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Estimated fair value of financial instruments | 12 Months Ended
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Mar. 31, 2018
Estimated fair value of financial instruments | 25. Estimated fair value of financial instruments The Bank’s financial instruments include financial assets and liabilities recorded on the balance sheet, including instruments such as foreign exchange and derivative contracts. Management uses its best judgment in estimating the fair value of the Bank’s financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented herein are not necessarily indicative of all the amounts the Bank could have realized in a sales transaction as of March 31, 2017 and March 31, 2018. The estimated fair value amounts as of March 31, 2017 and March 31, 2018 have been measured as of the respective year ends, and have not been re-evaluated or updated for purposes of these financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each year end. Financial instruments valued at carrying value The respective carrying values of certain on-balance-sheet financial instruments approximated their fair value. These financial instruments include cash and amounts due from banks, non-interest-bearing deposits in banks, securities purchased and sold under resale and repurchase agreements, accrued interest receivable, acceptances, accrued interest payable, and certain other assets and liabilities that are considered financial instruments. Carrying values were assumed to approximate fair values for these financial instruments as they are short-term in nature and their recorded amounts approximate fair values or are receivable or payable on demand. Trading securities Trading securities are carried at fair value based on quoted market prices. If quoted market prices did not exist, fair values were estimated using market yield on balance period to maturity on similar instruments and similar credit risk. For more information on the fair value of these securities, refer to note 5. Available for sale securities Available for sale investments principally comprise of debt securities and are carried at fair value. Such fair values were based on quoted market prices, if available. If quoted market prices did not exist, fair values were estimated using a market yield on the balance period to maturity on similar instruments and similar credit risks. The fair values of asset-backed and mortgage-backed securities are estimated based on revised estimated cash flows at each balance sheet date, discounted at current market pricing for transactions with similar risk. A reduction in the estimated cash flows of these instruments will adversely impact the value of these securities. A change in the timing of these estimated cash flows will also impact the value of these securities. For more information on the fair value of these securities, refer to note 6. Loans The fair values of consumer installment loans and other consumer loans that do not reprice or mature frequently are estimated using discounted cash flow models. The discount rates are based on internal models. The fair value of loans would decrease (increase) in value based upon an increase (decrease) in discount rate. Since substantially all individual lines of credit and other variable rate consumer loans reprice frequently, with interest rates reflecting current market pricing, the carrying values of these loans approximate their fair values. The fair values of commercial loans that do not reprice or mature within relatively short time frames are estimated using discounted cash flow models. The discount rates are based on internal models. The fair value of loans would decrease (increase) in value based upon an increase (decrease) in discount rate. For commercial loans that reprice within relatively short time frames, the carrying values approximate their fair values. For purposes of these fair value estimates, the fair values of impaired loans were computed by deducting an estimated market discount from their carrying values to reflect the uncertainty of future cash flows. Deposits The fair value of demand deposits, savings deposits, and money market deposits without defined maturities are the amounts payable on demand. For deposits with defined maturities, the fair values were estimated using discounted cash flow models that apply market interest rates corresponding to similar deposits and timing of maturities. Short-term borrowings The fair values of the Bank’s short-term debt were calculated based on a discounted cash flow model. The discount rates were based on yield curves appropriate for the remaining maturities of the instruments. Long-term debt The fair values of the Bank’s unquoted long-term debt instruments were calculated based on a discounted cash flow model. The discount rates were based on yield curves appropriate for the remaining maturities of the instruments. Term placements The fair values of term placements were estimated using discounted cash flow models. The discount rates were based on current market pricing for placements with similar characteristics and risk factors. Derivatives See note 24 A comparison of the fair values and carrying values of financial instruments is set out below:
|  | As of |
|  | March 31, 2017 |  |  | March 31, 2018 |
|  |  |  |  | Estimated Fair Value |  |  |  |  |  | Estimated Fair Value |  |  |  |  |  |  |
|  | Carrying Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |  |  | Carrying Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |  |  | Carrying Value |  |  | Estimated Fair Value |
|  | (In millions) |
Financial Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | Rs. | 430,708.6 |  |  | Rs. | 430,708.6 |  |  | Rs. | — |  |  | Rs. | — |  |  | Rs. | 430,708.6 |  |  | Rs. | 574,151.0 |  |  | Rs. | 574,151.0 |  |  | Rs. | — |  |  | Rs. | — |  |  | Rs. | 574,151.0 |  |  | US$ | 8,818.2 |  |  | US$ | 8,818.2 |
Term placements |  |  | 131,069.5 |  |  |  | — |  |  |  | 130,997.9 |  |  |  | — |  |  |  | 130,997.9 |  |  |  | 139,875.9 |  |  |  | — |  |  |  | 139,818.8 |  |  |  | — |  |  |  | 139,818.8 |  |  |  | 2,148.3 |  |  |  | 2,147.4 |
Investments held for trading |  |  | 35,363.7 |  |  |  | 4.8 |  |  |  | 35,358.9 |  |  |  | — |  |  |  | 35,363.7 |  |  |  | 167,513.9 |  |  |  | 3,652.4 |  |  |  | 163,861.5 |  |  |  | — |  |  |  | 167,513.9 |  |  |  | 2,572.8 |  |  |  | 2,572.8 |
Investments available for sale* |  |  | 2,110,677.4 |  |  |  | 8,198.7 |  |  |  | 2,080,579.6 |  |  |  | 21,899.1 |  |  |  | 2,110,677.4 |  |  |  | 2,222,002.6 |  |  |  | 4,569.0 |  |  |  | 2,198,899.0 |  |  |  | 18,534.6 |  |  |  | 2,222,002.6 |  |  |  | 34,126.9 |  |  |  | 34,126.9 |
Securities purchased under agreements to resell |  |  | 50,000.0 |  |  |  | — |  |  |  | 50,000.0 |  |  |  | — |  |  |  | 50,000.0 |  |  |  | 650,018.6 |  |  |  | — |  |  |  | 650,018.6 |  |  |  | — |  |  |  | 650,018.6 |  |  |  | 9,983.4 |  |  |  | 9,983.4 |
Loans |  |  | 5,910,412.8 |  |  |  | — |  |  |  | 1,791,981.2 |  |  |  | 4,169,757.8 |  |  |  | 5,961,739.0 |  |  |  | 7,263,671.8 |  |  |  | — |  |  |  | 2,078,100.0 |  |  |  | 5,218,275.8 |  |  |  | 7,296,375.8 |  |  |  | 111,560.0 |  |  |  | 112,062.3 |
Accrued interest receivable |  |  | 67,356.6 |  |  |  | — |  |  |  | 67,356.6 |  |  |  | — |  |  |  | 67,356.6 |  |  |  | 77,894.7 |  |  |  | — |  |  |  | 77,894.7 |  |  |  | — |  |  |  | 77,894.7 |  |  |  | 1,196.4 |  |  |  | 1,196.4 |
Other assets |  |  | 190,567.3 |  |  |  | — |  |  |  | 189,085.7 |  |  |  | — |  |  |  | 189,085.7 |  |  |  | 108,370.1 |  |  |  | — |  |  |  | 106,771.8 |  |  |  | — |  |  |  | 106,771.8 |  |  |  | 1,664.4 |  |  |  | 1,639.9 |
Financial Liabilities : |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing deposits |  |  | 5,277,644.0 |  |  |  | — |  |  |  | 5,316,226.4 |  |  |  | — |  |  |  | 5,316,226.4 |  |  |  | 6,693,649.3 |  |  |  | — |  |  |  | 6,716,360.3 |  |  |  | — |  |  |  | 6,716,360.3 |  |  |  | 102,805.2 |  |  |  | 103,154.1 |
Non-interest-bearing deposits |  |  | 1,153,678.9 |  |  |  | — |  |  |  | 1,153,678.9 |  |  |  | — |  |  |  | 1,153,678.9 |  |  |  | 1,190,102.2 |  |  |  | — |  |  |  | 1,190,102.2 |  |  |  | — |  |  |  | 1,190,102.2 |  |  |  | 18,278.3 |  |  |  | 18,278.3 |
Securities sold under repurchase agreements |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 138,000.0 |  |  |  | — |  |  |  | 138,000.0 |  |  |  | — |  |  |  | 138,000.0 |  |  |  | 2,119.5 |  |  |  | 2,119.5 |
Short-term borrowings |  |  | 322,265.6 |  |  |  | — |  |  |  | 321,708.0 |  |  |  | — |  |  |  | 321,708.0 |  |  |  | 779,201.7 |  |  |  | — |  |  |  | 779,418.7 |  |  |  | — |  |  |  | 779,418.7 |  |  |  | 11,967.5 |  |  |  | 11,970.8 |
Accrued interest payable |  |  | 44,487.6 |  |  |  | — |  |  |  | 44,487.6 |  |  |  | — |  |  |  | 44,487.6 |  |  |  | 65,514.4 |  |  |  | — |  |  |  | 65,514.4 |  |  |  | — |  |  |  | 65,514.4 |  |  |  | 1,006.2 |  |  |  | 1,006.2 |
Long-term debt |  |  | 730,920.7 |  |  |  | — |  |  |  | 758,454.8 |  |  |  | — |  |  |  | 758,454.8 |  |  |  | 932,906.3 |  |  |  | — |  |  |  | 943,813.5 |  |  |  | — |  |  |  | 943,813.5 |  |  |  | 14,328.2 |  |  |  | 14,495.7 |
Accrued expenses and other liabilities |  |  | 449,454.6 |  |  |  | — |  |  |  | 449,454.6 |  |  |  | — |  |  |  | 449,454.6 |  |  |  | 301,871.0 |  |  |  | — |  |  |  | 301,871.0 |  |  |  | — |  |  |  | 301,871.0 |  |  |  | 4,636.3 |  |  |  | 4,636.3 |
* | excluding investments carried at cost Rs. 708.4 million (US$10.9 million) (as at March 31, 2017, Rs. 708.2 million)

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 + Details
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