Fair values
For investments traded in organised financial markets, fair value is determined by reference to Stock Exchange quoted market bid prices at the close of business on the balance sheet date.

The fair value of interest-bearing items is estimated based on discounted cash flows using interest rates for items with similar remaining maturity. No fair value is made for demand deposits as balances are repayable on demand.

For investments where there is no quoted market price, a reasonable estimate of the fair value is determined by reference to the current market value of another instrument which is substantially the same, or is based on the expected discounted cash flows

Tangible fixed assets
Tangible fixed assets are recorded initially at cost. Revaluations of freehold land and buildings are carried out every five years on an open market value for existing use basis or on a depreciated replacement cost basis. Net surpluses arising on revaluation are credited to a revaluation reserve, except to the extent that a revaluation increase merely restores the carrying value of an asset to its original cost, whereby it is recognised as income. A decrease resulting from a revaluation is initially charged directly against any related revaluation surplus held in respect of that same asset with the remaining portion being charged as an expense. On disposal, the revaluation surplus is credited to retained earnings.

Depreciation
Depreciation is provided on a straight line basis on all tangible fixed assets, other than freehold land which is deemed to have an indefinite life. The rates of depreciation are based upon the following estimated useful lives:

Collateral pending sale
The bank occasionally acquires real estate in settlement of certain loans and advances. Real estate is stated at the lower of the net realisable value of the related loans and advances and the current fair value of such assets. Gains or losses on disposal, and unrealised losses on revaluation, are recognised in the income statement.

Goodwill
Goodwill is amortised over its economic useful life.

Taxation
Taxation is provided for in accordance with Omani and Indian fiscal regulations.

Deferred taxation is provided using the liability method on all temporary differences at the reporting date. It is calculated at the tax rates that are expected to apply to the period when it is anticipated the liabilities will be settled, and it is based on tax laws that have been enacted or substantively enacted at the balance sheet date.

The carrying amount of deferred income tax assets is reviewed at each balance sheet 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 income tax asset to be utilised.

Deposits
All money market and customer deposits are carried at cost, less amounts repaid.

Fiduciary assets
Assets held in trust or in a fiduciary capacity are not treated as assets of the bank in the balance sheet.

Revenue recognition
Interest receivable and payable is recognised on a time proportion basis, taking account of the principal outstanding and the rate applicable. Interest which is doubtful of recovery is reserved and excluded from income until it is received in cash. Other fees receivable or payable are recognised when due. Dividend income is recognised when the bank's right to receive payment is established.