1.  BASIS OF PREPARATION
 
 The financial statements have been prepared under the historical cost
 convention unless otherwise stated. They conform to Generally Accepted
 Accounting Principles (GAAP) in India, which comprises statutory
 provisions, regulatory/ Reserve Bank of India (RBI) guidelines,
 Accounting Standards/ guidance notes issued by the Institute of
 Chartered Accountants of India (ICAI) and the practices prevalent in
 the banking industry in India.
 
 2.  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 date of the
 financial statements and the reported income and expenses for the
 reporting period. Management believes that the estimates used in the
 preparation of the financial statements are prudent and reasonable.
 Future results could differ from these estimates. Any revision to the
 accounting estimates is recognised prospectively in the current and
 future periods .
 
 3.  REVENUE RECOGNITION
 
 3.1 Income and expenditure are accounted for on accrual basis except ,
 commission received / paid, locker rent, legal expenses for suit filed
 accounts and recoveries there against, dividend on investments,
 interest on overdue bills, insurance premium paid on Housing Loans and
 interest on tax refunds are accounted for on realisation/ payment
 basis.
 
 3.2 In view of uncertainity of collection of income in cases of Non
 performing Assets/Investments , such income is accounted for only on
 realisation in terms of the RBI guidelines.
 
 3.3 Interest on overdue deposits is provided for at the Saving Bank
 Deposit Rate and the balance is accounted for at the time of renewal.
 
 4.  INVESTMENTS
 
 4.1 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.
 
 4.2 Valuation: 
 
 i) Held to Maturity: -
 
 a.  Investments under Held to Maturity category are carried at
 acquisition cost or amortized cost if acquired at a premium over face
 value. Wherever the book value is higher than the face value /
 redemption value, the premium is amortized over the remaining period of
 maturity.
 
 b.  Investments in joint venture are valued at carrying cost less
 diminution, in value, if any, other than temporary in nature.
 
 c.  Investment in venture capital is valued at carrying cost
 
 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.
 
 4.3 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.
 
 4.4 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.
 
 4.5 Others:
 
 i.  Brokerage/commission received on subscription is booked in Profit
 and Loss Account.
 
 ii.  Brokerage, Commission, securities transaction tax etc. paid in
 connection with acquisition of investments are expensed upfront and
 excluded from cost .
 
 iii. Broken period interest paid / received on purchase / sale of
 securities is recognised as interest expense / income.
 
 iv.  Prudential norms of RBI for non performing investment
 Classification are applied to Investments and appropriate provisions
 are made in respect of non performing securities.
 
 v.  Profit/Loss on sale of any Investment in any category is taken to
 Profit and 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.
 
 vi. Valuation of HFT and AFS portfolio is done on daily and quarterly
 basis respectively and depreciation, if any, is provided on quarterly
 basis
 
 4.6 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.
 
 5.  ADVANCES / PROVISIONS / RECOVERIES
 
 5.1 Advances are classified as performing/ non performing assets and
 provisions are made in accordance with prudential norms prescribed by
 the Reserve Bank of India.
 
 5.2 Advances are net of provisions and technical write-offs made for
 non-performing Assets.
 
 5.3 Provision for performing Assets is shown under the head Other
 Liabilities and Provisions in terms of RBI guidelines.
 
 5.4 Recoveries in Non-Performing Assets are appropriated first towards
 principal and thereafter towards interest.
 
 6.  FIXED ASSETS AND DEPRECIATION
 
 6.1 Premises and other Fixed Assets are stated at historical cost
 except revalued premises which are stated at revalued amount. The
 appreciation on revaluation is credited to Revaluation Reserve and the
 incremental depreciation attributable to the revalued amount is
 deducted therefrom.
 
 6.2 Premises include cost of land.
 
 6.3 Fixtures and fittings in rented premises are treated as Temporary
 Erection.
 
 6.4 Depreciation on Fixed assets including premises where value of land
 is not separable (other than those referred in para 6.5 given below) ,
 is provided on the Written Down Value at the rates prescribed in the
 Income Tax Rules, 1962;
 
 6.5 Depreciation on Computers and ATMs is provided on Straight line
 Method at the rate of 33.33% per annum as per the guidelines of RBI
 .Computers softwares not
 forming an integral part of hardware is charged directly to Profit and
 Loss account.
 
 6.6. No depreciation is provided in the year of sale/disposal.
 Depreciation on additions during the period upto 180 days is provided
 for full year otherwise for half year.
 
 6.7 Premium paid on leasehold land is amortised over the period of
 lease.
 
 7.  FOREIGN EXCHANGE TRANSACTIONS
 
 7.1 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.
 
 7.2 Income and expenditure items are accounted for at the exchange
 rates prevailing on the date of the transaction.
 
 7.3 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.
 
 7.4 Foreign currency guarantees, acceptances, endorsements and other
 obligations are stated at FEDAI rates at the close of the financial
 year.
 
 8.  EMPLOYEE BENEFITS
 
 8.1 Provident fund is a defined contribution as the bank pays fixed
 contribution at predetermined rates. The obligation of the bank is
 limited to such fixed contribution.The Contributions are charged to
 Profit and Loss account.
 
 8.2 Gratuity and pension liability are defined benefit obligation and
 are provided for on the basis of Actuarial Valuation made at the end of
 the financial year. The schemes are funded by the Bank and are managed
 by separate trusts.  New Pension Scheme which is applicable to
 employees who have joined bank on or after 01.04.2010 is a defined
 contribution scheme. Bank pays fixed contribution at pre determined
 rate. The obligation of the bank is limited to such fixed contribution.
 The contribution is charged to Profit and Loss Account.
 
 8.3 Other Employee benefits such as leave encashments, leave fare
 concessions and sick leave are provided for based on actuarial
 valuation .
 
 8.4 Short term employee benefits are recognized as an expense in the
 profit and loss account of the year in which the related services are
 rendered.
 
 9.  TAXES ON INCOME
 
 Income tax expense is the aggregate amount of current tax and deferred
 tax.
 
 Current tax is determined on the amount of tax payable in respect of
 taxable income for the year and accordingly provision for tax is made.
 
 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 by the Balance Sheet date. Deferred tax assets
 are recognised only if there is virtual certainty of realisation of
 such assets in future.
 
 10.  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.
 
 11.  PROVISIONS,CONTINGENT LIABILITIES AND CONTINGENT ASSETS
 
 11.1 In conformity with 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.
 
 11.2 Contingent Assets are not recognized in the financial statements
 since this may result in the recognition of income that may never be
 realized.
 
 12.  EARNINGS PER SHARE
 
 The bank reports basic and diluted earnings per equity share in
 accordance with the AS 20 (Earnings Per Share) issued by the ICAI.
 Basic earnings per equity share has been computed by dividing net
 income by the weighted average number of equity shares outstanding for
 the period. Diluted earnings per equity share has been computed using
 the weighted average number of equity shares and dilutive potential
 equity shares outstanding during the period.