1.1 ACCOUNTING CONVENTION
These accounts have been prepared in accordance with historical cost
convention, applicable Accounting Standards notified by the Companies
(Accounting Standards) Rules, 2006 and relevant provisions of the
Companies Act, 1956 and the guidelines issued by the National Housing
The preparation of financial statements requires the Management to make
estimates and assumptions considered in the reported amounts of assets
and liabilities (including contingent liabilities) as of the date of
the financial statements and the reported income and expenses during
the reporting period. Management believes that the estimates used in
preparation of the financial statements are prudent and reasonable.
Future results could differ from these estimates.
1.2 SYSTEM OF ACCOUNTING
The Corporation adopts the accrual concept in the preparation of the
The Balance Sheet and the Statement of Profit and Loss of the
Corporation are prepared in accordance with the provisions contained in
Section 211 of the Companies Act 1956, read with Revised Schedule VI.
Assets and liabilities are recorded at historical cost to the
Corporation. These costs are not adjusted to reflect the changing value
in the purchasing power of money.
1.4 INTEREST ON HOUSING LOANS
Repayment of housing loans is generally by way of Equated Monthly
Instalments (EMIs) comprising principal and interest. EMIs commence
once the entire loan is disbursed. Pending commencement of EMIs,
pre-EMI interest is payable every month. Interest on loans is computed
either on an annual rest or on a monthly rest basis.
1.5 INCOME FROM LEASES
Lease rental income in respect of leases is recognised in accordance
with the Accounting Standard on ''Leases'' (AS 19) notified by the
Companies (Accounting Standards) Rules, 2006.
1.6 INCOME FROM INVESTMENTS
The gain/loss on account of Investments in Preference Shares,
Debentures/Bonds and Government Securities held as long-term
investments and acquired at a discount/premium, is recognised over the
life of the security on a pro-rata basis. Interest Income is accounted
on accrual basis. Dividend income is accounted when the right to
receive is established.
1.7 BROKERAGE AND SERVICE CHARGES ON DEPOSITS
Brokerage, other than incentive brokerage, and service charges on
deposits are amortised over the period of the deposit. Incentive
brokerage, which is payable to agents who achieve certain collection
targets, is charged to the Statement of Profit and Loss.
1.8 TRANSLATION OF FOREIGN CURRENCY
Assets and liabilities in foreign currencies are converted at the rates
of exchange prevailing at the year- end, where not covered by forward
contracts. Wherever the Corporation has entered into a forward contract
or an instrument that is, in substance, a forward exchange contract,
the difference between the forward rate and the exchange rate on the
date of the transaction is recognised as income or expense over the
life of the contract. Cross currency interest rate swaps are recorded
by marking the foreign currency component to spot rate. The net
loss/gain on translation of long term monetary assets and liabilities
in foreign currencies is amortised over the period of monetary assets
and liabilities. The net loss/gain on translation of short term
monetary assets and liabilities in foreign currencies is recorded in
the Statement of Profit and Loss.
Investments are capitalised at cost inclusive of brokerage and stamp
charges and are classified into two categories, viz. Current or Long
Term. Provision for diminution in the value of investments is made in
accordance with the guidelines issued by the National Housing Bank and
the Accounting Standard on ''Accounting for Investments'' (AS 13)
notified by the Companies (Accounting Standards) Rules, 2006, and is
recognised through the Provision for Contingencies Account. The
investment in properties is net of provision for depreciation.
1.10 TANGIBLE FIXED ASSETS
Fixed Assets are capitalised at cost inclusive of legal and/or
installation expenses. Leased Assets are accounted in accordance with
the Accounting Standard on ''Leases'' (AS 19) notified by the
Companies (Accounting Standards) Rules, 2006.
1.11 INTANGIBLE ASSETS
Intangible Assets comprising of system software are stated at cost of
acquisition, including any cost attributable for bringing the same to
its working condition, less accumulated amortisation. Any expenses on
such software for support and maintenance payable annually are charged
to the Statement of Profit and Loss.
1.12 DEPRECIATION AND AMORTISATION
Tangible Fixed Assets
Depreciation on all Fixed Assets other than Leased Assets and Leasehold
Improvements, is provided for the full year in respect of assets
acquired during the year. No depreciation is provided in the year of
In respect of Leased Assets and Leasehold Improvements, depreciation is
provided on a pro-rata basis from the date of installation /
Depreciation on Buildings, Computers, Leased Assets and Leasehold
Improvements, is calculated as per the straight-line method; and on
other assets as per the reducing balance method. All assets except
Computers and Leased Assets are depreciated at rates specified by the
Companies Act, 1956. Depreciation on Computers is calculated at the
rate of 25 per cent per annum. Depreciation in respect of finance
leases is provided on the straight line method over the primary period
of lease or over the specified period, as defined under Section
205(5)(a) of the Companies Act, 1956, whichever is shorter.
Depreciation in respect of Leasehold Improvements is provided on the
straight-line method over the primary period of the lease.
Capitalised software is amortised over a period of four years on a
1.13 INVESTMENT IN PROPERTIES
Depreciation on Investment in properties is provided on a pro-rata
basis from the date of acquisition.
1.14 PROVISION FOR CONTINGENCIES AND NON PERFORMING ASSETS
The Corporation''s policy is to carry adequate amounts in the
Provision for Non-Performing Assets account and the Provision for
Contingencies account to cover the amount outstanding in respect of all
non-performing assets and standard assets respectively as also all
other contingencies. All loans and other credit exposures where the
instalments are overdue for Ninety days and more are classified as
non-performing assets in accordance with the prudential norms
prescribed by the National Housing Bank. The provision for non-
performing assets is deducted from loans and advances. The provisioning
policy of the Corporation covers the minimum provisioning required as
per the NHB guidelines.
1.15 EMPLOYEE BENEFITS
Provident Fund and Superannuation Fund Contributions
The Corporation''s contributions paid / payable during the year
towards Provident Fund and Superannuation Fund are considered as
defined contribution plans and are charged in the Statement of Profit
and Loss every year. These funds and the schemes thereunder are
recognised by the Income-tax authorities and administered by various
Gratuity and Post Retirement Pension
The net present value of the Corporation''s obligation towards
gratuity to employees and post retirement pension scheme for whole time
Directors is actuarially determined based on the projected unit credit
method, except in the case of Dubai branch where the provision for
gratuity is made in accordance with the prevalent local laws. Actuarial
gains and losses are immediately recognised in the Statement of Profit
Other Employee Benefits
Compensated absences in the form of short term benefits are determined
on an undiscounted basis and recognised over the period of service,
which entitles the employees to such benefits. Any such benefits which
are long term in nature are actuarially determined.
The accounting treatment for income-tax in respect of the
Corporation''s income is based on the Accounting Standard 22 on
''Accounting for Taxes on Income'' as notified by the Companies
(Accounting Standards) Rules, 2006. The provision made for income-tax
in the accounts comprises both, the current tax and the deferred tax.
The deferred tax assets and liabilities for the year, arising on
account of timing differences, are recognised in the Statement of
Profit and Loss and the cumulative effect thereof is reflected in the
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the Balance Sheet date. Deferred
tax asset is recognised only to the extent that there is reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax asset can be realised. In situations
where the Company has unabsorbed depreciation or carried forward
losses, deferred tax assets are recognised only if there is virtual
certainty supported by convincing evidence that the same can be
realised against future taxable profits.
1.17 SECURITISED ASSETS
Derecognition of securitised assets in the books of the Corporation,
recognition of gain or loss arising on securitisation and accounting
for credit enhancement provided by the Corporation is based on the
Guidance Note on Accounting for Securitisation issued by the Institute
of Chartered Accountants of India.
Securitised assets are derecognised in the books of the Corporation
based on the principle of surrender of control over the assets. Credit
Enhancement provided by the Corporation by way of investments in
subordinate Class B Pass Through Certificates is included under
Investments in Pass Through Certificates in Note no. 13.