Enter the first few characters of Company and click 'Go'

Accounting Policies of Bank of Maharashtra Company

Mar 31, 2023

1. Basis of Preparation of Financial Statements:

1.1 The financial statements are prepared under the historical cost conventions except as otherwise stated and conform to the Generally Accepted Accounting Principles (GAAP) which include statutory provisions, practices prevailing within the Banking Industry in India, the regulatory/ Reserve Bank of India (âRBIâ) guidelines, applicable Accounting Standards/ Guidance Notes issued by the Institute of Chartered Accountants of India (ICAI).

1.2 Use of Estimates

The preparation of financial statements requires the management to make estimates and assumptions considered in the reported amount of Assets and Liabilities (including contingent liabilities) as of the date of financial statements and reported income and expenses for the year under report. Management is of the view that the estimates used in the preparation of financial statements are prudent and reasonable. Future results could differ from these estimates. Any revisions to the accounting estimates shall be recognized prospectively unless otherwise stated.

1.3 Revenue and costs are accounted for on accrual basis except as stated in para 6.1 below.

1.4 The accounting policies with regard to Revenue Recognition, Investments and Advances are in conformity with the prudential accounting norms and guidelines issued by Reserve Bank of India from time to time.

2. Foreign Exchange Transactions:

2.1 The foreign currency transactions are translated at the weekly average closing rates for the preceding week as published by Foreign Exchange Dealers'' Association of India (FEDAI). Revaluation of foreign currency assets and liabilities as on Balance Sheet date is done at the closing exchange rate published by FEDAI and the resultant profit/ loss is accounted for in the Profit & Loss Account.

i.e. on PV01 basis. The resulting profit/loss, on revaluation, is recognized in the Profit & Loss Account in accordance with RBI / FEDAI guidelines and the effect is taken to âOther Assetsâ in case of gain or to âOther Liabilitiesâ in case of loss.

2.3 Contingent Liabilities on account of Guarantees and Letters of Credit issued in foreign currency are stated in the Balance Sheet at the closing exchange rates published by FEDAI.

2.4 Credit exposure of the un-hedged foreign currency exposure, if any, of the constituents shall attract provisioning and capital requirements as per RBI guidelines.

3. Investments:

As per Reserve Bank of India guidelines, the investments are

classified and valued as under:

3.1 Investments are classified in the following categories:

a. Held to Maturity (HTM)

b. Available for sale (AFS)

c. Held for trading (HFT)

3.2 All the investments are further classified in the following six baskets in conformity with the requirement of Form-A of Third Schedule to the Banking Regulation Act, 1949:

a. Government Securities

b. Other approved Securities

c. Shares

d. Debentures and Bonds

e. Subsidiaries and Joint Ventures

f. Others (Commercial Papers, Mutual Fund Units etc.)

3.3 Bank decides the category of each investment at the time of acquisition and classifies the same accordingly. Shifting of securities from one category to another, other than shifting / transfer from HFT to AFS category, is done once in a year with the approval of Board of Directors, at the least of acquisition cost / book value / market value on the date of shifting. The depreciation, if any, on such shifting is provided for and the book value of the security is adjusted accordingly. The transfer of securities from one category to another is made as per permission from or guidelines of RBI. Transfer / shifting of investments from HFT to AFS category will be executed under exceptional circumstances, like not being able to sell the securities within 90 days due to tight liquidity conditions, or extreme volatility, or market becoming unidirectional.

3.4 REPO / Reverse REPO / Standing Deposit Facility

The Bank has adopted the Uniform Accounting Procedure prescribed by the RBI for accounting of market Repo and Reverse Repo transactions. Repo and Reverse Repo transactions are treated as Collateralized Borrowing / Lending Operations with an agreement to repurchase on the agreed terms. Securities sold under Repo are continued to be shown under investment and Securities purchased under Reverse Repo are not included in investment. Outstanding Repo / Term Repo is disclosed as borrowing and outstanding Reverse Repo is disclosed as lending. Costs and revenues are accounted for as interest expenditure / income, as the case may be.

3.5 Cost of investments is determined on the basis of Weighted Average Price method.

Interest paid for broken period / interest received for broken period at the time of purchase / sale of fixed income securities is treated as revenue expenditure / income.

Brokerage / incentive received / paid at the time of purchase/ sale of investment is deducted / added from the amount of investment.

3.6 Valuation of investments:

a. Held to Maturity:

i. Securities under the category âHeld to Maturity'' are valued at weighted average acquisition cost. Wherever the cost of security is higher than the face value, the premium is amortized over the remaining period of maturity on straight line basis. In case where the cost price is less than the face value, the difference is ignored.

ii. In case of investments in subsidiaries and joint ventures permanent diminution in value is recognized and provided for; investment in RRB is valued at carrying cost.

iii. On sale of investments in this category (a) the net profit is initially taken to profit and loss account and thereafter such profit net of applicable taxes and proportionate transfer to statutory reserve is appropriated to the âCapital Reserve account''; and (b) the net loss is charged to the Profit & Loss Account.

b. Available for Sale:

The individual securities under this category are marked to market on a quarterly basis and on each balance sheet date. Central/ State Government securities are valued at market rates declared by FBIL. Other approved securities, debentures and bonds are valued as per the yield curve, average credit spread rating and methodology suggested by FIMMDA. Quoted shares are valued at market rates. Unquoted shares are valued at break-up value ascertained from the latest available Balance Sheet i.e. Balance Sheet of immediate preceding year and in case the latest Balance Sheet is not available, the same is valued at Re.1/- per company / scrip.

Investments in discounted instruments, viz. Treasury Bills, Certificate of Deposits, Commercial Papers, Zero Coupon Bonds are valued at carrying cost. Mutual Fund Instruments are valued at market rate or repurchase price or net asset value in that order depending on their availability. Investments in Security Receipts (SRs) /Pass Through Certificates (PTCs) issued by Asset Reconstruction Companies (ARCs) in respect of financial assets sold to ARCs are carried at lower of redemption value and net book value (i.e. book value less provision held) of the financial assets.

Based on the above valuation under each of six-sub classifications under "Available for Sale'':

i. If it results in appreciation, the same is ignored.

ii. If it results in net depreciation, the same is charged to Profit & Loss account and credited to Provision for Depreciation on Investments (AFS) in the liability side.

Provided that, depreciation, if any, on equity shares allotted consequent to implementation of Strategic Debt Restructuring (SDR) shall be provided for over a maximum of 4 calendar quarters on straight line basis from the date of conversion of debt into equity.

iii. The book value of securities is not changed in respect of marked to market (MTM) except as required by the RBI guidelines.

iv. Profit or Loss on sale of investment in this category is accounted for in the Profit and loss account.

c. Held for Trading:

i. The individual securities under this category are held at original cost and are marked to market every month and each balance sheet date. Central/ State Government securities are valued at market rates declared by FBIL. Other approved securities, debentures and bonds are valued as per the yield curve; average credit spread rating and methodology suggested by FIMMDA. Quoted Shares are valued at market rates.

ii. Investments in discounted instruments, viz. Treasury Bills, Certificate of Deposits, Commercial Papers, Zero Coupon Bonds are valued at carrying cost. Mutual Fund Instruments are valued at market rate or repurchase price or net asset value in that order depending on their availability. Investments in SRs / PTCs issued by ARCs in respect of financial assets sold to ARCs are carried at lower of redemption value and net book value (i.e. book value less provision held), of the financial assets.

iii. Net basket-wise depreciation if any, is charged to Profit & Loss Account and credited to Provision on Depreciation on Investment (HFT) under liability. Net appreciation, if any is ignored. The book value of the securities is not changed after revaluation except as required by the RBI guidelines.

iv. Profit or loss on sale of investment in this category is accounted for in the Profit & Loss Account.

d. Classification of and provisions on investments, including on restructured investments, are made in accordance with the prudential norms prescribed by and guidelines of RBI from time to time.

e. Costs such as brokerage, fees, commission, taxes etc. incurred at the time of acquisition of securities are capitalized.

3.7 Derivatives:

Interest Rate Swaps:

i. Valuation:

a. Hedging Swaps: Interest Rate Swaps for hedging assets and liabilities are not marked to market.

b. Trading Swaps: Interest Rate Swaps for trading purpose are marked to market.

ii. Accounting of income on derivative deals:

a. Hedging Swaps: Income is accounted for on realization basis. Expenditure, if any, is accounted for on accrual basis, if ascertainable.

b. Trading Swaps: Income or expenditure is accounted for on realization basis on settlement date.

iii. Accounting of gain or loss on termination of swaps:

a. Hedging Swaps: Any gain or loss on the terminated swap is recognized over the shorter of (a) the remaining contractual life of the swap or (b) the remaining life of the asset/ liability.

b. Trading Swaps: Any gain or loss on terminated swap is recognized as income or expenditure in the year of termination.

3.8 Investment Fluctuation Reserve:

As per RBI circular number RBI/DOR/2021-22/81 DOR. MRG.42/21.04.141/2021-22 DATED AUG 25,2021 as updated till March 31,2023 Investment Fluctuation Reserve (IFR) is created to build up of adequate reserves to protect the bank against increase in yields.

Transfer to IFR is lower of the following -

a. Net profit on sale of Investments during the year or

b. Net profit for the year less mandatory appropriations, until the amount of IFR is at least 2 percent of the HFT and AFS portfolio, on a continuing basis

4. Advances:

4.1 Advances are disclosed net of write offs, provisions made for non-performing assets, claims settled with the credit guarantee institutions, provision for diminution in fair value for restructured advances and bills rediscounted.

4.2 Classification of advances and provisions thereon are made in accordance with the prudential norms prescribed by and guidelines of RBI from time to time, except in respect of following category of advances, provision on NPAs are made higher than the rate prescribed by RBI -

Sub-Standard - 20%

Doubtful Assets One to three years - 50% on secured portion

4.3 Provision for performing assets, other than provision on standard restructured advances, is shown under the head âOther liabilities and provisionsâ.

4.4 In respect of advances under SDR, provision is made in accordance with RBI guidelines, within a maximum period of four quarters.

4.5 In case of financial assets sold to Asset Reconstruction Company (ARC)/ Securitization Company (SC), if the sale is at a price higher than the NBV, the surplus is retained and utilised to meet the shortfall/loss on account of sale of other financial assets to SC/ARC. If the sale is at a price below the net book value (NBV), (i.e. outstanding less provision held) the shortfall is to be debited to the Profit and Loss account. However, if surplus is available, such shortfall will be absorbed in the surplus. Any shortfall arising due to sale of NPA will be amortised over a period of two years if not absorbed in the surplus.

Excess provision arising out of sale of NPAs are reversed only when the cash received (by way of initial consideration only/or redemption of SRs/PTC) is higher than the net book value (NBV) of the asset. Reversal of excess provision will be limited to the extent to which cash received exceeds the NBV of the asset.

5. Fixed Assets and Depreciation:

5.1 Premises and Other Fixed Assets are carried at cost less accumulated depreciation/ amortization, except for certain premises, which were revalued and stated at revalued amount.

Cost includes cost of purchase, taxes as per GST law and all expenditure such as site preparation, installation costs and professional fees incurred on the asset before it is put to use. Subsequent expenditure(s) incurred on the assets put to use are capitalised only when it increases the future benefits from such assets or their functioning capability

5.2 Depreciation on fixed assets is provided for at the rates specified below, except revalued assets where, depreciation is provided over the remaining useful life of the assets on revalued amount, so as to write down value of assets to Rupee One over the residual life of the assets.

S. N.	Category of Asset	Useful Life of Assets (In Years)	Rate of Depreciation (%)	Method of depreciation
1	Building & Premises	60	1.667	SLM
2	General Items including Safe	10	10	SLM
3	Electrical -Television, Mobile Phones, Home Theater, Printer, Camera	3	33.33	SLM
4	Electrical Equipment''s- Others	10	10	SLM
5	Office Machinery	5	20	SLM
6	Motor Vehicles	8	12.5	SLM
7	Safe Deposit Vaults	10	10	SLM

S. N.	Category of Asset	Useful Life of Assets (In Years)	Rate of Depreciation (%)	Method of depreciation
8	Computers & Laptops	3	33.33	SLM
9	ATM	7	14.29	SLM
10	UPS	5	20	SLM
11	BNA	7	14.29	SLM
12	Cash Re-cycler	7	14.29	SLM
SLM means Straight Line Method

5.3 In respect of assets acquired during the year, depreciation is provided on proportionate basis for the number of days the assets have been put to use during the year.

Similarly, in respect of assets sold / discarded during the year, depreciation is provided on proportionate basis till the number of days the assets had been put to use during the year.

5.4 Eligible fixed assets are revalued once in every three years. Revalued portion of fixed assets (over and above the cost of fixed assets) is depreciated on diminishing balance method over the residual life of the assets as certified by approved valuers at the time of valuation.

Revaluation reserve pertaining to lease hold lands, is amortised on straight line method over the residual life of the lease period.

Depreciation on revalued portion of fixed assets, over and above the cost is debited to Profit & Loss account. Amount of Revaluation Reserve to the extent of depreciation related to revalued portion of fixed assets over and above the cost debited to profit & loss account is transferred to Revenue Reserve from Revaluation Reserve.

5.5 In respect of leasehold premises, the lease premium, if any, is amortised over the period of lease on SLM basis in accordance with AS 19.

6. Revenue Recognition

6.1 All revenues and costs are accounted for on accrual basis except the following items, which are accounted for on cash basis:

a. Interest on Advances and Investments identified as Non-Performing Assets according to the prudential norms and guidelines issued by RBI, from time to time.

b. Income from commission viz., on Government

business, Mutual Fund business, credit & debit cards issued, Annual maintenance charges for cards and Locker Rent.

c. Interest for overdue period on bills purchased and bills discounted.

d. Insurance claims.

e. Remuneration on Debenture Trustee Business.

f. Loan Processing Fees.

g. Income from Merchant Banking Operations and

Underwriting Commission.

h. Transaction processing fees received on utility bill pay services through internet banking.

6.2 Pursuant to RBI guidelines, the interest payable on overdue term deposit is provided on accrual basis at rate of interest as applicable to saving account or contracted rate of interest on the matured TD, whichever is lower from 02.07.2021

7. Employeesâ Benefits:

Defined Contribution Plan: The contribution paid/ payable under defined contribution benefit schemes are charged to Profit & Loss Account.

Defined Benefit Plans: All eligible employees are entitled to receive benefits under the Bank''s Gratuity, Pension & Privilege Leave schemes which are valued based on the principles laid down in AS -15, Employees Benefit (Revised) issued by Institute of Chartered Accountants of India. Bank''s liabilities towards defined benefit schemes are determined by way of provisions and adjusted on the basis of an actuarial valuation report provided by the Actuaries appointed by the bank and made at the end of each quarter/financial year. Actuarial gains and losses are recognized in the Profit & Loss Account.

Other Employee Benefits such as Leave Fare Concession, Silver jubilee Award, resettlement allowance, and retirement benefit are provided based on Actuarial valuation.

8. Segment Reporting:

The Bank recognizes Business Segment as its Primary Segment in compliance with the RBI Guidelines and in compliance with the Accounting Standard 17 issued by ICAI.

9. Impairment of Assets:

Impairment losses if any, on fixed assets including revalued fixed assets are recognized in accordance with Accounting Standard 28- Impairment of Assets issued by the ICAI and charged to Profit & Loss Account. Assets are reviewed for Impairment whenever events or changes in circumstances warrant that the carrying amount of an asset may not be recoverable.

10. Provisions, Contingent Liabilities and Contingent Assets:

As per the Accounting Standard 29-âProvisions, Contingent Liabilities and Contingent Assetsâ issued by ICAI, the Bank recognizes provisions only when it has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and when a reliable estimate of the amount of the obligation can be made.

Contingent Liability is disclosed unless the possibility of an outflow of resources embodying economic benefit is remote.

Contingent assets are not recognized in the financial statements since this may result in the recognition of the income that may not be realized.

11. Net Profit, Provisions and Contingencies:

The Net Profit disclosed is after making the Provisions and Contingencies which include adjustment to the value of investments, write off of bad debts, provision for taxation (including deferred tax), and provision for advances including cases identified as fraud and contingencies /others.

12. Income Tax:

The provision for tax for the year comprises liability towards current Income Tax, and Deferred Tax. The deferred tax asset/ liability is recognized, subject to the consideration of prudence, taking into account the timing differences between the taxable income and accounting income, in terms of the Accounting Standard 22 issued by ICAI. The effect of change in tax rates on deferred tax assets and liabilities is recognized in the Profit & Loss Account in the period of applicability of the change.

Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax assets are recognized and re-assessed at each reporting period based on management judgement as to whether their realization is considered as reasonably certain.

In cases of unabsorbed depreciation or carried forward loss under taxation laws, all deferred tax assets are recognized only if there is virtual certainty of realization of such assets supported by convincing evidence.

Interest income on refund of Income Tax is accounted for in the year; the order is passed by the concerned authority.

The demand raised by the Tax authorities including the interest thereon is provided for when such demand is accepted by the bank and the same is not contested before appellate authority OR when such demand is upheld by jurisdictional tribunal and there is no favorable judgement of other tribunal on identical issue and bank does not prefer to go before High Court OR when such demand is upheld by High Court.

13. Earnings per Share:

The bank reports basic and diluted earnings per equity share in accordance with the Accounting Standard (AS-20) âEarnings Per Shareâ issued by ICAI. Basic Earnings per share is arrived by dividing net profit after tax with the weighted average number of equity shares outstanding for the period. The diluted earnings per equity share are computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the period.

Diluted earnings per share reflects the potential dilution that could occur in earnings per share if securities or other contracts to issue equity share are exercised or converted during the period.

Mar 31, 2022

1. Basis of Preparation of Financial Statements:

1.2 Use of Estimates

The preparation of financial statements requires the management to make estimates and assumptions considered in the reported amount of Assets and Liabilities (including contingent liabilities) as of the date of financial statements and reported income and expenses for the period under report. Management is of the view that the estimates used in the preparation of financial statements are prudent and reasonable. Future results could differ from these estimates. Any revisions to the accounting estimates shall be recognized prospectively unless otherwise stated.

1.3 Revenue and costs are accounted for on accrual basis except as stated in para 6.1 below.

2. Foreign Exchange Transactions:

2.3 Contingent Liabilities on account of Guarantees and Letters of Credit issued in foreign currency are stated in the Balance Sheet at the closing exchange rates published by FEDAI.

2.4 Credit exposure of the un-hedged foreign currency exposure, if any, of the constituents shall attract provisioning and capital requirements as per RBI guidelines.

3. Investments:

As per Reserve Bank of India guidelines, the investments are classified and valued as under:

3.1 Investments are classified in the following categories:

Held to Maturity (HTM)

Available for sale (AFS)

Held for trading (HFT)

3.2 All the investments are further classified in the following six baskets in conformity with the requirement of Form-A of Third Schedule to the Banking Regulation Act, 1949:

a. Government Securities

b. Other approved Securities

c. Shares

d. Debentures and Bonds

e. Subsidiaries and Joint Ventures

f. Others (Commercial Papers, Mutual Fund Units etc.)

3.4 REPO / Reverse REPO

3.5 Cost of investments is determined on the basis of Weighted Average Price method.

Interest paid for broken period / interest received for broken period at the time of purchase / sale of fixed income securities is treated as revenue expenditure / income.

Brokerage / incentive received / paid at the time of purchase/ sale of investment is deducted / added from the amount of investment.

3.6 Valuation of investments:

a. Held to Maturity:

Securities under the category ''Held to Maturity'' are valued at weighted average acquisition cost. Wherever the cost of security is higher than the face value, the premium is amortized over the remaining period of maturity on straight line basis. In case where the cost price is less than the face value, the difference is ignored.

In case of investments in subsidiaries and joint ventures permanent diminution in value is recognized and provided for; investment in RRB is valued at carrying cost.

On sale of investments in this category (a) the net profit is initially taken to profit and loss account and thereafter such profit net of applicable taxes and proportionate transfer to statutory reserve is appropriated to the âCapital Reserve account''; and (b) the net loss is charged to the Profit & Loss Account.

b. Available for Sale:

Sheet i.e. Balance Sheet of immediate preceding year and in case the latest Balance Sheet is not available, the same is valued at Re.1/- per company / scrip.

Based on the above valuation under each of six-sub classifications under ''Available for Sale'':

i. If it results in appreciation, the same is ignored.

ii. If it results in net depreciation, the same is charged to Profit & Loss account and credited to Provision for Depreciation on Investments (AFS) in the liability side.

iii. The book value of securities is not changed in respect of marked to market (MTM) except as required by the RBI guidelines.

iv. Profit or Loss on sale of investment in this category is accounted for in the Profit and loss account.

c. Held for Trading:

iv. Profit or loss on sale of investment in this category is accounted for in the Profit & Loss Account.

d. Classification of and provisions on investments, including on restructured investments, are made in accordance with the prudential norms prescribed by and guidelines of RBI from time to time.

e. Costs such as brokerage, fees, commission, taxes etc. incurred at the time of acquisition of securities are capitalized.

3.7 Derivatives:

Interest Rate Swaps:

i. Valuation:

a. Hedging Swaps: Interest Rate Swaps for hedging assets and liabilities are not marked to market.

b. Trading Swaps: Interest Rate Swaps for trading purpose are marked to market.

ii. Accounting of income on derivative deals:

a. Hedging Swaps: Income is accounted for on realization basis. Expenditure, if any, is accounted for on accrual basis, if ascertainable.

b. Trading Swaps: Income or expenditure is accounted for on realization basis on settlement date.

iii. Accounting of gain or loss on termination of swaps:

a. Hedging Swaps: Any gain or loss on the terminated swap is recognized over the shorter of (a) the remaining contractual life of the swap or (b) the remaining life of the asset/ liability.

b. Trading Swaps: Any gain or loss on terminated swap is recognized as income or expenditure in the year of termination.

3.8 Investment Fluctuation Reserve:

As per RBI circular number RBI/DOR/2021-22/81 DOR. MRG.42/21.04.141/2021-22 DATED AUG 25,2021 as updated till March 31,2022 Investment Fluctuation Reserve (IFR) is created to build up of adequate reserves to protect the bank against increase in yields.

Transfer to IFR is lower of the following -

a. Net profit on sale of Investments during the year or

b. Net profit for the year less mandatory appropriations, until the amount of IFR is at least 2 percent of the HFT and AFS portfolio, on a continuing basis

4. Advances:

Sub-Standard - 20%

Doubtful Assets One to three years - 50% on secured portion

4.3 Provision for performing assets, other than provision on standard restructured advances, is shown under the head âOther liabilities and provisionsâ.

4.4 In respect of Rescheduled/ Restructured accounts, provision for diminution in fair value of restructured advances is made on present value basis as per RBI guidelines.

In respect of advances under SDR, provision is made in accordance with RBI guidelines, within a maximum period of four quarters.

due to sale of NPA will be amortised over a period of two years if not absorbed in the surplus.

5. Fixed Assets and Depreciation:

5.1 Premises and Other Fixed Assets are carried at cost less accumulated depreciation/ amortization, except for certain premises, which were revalued and stated at revalued amount. Cost includes cost of purchase, taxes as per GST law and all expenditure such as site preparation, installation costs and professional fees incurred on the asset before it is put to use. Subsequent expenditure(s) incurred on the assets put to use are capitalised only when it increases the future benefits from such assets or their functioning capability

S. N.	Category of Asset	Useful Life of Assets	Rate of Depreciation (%)	Method of depreciation
1	Building & Premises	60	1.667	SLM
2	General Items including Safe	10	10	SLM
3	Electrical - Television, Mobile Phones, Home Theater, Printer, Camera	3	33.33	SLM
4	Electrical Equipment''s-Others	10	10	SLM
5	Office Machinery	5	20	SLM
6	Motor Vehicles	8	12.5	SLM
7	Safe Deposit Vaults	10	10	SLM
8	Computers & Laptops	3	33.33	SLM
9	ATM	7	14.29	SLM
10	UPS	5	20	SLM
11	BNA	7	14.29	SLM
12	Cash Re-cycler	7	14.29	SLM

*SLM means Straight Line Method

5.3 In respect of assets acquired during the year, depreciation is provided on proportionate basis for the number of days the assets have been put to use during the year.

Similarly, in respect of assets sold / discarded during the year, depreciation is provided on proportionate basis till the number of days the assets had been put to use during the year.

Revaluation reserve pertaining to lease hold lands, is amortised on straight line method over the residual life of the lease period.

5.5 In respect of leasehold premises, the lease premium, if any, is amortised over the period of lease on SLM basis in accordance with AS 19.

6. Revenue Recognition

6.1 All revenues and costs are accounted for on accrual basis except the following items, which are accounted for on cash basis:-

a. Interest on Advances and Investments identified as NonPerforming Assets according to the prudential norms and guidelines issued by RBI, from time to time.

b. Income from commission viz., on Guarantees, Letter of Credit, Government business, Mutual Fund business, credit & debit cards issued, Annual maintenance charges for cards and Locker Rent.

c. Interest for overdue period on bills purchased and bills discounted.

d. Insurance claims.

e. Remuneration on Debenture Trustee Business.

f. Loan Processing Fees.

g. Income from Merchant Banking Operations and Underwriting Commission.

h. Transaction processing fees received on utility bill pay services through internet banking.

7 Employeesâ Benefits:

Defined Contribution Plan: The contribution paid/ payable under defined contribution benefit schemes are charged to Profit & Loss Account.

Defined Benefit Plans: All eligible employees are entitled to receive benefits under the Bank''s Gratuity and Pension schemes which are valued based on the principles laid down in AS -15, Employees Benefit (Revised) issued by Institute of Chartered Accountants of India. Bank''s liabilities towards defined benefit schemes are determined by way of provisions and adjusted on the basis of an actuarial valuation report provided by the Actuaries appointed by the bank and made at the end of each quarter/financial year. Actuarial gains and losses are recognized in the Profit & Loss Account.

Other Employee Benefits such as Leave fare Concession, Privilege Leave, Silver jubilee Award, resettlement allowance, and retirement benefit are provided based on Actuarial valuation.

8. Segment Reporting:

The Bank recognizes Business Segment as its Primary Segment in compliance with the RBI Guidelines and in compliance with the Accounting Standard 17 issued by ICAI.

9. Impairment of Assets:

10. Provisions Contingent Liabilities and Contingent Assets:

Contingent Liability is disclosed unless the possibility of an outflow of resources embodying economic benefit is remote. Contingent assets are not recognized in the financial statements since this may result in the recognition of the income that may not be realized.

11. Net Profit, Provisions and Contingencies:

12. Income Tax:

Deferred tax assets are recognized and re-assessed at each reporting period based on management judgement as to whether their realization is considered as reasonably certain.

Interest income on refund of Income Tax is accounted for in the year; the order is passed by the concerned authority.

13. Earnings per Share:

Diluted earnings per share reflects the potential dilution that could occur in earnings per share if securities or other contracts to issue equity share are exercised or converted during the period.

Mar 31, 2019

1. Basis of Preparation of Financial Statements:

1.1 The financial statements are prepared under the historical cost conventions except as otherwise stated and conform to the Generally Accepted Accounting Principles (GAAP) which include statutory provisions, practices prevailing within the Banking Industry in India , the regulatory/ Reserve Bank of India (âRBIâ) guidelines, applicable Accounting Standards/ Guidance Notes issued by the Institute of Chartered Accountants of India (ICAI).

1.2 Use of Estimates

The preparation of financial statements requires the management to make estimates and assumptions considered in the reported amount of Assets and Liabilities (including contingent liabilities) as of the date of financial statements and reported income and expenses for the period under report. Management is of the view that the estimates used in the preparation of financial statements are prudent and reasonable. Future results could differ from these estimates. Any revisions to the accounting estimates shall be recognized prospectively unless otherwise stated.

1.3 Revenue and costs are accounted for on accrual basis except as stated in para 6.1 below.

2. Foreign Exchange Transactions:

2.1 The foreign currency transactions are translated at the weekly average closing rates for the preceding week as published by Foreign Exchange Dealersâ Association of India (FEDAI). Revaluation of foreign currency assets and liabilities as on Balance Sheet date is done at the closing exchange rate published by FEDAI and the resultant profit/ loss is accounted for in the Profit & Loss Account.

2.2 Outstanding Forward Foreign Exchange Contracts are stated at contracted rates and revalued/ marked to market as on quarterly basis and on Balance Sheet date at the exchange rates published by FEDAI for specified maturities by discounting the same at the applicable MIFOR rate published by Fixed Income Money Market and Derivatives Association of India [FIMMDA] - Reuter, i.e. on PV01 basis. The resulting profit/loss, on revaluation, is recognized in the Profit & Loss Account in accordance with RBI / FEDAI guidelines and the effect is taken to âOther Assetsâ in case of gain or to âOther Liabilitiesâ in case of loss.

2.3 Contingent Liabilities on account of Guarantees and Letters of Credit issued in foreign currency are stated in the Balance Sheet at the closing exchange rates published by FEDAI.

2.4 Credit exposure of the un-hedged foreign currency exposure, if any, of the constituents shall attract provisioning and capital requirements as per RBI guidelines.

3. Investments:

As per Reserve Bank of India guidelines, the investments are classified and valued as under:

3.1 Investments are classified in the following categories:

a. Held to Maturity (HTM)

b. Available for sale (AFS)

c. Held for trading (HFT)

3.2 All the investments are further classified in the following six baskets in conformity with the requirement of Form-A of Third Schedule to the Banking Regulation Act, 1949:

a. Government Securities

b. Other approved Securities

c. Shares

d. Debentures and Bonds

e. Subsidiaries and Joint Ventures

f. Others (Commercial Papers, Mutual Fund Units etc.)

3.4 REPO / Reverse REPO

3.5 Cost of investments is determined on the basis of Weighted Average Price method.

Interest paid for broken period / interest received for broken period at the time of purchase / sale of fixed income securities is treated as revenue expenditure / income.

Brokerage / incentive received / paid at the time of purchase/ sale of investment is deducted / added from the amount of investment.

3.6 Valuation of investments:

a. Held to Maturity:

(i) Securities under the category âHeld to Maturityâ are valued at weighted average acquisition cost. Wherever the cost of security is higher than the face value, the premium is amortized over the remaining period of maturity on straight line basis. In case of investments, where the cost price is less than the face value, the difference is ignored.

(ii) In case of investments in subsidiaries and joint ventures permanent diminution in value is recognized and provided for; investment in RRB is valued at carrying cost.

(iii) On sale of investments in this category (a) the net profit is initially taken to profit and loss account and thereafter such profit net of applicable taxes and proportionate transfer to statutory reserve is appropriated to the âCapital Reserve accountâ; and (b) the net loss is charged to the Profit & Loss Account.

b. Available for Sale:

The individual securities under this category are marked to market on a quarterly basis. Central/ State Government securities are valued at market rates declared by FIMMDA. Other approved securities, debentures and bonds are valued as per the yield curve, average credit spread rating and methodology suggested by FIMMDA. Quoted shares are valued at market rates. Unquoted shares are valued at break-up value ascertained from the latest available Balance Sheet i.e. Balance Sheet of immediate preceding year and in case the latest Balance Sheet is not available, the same is valued at Re.1/- per company / scrip. Investments in discounted instruments, viz. Treasury Bills, Certificate of Deposits, Commercial Papers, Zero Coupon Bonds are valued at carrying cost. Mutual Fund Instruments are valued at market rate or repurchase price or net asset value in that order depending on their availability. Investments in Security Receipts (SRs) /Pass Through Certificates (PTCs) issued by Asset Reconstruction Companies (ARCs) in respect of financial assets sold to ARCs are carried at lower of redemption value and net book value (i.e. book value less provision held) of the financial assets.

Based on the above valuation under each of six-sub classifications under âAvailable for Saleâ:

(i) If it results in appreciation, the same is ignored.

(ii) If it results in net depreciation, the same is charged to Profit & Loss account and credited to Provision for Depreciation on Investments (AFS) in the liability side. Provided that, depreciation, if any, on equity shares allotted consequent to implementation of Strategic Debt Restructuring (SDR) shall be provided for over a maximum of 4 calendar quarters on straight line basis from the date of conversion of debt into equity.

(iii) The book value of securities is not changed in respect of marked to market (MTM) except as required by the RBI guidelines.

(iv) Profit or Loss on sale of investment in this category is accounted for in the Profit and loss account.

c. Held for Trading:

(i) The individual securities under this category are held at original cost and are marked to market every month. Central/ State Government securities are valued at market rates declared by FIMMDA. Other approved securities, debentures and bonds are valued as per the yield curve; average credit spread rating and methodology suggested by FIMMDA. Quoted Shares are valued at market rates.

(ii) Investments in discounted instruments, viz. Treasury Bills, Certificate of Deposits, Commercial Papers, Zero Coupon Bonds are valued at carrying cost. Mutual Fund Instruments are valued at market rate or repurchase price or net asset value in that order depending on their availability. Investments in SRs / PTCs issued by ARCs in respect of financial assets sold to ARCs are carried at lower of redemption value and net book value (i.e. book value less provision held), of the financial assets.

(iii) Net basket-wise depreciation if any, is charged to Profit & Loss Account and credited to Provision on Depreciation on Investment (HFT) under liability. Net appreciation, if any is ignored. The book value of the securities is not changed after revaluation except as required by the RBI guidelines.

(iv) Profit or loss on sale of investment in this category is accounted for in the Profit & Loss Account.

a. Classification of and provisions on investments, including on restructured investments, are made in accordance with the prudential norms prescribed by and guidelines of RBI from time to time.

b. Costs such as brokerage, fees, commission, taxes etc. incurred at the time of acquisition of securities are capitalized.

f. Interest Rate Swaps:

(i) Valuation:

(a) Hedging Swaps: Interest Rate Swaps for hedging assets and liabilities are not marked to market.

(b) Trading Swaps: Interest Rate Swaps for trading purpose are marked to market.

(ii) Accounting of income on derivative deals:

(a) Hedging Swaps: Income is accounted for on realization basis. Expenditure, if any, is accounted for on accrual basis, if ascertainable.

(b) Trading Swaps: Income or expenditure is accounted for on realization basis on settlement date.

(iii) Accounting of gain or loss on termination of swaps:

(a) Hedging Swaps: Any gain or loss on the terminated swap is recognized over the shorter of (a) the remaining contractual life of the swap or (b) the remaining life of the asset/ liability.

(b) Trading Swaps: Any gain or loss on terminated swap is recognized as income or expenditure in the year of termination.

4. Advances:

4.1 Advances shown are net of write offs, provisions made for non-performing assets, claims settled with the credit guarantee institutions, provision for diminution in fair value for restructured advances and bills rediscounted.

4.2 Classification of advances and provisions thereon are made in accordance with the prudential norms prescribed by and guidelines of RBI from time to time.

4.3 Provision for performing assets, other than provision on standard restructured advances, is shown under the head âOther liabilities and provisionsâ.

4.4 In respect of Rescheduled/ Restructured accounts, provision for diminution in fair value of restructured advances is made on present value basis as per RBI guidelines.

4.5 In case of financial assets sold to Asset Reconstruction Company (ARC)/ Securitization Company (SC), if the sale is at a price higher than the NBV, the surplus is retained and utilised to meet the shortfall/loss on account of sale of other financial assets to SC/ARC. If the sale is at a price below the net book value (NBV), (i.e. outstanding less provision held) the shortfall is to be debited to the Profit and Loss account. However if surplus is available, such shortfall will be absorbed in the surplus. Any shortfall arising due to sale of NPA will be amortised over a period of two years if not absorbed in the surplus.

5. Fixed Assets and Depreciation:

5.1 Premises and Other Fixed Assets are accounted for at cost except for certain premises, which were revalued and stated at revalued amount.

5.2 Depreciation on fixed assets (other than those referred in para 5.3 and 5.4 below) is provided for on the diminishing balance method at the rates specified below, except in case of revalued assets, in respect of which higher depreciation is provided on the basis of estimated useful life of these revalued assets.

5.3 On computers, depreciation is provided at the rate of 33.33% on Straight Line Method (SLM) so as to write down the asset value in three years to Rupee One as per RBI guidelines. Computers include software, ATMs and UPS also.

5.4 Depreciation is provided for full year in respect of assets purchased during the year. No depreciation is provided on assets sold/discarded during the year.

5.5 Depreciation relating to revalued amount over and above the cost of the revalued assets, is provided on diminishing balance method over the residual life of the fixed assets as stated in para 5.2 and is debited to Profit & Loss Account. Revaluation Reserve on fully depreciated properties is amortized on the basis of their residual life as certified by approved valuers. Further Equivalent amount has been transferred from Revaluation Reserve to Revenue Reserve

5.6 Leasehold land cost is amortized over the period of lease on SLM basis.

6. Revenue Recognition:

6.1 All revenues and costs are accounted for on accrual basis except the following items, which are accounted for on cash basis:-

a. Interest on Advances and Investments identified as Non-Performing Assets according to the prudential norms and guidelines issued by RBI, from time to time.

b. Income from commission viz., on Guarantees, Letter of Credit, Government business, Bancassuarance, Mutual Fund business, credit & debit cards issued and Locker Rent.

c. Interest for overdue period on bills purchased and bills discounted.

d. Insurance claims.

e. Remuneration on Debenture Trustee Business.

f. Loan Processing Fees.

g. Income from Merchant Banking Operations and Underwriting Commission.

h. Transaction processing fees received on utility bill pay services through internet banking.

6.2 Pursuant to RBI guidelines, the interest payable on overdue term deposit is provided on accrual basis at Saving Bank rate effective from date of RBI circular dated 22.08.2008, on the balance at the time of renewal.

7. Employeesâ Benefits:

Defined Contribution Plan: The contribution paid/ payable under defined contribution benefit schemes are charged to Profit & Loss Account.

Defined Benefit Plans: Bankâs liabilities towards defined benefit schemes are determined on the basis of an actuarial valuation made at the end of each quarter/financial year. Actuarial gains and losses are recognized in the Profit & Loss Account.

8. Impairment of Assets:

9. Provisions, Contingent Liabilities and Contingent Assets:

As per the Accounting Standard 29-âProvisions, Contingent Liabilities and Contingent Assetsâ issued by ICAI, the Bank recognizes provisions only when it has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and when a reliable estimate of the amount of the obligation can be made.

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

10. Net Profit, Provisions and Contingencies:

11. Income Tax:

The provision for tax for the year comprises liability towards current Income Tax and Deferred Tax. The deferred tax asset/ liability is recognized, subject to the consideration of prudence, taking into account the timing differences between the taxable income and accounting income, in terms of the Accounting Standard 22 issued by ICAI. The effect of change in tax rates on deferred tax assets and liabilities is recognized in the Profit & Loss Account in the period of applicability of the change.

Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by 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 cases of unabsorbed depreciation or carried forward loss under taxation laws, all 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. Interest income on refund of Income Tax is accounted for in the year the order is passed by the concerned authority.

The demand raised by the Income Tax authorities including the interest thereon is provided for when such demand is upheld by High Court.

12. Earnings per Share:

The bank reports basic and diluted earnings per equity share in accordance with the Accounting Standard (AS-20) âEarnings Per Shareâ issued by ICAI. Basic Earnings per share is arrived by dividing net profit after tax by the weighted average number of equity shares outstanding for the period. The diluted earnings per equity share are computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the period.

Diluted earnings per share reflects the potential dilution that could occur in earnings per share if securities or other contracts to issue equity share are exercised or converted during the period.

During the FY 2018-19, Government of India infused capital of Rs. 4703 crores on preferential basis, out of which capital of Rs. 4498 crores was accounted as share application money pending for allotment.

* The same is considered in common Equity Tier 1 capital ratio.

During the FY 2018-19, Bank has redeemed Basel II /Basel III Compliant Bonds for Rs 200.00 crore as per due date of redemption of Bond. Details of the same are as under:

Mar 31, 2018

1. Basis of Preparation of Financial Statements:

1.1 The financial statements are prepared under the historical cost conventions except as otherwise stated and conform to the Generally Accepted Accounting Principles (GAAP) which include statutory provisions, practices prevailing within the Banking Industry in India , the regulatory/ Reserve Bank of India (âRBIâ) guidelines, applicable Accounting Standards/ Guidance Notes issued by the Institute of Chartered Accountants of India (ICAI).

1.2 Use of Estimates

The preparation of financial statements requires the management to make estimates and assumptions considered in the reported amount of Assets and Liabilities (including contingent liabilities) as of the date of financial statements and reported income and expenses for the period under report. Management is of the view that the estimates used in the preparation of financial statements are prudent and reasonable. Future results could differ from these estimates. Any revisions to the accounting estimates shall be recognized prospectively unless otherwise stated.

1.3 Revenue and costs are accounted for on accrual basis except as stated in para 6.1 below.

2. Foreign Exchange Transactions:

2.3 Contingent Liabilities on account of Guarantees and Letters of Credit issued in foreign currency are stated in the Balance Sheet at the closing exchange rates published by FEDAI.

2.4 Credit exposure of the un-hedged foreign currency exposure, if any, of the constituents shall attract provisioning and capital requirements as per RBI guidelines.

3. Investments:

As per Reserve Bank of India guidelines, the investments are classified and valued as under:

3.1 Investments are classified in the following categories:

a. Held to Maturity (HTM)

b. Available for sale (AFS)

c. Held for trading (HFT)

3.2 All the investments are further classified in the following six baskets in conformity with the requirement of Form-A of Third Schedule to the Banking Regulation Act, 1949:

a. Government Securities

b. Other approved Securities

c. Shares

d. Debentures and Bonds

e. Subsidiaries and Joint Ventures

f. Others (Commercial Papers, Mutual Fund Units etc.)

3.4 REPO / Reverse REPO

3.5 Cost of investments is determined on the basis of Weighted Average Price method.

Interest paid for broken period / interest received for broken period at the time of purchase / saleof fixed income securities is treated as revenue expenditure / income.

Brokerage / incentive received at the time of investment is deducted from the amount of investment.

3.6 Valuation of investments:

a. Held to Maturity:

(ii) In case of investments in subsidiaries and joint ventures permanent diminution in value is recognized and provided for ; investment in RRB is valued at carrying cost.

b. Available for Sale:

Investments in discounted instruments, viz. Treasury Bills, Certificate of Deposits, Commercial Papers, Zero Coupon Bonds are valued at carrying cost. Mutual Fund Instruments are valued at market rate or repurchase price or net asset value in that order depending on their availability. Investments in Security Receipts (SRs) /Pass Through Certificates (PTCs) issued by Asset Reconstruction Companies(ARCs) in respect of financial assets sold to ARCs are carried at lower of redemption value and net book value (i.e. book value less provision held) of the financial assets.

Based on the above valuation under each of six-sub classifications under âAvailable for Saleâ:

(i) If it results in appreciation, the same is ignored.

(ii) If it results in net depreciation, the same is charged to Profit & Loss account and credited to Provision for Depreciation on Investments (AFS) in the liability side.

(iii) The book value of securities is not changed in respect of marked to market (MTM) except as required by the RBI guidelines.

(iv) Profit or Loss on sale of investment in this category is accounted for in the Profit and loss account.

c. Held for Trading:

(iv) Profit or loss on sale of investment in this category is accounted for in the Profit & Loss Account.

d. Classification of and provisions on investments, including on restructured investments, are made in accordance with the prudential norms prescribed by and guidelines of RBI from time to time.

e. Costs such as brokerage, fees, commission, taxes etc. incurred at the time of acquisition of securities are capitalized.

f. Interest Rate Swaps:

(i) Valuation:

(a) Hedging Swaps: Interest Rate Swaps for hedging assets and liabilities are not marked to market.

(b) Trading Swaps: Interest Rate Swaps for trading purpose are marked to market.

(ii) Accounting of income on derivative deals:

(a) Hedging Swaps: Income is accounted for on realization basis. Expenditure, if any, is accounted for on accrual basis, if ascertainable.

(b) Trading Swaps: Income or expenditure is accounted for on realization basis on settlement date.

(iii) Accounting of gain or loss on termination of swaps:

(a) Hedging Swaps: Any gain or loss on the terminated swap is recognized over the shorter of (a) the remaining contractual life of the swap or (b) the remaining life of the asset/ liability.

(b) Trading Swaps: Any gain or loss on terminated swap is recognized as income or expenditure in the year of termination.

4. Advances:

4.2 Classification of advances and provisions thereon are made in accordance with the prudential norms prescribed by and guidelines of RBI from time to time.

4.3 Provision for performing assets, other than provision on standard restructured advances, is shown under the head âOther liabilities and provisionsâ.

4.4 In respect of Rescheduled/ Restructured accounts, provision for diminution in fair value of restructured advances is made on present value basis as per RBI guidelines.

4.5 In case of financial assets sold to Asset Reconstruction Company (ARC)/ Securitization Company (SC), if the sale is at a price higher than the NBV, the surplus is retained and utilised to meet the shortfall/loss on account of sale of other financial assets to SC/ARC. If the sale is at a price below the net book value (NBV), (i.e. outstanding less provision held) the shortfall is to be debited to the Profit and Loss account. However if surplus is available, such shortfall will be absorbed in the surplus. Any shortfall arising due to sale of NPA will be amortised over a period of two years if not absorbed in the surplus.

Excess provision arising out of sale of NPAs are reversed only when the cash received (by way of initial consideration only/or redemption of SRS/PTC) is higher then the net book value (NBV) of the asset. Reversal of excess provision will be limited to the extent to which cash received exceeds the NBV of the asset.

5. Fixed Assets and Depreciation:

5.1 Premises and Other Fixed Assets are accounted for at cost except for certain premises, which were revalued and stated at revalued amount.

5.4 Depreciation is provided for full year in respect of assets purchased during the year. No depreciation is provided on assets sold/discarded during the year.

5.5 Depreciation relating to revalued amount over and above the cost of the revalued assets, is provided on diminishing balance method over the residual life of the fixed assets as stated in para 5.2 and adjusted against the Revaluation Reserve. Revaluation Reserve on fully depreciated properties is amortized on the basis of their residual life as certified by approved valuers.

5.6 Leasehold land cost is amortized over the period of lease on SLM basis.

6. Revenue Recognition

6.1 All revenues and costs are accounted for on accrual basis except the following items, which are accounted for on cash basis:-

a. Interest on Advances and Investments identified as Non-Performing Assets according to the prudential norms and guidelines issued by RBI, from time to time.

b. Income from commission viz., on Guarantees, Letter of Credit, Government business, Bancassuarance, Mutual Fund business, credit & debit cards issued and Locker Rent.

c. Interest for overdue period on bills purchased and bills discounted.

d. Insurance claims.

e. Remuneration on Debenture Trustee Business.

f. Loan Processing Fees.

g. Income from Merchant Banking Operations and Underwriting Commission.

h. Transaction processing fees received on utility bill pay services through internet banking.

7. Employeesâ Benefits:

Defined Contribution Plan: The contribution paid/ payable under defined contribution benefit schemes are charged to Profit & Loss Account.

8. Impairment of Assets:

9. Provisions Contingent Liabilities and Contingent Assets:

As per the Accounting Standard 29-âProvisions, Contingent Liabilities and Contingent Assetsâ issued by ICAI, the Bank recognizes provisions only when it has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and when a reliable estimate of the amount of the obligation can be made.

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

10. Net Profit, Provisions and Contingencies:

11. Income Tax:

Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

Interest income on refund of Income Tax is accounted for in the year; the order is passed by the concerned authority.

The demand raised by the Income Tax authorities including the interest thereon is provided for when such demand is upheld in the second appeal (i.e. by ITAT).

12. Earnings per Share:

The bank reports basic and diluted earnings per equity share in accordance with the Accounting Standard (AS-20) âEarnings Per Shareâ issued by ICAI. Basic Earnings per share is arrived by dividing net profit after tax by the weighted average number of equity shares outstanding for the period. The diluted earnings per equity share are computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the period.

Diluted earnings per share reflects the potential dilution that could occur in earnings per share if securities or other contracts to issue equity share are exercised or converted during the period.

Mar 31, 2017

SCHEDULE 17 - SIGNIFICANT ACCOUNTING POLICIES 1. Accounting Conventions:

1.1 The financial statements are prepared under the historical cost conventions except as otherwise stated and conform to the Generally Accepted Accounting Principles (GAAP) which include statutory provisions, practices prevailing within the Banking Industry in India , the regulatory / Reserve Bank of India (âRBIâ) guidelines, applicable Accounting Standards / Guidance Notes issued by the Institute of Chartered Accountants of India (ICAI).

1.2 The preparation of financial statements requires the management to make estimates and assumptions considered in the reported amount of Assets and Liabilities (including contingent liabilities) as of the date of financial statements and reported income and expenses for the period under report. Management is of the view that the estimates used in the preparation of financial statements are prudent and reasonable.

1.3 Revenue and costs are accounted for on accrual basis except as stated in para 6.1 below.

2. Foreign Exchange Transactions:

2.1 The foreign currency transactions are translated at the weekly average closing rates for the preceding week as published by Foreign Exchange Dealers'' Association of India (FEDAI). Revaluation of foreign currency assets and liabilities as on Balance Sheet date is done at the closing exchange rate published by FEDAI and the resultant profit / loss is accounted for in the Profit & Loss Account.

2.2 Outstanding Forward Foreign Exchange Contracts are stated at contracted rates and revalued / marked to market as on quarterly basis and on Balance Sheet date at the exchange rates published by FEDAI for specified maturities by discounting the same at the applicable MIFOR rate published by Fixed Income Money Market and Derivatives Association of India [FIMMDA] - Reuter, i.e. on PV01 basis. The resulting profit / loss, on revaluation, is recognized in the Profit & Loss Account in accordance with RBI / FEDAI guidelines and the effect is taken to âOther Assetsâ in case of gain or to âOther Liabilitiesâ in case of loss.

2.3 Contingent Liabilities on account of Guarantees and Letters of Credit issued in foreign currency are stated in the Balance Sheet at the closing exchange rates published by FEDAI.

2.4 Credit exposure of the un-hedged foreign currency exposure, if any, of the constituents shall attract provisioning and capital requirements as per RBI guidelines.

3. Investments:

As per Reserve Bank of India guidelines, the investments are classified and valued as under:

3.1 Investments are classified in the following categories:

a. Held to Maturity (HTM)

b. Available for sale (AFS)

c. Held for trading (HFT)

3.2 All the securities are further classified in the following six baskets:

a. Government Securities

b. Other approved Securities

c. Shares

d. Debentures and Bonds

e. Subsidiaries and Joint Ventures

f. Others (Commercial Papers, Mutual Fund Units etc.)

3.4 REPO / Reverse REPO

3.5 Valuation of investments:

a. Held to Maturity:

(i) Securities under the category âHeld to Maturity'' are valued at average cost. Wherever the cost of security is higher than the face value, the premium is amortized over the remaining period of maturity on straight line basis. In case of investments, where the cost price is less than the face value, the difference is ignored.

(ii) In case of investments in subsidiaries and joint ventures permanent diminution in value is recognized and provided for; investment in RRB is valued at carrying cost.

(iii) On sale of investments in this category (a) the net profit is initially taken to profit and loss account and thereafter such profit net of applicable taxes and proportionate transfer to statutory reserve is appropriated to the âCapital Reserve account''; and (b) the net loss is charged to the Profit & Loss Account.

b. Available for Sale:

Investments in discounted instruments, viz. Treasury Bills, Certificate of Deposits, Commercial Papers, Zero Coupon Bonds are valued at carrying cost. Mutual Fund Instruments are valued at market rate or repurchase price or net asset value in that order depending on their availability. Investments in Security Receipts (SRs) / Pass Through Certificates (PTCs) issued by Asset Reconstruction Companies(ARCs) in respect of financial assets sold to ARCs are carried at lower of redemption value and net book value (i.e. book value less provision held) of the financial assets.

Based on the above valuation under each of six-sub classifications under ''Available for Sale'':

(i) If it results in appreciation, the same is ignored.

(ii) If it results in net depreciation, the same is charged to Profit & Loss account and credited to Provision for Depreciation on Investments (AFS) in the liability side.

(iii) The book value of securities is not changed in respect of marked to market (MTM) except as required by the RBI guidelines.

(iv) Profit or Loss on sale of investment in this category is accounted for in the Profit and loss account.

c. Held for Trading:

(i) The individual securities under this category are held at original cost and are marked to market every month. Central / State Government securities are valued at market rates declared by FIMMDA. Other approved securities, debentures and bonds are valued as per the yield curve, average credit spread rating and methodology suggested by FIMMDA. Quoted Shares are valued at market rates.

(ii) Investments in discounted instruments, viz. Treasury Bills, Certificate of Deposits, Commercial Papers, Zero Coupon Bonds are valued at carrying cost. Mutual Fund Instruments are valued at market rate or repurchase price or net asset value in that order depending on their availability. Investments in SRs /PTCs issued by ARCs in respect of financial assets sold to ARCs are carried at lower of redemption value and net book value (i.e. book value less provision held), of the financial assets.

(iv) Profit or loss on sale of investment in this category is accounted for in the Profit & Loss Account.

d. Classification of and provisions on investments, including on restructured investments, are made in accordance with the prudential norms prescribed by and guidelines of RBI from time to time.

e. Costs such as brokerage, fees, commission, taxes etc. incurred at the time of acquisition of securities are capitalized.

f. Interest Rate Swaps:

(i) Valuation:

(a) Hedging Swaps: Interest Rate Swaps for hedging assets and liabilities are not marked to market.

(b) Trading Swaps: Interest Rate Swaps for trading purpose are marked to market.

(ii) Accounting of income on derivative deals:

(a) Hedging Swaps: Income is accounted for on realization basis. Expenditure, if any, is accounted for on accrual basis, if ascertainable.

(b) Trading Swaps: Income or expenditure is accounted for on realization basis on settlement date.

(iii) Accounting of gain or loss on termination of swaps:

(a) Hedging Swaps: Any gain or loss on the terminated swap is recognized over the shorter of (a) the remaining contractual life of the swap or (b) the remaining life of the asset / liability.

(b) Trading Swaps: Any gain or loss on terminated swap is recognized as income or expenditure in the year of termination.

4. Advances:

4.1 Advances shown are net of write offs, provisions made for nonperforming assets, claims settled with the credit guarantee institutions, provision for diminution in fair value for restructured advances and bills rediscounted.

4.2 Classification of advances and provisions thereon are made in accordance with the prudential norms prescribed by and guidelines of RBI from time to time.

4.3 Provision for performing assets, other than provision on standard restructured advances, is shown under the head âOther liabilities and provisionsâ.

4.4 In respect of Rescheduled/ Restructured accounts, provision for diminution in fair value of restructured advances is made on present value basis as per RBI guidelines.

4.5 In respect of advances under SDR, provision is made in accordance with RBI guidelines, within a maximum period of four quarters.

4.6 In case of financial assets sold to Asset Reconstruction Company (ARC)/ Securitization Company (SC), if the sale is at a price higher than the NBV, the surplus is retained and utilised to meet the shortfall/loss on account of sale of other financial assets to SC/ARC. If the sale is at a price below the net book value (NBV), (i.e. outstanding less provision held) the shortfall is to be debited to the Profit and Loss account. However if surplus is available, such shortfall will be absorbed in the surplus. Any shortfall arising due to sale of NPA will be amortised over a period of two years if not absorbed in the surplus.

Excess provision arising out of sale of NPAs are reversed only when the cash received (by way of initial consideration only/ or redemption of SRS/PTC) is higher than the net book value (NBV) of the asset. Reversal of excess provision will be limited to the extent to which cash received exceeds the NBV of the asset.

5. Fixed Assets and Depreciation:

5.1 Premises and Other Fixed Assets are accounted for at cost except for certain premises, which were revalued and stated at revalued amount.

5.2 Depreciation on fixed assets (other than those referred in para

5.3 and 5.4 below) is provided for on the diminishing balance method at the rates specified below, except in case of revalued assets, in respect of which higher depreciation is provided on the basis of estimated useful life of these revalued assets.

8. Impairment of Assets:

Impairment losses, if any, on fixed assets including revalued fixed assets are recognized in accordance with Accounting Standard 28- Impairment of Assets issued by the ICAI and charged to Profit & Loss Account.

9. Provisions Contingent Liabilities and Contingent Assets:

As per the Accounting Standard 29-âProvisions, Contingent Liabilities and Contingent Assetsâ issued by ICAI, the Bank recognizes provisions only when it has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and when a reliable estimate of the amount of the obligation can be made.

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

10. Net Profit, Provisions and Contingencies:

The Net Profit disclosed is after making the Provisions and Contingencies which include adjustment to the value of investments, on bad debts, provision for taxation (including deferred tax), and provision for advances including cases identified as fraud and contingencies / others.

11. Income Tax:

The provision for tax for the year comprises liability towards current Income Tax, Wealth Tax and also Deferred Tax. The deferred tax asset / liability is recognized, subject to the consideration of prudence, taking into account the timing differences between the taxable income and accounting income, in terms of the Accounting Standard 22 issued by ICAI. The effect of change in tax rates on deferred tax assets and liabilities is recognized in the Profit & Loss Account in the period of applicability of the change.

Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax assets are recognized only to the extent there is reasonable certainly that the assets can be realized in future. In cases of unabsorbed depreciation or carried forward loss under taxation laws, all 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.

Interest income on refund of Income Tax is accounted for in the year; the order is passed by the concerned authority.

The demand raised by the Income Tax authorities including the interest thereon is provided for when such demand is upheld in the second appeal (i.e. by ITAT).

12. Earnings per Share

Basic and Diluted earnings per equity share are reported in accordance with the Accounting Standard (AS-20) âEarnings Per Shareâ issued by ICAI. Basic Earnings per share is arrived by dividing net profit by the weighted average number of equity shares outstanding for the period. The diluted earnings per equity share are computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the period.

**In terms of Reserve Bank of India letter DBR.CO.BP No. 11544/21.01.002/2016-17 dated March 30,2017 the Bank has considered such amount received from Government of India as a part of Common Equity Tier 1 (CET 1) as on March 31, 2017 .

Bank has issued Basel III compliant Unsecured, Perpetual, NonConvertible Additional Tier 1 (AT-1) Bond of Rs. 500.00 crores, and Basel III compliant Unsecured Non-Convertible Tier 2 Bond of Rs. 500.00 crores on private placement basis. The details are as under:

2. Investments:

The Bank has classified the investment portfolio into three categories

i.e. âHeld to Maturity (HTM)â, âAvailable for Sale (AFS)â, and âHeld for Trading (HFT)â and valued the investments in terms of the Reserve Bank of India (RBI) guidelines.

During the financial year 2016-17, the Bank has not shifted securities from HFT category to AFS category. Also, during the FY 2016-17, the Bank has not shifted securities from AFS and HFT categories to HTM Category.

During the FY 2016-17, the Bank has transferred securities from HTM category to AFS category amounting to Rs. 3158.65 crores (Rs. 1321.20 crores) and charged to Profit & Loss depreciation amounting to Rs. Nil due to such transfer taking in terms of RBI guidelines RBI/2015-16/97 DBR No BP. BC.6/21.04.141/2015-16 dated 1.7.2015.

Note:

Investments as in (v) being âSubsidiaries / Joint Ventures, & (vi) being âOthersâ are exempt from rating & listing requirements as per RBI guidelines.

Amounts reported under columns 4, 5, 6 & 7 may not be mutually exclusive.

The total investment of Rs. 6991.33 crores (Rs. 6025.06 crores) includes Rajasthan Special Bonds of Rs. 875.61 crores (Rs 1194.93 crores) UP state Power Bonds of Rs. 153.76 crores (Rs 284.63 crores)

Haryana State Special Bonds Rs. 199.59 crores (Rs.199.59 crores) Punjab State Special bonds Rs 276.58 crores (Rs. 439.99 crores) The same has been included in Govt. Securities in Schedule 8 to the Balance Sheet.

As per RBI letter DBR.BP.No.11657/21.04.132/2015-16 dated

17.03.2016, Investment amounting to Rs. 476.80 crores in UDAY bonds is treated as NPI and provision at 25% amounting to Rs. 119.20 crores is made on the same.

2.4 The value of the sales and transfer of securities to / from HTM category during the financial year 2016-17, excluding onetime transfer with the approval of the Board, sales to RBI under pre announced OMO auctions and as permitted by RBI, does not exceed 5 percent of the book value of the investments in HTM category at the beginning of the year.

Profit on sale of investments in HTM category should be first taken to the Profit & Loss Account, and thereafter be appropriated to the âCapital Reserve Account'' after netting off taxes and amount required to be transferred to Statutory Reserves as per RBI circular RPCD.CO.RRB.BC. No. 74/03.05.33/2013-14 dated 7th January 2014.

As per RBI guidelines, an amount of Rs. 87.25 crores net of taxes being profit on sale of investment in âHeld to Maturity'' category is transferred to Capital Reserve. In the previous FY i.e. 2015-16, amount of Rs. 28.83 crores net of taxes and appropriate transfer to statutory reserve had been transferred to capital reserve

2.5 The Bank has amortized Rs.62.55 crores during the year (Rs. 52.46 crores) for securities classified under âHeld to Maturity'' category, and the amount has been charged to Profit & Loss account by reducing the value of respective securities to that extent.

2.6 During the current financial year 2016-17, an amount of Rs.

8.12 crores net of taxes has been drawn down from Investment Reserve Account on account of depreciation required to be made for investment held under AFS & HFT categories.

In the previous FY i.e. 2015-16, amount of Rs. 12.96 crores net of taxes and appropriate transfer to statutory reserve had been drawn down from Investment Reserve on account of depreciation required to be made for investment held under AFS & HFT categories

The Bank has policy guidelines in place for IRS/ FRA''s. The approved ceiling for IRS / FRAs in terms of notional principal is Rs 2000 crores. As on 31st March 2017, the Bank had 4 outstanding swaps for notional principal of Rs 100 crores which were for trading purpose. MTM valuation for outstanding trading swaps is Rs. (-) 0.46 crores.

3.2 Exchange Traded Interest Rate

3.3 Disclosures on risk exposure in derivatives

3.3.1 Qualitative Disclosure

(i) Derivative policy is approved by the Board, which includes measurement of credit & market risk.

(ii) Policy for hedging and processes for monitoring the same are in place.

(iii) The hedged transactions are undertaken for Balance Sheet management. Proper system for reporting and monitoring of risks is in place.

(iv) Risk Management of derivative operations is headed by a Top Management Executive who reports to Head Office. The swaps are tracked on regular basis.

(v) Accounting Policy for recording hedge and non-hedge transactions is in place, which includes recognition of income, expenditure, valuation of outstanding contracts and credit risk mitigation as given in para 3.5 (f)(ii) of Schedule 17, viz., Significant Accounting Policies.

(vi) The Bank has made requisite provision on credit exposure of derivative contracts computed as per current exposure method & as per RBI guidelines.

* Credit Exposure calculated as per RWA guidelines of Basel III.

3.5 Credit Default Swaps (CDS):

The Bank has no credit default swaps during the year 2016-17 or as on March 31, 2017 is Nil.

4. Asset Quality

4.1 Non-Performing Assets

During the year 2016-17, the Bank has sold non-performing assets of the book value of Rs. 86.97 crores (Rs.72.10 crores) including Rs. 86.97 crores (Rs.1.94 crores), during the quarter ended March 31, 2017 resulting in reduction of NPAs.

As per guidelines issued by RBI vide master circular DBR.No.BP. BC.2/21.04.048/2015-16,dated 01.07.2015, banks have been allowed to amortise shortfall arising from sale of financial assets to ARC, for assets sold from 26.02.2014 and up to 31.03.2016 over a period of two years. Consequently the Bank has amortized Rs. 14.33 crores during the year ended March 31, 2017 (Rs. 14.39 crores for previous year March 2016). During the current financial year, there is no shortfall arising from sale of financial assets to ARCs.

Mar 31, 2016

1. Accounting Conventions:

1.1 The financial statements are prepared under the historical cost conventions except as otherwise stated and conform to the Generally Accepted Accounting Principles (GAAP) which include statutory provisions, practices prevailing within the Banking Industry in India , the regulatory/ Reserve Bank of India ("RBI") guidelines, applicable Accounting Standards/ Guidance Notes issued by the Institute of Chartered Accountants of India (ICAI).

1.2 The preparation of financial statements requires the management to make estimates and assumptions considered in the reported amount of assets and liabilities (including contingent liabilities) as of the date of financial statements and reported income and expenses for the period under report. Management is of the view that the estimates used in the preparation of financial statements are prudent and reasonable.

1.3 Revenue and costs are accounted for on accrual basis except as stated in para 6.1 below.

1.4 The accounting policies with regard to Revenue Recognition, Investments and Advances are in conformity with the prudential accounting norms issued by Reserve Bank of India from time to time.

2. Foreign Exchange Transactions:

2.1 The foreign currency transactions are translated at the weekly average closing rates for the preceding week as published by Foreign Exchange Dealers'' Association of India (FEDAI). Revaluation of foreign currency assets and liabilities as on Balance Sheet date is done at the closing exchange rate published by FEDAI and the resultant profit/ loss is accounted for in the profit & Loss Account.

2.2 Outstanding Forward Foreign Exchange Contracts are stated at contracted rates and revalued/ marked to market as on quarterly basis and on Balance Sheet date at the exchange rates published by FEDAI for specified maturities by discounting the same at the applicable MIFOR rate published by Fixed Income Money Market and Derivatives Association of India [FIMMDA]- Reuter, i.e. on PV01 basis. The resulting profit/loss, on revaluation, is recognized in the profit & Loss Account in accordance with RBI / FEDAI guidelines and the effect is taken to "Other Assets" in case of gain or to "Other Liabilities" in case of loss.

2.3 Contingent Liabilities on account of Guarantees and Letters of Credit issued in foreign currency are stated in the Balance Sheet at the closing exchange rates published by FEDAI.

2.4 Credit exposure of the un-hedged foreign currency exposure, if any, of the constituents shall attract provisioning and capital requirements as per RBI guidelines.

3. Investments:

As per Reserve Bank of India guidelines, the investments are classified and valued as under:

3.1 Investments are classified in the following categories:

a. Held to Maturity (HTM)

b. Available for sale (AFS)

c. Held for trading (HFT)

3.2 All the securities are further classified in the following six baskets:

a. Government Securities

b. Other approved Securities

c. Shares

d. Debentures and Bonds

e. Subsidiaries and Joint Ventures

f. Others (Commercial Papers, Mutual Fund Units, Rural Infrastructure Development Funds etc.)

3.3 Bank decides the category of each investment at the time of acquisition and classifies the same accordingly. Shifting of securities from one category to another, other than shifting / transfer from HFT to AFS category, is done once in a year with the approval of Board of Directors, at the least of acquisition cost / book value / market value on the date of shifting. The depreciation, if any, on such shifting is provided for and the book value of the security is adjusted accordingly. The transfer of securities from one category to another is made as per permission from or guidelines of RBI. Transfer / shifting of investments from HFT to AFS category will be executed under exceptional circumstances, like not being able to sell the securities within 90 days due to tight liquidity conditions, or extreme volatility, or market becoming unidirectional.

3.4 REPO / Reverse REPO

The Bank has adopted the Uniform Accounting Procedure prescribed by the RBI for accounting of market Repo and Reverse Repo transactions. Repo and Reverse Repo transactions are treated as Collateralized Borrowing / Lending Operations with an agreement to repurchase on the agreed terms. Securities sold under Repo are continued to be shown under investment and Securities purchased under Reverse Repo are not included in investment. Outstanding Repo /Term Repo is disclosed as borrowing and outstanding Reverse Repo is disclosed as lending. Costs and revenues are accounted for as interest expenditure / income, as the case may be.

3.5 Valuation of investments:

a. Held to Maturity:

(i) Securities under the category ''Held to Maturity'' are valued at average cost. Wherever the cost is higher than the face value, the premium is amortized over the remaining period of maturity on straight line basis. In case of investments, where the cost price is less than the face value, the difference is ignored

(ii) In case of investments in subsidiaries and joint ventures permanent diminution in value is recognized and provided for; investment in RRB is valued at carrying cost.

(iii) On sale of investments in this category (a) the net profit is initially taken to profit and loss account and thereafter net of applicable taxes and proportionate transfer to statutory reserve is appropriated to the ''Capital Reserve account''; and (b) the net loss is charged to the profit & Loss Account.

b. Available for Sale:

The individual securities under this category are marked to market on a quarterly basis. Central/ State Government securities are valued at market rates declared by FIMMDA. Other approved securities, debentures and bonds are valued as per the yield curve, average credit spread rating and methodology suggested by FIMMDA. Quoted shares are valued at market rates. Unquoted shares are valued at book value ascertained from the latest available Balance Sheet i.e. Balance Sheet of immediate preceding year and in case the latest Balance Sheet is not available, the same is valued at Re.1/- per company / scrip.

Investments in discounted instruments, viz. Treasury Bills, Certifcate of Deposits, Commercial Papers, Zero Coupon Bonds are valued at carrying cost. Mutual Fund Instruments are valued at market rate or repurchase price or net asset value in that order depending on their availability. Investments in Security Receipts (SRs) /Pass Through Certifcates (PTCs) issued by Asset Reconstruction Companies(ARCs) in respect of financial assets sold to ARCs are carried at lower of redemption value and net book value (i.e. book value less provision held), of the financial assets.

Based on the above valuation under each of six-sub classifcations under Rs.Available for Sale'':

(i)If it results in appreciation, the same is ignored.

(ii)If it results in net depreciation, the same is charged to profit & Loss account and credited to Provision for Depreciation on Investments (AFS) in the liability side.

Provided that, depreciation, if any, on equity shares allotted consequent to implementation of Strategic Debt Restructuring (SDR) shall be provided for over a maximum of 4 calendar quarters on straight line basis from the date of conversion of debt into equity.

(iii) The book value of securities is not changed in respect of marked to market (MTM) except as required by the RBI guidelines.

(iv) profit or Loss on sale of investment in this category is accounted for in the profit and loss account.

c. Held for Trading:

(i) The individual securities under this category are held at original cost and are marked to market every month. Central/ State Government securities are valued at market rates declared by FIMMDA. Other approved securities, debentures and bonds are valued as per the yield curve, average credit spread rating and methodology suggested by FIMMDA. Quoted Shares are valued at market rates.

(ii) Investments in discounted instruments, viz. Treasury Bills, Certificate of Deposits, Commercial Papers, Zero Coupon Bonds are valued at carrying cost. Mutual Fund Instruments are valued at market rate or repurchase price or net asset value in that order depending on their availability. Investments in SRs /PTCs issued by ARCs in respect of financial assets sold to ARCs are carried at lower of redemption value and net book value (i.e. book value less provision held), of the financial assets.

(iii) Net basket-wise depreciation if any, is charged to profit & Loss Account and credited to Provision on Depreciation on Investment (HFT) under liability. Net appreciation, if any is ignored. The book value of the securities is not changed after revaluation except as required by the RBI guidelines.

(iv) profit or loss on sale of investment in this category is accounted for in the profit & Loss Account.

d. Classification of and provisions on investments, including on restructured investments, are made in accordance with the prudential norms prescribed by and guidelines of RBI from time to time.

e. Costs such as brokerage, fees, commission, taxes etc. incurred at the time of acquisition of securities are capitalised.

f. Interest Rate Swaps:

(i) Valuation:

(a) Hedging Swaps: Interest Rate Swaps for hedging assets and liabilities are not marked to market.

(b) Trading Swaps: Interest Rate Swaps for trading purpose are marked to market.

(ii) Accounting of income on derivative deals:

(a) Hedging Swaps: Income is accounted for on realisation basis. Expenditure, if any, is accounted for on accrual basis, if ascertainable.

(b) Trading Swaps: Income or expenditure is accounted for on realisation basis on settlement date.

(iii) Accounting of gain or loss on termination of swaps:

(a) Hedging Swaps: Any gain or loss on the terminated swap is recognized over the shorter of (a) the remaining contractual life of the swap or (b) the remaining life of the asset/ liability.

(b) Trading Swaps: Any gain or loss on terminated swap is recognized as income or expenditure in the year of termination.

4. Advances:

4.1 Advances shown are net of write offs, provisions made for non-performing assets, claims settled with the credit guarantee institutions, provision for diminution in fair value for restructured advances and bills rediscounted.

4.2 Classification of advances and provisions thereon are made in accordance with the prudential norms prescribed by and guidelines of RBI from time to time.

4.3 Provision for performing assets, other than provision on standard restructured advances, is shown under the head "Other liabilities and provisions".

4.4 In respect of Rescheduled/ Restructured accounts, provision for diminution in fair value of restructured advances is made on present value basis as per RBI guidelines.

4.5 In respect of advances under SDR, provision is made in accordance with RBI guidelines, within a maximum period of four quarters.

4.6 In case of financial assets sold to Asset Reconstruction Company / Securitisation Company, if the sale is at price lower than the net book value, the short fall is amortised over a period of 2 years. If the sale value is higher than the net book value, the surplus provision is not reversed but will be utilized to meet the deficit/ loss on account of sale of other financial assets provided the excess provision on sale of NPAs, if the sale value is for a value higher than the NBV, shall be reversed to the profit & Loss A/c in the financial year in which amounts are received when the cash received (by way of initial consideration and / or redemption of SRs / PTCs) is higher than the NBV of the asset provided reversal of excess provision shall be limited to the extent to which cash received exceeds the NBV of the asset.

5. Fixed Assets and Depreciation:

5.1 Premises and Other Fixed Assets are accounted for at cost except for certain premises, which were revalued and stated at revalued amount.

5.2 Depreciation on fixed assets (other than those referred in para 5.3 and 5.4 below) is provided for on the diminishing balance method at the rates specified below, except in case of revalued assets, in respect of which higher depreciation is provided on the basis of estimated useful life of these revalued assets.

5.3 On computers, depreciation is provided at the rate of 33.33% on Straight Line Method (SLM) so as to write down the asset value in three years to Rupee One as per RBI guidelines. Computers include software, ATMs and UPS also.

5.4 Depreciation is provided for full year in respect of assets purchased during the year. No depreciation is provided on assets sold/discarded during the year.

5.5 Depreciation relating to revalued amount over and above the cost of the revalued assets, is provided on diminishing balance method over the residual life of the fixed assets as stated in para 5.2 and adjusted against the Revaluation Reserve. Revaluation Reserve on fully depreciated properties is amortized on the basis of their residual life as certified by approved valuers.

5.6 Leasehold land cost is amortized over the period of lease on SLM basis.

6. Revenue Recognition

6.1 All revenues and costs are accounted for on accrual basis except the following items, which are accounted for on cash basis:-

a Interest on Advances and Investments identified as Non-Performing Assets according to the prudential norms issued by RBI, from time to time.

b. Income from commission viz., on Guarantees, Letter of Credit, Government business, Bancassuarance, Mutual Fund business, credit & debit cards issued and Locker Rent.

c. Interest for overdue period on bills purchased and bills discounted.

d. Insurance claims.

e. Remuneration on Debenture Trustee Business.

f. Loan Processing Fees.

g. Income from Merchant Banking Operations and Underwriting Commission.

h. Transaction processing fees received on utility bill pay services through internet banking.

6.2 Pursuant to RBI guidelines, the interest payable on overdue term deposit is provided on accrual basis at Saving Bank rate effective from date of RBI circular dated 22.08.2008, and the balance at the time of renewal.

7. Employees'' Benefits:

Defined Contribution Plan: The contribution paid/ payable under defined contribution benefit schemes are charged to profit & Loss Account.

Defined Benefit Plans: Bank''s liabilities towards defined benefit schemes are determined on the basis of an actuarial valuation made at the end of financial year. Actuarial gains and losses are recognized in the profit & Loss Account.

8. Impairment of Assets:

Impairment losses, if any, on fixed assets including revalued fixed assets are recognized in accordance with Accounting Standard 28- Impairment of Assets issued by the ICAI and charged to profit & Loss Account.

9. Provisions Contingent Liabilities and Contingent Assets:

As per the Accounting Standard 29-"Provisions, Contingent Liabilities and Contingent Assets" issued by ICAI, the Bank recognizes provisions only when it has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and when a reliable estimate of the amount of the obligation can be made.

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

10. Net profit, Provisions and Contingencies:

The Net profit disclosed is after making the Provisions and Contingencies which include adjustment to the value of investments, on bad debts, provision for taxation (including deferred tax), provision for advances and contingencies/others.

11. Income Tax:

The provision for tax for the year comprises liability towards current Income Tax, Wealth Tax and also Deferred Tax. The deferred tax asset/ liability is recognized, subject to the consideration of prudence, taking into account the timing differences between the taxable income and accounting income, in terms of the Accounting Standard 22 issued by ICAI. The effect of change in tax rates on deferred tax assets and liabilities is recognized in the profit & Loss Account in the period of applicability of the change.

Interest income on refund of Income Tax is accounted for in the year the order is passed by the concerned authority.

The demand raised by the Income Tax authorities including the interest thereon is provided for when such demand is upheld in the second appeal (i.e. by ITAT).

12. Earnings per Share

Basic and Diluted earnings per equity share are reported in accordance with the Accounting Standard (AS-20) "Earnings Per Share" issued by ICAI. Basic Earnings per share is arrived by dividing net profit by the weighted average number of equity shares outstanding for the period. The diluted earnings per equity share are computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the period.

Mar 31, 2015

1. Accounting Conventions:

1.1 The financial statements are prepared under the historical cost conventions except as otherwise stated and conform to the Generally Accepted Accounting Principles (GAAP) which include statutory provisions, practices prevailing within the Banking Industry in India , the regulatory/ Reserve Bank of India ("RBI") guidelines, applicable Accounting Standards/ Guidance Notes issued by the Institute of Chartered Accountants of India (ICAI).

1.2 The preparation of financial statements requires the management to make estimates and assumptions considered in the reported amount of assets and liabilities (including contingent liabilities) as of the date of financial statements and reported income and expenses for the period under report. Management is of the view that the estimates used in the preparation of financial statements are prudent and reasonable.

1.3 Revenue and costs are accounted for on accrual basis except as stated in para 6.1 below.

1.4 The accounting policies with regard to Revenue Recognition, Investments and Advances are in conformity with the prudential accounting norms issued by Reserve Bank of India from time to time.

2. Foreign Exchange Transactions:

2.1 The foreign currency transactions are translated at the weekly average closing rates for the preceding week as published by Foreign Exchange Dealers'' Association of India (FEDAI). Revaluation of foreign currency assets and liabilities as on Balance Sheet date is done at the closing exchange rate published by FEDAI and the resultant profit/ loss is accounted for in the Profit & Loss Account.

2.2 Outstanding Forward Foreign Exchange Contracts are stated at contracted rates and revalued/ marked to market as on quarterly basis and on Balance Sheet date at the exchange rates published by FEDAI for specified maturities by discounting the same at the applicable MIFOR rate published by FIMMDA - Reuter, i.e. on PV01 basis. The resulting profit/loss, on revaluation, is recognized in the Profit & Loss Account in accordance with RBI / FEDAI guidelines and the effect is taken to "Other Assets" in case of gain or to "Other Liabilities" in case of loss.

2.3 Contingent Liabilities on account of Guarantees and Letters of Credit issued in foreign currency are stated in the Balance Sheet at the closing exchange rates published by FEDAI.

2.4 Credit exposure of the un-hedged foreign currency exposure, if any, of the constituents shall attract provisioning and capital requirements as per RBI guidelines.

3. Investments:

As per Reserve Bank of India guidelines, the investments are classified and valued as under:

3.1 Investments are classified in the following categories:

a. Held to Maturity (HTM)

b. Available for sale (AFS)

c. Held for trading (HFT)

3.2 All the securities are further classified in the following six baskets:

a. Government Securities

b. Other approved Securities

c. Shares

d. Debentures and Bonds

e. Subsidiaries and Joint Ventures

f. Others (Commercial Papers, Mutual Fund Units, Rural

Infrastructure Development Funds, etc).

3.3 Bank decides the category of each investment at the time of acquisition and classifies the same accordingly. Shifting of securities from one category to another, other than shifting / transfer from HFT to AFS category, is done once in a year with the approval of Board of Directors, at the least of acquisition cost / book value / market value on the date of shifting. The depreciation, if any, on such shifting is provided for and the book value of the security is adjusted accordingly. The transfer of securities from one category to another is made as per permission from or guidelines of Reserve Bank of India. Transfer / shifting of investments from HFT to AFS category will be executed under exceptional circumstances, like not being able to sell the securities within 90 days due to tight liquidity conditions, or extreme volatility, or market becoming unidirectional.

3.4 REPO / Reverse REPO

The Bank has adopted the Uniform Accounting Procedure prescribed by the RBI for accounting of market Repo and Reverse Repo transactions. Repo and Reverse Repo Transactions are treated as Collateralized Borrowing / Lending Operations with an agreement to repurchase on the agreed terms. Securities sold under Repo are continued to be shown under investment and Securities purchased under Reverse Repo are not included in Investment. Outstanding Repo / Term Repo is disclosed as borrowing and outstanding Reverse Repo is disclosed as lending. Costs and revenues are accounted for as interest expenditure / income, as the case may be.

3.5 Valuation of investments:

a. Held to Maturity:

(i) Securities under the category ''Held to Maturity'' are valued at average cost. Wherever the cost is higher than the face value, the premium is amortized over the remaining period of maturity on straight line basis. In case of investments, where the cost price is less than the face value, the difference is ignored

(ii) In case of investments in subsidiaries and joint ventures permanent diminution in value is recognized and provided for; investment in RRB is valued at carrying cost.

(iii) On sale of investments in this category (a) the net profit is initially taken to profit and loss account and thereafter net of applicable taxes and proportionate statutory reserve is appropriated to the ''Capital Reserve account''; and (b) the net loss is charged to the Profit & Loss Account.

b. Available for Sale:

The individual securities under this category are marked to market on a quarterly basis. Central/ State Government securities are valued at market rates declared by Fixed Income Money Market and Derivatives Association of India [FIMMDA]. Other approved securities, Debentures and Bonds are valued as per the yield curve, average credit spread rating and methodology suggested by FIMMDA. Quoted Shares are valued at market rates. Unquoted shares are valued at book value ascertained from the latest available Balance Sheet i.e Balance sheet of immediate preceding year and in case the latest Balance Sheet is not available, the same is valued at Rs..1/- per company / Scrip.

Investments in discounted instruments, viz. Treasury bills, Certificate of deposits and commercial papers, Zero coupon Bonds are valued at carrying cost. Mutual Fund Instruments are valued at market rate or repurchase price or net asset value in that order depending on their availability. Investments in Security Receipts /PTCs issued by Asset Reconstruction Companies (ARCs) in respect of financial assets sold to ARCs are carried at lower of redemption value and net book value (i.e. book value less provision held), of the financial assets.

Based on the above valuation under each of six-sub classifications under ''Available for Sale'':

(i) If it results in appreciation, the same is ignored.

(ii) If it results in net depreciation, the same is charged toProfit & Loss accountand credited to Provisionfor Depreciation on Investments (AFS) in the liability side.

(iii) The book value of securities is not changed in respect of marked to market (MTM) except as required by the RBI guidelines.

(iv) Profit orLosson sale of investmentin this category i s accounted for in the Profit and loss account.

c. Held for Trading:

(i) The individual securities under this category are held at original cost and are marked to market every month. Central/ State Government securities are valued at market rates declared by Fixed Income Money Market and Derivatives Association of India [FIMMDA]. Other approved securities, Debentures and Bonds are valued as per the yield curve, average credit spread rating and methodology suggested by FIMMDA. Quoted Shares are valued at market rates.

(ii) Investments in discounted instruments, viz. Treasury bills, Certificate of deposits and commercial papers, Zero coupon Bonds are valued at carrying cost. Mutual Fund Instruments are valued at market rate or repurchase price or net asset value in that order depending on their availability. Investments in Security Receipts /PTCs issued by Asset Reconstruction Companies (ARCs) in respect of financial assets sold to ARCs are carried at lower of redemption value and net book value (i.e. book value less provision held), of the financial assets.

(iii) Net basket-wise depreciation if any, is charged to Profit & Loss Account and credited to Provision onDepreciation onInvestment (HFT) underliabiMty. Netappreciation, ifanyis i gnored.Thebookvalueof thesecuritiesisnotchangedafterrevaluationexcept as required by the RBI guidelines.

(iv) Profit or loss on sale of investment in this category is accounted for in the Profit & Loss Account.

d. The non-performing investments are identified and depreciation/ provision are made as per RBI guidelines.

e. Costs such as brokerage, fees, commission , taxes etc. incurred at the time of acquisition of securities are capitalized.

f. Interest Rate Swaps:

(i) Valuation:

(a) Hedging Swaps: Interest Rate Swaps for hedging assets and liabilities are not marked to market.

(b) Trading Swaps: Interest Rate Swap for trading purpose is marked to market.

(ii) Accounting of income on derivative deals:

(a) Hedging Swaps: Income is accounted for on realization basis. Expenditure, if any, is accounted for on accrual basis, if ascertainable.

(b) Trading Swaps: Income or expenditure is accounted for on realization basis on settlement date.

(iii) Accounting of gain or loss on termination of swaps:

(a) Hedging Swaps: Any gain or loss on the terminated swap is recognized over the shorter of (a) the remaining contractual life of the swap or (b) the remaining life of the asset/ liability.

(b) Trading Swaps: Any gain or loss on terminated swap is recognized as income or expenses in the year of termination.

4. Advances:

4.1 Advances shown are net of write offs, provisions made for non-performing assets, claims settled with the credit guarantee institutions, provision on restructured advances and rediscounts.

4.2 Classification of advances and provisions are made in accordance with the prudential norms prescribed by RBI from time to time.

4.3 Provision for performing assets, other than provision on standard restructured advances, is shown under the head "Other liabilities and provisions".

4.4 In respect of Rescheduled/ Restructured accounts, provision for diminution in fair value of restructured advances is made in present value basis as per RBI guidelines.

4.5 In case of financial assets sold to Assets Reconstruction Company (ARC)/ Securitization Company (SC), if the sale is at price lower than the net book value, the short fall is charged to Profit & Loss Account. If the sale value is higher than the net book value, the surplus provision is not reversed but will be utilized to meet the deficit / loss on account of sale of other financial assets provided the excess provision on sale of NPAs, if the sale value is for a value higher than the NBV, shall be reversed to the Profit & Loss A/c in the financial year in which amounts are received when the cash received (by way of initial consideration and / or redemption of SRs / PTCs) is higher than the net book value (NBV) of the asset provided reversal of excess provision shall be limited to the extent to which cash received exceeds the NBV of the asset.

5. Fixed Assets and Depreciation:

5.1 Premises and Other Fixed Assets are accounted for at cost except for certain premises, which were revalued and stated at revalued amount.

5.2 Depreciation on fixed assets (other than those referred in para 5.3 and 5.4 below) is provided for on the diminishing balance method at the rates specified below, except in case of revalued assets, in respect of which higher depreciation is provided on the basis of estimated useful life of these revalued assets.

5.3 On computers, depreciation is provided at the rate of 33.33% on Straight Line Method so as to write down the asset value in three years to Rupee One as per RBI guidelines. Computers include software, ATMs and UPS also.

5.4 Depreciation is provided for full year in respect of assets purchased during the year. No depreciation is provided on assets sold / discarded during the year.

5.5 Depreciation relating to revalued amount over and above the cost of the revalued assets, is provided on diminishing balance method over the residual life of the fixed assets as stated in para 5.2 and adjusted against the Revaluation Reserve. Revaluation Reserve on fully depreciated properties is amortized on the basis of their residual life as certified by approved valuers

5.6 Leasehold land cost is amortized over the period of lease on Straight Line Method (SLM).

6. Revenue Recognition

6.1 All revenues and costs are accounted for on accrual basis except the following items, which are accounted for on cash basis:-

a Interest on Advances and Investments identified as Non-Performing Assets according to the prudential norms issued by RBI, from time to time.

b. Income from commission viz on Guarantees, Letter of Credit, Government business, Bancassuarance, Mutual Fund business, credit & debit cards issued and Locker Rent.

c. Interest for overdue period on bills purchased and bills discounted.

d. Insurance claims.

e. Remuneration on Debenture Trustee Business.

f. Loan Processing Fees.

g. Income from Merchant Banking Operations and Underwriting Commission.

h. Transaction processing fees received on utility bill pay services through internet banking.

6.2 Pursuant to RBI guidelines, the interest payable on overdue term deposit is provided on accrual basis at Saving Bank rate effective from date of RBI circular dated 22.08.2008, and the balance at the time of renewal.

7. Employees'' Benefits:

Defined Contribution Plan: The contribution paid / payable under defined contribution benefit schemes are charged to Profit & Loss Account.

Defined Benefit Plans: Bank''s liabilities towards defined benefit schemes are determined on the basis of an actuarial valuation made at the end of financial year. Actuarial gains and losses are recognized in the Profit & Loss Account.

8. Impairment of Assets:

Impairment losses, if any, on fixed assets including revalued fixed Assets are recognized in accordance with Accounting Standard 28 - Impairment of Assets issued by the Institute of Chartered Accountants of India (ICAI) and charged to Profit & Loss Account.

9. Provisions Contingent Liabilities and Contingent Assets:

As per the Accounting Standard 29-"Provisions, Contingent Liabilities and Contingent Assets" issued by ICAI, the Bank recognizes provisions only when it has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and when a reliable estimate of the amount of the obligation can be made.

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

10. Net Profit, Provisions and Contingencies:

The Net Profit disclosed is after making the Provisions and Contingencies which include adjustment to the value of investments, on bad debts, provision for taxation (including deferred tax), provision for advances and contingencies/others.

11. Income Tax:

The provision for tax for the year comprises liability towards current Income Tax, Wealth Tax and also Deferred Tax. The deferred tax asset/ liability is recognized, subject to the consideration of prudence, taking into account the timing differences between the taxable income and accounting income, in terms of the Accounting Standard 22 issued by ICAI. The effect of change in tax rates on deferred tax assets and liabilities is recognized in the Profit & Loss Account in the period of applicability of the change.

The demand raised by the Income Tax authorities including the interest thereon is provided for when such demand is upheld in the second appeal (i.e. by ITAT).

12. Earnings per Share

Basic and Diluted earnings per equity share are reported in accordance with the Accounting Standard (AS-20) "Earnings Per Share" issued by ICAI. Basic Earnings per share is arrived by dividing net profit by the weighted average number of equity shares outstanding for the period. The diluted earnings per equity share are computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the period.

* Represents depreciation on shifting of securities from HFT portfolio to AFS portfolio in FY 2013-14 on completion of 90 days, the maximum period available for holding such security in HFT portfolio.

During the FY 2014-15, the Bank has transferred securities from HFT category to AFS category amounting to Rs.309.54 crore upon completion of 90 days.

During the FY 2014-15, the Bank has shifted securities from HTM category to AFS category amounting to Rs.777.25 crore in terms of RBI guidelines DBOD.BPBC. No.21.04.141/2014-15 dated July 1,2014. No depreciation was required to be provided on account of such shifting.

During the FY 2014-15, the Bank has transferred securities from HTM category to AFS category amounting to Rs. 88.07 crore taking into account the RBI guidelines DBOD. BP.BC.No.21.04.141/2014-15 dated August 5, 2014; no depreciation arose on account of such transfer.

During the FY 2014-15, the Bank has not shifted from AFS and HFT categories to HTM category.

Mar 31, 2014

1. ACCOUNTING CONVENTIONS:

1.1 The financial statements are prepared under the historical cost conventions except as otherwise stated and conform to the Generally Accepted Accounting Principles (GAAP) which include statutory provisions, practices prevailing within the Banking Industry in India, the regulatory/ Reserve Bank of India ( ACI-RBI ACI-) guidelines, Accounting Standards/ Guidance Notes issued by the Institute of Chartered Accountants of India (ICAI).

1.2 The preparation of financial statements requires the management to make estimates and assumptions considered in the reported amount of assets and liabilities (including contingent liabilities) as of the date of financial statements and reported income and expenses for the period under report. Management is of the view that the estimates used in the preparation of financial statements are prudent and reasonable.

1.3 Revenue and costs are accounted for on accrual basis except as stated in para 6.1 below.

1.4 The accounting policies with regard to Revenue Recognition, Investments and Advances are in conformity with the prudential accounting norms issued by Reserve Bank of India from time to time.

2. FOREIGN EXCHANGE TRANSACTIONS:

2.1 The foreign currency transactions are translated at the weekly average closing rates for the preceding week as published by Foreign Exchange Dealers'' Association of India (FEDAI). Revaluation of foreign currency assets and liabilities as on Balance Sheet date is done at the closing exchange rate published by FEDAI and the resultant profit/loss is accounted for in the Profit ACY- Loss Account.

2.2 Outstanding Forward Exchange Contracts are stated at contracted rates and revalued as on Balance Sheet date at the exchange rates published by FEDAI for specified maturities. The resulting profit/loss is recognized in the Profit ACY- Loss Account in accordance with RBI / FEDAI Guidelines.

2.3 Contingent Liabilities on account of Guarantees and Letters of Credit issued in foreign currency are stated in the Balance Sheet at the closing exchange rates published by FEDAI.

3. INVESTMENTS:

As per Reserve Bank of India guidelines, the investments are classified and valued as under:

3.1 Investments are classified in the following categories:

a. Held to maturity

b. Available for sale

c. Held for trading

3.2 All the securities are further classified in the following six baskets:

a. Government Securities

b. Other approved Securities

c. Shares

d. Debentures and Bonds

e. Subsidiaries and Joint Ventures

f. Others (Commercial Papers, Mutual Fund Units. Rural Infrastructure Development Funds, etc).

3.3 Bank decides the category of each investment at the time of acquisition and classifies the same accordingly. Shifting of securities from one category to another is done once in a year with the approval of Board of Directors, at the least of acquisition cost / book value / market value on the date of shifting. The depreciation, if any, on such shifting is provided for and the book value of the security is changed accordingly. The transfer of securities from one category to another is made as per permission from or guidelines of Reserve Bank of India.

3.4 REPO / Reverse REPO

The Bank has adopted the Uniform Accounting Procedure prescribed by the RBI for accounting of market Repo and Reverse Repo transactions. Repo and Reverse Repo Transactions are treated as Collateralized Borrowing / Lending Operations with an agreement to repurchase on the agreed terms. Securities sold under Repo are continued to be shown under investment and Securities purchased under Reverse Repo are not included in Investment. Outstanding Repo / Term Repo is disclosed as borrowing and outstanding Reverse Repo is disclosed as lending. Costs and revenues are accounted for as interest expenditure / income, as the case may be.

3.5 Valuation of investments:

a. Held to Maturity:

(i) Securities under the category ''Held to Maturity1 are valued at average cost. Wherever the cost is higher than the face value, the premium is amortized over the remaining period of maturity.

(ii) In case of other investments under ACI-Held to Maturity ACI- category, where the cost price is less than the face value, the difference is ignored. In case of investments in subsidiaries and joint ventures permanent diminution in value is recognized and provided for. Investment in RRBs is valued at carrying cost.

(iii) On sale of investments in this category (a) the net profit is initially taken to profit and loss account and thereafter net of applicable taxes and statutory reserve is appropriated to the ''Capital Reserve account'' and (b) the net loss is charged to the Profit ACY- Loss Account.

b. Available for Sale:

The individual securities under this category are marked to market. Central Government securities are valued at market rates declared by Fixed Income Money Market and Derivatives Association of India AFs-FIMMDA AF0-. State Government securities, other approved securities, Debentures and Bonds are valued as per the yield curve, average credit spread rating and methodology suggested by FIMMDA. Quoted Shares are valued at market rates. Unquoted shares are valued at book value ascertained from the latest available Balance Sheet and in case the latest Balance Sheet is not available, the same is valued at X 1/- per company.

Investments in discounted instruments, viz. Treasury bills, Certificate of deposits and commercial papers are valued at carrying cost. Mutual Fund Instruments are valued at market rate or repurchase price or net asset value in that order depending on their availability. Investments in Security Receipts /PTCs issued by Asset Reconstruction Companies (ARCs) in respect of financial assets sold to ARCs are carried at lower of redemption value and net book value (i.e. book value less provision held), of the financial assets.

Based on the above valuation under each of six-sub classifications under ACI-Available for Sale'':

(i) If it results in appreciation, the same is ignored.

(ii) If it results in net depreciation, the same is charged to Profit ACY- Loss account and credited to Provision for Depreciation on Investments (AFS) in the liability side.

(iii) The book value of securities is not changed in respect of marked to market (MTM) except as required by the RBI guidelines.

(iv) Profit or Loss on sale of investment in this category is accounted for in the Profit and loss account.

c. Held for Trading :

(i) The individual scrips under this category are held at original cost. The same is valued at monthly intervals at market rates or as per the prices declared by FIMMDA and in respect of each classification under this category, net depreciation if any, is charged to Profit ACY- Loss Account and credited to Provision on Depreciation on Investment (HFT) under liability. Net appreciation, if any is ignored. The book value of the securities is not changed after revaluation except as required by the RBI guidelines.

(ii) Profit or loss on sale of investment in this category is accounted for in the Profit ACY- Loss Account.

d. The non-performing investments are identified and depreciation/ provision is made as per RBI guidelines.

e. Costs such as brokerage, fees etc. incurred at the time of acquisition of securities (except equity / preference shares, where it is treated as cost of acquisition) are recognized as expenses.

f. Interest Rate Swaps:

(i) Valuation:

(a) Hedging Swaps: Interest Rate Swaps for hedging assets and liabilities are not marked to market.

(b) Trading Swaps: Interest Rate Swap for trading purpose is marked to market.

(ii) Accounting of income on derivative deals:

(a) Hedging Swaps: Income is accounted for on realization basis. Expenditure, if any, is accounted for on accrual basis, if ascertainable.

(b) Trading Swaps: Income or expenditure is accounted for on realization basis on settlement date.

(iii) Accounting of gain or loss on termination of swaps:

(a) Hedging Swaps: Any gain or loss on the terminated swap is recognized over the shorter of (a) the remaining contractual life of the swap or (b) the remaining life of the asset/ liability.

(b) Trading Swaps: Any gain or loss on terminated swap is recognized as income or expenses in the year of termination.

4. ADVANCES:

4.1 Advances shown are net of write offs, provisions made for non-performing assets, claims settled with the credit guarantee institutions and rediscounts.

4.2 Classification of advances and provisions are made in accordance with the prudential norms prescribed by RBI from time to time.

4.3 Provision for performing assets is shown under the head ACI-Other liabilities and provisions ACI-.

4.4 In respect of Rescheduled/ Restructured accounts. provision for diminution in fair value of restructured advances is made in present value basis as per RBI guidelines.

4.5 In case of financial assets sold to Assets Reconstruction Company (ARC)/ Securitization Company (SC), if the sale is at price lower than the net book value, the short fall is debited to Profit ACY- Loss Account. If the sale value is higher than the net book value, the surplus provision is not reversed but will be utilized to meet the deficit/ loss on account of sale of other financial assets.

5. FIXED ASSETS AND DEPRECIATION:

5.1 Premises and Other Fixed Assets are accounted for at cost except for certain premises, which were revalued and stated at revalued amount.

5.2 Depreciation on fixed assets (other than those referred in para 5.3, 5.4, 5.5 below) is provided for on the diminishing balance method at the rates specified in Schedule XIV to the Companies Act, 1956 except in case of revalued assets, in respect of which higher depreciation is provided on the basis of estimated useful life of these revalued assets.

5.3 On computers, depreciation is provided at the rate of 33.33 ACU- on Straight Line Method so as to write down the asset value in three years to Rupee One as per RBI guidelines. Computers include software IBk-s, ATMs and UPS also.

5.4 On Fixed Assets having original cost below X 5,000/-. depreciation is provided for at applicable rates instead of providing 100 ACU- depreciation in the year of purchase.

5.5 Depreciation is provided for full year in respect of assets purchased during the year. No depreciation is provided on assets sold / discarded during the year.

5.6 Depreciation relating to revalued amount over and above the cost of the revalued assets, is provided on diminishing balance method over the residual life of the fixed assets as stated in para 5.2 and adjusted against the Revaluation Reserve. Revaluation Reserve on fully depreciated properties is amortized on the basis of their residual life as certified by approved values.

5.7 Leasehold land cost is amortized over the period of lease on Straight Line Method (SLM).

6. REVENUE RECOGNITION

6.1 All revenues and costs are accounted for on accrual basis except the following items, which are accounted for on cash basis:-

a. Interest on Advances and Investments identified as Non-Performing Assets according to the prudential norms issued by RBI, from time to time.

b. Income from commission viz on Guarantees, Letter of Credit, Government business, Bancassuarance. Mutual Fund business and Locker Rent.

c. Interest for overdue period on bills purchased and bills discounted.

d. Insurance claims.

e. Remuneration on Debenture Trustee Business.

f. Loan Processing Fees.

g. Income from Merchant Banking Operations and Underwriting Commission.

h. Transaction processing fees received on utility bill pay services through internet banking.

6.2 Pursuant to RBI guidelines, the interest payable on overdue term deposit is provided on accrual basis at Saving Bank rate effective from date of RBI circular dated 22.08.2008, and the balance at the time of renewal.

7. EMPLOYEES'' BENEFITS:

Defined Contribution Plan: The contribution paid / payable under defined contribution benefit schemes are charged to Profit ACY- Loss Account.

Defined Benefit Plans: Bank''s liabilities towards defined benefit schemes are determined on the basis of an actuarial valuation made at the end of financial year. Actuarial gains and losses are recognized in the Profit ACY- Loss Account.

8. IMPAIRMENT OF ASSETS:

Impairment losses if any, on fixed assets including Revalued Assets, are recognized in accordance with Accounting Standard 28- Impairment of Assets issued by the Institute of Chartered Accountants of India (ICAI) and charged to Profit ACY- Loss Account.

9. PROVISIONS CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

As per the Accounting Standard 29- ACI-Provisions, Contingent Liabilities and Contingent Assets ACI- issued by ICAI, the Bank recognizes provisions only when it has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and when a reliable estimate of the amount of the obligation can be made.

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

10. NET PROFIT, PROVISIONS AND CONTINGENCIES:

The Net Profit disclosed is after making the Provisions and Contingencies which include adjustment to the value of investments, write off of bad debts, provision for taxation (including deferred tax), provision for advances and contingencies/others.

11. INCOME TAX:

The provision for tax for the year comprises liability towards Current Income Tax, Wealth Tax and Deferred Tax. The deferred tax asset/ liability is recognized, subject to the consideration of prudence, taking into account the timing differences between the taxable income and accounting income, in terms of the Accounting Standard 22 issued by ICAI. The effect of change in tax rates on deferred tax assets and liabilities is recognized in the Profit ACY- Loss Account in the period of applicability of the change.

Interest income on refund of Income Tax is accounted for in the year the order is passed by the concerned authority.

The demand raised by the Income Tax authorities including the interest thereon is provided for when the demand is upheld in the second appeal (i.e. by ITAT).

12. EARNINGS PER SHARE

Basic and Diluted earnings per equity share are reported in accordance with the Accounting Standard (AS-20) ACI-Earnings Per Share ACI- issued by ICAI. Basic Earnings per share is arrived by dividing net profit by the weighted average number of equity shares outstanding for the period. The diluted earnings per equity share are computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the period.

Mar 31, 2013

1. ACCOUNTING CONVENTIONS:

1.1 The financial statements are prepared under the historical cost conventions except as otherwise stated and conform to the Generally Accepted Accounting Principles (GAAP) which include statutory provisions, practices prevailing within the Banking Industry in India, the regulatory/ Reserve Bank of India ("RBI") guidelines, Accounting Standards/ guidance notes issued by Institute of Chartered Accountants of India (ICAI).

1.2 The preparation of financial statements requires the management to make estimates and assumptions considered in the reported amount of assets and liabilities (including contingent liabilities) as of the date of financial statements and reported income and expenses for the period under report. Management is of the view that the estimates used in the preparation of financial statements are prudent and reasonable.

1.3 Revenue and costs are accounted for on accrual basis except as stated in para 6.1 below.

1.4 The accounting policies with regard to Revenue Recognition, Investments and Advances are in conformity with the prudential accounting norms issued by Reserve Bank of India from time to time.

2. FOREIGN EXCHANGE TRANSACTIONS:

2.1 The foreign currency transactions are translated at the weekly average closing rates for the preceding week as published by Foreign Exchange Dealers'' Association of India (FEDAI). Revaluation of foreign currency assets and liabilities as on Balance Sheet date is done at the closing exchange rate published by FEDAI and the resultant profit/loss is accounted for in the Profit & Loss Account.

2.2 Outstanding Forward Exchange Contracts are stated at contracted rates and revalued as on Balance Sheet date at the exchange rates published by FEDAI for specified maturities. The resulting profit/loss is recognized in the Profit & Loss Account in accordance with RBI / FEDAI Guidelines.

2.3 Contingent Liabilities on account of Guarantees and Letters of Credit issued in foreign currency are stated in the Balance Sheet at the closing exchange rates published by FEDAI.

3. INVESTMENTS:

As per Reserve Bank of India guidelines, the investments are classified and valued as under:

3.1 Investments are classified in the following categories:

a. Held to maturity

b. Available for sale

c. Held for trading

3.2 All the securities are further classified in the following six classifications:

a. Government Securities

b. Other approved securities

c. Shares

d. Debentures and bonds

e. Subsidiaries and Joint Ventures

f. Others (Commercial Papers, Mutual Fund Units, Rural Infrastructure Development Funds etc).

3.3 Bank decides the category of each investment at the time of acquisition and classifies the same accordingly. Shifting of securities from one category to another is done once in a year with the approval of Board of Directors, at the least of acquisition cost / book value / market value on the date of shifting. The depreciation, if any, on such shifting is provided for and the book value of the security is changed accordingly.

3.4 REPO / Reverse REPO

The Bank has adopted the Uniform Accounting Procedure prescribed by the RBI for accounting of market Repo and Reverse Repo transactions. Repo and Reverse Repo Transactions are treated as Collateralized Borrowing / Lending Operations with an agreement to repurchase on the agreed terms. Securities sold under Repo are continued to be shown under investment and Securities purchased under Reverse Repo are not included in Investment. Outstanding REPO / Reverse REPO is disclosed as borrowing / lending respectively from FY 2012-13. Costs and revenues are accounted for as interest expenditure / income, as the case may be.

3.5 Valuation of investments:

a. Held to Maturity:

(i) Securities under the category ''Held to Maturity'' are valued at cost. Wherever the cost is higher than the face value, the premium is amortized over the remaining period of maturity.

(ii) In case of other investments under "Held to Maturity" category, where the cost price is less than the face value, the difference is ignored. In case of investments in subsidiaries and joint ventures permanent diminution in value is recognized and provided for. Investment in RRBs is valued at carrying cost.

(iii) On sale of investments iri this category (a) the net profit is initially taken to profit and loss account and thereafter net of applicable taxes and statutory reserve is appropriated to the ''Capital Reserve account'' and (b) the net loss is charged to the profit and loss account.

b. Available for Sale:

The individual securities under this category are marked to market. Central Government securities are valued at market rates declared by Fixed Income Money Market and Derivatives Association of India [FIMMDA], State Government securities, other approved securities, Debentures and Bonds are valued as per the yield curve, average credit spread rating and methodology suggested by FIMMDA. Quoted Shares are valued at market rates. Unquoted shares are valued at book value ascertained from the latest available Balance Sheet and in case the latest Balance Sheet is not available, the same is valued at Rs. 1/- per company.

Treasury bills and commercial papers are valued at carrying cost. Mutual Fund Instruments are valued at market rate or repurchase price or net asset value in that order depending on their availability.

Based on the above valuation under each of six-sub classifications under ''Available for Sale'':

(i) If it results in appreciation, the same is ignored.

(ii) If it results in depreciation, the same is charged to Profit & Loss account and credited to Provision for Depreciation on Investment (AFS) under the head Provision & Contingencies under liability.

(iii) The book value of securities is not changed after revaluation except as required by the RBI guidelines.

(iv) Profit or Loss on sale of investment in this category is accounted for in the Profit and loss account.

c. Held for Trading :

(i) The individual scrips under this category are held at original cost. The same is valued at monthly intervals at market rates or as per the prices declared by FIMMDA and in respect of each classification under this category, net depreciation if any, is charged to profit and loss account and credited to Provision on Depreciation on Investment (HFT) under liability. Net appreciation, if any is ignored. The book value of the securities is not changed 1 after revaluation except as required by the RBI guidelines.

(ii) Profit or loss on sale of investment in this category is accounted for in the Profit and Loss account.

d. The non-performing investments are identified and depreciation/ provision is made as per RBI guidelines.

e. Costs such as brokerage, fees etc. incurred at the time of acquisition of securities (except equity/ preference shares, where it is treated as cost of acquisition) are recognized as expenses.

f. Interest Rate Swaps:

(i) Valuation:

(a) Hedging Swaps: Interest Rate Swaps for hedging assets and liabilities are not marked to market.

(b) Trading Swaps: Interest Rate Swap for trading purpose is marked to market.

(ii) Accounting of income on derivative deals:

(a) Hedging Swaps: Income is accounted for on realization basis. Expenditure, if any, is accounted for on accrual basis, if ascertainable.

(b) Trading Swaps: Income or expenditure is accounted for on realization basis on settlement date.

(iii) Accounting of gain or loss on termination of swaps:

(a) Hedging Swaps: Any gain or loss on the terminated swap is recognized over the shorter of (a) the remaining contractual life of the swap or (b) the remaining life of the asset/ liability.

(b) Trading Swaps: Any gain or loss on terminated swap is recognized as income or expenses in the year of termination.

4. ADVANCES:

4.1 Advances shown are net of write offs, provisions made for non-performing assets, claims settled with the credit guarantee institutions and rediscounts.

4.2 Classification of advances and provisions are made in accordance with the prudential norms prescribed by RBI from time to time.

4.3 Provision for performing assets is shown under the head "Other liabilities and provisions".

4.4 In respect of Rescheduled/ Restructured accounts, provision for diminution in fair value of restructured advances is made in present value basis as per RBI guidelines.

4.5 In case of financial assets sold to Assets Reconstruction Company (ARC)/ Securitization company (SC), if the sale is at price lower than the net book value, the short fall is debited to profit and loss account. If the sale value is higher than the net book value, the surplus provision is not reversed but will be utilized to meet the deficit/ loss on account of sale of other financial assets.

5. FIXED.ASSETS AND DEPRECIATION:

5.1 Premises and Other Fixed Assets are accounted for at cost except for certain premises, which were revalued and stated at revalued amount.

5.2 Depreciation on fixed assets (other than those referred in para 5.3, 5.4, 5.5 below) is provided for on the diminishing balance method at the rates specified in Schedule XIV to the Companies Act, 1956 except in case of revalued assets, in respect of which higher depreciation is provided on the basis of estimated useful life of these revalued assets.

5.3 On computers, depreciation is provided at the rate of 33.33% on Straight Line Method so as to write down the asset value in three years to Rupee One as per RBI guidelines. Computers include softwares, ATMs and UPS also.

5.4 On Fixed Assets having original cost below Rs. 5,000/-, depreciation is provided for at applicable rates instead of providing 100% depreciation in the year of purchase.

5.5 Depreciation is provided for full year in respect of assets purchased during the year. No depreciation is provided on assets sold I discarded during the year.

5.6 Depreciation relating to revalued amount over and above the cost of the revalued assets, is provided on diminishing balance method over the residual life of the fixed assets as stated in para 5.2 and adjusted against the Revaluation Reserve. Revaluation reserve on fully depreciated properties is amortized on the basis of their residual life as certified by approved valuers.

5.7 Leasehold land cost is amortized over the period of lease on Straight Line Method (SLM).

6. REVENUE RECOGNITION

6.1 All revenues and costs are accounted for on accrual basis except the following items, which are accounted for on cash basis:-

a. Interest on Advances and Investments identified as Non-Performing Assets according to the prudential norms issued by RBI, from time to time.

b. Income from commission viz on Guarantees, Letter of Credit, Government business, Bancassuarance, Mutual Fund business and Locker Rent.

c. Interest for overdue period on bills purchased and bills discounted.

d. Insurance claims.

e. Remuneration on Debenture Trustee Business.

f. Loan Processing Fees.

g. Income from Merchant Banking Operations and Underwriting Commission.

h. Transaction processing fees received on utility bill pay services through internet banking.

6.2 Pursuant to RBI guidelines, the interest payable on overdue term deposit is provided on accrual basis at Saving Bank rate effective from date of RBI circular dated 22.08.2008, and the balance at the time of renewal.

7. EMPLOYEES'' BENEFITS:

Defined Contribution Plan: The contribution paid / payable under defined contribution benefit schemes are charged to profit and loss account.

Defined Benefit Plans: Bank''s liabilities towards defined benefit schemes are determined on the basis of an actuarial valuation made at the end of financial year. Actuarial gains and losses are recognized in the Profit and Loss account.

8. IMPAIRMENT OF ASSETS:

Impairment losses if any, on fixed assets including Revalued Assets, are recognized in accordance with Accounting Standard 28 - Impairment of Assets issued by the Institute of Chartered Accountants of India (ICAI) and charged to profit and loss account.

9. PROVISIONS CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

As per the Accounting Standard 29-"Provisions, Contingent Liabilities and Contingent Assets" issued by ICAI, the Bank recognizes provisions only when it has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and when a reliable estimate of the amount of the obligation can be made.

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

10. NET PROFIT, PROVISIONS AND CONTINGENCIES:

The Net Profit disclosed is after making the Provisions and Contingencies which include adjustment to the value of investments, write off of bad debts, provision for taxation (including deferred tax), provision for advances and contingencies/others.

11. INCOME TAX:

The provision for tax for the year comprises liability towards Current Income Tax, Wealth Tax and Deferred Tax. The deferred tax asset/ liability is recognized, subject to the consideration of prudence, taking into account the timing differences between the taxable income and accounting income, in terms of the Accounting Standard 22 issued by ICAI. The effect of change in tax rates on deferred tax assets and liabilities is recognized in the profit and loss account in the period of applicability of the change.

Interest income on refund of Income Tax is accounted for in the year the order is passed by the concerned authority.

The demand raised by the Income Tax authorities including the interest thereon is provided for when the demand is upheld in the second appeal (i.e. by ITAT)

12. EARNINGS PER SHARE

Basic and Diluted earnings per equity share are reported in accordance with the Accounting Standard (AS-20) "Earnings Per Share" issued by ICAI. Basic Earnings per share is arrived by dividing net profit by the weighted average number of equity shares outstanding for the period. The diluted earnings per equity share are computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the period.

Mar 31, 2012

1. ACCOUNTING CONVENTIONS:

1.1 The financial statements are prepared under the historical cost conventions except as otherwise stated and conform to the Generally Accepted Accounting Principles (GAAP) which include statutory provisions, practices prevailing within the Banking Industry in India, the regulatory/ Reserve Bank of India ("RBI") guidelines, Accounting Standards/guidance notes issued by Institute of Chartered Accountants of India (ICAI).

1.2 The preparation of financial statements requires the management to make estimates and assumptions considered in the reported amount of assets and liabilities (including contingent liabilities) as of the date of financial statements and reported income and expenses for the period under report. Management is of the view that the estimates used in the preparation of financial statements are prudent and reasonable.

1.3 Revenue and costs are accounted for on accrual basis except as stated in para 6.1 below.

1.4 The accounting policies with regard to Revenue Recognition, Investments and Advances are in conformity with the prudential accounting norms issued by Reserve Bank of India from time to time.

2. FOREIGN EXCHANGE TRANSACTIONS:

2.1 The foreign currency transactions are translated at the weekly average closing rates for the preceding week as published by Foreign Exchange Dealers' Association of India (FEDAI). Revaluation of foreign currency assets and liabilities as on Balance Sheet date is done at the closing exchange rate published by FEDAI and the resultant profit/loss is accounted for in the Profit & Loss Account.

2.2 Outstanding Forward Exchange Contracts are stated at contracted rates and revalued as on Balance Sheet date at the exchange rates published by FEDAI for specified maturities. The resulting profit/loss is recognized in the Profit & Loss Account in accordance with RBI/FEDAI Guidelines.

2.3 Contingent Liabilities on account of Guarantees and Letters of Credit issued in foreign currency are stated in the Balance Sheet at the closing exchange rates published by FEDAI.

3. INVESTMENTS:

As per Reserve Bank of India guidelines, the investments are classified and valued as under:

3.1 Investments are classified in the following categories:

a. Held to maturity

b. Available for sale

c. Held for trading

3.2 All the securities are further classified in the following six classifications:

a. Government Securities

b. Other approved securities

c. Shares

d. Debentures and bonds

e. Subsidiaries and Joint Ventures

f. Others (Commercial Papers, Mutual Fund Units, Rural Infrastructure Development Funds etc).

3.3 Bank decides the category of each investment at the time of acquisition and classifies the same accordingly. Shifting of securities from one category to another is done once in a year with the approval of Board of Directors, at the least of acquisition cost/book value/market value on the date of shifting. The depreciation, if any, on such shifting is provided for and the book value of the security is changed accordingly.

3.4 REPO/Reverse REPO

The Bank has adopted the Uniform Accounting Procedure prescribed by the RBI for accounting of market Repo and Reverse Repo transactions [other than the Liquidity Adjustment Facility (LAF)]. Repo and Reverse Repo Transactions are treated as Collateralized Borrowing/ Lending Operations with an agreement to repurchase on the agreed terms. Securities sold under Repo are continued to be shown under investment and Securities purchased under Reverse Repo are not included in Investment. Costs and revenues are accounted for as interest expenditure/income, as the case may be.

Securities purchased/sold under LAF with RBI are debited/credited to Investment Account and reversed on maturity of the transactions. Interest thereon is accounted for as expenditure/revenue as the case may be.

3.5 Valuation of investments:

a. Held to Maturity:

(i) Securities under the category 'Held to Maturity' are valued at cost. Wherever the cost is higher than the face value, the premium is amortized over the remaining period of maturity.

(ii) In case of other investments under "Held to Maturity" category, where the cost price is less than the face value, the difference is ignored. In case of investments in subsidiaries and joint ventures permanent diminution in value is recognized and provided for. Investment in RRBs is valued at carrying cost.

(iii) On sale of investments in this category (a) the net profit is initially taken to profit and loss account and thereafter net of applicable taxes and statutory reserve is appropriated to the 'Capital Reserve account' and (b) the net loss is charged to the profit and loss account.

b. Available for Sale:

The individual securities under this category are marked to market. Central Government securities are valued at market rates declared by Fixed Income Money Market and Derivatives Association of India [FIMMDA]. State Government securities, other approved securities, Debentures and Bonds are valued as per the yield curve, average credit spread rating and methodology suggested by FIMMDA. Quoted Shares are valued at market rates. Unquoted shares are valued at book value ascertained from the latest available Balance Sheet and in case the latest Balance Sheet is not available, the same is valued at Re.1/- per company.

Treasury bills and commercial papers are valued at carrying cost. Mutual Fund Instruments are valued at market rate or repurchase price or net asset value in that order depending on their availability.

Based on the above valuation under each of six-sub classifications under 'Available for Sale':

(i) If it results in appreciation, the same is ignored.

(ii) If it results in depreciation, the same is charged to Profit & Loss account and credited to Provision for Depreciation on Investment (AFS) under the head Provision & Contingencies under liability.

(iii) The book value of securities is not changed after revaluation except as required by the RBI guidelines.

(iv) Profit or Loss on sale of investment in this category is accounted for in the Profit and loss account.

c. Held for Trading:

(i) The individual scrip's under this category are held at original cost. The same is valued at monthly intervals at market rates or as per the prices declared by FIMMDA and in respect of each classification under this category, net depreciation if any, is charged to profit and loss account and credited to Provision on Depreciation on Investment (HFT) under liability. Net appreciation, if any is ignored. The book value of the securities is not changed after revaluation except as required by the RBI guidelines.

(ii) Profit or loss on sale of investment in this category is accounted for in the Profit and Loss account.

d. The non-performing investments are identified and depreciation/provision is made as per RBI guidelines.

e. Costs such as brokerage, fees etc. incurred at the time of acquisition of securities (except equity/ preference shares, where it is treated as cost of acquisition) are recognized as expenses.

f. Interest Rate Swaps:

(i) Valuation:

(a) Hedging Swaps: Interest Rate Swaps for hedging assets and liabilities are not marked to market.

(b) Trading Swaps: Interest Rate Swap for trading purpose is marked to market.

(ii) Accounting of income on derivative deals:

(a) Hedging Swaps: Income is accounted for on realization basis. Expenditure, if any, is accounted for on accrual basis, if ascertainable.

(b) Trading Swaps: Income or expenditure is accounted for on realization basis on settlement date.

(iii) Accounting of gain or loss on termination of swaps:

(a) Hedging Swaps: Any gain or loss on the terminated swap is recognized over the shorter of (a) the remaining contractual life of the swap or (b) the remaining life of the asset/liability.

(b) Trading Swaps: Any gain or loss on terminated swap is recognized as income or expenses in the year of termination.

4. ADVANCES:

4.1 Advances shown are net of write offs, provisions made for non-performing assets, claims settled with the credit guarantee institutions and rediscounts.

4.2 Classification of advances and provisions are made in accordance with the prudential norms prescribed by RBI from time to time.

4.3 Provision for performing assets is shown under the head "Other liabilities and provisions.

4.4 In respect of Rescheduled/Restructured accounts, provision for diminution in fair value of restructured advances is made in present value basis as per RBI guidelines.

4.5 In case of financial assets sold to Assets Reconstruction Company (ARC)/Securitization company(SC), if the sale is at price lower than the net book value, the short fall is debited to profit and loss account. If the sale value is higher than the net book value, the surplus provision is not reversed but will be utilized to meet the deficit/loss on account of sale of other financial assets.

5. FIXED ASSETS AND DEPRECIATION:

5.1 Premises and Other Fixed Assets are accounted for at cost except for certain premises, which were revalued and stated at revalued amount.

5.2 Depreciation on fixed assets (other than those referred in para 5.3, 5.4, 5.5 below) is provided for on the diminishing balance method at the rates specified in Schedule XIV to the Companies Act, 1956 except in case of revalued assets, in respect of which higher depreciation is provided on the basis of estimated useful life of these revalued assets.

5.3 On computers, depreciation is provided at the rate of 33.33% on Straight Line Method so as to write down the asset value in three years to Rupee One as per RBI guidelines. Computers include softwares, ATMs and UPS also.

5.4 On Fixed Assets having original cost below t 5,000/-, depreciation is provided for at applicable rates instead of providing 100% depreciation in the year of purchase.

5.5 Depreciation is provided for full year in respect of assets purchased during the year. No depreciation is provided on assets sold/discarded during the year.

5.6 Depreciation relating to revalued amount over and above the cost of the revalued assets, is provided on diminishing balance method over the life of the fixed assets as stated in para 5.2 and adjusted against the Revaluation Reserve.

5.7 Leasehold land cost is amortized over the period of lease on Straight Line Method (SLM).

6. REVENUE RECOGNITION

6.1 All revenues and costs are accounted for on accrual basis except the following items, which are accounted for on cash basis:-

a. Interest on Advances and Investments identified as Non-Performing Assets according to the prudential norms issued by RBI, from time to time.

b. Income from commission viz on Guarantees, Letter of Credit, Government business, Bancassuarance, Mutual Fund business and Locker Rent.

c. Interest for overdue period on bills purchased and bills discounted.

d. Insurance claims.

e. Remuneration on Debenture Trustee Business.

f. Loan Processing Fees.

g. Income from Merchant Banking Operations and Underwriting Commission.

h. Transaction processing fees received on utility bill pay services through internet banking.

6.2 Pursuant to RBI guidelines, the interest payable on overdue term deposit is provided on accrual basis at Saving Bank rate effective from date of RBI circular dated 22.08.2008, and the balance at the time of renewal.

7. EMPLOYEES' BENEFITS:

Defined Contribution Plan: The contribution paid/payable under defined contribution benefit schemes are charged to profit and loss account.

Defined Benefit Plan: Bank's liabilities towards defined benefit schemes are determined on the basis of an actuarial valuation made at the end of financial year. Actuarial gains and losses are recognized in the Profit and Loss account.

8. IMPAIRMENT OF ASSETS:

Impairment losses if any, on fixed assets including Revalued Assets, are recognized in accordance with Accounting Standard 28- Impairment of Assets issued by the Institute of Chartered Accountants of India (ICAI) and charged to profit and loss account.

9. PROVISIONS CONTINGENT LIABILITIES AND CONTIN- GENT ASSETS:

As per the Accounting Standard 29-Provisions, Contingent Liabilities and Contingent Assets" issued by ICAI, the Bank recognizes provisions only when it has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and when a reliable estimate of the amount of the obligation can be made.

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

10. NET PROFIT, PROVISIONS AND CONTINGENCIES:

The Net Profit disclosed is after making the Provisions and Contingencies which include adjustment to the value of investments, write off of bad debts, provision for taxation (including deferred tax), provision for advances and contingencies/others.

11. INCOME TAX:

The provision for tax for the year comprises liability towards Current Income Tax, Wealth Tax and Deferred Tax. The deferred tax asset/liability is recognized, subject to the consideration of prudence, taking into account the timing differences between the taxable income and accounting income, in terms of the Accounting Standard 22 issued by ICAI.

The effect of change in tax rates on deferred tax assets and liabilities is recognized in the profit and loss account in the period of applicability of the change. Interest income on refund of Income Tax is accounted for in the year the order is passed by the concerned authority.

The demand raised by the Income Tax authorities including the interest thereon is provided for when the demand is upheld in the second appeal (i.e. by ITAT).

12. EARNINGS PER SHARE

Basic and Diluted earnings per equity share are reported in accordance with the Accounting Standard (AS-20) "Earnings Per Share" issued by ICAI. Basic Earnings per share is arrived by dividing net profit by the weighted average number of equity shares outstanding for the period. The diluted earnings per equity share are computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the period.

Mar 31, 2011

1. Accounting Conventions:

1.1 The financial statements are prepared under the historical cost conventions except as otherwise stated and conform to the statutory provisions and practices prevailing within the Banking Industry in India and the guidelines issued by Reserve Bank of India (ÃRBIÃ).

1.2 Revenue and costs are accounted for on accrual basis except as otherwise stated.

1.3 The accounting policies with regard to Revenue Recognition, Investments and Advances are in conformity with the prudential accounting norms issued by Reserve Bank of India from time to time.

2. Foreign Exchange Transactions:

2.1. The foreign currency transactions are translated at the weekly average closing rates for the preceding week as published by Foreign Exchange Dealers Association of India (FEDAI). Revaluation of foreign currency assets and liabilities as on Balance Sheet date is done at the closing exchange rate published by FEDAI and the resultant profit/loss is accounted for in the Profit & Loss Account.

2.2. Outstanding Forward Exchange Contracts are stated at contracted rates and revalued as on Balance Sheet date at the exchange rates published by FEDAI for specified maturities. The resulting profit/loss is recognized in the Profit & Loss Account in accordance with RBI / FEDAI Guidelines.

2.3 Contingent Liabilities on account of Guarantees and Letters of Credit issued in foreign currency are stated in the Balance Sheet at the closing exchange rates published by FEDAI.

3. Investments:

As per Reserve Bank of India guidelines, the investments are classified and valued as under:

3.1 Investments in SLR and non-SLR securities (Shares, Debentures, Bonds, units of MF, CP, CD etc.) are classified in the following categories:

a. Held to maturity

b. Available for sale

c. Held for trading

3.2 All the securities are classified in the following six classifications:

a. Government Securities

b. Other approved securities

c. Shares

d. Debentures and bonds

e. Subsidiaries and Joint Ventures

f. Others (Commercial Papers, Mutual Fund Units , RIDF etc).

3.3 Bank decides the category of each investment at the time of acquisition and classifies the same accordingly. Shifting of securities from one category to another is done once in a year with the approval of Board of Directors, at the least of acquisition cost / book value / market value on the date of shifting. The depreciation, if any, on such shifting is provided for and the book value of the security is changed accordingly.

3.4 Valuation of investments:

a. Held to Maturity:

(i) Securities under the category Held to Maturity are valued at cost. Wherever the cost is higher than the face value, the premium is amortized over the remaining period of maturity.

(ii) In case of other investments under ÃHeld to MaturityÃ category, where the cost price is less than the face value, the difference is ignored. In case of investments in subsidiaries and joint ventures permanent diminution in value is recognized and provided for. Investment in RRBs is valued at carrying cost.

(iii) On sale of investments in this category (a) the net profit is initially taken to profit and loss account and thereafter net of applicable taxes and statutory reserve is appropriated to the ÃCapital Reserve accountÃ and (b) the net loss is charged to the profit and loss account.

b. Available for Sale:

The individual securities under this category are marked to market. Central Government securities are valued at market rates declared by Fixed Income Money Market and Derivatives Association of India [FIMMDA]. State Government securities, other approved securities, Debentures and Bonds are valued as per the yield curve, average credit spread rating and methodology suggested by FIMMDA. Quoted Shares are valued at market rates. Unquoted shares are valued at book value ascertained from the latest available Balance Sheet and in case the latest Balance Sheet is not available, the same is valued at Rs. 1/- per company.

Treasury bills and commercial papers are valued at carrying cost. Mutual Fund Instruments are valued at market rate or repurchase price or net asset value in that order depending on their availability.

Based on the above valuation under each of six-sub classifications under Available for Sale:

(i) If the figure results in appreciation, the same is ignored.

(ii) If the figure results in depreciation, the same is charged to Profit & Loss account.

(iii) The book value of securities is not changed after revaluation except as required by the RBI guidelines.

(iv) Profit or Loss on sale of investment in this category is accounted for in the Profit and loss account.

c. Held for Trading:

(i) The individual scrips under this category are held at original cost. The same is valued at monthly intervals at market rates or as per the prices declared by FIMMDA and in respect of each classification under this category, net depreciation if any, is charged to profit and loss account and net appreciation, if any is ignored. The book value of the securities is not changed after revaluation except as required by the RBI guidelines.

(ii) Profit or loss on sale of investment in this category is accounted for in the Profit and Loss account.

d. The non-performing investments are identified and depreciation/ provision is made as per RBI guidelines.

e. Costs such as brokerage, fees etc. incurred at the time of acquisition of securities (except equity / preference shares, where it is treated as cost of acquisition) are recognized as expenses.

f. Interest Rate Swaps: (i) Valuation:

(a) Hedging Swaps: Interest Rate Swaps for hedging assets and liabilities are not marked to market.

(b) Trading Swaps: Interest Rate Swap for trading purpose is marked to market.

(ii) Accounting of income on derivative deals:

(a) Hedging Swaps: Income is accounted for on realization basis. Expenditure, if any, is accounted for on accrual basis, if ascertainable.

(b) Trading Swaps: Income or expenditure is accounted for on realization basis on settlement date.

(iii) Accounting of gain or loss on termination of swaps:

(a) Hedging Swaps: Any gain or loss on the terminated swap is recognized over the shorter of (a) the remaining contractual life of the swap or (b) the remaining life of the asset/ liability.

(b) Trading Swaps: Any gain or loss on terminated swap is recognized as income or expenses in the year of termination.

4. Advances:

4.1 Advances shown are net of write offs, provisions made for non-performing assets, claims settled with the credit guarantee institutions and rediscounts.

4.2 Classification of advances and provisions are made in accordance with the prudential norms prescribed by RBI from time to time except that provision on NPA-secured substandard assets of the Bank is made @ 15% instead of 10% as per IRAC norms issued by RBI

4.3 Provision for performing assets is shown under the head ÃOther liabilities and provisionsÃ.

4.4 Recoveries in the Non Performing Assets are appropriated first towards principal and thereafter towards interest.

5. Fixed Assets and Depreciation:

5.1 Premises and Other Fixed Assets are accounted for at cost except for certain premises, which were revalued and stated at revalued amount.

5.2 Depreciation is provided for on the diminishing balance method at the rates specified in Schedule XIV to the Companies Act, 1956 on fixed assets except for:-

a. On computers, depreciation is provided at the rate of 33.33% on Straight Line Method so as to write down the asset value in three years to Rupee One as per RBI guidelines. Computers include softwares, ATMs and UPS also.

b. On Fixed Assets having original cost below Rs. 5,000/-, depreciation is provided for at applicable rates instead of providing 100% depreciation in the year of purchase.

c. Depreciation is provided for full year in respect of assets purchased during the year. No depreciation is provided on assets sold/discarded during the year.

5.3 Depreciation relating to revaluation is adjusted against the Revaluation Reserve.

5.4 Leasehold land cost is amortized over the period of lease.

6. Revenue Recognition

6.1 All revenues and costs are accounted for on accrual basis except the following items, which are accounted for on cash basis:-

a. Interest on Advances and Investments identified as Non-Performing Assets according to the prudential norms issued by RBI, from time to time.

b. Income from commission viz on Guarantees, Letter of Credit, Government business, Bancassuarance, Mutual Fund business and Locker Rent.

c. Interest for overdue period on bills purchased and bills discounted.

d. Insurance claims.

e. Remuneration on Debenture Trustee Business.

f. Processing Fees.

g. Income from Merchant Banking Operations and Underwriting Commission.

6.2 Interest income on refund of Income Tax is accounted for in the year the order is passed by the concerned authority.

6.3 Pursuant to RBI guidelines, the interest payable on overdue term deposit is provided on accrual basis at Saving Bank rate effective from date of RBI circular dated 22.08.2008, and the balance at the time of renewal.

7. EmployeesÃ Benefits:

Defined Contribution Plan: The contribution paid/ payable under defined contribution benefit schemes are charged to profit and loss account.

Defined Benefit Plan: BankÃs liabilities towards defined benefit schemes are determined using Projected Unit Credit Method. Actuarial Valuations under the Projected Unit Credit Method are carried out as at the Balance Sheet date. Actuarial gains and losses are recognized in the Profit and Loss account.

8. Impairment of Assets:

Impairment losses if any, on fixed assets including Revalued Assets, are recognized in accordance with Accounting Standard 28- Impairment of Assets issued by the Institute of Chartered Accountants of India (ICAI) and charged to profit and loss account.

9. Provisions Contingent Liabilities and Contingent Assets:

As per the Accounting Standard 29-ÃProvisions, Contingent Liabilities and Contingent AssetsÃ issued by ICAI, the Bank recognizes provisions only when it has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and when a reliable estimate of the amount of the obligation can be made.

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

10. Net Profit, Provisions and contingencies:

The Net Profit disclosed is after making the Provisions and Contingencies which include adjustment to the value of investments, write off of bad debts, provision for taxation (including deferred tax), provision for advances and contingencies/others.

11. Income tax:

The provision for tax for the year comprises liability towards Current Income Tax, Wealth Tax and Deferred Tax. The deferred tax asset is recognized, subject to the consideration of prudence, taking into account the timing differences between the taxable income and accounting income, in terms of the Accounting Standard 22 issued by ICAI.

Mar 31, 2010

1. Accounting Conventions:

1.1 The financial statements are prepared under the historical cost conventions except as otherwise stated and conform to the statutory provisions and practices prevailing within the Banking Industry in India and the guidelines issued by Reserve Bank of India (RBI).

1.2 Revenue and costs are accounted for on accrual basis except as otherwise stated.

1.3 The accounting policies with regard to Revenue Recognition, Investments and Advances are in conformity with the prudential accounting norms issued by Reserve Bank of India from time to time.

2. Foreign Exchange Transactions:

2.1. The foreign currency transactions are translated at the weekly average closing rates for the preceding week as published by Foreign Exchange Dealers Association of India (FEDAI). Revaluation of foreign currency assets and liabilities as on Balance Sheet date is done at the closing exchange rate published by FEDAI and the resultant profit/loss is accounted for in the Profit & Loss Account.

2.2. Outstanding Forward Exchange Contracts are stated at contracted rates and revalued as on Balance Sheet date at the exchange rates published by FEDAI for specified maturities. The resulting profit/loss is recognized in the Profit & Loss Account in accordance with RBI / FEDAI Guidelines.

2.3 Contingent Liabilities on account of Guarantees and Letters of Credit issued in foreign currency are stated in the Balance Sheet at the closing exchange rates published by FEDAI.

3. Investments:

As per Reserve Bank of India guidelines, the investments are classified and valued as under:

3.1 Investments in SLR and Non-SLR securities (Shares, Debentures, Bonds, units of MF, CP, CD etc.) are classified in the following categories:

a. Held to maturity

b. Available for sale

c. Held for trading

3.2 All the securities are classified in the following six classifications:

a. Government Securities

b. Other approved securities

c. Shares

d. Debentures and bonds

e. Subsidiaries and Joint Ventures

f. Others (Commercial Papers, Mutual Fund Units, RIDF etc).

3.3 Bank decides the category of each investment at the time of acquisition and classifies the same accordingly. Shifting of securities from one category to another is done once in a year with the approval of Board of Directors, at the least of acquisition cost/ book value / market value on the date of shifting. The depreciation, if any, on such shifting is provided for and the book value of the security is changed accordingly.

3.4 Valuation of investments:

a. Held to Maturity:

(i) Securities under the category Held to Maturity are valued at cost. Wherever the cost is higher than the face value, the premium is amortized over the remaining period of maturity.

(ii) In case of other investments under "Held to Maturity" category, where the cost price is less than the face value, the difference, is ignored. In case of investments in subsidiaries and joint ventures permanent diminution in value is recognized and provided for. Investment in RRBs is valued at carrying cost.

(iii) On sale of investments in this category (a) the net profit is initially taken to profit and loss account and thereafter net of applicable taxes and statutory reserve is appropriated to the Capital Reserve account and (b) the net loss is charged to the profit and loss account.

b. Available (or Sale:

The individual securities under this category are marked to market. Central Government securities are valued at market rates declared by Fixed Income Money Market and Derivatives Association of India [FIMMDAJ. State Government securities, other approved securities. Debentures and Bonds are valued as per the yield curve, average credit spread rating and methodology suggested by FIMMDA. Quoted Shares are valued at market rates. Unquoted shares are valued at book value ascertained from the latest available Balance Sheet and in case the latest Balance Sheet is not available, the same is valued at Re.1/- per company.

Treasury bills and commercial papers are valued at carrying cost. Mutual Fund Instruments are valued at market rate or repurchase price or net asset value in that order depending on their availability.

Based on the above valuation under each of six-sub classifications under Available for Sale:

i. If the figure results in appreciation, the same is ignored.

ii. If the figure results in depreciation, the same is charged to Profit & Loss account.

iii. The book value of securities is not changed after revaluation except as required by the RBI guidelines.

iv. Profit or Loss on sale of investment in this category is accounted for in the Profit and loss account.

c. Held for Trading:

(i) The individual scrips under this category are held at original cost. The same is valued at monthly intervals at market rates or as per the prices declared by FIMMDA and in respect of each classification under this category, net depreciation if any, is charged to profit and loss account and net appreciation, if any is ignored. The book value of the securities is not changed after revaluation except as required by the RBI guidelines.

(ii) Profit or loss on sale of investment in this category is accounted for in the Profit and Loss account.

d. The non-performing investments are identified and depreciation/ provision is made as per RBI guidelines.

e. Costs such as brokerage, fees etc. incurred at the time of acquisition of securities (except equity / preference shares, where it is treated as cost of acquisition) are recognized as expenses.

f. Interest Rate Swaps: (i) Valuation:

(a) Hedging Swaps: Interest Rate Swaps for hedging assets and liabilities are not marked to market.

(b) Trading Swaps: Interest Rate Swaps for trading purpose is marked to market.

(ii) Accounting of income on derivative deals:

(a) Hedging Swaps: Income is accounted for on realization basis. Expenditure, if any, is accounted for on accrual basis, if ascertainable

(b) Trading Swaps: Income or expenditure is accounted for on realization basis on settlement date.

(ili) Accounting of gain or loss on termination of swaps:

(a) Hedging Swaps: Any gain or loss on the terminated swap is recognized over the shorter of (a) the remaining contractual life of the swap or (b) the remaining life of the asset/ liability.

(b) Trading Swaps: Any gain or loss on terminated swap is recognized as income or expenses in the year of termination.

4. Advances:

4.1 Advances shown are net of write offs, provisions made for non-performing assets, claims settled with the credit guarantee institutions and rediscounts.

4.2 Classification of advances and provisions are made in accordance with the prudential norms prescribed by RBI from time to time.

4.3 Provision for performing assets is shown under the head "Other liabilities and provisions".

4.4 Recoveries in the Non Performing Assets are appropriated first towards principal and thereafter towards interest.

5. Fixed Assets and Depreciation:

5.1 Premises and Other Fixed Assets are accounted for at cost except for certain premises, which were revalued and stated at revalued amount.

5.2 Depreciation is provided for on the diminishing balance method at the rates specified in Schedule XIV to the Companies Act, 1956 on fixed assets except for:-

a. On computers, depreciation is provided at the rate of 33.33% on Straight Line Method so as to write down the asset value in three years to Rupee One as per RBI guidelines. Computers include softwares, ATMs and UPS also.

b. On Fixed Assets having original cost below Rs. 5,000/-, depreciation is provided for at applicable rates instead of providing 100% depreciation in the year of purchase.

c. Depreciation is provided for full year in respect of assets purchased during the year. No depreciation is provided on assets sold/discarded during the year.

5.3 Depreciation relating to revaluation is adjusted against the Revaluation Reserve.

5.4 Leasehold land cost is amortized over the period of lease.

6. Revenue Recognition:

6.1 All revenues and costs are accounted for on accrual basis except the following items, which are accounted for on cash basis:-

a. Interest on Advances and Investments identified as Non-Performing Assets according to the prudential norms issued by RBI, from time to time.

b. Income from commission viz on Guarantees, Letter of Credit, Government business, Bancassuarance, Mutual Fund business and Locker Rent.

c. Interest for overdue period on bills purchased and bills discounted.

d. Insurance claims.

e. Remuneration on Debenture Trustee Business.

f Processing Fees.

g Income from Merchant Banking Operations and Underwriting Commission.

6.2 Interest income on refund of Income Tax is accounted for in the year the order is passed by the concerned authority.

6.3 Pursuant to RBI guidelines, the interest payable on overdue term deposit is provided on accrual basis at Saving Bank rate effective from date of RBI circular dated 22.08.2008, and the balance at the time of renewal.

7. Employees Benefits:

Defined Contribution Plan:The contribution paid/ payable under defined contribution benefit schemes are charged to profit and loss account.

Defined Benefit Plan: Bank s liabilities towards defined benefit schemes are determined using Projected Unit Credit Method. Actuarial Valuations under the Projected Unit Credit Method are carried out as at the Balance Sheet date. Actuarial gains and losses are recognized in the Profit and Loss account.

8. Impairment of Assets

Impairment losses if any, on fixed assets including Revalued Assets, are recognized in accordance with Accounting Standard 28- Impairment of Assets issued by the Institute of Chartered Accountants of India (ICAI) and charged to profit and loss account.

9. Provisions Contingent Liabilities and Contingent Assets

As per the Accounting Standard 29- "Provisions, Contingent Liabilities and Contingent Assets" issued by ICAI, the Bank recognizes provisions only when it has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and when a reliable estimate of the amount of the obligation can be made.

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

10. Net Profit, Provisions and Contingencies:

The Net Profit disclosed is after making the Provisions and Contingencies which include adjustment to the value of investments, write off of bad debts, provision for taxation (including deferred tax), provision for advances and contingencies/others.

11. Income tax:

The provision for tax for the year comprises liability towards Current Income Tax, Wealth Tax and Deferred Tax. The deferred tax asset is recognized, subject to the consideration of prudence, taking into account the timing differences between the taxable income and accounting income, in terms of the Accounting Standard 22 issued by ICAI.

Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article