book”) categories (hereinafter called “categories”). Subsequent shifting amongst the categories is done in accordance with the
RBI guidelines.

Under each of these categories, investments are further classified under six groups (hereinafter called “groups”) —- Government
Securities, Other Approved Securities, Shares, Debentures and Bonds, Investments in Subsidiaries / Joint Ventures and Other
Investments. We follow trade date accounting for purchase and sale of investments except for central and state government
securities where settlement date method of accounting is followed in accordance with RBI Guidelines.

Basis of classification: Investments that are held principally for resale within 90 days from the date of purchase are classified
under HFT category. Investments which we intend to hold till maturity are classified as HTM securities. Investments which are
not classified in either of the above categories are classified under AFS category.

Acquisition Cost and Broken Period Interest: Brokerage, commission and broken period interest on debts instruments are
recognised in Profit and Loss Account and are not included in the cost of acquisition.

Disposal of Investments: Profit/ loss on sale of investments under the aforesaid three categories is recognised in the Profit and
Loss Account. Cost of investments is based on the weighted average cost method. The profit from sale of investment under
HTM category, net of taxes and transfer to statutory reserve is appropriated from Profit and Loss Account to “Capital Reserve”
in accordance with the RBI Guidelines.

Short Sale: We undertake short sale transactions in dated central government securities in accordance with the RBI guidelines.
The short positions are categorised under HFT category and netted off from investments in the Balance Sheet. These positions
are marked-to-market along with the other securities under HFT portfolio. The mark-to-market loss is charged to profit and loss
account and gain, if any, is ignored as per RBI guidelines.

Valuation: Investments classified under AFS and HFT categories are marked to market as per the RBI guidelines.

Traded investments are valued based on the trades / quotes on the recognised stock exchanges, price list of RBI or prices
declared by Primary Dealers Association of India (‘PDAI’) jointly with Fixed Income Money Market and Derivatives
Association (‘FIMMDA’)/ Financial Benchmark India Private Limited (FBIL), periodically.

The market value of unquoted government securities which qualify for determining the Statutory Liquidity Ratio (‘SLR’),
included in the AFS and HFT categories, is computed as per the Yield-to-Maturity (“YTM’) rates published by FMMDA/FBIL.

The valuation of other unquoted fixed income securities (State Government securities, other approved securities, bonds and
debentures) and preference shares, is done with a mark-up (reflecting associated credit and liquidity risk) over the YTM rates
for government securities published by FIMMDA/FBIL.

Units of mutual funds are valued at the latest repurchase price/ net asset value declared by the mutual fund. Treasury bills,
commercial papers and certificate of deposits being discounted instruments, are valued at carrying cost.

Net depreciation in the value, if any, compared to the acquisition cost, in any of the groups, is charged to the Profit and Loss
Account. The net appreciation, if any, in any of the groups is not recognised except to the extent of depreciation already
provided.

Investments classified under HTM category are carried at their acquisition cost and not marked to market. Any premium on
acquisition is amortised over the remaining maturity period of the security on a constant yield-to-maturity basis. Such
amortisation of premium is adjusted against interest income under the head “Income from investments” as per the RBI
guidelines.

Non-performing investments are identified, and depreciation/ provision are made thereon based on 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.

As per relevant RBI circulars, to build up adequate reserves to protect against increase in yields in future, we have created an
Investment Fluctuation Reserve (IFR) to the extent of the lower of following: (a) net profit on sale of investments during the
year; (b) net profit for the year less mandatory appropriations. As per the RBI circular, this reserve will be created until the
amount of IFR is at least 2 percent of the HFT and AFS portfolio, on a continuing basis and where feasible this should be
achieved within a period of three years.

Investment Reserve Account: In accordance with the RBI Master Circular on Prudential Norms for Classification, Valuation
and Operation of Investment Portfolio by Banks, in case the provision on account of depreciation in the HFT and AFS categories
is found to be in excess of the required amount, the excess is credited to the Profit and Loss Account and an equivalent amount

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