SIGNIFICANT ACCOUNTING POLICIES
1. BASIS OF PREPARATION:
The financial statements are prepared following the
going concern concept, on historical cost basis unless
otherwise stated and conform, in all material aspects, to
the Generally Accepted Accounting Principles (GAAP) in
India, which encompasses applicable statutory provisions,
regulatory norms prescribed by the Reserve Bank of
India (RBI), Accounting Standards (AS), pronouncements
issued by The Institute of Chartered Accountants of India
(ICAI), Banking Regulation Act, 1949 and accounting
practices prevalent in the banking industry in India. In
respect of foreign offices/branches, statutory provisions
and accounting practices prevailing in the respective
foreign countries are complied with, except as specified
elsewhere.
2. USE OF ESTIMATES:
The preparation of financial statements requires the
management to make estimates and assumptions
considered in the reported amount 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. The actual results could differ
from the estimates. Any revision to accounting estimates is
recognized prospectively in current and future periods.
3. REVENUE RECOGNITION: (AS 9 - Revenue
Recognition)
a. Income/Expenditure is recognised on accrual basis,
unless otherwise stated. In respect of foreign offices,
income/expenditure is recognised as per local laws/
standards of host country.
b. Interest income is recognised on time proportion
basis except interest on non-performing
assets.
c. Commission on issue of Bank Guarantee (BG) and
Letter of Credit (LC) is recognised over the tenure of
BG/LC.
d. All other Commission and Exchange, Brokerage,
Fees and other charges are recognised as income
on realisation.
e. Income is recognized on accrual basis for
Government Securities, bonds and debentures
where interest is serviced regularly and is not in
arrears.
f. Income from units of Mutual funds, AIFs and
other such pooled/collective investment funds is
recognized on cash basis.
g. Discount or Premium on all securities is amortized
over the remaining life of the instruments on
constant yield method. The amortized amount is
shown under the head “Income on Investments”.
h. Brokerage, commission, securities transaction tax,
etc. paid on acquisition of equity investments are
included in cost.
i. Brokerage, commission, broken period interest
paid/ received on debt investments is treated as
expense/income and is excluded from cost/sale
consideration.
j. Brokerage and Commission, if any, received on
subscription of investments is credited to Profit and
Loss Account.
k. Profit or loss on sale of investments under “Held to
maturity” (HTM) is recognised in the Profit and Loss
Account under the head “Other Income”. In case of
profit on sale of investments under ‘Held to Maturity'
category, an equivalent amount (net of taxes and
amount required to be transferred to Statutory
Reserves) is appropriated to ‘Capital Reserve
Account' from Profit and Loss Account
l. On sale or maturity of a debt instrument in AFS
category, the accumulated gain/loss for that security
in AFS Reserve is transferred from AFS Reserve to
Profit and Loss Account.
m. On sale or maturity of an equity instrument
designated under AFS category, the accumulated
gain/loss for that security in AFS Reserve is
transferred from AFS Reserve to Capital Reserve.
n. The gain/profit on reclassification/sale of an
investment in a subsidiary, associate or joint venture
is first recognised in the Profit and Loss Account
and then appropriated to the Capital Reserve
Account'.
o. Dividend Income is recognised when the right to
receive the dividend is established.
p. Interest Income on Income-tax refund is recognised
in the year of passing of assessment order.
q. Appropriation of recoveries in NPA accounts:
In respect of NPA account, recoveries effected
except through a.) Compromise settlement /special
OTS, b.) Judgement of a Court/DRT/NCLT and c.)
Assignment to ARC's/SC's are to be made in the
following order:
• Charges debited to the account;
• Expenses/out of pocket expenses incurred but
not debited;
• Unrealised interest;
• Uncharged interest; and
•• Principal
In other cases, the recoveries made are appropriated as
per the order of relevant authority.
Further, in case of borrowers who are having multiple
accounts:
Recovery made in one account is apportioned by the
system in the above mentioned order i.e. Expenditure,
interest and Principal outstanding of the said account.
Surplus recovery amount, if any, takes care of
Expenditure, Interest and Principal outstanding of other
account(s) of the same customer.
4. ADVANCES:
a. Advances are classified into “Performing” and “Non¬
Performing Advances” (NPAs) in accordance with
the applicable regulatory guidelines.
b. NPAs are further classified into Sub-Standard,
Doubtful and Loss Assets in terms of applicable
regulatory guidelines.
c. In respect of domestic branches, NPA Provisions (on
the Outstanding Advances) are made at the rates
given as under:
d. In respect of foreign branches, classification of
advances as NPAs and provision in respect of
NPAs is made as per the regulatory requirements
prevailing at the respective foreign countries or as
per guidelines applicable to domestic branches,
whichever is stringent.
e. Provisions in respect of NPAs, unrealised interest,
ECGC claims, etc. are deducted from total advances
to arrive at net advances as per RBI norms.
f. Escalated provisions in case of specific accounts/
scheme/sector etc. are maintained with approval of
the appropriate authority.
g. In case of financial assets sold to Asset
Reconstruction Company (ARC) / Securitisation
Company (SC), if the sale is at a price below the net
book value (NBV), (i.e. outstanding less provision
held) the shortfall is debited to the Profit and Loss
account as per the extant RBI guidelines issued
from time to time. If the sale is at a price higher
than the NBV, the excess provision on sale of NPAs
may be reversed to profit and loss account in the
year the amounts is received. However, any excess
provision is reversed only when the cash received
(by way of initial consideration only/or redemption of
SR's/PTC) is higher than the net book value (NBV)
of the asset. Reversal of excess provision is limited
to the extent to which cash received exceeds the
NBV of the asset. However, in case of Security
Receipts (SRs) that are guaranteed by Government
of India, the excess provision is reversed to Profit
and Loss Account in the year of transfer if the sale
consideration comprises only of cash and SRs
guaranteed by Government of India.
h. Provision for Standard assets, including restructured
advances classified as standard, is made in
accordance with RBI guidelines. In respect of
foreign branches provision for Standard Assets
is made as per the regulatory requirements
prevailing at the respective foreign countries or as
per guidelines applicable to domestic branches,
whichever is stringent.
i. Provision for net funded country exposures (Direct/
Indirect) is made on a graded scale in accordance
with the RBI guidelines.
i. FLOATING PROVISION:
The bank has a policy for creation and utilisation of
floating provisions. The quantum of floating provisions to
be created is assessed at the end of each financial year.
The floating provisions are utilised only for contingencies
under extraordinary circumstances specified in the policy
with prior permission of Reserve Bank of India or on being
specifically permitted by Reserve Bank of India for specific
purposes. These provisions are netted off from gross
NPAs to arrive at Net NPAs.
S. DEBIT/CREDIT CARDS REWARD POINTS:
Provision for reward points in relation to the debit cards
is provided for on actuarial estimates and Provision for
Reward Points on Credit cards is made based on the
accumulated outstanding points.
r. INVESTMENTS:
Bank follows Settlement date accounting for recording
purchase and sale of transactions in all Securities.
A. Classification:
i. Investments are classified under the following
categories:
a. Held to Maturity (HTM)
b. Available for Sale (AFS)
c. Fair Value through Profit and Loss
(FVTPL)
(Held for Trading (HFT) is a separate
investment category under FVTPL)
d. Subsidiaries, Associates and Joint
Ventures
ii. Investments for the purpose of disclosure in
in. Investments for the purpose of valuation are
classified under the following categories:,
a. Level 1
b. Level 2
c. Level 3
Level 1/Level 2/ Level 3 are as follows:
Level 1: In the context of inputs used for
valuation of a financial instrument are those
inputs which are quoted prices (unadjusted)
in active markets for identical instruments
that the bank can access at the measurement
date. In reference to the valuation of an
instrument, it refers to a valuation that is
substantively based on Level 1 inputs and
does not have any significant Level 2 or Level
3 inputs
Level 2: In the context of inputs used for
valuation of a financial instrument are those
inputs, other than quoted prices included
within Level 1, that are observable for the
asset or liability, either directly or indirectly. In
reference to the valuation of an instrument, it
refers to a valuation that is based on Level
1 and Level 2 inputs and does not have any
significant Level 3 inputs
Level 3: In the context of inputs used
for valuation of a financial instrument are
unobservable inputs. In reference to the
valuation of an instrument, it refers to a
valuation in which there is a significant Level
3 input.
Basis of Classification
Classification of an investment is done at the
time of its acquisition.
i. Held to Maturity (HTM)
a. Investments acquired with an
intention and objective to hold till
maturity for collecting contractual
cash flows.
b. Investments that meet SPPI
(Solely payment of principal and
Interest on Principal outstanding)
criteria.
c. Investments in securitization
notes (other than equity tranche)
is classified under HTM if the
underlying pool of financial
instruments also meets the SPPI
Criteria.
ii. Available for Sale (AFS)
a. Investments are classified under
this category if the security are
obtained with an objective that
is achieved by both collecting
contractual cash flows and selling
securities and contractual terms
meet SPPI (Solely payment of
principal and Interest on Principal
outstanding) criteria
b. On Initial recognition, Bank has
irrevocable election to classify an
equity instrument under AFS that
is not held with an objective of
trading.
iii. Fair Value through Profit and Loss
(FVTPL)
a. Investments that do not qualify
for inclusion in HTM or AFS are
classified under FVTPL.
b. Investments with compulsorily,
optionally or contingently
convertible features and
Investments with Contractual loss
absorbency features.
c. Held for Trading (HFT) is a sub¬
category of FVTPL.
iv. Subsidiaries, Associates and Joint
Ventures
a. Investments made in Subsidiaries,
Associates and Joint Ventures are
classified under this category.
B. Initial Recognition:
i. All Investments are measured at fair value
on initial recognition unless the fair value is
materially different from the acquisition cost.
ii. In respect of Government securities acquired
through auction, switch operations and open
market operations, the price at which the
security is allotted shall be the fair value.
iii. Day 1 gain/loss on securities which are
quoted/fair value is determined based on
market observable inputs are recognized in
Profit and Loss Account.
iv. Day 1 loss arising from Level 3 investments
are recognized immediately in Profit and
Loss Account while Day 1 gains are deferred.
In case of Debt instruments Day 1 gain
is amortized on a straight-line basis up to
the maturity date while for unquoted equity
instruments, the gain is set aside as a liability
until the security is listed or derecognized.
C. Subsequent Measurement:
i. Held to Maturity (HTM)
a. Upon initial recognition, Investments
held under this category are carried at
cost and not at mark-to-market.
ii. Available for Sale (AFS)
a. Investments under this category, are fair
valued at least on a quarterly basis.
b. The valuation gains and losses across
all performing investments, irrespective
of classification held under AFS are
aggregated and the net appreciation
or depreciation is directly credited or
debited to AFS Reserve.
iii. Fair Value through Profit and Loss (FVTPL)
a. Investments under this category are fair
valued on quarterly basis and the net
gain or loss arising on such valuation
are directly credited or debited to the
Profit and Loss Account.
b. Investments under HFT category are
fair valued on daily basis and the net
gain or loss arising on such valuation
are directly credited or debited to the
profit and loss account.
iv. Subsidiaries, Associates and Joint
Ventures
a. Investments under this category are
held at acquisition cost.
b. Bank will evaluate Investments under
this category for impairment on a
quarterly basis.
D. Method of valuation:
Investments in India are valued in accordance with
the RBI guidelines and investments held at foreign
branches are valued at lower of the value as per
the statutory provisions prevailing at the respective
foreign countries or as per RBI guidelines issued
from time to time.
E. Reclassification of Investments between
Categories:
i. Reclassification of Investments between
various categories is done only upon prior
approval from Board and RBI.
ii. If such an approval is obtained by the Bank,
Bank will reclassify the investments as per
applicable RBI guidelines.
iii. Reclassification to be applied prospectively
from the reclassification date.
F. Non-performing Investments (NPIs) and
valuation thereof:
i. In respect of domestic offices investments are
classified as performing and non-performing,
based on the guidelines issued by the RBI.
ii. In respect of non-performing investments,
income is not recognised and provision
is made for depreciation in value of such
securities as per RBI guidelines.
iii. The provision on NPI investments is not
netted against the valuation gains and losses
of performing investments.
iv. Provision made is higher of provision required
as per IRCAP norms and depreciation on the
Investment. The provision for NPI (irrespective
of category) are recognized in Profit and Loss
Account.
v. In case of AFS investment, the provision
required is created by charging the same to
AFS-Reserve to the extent of such available
gains and in case of losses in AFS reserve,
the cumulative losses shall be transferred
from AFS-Reserve to the Profit and Loss
Account. Matured NPIs are shown under
‘Other Assets' Schedulell (Net of Provision).
vi. In respect of foreign offices, classification and
provisions for non-performing investments
(NPI) are made as per the local regulations
or as per the norms of RBI, whichever are
stringent.
G. Repo / Reverse Repo:
The securities sold and purchased under Repo/
Reverse repo are accounted as Collateralised
lending and borrowing transactions. However,
securities are transferred as in case of normal
outright sale/ purchase transactions and such
movement of securities is reflected using the Repo/
Reverse Repo Accounts and Contra entries. The
above entries are reversed on the date of maturity.
Costs and revenues are accounted as interest
expenditure/income, as the case may be.
Balance in Repo Account / Marginal Standing facility
including those under Liquidity Adjustment facility is
classified as Borrowings.
All type of Reverse Repos with RBI including those
under Liquidity Adjustment Facility/Standing Deposit
Facility are presented under sub item (ii) ‘In Other
Accounts' of item (II) Balances with RBI under
Schedule 6 ‘Cash and balances with RBI'.
Reverse Repos with banks and other institutions
having original tenors up to and inclusive of 14
daysare classified as Money at Call & Short Notice
under Schedule 7 “Balance with Banks and Money
at call & short notice” in the Balance sheet.
Reverse Repo with banks and other institutions
having original tenors more than 14 days shall be
shown under Schedule 9 “Advances” under following
head: A.(ii) ‘Cash credits, overdrafts and loans
repayable on demand'' B.(i) ‘Secured by tangible
assets' C.(I). (iii) Banks (iv) ‘Others' (as the case
may be).
Borrowing cost of repo transactions and revenue
on reverse repo transactions, with RBI or others,
is accounted for as interest expense and interest
income, respectively.
H. Investment in Security Receipts (SRs) backed by
assets: -
The Bank has valued SRs under securitization
in line with RBI guidelines issued vide
circular no. RBI/DOR/2021-22/86 DOR.STR.
REC.51/21.04.048/2021 -22 dated September
24, 2021 and RBI/DOR/2023/24/104 dated
September 12, 2023, and in terms of RBI
circular no. RBI/DOR/2024-25/135 DOR.STR.
REC.72/21.04.048/2024-25 dated March 29, 2025.
i. Investments in SRs / PTCs / other securities
issued by ARCs are valued periodically at the
Net Asset Value (NAV) declared by the ARC
based on the recovery ratings received for
such instruments.
Investments in the SRs/PTCs issued by ARCs
in respect of the stressed loans transferred by
the Bank to the ARC, are carried in the Bank's
books on an ongoing basis, until its transfer or
realization, at lower of the redemption value of
SRs arrived based on the NAV as above, and
the NBV of the transferred stressed loan at
the time of transfer.
When the investment by bank in SRs backed
by stressed loans transferred by it, is more
than 10 percent of all SRs backed by its
transferred loans, the valuation of such SRs
is at lower of face value of the SRs reduced
by the notional provisioning rate applicable if
the underlying loans continued in the books
of the Bank or NAV of the SRs. However,
SRs guaranteed by the Government of India
is valued periodically by reckoning the N AV
declared by the ARC.
ii. SRs/PTCs which are not redeemed as at the
end of the resolution period (i.e., five years or
eight years as the case may be) are treated
as loss asset and fully provided for.
iii. The valuation, classification and other
norms applicable to investment in Non-SLR
instruments prescribed by RBI from time
to time are applicable to bank's investment
in debentures/ bonds/ SRs /PTCs issued
by ARC. However, if any of the above
instruments issued by ARC is limited to the
actual realization of the financial assets
assigned to the instruments in the concerned
scheme, the bank reckons the NAV obtained
from ARC from time to time, for valuation of
such investments.
8. DERIVATIVES:
The Bank presently deals in Forex Forward Contracts,
interest rate, and currency derivatives. The interest rate
derivatives dealt with by the Bank are Rupee Interest Rate
Swaps, Foreign Currency Interest Rate Swaps, Forward
Rate Agreements and Interest Rate Futures. Currency
Derivatives dealt with by the Bank are Options, Currency
Swaps and Currency Futures. Based on RBI guidelines,
Derivatives are valued as under:
i. The hedge/non hedge (market making) transactions
are recorded separately.
ii. Income/expenditure on hedging derivatives are
accounted on accrual basis.
iii. All Derivative contracts are recognised on the
Balance Sheet date and measured at fair value
iv. Wherever, hedge accounting is not opted,
derivatives are accounted at fair value with changes
in fair value being recognised in the Profit and Loss
Account.
v. Gains/ losses on termination of the trading swaps
are recorded on the termination date as income/
expenditure. Any gain/loss on termination of hedging
swaps are deferred and recognised over the shorter
of the remaining contractual life of the swap or the
remaining life of the designated assets/liabilities.
vi. Option fees/premium is amortised over the tenor of
the option contract.
vii. Fair value in the context of derivative contracts
represents the ‘exit price'.
viii. Netting of Derivative assets and Derivative liabilities
is not carried out.
9. FIXED ASSETS: (AS 10 PROPERTY, PLANT &
EQUIPMENT)
i. Fixed assets are stated at historical cost less
accumulated depreciation/amortisation and
impairment losses, if any. Assets which have been
periodically revalued are stated at revalued amount
less accumulated depreciation. The appreciation on
revaluation is credited to Revaluation Reserve.
ii. Cost includes cost of purchase and all expenditure
such as site preparation, installation costs,
professional fees, etc. incurred on the asset before
it is ready to use or capable of ready to use.
Subsequent expenditure incurred on assets ready
to use is capitalised only when it increases the
future benefits from such assets or their functioning
capability.
iii. The rates of depreciation and method of charging
depreciation is given below:
iv. In respect of leasehold land, the lease premium, if
any, is amortised over the period of lease.
v. In respect of additions/sale during the year,
depreciation is provided on proportionate basis for
the number of days the assets have been ready to
use during the year.
vi. Computer Software, not forming integral part of
computer hardware is classified as intangible asset
and amortised over a period of 5 years.
vii. 5% residual value has been kept for all the assets
except for the assets with estimated useful life
less than 5 Years (eg. Mobile Phones, Computers
and Computer Software forming integral part of
hardware), where the entire cost of the assets is
amortised over the useful life.
viii. The revalued asset is depreciated over the balance
useful life of the asset as assessed at the time
of revaluation. Such depreciation is charged to
Profit & Loss Account and an equivalent amount
is transferred from the Revaluation Reserve to
Revenue Reserve. The revaluation of Bank's own
properties is carried out every 3 years.
ix. Depreciation on fixed assets outside India is
provided on Straight Line Method, except at the
centres where different rates/method have been
prescribed by the local statutory authorities.
10. TRANSACTION INVOLVING FOREIGN EXCHANGE:
Transactions involving foreign exchange are accounted
for in accordance with AS 11, “The Effect of Changes in
Foreign Exchange Rates” read with extant RBI guidelines:
A. Translation in respect of Integral Foreign
operations: Foreign currency transactions of Indian
branches have been classified as integral foreign
operations and foreign currency transactions of such
operations are translated as under:
i. Foreign currency transactions are recorded on
initial recognition in the reporting currency by
applying to the foreign currency amount, the
daily closing rate as available from Cogencis/
Reuter's page on date of the transaction.
ii. Foreign currency monetary items are
reported using the Foreign Exchange Dealers
Association of India (FEDAI) closing spot
rates.
iii. Foreign currency non-monetary items, which
are carried in terms of historical cost, are
reported using the exchange rate at the date
of the transaction.
iv. Contingent liabilities denominated in foreign
currency are reported using the FEDAI closing
spot rates.
v. Outstanding foreign exchange spot and
forward contracts held for trading are revalued
at the exchange rates notified by FEDAI for
specified maturities, and the resulting notional
profit or loss is recognised in the Profit and
Loss Account.
vi. Outstanding Foreign exchange forward
contracts which are not intended for trading
are valued at the closing spot rate as advised
by FEDAI. The premium or discount arising
at the inception of such a forward exchange
contract is amortised as expense or income
over the life of the contract.
vii. Exchange differences arising on the
settlement of monetary items at rates different
from those at which they were initially
recorded are recognised as income or as
expense in the period in which they arise.
viii. Gains/Losses on account of changes in
exchange rates of open position in currency
futures trades are settled with the exchange
clearing house on daily basis and such gains/
losses are recognised in the Profit and Loss
Account.
B. Translation in respect of Non-Integral Foreign
operations: Transactions and balances of foreign
branches are classified as non-integral foreign
operations and their financial statements are
translated as follows:
i. Assets and Liabilities (monetary and non¬
monetary as well as contingent liabilities)
are translated at the closing rates notified by
FEDAI.
ii. Income and expenses are translated at the
quarterly average closing rates notified by
FEDAI.
iii. All resulting exchange differences are
accumulated in a separate account ‘Foreign
Currency Translation Reserve' till the disposal
of the net investments by the bank in the
respective foreign branches.
iv. The Assets and Liabilities of foreign offices
in foreign currency (other than local currency
of the foreign offices) are translated into local
currency using spot rates applicable to that
country.
11. EMPLOYEE BENEFITS: (AS 15 Employee Benefits)
A. Short Term Employee Benefits:
The undiscounted amount of short-term employee
benefits, such as medical benefits etc. which are
expected to be paid in exchange for the services
rendered by employees are recognised during the
period when the employee renders the service.
B. Long Term Employee Benefits:
a. Defined Benefit Plan: -
i. Gratuity:
The Bank provides gratuity to all
eligible employees. The benefit is
in the form of lump sum payments to
vested employees on retirement, or
on death while in employment, or on
termination of employment, for an
amount equivalent to 15 days' basic
salary payable for each completed
year of service, subject to a maximum
prescribed as per The Payment of
Gratuity Act, 1972 or Bank of India
Gratuity Fund Rules,1975, whichever is
higher. Vesting occurs upon completion
of five years of service. The Bank
makes periodic contributions to a fund
administered by trustees based on an
independent actuarial valuation carried
out quarterly.
ii. Pension:
The Bank provides pension to all
eligible employees. The benefit is in the
form of monthly payments as per rules
and payments to vested employees
on retirement, on death while in
employment, or on termination of
employment. Vesting occurs at different
stages as per rules. The Bank makes
monthly contribution to the pension
fund at 10% of pay in terms of Bank
of India Pension Regulations, 1995.
The pension liability is reckoned based
on an independent actuarial valuation
carried out quarterly and Bank makes
such additional contributions periodically
to the Fund as may be required to
secure payment of the benefits under
the pension regulations.
b. Defined Contribution Plan:
i. Provident Fund:
The Bank operates a Provident Fund
scheme. All eligible employees are
entitled to receive benefits under
the Bank's Provident Fund scheme.
The Bank contributes monthly at a
determined rate (currently 10% of
employee's basic pay plus eligible
allowance). These contributions are
remitted to a trust established for this
purpose and are charged to Profit and
Loss Account. The bank recognises
such annual contributions as an
expense in the year to which it relates.
ii. Pension:
All Employees of the bank, who
have joined from 1st April, 2010 are
eligible for contributory pension. Such
employees contribute monthly at a
predetermined rate to the pension
scheme. The bank also contributes
monthly at a predetermined rate to the
said pension scheme. Bank recognises
its contribution to such scheme as
expenses in the year to which it
relates. The contributions are remitted
to National Pension System Trust. The
obligation of bank is limited to such
predetermined contribution.
C. Other Long Term Employee Benefit:
All eligible employees are entitled to the
following-
i. Leave encashment benefit, which is a defined
benefit obligation, is provided for on the basis
of an actuarial valuation in accordance with
AS 15 - Employee Benefits.
ii. Other employee benefits such as Leave Fare
Concession, Milestone award, resettlement
benefits, Sick leave etc. which are defined
benefit obligations are provided for on the
basis of an actuarial valuation in accordance
with AS 15 - Employee Benefits.
iii. In respect of overseas branches and offices,
the benefits in respect of employees other
than those on deputation are valued and
accounted for as per laws prevailing in the
respective territories.
12. SEGMENT REPORTING: (AS 17 Segment reporting)
The Bank recognises the business segment as the primary
reporting segment and geographical segment as the
secondary reporting segment in accordance with the RBI
guidelines and in compliance with the Accounting Standard
17 issued by Institute of Chartered Accountants of India.
13. LEASE TRANSACTIONS: (AS 19 LEASES)
Lease where risks & rewards of ownership are retained
by lessor are classified as Operating Lease as per AS 19
(Leases). Lease payments on such lease are recognised
in Profit & Loss Account on straight line basis over the
lease term.
14. EARNINGS PER SHARE: (AS 20 Earnings per Share)
Basic and Diluted earnings per equity share are reported
in accordance with AS 20 “Earnings per share”. Basic
earnings per equity share are computed by dividing net
profit after tax by the weighted average number of equity
shares outstanding during the period.
Diluted earnings per equity share are computed using the
weighted average number of equity shares and dilutive
potential equity shares outstanding at the end of the
period.
15. TAXES ON INCOME: (AS 22 Accounting for taxes on
Income)
Income tax expense is the aggregate amount of current
tax and deferred tax expense incurred by the Bank.
The current tax expense and deferred tax expense are
determined in accordance with the provisions of the
Income Tax Act, 1961 and as per Accounting Standard
22 - “Accounting for Taxes on Income” respectively after
taking into account taxes paid at the foreign offices, which
are based on the tax laws of respective jurisdictions.
Deferred Tax adjustments comprise changes in the
deferred tax assets or liabilities during the year. Deferred
tax assets and liabilities are recognised by considering the
impact of timing differences between taxable income and
accounting income for the current year, and carry forward
losses. Deferred tax assets and liabilities are measured
using tax rates and tax laws that have been enacted or
substantively enacted at the balance sheet date. The
impact of changes in deferred tax assets and liabilities is
recognised in the Profit and Loss account.
Deferred tax assets are recognised and re-assessed at
each reporting date, based upon management's judgment
as to whether their realisation is considered as reasonably
certain. Deferred Tax Assets are recognised on carry
forward of unabsorbed depreciation and tax losses only if
there is virtual certainty supported by convincing evidence
that such deferred tax assets can be realised against
future taxable income.
16. IMPAIRMENT OF ASSETS: (AS 28 Impairment of
Assets)
“Impairment losses, if any on Fixed Assets (including
revalued assets) are recognised and charged to Profit and
Loss account in accordance with AS 28 “Impairment of
Assets”. However, an impairment loss on a revalued asset
is recognized directly against any revaluation surplus for
the asset to the extent that the impairment loss does not
exceed the amount held in the revaluation surplus for that
same asset.”
SIGNIFICANT ACCOUNTING POLICIES
1. BASIS OF PREPARATION:
The financial statements are prepared following the
going concern concept, on historical cost basis unless
otherwise stated and conform, in all material aspects, to
the Generally Accepted Accounting Principles (GAAP) in
India, which encompasses applicable statutory provisions,
regulatory norms prescribed by the Reserve Bank of
India (RBI), Accounting Standards (AS), pronouncements
issued by The Institute of Chartered Accountants of India
(ICAI), Banking Regulation Act, 1949 and accounting
practices prevalent in the banking industry in India. In
respect of foreign offices/branches, statutory provisions
and accounting practices prevailing in the respective
foreign countries are complied with, except as specified
elsewhere.
2. USE OF ESTIMATES:
The preparation of financial statements requires the
management to make estimates and assumptions
considered in the reported amount 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. The actual results could differ
from the estimates. Any revision to accounting estimates is
recognized prospectively in current and future periods.
3. REVENUE RECOGNITION: (AS 9 - Revenue
Recognition)
a. Income/Expenditure is recognised on accrual basis,
unless otherwise stated. In respect of foreign offices,
income/expenditure is recognised as per local laws/
standards of host country.
b. Interest income is recognised on time proportion
basis except interest on non-performing
assets.
c. Commission on issue of Bank Guarantee (BG) and
Letter of Credit (LC) is recognised over the tenure of
BG/LC.
d. All other Commission and Exchange, Brokerage,
Fees and other charges are recognised as income
on realisation.
e. Income is recognized on accrual basis for
Government Securities, bonds and debentures
where interest is serviced regularly and is not in
arrears.
f. Income from units of Mutual funds, AIFs and
other such pooled/collective investment funds is
recognized on cash basis.
g. Discount or Premium on all securities is amortized
over the remaining life of the instruments on
constant yield method. The amortized amount is
shown under the head “Income on Investments”.
h. Brokerage, commission, securities transaction tax,
etc. paid on acquisition of equity investments are
included in cost.
i. Brokerage, commission, broken period interest
paid/ received on debt investments is treated as
expense/income and is excluded from cost/sale
consideration.
j. Brokerage and Commission, if any, received on
subscription of investments is credited to Profit and
Loss Account.
k. Profit or loss on sale of investments under “Held to
maturity” (HTM) is recognised in the Profit and Loss
Account under the head “Other Income”. In case of
profit on sale of investments under ‘Held to Maturity'
category, an equivalent amount (net of taxes and
amount required to be transferred to Statutory
Reserves) is appropriated to ‘Capital Reserve
Account' from Profit and Loss Account
l. On sale or maturity of a debt instrument in AFS
category, the accumulated gain/loss for that security
in AFS Reserve is transferred from AFS Reserve to
Profit and Loss Account.
m. On sale or maturity of an equity instrument
designated under AFS category, the accumulated
gain/loss for that security in AFS Reserve is
transferred from AFS Reserve to Capital Reserve.
n. The gain/profit on reclassification/sale of an
investment in a subsidiary, associate or joint venture
is first recognised in the Profit and Loss Account
and then appropriated to the Capital Reserve
Account'.
o. Dividend Income is recognised when the right to
receive the dividend is established.
p. Interest Income on Income-tax refund is recognised
in the year of passing of assessment order.
q. Appropriation of recoveries in NPA accounts:
In respect of NPA account, recoveries effected
except through a.) Compromise settlement /special
OTS, b.) Judgement of a Court/DRT/NCLT and c.)
Assignment to ARC's/SC's are to be made in the
following order:
• Charges debited to the account;
• Expenses/out of pocket expenses incurred but
not debited;
• Unrealised interest;
• Uncharged interest; and
•• Principal
In other cases, the recoveries made are appropriated as
per the order of relevant authority.
Further, in case of borrowers who are having multiple
accounts:
Recovery made in one account is apportioned by the
system in the above mentioned order i.e. Expenditure,
interest and Principal outstanding of the said account.
Surplus recovery amount, if any, takes care of
Expenditure, Interest and Principal outstanding of other
account(s) of the same customer.
4. ADVANCES:
a. Advances are classified into “Performing” and “Non¬
Performing Advances” (NPAs) in accordance with
the applicable regulatory guidelines.
b. NPAs are further classified into Sub-Standard,
Doubtful and Loss Assets in terms of applicable
regulatory guidelines.
c. In respect of domestic branches, NPA Provisions (on
the Outstanding Advances) are made at the rates
given as under:
d. In respect of foreign branches, classification of
advances as NPAs and provision in respect of
NPAs is made as per the regulatory requirements
prevailing at the respective foreign countries or as
per guidelines applicable to domestic branches,
whichever is stringent.
e. Provisions in respect of NPAs, unrealised interest,
ECGC claims, etc. are deducted from total advances
to arrive at net advances as per RBI norms.
f. Escalated provisions in case of specific accounts/
scheme/sector etc. are maintained with approval of
the appropriate authority.
g. In case of financial assets sold to Asset
Reconstruction Company (ARC) / Securitisation
Company (SC), if the sale is at a price below the net
book value (NBV), (i.e. outstanding less provision
held) the shortfall is debited to the Profit and Loss
account as per the extant RBI guidelines issued
from time to time. If the sale is at a price higher
than the NBV, the excess provision on sale of NPAs
may be reversed to profit and loss account in the
year the amounts is received. However, any excess
provision is reversed only when the cash received
(by way of initial consideration only/or redemption of
SR's/PTC) is higher than the net book value (NBV)
of the asset. Reversal of excess provision is limited
to the extent to which cash received exceeds the
NBV of the asset. However, in case of Security
Receipts (SRs) that are guaranteed by Government
of India, the excess provision is reversed to Profit
and Loss Account in the year of transfer if the sale
consideration comprises only of cash and SRs
guaranteed by Government of India.
h. Provision for Standard assets, including restructured
advances classified as standard, is made in
accordance with RBI guidelines. In respect of
foreign branches provision for Standard Assets
is made as per the regulatory requirements
prevailing at the respective foreign countries or as
per guidelines applicable to domestic branches,
whichever is stringent.
i. Provision for net funded country exposures (Direct/
Indirect) is made on a graded scale in accordance
with the RBI guidelines.
i. FLOATING PROVISION:
The bank has a policy for creation and utilisation of
floating provisions. The quantum of floating provisions to
be created is assessed at the end of each financial year.
The floating provisions are utilised only for contingencies
under extraordinary circumstances specified in the policy
with prior permission of Reserve Bank of India or on being
specifically permitted by Reserve Bank of India for specific
purposes. These provisions are netted off from gross
NPAs to arrive at Net NPAs.
S. DEBIT/CREDIT CARDS REWARD POINTS:
Provision for reward points in relation to the debit cards
is provided for on actuarial estimates and Provision for
Reward Points on Credit cards is made based on the
accumulated outstanding points.
r. INVESTMENTS:
Bank follows Settlement date accounting for recording
purchase and sale of transactions in all Securities.
A. Classification:
i. Investments are classified under the following
categories:
a. Held to Maturity (HTM)
b. Available for Sale (AFS)
c. Fair Value through Profit and Loss
(FVTPL)
(Held for Trading (HFT) is a separate
investment category under FVTPL)
d. Subsidiaries, Associates and Joint
Ventures
ii. Investments for the purpose of disclosure in
in. Investments for the purpose of valuation are
classified under the following categories:,
a. Level 1
b. Level 2
c. Level 3
Level 1/Level 2/ Level 3 are as follows:
Level 1: In the context of inputs used for
valuation of a financial instrument are those
inputs which are quoted prices (unadjusted)
in active markets for identical instruments
that the bank can access at the measurement
date. In reference to the valuation of an
instrument, it refers to a valuation that is
substantively based on Level 1 inputs and
does not have any significant Level 2 or Level
3 inputs
Level 2: In the context of inputs used for
valuation of a financial instrument are those
inputs, other than quoted prices included
within Level 1, that are observable for the
asset or liability, either directly or indirectly. In
reference to the valuation of an instrument, it
refers to a valuation that is based on Level
1 and Level 2 inputs and does not have any
significant Level 3 inputs
Level 3: In the context of inputs used
for valuation of a financial instrument are
unobservable inputs. In reference to the
valuation of an instrument, it refers to a
valuation in which there is a significant Level
3 input.
Basis of Classification
Classification of an investment is done at the
time of its acquisition.
i. Held to Maturity (HTM)
a. Investments acquired with an
intention and objective to hold till
maturity for collecting contractual
cash flows.
b. Investments that meet SPPI
(Solely payment of principal and
Interest on Principal outstanding)
criteria.
c. Investments in securitization
notes (other than equity tranche)
is classified under HTM if the
underlying pool of financial
instruments also meets the SPPI
Criteria.
ii. Available for Sale (AFS)
a. Investments are classified under
this category if the security are
obtained with an objective that
is achieved by both collecting
contractual cash flows and selling
securities and contractual terms
meet SPPI (Solely payment of
principal and Interest on Principal
outstanding) criteria
b. On Initial recognition, Bank has
irrevocable election to classify an
equity instrument under AFS that
is not held with an objective of
trading.
iii. Fair Value through Profit and Loss
(FVTPL)
a. Investments that do not qualify
for inclusion in HTM or AFS are
classified under FVTPL.
b. Investments with compulsorily,
optionally or contingently
convertible features and
Investments with Contractual loss
absorbency features.
c. Held for Trading (HFT) is a sub¬
category of FVTPL.
iv. Subsidiaries, Associates and Joint
Ventures
a. Investments made in Subsidiaries,
Associates and Joint Ventures are
classified under this category.
B. Initial Recognition:
i. All Investments are measured at fair value
on initial recognition unless the fair value is
materially different from the acquisition cost.
ii. In respect of Government securities acquired
through auction, switch operations and open
market operations, the price at which the
security is allotted shall be the fair value.
iii. Day 1 gain/loss on securities which are
quoted/fair value is determined based on
market observable inputs are recognized in
Profit and Loss Account.
iv. Day 1 loss arising from Level 3 investments
are recognized immediately in Profit and
Loss Account while Day 1 gains are deferred.
In case of Debt instruments Day 1 gain
is amortized on a straight-line basis up to
the maturity date while for unquoted equity
instruments, the gain is set aside as a liability
until the security is listed or derecognized.
C. Subsequent Measurement:
i. Held to Maturity (HTM)
a. Upon initial recognition, Investments
held under this category are carried at
cost and not at mark-to-market.
ii. Available for Sale (AFS)
a. Investments under this category, are fair
valued at least on a quarterly basis.
b. The valuation gains and losses across
all performing investments, irrespective
of classification held under AFS are
aggregated and the net appreciation
or depreciation is directly credited or
debited to AFS Reserve.
iii. Fair Value through Profit and Loss (FVTPL)
a. Investments under this category are fair
valued on quarterly basis and the net
gain or loss arising on such valuation
are directly credited or debited to the
Profit and Loss Account.
b. Investments under HFT category are
fair valued on daily basis and the net
gain or loss arising on such valuation
are directly credited or debited to the
profit and loss account.
iv. Subsidiaries, Associates and Joint
Ventures
a. Investments under this category are
held at acquisition cost.
b. Bank will evaluate Investments under
this category for impairment on a
quarterly basis.
D. Method of valuation:
Investments in India are valued in accordance with
the RBI guidelines and investments held at foreign
branches are valued at lower of the value as per
the statutory provisions prevailing at the respective
foreign countries or as per RBI guidelines issued
from time to time.
E. Reclassification of Investments between
Categories:
i. Reclassification of Investments between
various categories is done only upon prior
approval from Board and RBI.
ii. If such an approval is obtained by the Bank,
Bank will reclassify the investments as per
applicable RBI guidelines.
iii. Reclassification to be applied prospectively
from the reclassification date.
F. Non-performing Investments (NPIs) and
valuation thereof:
i. In respect of domestic offices investments are
classified as performing and non-performing,
based on the guidelines issued by the RBI.
ii. In respect of non-performing investments,
income is not recognised and provision
is made for depreciation in value of such
securities as per RBI guidelines.
iii. The provision on NPI investments is not
netted against the valuation gains and losses
of performing investments.
iv. Provision made is higher of provision required
as per IRCAP norms and depreciation on the
Investment. The provision for NPI (irrespective
of category) are recognized in Profit and Loss
Account.
v. In case of AFS investment, the provision
required is created by charging the same to
AFS-Reserve to the extent of such available
gains and in case of losses in AFS reserve,
the cumulative losses shall be transferred
from AFS-Reserve to the Profit and Loss
Account. Matured NPIs are shown under
‘Other Assets' Schedulell (Net of Provision).
vi. In respect of foreign offices, classification and
provisions for non-performing investments
(NPI) are made as per the local regulations
or as per the norms of RBI, whichever are
stringent.
G. Repo / Reverse Repo:
The securities sold and purchased under Repo/
Reverse repo are accounted as Collateralised
lending and borrowing transactions. However,
securities are transferred as in case of normal
outright sale/ purchase transactions and such
movement of securities is reflected using the Repo/
Reverse Repo Accounts and Contra entries. The
above entries are reversed on the date of maturity.
Costs and revenues are accounted as interest
expenditure/income, as the case may be.
Balance in Repo Account / Marginal Standing facility
including those under Liquidity Adjustment facility is
classified as Borrowings.
All type of Reverse Repos with RBI including those
under Liquidity Adjustment Facility/Standing Deposit
Facility are presented under sub item (ii) ‘In Other
Accounts' of item (II) Balances with RBI under
Schedule 6 ‘Cash and balances with RBI'.
Reverse Repos with banks and other institutions
having original tenors up to and inclusive of 14
daysare classified as Money at Call & Short Notice
under Schedule 7 “Balance with Banks and Money
at call & short notice” in the Balance sheet.
Reverse Repo with banks and other institutions
having original tenors more than 14 days shall be
shown under Schedule 9 “Advances” under following
head: A.(ii) ‘Cash credits, overdrafts and loans
repayable on demand'' B.(i) ‘Secured by tangible
assets' C.(I). (iii) Banks (iv) ‘Others' (as the case
may be).
Borrowing cost of repo transactions and revenue
on reverse repo transactions, with RBI or others,
is accounted for as interest expense and interest
income, respectively.
H. Investment in Security Receipts (SRs) backed by
assets: -
The Bank has valued SRs under securitization
in line with RBI guidelines issued vide
circular no. RBI/DOR/2021-22/86 DOR.STR.
REC.51/21.04.048/2021 -22 dated September
24, 2021 and RBI/DOR/2023/24/104 dated
September 12, 2023, and in terms of RBI
circular no. RBI/DOR/2024-25/135 DOR.STR.
REC.72/21.04.048/2024-25 dated March 29, 2025.
i. Investments in SRs / PTCs / other securities
issued by ARCs are valued periodically at the
Net Asset Value (NAV) declared by the ARC
based on the recovery ratings received for
such instruments.
Investments in the SRs/PTCs issued by ARCs
in respect of the stressed loans transferred by
the Bank to the ARC, are carried in the Bank's
books on an ongoing basis, until its transfer or
realization, at lower of the redemption value of
SRs arrived based on the NAV as above, and
the NBV of the transferred stressed loan at
the time of transfer.
When the investment by bank in SRs backed
by stressed loans transferred by it, is more
than 10 percent of all SRs backed by its
transferred loans, the valuation of such SRs
is at lower of face value of the SRs reduced
by the notional provisioning rate applicable if
the underlying loans continued in the books
of the Bank or NAV of the SRs. However,
SRs guaranteed by the Government of India
is valued periodically by reckoning the N AV
declared by the ARC.
ii. SRs/PTCs which are not redeemed as at the
end of the resolution period (i.e., five years or
eight years as the case may be) are treated
as loss asset and fully provided for.
iii. The valuation, classification and other
norms applicable to investment in Non-SLR
instruments prescribed by RBI from time
to time are applicable to bank's investment
in debentures/ bonds/ SRs /PTCs issued
by ARC. However, if any of the above
instruments issued by ARC is limited to the
actual realization of the financial assets
assigned to the instruments in the concerned
scheme, the bank reckons the NAV obtained
from ARC from time to time, for valuation of
such investments.
8. DERIVATIVES:
The Bank presently deals in Forex Forward Contracts,
interest rate, and currency derivatives. The interest rate
derivatives dealt with by the Bank are Rupee Interest Rate
Swaps, Foreign Currency Interest Rate Swaps, Forward
Rate Agreements and Interest Rate Futures. Currency
Derivatives dealt with by the Bank are Options, Currency
Swaps and Currency Futures. Based on RBI guidelines,
Derivatives are valued as under:
i. The hedge/non hedge (market making) transactions
are recorded separately.
ii. Income/expenditure on hedging derivatives are
accounted on accrual basis.
iii. All Derivative contracts are recognised on the
Balance Sheet date and measured at fair value
iv. Wherever, hedge accounting is not opted,
derivatives are accounted at fair value with changes
in fair value being recognised in the Profit and Loss
Account.
v. Gains/ losses on termination of the trading swaps
are recorded on the termination date as income/
expenditure. Any gain/loss on termination of hedging
swaps are deferred and recognised over the shorter
of the remaining contractual life of the swap or the
remaining life of the designated assets/liabilities.
vi. Option fees/premium is amortised over the tenor of
the option contract.
vii. Fair value in the context of derivative contracts
represents the ‘exit price'.
viii. Netting of Derivative assets and Derivative liabilities
is not carried out.
9. FIXED ASSETS: (AS 10 PROPERTY, PLANT &
EQUIPMENT)
i. Fixed assets are stated at historical cost less
accumulated depreciation/amortisation and
impairment losses, if any. Assets which have been
periodically revalued are stated at revalued amount
less accumulated depreciation. The appreciation on
revaluation is credited to Revaluation Reserve.
ii. Cost includes cost of purchase and all expenditure
such as site preparation, installation costs,
professional fees, etc. incurred on the asset before
it is ready to use or capable of ready to use.
Subsequent expenditure incurred on assets ready
to use is capitalised only when it increases the
future benefits from such assets or their functioning
capability.
iii. The rates of depreciation and method of charging
depreciation is given below:
iv. In respect of leasehold land, the lease premium, if
any, is amortised over the period of lease.
v. In respect of additions/sale during the year,
depreciation is provided on proportionate basis for
the number of days the assets have been ready to
use during the year.
vi. Computer Software, not forming integral part of
computer hardware is classified as intangible asset
and amortised over a period of 5 years.
vii. 5% residual value has been kept for all the assets
except for the assets with estimated useful life
less than 5 Years (eg. Mobile Phones, Computers
and Computer Software forming integral part of
hardware), where the entire cost of the assets is
amortised over the useful life.
viii. The revalued asset is depreciated over the balance
useful life of the asset as assessed at the time
of revaluation. Such depreciation is charged to
Profit & Loss Account and an equivalent amount
is transferred from the Revaluation Reserve to
Revenue Reserve. The revaluation of Bank's own
properties is carried out every 3 years.
ix. Depreciation on fixed assets outside India is
provided on Straight Line Method, except at the
centres where different rates/method have been
prescribed by the local statutory authorities.
10. TRANSACTION INVOLVING FOREIGN EXCHANGE:
Transactions involving foreign exchange are accounted
for in accordance with AS 11, “The Effect of Changes in
Foreign Exchange Rates” read with extant RBI guidelines:
A. Translation in respect of Integral Foreign
operations: Foreign currency transactions of Indian
branches have been classified as integral foreign
operations and foreign currency transactions of such
operations are translated as under:
i. Foreign currency transactions are recorded on
initial recognition in the reporting currency by
applying to the foreign currency amount, the
daily closing rate as available from Cogencis/
Reuter's page on date of the transaction.
ii. Foreign currency monetary items are
reported using the Foreign Exchange Dealers
Association of India (FEDAI) closing spot
rates.
iii. Foreign currency non-monetary items, which
are carried in terms of historical cost, are
reported using the exchange rate at the date
of the transaction.
iv. Contingent liabilities denominated in foreign
currency are reported using the FEDAI closing
spot rates.
v. Outstanding foreign exchange spot and
forward contracts held for trading are revalued
at the exchange rates notified by FEDAI for
specified maturities, and the resulting notional
profit or loss is recognised in the Profit and
Loss Account.
vi. Outstanding Foreign exchange forward
contracts which are not intended for trading
are valued at the closing spot rate as advised
by FEDAI. The premium or discount arising
at the inception of such a forward exchange
contract is amortised as expense or income
over the life of the contract.
vii. Exchange differences arising on the
settlement of monetary items at rates different
from those at which they were initially
recorded are recognised as income or as
expense in the period in which they arise.
viii. Gains/Losses on account of changes in
exchange rates of open position in currency
futures trades are settled with the exchange
clearing house on daily basis and such gains/
losses are recognised in the Profit and Loss
Account.
B. Translation in respect of Non-Integral Foreign
operations: Transactions and balances of foreign
branches are classified as non-integral foreign
operations and their financial statements are
translated as follows:
i. Assets and Liabilities (monetary and non¬
monetary as well as contingent liabilities)
are translated at the closing rates notified by
FEDAI.
ii. Income and expenses are translated at the
quarterly average closing rates notified by
FEDAI.
iii. All resulting exchange differences are
accumulated in a separate account ‘Foreign
Currency Translation Reserve' till the disposal
of the net investments by the bank in the
respective foreign branches.
iv. The Assets and Liabilities of foreign offices
in foreign currency (other than local currency
of the foreign offices) are translated into local
currency using spot rates applicable to that
country.
11. EMPLOYEE BENEFITS: (AS 15 Employee Benefits)
A. Short Term Employee Benefits:
The undiscounted amount of short-term employee
benefits, such as medical benefits etc. which are
expected to be paid in exchange for the services
rendered by employees are recognised during the
period when the employee renders the service.
B. Long Term Employee Benefits:
a. Defined Benefit Plan: -
i. Gratuity:
The Bank provides gratuity to all
eligible employees. The benefit is
in the form of lump sum payments to
vested employees on retirement, or
on death while in employment, or on
termination of employment, for an
amount equivalent to 15 days' basic
salary payable for each completed
year of service, subject to a maximum
prescribed as per The Payment of
Gratuity Act, 1972 or Bank of India
Gratuity Fund Rules,1975, whichever is
higher. Vesting occurs upon completion
of five years of service. The Bank
makes periodic contributions to a fund
administered by trustees based on an
independent actuarial valuation carried
out quarterly.
ii. Pension:
The Bank provides pension to all
eligible employees. The benefit is in the
form of monthly payments as per rules
and payments to vested employees
on retirement, on death while in
employment, or on termination of
employment. Vesting occurs at different
stages as per rules. The Bank makes
monthly contribution to the pension
fund at 10% of pay in terms of Bank
of India Pension Regulations, 1995.
The pension liability is reckoned based
on an independent actuarial valuation
carried out quarterly and Bank makes
such additional contributions periodically
to the Fund as may be required to
secure payment of the benefits under
the pension regulations.
b. Defined Contribution Plan:
i. Provident Fund:
The Bank operates a Provident Fund
scheme. All eligible employees are
entitled to receive benefits under
the Bank's Provident Fund scheme.
The Bank contributes monthly at a
determined rate (currently 10% of
employee's basic pay plus eligible
allowance). These contributions are
remitted to a trust established for this
purpose and are charged to Profit and
Loss Account. The bank recognises
such annual contributions as an
expense in the year to which it relates.
ii. Pension:
All Employees of the bank, who
have joined from 1st April, 2010 are
eligible for contributory pension. Such
employees contribute monthly at a
predetermined rate to the pension
scheme. The bank also contributes
monthly at a predetermined rate to the
said pension scheme. Bank recognises
its contribution to such scheme as
expenses in the year to which it
relates. The contributions are remitted
to National Pension System Trust. The
obligation of bank is limited to such
predetermined contribution.
C. Other Long Term Employee Benefit:
All eligible employees are entitled to the
following-
i. Leave encashment benefit, which is a defined
benefit obligation, is provided for on the basis
of an actuarial valuation in accordance with
AS 15 - Employee Benefits.
ii. Other employee benefits such as Leave Fare
Concession, Milestone award, resettlement
benefits, Sick leave etc. which are defined
benefit obligations are provided for on the
basis of an actuarial valuation in accordance
with AS 15 - Employee Benefits.
iii. In respect of overseas branches and offices,
the benefits in respect of employees other
than those on deputation are valued and
accounted for as per laws prevailing in the
respective territories.
12. SEGMENT REPORTING: (AS 17 Segment reporting)
The Bank recognises the business segment as the primary
reporting segment and geographical segment as the
secondary reporting segment in accordance with the RBI
guidelines and in compliance with the Accounting Standard
17 issued by Institute of Chartered Accountants of India.
13. LEASE TRANSACTIONS: (AS 19 LEASES)
Lease where risks & rewards of ownership are retained
by lessor are classified as Operating Lease as per AS 19
(Leases). Lease payments on such lease are recognised
in Profit & Loss Account on straight line basis over the
lease term.
14. EARNINGS PER SHARE: (AS 20 Earnings per Share)
Basic and Diluted earnings per equity share are reported
in accordance with AS 20 “Earnings per share”. Basic
earnings per equity share are computed by dividing net
profit after tax by the weighted average number of equity
shares outstanding during the period.
Diluted earnings per equity share are computed using the
weighted average number of equity shares and dilutive
potential equity shares outstanding at the end of the
period.
15. TAXES ON INCOME: (AS 22 Accounting for taxes on
Income)
Income tax expense is the aggregate amount of current
tax and deferred tax expense incurred by the Bank.
The current tax expense and deferred tax expense are
determined in accordance with the provisions of the
Income Tax Act, 1961 and as per Accounting Standard
22 - “Accounting for Taxes on Income” respectively after
taking into account taxes paid at the foreign offices, which
are based on the tax laws of respective jurisdictions.
Deferred Tax adjustments comprise changes in the
deferred tax assets or liabilities during the year. Deferred
tax assets and liabilities are recognised by considering the
impact of timing differences between taxable income and
accounting income for the current year, and carry forward
losses. Deferred tax assets and liabilities are measured
using tax rates and tax laws that have been enacted or
substantively enacted at the balance sheet date. The
impact of changes in deferred tax assets and liabilities is
recognised in the Profit and Loss account.
Deferred tax assets are recognised and re-assessed at
each reporting date, based upon management's judgment
as to whether their realisation is considered as reasonably
certain. Deferred Tax Assets are recognised on carry
forward of unabsorbed depreciation and tax losses only if
there is virtual certainty supported by convincing evidence
that such deferred tax assets can be realised against
future taxable income.
16. IMPAIRMENT OF ASSETS: (AS 28 Impairment of
Assets)
“Impairment losses, if any on Fixed Assets (including
revalued assets) are recognised and charged to Profit and
Loss account in accordance with AS 28 “Impairment of
Assets”. However, an impairment loss on a revalued asset
is recognized directly against any revaluation surplus for
the asset to the extent that the impairment loss does not
exceed the amount held in the revaluation surplus for that
same asset.”
|