1. BASIS OF PREPARATION:

The financial statements have been prepared on historical cost basis and conform, in all material aspects, to Generally Accepted Accounting Principles (GAAP) in India unless otherwise stated encompassing applicable statutory provisions, regulatory norms prescribed by the Reserve Bank of India (RBI), circulars and guidelines issued by the Reserve Bank of India ('RBI') from time to time, as per third schedule of Banking Regulation Act 1949, Accounting Standards (AS) and pronouncements issued by The Institute of Chartered Accountants of India (ICAI) and prevailing practices in banking industry in India.

In respect of foreign offices, statutory provisions and practices prevailing in respective foreign countries are complied with except as specified elsewhere.

The financial statements have been prepared on going concern basis with accrual concept and in accordance with the accounting policies and practices consistently followed unless otherwise stated.

2. USE OF ESTIMATES:

The preparation of financial statements requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as on the 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.

Future results could differ from these estimates. Difference between the actual results and estimates is recognized in the period in which the results are known / materialized.

Any revision to the accounting estimates is recognized prospectively in the current and future periods unless otherwise stated.

3. REVENUE RECOGNITION:

3.1 Income & expenditure (other than items referred to in paragraph 3.2 & 3.5) are generally accounted for on accrual basis.

3.2 Income from Non- Performing Assets (NPAs), comprising of advances and investments, is recognized upon realization, as per the prudential norms prescribed by the RBI/ respective country regulators in the case of foreign offices (hereafter collectively referred to as Regulatory Authorities).

3.3 Mode of appropriation of recovery in order of priority will be as below:

(a) Appropriation of Recoveries in NPA accounts (irrespective of the mode / status / stage of recovery actions) shall be regulated in the following order of priority:

i. Expenditure/Out of Pocket Expenses incurred for Recovery (earlier recorded in Memorandum Dues);

ii. Thereafter towards the interest irregularities / accrued interest.

iii. Principal irregularities, i.e., NPA outstanding in the account.

iv. Penal Charges

In case of borrowers who are having multiple accounts - On receiving recovery in one account, system appropriates recovery towards Expenditure, Interest, Principal and penal charges. Further, surplus recovery amount, if any, is appropriated towards Expenditure, Interest, Principal and penal charges of another account for same customer.

(b) However, in case of Compromise, Resolution/ Settlement through NCLT, Technically Written Off (TWO) & Credits received on account of CGTMSE / ECGC / GECL / CGFMU and subsidy if any, shall be appropriated in the order of Principal, Expenditure / out of pocket expenses incurred for recovery (earlier recorded in Memorandum Dues), Interest and penal charges.

(c) In case of suit filed/decreed accounts, recovery is appropriated as under:

i. As per the directives of the concerned Court.

ii. In the absence of specific directives from the Court, as mentioned at point (a) above.

Any exceptions to the above may be considered by HOCAC-III (for proposals falling under the powers of various committees upto HOCAC-III) & Management Committee / Board for proposals under their vested powers.

3.4 The sale of NPA is accounted as per guidelines prescribed by RBI and as disclosed under Para 5.3.

3.5 Commission (excluding on Government Business, Insurance Business, Mutual Fund Business, Letter of Credit and Bank Guarantee), Royalty from group entities and other such alike incomes such as Management Service Agreement (MSA) fee receivable, exchange, locker rent, Income on Rupee Derivatives designated as 'Trading' and Income from units of mutual funds, alternative investment funds & other such pooled/ collective investment funds are accounted for on realization and insurance claims are accounted for on settlement. Interest on overdue inland bills is accounted for on realization and interest on overdue foreign bill, till its crystallization is accounted for on crystallization and thereafter on realization.

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

3.7 Income from interest on refund of income tax is accounted for in the year the order is passed by the concerned authority.

3.8 Lease payments including cost escalation for assets taken on operating lease are recognized in the Profit and Loss Account over the lease term in accordance with the AS 19 (Leases) issued by ICAI.

3.9 Provision for outstanding Reward Points on Credit cards is made based on the actuarial estimates.

3.10If Term Deposit (TD) matures and proceeds are unpaid, the amount left unclaimed with the Bank attracts rate of interest as applicable to savings account or the contracted rate of interest on the matured TD, whichever is lower.

3.11 Bank recognizes dividend income on accrual basis for shares of corporate bodies provided dividend has been declared by the corporate body in its Annual General Meeting and the owner's right to receive payment is established. Dividend income on equity investments held under AFS is also recognised in the Profit and Loss Account.

4. INVESTMENTS:

4.1 As soon as the deal is entered into (whether settled or not) necessary vouchers are passed. For the equity deals, transaction vouchers are passed on the deal date and for other deals, contra vouchers are passed on deal date and transaction vouchers in securities are passed on the date of settlement.

4.2 Investments are classified into six categories as stipulated in Third Schedule to the Banking Regulation Act, 1949 (Form A- Schedule 8- Investment).

4.3 Entire investment portfolio (except investments in own subsidiaries, joint ventures and associates) has been classified under three categories, viz., Held to Maturity (HTM), Available for Sale (AFS) and Fair Value through Profit and Loss (FVTPL). Held for Trading (HFT) is a separate investment subcategory within FVTPL. The category of the investment is decided before or at the time of acquisition.

(a) HTM: Securities fulfilling the following conditions are classified under HTM:

(i) The security 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; and

(ii) The contractual terms of the security give rise to cash flows that are solely payments of principal and interest on principal outstanding (SPPI criterion') on specified dates.

(b) AFS: Securities fulfilling the following conditions are classified under AFS:

(i) The security acquired with an objective that is achieved by both collecting contractual cash flows and selling securities; and

(ii) The contractual terms of the security meet the 'SPPI criterion'.

(iii) Equity shares where, at initial recognition, the irrevocable option to classify in AFS has been exercised.

(iv) AFS securities also include debt securities held for asset liability management (ALM) purposes that meet the SPPI criterion where the Bank's intent is flexible with respect to holding to maturity or selling before maturity.

(c) FVTPL: Securities that do not qualify for inclusion in HTM or AFS are classified under FVTPL. These inter-alia include:

(i) Equity shares, other than (a) equity shares of subsidiaries, associates or joint ventures and (b) equity shares classified under AFS.

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

(iii) Investment in securitisation notes which do not meet 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 benchmark.

HFT: Separate sub-category called HFT is created within FVTPL and it consists of all instruments set out in the following -

• short-term resale;

• profiting from short-term price

movements;

• locking in arbitrage profits; or

• hedging risks that arise from

instruments meeting above.

• instruments that would give rise to a net short credit or equity position in the banking book.

• Any financial instrument when there is no legal impediment against selling or fully hedging it.

4.4 Investments in Subsidiaries, Associates and Joint Ventures

All investments in subsidiaries, associates and joint ventures are held in a distinct category separate from the other investment categories.

4.5 In case of Reclassification of investments from one category to another category, the accounting treatment is as given in the table below:

The reclassification is applied prospectively from reclassification date and details of such reclassification including the reclassification adjustments is provided as disclosure in the notes to the financial statements, if the case persists.

4.6 In determining acquisition cost of an investment

(a) Brokerage, commission, Securities Transaction Tax (STT) etc. paid in connection

with acquisition of securities are treated as revenue expenses upfront and excluded from cost.

(b) Interest accrued up to the date of acquisition/sale of securities i.e. broken-period interest is excluded from the acquisition cost/sale consideration and the same is accounted as interest accrued but not due.

(c) Cost is determined on the weighted average cost method for all categories of investments.

(d) 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, it is presumed that the acquisition cost is the fair value. In other cases, following treatment is done:

• Where the securities are quoted or the fair value is determined based on market observable inputs (such as yield curve, credit spread, etc.) any Day 1 gain/ loss is recognised in the Profit and Loss Account, under Schedule 14: 'Other Income' within the subhead 'Profit on revaluation of investments' or 'Loss on revaluation of investments'.

• Any Day 1 loss arising from Level 3 investments is recognised immediately.

• 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 derecognised.

4.7 Investments are valued as per RBI/ FIMMDA guidelines, on the following basis:

I. Held to Maturity

Securities held in HTM are carried at cost and are not marked to market (MTM) after initial recognition.

II. AFS

The securities held in AFS are fair valued on daily basis. 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 are aggregated and net appreciation or depreciation, is directly credited or debited to AFS Reserve without routing through the Profit and Loss account.

III. FVTPL

The securities held in FVTPL are fair valued and the net gain or loss arising on such valuation is credited or debited to the Profit and Loss Account. Out of above, Securities that are classified under the HFT sub-category within FVTPL are fair valued on daily basis and other securities under FVTPL on daily basis.

IV. Investments in Subsidiaries, Associates and Joint Ventures

All investments (i.e., including debt and equity) in subsidiaries, associates and joint ventures are held at acquisition cost. Investments in subsidiaries, associates or joint ventures are evaluated for impairment on quarterly basis and if required, on more frequent basis. In case of impairment, valuation of the investment is being done by an independent registered valuer and provision for impairment is made from Profit and Loss Account. It can be subsequently reversed through Profit and Loss Account, if there is a reversal of the diminution.

V. Amortization/ Accretion

Any discount or premium on the acquisition of debt securities in HTM/ AFS/ FVTPL/ Subsidiaries, Associates and Joint Ventures category is amortised over the remaining life of the instrument. The amortised amount is reflected in the financial statements under item II 'Income on Investments' of Schedule 13: 'Interest Earned' with a

contra in Schedule 8: 'Investments'. For amortization and accretion of investments, the Bank continues to follow the 'straight line method'.

Fair Value of Investments:

To increase consistency and comparability in fair value measurements and related disclosures, the investment portfolio is categorized into three fair value hierarchies, viz., Level 1, Level 2, and Level 3 as defined below:

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 a 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.

The fair value for the purpose of initial recognition and periodical valuation of Investments is determined as per table below:

4.8 When principal and/or interest are converted into equity, debentures, bonds, etc., such instruments are categorised in HTM, AFS or FVTPL (including HFT) at the time of initial recognition. Further, the asset classification of such instruments are same as the loan and provision are made as per the relevant norms.

4.9 Accounting Treatment on sale/ maturity of investments:

I. HTM: Any profit or loss on the sale of investments in HTM is being recognised 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 from the Profit and Loss Account to the 'Capital Reserve Account'. The amount so appropriated will be net of taxes and the amount to be transferred to Statutory Reserve.

II. AFS:

a. In the case of equity instruments designated under AFS at the time of initial recognition, any gain or loss on sale of such investments is transferred from AFS-Reserve to the Capital Reserve.

b. On sale or maturity of a debt 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 under item II Profit on sale of investments under Schedule 14-Other Income.

III. FVTPL: Any profit or loss on the sale is recognised directly through Profit and Loss Account including HFT securities.

IV. Subsidiaries, Associates and Joint Ventures: Any gain/ profit arising on the reclassification/ sale of an investment in a subsidiary, associate or joint venture is first

recognised in the Profit and Loss Account and then appropriated from the Profit and Loss Account to the 'Capital Reserve Account'. The amount so appropriated will be net of taxes and the amount to be transferred to Statutory Reserves.

All other guidelines of Reserve Bank of India (Commercial Banks - Classification, Valuation, and Operation of Investment Portfolio) Directions, 2025 dated November 28, 2025, and other subsequent guidelines/clarifications are adhered to.

4.10Securities repurchased/resold under buy back arrangement are accounted for at original cost.

4.11Investments are subject to appropriate provisioning/ de-recognition of income, in line with the prudential norms of Reserve Bank of India for NPI classification. Once an investment is classified as an NPI, it is segregated from rest of the portfolio and not considered for netting valuation gains and losses.

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

In case of securities, i.e., bonds, debentures, etc. the provision is made as higher of the following amounts -

(i) The amount of provision required as per IRACP norms computed on the carrying value of the investment immediately before it was classified as NPI; and

(ii) The depreciation on the investment with reference to its carrying value on the date of classification as NPI.

Upon an account being upgraded as per IRACP norms, any provision previously recognised is reversed and symmetric recognition of MTM gains and losses will be resumed.

In the case of investment in the unquoted shares of any company which are valued at '1 per company on account of the nonavailability of the latest balance sheet, those equity shares are reckoned as NPI. The NPI may be upgraded subsequently on receipt of audited balance sheet.

Provisions for investments classified under AFS (Available for Sale) are managed as follows:

• When there are cumulative gains in the AFS-Reserve, the required provision may be created by charging the AFS-Reserve up to the amount of these gains.

• When there are cumulative losses in the AFS-Reserve, these losses are transferred from the AFS-Reserve to the Profit and Loss Account.

4.12 Securities sold or purchased with an agreement to repurchase or resell under Repo or Reverse Repo transactions, including those under the Liquidity Adjustment Facility (LAF) with the RBI, shall be recorded as borrowings or lending. Securities sold under Repo agreements remain classified under investments, while securities purchased under Reverse Repo agreements shall not be included in investments. The associated costs and revenues shall be accounted for as interest expenditure or income, respectively.

4.13 The derivative transactions are undertaken for trading or hedging purposes. Trading transactions are marked to market. As per RBI guidelines, different categories of swaps are valued as under:

Hedge Swaps

Interest rate swaps with hedge interest bearing asset or liability are accounted for on accrual basis except the swaps designated with an asset or liability that are carried at lower of market value or cost in the financial statement.

Gain or losses on the termination of swaps are recognized over the shorter of the remaining contractual life of the swap or the remaining life of the asset/ liabilities.

Trading Swaps

Trading swap transactions are marked to market with changes recorded in the financial statements. Exchange Traded Derivatives entered into for trading purposes are valued at prevailing market rates based on rates given by the Exchange and the resultant gains and losses are recognized in the Profit and Loss Account.

4.14 Foreign Currency Options:

Foreign currency options written by the Bank with a back-to-back contract with another bank are not marked to market since there is no market risk.

Premium received is held as a liability and transferred to the Profit and Loss Account on maturity/cancellation.

5. LOANS / ADVANCES AND PROVISIONS THEREON:

5.1 Advances are classified as performing and non-performing assets; provisions are made in accordance with prudential norms prescribed by RBI.

(a) Advances are classified: Standard, Sub Standard, Doubtful and Loss assets borrower wise.

(b) Advances are stated net of specific loan loss provisions, provision for diminution in fair value of restructured advances.

5.2 In respect of foreign offices, the classification of loans and advances and provisions for NPAs are made as per the local regulations or as per the norms of RBI, whichever is more stringent.

Loans and advances held at the overseas branches that are identified as impaired as per host country regulations for reasons other than record of recovery, but which are standard as per the extant RBI guidelines, are classified as NPAs to the extent of amount outstanding in the host country.

5.3 Financial Assets sold are recognized as under:

(a) Prudential norms for the transfer transactions to ARCs:

When the stressed loan is transferred to ARC at a price below the NBV at the time of transfer, the Bank has debited the shortfall to the profit and loss account for the year in which the transfer has taken place. Banks are permitted to use countercyclical or floating provisions for meeting any shortfall on transfer of stressed loan when the transfer is at a price below the NBV.

On the other hand, when the stressed loan is transferred to an ARC for a value higher than the NBV at the time of transfer, lenders shall reverse the excess provision on transfer to the profit and loss account in the year the amounts are received and only when the sum of cash received by way of initial consideration and / or redemption or transfer of Security Receipts (SR) / Pass Through Certificates (PTCs)/ other securities issued by ARCs is higher than the NBV of the loan at the time of transfer. Further, such reversals are limited to the extent to which cash received exceeds the NBV of the loan at the time of transfer.

As per RBI/DOR/2025-26/159 DOR.STR. REC.No.78/21.04.048/2025-26 dated November 28, 2025, with a view to adopting

a differentiated approach in respect of SRs guaranteed by the Government of India, the prudential treatment relating to valuation of such SRs is such that if a loan is transferred to an ARC for a value higher than the net book value (NBV), the excess provision is reversed to the Profit and Loss Account in the year of transfer if the sale consideration comprises only of cash and SRs guaranteed by the Government of India. However, the non-cash component in the form of SRs is deducted from CET 1 capital, and no dividends are paid out of this component.

(b) Prudential norms for the transfer transactions to transferee(s) other than ARCs - Provisioning norms:

(i) When the bank transfers its NPAs to transferee(s) other than ARCs, the same are removed from the books on receipt of the entire transfer consideration.

(ii) If the transfer to transferee(s) other than ARCs is at a price below the net NBV at the time of transfer, the shortfall is debited to the profit and loss account of the year in which transfer has taken place.

(iii) If the sale consideration is for a value higher than the NBV at the time of transfer, the excess provisions has been reversed.

(c) The excess amount received, if any, over & above memoranda dues is credited proportionately to the respective heads of Income Interest on Loans and Advances say Income Interest on CC/ Term Loan, etc.

In case, the excess amount is to be returned subsequently due to, e.g., DRT/ Court orders or any other eventuality, the same head is debited to refund the excess amount recovered.

5.4 Restructured Assets:

For restructured/rescheduled advances, provisions are made in accordance with guidelines issued by RBI from time to time. Provision for diminution in fair value of restructured advances is measured at net present value terms as per RBI guidelines for accounts where total dues to the bank are Rupees One Crores and above. For other accounts, the provision for diminution in fair value is computed notionally at 5% of total exposure to the bank as per RBI guidelines.

5.5 In addition to the specific provision on NPAs, general provisions are also made for standard assets as per extant RBI Guidelines. These provisions are reflected in Schedule 5 of the Balance Sheet under the head 'Other Liabilities & Provisions -Others' and are not considered for arriving at the Net NPAs.

5.6 Amounts recovered against debts written-off in earlier years and provisions no longer considered necessary in the context of the current status of the borrower are recognized in the profit and loss account.

5.7 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 categorized 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 Schedule 5 of the Balance Sheet under the 'Other Liabilities & Provisions - Others'.

5.8 An additional provision of 2% (in addition to country risk provision that is applicable to all overseas exposures) against standard assets representing all exposures to step down subsidiaries of Indian Corporates has been made to cover the additional risk arising from complexity in the structure, location of different intermediary entities in different jurisdictions exposing the Indian Company, and hence the Bank, to a greater political and regulatory risk. (As per RBI Cir. No. RBI/ 2015.16/279 DBR. IBD.BC No. 68/ 23.37.001/ 2015-16 dated 31.12.2015).

5.9 Floating Provision:

The Bank has a policy for creation and utilisation of floating provision. The floating provision, so created can be utilised only for contingencies under extraordinary circumstances specified in the policy after obtaining Bank's Board approval and with prior permission of Reserve Bank of India. Floating provision is netted off from advances to the extent it is not treated as Tier 2 capital.

6. PROPERTY, PLANT & EQUIPMENT:

6.1 Property, Plant & Equipment are stated

at historical cost less accumulated depreciation/amortization, wherever

applicable, except those premises, which have been revalued in terms of Bank's policy, i.e., every three years. The appreciation on revaluation is credited to revaluation reserve and incremental depreciation attributable to the revalued amount is deducted there from and credited to General reserve.

6.2 Software is capitalized and clubbed under Intangible assets.

6.3 Cost includes cost of purchase and all expenditure such as site preparation, installation costs and professional fees incurred on the asset till the time of

capitalization. Subsequent expenditure/s incurred on the assets are capitalized only when it increases the future benefits from such assets or their functioning capability.

6.4 Depreciation:

A. Depreciation on assets (including land where value is not separable) is provided on straight-line method based on estimated life of the asset, except in respect of computers where it is calculated on the straight-line method, at the rates prescribed by RBI.

B. Depreciation on assets has been provided at the rates furnished below:

C. Depreciation on fresh additions to assets other than Bank's own premises is provided from the day in which the assets are capitalized and in the case of assets sold/disposed-off during the year, up to the date in which it is sold/ disposed-off.

D. The depreciation on bank's own premises existing at the close of the year is charged for full year. The construction cost is depreciated only when the building is complete in all respects. Where the cost of land and building cannot be separately

ascertained, depreciation is provided on the composite cost, at the rate applicable to buildings.

E. In respect of leasehold premises, the lease premium, if any, is amortized over the period of lease and the lease rent is charged in the respective year(s).

F. The Revalued assets are depreciated over the balance useful life of the asset as assessed at the time of revaluation.

7. IMPAIRMENT OF ASSETS:

The carrying costs of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/ external factors, an impairment loss is recognized wherever the carrying cost of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets net selling price and value in use. In assessing value in use, 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 carrying 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 increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

Impairment loss, if any, in respect of nonbanking assets acquired in satisfaction of claims is recognized as an expense in the statement of profit and loss immediately and carrying value of Non-Banking Assets is adjusted.

8. EMPLOYMENT BENEFITS:

PROVIDENT FUND:

Provident fund is a defined contribution scheme as the Bank pays fixed contribution at pre-determined rates. The obligation of the Bank is limited to such fixed contribution. The contribution is charged to Profit & Loss A/c.

GRATUITY:

Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation. The scheme is funded by the Bank and is managed by a separate trust.

PENSION:

Pension liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation. The scheme is funded by the Bank and is managed by a separate trust.

The Bank operates a New Pension Scheme (NPS) for all officers/ employees who have joined the Bank on or after 01.04.2010. As per the scheme, the covered employees contribute 10% of their basic pay plus dearness allowance to the scheme together with contribution of 14% of their basic pay plus dearness allowance from the Bank. Pending completion of the registration procedures of the employees concerned, these contributions are retained. The Bank recognizes such annual contributions as an expense in the year to which they relate. Upon the receipt of the Permanent Retirement Account Number (PRAN), the consolidated contribution amounts are transferred to the NPS Trust.

COMPENSATED ABSENCES:

Accumulating compensated absences such as Privilege Leave (PL - Superannuation) and Sick Leave (including unavailed casual

leave) are provided for based on actuarial valuation. The scheme for Privilege Leave (PL - Superannuation) is funded by the Bank and is managed by a separate trust.

Privilege Leave (PL) encashment other than superannuation are being paid from Bank expenditure account directly.

OTHER EMPLOYEE BENEFITS:

Other Employee Benefits such as Leave Fare Concession (LFC), Silver Jubilee Award, etc., are provided for based on actuarial valuation.

In respect of overseas branches and offices, the benefits in respect of employees other than those on deputation are accounted for as per laws prevailing in the respective countries.

The valuation method used for defined benefit obligations for employee benefits is 'Projected Unit Credit Method'.

9. TRANSLATION OF FOREIGN CURRENCY TRANSACTIONS & BALANCES:

Transactions involving foreign exchange are accounted for in accordance with AS 11, 'The Effect of Changes in Foreign Exchange Rates'.

9.1 All 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 (FEDAI) guidelines.

9.2 Non-monetary items other than fixed assets which are carried at historical cost are translated at exchange rate prevailing on the date of transaction.

9.3 Outstanding Foreign Exchange Spot and Forward contracts are translated as on the Balance Sheet date at the rates notified by FEDAI and the resultant gain/loss on translation is taken to Profit & Loss Account.

Funding Swaps that are outstanding on the Balance Sheet date is out of purview of FEDAI revaluation guidelines. The premium or discount arising at the inception of such a forward exchange contract is amortized as interest expense or income over the life of the contract.

9.4 Income and expenditure items are accounted for at the exchange rate prevailing on the date of transaction.

Exchange differences arising on the settlement of monetary items at rates different from those at which they were initially recorded are recognized as income or as expense in the period in which they arise.

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 recognized in the Profit and Loss Account.

9.5 Offices outside India / Offshore Banking Units:

(i) Operations of foreign branches and off shore banking unit are classified as 'Non-integral foreign operations' and operations of representative offices abroad are classified as 'integral foreign operations'.

(ii) Foreign currency transactions of integral foreign operations and non-integral foreign operations are accounted for as prescribed by AS-11.

(iii) Exchange Fluctuation resulting into Profit / loss of non-integral operations is credited /debited to Exchange Fluctuation Reserve.

10. 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 of changes in the deferred tax assets or liabilities during the year. Deferred tax assets and liabilities are recognized 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 recognized in the profit and loss account. Deferred tax assets are recognized and re-assessed at each reporting date, based upon management's judgment as to whether their realization is considered as reasonably/virtually certain.

11. EARNINGS PER SHARE:

The Bank reports basic and diluted earnings per share in accordance with AS 20 - 'Earnings per Share' issued by the ICAI. Basic Earnings per Share is computed by dividing the Net Profit after Tax for the year attributable to equity shareholders by the weighted average number of equity shares outstanding for the year.

Diluted Earnings per Share reflects the potential dilution that could occur if securities or other contracts to issue equity

shares were exercised or converted during the year. Diluted Earnings per Share is computed using the weighted average number of equity shares and dilutive potential equity shares outstanding.

12. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

In conformity with AS 29, 'Provisions, Contingent Liabilities and Contingent Assets', issued by the Institute of Chartered Accountants of India, the Bank recognizes provisions only when it has a present obligation as a result of a past event, and it is probable that 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.

A Contingent Liability is a potential liability, in terms of money, which may arise depending on the outcome of an uncertain specific event. A possible obligation which may or may not arise depending on how a future event unfolds has been recognized as Contingent Liability.

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.

13. BULLION TRANSACTIONS:

The Bank imports bullion including precious metal bars on a consignment basis for selling to its customers. The imports are typically on a back-to-back basis and are priced to the customer based on price quoted by the supplier. The Bank earns a fee on such bullion transactions.

The fee is classified under commission income. The Bank also accepts deposits and lends gold, which is treated as deposits/advances as the case may be with the interest paid / received classified as interest expense/income.

14. SEGMENT REPORTING:

The Bank recognizes 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 ICAI.

15. The Bank, in accordance with RBI Circular FIDD.CO.Plan.BC.23/ 04.09.01/ 2015-16 dated April 7, 2016, trades in Priority Sector portfolio by selling or buying PSLC. There is no transfer of risks or loan assets in these transactions. The fee paid for purchase of the PSLC is treated as an 'Expense' and the Fee received from sale of PSLCs is treated as 'Other Income'.

16. CASH & CASH EQUIVALENTS

Cash and cash equivalents include:

a) Cash and Balances with RBI, Balances with Bank and money at call and short notice.

b) The balances in Reverse Repo are reported as per the guidelines provided by RBI (i.e., under schedule 6, schedule 7 and schedule 9, as applicable). The balance held by the Bank under Standing Deposit Facility (SDF) is also reported similarly.