SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN INDIAN GAAP AND IPRS ‘The financial statements of the Issuer included in this Offering Circular have been prepared in ‘accordance with the accounting policies followed by the Issuer which conform 10 Indian GAAP as Gppticable 10 the Issuer. The following is @ general summary of certain principal differences between indian GAAP and IERS as applicable to the Issuer. The differences identified below are limited 10 those ronificent differences thet are appropriate to the Issuer's financial statements, However, they should not pe construed as being exhaustive, and no attempt has been made to identify possible future differences between Indian GAAP and IFRS as a result of prescribed changes in accounting standards nor 10 identify fluure differences the! may affect the Issuer's financial statements as a result of transactions or events that ‘may occur in the future 1. Contents of financial A_complete_set_ of financial Vatements General statements comprises @_ balance sheet income statement, cash flow Satement, statement showing Changes. inequity and other Comprehensive income as at and for the. last two fiscal years, accounting policies and “other explanatory ‘notes 10 financial Statements. with corresponding Figures from the previous year 2 Contents of financial No particular format is prescribed Statements — forthe income statement Disclosures However, an analysis of expenses ust be presented in one of two formats. unction or natu). Certain items must be presented on the face of the ineome statement ‘Similaely, no particular format 18 prescribed Tor the balance sheet: fin entity. may use a liquidity presentation of assets and Tiabliies, instead of a current/non-curtent presentation. ‘only when a liquidity presentation provides” more relevant and reliable information. Certain items must be presented on the face of the balance shect, However, banks shall present an income statement whieh, groups income and expenses by mature and. disclose the amounts of principal types of facome and expenses. Forther, banks shall presenta balance sheet that groups assets and liabilities by hnature and lists them in order that felleets their relative liquidity INDIAN GAAP ‘A complete set of financial Statements. normally” includes a balance sheet, profit and loss ‘account and cash flow statement 2s at and for the last fiscal” year, ‘accounting policies and notes to financial statements with one year comparative. The presentation of these financial statements differs in certain respects compared. to ERS. Listed entities are required to produce consolidated financial Statements and the related notes along. with standalone. financial “The Companies Act prescribes the balance sheet format and the prescribed format for the profit find loss account. In the case of banks, the format of the balay sect and profit and loss accounts prescribed in Schedule 3 to the Banking Regulations Act. Further, the RBI prescribes various Aisetosures fe3. Correction of errors — pers) presented in Sie erors have ‘curred 4. Changes in accounting policies 5, Statement of recognised gains and losses restatement of Conparatee amounts for the prior fear periods) presented in which Bord have oecurred ‘Any change in accounting policy i a te apeied Tetfospectivelyceguiring, enibes Tbradjust each affected component Sf equity for the caiest period resented, ‘except where Irpracticable wo do 8. The total of gains and. losses recognised in a” period is Comprised of net income together sri following gains and losses Which are recognised directly aul: + revaluation increases decrease + fair value gains/(osses) om fend "and "buildings, ‘viable-forsale, investments. and certain Fimaneral insteuments + foreign exchange translation aiforenses, + the cumulative effect of changes in" accounting policy + changes in fir values of Certain nancial instruments AT'desgnated as. cash low hedges net of tax and cash Tow hedges reclassified. to Income andlor the relevant todged ssetiabiiys + equity dividend; and + dividend of subsidiary (Gminarity interest). Recognised gains and losses ean be presented either in the notes to Findneial statements o¢ highlighted Separately within” the = primary Statement “of changes 1 Shareholders equity. Restatement is ot toque, The ature and amount of ror per items — should be Pes rately {sclosed nthe current year profit and los andthe effect ofthe Error. must algo be. ciselosed Stcurtes and Exchange Board of India (SEBS) may, inthe case of Publicly listed Gompanies, tak Recessary action as Ht deems i Including. mandating restatement of Books “of aeeounts on the Scrutiny of audit reports that Shalt the sccounts oF company Impact of and adjustments resting rom "the “Sane Sccounting polics are required to Be shown inthe income statement OF the period in which the change tpmade, except at specified inthe transition provisions of certain Sandards “where the changes resulting from: adoption of such Standards have a be shown by an Gjustment in he opening retained There ix no concept of comprehensive” income. However Sceounting standards, statute and industry practices allow forcerain Bijustmenis in reserves. The RB Speeically requires gain on Sale oF eld-to-matanty sezurites to be Sppropeated from the profiles account 10. capital. reserve Revaluation gains on fixed assets re directly “shows” as part feserves whereas, reveluation fosses, if Say. are charged. 106. Statement of changes in Shareholder °s equity Consolidation of ‘subsidiaries ens, ‘The statement must be presented asa primary. statement. The Sfatemeat must "show — capital transactions with owners,» the movement in accumulated profit and a reconciliation of all other Components of equity ‘The consolidated financial statements include all subsidiaries tnd foreignidomestic branches of the parent. TERS focuses on the teancept of the power to control in {determining whether "a parent Subsidiary relationship exists. The efinition of conteol and the concept of preparation of Consolidated financial statements fre. not based solely on legal ‘ownership. Control is. delined as the power to govern the financial and operating policies of an entity 0 as to obtain benefits from its fctivities. Control is presumed to fexist_where the parent company fowns,” directly "oF indirectly through subsidiaries, more than ‘one half ofthe voting power of an enterprise unless, in ‘exceptional circumstances, it ean be clearly ‘demonstrated that such ownership docs not constitule contro Control ean alsa exist in certain situations where the parent Company owns one hall oF less of the voting power of an enterprise Companies acquired (disposed off) fre included tn (excluded from) Consolidation rom’ the date on ‘which control passes. Currently exercisable potential voting fights Should also be considered. A Subsidiary can be excluded from Consolidation | when there is evidence that control is intended to be temporary. INDIAN GAAP No separate. statement required However, any adjustments to ‘equity and eserve account must be shown in the schedules that fecompany the financial Consolidation is required only in the ease of listed companies and ‘when there is controlling interest, Girectly or indigectly through Subsidiaries, by virue of holding the majority ofthe voting shares of fn enterprise or controlling the board of directors of an enterprise ‘except in case of entities such as gratuity teust where the objective fs not fo obtain economic benefits from their activities, A subsidiary shouldbe excluded fom tonsolidation when: + control is. intended 10 be femporary "because the Subsidiary is acquired and held exclusively with a view A its subsequent disposal in the near future; oF + it operates under severe long-term restrictions that jenificantly impair its ability transfer funds 1 the parent “The reasons for not consolidating a subsidiaey should be disclosed in the consolidated financial Statements. In separate financial Statements of banks, investments in such subsidiaries should be accounted for in accordance with fuidelines prescribed by the RBI ‘As per the RBI guidelines, such invesiments are required tobe fsccounted at costs less any permanent diminution in the value Df such investments,8, Consolidation of ‘subsidiaries — Uniform accounting policies 9. Consolidation of ‘lbsiaries — Reporting period 10. Consolidation of SPEs urs Consolidated financial statements fre prepared using uniform fccounting policies for all the entities ina group. ‘The consolidated financial Statements of the parent and the Subsidiary are usvally drawn up at the same reporting date. However the “consolidation of subsidiary fccounts can be drawn up at a tifferent reporting date provided that the difference between the feporting dates is nomore than three months. Adjustments are ‘made for significant transactions that occur in the gap period. Special purpose entities (SPEs) are required 10 be consolidated as per SIC 12 it: (a) in substance, the activities of the SPE are being conducted fon behalf of the entity according 10 its specific business needs so. that the entity obtains benefits from the SPE's operation; (b) in substance, the entity has the decision-making powers to obtain the majority of the benetits of the activities of the SPE of, by setting up an “utopilot’ mechanism. the cemtity has delegated these ‘decision-making powers Ge) in substance, the entity has Fights to obtain the majority ff the benefits of the SPE find therefore may — be texposed 10 risks incident 10 the activities of the SPE: oF (2) in substance, the entity retains the majority. of the Fesidual of ownership #sks Felated (0. the SPE or ils fssets in order to obtain benefits from its activities, Similar to IPRS, However. if iis hot. practical to. use uniform fecounting policies, that fact Should be disclosed together with the proportions of the items 10 ‘which different accounting policies have been applied. Similar to IFRS. However, the Gifference between the reporting dates shoukd not be more than six ‘months, SPEs are not required to be Consolidated if the entity does not have _majority ownership. oF control over such SPE.‘Accounting for jointly ‘controlled eniiies Jointly contred ‘entities ~ Reporting period Presentation of jointly ‘controlled entities {Goin ventures) Presentation of associate results A. venturer shall recognise its interest" ina jointly convolled cmtity using proportionate onsolidation (benchmark treatment) or equity method {alternative ereatment) of sccounting, ‘The consolidated financial Statements of the joint venturers fee usually drawn up at the same feporting date, However, the Consolidation ean be drawn up at ditferent reporting date provided the difference between the feporting dates is no more than three months, Adjustments are made for significant transactions that occur in the gap period In consolidated financials, both Proportional consolidation and equity method. is. permitted. In Standatone financials, investment in joint ventures is carried at cost, cr at fair value (TAS 39), Equity method must be used resentation must show share of posttax results Accounting for jointly contotled fenities is required. to. be done using. proportionate consolidation method, except when an interest it 2 jointly controlled entity + is acquired and held exclusively with a view 10 its Subsequent disposal. inthe ‘near futures and + operates under severe long term. restrictions whieh Significantly impale is ftbility to transfer Tunds to the investor. Similar to TFRS. However, the difference between the dates should not be more ‘months In consolidated financials, proportional consolidation is used However, in absence of a subsidiary, an entity may not prepare consolidated financial Statements and ot account them funder the proportional consolidation method. In Standalone financials, investment in joint venture is carried at cost less impairment, Similar to IFRS. However, the fccounting for associate results Using the equity method. was not Fequited under Indian GAAP until T April 2003, Upon transition to the equity method from the cost ‘method, an inerease in Tavestment in Associate in. Shareholders Equity should be recorded as an adjustment to reserves. Tor the Petiod of change. The equity fnethod “of accounting is not Feaquited inthe separate/standatone financial statements of the15 16 1, Is 9, [Employees Benefits — Recognition of Depreciation Component accounting or property, plant and equipment Deferred expenditure Discounting of Provisions TAS 19° provides options to fecognise ‘actuarial gains and losses a8 follows: + all actuarial gains and losses can be recognised Immediately in the profit and Toss account + all actuarial gains and losses can be recognised immediately in “other ‘comprehensive income, + actuarial gains and tosses below the 10.0% corridor ‘need not be recognised and hove the 10.0% corridor can be deferred over the remaining service period of employees or on accelerated bass, This is known as the corridor approach, + any poliey applied should be fpplied consistently and the same poliey should be applied Tor actuarial gains and losses Depreciation is allocated on a systematic basis 10 each svcounting period over the ‘economic useful Tife of the asset feflecting the pattera in which the ftity consumes. the asset's benefits Depreciation on revalued portion ceannot be recouped” ott of [As per IAS 16, itis mandatory to ‘identify and depreciate separately cach material component of an fasset having a separate useful life Costs in respect of any start up are expensed as incurred. Equity issue costs should be accounted for as 8 ‘eduction from equity (net of any related income tak benefit) Discounting is required for provisions if the effect is material, ‘Actuarial gain or loss should be ‘recognised immediately in. profit find loss. account. "The ‘corridor approach is hot permitted, ‘The Companies Act provides ‘minimum rates of depeeciation, If ‘managements’ estimate of useful life of fixed asset is shorter than depreciation rates. as per the Companies Act, depreciation is provided a¢ a higher Fate based on the managements’ estimate of usetul life Depreciation on tevalued portion can he recouped out of reservalion Indian GAAP allows but does not ‘mandate component accounting Costs are not allowed 10 be deferred unless permitted by the RBI Discounting of provisions is not permitted.2, 24 28. Provision for Initial recognition ncial Assets ~ Classification Financial Assets ~ ‘Measurement IAS 37 deals with ‘constructive obligation’ in the context of the treation of a provision. The effect fof recognising provision om the basis of constructive obligation is, that, in some eases, provision will bye required to be recognised at an carly stage Financial assets are required to be recognised at fair value on initial recognition, Financial assets ar tobe classified as one. of the. following four Categories depending on certain ‘conditions to be satisfied for each category + financial asset at fair value through profit or Loss: + held-to-maturity + toans and receivables: and + availablesor-sale financial Initially, 9 financial asset is measured at is fair value plus, in the ease of a financial asset moi at fair value through profit or loss, transaction costs that are dieetly itiibutable 10 the aequisition oF issue of the financial asset_ or financial liability. Subsequent measurement depends on the Classification of the investment — fe heldsto-maturity. investments fang loan receivables, earty at fmortised cost, using effective interest method otherwise state at fair value, Unrealised gains and losses on fair value through profit for oss. classification (neluding trading securities) ate recognised inthe income statement Unrealised gains and losses on svailable-forsale investments are Fecognised in equity. No. provision is requited 10 be made Tor constructive obligation. Upon initial recognition, financial assets are "recorded. at its transaction Value AS 13, Accounting for Tnvestinenis is aot applicable to banks. The RBI as given guidelines for classification of + eld-o-maturty + avaitablesfor-sale: and + held-forcrading, Loans. and ddvanees are classified on the basis of the Income Recognition and Asset Classification norms of REL Investments are measured and valued on the asis of the fuidelines issued by the RBI from Time to time, Loans and advances fre measured in accordance with the Income Recognition and Asset Classification norms of the RBL Tnvestments classified as available-for-sale or eld-for trading are measured at lower of fost oF market value and those Classified a6 held-to-maturity are fneasured at weighted average aequisiion cost less the Amortisation of premium amount it fay, over the remaining period of saturityrns, _ INDIAN GAAP, ‘4, Financial bilities — There are two categories of There are no. classification Classification Financial abilities: uidelines for financial liabilities, + financial liabilities: at fair value through the profit and Toss secount; and financial liabilities carried at amortised cost 25, Financial Liabilities - Initially, a financial ability is Liabitities are recognised based on ‘Measurement measured at its Tair value plus, in the legal obligation of the entity the ease of a financial liability not at fair value through profit or Loss, Transaction costs that are directly ftributable to the issue of the financial ability. After initial ‘ognition, an’ entity stall fneasure all financial liabilities at mortised cost using the effective interest method, except for + Financial Hiabitities at fair Value through profit oF loss. Such Habilives, incloding derivatives that ate Tiabilities, shall be measured at fair value except for 2 derivative Wabilty that is Tinked to and must be settled by delivery of an unquoted ccquity instrument whose fair Wilue’ ‘cannot be reliably measured, which shall be measured at cost; and + financial liabilities that arise ‘whem a transfer ofa financial asset does not qualify for Serecognition or is accounted for using the continuing involvement approach, Financial Wabilities that at designated as hedged stems fate subject to measurement funder the hedge accounting ‘requirements26 2 2. Financial Assets — Reclassification Discount on purchase of held-to-maturity Impairment of loans For Fair Value Through Profit & Loss (FVTPL), reclassification into and out of FVTPL on intial recognition and reclassification of Serivatives is prohibited. Held for Hading may be reclassified into AFS, HTM and L&R in certain For HTM, if significant amount of HTM is feclassified or sold, the remaining investments in HTM. talegory are to be reclassified into ‘AFS and no investment can be Classified as HTM fora period of 2 years (also known as “tinting”). For APS, that would have met the ‘efinition of loans and receivables {Gr it had not been designated as ‘AFS) it may be tansferred into loans and receivables sf the entity has the intention. and ability to hold the financial asset for the foreseeable future of until Discount on the purchase of held- formaturity securities are required tobe adjusted in the effective Interest rite of the security and fecognised over the life of the Impairment losses on loans and receivables are recognised when there isa loss event on the basis of individual or collective fssessment, Impaiement losses are fot allowed 10 be provided for future expected losses. Where long-term investments are reclassified ns current investments, transfers are made at the lower of cost and carrying amount atthe Gate of transfer. Where investments are reclassified from ureent to long-term, transfers at made atthe lower of cost and fait value at the date of transfer [As per the RBI Guidelines, Banks ‘may reclassify investments Into and out of HTM once a year Banks may reclassify investments from AFS to HFT, Reclassification of investments from HET to APS is allowed under exceptional circumstances. ‘Transfer of investments from one category to. another, under all fircumstances, should be done at the acquisition "cos/book Valuefmarket value on the date of transfer, whichover is the Teast nd the depreciation, if any, on Such. transfer should be fully provided for. Banks may apply the Nalues as on the date of transfer fand in the ‘event that there are practical difficulies in applying the values as onthe “date of transfer, banks have the option of applying the values as on the Previous working day, for serving tthe depreciation requirement on the shifting of securities Based on RBI guidelines, discount is not accreted. The same will be recognised in the profit and loss accounts atthe time of sale of the security. Impairment on loans are recognised based on RBI guidelines. The guidelines prescribe minimum losses 10 be provided based on the number of {ays passed due of an asset, Losses fbove the minimum preseribed Tevels can be provided based on ‘management estimates,2, 30. Hedge accounting Revenue ~ laverest Reward points Service fees TAS 39 recognises three types of hedges, ‘namely. the fait value hedge. cash flow hedge and net investment hedge. Under the fair Value hedge, ‘both the hedged fnstrument snd edging iastrument fre carried at fale value through the profit and loss account. For the fas flow hedge and. net westment hedge, the effective portion of fair value movement of fhe hedged "instrument is ecognived in Other Comprehensive tncome (OCI) ‘with ineffective portion recognised in the profit and toss account. The Tit value movement recorded in Cris subsequently released (0 the profit and” loss account concurrently ‘with the, earnings fecognition pattern of the hedged Interest income. is recognised using the effective’ saterest method. ‘As per TERIC 13, the transaction fee On eredit cards is required to be tleferred to the extent of fair value of the awards estimated 10. be Claimed in the future periods. Fees that are an integral part of the flfcctive interest rate of the fnstrument, for example, loan brigiation, arrangement fees and direct selling agents fees, are tleferred and. recognised. as an fidjustment to the effective interest fate. However when nancial struments are valved at fair value with changes in fair value being recognised in profit and loss, the fees are recognised a5 revenue ‘when ithe instrument is initially recognised, Fees armed as services are provided. ate recognised “as Services provided. For example fees charged for servicing a loan is recognised over the penod of the ees that are earned on the ‘execution of a significant act are recognised when sich act is completed. For example acement. fees Tor arranging foam and an investor are recognised when the loan has been arranged ow ‘Accounting fr interest ate hedges sing inorest rate derivatives ae prescribed by. the RBI Hedge Eccounting for foreign ‘currency Tink using. forwaed contracts on recognised assets and Hailities Is prescribed under AS. 1l(Revised). Tnvcase of Interest cate hedges, interest ate swaps are not fait Walued. The net inerest scored on the sap Hs recognised inthe peoit and lors aeeount. tn case of fonvard contacts, she premiom paid on the forwardcontact is Emorjaed over the contrat period ‘The forward contracts are valued sing the closing exchange Incerest is recognised on a time proportion han" taing mo find the rate applicable. However the interest “He recognised on receipt basis for NPAs as per RBI fuidatines. In absence of any specific hide, the entire ansacton fee farmed is recognised upfront. Financial service fee is recognised fas revenue depending on whether the service. has. been provided once forall” or is on a continuing basis Loan origination and arrangement fees are. recognised as. revenue ‘when the loan has been eriginated.3. M4, 36 38 Dividends paid Deferted income taxes m financial reporting Guarantees Related party disclosures [Employee stock options Dividends are recorded as liabilities when declared ‘The balance sheet approach must be used (with some exceptions), tinder which deferred tax is required to be created for all temporary differences between the {ax base and the carrying value of the assets and liabilities. Deferred tax assets are recognised only its recovery is probable, Further, deferred tax is required to he recognised in the consolidated financial statements for undistributed profits earned from the subsidiaries. Deferred tax is also required to be recognised for lunsealised intercompany profits in the consolidated financial Not mandatory to prepare interim Statements but must uxe standard it prepared, Basis should be Eonvisent with che full-year Statements "and include omparatives.Pablily traded companies are encouraged (0 frovide interim financial repos Recognise a liability at fair value in the statement of financial position at the inception of the suarantee The definition of related party Includes non-executive directors and the remuneration paid t0 such on-executive directors are required 10 be disclosed. ‘The grant date fair value of the option is recognised as the employee cost over the vesting period INDIAN GAAP Dividends are recorded as Thabiities when proposed. Deferred tax assets and liabilities should be recognised for al timing fifferences subject 10 consideration of fespect of deferred. tax assets Where "an has ‘unabsorbed depreciation or caries Torward losses under tax Laws, deferred tax. assets should be recognised only to the extent that there is virtual certainty supported by convincing evidence. that silficient future taxable income Will be_available against which Such deferred tax assets can be realised. Deferred tax assets are feassessed_at each balance sheet date and ate adjusted to reflect the amount that is reasonably or Virtually certain to be realised, Deferred tax is accounted using the income’ statement approach, which focuses oa timing differences, No deferred tax is recognised for undistributed profits earned from the subsidiaries or on unrealised profits from. intergroup Transactions inthe consolidated Financial statements. ‘The recognition and measurement principle laid down in Accounting Sandard. 25 (AS 25 — Interim Financial Reporting) are mandatory for only fisted ‘companies Guarantees must be disclosed as 2 contingent lability ‘The definition of related party is narrower. Key managerial persons donot include non-executive directors. ‘There is an option to recognise the intrinsic value or the fair value of the option as employee cost over the vesting period:39, 40, ‘Business combinations Securitisation Qualitative and ‘quantitative Aisclosures of related to risks Segment reporting RS Business combinations are Fequited to be accounted using the purchase method. Pooling of Interest method is prohibited AAs per IAS 39, securtised loans can’ be derecognised from the books of account only if substantial risks and rewards have been transferred. Where Substantial risks and rewards have neither been wansferred Substantially mor retained Substantially, then the entity should evaluate whether contol has over. the asset_has been transferred, TERS 7 requires both qualitative find ‘quantitative disclosures related to Fisks. Operating segments are identified based on the financial information that is evaluated regularly by the chief operating decision maker i deciding how to allocate resources tnd in assessing performance Pooling of interest method is allowed for amalgamations. when Certain conditions are met. ‘Securitsed loans are derecognised from the books of aceount If they meet the true sale criteria as pet the RBI guidelines ‘The RBI guidelines require certain Tisk related information to be ‘iselosed as part of Basel Pillar IL disclosures. Such disclosures are hot part of audited financials Indian GAAP requires an enterprise to identify two sets of Segments (namely business and [geographical) based on the risks and. rewards approach, with th enterprise's system of internal reporting to the Key management personnel. This serves asthe Starting point for the identification fof reportable segments. Reporting Segments are Mlenbfied based on parameters such as revenue, net Income, assets, and liabilities as prescribed in AS 17 ~ Segment Reporting,