1.  BASIS OF PREPARATION
 
 The financial statements have been prepared under the historical cost
 convention unless otherwise stated. They conform to Generally Accepted
 Accounting Principles (GAAP) in India, which comprises statutory
 provisions, regulatory/ Reserve Bank of India (RBI) guidelines,
 Accounting Standards/ guidance notes issued by the Institute of
 Chartered Accountants of India (ICAI) and the practices prevalent in
 the banking industry in India.  In respect of foreign offices,
 statutory provisions and practices prevailing in respective foreign
 countries are complied with.
 
 2 USE OF ESTIMATES
 
 The preparation of financial statements requires the management to make
 estimates and assumptions considered in the reported amount of assets
 and liabilites (including contingent liabilites) as of date of the
 financial statements and the reported income and expenses for the
 reporting period. Management believes that the estimates used in the
 preparation of the financial statements are prudent and reasonable.
 Future results could differ from these estimates. Any revision to the
 accounting estimates is recognised prospectively in the current and
 future periods unless otherwise stated.
 
 3 INVESTMENTS
 
 3.1 Classification
 
 The Investment portfolio of the Bank is classified, in accordance with
 the RBI guidelines, into:
 
 a Held to Maturity (HTM) comprising Investments acquired with the
 intention to hold them till maturity.
 
 b Held for Trading (HFT) comprising Investments acquired with the
 intention to trade.
 
 c Available for Sale (AFS) comprising Investments not covered by
 (a) and (b) above i.e. those which are acquired neither for trading
 purposes nor for being held till maturity.
 
 3.2 Acquisition Cost
 
 Cost of acquisition of Investments is net of incentives, front-end fees
 and commission.
 
 3.3 Basis of Valuation
 
 Investments classified as HTM are carried at weighted average
 acquisition cost unless it is more than the face value, in which case
 the premium is amortized over the period remaining to maturity.
 
 Investments classified as HTM includes debentures / bonds which are
 deemed to be in the nature of / treated as advances (for which
 provision is made by applying the RBI prudential norms of assets
 classification and provisioning applicable to Advances).
 
 Investments in Regional Rural Banks, Treasury Bills, Commercial Papers
 and Certificates of Deposit which have been valued at carrying cost.
 
 Investments in subsidiaries and joint ventures (both in India and
 abroad) are valued at acquisition cost less diminution, other than
 temporary in nature.
 
 Bank''s investments in units of VCFs made after 23.08.2006 are
 classified under HTM category for initial period of three years and are
 valued at cost.  After period of three years from date of disbursement,
 it will be shifted to AFS and marked-to-market as per RBI guidelines.
 
 Investments classified as HFT and AFS are marked to market scrip-wise
 and the resultant net depreciation if any, in each category disclosed
 in the Balance Sheet is recognized in the Profit and Loss Account,
 while the net appreciation, if any, is ignored.
 
 Investments made by the Bank as Primary Dealer in Treasury Bills under
 HFT category have been valued at carrying cost.
 
 For the purpose of valuation of quoted investments in Held for
 Trading and Available for Sale categories, the market rates /
 quotes on the Stock Exchanges, the rates declared by Primary Dealers
 Association of India (PDAI) / Fixed Income Money Market and Derivatives
 Association (FIMMDA) / Foreign Exchange Dealers Association of India
 (FEDAI) are used.
 
 Investments for which such rates / quotes are not available are valued
 as per norms laid down by RBI, which are as under:
 
 a Government / - 
 Approved securities               on Yield to Maturity basis.
 
 b Equity Shares, pSu and 
 Trustee shares
 
                                   at book value as per the latest
                                   Balance Sheet (not more than
                                   12 months old), otherwise Re.1
                                   per company.
 
 c Preference Shares
 
 -                                 on Yield to Maturity basis
                                   with appropriate credit spread
                                   mark- up
 
 d PSU Bonds
 
 -                                 on Yield to Maturity basis
                                   with appropriate credit spread
                                   mark-up.
 
 e Units of Mutual
 Funds
 
 -                                 at the latest repurchase price
                                   / NAV declared by the Fund in
                                   respect of each scheme.
 
 f Venture Capital
 
 -                                 Declared NAV or break up NAV
                                   as per audited balance sheet
                                   which is not more than 18 months
                                   old. If NAV/ audited financials
                                   are not available for more than
                                   18 months continuously then at
                                   Re. 1/- per VCF.
 
 3.4  Disposal of Investments
 
 Profit/ loss on sale of Investments classified as HTM is recognized in
 the Profit and Loss Account based on the weighted average cost / book 
 value of the related Investments and an amount equivalent of profit 
 on sale of Investments in HTM classification is appropriated to Capital Reserve Account.
 
 Profit/ loss on sale of Investment in AFS/ HFT category is recognized
 in Profit and Loss Account.
 
 3.5 The Bank is following uniform methodology of accounting for
 investments on settlement date basis.
 
 3.6 In respect of investments 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 the RBI are followed.
 
 3.7 The transfer of a security between these categories is accounted
 for at the acquisition cost / book value / market value on the date of
 transfer, whichever is the least, and the depreciation, if any, on such
 transfer is fully provided for.
 
 3.8 In respect of non-performing securities, income is not recognised,
 and provision is made for depreciation in the value of such securities
 as per RBI guidelines.
 
 3.9 REPO / Reverse REPO
 
 The Bank has adopted the Uniform Accounting Procedure prescribed by the
 RBI for accounting of market Repo and Reverse Repo transactions [other
 than the Liquidity Adjustment Facility (LAF) with the RBI]. Repo and
 Reverse Repo Transactions are treated as Collaterised Borrowing /
 Lending Operations with an agreement to Repurchase on the agreed terms.
 Securities sold under Repo are continued to be shown under investments
 and Securities purchased under Reverse Repo are not included in
 investments. Costs and revenues are accounted for as interest
 expenditure / income, as the case may be.
 
 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.
 
 3.10 Derivatives
 
 The Bank presently deals in interest rate and currency derivatives. The
 interest rate derivatives dealt with by the Bank are Rupee Interest
 Rate Swaps, Foreign Currency Interest Rate Swaps and forward rate
 agreements. Currency Derivatives dealt with by the Bank are Options and
 Currency swaps.
 
 Based on RBI guidelines, Derivatives are valued as under:
 
 The hedge/ non-hedge(market making) transactions are recorded
 separately. Derivative contracts designated as hedges are not marked to
 market unless their underlying is marked to market. Trading derivative
 positions are marked-to-market (MTM) and the resulting losses, if any,
 are recognized in the Profit and Loss Account. Profit, if any, is
 ignored. Income and Expenditure relating to interest rate swaps are
 recognized on the settlement date. Gains/ losses on termination of the
 trading swaps are recorded on the termination date as income/
 expenditure.
 
 
 For the purpose of valuation, 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 transactions of the swap agreements as on the
 Balance Sheet date. Losses arising there from, if any, are fully
 provided for while the profits, if any, are ignored.
 
 Contingent Liabilities on account of derivative contracts denominated
 in foreign currencies are reported at closing rates of exchange
 notified by FEDAI at the Balance Sheet date.
 
 4 ADVANCES
 
 4.1 Advances in India are classified as Standard, Sub- standard,
 Doubtful or Loss assets and provision for advances are made as per the
 Prudential Norms of the RBI. In respect of Advances made in overseas
 branches, Advances are classified in accordance with Prudential Norms
 prescribed by the RBI or local laws of the host country in which
 advances are made, whichever is more stringent.
 
 4.2 Advances are net of specific loan loss provisions, interest
 suspense, amount received and held in suit- filed Sundry Deposits and
 Claims Received.
 
 4.3 In respect of Rescheduled / Restructured accounts, Provision for
 dimunition in fair value of restructured advances is measured in net
 present value terms as per RBI guidelines.
 
 4.4 In case of financial assets sold to Asset Reconstruction Company
 (ARC)/ Securitization Company (SC), if the sale is at a price below the
 net book value (NBV), (i.e. Book value less provisions held) the
 shortfall is debited to the profit and loss account. If the sale value
 is higher than the NBV, surplus is carried forward and utilised to meet
 the shortfall/ loss on account of subsequent sale of non-performing
 financial assets.
 
 5 FIXED ASSETS
 
 5.1 Premises and other Fixed Assets are stated at historical cost
 except revalued premises which are stated at revalued amount. The
 appreciation on revaluation is credited to Capital Reserve and the
 depreciation provided thereon is deducted there from.
 
 5.2 Premises include land and building under construction.
 
 6 RESERVES AND SURPLUS
 
 Revenue and other Reserves include Statutory Reserves created by 
 foreign branches as per applicable local laws of the respective 
 countries.
 
 7 REVENUE RECOGNITION
 
 7.1 Income (other than item referred in Paragraph 7.2)/ expenditure is
 generally recognised on accrual basis.  In case of foreign offices,
 income/ expenditure is recognised as per the local laws of the country
 in which the respective foreign office is located.
 
 7.2 Income by way of Fees, Commission other than on Government
 business, Commission on Guarantees, Letter of Credits, Exchange,
 Brokerage and Interest on Advance Bills are accounted for on
 Realization basis. Dividend on shares in Subsidiaries, joint ventures 
 And associates is accounted on realisation basis.
 
 7.3 In view of uncertainty of collection of income in cases of
 Non-performing Assets/Investments, such income is accounted for only on
 realisation in terms of the RBI guidelines.
 
 7.4 Lease payments including cost escalation for assets taken on
 operating lease are recognised in the Profit and Loss Account over the
 lease term in accordance with the AS 19 (Leases) issued by ICAI.
 
 8 EMPLOYEE BENEFITS
 
 8.1 PROVIDENT FUND
 
 Provident fund is a defined contribution as 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.
 
 8.2 GRATUITY
 
 Gratuity liability is a defined benefit obligation 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 a
 separate trust.
 
 8.3 PENSION
 
 8.3.1 Pension liability is a defined benefit obligation and is provided
 for on the basis of actuarial valuation made at the end of the
 financial year, for the employees who have joined Bank up to 31.03.2010
 and opted for pension. The pension liability is funded by the bank and
 is managed by a separate trust.
 
 8.3.2 New Pension Scheme which is applicable to employees who joined
 bank on or after 01.04.2010 is a defined contribution scheme, Bank pays
 fixed contribution at pre determined rate, the obligation of the Bank
 is limited to such fixed contribution. The contribution is charged to
 Profit and Loss Account.
 
 8.4 COMPENSATED ABSENCES
 
 Accumulating compensated absences such as Privilege Leave and Sick
 Leave are provided for based on actuarial valuation.
 
 8.5 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 on deputation are valued and accounted for
 as per laws prevailing in the respective territories.
 
 9.  DEPRECIATION
 
 9.1 Depreciation on Fixed Assets in India [other than those referred in
 Paragraph 9.3 and 9.4] is provided on the written down value method in accordance with Schedule XIV to the
Companies Act, 1956, except in case 
 of revalued assets, in respect of which higher depreciation is provided
 on the basis of estimated useful life of these revalued assets.
 
 9.2 Depreciation on Fixed Assets outside India [other than those
 referred to in Para 9.3 below] is provided as per local laws or
 prevailing practices of the respective territories.
 
 9.3 Depreciation on Computers and Software forming an integral part of
 Computer Hardware, in and out side India is provided on Straight Line
 Method at the rate of 33.33% p.a., as per the guidelines of RBI.
 Computer software not forming part of an intergral part of hardware is
 charged directly to Profit and Loss Account.
 
 9.4 Depreciation on ATMs is provided on Straight Line Method at the
 rate of 20% p.a.
 
 9.5 Depreciation on additions is provided for full year and no
 depreciation is provided in the year of sale / disposal.
 
 9.6 Cost of leasehold land and leasehold improvements are amortised
 over the period of lease.
 
 10.  IMPAIRMENT OF ASSETS
 
 Impairment losses (if any) on Fixed Assets (including revalued assets)
 are recognised in accordance with AS 28 (Impairment of Assets) issued
 by the ICAI and charged off to Profit and Loss Account.
 
 11.  FOREIGN CURRENCY TRANSACTIONS
 
 11.1 Accounting for transactions involving foreign exchange is done in
 accordance with AS 11, (The Effects of Changes in Foreign Exchange
 Rates), issued by the ICAI.
 
 11.2 As stipulated in AS 11, the foreign currency operations of the
 Bank are classified as
 
 a) Integral Operations and
 
 b) Non Integral Operations. All Overseas Branches, Offshore Banking
 Units, Overseas Subsidiaries are treated as Non Integral Operations and
 domestic operations in foreign exchange and Representative Offices are
 treated as Integral Operations.
 
 11.3 Translation in respect of Integral Operations
 
 a.  The transactions are initially recorded on weekly average rate as
 advised by FEDAI.
 
 b.  Foreign Currency Assets and Liabilities (including contingent
 liabilities) are translated at the closing spot rates notified by FEDAI
 at the end of each quarter.
 
 c.  The resulting exchange differences are recognized as income or
 expenses and are accounted through Profit and Loss Account.  Any
 reversals / payment of foreign currency assets and liabilities is done
 at the weekly average closing rate of the preceding week and the
 difference between the outstanding figure and the amount for which
 reversal / payment is made, is reflected in Profit and Loss Account.
 
 d. Foreign exchange spot and forward contracts outstanding as at the
 balance sheet date and held for trading, are revalued at the closing
 spot and forward rates respectively notified by FEDAI and at
 interpolated rates for contracts of interim maturities. The resulting
 forward valuation profit or loss is included in the Profit and Loss
 Account.
 
 11.4 Translation in respect of Non Integral Operations
 
 a.  Assets and Liabilities are translated at the closing spot rates
 notified by FEDAI at the end of each quarter.
 
 b.  Foreign Exchange Spot and Forward contingent liabilities
 outstanding as at the balance sheet date are translated at the closing
 spot and forward rates respectively notified by FEDAI and at
 interpolated rates for contracts of interim maturities.
 
 c.  Income and Expense are translated at quarterly average rate
 notified by FEDAI at the end of each quarter.
 
 d.  The resulting exchange differences are not recognized as income or
 expense for the period but accumulated in a separate account Foreign
 Currency Translation Reserve till the disposal of the net
 investment.
 
 11.5 Forward Exchange Contracts
 
 In accordance with the guidelines of FEDAI and the provisions of AS 11,
 Foreign exchange spot and forward contracts outstanding as at the
 balance sheet date and held for trading, are revalued at the closing
 spot and forward rates respectively notified by FEDAI and at
 interpolated rates for contracts of interim maturities. The resulting
 forward valuation profit or loss is included in the Profit and Loss
 Account.
 
 12.  TAXES ON INCOME
 
 This comprise of provision for Income tax and deferred tax charge or
 credit (reflecting the tax effects of timing differences between
 accounting income and taxable income for the period) as determined in
 accordance with AS 22 (Accounting for taxes on Income) issued by ICAI.
 Deferred tax is recognised subject to consideration of prudence in
 respect of items of income and expenses those arise at one point of
 time and are capable of reversal in one or more subsequent periods.
 Deferred tax assets and liabilities are measured using enacted tax
 rates expected to apply to taxable income in the years in which the
 timing differences are expected to be reversed. The effect on deferred
 tax assets and liabilities of a change in tax rates is recognised in
 the income statement in the period of enactment of the change
 
 13.  EARNINGS PER SHARE
 
 The bank reports basic and diluted earnings per equity share in
 accordance with the AS 20 (Earnings Per Share) issued by the ICAI.
 Basic earnings per equity share has been computed by dividing net
 income by the weighted average number of equity shares outstanding for
 the period.  Diluted earnings per equity share has been computed using
 the weighted average number of equity shares and dilutive potential
 equity shares outstanding during the period.
 
 14.  PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
 
 As per AS 29 (Provisions, Contingent Liabilities and Contingent Assets)
 issued by the ICAI, the Bank recognises 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.
 
 Contingent liability is disclosed unless the possibility of an outflow
 of resouces embodying economic benefit is remote.
 
 Contingent Assets are not recognised in the financial statements since
 this may result in the recognition of income that may never be
 realised.