[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 (both
 monetary and non-monetary as well as contingent liabilities) are
 translated at the closing spot rate of exchange announced by Foreign
 Exchange Dealers'' Association of India (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 (AS) 11 issued by the Institute of Chartered
 Accountants of India (ICAI) and as per the guidelines of Reserve Bank of
 India (RBI). The resultant exchange gain/loss is credited/debited to
 Foreign Currency Translation Reserve.
 
 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 rate for the residual maturity of the contract in accordance with AS
 11 issued by ICAI and as per the guide lines of RBI.
 
 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
 RBI. 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 and the depreciation, if any, 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 & Associates and (f) Others.
 
 3.2. The valuation of Investments is done in accordance with the
 guidelines issued by the RBI as under:
 
 a) HELDTO MATURITY
 
 Investments under Held to Maturity category are carried at acquisition
 cost, net of amortisation, if any.  The excess of acquisition cost, if
 any, over the face value is amortized over the remaining period of
 maturity.
 
 Investments in Subsidiaries, Joint Ventures and Associates are valued
 at carrying cost. Any diminution in the value other than temporary in
 nature is fully provided for.
 
 Investment in sponsored Regional Rural Banks (RRB) 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 Loss Account.
 
 b) AVAILABLE FOR SALE
 
 The individual securities under Available for Sale'' category are
 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 lower of YTM rates / redemption values.
 
 Quoted Shares are 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 scrip wise and depreciation /appreciation
 Under each sub category is aggregated.
 
 Based on the above valuation, net appreciation if any, in each sub
 category is ignored while the net depreciation is fully provided for.
 
 c) HELDFORTRADING
 
 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
 for and net appreciation is ignored.
 
 3.3 Cost such as brokerage, commission etc., relating to securities at
 the time of purchase are charged to Profit
 
 & Loss Account.
 
 3.4. Broken period interest on debt instruments up to the
 Date of acquisition/disposal is treated 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/realisation, 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 Bank''s
 investment in Security Receipts issued by SC/RC.
 
 3.6. Non-Performing Investments (NPI) are identified as stated
 below, as per the guide lines issued by RBI:
 
 [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 Re.l per company, where the latest Balance
 Sheet is not available or the 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 also treated as NPI.
 
 3.7 Accounting for Repo/Reverse Repo and Liquidity Adjustment Facility
 (LAF)
 
 [a] The securities purchased/sold with an agreement to repurchase on
 the agreed terms under Repo / Reverse Repo (other than LAF) are
 accounted as borrowing/lending.
 
 [b] The securities purchased/sold under LAF with RBI are
 debited/credited to Investment account and reversed on maturity.
 
 [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 Interest Rate Swaps and Forward Rate Agreements.
 Currency Derivatives dealt by the Bank are Options and Currency Swaps.
 
 Based on RBI guidelines
 
 a.  Derivatives used for trading are marked to market and net
 depreciation is recognized while net appreciation is ignored.
 
 b.  Derivatives used for hedging are
 
 i.  Marked to market in case where the underlying Assets/Liabilities
 are marked to market.
 
 ii.  Income / Expenditure is accounted on accrual basis for Hedging
 swaps.
 
 [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 RBI.
 
 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 SC / RC, if the sale is at
 a price below the Net Book Value (NBV), the shortfall is debited to the
 Profit & Loss Account. If the sale is for a value higher than 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 leasehold
 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 in the Profit and Loss
 Account.
 
 [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 RBI, depreciation on Computers is charged at33.33%on
 Straight-Line Method.
 
 7.2. Premium paid on leasehold properties is charged off over the 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,
 1956afteradjustingCapital 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 for in the year of sale/disposal.
 
 [8] Impairment of Assets
 
 Impairment losses on Fixed Assets, if any, are recognized in Profits
 Loss Account in accordance with AS 28 issued by ICAI.
 
 [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 realisation, in accordance with the
 prudential norms prescribed by RBI. 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 and Privilege Leave is made based
 On the actuarial valuation at the year-end as per the AS -15(Revised)
 Issued by ICAI. Net actuarial gains/losses are recognized in Profit & Loss
 Account.
 
 [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 under Contingent 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 one or more subsequent 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 Income Tax and Wealth Tax
 
 - Provision for loan losses
 
 - Write off of certain Non-Performing Advances / Investments
 
 - Provision for Standard Assets
 
 - Other usual and necessary provisions
 
 - Transfer to contingencies