifting of securities from one category to another is done with the approval of the Board normally once in a year. Shifting is effected at the lower of acquisition cost / book value / market value on the date of transfer and the depreciation, if any, on such shifting is fully provided for and the book value ofsecurities is changed accordingly.
3.4 Securities under ''Held to Maturity'' are stated at acquisition costs unless such costs are higher than the face value, in which case the premium is amortized over the remaining period of maturity. Such amortization is shown under "Income on Investments-Schedule 13 item II as a netting item. In case, the cost is less than the redemption value, the difference being the unrealized gain, is ignored. Any diminution in value of investments in subsidiaries and joint venture, other than temporary in nature, is provided for each investment individually.
3.5 Securities under ''Available for sale'' are valued scrip wise and depreciation/ appreciation is segregated category wise. While net appreciation is ignored, net depreciation under each category is provided for.
3.6 Securities under ''Held for Trading'' are valued at market price and the net depreciation under each category is provided for and the net appreciation, ifany, is ignored.
3.7 Cost of investment is based on the weighted average cost method category wise.
3.8 METHODOFACCOUNTING-SETTLEMENTDATEACCOUNTING
Settlement date accounting refers to (a) the recognition of an asset on the day it is received by the entity, and (b) the de recognition of an asset and recognition of any gain or loss on disposal on the day it is delivered bythe entity.
Accordingly, Bank follows settlement date accounting for the whole portfolio, SLR as well as Non SLR. Cost of investment is based on the weighted average cost method categorywise.
3.8 The ''market value'' for the purpose of valuation of investments included in the ''Available for Sale'' and ''Held for Trading'' categories is the market price of the scrip as available from the trades/quotes on the stock exchanges, price list of RBI,
prices
declared by Primary Dealers Association of India (PDAI) jointly with the Fixed Income Money Market and Derivatives Association of India (FIMMDA).
In respec a. |
:t of unquoted securities, the procedure adopted is a Government of India Securities: and State Government securities. |
s below |
At rates put out by FIMMDA/PDAI/FBIL |
b. |
Other approved Securities, Preference Shares, Debentures and PSU Bonds: |
On yield to maturity (YTM) basis at the rate prescribed by FIMMDA/ PDAI/FBIL with such mark ups as laid down by RBI or FIMMDA/PDAI/FBIL |
|
c. |
Equity Shares: |
At market price taken from NSE and BSE for quoted share. For unquoted at Breakup Value (without considering revaluation reserve) based on the latest Balance Sheet, which are not older than one year on the date of valuation is considered. In cases where latest Balance Sheets are not available, the shares are valued at Re.1 per company |
|
d. |
Mutual Fund Units, Venture Capital Funds and Security Receipt: |
At re-purchase price or Net Assets Value |
|
e. |
Treasury Bills, Cash Management Bill, Commercial Papers, Certificate of Deposits, Recapitalization Bonds, Subsidiaries, Joint Ventures and Sponsored Institutions: |
At carrying cost. |
3.10 IN DETERMINING ACQUISITION COST OF INVESTMENTS:
a. Incentive received on subscription is deducted from the cost of securities;
b. Brokerage / commission/ stamp duty paid in connection with acquisition of securities are treated as revenue expenditure;
c. Broken period interest, if any, paid on acquisition of investment is debited to profit & loss account. Broken period interest received on sale of securities is recognized as Interest Income.
3.11 Profit/ Loss on sale of investments is taken to profit and loss account. However, in case of profit on sale of investments in ''Held to Maturity'' category, an equivalent amount of profit is appropriated to Capital Reserve.
3.12 NON PERFORMING INVESTMENTS
In respect of Non-Performing Securities, income is not recognized and appropriate provision is made for depreciation in the value of such securities as per Reserve Bank ofIndia guidelines.
3.13 Dividend Income on shares and units of mutual funds is booked on receipt basis.
3.14 In the event, depreciation booked on account of MTM in the ''AFS'' or ''HFT'' categories are found to be in excess of the required amount in any year, the excess is credited to the Profit & Loss Account and an equivalent amount is appropriated to an Investment Reserve Account inSchedule2-"Reserve&Surplus" underthehead "Revenue and OtherReserves".
4.1 Advances are classified into "Performing" and "Non-Performing" assets and provisions are made as per the prudential norms prescribed by the Reserve Bank of India. Bank has made provisions on Non-Performing Assets as per the prudential norms prescribed by the RBI as under
Category of Assets |
Provision Norms |
Sub-Standard |
15% on Secured Exposure. 25% on Unsecured Exposure* 20% on Unsecured Exposure* in respect of Infrastructure loan accounts where certain safeguards such as escrow accounts are available |
Doubtful-I |
25% on Secured 100% on Unsecured |
Doubtful-II |
40% on Secured 100% on Unsecured |
Doubtful-III |
100% on Secured 100% on Unsecured |
Loss |
100% of Book Outstanding |
* Unsecured exposure is defined as an exposure where the realizable value of the security, as assessed by the bank/ approved valuers/ Reserve Bank''sInspecting Officers, is notmore than 10 per cent, ab-initio, ofthe outstanding exposure.
4.2 Advances are stated net of de-recognized interest and provisions/ Technical write off made in respect of non-performing advances. Claims received from DICGC/ CGTMSE/ ECGC are not reduced from such advances till adjusted/ technically written-off whereas part recovery in all NPA accounts is reduced from advances.
4.3 Provisions on standard advances are made and are included under "Other Liabilities and Provisions" as per RBI''s guidelines.
4.4 For restructured/ rescheduled advances, provisions are made in accordance with the guidelines issued byRBI.
4.5 The sale of NPA is accounted for as per guidelines prescribed by RBI:-
I). When the bank sells its financial assets to Securitization Company (SC)/ Reconstruction Company (RC), the same is removed from the books.
ii) . If the sale is at a price below the net book value (NBV) (i.e. book value less provisions held), the shortfall is debited to
the Profit&Loss account oftheyearofsale.
iii) . If the sale is for a value higherthan the NBV, the excess provision is reversed inthe year the amounts are received.
In accordance with the RBI guidelines, the bank has an approved policy for creation and utilization of floating provisions separately for advances and investments. The quantum of floating provisions to be created would be assessed, at the end of each financial year. The floating provisions would be utilized only for contingencies under extra ordinary circumstances specified inthe policy with prior permission of Reserve Bank ofIndia.
6.1 Premises and other Fixed Assets are stated at historical cost/revalued amount. In respect of premises, where segregation is not possible between land and superstructure, are considered inthe value of superstructure.
6.2 Premises taken on perpetual lease are considered as freehold premises and are not amortized.
7.1 Depreciation is provided for on-
7.1.1 Computers at 33.33%, on straight-line method; additions are depreciated for the full year irrespective of the date of addition as perRBI guidelines.
7.1.2 Depreciation on fixed Assets is charged on Straight Line Method (SLM) basis as per useful life of assets, considering residual value at 5% of original cost. Additions during the year are depreciated for the full year irrespective of its date of addition. The useful lifeand depreciation rateare given hereunder:
S. No. |
Particulars |
Useful life |
Depreciation Rate |
1 |
Premises |
60 |
1.58% |
2 |
Furniture and Fixtures |
10 |
9.50% |
3 |
Plant & Machinery |
15 |
6.33% |
4 |
Vehicles |
8 |
11.88% |
7.1.3 Cost of premises is taken composite, wherever it is not possible to segregate the cost of land from the cost of the superstructure.
7.2 Nodepreciaton isprovided on assetssold/disposed ofduringtheyear.
7.3 Depreciation attributable to revalued portion of the assets is charged to Profit & Loss Account and equivalent amount is transferred from Revaluation Reserve Account to Revenue Reserve Account.
8.1 Income and expenditure are accounted for on accrual basis unless otherwise stated.
8.2 Income on non-performing assets is recognized on realization basis in accordance with the prudential norms prescribed by Reserve Bankof India.
8.3 Partial recoveryin non-performing assets is appropriated first towards principal and thereafter towards interest.
8.4 For cases covered under special schemes introduced by RBI viz. Scheme for Sustainable Structuring of Stressed Assets (S4A), Strategic Debt Restructuring, Flexible Structuring of Long Term Project Loans (5/25), Change in Ownership of Borrowing Entities (Outside Strategic Debt Restructuring Scheme), where subsequently the account turns NPA, any recovery shall be first credited to Interest on loans & Advances. Thereafter, the recovery shall be appropriated towards principal amount outstanding in the account. The accounting procedure shall be uniform and consistent in all accounts falling under above schemes.
8.5 Income on guarantees and letters of credit issued, locker rent, income from merchant banking transactions, money transfer services, dividend on shares, Interest on refund of income tax, commission on credit card, interest on overdue bills, processing fee, Government business including distribution of pension and income from units of mutual fund products and income from ATM operations are accounted for on receipt basis.
8.6 Rebate on compromised accounts isaccounted forat the time of full and final adjustment of the account.
8.7 Interest on overdue Term Depositsisprovidedatthe rate of interestapplicabletoSavings Bank Deposits.
8.8 Liability in respect of incremental lease rent on renewal of lease agreement is accounted for at the time of renewal of the lease.
8.9 Bond Issue Expenses incurred in connection with raising Tier-II Capital are treated as Deferred Revenue Expenditure to be written off overa period offiveyears.
8.10 Share Issue Expensesare adjusted against the Share Premium Account
9.1 Annual contribution to Gratuity Fund, Pension Fund and Leave Encashment Fund, Silver Jubilee Bonus and Retirement Gifts are provided for on the basisof an actuarial valuation.
9.2 The Employees joining on or after01.04.2010are being covered under the New Pension Scheme.
Impairment losses (if any) on Fixed Assets (including revalued assets) are recognized in accordance with AS 28 (Impairment of Assets) issued bythe ICAI and charged offto Profitand Loss Account.
11.1 Current Income Tax is measured at the amount expected to be paid considering the applicable tax rates and favorable judicial pronouncement/legal opinions.
11.2 In accordance with AS-22 Deferred Tax comprising of tax effect of timing differences between taxable and accounting income for the period, is recognized keeping in view the consideration of prudence in respect of Deferred Tax Assets/Liabilities.
Mar 31, 2018
1. GENERAL BASIS OF PREPARATION
The financial statements have been prepared and presented under historical cost convention on accrual basis of accounting unless otherwise stated and comply with Generally accepted accounting principles, statutory requirements prescribed under Banking Regulation Act, 1949, circulars and guidelines issued by Reserve Bank of India from time to time and notified accounting standards by companies (Accounting Standards) Rules, 2006 to the extent applicable and current practices in Banking Industry in India.
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.
2. Foreign Exchange Transactions
2.1 All the Monetary assets and liabilities in foreign currencies are translated in Indian rupees at the exchange rates prevailing at the Balance Sheet date as notified by Foreign Exchange Dealers Association of India (FEDAI). The resultant gain / loss is accounted for in the Profit & Loss account.
2.2 The outstanding foreign exchange contracts are stated at the prevailing exchange rate on the date of commitment. Profit or loss on such contracts is accounted for as per rates advised by FEDAI and in accordance with FEDAI guidelines and provisions of para 38 of AS-11.
2.3 Items of Income and expenditure relating to foreign exchange transactions are recorded at exchange rates prevailing on the date of the transactions.
2.4 Contingent liabilities on account of acceptances, endorsements and other obligations including guarantees & letter of credits in foreign currencies are valued as per rates published by FEDAI except Bills for Collection which are accounted for at the notional rates at the time of lodgment.
3. Investments
3.1 Classification and valuation of investments are made in accordance with the prudential norms prescribed by Reserve Bank of India read with clarifications / directions given by RBI.
3.2 The entire investment portfolio is classified into three categories, viz, Held to Maturity, Available for Sale and Held forTrading in line with the guidelines / directions of Reserve Bank of India. Disclosure of the investments under the three categories mentioned above is made under six classifications viz.,
i. Government Securities
ii. Other approved securities
iii. Shares
iv. Debentures
v. Subsidiaries/Joint Ventures and
vi. Others
3.3 Basis Of Classification:
i. Investments that the Bank intends to hold till maturity are classified as Held to Maturity.
ii. Investments that are held principally for resale within 90 Days from the date of purchase are classified as Held for Trading.
iii. Investments which are not classified in the above two categories, are classified as Available for Sale.
iv. An investment is classified under the above three categories at the time of its purchase. Shifting of securities from one category to another is done with the approval of the Board normally once in a year. Shifting is effected at the lower of acquisition cost / book value / market value on the date of transfer and the depreciation, if any, on such shifting is fully provided for and the book value of securities is changed accordingly.
3.4 Securities under âHeld to Maturityâ are stated at acquisition costs unless such costs are higher than the face value, in which case the premium is amortized over the remaining period of maturity. Such amortization is shown under âIncome on Investments- Schedule 13 item II. In case, the cost is less than the redemption value, the difference being the unrealized gain, is ignored. Any diminution in value of investments in subsidiaries and joint venture, other than temporary in nature, is provided for each investment individually
3.5 Securities under âAvailable for saleâ are valued scrip wise and depreciation/ appreciation is segregated category wise. While net appreciation is ignored, net depreciation under each category is provided for.
3.6 Securities under âHeld for Trading1 are valued at market price and the net depreciation under each category is provided for and the net appreciation, if any, is ignored.
3.7 Cost of investment is based on the weighted average cost method category wise.
3.8 Method Of Accounting - Settlement Date Accounting
Settlement date accounting refers to (a) the recognition of an asset on the day it is received by the entity , and (b) the derecognition of an asset and recognition of any gain or loss on disposal on the day it is delivered by the entity .
Accordingly, Bank follows settlement date accounting for the whole portfolio, SLR as well as Non SLR. Cost of investment is based on the weighted average cost method category wise.
3.9 The âmarket valueâ for the purpose of valuation of investments included in the âAvailable for Saleâ and âHeld for Tradingâ categories is the market price of the scrip as available from the trades/quotes on the stock exchanges, price list of RBI, prices declared by Primary Dealers Association of India (PDAI) jointly with the Fixed Income Money Market and Derivatives Association of India (FIMMDA).
In respect of unquoted securities, the procedure adopted is as below:
3.10 In determining acquisition cost of investments:
a. Incentive received on subscription is deducted from the cost of securities;
b. Brokerage /commission/ stamp duty paid in connection with acquisition of securities are treated as revenue expenditure;
c. Broken period interest, if any, paid on acquisition of investment is debited to profit & loss account. Broken period interest received on sale of securities is recognized as Interest Income.
3.11 Profit/ Loss on sale of investments is taken to profit and loss account. However, in case of profit on sale of investments in âHeld to Maturity1 category, an equivalent amount of profit is appropriated to Capital Reserve.
3.12 Non Performing Investments
In respect of Non-Performing Securities, income is not recognized and appropriate provision is made for depreciation in the value of such securities as per Reserve Bank of India guidelines.
3.13 Dividend Income on shares and units of mutual funds is booked on receipt basis.
3.14 In the event, provisions created on account of depreciation in the âAFSâ or âHFTâ categories are found to be in excess of the required amount in any year, the excess is credited to the P.& L. Account and an equivalent amount is appropriated to an Investment Reserve Account in Schedue 2 - âReserve & Surplusâ under the head âRevenue and Other Reservesâ.
4. Advances
4.1 Advances are classified into âPerformingâ and âNon-Performingâ assets and provisions are made as per the prudential norms prescribed by the Reserve Bank of India. Bank has made provisions on Non-Performing Assets as per the prudential norms prescribed by the RBI as under:
* Unsecured exposure is defined as an exposure where the realizable value of the security, as assessed by the bank/ approved valuers/ Reserve Bankâs Inspecting Officers, is not more than 10 per cent, ab-initio, of the outstanding exposure.
4.2 Advances are stated net of de-recognized interest and provisions/ Technical write off made in respect of non-performing advances. Claims received from DICGC/ CGTMSE/ ECGC are not reduced from such advances till adjusted/ technically written-offwhereas part recovery in all NPA accounts is reduced from advances.
4.3 Provisions on standard advances are made and are included under âOther Liabilities and Provisionsâ as per RBIâs guidelines.
4.4 For restructured/ rescheduled advances, provisions are made in accordance with the guidelines issued by RBI.
4.5 The sale of NPA is accounted for as per guidelines prescribed by RBI:-
i). When the bank sells its financial assets to Securitization Company (SC)/ Reconstruction Company (RC), the same is removed from the books.
ii). If the sale is at a price below the net book value (NBV) (i.e. book value less provisions held), the shortfall is debited to the Profit & Loss account of the year of sale.
iii). If the sale is for a value higher than the NBV, the excess provision is reversed in the year the amounts are received.
5 Floating Provisions
In accordance with the RBI guidelines, the bank has an approved policy for creation and utilization of floating provisions separately for advances and investments. The quantum of floating provisions to be created would be assessed, at the end of each financial year. The floating provisions would be utilized only for contingencies under extra ordinary circumstances specified in the policy with prior permission of Reserve Bank of India.
6 Fixed Assets
6.1 Premises and other Fixed Assets are stated at historical cost/revalued amount. In respect of premises, where segregation is not possible between land and superstructure, are considered in the value of superstructure.
6.2 Premises taken on perpetual lease are considered as freehold premises and are not amortized.
7 Depreciation on Fixed Assets
7.1 Depreciation is provided for on -
7.1.1 Computers at 33.33%, on straight-line method; additions are depreciated for the full year irrespective of the date of addition as per RBI guidelines.
7.1.2 Other Fixed assets on written down value method at the rates prescribed by the Income Tax Act 1961; additions effected before 30th September are depreciated for full year and additions effected thereafter are depreciated for half year.
7.1.3 Cost of premises is taken composite, wherever it is not possible to segregate the cost of land from the cost of the superstructure.
7.2 No depreciation is provided on assets sold/disposed of during the year.
7.3 Depreciation attributable to revalued portion of the assets is charged to Profit & Loss Account and equivalent amount is transferred from Revaluation Reserve Account to Revenue Reserve Account.
8 Revenue Recognition
8.1 Income and expenditure are accounted for on accrual basis unless otherwise stated.
8.2 Income on non-performing assets is recognized on realization basis in accordance with the prudential norms prescribed by Reserve Bank of India.
8.3 Partial recovery in non-performing assets is appropriated first towards principal and thereafter towards interest.
8.4 For cases covered under special schemes introduced by RBI viz. Scheme for Sustainable Structuring of Stressed Assets (S4A), Strategic Debt Restructuring, Flexible Structuring of Long Term Project Loans (5/25), Change in Ownership of Borrowing Entities (Outside Strategic Debt Restructuring Scheme), where subsequently the account turns NPA, any recovery shall be first credited to Interest on loans & Advances. Thereafter, the recovery shall be appropriated towards principal amount outstanding in the account. The accounting procedure shall be uniform and consistent in all accounts falling under above schemes.
8.5 Income on guarantees and letters of credit issued, locker rent, income from merchant banking transactions, money transfer services, dividend on shares, Interest on refund of income tax, commission on credit card, interest on overdue bills, processing fee, Government business including distribution of pension and income from units of mutual fund products and income from ATM operations are accounted for on receipt basis.
8.6 Rebate on compromised accounts is accounted for at the time of full and final adjustment of the account.
8.7 Interest on overdue Term Deposits is provided at the rate of interest applicable to Savings Bank Deposits.
8.8 Liability in respect of incremental lease rent on renewal of lease agreement is accounted for at the time of renewal of the lease.
8.9 Bond Issue Expenses incurred in connection with raising Tier-ll Capital are treated as Deferred Revenue Expenditure to be written off over a period of five years.
8.10 Share Issue Expenses are adjusted against the Share Premium Account
9 Staff Retirement Benefits
9.1 Annual contribution to Gratuity Fund, Pension Fund and Leave Encashment Fund are provided for on the basis of an actuarial valuation.
9.2 The Employees joining on or after 01.04.2010 are being covered under the New Pension Scheme.
10. Impairment of Assets
Impairment losses (if any) on Fixed Assets (including revalued assets) are recognized in accordance with AS 28 (Impairment of Assets) issued by the ICAI and charged off to Profit and Loss Account.
11 Taxes on Income
11.1 Current Income Tax is measured at the amount expected to be paid considering the applicable tax rates and favorable judicial pronouncement/ legal opinions.
11.2 In accordance with AS-22 Deferred Tax comprising of tax effect of timing differences between taxable and accounting income for the period, is recognized keeping in view the consideration of prudence in respect of Deferred Tax Assets/Liabilities.
Mar 31, 2017
1. General
BASIS OF PREPARATION
The financial statements have been prepared and presented under historical cost convention on accrual basis of accounting unless otherwise stated and comply with Generally accepted accounting principles, statutory requirements prescribed under Banking Regulation Act, 1949, circulars and guidelines issued by Reserve Bank of India from time to time and notified accounting standards by companies (Accounting Standards) Rules, 2006 to the extent applicable and current practices in Banking Industry in India.
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.
2. Foreign Exchange Transactions
2.1 All the Monetary assets and liabilities in foreign currencies are translated in Indian rupees at the exchange rates prevailing at the Balance Sheet date as notified by Foreign Exchange Dealers Association of India (FEDAI). The resultant gain / loss is accounted for in the Profit & Loss account.
2.2 The outstanding foreign exchange contracts are stated at the prevailing exchange rate on the date of commitment. Profit or loss on such contracts is accounted for as per rates advised by FEDAI and in accordance with FEDAI guidelines and provisions of para 38 of AS-11.
2.3 Items of Income and expenditure relating to foreign exchange transactions are recorded at exchange rates prevailing on the date of the transactions.
2.4 Contingent liabilities on account of acceptances, endorsements and other obligations including guarantees & letter of credits in foreign currencies are valued as per rates published by FEDAI except Bills for Collection which are accounted for at the notional rates at the time of lodgment.
3. Investments
3.1 Classification and valuation of investments are made in accordance with the prudential norms prescribed by Reserve Bank of India read with clarifications / directions given by RBI.
3.2 The entire investment portfolio is classified into three categories, viz, Held to Maturity, Available for Sale and Held for Trading in line with the guidelines / directions of Reserve Bank of India. Disclosure of the investments under the three categories mentioned above is made under six classifications viz.,
i. Government Securities
ii. Other approved securities
iii. Shares
iv. Debentures
v. Subsidiaries / Joint Ventures and
vi. Others
3.3 Basis Of Classification:
i. Investments that the Bank intends to hold till maturity are classified as Held to Maturity.
ii. Investments that are held principally for resale within 90 Days from the date of purchase are classified as Held for Trading.
iii. Investments which are not classified in the above two categories, are classified as Available for Sale.
iv. An investment is classified under the above three categories at the time of its purchase. Shifting of securities from one category to another is done with the approval of the Board normally once in a year. Shifting is effected at the lower of acquisition cost / book value / market value on the date of transfer and the depreciation, if any, on such shifting is fully provided for and the book value of securities is changed accordingly.
3.4 Securities under ''Held to Maturity'' are stated at acquisition costs unless such costs are higher than the face value, in which case the premium is amortized over the remaining period of maturity. Such amortization is shown under "Income on Investments- Schedule 13 item II. In case, the cost is less than the redemption value, the difference being the unrealized gain, is ignored. Any diminution in value of investments in subsidiaries and joint venture, other than temporary in nature, is provided for each investment individually
3.5 Securities under ''Available for sale'' are valued scrip wise and depreciation/ appreciation is segregated category wise. While net appreciation is ignored, net depreciation under each category is provided for.
3.6 Securities under ''Held for Trading'' are valued at market price and the net depreciation under each category is provided for and the net appreciation, if any, is ignored.
3.7 Cost of investment is based on the weighted average cost method category wise.
3.8 Method of Accounting - Settlement Date Accounting
Settlement date accounting refers to (a) the recognition of an asset on the day it is received by the entity , and (b) the de recognition of an asset and recognition of any gain or loss on disposal on the day it is delivered by the entity .
Accordingly, Bank follows settlement date accounting for the whole portfolio, SLR as well as Non SLR. Cost of investment is based on the weighted average cost method category wise.
3.9 The ''market value'' for the purpose of valuation of investments included in the ''Available for Sale'' and ''Held for Trading'' categories is the market price of the scrip as available from the trades/quotes on the stock exchanges, price list of RBI, prices declared by Primary Dealers Association of India (PDAI) jointly with the Fixed Income Money Market and Derivatives Association of India (FIMMDA).
3.10 In determining acquisition cost of investments:
a. Incentive received on subscription is deducted from the cost of securities;
b. Brokerage / commission/ stamp duty paid in connection with acquisition of securities are treated as revenue expenditure;
c. Broken period interest, if any, paid on acquisition of investment is debited to profit & loss account. Broken period interest received on sale of securities is recognized as Interest Income.
3.11 Profit/ Loss on sale of investments is taken to profit and loss account. However, in case of profit on sale of investments in ''Held to Maturity'' category, an equivalent amount of profit is appropriated to Capital Reserve.
3.12 Non Performing Investments
In respect of Non-Performing Securities, income is not recognized and appropriate provision is made for depreciation in the value of such securities as per Reserve Bank of India guidelines.
3.13 Dividend Income on shares and units of mutual funds is booked on receipt basis.
3.14 In the event, provisions created on account of depreciation in the ''AFS'' or ''HFT'' categories are found to be in excess of the required amount in any year, the excess is credited to the P.& L. Account and an equivalent amount is appropriated to an Investment Reserve Account in Schedule 2 - "Reserve & Surplus" under the head "Revenue and Other Reserves".
4. Advances
4.1 Advances are classified into "Performing" and "Non-Performing" assets and provisions are made as per the prudential norms prescribed by the Reserve Bank of India. Bank has made provisions on Non-Performing Assets as per the prudential norms prescribed by the RBI as under:
* Unsecured exposure is defined as an exposure where the realizable value of the security, as assessed by the bank/ approved valuers/ Reserve Bank''s Inspecting Officers, is not more than 10 per cent, ab-initio, of the outstanding exposure.
4.2 Advances are stated net of de-recognized interest and provisions/ Technical write off made in respect of non-performing advances. Claims received from DICGC/ CGTMSE/ ECGC are not reduced from such advances till adjusted/ technically written-off whereas part recovery in all NPA accounts is reduced from advances.
4.3 Provisions on standard advances are made and are included under "Other Liabilities and Provisions" as per RBI''s guidelines.
4.4 For restructured/ rescheduled advances, provisions are made in accordance with the guidelines issued by RBI.
4.5 The sale of NPA is accounted for as per guidelines prescribed by RBI:-
i). When the bank sells its financial assets to Securitization Company (SC)/ Reconstruction Company (RC), the same is removed from the books.
ii). If the sale is at a price below the net book value (NBV) (i.e. book value less provisions held), the shortfall is debited to the Profit & Loss account of the year of sale.
iii). If the sale is for a value higher than the NBV, the excess provision is reversed in the year the amounts are received.
5. Floating Provisions
In accordance with the RBI guidelines, the bank has an approved policy for creation and utilization of floating provisions separately for advances and investments. The quantum of floating provisions to be created would be assessed, at, the end of each financial year. The floating provisions would be utilized only for contingencies under extra ordinary circumstances specified in the policy with prior permission of Reserve Bank of India.
6. Fixed Assets
6.1 Premises and other Fixed Assets are stated at historical cost/revalued amount. In respect of premises, where segregation is not possible between land and superstructure, are considered in the value of superstructure.
6.2 Premises taken on perpetual lease are considered as freehold premises and are not amortized.
7. Depreciation on Fixed Assets
7.1 Depreciation is provided for on -
7.1.1 Computers at 33.33%, on straight-line method; additions are depreciated for the full year irrespective of the date of addition as per RBI guidelines.
7.1.2 Other Fixed assets on written down value method at the rates prescribed by the Income Tax Act 1961; additions effected before 30th September are depreciated for full year and additions effected thereafter are depreciated for half year.
7.1.3 Cost of premises is taken composite, wherever it is not possible to segregate the cost of land from the cost of the superstructure.
7.2 No depreciation is provided on assets sold/disposed of during the year.
7.3 Amount equivalent to depreciation attributable to revalued portion of the assets is transferred from Revaluation Reserve Account to the Profit & Loss Account.
8. Revenue Recognition
8.1 Income and expenditure are accounted for on accrual basis unless otherwise stated.
8.2 Income on non-performing assets is recognized on realization basis in accordance with the prudential norms prescribed by Reserve Bank of India.
8.3 Partial recovery in non-performing assets is appropriated first towards principal and thereafter towards interest.
8.4 For cases covered under special schemes introduced by RBI viz. Scheme for Sustainable Structuring of Stressed Assets (S4A), Strategic Debt Restructuring, Flexible Structuring of Long Term Project Loans (5/25), Change in Ownership of Borrowing Entities (Outside Strategic Debt Restructuring Scheme), where subsequently the account turns NPA, any recovery shall be first credited to Interest on loans & Advances. Thereafter, the recovery shall be appropriated towards principal amount outstanding in the account. The accounting procedure shall be uniform and consistent in all accounts falling under above schemes.
8.5 Income on guarantees and letters of credit issued, locker rent, income from merchant banking transactions, money transfer services, dividend on shares, Interest on refund of income tax, commission on credit card, interest on overdue bills, processing fee, Government business including distribution of pension and income from units of mutual fund products and income from ATM operations are accounted for on receipt basis.
8.6 Rebate on compromised accounts is accounted for at the time of full and final adjustment of the account.
8.7 Interest on overdue Term Deposits is provided at the rate of interest applicable to Savings Bank Deposits.
8.8 Liability in respect of incremental lease rent on renewal of lease agreement is accounted for at the time of renewal of the lease.
8.9 Bond Issue Expenses incurred in connection with raising Tier-II Capital are treated as Deferred Revenue Expenditure to be written off over a period of five years.
8.10 Share Issue Expenses are adjusted against the Share Premium Account
9. Staff Retirement Benefits
9.1 Annual contribution to Gratuity Fund, Pension Fund and Leave Encashment Fund are provided for on the basis of an actuarial valuation.
9.2 The Employees joining on or after 01.04.2010 are being covered under the New Pension Scheme.
10. Impairment of Assets
Impairment losses (if any) on Fixed Assets (including revalued assets) are recognized in accordance with AS 28 (Impairment of Assets) issued by the ICAI and charged off to Profit and Loss Account.
11. Taxes on Income
11.1 Current Income Tax is measured at the amount expected to be paid considering the applicable tax rates and favorable judicial pronouncement/ legal opinions.
11.2 In accordance with AS-22 Deferred Tax comprising of tax effect of timing differences between taxable and accounting income for the period, is recognized keeping in view the consideration of prudence in respect of Deferred Tax Assets/Liabilities.
Mar 31, 2015
1. General
BASIS OF PREPARATION
The financial statements have been prepared and presented under
historical cost convention on accrual basis of accounting unless
otherwise stated and comply with Generally accepted accounting
principles, statutory requirements prescribed under Banking Regulation
Act, 1949, circulars and guidelines issued by Reserve Bank of India
from time to time and notified accounting standards by companies
(Accounting Standards) Rules, 2006 to the extent applicable and current
practices in Banking Industry in India.
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.
2. Foreign Exchange Transactions
2.1 All the Monetary assets and liabilities in foreign currencies are
translated in Indian rupees at the exchange rates prevailing at the
Balance Sheet date as notified by Foreign Exchange Dealers Association
of India (FEDAI). The resultant gain / loss is accounted for in the
Profit & Loss account.
2.2 The outstanding foreign exchange contracts are stated at the
prevailing exchange rate on the date of commitment. Profit or loss on
such contracts is accounted for as per rates advised by FEDAI and in
accordance with FEDAI guidelines and provisions of para 38 of AS-11.
2.3 Items of Income and expenditure relating to foreign exchange
transactions are recorded at exchange rates prevailing on the date of
the transactions.
2.4 Contingent liabilities on account of acceptances, endorsements and
other obligations including guarantees in foreign currencies are valued
at year end closing rates published by FEDAI except Bills for
Collection which are accounted for at the notional rates at the time of
lodgment.
3. Investments
3.1 Classification and valuation of investments are made in accordance
with the prudential norms prescribed by Reserve Bank of India read with
clarifications / directions given by RBI.
3.2 The entire investment portfolio is classified into three
categories, viz, Held to Maturity, Available for Sale and Held for
Trading in line with the guidelines / directions of Reserve Bank of
India. Disclosure of the investments under the three categories
mentioned above is made under six classifications viz.,
i. Government Securities
ii. Other approved securities
iii. Shares
iv. Debentures
v. Subsidiaries / Joint Ventures and
vi. Others
3.3 Basis Of Classification:
i. Investments that the Bank intends to hold till maturity are
classified as Held to Maturity.
ii. Investments that are held principally for resale within 90 Days
from the date of purchase are classified as Held for Trading.
iii. Investments which are not classified in the above two categories,
are classified as Available for Sale.
iv. An investment is classified under the above three categories at
the time of its purchase. Shifting of securities from AFS to HTM and
vice versa can be done with the approval of the Board normally once in
a year. Shifting is effected at the lower of acquisition cost / book
value / market value on the date of transfer and the depreciation, if
any, on such shifting is fully provided for and the book value of
securities is changed accordingly.
3.4 Securities under ''Held to Maturity'' are stated at acquisition costs
unless such costs are higher than the face value, in which case the
premium is amortized over the remaining period of maturity. Such
amortization is shown under "Income on Investments- Schedule 13 item
II. In case, the cost is less than the redemption value, the difference
being the unrealized gain, is ignored. Any diminution in value of
investments in subsidiaries and joint venture, other than temporary in
nature, is provided for each investment individually
3.5 Securities under ''Available for sale'' are valued scrip wise and
depreciation/ appreciation is segregated category wise. While net
appreciation is ignored, net depreciation under each category is
provided for.
3.6 Securities under ''Held for Trading'' are valued at market price and
the net depreciation under each category is provided for and the net
appreciation, if any, is ignored.
3.7 Cost of investment is based on the weighted average cost method
category wise.
3.8 The ''market value'' for the purpose of valuation of investments
included in the ''Available for Sale'' and ''Held for Trading'' categories
is the market price of the scrip as available from the trades/quotes on
the stock exchanges, price list of RBI, prices declared by Primary
Dealers Association of India (PDAI) jointly with the Fixed Income Money
Market and Derivatives Association of India (FIMMDA).
In respect of unquoted securities, the procedure adopted is as below:
a. Government of India Securities: At rates put out by FIMMDA/PDAI
b. State Government Loans, Other On yield to maturity (YTM) basis
approved Securities, Preference at the rate prescribed by FIMMDA
Shares, Debentures and PSU Bonds: / PDAI with such mark ups as
laid down by RBI or FIMMDA/PDAI
c. Equity Shares: At break-up value based on the
latest Balance Sheet, which are
not older than one year on the
date of valuation. In cases
where latest Balance Sheets are
not available, the shares are
valued at Re.1 per company
d. Mutual Fund Units: At re-purchase price or Net
Assets Value
e. Treasury Bills, Commercial At carrying cost.
Papers, Certificate of Deposits,
Recapitalization Bonds,
Subsidiaries, Joint Ventures and
Sponsored Institutions:
3.9 In determining acquisition cost of investments:
a. Incentive received on subscription is deducted from the cost of
securities;
b. Brokerage / commission/ stamp duty paid in connection with
acquisition of securities are treated as revenue expenditure;
c. Broken period interest, if any, paid on acquisition of investment
is debited to profit & loss account. Broken period interest received on
sale of securities is recognized as Interest Income.
3.10 Profit/ Loss on sale of investments is taken to profit and loss
account. However, in case of profit on sale of investments in ''Held to
Maturity'' category, an equivalent amount of profit is appropriated to
Capital Reserve.
3.11 Non Performing Investments
In respect of Non-Performing Securities, income is not recognized and
appropriate provision is made for depreciation in the value of such
securities as per Reserve Bank of India guidelines.
3.12 Dividend Income on shares and units of mutual funds is booked on
receipt basis.
3.13 In the event, provisions created on account of depreciation in the
''AFS'' or ''HFT'' categories are found to be in excess of the required
amount in any year, the excess is credited to the P.& L. Account and an
equivalent amount is appropriated to an Investment Reserve Account in
Schedue 2 - "Reserve & Surplus" under the head "Revenue and Other
Reserves".
4. Advances
4.1 Advances are classified into "Performing" and "Non-Performing"
assets and provisions are made as per the prudential norms prescribed
by the Reserve Bank of India. Bank has made provisions on
Non-Performing Assets as per the prudential norms prescribed by the RBI
as under:
Category of Assets Provision norms
15% on Secured Exposure.
Sub-Standard 25% on Unsecured Exposure*
20% on Unsecured Exposure*
in respect of Infrastructure loan accounts
where certain safeguards such as escrow
accounts are available
Doubtful-I 25% on Secured
100% on Unsecured
Doubtful-II 40% on Secured
100% on Unsecured
Doubtful-III 100% on Secured
100% on Unsecured
Loss 100% of Book Outstanding
* Unsecured exposure is defined as an exposure where the realizable
value of the security, as assessed by the bank/ approved valuers/
Reserve Bank''s Inspecting Officers, is not more than 10 per cent,
ab-initio, of the outstanding exposure.
4.2 Advances are stated net of de-recognized interest and provisions/
Technical write off made in respect of non-performing advances. Claims
received from DICGC/ CGTMSE/ ECGC are not reduced from such advances
till adjusted/ technically written-off whereas part recovery in all NPA
accounts is reduced from advances.
4.3 Provisions on standard advances are made and are included under
"Other Liabilities and Provisions" as per RBI''s guidelines.
4.4 For restructured/ rescheduled advances, provisions are made in
accordance with the guidelines issued by RBI.
4.5 The sale of NPA is accounted for as per guidelines prescribed by
RBI:-
i) . When the bank sells its financial assets to Securitization Company
(SC)/ Reconstruction Company (RC), the same is
removed from the books.
ii) . If the sale is at a price below the net book value (NBV) (i.e.
book value less provisions held), the shortfall is debited to
the Profit & Loss account of the year of sale.
iii) . If the sale is for a value higher than the NBV, the excess
provision is reversed in the year the amounts are received.
5. Floating Provisions
In accordance with the RBI guidelines, the bank has an approved policy
for creation and utilization of floating provisions separately for
advances and investments. The quantum of floating provisions to be
created would be assessed, at, the end of each financial year. The
floating provisions would be utilized only for contingencies under
extra ordinary circumstances specified in the policy with prior
permission of Reserve Bank of India.
6. Fixed Assets
6.1 Premises and other Fixed Assets are stated at historical
cost/revalued amount. In respect of premises, where segregation is not
possible between land and superstructure, are considered in the value
of superstructure.
6.2 Premises taken on perpetual lease are considered as freehold
premises and are not amortized.
7. Depreciation on Fixed Assets
7.1 Depreciation is provided for on -
7.1.1 Computers at 33.33%, on straight-line method; additions are
depreciated for the full year irrespective of the date of addition as
per RBI guidelines.
7.1.2 Other Fixed assets on written down value method at the rates
prescribed by the Income Tax Act 1961; additions effected before 30th
September are depreciated for full year and additions effected
thereafter are depreciated for half year.
7.1.3 Cost of premises is taken composite, wherever it is not possible
to segregate the cost of land from the cost of the superstructure.
7.2 No depreciation is provided on assets sold/disposed of during the
year.
7.3 Amount equivalent to depreciation attributable to revalued portion
of the assets is transferred from Revaluation Reserve Account to the
Profit & Loss Account.
8. Revenue Recognition
8.1 Income and expenditure are accounted for on accrual basis unless
otherwise stated.
8.2 Income on non-performing assets is recognized on realization basis
in accordance with the prudential norms prescribed by Reserve Bank of
India.
8.3 Partial recovery in non-performing assets is appropriated first
towards principal and thereafter towards interest.
8.4 Income on guarantees and letters of credit issued, locker rent,
income from merchant banking transactions, money transfer services,
dividend on shares, Interest on refund of income tax, commission on
credit card, interest on overdue bills, processing fee, Government
business including distribution of pension and income from units of
mutual fund products and income from ATM operations are accounted for
on receipt basis.
8.5 Rebate on compromised accounts is accounted for at the time of full
and final adjustment of the account.
8.6 Interest on overdue Term Deposits is provided at the rate of
interest applicable to Savings Bank Deposits.
8.7 Liability in respect of incremental lease rent on renewal of lease
agreement is accounted for at the time of renewal of the lease.
8.8 Bond Issue Expenses incurred in connection with raising Tier-II
Capital are treated as Deferred Revenue Expenditure to be written off
over a period of five years.
8.9 Share Issue Expenses are adjusted against the Share Premium Account
9. Staff Retirement Benefits
9.1 Annual contribution to Gratuity Fund, Pension Fund and Leave
Encashment Fund are provided for on the basis of an actuarial
valuation.
9.2 The Employees joining on or after 01.04.2010 are being covered
under the New Pension Scheme.
10. Impairment of Assets
Impairment losses (if any) on Fixed Assets (including revalued assets)
are recognized in accordance with AS 28 (Impairment of Assets) issued
by the ICAI and charged off to Profit and Loss Account.
11. Taxes on Income
11.1 Current Income Tax is measured at the amount expected to be paid
considering the applicable tax rates and favorable judicial
pronouncement/ legal opinions.
11.2 In accordance with AS-22 Deferred Tax comprising of tax effect of
timing differences between taxable and accounting income for the
period, is recognized keeping in view the consideration of prudence in
respect of Deferred Tax Assets/Liabilities.
Mar 31, 2014
Not Available
Mar 31, 2013
1.1.1 Provisions for pension, gratuity, leave encashment and other
long term benefits have been made in accordance with the Revised
Accounting Standard (AS - 15) (revised 2006) issued by the ICAI.
However, the additional liability towards re-opening of pension option
and amendment in the Gratuity Act, 1972 has been dealt in accordance
with the provisions contained in Reserve Bank of India circular no.
DBOD.BP.BC.80/21.04.018/2011-12) dated 9th February 2011 on Re-open-
ing of Pension Option to Employees of Public Sector Banks and
Enhancement in Gratuity Limits . Accordingly the Bank has amortized
Rs.146.12 crore on account of Pension and Rs.26.57 crore on account of
Gratuity. The balance amount carried forward on account of Pension of
Rs.292.96 crore and Gratuity Rs.53.15 crore shall be carried forward to
be amortized in next two years.
1.2 Accounting Standard 22 - Accounting for Taxes on Income
1.2.1 Major components of deferred tax assets/liabilities are as
under:
The Deferred Tax Liability of Rs.22.43 crore (previous year Rs.14.82
crore) on account of Special Reserve created and maintained u/s 36 (1)
(viii) has not been considered necessary in view of the management''s
irrevocable decisions not to withdraw from the Special Reserve.
1.2.2 Based on the opinion of tax expert, the bank has considered the
difference between accounting income and computation of taxable income
on valuation of securities as permanent difference and accordingly,
deferred tax liability of Rs.277.77 crore (Previous Year Rs.281.79) has
not been considered necessary.
1.2.3 No provision has been considered necessary in respect of
disputed demands of Income Tax, Fringed Benefit Tax and Interest Tax
aggregating to Rs.261.07 crore Previous year Rs.284.97 crore) in view
of decisions of appellate authorities / judicial pronouncements /
opinions of legal experts.
Mar 31, 2012
1. GENERAL
BASIS OF PREPARATION
The financial statements have been prepared and presented under
historical cost convention on accrual basis of accounting unless
otherwise stated and comply with Generally accepted accounting
principles, statutory requirements prescribed under Banking
Regulation Act, 1949, circulars and guidelines issued by Reserve Bank
of India from time to time and notified accounting standards by
companies (Accounting Standards) Rules, 2006 to the extent applicable
and current practices in Banking Industry in India.
2. Foreign Exchange Transactions
2.1 All the Monetary assets and liabilities in foreign currencies are
translated in Indian rupees at the ex- change rates prevailing at the
Balance Sheet date as notified by Foreign Exchange Dealers Association
of India (FEDAI). The resultant gain / loss is accounted for in the
Profit & Loss account.
2.2 The outstanding foreign exchange contracts are stated at the
prevailing exchange rate on the date of commitment. Profit or loss on
such contracts is accounted for as per rates advised by FEDAI and in
accordance with FEDAI guidelines and provisions of para 38 of AS-11.
2.3 Items of Income and expenditure relating to foreign exchange
transactions are recorded at exchange rates prevailing on the date of
the transactions.
2.4 Contingent liabilities on account of acceptances, endorsements and
other obligations including guarantees & letter of credits in foreign
currencies are valued as per rates published by FEDAI except Bills for
Collection which are accounted for at the notional rates at the time of
lodgment.
3. Investments
3.1 Classification and valuation of investments are made in accordance
with the prudential norms prescribed by Reserve Bank of India read with
clarifications / directions given by RBI.
3.2 The entire investment portfolio is classified into three
categories, viz, Held to Maturity, Available for Sale and Held for
Trading in line with the guidelines / directions of Reserve Bank of
India. Disclosure of the investments under the three categories
mentioned above is made under six classifications viz.,
i. Government Securities
ii. Other approved securities
iii. Shares
iv. Debentures
v. Subsidiaries / Joint Ventures and
vi. Others
3.3 Basis Of Classification:
i. Investments that the Bank intends to hold till maturity are
classified as Held to Maturity.
ii. Investments that are held principally for resale within 90 Days
from the date of purchase are classified as Held for Trading.
iii. Investments which are not classified in the above two categories,
are classified as Available for Sale.
iv. An investment is classified under the above three categories at
the time of its purchase. Shifting of securities from one category to
another is done with the approval of the Board normally once in a year.
Shifting is effected at the lower of acquisition cost / book value /
market value on the date of transfer and the depreciation, if any, on
such shifting is fully provided for and the book value of securities is
changed accordingly.
3.4 Securities under 'Held to Maturity' are stated at acquisition costs
unless such costs are higher than the face value, in which case the
premium is amortized over the remaining period of maturity. Such
amortization is shown under "Income on Investments- Schedule 13 item
II. In case, the cost is less than the redemption value, the difference
being the unrealized gain, is ignored. Any diminution in value of
investments in subsidiaries and joint venture, other than temporary
in nature, is provided for each investment individually
3.5 Securities under 'Available for sale' are valued scrip wise and
depreciation/ appreciation is segregated category wise. While net
appreciation is ignored, net depreciation under each category is
provided for.
3.6 Securities under 'Held for Trading' are valued at market price and
the net depreciation under each category is provided for and the net
appreciation, if any, is ignored.
3.7 Cost of investment is based on the weighted average cost method
category wise.
3.8 The 'market value' for the purpose of valuation of investments
included in the 'Available for Sale' and 'Held for Trading' categories
is the market price of the scrip as available from the trades/quotes on
the stock exchanges, price list of RBI, prices declared by Primary
Dealers Association of India (PDAI) jointly with the Fixed Income Money
Market and Derivatives Association of India (FIMMDA).
3.9 In determining acquisition cost of investments:
a. Incentive received on subscription is deducted from the cost of
securities;
b. Brokerage / commission/ stamp duty paid in connection with
acquisition of securities are treated as revenue expenditure;
c. Broken period interest, if any, paid on acquisition of investment
is debited to profit & loss account. Broken period interest received
on sale of securities is recognized as Interest Income.
3.10 Profit/ Loss on sale of investments is taken to profit and loss
account. However, in case of profit on sale of investments in 'Held to
Maturity' category, an equivalent amount of profit is appropriated to
Capital Reserve.
3.11 Non Performing Investments
In respect of Non-Performing Securities, income is not recognized and
appropriate provision is made for depreciation in the value of such
securities as per Reserve Bank of India guidelines.
4. Advances
4.1 Advances are classified into "Performing" and "Non-Performing"
assets and provisions are made as per the prudential norms prescribed
by the Reserve Bank of India. However, the Bank has made higher
provisions for sub-standard and doubtful category as follows:
Revised Rates of Provisioning for Non-Performing Assets w.e.f
18.05.2011 are as under:
*/ Unsecured exposure is defined as an exposure where the realizable
value of the security, as assessed by the bank/ approved valuers/
Reserve Bank's Inspecting Officers, is not more than 10 per cent,
ab-initio, of the outstanding exposure.
The revised provisioning norms will have prospective effect on the
fresh slippage (i.e. accounts which slip into NPA category on or after
01.01.2011) and further deterioration in the existing NPAs. However,
the provisions already made in any existing NPA account as on
31.12.2010 will not be reduced/reversed.
4.2 Advances are stated net of de-recognized interest and provisions/
Technical write off made in respect of non- performing advances. Claims
received from DICGC/ CGTMSE/ ECGC are not reduced from such advances
till adjusted/ technically written-off whereas part recovery in all NPA
accounts is reduced from advances.
4.3 Provisions on standard advances are made and are included under
"Other Liabilities and Provisions" as per RBI's guidelines.
4.4 For restructured/ rescheduled advances, provisions are made in
accordance with the guidelines issued by RBI
5. Floating Provisions
In accordance with the RBI guidelines, the bank has an approved policy
for creation and utilization of floating provisions separately for
advances and investments. The quantum of floating provisions to be
created would be assessed, at, the end of each financial year. The
floating provisions would be utilized only for contingencies under
extra ordinary circumstances specified in the policy with prior
permission of Reserve Bank of India.
6 Fixed Assets
6.1 Premises and other Fixed Assets are stated at historical
cost/revalued amount. In respect of premises, where segregation is not
possible between land and superstructure, are considered in the value
of super- structure.
6.2 Premises taken on perpetual lease are considered as freehold
premises and are not amortized.
7 Depreciation on Fixed Assets
7.1 Depreciation is provided for on -
7.1.1 Computers at 33.33%, on straight-line method; additions are
depreciated for the full year irrespective of the date of addition as
per RBI guidelines.
7.1.2 Other Fixed assets on written down value method at the rates
prescribed by the Income Tax Act 1961; additions effected before 30th
September are depreciated for full year and additions effected
thereafter are depreciated for half year.
7.1.3 Cost of premises is taken composite, wherever it is not possible
to segregate the cost of land from the cost of the superstructure.
7.2 No depreciation is provided on assets sold/disposed of during the
year.
7.3 Amount equivalent to depreciation attributable to revalued portion
of the assets is transferred from Revaluation Reserve Account to the
Profit & Loss Account.
8 Revenue Recognition
8.1 Income and expenditure are accounted for on accrual basis unless
otherwise stated.
8.2 Income on non-performing assets is recognized on realization basis
in accordance with the prudential norms prescribed by Reserve Bank of
India.
8.3 Partial recovery in non-performing assets is appropriated first
towards principal and thereafter towards interest.
8.4 Income on guarantees and letters of credit issued, locker rent,
income from merchant banking transactions, money transfer services,
dividend on shares, Interest on refund of income tax, commission on
credit card, interest on overdue bills, processing fee, Government
business including distribution of pension and income from units of
mutual fund products and income from ATM operations are accounted for
on receipt basis.
8.5 Rebate on compromised accounts is accounted for at the time of full
and final adjustment of the account.
8.6 Interest on overdue Term Deposits is provided at the rate of
interest applicable to Savings Bank Deposits.
8.7 Liability in respect of incremental lease rent on renewal of lease
agreement is accounted for at the time of renewal of the lease.
8.8 Bond Issue Expenses incurred in connection with raising Tier-II
Capital are treated as Deferred Revenue Expenditure to be written off
over a period of five years.
8.9 Share Issue Expenses are adjusted against the Share Premium Account
9 Staff Retirement Benefits
9.1 Annual contribution to Gratuity Fund, Pension Fund and Leave
Encashment Fund are provided for on the basis of an actuarial
valuation.
9.2 Transitional liability relating to Pension Fund and Sick Leave
determined as per actuarial valuation is writ- ten off over a period of
five years commencing from 2007-08 in terms of Revised Accounting
Standard 15 (AS-15) as against remaining seven years out of ten years
as approved by Reserve Bank of India vide its letter no. DBOD.BP.No.
271/21.01.002/2005-06 dated 23.08.2005.
9.3 The additional liability on account of re-opening of pension option
for existing employees who had not opted for pension earlier as well as
amendment in the 'Payment of Gratuity Act, 1972' enhancing the gratuity
limit to Rs.10 lacs as per Actuarial Valuation is amortized over a
period of five years commencing from the FY 2010-11 in terms of RBI
Circular DBOD No.BP.BC.80/ 21.04.018/2010-11 dated February 9, 2011.
The unamortized expenditure carried forward does not include any amount
relating to separated/ retired employees.
9.4 The Employees joining on or after 01.04.2010 are being covered
under the New Pension Scheme.
10 Taxes on Income
10.1 Current Income Tax is measured at the amount expected to be paid
considering the applicable tax rates and favorable judicial
pronouncement/ legal opinions.
10.2 In accordance with AS-22 Deferred Tax comprising of tax effect of
timing differences between taxable and accounting income for the
period, is recognized keeping in view the consideration of prudence in
respect of Deferred Tax Assets/Liabilities.
Mar 31, 2011
1. GENERAL
BASIS OF PREPARATION
the financial statements have been prepared and presented under
historical cost convention on accrual basis of accounting unless
otherwise stated and comply with Generally accepted accounting
principles, statutory requirements prescribed under Banking regulation
Act, 1949, circulars and guidelines issued by reserve Bank of India
from time to time and notified accounting standards by companies
(Accounting Standards) rules, 2006 to the extent applicable and current
practices in Banking Industry in India.
2. Foreign exchange transactions
2.1 All the Monetary assets and liabilities in foreign currencies are
translated in Indian rupees at the exchange rates prevailing at the
Balance Sheet date as notified by Foreign exchange Dealers Association
of India (FEDAI). the resultant gain / loss is accounted for in the
profit & loss account.
2.2 the outstanding foreign exchange contracts are stated at the
prevailing exchange rate on the date of commitment. profit or loss on
such contracts is accounted for as per rates advised by FEDAI and in
accordance with FEDAI guidelines and provisions of para 38 of AS-11.
2.3 Items of Income and expenditure relating to foreign exchange
transactions are recorded at exchange rates prevailing on the date of
the transactions.
2.4 Contingent liabilities on account of acceptances, endorsements and
other obligations including guarantees & letter of credits in foreign
currencies are valued as per rates published by FEDAI except Bills for
Collection which are accounted for at the notional rates at the time of
lodgment.
3. Investments
3.1 Classification and valuation of investments are made in accordance
with the prudential norms prescribed by reserve Bank of India read with
clarifications / directions given by RBI.
3.2 the entire investment portfolio is classified into three
categories, viz, Held to Maturity, Available for Sale and Held for
trading in line with the guidelines / directions of reserve Bank of
India. Disclosure of the investments under the three categories
mentioned above is made under six classifications viz.,
i. Government Securities
ii. other approved securities
iii. Shares
iv. Debentures
v. Subsidiaries / Joint Ventures and
vi. others
3.3 Basis of Classification:
i. Investments that the Bank intends to hold till maturity are
classified as Held to Maturity.
ii. Investments that are held principally for resale within 90 Days
from the date of purchase are classified as Held for trading.
iii. Investments which are not classified in the above two categories,
are classified as Available for Sale.
iv. An investment is classified under the above three categories at the
time of its purchase. Shifting of securities from one category to
another is done with the approval of the Board normally once in a year.
Shifting is effected at the lower of acquisition cost / book value /
market value on the date of transfer and the depreciation, if any, on
such shifting is fully provided for and the book value of securities is
changed accordingly.
3.4 Securities under Held to Maturity are stated at acquisition costs
unless such costs are higher than the face value, in which case the
premium is amortized over the remaining period of maturity. Such
amortization is shown under "Income on Investmentsà Schedule 13 item
II. In case, the cost is less than the redemption value, the difference
being the unrealized gain, is ignored. Any diminution in value of
investments in subsidiaries and joint venture, other than temporary in
nature, is provided for each investment individually
3.5 Securities under Available for sale are valued scrip wise and
depreciation/ appreciation is segregated category wise. While net
appreciation is ignored, net depreciation under each category is
provided for.
3.6 Securities under Held for trading are valued at market price and
the net depreciation under each category is provided for and the net
appreciation, if any, is ignored.
3.7 Cost of investment is based on the weighted average cost method
category wise.
3.8 the market value for the purpose of valuation of investments
included in the Available for Sale and Held for trading categories
is the market price of the scrip as available from the trades/ quotes
on the stock exchanges, price list of RBI, prices declared by primary
Dealers Association of India (PDAI) jointly with the Fixed Income Money
Market and Derivatives Association of India (FIMMDA).
In respect of unquoted securities, the procedure adopted is as below:
a. Government of India Securities: At rates put out by FIMMDA/PDAI
b. State Government loans, other approved Securities, preference
Shares, Debentures and PSu Bonds: on yield to maturity (YTM) basis at
the rate prescribed by FIMMDA/ PDAI with such mark ups as laid down by
RBI or FIMMDA/PDAI
c. equity Shares : At break-up value based on the latest Balance
Sheet, which are not older than one year on the date of valuation. In
cases where latest Balance Sheets are not available, the shares are
valued at Re.1 per company
d. Mutual Fund units: At re-purchase price or net Assets Value
e. treasury Bills, Commercial papers, Certificate of Deposits,
recapitalization Bonds, Subsidiaries, Joint Ventures and Sponsored
Institutions: At carrying cost.
3.9 In determining acquisition cost of investments:
a. Incentive received on subscription is deducted from the cost of
securities;
b. Brokerage/commission/ stamp duty paid in connection with
acquisition of securities are treated as revenue expenditure;
c. Broken period interest, if any, paid on acquisition of investment
is debited to profit & loss account. Broken period interest received
on sale of securities is recognized as Interest Income.
3.10 profit/ loss on sale of investments is taken to profit and loss
account. However, in case of profit on sale of investments in Held to
Maturity category, an equivalent amount of profit is appropriated to
Capital reserve.
3.11 Non Performing Investments : In respect of non- performing
Securities, income is not recognized and appropriate provision is made
for depreciation in the value of such securities as per reserve Bank of
India guidelines.
4. Advances
The revised provisioning norms will have prospective effect on the
fresh slippage (i.e. Accounts which slip into npA category on or after
01.01.2011) and further deterioration in the existing NPAs. However,
the provisions already made in any existing NPA account will not be
reduced/ reversed.
4.2 Provisions for restructured/ rescheduled Advances are made as per
RBI guidelines.
4.3 Advances are stated net of de-recognized interest and provisions/
technical write off made in respect of non-performing advances. Claims
received from DICGC, CGTMSE, and ECGC are not reduced from such
advances till adjusted/ technically written-off whereas part recovery
in all NPA Accounts is reduced from advances.
4.4 Provisions on standard advances are made and are included under
Other liabilities and provisions as per RBI guidelines.
5 Floating Provisions
In accordance with the RBI guidelines, the bank has an approved policy
for creation and utilization of floating provisions separately for
advances and investments. the quantum of floating provisions to be
created would be assessed, at, the end of each financial year. the
floating provisions would be utilized only for contingencies under
extra ordinary circumstances specified in the policy with prior
permission of reserve Bank of India.
6. Fixed Assets
6.1 premises and other Fixed Assets are stated at historical
cost/revalued amount. In respect of premises, where segregation is not
possible between land and superstructure, are considered in the value
of superstructure.
6.2 premises taken on perpetual lease are considered as freehold
premises and are not amortized.
7. depreciation on Fixed Assets
7.1 Depreciation is provided for on -
7.1.1Computers at 33.33%, on straight-line method; additions are
depreciated for the full year irrespective of the date of addition as
per RBI guidelines.
7.1.2 other Fixed assets on written down value method at the rates
prescribed by the Income tax Act 1961; additions effected before 30th
September are depreciated for full year and additions effected
thereafter are depreciated for half year.
7.1.3 Cost of premises is taken composite, wherever it is not possible
to segregate the cost of land from the cost of the superstructure.
7.2 No depreciation is provided on assets sold/ disposed of during the
year.
7.3 Amount equivalent to depreciation attributable to revalued portion
of the assets is transferred from revaluation reserve Account to the
profit & loss Account.
8. Revenue Recognition
8.1 Income and expenditure are accounted for on accrual basis unless
otherwise stated.
8.2 Income on non-performing assets is recognized on realization basis
in accordance with the prudential norms prescribed by reserve Bank of
India.
8.3 Partial recovery in non-performing assets is appropriated first
towards principal and thereafter towards interest.
8.4 Income on guarantees and letters of credit issued, locker rent,
income from merchant banking transactions, money transfer services,
dividend on shares, Interest on refund of income tax,
commission on credit card, interest on overdue bills, processing fee,
Government business including distribution of pension and income from
units of mutual fund products. Income from ATM operations are accounted
for on receipt basis.
8.5 Rebate on compromised accounts is accounted for at the time of full
and final adjustment of the account.
8.6 Interest on overdue term Deposits is provided at the rate of
interest applicable to Savings Bank Deposits.
8.7 Liability in respect of incremental lease rent on renewal of lease
agreement is accounted for at the time of renewal of the lease.
8.8 Bond Issue expenses incurred in connection with raising Tier-II
Capital are treated as Deferred revenue expenditure to be written off
over a period of five years.
8.9 Share Issue expenses are adjusted against the Share premium Account
9. Staff Retirement Benefits
9.1 Annual contribution to Gratuity Fund, pension Fund and leave
encashment Fund are provided for on the basis of an actuarial
valuation.
9.2 Transitional liability relating to pension Fund and Sick leave
determined as per actuarial valuation is written off over a period of
five years commencing from 2007-08 in terms of revised Accounting
Standard 15 (AS-15) as against remaining seven years out of ten years
as approved by reserve Bank of India vide its letter no. DBOD.BP.No.
271/21.01.002/2005-06 dated 23.08.2005.
9.3 The additional liability on account of re-opening of pension option
for existing employees who had not opted for pension earlier as well as
amendment in the payment of Gratuity Act, 1972 enhancing the gratuity
limit to Rs.10 lacs as per Actuarial Valuation is amortized over a
period of five years commencing from the FY 2010-11 in terms of RBI
Circular DBOD No.Bp.BC.80/ 21.04.018/2010- 11 dated February 9, 2011.
the unamortized expenditure carried forward does not include any amount
relating to separated/ retired employees.
9.4 The employees joining on or after 01.04.2010 are being covered
under the new pension Scheme.
10. Taxes on Income
10.1 Current Income tax is measured at the amount expected to be paid
considering the applicable tax rates and favorable judicial
pronouncement/ legal opinions.
10.2 In accordance with AS-22 Deferred tax comprising of tax effect of
timing differences between taxable and accounting income for the
period, is recognized keeping in view the consideration of prudence in
respect of Deferred tax Assets/liabilities.