A. BASIS OF ACCOUNTING:
The financial statements are prepared following the going concern
concept, on historical cost basis unless otherwise stated and conform
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,
Accounting Standards (AS) specified under Section 133 of the Companies
Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 to
the extent applicable and current practices prevailing in the banking
industry in India.
B. 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.
C. PRINCIPAL ACCOUNTING POLICIES
1. TRANSACTIONS INVOLVING FOREIGN EXCHANGE:
(a) Foreign Currency Assets and Liabilities are evaluated at the
exchange rates prevailing at the close of the year as per the
guidelines issued by FEDAI. The resultant profit or loss is accounted
(b) Income and Expenditure in foreign currency are translated at the
exchange rates prevailing on the date of the respective transaction.
(c) Outstanding forward exchange contracts in each currency are
revalued at the Balance Sheet date at the corresponding forward rates
for the residual maturity of the contract, in accordance with the
guidelines of FEDAI and the provisions of AS-11, The difference between
revalued amount and the contracted amount is recognized as profit or
loss, as the case may be.
(d) Contingent liabilities on guarantees, letters of credit,
acceptances and endorsements are reported at the rates prevailing on
the Balance Sheet date.
(a) Investments are categorized under the heads ''Held to Maturity'',
Available for Sale, and ''Held for Trading'' and are valued in accordance
with the guidelines of the Reserve Bank of India.
(b) Brokerage / commission etc, paid in connection with the acquisition
of investments is charged to revenue and not included in cost.
(c) Broken period interest paid / received on debt instruments is
treated as interest expended / income.
(d) Security receipts are valued at NAV as declared by Securitisation
(e) The excess of acquisition cost over the face value of securities
under Held to Maturity category is amortised over the remaining
period to maturity.
3.1 In accordance with the prudential norms issued by RBI:
(a) Advances are classified into standard, sub-standard, doubtful and
loss assets borrower-wise;
(b) Provisions are made for loan losses, and
(c) General provision for standard advances is made.
3.2 Advances disclosed are net of provisions made for non-performing
assets, ECGC claims settled, part recovery towards NPA accounts
receipts held under sundries, and provision made for sacrifice of
interest / diminution in the value of restructured advances measured in
present value terms as per RBI guidelines.
4. FIXED ASSETS AND DEPRECIATION:
(a) Fixed assets are accounted for at their historical cost except for
Land and Building revalued in 2011 which are accounted at their
(b) Software is capitalised along with computer hardware and included
under Other Fixed Assets.
(c) Depreciation on assets other than computers are provided on
Straight Line Method after considering the useful life specified in
Schedule II to the Companies Act, 2013 except for hand held
communication devices which are depreciated in full considering the
fast changing technology and obsolescence.
(d) Depreciation on computers and Software are provided for on
straight-line method at the rate of 33.33% as per the guidelines issued
by the Reserve Bank of India.
(e) Depreciation for premises, in which land cost and construction cost
could not be ascertained separately, is provided on the total cost.
5. EMPLOYEE BENEFITS:
(a) Annual contributions to the approved Employees'' Gratuity Fund,
Approved Pension Fund and Provision for Leave Encashment benefits are
made on actuarial basis and net actuarial gain/loss are recognised as
per Accounting Standard 15. Contribution made by the bank to Provident
Fund and Contributory Pension Scheme are charged to Profit & Loss
(b) The Bank follows the intrinsic value method to account for its
employee compensation costs arising from grant of Employee Stock
6. PROVISION FOR TAXATION:
Provision for taxation is made on the basis of the estimated tax
liability, after due consideration of the judicial pronouncements and
legal opinion, with adjustment for deferred tax in terms of the
Accounting Standard 22 (Accounting for Taxes on Income).
7. REVENUE RECOGNITION:
(a) Income is accounted for on accrual basis.
(b) Interest income on non-performing advances/investments are
recognized on realization basis, owing to the significant uncertainty
in collection thereof:
(c) Interest on tax refund from Income Tax Department is accounted
based on assessment orders received.
(d) Dividend Income on Investments is accounted based on declaration
8. SEGMENT REPORTING:
(a) 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.
(b) Business Segment is classified into (a) Treasury (b) Corporate and
Wholesale Banking, (c) Retail Banking and (d) Other Banking Operations.
(c) Geographical Segment consists only of the Domestic Segment since
the Bank does not have any foreign branches.
9. EARNING PER SHARE:
Basic and Diluted earnings per equity share are reported in accordance
with the Accounting Standard 20 Earnings per share. Basic earnings
per equity share are computed by dividing net profit by the weighted
average number of equity shares outstanding for the year. Diluted
earnings per equity share are computed using the weighted average
number of equity shares and dilutive potential equity shares
outstanding during the period.
10. 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.
11. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
(a) As per the Accounting Standard 29 Provisions, Contingent
Liabilities and Contingent Assets, the Bank recognises provisions only
when it has a present obligation as a result of a past event and it is
probable that an outflow of resources embodying economic benefits will
be required to settle the obligation and when a reliable estimate of
the amount of the obligation can be made.
(b) Contingent Assets are not recognized in the financial statements
since this may result in the recognition of income that may never be
12. NET PROFIT:
The net profit as per the Profit & Loss account is arrived at after
necessary provisions towards: -
b) Advances and other assets.
c) Shortfall in the value of investments
d) Staff Retirement benefits.
e) Other usual and necessary provisions.