1. Foreign Exchange Transactions
Monetary Assets and Liabilities in Foreign Currencies, Outstanding
Forward Contracts and Spot and Forward Positions are translated at the
Exchange Rates prevailing at the yearend as notified by FEDAI and the
resultant Profit/ Loss is recognised in the Profit and Loss Account.
Income and expenditure items are translated at the exchange rates
ruling on the respective dates of the transaction.
Guarantees, Letters of Credit, Acceptances, Endorsements and other
obligations in foreign currencies are translated at Standard Mid Rates
notified by FEDAI at the year-end.
Investments are categorized into three categories - (i) Held to
Maturity, (ii) Held for Trading and (iii) Available for sale, with sub-
classification under each category viz., (i) Government Securities,
(ii) Other Approved Securities, (iii) Shares, (iv) Debentures & Bonds,
(v) Subsidiary and Joint Ventures and (vi) Others - Units of Mutual
Funds, Certificate of Deposits etc., in accordance with the guidelines
issued by Reserve Bank of India.
The category under which the investments would be classified is decided
at the time of acquisition.
Shifting of securities among the categories are accounted at the least
of the acquisition cost / book value / market price prevailing on the
date of shifting and depreciation, if any, on such shifting is fully
Investments classified under HTM category are carried at acquisition
cost except in cases where the acquisition cost is higher than the face
value, in which case the premium is amortized over the remaining period
Investments classified under HFT and AFS categories are marked to
market at regular intervals and net depreciation within each
sub-classification is recognized and provided for, while net
appreciation is ignored.
The Bank follows the method of calculating and accounting of profit on
sale of investments under weighted average cost method.
Interest rate swaps pertaining to trading position and which are
outstanding as on Balance Sheet date are marked to market and net
appreciation is ignored and net depreciation is recognized in the
Profit & Loss Account. Foreign Currency Options and Swaps are accounted
in accordance with the guidelines issued by FEDAI.
Advances are classified as Performing and Non-performing Assets and
provisions are made as per the prudential norms prescribed by RBI.
Advances stated in the Balance Sheet are net of provisions, claims
received from credit guarantee institutions etc.
5. Fixed Assets
Premises and other fixed assets are accounted for at historical cost as
reduced by depreciation written off.
Fixed Assets except Computers are depreciated under Written Down Value
Method at the rates specified in the schedule XIV of the Companies Act,
1956. Depreciation on Computers, including software, is charged at
33.33% on Straight Line Method as per the guidelines of RBI.
Depreciation on assets purchased and sold during the year is provided
on pro rata basis.
7. Revenue / Expense Recognition
Income and Expenditure are generally accounted on accrual basis.
Interest income on all advances other than non-performing assets is
recognized on accrual basis. In respect of non- performing assets, the
interest income is recognized on cash basis.
Commission (including commission received on insurance business),
exchange, brokerage and locker rent are accounted on cash basis.
Interest Income on Tax Refund is accounted on Receipt basis.
8. Employee Benefits
In accordance with Accounting Standard 15 issued under the Companies
(Accounting Standards) Rules, 2006, Provision for Gratuity, Pension and
other defined employee benefits are made on accrual basis as per
Actuarial valuation done at the year-end and short term benefits are
accounted for as and when the liability becomes due.
Options granted under Employee Stock Option Scheme (ESOS) are valued
and accounted for using Intrinsic Value Method.
9. 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.
10. 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.
Tax expenses comprise current and deferred taxes. Provision for
current Income tax is made after due consideration of the judicial
pronouncements and legal opinion.
Deferred income taxes recognizes timing differences between taxable
income and accounting income that originate in one period and are
capable of reversal in one or more subsequent periods. Deferred Tax
Assets are recognized in the books of account to the extent of their
future reversibility. Deferred Tax Liabilities are recognized fully in
the year of accrual.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the Balance Sheet date.
12. Impairment of Assets
The Bank assesses at each balance sheet date whether there is any
indication that an asset may be impaired. Impairment loss, if any, is
provided in the Profit and Loss Account to the extent the carrying
amount of assets exceeds their estimated recoverable amount.
13. 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 reflect 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.
Contingent Assets are not recognized since this may result in the
recognition of income that may never be realized.
14. Net Profit
The net profit disclosed in the Profit and Loss Account is after
Provision for Taxes,
Provision for Standard Assets and Non Performing Assets, Provision for
Depreciation on investments, and Other usual and necessary provisions