1) General:
 
 1.1 The accompanying financial statements have been prepared under the
 historical cost convention, except where otherwise stated, and in
 accordance with the accounting standards referred to in Section 211(3C)
 of the Companies Act, 1956, and notified by the Companies (Accounting
 Standards) Rules, 2006, read with guidelines issued by the Reserve Bank
 of India (''RBI'') and conform to the statutory provisions and practices
 prevailing within the banking industry in India.
 
 1.2 The preparation of the financial statements, in conformity with
 generally accepted accounting principles in India requires management
 to make estimates and assumptions that affect the reported amounts of
 assets, liabilities, revenues, expenses and disclosure of contingent
 liabilities on the date of the financial statements. Management believes
 that the estimates and assumptions used in the preparation of the
 financial statements are prudent and reasonable. Any revision to
 accounting estimates is recognised prospectively in current and future
 periods.
 
 2) Transactions involving Foreign Exchange:
 
 2.1 Monetary assets and liabilities denominated in foreign currency are
 translated at the Balance Sheet date at the exchange rates notified by
 the Foreign Exchange Dealers'' Association of India (''FEDAI'') and
 the resulting gains or losses are recognised in the Profit and Loss
 account.
 
 Non-monetary items which are carried in terms of historical cost
 denominated in a foreign currency are reported using the exchange rate
 at the date of the transaction; and non-monetary items which are
 carried at fair value or other similar valuation denominated in a
 foreign currency are reported using the exchange rates that existed
 when the values were determined.
 
 2.2 All Foreign Exchange contracts outstanding at the Balance Sheet
 date are re-valued at the rates of exchange notified by the FEDAI for
 specified maturities and the resulting gains or losses are recognised
 in the Profit and Loss account.
 
 2.3 The Swap Cost arising on account of foreign currency swap contracts
 to convert foreign currency funded liabilities into rupee liabilities
 is charged to the Profit and Loss account as ''Interest - Others'' by
 amortizing over the underlying swap period.
 
 2.4 Income and Expenditure items are translated at the rates of
 exchange prevailing on the date of the transaction.
 
 2.5 Contingent liability at the Balance Sheet date on account of
 outstanding forward foreign exchange contracts, guarantees,
 acceptances, endorsements and other obligations denominated in foreign
 currency is stated at the closing rates of exchange notified by FEDAI.
 
 3) Investments:
 
 The significant accounting policies in accordance with RBI guidelines
 are as follows:
 
 3.1 Categorisation of Investments :
 
 In accordance with the guidelines issued by RBI, the Bank classifies
 its investment portfolio on the date of purchase into the following
 three categories:
 
 i) ''Held to Maturity'' (HTM) - Securities acquired by the Bank with
 the intention to hold till maturity.
 
 ii) ''Held for Trading'' (HFT) - Securities acquired by the Bank with
 the intention to trade.
 
 iii) ''Available for Sale'' (AFS) - Securities which do not fall
 within the above two categories are classified as ''Available for Sale''.
 
 Subsequent shifting amongst the categories is done in accordance with
 RBI guidelines.
 
 3.2 Classification of Investments:
 
 For the purpose of disclosure in the Balance Sheet, investments are
 classified under six groups as required under RBI guidelines -
 Government Securities, Other Approved Securities, Shares, Debentures
 and Bonds, Investments in Subsidiaries / Joint Ventures and Other
 Investments.
 
 3.3 Valuation of Investments:
 
 (i) ''Held to Maturity'' - These investments are carried at their
 acquisition cost. Any premium on acquisition of debt securities is
 amortised over the balance period to maturity. The amortised amount is
 deducted from Interest earned - Income on investments (Item II of
 Schedule 13). The book value of security is reduced to the extent of
 amount amortised during the relevant accounting period. Diminution
 other than temporary, if any, in the value of such investments is
 determined and provided for on each investment individually.
 
 (ii) ''Held for Trading'' - Each security in this category is
 re-valued at the market price or fair value and the resultant
 depreciation of each security is charged to the Profit and Loss
 account. Appreciation, if any, is ignored. Market value of government
 securities is determined on the basis of the prices / Yield to Maturity
 (YTM) published by RBI or the prices / YTM periodically declared by
 Primary Dealers Association of India (PDAI) jointly with Fixed Income
 Money Market and Derivatives Association (FIMMDA) for valuation.
 
 (iii) ''Available for Sale'' - Each security in this category is
 re-valued at the market price or fair value and the resultant
 depreciation of each security in this category is charged to the Profit
 and Loss account and appreciation, if any, is ignored.
 
 Market value of government securities (excluding treasury bills) is
 determined on the basis of the price list published by RBI or the
 prices periodically declared by PDAI jointly with FIMMDA for valuation.
 In case of unquoted government securities, market price or fair value
 is determined as per the rates published by FIMMDA.
 
 Market value of other debt securities is determined based on the yield
 curve and spreads provided by FIMMDA.
 
 Quoted equity shares are valued at cost or the closing quotes on a
 recognised stock exchange, whichever is lower. Unquoted equity shares
 are valued at their break-up value or at Rs 1 per company where the
 latest Balance Sheet is not available.
 
 Treasury bills are valued at carrying cost, which includes discount
 amortised over the period to maturity.
 
 Units of mutual funds are valued at the lower of cost and Net Asset
 Value (NAV) provided by the respective mutual funds.
 
 (iv) Investments in equity shares held as long-term investments by
 erstwhile Induslnd Enterprises & Finance Ltd. and Ashok Leyland Finance
 Ltd. (since merged with the Bank) are valued at cost and classified as
 part of HTM category. Provision towards diminution in the value of such
 long-term investments is made only if the diminution in value is not
 temporary in the opinion of management.
 
 (v) Security Receipts (SR) are valued at the lower of redemption value
 of the security or the NAV obtained from Securitization Company /
 Reconstruction Company.
 
 (vi) Settlement Date accounting method is followed for recording
 purchase and sale of transactions in Government securities.
 
 (vii) Broken period interest on debt instruments is treated as a
 revenue item. Brokerage, commission, etc.  pertaining to investments,
 paid at the time of acquisition is charged to the Profit and Loss
 account.
 
 (viii) Provision for non-performing investments is made in conformity
 with the RBI guidelines.
 
 (ix) In line with the RBI guidelines on uniform accounting methodology,
 with effect from April 1, 2010, Repurchase (Repo) /Reverse Repurchase
 (Reverse Repo) transactions (except transactions under Liquidity
 Adjustment Facility (LAF) with RBI) are accounted for as Borrowing /
 Lending respectively. On completion of the second leg of the Repo /
 Reverse Repo transaction, the difference between the consideration
 amounts is reckoned as Interest Expenditure / Income. Amounts
 outstanding in Repo / Reverse Repo account as at the Balance Sheet date
 is shown as part of Borrowings / Money at Call and at Short Notice
 respectively, and the accrued expenditure / income till the Balance
 Sheet date is taken to the Profit and Loss account. Outstanding Repo
 transactions are marked to market as per the investment classification
 of the security.
 
 In respect of repo transactions under LAF with RBI, monies borrowed
 from RBI are credited to investment account and reversed on maturity of
 the transaction. Costs thereon are accounted for as interest expense.
 In respect of reverse repo transactions under LAF, monies lent to RBI
 are debited to investment account and reversed on maturity of the
 transaction. Revenues thereon are accounted as interest income.
 
 (x) Profit in respect of investments sold from HTM category is
 included in Profit on Sale of Investments and an equivalent amount (net
 of taxes if any, and transfer to Statutory Reserves as applicable to
 such profits) is transferred out of Profit and Loss Appropriation
 account to Capital Reserve account.
 
 (xi) In the event, provisions created on account of depreciation in the
 ''AFS'' or ''HFT'' categories are found to be in excess of the
 required amount in any year, the excess is credited to the Profit and
 Loss account and an equivalent amount (net of taxes, if any and net of
 transfer to Statutory Reserves as applicable to such excess provision)
 is appropriated to an Investment Reserve account (IRA). The balance in
 IRA account is considered as Tier II Capital within the overall ceiling
 of 1.25% of total Risk Weighted Assets prescribed for General
 Provisions / Loss reserves.
 
 The balance in IRA account is used to meet provision on account of
 depreciation in AFS and HFT categories by transferring an equivalent
 amount to the Profit and Loss account as and when required.
 
 4) Derivatives
 
 Derivative contracts are designated as hedging or trading and accounted
 for as follows:
 
 (i) The hedging contracts comprise of Forward Rate Agreements, Interest
 Rate Swaps and Currency Swaps undertaken to hedge interest rate risk on
 certain assets and liabilities. The net Interest Receivable / Payable
 is accounted on an accrual basis over the life of the swaps. However,
 where the hedge is designated with an asset or liability that is
 carried at market value or lower of cost and market value in the
 financial statements, then the hedging instruments is also marked to
 market with the resulting gain or loss recorded as an adjustment to the
 market value of designated assets or liabilities.
 
 (ii) The trading contracts comprise of proprietary trading in interest
 rate swaps and currency futures. The gain / loss arising on unwinding
 or termination of the contracts, is accounted for in the Profit and
 Loss account. Trading contracts outstanding as at the Balance Sheet
 date are re-valued at their fair value and resulting gains / losses are
 recognised in the Profit and Loss account.
 
 (iii) Gains or losses on the termination of hedge swaps is deferred and
 recognised over the shorter of the remaining contractual life of the
 hedge swap or the remaining life of the underlying asset/liability.
 
 (iv) Premium paid and received on currency options is accounted
 up-front in the Profit and Loss account as all options are undertaken
 on a back-to-back basis.
 
 (v) Provisioning of overdue customer receivable on derivative
 contracts, if any, is made as per RBI guidelines.
 
 (vi) In accordance with the Prudential Norms for Off-Balance Sheet
 Exposures issued by RBI, provisioning against outstanding credit
 exposure as at the Balance Sheet date is made, as is applicable to the
 assets of the concerned counterparties under ''standard'' category.
 Credit exposures are computed as per the current marked to market value
 of the contract arising on account of interest rate and foreign
 exchange derivative transactions.
 
 5) Advances:
 
 5.1 Advances are classified as per RBI guidelines into standard,
 sub-standard, doubtful and loss assets after considering subsequent
 recoveries to date.
 
 5.2 Provision for non-performing assets is made in conformity with RBI
 guidelines.
 
 5.3 In accordance with RBI guidelines, general provision on standard
 assets is made as under:
 
 a) At 1% of standard advances to Commercial Real Estate Sector;
 
 b) At 0.25% of standard direct advances to SME and Agriculture; and
 
 c) At 0.40% of the balance outstanding standard advance.
 
 5.4 Advances are disclosed in the Balance Sheet, net of provisions and
 interest suspended for non-performing advances. Provision made against
 standard assets is included in ''Other Liabilities and Provisions''.
 
 5.5 Advances include the Bank''s participation in / contributions to
 Pass Through Certificates (PTCs) and / or to the asset-backed
 assignment of loan assets of other banks / financial institutions where
 the Bank has participated on risk-sharing basis.
 
 5.6 Advances exclude derecognised securitised advances, inter-bank
 participation and bills rediscounted.
 
 5.7 Amounts recovered against bad debts written off in earlier years
 are recognised in the Profit and Loss account.
 
 5.8 Provision no longer considered necessary in context of the current
 status of the borrower as a performing asset, are written back to the
 Profit and Loss account to the extent such provisions were charged to
 the Profit and Loss account.
 
 5.9 Restructured / rescheduled accounts:
 
 In case of restructured / rescheduled accounts provision is made for the
 sacrifice against erosion / diminution in fair value of restructured
 loans, in accordance with RBI guidelines.
 
 The erosion in fair value of the advances is computed as the difference
 between fair value of the loan before and after restructuring.
 
 Fair value of the loan before restructuring is computed as the present
 value of cash flows representing the interest at the existing rate
 charged on the advance before restructuring and the principal,
 discounted at a rate equal to the Bank''s Benchmark Prime Lending Rate
 (BPLR) / Base Rate as on the date of restructuring plus the appropriate
 term premium and credit risk premium for the borrower category on the
 date of restructuring.
 
 Fair value of the loan after restructuring is computed as the present
 value of cash flows representing the interest at the rate charged on
 the advance on restructuring and the principal, discounted at a rate
 equal to Bank''s BPLR / Base Rate as on the date of restructuring plus
 the appropriate term premium and credit risk premium for the borrower
 category on the date of restructuring.
 
 The diminution in the fair value is re-computed on each Balance Sheet
 date till satisfactory completion of all repayment obligations and full
 repayment of the outstanding in the account, so as to capture the
 changes in the fair value on account of changes in BPLR / Base Rate,
 term premium and the credit category of the borrower. The shortfall /
 excess provision held is either charged / credited to the Profit and
 Loss account respectively.
 
 The restructured accounts have been classified in accordance with RBI
 guidelines, including special dispensation wherever allowed.
 
 6) Securitisation Transactions and bilateral assignments:
 
 6.1 The Bank transfers loans through securitisation transactions. The
 Bank transfers its loan receivables both through Bilateral Direct
 Assignment route as well as transfer to Special Purpose Vehicles
 (''SPV'') in securitisation transactions.
 
 6.2 The securitization transactions are without recourse to the Bank.
 The transferred loans and such securitised-out receivables are
 de-recognized in the Balance Sheet as and when these are sold (true
 sale criteria being fully met) and the consideration has been received
 by the Bank. Gains / losses are recognised only if the Bank surrenders
 the rights to the benefits specified in the loan contracts.
 
 6.3 In respect of certain transactions, the Bank provides credit
 enhancements in the form of cash collaterals / guarantee and / or by
 subordination of cash flows to senior Pass Through Certificates (PTC).
 Retained interest and subordinated PTCs are disclosed under
 Advances in the Balance Sheet.
 
 6.4 Recognition of gain or loss arising out of Securitisation of
 Standard Assets:
 
 In terms of RBI guidelines, profit / premium arising on account of sale
 of standard assets, being the difference between the sale consideration
 and book value, is amortised over the life of the securities issued by
 the Special Purpose Vehicles (''SPV'').
 
 Any loss arising on account of the sale is recognized in the Profit and
 Loss account in the period in which the sale occurs.
 
 7) Fixed Assets and depreciation:
 
 7.1 Fixed assets (including assets given on operating lease) have been
 stated at cost (except in the case of premises which were re-valued
 based on values determined by approved valuers) less accumulated
 depreciation and impairment, if any. Cost includes incidental
 expenditure incurred on the assets before they are ready for intended
 use. The carrying amount of Fixed Assets is reviewed at each Balance
 Sheet date to determine if there are any indications of impairment
 based on internal / external factors.
 
 7.2 The appreciation on revaluation is credited to Revaluation Reserve.
 Depreciation relating to revaluation is adjusted against the
 Revaluation Reserve.
 
 7.3 Depreciation has been provided pro rata for the period of use, on
 Straight Line Method at such rates that are reflective of
 management''s estimate of the useful life of the related Fixed Assets.
 These rates are as prescribed under Schedule XIV to the Companies Act,
 1956, except in respect of the following where the rates adopted are
 higher than the prescribed rates:
 
 (a) Computers at 33.33% p.a.
 
 (b) Furniture and Fixtures at 10% p.a.
 
 (c) Electrical Installations at 10% p.a.
 
 (d) Other Office Equipment at 10% p.a.
 
 (e) Vehicles at 20% p.a.
 
 Taking into account various criteria such as changes in technology,
 changes in business environment, utility and efficacy of an asset class
 to meet with intended user needs, etc., the useful life of an asset
 class is periodically assessed. Whenever there is a revision in the
 estimated useful life of an asset, the unamortised depreciable amount
 is charged over the revised remaining useful life of the said asset.
 
 7.4 The Bank reviews at each Balance Sheet date whether there is any
 indication of impairment in an asset. In case of impaired assets, the
 impairment loss i.e. the amount by which the carrying amount of the
 asset exceeds its recoverable value is charged to the Profit and Loss
 account to the extent the carrying amount of assets exceeds their
 estimated recoverable amount.
 
 8) Revenue Recognition:
 
 8.1 Income by way of interest and discount on performing assets is
 recognised on accrual basis and on non-performing assets; the same is
 recognised on realisation.
 
 8.2 Interest on Government securities, debentures and other fixed
 income securities is recognised on accrual basis.  Income on discounted
 instruments is recognised over the tenor of the instrument on a
 straight-line basis.
 
 8.3 Dividend income is accounted on accrual basis when the right to
 receive dividend is established.
 
 8.4 Commission (except for commission on Deferred Payment Guarantees
 which is recognised on accrual basis), Exchange and Brokerage are
 recognised on a transaction date and net off directly attributable
 expenses.
 
 8.5 Lease income and service charges earned on the Consumer Finance
 Advances are recognised on accrual basis.
 
 8.6 Income from distribution of third party products is recognised on
 the basis of business booked.
 
 9) Operating Leases:
 
 Lease rental obligations in respect of assets taken on operating lease
 are charged to the Profit and Loss account on a straight-line basis
 over the lease term. Initial direct costs are charged to the Profit and
 Loss account.
 
 Assets given under leases in respect of which all the risks and
 benefits of ownership are effectively retained by the Bank are
 classified as operating leases. Lease rentals received under operating
 leases are recognized in the Profit and Loss account on accrual basis
 as per contracts.
 
 10) Employee Benefits:
 
 10.1 Payment obligations under the Group Gratuity scheme are managed
 through purchase of appropriate insurance policies. The Gratuity scheme
 of the Bank is a defined benefit scheme and the expense for the year is
 recognized on the basis of actuarial valuation as at the Balance Sheet
 date. The present value of the obligation under such benefit plan is
 determined based on independent actuarial valuation using the Projected
 Unit Credit Method which recognizes each period of service that give
 rise to additional unit of employee benefit entitlement and measures
 each unit separately to build up the final obligation.
 
 10.2 Provident Fund contributions are made under trusts separately
 established for the purpose and the scheme administered by Regional
 Provident Fund Commissioner (RPFC), as applicable. The rate at which
 the annual interest is payable to the beneficiaries by the trusts is
 being administered by the government. The Bank has an obligation to
 make good the shortfall, if any, between the return from the
 investments of the trusts and the notified interest rates. Actuarial
 valuation of this Provident Fund Interest shortfall has been done as
 per the guidance note issued during the year in this respect by the
 Actuary Society of India (ASI) and the provision towards this liability
 has been made.
 
 10.3 Provision for compensated absences has been made on the basis of
 actuarial valuation as at the Balance Sheet date. The actuarial
 valuation is carried out as per the projected unit credit method.
 
 10.4 The Bank has applied the intrinsic value method to account for the
 compensation cost of ESOP granted to the employees of the Bank.
 Intrinsic value is the amount by which the quoted market price of the
 underlying shares on the grant date exceeds the exercise price of the
 options. Accordingly, the compensation cost is amortized over the
 vesting period.
 
 11) Segment Reporting:
 
 In accordance with the guidelines issued by RBI, the Bank has adopted
 Segment Reporting as under:
 
 1.  Treasury includes all investment portfolio; Profit / Loss on Sale
 of Investments, Profit / Loss on foreign exchange transactions,
 equities, income from derivatives and money market operations. The
 expenses of this segment consist of interest expenses on funds borrowed
 from external sources as well as internal sources and depreciation /
 amortisation of premium on Held to Maturity category investments.
 
 2.  Corporate / Wholesale Banking includes lending to and deposits from
 corporate customers and identified earnings and expenses of the
 segment.
 
 3.  Retail Banking includes lending to and deposits from retail
 customers and identified earnings and expenses of the segment.
 
 4.  Other Banking Operations includes all other operations not covered
 under Treasury, Corporate / Wholesale Banking and Retail Banking.
 
 Unallocated includes Capital and Reserves, Employee Stock Options
 (Grants) Outstanding and other unallocable assets and liabilities.
 
 12) Debit and Credit Card reward points liability:
 
 The liability towards Credit Card reward points is based on an
 actuarial valuation and liability towards Debit Card reward points is
 computed on the basis of management estimates considering past trends.
 
 13) Bullion:
 
 13.1 The Bank imports bullion including precious metal bars on a
 consignment basis for selling to its customers. The imports are on a
 back-to-back basis and are priced to the customer based on the
 prevailing price quoted by the supplier and the local levies related to
 the consignment like customs duty etc. The income earned is included in
 commission income.
 
 13.2 The Bank also sells gold coins to its customers. The difference
 between the sale price to customers and purchase price quoted is
 reflected under commission income.
 
 14) Income-tax:
 
 Tax expenses comprise of current and deferred taxes. Current income tax
 is measured at the amount expected to be paid to the tax authorities in
 accordance with the Income Tax Act, 1961. Deferred income taxes reflect
 the impact of current year timing differences between taxable income
 and accounting income for the year and reversal of timing differences
 of earlier years. Deferred tax is measured based on the tax rates and
 the tax laws enacted or substantively enacted at the Balance Sheet
 date. Deferred tax assets are recognised only to the extent that there
 is reasonable certainty that sufficient future taxable income will be
 available against which such deferred tax assets can be realized.
 Unrecognized deferred tax assets of earlier years are re-assessed and
 recognised to the extent that it has become reasonably certain that
 future taxable income will be available against which such deferred tax
 assets can be realized.
 
 15) Earnings per Share:
 
 Earnings per share are calculated by dividing the Net Profit or Loss
 for the period attributable to equity shareholders by the weighted
 average number of equity shares outstanding during the period. Diluted
 earnings per equity share are computed using the weighted average
 number of equity shares and dilutive potential equity shares
 outstanding as at end of the year.
 
 16) Provisions, contingent liabilities and contingent assets:
 
 A provision is recognised when there is an obligation as a result of
 past event, and it is probable that an outflow of resources will be
 required to settle the obligation, and in respect of which a reliable
 estimate can be made. Provisions are not discounted to their present
 value and are determined based on best estimate required to settle the
 obligation at the Balance Sheet date. These are reviewed at each
 Balance Sheet date and adjusted to reflect the current best estimates.
 
 A disclosure of contingent liability is made when there is:
 
 - A possible obligation arising from a past event, the existence of
 which will be confirmed by occurrence or non occurrence of one or more
 uncertain future events not within the control of the bank; or
 
 - A present obligation arising from a past event which is not
 recognized as it is not probable that an outflow of resources will be
 required to settle the obligation or a reliable estimate of the amount
 of the obligation cannot be made.
 
 When there is a possible obligation or a present obligation in respect
 of which the likelihood of outflow of resources is remote, no provision
 or disclosure is made.
 
 Contingent assets are not recognized in the financial statements.
 However, contingent assets are assessed continually and if it is
 virtually certain that an inflow of economic benefits will arise, the
 assets and related income are recognized in the period in which the
 change occurs.
 
 17) Cash and Cash equivalents:
 
 Cash and cash equivalents in the cash flow statement comprise Cash in
 Hand and Balances with RBI and Balances with Banks and Money at Call
 and Short Notice.