1 Accounting Convention
 
 The accompanying financial statements are prepared by following going
 concern concept and on historical cost basis unless otherwise stated
 and conform to the statutory provisions and generally accepted
 accounting practices prevailing in India.
 
 2 Revenue Recognition
 
 i) Income and Expenditure is generally accounted for on accrual basis
 unless otherwise stated.
 
 ii) Income on Non-performing Assets (NPAs) is recognised to the extent
 realised as per the prudential norms prescribed by the Reserve Bank of
 India.  Income accounted for in the preceding year and remaining
 unrealized is derecognised in respect of assets classifed as NPAs
 during the year.
 
 iii) Commission, exchange and brokerage earned, rent on Safe Deposit
 Lockers and commission on bio matrix card are accounted for on
 realization basis.
 
 3 Investments
 
 i) In conformity of the requirements in form A of the Third Schedule to
 the Banking Regulations Act, 1949, investments are classifed as under:
 
 a) Government Securities
 
 b) Other Approved Securities
 
 c) Shares
 
 d) Debentures & Bonds
 
 e) Investments in Subsidiaries & Joint Ventures, and
 
 f) Other Investments
 
 The Investment portfolio of the Bank is further classifed in accordance
 with the Reserve Bank of India guidelines into three categories viz.,
 
 a) Held to Maturity (HTM)
 
 b) Available for Sale (AFS)
 
 c) Held for Trading ( HFT)
 
 ii) As per Reserve Bank of India guidelines, the following principles
 have been adopted for the purpose of valuation:
 
 a) i) Securities held in Held to Maturity – at acquisition cost.
 
 The excess of acquisition cost over the face value is amortised over
 the remaining period of maturity.
 
 ii) Investments in Regional Rural Banks are valued at carrying cost.
 
 iii) Investments in Subsidiaries and Joint Ventures are valued at
 carrying cost.
 
 Permanent diminution, if any, in valuation of such investments is
 provided for.
 
 b) i) Securities held in Available for Sale and Held for Trading
 categories are valued classifcation- wise and scrip-wise and net
 depreciation, if any, in each classifcation is charged to Profit and
 Loss account while net appreciation, if any, is ignored.
 
 ii) Valuation of securities is arrived at as follows:
 
 i Govt. of India Securities
 
 As per quotations put out by Fixed Income Money Market and Derivatives
 Association (FIMMDA)
 
 ii State Development Loans, Securities guaranteed by Central / State
 Government, PSU Bonds
 
 On appropriate yield to maturity basis as per FIMMDA
 
 iii Equity Shares
 
 As per market rates, if quoted, otherwise at Book value as per latest
 Audited Balance Sheet (not more than 1 year old). In the absence of
 both at Re 1/- per company.
 
 iv Preference Shares
 
 As per market rates, if quoted, if quoted, or on appropriate yield to
 maturity basis not exceeding redemption value as per FIMMDA guidelines
 
 v Debentures/Bonds
 
 As per market rates, if quoted, otherwise on appropriate yield to
 maturity basis as per FIMMDA guidelines.
 
 vi Mutual Funds
 
 As per stock exchange quotations, if quoted. In case of unquoted units,
 as per latest Repurchase price declared by MF. In cases where latest
 repurchase price is not available, as per Net Asset Value (NAV)
 
 vii Treasury Bills / Certifcate of Deposits / Commercial papers
 
 At carrying cost
 
 viii Venture Capital Funds
 
 At declared NAV or Break-up NAV as per audited Balance sheet which is
 not more than 18 months old. If NAV / audited financial statements for
 more than 18 months continuously are not available, at Re.1/- per VCF
 
 ix Security Receipts
 
 At NAV as declared by Securitisation companies
 
 iii) Inter bank REPO/ Reverse REPO transactions are accounted for in
 accordance with extant RBI guidelines.
 
 iv) As per the extant RBI guidelines, the shifting of securities from
 one category to another is accounted for as follows:
 
 - From AFS/HFT categories to HTM category, at lower of book value or
 market value as on the date of shifting. Depreciation, if any, is fully
 provided for.
 
 - From HTM category to AFS/HFT category,
 
 - If the security is originally placed at discount in HTM category, at
 acquisition cost/ book value
 
 - If the security is originally placed at a premium, at amortised cost.
 
 The securities so shifted are revalued immediately and resultant
 depreciation is fully provided for.
 
 - From AFS to HFT category and vice versa, at book value.
 
 v) The non-performing investments are identifed and depreciation/
 provision is made as per RBI guidelines.
 
 vi) Profit/ loss on sale of investments in any category is taken to the
 Profit and Loss account. However, in case of Profit on sale of
 investments in Held to Maturity category, an equivalent amount (net
 of taxes and net of transfer to Statutory Reserves) is appropriated to
 the Capital Reserve account.
 
 vii) Commission, brokerage, broken period interest etc on securities
 are debited/credited to Profit & Loss Account.
 
 viii) As per the extant RBI guidelines, bank follows Settlement Date
 for accounting of investments transactions.
 
 Derivative Contracts
 
 i) The Interest Rate Swap which hedges interest bearing asset or
 liability are accounted for on accrual basis except the swap designated
 with an asset or liability that is carried at market value or lower of
 cost or market value in the financial statement. Gains 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 swap transactions are marked to market with changes
 recorded in the financial statements.
 
 iii) In the case of option contracts, guidelines issued by FEDAI from
 time to time for recognition of income, premium and discount are being
 followed.
 
 4 Advances
 
 i) All advances are classifed under four categories, i.e.  (a)
 Standard, (b) Sub-standard, (c) Doubtful and (d) Loss assets.
 Provisions required on such advances are made as per the extant
 prudential norms issued by the Reserve Bank of India.
 
 ii) Certain category of standard advances such as loans for consumer
 durables, educational loans, loans through credit cards and other
 personal loans carries an additional provision of 2% over and above the
 statutory requirement.
 
 iii) Advances are stated net of provisions and unrecovered interest
 held in sundry / claims received from CGTF / ECGC relating to
 non-performing assets.  The provision on standard advances is held in
 Other Liabilities and Provisions.
 
 5 Floating Provisions
 
 In accordance with the Reserve Bank of India guidelines, the Bank has
 an approved policy to set apart 1% of gross NPAs as foating provisions
 for advances till the coverage comes up to 100% of the gross NPAs.
 
 6 Fixed Assets
 
 i) Fixed Assets are stated at historical cost. Revalued Land and
 Buildings are stated at revalued amount.
 
 ii) Software systems are capitalized as intangible assets.
 
 iv) Depreciation on computers and software is provided at 33.33% on
 straight-line method.
 
 v) Depreciation on additions to assets made upto 30th September of the
 year is provided at full rate and on additions made thereafter, at half
 the rate.
 
 vi) Depreciation on premises is provided on composite cost, wherever
 the value of land and buildings is not separately identifable.
 
 vii) No depreciation is provided on assets sold / disposed off during
 the year.
 
 viii) Leasehold land is amortised over the period of lease.
 
 7 Transactions involving Foreign Exchange
 
 Revaluation of Foreign Currency Position and booking Profits / Losses:
 
 i) Monetary assets and liabilities are revalued at the exchange rates
 notifed by FEDAI at the close of the year and resultant gain / loss is
 recognized in the Profit and Loss Account.
 
 ii) Income and Expenditure items are recognised at the exchange rates
 prevailing on the date of the transaction.
 
 iii) Forward exchange contracts are recorded at the exchange rate
 prevailing on the date of commitment.  Outstanding forward exchange
 contracts are revalued at the exchange rates notifed by FEDAI for
 specifed maturities and at interpolated rates for contracts of
 in-between maturities. The resultant gains or losses are recognised
 in the Profit and loss account.
 
 iv) Contingent liabilities on account of guarantees, acceptances,
 endorsements and other obligations are stated at the exchange rates
 notifed by FEDAI at the close of the year.
 
 v) Representative offces of the bank outside India are treated as
 Integral Operation Unit as per RBI guidelines.
 
 8 Accounting for Non – Integral foreign operations
 
 Offshore Banking Units (OBU) and foreign branches are classifed as non-
 integral foreign operations.
 
 a) Offshore Banking Unit (OBU) & Foreign Branch:
 
 i. Assets and Liabilities (both monetary and non- monetary as well as
 contingent liabilities) are translated at the closing rates notifed by
 FEDAI at the year-end.
 
 ii. Income and expenses are translated at the quarterly average closing
 rate notifed by FEDAI at the end of respective quarter.
 
 iii. All resulting exchange differences are accumulated in Foreign
 Currency Translation Reserve.
 
 b) Foreign Branch:
 
 i) Revenue Recognition
 
 Income and expenditure are recognized / accounted for as per the local
 laws of the respective countries.
 
 ii) Asset Classifcation and Loan loss Provisioning
 
 Asset classifcation and loan loss provisioning are made as per local
 requirement or as per RBI guidelines whichever is more stringent.
 
 iii) Fixed Assets and Depreciation
 
 a) Fixed Assets are accounted for at historical cost
 
 b) Depreciation on fixed assets of foreign branch is provided as per the
 applicable laws of the respective countries.
 
 9 Employee benefits
 
 Annual contribution to Gratuity Fund, Pension Fund and provision
 towards leave are accounted for on the basis of actuarial valuation and
 contribution to the Provident Fund is charged to Profit and Loss
 Account. Net actuarial gains and losses are recognized during the year.
 
 10 Taxation
 
 Provision for Tax is made for both current and deferred taxes. Current
 tax is provided on the taxable income using applicable tax rate and tax
 laws. Deferred Tax Assets and Deferred Tax 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. Deferred Tax Assets are not recognized unless there is
 reasonable certainty that suffcient future taxable income will be
 available against which such deferred tax assets will be realized. In
 case of carry forward of unabsorbed depreciation and tax losses,
 deferred tax assets are recognized only if there is virtual
 certainty.
 
 11 Provisions, contingent liabilities and contingent assets
 
 Provisions involving substantial degree of estimation in measurement
 are recognized when there is a present obligation as a result of past
 events and it is probable that there will be an outflow of resources and
 a reliable estimate can be made of the amount of the obligation.
 Contingent Assets are neither recognized nor disclosed in the financial
 statements. Contingent liabilities are not provided for and are
 disclosed by way of notes.