1) GENERAL
 
 a) The financial statements are prepared on historical cost convention,
 on a going concern basis and conform to the statutory provisions and
 practices prevailing in the country except as otherwise stated.
 
 b) Revenue and expenses have generally been accounted for on accrual
 basis. However, commission received / paid, locker rent, legal expenses
 for suit filed accounts and recoveries there against, income on non-
 performing assets, dividend on investments, interest on overdue bills,
 insurance premium paid on Housing Loans and interest on tax refunds are
 accounted for on cash basis.
 
 c) The interest on overdue deposits is provided for at the Saving Bank
 Deposit Rate and the balance is accounted for at the time of renewal.
 
 2) FOREIGN EXCHANGE TRANSACTIONS
 
 a) Monetary assets and liabilities are revalued at exchange rates
 advised by Foreign Exchange Dealers Association of India (FEDAI) at the
 close of the financial year and the resultant gain/loss is taken to
 revenue.
 
 b) Income and expenditure items are accounted for at the exchange rates
 prevailing on the date of the transaction.
 
 c) Forward exchange contracts and bills are translated at the exchange
 rates prevailing on the date of commitment. Outstanding foreign
 exchange contracts and bills are revalued as per FEDAI rates and the-
 resultant gain/loss is taken to revenue.
 
 d) Foreign currency guarantees, acceptances, endorsements and other
 obligations are stated at FEDAI rates as at the close of the financial
 year.
 
 3) INVESTMENTS
 
 a) Classification:-
 
 In accordance with RBI guidelines, investments are classified into
 three categories.  i) Held to Maturity (Investments intended to be held
 till maturity) 
 
 ii) Held for Trading (Investments held for sale within 90 days from the
 date of acquisition) iii) Available for Sale: (Investments not
 classified in (i) and (ii), above.) However, for disclosure in the
 Balance Sheet, Investments are classified under the following heads,
 (a) Government Securities (b) Other Approved Securities (c) Shares (d)
 Debentures and Bonds (e) Subsidiaries/ Joint Ventures and (f) Others.
 b) Valuation:
 
 Held to Maturity: -
 
 i.  Investments under Held to Maturity category are carried at
 acquisition cost. Wherever the book value is higher than the face value
 / redemption value , the premium is amortized over the remaining period
 of maturity.
 
 ii. Investments in joint venture ere valued at carrying cost less
 diminution, in vaiue, if any, other than temporary in nature.
 
 iii.  Investment in venture capital is valued at carrying cost.
 Available for Sale and Held for Trading
 
 1.  Government of India Securities
 
 At market prices as per quotations published by Fixed Income Money
 Market and Derivatives Association (FIMMDA).
 
 2.  State Development Loans /Other Approved Securities
 
 At appropriate yield to maturity basis as per FIMMDAguidelines.
 
 3- Treasury Bills, Commercial Papers and Certificate of Deposits
 
 At carrying cost.
 
 4- Equity Shares
 
 (i) Quoted: At market price.
 
 (ii) Unquoted: At break up value, where latest balance sheet is
 available (not more than one year old), otherwise at Re. 1 /- per
 companv.
 
 5.  Preference Shares
 
 (i) Quoted: At market price.
 
 (ii) Unquoted: On appropriate yield to maturity.
 
 6.  Debentures / Bonds
 
 (i) Quoted: At market price.
 
 (ii) Unquoted: At appropriate yield to maturity based on rating
 assigned by Rating Agencies.
 
 1 Units of Mutual Funds
 
 (i) Quoted: At market price.
 
 (ii) Unquoted: At repurchase price/ Net Asset Value.
 
 8.  Security receipts of Asset
 
 Reconstruction Company of _ India Ltd. (ARCIL)
 
 At net asset value of the asset as declared by ARCIL.
 
 The above valuation in category of Available for Sale and Held for
 Trading are done scrip wise and depreciation / appreciation is
 aggregated for each classification. Net depreciation for each
 classification, if any, is provided for while net appreciation is
 ignored.
 
 c) Transfer of securities from one category to another is accounted for
 at the least of acquisition cost / book value / market value on the
 date of transfer. The Depreciation, if any, on such transfer is fully
 provided for.
 
 d) Securities purchased/sold under Liquidity Adjustment Facility (LAF)
 with RBI are debited/credited to Investment Account and reversed on
 maturity of the transaction. Interest expended/earned thereon is
 accounted for as expenditure/revenue.
 
 e) Others:
 
 i) Brokerage/commission received on subscription is deducted from cost
 of acquisition.
 
 ii) Broken period interest paid / received on purchase /sale of
 securities is recognised as interest expense / income.
 
 iii) Prudential norms of RBI for non performing investment
 Classification are applied to Investments and appropriate provisions
 are made in respect of non performing securities.
 
 iv) Profit/Loss on sale of any Investment in any category is taken to
 Profit & Loss Account.  However, in case of profit on Sale of
 Investments under Held to Maturity category, an equal amount is
 appropriated to Capital Reserve Account.
 
 v) Valuation of HFT and AFS portfolio is done on daily and quarterly
 basis respectively and depreciation if any is booked on quarterly
 basis.
 
 f) The derivatives transactions are undertaken for trading or hedging
 purposes. Trading transactions are marked to market. As per RBI
 guidelines, different categories of swaps are valued as under:
 
 i) Hedge swaps: Interest rate swaps which hedges interest bearing asset
 or liability is accounted for on accrual basis except the swap
 designated with an asset or liability that is carried at market value
 or lower of cost in the financial statement.
 
 Gain or losses on the termination of swaps are recognized over the
 shorter of the remaining contractual life of the swap or the remaining
 life of the asset/liability.  ii) Trading swaps: Trading swap
 transactions are marked to market with changes recorded in the
 financial statements.  
 
 4) ADVANCES / PROVISIONS / RECOVERIES
 
 a) Classification of Advances into performing / non-performing assets
 and provisions thereon are made as per the Prudential Norms Prescribed
 by the Reserve Bank of India.
 
 b) Advances are net of provisions and technical write-offs made for
 non-performing Assets.
 
 c) Provision for performing Assets is shown under the head Other
 Liabilities & Provisions.
 
 d) Recoveries in Non-Performing Assets are appropriated first towards
 principal and thereafter towards interest.
 
 5.  a) FIXED ASSETS
 
 (i) Fixed Assets are stated at historical cost less accumulated
 depreciation except in the case of assets which have been revalued. The
 appreciation on account of revaluation is credited to Revaluation
 Reserve.
 
 (ii) Premises include cost of land.
 
 (iii) Fixtures and fittings in rented premises are treated as Temporary
 Erection.
 
 b) DEPRECIATION ON FIXED ASSETS:
 
 (i) Depreciation:
 
 O on assets (including revalued assets), is charged on the Written Down
 Value at the rates prescribed by the Income Tax Rules, 1962; except in
 respect of computers on which depreciation is provided on Straight Line
 Method @ 33.33% as per RBI guidelines;
 
 O is not provided in the year of sale/djsposal of asset;
 
 O on the revalued portion of assets, is adjusted against the
 Revaluation Reserve
 
 (ii) Wherever the cost of land cannot be separately segregated, from
 buildings depreciation is provided on the composite amount, at the rate
 applicable to buildings.
 
 (iii) Premium paid on leasehold land is amortised over the period of
 lease.
 
 (iv) Software expenditure is charged to Revenue in the year of
 incurrence.
 
 6) LEASE TRANSACTIONS:
 
 a) i) Accounting for assets given under finance lease before
 
 April 1, 2001, has been done as per the Guidance Note issued by the
 Institute of Chartered Accountants of India. Such assets are included
 under Other Fixed Assets and depreciation thereon is provided equally
 over the lease period.  ii) In accordance with prudential norms issued
 by RBI, finance leases are classified as performing and non- performing
 and accordingly provisions are made.
 
 b) Assets taken under financial lease are recognized at the lower of
 the fair value of the leased assets and the present value of the
 minimum lease payments are included under Other Fixed Assets.
 
 The lease payments are apportioned between finance charge and the
 outstanding liability so as to account for the finance charge at the
 constant periodic rate of interest ever the lease period.
 
 c) Lease other than financial lease is classified as operating lease.
 
 d) Lease rental and depreciation are accounted for as per Accounting
 Standard (AS-19) issued by the Institute of Chartered Accountants of
 India.
 
 7) STAFF RETIREMENT BENEFITS
 
 a) The Bank has applied Accounting Standard 15 (Revised) - Employees
 Benefits, issued by the Institute of Chartered Accountants of India,
 for recognition of its liabilities in respect of employee benefits.
 
 b) Liability towards long term defined employee benefits - gratuity,
 pension, leave encashment, leave fare concession and sick leave are
 determined on actuarial valuation by independent actuaries at the year
 end by using Projected Unit Cost method. Liability so determined is
 funded, to the approved trusts of the bank, in the case of gratuity and
 pension and provided for in other cases.
 
 c) In respect of Pension scheme opted by existing employees who had not
 opted for Pension earlier, the Pension liability is amortized minimum
 one-fifth starting from financial year 2010-11 as permitted by RBI.
 
 d) In respect of Provident Fund, the contribution for the period is
 recognized as expense and charged to profit and loss account.
 
 e) Short term employee benefits are recognized as an expense at an
 undiscounted amount in the profit and loss account of the year in which
 the related services are rendered.
 
 8) INCOME TAX
 
 a) Provision for Tax is made for both current and deferred taxes.
 
 b) Current tax is provided on the taxable income using applicable tax
 rates and tax laws.
 
 c) Deferred Tax Assets and Liabilities arising on account of timing
 differences and which are capable of reversal in subsequent periods are
 recognized using the tax rates and the tax laws that have been enacted
 or substantively enacted till the date of the Balance Sheet.
 
 d) Deferred Tax Assets are not recognized unless there is virtual
 certainty that sufficient future taxable income will be available
 against which such deferred tax assets will be realized.
 
 9) IMPAIRMENT OF ASSETS
 
 Impairment losses, if any, on Fixed Assets including Revalued Assets,
 are recognized in accordance with Accounting Standard 28 Impairment of
 Assets issued in this regard by the Institute of Chartered Accountants
 of India and charged to Profit and Loss Account.
 
 10) 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 recognizes provisions only when it has a present
 obligation as a result of a past event, 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 realized.
 
 11) NET PROFIT:
 
 The Net Profit is arrived at after accounting for the following
 Provisions and Contingencies:
 
 a) Provision for taxes on income and wealth tax in accordance with
 statutory requirements.
 
 b) Provision on Standard Assets.
 
 c) Provision for Non Performing Advances and depreciation on
 Investments.
 
 d) Bad debts written off.
 
 e) Other usual and necessary provisions.