a.  Basis of preparation of financial statements
 
 The financial statements are prepared under the historical cost
 convention on accrual basis of accounting and in accordance with
 accounting principles generally accepted in India. The Financial
 Statements comply in all material aspects with the Accounting Standards
 notified under the Companies (Accounting Standards) Rules, 2006, the
 relevant provisions of the Companies Act, 1956, the National Housing
 Bank Act, 1987 and the Housing Finance Companies (NHB) Directions, 2010
 as amended from time to time.
 
 Accounting policies not specifically referred to otherwise are
 consistent with the generally accepted accounting principles followed
 by the Company.
 
 b.  Use of Estimates
 
 The preparation of financial statements requires the Management to make
 estimates and assumptions considered in 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 reporting period. The Management believes that the estimates used
 in preparation of the financial statements are prudent and reasonable.
 Future results could differ from these estimates.
 
 c.  Revenue recognition
 
 Interest on housing loans
 
 Repayment of Housing Loan is by way of Equated Monthly Installments
 (EMI) comprising of principal and interest or by way of proceeds of
 Life Insurance Policies where interest is collected in monthly
 installment. Necessary appropriation is made out of these EMI
 collections to principal and interest. Interest income is recognized on
 accrual basis except in case of non-performing assets where interest is
 accounted on realization.
 
 Fees and additional interest income on delayed EMI/Pre-EMI are
 recognized on receipt basis.
 
 Income from Investment
 
 Interest income on debt investment like Non convertible Debentures
 (NCD), Inter Corporate Deposits (ICD), Government Securities is
 recognized on accrual basis and Dividend income is accounted for in the
 year in which the same is declared in Annual General meeting and
 Company’s right to receive / payment is established.
 
 Other Income
 
 In other cases, income is recognized when there is no significant
 uncertainty as to determination and realization.
 
 d.  Fixed assets
 
 Fixed Assets are stated at cost of acquisition, or construction
 inclusive of expenses incidental thereto less accumulated depreciation
 and impairment loss, if any.
 
 e.  Depreciation
 
 Depreciation on Fixed Assets is provided on Straight Line Method at the
 rates and in the manner prescribed in Schedule XIV to the Companies
 Act, 1956.
 
 Cost of leasehold improvements is amortized over the period of the
 lease.
 
 Depreciation on assets whose cost individually does not exceed upto
 Rs.5,000/- is fully provided in the year of purchase.
 
 f.  Impairment loss
 
 Impairment loss is provided to the extent the carrying amount of assets
 exceeds their recoverable amounts. Recoverable amount is the higher of
 an asset’s net selling price and its value in use. Value in use is the
 present value of estimated future
 
 cash flows expected to arise from the continuing use of the asset and
 from its disposal at the end of its useful life. Net selling price is
 the amount obtainable from sale of the asset in an arm’s length
 transaction between knowledgeable, willing parties, less the costs of
 disposal.
 
 g.  Intangible assets
 
 Intangible assets are stated at cost of acquisition, including any cost
 attributable for bringing the same to its working condition, less
 amortization over estimated useful life. Software is amortized on
 straight line basis over five years. However old Software booked on
 which amortization was done on the basis of three years will continue
 to be amortized at same old rate.
 
 h.  Investments
 
 In accordance with the Guidelines issued by National Housing Bank
 (NHB), current investments are carried at lower of cost and fair value
 and long term investments are carried at cost. However, provision is
 made to recognize decline other than temporary in the carrying amount
 of long term investments. Unquoted investments in the units of Mutual
 Funds in nature of current investment are valued at the Net Asset Value
 declared by Mutual Funds in respect of each particular scheme as per
 the guidelines issued by the NHB.
 
 i.  Employee benefits
 
 Provident Fund
 
 Contribution as required by Statute paid to the Government Provident
 Fund as also contribution paid to other recognized Provident Fund Trust
 is debited to the Profit and Loss Account.
 
 Gratuity
 
 - Gratuity liability is defined benefit obligation for employees. The
 Company has taken Group Gratuity-cum-Life Insurance Policy from Life
 Insurance Corporation of India (LIC) for employees other than those
 under deputation from LIC Accordingly, the Company accounts for
 liability for future gratuity benefits based on actuarial valuation
 carried out at the end of each financial year and the Contribution by
 way of premium paid to LIC of India is charged to Profit/Loss Account.
 Actuarial gain or losses are immediately recognized in the Profit and
 Loss Account.
 
 - In respect of employees under deputation from LIC an amount equal to
 five percent of aggregate of basic salary and dearness allowance of
 such employees, paid to LIC is charged to the Profit and Loss Account
 and is a defined contribution obligation.
 
 Leave Benefits
 
 Benefits for both short term and long term in the form of vesting and
 non vesting compensated absences are accounted for on an actuarial
 valuation determined as at the year end.
 
 j.  Foreign Currency Transactions
 
 Transactions in foreign currencies are recorded at the original rates
 of exchange in force at the time the transactions are effected.
 
 In case of forward exchange contracts or other financial instruments
 that is in substance a forward exchange contract, other than for
 trading or speculation purposes, the premium or discount arising at the
 inception of the contract is amortized as expense or income over the
 life of the contract.
 
 Gains / losses on settlement of transactions arising on cancellation /
 renewal of forward exchange contracts are recognized as income or
 expense.
 
 At the year end, monetary items denominated in foreign currency are
 reported using the closing rate of exchange. Exchange difference
 arising thereon and on realization / payments of foreign exchange are
 accounted as income or expense in the relevant year.
 
 k.  Derivative Transactions
 
 Derivative transactions are considered Off-Balance Sheet items and the
 outstanding swap trades are disclosed at the fair value on the
 reporting date. The carry (difference between coupon rate liability and
 swap contract rate) is accounted on an
 
 accrual basis and the same is adjusted against the interest cost of the
 underlying liability. Gain realized on early termination of swap is
 amortized over the balance tenure of the swap or underlying liability
 whichever is less. Loss if any on early termination is charged to
 revenue in the same year.
 
 l.  Borrowing costs
 
 Borrowing costs that are attributable to the acquisition or
 construction of qualifying assets are capitalized as part of the cost
 of such assets. A qualifying asset is one that necessarily takes a
 substantial period of time to get ready for its intended use.  All
 other borrowing costs are charged to revenue.
 
 m.  Zero Coupon Instrument
 
 The difference between the discounted amount mobilized and redemption
 value of Commercial Papers/ Zero Coupon Bond/ NCD is apportioned on
 time basis over the life of instrument and charged as interest expense.
 
 n.  Income Taxes
 
 Income taxes are accounted for in accordance with Accounting Standard
 (AS)-22 – “Accounting for taxes on income”, notified under the
 Companies (Accounting Standards) Rules, 2006. Income tax comprises both
 current and deferred tax.
 
 Current tax is measured on the basis of estimated taxable income and
 tax credits computed in accordance with the provisions of the Income
 Tax Act, 1961.
 
 The tax effect of the timing differences that result between taxable
 income and accounting income and are capable of reversal in one or more
 subsequent periods are recorded as a deferred tax asset or deferred tax
 liability. They are measured using substantially enacted tax rates and
 tax regulations as of the Balance Sheet date.
 
 Deferred tax assets arising mainly on account of brought forward losses
 and unabsorbed depreciation under tax laws, are recognized, only if
 there is virtual certainty of its realization, supported by convincing
 evidence. Deferred tax assets on account of other timing differences
 are recognized only to the extent there is a reasonable certainty of
 its realization.
 
 o.  Provision for non-performing assets (NPA)
 
 All loans and other credit exposures, where the installments are
 overdue for ninety days & above are classified as NPA.  Provision is
 made in respect of NPA in accordance with the Prudential Norms as per
 Housing Finance Companies (NHB) Directions, 2010. Additional provisions
 (over and above the Prudential Norms) if required is made as per the
 Guidelines approved by the Board of Directors from time to time.
 
 p.  Provisions and Contingencies
 
 Provisions are recognized when the Company has a legal and constructive
 obligation as a result of a past event, for which it is probable that
 cash outflow will be required and a reliable estimate can be made of
 the amount of the obligation.  Contingent liabilities are disclosed
 when the Company has a possible or present obligation where it is not
 probable that an outflow of resources will be required to settle it.
 Contingent assets are neither recognized nor disclosed.
 
 q.  Leases
 
 Assets acquired on lease where significant portions of the risks and
 rewards incidental to ownership are retained by the lessors are
 classified as operating leases. Lease rentals are charged to the Profit
 and Loss Account on accrual basis.
 
 r.  Securitised Assets
 
 Derecognition of Securitised assets in the books of the Company,
 recognition of gain or loss arising on Securitisation and accounting
 for credit enhancement provided by the Company is based on the Guidance
 Note on Accounting for Securitisation issued by the Institute of
 Chartered Accountants of India.
 
 Securitised Assets are derecognized in the books of the Company based
 on the principal of surrender of control over the assets. Credit
 Enhancement provided by the Company by way of investments in
 subordinate Class B Pass Through Certificates is included under
 Investments in Pass Through Certificates in Schedule 7.