Accounting Policies of Canara Bank Company

Mar 31, 2025

1. Basis of Preparation

The financial statements have been prepared
under the historical cost convention, on the
accrual basis of accounting on going concern
basis, unless otherwise stated. They conform to
Generally Accepted Accounting Principles (GAAP)
in India, which comprises statutory provisions,
regulatory norms / guidelines prescribed by
Reserve Bank of India (RBI), Banking Regulation
Act - 1949, Accounting Standards/ guidance
notes issued by the Institute of Chartered
Accountants of India (ICAI) and the practices
prevalent in the banking industry in India. In
respect of foreign offices, statutory provisions
and practices prevailing in respective foreign
countries are complied with.

Use of Estimates

The preparation of financial statements requires
the management to make estimates and
assumptions that affect the reported amount
of assets, liabilities, expenses, income and
disclosure of contingent liabilities as at the
date of the financial statements. Management
believes that these estimates and assumptions
are reasonable and prudent. However, actual
results could differ from estimates. Any
revision to accounting estimates is recognized
prospectively in the current and future periods
unless otherwise stated.

2. Foreign Currency Translation / Conversion of
Foreign Currencies

2.1 Foreign currency monetary items are initially
recorded at a notional rate. Foreign currency
monetary items are restated at the rate published
by ''Foreign Exchange Dealers'' Association of
India (FEDAI) at the end of each quarter. Exchange
difference arising on restatement of such items
at the quarterly rates is recognised in Profit and
Loss Account.

2.2 Transactions and balances of foreign branches
are classified as non-integral foreign operations.
Such transactions and balances are consolidated
by the bank on a quarterly basis. Assets and
Liabilities (both monetary and non-monetary
as well as contingent liabilities) are translated
at the closing spot rate of exchange announced
by Foreign Exchange Dealers'' Association of
India (FEDAI) as at the end of each quarter.
Income and Expenditure items of the foreign
branches are translated at the quarterly average
rate published by FEDAI in accordance with
Accounting Standard (AS) 11 - "The effect of
Changes in Foreign Exchange rates" issued by
the Institute of Chartered Accountants of India
(ICAI) and as per the guidelines of Reserve Bank
of India (RBI) regarding the compliance of the
said standard.

The resultant exchange gain / loss is credited /
debited to Foreign Currency Translation Reserve.

2.3 Forward Exchange Contracts

Premium or discount arising at the inception of
all forward exchange contracts are amortized as
expense or income over the life of the contract.
Profit / Losses arising on cancellation of forward
exchange contracts, together with unamortized
premium or discount, if any, is recognized on
the date of termination. Exchange differences
on such contracts are recognized in the Profit &
Loss account in the reporting period in which the
exchange rates change.

Contingent liability in respect of outstanding
forward exchange contracts, guarantees,
acceptances, endorsements and other
obligations are stated in the balance sheet at the
closing rates published by FEDAI.

3. Investments

3.1 Investments

The Bank''s investment portfolio is classified
as per RBI master directions- Classification,
Valuation and Operation of Investment Portfolio
of Commercial Banks (Directions), 2023. The
entire investment portfolio of the bank is
classified under following categories viz. ''Held
to Maturity'' (HTM), ''Available for Sale'' (AFS),

''Fair value through Profit and Loss'' (FVTPL) and
''Subsidiaries, Joint Ventures and Associates''. Held
for Trading (HFT) shall be a separate investment
subcategory within FVTPL. The category of the
investment shall be decided before or at the time
of acquisition and this decision shall be properly
documented.

Investments are disclosed in the Balance Sheet
under six classifications viz: (a) Government
securities (b) Other approved securities (c) Shares
(d) Debentures & Bonds (e) Subsidiaries, Joint
Ventures & Associates and (f) Others.

The valuation of Investments is done in
accordance with the master directions-
Classification, Valuation and Operation of
Investment Portfolio of Commercial Banks
(Directions), 2023 issued by the RBI as under:

A. HELD TO MATURITY

Securities held in HTM shall be carried at cost
and shall not be marked to market (MTM) after
initial recognition. Any discount or premium on
the securities under HTM shall be amortised over
the remaining life of the instrument. The
amortised amount shall be reflected in the financial
statements under item II ''Income on Investments''
of Schedule 13: ''Interest Earned'' with a contra in
Schedule 8: ''Investments''.

B. AVAILABLE FOR SALE

• The securities held in AFS are fair valued on
daily basis. Any discount or premium on the
acquisition of debt securities under AFS shall
be amortised over the remaining life of the
instrument. The amortised amount shall be
reflected in the financial statements under
item II ''Income on Investments'' of Schedule 13:
''Interest Earned'' with a contra in Schedule 8:
''Investments''.

• The valuation gains and losses across all
performing investments, irrespective of
classification (i.e., Government securities, Other
approved securities, Bonds and Debentures,
etc.), held under AFS shall be aggregated. The
net appreciation or depreciation shall be directly
credited or debited to a reserve named AFS
Reserve without routing through the Profit &
Loss Account. In case of restructured securities,
appreciation is ignored and cumulative
depreciation is debited from AFS Reserve.

• Securities under AFS shall be subject to
income recognition, asset classification and
provisioning norms as applicable. The AFS-
Reserve shall be reckoned as Common Equity
Tier (CET) 1. The unrealised gains transferred
to AFS-Reserve shall not be available for any
distribution such as dividend and coupon on
Additional Tier 1.

• Upon sale or maturity of a debt instrument
in AFS category, the accumulated gain/ loss
for that security in the AFS-Reserve shall
be transferred from the AFS Reserve and
recognized in the Profit and Loss Account under
item II Profit on sale of investments under
Schedule 14-Other Income. In the case of equity
instruments designated under AFS at the time
of initial recognition, any gain or loss on sale of
such investments shall not be transferred from
AFS-Reserve to the Profit and Loss Account.
Instead, such gain or loss shall be transferred
from AFS-Reserve to the Capital Reserve.

• We shall not pay dividends out of net unrealised
gains recognised in the Profit and Loss Account
arising on fair valuation of Level 3 investments
on their Balance Sheet. Further, such net
unrealised gains on Level 3 investments
recognised in the Profit and Loss Account or in
the AFS-Reserve shall be deducted from CET 1
capital.

Provided that this clause shall not apply to
investments that meet the SPPI criteria and
are required to be risk weighted at 50% or
lower for credit risk as per applicable regulatory
instructions on capital adequacy. The unrealized
gains transferred to AFS-Reserve shall not be
available for any distribution such as dividend
and coupon on Additional Tier 1.

Upon sale or maturity of a debt instrument
in AFS category, the accumulated gain / loss
for that security in the AFS-Reserve shall
be transferred from the AFS Reserve and
recognized in the Profit and Loss Account under
item II Profit on sale of investments under
Schedule 14-Other Income. In the case of equity
instruments designated under AFS at the time
of initial recognition, any gain or loss on sale of
such investments shall not be transferred from
AFS-Reserve to the Profit and Loss Account.
Instead, such gain or loss shall be transferred
from AFS-Reserve to the Capital Reserve.

C. FAIR VALUE THROUGH PROFIT AND LOSS

The securities held in FVTPL shall be fair valued and
the net gain or loss arising on such valuation shall
be directly credited or debited to the Profit and
Loss Account. Securities that are classified under
the HFT sub-category within FVTPL are fair valued
on a daily basis, whereas other securities in FVTPL
are fair valued on a quarterly basis. Any discount
or premium on the acquisition of debt securities
under FVTPL shall be amortised over the remaining
life of the instrument. The amortised amount shall
be reflected in the financial statements under item
II ''Income on Investments'' of Schedule 13: ''Interest
Earned'' with a contra in Schedule 8:''Investments''.
Securities under FVTPL shall be subject to income
recognition, asset classification and provisioning
norms as applicable.

D. SUBSIDIARIES AND JOINT VENTURES

All investments in subsidiaries, associates and joint
ventures shall be held subsidiaries & Joint Ventures
i.e., in a distinct category for such investments
separate from the other investment categories (viz.
HTM, AFS and FVTPL).

All investments (i.e., including debt and equity) in
subsidiaries, associates and joint ventures shall be
held at acquisition cost. Any discount or premium
on the acquisition of debt securities of subsidiaries,
associates and joint ventures, meeting SPPI criteria,
shall be amortised over the remaining life of the
instrument. The amortised amount shall be reflected
in the financial statements under item II ''Income on
Investments'' of Schedule 13: ''Interest Earned''.

In case where there is already an investment in
an entity which is not a subsidiary, associate or
joint venture and subsequently the investee entity
becomes a subsidiary, associate or joint venture, the
revised carrying value as at the date of such investee
entity becoming a subsidiary, associate or joint
venture shall be determined as under:

(i) Where the investment is held under HTM, the
carrying value less any permanent impairment
shall be the revised carrying value.

(ii) Where an investment is held under AFS,
the cumulative gains and losses previously
recognised in AFS-Reserve shall be reversed and
adjusted to the carrying value of the investment
along with any permanent diminution in the
value of the investment to arrive at the revised
carrying value.

(iii) Where an investment is held in FVTPL, the fair
value as on the date of the investee becoming
a subsidiary, associate or joint venture shall be
taken as the carrying value.

(d) When an investee ceases to be a subsidiary,
associate or joint venture, the investments shall be
reclassified to the respective category as under:

(i) Where the investment is reclassified into HTM,
there shall be no change in the carrying value
and consequently no accounting adjustment
per se shall be required.

(ii) Where the investment is reclassified into AFS
or FVTPL, the fair value on the date of such
reclassification shall be the revised carrying
value. The difference between the revised and
previous carrying value shall be transferred
to AFS-Reserve and Profit and Loss Account
in case of reclassification into AFS and FVTPL
respectively.

Any gain / profit arising on the reclassification/
sale of an investment in a subsidiary, associate
or joint venture shall be first recognised in
the Profit and Loss Account and then shall be
appropriated below the line from the Profit and
Loss Account to the ''Capital Reserve Account''.
The amount so appropriated shall be net of
taxes and the amount required to be transferred
to Statutory Reserves.

3.2 Initial Recognition

All investments shall be measured at fair
value on initial recognition. Unless facts and
circumstances suggest that the fair value is
materially different from the acquisition cost,
it shall be presumed that the acquisition cost
is the fair value. In respect of government
securities acquired through auction (including
devolvement), switch operations and open
market operations (OMO) conducted by the RBI,
the price at which the security is allotted shall
be the fair value for initial recognition purposes.

Where the securities are quoted or the fair value
can be determined based on market observable
inputs (such as yield curve, credit spread, etc.)
any Day 1 gain / loss shall be recognised in
the Profit and Loss Account, under Schedule
14: ''Other Income'' within the subhead ''Profit
on revaluation of investments'' or ''Loss on
revaluation of investments'', as the case may be.

Any Day 1 loss arising from Level 3 investments
shall be recognised immediately. Any Day 1
gains arising from Level 3 investments shall be
deferred. In the case of debt instruments, the
Day 1 gain shall be amortized on a straight¬
line basis up to the maturity date (or earliest
call date for perpetual instruments), while for
unquoted equity instruments, the gain shall be
set aside as a liability until the security is listed
or derecognised.

Reclassification between categories:

Banks shall not reclassify investments between
categories (viz. HTM, AFS and FVTPL) without the approval
of their Board of Directors. Further, reclassification shall
also require the prior approval of the Department of
Supervision (DoS), RBI.

The reclassification should be applied prospectively from
reclassification date.

Acquisition cost:

Costs, including brokerage and commission paid at the
time of acquisition of investments and broken period
interest on debt instruments, are recognised in the
Profit and Loss Account and are not included in the cost
of acquisition. Cost of investments is determined based
on the weighted average cost method. Purchase and
sale transactions in securities are accounted on
settlement date.

Short sale:

The Bank undertakes short sale transactions in Central
Government dated securities in accordance with
the RBI guidelines. The short position is categorised
under FVTPL-HFT-PD category and netted off from
investments in government securities. The short
position along with other government securities under
FVTPL-HFT-PD portfolio is marked to market and the
resultant gain / loss, if any, is charged to the Profit and
Loss Account. Profit / Loss on short sale is recognised on
settlement date.

Fair Value of investments:

• Quoted Securities

The fair value for the quoted securities shall be the
prices declared by the Financial Benchmarks India
Private Ltd. (FBIL). For securities whose prices are not
published by FBIL, the fair value ofthe quoted security
shall be based upon quoted price as available from

the trades / quotes on recognised stock exchanges,
reporting platforms or trading platforms authorized
by RBI/SEBI or prices declared by the Fixed Income
Money Market and Derivatives Association of India
(FIMMDA).

• Unquoted SLR Securities

a. Treasury Bills shall be valued at carrying cost.

b. Unquoted Central / State Government
securities shall be valued on the basis of the
prices / YTM rates published by the FBIL.

c. Other approved securities shall be valued
applying the YTM method by marking them
up by 25 basis points above the yields of the
Central Government Securities of equivalent
maturity put out by FBIL.

• Unquoted debentures and bonds

The valuation of other unquoted fixed income
securities (viz. bonds and debentures), and
preference shares, is done with appropriate mark-up,
i.e. applicable FIMMDA published credit spread over
the Yield to Maturity (YTM) rates for Government of
India securities as published by FBIL.

• Unquoted equity shares are valued at
the breakup value, ascertained from the
company''s latest balance sheet. The date as
on which the latest balance sheet is drawn up
shall not precede the date of valuation by more
than 18 months. In case the latest audited
balance sheet is not available or is more than
18 months old, the shares shall be valued at
''1 per company.

• Units of mutual funds are valued at the
latest Net Asset Value (NAV) declared by the
mutual fund.

• Treasury bills, commercial papers and
certificate of deposits being discounted
instruments, are valued at carrying cost.

• Investments in Security Receipts (SRs) and
unquoted units of Infrastructure Investment
Trust (InvIT) are valued as per the net asset value
provided by the issuing Asset Reconstruction
Company and InvIT respectively. Government-
guaranteed SRs must be valued periodically
based on the Net Asset Value (NAV) declared
by the ARC, which is determined by recovery
ratings. Unrealized gains from fair valuation
of government-backed SRs must be deducted
from Common Equity Tier 1 (CET 1) capital,
and no dividends can be distributed from
such gains.

• Investments in unquoted units of Alternative
Investment Fund (AIF) classified under
FVTPL category shall be valued at the NAV as
disclosed by the AIF. NAV shall be based on
valuation of its underlying investments by an
independent valuer on half yearly frequency as
mandated by SEBI (AIF) Regulations. Where an
AIF fails to carry out and disclose the valuation
of its investments by an independent valuer
as mandated by SEBI (Alternative Investment
Fund) Regulations, 2012, the value of its
units shall be treated as ''1 for the purpose of
these Directions. In case AIF is not registered
under SEBI (Alternative Investment Fund)
Regulations, 2012 and the latest disclosed
valuation of its investments by an independent
valuer precedes the date of valuation by more
than 18 months, the value of its units shall be
treated as ''1.

Income Recognition, Asset Classification and
Provisioning:

Income recognition:

(a) Banks shall recognize income on accrual basis for
the following investments:

(i) Government Securities, bonds and debentures
of corporate bodies, where interest rates on
these securities are predetermined and provided
interest is serviced regularly and is not in arrears.

(b) Income from units of mutual funds, alternative
investment funds and other such pooled / collective
investment funds shall be recognized on cash basis.

Accounting for Broken Period Interest:

Banks shall not capitalize the broken period interest paid
to the seller as part of cost and shall treat it as an item
of expenditure under Profit & Loss Account in respect of
investments in securities.

Non-Performing Investments (NPI):

(a) Once an investment is classified as an NPI, it should
be segregated from rest of the portfolio and not
considered for netting valuation gains and losses.

(b) Banks shall not accrue any income on NPIs. Income
shall be recognised only on realisation of the same.
Further, any MTM appreciation in the security shall
be ignored.

(c) Irrespective of the category (i.e., HTM, AFS or FVTPL
(including HFT)) in which the investment has been
placed, the expense for the provision for impairment
shall always be recognised in the Profit and
Loss Account.

Upon an account being upgraded as per IRACP
norms, any provision previously recognised shall be
reversed and symmetric recognition of MTM gains
and losses can resume.

Investment Fluctuation Reserve

Banks shall create an Investment Fluctuation Reserve
(IFR) until the amount of IFR is at least two per cent of the
AFS and FVTPL (including HFT) portfolio, on a continuing
basis, by transferring to the IFR an amount not less than
the lower of the following:

i. Net profit on sale of investments during
the year.

ii. Netprofitfor the year,lessmandatory appropriations.
Accounting of Interest:

• For the purpose of Balance Sheet, interest
income (including dividend) shall be classified
under three heads viz., Interest received,
Interest Accrued & due and Interest Accrued
but not due.

• For provision of interest under interest
accrued and not due, for all Government debts
and approved securities / bonds, year shall
be reckoned as 360 days and month as 30
days. For non-approved and other corporate
bonds / debts year shall be reckoned as 365
days and month as actual days.

• Accrued Discount on zero coupon bonds shall
be amortized over the remaining maturity
period by taking the difference between the
book value and redemption value of zero
coupon bonds. Thereafter, valuation shall be
carried out.

• Bank shall recognize income on accrual
basis for Government Securities, bonds and
debentures of corporate bodies, where interest
rates on these securities are predetermined and
provided interest is serviced regularly and is not
in arrears.

• Interest on other approved securities and NCDs/
FCDs/PCDs/PSU bonds shall be accounted on
accrual basis if the investment continues to
be classified as standard, other wise the same
shall be accounted on cash basis only.

• Discount on Deep Discount (Zero Coupon)
Bonds, shall be accounted pro-rata, on
accrual basis.

• Discount accrued on Treasury Bills / Cash
Management Bills / Discounted instruments
shall be accrued and accounted under interest
income on investments. On sale of such
instruments the income over and above the
accrual shall be booked as profit on sale.

• Income distribution on MF instruments shall
be accounted on cash basis. In respect of
reinvestment plan the dividend accrued shall
be accounted as income on the last day of each
quarter or the redemption date, whichever
is earlier.

Repurchase and reverse repurchase transactions

• Repurchase (Repo) and reverse repurchase (Reverse
Repo) transactions are reported as borrowing and
lending respectively.

• Borrowing cost on repo transactions is accounted
as interest expense and revenue on reverse repo
transactions is accounted as interest income.

Accounting of MIBOR-OIS derivative contracts:

All derivatives are recognized on the balance sheet

and measured at fair value since a derivative contract

represents a contractual right or an obligation. In case of

MIBOR-OIS, principal amount is notional in nature.

Other Relevant Points:

• Amortisation across the investment categories shall
be on a straight-line basis over the residual maturity
of the instrument. Daily premium amortisation and
discount amortisation shall be reflected in expenses
head and income head respectively.

• Bank shall follow Revenue Method of accounting.
The basic price shall be treated as cost of purchase
and debited to the investment account whereas
the broken period interest (accrued interest up
to the purchase date) shall be treated as revenue
expenditure and is to be booked as an expense under
Profit & Loss Account. Costs such as brokerage,
commission, stamp duty, taxes etc. incurred at
the time of acquisition / sale of securities shall be
treated as revenue expenditure. Brokerage /
underwriting commission received shall be
accounted under income.

• In case of shares which were taken into books at
Re. 1/- (without paying any consideration) following
the best practices, Bank should book profit on
realization as in the case of other securities in the
respective portfolio. However, Bank should continue
to value these securities at Re. 1 and do not consider
the MTM appreciation till the time of eventual
realization.

• Interest income on investments shall include all
income derived from the investment portfolio by
way of interest and dividend (except dividend from
subsidiaries, associates and joint ventures).

• Income earned by way of dividend etc. from
subsidiaries, companies, joint ventures abroad / in
India to be accounted and presented separately.

• Provision for non-performing investments (NPI) shall
be reflected under Provisions and Contingencies.

Forward Exchange Contracts

Premium or discount arising at the inception of all
forward exchange contracts are amortized as expense
or income over the life of the contract. Profit / Losses
arising on cancellation of forward exchange contracts,
together with unamortized premium or discount, if
any, is recognized on the date of termination. Exchange
differences on such contracts are recognized in the Profit
& Loss account in the reporting period in which the
exchange rates change.

Contingent liability in respect of outstanding forward
exchange contracts, guarantees, acceptances,
endorsements and other obligations are stated in the
balance sheet at the closing rates published by FEDAI.

Derivative contracts

The Bank deals in Interest Rate Swaps and Currency
Derivatives. The Interest Rate Derivatives dealt by
the Bank are Cross Currency Interest Rate Swaps and
Forward Rate Agreements. Currency Derivatives dealt by
the Bank are Currency Options and Currency Swaps. Such
derivative contracts are valued as under:

a. Derivative contracts dealt for trading are valued on
mark to market basis, net depreciation / appreciation
is recognized in the Profit & Loss Account.

b. Derivative contracts undertaken for hedging are:

i. Derivative contracts designated as hedges
are also marked to market along with their
underlying asset.

ii. Income / Expenditure is recognized on accrual
basis for hedging swaps.

4. ADVANCES

1. Advances are classified as performing and non¬

performing assets in accordance with the
prudential norms issued by RBI.

2. Advances are classified into Standard,
Sub Standard, Doubtful and Loss assets
borrower wise.

3. Provisions for domestic advances are made
for performing / non-performing advances in
accordance with the RBI Guidelines.

4. Provisions for performing / non-performing
advances with foreign branches are made as
per regulations of host country or according
to the norms prescribed by RBI, whichever is
more stringent.

5. Advances stated in the Balance Sheet are
net of provisions made for Non-Performing
Assets, claims received from Credit Guarantee
Institutions and bill rediscount.

6. Recoveries in Non-Performing Advances are
apportioned first towards charges and interest,
thereafter towards principal.

Recovery in NPA accounts in case of
One Time Settlement (OTS) / National
Company Law Tribunal (NCLT) / Technically
Written Off (TWO) & Accounts covered
by Government Guarantees such as
CGTMSE / ECGC / GECL / CGFMU and Subsidy
if any, shall be appropriated in the order of
Principal, Charges and Interest.

Recovery in suit filed/ decreed accounts shall
be appropriated in the manner as per specific
directives from the Court / DRT, in case the
same is other than the one mentioned above.

7. In case of financial assets sold to SC / RC, the
valuation, income recognition etc., are done as
per RBI guidelines.

8. In addition to the specific provision on NPAs,
general provisions are also made for standard
assets as per extant RBI guidelines.

5. Fixed Assets

i. The premises of the Bank include freehold and
leasehold properties. All the Fixed Assets are
capitalized based on the date of put to use.

ii. Land and Premises are stated at revalued cost and
other fixed assets are stated at historical cost. The
appreciation on revaluation, if any, is credited to
the ''Revaluation Reserve'' Account. Depreciation /
Amortization attributable to the enhanced value
have been debited to the Profit & Loss account.
Equivalent amount has been transferred from
Revaluation Reserve to Revenue Reserve.

Depreciation

1. Depreciation method is on Straight Line Method, for
all Assets based on life span of the assets.

2. The life span of the assets is defined as per Part
C Schedule II of the Companies Act, 2013 other
than Software / Intangibles, Servers, Electrical
Equipment''s and Motor Vehicles.

3. Estimated life span of the assets adopted by the
bank for different class of assets is as under:

The change in rates (based on life span)
of depreciation is applied effective from
01-04-2020.

4. Software / Intangible Assets are amortized over
5 years.

5. If the item is put to use for 180 days and above in
the year of acquisition, 100% depreciation will be
charged for the concerned financial year. If the asset
is put to use for less than 180 days in the year of
acquisition, 50% depreciation is be charged for the
concerned financial year.

6. 5% of the Original cost price will be residual value
in case of the assets having useful life 8 years and
above. ''5/- of the Original cost price is residual
value for other assets.

7. Premium paid on leasehold properties is charged
off over the lease period or life span of relevant
asset whichever is earlier. Cost of leasehold land
and leasehold improvements are amortised over
the period of lease or life span of relevant assets
whichever is lower.

8. In respect of fixed assets held at foreign offices,
depreciation is provided as per the regulations /
norms of the respective countries

9. Lease payments including cost escalation for assets
taken on operating lease are recognised in the Profit
and Loss Account over the lease term in accordance
with the AS 19 (Leases) issued by ICAI.

Impairment of Assets

An assessment is made at each balance sheet date
whether there is any indication that an asset is impaired. If
any such indication exists, an estimate of the recoverable
amount is made and impairment loss, if any, is provided
for and charged off to Profit and Loss Account.

6. Revenue Recognition

Income and expenditure are generally accounted on
accrual basis, except the following:

a. Interest on non-performing advances and
non-performing investments is recognized on
receipt basis as per norms laid down by Reserve
Bank of India.

b. Interest on Overdue Bills, Commission (other
than Government business & Commission for
LC BG), Exchange, Brokerage and rent on lockers
is accounted on realization.

c. Dividend Income is recognized when the right
to receive the same is established.

d. In case of suit filed accounts, related legal and
other expenses incurred are charged to Profit
& Loss Account and on recovery the same are
accounted as Income.

7. Employee Benefits
Defined Contribution Plans

Defined Contribution to Plans such as Provident/
Pension fund are recognized as an expense and
charged to Profit & Loss account.

The Bank operates a New Pension Scheme (NPS) for
all officers / employees joining the Bank on or after
01-04-2010, which is a defined contribution Pension
Scheme, such new joinees not being entitled to
become members of the existing Pension Scheme. As
per the scheme, the covered employees contribute
10% of their basic pay plus dearness allowance
to the scheme together with a contribution from
the Bank equivalent to 14% of the basic pay plus
dearness allowance. The Bank recognizes such
annual contributions as an expense in the year to
which they relate.

Defined Benefit Plans

a. Gratuity: The employee Gratuity Fund

Scheme is funded by the Bank and managed
by a separate trust who in turn manages
their funds as per guidelines. The present
value of the Bank''s obligation under
Gratuity is recognized on actuarial basis as
at the year end and the fair value of the Plan
assets is reduced from the gross obligation
to recognize the obligation on a net basis.

b. Pension: The employee Pension Fund

Scheme is funded by the Bank and managed
by a separate trust. The present value of
the Bank''s obligations under Pension is
recognized on the basis of actuary''s report
as at the year end and the fair value of
the Plan assets is reduced from the gross
obligation to recognize the obligation on a
net basis.

The privilege leave is considered as a long-term
benefit and is recognized based on independent
actuarial valuation.

The cost of providing long-term benefits
under defined benefit Plans is determined
using the projected unit credit method with
actuarial valuations being carried out at each
Balance Sheet date. Actuarial gains/ losses are
immediately recognised in the Profit and Loss
Account and are not deferred.

Provision for Taxation

a) Income tax expense is the aggregate
amount of current tax and deferred tax
expense incurred by the Bank. The current
tax expense and deferred tax expense
are determined in accordance with the
provisions of the Income Tax Act, 1961 and
as per Accounting Standard 22-"Accounting
for Taxes on Income" respectively after
taking into account taxes paid at the foreign
offices, which are based on the tax laws of
respective jurisdictions.

b) Deferred Tax adjustments comprises
of changes in the deferred tax assets or
liabilities during the year. Deferred Tax
assets and liabilities arising on account of
timing differences and which are capable
of reversal in subsequent periods are
recognized using the tax rates and laws that
have been enacted or substantively enacted
as of the balance sheet date. The impact of
changes in deferred tax assets and liabilities
is recognised in the profit and loss account.

c) Deferred tax assets are recognised and
reassessed at each reporting date, based
upon management''s judgment as to
whether their realisation is considered as
reasonably certain or virtual certain as the
case may be.

d) Deferred Tax Assets are recognised on carry
forward of unabsorbed depreciation and
tax losses only if there is virtual certainty
supported by convincing evidence that such
deferred tax assets can be realised against
future profits. Deferred tax assets on the
items other than above are recognized on
the basis of reasonable certainty.

---

Mar 31, 2024

SIGNIFICANT ACCOUNTING POLICIES ON THE STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31^st MARCH, 2024

1 Basis of Preparation

The financial statements have been prepared under the historical cost convention, on the accrual basis of accounting on going concern basis, unless otherwise stated. They conform to Generally Accepted Accounting Principles (GAAP) in India, which comprises statutory provisions, regulatory norms / guidelines prescribed by Reserve Bank of India (RBI), Banking Regulation Act - 1949, Accounting Standards/ guidance notes issued by the Institute of Chartered Accountants of India (ICAI) and the practices prevalent in the banking industry in India. In respect of foreign offices, statutory provisions and practices prevailing in respective foreign countries are complied with.

Use of Estimates

The preparation of financial statements requires the management to make estimates and assumptions that affect the reported amount of assets, liabilities, expenses, income and disclosure of contingent liabilities as at the date of the financial statements. Management believes that these estimates and assumptions are reasonable and prudent. However, actual results could differ from estimates. Any revision to accounting estimates is recognized prospectively in the current and future periods unless otherwise stated.

2. Foreign Currency Translation / Conversion of Foreign Currencies

2.1 Foreign currency monetary items are initially recorded at a notional rate. Foreign currency monetary items are restated at the rate published by 'Foreign Exchange Dealers' Association of India (FEDAI) at the end of each quarter. Exchange difference arising on restatement of such items at the quarterly rates is recognised in Profit and Loss Account.

2.2    Transactions and balances of foreign branches are classified as non-integral foreign operations. Such transactions and balances are consolidated by the bank on a quarterly basis. Assets and Liabilities (both monetary and non-monetary as well as contingent liabilities) are translated at the closing spot rate of exchange announced by Foreign Exchange Dealers' Association of India (FEDAI) as at the end of each quarter. Income and Expenditure items of the foreign branches are translated at the quarterly average rate published by FEDAI in accordance with Accounting Standard (AS) 11 - "The effect of Changes in Foreign Exchange rates" issued by the Institute of Chartered Accountants of India (ICAI) and as per the guidelines of Reserve Bank of India (RBI) regarding the compliance of the said standard.

The resultant exchange gain / loss is credited / debited to Foreign Currency Translation Reserve.

2.3    Forward Exchange Contracts

Premium or discount arising at the inception of all forward exchange contracts are amortized as expense or income over the life of the contract. Profit/ Losses arising on cancellation of forward exchange contracts, together with unamortized premium or discount, if any, is recognized on the date of termination. Exchange differences on such contracts are recognized in the Profit & Loss account in the reporting period in which the exchange rates change.

Contingent liability in respect of outstanding forward exchange contracts, guarantees, acceptances, endorsements and other obligations are stated in the balance sheet at the closing rates published by FEDAI.

3. Investments

3.1 Investments

Classification of investments is made as per the guidelines of the RBI. The entire investment portfolio of the bank is classified under three categories viz. 'Held to Maturity' (HTM), 'Available for Sale' (AFS) and 'Held for Trading' (HFT). Such classification is decided at the time of acquisition of securities.

Investments are disclosed in the Balance Sheet under six classifications viz: (a) Government Securities (b) Other Approved Securities (c) Shares (d) Debentures & Bonds (e) Subsidiaries and Joint Ventures & Associates and (f) Others

In determining the acquisition cost of investment:-

a)    Costs such as brokerage, commission etc., relating to securities at the time of purchase are charged to Profit & Loss Account.

b)    Broken period interest on debt instruments up to the date of acquisition/ disposal is treated as revenue.

The valuation of Investments is done in accordance with the guidelines issued by the RBI as under:

A HELD TO MATURITY

Investments under Held to Maturity category are carried at acquisition cost, net of amortisation, if any. The excess of acquisition cost, if any, over the face value is amortized over the remaining period of maturity.

Investments in Subsidiaries and Joint Ventures & Associates are valued at carrying cost. Any diminution in the value other than temporary in nature is fully provided for.

Investment in sponsored Regional Rural Banks (RRB) and other Trustee shares are valued at carrying cost.

Investment in units of Venture Capital Funds (VCFs) made after 23.08.2006 are classified under HTM category for initial period of three years and valued at cost. After period of three years from date of disbursement, it will be shifted to AFS and marked-to-market as per RBI guidelines.

B. AVAILABLE FOR SALE

Investments classified under this category are mark to market on quarterly basis and valued as per Reserve Bank of India guidelines at the market rates available on the last day of each quarter (Balance Sheet date) from trades /

quotes on the stock exchanges, prices / yields declared by the Fixed Income Money Market and Derivatives Association of India (FIMMDA). Unquoted securities are also valued as per the Reserve Bank of India guidelines.

The net depreciation under each category / classification is fully provided for whereas the net appreciation, if any, is ignored. The book value of the individual securities does not undergo any change after these are valued at mark to market basis.

Units of Venture Capital Funds (VCF) transferred from HTM category after a period of three years (Refer paragraph 3.3(a) are valued at NAV as per the audited financial statements of Venture Capital Funds. In case such audited financial statements are not available continuously for 18 months as on the date of valuation, units are valued at '1 per VCF.

C. HELD FOR TRADING

Investments classified under this category are valued at rates based on market quotations, Price / yields declared by FIMMDA on a weekly basis.

The net depreciation under each security held is fully provided for whereas the net appreciation, if any, is ignored. The book value of the individual securities does not undergo any change after marked to market.

Transfer of scrips from one category to another is carried on the following basis:

a.    HTM to AFS / HFT category at acquisition price / book value. In case the investments under HTM category, originally placed at premium than the transfer is made at amortised cost and security shall be immediately revalued consequent to the transfer and resultant depreciation; if any, shall be provided.

b.    AFS / HFT to HTM category at lower of the book value or market value.

c. AFS to HFT category or vice versa, at the carrying value. The accumulated depreciation, if any, to be transferred to the provision for depreciation against HFT securities and vice versa.

Non-performing Investments Security Receipts issued by Securitisation / Reconstruction Company (SC / RC) in respect of financial assets sold by the Bank to the SC / RC are valued at the lower of the redemption value of the Security Receipt and the Net Book Value of the financial asset. The investment is carried in the books at the price determined as above until its sale or realisation and on such sale or realisation, loss or gain is dealt with as below:

a.    If sale is at a price below Net Book Value (NBV), the shortfall is recognised as per Reserve Bank of India guidelines.

b.    If the sale is for a value higher than NBV, the excess provision is not reversed but utilized to meet shortfall / loss on account of sale of other financial assets to SC / RC.

Securities included in any of three categories where interest / principal is in arrears for a specified period, are classified as Non-Performing Investment. Interest Income on such securities is not reckoned and appropriate depreciation/ provision in value of Investments is made. Deprecation in respect of such Non-Performing Investments is not set off against appreciation in other performing securities.

Profit on Sale of Investments

Profit on Sale of Investments in respect of "Available for Sale" and "Held for Trading" categories is recognized in Profit & Loss Account.

Profit on Sale of Investments in respect of "Held to Maturity" category is first taken to the Profit & Loss Account and an equivalent amount of Profit is appropriated to the Capital Reserve (net of taxes and amount required to be transferred to Statutory Reserve).

Loss on Sale of Investments in all the three categories is recognized in Profit & Loss Account.

Accounting for Repo / Reverse Repo and Liquidity Adjustment Facility (LAF)

Securities sold / purchased with an agreement to repurchase / resale on the agreed terms under Repo / Reverse Repo including LAF with RBI are recognized as Borrowing / Lending.

Securities sold under Repo are continued to be shown under investments and Securities purchased under Reverse Repo are not included in investments. Costs and revenues are accounted for as interest expenditure / income, as the case may be.

Forward Exchange Contracts

Premium or discount arising at the inception of all forward exchange contracts are amortized as expense or income over the life of the contract. Profit / Losses arising on cancellation of forward exchange contracts, together with unamortized premium or discount, if any, is recognized on the date of termination. Exchange differences on such contracts are recognized in the Profit & Loss account in the reporting period in which the exchange rates change.

Contingent liability in respect of outstanding forward exchange contracts, guarantees, acceptances, endorsements and other obligations are stated in the balance sheet at the closing rates published by FEDAI.

Derivative contracts

The Bank deals in Interest Rate Swaps and Currency Derivatives. The Interest Rate Derivatives dealt by the Bank are Rupee Interest Rate Swaps, Cross Currency Interest Rate Swaps and Forward Rate Agreements. Currency Derivatives dealt by the Bank are Options and Currency Swaps. Such derivative contracts are valued as under:

a. Derivative contracts dealt for trading are valued on mark to market basis, net depreciation is recognized while net appreciation is ignored.

b. Derivative contracts undertaken for hedging are:

i.    Derivative contracts designated as hedges are not marked to market unless their underlying asset is marked to market.

ii.    Income / Expenditure is recognized on accrual basis for hedging swaps.

4 ADVANCES

1.    Advances are classified as performing and non-performing assets in accordance with the prudential norms issued by RBI.

2.    Advances are classified into Standard, Sub-Standard, Doubtful and Loss Assets borrower wise.

3.    Provisions for domestic advances are made for performing / non-performing advances in accordance with the RBI Guidelines.

4.    Provisions for performing / non-performing advances with foreign branches are made as per regulations of host country or according to the norms prescribed by RBI, whichever is more stringent.

5.    Advances stated in the Balance Sheet are net of provisions made for Non-Performing Assets, claims received from Credit Guarantee Institutions and bill rediscount.

6.    Recoveries in Non-Performing Advances are apportioned first towards charges and interest, thereafter towards principal.

Recovery in NPA accounts in case of One Time Settlement (OTS) / National Company Law Tribunal (NCLT) / Technically Written Off (TWO) & Accounts covered by Government Guarantees such as CGTMSE / ECGC / GECL / CGFMU and Subsidy if any, shall be appropriated in the order of Principal, Charges and Interest.

Recovery in suit filed/ decreed accounts shall be appropriated in the manner as per specific directives from the Court/ DRT, in case the same is other than the one mentioned above.

7.    In case of financial assets sold to SC / RC, the valuation, income recognition etc., are done as per RBI guidelines.

8.    In addition to the specific provision on NPAs, general provisions are also made for standard assets as per extant RBI guidelines.

5. Fixed Assets

i.    The premises of the Bank include freehold and leasehold properties. All the Fixed Assets are capitalized based on the date of put to use.

ii.    Land and Premises are stated at revalued cost and other fixed assets are stated at historical cost. The appreciation on revaluation, if any, is credited to the 'Revaluation Reserve' Account. Depreciation / Amortization attributable to the enhanced value have been debited to the Profit & Loss account. Equivalent amount has been transferred from Revaluation Reserve to Revenue Reserve.

Depreciation

1.    Depreciation method is on Straight Line Method, for all Assets based on lifespan of the assets.

2.    The lifespan of the assets is defined as per Part C Schedule II of the Companies Act, 2013 other than Software / Intangibles, Servers, Electrical Equipment's and Motor Vehicles.

3.    Estimated lifespan of the assets adopted by the bank for different class of assets is as under:

Sl. No.	Type of Asset	Estimated Lifespan
1.	Free hold Buildings	60 years
2.	Leasehold Land & Building	Lease period
	A) Lease hold Land	Lease period
Â	B) Lease hold Building	Lower of lease period or 60 years
3.	Furniture & Fixtures	10 years

Â	A) Electronic Equipment: Televisions, Projectors, Refrigerators, etc., and Security Gadgets like CCTV Access Control System, Fire Alarm System, Note Counting, Note Sorting Machines, ATMs etc.	5 years
Â	B) Electrical Equipment: Water Cooler, Grinder, Mixer Grinder, Water Purifiers, Stabilizers, Fans etc.	8 years
Â	C) Electrical Fixtures: Like LED/ Tube light Fixtures, etc.	10 years
4.	Computers	3 years
5	Servers	5 years
6.	Motor Vehicles	5 years

The change in rates (based on lifespan) of depreciation is applied effective from 01-04-2020.

4.    Software / Intangible Assets are amortized over 5 years.

5.    If the item is put to use for 180 days and above in the year of acquisition, 100% depreciation will be charged for the concerned financial year. If the asset is put to use for less than 180 days in the year of acquisition, 50% depreciation is be charged for the concerned financial year.

6.    5% of the Original cost price will be residual value in case of the assets having useful life 8 years and above. '5/- of the Original cost price is residual value for other assets.

7.    Premium paid on leasehold properties is charged off over the lease period or lifespan of relevant asset whichever is earlier. Cost of leasehold land and leasehold improvements are amortised over the period of lease or lifespan of relevant assets, whichever is lower.

8.    In respect of fixed assets held at foreign offices, depreciation is provided as per the regulations / norms of the respective countries.

9.    Lease payments including cost escalation for assets taken on operating lease are recognised in the Profit and Loss Account over the lease term in accordance with the AS 19 (Leases) issued by ICAI.

Impairment of Assets

An assessment is made at each balance sheet date whether there is any indication that an asset is impaired. If any such indication exists, an estimate of the recoverable amount is made and impairment loss, if any, is provided for and charged off to Profit and Loss Account.

6.    Revenue Recognition

Income and expenditure are generally accounted on accrual basis, except the following:

a.    Interest on non-performing advances and non-performing investments is recognized on receipt basis as per norms laid down by Reserve Bank of India.

b.    Interest on Overdue Bills, Commission (other than Government business & Commission for LC BG), Exchange, Brokerage and rent on lockers is accounted on realization.

c.    Dividend Income is recognized when the right to receive the same is established.

d.    In case of suit filed accounts, related legal and other expenses incurred are charged to Profit & Loss Account and on recovery the same are accounted as Income.

7.    Employee Benefits Defined Contribution Plans

Defined Contribution to Plans such as Provident/ Pension fund are recognized as an expense and charged to Profit & Loss account.

The Bank operates a New Pension Scheme (NPS) for all officers / employees joining the Bank on or after 01-04-2010, which is a defined contribution Pension Scheme, such new joinees not being entitled to become members of the existing Pension Scheme. As per the scheme, the covered employees contribute 10% of their basic pay plus dearness allowance to the scheme together with a contribution from the Bank equivalent to 14% of the basic pay plus dearness allowance. The Bank recognizes such annual contributions as an expense in the year to which they relate.

Defined Benefit Plans

a.    Gratuity: The employee Gratuity Fund Scheme is funded by the Bank and managed by a separate trust which in turn manages its funds as per guidelines. The present value of the Bank's obligation under Gratuity is recognized on actuarial basis as at the year end and the fair value of the Plan assets is reduced from the gross obligation to recognize the obligation on a net basis.

b.    Pension: The employee Pension Fund Scheme is funded by the Bank and managed by a separate trust. The present value of the Bank's obligations under Pension is recognized on the basis of actuary's report as at the year end and the fair value of the Plan assets is reduced from the gross obligation to recognize the obligation on a net basis.

The privilege leave is considered as a long-term benefit and is recognized based on independent actuarial valuation.

The cost of providing long-term benefits under defined benefit Plans is determined using the projected unit credit method with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains/ losses are immediately recognised in the Profit and Loss Account and are not deferred.

8. Provision for Taxation

a)    Income tax expense is the aggregate amount of current tax and deferred tax expense incurred by the Bank. The current tax expense and deferred tax expense are determined in accordance with the provisions of the Income Tax Act, 1961 and as per Accounting Standard 22 - "Accounting for Taxes on Income" respectively after taking into account taxes paid at the foreign offices, which are based on the tax laws of respective jurisdictions.

b)    Deferred Tax adjustments comprise of changes in the deferred tax assets or liabilities during the year. Deferred Tax assets and liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognized using the tax rates and laws that have been enacted or substantively enacted as of the balance sheet date. The impact of changes in deferred tax assets and liabilities is recognised in the profit and loss account.

c)    Deferred tax assets are recognised and reassessed at each reporting date, based upon management's judgement as to whether their realisation is considered as reasonably certain or virtual certain as the case may be.

d)    Deferred Tax Assets are recognised on carry forward of unabsorbed depreciation and tax losses only if there is virtual certainty supported by convincing evidence that such deferred tax assets can be realised against future profits. Deferred tax assets on the items other than above are recognized on the basis of reasonable certainty.

9 Net Profit

Provisions, Contingent Liabilities and

Contingent

In conformity with AS 29, "Provisions, Contingent

Liabilities & Contingent Assets" issued by the

Institute of Chartered Accountants of India, the

Bank recognizes provision only when:

a.    It has a present obligation as a result of past event.

b.    It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and

c.    A reliable estimate of the amount of the obligation can be made.

No provision is recognized:

a.    For any possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the bank.

b.    Where it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or

c.    When a reliable estimate of the amount of obligation cannot be made.

Such obligations are recorded as Contingent Liabilities. These are assessed at regular intervals and only that part of the obligation for which the outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made.

i. Contingent Assets are not recognized in the financial Statements.

Net Profit

The Net Profit in the Profit & Loss Account is after:

(a)    Provision for depreciation on Investments

(b)    Provision for Taxation

(c)    Provision on Non-Performing Advances

(d)    Provision on Standard Assets

(e)    Provision for Non-Performing Investments

(f)    Provision for other usual & necessary Items

10. Earnings Per Share

The Bank reports basic and diluted Earnings per Share in accordance with AS - 20 "Earnings per Share", issued by ICAI. Basic Earnings per Share is computed by dividing the net profit after tax attributable to equity shareholders by the weighted average number of equity shares outstanding for the year.

11.    Cash Flow Statement

Cash flow Statement is reported by using indirect method.

12.    Segment Reporting

The Bank recognises the business segment as the primary reporting segment and geographical segment as the secondary reporting segment in accordance with the RBI guidelines & in compliance with AS-17 issued by ICAI.

---

Mar 31, 2023

SIGNIFICANT ACCOUNTING POLICIESSIGNIFICANT ACCOUNTING POLICIES ON THE STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31^st MARCH, 2023

1 Basis of Preparation

The financial statements have been prepared under the historical cost convention, on the accrual basis of accounting on going concern basis, unless otherwise stated. They conform to Generally Accepted Accounting Principles (GAAP) in India, which comprises statutory provisions, regulatory norms / guidelines prescribed by Reserve Bank of India (RBI),Banking Regulation Act - 1949, Accounting Standards/ guidance notes issued by the Institute of Chartered Accountants of India (ICAI) and the practices prevalent in the banking industry in India. In respect of foreign offices, statutory provisions and practices prevailing in respective foreign countries are complied with.

Use of Estimates

The preparation of financial statements requires the management to make estimates and assumptions that affect the reported amount of assets, liabilities, expenses, income and disclosure of contingent liabilities as at the date of the financial statements. Management believes that these estimates and assumptions are reasonable and prudent. However, actual results could differ from estimates. Any revision to accounting estimates is recognized prospectively in the current and future periods unless otherwise stated.

2 Foreign Currency Translation / Conversion of Foreign Currencies

2.1 Foreign currency monetary items are initially recorded at a notional rate. Foreign currency monetary items are restated at the rate published by ''Foreign Exchange Dealers'' Association of India (FEDAI) at the end of each quarter. Exchange difference arising on restatement of such items at the quarterly rates is recognised in Profit and Loss Account.

2.2 Transactions and balances of foreign branches are classified as non-integral foreign operations. Such transactions and balances are consolidated by the bank on a quarterly basis. Assets and Liabilities (both monetary and non-monetary as well as contingent liabilities) are translated at the closing spot rate of exchange announced by Foreign Exchange Dealers'' Association of India (FEDAI) as at the end of each quarter. Income and Expenditure items of the foreign branches are translated at the quarterly average rate published by FEDAI in accordance with Accounting Standard (AS) 11 - "The effect of Changes in Foreign Exchange rates" issued by the Institute of Chartered Accountants of India (ICAI) and as per the guidelines of Reserve Bank of India (RBI) regarding the compliance of the said standard.

The resultant exchange gain / loss is credited / debited to Foreign Currency Translation Reserve.

2.3 Forward Exchange Contracts

Premium or discount arising at the inception of all forward exchange contracts are amortized as expense or income over the life of the contract. Profit/ Losses arising on cancellation of forward exchange contracts, together with unamortized premium or discount, if any, is recognized on the date of termination. Exchange differences on such contracts are recognized in the Profit & Loss account in the reporting period in which the exchange rates change.

Contingent liability in respect of outstanding forward exchange contracts, guarantees, acceptances, endorsements and other obligations are stated in the balance sheet at the closing rates published by FEDAI.

3. Investments

3.1 Investments

Classification of investments is made as per the guidelines of the RBI. The entire investment portfolio of the bank is classified under three categories viz. ''Held to Maturity'' (HTM), ''Available for Sale'' (AFS) and ''Held for Trading'' (HFT). Such classification is decided at the time of acquisition of securities.

Investments are disclosed in the Balance Sheet under six classifications viz: (a) Government securities (b) Other approved securities (c) Shares (d) Debentures & Bonds (e) subsidiaries and Joint Ventures & Associates and (f) Others.

In determining the acquisition cost of investment:-

a) Costs such as brokerage, commission etc., relating to securities at the time of purchase are charged to Profit & Loss Account.

b) Broken period interest on debt instruments up to the date of acquisition / disposal is treated as revenue.

The valuation of Investments is done in accordance with the guidelines issued by the RBI as under:

A HELD TO MATURITY

Investments under Held to Maturity category are carried at acquisition cost, net of amortisation, if any. The excess of acquisition cost, if any, over the face value is amortized over the remaining period of maturity.

Investments in Subsidiaries and Joint Ventures & Associates are valued at carrying cost. Any diminution in the value other than temporary in nature is fully provided for.

Investment in sponsored Regional Rural Banks (RRB) and other Trustee shares are valued at carrying cost.

Investment in units of Venture Capital Funds (VCFs) made after 23.08.2006 are classified under HTM category for initial period of three years and valued at cost. After period of three years from date of disbursement, it will be shifted to AFS and marked-to-market as per RBI guidelines.

B. AVAILABLE FOR SALE

Investments classified under this category are mark to market on quarterly basis and valued as per Reserve Bank of India guidelines at the market rates available on the last day of each quarter (Balance Sheet date) from trades / quotes on the stock exchanges, prices / yields declared by the Fixed Income Money Market and Derivatives Association of India (FIMMDA). Unquoted securities are also valued as per the Reserve Bank of India guidelines.

The net depreciation under each category / classification is fully provided for whereas the net appreciation, if any, is ignored. The book value of the individual securities does not undergo any change after these are valued at mark to market basis.

Units of Venture Capital Funds (VCF) transferred from HTM category after a period of three years (Refer paragraph 3.3(a) are valued at NAV as per the audited financial statements of Venture Capital Funds. In case such audited financial statements are not available continuously for 18 months as on the date of valuation, units are valued at ''1 per VCF..

C. HELD FOR TRADING

Investments classified under this category are valued at rates based on market quotations, Price / yields declared by FIMMDA on a weekly basis.

The net depreciation under each security held is fully provided for whereas the net appreciation, if any, is ignored. The book value of the individual securities does not undergo any change after marked to market.

Transfer of scrips from one category to another is carried on the following basis:

a. HTM to AFS / HFT category at acquisition price / book value. In case the investments under HTM category, originally placed at premium than the transfer is made at amortised cost and security shall be immediately revalued consequent to the transfer and resultant depreciation; if any, shall be provided.

b. AFS / HFT to HTM category at lower of the book value or market value.

c. AFS to HFT category or vice versa, at the carrying value. The accumulated depreciation, if any, to be transferred to the provision for depreciation against HFT securities and vice versa.

Non-performing Investments Security Receipts issued by Securitisation / Reconstruction Company (SC / RC) in respect of financial assets sold by the Bank to the SC / RC are valued at the lower of the redemption value of the Security Receipt and the Net Book Value of the financial asset. The investment is carried in the books at the price determined as above until its sale or realisation and on such sale or realisation, loss or gain is dealt with as below:

a. If sale is at a price below Net Book Value (NBV), the shortfall is recognised as per Reserve Bank of India guidelines.

b. If the sale is for a value higher than NBV, the excess provision is not reversed but utilized to meet shortfall / loss on account of sale of other financial assets to SC / RC.

Securities included in any of three categories where interest / principal is in arrears for a specified period, are classified as NonPerforming Investment. Interest Income on such securities is not reckoned and appropriate depreciation/ provision in value of Investments is made. Deprecation in respect of such NonPerforming Investments is not set off against appreciation in other performing securities.

Profit on Sale of Investments

Profit on Sale of Investments in respect of "Available for Sale" and "Held for Trading" categories is recognized in Profit & Loss Account.

Profit on Sale of Investments in respect of "Held to Maturity" category is first taken to the Profit & Loss Account and an equivalent amount of Profit is appropriated to the Capital Reserve (net of taxes and amount required to be transferred to Statutory Reserve).

Loss on Sale of Investments in all the three categories is recognized in Profit & Loss Account.

Accounting for Repo / Reverse Repo and Liquidity Adjustment Facility (LAF)

Securities sold / purchased with an agreement to repurchase / resale on the agreed terms under Repo / Reverse Repo including LAF with RBI are recognized as Borrowing / Lending.

Securities sold under Repo are continued to be shown under investments and Securities purchased under Reverse Repo are not included in investments. Costs and revenues are accounted for as interest expenditure / income, as the case may be.

Forward Exchange Contracts

Premium or discount arising at the inception of all forward exchange contracts are amortized as expense or income over the life of the contract. Profit / Losses arising on cancellation of forward exchange contracts, together with unamortized premium or discount, if any, is recognized on the date of termination. Exchange differences on such contracts are recognized in the Profit & Loss account in the reporting period in which the exchange rates change.

Contingent liability in respect of outstanding forward exchange contracts, guarantees, acceptances, endorsements and other obligations are stated in the balance sheet at the closing rates published by FEDAI.

Derivative contracts

The Bank deals in Interest Rate Swaps and Currency Derivatives. The Interest Rate Derivatives dealt by the Bank are Rupee Interest Rate Swaps, Cross Currency Interest Rate Swaps and Forward Rate Agreements. Currency Derivatives dealt by the Bank are Options and Currency Swaps. Such derivative contracts are valued as under:

a. Derivative contracts dealt for trading are valued on mark to market basis, net depreciation is recognized while net appreciation is ignored.

b. Derivative contracts undertaken for hedging are:

i. Derivative contracts designated as hedges are not marked to market unless their underlying asset is marked to market.

ii. Income / Expenditure is recognized on accrual basis for hedging swaps.

4 ADVANCES

1. Advances are classified as performing and non-performing assets in accordance with the prudential norms issued by RBI.

2. Advances are classified into Standard, Sub Standard, Doubtful and Loss assets borrower wise.

3. Provisions for domestic advances are made for performing / non-performing advances in accordance with the RBI Guidelines.

4. Provisions for performing / non-performing advances with foreign branches are made as per regulations of host country or according to the norms prescribed by RBI, whichever is more stringent.

5. Advances stated in the Balance Sheet are net of provisions made for Non-Performing Assets, claims received from Credit Guarantee Institutions and bill rediscount.

6. Recoveries in Non-Performing Advances are apportioned first towards charges and interest, thereafter towards principal. Recovery in NPA accounts which are settled under OTS, through NCLT Resolution and which are Prudentially / Technically Written off including Accounts covered by Government Guarantees / Subsidy where the recoveries are adjusted in the order of Principal, Charges and Interest

7. In case of financial assets sold to SC / RC, the valuation, income recognition etc., are done as per RBI guidelines.

8. In addition to the specific provision on NPAs, general provisions are also made for standard assets as per extant RBI guidelines.

5. Fixed Assets

i. The premises of the Bank include freehold and leasehold properties. All the Fixed Assets are capitalized based on the date of put to use.

ii. Land and Premises are stated at revalued cost and other fixed assets are stated at historical cost. The appreciation on revaluation, if any, is credited to the ''Revaluation Reserve'' Account. Depreciation / Amortization attributable to the enhanced value have been debited to the Profit & Loss account. Equivalent amount has been transferred from Revaluation Reserve to Revenue Reserve.

Depreciation

1. Depreciation method is on Straight Line Method, for all Assets based on life span of the assets.

2. The life span of the assets is defined as per Part C Schedule II of the Companies Act, 2013 other than Software / Intangibles, Servers, Electrical Equipment''s and Motor Vehicles.

3. Estimated life span of the assets adopted by the bank for different class of assets is as under:

SL No.	Type of asset	Estimated life span
	Free hold Buildings	60 Years
	Leasehold Land & Building	Lease period
	A) Lease hold Land	Lease period
	B) Lease hold Building	Lower of lease period or 60 Years
	Furniture & Fixtures	10 Years
	A) Electronic Equipment: Televisions, Projectors, Refrigerators, etc., and Security Gadgets like CCTV Access Control System, Fire Alarm System, Note Counting, Note Sorting Machines, ATMs etc.	5 Years
	B) Electrical Equipment: Water Cooler, Grinder, Mixer Grinder, Water Purifiers, Stabilizers, Fans etc.	8 Years

	C) Electrical Fixtures: Like LED / Tube light Fixtures, etc.	10 Years
	Computers	3 Years
	Servers	5 Years
	Motor Vehicles	5 Years

The change in rates (based on life span) of depreciation is applied effective from 01-04-2020.

4. Software / Intangible Assets are amortized over 5 years.

5. If the item is put to use for 180 days and above in the year of acquisition, 100% depreciation will be charged for the concerned financial year. If the asset is put to use for less than 180 days in the year of acquisition, 50% depreciation is be charged for the concerned financial year.

6. 5% of the Original cost price will be residual value in case of the assets having useful life 8 years and above. ''5/- of the Original cost price is residual value for other assets.

7. Premium paid on leasehold properties is charged off over the lease period or life span of relevant asset whichever is earlier. Cost of leasehold land and leasehold improvements are amortised over the period of lease or life span of relevant assets whichever is lower.

8. In respect of fixed assets held at foreign offices, depreciation is provided as per the regulations / norms of the respective countries

9. Lease payments including cost escalation for assets taken on operating lease are recognised in the Profit and Loss Account over the lease term in accordance with the AS 19 (Leases) issued by ICAI.

Impairment of Assets

An assessment is made at each balance sheet date whether there is any indication that an asset is impaired. If any such indication exists, an estimate of the recoverable amount is made and impairment loss, if any, is provided for and charged off to Profit and Loss Account.

6. Revenue Recognition

Income and expenditure are generally accounted on accrual basis, except the following:

a. Interest on non-performing advances and non-performing investments is recognized on receipt basis as per norms laid down by Reserve Bank of India.

b. Interest on Overdue Bills, Commission (other than Government business & Commission for LC BG), Exchange, Brokerage and rent on lockers is accounted on realization.

c. Dividend Income is recognized when the right to receive the same is established.

d. In case of suit filed accounts, related legal and other expenses incurred are charged to Profit & Loss Account and on recovery the same are accounted as Income.

7. Employee Benefits Defined Contribution Plans

Defined Contribution to Plans such as Provident/ Pension fund are recognized as an expense and charged to Profit & Loss account.

The Bank operates a New Pension Scheme (NPS) for all officers / employees joining the Bank on or after 01-04-2010, which is a defined contribution Pension Scheme, such new joinees not being entitled to become members of the existing Pension Scheme. As per the scheme, the covered employees contribute 10% of their basic pay plus dearness allowance to the scheme together with a contribution from the Bank equivalent to 14% of the basic pay plus dearness allowance. The Bank recognizes such annual contributions as an expense in the year to which they relate.

Defined Benefit Plans

a. Gratuity: The employee Gratuity Fund Scheme is funded by the Bank and managed by a separate trust who in turn manages their funds as per guidelines. The present value of the Bank''s obligation under Gratuity is recognized on actuarial basis as at the year end and the fair value of the Plan assets is reduced from the gross obligation to recognize the obligation on a net basis.

b. Pension: The employee Pension Fund Scheme is funded by the Bank and managed by a separate trust. The present value of the Bank''s obligations under Pension is recognized on the basis of actuary''s report as at the year end and the fair value of the Plan assets is reduced from the gross obligation to recognize the obligation on a net basis.

The privilege leave is considered as a long-term benefit and is recognized based on independent actuarial valuation

The cost of providing long-term benefits under defined benefit Plans is determined using the projected unit credit method with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains/ losses are immediately recognised in the Profit and Loss Account and are not deferred.

8. Provision for Taxation

a) Income tax expense is the aggregate amount of current tax and deferred tax expense incurred by the Bank. The current tax expense and deferred tax expense are determined in accordance with the provisions of the Income Tax Act, 1961 and as per Accounting Standard 22 - "Accounting for Taxes on Income" respectively after taking into account taxes paid at the foreign offices, which are based on the tax laws of respective jurisdictions.

b) Deferred Tax adjustments comprises of changes in the deferred tax assets or liabilities during the year. Deferred Tax assets and liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognized using the tax rates and laws that have been enacted or substantively enacted as of the balance sheet date. The impact of changes in deferred tax assets and liabilities is recognised in the profit and loss account.

c) Deferred tax assets are recognised and reassessed at each reporting date, based upon management''s judgment as to whether their realisation is considered as reasonably certain or virtual certain as the case may be.

d) Deferred Tax Assets are recognised on carry forward of unabsorbed depreciation and tax losses only if there is virtual certainty supported by convincing evidence that such deferred tax assets can be realised against future profits. Deferred tax assets on the items other than above are recognized on the basis of reasonable certainty.

9 Net Profit

Provisions, Contingent Liabilities and Contingent Assets

In conformity with AS 29, "Provisions, Contingent Liabilities & Contingent Assets" issued by the Institute of Chartered Accountants of India, the bank recognizes provision only when:

a. It has a present obligation as a result of past event.

b. It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and

c. A reliable estimate of the amount of the obligation can be made.

No provision is recognized:

a. For any possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the bank.

b. Where it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or

c. When a reliable estimate of the amount of obligation cannot be made

Such obligations are recorded as Contingent Liabilities. These are assessed at regular intervals and only that part of the obligation for which the outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made.

i. Contingent Assets are not recognized in the financial Statements.

Net Profit

The Net Profit in the Profit & Loss Account is after:

(a) Provision for depreciation on Investments

(b) Provision for Taxation

(c) Provision on Non-Performing Advances

(d) Provision on Standard Assets

(e) Provision for Non-Performing Investments

(f) Provision for other usual & necessary Items

10. Earnings Per Share

The Bank reports basic and diluted Earnings Per Share in accordance with AS - 20 "Earnings Per Share", issued by ICAI. Basic Earnings Per Share is computed by dividing the net profit after tax attributable to equity shareholders by the weighted average number of equity shares outstanding for the Year.

11. Cash Flow Statement

Cash flow Statement is reported by using indirect method.

12. Segment Reporting

The Bank recognises the business segment as the primary reporting segment and geographical segment as the secondary reporting segment in accordance with the RBI guidelines & in compliance with AS-17 issued by ICAI.

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Mar 31, 2022

SIGNIFICANT ACCOUNTING POLICIESSIGNIFICANT ACCOUNTING POLICIES ON THE STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31^st MARCH, 2022

[1] (a) Basis of Preparation

The financial statements have been prepared under the historical cost convention, on the accrual basis of accounting on going concern basis, unless otherwise stated. They conform to Generally Accepted Accounting Principles (GAAP) in India, which comprises statutory provisions, regulatory norms / guidelines prescribed by Reserve Bank of India (RBI), Banking Regulation Act - 1949, Accounting Standards / guidance notes issued by the Institute of Chartered Accountants of India (ICAI) and the practices prevalent in the banking industry in India. In respect of foreign offices, statutory provisions and practices prevailing in respective foreign countries are complied with.

(b) Use of Estimates

The preparation of financial statements requires the management to make estimates and assumptions that affect the reported amount of assets, liabilities, expenses, income and disclosure of contingent liabilities as at the date of the financial statements. Management believes that these estimates and assumptions are reasonable and prudent. However, actual results could differ from estimates. Any revision to accounting estimates is recognized prospectively in the current and future periods unless otherwise stated.

[2] Foreign Currency Translation / Conversion of Foreign Currencies

2.1 Foreign currency monetary items are initially recorded at a notional rate. Foreign currency monetary items are restated at the rate published by ''Foreign Exchange Dealers'' Association of India (FEDAI) at the end of each quarter. Exchange difference arising on restatement of such items at the quarterly rates is recognised in Profit and Loss Account.

2.2 Transactions and balances of foreign branches are classified as non-integral foreign operations. Such transactions and balances are consolidated by the bank on a quarterly basis.

Assets and Liabilities (both monetary and non-monetary as well as contingent liabilities) are translated at the closing spot rate of exchange announced by Foreign Exchange Dealers'' Association of India (FEDAI) as at the end of each quarter. Income and Expenditure items of the foreign branches are translated at the quarterly average rate published by FEDAI in accordance with Accounting Standard (AS) 11 - "The effect of Changes in Foreign Exchange rates" issued by the Institute of Chartered Accountants of India (ICAI) and as per the guidelines of Reserve Bank of India (RBI) regarding the compliance of the said standard.

The resultant exchange gain / loss is credited / debited to Foreign Currency Translation Reserve.

2.3 Forward Exchange Contracts

Premium or discount arising at the inception of all forward exchange contracts are amortized as expense or income over the life of the contract. Profit / Losses arising on cancellation of forward exchange contracts, together with unamortized premium or discount, if any, is recognized on the date of termination. Exchange differences on such contracts are recognized in the Profit & Loss account in the reporting period in which the exchange rates change.

2.4 Contingent liability in respect of outstanding forward exchange contracts, guarantees, acceptances, endorsements and other obligations are stated in the balance sheet at the closing rates published by FEDAI.

[3] Investments

3.1 Classification of investments is made as per

the guidelines of the RBI. The entire investment portfolio of the bank is classified under three categories viz. ''Held to Maturity'' (HTM), ''Available for Sale'' (AFS) and ''Held for Trading'' (hFT). Such classification is decided at the time of acquisition of securities.

Investments are disclosed in the Balance Sheet under six classifications viz: (a) Government securities (b) Other approved securities (c) Shares (d) Debentures & Bonds (e) Subsidiaries and Joint Ventures & Associates and (f) Others.

3.2. In determining the acquisition cost of

investment:-

(a) Cost such as brokerage, commission etc., relating to securities at the time of purchase are charged to Profit & Loss Account.

(b) Broken period interest on debt instruments up to the date of acquisition / disposal is treated as revenue.

3.3 The valuation of Investments is done in

accordance with the guidelines issued by the RBI as under:

a) HELD TO MATURITY

Investments under Held to Maturity category are carried at acquisition cost, net of amortisation, if any. The excess of acquisition cost, if any, over the face value is amortized over the remaining period of maturity.

Investments in Subsidiaries and Joint Ventures & Associates are valued at carrying cost. Any diminution in the value other than temporary in nature is fully provided for.

Investment in sponsored Regional Rural Banks (RRB) and other Trustee Shares are valued at carrying cost.

Investment in units of Venture Capital Funds (VCFs) made after 23.08.2006 are classified under HTM category for initial period of three years and valued at cost. After period of three years from date of disbursement, it will be shifted to AFS and marked-to-market as per RBI guidelines

b) AVAILABLE FOR SALE

Investments classified under this category are mark to market on quarterly basis and valued as per Reserve Bank of India guidelines at the market rates available on the last day of each quarter (Balance Sheet date) from trades / quotes on the stock exchanges, prices / yields declared by the Fixed Income Money Market and Derivatives Association of India (FIMMDA). Unquoted securities are also valued as per the Reserve Bank of India guidelines.

The net depreciation under each category/ classification is fully provided for whereas the net appreciation, if any, is ignored. The book value of the individual securities does not undergo any change after these are valued at mark to market basis.

Units of Venture Capital Funds (VCF) transferred from HTM category after a period of three years (Refer paragraph 3.3(a) are valued at NAV as per the audited financial statements of Venture Capital Funds. In case such audited financial statements are not available continuously for 18 months as on the date of valuation, units are valued at ''1 per VCF.

c) HELD FOR TRADING

Investments classified under this category are valued at rates based on market quotations, price / yields declared by FIMMDA on a weekly basis.

The net depreciation under each security held is fully provided for whereas the net appreciation, if any, is ignored. The book value of the individual securities does not undergo any change after marked to market.

3.4. Transfer of scrips from one category to another is carried on the following basis:

(a) HTM to AFS / HFT category at acquisition price / book value. In case the investments under HTM category, originally placed at premium than the transfer is made at amortised cost and security shall be immediately revalued consequent to the transfer and resultant depreciation; if any, shall be provided.

(b) AFS / HFT to HTM category at lower of the book value or market value.

(c) AFS to HFT category or vice versa, at the carrying value. The accumulated depreciation, if any, to be transferred to the provision for depreciation against HFT securities and vice versa.

3.5 Non-performing Investments Security Receipts issued by Securitisation / Reconstruction Company (SC / RC) in respect of financial assets sold by the Bank to the SC / RC are valued at the lower of the redemption value of the Security Receipt and the Net Book Value of the financial asset. The Investment is carried in the books at the price determined as above until its sale or realisation and on such sale or realisation, loss or gain is dealt with as below:

(a) If sale is at a price below Net Book Value (NBV), the shortfall is recognised as per Reserve Bank of India guidelines.

(b) If the sale is for a value higher than NBV, the excess provision is not reversed but utilized to meet shortfall / loss on account of sale of other financial assets to SC / RC.

3.6 Securities included in any of three categories where interest / principal is in arrears for a specified period, are classified as Non-performing Investment. Interest Income on such securities is not reckoned and appropriate depreciation/ provision in value of Investments is made. Deprecation in respect of such Non-performing Investments is not set off against appreciation in other performing securities.

3.7 Profit on sale of Investments

Profit on sale of Investments in respect of "Available for Sale" and "Held for Trading" categories is recognized in Profit & Loss Account.

Profit on sale of Investments in respect of "Held to Maturity" category is first taken to the Profit & Loss Account and an equivalent amount of Profit is appropriated to the Capital Reserve (net of taxes and amount required to be transferred to Statutory Reserve).

Loss on sale of Investments in all the three categories is recognized in Profit & Loss Account.

3.8 Accounting for Repo / Reverse Repo and Liquidity Adjustment Facility (LAF)

Securities sold / purchased with an agreement to repurchase / resale on the agreed terms under Repo / Reverse Repo including LAF with RBI are recognized as Borrowing / Lending.

Securities sold under Repo are continued to be shown under investments and Securities purchased under Reverse Repo are not included in investments. Costs and revenues are accounted for as interest expenditure / income, as the case may be.

[4] Derivative contracts

The Bank deals in Interest Rate Swaps and Currency Derivatives. The Interest Rate Derivatives dealt by the Bank are Rupee Interest

Rate Swaps, Cross Currency Interest Rate Swaps and Forward Rate Agreements. Currency Derivatives dealt by the Bank are Options and Currency Swaps.

Such derivative contracts are valued as under:

(a) Derivative contracts dealt for trading are valued on mark to market basis, net depreciation is recognized while net appreciation is ignored.

(b) Derivative contracts undertaken for hedging are:

i. Derivative contracts designated as hedges are not marked to market unless their underlying asset is marked to market.

ii. Income / Expenditure is recognized on accrual basis for Hedging swaps.

[5] ADVANCES

5.1 Advances are classified as performing and

non-performing assets in accordance with the prudential norms issued by RBI.

5.2 Advances are classified into Standard, Sub

Standard, Doubtful and Loss assets borrower wise.

5.3 Provisions for domestic advances are made

for performing / non -performing advances in accordance with the RBI Guidelines.

5.4 Provisions for performing / non-performing advances with foreign branches are made as per regulations of host country or according to the norms prescribed by RBI, whichever is more stringent.

5.5 Advances stated in the Balance Sheet are net of provisions made for Non-performing Assets, claims received from Credit Guarantee Institutions and rediscount.

5.6 Recoveries in Non-performing Advances are apportioned first towards charges and interest, thereafter towards principal. Recovery in NPA accounts which are settled under OTS, through NCLT Resolution and which are Prudentially / Technically Written off including Accounts covered by Government Guarantees / Subsidy where the recoveries are adjusted in the order of Principal, Charges and Interest.

5.7 In case of financial assets sold to SC / RC, the valuation, income recognition etc., are done as per RBI guidelines.

5.8 In addition to the specific provision on NPAs, general provisions are also made for standard assets as per extant RBI guidelines.

[6] Fixed Assets

6.1 The premises of the Bank include freehold and leasehold properties. All the Fixed Assets are capitalized based on the date of put to use.

6.2 Land and Premises are stated at revalued cost and other fixed assets are stated at historical cost. The appreciation on revaluation, if any, is credited to the ''Revaluation Reserve'' Account. Depreciation / Amortization attributable to the enhanced value have been debited to the Profit & Loss account. Equivalent amount has been transferred from Revaluation Reserve to Revenue Reserve.

[7] Depreciation

7.1 Depreciation method is on Straight Line Method, for all Assets based on life span of the assets.

7.2 The life span of the assets is defined as per Part C Schedule II of the Companies Act, 2013 other than Software / Intangibles, Servers, Electrical Equipments and Motor Vehicles.

7.3 Estimated life span of the assets adopted by the bank for different class of assets is as under:

SL No.	Type of asset	Estimated life span
i	Free hold Buildings	60 Years
ii	A) Lease hold Land	Lease period
	B) Lease hold Building	Lower of lease period or 60 Years
iii	Furniture & Fixtures	10 Years

iv	A) Electronic Equipment: Televisions, Projectors, Refrigerators, etc and Security Gadgets like CCTV Access Control System, Fire Alarm System, Note Counting, Note Sorting Machines, ATMs etc.	5 Years
iv	B) Electrical Equipment: Water Cooler, Grinder, Mixer Grinder, Water Purifiers, Stabilizers, Fans etc.	8 Years
	C) Electrical Fixtures: Like LED / Tube light Fixtures, etc.	10 Years
v	Computers and Servers	3 Years
vi	Motor Vehicles	5 Years

The change in rates (based on life span) of depreciation is applied effective from 01-04-2020.

7.4 Software / Intangible Assets are amortized over 5 years.

7.5 If the item is put to use for 180 days and above in the year of acquisition, 100% depreciation will be charged for the concerned financial year. If the asset is put to use for less than 180 days in the year of acquisition, 50% depreciation is be charged for the concerned financial year.

7.6 5% of the Original cost price will be residual value in case of the assets having useful life 8 years and above. ''5/- of the Original cost price is residual value for other assets.

7.7 Premium paid on leasehold properties is charged off over the lease period or life span of relevant asset whichever is earlier. Cost of leasehold land and leasehold improvements are amortised over

the period of lease or life span of relevant assets whichever is lower.

7.8 In respect of fixed assets held at foreign offices, depreciation is provided as per the regulations / norms of the respective countries

7.9 Lease payments including cost escalation for assets taken on operating lease are recognised in the Profit and Loss Account over the lease term in accordance with the AS 19 (Leases) issued by ICAI.

[8] Impairment of Assets

An assessment is made at each balance sheet

date whether there is any indication that an asset is impaired. If any such indication exists, an estimate of the recoverable amount is made and impairment loss, if any, is provided for and charged off to Profit and Loss Account.

[9] Revenue Recognition

9.1 Income and expenditure are generally accounted

on accrual basis, except the following:

(a) Interest on Non-performing advances and non-performing investments is recognized on receipt basis as per norms laid down by Reserve Bank of India.

(b) Interest on Overdue Bills, Commission (other than Government business & Commission for LC BG), Exchange, Brokerage and rent on lockers is accounted on realization.

(c) Dividend Income is recognized when the right to receive the same is established.

(d) In case of suit filed accounts, related legal and other expenses incurred are charged to Profit & Loss Account and on recovery the same are accounted as Income.

[10] Employee Benefits

10.1 Defined Contribution Plans

Defined Contribution to Plans such as Provident / Pension fund are recognized as an expense and charged to Profit & Loss account.

The Bank operates a New Pension Scheme (NPS) for all officers / employees joining the Bank on or after 01-04-2010, which is a defined contribution Pension Scheme, such new joinees not being entitled to become members of the existing

Pension Scheme. As per the scheme, the covered employees contribute 10% of their basic pay plus dearness allowance to the scheme together with a contribution from the Bank equivalent to 14% of the basic pay plus dearness allowance. The Bank recognizes such annual contributions as an expense in the year to which they relate.

10.2 Defined Benefit Plans

(a) Gratuity: The employee Gratuity Fund Scheme is funded by the Bank and managed by a separate trust who in turn manages their funds as per guidelines. The present value of the Bank''s obligation under Gratuity is recognized on actuarial basis as at the year end and the fair value of the Plan assets is reduced from the gross obligation to recognize the obligation on a net basis.

(b) Pension: The employee Pension Fund Scheme is funded by the Bank and managed by a separate trust. The present value of the Bank''s obligations under Pension is recognized on the basis of actuary''s report as at the year end and the fair value of the Plan assets is reduced from the gross obligation to recognize the obligation on a net basis.

10.3 The privilege leave is considered as a long-term benefit and is recognized based on independent actuarial valuation.

10.4 The cost of providing long-term benefits under defined benefit Plans is determined using the projected unit credit method with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains / losses are immediately recognised in the Profit and Loss Account and are not deferred.

[11] Provision for Taxation

(a) Income tax expense is the aggregate amount of current tax and deferred tax expense incurred by the Bank. The current tax expense and deferred tax expense are determined in accordance with the provisions of the Income Tax Act, 1961 and as per Accounting Standard 22 - "Accounting for Taxes on Income" respectively after taking into account taxes paid at the foreign offices, which are based on the tax laws of respective jurisdictions.

(b) Deferred Tax adjustments comprises of changes in the deferred tax assets or liabilities during the year. Deferred Tax assets and liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognized using the tax rates and laws that have been enacted or substantively enacted as of the balance sheet date. The impact of changes in deferred tax assets and liabilities is recognized in the profit and loss account.

(c) Deferred tax assets are recognised and re-assessed at each reporting date, based upon management''s judgement as to whether their realisation is considered as reasonably certain or Virtual certain as the case may be.

(d) Deferred Tax Assets are recognised on carry forward of unabsorbed depreciation and tax losses only if there is virtual certainty supported by convincing evidence that such deferred tax assets can be realised against future profits. Deferred tax assets on the items other than above are recognized on the basis of reasonable certainty.

[12] Net Profit

12.1 Provisions, Contingent Liabilities and

Contingent Assets

I. In conformity with AS 29, "Provisions, Contingent

Liabilities & Contingent Assets" issued by the Institute of Chartered Accountants of India, the bank recognizes provision only when:

(a) It has a present obligation as a result of past event.

(b) It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and

(c) A reliable estimate of the amount of the obligation can be made.

No provision is recognized

(a) For any possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurence of one or more uncertain future events not wholly within the control of the bank.

(b) Where it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or

(c) When a reliable estimate of the amount of obligation cannot be made.

Such obligations are recorded as Contingent Liabilities. These are assessed at regular intervals and only that part of the obligation for which the outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made.

II. Contingent Assets are not recognized in the financial Statements.

12.2 Net Profit

The Net Profit in the Profit & Loss Account is after:

(a) Provision for depreciation on Investments

(b) Provision for Taxation

(c) Provision on Non-performing Advances

(d) Provision on Standard Assets

(e) Provision for Non-performing Investments

(f) Provision for other usual & necessary Items

[13] Earning Per Share

The Bank reports basic and diluted Earnings Per Share in accordance with AS - 20 "Earnings Per Share", issued by ICAI. Basic Earnings Per Share is computed by dividing the net profit after tax attributable to equity shareholders by the weighted average number of equity shares outstanding for the Year.

[14] Cash Flow Statement

Cash flow Statement is reported by using indirect method.

[15] Segment Reporting

The Bank recognises the business segment as the primary reporting segment and geographical segment as the secondary reporting segment in accordance with the RBI guidelines & in compliance with AS-17 issued by ICAI.

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Mar 31, 2021

SIGNIFICANT ACCOUNTING POLICIESSIGNIFICANT ACCOUNTING POLICIES ON THE STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31^st MARCH, 2021

[1] (a) Basis of Preparation:

The financial statements have been prepared under the historical cost convention, on the accrual basis of accounting on going concern basis, unless otherwise stated. They conform to Generally Accepted Accounting Principles (GAAP) in India, which comprises statutory provisions, regulatory norms / guidelines prescribed by Reserve Bank of India (RBI), Banking Regulation Act - 1949, Accounting Standards / guidance notes issued by the Institute of Chartered Accountants of India (ICAI) and the practices prevalent in the banking industry in India. In respect of foreign offices, statutory provisions and practices prevailing in respective foreign countries are complied with.

(b) Use of Estimates:

The preparation of financial statements requires the management to make estimates and assumptions that affect the reported amount of assets, liabilities, expenses, income and disclosure of contingent liabilities as at the date of the financial statements. Management believes that these estimates and assumptions are reasonable and prudent. However, actual results could differ from estimates. Any revision to accounting estimates is recognized prospectively in the current and future periods unless otherwise stated.

[2] Foreign Currency Translation / Conversion of Foreign Currencies

2.1 Foreign currency monetary items are initially recorded at a notional rate. Foreign currency monetary items are restated at the rate published by Foreign Exchange Dealers'' Association of India (FEDAI) at the end of each quarter. Exchange difference arising on restatement of such items at the quarterly rates is recognised in Profit and Loss Account.

2.2 Transactions and balances of foreign branches are classified as non-integral foreign operations. Such transactions and balances are consolidated by the bank on a quarterly basis.

Assets and Liabilities (both monetary and nonmonetary as well as contingent liabilities) are translated at the closing spot rate of exchange announced by Foreign Exchange Dealers'' Association of India (FEDAI) as at the end of each quarter. Income and Expenditure items of the foreign branches are translated at the quarterly average rate published by FEDAI in accordance with Accounting Standard (AS) 11- "The effect of Changes in Foreign Exchange rates" issued by the Institute of Chartered Accountants of India (ICAI) and as per the guidelines of Reserve Bank of India (RBI) regarding the compliance of the said standard.

The resultant exchange gain / loss is credited / debited to Foreign Currency Translation Reserve.

2.3 Forward Exchange Contracts

Premium or discount arising at the inception of all forward exchange contracts are amortized as expense or income over the life of the contract. Profit / Losses arising on cancellation of forward exchange contracts, together with unamortized premium or discount, if any, is recognized on the date of termination. Exchange differences on such contracts are recognized in the Profit & Loss account in the reporting period in which the exchange rates change

2.4 Contingent liability in respect of outstanding forward exchange contracts, guarantees, acceptances, endorsements and other obligations are stated in the balance sheet at the closing rates published by FEDAI.

[3] Investments

3.1 Classification of investments is made as per

the guidelines of the RBI. The entire investment portfolio of the bank is classified under three categories viz. ''Held to Maturity'' (HTM), ''Available for Sale'' (AFS) and ''Held for Trading'' (hFT). Such classification is decided at the time of acquisition of securities.

Investments are disclosed in the Balance Sheet under six classifications viz: (a) Government securities (b) Other approved securities (c) Shares (d) Debentures & Bonds (e) Subsidiaries and Joint Ventures & Associates and (f) Others.

3.2. In determining the acquisition cost of

investment:-

(a) Cost such as brokerage, commission etc., relating to securities at the time of purchase are charged to Profit & Loss Account.

(b) Broken period interest on debt instruments up to the date of acquisition / disposal is treated as revenue.

3.3 The valuation of Investments is done in

accordance with the guidelines issued by the RBI as under:

a) HELD TO MATURITY

Investments under Held to Maturity category are carried at acquisition cost, net of amortisation, if any. The excess of acquisition cost, if any, over the face value is amortized over the remaining period of maturity.

Investments in Subsidiaries and Joint Ventures & Associates are valued at carrying cost. Any diminution in the value other than temporary in nature is fully provided for.

Investment in sponsored Regional Rural Banks (RRB) and other Trustee Shares are valued at carrying cost.

Investment in units of Venture Capital Funds (VCFs) made after 23.08.2006 are classified under HTM category for initial period of three years and valued at cost. After period of three years from date of disbursement, it will be shifted to AFS and mark to market as per RBI guidelines

b) AVAILABLE FOR SALE

Investments classified under this category are mark to market on quarterly basis and valued as per Reserve Bank of India guidelines at the market rates available on the last day of each quarter (Balance Sheet date) from trades / quotes on the stock exchanges, prices / yields declared by the Fixed Income Money Market and Derivatives Association of India (FIMMDA). Unquoted securities are also valued as per the Reserve Bank of India guidelines.

The net depreciation under each category / classification is fully provided for whereas the net appreciation, if any, is ignored. The book value of the individual securities does not undergo any change after these are valued at mark to market basis.

Units of Venture Capital Funds (VCF) transferred from HTM category after a period of three years (Refer paragraph 3.3(a) are valued at NAV as per the audited financial statements of Venture Capital Funds. In case such audited financial statements are not available continuously for 18 months as on the date of valuation, units are valued at ''1 per VCF.

c) HELD FOR TRADING

Investments classified under this category are valued at rates based on market quotations, price / yields declared by FIMMDA on a weekly basis.

The net depreciation under each security held is fully provided for whereas the net appreciation, if any, is ignored. The book value of the individual securities does not undergo any change after marked to market.

3.4. Transfer of scrips from one category to another is carried on the following basis:

(a) HTM to AFS / HFT category at acquisition price / book value. In case the investments under HTM category are placed at premium originally the transfer is made at amortised cost.

(b) AFS / HFT to HTM category at lower of the book value or market value.

(c) AFS to HFT category or vice versa, at the carrying value. The accumulated depreciation, if any, to be transferred to the provision for depreciation against HFT securities and vice versa.

3.5 Non-performing Investments Security Receipts issued by Securitisation / Reconstruction Company (SC / RC) in respect of financial assets sold by the Bank to the SC / RC are valued at the lower of the redemption value of the Security Receipt and the Net Book Value of the financial asset. The Investment is carried in the books at the price determined as above until its sale or realisation and on such sale or realisation, loss or gain is dealt with as below:

(a) If sale is at a price below Net Book Value (NBV), the shortfall is recognised as per Reserve Bank of India guidelines.

(b) If the sale is for a value higher than NBV, the excess provision is not reversed but utilized to meet shortfall / loss on account of sale of other financial assets to SC / RC.

3.6 Securities included in any of three categories where interest / principal is in arrears for a specified period, are classified as Non-performing Investment. Interest Income on such securities is not reckoned and appropriate depreciation/ provision in value of Investments is made. Depreciation in respect of such Non-Performing Investments is not set off against appreciation in other performing securities.

3.7 Profit on sale of Investments

Profit on sale of Investments in respect of "Available for Sale" and "Held for Trading" categories is recognized in Profit & Loss Account. Profit on sale of Investments in respect of "Held to Maturity" category is first taken to the Profit & Loss Account and an equivalent amount of Profit is appropriated to the Capital Reserve (net of taxes and amount required to be transferred to Statutory Reserve).

Loss on sale of Investments in all the three categories is recognized in Profit & Loss Account.

3.8 Accounting for Repo / Reverse Repo and Liquidity Adjustment Facility (LAF)

Securities sold / purchased with an agreement to repurchase / resale on the agreed terms under Repo / Reverse Repo including LAF with RBI are recognized as Borrowing/Lending.

Securities sold under Repo are continued to be shown under investments and Securities purchased under Reverse Repo are not included in investments. Costs and revenues are accounted for as interest expenditure / income, as the case may be.

[4] Derivative contracts

The Bank deals in Interest Rate Swaps and Currency Derivatives. The Interest Rate Derivatives dealt by the Bank are Rupee Interest Rate Swaps, Cross Currency Interest Rate Swaps and Forward Rate Agreements. Currency Derivatives dealt by the Bank are Options and Currency Swaps.

Such derivative contracts are valued as under:

(a) Derivative contracts dealt for trading are valued on mark to market basis, net depreciation is recognized while net appreciation is ignored.

(b) Derivative contracts undertaken for hedging are:

i. Derivative contracts designated as hedges are not marked to market unless their underlying asset is marked to market.

ii. Income / Expenditure is recognized on accrual basis for Hedging swaps.

[5] ADVANCES

5.1 Advances are classified as performing and

non-performing assets in accordance with the prudential norms issued by RBI.

5.2 Advances are classified into Standard, Sub

Standard, Doubtful and Loss assets borrower wise.

5.3 Provisions for domestic advances are made

for performing / non-performing advances in accordance with the RBI Guidelines.

5.4 Provisions for performing / non-performing

advances with foreign branches are made as per regulations of host country or according to the norms prescribed by RBI, whichever is more stringent.

5.5 Advances stated in the Balance Sheet are

net of provisions made for Non-performing Assets, claims received from Credit Guarantee Institutions and rediscount.

5.6 Partial recoveries in Non-performing Advances are apportioned first towards charges and interest, thereafter towards principal with the exception of Non-performing advances involving compromise settlements / "Loan Past Due" advances where the recoveries are first adjusted towards principal.

5.7 In case of financial assets sold to SC / RC, the valuation, income recognition etc are done as per RBI guidelines.

5.8 In addition to the specific provision on NPAs, general provisions are also made for standard assets as per extant RBI Guidelines.

[6] Fixed Assets

6.1 The premises of the Bank include freehold and leasehold properties. All the Fixed Assets are capitalized based on the date of put to use.

6.2 Land and Premises are stated at revalued cost and other fixed assets are stated at historical cost. The appreciation on revaluation, if any, is credited to the ''Revaluation Reserve'' Account. Depreciation / Amortization attributable to the enhanced value have been debited to the Profit & Loss account. Equivalent amount has been transferred from Revaluation Reserve to Revenue Reserve.

[7] Depreciation

7.1 Depreciation method is on Straight Line Method, for all Assets based on life span of the assets.

7.2 The life span of the assets is defined as per Part C Schedule II of the Companies Act, 2013.

7.3 Estimated life span of the assets adopted by the bank for different class of assets is as under:

SL No.	Type of asset	Estimated life span
i	Free hold Buildings	60 Years
ii	Lease hold land & Buildings (Up to 25 years lease)	Lower of lease period or 60 Years.
iii	Furniture & Fixtures	10 Years
iv	Electric & Electronic Equipment	5 - 10 Years
v	Computers and Servers	3 Years
vi	Motor Vehicles	5 years

The change in rates (based on life span) of depreciation is applied effective from 01-04-2020.

7.4 Software / Intangible Assets are amortized over 5 years.

7.5 If the item is put to use for 180 days and above in the year of acquisition, 100% depreciation will be charged for the concerned financial year. If the asset is put to use for less than 180 days in the year of acquisition, 50% depreciation is be charged for the concerned financial year.

7.6 5% of the Original cost price will be residual value in case of the assets having useful life 8 years and above. ''5/- of the Original cost price is residual value for other assets.

7.7 Premium paid on leasehold properties is charged off over the lease period or life span of relevant asset whichever is earlier. Cost of leasehold land and leasehold improvements are amortised over the period of lease or life span of relevant assets which ever is lower.

7.8 In respect of fixed assets held at foreign offices, depreciation is provided as per the regulations / norms of the respective countries

7.9 Lease payments including cost escalation for assets taken on operating lease are recognised in the Profit and Loss Account over the lease term in accordance with the AS 19 (Leases) issued by ICAI.

[8] Impairment of Assets

An assessment is made at each balance sheet

date whether there is any indication that an asset is impaired. If any such indication exists, an estimate of the recoverable amount is made and impairment loss, if any, is provided for and charged off to Profit and Loss Account.

[9] Revenue Recognition

9.1 Income and expenditure are generally accounted

on accrual basis, except the following:

a) Interest on Non-performing advances and Non-performing investments is recognized on receipt basis as per norms laid down by Reserve Bank of India.

b) Interest on overdue bills, Exchange, Brokerage and rent on lockers is accounted on realization.

c) Dividend Income is recognized when the right to receive the same is established.

d) In case of suit filed accounts, related legal and other expenses incurred are charged to Profit & Loss Account and on recovery the same are accounted as Income.

[10] Employee Benefits

10.1 Defined Contribution Plans

Defined Contribution to Plans such as Provident / Pension fund are recognized as an expense and charged to Profit & Loss account.

The Bank operates a New Pension Scheme (NPS) for all officers / employees joining the Bank on or after 01-08-2010, which is a defined contribution plan, such new joinees not being entitled to become members of the existing Pension Scheme. As per the scheme, the covered employees contribute 10% of their basic pay plus dearness allowance to the scheme together with a matching contribution from the Bank. The Bank recognizes such annual contributions as an expense in the year to which they relate.

10.2 Defined Benefit Plans

a) Gratuity: The employee Gratuity Fund

Scheme is funded by the Bank and managed by a separate trust who in turn manages their funds as per guidelines. The present value of the Banks obligation under Gratuity is recognized on actuarial basis as at the year end and the fair value of the Plan assets is reduced from the gross obligation to recognize the obligation on a net basis.

b) Pension: The employee Pension Fund

Scheme is funded by the Bank and managed by a separate trust. The present value of the Banks obligations under Pension is recognized on the basis of actuary''s report as at the year end and the fair value of the Plan assets is reduced from the gross obligation to recognize the obligation on a net basis.

10.3 The privilege leave is considered as a long-term benefit and is recognized based on independent actuarial valuation

10.4 The cost of providing long-term benefits under defined benefit Plans is determined using the projected unit credit method with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains / losses are immediately recognised in the Profit and Loss Account and are not deferred.

[11] Provision for Taxation

a) Income tax expense is the aggregate amount of current tax and deferred tax expense incurred by the Bank. The current tax expense and deferred tax expense are determined in accordance with the provisions of the Income Tax Act, 1961 and as per Accounting Standard 22 - "Accounting for Taxes on Income" respectively after

taking into account taxes paid at the foreign offices, which are based on the tax laws of respective jurisdictions.

b) Deferred Tax adjustments comprises of changes in the deferred tax assets or liabilities during the year. Deferred Tax assets and liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognized using the tax rates and laws that have been enacted or substantively enacted as of the balance sheet date. The impact of changes in deferred tax assets and liabilities is recognised in the profit and loss account.

c) Deferred tax assets are recognised and re-assessed at each reporting date, based upon management''s judgment as to whether their realisationis considered as reasonably certain or Virtual certain as the case may be.

d) Deferred Tax Assets are recognised on carry forward of unabsorbed depreciation and tax losses only if there is virtual certainty supported by convincing evidence that such deferred tax assets can be realised against future profits. Deferred tax assets on the items other than above are recognized on the basis of reasonable certainty.

[12] Net Profit

12.1 Provisions, Contingent Liabilities and

Contingent Assets

I. In conformity with AS 29, "Provisions, Contingent

Liabilities & Contingent Assets" issued by the

Institute of Chartered Accountants Of India, the

bank recognizes provision only when :

a) It has a present obligation as a result of past event.

b) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and

c) A reliable estimate of the amount of the obligation can be made.

No provision is recognized:

a) For any possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or

non-occurrence of one or more uncertain future events not wholly within the control of the bank.

b) Where it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or

c) When a reliable estimate of the amount of obligation cannot be made.

Such obligations are recorded as Contingent Liabilities. These are assessed at regular intervals and only that part of the obligation for which the outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made.

II. Contingent Assets are not recognized in the financial Statements.

12.2 Net Profit

The Net Profit in the Profit & Loss Account is after:

(a) Provision for depreciation on Investments

(b) Provision for Taxation

(c) Provision on Non-performing Advances

(d) Provision on Standard Assets

(e) Provision for Non-performing Investments.

(f) Provision for other usual & necessary Items

[13] Earning Per Share

The Bank reports basic and diluted Earnings Per Share in accordance with AS - 20 "Earnings Per Share", issued by ICAI. Basic Earnings Per Share is computed by dividing the net profit after tax attributable to equity shareholders by the weighted average number of equity shares outstanding for the Year.

[14] Cash Flow Statement

Cash flow Statement is reported by using indirect method.

[15] Segment Reporting

The Bank recognises the business segment as the primary reporting segment and geographical segment as the secondary reporting segment in accordance with the RBI guidelines & in compliance with AS-17 issued by ICAI.

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Mar 31, 2019

[1] (a) Basis of Preparation:

The financial statements have been prepared under the historical cost convention, on the accrual basis of accounting on going concern basis, unless otherwise stated. They conform to Generally Accepted Accounting Principles (GAAP) in India, which comprises statutory provisions, regulatory norms / guidelines prescribed by Reserve Bank of India (RBI), Banking Regulation Act - 1949, Accounting Standards / guidance notes issued by the Institute of Chartered Accountants of India (ICAI) and the practices prevalent in the banking industry in India. In respect of foreign offices, statutory provisions and practices prevailing in respective foreign countries are complied with.

(b) Use of Estimates:

The preparation of financial statements requires the management to make estimates and assumptions that affect the reported amount of assets, liabilities, expenses, income and disclosure of contingent liabilities as at the date of the financial statements. Management believes that these estimates and assumptions are reasonable and prudent. However, actual results could differ from estimates. Any revision to accounting estimates is recognized in current and future periods.

[2] Foreign Currency Translation / Conversion of Foreign Currencies:

2.1 Foreign currency monetary items are initially recorded at a notional rate. Foreign currency monetary items are restated at the rate published by Foreign Exchange Dealers’ Association of India (FEDAI) at the end of each quarter. Exchange difference arising on restatement of such items at the quarterly rates is recognised in Profit and Loss Account.

2.2 Transactions and balances of foreign branches are classified as non-integral foreign operations. Such transactions and balances are consolidated by the bank on a quarterly basis.

Assets and Liabilities (both monetary and nonmonetary as well as contingent liabilities) are translated at the closing spot rate of exchange announced by Foreign Exchange Dealers’ Association of India (FEDAI) as at the end of each quarter. Income and Expenditure items of the foreign branches are translated at the quarterly average rate published by FEDAI in accordance with Accounting Standard (AS) 11- “The effect of Changes in Foreign Exchange rates” issued by the Institute of Chartered Accountants of India (ICAI) and as per the guidelines of Reserve Bank of India (RBI) regarding the compliance of the said standard.

The resultant exchange gain/loss is credited / debited to Foreign Currency Translation Reserve.

2.3 Forward Exchange Contracts:

Premium or discount arising at the inception of all forward exchange contracts are amortized as expense or income over the life of the contract. Profit/ Losses arising on cancellation of forward exchange contracts, together with unamortized premium or discount, if any, is recognized on the date of termination. Exchange differences on such contracts are recognized in the Profit & Loss account in the reporting period in which the exchange rates change.

2.4 Contingent liability in respect of outstanding forward exchange contracts, guarantees, acceptances, endorsements and other obligations are stated in the balance sheet at the closing rates published by FEDAI.

[3] Investments:

3.1 Classification of investments is made as per the guidelines of the RBI. The entire investment portfolio of the bank is classified under three categories viz. ‘Held to Maturity’ (HTM), ‘Available for Sale’ (AFS) and ‘Held for Trading’ (HFT). Such classification is decided at the time of acquisition of securities.

Investments are disclosed in the Balance Sheet under six classifications viz: (a) Government securities (b) Other approved securities (c) Shares (d) Debentures & Bonds (e) Subsidiaries and Joint Ventures & Associates and (f) Others.

3.2 In determining the acquisition cost of investment:

(a) Cost such as brokerage, commission etc., relating to securities at the time of purchase are charged to Profit & Loss Account.

(b) Broken period interest on debt instruments up to the date of acquisition / disposal is treated as revenue.

3.3 The valuation of Investments is done in accordance with the guidelines issued by the RBI as under:

a) HELD TO MATURITY:

Investments under Held to Maturity category are carried at acquisition cost, net of amortisation, if any. The excess of acquisition cost, if any, over the face value is amortized over the remaining period of maturity.

Investments in Subsidiaries and Joint Ventures & Associates are valued at carrying cost. Any diminution in the value other than temporary in nature is fully provided for.

Investment in sponsored Regional Rural Banks (RRB) and other Trustee Shares are valued at carrying cost.

Investment in units of Venture Capital Funds (VCFs) made after 23.08.2006 are classified under HTM category for initial period of three years and valued at cost. After period of three years from date of disbursement, it will be shifted to AFS and marked-to-market as per RBI guidelines

b) AVAILABLE FOR SALE:

Investments classified under this category are mark to market on quarterly basis and valued as per Reserve Bank of India guidelines at the market rates available on the last day of each quarter (Balance Sheet date) from trades / quotes on the stock exchanges, prices / yields declared by the Fixed Income Money Market and Derivatives Association of India (FIMMDA). Unquoted securities are also valued as per the Reserve Bank of India guidelines.

The net depreciation under each category / classification is fully provided for whereas the net appreciation, if any, is ignored. The book value of the individual securities does not undergo any change after these are valued at mark to market basis.

Units of Venture Capital Funds (VCF) transferred from HTM category after a period of three years (Refer paragraph 3.3(a) are valued at NAV as per the audited financial statements of Venture Capital Funds. In case such audited financial statements are not available continuously for 18 months as on the date of valuation, units are valued at Rs.1 per VCF.

c) HELD FOR TRADING:

Investments classified under this category are valued at rates based on market quotations, price / yields declared by FIMMDA on a weekly basis.

The net depreciation under each security held is fully provided for whereas the net appreciation, if any, is ignored. The book value of the individual securities does not undergo any change after marked to market.

3.4. Transfer of scrips from one category to another is carried on the following basis:

(a) HTM to AFS/HFT category at acquisition price/book value. In case the investments under HTM category are placed at premium originally the transfer is made at amortised cost.

(b) AFS/HFT to HTM category at lower of the book value or market value.

(c) AFS to HFT category or vice versa, at the carrying value. The accumulated depreciation, if any, to be transferred to the provision for depreciation against HFT securities and vice versa.

3.5 Non performing Investments Security Receipts issued by Securitisation / Reconstruction Company (SC/RC) in respect of financial assets sold by the Bank to the SC/RC are valued at the lower of the redemption value of the Security Receipt and the Net Book Value of the financial asset. The Investment is carried in the books at the price determined as above until its sale or realisation and on such sale or realisation, loss or gain is dealt with as below:

(a) If sale is at a price below Net Book Value (NBV), the shortfall is recognised as per Reserve Bank of India guidelines.

(b) If the sale is for a value higher than NBV, the excess provision is not reversed but utilized to meet shortfall/loss on account of sale of other financial assets to SC/RC.

3.6 Securities included in any of three categories where interest / principal is in arrears for a specified period, are classified as Non performing Investment. Interest Income on such securities is not reckoned and appropriate depreciation/ provision in value of Investments is made. Deprecation in respect of such Non Performing Investments is not set off against appreciation in other performing securities.

3.7 Profit on sale of Investments:

Profit on sale of Investments in respect of “Available for Sale” and “Held for Trading” categories is recognized in Profit & Loss Account.

Profit on sale of Investments in respect of “Held to Maturity” category is first taken to the Profit & Loss Account and an equivalent amount of Profit is appropriated to the Capital Reserve (net of taxes and amount required to be transferred to Statutory Reserve).

Loss on sale of Investments in all the three categories is recognized in Profit & Loss Account.

3.8 Accounting for Repo / Reverse Repo and Liquidity Adjustment Facility (LAF):

Securities sold / purchased with an agreement to repurchase / resale on the agreed terms under Repo/Reverse Repo including LAF with RBI are recognized as Borrowing / Lending.

Securities sold under Repo are continued to be shown under investments and Securities purchased under Reverse Repo are not included in investments. Costs and revenues are accounted for as interest expenditure / income, as the case may be.

[4] Derivative contracts:

The Bank deals in Interest Rate Swaps and Currency Derivatives.The Interest Rate Derivatives dealt by the Bank are Rupee Interest Rate Swaps, Cross Currency Interest Rate Swaps and Forward Rate Agreements. Currency Derivatives dealt by the Bank are Options and Currency Swaps.

Such derivative contracts are valued as under:

a) Derivative contracts dealt for trading are valued on mark to market basis, net depreciation is recognized while net appreciation is ignored.

b) Derivative contracts undertaken for hedging are:

i. Derivative contracts designated as hedges are not marked to market unless their underlying asset is marked to market.

ii. Income / Expenditure is recognized on accrual basis for Hedging swaps.

[5] Advances:

5.1 Advances are classified as performing and non-performing assets in accordance with the prudential norms issued by RBI.

5.2 Advances are classified into Standard, Sub Standard, Doubtful and Loss assets borrower wise

5.3 Provisions for domestic advances are made for performing / non - performing advances in accordance with the RBI Guidelines.

5.4 Provisions for performing / non-performing advances with foreign branches are made as per regulations of host country or according to the norms prescribed by RBI, whichever is more stringent.

5.5 Advances stated in the Balance Sheet are net of provisions made for Non Performing Assets, claims received from Credit Guarantee Institutions and rediscount.

5.6 Partial recoveries in Non Performing Advances are apportioned first towards charges and interest, thereafter towards principal with the exception of non performing advances involving compromise settlements / “Loan Past Due” advances where the recoveries are first adjusted towards principal.

5.7 In case of financial assets sold to SC / RC, the valuation, income recognition etc are done as per RBI guidelines.

5.8 In addition to the specific provision on NPAs, general provisions are also made for standard assets as per extant RBI Guidelines.

[6] Fixed Assets:

6.1 The premises of the Bank include freehold and leasehold properties. All the Fixed Assets are capitalized based on the date of put to use.

6.2 Land and Premises are stated at revalued cost and other fixed assets are stated at historical cost. The appreciation on revaluation, if any, is credited to the ‘Revaluation Reserve’ Account. Depreciation / Amortization attributable to the enhanced value have been debited to the Profit & Loss account. Equivalent amount has been transferred from Revaluation Reserve to Revenue Reserve.

[7] Depreciation;

7.1 Fixed Assets are depreciated under Straight line Method at the rates as follows:

The useful life of the respective assets is determined by the management except for the Computers where as per the guidelines of RBI, depreciation is charged under straight line method at 33.33%.

7.2 5 percent residual value has been kept for all the assets except for the assets with estimated useful life of 3 years or 5 years (Eg. computer, Servers and ATMs etc), where the entire cost of the asset is amortized over the useful life.

7.3 Depreciation on fixed assets in the year of capitalization is charged for the full year if the asset is used for more than 180 days during that financial year; else it is provided at 50 percent of the applicable rate. No depreciation is provided for in the year of sale / disposal.

7.4 Premium paid on leasehold properties is charged off over the lease period. Cost of leasehold land and leasehold improvements are amortised over the period of lease

7.5 In respect of fixed assets held at foreign offices, depreciation is provided as per the regulations / norms of the respective countries

7.6 Lease payments including cost escalation for assets taken on operating lease are recognised in the Profit and Loss Account over the lease term in accordance with the AS 19 (Leases) issued by ICAI.

[8] Impairment of Assets:

An assessment is made at each balance sheet date whether there is any indication that an asset is impaired. If any such indication exists, an estimate of the recoverable amount is made and impairment loss, if any, is provided for and charged off to Profit and Loss Account.

[9] Revenue Recognition:

Income and expenditure are generally accounted on accrual basis, except the following:

a) Interest on Non-Performing advances and non performing investments is recognized on receipt basis as per norms laid down by Reserve Bank of India.

b) Interest on overdue bills, Commission (other than Government business), Exchange, Brokerage and rent on lockers are accounted on realization.

c) Dividend Income is recognized when the right to receive the same is established.

d) In case of suit filed accounts, related legal and other expenses incurred are charged to Profit & Loss Account and on recovery the same are accounted as Income.

[10] Employee Benefits:

10.1 Defined Contribution Plans:

Defined Contribution to Plans such as Provident/ Pension fund are recognized as an expense and charged to Profit & Loss account.

The Bank operates a New Pension Scheme (NPS) for all officers / employees joining the Bank on or after 01-08-2010, which is a defined contribution plan, such new joinees not being entitled to become members of the existing Pension Scheme. As per the scheme, the covered employees contribute 10% of their basic pay plus dearness allowance to the scheme together with a matching contribution from the Bank. The Bank recognizes such annual contributions as an expense in the year to which they relate.

10.2 Defined Benefit Plans:

a) Gratuity: The employee Gratuity Fund Scheme is funded by the Bank and managed by a separate trust who in turn manages their funds as per guidelines. The present value of the Banks obligation under Gratuity is recognized on actuarial basis as at the year end and the fair value of the Plan assets is reduced from the gross obligation to recognize the obligation on a net basis.

b) Pension: The employee Pension Fund Scheme is funded by the Bank and managed by a separate trust. The present value of the Banks obligations under Pension is recognized on the basis of actuary’s report as at the year end and the fair value of the Plan assets is reduced from the gross obligation to recognize the obligation on a net basis.

10.3 The privilege leave is considered as a long term benefit and is recognized based on independent actuarial valuation

10.4 The cost of providing long term benefits under defined benefit Plans is determined using the projected unit credit method with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains / losses are immediately recognised in the Profit and Loss Account and are not deferred.

[11] Provision for Taxation:

a) Income tax expense is the aggregate amount of current tax and deferred tax expense incurred by the Bank. The current tax expense and deferred tax expense are determined in accordance with the provisions of the Income Tax Act, 1961 and as per Accounting Standard 22 - “Accounting for Taxes on Income” respectively after taking into account taxes paid at the foreign offices, which are based on the tax laws of respective jurisdictions.

b) Deferred Tax adjustments comprises of changes in the deferred tax assets or liabilities during the year. Deferred Tax assets and liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognized using the tax rates and laws that have been enacted or substantively enacted as of the balance sheet date. The impact of changes in deferred tax assets and liabilities is recognised in the profit and loss account.

c) Deferred tax assets are recognised and reassessed at each reporting date, based upon management’s judgment as to whether their realisation is considered as reasonably certain or Virtual certain as the case may be.

d) Deferred Tax Assets are recognised on carry forward of unabsorbed depreciation and tax losses only if there is virtual certainty supported by convincing evidence that such deferred tax assets can be realised against future profits. Deferred tax assets on the items other than above are recognized on the basis of reasonable certainty.

[12] Net Profit:

12.1 Provisions, Contingent Liabilities and Contingent Assets:

I. In conformity with AS 29, “Provisions, Contingent Liabilities & Contingent Assets” issued by the Institute of Chartered Accountants Of India, the bank recognizes provision only when :

a) It has a present obligation as a result of past event.

b) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and

c) A reliable estimate of the amount of the obligation can be made.

II. No provision is recognized:

a) For any possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the bank.

b) Where it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or

c) When a reliable estimate of the amount of obligation cannot be made.

Such obligations are recorded as Contingent Liabilities. These are assessed at regular intervals and only that part of the obligation for which the outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made.

III. Contingent Assets are not recognized in the financial Statements.

12.2 Net Profit:

The Net Profit in the Profit & Loss Account is after:

a) Provision for depreciation on Investments.

b) Provision for Taxation.

c) Provision on Non Performing Advances

d) Provision on Standard Assets.

e) Provision for Non Performing Investments.

f) Provision for other usual & necessary Items.

[13] Earning per share:

The Bank reports basic and diluted Earnings per Share in accordance with AS - 20 “Earnings Per Share”, issued by ICAI. Basic Earnings Per Share is computed by dividing the net profit after tax attributable to equity shareholders by the weighted average number of equity shares outstanding for the Year.

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Mar 31, 2018

[1] (a) Basis of Preparation

The accounts are prepared under the historical cost convention and conform to the statutory provisions and prevailing practices, except as otherwise stated.

(b) Use of Estimates:

The preparation of financial statements requires the management to make estimates and assumptions that affect the reported amount of assets, liabilities, expenses, income and disclosure of contingent liabilities as at the date of the financial statements. Management believes that these estimates and assumptions are reasonable and prudent. However, actual results could differ from estimates. Any revision to accounting estimates is recognized in current and future periods.

[2] Foreign Currency Translation / Conversion of Foreign Currencies

2.1 Foreign currency monetary items are initially recorded at a notional rate. Foreign currency monetary items are restated at the rate published by Foreign Exchange Dealers’ Association of India (FEDAI) at the end of each quarter. Exchange difference arising on restatement of such items at the quarterly rates is recognised in Profit and Loss Account.

2.2 Transactions and balances of foreign branches are classified as non-integral foreign operations. Such transactions and balances are consolidated by the bank on a quarterly basis.

Assets and Liabilities (both monetary and nonmonetary as well as contingent liabilities) are translated at the closing spot rate of exchange announced by Foreign Exchange Dealers’ Association of India (FEDAI) as at the end of each quarter. Income and Expenditure items of the foreign branches are translated at the quarterly average rate published by FEDAI in accordance with Accounting Standard (AS) 11-“The effect of Changes in Foreign Exchange rates” issued by the Institute of Chartered Accountants of India (ICAI) and as per the guidelines of Reserve Bank of India (RBI) regarding the compliance of the said standard.

The resultant exchange gain / loss is credited / debited to Foreign Currency Translation Reserve.

2.3 Forward Exchange Contracts

Premium or discount arising at the inception of all forward exchange contracts are amortized as expense or income over the life of the contract. Profit / Losses arising on cancellation of forward exchange contracts, together with unamortized premium or discount, if any, is recognized on the date of termination. Exchange differences on such contracts are recognized in the Profit & Loss account in the reporting period in which the exchange rates change.

2.4 Contingent liability in respect of outstanding forward exchange contracts, guarantees, acceptances, endorsements and other obligations are stated in the balance sheet at the closing rates published by FEDAI.

[3] Investments

3.1 Classification of investments is made as per the guidelines of the RBI. The entire investment portfolio of the bank is classified under three categories viz. ‘Held to Maturity’ (HTM), ‘Available for Sale’ (AFS) and ‘Held for Trading’ (HFT). Such classification is decided at the time of acquisition of securities.

Investments are disclosed in the Balance Sheet under six classifications viz: (a) Government securities (b) Other approved securities (c) Shares (d) Debentures & Bonds (e) Subsidiaries and Joint Ventures & Associates and (f) Others.

3.2 In determining the acquisition cost of investment:

(a) Cost such as brokerage, commission etc., relating to securities at the time of purchase are charged to Profit & Loss Account.

(b) Broken period interest on debt instruments up to the date of acquisition / disposal is treated as revenue.

3.3 The valuation of Investments is done in accordance with the guidelines issued by the RBI as under:

a) HELD TO MATURITY

Investments under Held to Maturity category are carried at acquisition cost, net of amortisation, if any. The excess of acquisition cost, if any, over the face value is amortized over the remaining period of maturity.

Investments in Subsidiaries and Joint Ventures & Associates are valued at carrying cost. Any diminution in the value other than temporary in nature is fully provided for.

Investment in sponsored Regional Rural Banks (RRB) and other Trustee Shares are valued at carrying cost.

Investment in units of Venture Capital Funds (VCFs) made after 23.08.2006 are classified under HTM category for initial period of three years and valued at cost.

b) AVAILABLE FOR SALE

Investments classified under this category are mark to market on quarterly basis and valued as per Reserve Bank of India guidelines at the market rates available on the last day of each quarter (Balance Sheet date) from trades/quotes on the stock exchanges, prices/yields declared by the Fixed Income Money Market and Derivatives Association of India (FIMMDA). Unquoted securities are also valued as per the Reserve Bank of India guidelines.

The net depreciation under each category/ classification is fully provided for whereas the net appreciation, if any, is ignored. The book value of the individual securities does not undergo any change after these are valued at mark to market basis.

Units of Venture Capital Funds (VCF) transferred from HTM category after a period of three years (Refer paragraph 3.3(a) are valued at NAV as per the audited financial statements of Venture Capital Funds. In case such audited financial statements are not available continuously for 18 months as on the date of valuation, units are valued at Rs.1 per VCF.

c) HELD FOR TRADING

Investments classified under this category are valued at rates based on market quotations, price/ yields declared by FIMMDA on a weekly basis.

The net depreciation under each security held is fully provided for whereas the net appreciation, if any, is ignored. The book value of the individual securities does not undergo any change after marked to market.

3.4. Transfer of scrips from one category to another is carried on the following basis:

(a) HTM to AFS / HFT category at acquisition price / book value. In case the investments under HTM category are placed at premium originally the transfer is made at amortised cost.

(b) AFS / HFT to HTM category at lower of the book value or market value.

(c) AFS to HFT category or vice versa, at the carrying value. The accumulated depreciation, if any, to be transferred to the provision for depreciation against HFT securities and vice versa.

3.5 Non Performing Investments Security Receipts issued by Securitisation / Reconstruction Company (SC/RC) in respect of financial assets sold by the Bank to the SC/RC are valued at the lower of the redemption value of the Security Receipt and the Net Book Value of the financial asset. The Investment is carried in the books at the price determined as above until its sale or realisation and on such sale or realisation, loss or gain is dealt with as below:

(a) If sale is at a price below Net Book Value (NBV), the shortfall is recognised as per Reserve Bank of India guidelines.

(b) If the sale is for a value higher than NBV, the excess provision is not reversed but utilized to meet shortfall/loss on account of sale of other financial assets to SC/RC.

3.6 Securities included in any of three categories where interest/principal is in arrears for a specified period, are classified as Non Performing Investment. Interest Income on such securities is not reckoned and appropriate depreciation/ provision in value of Investments is made. Deprecation in respect of such Non Performing Investments is not set off against appreciation in other performing securities.

3.7 Profit on sale of Investments

Profit on sale of Investments in respect of “Available for Sale” and “Held for Trading” categories is recognized in Profit & Loss Account.

Profit on sale of Investments in respect of “Held to Maturity” category is first taken to the Profit & Loss Account and an equivalent amount of Profit is appropriated to the Capital Reserve (net of taxes and amount required to be transferred to Statutory Reserve).

Loss on sale of Investments in all the three categories is recognized in Profit & Loss Account.

3.8 Accounting for Repo / Reverse Repo and Liquidity Adjustment Facility (LAF)

Securities sold/purchased with an agreement to repurchase/resale on the agreed terms under Repo/Reverse Repo including LAF with RBI are recognized as Borrowing/Lending.

[4] Derivative contracts

The Bank deals in Interest Rate Swaps and Currency Derivatives.The Interest Rate Derivatives dealt by the Bank are Rupee Interest Rate Swaps, Cross Currency Interest Rate Swaps and Forward Rate Agreements. Currency Derivatives dealt by the Bank are Options and Currency Swaps.

Such derivative contracts are valued as under:

a) Derivative contracts dealt for trading are valued on mark to market basis, net depreciation is recognized while net appreciation is ignored.

b) Derivative contracts undertaken for hedging are:

i. Derivative contracts designated as hedges are not marked to market unless their underlying asset is marked to market.

ii. Income / Expenditure is recognized on accrual basis for Hedging Swaps.

[5] Advances

5.1 Advances are classified as performing and non-performing assets in accordance with the prudential norms issued by RBI.

5.2 Advances are classified into Standard, Sub Standard, Doubtful and Loss assets borrower wise.

5.3 Provisions for domestic advances are made for performing/non-performing advances in accordance with the RBI Guidelines.

5.4 Provisions for performing/ non-performing advances with foreign branches are made as per regulations of host country or according to the norms prescribed by RBI, whichever is more stringent.

5.5 Advances stated in the Balance Sheet are net of provisions made for Non Performing Assets, claims received from Credit Guarantee Institutions and rediscount.

5.6 Partial recoveries in Non Performing Advances are apportioned first towards charges and interest, thereafter towards principal with the exception of non performing advances involving compromise settlements / “Loan Past Due” advances where the recoveries are first adjusted towards principal.

5.7 In case of financial assets sold to SC / RC, the valuation, income recognition etc are done as per RBI guidelines.

[6] Fixed Assets

6.1 The premises of the Bank include freehold and leasehold properties. All the Fixed Assets are capitalized based on the date of put to use.

6.2 Land and Premises are stated at revalued cost and other fixed assets are stated at historical cost. The appreciation on revaluation, if any, is credited to the ‘Revaluation Reserve’ Account. Depreciation / Amortization attributable to the enhanced value have been debited to the Profit & Loss account. Equivalent amount has been transferred from Revaluation Reserve to Revenue Reserve.

[7] Depreciation

7.1 Fixed Assets are depreciated under Straight line Method at the rates determined by the management on the basis of estimated useful life of the respective assets except for the Computers where as per the guidelines of RBI, depreciation is charged under straight line method at 33.33%.

7.2 5 percent residual value has been kept for all the assets except for the assets with estimated useful life of 3 years or 5 years (Eg. computer, Servers and ATMs etc), where the entire cost of the asset is amortized over the useful life.

7.3 Depreciation on fixed assets in the year of capitalization is charged for the full year if the asset is used for more than 180 days during that financial year; else it is provided at 50 percent of the applicable rate. No depreciation is provided for in the year of sale/disposal.

7.4 Premium paid on leasehold properties is charged off over the lease period.

7.5 In respect of fixed assets held at foreign offices, depreciation is provided as per the regulations / norms of the respective countries.

[8] Impairment of Assets

An assessment is made at each balance sheet date whether there is any indication that an asset is impaired. If any such indication exists, an estimate of the recoverable amount is made and impairment loss, if any, is provided for.

[9] Revenue Recognition

9.1 Income and expenditure are generally accounted on accrual basis, except the following:

a) Interest on Non-Performing advances and non performing investments is recognized on receipt basis as per norms laid down by Reserve Bank of India.

b) Interest on overdue bills, Commission (other than Government business), Exchange, Brokerage and rent on lockers are accounted on realization.

c) Dividend Income is recognized when the right to receive the same is established.

d) In case of suit filed accounts, related legal and other expenses incurred are charged to Profit & Loss Account and on recovery the same are accounted as Income.

[10] Employee Benefits

10.1 Defined Contribution Plans

Defined Contribution to Plans such as Provident / Pension fund are recognized as an expense and charged to Profit & Loss account.

10.2 Defined Benefit Plans

a) Gratuity: The employee Gratuity Fund Scheme is funded by the Bank and managed by a separate trust who in turn manages their funds as per guidelines. The present value of the Banks obligation under Gratuity is recognized on actuarial basis as at the year end and the fair value of the Plan assets is reduced from the gross obligation to recognize the obligation on a net basis.

b) Pension: The employee Pension Fund Scheme is funded by the Bank and managed by a separate trust. The present value of the Banks obligations under Pension is recognized on the basis of actuary’s report as at the year end and the fair value of the Plan assets is reduced from the gross obligation to recognize the obligation on a net basis.

10.3 The privilege leave is considered as a long term benefit and is recognized based on independent actuarial valuation on ‘Projected Unit Credit method’ at each Balance Sheet date.

[11] Provision for Taxation

a) Provision for tax is made for both Current and & Deferred Taxes.

b) Deferred Tax assets and liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognized using the tax rates and laws that have been enacted or substantively enacted as of the balance sheet date.

c) Deferred tax assets are not recognized unless there is virtual certainty that sufficient future taxable income would be available against which such deferred tax assets can be recognized.

[12] Net Profit

12.1 Provisions, Contingent Liabilities and Contingent Assets

I. In conformity with AS 29, “Provisions, Contingent Liabilities & Contingent Assets” issued by the Institute of Chartered Accountants Of India, the bank recognizes provision only when :

a) It has a present obligation as a result of past event.

b) It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and

c) A reliable estimate of the amount of the obligation can be made.

II. No provision is recognized:

a. For any possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the bank.

b. Where it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or

c. When a reliable estimate of the amount of obligation cannot be made.

Such obligations are recorded as Contingent Liabilities. These are assessed at regular intervals and only that part of the obligation for which the outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made.

III. Contingent Assets are not recognized in the financial Statements.

12.2 Net Profit

The Net Profit in the Profit & Loss Account is after:

a) Provision for depreciation on Investments.

b) Provision for Taxation.

c) Provision on Non Performing Advances.

d) Provision on Standard Assets.

e) Provision for Non Performing Investments.

f) Provision for other usual & necessary Items.

[13] Earning Per Share:

The Bank reports basic and diluted Earnings Per Share in accordance with AS 20. Basic Earnings Per Share is computed by dividing the net profit after tax by the weighted average number of equity shares outstanding for the Year.

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Mar 31, 2017

SIGNIFICANT ACCOUNTING POLICIES ADOPTED IN PREPARING FINANCIAL STATEMENTS

[1] (a) Basis of Preparation

The accounts are prepared under the historical cost convention and conform to the statutory provisions and prevailing practices except as otherwise stated.

(b) Use of Estimates

The preparation of financial statements requires the management to make estimates and assumptions that affect the reported amount of assets, liabilities, expenses, income and disclosure of contingent liabilities as at the date at the financial statements. Management believes that these estimates and assumptions are reasonable and prudent. However, actual results could differ from estimates. Any revision to accounting estimates is recognized in current and future periods.

[2] Foreign Currency Translation / Conversion of Foreign Currencies

2.1 Foreign currency monetary items are initially recorded at a notional rate. Foreign currency monetary items are restated at the rate published by Foreign Exchange Dealers'' Association of India (FeDAI) at the end of each quarter. Exchange difference arising on restatement of such items at the quarterly rates is recognized in, Profit and Loss Account.

2.2 Transactions and balances of foreign branches are classified as non-integral foreign operations. Such transactions and balances are consolidated, by the bank on a quarterly basis.

Assets and Liabilities (both monetary and non-monetary as well as contingent liabilities) are translated at the closing spot rate of exchange announced by Foreign Exchange Dealers'' Association of India (FEDAI) as at the end of each quarter. Income and Expenditure items of the foreign branches are translated at the quarterly average rate published by FEDAl in accordance with Accounting Standards (AS) 11-“The effect of Changes in Foreign Exchange rates” issued by the Institute of Chartered Accountants of India (ICAI) and as per the guidelines of Reserve Bank of India (RBI) regarding the compliance of the said standard. The resultant exchange gain / loss is credited / debited to Foreign Currency Translation Reserve.

2.3 Forward Exchange Contracts

Premium or discount arising at the inception of all forward exchange contracts are amortized as expense or income over the life of the contact. Profit / Losses arising on cancellation of forward exchange contracts, together with unamortized premium or discount, if any, is recognized on the date of termination. Exchange differences on such contracts are recognized in the Profit & Loss account in the reporting period in which the exchange rates change.

2.4 Contingent liability in respect of outstanding forward exchange contracts, guarantees, acceptances, endorsements and other obligations are stated in the balance sheet at the closing rates published by FEDAI.

[3] Investments

3.1 Classification of Investments is made as per the guidelines of the RBI. The entire investment portfolio of the bank is classified under three categories viz. ''Held to Maturity'' (HTM), ''Available for Sale'' (AFS) and ''Held for Trading'' (HFT). Such classification is decided at the time of acquisition of securities.

Investments are disclosed in the Balance Sheet under six classifications viz: (a) Government securities (b) Other approved securities (c) Shares (d) Debentures & Bonds (e) Subsidiaries and Joint Ventures & Associates and (f) Others.

3.2 In determining the acquisition cost of investment:

(a) Cost such as brokerage, commission etc. relating to securities at the time of purchase are charged to Profit & Loss Account.

(b) Broken period interest on debt instruments up to the date of acquisition / disposal is treated as revenue.

3.3 The valuation of investments is done in accordance with the guidelines issued by the RBI as under:

a) HELD TO MATURITY

Investments under Held to Maturity category are carried at acquisition cost, net of amortization, if any. The excess of acquisition cost, if any, over the face value is amortized over the remaining period of maturity.

Investments in Subsidiaries and Joint Ventures & Associates are valued at carrying cost. Any diminution in the value other than temporary in nature is fully provided for.

Investment in sponsored Regional Rural Banks (RRB) and other Trustee shares are valued at carrying cost.

Investment in units of Venture Capital Funds (VCFs) made after 23.08.2006 are classified under HTM category for initial period of three years and valued at cost.

b) AVAILABLE FOR SALE

Investments classified under this category are mark to market on quarterly basis and valued as per Reserve Bank of India guidelines at the market rates available on the last day of each quarter (Balance Sheet date) from trades / quotes on the stock exchanges, prices / yields declared by the Fixed Income Money Market and Derivatives Association of India (FIMMDA). Unquoted securities are also valued as per the Reserve Bank of India guidelines.

The net depreciation under each category/ classification is fully provided for whereas the net appreciation, if any, is ignored. The book value of the individual securities does not undergo any change after these are valued at mark to market basis.

Units of Venture Capital Funds (VCF) transferred from HTM category after a period of three years (Refer paragraph 3.3(a)) are valued at NAV as per the audited financial statements of Venture Capital Funds. In case such audited financial statements are not available continuously for 18 months as on the date of valuation, units are valued at Re. 1 per VCF.

c) HELD FOR TRADING

Investments classified under this category are valued at rates based on market quotations, price/yields declared by FIMMDA on a weekly basis.

The net depreciation under each security held is fully provided for whereas the net appreciation, if any, is ignored. The book value of the individual securities does not undergo any change after marked to market.

3.4. Transfer of scripts from one category to another is carried on the following basis:

(a) HTM to AFS / HFT category at acquisition price / book value. In case the investments under HTM category are placed at premium originally the transfer is made at amortized cost.

(b) AFS / HFT to HTM category at lower of the book value or market value.

(c) AFS to HFT category or vice versa, at the carrying value. The accumulated depreciation, if any, to be transferred to the provision for depreciation against HFT securities and vice versa.

3.5 Non performing Investments Security Receipts issued by Securitization / Reconstruction Company (SC / RC) in respect of financial assets sold by the Bank to the SC / RC are valued at the lower of the redemption value of the Security Receipt and the Net Book Value of the financial asset. The investment is carried in the books at the price determined as above until its sale or realization and on such sale or realization, loss or gain is dealt with as below:

(a) If sale is at a price below Net Book Value (NBV), the short fall is recognized as per Reserve Bank of India guidelines.

(b) If the sale is for a value higher than NBV, the excess provision is not reversed but utilized to meet shortfall / loss on account of sale of other financial assets to SC / RC.

3.6 Securities included in any of three categories where interest / principal is in arrears for a specified period, are classified as Non-performing Investment. Interest Income on such securities is not reckoned and appropriate depreciation/ provision in value of investments is made. Deprecation in respect of such Non Performing Investments is not set off against appreciation in other performing securities.

3.7 Profit on sale of investments

Profit on sale of investments in respect of “Available for Sale” and “Held for Trading” categories is recognized in Profit & Loss account.

Profit on sale of Investments in respect of “Held to Maturity” category is first taken to the Profit & Loss Account and an equivalent amount of Profit is appropriated to the Capital Reserve (net of taxes and amount required to be transferred to Statutory Reserve).

Loss on sale of Investments in all the three categories is recognized in Profit & Loss Account.

3.8 Accounting for Repo / Reverse Repo and Liquidity Adjustment Facility (LAF)

Securities sold / purchased with an agreement to repurchase / resale on the agreed terms under Repo / Reverse Repo including LAF with RBI are recognized as Borrowing/Lending.

[4] Derivative Contracts

The Bank deals in Interest Rate Swaps and Currency Derivatives. The Interest Rate Derivatives dealt by the Bank are Rupee Interest Rate Swaps, Cross Currency Interest Rate Swaps and Forward Rate Agreements. Currency derivatives dealt by the Bank are Options and Currency Swaps. Such derivative contracts are valued as under:

a) Derivative contracts dealt for trading are valued on mark to market basis, net depreciation is recognized while net appreciation is ignored.

b) Derivative contacts undertaken for hedging are:

i. Derivative contracts designated as hedges are not marked to market unless their underlying asset is marked to market.

ii. Income / Expenditure is recognized on accrual basis for Hedging swaps.

[5] ADVANCES

5.1 Advances are classified as performing and non-performing assets in accordance with the prudential norms issued by RBI.

5.2 Advances are classified into Standard, Sub Standard, Doubtful and Loss assets borrower wise.

5.3 Provisions for domestic advances are made for performing / non-performing advances in accordance with the RBI Guidelines.

5.4 Provisions for performing / non-performing advances with foreign branches are made as per regulations of host country or according to the norms prescribed by RBI, whichever is more stringent.

5.5 Advances stated in the Balance Sheet are net of provisions made for Non Performing Assets, claims received from Credit Guarantee Institutions and rediscount.

5.6 Partial recoveries in Non Performing Advances are apportioned first towards charges and interest, thereafter towards principal with the exception of non performing advances involving compromise settlements / “Loan Past Due” advances, the recoveries are first adjusted towards principal.

5.7 In case of financial assets sold to SC / RC, the valuation, income recognition is being done as per RBI guidelines.

[6] Fixed Assets

6.1 The premises of the Bank include freehold and leasehold properties. All the Fixed Assets are capitalized based on the date of put to use.

6.2 Premises and other Fixed Assets are stated at historical cost except wherever revalued. The appreciation on revaluation, if any, is credited to the ''Revaluation Reserve'' Account. Depreciation / Amortization attributable to the enhanced value is transferred from Revaluation Reserve to the credit of Depreciation in the Profit and Loss Account.

[7] Depreciation

7.1 Fixed Assets are depreciated under Straight line Method at the rates determined by the management on the basis of estimated useful life of the respective assets except for the Computers where as per the guidelines of RBI, depreciation is charged under straight line method at 33.33%.

7.2 5 percent residual value has been kept for all the assets except for the assets with estimated useful life of 3 years or 5 years (E.g. computer, Servers and ATMs etc) where the entire cost of the asset is amortized over the useful life

7.3 Depreciation on fixed assets in the year of capitalization is charged for the full year if the asset is used for more than 180 days during that financial year; else it is provided at 50 percent of the applicable rate. No depreciation is provided for in the year of sale / disposal.

7.4 Premium paid on leasehold properties is charged off over the lease period.

7.5 In respect of fixed assets held at foreign offices, depreciation is provided as per the regulations / norms of the respective countries.

[8] Impairment of Assets

An assessment is made at each balance sheet date whether there is any indication that an asset is impaired. If any such indication exists, an estimate of the recoverable amount is made and impairment loss, if any, is provided for.

[9] Revenue Recognition

9.1 Income and expenditure are generally accounted on accrual basis, except the following:

a) Interest on Non-Performing advances and non performing investments is recognized on receipt basis as per norms laid down by Reserve Bank of India.

b) Interest on overdue bills, Commission (other than Government business), Exchange, Brokerage and rent on lockers are accounted on realization.

c) Dividend Income is recognized when the right to receive the same is established.

d) In case of suit filed accounts, related legal and other expenses incurred are charged to Profit & Loss Account and on recovery the same are accounted as Income.

[10] Employee Benefits

10.1 Defined Contribution Plans

Defined Contribution Plans such as Provident / Pension fund are recognized as an expense and charged to Profit & Loss account.

10.2 Defined Benefit Plans

a) Gratuity: The employee Gratuity Fund Scheme is funded by the Bank and managed by a separate trust who in turn manages their funds as per guidelines. The present value of the Bank''s obligation under Gratuity is recognized on actuarial basis as at the year end and the fair value of the Plan assets is reduced from the gross obligation to recognize the obligation on a net basis.

b) Pension: The employee Pension Fund Scheme is funded by the Bank and managed by a separate trust. The present value of the Banks obligations under Pension is recognized on the basis as at the year end and the fair value of the Plan assets is reduced from the gross obligation to recognize the obligation on a net basis.

10.3 The privilege leave is considered as a long term benefit and is recognized based on independent actuarial valuation on ''Projected Unit Credit method'' at each Balance Sheet date.

[11] Provision for Taxation

a) Provision for tax is made for both Current and Deferred Taxes.

b) Deferred Tax assets and Liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognized using the tax rates and laws that have been enacted or substantively enacted as of the balance sheet date.

c) Deferred tax assets are not recognized unless there is virtual certainty that sufficient future taxable income would be available against which such deferred tax assets can be recognized.

[12] Net Profit

12.1 Provisions, Contingent Liabilities and Contingent Assets

I. In conformity with AS 29, “Provisions, Contingent Liabilities & Contingent Assets” issued by the Institute of Chartered Accountants of India, the bank recognizes provision only when:

a) It has a present obligation as a result of past event.

b) It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and

c) When a reliable estimate of the amount of the obligation can be made.

II. No provision is recognized

a) For any possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the bank.

b) Where it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or

c) When a reliable estimate of the amount of obligation cannot be made.

Such obligations are recorded as Contingent liabilities. These are assessed at regular intervals and only that part of the obligation for which the outflow of resources embodying economic benefits is probable is provided for, except in the extremely rare circumstances where no reliable estimate can be made.

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Mar 31, 2015

[1] (a) Basis of Preparation:

The accounts are prepared under the historical cost convention and conform to the statutory provisions and prevailing practices, except as otherwise stated.

(b) Use of Estimates:

The preparation of financial statements requires the management to make estimates and assumptions that affect the reported amount of assets, liabilities, expenses, income and disclosure of contingent liabilities as at the date of the financial statements. Management believes that these estimates and assumptions are reasonable and prudent. However, actual results could differ from estimates. Any revision to accounting estimates is recognized in current and future periods.

[2] Foreign Currency Translation / Conversion of Foreign Currencies

2.1 Foreign currency monetary items are initially recorded at a notional rate. Foreign currency monetary items are restated at the rate published by Foreign Exchange Dealers'' Association of India (FEDAI) at the end of each quarter. Exchange difference arising on restatement of such items at the quarterly rates is recognised in Profit and Loss Account.

2.2 Transactions and balances of foreign branches are classified as non-integral foreign operations. Such transactions and balances are consolidated by the bank on a quarterly basis.

Assets and Liabilities (both monetary and non- monetary as well as contingent liabilities) are translated at the closing spot rate of exchange announced by Foreign Exchange Dealers'' Association of India (FEDAI) as at the end of each quarter. Income and Expenditure items of the foreign branches are translated at the quarterly average rate published by FEDAI in accordance with Accounting Standard (AS) 11- "The effect of Changes in Foreign Exchange rates" issued by the Institute of Chartered Accountants of India (ICAI) and as per the guidelines of Reserve Bank of India (RBI) regarding the compliance of the said standard.

The resultant exchange gain/loss is credited / debited to Foreign Currency Translation Reserve.

2.3 Forward Exchange Contracts

Premium or discount arising at the inception of all forward exchange contracts are amortized as expense or income over the life of the contract. Profit/ Losses arising on cancellation of forward exchange contracts, together with unamortized premium or discount, if any, is recognized on the date of termination. Exchange differences on such contracts are recognized in the Profit & Loss account in the reporting period in which the exchange rates change.

2.4 Contingent liability in respect of outstanding forward exchange contracts, guarantees, acceptances, endorsements and other obligations are stated in the balance sheet at the closing rates published by FEDAI.

[3] Investments

3.1. Classification of investments is made as per the guidelines of the RBI. The entire investment portfolio of the bank is classified under three categories viz. ''Held to Maturity'' (HTM), ''Available for Sale'' (AFS) and ''Held for Trading'' (HFT). Such classification is decided at the time of acquisition of securities.

Investments are disclosed in the Balance Sheet under six classifications viz: (a) Government securities (b) Other approved securities (c) Shares

(d) Debentures & Bonds (e) Subsidiaries and Joint Ventures & Associates and (f) Others.

3.2. In determining the acquisition cost of investment:

(a) Cost such as brokerage, commission etc., relating to securities at the time of purchase are charged to Profit & Loss Account.

(b) Broken period interest on debt instruments up to the date of acquisition / disposal is treated as revenue.

3.3 The valuation of Investments is done in accordance with the guidelines issued by the RBI as under:

a) HELD TO MATURITY

Investments under Held to Maturity category are carried at acquisition cost, net of amortisation, if any. The excess of acquisition cost, if any, over the face value is amortized over the remaining period of maturity.

Investments in Subsidiaries and Joint Ventures & Associates are valued at carrying cost. Any diminution in the value other than temporary in nature is fully provided for.

Investment in sponsored Regional Rural Banks (RRB) and other Trustee Shares are valued at carrying cost.

Investment in units of Venture Capital Funds (VCFs) made after 23.08.2006 are classified under HTM category for initial period of three years and valued at cost.

b) AVAILABLE FOR SALE

Investments classified under this category are mark to market on quarterly basis and valued as per Reserve Bank of India guidelines at the market rates available on the last day of each quarter (Balance Sheet date) from trades/quotes on the stock exchanges, prices/yields declared by the Fixed Income Money Market and Derivatives Association of India (FIMMDA). Unquoted securities are also valued as per the Reserve Bank of India guidelines.

The net depreciation under each category/ classification is fully provided for whereas the net appreciation, if any, is ignored. The book value of the individual securities does not undergo any change after these are valued at mark to market basis.

Units of Venture Capital Funds (VCF) transferred from HTM category after a period of three years (Refer paragraph 3.3(a) are valued at NAV as per the audited financial statements of Venture Capital Funds. In case such audited financial statements are not available continuously for 18 months as on the date of valuation, units are valued at Re. 1 per VCF.

c) HELD FOR TRADING

Investments classified under this category are valued at rates based on market quotations, price/ yields declared by FIMMDA on a weekly basis.

The net depreciation under each security held is fully provided for whereas the net appreciation, if any, is ignored. The book value of the individual securities do not undergo any change after marked to market.

3.4. Transfer of scrips from one category to another is carried on the following basis:

(a) HTM to AFS/HFT category at acquisition price/ book value. In case the investments under HTM category are placed at premium originally the transfer is made at amortised cost.

(b) AFS/HFT to HTM category at lower of the book value or market value.

(c) AFS to HFT category or vice versa, at the carrying value. The accumulated depreciation, if any, to be transferred to the provision for depreciation against HFT securities and vice versa.

3.5. Non performing Investments Security Receipts issued by Securitisation / Reconstruction Company (SC/RC) in respect of financial assets sold by the Bank to the SC/RC are valued at the lower of the redemption value of the Security Receipt and the Net Book Value of the financial asset. The Investment is carried in the books at the price determined as above until its sale or realisation and on such sale or realisation, loss or gain is dealt with as below:.

(a) If sale is at a price below Net Book Value (NBV), the shortfall is recognised as per Reserve Bank of India guidelines.

(b) If the sale is for a value higher than NBV, the excess provision is not reversed but utilized to meet shortfall/loss on account of sale of other financial assets to SC/RC.

3.6. Securities included in any of three categories where interest/principal is in arrears for a specified period, are classified as Non performing Investment. Interest Income on such securities is not reckoned and appropriate depreciation/ provision in value of Investments is made. Deprecation in respect of such Non Performing Investments is not set off against appreciation in other performing securities.

3.7. Profit on sale of Investments

Profit on sale of Investments in respect of "Available for Sale" and "Held for Trading" categories is recognized in Profit & Loss Account.

Profit on sale of Investments in respect of "Held to Maturity" category is first taken to the Profit & Loss Account and an equivalent amount of Profit is appropriated to the Capital Reserve (net of taxes and amount required to be transferred to Statutory Reserve).

Loss on sale of Investments in all the three categories is recognized in Profit & Loss Account.

3.8. Accounting for Repo/Reverse Repo and Liquidity Adjustment Facility (LAF)

The securities purchased/sold with an agreement to repurchase on the agreed terms under Repo / Reverse Repo (other than LAF) are recognized as borrowing / lending.

The securities purchased/sold under LAF with RBI are debited/credited to Investment account and reversed on maturity.

[4] Derivative contracts

The Bank deals in Interest Rate Swaps and Currency Derivatives. The Interest Rate Derivatives dealt by the Bank are Rupee Interest Rate Swaps, Cross Currency Interest Rate Swaps and Forward Rate Agreements. Currency Derivatives dealt by the Bank are Options and Currency Swaps.

Such derivative contracts are valued as under:

a. Derivative contracts dealt for trading are valued on mark to market basis, net depreciation is recognized while net appreciation is ignored.

b. Derivative contracts undertaken for hedging are:

i. Derivative contracts designated as hedges are not marked to market unless their underlying asset is marked to market.

ii. Income / Expenditure is recognized on accrual basis for Hedging swaps.

[5] Advances

5.1 Advances are classified as performing and non-performing assets in accordance with the prudential norms issued by RBI.

5.2 Advances are classified into Standard, Sub Standard, Doubtful and Loss assets borrower wise.

5.3 Provisions for domestic advances are made for performing/non - performing advances in accordance with the RBI Guidelines.

5.4 Provisions for performing/ non-performing advances with foreign branches are made as per local regulations / regulations of host country according to the norms prescribed by RBI, whichever is more stringent.

5.5 Advances stated in the Balance Sheet are net of provisions made for Non Performing Assets, claims received from Credit Guarantee Institutions and rediscount.

5.6 Partial recoveries in Non Performing Advances are apportioned first towards charges and interest, thereafter towards principal with the exception of non performing advances involving compromise settlements/ "Loan Past Due" advances, the recoveries are first adjusted towards principal.

5.7 In case of financial assets sold to SC/ RC, the valuation, income recognition is being done as per RBI guidelines.

(6) Fixed Assets

6.1 The premises of the Bank include freehold and leasehold properties. Land and Buildings are capitalised based on conveyance / letters of allotment / agreement to lease, deposit made on long term leasehold properties and / or physical possession of the property.

6.2. Premises and other Fixed Assets are stated at historical cost except wherever revalued. The appreciation on revaluation, if any, is credited to the ''Revaluation Reserve'' Account. Depreciation / Amortization attributable to the enhanced value is transferred from Revaluation Reserve to the credit of Depreciation in the Profit and Loss Account.

[7] Depreciation

7.1. Fixed Assets excluding Computers are depreciated under Written Down Value Method at the rates determined by the management on the basis of estimated useful life of the respective assets. As per the guidelines of RBI, depreciation on Computers including ATMs is charged at 33.33% on Straight-Line Method.

7.2. Premium paid on leasehold properties is charged off over the lease period.

7.3. Depreciation on additions to fixed assets is charged for the full year irrespective of the date of acquisition. No depreciation is provided for in the year of sale/disposal.

[8] Impairment of Assets

An assessment is made at each balance sheet date whether there is any indication that an asset is impaired. If any such indication exists, an estimate of the recoverable amount is made and impairment loss, if any, is provided for.

[9] Revenue Recognition

9.1. Income and expenditure are generally accounted on accrual basis, except the following:

a) Interest on Non-Performing advances and non performing investments is recognized as per norms laid down by Reserve Bank of India.

b) Interest on overdue bills, Commission (other than Government business), Exchange, Brokerage and rent on lockers are accounted on realization.

c) Dividend Income is recognized when the right to receive the same is established.

d) In case of suit filed accounts, related legal and other expenses incurred are charged to Profit & Loss Account and on recovery the same are accounted as Income.

(10) Employee Benefits

10.1 Defined Contribution Plans

Defined Contribution Plans such as Provident / Pension fund are recognized as an expense and charged to Profit & Loss account.

10.2 Defined Benefit Plans

a) Gratuity: The employee Gratuity Fund Scheme is funded by the Bank and managed by a separate trust who in turn manages their funds as per guidelines. The present value of the Banks obligation under Gratuity is recognized on actuarial basis as at the year end and the fair value of the Plan assets is reduced from the gross obligation to recognize the obligation on a net basis.

b) Pension: The employee Pension Fund Scheme is funded by the Bank and managed by a separate trust. The present value of the Banks obligations under Pension is recognized on the basis as at the year end and the fair value of the Plan assets is reduced from the gross obligation to recognize the obligation on a net basis.

c) Amortization: The additional liability/expenditure arising consequent upon the reopening of Pension Option to the employees of the bank and enhancement in gratuity limit pursuant to amendment to Payment of Gratuity Act, 1972 has been amortized equally over a period of five years beginning with the financial year 2010-11.

10.3 The privilege leave is considered a long term benefit and is recognized based on independent actuarial valuation on ''Projected Unit Credit method'' at each Balance Sheet date.

(11) Provision for Taxation

a) Provision for tax is made for both Current and & Deferred Taxes.

b) Deferred Tax assets and liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognized using the tax rates and laws that have been enacted or substantively enacted as of the balance sheet date.

c) Deferred tax assets are not recognized unless there is virtual certainty that sufficient future taxable income would be available against which such deferred tax assets can be recognized.

(12) Net Profit

12.1 Provisions, Contingent Liabilities and Contingent Assets

I. In conformity with AS 29, "Provisions, Contingent Liabilities & Contingent Assets" issued by the Institute of Chartered Accountants Of India, the bank recognizes provision only when :

a. it has a present obligation as a result of past event.

b. it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and

c. when a reliable estimate of the amount of the obligation can be made.

II. No provision is recognized for:

a. Any possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the bank.

b. It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or

c. A reliable estimate of the amount of obligation cannot be made. Such obligations are recorded as Contingent Liabilities. These are assessed at regular intervals and only that part of the obligation for which the outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made.

III. Contingent Assets are not recognized in the financial Statements.

12.2 Net Profit

The Net Profit in the Profit & Loss Account is after:-

a) Provision for depreciation on Investments.

b) Provision for Taxation.

c) Provision on loan losses

d) Provision on Standard Assets.

e) Provision for Non Performing Investments.

f) Other usual & necessary Items.

[13] Earning per share:

The Bank reports basic and diluted Earnings Per Share in accordance with AS 20. Basic Earnings Per Share is computed by dividing the net profit after tax by the weighted average number of equity shares outstanding for the Year.

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Mar 31, 2014

[1](a) Basis of Preparation:

The accounts are prepared under the historical cost convention and conform to the statutory provisions and prevailing practices, except as otherwise stated.

(b) Use of Estimates:

The preparation of financial statements requires the management to make estimates and assumptions that affect the reported amount of assets, liabilities, expenses, income and disclosure of contingent liabilities as at the date of the financial statements. Management believes that these estimates and assumptions are reasonable and prudent. However, actual results could differ from estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

[2] Foreign Currency Translation / Conversion of Foreign Currencies

2.1 Foreign currency transactions are recorded on initial recognition at the notional rate. As at the Balance Sheet date, foreign currency monetary items are reported at closing rates.

2.2 Transactions and balances of foreign branches are classified as non-integral foreign operations. Such transactions and balances are consolidated by the bank on quarterly basis. Assets and Liabilities (both monetary and non monetary as well as contingent liabilities) are translated at the closing spot rate of exchange announced by Foreign Exchange Dealers'' Association of India (FEDAI) as at the end of each quarter and Income and Expenditure items of the foreign branches are translated at the quarterly average rate published by FEDAI in accordance with Accounting Standard (AS) 11 - "The effect of Changes in Foreign Exchange rates" issued by the Institute of Chartered Accountants of India (ICAI) and as per the guidelines of Reserve Bank of India (RBI) regarding the compliance of the said standard. The resultant exchange gain/loss is credited/ debited to Foreign Currency Translation Reserve.

2.2 Income and Expenditure items are accounted for at the exchange rates prevailing on the date of transactions.

2.3 Forward Exchange Contracts

Premium or discount arising at the inception of all forward exchange contracts are amortized as expense or income over the life of the contract. Profit/Losses arising on cancellation of forward exchange contracts, together with unamortized premium or discount, if any, is recognized on the date of cancellation. Exchange differences on forward contracts are recognized in the Profit & Loss account in the reporting period in which the exchange rates change.

2.4 Contingent liability in respect of outstanding forward exchange contracts, guarantees, acceptances, endorsements and other obligations are stated in the balance sheet at the closing rates announced by FEDAI.

[3] Investments

3.1. Classification of investments is made as per the guidelines of the RBI. The entire investment portfolio of the bank is classified under three categories viz. ''Held to Maturity'', ''Available for sale'' and ''Held for Trading'', which is decided at the time of acquisition of securities. Transfer of scrips, if any, from one category to another is done at the lowest of acquisition cost/book value/market value on the date of transfer and the depreciation, if any, on such transfer is fully provided for.

Investments are disclosed in the Balance Sheet under six classifi cations viz: (a) Government securities (b) Other approved securities (c) Shares (d) Debentures & Bonds (e) Subsidiaries and Joint Ventures & Associates and (f) Others.

3.2. The valuation of Investments is done in accordance with the guidelines issued by the RBI as under:

a) HELD TO MATURITY

Investments under Held to Maturity category are carried at acquisition cost, net of amortisation, if any. The excess of acquisition cost, if any, over the face value is amortized over the remaining period of maturity.

Investments in Subsidiaries and Joint Ventures & Associates are valued at carrying cost. Any diminution in the value other than temporary in nature is fully provided for.

Investment in sponsored Regional Rural Banks (RRB) and other Trustee Shares are carried at cost. Investment in units of Venture Capital Funds (VCFs) made after 23.08.2006 are classified under HTM category for initial period of three years and valued at cost.

Profit on sale of Investments in this category is first taken to the Profit and Loss Account and thereafter appropriated to the Capital Reserve Account net of taxes and Statutory Reserve. No amortisation is effected for securities sold during the year. Loss on sale is recognized in the Profit and Loss Account.

b) AVAILABLE FOR SALE

The individual securities under ''Available for Sale'' category are marked to market.

Central Government Securities and State Government Securities are valued at market prices as per prices declared by Fixed Income Money Market and Derivatives Association of India (FIMMDA).

Other approved securities are valued by applying the YTM method by marking it up by 25 basis points above the yields of Central Government securities of equivalent maturity put out by FIMMDA.

Non SLR securities such as Debentures / Bonds (other than Debentures / Bonds which are in the nature of advance) are valued at market prices, if available, and if not, are valued applying YTM method by marking it up by additional basis points based on credit rating above the yields of Central Government Securities of equivalent maturity as put out by FIMMDA and the methodology suggested by FIMMDA.

Preference Shares are valued at lower of YTM rates / redemption values.

Quoted Shares are valued at market prices.

Unquoted Shares are valued at break up value ascertained from the latest Balance Sheet not earlier than one year or otherwise at Rs.1/- per Company.

Treasury Bills, Commercial Papers and certificates of deposits are valued at carrying cost.

Units of Mutual Funds are valued at market rate or repurchase price or net asset value in that order depending on their availability.

Units of Venture Capital Funds (VCFs) made after 23.08.2006 are classified under HTM category for initial period of three years and valued at cost. After period of three years from the date of disbursement, it will be shifted to AFS and marked-to-market as per RBI guidelines.

Securities are valued scrip wise and depreciation/ appreciation under each sub category is aggregated.

Based on the above valuation, net appreciation if any, in each sub category is ignored while the net depreciation is fully provided for.

c) HELD FOR TRADING

The individual securities under Held for Trading category are valued periodically as per RBI guidelines, at market prices as available from the trades / quotes or as per prices declared by FIMMDA. In respect of each classification under this category, net depreciation is provided for and net appreciation is ignored.

3.3. In determining the acquisition cost of investment:

a) Cost such as brokerage, commission etc., relating to securities at the time of purchase are charged to Profit & Loss Account.

b) Broken period interest on debt instruments up to the date of acquisition / disposal is treated as revenue.

c) Cost of investments is based on the weighted average cost method.

3.4. Security Receipts issued by Securitisation / Reconstruction Company (SC/RC) in respect of financial assets sold by the Bank to the SC/RC are valued at the lower of the redemption value of the Security Receipt and the Net Book Value of the financial asset. The Investment is carried in the books at the price determined as above and the sale/realisation, if any, is reduced from investment and the net book value is shown.

The valuation, classification and other norms applicable to Investment in Non SLR securities prescribed by RBI is applied to Bank''s investment in Security Receipts issued by SC/RC.

3.5. Non-Performing Investments (NPI) are identified as stated below, as per the guidelines issued by RBI:

a) Securities / Preference Shares where interest / fixed dividend / installment (including maturity proceeds) is due and remains unpaid for more than 90 days.

b) Equity Shares valued at Re.1 per company, where the latest Balance Sheet is not available or the Net worth of the Company is negative.

c) If any credit facility availed by the issuer from the Bank is a non performing advance, investment in any of the securities issued by the same issuer is also treated as NPI.

3.6. Accounting for Repo/Reverse Repo and Liquidity Adjustment Facility (LAF)

a) The securities purchased/sold with an agreement to repurchase on the agreed terms under Repo / Reverse Repo (other than LAF) are accounted as borrowing/lending.

b) The securities purchased/sold under LAF with RBI are debited/credited to Investment account and reversed on maturity.

[4] Derivative contracts

The Bank deals in Interest Rate Swaps and Currency Derivatives. The Interest Rate Derivatives dealt by the Bank are Rupee Interest Rate Swaps, Cross Currency Interest Rate Swaps and Forward Rate Agreements. Currency Derivatives dealt by the Bank are Options and Currency Swaps.

Based on RBI guidelines

a. Derivatives used for trading are marked to market and net depreciation is recognized while net appreciation is ignored.

b. Derivatives used for hedging are

i. marked to market in case where the underlying Assets / Liabilities are marked to market.

ii. Income / Expenditure is accounted on accrual basis for Hedging swaps.

[5] Advances

5.1 Advances are classified as performing and non-performing assets in accordance with the prudential norms issued by RBI.

5.2 Advances are classified into Standard, Sub Standard, Doubtful and Loss assets borrower wise.

5.3 Provisions for domestic advances are made for performing / non - performing advances in accordance with the RBI Guidelines.

5.4 Provisions for performing / non-performing advances with foreign branches are made as per local regulations / regulations of host country according to the norms prescribed by RBI, whichever is more stringent.

5.5 Advances stated in the Balance Sheet are net of provisions made for Non Performing Assets, claims received from Credit Guarantee Institutions and rediscount.

5.6 Partial recoveries in Non Performing Advances are apportioned first towards charges and interest, there after towards principal with the exception of non performing advances involving compromise settlements / "Loan Past Due" advances, the recoveries are first adjusted towards principal.

5.7 In case of financial assets sold to SC/RC, the valuation, income recognition is being done as per RBI guidelines.

(6) Fixed Assets

6.1. The premises of the Bank include freehold and leasehold properties. Land and Buildings are capitalised based on conveyance / letters of allotment / agreement to lease, deposit made on long term leasehold properties and / or physical possession of the property.

6.2. Premises and other Fixed Assets are stated at historical cost except wherever re valued. The appreciation on revaluation, if any, is credited to the ''Revaluation Reserve'' Account. Depreciation / Amortization attributable to the enhanced value is transferred from Revaluation Reserve to the credit of Depreciation in the Profit and Loss Account

(7) Depreciation

7.1. Fixed Assets excluding Computers are depreciated under Written Down Value Method at the rates determined by the management on the basis of estimated useful life of the respective assets. As per the guidelines of RBI, depreciation on Computers including ATMs is charged at 33.33% on Straight-Line Method.

7.2. Premium paid on leasehold properties is charged off over the lease period.

7.3. Depreciation on Assets given on Lease is charged on Written Down Value Method as per Schedule XIV to the Companies Act, 1956 after adjusting Capital recovery.

7.4. Depreciation on additions to fixed/leased assets is charged for the full year irrespective of the date of acquisition. No depreciation is provided for in the year of sale/disposal.

(8) Impairment of Assets

An assessment is made at each balance sheet date whether there is any indication that an asset is impaired. If any such indication exists, an estimate of the recoverable amount is made and impairment loss, if any, is provided for.

(9) Revenue Recognition

9.1. Income and expenditure are generally accounted on accrual basis, except the following:

a) Interest on Non-Performing advances and non performing investments is recognized as per norms laid down by Reserve Bank of India

b) Interest on overdue bills, Commission (other than Government business), Exchange, Brokerage and rent on lockers are accounted on realization.

c) Dividend is accounted when the right to receive the same is established.

d) In case of suit filed accounts, related legal and other expenses incurred are charged to Profit & Loss Account and on recovery the same are accounted as Income.

(10) Employee Benefits

10.1 Defined Contribution Plans

Defined Contribution Plans such as Provident / Pension fund are recognized as an expense and charged to Profit & Loss account.

10.2 Defined Benefit Plans

a) Gratuity: The employee Gratuity Fund Scheme is funded by the Bank and managed by a separate trust who in turn manage their funds as per guidelines. The present value of the Bank''s obligations under Gratuity is recognized on the basis as at an year end and the fair value of the Plan assets is reduced from the gross obligations to recognize the obligations on a net basis.

b) Pension: The employee Pension Fund Scheme is funded by the Bank and managed by a separate trust. The present value of the Banks obligations under Pension is recognized on the basis as at an year end and the fair value of the Plan assets is reduced from the gross obligations to recognize the obligations on a net basis.

c) Amortization: The additional liability/expenditure arising consequent upon the reopening of Pension Option to the employees of the bank and enhancement in gratuity limit pursuant to amendment to Payment of Gratuity Act, 1972 is being amortized equally over a period of f ve years beginning with the financial year 2010-11.

10.3 The privilege leave is considered a long term benefit and is recognized based on independent actuarial valuation on ''projected Unit credit method'' at each Balance Sheet date.

(11) Provision for Taxation

a) Provision for tax is made for both Current and Deferred Taxes.

b) Deferred Tax assets and liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognized using the tax rates and laws that have been enacted or substantively enacted as of the balance sheet date.

c) Deferred tax assets are not recognized unless there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets will be recognized.

(12) Net Profit

12.1 Provisions, Contingent Liabilities and Contingent Assets

I. In conformity with AS 29, "Provisions, Contingent Liabilities & Contingent Assets" issued by the Institute of Chartered Accountants Of India, the bank recognized provision only when:

a) it has a present obligation as a result of past event.

b) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and

c) When a reliable estimate of the amount of the obligation can be made.

II. No provision is recognized for

a) Any possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the bank.

b) It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or

c) A reliable estimate of the amount of obligation cannot be made.

Such obligations are recorded as Contingent Liabilities. These are assessed at regular intervals and only that part of the obligation for which the outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made.

III. Contingent Assets are not recognized in the financial statements.

12.2 Net Profit

The Net Profit in the Profit & Loss Account is after-

a) Provision for depreciation on Investments.

b) Provision for Taxation.

c) Provision on loan losses

d) Provision on Standard Assets.

e) Provision for Non Performing Investments.

f) Other usual & unnecessary Items.

(13) Earning per share:

The Bank reports basic and diluted Earnings Per Share in accordance with AS 20. Basic Earnings Per Share is computed by dividing the net profit after tax by the weighted average number of equity shares outstanding for the Year.

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Mar 31, 2013

[1](a) Basis of Preparation:

The accounts are prepared under the historical cost convention and conform to the statutory provisions and prevailing practices, except as otherwise stated.

(b) Use of Estimates:

The preparation of financial statements requires the management to make estimates and assumptions that affect the reported amount of assets, liabilities, expenses, income and disclosure of contingent liabilities as at the date of the financial statements. Management believes that these estimates and assumptions are reasonable and prudent. However, actual results could differ from estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

[2] Foreign Currency Translation / Conversion of Foreign Currencies

2.1. Transactions and balances of foreign branches are classified as non-integral foreign operations. Assets and Liabilities (both monetary and non-monetary as well as contingent liabilities) are translated at the closing spot rate of exchange announced by Foreign Exchange Dealers'' Association of India (FEDAI) and Income and Expenditure items of the foreign branches are translated at the quarterly average rate published by FEDAI in accordance with Accounting Standard (AS) 11 issued by the Institute of Chartered Accountants of India (ICAI) and as per the guidelines of Reserve Bank of India (RBI). The resultant exchange gain/loss is credited / debited to Foreign Currency Translation Reserve.

2.2. Foreign currency transactions of Indian branches have been classified as integral foreign operations. Assets and Liabilities in foreign currency, Forward Exchange Contracts, Guarantees, Acceptances, Endorsements and Obligations are evaluated at the closing spot rate / forward rate for the residual maturity of the contract in accordance with AS 11 issued by ICAI and as per the guidelines of RBI.

Income and Expenditure items are accounted for at the exchange rates prevailing on the date of transactions.

2.3 Forward Exchange Contracts

Premium or discount arising at the inception of all forward exchange contracts are amortized as expense or income over the life of the contract. Profit / Losses arising on premature termination of forward exchange contracts, together with unamortized premium or discount, if any, is recognized on the date of termination. Contingent liability in respect of outstanding forward exchange contracts, guarantees, acceptances, endorsements and other obligations are calculated at the closing FEDAI rates.

[3] Investments

3.1. Classification of investments is made as per the guidelines of the RBI. The entire investment portfolio of the bank is classified under three categories viz. ''Held to Maturity'', ''Available for sale'' and ''Held for Trading'', which is decided at the time of acquisition of securities. Transfer of scrips, if any, from one category to another is done at the lowest of acquisition cost / book value / market value on the date of transfer and the depreciation, if any, on such transfer is fully provided for.

Investments are disclosed in the Balance Sheet under six classifications viz: (a) Government securities (b) Other approved securities (c) Shares (d) Debentures & Bonds (e) Subsidiaries and Joint Ventures & Associates and (f) Others.

3.2. The valuation of Investments is done in accordance with the guidelines issued by the RBI as under:

a) HELD TO MATURITY

Investments under Held to Maturity category are carried at acquisition cost, net of amortisation, if any. The excess of acquisition cost, if any, over the face value is amortized over the remaining period of maturity.

Investments in Subsidiaries and Joint Ventures & Associates are valued at carrying cost. Any diminution in the value other than temporary in nature is fully provided for.

Investment in sponsored Regional Rural Banks (RRB) and other Trustee Shares are carried at cost.

Investment in units of Venture Capital Funds (VCFs) made after 23.08.2006 are classified under HTM category for initial period of three years and valued at cost.

Profit on sale of Investments in this category is first taken to the Profit and Loss Account and thereafter appropriated to the Capital Reserve Account net of taxes and Statutory Reserve. No amortisation is effected for securities sold during the year. Loss on sale is recognized in the Profit and Loss Account.

b) AVAILABLE FOR SALE

The individual securities under ''Available for Sale'' category are marked to market.

Central Government Securities and State Government securities are valued at market prices as per prices declared by Fixed Income Money Market and Derivatives Association of India (FIMMDA).

Other approved securities are valued by applying the YTM method by marking it up by 25 basis points above the yields of Central Government securities of equivalent maturity put out by FIMMDA.

Non SLR securities such as Debentures / Bonds (other than Debentures / Bonds which are in the nature of advance) are valued at market prices, if available, and if not, are valued applying YTM method by marking it up by additional basis points based on credit rating above the yields of Central Government Securities of equivalent maturity as put out by FIMMDA and the methodology suggested by FIMMDA.

Preference Shares are valued at lower of YTM rates / redemption values.

Quoted Shares are valued at market prices.

Unquoted Shares are valued at break up value ascertained from the latest Balance Sheet not earlier than one year or otherwise at Rs.1 per Company

Treasury Bills, Commercial Papers and certificates of deposits are valued at carrying cost.

Units of Mutual Funds are valued at market rate or repurchase price or net asset value in that order depending on their availability

Units of Venture Capital Funds (VCFs) made after 23.08.2006 are classified under HTM category for initial period of three years and valued at cost. After period of three years from the date of disbursement, it will be shifted to AFS and marked- to-market as per RBI guidelines.

Securities are valued scrip wise and depreciation/ appreciation under each sub category is aggregated.

Based on the above valuation, net appreciation if any, in each sub category is ignored while the net depreciation is fully provided for.

c) HELD FOR TRADING

The individual securities under Held for Trading category are valued periodically as per RBI guidelines, at market prices as available from the trades/quotes or as per prices declared by FIMMDA. In respect of each classification under this category, net depreciation is provided for and net appreciation is ignored.

3.3. In determining the acquisition cost of investment:

(a) Cost such as brokerage, commission etc., relating to securities at the time of purchase are charged to Profit & Loss Account.

(b) Broken period interest on debt instruments up to the date of acquisition / disposal is treated as revenue.

(c) Cost of investments is based on the weighted average cost method.

3.4. Security Receipts issued by Securitisation / Reconstruction Company (SC/RC) in respect of financial assets sold by the Bank to the SC/RC are valued at the lower of the redemption value of the Security Receipt and the Net Book Value of the financial asset. The Investment is carried in the books at the price determined as above and the sale/realisation, if any, is reduced from investment and the net book value is shown.

The valuation, classification and other norms applicable to Investment in Non-SLR securities prescribed by RBI is applied to Bank''s investment in Security Receipts issued by SC/RC.

3.5. Non-Performing Investments (NPI) are identified as stated below, as per the guidelines issued by RBI:

(a) Securities/Preference Shares where interest / fixed dividend / instalment (including maturity proceeds) is due and remains unpaid for more than 90 days.

(b) Equity Shares valued at Re.1 per company, where the latest Balance Sheet is not available or the Net worth of the Company is negative.

(c) If any credit facility availed by the issuer from the Bank is a non-performing advance, investment in any of the securities issued by the same issuer is also treated as NPI.

3.6. Accounting for Repo/Reverse Repo and Liquidity Adjustment Facility (LAF)

(a) The securities purchased/sold with an agreement to repurchase on the agreed terms under Repo / Reverse Repo (other than LAF) are accounted as borrowing/lending.

(b) The securities purchased/sold under LAF with RBI are debited/credited to Investment account and reversed on maturity.

(4) Derivative contracts

The Bank deals in Interest Rate Swaps and Currency Derivatives. The Interest Rate Derivatives dealt by the Bank are Rupee Interest Rate Swaps, Cross Currency Interest Rate Swaps and Forward Rate Agreements. Currency Derivatives dealt by the Bank are Options and Currency Swaps.

Based on RBI guidelines

a. Derivatives used for trading are marked to market and net depreciation is recognized while net appreciation is ignored.

b. Derivatives used for hedging are

i. marked to market in case where the underlying Assets / Liabilities are marked to market.

ii. Income / Expenditure is accounted on accrual basis for Hedging swaps.

(5) Advances

5.1 Advances are classified as performing and non- performing assets and provisions are made in accordance with the prudential norms prescribed by RBI.

5.2 Advances are stated net of write off, provision for non-performing assets, claims received from credit guarantee institutions and re-discount.

5.3 In case of financial assets sold to the SC / RC, if the sale is at a price below the Net Book Value (NBV), the shortfall is debited to the Profit & Loss Account. If the sale is for a value higher than the NBV, the excess provision shall not be reversed but will utilized to meet the shortfall/loss on account of sale of other non-performing financial assets.

(6) Fixed Assets

6.1. The premises of the Bank include freehold and leasehold properties. Land and Buildings are capitalised based on conveyance / letters of allotment / agreement to lease, deposit made on long term leasehold properties and / or physical possession of the property.

6.2. Premises and other Fixed Assets are stated at historical cost except wherever revalued. The appreciation on revaluation, if any, is credited to the ''Revaluation Reserve'' Account. Depreciation / Amortization attributable to the enhanced value is transferred from Revaluation Reserve to the credit of Depreciation in the Profit and Loss Account.

(7) Depreciation

7.1. Fixed Assets excluding Computers are depreciated under Written Down Value Method at the rates determined by the management on the basis of estimated useful life of the respective assets. As per the guidelines of RBI, depreciation on Computers is charged at 33.33% on Straight-Line Method.

7.2. Premium paid on leasehold properties is charged off over the lease period.

7.3. Depreciation on Assets given on Lease is charged on Written Down Value Method as per Schedule XIV to the Companies Act, 1956 after adjusting Capital recovery.

7.4. Depreciation on additions to fixed/leased assets is charged for the full year irrespective of the date of acquisition. No depreciation is provided for in the year of sale/disposal.

(8) Impairment of Assets

Impairment losses on Fixed Assets, if any, are recognized in Profit & Loss Account in accordance with AS 28 issued by ICAI.

(9) Revenue Recognition

9.1. Income and expenditure are generally accounted on accrual basis.

9.2. In the case of Non-Performing Assets including Investments, income is recognised to the extent of realisation, in accordance with the prudential norms prescribed by RBI. In respect of "Loans Past Due" accounts, recoveries are appropriated first towards principal.

9.3. Commission, Exchange, Brokerage and Locker Rent are accounted for as income on receipt basis.

9.4. Interest income on tax refund is accounted based on the assessment orders passed.

(10) Employee Benefits

10.1 Defined benefit schemes

The liabilities towards Gratuity and Pension are recognized based on independent actuarial valuation on ''Projected Unit credit Method'' at each Balance Sheet date. These liabilities are funded by the Bank and are managed by separate trusts.

10.2 Long - term employee Benefit

The Privilege leave is considered a long term benefit and is recognized based on independent actuarial valuation on ''Projected Unit credit Method'' at each Balance Sheet date.

10.3 Defined contribution schemes Contributions to defined contribution schemes are recognized on the basis of the amount paid or payable for the period during which services are rendered by the employees.

(11) Taxation

Provision for Income Tax is made after due consideration of the judicial pronouncements and legal opinion. Disputed taxes, not provided for, are included under "Contingent Liabilities".

Tax expenses for the year comprise of Current Tax and Deferred Tax. Deferred Tax recognizes, subject to the consideration of prudence in respect of Deferred Tax Assets, timing differences being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

(12) Net Profit

12.1 Provisions, Contingent Liabilities and Contingent Assets

The Bank recognizes provisions only when it has a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation and when a reasonable estimate of the amount of the obligation can be made.

Contingent Assets are not recognized since this may result in the recognition of Income that may never be realized.

12.2 Net Profit is arrived at after accounting for the following "Provisions and Contingencies":

- Depreciation on Investments

- Provision for Income Tax and Wealth Tax

- Provision for loan losses

- Write off of certain Non-Performing Advances / Investments

- Provision for Standard Assets

- Other usual and necessary provisions

- Transfer to contingencies

(13) Earning per share:

The Bank reports basic and diluted Earnings Per Share in accordance with AS 20. Basic Earnings Per Share is computed by dividing the net profit after tax by the weighted average number of equity shares outstanding for the Year.

---

Mar 31, 2012

[1] Accounting Convention

The accounts are prepared under the historical cost convention and conform to the statutory provisions and prevailing practices, except as otherwise stated.

[2] Foreign Currency Translation / Conversion of Foreign Currencies

2.1. In respect of Foreign Branches, Assets and Liabilities (both monetary and non-monetary as well as contingent liabilities) are translated at the closing spot rate of exchange announced by Foreign Exchange Dealers' Association of India (FEDAI) and Income and Expenditure items of the foreign branches are translated at the quarterly average closing rate published by FEDAI in accordance with Accounting Standard (AS) 11 issued by the Institute of Chartered Accountants of India (ICAI) and as per the guidelines of Reserve Bank of India (RBI). The resultant exchange gain/loss is credited/debited to Foreign Currency Translation Reserve.

2.2. In respect of Domestic Branches, Assets and Liabilities in foreign currency, Forward Exchange Contracts, Guarantees, Acceptances, Endorsements and Obligations are evaluated at the closing spot rate / forward rate for the residual maturity of the contract in accordance with AS 11 issued by ICAI and as per the guide lines of RBI.

Income and Expenditure items are accounted for at the exchange rates prevailing on the date of transactions.

The gain or loss on such evaluation of outstanding Forward Exchange Contracts is taken to Profit & Loss Account.

[3] Investments

3.1. Classification of investments is made as per the guidelines of the RBI. The entire investment portfolio of the bank is classified under three categories viz. 'Held to Maturity', 'Available for sale' and 'Held for Trading', which is decided at the time of acquisition of securities. Transfer of scrips, if any, from one category to another is done at the lowest of acquisition cost / book value / market value on the date of transfer and the depreciation, if any, on such transfer is fully provided for. Investments are disclosed in the Balance Sheet under six classifications viz: (a) Government securities (b) Other approved securities (c) Shares (d) Debentures & Bonds (e) Subsidiaries, Joint Ventures & Associates and (f) Others.

3.2. The valuation of Investments is done in accordance with the guidelines issued by the RBI as under:

a) HELDTO MATURITY

Investments under Held to Maturity category are carried at acquisition cost, net of amortisation, if any. The excess of acquisition cost, if any, over the face value is amortized over the remaining period of maturity.

Investments in Subsidiaries, Joint Ventures and Associates are valued at carrying cost. Any diminution in the value other than temporary in nature is fully provided for.

Investment in sponsored Regional Rural Banks (RRB) and other Trustee Shares are carried at cost.

Profit on sale of Investments in this category is first taken to the Profit and Loss Account and thereafter appropriated to the Capital Reserve Account net of taxes and Statutory Reserve. No amortisation is effected for securities sold during the year. Loss on sale is recognized in the Profit and Loss Account.

b) AVAILABLE FOR SALE

The individual securities under Available for Sale' category are marked to market.

Central Government Securities are valued at market prices as per prices declared by Fixed Income Money Market and Derivatives Association of India (FIMMDA).

State Government securities and other approved securities are valued by applying the YTM method by marking it up by 25 basis points above the yields of Central Government securities of equivalent maturity put out by FIMMDA.

Non SLR securities such as Debentures / Bonds (other than Debentures / Bonds which are in the nature of advance) are valued at market prices, if available, and if not, are valued applying YTM method by marking it up by additional basis points based on credit rating above the yields of Central Government Securities of equivalent maturity as put out by FIMMDA and the methodology suggested by FIMMDA.

Preference Shares are valued at lower of YTM rates / redemption values.

Quoted Shares are valued at market prices.

Unquoted Shares are valued at break up value ascertained from the latest Balance Sheet not earlier than one year or otherwise at Re 1 per Company.

Treasury Bills and Commercial Papers are valued at carrying cost.

Units of Mutual Funds are valued at market rate or repurchase price or net asset value in that order depending on their availability.

Securities are valued scrip wise and depreciation /appreciation Under each sub category is aggregated.

Based on the above valuation, net appreciation if any, in each sub category is ignored while the net depreciation is fully provided for.

c) HELDFORTRADING

The individual securities under Held for Trading category are valued periodically as per RBI guidelines, at market prices as available from the trades/quotes or as per prices declared by FIMMDA. In respect of each classification under this category, net depreciation is provided for and net appreciation is ignored.

3.3 Cost such as brokerage, commission etc., relating to securities at the time of purchase are charged to Profit

& Loss Account.

3.4. Broken period interest on debt instruments up to the Date of acquisition/disposal is treated as revenue.

3.5. Security Receipts issued by Securitisation/Reconstruction Company (SC/RC) in respect of financial assets sold by the Bank to the SC/RC are valued at the lower of the redemption value of the Security Receipt and the Net Book Value of the financial asset. The Investment is carried in the books at the price determined as above and the sale/realisation, if any, is reduced from investment and the net book value is shown.

The valuation, classification and other norms applicable to Investment in Non-SLR securities prescribed by RBI is applied to Bank's investment in Security Receipts issued by SC/RC.

3.6. Non-Performing Investments (NPI) are identified as stated below, as per the guide lines issued by RBI:

[a] Securities/Preference Shares where interest / fixed dividend /instalment (including maturity proceeds) is due and remains unpaid for more than 90 days.

[b] Equity Shares valued at Re.l per company, where the latest Balance Sheet is not available or the Net worth of the Company is negative.

[c] If any credit facility availed by the issuer from the Bank is a non-performing advance, investment in any of the securities issued by the same issuer is also treated as NPI.

3.7 Accounting for Repo/Reverse Repo and Liquidity Adjustment Facility (LAF)

[a] The securities purchased/sold with an agreement to repurchase on the agreed terms under Repo / Reverse Repo (other than LAF) are accounted as borrowing/lending.

[b] The securities purchased/sold under LAF with RBI are debited/credited to Investment account and reversed on maturity.

[4] Derivative contracts

The Bank deals in Interest Rate Swaps and Currency Derivatives. The Interest Rate Derivatives dealt by the Bank are Rupee Interest Rate Swaps, Cross Currency Interest Rate Swaps and Forward Rate Agreements. Currency Derivatives dealt by the Bank are Options and Currency Swaps.

Based on RBI guidelines

a. Derivatives used for trading are marked to market and net depreciation is recognized while net appreciation is ignored.

b. Derivatives used for hedging are

i. Marked to market in case where the underlying Assets/Liabilities are marked to market.

ii. Income / Expenditure is accounted on accrual basis for Hedging swaps.

[5] Advances

5.1 Advances are classified as performing and non- performing assets and provisions are made in accordance with the prudential norms prescribed by RBI.

5.2 Advances are stated net of write off, provision for non-performing assets, claims received from credit guarantee institutions and re-discount.

5.3 In case of financial assets sold to the SC / RC, if the sale is at a price below the Net Book Value (NBV), the shortfall is debited to the Profit & Loss Account. If the sale is for a value higher than the NBV, the excess provision held in the account is not reversed but held till redemption of the Security Receipt, wherever applicable.

[6] Fixed Assets

6.1. The premises of the Bank include freehold and leasehold properties. Land and Buildings are capitalised based on conveyance / letters of allotment / agreement to lease, deposit made on long term leasehold properties and / or physical possession of the property.

6.2. Premises and other Fixed Assets are stated at historical cost except wherever revalued. The appreciation on revaluation, if any, is credited to the 'Revaluation Reserve' Account. Depreciation / Amortization attributable to the enhanced value is transferred from Revaluation Reserve to the credit of Depreciation in the Profit and Loss Account.

[7] Depreciation

7.1. Fixed Assets excluding Computers are depreciated under Written Down Value Method at the rates determined by the management on the basis of estimated useful life of the respective assets. As per the guidelines of RBI, depreciation on Computers is charged at33.33%on Straight-Line Method.

7.2. Premium paid on leasehold properties is charged off over the lease period.

7.3. Depreciation on Assets given on Lease is charged on Written Down Value Method as per Schedule XIV to the Companies Act, 1956afteradjustingCapital recovery.

7.4. Depreciation on additions to fixed/leased assets is charged for the full year irrespective of the date of acquisition. No depreciation is provided for in the year of sale/disposal.

[8] Impairment of Assets

Impairment losses on Fixed Assets, if any, are recognized in Profits Loss Account in accordance with AS 28 issued by ICAI.

[9] Revenue Recognition

9.1. Income and expenditure are generally accounted on accrual basis.

9.2. In the case of Non-Performing Assets including Investments, income is recognised to the extent of realisation, in accordance with the prudential norms prescribed by RBI. In respect of "Loans Past Due" accounts, recoveries are appropriated first towards principal.

9.3. Commission, Exchange, Brokerage, Dividends and Locker Rent are accounted for as income on receipt basis.

9.4. Interest income on tax refund is accounted based on the assessment orders passed.

[10] Employee Benefits

Provision for Pension, Gratuity and Privilege Leave is made based On the actuarial valuation at the year-end as per the AS -15(Revised) Issued by ICAI. Net actuarial gains/losses are recognized in Profit & Loss Account.

[11] Taxation

Provision for Income Tax is made after due consideration of the judicial pronouncements and legal opinion. Disputed taxes, not provided for, are included under "Contingent Liabilities".

Tax expenses for the year comprise of Current Tax and Deferred Tax. Deferred Tax recognizes, subject to the consideration of prudence in respect of Deferred Tax Assets, timing differences being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

[12] Net Profit

12.1 Provisions, Contingent Liabilities and Contingent Assets

The Bank recognizes provisions only when it has a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation and when a reasonable estimate of the amount of the obligation can be made.

Contingent Assets are not recognized since this may result in the recognition of Income that may never be realized.

12.2 Net Profit is arrived at after accounting for the following "Provisions and Contingencies":

- Depreciation on Investments

- Provision for Income Tax and Wealth Tax

- Provision for loan losses

- Write off of certain Non-Performing Advances / Investments

- Provision for Standard Assets

- Other usual and necessary provisions

- Transfer to contingencies

---

Mar 31, 2011

[1] Accounting Convention

The accounts are prepared under the Historical cost convention and conform to the statutory provisions and prevailing practices, except as otherwise stated.

[2] Foreign Currency Translation / Conversion of Foreign Currencies

2.1. In respect of Foreign Branches, Assets and Liabilities are translated at the closing spot rate of exchange announced by FEDAI and Income and Expenditure items of the foreign branches are translated at the quarterly average closing rate published by FEDAI in accordance with Accounting Standard 11 issued by the Institute of Chartered Accountants of India and as per the guidelines of Reserve Bank of India. The resultant exchange gains, if any, are taken to Foreign Currency Translation Reserve and loss, if any, net of reserves, is taken to Profit & Loss Account.

2.2. In respect of Domestic Branches, Assets and Liabilities in foreign currency, Forward Exchange Contracts, Guarantees, Acceptances, Endorsements and Obligations are evaluated at the closing spot rate / forward rateforthe residual maturity of the contract in accordance with Accounting Standard 11 issued by the Institute of Chartered Accountants of India and as perthe guidelines of Reserve Bank of India.

Income and Expenditure items are accounted for at the exchange rates prevailing on the date of transactions.

The gain or loss on such evaluation of outstanding Forward Exchange Contracts is taken to Profit & Loss Account.

[3] Investments

3.1. Classification of investments is made as per the guidelines of the Reserve Bank of India. The entire investment portfolio of the bank is classified under three categories viz. Held to Maturity, Available for sale and Held for Trading, which is decided at the time of acquisition of securities. Transfer of scrips, if any, from one category to another is done at the lowest of acquisition cost/book value/market value on the date of transfer a nd the depreciation, if a ny, on such transfer is fully provided for.

Investments are disclosed in the Balance Sheet under six classifications viz: (a) Government securities, (b) Other approved securities, (c) Shares, (d) Debentures & Bonds, (e) Subsidiaries / Joint Ventures and (f) Others.

3.2. The valuation of Investments is done in accordance with the guidelines issued by the Reserve Bank of ndia asunder:

a) HELD TO MATURITY

Investments under Held to Maturity category are carried at acquisition cost, net of amortization, if any. The excess of acquisition cost, if any, over the face value is amortized over the remaining period of maturity.

Investments in Subsidiaries and Joint Ventures are valued at carrying cost. Any diminution in the value otherthan temporary in nature isfuIly provided for.

Investment in RRBs and other Trustee Shares are carried at cost.

Profit on sale of Investments in this category is first taken to the Profit and Loss Account and thereafter appropriated to the Capital Reserve Account net of taxes and Statutory Reserve. No amortisation is effected for securities sold during the year. Loss on sale is recognized in the Profit and LossAccount.

b) AVAILABLE FOR SALE

The individual securities under Available For Sale category a re marked to market.

Central Government Securities are valued at market prices as per prices declared by Fixed Income Money Market and Derivatives Association of India (FIMMDA).

State Government securities and other approved securities are valued by applying the YTM method by marking it up by 25 basis points above the yields of Central Government securities of equivalent maturity put out by FIMMDA.

Non SLR securities such as Debentures / Bonds (other than Debentures / Bonds which are in the nature of advance) are valued at market prices, if available, and if not, are valued applying YTM method by marking it up by additional basis points based on credit rating above the yields of Central Government Securities of equivalent maturity as put out by FIMMDA and the methodology suggested by FIMMDA.

Preference Shares are valued at YTM rates / redemption values, whichever is lower.

Quoted Shares a re valued at market prices.

Unquoted Shares are valued at break up value ascertained from the latest Balance Sheet not earlier than one year or otherwise at Re 1 per Company.

Treasury Bills and Commercial Papers are valued at carrying cost.

Units of Mutual Funds are valued at market rate or repurchase price or net asset value in that order depending on their availability.

Securities are valued script wise, and depreciation/ appreciation undereach sub category is aggregated.

Based on the above valuation, net appreciation if any in each sub category is ignored while the net depreciation isfully provided.

c) HELDFORTRADINC

The individual securities under Held For Trading category are valued periodically as per RBI guidelines, at market prices as available from the trades/quotes or as per prices declared by FIMMDA. In respect of each classification under this category, net depreciation is provided and net appreciation is ignored.

3.3. Costs such as brokerage, commission etc., relating to securities atthetime of purchase are charged to Profit & LossAccount.

3.4. Broken period interest on debt instruments up to the date of acquisition/disposal istreated as revenue.

3.5. Security Receipts issued by Securitisation / Reconstruction Company (SC/RC) in respect of financial assets sold by the Bank to the SC/RC are valued at the lower of the redemption value of the Security Receipt and the Net Book Value of the financial asset. The Investment is carried in the books at the price determined as above and the sale/realization if any, is reduced from investment and the net book value is shown.

The valuation, classification and other norms applicable to Investment in Non-SLR securities prescribed by RBI is applied to Banks investment in Security Receipts issued bySC/RC.

3.6. Non-Performing Investments (NPI) are identified as stated below, as per the guidelines issued by Reserve Bankof India.

[a] Securities/Preference Shares where interest / fixed dividend /instalment (including maturity proceeds) is due and remains unpaid for more than 90 days.

[b] Equity Shares valued at Rs.1 per company where the latest Balance Sheet is not available orthe Net worth of the Company is negative.

[c] If any credit facility availed by the issuer from the Bank is a non-performing advance, Investment in any of the securities issued by the same issuer is alsotreatedasNPI.

[4] Derivative Contracts

The Bank deals in Interest Rate Swaps and Currency Derivatives. The Interest Rate Derivatives dealt by the Bank are Rupee Interest Rate Swaps, Cross Currency nterest Rate Swaps and Forward Rate Agreements. Currency Derivatives dealt by the Bank are Options and Currency Swaps.

Based on Reserve Bankof India guidelines:

a. Derivatives used fortrading are marked to market and net depreciation is recognized while net appreciation is ignored.

b. Derivatives usedforhedgingare

i. Marked to market in case where the underlying Assets / Lia bi I ities a re ma rked to ma rket.

ii. Income/Expenditure is accounted on accrual basis forHedgingswaps.

[5] Advances

5.1 Advances are classified as performing and non-performing assets and provisions are made in accordance with the prudential norms prescribed by Reserve Bankof India.

5.2 Advances are stated net of write off, provision for non-performing assets, claims received from Credit Guarantee institutions and re-discount.

5.3 In case of financial assets sold to the Securitization / Reconstruction Company, ifthesaleisata price below the Net Book Value (NBV), the shortfall is debited to the Profit & Loss Account. If the sale is for a value higherthan the NBV, the excess provision held in the account is not reversed but held till redemption of the Security Receipt, wherever applicable.

[6] Fixed Assets

6.1. The premises of the Bank include freehold and teasehold properties. Land and Buildings are capitalised based on conveyance/letters of allotment/ agreement to lease, deposit made on long term leasehold properties and /or physical possession of the property.

6.2. Premises and other Fixed Assets are stated at historical cost except wherever revalued. The appreciation on revaluation, if any, is credited to the Revaluation Reserve Account. Depreciation / Amortization attributable to the enhanced value is transferred from Revaluation Reserve to the credit of Depreciation intheProfitand LossAccount

[7] Depreciation

7.1. Fixed Assets excluding Computers are depreciated under Written Down Value Method at the rates determined by the management on the basis of estimated useful life of the respective assets. As per the guidelines of Reserve Bank of India, depreciation on Computers is charged at 33.33% on Straight-Line Method.

7.2. Premium paid on leasehold properties is charged off overthe lease period.

7.3. Depreciation on Assets given on Lease is charged on Written Down Value Method as per Schedule XIV to the Companies Act, 1956 after adjusting Capita recovery.

7.4. Depreciation on additions to fixed/leased assets is charged for the full year irrespective of the date of acquisition. No depreciation is provided in the year of sale/disposal.

[8] Impairment of Assets:

Impairment losses on Fixed Assets, if any, are recognized in Profit & Loss Account in accordance with Accounting Standard AS-28 issued by the institute of Chartered Accountants of India.

[9] Revenue Recognition

9.1. Income and expenditure are generally accounted on accrual basis.

9.2. In the case of Non-Performing Assets including investments, income is recognised to the extent of realization, in accordance with the prudential norms prescribed by Reserve Bank of India. In respect of "Loans Past Due" accounts, recoveries are appropriated first towards principal.

9.3. Commission, Exchange, Brokerage, Dividends and Locker Rent are accounted for as income on receipt basis.

9.4. Interest Income on Tax Refund is accounted based on the assessment orders passed.

[10] Employee Benefits

Provision for Pension, Gratuity, Privilege Leave and Sick Leave is made based on the actuarial valuation at the year-end as perthe Accounting Standard -15(Revised) issued by the Institute of Chartered Accountants of ndia. Net Actuarial gains and losses are recognized duringtheyear.

[11] Taxation

Provision for Income Tax is made after due consideration of the judicial pronouncements and legal opinion. Disputed taxes, not provided for are included underTontingent Liabilities".

Tax expenses for the year comprise of current Tax and Deferred Tax. Deferred Tax recognizes, subject to the consideration of prudence in respect of Deferred Tax Assets, timing differences being the difference between taxable income and accounting income that originate in one period and are capable of reversal in oneormoresubsequent periods.

[12] Net Profit

12.1 Provisions, Contingent Liabilities and Contingent Assets:

The Bank recognizes provisions only when it has a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation and when a reasonable estimate of the amount of the obligation can be made.

Contingent Assets are not recognized since this may result in the recognition of Income that may never be realized.

12.2 Net Profit is arrived at after accounting for the following "Provisions and Contingencies":

- Depreciation on Investments.

- Provision for IncomeTaxand Wealth Tax.

- Provision for loan losses.

- Write-off of certain Non-Performing Advances / investments.

- Provision for Standard Assets.

- Otherusual and necessary provisions.

- Transfer to contingencies.

---

Mar 31, 2010

[1] Accounting Convention

The accounts are prepared under the Historical cost convention and conform to the statutory provisions and prevailing practices, except as otherwise stated.

[2] Foreign Currency Translation / Conversion of Foreign Currencies

2.1. In respect of Foreign Branches, Assets and Liabilities are translated at the closing spot rate of exchange announced by FEDAI and Income and Expenditure items of the foreign branches are translated at the quarterly average closing rate published by FEDAI in accordance with Accounting Standard 11 issued by the Institute of Chartered Accountants of India and as per the guidelines of Reserve Bank of India. The resultant exchange gains, if any, are taken to Foreign Currency Translation Reserve and loss, if any, net of reserves, is ta ken to Profit & Loss Accou nt.

2.2. In respect of Domestic Branches, Assets and Liabilities in foreign currency, Forward Exchange Contracts, Guarantees, Acceptances, Endorsements and Obligations are evaluated at the closing spot rate / forward rate for the residual maturity of the contract in accordance with Accounting Standard 11 issued by the Institute of Chartered Accountants of India and as perthe guidelines of Reserve Bank of India.

Income and Expenditure items are accounted for at the exchange rates prevailing on the date of transactions.

The gain or loss on such evaluation of outstanding Forward Exchange Contracts is taken to Profit & Loss Account.

[3] Investments

3.1. Classification of investments is made as per the guidelines of the Reserve Bank of India. The entire investment portfolio of the bank is classified under three categories viz. Held to Maturity, Available for sale and Held for Trading, which is decided at the time of acquisition of securities. Transfer of scrips, if any, from one category to another is done at the lowest of acquisition cost/book value/market value on the date of transfer and the depreciation, if any, on such transfer is fully provided for.

Investments are disclosed in the Balance Sheet under six classifications viz-, (a) Government securities, (b) Other approved securities, (c) Shares, (d) Debentures & Bonds, (e) Subsidiaries / Joint Ventures and (f) Others.

3.2. The valuation of Investments is done in accordance with the guidelines issued by the Reserve Bank of India as under-.

a) HELD TO MATURITY

Investments under Held to Maturity category are carried at acquisition cost, net of amortization, if any. The excess of acquisition cost, if any, over the face value is amortized over the remaining period of maturity.

Investments in Subsidiaries and Joint Ventures are valued at carrying cost. Any diminution in the value other than temporary in nature is fully provided for.

Investment in RRBs and other Trustee Shares are carried at cost.

Profit on sale of Investments in this category is first taken to the Profit and Loss Account and thereafter appropriated to the Capital Reserve Account net of taxes and Statutory Reserve. No amortisation is effected for securities sold during the year. Loss on sale is recognized in the Profit and Loss Account.

b) AVAILABLE FOR SALE

The individual securities under Available For Sale category are marked to market.

Central Government Securities are valued at market prices as per prices declared by Fixed Income Money Market and Derivatives Association of India (FIMMDA).

State Government securities and other approved securities a re valued by applying the YTM method by marking it up by 25 basis points above the yields of Central Government securities of equivalent maturity put out by FIMMDA.

Non SLR securities such as Debentures / Bonds (other than Debentures / Bonds which are in the nature of advance) are valued at market prices, if available, and if not, are valued applying YTM method by marking it up by additional basis points based on credit rating above the yields of Central Government Securities of equivalent maturity as put out by FIMMDA and the methodology suggested by FIMMDA.

Preference Shares are valued at YTM rates / redemption values, whichever is lower.

Quoted Sharesare valued at market prices.

Unquoted Shares are valued at break up value ascertained from the latest Balance Sheet not earlier than one year or otherwise at Re 1 per Company.

Treasury Bills and Commercial Papers are valued at carrying cost.

Units of Mutual Funds are valued at market rate or repurchase price or net asset value in that order depending on their availability.

Securities are valued script wise, and depreciation/ appreciation undereach subcategory isaggregated.

Based on the above valuation, net appreciation if any in each sub category is ignored while the net depreciation isfully provided.

c) HELDFORTRADING

The individual securities under Held For Trading category are valued periodically as per RBI guidelines, at market prices as available from the trades/quotes or as per prices declared by FIMMDA. In respect of each classification under this category, net depreciation is provided and net appreciation is ignored.

3.3. Costs such as brokerage, commission etc., relating to securities at the time of purchase are charged to Profit & Loss Account.

3.4. Broken period interest on debt instruments up to the date of acquisition/disposal is treated as revenue.

3.5. Security Receipts issued by Securitisation / Reconstruction Company (SC/RC) in respect of financial assets sold by the Bank to the SC/RC are valued at the lower of the redemption value of the Security Receipt and the Net Book Value of the financial asset. The Investment is carried in the books at the price determined as above and the sale/realization if any, is reduced from investment and the net book vali/e is shown.

The valuation, classification and other norms applicable to Investment in Non-SLR securities prescribed by RBI is applied to Banks investment in Security Receipts issued by SC/RC.

3.6. Non-Performing Investments (NPI) are identified as stated below, as per the guidelines issued by Reserve Bankoflndia.

[a] Securities/Preference Shares where interest / fixed dividend /instalment (including maturity proceeds) is due and remains unpaid for more than 90 days.

[b] Equity Shares valued at Re.l per company, where the latest Balance Sheet is not available or the Net worth of the Company is negative."

[c] If any credit facility availed by the issuer from the Bank is a non-performing advance, Investment in any of the securities issued by the same issuer is alsotreatedasNPI.

[4] Derivative Contracts

The Bank deals in Interest Rate Swaps and Currency Derivatives. The Interest Rate Derivatives dealt by the Bank are Rupee Interest Rate Swaps, Cross Currency Interest Rate Swaps and Forward Rate Agreements. Currency Derivatives dealt by the Bank are Options and Currency Swaps.

Based on Reserve Bankoflndia guidelines:

a. Derivatives used fortrading are marked to market and net depreciation is recognized while net appreciation is ignored.

b. Derivatives used for hedging are

i. Marked to market in case where the underlying Assets/Liabilities are marked to market.

ii. Income/Expenditure is accounted on accrual basis forHedgingswaps.

[5] Advances

5.1 Advances are classified as performing and non-performing assets and provisions are made in accordance with the prudential norms prescribed by Reserve Bankoflndia.

5.2 Advances are stated net of write off, provision for non-performing assets, claims received from Credit Guarantee institutions and re-discount.

5.3 In case of financial assets sold to the Securitization / Reconstruction Company, if the sale is at a price below the Net Book value (NBV), the shortfall is debited to the Profit & Loss Account. If the sale is for a value higher than the NBV, the excess provision held in the account is not reversed but held till redemption of the Security Receipt, wherever applicable.

[6] Fixed Assets

6.1. The premises of the Bank include freehold and leasehold properties. Land and Buildings are capitalised based on conveyance / letters of allotment/ agreement to lease, deposit made on long term leasehold properties and / or physical possession of the property.

6.2. Premises and other Fixed Assets are stated at historical cost except wherever revalued. The appreciation on revaluation, if any, is credited to the Revaluation Reserve Account. Depreciation / Amortization attributable to the enhanced value is transferred from Revaluation Reserve to the credit of Depreciation in the Profit and Loss Account.

[7] Depreciation

7.1. Fixed Assets excluding Computers are depreciated under Written Down Value Method at the rates determined by the management on the basis of estimated useful life of the respective assets. As per the guidelines of Reserve Bank of India, depreciation on Computers is charged at 33.33% on Straight-Line Method.

7.2. Premium paid on leasehold properties is charged off overthe lease period.

7.3. Depreciation on Assets given on Lease is charged on Written Down Value Method as per Schedule XIV to the Companies Act, 1956 after adjusting Capital recovery.

7.4. Depreciation on additions to fixed/leased assets is charged for the full year irrespective of the date of acquisition. No depreciation is provided intheyearof sale/disposal.

[8] Impairment of Assets:

Impairment losses on Fixed Assets, if any, are recognized in Profit & Loss Account in accordance with Accounting Standard AS-28 issued by the Institute of Chartered Accountants of India.

[9] Revenue Recognition

9.1. Income and expenditure are generally accounted on accrual basis.

9.2. In the case of Non-Performing Assets including Investments, income is recognised to the extent of realization, in accordance with the prudential norms prescribed by Reserve Bank of India. In respect of "Loans Past Due" accounts, recoveries are appropriated firsttowards principal.

9.3. Commission, Exchange, Brokerage, Dividends and Locker Rent are accounted for as income on receipt basis.

9.4. Interest Income on Tax Refund is accounted based on the assessment orders passed.

[10] Employee Benefits

Provision for Pension, Gratuity, Privilege Leave and Sick Leave is made based on the actuarial valuation at the year-end as per the Accounting Standard -15(Revised) issued by the Institute of Chartered Accountants of India. Net Actuarial gains and losses are recognized duringtheyear.

[11] Taxation

Provision for Income Tax is made after due consideration of the judicial pronouncements and legal opinion. Disputed taxes, not provided for are included underTontingent Liabilities".

Tax expenses for the year comprise of current Tax and Deferred Tax. Deferred Tax recognizes, subject to the consideration of prudence in respect of Deferred Tax Assets, timing differences being the difference between taxable income and accounting incomethat originate in one period and are capable of reversal in one or more subsequent periods.

[12] Net Profit

12.1 Provisions, Contingent Liabilities and Contingent Assets:

The Bank recognizes provisions only when it has a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation and when a reasonable estimate of the amount of the obligation can be made.

Contingent Assets are not recognized since this may result in the recognition of Incomethat may never be realized.

12.2 Net Profit is arrived at after accounting for the following "Provisions and Contingencies":

- Depreciation on Investments.

- Provision for IncomeTax and Wealth Tax.

- Provision for loan losses.

- Write-off ef certain Non-Performing Advances / Investments.

- Provision for Standard Assets.

- Other usual and necessary provisions.

- Transfer to contingencies.