Accounting Policies of Dena Bank Company

Mar 31, 2018

1.1 BASIS OF ACCOUNTING

Bank’s financial statements are prepared under the historical cost convention, on accrual basis of accounting, unless otherwise stated and conform in all material aspects to Generally Accepted Accounting Principles (GAAP) in India, which comprise applicable statutory provisions, regulatory norms/guidelines prescribed by Reserve Bank of India (RBI), Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI), to the extent applicable and generally the practices prevailing in the banking industry in India.

1.2 USE OF ESTIMATES

The preparation of financial statements in conformity with 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. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable.

1.3 INVESTMENTS

A Basis of Classification

Investments have been categorized as per guidelines of Reserve Bank of India (i) Held to Maturity (ii) Available for Sale (iii) Held for Trading and are disclosed in the accounts under six classifications at the value net of depreciation provision thereon.

B Valuation

Investments are valued as per Reserve Bank of India guidelines in the following manner:

Basis:

‘Held to Maturity’

Investments held under this category are carried in books at their acquisition cost. Premium, if any, paid on acquisition is amortized using straight line method.

‘Available for Sale’ and ‘Held for Trading’

These Investments are marked to market scrip wise. Depreciation/Appreciation for each of six classifications is aggregated; net depreciation, if any, for each classification is provided for, but net appreciation is ignored.

C Methodology

All investments of Bank are valued consistently on Average Cost Method. Market value of quoted securities in case of Investments included in the ‘Available for Sale’ and ‘Held for Trading’ categories is taken based on last closing rate of recognized stock exchange/s or price list of FIMMDA [ Fixed Income Money Market and Derivatives Association of India]. The value in case of unquoted securities and securities where market quotes are not available, is determined based on Prices / Yield to Maturity declared by FIMMDA [Fixed Income Money Market and Derivatives Association of India] and Net Asset Value in case of units of Mutual Funds / SRs of ARCs / SCs/Venture Capital Fund and Net Book Value in case of Shares of Companies.

Treasury Bills, Commercial Papers, Certificate of Deposits. CBLO, Rural Infrastructure Development Funds and Investments including Share Capital Deposits in Regional Rural Banks are valued at carrying cost.

D INCOME RECOGNITION AND PRUDENTIAL NORMS

Bank follows the prudential norms formulated by Reserve Bank of India, from time to time, as to Asset Classification of all Investments, Income Recognition and Provisioning on such Investments.

Commission, brokerage, broken period interest on investment transactions are debited and /or credited to Profit and Loss Account in the year of transaction.

Profit on sale of investments under the category “Held to Maturity” is taken to Profit and Loss Account and thereafter appropriated to “Capital Reserve Account” whereas loss on sale of Investments is recognized in the Profit & Loss Account.

1.4 ADVANCES

A Bank follows the prudential norms formulated by Reserve Bank of India, from time to time, as to Asset Classification, Income Recognition and Provisioning thereon. Accordingly, all advances are being classified into Standard, Substandard, Doubtful and Loss Assets.

B Advances are stated net of provisions for Non Performing Assets, provision in lieu of diminution in the fair value of Restructured Accounts, Balance in Sundries Account in respect of NPA accounts, DICGC/ECGC Claims received and held pending adjustment, part payment received and kept in Suspense Account.

C A general provision for Standard Assets is made in conformity with the prudential norms. Provision on Standard Assets and excess Provision on Sale of NPA accounts are included in ‘Other Liabilities and Provisions’ in Schedule 5 to the Balance Sheet.

D Recoveries in Non Performing Advances are first appropriated towards principal outstanding and surplus, if any, is recognized as income.

E In case of sale of financial assets to the Asset Reconstruction Company (ARC) / Securitisation Company (SC)/ Banks/ FIs / NBFCs at a price below the Net Book Value (NBV), i.e. Book Value Less Provision held, the shortfall is debited to the Profit and Loss Account and in case of sale at a value higher than the NBV, the excess provision is not being reversed but is kept for utilization to meet the shortfall/loss on account of sale of other financial assets to ARC/SC/ Banks/FIs/NBFCs.

Balance in the FITL Accounts in case of failed restructured cases is debited to the provisions for FITL] Accounts.

1.5 FIXED ASSETS & DEPRECIATION

A Fixed assets are stated at historical cost except wherever revalued.

B Premises also include cost of land in some of the properties where the same could not be segregated.

C Fixed Assets are depreciated under Straight Line Method on the basis of useful life prescribed under schedule-II of the Companies Act 2013 for the respective assets.

D Depreciation has been charged on Depreciable Amount after deducting residual value of the assets. Residual Value has been considered @ 5% of the original cost of each class of Asset.

E Depreciation on additions/sale/ deletion to fixed assets made during the year is provided at proportionately for the period of use of the assets.

F Cost of leasehold land is amortized over the period of lease.

G Depreciation attributable to revalued portion, is charged to the Revaluation Reserve Account

H Computer Software Expenses are considered as Intangible Assets and are amortized over a period of five years, which is considered as useful economic life of such assets.

I Fixed Assets include Capital Work-in-Progress.

1.6 IMPAIRMENT OF ASSETS

Impairment loss, if any, on Fixed Assets is recognised in accordance with AS 28 - Impairment of Assets, issued by ICAI and charged to Profit and Loss Account.

1.7 LEASE ACCOUNTING

Lease payments for assets taken on operating lease are recognized in the Profit & Loss Account over the lease term in accordance with AS 19 - Leases, issued by ICAI.

1.8 NON BANKING ASSETS

Non Banking Assets are stated at cost.

1.9 REVENUE RECOGNITION

i Commission on Letters of Credit/ Bank Guarantees/ Government Business / Distribution of Insurance Policies/ Mutual Fund Products/ASBA; Locker Rent, Interest on Refund of Taxes, Dividend, Income on Units of Mutual Funds, Rental Income, and Service Charges on various Deposit Accounts are recognized on realization basis.

ii Interest/ Discount on Non-Performing Loans & Advances/ Investments is recognized to the extent realized as per the prudential guidelines of RBI.

iii Recoveries in Written Off Advances / Investments are being accounted for as ‘Miscellaneous Income’.

1.10 RECOGNITION OF EXPENSES

i Pursuant to RBI Circular dated 22nd August, 2008, interest payable on matured and unpaid Term Deposits is provided on accrual basis on Saving Bank Rate on deposits matured on or after 22.08.2008.

ii Expenses on the issue of shares, bonds etc. are recognized in the year of incurrence.

iii Legal Expenses in case of Suit Filed Accounts are charged to Profit and Loss Account.

iv Expenditure on Voluntary Retirement Scheme [VRS] is recognized in the year of payment.

1.11 EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES A Foreign Currency monetary items including outstanding

forward exchange contracts in foreign currency are valued at the year-end on the rates issued by Foreign Exchange

Dealers’ Association of India (FEDAI) and the resultant profit/loss arising out of such revaluation is accounted for in the Profit & Loss Account.

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

C Guarantees, letters of credit, acceptances, endorsements and other obligations in foreign currency are also revalued at the year-end on the rates issued by FEDAI for the purpose of Balance Sheet exposure.

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

1.12 EMPLOYEE BENEFITS

Gratuity, Pension and Leave Encashment payable on retirement; and other employee benefits are charged to Profit & Loss Account as per actuarial valuation as required by AS 15 [R] issued by ICAI.

1.13 TAXES ON INCOME

i Current Tax is provided using applicable tax rates on the amount worked out on the basis of applicable tax laws, judicial pronouncements / legal opinions and the past assessments.

ii Deferred Tax is recognised subject to consideration of prudence on timing difference, representing the difference between the taxable income and accounting income that originated in one period and are capable of reversal in one or more subsequent periods. Deferred Tax Assets and Liabilities are measured using tax rates and the tax laws that have been enacted or substantively enacted by the Balance Sheet date.

1.14 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

A As per AS 29 - Provisions, Contingent Liabilities and Contingent Assets issued by ICAI, the Bank recognises provisions only when it has a present obligation as a result of a past event, it is probable that an outflow of resources is expected to settle the obligation and a reliable estimate of the amount of obligation can be made.

B Contingent Liabilities are disclosed in a case when there is a present or possible obligation and it is not probable that an outflow of resources will be required to settle it.

C Contingent Assets are neither recognised nor disclosed.

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Mar 31, 2017

NOTES TO ABRIDGED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2017

1. Basis of Preparation

The Abridged Financial Statements have been prepared on the basis of the audited financial statements of the Bank for the year ended 31^st March, 2017 (herein referred to as Annual Financial Statements’) pursuant to Rule 7A of the Companies (Central Government General Rules and Forms, 1956 and as notified by Ministry of Finance, Government of India vide its letter no. F.No. 7/116/2012-BOA dated August 1, 2012.

2. Significant Accounting Policies:

Significant accounting policies of the Bank are contained in Schedule 17 of the ‘Annual Financial Statements’

3. Notes to accounts and other disclosures are contained in Schedule 18 of the Annual Financial Statements.

4. During the year the method of depreciation on fixed assets has been changed to straight line method (SLM), on the basis of useful life determined as per Companies Act 2013, as against the WDV method being used hitherto.

Consequent to the change, depreciation of prior period amounting to Rs, 70.62 crores has been found to be in excess and depreciation charged for the year is lower by Rs, 4.83 crores. As a result, the fixed assets and the profit before tax are higher by Rs, 75.45 crores.

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Mar 31, 2016

1. Basis of Preparation

The Abridged Financial Statements have been prepared on the basis of the audited financial statements of the Bank for the year ended 31st March, 2016 (herein referred to as ''Annual Financial Statements'') pursuant to Rule 7A of the Companies (Central Government General Rules and Forms, 1956 and as notified by Ministry of Finance, Government of India vide its letter no. F.No. 7/116/2012-BOA dated August 1, 2012.

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Mar 31, 2014

Basis of Preparation

The Abridged Financial Statements have been prepared on the basis of the audited financial statements of the Bank for the year ended 31stMarch, 2014 (herein referred to as "Annual Financial Statements") pursuant to Rule 7A of the Companies (Central Government General Rules and Forms, 1956 and as notified by Ministry of Finance, Government of India vide its letter no. F.No. 7/116/2012-BOA dated August 1, 2012.

Significant accounting policies of the Bank are contained in Schedule 17 of the "Annual Financial Statements".

*Extract of Notes to Accounts as referred to in the Auditors'' Report under Para "Emphasis of Matter"

1. Accounting Standard 22 – "Accounting for Taxes on Income

The Bank has complied with requirements of "AS-22" issued by ICAI and accordingly, deferred tax assets and liabilities are recognized.

Pursuant to Reserve Bank of India''s (RBI''s) Circular No. DBOD.No.BP.BC.77/21.04.018/2013-14 dated 20th December 2013, the Bank has created Deferred Tax Liability (DTL) on the Special Reserve under section 36(1)(viii) of the Income-tax Act, 1961. As required by the said RBI Circular, the expenditure, amounting to Rs. 66.96 cr due to the creation of DTL on Special Reserve as at 31st March, 2013, not previously charged to the Profit and Loss Account, has now been adjusted directly from the Revenue Reserves. Had this amount been charged to the Profit & Loss Account in accordance with the generally accepted accounting principles in India, the amount of Profit for year would have been lower by Rs. 66.96 cr.

During the year the Bank has created Deferred Tax Asset (DTA) of Rs. 99.20 cr (Rs. 52.23 cr up to 31st March, 2013 and the Balance of Rs. 46.97 cr for the current year) on the provision for sacrifice in Restructured Assets. Consequently, profit for the year is higher by Rs. 99.20 cr.

The Bank had been creating Deferred Tax Liabilities/ Deferred Tax Assets on the provision for depreciation on Investments in earlier years considering it as a timing difference. However, on the basis of expert opinion obtained by the Management, DTL/ DTA on the provision for depreciation on Investments has now been considered as a permanent difference. As a result, the Bank has not created net DTL of Rs. 366.65 cr on this account for the current financial year and has also reversed a net DTL of Rs. 63.32 cr outstanding as at 31st March, 2013. Consequently, profit for the year is higher by Rs. 429.97 cr.

2. (e) Accounting Standard - 15 – "Employee Benefits"

i) In terms of the requirements of RBI circular no

DBOD. No. BP.BC.80/ 21.04.018/2010-11 on Re- opening of Pension Option to Employees of Public Sector Banks and Enhancement in Gratuity Limits - Prudential Regulatory Treatment dated 9th February, 2011, the Bank has amortized an amount of Rs. 86.78 cr (representing 1/5th of Rs. 433.88 cr) out of the unrecognized amount of Rs. 173.56 cr as on 31.03.2013. The balance amount carried forward i.e. Rs. 86.77 cr (Pension Rs. 70.78 cr plus Gratuity Rs. 15.99 cr).

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Mar 31, 2012

1 BASIS OF ACCOUNTING

The Bank's financial statements are prepared under the historical cost convention, on accrual basis of accounting, unless otherwise stated and conform in all material aspects to Generally Accepted Accounting Principles (GAAP) in India, which comprise applicable statutory provisions, regulatory norms/guidelines prescribed by Reserve Bank of India (RBI), Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI), to the extent applicable and generally the practices prevailing in the banking industry in India.

2 USE OF ESTIMATES

The preparation of financial statements in conformity with 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. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable.

3 INVESTMENTS

A Basis of Classification Investments have been categorized as per guidelines of Reserve Bank of India (i) Held to Maturity, (ii) Available for Sale (iii) Held for Trading and are disclosed in the accounts under six classifications at the value net of depreciation provision thereon.

B Valuation

Investments are valued as per Reserve Bank of India guidelines in the following manner:

Basis:

- Held to Maturity' Investments held under this category are carried in books at their acquisition cost. Premium, if any, paid on acquisition is amortized using straight line method.

- Available for Sale' and 'Held for Trading' These Investments are marked to market scrip wise. Depreciation/ Appreciation for each of six classifications is aggregated; net depreciation, if any, for each classification is provided for, but net appreciation is ignored.

C Methodology

All investments of bank are valued consistently on Average Cost Method. Market value of quoted securities in case of Investments included in the 'Available for Sale' and 'Held for Trading' categories is taken based on market quotations of recognized stock exchange/s or price list of Reserve Bank of India.

The value in case of unquoted securities and securities where market quotes are not available, is determined based on Prices / Yield to Maturity declared by Primary Dealers Association of India jointly with Fixed Income Money Market and Derivatives Association of India and Net Asset Value in case of units of Mutual Funds / SRs of ARCs / SCs and Net Book Value in case of Shares of Companies.

Treasury Bills, Commercial Papers, Rural Infrastructure Development Funds and Investments including Share Capital Deposits in Regional Rural Banks are valued at carrying cost.

D INCOME RECOGNITION AND PRUDENTIAL NORMS Bank follows the prudential norms formulated by Reserve Bank of India, from time to time, as to Asset Classification of all Investments, Income Recognition and Provisioning on such Investments.

Commission, brokerage, broken period interest on investment transactions are debited and /or credited to Profit and Loss Account in the year of transaction. Profit on sale of investments under the category "Held to Maturity" is taken to Profit and Loss Account and thereafter appropriated to

"Capital Reserve Account" whereas loss on sale of Investments is recognized in the Profit & Loss Account.

4 ADVANCES

A) Bank follows the prudential norms formulated by Reserve Bank of India, from time to time, as to Asset Classification, Income Recognition and Provisioning thereon. Accordingly, all advances are being classified into Standard, Sub-standard, Doubtful and Loss Assets.

B) Advances are stated net of provisions for Non Performing Assets, provision in lieu of diminution in the fair value of Restructured Accounts, Balance in Sundries Account in respect of NPA accounts, DICGC/ECGC Claims received and held pending adjustment, part payment received and kept in Suspense Account.

C) A general provision for Standard Assets is made in conformity with the prudential norms. Provision on Standard Assets and excess Provision on Sale of NPA accounts are included in 'Other Liabilities and Provisions' in Schedule 5 to the Balance Sheet.

D) Recoveries in Non Performing Advances are first appropriated towards principal outstanding and surplus, if any, is recognized as income.

E) In case of sale of financial assets to the Asset Reconstruction Company (ARC) / Securitisation Company (SC)/ Banks/ FIs / NBFCs at a price below the Net Book Value (NBV), i.e. Book Value Less Provision held, the shortfall is debited to the Profit and Loss Account and in case of sale at a value higher than the NBV, the excess provision is not being reversed but is kept for utilization to meet the shortfall/loss on account of sale of other financial assets to ARC/SC/Banks/FIs/NBFCs.

5 FIXED ASSETS & DEPRECIATION

A) Fixed assets are stated at historical cost except certain premises, which have been stated at revalued amount.

B) Premises also include cost of land in some of the properties where the same could not be segregated.

C) Depreciation is charged on Written Down Value (W.D.V.) Method at the rates prescribed under the Income Tax Rules, 1962 except that the Computer Hardware purchased before 01.04.2000 are depreciated @ 25% p.a. on W.D.V. Method and those purchased on or after 01.04.2000 are depreciated @ 33.33% on Straight Line Method.

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

E) Cost of leasehold land is amortized over the period of lease.

F) Depreciation attributable to revalued portion is charged to the Revaluation Reserve Account.

G Computer Software Expenses are considered as Intangible Assets and are amortized over a period of five years, which is considered as useful economic life of such assets.

H Fixed Assets include Capital Work-in-Progress.

6 IMPAIRMENT OF ASSETS Impairment loss, if any, on Fixed Assets is recognised in accordance with the AS 28 - Impairment of Assets, issued by ICAI and charged to Profit and Loss Account.

7 LEASE ACCOUNTING

Lease payments for assets taken on operating lease are recognized in the Profit & Loss Account over the lease term in accordance with AS 19 - Leases, issued by ICAI.

8 NON BANKING ASSETS

Non Banking Assets are stated at cost.

9 REVENUE RECOGNITION

i Commission on Letters of Credit/ Bank Guarantees / Government Business / Distribution of Insurance Policies/ Mutual Fund Products; Locker Rent, Interest on Refund of Taxes, Dividend, Income on Units of Mutual Funds, Rental Income, and Service Charges on various Deposit Accounts are recognized on realization basis.

ii Interest/Discount on Non-Performing Loans & Advances/ Investments is recognized to the extent realized as per the prudential guidelines of RBI.

iii Recoveries in Written Off Advances / Investments are being accounted for as 'Miscellaneous Income'.

iv Unclaimed credit balances lying in Suspense Receipts Account for more than five years are being considered as 'Miscellaneous Income'. Subsequent claims, if any paid to the customers are charged to expenses in the year of payment.

10 RECOGNITION OF EXPENSES

i Pursuant to RBI Circular dated 22nd August, 2008, interest payable on matured and unpaid Term Deposits is provided on accrual basis on Saving Bank Rate on deposits matured on or after 22.08.2008.

ii Expenses on the issue of shares, bonds etc. are recognized in the year of incurrence

iii Legal Expenses in case of Suit Filed Accounts are charged to Profit and Loss Account.

iv Expenditure on Voluntary Retirement Scheme [VRS] is recognized in the year of payment.

11 EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES

A) Foreign Currency monetary items including outstanding forward exchange contracts in foreign currency are valued at the year-end on the rates issued by Foreign Exchange Dealers' Association of India (FEDAI) and the resultant profit/loss arising out of such revaluation is accounted for in the Profit & Loss Account.

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

C) Guarantees, letters of credit, acceptances, endorsements and other obligations in foreign currency are also revalued at the year- end on the rates issued by FEDAI for the purpose of Balance Sheet exposure.

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

12 EMPLOYEE BENEFITS

Gratuity, Pension and Leave Encashment payable on retirement; and other employee benefits are charged to Profit & Loss Account as per actuarial valuation as required by AS 15 [R] issued by ICAI. The liability on account of exercise of second pension option by the existing employees, and enhancement in gratuity limit from Rs. 3.50 lacs to Rs. 10 lacs, is amortized in five years starting from the FY 2010-11 in terms of RBI circular no: DBOD.No. BPBC.80/ 21.04.018/2010-11 dated 09th February, 2011.

13 TAXES ON INCOME

Current Tax is provided using applicable tax rates on the amount worked out on the basis of applicable tax laws, judicial pronouncements / legal opinions and the past assessments.

Deferred Tax is recognised subject to consideration of prudence on timing difference, representing the difference between the taxable incomes and accounting income that originated in one period and are capable of reversal in one or more subsequent periods. Deferred Tax Assets and Liabilities are measured using tax rates and the tax laws that have been enacted or substantively enacted by the Balance Sheet date.

14 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

A) As per AS 29 - Provisions, Contingent Liabilities and Contingent Assets issued by ICAI, the Bank recognises provisions only when it has a present obligation as a result of a past event, it is probable that an outflow of resources is expected to settle the obligation and a reliable estimate of the amount of obligation can be made.

B Contingent Liabilities are disclosed in a case when there is a present or possible obligation and it is not probable that an outflow of resources will be required to settle it.

C Contingent Assets are neither recognised nor disclosed.

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Mar 31, 2011

1.1 BASIS OF ACCOUNTING

The accounts have been prepared by following the going concern concept on historical cost basis, consistently, and are in conformity with the applicable statutory provisions for the time being in force including the RBI guidelines and generally accepted accounting principles, save as otherwise stated.

1.2 INVESTMENTS

a) CLASSIFICATION:

Investments have been categorized as per guidelines of Reserve Bank of India (i) Held to Maturity, (ii) Available for Sale (iii) Held for Trading and are disclosed in the accounts under six classifications at the value net of depreciation provision thereon.

b) VALUATION:

Investments are valued as per Reserve Bank of India guidelines in the following manner:

I. BASIS:

Held to Maturity

Investments held under this category are carried in books at their acquisition cost. Premium, if any, paid on acquisition is amortized using straight line method.

Available for Sale and Held for Trading

These Investments are marked to market scrip wise. Depreciation/ Appreciation for each of six classifications is aggregated; net depreciation, if any, for each classification is provided for, but net appreciation is ignored.

ii METHODOLOGY:

All investments of bank are valued consistently on Average Cost Method. Market value of quoted securities in case of Investments included in the Available for Sale and "Held for Trading categories is taken based on market quotations of recognized stock exchange/s or price list of Reserve Bank of India.

The value in case of unquoted securities and securities where market quotes are not available, is determined based on Prices / Yield to Maturity declared by Primary Dealers Association of India jointly with Fixed Income Money Market and Derivatives Association of India and Net Asset Value in case of units of Mutual Funds / SRs of ARCs / SCs and Net Book Value in case of Shares of Companies.

Treasury Bills, Commercial Papers, Rural Infrastructure Development Funds and Investments including Share Capital Deposits in Regional Rural Banks are valued at carrying cost.

INCOME RECOGNITION AND PRUDENTIAL NORMS:

Bank follows the prudential norms formulated by Reserve Bank of India, from time to time, as to Asset Classification of all Investments, Income Recognition and Provisioning on such Investments.

Commission, brokerage, broken period interest on investment transactions are debited and /or credited to Profit and Loss Account in the year of transaction.

Profit on sale of investments under the category "Held to Maturity" is taken to Profit and Loss Account and thereafter appropriated to "Capital Reserve Account" whereas loss on sale of Investments is recognized in the Profit & Loss Account.

17.1 ADVANCES

a) Bank follows the prudential norms formulated by Reserve Bank of India, from time to time, as to Asset Classification of Advances, Income Recognition and provisioning thereon. Accordingly all advances are being classified into Standard, Sub-standard, Doubtful and Loss Assets.

b) Advances are net of Provision for Non Performing Assets. Provision in lieu of diminution in the fair value of restructured accounts, balance in Sundries Account [interest capitalization - restructured accounts] in respect of NPA accounts, DICGC Claims/ ECGC claims received and held pending adjustment; part payment received and kept in Suspense Account.

c) Prudential provision on Standard Assets and excess provision on sale of NPA accounts are included in Other Liabilities and Provisions-Others in Schedule 5 to the Balance Sheet.

d) Recoveries in Non Performing Advances are first appropriated towards principal outstanding and surplus, if any, is recognized as income.

e) In case of sale of financial assets to the Asset Reconstruction Company (ARC) / Securitisation Company (SC) at a price below the net book value (NBV), i.e. Book Value Less Provision held, the shortfall is debited to the profit and loss account and in case of sale at a value higher than the NBV, the excess provision is not being reversed but is kept for utilization to meet the shortfall/loss on account of sale of other financial assets to ARC/SC.

f) The shortfall, in case of financial assets sold to the Banks, FIs and/ or, NBFCs, where the sale is at a price below the net book value (NBV), is debited to the profit and loss account, but in the case where the sale value is higher than the NBV, the excess provision is not reversed but being retained to meet the shortfall/loss on account of sale of other non-performing financial asset.

17.4 FIXED ASSETS & DEPRECIATION

a) Premises (except certain premises which have been stated at revalued amount) and other fixed assets are stated at historical cost.

b) Premises also include cost of land in some of the properties where the same could not be segregated.

c) Depreciation is charged on Written Down Value (W.D.V.) method at the rates prescribed under the Income Tax Rules, 1962 except that the computer hardware purchased before 01.04.2000 are

depreciated @ 25% p.a. on W.D.V. method and those purchased on or after 01.04.2000 are depreciated @ 33.33% on Straight Line Method.

d) Cost of leasehold land is amortized over the period of lease.

e) Depreciation attributable to revalued portion is charged to the Revaluation Reserve Account.

f) Fixed Assets include Capital Work-in-Progress.

g) Computer software expenses are considered as intangible assets and are amortized over a period of five years, which is considered as useful economic life of such assets.

17.5 NON BANKING ASSETS

Non Banking Assets are stated at cost.

17.6 REVENUE RECOGNITION

a) The Bank generally follows mercantile system of accounting.

b) Commission on letters of credit/ bank guarantees/ Government Business / distribution of third party products, locker rent, interest on refund of taxes, dividend, income on units of mutual funds, rental income and service charges on various deposit accounts are recognized on realization basis.

c) Interest/discount on non-performing loans advances/investments is recognized to the extent realized as per the prudential guidelines of RBI.

d) Recoveries in written off advances / investments are being accounted for as Miscellaneous Income.

e) Interest on term deposits matured on or after 22th August 2008 but remained unpaid has been provided /accounted for at saving bank rate.

f) Expenses on the issue of shares, bonds etc. are recognized in the year of incurrence.

g) Unclaimed credit balances lying in Suspense Receipts for more than five years are being considered as Miscellaneous Income. Subsequent claims, if any paid to the parties are charged to expenses in the year of payment.

h) Legal expenses in case of suit filed accounts are charged to Profit and Loss account.

17.7 TREATMENT OF VRS EXPENDITURE

Expenditure on VRS is recognized in the year of payment.

17.8 FOREIGN EXCHANGE

a) All foreign currency assets and liabilities including outstanding forward exchange contracts in foreign currency are valued at the year-end on the rates issued by FEDAI and the resultant profit/loss arising out of such revaluation is accounted for in the Profit & Loss Account.

b) Guarantees, letters of credit, acceptances, endorsements and other obligations in foreign currency are also revalued at the year- end on the rates issued by FEDAI for the purpose of Balance Sheet exposure.

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

17.9 STAFF BENEFITS

Gratuity, Pension and Leave Encashment payable on retirement; and other employee benefits are charged to Profit & Loss Account as per actuarial valuation as required by AS 15 [R] issued by ICAI. The liability on account of exercise of second pension option by the existing employees, and enhancement in gratuity limit from ?.3.50 lacs to Rs.10 lacs, will be amortized in five years starting from the FY 2010-11 in terms of RBI circular no: DBOD.No. BP.BC.80/ 21.04.018/2010-11 dated 09th February 2011.

17.10 TAXES ON INCOME

a) Current tax is provided using applicable tax rates on the amount worked out on the basis of applicable tax laws, judicial pronouncements / legal opinions and the past assessments.

b) Deferred tax, comprising of tax effect due to time difference between taxable and as per accounts income for the period, is recognized keeping in view the consideration of prudence in respect of deferred tax assets read with Accounting Standard 22 issued by ICAI.

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Mar 31, 2010

1.1. BASIS OF ACCOUNTING

The accounts have been prepared by following the going concern concept on historical cost basis, consistently, and are in conformity with the applicable statutory provisions for the time being in force and generally accepted accounting principles, save as otherwise stated.

1.2. INVESTMENTS

a) CLASSIFICATION:

Investments have been categorized as per guidelines of Reserve Bank of India (i) Held to Maturity, (ii) Available for Sale (iii) Held for Trading and are disclosed in the accounts under six classifi cations at the value net of depreciation provision thereon.

b) VALUATION:

Investments are valued as per Reserve Bank of India guidelines in the following manner:

i. BASIS:

Held to Maturity

Investments held under this category are carried in books at their acquisition cost. Premium, if any, paid on acquisition is amortized using constant yield method over the remaining period of maturity.

Available for Sale and Held for Trading

These Investments are marked to market scrip wise. Depreciation/ Appreciation for each of six classifi cations is aggregated; net depreciation, if any, for each classifi cation is provided for, but net appreciation is ignored.

ii. METHODOLOGY:

All investments of bank are valued consistently on Average Cost Method. Market value of quoted securities in case of Investments included in the Available for Sale and Held for Trading categories is taken based on market quotations of recognized stock exchange/s or price list of Reserve Bank of India.

The value in case of unquoted securities and securities where market quotes are not available, is determined based on Prices / Yield to Maturity declared by Primary Dealers Association of India jointly with Fixed Income Money Market and Derivatives Association of India and Net Asset Value in case of units of Mutual Funds/ SRs of ARCs/ SCs and Net Book Value in case of Shares of Companies.

Treasury Bills, Commercial Papers, Rural Infrastructure Development Funds and Investments including Share Capital Deposits in Regional Rural Banks are valued at carrying cost.

c) INCOME RECOGNITION AND PRUDENTIAL NORMS:

Bank follows the prudential norms formulated by Reserve Bank of India, from time to time, as to Asset Classifi cation of all Investments, Income Recognition and Provisioning on such Investments.

Commission, brokerage, broken period interest on investment transactions are debited and/or credited to Profi t and Loss Account in the year of transaction.

Profi t on sale of investments under the category "Held to Maturity" is taken to Profi t and Loss Account and thereafter appropriated to "Capital Reserve Account" whereas loss on sale of Investments is recognized in the Profi t & Loss Account.

17.1 ADVANCES

a. Bank follows the prudential norms formulated by Reserve Bank of India, from time to time, as to Asset Classifi cation of Advances, Income Recognition and provisioning thereon. Accordingly all advances are being classifi ed into Standard, Sub-standard, Doubtful and Loss Assets.

b) Advances are net of Provision for Non Performing Assets. Provision in lieu of diminution in the fair value of restructured accounts, balance in Sundries Account [interest capitalization - restructured accounts] in respect of NPA accounts, DICGC Claims/ECGC claims received and held pending adjustment; part payment received and kept in Suspense Account.

c) Prudential provision on Standard Assets and excess provision on sale of NPA accounts are included in Other Liabilities and Provisions - Others in Schedule 5 to the Balance Sheet.

d) Recoveries in Non-Performing Advances are fi rst appropriated towards principal outstanding and surplus, if any, is recognized as income.

e) In case of sale of fi nancial assets to the Asset Reconstruction Company (ARC) / Securitisation Company (SC) at a price below the net book value (NBV), i.e. Book Value Less Provision held, the shortfall is debited to the profi t and loss account and in case of sale at a value higher than the NBV, the excess provision is not being reversed but is kept for utilization to meet the shortfall/ loss on account of sale of other fi nancial assets to ARC/SC.

f) The shortfall, in case of fi nancial assets sold to the Banks, FIs and/ or, NBFCs, where the sale is at a price below the net book value (NBV), is debited to the profi t and loss account, but in the case where the sale value is higher than the NBV, the excess provision is not reversed but being retained to meet the shortfall/ loss on account of sale of other non-performing fi nancial asset.

1.1. FIXED ASSETS AND DEPRECIATION

a) Premises (except certain premises which have been stated at revalued amount) and other fi xed assets are stated at historical cost.

b) Premises also include cost of land in some of the properties where the same could not be segregated.

c) Depreciation is charged on Written Down Value (W.D.V.) method at the rates prescribed under the Income Tax Rules, 1962 except that the computer hardware purchased before 01.04.2000 are depreciated @ 25% p.a. on W.D.V. method and those purchased on or after 01.04.2000 are depreciated @ 33.33% on Straight Line Method.

d) Cost of leasehold land is amortized over the period of lease.

e) Depreciation attributable to revalued portion is charged to the Revaluation Reserve Account.

f) Fixed Assets include Capital Work-in-Progress.

g) Computer software expenses are considered as intangible assets and are amortized over a period of fi ve years, which is considered as useful economic life of such assets.

17.5 NON-BANKING ASSETS

Non-Banking Assets are stated at cost.

17.6 REVENUE RECOGNITION

a) The Bank generally follows mercantile system of accounting.

b) Commission on letters of credit/ bank guarantees/ Government Business/distribution of third party products, locker rent, interest on refund of taxes, dividend, income on units of mutual funds and rental income are recognized on realization basis.

c) Interest/discount on non-performing loans advances/ investments is recognized to the extent realized as per the prudential guidelines of RBI.

d) Recoveries in written off advances/investments are being accounted for as Miscellaneous Income.

e) Interest on term deposits matured on or after 22nd August, 2008 but remained unpaid has been provided /accounted for at saving bank rate.

f) Expenses on the issue of shares, bonds etc. are recognized in the year of incurrence.

g) Unclaimed credit balances lying in Suspense Receipts for more than fi ve years are being considered as Miscellaneous Income. Subsequent claims, if any paid to the parties are charged to expenses in the year of payment.

h) Legal expenses in case of suit fi led accounts are charged to Profi t and Loss account.

17.7 TREATMENT OF VRS EXPENDITURE

Expenditure on VRS is recognized in the year of payment.

17.8 FOREIGN EXCHANGE

a) All foreign currency assets and liabilities including outstanding forward exchange contracts in foreign currency are valued at the year-end on the rates issued by FEDAI and the resultant profi t/loss arising out of such revaluation is accounted for in the Profi t and Loss Account.

b) Guarantees, letters of credit, acceptances, endorsements and other obligations in foreign currency are also revalued at the year-end on the rates issued by FEDAI for the purpose of Balance Sheet exposure.

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

17.9 STAFF BENEFITS

Gratuity, Pension and Leave Encashment payable on retirement; and other employee benefi ts are provided for as per actuarial valuation as required by AS 15 issued by ICAI.

17.10 TAXES ON INCOME

a) Current tax is provided using applicable tax rates on the amount worked out on the basis of applicable tax laws, judicial pronouncements / legal opinions and the past assessments.

b) Deferred tax, comprising of tax effect due to time difference between taxable and as per accounts income for the period, is recognized keeping in view the consideration of prudence in respect of deferred tax assets read with Accounting Standard 22 issued by ICAI.

---

Mar 31, 2009

1. BASIS OF ACCOUNTING

The accounts have been prepared by following the going concern concept on historical cost basis, consistently, and are in conformity with the applicable statutory provisions for the time being in force and generally accepted accounting principles, save as otherwise stated.

2. INVESTMENTS

a. CLASSIFICATION:

Investments have been categorized as per guidelines of Reserve Bank of India (i) Held to Maturity, (ii) Available for Sale (iii) Held for Trading and are disclosed in the accounts under six classifications at the value net of depreciation provision thereon.

b. VALUATION:

Investments are valued as per Reserve Bank of India guidelines in the following manner:

i. BASIS:

Held to Maturity

Investments held under this category are carried in books at their acquisition cost. Premium, if any, paid on acquisition is amortized using constant yield method over the remaining period of maturity.

Available for Sale and Held for Trading

These Investments are marked to market scrip wise. Depreciation/ Appreciation for each of six classifications is aggregated; net depreciation, if any, for each classification is provided for, but net appreciation is ignored.

ii. METHODOLOGY:

All investments of bank are valued consistently on Average Cost Method. Market value of quoted securities in case of Investments included in the Available for Sale and Held for Trading categories is taken based on market quotations of recognized stock exchange/s or price list of Reserve Bank of India. The value in case of unquoted securities and securities where market quotes are not available, is determined based on Prices / Yield to Maturity declared by Primary Dealers Association Of India jointly with Fixed Income Money Market and Derivatives Association of India and Net Asset Value in case of units of Mutual Funds / SRs of ARCs / SCs and Net Book Value in case of Shares of Companies.

Treasury Bills, Commercial Papers, Rural Infrastructure Development Funds and Investments including Share Capital Deposits in Regional Rural Banks are valued at carrying cost.

c. INCOME RECOGNITION AND PRUDENTIAL NORMS:

Bank follows the prudential norms formulated by Reserve Bank of India, from time to time, as to Asset Classification of all Investments, Income Recognition and Provisioning on such Investments.

Commission, brokerage, broken period interest on investment transactions are debited and /or credited to Profit and Loss Account in the year of transaction.

Profit on sale of investments under the category Held to Maturity is taken to Profit and Loss Account and thereafter appropriated to Capital Reserve Account whereas loss on sale of Investments is recognized in the Profit & Loss Account.

3. ADVANCES

a. Bank follows the prudential norms formulated by Reserve Bank of India, from time to time, as to Asset Classification of Advances, Income Recognition and provisioning thereon. Accordingly all advances are being classified into Standard, Sub-standard, Doubtful and Loss Assets.

b. Advances are net of Provision for Non Performing Assets.

c. Prudential provision on Standard Assets and provision on account of Sacrifice on Restructured Standard Accounts are included in Other Liabilities and Provisions-Others in Schedule 5 to the Balance Sheet.

d. Recoveries in Non Performing Advances are first appropriated towards principal outstanding and surplus, if any, is recognized as income.

e. In case of sale of financial assets to the Asset Reconstruction Company (ARC) / Securitisation Company (SC) at a price below the net book value (NBV), i.e. Book Value Less Provision held, the shortfall is debited to the profit and loss account and in case of sale at a value higher than the NBV, the excess provision is not being reversed but is kept for utilization to meet the shortfall/loss on account of sale of other financial assets to ARC/SC.

f. The shortfall, in case of financial assets sold to the Banks, FIs and/ or, NBFCs, where the sale is at a price below the net book value (NBV), is debited to the profit and loss account, but in the case where the sale value is higher than the NBV, the excess provision is not reversed but being retained to meet the shortfall/ loss on account of sale of other non-performing financial asset.

4. FIXED ASSETS & DEPRECIATION

a. Premises (except certain premises which have been stated at revalued amount) and other fixed assets are stated at historical cost.

b. Premises also include cost of land in some of the properties where the same could not be segregated.

c. Depreciation is charged on Written Down Value (W.D.V.) method at the rates prescribed under the Income Tax Rules, 1962 except that the computer hardware purchased before 01.04.2000 are depreciated @ 25% p.a. on W.D.V. method and those purchased on or after 01.04.2000 are depreciated @ 33.33% on Straight Line Method.

d. Cost of leasehold land is amortized over the period of lease.

e. Depreciation attributable to revalued portion is charged to the Revaluation Reserve Account.

f. Fixed Assets include Capital Work-in-Progress.

g. Computer software expenses are considered as intangible assets and are amortized over a period of five years, which is considered as useful economic life of such assets.

5. NON BANKING ASSETS

Non Banking Assets are stated at cost.

6. REVENUE RECOGNITION

a. The Bank generally follows mercantile system of accounting

b. Commission on letters of credit/ bank guarantees/ Government Business / distribution of third party products, locker rent, interest on refund of taxes, dividend, income on units of mutual funds and rental income are recognized on realization basis.

c. Interest/ discount on non-performing loans advances/ investments is recognized to the extent realized as per the prudential guidelines of RBI.

d. Recoveries in written off advances / investments are being accounted for as Miscellaneous Income.

e. In case of matured Deposits unpaid/unclaimed, interest for the post maturity period is accounted for at saving bank rate.

f. Expenses on the issue of shares, bonds etc. are recognized in the year of incurrence.

g. Unclaimed credit balances lying in Suspense Receipts for more than five years are being considered as Miscellaneous Income. Subsequent claims, if any paid to the parties are charged to expenses in the year of payment.

h. Legal expenses in case of suit filed accounts, are charged to Profit and Loss account.

7. TREATMENT OF VRS EXPENDITURE

Expenditure on VRS is recognized in the year of payment.

8. FOREIGN EXCHANGE

a. All foreign currency assets and liabilities including outstanding forward exchange contracts in foreign currency are valued at the year-end on the rates issued by FEDAI and the resultant profit/loss arising out of such revaluation is accounted for in the Profit & Loss Account.

b. Guarantees, letters of credit, acceptances, endorsements and other obligations in foreign currency are also revalued at the year-end on the rates issued by FEDAI for the purpose of Balance Sheet exposure.

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

9. STAFF BENEFITS

Gratuity, Pension and Leave Encashment payable on retirement; and other employee benefits are provided for as per actuarial valuation as required by AS 15 issued by ICAI.

10. TAXES ON INCOME

a. Current tax is provided using applicable tax rates on the amount worked out on the basis of applicable tax laws, judicial pronouncements / legal opinions and the past assessments.

b. Deferred tax, comprising of tax effect due to time difference between taxable and as per accounts income for the period, is recognized keeping in view the consideration of prudence in respect of deferred tax assets read with Accounting Standard 22 issued by ICAI.

---

Mar 31, 2008

1 BASIS OF ACCOUNTING

The accounts have been prepared by following the going concern concept on historical cost basis, consistently, and are in conformity with the applicable statutory provisions for the time being in force and generally accepted accounting principles, save as otherwise stated.

2 INVESTMENTS

a) Classification:

Investments as per Reserve Bank of India guidelines have been classified in three categories (i) Held to Maturity, (ii) Available for Sale (iii) Held for Trading and have been accordingly disclosed in the accounts under six classifications at the value net of depreciation provision thereon.

b) Valuation:

Investments are valued as per Reserve Bank of India guidelines in the following manner:

c) Basis:

Held to Maturity

Investments held under this category are carried in books at their acquisition cost. Premium, if any, paid on acquisition is amortized using constant yield method over the remaining period of maturity.

Available for Sale and Held for Trading These Investments are marked to market scrip wise. Depreciation/Appreciation for each of six classifications is aggregated; net depreciation, if any, for each classification is provided for, but net appreciation is ignored.

d. Methodology:

The Bank follows for valuation of its investments Average Cost Method consistently. Market value of quoted securities in case of Investments included in the Available for Sale and Held for Trading categories is taken based on market quotations of recognized stock exchange/s or- price list of Reserve Bank of India.

The value in case of unquoted securities and securities where market quotes are not available, is determined based on Prices / Yield to Maturity declared by Primary Dealers Association Of India jointly with Fixed Income Money Market and Derivatives Association of India and Net Asset Value in case of units of Mutual Funds / SRs of ARCs / SCs and Net Book Value in case of Shares of Companies.

Treasury Bills, Commercial Papers, Rural Infrastructure Development Funds and Investments including Share Capital Deposits in Regional Rural Banks are valued at carrying cost.

e. Income Recognition and Prudential Norms:

The Bank follows prudential norms formulated by Reserve Bank of India, from time to time, as to Asset Classification of all Investments, Income Recognition and Provisioning on such Investments.

Commission, brokerage, broken period interest etc. on investment transactions are debited / credited to Profit and Loss Account in the year of transaction.

Profit on sale of investments under the category "Held to Maturity" is taken to Profit and Loss Account and thereafter appropriated to "Capital Reserve Account". Loss on sale of Investments is recognized in the Profit & Loss Account.

3. Advances

a. The Bank follows the prudential norms formulated by Reserve Bank of India, from time to time, as to Asset Classification of Advances, Income Recognition and provisioning thereon and accordingly all advances are being classified into Standard, Sub-standard, Doubtful and Loss Assets.

b. Advances are net of Provisions for Non Performing Assets.

c. Prudential provision on Standard Assets and provision on account of Sacrifice on Restructured Standard Accounts are included in Other Liabilities and Provisions-Others in Schedule 5 to the Balance Sheet.

d. Recoveries in Non Performing Advances are first appropriated towards principal outstanding and surplus, if any, is recognized as income.

e. In case of sale of financial assets to the Asset Reconstruction Company (ARC) / Securitisation Company (SC) at a price below the net book value (NBV). i.e. Book Value Less Provision held, the shortfall is debited to the profit and loss account and in case of sale at a value higher than the NBV, the excess provision is not being reversed but is kept for utilization to meet the shortfall/loss on account of sale of other financial assets to ARC/SC.

f. The shortfall, in case of financial assets sold to the Banks, FIs and/ or, NBFCs, where the sale is at a price below the net book value (NBV), is debited to the profit and loss account, but in the case where the sale value is higher than the NBV, the excess provision is not reversed but being retained to meet the shortfall/loss on account of sale of other non-performing financial asset.

4. Fixed Assets & Depreciation

a. Premises (except certain premises which have been stated at revalued amount) and other fixed assets are stated at historical cost.

b. Premises also include cost of land in some of the properties where the same could not be segregated.

c. Depreciation is charged on Written Down Value (W.D.V.) method at the rates prescribed under the Income Tax Rules, 1962 except the computer hardware purchased before 01.04.2000 depreciated @ 25% pa. on W.D.V. method and purchased on or after 01.04.2000 depreciated @ 33.33% on Straight Line Method.

d. Cost of leasehold land is amortized over the period of lease.

e. Depreciation attributable to revalued portion is charged to the Revaluation Reserve Account.

f. Fixed Assets include Capital Work-in-Progress.

g. Computer software expenses are considered as intangible assets and are amortized over a period of five years, which is considered as useful economic life of such assets.

5. NON BANKING ASSETS

Non Banking Assets are stated at cost.

6. REVENUE RECOGNITION

a. The Bank follows mercantile system of accounting except in case of interest/ discount on non-performing loans-advances/investments, commission on letters of credit/ bank cjuararvtees/Govecrvmer\t Busi.nessMkstcfoutAOo, ot third party products, locker rent, interest on refund of taxes, dividend, income on units of mutual funds and rent, where the income/expenses are recognized on cash basis.

b. In case of matured Term Deposits, interest for the post maturity period is accounted for as and when deposits are renewed.

c. Expenses incurred on the issue of shares, bonds etc. are recognized in the year of incurrence.

d. Unclaimed credit balances lying in Suspense Receipts for more than five years are being considered as Miscellaneous Income. Subsequent claims, if any paid to the parties are charged to expenses in the year of payment.

e. Recoveries in written off advances / investments are being accounted for as Miscellaneous Income.

f. In case of suit filed accounts, legal expenses are charged to Profit and Loss account.

7. TREATMENT OF VRS EXPENDITURE

Expenditure on VRS is recognized in the year of incurrence.

8. FOREIGN EXCHANGE

a. The Bank revalues all foreign currency assets and liabilities including outstanding forward exchange contracts in foreign currency at year-end rates issued by FEDAI and the resultant profit/loss arising out of such revaluation is accounted for in the Profit & Loss Account. Guarantees, letters of credit, acceptances, endorsements and other obligations in foreign currency are revalued at year-end rates issued by FEDAI for the purpose of Balance Sheet exposure.

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

9. STAFF BENEFITS

Provisions for Gratuity, Pension and Leave Encashment payable on retirement; and other employee benefits, etc. are made as per actuarial valuation.

10.TAXES ON INCOME

a. Current tax is provided at the amount worked out using applicable tax rates, tax laws, judicial pronouncements / legal opinions and the past assessments.

b. Deferred tax, comprising of tax effect due to time difference between taxable and as per accounts income for the period, is recognized keeping in view the consideration of prudence in respect of deferred tax assets read with Accounting Standard 22 issued by ICAI.

---

Mar 31, 2007

1. BASIS OF ACCOUNTING

These accounts are prepared by following the going concern concept on historical cost basis, consistently, and are in conformity with the statutory provisions and generally accepted accounting principles, save as otherwise stated.

2. INVESTMENTS

a) Classification:

As per Reserve Bank of India guidelines, Investments are classified in three categories viz.; Held to Maturity, Available for Sale & Held for Trading and are disclosed in the accounts in six classifications, net of depreciation provision.

b) Valuation:

Investments are valued as per Reserve Bank of India guidelines as follows:

c) Basis:

`Held to Maturity'

Wherever, the average' book value is higher than the face value/redemption value, such excess amount is amortized over the remaining period of maturity of the security adopting constant yield method. Accordingly, investments are valued at cost less amortization. `Available for Sale' and `Held for Trading'

These Investments are marked to market scrip wise. Depreciation/Appreciation for each of six classifications is aggregated; net depreciation, if any, for each classification is provided for, but net appreciation is ignored.

d) Methodology:

The Bank follows Average Cost Method consistently. Market value of quoted securities in case of Investments included in the 'Available for Sale' and 'Held for Trading' categories is taken based on market quotations of recognized stock exchange/s or price list of Reserve Bank of India.

Where market quotes are not available and in case of unquoted securities, value is determined based on Prices/Yield to Maturity declared by Primary Dealers Association of India jointly with Fixed Income Money Market and Derivatives Association of India and Net Asset Value in case of units of Mutual Funds/SRs of ARCs/SCs and Net Book Value in case of Shares of Companies.

Treasury Bills, Commercial Papers, Rural Infrastructure Development Bonds and Investments including Share Capital Deposits in Regional Rural Banks are valued at carrying cost.

e) Income Recognition and Prudential Norms:

The Bank has followed prudential norms formulated by Reserve Bank of India, from time to time, as to Asset Classification, Income Recognition and Provisioning on Investments.

Commission, brokerage, broken period interest etc. on investment transactions are debited/credited to Profit and Loss Account in the year of transaction.

Profit on sale of investments pertaining to investments under "Held to Maturity" category is taken to Profit and Loss Account and thereafter appropriated to "Capital Reserve Account". Loss on sale will be recognized in the Profit & Loss Account.

3. ADVANCES

a) The Bank has followed prudential norms formulated by Reserve Bank of India, from time to time, as to Asset Classification, Income Recognition and Provisioning on Advances and has accordingly classified its advances into Standard, Sub-standard, Doubtful and Loss Assets.

b) Advances are shown net of Provisions for Non Performing Assets.

c) Prudential provision on Standard Assets and provision on account of 'Sacrifice on Restructured Standard Accounts' are included in `Other Liabilities and Provisions-Others' in Schedule 5 to the Balance Sheet.

d) Recoveries in Non Performing Advances are first appropriated towards principal outstanding and surplus if any, is recognized as income.

e) In case of financial assets sold to the Asset Reconstruction Company (ARC)/Securitisation Company (SC), if the sale is at a price below the net book value (NBV), i.e Book Value Less Provision Held, the shortfall is debited to the profit and loss account. If the sale is for a value higher than the NBV, the excess provision will not be reversed but will be utilized to meet the shortfall/loss on account of sale of other financial assets to SC/RC.

f) In case of financial assets sold to the Banks, FIs. NBFCs, if the sale is at a price below the net book value (NBV), the shortfall is debited to the profit and loss account. If the sale is for a value higher than the NBV, the excess provision will not be reversed but will be utilized to meet the shortfall/loss on account of sale of other non-performing financial assets.

4. FIXED ASSETS & DEPRECIATION

a) Premises (except certain premises which have been stated at revalued amount) and other fixed assets are stated at historical cost.

b) Premises include cost of land in respect of certain properties where the same can be aggregated.

c) Depreciation is charged on Written Doown Value (W.D.V.) method at the rates prescribed under the Income Tax Rules, 1962 except.

i) Computer hardware purchased before 01.04.2000 are depreciated @ 25% p.a. on W.D.V. method and purchased on or after 01.04.2000 are depreciated @ 33.33% on Straight Line Method.

ii) Residential premises admeasuring less than or equal to 80 sq. m. are depreciated @ 5% p.a. on W.D.V. method.

d) Cost of leasehold land is amortized over the period of lease.

e) Depreciation attributable to revalued portion is charged to the Revaluation Reserve Account.

f) Fixed Assets include Capital Work-in-Progress.

g) Computer software expenses are considered as intangible assets and are amortized over a period of five years, which is considered as useful economic life of such assets.

5. NON BANKING ASSETS

Non Banking Assets are stated at cost.

6. REVENUE RECOGNITION

a) The Bank follows mercantile system of accounting except in cases where income/expenses are recognized on cash basis i.e. interest/discount on non-performing loans - advances/investments, commission on letters of credit/bank guarantees/Govt. Business/distribution of Third party products, locker rent, interest on refund of taxes, dividend, income on units of mutual funds and rent.

b) In case of matured Term Deposits, interest is accounted for as and when deposits are renewed.

c) Expenses incurred on the issue of shares, bonds etc. are recognized in the year of incurrence.

d) Unclaimed credit balances lying in Suspense Receipts for more than five years are being accounted for as `Miscellaneous Income'.

e) Recoveries in written off advances/investments are being accounted for as `Miscellaneous Income'.

f) In case of suit filed accounts, legal expenses are charged to Profit and Loss account.

7. TREATMENT OF VRS EXPENDITURE

Expenditure on VRS is recognized in the year of incurrence.

8. FOREIGN EXCHANGE

a) The Bank revalues all foreign currency assets and liabilities including outstanding forward foreign exchange contracts in foreign currency at year-end rates issued by FEDAI and the resultant profit/loss arising out of such revaluation is accounted for in the Profit & Loss Account. Guarantees, letters of credit, acceptances, endorsements and other obligations in foreign currency are revalued at year-end rates issued by FEDAI for the purpose of Balance Sheet Exposure.

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

9. STAFF BENEFITS

Provisions for Gratuity, Pension and Leave Encashment payable on retirement are made as per actuarial valuation.

10. TAXES ON INCOME

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

b) Deferred tax, comprising of tax effect of timing differences between taxable and accounting incomes for the period, is recognized keeping in view the consideration of prudence in respect of deferred tax assets.

11. NET PROFIT

Net Profit is arrived at after:

a) Provision for income tax in accordance with the statutory requirements with adjustments for deferred tax in terms of Accounting Standards 22 issued by the Institute of Chartered Accountants of India,

b) Provision for Wealth Tax

c) Provision for Fringe Benefit Tax

d) Provision for Advances,

e) Adjustments to the value of Investments,

f) Other usual and necessary provisions.

---

Mar 31, 2006

1. BASIS OF ACCOUNTING

These accounts are prepared by following the going concern concept on historical cost basis, consistently, and are in conformity with the statutory provisions and generally accepted accounting principles, save as otherwise stated.

2. INVESTMENTS

i) Classification :

As per Reserve Bank of India guidelines, Investments are classified in three categories viz.; (a) Held to Maturity (b) Available for Sale (c) Held for Trading and are disclosed in the accounts in six classifications, net of depreciation provision.

ii) VALUATION:

Investments are valued as per Reserve Bank of India guidelines as follows:

a. Basis:

`Held to Maturity'

Wherever the average book value is higher than the face value/redemption value, such excess amount is amortised equally over the remaining period of maturity of the security. Accordingly investments are valued at cost less amortisation.

`Available for Sale'

These Investments are marked to market. Depreciation/appreciation for each of six classifications is aggregated; net depreciation, if any, for each classification is provided for, but net appreciation is ignored.

`Held for Trading'

Each scrip in this category is marked to market. Net depreciation/appreciation under each scrip is recognized. At the year-end, unrealized gain, if any, is reversed.

b. Methodology :

The Bank follows Average Cost Method consistently. Market value of quoted securities in case of Investments included in the `Available for Sale' and `Held for Trading' categories is taken based on market quotations of recognized stock exchange/s or price list of Reserve Bank of India. Where market quotes are not available and in case of unquoted securities, value is determined based on:

Prices/Yield to Maturity declared by Primary Dealers Association Of India jointly with Fixed Income Money Market and Derivatives Association of India.

Treasury Bills, Commercial Papers and Investments including Share Capital Deposits in Regional Rural Banks at cost.

iii) INCOME RECOGNITION AND PRUDENTIAL NORMS:

a. The Bank has followed prudential norms formulated by Reserve Bank of India, from time to time, as to asset classification, Income Recognition and Provisioning of investments.

b. Commission, brokerage, broken period interest etc. on investment transactions are debited/credited to Profit and Loss Account in the year of transaction.

c. Profit on sale of investments pertaining to investments under "Held to Maturity" category is taken to Profit and Loss Account and thereafter appropriated to "Capital Reserve Account".

3. ADVANCES

i) The Bank has followed prudential norms formulated by Reserve Bank of India, from time to time, as to Asset Classification, Income Recognition and Provisioning of advances and has accordingly classified its advances into Standard, Sub-standard, Doubtful and Loss Assets.

ii) Advances are shown net of Provisions for Non Performing Assets.

iii) Prudential provision on Standard Assets and provision on account of `Sacrifice on Restructured Standard Accounts' are included in `Other Liabilities and Provisions-Others' in Schedule No.5 to the Balance Sheet.

iv) Recoveries in Non Performing Advances are first appropriated towards principal outstanding and surplus if any, is recognized as interest income.

4. FIXED ASSETS & DEPRECIATION

i) Premises (except certain premises which have been stated at revalued amount) and other fixed assets are stated at historical cost.

ii) Premises include cost of land in respect of certain properties where the same cannot be segregated.

iii) Depreciation is charged on Written Down Value (W.D.V.) method at the rates prescribed under the Income Tax Rules, 1962 except

a) Computer hardware purchased before 01.04.2000 are depreciated @ 25% p.a. on W.D.V. method and purchased on or after 01.04.2000 are depreciated @ 33.33% on Straight Line Method.

b) Residential premises admeasuring less than or equal to 80 sq.mts. are depreciated @ 5% p.a. on W.D.V method.

iv) Cost of lease hold land is amortized over the period of lease.

v) Depreciation attributable to revalued portion is charged to the Revaluation Reserve Account.

vi) Fixed Assets include Capital Work-in-Progress.

5. INTANGIBLE ASSETS

Computer software expenses are considered as intangible assets and are amortized over the period of five years, which is considered as the useful economic life of such assets.

6. NON BANKING ASSETS

Non Banking Assets are stated at cost.

7. REVENUE RECOGNITION

i) The Bank follows mercantile system of accounting except in cases where income/expenses are recognized on cash basis i.e. interest/discount on non-performing advances/investments, commission on letters of credit, locker rent, interest on refund of taxes, dividend receipts, rental income, income on units of mutual funds and interest on overdue term deposits.

ii) Expenses incurred on the issue of bonds are recognized in the year of incurrence.

iii) Expenses incurred on the public issue of equity shares prior to 1.4.2003, are amortized over a period of ten years starting from the year of issue. Expenses incurred thereafter are recognized in the year of incurrence.

iv) Unclaimed credit balances lying in Suspense Receipts for more than five years are being accounted for as `Miscellaneous Income'.

v) Recoveries in written off advances are being accounted for as Miscellaneous income.

vi) In case of suit filed accounts, legal expenses are charged to Profit and loss account.

8. TREATMENT OF VRS EXPENDITURE

Expenditure on VRS are recognized in the year of incurrence.

9. FOREIGN EXCHANGE

i) The Bank revalues all foreign currency assets and liabilities including outstanding forward foreign exchange contracts in foreign currency at the year end rates issued by FEDAI and the resultant profit/losses arising out of such revaluation is accounted for in Profit & Loss Account. Guarantees, letters of credit, acceptances, endorsements and other obligations in foreign currency are revalued at year-end rates issued by FEDAI for the purpose of Balance Sheet exposure.

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

10. STAFF BENEFITS

Provisions for Gratuity, Pension and Leave Encashment payable on retirement are made as per actuarial valuation.

11. TAXES ON INCOME

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

ii) Deferred tax, comprising of tax effect of timing differences between taxable and accounting incomes for the period, is recognized keeping in view the consideration of prudence in respect of deferred tax assets.

12. NET PROFIT

The Net Profit is arrived at after:

i) Provision for income tax in accordance with the statutory requirements with adjustments for deferred tax in terms of Accounting Standards 22 issued by the Institute of Chartered Accountants of India,

ii) Provision for wealth tax,

iii) Provisions for Fringe Benefit Tax,

iv) Provisions for Advances

v) Adjustments to the value of investments,

vi) Transfers to contingency funds,

vii) Other usual and necessary provisions.

---

Mar 31, 2005

17.1 BASIS OF ACCOUNTING

These accounts are prepared by following the going concern concept on historical cost basis, consistently, and are in conformity with the statutory provisions and generally accepted accounting principles, save as otherwise stated.

17.2.INVESTMENTS

i) Classification :

As per Reserve Bank of India guidelines, Investments are classified in three categories viz.; (a) Held to Maturity (b) Available for Sale (c) Held for Trading and are disclosed in the accounts in six classifications, net of depreciation provision.

ii) VALUATION:

Investments are valued as per Reserve Bank of India guidelines as follows:

a. Basis:

`Held to Maturity'

Wherever the average book value is higher than the face value/redemption value, such excess amount is amortised equally over the remaining period of maturity of the security. Accordingly investments are valued at cost less amortisation.

`Available for Sale'

These Investments are marked to market. Depreciation/appreciation for each of six classifications is aggregated; net depreciation, if any, for each classification is provided for, but net appreciation is ignored.

`Held for Trading'

Each scrip in this category is marked to market. Net depreciation/appreciation under each scrip is recognized. At the year-end, unrealized gain, if any, is reversed.

b. Methodology:

The Bank follows Average Cost Method consistently. Market value of quoted securities in case of Investments included in the `Available for Sale' and `Held for Trading' categories is taken based on market quotations of recognized stock exchange/s or price list of Reserve Bank of India. Where market quotes are not available and in case of unquoted securities, value is determined based on:

Prices/Yield to Maturity declared by Primary Dealers Association Of India jointly with Fixed Income Money Market and Derivatives Association of India.

Treasury Bills, Commercial Papers and Investments including Deposits in Regional Rural Banks at cost.

iii) INCOME RECOGNITION AND PRUDENTIAL NORMS:

a. The Bank has followed prudential norms formulated by Reserve Bank of India, from time to time, as to asset classification, Income Recognition and Provisioning of investments.

b. Commission, brokerage, broken period interest etc. on investment transactions are debited/credited to Profit and Loss Account in the year of transaction.

c. Profit on sale of investments pertaining to investments under "Held to Maturity" category is taken to Profit and Loss Account and thereafter appropriated to "Capital Reserve Account".

iv) As per Reserve Bank of India guidelines, Investment Fluctuation Reserve equivalent to 5 percent of investments held under categories "Held for Trading" and "Available for Sale" is to be created over a period of five years, out of profits available after appropriation of Statutory Reserve as per Banking Regulation Act 1949.

17.3 ADVANCES

i) The Bank has followed prudential norms formulated by Reserve Bank of India, from time to time, as to Asset Classification, Income Recognition and Provisioning of advances and has accordingly classified its advances into Standard, Sub-standard, Doubtful and Loss Assets.

ii) Advances are shown net of Provisions for Non Performing Assets.

iii) Prudential provision on Standard Assets and provision on account of `Sacrifice on Restructured Standard Accounts' are included in `Other Liabilities and Provisions-Others' in Schedule No.5 to the Balance Sheet.

iv) Recoveries in Non Performing Advances are first appropriated towards principal outstanding and surplus if any, is recognized as interest income.

17.4 FIXED ASSETS & DEPRECIATION

i) Premises (except certain premises which have been stated at revalued amount) and other fixed assets are stated at historical cost.

ii) Premises include cost of land in respect of certain properties where the same cannot be segregated.

iii) Depreciation is charged on Written Down Value (W.D.V.) method at the rates prescribed under the Income Tax Rules, 1962 except

a) Computer hardware purchased before 01.04.2000 are depreciated @ 25% p.a. on W.D.V. method and purchased on or after 01.04.2000 are depreciated @ 33.33% on Straight Line Method.

b) Residential premises admeasuring less than or equal to 80 sq.mts. are depreciated @ 5% p.a. on W.D.V method.

iv) Cost of lease hold land is amortized over the period of lease.

v) Depreciation attributable to revalued portion is charged to the Revaluation Reserve Account.

vi) Fixed Assets include Capital Work-in-Progress.

17.5 INTANGIBLE ASSETS

Computer software expenses are considered as intangible assets and are amortized over the period of five years, which is considered as the useful economic life of such assets.

17.6 NON BANKING ASSETS

Non Banking Assets are stated at cost.

17.7 REVENUE RECOGNITION

i) The Bank follows mercantile system of accounting except in cases where income/expenses are recognized on cash basis i.e. interest/discount on non-performing advances/investments, commission on letters of credit, locker rent, interest on refund of taxes, dividend receipts, rental income, income on units of mutual funds and interest on overdue term deposits.

ii) Expenses incurred on the issue of bonds are recognized in the year of incurrence.

iii) Expenses incurred on the public issue of equity shares prior to 1.4.2003, are amortized over a period of ten years starting from the year of issue. Expenses incurred thereafter are recognized in the year of incurrence.

iv) Unclaimed credit balances lying in Suspense Receipts for more than five years are being accounted for as `Miscellaneous Income'.

v) Recoveries in written off advances are being accounted for as Miscellaneous income.

vi) In case of suit filed accounts, legal expenses are charged to Profit and loss account.

17.8 TREATMENT OF VRS EXPENDITURE

Expenditure on VRS prior to 1.4.2003 has been amortised over a period of five years as per the guidelines issued by Reserve Bank of India. Expenses incurred thereafter are recognized in the year of incurrence.

17.9 FOREIGN EXCHANGE

i) The Bank revalues all foreign currency assets and liabilities including outstanding forward foreign exchange contracts except guarantees, letters of credit, acceptances, endorsements and other obligations in foreign currency at the year end free market rates issued by FEDAI and the resultant losses as well as profits arising out of such revaluation are accounted for in Profit & Loss Account.

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

17.10 STAFF BENEFITS

Provisions for Gratuity, Pension and Leave Encashment payable on retirement are made on accrual basis as per actuarial valuation.

17.11 TAXES ON INCOME

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

ii) Deferred tax, comprising of tax effect of timing differences between taxable and accounting incomes for the period, is recognized keeping in view the consideration of prudence in respect of deferred tax assets.

17.12 NET PROFIT

The Net Profit is arrived at after:

i) Provisions for income tax in accordance with the statutory requirements with adjustments for deferred tax in terms of Accounting Standards 22 issued by the Institute of Chartered Accountants of India,

ii) Provision for wealth tax,

iii) Provisions for advances,

iv) Adjustments to the value of investments,

v) Transfers to contingency funds,

vi) Other usual and necessary provisions.

---

Mar 31, 2004

1. BASIS OF ACCOUNTING

These accounts are prepared by following the going concern concept on historical cost basis and are in conformity with the statutory provisions and generally accepted accounting principles, except wherever otherwise stated.

2. INVESTMENTS

i) CLASSIFICATION:

As per Reserve Bank of India guidelines, Investments are classified into three categories viz.; (a) Held to Maturity (b) Available for Sale (c) Held for Trading and are disclosed in the accounts in six classifications, net of depreciation provision.

ii) VALUATION:

Investments are valued as per Reserve Bank of India guidelines as follows:

(a) Basis:

`Held to Maturity'

Wherever the average book value is higher than the face value/redemption value, such excess amount is amortised equally over the remaining period of maturity of the security. Accordingly investments are valued at cost less amortisation.

`Available for Sale'

These Investments are marked to market. Depreciation/appreciation for each of six classifications is aggregated; net depreciation, if any, for each classification is provided for, but net appreciation is ignored.

`Held for Trading'

Each scrip in this category is marked to market. Net depreciation/appreciation under each scrip is recognized. At the year-end, unrealized gain, if any, is reversed.

(b) Methodology:

The Bank follows Average Cost Method consistently. Market value of quoted securities in case of Investments included in the `Available for Sale' and `Held for Trading' categories is taken based on market quotations of recognized stock exchange/s or price list of Reserve Bank of India. Where market quotes are not available and in case of unquoted securities, value is determined based on:

- Prices/Yield to Maturity declared by Primary Dealers Association Of India jointly with Fixed Income Money Market and Derivatives Association of India.

- Treasury Bills, Commercial Papers and Investments including Deposits in Regional Rural Banks at cost.

(iii) INCOME RECOGNITION:

(a) In case of Investments where principal amount and/or interest is overdue for more than 90 days, unrealized income is not recognized and appropriate provision for diminution in value is made as per NPI norms for investments. Such diminution in value is not netted out against appreciation in other investments.

(b) Commission, brokerage, broken period interest etc. on investment transactions are debited/credited to Profit and Loss Account in the year of transaction.

(c) Profit on sale of investments pertaining to investments under "Held to Maturity" category is taken to Profit and Loss Account and thereafter appropriated to "Capital Reserve Account.

(iv) As per Reserve Bank of India guidelines, Investment Fluctuation Reserve equivalent to 5 percent of investments held under categories "Held for Trading" and "Available for Sale" is to be created over a period of five years, out of profits available after appropriation of Statutory Reserve as per Banking Regulation Act 1949.

3. ADVANCES

(i) The Bank has followed prudential norms formulated by Reserve Bank of India as to Asset Classification, Income Recognition and Provisioning of advances and has accordingly classified its advances into Standard, Sub-standard, Doubtful and Loss Assets.

(ii) Advances are shown net of Provisions for Non Performing Assets.

(iii) Prudential provision on Standard Assets and provision on account of 'Sacrifice on Restructured Accounts' are included in `Other Liabilities and Provisions-Others' in Schedule No.5 of the Balance Sheet.

(iv) Recoveries in Non Performing Advances are first appropriated against principal outstanding and surplus is recognized as interest income.

4. FIXED ASSETS & DEPRECIATION

(i) Premises (except certain premises which have been stated at revalued amount) and other fixed assets are stated at historical cost.

(ii) Premises include cost of land in respect of certain properties where the same can not be segregated.

(iii) Depreciation is charged on Written Down Value (W.D.V.) method at the rates prescribed under the Income Tax Rules, 1962 except

(a) Computer hardware purchased before 01.04.2000 are depreciated @ 25% p.a. on W.D.V. method and purchased on or after 01.04.2000 are depreciated @ 33.33% on Straight Line Method.

(b) Residential premises admeasuring less than or equal to 80 sq.mts. are depreciated @ 5% p.a. on W.D.V method.

(iv) Depreciation attributable to the increase on revaluation is charged to the Revaluation Reserve Account.

(v) Fixed Assets include Capital Work-in-Progress and Capital Advances.

5. INTANGIBLE ASSETS

Computer software expenses are considered as intangible assets & are amortized over the period of five years, which is considered as the useful economic life of such assets.

6. NON BANKING ASSETS

Non Banking Assets are stated at cost.

7. REVENUE RECOGNITION

(i) The Bank follows mercantile system of accounting except in cases where income/expenses are recognized on cash basis i.e. interest/discount on non-performing advances/investments, commission on letters of credit, locker rents, interest on refund of taxes, dividend receipts, rental income, income on units of mutual funds and interest on overdue term deposits.

(ii) Expenses incurred on the issue of bonds prior to 1.4.2003, are amortized over a period of five years starting from the year of issue. Expenses incurred thereafter are recognized in the year of incurrence.

(iii) Expenses incurred on the public issue of equity shares prior to 1.4.2003, are amortized over a period of ten years starting from the year of issue. Expenses incurred thereafter are recognized in the year of incurrence.

(iv) Unclaimed credit balances lying in Suspense Receipts for more than five years are being accounted for as `Miscellaneous Income'.

(v) Recoveries in written off advances are being accounted for as `Miscellaneous Income'.

(vi) In case of suit filed accounts, legal expenses are charged to Profit & Loss Account.

8. TREATMENT OF VRS EXPENDITURE

Expenditure on VRS prior to 1.4.2003 is amortised over a period of five years as per the guidelines issued by Reserve Bank of India. Expenses incurred thereafter are recognized in the year of incurrence.

9. FOREIGN EXCHANGE

(i) The Bank revalues all foreign currency assets and liabilities including outstanding forward foreign exchange contracts except guarantee, letter of credit, acceptances, endorsements & other obligations in foreign currency at the year end free market rates issued by FEDAI and the resultant losses as well as profits arising out of such revaluation are accounted for in Profit & Loss Account.

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

10. STAFF BENEFITS

Provisions for Gratuity, Pension and Leave Encashment payable on retirement are made on accrual basis as per actuarial valuation.

11. TAXES ON INCOME

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

(ii) Deferred tax, comprising of tax effect of timing differences between taxable and accounting incomes for the period, is recognized keeping in view the consideration of prudence in respect of deferred tax assets.

12. NET PROFIT

The Net Profit is arrived at after:

(i) Provisions for income tax in accordance with the statutory requirements with adjustments for deferred tax in terms of Accounting Standards 22 issued by the Institute of Chartered Accountants of India,

(ii) Provisions for wealth tax, (iii) Provisions for advances, (iv) Adjustments to the value of investments, (v) Transfers to contingency funds, (vi) Other usual and necessary provisions.

---

Mar 31, 2003

17.1 BASIS OF ACCOUNTING

These accounts are prepared on historical cost basis (except certain revalued premises) and are in conformity with the Statutory Provisions and Generally Accepted Accounting Practices, except to the extent of deviations disclosed under notes forming part of the accounts.

17.2 INVESTMENTS

17.2.1 CLASSIFICATION :

As per Reserve Bank of India guidelines, investments are classified in three categories viz. (i) `Held to Maturity; (ii) Available for Sale; (iii) Held for Trading and are disclosed in the accounts in six classifications.

17.2.2 VALUATION :

Investments are valued as per Reserve Bank of India guidelines as follows:

(a) Basis

(i) "Held to Maturity

Wherever the average book value is higher than the face value/ redemption value, such excess amount is amortised equally over the remaining period of maturity of the security. Accordingly investments are valued at cost less amortisation.

(ii) Available for Sale

These Investments are marked to market. Depreciation/appreciation for each of six classifications is aggregated; net depreciation, if any, for each classification is provided for, but net appreciation is ignored.

(iii) Held for Trading

Each script in this category is marked to market. Net depreciation/ appreciation under each script is recognized. At the year end, unrealised gain, if any, is reversed.

(b) Methodology:

(i) The Bank follows Average Cost Method consistently. Market value of quoted securities in case of Investments included in the Available for Sale and Held for Trading categories is taken based on market quotations of recognised stock exchange/s or price list of Reserve Bank of India. Where market quotes are not available and in case of unquoted securities, value is determined based on.

-Prices/Yield to Maturity declared by Primary Dealers Association of India jointly with Fixed Income Money Market and Derivatives Association of India.

-Treasury Bills, Commercial Papers and Investments including Deposits in Re-gional Rural Banks at cost.

17.2.3 INCOME RECOGNITION :

(i) In case of Investments where principal amount and/or interest is overdue for more than 180 days, unrealised income is not recognised and appropriate provi-sion for diminution in value is made as per NPA norms for advances. Such dimi-nution in value is not netted out against appreciation in other investments.

(ii) Commission, brokerage, broken period interest etc. on investment transactions are debited/credited to Profit and Loss Account in the year of transaction.

(iii) Profit on sale of investments pertaining to investments under-Held to Maturity" category is taken to "Profit and Loss Account" and thereafter appropriated to "Capital Reserve Account".

(iv) As per Reserve Bank of India guidelines, Investment Fluctuation Reserve equivalent to 5 percent of its investments held under categories "Held for Trading" and "Available for Sale" is created over a period of five years, out of profits available after appropriation of Statutory Reserve as per Banking Regulation Act.

17.3 ADVANCES

17.3.1 The Bank has followed prudential norms formulated by Reserve Bank of India as to Asset Classification, Income Recognition and Provisioning of advances and has accordingly classified Its advances into Standard, Sub-standard, Doubtful and Loss Assets.

17.3.2 Advances are shown net of Provisions for Non Performing Assets.

17.3.3 Prudential provision on Standard Assets and provision on account of Sacrifice on Restructured Accounts are included in Other Liabilities and Provisions-Others in Schedule No.5 of the Balance Sheet.

17.4 FIXED ASSETS & DEPRECIATION

17.4.1 Premises (except certain premises which have been stated at revalued amount) and other fixed assets are stated at historical cost.

17.4.2 Depreciation is charged on Written Down Value (W.D.V.) method at the rates prescribed under the Income Tax Rules, 1962 except for (a) Computer hardware purchased before 01.04.2000 are depreciated r 25% p.a. on W.D.V. method (b) Computer hardware purchased on or after 01.04.2000 are &depreciated @ 33.33% Straight Line Method (c) Residential premises admeasuring less than or equal to 80 sq.mts. are depreciated @ 5% p.a. on W.D.V method.

17.4.3 Depreciation attributable to the increase on revaluation is charged to the Revaluation Reserve Account.

17.4.4 Fixed Assets include Capital Work-in-Progress and Capital Advances.

17.5. REVENUE RECOGNITION

17.5.1 The Bank follows mercantile system of accounting except in cases where income/expenses are recognised on cash basis i.e. interest/discount on non-performing advances/investments, commission on letters of credit, locker rents, interest on refund of taxes, dividend receipts, rental income, income on units of mutual funds and interest on overdue term deposits not renewed.

17.5.2 Expenses incurred on the issue of bonds are amortised over a period of five years starting from the year of issue.

17.5.3 Expenses incurred on the public issue of equity shares are amortiaed over a period of ten years starting from the year of issue.

17.5.4 Expenses incurred on purchase of software are treated as Deferred Revenue Expenses and are written off in five equal annual installments.

17.5.5 Unclaimed credit balances lying in Suspense Receipts for more than five years are being accounted for as Miscellaneous Income.

17.5.6 Recoveries in written off advances are being accounted for as Mscellaneous Income.

17.6 TREATMENT OF VRS EXPENDITURE

The Bank has followed the guidelines issued by Reserve Bank of India with regard to the expenditure incurred under VRS and accordingly the same is being amortised over a period of five years.

17.7 FOREIGN EXCHANGE

17.7.1 The Bank revalues all foreign currency assets and liabilities including outstanding forward foreign exchange contracts at year end free market rates issued by FEDAI and the resultant losses as well as profits arising out of such revaluation are accounted for in Profit & Loss Account.

17.7.2 Income and Expenditure items are conver-ted at the exchange rates prevailing on the date of transaction.

17.8 STAFF BENEFITS

Provisions for Gratuity, Pension and Leave Encashment payable on retirement are made on accrual basis as per actuarial valuation.

17.9 TAXES ON INCOME

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

17.9.2 Deferred tax, comprising of tax effect of time difference between taxable and accounting incomes for the period, is recognized keeping in view the consideration of prudence in respect of deferred tax assets.

17.10 NET PROFIT

The Net Profit is arrived at after:

17.10.1 Provisions for income tax in accordance with the statutory requirements with adjustments for deferred tax in terms of Accounting Standards 22 issued by the Institute of Chartered Accountants of India,

17.10.2 Provision for wealth tax,

17.10.3 Provisions for advances,

17.10.4 Adjustments to the value of investments,

17.10.5 Transfers to contingency funds,

17.10.6 Other usual and necessary provisions.

---

Mar 31, 2002

1. BASIS OF ACCOUNTING

These accounts are prepared on historical cost basis (except certain premises which are revalued) and are in conformity with the Statutory Provisions and Generally Accepted Accounting Practices, except to the extent of deviations disclosed under notes forming part of the accounts.

2. INVESTMENTS

2.1 CLASSIFICATION:

Investments are classified in three categories viz. (i) Held to Maturity'; (ii) `Available for Sale'; (iii) Held for Trading and are disclosed in the accounts in six classifications as per Reserve Bank of India guidelines.

2.2. VALUATION

(a) Investments are valued as per Reserve Bank of India guidelines as follows:

(i) Held to Maturity

Wherever the book value is higher than the face value/redemption value, such excess amount is amortised equally over the remaining period of maturity of the security. Accordingly investments are valued at cost less amortisation.

(ii) Available for Sale

These Investments are marked to market. Depreciation/appreciation for each of six classifications is aggregated net depreciation, if any, for each classification is provided for, but net appreciation is ignored.

(iii) Held for Trading

Each script in this category is marked to market. Net depreciation/appreciation under each script is recognized. At the year end, unrealised gain, if any, is reversed.

(b) The Bank follows Average Cost Method consistently. Market value of quoted securities in case of Investments included in the Available for Sale and `Held for Trading categories is taken based on market quotations of recognised stock exchange/s or price list of Reserve Bank of India. Where market quotes are not available and in case of unquoted securities, value is determined based on Prices/Yield to Maturity declared by Primary Dealers Association of India jointly with Fixed Income Money Market and Derivatives Association of India.

(c) Treasury Bills, Commercial Papers arid Investments in Regional Rural Banks are valued at cost.

2.3 GENERAL

(a) In case of Investments where principal amount and/or interest is overdue for more than 180 days, unrealised income is not recognised and appropriate provision for diminution in value is made as per NPA norms for advances. Such diminution in value is not netted out against appreciation in other investments.

(b) Commission, brokerage, broken period interest etc. on investment transactions are debited/credited to Profit and Loss Account.

(c) Profit on sale of investments pertaining to investments under "Held to Maturity" category is first taken to "Profit and Loss Account" and thereafter is appropriated to Capital Reserve Account.

(d) As per Reserve Bank of India guidelines. Investment Fluctuation Reserve equivalent to 5 percent of its investments held under categories "Held for Trading" and "Available for Sale" is created over a period of five years, out of profits available after appropriation of Statutory Reserve.

3. ADVANCES

3.1 The Bank has followed prudential norms formulated by Reserve Bank of India as to. Asset Classification, Income Recognition and Provisioning of advances and has accordingly classified its advances into Standard, Sub-standard, Doubtful and Loss Assets.

3.2 Advances are shown net of Provisions for Non Performing Assets.

3.3 Prudential provision on Standard Assets and provision on account of Sacrifice on Restructured Accounts are included in Other Liabilities'.

4. FIXED ASSETS

4.1 Premises (except certain premises which have been stated at revalued amount) and other fixed assets are stated at historical cost.

4.2 Depreciation is charged on Written Down Value (W. D. V.) method at the rates prescribed under the Income Tax Rules, 1962 except for (a) Computer hardware purchased before 01.04.2000 are depreciated @ 25% p. a. on W. D. V. basis (b) Computer hardware purchased on or after 01.04.2000 are depreciated on Straight Line Method @ 33.33% p. a. (c) Residential premises admeasuring less than or equal to 80 sq. mts. are depreciated @ 5% p. a. on W. D. V basis

4.3 Depreciation attributable to the increase on revaluation is charged to the Revaluation Reserve Account.

4.4 Fixed Assets include Capital Work-in-Progress and Capital Advances.

5. REVENUE RECOGNITION

5.1 The Bank follows mercantile system of accounting except in cases where income/expenses are recognised on cash basis i.e. interest/discount on non-performing advances/investments, commission on letters of credit, locker rents, interest on refund of taxes, dividend receipts, rental income, income on units of mutual funds, leave encashment benefits and interest on overdue term deposits not renewed.

5.2 Expenses Incurred on the issue of bonds are amortised over a period of five years starting from the year of issue.

5.3 Expenses incurred on the public issue of equity shares are amortised over a period of ten years starting from the year of issue.

5.4 Expenses incurred on purchase of software are treated as Deferred Revenue Expenses and are written off in five equal annual installments.

5.5 Unclaimed credit balances lying in Suspense Receipts for more than five years are being accounted for as `Miscellaneous Income'.

5.6 Recoveries in written off advances are being accounted for as `Miscellaneous Income'.

6. TREATMENT OF VRS EXPENDITURE

The Bank has followed the guidelines issued by Reserve Bank of India with regard to the expenditure incurred under VRS and accordingly the same is being amortised over a period of five years.

7. FOREIGN EXCHANGE

7.1 The Bank revalues all foreign currency assets and liabilities including outstanding forward foreign exchange contracts at year end free market rates issued by PEDAI and the resultant losses as well as profits arising out of such revaluation are accounted for in Profit & Loss Account.

7.2 Income and Expenditure items are converted at the exchange rates prevailing on the date of transaction.

8. STAFF BENEFITS

Provisions for Gratuity and Pension are made on accrual basis as per actuarial valuation.

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Mar 31, 2001

SIGNIFICANT ACCOUNTING POLICES

1. BASIS OF ACCOUNTING

These accounts have been prepared on histroical cost basis (except for the revluation of certain premises) and are in conformity with the Statutory Provision and Standard Accounting Practices, except to the extent of deviations disclosed under notes forming part of the accounts.

2. INVESTMENTS

2.1 CLASSIFICATION

The Bank has classified their rentire investment portfolio under three categories viz. i) 'Held to Maturity'; ii) 'Available for Sale'; iii) 'Held for Trading', as per Reserve Bank of India guidelines effectiv from 30th September, 2000. The Bank has bifurcated Investment Portfolio in six classifications as per existing Reserve Bank of India guidelines.

2.2 VALUATION

(a) Investments are valued as per Reserve Bank of India guidelines and Prices/Yield to Maturity (YTM) declared by Primary Dealers Assocation of India (PDAI) jointly with Fixed Income Money Market and Derivatives Assocation of India (FIMMDA).

(b) Investments under "Available for Sale" and "Held for Trading" Categories are marked to market and Investments under "Held to Maturity" Category are valued at acquisition cost less amortisation wherever the securiteis are purchased at premium.

(c) Depreciation/appreication for each of six classifications is aggregated; net dpreciation, if any, for each classification is provided for, but net appreication is ignored.

2.3 GENERAL

(a) In case of Investments where principal amount and interst is overdue for more than 180 days, provision for diminution in value is made as per NPA norms on advances and depreication on such assets is not netted out against appreciation on other investments in the same classification.

(b) Commssion, brokerage, broken period interest etc., on investment transactions are debited/credited to profit and Loss Account.

(c) Profit on sale of investments out of investments under "Held to Maturity" category is first taken to "Profit and Loss Account" and thereafter is appropriated to "Capitl Reserve Account".

3. ADVANCES

3.1 The Bank has followed prudential norms fomulated by Reserve Bank of India as to classification, income recognition and provisioning of advances and has accordingly classified its advances into Standard, Sub-standard, Doubtful and Loss Assets.

3.2 Advances are shown net of Provisions for Non performing assets.

3.3 Prudential provision on standard assets is included in 'Other Liabilities'.

4. FIXED ASSETS

4.1 Premises (except cerain premises which have been stated at revalued cost) and other fixed assets are stated at historical cost.

4.2 Depreication s charged on written down value method at the rates prescribed under the Income Tax Rules, 1962 except for (a) Computer hardware which are depreicated @ 25% p.a. (b) Computer hardware purchase on or after 01.04.2000 which are depreicated on straight line method @33.33% p.a. (c) residential premises admeasuring less than or equal to 80 sq. mts. which are depreicated at 5% p.a.

4.3 Depreication atributable to the increase on revaluatin, has been charged to the Revaluation Reserve Account.

4.4 Premises includes capital work-in-progress/capital advances.

5. REVENUE RECOGNITION

5.1 The Bank follows mercantile ystem of accounting except in cases where income/expenses are recognised on cash basis ie. interst/discount on non-performing advances/investment, commission on letters of credit, locker rents, interst on refund to taxes, dividend receipts, incoe on unit of mutual funds, leave encashment benefits and interest on overdue deposits not renewed.

5.2 Expenses incurred on the issue of bonds are amortised over five years starting from the year of issue.

5.3 Expenses incurred on the public issue of equity shares are amortised over ten years starting from the year of issue.

5.4 Expenses incurred on purchase of software are treated as deferred revenue expenses and are written off in five equal annual installments.

5.5 Unclaimed credit balances laying in Suspense Receipts for more than five years are being accounted for as "Miscellaneous Income".

5.6 Recoveries in written of advances are being accounted for as "miscellaneous Income".

6. TREATMENT OF VRS EXPENDITURE

The Bank has followed the guidelines issued by Reserve Bank of India with regard to the expenditure incurred under VRS and accordingly the same is being amortised over a period of five years.

7.FOREIGN EXCHANGE

7.1 The Bank revalues all foreign currency assets and liabilities including outstanding forward foreig exchange contracts at year end free market ates issued by FEDAI and the resultant losses as well as profits arising out of such revaluation are accounted for in Profit & Loss Account.

7.2 Income and expenditure iterms are converted at the exchange rates prevailing on the date of transaction.

8. SAFE BENEFITS

Provisions for Gratuity and Pension are made on accrual basis as per acturial valuaion.

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Mar 31, 2000

1. GENERAL

1.1 These accounts have been prepared on historical cost basis (except for the revaluation of certain premises) and are in conformity with the Statutory Provisions and Standard Accounting Practices, except to the extent of deviations disclosed under notes forming part of the accounts.

2. INVESTMENTS

2.1 Investments are categorised and valued at lower of the cost or Market/Fair Value as per guidelines issued by Reserve Bank of India and are shown net of depreciation in the Balance Sheet.

All Investments in approved securities are classified as 'Current'.

Depreciation/appreciation for each category aggregated; net depreciation, if any, for each category is provided for and net appreciation ignored.

2.2 Commission, brokerage, broken period Interest etc., on Investment Transactions are debited/ credited to Profit and Loss Account.

2.3 Excess provision for depreciation in Investments as at the end of previous year as compared to the current year is credited to "Provisions and Contingencies" in the Profit and Loss Account. After deducting applicable Income Tax and Statutory Reserve, the balance is appropriated to Investment Fluctuation Reserve Account.

3. ADVANCES

3.1 The Bank has followed Prudential Norms formulated by Reserve Bank of India for classifying the advances into Standard, Sub-standard, Doubtful and Loss Assets.

3.2 Provisions for advances, classified as Standard, Sub-standard, Doubtful and Loss Assets have been made as per guidelines of Reserve Bank of India.

3.3 Advances are shown net of Provisions for NPAs.

4. FIXED ASSETS

4.1 Premises (except certain premises which have been revalued) and other Fixed Assets are stated at historical cost and depreciation is charged on written down value method at the rates prescribed under the Income Tax Rules, 1962 except for computers and residential premises admeasuring less than or equal to 80 sq.mts. which are depreciated at 25% and 5% respectively.

Depreciation attributable to the increase on revaluation, has been charged to the Revaluation Reserve Account.

4.2 Premises includes capital work-in-progress/ capital advances as at the date of the Balance Sheet.

5. REVENUE RECOGNITION

5.1 The Bank follows Mercantile system of accounting except in the cases where income/ expenses are recognised on cash basis i.e. interest/discount on non-performing advances, commission on Letters of Credit, Locker Rents, Interest on refund of Taxes, Dividend receipts, Leave encashment benefits and interest on overdue deposits not renewed.

Income on Investment is accounted on accrual basis except for cases carrying reasonable uncertainty of realisation.

5.2 Expenses incurred on the issue of Unsecured Bonds are amortised over five years.

5.3 Expenses incurred on the public issue of equity shams are amortised over ten years starting from the year of issue.

5.4 Expenses incurred on purchase of the software are treated as deferred revenue expenses and are written off in five equal annual instalments.

6. FOREIGN EXCHANGE

6.1 The Bank revalues all foreign currency assets and liabilities (where the exchange risk is to be borne by the Bank) including outstanding forward foreign exchange contracts at year end free market rates and takes into account resultant losses as well as profits arising out of such revaluation in accordance with the guidelines issued by FEDAI. The difference on revaluation is included in Other Assets/Liabilities in the Balance Sheet.

6.2 Where the exchange risk is not to be borne by the Bank, the Balances are converted at notional rates.

6.3 Income and expenditure items are converted at the exchange rates prevailing on the date of transaction.

7. STAFF BENEFITS

7.1 Provisions for Gratuity and Pension are made on accrual basis as per actuarial valuation.

7.2 Provision for Bonus is made on accrual basis.

8. PROVISIONS AND CONTINGENCIES

8.1 This includes provision for loan losses, taxation and other contingencies.

8.2 Provision for taxation is made keeping in view the judicial pronouncements and on the basis of the advice of counsels of the Bank.

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Mar 31, 1999

1. GENERAL

1.1 These accounts have been prepared on historical cost basis except for the revaluation of certain premises and are in conformity with the Statutory Provisions and Standard Accounting Practices, except to the extent of deviations disclosed under notes forming part of the accounts.

2. INVESTMENTS

2.1 Investments in approved securities which are intended to be held till maturity, are classified as 'Permanent' and Investments intended to be traded are classified as 'Current' investments. Securities received towards capital contribution from the Government do not form part of 'Permanent' or 'Current' Investments in terms of Reserve Bank of India (RBI) guidelines.

2.2 Permanent Category Investments are valued as under :

(a) Investments in Government and approved securities, classified under 'Permanent' are valued at cost.

(b) Where the cost price is higher than the face value (redemption value) of securities, the excess has been amortised over the remaining period of maturity of the security. Where the cost price is less than the face value (redemption value), the difference is ignored.

2.3 Current investments are valued as under :

(a) At lower of cost or market value, wherever market values are available.

(b) Wherever recent market quotations are not available, and in the case of unquoted shares/debentures, market value is taken as per the norms laid down by the RBI as under :

In the case of Government securities (excluding treasury bills valued at carrying cost), which are on RBI list, as per RBI price and in respect of other approved securities on yield to Maturity (YTM) basis, as declared by RBI.

In the case of Taxable Non-Priority Sector - Public Sector Undertaking,(PSU) Bonds- 2% above the YTM rates; and for the Tax free Non Priority Sector PSU Bonds-1% below the YTM rates; and for Tax-free priority sector PSU Bonds-2% below the YTM rates and for the Taxable Priority Sector PSU Bonds at YTM rates for Government Securities declared by R.B.I.

In the case of shares, at book value ascertained from the last Balance Sheet and at Re.One per company, where the latest Balance Sheet is not available.

In the case of PSU shares at break-up value as per Balance Sheet of 31st March 1998 & if it is not available, at break up value as per the balance sheet of 31st March 1997, reduced/discounted by 20%. If 31st March 1997 Balance Sheet is also not available the share of the concerned PSU is valued at Re. 1 per Company.

In the case of debentures, where interest is not serviced regularly and is in arrears, by applying the norms laid down by RBI for loan losses.

In the case of units of Mutual Funds, at the latest Net Asset Value (NAV) declared by the mutual fund in respect of each particular scheme and where NAV is not available at repurchase price. However, if market rates are available as per stock exchange quotations, market values are adopted.

Investments in Sponsored Institutions, Recapitalisation Bonds-Special Govt. Securities and Commercial Paper, are valued at carrying cost i.e. Book Value.

Provision for diminution in the value of current investments has been made for the net excess of the book value over the market value within the categories of securities.

ADVANCES

The Bank has followed Prudential Norms formulated by Reserve Bank of India for classifying the advances into Standard, Sub-standard, Doubtful and Loss Assets.

Provisions for advances, classified as Sub-standard, Doubtful and Loss Assets, have been made as per guidelines of Reserve Bank of India.

Advances are shown net of Provisions.

FIXED ASSETS

Premises (except certain premises which were revalued as of 31st March, 1999) and other Fixed Assets are accounted for at historical cost and depreciation is charged on written down value method at the rates prescribed under the Income Tax Rules, 1962, except for computers acquired after 1.4.98 which are charged at 25% only.

Depreciation attributable to the increase on revaluation, has been charged to the Revaluation Reserve Account.

Premises include capital work-in-progress/capital advances as at the date of the Balance Sheet.

REVENUE RECOGNITION

The Bank follows Mercantile system of accounting except in the cases where income/expenses are recognised on cash basis i.e. interest/discount on non-performing advances, commission on Letters of Credit, Locker Rents, Interest on refund of Taxes, Dividend receipts, Leave encashment benefits and interest on overdue deposits not renewed.

The losses arising out of the difference between the acquisition cost and the redemption value of permanent securities are amortised annually over the period from acquisition to maturity. Where the acquisition cost of permanent securities is less than the redemption value, the difference pertaining to the period after 31st March, 1994 is not recognised as income, until realised. The consequential impact of amortisation is included in Other Assets in the Balance Sheet.

Expenses incurred on the issue of Unsecured Bonds are amortised over five years.

Expenses incurred on the public issue of equity shares are amortised over ten years starting from the year of issue.

Expenses incurred on purchase of the software are treated as deferred revenue expenses and are written off in five equal annual instalments.

FOREIGN EXCHANGE

The Bank revalues all foreign currency assets and liabilities (where the exchange risk is to be borne by the Bank) including outstanding forward foreign exchange contracts at year end free market rates and takes into account resultant losses as well as profits arising out of such revaluation in accordance with the guidelines issued by FEDAI. The difference on revaluation is included in Other Assets/Liabilities in the Balance Sheet.

Where the exchange risk is not to be borne by the Bank, the Balances are converted at notional rates.

Income and expenditure items are converted at the exchange rates prevailing on the date of transaction.

STAFF BENEFITS

Provisions for Gratuity and Pension are made on accrual basis as per actuarial valuation. Provision for Bonus is also made on accrual basis.

PROVISIONS AND CONTINGENCIES

This includes provision for loan losses, provision for diminution in the value of current investments, taxation and other contingencies.

Provision for taxation is made keeping in view the judicial pronouncements and on the basis of the advice of counsels of the Bank.

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Mar 31, 1998

1. GENERAL

1.1 These accounts have been prepared on historical cost basis except for the revaluation of certain premises and are in conformity with the Statutory Provisions and Standard Accounting Practices except to the extent of deviations disclosed under notes forming part of the accounts.

2. INVESTMENTS

2.1 Investments in approved securities which are intended to be held till maturity, are classified as 'Permanent' and investments intended to be traded are classified as 'Current' investments. Securities received towards capital contribution from the Government do not form part of 'Permanent' or 'Current' investments, in terms of Reserve Bank of India (RBI) guidelines.

2.2 (a) Investments in Government and other approved securities, classified under 'Permanent' are valued at cost.

(b) Where the cost price is higher than the face value (redemption value) of securities, the excess has been amortised over the remaining period of maturity of the security. Where the cost price in less than the face value (redemption value), the difference has been ignored.

2.3 Current Investments are valued as under :

(a) At lower of cost or market value wherever market values are available.

(b) Wherever recent market quotations are not available, and in the case of unquoted shares/debentures, market value is taken as per the norms laid down by the RBI as under :

In the case of Government securities (excluding treasury bills valued at carrying cost), which are on RBI list as per RBI price and in respect of other approved securities on Yield to Maturity (YTM) basis.

In the case of taxable Public Sector Undertaking (PSU) bonds, 1% above the YTM rates and for the tax free (PSU) bonds at YTM of 10%.

In the case of shares, at book value ascertained from the latest Balance Sheet and at Re. One per company, where the Balance Sheet is not available.

In the case of debentures, where interest is not serviced regularly and is in arrears, by applying the norms laid down by RBI for loan losses.

In the case of units of Mutual Funds, at the latest Net Asset Value (NAV) declared by the mutual fund in respect of each particular scheme and where NAV is not available at repurchase price. However, if market rates are available as per stock exchange quotations, market values are adopted.

2.4 Investments in sponsored institutions are valued at carrying cost.

2.5 Provision for diminution in the value of current investments has been made for the net excess of the book value over the market value within the categories of securities.

3. ADVANCES

3.1 The Bank has followed Prudential Norms formulated by Reserve Bank of India for classifying the advances into Standard, Sub-standard, Doubtful and Loss Assets.

3.2 Provisions for advances, classified as Sub-standard, Doubtful and Loss Assets, have been made as per guidelines of Reserve Bank of India.

3.3 Advances are shown net of Provisions.

4. FIXED ASSETS

4.1 Premises (except certain premises which were revalued as of 31st March, 1993) and other Fixed Assets are accounted for at historical cost and depreciation is charged on written down value method at the rates prescribed under the Income Tax Rules, 1962.

Depreciation, attributable to the increase on revaluation, has been charged to the Revaluation Reserve Account.

4.2 Premises include capital work-in-progress/capital advances as at the date of the Balance Sheet.

5. REVENUE RECOGNITION

5.1 The Bank follows Mercantile system of accounting except in the cases where income/expenses are recognised on cash basis i.e.interest/discount on non-performing advances, commission on Letters of Credit, Locker Rents, Interest on refund of Taxes, Dividend receipts, Leave encashment benefits and interest on overdue deposits not renewed.

5.2 The losses arising out of-the difference between the acquisition cost and the redemption value in respect of permanent securities are amortised annually over the period from acquisition to maturity. Where the acquisition cost of permanent securities is less than the redemption value, the difference pertaining to the period after 31st March, 1994 is not recognised as income until realised. The consequential impact of amortisation is included in Other Assets in the Balance Sheet.

5.3 Expenses incurred on the issue of Unsecured Bonds are amortised equally over five accounting years. The difference between the issue price and the redemption value of the Unsecured Zero Coupon Bonds is appropriately charged to revenue over the tenure of the bonds.

5.4 Expenses incurred on the public issue of equity shares are amortised equally over ten accounting years starting from the year of issue 1996-97.

6. FOREIGN EXCHANGE

6.1 The Bank revalues all foreign currency assets and liabilities (where the exchange risk is to be borne by the Bank) including outstanding forward foreign exchange contracts at year end free market rates and takes into account resultant losses as well as profits arising out of such revaluation in accordance with the guidelines issued by FEDAI. The difference on revaluation is included in Other Assets/Liabilities in the Balance Sheet.

6.2 Where the exchange risk is not to be borne by the Bank, the Balances are converted at notional rates.

6.3 Income and expenditure items are converted at the exchange rates prevailing on the date of transaction.

7. STAFF BENEFITS

7.1 Provisions for Gratuity and Pension are made on accrual basis as per actuarial valuation. Provision for Bonus is also made on accrual basis.

8. PROVISIONS AND CONTINGENCIES

8.1 The above includes provision for loan losses, provision for diminution in the value of current investments, taxation and other contingencies.

8.2 Provision for taxation is made keeping in view the judicial pronouncements and on the basis of the advice of counsels of the Bank.

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Mar 31, 1997

1. GENERAL

1.1 These accounts have been prepared on the historical cost basis except for the revaluation of certain premises and are in conformity with the Statutory Provisions and Standard Accounting Practices.

2. INVESTMENTS

2.1 Investments in approved securities which are intended to be held till maturity are classified as 'Permanent' and investments intended to be traded are classified as 'Current' investments. Securities received towards capital contribution from the Government do not form part of 'Permanent' or 'Current' investments.

2.2 Permanent investments are valued at cost. Current Investments are valued at lower of cost or market value wherever market values are available and in all other cases valued at cost.

2.3 Wherever recent market quotations are not available and in the case of unquoted shares/debentures market value is taken as per the norms laid down by the Reserve Bank of India as under

In the case of Government securities (excluding treasury bills valued at carrying cost) which are on Reserve Bank of India list as per Reserve Bank of India price and in respect of other approved securities on Yield to Maturity (YTM) basis.

In case of taxable PSU Bonds, 1% above the YTM rates and for the tax free PSU Bonds at YTM of 10%

In the case of shares, at book value ascertained from the latest Balance Sheet and at Re.One per company, where the Balance Sheet is not available.

In the case of debentures where interest is not serviced regularly and is in arrears, by applying the norms laid down by the Reserve Bank of India for provisioning for loan losses.

In the case of units of Mutual Funds, at the latest net asset value (NAV) declared by the mutual fund in respect of each particular scheme and where NAV is not available, at repurchase price.

2.4 Investments in sponsored institutions are valued at carrying cost.

2.5 Provision for diminution in the value of current Investments has been made for the net excess of the hook value over the market value within the categories of securities.

3. ADVANCES

3.1 The Bank has followed Prudential Norms formulated by Reserve Bank of India for classifying the advances into Standard, Sub-standard, Doubtful and Loss Assets.

3.2 Provisions for advances, classified as Sub-standard, Doubtful and Loss Assets, have been made as per guidelines of Reserve Bank of India.

3.3 Advances are shown net of Provisions.

4. FIXED ASSETS

4. Premises (except certain premises which were revalued as of 31st March, 1993) and other fixed assets are accounted for at historical cost and depreciation is charged on written down value method at the rates prescribed under the Income Tax Rules, 1962

Depreciation, attributable to the increase on revaluation has been charged to the Revaluation Reserve Account.

4.2 Premises include capital work-in-progress as at the date of the Balance Sheet.

5. CONTINGENT LIABILITIES

Guarantees, acceptances, endorsements and other obligations are disclosed at the face value of the commitments.

6. REVENUE RECOGNITION

6.1 The Bank follows Mercantile system of accounting except in the cases where income/expenses are recognised on cash basis i.e., interest/discount on non-performing advances, commission on L/Cs, Locker Rents, Interest on refund of Taxed, Dividend receipts, Leave encashment benefits on retirement and interest on overdue deposits not renewed.

6.2 The losses arising out of the difference between the acquisition cost and the redemption value in respect of permanent securities are amortised annually over the to maturity. Where the acquisition cost of permanent securities is less than the redemption value, the difference pertaining to the period after 31st March, 1994 is not recognised as income until realised. The consequential impact of amortisation is included in Other Assets in the Balance Sheet.

6.3 Expenses incurred on the issue of Unsecured Bonds are amortised equally over five accounting years. The difference between the issue price and the redemption value of the Unsecured Zero Coupon Bonds is appropriately charged to revenue over the tenure of the bonds.

6.4 Expenses incurred on the public issue of equity shares are amortised equally over ten accounting years starting from the accounting year 1996-97.

7. FOREIGN EXCHANGE

7.1 The Bank revalues all foreign currency assets and liabilities (where the exchange risk is to be borne by the Bank) including outstanding forward foreign exchange contracts at year-end free market rates and takes into account resultant losses as well as profits arising out of such revaluation in accordance with the guidelines issued by FEDAI. The difference on revaluation is included in Other Assets/Liabilities in the Balance Sheet.

7.2 Where the exchange risk is not to be borne by the Bank, the balances are converted at notional rates.

7.3 Income and expenditure items are converted at the exchange tales prevailing on the date of transaction.

8. STAFF BENEFITS

Provisions for Gratuity and Pension are made on accrual basis as per actuarial valuation. The leave encashment at the time of retirement is accounted on cash basis.

9. PROVISIONS AND CONTINGENCIES

9.1 The above includes provision for loan losses, provision for diminution in the value of current investments, taxation and other contingencies.

9.2 Provision for taxation is made keeping in view the judicial pronouncements and on the basis of the advice of counsels of the Bank.

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Mar 31, 1996

1. GENERAL

1.1 These accounts have been prepared on the historical cost basis except for the revaluation of certain premises.

1.2 Revenues and Costs are accounted for on accrual basis except interest and other income on non-performing advances including government guaranteed advances (as per the norms laid down by the Reserve Bank of India), guarantee commission underwriting commission merchant banking income certain retirement benefits and interest on matured term deposits which are accounted for on cash basis.

2. INVESTMENTS

2.1 Investments in approved securities and joint ventures which are intended to be held till maturity are classified as "Permanent" and investments intended to be traded in are classified as "Current" investments Securities received towards capital contribution from the Government do not form part of "Permanent" or "Current" investment.

2.2 Permanent investments are valued at cost. Current investments are valued at lower of cost of market value, wherever market values are available and at cost in other cases. Securities received towards capital contribution from the Government are valued at cost.

2.3 Wherever recent market quotations are not available, market value is taken as per the norms laid down by the Reserve Bank of India as under:

* In the case of government securities (excluding treasury bills, other approved securities and public sector bonds, on yield to maturity basis.

* In the case of shares at book value ascertained from the latest available Balance Sheet and at Re.One per company where the Balance Sheet is not available.

* In the case of debentures, where interest is not serviced regularly and is in arrears by applying the norms laid down by the Reserve Bank of India for provisioning for loan losses.

* In the case of units of Mutual Funds at the latest net asset value declared by the mutual fund in respect of each particular scheme.

2.4 Provision for diminution in the value of current investments has been made for the net excess of the book value over the market value within the categories of securities.

2.5 Investments are disclosed in the Balance Sheet net of provision for diminution.

3. ADVANCES

Advances have been classified into Standard Sub-Standard, Doubtful and Loss Assets in accordance with the norms laid down by the Reserve Bank of India for ascertaining the provision for loan loses. Advances shown in the Balance Sheet are net of provision for loan losses.

4. FIXED ASSETS

4.1 Premises (except one of the premises which was revalued as at 31st March, 1993) and other fixed assets are accounted for at historical cost and depreciation is charged on certain written down value method at the rates prescribed under the Income Tax Rules, 1962.

* Depreciation, attributable to the increase on revaluation has been charged to the Revaluation Reserve Account.

4.2 Premises include capital work-in-progress as at the date of the Balance Sheet.

5. CONTINGENT LIABILITIES

Guarantees, acceptances, endorsements and other obligations are disclosed at the face value of the commitments and no evaluation of the risks involved is undertaken.

6. REVENUE RECOGNITION

6.1 Interest discount on advances/bills is recognised on time proportion basis except interest on non-performing advances (including government guaranteed advances), which is recognised on realisation.

Commission exchange and brokerage are normally recognised as income when debited to constituents, through the income may relate to transaction period extending beyond the date of the financial statement except on non-performing advances, where these are recognised on realisation.

6.2 The loss arising out of the difference between the acquisition cost and the redemption value in respect of permanent securities are amortised annually over the period from acquisition to maturity. Where the acquisition cost of permanent securities is less than the redemption value, the difference pertaining to the period after 31st March 1994 is not recognised as income until realised. The consequential impact of amortisation is included in Other Assets in the Balance Sheet.

6.3 Actual gain or loss on investments is recognised on the date of sale redemption.

6.4 Expenses recurred on the issue of Unsecured Bonds are amortised equally over five accounting years. Difference between the Redemption Value and issue Price of the Unsecured Zero Coupon Bonds is appropriately charged to revenue over the tenure of the bonds.

7. FOREIGN EXCHANGE TRANSLATION

7.1 The Bank revalues all foreign currency assets and liabilities (where the exchange risk is to be borne by the Bank) including outstanding forward foreign exchange contracts at year end free market rates and takes into account resultant losses as well as profits arising out of such revaluation in accordance with the guidelines issued by FEDAI. The difference on revaluation is included in Other Assets Liabilities in the Balance Sheet.

7.2 Where the exchange risk is not to be borne by the Bank, the balances are converted at notional rates.

7.3 Income and Expenditure items are converted at the exchange rates prevailing on the date of transactions.

8. PAYMENTS TO AND PROVISIONS FOR EMPLOYEES

The contribution to the gratuity fund is computed on actural valuation as at the end of the year. All other retirement benefits payable to the employees are accounted on cash basis.

9. PROVISIONS AND CONTINGENCIES

9.1 The above includes provision for loan losses, provision for diminution in the value of current investments taxation and other contingencies.

9.2 Provision for taxation is made keeping in view the judicial pronouncements and on the basis of the advice of counsels of the Bank.

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Mar 31, 1995

1. GENERAL

1.1 These accounts have been prepared on the historical cost basis except for the revaluation of certain premises.

1.2 Revenues and Costs are accounted for on accrual basis except interest and other income on non-performing advances including government guaranteed advances (as per the norms laid down by the Reserve Bank of India), guarantee commission, underwriting commission, merchant banking income, certain retirement benefits and interest on matured term deposits which are accounted for on cash basis.

2. INVESTMENTS

2.1 Investments in approved securities and joint ventures, which are intended to held till maturity are classified as "Permanent" and investments intended to be traded in are classified as "Current" investments. Securities received towards capital contribution from the Government do not from part of "Permanent" or "Current" investments.

2.2 Permanent investments are valued at cost Current investments are valued at lower of cost or market value, wherever market values are available and at cost in other cases. Securities received towards capital contribution from the Government are valued at cost

2.3 Wherever recent market quotations are not available, market value is taken as per the norms laid down by the Reserve Bank of India as under:

In the case of government securities (excluding treasury bills), other approved securities and public sector bonds, on yield to maturity basis.

In the case of shares, at book value ascertained from the latest available Balance Sheet and at Re. One per company, where the Balance Sheet is not available.

In the case of debentures, where interest is not serviced regularly and is in arrears, by applying the norms laid down by the Reserve Bank of India for provisioning for loan losses. In the case of units of Mutual Funds, at the latest net asset value declared by the mutual fund in respect of each particular scheme.

2.4 Provision for diminution in the value of current investments has been made for the net excess of the book value over the market value within the categories of securities.

2.5 Investments are disclosed in the Balance Sheet net of provision for diminution.

3. ADVANCES

Advances have been classified into Standard, Sub-Standard, Doubtful and Loss Assets in accordance with the norms laid down by the Reserve Bank of India for ascertaining the provision for loan losses. Advances shown in the Balance Sheet are net of provision for loan losses.

4. FIXED ASSETS

4.1 Premises (except one of the premises which was revalued as at 31st March, 1993) and other fixed assets are accounted for at historical cost and depreciation is charged on written down value method at the rates prescribed under the Income Tax Rules, 1962.

Depreciation, attributable to the increase on revaluation, has been charged to the Revaluation Reserve Account

4.2 Premises include capital work-in-progress as at the date of the Balance Sheet.

5. CONTINGENT LIABILITIES

Guarantees, acceptances, endorsements and other obligations are disclosed at the face value of the commitments and no evaluation of the risks involved is undertaken.

6. REVENUE RECOGNITION

6.1 Interest / discount on advances / bills is recognised on time proportion basis except interest on non-performing advances (including government guaranteed advances), which is recognised on realisation.

Commission, exchange and brokerage are normally recognised as income when debited to constituents, though the income may relate to transaction period extending beyond the date of the financial statement, except on non- performing advances, where these are recognised on realisation.

6.2 The tosses arising out of the difference between the acquisition cost and the redemption value in respect of permanent securities are amortised annually over the period from acquisition to maturity. Where the acquisition cost of permanent securities is less than the redemption value, the difference pertaining to the period after 31st March, 1994 is not recognised as income until realised. The consequential impact of amortisation is included in Other Assets / Liabilities in the Balance Sheet.

6.3 Actual gain or loss on investments is recognised on the date of sale / redemption.

7. FOREIGN EXCHANGE TRANSLATION

7.1 The Bank revalues all outstanding forward foreign exchange contracts, holding of foreign currency notes, travellers' cheques, foreign bills purchased and balances in respect of NOSTRO accounts at year-end free market rates and takes into account resultant losses as well as profits arising out of such revaluation in accordance with the guidelines issued by FEDAI.

7.2 Foreign Exchange borrowings and deposits denominated in foreign currency are converted at notional rates.

7.3 Income and expenditure items are converted at the exchange rates prevailing on the date of transaction.

8. PAYMENTS TO AND PROVISIONS FOR EMPLOYEES

The contribution to the gratuity fund is computed on actuarial valuation as at the end of the year. All other retirement benefits payable to the employees are accounted on cash basis.

9. PROVISIONS AND CONTINGENCIES

9.1 The above includes provision for loan losses, taxation and other contingencies.

9.2 Provision for taxation is made keeping in view the judicial pronouncements and on the basis of the advice of counsels of the Bank.

SCHEDULE -18 NOTES FORMING PART OF THE ACCOUNTS

1. Outstanding entries in Inter-branch accounts have been identified upto 31st March, 1992 and the process of consequential adjustments is in progress. Balancing of subsidiary ledgers / registers and reconciliation with general ledgers is in progress at some branches. There are outstanding entries in some heads of accounts including demand draft payable, drafts paid without advice, items in transit, suspense accounts, clearing adjustments which are in the process of reconciliation / adjustments. In some cases, balances with other banks including Reserve Bank of India and NOSTRO accounts have not been reconciled and / or confirmed and in some cases where the accounts have been reconciled, oustanding entries have not been adjusted due to insufficient information. Pending such reconciliation / balancing / adjustment, consequential impact on the accounts is not ascertainable at this stage.

2. No provision has been made for the excess of the book value of permanent investments over their market value since the permanent investments are intended to be held till their respective dates of maturity.

3. Provision for loan losses has been made borrowerwise and not classified on the basis of facility / security / priority as detailed in Schedule - 9 to the Accounts. Accordingly, the gross provision has been deducted from (a) Cash Credits, Overdrafts and Loans repayable on demand (b) Unsecured Advances and (c) Non-Priority - Others.

4. For the purpose of classification of advances on the basis of security in Schedule -9, Government / DICGC / ECGC guarantees have been considered prior to the tangible securities available. Provision for loan losses has been made considering that claims lodged / to be lodged with the guarantee institutions are fully recoverable.

5. In respect of unaudited branches, wherever adequate information with regard to classification of advances was not available, the same have been classified and provision made therefor to the extent possible, on the basis of information available at the controlling offices.

6. Cost of Premises includes Rs. 774 lacs (Previous Year Rs. 769 lacs), in respect of properties, for which the documents have been lodged for registration.

7. Pending approval of the pension scheme for the employees by the appropriate authorities, liability therefor has not been ascertained.

8. Previous year's figures have been regrouped / reclassified, wherever necessary, to make them comparable with the current year's figures.

9. EFFECTS OF CHANGES IN THE ACCOUNTING POLICIES

The accounting policies with regard to provisioning for advances and to revenue recognition have been suitably modified to be in conformity with the prudential accounting norms laid down by the Reserve Bank of India.

(i) During the current year, identification of non-performing advances has been made with reference to the non recovery of interest / principal dues for two quarters as against non recovery for three quarters in the previous year. Had the same practice been followed as in the previous year, the profit would have been higher, the impact of which is not ascertainable.

(ii) During the current year, where the acquisition cost of permanent securities is less than the redemption value, the difference is not recognised as income until realised as against the practice of accruing such difference annually over the period from acquisition to maturity in earlier years. Had the same practice been followed as in the earlier years, the profit for the year would have been higher by Rs. 55 lacs with consequential impact on Other Assets.

REPORT OF THE AUDITORS

TO THE PRESIDENT OF INDIA

1. We have audited the attached Balance Sheet of Dena Bank as at 31st March, 1995 and the Profit and Loss Account annexed thereto for the year ended on that date, in which have been incorporated the returns of 12 branches audited by us, 561 branches audited by other auditors and unaudited returns in respect of 508 branches, not visited by us. The branches audited by us and those audited by other auditors have been selected by the Bank in accordance with the guidelines issued by the Reserve Bank of India.

2. The Balance Sheet and the Profit and Loss Account have been drawn up in Forms "A" and "B" respectively of the Third Schedule to the Banking Regulation Act, 1949.

3. On the basis of the audit indicated in para 1 above and as required by the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and subject to the limitation of disclosure required therein, we report that:

(i) There is a change in the accounting policies in respect of the method of identification of non performing advances and the income recognition norms for permanent investments, the nature and impact whereof is referred to in Note Nos. 9 (i) and 9 (ii) of Schedule 18 to the Accounts respectively.

(ii) The effect on accounts, if any, as a consequence of pending inter branch and inter bank reconciliation including Reserve Bank of India and NOSTRO accounts, etc. and balancing of Subsidiary Ledgers I Registers and reconciliation with General Ledgers which are in arrears at some branches referred to in Note No. 1 of Schedule 18 to the Accounts is not ascertainable at this stage.

(iii) In respect of unaudited branches, where the information in the returns of advances was not adequate and complete, the classification of advances made by the Bank has been accepted.

(iv) No provision has been made for the excess of the book value over the market value of permanent investments as indicated in Note No. 2 of Schedule 18 to the Accounts.

(v) Provision for loan losses has been made considering that claims lodged I to be lodged with the guarantee institutions are fully recoverable.

4. Subject to our comments in para 3 above, read with the Notes forming part of the Accounts and Schedules mentioned therein, we further report that:

(a) In our opinion and to the best of our information and according to the explanations given to us and as sown by the books of the Bank;

(i) The Balance Sheet read with the Significant Accounting Policies and the Notes thereon is a full and fair Balance Sheet containing the necessary particulars and it is properly drawn up so as to exhibit a true and fair view of the affairs of the Bank as at 31st March, 1995.

(ii) The Profit and Loss Account read with the Significant Accounting Policies and the Notes thereon shows a true balance of the profit for the year ended 31st March, 1995.

(b) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit and have found them to be satisfactory.

(c) The transactions of the Bank which have come to our notice have been within the powers of the Bank.

(d) Read with the Para 3 (iii) above, the returns received from the offices and branches of the Bank have been found adequate for the purpose of our audit.

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Mar 31, 1994

1. GENERAL

1.1 These accounts have been prepared on the historical cost basis except for the revaluation of certain premises.

1.2 Revenues and Costs are accounted for on accrual basis except interest and other income on non-performing advances including government guaranteed advances (as per the norms laid down by the Reserve Bank of India), guarantee commission, underwriting commission, certain retirement benefits and interest on overdue term deposits which are accounted for on cash basis.

2. INVESTMENTS

2.1 Investments in approved securities, joint ventures, Central Government Special Securities and Recapitalisation Bonds, which are intended to be held till maturity are classified as "Permanent" and investments intended to be traded in are classified as "Current" investments.

2.2 Permanent investments are valued at cost. Current investments are valued at lower of cost or market value, wherever market values are available and at cost in other cases.

2.3 Wherever recent market quotations are not available, market value is taken as per the norms laid down by the Reserve Bank of India as under:

- In the case of government securities (excluding treasury bills), other approved securities and public sector bonds on yield to maturity basis.

- In the case of shares, at book value ascertained from the latest available Balance Sheet and at Re. One per company, where the Balance Sheet is not available.

- In the case of debentures, where interest is not serviced regularly and is in arrears, by applying the norms laid down by the Reserve Bank of India for provisioning for loan losses.

2.4 Provision for diminution in the value of current investments has been made for the net excess of the book value over the market value within the categories of securities.

2.5 Investments in Government and other approved securities are disclosed in the Balance Sheet at cost, depreciation on current investments being included in the Other Liabilities and Provisions.

3. ADVANCES

Advances shown in the Balance Sheet are net of provisions for loan losses made in conformity with the norms laid down by the Reserve Bank of India.

4. FIXED ASSETS

4.1 Premises (except one of the premises which was revalued as at 31st March 1993) and other fixed assets are accounted for at historical cost and depreciation is charged on written down value method at the rates prescribed under the Income Tax Rules 1962.

Depreciation, attributable to the increase on revaluation, has been charged to the Revaluation Reserve Account.

4.2 Premises include capital work-in-progress as at the date of the Balance Sheet.

5. CONTINGENT LIABILITIES

Guarantees, acceptances, endorsements and other obligations are disclosed at the face value of the commitments and no evaluation of the risks involved is undertaken.

6. REVENUE RECOGNITION

6.1 Interest/discount on advances/bills is recognised on time proportion basis except interest on non-performing advances (including government guaranteed advances), which is recognised on realisation.

Commission, exchange and brokerage are normally recognised as income when debited to constituents, though the income may relate to transaction period extending beyond the date of the financial statement, except on non-performing advances, where these are recognised on realisation.

6.2 The gain/losses arising out of the difference between the acquisition cost and the redemption value in respect of permanent securities is accrued annually over the period from acquisition to maturity. The consequential net increase/decrease in the book value of investments is included in Other Assets/Liabilities in the Balance Sheet.

6.3 Actual gain or loss of investments is recognised on the date of sale.

7. FOREIGN EXCHANGE TRANSLATION

7.1 The Bank revalues all outstanding forward foreign exchange contracts, holding of foreign bills purchased and balances in respect of NOSTRO accounts at year end free market rates and takes into account resultant losses as well as profits arising out of such revaluation in accordance with the guidelines issued by FEDAI.

7.2 Income and Expenditure items are converted at the exchange rates ruling on the date of transaction.

8. PAYMENTS TO AND PROVISIONS FOR EMPLOYEES

The contribution to the gratuity fund is computed on actuarial valuation as at the end of the year. All other retirement benefits payable to the employees are accounted on cash basis.

9. PROVISIONS AND CONTINGENCIES

9.1 The above includes provision for loan losses, taxation and depreciation on investments.

9.2 Provision for taxation is made keeping in view the judicial pronouncements and on the basis of the advice of consultants.

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Mar 31, 1993

1. GENERAL

1.1 These accounts have been prepared on the historical cost basis except for the revaluation of premises.

1.2 Revenues and Costs are accounted for on accrual basis except interest and other income on non-performing assets (as per the norms laid down by the Reserve Bank of India), guarantee commission, underwriting commission, certain retirement benefits and interest on overdue term deposits which are accounted for on cash basis.

2. INVESTMENTS

2.1 Investments in approved securities, which are intended to be held till maturity are classified as "Permanent" and those intended to be traded in are classified as "Current" investments.

2.2 Permanent investments in approved securities are valued at cost. Current investments in approved securities and other non-trustee securities are valued at lower of cost or market value, if quoted, and at historical cost, if unquoted.

2.3 Wherever recent stock exchange quotations in respect of government securities are not available, market value is taken based on estimates considered reasonable by the bank.

2.4 Investments in Government and other approved securities are disclosed in the Balance Sheet at cost, depreciation on current investments being included in other liabilities and provisions.

3. ADVANCES

Advances shown in the Balance Sheet are net of provisions made for non-performing assets in conformity with the norms laid down by the Reserve Bank of India.

4. FIXED ASSETS

4.1 Premises and other fixed assets are accounted for at the historical cost and depreciation is charged on written down value method at the rates prescribed under the Income Tax Rules, 1962.

One of the premises has been valued as on 31st March 1993 based on valuation by approved valuers. The resultant appreciation has been credited to Revaluation Reserve Account.

4.2 Premises include capital work-in-progress as on the date of the Balance Sheet.

5. CONTINGENT LIABILITIES

Guarantees, acceptances, endorsements and other obligations are disclosed at the face value of the commitments and no evaluation of the risks involved is undertaken.

6. REVENUE RECOGNITION

6.1 Interest discount on advances/bills is recognised on time proportion basis except interest on non-performing assets, which is recognised on realisation.

Commission, exchange and brokerage are normally recognised as income when debited to constituents, though the income may relate to transaction period extending beyond the date of the financial statement, except on non-performing assets, where these are recognised on realisation.

6.2 The gains/losses arising out of the difference between the acquisition cost and the redemption value in respect of permanent securities is accrued annually over the period from acquisition to maturity. The consequential net increase/decrease in the book value of investments is included in Other Assets/Liabilities in the Balance Sheet.

6.3 Actual gain or loss on investments is recognised on the date of sale.

7. FOREIGN EXCHANGE TRANSLATION

7.1 The Bank revalues at year-end free market rates, all outstanding forward foreign exchange contracts, holding of foreign bills purchased and balances in respect of NOSTRO accounts and takes into account resultant losses as well as profits arising out of such revaluation in accordance with the guidelines issued by FEDAI.

7.2 Income and expenditure items are converted at the exchange rates ruling on the date of transaction.

8. PAYMENTS TO AND PROVISIONS FOR EMPLOYEES

The contribution to the gratuity fund is computed on actuarial valuation as at the end of the year. All other retirement benefits payable to the employees are accounted on cash basis.

9. PROVISIONS AND CONTINGENCIES

9.1 The above includes provision for loan losses, taxation and depreciation on investments.

9.2 Provision for taxation is made keeping in view the judicial pronouncements and on the basis of the advice of consultants.

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Mar 31, 1992

These accounts have been prepared on the historical cost basis. Revenues and Costs are accounted for on accrual basis except interest on recalled, suit filed/decreed, doubtful advances, guarantee commission, underwriting commission, retirement benefits and interest on overdue term deposits which are accounted for on cash basis.

Investments in securities of the Central and State governments and other trustee securities are valued at cost.

Investments in non-trustee securities which are quoted are valued at lower of the cost or market value. Unquoted investments in shares/debentures are stated at historical cost.

Provision for Bad & Doubtful advances are made to the satisfaction of the auditors :

In respect of identified advances based on periodical review of advances and after taking into account security available against outstanding loans, estimated worth and credit worthiness of the borrowers/guarantors, guarantees of Central or State Governments, guarantee schemes of DICGC and ECGC, revival prospects of borrowers whose accounts are under rehabilitation, decrees under execution, civil suits and settlements pending.

In respect of advances at rural branches as a percentage of their total advances.

Advances are stated net of the above provisions.

Premises and other fixed assets are accounted for at the historical cost and depreciation is charged on written down value method at the rates prescribed under Income Tax Rules 1962.

Premises include Capital work-in-progress as on the date of the Balance Sheet.

CONTINGENT LIABILITIES :

Guarantees, acceptances, endorsements and other obligations are disclosed at the face value of the commitments and no evaluation of the risks involved is undertaken.

This income is recognised on time proportion basis. Interest is charged in conformity with Health Code System prescribed by Reserve Bank of India. Interest is not charged on advances which are recalled, suit filed/decreed and where provisions for doubtful debts are made. Interest is charged on case to case basis in respect of sticky advances and advances to sick units which are under repayment, nursing programme and proposed rehabilitation/nursing programme including those referred to BIFR.

These are normally recognised as income on the date of receipt though the income may relate to transaction period extending beyond the date of the financial statements.

Actual gain or loss on investments is recognised on the date of transaction period of sale.

The Bank revalues at year-end free market rates, all outstanding torward foreign exchange contracts, holding of foreign bills purchased and balances in respect of NOSTRO accounts and takes into account resultant losses as well as profits arising out of such revaluation in line with guildelines issued by FEDAI.

Income & Expenditure items are converted at the exchange rates ruling on the date of the transaction.

The contribution to gratuity fund is made on actuarial valuation as on 31st March of the preceding year. The quantum of incremental gratuity liability for the year under audit is paid to the fund in the subsequent year. Other retirement benefits payable to employees are on cash basis.

Provision for taxation is made keeping in view trends of the judicial procurements and also on the basis of interpretations of the law placed by the counsels.

Bad debts written off are included in provisions and contingencies.