Bank of baroda

BANK OF BARODA
recognized on the settlement date. Gains/losses on termination of trading swaps are recorded on the termination date as
income/expenditure.
Our policies on provisioning and write-offs of non-performing assets are consistent with those proscribed by the RBI
guidelines. The size of our “floating” provision against non-performing assets, however, is determined by our management
based on a number of factors, including our net profit position, tax benefits available, management’s perception of market
risk, expectations and estimates regarding our asset portfolio and its future performance and general prudential principles.
As of March 31, 2004, we had a NPA provision coverage ratio of 73.82% for our non-performing assets of Rs. 39,798.6
million, as of March 31, 2005, we had a NPA provision coverage ratio of 81.35% for our non-performing assets of Rs.
33,218.1 million and as of September 30, 2005, we had a NPA provision coverage ratio of 83.08% for our non-performing
assets of Rs.32,349.5 million. Our provisioning policies are discussed in further detail in the section titled “Selected
Statistical Information” on page 238 of this Red Herring Prospectus.
Changes in Accounting Policies
With respect to accounting policies for our Bank’s international operations, we follow the RBI guidelines or those of the
host country, whichever is more stringent.
For fiscal 2003, 2004, 2005, our accounting policy for the translation/conversion of foreign currency was as follows:
1.
Financial statements of foreign branches are translated at mid-rate of exchange at the year-end. The accumulated
net difference, between Head Office figures and corresponding figures of foreign branches on account of assigned
capital, Head Office interest free funds and unremitted profit / loss, is carried over if in profit and written off to the
Profit and Loss Account, if in loss.
2.
Foreign currency balances of Indian branches including outstanding forward exchange contracts, acceptances,
endorsements and other obligations including guarantees and interest income and interest expenses relating thereto
are converted at year end mid-rate of exchange as advised by FEDAI.
3.
Other income and expenditure transactions of Indian branches are accounted for at exchange rates as ruling on the
date of transaction.
For the six months ended September 30, 2005, we have followed AS-11 (revised) “Accounting for Effects of Changes in
Foreign Exchange Rates” issued by the Institute of Chartered Accountants of India, which primarily involves the recording
of foreign exchange transactions at weekly average rates. The effect of this change in our accounting policy is not
reflected in the prior periods presented here in as the same has not been ascertained.
RBI has issued various guidelines on income recognition, asset classification and provisioning in respect of NPAs,
valuation of/depreciation on investments, depreciation on computers and charging premium/discount on money market
swaps. We have carried out necessary amendments in our accounting policies in the relevant periods to be in comformity
with the said RBI guidelines. However, the restated financial statements in this Red Herring Prospectus have not been
restated to reflect our latest accounting policies in this regard and the effect that these changes would have on our prior
financial results has not been ascertained.