1.1 Bank of Maharashtra (the Bank) is governed by the
Banking Regulation Act, 1949 and The Banking
Companies (Acquisition and Transfer of
Undertakings) Act, 1970.

1.2 Basis of Preparation of Financial Statements:

The financial statements are prepared under the
historical cost conventions with fundamental
accounting assumptions of going concern,
consistency, and accrual,except as otherwise stated
and conform to the Generally Accepted Accounting
Principles (GAAP) which include statutory provisions,
practices prevailing within the Banking Industry in
India, the regulatory/ Reserve Bank of India (“RBI”)
guidelines, applicable Accounting Standards/
Guidance Notes issued by the Institute of Chartered
Accountants of India (ICAI). The financial statements
have been prepared in accordance with requirements
under the Third Schedule of the Banking Regulation
Act, 1949

1.3 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 the
date of financial statements and reported income and
expenses for the year under report. Management is of
the view that the estimates used in the preparation of
financial statements are prudent and reasonable.
Future results could differ from these estimates. Any
revisions to the accounting estimates shall be
recognized prospectively unless otherwise stated.

1.4 Revenue and costs are accounted for on accrual
basis except as stated in para 6.1 below.

1.5 The accounting policies with regard to Revenue
Recognition, Investments and Advances are in
conformity with the prudential accounting norms and
guidelines issued by Reserve Bank of India from time
to time.

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2.1 Foreign Currency Translation / Conversion of
Foreign Currencies :

The foreign currency transactions are translated at
the weekly average closing rates for the preceding
week as published by Foreign Exchange Dealers'

Association of India (FEDAI). Foreign currency assets
and liabilities are restated at the rate published by
FEDAI at the end of each quarter and resultant
foreign exchange difference is recognized in Profit &
Loss Account.

2.2 Transactions and balances of foreign branches are
classified as non-integral foreign operations. Such
transactions and balances are consolidated by the
bank on a quarterly basis. Assets and Liabilities (both
monetary and non-monetary as well as contingent
liabilities) are translated at the closing spot rate of
exchange announced by Foreign Exchange Dealers'
Association of India (FEDAI) as at the end of each
quarter. Income and Expenditure items of the foreign
branches are translated at the quarterly average rate
published by FEDAI in accordance with Accounting
Standard (AS) 11 - “The effect of Changes in Foreign
Exchange rates” issued by the Institute of Chartered
Accountants of India (ICAI) and as per the guidelines
of Reserve Bank of India (RBI) regarding the
compliance of the said standard at the end of the
respective quarter.

The resultant exchange gain / loss is accumulated in
a separate account i.e. to Foreign Currency
Translation Reserve till the disposal of assets /
liabilities.

2.3 Outstanding Forward Foreign Exchange Contracts
are stated at contracted rates and revalued/ marked
to market as on quarterly basis and on Balance Sheet
date at the exchange rates published by FBIL for
specified maturities by discounting the same at the
Modified MIFOR rate published by Financial
Benchmarks India Pvt. Ltd. [FBIL] i.e. on PV01 basis.
The resulting profit/loss, on revaluation, is recognized
in the Profit & Loss Account in accordance with RBI
/ FEDAI guidelines and the effect is taken to “Other
Assets” in case of gain or to “Other Liabilities” in case
of loss.

2.4 Contingent Liabilities on account of Guarantees and
Letters of Credit issued in foreign currency are stated
in the Balance Sheet at the closing exchange rates
published by FEDAI.

2.5 Credit exposure of the un-hedged foreign currency
exposure, if any, of the constituents shall attract
provisioning and capital requirements as per RBI
guidelines.

As per Reserve Bank of India guidelines, the investments

are classified and valued as under:

3.1 Investments are classified in the following
categories:

a. Held to Maturity (HTM)

b. Available for sale (AFS)

c. Fair Value through Profit and Loss (FVTPL) with
subcategory of Held for trading (HFT)

All investments in subsidiaries, associates and joint
ventures is held in a distinct category separate from
above category.

3.2 All the investments are classified as investments
in India and are further classified in the following
six baskets in conformity with the requirement of
Form-A of Third Schedule to the Banking
Regulation Act, 1949:

a. Government Securities

b. Other approved Securities

c. Shares

d. Debentures and Bonds

e. Subsidiaries and Joint Ventures (Including
associates)

f. Others (Commercial Papers, Mutual Fund Units
etc.)

3.3 Initial Recognition:

i. Bank decides the category of each investment at
the time of acquisition and classifies the same
accordingly. All investments are measured at fair
value on initial recognition. Unless facts and
circumstances suggest that the fair value is
materially different from the acquisition cost, then
the acquisition cost is taken as the fair value. Any
discount or premium on securities under HTM,
AFS, and FVTPL is amortized over the remaining
life of the instrument. Any sale from HTM (within
limit of 5%) is as per Board approved policy.

ii. Fair value measurements are categorized into
following 3 fair value hierarchy based on the
degree to which the inputs to the fair value
measurements are observable.

a. “Level 1” - wherein inputs used for valuation
of a financial instrument are quoted prices
(unadjusted) in active markets for identical
instruments that the bank can access at the
measurement date;

b. “Level 2” - wherein inputs used for valuation
of a financial instrument are inputs other than
quoted prices that are observable for the

asset or liability, either directly or indirectly
(such as yield curve, credit spread etc.);

c. “Level 3” - wherein valuation is based on
unobservable inputs.

iii. Recognition of Day 1 Gain/Loss:

a. Day 1 gain / loss arising in initial recognition

of Level 1 and Level 2 hierarchy, is

recognized in the Profit and Loss Account,
under item III- 'Profit/Loss on revaluation of
investments(net)' under Schedule 14: 'Other
Income.

b. Any Day 1 loss arising from Level 3

investments is recognized immediately.

c. Any Day 1 gains arising from Level 3

investments is deferred. In the case of debt
instruments, the Day 1 gain is amortized on a
straight-line basis up to the maturity date (or
earliest call date for perpetual instruments),
while for unquoted equity instruments, the
gain is set aside as a liability until the security
is listed or derecognized.

iv. Bank follows 'Settlement Date' accounting for
recording purchase and sale of transactions in
Government Securities.

v. Cost of investments is determined on the basis of
Weighted Average Price method.

vi. Interest paid for broken period / interest received
for broken period at the time of purchase / sale of
fixed income securities is treated as revenue
expenditure / income.

vii. Brokerage / incentive received / paid at the time
of purchase/sale of investment is deducted /
added from the amount of investment.

5.4 REPO / Reverse REPO

The Bank has adopted the Uniform Accounting
Procedure prescribed by the RBI for accounting of
market Repo and Reverse Repo transactions. Repo
and Reverse Repo transactions are treated as
Collateralized Borrowing / Lending Operations with an
agreement to repurchase on the agreed terms.
Securities sold under Repo are continued to be
shown under investment and Securities purchased
under Reverse Repo are not included in investment.
Outstanding Repo / Term Repo is disclosed as
borrowing and outstanding Reverse Repo is disclosed
as lending. Costs and revenues are accounted for as
interest expenditure / income, as the case may be.

5.5 Classification and Subsequent measurement of
Investments:

a. Held to Maturity (HTM):

i. Securities under the category 'Held to
Maturity' is acquired with the intention and
objective of holding it to maturity i.e. the
financial assets are held with an objective to
collect the contractual cash flows. The

contractual terms of the security give rise to
cash flows that are solely payment of principal
and interest on principal outstanding (“SPPI
criterion”) on specified date.

ii. Securities held in HTM is carried at cost and
not be marked to market (MTM) after initial
recognition. Any discount or premium on the
securities under HTM is amortized over the
remaining life of the instrument.

iii. Any profit or loss on the sale of investments in
HTM is recognized in the profit and loss
account under item II of Schedule 14 Other
Income. The profit on sale of an investment in
HTM is appropriated below the line from the
Profit and Loss Account to the Capital
Reserve Account. The amount so
appropriated is net of taxes and the amount
required to be transferred to Statutory
Reserve.

b. Available for Sale (AFS):

i. Securities under the category 'Available for
Sale' is acquired with an objective that is
achieved by both collecting contractual cash
flows and selling securities before maturity.

ii. The securities held in AFS is fair valued at
least on quarterly basis. Any discount or
premium on the acquisition of debt securities
under AFS is amortized over the remaining
life of the instrument. The valuation gains and
losses across all performing investments,
irrespective of classification (i.e. Government
Securities, other approved securities, bonds
and debentures, etc) held under AFS is
aggregated.

iii. The net appreciation or depreciation is
directly credited or debited to a reserve
named AFS Reserve.

iv. Upon sale or maturity of any instrument in
AFS category, the accumulated gain/loss for
that security in the AFS-Reserve is
transferred from the AFS Reserve and
recognized in the Profit and Loss Account. In
case of equity instrument, any gain or loss on
sale of such investment is transferred from
AFS Reserve to the Capital Reserve.

c. Fair Value Through Profit & Loss (FVTPL):

i. Securities that do not qualify for inclusion in
HTM or AFS is classified under FVTPL with a
subcategory named Held for Trading (HFT).
Any instrument that is held for one or more of
the following purposes is designated as a
Held for Trading (HFT) instrument:

a. short-term resale;

b. profiting from short-term price movements;

c. locking in arbitrage profits; or

d. hedging risks that arise from instruments
meeting (a), (b) or (c) above.

ii. The Bank undertakes short sale transactions
in Central Government dated securities in
accordance with the RBI guidelines. The short
position is categorized under HFT and netted
off from investments in government securities.
The short position along with other
government securities under HFT portfolio is
marked to market and the resultant MTM
profit or loss, is taken to the Profit and Loss
Account. Profit / Loss on short sale is
recognized on settlement date.

iii. The securities held in FVTPL is fair valued
and the net gain or loss arising on such
valuation is directly credited or debited to the
Profit and Loss Account.

iv. The securities that are classified under the
HFT sub-category within FVTPL is fair valued
on a daily basis, whereas other securities in
FVTPL is fair valued at least on a quarterly, if
not on a more frequent basis.

v. Any discount or premium on the acquisition of
debt securities under FVTPL is amortized
over the remaining life of the instrument.

d. Investments in Subsidiaries, Joint Ventures &

Associates (SAJV):

i. All investments (i.e., including debt and
equity) in subsidiaries, associates and joint
ventures shall be held at acquisition cost.

ii. Any discount or premium on the acquisition of
debt securities of subsidiaries, associates and
joint ventures shall be amortized over the
remaining life of the instrument. The
amortized amount shall be reflected in the
financial statements under item II 'Income on
Investments' of Schedule 13: 'Interest
Earned'.

e. Fair valuation:

i. For the purpose of initial recognition and
subsequent measurement, investments are
fair valued based on RBI guidelines.
Securities are valued scrip-wise.

ii. Quoted investments are valued based on the
closing quotes on the recognised stock
exchanges or prices declared by Fixed
Income Money Market and Derivatives
Association (FIMMDA) / Financial Benchmark
India Private Limited (FBIL), periodically.

iii. The market / fair value of unquoted
government securities which are in nature of
Statutory Liquidity Ratio (SLR) securities
included in the AFS and FVTPL categories is
as per the rates published by FBIL and for
unquoted corporate bonds, security level
valuation (SLV) published by FIMMDA. The
valuation of other unquoted fixed income
securities, including Pass Through
Certificates, wherever linked to the Yield-to-
Maturity (YTM) rates, is computed with a

mark-up (reflecting associated credit risk)
over the YTM rates for government securities
published by FIMMDA.

iv. Treasury bills, commercial papers and
certificate of deposits, being discounted
instruments, are valued at carrying cost.

v. Unquoted equity shares are valued at the
break-up value, if the latest balance sheet is
available, or at Re. 1/-, as per RBI guidelines.

Investments in units of Venture Capital Funds
(VCFs) are categorised under FVTPL and are
valued at the net asset value (NAV) declared by
the VCF. If the latest NAV is not available
continuously for more than 18 months, the units
of VCF are valued at Re. 1/-, as per RBI
guidelines.

3.6 Non Performing Investments:

Non-performing investments are identified and
depreciation / provision are made thereon based on
the RBI guidelines. Based on management
assessment of impairment, the Bank additionally
creates provision over and above the RBI guidelines.
The depreciation / provision on such non-performing
investments are not set off against the appreciation in
respect of other performing securities.
Interest on non-performing investments is not
recognized in the Profit and Loss account until
received.

3.7 Derivatives:

Interest Rate Swaps:

i. Valuation:

a. Hedging Swaps: Interest Rate Swaps for
hedging assets and liabilities are not marked
to market.

b. Trading Swaps: Interest Rate Swaps for
trading purpose are marked to market.

ii. Accounting of income on derivative deals:

a. Hedging Swaps: Income is accounted for on

realization basis. Expenditure, if any, is
accounted for on accrual basis, if

ascertainable.

b. Trading Swaps: Income or expenditure is

accounted for on realization basis on

settlement date.

iii. Accounting of gain or loss on termination of
swaps:

a. Hedging Swaps: Any gain or loss on the

terminated swap is recognized over the

shorter of (a) the remaining contractual life of
the swap or (b) the remaining life of the asset/
liability.

b. Trading Swaps: Any gain or loss on

terminated swap is recognized as income or
expenditure in the year of termination.

3.8 Investment Fluctuation Reserve:

As per RBI master direction, Investment Fluctuation
Reserve (IFR) to be created until the amount of IFR
is at least 2% of AFS and FVTPL (Including HFT)
portfolio, on continuous basis, by transferring to the
IFR of an amount not less than the lower of the
following:

a. Net profit on sale of Investments during the year
or

b. Net profit for the year less mandatory
appropriations.

Bank has been permitted to draw down the balance
from IFR in excess of 2% of its AFS and FVTPL
(including HFT) portfolio, for credit to the balance of
profit/loss as disclosed in the profit and loss account
at the end of any accounting year subject to the
conditions stipulated in RBI guidelines.

4.1 Advances are disclosed net of write offs, provisions
made for non-performing assets, claims settled with
the credit guarantee institutions and bills
rediscounted.

4.2 Classification of advances and provisions thereon are
made in accordance with the prudential norms
prescribed by and guidelines of RBI from time to time,
except in respect of following category of advances,
provision on Non Performing Assets (NPAs) are made
higher than the rate prescribed by RBI -

Sub-Standard - 20%

Doubtful Assets One to three years - 50% on secured
portion

The Bank also makes additional provision on specific
non performing assets

4.3 Provision for performing assets, is shown under the
head “Other liabilities and provisions”.

4.4 In case of financial assets sold to Asset
Reconstruction Company (ARC) / Securitization
Company (SC), if the sale is at a price higher than the
NBV, the surplus is retained and utilised to meet the
shortfall/loss on account of sale of other financial
assets to SC/ARC. If the sale is at a price below the
net book value (NBV), (i.e. outstanding less provision
held) the shortfall is to be debited to the Profit and
Loss account. However, if surplus is available, such
shortfall will be absorbed in the surplus. Any shortfall
arising due to sale of NPA will be amortised over a
period of two years if not absorbed in the surplus.

Excess provision arising out of sale of NPAs are
reversed only when the cash received (by way of
initial consideration only/or redemption of SRs/PTC)

5.3 In respect of assets acquired during the year,
depreciation is provided on proportionate basis for
the number of days the assets have been put to use
during the year.

Similarly, in respect of assets sold / discarded during
the year, depreciation is provided on proportionate
basis till the number of days the assets had been put
to use during the year.

5.4 Eligible fixed assets are revalued once in every three
years. Revalued portion of fixed assets net of salvage
value (over and above the cost of fixed assets) is
depreciated on straight line method over the residual
life of the assets as certified by approved valuers at
the time of valuation.

Revaluation reserve pertaining to lease hold lands, is
amortised on straight line method over the residual
life of the lease period.

Depreciation on revalued portion of fixed assets, over
and above the cost is debited to Profit & Loss
account. Amount of Revaluation Reserve to the
extent of depreciation related to revalued portion of
fixed assets over and above the cost debited to profit
& loss account is transferred to Revenue Reserve
from Revaluation Reserve.

5.5 In respect of leasehold premises, the lease premium,
if any, is amortised over the period of lease on SLM
basis in accordance with AS 19.

6.1 All revenues and costs are accounted for on accrual
basis except the following items, which are accounted
for on cash basis:

a. Interest on Advances and Investments identified
as Non-Performing Assets according to the
prudential norms and guidelines issued by RBI,
from time to time.

b. Income from commission like on Government
business, Mutual Fund business, credit & debit
cards issued, Annual maintenance charges for
cards and Locker Rent.

c. Interest for overdue period on bills purchased
and bills discounted.

d. Insurance claims.

e. Remuneration on Debenture Trustee Business.

f. Loan originations / renewal fees.

g. Income from Merchant Banking Operations and
Underwriting Commission.

h. Transaction processing fees received on utility
bill pay services through internet banking.

6.2 Pursuant to RBI guidelines, the interest payable on
overdue term deposit is provided on accrual basis at
rate of interest as applicable to saving account or
contracted rate of interest on the matured TD,
whichever is lower from 02.07.2021.

Defined Contribution Plan: The contribution paid/
payable under defined contribution benefit schemes
are charged to Profit & Loss Account.

The Bank operates a New Pension Scheme (NPS) for
all officers / employees joining the Bank on or after
01-04-2010, which is a defined contribution Pension
Scheme, such new joinees not being entitled to
become members of the existing Pension Scheme.
As per the scheme, the covered employees
contribute 10% of their basic pay plus dearness
allowance to the scheme together with a contribution
from the Bank equivalent to 14% of the basic pay plus
dearness allowance. The Bank recognizes such
annual contributions as an expense in the year to
which they relate.

Defined Benefit Plans: All eligible employees are
entitled to receive benefits under the Bank's Gratuity,
Pension & Privilege Leave schemes which are valued
based on the principles laid down in AS -15,
Employees Benefit (Revised) issued by Institute of
Chartered Accountants of India. Bank's liabilities
towards defined benefit schemes are determined by
way of provisions and adjusted on the basis of an
actuarial valuation report provided by the Actuaries
appointed by the bank and made at the end of each
quarter/financial year. Actuarial gains and losses are
recognized in the Profit & Loss Account.

Other Employee Benefits such as Leave Fare
Concession, Silver jubilee Award, resettlement
allowance, and retirement benefit are also provided
based on Actuarial valuation.

The Bank recognizes Business Segment as its
Primary Segment in compliance with the RBI
Guidelines and in compliance with the Accounting
Standard 17 issued by ICAI.

Impairment losses if any, on fixed assets including
revalued fixed assets are recognized in accordance
with Accounting Standard 28- Impairment of Assets
issued by the ICAI and charged to Profit & Loss
Account. Assets are reviewed for Impairment
whenever events or changes in circumstances
warrant that the carrying amount of an asset may not
be recoverable.