SIGNIFICANT ACCOUNTING POLICIES FOR THE YEAR ENDED MARCH 31,2024

1    BASIS OF PREPARATION

The financial statements have been prepared under the historical cost convention unless otherwise stated. They conform to Generally Accepted Accounting Principles (GAAP) in India, which comprises statutory provisions, regulatory/ Reserve Bank of India (RBI) guidelines, Accounting Standards/ guidance notes issued by the Institute of Chartered Accountants of India (ICAI) and the practices prevalent in the banking industry in India. In respect of foreign offices, statutory provisions and practices prevailing in respective foreign countries are complied with.

2    USE OF ESTIMATES

The preparation of financial statements requires the management to make estimates and assumptions considered in the reported amount of assets and liabilites (including contingent liabilites) as of 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. Actual results could differ from these estimates. Any revision to the accounting estimates is recognised prospectively from the period of change unless otherwise stated.

3    INVESTMENTS AND DERIVATIVES:

The Bank is following uniform methodology of accounting for investments on settlement date basis. Classification and valuation of the Bank's investments are carried out in accordance with RBI Master Circular RBI/DOR/2021-22/81    DOR.MRG.42/21.04.141/2021-22

dated August 25, 2021.

3.1 Classification

a) Basis of classification

In compliance with the Reserve Bank of India guidelines, the investment portfolio of the Bank is classified into

i)    “Held to Maturity” (HTM) comprising Investments acquired with the intention to hold them till maturity.

ii)    “Held for Trading” (HFT) comprising Investments acquired with the intention to trade. Securities that are held principally for resale within 90 days from the date of purchase are classified under the HFT category.

iii)    “Available for Sale” (AFS) comprising Investments

not covered by (a) and (b) above i.e. those which are acquired neither for trading purposes nor for being held till maturity.

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) bonds and debentures (e) subsidiaries and joint ventures and (f) others.

b)    Cost of acquisition

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

c)    Transfer between categories

Reclassification of investments from one category to the other, if done, is in accordance with RBI guidelines. Transfer of scrip from AFS / HFT category to HTM category is made at the lower of book value or market value. In the case of transfer of securities from HTM to AFS / HFT category, the investments held under HTM at a discount are transferred to AFS / HFT category at the acquisition price and investments placed in the HTM category at a premium are transferred to AFS / HFT at the amortized cost.

Transfer of investments from AFS to HFT or vice-a-versa is done at the book value. Depreciation carried, if any, on such investments is also transferred from one category to another.

The transfer of a security between these categories is accounted for at the acquisition cost / book value / market value on the date of transfer, whichever is the least, and the depreciation, if any, on such transfer is fully provided for.

3.2 Valuation

Investments classified as “Held to Maturity” are carried at weighted average acquisition cost unless it is more than the face value, in which case the premium is amortized over the period remaining to maturity. Amortization expense of premium on investments in the HTM category is deducted from interest income in accordance with RBI Master Circular RBI/DOR/2021-22/81 DOR. MRG.42/21.04.141/2021-22 dated August 25, 2021.

Investments classified as “Held to Maturity” includes debentures / bonds which are deemed to be in the nature of / treated as advances (for which provision is made by applying the Reserve Bank of India prudential norms of assets classification and provisioning applicable to Advances).

Investments in Regional Rural Banks, Treasury Bills, Commercial Papers and Certificates of Deposit are valued at carrying cost.

Pass through Certificates purchased for priority sector lending requirements are valued at Book Value as per RBI guidelines.

Investments in subsidiaries, joint ventures and associates (both in India and abroad) are valued at acquisition cost less diminution, other than temporary in nature.

Bank's investments in units of Venture Capital Funds (VCFs) made after August 23, 2006 are classified under HTM category for initial period of three years and are valued at cost. After period of three years from date of disbursement, it is shifted to AFS category. These are valued using Net Assets Value shown by VCF as per the financial statements or declared NAV as per Reserve Bank of India guidelines. If NAV/ audited financials are not available for more than 18 months continuously then at Re. 1/- per VCF

Investments categorized under AFS and HFT categories are Marked-to-Market (MTM) on a periodical basis as per relevant RBI guidelines. Net depreciation, if any, in the category under the classification mentioned in Schedule 8 (‘Investments') is recognized in the profit and loss account. The net appreciation, if any, in the category under each classification is ignored, except to the extent of depreciation previously provided. The book value of individual securities is not changed consequent to periodic valuation of investments.

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 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.

At the end of each reporting period, security receipts issued by the asset reconstruction company are valued in accordance with the guidelines applicable to such instruments, prescribed by RBI from time to time. Accordingly, in cases where the cash flows from security receipts issued by the asset reconstruction company are limited to the actual realization of the financial assets assigned to the instruments in the concerned scheme, the Bank reckons the net asset value obtained from the asset reconstruction company from time to time, for valuation of such investments at each reporting date. In case of investment in Security Receipts on or after April 1, 2017 which are backed by more than 50% of the stressed assets sold by the bank, provision for depreciation in value is made at higher of - provisioning rate required in terms of net assets value declared by Reconstruction Company (RC)/ Securitization Company (SC) or the provisioning rate as per the extant asset classification and provisioning norms as applicable to the underlying loans, assuming that the loan notionally continue in the books of the Bank. All other investments in the Security Receipts are valued as per the NAV obtained from issuing RC / SC.

The quoted equity shares / bonds/ units of Category I and II AIFs in the bank's portfolio are marked to market preferably on a daily basis, but at least on a weekly basis.

The units are valued based on the audited results once in a year. However, if the audited balance sheet/ financial statements showing NAV figures are not available continuously for more than 18 months as on the date of valuation, the investments are valued at Rupee 1 per Category I and II AIF.

Investments made by the Bank as Primary Dealer in Treasury Bills under HFT category is valued at carrying cost.

The Bank undertakes short sale transactions in Central Government dated securities in accordance with RBI guidelines. The short sale position is reflected in Securities Short sold (SSS) account, specifically created for this purpose. The short position is marked to market and loss, if any, is charged to the Profit and Loss account while gain, if any, is ignored. Profit /Loss on settlement of the short position is recognized in the Profit and Loss account.

Special bonds such as Oil bonds, fertilizer bonds, UDAY bonds etc which are directly issued by Government of India, are valued based on FBIL valuation.

For the purpose of valuation of quoted investments in "Held for Trading” and “Available for Sale” categories, the market rates / quotes on the Stock Exchanges, the rates declared by Financial Benchmarks India Pvt. Ltd (FBIL) are used.

Investments for which such rates / quotes are not available are valued as per norms laid down by Reserve Bank of India, which are as under:

Non-performing investments are identified and depreciation/provision are made thereon based on the RBI guidelines. 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 recognized in the Profit and Loss account until received.

In respect of Investments at Overseas Branches, Reserve Bank of India guidelines or those of the host

countries, whichever are more stringent are followed. In case of those branches situated in countries where no guidelines are specified, the guidelines of the Reserve Bank of India are followed.

3.3    Disposal of Investments

Profit / Loss on sale of Investments classified as HTM category is recognized in the Profit & Loss Account based on the weighted average cost / book value of the related Investments and an amount equivalent of profit on sale of Investments in “Held to Maturity” classification is appropriated to Capital Reserve Account.

Profit/loss on sale of Investment in AFS/HFT category is recognized in profit and loss account.

3.4    Accounting for repo/reverse repo

The Bank has adopted the Uniform Accounting Procedure prescribed by the RBI for accounting of Market Repo and Reverse Repo transactions [Including the Liquidity Adjustment Facility (LAF) with the RBI vide circular no. RBI/2016-17/FMOD.MAOG. No. /01.01.001/2016-17 Dated September 15, 2016 and circular no. RBI/2019-20/107 FMRD.DIRD.21/14.03.038/2019-20 Repurchase Transactions (Repo) (Reserve Bank) Directions, 2018 Dated November 28, 2019. Repo and Reverse Repo Transactions are treated as Collaterised Borrowing / Lending Operations with an agreement to repurchase on the agreed terms. Securities sold under Repo are continued to be shown under investments and Securities purchased under Reverse Repo are not included in investments. Costs and Revenues are accounted for as interest expenditure / income, as the case may be.

3.5    Investment fluctuation reserve

With a view to building up of adequate reserves to protect against increase in yields, RBI through circular number RBI/2017-18/147 DBR.No.BP BC.102/21.04.048/2017-18 dated April 2, 2018, advised all banks to create an IFR with effect from the FY 2018-19.

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 HFT and AFS portfolio, on a continuing basis.

3.6    Derivatives

The Bank presently deals in interest rate and currency derivatives. The interest rate derivatives dealt with by the Bank are Rupee Interest Rate Swaps, Foreign Currency Interest Rate Swaps, Exchange traded Rupee Interest Rate Future and Forward Rate Agreements. Currency Derivatives dealt with by the Bank are Options, Currency swaps and Exchange traded Currency Future. The Bank undertakes derivative transactions for market making/ trading and hedging on-balance sheet assets and liabilities. The Bank identifies the hedged item (asset or liability) at the inception of the hedging transaction itself. Hedge effectiveness is ascertained at the time of

the inception of the hedge and at each reporting date thereafter.

3.7 Valuation of Derivatives

The Bank values derivatives as under:

The hedge/ non-hedge transactions are recorded separately. For transactions designated as hedges, following treatment is followed -

•    in case of a fair value hedge, the changes in the fair value of the hedging instruments and hedged items are recognised in the Profit and Loss Account,

•    in case of cash flow hedges, the changes in fair value of effective portion are recognised in Reserves and Surplus under ‘Cash flow hedge reserve' and ineffective portion of an effective hedging relationship, if any, is recognised in the Profit and Loss Account. The accumulated balance in the cash flow hedge reserve, in an effective hedging relationship, is recycled in the Profit and Loss Account at the same time that the impact from the hedged item is recognised in the Profit and Loss Account.

Derivative positions, unless designated as hedges, are marked to market and the resulting losses, if any, are recognized in the Profit and Loss Account and Profit, if any, is ignored. Income and expenditure relating to interest rate swaps are accrued on daily basis. Gains/ Losses on termination of the trading swaps are recorded on the termination date as immediate income/ expenditure.

For the purpose of valuation, the fair value of the total swap is computed on the basis of the amount that would be receivable or payable on termination of the swap agreements as on the Balance sheet date. Losses arising there from, if any, are fully provided for, while the profits, if any, are ignored.

The Bank follows the option premium accounting principle prescribed by FEDAI. Premium on option transaction is recognized as income/expense on expiry or early termination of the transaction.

The amounts received/paid on cancellation of option contracts are recognized as realized gains/losses on options. Charges receivable/payable on cancellation/ termination of foreign exchange forward contracts and swaps are recognized as income/expense on the date of cancellation/ termination.

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

Contingent Liabilities on account of derivative contracts denominated in foreign currencies are reported at closing rates of exchange notified by FEDAI at the Balance Sheet date.

4 ADVANCES

4.1    Advances in India are classified as Standard, Substandard, Doubtful or Loss assets and provision for advances are made as per the Prudential Norms of the RBI except as stated in para 4.3. In respect of Advances made in overseas branches, Advances are classified in accordance with Prudential Norms prescribed by the RBI or local laws of the host country in which advances are made, whichever is more stringent.

4.2    Advances are net of specific loan loss provisions, interest suspense, amount received and held in suit-filed Sundry Deposits and Claims Received.

4.3    As a consistent practice, the Bank has made the additional provision on the following:

•    Provision @ 20% on the Secured Sub-standard Advances as against the Regulatory requirement of 15%.

•    Provision is made on Non-fund based facilities of NPA Borrowers by applying 50% Credit conversion factor (CCF). The provision is based on the Asset class of fund based facility of the Borrower

•    Bank has also made 100% provision in respect of existing NPA accounts which are more than 6 months old and collateral free viz Auto Loan, Education Loan and Personal Loan .

•    With respect to Loan against mortgage of properties which are secured (collateral) and are NPA for more than 2 years, Bank has made 100% provision

•    Bank has also made 100% provision in respect of existing NPA accounts viz Loan for Tractors/ tiller/ Power tillers which are 6 month old.

4.4    I n respect of Restructured accounts, 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 bank are Rupees One crore 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.

4.5    In case of sale of financial assets to Asset Reconstruction Company (ARC) / Securitization Company (SC), the bank is following the guidelines issued by Reserve Bank of India. At present, the guideline followed by the Bank is that 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 profit and loss account in the same year. If the sale value is higher than the NBV, excess provision is reversed to profit & loss account in the year the amounts are received.

In case of sale of financial assets to banks, and 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 profit and loss account in the same year. If the sale value is higher than the NBV, excess provision shall be not

reversed but will be utilised to meet the shortfall / loss on account of sale of other non-performing financial assets.

5    FLOATING PROVISIONS:

The Bank has a policy for creation and utilisation of floating provisions separately for advances, investments and general purposes. The quantum of floating provisions to be created is assessed every year. The floating provisions are utilised only for contingencies under extraordinary circumstances specified in the policy with prior permission of Reserve Bank of India.

6    FIXED ASSETS

6.1    Premises and other fixed assets are stated at historical cost (or revalued amounts, as the case may be), less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price and any attributable cost of 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. Profit on sale of immovable properties are being formed part of profit and loss account of the Bank.

6.2    Revaluation of Fixed Assets

Portfolio of immovable properties is revalued periodically by an independent valuer to reflect current market valuation. All land and building owned by the Bank and used as branches, administrative offices, staff quarters etc. are grouped under Bank's own premises in fixed assets category. Appreciation as per latest valuation report, if any, on revaluation is credited to Revaluation Reserve under Capital Reserves. Additional Depreciation on the revalued asset is charged to the Profit and Loss Account and appropriated from the Revaluation Reserves to Other Revenue Reserve.

6.3    Premises include land and building under construction.

7    RESERVES AND SURPLUS

Revenue and other Reserves include Statutory Reserves created by foreign branches/ subsidiaries as per applicable local laws of the respective countries.

8    REVENUE RECOGNITION

8.1    Income (other than item referred in Paragraph 8.2)/ expenditure is generally recognised on accrual basis. Interest on income tax refund is booked on receiving the refund order/s/initmation from Income Tax Department. In case of foreign offices, income/ expenditure is recognised as per the local laws of the country in which the respective foreign office is located

8.2    Income by way of Fees, all Commissions (other than on Government business and commission from sale of third party products), Commission on Guarantees, Letter of Credits, Exchange and Brokerage and Interest on Advance Bills are accounted for on realisation basis. Dividend on shares in Subsidiaries, joint ventures and associates is accounted on realisation basis.

8.3    In view of uncertainty of collection of income in cases of Non-performing Assets/Investments, such income is accounted for only on realisation in terms of the RBI guidelines.

8.4    Lease where risks & rewards of ownership are retained by lessor are classified as Operating Lease as per AS 19 (Leases). Lease payments on such lease are recognised in Profit & Loss Account on a straight line basis over the lease tern in accordance with AS 19.

8.5    Appropriation of recoveries in NPA accounts :

Recoveries effected in the account (including recovery under Public Money Recovery Act) from time to time is appropriated in the following order:

•    towards all costs, commission, charges and expenses paid or incurred by the Bank

•    towards interest, additional interest, further interest, penal interest due to the Bank

•    towards repayment of the principal money Recovery in suit filed/ decreed accounts is appropriated:

•    As per the directives of the concerned Court.

•    In the absence of specific directives from the Court, as applicable to non-suit filed accounts.

Recovery by settlement through compromise/NCLT Resolution:

In case of Resolution/Settlement through NCLT or compromise sanctioned account, recovery is appropriated as per the terms of compromise sanction/ resolution settlement.

8.6    Appropriation of recoveries in Standard accounts :

The appropriation of recovery in Standard Accounts is effected as per the date of demands raised and the earliest demand is being satisfied in the following order:

•    towards all costs, commission, charges and expenses paid or incurred by the Bank

•    towards interest, additional interest, further interest, penal interest due to the Bank

•    towards payment of the principal money 9 EMPLOYEE BENEFITS

9.1    PROVIDENT FUND

Provident fund is a statutory obligation as per Bank of Baroda PF Rules as the Bank pays fixed contribution at pre-determined rates.The obligation of the Bank is limited to such fixed contribution. The contributions are charged to Profit and Loss Account. The fund is managed by Bank of Baroda Provident Fund Trust.

9.2    GRATUITY

Gratuity liability is a statutory obligation being higher of gratuity payment as per Bank of Baroda Gratuity Fund Rules and Regulations and Payment of Gratuity Act

1972. This is provided for on the basis of an actuarial valuation made at the end of the financial year. The gratuity liability is funded by the bank and is managed by Bank of Baroda Gratuity Fund Trust.

9.3    PENSION

Pension liability is a defined benefit obligation under Bank of Baroda Employees Pension Regulations 1995 and is provided for on the basis of actuarial valuation made at the end of the financial year, for the employees who have joined Bank up to March 31, 2010 and opted for pension. The pension liability is funded by Bank of Baroda (Employees) Pension Fund Trust.

New Pension Scheme which is applicable to employees who joined bank on or after April 1, 2010 is a defined contribution scheme, Bank pays fixed contribution at pre determined rate and the obligation of the Bank is limited to such fixed contribution. The contribution is charged to Profit and Loss Account.

9.4    COMPENSATED ABSENCES

Accumulating compensated absences such as Privilege Leave and unavailed sick leave are provided for based on actuarial valuation.

9.5    OTHER EMPLOYEE BENEFITS

Other Employee benefits such as Leave Encashment, Leave Fare Concession and Additional Retirement Benefit on Retirement 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 valued and accounted for as per laws prevailing in the respective territories.

10 DEPRECIATION

10.1 Depreciation on Fixed Assets in India [other than those referred in Paragraph 10.3 and 10.4] is provided in accordance with Schedule II to the Companies Act, 2013, as per following table, except in case of revalued assets, in respect of which depreciation is provided on the basis of estimated useful life of these revalued assets

10.2    Depreciation on Fixed Assets outside India [other than those referred to in Para 10.3 below] is provided as per local laws or prevailing practices of the respective territories.

10.3    Depreciation on Computers and Software forming an integral part of Computer Hardware, in and outside India is provided on Straight Line Method at the rate of 33.33% p.a., as per the guidelines of RBI.

Computer software not forming part of an integral part of hardware having estimated life of more than 2 years and in excess of original cost in of Rs 50,000/- is classified as Intangible asset and amortised over a period of 3 years. Other items of computer software not forming integral part of hardware is charged directly to Profit and Loss Account.

10.4    Depreciation on ATMs is provided on Straight Line Method at the rate of 20% p.a.

10.5    Depreciation on additions is provided proportionately from the date of purchase/put to use.

10.6    Cost of leasehold land and leasehold improvements are amortised over the period of lease

10.7    The increase in Net Book Value of the asset due to latest available revaluation is credited to the Revaluation Reserve Account without routing through the Profit and Loss Account. Additional Depreciation on the revalued asset is charged to the Profit and Loss Account and appropriated from the Revaluation Reserves to Other Revenue Reserve.

10.8    The Revalued Asset is depreciated over the balance useful life of the asset as assessed at the time of revaluation.

11    IMPAIRMENT OF ASSETS

Impairment losses (if any) on Fixed Assets (including revalued assets) are recognised in accordance with AS 28 (Impairment of Assets) issued by the ICAI and charged off to Profit and Loss Account.

The carrying amount of assets is reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount 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, depreciation is provided on the revised carrying amount of the asset over remaining useful life.

12    FOREIGN CURRENCY TRANSACTIONS:

12.1    Accounting for transactions involving foreign exchange is done in accordance with Accounting Standard (AS) 11, ”The Effects of Changes in Foreign Exchange Rates”, issued by The Institute of Chartered Accountants

of India.

12.2    As stipulated in AS-11, the foreign currency operations of the Bank are classified as a) Integral Operations and b) Non Integral Operations. Foreign exchange operations of domestic business and Representative Offices are treated as Integral Operations and all Overseas Branches, Offshore Banking Units, Overseas Subsidiaries are treated as Non Integral Operations.

12.3    The Bank hedges its investments in overseas branches and offshore banking units through use of forward exchange contracts. The forward exchange contracts used to hedge its investments in overseas branches and offshore banking units are accounted for in accordance with Guidance Note on Accounting for Derivative Contracts issued by ICAI wherein gains and losses on foreign currency derivatives used as hedging instruments are recognised directly in equity to the extent that the hedge is considered to be effective and the ineffective portion of the gains and losses on the hedging instruments (and any proportion not designated in the hedging relationship) is recognised in the Profit and Loss Account immediately. Any net deferred foreign currency gains and losses, i.e., arising from both the net investment and the hedging instruments are recognised in the Profit and Loss Account at the time of disposal of the foreign operation.

12.4    Translation in respect of Integral Operations:

a)    The transactions are initially recorded at rate as per FEDAI guidelines.

b)    Foreign Currency Assets and Liabilities (including

contingent liabilities) are translated at the closing spot rates notified by FEDAI at the end of each quarter.

c)    The resulting exchange differences are recognized as income or expenses and are accounted through Profit & Loss Account. Any reversal / payment of foreign currency assets & liabilities is done at rate as per FEDAI guidelines and the difference between the outstanding figure and the amount for which reversal / payment is made, is reflected in profit and loss account.

d)    Foreign exchange spot and forward contracts outstanding as at the balance sheet date and held for trading, are marked to market at the closing spot and forward rates respectively notified by FEDAI and at interpolated rates for contracts of interim maturities. The MTM values thus obtained are discounted to arrive at present value of MTM. This MTM is used to revalue the spot and forward transactions on PV basis. The resulting Forward Valuation profit or loss is included in the Profit & Loss Account.

12.5 Translation in respect of Non Integral Operations:

a)    Assets and liabilities are translated at the closing spot rates notified by FEDAI at the end of each quarter.

b)    Foreign exchange Spot and Forwards contingent liabilities outstanding as at the balance sheet date are translated at the closing spot and forward rates respectively notified by FEDAI and interpolated rates for contracts of interim maturities.

c)    Income and expense are translated at quarterly average rate notified by FEDAI at the end of each quarter.

d)    The resulting exchange differences are not recognized as income or expense for the period but accumulated in a separate account “Foreign Currency Translation Reserve” till the disposal of the net Investment.

13 TAXES ON INCOME

This comprise of provision for Income tax and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the period) as determined in accordance with AS 22 (Accounting for taxes on Income) issued by ICAI. Deferred tax is recognised subject to consideration of prudence in respect of items of income and expenses those arise at one point of time and are capable of reversal in one or more subsequent periods. Deferred

tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the timing differences are expected to be reversed. The effect on deferred tax assets and liabilities of a change in tax rates is recognised in the income statement in the period of enactment of the change.

14    EARNINGS PER SHARE

The bank reports basic and diluted earnings per equity share in accordance with the AS 20 (Earnings Per Share) issued by the ICAI. Basic earnings per equity share has been computed by dividing net profit for the period by the weighted average number of equity shares outstanding for the period. Diluted earnings per equity share has been computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the period.

15    PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

As per AS 29 (Provisions, Contingent Liabilities and Contingent Assets) issued by the ICAI, the Bank recognises provisions only when it 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 benefit is remote.

Contingent Assets are not recognised in the financial statements since this may result in the recognition of income that may never be realised.

16    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.

17    CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash in hand and ATMs, balances with the Reserve Bank of India, balances with other banks and money at call and short notice (including effect of changes in exchange rates on cash and cash equivalents in foreign currency).