1.  ACCOUNTING CONVENTION
 
 The financial statements are prepared by following the going concern
 concept on historical cost convention and conform to the statutory
 provisions and practices prevailing in India unless otherwise stated
 and in respect of foreign branches as per statutory provisions and
 practices prevailing in the respective countries.
 
 2.  TRANSACTIONS INVOLVING FOREIGN EXCHANGE
 
 Foreign Currency transactions of Indian operations and non-integral
 foreign operations are accounted for as per Accounting Standard-11
 (AS-11) issued by the Institute of Chartered Accountants of India
 (ICAI).
 
 2.1 Translation in respect of Indian operations
 
 1.  Foreign exchange transactions are recorded at the Weekly Average
 Rate (WAR) notified by Foreign Exchange Dealers Association of India (
 FEDAI).
 
 2.  Foreign currency assets and liabilities are translated at the
 closing rates notified by FEDAI at the year end.
 
 3.  Acceptances, endorsements and other obligations and guarantees in
 foreign currency are carried at the closing rates notified by FEDAI at
 the year end.
 
 4.  Exchange differences arising on settlement and translation of
 foreign currency assets and liabilities at the end of the financial
 year are recognized as income or expenses in the period in which they
 arise.
 
 5.  Outstanding forward exchange contracts are disclosed at the
 Contracted rates and revalued at FEDAI closing rates, and the resultant
 effect is recognized in the Profit and Loss account.
 
 2.2 Translation in respect of non-integral foreign operations.
 
 Foreign branches are classified as non-integral foreign operations and
 the financial statements are translated as follows:
 
 1.  Assets and liabilities including contingent liabilities are
 translated at the closing rates notified by FEDAI at the year end.
 
 2.  Income and expenses are translated at the Quarterly Average Closing
 rate notified by FEDAI at the end of the respective quarter.
 
 3.  All resulting exchange differences are accumulated in a separate
 account Exchange Fluctuation Fund till the disposal of the net
 investments.
 
 3.  INVESTMENTS
 
 3.1 The investment portfolio of the Bank is classified in accordance
 with the RBI guidelines into three categories viz.,
 
 > Held To Maturity (HTM)
 
 > Available For Sale (AFS)
 
 > Held For Trading (HFT)
 
 The securities acquired with the intention to be held till maturity are
 classified under HTM category.  The securities acquired with the
 intention to trade by taking advantage of short-term price/interest
 movements are classified as HFT. All other securities which do not
 fall under any of the two categories are classified under AFS
 category.
 
 3.2 Profit on sale of securities under HTM category is first taken to
 Profit and Loss account and thereafter appropriated to Capital Reserve
 account (net of taxes and amount required to be transferred to
 statutory reserves) and loss, if any, charged to Profit & Loss account.
 
 3.3 Investments in India are valued in accordance with RBI guidelines,
 as under:
 
 a) Securities in HTM category are valued at acquisition cost except
 where the acquisition cost is higher than the face value, in which
 case, such excess of acquisition cost over the face value is amortised
 over the remaining period of maturity.  Any diminution, other than
 temporary, in value of investments in subsidiaries/joint ventures which
 are included under HTM category is recognized and provided. Such
 diminution is being determined and provided for each investment
 individually.
 
 b) Investments in AFS category are marked to market, scrip-wise and
 classification wise, at quarterly intervals. Net depreciation, if any,
 is pro vided for in the Profit and Loss account while net appreciation,
 if any, is ignored. The book value of the individual securities does
 not undergo any change after marking to market.
 
 c) The individual scrips in the HFTcategory are marked to market at
 daily intervals. Net depreciation, if any, is provided for in the
 Profit and Loss account while net appreciation, if any, is ignored. The
 Book Value of the individual securities in this category does not
 undergo any change.
 
 d) Securities in AFS and HFT categories are valued as under:
 
 i) Central Government Securities are valued at prices / YTM Rates as
 announced by Primary Dealers Association of India (PDAI) jointly with
 Fixed Income Money Market and Derivatives Association of India
 (FIMMDA).
 
 ii) State Government and Other approved securities are valued applying
 the YTM method by marking up 25 basis points above the yields of the
 Central Government Securities of equivalent maturity put out by PDAI /
 FIMMDA periodically.
 
 iii) Equity shares are valued at market price, if quoted. Unquoted
 equity shares are valued at break-up value (without considering
 revaluation reserves if any) as per the companys latest balance sheet
 (not more than one year prior to the date of valuation). Otherwise, the
 shares are valued at Re. 1 per company.
 
 iv) Preference shares are valued at market price, if quoted; otherwise
 at lower of the value determined based on the appropriate YTM rates or
 redemption value.
 
 v) All debentures/bonds, other than those which are in the nature of
 advances, are valued on the YTM basis.
 
 vi) Treasury bills, Certificate of deposits and Commercial papers are
 valued at carrying cost.
 
 vii) Units of Mutual Funds are valued at market price, if quoted;
 otherwise at lower of repurchase price or Net Asset Value (NAV). In
 case of funds with a lock-in period, where repurchase price / market
 quote is not available, units are valued at NAV, else valued at cost
 till the end of the lock-in period.
 
 3.4 Investments of Foreign Branches are valued as per the practice
 prevailing in the respective countries.
 
 3.5 Debentures and Bonds, where interest/ principal is in arrears for
 more than 90 days are valued applying the prudential norms prescribed
 by RBI.
 
 3.6 Brokerages / Commission / incentive received on subscriptions are
 deducted from the cost of securities. Brokerage / Commission / Stamp
 duty paid in connection with acquisition of securities are treated as
 revenue expenses.
 
 3.7 Interest Rate Swap transactions for hedging are accounted on
 accrual basis and transactions for trading are marked to market at
 quarterly intervals.  The fair value of the total swaps is computed on
 the basis of the amount that would be received/ receivable or paid/
 payable on termination of the swap agreements as on the balance sheet
 date. Losses arising therefrom, if any, are fully provided for, while
 the profit, if any, is ignored.  Gains or loss on termination of swaps
 is deferred and recognised over the shorter period of the remaining
 contractual life of the swap or the remaining life of the designated
 asset or liability.
 
 3.8 Exchange traded FIX Derivatives i.e. Currency Futures, are valued at
 the Exchange determined prices and the resultant gains and losses are
 recognized in the Profit and Loss account.
 
 3.9 Investments backed by guarantee of the Central Government though
 overdue are treated as Non Performing Asset (NPA) only
 whentheGovernment repudiates its guarantee when invoked.
 
 3.10 Investment in State Government guaranteed securities, including
 those in the nature of deemed advances, are subjected to asset
 classification and provisioning as per prudential norms if
 interest/instalment of principal (including maturity proceeds) or any
 other amount due to the Bank remains unpaid for more than 90 days.
 
 4.  FINANCIAL ASSETS SOLD TO ASSET RECOVERY COMPANIES
 
 4.1 Security Receipts (SR) issued by ARCs in respect of financial
 assets sold to them is recognized at lower of redemption value of SRs
 and Net Book Value of financial assets. SRs are valued at Net Asset
 Value declared by ARCs on the Balance Sheet date and depreciation, if
 any, is provided for and appreciation is ignored.
 
 4.2 The net-shortfall, if any, arising on sale of financial assets to
 ARCs is charged to Profit & Loss Account.
 
 5 ADVANCES
 
 5.1 In accordance with the prudential norms issued by RBI, advances in
 India are classified into standard, sub-standard, doubtful and loss
 assets borrower-wise.
 
 5.2 Provisions are made for non performing advances irrespective of
 availablility of security:
 
 For substandard category - 20 % For others-100%
 
 5.3 General provision is made for standard advances as per RBI
 directives.
 
 5.4 In respect of foreign branches, income recognition, asset
 classification and provisioning for loan losses are made as per local
 requirement or as per RBI prudential norms, whichever is more
 stringent.
 
 5.5 Advances disclosed are net of provisions made for non-performing
 assets, DICGC/ ECGC/ CGTSI claims received and held pending adjustment,
 repayments received and kept in sundries account, participation
 certificates and usance bills rediscounted.
 
 6.  FIXED ASSETS / DEPRECIATION
 
 6.1 Premises and other fixed assets are stated at historical cost and
 at revalued amount in respect of assets revalued.
 
 6.2 Depreciation on buildings (including cost of land wherever
 inseparable/ not segregated) and other fixed assets (excluding items
 referred in 6.3 to 6.5) in India is provided for on the straight-line
 method atratesspecifiedinScheduleXIVtotheCompanies Act, 1956 and at the
 Bank determined rates based on Residual Life in the case of Revalued
 Assets.  Depreciation relatable to revalued component is charged
 against revaluation reserve.
 
 6.3 Depreciation on computers (hardware and software) and Uninterrupted
 Power Supply Systems (UPS) is provided at the rate of 33.33% per annum
 on Straight Line Method (SLM).
 
 6.4 The rate of depreciation on motor car is 20 % on straight line
 method.
 
 6.5 100% depreciation is provided on all cell phones and on small value
 items costing upto Rs.5000/-
 
 6.6 Depreciation on fixed assets acquired on or before 30th September
 is charged at 100% of the prescribed rates and at 50% of the prescribed
 rates on the fixed assets acquired thereafter.
 
 6.7 Premium on leasehold land is capitalised in the year of acquisition
 and amortized over the period of lease.
 
 6.8 Depreciation in respect of fixed assets at foreign branches is
 provided as perthe practice prevailing in the respective countries.
 
 6.9 In respect of Non Banking Assets, no depreciation is charged.
 
 7.  REVENUE RECOGNITION
 
 7.1 Income and expenditure are generally accounted for on accrual
 basis, unless otherwise stated.
 
 7.2 Income from non-performing assets, Central Government guaranteed
 assets (where it is overdue beyond 90 days), dividend income, insurance
 claims, commission on letters of credit/ guarantees issued (other than
 those relating to project finance), income from bancassurance products,
 additional interest/ overdue charges on bills purchased, locker rent,
 finance charges on credit cards income on Banks rightto recompense,
 etc. are accounted for on realisation.
 
 7.3 In case of overdue foreign bills, interest and other charges are
 recognised till the date of crystallisation as per FEDAI guidelines.
 
 8.  CREDIT CARD REWARD POINTS
 
 Reward points earned by card members on use of Card facility is
 recognized as expenditure on such use.
 
 9.  NET PROFIT / LOSS
 
 The result disclosed in the Profit and Loss Account is after
 considering:
 
 Provision for Non-Performing Advances and/ or Investments.
 
 General provision on Standard Advances
 
 Provision for Restructured Advances
 
 Provision for Depreciation on Fixed Assets
 
 Provision for Depreciation on Investments
 
 Transfer to/ from Contingency Fund
 
 Provision for direct taxes
 
 Usual or/and other necessary provisions
 
 10.  STAFF RETIREMENT BENEFITS
 
 10.1 Annual contributions to Pension Fund and Gratuity Fund are
 determined and provided for:
 
 (i) on the basis of actuarial valuation
 
 (ii) as per the local laws in respect of foreign branches.
 
 10.2 Leave encashment benefit for employees is accounted for on
 actuarial basis.
 
 10.3.1 Transitional liability relating to employee benefits determined
 as per actuarial valuation is written off over a period of five years
 in terms of Revised Accounting Standard 15 (AS -15), Employee
 Benefits, issued by ICAI.
 
 10.3.2 Liability determined in accordance with RBI Guidelines in
 respect of pension (second option) for existing employees and gratuity
 is amortised equally over a period of five years
 
 11.  CONTINGENT LIABILITIES AND PROVISIONS
 
 (a) Past events leading to, possible or present obligations are treated
 as contingent liability.  Provision is recognised in case of present
 obligations where a reliable estimate can be made and/or where there
 are probable outflow of resources embodying foregoing of economic
 benefits to settle the obligations.
 
 (b) Provisions for Market Risks, Country Risk, etc., are made in terms
 of extant instructions of RBI.
 
 (c) Floating provision as identified by the Bank Management is provided
 for.
 
 12.  IMPAIRMENT OF ASSETS
 
 Impairment losses, if any, are recognised in accordance with the
 Accounting Standard 28 issued in this regard by the Institute of
 Chartered Accountants of India.
 
 13.  TAXES ON INCOME
 
 13.1 Provision for tax is made for both Current Tax and Deferred Tax.
 
 13.2 Current tax is measured at the amount expected to be paid to the
 taxation authorities, using the applicable tax rates, tax laws and
 favourable judicial pronouncements / legal opinion.
 
 13.3 Deferred Tax Assets and Liabilities arising on account of timing
 differences and which are capable of reversal in subsequent periods are
 recognised using the tax rates and tax laws that have been enacted or
 substantively enacted till the date of the Balance Sheet. Deferred Tax
 Assets are not recognised unless there is virtual certainty that
 sufficient future taxable income will be available against which such
 deferred tax assets will be realised.