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Accounting Policies of Union Bank of India Company

Mar 31, 2015

1 Accounting Convention

The financial statements have been prepared in accordance with requirements prescribed under the Third Schedule of the Banking Regulation Act, 1949. The accounting and reporting policies of the Bank used in the preparation of these financial statements conform to Generally Accepted Accounting Principles in India (Indian GAAP), the guidelines issued by Reserve Bank of India (RBI) from time to time and the Accounting Standards (AS) issued by the Institute of Chartered Accountants of India (ICAI) to the extent applicable and practices generally prevalent in the banking industry in India.

2 Use of Estimates

The preparation of financial statements requires the management to make estimates and assumptions considered in the reported amount of Assets and Liabilities (including Contingent Liabilities) as of the date of the financial statements and the reported Income and the Expenses during the reporting period. Management believes that the estimates wherever used in the preparation of the financial statements are prudent and reasonable. Difference between the actual results and estimates is recognized in the period in which the results are known / materialized.

3 Revenue Recognition

i) Income and Expenditure have generally been accounted for on accrual basis unless otherwise stated.

ii) Income on Non-Performing Assets (NPAs) is recognized to the extent realized as per the prudential norms prescribed by the Reserve Bank of India (RBI). Income accounted for in the preceding year and remaining unrealized is derecognized in respect of assets classified as NPAs during the year.

iii) Bank commission, exchange and brokerage earned, rent on Safe Deposit Lockers, commission on biometric cards, income from Aadhar cards etc. are accounted for on realization basis.

iv) Income (Other than interest) on investments in "Held to Maturity" (HTM) category acquired at discount to the face value is recognized as follows:

a) On interest bearing securities, it is recognized only at the time of sale/ redemption.

b) On Zero- coupon securities, it is accounted for over the balance tenor of the securities on a constant yield basis.

v) Dividend is accounted on an accrual basis where the right to receive the dividend is established.

4 Cash Flow Statements

Cash and Cash equivalents include Cash in hand, Balances with RBI, Balances with other Banks and Money at call and short notice.

5 Investments

i) In conformity of the requirements in form A of the Third Schedule to the Banking Regulations Act, 1949, Investments are classified as under:

a) Government Securities

b) Other Approved Securities

c) Shares

d) Debentures & Bonds

e) Investments in Subsidiaries & Joint Ventures and

f) Other Investments

The Investment portfolio of the Bank is further classified in accordance with the RBI guidelines into three categories viz.,

a) Held to Maturity (HTM)

b) Available for Sale (AFS)

c) Held for Trading ( HFT)

ii) As per RBI guidelines, the following principles have been adopted for the purpose of valuation

a) i) Securities held in "HTM" - at acquisition cost.

The excess of acquisition cost over the face value is amortized over the remaining period of maturity and in case of discount; it is not recognized as income.

ii) Investments in Regional Rural Banks are valued at carrying cost.

iii) Investments in Subsidiaries and Joint Ventures are valued at carrying cost.

Diminution other than temporary, if any, in valuation of such investments is provided for.

b) i) Securities held in "AFS" and "HFT" categories are valued classification wise and scrip-wise and net depreciation, if any, in each classification is charged to Profit & Loss account while net appreciation, if any, is ignored.

ii) Valuation of securities is arrived at as follows:

iii) Interbank Repo/ Reverse Repo transactions are accounted for in accordance with extant RBI guidelines.

iv) As per the extant RBI guidelines, the shifting of securities from one category to another is accounted for as follows:

- From AFS/HFT categories to HTM category, at lower of book value or market value as on the date of shifting. Depreciation, if any, is fully provided for.

- From HTM category to AFS/HFT category,

- If the security is originally placed at discount in HTM category, at acquisition cost / book value

- If the security is originally placed at a premium, at amortized cost.

The securities so shifted are revalued immediately and resultant depreciation is fully provided for.

- From AFS to HFT category and vice versa, at book value.

v) The non-performing investments are identified and depreciation / provision is made as per the extant RBI guidelines.

vi) Profit / Loss on sale of investments in any category is taken to the Profit & Loss account. However, in case of profit on sale of investments in "HTM" category, an equivalent amount (net of taxes and net of transfer to Statutory Reserves) is appropriated to the Capital Reserve account.

vii) Commission, brokerage, broken period interest etc on securities is debited / credited to Profit & Loss Account.

viii) As per the extant RBI guidelines, the Bank follows ''Settlement Date'' for accounting of investments transactions.

Derivative Contracts

i) The Interest Rate Swap which hedges interest bearing Asset or Liability are accounted for in the financial statements on accrual basis except the swap designated with an Asset or Liability that is carried at market value or lower of cost or market value. Gains or losses on the termination of swaps are recognized over the shorter of the remaining contractual life of the swap or the remaining life of the Asset / Liability.

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

iii) In the case of option contracts, guidelines issued by Foreign Exchange Dealers Association of India (FEDAI) from time to time for recognition of income, premium and discount are being followed.

6 Advances

i) All advances are classified under four categories, i.e.

(a) Standard, (b) Sub-standard, (c) Doubtful and (d) Loss assets. Provisions required on such advances are made as per the extant prudential norms issued by the RBI.

ii) Advances are stated net of specific loan loss provisions, Counter cyclical provisioning buffer, Provision for diminution in fair value of restructured advances and unrecovered interest held in Sundry / claims received from Credit Guarantee Trust Fund (CGTF) / Export Credit Guarantee Corporation (ECGC) relating to non-performing assets.

iii) The general provision on Standard Advances is held in "Other Liabilities and Provisions" reflected in Schedule 5 of the Balance Sheet and is not considered for arriving at both net NPAs and net advances.

7 Fixed Assets and Depreciation

i) Premises and Other Fixed Assets are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises of purchase price less trade discounts and rebates, eligible borrowing costs and directly attributable costs of bringing the Asset to its working condition for the intended use. Subsequent expenditure incurred on assets put to use is capitalized only when it increases the future benefits from such assets or their functional capability. Land and Buildings, if revalued are stated at revalued amount. The appreciation on revaluation is credited to Revaluation Reserve and the depreciation provided thereon is deducted there from.

ii) Application Software is capitalized and clubbed under Intangible assets. Depreciation on Computers and Software forming an integral part of Computer hardware and on ATM is provided on Straight line method at the rate of 33.33% as per the guidelines of RBI.

iii) Depreciation on Fixed Assets is provided for on the written down value method at the rates considered appropriate by the management as under:

iv) Depreciation on additions to assets made upto 30th September of the year is provided at full rate and on additions made thereafter, at half the rate.

v) Depreciation on premises is provided on composite cost, wherever the value of Land and Buildings is not separately identifiable.

vi) No depreciation is provided on assets sold / disposed off during the year.

vii) Depreciation on Leased assets and Leasehold improvements is recognized on a straight-line basis using rates determined with reference to the primary period of lease.

8 Impairment of Assets

The carrying costs of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying cost of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset. After impairment, depreciation is provided on the revised carrying cost of the asset over its remaining useful life. A previously recognized impairment loss is increased or reversed depending on changes in circumstances. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

9 Counter Cyclical Provisioning Buffer

The Bank has policy for creation and utilization of Counter Cyclical Provisioning Buffer separately for Advances and Investments. The quantum of provision to be created is assessed at the end of each financial year. The counter cyclical provisions are utilized only for contingencies under extra ordinary circumstances specified in the policy with prior permission of the Reserve Bank of India.

10 Transactions involving Foreign Exchange

Revaluation of Foreign Currency position and booking Profits / Losses:

i) Monetary and Non Monetary Assets and Liabilities are revalued at the exchange rates notified by FEDAI at the close of the year and resultant gain / loss is recognized in the Profit & Loss Account.

ii) Income & Expenditure items are recognized at the exchange rates prevailing on the date of the transaction.

iii) Forward exchange contracts are recorded at the exchange rate prevailing on the date of commitment. Outstanding forward exchange contracts are revalued at the exchange rates notified by FEDAI for specified maturities and at interpolated rates for contracts of ''in-between'' maturities. The resultant gains or losses are recognized in the Profit & Loss account.

iv) Contingent liabilities on account of guarantees, acceptances, endorsements and other obligations are stated at the exchange rates notified by FEDAI at the close of the year.

v) Representative Offices of the Bank outside India are treated as Integral Operation Unit as per RBI guidelines.

11 Accounting for Non-Integral Foreign operations

Foreign branches are classified as non-integral foreign operations by:

i) Revenue Recognition

Income and Expenditure are recognized / accounted for as per the local laws of the respective countries.

ii) Asset Classification and Loan Loss Provisioning

Asset classification and loan loss provisioning are made as per the local laws of the respective countries or as per RBI guidelines whichever is higher.

iii) Fixed Assets and Depreciation

a) Fixed Assets are accounted for at historical cost.

b) Depreciation on Fixed Assets is provided as per the applicable laws of the respective countries.

iv) Assets and Liabilities (monetary and non-monetary as well as Contingent Liabilities) are translated at the closing rates notified by FEDAI at the close of the year.

v) Income & Expenditure are translated at the quarterly average closing rates notified by FEDAI at the end of respective quarters.

vi) All resulting exchange differences are accumulated in ''Foreign Currency Translation Reserve''.

12 Employee Benefits

Retirement benefit in the form of Provident Fund is a defined contribution scheme. The contributions to the Provident Fund are charged to the Profit & Loss account for the year when the contributions are due. The Bank has no obligation other than the contribution payable to the Provident Fund.

Gratuity liability, Pension Fund and provision towards Leave are defined benefit obligations, and are provided for on the basis of an actuarial valuation as per AS 15 (Revised) made at the end of each financial year, based on the projected unit credit method. Actuarial gains/losses are immediately taken to the Profit & Loss account.

New Pension Scheme is applicable to employees who joined the Bank on or after 01.04.2010 is a defined contribution scheme. Bank pays fixed contribution at predetermined rate and the obligation of the Bank is limited to such fixed contribution. The contribution is charged to Profit & Loss account.

Employee benefits relating to employees employed at foreign offices are valued and accounted for as per the local laws/regulations of the respective countries.

13 Segment Reporting

The Bank recognizes the Business segment as the Primary reporting segment and Geographical segment as the Secondary reporting segment, in accordance with the RBI guidelines and in the compliances with the Accounting Standard 17 issued by ICAI.

Business segments are classified into

(a) Treasury Operation,

(b) Corporate and Wholesale Banking,

(c) Retail Banking Operation and

(d) Other Banking Operations.

14 Lease Transactions

Lease payments for Assets taken on operating lease are amortized over the lease term. The properties taken on lease/rental basis are renewable / cancellable at the option of the Bank. The Bank''s liabilities in respect of disputes pertaining to additional rent / lease rent are recognized on settlement or on renewal.

15 Earning per Share

Earnings per Share is calculated by dividing the net Profit or Loss (after tax) for the year attributable to the Equity share holders by the weighted average number of Equity shares outstanding during the year.

Diluted earnings per share reflect the potential dilution that could occur if contracts to issue Equity shares were exercised or converted during the year. Diluted earnings per Equity share is calculated by using the weighted average number of Equity shares and dilutive potential Equity shares outstanding as at the year end.

16 Taxation

Provision for Tax is made for both current and deferred taxes. Current tax is provided on the taxable income using applicable tax rate and tax laws. Deferred Tax Assets and Deferred Tax Liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognized using the tax rates and the tax laws that have been enacted or substantively enacted till the date of the Balance Sheet. Deferred Tax Assets are not recognized unless there is ''reasonable certainty'' that sufficient future taxable income will be available against which such Deferred Tax Assets will be realized. In case of carry forward of unabsorbed depreciation and tax losses, Deferred Tax Assets are recognized only if there is "virtual certainty".

17 Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources and a reliable estimate can be made of the amount of the obligation. Contingent Assets are neither recognized nor disclosed in the financial statements. Contingent Liabilities are not provided for and are disclosed by way of notes.

18 Share Issue Expenses:

Share Issue expenses are charged to the Share Premium account.


Mar 31, 2014

1 Accounting Convention

The financial statements have been prepared in accordance with requirements prescribed under the Third Schedule of the Banking Regulation Act, 1949. The accounting and reporting policies of the Bank used in the preparation of these fi nancial statements conform to Generally Accepted Accounting Principles in India (Indian GAAP), the guidelines issued by Reserve Bank of India (RBI) from time to time and the Accounting Standards (AS) issued by the Institute of Chartered Accountants of India (ICAI) to the extent applicable and practices generally prevalent in the banking industry in India.

2 Use of Estimates

The preparation of fi nancial statements requires the management to make estimates and assumptions considered in the reported amount of assets and liabilities (including contingent liabilities) as of the date of the fi nancial statements and the reported income and the expenses during the reporting period. Management believes that the estimates wherever used in the preparation of the fi nancial statements are prudent and reasonable. Difference between the actual results and estimates is recognized in the period in which the results are known / materialized.

3 Revenue Recognition

i) Income and Expenditure have generally been accounted for on accrual basis unless otherwise stated.

ii) Income from Non-Performing Assets (NPAs) is recognized to the extent realized as per the prudential norms prescribed by RBI. Income accounted for in the preceding year and remaining unrealized is derecognized in respect of assets classifi ed as NPAs during the year.

iii) Bank commission, exchange and brokerage earned, rent on Safe Deposit Lockers (SDV), commission on biometric cards, income from aadhar cards etc. are accounted for on realization basis.

iv) Income (other than interest) on investments in "Held to Maturity" (HTM) category acquired at discount to the face value is recognized as follows:

a) On interest bearing securities, it is recognized only at the time of sale/ redemption.

b) On zero-coupon securities, it is accounted for over the balance tenor of the securities on a constant yield basis.

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

4 Cash Flow Statements

Cash and cash equivalents include cash in hand, balances with RBI, balances with other banks and money at call and short notice.

5 Investments

i) In conformity of the requirements in form A of the Third Schedule to the Banking Regulations Act, 1949, Investments are classifi ed as under:

a) Government Securities

b) Other Approved Securities

c) Shares

d) Debentures & Bonds

e) Investments in Subsidiaries & Joint Ventures, and

f) Other Investments

The Investment portfolio of the Bank is further classifi ed in accordance with the RBI guidelines into three categories viz.,

a) Held to Maturity (HTM)

b) Available for Sale (AFS)

c) Held for Trading (HFT)

ii) As per RBI guidelines, the following principles have been adopted for the purpose of valuation

a) i) Securities held in "HTM" – at acquisition cost.

The excess of acquisition cost over the face value is amortized over the remaining period of maturity and in case of discount, it is not recognized as income.

ii) Investments in Regional Rural Banks are valued at carrying cost.

iii) Investments in Subsidiaries and Joint Ventures are valued at carrying cost. Diminution other than temporary, if any, in valuation of such investments is provided for.

b) i) Securities held in "AFS" and "HFT" categories are valued classifi cation wise and scrip-wise and net depreciation, if any, in each classifi cation is charged to Profi t and Loss Account while net appreciation, if any, is ignored. ii) Valuation of securities is arrived at as follows

iii) Inter bank REPO/ Reverse REPO transactions are accounted for in accordance with extant RBI guidelines.

iv) As per the extant RBI guidelines, the shifting of securities from one category to another is accounted for as follows:

From AFS/HFT categories to HTM category, at lower of book value or market value as on the date of shifting. Depreciation, if any, is fully provided for.

From HTM category to AFS/HFT category,

- If the security is originally placed at discount in HTM category, at acquisition cost/ book value

- If the security is originally placed at a premium, at amortized cost.

The securities so shifted are revalued immediately and resultant depreciation is fully provided for.

From AFS to HFT category and vice versa, at book value.

v) The non-performing investments are identifi ed and depreciation/ provision is made as per the extant RBI guidelines.

vi) Profi t/Loss on sale of investments in any category is taken to the Profi t and Loss Account. However, in case of profi t on sale of investments in "HTM" category, an equivalent amount (net of taxes and net of transfer to Statutory Reserves) is appropriated to the Capital Reserve Account.

vii) Commission, brokerage, broken period interest etc on securities is debited / credited to Profi t & Loss Account.

viii) As per the extant RBI guidelines, the Bank follows ''Settlement Date'' for accounting of investments transactions.

c) Derivative Contracts

The Interest Rate Swap which hedges interest bearing asset or liability are accounted for in the fi nancial statements on accrual basis except the swap designated with an asset or liability that is carried at market value or lower of cost or market value. Gains or losses on the termination of swaps are recognized over the shorter of the remaining contractual life of the swap or the remaining life of the asset/liability.

i) Trading swap transactions are marked to market with changes recorded in the fi nancial statements.

ii) In the case of option contracts, guidelines issued by Foreign Exchange Dealers Association of India (FEDAI) from time to time for recognition of income, premium and discount are being followed.

6 Advances

i) All advances are classifi ed under four categories, i.e. (a) Standard, (b) Sub-standard, (c) Doubtful and (d) Loss assets. Provisions required on such advances are made as per the extant prudential norms issued by the RBI.

ii) Advances are stated net of specifi c loan loss provisions, counter cyclical provisioning buffer, provision for diminution in fair value of restructured advances and unrecovered interest held in sundry / claims received from Credit Guarantee Fund Trust (CGFT)/Export Credit Guarantee Corporation (ECGC) relating to non-performing assets.

iii) The general provision on standard advances is held in "Other Liabilities and Provisions" refl ected in Schedule 5 of the balance sheet and is not considered for arriving at both net NPAs and net advances.

7 Fixed Assets and Depreciation

i) Premises and Other Fixed Assets are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises of purchase price less trade discounts and rebates, eligible borrowing costs and directly attributable costs of bringing the Asset to its working condition for the intended use. Subsequent expenditure incurred on assets put to use is capitalized only when it increases the future benefi ts from such assets or their functional capability. Land and Buildings, if revalued are stated at revalued amount. The appreciation on revaluation is credited to Revaluation Reserve and the depreciation provided thereon is deducted there from.

ii) Depreciation on Fixed Assets is provided for on the written down value method at the rates considered appropriate by the management as under

iii) Application Software is capitalized and clubbed under intangible assets. Depreciation on computers and software forming an integral part of Computer Hardware and on ATM is provided on Straight Line Method at the rate of 33.33% as per the guidelines of RBI.

iv) Depreciation on additions to assets made upto 30th September of the year is provided at full rate and on additions made thereafter, at half the rate.

v) Depreciation on premises is provided on composite cost, wherever the value of land and buildings is not separately identifi able.

vi) No depreciation is provided on assets sold / disposed off during the year.

vii) Depreciation on leased assets and leasehold improvements is recognized on a straight-line basis using rates determined with reference to the primary period of lease.

8 Impairment of Assets

The carrying costs of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying cost of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use. In assessing value in use, the estimated future cash fl ows are discounted to their present value using a pre-tax discount rate that refl ects current market assessments of the time value of money and risks specifi c to the asset. After impairment, depreciation is provided on the revised carrying cost of the asset over its remaining useful life. A previously recognized impairment loss is increased or reversed depending on changes in circumstances. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

9 Counter Cyclical Provisioning Buffer

The Bank has a Policy for creation and utilization of Counter cyclical provisioning buffer separately for advances and investments. The quantum of provision to be created is assessed at the end of each fi nancial year. The counter cyclical provisions are utilized only for contingencies under extra ordinary circumstances specifi ed in the policy with prior permission of the RBI.

10 Transactions involving Foreign Exchange

Revaluation of Foreign Currency Position and booking Profi ts / Losses:

i) Monetary and Non Monetary assets and liabilities are revalued at the exchange rates notifi ed by FEDAI at the close of the year and resultant gain / loss is recognized in the Profi t and Loss Account.

ii) Income and Expenditure items are recognized at the exchange rates prevailing on the date of the transaction.

iii) Forward exchange contracts are recorded at the exchange rate prevailing on the date of commitment. Outstanding forward exchange contracts are revalued at the exchange rates notifi ed by FEDAI for specifi ed maturities and at interpolated rates for contracts of ''in-between'' maturities. The resultant gains or losses are recognized in the Profi t and Loss Account.

iv) Contingent liabilities on account of guarantees, acceptances, endorsements and other obligations are stated at the exchange rates notifi ed by FEDAI at the close of the year.

v) Representative offi ces of the Bank outside India are treated as Integral Operation Units as per RBI guidelines.

11 Accounting for Non–Integral foreign operations

Offshore Banking Units (OBU) and Foreign Branches are classifi ed as non-integral foreign operations.

a) Offshore Banking Unit (OBU)

i. Assets and Liabilities (both monetary and non- monetary as well as contingent liabilities) are translated at the closing rates notifi ed by FEDAI at the close of the year.

ii. Income and Expenditure are translated at the quarterly average closing rates notifi ed by FEDAI at the end of respective quarters.

iii. All resulting exchange differences are accumulated in ''Foreign Currency Translation Reserve''.

b) Foreign Branch

i) Revenue Recognition

Income and Expenditure are recognized / accounted for as per the local laws of the respective countries.

ii) Asset Classifi cation and Loan Loss Provisioning

Asset classifi cation and loan loss provisioning are made as per the local laws of the respective countries or as per RBI guidelines whichever is higher.

iii) Fixed Assets and Depreciation

a) Fixed Assets are accounted for at historical cost.

b) Depreciation on fi xed assets is provided as per the applicable laws of the respective countries.

iv) Assets and Liabilities (both monetary and non- monetary as well as contingent liabilities) are translated at the closing rates notifi ed by FEDAI at the close of the year.

v) Income and Expenditure are translated at the quarterly average closing rates notifi ed by FEDAI at the end of respective quarters.

vi) All resulting exchange differences are accumulated in ''Foreign Currency Translation Reserve''.

12 Employee Benefits

Retirement benefi ts in the form of provident fund is a defi ned contribution scheme. The contributions to the provident fund are charged to the Profi t and Loss Account for the year when the contributions are due. The Bank has no obligation, other than the contribution payable to the provident fund.

Gratuity liability, Pension fund and provision towards leave are defi ned benefi t obligations, and are provided for on the basis of an actuarial valuation as per AS 15 (Revised) made at the end of each fi nancial year, based on the projected unit credit method. Actuarial gains/losses are immediately taken to the Profi t and Loss Account.

New Pension Scheme is applicable to employees who joined the Bank on or after 01.04.2010 is a defi ned contribution scheme. Bank pays fi xed contribution at predetermined rate and the obligation of the Bank is limited to such fi xed contribution. The contribution is charged to Profi t and Loss Account.

Employee benefi ts relating to employees employed at foreign offi ces are valued and accounted for as per the local laws/regulation of the respective countries.

13 Segment Reporting

The Bank recognizes the Business Segment as the Primary Reporting Segment and Geographical Segment as the Secondary Reporting Segment, in accordance with the RBI guidelines and in the compliances with the Accounting Standard 17 issued by ICAI.

Business Segments are classifi ed into (a) Treasury Operations, (b) Corporate and Wholesale Banking, (c) Retail Banking Operations and (d) Other Banking Operations.

14 Lease Transactions

Lease payments for assets taken on operating lease are amortized over the lease term. The properties taken on lease/rental basis are renewable / cancellable at the option of the Bank. The Bank''s liabilities in respect of disputes pertaining to additional rent/lease rent are recognized on settlement or on renewal.

15 Earnings Per Share

Earnings per share is calculated by dividing the net profi t or loss (after tax) for the year attributable to the equity share holders by the weighted average number of equity shares outstanding during the year.

Diluted earnings per share refl ect the potential dilution that could occur if contracts to issue equity shares were exercised or converted during the year. Diluted earnings per equity share is calculated by using the weighted average number of equity shares and dilutive potential equity shares outstanding as at the year-end.

16 Taxation

Provision for tax is made for both current and deferred taxes. Current tax is provided on the taxable income using applicable tax rates and tax laws. Deferred Tax Assets and Deferred Ta x Liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognized using the tax rates and the tax laws that have been enacted or substantively enacted till the date of the Balance Sheet. Deferred Tax Assets are not recognized unless there is ''reasonable certainty'' that suffi cient future taxable income will be available against which such deferred tax assets will be realized. In case of carry forward of unabsorbed depreciation and tax losses, deferred tax assets are recognized only if there is "virtual certainty".

17 Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outfl ow of resources and a reliable estimate can be made of the amount of the obligation. Contingent Assets are neither recognized nor disclosed in the fi nancial statements. Contingent Liabilities are not provided for and are disclosed by way of notes.

18 Share Issue Expenses:

Share Issue expenses are charged to the Share Premium Account.


Mar 31, 2013

1. Accounting Convention

The accompanying financial statements are prepared by following going concern concept and on historical cost basis unless otherwise stated and conform to the statutory provisions and generally accepted accounting practices prevailing in India.

2. Use of Estimates

The preparation of financial statements requires the management to make estimates and assumptions considered in the reported amount of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and the expenses during the reporting period. Management believes that the estimates wherever used in the preparation of the financial statements are prudent and reasonable. Difference between the actual results and estimates is recognized in the period in which the results are known / materialized.

3. Revenue Recognition

i) Income and Expenditure have generally been accounted for on accrual basis unless otherwise stated.

ii) Income on Non-performing Assets (NPAs) is recognized to the extent realized as per the prudential norms prescribed by the Reserve Bank of India (RBI). Income accounted for in the preceding year and remaining unrealized is derecognized in respect of assets classified as NPAs during the year.

iii) Bank commission, exchange and brokerage earned, rent on Safe Deposit Lockers, commission on biometric cards, income from aadhar cards etc. are accounted for on realization basis.

iv) Income (Other than interest) on investments in "Held to Maturity" (HTM) category acquired at discount to the face value is recognized as follows:

a) On interest bearing securities, it is recognized only at the time of sale/ redemption.

b) On Zero- coupon securities, it is accounted for over the balance tenor of the securities on a constant yield basis.

v) Dividend is accounted on an accrual basis where the right to receive the dividend is established.

4. Investments

i) In conformity of the requirements in form A of the Third Schedule to the Banking Regulations Act, 1949, Investments are classified as under:

a) Government Securities

b) Other Approved Securities

c) Shares

d) Debentures & Bonds

e) Investments in Subsidiaries & Joint Ventures, and

f) Other Investments

The Investment portfolio of the Bank is further classified in accordance with the RBI guidelines into three categories viz.,

a) Held to Maturity (HTM)

b) Available for Sale (AFS)

c) Held for Trading ( HFT)

ii) As per RBI guidelines, the following principles have been adopted for the purpose of valuation

a) i) Securities held in "HTM" - at acquisition cost.

The excess of acquisition cost over the face value is amortized over the remaining period of maturity.

ii) Investments in Regional Rural Banks are valued at carrying cost.

iii) Investments in Subsidiaries and Joint Ventures are valued at carrying cost.

Permanent diminution, if any, in valuation of such investments is provided for.

b) i) Securities held in "AFS" and "HFT" categories are valued classification wise and scrip- wise and net depreciation, if any, in each classification is charged to Profit and Loss account while net appreciation, if any, is ignored.

ii) Valuation of securities is arrived at as follows

iii) Inter bank REPO/ Reverse REPO transactions are accounted for in accordance with extant RBI guidelines.

iv) As per the extant RBI guidelines, the shifting of securities from one category to another is accounted for as follows: - From AFS/HFT categories to HTM category, at lower of book value or market value as on the date of shifting. Depreciation, if any, is fully provided for.

- From HTM category to AFS/HFT category,

- If the security is originally placed at discount in HTM category, at acquisition cost/ book value

- If the security is originally placed at a premium, at amortized cost.

The securities so shifted are revalued immediately and resultant depreciation is fully provided for.

- From AFS to HFT category and vice versa, at book value.

v) The non-performing investments are identified and depreciation/ provision is made as per the extant RBI guidelines.

vi) Profit/ loss on sale of investments in any category is taken to the Profit and Loss account. However, in case of profit on sale of investments in "HTM" category, an equivalent amount (net of taxes and net of transfer to Statutory Reserves) is appropriated to the Capital Reserve account.

vii) Commission, brokerage, broken period interest etc on securities is debited / credited to Profit & Loss Account.

viii) As per the extant RBI guidelines, the Bank follows ''Settlement Date'' for accounting of investments transactions.

Derivative Contracts

i) The Interest Rate Swap which hedges interest bearing asset or liability are accounted for in the financial statements on accrual basis except the swap designated with an asset or liability that is carried at market value or lower of cost or market value. Gains or losses on the termination of swaps are recognized over the shorter of the remaining contractual life of the swap or the remaining life of the asset/liability.

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

iii) In the case of option contracts, guidelines issued by Foreign Exchange Dealers Association of India (FEDAI) from time to time for recognition of income, premium and discount are being followed.

5. Advances

i) All advances are classified under four categories, i.e. (a) Standard, (b) Sub-standard, (c) Doubtful and (d) Loss assets. Provisions required on such advances are made as per the extant prudential norms issued by the RBI.

ii) Certain category of standard advances such as loans for consumer durables, educational loans, loans through credit cards and other personal loans carry (except Loan against Deposits) an additional provision of 2% over and above the statutory requirement.

iii) Advances are stated net of provisions and unrecovered interest held in sundry /claims received from CGTF / ECGC relating to non-performing assets. The provision on standard advances is held in "Other Liabilities and Provisions".

6. Fixed Assets and Depreciation

i) Fixed Assets are stated at cost, net of accumulated depreciation and accumulated impairment losses, If any. The cost comprises purchase price less trade discounts and rebates, eligible borrowing costs and directly attributable cost of bringing the Asset to its working condition for the intended use. Subsequent expenditure incurred on assets put to use is capitalized only when it increases the future benefits from such assets or their functional capability. Revalued Land and Buildings are stated at revalued amount.

ii) Application Software is capitalized as intangible assets.

iii) Depreciation on Fixed Assets is provided for on the written down value method at the rates considered appropriate by the management as under

iv) Depreciation on computers, ATM and software is provided at 33.33% on straight-line method.

v) Depreciation on additions to assets made upto 30th September of the year is provided at full rate and on additions made thereafter, at half the rate.

vi) Depreciation on premises is provided on composite cost, wherever the value of land and buildings is not separately identifiable.

vii) No depreciation is provided on assets sold / disposed off during the year.

viii) Leasehold land is amortized over the period of lease.

7. Impairment of Assets

The carrying costs of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying cost of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset. After impairment, depreciation is provided on the revised carrying cost of the asset over its remaining useful life. A previously recognized impairment loss is increased or reversed depending on changes in circumstances. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

8. Counter cyclical provisioning buffer

The Bank has Policy for creation and utilization of Counter cyclical provisioning buffer separately for advances and investments. The quantum of provision to be created is assessed at the end of each financial year. The counter cyclical provisions are utilized only for contingencies under extra ordinary circumstances specified in the policy with prior permission of the Reserve Bank of India.

9. Transactions involving Foreign Exchange

Revaluation of Foreign Currency Position and booking Profits / Losses:

i) Monetary and Non Monetary assets and liabilities are revalued at the exchange rates notified by FEDAI at the close of the year and resultant gain / loss is recognized in the Profit and Loss Account.

ii) Income and Expenditure items are recognized at the exchange rates prevailing on the date of the transaction.

iii) Forward exchange contracts are recorded at the exchange rate prevailing on the date of commitment. Outstanding forward exchange contracts are revalued at the exchange rates notified by FEDAI for specified maturities and at interpolated rates for contracts of ''in-between'' maturities. The resultant gains or losses are recognized in the Profit and Loss Account.

iv) Contingent liabilities on account of guarantees, acceptances, endorsements and other obligations are stated at the exchange rates notified by FEDAI at the close of the year.

v) Representative offices of the bank outside India are treated as Integral Operation Unit as per RBI guidelines.

10. Accounting for Non-Integral foreign operations Offshore Banking Units (OBU) and foreign branches are classified as non-integral foreign operations.

a) Offshore Banking Unit (OBU) & Foreign Branch

i. Assets and Liabilities (both monetary and non- monetary as well as contingent liabilities) are translated at the closing rates notified by FEDAI at the year-end.

ii. Income and Expenditure are translated at the quarterly average closing rate notified by FEDAI at the end of respective quarter.

iii. All resulting exchange differences are accumulated in ''Foreign Currency Translation Reserve''.

b) Foreign Branch

i) Revenue Recognition

Income and Expenditure are recognized / accounted for as per the local laws of the respective countries.

ii) Asset Classification and Loan Loss Provisioning

Asset classification and loan loss provisioning are made as per local requirement or as per RBI guidelines whichever is higher.

iii) Fixed Assets and Depreciation

a) Fixed Assets are accounted for at historical cost.

b) Depreciation on fixed assets is provided as per the applicable laws of the respective countries.

11. Employee Benefits

Retirement benefit in the form of provident fund is a defined contribution scheme. The contributions to the provident fund are charged to the profit and loss account for the year when the contributions are due. The Bank has no obligation, other than the contribution payable to the provident fund.

Gratuity liability, Pension Fund and provision towards Leave are defined benefit obligations, and are provided for on the basis of an actuarial valuation as per AS 15 (Revised) made at the end of each financial year, based on the projected unit credit method. Actuarial gains/losses are immediately taken to the profit and loss account.

Employee benefits relating to employees employed at foreign offices are valued and accounted for as per the respective local laws/regulations.

12. Segment Reporting

The bank recognizes the Business Segment as the Primary Reporting Segment and Geographical Segment as the Secondary Reporting Segment, in accordance with the RBI guidelines and in the compliances with the Accounting Standard 17 issued by ICAI.

Business Segments are classified into (a) Treasury Operation, (b) Corporate and Wholesale Banking,

(c) Retail Banking Operation and (d) Other Banking Operations.

13. Lease Transactions

The properties taken on lease / rental basis are renewable / cancelable at the option of the Bank. The Bank''s liabilities in respect of disputes pertaining to additional rent/lease rent are recognized on settlement or on renewal.

14. Earning per share

Earnings per share is calculated by dividing the net profit or loss for the year attributable to the equity share holders by the weighted average number of equity shares outstanding during the year.

Diluted Earnings per equity share is calculated by using the weighted average number of equity shares and dilutive potential equity shares outstanding as at the year end.

15. Taxation

Provision for Tax is made for both current and deferred taxes. Current tax is provided on the taxable income using applicable tax rate and tax laws. Deferred Tax Assets and Deferred Tax Liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognized using the tax rates and the tax laws that have been enacted or substantively enacted till the date of the Balance Sheet. Deferred Tax Assets are not recognized unless there is ''reasonable certainty'' that sufficient future taxable income will be available against which such deferred tax assets will be realized. In case of carry forward of unabsorbed depreciation and tax losses, deferred tax assets are recognized only if there is "virtual certainty".

16. Provisions, contingent liabilities and contingent assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources and a reliable estimate can be made of the amount of the obligation. Contingent Assets are neither recognized nor disclosed in the financial statements. Contingent Liabilities are not provided for and are disclosed by way of notes.

17. Share Issue Expenses:

Share Issue expenses are charged to the Share Premium Account.


Mar 31, 2012

1 Accounting Convention

The accompanying financial statements are prepared by following going concern concept and on historical cost basis unless otherwise stated and conform to the statutory provisions and generally accepted accounting practices prevailing in India.

2. Use of Estimates

The preparation of financial statements requires the management to make estimates and assumptions considered in the reported amount of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and the expenses during the reporting period. Management believes that the estimates wherever used in the preparation of the financial statements are prudent and reasonable. Difference between the actual results and estimates is recognized in the period in which the results are known / materialized.

3. Revenue Recognition

i) Income and Expenditure have generally been accounted for on accrual basis unless otherwise stated.

ii) Income on Non-performing Assets (NPAs) is recognized to the extent realized as per the prudential norms prescribed by the Reserve Bank of India (RBI). Income accounted for in the preceding year and remaining unrealized is derecognized in respect of assets classified as NPAs during the year.

iii) Bank commission, exchange and brokerage earned, rent on Safe Deposit Lockers, commission on bio matrix card, etc. are accounted for on realization basis.

4. Investments

i) In conformity of the requirements in form A of the Third Schedule to the Banking Regulations Act, 1949, Investments are classified as under:

a) Government Securities

b) Other Approved Securities

c) Shares

d) Debentures & Bonds

e) Investments in Subsidiaries & Joint Ventures, and

f) Other Investments

The Investment portfolio of the Bank is further classified in accordance with the RBI guidelines into three categories viz.,

a) Held to Maturity (HTM)

b) Available for Sale (AFS)

c) Held for Trading ( HFT)

ii) As per RBI guidelines, the following principles have been adopted for the purpose of valuation

a) i) Securities held in "HTM" - at acquisition cost.

The excess of acquisition cost over the face value is amortized over the remaining period of maturity.

ii) Investments in Regional Rural Banks are valued at carrying cost.

iii) Investments in Subsidiaries and Joint Ventures are valued at carrying cost.

Permanent diminution, if any, in valuation of such investments is provided for.

b) i) Securities held in "AFS" and "HFT" categories are valued classification wise and scrip-wise and net depreciation, if any, in each classification is charged to Profit and Loss account while net appreciation, if any, is ignored.

ii) Valuation of securities is arrived at as follows

iii) Inter bank REPO/ Reverse REPO transactions are accounted for in accordance with extant RBI guidelines.

iv) As per the extant RBI guidelines, the shifting of securities from one category to another is accounted for as follows:

- From AFS/HFT categories to HTM category, at lower of book value or market value as on the date of shifting. Depreciation, if any, is fully provided for.

- From HTM category to AFS/HFT category,

- If the security is originally placed at discount in HTM category, at acquisition cost/ book value

- If the security is originally placed at a premium, at amortized cost.

The securities so shifted are revalued immediately and resultant depreciation is fully provided for.

- From AFS to HFT category and vice versa, at book value.

v) The non-performing investments are identified and depreciation/ provision is made as per the extant RBI guidelines.

vi) Profit/ loss on sale of investments in any category is taken to the Profit and Loss account. However, in case of profit on sale of investments in "HTM" category, an equivalent amount (net of taxes and net of transfer to Statutory Reserves) is appropriated to the Capital Reserve account.

vii) Commission, brokerage, broken period interest etc on securities is debited / credited to Profit & Loss Account.

viii) As per the extant RBI guidelines, the Bank follows 'Settlement Date' for accounting of investments transactions.

Derivative Contracts

i) The Interest Rate Swap which hedges interest bearing asset or liability are accounted for in the financial statements on accrual basis except the swap designated with an asset or liability that is carried at market value or lower of cost or market value. Gains or losses on the termination of swaps are recognized over the shorter of the remaining contractual life of the swap or the remaining life of the asset/liability.

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

iii) In the case of option contracts, guidelines issued by Foreign Exchange Dealers Association of India (FEDAI) from time to time for recognition of income, premium and discount are being followed.

5. Advances

i) All advances are classified under four categories, i.e. (a) Standard, (b) Sub-standard, (c) Doubtful and (d) Loss assets. Provisions required on such advances are made as per the extant prudential norms issued by the RBI.

ii) Certain category of standard advances such as loans for consumer durables, educational loans, loans through credit cards and other personal loans carries an additional provision of 2% over and above the statutory requirement.

iii) Advances are stated net of provisions and unrecovered interest held in sundry /claims received from CGTF / ECGC relating to non-performing assets. The provision on standard advances is held in "Other Liabilities and Provisions".

6. Fixed Assets and Depreciation

i) Fixed Assets are stated at historical cost. Revalued Land and Buildings are stated at revalued amount.

ii) Software systems are capitalized as intangible assets.

iii) Depreciation on Fixed Assets is provided for on the written down value method at the rates considered appropriate by the management as under

iv) Depreciation on computers and software is provided at 33.33% on straight-line method.

v) Depreciation on additions to assets made upto 30th September of the year is provided at full rate and on additions made thereafter, at half the rate.

vi) Depreciation on premises is provided on composite cost, wherever the value of land and buildings is not separately identifiable.

vii) No depreciation is provided on assets sold / disposed off during the year.

viii) Leasehold land is amortized over the period of lease.

7. Impairment of Assets

Impairment losses, if any, are recognized in accordance with the Accounting Standard 28 issued in this regard by the Institute of Chartered Accountants of India (ICAI).

8. Counter cyclical provisioning buffer

In accordance with the RBI guidelines, the Bank has an approved policy for counter cyclical provisioning buffer.

9. Transactions involving Foreign Exchange

Revaluation of Foreign Currency Position and booking Profits / Losses:

i) Monetary assets and liabilities are revalued at the exchange rates notified by FEDAI at the close of the year and resultant gain / loss is recognized in the Profit and Loss Account.

ii) Income and Expenditure items are recognized at the exchange rates prevailing on the date of the transaction.

iii) Forward exchange contracts are recorded at the exchange rate prevailing on the date of commitment. Outstanding forward exchange contracts are revalued at the exchange rates notified by FEDAI for specified maturities and at interpolated rates for contracts of 'in-between' maturities. The resultant gains or losses are recognized in the Profit and Loss Account.

iv) Contingent liabilities on account of guarantees, acceptances, endorsements and other obligations are stated at the exchange rates notified by FEDAI at the close of the year.

v) Representative offices of the bank outside India are treated as Integral Operation Unit as per RBI guidelines.

10. Accounting for Non-Integral foreign operations Offshore Banking Units (OBU) and foreign branches are classified as non-integral foreign operations.

a) Offshore Banking Unit (OBU) & Foreign Branch

i. Assets and Liabilities (both monetary and non- monetary as well as contingent liabilities) are translated at the closing rates notified by FEDAI at the year-end.

ii. Income and Expenditure are translated at the quarterly average closing rate notified by FEDAI at the end of respective quarter.

iii. All resulting exchange differences are accumulated in 'Foreign Currency Translation Reserve'.

b) Foreign Branch

i) Revenue Recognition

Income and Expenditure are recognized / accounted for as per the local laws of the respective countries.

ii) Asset Classification and Loan Loss Provisioning

Asset classification and loan loss provisioning are made as per local requirement or as per RBI guidelines whichever is higher.

iii) Fixed Assets and Depreciation

a) Fixed Assets are accounted for at historical cost.

b) Depreciation on fixed assets is provided as per the applicable laws of the respective countries.

11. Employee Benefits

Annual contribution to Gratuity Fund, Pension Fund and provision towards leave encashment are accounted for on the basis of actuarial valuation contribution to the Provident Fund is charged to Profit and Loss Account.

Net actuarial gains and losses are recognized during the year.

12. Segment Reporting

The bank recognizes the Business Segment as the Primary Reporting Segment and Geographical Segment as the Secondary Reporting Segment, in accordance with the RBI guidelines and in the compliances with the Accounting Standard 17 issued by ICAI.

Business Segments are classified into (a) Treasury Operation, (b) Corporate and Wholesale Banking,

(c) Retail Banking Operation and (d) Other Banking Operations.

13. Lease Transactions

The properties taken on lease / rental basis are renewable / cancelable at the option of the Bank. The Bank's liabilities in respect of disputes pertaining to additional rent/lease rent are recognized on settlement or on renewal.

14. Earning per share

Earnings per share is calculated by dividing the net profit or loss for the year attributable to the equity share holders by the weighted average number of equity shares outstanding during the year.

Diluted Earnings per equity share is calculated by using the weighted average number of equity shares and dilutive potential equity shares outstanding as at the year end.

15. Taxation

Provision for Tax is made for both current and deferred taxes. Current tax is provided on the taxable income using applicable tax rate and tax laws. Deferred Tax Assets and Deferred Tax Liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognized using the tax rates and the tax laws that have been enacted or substantively enacted till the date of the Balance Sheet. Deferred Tax Assets are not recognized unless there is 'reasonable certainty' that sufficient future taxable income will be available against which such deferred tax assets will be realized. In case of carry forward of unabsorbed depreciation and tax losses, deferred tax assets are recognized only if there is "virtual certainty".

16. Provisions, contingent liabilities and contingent assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources and a reliable estimate can be made of the amount of the obligation. Contingent Assets are neither recognized nor disclosed in the financial statements. Contingent Liabilities are not provided for and are disclosed by way of notes.


Mar 31, 2011

1 Accounting Convention

The accompanying financial statements are prepared by following going concern concept and on historical cost basis unless otherwise stated and conform to the statutory provisions and generally accepted accounting practices prevailing in India.

2 Revenue Recognition

i) Income and Expenditure is generally accounted for on accrual basis unless otherwise stated.

ii) Income on Non-performing Assets (NPAs) is recognised to the extent realised as per the prudential norms prescribed by the Reserve Bank of India. Income accounted for in the preceding year and remaining unrealized is derecognised in respect of assets classifed as NPAs during the year.

iii) Commission, exchange and brokerage earned, rent on Safe Deposit Lockers and commission on bio matrix card are accounted for on realization basis.

3 Investments

i) In conformity of the requirements in form A of the Third Schedule to the Banking Regulations Act, 1949, investments are classifed as under:

a) Government Securities

b) Other Approved Securities

c) Shares

d) Debentures & Bonds

e) Investments in Subsidiaries & Joint Ventures, and

f) Other Investments

The Investment portfolio of the Bank is further classifed in accordance with the Reserve Bank of India guidelines into three categories viz.,

a) Held to Maturity (HTM)

b) Available for Sale (AFS)

c) Held for Trading ( HFT)

ii) As per Reserve Bank of India guidelines, the following principles have been adopted for the purpose of valuation:

a) i) Securities held in "Held to Maturity" – at acquisition cost.

The excess of acquisition cost over the face value is amortised over the remaining period of maturity.

ii) Investments in Regional Rural Banks are valued at carrying cost.

iii) Investments in Subsidiaries and Joint Ventures are valued at carrying cost.

Permanent diminution, if any, in valuation of such investments is provided for.

b) i) Securities held in "Available for Sale" and "Held for Trading" categories are valued classifcation- wise and scrip-wise and net depreciation, if any, in each classifcation is charged to Profit and Loss account while net appreciation, if any, is ignored.

ii) Valuation of securities is arrived at as follows:

i Govt. of India Securities

As per quotations put out by Fixed Income Money Market and Derivatives Association (FIMMDA)

ii State Development Loans, Securities guaranteed by Central / State Government, PSU Bonds

On appropriate yield to maturity basis as per FIMMDA

iii Equity Shares

As per market rates, if quoted, otherwise at Book value as per latest Audited Balance Sheet (not more than 1 year old). In the absence of both at Re 1/- per company.

iv Preference Shares

As per market rates, if quoted, if quoted, or on appropriate yield to maturity basis not exceeding redemption value as per FIMMDA guidelines

v Debentures/Bonds

As per market rates, if quoted, otherwise on appropriate yield to maturity basis as per FIMMDA guidelines.

vi Mutual Funds

As per stock exchange quotations, if quoted. In case of unquoted units, as per latest Repurchase price declared by MF. In cases where latest repurchase price is not available, as per Net Asset Value (NAV)

vii Treasury Bills / Certifcate of Deposits / Commercial papers

At carrying cost

viii Venture Capital Funds

At declared NAV or Break-up NAV as per audited Balance sheet which is not more than 18 months old. If NAV / audited financial statements for more than 18 months continuously are not available, at Re.1/- per VCF

ix Security Receipts

At NAV as declared by Securitisation companies

iii) Inter bank REPO/ Reverse REPO transactions are accounted for in accordance with extant RBI guidelines.

iv) As per the extant RBI guidelines, the shifting of securities from one category to another is accounted for as follows:

- From AFS/HFT categories to HTM category, at lower of book value or market value as on the date of shifting. Depreciation, if any, is fully provided for.

- From HTM category to AFS/HFT category,

- If the security is originally placed at discount in HTM category, at acquisition cost/ book value

- If the security is originally placed at a premium, at amortised cost.

The securities so shifted are revalued immediately and resultant depreciation is fully provided for.

- From AFS to HFT category and vice versa, at book value.

v) The non-performing investments are identifed and depreciation/ provision is made as per RBI guidelines.

vi) Profit/ loss on sale of investments in any category is taken to the Profit and Loss account. However, in case of Profit on sale of investments in "Held to Maturity" category, an equivalent amount (net of taxes and net of transfer to Statutory Reserves) is appropriated to the Capital Reserve account.

vii) Commission, brokerage, broken period interest etc on securities are debited/credited to Profit & Loss Account.

viii) As per the extant RBI guidelines, bank follows Settlement Date for accounting of investments transactions.

Derivative Contracts

i) The Interest Rate Swap which hedges interest bearing asset or liability are accounted for on accrual basis except the swap designated with an asset or liability that is carried at market value or lower of cost or market value in the financial statement. Gains or losses on the termination of swaps are recognized over the shorter of the remaining contractual life of the swap or the remaining life of the asset/liability.

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

iii) In the case of option contracts, guidelines issued by FEDAI from time to time for recognition of income, premium and discount are being followed.

4 Advances

i) All advances are classifed under four categories, i.e. (a) Standard, (b) Sub-standard, (c) Doubtful and (d) Loss assets. Provisions required on such advances are made as per the extant prudential norms issued by the Reserve Bank of India.

ii) Certain category of standard advances such as loans for consumer durables, educational loans, loans through credit cards and other personal loans carries an additional provision of 2% over and above the statutory requirement.

iii) Advances are stated net of provisions and unrecovered interest held in sundry / claims received from CGTF / ECGC relating to non-performing assets. The provision on standard advances is held in "Other Liabilities and Provisions".

5 Floating Provisions

In accordance with the Reserve Bank of India guidelines, the Bank has an approved policy to set apart 1% of gross NPAs as foating provisions for advances till the coverage comes up to 100% of the gross NPAs.

6 Fixed Assets

i) Fixed Assets are stated at historical cost. Revalued Land and Buildings are stated at revalued amount.

ii) Software systems are capitalized as intangible assets.

iv) Depreciation on computers and software is provided at 33.33% on straight-line method.

v) Depreciation on additions to assets made upto 30th September of the year is provided at full rate and on additions made thereafter, at half the rate.

vi) Depreciation on premises is provided on composite cost, wherever the value of land and buildings is not separately identifable.

vii) No depreciation is provided on assets sold / disposed off during the year.

viii) Leasehold land is amortised over the period of lease.

7 Transactions involving Foreign Exchange

Revaluation of Foreign Currency Position and booking Profits / Losses:

i) Monetary assets and liabilities are revalued at the exchange rates notifed by FEDAI at the close of the year and resultant gain / loss is recognized in the Profit and Loss Account.

ii) Income and Expenditure items are recognised at the exchange rates prevailing on the date of the transaction.

iii) Forward exchange contracts are recorded at the exchange rate prevailing on the date of commitment. Outstanding forward exchange contracts are revalued at the exchange rates notifed by FEDAI for specifed maturities and at interpolated rates for contracts of in-between maturities. The resultant gains or losses are recognised in the Profit and loss account.

iv) Contingent liabilities on account of guarantees, acceptances, endorsements and other obligations are stated at the exchange rates notifed by FEDAI at the close of the year.

v) Representative offces of the bank outside India are treated as Integral Operation Unit as per RBI guidelines.

8 Accounting for Non – Integral foreign operations

Offshore Banking Units (OBU) and foreign branches are classifed as non- integral foreign operations.

a) Offshore Banking Unit (OBU) & Foreign Branch:

i. Assets and Liabilities (both monetary and non- monetary as well as contingent liabilities) are translated at the closing rates notifed by FEDAI at the year-end.

ii. Income and expenses are translated at the quarterly average closing rate notifed by FEDAI at the end of respective quarter.

iii. All resulting exchange differences are accumulated in Foreign Currency Translation Reserve.

b) Foreign Branch:

i) Revenue Recognition

Income and expenditure are recognized / accounted for as per the local laws of the respective countries.

ii) Asset Classifcation and Loan loss Provisioning

Asset classifcation and loan loss provisioning are made as per local requirement or as per RBI guidelines whichever is more stringent.

iii) Fixed Assets and Depreciation

a) Fixed Assets are accounted for at historical cost

b) Depreciation on fixed assets of foreign branch is provided as per the applicable laws of the respective countries.

9 Employee benefits

Annual contribution to Gratuity Fund, Pension Fund and provision towards leave are accounted for on the basis of actuarial valuation and contribution to the Provident Fund is charged to Profit and Loss Account. Net actuarial gains and losses are recognized during the year.

10 Taxation

Provision for Tax is made for both current and deferred taxes. Current tax is provided on the taxable income using applicable tax rate and tax laws. Deferred Tax Assets and Deferred Tax Liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognized using the tax rates and the tax laws that have been enacted or substantively enacted till the date of the Balance Sheet. Deferred Tax Assets are not recognized unless there is reasonable certainty that suffcient future taxable income will be available against which such deferred tax assets will be realized. In case of carry forward of unabsorbed depreciation and tax losses, deferred tax assets are recognized only if there is "virtual certainty".

11 Provisions, contingent liabilities and contingent assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources and a reliable estimate can be made of the amount of the obligation. Contingent Assets are neither recognized nor disclosed in the financial statements. Contingent liabilities are not provided for and are disclosed by way of notes.


Mar 31, 2010

1. Accounting Convention

The accompanying fi nancial statements are prepared by following going concern concept and on historical cost basis unless otherwise stated and conform to the statutory provisions and generally accepted accounting practices prevailing in India.

2. Revenue Recognition

i) Income and Expenditure is generally accounted for on accrual basis unless otherwise stated.

ii) Income on Non-performing Assets (NPAs) is recognised to the extent realised as per the prudential norms prescribed by the Reserve Bank of India. Income accounted for in the preceding year and remaining unrealized is derecognised in respect of assets classifi ed as NPAs during the year.

iii) Commission, exchange and brokerage earned, rent on Safe Deposit Lockers and commission on bio matrix card are accounted for on realization basis.

3. Investments

i) The Investment portfolio of the Bank is classifi ed in accordance with the Reserve Bank of India guidelines into three categories viz.:

a) Held to Maturity (HTM),

b) Available for Sale (AFS),

c) Held for Trading (HFT).

ii) As per Reserve Bank of India guidelines, the following principles have been adopted for the purpose of valuation:

a) i) Securities held in "Held to Maturity" category - at acquisition cost.

The excess of acquisition cost over the face value is amortised over the remaining period to maturity.

ii) Investments in Regional Rural Banks are valued at carrying cost.

c) i) Securities held in "Held for Trading" category - At market price based on quotations of Government Securities put out by FIMMDA.

ii) Inter bank REPO Reverse REPO transactions are accounted for in accordance with extant RBI guidelines.

iii) Investments in "Available for Sale Held for Trading" are valued category-wise and scrip- wise. Net depreciation, if any, in each category is charged to Profi t and Loss Account while net appreciation, if any, is ignored.

iv) The shifting of Securities from one category to another category is carried out at lower of acquisition cost book value market value on the date of transfer. The depreciation, if any, on such transfer is fully provided for.

v) The non-performing investments are identifi ed and depreciation provision is made as per RBI guidelines.

vi) Profi t loss on sale of investments in any category is taken to the Profi t and Loss Account. However, in case of profi t on sale of investments in "Held to Maturity" category, an equivalent amount (net of taxes if any, and net of transfer to Statutory Reserves) is appropriated to the Capital Reserve Account.

vii) Commission, brokerage, broken period interest etc. on Securities are debited credited to Profi t and Loss Account.

d. Derivative Contracts

i) The Interest Rate Swap which hedges interest bearing asset or liability are accounted for on accrual basis except the swap designated with an asset or liability that is carried at market value or lower of cost or market value in the fi nancial statement. Gains or losses on the termination of swaps are recognised over the shorter of the remaining contractual life of the swap or the remaining life of the asset liability.

ii) Trading swap transactions are marked to market with changes recorded in the fi nancial statements.

iii) In the case of option contracts, guidelines issued by FEDAI from time to time for recognition of income, premium and discount are being followed.

4. Advances

i) All advances are classifi ed under four categories, i.e. (a) Standard, (b) Sub-standard, (c) Doubtful and (d) Loss assets. Provisions required on such advances are made as per the extant prudential norms issued by the Reserve Bank of India. Certain category of standard advances such as loans for consumer durables, educational loans, loans through credit cards and other personal loans carries an additional provision of 2% over and above the statutory requirement.

ii) Advances are stated net of provisions and unrecovered interest held in sundry claims received from CGTF ECGC relating to non-performing assets. The provision on standard advances is held in “Other Liabilities and Provisions”.

5. Floating Provisions

In accordance with the Reserve Bank of India guidelines, the Bank has an approved policy to set apart a minimum of 1% of gross NPAs as fl oating provisions for advances over and above the existing fl oating provisions till the coverage comes up to 100% of the gross NPAs.

6. Fixed Assets

i) Fixed Assets are stated at historical cost. Revalued Land and Buildings are stated at revalued amount.

ii) Software systems are capitalized as intangible assets.

iv) Depreciation on computers and software systems is provided at 33.33% on straight-line method.

v) Depreciation on additions to assets made upto 30th September of the year is provided at full rate and on additions made thereafter, at half the rate.

vi) Depreciation on premises is provided on composite cost, wherever the value of land and buildings is not separately identifi able.

vii) No depreciation is provided on assets sold disposed off during the year.

viii) Leasehold land is amortised over the period of lease.

7. Transactions involving Foreign Exchange

Revaluation of Foreign Currency Position and booking Profi ts Losses:

i) Monetary assets and liabilities are revalued at the exchange rates notifi ed by FEDAI at the close of the year and resultant gain loss is recognized in the Profi t and Loss Account.

ii) Income and Expenditure items are recognised at the exchange rates prevailing on the date of the transaction.

iii) Forward exchange contracts are recorded at the exchange rate prevailing on the date of commitment. Outstanding forward exchange contracts are revalued at the exchange rates notifi ed by FEDAI for specifi ed maturities and at interpolated rates for contracts of ‘in-between maturities. The resultant gains or losses are recognised in the profi t and loss account.

iv) Contingent liabilities on account of guarantees, acceptances, endorsements and other obligations are stated at the exchange rates notifi ed by FEDAI at the close of the year.

v) Representative offi ces of the bank outside India are treated as Integral Operation Unit as per RBI guidelines.

8. Accounting for Non – Integral foreign operations Offshore Banking Units (OBU) and foreign branches are classifi ed as non- integral foreign operations.

a) Offshore Banking Unit (OBU):

i. Assets and Liabilities (both monetary and non- monetary as well as contingent liabilities) are translated at the closing rates notifi ed by FEDAI at the year-end.

ii. Income and expenses are translated at the quarterly average closing rate notifi ed by FEDAI at the end of respective quarter.

iii. All resulting exchange differences are accumulated in Foreign Currency Translation Reserve.

b) Foreign Branch:

i) Revenue Recognition

Income and expenditure are recognized accounted for as per the local laws of the respective countries.

ii) Asset Classifi cation and Loan loss Provisioning

Asset classifi cation and loan loss provisioning are made as per local requirement or as per RBI guidelines whichever is more stringent.

iii) Fixed Assets and Depreciation

a) Fixed Assets are accounted for at historical cost

b) Depreciation on fi xed assets of foreign branch is provided as per the applicable laws of the respective countries.

iv) Translation of the Assets and Liabilities and the Income and Expenses for foreign branches is done as per 8(a)(i,ii,iii) above.

9. Employee Benefi ts

Annual contribution to Gratuity Fund, Pension Fund and provision towards leave are accounted for on the basis of actuarial valuation and contribution to the Provident Fund is charged to Profi t and Loss Account. Net actuarial gains and losses are recognized during the year.

10. Taxation

Provision for Tax is made for both current and deferred taxes. Current tax is provided on the taxable income using applicable tax rate and tax laws. Deferred Tax Assets and Deferred Tax Liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognized using the tax rates and the tax laws that have been enacted or substantively enacted till the date of the Balance Sheet. Deferred Tax Assets are not recognized unless there is reasonable certainty that suffi cient future taxable income will be available against which such deferred tax assets will be realized. In case of carry forward of unabsorbed depreciation and tax losses, deferred tax assets are recognized only if there is “virtual certainty”.

11. Provisions, contingent liabilities and contingent assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outfl ow of resources and a reliable estimate can be made of the amount of the obligation. Contingent Assets are neither recognized nor disclosed in the fi nancial statements. Contingent liabilities are not provided for and are disclosed by way of notes.