Accounting Policies of Indian Bank Company

Mar 31, 2025

1. ACCOUNTING CONVENTION:

The financial statements are prepared by following
the going concern concept on historical cost
convention unless otherwise stated. They conform
to generally accepted accounting principles in India,
which comprises statutory provisions, regulatory
/ Reserve Bank of India guidelines, accounting
standards / guidance notes issued by the Institute
of Chartered Accountants of India and the practices
prevalent in the Banking Industry in India. In respect
of foreign branches as per statutory provisions and
practices prevailing in the respective countries.

2. USE OF ESTIMATES :

The preparation of financial statements requires the
management to make estimates and assumptions
for considering the reported assets and liabilities
(including contingent liabilities) as on the date of
financial statements and the income and expenses
for the reporting period. Management believes that
the estimates used in the preparation of the financial
statements are prudent and reasonable.

3. TRANSACTIONS INVOLVING FOREIGN EXCHANGE

Foreign Currency transactions of Indian operations
and non-integral foreign operations are accounted
for as per Accounting Standard-11 (AS-11) issued by
the Institute of Chartered Accountants of India (ICAI).

3.1 Translation in respect of Indian operations

• Foreign exchange transactions are recorded
at the exchange rate prevailing at preceding
business day closing. The rate to be used is
closing rate.

• Foreign currency assets and liabilities are

translated at the Weekly Average Rates notified
by FEDAI every Weekend.

• Foreign currency assets and liabilities are

translated at the closing rates/Revaluation Rates

notified by FEDAI at every Month/Quarter/Year
end.

• Acceptances, endorsements and other
obligations and guarantees in foreign currency
are carried at the closing rates notified by FEDAI
at the Month/Quarter/Year end.

• Exchange differences arising on settlement
and translation of foreign currency assets and
liabilities at the end of the respective Quarter/
Year are recognized as income or expenses in
the period in which they arise.

• Outstanding forward exchange contracts are
disclosed at the Contracted rates, and revalued
at FEDAI closing rates, and the resultant effect is
recognized in the Profit and Loss account.

3.2 Translation in respect of non-integral foreign
operations.

Foreign branches are classified as non-integral
foreign operations and the financial statements are
translated as follows:

• Assets and liabilities including contingent
liabilities are translated at the closing rates
notified by FEDAI at the year end.

• Income and expenses are translated at the
Quarterly Average Closing rate notified by FEDAI
at the end of the respective quarter.

• All resulting exchange differences are
accumulated in a separate account "Foreign
Currency Translation Reserve" (FCTR) till the
disposal of the net investments.

4. INVESTMENTS

4.1 Bank shall classify the entire investment portfolio
(except investments in their own subsidiaries, joint
ventures and associates) under three categories, viz.,
Held to Maturity (HTM), Available for Sale (AFS), Fair
Value through Profit and Loss (FVTPL).

Held for Trading (HFT) shall be a separate investment
sub- category within FVTPL. The category of the
investment shall be decided by the bank before or
at the time of acquisition and this decision shall be
properly documented. All investments in subsidiaries,
associates and joint ventures shall be held sui generis

i.e., in a distinct category for such investments
separate from the other investment categories (viz.
HTM, AFS and FVTPL). All the investments will be
classified in the following category:

(i) Held to Maturity (HTM)

(ii) Available for Sale (AFS)

(iii) Fair Value through Profit and Loss (FVTPL)

(i) Held for Trading (HFT)

(iv) Subsidiaries, associates and joint ventures (SAJV)

Bank shall continue to present the investments in the
Balance Sheet as set out in The Third Schedule to the
BR Act (Form A, Schedule 8 - Investments) as under:

(i) Government securities

(ii) Otherapproved securities

(iii) Shares

(iv) Debentures&Bonds

(v) Subsidiariesand/ orjointventures

(vi) Others(tobe specified)

Held to Maturity (HTM):

(a) Securities that fulfill the following conditions shall be
classified under HTM

(i) The security is acquired with the intention
and objective of holding it to maturity, i.e., the
financial assets are held with an objective to
collect the contractual cash flows; and

(ii) The contractual terms of the security give rise to
cash flows that are solely payments of principal
and interest on principal outstanding (''SPPI
criterion'') on specified dates.

(b) Investments in the securitization notes, other than
the equity tranche, shall be considered to meet the

SPPI criteria if the tranche in which the investment is
made meets all the following conditions:

(i) The contractual terms of the tranche being
assessed for classification (without looking
through to the underlying pool of financial
instruments) give rise to cash flows that are
solely payments of principal and interest on the
principal amount outstanding.

(ii) The under lying pool of financial instruments
meet the SPPI criteria.

(iii) The credit risk of the tranche is equal to or lower
than the credit risk of the combined underlying
pool of assets.

Available for Sale (AFS):

(a) Securities that meet the following conditions shall be
classified under AFS

(i) The security is acquired with an objective that
is achieved by both collecting contractual cash
flows and selling securities; and

(ii) The contractual terms of the security meet
the ''SPPI criterion'' as given in RBI Circular-
Master Direction - Classification, Valuation and
Operation of Investment Portfolio of Commercial
Banks (Directions), 2023.

Provided that on initial recognition, a bank may
make an irrevocable election to classify an equity
instrument that is not held with the objective of
trading.

(b) AFS securities shall inter-alia include debt securities
held for asset liability management (ALM) purposes
that meet the SPPI criterion where the bank''s intent is
flexible with respect to holding to maturity or selling
before maturity.

(c) Notwithstanding the intent with which the following
securities are acquired, they shall not meet the
SPPI criteria and therefore shall not be eligible for
classification either as HTM or AFS:

(i) Instruments with compulsorily, optionally or
contingently convertible features.

(ii) Instruments with contractual loss absorbency
features such as those qualifying for Additional
Tier 1 and Tier 2 under Basel III Capital
Regulations.

(iii) Instruments whose coupons are not in the
nature of interest as defined in RBI Circular-
Master Direction - Classification, Valuation and
Operation of Investment Portfolio of Commercial
Banks (Directions), 2023.

(iv) Preference shares and Equity shares.

FVTPL

(a) Securities that do not qualify for inclusion in HTM or

AFS shall be classified under FVTPL. These shall inter-

alia include:

(i) Equity shares, other than (a) equity shares of
subsidiaries, associates or joint ventures and (b)
equity shares where, at initial recognition, the
irrevocable option to classify at AFS has been
exercised.

(ii) Investments in Mutual Funds, Alternative
Investment Funds, Real Estate Investment
Trusts, Infrastructure Investment Trusts, etc.

(iii) Investment in securitisation notes which
represent the equity tranche of a securitisation
transaction. Investments in senior and other
subordinate tranches shall need to be reviewed
for their compliance with SPPI criterion.

(iv) Bonds, debentures, etc. where the payment is
linked to the movement in a particular index
such as an equity index rather than an interest
rate benchmark.

HFT

Bank shall create a separate sub-category called HFT within
FVTPL. Bank shall comply with the requirements specified
in RBI Circular-Master Direction - Classification, Valuation
and Operation of Investment Portfolio of Commercial
Banks (Directions), 2023 for classifying investments under
HFT. Details in Annexure 1

Investments in Subsidiaries, Associates and Joint
Ventures

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

4.2 INITIAL RECOGNITION

4.2.1 All investments shall be measured at fair value on
initial recognition. Unless facts and circumstances
suggest that the fair value is materially different
from the acquisition cost, it shall be presumed that
the acquisition cost is the fair value. Situations where
the presumption shall be tested include where:

(a) The transaction is between related parties.

(b) The transaction is taking place under duress
where one party is forced to accept the price in
the transaction.

(c) The transaction is done outside the principal
market for that class of securities.

(d) Other situations, where in the opinion of the
supervisor, facts and circumstances warrant
testing of the presumption.

4.2.2 In respect of government securities acquired through
auction (including devolvement), switch operations
and open market operations (OMO) conducted by
the RBI, the price at which the security is allotted
shall be the fair value for initial recognition purposes.

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

4.2.4 Any Day 1 loss arising from Level 3 investments shall
be recognised immediately.

4.2.5 Any Day 1 gains arising from Level 3 investments
shall be deferred. In the case of debt instruments,

the Day 1 gain shall be amortized on a straight-line
basis up to the maturity date (or earliest call date for
perpetual instruments), while for unquoted equity
instruments, the gain shall be set aside as a liability
until the security is listed or derecognised.

4.3 SUBSEQUENT MEASUREMENT

4.3.1 HTM

a) Securities held in HTM shall be carried at cost
and shall not be marked to market (MTM) after
initial recognition. However, they shall be subject
to income recognition, asset classification and
provisioning norms as specified in RBI Circular-
Master Direction - Classification, Valuation and
Operation of Investment Portfolio of Commercial
Banks (Directions), 2023.

(b) Any discount or premium on the securities under
HTM shall be amortised over the remaining life
of the instrument. The amortised amount shall
be reflected in the financial statements under
item II ''Income on Investments'' of Schedule
13: ''Interest Earned'' with a contra in Schedule
8:''Investments''.

(c) The acquisition cost adjusted for any premium/
discount amortised between date of acquisition
and March 31, 2024, shall be the revised
carrying value.The difference between the
revised carrying value and the previous carrying
value shall be adjusted in any Revenue/General
Reserve.

(d) Only in exceptional circumstances, where it is
not practicable to calculate revised carrying
value as above, the fair value of the securities as
of March 31, 2024, may be taken as the revised
carrying value.

4.3.2 AFS

a) The securities held in AFS shall be fair valued at
least on a quarterly basis, if not more frequently.
Any discount or premium on the acquisition of
debt securities under AFS shall be amortised

over the remaining life of the instrument. The
amortised amount shall be reflected in the
financial statements under item II''Income on
Investments'' of Schedule 13: ''Interest Earned''
with a contra in Schedule 8: ''Investments''.

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

(c) Securities under AFS shall be subject to
income recognition, asset classification and
provisioning norms as specified in RBI Circular-
Master Direction - Classification, Valuation and
Operation of Investment Portfolio of Commercial
Banks (Directions), 2023.

(d) The AFS-Reserve shall be reckoned as Common
Equity Tier (CET) 1 subject to clause 28 of these
Directions. The unrealised gains transferred
to AFS-Reserve shall not be available for any
distribution such as dividend and coupon on
Additional Tier 1.

(e) Upon sale or maturity of a debt instrument in
AFS category, the accumulated gain/ loss for that
security in the AFS-Reserve shall be transferred
from the AFS- Reserve and recognized in the
Profit and Loss Account under item II Profit on
sale of investments under Schedule 14-Other
Income.

(f) In the case of equity instruments designated
under AFS at the time of initial recognition, any
gain or loss on sale of such investments shall not
be transferred from AFS-Reserve to the Profit
and Loss Account. Instead, such gain or loss
shall be transferred from AFS-Reserve to the
Capital Reserve.

433 FVTPL

a) The securities held in FVTPL shall be fair valued
and the net gain or loss arising on such valuation
shall be directly credited or debited to the Profit
and Loss Account. Securities that are classified
under the HFT sub-category within FVTPL shall
be fair valued on a daily basis, whereas other
securities in FVTPL shall be fair valued at least
on a quarterly, if not on a more frequent basis.

(b) Bank shall fair value daily all HFT instruments
and recognise any valuation change in the profit
and loss account.

(c) Any discount or premium on the acquisition of
debt securities under FVTPL shall be amortised
over the remaining life of the instrument. The
amortised amount shall be reflected in the
financial statements under item II ''Income on
Investments'' of Schedule 13: ''Interest Earned''
with a contra in Schedule 8: ''Investments''.

(d) Securities under FVTPL shall be subject to
income recognition, asset classification and
provisioning norms as specified in RBI Circular-
Master Direction - Classification, Valuation and
Operation of Investment Portfolio of Commercial
Banks (Directions), 2023

4.3.4 Investments in Subsidiaries, Associates and Joint

ventures

a) All investments (i.e., including debt and equity)
in subsidiaries, associates and joint ventures
shall be held at acquisition cost, subject
to the requirements as per RBI Circular-
Master Direction - Classification, Valuation
and Operation of Investment Portfolio of
Commercial Banks (Directions), 2023.

(b) Any discount or premium on the acquisition
of debt securities of subsidiaries, associates
and joint ventures shall be amortised over
the remaining life of the instrument. The
amortised amount shall be reflected in the
financial statements under item II ''Income on
Investments'' of Schedule 13: ''Interest Earned''.

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

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

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

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

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

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

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

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

(f) Bank shall evaluate investments in subsidiaries,
associates or joint ventures for impairment at
least on a quarterly, if not more frequent basis.
A non-exhaustive list of indicators of potential
impairment is as under:

i. The entity has defaulted in repayment of its
debt obligations.

ii. The loan amount of the entity with any bank
has been restructured.

iii. The credit rating of the entity has been
downgraded to below investment grade.

iv. The entity has incurred losses for a
continuous period of three years and the
net worth has consequently reduced by 25
per cent or more.

v. There is a significant decline in the fair value
vis-a-vis the carrying value for a period of
six months or more. For the purpose of
this sub-clause the term significant shall be
interpreted as at least 20 per cent. Bank,
with the approval of their Boards, may
apply even more conservative thresholds.

vi. Any or all of the entity''s outstanding
securities have been delisted, are in the
process of being delisted, or are under
threat of being delisted from an exchange
due to noncompliance with the listing
requirements or for financial reasons.

vii. In the case of a new entity/ project where
the originally projected date of achieving

the breakeven point has been extended
i.e., the entity/ project has not achieved
break-even within the gestation period as
originally envisaged.

(g) When the need to determine whether
impairment has occurred arises in respect of a
subsidiary, associate or joint venture, the bank
shall obtain a valuation of the investment by
an independent registered valuer and make
provision for the impairment, if any. Such
diminution shall be provided by recognising it
as an expense in the Profit and Loss Account.
It may be subsequently reversed through Profit
and Loss Account, if there is a reversal of the
diminution.

4.4 RECLASSIFICATION BETWEEN CATEGORIES

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

(b) The reclassification should be applied
prospectively from reclassification date.

(c) When a bank reclassifies investments from one
category to another category, the accounting
treatment shall be as given in the table below.
The bank shall disclose the details of such
reclassification including the reclassification
adjustments in the notes to the financial
statements

4.5 SALE OF INVESTMENTS FROM HTM

(a) Any sales from HTM shall be as per a Board
approved policy. Details of sales out of HTM
shall be disclosed in the notes to accounts of
the financial statements in the format specified
in RBI Circular-Master Direction - Classification,
Valuation and Operation of Investment Portfolio
of Commercial Banks (Directions), 2023.

(b) In any financial year, the carrying value of
investments sold out of HTM shall not exceed
five per cent of the opening carrying value of the

HTM portfolio. Any sale beyond this threshold
shall require prior approval from DoS, RBI.

(c) Sales of securities in the situations given
below shall be excluded from the regulatory
limit of five per cent prescribed in RBI Circular-
Master Direction - Classification, Valuation and
Operation of Investment Portfolio of Commercial
Banks (Directions), 2023

i. Sales to the RBI under liquidity management
operations of RBI such as the Open Market
Operations (OMO) and Government
Securities Acquisition Programme (GSAP).

ii. Repurchase of Government Securities by
Government of India from Bank under
buyback or switch operations.

iii. Repurchase of State Development Loans
by respective state governments under
buyback or switch operations.

iv. Repurchase, buyback or exercise of call
option of non-SLR securities by the issuer.

v. Sale of non-SLR securities following a
downgrade in credit ratings or default by
the counterparty.

vi. Sale of securities as part of a resolution
plan under the Prudential Framework for
Resolution of Stressed Assets for a borrower
facing financial distress.

vii. Additional sale of securities explicitly
permitted by the Reserve Bank of India.

(d) Any profit or loss on the sale of investments in HTM
shall be recognised in the Profit and Loss Account
under Item II of Schedule 14:''Other Income''. The
profit on sale of an investments in HTM shall be
appropriated below the line from the Profit and Loss
Account to the ''Capital Reserve Account''. The amount
so appropriated shall be net of taxes and the amount
required to be transferred to Statutory Reserve.

(e) Any gain/ profit arising on the reclassification/ sale
of an investment in a subsidiary, associate or joint

venture shall be first recognised in the Profit and Loss
Account and then shall be appropriated below the
line from the Profit and Loss Account to the ''Capital
Reserve Account''. The amount so appropriated
shall be net of taxes and the amount required to be
transferred to Statutory Reserves

4.5 FAIR VALUE OF INVESTMENTS

The fair value for the purpose of initial recognition
and periodical valuation of investments as required
by these Directions shall be determined as per the
valuation norms laid down in this Chapter.

4.6.1 Quotes Securities

The fair value for the quoted securities shall be
the prices declared by the Financial Benchmarks
India Private Ltd. (FBIL) in accordance with RBI
circularFMRD.DIRD.7/14.03.025/2017-18 dated
March 31, 2018, as amended from time to time. For
securities whose prices are not published by FBIL, the
fair value of the quoted security shall be based upon
quoted price as available from the trades/ quotes on
recognised stock exchanges, reporting platforms or
trading platforms authorized by RBI/SEBI or prices
declared by the Fixed Income Money Market and
Derivatives Association of India (FIMMDA).

4.6.2 Unquoted SLR Securities

(a) Treasury Bills shall be valued at carrying cost.

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

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

4.6.3 Unquoted Non-SLR Securities

I. Unquoted debentures & Bonds

a) Unquoted debentures and bonds shall be
valued by applying the appropriate mark-up
over the YTM rates for Central Government

Securities as put out by FBIL/FIMMDA, subject to
the following:

i. The mark-up applied shall be determined
based on the ratings assigned to the
debentures/ bonds by the credit rating
agencies and shall be subject to the
following:

• The mark up shall be at least 50 basis
points above the rate applicable
to a Central Government security
of equivalent maturity for rated
debentures/ bonds.

• The mark-up for unrated debentures or
bonds shall not be less than the mark¬
up applicable to rated debentures or
bonds of equivalent maturity.

Provided that the mark-up for the unrated
debentures or bonds should appropriately
reflect the credit risk borne by the bank.

• Where the debentures/ bonds are quoted
and there have been transactions within 15
days prior to the valuation date, the value
adopted shall not be higher than the rate at
which the transaction has been recorded on
the Exchanges/trading platforms/reporting
platforms authorized by RBI/ SEBI.

b) Ujjwal DISCOM Assurance Yojana (UDAY) bonds
and bonds issued by state distribution companies
(DISCOMs) under financial restructuring plan.

i. UDAY bonds shall be valued on basis of
prices/yields published by FBIL.

ii. State government guaranteed bonds
issued and serviced by DISCOM (i.e., when
bonds'' liabilities are with the DISCOMs)
shall be valued by applying a mark-up of
75 basis points on YTM rates for Central
Government Securities of equivalent
maturities as published by FBIL.

iii. Other bonds issued and serviced by
DISCOMs shall be valued by applying a

mark-up of 100 basis points on YTM rates
for Central Government Securities of
equivalent maturities as published by FBIL.

iv. Bonds issued and serviced by the State
Government (i.e., when bonds'' liabilities are
with the State Government) shall be valued
by applying a mark-up of 50 basis points
on YTM rates for Central Government
Securities of equivalent maturities as
published by FBIL.

c) Special securities, which are directly issued by
Government of India, and which do not carry
SLR status shall be valued at a spread of 25 basis
points above the corresponding yield on Central
Government securities of equivalent maturity.

d) Zero coupon bonds (ZCBs): In the absence of
market value, the ZCBs shall be marked to
market with reference to the present value of
the ZCB. The fair value so determined should be
compared with the carrying cost to determine
valuation gain or loss.

II. Preference Shares

a) When a preference share has been traded on
exchange within 15 days prior to the valuation
date, the value shall not be higher than the price
at which the share was traded.

b) The valuation of unquoted preference shares
shall be done on YTM basis with appropriate
mark-up over the YTM rates for Central
Government Securities of equivalent maturity
put out by the FBIL subject to such preference
share not being valued above its redemption
value. The mark-up shall be graded according to
the ratings assigned to the preference shares by
the rating agencies and shall be subject to the
following:

i. The mark-up cannot be negative i.e., the
YTM rate shall not be lower than the coupon
rate/ YTM for a Central Government India
security of equivalent maturity.

ii. The rate used for the YTM for unrated
preference shares shall not be less than the
rate applicable to rated preference shares of
equivalent maturity and shall appropriately
reflect the credit risk borne by the bank.

iii. Where the investment in preference shares
is made as part of a resolution, the mark¬
up shall not be lower than 1.5 percentage
points.

c) Where preference dividends/coupons are in
arrears, no credit should be taken for accrued
dividends/coupons and the value determined
as above on YTM basis should be discounted
further by at least 15 per cent if arrears are
for one year, 25 per cent if arrears are for two
years, so on and so forth (i.e., with 10 percent
increments). The overarching principle should
be that valuation shall be based on conservative
assessment of cash flows with appropriate
discount rates to reflect the risk. Statutory
Auditors should also specifically examine as
to whether the valuations adequately reflect
the risk associated with such instruments. The
depreciation/provision requirement arrived
at in respect of non-performingshares where
dividends are in arrears shall not be allowed
to be set-off against appreciation on other
performing preference shares.

d) Investments in preference shares as part of the
project finance shall be valued at par for a period
of two years after commencement of production
or five years after subscription whichever is
earlier.

III. Equity Shares

Equity shares for which current quotations are not
available i.e., which are classified as illiquid or which
are not listed on a recognised exchange, the fair
value for the purposes of these directions shall be
the break-up value (without considering ''revaluation
reserves'', if any) which is to be as certained from the
company''s latest audited balance sheet. The date as

on which the latest balance sheet is drawn up shall
not precede the date of valuation by more than 18
months. Incase the latest audited balance sheet
is not available or is more than 18 months old, the
shares shall be valued at ? 1 per company.

IV. Mutual Fund Units

a) Investment in un-quoted MF units shall be
valued on the basis of the latest re- purchase
price declared by the MF in respect of each
scheme.

b) In case of funds with a lock-in period or any other
Mutual Fund, where repurchase price/ market
quote is not available, units shall be valued at
Net Asset Value (NAV) of the scheme. If NAV is
not available, these shall be valued at cost, till
the end of the lock-in period.

V. Commercial paper

Commercial paper shall be valued at the carrying
cost.

VI. Investment in security receipts (SRs) and other
instruments issued by an Asset Reconstruction
Company (ARC) In respect of investments in SRs
and other instruments issued by ARCs, Bank shall
comply with the requirements of Reserve Bank of
India (Transfer of LoanExposures) Directions, 2021,
as amended from time to time.

VII. Investment in Alternative Investment Funds
(AIFs)

a) Quoted equity shares, bonds, units of AIFs in
the bank''s portfolio shall be valued mutatis
mutandis as per instructions given in these
directions for quoted securities.

b) Unquoted instruments of AIFs shall be valued as
under:

i. Units: The valuation shall be done at the
NAV as disclosed by the AIF. Where an AIF
fails to carry out and disclose the valuation
of its investments by an independent valuer
as per the frequency mandated by SEBI

(Alternative Investment Fund) Regulations,
2012, the value of its units shall be treated
as ?1 for the purpose of these Directions.
In case AIF is not registered under SEBI
(Alternative Investment Fund) Regulations,
2012 and the latest disclosed valuation of
its investments by an independent valuer
precedes the date of valuation by more
than 18 months, the value of its units shall
be treated as ?1 for the purpose of these
Directions.

ii. Other instruments: The valuation of
unquoted equity and other instruments
issued by an AIF shall be as per the
methodology specified for such instruments
above.

iii. As per RBI Circular dated 27.03.2024,
RBI/2023-24/140

DO R.STR.REC. 85/21.04.048/2023-24
Provisioning shall be required only to the extent
of investment by the Regulated entities (REs) in
the AIF scheme which is further invested by the
AIF in the debtor company, and not on the entire
investment of the RE in the AIF scheme

VIII. Conversion of principal and unpaid interest into
debt, preference or equity shares In cases of
conversion of principal and unpaid interest into debt,
preference or equity instruments bank shall follow
the requirements of the Prudential Framework for
Resolution of Stressed Assets issued vide circularDBR.
No.BP.BC.45/21.04.048/2018-19 dated June 7, 2019,
as amended from time to time.

IX. To increase consistency and comparability in fair
value measurements and related disclosures, the
bank shall categorize its investment portfolio into
three fair value hierarchies viz. Level 1, Level 2, and
Level 3 as defined in Clause 4 above. The details of
the investment portfolio shall be disclosed in their
notes to accounts of their financial statements. These
disclosure requirements shall become effective from
the audited financial statements for the financial

year ending March 31,2026, onwards.

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

Provided that this clause shall not apply to
investments that meet the SPPI criteria and are
required to be risk weighted at 50 per cent or lower
for credit risk as per applicable regulatory instructions
on capital adequacy.

4.7 Income Recognition, Asset Classification and

Provisioning

4.7.1 Income Recognition

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

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

ii. Shares of corporate bodies provided
dividend has been declared by the corporate
body in its Annual General Meeting and
the owner''s right to receive payment is
established.

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

c) Subject to sub-clause (a) above, dividend income
on equity investments held under AFS shall be
recognised in the Profit and Loss Account.

4.7.2 Accounting for Broken Period Interest: Bank shall
not capitalize the broken period interest paid to the
seller as part of cost and shall treat it as an item of
expenditure under Profit & Loss Account in respect of

investments in securities.

4.7.3 Non-PerformingInvestments (NPI)

a) The criterion used to classify an asset as Non¬
Performing Asset (NPA) as per the extant
Prudential Norms on Income Recognition,
Asset Classification and Provisioning (IRACP)
pertaining to Advances shall be used to classify
an investment as a Non-Performing Investment
(NPI). Similarly, an NPI shall only be upgraded to
standard when it meets the criteria specified in
the IRACP norms.

i. In respect of debt instruments such as
bonds or debentures, an NPI is one where
interest/ instalment (including maturity
proceeds) is due and remains unpaid for
more than 90 days.

ii. Sub-clause (a)(i) above shall apply, mutatis
mutandis to preference shares where the
fixed dividend is not paid. If the dividend
on preference shares (cumulative or non¬
cumulative) is not declared / paid in any
year it shall be treated as due / unpaid in
arrears and the date of balance sheet of
the issuer for that particular year shall be
reckoned as due date for the purpose of
asset classification. Such an investment can
be upgraded subsequently on payment of
dividend for the current period in the case
of non-cumulative preference shares and
payment of dividend in arrears and for
current period in the case of cumulative
preferences shares.

iii. In the case of equity shares, in the event the
investment in the shares of any company is
valued at ?1 per company on account of
the non-availability of the latest balance
sheet in accordance with RBI Circular-
Master Direction - Classification, Valuation
and Operation of Investment Portfolio of
Commercial Banks (Directions), 2023, those
equity shares shall be reckoned as NPI.

The NPI can be upgraded subsequently on
receipt of audited balance sheet.

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

v. In case of conversion of principal and / or
interest into equity, debentures, bonds,
etc., such instruments shall be classified in
the same asset classification category as
the loan and provision shall be made as per
the norms. In case of post conversion, if the
classification is standard or is subsequently
upgraded to standard as per IRACP norms,
the investment shall be categorised in HTM,
AFS or FVTPL (including HFT) as per the RBI
Circular-Master Direction - Classification,
Valuation and Operation of Investment
Portfolio of Commercial Banks (Directions),
2023.

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

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

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

Profit and Loss Account. The provision to be held
on an NPI shall be the higher of the following
amounts:

i. The amount of provision required as per
IRACP norms computed on the carrying
value of the investment immediately before
it was classified as NPI; and

ii. The depreciation on the investment with
reference to its carrying value on the date
of classification as NPI.

In view of the above, no additional provision for
depreciation shall be required over and above
the provision for NPI as specified above.

Provided that in the case of an investment
categorised under AFS against which there are
cumulative gains in AFS-Reserve, the provision
required maybecreatedbychargingthesametoA
FS-Reservetotheextentofsuch available gains.

Provided further that in the case of an investment
categorised under AFS against which there are
cumulative losses inAFS-Reserve, thecumulative
losses shall be transferred from AFS-Reserve to
the Profit and Loss Account.

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

f) Investments in Government securities and

Government guaranteed investment.

i. Investments in Central Government

Securities and State Government Securities
shall not be classified as NPI.

ii. Investments in Central Government

guaranteed securities shall also not

be classified as NPI until the Central
Government has repudiated the guarantee
when invoked. Inrespect of such securitie
sheld in AFS and FVTPL, bank shall continue
to recognise MTM gains/losses in AFS-
Reserve and Profit and Loss respectively.

However, any income shall be recognised
only on realisation basis.

iii. Investment in State Government

guaranteed securities, shall attract

prudential norms for identification of NPI
and provisioning, when interest/ instalment
of principal (including maturity proceeds) or
any other amount due to the bank remains
unpaid for more than 90 days.

4.7.4 Investment Fluctuation Reserve

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

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

ii. Net profit for the year, less mandatory
appropriations.

b) IFR shall be eligible for inclusion in Tier II capital.
The cap applicable on recognition of General
Provisions and Loss Reserves as Tier II capital is
not applicable on IFR.

c) Bank shall, be permitted to draw down the
balance available in IFR in excess of two percent
of its AFS and FVTPL (including HFT) portfolio, for
credit to the balance of profit/loss as disclosed
in the profit and loss account at the end of any
accounting year.

d) In the event the balance in the IFR is less than
two percent of the AFS and FVTPL (including
HFT) investment portfolio, a draw down shall be
permitted subject to the following conditions:

i. The drawn down amount is used only for
meeting the minimum CET 1/Tier 1 capital
requirements by way of appropriation to
free reserves or reducing the balance of
loss.

ii. The amount drawn down shall not be more
than the extent the MTM provisions/losses
during the aforesaid year exceed the net
profit on sale of investments during that
year.

4.7.5 Derivatives

a) Bank shall comply with the requirements of the
Guidance Note on Accounting for Derivative
Contracts (revised 2021) issued by the Institute
of Chartered Accountants of India. Bank shall
present their derivative asset and liabilities
as separate line items under Schedule 11:
''Other Assets'' and Schedule 5: ''Other Liabilities''
respectively. Bank may make adjustments to the
carrying value of their investments in compliance
with the hedge accounting requirements.

b) Bank shall categorize their derivatives portfolio
into three fair value hierarchies viz. Level 1,
Level 2, and Level 3 as defined in RBI Circular-
Master Direction - Classification, Valuation and
Operation of Investment Portfolio of Commercial
Banks (Directions), 2023 and disclose the same
in the notes to accounts of their financial
statements.

c) Bank shall not pay dividends out of net
unrealised gains recognised in the Profit and
Loss Account arising on fair valuation of Level 3
derivatives assets and liabilities on their Balance
Sheet. Further, such net unrealised gains on
Level 3 derivatives recognised in the Profit
and Loss Account shall be deducted from
CET 1 capital.

4.7.6 Transition and Repeal Provisions

a) At the time of transition to these directions (i.e.,
on April 1, 2024), Bank shall re- classify their
investment portfolio as at March 31,2024, as per
the directions laid down in RBI Directions. The
balance in provision for depreciation, as at March
31, 2024, shall be reversed into the Revenue/
General Reserve. The balances in Investment
Reserve Account (IRA), if any, as of March 31,

2024, shall be transferred to the Revenue/
General Reserve if the bank meets the minimum
regulatory requirements of IFR. If the bank
does not meet the minimum IFR requirements,
the balances in IRA shall be transferred to IFR.
The specific treatment for transition from the
previous to the revised framework is given in the
table below:

b) Bank shall make suitable disclosures of the
transitional adjustment made in their notes to
the financial statements for the financial year
ending March 31,2025.

c) With the implementation of these Directions,
Reserve Bank of India (Classification, Valuation
and Operation of Investment Portfolio of
CommercialBanks) Directions, 2021 dated
August 25, 2021, shall stand repealed.

d) All the repealed circulars are deemed to have
been in force prior to the coming into effect of
these Directions.

e) As per RBI Circular-Master Direction -
Classification, Valuation and Operation of
Investment Portfolio of Commercial Banks
(Directions) 2023, the modification to the

Circular, RBI advised that the difference between
the revised and previous carrying value shall
be adjusted in Revenue/General Reserve rather
than AFS-Reserve. However, in the case of equity
instruments designated under AFS difference
between the revised and previous carrying value
shall be adjusted in AFS-Reserve.

• Accounting for Repo/Reverse Repo transactions:

All types of repo/reverse repo transactions with
RBI including LAF, variable rate term operations,
Long term Repo operations (LTRO), MSF and also
Market Repo transactions are accounted as per RBI
guidelines.

The securities sold and purchased under Repo/
Reverse Repo are accounted as Triparty Repo
wherein securities are transferred as in the case of
normal outright sale/purchase transactions and such
movement of securities is reflected using the Repo/
Reverse Repo Accounts and Contra entries. The above
entries are reversed on the date of maturity. Costs
and revenues are accounted as Interest expenditure
/ income, as the case may be. Balance in Repo
Account is classified under Schedule 4 (Borrowings)
and balance in Reverse Repo Account is classified as
under:

(a) All type of reverse repos with the Reserve Bank of
India including those under Liquidity Adjustment
Facility shall be presented under sub-item (ii)
''In Other Accounts'' of item (II) ''Balances with
Reserve Bank of India'' under schedule 6 ''cash
and balances with Reserve Bank of India''.

(b) Reverse repos with banks and other institutions
having original tenors up to and inclusive of 14
days shall be classified under item (ii) ''Money at
call and short notice'' under Schedule 7 ''Balances
with banks and money at call and short notice''.

(c) Reverse repos with banks and other institutions
having original tenors more than 14 days shall
be classified under Schedule 9 - ''Advances''
under the following heads:

i. A.(ii) ''Cash credits, overdrafts and loans
repayable on demand''

ii. B.(i) ''Secured by tangible assets''

iii. C.(I).(iii) Banks (iv) ''Others'' (as the case
may be)

5. FINANCIAL ASSETS SOLD TO RECONSTRUCTION
COMPANIES (RC)

5.1 Security Receipts (SR) issued by SCs/RCs in respect of

financial assets sold to them is recognized at lower
of redemption value of SRs and Net Book Value of
financial assets. SRs are valued at:

(a) SRs issued by SCs/RCs prior to 01.04.2017 at Net
Asset Value declared by SCs/RCs on the Balance
Sheet date and depreciation, if any, is provided
for and appreciation is ignored.

(b) As per amended guidelines issued by RBI
with effect from April 01,2017, provisioning
requirement on SRs will be higher of

(i) provisioning rate in terms of Net Asset
Value declared by the SCs/RCs

(ii) provisioning rate as applicable to the
underlying loans, assuming that the loans
notionally continued in the books of the
bank

5.2 In case of financial assets sold to RC, the valuation
and, income recognition is being done as per RBI
Guidelines. If the sale is for value lower than the
Net Book Value (NBV) (i.e, book value less provisions
held), the shortfall is debited to the Profit and Loss
account or met out of utilisation of Floating provision
held, as per extant RBI guidelines

If the cash received (by way of initial consideration
and /or redemption of security receipts) is higher
than the Net Book value of the Non-Performing Asset
(NPA) sold to RC, then excess provision is reversed to
the profit and Loss account. The quantum of excess
provision reversed to profit and loss account is
limited to the extent to which cash received exceeds
the NBV of the NPA sold.

6. ADVANCES

6.1 In accordance with the prudential norms issued by
RBI, advances in India are classified into Standard,
Sub-Standard, Doubtful and Loss assets borrower-
wise.

6.2 Provisions are made for non-performing advances
as under:

a) Sub Standard:

i) A general provision of 15% on the total
outstanding

ii) Additional provision of 10% for exposure
which are unsecured ab-initio (ie., where
realizable value of securities is not more
than 10% ab-initio)

b) Doubtful category-1

i) 25 % for Secured portion.

ii) 100% for Unsecured portion.

c) Doubtful Category - 2

i) 40 % for Secured portion.

ii) 100% for Unsecured portion.

d) Doubtful category-3 and Loss advances - 100 %.

• Provision is made for standard advances
including Restructured / Rescheduled
standard advances as per RBI directives.

• In respect of foreign branches, income
recognition, asset classification and
provisioning for loan losses are made as per
local requirement or as per RBI prudential
norms, whichever is more stringent.

Further, if an asset in the overseas books
of the Bank requires to be classified as NPA
at any point of time in terms of regulations
issued by Reserve Bank of India, then
all the facilities granted by the bank to
the borrower and investment in all the
securities issued by the borrower will be
classified as NPAs/NPIs.

However, accounts classified as Non-
performing/Impaired assets (NPAs) by host
regulators for reasons other than record of
recovery, would be classified as NPAs at the
time of consolidating financial statements
in India and provided for, as required;
whereas asset classification of other credit
exposures to the same counterparties in
other jurisdictions (including India) will
continue to be governed by the extant
guidelines in the respective jurisdictions.

• Advances disclosed are net of provisions
made for non-performing assets, DICGC/
ECGC/ CGTMSE claims received and held
pending adjustment, repayments received
and kept in sundries account, participation
certificates, usance bills rediscounted.

7. FIXED ASSETS / DEPRECIATION

7.1 Fixed assets are carried at cost / revalued amount
less accumulated depreciation / amortization

7.2 Cost includes cost of purchase and all expenditure
such as site preparation, installation costs and
professional fees incurred on the asset before it
is put to use. Subsequent expenditure(s) incurred
on the assets put to use are capitalized only when
it increases the future economic benefits from such
assets on their functioning capacity.

7.3 Depreciation on buildings (including cost of land
wherever inseparable / not segregated) and other
fixed assets in India will be provided for on the
straight-line method at the rates / useful life, as
specified below:

7.4 In respect of assets sold / acquired during the year,
depreciation will be charged on proportionate basis
for the number of days the assets have been put to
use / from the Date of capitalization during the year.

7.5 Assets costing upto 5000/- will be fully depreciated in
the year of purchase.

7.6 The revalued asset will be depreciated over the
balance useful life of the asset as assessed at the
time of revaluation.

The increase in Net Book Value of the asset due
to revaluation will b

---

Mar 31, 2024

1. ACCOUNTING CONVENTION:

The financial statements are prepared by following the going concern concept on historical cost convention unless otherwise stated. They conform to generally accepted accounting principles in India, which comprises statutory provisions, regulatory / Reserve Bank of India guidelines, accounting standards / guidance notes issued by the Institute of Chartered Accountants of India and the practices prevalent in the Banking Industry in India. In respect of foreign branches as per statutory provisions and practices prevailing in the respective countries.

2. USE OF ESTIMATES :

The preparation of financial statements requires the management to make estimates and assumptions for considering the reported assets and liabilities (including contingent liabilities) as on the date of financial statements and the income and expenses for the reporting period. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable.

3. TRANSACTIONS INVOLVING FOREIGN EXCHANGE

Foreign Currency transactions of Indian operations and non-integral foreign operations are accounted for as per Accounting Standard-11 (AS-11) issued by the Institute of Chartered Accountants of India (ICAI).

3.1 Translation in respect of Indian operations

• Foreign exchange transactions are recorded at the Weekly Average Rate (WAR) notified by Foreign Exchange Dealers'' Association of India (FEDAI).

• Foreign currency assets and liabilities are translated at the closing rates notified by

FEDAI at the year end.

• Acceptances, endorsements and other obligations and guarantees in foreign currency are carried at the closing rates notified by FEDAI at the year end.

• Exchange differences arising on settlement and translation of foreign currency assets and liabilities at the end of the financial year are recognized as income or expenses in the period in which they arise.

• Outstanding forward exchange contracts are disclosed at the Contracted rates, and revalued at FEDAI closing rates, and the resultant effect is recognized in the Profit and Loss account.

3.2 Translation in respect of non-integral foreign operations.

Foreign branches are classified as non-integral foreign operations and the financial statements are translated as follows:

• Assets and liabilities including contingent liabilities are translated at the closing rates notified by FEDAI at the year end.

• Income and expenses are translated at the Quarterly Average Closing rate notified by FEDAI at the end of the respective quarter.

• All resulting exchange differences are accumulated in a separate account “Foreign Currency Translation Reserve" (FCTR) till the disposal of the net investments.

4. INVESTMENTS

4.1 The entire investment portfolio of the Bank is classified in accordance with the RBI guidelines into three categories viz.

• Held To Maturity (HTM)

• Available For Sale (AFS)

• Held For Trading (HFT)

The securities acquired with the intention to be held till maturity are classified under “HTM" category. The securities acquired with the intention to trade by taking advantage of shortterm price / interest movements are classified as “HFT". All other securities which do not fall under any of the two categories are classified under “AFS" category.

An investment is classified as Held to Maturity, Available for Sale or Held for Trading at the time of its purchase/acquisition and subsequent shifting is done in conformity with the Regulatory guidelines. Transfer of scrips, if any, from one category to another is done at the lowest of acquisition cost/book value/market value on the date of transfer and depreciation, if any, on such transfer is fully provided for.

Investment in Subsidiaries, Joint Ventures and Associates are classified as Held to Maturity.

4.2 Profit on sale of securities under HTM category is first taken to Profit and Loss account and thereafter appropriated to Capital Reserve account (net of taxes and amount required to be transferred to statutory reserves) and loss, if any, charged to Profit & Loss account.

4.3 Investments in India are valued in accordance with RBI guidelines, as under:

a) Securities in HTM category are valued at acquisition cost except where the acquisition cost is higher than the face value, in which case, such excess of acquisition cost over the face value is amortised over the remaining period of maturity. Any diminution, other than temporary, in value of investments in subsidiaries/joint ventures/Associates which are included under HTM category is recognized and provided. Such diminution

is being determined and provided for each investment individually. Investment in units of Venture Capital funds (VCF) / Alternate Investment Fund (AIF) made after 23.08.2006 are classified under HTM category for initial period of 3 years and valued at cost.

b) Investment in Subsidiaries, Joint Ventures and Associates are valued at historical cost. Investment in sponsored Regional Rural Banks(RRB) are valued at carrying cost (i.e. Book value).

c) Investments in AFS category are marked to market, scrip-wise and classification wise, at quarterly intervals. Net depreciation, if any, is provided for in the Profit and Loss account while net appreciation, if any, is ignored. The book value of the individual securities does not undergo any change after marking to market.

d) The individual scrips in the HFT category are marked to market at daily intervals. Net depreciation, if any, is provided for in the Profit and Loss account while net appreciation, if any, is ignored. The Book Value of the individual securities in this category does not undergo any change.

e) Securities in AFS and HFT categories are valued as under:

i. Central Government Securities and State Govt. Securities are valued at prices / YTM rates as announced by Primary Dealers Association of India (PDAI) jointly with Fixed Income Money Market and Derivatives Association of India (FIMMDA) / Financial Benchmark India Private Ltd (FBIL).

ii. Other approved securities are valued applying the YTM method by marking up 25 basis points above the yields of the Central Government Securities of equivalent maturity put out by PDAI /

FIMMDA/ FBIL periodically.

iii. Equity shares are valued at market price, if quoted. Unquoted equity shares are valued at break-up value (without considering revaluation reserves if any) as per the company''s latest balance sheet (not more than one year prior to the date of valuation). Otherwise, the shares are valued at Re. 1 per company.

iv. Preference shares are valued at market price, if quoted; otherwise at lower of the value determined based on the appropriate YTM rates or redemption value.

v. All debentures/bonds, other than those which are in the nature of advances, are valued on the YTM basis.

vi. Treasury bills, Certificate of deposits and Commercial papers are valued at carrying cost.

vii. Units of Mutual Funds are valued at market price, if quoted; otherwise at lower of repurchase price or Net Asset Value (NAV). In case of funds with a lock-in period, where repurchase price / market quote is not available, units are valued at NAV, else valued at cost till the end of the lock-in period.

viii. Investment in units of Venture Capital funds (VCF) / Alternate Investment Fund (AIF) made after 23.08.2006 are classified under HTM category for initial period of 3 years and valued at cost. After period of 3 years from the date of disbursement, it will be shifted to AFS and marked-to-market as per RBI guidelines.

ix. In respect of investment at Overseas branches, RBI guidelines or those of the host countries whichever are more stringent are followed. In case of those

branches situated in countries where no guidelines are specified, the guidelines of RBI are followed.

4.4 Non-performing investment (NPI) are identified

as stated below, as per guidelines issued by RBI.

• Securities/Non-cumulative Preference shares where interest/fixed dividend/instalment (including maturity proceeds) is due and remains unpaid for more than 90 days.

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

• Investments backed by guarantee of the Central Government though overdue are treated as Non-Performing Asset (NPA) only when the Government repudiates its guarantee when invoked.

• Investment in State Government guaranteed securities, including those in the nature of ''deemed advances'', are subjected to asset classification and provisioning as per prudential norms if interest/ installment of principal (including maturity proceeds) or any other amount due to the Bank remains unpaid for more than 90 days.

• Equity investment classified as NPI should be valued at market value, if quoted, and in case where equity is not quoted, it should be valued at Re.1

4.5 Brokerages / Commission / incentive received

on subscriptions are deducted from the cost of

securities. Brokerage / Commission / Stamp duty paid in connection with acquisition of securities are treated as revenue expenses.

4.6 Interest Rate Swap transactions for trading is marked to market at quarterly intervals. The fair value of the total swaps is computed on the basis of the amount that would be received/ receivable or paid/ payable on termination of the swap agreements as on the balance sheet date. Losses arising there from, if any, are fully provided for, while the profit, if any, is ignored.

4.7 Exchange traded FX Derivatives i.e. Currency Futures, are valued at the Exchange determined prices and the resultant gains and losses are recognized in the Profit and Loss account.

4.8 Premium/interest arising at the inception of forward exchange swap facility of RBI for FCNR (b) dollar deposits is amortized as expense over the period of the swap contract.

4.9 Cost of investments is determined based on the Weighted Average Cost method in each category. Investments classified under HTM are carried at acquisition cost as arrived under Weighted Average Cost method and in case the weighted average cost is more than the face value, the premium is amortised over the remaining period of maturity.

• Accounting for Repo/Reverse Repo transactions:

All types of repo/reverse repo transactions with RBI including LAF, variable rate term operations, Long term Repo operations (LTRO), MSF and also Market Repo transactions are accounted as per RBI guidelines.

The securities sold and purchased under Repo/ Reverse Repo are accounted as Triparty Repo wherein securities are transferred as in the case of normal outright sale/purchase transactions and such movement of securities is reflected using the Repo/Reverse Repo Accounts and

Contra entries. The above entries are reversed on the date of maturity. Costs and revenues are accounted as Interest expenditure / income, as the case may be. Balance in Repo Account is classified under Schedule 4 (Borrowings) and balance in Reverse Repo Account is classified as under:

(a) All type of reverse repos with the Reserve Bank of India including those under Liquidity Adjustment Facility shall be presented under sub-item (ii) ''In Other Accounts'' of item (II) ''Balances with Reserve Bank of India'' under schedule 6 ''cash and balances with Reserve Bank of India''.

(b) Reverse repos with banks and other

institutions having original tenors up to and inclusive of 14 days shall be classified under item (ii) ''Money at call and short notice'' under Schedule 7 ''Balances with banks and money at call and short notice''.

(c) Reverse repos with banks and other

institutions having original tenors more than 14 days shall be classified under Schedule 9 - ''Advances'' under the following heads:

i. A.(ii) ''Cash credits, overdrafts and loans repayable on demand''

ii. B.(i) ''Secured by tangible assets''

iii. C.(I).(iii) Banks (iv) ''Others'' (as the case may be)

5. FINANCIAL ASSETS SOLD TO RECONSTRUCTION COMPANIES (RC)

5.1 Security Receipts (SR) issued by SCs/RCs in respect of financial assets sold to them is recognized at lower of redemption value of SRs and Net Book Value of financial assets. SRs are valued at:

(a) SRs issued by SCs/RCs prior to 01.04.2017 at Net Asset Value declared by SCs/RCs on the Balance Sheet date and depreciation, if any, is provided for and appreciation is ignored.

(b) As per amended guidelines issued by RBI with effect from April 01,2017, provisioning requirement on SRs will be higher of

(i) provisioning rate in terms of Net Asset Value declared by the SCs/RCs

(ii) provisioning rate as applicable to the underlying loans, assuming that the loans notionally continued in the books of the bank.

5.2 In case of financial assets sold to RC, the valuation and, income recognition is being done as per RBI Guidelines. If the sale is for value lower than the Net Book Value (NBV) (i.e, book value less provisions held), the shortfall is debited to the Profit and Loss account or met out of utilisation of Floating provision held, as per extant RBI guidelines

If the cash received (by way of initial consideration and /or redemption of security receipts) is higher than the Net Book value of the Non-Performing Asset (npa) sold to RC, then excess provision is reversed to the profit and Loss account. The quantum of excess provision reversed to profit and loss account is limited to the extent to which cash received exceeds the NBV of the NPA sold.

6. ADVANCES

6.1 In accordance with the prudential norms issued by RBI, advances in India are classified into Standard, Sub-Standard, Doubtful and Loss assets borrower-wise.

6.2 Provisions are made for non-performing advances as under:

a) Sub Standard:

i) A general provision of 15% on the total outstanding

ii) Additional provision of 10% for exposure which are unsecured ab-initio (ie., where realizable value of securities is not more than 10% ab-initio)

b) Doubtful category-1

i) 25 % for Secured portion.

ii) 100% for Unsecured portion.

c) Doubtful Category - 2

i) 40% for Secured portion.

ii) 100% for Unsecured portion.

d) Doubtful category-3 and Loss advances -100%.

• Provision is made for standard advances including Restructured / Rescheduled standard advances as per RBI directives.

• In respect of foreign branches, income recognition, asset classification and provisioning for loan losses are made as per local requirement or as per RBI prudential norms, whichever is more stringent.

• Further, if an asset in the overseas books of the Bank requires to be classified as NPA at any point of time in terms of regulations issued by Reserve Bank of India, then all the facilities granted by the bank to the borrower and investment in all the securities issued by the borrower will be classified as NPAs/NPIs.

However, accounts classified as Non-performing/Impaired assets (NPAs) by host regulators for reasons other than record of recovery, would be classified as NPAs at the time of consolidating financial statements in India and provided for, as required; whereas asset classification of other credit exposures to the same counterparties in other jurisdictions (including India) will continue to be governed by the extant guidelines in the respective jurisdictions.

• Advances disclosed are net of provisions made for non-performing assets, DICGC/ ECGC/ CGTMSE claims received and held pending adjustment, repayments received and kept in sundries account, participation certificates,usance bills rediscounted and

provision in lieu of diminution in the fair value of restructured accounts classified as standard assets.

7. FIXED ASSETS / DEPRECIATION

7.1 Fixed assets are carried at cost / revalued amount less accumulated depreciation / amortization

7.2 Cost includes cost of purchase and all expenditure such as site preparation, installation costs and professional fees incurred on the asset before it is put to use. Subsequent expenditure(s) incurred on the assets put to use are capitalized only when it increases the future economicbenefits from such assets on their functioning capacity.

7.3 Depreciation on buildings (including cost of land wherever inseparable / not segregated) and other fixed assets in India will be provided for on the straight-line method at the rates / useful life, as specified below:

Sl. No.	Description of fixed assets	Depreciation Rate/ Useful Life
1	Computers	33.33% every year
2	Computer Software forming an integral part of the Computer hardware	33.33% every year
3	Computer Software which does not form an integral part of Computer hardware and cost of Software Development	33.33% every year
4	Automated Teller Machine/ Cash Deposit Machine / Coin Vending Machine etc.	20.00% every year
5	Servers	33.33% every year
6	Network equipment	20.00% every year
7	Other fixed assets	Estimated useful life of major group of assets are as under: Premises: 60 years Safes / Locker / Doors (Steel): 20 years

Vehicles: 5 years Furniture and Fixtures: 10 years Cell phones: 1 year Gold Purity Testing Machine: 7 years

7.4 In respect of assets sold / acquired during the year, depreciation will be charged on proportionate basis for the number of days the assets have been put to use / from the Date of capitalization during the year.

7.5 Assets costing upto 5000/- will be fully depreciated in the year of purchase.

7.6 The revalued asset will be depreciated over the balance useful life of the asset as assessed at the time of revaluation.

The increase in Net Book Value of the asset due to revaluation will be credited to the Revaluation Reserve Account without routing through the Profit and Loss Account. Depreciation relatable to revalued component will be charged against revenue expenditure and an equivalent amount will be charged straight away against revaluation reserve and credited to the revenue reserve, as per revised AS 10 issued by ICAI.

7.7 In respect of Assets where subsidy is received from Government, the same will be credited to the respective asset account and depreciation will be charged accordingly.

7.8 Premium on leasehold land will be capitalized in the year of acquisition and amortized over the period of lease.

7.9 Depreciation in respect of fixed assets at foreign branches will be provided as per the practice prevailing in the respective countries.

7.10 In respect of Non-Banking Assets, no depreciation will be charged.

8. REVENUE RECOGNITION

8.1 Income and expenditure are generally accounted for on accrual basis, unless otherwise stated.

8.2 Income from non-performing assets, Central Government guaranteed assets (where it is overdue beyond 90 days), dividend income, insurance claims, commission on letters of credit / guarantees issued (other than those relating to project finance), income from wealth management, additional interest / overdue charges on bills purchased, finance charges on credit cards, income on Bank''s right to recompense, AMC charges on debit cards, all other commission / fee income are accounted for on realisation basis and locker rent received, income from Bancassurance products are accounted on accrual basis. Commission / Fees Income earned on sale of PSLCs are accounted on accrual basis and recognized proportionately during the quarter over the remaining period of PSLCs.

8.3 In case of overdue foreign bills, interest and other charges are recognised till the date of crystallisation as per FEDAI guidelines.

9. CREDIT CARD REWARD POINTS

Reward points earned by card members on use of Card facility is recognized as expenditure on such use.

10. NET PROFIT / LOSS

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

- Provision for Non-Performing Advances and / or Investments.

- General provision on Standard Advances

- Provision for Restructured Advances

- Provision for Depreciation on Fixed Assets

- Provision for Depreciation on Investments

- Transfer to/ from Contingency Fund

- Provision for direct taxes

- Provision for Unhedged Foreign Currency Exposure

- Usual or/and other necessary provisions

11. STAFF RETIREMENT BENEFITS

i) PROVIDENT FUND

Provident fund is a statutory obligation and in the case of Contributory Provident Fund Optees, the Bank pays fixed contribution at pre-determined rates. The obligation of the Bank is limited to such fixed contribution. The contributions are charged to Profit and Loss Account. The fund is managed by Indian Bank Staff Provident Fund Trust.

ii) GRATUITY

Gratuity liability is a statutory obligation as per Indian Bank Employees'' Gratuity Fund Rules and Regulations and is provided for on the basis of an actuarial valuation made at the end of the financial year. The gratuity liability is funded by the Bank and is managed by Indian Bank Employees Gratuity Fund Trust.

iii) PENSION

• Pension liability is a defined benefit obligation under Indian Bank (Employees) Pension Regulations 1995 and is provided for on the basis of actuarial valuation, for the employees who have joined Bank up to 31.03.2010 and opted for pension.

• New Pension Scheme (NPS) which is applicable to employees who joined bank on or after 01.04.2010 and it is a defined contribution scheme. Under NPS the Bank pays fixed contribution at predetermined rate and the obligation of the Bank is limited to such fixed contribution. The contribution is charged to Profit and Loss Account.

iv) COMPENSATED ABSENCES

Accumulating compensated absences such as Privilege Leave and Sick Leave are provided for based on actuarial valuation.

v) OTHER EMPLOYEE BENEFITS

Other Employee benefits such as Leave Fare Concession and Additional Retirement Benefit on Retirement are provided for based on actuarial valuation. In respect of overseas branches and offices, the benefits in respect of employees other than those on deputation are valued and accounted for as per laws prevailing in the respective territories.

12. ACCOUNTING FOR LEASES

Lease payments including cost escalation for assets taken on operating lease arerecognized in the Profit and Loss Account over the lease term or life whichever is lower.

13. CONTINGENT LIABILITIES AND PROVISIONS

13.1 Contingent liability: Past events leading to, possible or present obligations are recognized as contingent liability in the following instances where:

(a) The existence of such obligations has not been confirmed

(b) no outflow of resources are required to settle such obligations

(c) a reliable estimate of the amount of the obligations cannot be made

(d) such amounts are not material

13.2 (a) Provision is recognized in case of present

obligations where a reliable estimate can be made and/or where there are probable outflow of resources embodying foregoing of economic benefits to settle the obligations, excluding frivolous claims.

(b) Provision for Market Risk, Country Risk, etc., are

made in terms of extant instructions of RBI.

(c) Floating provision as identified by the Bank

Management is provided for.

Floating provision may be utilized as per extant RBI guidelines, for -

(i) Making specific provisions for non-performing assets;

(ii) Meeting any shortfall in sale of nonperforming assets.

14. IMPAIRMENT OF ASSETS

Impairment losses, if any, on Fixed Assets (including revalued assets) are recognised and charged to Profit and Loss Account in accordance with the Accounting Standard 28 “Impairment of Assets". However, an impairment loss on a revalued asset is recognised directly against any revaluation surplus for the asset to the extent that the impairment loss does not exceed the amount held in the revaluation surplus for that same asset.

15. TAXES ON INCOME

15.1 Provision for tax is made for both Current Tax and Deferred Tax.

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

15.3 Deferred Tax Assets and Liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognized using the tax rates and tax laws that have been enacted or substantively enacted till the date of the Balance Sheet. Deferred Tax Assets are not recognized unless there is “virtual certainty" that sufficient future taxable income will be available against which such deferred tax assets will be realized.

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Mar 31, 2023

1. ACCOUNTING CONVENTION:

The financial statements are prepared by following the going concern concept on historical cost convention unless otherwise stated. They conform to generally accepted accounting principles in India, which comprises statutory provisions, regulatory / Reserve Bank of India guidelines, accounting standards / guidance notes issued by the Institute of Chartered Accountants of India and the practices prevalent in the Banking Industry in India. In respect of foreign branches as per statutory provisions and practices prevailing in the respective countries.

2. USE OF ESTIMATES :

The preparation of financial statements requires the management to make estimates and assumptions for considering the reported assets and liabilities (including contingent liabilities) as on the date of financial statements and the income and expenses for the reporting period. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable.

3. TRANSACTIONS INVOLVING FOREIGN EXCHANGE

Foreign Currency transactions of Indian operations and non-integral foreign operations are accounted for as per Accounting Standard-11 (AS-11) issued by the Institute of Chartered Accountants of India (ICAI).

3.1 Translation in respect of Indian operations

• Foreign exchange transactions are recorded at the Weekly Average Rate (war) notified by Foreign Exchange Dealers’ Assocation of India (FEDAI).

• Foreign currency assets and liabilities are translated at the closing rates notified by FEDAI at the year end.

• Acceptances, endorsements and other obligations and guarantees in foreign currency are carried at the closing rates notified by FEDAI at the year end.

• Exchange differences arising on settlement and translation of foreign currency assets and liabilities at the end of the financial year are recognized as income or expenses in the period in which they arise.

• Outstanding forward exchange contracts are disclosed at the Contracted rates, and revalued at FEDAI closing rates, and the resultant effect is recognized in the Profit and Loss account.

3.2 Translation in respect of non-integral foreign operations.

Foreign branches are classified as non-integral foreign operations and the financial statements are translated as follows:

• Assets and liabilities including contingent liabilities are translated at the closing rates notified by FEDAI at the year end.

• Income and expenses are translated at the Quarterly Average Closing rate notified by FEDAI at the end of the respective quarter.

• All resulting exchange differences are accumulated in a separate account “Foreign Currency Translation Reserve” (FCTR) till the disposal of the net investments.

4. INVESTMENTS

4.1 The entire investment portfolio of the Bank is classified in accordance with the RBI guidelines into three categories viz.

• Held To Maturity (HTM)

• Available For Sale (AFS)

• Held For Trading (HFT)

The securities acquired with the intention to be held till maturity are classified under “HTM" category. The securities acquired with the intention to trade by taking advantage of short-term price / interest movements are classified as “HFT". All other securities which do not fall under any of the two categories are classified under “AFS" category.

An investment is classified as Held to Maturity, Available for Sale or Held for Trading at the time of its purchase/acquisition and subsequent shifting is done in conformity with the Regulatory guidelines. Transfer of scrips, if any, from one category to another is done at the lowest of acquisition cost/book value/market value on the date of transfer and depreciation, if any, on such transfer is fully provided for.

Investment in Subsidiaries, Joint Ventures and Associates are classified as Held to Maturity.

4.2 Profit on sale of securities under HTM category is first taken to Profit and Loss account and thereafter appropriated to Capital Reserve account (net of taxes and amount required to be transferred to statutory reserves) and loss, if any, charged to Profit & Loss account.

4.3 Investments in India are valued in accordance with RBI guidelines, as under:

a) Securities in HTM category are valued at acquisition cost except where the acquisition cost is higher than the face value, in which case, such excess of acquisition cost over the face value is amortised over the remaining period of maturity. Any diminution, other than temporary, in value of investments in subsidiaries/joint ventures/Associates which are included under HTM category is recognized and provided. Such diminution is being determined and provided for each investment individually. Investment in units of Venture Capital funds (VCF) / Alternate Investment Fund (aif) made after 23.08.2006 are classified under HTM category for initial period of 3 years and valued at cost.

b) Investment in Subsidiaries, Joint Ventures and Associates are valued at historical cost. Investment in sponsored Regional Rural Banks(RRB) are valued at carrying cost (i.e. Book value).

c) Investments in AFS category are marked to market, scrip-wise and classification wise, at quarterly intervals. Net depreciation, if any, is provided for in the Profit and Loss account while net appreciation, if any, is ignored. The book value of the individual securities does

not undergo any change after marking to market.

d) The individual scrips in the HFT category are marked to market at daily intervals. Net depreciation, if any, is provided for in the Profit and Loss account while net appreciation, if any, is ignored. The Book Value of the individual securities in this category does not undergo any change.

e) Securities in AFS and HFT categories are valued as under:

i. Central Government Securities and State Govt. Securities are valued at prices/ YTM rates as announced by Primary Dealers Association of India (pdai) jointly with Fixed Income Money Market and Derivatives Association of India (FIMMDA)/ Financial Benchmark India Private Ltd. (FBIL).

ii. Other approved securities are valued applying the YTM method by marking up 25 basis points above the yields of the Central Government Securities of equivalent maturity put out by PDAI/ FIMMDA/ FBIL periodically.

iii. Equity shares are valued at market price, if quoted. Unquoted equity shares are valued at break-up value (without considering revaluation reserves if any) as per the company’s latest balance sheet (not more than one year prior to the date of valuation). Otherwise, the shares are valued at Re. 1 per company.

iv. Preference shares are valued at market price, if quoted; otherwise at lower of the value determined based on the appropriate YTM rates or redemption value.

v. All debentures/bonds, other than those which are in the nature of advances, are valued on the YTM basis.

vi. Treasury bills, Certificate of deposits and Commercial papers are valued at carrying cost.

vii. Units of Mutual Funds are valued at market price, if quoted; otherwise at lower of repurchase price or Net Asset Value (nav). In case of funds with a lock-in period, where repurchase price / market quote is not available, units are valued at NAV, else valued at cost till the end of the lock-in period.

viii. Investment in units of Venture Capital funds (VCF) / Alternate Investment Fund (aif) made after 23.08.2006 are classified under HTM category for initial period of 3 years and valued at cost. After period of 3 years from the date of disbursement, it will be shifted to AFS and marked-to-market as per RBI guidelines.

ix. In respect of investment at Overseas branches, RBI guidelines or those of the host countries whichever are more stringent are followed. In case of those branches situated in countries where no guidelines are specified, the guidelines of RBI are followed.

4.4 Non-performing investment (npi) are identified as

stated below, as per guidelines issued by RBI.

• Securities / Non-cumulative Preference shares where interest / fixed dividend/ instalment (including maturity proceeds) is due and remains unpaid for more than 90 days.

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

• Investments backed by guarantee of the Central Government though overdue are treated as Non-Performing Asset (npa) only when the Government repudiates its guarantee when invoked.

• Investment in State Government guaranteed securities, including those in the nature of ‘deemed advances’, are subjected to asset classification and provisioning as per prudential norms if interest/ installment of principal (including maturity proceeds) or any other amount due to the Bank remains unpaid for more than 90 days.

• Equity investment classified as NPI should be valued at market value, if quoted, and in case where equity is not quoted, it should be valued at Re.1

4.5 Brokerages / Commission / incentive received on subscriptions are deducted from the cost of securities. Brokerage / Commission / Stamp duty paid in connection with acquisition of securities are treated as revenue expenses.

4.6 Interest Rate Swap transactions for trading is marked to market at quarterly intervals. The fair value of the total swaps is computed on the basis of the amount that would be received/ receivable or paid/ payable on termination of the swap agreements as on the balance sheet date. Losses arising there from, if any, are fully provided for, while the profit, if any, is ignored.

4.7 Exchange traded FX Derivatives i.e. Currency Futures, are valued at the Exchange determined prices and the resultant gains and losses are recognized in the Profit and Loss account.

4.8 Premium/interest arising at the inception of forward exchange swap facility of RBI for FCNR (b) dollar deposits is amortized as expense over the period of the swap contract.

4.9 Cost of investments is determined based on the Weighted Average Cost method in each category. Investments classified under HTM are carried at acquisition cost as arrived under Weighted Average Cost method and in case the weighted average cost is more than the face value, the premium is amortised over the remaining period of maturity.

• Accounting for Repo/Reverse Repo transactions:

All types of repo/reverse repo transactions with RBI including LAF, variable rate term operations, Long term Repo operations (ltro), MSF and also

Market Repo transactions are accounted as per RBI guidelines.

The securities sold and purchased under Repo/ Reverse Repo are accounted as Triparty Repo wherein securities are transferred as in the case of normal outright sale/purchase transactions and such movement of securities is reflected using the Repo/Reverse Repo Accounts and Contra entries. The above entries are reversed on the date of maturity. Costs and revenues are accounted as Interest expenditure / income, as the case may be. Balance in Repo Account is classified under Schedule 4 (Borrowings) and balance in Reverse Repo Account is classified as under:

(a) All type of reverse repos with the Reserve Bank of India including those under Liquidity Adjustment Facility shall be presented under sub-item (ii) ‘In Other Accounts’ of item (ii) ‘Balances with Reserve Bank of India’ under schedule 6 ‘cash and balances with Reserve Bank of India’.

(b) Reverse repos with banks and other

institutions having original tenors up to and inclusive of 14 days shall be classified under item (ii) ‘Money at call and short notice’ under Schedule 7 ‘Balances with banks and money at call and short notice’.

(c) Reverse repos with banks and other

institutions having original tenors more than 14 days shall be classified under Schedule 9 -‘Advances’ under the following heads:

i. A.(ii) ‘Cash credits, overdrafts and loans repayable on demand’

ii. B.(i) ‘Secured by tangible assets’

iii. C.(I).(iii) Banks (iv) ‘Others’ (as the case may be)

5. FINANCIAL ASSETS SOLD TO RECONSTRUCTION COMPANIES (RC)

5.1 Security Receipts (sr) issued by SCs/RCs in respect of financial assets sold to them is recognized at lower of redemption value of SRs and Net Book Value of financial assets. SRs are valued at:

(a) SRs issued by SCs/RCs prior to 01.04.2017 at Net Asset Value declared by SCs/RCs on the

Balance Sheet date and depreciation, if any, is provided for and appreciation is ignored.

(b) As per amended guidelines issued by RBI with effect from April 01,2017, provisioning requirement on SRs will be higher of

(i) provisioning rate in terms of Net Asset Value declared by the SCs/RCs

(ii) provisioning rate as applicable to the underlying loans, assuming that the loans notionally continued in the books of the bank

5.2 In case of financial assets sold to RC, the valuation and, income recognition is being done as per RBI Guidelines. If the sale is for value lower than the Net Book Value (nbv) (i.e, book value less provisions held), the shortfall is debited to the Profit and Loss account or met out of utilisation of Floating provision held, as per extant RBI guidelines

If the cash received (by way of initial consideration and /or redemption of security receipts) is higher than the Net Book value of the Non-Performing Asset (npa) sold to RC, then excess provision is reversed to the profit and Loss account. The quantum of excess provision reversed to profit and loss account is limited to the extent to which cash received exceeds the NBV of the NPA sold.

6. ADVANCES

6.1 In accordance with the prudential norms issued by RBI, advances in India are classified into Standard, Sub-Standard, Doubtful and Loss assets borrower-wise.

6.2 Provisions are made for non-performing advances as under:

a) Sub Standard:

i) A general provision of 15% on the total outstanding

ii) Additional provision of 10% for exposure which are unsecured ab-initio (ie., where realizable value of securities is not more than 10% ab-initio)

b) Doubtful category-1

i) 25 % for Secured portion.

ii) 100% for Unsecured portion.

c) Doubtful Category - 2

i) 40% for Secured portion.

ii) 100% for Unsecured portion.

d) Doubtful category-3 and Loss advances -100%.

• Provision is made for standard advances including Restructured / Rescheduled standard advances as per RBI directives.

• In respect of foreign branches, income recognition, asset classification and provisioning for loan losses are made as per local requirement or as per RBI prudential norms, whichever is more stringent.

Further, if an asset in the overseas books of the Bank requires to be classified as NPA at any point of time in terms of regulations issued by Reserve Bank of India, then all the facilities granted by the bank to the borrower and investment in all the securities issued by the borrower will be classified as NPAs/NPIs.

However, accounts classified as Non-performing/lmpaired assets (NPAs) by host regulators for reasons other than record of recovery, would be classified as NPAs at the time of consolidating financial statements in India and provided for, as required; whereas asset classification of other credit exposures to the same counterparties in other jurisdictions (including India) will continue to be governed by the extant guidelines in the respective jurisdictions.

• Advances disclosed are net of provisions made for non-performing assets, DICGC/ ECGC/ CGTMSE claims received and held pending adjustment, repayments received and kept in sundries account, participation certificates, usance bills rediscounted and provision in lieu of diminution in the fair value of restructured accounts classified as standard assets.

7. FIXED ASSETS / DEPRECIATION

7.1 Fixed assets are carried at cost / revalued amount

less accumulated depreciation / amortization

7.2 Cost includes cost of purchase and all expenditure such as site preparation, installation costs and professional fees incurred on the asset before it is put to use. Subsequent expenditure(s) incurred on the assets put to use are capitalized only when it increases the future economic benefits from such assets on their functioning capacity.

7.3 Depreciation on buildings (including cost of land wherever inseparable / not segregated) and other fixed assets in India will be provided for on the straight-line method at the rates / useful life, as specified below:

Sl. No.	Description of fixed assets	Depreciation Rate/ Useful Life
1	Computers	33.33% every year
2	Computer Software forming an integral part of the Computer hardware	33.33% every year
3	Computer Software which does not form an integral part of Computer hardware and cost of Software Development	33.33% every year
4	Automated Teller Machine/ Cash Deposit Machine / Coin Vending Machine	20.00% every year
5	Servers	33.33% every year
6	Network equipment	20.00% every year
7	Other fixed assets	Estimated useful life of major group of assets are as under: Premises: 60 years Safes/Locker/ Doors (Steel): 20 years Vehicles : 5 years Furniture and Fixtures : 10 years Cell phones : 1 year

7.4 In respect of assets sold / acquired during the year, depreciation will be charged on proportionate basis for the number of days the assets have been put to use / from the Date of capitalization during the year.

7.5 Assets costing upto 5000/- will be fully depreciated in the year of purchase.

9. CREDIT CARD REWARD POINTS

Reward points earned by card members on use of Card facility is recognized as expenditure on such use.

10. NET PROFIT / LOSS

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

- Provision for Non-Performing Advances and / or Investments.

- General provision on Standard Advances

- Provision for Restructured Advances

- Provision for Depreciation on Fixed Assets

- Provision for Depreciation on Investments

- Transfer to/ from Contingency Fund

- Provision for direct taxes

- Provision for Unhedged Foreign Currency Exposure

- Usual or/and other necessary provisions

11. STAFF RETIREMENT BENEFITS

i) PROVIDENT FUND

Provident fund is a statutory obligation and in the case of Contributory Provident Fund Optees, the Bank pays fixed contribution at pre-determined rates. The obligation of the Bank is limited to such fixed contribution. The contributions are charged to Profit and Loss Account. The fund is managed by Indian Bank Staff Provident Fund Trust.

ii) GRATUITY

Gratuity liability is a statutory obligation as per Indian Bank Employees’ Gratuity Fund Rules and Regulations and is provided for on the basis of an actuarial valuation made at the end of the financial year. The gratuity liability is funded by the Bank and is managed by Indian Bank Employees Gratuity Fund Trust.

iii) PENSION

• Pension liability is a defined benefit obligation under Indian Bank (Employees) Pension Regulations 1995 and is provided for on the basis of actuarial valuation, for the employees who have joined Bank up to 31.03.2010 and opted for pension.

7.6 The revalued asset will be depreciated over the balance useful life of the asset as assessed at the time of revaluation.

The increase in Net Book Value of the asset due to revaluation will be credited to the Revaluation Reserve Account without routing through the Profit and Loss Account. Depreciation relatable to revalued component will be charged against revenue expenditure and an equivalent amount will be charged straight away against revaluation reserve and credited to the revenue reserve, as per revised AS 10 issued by ICAI.

7.7 In respect of Assets where subsidy is received from Government, the same will be credited to the respective asset account and depreciation will be charged accordingly.

7.8 Premium on leasehold land will be capitalized in the year of acquisition and amortized over the period of lease.

7.9 Depreciation in respect of fixed assets at foreign branches will be provided as per the practice prevailing in the respective countries.

7.10 In respect of Non-Banking Assets, no depreciation will be charged.

8. REVENUE RECOGNITION

8.1 Income and expenditure are generally accounted for on accrual basis, unless otherwise stated.

8.2 Income from non-performing assets, Central Government guaranteed assets (where it is overdue beyond 90 days), dividend income, insurance claims, commission on letters of credit / guarantees issued (other than those relating to project finance), income from wealth management, additional interest / overdue charges on bills purchased, finance charges on credit cards, income on Bank’s right to recompense, AMC charges on debit cards, all other commission / fee income are accounted for on realisation basis and locker rent received, income from Bancassurance products are accounted on accrual basis.

8.3 In case of overdue foreign bills, interest and other charges are recognised till the date of crystallisation as per FEDAI guidelines.

• New Pension Scheme (NPS) which is applicable to employees who joined bank on or after 01.04.2010 and it is a defined contribution scheme. Under NPS the Bank pays fixed contribution at predetermined rate and the obligation of the Bank is limited to such fixed contribution. The contribution is charged to Profit and Loss Account.

iv) COMPENSATED ABSENCES

Accumulating compensated absences such as Privilege Leave and Sick Leave are provided for based on actuarial valuation.

v) OTHER EMPLOYEE BENEFITS

Other Employee benefits such as Leave Fare Concession and Additional Retirement Benefit on Retirement are provided for based on actuarial valuation. In respect of overseas branches and offices, the benefits in respect of employees other than those on deputation are valued and accounted for as per laws prevailing in the respective territories.

12. ACCOUNTING FOR LEASES

Lease payments including cost escalation for assets taken on operating lease are recognized in the Profit and Loss Account over the lease term or life whichever is lower.

13. CONTINGENT LIABILITIES AND PROVISIONS

13.1 Contingent liability: Past events leading to, possible or present obligations are recognized as contingent liability in the following instances where:

(a) The existence of such obligations has not been confirmed

(b) no outflow of resources are required to settle such obligations

(c) a reliable estimate of the amount of the obligations cannot be made

(d) such amounts are not material

13.2 (a) Provision is recognized in case of present

obligations where a reliable estimate can be made and/or where there are probable

outflow of resources embodying foregoing of economic benefits to settle the obligations, excluding frivolous claims.

(b) Provision for Market Risk, Country Risk, etc., are made in terms of extant instructions of RBI.

(c) Floating provision as identified by the Bank Management is provided for.

Floating provision may be utilized as per extant RBI guidelines, for -

(i) Making specific provisions for non-performing assets;

(ii) Meeting any shortfall in sale of nonperforming assets.

14. IMPAIRMENT OF ASSETS

Impairment losses, if any, on Fixed Assets (including revalued assets) are recognised and charged to Profit and Loss Account in accordance with the Accounting Standard 28 “Impairment of Assets”. However, an impairment loss on a revalued asset is recognised directly against any revaluation surplus for the asset to the extent that the impairment loss does not exceed the amount held in the revaluation surplus for that same asset.

15. TAXES ON INCOME

15.1 Provision for tax is made for both Current Tax and Deferred Tax.

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

15.3 Deferred Tax Assets and Liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognized using the tax rates and tax laws that have been enacted or substantively enacted till the date of the Balance Sheet. Deferred Tax Assets are not recognized unless there is “virtual certainty” that sufficient future taxable income will be available against which such deferred tax assets will be realized.

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Mar 31, 2022

1. ACCOUNTING CONVENTION

The financial statements are prepared by following the going concern concept on historical cost convention unless otherwise stated. They conform to generally accepted accounting principles in India, which comprises statutory provisions, regulatory / Reserve Bank of India guidelines, accounting standards / guidance notes issued by the Institute of Chartered Accountants of India and the practices prevalent in the Banking Industry in India. In respect of foreign branches as per statutory provisions and practices prevailing in the respective countries.

2. USE OF ESTIMATES

The preparation of financial statements requires the management to make estimates and assumptions for considering the reported assets and liabilities (including contingent liabilities) as on the date of financial statements and the income and expenses for the reporting period. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable.

3. TRANSACTIONS INVOLVING FOREIGN EXCHANGE

Foreign Currency transactions of Indian operations and non-integral foreign operations are accounted for as per Accounting Standard -11 (AS-11) issued by the Institute of CharteredAccountants of India (ICAI).

3.1 Translation in respect of Indian operations

• Foreign exchange transactions are recorded at the Weekly Average Rate (WAR) notified by Foreign Exchange Dealers'' Association of India (FEDAI).

• Foreign currency assets and liabilities are translated at the closing rates notified by FEDAI at the year end.

• Acceptances, endorsements and other obligations and guarantees in foreign currency are carried at the closing rates notified by FEDAI at the year end.

• Exchange differences arising on settlement and translation of foreign currency assets and liabilities at the end of the financial year are recognized as income or expenses in the period in which they arise.

• Outstanding forward exchange contracts are disclosed at the Contracted rates, and revalued at FEDAI closing rates, and the resultant effect is recognized in the Profit and Loss account.

3.2 Translation in respect of Non-Integral Foreign Operations.

Foreign branches are classified as non-integral foreign operations and the financial statements are translated as follows:

• Assets and liabilities including contingent liabilities are translated at the closing rates notified by FEDAI at the year end.

• Income and expenses are translated at the Quarterly Average Closing rate notified by FEDAI at the end of the respective quarter.

• All resulting exchange differences are accumulated in a separate account "Foreign Currency Translation Reserve" (FCTR) till the disposal of the net investments.

4. INVESTMENTS

4.1 The entire investment portfolio of the Bank is classified in accordance with the RBI guidelines into three categories viz.

> Held To Maturity (HTM)

> Available For Sale (AFS)

> Held ForTrading (HFT)

The securities acquired with the intention to be held till maturity are classified under "HTM" category. The securities acquired with the intention to trade by taking advantage of short-term price / interest movements are classified as "HFT". All other securities which do not fall under any of the two categories are classified under "AFS" Category.

An investment is classified as Held to Maturity, Available for Sale or Held for Trading at the time of its purchase / acquisition and subsequent shifting is done in conformity with the Regulatory guidelines. Transfer of scrips, if any, from one category to another is done at the lowest of acquisition cost / book value / market value on the date of transfer and depreciation, if any, on such transfer is fully provided for.

Investment in Subsidiaries, Joint Ventures and Associates are classified as Held to Maturity.

4.2 Profit on sale of securities under HTM category is first taken to Profit and Loss account and thereafter appropriated to Capital Reserve account (net of taxes and amount required to be transferred to statutory reserves) and loss, if any, charged to Profit & Loss account.

4.3 Investments in India are valued in accordance with RBI

guidelines, as under:

a) Securities in HTM category are valued at acquisition cost except where the acquisition cost is higher than the face value, in which case, such excess of acquisition cost over the face value is amortised over the remaining period of maturity. Any diminution, other than temporary, in value of investments in subsidiaries / joint ventures / Associates which are included under HTM category is recognized and provided. Such diminution is being determined and provided for each investment individually. Investment in units of Venture Capital Funds (VCF) / Alternate Investment Fund (AIF) made after 23.08.2006 are classified under HTM category for initial period of 3 years and valued at cost.

b) Investment in Subsidiaries, Joint Ventures and Associates are valued at historical cost. Investment in sponsored Regional Rural Banks (RRB) are valued at carrying cost (i.e. Book value).

c) Investments in AFS category are marked to market, scrip-wise and classification wise, at quarterly intervals. Net depreciation, if any, is provided for in the Profit and Loss account while net appreciation, if any, is ignored. The book value of the individual securities does not undergo any change after marking to market.

d) The individual scrips in the H FT category are marked to market at daily intervals. Net depreciation, if any, is provided for in the Profit and Loss account while net appreciation, if any, is ignored. The Book Value of the individual securities in this category does not undergo any change.

e) Securities in AFS and HFT categories are valued as under:

i. Central Government Securities and State Govt. Securities are valued at prices / YTM rates as announced by Primary Dealers Association of India (PDAI) jointly with Fixed Income Money Market and Derivatives Association of India (FIMMDA) / Financial Benchmark India Private Ltd., (FBIL).

ii. Other approved securities are valued applying the YTM method by marking up 25 basis points above the yields of the Central Government Securities of equivalent maturity put out by PDAI / FIMMDA/ FBIL periodically.

iii. Equity shares are valued at market price, if quoted. Unquoted equity shares are valued at break-up value (without considering revaluation reserves if any) as per the company''s latest balance sheet (not more than one year prior to the date of valuation). Otherwise, the shares are valued at Re. 1 per company.

iv. Preference shares are valued at market price, if quoted; otherwise at lower of the value

determined based on the appropriate YTM rates or redemption value.

v. All debentures / bonds, other than those which are in the nature of advances, are valued on the YTM basis.

vi. Treasury bills, Certificate of deposits and Commercial papers are valued at carrying cost.

vii. Unitsof Mutual Funds are valued at market price, if quoted; otherwise at lower of repurchase price or Net Asset Value (NAV). In case of funds with a lock-in period, where repurchase price / market quote is not available, units are valued at NAV, else valued at cost till the end of the lock-in period.

viii. Investment in units of Venture Capital Funds (VCF) /Alternate Investment Fund (AIF) made after 23.08.2006 are classified under HTM category for initial period of 3 years and valued at cost. After period of 3 years from the date of disbursement, it will be shifted to AFS and marked-to-market as per RBI guidelines.

ix. In respect of investment at Overseas branches, RBI guidelines or those of the host countries whichever are more stringent are followed. In case of those branches situated in countries where no guidelines are specified, the guidelines of RBI are followed.

4.4 Non-performing investment (NPI) are identified as

stated below, as per guidelines issued by RBI.

• Securities / Non-cumulative Preference shares where Interest/ Fixed Dividend / Instalment (including maturity proceeds) is due and remains unpaid for more than 90 Days.

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

• Investments backed by guarantee of the Central Government though overdue are treated as NonPerforming Asset (NPA) only when the Government repudiates its guarantee when invoked.

• Investment in State Government guaranteed securities, including those in the nature of ''deemed advances'', are subjected to asset classification and provisioning as per prudential norms if interest / installment of principal (including maturity proceeds) or any other amount due to the Bank remains unpaid for more than 90 days.

• Equity investment classified as NPI should be valued at market value, if quoted, and in case where equity is not quoted, it should be valued at Re.1

4.5 Brokerages / Commission / incentive received on subscriptions are deducted from the cost of securities. Brokerage / Commission / Stamp duty paid in connection with acquisition of securities are treated as revenue expenses.

4.6 Interest Rate Swap transactions for trading is marked to market at quarterly intervals. The fair value of the total swaps is computed on the basis of the amount that would be received/ receivable or paid/ payable on termination of the swap agreements as on the balance sheet date. Losses arising there from, if any, are fully provided for, while the profit, if any, is ignored.

4.7 Exchange traded FX Derivatives i.e. Currency Futures, are valued at the Exchange determined prices and the resultant gains and losses are recognized in the Profit and Loss account.

4.8 Premium / interest arising at the inception of forward exchange swap facility of RBI for FCNR (B) dollar deposits is amortized as expense over the period of the swap contract.

4.9 Cost of investments is determined based on the Weighted Average Cost method in each category. Investments classified under HTM are carried at acquisition cost as arrived under Weighted Average Cost method and in case the weighted average cost is more than the face value, the premium is amortised over the remaining period of maturity.

• Accounting for Repo / Reverse Repo transactions:

All types of Repo / Reverse Repo Transactions with RBI including LAF, variable rate term operations, Long term Repo operations (LTRO), MSF and also Market Repo transactions are accounted as per RBI guidelines.

The securities sold and purchased under Repo / Reverse Repo are accounted as Triparty Repo wherein securities are transferred as in the case of normal outright sale / purchase transactions and such movement of securities is reflected using the Repo / Reverse Repo Accounts and Contra entries. The above entries are reversed on the date of maturity. Costs and revenues are accounted as interest expenditure / income, as the case may be. Balance in Repo Account is classified under Schedule 4 (Borrowings) and balance in Reverse Repo Account is classified under Schedule 7 (Balance with Banks and Money at Call & Short Notice).

5. FINANCIAL ASSETS SOLD TO RECONSTRUCTION COMPANIES (RC)

5.1 Security Receipts (SR) issued by SCs / RCs in respect of financial assets sold to them is recognized at lower of redemption value of SRs and Net Book Value of financial assets. SRs are valued at:

(a) SRs issued by SCs / RCs prior to 01.04.2017 at Net Asset Value declared by SCs / RCs on the Balance Sheet date and depreciation, if any, is provided for and appreciation is ignored.

(b) As per amended guidelines issued by RBI with effect from April, 01 2017, provisioning requirement on SRs will be higher of

(I) provisioning rate in terms of Net Asset Value declared by the SCs / RCs

(ii) provisioning rate as applicable to the underlying loans, assuming that the loans notionally continued in the books of the bank

5.2 In case of financial assets sold to RC, the valuation and,

income recognition is being done as per RBI guidelines. If the sale is for value lower than the Net Book Value (NBV) (i.e, book value less provisions held), the shortfall is debited to the Profit and Loss account or met out of utilisation of Floating provision held, as per extant RBI guidelines

If the cash received (by way of initial consideration and / or redemption of security receipts) is higher than the Net Book value of the Non-Performing Asset (NPA) sold to RC, then excess provision is reversed to the profit and Loss account. The quantum of excess provision reversed to profit and loss account is limited to the extent to which cash received exceeds the NBV of the NPA sold.

6 ADVANCES

6.1 In accordance with the prudential norms issued by RBI, advances in India are classified into Standard, SubStandard, Doubtful and Loss assets borrower-wise.

6.2 Provisions are made for non-performing advances as under:

a) Sub Standard:

I) A general provision of 15% on the total outstanding

ii) Additional provision of 10% for exposure which are unsecured ab-initio (ie., where realizable value of securities is not more than 10% ab-initio)

b) Doubtful Category -1

i) 25% for Secured portion.

ii) 100% for Unsecured portion.

c) Doubtful Category - 2

i) 40% for Secured portion.

ii) 100% for Unsecured portion.

d) Doubtful Category - 3 and Loss advances -100%.

• Provision is made for standard advances including Restructured / Rescheduled standard advances as per RBI directives.

• In respect of foreign branches, income recognition, asset classification and provisioning for loan losses are made as per local requirement or as per RBI prudential norms, whichever is more stringent.

Further, if an asset in the overseas books of the Bank requires to be classified as NPAat any point of time in terms of regulations issued by Reserve Bank of India, then all the facilities granted by the bank to the borrower and investment in all the securities issued by the borrower will be classified asNPAs/NPIs.

However, accounts classified as Non-performing / Impaired assets (NPAs) by host regulators for reasons other than record of recovery, would be classified as NPAs at the time of consolidating financial statements in India and provided for, as required; whereas asset classification of other credit exposures to the same counter parties in other jurisdictions (including India) will continue to be governed by the extant guidelines in the respective jurisdictions.

• Advances disclosed are net of provisions made for non-performing assets, DICGC / ECGC / CGTMSE claims received and held pending adjustment, repayments received and kept in sundries account, participation certificates, usance bills rediscounted and provision in lieu of diminution in the fair value of restructured accounts classified as standard assets.

7. FIXEDASSETS/DEPRECIATION

7.1. Fixed assets are carried at cost / revalued amount less accumulated depreciation / amortization.

7.2. Cost includes cost of purchase and all expenditure such as site preparation, installation costs and professional fees incurred on the asset before it is put to use. Subsequent expenditure(s) incurred on the assets put to use are capitalized only when it increases the future economic benefits from such assets on their functioning capacity.

7.3. Depreciation on buildings (including cost of land wherever inseparable / not segregated) and other fixed assets in India will be provided for on the straight-line method at the rates / useful life, as specified below:

Sl. No.	Description of fixed assets	Depreciation Rate / Useful Life
1.	Computers	33.33% every year
2.	Computer Software forming an integral part of the Computer hardware	33.33% every year
3.	Computer Software which does not form an integral part of Computer hardware and cost of Software Development	33.33% every year
4.	Automated Teller Machine / Cash Deposit Machine / Coin Vending Machine	20.00% every year

5.	Servers	33.33% every year
6.	Network Equipment	20.00% every year
7.	Other Fixed Assets	Estimated useful life of major group of assets are as under:
		Premises : 60 years Safes/Locker/Doors (Steel): 20 years Vehicles : 5 years Furniture and Fixtures : 10 years Cell phones : 1 year

7.4. In respect of assets sold / acquired during the year, depreciation will be charged on proportionate basis for the number of days the assets have been put to use / from the date of capitalization during the year.

7.5. Assets costing upto '' 5,000/- will be fully depreciated in the year of purchase.

7.6. The revalued asset will be depreciated over the balance useful life of the asset as assessed at the time of revaluation.

The increase in Net Book Value of the asset due to revaluation will be credited to the Revaluation Reserve Account without routing through the Profit and Loss Account. Depreciation relatable to revalued component will be charged against revenue expenditure and an equivalent amount will be charged straight away against revaluation reserve and credited to the revenue reserve, as per revised AS 10 issued by ICAI.

7.7 In respect of Assets where subsidy is received from Government, the same will be credited to the respective asset account and depreciation will be charged accordingly.

7.8 Premium on leasehold land will be capitalized in the year of acquisition and amortized over the period of lease.

7.9 Depreciation in respect of fixed assets at foreign branches will be provided as per the practice prevailing in the respective countries.

7.10 In respect of Non-Banking Assets, no depreciation will be charged.

8. REVENUE RECOGNITION

8.1 Income and expenditure are generally accounted for on accrual basis, unless otherwise stated.

8.2 Income from non-performing assets, Central Government guaranteed assets (where it is overdue beyond 90 days), dividend income, insurance claims, commission on letters of credit / guarantees issued (other than those relating to project finance), income from wealth management, additional interest / overdue charges on bills purchased, finance charges on credit cards, income on Bank''s right to recompense, AMC charges on debit cards are accounted for on realisation basis and locker rent received, income from Bancassurance products are accounted on accrual basis.

8.3 In case of overdue foreign bills, interest and other charges are recognised till the date of crystallisation as per FEDAI guidelines.

9. CREDIT CARD REWARD POINTS

Reward points earned by card members on use of Card facility is recognized as expenditure on such use.

10. NETPROFIT/LOSS

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

- Provision for Non-Performing Advances and / or Investments.

- General provision on Standard Advances

- Provision for Restructured Advances

- Provision for Depreciation on Fixed Assets

- Provision for Depreciation on Investments

- Transfer to / from Contingency Fund

- Provision for Direct taxes

- Provision for Unhedged Foreign Currency Exposure

- Usual or / and other necessary provisions

11. STAFF RETIREMENT BENEFITS

i) PROVIDENTFUND

Provident fund is a statutory obligation and in the case of Contributory Provident Fund Optees, the Bank pays fixed contribution at pre-determined rates. The obligation of the Bank is limited to such fixed contribution. The contributions are charged to Profit and Loss Account. The fund is managed by Indian Bank Staff Provident Fund Trust.

ii) GRATUITY

Gratuity liability is a statutory obligation as per Indian Bank Employees'' Gratuity Fund Rules and Regulations and is provided for on the basis of an actuarial valuation made at the end of the financial year. The gratuity liability is funded by the Bank and is managed by Indian Bank Employees Gratuity FundTrust.

iii) PENSION

• Pension liability is a defined benefit obligation under Indian Bank (Employees) Pension Regulations 1995 and is provided for on the basis of actuarial valuation, for the employees who have joined Bank up to 31.03.2010 and opted for pension.

• New Pension Scheme (NPS) which is applicable to employees who joined bank on or after 01.04.2010 and it is a defined contribution scheme. Under NPS the Bank pays fixed contribution at pre-determined rate and the obligation of the Bank is limited to such fixed contribution. The contribution is charged to Profit and Loss Account.

iv) COMPENSATEDABSENCES

Accumulating compensated absences such as Privilege Leave and Sick Leave are provided for based on actuarial valuation.

v) OTHER EMPLOYEEBENEFITS

Other Employee benefits such as Leave Fare Concession and Additional Retirement Benefit on Retirement are provided for based on actuarial valuation. In respect of overseas branches and offices, the benefits in respect of employees other than those on deputation are valued and accounted for as per laws prevailing in the respective territories.

12. ACCOUNTING FORLEASES

Lease payments including cost escalation for assets taken on operating lease are recognized in the Profit and Loss Account over the lease term or life whichever is lower.

13. CONTINGENT LIABILITIESAND PROVISIONS

13.1 Contingent liability: Past events leading to, possible or present obligations are recognized as contingent liability in the following instances where:

(a) The existence of such obligations has not been confirmed

(b) no outflow of resources are required to settle such obligations

(c) a reliable estimate of the amount of the obligations cannot be made

(d) such amounts are not material

13.2 (a) Provision is recognized in case of present obligations

where a reliable estimate can be made and / or where there are probable outflow of resources embodying foregoing of economic benefits to settle the obligations, excluding frivolous claims.

(b) Provision for Market Risk, Country Risk, etc., are made in terms of extant instructions of RBI.

(c) Floating provision as identified by the Bank Management is provided for.

Floating provision may be utilized as per extant RBI guidelines, for-

(i) Making specific provisions for non-performing assets;

(ii) Meeting any shortfall in sale of non-performing assets.

14. IMPAIRMENTOFASSETS

Impairment losses, if any, on Fixed Assets (including revalued assets) are recognised and charged to Profit and Loss Account in accordance with the Accounting Standard 28 "Impairment of Assets". However, an impairment loss on a revalued asset is recognised directly against any revaluation surplus for the asset to the extent that the impairment loss does not exceed the amount held in the revaluation surplus for that same asset.

15. TAXESONINCOME

15.1 Provision for tax is made for both Current Tax and Deferred Tax.

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

15.3 Deferred Tax Assets and Liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognized using the tax rates and tax laws that have been enacted or substantively enacted till the date of the Balance Sheet. Deferred Tax Assets are not recognized unless there is "virtual certainty" that sufficient future taxable income will be available against which such deferred tax assets will be realized.

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Mar 31, 2019

1. ACCOUNTING CONVENTION

The financial statements are prepared by following the going concern concept on historical cost convention unless otherwise stated. They conform to generally accepted accounting principles in India, which comprises statutory provisions, regulatory / Reserve Bank of India guidelines, accounting standards / guidance notes issued by the Institute of Chartered Accountants of India and the practices prevalent in the Banking Industry in India. In respect of foreign branches as per statutory provisions and practices prevailing in the respective countries

2. USE OF ESTIMATES

The preparation of financial statements requires the management to make estimates and assumptions for considering the reported assets and liabilities (including contingent liabilities) as on the date of financial statements and the income and expenses for the reporting period. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable.

3. TRANSACTIONS INVOLVING FOREIGN EXCHANGE

Foreign Currency transactions of Indian operations and non-integral foreign operations are accounted for as per Accounting Standard-11 (AS-11) issued by the Institute of Chartered Accountants of India (ICAI).

3.1 Translation in respect of Indian operations

- Foreign exchange transactions are recorded at the Weekly Average Rate (WAR) notified by Foreign Exchange Dealers ‘Association of India (FEDAI).

- Foreign currency assets and liabilities are translated at the closing rates notified by FEDAI at the year end.

- Acceptances, endorsements and other obligations and guarantees in foreign currency are carried atthe closing rates notified by FEDAI at the year end.

- Exchange differences arising on settlement and translation of foreign currency assets and liabilities at the end of the financial year are recognized as income or expenses in the period in which they arise.

- Outstanding forward exchange contracts are disclosed at the Contracted rates, and revalued at FEDAI closing rates, and the resultant effect is recognized in the Profit and Loss account.

3.2 Translation in respect of non-integral foreign operations.

Foreign branches are classified as non-integral foreign operations and the financial statements are translated as follows:

- Assets and liabilities including contingent liabilities are translated atthe closing rates notified by FEDAI at the year end.

- Income and expenses are translated at the Quarterly Average Closing rate notified by FEDAI at the end of the respective quarter.

- All resulting exchange differences are accumulated in a separate account “Foreign Currency Translation Reserve” (FCTR) till the disposal of the net investments.

4. INVESTMENTS

4.1 The entire investment portfolio of the Bank is classified in accordance with the RBI guidelines into three categories viz.

- Held To Maturity (HTM)

- Available For Sale (AFS)

- Held ForTrading(HFT)

The securities acquired with the intention to be held till maturity are classified under “HTM” category. The securities acquired with the intention to trade by taking advantage of short-term price / interest movements are classified as “HFT”. All other securities which do not fall under any of the two categories are classified under “AFS” category.

An investment is classified as Held to Maturity, Available for Sale or Held for Trading at the time of its purchase/acquisition and subsequent shifting is done in conformity with the Regulatory guidelines. Transfer of scrips, if any, from one category to another is done atthe lowest of acquisition cost/book value/market value on the date of transfer and depreciation, if any, on such transfer is fully provided for.

Investment in Subsidiaries and Associates are classified as Held to Maturity.

4.2 Profit on sale of securities under HTM category is first taken to Profit and Loss account and thereafter appropriated to Capital Reserve account (net of taxes and amount required to be transferred to statutory reserves) and loss, if any, charged to Profit & Loss account.

4.3 Investments in India are valued in accordance with RBI guidelines, asunder:

a) Securities in HTM category are valued at acquisition cost except where the acquisition cost is higher than the face value, in which case, such excess of acquisition cost over the face value is amortised over the remaining period of maturity. Any diminution, other than temporary, in value of investments in subsidiaries/joint ventures/Associates which are included under HTM category is recognized and provided. Such diminution is being determined and provided for each investment individually. Investment in units of Venture Capital funds (VCF) made after 23.08.2006 are classified under HTM category for initial period of 3 years and valued at cost.

b) Investment in Subsidiaries, Joint Ventures and Associates are valued at historical cost. Investment in sponsored Regional Rural Banks (RRB) are valued at carrying cost (i.e. Book value).

c) Investments in AFS category are marked to market, scrip-wise and classification wise, at quarterly intervals. Net depreciation, if any, is provided for in the Profit and Loss account while net appreciation, if any, is ignored. The bookvalue of the individual securities does not undergo any change after marking to market.

d) The individual scripts in the HFT category are marked to market at daily intervals. Net depreciation, if any, is provided for in the Profit and Loss account while net appreciation, if any, is ignored. The Book Value of the individual securities in this category does not undergo any change.

e) Securities in AFS and HFT categories are valued as under:

- Central Government Securities are valued at prices / YTM rates as announced by Primary Dealers Association of India (PDAI) jointly with Fixed Income Money Market and Derivatives Association of India(FIMMDA).

- State Government and Other approved securities are valued applying the YTM method by marking up 25 basis points above the yields of the Central Government Securities of equivalent maturity put out by PDAI /FIMMDA periodically.

- Equity shares are valued at market price, if quoted. Unquoted equity shares are valued at break-up value (without considering revaluation reserves if any) as per the company’s latest balance sheet (not more than one year prior to the date of valuation). Otherwise, the shares are valued at Re. 1 per company.

- Preference shares are valued at market price, if quoted; otherwise at lower of the value determined based on the appropriate YTM rates or redemption value.

- All debentures/bonds, otherthan those which are in the nature of advances, are valued on the YTM basis.

- Treasury bills, Certificate of deposits and Commercial papers are valued at carrying cost.

- Units of Mutual Funds are valued at market price, if quoted; otherwise at lower of repurchase price or Net Asset Value (NAV). In case of funds with a lock-in period, where repurchase price / market quote is not available, units are valued at NAV, else valued at cost till the end of the lock-in period.

- Investment in units of Venture Capital funds (VCF) made after 23.08.2006 are classified under HTM category for initial period of 3 years and valued at cost. After period of 3 years from the date of disbursement, it will be shifted to AFS and marked-to-market as per RBI guidelines.

- In respect of investment at Overseas branches, RBI guidelines or those of the host countries whichever are more stringent are followed. In case of those branches situated in countries where no guidelines are specified, the guidelines of RBI are followed.

4.4 Non-performing investment (NPI) are identified as stated below, as per guidelines issued by RBI.

- Securities/Non-cumulative Preference shares where interest/fixed dividend/installment (including maturity proceeds) is due and remains unpaid for more than 90 days.

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

- Non performing equity shares are values as

i) As per RBI guidelines, restructured non performing equity investments are valued at market price, if quoted. Unquoted equity shares are valued at break-up value (without considering revaluation reserves, if any) as per the company’s latest balance sheet (not more than one year prior to the date of valuation). Otherwise the shares are valued at Re.1/- per company.

ii) In case of other equity investments, classified as NPI, shares are valued at market price, if quoted and in case it is not quoted, they are valued at Re.1 per company.

- Investments backed by guarantee of the Central Government though overdue are treated as Non Performing Asset (NPA) only when the Government repudiates its guarantee when invoked.

- Investment in State Government guaranteed securities, including those in the nature of ‘deemed advances’, are subjected to asset classification and provisioning as per prudential norms if interest/installment of principal (including maturity proceeds) or any other amount due to the Bank remains unpaid for more than 90 days.

4.5 Brokerages / Commission / incentive received on subscriptions are deducted from the cost of securities. Brokerage / Commission / Stamp duty paid in connection with acquisition of securities are treated as revenue expenses.

4.6 Interest Rate Swap transactions for trading is marked to market at quarterly intervals. The fair value of the total swaps is computed on the basis of the amount that would be received/ receivable or paid/ payable on termination of the swap agreements as on the balance sheet date. Losses arising there from, if any, are fully provided for, while the profit, if any, is ignored.

4.7 Exchange traded FX Derivatives i.e. Currency Futures, are valued at the Exchange determined prices and the resultant gains and losses are recognized in the Profit and Loss account.

4.8 Premium/interest arising at the inception of forward exchange swap facility of RBI for FCNR (B) dollar deposits is amortized as expense over the period of the swap contract.

4.9 Cost of investments is determined based on the Weighted Average Cost method in each category. Investments classified under HTM are carried at acquisition cost as arrived under Weighted Average Cost method and in case the weighted average cost is more than the face value, the premium is amortised over the remaining period of maturity.

- Accounting for Repo/Reverse Repo transactions:

All types of repo/reverse repo transactions with RBI including LAF, variable rate term operations and MSF and also Market Repo transactions are accounted as per RBI guidelines. The securities sold and purchased under Repo/Reverse Repo are accounted as Collateralised lending and borrowing transactions and Triparty Repo wherein securities are transferred as in the case of normal outright sale/purchase transactions and such movement of securities is reflected using the Repo/Reverse Repo Accounts and Contra entries. The above entries are reversed on the date of maturity. Costs and revenues are accounted as Interest expenditure / income, as the case may be. Balance in Repo Account is classified under Schedule 4 (Borrowings) and balance in Reverse Repo Account is classified under Schedule 7 (Balance with Banks and Money at Call & Short Notice)

5. FINANCIAL ASSETS SOLD TO SECURITISATION COMPANIES (SC) / RECONSTRUCTION COMPANIES (RC)

5.1 Security Receipts (SR) issued by SCs/RCs in respect of financial assets sold to them is recognized at lower of redemption value of SRs and Net Book Value of financial assets. SRs are valued at:

(a) SRs issued by SCs/RCs priorto 01.04.2017 at NetAsset Value declared by SCs/RCs on the Balance Sheet date and depreciation, if any, is provided for and appreciation is ignored.

(b) As per amended guidelines issued by RBI with effect from April,01,2017, provisioning requirement on SRs will be higher of

(i) provisioning rate in terms of Net Asset Value declared by the SCs/RCs

(ii) provisioning rate as applicable to the underlying loans, assuming that the loans notionally continued in the books of the bank

5.2 In case of financial assets sold to RC, the valuation and, income recognition is being done as per RBI Guidelines. If the sale is for value lower than the Net Book Value (NBV) (i.e, bookvalue less provisions held), the shorfall is debited to the Profit and Loss account or met out of utilisation of Floating provision held, as per extant RBI guidelines.

If the cash received (by way of initial consideration and /or redemption of security receipts) is higherthan the Net Book value of the Non Performing Asset (NPA) sold to RC, then excess provision is reversed to the profit and Loss account. The quantum of excess provision reversed to profit and loss account is limited to the extent to which cash received exceeds the NBV of the NPA sold.

6 ADVANCES

6.1 In accordance with the prudential norms issued by RBI, advances in India are classified into Standard, SubStandard, Doubtful and Loss assets borrower-wise.

6.2 Provisions are made for non performing advances as under:

a) Sub Standard:

i) A general provision of 15% on the total outstanding

ii) Additional provision of 10% for exposure which are unsecured ab-initio (ie., where realizable value of securities is not more than 10% ab-initio)

b) Doubtful category-1

i) 25% for Secured portion.

ii) 100% for Unsecured portion.

c) Doubtful Category-2

i) 40% for Secured portion.

ii) 100% for Unsecured portion.

d) Doubtful category-3 and Loss advances -100 %.

- Provision is made for standard advances including Restructured / Rescheduled standard advances as per RBI directives.

- In respect of foreign branches, income recognition, asset classification and provisioning for loan losses are made as per local requirement or as per RBI prudential norms, whichever is more stringent.

Further,if an asset in the overseas books of the Bank requires to be classified as NPAatany point of time in terms of regulations issued by Reserve Bank of India, then all the facilities granted by the bank to the borrower and investment in all the securities issued by the borrower will be classified as NPAs/NPIs.

However, accounts classified as Nonperforming/Impaired assets (NPAs) by host regulators for reasons other than record of recovery, would be classified as NPAs at the time of consolidating financial statements in India and provided for, as required; whereas asset classification of other credit exposures to the same counterparties in other jurisdictions (including India) will continue to be governed by the extant guidelines in the respective jurisdictions.

- Advances disclosed are net of provisions made for non-performing assets, DICGC/ ECGC/ CGTMSE claims received and held pending adjustment, repayments received and kept in sundries account, participation certificates , usance bills rediscounted and provision in lieu of diminution in the fair value of restructured accounts classified as standard assets.

7. FIXEDASSETS / DEPRECIATION

7.1. Premises and other fixed assets are stated at historical cost and at the revalued amount in respect of assets revalued.

7.2. Depreciation on buildings (including cost of land wherever inseparable/ not segregated) and other fixed assets in India is provided for on the straight-line method atthe same rates in which the said assets were charged, as specified below:

7.3. Depreciation relatable to revalued component will be charged under revenue expenditure and an equivalent amount will be charged straightway against revaluation reserve and credited to the revenue reserve, as per revisedAS 10 issued by ICAI.

Depreciation on fixed assets acquired and put in to use on or before 30th September is charged at 100% of the prescribed rates and at 50% of the prescribed rates on the fixed assets acquired and put in to use thereafter. No depreciation on the fixed assets is provided for in the year of sale / disposal. In respect of Assets where subsidy is received from Government, the same is credited to the respective asset account and depreciation is charged accordingly.

7.4. Premium on leasehold land is capitalized in the year of acquisition and amortized overthe period of lease.

7.5. Depreciation in respect of fixed assets at foreign branches is provided as perthe practice prevailing in the respective countries.

7.6. In respect of Non Banking Assets, no depreciation is charged.

8. REVENUE RECOGNITION

8.1 Income and expenditure are generally accounted for on accrual basis, unless otherwise stated.

8.2 Income from non-performing assets, Central Government guaranteed assets (where it is overdue beyond 90 days), dividend income, insurance claims, commission on letters of credit/ guarantees issued (other than those relating to project finance), income from Bancassurance products, income from wealth management, additional interest/ overdue charges on bills purchased, finance charges on credit cards, income on Bank’s right to recompense, AMC charges on debit cards are accounted for on realisation basis and locker rent received is accounted on accrual basis.

8.3 In case of overdue foreign bills, interest and other charges are recognised till the date of crystallisation as per FEDAI guidelines.

9. CREDIT CARDREWARDPOINTS

Reward points earned by card members on use of Card facility is recognized as expenditure on such use.

10. NETPROFIT/LOSS

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

- Provision for Non-Performing Advances and / or Investments.

- General provision on Standard Advances

- Provision for Restructured Advances

- Provision for Depreciation on Fixed Assets

- Provision for Depreciation on Investments

- Transfer to/from Contingency Fund

- Provision for directtaxes

- Provision for Unhedged Foreign Currency Exposure

- Usual or/and other necessary provisions

11. STAFFRETIREMENT BENEFITS

i) PROVIDENT FUND

Provident fund is a statutory obligation and in the case of Contributory Provident Fund Optees, the Bank pays fixed contribution at pre-determined rates. The obligation of the Bank is limited to such fixed contribution. The contributions are charged to Profit and Loss Account. The fund is managed by Indian Bank Staff Provident Fund Trust.

ii) GRATUITY

Gratuity liability is a statutory obligation as per Indian Bank Employees’ Gratuity Fund Rules and Regulations and is provided for on the basis of an actuarial valuation made atthe end of the financial year. The gratuity liability is funded by the Bank and is managed by Indian Bank Employees Gratuity Fund Trust.

iii) PENSION

- Pension liability is a defined benefit obligation under Indian Bank (Employees) Pension Regulations 1995 and is provided for on the basis of actuarial valuation, for the employees who have joined Bank upto 31.03.2010 and opted for pension.

- New Pension Scheme (NPS) which is applicable to employees who joined bank on or after 01.04.2010 and it is a defined contribution scheme. Under NPS the Bank pays fixed contribution at pre determined rate and the obligation of the Bank is limited to such fixed contribution. The contribution is charged to Profit and LossAccount.

iv) COMPENSATEDABSENCES

Accumulating compensated absences such as Privilege Leave and Sick Leave are provided for based on actuarial valuation.

v) OTHER EMPLOYEE BENEFITS

Other Employee benefits such as Leave Fare Concession and Additional Retirement Benefit on Retirement are provided for based on actuarial valuation. In respect of overseas branches and offices, the benefits in respect of employees other than those on deputation are valued and accounted for as per laws prevailing in the respective territories.

12. ACCOUNTINGFOR LEASES

Lease payments including cost escalation for assets taken on operating lease are recognized in the Profit and Loss Account over the lease term or life whichever is lower.

13. CONTINGENT LIABILITIESAND PROVISIONS

13.1 Contingent liability: Past events leading to, possible or present obligations are recognised as contingent liability in the following instances where:

(a) The existence of such obligations has not been confirmed

(b) no outflow of resources are required to settle such obligations

(c) a reliable estimate of the amount of the obligations cannot be made

(d) such amounts are not material

13.2 (a) Provision is recognized in case of present obligations where a reliable estimate can be made and/or where there are probable outflow of resources embodying foregoing of economic benefits to settle the obligations, excluding frivolous claims.

(b) Provision for Market Risk, Country Risk, etc., are made in terms of extant instructions of RBI.

(c) Floating provision as identified by the Bank Management is provided for.

Floating provision may be utilized as per extant RBI guidelines, for-

(i) Making specific provisions for non-performing assets;

(ii) Meeting any shortfall in sale of non-performing assets.

14. IMPAIRMENTOFASSETS

Impairment losses, if any, on Fixed Assets (including revalued assets) are recognised and charged to Profit and Loss Account in accordance with the Accounting Standard 28 “Impairment of Assets”. However, an impairment loss on a revalued asset is recognised directly against any revaluation surplus for the asset to the extent that the impairment loss does not exceed the amount held in the revaluation surplus for that same asset.

15. TAXES ON INCOME

15.1 Provision for tax is made for both Current Tax and Deferred Tax.

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

15.3 Deferred Tax Assets and Liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognised using the tax rates and tax laws that have been enacted or substantively enacted till the date of the Balance Sheet. Deferred Tax Assets are not recognised unless there is “virtual certainty” that sufficient future taxable income will be available against which such deferred tax assets will be realised.

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Mar 31, 2018

1. ACCOUNTING CONVENTION

The financial statements are prepared by following the going concern concept on historical cost convention unless otherwise stated. They conform to generally accepted accounting principles in India, which comprises statutory provisions, regulatory / Reserve Bank of India guidelines, accounting standards / guidance notes issued by the Institute of Chartered Accountants of India and the practices prevalent in the Banking Industry in India. In respect of foreign branches as per statutory provisions and practices prevailing in the respective countries.

2. USE OF ESTIMATES

The preparation of financial statements requires the management to make estimates and assumptions for considering the reported assets and liabilities (including contingent liabilities) as on the date of financial statements and the income and expenses for the reporting period. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable.

3. TRANSACTIONS INVOLVING FOREIGN EXCHANGE

Foreign Currency transactions of Indian operations and non-integral foreign operations are accounted for as per Accounting Standard-11 (AS-11) issued by the Institute of Chartered Accountants of India (ICAI).

3.1 Translation in respect of Indian operations

1. Foreign exchange transactions are recorded at the Weekly Average Rate (WAR) notified by Foreign Exchange Dealers Association of India (FEDAI).

2. Foreign currency assets and liabilities are translated at the closing rates notified by FEDAI at the year end.

3. Acceptances, endorsements and other obligations and guarantees in foreign currency are carried at the closing rates notified by FEDAI atthe year end.

4. Exchange differences arising on settlement and translation of foreign currency assets and liabilities at the end of the financial year are recognized as income or expenses in the period in which they arise.

5. Outstanding forward exchange contracts are disclosed at the Contracted rates, and revalued at FEDAI closing rates, and the resultant effect is recognized in the Profit and Loss account.

3.2 Translation in respect of non-integral foreign operations.

Foreign branches are classified as non-integral foreign operations and the financial statements are translated as follows:

1. Assets and liabilities including contingent liabilities are translated at the closing rates notified by FEDAI atthe year end.

2. Income and expenses are translated at the Quarterly Average Closing rate notified by FEDAI at the end of the respective quarter.

3. All resulting exchange differences are accumulated in a separate account "Foreign Currency Translation Reserve" (FCTR) till the disposal of the net investments.

4. INVESTMENTS

4.1 The entire investment portfolio of the Bank is classified in accordance with the RBI guidelines into three categories viz.

- Held To Maturity (HTM)

- Available For Sale (AFS)

- Held For Trading (HFT)

The securities acquired with the intention to be held till maturity are classified under "HTM” category. The securities acquired with the intention to trade by taking advantage of short term price / interest movements are classified as "HFT”. All other securities which do not fall under any of the two categories are classified under "AFS” category.

An investment is classified as Held to Maturity, Available for Sale or Held for Trading at the time of its purchase/acquisition and subsequent shifting is done in conformity with the Regulatory guidelines. Transfer of scrips, if any, from one category to another is done at the lowest of acquisition cost/book value/market value on the date of transfer and depreciation, if any, on such transfer is fully provided for.

Investment in Subsidiaries and Associates are classified as Held to Maturity.

4.2 Profit on sale of securities under HTM category is first taken to Profit and Loss account and thereafter appropriated to Capital Reserve account (net of taxes and amount required to be transferred to statutory reserves) and loss, if any, charged to Profit & Loss account.

4.2.1 Investments in India are valued in accordance with RBI guidelines, as under:

a) Securities in HTM category are valued at acquisition cost except where the acquisition cost is higher than the face value, in which case, such excess of acquisition cost over the face value is amortized over the remaining period of maturity. Any diminution, other than temporary, in value of investments in subsidiaries/ joint ventures/Associates which are included under HTM category is recognized and provided. Such diminution is being determined and provided for each investment individually. Investment in units of Venture Capital funds (VCF) made after 23.08.2006 are classified under HTM category for initial period of 3 years and valued at cost.

b) Investment in Subsidiaries, Joint Ventures and Associates are valued at historical cost. Investment in sponsored Regional Rural Banks (RRB) are valued at carrying cost (i.e. Book value).

c) Investments in AFS category are marked to market, scrip-wise and classification wise, at quarterly intervals. Net depreciation, if any, is provided for in the Profit and Loss account while net appreciation, if any, is ignored. The book value of the individual securities does not undergo any change after marking to market.

d) The individual scripts in the HFT category are marked to market at daily intervals. Net depreciation, if any, is provided for in the Profit and Loss account while net appreciation, if any, is ignored. The Book Value of the individual securities in this category does not undergo any change.

e) Securities in AFS and HFT categories are valued as under:

i. Central Government Securities are valued at prices / YTM rates as announced by Primary Dealers Association of India (PDAI) jointly with Fixed Income Money Market and Derivatives Association of India (FIMMDA).

ii. State Government and Other approved securities are valued applying the YTM method by marking up 25 basis points above the yields of the Central Government Securities of equivalent maturity put out by PDAI / FIMMDAperiodically.

iii. Equity shares are valued at market price, if quoted. Unquoted equity shares are valued at break-up value (without considering revaluation reserves if any) as per the companies latest balance sheet (not more than one year prior to the date of valuation). Otherwise, the shares are valued at Re. 1 per company.

iv. Preference shares are valued at market price, if quoted; otherwise at lower of the value determined based on the appropriate YTM rates or redemption value.

v. All debentures/bonds, other than those which are in the nature of advances, are valued on the YTM basis.

vi. Treasury bills, Certificate of deposits and Commercial papers are valued at carrying cost.

vii. Unitsof Mutual Funds are valued at market price, if quoted; otherwise at lower of repurchase price or

Net Asset Value (NAV). In case of funds with a lock-in period, where repurchase price / market quote is not available, units are valued at NAV, else valued at cost till the end of the lock-in period.

viii. Investment in units of Venture Capital funds (VCF) made after 23.08.2006 are classified under HTM category for initial period of 3 years and valued at cost. After period of 3 years from the date of disbursement, it will be shifted to AFS and marked-to-market as per RBI guidelines.

4.3 In respect of investment at Overseas branches, RBI guidelines or those of the host countries whichever are more stringent are followed. In case of those branches situated in countries where no guidelines are specified, the guidelines of RBI are followed.

4.4 Non-performing investment (NPI) are identified as stated below, as per guidelines issued by RBI.

a) Securities/Non-cumulative Preference shares where interest/fixed dividend/installment (including maturity proceeds) is due and remains unpaid for more than 90 days.

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

c) Non performing equity shares are valued as

i) As per RBI guidelines, restructured non performing equity investments are valued at market price, if quoted. Unquoted equity shares are valued at break-up value (without considering revaluation reserves, if any) as per the company''s latest balance sheet (not more than one year prior to the date of valuation). Otherwise the shares are valued at Re.1/- per company.

ii) In case of other equity investments, classified as NPI, shares are valued at market price. If quoted and in case it is not quoted, they are valued at Re.1 per company.

4.5 Brokerages / Commission / incentive received on subscriptions are deducted from the cost of securities. Brokerage / Commission / Stamp duty paid in connection with acquisition of securities are treated as revenue expenses.

4.6 Interest Rate Swap transactions for trading is marked to market at quarterly intervals. The fair value of the total swaps is computed on the basis of the amount that would be received/ receivable or paid/ payable on termination of the swap agreements as on the balance

sheet date. Losses arising there from, if any, are fully provided for, while the profit, if any, is ignored.

4.7 Exchange traded FX Derivatives i.e. Currency Futures, are valued at the Exchange determined prices and the resultant gains and losses are recognized in the Profit and Loss account.

4.8 Premium/interest arising at the inception of forward exchange swap facility of RBI for FCNR (B) dollar deposits is amortized as expense over the period of the swap contract.

4.9 Investments backed by guarantee of the Central Government though overdue are treated as Non Performing Asset (NPA) only when the Government repudiates its guarantee when invoked.

4.10 Investment in State Government guaranteed securities, including those in the nature of deemed advances, are subjected to asset classification and provisioning as per prudential norms if interest/ installment of principal (including maturity proceeds) or any other amount due to the Bank remains unpaid for more than 90 days.

4.11 Cost of investments is determined based on the Weighted Average Cost method in each category. Investments classified under HTM are carried at acquisition cost as arrived under Weighted Average Cost method and in case the weighted average cost is more than the face value, the premium is mortised over the remaining period of maturity.

4.12 Accounting for Repo/Reverse Repo transactions:

All types of repo/reverse repo transactions with RBI including LAF, variable rate term operations and MSF and also Market Repo transactions are accounted as per RBI guidelines. The securities sold and purchased under Repo/Reverse Repo are accounted as Collateralized lending and borrowing transactions wherein securities are transferred as in the case of normal outright sale/purchase transactions and such movement of securities is reflected using the Repo/Reverse Repo Accounts and Contra entries. The above entries are reversed on the date of maturity. Costs and revenues are accounted as Interest expenditure/income, as the case may be. Balance in Repo Account is classified under Schedule 4 (Borrowings) and balance in Reverse Repo Account is classified under Schedule 7 (Balance with Banks and Money at Call &Short Notice).

5. FINANCIAL ASSETS SOLD TO RECOVERY COMPANIES (RC)

5.1 Security Receipts (SR) issued by RCs in respect of financial assets sold to them is recognized at lower of redemption value of SRs and Net Book Value of financial assets. SRs are valued at:

(a) SRs issued by SCs/RCs prior to 01.04.2017 at Net Asset Value declared by SCs/RCs on the Balance Sheet date and depreciation, if any, is provided for and appreciation is ignored.

(b) Other SRs issued by SCs/RCs are valued at after providing higher provision of

(i) provisioning rate in terms of Net Asset Value declared by the SCs/RCs

(ii) provisioning rate as applicable to the underlying loans, assuming that the loans notionally continued in the books of the bank

5.2 In case of financial assets sold to RC, the valuation and, income recognition is being done as per RBI Guidelines. If the sale is for value lower than the Net Book Value (NBV) (i.e, book value less provisions held), the shorfall is debited to the Profit and Loss account or met out of utilization of Floating provision held, as per extant RBI guidelines

If the cash received (by way of initial consideration and /or redemption of security receipts) is higher than the Net Book value of the Non Performing Asset (NPA) sold to RC, then excess provision is reversed to the profit and Loss account. The quantum of excess provision reversed to profit and loss account is limited to the extent to which cash received exceeds the NBV of the NPA sold.

6 ADVANCES

6.1 In accordance with the prudential norms issued by RBI, advances in India are classified into Standard, Substandard, Doubtful and Loss assets borrower-wise.

6.2 Provisions are made for non performing advances as under:

a) Sub Standard:

i) A general provision of 15% on the total outstanding

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

b) Doubtful category-1

i) 25 % for Secured portion.

ii) 100% for Unsecured portion.

c) Doubtful Category - 2

i) 40% for Secured portion.

ii) 100% for Unsecured portion.

d) Doubtful category-3 and Loss advances -100 %.

6.3 Provision is made for standard advances including Restructured / Rescheduled standard advances as per RBI directives.

6.4 In respect of foreign branches, income recognition, asset classification and provisioning for loan losses are made as per local requirement or as per RBI prudential norms, whichever is more stringent.

Further, if an asset in the overseas books of the Bank requires to be classified as NPA at any point of time in terms of regulations issued by Reserve Bank of India, then all the facilities granted by the bank to the borrower and investment in all the securities issued by the borrower will be classified as NPAs/NPIs.

However, accounts classified as Non-performing/ Impaired assets (NPAs) by host regulators for reasons other than record of recovery, would be classified as NPAs at the time of consolidating financial statements in India and provided for, as required; whereas asset classification of other credit exposures to the same counterparties in other jurisdictions (including India) will continue to be governed by the extant guidelines in the respective jurisdictions.

6.5 Advances disclosed are net of provisions made for non-performing assets, DICGC/ ECGC/ CGTMSE claims received and held pending adjustment, repayments received and kept in sundries account, participation certificates , usance bills rediscounted and provision in lieu of diminution in the fair value of restructured accounts classified as standard assets.

7.FIXEDASSETS/DEPRECIATION

7.1. Premises and other fixed assets are stated at historical cost and at the revalued amount in respect of assets revalued.

7.3. Depreciation relatable to revalued component will be charged under revenue expenditure and an equivalent amount will be charged straightway against revaluation reserve and credited to the revenue reserve, as per revisedAS 10 issued by ICAI.

Depreciation on fixed assets acquired and put in to use on or before 30th September is charged at 100% of the prescribed rates and at 50% of the prescribed rates on the fixed assets acquired and put in to use thereafter. No depreciation on the fixed assets is provided for in the year of sale / disposal. In respect of Assets where subsidy is received from Government, the same is credited to the respective asset account and depreciation is charged accordingly.

7.4. Premium on leasehold land is capitalized in the year of acquisition and amortized over the period of lease.

7.5. Depreciation in respect of fixed assets at foreign branches is provided as per the practice prevailing in the respective countries.

7.6. In respect of Non Banking Assets, no depreciation is charged.

8. REVENUE RECOGNITION

8.1 Income and expenditure are generally accounted for on accrual basis, unless otherwise stated.

8.2 Income from non-performing assets, Central Government guaranteed assets (where it is overdue beyond 90 days), dividend income, insurance claims, commission on letters of credit/ guarantees issued (other than those relating to project finance), income from Bancassurance products, income from wealth management, additional interest/ overdue charges on bills purchased, finance charges on credit cards, income on Banks right to recompense, AMC charges on debit cards are accounted for on realisation and Locker Rent received is accounted on accrual basis.

8.3 In case of overdue foreign bills, interest and other charges are recognised till the date of crystallization as per FEDAI guidelines.

9. CREDIT CARD REWARD POINTS

Reward points earned by card members on use of Card facility is recognized as expenditure on such use.

10. NETPROFIT/LOSS

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

- Provision for Non-Performing Advances and / or Investments.

- General provision on Standard Advances

- Provision for Restructured Advances

- Provision for Depreciation on Fixed Assets

- Provision for Depreciation on Investments Transfer to/from Contingency Fund

- Provision for direct taxes

- Provision for Unhedged Foreign Currency Exposure

- Usual or/and other necessary provisions

11. STAFF RETIREMENT BENEFITS

i) PROVIDENTFUND

Provident fund is a statutory obligation and in the case of Contributory Provident Fund Optees, the Bank pays fixed contribution at pre-determined rates. The obligation of the Bank is limited to such fixed contribution. The contributions are charged to Profit and Loss Account. The fund is managed by Indian Bank Staff Provident FundT rust.

ii) GRATUITY

Gratuity liability is a statutory obligation as per Indian Bank Employees Gratuity Fund Rules and Regulations and is provided for on the basis of an actuarial valuation made at the end of the financial year. The gratuity liability is funded by the Bank and is managed by Indian Bank Employees Gratuity Fund Trust.

iii) PENSION

a) Pension liability is a defined benefit obligation under Indian Bank (Employees) Pension Regulations 1995 and is provided for on the basis of actuarial valuation, for the employees who have joined Bank up to 31.03.2010 and opted for pension. .

b) New Pension Scheme (NPS) which is applicable to employees who joined bank on or after 01.04.2010 and it is a defined contribution scheme. Under NPS the Bank pays fixed contribution at pre determined rate and the obligation of the Bank is limited to such fixed contribution. The contribution is charged to Profit and Loss Account.

iv) COMPENSATEDABSENCES

Accumulating compensated absences such as Privilege Leave and Sick Leave are provided for based on actuarial valuation.

v) OTHEREMPLOYEEBENEFITS

Other Employee benefits such as Leave Fare Concession and Additional Retirement Benefit on Retirement are provided for based on actuarial valuation. In respect of overseas branches and offices, the benefits in respect of employees other than those on deputation are valued and accounted for as per laws prevailing in the respective territories.

12. ACCOUNTING FORLEASES

Lease payments including cost escalation for assets taken on operating lease are recognized in the Profit and Loss Account over the lease term or life whichever is lower.

13. CONTINGENT LIABILITIESAND PROVISIONS

13.1 Contingent liability: Past events leading to, possible or present obligations are recognized as contingent liability in the following instances where:

(a) The existence of such obligations has not been confirmed

(b) no outflow of resources are required to settle such obligations

(c) a reliable estimate of the amount of the obligations cannot be made

(d) such amounts are not material

13.2 (a) Provision is recognized in case of present obligations where a reliable estimate can be made and/or where there are probable outflow of resources embodying foregoing of economic benefits to settle the obligations, excluding frivolous claims.

(b) Provision for Market Risk, Country Risk, etc., are made in terms of extant instructions of RBI.

(c) Floating provision as identified by the Bank Management is provided for. Floating provision may be utilized as per extant RBI guidelines, for -

(i) Making specific provisions for non-performing assets;

(ii) Meeting any shortfall in sale of non-performing assets.

14. IMPAIRMENTOFASSETS

Impairment losses, if any, on Fixed Assets (including revalued assets) are recognised and charged to Profit and Loss Account in accordance with the Accounting Standard 28 "Impairment of Assets". However, an impairment loss on a revalued asset is recognised directly against any revaluation surplus for the asset to the extent that the impairment loss does not exceed the amount held in the revaluation surplus for that same asset.

15. TAXESONINCOME

15.1 Provision for tax is made for both Current Tax and Deferred Tax.

15.2 Current tax is measured at the amount expected to be paid to the taxation authorities, using the applicable tax rates, tax laws and favourablejudicial pronouncements / legal opinion.

15.3 Deferred Tax Assets and Liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognized using the tax rates and tax laws that have been enacted or substantively enacted till the date of the Balance Sheet. Deferred Tax Assets are not recognized unless there is "virtual certainty" that sufficient future taxable income will be available against which such deferred tax assets will be realized.

‘Domestic SLR securities in HTM category as a percentage of Net Demand and Time Liabilities works out to 17.02% against the stipulated maximum level of 19.50 % (previous year works out to 20.19% as against the stipulated maximum level of 20.50%).

2.2.3 Sale and Transfers to/from HTM Category:

The value of sales and transfers of securities to / from HTM category did not exceed 5 per cent of the book value of investments held in HTM category at the beginning of the year as per RBI guidelines.

- Profit on account of sale of securities from HTM category amounting to R 71.70 crores (previous year R86.84 crores) has been taken to Profit and Loss Accountand thereafter an amount of R 35.20 crores (previous year R42.59 crores) was transferred to Capital Reserve Account (net of taxes and the amount required to be transferred to statutory reserves).

- Shifting of securities

(I) In the beginning of the year, the Bank shifted

SLR Securities for Book Value of R 14509.49 crores which has resulted in no additional provision & Non-SLR VCF Securities for Book Value of R1.07 crores with a depreciation provision of R 0.21 crore from HTM category to AFS category and

SLR Securities for Book Value of R 13436.45 crores from AFS category to HTM category which has resulted in adjustment of provision held against depreciation for R 119.35 crores to reduce the book value to the market value.

(ii) On 29/04/2017, the Bank shifted Non-SLR Securities for book-value of R10.08 crore (face value R10.00 crores) from HFT Category toAFS Category.

During the year, the Bank shifted SLR Securities for book-value of R 394.83 crores face value R 385 crores) from HFT Category toAFS Category on various dates.

In case of securities classified under HTM category, if acquisition cost is more than the face value, the premium is amortized over the remaining period to maturity. For the Financial Year 2017-18, a sum of R 108.64 crore (previous year R 80.81 crore) has been amortized and the same is reflected as a deduction from ''Income on Investments''.

In line with RBI circular No. BP/BC/102/21.04.048/2017-18 dated 02.04.2018, bank has spread mark to market (MTM) losses on investment held in AFS and HFT for the quarters ended December 31, 2017 and March 31, 2018 equally over up to four quarters, commencing with the quarter in which the loss is incurred. The following disclosure is made pursuant to RBI Circular regarding spread of mTm losses.

*The above figures do not include reversal of MTM losses in subsequent periods

# The remaining MTM losses to be provided in subsequent quarters of ensuing year, has not been netted from the investments

3.3 Disclosures on Risk Exposure in Derivatives

3.3.1 Qualitative Disclosures:

Banks policy permits hedging of asset as well as liability using IRS. The hedging transactions are to be accounted on an accrual basis. Swaps, which hedge interest bearing asset / liability, are accounted for as the asset or liability hedged. Outstanding swap contracts are marked to market.

All swap deals shall be based on the guidelines of International Swaps Dealers'' Association. Bank has adequate control systems and also internal approvals prior to concluding transactions. There exists a clear functional segregation between (i) trading (Dealing)

(ii) back office (settlement, monitoring and control) and (iii) accounting sections.

In the derivatives segment, the banks policy permits doing proprietary trading in Overnight Index Swaps (OIS). The activities in this segment are governed by the Derivatives Policy approved by the Bank''s Board.

The gain or loss in OIS transactions is booked in the Profit and Loss account on the maturity or unwinding of the deal whichever is earlier. For the purpose of valuation of outstanding OIS deals, the fair value of the total swap is computed on the basis of the amount that would be receivable or payable on termination of the swap as on the balance sheet date. Losses arising there from, if any, are fully provided for, while the profits, if any, are ignored.

Exchange traded FX Derivatives i.e. Currency Futures, are valued at the Exchange determined prices and the resultant gains and losses are recognized in the Profit and Loss account.

3.3.2 Quantitative Disclosures

The Bank is active in the following products under derivatives:-

- Overnight Index Swaps (OIS)

- Currency Futures

The outstanding OIS position as on 31st March 2018 was Rs, 50.00 crores (previous year Rs,150.00 crores).

Outstanding position in Currency futures as on 31.03.2018 is Rs, 620.93 crores and previous year was Rs,200.20 crores

COUNTRY RISK MANAGEMENT:

As per the updated country risk classification by the ECGC, vide its circular ECGC/CUD/225/2017-18 dated 02.01.2018, the Bank has analysed its net funded exposure to various countries as on 31.03.2018 and such exposure to countries other than Singapore is well within the stipulation of 1% of the total assets of the Bank. In respect of Singapore, which is classified under "Insignificant" risk category by ECGC Ltd, a provision of R 3.07 Cr (Previous year R3.04 Cr for ''Insignificant'' and R3.70 Cr. for ''Low'' risk category) is available.

7.5 Unsecured Advances

Out of the total unsecured advances, advances secured by intangible securities such as rights, licenses, authority, etc. charged to the bank as collateral in respect of projects (including infrastructure projects) is NIL. Estimated total value of such intangible collateral is NIL

The disputed income tax demand paid as at 31.03.2018 was R3292.14 Crores (previous year R 2576.67 Crores). The same has also been included under contingent liabilities of R 4079.28 Crores (previous year R 2619.21 Crores) relating to disputed tax matters as at 31.03.2018. No provision is considered necessary for the said disputed demands on account of judicial pronouncements and favorable decisions in Banks'' own case.

8 Disclosure of Penalties imposed by RBI

During the year RBI has imposed penalty of R 9.88 lakhs (84 entries) (Previous Year ending 2016-17 R 14.95 lakhs -182 entries) for shortages, forgeries in soiled notes remittances and delayed / wrong reporting in ICCOMS / non adherence to RBI guidelines by the currency Chest operations.

8.1 FixedAssets

8.1.1 The premises of the Bank include land and are stated at revalued amount. The Bank revalued its premises in the financial year 2015-16 at fair market value determined by the approved external valuers. For the year 2017-18, depreciation amounting to R161.06 crores (Previous Year - R83.73 crore) was charged under expenditure and depreciation on revalued portion amounting to NIL (previous year R 80.90 crore) is adjusted against the "Revaluation Reserve account''. As per AS 10 Standard, depreciation on revalued assets amounting to R 78.98 cr. was also charged under expenditure for the year 2017-18. The same was adjusted against Revaluation Reserve to the credit of Revenue ReserveA/c.

9.2 Property, Plant and Equipment (AS-10)

During the year, the depreciation on revalued portion of the fixed assets is charged to profit and loss account as against charge to revaluation reserves during the previous financial years to comply with the change in Accounting Standard (AS-10). This has the effect of increase in the expenses by R 78.98 crore and lowering the net profit by R 78.98 crore.

9.3 EMPLOYEE BENEFITS (AS 15)

9.3.1 Defined Contribution Plans:

Provident fund is a statutory obligation and in the case of Contributory Provident Fund Optees, the Bank pays fixed contribution at pre-determined rates. The obligation of the Bank is limited to such fixed contribution. The contributions are charged to Profit and Loss Account. The fund is managed by Indian Bank Staff Provident Fund Trust. During the financial year 2017-18, the Bank has contributed R 0.81 crores (previous year Rs.0.95 crore).

New Pension Scheme (NPS) is applicable to employees who joined bank on or after 01.04.2010 and it is a defined contribution scheme. Under NPS the Bank pays fixed contribution at pre determined rate and the obligation of the Bank is limited to such fixed contribution. The contribution is charged to Profit and Loss Account. During the financial year 2017-18, the Bank has contributed R 45.95 crores (previous year R35.77 crores).

* Expected Rate of return on Plan Assets not applicable for Leave encashment.

The estimates of future salary increases are considered taking into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market and in tandem with Funding Guidelines for Superannuation Schemes communicated by IBA.

The liabilities of leave encashment are unfounded.

RBI vide its letter DBR No.BP.BC.9730/21.04.018/2017-18 dated 27.04.2018 has given the option to Banks to spread additional liability on account of the enhancement in gratuity limits from Rs, 10 lakhs to Rs, 20 lakhs from 29-03-2018 under the Payment of Gratuity Act, 1972, over four quarters beginning with the quarter ended March 31, 2018. The Bank has exercised the option and has deferred Rs.24.33 Crore to subsequent three quarters of the ensuing financial year.

9.3.3 Other Long Term Employee Benefits

Amount of Rs,1.74 crore (previous yearRs, 1.68 crore is written back) towards Long Term Employee Benefits as per the actuarial valuation by the independent Actuary appointed by the Bank and is included under the head "Payments to and Provisions for Employees" in Profit and LossAccount.

Details of additional Provisions made / (written back) for various long Term Employee Benefits during the year:

9.5 RELATED PARTY DISCLOSURES (AS 18)

Names of the Related Parties and theirrelationship with the Bank:

a) Subsidiaries:

i. Ind Bank Housing Ltd.

ii. Indbank Merchant Banking Services Ltd.

b) Associates : (Regional Rural Banks)

i) Pallavan Grama Bank

ii) SaptagiriGrameenaBank

iii) Puduvai Bharathiar Grama Bank

c) Key Managerial Personnel:

Shri Mahesh Kumar Jain Managing Director & Chief Executive Officer (w.e.f. 02.11.2015 upto 03.04.2017) Shri Kishor Kharat Managing Director & Chief Executive Officer (w.e.f. 04.04.2017)

ShriAS Rajeev Executive Director (w.e.f. 22.01.2016)

Shri M K Bhattacharya Executive Director (w.e.f. 18.02.2017)

Shri PAKrishnan Chief Financial Officer (w.e.f. 17.05.2016)

ii. The transactions with subsidiaries and associates have not been disclosed in view of para 9 of AS-18 Related Party Disclosure, which exempts state controlled enterprises from making any disclosure pertaining to their transactions with other related parties which are also state controlled enterprises.

9.6 Leases (AS 19)

a) The properties taken on lease / rental basis are renewable / cancellable at the option of the Bank.

The leases entered into by the Bank are for agreed period with an option to terminate the leases even during the currency of lease period by giving agreed calendar months notice in writing.

Lease rent paid for operating leases are recognized as an expense in the Profit & Loss account in the year to which it relates. The lease rent recognized during the year is Rs, 195.94 Crores (Previous year Rs,180.73 Crore).

10.5 Letter of comfort issued by the Bank:

During the year ended 31.03.2018, 1285 (Previous year-1093) letters of comfort have been issued by the bank amounting to R 3833.67 Crores (Previous Year: R 2904.71 crores). The letters of comfort outstanding as on 31.03.2018 was 475 (Previous Year-486) amounting to R 1637.81 Crores (Previous Year: R 1167.65 crores)

The estimated financial impact on the outstanding LOC/LOU would be to the tune of R 7.37 crores. During the year ended 31.03.2018, Letter of Comfort issued by our foreign branches (Singapore and Colombo) is NIL and outstanding as on 31.03.2018 is NIL

In view of the Letter of Responsibility given by the Bank to the Monetary Authority of Singapore, the Bank continues to maintain deposits from FCNR (B) resources to the extent of USD 43.00 Mio (equivalent to INR 280.25 crore) with Singapore Branch to meet the minimum NetAdjusted Capital funds requirement of the Branch.

10.6 Provision Coverage Ratio (PCR)

Non Performing Loan Provisioning Coverage Ratio is 64.27% (previous year 58.14%).

10.7 BANCASSURANCEBUSINESS

During the current year, the Bank has earned commission, etc, to the extent of Rs,16.75 Crore on sale/marketing of various Bancassurance products/Mutual Funds (previous yearRs, 12.75 Crore). (AmountRs, in crore)

10.8 Indian BankTrustforRural Development

Indian Bank Trust for Rural Development has been set up by the Bank on 22.09.2008 to exclusively focus on rural development and accomplish better results by coordinating with various other players / agencies who are also engaged in the development of rural areas.

Under the Trust, Indian Bank Self Employment Training Institutes (INDSETIs) have been established in 12 centers, viz. Chittoor (in Andhra Pradesh), Puducherry (in UT of Puducherry), Cuddalore, Dharmapuri, Kancheepuram, Krishnagiri, Namakkal, Salem, Thiruvannamalai, Tiruvallur, Vellore and Villupuram (in Tamil Nadu) to impart skill oriented training to rural unemployed youth, to enable them to either self / wage employed as per the directions of Ministry of Rural Development, Govt. of India. Financial Literacy Centres (FLCs) have also been established under the Trust in 19 places viz. Chittoor, Machilipatnam (in Andhra Pradesh), Kollam, Chadayamangalam, Parassala (in Kerala), Puducherry (in UT of Puducherry), Cuddalore, Dharmapuri, Kancheepuram, Krishnagiri, Namakkal, Salem, Thiruvannamalai, Tiruvallur, Vellore, Villupuram (in Tamil Nadu) and Urban FLCs in Chennai, Delhi and Mumbai to provide financial literacy and counseling services to the general public to assist the banks in financial inclusion project.

The books of account of the Trust are being subjected to audit, independently by the Chartered Accountants appointed by the Trust

10.13 Unamortized Pension and Gratuity Liabilities: R 24.33 cr.

RBI vide its letter DBR.No.BP.BC.9730/21.04.018/2017-18 dated 27.04.2018 has given the option to Banks to spread additional liability on account of the enhancement in gratuity limits from R10 lakhs to R20 lakhs from 29/03/2018 under the Payment of Gratuity Act, 1972, over four quarters beginning with the quarter ended March 31, 2018. The bank has exercised the option and has deferred R 24.33 Crore to subsequent three quarters of the ensuing financial year

10.14 Disclosures relating to Securitization: NIL

10.15 Credit Default Swaps: Nil

10.17 Contingent liabilities include an A/c M/s Nimbus Communications Ltd., Where Guarantees were issued by Consortium Banks favouring BCCI. BCCI filed suit against Consortium Banks claiming guarantee liability and in the suit, conditional leave to defend was granted on making payment of R 400 crores, wherein our Bank share is R 100 crore. Remittance of our Bank''s share of R100 crore was made with the Prothonotary and Senior Master of the Hon''ble High Court of Bombay. The summary suit is pending adjudication before Hon''ble High Court of Bombay.

For this claim against the Bank by BCCI, Bank is having a sum of R33.23 crore as provision under the head ''Provision for Other Contingencies'' after taking into consideration a sum of R66.77 crore held as security - margin money as on 31.03.2018

---

Mar 31, 2017

1. ACCOUNTING CONVENTION

The financial statements are prepared by following the going concern concept on historical cost convention unless otherwise stated. They conform to generally accepted accounting principles in India, which comprises statutory provisions, regulatory / Reserve Bank of India guidelines, accounting standards / guidance notes issued by the Institute of Chartered Accountants of India and the practices prevalent in the Banking Industry in India. In respect of foreign branches as per statutory provisions and practices prevailing in the respective countries.

2. USE OF ESTIMATES

The preparation of financial statements requires the management to make estimates and assumptions for considering the reported assets and liabilities (including contingent liabilities) as on the date of financial statements and the income and expenses for the reporting period. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable.

2. TRANSACTIONS INVOLVING FOREIGN EXCHANGE

Foreign Currency transactions of Indian operations and non-integral foreign operations are accounted for as per Accounting Standard-11 (AS-11) issued by the Institute of Chartered Accountants of India (ICAI).

3.1 Translation in respect of Indian operations

1. Foreign exchange transactions are recorded at the Weekly Average Rate (WAR) notified by Foreign Exchange Dealers Association of India (FEDAI).

2. Foreign currency assets and liabilities are translated at the closing rates notified by FEDAI at the year end.

3. Acceptances, endorsements and other obligations and guarantees in foreign currency are carried at the closing rates notified by FEDAI at the yearend.

4. Exchange differences arising on settlement and translation of foreign currency assets and liabilities at the end of the financial year are recognized as income or expenses in the period in which they arise.

5. Outstanding forward exchange contracts are disclosed at the Contracted rates, and revalued at FEDAI closing rates, and the resultant effect is recognized in the Profit and Loss account.

3.2 Translation in respect of non-integral foreign operations.

Foreign branches are classified as non-integral foreign operations and the financial statements are translated as follows:

1. Assets and liabilities including contingent liabilities are translated at the closing rates notified by FEDAI at the year end.

2. Income and expenses are translated at the Quarterly Average Closing rate notified by FEDAI at the end of the respective quarter.

3. All resulting exchange differences are accumulated in a separate account “Foreign Currency Translation Reserve” (FCTR) till the disposal of the net investments.

4. INVESTMENTS

4.1 The entire investment portfolio of the Bank is classified in accordance with the RBI guidelines into three categories viz.

- Held To Maturity (HTM)

- Available For Sale (AFS)

- Held For Trading (HFT)

The securities acquired with the intention to be held till maturity are classified under "HTM” category. The securities acquired with the intention to trade by taking advantage of short term price / interest movements are classified as "HFT”. All other securities which do not fall under any of the two categories are classified under "AFS” category.

An investment is classified as Held to Maturity, Available for Sale or Held for Trading at the time of its purchase/acquisition and subsequent shifting is done in conformity with the Regulatory guidelines. Transfer of scrips, if any, from one category to another is done at the lowest of acquisition cost/book value/market value on the date of transfer and depreciation, if any, on such transfer is fully provided for.

Investment in Subsidiaries and Associates are classified as Held to Maturity.

4.2.1 Profit on sale of securities under HTM category is first taken to Profit and Loss account and thereafter appropriated to Capital Reserve account (net of taxes and amount required to be transferred to statutory reserves) and loss, if any, charged to Profit & Loss account.

4.2.2 Investments in India are valued in accordance with RBI guidelines, as under:

a) Securities in HTM category are valued at acquisition cost except where the acquisition cost is higher than the face value, in which case, such excess of acquisition cost over the face value is amortized over the remaining period of maturity. Any diminution, other than temporary, in value of investments in subsidiaries/joint ventures/Associates which are included under HTM category is recognized and provided. Such diminution is being determined and provided for each investment individually. Investment in units of Venture Capital funds (VCF) made after 23.08.2006 are classified under HTM category for initial period of 3 years and valued at cost.

b) Investment in Subsidiaries, Joint Ventures and Associates are valued at historical cost. Investment in sponsored Regional Rural Banks (RRB) are valued at carrying cost (i.e. Book value).

c) Investments in AFS category are marked to market, scrip-wise and classification wise, at quarterly intervals. Net depreciation, if any, is provided for in the Profit and Loss account while net appreciation, if any, is ignored. The book value of the individual securities does not undergo any change after marking to market.

d) The individual scripts in the HFT category are marked to market at daily intervals. Net depreciation, if any, is provided for in the Profit and Loss account while net appreciation, if any, is ignored. The Book Value of the individual securities in this category does not undergo any change.

e) Securities in AFS and HFT categories are valued asunder:

I. Central Government Securities are valued at prices / YTM rates as announced by Primary Dealers Association of India (PDAI) jointly with Fixed Income Money Market and Derivatives Association of India (FIMMDA).

ii. State Government and Other approved securities are valued applying the YTM method by marking up 25 basis points above the yields of the Central Government Securities of equivalent maturity put out by PDAI / FIMMD A periodically.

iii. Equity shares are valued at market price, if quoted. Unquoted equity shares are valued at break-up value (without considering revaluation reserves if any) as per the company’s latest balance sheet (not more than one year prior to the date of valuation). Otherwise, the shares are valued at Re. 1 per company.

iv. Preference shares are valued at market price, if quoted; otherwise at lower of the value determined based on the appropriate YTM rates or redemption value.

v. All debentures/bonds, other than those which are in the nature of advances, are valued on the YTM basis.

vi. Treasury bills, Certificate of deposits and Commercial papers are valued at carrying cost.

vii. Units of Mutual Funds are valued at market price, if quoted; otherwise at lower of repurchase price or

Net Asset Value (NAV). In case of funds with a lock-in period, where repurchase price / market quote is not available, units are valued at NAV, else valued at cost till the end of the lock-in period.

viii. Investment in units of Venture Capital funds (VCF) made after 23.08.2006 are classified under HTM category for initial period of 3 years and valued at cost. After period of 3 years from the date of disbursement, it will be shifted to AFS and marked-to-market as per RBI guidelines.

4.3 In respect of investment at Overseas branches, RBI guidelines or those of the host countries whichever are more stringent are followed. In case of those branches situated in countries where no guidelines are specified, the guidelines of RBI are followed.

4.4 Non-performing investment (NPI) are identified as stated below, as per guidelines issued by RBI.

a) Securities/Non-cumulative Preference shares where interest/fixed dividend/installment (including maturity proceeds) is due and remains unpaid for more than 90 days.

b) If any credit facility availed by the issuer from the Bank is a Non-performing advance, investment in any of the securities issued by the same issue is also treated as NPI.

4.5 Brokerages / Commission / incentive received on subscriptions are deducted from the cost of securities. Brokerage / Commission / Stamp duty paid in connection with acquisition of securities are treated as revenue expenses.

4.6 Interest Rate Swap transactions for trading is marked to market at quarterly intervals. The fair value of the total swaps is computed on the basis of the amount that would be received/ receivable or paid/ payable on termination of the swap agreements as on the balance sheet date. Losses arising there from, if any, are fully provided for, while the profit, if any, is ignored.

4.7 Exchange traded FX Derivatives i.e. Currency Futures, are valued at the Exchange determined prices and the resultant gains and losses are recognized in the Profit and Loss account.

4.8 Premium/interest arising at the inception of forward exchange swap facility of RBI for FCNR (B) dollar deposits is amortized as expense over the period of the swap contract.

4.9 Investments backed by guarantee of the Central Government though overdue are treated as Non Performing Asset (NPA) only when the Government repudiates its guarantee when invoked.

4.10 Investment in State Government guaranteed securities, including those in the nature of deemed advances, are subjected to asset classification and provisioning as per prudential norms if interest/ installment of principal (including maturity proceeds) or any other amount due to the Bank remains unpaid for more than 90 days.

4.11 Cost of investments is determined based on the Weighted Average Cost method in each category. Investments classified under HTM are carried at acquisition cost as arrived under Weighted Average Cost method and in case the weighted average cost is more than the face value, the premium is amortized over the remaining period of maturity.

4.12 Accounting for Repo/Reverse Repo transactions:

a. Under the Liquidity Adjustment Facility (LAF) with the RBI: Securities purchased/sold under LAF with RBI are debited/credited to Investment Account and reversed on maturity of the transaction. Interest expended/earned thereon is accounted for as expenditure/revenue.

b. Other than transactions under the Liquidity Adjustment Facility (LAF) with the RBI: The securities sold and purchased under Repo/Reverse Repo are accounted as Collateralized lending and borrowing transactions. However, securities are transferred as in the case of normal outright sale/purchase transactions and such movement of securities is reflected using the Repo/Reverse Repo Accounts and Contra entries. The above entries are reversed on the date of maturity. Costs and revenues are accounted as Interest expenditure/income, as the case may be. Balance in Repo Account is classified under Schedule 4 (Borrowings) and balance in Reverse Repo Account is classified under Schedule 7 (Balance with Banks and Money at Call & Short Notice).

5. FINANCIAL ASSETS SOLD TO RECOVERY COMPANIES (RC)

5.1 Security Receipts (SR) issued by RCs in respect of financial assets sold to them is recognized at lower of redemption value of SRs and Net Book Value of financial assets. SRs are valued at Net Asset Value declared by RCs on the Balance Sheet date and depreciation, if any, is provided for and appreciation is ignored.

5.2 In case of financial assets sold to RC, the valuation and, income recognition is being done as per RBI Guidelines. If the sale is for value lower than the Net Book Value (NBV) (i.e, book value less provisions held), the shortfall is debited to the Profit and Loss account or met out of utilization of Floating provision held, as per extant RBI guidelines

If the cash received (by way of initial consideration and /or redemption of security receipts) is higher than the Net Book value of the Non Performing Asset (NPA) sold to RC, then excess provision is reversed to the profit and Loss account. The quantum of excess provision reversed to profit and loss account is limited to the extent to which cash received exceeds the NBV of the NPA sold.

6 ADVANCES

6.1 In accordance with the prudential norms issued by RBI, advances in India are classified into Standard, Substandard, Doubtful and Loss assets borrower-wise.

6.2 Provisions are made for non performing advances as under:

a) Sub Standard:

i) 25% for Unsecured exposures

ii) 15% for Secured exposures

b) Doubtful category-1

i) 25% for Secured portion.

ii) 100% for Unsecured portion.

c) Doubtful Category-2

i) 40% for Secured portion.

ii) 100% for Unsecured portion.

d) Doubtful category-3 and Loss advances-100%.

6.3 Provision is made for standard advances including Restructured / Rescheduled standard advances as per RBI directives.

6.4 In respect of foreign branches, income recognition, asset classification and provisioning for loan losses are made as per local requirement or as per RBI prudential norms, whichever is more stringent.

Further, if an asset in the overseas books of the Bank requires to be classified as NPA at any point of time in terms of regulations issued by Reserve Bank of India, then all the facilities granted by the bank to the borrower and investment in all the securities issued by the borrower will be classified as NPAs/NPIs.

However, accounts classified as Nonperforming/Impaired assets (NPAs) by host regulators for reasons other than record of recovery, would be classified as NPAs at the time of consolidating financial statements in India and provided for, as required; whereas asset classification of other credit exposures to the same counterparties in other jurisdictions (including India) will continue to be governed by the extant guidelines in the respective jurisdictions.

6.5 Advances disclosed are net of provisions made for nonperforming assets, DICGC/ ECGC/ CGTMSE claims received and held pending adjustment, repayments received and kept in sundries account, participation certificates , since bills rediscounted and provision in lieu of diminution in the fair value of restructured accounts classified as standard assets.

7. FIXEDASSETS/DEPRECIATION

7.1. Premises and other fixed assets are stated at historical cost and at the revalued amount in respect of assets revalued.

7.2. Depreciation on buildings (including cost of land wherever inseparable/ not segregated) and other fixed assets in India is provided for on the straight-line method at the same rates in which the said assets were charged, as specified below:

7.3. Depreciation relatable to revalued component is charged against revaluation reserve. Depreciation on fixed assets acquired and put in to use on or before 30th September is charged at 100% of the prescribed rates and at 50% of the prescribed rates on the fixed assets acquired thereafter. No depreciation on the fixed assets is provided for in the year of sale/disposal. In respect of Assets where subsidy is received from Government, the same is credited to the respective asset account and depreciation has been charged accordingly.

7.4. Premium on leasehold land is capitalized in the year of acquisition and amortized over the period of lease.

7.5. Depreciation in respect of fixed assets at foreign branches is provided as per the practice prevailing in the respective countries.

7.6. In respect of Non Banking Assets, no depreciation is charged.

8. REVENUE RECOGNITION

8.1 Income and expenditure are generally accounted for on accrual basis, unless otherwise stated.

8.2 Income from non-performing assets, Central Government guaranteed assets (where it is overdue beyond 90 days), dividend income, insurance claims, commission on letters of credit/ guarantees issued (other than those relating to project finance), income from Banc assurance products, income from wealth management, additional interest/ overdue charges on bills purchased, finance charges on credit cards, income on Banks right to recompense, AMC charges on debit cards are accounted for on realization and Locker Rent received is accounted on accrual basis.

8.3 In case of overdue foreign bills, interest and other charges are recognized till the date of crystallization as per FEDAI guidelines.

9. CREDIT CARD REWARD POINTS

Reward points earned by card members on use of Card facility is recognized as expenditure on such use.

10. NETPROFIT/LOSS

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

- Provision for Non-Performing Advances and / or Investments.

- General provision on Standard Advances

- Provision for Restructured Advances

- Provision for Depreciation on Fixed Assets

- Provision for Depreciation on Investments

- Transfer to/from Contingency Fund

- Provision for direct taxes

- Provision for Unheeded Foreign Currency Exposure

- Usual or/and other necessary provisions

11. STAFF RETIREMENT BENEFITS

I) PROVIDENTFUND

Provident fund is a statutory obligation and in the case of Contributory Provident Fund Optees, the Bank pays fixed contribution at pre-determined rates. The obligation of the Bank is limited to such fixed contribution. The contributions are charged to Profit and LossAccount. The fund is managed by Indian Bank Staff Provident Fund Trust.

ii) GRATUITY

Gratuity liability is a statutory obligation as per Indian Bank Employees Gratuity Fund Rules and Regulations and is provided for on the basis of an actuarial valuation made at the end of the financial year. The gratuity liability is funded by the Bank and is managed by Indian Bank Employees Gratuity Fund Trust.

iii) PENSION

a) Pension liability is a defined benefit obligation under Indian Bank (Employees) Pension Regulations 1995 and is provided for on the basis of actuarial valuation, for the employees who have joined Bank up to 31.03.2010 and opted for pension..

b) New Pension Scheme (NPS) which is applicable to employees who joined bank on or after 01.04.2010 and it is a defined contribution scheme. Under NPS the Bank pays fixed contribution at pre determined rate and the obligation of the Bank is limited to such fixed contribution. The contribution is charged to Profit and Loss Account.

iv) COMPENSATEDABSENCES

Accumulating compensated absences such as Privilege Leave and Sick Leave are provided for based on actuarial valuation.

v) OTHER EMPLOYEE BENEFITS

Other Employee benefits such as Leave Fare Concession and Additional Retirement Benefit on Retirement are provided for based on actuarial valuation. In respect of overseas branches and offices, the benefits in respect of employees other than those on deputation are valued and accounted for as per laws prevailing in the respective territories.

12. ACCOUNTING FORLEASES

Lease payments including cost escalation for assets taken on operating lease are recognized in the Profit and Loss Account over the lease term or life whichever is lower.

13. CONTINGENT LIABILITIESAND PROVISIONS

13.1 Contingent liability: Past events leading to, possible or present obligations are recognized as contingent liability in the following instances where:

(a) The existence of such obligations has not been confirmed

(b) no outflow of resources are required to settle such obligations

(c) a reliable estimate of the amount of the obligations cannot be made

(d) such amounts are not material

13.2 (a) Provision is recognized in case of present obligations where a reliable estimate can be made and/or where there are probable outflow of resources embodying foregoing of economic benefits to settle the obligations, excluding frivolous claims.

(b) Provision for Market Risk, Country Risk, etc., are made in terms of extant instructions of RBI.

(c) Floating provision as identified by the Bank Management is provided for. Floating provision may be utilized as per extant RBI guidelines, for-

(i) Making specific provisions for non-performing assets;

(ii) Meeting any shortfall in sale of non-performing assets.

14. IMPAIRMENTOFASSETS

Impairment losses, if any, on Fixed Assets (including revalued assets) are recognized and charged to Profit and Loss Account in accordance with the Accounting Standard 28 “Impairment of Assets”. However, an impairment loss on a revalued asset is recognized directly against any revaluation surplus for the asset to the extent that the impairment loss does not exceed the amount held in the revaluation surplus for that same asset.

15. TAXESONINCOME

15.1 Provision for tax is made for both Current Tax and Deferred Tax.

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

15.3 Deferred Tax Assets and Liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognized using the tax rates and tax laws that have been enacted or substantively enacted till the date of the Balance Sheet. Deferred Tax Assets are not recognized unless there is “virtual certainty” that sufficient future taxable income will be available against which such deferred tax assets will be realized.

‘Domestic SLR securities in HTM category as a percentage of Net Demand and Time Liabilities works out to 20.19% against the stipulated maximum level of20.50% (previous year 16.66% as against the stipulated maximum level of 21.50%).

‘‘Figures as per audited Balance Sheet as on 31.03.2016 was Rs.27383.61 crores. Security pledged for LAF Borrowing as on 31.03.2016 was Rs.3942.59crores. HTM Book Value without netting LAF Borrowing is Rs.31326.20 crores.

*** Figures as per audited Balance Sheet as on 31.03.2016 was Rs.23064.41 crores. Security received under LAF Lending as on

31.03.2016 was Rs.2288.00 crores. AFS Book Value without netting LAF Lending is Rs.20776.41 crores.

‘Figures as per audited Balance Sheet as on 31.03.2016 was Rs.50748.65 crores. Security pledged for LAF Borrowing as on

31.03.2016 was Rs.3942.59 crores. Security received under LAF Lending as on 31.03.2016 was Rs.2288.00 crores. Book value without netting LAF Lending/LAF Borrowing is Rs.52403.24 crores.

** Figures as per audited Balance Sheet as on 31.03.2016 was Rs.50514.67 crores. Security pledged for LAF Borrowing as on

31.03.2016 was Rs.3942.59 crores. Security received under LAF Lending as on 31.03.2016 was Rs.2288.00 crores. Book Value without netting LAF Lending/LAF Borrowing is Rs.52169.26 crores.

2.2.3 Sale and Transfers to/from HTM Category:

The value of sales and transfers of securities to / from HTM category did not exceed 5 per cent of the book value of investments held in HTM category at the beginning of the year as per RBI guidelines.

- Profit on account of sale of securities from HTM category amounting to Rs, 86.84 crores (previous yearRs, 45.82 crores) has been taken to Profit and Loss Account and thereafter an amount ofRs, 42.59 crores (previous yearRs, 22.48 crores) was transferred to Capital Reserve Account (net of taxes and the amount required to be transferred to statutory reserves).

- Shifting of securities

(i) In the beginning of the year, the Bank shifted

SLR Securities for Book Value of Rs, 6197.54 crores & Non-SLR VCF Securities for Book Value ofRs, 5.78 crores from HTM category to AFS category which has resulted in no additional provision and SLR Securities for Book Value of Rs, 5789.79 crores from AFS category to HTM category which has resulted in no adjustment of provision held against depreciation to reduce the book value to the market value.

(ii) On 20/02/2017, the Bank shifted Non-SLR securities for Book Value of Rs,10.18 crores from HFT category to AFS category.

In case of securities classified under HTM category, if acquisition cost is more than the face value, the premium is amortized over the remaining period to maturity. For the Financial Year 2016-17, a sum of Rs, 80.81 crore (previous yearRs, 61.69 crore) has been amortized and the same is reflected as a deduction from Income on Investments.

3.3 Disclosures on Risk Exposure in Derivatives

3.3.1 Qualitative Disclosures:

Banks policy permits hedging of asset as well as liability using IRS. The hedging transactions are to be accounted on an accrual basis. Swaps, which hedge interest bearing asset / liability, are accounted for as the asset or liability hedged. Outstanding swap contracts are marked to market.

All swap deals shall be based on the guidelines of International Swaps Dealers ‘Association. Bank has adequate control systems and also internal approvals prior to concluding transactions. There exists a clear functional segregation between (i) trading (Dealing)

(ii) back office (settlement, monitoring and control) and (iii) accounting sections.

In the derivatives segment, the bank’s policy permits doing proprietary trading in Overnight Index Swaps (OIS). The activities in this segment are governed by the Derivatives Policy approved by the Banks Board.

The gain or loss in OIS transactions is booked in the Profit and Loss account on the maturity or unwinding of the deal whichever is earlier. For the purpose of valuation of outstanding OIS deals, the fair value of the total swap is computed on the basis of the amount that would be receivable or payable on termination of the swap as on the balance sheet date. Losses arising there from, if any, are fully provided for while the profits, if any, are ignored.

Exchange traded FX Derivatives i.e. Currency Futures, are valued at the Exchange determined prices and the resultant gains and losses are recognized in the Profit and Loss account.

3.3.2 Quantitative Disclosures

The Bank is active in the following products under derivatives:-

- Overnight Index Swaps (OIS)

- Currency Futures

The outstanding OIS position as on 31st March 2017 was Rs, 150.00 crores (previous year Nil).

Outstanding position in Currency futures as on 31.03.2017 is Rs, 200.20 crores and previous year was Rs, 2584.92 crores

4.1.2 RBI vide their circular No.DBR.BP.BC.No.63/21.04.018/.2016-17 dated 18.04.2017 has prescribed Banks to make suitable disclosure in the “Notes to Accounts”, wherever the additional provisioning requirement assessed by RBI due to divergence in the Asset Classification exceeds certain threshold limit. No disclosure in this regard is required as divergences identified by RBI are within the threshold limits prescribed.

**As per the updated country risk classification by the ECGC, vide its circular ECGC/CUD/225/2017 dated 03.04.2017.

COUNTRY RISK MANAGEMENT:

The Bank has analyzed its net funded exposure to various countries as on 31.03.2017 and such exposure to countries other than Singapore and Sri Lanka are well within the stipulation of 1% of the total assets of the Bank. In respect of Singapore, which is classified under “Insignificant” risk category by ECGC Ltd, a provision of Rs,3.04 Cr (Previous year Rs,2.05 Cr) is available and in respect of Sri Lanka which is classified under “Low” risk category Rs,3.70 crore (Previous year Rs,4.22 Cr) is available

The disputed income tax demand as at 31.03.2017 is at Rs.2619.21 Crores (previous year Rs. 2350.60 Crores), also included under contingent liabilities, out of which Rs. 2576.67 Crores (previous year Rs. 2110.60 Crores) is the disputed income tax paid as at 31.03.2017. No provision is considered necessary for the said disputed demands on account of judicial pronouncements and favorable decisions in Banks own case.

8.1 Disclosure of Penalties imposed by RBI

During the year RBI has imposed penalty of 14.95lakhs (182entries) (Previous Year ending 2015-16 18.77lakhs-312 entries) for shortages, forgeries in soiled notes remittances and delayed / wrong reporting in ICCOMS / non adherence to RBI guidelines by the currency Chest operations.

8.2 Fixed Assets

8.2.1 The premises of the Bank include land and are stated at revalued amount. The Bank revalued its premises in the financial year 2015-16 at fair market value determined by the approved external valuers. For the year, depreciation amounting Rs.80.90 crores was charged on the opening revalued amount and adjusted against the “Revaluation Reserve Accounts”.

8.2.2 Premises include 4 properties costing 3.59 crores (Previous year 4 properties costing 3.59 crores) having revalued book value, net of depreciation at 53.75 Crore (Previous year 55.22 crore) for which registration formalities are pending.

9.2 Net Profit or loss for the period, prior period item and changes in Accounting Policies (AS 5)

During the year, the Bank has changed its accounting policy on Revenue Recognition in respect of income on Locker Rent from realization basis to accrual basis. This has impact on lowering the income on “Commission Exchange & Brokerage” by 11.45 crore in the current year withconsequentloweringof“OtherIncome,”“TotalIncome”and“NetProfit”fortheyear.

9.3 EMPLOYEE BENEFITS (AS 15)

9.3.1 Defined Contribution Plans:

Provident fund is a statutory obligation and in the case of Contributory Provident Fund Optees, the Bank pays fixed contribution at pre-determined rates. The obligation of the Bank is limited to such fixed contribution. The contributions are charged to Profit and Loss Account. The fund is managed by Indian Bank Staff Provident Fund Trust. During the financial year 2016-17, the Bank has contributed 0.95crores(previousyearRs.2.11 crore).

New Pension Scheme (NPS) is applicable to employees who joined bank on or after 01.04.2010 and it is a defined contribution scheme. Under NPS the Bank pays fixed contribution at pre determined rate and the obligation of the Bank is limited to such fixed contribution. The contribution is charged to Profit and Loss Account. During the financial year 2016-17, the Bank has contributed Rs,35.77 crores (previous yearRs,26.47 crores).

9.3.2 Defined Benefit Plans:

The summarized position of Post-employment benefits and long term employee benefits recognized in the Profit & Loss Account and Balance Sheet as required in accordance with Accounting Standard 15 (Revised) are as under:

* Expected Rate of return on Plan Assets not applicable for Leave encashment.

The estimates of future salary increases are considered taking into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market and in tandem with Funding Guidelines for Superannuation Schemes communicated by IBA.

The liabilities of leave encashment are unfounded.

9.5 RELATED PARTY DISCLOSURES (AS 18)

Names of the Related Parties and their relationship with the Bank:

a) Subsidiaries:

i. Ind Bank Housing Ltd.

ii. Indian Merchant Banking Services Ltd.

b) Associates: (Regional Rural Banks)

i) Pallavan Grama Bank

ii) Saptagiri Grameena Bank

iii) Puduvai Bharathiar Grama Bank

c) Key Managerial Personnel:

Shri Mahesh Kumar Jain Executive Director (up to 01.11.2015) & Managing Director & Chief Executive Officer (w.e.f. 02.11.2015 up to 03.04.2017) Shri RSubramanian Kumar Executive Director (w.e.f. 22.01.2016 up to 28.09.2016) ShriAS Rajeev Executive Director (w.e.f. 22.01.2016)

Shri M K Bhattacharya Executive Director (w.e.f. 02.02.2017)

ii. The transactions with subsidiaries and associates have not been disclosed in view of para 9 of AS-18 Related Party Disclosure, which exempts state controlled enterprises from making any disclosure pertaining to their transactions with other related parties which are also state controlled enterprises.

9.6 Leases (AS 19)

a) The properties taken on lease / rental basis are renewable / cancellable at the option of the Bank.

The leases entered into by the Bank are for agreed period with an option to terminate the leases even during the currency of lease period by giving agreed calendar months notice in writing.

Lease rent paid for operating leases are recognized as an expense in the Profit & Loss account in the year to which it relates. The lease rent recognized during the year is Rs, 180.73 Crores (Previous year Rs,157.68 Crore).

10.7 Letter of comfort issued by the Bank:

During the year ended 31.03.2017,1093 (Previous year-967) letters of comfort have been issued by the bank amounting to Rs,2904.71 Crores (Previous Year: 2219.81 crores). The letters of comfort outstanding as on 31.03.2017 are 486 (Previous Year-326) amounting to Rs,1167.65 Crores (Previous Year: Rs,835.60 crores)

The estimated financial impact on the outstanding LOC/LOU would be to the tune of Rs,4.75 crores. During the year ended 31.03.2017, Letter of Comfort issued by our foreign branches (Singapore and Colombo) is NIL and outstanding as on 31.03.2017 is NIL.

10.8 Provision Coverage Ratio (PCR)

Non Performing Loan Provisioning Coverage Ratio is 58.14% (previous year 53.37%).

10.9 BANCASSURANCEBUSINESS

During the current year, the Bank has earned commission, etc, to the extent of Rs,12.75 Crore on sale/marketing of various Banc assurance products/Mutual Funds (previous year Rs, 9.15 Crore).

10.10 Indian Bank Trust for Rural Development

Indian Bank Trust for Rural Development has been setup by the Bank on 22.09.2008 to exclusively focus on rural development and accomplish better results by coordinating with various other players / agencies who are also engaged in the development of rural areas.

Under the Trust, Indian Bank Self Employment Training Institutes (INDSETIs) have been established in 12 centers, viz. Chittoor (in Andhra Pradesh), Puducherry (in uT of Puducherry), Cuddalore, Dharmapuri, Kancheepuram, Krishnagiri, Namakkal, Salem, Thiruvannamalai, Tiruvallur, Vellore and Villupuram (in Tamil Nadu) to impart skill oriented training to rural unemployed youth, to enable them to either self / wage employed as per the directions of Ministry of Rural Development, Govt. of India. Financial Literacy Centres (FLCs) have also been established under the Trust in 19 places viz. Chittoor, Machilipatnam (in Andhra Pradesh), Kollam, Chadayamangalam, Parassala(in Kerala), Puducherry (in UT of Puducherry), Cuddalore, Dharmapuri, Kancheepuram, Krishnagiri, Namakkal, Salem, Thiruvannamalai, Tiruvallur, Vellore, Villupuram (in Tamil Nadu) and Urban FLCs in Chennai, Delhi and Mumbai to provide financial literacy and counseling services to the general public to assist the banks in financial inclusion project.

The books of account of the T rust are being subjected to audit, independently by the Chartered Accountants appointed by the T rust

11.2 Unamortized Pension and Gratuity Liabilities:

Bank does not have any unamortized Pension and Gratuity Liability as on 31.03.2017.

11.3 Disclosures relating to Securitization:

Bank has not undertaken any securitization during the year.

11.4 Credit Default Swaps:

Bank has not entered into any Credit Default Swap during the year.

11.5 Intra Group Exposures:

No disclosure is required in view of para 9ofAS-18 Related Party Disclosure which exempts state-controlled enterprises from making any disclosure regarding related party relationships with other state-controlled enterprises and transactions with such enterprises.

11.6 Contingent liabilities include an A/c M/s Nimbus Communications Ltd., Guarantees were issued by Consortium Banks favoring BCCI. BCCI filed suit against Consortium Banks claiming guarantee liability and in the suit, conditional leave to defend was granted on making payment of 400 crores, wherein our Bank share is 100 crore. Remittance of our Banks share of 100 crore was made with the Prothonotary and Senior Master of the Honble High Court of Bombay. The summary suit is pending adjudication before Honble High Court of Bombay.

11.8 Foreign Currency Exposure:

The Bank has in place a policy on managing credit risk arising out of unhedged foreign currency exposures of its borrowers .Where there is no natural hedge, forward cover is suggested to customers in respect of import/export transactions. The forward cover will act as Unhedged risk mitigation on exchange risk. While sanctioning the facilities, bank is ensuring that all the exposures (fund based and non fund based including Letter of Comfort / Letter of Undertaking) in foreign currencies are covered by forward cover. Request for considering waiver of forward cover if any is considered only at corporate office level. While reviewing the borrowal accounts hedged and unhedged exposure are captured and impact is analyzed in credit proposals.

The Bank has retrieved an amount of 7.04 crores for the year ended 31st March 2017 and holds a provision of 8.33 crore and a capital of 8.34 crore as at the year end on Unhedged Foreign Currency Exposure to their constituents in terms of RBI circular dated January 15,2014.

11.9 Frauds reported during the year:

The Bank has reported 133 fraud cases amounting to Rs,480.45 crores and made a provision of Rs, 158.32 crores during the year net of provisions/collaterals already held. The Bank has no unamortized provision at the end of the year.

13. MISCELLANEOUS

13.1 Reconciliation and Adjustments

13.1.1 Reconciliation of Inter Branch Account is completed up to 31.03.2017. The Bank through various effective steps has achieved reduction in the old outstanding entries in IBGA. Adjustments of the remaining outstanding entries are in progress. As per the Management, 6798 IBGA credit entries aggregating to .5.67 crores are outstanding, pertaining to the period before 01/03/2009.

13.1.2 In view of the credit unreconciled entries in the Inter Branch Account outstanding for more than 6 months as on

31.03.2017, no provision is required.

13.1.3 Old outstanding entries in drafts payable, clearing adjustment, sundries receivable, sundry deposit accounts, etc. and in bank reconciliation relating to Reserve Bank of India and other banks are being regularly reviewed for appropriate adjustments.

13.1.4 Balancing of subsidiary / ledgers, registers and reconciliation with general ledgers are in branches. In the opinion of the management, consequential financial impact of the above will not be significant

13.1.5 As per information available with the Bank, there is no outstanding dues payable by the Bank to MSME units identified by the Bank, which is pending beyond the time limit prescribed under MSMED Act, 2006 and there have been no reported cases of accepted liability of delayed payments of principal amount or interest thereon for such parties during the year

13.1.6 Miscellaneous income includes

i) Asum of .212.74 crore (previous year 247.42 crore) being recovery in written-off accounts.

ii) Pursuant to Reserve Bank of India circular No. DBR No.BP.BC.75/21.04.048/2014-15 dt,11th March 2015, on sale of treatment of loss and profit made on sale of accounts, excess provision of earlier years of 2.94 crore has been reversed during the current year with consequential increase in profit for the year ended 31.03.2017

iii) Asum of 137.45 crore (previous year 125.06 crore) being recovery of processing charges during the year.

14. Dividend

Equity shares: Proposed Equity @ 60% amounting to 288.17 crore (Previous Year 72.04 crore) is appropriated from the current year profit (FY 2016-17).

15. Previous year s figures have been regrouped / reclassified, wherever necessary, to conform to current year s figures.

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Mar 31, 2015

1. ACCOUNTING CONVENTION

The financial statements are prepared by following the going concern concept on historical cost convention unless otherwise stated. They conform to generally accepted accounting principles in India, which comprises statutory provisions, regulatory / Reserve Bank of India guidelines, accounting standards / guidance notes issued by the Institute of Chartered Accountants of India and the practices prevalent in the Banking Industry in India. In respect of foreign branches as per statutory provisions and practices prevailing in the respective countries.

2. USE OF ESTIMATES

The preparation of financial statements requires the management to make estimates and assumptions for considering the reported assets and liabilities (including contingent liabilities) as on the date of financial statements and the income and expenses for the reporting period. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable.

3. TRANSACTIONS INVOLVING FOREIGN EXCHANGE

Foreign Currency transactionsof Indian operations and non-integral foreign operations are accounted for as per Accounting Standard-11 (AS-11) issued by the InstituteofCharteredAccountantsofIndia (ICAI).

3.1 Translationinrespectof Indian operations

1. Foreign exchange transactions are recorded at the Weekly Average Rate (WAR) notified by Foreign Exchange Dealers''AssociationofIndia( FEDAI).

2. Foreign currency assets and liabilities are translated at the closing rates notifiedbyFEDAIatthe year end.

3. Acceptances, endorsements and other obligations and guarantees in foreign currency are carried at the closing rates notifiedbyFEDAI atthe year end.

4. Exchange differences arising on settlement and translation of foreign currency assets and liabilities at the end of the financial year are recognized as income or expenses inthe periodinwhich they arise.

5. Outstanding forward exchange contracts are disclosed at the Contracted rates, and revalued at FEDAI closing rates, and the resultant effect is recognized in the Profit and Loss account.

3.2 Translation in respect of non-integral foreign operations.

Foreign branches are classified as non-integral foreign operations and the financial statements are translated as follows:

1. Assets and liabilities including contingent liabilities are translated at the closing rates notified by FEDAI at the year end.

2. Income and expenses are translated at the Quarterly Average Closing rate notified by FEDAI at the end of the respective quarter.

3. All resulting exchange differences are accumulated ina separate account "Exchange Fluctuation Fund" till the disposalof the net investments.

4. INVESTMENTS

4.1 The entire investment portfolio of the Bank is classified in accordance with the RBI guidelines into three categories viz.

- Held To Maturity (HTM)

- Available For Sale (AFS)

- Held ForTrading(HFT)

The securities acquired with the intention to be held till maturity are classified under "HTM" category. The securities acquired with the intention to trade by taking advantage of short-term price / interest movements are classified as "HFT". All other securities which do not fall under any of the two categories are classified under "AFS" category.

An investment is classified as Held to Maturity, Available for Sale or Held for Trading at the time of its purchase/acquisition and subsequent shifting is done in conformity with the Regulatory guidelines. Transfer of scrips, if any, from one category to another is done at the lowest of acquisition cost/book value/market value on the date of transfer and depreciation, if any, on such transfer is fully provided for.

Investment in Subsidiaries and Associates are classified as Held to Maturity.

4.2.1 Profit on sale of securities under HTM category is first taken to Profit and Loss account and thereafter appropriated to Capital Reserve account (net of taxes and amount required to be transferred to statutory reserves) and loss, if any, charged to Profit & Loss account.

4.2.2 Investments in India are valued in accordance with RBI guidelines, as under:

a) Securities in HTM category are valued at acquisition cost except where the acquisition cost is higher than the face value, in which case, such excess of acquisition cost over the face value is amortised over the remaining period of maturity. Any diminution, other than temporary, in value of investments in subsidiaries/joint ventures/Associates which are included under HTM category is recognized and provided. Such diminution is being determined and provided for each investment individually. Investment in units of Venture Capital funds (VCF) made after 23.08.2006 are classified under HTM category for initial period of 3 years and valued at cost.

b) Investment in Subsidiaries, Joint Ventures and Associates are valued at historical cost. Investment in sponsored Regional Rural Banks (RRB) are valued at carrying cost (i.e. Book value).

c) Investments in AFS category are marked to market, scrip-wise and classification wise, at quarterly intervals. Net depreciation, if any, is provided for in the Profit and Loss account while net appreciation, if any, is ignored. The book value of the individual securities does not undergo any change after marking to market.

d) The individual scrips in the HFT category are marked to market at daily intervals. Net depreciation, if any, is provided for in the Profit and Loss account while net appreciation, if any, is ignored. The Book Value of the individual securities in this category does not undergo any change.

e) Securities in AFS and HFT categories are valued as under:

i Central Government Securities are valued at prices /

YTM rates as announced by Primary Dealers Association of India (PDAI) jointly with Fixed Income Money Market and Derivatives Association of India (FIMMDA).

ii. State Government and Other approved securities are valued applying the YTM method by marking up 25 basis points above the yields of the Central Government Securities of equivalent maturity put out by PDAI /FIMMDAperiodically.

iii. Equity shares are valued at market price, if quoted. Unquoted equity shares are valued at break-up value (without considering revaluation reserves if any) as per the company''s latest balance sheet (not more than one year prior to the date of valuation). Otherwise, the shares are valuedat Rs.1 per company.

iv. Preference shares are valued at market price, if quoted; otherwise at lower of the value determined based on the appropriate YTM rates or redemption value.

v. All debentures/bonds, other than those which are in the natureofadvances, are valuedontheYTM basis.

vi. Treasury bills, Certificate of deposits and Commercial papers are valuedat carrying cost.

vii. Units of Mutual Funds are valued at market price, if quoted; otherwise at lower of repurchase price or Net Asset Value (NAV). In case of funds with a lock-in period, where repurchase price / market quote is not available, units are valued atNAV, else valuedat cost till the endof the lock-in period.

viii. Investment in units of Venture Capital funds (VCF) made after 23.08.2006 are classified under HTM category for initial period of 3 years and valued at cost. After period of 3 years from the date of disbursement, it will be shifted toAFS and marked-to-market as per RBI guidelines.

4.3 In respect of investment at Overseas branches, RBI guidelines or those of the host countries whichever are more stringent are followed. In case of those branches situated in countries where no guidelines are specified, the guidelinesofRBI are followed.

4.4 Non-performing investment (NPI) are identified as stated below,as per guidelines issued byRBI.

a) Securities/Non-cumulative Preference shares where interest/fixed dividend/installment (including maturity proceeds) is due and remains unpaid for more than90days.

b) If any credit facility availed by the issuer from the Bank is a Non-performing advance, investment in any of the securities issued by the same issuer is also treatedasNPI.

4.5 Brokerages / Commission / incentive received on

subscriptions are deducted from the cost of securities. Brokerage / Commission / Stamp duty paid in connection with acquisition of securities are treated as revenue expenses.

4.6 Interest Rate Swap transactions for trading ismarked to market at quarterly intervals. The fair value of the total swaps is computed on the basis of the amount that would be received/ receivable or paid/ payable on termination of the swap agreements as on the balance sheet date. Losses arising there from, if any, are fully provided for, while the profit, if any, is ignored.

4.7 Exchange traded FX Derivatives i.e. Currency Futures, are valued at the Exchange determined prices and the resultant gains and losses are recognized in the Profit and Loss account.

4.8 Premium/interest arising at the inception of forward exchange swap facility of RBI for FCNR (B) dollar deposits is amortized as expense over the period of the swap contract.

4.9 Investments backed by guarantee of the Central Government though overdue are treated as Non Performing Asset (NPA) only when the Government repudiates its guarantee when invoked.

4.10 Investment in State Government guaranteed securities, including those in the nature of ''deemed advances'', are subjected to asset classification and provisioning as per prudential norms if interest/ installment of principal (including maturity proceeds) or any other amount due to the Bank remains unpaid for more than90days.

4.11 Cost of investments is determined based on the Weighted Average Cost method in each category. Investments classified under HTM are carried at acquisition cost as arrived under Weighted Average Cost method and in case the weighted average cost is more than the face value, the premium is amortised over the remaining period ofmaturity.

5. FINANCIAL ASSETS SOLD TO RECONSTRUCTION COMPANIES(RC)

5.1 Security Receipts (SR) issued by RCs in respect of financial assets sold to them is recognized at lower of redemption value of SRs and Net Book Value of financial assets. SRs are valued at Net Asset Value declared by RCs on the Balance Sheet date and depreciation, if any, is provided for and appreciation is ignored.

5.2 Incaseof financial assets sold to RC, the valuation and, income recognition is being done as per RBI Guidelines. If the sale is for value lower than the Net Book Value (NBV) (i.e, book value less provisions held), the shorfall is debited to the Profit and Loss account or met out of utilisation of Floating provision held, as per extant RBI guidelines. If the cash received (by way of initial consideration and /or redemption of security receipts) is higher than the Net Book value of the Non Performing Asset (NPA) sold to RC, then excess provision is reversed to the profit and Loss account. The quantum of excess provision reversed to profit and loss account is limited to the extent to which cash received exceeds the NBV ofthe NPAsold.

G6 ADVANCES

6.1 In accordance with the prudential norms issued by RBI, advances in India are classified into Standard, Sub-Standard, Doubtful and Loss assets borrower-wise,

6.2 Provisions are made for non performing advances as under:

a) Sub Standard:

i) 25% both for secured and unsecured category classified and/ orcategorized before 01.10.2014

ii) For accounts classified as Sub-Standard on or after 01.10.2014:

a)Accounts with unsecured exposures-25%

b)Others - 15%

b) Doubtful category-1

i) 100 % for secured and unsecured classified and / or categorized before 01.07.2011.

ii) 25 % for secured classified and / or categorized after 30.06.2011

iii)100% for Unsecured portion.

c) Doubtful Category -2

i) 100 % for secured and unsecured classified and / or categorized before 01.07.2011

ii) 40 % for secured classified and / or categorized after 30.06.2011

iii) 100% for Unsecured portion.

d) Doubtful category-3 and Loss advances- 100 %.

6.3 Provision is made for standard advances including Restructured / Rescheduled standard advances as per RBI directives.

6.4 In respect of foreign branches, income recognition, asset classification and provisioning for loan losses are made as per local requirement or as per RBI prudential norms, whichever ismore stringent.

Further, if an asset in the overseas books of the Bank requires to be classified as NPA at any point of time in terms of regulations issued by Reserve Bank of India, then all the facilities grantedby the banktothe borrower and investment in all the securities issued by the borrower willbeclassified asNPAs/NPIs.

However, accounts classified as Non - performing / Impaired assets (NPAs) by host regulators for reasons other than record of recovery, would be classified as NPAs at the time of consolidating financial statementsinIndia and provided for, as required; whereas asset classification of other credit exposures to the same counter parties in other jurisdictions (including India) will continue to be governed by the extant guidelines in the respective jurisdictions.

6.5 Advances disclosed are net of provisions made for non- performing assets, DICGC/ ECGC/ CGTMSE claims received and held pending adjustment, repayments received and kept in sundries account, participation certificates , usance bills rediscounted and provision in lieu of diminution in the fair value of restructured accounts classifiedasstandard assets..

7. FIXEDASSETS/DEPRECIATION

7.1. Premises and other fixed assets are stated at historical cost and at revalued amount in respect of assets revalued.

7.3. Depreciation relatable to revalued component is charged against revaluation reserve.

Depreciation on fixed assets acquired on or before 30th September is charged at 100% of the prescribed rates and at 50% of the prescribed rates on the fixed assets acquired thereafter. No depreciation on the fixed assets is provided for in the year of sale / disposal.

7.4 Premium on leasehold land is capitalised in the year of acquisition and amortized over the period oflease.

7.5 Depreciation in respect of fixed assets at foreign branches is provided as per the practice prevailing in the respective countries.

7.6 In respect of Non Banking Assets, no depreciation is charged.

8. REVENUE RECOGNITION

8.1 Income and expenditure are generally accounted for on accrual basis, unless otherwise stated.

8.2 Income from non-performing assets, Central Government guaranteed assets (where it is overdue beyond 90 days), dividend income, insurance claims, commission on letters of credit / guarantees issued (other than those relating to project finance), income from bancassurance products, income from wealth management, additional interest/ overdue charges on bills purchased, locker rent, finance charges on credit cards, income on Bank''s right to recompense, etc. are accounted for on realisation.

8.3 In case of overdue foreign bills, interest and other charges are recognised till the date of crystallisation as per FEDAI guidelines.

9. CREDIT CARD REWARD POINTS

Reward points earned by card members on use of Card facility is recognized as expenditure on such use.

10. NET PROFIT/LOSS

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

- Provision for Non-Performing Advances and / or

Investments.

- General provision on Standard Advances

- Provision for Restructured Advances

- Provision for Depreciation on Fixed Assets

- Provision for Depreciation on Investments

- Transfer to/from Contingency Fund

- Provision for direct taxes

- Usual or/and other necessary provisions

11. STAFF RETIREMENT BENEFITS

i) PROVIDENT FUND

Provident fund is a statutory obligation and in the case of Contributory Provident Fund Optees, the Bank pays fixed contribution at pre-determined rates. The obligation of the Bank is limited to such fixed contribution. The contributions are charged to Profit and Loss Account. The fund is managed by Indian Bank Staff Provident Fund Trust.

ii) GRATUITY

Gratuity liability is a statutory obligation as per Indian Bank Employees'' Gratuity Fund Rules and Regulations and is provided for on the basis of an actuarial valuation made at the end of the financial year. The gratuity liability is funded by the Bank and is managed by Indian Bank Employees Gratuity Fund Trust.

iii) PENSION

a) Pension liability is a defined benefit obligation under Indian Bank (Employees) Pension Regulations 1995 and is provided for on the basis of actuarial valuation, for the employees who have joined Bank up to 31.03.2010 and opted for pension.

b) New Pension Scheme (NPS) which is applicable to employees who joined bank on or after 01.04.2010 and it is a defined contribution scheme. Under NPS the Bank pays fixed contribution at pre determined rate and the obligation of the Bank is limited to such fixed contribution. The contribution is charged to Profit and LossAccount.

iv) COMPENSATED ABSENCES

Accumulating compensated absences such as Privilege Leave and Sick Leave are provided for based on actuarial valuation.

v) OTHER EMPLOYEE BENEFITS

Other Employee benefits such as Leave Encashment, Leave Fare Concession and Additional Retirement Benefit on Retirement are provided for based on actuarial valuation. In respect of overseas branches and offices, the benefits in respect of employees other than those ondeputation are valued and accounted for as per laws prevailing in the respective territories.

12. ACCOUNTING FOR LEASES

Lease payments including cost escalation for assets taken on operating lease are recognized in the Profit and Loss account over the lease term in accordance withAS19issuedbyICAI.

13. CONTINGENT LIABILITIES AND PROVISIONS

13.1 Contingent liability : Past events leading to, possible or present obligations are recognised as contingent liability in the following instances where :

(a) The existence of such obligations has not been confirmed

(b) no outflow of resources are required to settle such obligations

(c) a reliable estimate of the amount of the obligations cannotbemade

(d) such amounts are not material

13.2 (a) Provision is recognized in case of present

obligations where a reliable estimate can be made and/or where there are probable outflow of resources embodying foregoing of economic benefits to settle the obligations, excluding frivolous claims.

(b) Provision for Market Risk, Country Risk, etc., are madeintermsofextant instructionsofRBI.

(c) Floating provision as identified by the Bank Management is provided for. Floating provision may beutilizedasper extant RBI guidelines, for -

i) Making specific provisions for non-performing assets.

(ii) Meeting any shortfall in sale of non-performing assets.

14. IMPAIRMENT OF ASSETS

Impairment losses, if any, are recognised in accordance with theAccounting Standard 28 issued in this regard by the Institute ofCharteredAccountants of India (ICAI).

15. TAXES ON INCOME

15.1 Provision for tax is made for both Current Tax and Deferred Tax.

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

15.3 Deferred Tax Assets and Liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognised using the tax rates and tax laws that have been enacted or substantively enacted till the date of the Balance Sheet. Deferred TaxAssets are not recognised unless there is "virtual certainty" that sufficient future taxable income will be available against which such deferred tax assets will be realised.

---

Mar 31, 2014

1. ACCOUNTING CONVENTION

The financial statements are prepared by following the going concern concept on historical cost convention and conform to the statutory provisions and practices prevailing in India unless otherwise stated and in respect of foreign branches as per statutory provisions and practices prevailing in the respective countries.

2. TRANSACTIONS INVOLVING FOREIGN EXCHANGE

Foreign Currency transactions of Indian operations and non-integral foreign operations are accounted for as per Accounting Standard-11 (AS-11) issued by the Institute of Chartered Accountants of India (ICAI).

2.1 Translation in respect of Indian operations

1. Foreign exchange transactions are recorded at the Weekly Average Rate (WAR) notified by Foreign Exchange Dealers'' Association of India ( FEDAI).

2. Foreign currency assets and liabilities are translated at the closing rates notified by FEDAI at the year end.

3. Acceptances, endorsements and other obligations and guarantees in foreign currency are carried at the closing rates notified by FEDAI at the year end.

4. Exchange differences arising on settlement and translation of foreign currency assets and liabilities at the end of the financial year are recognized as income or expenses in the period in which they arise.

5. Outstanding forward exchange contracts are disclosed at the Contracted rates, and revalued at FEDAI closing rates, and the resultant effect is recognized in the Profit and Loss account.

2.2 Translation in respect of non-integral foreign operations.

Foreign branches are classified as non-integral foreign operations and the financial statements are translated as follows:

1. Assets and liabilities including contingent liabilities are translated at the closing rates notified by FEDAI at the year end.

2. Income and expenses are translated at the Quarterly Average Closing rate notified by FEDAI at the end of the respective quarter.

3. All resulting exchange differences are accumulated in a separate account "Exchange Fluctuation Fund" till the disposal of the net investments.

3. INVESTMENTS

3.1 The entire investment portfolio of the Bank is classified in

accordance with the RBI guidelines into three categories viz.

- Held To Maturity (HTM)

- Available For Sale (AFS)

- Held For Trading (HFT)

The securities acquired with the intention to be held till maturity are classified under "HTM" category. The securities acquired with the intention to trade by taking advantage of short-term price / interest movements are classified as "HFT". All other securities which do not fall under any of the two categories are classified under "AFS" category.

An investment is classified as Held to Maturity, Available for Sale or Held for Trading at the time of its purchase/acquisition and subsequent shifting is done in conformity with the Regulatory guidelines. Transfer of scrips, if any, from one category to another is done at the lowest of acquisition cost/book value/market value on the date of transfer and depreciation, if any, on such transfer is fully provided for.

Investment in Subsidiaries and Associates are classified as Held to Maturity.

3.2 Profit on sale of securities under HTM category is first taken to Profit and Loss account and thereafter appropriated to Capital Reserve account (net of taxes and amount required to be transferred to statutory reserves) and loss, if any, charged to Profit & Loss account.

3.3 Investments in India are valued in accordance with RBI guidelines, as under:

a) Securities in HTM category are valued at acquisition cost except where the acquisition cost is higher than the face value, in which case, such excess of acquisition cost over the face value is amortised over the remaining period of maturity. Any diminution, other than temporary, in value of investments in subsidiaries/joint ventures/Associates which are included under HTM category is recognized and provided. Such diminution is being determined and provided for each investment individually. Investment in units of Venture Capital funds (VCF) made after 23.08.2006 are classified under HTM category for initial period of 3 years and valued at cost.

b) Investment in Subsidiaries, Joint Ventures and Associates are valued at historical cost. Investment in sponsored Regional Rural Banks (RRB) are valued at carrying cost (i.e. Book value).

c) Investments in AFS category are marked to market, scrip-wise and classification wise, at quarterly intervals. Net depreciation, if any, is provided for in the Profit and Loss account while net appreciation, if any, is ignored. The book value of the individual securities does not undergo any change after marking to market.

d) The individual scrips in the HFT category are marked to market at daily intervals. Net depreciation, if any, is provided for in the Profit and Loss account while net appreciation, if any, is ignored. The Book Value of the individual securities in this category does not undergo any change.

e) Securities in AFS and HFT categories are valued as under:

i. Central Government Securities are valued at prices / YTM rates as announced by Primary Dealers Association of India (PDAI) jointly with Fixed Income Money Market and Derivatives Association of India (FIMMDA).

ii. State Government and Other approved securities are valued applying the YTM method by marking up 25 basis points above the yields of the Central Government Securities of equivalent maturity put out by PDAI / FIMMDA periodically.

iii. Equity shares are valued at market price, if quoted. Unquoted equity shares are valued at break-up value (without considering revaluation reserves if any) as per the company''s latest balance sheet (not more than one year prior to the date of valuation). Otherwise, the shares are valued at Re. 1 per company.

iv. Preference shares are valued at market price, if quoted; otherwise at lower of the value determined based on the appropriate YTM rates or redemption value.

v. All debentures/bonds, other than those which are in the nature of advances, are valued on the YTM basis.

vi. Treasury bills, Certificate of deposits and Commercial papers are valued at carrying cost.

vii. Units of Mutual Funds are valued at market price, if quoted; otherwise at lower of repurchase price or Net Asset Value (NAV). In case of funds with a lock- in period, where repurchase price / market quote is not available, units are valued at NAV, else valued at cost till the end of the lock-in period.

viii. Investment in units of Venture Capital funds (VCF) made after 23.08.2006 are classified under HTM category for initial period of 3 years and valued at cost. After period of 3 years from the date of disbursement, it will be shifted to AFS and marked- to-market as per RBI guidelines.

3.4 In respect of investment at Overseas branches, RBI guidelines or those of the host countries whichever are more stringent are followed. In case of those branches situated in countries where no guidelines are specified, the guidelines of RBI are followed.

3.5 Non-performing investment (NPI) are identified as stated below, as per guidelines issued by RBI.

a) Securities/Non-cumulative Preference shares where interest/fixed dividend/ installment (including maturity proceeds) is due and remains unpaid for more than 90 days.

b) If any credit facility availed by the issuer from the Bank is a Non-performing advance, investment in any of the securities issued by the same issue is also treated as NPI.

3.6 Brokerages / Commission / incentive received on subscriptions are deducted from the cost of securities. Brokerage / Commission / Stamp duty paid in connection with acquisition of securities are treated as revenue expenses.

3.7 Interest Rate Swap transactions for trading is marked to market at quarterly intervals. The fair value of the total swaps is computed on the basis of the amount that would be received/ receivable or paid/ payable on termination of the swap agreements as on the balance sheet date. Losses arising there from, if any, are fully provided for, while the profit, if any, is ignored.

3.8 Exchange traded FX Derivatives i.e. Currency Futures, are valued at the Exchange determined prices and the resultant gains and losses are recognized in the Profit and Loss account.

3.9 Premium/interest arising at the inception of forward exchange swap facility of RBI for FCNR (B) dollar deposits is amortized as expense over the period of the swap contract.

3.10 Investments backed by guarantee of the Central Government though overdue are treated as Non Performing Asset (NPA) only when the Government repudiates its guarantee when invoked.

3.11 Investment in State Government guaranteed securities, including those in the nature of ''deemed advances'', are subjected to asset classification and provisioning as per prudential norms if interest/ instalment of principal (including maturity proceeds) or any other amount due to the Bank remains unpaid for more than 90 days.

4. FINANCIAL ASSETS SOLD TO ASSET RECOVERY

COMPANIES (ARC)

4.1 Security Receipts (SR) issued by ARCs in respect of financial assets sold to them is recognized at lower of redemption value of SRs and Net Book Value of financial assets. SRs are valued at Net Asset Value declared by ARCs on the Balance Sheet date and depreciation, if any, is provided for and appreciation is ignored.

4.2 If the sale is for value lower than the Net Book Value (NBV) (i.e, book value less provisions held), the shorfall will be debited to the Profit and Loss account or will be met out of utilisation of Floating provision held, as per extant RBI guidelines If the sale is for value higher than the Net Book Value, the excess provision will be reversed to the Profit & Loss Account in the year the amounts are received

5 ADVANCES

5.1 In accordance with the prudential norms issued by RBI, advances in India are classified into standard, sub- standard, doubtful and loss assets borrower-wise,

5.2 Provisions are made for non performing advances as under:

a) Substandard category – 25 % both secured and unsecured category

b) Doubtful category-1

i) 100 % for secured and unsecured classified and / or categorized before 01.07.2011.

ii) 25 % for secured classified and / or categorized after 30.06.2011

iii) 100% for Unsecured portion.

c) Doubtful Category – 2

i) 100 % for secured and unsecured classified and / or categorized before 01.07.2011

ii) 40 % for secured classified and / or categorized after 30.06.2011

iii) 100% for Unsecured portion.

d) Doubtful category-3 and Loss advances – 100 %.

5.3 Provision is made for standard advances including restructured standard advances as per RBI directives.

5.4 In respect of foreign branches, income recognition, asset classification and provisioning for loan losses are made as per local requirement or as per RBI prudential norms, whichever is more stringent.

Further, if an asset in the overseas books of the Bank requires to be classified as NPA at any point of time in terms of regulations issued by Reserve Bank of India, then all the facilities granted by the bank to the borrower and investment in all the securities issued by the borrower will be classified as NPAs/NPIs.

However, accounts classified as Non- performing/Impaired assets (NPAs) by host regulators for reasons other than record of recovery, would be classified as NPAs at the time of consolidating financial statements in India and provided for, as required; whereas asset classification of other credit exposures to the same counterparties in other jurisdictions (including India) will continue to be governed by the extant guidelines in the respective jurisdictions.

5.5 Advances disclosed are net of provisions made for non- performing assets, DICGC/ ECGC/ CGTMSE claims received and held pending adjustment, repayments received and kept in sundries account, participation certificates , since bills rediscounted and provision in lieu of diminution in the fair value of restructured accounts classified as standard assets..

6. FIXED ASSETS / DEPRECIATION

6.1. Premises and other fixed assets are stated at historical cost and at re valued amount in respect of assets re valued.

6.2. Depreciation on buildings (including cost of land wherever inseparable/ not segregated) and other fixed assets (excluding items referred in 6.3 to 6.5) in India is provided for on the straight-line method at rates specified in Schedule XIV to the Companies Act, 1956 and at the Bank determined rates based on Residual Life in the case of ''Re valued Assets''. Depreciation relatable to re valued component is charged against revaluation reserve.

6.3. Depreciation on computers (hardware and software) and Uninterrupted Power Supply Systems (UPS) is provided at the rate of 33.33% per annum on Straight Line Method (SLM).

6.4. The rate of depreciation on motor car is 20 % on straight line method.

6.5. 100% depreciation is provided on all cell phones and on small value items costing up to Rs.5000/- .

6.6. Depreciation on fixed assets acquired on or before 30th September is charged at 100% of the prescribed rates and at 50% of the prescribed rates on the fixed assets acquired thereafter. No depreciation on the fixed assets is provided for in the year of sale / disposal.

6.7. Premium on leasehold land is capitalised in the year of acquisition and amortized over the period of lease.

6.8. Depreciation in respect of fixed assets at foreign branches is provided as per the practice prevailing in the respective countries.

6.9. In respect of Non Banking Assets, no depreciation is charged.

7. REVENUE RECOGNITION

7.1 Income and expenditure are generally accounted for on accrual basis, unless otherwise stated.

7.2 Income from non-performing assets, Central Government guaranteed assets (where it is overdue beyond 90 days), dividend income, insurance claims, commission on letters of credit/ guarantees issued (other than those relating to project finance), income from banc assurance products, income from wealth management, additional interest/ overdue charges on bills purchased, locker rent, finance charges on credit cards, income on Bank''s right to recompense, etc. are accounted for on realisation.

7.3 In case of overdue foreign bills, interest and other charges are recognised till the date of crystallisation as per FEDAI guidelines.

8. CREDIT CARD REWARD POINTS

Reward points earned by card members on use of Card facility is recognized as expenditure on such use.

9. NET PROFIT / LOSS

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

- Provision for Non-Performing Advances and / or Investments.

- General provision on Standard Advances

- Provision for Restructured Advances

- Provision for Depreciation on Fixed Assets

- Provision for Depreciation on Investments

- Transfer to/ from Contingency Fund

- Provision for direct taxes

- Usual or/and other necessary provisions

10. STAFF RETIREMENT BENEFITS

10.1 Annual contributions to Pension Fund and Gratuity Fund are determined and provided for:

(i) on the basis of actuarial valuation and

(ii) as per the local laws in respect of foreign branches.

10.2 Leave encashment benefit for employees is accounted for on actuarial basis.

10.3 Transitional liability relating to employee benefits determined as per actuarial valuation is written- off over a period of five years in terms of Revised Accounting Standard 15 (AS -15) - "Employee Benefits", issued by ICAI.

10.4 Liability determined in respect of pension (second option) for existing employees and gratuity is amortised equally over a period of five years in accordance with RBI Guidelines.

11. CONTINGENT LIABILITIES AND PROVISIONS

11.1 Contingent liability : Past events leading to, possible or present obligations are recognised as contingent liability in the following instances where :

(a) The existence of such obligations has not been confirmed

(b) no outflow of resources are required to settle such obligations

(c) a reliable estimate of the amount of the obligations cannot be made

(d) such amounts are not material

11.2 (a) Provision is recognized in case of present obligations where a reliable estimate can be made and/or where there are probable outflow of resources embodying foregoing of economic benefits to settle the obligations, excluding frivolous claims.

(b) Provision for Market Risk, Country Risk, etc., are made in terms of extant instructions of RBI.

(c) Floating provision as identified by the Bank Management is provided for. Floating provision may be utilized as per extant RBI guidelines, for -

i) Making specific provisions for non-performing assets;

(ii) Meeting any shortfall in sale of non-performing assets.

12. IMPAIRMENT OF ASSETS

Impairment losses, if any, are recognised in accordance with the Accounting Standard 28 issued in this regard by the Institute of Chartered Accountants of India (ICAI).

13. TAXES ON INCOME

13.1 Provision for tax is made for both Current Tax and Deferred Tax.

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

13.3 Deferred Tax Assets and Liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognised using the tax rates and tax laws that have been enacted or substantively enacted till the date of the Balance Sheet. Deferred Tax Assets are not recognised unless there is "virtual certainty" that sufficient future taxable income will be available against which such deferred tax assets will be realised.

---

Mar 31, 2012

1. ACCOUNTING CONVENTION

The financial statements are prepared by following the going concern concept on historical cost convention and conform to the statutory provisions and practices prevailing in India unless otherwise stated and in respect of foreign branches as per statutory provisions and practices prevailing in the respective countries.

2. TRANSACTIONS INVOLVING FOREIGN EXCHANGE

Foreign Currency transactions of Indian operations and non-integral foreign operations are accounted for as per Accounting Standard-11 (AS-11) issued by the Institute of Chartered Accountants of India (ICAI).

2.1 Translation in respect of Indian operations

1. Foreign exchange transactions are recorded at the Weekly Average Rate (WAR) notified by Foreign Exchange Dealers' Association of India (FEDAI).

2. Foreign currency assets and liabilities are translated at the closing rates notified by FEDAI at the year end.

3. Acceptances, endorsements and other obligations and guarantees in foreign currency are carried at the closing rates notified by FEDAI at the year end.

4. Exchange differences arising on settlement and translation of foreign currency assets and liabilities at the end of the financial year are recognized as income or expenses in the period in which they arise.

5. Outstanding forward exchange contracts are disclosed at the Contracted rates, and revalued at FEDAI closing rates, and the resultant effect is recognized in the Profit and Loss account.

2.2 Translation in respect of non-integral foreign operations.

Foreign branches are classified as non-integral foreign operations and the financial statements are translated as follows:

1. Assets and liabilities including contingent liabilities are translated at the closing rates notified by FEDAI at the year end.

2. Income and expenses are translated at the Quarterly Average Closing rate notified by FEDAI at the end of the respective quarter.

3. All resulting exchange differences are accumulated in a separate account "Exchange Fluctuation Fund" till the disposal of the net investments.

3. INVESTMENTS

3.1 The investment portfolio of the Bank is classified in accordance with the RBI guidelines into three categories viz.,

-- Held To Maturity (HTM)

-- Available For Sale (AFS)

-- Held For Trading (HFT)

The securities acquired with the intention to be held till maturity are classified under "HTM" category. The securities acquired with the intention to trade by taking advantage of short-term price/interest movements are classified as "HFT". All other securities which do not fall under any of the two categories are classified under "AFS" category.

3.2 Profit on sale of securities under HTM category is first taken to Profit and Loss account and thereafter appropriated to Capital Reserve account (net of taxes and amount required to be transferred to statutory reserves) and loss, if any, charged to Profit & Loss account.

3.3 Investments in India are valued in accordance with RBI guidelines, as under:

a) Securities in HTM category are valued at acquisition cost except where the acquisition cost is higher than the face value, in which case, such excess of acquisition cost over the face value is amortised over the remaining period of maturity. Any diminution, other than temporary, in value of investments in subsidiaries/joint ventures which are included under HTM category is recognized and provided. Such diminution is being determined and provided for each investment individually.

b) Investments in AFS category are marked to market, scrip-wise and classification wise, at quarterly intervals. Net depreciation, if any, is provided for in the Profit and Loss account while net appreciation, if any, is ignored. The book value of the individual securities does not undergo any change after marking to market.

c) The individual scrips in the HFT category are marked to market at daily intervals. Net depreciation, if any, is provided for in the Profit and Loss account while net appreciation, if any, is ignored. The Book Value of the individual securities in this category does not undergo any change.

d) Securities in AFS and HFT categories are valued as under:

i) Central Government Securities are valued at prices/ Yield To Maturity (YTM) rates as announced by Primary Dealers Association of India (PDAI) jointly with Fixed Income Money Market and Derivatives Association of India (FIMMDA).

ii) State Government and Other approved securities are valued applying the YTM method by marking up 25 basis points above the yields of the Central Government Securities of equivalent maturity put out by PDAI / FIMMDA periodically.

iii) Equity shares are valued at market price, if quoted. Unquoted equity shares are valued at break-up value (without considering revaluation reserves if any) as per the company's latest balance sheet (not more than one year prior to the date of valuation). Otherwise, the shares are valued at Rs1 per company.

iv) Preference shares are valued at market price, if quoted; otherwise at lower of the value determined based on the appropriate YTM rates or redemption value.

v) All debentures/bonds, other than those which are in the nature of advances, are valued on the YTM basis.

vi) Treasury bills, Certificate of deposits and Commercial papers are valued at carrying cost.

vii) Units of Mutual Funds are valued at market price, if quoted; otherwise at lower of repurchase price or Net Asset Value (NAV). In case of funds with a lock-in period, where repurchase price / market quote is not available, units are valued at NAV, else valued at cost till the end of the lock-in period.

3.4 Investments by Foreign Branches are valued as per the practice prevailing in the respective countries.

3.5 Debentures and Bonds, where interest/ principal is in arrears for more than 90 days are subject to prudential norms prescribed by RBI.

3.6 Brokerages / Commission / incentive received on subscriptions are deducted from the cost of securities. Brokerage / Commission / Stamp duty paid in connection with acquisition of securities are treated as revenue expenses.

3.7 Interest Rate Swap transactions for hedging are accounted on accrual basis and transactions for trading are marked to market at quarterly intervals. The fair value of the total swaps is computed on the basis of the amount that would be received/ receivable or paid/ payable on termination of the swap agreements as on the balance sheet date. Losses arising therefrom, if any, are fully provided for, while the profit, if any, is ignored. Gains or loss on termination of swaps is deferred and recognised over the shorter period of the remaining contractual life of the swap or the remaining life of the designated asset or liability.

3.8 Exchange traded FX Derivatives i.e., Currency Futures, are valued at the Exchange determined prices and the resultant gains and losses are recognized in the Profit and Loss account.

3.9 Investments backed by guarantee of the Central Government though overdue are treated as Non Performing Asset (NPA) only when the Government repudiates its guarantee when invoked.

3.10 Investment in State Government guaranteed securities, including those in the nature of 'deemed advances', are subjected to asset classification and provisioning as per prudential norms if interest/ instalment of principal (including maturity proceeds) or any other amount due to the Bank remains unpaid for more than 90 days.

4. FINANCIAL ASSETS SOLD TO ASSET RECOVERY COMPANIES

4.1 Security Receipts (SR) issued by ARCs in respect of financial assets sold to them is recognized at lower of redemption value of SRs and Net Book Value of financial assets. SRs are valued at Net Asset Value declared by ARCs on the Balance Sheet date and depreciation, if any, is provided for and appreciation is ignored.

4.2 The net-shortfall, if any, arising on sale of financial assets to ARCs is charged to Profit & Loss Account.

5. ADVANCES

5.1 In accordance with the prudential norms issued by RBI, advances in India are classified into standard, sub- standard, doubtful and loss assets, borrower-wise.

5.2 Provisions are made for non performing advances as under:

a) Substandard category - 25 % both secured and unsecured category.

b) Doubtful category-1 :

i) 100 % for secured and unsecured classified and / or categorized before 01.07.2011.

ii) 25 % for secured classified and / or categorized after 30.06.2011.

iii) 100% for Unsecured portion.

c) Doubtful Category - 2:

i) 100 % for secured and unsecured classified and / or categorized before 01.07.2011.

ii) 40 % for secured classified and / or categorized after 30.06.2011.

iii) 100% for Unsecured portion.

d) Doubtful category-3 and Loss advances - 100 %.

5.3 Provision is made for standard advances including restructured standard advances as per RBI directives.

5.4 In respect of foreign branches, income recognition, asset classification and provisioning for loan losses are made as per local requirement or as per RBI prudential norms, whichever is more stringent.

5.5 Advances disclosed are net of provisions made for non-performing assets, DICGC/ eCgC/ CGTMSE claims received and held pending adjustment, repayments received and kept in sundries account, participation certificates, usance bills rediscounted and provision in lieu of diminution in the fair value of restructured accounts classified as standard assets.

6. FIXED ASSETS / DEPRECIATION

6.1 Premises and other fixed assets are stated at historical cost and at revalued amount in respect of assets revalued.

6.2 Depreciation on buildings (including cost of land wherever inseparable/ not segregated) and other fixed assets (excluding items referred in 6.3 to 6.5) in India is provided for on the straight-line method at rates specified in Schedule XIV to the Companies Act, 1956 and at the Bank determined rates based on Residual Life in the case of 'Revalued Assets'. Depreciation relatable to revalued component is charged against revaluation reserve.

6.3 Depreciation on computers (hardware and software) and Uninterrupted Power Supply Systems (UPS) is provided at the rate of 33.33% per annum on Straight Line Method (SLM).

6.4 The rate of depreciation on motor car is 20 % on straight line method.

6.5 100% depreciation is provided on all cell phones and on small value items costing upto Rs.5000/-.

6.6 Depreciation on fixed assets acquired on or before 30th September is charged at 100% of the prescribed rates and at 50% of the prescribed rates on the fixed assets acquired thereafter.

6.7 Premium on leasehold land is capitalised in the year of acquisition and amortized over the period of lease.

6.8 Depreciation in respect of fixed assets at foreign branches is provided as per the practice prevailing in the respective countries.

6.9 In respect of Non Banking Assets, no depreciation is charged.

7 REVENUE RECOGNITION

7.1 Income and expenditure are generally accounted for on accrual basis, unless otherwise stated.

7.2 Income from non-performing assets, Central Government guaranteed assets (where it is overdue beyond 90 days), dividend income, insurance claims, commission on letters of credit/ guarantees issued (other than those relating to project finance), income from bancassurance products, additional interest / overdue charges on bills purchased, locker rent, finance charges on credit cards, income on Bank's right to recompense, etc., are accounted for on realisation.

7.3 In case of overdue foreign bills, interest and other charges are recognised till the date of crystallisation as per FEDAI guidelines.

8. CREDIT CARD REWARD POINTS:

Reward points earned by card members on use of card facility is recognized as expenditure on such use.

9. NET PROFIT / LOSS

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

-- Provision for Non Performing Advances and / or Investments

-- General provision on Standard Advances

-- Provision for Restructured Advances

-- Provision for Depreciation on Fixed Assets

-- Provision for Depreciation on Investments

-- Transfer to / from Contingency Fund

-- Provision for direct taxes

-- Usual or/ and other necessary provisions

10. STAFF RETIREMENT BENEFITS

10.1 Annual contributions to Pension Fund and Gratuity Fund are determined and provided for:

-- on the basis of actuarial valuation

-- as per the local laws in respect of foreign branches

10.2 Leave encashment benefit for employees is accounted for on actuarial basis.

10.3 Transitional liability relating to employee benefits determined as per actuarial valuation is written off over a period of five years in terms of Revised Accounting Standard 15 (AS -15) - "Employee Benefits", issued by ICAI.

10.4 Liability determined in respect of pension (second option) for existing employees and gratuity is amortised equally over a period of five years in accordance with RBI Guidelines.

11. CONTINGENT LIABILITIES AND PROVISIONS

11.1 Contingent liability : Past events leading to, possible or present obligations are recognised as contingent liability in the following instances where :

(a) The existence of such obligations has not been confirmed

(b) no outflow of resources are required to settle such obligations

(c) a reliable estimate of the amount of the obligations cannot be made

(d) such amounts are not material

11.2 (a) Provision is recognized in case of present

obligations where a reliable estimate can be made and/or where there are probable outflow of resources embodying foregoing of economic benefits to settle the obligations, excluding frivolous claims.

(b) Provision for Market Risk, Country Risk, etc., are made in terms of extant instructions of RBI.

(c) Floating provision as identified by the Bank Management is provided for.

12. IMPAIRMENT OF ASSETS

Impairment losses if any, are recognised in accordance with the Accounting Standard (AS) -28 issued in this regard by the ICAI.

13. TAXES ON INCOME

13.1 Provision for tax is made for both Current Tax and Deferred Tax.

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

13.3 Deferred Tax Assets and Liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognised using the tax rates and tax laws that have been enacted or substantively enacted till the date of the Balance Sheet. Deferred Tax Assets are not recognised unless there is "virtual certainty" that sufficient future taxable income will be available against which such deferred tax assets will be realised.

---

Mar 31, 2011

1. ACCOUNTING CONVENTION

The financial statements are prepared by following the going concern concept on historical cost convention and conform to the statutory provisions and practices prevailing in India unless otherwise stated and in respect of foreign branches as per statutory provisions and practices prevailing in the respective countries.

2. TRANSACTIONS INVOLVING FOREIGN EXCHANGE

Foreign Currency transactions of Indian operations and non-integral foreign operations are accounted for as per Accounting Standard-11 (AS-11) issued by the Institute of Chartered Accountants of India (ICAI).

2.1 Translation in respect of Indian operations

1. Foreign exchange transactions are recorded at the Weekly Average Rate (WAR) notified by Foreign Exchange Dealers Association of India ( FEDAI).

2. Foreign currency assets and liabilities are translated at the closing rates notified by FEDAI at the year end.

3. Acceptances, endorsements and other obligations and guarantees in foreign currency are carried at the closing rates notified by FEDAI at the year end.

4. Exchange differences arising on settlement and translation of foreign currency assets and liabilities at the end of the financial year are recognized as income or expenses in the period in which they arise.

5. Outstanding forward exchange contracts are disclosed at the Contracted rates and revalued at FEDAI closing rates, and the resultant effect is recognized in the Profit and Loss account.

2.2 Translation in respect of non-integral foreign operations.

Foreign branches are classified as non-integral foreign operations and the financial statements are translated as follows:

1. Assets and liabilities including contingent liabilities are translated at the closing rates notified by FEDAI at the year end.

2. Income and expenses are translated at the Quarterly Average Closing rate notified by FEDAI at the end of the respective quarter.

3. All resulting exchange differences are accumulated in a separate account "Exchange Fluctuation Fund" till the disposal of the net investments.

3. INVESTMENTS

3.1 The investment portfolio of the Bank is classified in accordance with the RBI guidelines into three categories viz.,

> Held To Maturity (HTM)

> Available For Sale (AFS)

> Held For Trading (HFT)

The securities acquired with the intention to be held till maturity are classified under "HTM" category. The securities acquired with the intention to trade by taking advantage of short-term price/interest movements are classified as "HFT". All other securities which do not fall under any of the two categories are classified under "AFS" category.

3.2 Profit on sale of securities under HTM category is first taken to Profit and Loss account and thereafter appropriated to Capital Reserve account (net of taxes and amount required to be transferred to statutory reserves) and loss, if any, charged to Profit & Loss account.

3.3 Investments in India are valued in accordance with RBI guidelines, as under:

a) Securities in HTM category are valued at acquisition cost except where the acquisition cost is higher than the face value, in which case, such excess of acquisition cost over the face value is amortised over the remaining period of maturity. Any diminution, other than temporary, in value of investments in subsidiaries/joint ventures which are included under HTM category is recognized and provided. Such diminution is being determined and provided for each investment individually.

b) Investments in AFS category are marked to market, scrip-wise and classification wise, at quarterly intervals. Net depreciation, if any, is pro vided for in the Profit and Loss account while net appreciation, if any, is ignored. The book value of the individual securities does not undergo any change after marking to market.

c) The individual scrips in the HFTcategory are marked to market at daily intervals. Net depreciation, if any, is provided for in the Profit and Loss account while net appreciation, if any, is ignored. The Book Value of the individual securities in this category does not undergo any change.

d) Securities in AFS and HFT categories are valued as under:

i) Central Government Securities are valued at prices / YTM Rates as announced by Primary Dealers Association of India (PDAI) jointly with Fixed Income Money Market and Derivatives Association of India (FIMMDA).

ii) State Government and Other approved securities are valued applying the YTM method by marking up 25 basis points above the yields of the Central Government Securities of equivalent maturity put out by PDAI / FIMMDA periodically.

iii) Equity shares are valued at market price, if quoted. Unquoted equity shares are valued at break-up value (without considering revaluation reserves if any) as per the companys latest balance sheet (not more than one year prior to the date of valuation). Otherwise, the shares are valued at Re. 1 per company.

iv) Preference shares are valued at market price, if quoted; otherwise at lower of the value determined based on the appropriate YTM rates or redemption value.

v) All debentures/bonds, other than those which are in the nature of advances, are valued on the YTM basis.

vi) Treasury bills, Certificate of deposits and Commercial papers are valued at carrying cost.

vii) Units of Mutual Funds are valued at market price, if quoted; otherwise at lower of repurchase price or Net Asset Value (NAV). In case of funds with a lock-in period, where repurchase price / market quote is not available, units are valued at NAV, else valued at cost till the end of the lock-in period.

3.4 Investments of Foreign Branches are valued as per the practice prevailing in the respective countries.

3.5 Debentures and Bonds, where interest/ principal is in arrears for more than 90 days are valued applying the prudential norms prescribed by RBI.

3.6 Brokerages / Commission / incentive received on subscriptions are deducted from the cost of securities. Brokerage / Commission / Stamp duty paid in connection with acquisition of securities are treated as revenue expenses.

3.7 Interest Rate Swap transactions for hedging are accounted on accrual basis and transactions for trading are marked to market at quarterly intervals. The fair value of the total swaps is computed on the basis of the amount that would be received/ receivable or paid/ payable on termination of the swap agreements as on the balance sheet date. Losses arising therefrom, if any, are fully provided for, while the profit, if any, is ignored. Gains or loss on termination of swaps is deferred and recognised over the shorter period of the remaining contractual life of the swap or the remaining life of the designated asset or liability.

3.8 Exchange traded FIX Derivatives i.e. Currency Futures, are valued at the Exchange determined prices and the resultant gains and losses are recognized in the Profit and Loss account.

3.9 Investments backed by guarantee of the Central Government though overdue are treated as Non Performing Asset (NPA) only whentheGovernment repudiates its guarantee when invoked.

3.10 Investment in State Government guaranteed securities, including those in the nature of deemed advances, are subjected to asset classification and provisioning as per prudential norms if interest/instalment of principal (including maturity proceeds) or any other amount due to the Bank remains unpaid for more than 90 days.

4. FINANCIAL ASSETS SOLD TO ASSET RECOVERY COMPANIES

4.1 Security Receipts (SR) issued by ARCs in respect of financial assets sold to them is recognized at lower of redemption value of SRs and Net Book Value of financial assets. SRs are valued at Net Asset Value declared by ARCs on the Balance Sheet date and depreciation, if any, is provided for and appreciation is ignored.

4.2 The net-shortfall, if any, arising on sale of financial assets to ARCs is charged to Profit & Loss Account.

5 ADVANCES

5.1 In accordance with the prudential norms issued by RBI, advances in India are classified into standard, sub-standard, doubtful and loss assets borrower-wise.

5.2 Provisions are made for non performing advances irrespective of availablility of security:

For substandard category - 20 % For others-100%

5.3 General provision is made for standard advances as per RBI directives.

5.4 In respect of foreign branches, income recognition, asset classification and provisioning for loan losses are made as per local requirement or as per RBI prudential norms, whichever is more stringent.

5.5 Advances disclosed are net of provisions made for non-performing assets, DICGC/ ECGC/ CGTSI claims received and held pending adjustment, repayments received and kept in sundries account, participation certificates and usance bills rediscounted.

6. FIXED ASSETS / DEPRECIATION

6.1 Premises and other fixed assets are stated at historical cost and at revalued amount in respect of assets revalued.

6.2 Depreciation on buildings (including cost of land wherever inseparable/ not segregated) and other fixed assets (excluding items referred in 6.3 to 6.5) in India is provided for on the straight-line method atratesspecifiedinScheduleXIVtotheCompanies Act, 1956 and at the Bank determined rates based on Residual Life in the case of Revalued Assets. Depreciation relatable to revalued component is charged against revaluation reserve.

6.3 Depreciation on computers (hardware and software) and Uninterrupted Power Supply Systems (UPS) is provided at the rate of 33.33% per annum on Straight Line Method (SLM).

6.4 The rate of depreciation on motor car is 20 % on straight line method.

6.5 100% depreciation is provided on all cell phones and on small value items costing upto Rs.5000/-

6.6 Depreciation on fixed assets acquired on or before 30th September is charged at 100% of the prescribed rates and at 50% of the prescribed rates on the fixed assets acquired thereafter.

6.7 Premium on leasehold land is capitalised in the year of acquisition and amortized over the period of lease.

6.8 Depreciation in respect of fixed assets at foreign branches is provided as perthe practice prevailing in the respective countries.

6.9 In respect of Non Banking Assets, no depreciation is charged.

7. REVENUE RECOGNITION

7.1 Income and expenditure are generally accounted for on accrual basis, unless otherwise stated.

7.2 Income from non-performing assets, Central Government guaranteed assets (where it is overdue beyond 90 days), dividend income, insurance claims, commission on letters of credit/ guarantees issued (other than those relating to project finance), income from bancassurance products, additional interest/ overdue charges on bills purchased, locker rent, finance charges on credit cards income on Banks rightto recompense, etc. are accounted for on realisation.

7.3 In case of overdue foreign bills, interest and other charges are recognised till the date of crystallisation as per FEDAI guidelines.

8. CREDIT CARD REWARD POINTS

Reward points earned by card members on use of Card facility is recognized as expenditure on such use.

9. NET PROFIT / LOSS

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

Provision for Non-Performing Advances and/ or Investments.

General provision on Standard Advances

Provision for Restructured Advances

Provision for Depreciation on Fixed Assets

Provision for Depreciation on Investments

Transfer to/ from Contingency Fund

Provision for direct taxes

Usual or/and other necessary provisions

10. STAFF RETIREMENT BENEFITS

10.1 Annual contributions to Pension Fund and Gratuity Fund are determined and provided for:

(i) on the basis of actuarial valuation

(ii) as per the local laws in respect of foreign branches.

10.2 Leave encashment benefit for employees is accounted for on actuarial basis.

10.3.1 Transitional liability relating to employee benefits determined as per actuarial valuation is written off over a period of five years in terms of Revised Accounting Standard 15 (AS -15), "Employee Benefits", issued by ICAI.

10.3.2 Liability determined in accordance with RBI Guidelines in respect of pension (second option) for existing employees and gratuity is amortised equally over a period of five years

11. CONTINGENT LIABILITIES AND PROVISIONS

(a) Past events leading to, possible or present obligations are treated as contingent liability. Provision is recognised in case of present obligations where a reliable estimate can be made and/or where there are probable outflow of resources embodying foregoing of economic benefits to settle the obligations.

(b) Provisions for Market Risks, Country Risk, etc., are made in terms of extant instructions of RBI.

(c) Floating provision as identified by the Bank Management is provided for.

12. IMPAIRMENT OF ASSETS

Impairment losses, if any, are recognised in accordance with the Accounting Standard 28 issued in this regard by the Institute of Chartered Accountants of India.

13. TAXES ON INCOME

13.1 Provision for tax is made for both Current Tax and Deferred Tax.

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

13.3 Deferred Tax Assets and Liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognised using the tax rates and tax laws that have been enacted or substantively enacted till the date of the Balance Sheet. Deferred Tax Assets are not recognised unless there is "virtual certainty" that sufficient future taxable income will be available against which such deferred tax assets will be realised.

---

Mar 31, 2010

1. ACCOUNTING CONVENTION

The financial statements are prepared by following the going concern concept on historical cost convention and conform to the statutory provisions and practices prevailing in India unless otherwise stated and in respect of foreign branches as per statutory provisions and practices prevailing in the respective countries.

2. TRANSACTIONS INVOLVING FOREIGN EXCHANGE

Foreign Currency transactions of Indian operations and non-integral foreign operations are accounted for as per Accounting Standard-11 (AS-11) issued by the Institute of Chartered Accountants of India (ICAI).

2.1 Translation in respect of Indian operations

1. Foreign exchange transactions are recorded at the Weekly Average Rate (WAR) notified by Foreign Exchange Dealers Association of India ( FEDAI).

2. Foreign currency assets and liabilities are translated at the closing rates notified by FEDAI at the year end.

3. Acceptances, endorsements and other obligations and guarantees in foreign currency are carried at the closing rates notified by FEDAI at the year end.

4. Exchange differences arising on settlement and translation of foreign currency assets and liabilities at the end of the financial year are recognized as income or expenses in the period in which they arise.

5. Outstanding forward exchange contracts are disclosed at the Contracted rates and revalued at FEDAI closing rates, and the resultant effect is recognized in the Profit and Loss account.

2.2 Translation in respect of non-integral foreign operations.

Foreign branches are classified as non-integral foreign operations and the financial statements are translated as follows:

1. Assets and liabilities including contingent liabilities are translated at the closing rates notified by FEDAI at the year end.

2. Income and expenses are translated at the Quarterly Average Closing rate notified by FEDAI at the end of the respective quarter.

3. All resulting exchange differences are accumulated in a separate account "Exchange Fluctuation Fund" till the disposal of the net investments.

3. INVESTMENTS

3.1 The investment portfolio of the Bank is classified in accordance with the RBI guidelines into three categories viz.,

> Held To Maturity (HTM)

> Available For Sale (AFS)

> Held For Trading (HFT))

The securities acquired with the intention to be held till maturity are classified under "HTM" category. The securities acquired with the intention to trade by taking advantage of short- term price/interest movements are classified as "HFT". All other securities which do not fall under any of the two categories are classified under "AFS" category.

3.2 Profit on sale of securities under HTM category is first taken to Profit and Loss account and thereafter appropriated to Capital Reserve account and loss, if any, charged to Profit & Loss account.

3.3 Investments in India are valued in accordance with RBI guidelines, as under:

a) Securities in HTM category are valued at acquisition cost except where the acquisition cost is higher than the face value, in which case, such excess of acquisition cost over the face value is amortised over the remaining period of maturity. Any diminution, other than temporary, in value of investments in subsidiaries/joint ventures which are included under HTM category is recognized and provided. Such diminution is being determined and provided for each investment individually.

b) Investments in AFS category are marked to market, scrip-wise and classification wise, at quarterly intervals. Net depreciation, if any, is provided for in the Profit and Loss account while net appreciation, if any, is ignored. The book value of the individual securities does not undergo any change after marking to market.

c) The individual scrips in the HFT category are marked to market at monthly intervals. Net depreciation, if any, is provided for in the Profit and Loss account while net appreciation, if any, is ignored. The Book Value of the individual securities in this category does not undergo any change.

d) Securities in AFS and HFT categories are valued as under:

i) Central Government Securities are valued at market price on the basis of appropriate Yield To Maturity (YTM) rates as announced by Primary Dealers Association of India (PDAI), Fixed Income Money Market and Derivatives Association of India (FIMMDA) and Bloomberg.

ii) State Government and Other approved securities are valued applying the YTM method by marking up 25 basis points above the yields of the Central Government Securities of equivalent maturity put out by PDAI, FIMMDA and Bloomberg.

iii) Equity shares are valued at market price, if quoted. Unquoted equity shares are valued at break-up value (without considering revaluation reserves if any) as per the companys latest balance sheet (not more than one year prior to the date of valuation). Otherwise, the shares are valued at Rupee One per company.

iv) Preference shares are valued at market price, if quoted; otherwise at lower of the value determined based on the appropriate YTM rates or redemption value.

v) All debentures/bonds, other than those which are in the nature of advances, are valued on the YTM basis.

vi) Treasury bills, Certificate of deposits and Commercial papers are valued at carrying cost.

vii) Units of Mutual Funds are valued at market price, if quoted; otherwise at lower of repurchase price or Net Asset Value (NAV). In case of funds with a lock-in period, where repurchase price / market quote is not available, units are valued at NAV, else valued at cost till the end of the lock-in period.

3.4 Investments by Foreign Branches are valued as per the practice prevailing in the respective countries.

3.5 Debentures and Bonds, where interest/ principal is in arrears for more than 90 days are valued applying the prudential norms prescribed by RBI.

3.6 Brokerages / Commission / incentive received on subscriptions are deducted from the cost of securities. Brokerage / Commission / Stamp duty paid in connection with acquisition of securities are treated as revenue expenses.

3.7 Interest Rate Swap transactions for hedging are accounted on accrual basis and transactions for trading are marked to market at fortnightly intervals, in line with the RBI guidelines. The fair value of the total swaps is computed on the basis of the amount that would be received/ receivable or paid/ payable on termination of the swap agreements as on the balance sheet date. Losses arising therefrom, if any, are fully provided for, while the profit, if any, is ignored. Gains or loss on termination of swaps is deferred and recognised over the shorter period of the remaining contractual life of the swap or the remaining life of the designated asset or liability.

3.8 Investments backed by guarantee of the Central Government though overdue are treated as Non Performing Asset (NPA) only when the Government repudiates its guarantee when invoked.

3.9 Investment in State Government guaranteed securities, which are not in the nature of deemed advances, are subjected to asset classification and provisioning norms if interest/ instalment of principal (including maturity proceeds) or any other amount due to the Bank remains unpaid for more than 90 days.

4 ADVANCES

4.1 In accordance with the prudential norms issued by RBI, advances in India are classified into standard, sub-standard, doubtful and loss assets borrower-wise.

4.2 Provisions are made for non performing advances:

For substandard category - 20 %

For others - 100 % irrespective of availablility of security.

4.3 General provision is made for standard advances as per RBI directives.

4.4 In respect of foreign branches, income recognition, asset classification and provisioning for loan losses are made as per local requirement or as per RBI prudential norms, whichever is more stringent.

4.5 Advances disclosed are net of provisions made for non-performing assets, DICGC/ ECGC/ CGTSI claims received and held pending adjustment, repayments received and kept in sundries account, participation certificates and usance bills rediscounted.

5. FIXED ASSETS / DEPRECIATION

5.1 Premises and other fixed assets are stated at historical cost and at revalued amount in respect of assets revalued.

5.2 Depreciation on buildings (including cost of land wherever inseparable/ not segregated) and other fixed assets (excluding items referred in 5.3 to 5.5) in India is provided for on the straight-line method at rates specified in Schedule XIV to the Companies Act, 1956 and at the Bank determined rates based on Residual Life in the case of Revalued Assets. Depreciation relatable to revalued component is charged against revaluation reserve.

5.3 Depreciation on computers (hardware and software) and Uninterrupted Power Supply Systems (UPS) is provided at the rate of 33.33% per annum on Straight Line Method (SLM).

5.4 The rate of depreciation on motor car is 20 % on straight line method.

5.5 100% depreciation is provided on all cell phones and on small value items costing upto Rs.5000/- (refer notes on accounts 8.4.3).

5.6 Depreciation on fixed assets acquired on or before 30th September is charged at 100% of the prescribed rates and at 50% of the prescribed rates on the fixed assets acquired thereafter.

5.7 Premium on leasehold land is capitalised in the year of acquisition and amortized over the period of lease.

5.8 Depreciation in respect of fixed assets at foreign branches is provided as perthe practice prevailing in the respective countries.

5.9 In respect of Non Banking Assets, no depreciation is charged.

6. REVENUE RECOGNITION

6.1 Income and expenditure are generally accounted for on accrual basis, unless otherwise stated.

6.2 Incomefrom non-performing assets, Government guaranteed assets (where interest is not serviced regularly), dividend income, insurance claims, commission on letters of credit/ guarantees issued (other than those relating to project finance), income from bancassurance products, additional interest/ overdue charges on bills purchased, locker rent, finance charges on credit cards etc. are accounted for on realisation.

6.3 In case of overdue foreign bills, interest and other charges are recognised till the date of crystallisation as per FEDAI guidelines.

7. Credit Card Reward Points

Reward points earned by card members on use of Card facility is recognized as expenditure on such use.

8. NET PROFIT / LOSS

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

Provision for Non-Performing Advances and/ or Investments.

General provision on Standard Advances

Provision for Restructured Advances

Provision for Depreciation on Fixed Assets

Provision for Depreciation on Investments

Transfer to/ from Contingency Fund

Provision for direct taxes

Usual or/and other necessary provisions

9. STAFF RETIREMENT BENEFITS

9.1 Annual contributions to Pension Fund and Gratuity Fund are determined and provided for:

(i) on the basis of actuarial valuation and

(ii) as per the local laws in respect of foreign branches.

9.2 Leave encashment benefit for employees is accounted for on actuarial basis.

9.3 Transitional liability relating to employee benefits determined as per actuarial valuation is written off over a period of five years in terms of Revised

Accounting Standard 15 (AS -15), "Employee Benefits", issued by ICAI.

10. CONTINGENT LIABILITIES AND PROVISIONS

(a) Past events leading to, possible or present obligations are treated as contingent liability. Provision is recognised in case of present obligations where a reliable estimate can be made and/or where there are probable outflow of resources embodying forgoing of economic benefits to settle the obligations.

(b) Provisions for Market Risks, Country Risk, etc., are made in terms of extant instructions of RBI and floating provision requirements are identified by the Bank Management and provided for.

11. IMPAIRMENT OF ASSETS

Impairment losses, if any, are recognised in accordance with the Accounting Standard 28 issued in this regard by the Institute of Chartered Accountants of India.

12. TAXES ON INCOME

12.1 Provision for tax is made for both Current Tax and Deferred Tax.

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

12.3 Deferred Tax Assets and Liabilities arising on account of timing differences and which are capable of reversal in subsequent periods are recognised using the tax rates and tax laws that have been enacted or substantively enacted till the date of the Balance Sheet. Deferred Tax Assets are not recognised unless there is "virtual certainty" that sufficient future taxable income will be available against which such deferred tax assets will be realised.