DBOD.No. BP.BC.29/21.04.048/98

April 11, 1998

Chaitra 21, 1920 (Saka)

All Commercial Banks

(excluding Regional Rural Banks)

Dear Sir,

Income recognition, asset classification, Provisioning and other related matters - Valuation of investments

Please refer to our circular DBOD.No.BP.BC. 30/21.04.048/97 dated 9 April 1997 prescribing the method to be adopted by banks and auditors for valuation of Government and other securities while finalising the Balance Sheet as on 31 March 1997. It has now been decided that banks should adopt the method indicated in the Annexure, for the Balance Sheet as on 31 March 1998.

2. In this connection we advise that if there is any appreciation in the value of securities on account of the method of valuation as indicated in the Annexure, it should not be booked as Income. Further, banks which have adopted a more prudent method of valuation of securities than the one now being suggested, may continue the practice hitherto followed by them.

Yours faithfully,

(C.R. Muralidharan)

General Manager