Chapter No.

1 Introduction of Banking Companies

Banking companies in India are governed by the Banking Regulation Act 1949 which came into force from the 16th March, 1949. As per section 2 of the Banking Regulation Act, 1949 provisions of the Companies Act, 1956 are applicable to Banking Companies in the absence of any special provisions to that effect in the Banking Regulation Act, 1949.

Meaning of Banking & Banking Company:As per section 5(b), Banking means the accepting, for the purpose of lending or investment, of deposits of money from the public, re payable on demand or otherwise, & withdrawable by cheque, draft or otherwise. AND A banking company means any company which transacts the business of banking in India. However, any company which accepts deposits of money from public merely for the purpose of financing its business of manufacturing or trading shall not be deemed to transact the business of banking.

The major companies carrying on business of banking in India include:Types of Banks

1. Nationalized Banks

Enactments governing them

Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970. Banking Regulation Act, 1949 (certain provisions only).

2.

Non Nationalized Banks

Banking Regulation Act, 1949. Companies Act, 1956 (to the extent they are inconsistent with the provisions with the provisions of Banking Regulation Act, 1949).

3.

Co operative Banks

Co operative Societies Act, 1912. Co operative Societies Act of the State in which they are located. Banking Regulation Act, 1949 (Part V).

4.

Regional Rural Banks

Regional Rural Banks Act, 1976. Banking Regulation Act, 1949 (certain provisions only)

5.

State Bank of India & its subsidiaries

State Bank of India Act, 1955. State Bank of India (Subsidiary Banks) Act, 1956 Banking Regulation Act, 1949 (certain provisions Only).

Functions of Banks:Some of the main functions of modern commercial Banks are as follows: 1. Receiving deposits withdrawable by cheque etc. 2. Lending of money by (i) Making loans & advances, & (ii) Purchasing or discounting of bills. 3. Making investments on its own account or for customers. 4. Transferring money from place to place by (i) Issue of demand drafts, telegraphic transfers, travellers, cheques, etc (ii) Collection of bills. 5. Issuing Letters of Credit. 6. Safe custody of securities & valuables. 7. Issuing Guarantees. 8. Acting as executers & trustees, sometimes through subsidiaries formed for this purpose. 9. Buying, selling & dealing in foreign exchange. 10. Acting as Managers to issue of shares by companies.

The Principle books of Accounts Maintained By the Banking Companies :1. General Ledger: The General Ledger contains accounts of all personal ledgers, the Profit & Loss Account & different Asset accounts. The accounts are arranged in a such a fashion that the financial statements can be readily prepared thereform. 2. Profit & Loss Ledger: a) Profit & Loss Ledger are columnar books having separate columns for each revenue or expenses head, which are posted from vouchers. b) The total of various items are transferred in the end into the Profit & Loss Account in the General Ledger. c) In certain Banks, the Revenue Accounts are also maintained in the General Ledger itself, while in some others broad revenue heads are kept in the General Ledger & their details are kept in subsidiary ledgers.
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3.

4.

5.

6.

d) The account head in the profit & loss Ledger are more detailed, for management purposes, than those shown in the published Profit & Loss Account. subsidiary Books: a) Personal Ledgers: Separate ledgers are maintained by a bank for different types of accounts like Current Accounts, Fixed Deposits, Loans, and Overdrafts etc., which are posted directly from vouchers, which in turn are summarized into Voucher Summary Sheets. b) Bill Registers: Details of different types of bills are kept in separate Bill Registers having suitable columns are entered serially on day -to-day basis. Apart from this, in respect of Bills Purchase / Discounted, party-wise details are also kept in Normal Ledger from to ensure that the sanctioned limit parties are not exceeded. Entries in these registers are made by reference to the original documents i.e. vouchers. In respect of bills for collection, contra vouchers reflecting both sides of the transaction are prepared at the time of the original entry, & this are reversed on realisation. The outstanding entries in the Bill Registers are summarized frequently & their total agreed with the respective control accounts n the General Ledger. Other Subsidiary Registers: There are different registers for various types of transactions like Registers for the following: a) Demand Drafts, Telegraphic Transfers & Mail Transfers issued on Branches & Agencies. or b) Demand Drafts, Telegraphic Transfers & Mail Transfers received from Branches & Agencies. or c) Letters of Credit; or d) Letters of Guarantee. Departmental Journals: These are Memoranda Books only & contain details of transfer Entries passed by each department. Their purpose is to maintain a record of all the transfer entries originated by each department. Other Memoranda Books: Various departments of the bank maintain number of Memoranda Books to facilitate their work. Example: (a) Cash Departments: This department maintains following books: (i) Receiving Cashiers Cash Book; (ii) Paying Cashiers Cash Book; (iii)Main Cash Book; & (iv) Cash Balance Book. (b) Outward Clearing: (i) Clearing Cheques Received Book for entering cheques received from customers for clearing; & (ii) Bank wise list of cheques received for clearing. (c) Loans & Overdrafts Departments: (i) Register for shares & other securities held on behalf of each customer; (ii) Summary books of securities giving details Government securities, shares of companies etc;
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(iii) Godown Register maintained by the godown keeper of the bank; (iv) Price register giving the wholesale price of the commodities pledged with the bank; (v) Overdraft sanction Register; (vi) Drawing Power Book; (d) Deposits Department: (i) Accounts Opening & Closing Registers; (ii) Rate of Interest Register giving analysis of Deposits according to Rates; (iii)Due Date Dairy (iv) Specimen signatures book. (e) Establishment Department: (i) Salary & allied registers, such as attendance register, leave register, overtime register, etc. (ii) Register of fixed assets, e.g., furniture & fixtures, motorcars, vehicles. Etc. (iii)Stationery registers (iv) Old records register. 7. Statistical Books: Statistical records kept by different banks are in accordance with their individual needs. Example: Books for recording Average Balance in Loans & Advances; Deposits Received / Matured each month; etc.

Final Accounts:Banking Companies now have to maintain financial year as the accounting year. Previously accounts were maintained on calendar year basis Consequent to the amendment in income-tax Act, the Banking Regulation Act was also amended to make the accounting year as April to March. The final statements of accounts consist of Balance Sheet & Profit & Loss Account. The formats of preparation of these statements are given by the Third Schedule to the Act. These forms were recently revised & are applicable for final accounts for the year ended 31 st March, onwards. We will first study these forms & then discuss the important terms contained therein.

Formats:
Exhibit 1: Form of Balance Sheet Form A
Balance Sheet of_______________________ (here enter the name of the Banking Company) Balance Sheet as on 31st March________ (year) Schedule No. Capital & Liabilities Capital Reserves & Surplus Deposits Borrowings Other Liabilities & Provisions Total Assets Cash & balance with Reserve Bank of India Balances with Banks & Money at call & short notice Investments Advances Fixed Assets Other Assets Total Contingent Liabilities Bills for Collection 12 8 9 10 11 6 1 2 3 4 5 (000s omitted) As on 31.3 (Previous Year)

As on 31.3 (Current Year)

Exhibit 2: Form of Profit & Loss Account Form B

Profit & Loss Account For the Year Ended 31st March________ (year) (000s omitted)

Schedule No.

Year ended 31.3 (Current Year)

Year ended 31.3 (Previous Year)

I.

Income Interest Earned Other Income

13 14

Total II. Expenditure Interest Expended Operating Expenses Provisions & Contingencies

Total III. Profit / Loss Net Profit / Loss (-) for the year Profit / Loss (-) brought forward

15 16

Total IV. Appropriations Transfer to Statutory Reserves Transfer to Other Reserves Transfer to Government / Proposed Dividend

Balance carried over to Balance Sheet

Total

Exhibit 3: Schedules Schedule 1 Capital

As on 31.3 (Current Year) I. II. For Nationalised Banks Capital (Fully owned by Central Government) For Banks Incorporated Outside India Capital (The amount brought in by banks by way of start-up capital as prescribed by RBI should be shown under this head) Amount of deposit kept with the RBI under Section 11(2) of Banking Regulation Act, 1949. As on 31.3 (Previous Year)

Total III. For Other Banks Authorised Capital ______ shares of Rs. _____ each Issued Capital ______ shares of Rs._____ each Subscribed Capital ______ shares of Rs. _____ each Called-up Capital ______ shares of Rs. _____ each Less: Calls unpaid Add: Forfeited shares

Schedule 2 Reserves & Surplus

As on 31.3 (Current Year) I. Statutory Reserves Opening Balance Additions during the Year Deductions during the Year II. Capital Reserves Opening Balance Additions during the Year Deductions during the Year III. Shares Premium
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As on 31.3 (Previous Year)

IV.

Opening Balance Additions during the Year Deductions during the Year Revenue & Other Reserves Opening Balance Additions during the Year Deductions during the Year

V.

Balance in Profit & Loss Account Total ( I + II + III + IV + V )

Schedule 3 Deposits

As on 31.3 (Current Year) A. I. Demand Deposits (i) Form Banks (ii) From Others II. Savings & Deposits III. Term Deposits (i) Form Banks (ii) From Others Total ( I + II + III ) B. (i) Deposits of Branches in India (ii) Deposits of Branches outside India Total

As on 31.3 (Previous Year)

Schedule 4 Borrowings

As on 31.3 (Current Year) I. Borrowings in India (i) Reserve Bank of India (ii) Other Banks (iii)Other Institutions & Agencies Borrowing Outside India Total ( I + II )

As on 31.3 (Previous Year)

II.

Secured borrowings included in I & II above Rs..

Schedule 5 Other Liabilities & Provisions

As on 31.3 (Current Year) I. Bills Payable II. Inter office Adjustments ( Net) III. Interest Accrued IV. Others ( including provisions) Total

As on 31.3 (Previous Year)

Schedule 6 Cash & Balance with Reserve bank of India

As on 31.3 (Current Year) I. II. Cash in hand ( including Foreign Currency Notes) Balances with RBI (i) In Current Account (ii) In Other Accounts Total ( I + II )

As on 31.3 (Previous Year)

Schedule 7 Balances with Banks & Money at Call & Short Notice

As on 31.3 (Current Year) I. In India (i) Balances with Banks (a) In Current Account (b) In Other Accounts (ii) Money at Call & Short Notice (a) with Banks (b) with Other Institutions Total II. Outside India (i) In Current Accounts (ii) In Other Deposit Accounts (iii) Money at call & short notice Total Grand Total ( I + II )

As on 31.3 (Previous Year)

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Schedule 8 Investments

As on 31.3 (Current Year) I. Investments in India in (i) Government Securities (ii) Other Approved Securities (iii) Shares (iv) Debentures & Bonds (v) Subsidiaries & / or Joint Ventures (vi) Others ( to be specified)

As on 31.3 (Previous Year)

Total II. Investments Outside India in (i) Government Securities ( including local authorities) (ii) Subsidiaries & / or Joint Ventures abroad (iii)Other Investments ( to be approved) Total Grand Total ( I + II )

Schedule 9 Advances

As on 31.3 (Current Year) A. (i) Bills Purchased & Discounted (ii) Cash Credits, Overdrafts & Loans Repayable on Demand (iii) term Loans Total B. (i) Secured by Tangible Assets (ii) Covered by Bank / Government Guarantees (iii) Unsecured Total
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As on 31.3 (Previous Year)

C. I. Advances in India (i) Priority Sectors (ii) Public Sectors (iii) Banks (iv) Others Total II. Advances Outside India (i) Due from Banks (ii) Due from Others (a) Bills Purchased & Discounted (b) Syndicated Loans (c) Others Total (C. I. + C. II.) Grand Total

Schedule 10 Fixed Assets

As on 31.3 (Current Year) I. Premises At cost as on 31st March of the Preceding Year Additions during the year Deductions during the year Depreciation to Date Other Fixed Assets ( including Furniture & Fixtures) At cost as on 31st March of the Preceding Year Additions during the year Deductions during the year Depreciation to Date

As on 31.3 (Previous Year)

II.

Total

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Schedules 11 Other Assets

As on 31.3 (Current Year) I. II. III. IV. V. VI. Inter office Adjustments ( Net ) Interest Accrued Tax paid in advance / Tax deducted at source Stationery & Stamps Non Banking Assets acquired in satisfaction of claims Others Total

As on 31.3 (Previous Year)

Schedule 12 Contingent Liabilities

As on 31.3 (Current Year) I. II. III. IV. Claims against the Bank not acknowledged as Debts Liability for party paid investments Liability on account on outstanding forward exchange contracts Guarantees given on behalf of Constituents (a) In India (b) Outside India Acceptances, Endorsements & Other Obligations Other Items for which the Bank is Contingently Liable Total As on 31.3 (Previous Year)

V. VI.

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Schedule 13 Interest Earned

As on 31.3 (Current Year) I. II. III. IV. Interest / Discount on Advances / Bills Income on Investments Interest on Balances with Reserve Bank of India & other inter bank funds Others Total

As on 31.3 (Previous Year)

Schedule 14 Other Income

As on 31.3 (Current Year) I. II. III. IV. Commission, Exchange & Brokerage Profit on Sale of Investments Less : Loss on Sale of Investment Profit on Revaluation of Investments Less : Loss on Revaluation of Investments Profit on Sale of Land, Buildings & Other Assets Less : Loss on Sale of Land, Buildings & Other Assets Profit on Exchange Transactions Less : Loss on Exchange Transactions Income earned by way of dividends etc., from Subsidiaries / Companies & / or Joint Ventures Abroad / in India Miscellaneous Income Total As on 31.3 (Previous Year)

V. VI.

VII.

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Schedule 15 Interest Expended

As on 31.3 (Current Year) I. Interest on Deposits II. Interest on Reserves Bank of India/ Bank Borrowings III. Others Total

As on 31.3 (Previous Year)

Schedules 16 Operating Expenses

As on 31.3 (Current Year) I. II. III. IV. V. VI. VII. VIII. IX. X. XI. XII. Payments to and Provisions For Employees Rent, Taxes & Lighting Printing & Stationery Advertisement & Publicity Depreciation on Banks Property Directors Fees, Allowances & Expenses Auditors s fees & Expenses (including Branch Auditors Fees & Expenses) Law Charges Postages, Telegrams, Telephones, etc. Repairs & Maintenance Insurance Other Expenditure Total As on 31.3 (Previous Year)

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Chapter No. 2 Introduction of TJSB Bank Introduction:Thane Janata Sahakari Bank(TJSB), a cooperative bank, has decided to expand its in India presence during the current financial year by opening more branches in Goa, Karnataka and Gujarat, informed a press release here recently. Vidyadhar Vaishampayan, Thane Janata Sahakari Bank(TJSB), chairman announced the expansion plan for the current financial year which includes opening of three branches in Gujarat, one in Karnataka and two in Goa. The bank intends to tap the financial market in Gujarats Ahmadabad, Surat and Baroda cities besides making its presence in Karnatakas capital city of Bangaluru. Vishampayan said that two branches in Goa at Ponda and Margao in addition to its branch in Mapusa are also on the card. The Reserve Bank of India has already given permission for the bank to open 20 branches during the current financial year raising the number of their outlets from existing 63 to 83 during Financial Year 2012-13. The bank had laid its footstep in Goa and Karnataka six months back and since then have been receiving good response from the customers, banks chief executive officer Satish Utekar claimed. He informed in a press release that the bank has a mix business of Rs 15 core with 70:30 deposit-credit ratios in the state. TSJB aims at targeting small and medium entrepreneurs (SME) through its presence in Goas Ponda and Margao cities, which are hub of commercial activity. Overall, Utekar said, the bank has grown by 28 per cent during last fiscal reporting a total turn over of Rs 7,000 cores. The bank also plans to have cash acceptance machines (CAM) in its branches in Thane (Maharashtra) for the convenience of the traders, who have to go back home in unsafe environment after their daily business closes every night. Utekar explained that the CAM will have the facility to accept the money on the spot and credit it to the account overnight. Once our experiment is successful in Thane, we will replicate it to the branches where traders are more, banks chairman Vaishampayan said responding to a question.

History of TJSB Bank:With the modest beginning in 1972 in the co-operative field, the dynamism infused by the Board of Directors, unflinching loyalties of clientele and devotion of staff has propelled the sound foundation of The Thane Janata Sahakari Bank Ltd (TJSB) and has emerged as one of the leading scheduled co-operative Bank in the country. TJSB presently is catering to the needs of society through a close network of 37 Branches and 5 Extension Counters spread all over the city of Thane, Mumbai, Navi Mumbai, Nasik & Pune. All these Branches have made remarkable progress on all Fronts in all these years.
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TJSB believes that "customer delight" is the ultimate goal and has a strong belief that Customers & all Stakeholders wholehearted support, absolute faith and their patronage has largely been responsible for its enviable growth. TJSB is committed to provide banking with speed, comfort and convenience. TJSB feels proud to acknowledge the growth of large number of successful industrialists, traders and professionals who have grown leaps & bound due to timely Assistance and support of the bank. TJSB has set before a Visionary Growth Plan focusing all business strategies solely on creation of Stakeholders value.

TJSB Banking Services:1. Initial Services:Banking services are extremely important in a free market economy such as that found in Canada and the United States. Banking services serve two primary purposes. First, by supplying customers with the basic mediums-of-exchange (cash, cheque facility, and credit cards), banks play a key role in the way goods and services are purchased. Without these familiar methods of payment, goods could only be exchanged by barter (trading one good for another), which is extremely time-consuming and inefficient. Second, by accepting money deposits from savers and then lending the money to borrowers, banks encourage the flow of money to productive use and investments. This in turn allows the economy to grow. Without this flow, savings would sit idle in someones safe or pocket, money would not be available to borrow, people would not be able to purchase cars or houses, and businesses would not be able to build the new factories the economy needs to produce more goods and grow. Enabling the flow of money from savers to investors is called financial intermediation, and it is extremely important to a free market economy. Commercial banks and thrifts offer various services to their customers. These services fall into three major categories: Opening Accounts, Loans, and Cash Management Services.

(A) Opening Accounts

Banks facilitated the opening of three major types of accounts: Saving Accounts Current Account Fixed Deposits Accounts Saving Account :

A Saving is an account in which people can save the money fort short period of time. The customer can deposit or withdraw the money at any time and there are no restrictions on the times of removal of money. The customer can remove the money from the saving account by cheques or withdrawal form, but in case for issuing cheques book he needs to have minimum balance in his saving account and in case of withdrawal form the customer should have a
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minimum balance of generally Rs.100 in case of Co-OP banks and 500 in case of nationalized banks. Current Account:

A current account is mostly used by the business people because they can safely deposit their money as keeping huge amount in the office is not safe. There are no restrictions on the number of time the deposits and withdrawal of money. The bank also provides overdraft facility on this kind of account. As a businessman may be in need of money at any time. The rate of interest is very low as compared to other types of accounts. Fixed Deposits Accounts:

In this account the funds are deposited for a particular fixed period of time (5years, 10 years). This period is known as Maturity Period prior to which the money cannot be withdrawn. If the person wants to withdraw the money before the maturity period he will loose his interest for that particular year. The interest earned on such accounts is maximum as compared to other accounts.

(B) Loans
Banks provide Short Term, Medium Term and Long Term Loans which can take any of the below form: 1. Commercial / Industrial Loans Consumer loans, Mortgage loans. Commercial and Industrial loans are loans to businesses or industrial firms. These are primarily short-term working capital loans (loans to finance28 the purchase of material or labor) or transaction or longer-term loans (loans to purchase machines and equipment). Most commercial banks offer variable rate on these loans, which means that the interest rate can changeover the course of the loan. Whether a bank will make a loan or not depend son the credit and loan history of the borrower, the borrower's ability to make scheduled loan payments, the amount of capital the borrower has invested in the business, the condition of the economy, and the value of the collateral the borrower pledges to give the bank if the loan payments are not made. 2. Consumer loans are loans for consumers to purchase goods or services. There are two types of consumer loans: closed-end credit and open-end credit. a. Closed-end credit loans are loans for a fixed amount of money, for affixed period of time (usually not more than five years), and for affixed purpose (for example, to buy a car). Most closed-end loans are called installment loans because they must be repaid in equal monthly installments. The item purchased by the consumer serves as collateral for the loan. For example, if the consumer fails to make payments on an automobile, the bank can recoup the cost of its loan by taking ownership of the car. b. Open-end credit loans are loans for variable amounts of money up to set limit. Unlike closed-end loans, open-end credit does not require borrower to specify the purpose of the loan and the lender cannot foreclose on the loan. Credit cards are an example of open-end credit. Most open-end loans carry fixed interest rates-that is, the rate does not vary over the term of the loan. Open-end loans require no collateral, but interest rates or other penalties or fees may be charged-for example, if credit card charges are not paid in full,
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interest is charged, or if payment is late, a fee is charged to the borrower. Open-end credit interest rates usually exceed closed-end rates because open-end loans are not backed by collateral. 3. Mortgage loans or real estate loans are loans used to purchase land or buildings such as houses or factories. These are typically long-term loans and the interest rate charged can be either a variable or a fixed rate for the term of the loan, which often ranges from 15 to 30 years. The land and buildings purchased serve as the collateral for the loan.

(C) Cash Management and Other Services

Although deposits and loans are the basic banking services provided by banks, these institutions provide a wide variety of other services to customers. For consumers, these include cheques cashing, foreign currency exchange, safety deposit boxes in which consumers can store valuables, electronic wire transfer through which consumers can transfer money and securities from one financial institution to another, and credit life insurance which automatically pays off loans in the event of the borrower's death or disability. For businesses, commercial banks also provide specialized cash management and credit enhancement services. Cash management services are designed to allow businesses to make efficient use of their cash. For example, under normal circumstances a business would sell its product to a customer and send the customer a bill. The customer would then send a cheque to the business, and the business would then deposit the cheques in the bank. The time between the date the business receives the cheques and deposits the cheques in the bank could be several days or a week. To eliminate this delay and allow the business to earn interest on its money sooner, commercial banks offer services to businesses whereby customers send cheques directly to the bank, not the business. This practice is referred to as "lock box services because the payments are mailed to a secure post office box where they are picked up by bank couriers for immediate deposit. Another important business service performed by banks is a credit enhancement. Commercial banks back up the performance of businesses by promising to pay the debts of the business if the business itself cannot pay. This service substitutes the credit of the bank for the credit of the business. This is valuable for example, in international trade where the exporting firm is unfamiliar with the importing firm in another country and is, therefore, reluctant to ship goods without knowing for certain that the importer will pay for them. By substituting the credit of a foreign bank known to the exporter's bank, the exporter knows payment will be made and will ship the goods. Credit enhancements are frequently called standby letters of credit or commercial letters of credit.

2. Financial Services:On the Technology front, Bank has implemented successfully the "Core Banking Solution" (CBS) developed by M/s Infrasoft Technologies Ltd. Bank has state of art Data Center This has helped us to migrate the Branches from being the processing centers to marketing customer's centric outfits. It will also extend the Banks reach to its customers by multiple delivery channels such as ATM, Internet, and Mobile etc. This has brought the Bank on par with the leading Banks. TJSB is the first Bank in Co-Operative sector to install Cheque Depository Machines at 15 branches, which are operational 24 x 7. TJSB is the first Bank to install Cheque Book Making and Issuance Machine at Naupada - E-Lobby by which customers can avail the facility of issuance of Personalized Cheque Book.
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1. Cheque Depository Machine Branches of the Bank are fully equipped with Cheques depository machines giving the convenience to the customers to deposit the cheques24x7x365. The printed acknowledgement is given to the Customers by the Cheques depository machine for Cheques being deposited in the machine. 2. Automated Cheque Issuance Machine Bank has always put the thrust on providing value added services to the customers which will be operational on 24x7x365. As part of this process Bank has installed the Automated Cheques Issuance Machine at its e-lobby at Naupada Branch. Under single customer Id all the accounts maintained in the bank will be displayed for selection. Customer has to just enter the Customer Id and secret pin issued to him and customers personalized Cheque book will be issued without any manual intervention. All the Customers of the bank irrespective of the Branch where the account is maintained will able to take the benefit of the facility. 3. SMS Banking SMS Banking services are available for the Customers of the bank to know the latest balances and last 3 transactions in their account using the SMS feature of the Mobile Phones. Apart from Customer pull operations Bank is also giving SMS alerts to the Customers for clearance of cheques, maturity of terms deposits, return of the cheques and host of other services. 4. E-Lobby At Naupada Branch Customer Delight being the motto the bank has implemented and focusing on creation of virtual service outlets operated through Customer Activated delivery channels. The e-Lobby of the Bank at Naupada is now equipped with 3 ATMs, Cheque Depository machines and 24x7 Automated Cheque Book Issuance machines. 5. RTGS The Real Time Gross Settlement (RTGS) System aims to do what e-mail did for the post card. Instead of sending instructions for payments through cheques, with Real Time Gross Settlement System banks can route payments through on-line messages to RBIs RTGS payment gateway. RTGS facilitate the funds transfer across the Banks and Branches. At present 95 Banks and 1435 Branches are under RTGS system. Under RTGS system Inter Bank transactions and Customer Transactions has been enabled by the RBI Customer Transaction can be outward or inward remittances i.e. Funds can be transferred by or received by the Customer under RTGS system. The unique feature of the system is unlike other clearing system in RTGS Funds can be transferred or received Just In Time i.e. within 2 hours of instructions so given that to at cost less than drafts charges. 6. Automated Teller Machines ATM facility is provided at all branches including extension counter. Thane Janata is the First Co-operative bank to set up "OFF-SITE" ATM's. The bank has a network of 28 ATM Centers. Off-Site ATM launched at Khadke Building, Opp. Saraswati Secondary High School, Naupada, Thane West. 7. Safe Deposit Lockers Thane Janata offers to the customers Safe Deposit Lockers at all the branches except Airoli in Navi Mumbai and Rabodi K Villa. The facility is made available throughout business timings.
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8. Savings Deposit Account Savings Account at The Thane Janata Sahakari Bank comes with banquette of facilities & services at no extra charge to the Customers. Eligible person/s and eligible organizations or agencies as approved can open Savings Account with the Bank. Savings Account can be opened withRs.1000/- and minimum balance to be kept in the Account is Rs.1000/- only. Amount can be withdrawn from Savings Account by way of cheques or withdrawal slips. Interest is paid half yearly on Savings Account at 3.5 % p.a. As per the directives fixed by Reserve Bank of India. 9. Current Account Current Accounts can be opened by Businessmen / Proprietorship /Partnership Firms / Public or Private Companies requiring doing multiple or numerous business transactions. Customer can deposit or withdraw the amounts many times required. Minimum Balance to be maintained is Rs.2500/- in the account.

OTHER FACILITIES PROVIDED BY TJSB BANK : ATM Card Facility with withdrawal Limit of Rs.20, 000/ for Proprietary Accounts. Any Branch Banking Facility through out all Branches of the Bank for operations in Current Accounts. SMS banking facility for Balance Inquiry, Statement Details, Transaction Alerts. 24x7 Cheque Issuance Machine facility for getting personalized cheques at any time. Statement of Account at monthly intervals by e-mail. 24x 7 Cheque Deposit Facility with acknowledgement for cheques deposited.

Commercial & Other Loans:Bank is actively lending to all sectors of the Industries \ Business and provide customized solutions for Small Business activities, Transporters, wholesalers, stockiest, Distributors, Retailers having exclusive showrooms dealing in FMCG products, readymade garments, consumer durables, pharmaceutical stores, etc. Bank also actively considers Working Capital Term Loans for execution of ad-hoc orders or Loans against mortgage of existing securities for specified purposes. Purpose For establishment \ modernization \ up-gradation of Fixed Assets Setting up Office, Renovation of the premises Purchase of vehicles, etc. Working Capital Limits
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 Export Finance and Guarantee Limits. Eligibility Exiting running business activity and good track record Foreign exchange business To deal with import-export credit needs of the customers, the bank has made special arrangements with the nationalized / private and foreign banks.

Chapter No. 3 Analysis of TJSB Bank Annual Report 2011-2012:

The Global Economy:-

The global economy has continued to improve over the past year. Growth in emerging markets has been strong while advanced economies have been moving towards a self sustaining trade and investment gradually replacing fiscal and monetary stimulus as principal drivers of economic growth. But recovery is happening at different speeds across the globe. In advanced economies growth remained modest at around 3% in 2011, but emerging economies registered robust growth of around7%during the last year led by China and India. While the sense of crisis has waned, new challenges have surfaced to the global economy. Weak sovereign balance sheets, looming debt crisis in Euro zone, high levels of unemployment and continued weakness of the US financial markets are some of the major concerns for the advanced economies. In the emerging economies the major risks emanate from asset price bubbles, rapid rise in inflationary pressures and spurt in commodity prices.

Indian Economic Scenario:The Reserve Bank of India in its monetary policy 2012 13 has stated that domestically the state of the economy is a matter of growing concern. Though inflation has moderated in recent months, it remains sticky and above the tolerance level, even as growth has slowed. Significantly these trends are occurring in a situation in which concerns over the fiscal deficit, the current account deficit and deteriorating asset quality loom large. In this context, the challenge for monetary policy is to maintain vigil on controlling inflation while being sensitive to risks to growth and vulnerabilities. GDP growth moderated to 6.1% during third quarter of the 2011-12 as against 8.3% in the corresponding quarter of 2010-11. Growth in the Index of Industrial Production (IIP) decelerated to 3.5% during 2011-12 from 8.1% in corresponding period of the previous year. Headline Wholesale Price Index (WPI) which remained above 9% during April November 2011, moderated to 6.9% by end of March 2012. Moderation in inflation in December 2011- January 2012 owed largely to softening of food prices while the same in February-March 2012 was largely driven by core nonfood manufactured products inflation which fell below 5% for the first time after two years

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 PROFIT AND LOSS ACCOUNT FOR:Year Ended 31st March 2012

2,90,58,50 31,68,13 1,77 18,61,11 77,36 2,15,81 1,16,75 89,92 3,30,29 11,76,59 2,76,59 1,15,21 3,84,94 16,89 1,29,74 59,68 1,88,65 67,66 4,45,78 1,41,96 3,79,23,33

Expenditure
1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11) 12) 13) 14) 15) 16) 17) 18) 19) 20) Interest on Deposits & Borrowings Salaries & Allowances Directors and local committee members fees Rent, Rate, Taxes, Insurance and Lighting Legal and Professional Charges Postage, Telegrams and Telephone Charges Travelling and Conveyance Audit Fees Repairs and Maintenance Depreciation on Fixed Assets Amortisation of Premium on Securities Printing and Stationery Advertisement Loss on sale of Assets Bank charges Clearing and Encoding Charges Security Charges Contractual Expenses Other Expenses Bad debts Written Off Balance c/f

Year Ended 31st March 2011

2,11,39,93 31,35,07 2,01 11,84,11 79,29 1,71,54 74,59 86,82 2,34,27 10,29,05 3,08,11 1,04,10 3,58,45 75 96,97 51,19 1,50,04 74,97 4,18,16 3,09,71 2,90,09,13

23

 THE YEAR ENDED 31ST MARCH 2012 : (Rs. in Thousands) Year ended Year ended 31 Mar 2011 2,19,58,77 1,34,31,49 5 6,59,23 85,95 1,41,06 14,12,75 26,09 3,09,71

Income
1) 2) 3) 4) 5) 6) 7) 8) 9) Interest on Advances Interest on Investment Dividend on shares Commission, Exchange and Brokerage Rent on Safe Deposit Lockers Income from sale of securities Other Income Written off Bad Debts recovered BDDR Written Back

31 Mar 2012 2,86,65,02 1,66,72,07 5 9,24,16 1,42,83 96,92 17,28,34 1,29,77 1,41,96

Balance c/f

4,85,01,12

3,80,25,10

PROFIT AND LOSS ACCOUNT FOR :Expenditure

Year ended 31 Mar 2012 Year ended 31 Mar 2012

24

Balance b/f 3,79,23,33 21) PROVISIONS AND CONTINGENCIES A) Bad & Doubtful Debts i) Amount Provided for Bad and Doubtful Debts 7,25,00 ii) Expenditure Provision & Contingencies 4,65,80 iii) Provision for Miscellaneous Assets 5,00 B) Special Reserve (u/s 36(1) (viii) of Income Tax 3,75,00 Act, 1961) C) Amortisation of Cost of Acquired Banks Navjeevan Nagari Sahakari Bank Ltd. 57,16 Shree Sadguru Jangli Maharaj Sahakari Bank Ltd. 2,41,20 D) Contingent Provision against Standard Assets 2,25,00 22) PROFIT BEFORE TAX Income Tax Deferred Tax
NET PROFIT

2,90,09,13

6,25,00 50,44
0

4,25,00

58,33 5,36,94 1,00,00 72,20,26 24,00,00 (1,37,33) 49,57,59

84,83,63 27,05,17 (2,30,88) 60,09,34

TOTAL

4,85,01,12

3,80,25,10

25

 THE YEAR ENDED 31ST MARCH 2012:-

Year Ended Income Balance b/f 31st March 2012 4,85,01,12

Year Ended 31st March 2011 3,80,25,10

TOTAL

4,85,01,12

3,80,25,10

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 PROFIT AND LOSS APPROPRIATION ACCOUNT:Particulars Statutory Reserve Fund General Reserve Investment Fluctuation Reserve Dividend to Shareholders @ 15% Charitable Fund-1% Members Welfare Fund Co-operative Education Fund- 1% Contingency Reserve - 10% Ex-Gratia to Employees NET PROFIT CARRIED TO BALANCE SHEET Profit B/f Profit for Last year As on 31 Mar 2012 15,02,50 19,59,90 5,00,00 9,50,00 60,09 10,00 69,09 6,01,50 3,65,29 10 60,09,34, 13 TOTAL 60,09,47 As on 31 Mar 2011 24,42,25 5,00,00 4,50,00 7,20,000 49,57 10,00 49,57 4,95,76 2,40,50 13 49,57,39 19 49,57,28

27

 BALANCE SHEET AS ON :-

CAPITAL & LIABILITIES Capital Reserve fund and other reserves Deposits and other accounts Borrowings Bills for collection being bills for receivable Branch adjustments Overdue interest reserves Interest Payable Other Liabilities Amortisation Reserve Profit & Loss GRAND TOTAL Contingent Liabilities

Schedule A B C D

As on 31 Mar 2012 72,10,06 4,24,01,21 43,44,97,11 2,55,69,47 49,89,05 0 50,48,52 18,43,53

As on 31 Mar 2011 55,11,08 3,73,87,31 34,71,58,14 1,97,34,86 17,15,19 0 54,28,33 14,11,64 1,66,59,47 26,31,13 13 43,76,37,28 1,60,30,38

E F G

2,01,12,37 29,29,50 10 54,46,00,92

2,88,28,58,

PROPERTY & ASSETS Cash & Bank Balance Balance with other Banks Money at call & short noticed/cblo Investment Advance Interest Receivable a) on investment & staff loan b)on Advances (considered bad & doubtful

Schedule H I

Year ended as on 31mar 2012 2,65,97,24 5,10,49,17 0

Year ended as on 31 mar 2011 2,26,89,89 4,68,09,12 0 13,55,26,81 19,91,87,06

J K

16,22,57,01 26,40,18,35

67,26,47 50,48,52

55,62,39 54,28,33

28

of recovery) (as per Contra) Branch Adjustment Bills Receivable Fixed Assets Capital work in progress Other assets Cost of acquisition GRAND TOTAL N O M

38,82 49,89,05 61,62,72 2,38,47 1,45,45,60 29,29,50 54,46,00,92

62,88 17,15,19 49,09,40 8,44,85 1,16,12,44 32,88,92 43,76,37,28,

SCHEDULES
SCHEDULE A - CAPITAL Year ended as on 31 Mar 2012 2,00,000 72,10,06 Year ended as on 31 Mar 2011 2,00,000 55,11,08

Authorised Capital 4,00,00,000 Shares of 50/- each Issued, Subscribed and Paid-up Capital 1,44,20,126 Shares of 50/- each SCHEDULE B - RESERVE FUND AND OTHER RESERVES i) Statutory Reserve ii) Building Fund iii) Bad & Doubtful Debts Reserve iv) Contingent Provision Against Standard Assets v) Investment Fluctuation Reserve vi) Investment Depreciation Reserve vii) Members Welfare Fund viii) General Reserve ix) Building Revaluation Reserve x)Special Reserve u/s 36 (1) (viii) of income tax act 1961 xi) Provision for Bad & Doubtful Investments xii) Charitable Fund xiii) Contingency Reserve Total

Year ended as on 31 Mar 2012 2,02,14,06 24,00,00 87,76,08 9,49,90 42,24,46 0 1,03,38 24,59,90 32,54 13,53,00 44,35 60,81 11,82,73 4,24,01,21

Year ended as on 31 Mar 2011 1,86,02,59 24,00,00 85,81,22 7,24,90 37,24,46 4,46,46 98,16 5,00,00 53,13 9,78,00 44,35 52,81 11,81,23 3,73,873

29

SCHEDULE C - DEPOSITS AND OTHER ACCOUNTS

Year ended as on 31 Mar 2012

Year ended as on 31 Mar 2011

i) Current Deposits a) Individuals b) Other societies ii) Savings Deposits a) Individuals b) Other societies

2,59,72,27 1,54,52 TOTAL (i) 2,61,26,79 8,84,75,65 32,29,55 TOTAL(ii) 9,17,05,20

2,40,89,96 1,12,41 2,42,02,37 8,53,11,15 29,66,99 8,82,78,14

iii) Term Deposits a) Individuals b) Other societies iv) Matured Deposits 29,78,68,14 1,07,69,96 TOTAL(iii) 30,86,38,10 80,27,02 TOTAL ( I +ii+iii+iv) 43,44,97,11 Year ended as on 31 Mar 2012 61,58,78 90 1,94,10,69 0 TOTAL 2,55,69,47 Year ended as on 31 Mar 2012 2,05,08 8 5,65,84 42,38 12,42,91 26,80 1,73 8,67,83 22,01,22,58 80,72,61 22,81,95,19 64,82,44 34,71,58,14 Year ended as on 31 Mar 2011 90,81,42 1,06,53,44 0 1,97,34,86 Year ended as on 31 Mar 2011 1,05,80 22 2,42,39 5,13 28,30,53 32,06 1,27 0

SCHEDULE D - BORROWINGS

i) Refinance from National Housing Bank ii) CBLO Borrowings iii) Overdraft against Fixed Deposit

SCHEDULE E - OTHER LIABILITIES

i) Sundry Creditors ii) Surcharge Payable (Recovery) iii) Provision for Expenses iv) Advance comm. on franking / Advance int. recd. on Hsg. Loan v) Payslip Payable vi) Draft Payable vii) Share Suspense / Nominal Membership fee viii) Contingent Provision for Depreciation in Investments
30

ix) TDS Payable x) Service Tax Payable xi) Loan Clearing Adjustment / Clearing Adjustment xii) Provision for Income Tax xiii) Unclaimed Dividend xiv) Share Collection Account - [ Acquired Banks ] xv) Provision for Miscellaneous Assets xvi) MVAT Payable xvii) Ex-gratia xviii) Staff Interest Reserve Account xix) NFS Settlement Account xx) Provision for Leave Encashment xxi) Co-operative Education Fund xxii) Forex Deal Revaluation Provision xxiii) Balance with correspondents - EEFC A/c TOTAL

76,24 16,84 6,38 86,20,38 10,09,29 10,40,77 48,46,89 1,78 3,65,29 12 38,85 3,88,20 60,09 15,30 6,73,30 2,01,12,37

52,00 17,18 8,22 59,32,38 7,91,49 10,40,77 48,41,89 0 2,46,52 5 36,06 4,25,64 49,5 0 0 1,66,59,47

SCHEDULE F - AMORTISATION RESERVE

Year ended as Year ended as on 31 Mar on 31 Mar 2012 2011 2,41,59 23,89,54 26,31,13

i) Navjeevan Nagari Sahakari Bank Ltd. 2,98,76 ii) Shree Sadguru Jangli Maharaj Sahakari Bank Ltd. 26,30,74 TOTAL 29,29,50

SCHEDULE G - PROFIT & LOSS

Year ended as Year ended as on 31 Mar on 31 Mar 2012 2011

Refer to Profit and Loss Appropriation Account and Note in Notes to Accounts SCHEDULE H - CASH AND BANK BALANCES

Year ended as on 31 Mar 2012 i) Cash in Hand 21,14,95 ii) Balances with Reserve Bank of India 2,19,09,58 iii) Balances with SBI and Nationalised Banks 8,78,80 iv) Balances with State Co-operative Bank 17 v) Balances with District Central Co-operative Banks 8 vi) Balances with other Banks 8,13,93 vii) Balances with Banks abroad 8,79,73 TOTAL 2,65,97,24

Year ended as on 31 Mar 2011 23,20,96 1,92,58,71 3,85,20, 10 3 5,97,11 1,27,78 2,26,89,89

31

SCHEDULE I - BALANCES WITH OTHER BANKS i) Fixed Deposit with State / District Central Co-op Banks ii) Fixed Deposit with SBI and Nationalised Banks iii) Fixed Deposit with other Banks TOTAL SCHEDULE J - INVESTMENTS

Year ended as Year ended as on 31 Mar on 31 Mar 2012 2011 1,00 1,00 2,60,67,00 2,07,41,12 4,68,09,12 Year ended as on 31 Mar 2011 11,06,74,63 0 44,69 2,33,66,48 14,41,01 13,55,26,81 Year ended as on 31 Mar 2011

2,95,30,75 2,15,17,42 5,10,49,17 Year ended as on 31 Mar 2012 i) Government Securities 13,66,92,74 ii) Other Trustee Securities 0 iii) Shares in other Co-op. Institutions 44,69 iv) Bonds & NCDs 2,55,19,58 v) Certificate of Deposits 0 TOTAL 16,22,57,01 SCHEDULE K - ADVANCES Year ended as on 31 Mar 2012 i) Short term loans, cash credits, overdrafts and bills discounted a) Govt. and Other Approved Securities 3,71,45 b) Other Tangible Securities 10,80,37,67 c) Unsecured Advances / Surety Loans with or without 14,70,03 Collateral Securities Of the advances, amount due from individuals [P.Y. 83,23,97] 1,28,69,43 Of the advances, amount overdue [P.Y.30,98,73] 53,42,05 Considered Bad and Doubtful of recovery 26,06,35 [P.Y. 25,44,62] [Fully Provided for] TOTAL 10,98,79,15 ii) Long Term Loans of which secured against a) Govt. and Other Approved Securities 1,05,14 b) Other Tangible Securities 10,62,43,37 c) Unsecured Advances / Surety Loans with or without 19,18,83 Collateral Securities Of the advances, amount due from individual [P.Y. 1,12,78,51] 1,69,04,87 Of the advances, amount overdue [P.Y. 24,34,48] 20,64,90 Considered Bad and Doubtful of recovery [P.Y. 19,63,91] 17,58,39 TOTAL 4,67,76,84
32

4,74,82 7,16,15,83 12,96,22

7,33,86,57 82,05 8,71,51,96 15,33,29

3,79,21,97

III Long Term Loans of which secured against a) Govt. and Other Approved Securities b) Other Tangible Securities c) Unsecured Advances / Surety Loans with or without Collateral Securities Of the advances, amount due from individuals [P.Y. 4,34,45,16] 4,94,28,33 Of the advances, amount overdue [P.Y. 24,58,65] 32,94,32 Considered Bad and Doubtful of recovery [P.Y. 23,03,31] 25,88,27 TOTAL Total (I)+(II)+(III) SCHEDULE L - INTEREST RECEIVABLE

1,05,14 10,62,43,37 10,13,85

82,05 8,71,51,96 6,44,51

10,73,62,36 26,40,18,35 Year ended as on 31 Mar 2012

8,78,78,52 19,91,87,06 Year ended as on 31 Mar 2011 51,22,70 4,46,28 55,62,39 Year ended as on 31 Mar 2011 63,89 1,04,67 75 8,56 2,25,02 1,63,59 2,26,01 19,14 54,36 58,75,63 16,26 48,41,89 9,13 1,16,12,44 Year ended as on 31 Mar 2011 3,01,99

i) On Investments ii) On Staff Housing Loans

62,80,19 4,46,28 TOTAL 67,26,47 SCHEDULE N - OTHER ASSETS Year ended as on 31 Mar 2012 i) Sundry Debtors ii) Stock of Stationery 91,53 iii) Security Deposits 1,26,49 iv) Unused Stamps 1,29 v) Service Tax / CENVAT Receivable 54,00 vi) Deposit for Premises 3,37,80 vii) Advance for franking 1,29,78 viii) Deferred Tax Asset 4,56,89 ix) Forex deal revaluation provision 0 x) Prepaid Expenses 74,10 xi) Advance Income Tax 83,41,51 xii) Other Receivables 45,33 xiii) Miscellaneous Assets 48,41,89 xiv) Forex current assets 0 TOTAL 1,45,45,60 SCHEDULE O - COST OF ACQUISITION Year ended as on 31 Mar 2012 i) Navjeevan Nagari Sahakari Bank Ltd. 2,98,76
33

ii) Shree Sadguru Jangli Maharaj Sahakari Bank Ltd. 26,30,74 TOTAL 29,29,50 SCHEDULE P - CONTINGENT LIABILITIES Year ended as on 31 Mar 2012

29,86,93 32,88,92 Year ended as on 31 Mar 2011 69,09,45 63,98,43 27,22,50 1,60,30,38

I) Bank Guarantees II) Letter of Credit III) Forward Exchange Contracts

94,16,92 94,60,09 99,51,57 TOTAL 2,88,28,58

Financial statements for the year ended 31 March, 2012 :I. Summary of significant accounting policies
1. Basis of preparation: The financial statements of the Bank have been prepared in accordance with the generally accepted accounting principles in India. The Bank has prepared these financial statements to comply in all material respects with the accounting standards issued by the Institute of Chartered Accountants of India (ICAI), to the extent applicable, and applicable statutory provisions under the Banking Regulation Act, 1949 & Multi State Cooperative Societies Act, 2002. The financial statements have been prepared following the going concern concept on an accrual basis under the historical cost convention, except for land and building acquired on merger with Navjeevan Nagari Sahakari Bank Ltd, Pune which is carried at revalued amount. The accounting policies adopted in the current year are consistent with those of previous year, except of change in accounting policy as explained in notes forming part of Accounts. 2. Use of Estimates: The presentation of financial statements are in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent liabilities at the end of the reporting period. Although these estimates are based on management's best knowledge of current event and actions, uncertainty about these assumptions and estimates could result in outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in the future periods.

3. Investments: 1. Investments other than in those held against Term Deposits with Banks / Institutions / Mutual Fund / Certificate of Deposits and Shares of Co-op Institutions are classified into Held for Trading (HFT), Available for Sale (AFS) and Held to Maturity (HTM) categories in accordance with the Reserve Bank of India (RBI) guidelines on Classification and Valuation of Investments for Primary (Urban) Co-operative Banks.

34

2. Investments under Held to Maturity (HTM) category are carried at Book Value. The premium paid, if any, on the investments under this category is amortised over the residual life of the security as per guidelines of RBI and Policy adopted by Bank. 3. Investments under Available for Sale category are valued scrip-wise at lower of Cost or Market Value. Net depreciation, if any, under each classification has been provided for. Net appreciation, if any, has been ignored. 4. Market Value, where market quotes are not available, is determined on the basis of the Yield to Maturity (YTM) method as indicated by Primary Dealers Association of India (PDAI) jointly with the Fixed Income and Money Market Derivatives Association of India (FIMMDA). Appreciation/ Depreciation are aggregated for each class of securities and net depreciation in aggregate for each category as per RBI guidelines is charged to Profit and Loss account. Net appreciation, if any, is ignored. 5. The Bank is not holding any investments under Held for Trading (HFT) category. 4. Foreign Exchange Transactions: The Bank started its foreign exchange operations w.e.f. July 19, 2010 as authorized dealer under AD Category-I licence issued by RBI and the following accounting policy has been adopted by the bank for recording foreign currency transactions : 1. All foreign exchange transactions are accounted for at the ongoing market rates prevailing on the date of transactions. Monetary foreign currency assets and liabilities reflected in the Balance sheet on the date are at the rates notified by Foreign Exchange Dealers Association of India (FEDAI). All profits/losses due to revaluations are recognised in the Profit & Loss account. 2. The Outstanding spot and forward contracts are revalued at the rates notified by FEDAI. The resulting profits/losses are included in Profit & Loss account as per FEDAI/RBI guidelines. 3. The Contingent liabilities on account of foreign exchange contracts and other obligations denominated in foreign currency are disclosed at closing rates of exchange declared by FEDAI. 5. Advances : 1. The classification of advances into Standard, Sub-standard Doubtful and Loss assets as well as provisioning on Standard Advances and Non-Performing Advances has been arrived at in accordance with the Income Recognition, Assets Classification and Provisioning Norms prescribed by the Reserve Bank of India from time to time till date. 2. The unrealized interest in respect of advances classified as Non-Performing Assets is disclosed as Overdue Interest Reserve as per Reserve Bank of India directives. 6. Fixed Assets: 1. Premises, Furniture & Fixtures, Plant & Machinery and Capital Expenditure on Rental premises are depreciated on Written down Value method. 2. The stamp duty and registration fees paid for premises acquired on lease are expensed out to Profit and Loss account. 3. Computers & Peripherals are depreciated on Straight Line method@33.33% as directed by RBI. Computers Peripherals used for providing technological services are depreciated over the period of contract. 4. Vehicles are depreciated at30%on straight line basis. 5. The depreciation on assets acquired prior to 1st October is provided for the whole year otherwise the same are depreciated at 50% of the normal rates except depreciation on
35

vehicles which is provided for full year in the year of acquisition irrespective of date of acquisition. 7. Revenue recognition: Income is accounted on accrual basis as and when it is earned except for: a) The income on Non-Performing Assets is recognized on realisation as per Reserve Bank of India directives. b) The commission on Letters of Credit / Guarantees, locker rent and Dividends received from shares of co-operative institutions and mutual funds are accounted on receipt basis. c) The deposit for services like Telephone, Electricity etc. paid to concerned authorities are written off as expenditure in the year in which the relevant service, connection is installed. 8. Employee Benefits: a) The payment of Provident Fund is made to the Commissioner for Provident Fund at rates prescribed in the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and is accounted for on accrual basis. b) The bank has provided for leave encashment as per actuarial valuation as on March 31, 2012 c) The bank has taken Unit Linked Insurance policy from HDFC and is maintaining fund under trust deed with Life Insurance Corporation of India (LIC) for gratuity payments to Employees. The premium / contribution paid to HDFC and LIC to meet gratuity liability debited to Profit&Loss account. d) Ex-Gratia is appropriated out of Net profit in accordance with the Multi-State Cooperative Societies Act, 2002. 9. Lease payment: Operating lease payments are recognized as an expense in the Profit&Loss account on a straight line basis over the lease term. 10. Taxes on Income : a) Tax expense comprises of current and deferred tax. Current Income Tax is measured on the basis of estimated taxable income for the year in accordance with the provisions of Income Tax Act, 1961 and rules framed there under. b) Deferred income tax reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for earlier year. Deferred tax is measured using tax rates and tax laws enacted or substantially enacted at reporting date. Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. 11. Segment Reporting: In accordance with the guidelines issued by RBI, Segment Reporting is made as under : a) Treasury includes all investment portfolio, profit / loss on sale of investments, profit / loss on foreign exchange transactions, equities and money market operations. The expenses of this segment consist of interest expenses on funds borrowed from external sources as well as internal sources and depreciation /amortisation of premium on investments. b) Other banking operations include all other operations not covered under Treasury Operations.
36

12. Earnings per share: Basic earnings per share are calculated by dividing the net profit for the period after tax (after appropriation of Statutory Reserves) by weighted average number of equity shares Outstanding during the period.

37