1 BACKGROUND
 
 ING Vysya Bank Limited (the Bank) was incorporated on 29 March 1930
 and is headquartered in Bangalore. Subsequent to acquisition of stake
 in the Bank by ING Group N.V. in August 2002, the name of the Bank was
 changed from Vysya Bank Limited to ING Vysya Bank Limited.
 
 2 BASIS OF PREPARATION OF FINANCIAL STATEMENTS
 
 These financial statements have been prepared and presented under the
 historical cost convention and accrual basis of accounting, unless
 otherwise stated, and in accordance with the generally accepted
 accounting principles (GAAP) in India and conform to the statutory
 requirements prescribed under the Banking Regulation Act, 1949,
 circulars and guidelines issued by the Reserve Bank of India (RBI)
 from time to time to the extent they have financial statements impact
 and current practices prevailing within the banking industry in India.
 The financial statements comply in all material respects with the
 Notified accounting standards by Companies (Accounting Standards)
 Rules, 2006 and the relevant provisions of the Companies Act, 1956, to
 the extent applicable and current practices prevailing within the
 banking industry in India.  The accounting policies have been
 consistently applied and except for the changes in accounting policy
 disclosed in these financial statements, are consistent with those used
 in the previous year.
 
 3 USE OF ESTIMATES
 
 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 and liabilities, the disclosure of contingent liabilities at the
 date of the financial statements and the reported amounts of revenues
 and expenses for the reporting period. The estimates and assumptions
 used in the accompanying financial statements are based upon
 management''s evaluation of the relevant facts and circumstances as of
 the date of financial statements. Actual results could differ from
 those estimates. Any revisions to accounting estimates are recognized
 prospectively in the current and future periods.
 
 4 REVENUE RECOGNITION
 
 Revenue is recognized to the extent that it is probable that the
 economic benefits will flow to the Bank and the revenue can be reliably
 measured.
 
 a.  Income and expenditure is accounted on accrual basis except as
 stated below:
 
 Interest on advances, securities and other assets classified as
 non-performing assets/ securities is recognized on realization in
 accordance with the guidelines issued by the RBI.
 
 Processing fees collected on loans disbursed, along with related loan
 acquisition costs are recognized at the inception of the loan.
 
 b.  Income on assets given on lease
 
 Finance income in respect of assets given on lease is accounted based
 on the interest rate implicit in the lease in accordance with the
 guidance note issued by the ICAI in respect of leases given up to 31
 March 2001 and in accordance with AS 19 - Leases in respect of leases
 given from 1 April 2001.
 
 c.  Premium/discount on acquired loans
 
 Premium paid/discount received on loans acquired under deeds of
 assignment are recognised in the profit and loss account in the year of
 such purchases.
 
 d.  Sale of investments
 
 Realized gains on investments under Held To Maturity (HTM) category
 are recognized in the profit and loss account and subsequently
 appropriated, from the profit available for appropriation, if any, to
 capital reserve account in accordance with RBI guidelines after
 adjusting for income tax and appropriations to the statutory reserve.
 
 5 FOREIGN EXCHANGE TRANSACTIONS
 
 a.  Monetary assets and liabilities denominated in foreign currencies
 are translated into Indian Rupees at the rates of exchange prevailing
 at the balance sheet date as notified by Foreign Exchange Dealers
 Association of India (FEDAI) and resulting gains/losses are
 recognised in the profit and loss account.
 
 b.  Outstanding forward exchange contracts and bills are revalued on
 the balance sheet date at the rates notified by FEDAI and the resultant
 gain/ loss on revaluation is included in the profit and loss account.
 
 c.  Contingent liabilities denominated in foreign currencies are
 disclosed on the balance sheet date at the rates notified by FEDAI.
 
 d.  Derivative contracts including foreign exchange contracts which
 have overdue receivables which have remain unpaid for 90 days or more
 are classified as non-performing assets and provided for as per the
 extant master circular on Prudential Norms on Income Recognition, Asset
 Classification and Provisioning issued by RBI.
 
 6 DERIVATIVE TRANSACTIONS
 
 Derivative transactions comprise forwards, interest rate swaps,
 currency swaps, currency and cross currency options to hedge on-balance
 sheet assets and liabilities or to take trading positions.
 
 Derivative transactions designated as Trading are Marked to Market
 (MTM) with resulting gains/losses included in the profit and loss
 account and in other assets/other liabilities. Derivative transactions
 designated as Hedge are accounted for on an accrual basis.
 
 7 INVESTMENTS
 
 For presentation in the Balance sheet, investments (net of provisions)
 are classified under the following heads - Government securities, Other
 approved securities, Shares, Debentures and Bonds, Subsidiaries and
 Joint Ventures and Others, in accordance with Third Schedule to the
 Banking Regulation Act, 1949.
 
 Valuation of investments is undertaken in accordance with the
 Prudential Norms for Classification, Valuation and Operation of
 Investment Portfolio by Banks issued by the RBI. For the purpose of
 valuation, the Bank''s investments are classified into three categories,
 i.e. ''Held to Maturity'', ''Held for Trading'' and ''Available for Sale'':
 
 a.  Held to Maturity (HTM) comprises securities acquired by the Bank
 with the intention to hold them upto maturity. With the issuance of RBI
 Circular No. DBOD.  BP.BC.37/21/04/141/2004-05 dated 2 September 2004,
 the investment in SLR securities under this category is permitted to a
 maximum of 25% of Demand and Time Liabilities.
 
 b.  Held for Trading (HFT) comprises securities acquired by the
 Bankwith the intention of trading i.e. to benefit from short-term
 price/interest rate movements.
 
 c.  Available for Sale (AFS) securities are those, which do not
 qualify for being classified in either of the above categories.
 
 d.  Transfer of securities between categories of investments is
 accounted for at the acquisition cost / book value / market value on
 the date of transfer, whichever is lower, and the depreciation, if any,
 on such transfer is fully provided for.
 
 Valuation of investments is undertaken as under:
 
 a. For investments classified as HTM, excess of cost over face value is
 amortized over the remaining period of maturity. The discount, if any,
 being unrealised is ignored. Provisions are made for diminutions other
 than temporary in the value of such investments.
 
 b.  Investments classified as HFT and AFS are revalued at monthly
 intervals. These securities are valued scrip- wise and any resultant
 depreciation or appreciation is aggregated for each category. The net
 depreciation for each category is provided for, whereas the net
 appreciation for each category is ignored. The book value of individual
 securities is not changed consequent to periodic valuation of
 investments
 
 c.  In the event provisions created on account of depreciation in the
 Available for sale or Held for trading categories are found to be
 in excess of the required amount in any year, such excess is recognised
 in the profit and loss account and subsequently appropriated, from
 profit available for appropriation, if any, to Investment Reserve
 account in accordance with RBI guidelines after adjusting for income
 tax and appropriation to statutory reserve.
 
 d.  Treasury bills and Commercial paper being discounted instruments,
 are valued at carrying cost. Discount accreted on such instruments is
 disclosed under other assets in accordance with RBI directive and
 investments are shown at acquisition cost.
 
 e.  REPO and Reverse REPO transactions are accounted for on an outright
 sale and outright purchase basis respectively in line with RBI
 guidelines. The cost/income of the transactions upto the year end is
 accounted for as interest expense/income. However, in case of reverse
 REPO, the depreciation in value of security compared to original cost
 is provided for.
 
 8 ADVANCES
 
 Advances are classified into standard, sub-standard, doubtful and loss
 assets in accordance with the guidelines issued by RBI and are stated
 net of provisions made towards non-performing advances.
 
 Provision for non-performing advances comprising sub- standard,
 doubtful and loss assets is made in accordance with the RBI guidelines
 which prescribe minimum provision levels and also encourage banks to
 make a higher provision based on sound commercialjudgement.
 Non-performing advances are identified by periodic appraisals of the
 loan portfolio by management. In case of consumer loans, provision for
 NPAs is made based on the inherent risk assessed for the various
 product categories. The provisioning done is higher than the minimum
 prescribed under RBI guidelines.
 
 As per RBI guidelines, a general provision at the rate of 0.40% is made
 on all the standard advances except for the following where provision
 is made at different rates.
 
 a.  at 0.25% for loans to Small and Medium Enterprises and direct
 agricultural advances; and.
 
 b.  at 1.00% on Commercial Real Estate (CRE) sector.
 
 c.  at 2.00% on housing loans at teaser rates
 
 Provision towards standard assets is shown separately in the Balance
 Sheet under Schedule-5 - Other liabilities and Provisions.
 
 9 FIXED ASSETS
 
 Fixed assets are stated at historical cost less accumulated
 depreciation, with the exception of premises, which were revalued as at
 31 December 1999, based on values determined by approved valuers.
 
 Cost includes cost of purchase of the asset and all other expenditure
 in relation to its acquisition and installation and includes duties,
 taxes (excluding service tax), freight and any other incidental expense
 incurred on the asset before it is ready for commercial use.
 
 Office Equipment (including Electrical and Electronic equipment,
 Computers, Vehicles and other Office Appliances) are grouped under
 Other Fixed Assets.
 
 a.  Depreciation on Premises is charged on straight line basis at the
 rate of 1.63% upto 31 March 2002 and at 2% with effect from 1 April
 2002.
 
 b.  Additional depreciation on account of revaluation of assets is
 deducted from the current year''s depreciation and adjusted in the
 Revaluation Reserve account.
 
 Depreciation on the following items of Fixed Assets is charged over the
 estimated useful life of the assets on Straight Line basis. The rates
 of depreciation are:
 
 i.  Electrical and Electronic equipment - 20%
 
 ii.  Furniture and Fixtures - 10%
 
 iii.  Vehicles-20%
 
 iv.  Computers and Software - 33.33%
 
 v.  ATMs and VSAT equipment-16.66%
 
 vi. Improvements to leasehold premises - amortised over the shorter of
 primary period of lease or estimated useful life of such assets, which
 is currently estimated at 6 years.
 
 Depreciation on Leased Assets is provided on WDV method at the rates
 stipulated under Schedule XIV to the Companies Act, 1956.
 
 Software whose actual cost does not exceed Rs. 100,000 and other items
 whose actual cost does not exceed Rs. 10,000 are fully expensed in the
 year of purchase.
 
 Assets purchased during the year are depreciated on the basis of actual
 number of days the asset has been put to use in the year. Assets
 disposed off during the year are depreciated upto the date of disposal.
 
 Capital work-in-progress includes cost of fixed assets that are not
 ready for their intended use and also includes advances paid to acquire
 fixed assets.
 
 Profits on sale of fixed assets is first credited to profit and loss
 account and then appropriated to capital reserve.
 
 10 IMPAIRMENT OF ASSETS
 
 In accordance with AS 28 - Impairment of Assets, the Bank assesses at
 each balance sheet date whether there is any indication that an asset
 (comprising a cash generating unit) may be impaired. If any such
 indication exists, the Bank estimates the recoverable amount of the
 cash generating unit. The recoverable amount is the greater of the
 asset''s net selling price and value in use. In assessing value in use,
 the estimated future cash flows are discounted to their present value
 at the weighted average cost of capital. If such recoverable amount of
 the cash generating unit is less than its carrying amount, the carrying
 amount is reduced to its recoverable amount. The reduction is treated
 as an impairment loss and is recognised in the profit and loss account.
 After impairment, depreciation is provided on the revised carrying
 amount of the asset over its remaining useful life. If at the balance
 sheet date, there is an indication that a previously assessed
 impairment loss no longer exists, the recoverable amount is reassessed
 and the asset is reflected at the revised recoverable amount, subject
 to a maximum of depreciated historical cost.
 
 11 NON-BANKING ASSETS
 
 Non-Banking assets acquired in settlement of debts /dues are accounted
 at the lower of their cost of acquisition or net realisable value.
 
 12 CASH AND CASH EQUIVALENTS
 
 Cash and cash equivalents include cash in hand, balances with Reserve
 Bank of India, balances with other banks/ institutions and money at
 call and short notice (including the effect of changes in exchange
 rates on cash and cash equivalents in foreign currency).
 
 13 EMPLOYEES''STOCK OPTION SCHEME
 
 The Employee Stock Option Schemes provide for the grant of equity
 shares of the Bank to its employees. The Schemes provide that employees
 are granted an option to acquire equity shares of the Bank that vests
 in a graded manner.  The options may be exercised within a specified
 period. The Scheme is in accordance with the Securities and Exchange
 Board of India (SEBI) (Employees Stock Option Scheme and Employee Stock
 Purchase Scheme) Guidelines, 1999.  The Bank follows the intrinsic
 value method to account for its stock-based employee compensation plans
 as per the Guidance Note on ''Accounting for Employee Share- based
 Payments'' issued by the ICAI. Compensation cost is measured by the
 excess, if any, of the fair market price of the underlying stock over
 the exercise price on the grant date. The fair price is the latest
 closing price, immediately prior to the date of the Board of Directors
 meeting in which the options are granted, on the stock exchange on
 which the shares of the Bank are listed. If the shares are listed on
 more than one stock exchange, then the stock exchange where there is
 highest trading volume on the said date is considered.
 
 14 STAFF BENEFITS
 
 The Bank provides for its Pension, Gratuity and Leave liability based
 on actuarial valuation done as per the Accounting Standard 15
 (Revised).
 
 i. Retirement benefits in the form of Provident Fund is a defined
 contribution scheme and the contributions are charged to the Profit and
 Loss Account of the year when the contributions to the respective funds
 are due. There are no other obligations other than the contribution
 payable to the respective trusts.
 
 ii. Gratuity, Pension and Leave Encashment Liability are defined
 benefit obligations and are provided for on the basis of an actuarial
 valuation on projected unit credit method made at the end of each
 financial year.
 
 iii. Long term compensated absences are provided for based on actuarial
 valuation. The actuarial valuation is done as per projected unit credit
 method. Short term compensated absences are provided for based on
 estimates.
 
 iv. Actuarial gains/losses are immediately taken to profit and loss
 account and are not deferred.
 
 15 TAXES ON INCOME
 
 Income-tax expense comprises current tax (i.e. amount of tax for the
 year determined in accordance with the income- tax law) and deferred
 tax charge or credit (reflecting the tax effects of timing differences
 between accounting income and taxable income for the year). The
 deferred tax charge or credit and the corresponding deferred tax
 liabilities or assets are recognized using the tax rates that have been
 enacted or substantively enacted by the balance sheet date.  Deferred
 tax assets are recognized only to the extent there is reasonable
 certainty that the assets can be realized in future; however, where
 there is unabsorbed depreciation or carry forward of losses under
 taxation laws, deferred tax assets are recognized only if there is
 virtual certainty of realization of such assets. Deferred tax assets
 are reviewed as at each balance sheet date and written down or written-
 up to reflect the amount that is reasonably/virtually certain (as the
 case may be) to be realized.
 
 The Bank offsets, on a year on year basis, current tax assets and
 liabilities, where it has a legally enforceable right and where it
 intends to settle such assets and liabilities on a net basis.
 
 16 NET PROFIT/(LOSS)
 
 Net profit / (loss) disclosed in the profit and loss account is after
 considering the following:
 
 - Provision/write off of non-performing assets as per the norms
 prescribed by RBI;
 
 - Provision for income tax and wealth tax;
 
 - Depreciation/ write off of investments; and
 
 - Other usual, necessary and mandatory provisions, if any.
 
 17 EARNINGS PER SHARE (EPS)
 
 Basic earnings per share is calculated by dividing the net profit or
 loss for the year attributable to equity shareholders by the weighted
 average number of equity shares outstanding during the year.
 
 Diluted earnings per share reflects the potential dilution that could
 occur if contracts to issue equity shares were exercised or converted
 during the year. Diluted earnings per equity share is computed using
 the weighted average number of equity shares and dilutive potential
 equity shares outstanding during the year, except where the results are
 anti-dilutive.
 
 18 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
 
 In accordance with AS 29 - Provisions, Contingent Liabilities and
 Contingent Assets, the Bank creates a provision when there is a present
 obligation as a result of a past event that probably requires an
 outflow of resources and a reliable estimate can be made of the amount
 of the obligation.  Such provisions are not discounted to present
 value. A disclosure for a contingent liability is made when there is a
 possible obligation, or a present obligation where outflow of resources
 is not probable. Where 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. Provisions are reviewed
 at each balance sheet date and adjusted to reflect the current best
 estimate. If it is no longer probable that an outflow of resource would
 be required to settle the obligation, the provision is reversed. The
 bank does not account for or disclose contingent assets, if any.