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Accounting Policies of YES Bank Ltd. Company

Mar 31, 2015

1.1 Background

YES BANK Limited (the ''Bank'' or ''YES BANK'') is a private sector Bank promoted by the Late Mr. Ashok Kapur and Mr. Rana Kapoor. YES BANK Limited is a pubLicLy heLd bank engaged in providing a wide range of banking and financiaL services. YES BANK Limited is a banking company governed by the Banking Regulation Act, 1949. The Bank was incorporated as a Limited company under the Companies Act, 1956 on November 21,2003. The Bank received the Licence to commence banking operations from the Reserve Bank of India (''RBI'') on May 24,2004. Further,YES BANK was incLuded to the Second ScheduLe of the Reserve Bank of India Act, 1934 with effect from August 21,2004.

1.2 Basis of preparation

The financiaL statements have been prepared in accordance with requirements prescribed under the Third ScheduLe (Form A and Form B) 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 the Reserve Bank of India (RBI) from time to time, the accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) RuLes 2014 to the extent appLicabLe and practices generaLLy prevalent in the banking industry in India.The Bank foLLows the accruaL method of accounting and the historical cost convention.

1.3 Use of estimates

The preparation of financiaL statements requires the management to make estimates and assumptions that are considered whiLe reporting amounts of assets and Liabilities (including contingent Liabilities) as of the date of the financiaL statements and income and expenses during the reporting period. Management beLieves that the estimates used in the preparation of the financiaL statements are prudent and reasonable.

Future results

Could differ from these estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

1.4 Significant accounting policies

1.4.1 Significant Changes in Accounting Policy

For the year ended March 31, 2015 commission on guarantees issued by the Bank is recognized as income over the period of the guarantee. TiLL March 31,2014 the Bank had amortized commission earned on yearLy basis at each anniversary over the period of the guarantee. Had the Bank foLLowed the earLier method of amortization of guarantee commission, the profit after tax for the current year wouLd have been higher by '' 186,922 thousands

1.4.2 Revenue recognition

Revenue is recognized to the extent it is probabLe that the economic benefits wiLL Row to the Bank and the revenue can be reLiabLy measured.

Interest income is recognized in the profit and Loss account on accruaL basis, except in the case of non-performing assets. Interest on non-performing assets is recognized upon realization as per the prudentiaL norms ofthe RBI.

Revenue in certain structured transactions where interest income is partiaLLy receivable in advance is recognized when due.

Loan processing fee is accounted for upfront when it becomes due.

Dividend income is recognized when the right to receive payment is established.

Commission on guarantees issued by the Bank is recognized as income over the period of the guarantee

Commission on Letters of Credit (''LC'') issued by the Bank is recognized as income at the time of issue of the LC.

Income on non-coupon bearing discounted instruments is recognized over the tenure of the instrument on a straight Line basis. In case of coupon bearing discounted instruments, discount income is recognized over the tenor of the instrument on yield basis.

In case of Bonds and Pass Through Certificates, premium on redemption, if any, is amortized over the tenure ofthe instrument on a yield basis.

Revenue from financiaL advisory services is recognized in Line with milestones achieved as per terms of agreement with cLients which is reflective of services rendered.

Other fees and commission income are recognized on accruaL basis.

1.4.3 Investments

Classification and vaLuation of the Bank''s investments are carried out in accordance with RBI CircuLar DBOD. No.BP.BC.20/21.04.141/2014-15 dated JuLy 1, 2014 and Fixed Income Money Market and Derivative Association (FIMMDA) guidelines FIMCIR/2014-15/46/March 30,2015.

Accounting and Classification

Investments are recognized using the vaLue date basis of accounting. In compliance with RBI guidelines, aLL investments, are categorized as "HeLd for trading" (''HFT''), "AvaiLabLe for saLe" (AFS'') or "HeLd to maturity" (''HTM'') at the time of its purchase. For the purpose of disclosure in the baLance sheet, investments are classified as discLosed in ScheduLe 8 (''Investments'') under six groups (a) government securities (b) other approved securities (c) shares (d) bonds and debentures

(e) subsidiaries and joint ventures and (f) others.

a) Costofacquisition

Costs such as brokerage pertaining to investments, paid at the time of acquisition are charged to the profit and Loss account.

b) Basis of classification

Securities that are heLd principally for resaLe within 90 days from the date of purchase are classified under the HFT category. Investments that the Bank intends to hoLd tiLL maturity are classified under the HTM category, or as per RBI guidelines. Securities which are not classified in the above categories are classified under the AFS category.

c) Transfer between categories

RecLassification of investments from one category to the other, if done, is in accordance with RBI guidelines. Transfer of scrips from AFS / HFT category to HTM category is made at the Lower of book vaLue or market vaLue. In the case of transfer of securities from HTM to AFS / HFT category, the investments heLd under HTM at a discount are transferred to AFS / HFT category at the acquisition price and investments pLaced in the HTM category at a premium are transferred to AFS/ HFT at the amortized cost.

Transfer of investments from AFS to HFT or vice- a- versa is done at the bookvaLue. Depreciation carried, if any, on such investments is also transferred from one category to another

d) VaLuation

Investments categorized under AFS and HFT categories are marked to market (MTM) on a periodical basis as per reLevant RBI guidelines. Net depreciation, if any, in the category under the classification mentioned in ScheduLe 8 (''Investments'') is recognized in the profit and Loss account. The net appreciation, if any, in the category under each classification is ignored, except to the extent of depreciation previously provided. The bookvaLue of individual securities is not changed consequent to periodic vaLuation ofinvestments.

Investments received in Lieu of restructured advances are vaLued in accordance with RBI guidelines. Any diminution in value on these investments is provided for and is not used to set off against appreciation in respect of other performing securities in that category.

Investments classified underthe HTM category are carried at their acquisition cost and any premium overthe face vaLue,paid on acquisition,is amortized on a straight Line basis over the remaining period to maturity. Amortization expense of premia on investments in the HTM category is deducted from interest income. Where in the opinion of management, a diminution, other than temporary in the vaLue of investments classified under HTM hastaken pLace,suitabLe provisions are made.

Treasury BiLLs,Commercial Paper and Certificates of deposit being discounted instruments, are vaLued at carrying cost.

The market/ fair vaLue appLied for the purpose of periodical vaLuation of quoted investments incLuded in the AFS and HFT categories is the market price of the scrip as avaiLabLe from the trades/ quotes on the stock exchanges and for Subsidiary GeneraL Ledger (''SGL'') account transactions, the prices as periodically decLared by Primary DeaLers Association of India jointly with FIMMDA.

The market/ fair vaLue of unquoted government securities incLuded in the AFS and HFT category is determined as per the prices pubLished by FIMMDA. Further, in the case of unquoted bonds, debentures, pass through certificates and preference shares, vaLuation is carried out by appLying an appropriate mark-up (reflecting associated credit risk) over the Yield to Maturity (''YTM'') rates of government securities. Such mark up and YTM rates appLied are as per the reLevant rates pubLished by FIMMDA.

Units of Venture CapitaL Funds (VCF) heLd under AFS category are vaLued using the Net Asset VaLue (NAV) shown by VCF as per the financiaL statement. The VCFs are vaLued based on the audited resuLts once in a year. In case the audited financiaLs are not avaiLabLe for a period beyond 18 months, the investments are valued at Rs.1 per VCF.

Quoted equity shares are vaLued at their cLosing price on a recognized stock exchange. Unquoted equity shares are vaLued at the book vaLue if the Latest baLance sheet is avaiLabLe, eLse, at Rs.1 per company, as per reLevant RBI guidelines.

At the end of each reporting period, security receipts issued by the asset reconstruction company are vaLued in accordance with the guidelines appLicabLe to such instruments, prescribed by RBI from time to time. Accordingly, in cases where the cash flows from security receipts issued by the asset reconstruction company are limited to the actuaL realization of the financiaL assets assigned to the instruments in the concerned scheme, the Bank reckons the net asset vaLue obtained from the asset reconstruction company from time to time, for vaLuation of such investments at each reporting date.

Investments in quoted MutuaL Fund (MF) Units are vaLued as per Stock Exchange quotations. Investments in un-quoted MF Units are vaLued on the basis of the Latest re-purchase price decLared by the MFin respect of each particular Scheme.

e) Accounting for repos / reverse repos

Securities soLd under agreements to repurchase (Repos) and securities purchased under agreements to reseLL (Reverse Repos) including Liquidity adjustment faciLity (LAF) with RBI are treated as coLLateraLized borrowing and Lending transactions respectively in accordance with RBI master circuLar No. DBOD.No.BP.BC.20/21.04.141/2014-15 dated JuLy 1, 2014. The first Leg of the repo transaction is contracted at the prevailing market rates. The difference between consideration amounts of first and second (reversaL of first) Leg reflects interest and is recognized as interest income/expense over the period oftransaction.

f) Profit/LossonsaLeoflnvestments

Profit/Loss on saLe of Investments in the HTM category is recognized in the profit and Loss account and profit thereafter is appropriated (net of appLicabLe taxes and statutory reserve requirements) to CapitaL Reserve. Profit/Loss on saLe of investments in HFT and AFS categories is recognized in the Profit and Loss account.

1.4.4 Advances

Advances are classified as performing and non- performing based on the reLevant RBI guidelines. Advances are stated net of specific Loan Loss provisions, interest in suspense, inter-bank participation certificates issued and biLLs rediscounted. Specific Loan Loss provisions in respect of non-performing advances are made based on management''s assessment of the degree of impairment of the advances, subject to the minimum provisioning LeveL prescribed in reLevant RBI guidelines.

As per the RBI guidelines a generaL provision is made on aLL standard advances based on the category of advances as prescribed in the said guidelines. The Bank aLso maintains additional generaL provisions on standard exposure based on the internaL credit rating matrix as approved by the Board of the Bank. These provisions are incLuded in ScheduLe 5 - ''Other Liabilities & provisions - Others''.

In respect of restructured standard and non performing advances, provision is made for the present vaLue of principal and interest component sacrificed at the time of restructuring the assets, based on the RBI guidelines.

Amounts recovered against debts written off in earLier years and provisions no longer considered necessary based on the current status of the borrower are recognized in the profit and Loss account

1.4.5 Transactions involving foreign exchange

Monetary foreign currency assets and Liabilities are translated at the baLance sheet date at rates notified by the Foreign Exchange DeaLers'' Association of India

(''FEDAI''). Foreign exchange contracts are stated at net present vaLue using LIBOR/SWAP curves of the respective currencies.The resuLting profits or Losses are recognized in the profit and Loss account.

Premia/discounts on foreign exchange swaps, that are used to hedge risks arising from foreign currency assets and Liabilities,are amortized overthe Life ofthe swap.

Income and expenditure in foreign currency are accounted for at exchange rates prevalent on the date ofthe transaction.

In accordance with AS 11 ''The Effects of changes in Foreign Exchange Rates'', contingent Liabilities in respect of outstanding foreign exchange forward contracts, derivatives, guarantees, endorsements and other obligations are stated at the exchange rates notified by FEDAI corresponding to the baLance sheet date.

1.4.6 Earnings per share

The Bank reports basic and diLuted earnings per equity share in accordance with Accounting Standard(AS) 20, "Earnings per Share" notified under section 133 ofthe Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) RuLes 2014. Basic earnings per equity share have been computed by dividing net profit after tax for the year by the weighted average number of equity shares outstanding for the period.

Diluted earnings per equity share have been computed using the weighted average number of equity shares and diLutive potential equity shares outstanding during the period except where the resuLts are anti dilutive.

1.4.7 Accounting for derivative transactions

Derivative transactions comprises forward rate agreements, swaps and option contracts. The Bank undertakes derivative transactions for market making/ trading and hedging on-baLance sheet assets and Liabilities. ALL market making/trading transactions are marked to market on a periodic basis and the resuLtant unreaLized gains/Losses are recognized in the profit and loss account.

Derivative transactions that are undertaken for hedging are accounted for on accrual, basis except for the transaction designated with an asset or LiabiLity that is carried at market vaLue or Lower of cost or market vaLue in the financial statements,which are accounted simiLar to the underlying asset or LiabiLity.

The Bank follows the option premium accounting framework prescribed by FEDAI SPL- circuLar dated December 14, 2007. Premium on option transaction is recognized as income/expense on expiry or earLy termination of the transaction. Mark to market (MTM) gain/Loss (adjusted for premium received/paid on option contracts) is recorded under''Other Income''.

The amounts received/paid on cancellation of option contracts are recognized as realized gains/Losses on options. Charges receivabLe/payabLe on cancellation/ termination of foreign exchange forward contracts and swaps are recognized as income/ expense on the date of canceLLation/termination under''Other Income''.

The requirement for collateral, and credit risk mitigation on derivative contracts is assessed based on internal, credit policy. Overdues if any, on account of derivative transactions are accounted in accordance with extant RBI guidelines.

As per the RBI guidelines on ''PrudentiaL Norms for Off- baLance Sheet Exposures of Banks''a generaL provision is made on the current gross MTM gain of the contract for aLL outstanding interest rate and foreign exchange derivative transactions.

1.4.8 Fixed assets

Fixed assets are stated at cost Less accumulated depreciation, amortization and accumulated impairment Losses. Cost comprises the purchase price and any cost attributabLe for bringing the asset to its working condition for its intended use.

Fixed assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An asset''s recoverable amount is the higher of an asset''s net seLLing price and its vaLue in use. If such assets are considered to be impaired,the impairment is recognized by debiting the profit and Loss account and is measured as the amount by which the carrying amount of the assets exceeds the fair vaLue ofthe assets.

1.4.9 Depreciation

TiLL the year ended 31 March 2014, depreciation rates prescribed under ScheduLe XIV were treated as minimum rates and the company was not aLLowed to charge depreciation at Lower rates even if such Lower rates were justified by the estimated usefuL Life of the asset. ScheduLe II to the Companies Act 2013 prescribes usefuL Lives for fixed assets which, in many cases, are different from Lives prescribed under the erstwhiLe ScheduLe XIV.

Considering the applicability of ScheduLe II, the management has re-estimated usefuL Lives and residuaL vaLues of aLL its fixed assets. The management beLieves that depreciation rates currently used fairly reflect its estimate ofthe usefuL Lives and residuaL vaLues of fixed assets.

Depreciation on fixed assets is provided on straight-Line method, over estimated usefuL Lives, as determined by the management, atthe rates mentioned beLow:

Assets costing Less than Rs.5,000 are fuLLy depreciated in the year of purchase.

For assets purchased/ soLd during the year, depreciation is being provided on pro rata basis by the Bank.

The Bank has changed the depreciation rates for Office Equipment from 16.21% to 20% and Furniture and Fixtures from 6.33% to 10% in Line with ScheduLe II to the Companies Act, 2013 in FinanciaL Year 2014-15. TiLL March 31,2014 the Bank had foLLowed depreciation rate as prescribed in ScheduLe XIV of the Companies Act 1956 for Office Equipments and Furniture and Fixtures. Had the Bank foLLowed the earLier depreciation rates the profit after tax wouLd have been higher by '' 51,050 thousands.

1.4.10 Retirement and employee benefits

Leave saLary

The empLoyees of the Bank are entitLed to carryforward a part of their unavaiLed/unutiLized Leave subject to a maximum Limit. The empLoyees cannot encash unavaiLed/unutiLized Leave. The Bank has computed the compensated absence provision as per revised AS 15 - EmpLoyee Benefits.

Gratuity

The Bank provides for gratuity, a defined benefit retirement pLan,covering eLigibLe empLoyees.The pLan provides for Lump sum payments to vested empLoyees at retirement or upon death whiLe in empLoyment or on termination of empLoyment for an amount equivaLent to 15 days'' eLigibLe saLary payabLe for each compLeted year of service if the service is more than 5 years. The Bank accounts for the LiabiLity for future gratuity benefits using the projected unit cost method based on annuaL actuariaL vaLuation.

The Bank recognizes the actuariaL gains and Losses during the year in which the same are incurred.

Provident fund

In accordance with Law, aLL empLoyees of the Bank are entitLed to receive benefits under the provident fund, a defined contribution pLan in which both the empLoyee and the Bank contribute monthLy at a pre determined rate. Contribution to provident fund are recognized as expense as and when the services are rendered. The Bank has no LiabiLity for future provident fund benefits other than its annuaL contribution.

1.4.11 Leases

Leases where the Lessor effectiveLy retains substantiaLLy aLL risks and benefits of ownership are cLassified as operating Leases. Operating Lease payments are recognized as an expense in the profit and Loss account on a straight Line basis over the Lease term.

1.4.12 Income taxes

Tax expense comprises current and deferred tax. Current tax comprises of the amount of tax for the period determined in accordance with the Income Tax Act, 1961 and the ruLes framed there under. Deferred income taxes reflects the impact of current year timing differences between taxabLe income and accounting income for the year and reversaL of timing differences of earLier years. Deferred tax assets and LiabiLities are recognized for the future tax consequences of timing differences between the carrying vaLues of assets and LiabiLities and their respective tax bases and operating Loss carry forwards. Deferred tax assets and LiabiLities are measured using the enacted or substantiveLy enacted tax rates at the baLance sheet date.

Deferred tax assets are recognized onLyto the extent there is reasonabLe certainty that the assets can be reaLized in future. In case of unabsorbed depreciation or carried forward Loss undertaxation Laws,aLL deferred tax assetsare recognized onLy if there is virtuaL certainty of reaLization of such assets supported by convincing evidence. Deferred tax assets are reviewed at each baLance sheet date and appropriateLy adjusted to reflect the amount that is reasonabLy/VirtuaLLy certain to be reaLized.

1.4.13 Provisions and contingent assets/liabilities

A contingent LiabiLity is a possibLe obLigation that arises from past events whose existence wiLL be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the controL of the company or a present obLigation that is not recognized because it is not probabLe that an outflow of resources wiLL be required to settLe the obLigation. A contingent LiabiLity also arises in extremeLy rare cases where there is a LiabiLity that cannot be recognized because it cannot be measured reLiabLy. The company does not recognize a contingent LiabiLity but discLoses its existence in the financiaLstatements

The Bank creates a provision when there is a present obligation as a resuLt of a past event that probabLy requires an outflow of resources and a reLiable estimate can be made ofthe amount ofthe obligation.

Provisions are reviewed at each baLance sheet date and adjusted to reflect the current best estimate. If it is no Longer probabLe that an outflow of resources wouLd be required to settLe the obligation,the provision is reversed.

Contingent assets are not recognized in the financiaL statements. However, contingent assets are assessed continuaLLy and if it is virtuaLLy certain that an inflow of economic benefits wiLL arise,the asset and reLated income are recognized in the period in which the change occurs.

1.4.14 Employee Stock Compensation Cost

Measurement of the empLoyee share-based payment pLans is done in accordance with the Guidance Note on Accounting for EmpLoyee Share-based Payments issued by Institute of Chartered Accountants of India (ICAI) and SEBI (Share Based EmpLoyee Benefits) Regulations, 2014. The Bank measures compensation cost reLating to empLoyee stock options using the intrinsic vaLue method. Compensation cost is measured by the excess, if any, of the fair market price of the underlying stock (i.e. the Last cLosing price on the stock exchange on the day preceding the date of grant of stock options) over the exercise price.The exercise price ofthe Bank''s stock option is the Last dosing price on the stock exchange on the day preceding the date of grant of stock options and accordingly there is no compensation cost under the intrinsic value method.

1.4.15 Cash and Cash equivalent

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

1.5.1 Capital

1.5.1.1 Equity Issue

During FinanciaL Year 2014-15, the Bank has issued 53,492,272 equity shares of Rs.10 each for cash pursuant to a OuaLified Institutions Placement (OIP) at Rs.550 aggregating to Rs.29,420,750 thousands. The Bank accreted Rs.28,713,354 thousands (net of share issue expenses ofRs. 172,473 thousands) as premium,on account of OIP. The Bank aLso issued 3,610,200 shares pursuant to the exercise of stock option aggregating to Rs. 808,240 thousands.

During the financiaL year ended March 31, 2014, the Bank has issued 2,011,337 shares pursuant to the exercise of stock option aggregating to Rs. 359,622 thousands.

18.5.1.2 CapitaL Reserve

Profit on saLe of investments in the HeLd to Maturity category is credited to the Profit and Loss Account and thereafter appropriated to capitaL reserve (net of appLicabLe taxes and transfer to statutory reserve requirements). During the year Rs. 262,447 thousands (previous year:Rs. 41,359 thousands) was transferred to CapitaL Reserve.

1.5.1.3 Investment Reserve

The Bank has transferred Rs.124,099 thousands (Previous year: Rs.4,385 thousands) (net of appLicabLe taxes and transfer to statutory reserve requirements) towards Investment Reserve on provisions for depreciation on investments credited to Profit and Loss Account.

1.5.1.5 Tier I and Tier II Capital.

During Financial. Year 2014-15,the Bank has not raised Tier I Debt instruments or Tier II Debt Instruments.

During Financial. Year 2013-14, the Bank has raised Tier I Debt instruments amounting to Rs.2,800,000 thousands, detaiLs ofwhich are as follows:

There was no provision for depreciation on investments outside India as at March 31,2015 and March 31,2014.

1.5.3 Repo Transactions

The detaiLs ofsecurities soLd and purchased under repos and reverse repos during the year ended March 31,2015:

The bank has dealt only in government securities in repo or reverse repo transactions during the financial year ended March 31, 2015 and March 31,2014.

The above figures excludes securities sold and purchased under Liquidity Adjustment Facility (LAF) with RBI.

The Bank has not soLd and transferred securities to or from HTM category exceeding 5% of the book vaLue of investment heLd in HTM category at the beginning of the year. The 5% threshold referred to above does not incLude onetime transfer of securities to/from HTM category with the approval, of Board of Directors permitted to be undertaken by banks as per extant RBI guidelines and saLe of securities under pre-announced Open Market Operation (OMO) auction to the RBI.

1.5.5.2 Un-hedged / uncovered foreign currency exposure ofthe Bank

The Bank''s foreign currency exposures as at March 31, 2015 that are not hedged/covered by either derivative instruments or otherwise are within the Net Overnight Open Position Limit (NOOP) and the Aggregate Gap Limit, as approved by the RBI. NOOP at March 31,2015 is Rs.1,884,151 thousands (March 31,2014 Rs.251,121 thousands).

1.5.5.3 Exchange Traded Interest Rate Derivatives

The foLLowing tabLe sets forth,for the period indicated,the detaiLs of exchange traded interest rate derivatives:

1.5.5.4 Currency Futures

The bank had deaLt in exchange traded currency forwards (Futures) during the financiaLyear ended March 31, 2015. As on March 31, 2015, the open contracts on the exchange were to the tune of USD 5,023 thousand (Rs. 315,608 thousand) for April 2015 expiry.

The Bank had deaLt in exchange traded currency Forwards (futures) during the financial year ended March 31, 2014. As on March 31, 2014 there were NiL Open Contracts.

1.5.5.5 Disclosures on risk exposure in derivatives As per RBI Master circuLar DBOD.BP.BC. No.8/21.04.018/2014-15 dated July 1, 2014, the foLLowing disclosures are being made with respect to risk exposure in derivatives ofthe Bank:

a) Purpose: The Bank uses Derivatives incLuding Forwards & swaps for various purposes viz. hedging its currency and interest rate risk in its baLance sheet, customer offerings and proprietary trading. The management of these products and businesses is governed by the Market Risk PoLicy, Investment PoLicy, Derivatives PoLicy, Derivatives Appropriateness PoLicy, Hedging PoLicy and ALM poLicy.

b) Structure: The Board of Directors ofthe Bank have constituted a Board LeveLsub-committee,the Risk Monitoring Committee (''RMC'') and delegated to it aLL functions and responsibilities reLating to the risk management poLicy of the Bank and its supervision thereof.

c) As part of prudent business and risk management practice, the Bank has aLso instituted a comprehensive Limit and control structure encompassing VaLue-at-Risk (VAR), Sensitivity and Greeks, Stop Loss & credit Limits for derivative transactions including a robust suitability and appropriateness framework. The Bank has an elaborate internaL reporting mechanism providing reguLar reports to the RMC. Such a structure heLps the Bank to monitorand mitigate market risk across FX, interest rates,credit risk,operational risk incLuding reputationaL risk and LegaL risk.

d) The Bank has an independent MiddLe Office, which isresponsibLeformonitoring, measurement a n d anaLysis of derivative reLated risks, among others. The Bank has a Credit Risk Management unit which is responsible for setting up counterparty Limits and aLso a treasury operation unit which is responsible for managing operational aspects of derivatives controLfunctionand settlement of transactions. The Bank is subject to a concurrent audit for aLL treasury transactions, incLuding derivatives, a monthLy report of which is periodically submitted totheAudit& Compliance Committee of the Bank.

e) In addition to the above, the Bank independently evaLuates the potentiaL credit exposure on account of aLL derivative transactions, wherein risk Limits are specified separately for each product, in terms of both credit exposure and tenor. As mandated by the Credit PoLicy ofthe Bank,the Bank has instituted an approvaL structure for aLL treasury/derivative reLated credit exposures. Wherever necessary, appropriate credit covenants are stipulated as trigger events to caLL for coLLateraLs or terminate a transaction and contain the risk.

f) The Bank reports aLL trading positions to the management on a daiLy basis. The Bank revaLues its trading position on a daiLy basis for Management and Information System (''MIS'') and control purposes and records the same in the books ofaccounts on a monthLy basis.

g) For derivative contracts in the banking book designated as hedge, the Bank documents at the inception of the relationship between the hedging instrument and the hedged item, the risk management objective for undertaking the hedge and ALCO monitors aLL outstanding hedges on a periodical basis. Further the Bank''s ''Hedging Policy'' has stipulated conditions to ensure that the Hedges entered into are effective.

h) Refer Note 1.4.7 for accounting poLicy on derivatives.

The Bank does not have any advances which are outstanding in the books of the branches, but have been written-off (fuLLy or partially) at Head Office LeveL.

1.5.6.3 Provision coverage Ratio

The provision coverage ratio of the Bank as at March 31, 2015 computed as per the RBI guidelines is 72.01% (previous year 85.10%)

1.5.6.4 Concentration ofNPAs

Exposure (Funded Non Funded) of the Bank to top four NPA is Rs. 1,151,171 thousands as at March 31, 2015 (previous year Rs.718,632 thousands).

1.5.8 Non-performing financial, assets purchased/ soLd from/ to other bank

The Bank has not purchased/sold any non performing financial assets from/to bank during the year ended March 31,2015 and March 31,2014.

1.5.9 Provisions for Standard Assets

Provision on standard advances is Rs.6,593,528 thousands and Rs.4,153,204 thousands as at March 31,2015 and March 31,2014 respectively.

1.5.11 Asset Liability Management

In compiling the information of maturity pattern estimates and assumptions have been made by the management and have been relied upon by the auditors. For Investment Securities, the Bank buckets HFT portfolio and reLated depreciation in 29-90 days bucket oractuaL maturity whichever is earlier.

1.5.12 Exposures

The Bank has lending to sectors, which are sensitive to asset price fluctuations. Such sectors include capital market and real estate.

1.5.12.1 Exposure to ReaL Estate Sector

The exposure, representing the higher of funded and non-funded limits sanctioned or outstanding to real estate sector, is given in the table below:

1.5.12.2 Exposure to CapitaL Market

The exposure representing the higher of funded and non-funded limits sanctioned or outstanding to capital market sector is given in the table below:

1.5.12.3 Risk Category wise Country Exposure

As perthe extant RBI guidelines, the country exposure of the Bank is categorized into various risk categories Listed in the foLLowing tabLe. As at March 31,2015 and March 31, 2014, the Bank''s funded exposure to any individual country did not exceed l%of the totaL funded assets of the Bank :

During the year ended March 31, 2014, with the prior approval, of the Board of Directors, the Bank sanctioned enhancement in singLe borrower Limit for Sesa SterLite Ltd from 15% of CapitaL Funds to 20% of CapitaL Funds. At March 31,2014,the exposure to Sesa SterLite Ltd as a percentage of capitaL funds as of March 31,2014 was 17.0%.

During the year ended March 31, 2014, with the prior approvaL of the Board of Directors, the Bank sanctioned enhancement in group borrower Limit for Tata Group from 50% of CapitaL Funds to 55% of CapitaL Funds. At March 31,2014, the exposure to Tata Group as a percentage of capitaL funds as of March 31,2014 was 40.7%.

1.6 Miscellaneous

1.6.1 Income Taxes

Provisions made for Income Tax during the year

1.6.2 Disclosure of penalties imposed by RBI

As per the provision of RBI Master CircuLar DCM (CC) No. G-3/03.39.01/2013-14 -Scheme of Incentive and penaLties for Bank branches based on performance in rendering customer service to the member of public dated July 1, 2013, RBI has imposed penalty of Rs.10 thousand in June 2014 on account of deficiencies in services in providing facility for adjudication and exchange of mutiLated notes.

RBI has imposed penalty of Rs.1,000 thousands in July 2014 under sub section 1 of Section 47A of the Banking Regulation Act, 1949 for non compliance with the RBI guidelines pertaining to discipline in current account opening and quarterly exchange of information amongst banks under MuLtipLe / Consortium banking.

RBI has Levied penaLty of Rs.20,000 thousand in July 2013 under Section 47 A (1) (c) read with section 46 (4) (i) of the Banking Regulation Act, 1949 for non compliance of the RBI instruction on Know Your Customer/Anti Money Laundering. Further, in terms of RBI circuLar reference no. IDMD.DOD.17/11.01.01 (B) 2010-11 dated July 14, 2010, RBI has Levied penaLty of Rs.500 thousand on January 3, 2014 on account of instance of Subsidiary GeneraL Ledger (SGL) bounce due to insufficient baLance in the SGL account.

1.6.3 Fees/ Remuneration received from bancassurance

Bank has earned Rs.357,876 thousands from bancassurance business during year ended March 31, 2015 (previous year: Rs.237,572 thousands).

1.6.4 Concentration of Deposits

As at March 31,2015, the deposits of top 20 depositors aggregated to Rs.120,505,557 thousands (previous year: Rs. 104,528,126 thousands) (excLuding certificate of deposits, which are tradabLe instruments), representing 13.22% (previous year: 14.09%) of the totaL deposit base.

1.6.5 Concentration of Advances

As at March 31,2015 the top 20 advances aggregated to Rs.234,026,685 thousands (previous year Rs.200,355,130 thousands), representing 14.24% (previous year 16.19%) of the totaL advances. For this purpose, advance is computed as per definition of Credit Exposure in RBI Master CircuLar on Exposure Norms DBOD.No.Dir. BC.12/13.03.00/2014-15 dated July 1,2014.

1.6.6 Concentration of Exposures

As at March 31,2015 the top 20 exposures aggregated to Rs.261,110,589 thousands (previous year Rs.229,680,404 thousands), representing 14.35% (previous year 16.10%) of the total, exposures. Exposure is computed as per definition of Credit and Investment Exposure in RBI Master CircuLar on Exposure Norms DBOD.No.Dir. BC.12/13.03.00/2014-15 datedJuLy 1,2014.

1.6.7 Overseas Assets, NPAs and Revenue

For the year ended March 31,2015 and March 31,2014, the Bank has not earned any revenue from overseas branches. The Bank does not have any assets or NPA from overseas branches as at March 31,2015 and March 31,2014.

1.6.8 Sponsored SPVs

The Bank has not sponsored any SPV and hence there is no consolidation due to SPVs in Bank''s books.

1.7.1 Staff retirement benefits

The foLLowing tabLe sets out the funded status of the Gratuity PLan and the amounts recognized in the Bank''s financiaLstatements as of March 31,2015 and March 31,2014:

The Bank has entire contribution of Gratuity Fund as Investments with Insurance Companies.

The overaLL expected rate of return on assets is determined based on the market prices prevailing on that date, appLicabLe to the period over which the obligation is to be settLed.


Mar 31, 2014

1 Background

YES BANK Limited (the ''Bank'' or ''YES BANK'') is a private sector Bank promoted by the late Mr. Ashok Kapur and Mr. Rana Kapoor. YES BANK Limited is a publicly held bank engaged in providing a wide range of banking and financial services. YES BANK Limited is a banking company governed by the Banking Regulation Act, 1949. The Bank was incorporated as a limited company under the Companies Act, 1956 on November 21, 2003. The Bank received the licence to commence banking operations from the Reserve Bank of India (''RBI'') on May 24, 2004. Further, YES BANK was included to the Second Schedule of the Reserve Bank of India Act, 1934 with effect from August 21, 2004.

2 Basis of preparation

The financial statements have been prepared in accordance with requirements prescribed under the Third Schedule (Form A and Form B) 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 the Reserve Bank of India (RBI) from time to time, the Accounting Standards (AS) notified under the Companies Act, 1956, read with General Circular 8/2014 dated April 4, 2014 issued by the Ministry of Corporate Affairs to the extent applicable and practices generally prevalent in the banking industry in India. The Bank follows the accrual method of accounting and the historical cost convention.

3 Use of estimates

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

4 Significant accounting policies

4.1 Revenue recognition

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

- Interest income is recognized in the profit and loss account on accrual basis, except in the case of non- performing assets. Interest on non-performing assets is recognized upon realization as per the prudential norms of the RBI.

- Revenue in certain structured transactions where interest income is partially receivable in advance is recognized when due.

- Loan processing fee is accounted for upfront when it becomes due.

- Dividend income is recognized when the right to receive payment is established.

- Commission on guarantees issued by the Bank is recognized as income on yearly basis at each anniversary over the period of the guarantee, except for guarantee commission not exceeding Rs.100 thousands, which is recognized at the time of issue of the guarantee.

- Commission on Letters of Credit (''LC'') issued by the Bank is recognized as income at the time of issue of the LC.

- Income on non-coupon bearing discounted instruments is recognized over the tenure of the instrument on a straight line basis. In case of coupon bearing discounted instruments, discount income is recognized over the tenor of the instrument on yield basis.

- In case of Bonds and Pass Through Certificates, premium on redemption, if any, is amortised over the tenure of the instrument on a yield basis.

- Revenue from financial advisory services is recognized in line with milestones achieved as per terms of agreement with clients which is reflective of services rendered.

- Other fees and commission income are recognized on accrual basis.

4.2 Investments

Classification and valuation of the Bank''s investments are carried out in accordance with RBI Circular DBOD.No.BP. BC.8/21.04.141/2013-14 dated 1 July 2013 and Fixed Income Money Market and Derivative Association (FIMMDA) guidelines FIMCIR/2013-14/50/March 28, 2014.

a) accounting and classification

Investments are recognized using the value date basis of accounting. In compliance with RBI guidelines, all investments, are categorized as "Held for trading" (''HFT''), "Available for sale" (''AFS'') or "Held to maturity" (''HTM'') at the time of its purchase. For the purpose of disclosure in the balance sheet, investments are classified as disclosed in Schedule 8 (''Investments'') under six groups (a) government securities (b) other approved securities (c) shares (d) bonds and debentures (e) subsidiaries and joint ventures and (f) others.

b) cost of acquisition

Costs such as brokerage pertaining to investments, paid at the time of acquisition are charged to the profit and loss account.

c) Basis of classification

Securities that are held principally for resale within 90 days from the date of purchase are classified under the HFT category. Investments that the Bank intends to hold till maturity are classified under the HTM category, or as per RBI guidelines. Securities which are not classified in the above categories are classified under the AFS category.

d) Transfer between categories

Reclassification of investments from one category to the other, if done, is in accordance with RBI guidelines. Transfer of scrips from AFS/HFT category to HTM category is made at the lower of book value or market value. In the case of transfer of securities from HTM to AFS/HFT category, the investments held under HTM at a discount are transferred to AFS/HFT category at the acquisition price and investments placed in the HTM category at a premium are transferred to AFS/HFT at the amortized cost.

Transfer of investments from AFS to HFT or vice- a- versa is done at the book value. Depreciation carried, if any, on such investments is also transferred from one category to another.

e) Valuation

Investments categorized under AFS and HFT categories are marked to market (MTM) on a periodical basis as per relevant RBI guidelines. Net depreciation, if any, in the category under the classification mentioned in Schedule 8 (''Investments'') is recognized in the profit and loss account. The net appreciation, if any, in the category under each classification is ignored, except to the extent of depreciation previously provided. The book value of individual securities is not changed consequent to periodic valuation of investments.

Investments received in lieu of restructured advances are valued in accordance with RBI guidelines. Any diminution in value on these investments is provided for and is not used to set off against appreciation in respect of other performing securities in that category.

Investments classified under the HTM category are carried at their acquisition cost and any premium over the face value, paid on acquisition, is amortised on a straight line basis over the remaining period to maturity. Amortization expense of premia on investments in the HTM category is deducted from interest income. Where in the opinion of management, a diminution, other than temporary in the value of investments classified under HTM has taken place, suitable provisions are made.

Treasury Bills, Commercial Paper and Certificates of deposit being discounted instruments, are valued at carrying cost.

The market/fair value applied for the purpose of periodical valuation of quoted investments included in the AFS and HFT categories is the market price of the scrip as available from the trades/quotes on the stock exchanges and for Subsidiary General Ledger (''SGL'') account transactions, the prices as periodically declared by Primary Dealers Association of India jointly with FIMMDA.

The market/fair value of unquoted government securities included in the AFS and HFT category is determined as per the prices published by FIMMDA. Further, in the case of unquoted bonds, debentures, pass through certificates and preference shares, valuation is carried out by applying an appropriate mark-up (reflecting associated credit risk) over the Yield to Maturity (''YTM'') rates of government securities. Such mark up and YTM rates applied are as per the relevant rates published by FIMMDA.

Units of Venture Capital Funds (VCF) held under AFS category are valued using the Net Asset Value (NAV) shown by VCF as per the financial statement. The VCFs are valued based on the audited results once in a year. In case the audited financials are not available for a period beyond 18 months, the investments are valued at Rs.1 per VCF.

Quoted equity shares are valued at their closing price on a recognized stock exchange. Unquoted equity shares are valued at the book value if the latest balance sheet is available, else, at Rs.1 per company, as per relevant RBI guidelines.

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

Investments in quoted Mutual Fund (MF) Units are valued as per Stock Exchange quotations. Investments in un-quoted MF Units are valued on the basis of the latest re-purchase price declared by the MF in respect of each particular Scheme.

f) accounting for repos/reverse repos

Securities sold under agreements to repurchase (Repos) and securities purchased under agreements to resell (Reverse Repos) including liquidity adjustment facility (LAF) with RBI are treated as collateralized borrowing and lending transactions respectively in accordance with RBI master circular No. DBOD.No.BP.BC.8/21.04.141/2013- 14 dated July 1, 2013. The first leg of the repo transaction is contracted at the prevailing market rates. The difference between consideration amounts of first and second (reversal of first) leg reflects interest and is recognized as interest income/expense over the period of transaction.

g) profit/Loss on sale of Investments

Profit/Loss on sale of Investments in the HTM category is recognized in the profit and loss account and profit thereafter is appropriated (net of applicable taxes and statutory reserve requirements) to Capital Reserve. Profit/ Loss on sale of investments in HFT and AFS categories is recognized in the Profit and Loss account.

4.3 advances

Advances are classified as performing and non-performing based on the relevant RBI guidelines. Advances are stated net of specific loan loss provisions, interest in suspense, inter- bank participation certificates issued and bills rediscounted. Specific loan loss provisions in respect of non-performing advances are made based on management''s assessment of the degree of impairment of the advances, subject to the minimum provisioning level prescribed in relevant RBI guidelines.

As per the RBI guidelines a general provision is made on all standard advances based on the category of advances as prescribed in the said guidelines. The Bank also maintains additional general provisions on standard exposure based on the internal credit rating matrix as approved by the Board of the Bank. These provisions are included in Schedule 5 - ''Other liabilities & provisions - Others''.

In respect of restructured standard and non performing advances, provision is made for the present value of principal and interest component sacrificed at the time of restructuring the assets, based on the RBI guidelines.

Amounts recovered against debts written off in earlier years and provisions no longer considered necessary based on the current status of the borrower are recognised in the profit and loss account.

4.4 Transactions involving foreign exchange Monetary foreign currency assets and liabilities are translated at the balance sheet date at rates notified by the Foreign Exchange Dealers'' Association of India (''FEDAI''). Foreign exchange contracts of original maturities less than 12 months outstanding at the balance sheet date are marked to market at rates notified by FEDAI for specified maturities, suitably interpolated for in-between maturity contracts. Long term foreign exchange contracts (original maturities of over 12 months) are stated at net present value using LIBOR/SWAP curves of the respective currencies. The resulting profits or losses are recognized in the profit and loss account.

Premia/discounts on foreign exchange swaps, that are used to hedge risks arising from foreign currency assets and liabilities, are amortized over the life of the swap.

Income and expenditure in foreign currency are accounted for at exchange rates prevalent on the date of the transaction.

In accordance with AS 11 ''The Effects of changes in Foreign Exchange Rates'', contingent liabilities in respect of outstanding foreign exchange forward contracts, derivatives, guarantees, endorsements and other obligations are stated at the exchange rates notified by FEDAI corresponding to the balance sheet date.

4.5 earnings per share

The Bank reports basic and diluted earnings per equity share in accordance with Accounting Standard(AS) 20, "Earnings per Share" notified under the Companies Act, 1956, read with General Circular 8/2014 dated April 4, 2014 issued by the Ministry of Corporate Affairs to the extent applicable. Basic earnings per equity share have been computed by dividing net profit after tax for the year by the weighted average number of equity shares outstanding for the period.

Diluted earnings per equity share have been computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the period except where the results are anti dilutive.

4.6 accounting for derivative transactions Derivative transactions comprises forward rate agreements, swaps and option contracts. The Bank undertakes derivative transactions for market making/trading and hedging on- balance sheet assets and liabilities. All market making/ trading transactions are marked to market on a periodic basis and the resultant unrealized gains/losses are recognized in the profit and loss account.

Derivative transactions that are undertaken for hedging are accounted for on accrual basis except for the transaction designated with an asset or liability that is carried at market value or lower of cost or market value in the financial statements, which are accounted similar to the underlying asset or liability.

The Bank follows the option premium accounting framework prescribed by FEDAI SPL- circular dated Dec 14, 2007. Premium on option transaction is recognized as income/expense on expiry or early termination of the transaction. Mark to market (MTM) gain/loss (adjusted for premium received/paid on option contracts) is recorded under ''Other Income''.

The amounts received/paid on cancellation of option contracts are recognized as realized gains/losses on options. Charges receivable/payable on cancellation/termination of foreign exchange forward contracts and swaps are recognized as income/expense on the date of cancellation/ termination under ''Other Income''.

The requirement for collateral and credit risk mitigation on derivative contracts is assessed based on internal credit policy. Overdues if any, on account of derivative transactions are accounted in accordance with extant RBI guidelines.

As per the RBI guidelines on ''Prudential Norms for Off- balance Sheet Exposures of Banks'' a general provision is made on the current gross MTM gain of the contract for all outstanding interest rate and foreign exchange derivative transactions.

4.7 Fixed assets

Fixed assets are stated at cost less accumulated depreciation and provision for impairment. Cost comprises the purchase price and any cost attributable for bringing the asset to its working condition for its intended use.

Fixed assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset with future net discounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment is recognised by debiting the profit and loss account and is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.

4.8 Depreciation

Depreciation on fixed assets is provided on straight-line method, over estimated useful lives, as determined by the management, at the rates mentioned below (which are higher than or equal to the corresponding rates prescribed in Schedule XIV to the Companies Act, 1956):

Assets costing less than Rs.5,000 are fully depreciated in the year of purchase.

For assets purchased/sold during the year, depreciation is being provided on pro rata basis by the Bank.

4.9 Retirement and employee benefits

Leave salary

The employees of the Bank are entitled to carry forward a part of their unavailed/unutilized leave subject to a maximum limit. The employees cannot encash unavailed/ unutilized leave. The Bank has computed the compensated absence provision as per revised AS 15 – Employee Benefits.

gratuity

The Bank provides for gratuity, a defined benefit retirement plan, covering eligible employees. The plan provides for lump sum payments to vested employees at retirement or upon death while in employment or on termination of employment for an amount equivalent to 15 days'' eligible salary payable for each completed year of service if the service is more than 5 years. The Bank accounts for the liability for future gratuity benefits using the projected unit cost method based on annual actuarial valuation.

The Bank recognizes the actuarial gains and losses during the year in which the same are incurred.

provident fund

In accordance with law, all employees of the Bank are entitled to receive benefits under the provident fund, a defined contribution plan in which both the employee and the Bank contribute monthly at a pre determined rate. The Bank has no liability for future provident fund benefits other than its annual contribution and recognizes such contributions as an expense in the year incurred.

4.10 Leases

Leases where the lessor effectively retains substantially all risks and benefits of ownership are classified as operating leases. Operating lease payments are recognized as an expense in the profit and loss account on a straight line basis over the lease term.

4.11 Income taxes

Income tax expense comprises current tax provision (i.e. the amount of tax for the period determined in accordance with the Income Tax Act, 1961 and the rules framed there under) and the net change in the deferred tax asset or liability in the year. Deferred tax assets and liabilities are recognised for the future tax consequences of timing differences between the carrying values of assets and liabilities and their respective tax bases and operating loss carry forwards. Deferred tax assets and liabilities are measured using the enacted or substantively enacted tax rates at the balance sheet date.

Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in future. In case of unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognized only if there is virtual certainty of realization of such assets supported by convincing evidence. Deferred tax assets are reviewed at each balance sheet date and appropriately adjusted to reflect the amount that is reasonably/virtually certain to be realized.

4.12 provisions and contingent assets/liabilities

The Bank creates a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for contingent liability is made when there is a possible obligation or a present obligation that may but probably will not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources would be required to settle the obligation, the provision is reversed.

Contingent assets are not recognized in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognized in the period in which the change occurs.

4.13 employee Stock compensation cost Measurement of the employee share-based payment plans is done in accordance with the Guidance Note on Accounting for Employee Share-based Payments issued by Institute of Chartered Accountants of India (ICAI) and SEBI ESOP Guidelines 1999. The Bank measures compensation cost relating to employee stock options using the intrinsic value method. Compensation cost is measured by the excess, if any, of the fair market price of the underlying stock (i.e. the last closing price on the stock exchange on the day preceding the date of grant of stock options) over the exercise price. The exercise price of the Bank''s stock option is the last closing price on the stock exchange on the day preceding the date of grant of stock options and accordingly there is no compensation cost under the intrinsic value method.

4.14 cash and cash equivalent

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

5.1 capital

5.1 equity Issue

During the financial year ended March 31, 2014, the Bank has issued 2,011,337 shares (previous year: 5,634,865 shares) pursuant to the exercise of stock option aggregating to Rs.359,622 thousands (previous year: Rs.813,123 thousands).

5.2 capital Reserve

Profit on sale of investments in the Held to Maturity category is credited to the Profit and Loss Account and thereafter appropriated to capital reserve (net of applicable taxes and transfer to statutory reserve requirements). During the year Rs.41,359 thousands (previous year: Rs.348,646 thousands) was transferred to Capital Reserve.

5.3 Investment Reserve

The Bank has transferred Rs.4,385 thousands (Previous year: Rs.97,136 thousands) (net of applicable taxes and transfer to statutory reserve requirements) towards Investment Reserve on provisions for depreciation on investments credited to Profit and Loss Account.

5.4 Un-hedged/uncovered foreign currency exposure

The Bank''s foreign currency exposures as at March 31, 2014 that are not hedged/covered by either derivative instruments or otherwise are within the Net Overnight Open Position limit (NOOP) and the Aggregate Gap limit, as approved by the RBI. NOOP at March 31, 2014 is Rs.251,121 thousands (March 31, 2013 Rs.519,379 thousands).

5.5 currency Futures

The Bank had dealt in exchange traded currency forwards(futures) during the financial year ended March 31, 2014. As on March 31, 2014 there were Nil Open Contracts (Previous Year: Nil).

5.6 Disclosures on risk exposure in derivatives

As per RBI Master circular DBOD.No.BP.BC. 9/21.06.001/2013-14 dated July 1, 2013, the following disclosures are being made with respect to risk exposure in derivatives of the Bank:

a) Purpose: The Bank uses Derivatives including Forwards & swaps for various purposes viz. hedging its currency and interest rate risk in its balance sheet, customer offerings and proprietary trading. The management of these products and businesses is governed by the Market Risk Policy, Investment Policy, Derivatives Policy, Derivatives Appropriateness Policy, Hedging Policy and ALM policy.

b) Structure: The Board of Directors of the Bank have constituted a Board level sub-committee, the Risk Monitoring Committee (''RMC'') and delegated to it all functions and responsibilities relating to the risk management policy of the Bank and its supervision thereof.

c) As part of prudent business and risk management practice, the Bank has also instituted a comprehensive limit and control structure encompassing Value-at-Risk (VAR), Sensitivity and Greeks, Stop loss & credit limits for derivative transactions including a robust suitability and appropriateness framework. The Bank has an elaborate internal reporting mechanism providing regular reports to the RMC. Such a structure helps the Bank to monitor and mitigate market risk across FX, interest rates, credit risk, operational risk including reputational risk and legal risk.

d) The Bank has an independent Middle Office, which is responsible for monitoring, measurement and analysis of derivative related risks, among others. The Bank has a Credit Risk Management unit which is responsible for setting up counterparty limits and also a treasury operation unit which is responsible for managing operational aspects of derivatives control function and settlement of transactions. The Bank is subject to a concurrent audit for all treasury transactions, including derivatives, a monthly report of which is periodically submitted to the Audit & Compliance Committee of the Bank.

e) In addition to the above, the Bank independently evaluates the potential credit exposure on account of all derivative transactions, wherein risk limits are specified separately for each product, in terms of both credit exposure and tenor. As mandated by the Credit Policy of the Bank, the Bank has instituted an approval structure for all treasury/derivative related credit exposures. Wherever necessary, appropriate credit covenants are stipulated as trigger events to call for collaterals or terminate a transaction and contain the risk.

f) The Bank reports all trading positions to the management on a daily basis. The Bank revalues its trading position on a daily basis for Management and Information System (''MIS'') and control purposes and records the same in the books of accounts on a monthly basis.

g) For derivative contracts in the banking book designated as hedge, the Bank documents at the inception of the relationship between the hedging instrument and the hedged item, the risk management objective for undertaking the hedge and ALCO monitors all outstanding hedges on a periodical basis. Further the Bank''s ''Hedging Policy'' has stipulated conditions to ensure that the Hedges entered into are effective.

h) Refer Note

5.7 for accounting policy on derivatives.

1 Currency derivatives includes options purchased and sold, cross currency interest rate swaps and currency futures.

2 Trading portfolio including accrued interest.

3 Mark to Market for credit exposure includes accrued interest.

4 Interest rate derivatives include Interest Rate Swaps, forward rate agreements and exchange traded interest rate derivatives

Note:

1) Denotes absolute value of loss which the Bank could suffer on account of a change in interest rates by 1% which however doesn''t capture the off-setting exposures between interest rate and currency derivatives.

2) PV01 exposures reported above may not necessarily indicate the interest rate risk the bank is exposed to, given that PV01 exposures in Investments (which may offset the PV01 reflected above) do not form part of the above table.

3) The notional principal amount of foreign exchange contracts classified as trading at March 31, 2014 amounted to Rs.1,097,322,162 thousands( previous year: Rs.1,460,579,466 thousands). For these trading contracts, at March 31, 2014, marked to market position was asset of Rs.24,404,919 thousands( Previous year: Rs.17,375,046 thousands) and liability of Rs.24,082,263 thousands( Previous Year: Rs.16,538,216 thousands).The notional principal amount of foreign exchange contracts classified as hedging at March 31, 2014 amounted to Rs.7,344,331 thousands (previous year: Rs.39,722,630 thousands). Credit exposure on forward exchange contracts at March 31, 2014 was Rs.41,056,119 thousands (Previous Year: Rs.39,992,956 thousands).

5.8 provision coverage Ratio

The provision coverage ratio of the Bank as at March 31, 2014 computed as per the RBI guidelines is 85.10% (previous year 92.59%)

5.9 concentration of npas

Exposure (Funded Non Funded) of the Bank to top four NPA is Rs.718,632 thousands as at March 31, 2014 (previous year Rs.558,250 thousands) and the Bank has provided for Rs.718,632 thousands (previous year Rs.558,250 thousands) for the same.

5.10 non-performing financial assets purchased/sold from/to other bank

The Bank has not purchased/sold any non performing financial assets from/to bank during the year ended March 31, 2014 and March 31, 2013.

5.11 provisions for Standard assets

Provision on standard advances is Rs.4,153,204 thousands and Rs.2,655,326 thousands as at March 31, 2014 and March 31, 2013 respectively.

5.12 asset Liability Management

In compiling the information of maturity pattern, estimates and assumptions have been made by the management and have been relied upon by the auditors. For Investment Securities, the Bank buckets HFT portfolio and related depreciation in 29-90 days bucket or actual maturity whichever is earlier.

5.13 Details of Single Borrower Limit (SBL) and group Borrower Limit (gBL)

During the year ended March 31, 2014, the Bank has complied with the Reserve Bank of India guidelines on single borrower and borrower group limit. As per the exposure limits permitted under the extant RBI regulation, the Bank, with the approval of the Board of Directors, can enhance exposure to a single borrower or borrower group by a further 5 percent of capital funds.

During the year ended March 31, 2014, with the prior approval of the Board of Directors, the Bank sanctioned enhancement in single borrower limit for Sesa Sterlite Ltd from 15% of Capital Funds to 20% of Capital Funds. At March 31, 2014, the exposure to Sesa Sterlite Ltd as a percentage of capital funds as of March 31, 2014 was 17.0%.

During the year ended March 31, 2014, with the prior approval of the Board of Directors, the Bank sanctioned enhancement in group borrower limit for Tata Group from 50% of Capital Funds to 55% of Capital Funds. At March 31, 2014, the exposure to Tata Group as a percentage of capital funds as of March 31, 2014 was 40.7%.

During the year ended March 31, 2013, the Bank has complied with the Reserve Bank of India guidelines on single borrower and borrower group limit. As per the exposure limits permitted under the extant RBI regulation, the Bank, with the approval of the Board of Directors, can enhance exposure to a single borrower or borrower group by a further 5 percent of capital funds. During the year ended March 31, 2013, with the prior approval of the Board of Directors, the Bank exceeded the single borrower limit of 15% of capital funds to Tata Steel and Hindalco Industries. At March 31, 2013, the exposure to Tata Steel as a percentage of capital funds was 11.68% and exposure to Hindalco Industries as a percentage of capital funds was 5.32%.

6.1 Disclosure of penalties imposed by RBI Pursuant to the show cause notice dated June 7, 2013, RBI has levied penalty of Rs.20,000 thousand in July 2013 under Section 47 A (1) (c ) read with section 46 (4) (i) of the Banking Regulation Act, 1949 for non compliance of the RBI instruction on Know Your Customer/Anti Money Laundering. Further, In terms of RBI circular reference no. IDMD.DOD.17/11.01.01 (B) 2010-11 dated July 14, 2010, RBI has levied penalty of Rs.500 thousand on January 3, 2014 on account of instance of Subsidiary General Ledger (SGL) bounce due to insufficient balance in the SGL account on December 26, 2013.

No penalty has been imposed by RBI on the Bank during the financial year ended March 31, 2013.

6.2 Fees/Remuneration received from bancassurance Bank has earned Rs.237,572 thousands from bancassurance business during year ended March 31, 2014 (previous year: Rs.200,049 thousands).

6.3 concentration of Deposits

As at March 31, 2014, the deposits of top 20 depositors aggregated to Rs.104,528,126 thousands (previous year: Rs.100,431,510 thousands) (excluding certificate of deposits, which are tradable instruments), representing 14.09% (previous year: 15.01%) of the total deposit base.

6.4 concentration of advances

As at March 31, 2014 the top 20 advances aggregated to Rs.200,355,130 thousands (previous year Rs.140,002,772 thousands), representing 16.19% (previous year 13.38%) of the total advances. For this purpose, advance is computed as per definition of Credit Exposure in RBI Master Circular on Exposure Norms DBOD.No.Dir.BC.13/13.03.00/2013-14 dated July 1, 2013.

6.5 concentration of exposures

As at March 31, 2014 the top 20 exposures aggregated to Rs.229,680,404 thousands (previous year Rs.193,299,611 thousands), representing 16.10% (previous year 15.55%) of the total exposures. Exposure is computed as per definition of Credit and Investment Exposure in RBI Master Circular on Exposure Norms DBOD.No.Dir.BC.13/13.03.00/2013-14 dated July 1, 2013.

6.6 Overseas assets, npas and Revenue

For the year ended March 31, 2014 and March 31, 2013, the Bank has not earned any revenue from overseas branches. The Bank does not have any assets or NPA from overseas branches as at March 31, 2014 and March 31, 2013.

6.7 Sponsored SpVs

The Bank has not sponsored any SPV and hence there is no consolidation in Bank''s books.

7.1 Staff retirement benefits

The following table sets out the funded status of the Gratuity Plan and the amounts recognized in the Bank''s financial statements as of March 31, 2014 and March 31, 2013:

7.2 Segment Results

Pursuant to the guidelines issued by RBI on AS-17 (Segment Reporting) - Enhancement of Disclosures dated April 18, 2007, effective from period ending March 31, 2008, the following business segments have been reported.

- Treasury: Includes investments, all financial markets activities undertaken on behalf of the Bank''s customers, proprietary trading, maintenance of reserve requirements and resource mobilisation from other banks and financial institutions.

- Corporate/Wholesale Banking: Includes lending, deposit taking and other services offered to corporate customers.

- Retail Banking: Includes lending, deposit taking and other services offered to retail customers.

- Other Banking Operations: Includes para banking activities like third party product distribution, merchant banking etc.


Mar 31, 2013

1.4.1 Revenue recognition

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

- Interest income is recognised in the profit and loss account on accrual basis, except in the case of non-performing assets. Interest on non- performing assets is recognised upon realisation as per the prudential norms of the RBI.

- Revenue in certain structured transactions where interest income is partially receivable in advance is recognised when due.

- Loan processing fee is accounted for upfront when it becomes due.

- Dividend income is recognised when the right to receive payment is established.

- Commission on guarantees issued by the Bank is recognised as income on yearly basis at each anniversary over the period of the guarantee, except for guarantee commission not exceeding Rs. 100 thousands, which is recognised at the time of issue of the guarantee.

- Commission on Letters of Credit (''LC'') issued by the Bank is recognised as income at the time of issue of the LC.

- Income on non-coupon bearing discounted instruments is recognised over the tenure of the instrument on a straight line basis. In case of coupon bearing discounted instruments, discount income is recognised over the tenor of the instrument on yield basis.

- In case of Bonds and Pass Through Certificates, premium on redemption, if any, is amortised over the tenure of the instrument on a yield basis.

- Revenue from financial advisory services is recognised in line with milestones achieved as per terms of agreement with clients which is reflective of services rendered.

- Other fees and commission income are recognised on accrual basis.

1.4.2 Investments

Classification and valuation of the Bank''s investments are carried out in accordance with RBI Circular DB0D.No.BPBC.13/21.04.141/2012-13 dated 2 July 2012 and Fixed Income Money Market and Derivative Association (FIMMDA) guidelines FIMCIR/2012-13/41/March 01, 2013.

a) Accounting and Classification

Investments are recognised using the value date basis of accounting. In compliance with RBI guidelines, all investments, are categorised as "Held for trading" (''HFT''), "Available for sale" (''AFS'') or "Held to maturity" (''HTM'') at the time of its purchase. For the purpose of disclosure in the balance sheet, investments are classified as disclosed in Schedule 8 (''Investments'') under six groups (a) government securities (b) other approved securities (c) shares (d) bonds and debentures (e) subsidiaries and joint ventures and (f) others.

b) Cost of acquisition

Costs such as brokerage pertaining to investments, paid at the time of acquisition are charged to the profit and loss account.

c) Basis of classification

Securities that are held principally for resale within 90 days from the date of purchase are classified under the HFT category. Investments that the Bank intends to hold till maturity are classified under the HTM category, or as per RBI guidelines. Securities which are not classified in the above categories are classified under the AFS category.

d) Transfer between categories

Reclassification of investments from one category to the other, if done, is in accordance with RBI guidelines. Transfer of scrips from AFS / HFT category to HTM category is made at the lower of book value or market value. In the case of transfer of securities from HTM to AFS / HFT category, the investments held under HTM at a discount are transferred to AFS / HFT category at the acquisition price and investments placed in the HTM category at a premium are transferred to AFS/ HFT at the amortised cost.

Transfer of investments from AFS to HFT or vice- a- versa is done at the book value. Depreciation carried, if any, on such investments is also transferred from one category to another.

e) Valuation

Investments categorised under AFS and HFT categories are marked to market (MTM) on a periodical basis as per relevant RBI guidelines. Net depreciation, if any, in the category under the classification mentioned in Schedule 8 (''Investments'') is recognised in the profit and loss account. The net appreciation, if any, in the category under each classification is ignored, except to the extent of depreciation previously provided. The book value of individual securities is not changed consequent to periodic valuation of investments.

Investments received in lieu of restructured advances are valued in accordance with RBI guidelines. Any diminution in value on these investments is provided for and is not used to set off against appreciation in respect of other performing securities in that category.

Investments classified under the HTM category are carried at their acquisition cost and any premium over the face value, paid on acquisition, is amortised on a straight line basis over the remaining period to maturity. Amortisation expense of premia on investments in the HTM category is deducted from interest income. Where in the opinion of management, a diminution, other than temporary in the value of investments classified under HTM has taken place, suitable provisions are made.

Treasury Bills, Commercial Paper and Certificates of deposit being discounted instruments, are valued at carrying cost.

The market/ fair value applied for the purpose of periodical valuation of quoted investments included in the AFS and HFT categories is the market price of the scrip as available from the trades/ quotes on the stock exchanges and for Subsidiary General Ledger (''SGL'') account transactions, the prices as periodically declared by Primary Dealers Association of India jointly with FIMMDA.

The market/ fair value of unquoted government securities included in the AFS and HFT category is determined as per the prices published by FIMMDA. Further, in the case of unquoted bonds, debentures, pass through certificates and preference shares, valuation is carried out by applying an appropriate mark-up (reflecting associated credit risk) over the Yield to Maturity (''YTM'') rates of government securities. Such mark up and YTM rates applied are as per the relevant rates published by FIMMDA.

Units of Venture Capital Funds (VCF) held under AFS category are valued using the Net Asset Value (NAV) shown by VCF as per the financial statement. The VCFs are valued based on the audited results once in a year. In case the audited financials are not available for a period beyond 18 months, the investments are valued at Rs. 1 per VCF.

Quoted equity shares are valued at their closing price on a recognised stock exchange. Unquoted equity shares are valued at the book value if the latest balance sheet is available, else, at Rs. 1 per company, as per relevant RBI guidelines.

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

Investments in quoted Mutual Fund (MF) Units are valued as per Stock Exchange quotations. Investments in un-quoted MF Units are valued on the basis of the latest re-purchase price declared by the MF in respect of each particular Scheme.

f) Accounting for repos / reverse repos

Securities sold under agreements to repurchase (Repos) and securities purchased under agreements to resell (Reverse Repos) including liquidity adjustment facility (LAF) with RBI are treated as collateralised borrowing and lending transactions respectively in accordance with RBI master circular No. DBOD. No.BPBC.13/21.04.141/2012-13 dated July 2, 2012. The first leg of the repo transaction is contracted at the prevailing market rates. The difference between consideration amounts of first and second (reversal of first) leg reflects interest and is recognised as interest income/ expense over the period of transaction.

g) Profit/Loss on sale of Investments

Profit/Loss on sale of Investments in the HTM category is recognised in the profit and loss account and profit thereafter is appropriated (net of applicable taxes and statutory reserve requirements) to Capital Reserve. Profit/ Loss on sale of investments in HFT and AFS categories is recognised in the Profit and Loss account.

1.4.3 Advances

Advances are classified as performing and non-performing based on the relevant RBI guidelines. Advances are stated net of specific loan loss provisions, interest in suspense, inter- bank participation certificates issued and bills rediscounted. Specific loan loss provisions in respect of non-performing advances are made based on management''s assessment of the degree of impairment of the advances, subject to the minimum provisioning level prescribed in relevant RBI guidelines.

As per the RBI guidelines a general provision is made on all standard advances based on the category of advances as prescribed in the said guidelines. The Bank also maintains additional general provisions on standard exposure based on the internal credit rating matrix. These provisions are included in Schedule 5 - ''Other liabilities & provisions - Others''.

In respect of restructured standard and non performing advances, provision is made for the present value of principal and interest component sacrificed at the time of restructuring the assets, based on the RBI guidelines.

Amounts recovered against debts written off in earlier years and provisions no longer considered necessary based on the current status of the borrower are recognised in the profit and loss account.

1.4.4 Transactions involving foreign exchange

Monetary foreign currency assets and liabilities are translated at the balance sheet date at rates notified by the Foreign Exchange Dealers'' Association of India (''FEDAI''). Foreign exchange contracts of original maturities less than 12 months outstanding at the balance sheet date are marked to market at rates notified by FEDAI for specified maturities, suitably interpolated for in-between maturity contracts. Long term foreign exchange contracts (original maturities of over 12 months) are stated at net present value using LIBOR/SWAP curves of the respective currencies. The resulting profits or losses are recognised in the profit and loss account.

Premia/discounts on foreign exchange swaps, that are used to hedge risks arising from foreign currency assets and liabilities, are amortised over the life of the swap.

Income and expenditure in foreign currency are accounted for at exchange rates prevalent on the date of the transaction.

In accordance with AS 11 ''The Effects of changes in Foreign Exchange Rates'', contingent liabilities in respect of outstanding foreign exchange forward contracts, derivatives, guarantees, endorsements and other obligations are stated at the exchange rates notified by FEDAI corresponding to the balance sheet date.

1.4.5 Earnings per share

The Bank reports basic and diluted earnings per equity share in accordance with (AS) 20, "Earnings per Share" prescribed by the Companies (Accounting Standards) Rules, 2006. Basic earnings per equity share have been computed by dividing net profit after tax for the year by the weighted average number of equity shares outstanding for the period.

Diluted earnings per equity share have been computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the period except where the results are anti dilutive.

1.4.6 Accounting for derivative transactions

Derivative transactions comprises forward rate agreements, swaps and option contracts. The Bank undertakes derivative transactions for market making/trading and hedging on-balance sheet assets and liabilities. All market making/trading transactions are marked to market on a periodic basis and the resultant unrealised gains/losses are recognised in the profit and loss account.

Derivative transactions that are undertaken for hedging are accounted for on accrual basis except for the transaction designated with an asset or liability that is carried at market value or lower of cost or market value in the financial statements, which are accounted similar to the underlying asset or liability.

The Bank follows the option premium accounting framework prescribed by FEDAI SPL- circular dated Dec 14, 2007. Premium on option transaction is recognised as income/expense on expiry or early termination of the transaction. Mark to market (MTM) gain/loss (adjusted for premium received/ paid on option contracts) is recorded under ''Other Income''.

The amounts received/paid on cancellation of option contracts are recognised as realised gains/ losses on options. Charges receivable/payable on cancellation/ termination of foreign exchange forward contracts and swaps are recognised as income/ expense on the date of cancellation/ termination under ''Other Income''.

The requirement for collateral and credit risk mitigation on derivative contracts is assessed based on internal credit policy. Overdues if any, on account of derivative transactions are accounted in accordance with extant RBI guidelines.

As per the RBI guidelines on ''Prudential Norms for Off-balance Sheet Exposures of Banks'' a general provision is made on the current gross MTM gain of the contract for all outstanding interest rate and foreign exchange derivative transactions.

1.4.7 Fixed assets

Fixed assets are stated at cost less accumulated depreciation and provision for impairment. Cost comprises the purchase price and any cost attributable for bringing the asset to its working condition for its intended use.

Fixed assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset with future net discounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment is recognised by debiting the profit and loss account and is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.

1.4.8 Depreciation

Depreciation on fixed assets is provided on straight-line method, over estimated useful lives, as determined by the management, at the rates mentioned below (which are higher than or equal to the corresponding rates prescribed in Schedule XIV to the Companies Act, 1956):

Assets costing less than Rs. 5,000 are fully depreciated in the year of purchase.

For assets purchased/ sold during the year, depreciation is being provided on pro rata basis by the Bank.

1.4.9 Retirement and employee benefits Leave salary

The employees of the Bank are entitled to carry forward a part of their unavailed/unutilised leave subject to a maximum limit. The employees cannot encash unavailed/unutilised leave. The Bank has computed the compensated absence provision as per revised AS 15 - Employee Benefits.

Gratuity

The Bank provides for gratuity, a defined benefit retirement plan, covering eligible employees. The plan provides for lump sum payments to vested employees at retirement or upon death while in employment or on termination of employment for an amount equivalent to 15 days'' eligible salary payable for each completed year of service if the service is more than 5 years. The Bank accounts for the liability for future gratuity benefits using the projected unit cost method based on annual actuarial valuation.

The Bank recognises the actuarial gains and losses during the year in which the same are incurred.

Provident fund

In accordance with law, all employees of the Bank are entitled to receive benefits under the provident fund, a defined contribution plan in which both the employee and the Bank contribute monthly at a pre determined rate. The Bank has no liability for future provident fund benefits other than its annual contribution and recognises such contributions as an expense in the year incurred.

1.4.10 Leases

Leases where the lessor effectively retains substantially all risks and benefits of ownership are classified as operating leases. Operating lease payments are recognised as an expense in the profit and loss account on a straight line basis over the lease term.

1.4.11 Income taxes

Income tax expense comprises current tax provision (i.e. the amount of tax for the period determined in accordance with the Income Tax Act, 1961 and the rules framed there under) and the net change in the deferred tax asset or liability in the year. Deferred tax assets and liabilities are recognised for the future tax consequences of timing differences between the carrying values of assets and liabilities and their respective tax bases, and operating loss carry forwards. Deferred tax assets and liabilities are measured using the enacted or substantively enacted tax rates at the balance sheet date.

Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future. In case of unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets supported by convincing evidence. Deferred tax assets are reviewed at each balance sheet date and appropriately adjusted to reflect the amount that is reasonably/virtually certain to be realised.

1.4.12 Provisions and contingent assets/ liabilities

The Bank creates a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for contingent liability is made when there is a possible obligation or a present obligation that may but probably will not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources would be required to settle the obligation, the provision is reversed.

Contingent assets are not recognised in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognised in the period in which the change occurs.

1.4.13 Employee Stock Compensation Cost

Measurement of the employee share-based payment plans is done in accordance with the Guidance Note on Accounting for Employee Share-based Payments issued by Institute of Chartered Accountants of India (ICAI) and SEBI ESOP Guidelines 1999. The Bank measures compensation cost relating to employee stock options using the intrinsic value method. Compensation cost is measured by the excess, if any, of the fair market price of the underlying stock (i.e. the last closing price on the stock exchange on the day preceding the date of grant of stock options) over the exercise price. The exercise price of the Bank''s stock option is the last closing price on the stock exchange on the day preceding the date of grant of stock options and accordingly there is no compensation cost under the intrinsic value method.

1.4.14 Cash and Cash equivalent

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


Mar 31, 2010

1.1 Basis of preparation

The financial statements have been prepared in accordance with requirements prescribed under the Third Schedule (Form A and Form B) 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, the Accounting Standards (AS) issued by the Institute of Chartered Accountants of India (ICAI) and notified by the Companies (Accounting Standards) Rules, 2006 to the extent applicable and practices generally prevalent in the banking industry in India.The Bank follows the accrual method of accounting, except where otherwise stated, and the historical cost convention.

1.2 Use of estimates

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

1.3.1 Revenue recognition

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

- Interest income is recognised in the profit and loss account on accrual basis, except in the case of non-performing assets. Interest on non-performing assets is recognized upon realisation as per the prudential norms of the RBI.

- Revenue, in certain structured transactions where interest income is partially receivable in advance is recognised when due.

- Dividend income is recognised when the right to receive payment is established.

- Commission on guarantees issued by the Bank is recognised as income on yearly basis over the period of the guarantee, except for guarantee commission not exceeding Rs. 100 thousands, which is recognised in the profit and loss account at the time of issue of the guarantee.

- Commission on Letters of Credit (LC) issued by the Bank is recognised as income at the time of issue of the LC.

- Income on discounted instruments is recognised over the tenure of the instrument on a straight-line basis.

- Revenue from financial advisory services is recognized based on milestones achieved as per terms of agreement with client.

- Other fees and commission income are recognised on accrual basis.

1.3.2 Investments

Classification and valuation of the Banks investments are carried out in accordance with RBI Circular DBOD. No. BR BC. 3/21.04.141 /2009-10 dated I July 2009 and Fixed Income Money Market and Derivative Association (FIMMDA) guidelines FIMCIR/2009-10/50 dated March 17,2010.

a) Accounting and Classification

Investments are recognised using the value date basis of accounting. In compliance with RBI guidelines, all investments, which cover both debt and equity securities, are categorized as Held for trading (HFT), Available for sale (AFS) or "Held to maturity" (HTM) at the time of its purchase. For the purpose of disclosure in the balance sheet, investments are classified as disclosed in Schedule 8 (Investments) under six groups (a) government securities (b) other approved securities (c) shares (d) bonds and debentures (e) subsidiaries and joint ventures and (f) others.

b) Cost of acquisition

Costs such as brokerage, commission, etc. pertaining to investments, paid at the time of acquisition are charged to the profit and loss account.

c) Basis of classification

Securities that are held principally for resale within 90 days from the date of purchase are classified under the HFT category. Investments that the Bank intends to hold till maturity are classified under the HTM category. Securities which are not classified in the above categories are classified under the AFS category.

d) Transfer between categories

Reclassification of investments from one category to the other, if done, is in accordance with RBI guidelines and any such transfer is accounted for at the acquisition cost/ book value/ market value, whichever is lower, as at the date of transfer Depreciation, if any, on such transfer is fully provided for.

e) Valuation

Investments categorized under AFS and HFT categories are marked to market on a periodical basis as per relevant RBI guidelines. Net depreciation, if any, in any classification mentioned in Schedule 8 (Investments) is recognised in the profit and loss account. The net appreciation if any, under each classification is ignored, except to the extent of depreciation previously provided. The book value of individual securities is not changed consequent to periodic valuation of investments.

Investments classified under the HTM category are carried at their acquisition cost and any premium over the face value, paid on acquisition, is amortised on a straight-line basis over the remaining period to maturity. Amortization expense of premia on investments in the Held to Maturity (HTM) category is deducted from interest income. Where in the opinion of management, a diminution, other than temporary in the value of investments classified under HTM has taken place, suitable provisions are made.

Treasury Bills, Commercial Paper and Certificates of deposit being discounted instruments, are valued at carrying cost.

The market/ fair value applied for the purpose of periodical valuation of quoted investments included in the Available for Sale and Held for Trading categories is the market price of the scrip as available from the trades/quotes on the stock exchanges, Subsidiary General Ledger (SGL) account transactions, the price list published by RBI or the prices periodically declared by Primary DealersAssociation of India jointly with Fixed Income Money Market and Derivatives Association (FIMMDA).

The market/fair value of unquoted government securities included in the Available for Sale and Held for Trading category is determined as per the rates published by FIMMDA. Further, in the case of unquoted fixed income securities (other than government securities), valuation is carried out by applying an appropriate mark-up (reflecting associated credit risk) over the Yield to Maturity (YTM) rates of government securities. Such mark-up and YTM rates applied are as per the relevant rates published by FIMMDA.

Quoted equity shares are valued at their closing price on a recognised stock exchange. Unquoted equity shares are valued at the book value if the latest balance sheet is available, else, at Re. I per company, as per relevant RBI guidelines.

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

Mutual Fund units are valued at their net asset value on the valuation date.

f) Accounting for repos/reverse repos

Repurchase (repos) and reverse repurchase (reverse repos) transactions are accounted for on outright sale and outright purchase basis respectively in line with RBI guidelines.The difference between the clean price of first leg and the clean price of the second leg is recognised as interest income/expense over the period of transaction. However; depreciation in the value, if any, compared to the original cost, is provided for

In respect of repo transactions under Liquidity Adjustment Facility (LAF) with RBI, money borrowed from RBI are credited to borrowing account and reversed on maturity of the transaction. Costs thereon are accounted for as interest expense. In respect of reverse repo transactions under LAF, money paid to RBI are debited to lending account and reversed on maturity of the transaction. Revenues thereon are accounted as interest income.

1.3.4 Advances

Advances are classified as performing and non-performing based on the relevant RBI guidelines. Advances are stated net of specific loan loss provisions, interest in suspense, Export Credit Guarantee Corporation of India Limited (ECGC) claims received, inter-bank participation certificates issued and bills rediscounted. Specific loan loss provisions in respect of non-performing advances are made based on managements assessment of the degree of impairment of the advances, subject to the minimum provisioning level prescribed in relevant RBI guidelines.

As per the RBI guidelines a general provision is made on all standard advances based on the category of advances as prescribed in the said guidelines.The Bank also maintains additional general provisions on standard exposure based on the internal credit rating matrix.These provisions are included in Schedule 5 - Other liabilities and provisions - Others.

In addition to the provisions required according to the asset classification status, provisions are made for individual country exposures (other than for home country exposure) in accordance with RBI guidelines. Countries are categorized into seven risk categories namely insignificant, low, moderate, high, very high, restricted and off-credit and provisioning is done in respect of that country where the net funded exposure is one per cent or more of the Banks total assets.

In respect of restructured standard and sub-standard assets, provision is made for the present value of principal and interest component sacrificed at the time of restructuring the assets, based on the RBI guidelines.

Amounts recovered against debts written off in earlier years and provisions no longer considered necessary in the context of the current status of the borrower are recognised in the profit and loss account.

1.3.5 Securitization transactions

The Bank enters into securitization transactions wherein corporate loans are sold to a Special Purpose Vehicle (SPV). These securitization transactions are accounted for in accordance with the RBI guidelines on Securitization of Standard Assets.

Securitized assets are derecognised upon sale if the Bank surrenders control over the contractual rights that comprise the financial asset and fulfils other conditions as per the applicable extant RBI guidelines.

Gain on securitization is amortised over the life of the securities issued by the SPV. Losses are recognised immediately.

Sales and transfers that do not meet the criteria for surrender of control are accounted for as secured borrowings.

1.3.6 Transactions involving foreign exchange

Monetary foreign currency assets and liabilities are translated at the balance sheet date at rates notified by the Foreign Exchange Dealers Association of India (FEDAI). Foreign exchange contracts outstanding at the balance sheet date are marked to market at rates notified by FEDAI for specified maturities, suitably interpolated for in-between maturity contracts as specified by FEDAI, and are stated at net present value based on LIBOR/SWAP curves of the respective currencies for contracts of maturities over 12 months (Long Term Forex Contract).The resulting profits or losses are recognised in the profit and loss account.

The premium or discount arising on inception of forward exchange contracts that are entered into to establish the amount of reporting currency required or available at the settlement date of a transaction is amortised over the life of the contract. Premia/ discounts on foreign exchange swaps, that are used to cover risks arising from foreign currency assets and liabilities, are amortised over the life of the swap.

Income and expenditure in foreign currency are accounted for at exchange rates prevalent on the date of the transaction.

In accordance with Accounting Standard I I The Effects of changes in Foreign Exchange Rates issued by the Institute of Chartered Accountants of India (ICAI), contingent liabilities in respect of outstanding foreign exchange forward contracts, derivatives, guarantees, endorsements and other obligations are stated at the exchange rates notified by FEDAI corresponding to the balance sheet date.

1.3.7 Earnings per share

The Bank reports basic and diluted earnings per equity share in accordance with (AS) 20,Earnings per Share prescribed by the Companies (Accounting Standards) Rules, 2006. Basic earnings per equity share have been computed by dividing net profit for the year by the weighted average number of equity shares outstanding for the period. Diluted earnings per equity share have been computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the period except where the results are anti dilutive.

1.3.7 Accounting for derivative transactions

Derivative transactions comprise of forward rate agreements, swaps and option contracts. The Bank undertakes derivative transactions for market making/trading and hedging on-balance sheet assets and liabilities. All market making/trading transactions are marked to market on a periodic basis and the resultant unrealised gains/losses are recognised in the profit and loss account. Derivative transactions that are undertaken for hedging are accounted for on accrual basis.

Premia received on Options transactions are recorded under Other Income. The amounts received/paid on cancellation of Option contracts are recognised as realized gains/losses on Options. Charges receivable/ payable on cancellation/ termination of foreign exchange forward contracts and swaps are recognised as income/ expense on the date of cancellation/ termination under Other Income.

The requirement for collateral and credit risk mitigation on derivative contracts is assessed based on internal credit policy. Provisions for overdues, if any, are made as per the relevant RBI guidelines.

As per the RBI guidelines on Prudential Norms for Off-balance Sheet Exposures of Banks a general provision is made on the current gross marked to market gain of the contract for all outstanding interest rate and foreign exchange derivative transactions.

1.3.8 Fixed assets

Fixed assets are stated at cost less accumulated depreciation and provision for impairment. Cost comprises the purchase price and any cost attributable for bringing the asset to its working condition for its intended use.

Fixed assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset with future net discounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment is recognised by debiting the profit and loss account and is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.

1.3.9 Depreciation

Depreciation on fixed assets is provided on straight-line method, over estimated useful lives, as determined by the management, at the rates mentioned below which are higher than or equal to the corresponding rates prescribed in Schedule XIV to the Companies Act, 1956:

Class of asset Rates of depreciation per annum

Office equipment 16.21 %

Computer hardware 33.33%

Computer software 25.00%

Vehicles 20.00%

Furniture and Fixtures 6.33%

Leasehold improvements to premises Over the lease period.

Assets costing less than Rs. 5,000 are fully depreciated in the year of purchase.

For assets purchased/sold during the year depreciation is being provided on pro rata basis by the Bank.

1.3.10 Retirement and employee benefits

Leave salary

The employees of the Bank are entitled to carry forward a part of their unavailed/unutilised leave subject to a maximum limit. The employees cannot encash unavailed/unutilised leave.The Bank has computed the leave compensated absence provision as per revised Accounting Standard 15 - Employee Benefits.

Gratuity

The Bank provides for gratuity, a defined benefit retirement plan, covering eligible employees.The plan provides for lump sum payments to vested employees at retirement or upon death while in employment or on termination of employment for an amount equivalent to 15 days eligible salary payable for each completed year of service if the service is more than 5 years. The Bank accounts for the liability for future gratuity benefits using the projected unit cost method based on annual actuarial valuation.

The Bank recognises the actuarial gains and losses during the year in which the same are incurred.

Provident fund

In accordance with law, all employees of the Bank are entitled to receive benefits under the provident fund, a defined contribution plan in which both the employee and the Bank contribute monthly at a predetermined rate. The Bank has no liability for future provident fund benefits other than its annual contribution and recognises such contributions as an expense in the year incurred.

1.3.11 Leases

Leases where the lessor effectively retains substantially all risks and benefits of ownership are classified as operating leases, Operating lease payments are recognized as an expense in the profit and loss account on a straight-line basis over the lease term.

1.3.12 Income taxes

Tax expense comprises of current and deferred tax. Current income tax is measured as the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961 and as per Accounting Standard 22 - Accounting forTaxes on Income issued by the Institute of Chartered Accountants of India.The levy of Fringe Benefit Tax is not applicable as the Finance (No.2) Act, 2009 has abolished the tax with effect from April 1, 2009.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. In

situations where the Bank has unabsorbed depreciation and carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits.

The carrying amount of deferred tax assets are reassessed and reviewed at each balance sheet date. The Bank recognises deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realised.

1.3.13 Provisions and Contingent Assets / Liabilities

The Bank creates a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for contingent liability is made when there is a possible obligation or a present obligation that may but probably will not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources would be required to settle the obligation, the provision is reversed.

Contingent assets are not recognised in the financial statements. However; contingent assets are assessed continually and if it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognised in the period in which the change occurs.

1.3.14 Employee Stock Compensation Cost

Measurement and disclosure of the employee share-based payment plans is done in accordance with the Guidance Note on Accounting for Employee Share-based Payments, issued by the ICAl.The Bank measures compensation cost relating to employee stock options using the intrinsic value method. Compensation cost is measured by the excess, if any, of the fair market price of the underlying stock (i.e. the last closing price on the stock exchange on the day preceding the date of grant of stock options) over the exercise price. The exercise price of the Banks stock option is the last closing price on the stock exchange on the day preceding the date of grant of stock options and accordingly there is no compensation cost under the intrinsic value method.

1.4 Statutory disclosures as per RBI

1.4.1 Capital

1.4.1.1 Equity Issue:

During the financial year 2009-10, the Bank has issued 38,362,709 equity shares of Rs. 10 each for cash pursuant to a Qualified Institutions Placement (QIP) at Rs. 269.50 aggregating to Rs. 10,338,750 thousands, The Bank also issued 4,325,630 shares pursuant to the exercise of stock option aggregating to Rs. 279,355 thousands.The Bank accreted Rs. 10,045,157 thousands (net of share issue expenses of Rs. 146,065 thousands) as premium, on the QIP and stock options excercised.

In connection with the QIP issue, the Bank has incurred share issue expenses aggregating to Rs. 146,065 thousands.The proposed payment of the issue expenses is higher than the limit prescribed under Section 13 of the Banking Regulation Act, 1949. In this connection, the Bank has written to the Reserve Bank of India seeking its approval, which is awaited.The Bank has utilized the share premium account for meeting the said share issue expenses.

During the financial year 2008-09, the Bank has issued 1, 189,180 equity shares of Rs. 10 each for cash pursuant to the exercise of stock options by certain employees.The Bank collected Rs. 2,635 thousands as premium on allotment of stock options.

1.4.1.2 Capital Reserve

Profit on sale of investments in the HTM category is credited to the profit and loss account and thereafter appropriated to capital reserve (net of applicable taxes and transfer to statutory reserve requirements). During the year Rs. 3 15,182 thousands (previous year: Rs. 671,672 thousands) were transferred to capital reserve.

1.4.1.3 Investment Reserve

The Bank has transferred Rs. Nil (Previous year: Rs. 212 thousands) towards Investment Reserve on provisions credited to profit and loss account.

1.4.2 Derivatives

1.4.2.1 Forward Rate Agreement/ Interest Rate Swap

The details of Forward Rate Agreements/Interest Rate Swaps outstanding as at March 31,2010 are provided in accordance with the RBI guidelines on Forward Rate Agreements and Interest Rate Swaps (MPD.BC. 187/07.01.279/1999-2000) as applicable to Indian Rupee transactions:

1.4.2.2 Unhedged/uncovered foreign currency exposure

The Banks foreign currency exposures as at March 31, 2010 that are not hedged/covered by either derivative instruments or otherwise are within the Net Overnight Position limit and the Aggregate Gap limit, as approved by the RBI.The Net Overnight position at March 3 1, 2010 is Rs. 281,577 thousands (March 3 1, 2009: Rs. 530,727 thousands).

1.4.2.3 Exchange Traded Interest Rate Derivatives

The Bank has not dealt in exchange traded interest rate derivatives during the financial year ended March 3 1, 2010 (Previous Year: Nil).

1.4.2.4 Currency Futures

The Bank had dealt in exchange traded currency Futures during the financial year ended March 31, 2010. As at March 31, 2010 the open contracts on the exchange were to the tune of EURO 6,000,000 (INR 365,535,000) and GBP 337,000 (INR 22,997,722) for April 2010 expiry (Previous Year: USD 2,968,000 (INR 150,536,930) for April 2009 expiry).

1.4.2.5 Disclosures on risk exposure in derivatives

As per RBI Master circular RBI BRBC. No. 22/21.04.018/2009-10 dated July 1,2009, the following disclosures are being made with respect to risk exposure in derivatives of the Bank:

a) Structure: The Board of Directors of the Bank have constituted a Board level sub-committee, the Risk Monitoring Committee (RMC) and delegated to it all functions and responsibilities relating to the Risk Management Policy of the Bank and its supervision thereof.

b) The Bank has adopted various policies including a Derivatives Appropriateness Policy as part of prudent business and risk management practice. The Bank has also instituted a comprehensive limit and control structure encompassing Value-at-Risk (VAR), Stop loss and portfolio credit limits for derivative transactions.The Bank has an elaborate internal reporting mechanism providing regular reports to the RMC.

c) The Bank has an independent Middle Office, which is responsible for monitoring, measurement and analysis of derivative related risks, among others.The Bank has a Credit Risk Management unit which is responsible for setting up counterparty limits and also a treasury operation unit which is responsible for managing operational aspects of derivatives control function and settlement of transactions.The Bank is subject to a concurrent audit for all treasury transactions, including derivatives, a monthly report of which is periodically submitted to the top management and Audit and Compliance Committee of the Bank.

d) In addition to the above, the Bank independently evaluates the potential credit exposure on account of all derivative transactions, wherein risk limits are specified separately for each product, in terms of both credit exposure and tenure. As mandated by the Credit Policy of the Bank, the Bank has instituted an approval structure for all treasury/derivative related credit exposures.

e) The Bank reports all trading positions to the management on a daily basis.The Bank revalues its trading position on a daily basis for MIS and control purposes and records the same in the books of account on a monthly basis.

f) * Refer Note 18.4.7 for accounting policy on derivatives.

1.4.5.1 Provsision coverage Ratio

The provision coverage ratio of the Bank as at March 3 1,2010 computed as per the the RBI circular dated December 01, 2009 is 78.43% (excluding technical write-offs).

1.4.5.2 Concentration of NPAs

Exposure (Funded + Non-Funded) of the Bank to top four NPA is Rs. 473,980 thousands and the Bank has provided for Rs. 382,1 14 thousands for the same.

1.5.1 Financial assets sold to Securitization/Reconstruction Company for Asset Reconstruction

The Bank has not sold any financial assets to Securitizations/Reconstruction Company for Asset Reconstruction during year ended March 31, 2010 and March 3 1, 2009.

1.5.2 Non-performing financial assets purchased/sold from/ to other Bank

The Bank has not purchased/sold any Non Performing financial assets from/to Bank during year ended March 31, 2010 and March 3 1, 2009.

1.5.3 Provisions for Standard Assets

Provision on standard advances is Rs. 1,179,863 thousands and Rs. 791,208 thousands as at March 31, 2010 and 2009 respectively.The Bank has not writern back any standard asset provision pursuant to the issuance of the RBI Circular no. DBOD. BRBC.83/21.01.002/2008-2009 dated November 15,2008.

1.5.4 Asset Liability Management

Maturity pattern of certain items of assets and liabilities;

In compiling the information of maturity pattern (refer 18,5.1 I (a), (b), (c) and (d) below), certain estimates and assumptions have been made by the management.

Assets and liabilities in foreign currency exclude off-balance sheet assets and liabilities.

1.5.4.1 Details of Single Borrower Limit (SBL) and Group Borrower Limit (GBL)

During the year ended March 31, 2010, the Bank has not exceeded single borrower or group borrower exposure limit.

During the year ended March 3 1,2009, the Bank has exceeded single borrower exposure limit of 1596 (but within 25/6 in case of oil companies who have been issued oil bonds and 2096 for other companies) with the approval of the Board of Directors in the case of (i) Larsen &Toubro where the sanctioned limit to capital funds was 16.8996, (ii) MMTC India Ltd where the sanctioned limit to capital funds was 16.8996, (iii) Bharat Petroleum Corporation Limited where the sanctioned limit to capital funds was 24.6396, (iv) Hindustan Petroleum Corporation Limited where the sanctioned limit to capital funds was 24.6396, (v) Indian Farmers Fertiliser Cooperative Limited (IFFCO) where the sanctioned limit to capital funds was 19.7096, (vi) Steel Authority of India Limited where the sanctioned limit to capital funds was 19.7096 and (vii) Punjab State Co-op, Supply and Mktg. Federation Ltd. (MARKFED), where the sanctioned limit to percentage of capital funds was 19.7096.

1.5 Miscellaneous

1.5.1 Disclosure of penalties imposed by RBI

No penalties have been imposed by RBI on the Bank during the financial year 2009-10 (Previous year: Rs Nil).

1.5.2 Fees/Remuneration received from bancassurance

Bank has earned Rs. 112,293 thousands from bancassurance business during year ended March 31, 2010.

1.5.3 Concentration of Deposits

As at March 31, 2010 the deposits of top 20 depositors aggregated to Rs. 50,416,139 thousands (excluding certificate of deposits, which are tradable instruments), representing 18.8196 of the total deposit base.

1.5.4 Concentration of Advances

As at March 31, 2010 the top 20 advances aggregated to Rs. 72,725,550 thousands, representing 15.9196 of the total advances. For this purpose, advance is computed as per definition of Credit Exposure in RBI Master Circular on Exposure Norms DBOD No. Dir BC. 15/1 3.03.00/2009-10 dated July 1, 2009.

1.5.5 Concentration of Exposures

As at March 31,2010 the top 20 exposures aggregated to Rs. 72,725,550 thousands, representing 14.8096 of the total exposures. Exposure is computed as per definition of Credit and Investment Exposure in RBI Master Circular on Exposure Norms DBOD. No. Dir. BC. 15/1 3.03.00/2009-10 dated July 1, 2009.

1.5.6 Overseas Assets, NPAs and Revenue

For the year ended March 31,2010, the Bank does not have any overseas revenue.The Bank does not have any overseas assets or NPA as at March 31,2010.

1.5.7 Sponsored SPVs

The Bank has not sponsored any SPV and hence there is no consolidation in Banks books.

 
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