SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN INDIAN GAAP AND U.S. GAAP The summarized financial information and financial statements included in this Red Herring Prospectus have been
prepared in accordance with the requirements of the Indian Companies Act, 1956 and the Indian Banking Regulation Act,
1949 and accounting principles generally accepted in India (collectively “Indian GAAP”), which differ in certain respects
from the accounting principles generally accepted in the United States (or “U.S. GAAP”).
The following table summarizes significant measurement differences between U.S..GAAP and Indian GAAP insofar as
they affect financial information reported in this Prospectus.
Various U.S. GAAP and Indian GAAP pronouncements have been issued for which the mandatory application date is
later than the reporting dates in this Red Herring Prospectus. These, together with standards that are in the process of
being developed in both jurisdictions, could have a significant impact on future comparisons between U.S. GAAP and
Indian GAAP.
Subject Indian GAAP U.S. GAAP Format and content of
financial statements
Entities are required to present balance sheets, profit
and loss accounts and, if listed or proposing listing,
cash flows for two years together with accounting
policies, schedules and notes. Entities seeking a
listing are required to present five years of adjusted
financial information.
Format for presentation of financial statements is as
prescribed by the relevant statute.
All entities are required to present balance sheets,
income statements, statements of shareholders’
equity, cash flows and comprehensive income,
together with accounting policies and notes to the
financial statements. The extent of disclosures in
the notes to financial statements generally is far
more extensive than under Indian GAAP.
No specific format is mandated, generally items are
presented on the face of the Balance Sheet in
decreasing order of liquidity. Income statement items
may be presented using a single-step or a multiple
step format. Expenditure must be presented by
function.
Allowance for credit losses Allowance for credit losses are based on defaults
made on principal and interest. The allowance does
not consider present value of future inflows. The
allowances are made in accordance with the
prudential norms prescribed by RBI.The non-
performing loans are placed on non-accrual basis
Loans are identified as non- performing and placed
on non- accrual basis, where management
estimates that payment of interest or principal is
doubtful of collection. Non-performing loans are
reported after considering the impact of impairment.
The impairment is measured by comparing the
carrying amount of the loan to the present value of
expected future cash flows or the fair value of the
collateral (discounted at the loan’s effective rate).
Investments in securities
Securities are classified as held to maturity, available
for sale and held for trading as per RBI guidelines.
Held to maturity are valued at cost unless more
than face value in which case the premium is
amortized over the remaining period / years of
maturity. Held for trading securities are valued scrip-
wise and net depreciation is accounted for. Available
for sale are valued scrip- wise and net depreciation
under each category is provided for while net
appreciation is ignored.
Amortisation of purchase premium is required in
respect of ‘Held to Maturity’ category
Investments in marketable equity and all debt
securities are classified according to management’s
holding intent, into one of the following categories:
trading, available for sale, or held to maturity.
Trading securities are marked to fair value, with
the resulting unrealized gain or loss recognized in
the income statement.
Available-for-sale (AFS) securities are marked to
fair value, with the resulting unrealized gain or loss
recorded directly in a separate component of equity
called ‘Other Comprehensive Income’ until realized,
at which time the gain or loss is reported in income.
Held-to-maturity (HTM) debt securities are carried
at amortized cost.
Other than temporary impairments in the value of
HTM and AFS investments are accounted for as
realized losses.
Amortisation of purchase premium and discount is
required for all the categories of debt securities.
