Bank of baroda

4.
Interest Rate Swaps:
4.1.1 The interest rate swap transactions for hedging are accounted for on accrual basis and transactions for
trading are marked to market at fortnightly intervals in line with the Reserve Bank of India guidelines.
4.1.2 For the purpose of valuation, the fair value of the total swap is computed on the basis of the amount that
would be receivable or payable on termination of the transactions of the swap agreements as on the balance
sheet date. Losses arising therefrom, if any, are fully provided for while the profits, if any, are ignored.
5.
Advances:
5.1.1 Advances are net of interest suspense, amounts received and held in suit-filed sundry deposits, claims
received and provision made for non-performing advances in accordance with the prudential norms prescribed
by Reserve Bank of India and revised from time to time. In respect of advances made in overseas branches,
advances are classified in accordance with stricter of the prudential norms prescribed by the Reserve Bank of
India or local laws of the host country in which advances are made, wherever applicable.
5.1.2 Advances in India are classified as Standard, Sub-standard, Doubtful or Loss assets and provision for losses
made on Sub-standard, Doubtful and Loss assets as per the prudential norms of the Reserve Bank of India
as under:
a)
Sub-standard 10% / 20% (as applicable).
b)
Doubtful
100% of the unsecured portion plus 20% / 30% / 100% of the secured portion
depending on the period for which the advance has remained doubtful. However,
in case of doubtful advances outstanding as on 31.03.2004 for more than 3 years
provision for secured portion is made upto 60% as on 31.03.2005, 75% as on
31.03.2006 and 100% as on 31.03.2007.
c)
Loss Assets
100%
5.1.3 Provision @ 0.25% is made on Standard advances (including in respect of investments by way of debentures
/ bonds in the nature of advances), and is included under the head ‘Other Liabilities’ as per Reserve Bank of
India guidelines.
5.1.4 In respect of rescheduled / restructured accounts, provision is made for the sacrifice of interest measured in
present value terms as per Reserve Bank of India guidelines. The said provision is included under the head
‘Other Liabilities’.

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