1) General:
 
 1.1 The accompanying financial statements have been prepared on 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 requires management to make
 estimates and assumptions that affect the reported amounts of assets,
 liabilities, revenues, expenses and disclosure of contingent
 liabilities in the financial statements. Management believes that the
 estimates used in the preparation of the financial statements are
 prudent and reasonable. Any revisions to the accounting estimates are
 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 liability is
 charged to 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 the RBI
 guidelines and subsequent circulars issued by the RBI are as follows:
 
 3.1 Categorisation of investments:
 
 In accordance with the guidelines issued by RBI, the Bank classifies
 its investment portfolio 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.
 
 3.2 Classification of Investments:
 
 For the purpose of disclosure in the Balance Sheet, investments have
 been 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 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 scrip in this category is re-valued at
 the market price or fair value and the resultant depreciation of each
 scrip in this category is recognised in the Profit and Loss account.
 Appreciation, if any, is ignored. Market value of government securities
 is determined on the basis of the prices/ 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 at year-end. In case of unquoted
 government securities, market price or fair value is determined as per
 the prices/ YTM published by FIMMDA.
 
 (iii) Available for Sale – Each scrip in this category is re-valued
 at the market price or fair value and the resultant depreciation of
 each scrip in this category is recognised in the Profit and Loss
 account. 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
 at year- end. 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.
 
 Equity shares are valued at cost or the closing quotes on a recognised
 stock exchange, whichever is lower.
 
 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 provided by the respective mutual funds.
 
 (iv) Investments in Equity Shares held as Long-term investments by
 erstwhile IndusInd Enterprises & Finance Ltd. and Ashok Leyland Finance
 Ltd. (since merged) are valued at cost. 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) Settlement Date accounting method is followed for recording
 purchase and sale of transactions in Government securities.
 
 (vi) 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 revenue.
 
 (vii) In line with the RBI guidelines on uniform accounting
 methodology, with effect from 1st April 2010, Repurchase (Repo) /
 Reverse Repurchase (Reverse Repo) transactions 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 a part of Borrowings/ Money at Call and at Short
 Notice respectively, and only the accrued expenditure / income till the
 Balance Sheet date is taken to Profit and Loss account. Outstanding
 Repo transactions are marked to market as per the investment
 classification of the security.
 
 (viii) 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 P & L Appropriation account after
 tax to Capital Reserve account.
 
 (ix) Security Receipts (SR) are valued at the lower of redemption value
 of the security or the Net Asset Value (NAV) obtained from
 Securitization Company / Reconstruction Company.
 
 (x) 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 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) in Schedule 2 –
 “Reserves &
 
 Surplus” under the head Revenue & Other reserves. The balance in IRA
 account is included under Tier II 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 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 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 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 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) 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.
 
 (iv) Provisioning of overdue customer receivable on derivative
 contracts, if any, is made as per RBI guidelines.
 
 (v) 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 the 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 the
 RBI guidelines.
 
 5.3 In accordance with RBI guidelines, general provision on standard
 assets has been 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
 
 c) And at 0.40% of the balance outstanding standard advance.
 
 5.4 Advances disclosed under Schedule 9 of the Balance Sheet are 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 Banks 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 to the Profit and Loss account.
 
 5.8 Provisions 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 Banks 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 Banks 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.
 
 In cases restructured under CDR, the amount of sacrifice is generally
 as per the CDR package. The restructured accounts have been classified
 in accordance with RBI guidelines, including special dispensation
 wherever allowed.
 
 6) Securitisation Transactions:
 
 6.1 The Bank transfers loans through securitisation transactions. The
 Bank securitises its loan receivables both through Bilateral Direct
 Assignment route as well as transfer to Special Purpose Vehicles
 (SPV) in securitisation transactions.
 
 6.2 The securitisation transactions are without recourse to the Bank.
 The transferred loans and such securitised-out receivables are
 de-recognised 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 cashflows 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:
 
 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 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 managements
 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
 will be charged over the revised remaining useful life of the said
 asset.
 
 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 payment is established.
 
 8.4 Commission (except for commission on Deferred Payment Guarantees
 which is recognised on accrual basis), exchange and brokerage are
 recognised on realisation.
 
 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 profit and loss account on straight-line basis over the
 lease term. Initial direct costs are charged to 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) Retirement and Other 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.
 
 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.
 
 10.3 Provision for compensated absences has been made in the accounts
 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, 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 and deposits from
 corporate customers and identified earnings and expenses of the
 segment.
 
 3.  Retail Banking includes lending 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, Wholesale Banking and Retail Banking.
 
 12) Income-tax:
 
 Tax expenses comprise 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.
 
 13) 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 have been computed using the weighted average
 number of equity shares and dilutive potential equity shares
 outstanding as at end of the year.
 
 14) Provisions:
 
 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.
 
 15) Others:
 
 Cash and cash equivalents in the cash flow statement comprise cash in
 hand and balances with RBI (Schedule 6) and balances with banks and
 money at call and short notice (Schedule 7).