1. BASIS OF ACCOUNTING:
The financial statements have been prepared in accordance with the
historical cost convention except where otherwise stated and conform to
the statutory provisions and practices prevailing within the banking
industry in India and the guidelines / instructions of Reserve Bank of
India issued from time to time.
2. TRANSACTIONS INVOLVING FOREIGN EXCHANGE:
(a) Foreign Currency Assets and Liabilities have been translated 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) Forward Exchange Contracts:
In accordance with the guidelines of FEDAI and the provisions of AS-11,
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. 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.
Investments are categorized under the heads ''Held to Maturity'',
Available for Sale, and ''Held for Trading'' and are valued category
wise, in accordance with the guidelines of the Reserve Bank of India.
(i) Brokerage / commission etc, paid in connection with the acquisition
of investments is charged to revenue and not included in cost.
(ii) Broken period interest paid / received on debt instruments is
treated as interest expended / income.
(iii) Security receipts are valued at NAV as declared by Securitisation
4.1 In accordance with the prudential norms issued by RBI:
(i) Advances are classified into standard, sub-standard, doubtful and
loss assets borrower-wise;
(ii) Provisions are made for loan losses, and
(iii) General provision for standard advances is made.
4.2 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.
5. FIXED ASSETS AND DEPRECIATION:
(a) Fixed assets (Premises portfolio) have been accounted for at their
revalued cost. Fixed assets other than premises portfolio have been
accounted for at their historical cost.
(b) Depreciation on assets other than computers has been provided for
on the diminishing balance method at the rates specified in Schedule
XIV to the Companies Act, 1956.
(c) Depreciation on computers has been provided for on straight-line
method at the rate of 33.33% as per the guidelines issued by the
Reserve Bank of India.
(d) In view of fast changing technology and obsolescence, iPad
communication device is depreciated in full.
(e) Operating Software, which is an integral part of hardware, is
capitalized and depreciation is provided for at the rate of 33.33% on
(f) For premises, in which land cost and construction cost could not be
ascertained separately, depreciation is provided for on the total cost.
6. EMPLOYEE BENEFITS:
(a) Annual contributions to the approved Employees'' Gratuity Fund,
Approved Pension Fund and Provision for Leave Encashment benefits have
been made on actuarial basis. Contribution to Provident Fund is
accounted for on actual basis.
(b) Consequent to reopening of pension option to Employees and
enhancement in Gratuity limits, the additional liability have been
amortised over a period of 5 years and 1/5th of the additional
liability have been charged to the current year Profit & loss account
vide RBI circular DBOD. No. BP.BC.15896/ 21.04.018/2010-11 dated
(c) The Employee Stock Option Scheme provides for grant of equity stock
options to top executives of the bank that vest in a graded manner. The
Bank follows the intrinsic value method to account for its employee
compensation costs arising from grant of such options. The excess of
fair market price over the exercise price shall be accounted as
employee compensation cost over the respective period of vesting. The
fair market price is the latest closing price of the shares on the
stock exchanges in which shares of the bank are largely traded
immediately prior to the date of meeting of the compensation committee
in which the options are granted.
7. PROVISION FOR TAXATION:
Provision for taxation is made on the basis of the estimated tax
liability with adjustment for deferred tax in terms of the Accounting
Standard 22 (Accounting for Taxes on Income) formulated by the
Institute of Chartered Accountants of India.
8. REVENUE RECOGNITION:
(a) Income and expenditure are accounted for on accrual basis.
(b) The following items of income are recognized on realization basis,
owing to the significant uncertainty in collection thereof:
(i) Interest on non-performing advances, including overdue bills.
(ii) Interest on non-performing investments.
(c) Interest on tax refund from Income Tax Department based on
assessment orders received.
(d) Dividend Income on Investments on declaration basis.
9. 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.
10. ACCOUNTING STANDARDS:
Accounting Standards as specified in section 211(3C) of the Companies
Act 1956, to the extent they are applicable to Banking Companies and as
per directions issued by the RBI from time to time, have been followed.
11. SEGMENT INFORMATION:
The reportable business segments have been classified in accordance
with the guidelines issued by Reserve Bank of India. The directly
attributable income and assets are considered under respective segments
and other income, expenses, other assets & liabilities are considered
on appropriate basis.
12. EARNING PER SHARE:
Basic and Diluted earnings per equity share are reported in accordance
with the Accounting Standard 20 Earnings per share issued by the
Institute of Chartered Accountants of India. Basic earnings per equity
share are computed by dividing net profit by the weighted average
number of equity shares outstanding for the period. Diluted earnings
per equity share are computed using the weighted average number of
equity shares and dilutive potential equity shares outstanding during
13. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
As per the Accounting Standard 29 Provisions, Contingent Liabilities
and Contingent Assets issued by The Institute of Chartered Accountants
of India, 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.
Contingent Assets are not recognized in the financial statements since
this may result in the recognition of income that may never be