Banking Companies

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2. General Ledger: General ledger provides details regarding expenses and asset not covered under subsidiary books and also contains the control accounts of subsidiary books.

Subsidiary Ledgers It includes:

(a) Receiving Cashier’s Counter Cash Book; (b) Paying Cashier’s Counter Cash Book; (c) Current Accounts Ledger;

(d) Savings Bank Accounts Ledger; (e) Fixed Deposit Accounts Ledger (f) Investment Ledger;

(g) Cash Credit Ledger; (h) Loan Ledger;

(i) Bills Discounted and Purchased Ledger; (j) Recurring Deposit Accounts Ledger; (k) Fixed Deposit Accounts Ledger;

(l) Customer’s Acceptance, Endorsement and Guarantee Ledger etc.; Other Registers and Memorandum Books

It includes:

(a) Bills for Collection Register; (b) Share Security Register; (c) Jewellery Register; (d) Demand Draft Register; (e) Safe Custody Register; (f) Standing Order Register; (g) Dishonored Cheque Register; (h) Letter of Credit Register; (i) Lockers Register etc.; Special Features of Bank Accounting

The following are the features of bank accounting;

1. Banking companies have to maintain books of accounts under Double-Entry System.

2. It has to maintain all books of accounts, as required under the provisions of the Banking Regulation Act.

3. The posting of transactions in the ledger will be based on debit/credit slips. (That is, slip system of ledger posting is followed in banking companies).

4. Self-balancing system of ledge is followed in accounting, by banking companies. SOME IMPORTANT PROVISIONS OF THE BANKING REGULATION ACT, 1949 I. Share Capita

(a) A banking company can issue only equity shares. (Section 12).

(b) The subscribed capital of a banking company (carrying on business in India) must be atleast one-half of the authorised capital; and the paid-up capital must be atleast one-half of the subscribed (Section 12).

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(c) The total of paid-up capital and reserves must be atleast the amount specified in Section 11,which have been given below:

Minimum Total of Paid-up capital and reserves Rs.

1. For banking companies incorporated outside India (i.e., Foreign Banks)

(a) If it has place of business in Mumbai or Kolkata; or both (b) If it has place of business other than in Mumbai or

Kolkata;

2. For Banking Companies Incorporated in India

(a) If it has place of business in Mumbai or Kolkata; or both (b) If it does not have place of business in Mumbai or Kolkata;

but have place of business (I) in more than one state (II) in only one state

- If there is only one place of business - If it has more than one place of businesses For principal place of business

For every other place of business, in the same district For every other place of business outside the district (The total, in this case however, need not exceed Rs. 5,00,000)

(c) If it has place and business in one state and also have place of business in Mumbai or Kolkata; or both

(I) for place of business in Mumbai or Kolkata; or both (II) for each place situated outside the city of Mumbai and Kolkata

(The total in this case, however, need not exceed Rs. 10,00,000) 20,00,000 15,00,000 10,00,000 5,00,000 50,000 1,00,000 Additional 10,000 Additional 25,000 5,00,000 Additional 25,000

(d) Private banks registered as a pubic limited company under the companies act, 1956, must have a minimum paid – up – capital of Rs. 100 crores.

(e) The capital adequacy Ratio (CAR) of all the banks operating in India must be 8%, and it should be 10% by 2002. (Capital Adequacy Ratio Refers to the percentage of capital and reserves [after writing off bad debts] to the assets of the bank). II. Statutory Reserve

According to Section 17(1) of the Banking Regulation Act, every banking company, incorporated in India, must transfer at least 25% of its annual profits (before declaring dividends) to Statutory Reserve. Such transfer must be made until the Reserve (along with share premium, if any) exceeds the paid-up capital.

III. Cash Reserve (Cash Reserve Ratio)

According to Section 42 of the Banking Regulation Act, every scheduled and non-scheduled Bank must deposit with Reserve Bank of India, an amount equal to 3% of its time

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and demand liabilities. Presently, the percentage is 8%. RBI has powers to increase the percentage upto 20%.

IV. Statutory Liquidity Ratio

Every Banking Company must invest 25% of its time and demand liabilities (i.e., total deposits) in God and Securities. The percentage can be increased upto 40% by RBI. This equipments is provided under Section 24 of the Banking Regulation Act.

V. Assets in India

According to Section 25 of the Banking Regulation Act, every Banking Company must have assets in India, equivalent to at least 75% of its time and demand liabilities, at the close of business on the last Friday of every quarter.

VI. Investment in Share and Debentures

Other than in exceptional cases provided in Section 19, no banking company shall hold shares and debentures of another company, more than 30% of the concerned company’s paid-up capital or its own paid-up capital.

VII. Declaration and Payment of Dividends

According to Section 15, no banking company can declare and pay dividends until all capitalized expenses (i.e., preliminary expenses, brokerage, indemnity commission etc.) have been completely written off.

VIII. Payment of Commission, Brokerage or Remuneration in respect of Issue of Shares or Discount on issue of Shares

According to section 13 of the Banking Regulation Act, such payment or discount cannot exceed 2.5% of the paid-up value of the said shares.

IX. Uncalled Capital

According to Section 14, a banking company cannot create any charge on uncalled capital.

X. Restrictions on Loans and Advances.

According to section 20, a banking company is bound by the following restrictions regarding loans and advances:

1. It cannot grant any loans or advances on the security of its own shares:

2. It cannot enter into any commitment for granting any loan or advance to or on behalf of the following persons;

(a) Any of its directors;

(b) Any firm in which any of its director is interested as partner, manager, employer or guarantor.

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(c) Any company (not being a subsidiary of a banking company or a company registered under section 25 of the companies act, 1956 or a government company) of which any of the directors of the banking company is a director, manager or employee or guarantor or in which he holds substantial interest;

(d) Any individual in respect of whom any of its directors is a partner or guarantor.

FINAL ACCOUNTSOF BANKING COMPANIES

Section 29, schedule III of the banking regulations act, gives the format for the preparation of Final Accounts of Banking Companies. The present format is applicable with effect 1st_{April, 1991.}

The final accounts of banking companies include preparation of profit and loss account and balance sheet. The prescribed formats of the two, along with formats of schedules to be prepared are given below:

The Third Schedule (See Section 29)

Form ‘A’

Form of Balance Sheet

Balance sheet of ……….(here enter name of the banking company) Balance sheet as on 31st_{March (year)}

Schedule _{(Current year)}As on 31.3…. _{(previous year)}As on 31.3… Capital& Liabilities

Capital 1

Reserve & surplus 2

Deposit 3

Borrowings 4

Other liabilities and provisions 5 TOTAL

ASSETS

Cash and balance with Reserve Bank of India

6 Balances with banks and money at call and short notice

7 Investments 8 Advances 9 Fixed assets 10 Other assets 11 TOTAL Contingent liabilities. 12

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SCHEDULE 1- CAPITAL

As on 31.3…. (Current year)

As on 31.3… (previous year) I. FOR NATIONALISED BANKS

Capital (fully owner by Central Government) II. FOR BANKS INCORPORATED OUTSIDE INDIA CAPITAL

(I) (The amount brought by banks by way of start –up capital as prescribed by RBI should be shown under this head)

(II) Amount of deposit kept with the RBI under Section 11(2) of the Banking Regulation Act, 1949.

III. FOR OTHER BANKS Authorised capital (. Shares of Rs. Each) Issued Capital (…Shares Rs. Each) Subscribed Capital (…Shares Rs. Each) Called-up capital (…Shares Rs. Each) Less : Calls unpaid Add : Forfeited Shares TOTAL

SCHEDULE 2- RESERVES & SURPLUS As on 31.3….

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I. Statutory Reserves Opening Balance

Additions During the year Deductions during the year II. Capital Reserves

Opening Balance

Additions During the year Deductions during the year III. Share Premium

Opening Balance

Additions During the year Deductions during the year IV. Reserves and Other Reserves Opening Balance

Additions During the year Deductions during the year

V. Balance in profit and loss amount TOTAL

SCHEDULE 3- DEPOSITS

As on 31.3….

(Current year) (previous year)As on 31.3… A. I. Demand Deposits

(I) From Banks (II) From Others II. Savings Bank Deposits III. Term Deposits

(I) From Banks (II) From Others Total

B. (I) Deposits of branches in India (II) Deposits of branches outside India TOTAL

SCHEDULE 4 – BORROWINGS As on 31.3….

(Current year) (previous year)As on 31.3… I.

II.

Borrowing in India (I) Reserve Bank of India (II) Other Banks

(III) Other institutions and agencies Borrowings outside India

TOTAL

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SCHEDULE 5 – OTHER LIABILITIES AND PROVISIONS As on 31.3…. (Current year) As on 31.3… (previous year) I. II. III IV Bills Payable

Inter – office adjustments (net) Interest accrued

Others (including provisions) TOTAL

SCHEDULE 6 – CASH AND BALANCES WITH RESERVE BANK OF INDIA

As on 31.3…. (Current year) As on 31.3… (previous year) I II Cash in hand

(Including foreign currency notes) Balances with Reserve

Bank of India

(I) In Current Account (II) In Other Accounts TOTAL

SCHEDULE 7 – BALANCES WITH BANKS & MONEY AT CALL & SHORT NOTICE

As on 31.3….

(Current year) (previous year)As on 31.3… I.

II

In India

(I) Balance with banks (a) In Current Accounts (b) In other deposit accounts (II) Money at call and short notice

(a) With banks

(b) With other institutions TOTAL

Outside India

(I) In Current Accounts

(II) Money at call and short notice TOTAL

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SCHEDULE 8 – INVESTMENTS As on 31.3…. (Current year) As on 31.3… (previous year) I II. Investments in India in I. Government securities II. Other approved securities III. Shares

IV. Debenture and bonds

V. Subsidiaries and/or joint ventures VI. Others (to be specified)

TOTAL

Investments outside India in

I. Government securities (including local authorities)

II. Subsidiaries and/or joint ventures abroad

III. Other investments (to be specified) TOTAL

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SCHEDULE 9– ADVANCES As on 31.3…. (Current year) As on 31.3… (previous year) A. B. C.I II

(I) Bills purchased and discounted (II) Cash credits, overdrafts and loans

repayable on demand (III) Term loans

TOTAL

(I) Secured by tangible assets

(II) Covered by Bank / Government Guarantees

(III) Unsecured TOTAL

Advances in India

(I) Priority sectors (II) Public sector (III) Banks (IV) Others TOTAL

Advance outside India (I) Due from banks (II) Due from others

(a) bills purchased and discounted (b) syndicated loans

(c) others TOTAL

GRAND TOTAL (C.I & II)

SCHEDULE 10– FIXED ASSETS As on 31.3…. (Current year) As on 31.3… (previous year) I II Premises

At cost as on 31st_{March of the preceding year} Additions during the year

Deductions during the year Depreciation to date

Other fixed articles (including furniture & fixture)

At cost as on 31st_{March of the preceding year} Additions during the year

Deductions during the year Depreciation to date TOTAL

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SCHEDULE 11– OTHER ASSETS As on 31.3…. (Current year) As on 31.3… (previous year) I II III IV V VI

Inter – office adjustments (net) Interest accrued

Tax paid in advance/tax deducted at source Stationary and stamps

Non-banking assets acquired in satisfaction claims

Others TOTAL

*in case there is any unadjusted balance of loss the same may be shown under this item with appropriate footnote.

SCHEDULE 12– CONTINGENT LIABILITIES As on 31.3…. (Current year)

As on 31.3… (previous year) I Claims against the bank not acknowledged as

debts

II Liability for partly paid investments

III Liability on account of outstanding forward exchange contracts

IV Guarantees given on behalf of constitutes (a) In India

(b) Outside India

V Acceptances, endorsements and other obligations

VI Other items for which the bank is contingently liable

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Form ‘B’

Form of Profit & Loss Account

Profit & Loss account for the year ended 31st_{March………}

Schedule As on 31.3…. (Current year) As on 31.3… (previous year) I II III IV INCOME Interest earned Other income TOTAL EXPENDITURE Interest expended Operating expenses

Provisions and contingencies TOTAL

PROFIT / LOSS

Net profit / Loss (---) for the year Profit / loss (---) brought forward TOTAL

APPROPRIATIONS Transfer to statutory reserves Transfer to other reserves

Transfer to Government/Proposed dividend

Balance carried over to balance sheet TOTAL 13 14 15 16

SCHEDULE 13– INTEREST EARNED As on 31.3….

(Current year) (previous year)As on 31.3… I

II III IV V

Interest / discount on advances/bills Income on investments

Interest on balances with reserve bank of India and other inter-bank funds

Others TOTAL

SCHEDULE 14– OTHER INCOME As on 31.3…. (Current year)

As on 31.3… (previous year)

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I II III IV V VI VII

Commission, exchange and brokerage Profit on sale of investments

Less: Loss on sale of investments Profit on revaluation of investments Less: Loss on revaluation of investments Profit on sale of land, buildings and other assets

Less: loss on sale of land, buildings and other assets.

Profit on exchange transactions Less: Loss on exchange transactions

Income earned by way of dividends etc. from Subsidiaries / companies and / or joint ventures abroad / in India

Miscellaneous Income TOTAL

Note: Under Items I to V loss figures may be shown in brackets.

SCHEDULE 15– INTEREST EARNED As on 31.3…. (Current year) As on 31.3… (previous year) I II III Interest on deposits

Interest on Reserve Bank of India/inter – bank borrowing

Others

TOTAL

SCHEDULE 16– OTHER INCOME As on 31.3…. (Current year) As on 31.3… (previous year) I II III IV V VI VII VIII IX X XI XII

Payments to and provisions for employees Rent, taxes and lighting

Printing and stationery Advertisement and publicity Depreciation on bank’s publicity Directors fees, allowance and expenses Auditors fees, allowances and expenses (including branch auditors)

Law charges

Postage, Telegrams, Telephones, etc. Repairs and maintenance

Insurance

Other Expenditure TOTAL

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Guidelines of RBI for compilation of Financial Statements Balance Sheet

Item Coverage Notes and instructions for _compilation Capital Nationalized Banks

Capital (Fully owned by Central Government)

The capital owned by Central Government as on the date of the balance sheet including contribution from Government, if any, for participating in world bank projects should be shown.

Banking companies incorporated outside India

Other Banks (Indian) Authorised Capital (….Shares of Rs. Each)

Issued Capital (…Share of Rs. Each)

Subscribed capital (..share of Rs. ....each)

Called up capita (…share of Rs….each)

Less: calls unpaid Add: Forfeited shares: Paid up capital)

I

II

The amount brought in by banks by way of start up capital as prescribed by RBI should be shown under this head.

The amount of deposit kept with RBI, under sub-section 2 of section 11 of the Banking Regulation Act, 1949 should also be shown.

Authorized, issued, subscribed, called-up capital should be given separately. Calls – in – arrears will be deducted from called up capital while the paid – up value of forfeited shares should be added thus arriving at the paid-up capital. Where necessary, items which can be combined should be shown under one head for instance ‘Issued and Subscribed Capital Notes – General

The charges in the above item, if any, during the years, say, fresh contribution made by Government, fresh issue of capital, capitalization of reserves, etc. may be explained in the notes.

Reserves and Surplus

(I) Statutory Reserves Reserves created in terms of Section 17 or any other section of A Banking Regulation Act must be separately disclosed.

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(II) Capital Reserve The expression ‘capital reserves’ shall not include any amount regarded as free for distribution through the profit & loss account. Surplus revaluation should be treated as Capital Reserves. Surplus on translation of the financial statements of foreign branches (which includes fixed assets also) is not a revaluation reserve.

(III) Share Premium Premium on issue of share capital may be shown separately under this head.

(IV) Revenue and other Reserves

The expression ‘Revenue Reserve’ shall mean any reserve other than capital reserve. This item will include all reserves, other than those separately classified. The expression ‘reserve’ shall not include any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets or retained by way of providing for any known liability. (V) Balance of Profit Includes balance of profit after

appropriations. In case of loss the balance may be shown as a deduction.

Notes – General

Movement in various categories of reserves should be shown as indicated in the schedule.

Deposits A (I) Demand Deposits (I) From Banks (II) From others

Includes all bank deposits repayable on demand.

Includes all demand deposits of the non-bank sectors. Credit balances in overdrafts, cash credit accounts, deposits payable at call, overdue deposits inoperative current accounts, matured time deposits and cash certificates, certificates of deposits, etc., are to be included under this category.

(II) Savings Bank Deposits Includes all savings banks deposits (including inoperative savings bank accounts).

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(III) Term Deposits (I) From Bank (II) From others

Includes all types of bank deposits repayable after a specified term. Includes all types of deposits of the non-bank sector repayable after a specified term. Fixed deposits, cumulative and recurring deposits, cash certificates, certificates of deposits, annuity deposits, deposits mobilized under various schemes, ordinary staff deposits, foreign currency non-resident deposits accounts, etc. are to be included under this category.

B. (I) Deposits of Branches in India

(II) Deposits of branches outside India.

The total of these two items will agree with the total deposits.

Notes – General

(a) Internal Payable on deposits which is accrued but not due should not be included but shown under other liabilities.

(b) Matured time deposits and cash certificates, etc. should be treated as demand deposits.

(c) Deposits under special schemes should be included under term deposit if they are not payable on demand. When such deposits have matured for payment they should be shown under demand deposits.

(d) Deposits from banks will include deposits from the banking system in India, Co-operative banks, foreign banks which may or may not have a presence in India.

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Borrowings (I) Borrowings in India (I) Reserve Bank of

India (II) Other Banks

(III) Other institutions and agencies

(II) Borrowings Outside India

Secured borrowing included above.

Includes borrowing / refinance obtained from Reserve Bank of India Includes borrowings / refinance obtained from commercial banks (including co-operative banks). Includes borrowings/refinance obtained from commercial banks (including co-operative banks). Includes borrowing / refinance obtained from Industrial Development Bank of India, Export Import Bank of India, National Bank for Agriculture and Rural Development and other institutions, agencies (including liability against participation certificates, if any) Includes borrowing of Indian branches abroad as well as borrowings of foreign branches. This item will be shown separately, includes secured borrowing / refinance in India and outside India. Notes – General

(I) The total of I & II will agree with the total borrowings shown in the balance sheet.

(II) Inter-office transactions should not be shown as borrowings.

(III) Funds raised by foreign branches by way of certificates of deposits, notes, bonds, etc. should be classified depending upon documentations, as ‘deposits’, ‘borrowing’, etc.

(IV) Refinance obtained by banks from reserve bank of India and various institutions are being brought under the head ‘Borrowings’. Hence, advance will be shown at the gross amount on the assets side.

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Other liabilities

and provisions I. Bills Payable Includes drafts, telegraphic transfer, traveler Cheque, mail transfers payable, pay slips, bankers Cheque and other miscellaneous items. II. Inter – office adjustments

(net) The inter-office adjustments balance, if in credit, should be shown under this head. Only net position of inter-office accounts, inland as well as foreign, should be shown here. III. Interest accrued Includes interest accrued but not due

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IV. Others (including

provisions) Includes net provision for income tax and other taxes like interest tax (less advance payment, tax, deducted at source, etc). surplus in aggregate in provisions for bad debts provision account, surplus in aggregate in provisions for depreciation in securities, contingency funds which are not disclosed as reserve but are actually in the nature of reserves, proposed dividend/transfer to Government, other liabilities which are not disclosed under any of the major head such as unclaimed dividend, provisions and funds kept for specific purposes, unexpired discount, outstanding charges like rent, conveyance etc. certain types of deposits like staff security deposits, margin deposits, etc. where the repayment is not free should also be included under this head.

(I) For arriving at the balance of inter-office adjustments all connected inter-office accounts should be aggregated and the net balance only will be shown, representing mostly item in transit and unadjusted items.

(II) The interest accruing on all deposits, whether the payment is due or not, should be treated as a liability.

(III) It is proposed to show only pure deposits under this head ‘deposits’ and hence all surplus provisions for bad and

doubtful debts,

contingency funds, secret reserves etc. which are netted off against the relative assets, should be brought under the head ‘Others (including provisions).

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Cash and Balances with the Reserve Bank of India

I. Cash in Hand (Including foreign currency notes)

II. Balances with Reserve Bank of India

(I) in current account (II) in other account I. In India

(I) Balances with banks (a) in current account (b) in other deposit

accounts

(II) Money at call short notice (a) with banks (b) with other

institutions

II. Outside India

(I) Current Accounts (II) Deposits Accounts

(III) Money at call and short notice

Includes cash in hand including foreign currency notes and also foreign branches in the case of banks having such branches.

Includes all balances with banks in India (Including co-operative). Balance in current accounts and deposit accounts should be shown separately.

Includes deposits repayable within 15 days or less than 15 days notice lent in the inter-bank call money market.

Includes balances held by foreign branches and balances held by Indian branches of the banks outside India. Balance held with foreign branches by other branches of the bank should not be shown under this head but should be included in inter-branch accounts. The amount held in ‘current account’ and ‘deposit accounts’ should be shown separately.

Includes deposits usually classified in foreign countries as money at call and short notice.

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Investments I. Investments in India (I) Government

securities

(II) Other approved securities

(III) Shares

(IV) Debentures and shares

(V) Investment in subsidiaries/joint ventures

(VI) Others

Includes central and state government securities and government treasury bills. These securities should be shown at the book value. However, the difference between the book value and market value should be given in the notes to the balance sheet.

Securities other than government securities, which according to the banking regulation act, 1949 are treated as approved securities, should be included here.

Investments in shares of companies and corporations not included in item (ii) should be included here. Investments in debentures and books of companies and corporations not included in item (ii) should be included here.

Investments in subsidiaries/joint ventures (including RRBs) should be included here.

Includes residual investments, if any, like gold, commercial papers and other instruments in the nature of shares / debentures / bonds.

II. Investments outside India (I) Government

securities (including local authorities) (II) Subsidiaries and / or

joint ventures abroad

(III) Others

All foreign government securities including securities issued by the local authorities may be classified under this head.

All investments made in the share capital of subsidiaries floated outside India and/or joint ventures abroad should be classified under this head. All other investments outside India may be shown under this head. Advances A. (I) Bills purchased and

discounted

(II) Cash credits, overdrafts and loans repayable on demand

(III) Term loans

In classification under section ‘A’, all outstanding – in India as well as outside – less provisions made, will be classified under three heads as indicated and both secured and unsecured advances will be included under these heads, including overdue installments.

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B.

(I) Secured by tangible assets

(II) Covered by Bank / Government guarantee

(III) Unsecured

All advance or part of advances which are secured by tangible assets may be shown here. The item will include advances in India and outside India.

Advances in India and outside India to the extent they are covered by guarantee of Indian and Foreign governments and Indian and foreign banks and DICGC & ECGC are to be included

All advances not classified under (i) and (ii) will be included here.

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C. I. Advance in India (I) Priority sectors (II) Public sector (III) Banks (IV) Others

C. II. Advances outside India (I) Due from Banks (II) Due from others

(a) Bills purchased and discounted (b) Syndicated loans

(c) Others

Total of ‘A’ should tally with total of ‘B’ advance should be broadly classified into ‘Advances in India’ and ‘Advances outside India’. Advances in India will be further classified on the sartorial basis as indicated.

Advances to sectors which for the time being as classified as priority sectors according to the instructions of the Reserve Bank are to be classified under the head ‘Priority sectors’, such advances should be excluded from item (ii) i.e., advances to public sector. Advances to Central and State Government and other government undertakings including government companies and corporation which are, according to the status, to be treated as public sector companies are to be included in the category ‘Pubic Sector’. All advances to the banking sector including co-operative bank will come under the head ‘Banks’, all the remaining advances will be included under the head ‘other’s and typically this category will include non-priority and advances to the private, joint and co-operative sectors.

(I) The Gross amount of advances including refinance and rediscounts but excluding provisions made to the satisfaction of auditors should be shown as advance.

(II) Term loan will be loans not repayable on demand. (III) Consortium advances would be shown net of share from other participating

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Fixed Assets I. Premises

(I) At cost as on 31st March of the preceding year (II) Additions during the

year

(III) Deductions during the year

(IV) Depreciation to date

II. Other Fixed Assets

(Including furniture and fixtures) (I) At cost on 31st_March of the preceding year (II) Additions during the

year

(III) Deductions during the year

(IV) Depreciation to date

Premises wholly or partly owned by the banking company for the purpose of business including residential premises should be shown against ‘premises’. In the case of premises and other fixed assets, the previous balance, additions thereto and deductions therefrom during the year as also the total depreciation written off should be shown. Where sums have been written off on reduction of capital or revaluation of assets, every balance sheet after the first balance sheet subsequent to the reduction or revaluation should show the revised figures for a period of five years with the date and amount of revision made.

Motor vehicles and all other fixed assets other than premises but including furniture and fixtures should be shown under this head.

Other assets I. Inter – office adjustments (net) The inter-office adjustments balance, if in debit, should be shown under this head. Only net position of inter-office accounts, inland as well as foreign, should be shown here, for arriving at the net balance of inter-office adjustment accounts, all connected inter-office accounts should be aggregated and the net balance, if in debit only should be shown representing mostly items in transit and unadjusted items.

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II. Interest accrued Interest accrued but not due on investments and advances and interest due but not collected on investment will be the main components of this item. As banks normally debit the borrowers account with interest due on the balance sheet date, usually there may not be any amount of interest due on advances. Only such interest as can be realized in the ordinary course should be shown under this head. III. Tax paid in advance / tax

deduced at source

The amount of tax deducted at source on securities, advance tax paid etc. to the extent that these items are not set off against relative tax provision should be shown against this item.

IV. Stationery and stamps Only exceptional items of expenditure on stationery like bulk purchase of security paper, loose leaf or other ledgers, etc. which are shown as quasi – asset to be written off over a period of time should be shown here. The value should be on a realistic basis and cost escalation should not be taken into account, as these items are for internal use. V. Non – Banking assets

acquired in satisfaction of claims

Immovable properties/tangible assets acquired in satisfaction of claims are to be shown under this head.

VI. Others This will include items like claims which have not been met, for instance, clearing items, debit item representing addition to assets or reduction in liabilities which have not been adjusted for technical reasons, want to particulars, etc., advances given to staff by a bank as employer and not as a banker, etc. items which are in the nature of expenses which are pending adjustments should be provided for and the provision noted against this items so that only realizable value is shown under this head. Accrued income other than interest may also be included here.

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Contingent

liabilities I. Claims against the bank not acknowledged as debts II. Liability for partly paid Investments.

III. Liability on account of outstanding forward exchange contracts.

_____

Liabilities on partly paid shares, debentures, etc. will be included in this head.

Outstanding forward exchange contracts may be included here.

Bills for collection

IV. Guarantees given on behalf of constituents

(I) In India (II) Outside India

V. Acceptances, endorsement and other obligations.

VI. other items for which the bank is contingently liable

Guarantees given for constituents in India and outside India may be shown separately.

This item will include letters of credit and bills accepted by the bank of behalf of customers.

Arrears of cumulative dividends, bills rediscounted underwriting contracts, estimated amounts of contracts remaining to be executed on capital account and not provided for, etc. are to be included here. Bills and other items in the course of collection and not adjusted will be shown against this item in the summary version only. No separate schedule is proposed.

PROFIT AND LOSS ACCOUNT Interest earned I. Interest/discount on

advances/bills

Includes interest and discount on all types of loans and advances like cash credit, demand loans, overdrafts, export loans, term loans, domestic and foreign bills purchased and discounted (including those rediscounted), overdue interest and also interest subsidy, if any, relating to such advances/bills.

II. Income on investments. Includes all income derived from the investments portfolio by way of interest and dividend

III. Interest on balances with Reserve Bank of India and other inter-bank funds

Includes interest on balance with Reserves banks and other banks, call loans, money market placements etc. IV. Others Includes any other interest/discount

income not included in the above heads.

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Other Income I. Commission, exchange and

brokerage Includes all remuneration on service such as commission on collection,

commission/exchange on

remittances and transfers, commission on letters of credit, letting out of lockers and guarantees, commission on government business, commission on other permitted agency business including consultancy and other services, brokerage, etc. on securities. It does not include foreign exchange income.

II. Profit on sale of investments Less: Loss on sale of

investments

Includes profit/loss on sale of securities, furniture, land and buildings, motor vehicle, gold, silver etc. only the net position should be shown. If the net position is a loss, the amount should be shown as a III. Profit on revaluation of

investments

Less: Loss on revaluation of investments

Deduction. The net profit/loss on revaluation of assets may also be shown under this item.

IV. Profit on sale of land, buildings and other assets less: Loss on sale of land, buildings and other assets V. Profit on Exchange

transaction Less: Loss on exchange transactions. VI. Income earned by

way of dividends etc. from subsidiaries, companies, joint ventures abroad/in India

Includes profit/loss on dealing in foreign exchange, all income earned by way of foreign exchange, commission and charges on foreign exchange transactions excluding interest which will be shown under interest, only the net position should be shown. If the net position is a loss, it is to be shown as a deduction.

VII. Miscellaneous Income Includes recoveries from constituents for godown rents, income from bank’s properties, security charges, insurance etc. and any other miscellaneous income. In case any item under this head exceeds one percentage of the total income, particulars may be given in the notes.

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Internet

expended I. Interest on Deposits Includes interest paid on all types of deposits including deposits from banks and other institutions.

II. Interest on Reserve Bank of India/inter-bank borrowings

Includes discount/interest on all borrowings and refinance from Reserve Bank of India and other banks.

III. Others Includes discount / interest on all borrowings / refinance from financial institutions. All other payments like interest on participation certificates, penal interest paid, etc. may also be included here. Included staff salaries Operating

Expenses I. Payments to and provisions for employees Wages, allowances, bonus, other staff benefits like provident funds, pension, gratuity, liveries to staff, leave fare concession, staff welfare, medical allowance to staff, etc. II. Rent, taxes and lighting Includes rent paid by the banks on

buildings and other municipal and other taxes paid (excluding income tax and interest tax). Electricity and other similar charges and levies. House rent allowance and other similar payments to staff should appear under the head payments to and provisions for employees.

III. Printing and Stationary Includes books and forms and stationery used by the bank and other printing charges which are not incurred by way of publicity expenditure.

IV. Advertisement and publicity Includes expenditure incurred by the bank for advertisement and publicity purposes including printing charges of publicity matter.

V. Depreciation on bank’s

property Includes depreciation on bank’s own property, motor cars and other vehicles, furniture, electric fitting, vaults, lifts, leasehold properties, non-banking assets, etc.

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VI. Director’s fees, allowances

and expenses. Includes sitting fees and all other items of expenditure incurred on behalf of directors. The daily allowance, hotel charges, conveyance charges etc. which though in the nature of reimbursement of expenses incurred may be included under this head. Similar expenses of local committee members may also be included under this head.

VII. Auditor’s fees and expenses (including branch auditors fees and expenses)

Includes the fees paid to the statutory auditors and branch auditors for professional services rendered and all expenses for performing their duties, even though they may be in the nature of reimbursement of expenses. If external auditors and other services the expenses incurred in that context including fees may not be included under this head but shown under ‘other expenditure’.

VIII. Law charges All legal expenses and

reimbursement of expenses incurred in connection with legal services are to be included here.

IX. Postage, telegrams, telephones etc.

Includes all postal charges like stamps, telegrams, telephone, teleprinter etc.

X. Repairs and maintenance Includes repairs to bank’s property, their maintenance charges etc.

XI. Insurance Includes insurance charges on bank’s property, insurance premia paid to deposit insurance & credit guarantee corporation etc to the extent they are not recovered from the concerned parties.

XII. Other Expenditure All expenses other than those not included in any of the other heads, like, licence fees, donations, subscriptions to papers, periodicals, entertainment expenses, travel expenses, etc. may be included under this head. In case any particular item under this head exceeds one percentage of the total income particulars may be given in the notes.

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Provisions and

contingencies _____ Includes all provisions made for bad and doubtful debts, provision for taxation, provision for diminution in the valve of investments, transfer to contingencies and other similar items.

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9. Investments

Investments by bank could be in Government Securities, Shares, Debentures, Bonds, Units of UTI and Mutual Funds, Gold etc. These items must be shown under Schedule 8 – “Investments” on the assets side of the Balance Sheet.

10. Loans and Advances

Banks advance loans in different nomenclatures like cash credits, overdrafts, bills discounted/purchased, term loans etc. These items must be show under Section 9 – “Advances” on the assets side of the Balance Sheet.

11. Closing Balance of Stationery and Stamps

This must be shown under Schedule 11 – “Other Assets” on the assets side of the Balance Sheet.

12. Contingent Liabilities

These are items which become liabilities on the happening of some event. This include claims against the banks not acknowledged as debts, liability for partly investments, liabilities on account of outstanding forward exchange contracts, guarantees given on behalf of customers, acceptances, endorsements and other obligations etc. these are not found in trial balance. If found in adjustments, they should be shown under Schedule 12 – “Contingent Liabilities”. However, the contingent liabilities must be shown outside the Balance Sheet, since it does not form a part of the total of balance sheet, not being actual liabilities.

13. Bills for Collection, being Bills Receivable

This also is not a trial balance item. Even is given in trial balance, it will have both debit and credit balances. This item should be shown as a footnote to the Balance Sheet. 14. Provision and Contingencies

Any provisions like provisions for bad and doubtful debts, provision for tax etc., and contingencies found in trial balance will be shown under Schedule 5 – “Other Liabilities” on the liabilities side of the Balance Sheet.

If these items are found in additional information (i.e., adjustments) they should be shown in two places;

(a) Under “provisions and contingencies” on the expenditure side of profit and loss account; and

(b) Under Schedule 5 – “Other Liabilities and Provisions” on the liabilities side of the Balance Sheet.

15. Non – Banking Assets

They refer to those assets acquired from customers for non-repayment of loan. They must be shown under schedule 11 – “Other Assets” on the assets side of the Balance Sheet.

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16. Acceptances, Endorsements and other obligations

This refers to the bills accepted by the bank or endorsed by the bank on behalf of its customer. This is a contingent liability, since if the person for whom the bank stands as a guarantor, dishonours the payments, the acceptance becomes as actual liability. This is not a trial balance item. However, even if given in trail balance, It will be found with both debit and credit balance. This must be shown under Schedule 12 -“Contingent liabilities”.

17. Money at Call and Short Notice

This consists of loans (a) at call and (b) at short notice. These loans are given to fill brokers, stock stockers and other banks for a short period. When the banks have surplus money with them, they advances their surplus to another banker under this category. At any time, or by giving a short notice, the money will be repaid by the borrower. The rate of interest will depend on current money market condition. This lender is shown as the asset side of the Balance Sheet under Schedule – 7 “Balance with banks and money at call and short notice.”

18. Non – Performing Assets

Banks advances can be classified as performing assets and non-performing assets (NPA). An assets becomes non-performing when income form it is not received in the bank for a certain period. The RBI has issued certain guidelines to banks regarding classification of advances into performing and non-performing assets. The NPA is defined as any credit facility in respect to which interest remained unpaid for a period of four quarters during the year ending 31st_{March, 1993, three quarters during the ending 1994, and two quarters during the year} ending 31st_{Mach 1995 on wards.}

CLASSIFICATION OF BANK ADVANCES

Bank advances are broadly classified into four groups: 1. Standard assets

2. Sub – Standard Assets 3. Doubtful assets and 4. Loss Assets

The classification is done after taken into consideration the extent of dependence on the collateral security for realization to dues the degree of well defined credit weakness. 1. Standard Assets

Those assets which do not cause any problem and do not carry more than normal risk attached to the business are called standard assets.

2. Sub – Standard Assets

Where Installments of term loans are overdue for a period exceeding one year should be treated as sub-standard assets. Where term of loan agreement regarding interest and

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principal are rescheduled after commencement of production should be classified as sub-standard and should remain in such category at least for two years of satisfactory performance under the rescheduled terms. Thus, an asset which has remained as NPA for less than two years is also classified as sub-standard assets.

The bank should make provision of 10% the total outstanding against sub-standard assets.

3. Doubtful Assets

Where installments of term loans are overdue for a period exceeding two years must be treated as doubtful assets.

The bank must make provision for doubtful debts as follows:

(a) 100% of the extent of which the advance is not covered by the realizable value of the security in the possession of the bank. The reasonable value is estimated on realistic basis.

(b) Over and above them (i) above, depending on the period for which the assets remained doubtful, 20% to 50% of the secured position. The realizable value of outstanding is estimated at upto one year, 20% of provision, are to three years, 30% of provision and more than three years, 50% of provision.

4. Loss Assets

When the loss on an asset is identified by the bank but the amount has not been written off wholly or partly is known as loss assets. Such as asset is uncollectable and is of such little value that it is not desirable to show it as banks in assets though it may have some salvage or recovery value.

The banks should make provisions against loss assets as follows.

The entire assets should be written off. If the assets are to remain in the books for any reason, then 100% of the outstanding should be provided.

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Key Points to be remembered in preparation of final accounts of Banking Companies. 1. When trial balance is not given in the problem, it is advisable to prepare trial balance

before preparation of final accounts.

2. When trial balance shows any difference (i.e. if the credit and debit totals of trial balance does not tally), the balance should be shown in Balance Sheet. When credit column of trial balance is more, the difference in trial balance should be shown under schedule 5- “Other Liabilities and Provisions” and when debit column of trial balance is more, the difference in trial balance should be shown under Schedule 11 – “Other Assets”.

3. Before preparation of Profit and Loss A/c, and Balance Sheet, identify the adjustments given for items in trial balance and mark the adjustment number, next to the respective item in trial balance, for easy identification while solving the problem. 4. Keep ready the formats of Profit and Loss A/c and Balance Sheet (with Schedule

Numbers), along with Schedules. Schedules need not be completely written. Keep ready till the schedules only with their numbers and headings.

5. Begin with items in trial balance – remember, each item in trial balance appears only once. Identify the schedule under which the item has to appear, and enter the item under the schedule.

6. When the item has any adjustment, it has to appear twice. Again, identify the two schedules in which the item has to be adjusted and enter them under the respective schedules.

7. After all items in trial balance are entered, check if any adjustments are yet to be considered. If so show the entries for the adjustments in the relevant schedules.

8. On completion of all entries, close the schedules pertaining to Profit and Loss A/c and transfer the balances to P&L A/c.

9. Close Profit and Loss A/c and transfer the relevant balances to relevant schedules. 10. Close the other schedules and transfer the relevant balances to relevant schedules. 11. Enter the difference, if any, in trial balance under the relevant head. With this, the

Balance Sheet must tally.

12. While solving the problem in exams, it is not Mandatory to show all schedules. Hence, only those schedules under which items in the problem would appear should be prepared.

13. The column relating to “Previous Year” figures can be excluded in final accounts and also in schedules, for working purposes.

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Illustration 4(Problem of Profit and Loss Account)

From the following particulars, prepare profit and loss account of Krishna Bank Ltd. for 1999-2000.

Rs.

Interest on loans 34,900

Interest on fixed deposits 36,500

Rebate on bills discounted 4,800

Commission charged on customers 910

Office expenses 15,500

Discount on cash credits 19,400

Interest on cash credits 22,400

Balance of profit & loss a/c 1,200

Rent and taxes 1,800

Interest on overdraft 12,800

Director’s Remuneration 420

Interest on savings deposits accounts 6,900

Postal expenses 150

Printing and stationery 390

Other expenses 180

Solutions: -

Schedule 13: Interest Earned

I. Interest and discount (34,900+19,400+22,400+12,800-4,800) 84,700

II. Interest on investments

-III. Interest on RBI deposits

-IV. Others

-Total 84,700

Schedule 14: Other Incomes

I. Commissions, Brokerage and Exchange 910

II. Profit on sale of investments

-III. Profit on revaluation of investments

-IV. Profit on sale of assets

-V. Income by way of foreign exchange

-VI. Income by way of dividend on investments

-VII. Others

-Total 910

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I. Interest on deposits (36,500 + 6,900) 43,400

II. Interest on borrowings

-III. Others

-Total 43,400

Schedule 16: Operating Expenses

I. Salaries 1,800

II. Rent, rates, taxes and lighting 390

III. Printing and stationary

-IV. Advertisement and publicity

-V. Depreciation 420

VI. Director’s fees

-VII. Audit fees

-VIII

. Law charges 150

IX. Postage, telegram and telephone

-X. Repairs and maintenance

-XI. Insurance

-XII. Others expenses (180+15,500) 15,680

Total 18,440

Provisions and Contingencies

-Total

-Krishna Bank Ltd.

Profit / Loss Account for the Year Ended

Particulars Schedule number Amount (Rs.) Incomes: Interest earned 13 84,700 Other incomes 14 910 Total 85,610 Expenditure: Interest expended 43,400 Operating expenses 18,440

Provisions and contingencies

Total 61,840

Profit / Loss:

Profits for the year 23,770

Profits b/d 1,200

Total 24,970

Appropriations:

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Transfer to other Reserve

-Transfer to Government or proposed dividend

-Profits c/d 19,028

Total 24,970

From the following particulars, prepare profit and loss account of Lakshmi Bank Ltd. for the year ended

Rs.

Interest on loans 2,59,000

Interest on fixed deposits 2,75,000

Commission charged on customers 8,200

Establishment expenses 54,000

Discount on bills discounted 1,95,000

Interest on cash credits 2,23,000

Interest on current account 42,000

Interest on overdraft 54,000

Director’s and audit fees 4,200

Interest on savings bank deposits 68,000

Postal and telegrams 1,400

Printing and advertisement 2,900

Sundry charges 1,700

Solutions: -

I. Interest and discount (2,29,000+2,23,000+54,000+1,95,000-49,000)

6,82,000

-IV. Others

-Total 6,82,000

I. Commissions, Brokerage and Exchange 8,200

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-IV. Profit on sale of assets

-VII. Others

-Total 8,200

Schedule 15: Interest Expended

I. Interest on deposits (2,75,000+42,000+68,000) 3,85,000

-III. Others

-Total 3,85,000

I. Salaries

-II. Rent, rates, taxes and lighting 18,000

III. Printing and stationary 2,900

IV. Advertisement and publicity

-V. Depreciation

-VI. Director’s fees 4,200

VII. Audit fees

-VIII

. Law charges

-IX. Postage and telegram 1,400

X. Repairs and maintenance

-XI. Insurance

-XII. Others expenses (54,000+1,700) 55,700

Total 82,200

-Total

-Krishna Bank Ltd.

Profit / Loss Account for the Year Ended

Particulars Schedule _number Amount (Rs.) Incomes: Interest earned 13 6,82,000 Other incomes 14 8,2000 Total 6,90,200 Expenditure: Interest expended 15 3,85,000 Operating expenses 16 82,200

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Total 4,67,200 Profit / Loss:

Profits for the year 2,23,200

Profits b/d -Total 2,23,200 Appropriations: Transfer to Statutory @ 25% 55,700 Profits c/d 1,67,250 Total 2,23,000

From the following particulars, prepare profit and loss account of Trimurthy Bank Ltd for the year ended 31-03-2001.

Rs.

Interest on loans 25,90,000

Interest on fixed deposits 27,50,000

Commission 82,000

Establishment charges 5,04,000

Interest on cash credits 22,30,000

Interest on current account 42,000

Discount on bills discounted 14,60,000

Interest on current and savings deposits 11,00,000

Rent and taxes 1,80,000

Interest on overdrafts 15,40,000

Director’s fees 30,000

Audit Fees 12,000

Postal and telegrams 14,000

Printing and Stationary 29,000

Sundry charges 17,000

Bad debts to be written off amounted to Rs. 4,00,000. provide for taxation at 55%. Rebate on bills discounted Rs. 40,000.

Solutions: -

Schedule 13: Interest Earned I. Interest and discount

(2,59,000+22,30,000+14,60,000+15,40,000-40,000)

77,80,000

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-Total 7,80,000

I. Commissions, Brokerage and Exchange 82,000

-III. Profit on revaluation

-IV. Profit on sale of others assets

-VII. Others

-Total 82,000

I. Interest on deposits (27,50,000+11,00,000) 38,50,000

-III. Others

-Total 38,50,000

I. Payment to employee

-II. Rent, rates and lighting 1,80,000

III. Printing and stationary 29,000

-V. Depreciation 30,000

VI. Director’s fees 12,000

VII. Audit fees

-VIII

. Legal charges 14,000

IX. Postage and telegram

-X. Repairs and maintenance

-XI. Insurance

-XII. Others (Establishment charges & Sundry charges) (5,40,000+17,000)

5,57,000

Total 8,22,000

-(i) Bad debts written off 4,00,000

(ii) Provision for taxation 15,34,500

Total 19,34,500

Trimurthy Bank Ltd.

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Particulars Schedule _number Amount (Rs.) Incomes: Interest earned 13 77,80,000 Other incomes 14 82,000 Total 78,62,000 Expenditure: Interest expended 15 38,50,000 Operating expenses 16 8,22,000

Provisions and Contingencies 19,34,500

Total 66,06,500

Profit / Loss:

Profits for the year 12,55,500

Profits b/d -Total 12,55,500 Appropriations: Transfer to Statutory (12,55,000x25%) 3,13,875 Profits c/d 9,41,625 Total 12,55,500

From the following particulars, prepare profit and loss account of Mysore Bank Ltd for the year ended 31-03-2001.

Rs.

Commission received 1,600

Salaries and allowances 10,800

Discount on bills discounted 29,200

Interest on cash credit 44,600

Interest on current accounts 8,400

Interest on overdrafts 30,8001

Director’s fees 600

Audit Fees 200

Interest on Saving Bank deposits 13,600

Postal and telegrams 300

Printing and Stationary 600

Locker rent 200

Transfer fees 100

Depreciation on Bank properties 1,000

Sundry charges 400

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(I) Provision for bad debts Rs. 8,000 (II) Provision for income tax Rs. 30,000 Solutions: -

I. Interest and discount (51,800+29,200+44,600+30,800-9,800) 1,46,600

-IV. Others

-Total 1,46,600

I. Commissions, Exchange and Brokerage 1,600

-III. Profit on revaluation of investments

-VII. Others 300

Total 1,900

IV. Interest on deposits (55,000+8,400+13,600) 77,000

V. Interest on borrowings

-VI. Others

-Total 77,000

I. Payment to employee 10,800

II. Rent, rates, taxes and lighting 3,600

III. Printing and stationary 600

-V. Depreciation Banks property 1,000

VI. Director’s fees 600

VII. Audit fees 200

VIII .

Law charges

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-XI. Insurance

-XII. Others (sundry charges) 400

Total 17,500

-(i) provision for Bad debts 8,000

(ii) Provision for income tax 30,000

Total 38,000

Mysore Bank Ltd.

Profit / Loss Account for the Year Ended 31-03-2001

Particulars Schedule _number Amount (Rs.) Incomes: Interest earned 13 1,46,600 Other incomes 14 1,9000 Total 1,48,500 Expenditure: Interest expended 15 77,000 Operating expenses 16 17,500

Provisions and Contingencies 38,000

Total 1,32,500

Profit / Loss:

Profits b/d

-Total 16,000

Appropriations:

Transfer to Statutory Reserve at 25% 4,000

Profits c/d 12,0000

Total 16,000

From the following particulars, prepare profit and loss account of Canara Bank Ltd for 2000-2001

Rs.

Commission received 1,000

Office expenses 15,000

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Interest on cash credits 23,000

Balance of profit/loss a/c 1,200

Interest on overdrafts 12,900

Director’s remuneration 450

Interest on savings deposits 7,000

Postal expenses 150

Printing and Stationary 400

Other expenses 200

Solutions: -

I. Interest and discount (35,000+20,000+23,000+12,900) 90,900

-IV. Others

-Total 90,900

I. Commissions, Exchange and Brokerage 1,000

-III. Profit on revaluation

-VII. Others

-Total 1,000

I. Interest on deposits (36,000+7,000) 43,000

-III. Others

-Total 43,000

I. Payment to employee

-II. Rent, rates and lighting 1,800

III. Printing and stationary 400

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-V. Depreciation

-VI. Director’s fees 450

VII. Audit fees

-VIII .

Legal charges

-IX. Postage and telegram 150

-XI. Insurance

-XII. Others (Establishment charges & Sundry charges) (5,40,000+17,000)

15,200

Total 18,000

-Total

-Canara Bank Ltd.

Profit / Loss Account for the Year Ended 2000-2001

Particulars Schedule _number Amount (Rs.) Incomes: Interest earned 13 90,900 Other incomes 14 1,000 Total 91,900 Expenditure: Interest expended 15 43,000 Operating expenses 16 18,000

Provisions and Contingencies

-Total 61,000

Profit / Loss:

Profits b/d 1,200

Total 32,100

Appropriations:

Transfer to Statutory Reserve at 25% (30,900x25%) 7,725

Profits c/d 24,375

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From the following information, your are required to prepare the profit and loss account of P.N.Bank for the year ended 31.03.1998 under the provisions of the act applicable thereto.

Rs. (in ‘000)

Interest on loans 518

Interest on cash credit 446

Discount on bills discounted 390

Interest on overdraft 108

Interest on savings bank deposit 220

Interest on fixed deposits 554

Commission, Exchange and brokerage 16.4

Rent, taxes and lighting 36

Auditor’s fees 2.4

Postage, telegram and telephones 2.8

Sundry charges 2

Advertisement and publicity 1.4

Director’ fess 6

Printing and stationery 0.4

Law charges 1.4

Payment to employees 108

Locker rent 0.7

Transfer fees 1.4

Depreciation on Banks property 10

Supplementary Information:

(i) Rebate on bills discounted Rs. 9,800 (ii) Provide for bad debts Rs. 58,000 Solutions: -

I. Interest and discount (518+446+390+108-98) 1,364

-IV. Others

-Total 1,364

I. Commissions, Brokerage and Exchange 16.4