1.0 RETIREMENT BENEFITS
 
 1.1 Statutory contribution is made to Provident Fund Trust in respect
 of employees who have opted for Provident Fund. For others who have
 opted for pension scheme, contribution to Pension Fund Trust is made
 based on actuarial valuation.
 
 1.2 Contribution to Gratuity Fund Trust is based on actuarial
 valuation.
 
 1.3 Liability towards leave encashment is provided on accrual basis as
 per actuarial valuation
 
 2.0 REVENUE RECOGNITION
 
 a) Revenue and expenses are generally accounted for on accrual basis
 except in respect of fees/ commission on transactions with Mutual
 Funds, income on non-banking assets, locker rent, interest on overdue
 bills/tax refunds, income from non-performing assets and legal expenses
 on suit filed accounts which are accounted on cash basis.
 
 b) Income from dividend on shares is accounted on accrual basis when
 the same is declared and the right to receive the dividend is
 established.
 
 c) Interest on overdue deposits is accounted for at the time of
 renewal. In respect of matured deposits provision has been made as per
 the RBI guidelines.
 
 d) The broken period interest on sale or purchase of securities is
 treated as revenue as per RBI guidelines.
 
 e) Expenditure in respect of application software, bonds issue,
 franchises of credit card and insurance products are charged off to
 revenue.
 
 f) Income from consignment sale of imported gold coins is accounted for
 as other income after the sale is complete.
 
 3.  TAXES ON INCOME
 
 3.1 Current tax is determined as per the provisions of the Income tax
 Act, 1961.
 
 3.2 Deferred tax assets and liabilities arising on account of timing
 differences between taxable and accounting income, is recognized
 keeping in view, the consideration of prudence in respect of deferred
 tax assets in accordance with the Accounting Standard 22 issued by
 ICAI.
 
 4.  COUNTRY RISK MANAGEMENT
 
 The bank has adopted the Country Risk Management policy in accordance
 with the RBI guidelines.
 
 5.  GOLD COINS
 
 Stock of imported gold coins is valued at cost or market price,
 whichever is lower.
 
 6.  NET PROFIT
 
 Net Profit is arrived at after accounting for the following under
 Provisions & Contingencies:
 
 - Provision for Income Tax and Wealth Tax
 
 - Provision/Write off of Non-Performing Advances and Investments
 
 - Provision on Standard Assets
 
 - Adjustment for appreciation/depreciation on Investments
 
 - Transfer to Contingencies
 
 - Other usual and necessary provisions.
 
 7. B.  Exchange Traded Derivatives - Currency Futures
 
 - The Bank undertakes proprietary trading in Currency Futures in
 USD/INR on the Exchanges. There are no outstanding contracts under
 Currency Futures as on 31-3-2011.
 
 - Exchange traded Interest Rate derivatives is NIL. The bank is not
 dealing in exchange traded interest rate derivatives.
 
 7. C.  Disclosures on Risk Exposure in Derivatives a) Qualitative
 Disclosure
 
 The Bank is undertaking derivative transactions for hedging risks on
 its balance sheet as well as for trading/ market-making purposes. Bank
 is undertaking derivative transactions like FRAs, Interest rate swaps.
 Currency swaps and Currency Options, with bank and Non-bank Counter
 parties. The bank is also undertaking proprietary trading in Currency
 Futures on the Exchange.
 
 - Bank is not having any exposure in complex derivatives nor has it any
 direct exposure to the sub- prime assetSi
 
 - The Bank has a well laid-down policy for undertaking derivative
 transactions approved by its Board.
 
 - The Bank has not crystallised and written off any account nor
 incurred any loss on account of undertaking derivative transactions.
 
 - The segregation of front Office, Mid Office and Back Office is
 ensured to avoid conflict of interest and to mitigate the degree of
 risk. The Mid Office is directly reporting to Risk Management and
 Monitoring Department at Corporate Office, Bangalore.
 
 - Credit risk of counter parties, including non-bank clients is
 properly appraised and limits fixed.
 
 - Credit risk is monitored by setting counterparty exposure limits,
 setting country risk exposure and mitigating settlement risk through
 CCIL/CLS.
 
 - Currency Futures have no credit risk for the Bank as the exchanges
 guarantee payment.
 
 - Cross-currency swaps are undertaken upto a period of 10 years,
 covering the same back-to-back without any open position and upto an
 amount of USD 50 Mio for non-bank clients.
 
 - Currency swaps are undertaken for non-bank clients with ratings SYND
 01 to SYND 03 only.
 
 - Forward contracts under past performance category are booked for
 clients with rating SYND 01- SYND 04 only and on complying with RBI
 guidelines.
 
 - Cover currency swaps are undertaken both principal and interest
 back-to-back thus hedging both exchange rate risk and interest rate
 risk without involvement of any outlays.
 
 - The transactions with our counter-party banks and non-bank
 counterparty are undertaken within the limits approved by the Board.
 The transactions with non-bank counterparty are done on a back-to-back
 covered basis without assuming any market risk.
 
 - Credit exposures for derivative transactions are monitored on the
 basis of current credit exposure Method.
 
 - ISDA agreements are executed / exchanged with every counterparty bank
 and non-bank clients as per RBI guidelines.
 
 - Midoffice measures and monitors the risk arising out of trading deals
 independently.
 
 - The transactions are undertaken within the overall Aggregate Gap
 Limits sanctioned by the Board.
 
 - Any transaction undertaken for hedging purpose, if it becomes naked,
 is treated as a trading transaction and allowed to run till maturity.
 
 - The transactions are separately classified as hedge or non-hedge
 transactions and measured at fair value.
 
 - The transactions covered on back-to-back basis and the transactions
 undertaken to hedge the risks on Banks assets and liabilities are
 valued as per the valuation prescribed and Interest is accounted on
 accrual basis.
 
 - Premium at the time of purchase, if any, is amortized over the
 residual period of the transaction. Profit is recognised on maturity.
 Discount is held in Income Received in Advance account and appropriated
 to P&L account on maturity.
 
 - Adequate provision is made for transactions undertaken for hedging
 purpose, which become naked resulting in mark-to-market losses.
 
 - Provision is also made for net funded country exposures, where the
 exposure is 1 % or more of the Banks assets.
 
 - Transactions for market making purposes are marked- to-market at
 fortnightly intervals and those for hedging purposes are accounted for,
 on accrual basis.
 
 - Collaterals are also obtained depending on the terms of sanction.
 
 - Banks branch at London is undertaking FRAs and IRS for hedging
 purpose only and accounting interest on accrual basis.
 
 - 83.82 % of Derivatives fall under the short tenure of less than one
 year.
 
 8.  DISCLOSURE IN TERMS OF ACCOUNTING STANDARDS (AS)
 
 The disclosures under Accounting Standards issued by the Institute of
 Chartered Accountants of India (ICAI) (to the extent applicable) are
 given below:
 
 i) Net profit or loss for the period, prior period items and changes in
 accounting policy (AS 5)
 
 a) Investment in Floating Rate Note and Credit Linked Note Investments
 held in London branch are classified as available for sale and are
 valued at nominal value or market value whichever is lower.  FRNs are
 valued based on issuers value and the CLNs are valued based on FIMMDA
 spread.  Consequently the provision for depreciation on these
 investments is at Rs.25.35 crore.
 
 ii) Effect of changes in Foreign Exchange Rate (AS 11):
 
 The net loss for the year includes an amount of Rs. 1.72 crores (Rs. 2.94
 crores profit for the previous year) being the profit booked under
 difference in exchange on account of AS 11 valuation of FIX assets &
 Liabilities.
 
 In terms of regulatory directives. Accounting procedure (AS 11) in
 respect of Forex Assets and Liabilities have been implemented to ensure
 a fair and true disclosure of the value of the same in the Balance
 Sheet.
 
 iii) Employee Benefits (AS 15)
 
 Bank has complied with the revised Accounting Standard 15 and
 accordingly a sum of Rs.298.68 crores has been considered as transitional
 liability as on 31 -3-2007. Out of total transitional liability, the
 Bank has charged Rs.59.74 crores (one fifth) to the current years profit
 and loss account and the balance amount of Rs.59.74 crores (previous year
 Rs.119.48 crores) will be provided in the next year.
 
 In accordance with the RBI guidelines, the bank has amortised l/5,h of
 the enhanced liability of Rs. 726.90 crores in respect of pension and
 gratuity relating to continuing employees resulting in carry forward of
 unamortised liability of Rs. 581.52 crores. Further the bank has also
 absorbed an amount of Rs. 364 crores during the year towards the
 additional pension liability for retired/separated employees as per the
 RBI guidelines.
 
 v) Related Party Disclosures (AS 18)
 
 Names of Related Parties and their relationship:
 
 a) Subsidiary:
 
 Syndbank Services Limited
 
 b) Associates:
 
 Gurgaon Grameena Bank North Malabar Grameena Bank Prathama Bank
 
 Andhra Pragathi Grameena Bank Karnataka Vikas Grameena Bank
 
 c) Key Management Personnel:
 
 Sri Basant Seth Chairman and Managing
 
 Director
 
 Sri V K Nagar Executive Director
 
 Sri Ravi Chatterjee Executive Director
 
 vl) Consolidated Financial Statements (AS 21)
 
 The consolidated financial statements for the year ended 31st March,
 2011 have been prepared in accordance with the AS 21 and on the basis
 of the audited financial statements of the subsidiary of the Bank, M/s
 Syndbank Services Ltd.
 
 vii) Accounting for Taxes on Income (AS 22)
 
 The Bank has complied with the requirements of AS 22.  The net balance
 of Deferred Tax Liability (DTL) as on 31-03-2011 stood at Rs.2.09 crore
 (Rs.5.93 crore as on 31-03-2010) after adjusting a sum of Rs.3.84 crore
 towards Deferred Tax Assets (DTA) for the year on depreciation on fixed
 asset. Further bank has not recognised DTA on provision made for
 employee benefit liabilities (allowable upon payment/crystallisation)
 and capital loss out of prudence.
 
 g) Fixed Assets
 
 In respect of certain premises of the Bank, documentation formalities
 as to transfer of title are yet to be completed.  However the Bank
 holds documents to prove its title as per the legal opinions obtained.
 
 h) Investments
 
 Profit on account of sale of securities from HTM category amounting to
 NIL has been taken to Profit and Loss Account and thereafter
 appropriated towards Capital Reserve Account.
 
 The amortization charges of Rs.60.77 crore (previous year Rs.80.88 crore)
 on the HTM category of securities is debited to Profit and Loss Account
 and reflected in Schedule-13, Interest Earned: Item II - Income on
 Investments as a deduction as per RBI Master Circular.
 
 i) Details of Bonds/Capital Issue
 
 During the year, bank has allotted 5.13 crore equity shares of face
 value of Rs.10/- each for cash at premium of Rs.113.35 (Rupees one hundred
 thirteen and paisa thirty five only) determined in accordance with
 Regulation 76(1) of SEBI ICDR Regulations aggregating to Rs.632.99 crore
 on preferential basis to Government of India.
 
 j) Provision Coverage Ratio:
 
 The provision coverage ratio for the financial Year 2010- 11 is 77.18%.
 
 k) Letters of Comfort issued in favour of overseas branch at LONDON by
 International Division, Mumbai & Branches
 
 The Bank has given a confirmation to FSA (Financial Services Authority)
 of U.K. that it will make available liquidity resources at all times to
 its London branch (if needed) in connection with application made for
 Whole form liquidity modification of the London branch under the new
 liquidity regime of FSA U.K.
 
 International Division Mumbai issued Letter of Comfort amounting to US$
 75 Mb in favour of London branch with the approval of Board of
 Directors / Reserve Bank of India.
 
 During the financial year 2010-11, the daily outstanding placements
 made at market related rates by International Division with London
 branch stands above the minimum undertaken level, as per the Letter of
 Comfort issued for US$ 75 Mio. Hence, the amount of Letter of Comfort
 for US$ 75 Mio will not appear as a Contingent Liability as on Balance
 Sheet date. Total Deposit of US$ 166.02 Mio placed by International
 Division with London branch as on 31-03-2011.
 
 I) Letter of Comfort issued by branches for the purpose of buyers
 credit facility to corporate clients
 
 Branches have issued Letters of Comfort on behalf of their corporate
 customers in favour of London branch for providing Buyers credit to the
 extent of Rs.483.17 crores as on 31-03-2011.
 
 Letter of Comfort issued by the branches for the purpose of providing
 buyers credit facility to the Corporate clients, in favour of various
 other banks is Rs.92.39 crores and the outstanding gross amount of Letter
 of comfort issued by our branches and International Division, Mumbai as
 at 31-03-2011 stands at US$ 129.06 Mio (Rs.575.56 crores).
 
 The financial impact on account of letters of comfort issued may not be
 significant when the quality of Letters of Comfort, Credit Ratings /
 World Rankings, Securities, Collaterals and Counter Guarantees
 available of / from the underlying reference entities are taken into
 account.
 
 o) Income earned on the bank assurance business during the year 2010-11
 is Rs.704.88 lakhs against Rs.1551.94 lakhs in previous year.
 
 p) Amount of advance for which, intangible securities has been taken :
 
 Total Amount of advances for which intangible securities, such as
 charge over the rights, licences, authorizations, etc., charged as
 collateral in respect of projects (including infrastructure projects)
 is Rs.1 70.00 crores. Estimated value of such intangible collaterals is
 Rs.524.52 crores.
 
 q) Previous year figures
 
 Previous year figures have been regrouped / rearranged wherever
 considered necessary to conform to the current years classification.