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Accounting Policies of Syndicate Bank Company

Mar 31, 2015

1. (A) ACCOUNTING CONVENTIONS

The financial statements of the Bank including foreign office have been prepared following the going concern concept under the historical cost convention unless otherwise stated. They conform to Generally Accepted Accounting Principles (GAAP) in India, which comprise statutory provisions, regulatory/Reserve Bank of India (RBI) guidelines, Accounting Standards/Guidance Notes issued by the Institute of Chartered Accountants of India (ICAI) and the practices prevalent in the banking industry in India. However, in respect of foreign office, statutory provisions and practices prevailing in respective foreign country are complied with.

(B) USE OF ESTIMATES

The preparation of financial statements requires the management to make estimates and assumptions considered in the reported amount of assets and liabilities (including contingent liabilities) as on date of the financial statements and the reported income and expense for the reporting period. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Any revision to the accounting estimate is recognized prospectively in the current and future periods unless otherwise stated.

2. TRANSACTIONS INVOLVING FOREIGN EXCHANGE

2.1 Exchange Rates as notified by Foreign Exchange Dealers'' Association of India (FEDAI) are adopted.

2.2 All foreign currency transactions involving forex liabilities are recorded by applying weekly average rate (WAR), whereas all forex assets are recorded at ongoing market rates.

2.3 All the monetary assets and liabilities are reported at the end of the year at closing exchange rate and the resultant profit/loss is taken to revenue.

2.4 Outstanding Forward Exchange Contracts are reported at the exchange rates notified for specified maturities and at interpolated rates for contracts of "in between maturities". The resultant Marked to Market (MTM) is discounted to arrive at present value MTM by using CCIL- Zero Coupon Yield Curve (ZCYC) rates.

2.5 Contingent liabilities on account of Guarantees, Forward Contracts, Letters of Credit, Acceptances, Endorsements and other obligations are translated at the closing exchange rates.

2.6 Foreign Branch of the Bank is classified as "Non- Integral Foreign Operation"

a) All assets and liabilities of the foreign operations, both monetary and non-monetary as well as contingent liabilities are translated at closing exchange rates.

b) Income and Expenditure are translated at quarterly average exchange rates.

c) The resulting Exchange Difference arising from translation as per AS-11 is accumulated in a "Foreign Currency Translation Reserve" until disposal of net investment of the foreign branch.

3. INVESTMENTS

3.1 In accordance with RBI guidelines, investments in India are classified into:

I. Held to Maturity

II. Available for Sale

III. Held for Trading

Each category is further classified into:

a) Government Securities

b) Other Approved Securities

c) Shares

d) Debentures and Bonds

e) Subsidiaries/Associates

f) Others

3.2 Investments are valued in accordance with RBI guidelines.

3.2.1 Investments under ''Held to Maturity'' are valued at cost of acquisition, except where it is acquired at a premium in which case the premium is amortised over the remaining period of maturity using Straight Line Method.

3.2.2 Investments held under ''Available for Sale'' and ''Held for Trading'' categories are valued at cost or market value, whichever is lower. Individual scrips are valued and depreciation/appreciation is aggregated category-wise as per the classification of investments in the Balance Sheet. Net depreciation is provided for and net appreciation, if any, is ignored.

3.2.3 For the purpose of valuation –

I. Cost refers to actual cost of acquisition/carrying cost, wherever applicable.

II. Market value refers to latest available price from the trades/quotes on the stock exchanges, SGL account transactions, price list of RBI/FIMMDA/ PDAI; and accordingly:

a) Government Securities and Other Approved Securities are valued on the basis of prices/ Yield to Maturity (YTM) rates of FIMMDA/PDAI with appropriate spreads as prescribed by RBI.

b) Debentures/Bonds are valued at Market price if quoted, otherwise on YTM basis with appropriate spreads as prescribed by PDAI/ FIMMDA.

c) Treasury Bills, Rural Infrastructure Development Fund (RIDF), Commercial Papers and Certificate of Deposits are valued at carrying cost.

d) Preference Shares are valued on YTM basis and not exceeding redemption value as per RBI/FIMMDA guidelines.

e) Equity Shares are valued at last traded prices if quoted; unquoted shares are valued at breakup value (without considering ''revaluation reserves'', if any) as per the latest available balance sheet or at Rs.1 per company, where latest balance sheet is not available.

f) Investment in RRBs is valued at carrying cost (i.e. book value).

g) Investment in Subsidiaries/ Joint ventures is valued at carrying cost.

h) Security Receipts issued by Securitisation Companies (SC)/Reconstruction Company (RC) are valued/classified as per the norms applicable to investment in Non SLR instruments as prescribed by RBI from time to time.

i) Units of Venture Capital Funds (VCF) are valued at NAV shown by the VCF in its financial statements not older than 18 months.

j) Units of mutual funds are valued as per stock exchange quotations, if quoted; at Repurchase Price/Net Asset Value, if unquoted.

3.2.4 Investments are also categorized based on their performance and provisions are made as per IRAC norms applicable to advances as per RBI guidelines. Provision made on non-performing investments is not set off against the appreciation in respect of other performing investments.

3.3 Gain, if any, on sale/disposal of securities in the Held to Maturity category is appropriated to Capital Reserve through the Profit and Loss Account (Net of taxes and amount required to be transferred to Statutory Reserve).

3.4 Transfer of securities from one category to another is carried out at lowest of acquisition cost/book value/market value on the date of transfer. The depreciation, if any, on such transfer is fully provided for.

3.5 Floating/Fixed Rate Note and Credit Linked Note, Investments at Foreign Branch are classified as ''Available For Sale'' category and are valued at nominal value or market value, whichever is lower. These Investments are marked to market at quarterly intervals and where the value of these Investments is lower than the nominal value, provision for depreciation is created in the Balance Sheet and a corresponding charge is recognized in the Profit and Loss Account.

3.6 Incentive received on subscriptions is deducted from the cost of securities. Brokerage/Commission/Stamp Duty paid in connection with acquisition of securities is treated as revenue expense.

3.7 Availment of funds from RBI under Repo and deployment of funds under Reverse Repo are accounted as borrowing and lending respectively.

4. DERIVATIVES

4.1 The credit exposures for derivative transactions are monitored on Current Credit Exposure method.

4.2 The naked hedging transactions are considered as a trading transaction and allowed to run till maturity.

4.3 Derivative transactions are classified into hedge and non-hedge and measured at fair value.

4.4 The transactions covered on back-to-back basis and the transactions undertaken to hedge the risk on assets and liabilities are valued and accounted for on interest accrual basis.

4.5 Market making transactions are accounted on marked-to-market basis at monthly intervals, while hedging transactions are accounted for on accrual basis.

4.6 Premium at the time of purchase, if any, is amortized over the residual period of the transactions and profit is recognised on maturity. Discount is held in Income Received in Advance account and appropriated to Profit and Loss account on maturity.

5. ADVANCES

5.1 Advances are classified into Performing and Non Performing Assets and provisions for losses on such advances are made as per prudential norms issued by Reserve Bank of India from time to time. In respect of foreign branch, asset classification and provisioning for loan losses are made as per local requirements or as per RBI prudential norms, whichever are more stringent.

5.2 Advances are stated net of provisions made for Non Performing Assets except general provisions for Standard Advances.

5.3 In case of sale of financial assets to the Asset Recon- struction Company (ARC)/Securitization Company (SC)/Banks/FIs/NBFCs at a price below the Net Book Value (NBV), i.e Book Value less Provision held, the shortfall is debited to the Profit and Loss Account and in case of sale at a value higher than the NBV, the excess provision is reversed to Profit and Loss Account in the year in which the amounts are received.

6. PREMISES AND OTHER FIXED ASSETS

6.1 Premises and other fixed assets are stated at historical cost and/or revaluation value less accumulated depreciation. The premises are revalued every five years at value determined based on the appraisal by approved valuers. Surplus arising at such revaluation is credited to Revaluation Reserve.

6.2 Depreciation on premises has been provided on composite cost wherever cost of land cannot be segregated. Additional depreciation on revalued amount is adjusted to the Revaluation Reserve.

6.3 Depreciation on other fixed assets, including additions, is provided for on the basis of written down value, except as otherwise stated, at the following rates:

and operating software, which is provided on pro- rata basis. No depreciation is provided on the assets in the year of their disposal.

7. RETIREMENT BENEFITS

7.1 Statutory contribution is made to Provident Fund Trust in respect of employees who have opted for Provident Fund. For others who have opted for pension scheme, contribution to Pension Fund Trust is made based on actuarial valuation.

7.2 Contribution to Gratuity Fund Trust is based on actuarial valuation.

7.3 Liability towards leave encashment is accounted for on Cash Basis.

8. REVENUE RECOGNITION

a) Revenue and expenses are generally accounted for on accrual basis except in respect of fees/ commission on transactions with Mutual Funds, income from non-banking assets, locker rent, interest on overdue bills/tax refunds, income from non-performing assets and legal expenses on suit filed accounts which are accounted for on cash basis.

b) Income from dividend on shares is accounted for on accrual basis when the same is declared and the right to receive the dividend is established.

c) Interest on matured deposits is accounted for at the time of renewal. However provision for interest on matured deposits is made at the Corporate Office as per the RBI guidelines.

d) The broken period interest on sale or purchase of securities is treated as revenue as per RBI guidelines.

e) Expenditure in respect of application software, bonds issue, franchises of credit card and insurance products are charged off to revenue.

f) Income from consignment sale of imported gold coins is accounted for as other income after the sale is completed.

9. TAXES ON INCOME

9.1 Current tax is determined as per the provisions of the Income Tax Act, 1961.

9.2 Deferred Tax Assets and Liabilities arising on account of timing differences between taxable and accounting income, is recognized keeping in view, the consideration of prudence in respect of Deferred Tax Assets/Liabilities in accordance with the Accounting Standard 22 issued by ICAI.

10. COUNTRY RISK MANAGEMENT

The Bank has adopted the Country Risk Management policy in accordance with the RBI guidelines and following the Country Risk Category classification published by Export Credit Guarantee Corporation (ECGC).

11. UNHEDGED FOREIGN CURRENCY EXPOSURE

The Bank has framed and approved a policy for administration of credit risk rising out of Unhedged foreign currency exposures in accordance with extant RBI guidelines.

12. IMPAIRMENT OF ASSETS

The carrying amount of assets is reviewed at each Balance Sheet date for any indication of impairment based on internal/external factor. An impairment loss is recognized whenever the carrying amount of an asset exceeds its estimated recoverable amount.

13. NET PROFIT

Net Profit is arrived at after accounting for the following under "Provisions and Contingencies": – Provision for Income Tax and Wealth Tax – Provision/Write off of Non-Performing Advances and Investments – Provision on Standard Assets – Adjustment for appreciation/depreciation on Investments – Transfer to Contingencies – Other usual and necessary provisions.

14. EARNINGS PER SHARE

Earnings per Share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted earnings per equity share are computed using the weighted average number of equity shares and dilutive potential equity shares outstanding as at the end of the year.

Note: *Appreciation / Reduction in rupee valuation of Investments include fluctuation in currency rates / INR rates.

iii) Sale and transfers to / from HTM category

The value of sales and transfers of securities to/from HTM category does not exceed 5 percent of the book value of investments held in HTM category at the beginning of the year as per RBI guidelines.

iv) SGL Bouncing

There was no instance of SGL bouncing during the financial year 2014-15.


Mar 31, 2013

1. ACCOUNTING CONVENTIONS

The accompanying financial statements are prepared following the ''Going Concern'' concept on historical cost basis and conform to the statutory provisions including the RBI guidelines and the applicable accounting standards and prevailing practices of the countries concerned, except wherever otherwise stated.

2. TRANSACTIONS INVOLVING FOREIGN EXCHANGE

2.1 Exchange rates as notified by Foreign Exchange Dealers'' Association of India (FEDAI) are adopted.

2.2 All foreign currency transactions involving forex liabilities are recorded by applying weekly average rate (WAR), whereas all forex assets are recorded at on going market rates.

2.3 All the monetary assets and liabilities are reported at the end of the year at closing exchange rate and the resultant profit / loss is taken to revenue.

2.4 Outstanding Forward Exchange Contracts are reported at the exchange rates notified for specified maturities and at interpolated rates for contracts of "in between maturities".

2.5 Contingent liabilities on account of Guarantees, Forward Contracts, Letters of Credit, Acceptances, Endorsements and other obligations are translated at the closing exchange rates.

2.6 Foreign Branch of the Bank is classified as "Non- Integral Foreign Operation"

a) All assets and liabilities of the foreign operations, both monetary and non-monetary as well as contingent liabilities are translated at closing exchange rates.

b) Income and Expenditure are translated at quarterly average exchange rates.

c) The resulting Exchange Difference arising from translation as per AS-11 is accumulated in a "Foreign Currency Translation Reserve" until disposal of net investment of the foreign operation.

3. INVESTMENTS

3.1 In accordance with RBI guidelines, investments in India are classified into:

I. Held to Maturity

II. Available for Sale

III. Held for Trading

Each category is further classified into:

a) Government Securities b) Other Approved

c) Shares Securities

d) Debentures and Bonds e) Subsidiaries

f) Others

3.2 Investments are valued in accordance with RBI guidelines.

3.2.1 Investments under ''Held to Maturity'' are valued at cost of acquisition, except where it is acquired at premium in which case the premium is amortised over the remaining period of maturity using Straight Line Method.

3.2.2 Investments held under ''Available for Sale'' and ''Held for Trading'' categories are valued at cost or market value, whichever is lower. Individual scripts are valued and depreciation/appreciation is aggregated category-wise as per the classification of investments in the Balance Sheet. Net depreciation is provided for and net appreciation, if any, is ignored.

3.2.3 For the purpose of valuation -

I. Cost refers to actual cost of acquisition / carrying cost, wherever applicable.

II. Market value refers to latest available price from the trades / quotes on the stock exchanges, SGL account transactions, price list of RBI / FIMMDA / PDAI; and accordingly:

a) Government Securities and Other Approved Securities are valued on the basis of prices / Yield to Maturity (YTM) rates of FIMMDA / PDAI with appropriate spreads as prescribed by RBI.

b) Debentures / Bonds are valued on YTM basis with appropriate spreads as prescribed by PDAI / FIMMDA.

c) Treasury Bills, Rural Infrastructure Development Fund (RIDF), Commercial Papers and Certificate of Deposits are valued at cost.

d) Preference Shares are valued on YTM basis.

e) Equity Shares are valued at last traded prices and where the shares are not quoted on stock exchanges, the unquoted shares are valued at breakup value (without considering ''revaluation reserves'', if any) as per the latest available balance sheet or at Rs. 1 per company, where latest balance sheet is not available.

f) Investment in RRBs is valued at carrying cost ( i.e. book value).

g) Security Receipts issued by Securitisation Companies (SC) / Reconstruction Company (RC) are valued / classified as per the norms applicable to investment in Non SLR instruments as prescribed by RBI from time to time.

h) Units of Venture Capital Funds (VCF) are valued at NAV shown by the VCF in its financial statements not older than 18 months.

i) Units in mutual fund are valued at repurchase price or Net Asset Value, whichever is lower.

3.2.4 Investments are also categorised based on their performance and provisions are made as per IRAC norms applicable to advances as per RBI guidelines. Provision made on non-performing investments is not set off against the appreciation in respect of other performing investments.

3.3. Gain, if any, on sale / disposal of securities in the Held to Maturity category is taken to Capital Reserve through the Profit and Loss Account (Net of taxes and amount required to be transferred to Statutory Reserve).

3.4. Transfer of securities from one category to another is effected after providing for depreciation, if any, on the securities so transferred.

3.5 Floating / Fixed Rate Note and Credit Linked Note, investments at Foreign Branch are classified as ''Available For Sale'' category and are valued at nominal value or market value, whichever is lower. These investments are marked to market at quarterly intervals and where the value of these investments is lower than the nominal value, a provision for depreciation is created in the Balance Sheet and a corresponding charge is recognized in the Profit and Loss Account.

3.6 Incentive received on subscriptions is deducted from the cost of securities. Brokerage / commission / stamp duty paid in connection with acquisition of securities is treated as revenue expense.

3.7 Availment of funds from RBI under Repo and deployment of funds under Reverse Repo are accounted as borrowing and lending respectively.

4. DERIVATIVES

4.1 The credit exposures for derivative transactions are monitored on Current Credit Exposure method.

4.2 The naked hedging transactions are considered as a trading transaction and allowed to run till maturity.

4.3 Derivative transactions are classified into hedge and non-hedge and measured at fair value.

4.4 The transactions covered on back-to-back basis and the transactions undertaken to hedge the risk on assets and liabilities are valued and accounted on interest accrual basis.

4.5 Market making transactions are accounted on marked-to-market basis at fortnightly intervals, while hedging transactions are accounted for on accrual basis.

4.6 Premium at the time of purchase, if any, is amortized over the residual period of the transactions and profit is recognised on maturity. Discount is held in Income Received in Advance account and appropriated to Profit and Loss account on maturity.

5. ADVANCES

5.1 Advances are classified into Performing and Non Performing Assets and provisions for loan losses on such advances are made as per prudential norms issued by Reserve Bank of India from time to time. In respect of foreign branch, asset classification and provisioning for loan losses are made as per local requirements or as per RBI prudential norms, whichever is more stringent.

5.2 Advances are stated net of provisions made for Non Performing Assets except general provisions for Standard Advances. Provision held for assets sold to ''Assets Recovery Company (ies)'' have been included in ''Other Liabilities and Provisions''.

6. PREMISES AND OTHER FIXED ASSETS

6.1 Premises and other fixed assets are stated at historical cost and / or revaluation value less accumulated depreciation. The premises are revalued every five years at value determined based on the appraisal by approved valuers. Surplus arising at such revaluation is credited to Revaluation Reserve.

6.2 Depreciation on premises has been provided on composite cost wherever cost of land cannot be segregated. Additional depreciation on revalued amount is adjusted to the Revaluation Reserve.

6.3 Depreciation on other fixed assets, including additions, is provided for on the basis of written down value, except as otherwise stated, at the following rates:

6.4 Depreciation on additions to fixed assets is provided for the whole year except on additions to computers and operating software, which is on pro-rata basis. No depreciation is provided on the assets in the year of their disposal.

7. RETIREMENT BENEFITS

7.1 Statutory contribution is made to Provident Fund Trust in respect of employees who have opted for Provident Fund. For others who have opted for pension scheme, contribution to Pension Fund Trust is made based on actuarial valuation.

7.2 Contribution to Gratuity Fund Trust is based on actuarial valuation.

7.3 Liability towards leave encashment is provided for on accrual basis as per actuarial valuation.

8. REVENUE RECOGNITION

a) Revenue and expenses are generally accounted for on accrual basis except in respect of fees / commission on transactions with Mutual Funds, income on non-banking assets, locker rent, interest on overdue bills / tax refunds, income from non-performing assets and legal expenses on suit filed accounts which are accounted for on cash basis.

b) Income from dividend on shares is accounted on accrual basis when the same is declared and the right to receive the dividend is established.

c) Interest on matured deposits is accounted for at the time of renewal. However provision for interest on matured deposits is made at Corporate Office as per the RBI guidelines.

d) The broken period interest on sale or purchase of securities is treated as revenue as per RBI guidelines.

e) Expenditure in respect of application software, bonds issue, franchises of credit card and insurance products are charged off to revenue.

f) Income from consignment sale of imported gold coins is accounted for as other income after the sale is completed.

9. TAXES ON INCOME

9.1 Current tax is determined as per the provisions of the Income Tax Act, 1961.

9.2 Deferred Tax Assets and Liabilities arising on account of timing differences between taxable and accounting income, is recognized keeping in view, the consideration of prudence in respect of Deferred Tax Assets / Liabilities in accordance with the Accounting Standard 22 issued by ICAI.

10. COUNTRY RISK MANAGEMENT

The Bank has adopted the Country Risk Management policy in accordance with the RBI guidelines.

11. VALUATION OF GOLD COINS

Stock of imported gold coins, if any, is valued at cost or market price, whichever is lower.

However, there was no Purchase and Sale of gold coins during the financial year 2012 - 13. As a result, there was no stock of gold coins as on 31-03-2013.

12. IMPAIRMENT OF ASSETS

The carrying amount of assets are reviewed at each Balance Sheet date for any indication of impairment based on internal / external factor. An impairment loss is recognized whenever the carrying amount of an asset exceeds its estimated recoverable amount.

13. NET PROFIT

Net Profit is arrived at after accounting for the following under "Provisions & Contingencies":

- Provision for Income Tax and Wealth Tax

- Provision / Write off of Non-Performing Advances and Investments

- Provision on Standard Assets

- Adjustment for appreciation / depreciation on Investments

- Transfer to Contingencies

- Other usual and necessary provisions.

14. EARNINGS PER SHARE

Earnings Per Share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted earnings per equity share have been computed using the weighted average number of equity shares and dilutive potential equity shares outstanding as at the end of the year.


Mar 31, 2012

1. ACCOUNTING CONVENTIONS

The accompanying financial statements are prepared following the 'Going Concern' concept on historical cost basis and conform to the statutory provisions including the RBI guidelines and the applicable accounting standards and prevailing practices of the countries concerned, except wherever otherwise stated.

2. TRANSACTIONS INVOLVING FOREIGN EXCHANGE

2.1 Exchange rates as notified by Foreign Exchange Dealers' Association of India (FEDAI) are adopted.

2.2 All foreign currency transactions involving forex liabilities are recorded by applying weekly average rate (WAR) published by FEDAI, whereas all forex assets are recorded at on going market rates.

2.3 All the monetary assets & liabilities are reported at the end of the year at FEDAI closing exchange rate and the resultant profit / loss is taken to revenue.

2.4 Outstanding Forward Exchange Contracts are reported at the exchange rates notified for specified maturities and at interpolated rates for contracts of "in between maturities".

2.5 Contingent liabilities on account of Guarantees, Letters of Credit, Acceptances, Endorsements and other obligations are translated at the closing exchange rates.

2.6 Foreign Branch of the Bank is classified as "Non-Integral Foreign Operation"

a) All assets & liabilities of the foreign operations, both monetary and non-monetary as well as contingent liabilities are translated at closing exchange rates.

b) Income and Expenditure are translated at quarterly average exchange rates.

c) The resulting exchange difference arising from translation as per AS-11 is accumulated in a "Foreign Currency Translation Reserve" until disposal of net investment of the foreign operation.

3. INVESTMENTS

3.1 In accordance with RBI guidelines, investments in India are classified into:

I. Held to Maturity

II. Available for Sale

III. Held for Trading

Each category is further classified into:

a) Government Securities b) Other Approved Securities

c) Shares d) Debentures & Bonds

e) Subsidiaries f) Others

3.2 Investments are valued in accordance with RBI guidelines.

3.2.1 Investments under Held to Maturity are valued at cost of acquisition, except where it is acquired at premium in which case the premium is amortised over the remaining period of maturity using Straight Line Method.

3.2.2 Investments held under Available for Sale and Held for Trading category are valued at cost or market value, whichever is lower. Individual scripts are valued and depreciation / appreciation is aggregated category- wise as per the classification of investments in the Balance Sheet. Net depreciation is provided for and net appreciation, if any, is ignored.

3.2.3 For the purpose of valuation -

I. Cost refers to actual cost of acquisition / carrying cost, wherever applicable.

II. Market value refers to latest available price from the trades / quotes on the stock exchanges, SGL account transactions, price list of RBI / FIMMDA / PDAI and accordingly:

a) Government Securities and Other Approved Securities are valued on the basis of prices / Yield to Maturity (YTM) rates of FIMMDA / PDAI with appropriate spreads as prescribed by RBI.

b) Debentures / Bonds are valued on YTM basis with appropriate spreads as prescribed by PDAI / FIMMDA.

c) Treasury Bills, Rural Infrastructure Development Fund (RIDF), Commercial Papers and Certificate of Deposits are valued at cost.

d) Preference Shares are valued on YTM basis.

e) Equity Shares are valued at last traded prices and where the shares are not quoted on stock exchanges, the unquoted shares are valued at breakup value (without considering 'revaluation reserves', if any) as per the latest available balance sheet or atRs 1 per company, where latest balance sheet is not available.

f) Investment in RRBs is valued at carrying cost ( i.e. book value).

g) Security Receipts issued by Securitisation Companies (SC)/Reconstruction Company (RC) are valued/classified as per the norms applicable to investment in Non SLR instruments as prescribed by RBI from time to time.

h) Units of Venture Capital Funds (VCF) are valued at NAV shown by the VCF in its financial statements not older than 18 months.

i) Units in mutual fund are valued at repurchase price or Net Asset Value, whichever is lower.

3.2.4 Investments are also categorised based on their performance and provisions are made as per IRAC norms applicable to advances as per RBI guidelines. Provision made on non-performing investments is not set off against the appreciation in respect of other performing investments.

3.3. Gain, if any, on sale / disposal of securities in the Held to Maturity category is taken to Capital Reserve through the Profit and Loss Account (Net of taxes and amount required to be transferred to Statutory Reserve).

3.4. Transfer of securities from one category to another is effected after providing for depreciation, if any, on the securities so transferred.

3.5 Floating Rate Note and Credit Linked Note investments at Foreign Branch are classified as Available For Sale category and are valued at nominal value or market value, whichever is lower. These investments are marked to market at quarterly intervals and where the value of these investments is lower than the nominal value, a provision for depreciation is created in the Balance Sheet and a corresponding charge is recognized in the Profit and Loss Account.

3.6 Incentive received on subscriptions is deducted from the cost of securities. Brokerage/commission/stamp duty paid in connection with acquisition of securities is treated as revenue expenses.

3.7 Availment of funds from RBI under Repo and deployment of funds under Reverse Repo are accounted as borrowing and lending respectively.

4. DERIVATIVES

4.1 The credit exposures for derivative transactions are monitored on Current Credit Exposure method.

4.2 The naked hedging transactions are considered as a trading transaction and allowed to run till maturity.

4.3 Derivative transactions are classified into hedge and non- hedge and measured at fair value.

4.4 The transactions covered on back-to-back basis and the transactions undertaken to hedge the risk on assets and liabilities are valued and accounted on interest accrual basis.

4.5 Market making transactions are accounted on marked- to-market basis at fortnightly intervals, while hedging transactions are accounted for on accrual basis.

4.6 Premium at the time of purchase if any is amortized over the residual period of the transactions and profit is booked on maturity. Discount is held in Income Received in Advance account and appropriated to Profit and Loss account on maturity.

5. ADVANCES

5.1 Advances are classified into Performing and Non Performing Assets and provisions for loan losses on such advances are made as per prudential norms issued by Reserve Bank of India from time to time. In respect of foreign branch, asset classification and provisioning for loan losses are made as per local requirements or as per RBI prudential norms, whichever is more stringent.

5.2 Advances are stated net of provisions made for Non Performing Assets except general provisions for Standard Advances, Provision held for sold assets have been included in 'Other Liabilities and Provisions'.

6. PREMISES AND OTHER FIXED ASSETS

6.1 Premises and other fixed assets are stated at historical cost and/or revaluation value less accumulated depreciation. The premises are revalued every five years at value determined based on the appraisal by approved valuers. Surplus arising at such revaluation is credited to Revaluation Reserve.

6.2 Depreciation on premises has been provided on composite cost wherever cost of land cannot be segregated. Additional depreciation on revalued amount is adjusted to the Revaluation Reserve.

6.4 Depreciation on additions to fixed assets is provided for the whole year except on additions to computers and operating software, which is on pro-rata basis. No depreciation is provided on the assets in the year of their disposal.

7. RETIREMENT BENEFITS

7.1 Statutory contribution is made to Provident Fund Trust in respect of employees who have opted for Provident Fund. For others who have opted for pension scheme, contribution to Pension Fund Trust is made based on actuarial valuation.

7.2 Contribution to Gratuity Fund Trust is based on actuarial valuation.

7. 3 Liability towards leave encashment is provided on accrual basis as per actuarial valuation.

8. REVENUE RECOGNITION

a) Revenue and expenses are generally accounted for on accrual basisexceptin respect offees/commission on transactions with Mutual Funds, income on non- banking assets, locker rent, interest on overdue bills/ tax refunds, income from non-performing assets and legal expenses on suit filed accounts which are accounted on cash basis.

b) Income from dividend on shares is accounted on accrual basis when the same is declared and the right to receive the dividend is established.

c) Interest on matured deposits is accounted for at the time of renewal. However provision for interest on matured deposits has been made at corporate office as per the RBI guidelines.

d) The broken period interest on sale or purchase of securities is treated as revenue as per RBI guidelines.

e) Expenditure in respect of application software, bonds issue, franchises of credit card and insurance products are charged off to revenue.

f) Income from consignment sale of imported gold coins is accounted for as other income after the sale is complete.

9. TAXES ON INCOME

9.1 Current tax is determined as per the provisions of the Income tax Act, 1961.

9.2 Deferred tax assets and liabilities arising on account of timing differences between taxable and accounting income, is recognized keeping in view, the consideration of prudence in respect of deferred tax assets/liabilities in accordance with the Accounting Standard 22 issued by ICAI.

10. COUNTRY RISK MANAGEMENT

The bank has adopted the Country Risk Management policy in accordance with the RBI guidelines.

11. GOLD COINS

Stock of imported gold coins is valued at cost or market price, whichever is lower.

12. NET PROFIT

Net Profit is arrived at after accounting for the following under "Provisions & Contingencies":

- Provision for Income tax and Wealth tax

- Provision/Write off of Non-Performing Advances and Investments

- Provision on Standard Assets

- Adjustment for appreciation/depreciation on Investments

- Transfer to Contingencies

- Other usual and necessary provisions.


Mar 31, 2011

1.0 ACCOUNTING CONVENTIONS

The accompanying financial statements are prepared following the Going Concern concept on historical cost basis and conform to the statutory provisions including the RBI guidelines and the applicable accounting standards and prevailing practices of the countries concerned, except wherever otherwise stated.

2.0 TRANSACTIONS INVOLVING FOREIGN EXCHANGE

2.1 Exchange rates as notified by Foreign Exchange Dealers Association of India (FEDAI) are adopted.

2.2 All foreign currency transactions involving forex liabilities are recorded by applying weekly average rate (WAR) published by FEDAI whereas all forex assets are recorded at on going market rates.

2.3 All the monetary assets & liabilities are reported at the end of the year at FEDAI closing exchange rate and the resultant profit / loss is taken to revenue.

2.4 Outstanding Forward Exchange Contracts are reported at the exchange rates notified for specified maturities and at interpolated rates for contracts of "in between maturities".

2.5 Contingent liabilities on account of Guarantees, Letters of Credit, Acceptances, Endorsements and other obligations are translated at closing exchange rates.

2.6 Foreign Branch of the Bank is classified as "Non- Integral Foreign Operation"

a) All assets & liabilities of the foreign operations, both monetary and non-monetary as well as contingent liabilities are translated at closing exchange rates.

b) Income and Expenditure are translated at quarterly average exchange rates.

c) The resulting exchange difference arising from translation as per AS-11 is accumulated in a "Foreign Currency Translation Reserve" until disposal of net investment of the foreign operation.

3.0 INVESTMENTS

3.1 In accordance with guidelines of RBI, investments in India are classified into:

I. Held to Maturity

II. Available for Sale

III. Held for Trading

Each category is further classified into: a) Government Securities b) Other Approved Securities c) Shares d) Debentures & Bonds

e) Subsidiaries f) Others,

3.2 Investments are valued in accordance with RBI guidelines.

3.2.1 Investments under Held to Maturity are valued at cost of acquisition, except where it is acquired at premium in which case the premium is amortised over the remaining period of maturity using Straight Line Method.

3.2.2 Investments held under Available for Sale category are valued at cost or market value, whichever is lower. Individual scripts are valued and depreciation / appreciation is aggregated category-wise as per the classification of investments in the Balance Sheet. Net depreciation is provided for and net appreciation, if any, is ignored.

3.2.3 Investments under Held for Trading category are marked to market and the resultant appreciation/ depreciation is aggregated category-wise as per Balance Sheet classification. Net depreciation is provided for and net appreciation, if any, is ignored.

3.2.4 For the purpose of valuation -

I. Cost refers to actual cost of acquisition / carrying cost, wherever applicable.

II. Market value refers to latest available price from the trades / quotes on the stock exchanges, SGL account transactions, price list of RBI / FIMMDA / PDAI as such:

a) Government Securities and Other Approved Securities are valued on the basis of Prices / Yield to Maturity (YTM) rates of FIMMDA / PDAI with appropriate spreads as prescribed by RBI.

b) Debentures / Bonds are valued on YTM basis with appropriate spreads as prescribed by PDAI / FIMMDA.

c) Treasury Bills, RIDF, Commercial Papers and Certificate of Deposits are valued at cost.

d) Preference Shares are valued on YTM basis.

e) Equity Shares are valued at last traded prices and where the shares are not quoted on stock exchanges, the unquoted shares are valued at breakup value (without considering revaluation reserves, if any) as per the latest available balance sheet.

f) Investment in RRBs is valued at carrying cost (i.e. book value).

g) Security Receipts issued by Securitisation Companies (SC)/Reconstruction Company (RC) are valued/classified as per the norms applicable to investment in Non- SLR instruments as prescribed by RBI from time-to-time.

h) Units of Venture Capital Funds (VCF) are valued at NAV shown by the VCF in its financial statements not older than 18 months.

i) Units in mutual fund are valued at repurchase price or Net Asset Value, whichever is lower.

3.2.5 Investments are also categorised based on their performance and provisions are made as per IRAC norms applicable to advances as per RBI guidelines. Provision made on non-performing investments is not set off against the appreciation in respect of other performing investments.

3.3. Gain, if any, on sale / disposal of securities in the Held to Maturity category is taken to Capital Reserve through the Profit and Loss Account.

3.4. Transfer of securities from one category to another is effected after providing for depreciation, if any, on the securities so transferred.

3.5 Floating Rate Note and Credit Linked Note investments at Foreign Branch are classified as Available For Sale and are valued at nominal value or market value, whichever is lower. These investments are marked to market at quarterly intervals and where the value of these investments is lower than the nominal value, a provision for depreciation is created in the Balance Sheet and a charge is recognized in the Profit and Loss Account.

3.6 Incentive received on subscriptions is deducted from the cost of securities. Brokerage/commission/stamp duty paid in connection with acquisition of securities is treated as revenue expenses.

4.0 DERIVATIVES

4.1 The credit exposures for derivative transactions are monitored on Current Credit Exposure method.

4.2 The naked hedging transactions are considered as a trading transaction and allowed to run till maturity.

4.3 Derivative transactions are classified into hedge and non-hedge and measured at fair value.

4.4 The transactions covered on back-to-back basis and the transactions undertaken to hedge the risk on assets and liabilities are valued and accounted on interest accrual basis.

4.5 Market making transactions are accounted on marked-to-market basis at fortnightly intervals, while hedging transactions are accounted for on accrual basis.

4.6 Premium at the time of purchase if any is amortized over the residual period of the transactions and profit is booked on maturity. Discount is held in Income Received in Advance account and appropriated to P&L account on maturity.

5.0 ADVANCES

5.1 Advances are classified into Performing and Non- Performing Assets and provisions for loan losses on such advances are made as per prudential norms issued by Reserve Bank of India from time-to-time. In respect of foreign branch, asset classification and provisioning for loan losses are made as per local requirements or as per RBI prudential norms, whichever is more stringent.

5.2 Advances are stated net of provisions made for Non-Performing Assets except general provisions for Standard Advances, Provision held for sold assets which have been included in Other Liabilities and Provisions.

6.0 PREMISES AND OTHER FIXED ASSETS

6.1 Premises and other fixed assets are stated at historical cost and/or revaluation value less accumulated depreciation. The premises are revalued every five years at value determined based on the appraisal by approved valuers. Surplus arising at such revaluation is credited to Revaluation Reserve.

6.2 Depreciation on premises has been provided on composite cost wherever cost of land cannot be segregated. Additional depreciation on revalued amount is adjusted to the Revaluation Reserve.

6.3 Depreciation on other fixed assets, including additions, is provided for on the basis of written down value, except as otherwise stated, at the following rates:

6.4 Depreciation on additions to fixed assets is provided for the whole year except on additions to computers and operating software, which is on pro-rata basis. No depreciation is provided on the assets in the year of their disposal.

 
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