1.1 BASIS OF ACCOUNTING
 
 The accounts have been prepared by following the going concern concept
 on historical cost basis, consistently, and are in conformity with the
 applicable statutory provisions for the time being in force including
 the RBI guidelines and generally accepted accounting principles, save
 as otherwise stated.
 
 1.2 INVESTMENTS
 
 a) CLASSIFICATION:
 
 Investments have been categorized as per guidelines of Reserve Bank of
 India (i) Held to Maturity, (ii) Available for Sale (iii) Held for
 Trading and are disclosed in the accounts under six classifications at
 the value net of depreciation provision thereon.
 
 b) VALUATION:
 
 Investments are valued as per Reserve Bank of India guidelines in the
 following manner:
 
 I. BASIS:
 
 Held to Maturity
 
 Investments held under this category are carried in books at their
 acquisition cost. Premium, if any, paid on acquisition is amortized
 using straight line method.
 
 Available for Sale and Held for Trading
 
 These Investments are marked to market scrip wise. Depreciation/
 Appreciation for each of six classifications is aggregated; net
 depreciation, if any, for each classification is provided for, but net
 appreciation is ignored.
 
 ii METHODOLOGY:
 
 All investments of bank are valued consistently on Average Cost Method.
 Market value of quoted securities in case of Investments included in
 the Available for Sale and Held for Trading categories is taken
 based on market quotations of recognized stock exchange/s or price list
 of Reserve Bank of India.
 
 The value in case of unquoted securities and securities where market
 quotes are not available, is determined based on Prices / Yield to
 Maturity declared by Primary Dealers Association of India jointly with
 Fixed Income Money Market and Derivatives Association of India and Net
 Asset Value in case of units of Mutual Funds / SRs of ARCs / SCs and
 Net Book Value in case of Shares of Companies.
 
 Treasury Bills, Commercial Papers, Rural Infrastructure Development
 Funds and Investments including Share Capital Deposits in Regional
 Rural Banks are valued at carrying cost.
 
 INCOME RECOGNITION AND PRUDENTIAL NORMS:
 
 Bank follows the prudential norms formulated by Reserve Bank of India,
 from time to time, as to Asset Classification of all Investments,
 Income Recognition and Provisioning on such Investments.
 
 Commission, brokerage, broken period interest on investment
 transactions are debited and /or credited to Profit and Loss Account in
 the year of transaction.
 
 Profit on sale of investments under the category Held to Maturity is
 taken to Profit and Loss Account and thereafter appropriated to
 Capital Reserve Account whereas loss on sale of Investments is
 recognized in the Profit & Loss Account.
 
 17.1 ADVANCES
 
 a) Bank follows the prudential norms formulated by Reserve Bank of
 India, from time to time, as to Asset Classification of Advances,
 Income Recognition and provisioning thereon. Accordingly all advances
 are being classified into Standard, Sub-standard, Doubtful and Loss
 Assets.
 
 b) Advances are net of Provision for Non Performing Assets.  Provision
 in lieu of diminution in the fair value of restructured accounts,
 balance in Sundries Account [interest capitalization - restructured
 accounts] in respect of NPA accounts, DICGC Claims/ ECGC claims
 received and held pending adjustment; part payment received and kept in
 Suspense Account.
 
 c) Prudential provision on Standard Assets and excess provision on sale
 of NPA accounts are included in Other Liabilities and
 Provisions-Others in Schedule 5 to the Balance Sheet.
 
 d) Recoveries in Non Performing Advances are first appropriated towards
 principal outstanding and surplus, if any, is recognized as income.
 
 e) In case of sale of financial assets to the Asset Reconstruction
 Company (ARC) / Securitisation Company (SC) at a price below the net
 book value (NBV), i.e. Book Value Less Provision held, the shortfall is
 debited to the profit and loss account and in case of sale at a value
 higher than the NBV, the excess provision is not being reversed but is
 kept for utilization to meet the shortfall/loss on account of sale of
 other financial assets to ARC/SC.
 
 f) The shortfall, in case of financial assets sold to the Banks, FIs
 and/ or, NBFCs, where the sale is at a price below the net book value
 (NBV), is debited to the profit and loss account, but in the case where
 the sale value is higher than the NBV, the excess provision is not
 reversed but being retained to meet the shortfall/loss on account of
 sale of other non-performing financial asset.
 
 17.4 FIXED ASSETS & DEPRECIATION
 
 a) Premises (except certain premises which have been stated at revalued
 amount) and other fixed assets are stated at historical cost.
 
 b) Premises also include cost of land in some of the properties where
 the same could not be segregated.
 
 c) Depreciation is charged on Written Down Value (W.D.V.) method at the
 rates prescribed under the Income Tax Rules, 1962 except that the
 computer hardware purchased before 01.04.2000 are
 
 depreciated @ 25% p.a. on W.D.V. method and those purchased on or after
 01.04.2000 are depreciated @ 33.33% on Straight Line Method.
 
 d) Cost of leasehold land is amortized over the period of lease.
 
 e) Depreciation attributable to revalued portion is charged to the
 Revaluation Reserve Account.
 
 f) Fixed Assets include Capital Work-in-Progress.
 
 g) Computer software expenses are considered as intangible assets and
 are amortized over a period of five years, which is considered as
 useful economic life of such assets.
 
 17.5 NON BANKING ASSETS
 
 Non Banking Assets are stated at cost.
 
 17.6 REVENUE RECOGNITION
 
 a) The Bank generally follows mercantile system of accounting.
 
 b) Commission on letters of credit/ bank guarantees/ Government
 Business / distribution of third party products, locker rent, interest
 on refund of taxes, dividend, income on units of mutual funds, rental
 income and service charges on various deposit accounts are recognized
 on realization basis.
 
 c) Interest/discount on non-performing loans advances/investments is
 recognized to the extent realized as per the prudential guidelines of
 RBI.
 
 d) Recoveries in written off advances / investments are being accounted
 for as Miscellaneous Income.
 
 e) Interest on term deposits matured on or after 22th August 2008 but
 remained unpaid has been provided /accounted for at saving bank rate.
 
 f) Expenses on the issue of shares, bonds etc. are recognized in the
 year of incurrence.
 
 g) Unclaimed credit balances lying in Suspense Receipts for more than
 five years are being considered as Miscellaneous Income.  Subsequent
 claims, if any paid to the parties are charged to expenses in the year
 of payment.
 
 h) Legal expenses in case of suit filed accounts are charged to Profit
 and Loss account.
 
 17.7 TREATMENT OF VRS EXPENDITURE
 
 Expenditure on VRS is recognized in the year of payment.
 
 17.8 FOREIGN EXCHANGE
 
 a) All foreign currency assets and liabilities including outstanding
 forward exchange contracts in foreign currency are valued at the
 year-end on the rates issued by FEDAI and the resultant profit/loss
 arising out of such revaluation is accounted for in the Profit & Loss
 Account.
 
 b) Guarantees, letters of credit, acceptances, endorsements and other
 obligations in foreign currency are also revalued at the year- end on
 the rates issued by FEDAI for the purpose of Balance Sheet exposure.
 
 c) Income and Expenditure items are recognized at the exchange rates
 prevailing on the date of transaction.
 
 17.9 STAFF BENEFITS
 
 Gratuity, Pension and Leave Encashment payable on retirement; and other
 employee benefits are charged to Profit & Loss Account as per actuarial
 valuation as required by AS 15 [R] issued by ICAI.  The liability on
 account of exercise of second pension option by the existing employees,
 and enhancement in gratuity limit from ?.3.50 lacs to Rs.10 lacs, will
 be amortized in five years starting from the FY 2010-11 in terms of RBI
 circular no: DBOD.No. BP.BC.80/ 21.04.018/2010-11 dated 09th February
 2011.
 
 17.10 TAXES ON INCOME
 
 a) Current tax is provided using applicable tax rates on the amount
 worked out on the basis of applicable tax laws, judicial pronouncements
 / legal opinions and the past assessments.
 
 b) Deferred tax, comprising of tax effect due to time difference
 between taxable and as per accounts income for the period, is
 recognized keeping in view the consideration of prudence in respect of
 deferred tax assets read with Accounting Standard 22 issued by ICAI.