C. SIGNIFICANT ACCOUNTING POLICIES

1. REVENUE RECOGNITION

Income and Expenditure are accounted on accrual
basis, except the following;

a. Interest on Non-Performing Advances (NPA) and
Non-Performing Investments (NPI) are recognised
upon realisation as per the prudential norms
prescribed by RBI.

b. Interest on overdue bills, commission (excluding
insurance commission), exchange, brokerage and
rent on lockers are accounted on realization.

c. Dividend on equity shares, preference shares and
mutual fund units is accounted as income when the
right to receive the dividend is established.

In case of suit filed accounts, related legal and other
expenses incurred are charged to Profit and Loss
Account and on recovery the same are accounted as
income.

2. INVESTMENTS

a) Securities classified under "Held to Maturity"
category are valued at carrying cost.

b) Securities held in "Available for Sale" Category are
valued scrip wise as under:

i) Government of India Securities and State
government Securities are valued at market
price as per quotation put out by Financial
Benchmark India Limited.

ii) Trustee Securities, Securities guaranteed by
Central/State Governments and PSU Bonds are
valued on appropriate Yield to Maturity (YTM)
basis as per Financial Benchmark India
Limited/Reserve bank of India guidelines.

iii) Treasury Bills/ Certificate of Deposits/
Commercial Papers are valued at carrying cost.

iv) Unquoted Equity Shares are valued at Break up
Value as per the latest Balance Sheet, if
available, or '1/- per Company.

For all above investments under AFS, net depreciation
/ appreciation on revaluation is charged to AFS
reserve account.

c) Securities held in "Fair Value Through Profit and
Loss (FVTPL) - Non HFT" Category are valued as
under.

i. Quoted Equity Shares are valued at market rate
provided by the NSE. Unquoted shares are valued
at Breakup Value as per the latest Balance Sheet, if
the latest balance sheet is not available, then the
valued at Re.1/- per Company.

ii. Preference shares are valued at market price if
quoted or at appropriate YTM basis as per
Financial Benchmark India Limited guidelines.

iii. Debentures / Bonds are valued at market price, if
quoted, otherwise on an appropriate YTM basis by
using spread matrix provided by FIMMDA.

iv. Mutual Funds are valued at market price, if quoted,
or at NAV or Market Price/ Repurchase Price.

For all above investments under FVTPL (Non-HFT) net
depreciation / appreciation after revaluation is
charged to Profit / Loss Account.

d) Individual scrips under "FVTPL-Held For Trading"
category are valued at Market Price.

• Government of India Securities are valued at
market price as per quotation put out by Financial
Benchmark India Limited.

• Equity Shares are valued at market rate if quoted,
otherwise at Break up Value as per the latest
Balance Sheet, if available, or '1/- per Company.

For all above investments under FVTPL- HFT, net
depreciation / appreciation after revaluation, if any, for
each asset class is charged to Profit / Loss Account.

In all the above categories, the premium / discount on the
dated securities are amortised over the life time of the
instrument.

Profit / Loss on sale of Investments from HTM category is
first credited to profit and loss account and thereafter an
amount equivalent to profit net of statutory reserve and
taxes is appropriated to Capital Reserve Account.

Profit / Loss on sale of Investments from
AFS/FVTPL/HFT (Other than Equity Shares held under
AFS) is taken to profit and loss account. In case of Equity
Shares held under AFS, profit / loss on sale of such shares

is taken to Capital Reserve without crediting to Profit and
Loss Account.

3. LOANS / ADVANCES AND PROVISIONS THEREON

3.1 Advances have been classified as per the Asset
Classification norms laid down by the Reserve
Bank of India. The required provisioning for
Standard Assets and for Non Performing Assets
have been made as per the Regulatory norms.

3.2 Advances shown in the Balance Sheet are net of
specific provisions, technical write offs and
ECGC/DICGC claims received.

Partial recoveries in Non Performing Assets are
apportioned first towards charges and interest,
thereafter towards principal.

3.3 NPAs are classified into Sub-standard, Doubtful
and Loss Assets based on the following criteria
stipulated by RBI:

i. Sub-standard: A loan asset that has remained
non-performing for a period less than or
equal to 12 months.

ii. Doubtful : A loan asset that has remained in
the sub-standard category for a period of 12
months.

iii. Loss : A loan asset where loss has been
identified but the amount has not been fully
written off.

3.4 Provisions are made for NPAs as per the extant
guidelines prescribed by the regulatory
authorities, subject to minimum provisions as
prescribed below:

Substandard Assets:

i. A general provision of 15% on the total
outstanding;

ii. Additional provision of 10% for exposures
which are unsecured.

iii. Unsecured Exposure in respect of
infrastructure advances where certain
safeguards such as escrow accounts are
available-20%.

Loss Assets :

100% to be provided on the total outstanding;

3.5 Floating Provisions:

The Bank has a policy for creation and utilisation
of floating provisions separately for advances,
investments and general purposes. The
quantum of floating provisions to be created is
assessed at the end of the 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.

3.6 Provision for Country Exposure:

In addition to the specific provisions held
according to the asset classification status,
provisions are also made for individual country
exposures (other than the home country).
Countries are categorised into seven risk
categories, namely, insignificant, low,
moderately low, moderate, moderately high,
high and very high and provisioning made as per
extant RBI guidelines. If the country exposure
(net) of the Bank in respect of each country does
not exceed 1% of the total funded assets, no
provision is maintained on such country
exposures. The provision is reflected in
Schedules of the Balance Sheet.

3.7 Provision for unhedged foreign currency
exposure:

Provision for Unhedged Foreign Currency
Exposure of borrower entities is made
considering their unhedged exposure to the
Bank.

4. FIXED ASSETS, DEPRECIATION & AMORTIZATION

4.1 Premises, Software and other Fixed Assets are
accounted at acquisition cost less depreciation.
Cost includes cost of purchase and all
expenditure like site preparation, installation

costs and professional fees incurred on the asset
before it is ready to use.

4.2 Capital work-in-progress includes cost of fixed
assets that are not ready for their intended use.

4.3 Depreciation has been provided on the
composite value for premises acquired with land
and building, where cost of the land is not
separately identifiable.

4.4 The Bank has provided depreciation based on
useful life of the assets in line with Schedule II of
the Companies Act, 2013. Depreciation is
charged over the estimated useful life of the fixed
asset on a straight-line basis. Depreciation on
assets purchased and sold during the year is
provided on a pro-rata basis.

5. EFFECTS OF CHANGES IN THE FOREIGN

EXCHANGE RATE

5.1 Assets and Liabilities denominated in Foreign
Currencies are translated at the rates notified by
FEDAI at the close of the year. Profit or Loss
accruing from such transactions is recognised in
the Profit and Loss Account.

5.2 Income and Expenditure items have been
translated at the exchange rates prevailing on the
date of the transactions.

5.3 The Bank does not have a branch in any Foreign
Country.

5.4 Outstanding Forward Exchange contracts are
revalued at the exchange rates notified by FEDAI
and the resultant net gain or loss is recognised in
the Profit and Loss Account.

5.5 Foreign Currency Guarantees, Acceptances,
Endorsements and other obligations are
reported at the FEDAI notified closing exchange
rates prevailing on the date of the Balance Sheet.

6. EMPLOYEE BENEFITS

6.1 Payments to defined contribution schemes such
as Provident Fund and Employees Pension Fund
are charged as expenses as and when they fall
due.

6.2 Provision towards leave encashment is
accounted on actuarial basis in accordance with
Accounting Standard 15 (revised 2005) issued
by ICAI.

6.3 Payments to the Group Gratuity Life Assurance
Scheme of the Life Insurance Corporation of India
towards gratuity liability are charged as expenses
as and when they fall due.

7. EMPLOYEES STOCK OPTION SCHEME

The Employee Stock Option Scheme provides for grant
of equity stock options to employees that vest in a
graded manner. The Bank follows the intrinsic value
method to account for its employee compensation
costs arising from grant of such options. The excess of
fair market price over the exercise price shall be
accounted as employee compensation cost in the year
of vesting. The fair market price is the latest closing
price of the shares on the stock exchanges in which
shares of the Bank are largely traded immediately
prior to the date of meeting of the compensation
committee in which the options are granted.

8. 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.

Business Segment is classified into (a) Treasury (b)
Corporate and Wholesale Banking, (c) Retail Banking
(includes Digital Banking Units) (d) Other Banking
Operations.

9. EARNINGS PER SHARE

Basic earning per share is calculated by dividing the
net profit of the year by the weighted average
number of equity shares.

Diluted earning per share is computed using the
weighted average number of equity shares and
dilutive potential equity shares.

10. IMPAIRMENT OF ASSETS

An assessment is made at each balance sheet date
whether there is any indication that an asset is
impaired. If any such indication exists, an estimate of
the recoverable amount is made and impairment
loss, if any, is provided for.