net of taxes, if any, and adjusted for transfer to Statutory Reserve as applicable to such excess provision is appropriated to the
Investment Reserve Account.

Repo and Reverse Repo Transactions: In accordance with the RBI guidelines, repurchase and reverse repurchase transactions
in government securities including those conducted under the Liquidity Adjustment Facility (‘LAF’) and Marginal Standing
Facility (‘MSF’) with RBI are accounted as borrowing and lending transactions respectively. Borrowing cost on repo
transactions is accounted for as interest expense and revenue on reverse repo transactions is accounted for as interest income.

Advances

Advances are classified as performing and non-performing advances (‘NPAs’) as per the RBI guidelines on Income Recognition
and Asset Classification and are stated net of specific provisions made towards NPAs and inter-bank participation with risk.
Further, NPAs are classified into sub-standard, doubtful and loss assets based on the criteria stipulated by the RBI. Provisions
for NPAs are made for sub-standard and doubtful assets at rates as prescribed by the RBI. NPAs are identified by periodic
appraisals of the loan portfolio by management.

NPA accounts are written off in accordance with RBI guidelines and Bank’s Policy post approval from Board of Directors
(BOD). Amounts recovered against debts written-off are recognised in the Profit and Loss account. For restructured/
rescheduled assets, provision is made in accordance with guidelines issued by RBI. The restructured accounts are classified in
accordance with RBI guidelines. We maintain a general provision on standard advances at the rates prescribed by RBI. Provision
made against standard assets is included in “Other liabilities & provisions”.

Provisions made in excess of our policy for specific loan provisions for non-performing assets and regulatory general provisions
are categorised as floating provisions. Creation of floating provisions is considered up to a level approved by the Board. In
accordance with the RBI guidelines, floating provisions are used up to a level approved by the Board and RBI only for
contingencies under extraordinary circumstances and for making specific provisions for impaired accounts as per these
guidelines or any other regulatory guidelines as applicable. The floating provision is netted-off from advances.

We recognise the provision for unhedged foreign currency exposure of its borrowers as per regulatory guidelines stipulated by
the RBI from time to time and as per methodology prescribed. The provisions are included in provision for standard assets and
reported under other liabilities.

Priority Sector Lending Certificates

We enter into transactions for the sale or purchase of Priority Sector Lending Certificates (PSLCs). In the case of a sale
transaction, we sell the fulfilment of priority sector obligation and in the case of a purchase transaction, we buy the fulfilment
of priority sector obligation through the RBI trading platform. There is no transfer of risks or loan assets. The fee received for
the sale of PSLCs is recorded as ‘Miscellaneous Income’ and the fee paid for purchase of the PSLCs is recorded as ‘Other
Expenditure’ in Profit and Loss account. We amortise the income over the residual quarters.

Revenue Recognition

Interest income is recognised in the Profit and Loss Account on an accrual basis, except in the case of non-performing assets is
recognised upon realisation as per income recognition and asset classification norms of RBI. Income on non-coupon bearing
discounted instruments is recognised over the tenor of the instrument on a constant effective yield basis. Loan processing fees
is accounted for upfront when it becomes due. Interest income on deposits with banks and financial institutions is recognized
on a time proportion basis taking into accounts the amount outstanding and the implicit rate of interest. Dividend is recognised
as income when the right to receive the dividend is established. Profit or loss on sale of mutual fund units is recognised on trade
date. All other fees are accounted for as and when they become due.

Fixed Assets and Depreciation

Tangible Assets: Fixed assets are stated at cost less accumulated depreciation/ amortization and impairment loss, if any. The
cost comprises purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Any
trade discounts and rebates are deducted in arriving at the purchase price.

Depreciation is charged over the estimated useful life of the fixed asset on written down value basis from the date asset is put
to use considering residual value of 5% of the cost. Assets individually costing 5,000 or less are fully depreciated in the year
of purchase. Assets purchased/ sold during the year are depreciated on a pro-rata basis for the actual number of days the assets
have been put to use. Depreciation rate used by our Bank are in line with those specified under Schedule II of the Companies
Act, 2013.

The details of useful life are as under:

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