Accounting Policies of Corporation Bank [Merged] Company

Mar 31, 2019

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

a) The financial statements have been prepared and presented under the historical cost convention on accrual basis of accounting unless otherwise stated and except for items recognized on cash basis, as per guidelines issued by the Reserve Bank of India [‘RBI’] and comply with the Accounting Standards (AS) issued by the Institute of Chartered Accountants of India (ICAI) and relevant requirements prescribed under the Banking Regulation Act, 1949 and Companies Act, 2013, and current practices prevailing within the banking industry in India.

b) The preparation of financial statements in conformity with generally accepted accounting principles [GAAP] requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. The Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Actuals could differ from these estimates.

2. REVENUE RECOGNITION

a] Income is recognized on an accrual basis except:

i) Commission on Bank Guarantees and Letters of Credit; arrangement of suppliers/buyers Credit; and Locker rent which are recognized on receipt basis.

ii) Interest income on Non-Performing advances and investments, and securities guaranteed by Central Government where interest is not realized within 90 days is recognized on receipt basis.

iii) Interest on Income-tax refunds is accounted for on receipt of Intimation order from the Income Tax Department.

b] Profit or loss on sale of investments is recognized in the Profit and Loss Account on settlement basis at the time of sale except the realized profit on sale of investments in ‘Held to Maturity’ category which is recognized in the profit and loss account and subsequently appropriated to capital reserve account in accordance with the RBI guidelines.

c] Brokerage/commission/incentives received on Bank’s direct subscriptions are deducted from the cost of securities, whereas brokerage paid in connection with acquisition of securities is treated as revenue expenditure.

d] The broken period interest on sale or purchase of securities is treated as revenue item.

3. ADVANCES

a) Advances are classified into standard, sub-standard, doubtful and loss assets in accordance with the guidelines issued by the RBI and are stated net of specific provisions made towards Non-Performing Advances [‘NPAs’].

b) Credit Card dues are identified as NPAs where minimum dues receivable as mentioned in the statement are in default for a continuous period of more than 90 days from the payment due date mentioned in statement. Income from non-performing card accounts is not recognized in financial statements.

c) Provisions for sub-standard, doubtful and loss advances are made on the basis of asset classification and provisioning requirements under the prudential norms laid down by the RBI.

d) Partial recoveries in non-preforming advances will be appropriated account-wise (not party-wise) in the following order of priority:

i. Expenditure/out of pocket expenses incurred for recovery,

ii. Interest irregularities/accrued interest, and

iii. Principal irregularities i.e. Principal outstanding in the account.

e) In case of non-performing advances involving compromise settlements, the recoveries may be adjusted first towards principal.

The adjustment of the recoveries as per sanction terms of competent Authority /NCLT/ Judiciary.

In case of non-performing advances involving compromise settlements, the adjustment of recoveries may be adjusted first towards principal then to interest if recovery is over and above the Principal amount.

f) General provision for Standard Assets made in accordance with RBI Guidelines is included under “Other Liabilities & Provisions-others”.

g) Restructured Accounts: For restructured advances, provisions for erosion in fair value of loan are made in accordance with the guidelines issued by the RBI, in addition to the provisions otherwise required. The provision for erosion in fair value of advance is not reduced from advances and is included in the Balance Sheet under the head “Other Liabilities & Provisions-Others”.

4. INVESTMENTS

4.1 Categorization & Classification

In accordance with the RBI guidelines, investments at the time of acquisition are categorized as:

- Held to Maturity [HTM],

- Available for Sale [AFS] and

- Held for Trading [HFT].

The Bank shifts investments from AFS/HFT category to HTM category at the lower of book value or market value. In other words, in cases where the market value is higher than the book value at the time of transfer, the appreciation should be ignored and the security should be transferred at the book value. In cases where the market value is less than the book value, the provision against depreciation held against this security (including the additional provision, if any, required based on valuation done on the date of transfer) should be adjusted to reduce the book value to the market value and the security should be transferred at the market value.

If the security was originally placed under the HTM category at a discount, it may be transferred to AFS/ HFT category at the acquisition price/book value. (It may be noted that as per existing instructions banks are not allowed to accrue the discount on the securities held under HTM category and, therefore, such securities would continue to be held at the acquisition cost till maturity). After transfer, these securities should be immediately re-valued and resultant depreciation, if any, may be provided.

If the security was originally placed in the HTM category at a premium, it may be transferred to the AFS / HFT category at the amortised cost. After transfer, these securities should be immediately re-valued and resultant depreciation, if any, may be provided.

In the case of transfer of securities from AFS to HFT category or vice-versa, the securities need not be revalued on the date of transfer and the provisions for the accumulated depreciation, if any, held may be transferred to the provisions for depreciation against the HFT securities and vice-versa.

However, for disclosure in the Balance Sheet, investments are classified under six categories — Government Securities, State Government Securities, Other Approved Securities, Shares, Debentures and Bonds, Investments in Subsidiaries/RRB/ Joint Ventures and Others [units of Mutual Funds, Commercial Papers, Certificate of Deposits and Venture Capital Funds].

Investments classified under ‘Held to Maturity’ include the following:

a) Investments in SLR securities as percentage of Demand and Time liabilities or as notified by RBI from time to time.

b) Recapitalization bonds received from the Government of India towards recapitalization requirements.

c) Investments in share of subsidiaries and joint ventures.

d) Investments in Venture Capital Funds, for an initial period of 3 years of each draw down, after 23^rd August 2006.

e) Investments in long term bonds issued by companies engaged in infrastructure activities.

Investments acquired primarily with an intention for trading are classified as HFT securities. As per RBI guidelines, securities in HFT category are not held beyond 90 days and are transferred to AFS category under exceptional circumstances like not able to sell or extreme volatility or market becoming unidirectional, with the approval of the Board/ALCO/Investment Committee.

All other investments are classified under AFS.

4.3 Valuation and consequential adjustments :

a] Held to Maturity: Investments classified under ‘Held-to-Maturity’ are carried at weighted average acquisition cost. Premium on acquisition, if any, is amortized on a straight-line basis over the remaining maturity period. In case of investments in subsidiaries/ joint ventures any diminution, other than temporary, in the value of such investment is recognized and provided for. Investments in Venture Capital Fund are valued at Cost.

b] Available for Sale and Held for Trading:

(i) Investments in these categories (classified under the category ‘Held for Trading’ and ‘Available for Sale’) are marked to market / estimated realizable value as per the RBI guidelines at monthly and quarterly intervals for HFT and AFS respectively. While the resultant net depreciation, if any, within each category referred to in 4.1 above, is recognized in profit & loss account as “Provisions and Contingencies”, the net appreciation is ignored except to the extent of depreciation previously provided. The book value of the individual scrip is not changed after revaluation.

(ii) In the case of write back of excess provision of depreciation the same is credited to “Provisions and Contingencies” and a like amount (net of taxes and transfer to Statutory Reserve) is appropriated to Investment Reserve Account under Schedule 2 — “Reserves & Surplus”.

4.3 Non-performing Investments

a] All such securities where repayment of principal or interest not serviced within 90 days from the due date are classified as Non-Performing Investments, except securities guaranteed by the Central Government which are treated as performing investments notwithstanding arrears of principal/interest payments. In respect of investments classified as Non-performing, appropriate provisions are made for the depreciation in the value of these investments. The depreciation requirement in respect of these securities is not set off against appreciation in respect of other performing securities.

b] Where the Bank has both credit and investment exposures to any borrower/group and in the event the credit exposure is classified as Non-Performing asset, the investment exposure to them is also classified as Non-Performing.

Clarifications:

If any credit facility availed by the issuer is NPA in the books of the bank, investment in any of the securities, including preference shares issued by the same issuer would also be treated as NPI and vice versa. However, if only the preference shares are classified as NPI, the investment in any of the other performing securities issued by the same issuer may not be classified as NPI and any performing credit facilities granted to that borrower need not be treated as NPA.

4.4 ACCOUNTING FOR REPO TRANSACTIONS

The Bank follows the accounting norms prescribed by the RBI vide circular Ref. No. RBI/2018-19/24 FMRD. DIRD.01/14.03.038/2018-19 dated 24.07.2018 in respect of repo/reverse repo transactions under market repo and the accounting guidelines issued vide Ref. RBI/20152016/403 FMRD.DIRD. 10/14.03.002/2015-16 dated 19.05.2016 in respect of repo/reverse repo transactions under Liquidity Adjustment Facility (LAF) and the Marginal Standing Facility (MSF).

The accounting norms to be followed by Bank for repo/ reverse repo transactions under LAF and the Marginal Standing Facility (MSF) of RBI shall be same as prescribed for market repo transactions. Further, in order to distinguish repo/reverse repo transactions with RBI from market repo transactions, a parallel set of accounts similar to those maintained for market repo transactions but prefixed with ‘RBI’ may be maintained.

Reckon the market value of collateral securities for calculating the haircut instead of face value while initiating the LAF/MSF transactions;

Bestow SLR status to the securities acquired by banks under reverse repo with RBI; and

Allow re-repo of securities received under LAF reverse repo with market participants subject to the conditions prescribed in RBI circular FMRD. DIRD.5/14.03.002/2014-15 dated February 5, 2015.

4.5 Accounting For Investment Transactions

i) The Bank follows settlement date method of accounting its investments;

ii) Cost is determined on weighted average cost method;

iii) Profit on sale is netted with loss on sale of securities; and

iv) The portion of income/loss that arises on account of movement in the yield, when the following investments are sold, will have to be treated as profit/ loss:

a) The difference between the sale price/ redemption value of fixed income securities and its book value shall be treated as profit or loss on sale of investments.

b) The difference between sale price/redemption value of mutual funds including liquid Mutual Funds and its book value shall be treated as profit/ loss on sale of investments.

c) In respect of discounted securities viz. CD/CP/T-Bills, difference between sale price and carrying cost (book value accrued interest) shall be treated as profit/ loss on investment.

5. FIXED ASSETS

a] i. Fixed assets are stated at cost less accumulated depreciation and provision for impairment. Cost comprises of the purchase price and any cost attributable for bringing the asset to its working condition for its intended use. The carrying amounts of fixed assets are reviewed at each Balance Sheet date and adjusted for any impairment in accordance with the Accounting Standard 28 (“Impairment of Assets”) issued in this regard by the ICAI.

ii. Land and Buildings (other than Leasehold Land) being part of Premises revalued during

September 2018 are stated at the average market value of two Valuation reports by crediting to Revaluation reserve. Consequently, depreciation on these assets is charged to Profit and Loss account and an equal amount is adjusted to the accumulated depreciation. Difference between the depreciation and revalued carrying amount and depreciation on its original cost is transferred from “Reserve for revaluation of Land and Building“ to “General Reserve” in accordance with AS 10 “Property, Plant and Equipment issued in this regard by the ICAI”.

iii. Impairment of Assets:

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

iv. Capital Work-in-progress includes cost of fixed assets that are not ready for their intended use and also includes advances paid to acquire fixed assets.

b] Depreciation shall be provided under the straight line method from the date of capitalization. The assets are depreciated taking into consideration the useful life of the asset as provided in Schedule II of the Companies Act, 2013. The Bank as a matter of prudence finds that the useful life of the following assets is lower than the useful life of the respective category of assets mentioned in Schedule II (ref.: Sec. 123) of the Companies Act, 2013 as stated below:

a. Motor Cycles, scooters and other mopeds - 8 years (As against standard life mentioned in Companies Act Schedule-II -10 years)

b. Mobile Phones - 3 years (As against standard life mentioned in Companies Act Schedule-II -15 years)

c. UPS and allied items - 5 years (As against standard life mentioned in Companies Act Schedule - II -10 years)

d. Air conditioners and Electrical fittings - 5 years (As against standard life mentioned in Companies Act Schedule-II - 10 years)

e. Leasehold Improvements are depreciated over period of 5 years.

f. Depreciation on premises is provided for on composite cost, wherever the value of land and building is not separately identified.

6. TRANSACTIONS INVOLVING FOREIGN EXCHANGE

a. Transactions denominated in foreign currencies are accounted for at the rates prevailing on the date of the transaction. Foreign currency monetary assets and liabilities are translated at the balance sheet date at closing exchange rates notified by Foreign Exchange Dealers Association of India [‘FEDAI’] and the resulting profits/ losses are recognized in the profit and loss account.

b. Foreign Currency non-monetary items, which are carried in terms at historical cost, are reported using the exchange rate at the date of the transaction.

c. Outstanding foreign exchange spot and forward contracts meant for trading purpose are revalued at the exchange rates specified for spot and the respective forward maturities as notified by FEDAI. The resulting profit or loss is shown under Profit or Loss account.

d. Foreign exchange forward contracts, which are not intended for trading and are outstanding at the balance sheet date, are revalued at the closing spot rate as notified by FEDAI and the resulting profit or loss is shown under Profit or Loss account. The premium or discount arising at the inception of such a forward exchange contract is amortized as interest expense or income over the period of the contract.

e. Contingent liabilities denominated in foreign currency are reported using the FEDAI closing spot rates.

7. DERIVATIVES

a) The bank enters into derivative contracts such as foreign currency interest rate swaps, currency swaps, currency futures, options and forward rate agreements.

b) The income/expenses on derivative contracts classified as hedge are recorded on accrual basis.

c) All trading derivative contracts are marked to market and the resultant gains or losses are recognized in the profit and loss account.

d) All derivative transactions are classified under contingent liabilities and those denominated in foreign currencies are reported using the FEDAI closing spot rates.

8. TRANSACTIONS INVOLVING PRECIOUS METALS

a] Income from precious metals transactions is accounted for as “Other Income”. In case of metals received on consignment basis, the income thereon is recognized at the time of sale.

b] Commodity loans to the constituents and deposits from public under the gold deposit scheme in the form of precious metals are translated at market related rates prevailing at the close of the period and shown under the head “Advances” and “Deposits” respectively.

c] Closing stock of precious metals [own dealing] is valued at lower of the cost and net realizable value.

d] Closing stock of gold held under Gold Deposit Scheme is valued at market related rates, as per RBI guidelines.

9. CASH AND BALANCES WITH RESERVE BANK OF INDIA

Cash and Balance with Reserve Bank of India include cash on hand and in ATMs, and gold in hand and balances with RBI in current accounts.,

10. EMPLOYEE BENEFITS

a) The Bank has accounted for Employee Benefits as per Accounting Standard 15 issued by the ICAI.

b) i) Contributions payable to Gratuity, Pension and Leave Encashment etc., which are defined benefits, based on actuarial valuations, at the Balance Sheet date, carried out by an independent actuary;

ii) Contributions payable to the recognized provident fund/National Pension Scheme (NPS), which is a defined contribution scheme; are charged to the profit and loss account.

11. LEASE TRANSACTIONS

Lease payments for assets taken on operating lease are recognized as an expense in the profit and loss account on a straight-line basis over the lease term.

12. CONTINGENT LIABILITIES AND PROVISIONS

In conformity with AS 29, “Provisions, Contingent Liabilities and Contingent Assets”, issued by the 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.

Past events leading to possible obligations existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Bank; or present obligations where it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or a reliable estimate of the amount of obligation cannot be made, are treated as contingent liabilities and are dealt-with in accordance with AS-29.

Contingent Assets are not recognized in the financial statements.

13. TAXES ON INCOME

Income-tax expense comprises current tax [i.e. amount of tax for the period determined in accordance with the income-tax law] and deferred-tax charge or credit [reflecting tax effects of timing differences between accounting income and taxable income for the period].

a] Current tax is measured at the amount expected to be paid to the taxation authorities, using the applicable tax rates, tax laws and favourable judicial pronouncements/legal opinions.

b] The deferred-tax charge or credit and the corresponding deferred-tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted by the Balance Sheet date. As advised by the RBI, Bank shall create Deferred Tax Liabilities on the “Special Reserves” created by Banks under Section 36 (1) (viii) of the Income Tax Act, 1961. Deferred Tax assets are recognized keeping in view the consideration of prudence only to the extent there is virtual certainty that the assets are realized in future.

14. EARNINGS PER SHARE

Basic and Diluted Earnings per Equity Share are computed in accordance with Accounting Standard 20, Earnings Per Share, issued by the Institute of Chartered Accountants of India.

15. Treatment of Basel III compliant Additional Tier I Bonds and Tier II Bonds on occurrence of Trigger events:

A] On occurrence of Trigger event i.e. Common Equity Tier I trigger event the Bank shall write-down the outstanding principal of the Bonds not less than that the amount required to immediately return the Banks Common Equity Ratio to above the CET1 trigger event by creating “AT 1 Bond Reserve”. The reserve so created shall be part of Common Equity Tier I Capital Bonds written down on occurrence of CET1 Trigger event temporarily may be re-instated in terms of Bond issue /RBI guidelines by debit to AT-1 Bond reserve.

B] On occurrence of Point of Non-Viability [PONV] trigger event initiated by Reserve Bank of India, the Bank may create common equity Tier I capital by writing off Additional Tier I Bond principal amount permanently with corresponding creation of AT-1 Bond reserve/Tier II Bond Reserve as the case may be. The re-instatement clause is not applicable on occurrence of PONV trigger event.

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Mar 31, 2018

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

a) The financial statements have been prepared and presented under the historical cost convention on accrual basis of accounting unless otherwise stated and except for items recognized on cash basis, as per guidelines issued by the Reserve Bank of India [‘RBI’] and comply with the Accounting standards issued by the Institute of Chartered Accountants of India and relevant requirements prescribed under the Banking Regulation Act, 1949 and Companies Act, 2013, and current practices prevailing within the banking industry in India.

b) The preparation of financial statements in conformity with generally accepted accounting principles [GAAP] requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. The Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Actuals could differ from these estimates.

2. REVENUE RECOGNITION

a] Income is recognized on an accrual basis except:

(i) Commission on Bank Guarantees and Letters of Credit; arrangement of suppliers /buyers Credit; and Locker rent which are recognized on receipt basis.

(ii) Interest income on Non-Performing advances and investments, and securities guaranteed by Central Government where interest is not realized within 90 days is recognized on receipt basis.

(iii) Interest on Income-tax refunds is accounted for on receipt of Intimation order from the Income Tax Department.

b] Profit or loss on sale of investments is recognized in the profit and loss account on settlement basis at the time of sale except the realized profit on sale of investments in ‘Held to Maturity’ category which is recognized in the profit and loss account and subsequently appropriated to capital reserve account in accordance with RBI guidelines.

c] Brokerage/commission/incentives received on Banks direct subscriptions are deducted from the cost of securities, whereas brokerage paid in connection with acquisition of securities is treated as revenue expenditure.

d] The broken period interest on sale or purchase of securities is treated as revenue item.

3. ADVANCES

a) Advances are classified into standard, sub-standard, doubtful and loss assets in accordance with the guidelines issued by the RBI and are stated net of specific provisions made towards Non-Performing Advances [‘NPAs’].

b) Credit Card dues are identified as NPAs where minimum dues receivable as mentioned in the statement are in default for a continuous period of more than 90 days from the payment due date mentioned in statement. Income from non performing card accounts is not recognized in financial statements.

c) Provisions for sub-standard, doubtful and loss advances are made on the basis of asset classification and provisioning requirements under the prudential norms laid down by the Reserve Bank of India.

d) Partial recoveries in non-preforming advances will be appropriated in the following order of priority:

i) Expenditure/out of pocket expenses incurred for recovery.

ii) Interest irregularities/accrued interest.

iii) Principal irregularities i.e. Principal outstanding in the account.

e) General provision for Standard Assets made in accordance with RBI Guidelines is included under “Other Liabilities & Provisions-others”.

f) Restructured Accounts: For restructured advances, provisions for erosion in fair value of loan are made in accordance with the guidelines issued by RBI, in addition to the provision otherwise required. The provision for erosion in fair value of advance is not reduced from advances and is included in the balance sheet under the head “Other Liabilities & Provisions-Others”.

4. INVESTMENTS

4.1 Categorization & Classification:

In accordance with the RBI guidelines, investments at the time of acquisition are categorized as

- Held to Maturity [HTM],

- Available for Sale [AFS] and

- Held for Trading [HFT].

The Bank shifts investments from AFS / HFT category to HTM category at the lower of book value or market value. In other words, in cases where the market value is higher than the book value at the time of transfer, the appreciation is ignored and the security is transferred at the book value. In cases where the market value is less than the book value, the provision against depreciation held against this security (including the additional provision, if any, required based on valuation done on the date of transfer) is adjusted to reduce the book value to the market value and the security is transferred at the market value.

If the security was originally placed under the HTM category at a discount, it may be transferred to AFS / HFT category at the acquisition price / book value. (It may be noted that as per existing instructions banks are not allowed to accrue the discount on the securities held under HTM category and, therefore, such securities would continue to be held at the acquisition cost till maturity). After transfer, these securities are immediately re-valued and resultant depreciation, if any, is provided.

If the security was originally placed in the HTM category at a premium, it may be transferred to the AFS/HFT category at the amortised cost. After transfer, these securities are immediately re-valued and resultant depreciation, if any, is provided.

In the case of transfer of securities from AFS to HFT category or vice-versa, the securities are not re-valued on the date of transfer and the provisions for the accumulated depreciation, if any, are transferred to the provisions for depreciation against the HFT securities and vice-versa.

For disclosure in the Balance sheet, investments are classified under the following six categories — Government Securities, State Government Securities, Other Approved Securities, Shares, Debentures and Bonds, Investments in Subsidiaries/ RRB/Joint Ventures and Others [units of Mutual Funds, Commercial Papers, Certificate of Deposits and Venture Capital Funds and investments in RIDF of NABARD, MSME Fund of SIDBI, NHB etc.]

Investments classified under ‘HTM’ include the following:

a) Investments in SLR securities as a percentage of Demand and Time liabilities as notified by RBI from time to time.

b) Recapitalisation bonds received from the Government of India towards recapitalisation requirements.

c) Investments in shares of subsidiaries and joint ventures.

d) Investment in Venture Capital Funds, for an initial period of 3 years of each draw down, after 23rd August 2006.

e) Investment in long term bonds issued by companies engaged in infrastructure activities.

Investments acquired primarily with an intention for trading are classified as HFT securities. As per RBI guidelines, securities in HFT category are not held beyond 90 days and are transferred to AFS category under exceptional circumstances like not able to sell or extreme volatility or market becoming unidirectional, with the approval of the Board/ALCO/Investment Committee.

All other investments are classified under AFS.

4.2 Valuation and consequential adjustments :

a] Held to Maturity: Investments classified under ‘Held-to-Maturity’ are carried at weighted average acquisition cost. Premium on acquisition, if any, is amortized on a straight-line basis over the remaining maturity period. In case of investments in subsidiaries/joint ventures any diminution, other than temporary, in the value of such investment is recognized and provided for. Investments in Venture Capital Fund are valued at Cost.

b] Available for Sale and Held for Trading :

(i) Investments in these categories (classified under the category ‘Held for Trading’ and ‘Available for Sale’) are marked to market / estimated realizable value as per RBI guidelines at monthly and quarterly intervals for HFT and AFS respectively. While the resultant net depreciation, if any, within each category referred to in 4.1 above, is recognized in Profit and Loss Account as “Provisions and Contingencies”, the net appreciation is ignored except to the extent of depreciation previously provided. The book value of the individual scrip is not changed after revaluation.

(ii) In the case of write back of excess provision of depreciation, the same is Credited to “Provisions and Contingencies’’ and a like amount (net of taxes and transfer to Statutory Reserve) is appropriated to Investment Reserve Account under Schedule 2 — “Reserves & Surplus”.

(iii) For the purpose of (i) above, the market price/ estimated realizable value is determined as under:

4.3 Non-performing Investments:

a] All such securities where repayment of principal or interest not serviced within 90 days from the due date are classified as Non-Performing Investments, except securities guaranteed by the Central Government which are treated as performing investments notwithstanding arrears of principal / interest payments. In respect of investments classified as Non-performing, appropriate provisions are made for the depreciation in the value of these investments. The depreciation requirement in respect of these securities is not set off against appreciation in respect of other performing securities.

b] Where the Bank has both credit and investment exposures to any borrower/ group and in the event the credit exposure is classified as Non-Performing asset, the investment exposure to them is also classified as Non-Performing.

4.4 Accounting for Repo Transactions:

The Bank follows the accounting norms prescribed by RBI vide Circular Ref. IDMD/4135/11.08.43/2009-10 dated 23.03.2010 in respect of repo / reverse repo transactions under market repo and the accounting guidelines issued vide Ref.RBI/2015-2016/403 FMRD. DIRD. 10/14.03.002/2015-16 dated 19.05.2016 in respect of repo / reverse repo transactions under Liquidity Adjustment Facility (LAF) and the Marginal Standing Facility (MSF).

4.5 Accounting for Investment Transactions:

i) The Bank follows settlement date method of accounting for its investments;

ii) Cost is determined on weighted average cost method;

iii) Profit on sale is netted with loss on sale of securities;

iv) The portion of income/loss that arises on account of movement in the yield, when the following investments are sold, will have to be treated as profit/ loss.

The difference between the sale price/redemption value of fixed income securities and its book value are treated as profit or loss on sale of investments.

The difference between sale price/redemption value of mutual funds including liquid Mutual Funds and its book value are treated as profit/loss on sale of investments.

In respect of discounted securities viz. CD/CP/T-Bills, difference between sale price and carrying cost (book value accrued interest) are treated as profit/ loss on investment.

5. FIXED ASSETS

a] i. Fixed assets (other than revalued assets) are stated at cost less accumulated depreciation and provision for impairment. Cost comprises of the purchase price and any cost attributable for bringing the asset to its working condition for its intended use. The carrying amounts of fixed assets are reviewed at each balance sheet date and adjusted for any impairment in accordance with the Accounting Standard 28 (AS) 28 “Impairment of Assets” issued in this regard by the Institute of Chartered Accountants of India.

ii. Land and Buildings (other than leasehold land) revalued during September 2015 are stated at realizable value by crediting to Revaluation Reserve. Consequently, depreciation on these assets is charged to Profit and Loss Account and an equal amount is adjusted to the accumulated depreciation. Difference between depreciation and revalued carrying amount and depreciation on its original cost is transferred from ‘Reserve for revaluation of Land and Building’ to ‘Revenue Reserve’ in accordance with the Accounting Standard (AS) 10 “Property, Plant & Equipment issued in this regard by the Institute of Chartered Accountants of India.

iii. Impairment of Assets:

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

iv. Capital Work-in-progress includes cost of fixed assets that are not ready for their intended use and also includes advances paid to acquire fixed assets.

b] Depreciation is provided under the straight line method from the date of capitalization. The assets are depreciated taking into consideration the useful life of the asset as provided in schedule II of the Companies Act, 2013. The Bank as a matter of prudence finds that the useful life of the following assets is lower than the useful life of the respective category of assets mentioned in Schedule II (ref.: Sec. 123) of the Companies Act, 2013 as stated below:

a. Motor Cycle, scooters and other mopeds — 8 years (As against standard life mentioned in Companies Act Schedule-II —10 years)

b. Mobile Phones — 3 years (As against standard life mentioned in Companies Act Schedule-II -15 years)

c. UPS and allied items — 5 years (As against standard life mentioned in Companies Act Schedule-II -10 years)

d. Air conditioners and Electrical fittings- 5 years(As against standard life mentioned in Companies Act Schedule-II -10 years)

c] Leasehold Improvements are depreciated over a period of 5 years.

d] Depreciation on premises is provided for on composite cost, wherever the value of land and building is not separately identified.

6. TRANSACTIONS INVOLVING FOREIGN EXCHANGE

a) Transactions denominated in foreign currencies are accounted for at the rates prevailing on the date of the transaction. Foreign currency monetary assets and liabilities are translated at the balance sheet date at closing exchange rates notified by Foreign Exchange Dealers Association of India [‘FEDAI’] and the resulting profits/losses are recognized in the Profit and Loss account.

b) Foreign Currency non-monetary items, which are carried in terms at historical cost, are reported using the exchange rate at the date of the transaction.

c) Outstanding foreign exchange spot and forward contracts meant for trading purpose are revalued at the exchange rates specified for spot and the respective forward maturities as notified by FEDAI. The resulting profit or loss is shown under Profit and Loss Account.

d) Foreign exchange forward contracts, which are not intended for trading and are outstanding at the Balance Sheet date, are revalued at the closing spot rate as notified by FEDAI and the resulting profit or loss is shown under Profit and Loss Account. The premium or discount arising at the inception of such a forward exchange contract is amortized as interest expense or income over the period of the contract.

e) Contingent liabilities denominated in foreign currency are reported using the FEDAI closing spot rates.

7. DERIVATIVES

a) The bank enters into derivative contracts such as foreign currency interest rate swaps, currency swaps, currency futures, options and forward rate agreements.

b) The income/expenses on derivative contracts classified as hedge are recorded on accrual basis.

c) All trading derivative contracts are marked to market and the resultant gains or losses are recognized in the Profit and Loss Account.

d) All derivative transactions are classified under contingent liabilities and those denominated in foreign currencies are reported using the FEDAI closing spot rates.

8. TRANSACTIONS INVOLVING PRECIOUS METALS

a] Income from precious metals transactions is accounted for as “Other Income”. In case of metals received on consignment basis, the income thereon is recognized at the time of sale.

b] Commodity loans to the constituents and deposits from public under the gold deposit scheme in the form of precious metals are translated at market related rates prevailing at the close of the period and shown under the head “Advances” and “Deposits” respectively.

c] Closing stock of precious metals [own dealing] is valued at lower of the cost and net realizable value.

d] Closing stock of gold held under Gold Deposit Scheme is valued at market related rates, as per RBI guidelines.

9. CASH AND BALANCES WITH RESERVE BANK OF INDIA

Cash and Balance with Reserve Bank of India include cash on hand and in ATM’s, and gold in hand and balances with RBI in current accounts.

10. EMPLOYEE BENEFITS

a) The Bank has accounted for Employee Benefits as per Accounting Standard 15 issued by the Institute of Chartered Accountants of India.

b) i) Contributions payable to Gratuity, Pension, Leave

Encashment and Sick Leave etc., which are defined benefits are accounted based on actuarial valuations made at the Balance Sheet date carried out by an independent actuary;

ii) Contributions payable to the recognized provident fund/National Pension Scheme (NPS), which is a defined contribution scheme; are charged to the Profit and Loss account.

11. LEASE TRANSACTIONS

Lease payments for assets taken on operating lease are recognized as an expense in the Profit and Loss account on a straight-line basis over the lease term.

12. CONTINGENT LIABILITIES AND PROVISIONS

In conformity with Accounting Standard 29, “Provisions, Contingent Liabilities and Contingent Assets”, issued by the Institute of Chartered Accountants of India, 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.

Past events leading to possible obligations existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Bank or present obligations where it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or a reliable estimate of the amount of obligation cannot be made, are treated as contingent liabilities and are dealt-with in accordance with AS-29. Contingent Assets are not recognized in the financial statements.

13. TAXES ON INCOME

Income-tax expense comprises current tax [i.e. amount of tax for the period determined in accordance with the income-tax law] and deferred-tax charge or credit [reflecting tax effects of timing differences between accounting income and taxable income for the period].

a] Current tax is measured at the amount expected to be paid to the taxation authorities, using the applicable tax rates, tax laws and favourable judicial pronouncements / legal opinions.

b] The deferred-tax charge or credit and the corresponding deferred-tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted by the Balance Sheet date. As advised by RBI, Bank shall create of Deferred Tax Liabilities on the “Special Reserves” created by Banks under Section 36 (1) (viii) of the Income Tax Act, 1961. Deferred Tax assets are recognized keeping in view the consideration of prudence only to the extent there is virtual certainty that the assets can be realized in future.

14. EARNINGS PER SHARE

Basic and Diluted Earnings per Equity Share are computed in accordance with Accounting Standard 20, Earnings Per Share, issued by the Institute of Chartered Accountants of India.

15. TREATMENT OF BASEL III COMPLIANT ADDITIONAL TIER I BONDS AND TIER II BONDS ON OCCURRENCE OF TRIGGER EVENTS

a] On occurrence of Trigger event i.e. Common Equity Tier 1 (CET I) trigger event the Bank shall writedown the outstanding principal of the Bonds not less than that the amount required to immediately return the Bank’s Common Equity Ratio to above the CET1 trigger event by creating “AT 1 Bond Reserve”. The reserve so created shall be part of Common Equity Tier I Capital Bonds written down on occurrence of CET1 Trigger event temporarily may be re-instated in terms of Bond issue /RBI guidelines by debit to AT-1 Bond reserve.

b] On occurrence of Point of Non Viability [PONV] trigger event initiated by Reserve Bank of India, the Bank may create CET I capital by writing off Additional Tier I Bond principal amount permanently with corresponding creation of AT-1 Bond reserve/ Tier II Bond Reserve as the case may be. The reinstatement clause is not applicable on occurrence of PONV trigger event.

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Mar 31, 2017

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

a) The financial statements have been prepared and presented under the historical cost convention on accrual basis of accounting unless otherwise stated and except for items recognized on cash basis, as per guidelines issued by the Reserve Bank of India [''RBI''] and comply with the Accounting standards issued by the Institute of Chartered Accountants of India and relevant requirements prescribed under the Banking Regulation Act, 1949 and the Companies Act, 2013, and current practices prevailing in the banking industry in India.

b) The preparation of financial statements in conformity with generally accepted accounting principles [GAAP] requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. The Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Actuals could differ from these estimates.

2. REVENUE RECOGNITION

a] Income is recognized on an accrual basis except:

(i) Commission on Bank Guarantees and Letters of Credit; arrangement of Suppliers/Buyers Credit; and Locker rent which are recognized on receipt basis.

(ii) Interest income on Non-Performing advances and investments, and securities guaranteed by Central Government where interest is not realized within 90 days is recognized on receipt basis.

(iii) Interest on Income-tax refunds is accounted for on receipt of Intimation order from the Income Tax Department.

b] Profit or loss on sale of investments is recognized in the Profit and Loss Account on settlement basis at the time of sale except the realized profit on sale of investments in ‘Held to Maturity’ category which is recognized in the Profit and Loss Account and subsequently appropriated to Capital Reserve in accordance with RBI guidelines.

c] Brokerage/commission/incentives received on Banks direct subscriptions are deducted from the cost of securities, whereas brokerage paid in connection with acquisition of securities is treated as revenue expenditure.

d] The broken period interest on sale or purchase of securities is adjusted to revenue.

3. ADVANCES

a) Advances are classified into standard, sub-standard, doubtful and loss assets in accordance with the guidelines issued by the RBI and are stated net of specific provisions made towards Non-Performing Advances [''NPAs''].

b) Credit Card dues are identified as NPAs where minimum dues receivable as mentioned in the statement are in default for a continuous period of more than 90 days from the payment due date mentioned in statement. Income from nonperforming card accounts is not recognized in financial statements.

c) Provisions for sub-standard, doubtful and loss advances are made on the basis of asset classification and provisioning requirements under the prudential norms laid down by the RBI.

d) Recoveries in non-performing advances are appropriated first towards book balance, then to charges and thereafter to unrealized interest.

e) General provision for Standard Assets made in accordance with RBI Guidelines is included under “Other Liabilities & Provisions-Others”.

f) Restructured Accounts: For restructured advances, provisions for erosion in fair value of advances are made in accordance with the guidelines issued by RBI, in addition to the provision otherwise required. The provision for erosion in fair value of advance is not reduced from advances and is included in the Balance Sheet under the head “Other Liabilities & Provisions-Others”.

4. INVESTMENTS

4.1 Categorization & Classification:

In accordance with the RBI guidelines, investments at the time of acquisition are categorized as

- Held to Maturity [HTM],

- Available for Sale [AFS] and

- Held for Trading [HFT].

The Bank shifts investments from AFS/HFT category to HTM category at the lower of book value or market value. In other words, in cases where the market value is higher than the book value at the time of transfer, the appreciation is ignored and the security is transferred at the book value. In cases where the market value is less than the book value, the provision against depreciation

held against this security (including the additional provision, if any, required based on valuation done on the date of transfer) is adjusted to reduce the book value to the market value and the security is transferred at the market value.

If the security was originally placed under the HTM category at a discount, it may be transferred to AFS/ HFT category at the acquisition price/book value. (It may be noted that as per existing instructions banks are not allowed to accrue the discount on the securities held under HTM category and, therefore, such securities would continue to be held at the acquisition cost till maturity). After transfer, these securities are immediately re-valued and resultant depreciation, if any, is provided.

If the security was originally placed in the HTM category at a premium, it may be transferred to the AFS/HFT category at the amortized cost. After transfer, these securities are immediately re-valued and resultant depreciation, if any, is provided.

In the case of transfer of securities from AFS to HFT category or vice-versa, the securities are not re-valued on the date of transfer and the provisions for the accumulated depreciation, if any, are transferred to the provisions for depreciation against the HFT securities and vice-versa.

For disclosure in the Balance Sheet, investments are classified under the following categories — Government securities, State Govt. Securities, Other Approved Securities, Shares, Debentures and Bonds, Investments in Subsidiaries/RRB/Joint Ventures and Others. [units of Mutual Funds, Commercial Papers, Certificates of Deposit and Venture Capital Funds.]

Investments classified under ‘HTM’ include the following:

a) Investments in SLR securities as a percentage of Demand and Time Liabilities as notified by RBI from time to time.

b) Recapitalization bonds received from the Government of India towards recapitalization requirements.

c) Investments in share of subsidiaries and joint ventures.

d) Investment in Venture Capital Funds, for an initial period of 3 years of each draw down, after 23^rd August, 2006.

e) Investment in long term bonds issued by companies engaged in infrastructure activities.

Investments acquired primarily with an intention for trading are classified as HFT securities. As per RBI guidelines, securities in HFT category are not held beyond 90 days and are transferred to AFS category under exceptional circumstances like not able to sell or extreme volatility or market becoming unidirectional, with the approval of the Board/ALCO/Investment Committee.

All other investments are classified under AFS.

a] Held to Maturity: Investments classified under ‘Held-to-Maturity’ are carried at weighted average acquisition cost. Premium on acquisition, if any, is amortized on a straight-line basis over the remaining maturity period. In case of investments in subsidiaries/ joint ventures any diminution, other than temporary, in the value of such investment is recognized and provided for. Investments in Venture Capital Fund are valued at Cost.

b] Available for Sale and Held for Trading :

(i) Investments in these categories (classified under the category ‘Held for Trading’ and ‘Available for Sale’) are marked to market / estimated realizable value as per RBI guidelines at monthly and quarterly intervals for HFT and AFS respectively. While the resultant net depreciation, if any, within each category referred to in 4.1 above, is recognized in Profit & Loss Account as ‘‘Provisions and Contingencies’’, the net appreciation is ignored except to the extent of depreciation previously provided. The book value of the individual scrip is not changed after revaluation.

(ii) In the case of write back of excess provision of depreciation, the same is Debited to “Provisions and Contingencies’’ and a like amount (net of taxes and transfer to Statutory Reserve) is appropriated to Investment Reserve Account under Schedule 2 — “Reserves & Surplus”.

(iii) For the purpose of (i) above, the market price/ estimated realizable value is determined as under:

a] All such securities where repayment of principal or interest is not serviced within 90 days from the due date are classified as Non-Performing Investments, except securities guaranteed by the Central Government which are treated as performing investments notwithstanding arrears of principal/ interest payments. In respect of investments classified as Non-performing, appropriate provisions are made for the depreciation in the value of these investments. The depreciation requirement in respect of these securities is not set off against appreciation in respect of other performing securities.

b] Where the Bank has both credit and investment exposures to any borrower/group and in the event the credit exposure is classified as Non-Performing asset, the investment exposure to them is also classified as Non-Performing.

4.4 Accounting for Repo Transactions:

The Bank follows the accounting norms prescribed by RBI vide Circular dated 23.03.2010 in respect of repo / reverse repo transactions under market repo and the accounting guidelines issued vide Ref. RBI/2015-2016/403 FMRD. DIRD.10/14.03.002/2015-16 dated 19.05.2016 in respect of repo/reverse repo transactions under Liquidity Adjustment Facility (LAF) and the Marginal Standing Facility (MSF).

4.5 Accounting for Investment Transactions:

i) The Bank follows settlement date method of accounting for its investments;

ii) Cost is determined on weighted average cost method;

iii) Profit on sale is netted with loss on sale of securities;

iv) The portion of income/loss that arises on account of movement in the yield, when the following investments are sold, will have to be treated as profit/ loss.

The difference between the sale price/redemption value of fixed income securities and its book value shall be treated as profit or loss on sale of investments.

The difference between sale price/redemption value of mutual funds including liquid Mutual Funds and its book value shall be treated as profit/loss on sale of investments.

In respect of discounted securities viz., CD/CP/T-Bills, difference between sale price and carrying cost (book value accrued interest) shall be treated as profit/loss on investment.

5. FIXED ASSETS

a] i. Fixed assets (other than revalued assets) are stated at cost less accumulated depreciation and provision for impairment. Cost comprises of the purchase price and any cost attributable for bringing the asset to its working condition for its intended use. The carrying amounts of fixed assets are reviewed at each balance sheet date and adjusted for any impairment in accordance with the Accounting Standard (AS) 28 “Impairment of Assets” issued in this regard by the Institute of Chartered Accountants of India.

ii. Land and Buildings (other than leasehold land) revalued during September, 2015 are stated at realizable value by crediting to Revaluation

Reserve. Consequently, depreciation on these assets is charged to Profit and Loss Account and an equal amount is adjusted to the accumulated depreciation. Difference between depreciation and revalued carrying amount and depreciation on its original cost is transferred from ‘Reserve for revaluation of Land and Building’ to ‘Revenue Reserve’ in accordance with the Accounting Standard (AS) 10 “Property, Plant & Equipment” issued in this regard by the Institute of Chartered Accountants of India.

iii. Impairment of Assets:

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

iv. Capital Work-in-progress includes cost of fixed assets that are not ready for their intended use.

b] Depreciation is provided under the straight-line method from the date of capitalization. The assets are depreciated taking into consideration the useful life of the asset as provided in Schedule II of the Companies Act, 2013. The Bank as a matter of prudence finds that the useful life of the following assets is lower than the useful life of the respective category of assets mentioned in Schedule II (ref.: Sec. 123) of the Companies Act, 2013 as stated below : Motor Cycle, Scooters and other Mopeds - 8 Years Mobile Phones - 3 Years UPS and allied items - 5 Years Air-conditioners and Electrical fittings - 5 Years

c] Leasehold Improvements are depreciated over a period of 5 years.

d] Depreciation on premises is provided for on composite cost, wherever the value of land and building is not separately identified.

6. TRANSACTIONS INVOLVING FOREIGN EXCHANGE

a) Transactions denominated in foreign currencies are accounted for at the rates prevailing on the date of the transaction. Foreign currency monetary assets and liabilities are translated at the balance sheet date at closing exchange rates notified by Foreign Exchange Dealers Association of India [‘FEDAI’] and the resulting profits/losses are recognized in the Profit and Loss Account.

b) Foreign Currency non-monetary items, which are carried in terms of historical cost, are reported using the exchange rate at the date of the transaction.

c) Outstanding foreign exchange spot and forward contracts meant for trading purpose are revalued at the exchange rates specified for spot and the respective forward maturities as notified by FEDAI. The resulting profit or loss is shown under Profit or Loss Account.

d) Foreign exchange forward contracts, which are not intended for trading and are outstanding at the balance sheet date, are revalued at the closing spot rate as notified by FEDAI and the resulting profit or loss is shown under Profit or Loss Account. The premium or discount arising at the inception of such a forward exchange contract is amortized as interest expense or income over the period of the contract.

e) Contingent liabilities denominated in foreign currency are reported using the FEDAI closing spot rates.

7. DERIVATIVES

a) The bank enters into derivative contracts such as foreign currency interest rate swaps, currency swaps, currency futures, options and forward rate agreements.

b) The income/expenses on derivative contracts classified as hedge are recorded on accrual basis.

c) All trading derivative contracts are marked to market and the resultant gains or losses are recognized in the Profit and Loss Account.

d) All derivative transactions are classified under contingent liabilities and those denominated in foreign currencies are reported using the FEDAI closing spot rates.

8. TRANSACTIONS INVOLVING PRECIOUS METALS

a] Income from precious metals transactions is accounted for as ‘‘Other Income’’. In case of metals received on consignment basis, the income thereon is recognized at the time of sale.

b] Commodity loans to the constituents and deposits from public under the gold deposit scheme in the form of precious metals are translated at market related rates prevailing at the close of the period and shown under the head ‘‘Advances’’ and ‘‘Deposits’’ respectively.

c] Closing stock of precious metals [own dealing] is valued at lower of the cost and net realizable value.

d] Closing stock of gold held under Gold Deposit Scheme is valued at market related rates, as per RBI guidelines.

9. CASH AND BALANCES WITH RESERVE BANK OF INDIA

Cash and Balance with Reserve Bank of India include cash on hand and in ATM’s, and gold in hand and balances with RBI in current accounts.

10. EMPLOYEE BENEFITS

a) The Bank accounts for Employee Benefits as per Accounting Standard 15 issued by the Institute of Chartered Accountants of India.

b) i) Contributions payable to Gratuity, Pension and

Leave Encashment which are defined benefit plans are accounted based on actuarial valuations made, at the balance sheet date, carried out by an independent actuary;

ii) Contributions payable to the Recognized Provident Fund and National Pension Scheme (NPS), which are defined contribution schemes, are charged to the Profit and Loss Account.

11. LEASE TRANSACTIONS

Lease payments for assets taken on operating lease are recognized as an expense in the Profit and Loss Account on a straight-line basis over the lease term.

12. CONTINGENT LIABILITIES AND PROVISIONS

In conformity with Accounting Standard 29, “Provisions, Contingent Liabilities and Contingent Assets”, issued by the Institute of Chartered Accountants of India, 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.

Past events leading to possible obligations existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Bank; or present obligations where it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or a reliable estimate of the amount of obligation cannot be made, are treated as contingent liabilities and are dealt-with in accordance with AS 29. Contingent Assets are not recognized in the financial statements.

13. TAXES ON INCOME

Income-tax expense comprises current tax [i.e., amount of tax for the period determined in accordance with the income-tax law] and deferred-tax charge or credit [reflecting tax effects of timing differences between accounting income and taxable income for the period].

a] Current tax is measured at the amount expected to be paid to the taxation authorities, using the applicable tax rates, tax laws and favorable judicial pronouncements/legal opinions.

b] The deferred-tax charge or credit and the corresponding deferred-tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted by the balance sheet date. As advised by RBI, Bank provides Deferred Tax Liabilities on the “Special Reserves” created by Banks under Section 36 (1) (viii) of the Income Tax Act, 1961. Deferred-tax assets are recognized keeping in view the consideration of prudence only to the extent there is virtual certainty that the assets can be realized in future.

14. EARNINGS PER SHARE

Basic and Diluted Earnings per Equity Share are computed in accordance with Accounting Standard 20, Earnings Per Share, issued by the Institute of Chartered Accountants of India.

15. TREATMENT OF BASEL III COMPLIANT ADDITIONAL TIER I BONDS AND TIER II BONDS ON OCCURRENCE OF TRIGGER EVENTS

a] On occurrence of Common Equity Tier 1 trigger event the Bank shall write-down the outstanding principal of the Bonds not less than that the amount required to immediately return the Banks Common Equity Ratio to above the CET1 trigger event by creating “AT 1 Bond Reserve”. The reserve so created shall be part of Common Equity Tier I Capital Bonds written down on occurrence of CET1 Trigger event temporarily may be re-instated in terms of Bond issue/ RBI guidelines by debit to AT-1 Bond reserve.

b] On occurrence of Point of Non-Viability [PONV] trigger event initiated by Reserve Bank of India, the Bank may create common equity Tier I capital by writing off Additional Tier I Bond principal amount permanently with corresponding creation of AT-1 Bond reserve/Tier II Bond Reserve as the case may be. The re-instatement clause is not applicable on occurrence of PONV trigger event.

A. DISCLOSURES REQUIRED IN TERMS OF GUIDELINES ISSUED BY RBI 1.0 CAPITAL

a) During the year, the Bank has allotted 12,45,70,868 equity shares of Rs,2/- each at a premium of Rs,38.78 per share to Government of India on preferential basis on September 28, 2016 for a total consideration of Rs,508.00 Crores.

b) During the year, the Bank has raised Rs,500.00 Crores additional Tier I Bonds on March 24, 2017.

c) The Bank’s Capital to Weighted Risk Assets Ratio (CRAR) has been worked out as per the RBI guidelines. These ratios are given below:

Government Securities amounting to Rs,21,936.67 Crores (Previous Year Rs,1,241.87 Crores) are kept as margin with Clearing Corporation of India Limited (CCIL) / NSCCL/ MCX-CCL/ ICCL towards securities settlement.

Investments include securities of the face value of Rs,8885.00 Crores (Previous Year Rs,11,610.00 Crores), pledged/transferred to RBI for availing various facilities. It includes securities of the face value Nil (Previous year Rs,6705.92 Crores) encumbered for borrowing under LAF-Repo.

During the year, the Bank has transferred securities of book value of Rs,2482.28 Crore (Previous year Rs,1655.33 Crore) from “Available for Sale category” to “Held to Maturity”, transferred securities of book value of Rs,3312.56 crore (Previous year Rs,490.43 crore) from “Held to Maturity” to “Available for Sale category”, transferred securities of book value of Rs,NIL Crore (Previous year Rs, Nil) from “Held for Trading” to “Available for Sale Category” and also transferred securities of book value of Rs,NIL crore (Previous year Rs,Nil) from “Held for Trading” to “Held to Maturity”.

2.1 During the current year, the value of sales / transfers of securities to / from HTM category [excluding portfolio transfer of securities (under one time / special window permitted by RBI) and sales to RBI under OMO auctions] exceeded the limit of 5% of the book value of the investment held in HTM category at the beginning of the year. The market value of investment held in the HTM category was Rs,44,440.45 Crores as on 31.03.2017. The excess of Book Value over Market Value for which provision was not made was Nil.

3.3 Disclosure on Risk Exposure in Derivatives

(i) Qualitative Disclosure:

a. The Bank’s Derivative Policy as approved by Board permits Bank to undertake deals in over-the-counter (OTC) as well as exchange traded (ET) interest rate and currency derivatives. The policy permits the offering of the products to the customer to manage their foreign currency exposures, which are to be covered on Back-to-Back basis in the inter-bank market. Derivatives can also be used by the Bank both for trading as well as hedging on-balance sheet items. In the current financial year, the Bank has entered into derivative deals involving forwards and currency futures.

b. The Asset Liability Management Committee (ALCO) of the Bank overseas management of these risks. The Bank’s Integrated Risk Management Department (IRMD), independently identifies, measures and monitors market risk associated with derivative transactions, assists ALCO in controlling and managing these risks and reports compliance with policy prescriptions to the Risk Management Committee of the Board (RMCB) at regular intervals.

c. Derivative transactions carry market risk i.e., the probable loss the Bank may incur as a result of adverse movements in interest rates/exchange rates and credit risk i.e. the probable loss the Bank may incur if the counterparties fail to meet their obligations. The Bank’s “Derivative Policy” approved by the Board prescribes the market risk parameters as well as Customer Appropriateness policy for entering into derivative transactions. Credit risk is controlled by entering into derivative transactions only with counterparties in respect of whom appropriate credit limits are sanctioned taking into account their ability to honor obligations. The Bank enters into International Swap Dealers Association (ISDA) agreements with each counter party.

d. The accounting policy for derivatives as stated in Significant Accounting Policies, has been drawn-up in accordance with RBI guidelines and revenues are recognized accordingly.

4.0 ASSET QUALITY

4.1 ADVANCES

a) In the case of unaudited branches, the classification of advances, as certified by the Branch Managers has been incorporated.

b) During the year the Bank has made provision for NPA of Rs,3,860.65 Crores (Previous Year Rs,5,378.65 Crores). The Bank has made required provision cumulative for Non Performing Advances as at 31st March, 2017 Rs,5,188.34 Crores (Previous Year Rs,5,278.21 Crores) in the line with RBI guidelines.

4.3 Divergence in Asset Classification and Provisioning for NPAs:

Pursuant to RBI Circular No. DBR.BP.BC.63/21.04.018/ 2016-17 dated April 18, 2017, Rs,Divergence in the asset classification and provisioning’, the Bank has incorporated the disclosure prescribed as under:

During the year, the Bank has made provision with respect to all divergent accounts as per RBS Report for the Year 2015-16. However, with respect to six divergent accounts amounting to Rs,1249.00 Crores, pending representation of the Bank for reconsideration of classification, the Bank has retained the assets classification as ‘Standard’.

4.4 In compliance with RBI directives, the accounts where restructuring failed due to non-fulfillment of certain conditions as mentioned under Annexure 3 of Asset Quality Review (AQR), the required provision held in these accounts as per RBI directives has been reviewed as at March 31, 2017 and these accounts have been classified and provision made as per IRAC norms. Incremental provision of Rs,115.33 Crores which was made in terms of RBI directives has been reversed on March 31, 2017 with respect to those accounts which remained standard as on March 31, 2017.

*** includes investments of Rs,671.97 Crores (Previous year Rs,426.54 Crores) on account of conversion of debt into equity under CDR/SDR/S4A schemes and Rs,107.70 Crores (previous year Rs,107.70 Crores) as Strategic/Subsidiary investments both of which are exempted from 20% ceiling and Rs,2.49 Crores (previous year Rs,3.97 Crores) in NCDs which are secured by equity shares of the issuer company.

7.3 Risk Category wise Country Exposure

The following are the bank’s countrywide net risk exposure based on the Country risk classification provided by the Export Credit Guarantee Corporation (ECGC).

7.4 Details of Single Borrower Limit (SBL), Group Borrower Limit (GBL) exceeded by the Bank

During the year ended March 31, 2017, the Bank has exceeded the exposure ceiling fixed by RBI to Individual borrower/Group in the following cases, which have been approved by the Board.

8.0 Disclosure of Penalties Imposed by RBI

During the year, Reserve Bank of India (“RBI”) has imposed following Penalties:

A. i) As per the provision of RBI Master Circular DCM (CC)

No. G-3/03.039.01/2014-15 — Scheme of Incentive and penalties for Bank branches based on performance in rendering customer service to the member of public, an amount of Rs,0.18 Crores has been imposed as penalty for discrepancies detected while processing the soiled notes remittances received from the Currency Chests.

ii) Penalty levied during Incognito Visit of RBI Rs,0.003 Crores.

iii) Rs,1.00 Crore penalty levied by RBI for violation of RBI Directions/ Statutory provisions as per RBI.DBS. C0.ICD/641/12.09.001/2016-17dated 19.07.2016.

iv) On March 3, 2017 there was an instance of short fall of securities in borrowing under Clear corp Repo 0rder Matching Systems (CROMS) for which the Bank paid a penalty of Rs,5 lakhs.

B. Disclosure requirements as per accounting standards where RBI has issued guidelines in respect of disclosure items for notes to the accounts 1.0 PRIOR PERIOD ITEMS

Prior Period Income (net of expenses) during the year Rs,11.06 Crores [Previous year Rs,1.18 Crores (Prior Period Expenses (net of income)] to the extent identified.

2.0 FIXED ASSETS

1. Premises include properties costing Rs,12.30 Crores (previous year Rs,12.30 Crores) for which registration formalities are pending.

2. Fixed Assets include Rs, Nil Crores (Previous Year Rs,0.38 Crores) in respect of Capital Work in Progress-Premises.

3. During the year 2016-17, cost of software acquired is Rs,45.54 Crores (Previous Year Rs,17.38 Crores) and the amount amortized during the year is Rs,15.99 Crores (Previous Year Rs,16.24 Crores).

4. Contracts pending execution on Capital account and not provided for is Rs,93.91 Crores (Previous Year Rs,100.92 Crores).

5. During the year, the Bank has reversed Rs,16.46 Crores from the Reserve for Revaluation of Land & Buildings.

3.0 EMPLOYEE BENFITS

3.1 The Bank has accounted for Employee Benefits as per

Accounting Standard 15 issued by the Institute of Chartered

Accountants of India.

The transactions with the subsidiary are not disclosed in view of para 9 of AS-18 “Related Party Disclosure”, which exempts state controlled enterprises from making any disclosures pertaining to their transactions with other related parties, which are also state controlled.

Transactions in the nature of banker-customer relationship including those with KMP and relatives of KMP have been disclosed in terms of Para 5 of AS-18.

6.0 LEASES

The Bank has entered into various operating leases for offices, guest houses and residential premises for employees that are renewable on a periodical basis and cancellable at the Bank’s option. Rental expense for such operating leases is Rs,260.86 Crores (Previous year Rs,242.20 Crores)

7.0 EARNINGS PER SHARE

Basic and diluted earnings per share has been computed in accordance with Accounting Standard - 20 (Earnings Per Share):

8.0 ACCOUNTING FOR TAXES ON INCOME

a) The bank has reckoned the Income Computation and Disclosure Standards (ICDS) as per Notification by Central Board of Direct Taxes (CBDT) Dt 29.09.2016, read with Circular of CBDT Dt 23.03.2017 in this regard which are applicable for the Assessment Year 2017-18 and subsequent Assessment Years.

b) The Bank has recognized deferred tax assets and liabilities as per Accounting Standard No. 22 issued by the Institute of Chartered Accountants of India (ICAI). The components are as under:

The Bank has availed MAT Credit of Rs,179.80 crores as available under Income Tax Laws.

ii) Assessments for Income Tax have been completed up to the financial year 2013 - 14 (AY 2014-15).

The following appeals by the Bank/Income Tax Department are pending before various appellate authorities/courts :

iii) Advance Taxes paid, Taxes Paid under Disputes, CENVAT Credit availed and TDS deducted on Income to the Bank are appearing under “Other Assets

— Tax Paid in Advance / Tax Deducted at Source”. With regard to the Taxes paid under disputes the Bank has gone on appeal and no additional provision is considered necessary in view of favorable judicial pronouncements in similar cases.

9.0 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

*includes provision for claims against the Bank not acknowledged as debt, provision towards fraudulent transactions and other miscellaneous transactions.

Figures in brackets represent previous year figures.

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Mar 31, 2016

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

a) The financial statements have been prepared and presented under the historical cost convention on accrual basis of accounting unless otherwise stated and except for items recognized on cash basis, as per guidelines issued by the Reserve Bank of India [‘RBI’] and comply with the Accounting standards issued by the Institute of Chartered Accountants of India and relevant requirements prescribed under the Banking Regulation Act, 1949 and Companies Act, 2013, and current practices prevailing within the banking industry in India.

b) The preparation of financial statements in conformity with generally accepted accounting principles [GAAP] requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. The Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Actuals could differ from these estimates.

2. REVENUE RECOGNITION

a] Income is recognized on an accrual basis except:

(i) Commission on Bank Guarantees and Letters of Credit; arrangement of suppliers/buyers Credit; and Locker rent which are recognized on receipt basis.

(ii) Interest income on Non-Performing advances and investments, and securities guaranteed by Central Government where interest is not realized within 90 days is recognized on receipt basis.

(iii) Interest on Income-tax refunds is accounted for on receipt of Intimation order from the Income Tax Department.

b] Profit or loss on sale of investments is recognized in the profit and loss account on settlement basis at the time of sale except the realized profit on sale of investments in ‘Held to Maturity’ category which is recognized in the profit and loss account and subsequently appropriated to capital reserve account in accordance with RBI guidelines.

c] Brokerage/commission/incentives received on Banks direct subscriptions are deducted from the cost of securities, whereas brokerage paid in connection with acquisition of securities is treated as revenue expenditure.

d] The broken period interest on sale or purchase of securities is treated as revenue item.

3. ADVANCES

a) Advances are classified into standard, sub-standard, doubtful and loss assets in accordance with the guidelines issued by the RBI and are stated net of specific provisions made towards Non-Performing Advances [‘NPAs’].

b) Credit Card dues are identified as NPAs where minimum dues receivable as mentioned in the statement are in default for a continuous period of more than 90 days from the payment due date mentioned in statement. Income from non-performing card accounts is not recognized in financial statements.

c) Provisions for sub-standard, doubtful and loss advances are made on the basis of asset classification and provisioning requirements under the prudential norms laid down by the Reserve Bank of India.

d) Recoveries in non-performing advances are appropriated first towards book balance, then to charges and thereafter to unrealized interest.

e) General provision for Standard Assets made in accordance with RBI Guidelines is included under “Other Liabilities & Provisions-others”.

f) Restructured Accounts: For restructured advances, provisions for erosion in fair value of loan are made in accordance with the guidelines issued by RBI, in addition to the provision otherwise required. The provision for erosion in fair value of advance is not reduced from advances and is included in the balance sheet under the head “Other Liabilities & Provisions-Others”

4. INVESTMENTS

4.1 Categorization & Classification

In accordance with the RBI guidelines, investments at the time of acquisition are categorized as

- Held to Maturity [HTM],

- Available for Sale [AFS] and

- Held for Trading [HFT].

The Bank shifts investments from AFS / HFT category to HTM category at the lower of book value or market value. In other words, in cases where the market value is higher than the book value at the time of transfer, the appreciation should be ignored and the security should be transferred at the book value. In cases where the market value is less than the book value, the provision against depreciation held against this security (including the additional provision, if any, required based on valuation done on the date of transfer) should be adjusted to reduce the book value to the market value and the security should be transferred at the market value.

If the security was originally placed under the HTM category at a discount, it may be transferred to AFS / HFT category at the acquisition price / book value. (It may be noted that as per existing instructions banks are not allowed to accrue the discount on the securities held under HTM category and, therefore, such securities would continue to be held at the acquisition cost till maturity). After transfer, these securities should be immediately re-valued and resultant depreciation, if any, may be provided.

If the security was originally placed in the HTM category at a premium, it may be transferred to the AFS / HFT category at the amortized cost. After transfer, these securities should be immediately re-valued and resultant depreciation, if any, may be provided.

In the case of transfer of securities from AFS to HFT category or vice-versa, the securities need not be re-valued on the date of transfer and the provisions for the accumulated depreciation, if any, held may be transferred to the provisions for depreciation against the HFT securities and vice-versa.

However, for disclosure in the Balance sheet, investments are classified under seven categories — Government securities, State Govt. special securities, other approved securities, shares, debentures and bonds, Investments in Subsidiaries/RRB/Joint Ventures and Others [units of Mutual Funds, Commercial Papers, certificate of deposits, Security Receipts and Venture Capital Funds].

Investments classified under ‘Held to Maturity’ include the following:

a) Investments in SLR securities up to 21.50% of Demand and Time liabilities or as notified by RBI from time to time.

b) Recapitalization bonds received from the Government of India towards recapitalization requirements.

c) Investments in share of subsidiaries and joint ventures.

d) Investment in Venture Capital Funds, for an initial period of 3 years of each draw down, after August 23, 2006.

Investments acquired primarily with an intention for trading are classified as HFT securities. As per RBI guidelines, securities in HFT category are not held beyond 90 days are transferred to AFS category.

All other investments are classified under AFS.

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Mar 31, 2015

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

a) The financial statements have been prepared and presented under the historical cost convention on accrual basis of accounting unless otherwise stated and except for items recognized on cash basis, as per guidelines issued by the Reserve Bank of India [''RBI''] and comply with the Accounting standards issued by the Institute of Chartered Accountants of India and relevant requirements prescribed under the Banking Regulation Act, 1949 and Companies Act, 2013, and current practices prevailing within the banking industry in India.

b) The preparation of financial statements in conformity with generally accepted accounting principles [GAAP] requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. The Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Actuals could differ from these estimates.

2. REVENUE RECOGNITION

a] Income is recognized on an accrual basis except:

(i) Commission on Bank Guarantees and Letters of Credit, arrangement of suppliers /buyers Credit, and Locker rent which are recognized on receipt basis.

(ii) Interest income on Non-Performing advances and investments, and securities guaranteed by Central Government where interest is not realized within 90 days is recognized on receipt basis.

(iii) Interest on Income-tax refunds is accounted for on receipt of Intimation order from the Income Tax Department.

b] Profit or loss on sale of investments is recognized in the profit and loss account on settlement basis at the time of sale except the realized profit on sale of investments in ''Held to Maturity'' category which is recognized in the profit and loss account and subsequently appropriated to capital reserve account in accordance with RBI guidelines.

c] Brokerage/commission/incentives received on Banks direct subscriptions are deducted from the cost of securities, whereas brokerage paid in connection with acquisition of securities is treated as revenue expenditure.

d] The broken period interest on sale or purchase of securities is treated as revenue item.

3. ADVANCES

a) Advances are classified into standard, sub-standard, doubtful and loss assets in accordance with the guidelines issued by the RBI and are stated net of specific provisions made towards Non-Performing Advances [''NPAs''].

b) Credit Card dues are identified as NPAs where minimum dues receivable are in default for a continuous period of more than 90 days. Income from non performing card accounts is not recognized in financial statements.

c) Provisions for sub-standard, doubtful and loss advances are made on the basis of asset classification and provisioning requirements under the prudential norms laid down by the Reserve Bank of India.

d) Recoveries in non-performing advances are appropriated first towards book balance, then to charges and thereafter to unrealized interest.

e) General provision for Standard Assets made in accordance with RBI Guidelines is included under "Other Liabilities & Provisions-others".

f) Restructured Accounts: For restructured advances, provisions for erosion in fair value of loan are made in accordance with the guidelines issued by RBI, in addition to the provision otherwise required. The provision for erosion in fair value of advance is not reduced from advances and is included in the balance sheet under the head "Other Liabilities & Provisions- Others"

4. INVESTMENTS

4.1 Categorization & Classification

In accordance with the RBI guidelines, investments at the time of acquisition are categorized as

- Held to Maturity [HTM],

- Available for Sale [AFS] and

- Held for Trading [HFT].

The Bank shifts investments from AFS / HFT category to HTM category at the lower of book value or market value. In other words, in cases where the market value is higher than the book value at the time of transfer, the appreciation should be ignored and the security should be transferred at the book value. In cases where the market value is less than the book value, the provision against depreciation held against this security (including the additional provision, if any, required based on valuation done on the date of transfer) should be adjusted to reduce the book value to the market value and the security should be transferred at the market value.

If the security was originally placed under the HTM category at a discount, it may be transferred to AFS / HFT category at the acquisition price / book value. (It may be noted that as per existing instructions banks are not allowed to accrue the discount on the securities held under HTM category and, therefore, such securities would continue to be held at the acquisition cost till maturity). After transfer, these securities should be immediately re-valued and resultant depreciation, if any, may be provided.

If the security was originally placed in the HTM category at a premium, it may be transferred to the AFS / HFT category at the amortised cost. After transfer, these securities should be immediately re-valued and resultant depreciation, if any, may be provided.

In the case of transfer of securities from AFS to HFT category or vice-versa, the securities need not be re- valued on the date of transfer and the provisions for the accumulated depreciation, if any, held may be transferred to the provisions for depreciation against the HFT securities and vice-versa.

However, for disclosure in the Balance sheet, investments are classified under seven categories — Government securities, State Govt. special securities, other approved securities, shares, debentures and bonds, Investments in Subsidiaries/RRB/Joint Ventures and Others [units of Mutual Funds, Commercial Papers, certificate of deposits and Venture Capital Funds and investments in RIDF of NABARD, MSME Fund of SIDBI, NHB].

Investments classified under ''Held to Maturity'' include the following:

a) Investments in SLR securities upto 21.50% of Demand and Time liabilities or as notified by RBI from time to time.

b) Recapitalisation bonds received from the Government of India towards recapitalisation requirements.

c) Investments in share of subsidiaries and joint ventures.

d) RIDF Schemes of NABARD / MSME (Refinance) Fund of SIDBI/RHF deposits of NHB

e) Investment in Venture Capital Funds, for an initial period of 3 years of each draw down, after 23rd August, 2006.

Investments acquired primarily with an intention for trading are classified as HFT securities. As per RBI guidelines, securities in HFT category are not held beyond 90 days and are transferred to AFS category under exceptional circumstances like not able to sell or extreme volatility or market becoming unidirectional, with the approval of the Board/ALCO/Investment Committee.

All other investments are classified under AFS.

a] Held to Maturity: Investments classified under ''Held-to-Maturity'' are carried at weighted average acquisition cost. Premium on acquisition, if any, is amortized on a straight-line basis over the remaining maturity period. In case ofinvestments in subsidiaries / joint ventures any diminution, other than temporary, in the value of such investment is recognized and provided for. Investments in Venture Capital Fund are valued at Cost.

b] Available for Sale and Held for Trading :

(i) Investments in these categories (classified under the category ''Held for Trading'' and ''Available for Sale'') are marked to market / estimated realizable value as per RBI guidelines at monthly and quarterly intervals for HFT and AFS respectively. While the resultant net depreciation, if any, within each category referred to in 4.1 above, is recognized in profit & loss account as "Provisions and Contingencies", the net appreciation is ignored except to the extent of depreciation previously provided. The book value of the individual scrip is not changed after revaluation. In the case of write back of excess provision of depreciation the same is credited to "Provisions and Contingencies "and a like amount (net of taxes and transfer to Statutory Reserve) is appropriated to Investment Reserve Account under Schedule 2 — "Reserves & Surplus".

(ii) For the purpose of (i) above, the market price / estimated realizable value is determined as under:

a] All such securities where repayment of principal or interest not serviced within 90 days from the due date are classified as Non-Performing Investments, except securities guaranteed by the Central Government which are treated as performing investments notwithstanding arrears of principal / interest payments. In respect of investments classified as Non-performing, appropriate provisions are made for the depreciation in the value of these investments. The depreciation requirement in respect of these securities is not set off against appreciation in respect of other performing securities.

b] Where the Bank has both credit and investment exposures to any borrower/ group and in the event the credit exposure is classified as Non-Performing asset, the investment exposure to them is also classified as Non-Performing.

Clarifications:

If any credit facility availed by the issuer is NPA in the books of the bank, investment in any of the securities, including preference shares issued by the same issuer would also be treated as NPI and vice versa. However, if only the preference shares are classified as NPI, the investment in any of the other performing securities issued by the same issuer may not be classified as NPI and any performing credit facilities granted to that borrower need not be treated as NPA.

4.4 ACCOUNTING FOR REPO TRANSACTIONS

The revised accounting guidelines effective from April 1, 2010 issued by Reserve Bank of India are applicable to market repo transactions in Government Securities and corporate debt securities. These accounting norms will, however, not apply to repo / reverse repo transactions conducted under the Liquidity Adjustment Facility (LAF) with the Reserve Bank.

The following procedure shall be applicable for Repo / Reverse Repo transactions:

Monies received/paid during the year on Repo / Reverse Repo transactions are debited / credited to Repo/ Reverse Repo Account and reversed on maturity of the transactions. Costs and revenues are accounted for as interest expenditure/income, as the case may be.

4.5 Accounting for Investment Transactions

i) The Bank follows settlement date method of accounting its investments;

ii) Cost is determined on weighted average cost method;

iii) Profit on sale is netted with loss on sale of securities;

iv) The difference between the sale/ redemption value of liquid Mutual Funds and the book value is treated as profit on sale of investments.

5. FIXED ASSETS

a] i. Fixed assets are stated at cost less accumulated depreciation and provision for impairment. Cost comprises of the purchase price and any cost attributable for bringing the asset to its working condition for its intended use. The carrying amounts of fixed assets are reviewed at each balance sheet date and adjusted for any impairment in accordance with the Accounting Standard 28 ("Impairment of Assets") issued in this regard by the Institute of Chartered Accountants of India.

ii. Impairment of Assets:

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

iii. Capital Work-in-progress includes cost of fixed assets that are not ready for their intended use and also includes advances paid to acquire fixed assets.

b] Depreciation is provided under the straight line method from the date of capitalization. The assets are depreciated taking into consideration the useful life of the asset as provided in schedule II of the Companies Act, 2013. The Bank as a matter of prudence finds that the useful life of the following assets is lower than the useful life of the respective category of assets mentioned in Schedule II (ref.: Sec. 123) of the Companies Act, 2013:

a) Servers and networks

b) Mobile Phones

c) UPS and allied items

Depreciation in the case of Servers and networks and Mobile phones are depreciated at the rate of 1/3rd per annum and UPS and Allied items at the rate of 1/5th per annum. Leasehold improvements are depreciated at the rate of 1/5th per annum.

c] Depreciation on premises is provided for on composite cost, wherever the value of land and building is not separately identified.

6. TRANSACTIONS INVOLVING FOREIGN EXCHANGE

a) Transactions denominated in foreign currencies are accounted for at the rates prevailing on the date of the transaction. Foreign currency monetary assets and liabilities are translated at the balance sheet date at closing exchange rates notified by Foreign Exchange Dealers Association of India [''FEDAI''] and the resulting profits/losses are recognized in the profit and loss account.

b) Foreign Currency non-monetary items, which are carried in terms at historical cost, are reported using the exchange rate at the date of the transaction.

c) Outstanding foreign exchange spot and forward contracts meant for trading purpose are revalued at the exchange rates specified for spot and the respective forward maturities as notified by FEDAI. The resulting profit or loss is shown under Profit or Loss account.

d) Foreign exchange forward contracts, which are not intended for trading and are outstanding at the balance sheet date, are revalued at the closing spot rate as notified by FEDAI and the resulting profit or loss is shown under Profit or Loss account. The premium or discount arising at the inception of such a forward exchange contract is amortized as interest expense or income over the period of the contract.

e) Contingent liabilities denominated in foreign currency are reported using the FEDAI closing spot rates.

7. DERIVATIVES

a) The bank enters into derivative contracts such as foreign currency interest rate swaps, currency swaps, currency futures, options and forward rate agreements.

b) The income/expenses on derivative contracts classified as hedge are recorded on accrual basis.

c) All trading derivative contracts are marked to market and the resultant gains or losses are recognized in the profit and loss account.

d) All derivative transactions are classified under contingent liabilities and those denominated in foreign currencies are reported using the FEDAI closing spot rates.

8. TRANSACTIONS INVOLVING PRECIOUS METALS

a] Income from precious metals transactions is accounted for as "Other Income". In case of metals received on consignment basis, the income thereon is recognized at the time of sale.

b] Commodity loans to the constituents and deposits from public under the gold deposit scheme in the form of precious metals are translated at market related rates prevailing at the close of the period and shown under the head "Advances" and "Deposits" respectively.

c] Closing stock of precious metals [own dealing] is valued at lower of the cost and net realizable value.

d] Closing stock of gold held under Gold Deposit Scheme is valued at market related rates, as per RBI guidelines.

9. CASH AND BALANCES WITH RESERVE BANK OF INDIA

Cash and Balance with Reserve Bank of India include cash on hand and in ATM''s, and gold in hand and balances with RBI in current accounts.

10. EMPLOYEE BENEFITS

a) The Bank has accounted for Employee Benefits as per Accounting Standard 15 issued by the Institute of Chartered Accountants of India.

b) i) Contributions payable to Gratuity, Pension and Leave Encashment etc., which are defined benefits, based on actuarial valuations, at the Balance Sheet date, carried out by an independent actuary;

ii) Contributions payable to the recognized provident fund/National Pension Scheme (NPS), which is a defined contribution scheme; are charged to the profit and loss account.

11. LEASE TRANSACTIONS

Lease payments for assets taken on operating lease are recognized as an expense in the profit and loss account on a straight-line basis over the lease term.

12. CONTINGENT LIABILITIES AND PROVISIONS

In conformity with AS 29, "Provisions, Contingent Liabilities and Contingent Assets", issued by the Institute of Chartered Accountants of India, 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.

Past events leading to possible obligations existence of which will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the Bank; or present obligations where it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or a reliable estimate of the amount of obligation cannot be made, are treated as contingent liabilities and are dealt-with in accordance with AS 29.

Contingent Assets are not recognized in the financial statements.

13. TAXES ON INCOME

Income-tax expense comprises current tax [i.e. amount of tax for the period determined in accordance with the income-tax law] and deferred-tax charge or credit [reflecting tax effects of timing differences between accounting income and taxable income for the period].

a] Current tax is measured at the amount expected to be paid to the taxation authorities, using the applicable tax rates, tax laws and favourable judicial pronouncements / legal opinions.

b] The deferred-tax charge or credit and the corresponding deferred-tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted by the balance sheet date. As per RBI guideline, Deduction under section 36(1)(viii) of the Income Tax Act 1961 is no longer considered as permanent difference and the Deferred Tax Liability is to be created. As regards depreciation on Investment Portfolio, since the difference in depreciation on Investments as per accounts and as per income tax computation is treated as permanent difference, creation of DTL against depreciation on investment portfolio not considered necessary. Deferred-tax assets are recognized keeping in view the consideration of prudence only to the extent there is virtual certainty that the assets can be realized in future. However Bank will not create Deferred Tax Assets on losses.

14. EARNINGS PER SHARE

Basic and Diluted Earnings per Equity Share are computed in accordance with Accounting Standard 20, Earnings Per Share, issued by the Institute of Chartered Accountants of India.

15. Treatment of Basel III compliant Additional Tier I Bonds and Tier II Bonds on occurrence of Trigger events:

A] On occurrence of Trigger event i.e. Common Equity Tier 1 trigger event the Bank shall write-down the outstanding principal of the Bonds not less than that the amount required to immediately return the Banks Common Equity Ratio to above the CET1 trigger event by creating "AT 1 Bond Reserve". The reserve so created shall be part of Common Equity Tier I Capital Bonds written down on occurrence of CET1 Trigger event temporarily may be re-instated in terms of Bond issue /RBI guidelines by debit to AT-1 Bond reserve.

b] On occurrence of Point of Non Viability [PONV] trigger event initiated by Reserve Bank of India, the Bank may create common equity Tier I capital by writing off Additional Tier I Bond principal amount permanently with corresponding creation of AT-1 Bond reserve/Tier II Bond Reserve as the case may be. The re-instatement clause is not applicable on occurrence of PONV trigger event.

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Mar 31, 2014

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

a) The financial statements have been prepared and presented under the historical cost convention on accrual basis of accounting unless otherwise stated and except for items recognized on cash basis, as per guidelines issued by the Reserve Bank of India [''RBI''] and comply with the Accounting standards issued by the Institute of Chartered Accountants of India and relevant requirements prescribed under the Banking Regulation Act, 1949 and Companies Act, 1956, and current practices prevailing within the banking industry in India.

b) The preparation of financial statements in conformity with generally accepted accounting principles [GAAP] requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. The Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Actuals could differ from these estimates.

2. REVENUE RECOGNITION

a] Income is recognized on an accrual basis except:

(i) Commission on Bank Guarantees and Letters of Credit; arrangement of suppliers/buyers Credit; and Locker rent which are recognized on receipt basis.

(ii) Interest income on Non-Performing advances and investments, and securities guaranteed by Central Government where interest is not realized within 90 days is recognized on receipt basis.

(iii) Interest on Income-tax refunds is accounted for on receipt of Intimation order.

b] Profit or loss on sale of investments is recognized in the profit and loss account on settlement basis at the time of sale except the realized profit on sale of investments in ''Held to Maturity'' category which is recognized in the profit and loss account and subsequently appropriated to capital reserve account in accordance with RBI guidelines.

c] Brokerage/commission/incentives received on Banks direct subscriptions are deducted from the cost of securities, whereas brokerage paid in connection with acquisition of securities is treated as revenue expenditure.

d] The broken period interest on sale or purchase of securities is treated as revenue item.

3. ADVANCES

a) Advances are classified into standard, sub-standard, doubtful and loss assets in accordance with the guidelines issued by the RBI and are stated net of specific provisions made towards Non-Performing Advances [''NPAs''].

b) Credit Card dues are identified as NPAs where minimum dues receivable are in default for a continuous period of more than 90 days. Income from non-performing card accounts is not recognized in financial statements.

c) Provisions for sub-standard, doubtful and loss advances are made on the basis of asset classification and provisioning requirements under the prudential norms laid down by the Reserve Bank of India.

d) Recoveries in non-performing advances are appropriated first towards book balance, then to charges and thereafter to unrealized interest.

e) General provision for Standard Assets made in accordance with RBI Guidelines is included under "Other liabilities-others".

f) Restructured Accounts: For restructured advances, provisions for erosion in fair value of loan are made in accordance with the guidelines issued by RBI, in addition to the provision otherwise required. The provision for erosion in fair value of advance is not reduced from advances and is included in the balance sheet under the head "Other Liabilities-Others".

4. INVESTMENTS

4.1 Categorization & Classification

In accordance with the RBI guidelines, investments at the time of acquisition are categorized as

- Held to Maturity [HTM],

- Available for Sale [AFS] and

- Held for Trading [HFT].

The Bank shifts investments to/from HTM at the least of Book Value/Market Value on the date of transfer and the depreciation, if any, on such transfer is recognized in the profit and loss account. For shifting of investments from AFS to HFT or vice versa, the securities need not be revalued on the date of transfer and the provision for the accumulated depreciation if any, held may be transferred to the provision for depreciation against HFT securities and vice-versa.

However, for disclosure in the Balance sheet, investments are classified under six categories – Government securities, other approved securities, shares, debentures and bonds, Investments in Subsidiaries/RRB/Joint Ventures and Others [units of Mutual Funds, Commercial Papers, certificate of deposits and Venture Capital Funds and investments in RIDF of NABARD, MSME Fund of SIDBI, NHB].

Investments classified under ''Held to Maturity'' include the following:

a) Investments in SLR securities upto 23% of Demand and Time liabilities or as notified by RBI from time-to-time.

b) Recapitalisation bonds received from the Government of India towards recapitalisation requirements.

c) Investments in share of subsidiaries and joint ventures.

d) RIDF Schemes of NABARD/MSME (Refinance) Fund of SIDBI/RHF deposits of NHB

e) Investment in Venture Capital Funds, for an initial period of 3 years of each draw down, after 23rd August, 2006.

Investments acquired primarily with an intention for trading are classified as HFT securities. As per RBI guidelines, securities in HFT category are not held beyond 90 days and are transferred to AFS category under exceptional circumstances like not able to sell or extreme volatility or market becoming unidirectional, with the approval of the Board/ALCO/Investment Committee.

All other investments are classified under AFS.

4.2 Valuation and consequential adjustments :

a] Held to Maturity: Investments classified under ''Held-to-Maturity'' are carried at weighted average acquisition cost. Premium on acquisition, if any, is amortized on a straight-line basis over the remaining maturity period. In case of investments in subsidiaries/ joint ventures any diminution, other than temporary, in the value of such investment is recognized and provided for. Investments in Venture Capital Fund are valued at Cost.

b] Available for Sale and Held for Trading:

(i) Investments in these categories (classified under the category ''Held for Trading'' and ''Available for Sale'') are marked to market/estimated realizable value as per RBI guidelines at monthly and quarterly intervals for HFT and AFS respectively. While the resultant net depreciation, if any, within each category referred to in 4.1 above, is recognized in profit & loss account as "Provisions and Contingencies", the net appreciation is ignored except to the extent of depreciation previously provided. The book value of the individual scrip is not changed after revaluation. In the case of write back of excess provision of depreciation the same is credited to "Provisions and Contingencies" and a like amount (net of taxes and transfer to Statutory Reserve) is appropriated to Investment Reserve Account under Schedule 2 – "Reserves & Surplus".

(ii) For the purpose of (i) above, the market price/ estimated realizable value is determined as under:

4.3 Non-performing Investments

a) All such securities where repayment of principal or interest not serviced within 90 days from the due date are classified as Non-Performing Investments, except securities guaranteed by the Central Government which are treated as performing investments notwithstanding arrears of principal/ interest payments. In respect of investments classified as Non-performing, appropriate provisions are made for the depreciation in the value of these investments. The depreciation requirement in respect of these securities is not set off against appreciation in respect of other performing securities.

b) Where the Bank has both credit and investment exposures to any borrower/ group and in the event the credit exposure is classified as Non-Performing asset, the investment exposure to them is also classified as Non-Performing.

4.4 Accounting for Repo Transactions

In line with the uniform accounting treatment prescribed by the RBI, monies received/paid during the year on Repo transactions are debited/credited to Repo Account and reversed on maturity of the transactions. Costs and revenues are accounted for as interest expenditure/income, as the case may be. Balance in Repo account is adjusted against the balance in the investment account.

In respect of Repo transactions under Liquidity Adjustment Facility with the RBI, monies borrowed during the year on such transactions are credited to REPO account from RBI. Expenditure thereon is accounted for as Interest Expenditure. Balance held in Repo account with RBI is not deducted from investment and are valued. SLR securities (including margin) acquired under the Reserve Bank of India (RBI)- Liquidity Adjustment Facility (LAF), are not treated as an eligible asset for maintenance of SLR.

In respect of Reverse Repo Transactions under LAF with the RBI, monies paid during the year are debited to ''Reverse REPO/Investment –RBI'' and reversed on maturity of the transaction. Revenue thereon is accounted as interest income. Balance held in Reverse Repo with RBI is included under investments as on the Balance Sheet date and are not valued.

4.5 Accounting for Investment Transactions

i) The Bank follows settlement date method of accounting its investments; ii) Cost is determined on weighted average cost method; iii) Profit on sale is netted with loss on sale of securities; iv) The difference between the sale/redemption value of liquid Mutual Funds and the book value is treated as profit on sale of investments.

5. Fixed assets

a] i. Fixed assets are stated at cost less accumulated depreciation and provision for impairment. Cost comprises of the purchase price and any cost attributable for bringing the asset to its working condition for its intended use. The carrying amounts of fixed assets are reviewed at each balance sheet date and adjusted for any impairment in accordance with the Accounting Standard 28 ("Impairment of Assets") issued in this regard by the Institute of Chartered Accountants of India.

ii. Impairment of Assets:

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

iii. Capital Work-in-progress includes cost of fixed assets that are not ready for their intended use and also includes advances paid to acquire fixed assets.

b] Depreciation is provided on the diminishing balance method from the date of addition except in case of computers/ATMs and leasehold improvements where the straight-line method is used. The assets are depreciated at the rates prescribed in Schedule XIV to the Companies Act, 1956, except in the case of computers, ATMs and leasehold improvements which are depreciated at the rate of 1/3rd per annum, 1/7th per annum and over the period of the lease respectively.

c] Depreciation on premises is provided for on composite cost, wherever the value of land and building is not separately identified.

6. Transactions Involving Foreign Exchange

a) Transactions denominated in foreign currencies are accounted for at the rates prevailing on the date of the transaction. Foreign currency monetary assets and liabilities are translated at the balance sheet date at closing exchange rates notified by Foreign Exchange Dealers Association of India [''FEDAI''] and the resulting profits/losses are recognized in the profit and loss account.

b) Foreign Currency non-monetary items, which are carried in terms at historical cost, are reported using the exchange rate at the date of the transaction.

c) Outstanding foreign exchange spot and forward contracts meant for trading purpose are revalued at the exchange rates specified for spot and the respective forward maturities as notified by FEDAI. The resulting profit or loss is shown under Profit or Loss account.

d) Foreign exchange forward contracts, which are not intended for trading and are outstanding at the balance sheet date, are revalued at the closing spot rate as notified by FEDAI and the resulting profit or loss is shown under Profit or Loss account. The premium or discount arising at the inception of such a forward exchange contract is amortized as interest expense or income over the period of the contract.

e) Contingent liabilities denominated in foreign currency are reported using the FEDAI closing spot rates.

7. Derivatives

a) The bank enters into derivative contracts such as foreign currency interest rate swaps, currency swaps, currency futures, options and forward rate agreements.

b) The income/expenses on derivative contracts classified as hedge are recorded on accrual basis.

c) All trading derivative contracts are marked to market and the resultant gains or losses are recognized in the profit and loss account.

d) All derivative transactions are classified under contingent liabilities and those denominated in foreign currencies are reported using the FEDAI closing spot rates.

8. Transactions involving Precious Metals

a) Income from precious metals transactions is accounted for as "Other Income". In case of metals received on consignment basis, the income thereon is recognized at the time of sale.

b] Commodity loans to the constituents and deposits from public under the gold deposit scheme in the form of precious metals are translated at market related rates prevailing at the close of the period and shown under the head "Advances" and "Deposits" respectively.

c] Closing stock of precious metals [own dealing] is valued at lower of the cost and net realizable value.

d] Closing stock of gold held under Gold Deposit Scheme is valued at market related rates, as per RBI guidelines.

9. Cash and Balances with Reserve Bank of India

Cash and Balance with Reserve Bank of India include cash on hand and in ATM''s, and gold in hand and balances with RBI in current accounts.

10. Employee benefits

a) The Bank has accounted for Employee Benefits as per Accounting Standard 15 issued by the Institute of Chartered Accountants of India.

b) i) Contributions payable to Gratuity, Pension and Leave Encashment, Sick Leave, etc., which are defined benefits, based on actuarial valuations, at the Balance Sheet date, carried out by an independent actuary;

ii) Contributions payable to the recognized provident fund, which is a defined contribution scheme; are charged to the profit and loss account.

11. Lease transactions

Lease payments for assets taken on operating lease are recognized as an expense in the profit and loss account on a straight-line basis over the lease term.

12. Contingent Liabilities and Provisions

In conformity with AS 29, "Provisions, Contingent Liabilities and Contingent Assets", issued by the Institute of Chartered Accountants of India, 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.

Past events leading to possible obligations existence of which will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the Bank; or present obligations where it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or a reliable estimate of the amount of obligation cannot be made, are treated as contingent liabilities and are dealt-with in accordance with AS29.

Contingent Assets are not recognized in the financial statements.

13. Taxes on Income

Income-tax expense comprises current tax [i.e. amount of tax for the period determined in accordance with the income-tax law] and deferred-tax charge or credit [reflecting tax effects of timing differences between accounting income and taxable income for the period].

a] Current tax is measured at the amount expected to be paid to the taxation authorities, using the applicable tax rates, tax laws and favourable judicial pronouncements/legal opinions.

b] The deferred-tax charge or credit and the corresponding deferred-tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted by the balance sheet date. As per RBI guideline, Deduction under Section 36(1)(viii) of the Income Tax Act, 1961 is no longer considered as permanent difference. The Deferred Tax Liability is to be created on accumulated Special reserve as well as for the current year Financial Year 2013-14. As regards depreciation on Investment Portfolio, since the difference in depreciation on Investments as per accounts and as per income tax computation is treated as permanent difference, creation of DTL against depreciation on investment portfolio not considered necessary. Deferred-tax assets are recognized keeping in view the consideration of prudence only to the extent there is virtual certainty that the assets can be realized in future. However Bank will not create Deferred Tax Assets on losses.

14. Earnings per Share

Basic and Diluted Earnings per Equity Share are computed in accordance with Accounting Standard 20, Earnings Per Share, issued by the Institute of Chartered Accountants of India.

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Mar 31, 2013

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

a. The financial statements have been prepared and presented under the historical cost convention on accrual basis of accounting unless otherwise stated and except for items recognized on cash basis, as per guidelines issued by the Reserve Bank of India [''RBI''] and comply with the Accounting Standards issued by the Institute of Chartered Accountants of India and relevant requirements prescribed under the Banking Regulation Act, 1949 and Companies Act, 1956, and current practices prevailing within the banking industry in India.

b. The preparation of financial statements in conformity with generally accepted accounting principles [GAAP] requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. The Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Actuals could differ from these estimates.

2. REVENUE RECOGNITION

a] Income is recognized on an accrual basis except:

i) Commission on Bank Guarantees and Letters of Credit; arrangement of suppliers /buyers Credit; and Locker rent which are recognized on receipt basis.

ii) Interest income on Non-Performing advances and investments, and securities guaranteed by Central Government where interest is not realized within 90 days is recognized on receipt basis.

b] Profit or loss on sale of investments is recognized in the profit and loss account on settlement basis at the time of sale except the realized profit on sale of investments in ''Held to Maturity'' category which is recognized in the profit and loss account and subsequently appropriated to capital reserve account in accordance with RBI guidelines.

c] Brokerage/commission/incentives received on Banks direct subscriptions are deducted from the cost of securities, whereas brokerage paid in connection with acquisition of securities is treated as revenue expenditure.

d] The broken period interest on sale or purchase of securities is treated as revenue item.

3. ADVANCES

a. Advances are classified into standard, sub-standard, doubtful and loss assets in accordance with the guidelines issued by the RBI and are stated net of specific provisions made towards Non-Performing Advances [''NPAs''].

b. Credit Card dues are identified as NPAs where minimum dues receivable are in default for a continuous period of more than 90 days. Income from non-performing card accounts is not recognized in financial statements.

c. Provisions for sub-standard, doubtful and loss advances are made on the basis of asset classification and provisioning requirements under the prudential norms laid down by the Reserve Bank of India.

d. Recoveries in non-performing advances are appropriated first towards book balance, then to charges and thereafter to unrealized interest.

e. General provision for Standard Assets made in accordance with RBI Guidelines is included under "Other liabilities-others".

f. Restructured Accounts: For restructured advances, provisions for erosion in fair value of loan are made in accordance with the guidelines issued by RBI, in addition to the provision otherwise required. The provision for erosion in fair value of advance is not reduced from advances and is included in the balance sheet under the head "Other Liabilities-Others".

4. INVESTMENTS

4.1 Categorization & Classification

In accordance with the RBI guidelines, investments at the time of acquisition are categorized as Held to Maturity [HTM], Available for Sale [AFS] and Held for Trading [HFT].

The Bank shifts the investments category inter-se as permitted by RBI, at the least of acquisition cost / book value / market value, on the date of transfer and the depreciation, if any, on such transfer is recognized in the profit and loss account.

However, for disclosure in the Balance sheet, investments are classified under six categories — Government securities, other approved securities, shares, debentures and bonds, Investments in Subsidiaries/RRB/Joint Ventures and Others [units of Mutual Funds, Commercial Papers, certificate of deposits and Venture Capital Funds and investments in RIDF of NABARD, MSME Fund of SIDBI, NHB].

Investments classified under ''Held to Maturity'' include the following:

a. Investments in SLR securities upto 25% of Demand and Time liabilities.

b. Recapitalisation bonds received from the Government of India towards recapitalisation requirements.

c. Investments in share of subsidiaries and joint ventures.

d. RIDF Schemes of NABARD / MSMS (Refinance) Fund of SIDBI/RHF deposits of NHB

e. Investment in Venture Capital Funds, for an initial period of 3 years of each draw down, after 23rd August 2006.

Investments acquired primarily with an intention for trading are classified as HFT securities. As per RBI guidelines, securities in HFT category are not held beyond 90 days and are transferred to AFS category under exceptional circumstances like not able to sell or extreme volatility or market becoming unidirectional, with the approval of the Board/ALCO/Investment Committee.

All other investments are classified under AFS.

4.2 Valuation and consequential adjustments :

a. Held to Maturity: Investments classified under ''Held- to-Maturity'' are carried at weighted average acquisition cost. Premium on acquisition, if any, is amortized on a straight-line basis over the remaining maturity period. In case of investments in subsidiaries /joint ventures any diminution, other than temporary, in the value of such investment is recognized and provided for. Investments in Venture Capital Fund are valued at Cost.

b. Available for Sale and Held for Trading:

(i) Investments in these categories (classified under the category ''Held for Trading'' and ''Available for Sale'') are marked to market / estimated realizable value as per RBI guidelines at monthly and quarterly intervals for HFT and AFS respectively. While the resultant net depreciation, if any, within each category referred to in 4.1 above, is recognized in profit & loss account as ''''Provisions and Contingencies'''', the net appreciation is ignored except to the extent of depreciation previously provided. The book value of the individual scrip is not changed after revaluation. In the case of write back of excess provision of depreciation the same is credited to "Provisions and Contingencies" and a like amount (net of taxes and transfer to Statutory Reserve) is appropriated to Investment Reserve Account under Schedule 2 — "Reserves & Surplus''''.

4.3 Non-performing Investments

a) All such securities where repayment of principal or interest not serviced within 90 days from the due date are classified as Non-Performing Investments, except securities guaranteed by the Central Government which are treated as performing investments notwithstanding arrears of principal/interest payments. In respect of investments classified as Non-performing, appropriate provisions are made for the depreciation in the value of these investments. The depreciation requirement in respect of these securities is not set off against appreciation in respect of other performing securities.

b) Where the Bank has both credit and investment exposures to any borrower/ group and in the event the credit exposure is classified as Non-Performing asset, the investment exposure to them is also classified as Non-Performing.

4.4 Accounting for Repo Transactions

In line with the uniform accounting treatment prescribed by the RBI, monies received/paid during the year on Repo transactions are debited/credited to Repo Account and reversed on maturity of the transactions. Costs and revenues are accounted for as interest expenditure/income, as the case may be. Balance in Repo account is adjusted against the balance in the investment account.

In respect of Repo transactions under Liquidity Adjustment Facility with the RBI, monies borrowed during the year on such transactions are credited to Repo account from RBI. Expenditure thereon is accounted for as Interest Expenditure. Balance held in Repo account with RBI is not deducted from investment and are valued. SLR securities (including margin) acquired under the Reserve Bank of India (RBI) - Liquidity Adjustment Facility (LAF), are not treated as an eligible asset for maintenance of SLR.

In respect of Reverse Repo Transactions under LAF with the RBI, monies paid during the year are debited to ''Reverse REPO/ Investment —RBI'' and reversed on maturity of the transaction. Revenue thereon is accounted as interest income. Balance held in Reverse Repo with RBI is included under investments as on the Balance Sheet date and are not valued.

4.5 Accounting for Investment Transactions

i) The Bank follows settlement date method of accounting its investments;

ii) Cost is determined on weighted average cost method;

iii) Profit on sale is netted with loss on sale of securities;

iv) The difference between the sale/redemption value of liquid Mutual Funds and the book value is treated as profit on sale of investments.

5. Fixed assets

a] i. Fixed assets are stated at cost less accumulated depreciation and provision for impairment. Cost comprises of the purchase price and any cost attributable for bringing the asset to its working condition for its intended use. The carrying amounts of fixed assets are reviewed at each balance sheet date and adjusted for any impairment in accordance with the Accounting Standard 28 ("Impairment of Assets") issued in this regard by the Institute of Chartered Accountants of India.

ii. Impairment of Assets:

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

iii. Capital Work-in-progress includes cost of fixed assets that are not ready for their intended use and also includes advances paid to acquire fixed assets.

b] Depreciation is provided on the diminishing balance method from the date of addition except in case of computers/ATMs and leasehold improvements where the straight-line method is used. The assets are depreciated at the rates prescribed in Schedule XIV to the Companies Act 1956, except in the case of computers, ATMs and leasehold improvements which are depreciated at the rate of 1/3rd per annum, 1/7th per annum and over the period of the lease respectively.

c] Depreciation on premises is provided for on composite cost, wherever the value of land and building is not separately identified.

6. Transactions Involving Foreign Exchange

a) Transactions denominated in foreign currencies are accounted for at the rates prevailing on the date of the transaction. Foreign currency monetary assets and liabilities are translated at the balance sheet date at closing exchange rates notified by Foreign Exchange Dealers Association of India [''FEDAI''] and the resulting profits/losses are recognized in the profit and loss account.

b) Foreign Currency non-monetary items, which are carried in terms at historical cost, are reported using the exchange rate at the date of the transaction.

c) Outstanding foreign exchange spot and forward contracts meant for trading purpose are revalued at the exchange rates specified for spot and the respective forward maturities as notified by FEDAI. The resulting profit or loss is shown under Profit or Loss account.

d) Foreign exchange forward contracts, which are not intended for trading and are outstanding at the balance sheet date, are revalued at the closing spot rate as notified by FEDAI and the resulting profit or loss is shown under Profit or Loss account. The premium or discount arising at the inception of such a forward exchange contract is amortized as interest expense or income over the period of the contract.

e) Contingent liabilities denominated in foreign currency are reported using the FEDAI closing spot rates.

7. Derivatives

a) The bank enters into derivative contracts such as foreign currency interest rate swaps, currency swaps, currency futures, options and forward rate agreements.

b) The income/expenses on derivative contracts classified as hedge are recorded on accrual basis.

c) All trading derivative contracts are marked to market and the resultant gains or losses are recognized in the profit and loss account.

d) All derivative transactions are classified under contingent liabilities and those denominated in foreign currencies are reported using the FEDAI closing spot rates.

8. Transactions involving Precious Metals

a) Income from precious metals transactions is accounted for as ''''Other Income''''. In case of metals received on consignment basis, the income thereon is recognized at the time of sale.

b) Commodity loans to the constituents and deposits from public under the gold deposit scheme in the form of precious metals are translated at market related rates prevailing at the close of the period and shown under the head ''''Advances'''' and ''''Deposits'''' respectively.

c) Closing stock of precious metals [own dealing] is valued at lower of the cost and net realizable value.

d) Closing stock of gold held under Gold Deposit Scheme is valued at market related rates, as per RBI guidelines.

9. Cash and Balances with Reserve Bank of India

Cash and Balance with Reserve Bank of India include cash on hand and in ATM''s, and gold in hand and balances with RBI in current accounts.

10. Employee benefits

a) The Bank has accounted for Employee Benefits as per Accounting Standard 15 issued by the Institute of Chartered Accountants of India.

b) i) Contributions payable to Gratuity, Pension and Leave Encashment, Sick Leave, etc., which are defined benefits, based on actuarial valuations, at the Balance Sheet date, carried out by an independent actuary;

ii) Contributions payable to the recognized provident fund, which is a defined contribution scheme; are charged to the profit and loss account.

11. Lease transactions

Lease payments for assets taken on operating lease are recognized as an expense in the profit and loss account on a straight-line basis over the lease term.

12. Contingent Liabilities and Provisions

In conformity with AS 29, "Provisions, Contingent Liabilities and Contingent Assets", issued by the Institute of Chartered Accountants of India, 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.

Past events leading to possible obligations existence of which will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the Bank; or present obligations where it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or a reliable estimate of the amount of obligation cannot be made, are treated as contingent liabilities and are dealt-with in accordance with AS 29.

Contingent Assets are not recognized in the financial statements.

13. Taxes on Income

Income-tax expense comprises current tax [i.e. amount of tax for the period determined in accordance with the income-tax law] and deferred-tax charge or credit [reflecting tax effects of timing differences between accounting income and taxable income for the period].

a) Current tax is measured at the amount expected to be paid to the taxation authorities, using the applicable tax rates, tax laws and favourable judicial pronouncements / legal opinions.

b) The deferred-tax charge or credit and the corresponding deferred-tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deduction under Section 36 (1) (viii) of the Income Tax Act, 1961 is considered as permanent difference. Deferred-tax assets are recognized keeping in view the consideration of prudence only to the extent there is virtual certainty that the assets can be realized in future.

14. Earnings per Share

Basic and Diluted Earnings per Equity Share are computed in accordance with Accounting Standard 20, Earnings Per Share, issued by the Institute of Chartered Accountants of India.

---

Mar 31, 2012

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

a) The financial statements have been prepared and presented under the historical cost convention on accrual basis of accounting unless otherwise stated and except for items recognized on cash basis, as per guidelines issued by the Reserve Bank of India ['RBI'] and comply with the Accounting Standards issued by the Institute of Chartered Accountants of India and relevant requirements prescribed under the Banking Regulation Act, 1949 and Companies Act, 1956, and current practices prevailing within the banking industry in India.

b) The preparation of financial statements in conformity with generally accepted accounting principles [GAAP] requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. The Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Actual could differ from these estimates.

2. REVENUE RECOGNITION

a] Income is recognized on an accrual basis except:

(i) Commission on Bank Guarantees and Letters of Credit; arrangement of suppliers/buyers Credit; and Locker rent which are recognized on receipt basis.

(ii) Interest income on Non-Performing advances and investments, and securities guaranteed by Central Government where interest is not realized within 90 days is recognized on receipt basis.

b] Profit or loss on sale of investments is recognized in the profit and loss account on settlement basis at the time of sale except the realized profit on sale of investments in 'Held to Maturity' category which is recognized in the profit and loss account and subsequently appropriated to capital reserve account in accordance with RBI guidelines.

c] Brokerage/commission/incentives received on Banks direct subscriptions are deducted from the cost of securities, whereas brokerage paid in connection with acquisition of securities is treated as revenue expenditure.

d] The broken period interest on sale or purchase of securities is treated as revenue item.

3. ADVANCES

a) Advances are classified into standard, sub-standard, doubtful and loss assets in accordance with the guidelines issued by the RBI and are stated net of specific provisions made towards Non-Performing Advances ['NPAs'].

b) Credit Card dues are identified as NPAs where minimum dues receivable are in default for a continuous period of more than 90 days. Income from non-performing card accounts is not recognized in financial statements.

c) Provisions for sub-standard, doubtful and loss advances are made on the basis of asset classification and provisioning requirements under the prudential norms laid down by the Reserve Bank of India.

d) Recoveries in non-performing advances are appropriated first towards book balance, then to charges and thereafter to unrealized interest.

e) General Provision for Standard Assets made in accordance with RBI Guidelines is included under "Other liabilities-others".

f) Restructured Accounts: For restructured advances, provisions for erosion in fair value of loan are made in accordance with the guidelines issued by RBI, in addition to the provision otherwise required. The provision for erosion in fair value of advance is not reduced from advances and is included in the balance sheet under the head "Other Liabilities-Others".

4. INVESTMENTS

4.1 Categorization & Classification

In accordance with the RBI guidelines, investments at the time of acquisition are categorized as

- Held to Maturity [HTM],

- Available for Sale [AFS] and

- Held for Trading [HFT].

The Bank shifts the investments category inter-se as permitted by RBI, at the least of acquisition cost / book value/market value, on the date of transfer and the depreciation, if any, on such transfer is recognized in the profit and loss account.

However, for disclosure in the Balance Sheet, investments are classified under six categories — Government securities, other approved securities, shares, debentures and bonds, Investments in Subsidiaries/RRB/Joint Ventures and Others [units of Mutual Funds, Commercial Papers, Certificate of Deposits and Venture Capital Funds and investments in RIDF of NABARD, MSME Fund of SIDBI, NHB].

Investments classified under 'Held to Maturity' include the following:

a) Investments in SLR securities upto 25% of Demand and Time liabilities.

b) Recapitalisation bonds received from the Government of India towards recapitalisation requirements.

c) Investments in share of subsidiaries and joint ventures.

d) RIDF Schemes of NABARD/MSMS (Refinance) Fund of SIDBI/RHF deposits of NHB.

e) Investment in Venture Capital Funds, for an initial period of 3 years of each draw down, after 23rd August 2006.

Investments acquired primarily with an intention for trading are classified as HFT securities. As per RBI guidelines, securities in HFT category are not held beyond 90 days and are transferred to AFS category under exceptional circumstances like not able to sell or extreme volatility or market becoming unidirectional, with the approval of the Board/ALCO/Investment Committee.

All other investments are classified under AFS.

4.2 Valuation and consequential adjustments :

a] Held to Maturity: Investments classified under 'Held- to-Maturity' are carried at weighted average acquisition cost. Premium on acquisition, if any, is amortized on a straight-line basis over the remaining maturity period. In case of investments in subsidiaries / joint ventures any diminution, other than temporary, in the value of such investment is recognized and provided for. Investments in Venture Capital Fund are valued at Cost.

b] Available for Sale and Held for Trading:

(i) Investments in these categories (classified under the category 'Held for Trading' and 'Available for Sale') are marked to market / estimated realizable value as per RBI guidelines at monthly and quarterly intervals for HFT and AFS respectively. While the resultant net depreciation, if any, within each category referred to in 4.1 above, is recognized in profit & loss account as "Provisions and Contingencies", the net appreciation is ignored except to the extent of depreciation previously provided. The book value of the individual scrip is not changed after revaluation. In the case of write back of excess provision of depreciation the same is credited to "Provisions and Contingencies" and a like amount (net of taxes and transfer to Statutory Reserve) is appropriated to Investment Reserve Account under Schedule 2 — "Reserves & Surplus".

(ii) For the purpose of (i) above, the market price / estimated realizable value is determined as under:

4.3 Non-performing Investments

a] All such securities where repayment of principal or interest not serviced within 90 days from the due date are classified as Non-Performing Investments, except securities guaranteed by the Central Government which are treated as performing investments notwithstanding arrears of principal/ interest payments. In respect of investments classified as Non-performing, appropriate provisions are made for the depreciation in the value of these investments. The depreciation requirement in respect of these securities is not set off against appreciation in respect of other performing securities.

b] Where the Bank has both credit and investment exposures to any borrower/ group and in the event the credit exposure is classified as Non-Performing Asset, the investment exposure to them is also classified as Non-Performing.

4.4 Accounting for Repo Transactions

In line with the uniform accounting treatment prescribed by the RBI, monies received/paid during the year on Repo transactions are debited/credited to Repo Account and reversed on maturity of the transactions. Costs and revenues are accounted for as interest expenditure/income, as the case may be. Balance in Repo account is adjusted against the balance in the investment account.

In respect of Repo transactions under Liquidity Adjustment Facility with the RBI, monies borrowed during the year on such transactions are credited to REPO account from RBI. Expenditure thereon is accounted for as Interest Expenditure. Balance held in Repo account with RBI is not deducted from investment and are valued. SLR securities (including margin) acquired under the Reserve Bank of India (RBI)- Liquidity Adjustment Facility (LAF), are not treated as an eligible asset for maintenance of SLR.

In respect of Reverse Repo Transactions under LAF with the RBI, monies paid during the year are debited to 'Reverse REPO/Investment - RBI' and reversed on maturity of the transaction. Revenue thereon is accounted as interest income. Balance held in Reverse Repo with RBI is included under investments as on the Balance Sheet date and are not valued.

4.5 Accounting for Investment Transactions

i) The Bank follows settlement date method of accounting its investments;

ii) Cost is determined on weighted average cost method;

iii) Profit on sale is netted with loss on sale of securities;

iv) The difference between the sale/redemption value of liquid Mutual Funds and the book value is treated as profit on sale of investments.

5. FIXED ASSETS

a] Fixed assets are stated at cost less accumulated depreciation and provision for impairment. Cost comprises of the purchase price and any cost attributable for bringing the asset to its working condition for its intended use. The carrying amounts of fixed assets are reviewed at each balance sheet date and adjusted for any impairment in accordance with the Accounting Standard 28 ("Impairment of Assets") issued in this regard by the Institute of Chartered Accountants of India.

Capital Work-in-progress includes cost of fixed assets that are not ready for their intended use and also includes advances paid to acquire fixed assets.

b] Depreciation is provided on the diminishing balance method from the date of addition except in case of computers/ATMs and leasehold improvements where the straight-line method is used. The assets are depreciated at the rates prescribed in Schedule XIV to the Companies Act 1956, except in the case of computers, ATMs and leasehold improvements which are depreciated at the rate of 1/3rd per annum, 1/7th per annum and over the period of the lease respectively.

c] Depreciation on premises is provided for on composite cost, wherever the value of land and building is not separately identified.

6. TRANSACTIONS INVOLVING FOREIGN EXCHANGE

a) Transactions denominated in foreign currencies are accounted for at the rates prevailing on the date of the transaction. Foreign currency monetary assets and liabilities are translated at the balance sheet date at closing exchange rates notified by Foreign Exchange Dealers Association of India ['FEDAI'] and the resulting profits/losses are recognized in the profit and loss account.

b) Foreign Currency non-monetary items, which are carried in terms at historical cost, are reported using the exchange rate at the date of the transaction.

c) Outstanding foreign exchange spot and forward contracts meant for trading purpose are revalued at the exchange rates specified for spot and the respective forward maturities as notified by FEDAI. The resulting profit or loss is shown under Profit or Loss account.

d) Foreign exchange forward contracts, which are not intended for trading and are outstanding at the balance sheet date, are not revalued. The premium or discount arising at the inception of such a forward exchange contract is amortized as interest expense or income over the period of the contract.

e) Contingent liabilities denominated in foreign currency are reported using the FEDAI closing spot rates.

7. DERIVATIVES

a) The bank enters into derivative contracts such as foreign currency interest rate swaps, currency swaps, currency futures, options and forward rate agreements.

b) The income/expenses on derivative contracts classified as hedge are recorded on accrual basis.

c) All trading derivative contracts are marked to market and the resultant gains or losses are recognized in the profit and loss account.

d) All derivative transactions are classified under contingent liabilities and those denominated in foreign currencies are reported using the FEDAI closing spot rates.

8. TRANSACTIONS INVOLVING PRECIOUS METALS

a] Income from precious metals transactions is accounted for as "Other Income". In case of metals received on consignment basis, the income thereon is recognized at the time of sale.

b] Commodity loans to the constituents and deposits from public under the gold deposit scheme in the form of precious metals are translated at market related rates prevailing at the close of the period and shown under the head "Advances" and "Deposits" respectively.

c] Closing stock of precious metals [own dealing] is valued at lower of the cost and net realizable value.

d] Closing stock of gold held under Gold Deposit Scheme is valued at market related rates, as per RBI guidelines.

9. CASH AND BALANCES WITH RESERVE BANK OF INDIA

Cash and Balance with Reserve Bank of India include cash on hand and in ATM's, and gold in hand and balances with RBI in current accounts.

10. EMPLOYEE BENEFITS

a) The Bank has accounted for Employee Benefits as per Accounting Standard 15 issued by the Institute of Chartered Accountants of India.

b) i) Contributions payable to Gratuity, Pension and

Leave Encashment, Sick Leave, etc., which are defined benefits, based on actuarial valuations, at the Balance Sheet date, carried out by an independent actuary;

ii) Contributions payable to the recognized provident fund, which is a defined contribution scheme; are charged to the profit and loss account.

11. LEASE TRANSACTIONS

Lease payments for assets taken on operating lease are recognized as an expense in the profit and loss account on a straight-line basis over the lease term.

12. CONTINGENT LIABILITIES AND PROVISIONS

In conformity with AS 29, "Provisions, Contingent Liabilities and Contingent Assets", issued by the Institute of Chartered Accountants of India, 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.

Past events leading to possible obligations existence of which will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the Bank; or present obligations where it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or a reliable estimate of the amount of obligation cannot be made, are treated as contingent liabilities and are dealt-with in accordance with AS 29.

Contingent Assets are not recognized in the financial statements.

13. TAXES ON INCOME

Income-tax expense comprises current tax [i.e. amount of tax for the period determined in accordance with the income-tax law] and deferred-tax charge or credit [reflecting tax effects of timing differences between accounting income and taxable income for the period].

a] Current tax is measured at the amount expected to be paid to the taxation authorities, using the applicable tax rates, tax laws and favourable judicial pronouncements / legal opinions.

b] The deferred-tax charge or credit and the corresponding deferred-tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deduction under Section 36 (1) (viii) of the Income Tax Act, 1961 is considered as permanent difference. Deferred-tax assets are recognized keeping in view the consideration of prudence only to the extent there is virtual certainty that the assets can be realized in future.

14. EARNINGS PER SHARE

Basic and Diluted Earnings per Equity Share are computed in accordance with Accounting Standard 20, Earnings Per Share, issued by the Institute of Chartered Accountants of India.

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Mar 31, 2011

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

a) The financial statements have been prepared and presented under the historical cost convention on accrual basis of accounting unless otherwise stated and except for items recognized on cash basis, as per guidelines issued by the Reserve Bank of India [‘RBI] and comply with the Accounting standards issued by the Institute of Chartered Accountants of India and relevant requirements prescribed under the Banking Regulation Act, 1949 and Companies Act, 1956, and current practices prevailing within the banking industry in India.

b) The preparation of financial statements in conformity with generally accepted accounting principles [GAAP] requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. The Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Actuals could differ from these estimates.

2. REVENUE RECOGNITION

a] Income is recognized on an accrual basis except:

(i) Commission on Bank Guarantees and Letters of Credit; arrangement of suppliers /buyers Credit; and Locker rent which are recognized on receipt basis.

(ii) Interest income on Non-Performing advances and investments, and securities guaranteed by Central Government where interest is not realized within 90 days is recognized on receipt basis.

b] Profit or loss on sale of investments is recognized in the Profit and loss account on settlement basis at the time of sale except the realized Profit on sale of investments in ‘Held to Maturity category which is recognized in the Profit and loss account and subsequently appropriated to capital reserve account in accordance with RBI guidelines.

c] Brokerage/commission/incentives received on Banks direct subscriptions are deducted from the cost of securities, whereas brokerage paid in connection with acquisition of securities is treated as revenue expenditure.

d] The broken period interest on sale or purchase of securities is treated as revenue item.

3. ADVANCES

a) Advances are classifed into standard, sub-standard, doubtful and loss assets in accordance with the guidelines issued by the RBI and are stated net of specifc provisions made towards Non-Performing Advances [‘NPAs].

b) Credit Card dues are identifed as NPAs where minimum dues receivable are in default for a continuous period of more than 90 days. Income from non performing card accounts is not recognized in financial statements.

c) Provisions for sub-standard, doubtful and loss advances are made on the basis of asset classifcation and provisioning requirements under the prudential norms laid down by the Reserve Bank of India.

d) Recoveries in non-performing advances are appropriated frst towards book balance, then to charges and thereafter to unrealized interest.

e) General provision for Standard Assets made in accordance with RBI Guidelines is included under "Other liabilities- others".

f) Restructured Accounts: For restructured advances, provisions for erosion in fair value of loan are made in accordance with the guidelines issued by RBI, in addition to the provision otherwise required. The provision for erosion in fair value of advance is not reduced from advances and is included in the balance sheet under the head "Other Liabilities-Others".

4. INVESTMENTS

4.1 Categorization & Classifcation

In accordance with the RBI guidelines, investments at the time of acquisition are categorized as

- Held to Maturity [HTM],

- Available for Sale [AFS] and

- Held for Trading [HFT].

The Bank shifts the investments category inter-se as permitted by RBI at the least of acquisition cost / book value / market value, on the date of transfer and the depreciation, if any, on such transfer is recognized in the Profit and loss account.

However, for disclosure in the balance sheet, investments are classifed under six categories – Government securities, other approved securities, shares, debentures and bonds, Investments in Subsidiaries/ RRB/Joint Ventures and Others [units of Mutual Funds, Commercial Papers, certifcate of deposits and Venture Capital Funds and investments in RIDF of NABARD, MSME Fund of SIDBI,NHB].

Investments classifed under ‘Held to Maturity include the following:

a) Investments in SLR securities upto 25% of Demand and Time liabilities.

b) Recapitalisation bonds received from the Government of India towards recapitalisation requirements.

c) Investments in share of subsidiaries.

d) RIDF Schemes of NABARD/MSME (Refnance) Fund of SIDBI/ RHF Deposits of NHB.

e) Investment in Venture Capital Funds, for an initial period of 3 years of each draw down, after 23rd August 2006.

Investments acquired primarily with an intention for trading are classifed as HFT securities. As per RBI guidelines, securities in HFT category are not held beyond 90 days and are transferred to AFS category under exceptional circumstances like not able to sell or extreme volatility or market becoming unidirectional, with the approval of the ALCO/Investment Committee.

All other investments are classifed under AFS.

4.2 Valuation and consequential adjustments :

a] Held to Maturity: Investments classifed under ‘Held- to-Maturity are carried at weighted average acquisition cost. Premium on acquisition, if any, is amortized on

a straight-line basis over the remaining maturity period. In case of investments in subsidiaries any diminution, other than temporary, in the value of such investment is recognized and provided for. Investments in Venture Capital Fund is valued at Cost.

b] Available for Sale and Held for Trading:

(i) Investments in these categories (classifed under the category Rs.Held for Trading and Rs.Available for Sale) are marked to market / estimated realizable value as per RBI guidelines at monthly and quarterly intervals for HFT and AFS respectively. While the resultant net depreciation, if any, within each category referred to in 4.1 above, is recognized in Profit & loss account as "Provisions and Contingencies", the net appreciation is ignored except to the extent of depreciation previously provided. The book value of the individual scrip is not changed after revaluation. In the case of write back of excess provision of depreciation the same is credited to "Provisions and Contingencies " and a like amount (net of taxes and transfer to Statutory Reserve) is appropriated to Investment Reserve Account under Schedule 2 – "Reserves & Surplus".

(ii) For the purpose of (i) above, the market price / estimated realizable value is determined as under:

4.3 Non-performing Investments

a] All such securities where repayment of principal or interest not serviced within 90 days from the due date are classifed as Non-Performing Investments, except securities guaranteed by the Central Government

which are treated as performing investments notwithstanding arrears of principal / interest payments. In respect of investments classifed as Non- performing, appropriate provisions are made for the depreciation in the value of these investments. The

depreciation requirement in respect of these securities is not set off against appreciation in respect of other performing securities.

b] Where the Bank has both credit and investment exposures to any borrower/ group and in the event the credit exposure is classifed as Non-Performing asset, the investment exposure to them is also classifed as Non-Performing.

4.4 ACCOUNTING FOR REPO TRANSACTIONS

In line with the uniform accounting treatment prescribed by the RBI, monies received/paid during the year on Repo transactions are debited/credited to Repo Account and reversed on maturity of the transactions. Costs and revenues are accounted for as interest expenditure/income, as the case may be. Balance in Repo account is adjusted against the balance in the investment account.

In respect of Repo transactions under Liquidity Adjustment Facility with the RBI, monies borrowed during the year on such transactions are credited to REPO account from RBI. Expenditure thereon is accounted for as Interest Expenditure. Balance held in Repo account with RBI is not deducted from investment and are valued. SLR securities (including margin) acquired under the Reserve Bank of India (RBI)- Liquidity Adjustment Facility (LAF), are not treated as an eligible asset for maintenance of SLR.

In respect of Reverse Repo Transactions under LAF with the RBI, monies paid during the year are debited to ‘Reverse REPO/Investment –RBI and reversed on maturity of the transaction. Revenue thereon is accounted as interest income. Balance held in Reverse Repo with RBI is included under investments as on the Balance Sheet date and are not valued.

4.5 Accounting For Investment Transactions

i) The Bank follows settlement date method of accounting its investments;

ii) Cost is determined on weighted average cost method;

iii) Profit on sale is netted with loss on sale of securities;

iv) The difference between the sale/ redemption value of liquid Mutual Funds and the book value is treated as Profit on sale of investments.

5. FIXED ASSETS

a] Fixed assets are stated at cost less accumulated depreciation and provision for impairment. Cost comprises of the purchase price and any cost attributable for bringing the asset to its working condition for its intended use. The carrying amounts of fxed assets are reviewed at each balance sheet date

and adjusted for any impairment in accordance with the Accounting Standard 28 ( "Impairment of Assets") issued in this regard by the Institute of Chartered Accountants of India.

Capital Work-in-progress includes cost of fxed assets that are not ready for their intended use and also includes advances paid to acquire fxed assets.

b] Depreciation is provided on the diminishing balance method from the date of addition except in case of computers /ATMs and leasehold improvements where the straightline method is used. The assets are depreciated at the rates prescribed in Schedule XIV to the Companies Act 1956, except in the case of computers, ATMs and leasehold improvements which are depreciated at the rate of 1/3rd per annum, 1/7th per annum and over the period of the lease respectively.

c] Depreciation on premises is provided for on composite cost, wherever the value of land and building is not separately identifed.

6. TRANSACTIONS INVOLVING FOREIGN EXCHANGE

a) Transactions denominated in foreign currencies are accounted for at the rates prevailing on the date of the transaction. Foreign currency monetary assets and liabilities are translated at the balance sheet date at closing exchange rates notifed by Foreign Exchange Dealers Association of India [‘FEDAI] and the resulting Profits/losses are recognized in the Profit and loss account.

b) Foreign Currency non-monetary items, which are carried in terms at historical cost, are reported using the exchange rate at the date of the transaction.

c) Outstanding foreign exchange spot and forward contracts meant for trading purpose are revalued at the exchange rates specifed for spot and the respective forward maturities as notifed by FEDAI. The resulting Profit or loss is shown under Profit or Loss account.

d) Foreign exchange forward contracts, which are not intended for trading and are outstanding at the balance sheet date, are not revalued. The premium or discount arising at the inception of such a forward exchange contract is amortized as interest expense or income over the period of the contract.

e) Contingent liabilities denominated in foreign currency are reported using the FEDAI closing spot rates.

7. DERIVATIVES

a) The bank enters into derivative contracts such as foreign currency interest rate swaps, currency swaps, currency futures, options and forward rate agreements.

b) The income/expenses on derivative contracts classifed as hedge are recorded on accrual basis.

c) All trading derivative contracts are marked to market and the resultant gains or losses are recognized in the Profit and loss account.

d) All derivative transactions are classifed under contingent liabilities and those denominated in foreign currencies are reported using the FEDAI closing spot rates.

8. TRANSACTIONS INVOLVING PRECIOUS METALS

a] Income from precious metals transactions is accounted for as "Other Income". In case of metals received on consignment basis, the income thereon is recognized at the time of sale.

b] Commodity loans to the constituents and deposits from public under the gold deposit scheme in the form of precious metals are translated at market related rates prevailing at the close of the period and shown under the head "Advances" and "Deposits" respectively.

c] Closing stock of precious metals [own dealing] is valued at lower of the cost and net realizable value.

d] Closing stock of gold held under Gold Deposit Scheme is valued at market related rates, as per RBI guidelines.

9. CASH AND BALANCES WITH RESERVE BANK OF INDIA

Cash and Balance with Reserve Bank of India include cash on hand and in ATMs, and gold in hand and balances with RBI in current accounts.

10. EMPLOYEE BENEFITS

a) The Bank has accounted for Employee Benefts as per Accounting Standard 15 issued by the Institute of Chartered Accountants of India.

b) i) Contributions payable to Gratuity, Pension and

Leave Encashment, Sick Leave, etc., which are defned benefts, based on actuarial valuations, at the Balance Sheet date, carried out by an independent actuary;

ii) Contributions payable to the recognized provident fund, which is a defned contribution scheme; are charged to the Profit and loss account.

11. LEASE TRANSACTIONS

Lease payments for assets taken on operating lease are recognized as an expense in the Profit and loss account on a straight-line basis over the lease term.

12. CONTINGENT LIABILITIES AND PROVISIONS

In conformity with AS 29, "Provisions, Contingent Liabilities and Contingent Assets", issued by the Institute of Chartered Accountants of India, 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 benefts will be required to settle the obligation, and when a reliable estimate of the amount of the obligation can be made.

Past events leading to possible obligations existence of which will be confrmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the Bank; or present obligations where it is not probable that an outflow of resources embodying economic benefts will be required to settle the obligation; or a reliable estimate of the amount of obligation cannot be made, are treated as contingent liabilities and are dealt-with in accordance with AS29.

Contingent Assets are not recognized in the financial statements.

13. TAXES ON INCOME

Income-tax expense comprises current tax [i.e. amount of tax for the period determined in accordance with the income-tax law] and deferred-tax charge or credit [refecting tax effects of timing differences between accounting income and taxable income for the period].

a] Current tax is measured at the amount expected to be paid to the taxation authorities, using the applicable tax rates, tax laws and favourable judicial pronouncements / legal opinions.

b] The deferred-tax charge or credit and the corresponding deferred-tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deduction under Section 36(1)(viii) of the Income Tax Act,1961 is considered as permanent difference. Deferred-tax assets are recognized keeping in view the consideration of prudence only to the extent there is virtual certainty that the assets can be realized in future.

14. EARNINGS PER SHARE

Basic and diluted Earnings Per Equity Share are computed in accordance with Accounting Standard 20, Earnings Per Share, issued by the Institute of Chartered Accountants of India.

---

Mar 31, 2010

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

a) The financial statements have been prepared and presented under the historical cost convention on accrual basis of accounting unless otherwise stated and except for items recognized on cash basis, as per guidelines issued by the Reserve Bank of India [RBI] and comply with the Accounting standards issued by the Institute of Chartered Accountants of India and relevant requirements prescribed under the Banking Regulation Act, 1949 and Companies Act, 1956, and current practices prevailing within the banking industry in India.

b) The preparation of financial statements in conformity with generally accepted accounting principles [GAAP] requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. The Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Actuals could differ from these estimates.

2. REVENUE RECOGNITION

a] Income is recognized on an accrual basis except:

(i) Commission on Bank Guarantees and Letters of Credit; arrangement of suppliers /buyers Credit; and Locker rent which are recognized on receipt basis.

(ii) Interest income on Non-Performing advances and investments, and securities guaranteed by Central Government where interest is not realized within 90 days is recognized on receipt basis.

b] Profit or loss on sale of investments is recognized in the profit and loss account on settlement basis at the time of sale except the realized profit on sale of investments in Held to Maturity category which is recognized in die profit and loss account and subsequently appropriated to capital reserve account in accordance with RBI guidelines.

c] Brokerage/commission/incentives received on Banks direct subscriptions are deducted from the cost of securities, whereas brokerage paid in connection with acquisition of securities is treated as revenue expenditure.

d] The broken period interest on sale or purchase of securities is treated as revenue item.

3. ADVANCES

a) Advances are classified into standard, sub-standard, doubtful and loss assets in accordance with the guidelines issued by the RBI and are stated net of specific provisions made towards Non-Performing Advances [NPAs].

b) Credit Card dues are identified as NPAs where minimum dues receivable are in default for a continuous period of more than 90 days. Income from non performing card accounts is not recognized in financial statements.

c) Provisions for sub-standard, doubtful and loss advances are made on the basis of asset classification and provisioning requirefhents under the prudential norms laid down by the Reserve Bank of India.

d) Recoveries in non-performing advances are appropriated first towards book balance, then to charges and thereafter to unrealized interest.

e) General provision for Standard Assets made in accordance with RBI Guidelines is included under "Other liabilities- others".

f) Restructured Accounts: For restructured advances, provisions for erosion in fair value of loan are made in accordance with the guidelines issued by RBI, in addition to the provision otherwise required. The provision for erosion in fair value of advance is not reduced from advances and is included in the balance sheet under the head "Other Liabilities-Others".

4. INVESTMENTS

4.1 Categorization & Classification

In accordance with the RBI guidelines, investments at the time of acquisition are categorized as

- Held to Maturity [HTM],

- Available for Sale [AFS] and

- Held for Trading [HFT].

The Bank shifts the investments category in ter-se as permitted by RBI at the least of acquisition cost / book value / market value, on the date of transfer and the depreciation, if any, on such transfer is recognized in the profit and loss account.

However, for disclosure in the balance sheet, investments are classified under six categories - Government securities, other approved securities, shares, debentures and bonds, Investments in Subsidiaries/ RRB/Joint Ventures and Others

[units of Mutual Funds, Commercial Papers, certificate of deposits and Venture Capital Funds].

Investments classified under Held to Maturity include the following:

a) Investments in SLR securities upto 25% of Demand and Time liabilities.

b) Recapitalisation bonds received from the Government of India towards recapitalisation requirements.

c) Investments in share of subsidiaries.

d) RIDF Schemes of NABARD/MSME (Refinance) Fund of SIDBI/ RHF Deposits of NHB.

e) Investment in Venture Capital Funds, for an initial period of 3 years of each draw down, after 23rd August 2006.

Investments acquired primarily with an intention for trading are classified as HFT securities. As per RBI guidelines, securities in HFT category are not held beyond 90 days and are transferred to AFS category under exceptional circumstances like not able to sell or extreme volatility or market becoming unidirectional, with the approval of the ALCO/Investment Committee. All other investments are classified under AFS.

4.2 Valuation and consequential adjustments :

a] Held to Maturity : Investments classified under Held- to-Maturity are carried at weighted average acquisition

cost. Premium on acquisition, if any, is amortized on a straight-line basis over the remaining maturity period. In case of investments in subsidiaries any diminution, other than temporary, in the value of such investment is recognized and provided for. Investments in Venture Capital Fund is valued at Cost.

b] Available for Sale and Held for Trading:

(i) Investments in these categories (classified under the category "Held for Trading and Available for Sale) are marked to market / estimated realizable value as per RBI guidelines at monthly and quarterly intervals for HFT and AFS respectively. While the resultant net depreciation, if any, within each category referred to in 4.1 above, is recognized in profit &C loss account as "Provisions and Contingencies", the net appreciation is ignored except to the extent of depreciation previously provided. The book value of the individual scrip is not changed after revaluation. In the case of write back of excess provision of depreciation the same is credited to "Provisions and Contingencies" and a like amount (net of taxes and transfer to Statutory Reserve) is appropriated to Investment Reserve Account under Schedule 2 — "Reserves & Surplus".

(ii) For the purpose of (i) above, the market price / estimated realizable value is determined as under:

4.3 Non-performing Investments

a] All such securities where repayment of principal or interest not serviced within 90 days from the due date are classified as Non-Performing Investments, except securities guaranteed by the Central Government which are treated as performing investments notwithstanding arrears of principal / interest payments. In respect of investments classified as Non-performing, appropriate provisions are made for the depreciation in the value of these investments. The depreciation requirement in respect of these securities is not set off against appreciation in respect of other performing securities.

b] Where the Bank has both credit and investment exposures to any borrower/ group and in the event the credit exposure is classified as Non-Performing asset, the investment exposure to them is also classified as Non-Performing.

4.4 ACCOUNTING FOR REPO TRANSACTIONS

In line with the uniform accounting treatment prescribed by the RBI, monies received/paid during the year on Repo transactions are debited/credited to Repo Account and reversed on maturity of the transactions. Costs and revenues are accounted for as interest expenditure/income, as the case may be. Balance in Repo account is adjusted against the balance in the investment account.

In respect of Repo transactions under Liquidity Adjustment Facility with the RBI, monies borrowed during the year on such transactions are credited to REPO account from RBI. Expenditure thereon is accounted for as Interest Expenditure. Balance held in Repo account with RBI is not deducted from investment and are valued. The balance in Repo account is reduced from the amount of securities held while furnishing SLR investments.

In respect of Reverse Repo Transactions under LAP with the RBI, monies paid during the year are debited to Reverse REPO/Investment —RBI and reversed on maturity of the transaction. Revenue thereon is accounted as interest income. Balance held in Reverse Repo with RBI is included under investments as on the Balance Sheet date and are not valued. The balance in Reverse Repo is included in the amount of securities held while furnishing data on SLR investments.

4.5 Accounting For Investment Transactions

i) The Bank follows value date method of accounting its investments.;

ii) Cost is determined on weighted average cost method.;

iii) Profit on sale is netted with loss on sale of securities.;

iv) The difference between the sale/ redemption value of liquid Mutual Funds and the book value, is treated as interest income. The difference between the Net Asset value and book value is accounted on accrual basis as interest income at the end of each quarter.

5. FIXED ASSETS

a] Fixed assets are stated at cost less accumulated depreciation and provision for impairment. Cost comprises of the purchase price and any cost attributable for bringing the asset to its working condition for its intended use. The carrying amounts of fixed assets are reviewed at each balance sheet date and adjusted for any impairment in accordance with the Accounting Standard 28 ( "Impairment of Assets") issued in this regard by the Institute of Chartered Accountants of India.

Capital Work-in-progress includes cost of fixed assets that are not ready for their intended use and also includes advances paid to acquire fixed assets.

b] Depreciation is provided on the diminishing balance method from the date of addition except in case of computers /ATMs and leasehold improvements where the straightline method is used. The assets are depreciated at the rates prescribed in Schedule XIV to the Companies Act 1956, except in the case of computers, ATMs and leasehold improvements which are depreciated at the rate of 1 /3rd per annum, l/7th per annum and over the period of the lease respectively.

c] Depreciation on premises is provided for on composite cost, wherever the value of land and building is not separately identified.

6. TRANSACTIONS INVOLVING FOREIGN EXCHANGE

a) Transactions denominated in foreign currencies are accounted for at the rates prevailing on the date of the transaction. Foreign currency monetary assets and liabilities are translated at the balance sheet date at closing exchange rates notified by Foreign Exchange Dealers Association of India [TEDAF] and the resulting profits/losses are recognized in the profit and loss account.

b) Foreign Currency non-monetary items, which are carried in terms at historical cost, are reported using the exchange rate at the date of the transaction.

c) Outstanding foreign exchange spot and forward contracts meant for trading purpose are revalued at the exchange rates specified for spot and the respective forward maturities as notified by FEDAI. The resulting profit or loss is shown under Profit or Loss account.

d) Foreign exchange forward contracts, which are not intended for trading and are outstanding at the balance sheet date, are valued at the closing spot rate and the resulting profit or loss is included in the Profit or Loss account. The premium or discount arising at the inception of such a forward exchange contract is amortized as interest expense or income over the life of the contract.

e) Contingent liabilities denominated in foreign currency are reported using the FEDAI closing spot rates.

7. DERIVATIVES

a) The bank enters into derivative contracts such as foreign currency interest rate swaps, currency swaps, currency futures, options and forward rate agreements.

b) The income/expenses on derivative contracts classified as hedge are recorded on accrual basis.

c) All trading derivative contracts are marked to market and the resultant gains or losses are recognized in the profit and loss account.

d) All derivative transactions are classified under contingent liabilities and those denominated in foreign currencies are reported using the FEDAI closing spot fates.

8. TRANSACTIONS INVOLVING PRECIOUS METALS

a] Income from precious metals transactions is accounted for as "Other Income". In case of metals received on consignment basis, the income thereon is recognized at the time of sale.

b] Commodity loans to the constituents and deposits from public under the gold deposit scheme in the form of precious metals are ttanslated at market related rates prevailing at the close of the period and shown under the head "Advances" and "Deposits" respectively.

c] Closing stock of precious metals [own dealing] is valued at lower of the cost and net realizable value.

d] Closing stock of gold held under Gold Deposit Scheme is valued at market related rates, as per RBI guidelines.

9. CASH AND BALANCES WITH RESERVE BANK OF INDIA

Cash and Balance with Reserve Bank of India include cash on hand and in ATMs, and gold in hand and balances with RBI in cutrent accounts.

10. EMPLOYEE BENEFITS

a) The Bank has accounted for Employee Benefits as per Accounting Standard 15 issued by the Institute of Chartered Accountants of India.

b) i) Contributions payable to Gtatuity, Pension and

Leave Encashment, Sick Leave, etc., which are defined benefits, based on actuatial valuations, at the Balance Sheet date, earned out by an independent actuary;

ii) Conttibutions payable to the recognized provident fund, which is a defined contribution scheme; ate charged to the profit and loss account.

11. INTANGIBLES

Intangible assets comprising of Computer software is amortised @l/3 p.a.

12. LEASE TRANSACTIONS

Lease payments for assets taken on operating lease are recognized as an expense in the profit and loss account on a straight-line basis over the lease term.

13. CONTINGENT LIABILITIES AND PROVISIONS

In conformity with AS 29, "Provisions, Contingent Liabilities and Contingent Assets", issued by the Institute of Chartered Accountants of India, 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 requited to settle the obligation, and when a reliable estimate of the amount of the obligation can be made.

Past events leading to possible obligations existence of which will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the Bank; or present obligations where it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or a reliable estimate of the amount of obligation cannot be made, are treated as contingent liabilities and are dealt- with in accordance with AS29.

Contingent Assets ate not recognized in the financial statements.

14. TAXES ON INCOME

Income-tax expense compiises current tax [i.e. amount of tax for the period determined in accordance with the income-tax law] and deferred-tax charge or credit [reflecting tax effects of timing differences between accounting income and taxable income for the period].

a] Current tax is measured at the amount expected to be paid to the taxation authorities, using the applicable tax rates, tax laws and favourable judicial pronouncements/ legal opinions.

b] The deferred-tax charge or credit and the corresponding deferred-tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred-tax assets are recognized keeping in view the consideration of prudence only to the extent there is virtual certainty that the assets can be realized in future.

15. EARNINGS PER SHARE

Basic and diluted Earnings Per Equity Share are computed in accordance with Accounting Standard 20, Earnings Per Share, issued by the Institute of Chartered Accountants of India.