1.0 ACCOUNTING CONVENTIONS
 
 The accompanying financial statements are prepared following the Going
 Concern concept on historical cost basis and conform to the statutory
 provisions including the RBI guidelines and the applicable accounting
 standards and prevailing practices of the countries concerned, except
 wherever otherwise stated.
 
 2.0 TRANSACTIONS INVOLVING FOREIGN EXCHANGE
 
 2.1 Exchange rates as notified by Foreign Exchange Dealers Association
 of India (FEDAI) are adopted.
 
 2.2 All foreign currency transactions involving forex liabilities are
 recorded by applying weekly average rate (WAR) published by FEDAI
 whereas all forex assets are recorded at on going market rates.
 
 2.3 All the monetary assets & liabilities are reported at the end of
 the year at FEDAI closing exchange rate and the resultant profit / loss
 is taken to revenue.
 
 2.4 Outstanding Forward Exchange Contracts are reported at the exchange
 rates notified for specified maturities and at interpolated rates for
 contracts of in between maturities.
 
 2.5 Contingent liabilities on account of Guarantees, Letters of Credit,
 Acceptances, Endorsements and other obligations are translated at
 closing exchange rates.
 
 2.6 Foreign Branch of the Bank is classified as Non- Integral Foreign
 Operation
 
 a) All assets & liabilities of the foreign operations, both monetary
 and non-monetary as well as contingent liabilities are translated at
 closing exchange rates.
 
 b) Income and Expenditure are translated at quarterly average exchange
 rates.
 
 c) The resulting exchange difference arising from translation as per
 AS-11 is accumulated in a Foreign Currency Translation Reserve until
 disposal of net investment of the foreign operation.
 
 3.0 INVESTMENTS
 
 3.1 In accordance with guidelines of RBI, investments in India are
 classified into:
 
 I.  Held to Maturity
 
 II.  Available for Sale
 
 III.  Held for Trading
 
 Each category is further classified into: a) Government Securities b)
 Other Approved Securities c) Shares d) Debentures & Bonds
 
 e) Subsidiaries f) Others,
 
 3.2 Investments are valued in accordance with RBI guidelines.
 
 3.2.1 Investments under Held to Maturity are valued at cost of
 acquisition, except where it is acquired at premium in which case the
 premium is amortised over the remaining period of maturity using
 Straight Line Method.
 
 3.2.2 Investments held under Available for Sale category are valued at
 cost or market value, whichever is lower. Individual scripts are valued
 and depreciation / appreciation is aggregated category-wise as per the
 classification of investments in the Balance Sheet. Net depreciation is
 provided for and net appreciation, if any, is ignored.
 
 3.2.3 Investments under Held for Trading category are marked to market
 and the resultant appreciation/ depreciation is aggregated
 category-wise as per Balance Sheet classification. Net depreciation is
 provided for and net appreciation, if any, is ignored.
 
 3.2.4 For the purpose of valuation -
 
 I.  Cost refers to actual cost of acquisition / carrying cost, wherever
 applicable.
 
 II.  Market value refers to latest available price from the trades /
 quotes on the stock exchanges, SGL account transactions, price list of
 RBI / FIMMDA / PDAI as such:
 
 a) Government Securities and Other Approved Securities are valued on
 the basis of Prices / Yield to Maturity (YTM) rates of FIMMDA / PDAI
 with appropriate spreads as prescribed by RBI.
 
 b) Debentures / Bonds are valued on YTM basis with appropriate spreads
 as prescribed by PDAI / FIMMDA.
 
 c) Treasury Bills, RIDF, Commercial Papers and Certificate of Deposits
 are valued at cost.
 
 d) Preference Shares are valued on YTM basis.
 
 e) Equity Shares are valued at last traded prices and where the shares
 are not quoted on stock exchanges, the unquoted shares are valued at
 breakup value (without considering revaluation reserves, if any) as
 per the latest available balance sheet.
 
 f) Investment in RRBs is valued at carrying cost (i.e. book value).
 
 g) Security Receipts issued by Securitisation Companies
 (SC)/Reconstruction Company (RC) are valued/classified as per the norms
 applicable to investment in Non- SLR instruments as prescribed by RBI
 from time-to-time.
 
 h) Units of Venture Capital Funds (VCF) are valued at NAV shown by the
 VCF in its financial statements not older than 18 months.
 
 i) Units in mutual fund are valued at repurchase price or Net Asset
 Value, whichever is lower.
 
 3.2.5 Investments are also categorised based on their performance and
 provisions are made as per IRAC norms applicable to advances as per RBI
 guidelines.  Provision made on non-performing investments is not set
 off against the appreciation in respect of other performing
 investments.
 
 3.3.  Gain, if any, on sale / disposal of securities in the Held to
 Maturity category is taken to Capital Reserve through the Profit and
 Loss Account.
 
 3.4.  Transfer of securities from one category to another is effected
 after providing for depreciation, if any, on the securities so
 transferred.
 
 3.5 Floating Rate Note and Credit Linked Note investments at Foreign
 Branch are classified as Available For Sale and are valued at nominal
 value or market value, whichever is lower. These investments are marked
 to market at quarterly intervals and where the value of these
 investments is lower than the nominal value, a provision for
 depreciation is created in the Balance Sheet and a charge is recognized
 in the Profit and Loss Account.
 
 3.6 Incentive received on subscriptions is deducted from the cost of
 securities. Brokerage/commission/stamp duty paid in connection with
 acquisition of securities is treated as revenue expenses.
 
 4.0 DERIVATIVES
 
 4.1 The credit exposures for derivative transactions are monitored on
 Current Credit Exposure method.
 
 4.2 The naked hedging transactions are considered as a trading
 transaction and allowed to run till maturity.
 
 4.3 Derivative transactions are classified into hedge and non-hedge and
 measured at fair value.
 
 4.4 The transactions covered on back-to-back basis and the transactions
 undertaken to hedge the risk on assets and liabilities are valued and
 accounted on interest accrual basis.
 
 4.5 Market making transactions are accounted on marked-to-market basis
 at fortnightly intervals, while hedging transactions are accounted for
 on accrual basis.
 
 4.6 Premium at the time of purchase if any is amortized over the
 residual period of the transactions and profit is booked on maturity.
 Discount is held in Income Received in Advance account and appropriated
 to P&L account on maturity.
 
 5.0 ADVANCES
 
 5.1 Advances are classified into Performing and Non- Performing Assets
 and provisions for loan losses on such advances are made as per
 prudential norms issued by Reserve Bank of India from time-to-time.  In
 respect of foreign branch, asset classification and provisioning for
 loan losses are made as per local requirements or as per RBI prudential
 norms, whichever is more stringent.
 
 5.2 Advances are stated net of provisions made for Non-Performing
 Assets except general provisions for Standard Advances, Provision held
 for sold assets which have been included in Other Liabilities and
 Provisions.
 
 6.0 PREMISES AND OTHER FIXED ASSETS
 
 6.1 Premises and other fixed assets are stated at historical cost
 and/or revaluation value less accumulated depreciation. The premises
 are revalued every five years at value determined based on the
 appraisal by approved valuers. Surplus arising at such revaluation is
 credited to Revaluation Reserve.
 
 6.2 Depreciation on premises has been provided on composite cost
 wherever cost of land cannot be segregated. Additional depreciation on
 revalued amount is adjusted to the Revaluation Reserve.
 
 6.3 Depreciation on other fixed assets, including additions, is
 provided for on the basis of written down value, except as otherwise
 stated, at the following rates:
 
 6.4 Depreciation on additions to fixed assets is provided for the whole
 year except on additions to computers and operating software, which is
 on pro-rata basis.  No depreciation is provided on the assets in the
 year of their disposal.