1.  GENERAL:
 
 The financial statements are prepared on historical cost convention and
 accrual basis, unless otherwise stated, by following going concern
 concept and conform to the statutory provisions, accounting
 standards/guidance notes issued by Institute of Chartered Accountants
 of India and practices prevailing in the banking industry in India.
 
 2.  REVENUE RECOGNITION:
 
 a.  Interest on non-performing advances and investments is recognized
 as per the norms laid down by Reserve Bank of India.
 
 b.  Interest on overdue bills, commission, exchange, brokerage and rent
 on lockers are accounted on realization.
 
 c.  In case of suit filed accounts, legal and other expenses incurred
 are charged to Profit and Loss Account and at the time of recovery of
 such expenses the same is accounted as income.
 
 3.  FOREIGN EXCHANGE TRANSACTIONS:
 
 a.  Income and Expenditure items are recorded at the exchange rates
 prevailing on the date of transaction.
 
 b.  Monetary items are reported at weekly average rate.  Such monetary
 items are reported at closing rates as at balance sheet date. Exchange
 differences arising on the reporting of such monetary items at rates
 prevailing at the year end or on the settlement of monetary items at
 rates different from those at which they were initially recorded, are
 recognized as income or expense, as the case may be.
 
 c.  Forward exchange contracts are initially recorded at exchange rate
 prevailing at the time of booking of the contract and reported on the
 Balance Sheet date also at original booked rate only. Such forward
 contracts are revalued on the basis of FEDAI revaluation rate at the
 end of each month and profit or loss on such revaluation is recognized
 as income or expense as the case may be. Any profit or loss arising on
 cancellation of a forward exchange contract is recognized as income or
 expenditure as the case may be.
 
 d.  Foreign Letters of Credit and Letters of Guarantee are recorded at
 the rates prevailing on the date of entering into such commitment.
 Outstanding items are restated at the rate prevailing at the Balance
 Sheet date.
 
 e.  Derivative contracts undertaken on back-to-back basis or for
 hedging our own foreign currency exposure are recorded at the rate
 prevailing on the date of the contract and are reported at the closing
 rates at the Balance Sheet date. The revenue in respect of these
 transactions is recognized for the proportionate period till expiry of
 the contract. In respect of contracts done on back to back basis, the
 revenue on early termination of the contract is recognized on
 termination.
 
 f.  The exchange rates used for this purpose are those notified by
 FEDAI.  4.  INVESTMENTS:
 
 a.  The Investment portfolio of the Bank is classified into the
 following three categories:
 
 i.  Held to Maturity (HTM) ii.  Available for Sale (AFS) iii.  Held for
 Trading (HFT)
 
 Held to Maturity category comprises of securities acquired with the
 intention to hold them up to maturity.  Held for Trading category
 comprises securities acquired with the intention of trading. Available
 for Sale- securities are those which are not classified in either of
 the above two categories.
 
 b.  Investments are classified and shown in Balance Sheet under the
 following six heads:
 
 i.  Government Securities ii.  Other Approved Securities iii.  Shares
 
 iv Debentures and Bonds v.  Subsidiaries /Joint Ventures and vi.
 Others.  c.  Valuation:
 
 The securities in each classification are valued in accordance with
 Reserve Bank of India guidelines on the following basis:- i) Held to
 Maturity:
 
 a.  Investments classified underthis category are stated at acquisition
 cost net of amortization. The excess of acquisition cost over the face
 value, if any, is amortized over the remaining period of maturity.
 
 b.  Any diminution, other than temporary in nature, in the value of
 investments is determined and provided for each investment
 individually.
 
 ii) Available for Sale:
 
 a.  Investments classified under this category are marked to market on
 quarterly basis and valued as per Reserve Bank of India guidelines at
 the market rates available on the Balance Sheet date from trades/quotes
 on the Stock Exchanges, prices/yields declared by the Fixed Income
 Money Market and Derivatives Association of India (FIMMDA). Unquoted
 securities are also valued as per the Reserve Bank of India guidelines.
 
 b.  The net depreciation under each of the six heads (Para 4b above) is
 fully provided for whereas the net appreciation, if any, under any of
 the aforesaid heads is ignored. The bookvalue of the individual
 securities does not undergo any change after marking to market.
 
 iii) Held for Trading:
 
 a.  Investments classified under this category are valued at market
 price based on market quotations, prices/yields declared by FIMMDA at
 the end of every month.
 
 b.  Depreciation is recognized classification wise (see para 4b above)
 and appreciation, if any, is ignored.
 
 c.  The book value of the individual securities does not undergo any
 change after marking to market.
 
 d) Prudential Norms:
 
 The identification of non performing investments and provision made
 thereon is as per Reserve Bank of India guidelines. Provision
 requirement in respect of non- performing investments is not set off
 against the appreciation of other performing investments.
 
 e) Profit / Loss on Sale of Investments:
 
 i. Profit or loss on sale of investments is recognized on the value
 dates on the basis of weighted average cost. Premium on redemption of
 Debentures/ Bonds is recognized on the date of redemption.  ii. Profit
 on sale of investments held in Available for Sale and Held for
 Trading categories is recognized in the Profit and Loss Account.
 
 iii. Profit on sale of investments in Held to Maturity- category is
 first taken to the Profit and Loss Account and an equivalent amount of
 profit is appropriated to the Capital Reserve (net of taxes and amount
 required to be transferred to Statutory Reserve).  iv Loss on sale of
 investments in any of the three categories is recognized in Profit and
 Loss Account.
 
 f) General
 
 i. Bank is following Settlement Date accounting for recording
 purchase and sale of transactions in Government Securities from January
 1, 2011.  ii. a)Transferof scrips from AFS/HFT category to HTM category
 : Transfer is made at the lower of book value or market value. In case
 where the market value is higher than the book value at the time of
 transfer, the appreciation is ignored and the security is transferred
 at book value. In case where the market value is less than the book
 value, the provision against depreciation held against this security
 (including the additional provision, if any, required based on
 valuation done on the date of transfer) is adjusted to reduce the book
 value to the market value and the security is transferred at the market
 value.
 
 b) In case of transfer of securities from HTM to AFS/ HFT category:
 
 If the security was originally placed under HTM category
 
 - at a discount, it is transferred to AFS/HFT category at the
 acquisition price/book value.
 
 - at a premium, it is transferred to AFS/HFT category at the amortized
 cost.
 
 Aftertransfer in both of the above cases, these securities are
 immediately re-valued and resultant depreciation, if any, is provided.
 
 c) In case of transfer of securities from AFS to HFT category or
 vice-versa, the securities are not re-valued on the date of transfer
 and the provisions for the accumulated depreciation, if any, is
 transferred to the provisions for depreciation against the HFT
 securities and vice-versa.
 
 iii. Upfront fee/Incentives on subscription of securities in HTM /AFS /
 HFT categories are reduced from the cost of securities. The incentives
 received after sale of securities is credited to Profit and Loss
 account.
 
 iv. Brokerage, Commission and Stamp Duty paid in connection with the
 acquisition of securities are treated as revenue expenditure.
 
 5.  a).  INTEREST RATE SWAPS: (Hedging)
 
 i.  Income on continuing swap transactions is recognized on accrual
 basis except the swap designated with an asset or liability that is
 carried at market value or lower of cost or market value in the
 financial statements. In that case, the swap is marked to market with
 the resulting gain or loss recorded as an adjustment to the market
 value or designated asset or liability.  ii.  Gains/ losses on
 terminated swap transactions are recognized when the offsetting gain or
 loss is recognized on the designated asset or liability. Thus, the gain
 or loss on the terminated swap is deferred and recognized over the
 shorter of the remaining contractual life of the swap or the remaining
 life of the asset/liability b).  INTEREST RATE SWAPS (Trading) i.
 Trading swaps are marked to market with changes recorded in the Profit
 and Loss account; ii.  Income and expenses relating to these swaps are
 recognized on the settlement date; iii.  Fee is recognized as income or
 expenses as the case may be;
 
 iv. Gains or losses on the termination of the swaps are recorded
 immediately as income or expenses on such termination.
 
 6.  ADVANCES
 
 a) Advances are stated in accordance with the Prudential Norms issued
 by Reserve Bank of India.
 
 i. Advances are classified into standard, sub-standard, doubtful and
 loss assets borrower-wise.
 
 ii.  Provisions are made for non performing assets and
 
 iii.  General provision is made for standard assets.
 
 b) Advances stated in the Balance Sheet are net of provisions made for:
 
 I.  Non performing assets
 
 II.  Additional Provision made for Non-performing Assets
 
 c) Partial recoveries in Non Performing Assets are apportioned first
 towards charges and interest, thereafter towards principal.
 
 7.  FIXED ASSETS
 
 a) Premises and other Fixed Assets are stated at historical cost net of
 depreciation.
 
 b) DEPRECIATION
 
 i.  Depreciation on Premises and on other Fixed Assets except Computers
 and ATMs is provided on written down value method at the rates
 specified in Schedule XIV of the Companies Act 1956.
 
 ii.  The depreciation on Computers and other Peripherals is provided @
 of 33.33 % on straight line method.
 
 iii.  Depreciation on ATMs is provided on straight line method based on
 the estimated useful life of seven years.
 
 c) AMORTIZATION
 
 i. Premium paid for acquisition of leasehold land for a period less
 than 60 years and cost of the buildings constructed thereon is
 amortized over the period of lease.
 
 ii.  The cost of Software is treated as intangible asset and the same
 is amortized over its estimated useful life.  8.  EMPLOYEES BENEFITS
 
 a) Short Term Employee Benefits
 
 Short Term Employee Benefits such as short-term compensated absences
 are recognized as an expense on an undiscounted basis in the Profit
 &Loss Account of the year in which the related service is rendered.
 
 b) Post Employment Benefits
 
 i) Defined Contribution Plans: Defined Contribution Plans such as
 Provident / Pension fund are recognized as an expense and charged to
 the Profit &Loss Account.  ii) Defined Benefit Plans
 
 (a) Gratuity:
 
 The employees Gratuity Fund Scheme is funded by the Bank and managed by
 LIC /Bank through a separate scheme. The present value of the Banks
 obligations under Gratuity is recognized on the basis of an actuarial
 valuation as at the year end and the fair value of the Plan assets is
 reduced from the gross obligations to recognize the obligation on a net
 basis.
 
 (b) Pension:
 
 The employees Pension Fund is funded by the Bank and is managed by a
 separate trust. The present value of the Banks obligations under
 Pension is recognized on the basis of an actuarial valuation as at the
 year end and the fair value of the Plan assets is reduced from the
 gross obligations to recognize the obligation on a net basis
 
 Amortization
 
 The additional liability/expenditure arising consequent upon the
 reopening of Pension Option to the employees of the bank during the
 year and enhancement in gratuity limit during the year pursuant to
 amendment to Payment of Gratuity Act, 1972 is being amortized over a
 period of five years beginning with the current financial year 2010-11,
 with 1/5th of total amount being charged offto the Profit and Loss
 Account every year.
 
 (a) Other Long Term Benefits:
 
 Other Long Term Benefits such as Leave Encashment, Sick Leave,
 LFC/LTCavailment/encashment, Employee Incentive Scheme, Ex-gratia to
 retirees and Relocation of expenses on exit are recognized on the basis
 of actuarial valuation made as at the end of the year.
 
 9.  PROVISION FOR TAXATION:
 
 a) Provision for taxes is made on the basis of estimated tax liability.
 
 b) In compliance with AS-22 Accounting for Taxes on Income, issued by
 the Institute of Chartered Accountants of India, accounting for
 deferred income tax is made after considering tax rates and laws that
 have been enacted or substantively enacted as of balance sheet date.
 
 10.  IMPAIRMENT OF ASSETS
 
 An assessment is made at each balance sheet date whether there is any
 indication that an asset is impaired.  If any such indication exists,
 an estimate of the recoverable amount is made and impairment loss, if
 any is provided for.
 
 11.  CONTINGENT LIABILITIES AND PROVISIONS Past events leading to
 possible or present obligation is treated as contingent liabilities.
 Provision is recognized in the case of present obligation where the
 reliable estimate can be made and where there are probable out flow of
 resources embodying forgoing of economic benefits to settle the
 obligation.
 
 12.  NET PROFIT
 
 The Net Profit disclosed in the Profit and Loss Account is after- fa)
 Provision for depreciation on Investments.
 
 (b) Provision for Taxation.
 
 (c) Provision on loan losses as per prudential guidelines issued by
 Reserve Bank of India
 
 (d) Provision for non-performing investments as per prudential
 guidelines issued by Reserve Bank of India.
 
 (e) Other usual and necessary provisions.