1. Basis of Preparation
 
 The accompanying financial statements have been prepared on historical
 basis and conform, in all material aspects, to Generally Accepted
 Accounting Principles (GAAP) in India which encompasses applicable
 statutory provisions, regulatory norms prescribed by Reserve Bank of
 India (RBI), Accounting Standards (AS) and prevailing practices in
 Banking industry.
 
 2. Use of Estimates
 
 The preparation of financial statements requires the management to make
 estimates and assumptions that affect the reported amount of assets,
 liabilities, expenses, income and disclosure of contingent liabilities
 as at the date of the financial statements. Management believes that
 these estimates and assumptions are reasonable and prudent. However,
 actual results could differ from estimates. Any revision to accounting
 estimates is recognized prospectively in current and future periods.
 
 3. Revenue Recognition
 
 Revenue is recognized to the extent it is probable that the economic
 benefits will flow to the Bank and the revenue can be reliably
 measured:
 
 Interest income and lease rentals are accrued except in the case of non
 performing assets where it is recognised upon realisation as per the
 prudential norms of the RBI.
 
 Commissions on LC/ guarantee are reckoned as accrued, upfront in cases
 where the commission does not exceed Rs 1 lakh and, in other cases,
 accrued over the period of LC/ Guarantees.
 
 iii. Fee based income are accrued on certainty of receipt and is based
 on milestones achieved as per terms of agreement with the client.
 
 iv. Income on discounted instruments is recognised over the tenure of
 the instrument on a constant yield basis.
 
 v. Dividend is accounted on an accrual basis when the right to receive
 the same is established.
 
 4. Advances and Provisions:
 
 i. Advances are classified into Standard, Sub-standard, Doubtful and
 Loss assets and provisions are made in accordance with the prudential
 norms prescribed by RBI. Advances are stated net of provisions towards
 non- performing advances.
 
 ii. Advances are classified as Secured by Tangible Assets'' when
 security of at least 10% of the advance has been stipulated/created
 against tangible security including book debts. Security in the nature
 of escrow, guarantee, comfort letter, charge on brand, license, patent,
 copyright etc are not considered as Tangible Assets''.
 
 5. Investments:
 
 Classification:
 
 i. Held To Maturity,
 
 ii. Available For Sale and
 
 iii. Held For Trading.
 
 Investments under each category are further classified as
 
 i. Government Securities
 
 ii. Other Approved Securities
 
 iii. Shares
 
 iv. Debentures and Bonds
 
 v. Subsidiaries/Joint Ventures
 
 vi. Others (Commercial Paper, Mutual Fund Units, etc.).
 
 
 Basis of Classification:
 
 a) Investments that the Bank intends to hold till maturity are
 classified as ''Held to Maturity''.
 
 b) Investments that are held principally for resale within 90 days from
 the date of purchase are classified as ''Held F Trading''.
 
 c) Investments, which are not classified in the above two categories,
 are classified as ''Available For Sale''.
 
 d) An investment is classified as ''Held To Maturity'', ''Available For
 Sale'' or ''Held For Trading'' at the time of purchase and subsequent
 shifting amongst categories and its valuation is done in conformity
 with regulat guidelines.
 
 e) Investments in subsidiaries and joint ventures are classified as
 ''Held To Maturity''.
 
 f) The debentures/ bonds/ preference shares deemed to be in the nature
 of advance, are subject to the usual prude norms of asset
 classification and provisioning that are applicable to advances.
 
 Valuation:
 
 i) In determining the acquisition cost of an investment:
 
 a) Brokerage, commission, stamp duty and other taxes paid are included
 in cost of acquisition in r< of acquisition of equity instruments from
 the secondary market whereas in respect of other investments, including
 treasury investments, such expenses are charged to revenue.
 
 b) Upfront incentives received on subscription to securities are
 recognized as income.
 
 c) Broken period interest paid/ received is excluded from the
 acquisition cost/ sale and treated as interest expense/ income.
 
 d) Cost is determined on the weighted average cost method.
 
 ii) Investments ''Held To Maturity'' are carried at acquisition cost
 unless it is more than the face value, in which case the premium is
 amortised on straight line basis over the remaining period of maturity.
 Diminution, other than temporary, in the value of investments in
 subsidiaries/ joint ventures under this category is provided for each
 investment individually. Profits on sale of investments in this
 category is first credited to Profit and Loss Account and thereafter
 appropriated net of applicable taxes to the Capital Reserve Account at
 the year/period end. Loss on sale is recognized in the Profit and Loss
 Account.
 
 iii) Investments ''Held For Trading'' and ''Available For Sale'' are marked
 to market scrip-wise and the resultant net depreciation, if any, in
 each category is recognized in the Profit and Loss account, while the
 net appreciation, if any, is ignored.
 
 a) Treasury Bills, commercial papers and certificates of deposit being
 discounted instruments are valued at carrying cost,
 
 b) In respect of traded/ quoted investments, the market price is taken
 from the trades/ quotes available on the stock exchanges. Government
 Securities are valued at market prices or prices declared by Primary
 Dealers Association of India (PDAI) jointly with Fixed Income Money
 Market and Derivative Association of India (FIMMDA)
 
 c) The unquoted shares/ units are valued at break-up value/ repurchase
 price or at Net Asset Value if the latest balance sheet is available,
 else, at Rs 1/- per company, as per relevant RBI guidelines. The
 unquoted fixed income securities (other than government securities) are
 valued on Yield to Maturity (YTM) basis with appropriate mark-up over
 the YTM rates for Central Government securities of equivalent maturity.
 Such mark-up and YTM rates applied are as per the relevant rates
 published by FIMMDA.
 
 d) Profit or Loss on sale of investments is credited/ debited to Profit
 and Loss Account (Sale of Investments).
 
 iv) Investments are shown net of provisions.
 
 v) Investments are shown net of securities given against borrowing and
 include securities received against lending under Repo/ Reverse Repo
 arrangements respectively.
 
 6. Derivative Transactions:
 
 In Transactions designated as ''Hedge'':
 
 a.  Net interest payable/ receivable on derivative transactions is
 accounted on accrual basis.
 
 b.  On premature termination of Hedge swaps, any profit/ losses are
 recognised over the remaining contractual life of the swap or the
 residual life of the asset/ liability whichever is lesser.
 
 c.  Redesignation of hedge swaps by change of underlying liability is
 accounted as the termination of one hedge and acquisition of another.
 
 d. Hedge contracts are not marked to market unless the underlying is
 also marked to market. In respect of hedge contracts that are marked to
 market, changes in the market value are recognized in the profit and
 loss account.
 
 ii. '' In Transactions designated as ''Trading'':
 
 Outstanding derivative transactions designated as ''Trading'', which
 includes interest rate swaps, cross currency swaps, cross currency
 options and forward rate agreements, are measured at their fair value.
 The resulting profits/ losses are included in the profit and loss
 account. Premium on options, is recorded as a balance sheet item and
 transferred to Profit and Loss Account on maturity/ cancellation.
 
 7. Fixed Assets and depreciation:
 
 i. Fixed assets are carried at historical cost (inclusive of
 installation cost) except wherever revalued. The appreciation on
 revaluation, if any, is credited to the Revaluation Reserve'' Account.
 In respect of revalued assets, the additional depreciation consequent
 to revaluation is transferred from Revaluation Reserve to the Profit
 and Loss account.
 
 ii. Fixed assets individually costing less than Rs 5000 are fully
 depreciated in the year of addition.
 
 iii. Depreciation is provided on Straight Line Method (SLM) from the
 date of addition. The rates of depreciation prescribed in Schedule XIV
 of the Companies Act, 1956 are considered as the minimum rates. If the
 management''s estimate of the useful life of a fixed asset at the time
 of acquisition of the asset or of the remaining useful life on a
 subsequent review is shorter, depreciation is provided at a higher rate
 based on management''s estimates of the useful life/ remaining useful
 life. Pursuant to this policy, depreciation has been provided using the
 following rates:
 
 iv. Depreciation on additions/ sale of fixed assets during the year is
 provided for the actual period.
 
 v. Leasehold land is amortised over the period of lease.
 
 vi. Computer Software (non-integral) individually costing more than Rs
 2.50 lakh is capitalised and depreciated over its useful life, not
 exceeding 5 years.
 
 8. Assets given on lease
 
 i. Assets given on finance lease by the Bank on or before March 31,
 2001 are classified as Leased Assets under Fixed Assets.
 Depreciation thereon is provided on SLM basis at the rates prescribed
 under Schedule XIV of the Companies Act, 1956. The amount of Lease
 Equalisation representing the difference between the annual lease
 charge and the depreciation is adjusted in the Profit & Loss Account.
 
 ii. Assets given under finance lease after March 31, 2001 are accounted
 in accordance with the provisions of AS 19 and included under
 Advances.
 
 9. Securitisation Transactions:
 
 Securitisation of various loans result in sale of these assets to
 Special Purpose Vehicles (''SPVs''), which, in turn issue securities to
 investors. Financial assets are partially or wholly derecognised when
 the control of the contractual rights in the securitised assets is
 lost. The Bank accounts for any loss arising on sale immediately at the
 time of sale and the profit/ premium arising on account of sale is
 amortised over the life of the securities issued or to be issued by the
 SPV to which the assets are sold.
 
 10. Sale of financial assets to Securitization Companies/
 Reconstruction Companies:
 
 Sale of financial assets to Securitisation Companies (SCs)/
 Reconstruction Companies (RCs) is reckoned at the lower of the
 redemption value of Security Receipts (SRs)/ Pass Through Certificates
 (PTCs) received and the net book value of the financial asset. Gains
 arising on such sale or realisation are not recognised in the profit
 and loss account but earmarked as provisions for meeting the losses/
 shortfall arising on sale of other financial assets to SCs/ RCs or
 sale/ realisation of other SRs/ PTCs. Losses arising on such sale or
 realisation are first set off against balance of provisions, if any,
 created out of earlier gains and residual amount of losses are charged
 to profit and loss account. The PTCs are carried at the value as
 determined above, till their sale or realisation. The SRs are carried,
 in the aggregate, at book value or at latest NAV, whichever is lower.
 
 11. Foreign Currency Transactions:
 
 i. Foreign currency transactions, on initial recognition are recorded
 at the exchange rate prevailing on the date of transaction. Monetary
 foreign currency assets and liabilities are translated at the closing
 rates prescribed by Foreign Exchange Dealers Association of India
 (FEDAI) and the resultant gain or loss is recognised in the profit and
 loss account. Exchange differences arising on the settlement of
 monetary items are recognised as income or expense in the period in
 which they arise.
 
 ii. Premium or discount arising at the inception of Forward Exchange
 Contracts which are not intended for trading or speculation is
 amortised as expense or income over the life of the contract. Premium
 or discount on other Forward Exchange Contracts is not recognised.
 
 iii. Outstanding Forward Exchange Contracts which are not intended for
 trading or speculation are revalued at closing FEDAI rates. Other
 outstanding Forward Exchange Contracts are revalued at rates of
 exchange notified by FEDAI for specified maturities or at interpolated
 rates for in-between maturities. The resultant profit/ losses are
 included in the profit and loss account.
 
 iv. Prof it/losses arising on premature termination of Forward Exchange
 Contracts, together with unamortized premium or discount, if any, is
 recognised on the date of termination.
 
 V. Contingent liability in respect of outstanding forward exchange
 contracts is calculated at the contracted rates of exchange and in
 respect of guarantees, acceptances, endorsements and other obligations
 are calculated at the closing FEDAI rates.
 
 vi. Operations of foreign branch are classified as integral Foreign
 Operations'' and are translated using the same principles and procedures
 as those of the bank.
 
 12. '' Employee Benefits
 
 i. a) Payments to defined contribution schemes are charged as expense
 as they fall due.
 
 b) For defined benefit schemes, the cost of providing benefits is
 determined using the Projected Unit Credit Method, with actuarial
 valuations being carried out at each Balance Sheet date. Actuarial
 gains or losses are recognized in full in the profit and loss account
 for the period in which they occur. Past Service cost is recognized
 immediately to the extent that the benefits are already vested and
 otherwise is amortised on a straight-line basis over the average period
 until the benefits become vested.
 
 ii. Short-term employee Benefit:
 
 The undiscounted amount of short-term employee benefits expected to be
 paid in exchange for the services rendered by employees is recognized
 during the period when the employee renders the service.
 
 iii. Transitional Liability
 
 The Bank has adopted Accounting Standard-15 (Revised 2005), ''Employee
 Benefits'' with effect from April 1, 2007.  The transitional liability
 arising on such adoption is amortised over a period of five years
 commencing from the financial year 2007-08 in accordance with the
 provisions of AS-15.
 
 iv. The intrinsic value of options under Employee Stock Option Plan
 (ESOP) is expensed on a straight-line basis over the vesting period of
 the ESOP.
 
 13. Income Tax
 
 i. Tax expense comprises of current and deferred tax.
 
 ii. Minimum Alternate Tax (MAT) credit is recognized as an asset only
 when and to the extent there is convincing evidence that the Bank will
 pay normal income tax during the specified period.
 
 iii. Deferred tax for timing differences between the book and tax
 profits for the year is accounted for, using the tax rates and laws
 that have been substantively enacted as of the balance sheet date.
 Deferred tax assets arising from timing differences are recognized to
 the extent there is reasonable certainty that these would be realized
 in future.
 
 iv. Deferred tax assets in case of unabsorbed losses are recognized
 only if there is virtual certainty that such deferred tax asset can be
 realized against future taxable profits.
 
 v. Disputed taxes not provided for including departmental appeals are
 included under Contingent Liabilities.
 
 14. Earnings Per Share:
 
 i. The Bank reports basic and diluted Earnings Per Share in accordance
 with AS 20. Basic Earnings Per Share is computed by dividing the net
 profit after tax by the weighted average number of equity shares
 outstanding for the year.
 
 ii. Diluted Earnings Per Share reflect the potential dilution that
 could occur if securities or other contracts to issue equity shares
 were exercised or converted during the period. Diluted Earnings Per
 Share is computed by dividing the net profit after tax by the sum of
 the weighted average number of equity shares and dilutive potential
 equity shares outstanding at the year end.
 
 15. Impairment of Assets
 
 Fixed Assets are reviewed for impairment whenever events or changes in
 circumstances warrant that the carrying amount of an asset may not be
 recoverable. Recoverability of assets to be held and used is measured
 by a comparison of the carrying amount of an asset to the estimated
 current realizable value. If such assets are considered to be impaired,
 the impairment to be recognized is measured by the amount by which the
 carrying amount of the asset exceeds estimated current realizable value
 of the asset.
 
 16. Provisions, Contingent Liabilities and Contingent Assets
 
 i. In conformity with AS 29, Provisions, Contingent Liabilities and
 Contingent Assets, the Bank recognizes provisions only when it has a
 present obligation as a result of a past event, it is probable that an
 outflow of resources embodying economic benefits will be required to
 settle the obligation, and when a reliable estimate of the amount of
 the obligation can be made.
 
 ii. Provisions are not discounted to its present value and are
 determined based on best estimate required to settle the obligation at
 the balance sheet date.
 
 iii. Reimbursement expected in respect of expenditure required to
 settle a provision is recognised only when it is virtually certain that
 the reimbursement will be received.
 
 iv. Contingent Assets are not recognized.