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
and current practices prevailing in the banking industry in India.
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.
differences, if any between estimates and actual will be dealt appropriately in future
PRINCIPAL ACCOUNTING POLICIES
TRANSACTIONS INVOLVING FOREIGN EXCHANGE:
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
Income and Expenditure in foreign currency are translated at the exchange rates prevailing
on the date of the respective
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.
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 in accordance with the guidelines of the Reserve Bank of
Brokerage / commission etc, paid in connection with the acquisition of investments is
charged to revenue and not
included in cost.
Broken period interest paid / received on debt instruments is treated as interest expended
Security receipts are valued at NAV as declared by Securitisation
The excess of acquisition cost over the face value of securities under “Held to
Maturity” category is amortised over the
remaining period to maturity.
In accordance with the prudential norms issued by RBI:
Advances are classified into standard, sub-standard, doubtful and loss assets
Provisions are made for loan losses, and
General provision for standard advances is made.
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.
FIXED ASSETS AND DEPRECIATION:
Fixed assets are accounted for at their historical cost except for Land and Building which
are accounted at their
Software is capitalised along with computer hardware and included under Other Fixed
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
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.
Depreciation for premises, in which land cost and construction cost could not be
ascertained separately, is provided
on the total cost.
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.
The Bank follows the intrinsic value method to account for its employee compensation costs
arising from grant of
Employee Stock Options.
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 is accounted for on accrual basis.
Interest income on non-performing advances/investments are recognized on realization basis,
owing to the significant
uncertainty in collection thereof:
Interest on tax refund from Income Tax Department is accounted based on assessment orders
Dividend Income on Investments is accounted based on declaration
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
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
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.
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
PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT
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
Contingent Assets are not recognized in the financial statements since this may result in
the recognition of income
that may never be realised.
The net profit as per the Profit & Loss account is arrived at after necessary
provisions towards: -
Advances and other assets.
Shortfall in the value of investments
Staff Retirement benefits.
Other usual and necessary provisions.
CASH AND CASH EQUIVALENTS:
Cash and cash equivalents include cash in hand, Balance with RBI, Balance with other Banks
and money at Call and Short