1.2.6 Provisions and Contingent Liabilities

a) Provisions

Provisions are recognized when the Company has a present obligation (legal or
constructive) as a result of a past event, and it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of obligation. Provisions are measured at the best
estimate of the expenditure required to settle the present obligation, at the balances
sheet date.

If the effect of the time value of money is material, provisions are discounted to reflect
its present value using a current pre-tax rate that reflects the current market
assessments of the time value of money and the risks specific to the obligation. When
discounting is used, the increase in the provision due to the passage of time is
recognised as a finance cost.

b) Contingent Liabilities

A disclosure for a contingent liability is made when there is a possible obligation arising
from past events, the existence of which will be confirmed only by the occurrence or
non-occurrence of one or more uncertain future events not wholly within the control of
the Company or a present obligation arising as a result of past event that probably will
not require an outflow of resources or where a reliable estimate of the obligation cannot
be made.

c) Provision for NPA & Standard Assets

All loans and other credit exposures, where the installments are overdue for a period
of six months or more are classified as NPA. Provision is made in respect of NPA and
SA in accordance with the stipulations of Prudential Norms prescribed in the "Non
Banking Financial company - Non-systemically Important Non-deposit taking company
(Reserve Bank) Directions, 2016" by the RBI.

1.2.7 Revenue Recognition

a) Revenue is recognized to the extent that it is probable that the economic benefit will flow
to the company and the revenue can be reliably measured. The following specific
recognition criteria must be fulfilled before revenue is recognized.

b) Interest and other dues are accounted on accrual basis except in the case of non¬
performing loans where it is recognized upon realization, as per the income recognition
and assets classification norms prescribed by the RBI.

c) Income or discounted instruments are recognized over the tenure of the investment on a
straight line method.

d) Dividend is accounted when the right to receive is established.

e) Front end fees on processing of loans are recognized upfront as income.

f) All other fees are recognized when reasonable right to recovery is established, revenue
can be reliably measured as and when they become due.

g) Other revenue is recognized on accrual basis and no significant uncertainty exists as to
its realization or collection.

1.2.8 Employee Benefits

Short Term Employee Benefits

All Employee benefits payable within twelve months of rendering the services are classified
as short term benefits. Such benefits include salaries, wages, bonus, awards, ex-gratia,
performance incentive/pay etc. and the same are recognized in the period in which the
employee renders the related services.

1.2.9 Operating leases

Operating leases where the lessor effectively retains substantially all the risks and benefits
of ownership over the leased term are classified as operating leases. Operating lease
rentals are recognized as an expense in the statement of profit and loss on straight line
basis over the lease term, unless the payments are structured to increase in line with the
expected general inflation to compensate for the lessor in expected inflationary cost
increase.

1.2.10Foreign Currency Transactions

Foreign currency transactions are recorded at the exchange rate prevailing on the date of
transaction. Monetary assets and liabilities in foreign currency existing at balance sheet
date are translated at the year-end exchange rates. Exchange rate differences arising on
settlement of transaction and translation of monetary items are recognized as income or
expenses in the year in which they arise.

Non- monetary items that are measured in terms of historical cost in foreign currency are
translated using the exchange rates at the dates of initial transactions. Non-monetary
items measured at fair value in a foreign currency are translated using the exchange rates
at the date when the fair value is determined.

Premium or discount on forward exchange contract is amortized as income or expense
over the life of the contract. Exchange difference on such contract is recognized in the
Statement of Profit and Loss in the reporting period in which the exchange rate changes.
Any profit or loss arising on cancellation or renewal of forward contract is recognized as
income or expenditure during the period.

1.2.11 Taxation

Tax expense for the year comprises of Current Tax and Deferred Tax.

a. Current Tax

Current income tax, assets and liabilities are measured at the amount expected
to be paid to or recovered from the taxation authorities in accordance with the
Income Tax Act, 1961 and the Income Computation and Disclosure Standards
(ICDS) enacted in India by using tax rates and the tax laws that are enacted at
the reporting date.

b. Deferred Tax

Deferred tax is provided using the liability method on temporary differences
between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes at the reporting date. Deferred tax assets and
liabilities are recognised for all deductible temporary differences, the carry forward
of unused tax credits and any unused tax losses.

Deferred tax assets are recognised to the extent that it is probable that taxable
profit will be available against which the deductible temporary differences, and
the carry forward of unused tax credits and unused tax losses can be utilised. The
carrying amount of deferred tax assets is reviewed at each reporting date and
reduced to the extent that it is no longer probable that sufficient taxable profit will
be available to allow all or part of the deferred tax asset to be utilised.
Unrecognised deferred tax assets are re-assessed at each reporting date and are
recognised to the extent that it has become probable that future taxable profits
will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities
are measured at the tax rates that are expected to apply in the year when the
asset is realized or the liability is settled, based on tax rates (and tax laws) that
have been enacted or substantively enacted at the reporting date.

1.2.12 Earnings per Share:

Basic earnings per share is calculated by dividing net profit of the year attributable
to equity shareholders by the weighted average number of equity shares
outstanding during the year.

For the purpose of calculating diluted earnings per share, the net profit or loss for
the year attributable to equity shareholders and the weighted average number of
shares outstanding during the year are adjusted for the effects of all dilutive
potential equity shares.