1.  BASIS OF PREPARATION:
 
 The accompanying financial statements have been prepared following the
 going concern concept, on historical cost basis and confirm to the
 Generally Accepted Accounting Principles, (GAAP) in India which
 encompasses applicable statutory provisions, regulatory norms
 prescribed by the Reserve Bank of India (RBI) from time to time,
 notified Accounting Standards (AS) issued under the Companies
 (Accounting Standards) Rules, 2006 to the extent applicable and current
 practices prevailing in the banking industry in India.
 
 2.  USE OF ESTIMATES:
 
 The preparation of the financial statements require management to make
 estimates and assumptions that affect the reported amounts of assets
 and liabilities including contingent liabilities as of the date of the
 financial statements and the reported income and expenses during the
 reported period. The Management believes that the estimates and
 assumptions used in the preparation of the financial statements are
 prudent and reasonable.  Actual results could differ from these
 estimates. The differences, if any between estimates and actual will be
 dealt appropriately in future periods.
 
 3.  REVENUE RECOGNITION:
 
 Income and expenditure are accounted for on accrual basis except in
 respect of income from Non Performing Assets, commission, exchange and
 rent on safe deposit lockers, all of which are accounted on cash basis.
 Recoveries made in Non-Performing Advances (NPAs) are appropriated
 towards the principal, interest and charges in the order of demand
 except in the case of One Time Settlement (OTS) where recoveries are
 first adjusted to Principal balance.
 
 4.  INVESTMENTS:
 
 Investments are classified under the heads “Held to Maturity”,
 “Available for Sale” and “Held for Trading” categories and are valued
 in accordance with the RBI guidelines. The value, net of depreciation
 is shown in the Balance Sheet. The excess of acquisition cost over the
 face value of securities under “Held to Maturity” category is amortised
 over the remaining period to maturity. Provisions for non-performing
 investments are made as per RBI guidelines.
 
 5.  DERIVATIVE CONTRACTS:
 
 Derivative contracts are designated as hedging or trading and accounted
 in accordance with Reserve Bank of Indias guidelines.
 
 Derivatives deals for trading are marked to market and net depreciation
 is recognised while net appreciation is ignored Derivatives used for
 hedging are marked to market in cases where the underlying assets/
 liabilities are marked to market and Income /expenditure is accounted
 on accrual basis.
 
 6.  ADVANCES:
 
 Advances are classified into (a) Standard; (b) Sub-Standard; (c)
 Doubtful; and (d) Loss assets, in accordance with the RBI Guidelines
 and are stated net of provisions made towards non performing advances,
 unrealised interest, claims received from Credit Guarantee institutions
 etc. Provisions are made in accordance with the prudential norms
 prescribed by Reserve Bank of India.
 
 In case of financial assets sold to Securitisation/reconstruction
 Company, if the sale is at a price below the net book value (NBV), the
 shortfall is debited to the Profit and Loss account. If the sale is for
 the price higher than the net book value, excess provision held is not
 reversed.
 
 7.  FIXED ASSETS:
 
 Premises and other fixed assets have been shown at cost as reduced by
 depreciation written off to date. Software is capitalised along with
 computer and included under Other Fixed Assets.
 
 8.  DEPRECIATION:
 
 Depreciation on fixed assets are provided on Written Down Value (WDV)
 method as per the rates and in the manner specified under Schedule –XIV
 of the Companies Act 1956, except in respect of computers (including
 software) where depreciation is provided at a fat rate of 33.33 % on
 Straight Line Method (SLM) as per RBI guidelines, which is more than
 the amount required to be charged off under schedule –XIV of the
 Companies Act 1956.
 
 Depreciation on assets purchased during the year is computed up to the
 end of the year including for the entire month in which the asset is
 capitalised, and on assets sold/scrapped, up to the end of the month in
 which it is sold / scrapped.
 
 Premium paid on lease hold properties is charged off over the lease
 period.
 
 Depreciation of leased assets is calculated so as to spread the
 depreciable amount over the primary lease period.  Carrying amount of
 assets is reviewed at each balance sheet date for indication of
 impairment if any and is recognized wherever the carrying amount of an
 asset exceeds its recoverable value.
 
 9.  FOREIGN CURRENCY TRANSACTIONS:
 
 Monetary Assets and Liabilities, Forward Exchange Contracts,
 Guarantees, Letters of Credit, Acceptances, Endorsements and other
 obligations are evaluated at the closing spot rates/Forward rates for
 the residual maturity of the contract, as published by FEDAI and in
 accordance with the Accounting Standard 11.  Income and expenditure
 items are translated at the exchange rates ruling on the respective
 dates of the transaction.  The gain or loss on evaluation of
 outstanding monetary assets/liabilities and Foreign Exchange Contracts
 are taken to Profit and Loss Account.
 
 10.  EMPLOYEE BENEFITS:
 
 Contribution made by the Bank to the Provident Fund is charged to the
 Profit and Loss Account.  Contribution to the recognised Gratuity Fund,
 Pension Fund and en-cashable Leave are determined and recognised in the
 accounts based on actuarial valuation as at the Balance Sheet date and
 net actuarial gains/ Losses are recognised as per the Accounting
 Standard 15.
 
 Provisions for short term employee benefits are accounted for on an
 estimated basis.
 
 11.  EMPLOYEE STOCK OPTION:
 
 The Bank uses Intrinsic Value method to account for compensation cost
 of stock options granted to employees of the Bank. Intrinsic value is
 the amount by which the quoted market price of the underlying shares
 exceeds the exercise price of the options.
 
 12.  SEGMENT REPORTING:
 
 The Bank recognises the Business Segment as the Primary Reporting
 Segment and Geographical Segment as the Secondary Reporting Segment, in
 accordance with the RBI guidelines and in compliance with the
 Accounting Standard 17.
 
 Business Segment is classified into (a) Treasury (b) Corporate and
 Wholesale Banking, (c) Retail Banking and (d) Other Banking Operations.
 
 Geographical Segment consists only of the Domestic Segment since the
 Bank does not have any foreign branches.
 
 13.  SHARE ISSUE EXPENSES:
 
 Share issue expenses are adjusted from share premium account.
 
 14.  EARNINGS PER SHARE:
 
 Earnings per share are calculated by dividing the net profit or loss
 for the year attributable to the equity share holders by the weighted
 average number of equity shares outstanding during the year.
 
 Diluted Earnings per equity share are computed by using the weighted
 average number of equity shares and dilutive potential equity share
 outstanding as at the year end.
 
 15.  TAXATION:
 
 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 and are made after due
 consideration of the judicial pronouncement and legal opinions.
 
 Deferred income taxes refect 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 not recognised unless there is a virtual certainty that sufficient
 future taxable income will be available against which such deferred tax
 assets will be realised.
 
 16.  PROVISIONS AND CONTINGENT LIABILITIES:
 
 A provision is recognised when there is an obligation as a result of
 past event, 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 the best estimate required to settle
 the obligation as at the balance sheet date. These are reviewed at each
 balance sheet date and adjusted to refect the current best estimates.
 
 In case where the available information indicates that the loss on the
 contingency is reasonably possible but the amount of loss cannot be
 reasonably estimated, a disclosure is made in the financial statements
 under Contingent Liabilities.
 
 17.  NET PROFIT:
 
 The net profit disclosed in the Profit & Loss Account is after making
 provisions for (i) taxes, (ii) Non Performing Assets, (iii) Standard
 Advances, (iv) Restructured advances and (v) Investments and other
 necessary and applicable provisions.