SIGNIFICANT ACCOUNTING POLICIES

A. Background

Punjab 4 Sind Sank (PSB orthe Bank) is a banking and financial services statutory body engaged in providing a wide range of products and services to individuals, commercial enterprises, large corporates, public bodies, and institutional customers. The Bank is governed by the Banking Regulation Act, 1949.

B. Basis of Prep a rat ro n

T he fina nci al state ments o! Punj ab & Sind Bank (the “ Ba nk^H) h ave be en prepared and presented u nder historica I cost convention, on accrual basis of accounting, ongoing concern basis, and conform in all material aspecfs, unless otherwise stated. The financial statements have been prepared in accordance with requirements prescribed under Third Schedule of Banking Regulation Act, 1949. They conform to Generally Accepted Accounting Pnnciples(GAAP) in India, statutory provisions, regulatory norms prescribed and circulars, directions and guidelines issued by Reserve Bank of India (RBI) from time to time, Banking Regulation Act, 1949. Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI) to the extent relevant and applicable to Ihe Bank and prevailing practices in the Banking Industry in India.

C. Use of Estimates

The preparation of financial statements requires the management to make estimates and assumptions that affect the reported amounlof assets and liabilities (in eluding contingent liabilities) as on date of the financial statements and the reported income and expenses for the reporting period. Management believes that the estimates wherever used in the preparation of the financial statements are prudent and reasonable. Actual results could differ from these estimates. Any revision to the accounting estimates is recognized prospectively from the period in which the results are known/materialized, unless otherwise stated.

D. Significant Accounting Policies

1. Revenue Recognition

1.1 Income (otherthan item referred in Paragraph 1.2) and expenditure have been accounted for on accrual basis unless otherwise staled.

1.2 In come by way of F ees. ail commiss ion (other than on Gove mment business an d commiss ion from sale of third pa rty products including Mutual funds), Commission on Guarantees and Letters of credits, Locker rent, Service charges on various Deposit Products, money transfer services, Dividend on shares, interest on overdue bills purchased and discounted, Processing fees, income from units of mutual fund products and income from ATM operations including AMC charges for cards are accounted for on receipt basis.

1.3 In terest on in come tax nefu nds is accou nted for i n the yea r in whic h ord er is received by the ba nk.

1.4 Appropriation of recoveries in NPAacoounts-

1.4.1 Income on Non-Perfomning Assets (IN PAs) comprising of advances and investments is recognized on realization basis i n a ccorda ncewiththeprudentialnormsprescribedby Reserve Bankoflndia.

1A2. Appropri ati on of R ecoveri es in NPA accounts (other tha n stated in pa ra 1.4.3) s hail be as un den

a. Towards Expenditure/Oul of Pocket Eixpenses/charges incurred by the bank tor Recovery

b. Thereafter towards the interest irregulartties/accrued interest

c. Principal iregularities i.e. NPA outstanding in the account

1.4.3 In case of Compromise, Resolution/Settlement through NCLT. Technically Written Off (TWO) & Credits received on a ccount of CGTMS£/ ECGCV G ECL/ CGM l^: U and subsidy if a ny. sh all be appropri ated in the orde r of Principal, Charges and interest

1.4.4 In case of suit filed/decreed accounts, recovery shall be appropriated as under:

a. As per the directives of the concerned Court

b. In the absence of specific directives from the Court in this regard, as mentioned at para 1.4.3 above shall prevail

1.5 Appropriation of Recoveries m Standard accounts: 1 he appropriation of recovery in Standard accounts is effected

as per the date of demands rai sed a nd rhe ea rli est demand is satisfie d in the fol lowi ng orde ra. Towards costs /charges t expenses paid or incurred by the bank

b. Thereafter towardsthe interes (/additional interest if any. due tothebank

c. Towards payment of Principal a mou nt

1.6 I nterest on overdue Term Deposits is provided at the rate of i nterest applicable to Savings Ba nk Accounts.

1.7 Bond Issue Expenses incurred in connection with raising Tier-ll Capital are treated as Deferred Revenue [Expenditure to be written off over a penod of five years.

1.6 Share Issue Expenses are adjusted against the Share Premium Account.

1. H Rebate on compromised accounts is accou nted tor at the ti me ol f u 11 and fina I adjustment of the account.

1.10 Amount recovered against bad debts written off are recognized as revenue in the year of recovery

2. Investments

Investments are accounted for in accordance with Ihe extant RBI guidelines on inveslment classification and valuation issued vide Master Circular Master Direction - Classification. Valuation and Operation of Investment Portfolio of Commercial Banks (Directions). 2023 dated September 23.2023.

2.1 Classification

in compliance with the RBI guidelines, the Investment portfolio has been classified into 3 categories (except investments in own subsidiaries, joint ventures and associates) namely -

2.1.1 Heid to Maturity (HTM) comprising of Investments that the Bank intends to hold till maturity i.e., the financial assets are held with an objective to collect the conlractual cash flows & the contractual terms of the security give rise to cash flows that are solely payments of principal and interest on principal outstanding (‘SPPl

Criterion¹) on specified dates.

2.1.2 Available for Sale (AFS): Securities that are acquired with an objective that is achieved by both collecting contractual cash flows and selling securities and the contractual terms of the security meet the 'SPPI criterion'* Provided th at on in i tia I reoog ni tion. Sank to make an i rrevocab le electron to classify a n equity in stru merit 1h at is not held with the objective of trading. AFS secunties shall inter-alia include debt securities held for asset liability management (ALM) purposes tha! meet the SPPI criterion where the bank’s intent is flexible with respect to holding to ma (unity or selling before matunty.

Notwithstanding the intent with which the following securities are acquired, they shall not meet the SPPf criteria and therefore shall not be eligible for classification either as HTMarAFS:

i) Instruments with compulsorily, optionally or contingently convertible features.

ii) instruments with contractual loss absorbency features such as those qualifying for Additional Tier 1 and Tier 2 under Basel III Capital Regulations.

iii) Instruments whose coupons are not in trie nature ot interest as defined in Clause 4(a) (xviii) of Reserve Bank of India (Classification, Valuation and Operation of Investment Portfolio of Commercial Banks) Directions, 2023.

iv) Preference shares and Equity shares.

2.1.3 Fair Value Through Profit & Loss (FVTPL) with Held for Trading (HFT) being maintained as separate investment subcategory within FVTPL -

Securities that do not qualify for inclusion in HIM or AFS shall be classified under FVTPL. These shall inter-alia include:

i) Equity shares, other than (a) equity shares of subsidiaries, associates or joint ventures and (b) equity shares where, at i niti al recog niti on, the irrevoca ble option to classify at Af $ h as been exe noised.

ii) Investments in Mutual Funds, Alternative Investment Funds, Real Estate Investment Trusts, Infrastructure Investment Trusts, etc.

iii) Investment in securitization notes which represent (he equity Iranche of a securitization transaction. I n vestments in sen lor a nd other suborti i nate tranches sha 11 need to be revi ewed for their comp I iance with SPPI criterion.

iv) Bonds, debentures, etc. where the payment is linked to the movement in a particular index such as an equity index rather than an interest rate bench mark.

2.1.3.1 HFT (Held for Trading): A separate sub-category called HFT within FVTPL has been created. The secunties which com plies with the following requirements are classified under HFT.

a) Any instrument held by the bank for one or more of the following purposes shall, when it is first

recognized on its hooks, be designated as a HFT instrument

t) short-term resale

it) profiting from short-term price movements

lit) focking in arbitrage profits; or

iv) hedg i ng risks that ari se from i nstruments meeti ng (i), (ii) or (rrtj above

b) the following instruments shall not be included in HFT category

i) unlisted equities and equity inveslments in sobsidianes, associates and joint ventures

ii) I nstruments de sig na ied for securitization warehousi ng.

iii) D irect holding of rea I estate and denvatives on d irect holdings of real esta te.

iv) eq uity i nvestments in a fund, u nless the ba nk meets at I ea st one of the tol I owi ng oond itions:

Ý Bank is able to look through the fund to its individual components and there is sufficient and frequent

i nf ormation. verified by a n indepen dent third party, pro vi ded to tb e ban k neg arding the fund s composition

* Bank obtains daily price quotes for the lund and it has access to the information contained in the fund’s mandate or in the national regulations governing such investment funds

v) derivative instrumentsand funds that have instrument types specified from (i ) to (iv) above as underlying assets; or

vi) instruments held for the purpose of hedging a particular risk of a position tn the types ot instruments specified from (i)to (v) above.

2.1.4 Transfer between categories: An investment is classified underfbe above categories at the time of its purchase. Ban k sha 11 n ot reclassify i nvestments between categories (viz. H TM, AF S and FV T PL) without the approval of th eir Board of Directors. Further, reclassification shall also require the prior approval of the Department of Supervision (DoS), RBI.

T he reel assification i f do ne (as per approval from a bove poi nt) to be appl i ed prospectively from reda ssiftca tion date.

In case of reclassification of investments from one category to another category, the accounting treatment shall be as per instructions contained in Reserve Bank of India (Classification, Valuation and Operation of Investment Portfolio of Commercial Banks} Directions, 2023.

2,1*5 For disclosure in the Balance sheet, the aforesaid Investments are classified as Investments in India and Outside India.

Investments in India are further categorized as under:

I. Government Sec unties

ii. Other approved securities

iii. Shares

iv. Debentures & Bonds

v. Subsidiaries and (or Joint Ventures

vi. Others (fo be specified)

Investments Outside India are further categorized as under

I. Government Securities (including focal authorities)

i i. S ub e id i a lies, ass oc iates an d Joi nt Ventures

iii, Other investments

22 Accounting of Investments

22 . i The transactions in all the securities are recorded on Settlement Date i.e the recognition of an asset on the day it is received by the entity, and de-recognition of an asset and recognition of any gain or loss on disposal, on th e d ay it is delivered by the entity.

222 Cost of acquisition The cost is determined on weighted average cost method. Brokerage I commission received on subscription is reduced from the cost. Brokerage, commission, Securities Transaction Tax (STT Jetc. paid in connection with acquisition of investments are expensed upfront and excluded from cost. Interest accrued up to th e date of acqui sition / sa I e of seen lilies i. e. broken period in terest on debt i ns Eruments is exclud ed from the acqu isiti on cost / sa le con sid eration and is treated as interest expense i i ncome.

2.3 Valuation:

2.3,1 Initial recognition: All investments shall be measured affair value on initial recognition Unless facts and d rcum stan ces suggest th at the fa ir va I ue is maleria 11 y differe nt from the acquisiti on cost, it shal I be pres umed that the acquisition cost is the fair value.

Situations where the presumption to be tested inetude where.

(a) The transaction is between related parties.

(b) The transaction is taking place under duress where one party is forced to accept the price in the transaction.

(c} The transaction is done outside the pri nci pa I market for th at cl ass of securities.

(d) Other situations, where in the opinion of the supervisor, iacts and circumstances warrant testing of the presumption

1. In respect of government secu rities acqu i red th rough a uction (including devol vement}. switch operations and open market operations (O MO) con ducted by the RSI, the price at which the security is allotted shall be th e fa i r value for in itra I recogn rtion purposes.

2. Where the securities are quoted or the fair value can be determined based or market observable inputs (such as yield curve, credit spread, etc.) any Day 1 gainf loss shall be recognized sn the Profit and Loss Account, under Schedule 14: ‘Other income'within the subhead Profit on revaluation of investments' or 'Losson revaluation of investments', as the case may be.

3. Any Day 1 loss arising from Level 3 investments shall be recognized immediately.

4. Any Day 1 gains an sing from Level 3 investments shall be deferred.

In thecase of debt instruments, the Day 1 gain shall be amortized on a straight-line basis up to the matu rtty date (or earliest ca 11 date for perpetual instruments), wh N e for u nq uoted equity i nstru ments. the ga i n sha 11 be set aside a s a liabi I ity u nti I the security is I i sted or derecog nized.

2.3:2 Subsequent Measure merit

2.3.2.1 HTM

Secu nti es held in H T M sha 11 be cam ed at cost and sha 11 not be marked to mark et f M T M) after in itra I recog niti on. any

discount or premium on the securities under HTM 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'at

Sch ed ule 13: 'interest Earned'with a contra in Sch ed ule 8:' I nvestments

2 3.2.2AFS

a) The secu rities hefd i n AF S sha 11 be fair va I ued at lea st on a quarterly basis. if not more frequently. Any di scount or premium on the acquisition of debt securities under AFS shall be amortised over the remaining life of the instrument The amortised amount shall be reflected in the financial statements under item II 'Income on I nveslments¹ of Sched ule “I3: '1 nterest F arned' with a contra in Sched ule 8: 'Investments

b) T he va I uation ga ins a nd losses across all pe rform i ng in vestme n!s, i respective of classifies tion (i e., G overnment securities, otfier approved securities. Bonds and Debentures, etc.), held under AFS shall be aggregated. Net appreciation or depreciation! t shall be directly credited or debited to a reserve named AFS Reserve without routing through the Profits Loss Account

c) The unrealised gains transferred to AFS-Reserve shall not be available for any distribution such as dividend and coupon on Additional Tier 1.

d) Upon sale or maturity of a debt instrument in AF S category, the accumulated gain/ loss forthat security in the AFS-Reserve shall be transferred from the AFS Reserve and recognized in the Profit and Loss Account under item II Profit on safe of investments under Schedule T4-Other Income.

e) In the case of equity instruments designated under AFS at the time of initial recognition, any gain or loss on sale of such investments sha 11 not be fransferredfrom AFS-Reservetothe Profit and Loss Account. Instead, such gain or loss shall be transferred from AFS-Reserve to the Capital Reserve.

2.3.2.3 FVTPL

a) The securities held in FVTPL sha 11 be fair valued and the net gain or loss arising on such valuation sha II be directly credited ordebitedtothe Profit and Loss Account Securities that are classified undertheHFT sub-category within FVTPL shall be fair valued on a daily basis, whereas other securities in FVTPL shall be lair valued at feast on a quarterly if not on a more frequent basis.

b) Any d i scount or p remiu m on Ihe acq uis ition of d ebt sec uritie s under FVTPL sha 11 be a morti sed over the rema i nmg life of the instru men l. T he a mortised a mou nt sha 11 be reflected in the financial statements under item 11 'In come on I nvestm ents¹ of S ch ed ule 13: 'J nterest Famed¹ with a contra in Schedule 8: 'Investments'

2.3.3 Safe of investments from HTM

a) Any sales from HTM shall be as per a Board approved policy. Any p rofit or loss on the sa le of i nvestments i n H T M shall be recognized in the Profit and Loss Account under Item II of Schedule 14:'0ther Income'. The profit on safe of an investment in HTM shall be appropriated below the line from the Profit and Loss Account to the 'Capital Reserve Accou nfi. T he a mou nt so a pp ropria ted sha II be net of taxes and the amount requ i red to be transferred to Sta tutoryReserve.

2.3.4 Fair Value of Investments

The 'market price / fair value' for the purpose of valuation of investments intruded in the 'Available for Sale' and FVTPL (Including HFT) & HiM categories is the market price of the scrip as available from the trades/quotes on the stock exchanges, price list of RBI, prices declared by Primary Dealers Association of India (PD At) jointly with the Fixed Income Money Market and Derivatives Association of India (FIMMDA).

2.4 Non-Performing Investments (NPt)

Investments are subject to provisioning / de-recognition ol income, as per prudential norms of Reserve Bank of India for NPt classification. The depredation/provision in respect of non-performing securities is not set off against the appreciation in respect of the other performing securities

If any credit facility availed by an entity is NPAin the books of the Bank, investments any of the securities issued by the same entity would also be treated as NPl and vice versa. However, in respect of NPl preference share where the dividend is not paid, the corresponding credit facility is nol treated as NPA.

2.5 Investment Fluctuation Reserve

Sank shall create an Investment Fluctuation Reserve (IFR) until the amount of IFR is at least two per cent of the AFS and FVTPL(induding HF T) portfolio, on a continuing basis, by transferring to the IF R an amount not less than the lower of the following:

i. Net profit on saie of investments during the year.

ii. N et profit for the year, I ess man datory a pprop riations.

3 Loans/Advances and Provisions thereon:

3.1. Loans and Advances are classified as “Performing” and “Non-Performing" assets based on guidelines issued by RBI. The provisions on such advances are made in accordance with prudential norms prescribed by the Reserve Banket India.

3.2 All Advances are classified into Standard, Sub-Standard, Doubtfui and Loss assets, borrower wise.

3.3 Provisions for NPA are made as per the extant guidelines prescnbed by RBf, subject to minimum provisions as per RBI Directions as prescnbed below:

3.4 Adva nces a re stated n et of specific I oa n loss provisi ons {in case of N PA), provision for di mi nufion in fair val Lie of restrucluned advances, unrealized interest.

3.5 I n a dd ition to the s pecific provisi on on NPAs, gen erat provisions are aiso mad e for stan da rd assets a s per extant RBI Guidelines. These provisions are included under Schedule b of the Balance Sheet under the head "Other Liabilities and Provisions" and are not considered for arriving at the Net NPAs.

3.6 For restructured/rescheduled advances, provisions are made in accordance with the guidelines issued by RBL

3.7 The sale of NPA is accounted for as per guidelines prescribed byRBi, asunder

i) . When the Bank sells its financial assets to Securitization Company (SC) I Reconstruction Company (RC), the same is removed from the books.

ii) . If the sale is at a price below the net book value (NBV) (i.e. book value less provisions held), the shortfall is debited to the Profits Loss account of the year of sale

di). 11 the sale is for a value higher than the NBV, the excess provision is reversed in the year the amounts are received.

4. Floating Pro visions

En accordance with the RBI guidelines, the Bank has an approved policy for creation and utilization of floating provisions separately for advances and investments. The quantum of floating provisions to be created is assessed, at the end of each financial year, l he floating provisions would be utilized only for contingencies under extra ondin ary circu msta nces specified i n the policy with prior permission of Rese rve Ba nk of India.

5. Fixed Assets

5.1 Premises and other Fixed Assets are stated at historical cost {except revalued premises which are stated at revalued amount) net olf accumulated depredation/ amortization and impairment losses, if any. The appreciation on revaluation is credited to Ftevaluation Reserve and the incremental depreciation attributable to the revalued amount is debited to the Profit & Loss account and the equal amount is transferred from Revaluation Reserve to Revenue Si Other Reserve.

Cost of fixed assets include cost of purchase and all expenditure such as site preparation, installation costs and professional fees incurred on the asset till the lime of capitalization ) put to use. Subsequent expenditurefs maimed on the assets put to use is capitalized only when it increases the tutu re benefits from such assets or their functioning capability.

5.2 Where segregation of cost between land and superstructure cannot be ascertained, depreciation is provided on the composite cost at the rate applicable to superstructure.

5.3 Land included under Premises fa ken on perpetual lease is considered as freehold and not depreciated.

5.4 The bank revalues immovable properties once in every three years. Properties acquired dunng last three years are not re va I ued. Valuati on of the re val ued assets is done e very fi ree yea rs there after.

6 Depreciation on Fixed Assets and Amortization

5.1 Depreciation on Fixed Assets (other than Computers) is charged on straight line method basis as per useful life of assets, considering residual value at 5% of original cost. The useful life and depreciation rate are given hereunder

6.2 Computers are fully depreciated at 33.33%, on straight-ifne method as per RSI guidelines

6.3 Revalued premises are depreciated over the balance useful life of such premises.

6.4 Additions during the year are depreciated for the full year irrespective of its date of addition.

6.5 No depreciation is provided on assets sold/disposed of dunng the year.

6.6 In respect of leasehold premises, the lease premium, if any, is amortized over the period of the lease

7. Employment Benefits

7.1 Longterm Employee Bene fits:

7.1*1, Defined Contribution Plan:

Provident Fund and Mew Pension Scheme {which is applicable to employees who have joined Bank on or after 01.04.2010) are defined contribution schemes, as the Bank pays fixed contribution at predetermined rates. The obligation of the bank is limited to such fixed contribution. The conbibuttons are charged to the Profit and Loss Account.

7.1.2 Defin ed Benefit P Ians:

Gratuity, Pension and Leave Encashment liabilities are defined benefit obligations and are provided lor on the basis of a ctu aria I valu ati on ma de at. the end of th e fin an cia I yea r as per AS 15 "E mpioyee Benefits' i ssued by IC Al. These schemes are funded by the Bank and are managed by separate trusts. The short/excess of the liability as compared to the lund held by the respective trust is accounted tor as liability / assets as at the at the end of the financial year.

Ofherlong term Employee benefits such as Silver Jubilee, Bonus and Retirement Gifts are provided for based on actuarial valuation.

7.2 Short Term employment benefits

Short term employee benefits {eg medical benefits) are recognized as an expense in the Profit and Loss account of the year in which the related services are rendered.

8 Foreign Exchange Transactions

8.1. Monetary assets and liabilities, guarantees, acceptances, endorsements and other obligations are translated in Indian Rupee equivalent at the exchange rates prevailing as on the Balance Sheet date as per Foreign Exchange Dealers’Association of India (FED AJ) guidelines.

8.2. Non-monel ary items other than fixed assets which are carried at historical cost are translated at exchange rate prevailingonfhedateoftransaction.

8.3. F orward exchange contra cfcs and bil I s a re tra nsl ated at the exchange rates prevai li ng on the date of commi Iment. Outstanding foreign exchange contracts and bi Its are translated as on the Balance Sheet dale at the rates notified by FEDAJ and the resultant gain /loss is taken to revenue.

8.4. Income and expenditure items are recorded at exchange rates prevailing on the dale of the transaction.

Excba ng e differences ari si ng on the settl ement of monela ry ite ms at rates diffene nt from those at which they were initially recorded a re recogn ized a s i ncome or as expen se i n the period i n which they ari se.

Gains/Losses on account of changes in exchange rates of open position in currency futures trades are settled with the excha nge cl ea ri ng house on daily basis and such gain si losses a re recognized in the Profit a nd Loss Account.

6.5 Conti ngent lia bilities o n accou nt of acceptan ces. end orse ments a nd othe r obligati on s i nd udin g gua ra ntees and

letter of credits in foreign currencies are reported at the Balance Sheet date using the FEDAI closing spot rates, except th e Bills for Collection wh i ch a re accoun ted for at th e noti onal rates a t the ti me of lod gment.

9. Taxes on Income

Income tax expense is the aggregate amount of current tax, including Minimum Alternate Tax (MAT'}, wherever applicable and Deferred tax. The current lax anddeffered lax are determined in accordance with the provisions of lncometaxactl961 and AS 2 2 Accounting for Taxes on Income issued by 1C Al.

Cu rrent tax is determi ned a s the amou nt of tax payable for the year and accord i ngly provisi on for tax is made.

Deterred Tax Assets and Liabilities arising on account ot timing differences and which are capable of reversal in subsequent periods are recognized using the tax rates and the tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognized only if there is virtual certainty of realization of such assets in future.

MAT credit, wherever applicable, is recognized as an asset only when and to the extent there is convincing evidence thal there will be payment of normal income tax during the period specified under Ehe Income TaxAct, 196V

10. Impairment of Assets

Impairment losses if any. or the assets are recognized in accordance with AS 26 on Impairment of Assets issued by ICAJ and charged to Profiland Loss account. The carrying costs ofassets are reviewed at each Balance Sheet date. Jf there is any indication ot impairment based on internal/extemai factors an impairment loss is recognized wherever the carrying cost ot an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets net selling price and value in use. ]n assessing value in use_r the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset.

After impairment, if any. depreciation is provided on the revised canying cost of the asset over its remaining useful life. A previously recognized impairment loss is increased or reversed depending on changes in circumstances. However, the carrying value after reversal is not in creased beyond the canying value that would have prevailed by charging usual depreciation if there was no impairment

11 SEGMENT REPORTING

The Bank recognizes the business segment as the primary reporting segment, in accordance with the RBI g uidel i nes and i n complian ce with th e Accoun ting Sta ndard 1 / i ssued by ICAI. As Ban k ha s no ove rseas branch I operation, there is no geographical segment.

12. PROVISIONS, CONT1NGENT UABILITIES AND CONHNGENT ASSETS

In conformity with Accounting Standard 29 "Provisions, Contingent Liabilities and Contingent Assets'" issued by the ICAJ. the Bank recognizes provisions only when il has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and when a reliable estimate of the amount of the obligation can be made.

Contingent liability is disclosed unless the possibility of an outflow of resources embodying economic benefits is remote.

Further, the cases which although have been filed against the bank but possibility of any obligation arising upon the bank in those case is remote, have not been construed and included in Contingent liability. Contingent Assets are not recognized in the financial statements since this may result in the recognition of income that may never be realized

13. LEASES

Lease payments including cost escalations for assets taken on operating [ease are recognized in the Profit and Loss Account over the tease term con sidering the concept of materiality.

14. EARNINGS PER SHARE

The Bank reports basic and diluted eamings per equity share in accordance with the Accounting Standard 20 "tamings Per Share" issued by the LCAI. Sasic eamings per equity share is arrived at by dividing net profit after la* with the weighted average number of equity shares outstanding for the period. Diluted eamings per equity share has been computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the period