1.  Basis of Accounting:
 
 (i) The financial statements have been prepared under the historical
 cost convention and accrual basis of accounting, unless otherwise
 stated and are in conformity with the statutory provisions and
 generally accepted accounting principles.
 
 (ii) The financial statements also conform to the guidelines issued by
 the Reserve Bank of India (RBI) from time to time in respect of income
 recognition, asset classification, provisioning and other related
 matters. Accounting Standard and pronouncements issued by the Institute
 of Chartered Accountants of India and accounting practices prevalent in
 the banking industry in India.
 
 2.  Transactions involving Foreign Exchange:
 
 2.1 Branches / Offices outside India
 
 (i) Foreign Branches are classified as Non-integral Foreign
 Operations and their financial statements are translated as follows:
 
 a) Both monetary and non-monetary Assets and Liabilities as well as
 Contingent Liabilities at the closing spot rates notified by the
 Foreign Exchange Dealers Association of India (FEDAI) at the end of
 each quarter.
 
 b) Revenue items are translated at the quarterly average closing rate
 notified by FEDAI at the end of respective quarter.
 
 c) All resulting exchange difference is accumulated in a separate
 account ‘Foreign Currency Translation Reserve.
 
 (ii) Operations of representative offices abroad are classified as
 Integral Foreign Operations and their financial statements are
 accounted for as follows:
 
 a) All monetary Assets and Liabilities, Guarantees, Acceptances,
 Endorsements and other obligations are translated to Indian rupee
 equivalent at the spot exchange rates prevailing at the end of each
 quarter as per FEDAI guidelines.
 
 b) Non-monetary items are translated at exchange rate prevailing on the
 date of transaction.
 
 c) Revenue items are accounted for at the exchange rates prevailing on
 the date of transaction.
 
 d) All resulting exchange differences are accounted for in Profit &
 Loss Account.
 
 (iii) Advances are classified under categories in line with those of
 Indian Offices. Provisions in respect of advances are made as per the
 local law requirements or as per the norms of RBI, whichever is higher.
 
 2.2 Branches in India
 
 (i) Foreign currency balances whether of assets or liabilities
 [including deposits mobilized under FCNR Scheme, EEFC Scheme, RFC
 Scheme etc.] and outstanding forward exchange contracts are converted
 at quarter end rates as advised by Foreign Exchange Dealers
 Association of India (FEDAI).
 
 The resultant profit/loss on revaluation of forward exchange contracts
 and NOSTRO accounts is taken to revenue as per FEDAI guidelines.
 
 (ii) Income and Expenditure items relating to foreign currency are
 converted using the exchange rate prevailing as on the date of
 transaction.
 
 (iii) Acceptances, endorsements and other obligations including
 guarantees are stated at FEDAI advised rates prevailing at the end of
 each quarter.
 
 3.  Investments:
 
 (i) Investments are classified in accordance with RBI guidelines under
 three categories viz. Held to Maturity, Held for Trading and
 Available for Sale.
 
 (ii) The disclosures of Investments are further classified into the
 following six groups :
 
 a) Government Securities,
 
 b) Other Approved Securities,
 
 c) Shares,
 
 d) Debentures & Bonds,
 
 e) Subsidiaries/ Joint Ventures and
 
 f) Others
 
 (iii) a) Investments that the Bank intends to hold till maturity are
 classified as Held to Maturity.
 
 b) Investments that are held principally for resale within 90 days from
 the date of purchase are classified as Held for Trading.
 
 c) Investments, which are not classified in the above two categories,
 are classified as Available for sale.
 
 d) An investment is classified as Held to Maturity, Held for Trading or
 Available for sale at the time of its purchase and subsequent shifting
 amongst categories is done in conformity with regulatory guidelines.
 
 e) Investments in subsidiaries, joint ventures and associates are
 classified as Held to Maturity.
 
 (iv) Investments classified as ‘Held to Maturity (other than in
 Regional Rural Banks) are carried at acquisition cost. In case the
 acquisition cost is higher than the face value, the excess is amortized
 over the period remaining to maturity and provision is made for:
 
 a) Depreciation in the value of debentures / bonds which are deemed to
 be in the nature of advances by applying the RBI prudential norms of
 asset classification and provisioning applicable to advances.
 
 b) Diminution, other than temporary, in the value of investments in
 subsidiaries / joint ventures.
 
 (v) Investments classified as Held for Trading are revalued
 scrip-wise at monthly interval and resultant net depreciation is
 recognized and net appreciation, if any, is ignored under each
 classification. The book value of the individual scrip is not changed
 with the revaluation as indicated above.
 
 (vi) Investments classified as Available for Sale are marked to
 market scrip-wise at quarterly intervals and resultant net depreciation
 is recognized and net appreciation, if any, is ignored under each
 classification. The book value of the individual scrip is not changed
 with the revaluation as indicated above.
 
 (vii) Investments in Regional Rural Banks are valued at carrying cost.
 
 (viii) In respect of non-performing securities (where interest/
 principal is in arrears for more than 90 days) income is not recognized
 and appropriate provision is made for depreciation in the value of the
 securities by applying prudential norms of asset classification and
 such depreciation is not set-off against the appreciation in respect of
 other performing securities.
 
 (ix) Cost of acquisition of investments:
 
 .     is net of incentives/commission and front-end fees
 received in case of securities subscribed, and
 
 .     excludes commission, brokerage, securities transaction
 tax and stamp duty.
 
 (x) Profit/loss on sale of investments is recognized in the Profit and
 Loss Account. An amount equivalent to the profit on sale of investments
 under Held to Maturity category is first taken to the Profit and Loss
 Account and thereafter, appropriated to the Capital Reserve Account.
 
 (xi) For the purpose of determining market value of investments, Stock
 exchange quotations or rates put up by FIMMDA/PDAI are adopted. In
 absence of such quotations/ rates, the market value is determined by
 applying appropriate Yield to Maturity rates as prescribed by FIMMDA /
 PDAI or as per norms laid down by the Reserve Bank of India.
 
 (xii) As per RBI guidelines, the different categories of Swaps are
 valued as under:
 
 g) Hedge Swaps
 
 Interest rate swaps which hedges interest bearing assets or liabilities
 are accounted for on accrual basis except the Swaps designated with an
 assets or liability that is carried at market value or lower of cost or
 market value in the financial statements.
 
 Gains or Losses on the termination of Swaps are recognized over the
 shorter of the remaining contractual life of the Swap or the remaining
 life of the assets / liabilities.
 
 h) Trading Swaps
 
 Trading Swap transactions are marked to market with changes recorded in
 the financial statements.
 
 4.  Advances:
 
 (i) Advances are classified as performing and non- performing as per
 guidelines prescribed by RBI and are shown net of provisions for
 non-performing advances.
 
 (ii) The provision made for standard advances (performing) in terms of
 RBI guidelines is however included in Other Liabilities and
 Provisions.
 
 5.  Fixed Assets and Depreciation:
 
 (i) Premises including Freehold and other Fixed Assets are stated at
 historical cost except certain premises, which are stated at their
 revalued amount.
 
 (ii) Capital expenditure incurred during construction period is
 included under ‘Other Assets.
 
 (iii) Depreciation is provided on diminishing balance method at the
 rates and the manner prescribed in Schedule XIV
 
 of the Companies Act, 1956 except that in respect of ALPMs and
 Computers, where depreciation is provided on straight line method @
 33.33% as per guidelines of Reserve Bank of India.  (iv) In respect of
 revalued assets, the amount of additional depreciation consequent to
 revaluation is transferred from Revaluation Reserve to the Profit &
 Loss Account.
 
 (v) Premium on leasehold land is amortized over the period of the
 lease.
 
 (vi) Depreciation on Fixed Assets of foreign branches is provided as
 per the applicable laws prevalent in that country.
 
 6.  Intangible Assets (Computer Software)
 
 (i) Software for a computer that cannot operate without that specific
 software is an integral part of related hardware and is treated as
 fixed assets. Where the software is not an integral part of the related
 hardware, computer software is recognised as an Intangible Asset.
 
 (ii) Computer software acquired from vendors is recognised as
 Intangible Asset only if the value /cost of the software is more than
 Rs.10 Lakhs. Such intangible assets are amortised over its effective
 life subject to a maximum period of ten years.
 
 7.  Employee Benefits:
 
 (i) The Bank has applied Accounting Standard 15(Revised) - Employees
 Benefits, issued by the Institute of Chartered Accountants of India,
 for recognition of its liabilities in respect of employee benefits.
 
 (ii) Liability towards long term defined employee benefits is
 determined based on actuarial valuation by independent actuaries at the
 year-end by using Projected Unit Credit method as per policies
 mentioned herein below:
 
 a.  Gratuity:
 
 The Bank pays gratuity in case of retirement or death or resignation or
 termination etc. of its employees, having regard to the provisions of
 Payment of gratuity Act, 1972 / Service Awards / Service Regulations,
 as the case may be. A fund created out of Banks contribution is
 maintained by an in-house Trust for payment of gratuity. The Bank makes
 contribution to this fund on the basis of actuarial valuation of its
 liability.
 
 b.  Pension (ABRPR):
 
 The Bank pays pension under Allahabad Bank (Employees) Pension
 Regulations, 1995(ABEPR) to employees, who exercised option under the
 Regulations and also to Employees joining the Bank Service during the
 period from 29/09/1995 to 31.03.2010. The plan provides for a pension /
 family pension on monthly basis in respect of these employees on their
 retirement / death, as the case may be, based on the salary and
 qualifying service of the respective employees. Employees covered under
 ABEPR – 1995 are not eligible for Banks contribution to Provident
 Fund. A fund created out of Banks contribution is maintained by an
 in-house Trust for payment of Pension. The bank makes contributions to
 this Fund on the basis of actuarial valuation of its liability in
 respect of Pension, which is conducted by approved Actuary .
 
 c.  Leave Fare Concession (LFC):
 
 This facility is granted to the employees and extends to reimbursement
 of travelling expenses incurred for the family members of the employee
 concerned, as defined under the Scheme, in terms of service rules as
 amended from time to time as per Industry wide Settlements / Awards. It
 is a non- funded scheme and the Bank maintains a provision on account
 of its liability in respect of Leave Fare Concession under the Scheme
 on the basis of actuarial valuation, which is conducted by approved
 Actuary. Payment in respect of LFC facility is made through the Profit
 and Loss Account.
 
 d.  Leave Encashment:
 
 The Bank permits encashment of Privilege Leave balance to it employees
 availing LFC facility, up to the maximum limit of 30 days leave in a
 block of four years of service. Encashment of privilege leave standing
 to the credit of an employee is also permitted in case of retirement or
 death subject to a maximum of 240 days. In case of resignation from the
 service by an employee, such encashment is restricted to 50% of the
 balance of privilege leave subject to a maximum of 120 days. It is a
 non-funded scheme and the Bank maintains a provision on account of its
 leave encashment liability under the Scheme on the basis of actuarial
 valuation, which is conducted by approved Actuary . Payment of such
 leave encashment is made through the Profit and Loss Account.
 
 e.  Sick Leave:
 
 The Bank maintains a provision for its liability on account of any
 contingency arising out of employees going on sick leave on medical
 ground, which is permissible in terms of prevailing service conditions
 / rules. It is a non-funded scheme and the Bank maintains the provision
 on the basis of actuarial valuation, which is conducted by approved
 Actuary.
 
 (iii) In respect of Provident Fund, the contribution for the period is
 recognized as expense and charged to Profit & Loss account.
 
 (iv) In terms of Industry wide Settlement/Joint Note dated 27.04.2010,
 employees joining the services of the Bank on or after 01.04.2010 are
 covered by defined contribution retirement benefit scheme.
 
 (v) Short-term employee benefits are recognized as an expense at an
 undiscounted amount in the Profit and Loss Account of the year in which
 the related services are rendered.
 
 8.  Recognition of Income and Expenditure:
 
 Income and Expenditure are accounted for on accrual basis other than
 those stated below:
 
 (i) Interest and Other Income on advances classified as non- performing
 assets are recognized to the extent realized.
 
 (ii) Income from interest on refund of Income Tax and Interest Tax are
 accounted for in the year the order is passed by the concerned
 assessing officer.
 
 9.  Lease
 
 Rentals received by the Bank are recognized in the profit and loss
 account on accrual basis.
 
 Lease payments for assets taken on operating lease are recognized as an
 expense in the profit and loss account.
 
 10.  Earnings Per Share
 
 Basic and Diluted Earnings per Equity Share are reported in accordance
 with the Accounting Standard 20 Earnings per share issued by the
 Institute of Chartered Accountants of India. Basic earnings per equity
 share are computed by dividing net income by the weighted average
 number of equity shares outstanding for the period. Diluted earnings
 per equity share are computed using the weighted average number of
 equity shares and dilutive potential equity shares outstanding during
 the period.
 
 11.  Taxation
 
 (i) Provision is made for both current tax (including Minimum
 Alternative Tax - MAT) and deferred tax. Current tax is provided on the
 taxable income using applicable tax rate and tax laws. In compliance
 with Accounting Standard 22 : Accounting for Taxes on Income issued by
 the Institute of Chartered Accountants of India, 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 the 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.
 
 (ii) Minimum Alternative Tax (MAT) credit is recognised as an asset
 only when and to the extent there is convincing evidence that the
 company will pay normal income tax during the period specified under
 the Income Tax Act 1961.
 
 12. Cash and Cash equivalents
 
 Cash and cash equivalent include cash on hand and in ATMs and balances
 with RBI.
 
 13.  Impairment of Losses (if any) on Fixed Assets (including revalued
 assets) are recognized and charged to Profit & Loss Account in
 accordance with the Accounting Standard 28 Impaired of Assets issued
 by The Institute of Chartered Accountants of India.
 
 14. Contingent Liabilities and Provisions & Contingent Assets
 
 (i) In conformity with AS 29. Provisions, Contingent Liabilities and
 contingent Assets. Issued by the Institute of Chartered Accounts of
 India, the Bank recognizes provisions only when It has a present
 obligation as a result of a past event, it is probable that an outflow
 of resources embodying economic benefits will be required to settle the
 obligation, and when a reliable estimate of the amount of the
 obligation can be made.
 
 (ii) No provision is recognized for
 
 a) Any possible obligation that arises from past events and the
 existence of which will be confirmed only by the occurrence or
 non-occurrence of one or more uncertain future events not wholly within
 the control of the Bank; or
 
 b) Any present obligation that arises from past events but is not
 recognized because
 
 i) It is not probable that an outflow of resources embodying economic
 benefits will be required to settle the obligation; or
 
 ii) A reliable estimate of the amount of obligation cannot be made.
 Such obligations are recorded as contingent Liabilities. These are
 assessed at regular intervals and only that part of the obligation for
 which an outflow of resources embodying economic benefits is probable,
 is provided for, except in the extremely rare circumstances where no
 reliable estimate can be made.
 
 (iii) Contingent Assets are not recognized in the financial statements
 as this may result in the recognition of income that never be realized.