17.4 Significant accounting policies

17.4.1 Revenue recognition

Revenue is recognized to the extent it is probable that the economic benefits will flow to the Bank and the revenue can be

reliably measured.

• Interest income is recognized in the profit and loss account on accrual basis, except in the case of non-performing
assets. Interest on non-performing assets is recognized as per the prudential norms of the RBI.

• Dividend income is recognised when the right to receive payment is established.

• Commission on Guarantees and Letters of Credit ('LC') issued by the Bank is recognised as income over the period
of the Guarantee and LC respectively.

• Income on non-coupon bearing discounted instruments is recognised over the tenure of the instrument on a
straight line basis. In case of coupon bearing discounted instruments, discount income is recognised over the tenor
of the instrument on a straight line basis.

• In case of Bonds and Pass Through Certificates (PTC), premium on redemption, if any, is amortised over the tenure
of the instrument on a straight line basis.

• Revenue from financial advisory services is recognised in line with milestones achieved as per terms of agreement
with clients which is reflective of services rendered.

• Facility fees and loan processing fees are recognised when due and realisable.

• Penal charges for covenant breach is recognized upon certainty of its realisation.

• Other fees and commission are accounted for as and when they became due and realisable.

• Gain / loss on sell down of loans is recognised in line with the extant RBI guidelines.

• Appropriations of recoveries in standard advances* (except for credit cards, which is based on agreement) are made
in below order:

a) Penal charges (on financial overdue)

b) Interest

c) Principal

d) Charges, Costs, Commission etc.

• Appropriations of recoveries in NPAs (except for credit cards, which is based on agreement) are made in below order:

a) Principal

b) Interest

c) Penal charges (on financial charges)

d) Penal charges (on non-financial overdue), costs, commissions etc.

*In case of Equated Monthly Installment (EMI) based standard retail advances, interest which get levied at contractual rate due to delay /
default on EMI are appropriated post EMI recovery.

17.4.2 Investments

Classification and valuation of the Bank's investments are carried out in accordance with Reserve Bank of India (Commercial
Banks - Classification, Valuation, and Operation of Investment Portfolio) Directions, 2025 as updated from time to time.

Accounting and Classification

The Bank follows settlement date accounting for Investments. In compliance with RBI guidelines, all investments, are categorised
as "Fair Value Through Profit & Loss" ('FVTPL'), "Available for Sale" ('AFS') or "Held to Maturity" ('HTM') and under sub-category
of FVTPL as "Held for Trading" ('HFT') at the time of its purchase. All investments in subsidiaries, associates and joint ventures
are categorised under a separate category as "Investments in Subsidiaries, Associates and Joint Ventures" ('Subsidiaries and/
or joint ventures'). For the purpose of disclosure in the balance sheet, investments are classified as disclosed in Schedule 8
('Investments') under six groups (a) government securities (b) other approved securities (c) shares (d) debentures and bonds (e)
subsidiaries and/or joint ventures and (f) others.

Purchase and sale transactions in securities are accounted on settlement date.

a) Initial Recognition (Cost of acquisition)

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, the acquisition cost is the fair value of the assets. In case the fair value of
investment is different from cost of acquisition, Day 1 Gain/Loss shall be recognised in Profit and Loss Account.

Day 1 Loss arising from Level 3 investments is recognised immediately. Any Day 1 gains arising from Level 3 investments
is deferred. In 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.

Cost such as brokerage pertaining to investments, paid at the time of acquisition and broken period interest are charged to
the profit and loss account as per the RBI guidelines.

b) Basis of classification

Investments are classified as per Reserve Bank of India (Commercial Banks - Classification, Valuation, and Operation of
Investment Portfolio) Directions, 2025 as updated from time to time. Securities that meets SPPI criterion and the Bank
intends to hold them till maturity are classified under the HTM category. Securities meets SPPI criterion and the Bank
intends to held for sale are classified under AFS category. All other investments excluding investments in subsidiaries,
Associates and Joint Ventures, which are not classified in the above categories are classified under the FVTPL (non-HFT)
residual category. Held for Trading (HFT) is a separate investment subcategory within FVTPL. Investment in Subsidiaries,
Associates and Joint Ventures are classified under a separate category as "Investments in Subsidiaries, Associates and
Joint Ventures.

c) Reclassification between categories

Reclassification of investments from one category to the other, if done, is in accordance with RBI guidelines. As per RBI
guidelines, reclassification between category required Board of Directors prior approval. Further, reclassification shall also
require the prior approval of the Department of Supervision (DoS), RBI.

When investments reclassified between categories, the accounting treatment shall be in accordance with Reserve Bank
of India (Commercial Banks - Classification, Valuation, and Operation of Investment Portfolio) Directions, 2025 as updated
from time to time.

d) Valuation (Subsequent Measurement)

The Bank determines the fair values of its investments according to the following hierarchy:

Level 1: Valuation based on quoted market price: These investments are valued with quoted prices (unadjusted) for identical
instruments in active markets that the Bank can access at the measurement date.

Level 2: Valuation based on using observable inputs: These investments are valued with inputs other than quoted prices
included within Level 1, that are observable, either directly or indirectly.

Level 3: Valuation technique with significant unobservable inputs: These investments are valued using valuation techniques
where one or more significant inputs are unobservable.

Investments categorised under AFS and FVTPL categories is fair valued on periodical basis as per relevant RBI guidelines.
The valuation gains and losses across all performing investments irrespective of classification held under AFS or FVTPL
shall be aggregated. The net appreciation or depreciation shall be directly credited or debited to AFS reserve or Profit & Loss
Account of investments under AFS or FVTPL category respectively.

Investments received in lieu of restructured advances scheme are valued in accordance with RBI guidelines. Any diminution
in value on these investments is provided for and is not used to set off against appreciation in respect of other performing
securities in that category. Depreciation on equity shares acquired and held by the Bank under restructuring scheme is
provided as per RBI guidelines.

Investments classified under the HTM category are carried at cost and any premium or discount over the face value, paid on
acquisition, is amortised on a straight-line basis over the remaining period to maturity. Where in the opinion of management,
a diminution, other than temporary in the value of investments classified under HTM has taken place, suitable provisions

are made. Profit/loss on sale of investments in the 'Held to Maturity' category is recognised in the profit and loss account
and profit is thereafter appropriated (net of applicable taxes and statutory reserve requirements) to Capital Reserve.

Investments in subsidiaries, Associates and Joint Ventures as classified under a separate category "Investments in
Subsidiaries, Associates and Joint Ventures" is held at acquisition cost. The Bank assesses these investments for impairment
on intervals as mentioned in RBI circular.

Treasury Bills, Commercial Paper and Certificates of deposit being discounted instruments, are valued at carrying cost.

PTCs purchased for priority sector lending requirements are valued in accordance with RBI guidelines.

The market/ fair value applied for the purpose of periodical valuation of quoted investments included in the AFS and FVTPL
(including HFT) categories is the market price of the scrip as available from the trades/ quotes on the recognised stock
exchanges and for Subsidiary General Ledger ('SGL') account transactions, the prices as periodically declared by Financial
Benchmarks India Pvt. Ltd. (FBIL).

The market/ fair value of unquoted government securities included in the AFS and FVTPL (including HFT) category is
determined as per the prices published by FBIL. Further, in the case of unquoted bonds, debentures, PTCs (other than
priority sector) and preference shares, valuation is carried out by applying an appropriate mark-up (reflecting associated
credit risk) over the Yield To Maturity ('YTM') rates of government securities. Such mark up and YTM rates applied are as per
the relevant rates published by FIMMDA/FBIL.

The Bank undertakes short sale transactions in Central Government dated securities in accordance with RBI guidelines.
The short position is reflected as the amount received on sale which is categorised under HFT category and is netted in the
Investment schedule. The short position is marked to market and same is charged to the Profit and Loss account. Profit /
Loss on settlement of the short position is recognised in the Profit and Loss account.

Investments in unquoted Alternative Investment Funds (AIF)/Venture Capital Funds (VCF) are valued at Net Asset Value
(NAV) disclosed by the AIF/VCF. Where AIF/VCF fails to carry out and disclose the valuation of an independent valuer as per
the frequency mandated by SEBI, the value of its units shall be treated as ' 1 per VCF/AIF.

In case AIF/VCF is not registered under SEBI (Alternative Investment Fund) Regulations, 2012 (SEBI AIF regulations) and the
latest disclosed valuation of its investment precedes the date of valuation by more than 18 months the value of units shall
be treated as at ' 1 per VCF/AIF. In case AIF is registered under SEBI AIF regulations, Category I and Category II Alternative
Investment Funds, undertakes valuation at least once in every six months, by an independent valuer appointed by the
Alternative Investment Fund:

Quoted equity shares are valued at their closing price on a recognised stock exchange. Unquoted equity shares are valued
at the break-up value if the latest balance sheet is available, else, at ' 1 per company, as per relevant RBI guidelines.

For stressed loans transferred to Asset Reconstruction Company (ARC) where the consideration is lower than the net
book value (NBV) at the time of transfer, the shortfall is debited to the Profit and Loss Account and spread equally over
the financial year. The realised profit, where the cash recovery exceeds the NBV of the stressed loans, the same is credited
to Profit and Loss Account. For stressed loans where the consideration received was higher than the NBV at the time of
transfer but the cash recovery is lower than the NBV, such excess amount is not reversed in the Profit and Loss Account and
the Bank continues to carry forward the same as provision against the Security Receipts (SRs). In effect, the value of SRs
is reflected in a manner that the value of SRs is not higher than the NBV of the loans transferred to ARC. The provisioning
requirements is as per the extant RBI guidelines applied on each reporting date, taking into account the principle that there
should be no provisioning arbitrage between the provisioning on security receipts vis-a-vis the provisioning requirements

on the underlying stressed loans, had it stayed in the books. SRs/ PTCs which are not redeemed as at the end of resolution
period are fully provided in books of accounts.

Investments in quoted Mutual Fund (MF) Units are valued at the latest repurchase price/NAV declared by the MF.
Investments in un-quoted MF Units are valued on the basis of the latest re-purchase price declared by the MF in respect
of each particular Scheme.

Investment in listed instruments of Real Estate Investment Trust (REIT)/Infrastructure Investment Trust (INVIT) is valued
at closing price on a recognised stock exchange with the higher volumes. In case the instruments were not traded on any
stock exchange within 15 days prior to date of valuation, valuation is done based on the latest NAV (not older than 1 year)
submitted by the valuer.

Sovereign foreign currency bonds are valued using Composite Bloomberg Bond Trader (CBBT) price or Bloomberg Valuation
Service (BVAL) price or on Treasury curve in the chronological order based on availability.

Non-Sovereign foreign currency Bonds are valued using either CBBT price, BVAL price, Bloomberg Generic price (BGN),
Last available CBBT pricing for the instrument or Proxy Bond Pricing from Bloomberg in the chronological order based
on availability.

Masala bonds are valued using either CBBT price, BVAL price or as per FIMMDA guided valuation methodology for unquoted
bonds in the chronological order based on availability.

Special bonds such as oil bonds, fertilizer bonds, UDAY bonds etc. which are directly issued by Government of India ('GOI')
is valued based on FBIL valuation.

Equity shares in the Bank's demat account, acquired through exercise of pledge, is not accounted as investments. Upon sale
of the pledged shares, the proceeds are utilized to offset the borrower's liability.

Non-performing investments are identified and depreciation / provision are made thereon as per the RBI guidelines.
The criterion used to classify an asset as Non-Performing Asset (NPA) as per the extant Prudential Norms on Income
Recognition, Asset Classification and Provisioning (IRACP) pertaining to Advances is used to classify an investment as a
Non-Performing Investment (NPI). Similarly, an NPI shall only be upgraded to standard when it meets the criteria specified
in the IRACP norms. 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 recognised in the
Profit and Loss account until received in cash.

e) Profit/Loss on sale of Investments

Cost of investments is computed based on the First-In-First-Out (FIFO) method. Profit/Loss on sale of Investments in the
HTM category is recognised in the profit and loss account and profit thereafter is appropriated (net of applicable taxes and
statutory reserve requirements) to Capital Reserve. Profit/Loss on sale of investments in FVTPL and non-equity investment
under AFS categories is recognised in the Profit and Loss account. Profit/Loss on sale of investments in equity investment
under AFS category is transferred from AFS-reserve to the Capital Reserve.

f) Accounting for repos / reverse repos/Targeted Long-Term Repo Operations (TLTRO)

Securities sold under agreements to repurchase (Repos) and securities purchased under agreements to resell (Reverse
Repos) including liquidity adjustment facility (LAF) with RBI are treated as collateralized borrowing and lending transactions
respectively in accordance with Reserve Bank of India (Commercial Banks - Classification, Valuation, and Operation of

Investment Portfolio) Directions, 2025 as updated from time to time. The first leg of the repo transaction is contracted at
the prevailing market rates. The difference between consideration amounts of first and second (reversal of first) leg reflects
interest and is recognised as interest income/expense over the period of transaction.

In compliance with Reserve Bank of India (Commercial Banks - Classification, Valuation and Operation of Investment
Portfolio) Directions, 2025, reverse repos with banks and other institutions having original tenors more than 14 days
classified under Schedule 9 - Advances

g) Investment fluctuation reserve (IFR)

Transfer to IFR will be lower of the following (i) net profit on sale of investments during the year or (ii) net profit for the year
less mandatory appropriations; until the amount of IFR is at least 2 percent of the AFS and FVTPL (including HFT) portfolio,,
on a continuing basis.

17.4.3 Advances
Accounting and classification

Advances are classified as performing and non-performing based on the relevant RBI guidelines. Advances are stated net of
specific provisions, interest in suspense, inter-bank participation certificates issued, direct assignment and bills rediscounted.

Assets transferred through direct assignment of cash flows are de-recognised in the Balance Sheet when they are sold (true sale
criteria being fully met with) and consideration is received by the Bank. For assets acquired under direct assignment / co-lending
arrangements, the appropriation of recoveries and levy of penal interest / charges is in accordance with the contractual terms
that have been agreed with the borrower.

Provisioning

Provisions in respect of non-performing advances are made based on management's assessment of the degree of impairment
of the advances, subject to the minimum provisioning level prescribed in relevant RBI guidelines. The specific provision levels for
retail non-performing advances are also based on the nature of product and delinquency levels. Specific provisions in respect
of non-performing advances are charged to the Profit and Loss account and included under Provisions and Contingencies.
In relation to non-performing derivative contracts, as per the extant RBI guidelines, the Bank makes provision for the entire
amount of overdue and future receivables relating to positive marked to market value of the said derivative contracts.

In respect of loans reported as fraud to RBI the entire amount is provided for over a period not exceeding four quarters starting
from the quarter in which fraud has been detected. In respect of loans where there has been delay in reporting the fraud to the
RBI, the entire amount is provided immediately.

The Bank considers an account as restructured, where for economic or legal reasons relating to the borrower's financial difficulty,
the Bank grants concessions to the borrower, that the Bank would not otherwise consider. The moratorium granted to the
borrowers based on RBI guidelines is not accounted as restructuring of loan. The RBI guidelines on 'Resolution Framework for
COVID-19-related Stress' provide a prudential framework for resolution plan of certain loans. The borrowers where resolution
plan was implemented under these guidelines are classified as standard restructured.

As per the RBI guidelines a general provision is made on all standard advances, including provision on credit exposures computed
as per the current marked to market value of the contract, arising on account of the interest rate & foreign exchange derivative
transactions and credit default swaps.

The general provision also includes provision for stressed sector exposures, provision for borrowers having unhedged foreign
currency exposure, provision on exposures to step-down subsidiaries of Indian companies, additional provisions as per RBI
guidelines for each quarter of deferment for accounts which have availed DCCO deferment, additional provisions as per RBI

guidelines for the cases where viable resolution plan has not been implemented within timelines prescribed by RBI, from
the date of default. and provision for incremental exposure of the banking system to a specified borrower beyond Normally
Permitted Lending Limit (NPLL). Further, provision requirement under various Restructure scheme of RBI also forms part of
general provision. Such provisions are included in Schedule 5-'Other liabilities & provisions-Others'.

In respect of restructured standard and non-performing advances/investments, provision is made for the present value of
principal and interest component sacrificed at the time of restructuring the assets, based on the RBI guidelines.

As per requirement of RBI guideline, any interest accrued and due if converted into a loan (i.e. Funded Interest Term Loan) then
such income will be reversed and will be recognised on cash basis.

Accounts are written-off in accordance with the Bank's policies. Recoveries from bad debts written-off are recognised in the
Profit and Loss account and included under Provisions and Contingencies.

The Bank has in place a Country Risk management policy as part of its Board approved Credit policy, which is based on extant
regulatory guidelines and addresses the identification, measurement, monitoring and reporting of country risk. Countries are
categorized into seven risk categories, viz. Insignificant, Low Risk, Moderately Low Risk, Moderate Risk, Moderately High Risk,
High Risk and Very High Risk. The Bank calculates direct and indirect country risk in line with the Credit policy requirements.
Indirect exposure is reckoned at 50% of the exposure in case of countries where the net funded exposure exceeds 1% of the Bank's
total assets. Further, if the net funded exposure of the Bank in respect of each country exceeds 1% of the Bank's total assets,
provisioning is required to be made on exposure to such countries. Depending on the risk category of the country, provisioning is
done on a graded scale ranging from 0.25% to 100%.

The Bank has a Board approved policy for creation, utilization and accounting of contingency provisions. The contingency
provision refers to specific provision recognized on the Bank's standard advances / investments and NFB exposures over and
above regulatory provision. The contingency provision will be utilized against creation of specific regulatory provision or provision
as per Bank's Policy. Contingency provisions shall not be reversed by credit to the profit and loss account unless the specific
exposures have been fully or partially settled/paid off / written off. Until utilization, the contingency provisions shall not be
netted from gross advances but shown separately as 'Contingent Provisions against Standard Assets' under 'Other Liabilities
and Provisions Others' in Schedule 5 of the balance sheet.

The Bank has a Board approved policy for making floating provision, which is in addition to the specific and general provisions
made by the Bank. The floating provision is utilised, with the approval of Board and RBI, in case of contingencies which do not
arise in the normal course of business and are exceptional and non-recurring in nature and for making specific provision for
impaired loans as per the requirement if extant RBI guidelines or any regulatory guidance/instructions. The floating provision
created is netted from gross NPAs to arrive at net NPAs.

17.4.4 Transactions involving foreign exchange

Foreign currency income and expenditure items of domestic operations are translated at the exchange rates prevailing on the
date of the transaction. Income and expenditure items of integral foreign operations are translated at the daily average closing
rates and of non-integral foreign operations (foreign branches) at the monthly average closing rates.

Premia/discounts on foreign exchange swaps that are used to hedge risks arising from foreign currency assets and liabilities are
amortized over the life of the swap.

Monetary foreign currency assets and liabilities are translated at the balance sheet date at rates notified by the Foreign
Exchange Dealers' Association of India ('FEDAI'). Foreign exchange contracts are stated at net present value using risk-free rates
('RFRs')/SWAP curves of the respective currencies with the resulting unrealised gain or loss being recognised in the Profit and

Loss Account and correspondingly in other assets (representing positive Mark-to-Market) and in other liabilities (representing
negative Mark-to-Market ('MTM')) on a gross basis.

In accordance with Accounting Standard ("AS")-11 'The Effects of changes in Foreign Exchange Rates, contingent liabilities in
respect of outstanding foreign exchange forward contracts, derivatives, guarantees, endorsements and other obligations are
stated at the exchange rates notified by FEDAI corresponding to the balance sheet date.

Both monetary and non-monetary foreign currency assets and liabilities of non-integral foreign operations are translated
at closing exchange rates notified by FEDAI at the Balance Sheet date and the resulting profit / loss arising from exchange
differences are accumulated in the Foreign Currency Translation Reserve until the disposal of the net investment in the
non-integral foreign operations.

In accordance with the RBI clarification, the Bank does not recognise in the profit and loss account the proportionate exchange
gains or losses held in the foreign currency translation reserve on repatriation of profits from overseas operations.

Currency future contracts are marked to market daily using settlement price on a trading day, which is the closing price of the
respective future contracts on that day. While the daily settlement prices is computed on the basis of weighted average price of
such contract, the final settlement price is taken as the RBI reference rate on the last trading day of the future contract or as may
be specified by the relevant authority from time to time. All open positions are marked to market based on the settlement price
and the resultant marked to market profit / loss is daily settled.

17.4.5 Earnings per share

The Bank reports basic and diluted earnings per equity share in accordance with AS-20, "Earnings per Share". Basic earnings per
equity share have been computed by dividing net profit after tax for the year by the weighted average number of equity shares
outstanding for the period.

Diluted earnings per equity share have been computed using the weighted average number of equity shares and dilutive potential
equity shares outstanding during the period except where the results are anti-dilutive.

17.4.6 Accounting for derivative transactions

Derivative transactions comprises foreign exchange contracts, forward rate agreements, swaps and option contracts (Including
Exchange Traded Currency Option (ETCO)). The Bank undertakes derivative transactions for market making/trading and hedging
on-balance sheet assets and liabilities. All market making/trading transactions are marked to market on a regular basis and the
resultant unrealised gains/losses are recognised in the profit and loss account.

Derivative transactions that are undertaken for hedging are accounted for on accrual basis except for the transaction designated
with an asset or liability that is carried at market value or lower of cost or market value in the financial statements, which are
accounted similar to the underlying asset or liability.

The Bank follows the option premium accounting framework prescribed by FEDAI SPL- circular dated December 14, 2007.
Premium on option transaction is recognised as income/expense on expiry or early termination of the transaction. Mark to
market (MTM) gain/loss (adjusted for premium received/paid on option contracts) is recorded under 'Other Income'.

The amounts received/paid on cancellation of option contracts are recognised as realised gains/losses on options.
Charges receivable/payable on cancellation/ termination of foreign exchange forward contracts and swaps are recognised as
income/ expense on the date of cancellation/ termination under 'Other Income'.

Valuation of Interest Rate Futures (IRF) is carried out on the basis of the daily settlement price of each contract provided
by the exchange.

The requirement for collateral and credit risk mitigation on derivative contracts is assessed based on internal credit policy.
Overdue if any, on account of derivative transactions are accounted in accordance with extant RBI guidelines.

As per the RBI guidelines on 'Prudential Norms for Off-balance Sheet Exposures of Banks' a general provision is made on the
current gross MTM gain of the contract for all outstanding interest rate and foreign exchange derivative transactions.

The Bilateral Netting of Qualified Financial Contracts Act, 2020 (the Act), has been notified by the Government of India and
subsequent to this the Reserve Bank of India (Commercial Banks-Prudential Norms on Capital Adequacy) Directions, 2025
(Updated as on March 10, 2026). In respect of derivative contracts, the Bank has computed the exposure under the Current
Exposure Method for counterparty credit risk capital computation based on the guidelines issued by Reserve Bank of India
(Commercial Banks-Prudential Norms on Capital Adequacy) Directions, 2025 (Updated as on March 10, 2026).

17.4.7 Fixed assets

Fixed assets are stated at cost less accumulated depreciation, amortization and accumulated impairment losses. Cost comprises
the purchase price including import duties and non -refundable purchase taxes, after deducting trade discounts and rebates and
any cost attributable for bringing the asset to its working condition for its intended use. Subsequent expenditure incurred on
assets put to use is capitalised only when it increases the future benefit /functioning capability from / of such assets.

Capital work-in-progress includes cost of fixed assets that are not ready for their intended use and also includes advances paid
to acquire fixed assets.

17.4.8 Non-banking assets

Non-banking assets (NBAs) acquired in satisfaction of claims are carried at lower of net book value and net realisable value,
whichever is lower. Further, the Bank creates provision on these assets as per the extant RBI guidelines or specific RBI directions.

17.4.9 Depreciation

Depreciation on fixed assets is provided on straight-line method for the complete month of the purchase, over estimated useful
lives, as determined by the management, as mentioned below:
¹ Based on technical evaluation, the management believes that the useful lives as given above best represent the period over which management
expects to use these assets. Hence, the useful lives for these assets are different from the useful lives as prescribed under Part C of Schedule II
of the Companies Act 2013.

²Based on technical evaluation, management has decided to change in useful lives of Computer Hardware which primarily includes servers/
networks/ data center assets to 6 years (excluding end user technology assets like laptops and desktops) and Computer software to 5 years
w.e.f. April 01, 2024 as against 3 years and 4 years respectively.

• Asset costing up to ' 5,000 are fully depreciated in the year of purchase.

• For assets purchased/ sold during the year, depreciation is being provided on pro rata basis by the Bank.

• Profit on sale of premises by the Bank is appropriated to capital reserve, net of transfer to Statutory Reserve taxes, in
accordance with RBI guidelines.

• Subsequent improvements to leasehold assets are depreciated over the remaining period of lease.

• Reimbursement, if any, is recognised on receipt and is adjusted to the book value of asset and depreciated over the
balance life of the asset.

• Whenever there is a revision in the estimated useful life of the asset, the unamortised depreciable amount is charged
over the revised remaining useful life of the said asset.

• The useful life of assets is based on historical experience of the Bank, which is different from the useful life as prescribed
in Schedule II to the Companies Act, 2013.

17.4.10 Impairment of assets

The Bank assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. Impairment loss, if any,
is provided in the Profit and Loss Account to the extent the carrying amount of assets exceeds their estimated recoverable amount.

17.4.11 Employee benefits¹

Employee Stock Option Scheme ('ESOS')

The Employee Stock Option Scheme ('the Scheme') provides for the grant of options to acquire equity shares of the Bank to its
employees. The options granted to employees vest in a graded manner and these may be exercised by the employees within
specified periods.

Measurement of the employee share-based payment plans is done in accordance with the Guidance Note on Accounting for
Employee Share-based Payments issued by Institute of Chartered Accountants of India (ICAI) and Securities and Exchange Board
of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021. Reserve bank of India (Commercial Banks -
Financial Statements: Presentation & Disclosures) Directions 2025 on Guidelines on Compensation of Whole Time Directors
/ Chief Executive Officers / Material Risk Takers and Control Function Staff, advised banks that the fair value of share-linked
instruments on the date of grant should be recognized as an expense for all instruments granted after the accounting period
ending March 31, 2021. Accordingly, the Bank changed its accounting policy from the intrinsic value method to the fair value
method for all share-linked instruments granted after March 31, 2021. The fair value of the stock-based compensation is
estimated on the date of grant using Black-Scholes model is recognized as compensation expense over the vesting period.

Options granted till March 31, 2021, the Bank measures compensation cost relating to employee stock options using the
intrinsic value method. Compensation cost is measured by the excess, if any, of the fair market price of the underlying stock
(i.e. the last closing price on the stock exchange on the day preceding the date of grant of stock options) over the exercise price.
The exercise price of the Bank's stock option is the last closing price on the stock exchange on the day preceding the date of grant
of stock options.

Compensated absences

The employees of the Bank are entitled to carry forward a part of their unavailed/unutilised privilege leave subject to a maximum
limit. The employees cannot encash unavailed/unutilised leave except employees based out of Abu Dhabi Representative
Office ("ADRO") and employees superannuating from the Bank. Employees based at ADRO are allowed to encash remaining
annual leave only at the time resignation/termination/transfer to another country. Employees superannuating are allowed to
encash a maximum of 30 days privilege leave balance at time of superannuation. The Bank provides for leave encashment /

compensated absences based on an independent actuarial valuation at the Balance Sheet date, which includes assumptions
about demographics, early retirement, salary increases, interest rates and leave utilisation.

Gratuity

The Bank provides for gratuity, for all employees. Gratuity is payable to an employee as per Payment of Gratuity Act.
The Bank accounts for the liability for future gratuity benefits using the projected unit credit method based on independent
actuarial valuation.

The defined gratuity benefit plans are valued by an independent actuary as at the Balance Sheet date using the projected unit
credit method as per the requirement of AS-15, Employee Benefits, to determine the present value of the defined benefit
obligation and the related service costs. Under this method, determination is based on actuarial calculations, which include
assumptions about demographics, early retirement, salary increases and interest rates. Actuarial gain or loss is recognized in
the Profit and Loss account.

Provident fund

All employees of the Bank are covered under the Employees Provident Fund, a defined contribution plan in which both the
employee and the Bank contribute monthly. Contribution to provident fund are recognized as expense as and when the services
are rendered. The Bank has no liability for future provident fund benefits other than its monthly contribution.

National Pension System (NPS)

The NPS is a defined contribution retirement plan. The primary objective is enabling systematic savings and to provide
retirees with an option to achieve financial stability. Pension contributions are invested in the pension fund schemes.
The Bank has no liability for future fund benefits other than the voluntary contribution made by employees who agree to
contribute to the scheme.

17.4.12 Leases

Leases where the lessor effectively retains substantially all risks and benefits of ownership are classified as operating leases.
Operating lease payments are recognized as an expense in the profit and loss account on a straight line basis over the lease term
in accordance with AS-19, Leases.

17.4.13 Income taxes

Tax expense comprises of current and deferred tax. Current tax comprises of the amount of tax for the period determined
in accordance with the Income-tax Act, 1961 and the rules framed there under. Deferred taxes reflect the impact of timing
differences between taxable income and accounting income for the current year and reversal of timing differences of earlier
years and carry forward losses. Deferred tax assets and liabilities are recognised for the future tax consequences of timing
differences between the carrying values of assets and liabilities and their respective tax bases, and operating loss carry forwards.
Deferred tax assets and liabilities are measured using the enacted or substantively enacted tax rates at the balance sheet date.
The impact of changes in deferred tax assets and liabilities is recognised in the profit and loss account.

Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realised in future.
Deferred tax assets in case of unabsorbed depreciation/ losses are recognized only if there is virtual certainty that such deferred
tax asset can be realised against future taxable profits. Deferred tax assets are recognized and reassessed at each balance
sheet date based upon management's judgement and appropriately adjusted to reflect the amount that is reasonably certain
to be realised.