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
 Bank.
 
 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
 accounts.
 
 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.
 
 1.3 INFLATION
 
 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.
 
 1.9 INVESTMENTS
 
 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
 sale.
 
 In respect of Leased Assets and Leasehold Improvements, depreciation is
 provided on a pro-rata basis from the date of installation /
 acquisition.
 
 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.
 
 Intangible Assets
 
 Capitalised software is amortised over a period of four years on a
 straight-line basis.
 
 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
 trustees.
 
 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
 and Loss.
 
 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.
 
 1.16 INCOME-TAX
 
 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
 Balance Sheet.
 
 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.