1. The financial statements have been prepared under historical cost basis and in confirmation to the statutory provisions and Practice prevailing in India.

2. ADVANCES

i)   All advances have been classified asper RBI guidelines into four categories i.e.
A) Standard Assets,
B) Sub-StandardAssets,
C) Doubtful Assets, and
D) Loss Assets

ii) Provisions on loan accounts are made on both non-performing as well as performing assets as per IRAC guideline issued by Reserve Bank oflndia, which are as follows: Provisions are made on all NPA Accounts on outstanding, net of interest, not realized and also on Standard Assets, atthe following rates:-
A) Standard Assets at 0.40% provision are made.
B) Sub-Standard Assets at l0% of the outstanding.
C) Doubtfu l Assets at 20%, 30% and l00% of the secured portion based on the number of years the account remained as 'Doubtful' and at the rate of 100% of the outstanding for unsecured portion .
D) Loss Assets at l 00% of the out standard portion.

3 INVESTMENTS

The Bank classifies and values its investments, as per RBI guidelines, which are as follows:
i)  The  Investment  Portfolio  is  classified  into  three  categories  i.e.  (i)  Held  to Maturity(HTM) , (ii) Held for trading(HFT) and (iii) Available for sale(AFS).
ii) Basis of Classification
A) Held to Maturity (HTM)
Investment intended to be held till maturity.
B) Held for Trading (HFT) :
Investment principally held for resale within 90 days from the date of purchase.
C) Available for Sale (AFS)
Investment not classified in i) & ii) above.
iii) Valuation
A) Held tomaturity (HTM) :-
At costsubject to amortization of premium overresidual maturity.
B) Held for Trading (HFT) and Available for Sale(AFS) :-
Individual scrip are marked to market and depreciation/appreciation is aggregated for each classification indicated under b) below, separately for AFS and HFT. Net depreciation, ifany, isprovided for.Net appreciation, if any, is ignored.

The Market Value for the purpose of valuation in HFT/AFS,isarrived at as follows:
a) Quoted : At market price as available from trades/quotes on Stock Exchange,SGLa/c transactions, price list of RBI, price put out by FBIL/PDAI
b) Unquoted :
• Government Securities :
-- Central Govt. securities at price/YTM rates put out by FBIL/PDAI.
-- State Gov. Securities applying appropriate mark-up over the YTM rates of Central Govt. securities of equivalent maturity put out by FBIL/PDAI.
• Other Approved Securities :
- Applyi ng appropriate mark-up over the YTM rates of Central  Govt. Securities of equivalent maturity put outby FBIL/PDAI.
• PSU Bonds :Applying appropriate mark-up, graded according to the rating assigned, over the YTM rates of approved Securities of Central Govt. Securities of equivalent maturity put out by FBIL/PDA I."
• Other :Investment in debt/money market Mutual Fund units and fixed maturity plans (Mutual Fund units) on the basis oflatest repurchase price if available or declared by the Fund Otherwise at NAV/cost.
As the Bank did not, enter into transactions of sale of its Investments, none of its purchase were placed in the Held for Trading category, during the year.
 

4 FIXED ASSETS
i) Fixed Assets are stated at cost less depreciation. @l0% & 15%
ii) Depreciation is provided for on written down value method as prescribed in Income­ taxAct  1961.

However, in case of Computers and related hardware purchased after 31.03.2003, the depreciation isprovided on straight-line method,@33.33% p.s., as per RBI guidelines.

5 RECOGNITION OFINCOME
Income is accounted for on accrual basis except In the following cases :
i) Interest  on Non-Performing  Assets  is recognized  on realization  basis  as per RBI guidelines.
ii) Rent  on  Safe  Deposit   lockers,  income  receivable  on  outstanding  Govt. Security/Mutual Fund unit and dividends are accounted for, on realization.
 

6 RECOGNITION OFEXPENDITURE
Expenses are accounted for on accrual basis except in the following cases :
i) Employee Superannuation benefit expenses and Group Insurance paid to LIC oflndia are accounted on the basis of the actualpayment made.