Accounting Policies of City Union Bank Ltd. Company

Mar 31, 2025

A. BACKGROUND

City Union Bank Limited (the Bank), incorporated in Kumbakonam, India is a publicly held Banking Company governed by the Banking Regulation Act, 1949 and is engaged in providing a wide range of Banking and Financial Services including Commercial Banking and treasury operations.

B. BASIS OF PREPARATION

The Financial Statements are prepared under the historical cost convention following accrual basis of accounting, unless otherwise stated, using going concern assumption, and conform in all material aspects to the Generally Accepted Accounting Principles (GAAP) in India, which comprises applicable statutory provisions, regulatory norms / guidelines and extant disclosure norms prescribed by the Reserve Bank of India (RBI), Accounting Standards (AS) issued under Section 133 of the Companies Act, 2013 read together with the Companies (Accounting Standards) Rules, 2021, Banking Regulation Act, 1949 and practices prevalent in the banking industry in India.

USE OF ESTIMATES

The preparation of Financial Statements in conformity with GAAP require the management to make estimates and assumptions in the reported amounts of Assets and Liabilities (including Contingent Liabilities) as of the date of the Financial Statements and the reported income and expenses during the reporting period. Management believes that the estimates used in preparation of the Financial Statements are prudent and reasonable. Actual results could differ from these estimates. Any revision in the accounting estimates is recognised prospectively in the current and future periods.

C. SIGNIFICANT ACCOUNTING POLICIES

1. REVENUE RECOGNITION

Income and Expenditure are accounted on accrual basis, except the following;

a. Interest on Non-Performing Advances (NPA) and

Non-Performing Investments (NPI) are recognised upon realisation as per the prudential norms prescribed by RBI.

b. Interest on overdue bills, commission (excluding insurance commission), exchange, brokerage and rent on lockers are accounted on realization.

c. Dividend on equity shares, preference shares and mutual fund units is accounted as income when the right to receive the dividend is established.

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

2. INVESTMENTS

a) Securities classified under "Held to Maturity" category are valued at carrying cost.

b) Securities held in "Available for Sale" Category are valued scrip wise as under:

i) Government of India Securities and State Government Securities are valued at market price as per quotation put out by Financial Benchmark India Limited.

ii) Trustee Securities, Securities guaranteed by Central / State Governments and PSU Bonds are valued on appropriate Yield to Maturity (YTM) basis as per Financial Benchmark India Limited / Reserve Bank of India guidelines.

iii) Treasury Bills / Certificate of Deposits / Commercial Papers are valued at carrying cost.

iv) Unquoted Equity Shares are valued at Break up Value as per the latest Balance Sheet, if available, or ''1/- per Company.

For all above investments under AFS, net depreciation / appreciation on revaluation is charged to AFS reserve account.

c) Securities held in "Fair Value Through Profit and Loss (FVTPL) - Non HFT" Category are valued as under.

I. Quoted equity Shares are valued at market rate provided by the NSE. Unquoted shares are valued at Breakup Value as per the latest Balance Sheet, if the latest balance sheet is not available, then the valued at ''1/- per Company.

ii. Preference shares are valued at market price if quoted or at appropriate YTM basis as per Financial Benchmark India Limited guidelines.

iii. Debentures / Bonds are valued at market price, if quoted, otherwise on an appropriate YTM basis by using spread matrix provided by FIMMDA.

iv. Mutual Funds are valued at market price, if quoted, or at NAV or Market Price/ Repurchase Price.

For all above investments under FVTPL (Non-HFT) net depreciation / appreciation after revaluation is charged to Profit / Loss Account.

d) Individual scrips under "FVTPL-Held For Trading" category are valued at Market Price.

• Government of India Securities are valued at market price as per quotation put out by Financial Benchmark India Limited.

• Equity Shares are valued at market rate if quoted, otherwise at Break up Value as per the latest Balance Sheet, if available, or Re.1/- per Company.

For all above investments under FVTPL- HFT, net depreciation / appreciation after revaluation, if any, for each asset class is charged to Profit / Loss Account.

In all the above categories, the premium / discount on the dated securities are amortised over the life time of the instrument.

Profit / Loss on sale of Investments from HTM category is first credited to profit and loss account and thereafter an amount equivalent to profit net of statutory reserve and taxes is appropriated to Capital Reserve Account.

Profit / Loss on sale of Investments from AFS/FVTPL/HFT (Other than Equity Shares held under AFS) is taken to profit and loss account. In case of Equity Shares held under AFS, profit / loss on sale of such shares is taken to Capital Reserve without crediting to Profit and Loss Account.

3. LOANS / ADVANCES AND PROVISIONS THEREON

3.1 Advances have been classified as per the Asset Classification norms laid down by the Reserve Bank of India. The required provisioning for Standard Assets and for Non Performing Assets have been made as per the Regulatory Norms.

3.2 Advances shown in the Balance Sheet are net of specific provisions, technical write offs and ECGC / DICGC claims received. Partial recoveries in Non Performing Assets are apportioned first towards charges and interest, thereafter towards principal.

3.3 NPAs are classified into Sub-Standard, Doubtful and Loss Assets based on the following criteria stipulated by RBI :

I. Sub-Standard : A loan asset that has remained non-performing for a period less than or equal to 12 months.

ii. Doubtful : A loan asset that has remained in the sub-standard category for a period of 12 months.

iii. Loss : A loan asset where loss has been identified but the amount has not been fully written off.

3.4 Provisions are made for NPAs as per the extant guidelines prescribed by the regulatory authorities, subject to minimum provisions as prescribed below :

Substandard Assets :

i. A general provision of 15% on the total outstanding ;

ii. Additional provision of 10% for exposures which are unsecured ;

iii. Unsecured Exposure in respect of infrastructure advances where certain safeguards such as escrow accounts are available 20%.

Doubtful Assets :

- Secured portion i. Upto one year - 25%

ii. One to three years - 40%

iii. More than three years - 100%

- Unsecured portion - 100%

Loss Assets:

100% to be provided on the total outstanding;

3.5 Floating Provisions :

The Bank has a policy for creation and utilisation of floating provisions separately for advances, investments and general purposes. The quantum of floating provisions to be created is assessed at the end of the financial year. The floating provisions are utilised only for contingencies under extraordinary circumstances specified in the policy with prior permission of Reserve Bank of India.

3.6 Provision for Country Exposure :

In addition to the specific provisions held according to the asset classification status, provisions are also made for individual country exposures (other than the home country). Countries are categorised into seven risk categories, namely, insignificant, low, moderately low, moderate, moderately high, high and very high and provisioning made as per extant RBI guidelines. If the country exposure (net) of the Bank in respect of each country does not exceed 1% of the total funded assets, no provision is maintained on such country exposures. The provision is reflected in Schedules of the Balance Sheet.

3.7 Provision for Unhedged Foreign Currency Exposure :

Provision for Unhedged Foreign Currency Exposure of borrower entities is made considering their Unhedged Exposure to the Bank.

4. FIXED ASSETS, DEPRECIATION & AMORTIZATION

4.1 Premises, Software and Other Fixed Assets are accounted at acquisition cost less depreciation. Cost includes cost of purchase and all expenditure like site preparation, installation costs and professional fees incurred on the asset before it is ready to use.

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

4.3 Depreciation has been provided on the composite value for premises acquired with land

and building, where cost of the land is not separately identifiable.

4.4 The Bank has provided depreciation based on useful life of the assets in line with Schedule II of the Companies Act, 2013. Depreciation is charged over the estimated useful life of the fixed asset on a straight-line basis. Depreciation on assets purchased and sold during the year is provided on a pro-rata basis.

5. EFFECTS OF CHANGES IN THE FOREIGN

EXCHANGE RATE

5.1 Assets and Liabilities denominated in Foreign Currencies are translated at the rates notified by FEDAI at the close of the year. Profit or Loss accruing from such transactions is recognised in the Profit and Loss Account.

5.2 Income and Expenditure items have been translated at the exchange rates prevailing on the date of the transactions.

5.3 The Bank does not have a Branch in any Foreign Country.

5.4 Outstanding Forward Exchange Contracts are revalued at the exchange rates notified by FEDAI and the resultant net gain or loss is recognised in the Profit and Loss Account.

5.5 Foreign Currency Guarantees, Acceptances, Endorsements and other obligations are reported at the FEDAI notified closing exchange rates prevailing on the date of the Balance Sheet.

6. EMPLOYEE BENEFITS

6.1 Payments to defined contribution schemes such as Provident Fund and Employees Pension Fund, are charged as expenses, as and when they fall due.

6.2 Provision towards Leave Encashment is accounted on actuarial basis in accordance with Accounting Standard 15 (Revised 2005) issued by ICAI.

6.3 Payments to the Group Gratuity Life Assurance Scheme of the Life Insurance Corporation of India towards gratuity liability are charged as expenses, as and when they fall due.

7. EMPLOYEES STOCK OPTION SCHEME

The Employee Stock Option Scheme provides for grant of equity stock options to employees that vest in a graded manner. The Bank follows the Intrinsic Value Method to account for its employee compensation costs arising from grant of such options. The excess of fair market price over the exercise price shall be accounted as employee compensation cost in the year of vesting. The fair market price is the latest closing price of the shares on the Stock Exchanges in which shares of the Bank are largely traded immediately prior to the date of meeting of the Compensation Committee in which the options are granted.

8. 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 and in compliance with the Accounting Standard 17.

Business Segment is classified into (a) Treasury (b) Corporate and Wholesale Banking, (c)Retail Banking (includes Digital Banking Units) (d) Other Banking Operations.

9. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the net profit of the year by the weighted average number of equity shares.

Diluted earnings per share is computed using the weighted average number of equity shares and dilutive potential equity shares.

10. 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.

11. PROVISIONS, CONTINGENT LIABILITIES AND

CONTINGENT ASSETS

11.1 In conformity with AS 29 "Provisions, Contingent Liabilities and 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 a 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.

11.2 No provision is recognized for :

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

ii. Any present obligation that arises from past events but is not recognized because

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

b) 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 an outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made.

11.3 Contingent Assets are not recognized in the Financial Statements.

12. INCOME TAX

Income Tax comprises current tax and deferred tax for the year. The deferred tax assets / liability is recognised in accordance with Accounting Standard 22 issued by the Institute of Chartered Accountants of India.

13. NET PROFIT

The Net Profit disclosed in the Profit and Loss Account is after considering :

a. Provision for taxes on income in accordance with statutory requirements.

b. Provision for Standard Assets and NonPerforming Assets.

c. Provision for depreciation on Investments

d. Other usual and necessary provisions.

14. PROPOSED DIVIDEND

In term of AS 4 - "Contingencies and Events occurring after the Balance Sheet date" proposed dividend or dividend declared after Balance Sheet date is not shown as "Other Liability" in the Balance

Sheet, instead a note on the same will be included in the Financial Statement. Such proposed dividend will be appropriated from the "Reserves and Surplus" only after the approval of the shareholder.

15. SPECIAL RESERVES

Revenue and other Reserve include Special Reserve created under Section 36(i](viii] of the Income Tax Act, 1961 with the approval of the Board of Directors of the Bank.

16. CORPORATE SOCIAL RESPONSIBILITY

The expenditure towards Corporate Social Responsibility in accordance with the Companies Act, 2013 is recognised in the Profit and Loss Account.

17. OPERATING LEASES

Leases where all the risks and rewards of ownership are retained by the lessor are classified as ''Operating Lease''. Operating Lease payments are recognised as an expense in the Profit and Loss Account as per the lease terms. Initial direct costs in respect of operating leases such as legal costs, brokerage costs etc., are recognised as expense in the Profit and Loss Account.

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Mar 31, 2024

A. BACKGROUND

City Union Bank Limited (the Bank), incorporated in Kumbakonam, India is a publicly held Banking Company governed by the Banking Regulation Act, 1949 and is engaged in providing a wide range of Banking and Financial Services including Commercial Banking and treasury operations.

B. BASIS OF PREPARATION

The Financial Statements are prepared under the historical cost convention following accrual basis of accounting, unless otherwise stated, using going concern assumption, and conform in all material aspects to the Generally Accepted Accounting Principles (GAAP) in India, which comprises applicable statutory provisions, regulatory norms / guidelines and extant disclosure norms prescribed by the Reserve Bank of India (RBI), Accounting Standards (AS) issued under Section 133 of the Companies Act, 2013 read together with the Companies (Accounting Standards) Rules, 2021, Banking Regulation Act, 1949 and practices prevalent in the banking industry in India.

USE OF ESTIMATES

The preparation of Financial Statements in conformity with GAAP require the management to make estimates and assumptions in the reported amounts of Assets and Liabilities (including Contingent Liabilities) as of the date of the Financial Statements and the reported income and expenses during the reporting period. Management believes that the estimates used in preparation of the Financial Statements are prudent and reasonable. Actual results could differ from these estimates. Any revision in the accounting estimates is recognised prospectively in the current and future periods.

C. SIGNIFICANT ACCOUNTING POLICIES

1. REVENUE RECOGNITION

Income and Expenditure are accounted on accrual basis, except the following;

a. Interest on Non-Performing Advances (NPA) and Non-Performing Investments (NPI) are recognised

upon realisation as per the prudential norms prescribed by RBI.

b. Interest on overdue bills, commission, exchange, brokerage and rent on lockers are accounted on realization.

c. Dividend on equity shares, preference shares and mutual fund units is accounted as income when the right to receive the dividend is established.

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

2. INVESTMENTS

2.1 As per RBI guidelines, the investments of the Bank are classified into the following categories at the time of acquisition

• Held To Maturity (HTM)

• Available For Sale (AFS)

• Held For Trading (HFT)

They are further sub-classified and shown in the Balance Sheet under the following six categories :

i) Government Securities

ii) Other Approved Securities

iii) Shares

iv) Debentures and Bonds

v) Subsidiaries / Joint Ventures and

vi) Others

a) Securities classified under HTM category are valued at acquisition cost. Where the acquisition cost is higher than the face value, such excess of acquisition cost over the face value is amortised over the remaining period to maturity.

b) Securities held in AFS Category are valued scrip wise as under :

i) Government of India Securities are valued at market price as per quotation put out by Fixed I n c o m e M o n e y M a r ke t a n d D e r iv a t i ve s Association of India (FIMMDA) & Bloomberg / Financial Benchmark India Limited.

ii) State Government Loans, Trustee Securities, Securities guaranteed by Central / State Governments and PSU Bonds are valued on appropriate Yield to Maturity (YTM) basis as per FIMMDA & Bloomberg / Financial Benchmark India Limited.

iii) Treasury Bills / Certificate of Deposits / Commercial Papers, being discounted instruments, are valued at carrying cost.

iv) Equity Shares are valued at market rate if quoted, otherwise at Break up Value as per the latest Balance Sheet if available, or ''1/- for each Company.

v) Preference shares are valued at market price if quoted or at appropriate YTM basis as per FIMMDA & Bloomberg / Financial Benchmark India Limited.

vi) Debentures / Bonds are valued at market price if quoted, otherwise on an appropriate YTM basis.

vii) Units of mutual funds are valued at the Latest Repurchase Price / Net Asset Value (NAV) declared by the mutual fund.

viii) Security Receipts are valued at NAV as declared by the Securitization Companies.

c) Individual scrips under HFT category are valued at Market Price.

2.2 Investments in AFS / HFT are valued scrip-wise, aggregated category-wise and net depreciation, if any, within each category is charged to Profit & Loss Account, while net appreciation, if any, under each category is ignored.

2.3 Shifting of Securities from one category to another is carried out at the lower of acquisition cost / book value / market value as on the date of transfer. The depreciation, if any on such transfer is fully provided for.

2.4 Purchase and Sale transactions in Securities are accounted on settlement date. Profit / Loss on Sale of Investments in any category is taken to the

Profit & Loss Account. However, in case of Sale of Investments in HTM category, the profit is first credited to Profit and Loss Account and thereafter an amount equivalent to profit, net of Statutory Reserve and Taxes, is appropriated to the Capital Reserve Account.

2.5 The Bank undertakes short sale transactions in Central Government dated securities. The short position is marked to market and loss, if any, is charged to the Profit and Loss Account while gain, if any, is ignored. Profit / Loss on short sale is recognised on settlement date.

2.6 Cost of Investments is based on the Weighted Average Cost Method.

2.7 Commission, Brokerage, Broken Period Interest etc., incurred on acquisition of Securities is debited to Profit and Loss account. Commission, Incentives, Brokerage received on subscription is deducted from the cost of the Securities.

2.8 Investments are shown net of Depreciation, if any in the Balance Sheet.

2.9 Non Performing Investments are identified and provided for as per RBI guidelines. The provision on such Non-Performing Investments are not set off against the appreciation in respect of Other Performing Investments. Interest on NonPerforming Investments is not recognised until received.

3. LOANS / ADVANCES AND PROVISIONS THEREON

3.1 Advances have been classified as per the Asset Classification norms laid down by the Reserve Bank of India. The required provisioning for Standard Assets and for Non Performing Assets have been made as per the Regulatory Norms.

3.2 Advances shown in the Balance Sheet are net of specific provisions, technical write offs and ECGC / DICGC claims received.

Partial recoveries in Non Performing Assets are apportioned first towards charges and interest, thereafter towards principal.

3.3 NPAs are classified into Sub-Standard, Doubtful and Loss Assets based on the following criteria stipulated by RBI :

I. Sub-Standard : A loan asset that has remained non-performing for a period less than or equal to 12 months.

ii. Doubtful : A loan asset that has remained in the sub-standard category for a period of 12 months.

iii. Loss : A loan asset where loss has been identified but the amount has not been fully written off.

3.4 Provisions are made for NPAs as per the extant guidelines prescribed by the regulatory authorities, subject to minimum provisions as prescribed below :

Substandard Assets:

i. A general provision of 15% on the total outstanding ;

ii. Additional provision of 10% for exposures which are unsecured ;

iii. Unsecured Exposure in respect of infrastructure advances where certain safeguards such as escrow accounts are available 20%.

Doubtful Assets:

- Secured portion i. Upto one year - 25%

ii. One to three years - 40%

iii. More than three years - 100%

- Unsecured portion - 100%

Loss Assets:

100% to be provided on the total outstanding;

3.5 Floating Provisions :

The Bank has a policy for creation and utilisation of floating provisions separately for advances, investments and general purposes. The quantum of floating provisions to be created is assessed at the end of the financial year. The floating provisions are utilised only for contingencies under extraordinary circumstances specified in the policy with prior permission of Reserve Bank of India.

3.6 Provision for Country Exposure :

In addition to the specific provisions held according to the asset classification status, provisions are also made for individual country exposures (other than the home country). Countries are categorised into seven risk categories, namely, insignificant, low, moderately low, moderate, moderately high, high and very high and provisioning made as per extant RBI guidelines. If the country exposure (net) of the Bank in respect of each country does not exceed 1% of the total funded assets, no provision is maintained on such country exposures. The provision is reflected in Schedules of the Balance Sheet.

3.7 Provision for Unhedged Foreign Currency Exposure :

Provision for Unhedged Foreign Currency Exposure of borrower entities is made considering their Unhedged Exposure to the Bank.

4. FIXED ASSETS, DEPRECIATION & AMORTIZATION

4.1 Premises, Software and Other Fixed Assets are accounted at acquisition cost less depreciation. Cost includes cost of purchase and all expenditure like site preparation, installation costs and professional fees incurred on the asset before it is ready to use.

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

4.3 Depreciation has been provided on the composite value for premises acquired with land and building, where cost of the land is not separately identifiable.

4.4 The Bank has provided depreciation based on useful life of the assets in line with Schedule II of the Companies Act, 2013. Depreciation is charged over the estimated useful life of the fixed asset on a straight-line basis. Depreciation on assets purchased and sold during the year is provided on a pro-rata basis.

5. EFFECTS OF CHANGES IN THE FOREIGN EXCHANGE RATE

5.1 Assets and Liabilities denominated in Foreign Currencies are translated at the rates notified by FEDAI at the close of the year. Profit or Loss accruing from such transactions is recognised in the Profit and Loss Account.

5.2 Income and Expenditure items have been translated at the exchange rates prevailing on the date of the transactions.

5.3 The Bank does not have a Branch in any Foreign Country.

5.4 Outstanding Forward Exchange Contracts are revalued at the exchange rates notified by FEDAI and the resultant net gain or loss is recognised in the Profit and Loss Account.

5.5 Foreign Currency Guarantees, Acceptances, Endorsements and other obligations are reported at the FEDAI notified closing exchange rates prevailing on the date of the Balance Sheet.

6. EMPLOYEE BENEFITS

6.1 Payments to defined contribution schemes such as Provident Fund and Employees Pension Fund, are charged as expenses, as and when they fall due.

6.2 Provision towards Leave Encashment is accounted on actuarial basis in accordance with Accounting Standard 15 (Revised 2005) issued by ICAI.

6.3 Payments to the Group Gratuity Life Assurance Scheme of the Life Insurance Corporation of India towards gratuity liability are charged as expenses, as and when they fall due.

7. EMPLOYEES STOCK OPTION SCHEME

The Employee Stock Option Scheme provides for grant of equity stock options to employees that vest in a graded manner. The Bank follows the Intrinsic Value Method to account for its employee compensation costs arising from grant of such options. The excess of fair market price over the exercise price shall be accounted as employee compensation cost in the year of vesting. The fair market price is the latest closing price of the shares on the Stock Exchanges in which shares of the Bank are largely traded immediately prior to the date of meeting of the Compensation Committee in which the options are granted.

8. 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 and in compliance with the Accounting Standard 17.

Business Segment is classified into (a) Treasury (b) Corporate and Wholesale Banking, (c)Retail Banking (includes Digital Banking Units) (d) Other Banking Operations.

9. EARNING PER SHARE

Basic earning per share is calculated by dividing the net profit of the year by the weighted average number of equity shares.

Diluted earning per share is computed using the weighted average number of equity shares and dilutive potential equity shares.

10. 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.

11. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

11.1 In conformity with AS 29 "Provisions, Contingent Liabilities and 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 a 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.

11.2 No provision is recognized for :

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

ii. Any present obligation that arises from past events but is not recognized because

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

b) 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 an outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made.

11.3 Contingent Assets are not recognized in the Financial Statements.

12. INCOME TAX

Income Tax comprises current tax and deferred tax for the year. The deferred tax assets / liability is recognised in accordance with Accounting Standard 22 issued by the Institute of Chartered Accountants of India.

13. NET PROFIT

The Net Profit disclosed in the Profit and Loss Account is after considering :

a. Provision for taxes on income in accordance with statutory requirements.

b. Provision for Standard Assets and NonPerforming Assets.

c. Provision for depreciation on Investments

d. Other usual and necessary provisions.

14. PROPOSED DIVIDEND

In term of AS 4 - "Contingencies and Events occurring after the Balance Sheet date" proposed dividend or dividend declared after Balance Sheet date is not shown as "Other Liability" in the Balance Sheet, instead a note on the same will be included in the Financial Statement. Such proposed dividend will be appropriated from the "Reserves and Surplus" only after the approval of the shareholder.

15. SPECIAL RESERVES

Revenue and other Reserve include Special Reserve created under Section 36(i)(viii) of the Income Tax Act, 1961 with the approval of the Board of Directors of the Bank.

16. CORPORATE SOCIAL RESPONSIBILITY

The expenditure towards Corporate Social Responsibility in accordance with the Companies Act, 2013 is recognised in the Profit and Loss Account.

17. OPERATING LEASES

Leases where all the risks and rewards of ownership are retained by the lessor are classified as ''Operating Lease''. Operating Lease payments are recognised as an expense in the Profit and Loss Account as per the lease terms. Initial direct costs in respect of operating leases such as legal costs, brokerage costs etc., are recognised as expense in the Profit and Loss Account.

---

Mar 31, 2023

A. BACKGROUND

City Union Bank Limited (the Bank), incorporated in Kumbakonam, India is a publicly held banking company governed by the Banking Regulation Act, 1949 and is engaged in providing a wide range of banking and financial services including commercial banking and treasury operations.

B. BASIS OF PREPARATION

The financial statements are prepared under the historical cost convention following accrual basis of accounting, unless otherwise stated, using going concern assumption, and conform in all material aspects to the Generally Accepted Accounting Principles (GAAP) in India, which comprises applicable statutory provisions, regulatory norms/guidelines and extant disclosure norms prescribed by the Reserve Bank of India(RBI), Accounting Standards (AS) issued under Section 133 of the Companies Act 2013 read together with the Companies (Accounting Standards) Rules, 2021, Banking Regulation Act, 1949 and practices prevalent in the banking industry in India.

USE OF ESTIMATES

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

C. SIGNIFICANT ACCOUNTING POLICIES

1. REVENUE RECOGNITION

Income and Expenditure are accounted on accrual basis, except the following;

a. Interest on non-performing advances (NPA), nonperforming investments (NPI) and income from funded interest term loan accounts (FITL) are recognised upon realisation as per the prudential

norms prescribed by RBI.

b. Interest on overdue bills, commission, exchange, brokerage and rent on lockers are accounted on realization.

c. Dividend on equity shares, preference shares and mutual fund units is accounted as income when the right to receive the dividend is established.

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

2. INVESTMENTS

2.1 As per RBI guidelines, the investments of the bank are

classified into the following categories at the time of

acquisition

• Held to Maturity (HTM)

• Available for Sale (AFS)

• Held for Trading (HFT)

They are further sub-classified and shown in the

Balance Sheet under the following six categories:

i) Government Securities

ii) Other Approved Securities

iii) Shares

iv) Debentures and Bonds

v) Subsidiaries /Joint Ventures and

vi) Others

a) Securities classified under HTM category are valued at acquisition cost. Where the acquisition cost is higher than the face value, such excess of acquisition cost over the face value is amortised over the remaining period to maturity.

b) Securities held in AFS Category are valued scrip wise as under:

i) Government of India Securities are valued at market price as per quotation put out by Fixed Income Money Market and Derivatives Association of India (FIMMDA) & Bloomberg/Financial Benchmark India Limited.

ii) State Government loans, Trustee Securities, Securities guaranteed by Central/State Governments and PSU Bonds are valued on appropriate Yield to Maturity (YTM) basis as per FIMMDA & Bloomberg/Financial Benchmark India Limited.

iii) Treasury Bills/ Certificate of Deposits/ Commercial Papers, being discounted instruments, are valued at carrying cost.

iv) Equity Shares are valued at market rate if quoted, otherwise at Break up Value as per the latest Balance Sheet if available, or Re.1/- for each Company.

v) Preference shares are valued at market price if quoted or at appropriate YTM basis as per FIMMDA & Bloomberg/Financial Benchmark India Limited.

vi) Debentures / Bonds are valued at market price if quoted, otherwise on an appropriate YTM basis.

vii) Units of mutual funds are valued at the latest repurchase price/Net Asset Value (NAV) declared by the mutual fund.

viii) Security Receipts are valued at NAV as declared by the Securitisation companies.

c) Individual scrips under HFT category are valued at Market Price.

2.2 Investments in AFS / HFT are valued scrip-wise, aggregated category-wise and net depreciation, if any, within each category is charged to Profit & Loss Account, while net appreciation, if any, under each category is ignored.

2.3 Shifting of securities from one category to another is carried out at the lower of acquisition cost/ book value/ market value as on the date of transfer. The depreciation, if any on such transfer is fully provided for.

2.4 Purchase and sale transactions in securities are accounted on settlement date. Profit/Loss on sale of Investments in any category is taken to the Profit & Loss Account. However, in case of sale of

investments in HTM category, the profit is first credited to Profit and Loss Account and thereafter an amount equivalent to profit, net of statutory reserve and taxes, is appropriated to the Capital Reserve Account.

2.5 The Bank undertakes short sale transactions in Central Government dated securities. The short position is marked to market and loss, if any, is charged to the Profit and Loss Account while gain, if any, is ignored. Profit / Loss on short sale is recognised on settlement date.

2.6 Cost of investments is based on the weighted average cost method.

2.7 Commission, brokerage, broken period interest etc. incurred on acquisition of securities is debited to Profit and Loss account. Commission, incentives, brokerage received on subscription is deducted from the cost of the securities.

2.8 Investments are shown net of Depreciation, if any in the Balance Sheet.

2.9 Non Performing Investments are identified and provided for as per RBI guidelines. The provision on such non-performing investments are not set off against the appreciation in respect of other performing investments. Interest on nonperforming investments is not recognised until received.

3. LOANS / ADVANCES AND PROVISIONS THEREON

3.1 Advances have been classified as per the Asset Classification norms laid down by the Reserve Bank of India. The required provisioning for Standard Assets and for Non Performing Assets have been made as per the Regulatory norms.

3.2 Advances shown in the Balance Sheet are net of specific provisions, technical write offs and ECGC/DICGC claims received.

3.3 Partial recoveries in Non Performing Assets are apportioned first towards charges and interest, thereafter towards principal with the exception of non performing advances involving compromise settlements in which case the recoveries are first adjusted towards principal.

3.4 NPAs are classified into Sub-standard, Doubtful and Loss Assets based on the following criteria stipulated by RBI:

I. Sub-standard: A loan asset that has remained non-performing for a period less than or equal to 12 months.

ii. Doubtful : A loan asset that has remained in the sub-standard category for a period of 12 months.

iii. Loss : A loan asset where loss has been identified but the amount has not been fully written off.

3.5 Provisions are made for NPAs as per the extant guidelines prescribed by the regulatory authorities, subject to minimum provisions as prescribed below:

Substandard Assets:

i. A general provision of 15% on the total outstanding;

ii. Additional provision of 10% for exposures which are unsecured.

iii. Unsecured Exposure in respect of infrastructure advances where certain safeguards such as escrow accounts are available 20%.

Doubtful Assets:
- Secured portion: i. Upto one year	- 25%
ii. One to three years	- 40%
iii. More than three years	- 100%
- Unsecured portion	- 100%

Loss Assets:

100% to be provided on the total outstanding;

3.6 Floating Provisions:

The Bank has a policy for creation and utilisation of floating provisions separately for advances, investments and general purposes. The quantum of floating provisions to be created is assessed at the end of the financial year. The floating provisions are utilised only for contingencies under extraordinary circumstances specified in the policy with prior permission of Reserve Bank of India.

3.7 Provision for Country Exposure:

In addition to the specific provisions held according to the asset classification status, provisions are also made for individual country exposures (other than the home country). Countries are categorised into seven risk categories, namely, insignificant, low, moderately low, moderate, moderately high, high and very high and provisioning made as per extant RBI guidelines. If the country exposure (net) of the Bank in respect of each country does not exceed 1% of the total funded assets, no provision is maintained on such country exposures. The provision is reflected in Schedules of the Balance Sheet.

3.8 Provision for unhedged foreign currency exposure:

Provision for Unhedged Foreign Currency Exposure of borrower entities is made considering their unhedged exposure to the Bank.

4. FIXED ASSETS, DEPRECIATION & AMORTIZATION

4.1 Premises, Software and other Fixed Assets are accounted at acquisition cost less depreciation. Cost includes cost of purchase and all expenditure like site preparation, installation costs and professional fees incurred on the asset before it is ready to use.

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

4.3 Depreciation has been provided on the composite value for premises acquired with land and building, where cost of the land is not separately identifiable.

4.4 The Bank has provided depreciation based on useful life of the assets in line with Schedule II of the Companies Act, 2013. Depreciation is charged over the estimated useful life of the fixed asset on a straight-line basis. Depreciation on assets purchased and sold during the year is provided on a pro-rata basis.

5. EFFECTS OF CHANGES IN THE FOREIGN EXCHANGE RATE

5.1 Assets and Liabilities denominated in Foreign Currencies are translated at the rates notified by FEDAI at the close of the year. Profit or Loss accruing from such transactions is recognised in the Profit and Loss Account.

5.2 Income and Expenditure items have been translated at the exchange rates prevailing on the date of the transactions.

5.3 The Bank does not have a branch in any Foreign Country.

5.4 Outstanding Forward Exchange contracts are revalued at the exchange rates notified by FEDAI and the resultant net gain or loss is recognised in the Profit and Loss Account.

5.5 Foreign Currency Guarantees, Acceptances, Endorsements and other obligations are reported at the FEDAI notified closing exchange rates prevailing on the date of the Balance Sheet.

6. STAFF BENEFITS

6.1 Payments to defined contribution schemes such as Provident Fund, Employees Pension Fund, and are charged as expenses as and when they fall due.

6.2 Provision towards leave encashment is accounted on actuarial basis in accordance with Accounting Standard 15 (revised 2005) issued by ICAI.

6.3 Payments to the Group Gratuity Life Assurance Scheme of the Life Insurance Corporation of India towards gratuity liability are charged as expenses as and when they fall due.

7. EMPLOYEES STOCK OPTION SCHEME

The Employee Stock Option Scheme provides for grant of equity stock options to employees that vest in a graded manner. The Bank follows the intrinsic value method to account for its employee compensation costs arising from grant of such options. The excess of fair market price over the exercise price shall be accounted as employee compensation cost in the year of vesting. The fair market price is the latest closing price of the shares on the stock exchanges in which shares of the Bank are largely traded immediately prior to the date of meeting of the compensation committee in which the options are granted.

8. 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 and in compliance with the Accounting Standard 17.

Business Segment is classified into (a) Treasury (b) Corporate and Wholesale Banking, (c)Retail Banking (includes digital banking units) (d) Other Banking Operations.

9. EARNING PER SHARE

Basic earning per share is calculated by dividing the net profit of the year by the weighted average number of equity shares.

Diluted earning per share is computed using the weighted average number of equity shares and dilutive potential equity shares.

10. 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.

11. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

11.1 In conformity with AS.29 "Provisions, Contingent Liabilities and 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 a 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.

11.2 No provision is recognized for:

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

ii. Any present obligation that arises from past events but is not recognized because

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

b) 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 an outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made.

11.3 Contingent Assets are not recognized in the financial statements.

12. INCOME TAX

Income Tax comprises current tax and deferred tax for the year. The deferred tax assets/liability is recognised in accordance with Accounting Standard-22 issued by the Institute of Chartered Accountants of India.

13. NET PROFIT

The Net Profit disclosed in the Profit and Loss Account is after considering:

a. Provision for taxes on income in accordance with statutory requirements.

b. Provision for Standard Assets and Nonperforming Assets.

c. Provision for depreciation on Investments

d. Other usual and necessary provisions.

14. SPECIAL RESERVES

Revenue and other Reserve include Special Reserve created under Section 36(i)(viii) of the Income Tax Act, 1961. The Board of Directors of the Bank had passed a resolution approving creation of the reserve and confirm that it has no intention to make withdrawal from the Special Reserve.

15. CORPORATE SOCIAL RESPONSIBILITY

The expenditure towards corporate social responsibility in accordance with The Companies Act, 2013 is recognised in the Profit and Loss Account.

16. OPERATING LEASES

Leases where all the risks and rewards of ownership are retained by the lessor are classified as ''Operating lease''. Operating lease payments are recognised as an expense in the Profit and Loss Account as per the lease terms. Initial direct costs in respect of operating leases such as legal costs, brokerage costs etc., are recognised as expense in the Profit and Loss Account.

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Mar 31, 2022

1. BASIS OF PREPARATION

The Bank''s financial statements are prepared under the historical cost convention and on accrual basis of accounting, unless otherwise stated, by following going concern assumption and conform in all material aspects to Generally Accepted Accounting Principles (GAAP) in India, which comprises applicable statutory provisions, regulatory norms / guidelines prescribed by the Reserve Bank of India, Accounting Standards, Banking Regulation Act, 1949, Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI) and practices prevalent in the banking industry in India.

2. USE OF ESTIMATES

The preparation of financial statements require the management to make estimates and assumptions considered for Assets and Liabilities (including contingent liabilities) as on the date of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.

SIGNIFICANT ACCOUNTING POLICIES3. REVENUE RECOGNITION

Income and Expenditure are accounted on accrual basis, except the following;

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

b. Interest on overdue bills, commission, exchange, brokerage and rent on lockers are accounted on realization.

c. Dividend is accounted when the right to receive the same is established.

In case of suit filed accounts, related legal and the expenses incurred are charged to Profit and Loss

Account and on recovery the same are accounted as income.

4. EFFECTS OF CHANGES IN THE FOREIGN EXCHANGE RATE

a. Assets and Liabilities denominated in Foreign Currencies are translated at the rates notified by FEDAI at the close of the year. Profit or Loss accruing from such transactions is recognised in the Profit and Loss Account.

b. Income and Expenditure items have been translated at the exchange rates ruling on the date of the transactions.

c. The Bank does not have a branch in any Foreign Country.

d. Outstanding Forward Exchange contracts are revalued at the exchange rates notified by FEDAI and the resultant net gain or loss is recognised in the Profit and Loss Account.

e. Foreign Currency Guarantees, Acceptances, Endorsements and other obligations are reported at the exchange rates prevailing on the date of the Balance Sheet.

5. INVESTMENTS

5.1 As per RBI guidelines, the investments of the Bank are classified into the following categories at the time of acquisition:

• Held to Maturity

• Available for Sale

• Held for Trading

They are further sub classified and shown in Balance Sheet under the following six categories:

i) Government Securities

ii) Other Approved Securities

iii) Shares

iv) Debentures and Bonds

v) Subsidiaries /Joint Ventures and

vi) Others

a) Securities classified under "Held to Maturity" category are valued at acquisition cost. Where the acquisition cost is higher than the face value, such excess of acquisition cost over the face value is amortised over the remaining period to maturity.

b) Securities held in "Available for Sale" Category are valued scrip wise as under:

i) Government of India Securities are valued at market price as per quotation put out by Fixed Income Money Market and Derivatives Association of India & Bloomberg / Financial Benchmark India Limited.

ii) State Government loans, Trustee Securities, Securities guaranteed by Central / State Governments and PSU Bonds are valued on appropriate Yield to Maturity (YTM) basis as per Fixed Income Money Market and Derivatives Association of India & Bloomberg / Financial Benchmark India Limited.

iii) Treasury Bills / Certificate of Deposits/ Commercial Papers are valued at carrying cost.

iv) Equity Shares are valued at market rate if quoted, otherwise at Break up Value as per the latest Balance Sheet, if available, or ''1/- per Company.

v) Preference shares are valued at market price if quoted or at appropriate YTM basis as per Fixed Income Money Market and Derivatives Association of India & Bloomberg / Financial Benchmark India Limited.

vi) Debentures / Bonds are valued at market price, if quoted, otherwise on an appropriate YTM basis.

vii) Mutual Funds are valued at market price, if quoted, or at NAV or Market Price / Repurchase Price.

viii) Security Receipts are valued at NAV as declared by Securitisation companies.

c) Individual scrips under "Held for Trading" category are valued at Market Price.

5.2 Individual scrips in Available for Sale / Held for Trading are valued at scrip wise aggregated category wise and net depreciation, if any, for each category is charged to Profit & Loss Account, while net appreciation, if any, is ignored.

5.3 Shifting of securities from one category to another category is carried out lower of acquisition cost/ book value / market value on the date of transfer. The depreciation, if any on such transfer is fully provided for.

5.4 Profit / Loss on sale of Investments in any category is taken to the Profit & Loss Account. However, in case of sale of investment in "Held to Maturity" category, the profit is first credited to Profit and Loss Account and thereafter an amount equivalent to profit, net of statutory reserve and taxes, is appropriated to the Capital Reserve Account.

5.5 Commission, brokerage, broken period interest etc. on securities incurred on acquisition is debited to Profit and Loss account. Commission, incentives, brokerage received on subscription is deducted from the cost of the securities.

5.6 The Investments shown in the Balance Sheet are net of Depreciation, if any.

5.7 The Non Performing Investments are identified and provided for as per RBI guidelines.

6. LOANS / ADVANCES AND PROVISIONS THEREON

6.1 Advances have been classified as per the Asset Classification norms laid down by the Reserve Bank of India. The required provisioning for Standard Assets and for Non Performing Assets have been made as per the Regulatory Norms.

6.2 Advances shown in the Balance Sheet are net of provisions and interest reserve on NPA accounts, technical write offs, ECGC / DICGC claims received and provisions for Restructured accounts.

6.3 Partial recoveries in Non Performing Assets are apportioned first towards charges and interest, thereafter towards principal with the exception of non performing advances involving compromise settlements in which case the recoveries are first adjusted towards principal.

6.4 NPAs are classified into Sub-standard, Doubtful and Loss Assets based on the following criteria stipulated by RBI:

i. Sub-Standard: A loan asset that has remained non-performing for a period less than or equal to 12 months.

ii. Doubtful : A loan asset that has remained in the Sub-Standard category for a period of 12 months.

iii. Loss : A loan asset where loss has been identified but the amount has not been fully written off.

6.5 Provisions are made for NPAs as per the extant guidelines prescribed by the regulatory authorities, subject to minimum provisions as prescribed below:

Substandard Assets:

i. A general provision of 15% on the total outstanding;

ii. Additional provision of 10% for exposures which are unsecured.

iii. Unsecured Exposure in respect of infrastructure advances where certain safeguards such as escrow accounts are available - 20%.

Doubtful Assets:

-Securedportion: i. Upto one year - 25%

ii. One to three years - 40%

iii. More than three years - 100%

- Unsecured portion - 100%

Loss Assets:

100% to be provided on the total outstanding;

6.6 Floating Provisions:

The Bank has a policy for creation and utilisation of floating provisions separately for advances, investments and general purposes. The quantum of floating provisions to be created is assessed at the end of the financial year. The floating provisions are utilised only for contingencies under extraordinary

circumstances specified in the policy with prior permission of Reserve Bank of India.

6.7 Provision for Country Exposure:

In addition to the specific provisions held according to the asset classification status, provisions are also made for individual country exposures (other than the home country). Countries are categorised into seven risk categories, namely, insignificant, low, moderate, high, very high, restricted and off-credit and provisioning made as per extant RBI guidelines. If the country exposure (net) of the Bank in respect of each country does not exceed 1% of the total funded assets, no provision is maintained on such country exposures. The provision is reflected in Schedules of the Balance Sheet.

7. FIXED ASSETS, DEPRECIATION & AMORTIZATION

7.1 Premises and other Fixed Assets are accounted at acquisition cost less depreciation.

7.2 Depreciation has been provided on the composite value for premises acquired with land and building, where cost of the land is not separately identifiable.

7.3 With effect from 1^st April, 2014, in accordance with the Companies Act, 2013, the Bank has provided depreciation based on useful life of the assets in line with Schedule II of the Companies Act, 2013. Further the method of depreciation is on Straight line method (SLM) in respect of all fixed assets. Depreciation on assets purchased and sold during the year is provided on pro rata basis.

8. STAFF BENEFITS

8.1 Provision towards leave encashment is accounted on actuarial basis in accordance with the guidelines contained in Accounting Standard 15 (revised 2005) issued by ICAI.

8.2 Liability for Gratuity to staff is contributed to the Group Gratuity Life Assurance Scheme of the Life Insurance Corporation of India.

8.3 Payments to defined contribution schemes such as Provident Fund and Employees Pension Fund Superannuation Scheme of Life Insurance Corporation of India are charged as expenses as they fall due.

9. EMPLOYEES STOCK OPTION SCHEME

The Employee Stock Option Scheme provides for grant of equity stock options to employees that vest in a graded manner. The Bank follows the intrinsic value method to account for its employee compensation costs arising from grant of such options. The excess of fair market price over the exercise price shall be accounted as employee compensation cost in the year of vesting. The fair market price is the latest closing price of the shares on the stock exchanges in which shares of the Bank are largely traded immediately prior to the date of meeting of the Compensation Committee in which the options are granted.

10. 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 and in compliance with the Accounting Standard 17.

Business Segment is classified into (a) Treasury (b) Corporate and Wholesale Banking, (c) Retail Banking (d) Other Banking Operations.

11. EARNING PER SHARE

Basic earning per share is calculated by dividing the net profit of the year by the weighted average number of equity shares.

Diluted earning per share is computed using the weighted average number of equity shares and dilutive potential equity shares.

12. 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.

13. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

13.1 In conformity with AS.29 "Provisions, Contingent

Liabilities and 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 a 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.

13.2 No provision is recognized for:

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

ii. Any present obligation that arises from past events but is not recognized because

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

b) 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 an outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made.

13.3 Contingent Assets are not recognized in the financial statements.

14. INCOME TAX

Income Tax comprises Current Tax and Deferred Tax for the year. The Deferred Tax Assets / liability is recognised in accordance with Accounting Standard-22 issued by the Institute of Chartered Accountants of India.

15.NET PROFIT

The Net Profit disclosed in the Profit and Loss Account is after considering:

15.1 Provision for Taxes on Income in accordance with statutory requirements.

15.2 Provision for Bad and Doubtful Advances and investments.

15.3 Contingent Provision for Standard Assets.

15.4 Other usual and necessary provisions.

16. SPECIAL RESERVES

Revenue and other Reserve include Special Reserve created under Section 36(i](viii] of the Income Tax Act, 1961. The Board of Directors of the Bank have passed a resolution approving creation of the reserve and confirming that it has no intention to make withdrawal from the Special Reserve.

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Mar 31, 2018

1. BASIS OF PREPARATION

The Bank’s financial statements are prepared under the historical cost convention and on accrual basis of accounting, unless otherwise stated, by following going concern assumption and confirm in all material aspects to Generally Accepted Accounting Principles (GAAP) in India, which comprises applicable statutory provisions, regulatory norms / guidelines prescribed by the Reserve Bank of India, Accounting Standards, Banking Regulation Act, 1949, Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI) and practices prevalent in the Banking industry in India.

2. USE OF ESTIMATES

The preparation of financial statements require the management to make estimates and assumptions considered for Assets and Liabilities (including contingent liabilities) as on the date of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.

3. REVENUE RECOGNITION

Income and Expenditure are accounted on accrual basis, except the following;

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

b. Interest on overdue bills, commission, exchange, brokerage and rent on lockers are accounted on realization.

c. Dividend is accounted when the right to receive the same is established.

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

4. EFFECTS OF CHANGES IN THE FOREIGN EXCHANGE RATE

a. Assets and Liabilities denominated in Foreign Currencies are translated at the rates notified by FEDAI at the close of the year. Profit or Loss accruing from such transactions is recognised in the Profit and Loss Account.

b. Income and Expenditure items have been translated at the exchange rates prevailing on the date of the transactions.

c. The Bank does not have a branch in any Foreign Country.

d. Outstanding Forward Exchange contracts are revalued at the exchange rates notified by FEDAI and the resultant net gain or loss is recognised in the Profit and Loss Account.

e. Foreign Currency Guarantees, Acceptances, Endorsements and other obligations are reported at the exchange rates prevailing on the date of the Balance Sheet.

5. INVESTMENTS

5.1 As per RBI guidelines, the investments of the Bank are classified into the following categories at the time of acquisition

- Held to Maturity (HTM)

- Available for Sale (AFS)

- Held for Trading (HFT)

They are further sub classified and shown in Balance Sheet under the following six categories:

i) Government Securities

ii) Other Approved Securities

iii) Shares

iv) Debentures and Bonds

v) Subsidiaries / Joint Ventures and

vi) Others

a) Securities classified under “Held to Maturity” category are valued at acquisition cost. Where the acquisition cost is higher than the face value, such excess of acquisition cost over the face value is amortised over the remaining period to maturity.

b) Securities held in “Available for Sale” Category are valued scrip wise as under:

i) Government of India Securities are valued at market price as per quotation put out by Fixed Income Money Market and Derivatives Association of India & Bloomberg / Financial Benchmark India Limited.

ii) State Government loans, Trustee Securities, Securities guaranteed by Central / State Governments and PSU Bonds are valued on appropriate Yield to Maturity (YTM) basis as per Fixed Income Money Market and Derivatives Association of India & Bloomberg / Financial Benchmark India Limited.

iii) Treasury Bills / Certificate of Deposits / Commercial Papers are valued at carrying cost.

iv) Equity Shares are valued at market rate if quoted, otherwise at Break up Value as per the latest Balance Sheet, if available, or Rs.1/- per Company.

v) Preference shares are valued at market price if quoted or at appropriate YTM basis as per Fixed Income Money Market and Derivatives Association of India & Bloomberg / Financial Benchmark India Limited.

vi) Debentures / Bonds are valued at market price, if quoted, otherwise on an appropriate YTM basis.

vii) Mutual Funds are valued at market price, if quoted, or at NAV or Market Price / Repurchase Price.

viii) Security Receipts are valued at NAV as declared by Securitization companies.

c) Individual scrips under “Held for Trading” category are valued at Market Price.

5.2 Individual scrips in Available for Sale / Held for Trading are valued at scrip wise aggregated category wise and net depreciation, if any, for each category is charged to Profit & Loss Account, while net appreciation, if any, is ignored.

5.3 Shifting of securities from one category to another category is carried out at lower of acquisition cost / book value / market value on the date of transfer. The depreciation, if any on such transfer is fully provided for.

5.4 Profit / Loss on sale of Investments in any category is taken to the Profit & Loss Account. However, in case of sale of investment in “Held to Maturity” category, the profit is first credited to Profit and Loss Account and thereafter an amount equivalent to profit, net of Statutory Reserve and taxes, is appropriated to the Capital Reserve Account.

5.5 Commission, brokerage, broken period interest etc. on securities incurred on acquisition is debited to Profit and Loss account. Commission, incentives, brokerage received on subscription is deducted from the cost of the securities.

5.6 The Investments shown in the Balance Sheet are net of Depreciation, if any.

5.7 The Non Performing Investments are identified and provided for, as per RBI guidelines.

6. LOANS / ADVANCES AND PROVISIONS THEREON

6.1 Advances have been classified as per the Asset Classification norms laid down by the Reserve Bank of India. The required provisioning for Standard Assets and for Non Performing Assets have been made as per the Regulatory Norms.

6.2 Advances shown in the Balance Sheet are net of provisions and interest reserve on NPA accounts, technical write offs, ECGC / DICGC claims received and provisions for Restructured accounts.

6.3 Partial recoveries in Non Performing Assets are apportioned first towards charges and interest, thereafter towards principal with the exception of non performing advances involving compromise settlements in which case the recoveries are first adjusted towards principal.

6.4 NPAs are classified into Sub-standard, Doubtful and Loss Assets based on the following criteria stipulated by RBI:

i. Sub-standard: A loan asset that has remained nonperforming for a period of less than or equal to 12 months.

ii. Doubtful : A loan asset that has remained in the sub-standard category for a period of 12 months.

iii. Loss : A loan asset where loss has been identified but the amount has not been fully written off.

6.5 Provisions are made for NPAs as per the extant guidelines prescribed by the regulatory authorities, subject to minimum provisions as prescribed below: Substandard Assets :

i. A general provision of 15% on the total outstanding;

ii. Additional provision of 10% for exposures which are unsecured ab-initio (i.e. where realizable value of security is not more than 10 percent ab-initio);

iii. Unsecured Exposure in respect of infrastructure advances where certain safeguards such as escrow accounts are available - 20%.

Doubtful Assets :

- Secured portion i. Upto one year - 25%

ii. One to three years - 40%

iii. More than three years - 100%

- Unsecured portion - 100%

Loss Assets : 100% to be provided on the total outstanding;

6.6 Floating Provisions:

The Bank has a policy for creation and utilisation of floating provisions separately for advances, investments and general purposes. The quantum of floating provisions to be created is assessed at the end of the financial year. The floating provisions are utilised only for contingencies under extraordinary circumstances specified in the policy with prior permission of Reserve Bank of India.

6.7 Provision for Country Exposure :

In addition to the specific provisions held according to the asset classification status, provisions are also made for individual country exposures (other than the home country). Countries are categorised into seven risk categories namely; insignificant, low, moderate, high, very high, restricted and off-credit and provisioning made as per extant RBI guidelines. If the country exposure (net) of the Bank in respect of each country does not exceed 1% of the total funded assets, no provision is maintained on such country exposures. The provision is reflected in Schedules of the Balance Sheet.

7. FIXED ASSETS, DEPRECIATION & AMORTIZATION

7.1 Premises and other Fixed Assets are accounted at acquisition cost less depreciation.

7.2 Depreciation has been provided on the composite value for premises acquired with land and building, where cost of the land is not separately identifiable.

7.3 With effect from 1^st April, 2014, in accordance with the Companies Act, 2013, the Bank has provided depreciation based on useful life of the assets in line with Schedule II of the Companies Act, 2013. Further the method of depreciation is on Straight line method (SLM) in respect of all fixed assets. Depreciation on assets purchased and sold during the year is provided on pro rata basis.

8. STAFF BENEFITS

8.1 Provision towards leave encashment is accounted on actuarial basis in accordance with the guidelines contained in Accounting Standard 15 (revised 2005) issued by ICAI.

8.2 Liability for Gratuity to staff is contributed to the Group Gratuity Life Assurance Scheme of the Life Insurance Corporation of India.

8.3 Payments to defined contribution schemes such as Provident Fund and Employees Pension Fund Superannuation Scheme of Life Insurance Corporation of India are charged as expenses as they fall due.

9. EMPLOYEES STOCK OPTION SCHEME

The Employee Stock Option Scheme provides for grant of equity stock options to employees that vest in a graded manner. The Bank follows the intrinsic value method to account for its employee compensation costs arising from grant of such options. The excess of fair market price over the exercise price shall be accounted as employee compensation cost in the year of vesting. The fair market price is the latest closing price of the shares on the stock exchanges in which shares of the Bank are largely traded immediately prior to the date of meeting of the Compensation Committee in which the options are granted.

10. 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 and in compliance with the Accounting Standard 17.

Business Segment is classified into (a) Treasury (b) Corporate and Wholesale Banking, (c) Retail Banking (d) Other Banking Operations.

11. EARNING PER SHARE

Basic earning per share is calculated by dividing the net profit of the year by the weighted average number of equity shares.

Diluted earning per share is computed using the weighted average number of equity shares and dilutive potential equity shares.

12. 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.

13. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

13.1 In conformity with AS.29 “Provisions, Contingent Liabilities and 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 a 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.

13.2 No provision is recognized for :

i. 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; or

ii. Any present obligation that arises from past events but is not recognized because

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

b) 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 an outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made.

13.3 Contingent Assets are not recognized in the financial statements.

14. INCOME TAX

Income Tax comprises current tax and deferred tax for the year. The deferred tax assets / liability is recognised in accordance with Accounting Standard 22 issued by the Institute of Chartered Accountants of India.

15. NET PROFIT

The Net Profit disclosed in the Profit and Loss Account is after considering :

15.1 Provision for taxes on income in accordance with statutory requirements.

15.2 Provision for bad and doubtful advances and investments.

15.3 Contingent Provision for Standard Assets.

15.4 Other usual and necessary provisions.

16. SPECIAL RESERVES

Revenue and other Reserve include Special Reserve created under Section 36(i)(viii) of the Income Tax Act, 1961. The Board of Directors of the Bank have passed a resolution approving creation of the reserve and confirming that it has no intention to make withdrawal from the Special Reserve.

---

Mar 31, 2017

1. GENERAL

The financial statements are prepared on historical cost convention and on accrual basis of accounting, unless otherwise stated, by following going concern assumption and conform to the statutory provisions, regulatory guidelines, Accounting Standards, Guidance Notes issued by Institute of Chartered Accountants of India (ICAI) and practices prevailing in the Banking Industry in India.

2. REVENUE RECOGNITION

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

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

b. Interest on overdue bills, commission, exchange, brokerage and rent on lockers are accounted on realization.

c. Dividend is accounted when the right to receive the same is established.

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

3. FOREIGN EXCHANGE TRANSACTIONS

a. Assets and Liabilities denominated in Foreign Currencies are translated at the rates notified by FEDAI at the close of the year. Profit or Loss accruing from such transactions is recognised in the Profit and Loss Account.

b. Income and Expenditure items have been translated at the exchange rates ruling on the date of the transactions.

c. The Bank does not have a branch in any Foreign Country.

d. Outstanding Forward Exchange contracts are revalued at the exchange rates notified by FEDAI and the resultant net gain or loss is recognized in the Profit and Loss Account.

e. Foreign Currency Guarantees, Acceptances, Endorsements and other obligations are reported at the exchange rates prevailing on the date of the Balance Sheet.

4. INVESTMENTS

4.1 As per RBI guidelines, the investments of the Bank are classified into the following categories at the time of acquisition

- Held to Maturity

- Available for Sale

- Held for Trading

They are further sub classified and shown in Balance Sheet under the following six categories:

i) Government Securities ii) Other Approved Securities iii) Shares iv) Debentures and Bonds v) Subsidiaries / Joint Ventures and vi) Others.

a) Securities classified under "Held to Maturity" category are valued at acquisition cost. Where the acquisition cost is higher than the face value, such excess of acquisition cost over the face value is amortized over the remaining period to maturity.

b) Securities held in "Available for Sale" Category are valued scrip wise as under:

i) Government of India Securities are valued at market price as per quotation put out by Primary Dealers'' Association of India / Fixed Income Money Market and Derivatives Association of India & Bloomberg.

ii) State Government loans, Trustee Securities, Securities guaranteed by Central / State Governments and PSU Bonds are valued on appropriate Yield to Maturity (YTM) basis as per Primary Dealers'' Association of India / Fixed Income Money Market and Derivatives Association of India guidelines.

iii) Treasury Bills / Certificate of Deposits / Commercial Papers are valued at carrying cost.

iv) Equity Shares are valued at market rate, if quoted, otherwise at Break up Value as per the latest Balance Sheet, if available, or Rs.1/- per Company.

v) Preference shares are valued at market price, if quoted, or at appropriate YTM basis as per Primary Dealers'' Association of India / Fixed Income Money Market and Derivatives Association of India guidelines.

vi) Debentures / Bonds are valued at market price, if quoted, otherwise on an appropriate YTM basis.

vii) Mutual Funds are valued at market price, if quoted, or at NAV or Market Price / Repurchase Price.

viii) Security Receipts are valued at NAV as declared by Securitization Companies.

c) Individual scrips under "Held for Trading" category are valued at Market Price.

4.2 Individual scrips in Available for Sale / Held for Trading are valued at scrip wise aggregated category wise and net depreciation, if any, for each category is charged to Profit & Loss Account, while net appreciation, if any, is ignored.

4.3 Shifting of securities from one category to another category is carried out lower of acquisition cost / book value / market value on the date of transfer. The depreciation, if any on such transfer is fully provided for.

4.4 Profit / Loss on sale of Investments in any category is taken to the Profit and Loss Account. However, in case of sale of investment in "Held to Maturity" category, the profit is first credited to Profit and Loss Account and thereafter an amount equivalent to profit, net of statutory reserve and taxes, is appropriated to the Capital Reserve Account.

4.5 Commission, brokerage, broken period interest etc. on securities incurred on acquisition is debited to Profit and Loss account. Commission, incentives, brokerage received on subscription is deducted from the cost of the securities.

4.6 The Investments shown in the Balance Sheet are net of Depreciation, if any.

4.7 The Non Performing Investments are identified and provided for as per RBI guidelines.

5. ADVANCES

5.1 Advances have been classified as per the Asset Classification norms laid down by the Reserve Bank of India. The required provisioning for Standard Assets and for Non Performing Assets have been made as per the Regulatory Norms.

5.2 Advances shown in the Balance Sheet are net of provisions and interest reserve on NPA accounts, technical write offs, ECGC / DICGC claims received and provisions for Restructured accounts.

5.3 Partial recoveries in Non Performing Assets are apportioned first towards charges and interest, thereafter towards principal with the exception of non performing advances involving compromise settlements in which case the recoveries are first adjusted towards principal.

6. FIXED ASSETS

6.1 Premises and other Fixed Assets are accounted at acquisition cost less depreciation.

6.2 Depreciation has been provided on the composite value for premises acquired with land and building, where cost of the land is not separately identifiable.

6.3 With effective from 1^st April, 2014, in accordance with the Companies Act, 2013, the Bank has provided depreciation based on useful life of the assets in line with Schedule II of the Companies Act, 2013. Further the method of depreciation is on Straight line method (SLM) in respect of all fixed assets. Depreciation on assets purchased and sold during the year is provided on pro rata basis.

7. STAFF BENEFITS

7.1 Provision towards leave encashment is accounted on actuarial basis in accordance with the guidelines contained in Accounting Standard 15 (revised 2005) issued by ICAI.

7.2 Liability for Gratuity to staff is contributed to the Group Gratuity Life Assurance Scheme of the Life Insurance Corporation of India.

7.3 Payments to defined contribution schemes such as Provident Fund and Employees Pension Fund Superannuation Scheme of Life Insurance Corporation of India are charged as expenses as they fall due.

8. EMPLOYEES STOCK OPTION SCHEME

The Employee Stock Option Scheme provides for grant of equity stock options to employees that vest in a graded manner. The Bank follows the intrinsic value method to account for its employee compensation costs arising from grant of such options. The excess of fair market price over the exercise price shall be accounted as employee compensation cost in the year of vesting. The fair market price is the latest closing price of the shares on the Stock Exchanges in which shares of the Bank are largely traded immediately prior to the date of meeting of the Compensation Committee in which the options are granted.

9. Segment Reporting

The Bank recognizes the Business Segment as the Primary Reporting Segment and Geographical Segment as the Secondary Reporting Segment, in accordance with the RBI guidelines and in compliance with the Accounting Standard 17.

Business Segment is classified into (a) Treasury (b) Corporate and Wholesale Banking, (c) Other Banking Operations.

10. EARNING PER SHARE

Basic earning per share is calculated by dividing the net profit of the year by the weighted average number of equity shares.

Diluted earning per share is computed using the weighted average number of equity shares and dilutive potential equity shares.

11. 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.

12.PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

12.1 In conformity with AS 29 "Provisions, Contingent Liabilities and 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 a 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.

12.2 No provision is recognized for:

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

ii. Any present obligation that arises from past events but is not recognized because

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

b. 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 an outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made.

12.3 Contingent Assets are not recognized in the financial statements.

13. INCOME TAX

Income Tax comprises current tax and deferred tax for the year. The deferred tax assets / liability is recognized in accordance with Accounting Standard-22 issued by the Institute of Chartered Accountants of India.

14.NET PROFIT

The Net Profit disclosed in the Profit and Loss Account is after considering:

14.1 Provision for taxes on income in accordance with statutory requirements.

14.2 Provision for bad and doubtful advances and investments.

14.3 Contingent Provision for Standard Assets.

14.4 Other usual and necessary provisions.

---

Mar 31, 2015

1. GENERAL

The financial statements are prepared on historical cost convention and on accrual basis of accounting, unless otherwise stated, by following going concern assumption and conform to the statutory provisions, regulatory guidelines, Accounting Standards, Guidance Notes issued by Institute of Chartered Accountants of India (ICAI) and practices prevailing in the banking industry in India.

2. REVENUE RECOGNITION

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

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

b) Interest on overdue bills, commission, exchange, brokerage and rent on lockers are accounted on realization.

c) Dividend is accounted when the right to receive the same is established. In case of suit filed accounts, related legal and the expenses incurred are charged to Profit and Loss Account and on recovery the same are accounted as income.

3. FOREIGN EXCHANGE TRANSACTIONS

a) Assets and Liabilities denominated in Foreign Currencies are translated at the rates notified by FEDAI at the close of the year. Profit or Loss accruing from such transactions is recognized in the Profit and Loss Account.

b) Income and Expenditure items have been translated at the exchange rates ruling on the date of the transactions.

c) The Bank does not have a branch in any Foreign Country.

d) Outstanding Forward Exchange contracts are revalued at the exchange rates notified by FEDAI and the resultant net gain or loss is recognized in the Profit and Loss Account.

e) Foreign Currency Guarantees, Acceptances, Endorsements and other obligations are reported at the exchange rates prevailing on the date of the Balance Sheet.

4. INVESTMENTS

4.1 As per RBI guidelines, the investments of the Bank are classified into the following categories at the time of acquisition :

* Held to Maturity

* Available for Sale

* Held for Trading

They are further sub - classified and shown in Balance Sheet under the following six categories:

i) Government Securities ii) Other Approved Securities iii) Shares iv) Debentures and Bonds

v) Subsidiaries / Joint Ventures and vi) Others

a) Securities classified under "Held to Maturity" category are valued at acquisition cost. Where the acquisition cost is higher than the face value, such excess of acquisition cost over the face value is amortised over the remaining period to maturity.

b) Securities held in "Available for Sale" Category are valued scrip wise as under:

i) Government of India Securities are valued at market price as per quotation put out by Primary Dealers'' Association of India / Fixed Income Money Market and Derivatives Association of India & Bloomberg.

ii) State Government loans, Trustee Securities, Securities guaranteed by Central / State Governments and PSU Bonds are valued on appropriate Yield to Maturity (YTM) basis as per Primary Dealers'' Association of India / Fixed Income Money Market and Derivatives Association of India guidelines.

iii) Treasury Bills / Certificate of Deposits / Commercial Papers are valued at carrying cost.

iv) Equity Shares are valued at market rate if quoted, otherwise at Break up Value as per the latest Balance Sheet, if available, or Rs. 1/- per Company.

v) Preference shares are valued at market price if quoted or at appropriate YTM basis as per Primary Dealers'' Association of India / Fixed Income Money Market and Derivatives Association of India guidelines.

vi) Debentures / Bonds are valued at market price, if quoted, otherwise on an appropriate YTM basis.

vii) Mutual Funds are valued at market price, if quoted, or at NAV or Market Price / Repurchase Price.

viii) Security Receipts are valued at NAV as declared by Securitization companies.

c) Individual scrips under "Held for Trading" category are valued at Market Price.

4.2 Individual scrips in Available for Sale / Held for Trading are valued scrip - wise, aggregated category- wise and net depreciation, if any, for each category is charged to Profit & Loss Account, while net appreciation, if any, is ignored.

4.3 Shifting of securities from one category to another category is carried out lower of acquisition cost / book value / market value on the date of transfer. The depreciation, if any on such transfer is fully provided for.

4.4 Profit / Loss on sale of Investments in any category is taken to the Profit & Loss Account. However, in case of sale of investment in "Held to Maturity" category, the profit is first credited to Profit and Loss Account and thereafter an amount equivalent to profit, net of statutory reserve and taxes, is appropriated to the Capital Reserve Account.

4.5 Commission, brokerage, broken period interest etc. on securities incurred on acquisition is debited to Profit and Loss account. Commission, incentives, brokerage received on subscription is deducted from the cost of the securities.

4.6 The Investments shown in the Balance Sheet are net of Depreciation, if any.

4.7 The Non - Performing Investments are identified and provided for as per RBI guidelines.

5. ADVANCES

5.1 Advances have been classified as per the Asset Classification norms laid down by the Reserve Bank of India. The required provisioning for Standard Assets and for Non - Performing Assets have been made as per the Regulatory Norms.

5.2 Advances shown in the Balance Sheet are net of provisions and interest reserve on NPA accounts, technical write offs, ECGC / DICGC claims received and provisions for Restructured accounts.

5.3 Partial recoveries in Non Performing Assets are apportioned first towards charges and interest, thereafter towards principal with the exception of non - performing advances involving compromise settlements in which case the recoveries are first adjusted towards principal.

6. FIXED ASSETS

6.1 Premises and other Fixed Assets are accounted at acquisition cost less depreciation.

6.2 Depreciation has been provided on the composite value for premises acquired with land and building, where cost of the land is not separately identifiable.

6.3 In the current year, effective from 1st April, 2014, in accordance with the Companies Act, 2013, the Bank has changed the accounting policy of charging depreciation having regard to change in the estimated useful life of the assets, from Written down value (WDV) method to Straight line method (SLM) in respect of all fixed assets.

Useful life of the assets has been estimated in line with Schedule II of the Companies Act, 2013.

In the previous years, fixed assets except Computers were depreciated under Written Down Value Method at the rates specified in the schedule XIV of the Companies Act, 1956.

Depreciation on Computers, including software were charged at 33.33% on Straight Line Method as per the guidelines of RBI.

Depreciation on assets purchased and sold during the year is provided on pro rata basis.

7. STAFF BENEFITS

7.1 Provision towards leave encashment is accounted on actuarial basis in accordance with the guidelines contained in Accounting Standard 15 (Revised 2005) issued by ICAI.

7.2 Liability for Gratuity to staff is contributed to the Group Gratuity Life Assurance Scheme of the Life Insurance Corporation of India.

7.3 Payments to defined contribution schemes such as Provident Fund and Employees Pension Fund Superannuation Scheme of Life Insurance Corporation of India are charged as expenses as they fall due.

8. EMPLOYEES STOCK OPTION SCHEME

The Employee Stock Option Scheme provides for grant of equity stock options to employees that vest in a graded manner. The Bank follows the intrinsic value method to account for its employee compensation costs arising from grant of such options. The excess of fair market price over the exercise price shall be accounted as employee compensation cost in the year of vesting. The fair market price is the latest closing price of the shares on the stock exchanges in which shares of the Bank are largely traded immediately prior to the date of meeting of the compensation committee in which the options are granted.

9. 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 and in compliance with the Accounting Standard 17.

Business Segment is classified into (a) Treasury (b) Corporate and Wholesale Banking, (c) Other Banking Operations.

10. EARNING PER SHARE

Basic earning per share is calculated by dividing the net profit of the year by the weighted average number of equity shares.

Diluted earning per share is computed using the weighted average number of equity shares and dilutive potential equity shares.

11. 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.

12. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

12.1 In conformity with AS 29 "Provisions, Contingent Liabilities and 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 a 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.

12.2 No provision is recognized for:

i. 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; or

ii. Any present obligation that arises from past events but is not recognized because -

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

b) 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 an outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made.

12.3 Contingent Assets are not recognized in the financial statements.

13. INCOME TAX

Income Tax comprises current tax and deferred tax for the year. The deferred tax assets / liability is recognised in accordance with Accounting Standard 22 issued by the Institute of Chartered Accountants of India.

14. NET PROFIT

The Net Profit disclosed in the Profit and Loss Account is after considering:

14.1 Provision for taxes on income in accordance with statutory requirements.

14.2 Provision for bad and doubtful advances and investments.

14.3 Contingent provision for Standard Assets.

14.4 Other usual and necessary provisions.

---

Mar 31, 2014

1. GENERAL

The financial statements are prepared on historical cost convention and on accrual basis of accounting, unless otherwise stated, by following going concern assumption and conform to the statutory provisions, regulatory guidelines, Accounting Standards, Guidance Notes issued by Institute of Chartered Accountants of India (ICAI) and practices prevailing in the banking industry in India.

2. REVENUE RECOGNITION

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

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

b. Interest on overdue bills, commission, exchange, brokerage and rent on lockers are accounted on realization.

c. Dividend is accounted when the right to receive the same is established.

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

The financial statements have been prepared on historical cost convention and on accrual basis of accounting, except where stated otherwise and conform to the statutory provisions and practices prevailing within the banking industry in India.

3. FOREIGN EXCHANGE TRANSACTIONS

a. Assets and Liabilities denominated in Foreign Currencies are translated at the rates notified by FEDAI at the close of the year. Profit or Loss accruing from such transactions is recognized in the Profit and Loss Account.

b. Income and Expenditure items have been translated at the exchange rates ruling on the date of the transactions.

c. The Bank does not have a branch in any Foreign Country.

d. Outstanding Forward Exchange contracts are revalued at the exchange rates notified by FEDAI and the resultant net gain or loss is recognized in the Profit and Loss Account.

e. Foreign Currency Guarantees, Acceptances, Endorsements and other obligations are reported at the exchange rates prevailing on the date of the Balance Sheet.

4. INVESTMENTS

4.1 As per RBI guidelines, the investments of the Bank are classified into the following categories at the time of acquisition :

- Held to Maturity

- Available for Sale

- Held for Trading

They are further sub - classified and shown in Balance Sheet under the following six categories:

i) Government Securities ii) Other Approved Securities iii) Shares iv) Debentures and Bonds v) Subsidiaries /Joint Ventures and vi) Others

a) Securities classified under "Held to Maturity" category are valued at acquisition cost. Where the acquisition cost is higher than the face value, such excess of acquisition cost over the face value is amortised over the remaining period to maturity.

b) Securities held in "Available for Sale" Category are valued scrip wise as under:

i) Government of India Securities are valued at market price as per quotation put out by Primary Dealers'' Association of India/ Fixed Income Money Market and Derivatives Association of India & Bloomberg.

ii) State Government loans, Trustee Securities, Securities guaranteed by Central/State Governments and PSU Bonds are valued on appropriate Yield to Maturity (YTM) basis as per Primary Dealers'' Association of India/ Fixed Income Money Market and Derivatives Association of India guidelines.

iii) Treasury Bills/ Certificate of Deposits/ Commercial Papers are valued at carrying cost.

iv) Equity Shares are valued at market rate if quoted, otherwise at Break up Value as per the latest Balance Sheet, if available, orRs.1/- per Company.

v) Preference shares are valued at market price if quoted or at appropriate YTM basis as per Primary Dealers'' Association of India/ Fixed Income Money Market and Derivatives Association of India guidelines.

vi) Debentures / Bonds are valued at market price, if quoted, otherwise on an appropriate YTM basis.

vii) Mutual Funds are valued at market price, if quoted, or at NAV or Market Price/ Repurchase Price.

viii)Security Receipts are valued at NAV as declared by Securitization companies.

c) Individual scrips under "Held for Trading" category are valued at Market Price.

4.2 Individual scrips in Available for Sale / Held for Trading are valued scrip - wise, aggregated category- wise and net depreciation, if any, for each category is charged to Profit & Loss Account, while net appreciation, if any, is ignored.

4.3 Shifting of securities from one category to another category is carried out lower of acquisition cost/ book value/ market value on the date of transfer. The depreciation, if any on such transfer is fully provided for.

4.4 Profit/Loss on sale of Investments in any category is taken to the Profit & Loss Account. However, in case of sale of investment in "Held to Maturity" category, the profit is first credited to Profit and Loss Account and thereafter an amount equivalent to profit, net of statutory reserve and taxes, is appropriated to the Capital Reserve Account.

4.5 Commission, brokerage, broken period interest etc. on securities incurred on acquisition is debited to Profit and Loss account. Commission, incentives, brokerage received on subscription is deducted from the Cost of the securities.

4.6 The Investments shown in the Balance Sheet are net of Depreciation, if any.

4.7 The Non Performing Investments are identified and provided for as per RBI guidelines.

5. ADVANCES

5.1 Advances have been classified as per the Asset Classification norms laid down by the Reserve Bank of India. The required provisioning for Standard Assets and for Non Performing Assets have been made as per the Regulatory Norms.

5.2 Advances shown in the Balance Sheet are net of provisions and interest reserve on NPA accounts, technical write - offs, ECGC / DICGC claims received and provisions for Restructured accounts.

5.3 Partial recoveries in Non Performing Assets are apportioned first towards charges and interest, thereafter towards principal with the exception of non - performing advances involving compromise settlements in which case the recoveries are first adjusted towards principal.

6. FIXED ASSETS

6.1 Premises and other Fixed Assets are accounted at acquisition cost less depreciation.

6.2 Depreciation has been provided on the composite value for premises acquired with land and building, where cost of the land is not separately identifiable.

6.3 Depreciation in respect of fixed assets is charged on the written down value of the assets from the date of purchase on pro-rata basis at the rates specified under Schedule XIV of the Companies Act, 1956, except in the case of computers and operating software which are depreciated @ 33.33 % on straight line method as per RBI guidelines.

7. STAFF BENEFITS

7.1 Provision towards leave encashment is accounted on actuarial basis in accordance with the guidelines contained in Accounting Standard 15 (Revised 2005) issued by ICAI.

7.2 Liability for Gratuity to staff is contributed to the Group Gratuity Life Assurance Scheme of the Life Insurance Corporation of India.

7.3 Payments to defined contribution schemes such as Provident Fund and Employees Pension Fund Superannuation Scheme of Life Insurance Corporation of India are charged as expenses as they fall due.

8. EMPLOYEES STOCK OPTION SCHEME

The Employee Stock Option Scheme provides for grant of equity stock options to employees that vest in a graded manner. The Bank follows the intrinsic value method to account for its employee compensation costs arising from grant of such options. The excess of fair market price over the exercise price shall be accounted as employee compensation cost in the year of vesting. The fair market price is the latest closing price of the shares on the stock exchanges in which shares of the Bank are largely traded immediately prior to the date of meeting of the compensation committee in which the options are granted.

9. EARNING PER SHARE

Basic earning per share is calculated by dividing the net profit of the year by the weighted average number of equity shares.

Diluted earning per share is computed using the weighted average number of equity shares and dilutive potential equity shares.

10. 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.

11. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

11.1 In conformity with AS.29 "Provisions, Contingent Liabilities and 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 a 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.

11.2 No provision is recognized for:

i. 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; or

ii. Any present obligation that arises from past events but is not recognized because

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

b. 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 an outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made.

11.3 Contingent Assets are not recognized in the financial statements.

12. INCOME TAX

Income Tax comprises current tax and deferred tax for the year. The deferred tax assets/liability is recognised in accordance with Accounting Standard-22 issued by the Institute of Chartered Accountants of India.

13. NET PROFIT

The Net Profit disclosed in the Profit and Loss Account is after considering:

13.1 Provision for taxes on income in accordance with statutory requirements.

13.2 Provision for bad and doubtful advances and investments.

13.3 Contingent provision for Standard Assets.

13.4 Other usual and necessary provisions.

---

Mar 31, 2013

1. General

The financial statements have been prepared on historical cost convention and on accrual basis of accounting, except where stated otherwise and conform to the statutory provisions and practices prevailing within the banking industry in India.

2. Foreign Exchange Transactions

2.1 Assets and Liabilities denominated in Foreign Currencies are translated at the rates notified by FEDAI at the close of the year. Profit or Loss accruing from such transactions is recognised in the Profit and Loss Account.

2.2 Income and Expenditure items have been translated at the exchange rates ruling on the date of the transactions.

2.3 The Bank does not have a branch in any Foreign Country.

2.4 Outstanding Forward Exchange contracts are revalued at the exchange rates notified by FEDAI and the resultant net gain or loss is recognised in the Profit and Loss Account.

2.5 Foreign Currency Guarantees, Acceptances, Endorsements and other obligations are reported at the exchange rates prevailing on the date of the Balance Sheet.

3. Investments

3.1 As per RBI guidelines, the investments of the bank are classified into the following categories at the time of acquisition.

Held to Maturity Available for Sale Held for Trading

They are further sub classified and shown in Balance Sheet under the following six categories:

i) Government Securities iv) Debentures and Bonds

ii) Other Approved Securities v) Subsidiaries / Joint Ventures

iii) Shares vi) Others

a) Securities classified under "Held to Maturity" category are valued at acquisition cost. Where the acquisition cost is higher than the face value, such excess of acquisition cost over the face value is amortised over the remaining period to maturity.

b) Securities held in "Available for Sale" Category are valued scrip wise as under:

i) Government of India Securities are valued at market price as per quotation put out by Primary Dealers'' Association of India/ Fixed Income Money Market and Derivatives Association of India & Bloomberg.

ii) State Government loans, Trustee Securities, Securities guaranteed by Central / State Governments and PSU Bonds are valued on appropriate Yield to Maturity (YTM) basis as per Primary Dealers'' Association of India / Fixed Income Money Market and Derivatives Association of India guidelines.

iii) Treasury Bills / Certificate of Deposits / Commercial Papers are valued at carrying cost.

iv) Equity Shares are valued at market rate if quoted, otherwise at Break up Value as per the latest Balance Sheet, if available, or? 1/- per Company.

v) Preference shares are valued at market price if quoted or at appropriate YTM basis as per Primary Dealers'' Association of India / Fixed Income Money Market and Derivatives

Association of India guidelines.

vi) Debentures / Bonds are valued at market price, if quoted, otherwise on an appropriate YTM basis.

vii) Mutual Funds are valued at market price, if quoted, or at NAV or Market Price / Repurchase Price.

viii) Security Receipts are valued at NAV as declared by Securitisation companies.

c) Individual scrips under "Held for Trading" category are valued at Market Price.

3.2 Individual scrips in Available for Sale / Held for Trading are valued scrip wise, aggregated category wise and net depreciation, if any, for each category is charged to Profit & Loss Account, while net appreciation, if any, is ignored.

3.3 Shifting of securities from one category to another category is carried out lower of acquisition cost / book value / market value on the date of transfer. The depreciation, if any on such transfer is fully provided for.

3.4 Profit / Loss on sale of Investments in any category is taken to the Profit & Loss Account. However, in case of sale of investment in "Held to Maturity" category, the profit is first credited to Profit and Loss Account and thereafter an amount equivalent to profit, net of statutory reserve and taxes, is appropriated to the Capital Reserve Account.

3.5 Commission, brokerage, broken period interest etc. on securities incurred on acquisition is debited to Profit and Loss account. Commission, incentives, brokerage received on subscription is deducted from the Cost of the securities.

3.6 The Investments shown in the Balance Sheet are net of Depreciation, if any.

3.7 The Non Performing Investments are identified and provided for as per RBI guidelines.

4. Advances

4.1 Advances have been classified as per the Asset Classification norms laid down by the Reserve Bank of India. The required provisioning for Standard Assets and for Non Performing Assets have been made as per the Regulatory Norms.

4.2 Advances shown in the Balance Sheet are net of provisions and interest reserve on NPA accounts, technical write - offs, ECGC / DICGC claims received and provisions for Restructured accounts.

5. Fixed Assets

5.1 Premises and other Fixed Assets are accounted at acquisition cost less depreciation.

5.2 Depreciation has been provided on the composite value for premises acquired with land and building, where cost of the land is not separately identifiable.

5.3 Depreciation in respect of fixed assets is charged on the written down value of the assets from the date of purchase on pro-rata basis at the rates specified under Schedule XIV of the Companies Act, 1956, except in the case of computers and operating softwares which are depreciated @ 33.33 % on straight line method as per RBI guidelines.

6. Staff Benefits

6.1 Provision towards leave encashment is accounted on actuarial basis in accordance with the guidelines contained in Accounting Standard 15 (revised 2005) issued by ICAI.

6.2 Liability for Gratuity to staff is contributed to the Group Gratuity Life Assurance Scheme of the Life Insurance Corporation of India.

6.3 Payments to defined contribution schemes such as Provident Fund and Employees Pension Fund Superannuation Scheme of Life Insurance Corporation of India are charged as expenses as they fall due.

7. Employees Stock Option Scheme

The Employee Stock Option Scheme provides for grant of equity stock options to employees that vest in a graded manner. The Bank follows the intrinsic value method to account for its employee compensation costs arising from grant of such options. The excess of fair market price over the exercise price shall be accounted as employee compensation cost in the year of vesting. The fair market price is the latest closing price of the shares on the stock exchanges in which shares of the Bank are largely traded immediately prior to the date of meeting of the compensation committee in which the options are granted.

8. Earning Per share

Basic earning per share is calculated by dividing the net profit of the year by the weighted average number of equity shares.

Diluted earning per share is computed using the weighted average number of equity shares and dilutive potential equity shares.

9. Income Recognition

Interest Income on all advances / performing assets is recognised on accrual basis. In respect of Non- Performing Assets / Non-Performing Investments, interest income is recognised on receipt basis. Commission earned, Locker rent, Dividends on equity shares & Mutual Funds are recognised on receipt basis.

10. Income Tax

Income Tax comprises current tax and Deferred Tax for the year. The deferred tax assets / liability is recognised in accordance with Accounting Standard-22 issued by the Institute of Chartered Accountants of India.

11. Net Profit

The Net Profit disclosed in the Profit and Loss Account is after considering :

11.1 Provision for taxes on income in accordance with statutory requirements.

11.2 Provision for bad and doubtful advances and investments.

11.3 Contingent Provision for Standard Assets.

11.4 Other usual and necessary provisions.

---

Mar 31, 2012

1. General

The financial statements have been prepared on historical cost convention and on accrual basis of accounting, except where stated otherwise and conform to the statutory provisions and practices prevailing within the banking industry in India.

2. Foreign Exchange Transactions

2.1 Assets and Liabilities denominated in Foreign Currencies are translated at the rates notified by FEDAI at the close of the year. Profit or Loss accruing from such transactions is recognised in the Profit and Loss Account.

2.2 Income and Expenditure items have been translated at the exchange rates ruling on the date of the transactions.

2.3 The Bank does not have a branch in any Foreign Country.

2.4 Outstanding Forward Exchange contracts are revalued at the exchange rates notified by FEDAI and the resultant net gain or loss is recognised in the Profit and Loss Account.

2.5 Foreign Currency Guarantees, Acceptances, Endorsements and other obligations are reported at the exchange rates prevailing on the date of the Balance Sheet.

3. Investments

3.1 As per RBI guidelines, the investments of the bank are classified into the following categories at the time of acquisition.

- Held to Maturity

- Available for Sale

- Held for Trading

They are further sub classified and shown in Balance Sheet under the following six categories:

i) Government Securities iv) Debentures and Bonds

ii) Other Approved Securities v) Subsidiaries / Joint Ventures

iii) Shares vi) Others

a) Securities classified under "Held to Maturity" category are valued at acquisition cost. Where the acquisition cost is higher than the face value, such excess of acquisition cost over the face value is amortised over the remaining period to maturity.

b) Securities held in "Available for Sale" Category are valued scrip wise as under:

i) Government of India Securities are valued at market price as per quotation put out by Primary DealersRs. Association of India/ Fixed Income Money Market and Derivatives Association of India & Bloomberg.

ii) State Government loans, Trustee Securities, Securities guaranteed by Central / State Governments and PSU Bonds are valued on appropriate Yield to Maturity (YTM) basis as per Primary Dealers' Association of India / Fixed Income Money Market and Derivatives Association of India guidelines.

iii) Treasury Bills / Certificate of Deposits / Commercial Papers are valued at carrying cost.

iv) Equity Shares are valued at market rate if quoted, otherwise at Break up Value as per the latest Balance Sheet, if available, or Rs. 1/- per Company.

v) Preference shares are valued at market price if quoted or at appropriate YTM basis as per Primary Dealers' Association of India / Fixed Income Money Market and Derivatives Association of India guidelines.

vi) Debentures / Bonds are valued at market price, if quoted, otherwise on an appropriate YTM basis.

vii) Mutual Funds are valued at market price, if quoted, or at NAV or Market Price / Repurchase Price.

viii) Security Receipts are valued at NAV as declared by Securitisation companies.

c) Individual scrips under "Held for Trading" category are valued at Market Price.

3.2 Investments in Available for Sale / Held for Trading are valued scrip wise, aggregated category wise and net depreciation, if any, for each category is charged to Profit & Loss Account, while net appreciation, if any, is ignored.

3.3 Shifting of securities from one category to another category is carried out lower of acquisition cost / book value / market value on the date of transfer. The depreciation, if any on such transfer is fully provided for.

3.4 Profit / Loss on sale of Investments in any category is taken to the Profit & Loss Account. However, in case of sale of investment in "Held to Maturity" category, the profit is first credited to Profit and Loss Account and thereafter an amount equivalent to profit, net of statutory reserve and taxes, is appropriated to the Capital Reserve Account.

3.5 Commission, brokerage, broken period interest etc. on securities incurred on acquisition is debited to Profit and Loss account. Commission, incentives, brokerage received on subscription is deducted from the Cost of the securities.

3.6 The Investments shown in the Balance Sheet are net of Depreciation, if any.

3.7 The Non Performing Investments are identified and provided for as per RBI guidelines.

4. Advances

4.1 Advances have been classified as per the Asset Classification norms laid down by the Reserve Bank of India. The required provisioning for Standard Assets and for Non Performing Assets have been made as per the Regulatory Norms.

4.2 Advances shown in the Balance Sheet are net of provisions and interest reserve on NPA accounts, technical write - offs, ECGC / DICGC claims received and provisions for Restructured accounts.

5. Fixed Assets

5.1 Premises and other Fixed Assets are accounted at acquisition cost less depreciation.

5.2 Depreciation has been provided on the composite value for premises acquired with land and building, where cost of the land is not separately identifiable.

5.3 Depreciation in respect of fixed assets is charged on the written down value of the assets from the date of purchase on pro-rata basis at the rates specified under Schedule XIV of the Companies Act, 1956, except in the case of computers and operating softwares which are depreciated @ 33.33 % on straight line method as per RBI guidelines.

6. Staff Benefits

6.1 Provision towards leave encashment is accounted on actuarial basis in accordance with the guidelines contained in Accounting Standard 15 (revised 2005) issued by ICAI.

6.2 Liability for Gratuity to staff is contributed to the Group Gratuity Life Assurance Scheme of the Life Insurance Corporation of India.

6.3 Payments to defined contribution schemes such as Provident Fund and Employees Pension Fund Superannuation Scheme of Life Insurance Corporation of India are charged as expenses as they fall due.

7. Employees Stock Option Scheme

The Employee Stock Option Scheme provides for grant of equity stock options to employees that vest in a graded manner. The Bank follows the intrinsic value method to account for its employee compensation costs arising from grant of such options. The excess of fair market price over the exercise price shall be accounted as employee compensation cost in the year of vesting. The fair market price is the latest closing price of the shares on the stock exchanges in which shares of the Bank are largely traded immediately prior to the date of meeting of the compensation committee in which the options are granted.

8. Earning Per share

Basic earning per share is calculated by dividing the net profit of the year by the weighted average number of equity shares.

Diluted earning per share is computed using the weighted average number of equity shares and dilutive potential equity shares.

9. Income Recognition

Interest Income on all advances / performing assets is recognised on accrual basis. In respect of Non- Performing Assets / Non-Performing Investments, interest income is recognised on receipt basis. Commission earned, Locker rent, Dividends on equity shares & Mutual Funds are recognised on receipt basis.

10. Income Tax

Income Tax comprises current tax and Deferred Tax for the year. The deferred tax assets / liability is recognised in accordance with Accounting Standard-22 issued by the Institute of Chartered Accountants of India.

11. Net Profit

The Net Profit disclosed in the Profit and Loss Account is after considering :

11.1 Provision for taxes on income in accordance with statutory requirements.

11.2 Provision for bad and doubtful advances and investments.

11.3 Contingent Provision for Standard Assets.

11.4 Other usual and necessary provisions.

---

Mar 31, 2011

1. General

The financial statements have been prepared on historical cost convention and on accrual basis of accounting, except where stated otherwise and conform to the statutory provisions and practices prevailing within the banking industry in India.

2. Foreign Exchange Transactions

2.1 Assets and Liabilities denominated in Foreign Currencies are translated at the rates notified by FEDAI at the close of the year. Profit or Loss accruing from such transactions is recognised in the Profit and Loss Account.

2.2 Income and Expenditure items have been translated at the exchange rates ruling on the date of the transactions.

2.3 The Bank does not have a branch in any Foreign Country.

2.4 Outstanding Forward Exchange contracts are revalued at the exchange rates notified by FEDAI and the resultant net gain or loss is recognised in the Profit and Loss Account.

2.5 Foreign Currency Guarantees, Acceptances, Endorsements and other obligations are accounted at the exchange rates prevailing on the date of the transactions.

3. Investments

3.1 As per RBI guidelines, the investments of the bank are classified as under at the time of acquisition.

- Held to Maturity

- Available for Sale

- Held for Trading

They are further sub classified and shown in Balance Sheet under the following six categories:

i) Government Securities ii) Other Approved Securities iii) Shares iv) Debentures and Bonds v) Subsidiaries /Joint Ventures and vi) Others

a) Securities classified under "Held to Maturity" category are valued at acquisition cost. Where the acquisition cost is higher than the face value, such excess of acquisition cost over the face value is amortised over the remaining period to maturity.

b) Securities held in "Available for Sale" Category are valued scrip wise as under:

i) Government of India Securities are valued at market price as per quotation put out by Primary Dealers' Association of India/ Fixed Income Money Market and Derivatives Association of India & Bloomberg.

ii) State Government loans, Trustee Securities, Securities guaranteed by Central/State Governments and PSU Bonds are valued on appropriate Yield to Maturity (YTM) basis as per Primary Dealers' Association of India/ Fixed Income Money Market and Derivatives Association of India guidelines.

iii) Treasury Bills/ Certificate of Deposits/ Commercial Papers are valued at carrying cost.

iv) Equity Shares are valued at market rate if quoted, otherwise at Break up Value as per the latest Balance Sheet if available or Re.1/- per Company.

v) Preference shares are valued at market price if quoted or at appropriate YTM basis as per Primary Dealers' Association of India/ Fixed Income Money Market and Derivatives Association of India guidelines.

vi) Debentures are valued at market price, if quoted, otherwise on an appropriate YTM basis.

vii) Mutual Funds are valued at market price if quoted or at NAV or Market Price/ Repurchase Price.

viii) Security Receipts are valued at NAV as declared by Securitisation companies.

c) Securities under "Held for Trading" category are valued at Market Price based on quotations of Government Securities put out by Fixed Income Money Market and Derivatives Association of India.

3.2 Investments in Available for Sale / Held for Trading are valued scrip wise, category wise and net depreciation if any in each category is charged to Profit & Loss Account, while net appreciation if any, is ignored.

3.3 Shifting of securities from one category to another category is carried out lower of acquisition cost/ book value/ market value on the date of transfer. The depreciation, if any on such transfer is fully provided for.

3.4 Profit/Loss on sale of Investments in any category is taken to the Profit & Loss Account. However, in case of sale of investment in "Held to Maturity" category, the profit is first credited to Profit and Loss Account and thereafter an amount equivalent to profit net of statutory reserve and taxes is appropriated to the Capital Reserve Account.

3.5 Commission, brokerage, broken period interest etc. on securities incurred on acquisition are debited to Profit and Loss account. Commission, incentives, brokerage received on subscription are deducted from the Cost of the securities.

3.6 The Investments shown in the Balance Sheet are net of Depreciation, if any.

3.7 The Non Performing Investments are identified and provided for as per RBI guidelines.

4. Advances

4.1 Advances have been classified as per the Asset Classification norms laid down by the Reserve Bank of India. The required provisioning for Standard Assets and for Non Performing Assets have been made as per the Regulatory Norms.

4.2 Advances shown in the Balance Sheet are net of provisions and interest reserve on NPA accounts, ECGC/DICGC claims received and provisions for Restructured accounts.

5. Fixed Assets

5.1 Premises and other Fixed Assets are accounted at acquisition cost less depreciation.

5.2 Depreciation has been provided on the composite value for premises acquired with land and building, where cost of the land is not separately identifiable.

5.3 Depreciation in respect of fixed assets is charged on the written down value of the assets from the date of purchase on pro-rata basis at the rates specified under Schedule XIV of the Companies Act, 1956; except in the case of computers, which are depreciated @ 33.33 % on straight line method as per RBI guidelines.

6. Staff Benefits

6.1 Provision towards leave encashment is accounted on actuarial basis in accordance with the guidelines contained in Accounting Standard 15 (revised 2005) issued by ICAI.

6.2 Liability of Gratuity to staff is contributed to the Group Gratuity Life Assurance Scheme of the Life Insurance Corporation of India.

6.3 Payments to defined contribution schemes such as Provident Fund and Employees Pension Fund Superannuation Scheme of Life Insurance Corporation of India are charged as expenses as they fall due.

7. Employees Stock Option Scheme

The Employee Stock Option Scheme provides for grant of equity stock options to employees that vest in a graded manner. The Bank follows the intrinsic value method to account for its employee compensation costs arising from grant of such options. The excess of fair market price over the exercise price shall be accounted as employee compensation cost in the year of vesting. The fair market price is the latest closing price of the shares on the stock exchanges in which shares of the Bank are largely traded immediately prior to the date of meeting of the compensation committee in which the options are granted.

8. Earning Per share

Basic earning per share is calculated by dividing the net profit of the year by the weighted average number of equity shares.

Diluted earning per share is computed using the weighted average number of equity shares and dilutive potential equity shares.

9. Income Recognition

Interest Income on all advances / performing assets is recognised on accrual basis. In respect of Non- Performing Assets / Non-Performing Investments, interest income is recognised on receipt basis. Commission earned, Locker rent, Dividends on equity shares & Mutual Funds are recognised on receipt basis.

10. Income Tax

Income Tax comprises current tax and Deferred Tax for the year. The deferred tax assets/liability is recognised in accordance with Accounting Standard-22 issued by the Institute of Chartered Accountants of India.

11. Net Profit

The Net Profit disclosed in the Profit and Loss Account is after considering

11.1 Provision for taxes on income in accordance with statutory requirements.

11.2 Provision for bad and doubtful advances and investments.

11.3 Contingent Provision for Standard Assets.

11.4 Other usual and necessary provisions.

---

Mar 31, 2010

1. General

The financial statements have been prepared on historical convention basis and on accrual basis of accounting except where stated otherwise and conform to the statutory provisions and practices prevailing within the banking industry in India.

2. Foreign Exchange Transactions

2.1 Assets and Liabilities denominated in Foreign Currencies are translated at the rates notified by FEDAI at the close of the year. Profit or Loss accruing from such transactions is recognised in the profit and loss account.

2.2 Income and Expenditure items have been translated at the Exchange rates ruling on the date of the transactions.

2.3 The Bank does not have a branch in any Foreign Country.

2.4 Outstanding Forward Exchange contracts are revalued at the exchange rates notified by FEDAI and the resultant net gain or loss is recognised in the Profit and Loss account.

2.5 Foreign Currency Guarantees, Acceptances, Endorsements and other obligations are accounted at the exchange rates prevailing on the date of the transactions.

3. Investments

3.1 As per RBI guidelines, the investments of the bank are categorised and valued as under:

• Held to Maturity

• Available for Sale

• Held for Trading

a) Securities classified under "Held to Maturity" category are valued at acquisition cost. Where the acquisition cost is higher than the face value, such excess of acquisition cost over the face value is amortised over the remaining period to maturity.

b) Securities held in "Available for Sale" Category are valued scrip wise as under:

i) Government of India Securities are valued at market price as per quotation put out by Primary Dealers Association of India/ Fixed Income Money Market and Derivatives Association of India & Bloomberg.

ii) State Government loans, Trustee Securities, Securities guaranteed by Central/State Governments and PSU Bonds are valued on appropriate Yield to Maturity (YTM) basis as per Primary Dealers Association of India/ Fixed Income Money Market and Derivatives Association of India guidelines.

iii) Treasury Bills/ Certificate of Deposits/ Commercial Papers are valued at carrying cost.

iv) Equity Shares are valued at market rate if quoted, otherwise at Break up Value as per the latest Balance Sheet if available or Re.1/- per Company.

v) Preference shares are valued at market price if quoted or at appropriate YTM basis as per Primary Dealers Association of India/ Fixed Income Money Market and Derivatives Association of India guidelines.

vi) Debentures are valued at market price, if quoted, otherwise on an appropriate YTM basis.

vii) Mutual Funds are valued at market price if quoted or at NAV or Market Price/ Repurchase Price.

viii) Security Receipts are valued at NAV as declared by Securitisation companies.

c) Securities held in "Held for Trading" category are valued at Market Price based on quotations of Government Securities put out by Fixed Income Money Market and Derivatives Association of India.

3.2 Investments in Available for Sale / Held for Trading are valued scrip wise, category wise and net depreciation if any in each category is charged to Profit & Loss A/c, while net appreciation if any, is ignored.

3.3 Shifting of securities from one category to another category is carried out lower of acquisition cost/ book value/ market value on the date of transfer. The depreciation, if any on such transfer is fully provided for.

3.4 Profit/ loss on sale of investments in any category is taken to the Profit & Loss account. However, in case of profit on sale of investment in "Held to Maturity" category, and thereafter appropriated to the Capital Reserve account.

3.5 Commission, brokerage, broken period interest etc. on securities incurred on acquisition are debited / credited to Profit and Loss account. Commission, incentives, brokerage received on subscription are deducted from the cost of the securities.

3.6 The investments shown in the Balance Sheet are net of depreciation, if any.

3.7 The non performing investments are identified and provided for as per RBI guidelines.

4. Advances

4.1 Advances have been classified and provisions for standard assets and NPAs made in accordance with the prudential norms laid down by RBI for asset classification and provisioning requirements.

4.2 Advances shown in the Balance Sheet are net of provisions for and interest reserve on NPA accounts, ECGC/DICGC claims received and provisions for Restructured accounts.

5. Fixed Assets

5.1 Premises and other Fixed Assets are accounted at acquisition cost less depreciation.

5.2 Depreciation has been provided on the composite value for premises acquired with land and building, where cost of the land is not separately identifiable.

5.3 Depreciation in respect of fixed assets is charged on the written down value of the assets from the date of purchase on pro-rata basis at the rates specified under Schedule XIV of the Companies Act, 1956; except in the case of computers, which are depreciated @ 33.33 % on straight line method as per RBI guidelines.

6. Staff Benefits

6.1 Provision for encashment of accumulated leave is accounted on actuarial basis in accordance with the guidelines contained in Accounting Standard 15 (revised 2005) issued by ICAI.

6.2 Liability of Gratuity to staff is contributed to the Group Gratuity Life Assurance Scheme of the Life Insurance Corporation of India.

6.3 Provident Fund and subscriptions to retirement annuity scheme are accounted on contributory basis.

7. Employees Stock Option Scheme

The Employee Stock Option Scheme provides for grant of equity stock options to employees that vest in a graded manner. The Bank follows the intrinsic value method to account for its employee compensation costs arising from grant of such options. The excess of fair market price over the exercise price shall be accounted as employee compensation cost in the year of vesting. The fair market price is the latest closing price of the shares on the stock exchanges in which shares of the Bank are largely traded immediately prior to the date of meeting of the compensation committee in which the options are granted.

8. Earning Per share

Basic earning per share is calculated by dividing the net profit of the year by the weighted average number of equity shares outstanding during the year.

Diluted earning per share is computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the year.

9. Income Recognition

Interest Income on all advances/ performing assets is recognised on accrual basis. In respect of Non- Performing Assets / Non-Performing Investments, interest income is recognised on receipt basis. Commission earned, Locker rent, Dividends on Equity Shares & Mutual Funds are recognised on receipt basis.

10. Income Tax

Income Tax comprises current tax and Deferred Tax for the year. The deferred tax assets/liability is recognised in accordance with Accounting Standard-22 issued by the Institute of Chartered Accountants of India.

11. Net Profit

The Net Profit disclosed in the Profit and Loss Account is after considering

11.1 Provision for taxes on income in accordance with statutory requirements.

11.2 Provision for bad and doubtful advances and investments.

11.3 Contingent Provision for Standard Assets.

11.4 Other usual and necessary provisions

a. A summary discussion of the Banks approach to assessing the adequacy of its capital to support

current and future activities.

In order to strengthen the capital base of banks in India, the Reserve Bank of India in April 1992 introduced capital adequacy measures in banks, based on the capital adequacy framework (Basel I) issued by Basel Committee on Banking Supervision (BCBS). Initially, the framework addressed capital for credit risk, which was subsequently amended to include capital for market risk as well. The Bank has been compliant with regard to maintainance of minimum capital for credit and market risks.

Subsequently, the BCBS has released the "International Convergence of Capital Measurement and Capital Standards: A Revised Framework" (popularly known as Basel II document) on June 26, 2004. Reserve Bank of India has issued final guidelines on April 27, 2007 for implementation of the New Capital Adequacy (Basel II) Framework.

In line with the RBI guidelines, the Bank has sucessfully migrated to the revised framework from 31.03.2009. The Bank has continued the Parallel run of Basel II framework continuously tracking the exposures and studied the impact on Banks Capital to Risk weighted Assets Ratio (CRAR) on a quarterly basis.

In accordance with the RBIs requirement, the Bank has continued to adopt Standardised Approach (SA) for Credit Risk and Basic Indicator Approach (BIA) for Operational Risk to compute capital as on March 31, 2010. Besides this, the Bank continues to apply the Standardised Duration Approach(SDA) for computing capital requirement for Market Risk.

Reserve Bank of India has prescribed Banks to maintain a minimum CRAR of 9% with regard to credit risk, market risk and operational risk on an ongoing basis. The total Capital to Risk weighted Assets Ratio (CRAR) as per Basel II guidelines works to 13.46% as on 31.03.2010 (as against 9%). The Tier I CRAR stands at 12.41% as against RBIs prescription of 6%.

The Bank has followed the RBI guidelines in force, to arrive at the eligible capital, risk weighted assets and CRAR. As regards the adequacy of capital to support the future activities, the Bank has drawn an assessment of capital requirement for three years with the approval of the Board. The surplus CRAR shall act as a buffer to support the future activities.