[1] Accounting Convention
 
 The accounts are prepared under the Historical cost convention and
 conform to the statutory provisions and prevailing practices, except as
 otherwise stated.
 
 [2] Foreign Currency Translation / Conversion of Foreign Currencies
 
 2.1.  In respect of Foreign Branches, Assets and Liabilities are
 translated at the closing spot rate of exchange announced by FEDAI and
 Income and Expenditure items of the foreign branches are translated at
 the quarterly average closing rate published by FEDAI in accordance
 with Accounting Standard 11 issued by the Institute of Chartered
 Accountants of India and as per the guidelines of Reserve Bank of
 India. The resultant exchange gains, if any, are taken to Foreign
 Currency Translation Reserve and loss, if any, net of reserves, is
 taken to Profit & Loss Account.
 
 2.2.  In respect of Domestic Branches, Assets and Liabilities in
 foreign currency, Forward Exchange Contracts, Guarantees, Acceptances,
 Endorsements and Obligations are evaluated at the closing spot rate /
 forward rateforthe residual maturity of the contract in accordance with
 Accounting Standard 11 issued by the Institute of Chartered Accountants
 of India and as perthe guidelines of Reserve Bank of India.
 
 Income and Expenditure items are accounted for at the exchange rates
 prevailing on the date of transactions.
 
 The gain or loss on such evaluation of outstanding Forward Exchange
 Contracts is taken to Profit & Loss Account.
 
 [3] Investments
 
 3.1. Classification of investments is made as per the guidelines of the
 Reserve Bank of India. The entire investment portfolio of the bank is
 classified under three categories viz. Held to Maturity, Available
 for sale and Held for Trading, which is decided at the time of
 acquisition of securities. 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 a nd the depreciation, if a
 ny, on such transfer is fully provided for.
 
 Investments are disclosed in the Balance Sheet under six
 classifications viz: (a) Government securities, (b) Other approved
 securities, (c) Shares, (d) Debentures & Bonds, (e) Subsidiaries /
 Joint Ventures and (f) Others.
 
 3.2. The valuation of Investments is done in accordance with the
 guidelines issued by the Reserve Bank of ndia asunder:
 
 a) HELD TO MATURITY
 
 Investments under Held to Maturity category are carried at acquisition
 cost, net of amortization, if any.  The excess of acquisition cost, if
 any, over the face value is amortized over the remaining period of
 maturity.
 
 Investments in Subsidiaries and Joint Ventures are valued at carrying
 cost. Any diminution in the value otherthan temporary in nature isfuIly
 provided for.
 
 Investment in RRBs and other Trustee Shares are carried at cost.
 
 Profit on sale of Investments in this category is first taken to the
 Profit and Loss Account and thereafter appropriated to the Capital
 Reserve Account net of taxes and Statutory Reserve. No amortisation is
 effected for securities sold during the year. Loss on sale is
 recognized in the Profit and LossAccount.
 
 b) AVAILABLE FOR SALE
 
 The individual securities under Available For Sale category a re
 marked to market.
 
 Central Government Securities are valued at market prices as per prices
 declared by Fixed Income Money Market and Derivatives Association of
 India (FIMMDA).
 
 State Government securities and other approved securities are valued by
 applying the YTM method by marking it up by 25 basis points above the
 yields of Central Government securities of equivalent maturity put out
 by FIMMDA.
 
 Non SLR securities such as Debentures / Bonds (other than Debentures /
 Bonds which are in the nature of advance) are valued at market prices,
 if available, and if not, are valued applying YTM method by marking it
 up by additional basis points based on credit rating above the yields
 of Central Government Securities of equivalent maturity as put out by
 FIMMDA and the methodology suggested by FIMMDA.
 
 Preference Shares are valued at YTM rates / redemption values,
 whichever is lower.
 
 Quoted Shares a re valued at market prices.
 
 Unquoted Shares are valued at break up value ascertained from the
 latest Balance Sheet not earlier than one year or otherwise at Re 1 per
 Company.
 
 Treasury Bills and Commercial Papers are valued at carrying cost.
 
 Units of Mutual Funds are valued at market rate or repurchase price or
 net asset value in that order depending on their availability.
 
 Securities are valued script wise, and depreciation/ appreciation
 undereach sub category is aggregated.
 
 Based on the above valuation, net appreciation if any in each sub
 category is ignored while the net depreciation isfully provided.
 
 c) HELDFORTRADINC
 
 The individual securities under Held For Trading category are valued
 periodically as per RBI guidelines, at market prices as available from
 the trades/quotes or as per prices declared by FIMMDA. In respect of
 each classification under this category, net depreciation is provided
 and net appreciation is ignored.
 
 3.3. Costs such as brokerage, commission etc., relating to securities
 atthetime of purchase are charged to Profit & LossAccount.
 
 3.4.  Broken period interest on debt instruments up to the date of
 acquisition/disposal istreated as revenue.
 
 3.5.  Security Receipts issued by Securitisation / Reconstruction
 Company (SC/RC) in respect of financial assets sold by the Bank to the
 SC/RC are valued at the lower of the redemption value of the Security
 Receipt and the Net Book Value of the financial asset. The Investment
 is carried in the books at the price determined as above and the
 sale/realization if any, is reduced from investment and the net book
 value is shown.
 
 The valuation, classification and other norms applicable to Investment
 in Non-SLR securities prescribed by RBI is applied to Banks investment
 in Security Receipts issued bySC/RC.
 
 3.6. Non-Performing Investments (NPI) are identified as stated below,
 as per the guidelines issued by Reserve Bankof India.
 
 [a] Securities/Preference Shares where interest / fixed dividend
 /instalment (including maturity proceeds) is due and remains unpaid for
 more than 90 days.
 
 [b] Equity Shares valued at Rs.1 per company where the latest Balance
 Sheet is not available orthe Net worth of the Company is negative.
 
 [c] 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 alsotreatedasNPI.
 
 [4] Derivative Contracts
 
 The Bank deals in Interest Rate Swaps and Currency Derivatives. The
 Interest Rate Derivatives dealt by the Bank are Rupee Interest Rate
 Swaps, Cross Currency nterest Rate Swaps and Forward Rate Agreements.
 Currency Derivatives dealt by the Bank are Options and Currency Swaps.
 
 Based on Reserve Bankof India guidelines:
 
 a.  Derivatives used fortrading are marked to market and net
 depreciation is recognized while net appreciation is ignored.
 
 b.  Derivatives usedforhedgingare
 
 i.  Marked to market in case where the underlying Assets / Lia bi I
 ities a re ma rked to ma rket.
 
 ii.  Income/Expenditure is accounted on accrual basis forHedgingswaps.
 
 [5] Advances
 
 5.1 Advances are classified as performing and non-performing assets and
 provisions are made in accordance with the prudential norms prescribed
 by Reserve Bankof India.
 
 5.2 Advances are stated net of write off, provision for non-performing
 assets, claims received from Credit Guarantee institutions and
 re-discount.
 
 5.3 In case of financial assets sold to the Securitization /
 Reconstruction Company, ifthesaleisata price below the Net Book Value
 (NBV), the shortfall is debited to the Profit & Loss Account. If the
 sale is for a value higherthan the NBV, the excess provision held in
 the account is not reversed but held till redemption of the Security
 Receipt, wherever applicable.
 
 [6] Fixed Assets
 
 6.1. The premises of the Bank include freehold and teasehold
 properties. Land and Buildings are capitalised based on
 conveyance/letters of allotment/ agreement to lease, deposit made on
 long term leasehold properties and /or physical possession of the
 property.
 
 6.2.  Premises and other Fixed Assets are stated at historical cost
 except wherever revalued. The appreciation on revaluation, if any, is
 credited to the Revaluation Reserve Account. Depreciation /
 Amortization attributable to the enhanced value is transferred from
 Revaluation Reserve to the credit of Depreciation intheProfitand
 LossAccount
 
 [7] Depreciation
 
 7.1.  Fixed Assets excluding Computers are depreciated under Written
 Down Value Method at the rates determined by the management on the
 basis of estimated useful life of the respective assets. As per the
 guidelines of Reserve Bank of India, depreciation on Computers is
 charged at 33.33% on Straight-Line Method.
 
 7.2.  Premium paid on leasehold properties is charged off overthe lease
 period.
 
 7.3.  Depreciation on Assets given on Lease is charged on Written Down
 Value Method as per Schedule XIV to the Companies Act, 1956 after
 adjusting Capita recovery.
 
 7.4.  Depreciation on additions to fixed/leased assets is charged for
 the full year irrespective of the date of acquisition. No depreciation
 is provided in the year of sale/disposal.
 
 [8] Impairment of Assets:
 
 Impairment losses on Fixed Assets, if any, are recognized in Profit &
 Loss Account in accordance with Accounting Standard AS-28 issued by the
 institute of Chartered Accountants of India.
 
 [9] Revenue Recognition
 
 9.1.  Income and expenditure are generally accounted on accrual basis.
 
 9.2.  In the case of Non-Performing Assets including investments,
 income is recognised to the extent of realization, in accordance with
 the prudential norms prescribed by Reserve Bank of India. In respect of
 Loans Past Due accounts, recoveries are appropriated first towards
 principal.
 
 9.3. Commission, Exchange, Brokerage, Dividends and Locker Rent are
 accounted for as income on receipt basis.
 
 9.4.  Interest Income on Tax Refund is accounted based on the
 assessment orders passed.
 
 [10] Employee Benefits
 
 Provision for Pension, Gratuity, Privilege Leave and Sick Leave is made
 based on the actuarial valuation at the year-end as perthe Accounting
 Standard -15(Revised) issued by the Institute of Chartered Accountants
 of ndia. Net Actuarial gains and losses are recognized duringtheyear.
 
 [11] Taxation
 
 Provision for Income Tax is made after due consideration of the
 judicial pronouncements and legal opinion. Disputed taxes, not provided
 for are included underTontingent Liabilities.
 
 Tax expenses for the year comprise of current Tax and Deferred Tax.
 Deferred Tax recognizes, subject to the consideration of prudence in
 respect of Deferred Tax Assets, timing differences being the difference
 between taxable income and accounting income that originate in one
 period and are capable of reversal in oneormoresubsequent periods.
 
 [12] Net Profit
 
 12.1 Provisions, Contingent Liabilities and Contingent Assets:
 
 The Bank recognizes provisions only when it has a present obligation as
 a result of a past event and it is probable that an outflow of
 resources will be required to settle the obligation and when a
 reasonable estimate of the amount of the obligation can be made.
 
 Contingent Assets are not recognized since this may result in the
 recognition of Income that may never be realized.
 
 12.2 Net Profit is arrived at after accounting for the following
 Provisions and Contingencies:
 
 - Depreciation on Investments.
 
 - Provision for IncomeTaxand Wealth Tax.
 
 - Provision for loan losses.
 
 - Write-off of certain Non-Performing Advances / investments.
 
 - Provision for Standard Assets.
 
 - Otherusual and necessary provisions.
 
 - Transfer to contingencies.