1) ACCOUNTING CONVENTION
 
 The financial statements have been prepared by following the going
 concern concept on historical cost basis except as otherwise stated and
 in accordance with Company(Accounting Standard) Rules, 2006 to the
 extent applicable read with guidelines issued by the Reserve Bank of
 India (RBI) and conform to the statutory provisions and practices
 prevailing within the banking industry in India.
 
 The preparation of the financial statements, in conformity with
 generally accepted accounting principles requires management to make
 estimates and assumptions that affect the reported amounts of assets,
 liabilities, revenues, expenses and disclosure of contingent
 liabilities in the financial statements. Management believes that the
 estimates used in the preparation of the financial statements are
 prudent and reasonable. Any revisions to the accounting estimates are
 recognised prospectively in current and future periods.
 
 2) FOREIGN EXCHANGE TRANSACTIONS
 
 I.  Transactions other than FCNR/EEFC/RFC Accounts
 
 a) Foreign Currency balances both under assets and liabilities and
 outstanding forward exchange contracts and swaps are evaluated at the
 year end rates as quoted by Foreign Exchange Dealers Association of
 India (FEDAI). The resultant profit/loss are included in Profit / Loss
 Account.
 
 b) Income and expenditure items have been translated at the exchange
 rates ruling on the dates of the transactions.
 
 c) Contingent liabilities on account of acceptances, endorsements and
 other obligations including guarantees and Letters of Credit issued in
 Foreign Currencies, shown in the Balance Sheet are valued at the
 exchange rates prevailing at the year end.
 
 II.  Transactions relating to FCNR/EEFC/RFC accounts
 
 Foreign Currency Deposits in FCNR/EEFC/RFC accounts including interest
 accrued and also the corresponding assets are recorded at market
 related notional rates, which are periodically reviewed.  Assets and
 Liabilities at the year end are revalued at rates quoted by Foreign
 Exchange Dealers Association of India. The resultant profit / loss is
 shown as income . toss.
 
 3) INVESTMENTS
 
 I.  Investments are accounted for in accordance with the extant RBI
 guidelines on investment classification and valuation and are
 regrouped, shown in balance sheet under the following six groups:
 
 a) Government Securities
 
 b) Other Approved Securities
 
 c) Shares
 
 d) Debentures and Bonds
 
 e) Investments in Subsidiaries/Joint Ventures
 
 f) Others (Commercial Paper, Units of Mutual Fund, NABARD-RIDF, Venture
 Capital Funds etc.)
 
 II.  The Investment portfolio of the Bank is classified into the
 following three categories:
 
 a) Held to Maturity
 
 b) Available for Sale
 
 c) Held for Trading
 
 Bank decides the category of each investment at the time of acquisition
 and classifies the same accordingly. Transfer of securities from one
 category to another is done at the least of the acquisition cost/book
 value/ market value on the date of transfer. The depreciation, if any,
 on such transfer is fully provided for and the book value of the
 security is changed.
 
 III.  Valuation
 
 a) Held to Maturity
 
 i) Investments classified under this category are valued at the year
 end at the acquisition cost, except where the acquisition cost is more
 than the face value, in which case the premium is amortized on constant
 yield method.
 
 ii) In the case of investments in subsidiaries/ joint ventures, any
 diminution in value, other than temporary, is recognized and provided
 for each investment individually.  Investment in RRB and venture
 capital fund is valued at carrying cost.
 
 iii) Profit on sale of investments in this category is first taken to
 Profit and Loss Account and thereafter appropriated to the Capital
 Reserve Account. Loss on sale is recognised in the Profit and Loss
 Account.
 
 Provisions on account of depreciation on net basis if found to be in
 excess, is first taken to Profit & Loss Account and thereafter
 appropriated to the Investment Reserve Account as per the extant RBI
 guidelines.
 
 IV.  Prudential Norms
 
 (a) (i) Securities with guarantees of the Central
 
 Government are treated as performing investments, notwithstanding
 arrears of principal/interest payments.  However, interest if not
 realized for more than 90 days is recognized as income only on cash
 basis.
 
 (ii) Securities guaranteed by the State Government, where the
 principal/interest is due but not paid for a period of more than 90
 days as on 31.03.2011, are treated as Non Performing Investments and
 provided for as per the RBI guidelines. Further, for securities
 guaranteed by the State Governments, where the principal/interest is
 due but not paid for a period of more than 90 days, interest is
 recognized as income only on cash basis.
 
 (b) Securities not guaranteed by the Central Government/State
 Governments/Preference shares: Where the Principal/lnterest/Fixed
 Dividend is due but not paid for a period of more than 90 days as on
 31.03.2011 are treated as Non Performing Investments and provided for
 as per the Reserve Bank of India guidelines.
 
 (c) In the case of debentures/bonds where principal/ interest is in
 arrears, provision is made as in the case of advances.
 
 (d) If any credit facility availed by the issuer from the Bank is NPA,
 investments in any of the securities issued by the same issuer is also
 treated as Non Performing Investments.
 
 (e) The depreciation/provision requirement in respect of non-performing
 investments is not set off against the appreciation in respect of other
 performing investments.
 
 (f) The equity shares in the Banks portfolio has been marked to market
 on periodical basis.  Equity shares for which current quotations are
 not available or where the shares are not quoted on the stock
 exchanges, are valued at break-up value (without considering
 revaluation reserves if any) which is ascertained from the Companys
 latest balance sheet (Not more than one year prior to the date of
 valuation). In case the latest balance sheet is not available the
 shares are valued at Rs. 1 per company.
 
 (g) In the case of Equity Shares, in the event the investment in the
 shares of any company is valued at Re.1 per company on account of the
 non availability of the quotation or latest balance sheet in accordance
 with the RBI guidelines, those equity shares would also be reckoned as
 Non Performing Investment on case to case basis.
 
 4) TRANSACTIONS RELATING TO DERIVATIVES
 
 Derivative contracts are designated as hedging or trading and accounted
 for as follows:
 
 a) Hedge Swaps: The interest rate swaps which hedges interest bearing
 assets and liabilities are accounted for on accrual basis except the
 swaps designated with an asset or liability that is carried at market
 value or lower of cost or market value in the financial statements. In
 that case the swaps are marked to market with the resulting gain or
 loss recorded as an adjustment to the market value of designated asset
 or liability.
 
 The gain or loss on the terminated swaps is deferred and recognized
 over the shorter of the remaining contractual life of the swap or the
 remaining life of the asset/liability.
 
 b) Re-designation of Hedge items: If a hedge is redesignated from one
 item of asset/liability to another item of asset/liability, such
 redesignaion is accounted for as the termination of one hedge and
 acquisition of another. On the date of redesignation, the swap is
 marked to market and the mark to market value is amortized over the
 shorter period of the remaining life of the swap or remaining life of
 the asset/liability. The offsetting mark to market entry adjustments
 would be treated as premium received or paid for hedge on the newly
 designated item of asset/liability and this would be amortized over the
 life of the redesignated asset/liability or remaining term of the swap
 whichever is shorter.
 
 c) Trading Swaps: The trading swaps are marked to market with the
 resulting gain or loss recorded in the income statement. Gain or loss
 on termination of the swap is recorded as immediate income or expense.
 
 5) FIXED ASSETS/DEPRECIATION
 
 (I) Fixed Assets
 
 (a) Premises of the bank include free hold as well as lease hold
 properties. Land and buildings purchased or allotted have been
 capitalised based on agreements/letters of allotment and physical
 possession. Other Fixed Assets are capitalized on the date put to use.
 Premises and other Fixed Assets are stated at their historical cost
 except those which were revalued.  Such Fixed Assets are stated on the
 revalued amount.
 
 b) Advance payments made for acquisition of capital assets and deposits
 made in respect of properties taken on lease/rent are included under
 Other Assets.
 
 (II) Depreciation
 
 a) Fixed Assets (other than Computers including software) are
 depreciated at the rates prescribed under the Income Tax Rules on
 reducing balance method including on the composite cost of certain
 properties where it is not possible to segregate the land cost.
 Computers (including operating software) are depreciated on Straight
 Line Method at the rate of 33.33% per annum.  Other software expenses
 treated as intangible assets are amortized at 100% in the current year.
 Depreciation on additions to Fixed Asset during the financial year is
 provided at 100% of the rate of depreciation prescribed, if the asset
 is put to use for 180 days and above during the year and at 50% of the
 rate of depreciation prescribed, if the asset is put to use for less
 than 180 days during the year. No depreciation is provided in the year
 of sale/disposal of fixed assets.
 
 b) Incremental depreciation on revalued amount in respect of premises
 is adjusted from Revaluation Reserve account.
 
 6) LEASED OUT ASSETS
 
 Accounting for leased assets is done as per the Guidance Note of the
 Institute of Chartered Accountants of India and the Accounting Standard
 19 as applicable for the respective period. Provision in respect of
 non- performing assets, is made by applying the asset classification
 norms prescribed by the RBI for advances.
 
 7) NON BANKING ASSETS
 
 Non-Banking assets are shown at cost.
 
 8) ADVANCES
 
 Advances are classified as per the RBI guidelines into standard,
 sub-standard, doubtful and loss assets after considering subsequent
 recoveries to date. Provision for non-performing assets is made in
 conformity with the RBI guidelines.
 
 a) In terms of the guidelines of the Reserve Bank of India, advances
 are classified as Performing and Non-Performing assets based on
 recovery of principal/interest and advances are classified as Non
 Performing Assets with 90 days delinquency norms. In case of State
 Government Guaranteed advances, requirement of invocation of the
 Guarantee has been de-linked for classification of an account as NPA.
 Non Performing Advances (NPAs) are categorized as Sub-Standard,
 Doubtful and Loss Assets for the purpose of computing provision
 requirements.
 
 Advances shown in the Balance Sheet are net of provisions [including
 floating provisions] in respect of non-performing advances, interest
 suspense and ECGC/DICGC claims received.
 
 b) Advances include the Banks participation in/ contributions to Pass
 Through Certificates (PTCs) and /or to the asset-backed assignment of
 loan assets of other banks / financial institutions where the Bank has
 participated on risk-sharing basis.
 
 c) Amounts recovered against bad debts written off in earlier years are
 recognised to the Profit and Loss account.
 
 d) Provisions no longer considered necessary in context of the current
 status of the borrower as a performing asset, are written back to the
 Profit and Loss account to the extent such provisions were charged to
 the Profit and Loss account.
 
 e) Provisions on Standard Advances are shown under Other Liabilities
 and Provisions.
 
 f) Provision on advances is made as per the RBI guidelines as under:
 
 1. Standard Assets: 1 % of standard advances to Commercial Real Estate
 Sector, 0.25% of the outstanding advances under direct agriculture &
 SME Sectors and 0.40% on all other outstanding advances.
 
 2.  Sub Standard Assets: 10% of the outstanding advances. However, in
 case of sub standard assets which are identified ab-initio as
 unsecured exposures provision at 20% of the outstanding balance is
 made.
 
 3.  Doubtful assets: 20% to 100% as applicable on the secured portion
 of advances, depending upon the period for which the asset has remained
 doubtful and 100% of the unsecured portion of the outstanding advance
 after netting realized amount in respect of DICGC scheme and
 realized/realizable amount of guarantee cover under the ECGC/CGSTI
 Schemes.
 
 4.  Loss Assets: 100% of the outstanding advances.
 
 g) Restructured / rescheduled accounts:
 
 In case of restructured / rescheduled accounts provision is made for
 the sacrifice against erosion/ diminution in fair value of restructured
 loans, in accordance with the general framework of restructuring of
 advances issued by RBI vide circular dated August 27, 2008 and Master
 Circular dated July 01, 2010.
 
 The erosion in fair value of the advances is computed as the difference
 between fair value of the loan before and after restructuring.
 
 Fair value of the loan before restructuring is computed as the present
 value of cash flows representing the interest at the existing rate
 charged on the advance before restructuring and the principal,
 discounted at a rate equal to the Banks BPLR as on the date of
 restructuring plus the appropriate term premium and credit risk premium
 for the borrower category on the date of restructuring.
 
 Fair value of the loan after restructuring is computed as the present
 value of cash flows representing the interest at the rate charged on
 the advance on restructuring and the principal, discounted at a rate
 equal to Banks BPLR as on the date of restructuring plus the
 appropriate term premium and credit risk premium for the borrower
 category on the date of restructuring.
 
 The restructured accounts have been classified in accordance with RBI
 guidelines, including special dispensation wherever allowed.
 
 9) REVENUE RECOGNITION
 
 Income/Expenditure is accounted on accrual basis except in the
 following cases:
 
 a) In the case of Non Performing Assets, income is recognized on cash
 basis, in terms of guidelines of the Reserve Bank of India. Where
 recovery is not adequate to upgrade the Non Performing Assets accounts
 by way of regularization, such recovery is being appropriated towards
 the principal/book balance in the first instance and towards interest
 dues thereafter. In respect of Non Performing Investments, the same
 accounting treatment as above is followed except on mutually agreed
 terms.
 
 b) In the case of advances guaranteed by the Central/ State
 Governments, income is recognized on cash basis if the interest is not
 realized for more than 90 days.
 
 c) Income from Units of Mutual Funds, Commission on insurance and
 depositary participants business, Merchant Banking transactions,
 General Insurance business, Money transfer services, sale of mutual
 fund products, locker rent, commission on Government business, etc. are
 accounted on cash/ realisation basis.
 
 d) Commission earned from Non-fund based business viz., Letter of
 Credits and Bank Guarantees is accounted on cash basis.
 
 e) Interest on securities which is due and not paid for a period of
 more than 90 days is recognized on realisation basis as per RBI
 guidelines.
 
 f) Pursuant to revised guidelines issued by the Reserve Bank of India,
 Savings Bank Deposit Rate of Interest is provided for on Matured Term
 Deposits and Inoperative Savings Deposits.
 
 g) Expenses arising out of claims in respect of employee matters under
 dispute/negotiation are accounted during the year of final settlement/
 determination.
 
 h) In the case of suit filed accounts, legal expenses are charged to
 the profit and loss account. Similarly, at the time of recovery of
 legal expenses in respect of such suit filed accounts, the amount
 recovered is accounted as income.
 
 i) Premium on insurance policies taken by the Bank in respect of
 V-Housing Loans is charged in the year of payment.
 
 10) NET PROFIT
 
 The net profit is arrived at after
 
 a) Provisions for Income Tax & Wealth Tax in accordance with statutory
 requirements
 
 b) Provision on advances/investments
 
 c) Adjustments to the value of investments
 
 d) Transfers to provisions and contingencies
 
 e) Provision for Inter Branch accounts lying unadjusted for more than
 six months as per RBI norms
 
 f) Other usual and necessary provisions
 
 11} EMPLOYEESBENEFITS
 
 a) In respect of employees who have opted for Provident Fund scheme,
 matching contribution as applicable is made by the Bank to the
 recognised Provident Fund. For others who have opted for pension
 scheme, contribution to Pension Fund is made based on actuarial
 valuation, as per Accounting Standard 15 (revised).
 
 b) Contribution to Gratuity Fund is made based on actuarial valuation,
 as per Accounting Standard 15 (revised).
 
 c) Liability towards leave encashment, privilege leave and sick leave
 is provided based on actuarial valuation, as per Accounting Standard 15
 (revised).
 
 Details are as under:
 
 Short term employee benefits:
 
 Short term employee benefits (benefits which are payable within twelve
 months after the end of the period in which the employees render
 service) ie., sick leave is measured as per the actuarial valuation
 report obtained as of each year end balance sheet date.
 
 Long term employee benefits:
 
 Long term employee benefits (benefits which are payable after the end
 of twelve months from the end of the period in which employees render
 service), and post employment benefits (benefits which are payable
 after completion of employment), are measured on a discounted basis by
 the projected Unit Credit Method, on the basis of annual third party
 actuarial valuations. The bank provides for
 
 the following long term employee benefits as per actuarial valuation:
 
 1.  Leave encashment: The Bank provides for liability accruing on
 account of deferred entitlement towards leave encashment in the year in
 which the employees concerned render their services based on third
 party actuarial valuation obtained as of each year end balance sheet
 date.
 
 2.  Pension: The Bank provides for liability accruing on account of the
 employees who have opted for pension based on the actuarial valuation
 obtained as of each year end balance sheet date. As per IX Bipartite
 settlement, pension option was re-opened for the employees who were in
 the service of the Bank as on 27.04.2007. Consequent to this, there was
 requirement for providing additional contribution to the pension fund.
 While Reserve Bank of India has permitted amortization of the
 additional liability due to the existing employees opting for 2nd
 pension option over of a period of five years, this relaxation was not
 extended in respect of the additional liability arising out of the
 retired employees exercising 2nd pension option. The Bank has obtained
 third party actuarial valuation report as of 31.03.2011 and accordingly
 made the additional contribution required for the pension fund.
 
 3.  Gratuity: The Bank provides for gratuity liability based on the
 actuarial valuation obtained as of each year end balance sheet date.
 Maximum amount of Gratuity payable to the employees has been increased
 from Rs. 3.50 lacs to Rs. 10.00 lacs wef 24.05.2010 by amendment to the
 Payment of Gratuity Act of 1972. Reserve Bank of India has permitted
 amortization of the additional burden arising due to increase in the
 ceiling over a period of five years. The Bank has obtained third party
 actuarial valuation report as of 31.03.2011 and accordingly made the
 additional contribution required for the pension fund.
 
 The pension and gratuity contributions are transferred to self-managed
 trusts.
 
 12) PROVISION FOR TAXATION
 
 Tax expenses comprise current and deferred taxes.  Current income tax
 is measured at the amount expected to be paid to the tax authorities in
 accordance with the Income Tax Act, 1961. Deferred income taxes reflect
 the impact of current year timing differences between taxable income
 and accounting income for the year and reversal of timing differences
 of earlier years. Deferred tax is measured based on the tax rates and
 the tax laws enacted or substantively enacted at the balance sheet
 date.
 
 13) IMPAIRMENTS:
 
 The carrying amounts of assets are reviewed at each Balance Sheet date
 for any indication of impairment based on internal/external factor. An
 impairment loss is recognized whenever the carrying amount of an asset
 exceeds its estimated recoverable amount.
 
 14) SEGMENT REPORTING:
 
 In accordance with the guidelines issued by RBI, Bank has adopted
 Segment Reporting as under:
 
 1.  Treasury includes all investment portfolio, profit / loss on sale
 of investments, profit/loss on foreign exchange transactions, equities,
 income from derivatives and money market operations.  The expenses of
 this segment consist of interest expenses on funds borrowed from
 external sources as well as internal sources and depreciation /
 amortisation of premium on Held to Maturity category investments.
 
 2.  Corporate/ Wholesale Banking includes lending and deposits from
 corporate customers and identified earnings and expenses of the
 segment.
 
 3.  Retail Banking includes lending and deposits from retail customers
 and identified earnings and expenses of the segment.
 
 4.  Other Banking Operations includes all other operations not covered
 under Treasury, Wholesale Banking and Retail Banking.
 
 15) EARNINGS PER SHARE:
 
 Earnings per share are calculated by dividing the net profit or loss
 for the period attributable to equity
 
 shareholders (after deducting attributable taxes) by the weighted
 average number of equity shares outstanding during the period. Diluted
 earnings per equity share have been computed using the weighted average
 number of equity shares and dilutive potential equity shares
 outstanding as at end of the year.
 
 16) CONTINGENT LIABILITIES AND PROVISIONS:
 
 A provision is recognised when there is an obligation as a result of
 past event if it is probable that an outflow of resources will be
 required to settle the obligation, in respect of which a reliable
 estimate can be made.  Provisions are not discounted to their present
 value and are determined based on best estimate required to settle the
 obligation at the balance sheet date.  These are reviewed at each
 balance sheet date and adjusted to reflect the current best estimates.
 
 17) OTHERS:
 
 Cash and cash equivalents in the cash flow statement comprise cash and
 balances with RBI (Schedule 6) and balances with banks and money at
 call and short notice (Schedule 7).
 
 18) The Bank has followed the same accounting policies as in the
 previous years subject to regulatory changes, if any.