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Lakshmi Vilas Bank
BSE: 534690|NSE: LAKSHVILAS|ISIN: INE694C01018|SECTOR: Banks - Private Sector
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« Mar 14
Accounting Policy Year : Mar '15
 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
 for.
 
 (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.
 
 2.  INVESTMENTS:
 
 (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
 Companies.
 
 (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.  ADVANCES:
 
 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
 revalued cost.
 
 (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
 account.
 
 (b) The Bank follows the intrinsic value method to account for its
 employee compensation costs arising from grant of Employee Stock
 Options.
 
 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
 basis.
 
 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
 realised.
 
 12.  NET PROFIT:
 
 The net profit as per the Profit & Loss account is arrived at after
 necessary provisions towards: -
 
 a) Taxation.
 
 b) Advances and other assets.
 
 c) Shortfall in the value of investments
 
 d) Staff Retirement benefits.
 
 e) Other usual and necessary provisions.
 
 
Source : Dion Global Solutions Limited
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