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BSE: 532218ISIN: INE683A01023INDUSTRY: Finance - Banks - Private Sector

BSE   ` 27.29   Open: 27.39   Today's Range 26.93
28.09
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36.53
Year End :2023-03 

The South Indian Bank Limited

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

Opinion

We have audited the standalone financial statements of The South Indian Bank Limited ('the Bank'), which comprise the Balance Sheet as at March 31, 2023, the Profit and Loss Account, the Cash Flow Statement for the year then ended, and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Banking Regulation Act, 1949 as well as the Companies Act, 2013 ('the Act') and the circulars and guidelines issued by the Reserve Bank of India ("RBI"), in the manner so required for banking companies and give a true and fair view in conformity with accounting principles generally accepted in India, including the Accounting Standards prescribed under Section 133 of the Act, read with rules thereunder, of the state of affairs of the Bank as at March 31, 2023, and its profit and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the

Act. Our responsibilities under those SAs are further described in the 'Auditor's Responsibilities for the Audit of the Standalone Financial Statements' section of our report. We are independent of the Bank in accordance with the "Code of Ethics" issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the Standalone Financial Statements under the provisions of the Act, and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained, is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Key Audit Matters

Key Audit Matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements for the financial year ended March 31, 2023. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone financial statements. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and results of our audit procedures, including the procedures performed to address the matters below, provide the basis in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters prescribed below to be the key audit matters:

Key Audit Matters

How our audit addressed the Key Audit Matters

(i) Classification of Advances, identification of non-performing advances, Income Recognition, and provisioning

on Advances (Refer Schedule 9, Note 3 of Schedule 17 and Note 4 of Schedule 18A to the standalone financial

statements)

Advances include Bills purchased and discounted, Cash

Our audit approach / procedures included the following:

credits, Overdrafts, Loans repayable on demand and Term loans. These are further categorized as secured by Tangible assets (including advances against Book Debts), covered by Bank/Government Guarantees and Unsecured advances;

- Understanding and considering the Bank's accounting policies for NPA identification and provisioning and assessing compliance with the prudential norms prescribed by the RBI (IRACP Norms) including the additional provisions made

RBI prescribes the prudential norms for Income

on advances and additional provisions and asset

Recognition, Asset Classification and Provisioning of

classification benefit extended on restructured

non-performing assets (including circulars in relation

advances under RBI's COVID-19 Regulatory Package.

to COVID-19 Regulatory Package - Asset Classification and Provisioning) (IRACP Norms) and prescribes the minimum provision required for such assets.

- Understanding, evaluation and testing the design and operating effectiveness of key controls (including application controls for system driven

The identification of performing and non-performing

identification of NPAs) over approval, recording,

advances (including advances restructured accounts

monitoring and recovery of loans, monitoring

under applicable IRACP Norms) involves establishment

overdue / stressed accounts, identification of

of proper systems, controls mechanism, and the bank

NPA, provision for NPA, valuation of security and

is required to apply significant degree of judgement

collateral and identification and provisioning of

to identify and determine the amount of provision

impaired accounts based on the extant guidelines

required against each Non-Performing Asset ('NPA')

on IRACP laid down by the RBI. Further obtained

applying both quantitative as well as qualitative factors

an understanding of the contingency provision

prescribed by the regulations. The risk of identification

carried by the Bank and verified the underlying

of NPAs is affected by factors like stress and liquidity

assumptions used by the Bank for such estimate.

concerns in certain sectors.

- Testing of application controls on sample basis

The provision on NPA is estimated based on ageing

including testing of automated and manual

and classification of NPAs, recovery estimates, nature

controls, reports and system reconciliations, in

of loan product, value of security and other qualitative

relation to income recognition, asset classification,

factors and is subject to the minimum provisioning

provisioning pertaining to advances and

norms specified by RBI and approved policy of the Bank

investments and compliances of other regulatory

in this regard.

guidelines issued by the RBI.

The Management of the Bank also makes an assessment

- Testing on sample basis the accuracy of the data

of the impact on borrowers' accounts which were

input in the system for income recognition,

restructured as per RBI Circulars issued to provide relief

classification into performing and nonperforming

to the borrowers.

Advances and provisioning in accordance with the IRACP norms.

- Selected the sample borrowers based on

quantitative and qualitative risk factors for their assessment of appropriate classification as NPA including computation of overdue ageing to assess its correct classification and provision amount as per extant IRACP norms and the Bank policy.

- Performed other procedures including substantive

audit procedures covering the identification of NPAs by the Bank. These procedures included:

Key Audit Matters

How our audit addressed the Key Audit Matters

Significant judgements and estimates for NPA

(a)

Considering testing of the exception reports

identification and provisioning could give rise to

generated from the application software and the

material misstatements on:

systems where the advances have been recorded;

- Completeness and timing of recognition of non-

(b)

Considering the accounts reported by the Bank

performing assets in accordance with criteria as

and other banks as Special Mention Accounts

per IRACP norms.

("SMA") in RBI's central repository of information

- Measurement of the provision for non-

on large credits (CRILC) to identify stress;

performing assets based on loan exposure,

(c)

Reviewing account statements, appraisal note,

ageing and classification of the loan, realizable

audited financial statements, drawing power

value of security;

calculation, security and other related documents

- Appropriate reversal of unrealized income on the NPAs

and information of the sample borrowers selected based on quantitative and qualitative risk factors;

Since the identification of NPAs and provisioning of advances (including additional provisions arising out of COVID-19 pandemic) requires proper mechanism and significant level of estimation and given its significance to the overall audit, including possible observation by RBI which could result into disclosure in the financial

(d)

Reading of minutes of management committee and credit committee meetings and performing inquiries with the credit and risk departments to ascertain if there were indicators of stress or an occurrence of an event of default in a loan account or any product;

statements, we have ascertained identification of

(e)

Considering Internal Audit, Systems Audit, Credit

NPAs and provisioning against such NPAs as a key

Audit, Concurrent Audit, stock and receivable

audit matter.

audit and credit appraisal as per the policies and procedures of the Bank;

(f)

Considering the RBI Annual Financial Inspection report on the Bank, the bank's response to the observations and other communication with RBI during the year;

(g)

Examination of advances including stressed advances on a sample basis with respect to compliance with the RBI Master Circulars / Guidelines.

For NPAs identified, we, based on our sample factors including stressed sectors and account materiality, tested the asset classification dates, value of available security and provisioning as per IRACP norms. We recomputed the provision for NPA after considering the key input factors and compared our measurement outcome to that of system-generated reports and statements prepared by management.

Key Audit Matters

How our audit addressed the Key Audit Matters

(ii) Classification and Valuation of Investments, Identification of and provisioning for Non-Performing Investments

(Refer Schedule 8, Note 2 of Schedule 17 and Note 3 of Schedule 18A to the standalone financial statements)

Investments include investments made by the Bank in various Government Securities, Bonds, Debentures, Shares, Security receipts and other approved securities. These are governed by the circulars and directives of the RBI. These directions of RBI, inter-alia, cover valuation of investments, classification of investments, identification of non-performing investments (NPI),

Our audit approach/procedures included the following:

- We evaluated and understood the Bank's internal control system to comply with relevant RBI guidelines regarding valuation, classification, identification of NPIs and provisioning/depreciation related to investments;

nonrecognition of income and provisioning against NPI.

- We assessed and evaluated the process adopted for

Investments are classified into 'Held for Trading' ('HFT'), 'Available for Sale' ('AFS') and 'Held to Maturity' ('HTM')

collection of information from various sources for determining market value of these investments;

categories at the time of purchase. Investments, which

- For the selected sample of investments in hand,

the Bank intends to hold till maturity are classified as

we tested accuracy and compliance with the RBI

HTM investments.

Master Circulars and directions by re-performing

Investments classified as HTM are carried at amortised cost. Where in the opinion of management, a diminution, other than temporary, in the value of investments has taken place, appropriate provisions

valuation for each category of the security. Samples were selected after ensuring that all the categories of investments (based on nature of security) were covered in the sample;

are made.

- We assessed and evaluated the process of

Investments classified as AFS and HFT are marked-to-market on a periodic basis as per the relevant

identification of NPIs and corresponding reversal of income and creation of provision;

RBI guidelines.

- We carried out substantive audit procedures to

The valuation of each category (type) of the aforesaid securities is to be done as per the method prescribed in circulars and directives issued by the RBI which involves collection of data/information from various sources such as FBIL /FIMMDA rates, rates quoted on BSE/NSE, financial statements of unlisted companies etc.

recompute independently the provision to be maintained in accordance with the circulars and directives of the RBI. Accordingly, we selected samples from the investments of each category and tested for NPIs as per the RBI guidelines and recomputed the provision to be maintained in accordance with the RBI Circular for those selected

Considering the complexities and extent of judgement involved in the valuation, volume of transactions, investments on hand and degree of regulatory focus, this has been determined as a Key Audit Matter.

sample of NPIs;

- We tested the mapping of investments between the Investment application software and the financial statement preparation software to

Accordingly, our audit was focused on valuation of

ensure compliance with the presentation and

investments, classification, identification of NPI and

disclosure requirements as per the aforesaid RBI

provisioning related to investments.

Circular/directions.

Key Audit Matters

How our audit addressed the Key Audit Matters

(iii) Assessment of Provision for Taxation (including Deferred Tax Assets) (Refer Note 14 of Schedule 17 and Note

3 of Schedule 18B to the standalone financial statements)

This matter has been identified as a Key Audit Matter

Our

key audit procedures includes:

due to the significant level of management judgement required in the estimation of provision for income taxes including any write back of provisions, due to the following factors

a.

Obtaining an understanding of the Bank's process and respective internal controls for determining tax liabilities, tax provisions, deferred tax assets and contingent liabilities in respect of the major

a. The Bank's assessment of provision is based on

litigations in order to design our audit procedures

facts of matter, existence of multiple uncertain tax

that are appropriate in the circumstances;

positions leading to multiple disputes / litigations

b.

Analyzing the facts of subject matter of each

b. Provision for tax involves interpretation of various

dispute, issue and matter under consideration and

rules and law. It also involves consideration of

judgements/ interpretation of law involved.

the complex issues in on-going disputes and disclosures of related contingencies.

c.

Understanding the current status of the litigations/ tax assessments in respect of each matter for

Further, significant judgements are also involved in

different years;

Assessment of Liability, Adequacy of provisions and Adequacy of disclosures for measuring such obligations.

d.

Discussion with appropriate senior management personnel, independently assessed management's

Recognition of deferred tax assets involves the

estimate of the possible outcome of the disputed

assessment of its recoverability within the allowed time

cases; and evaluated the Management's underlying

frame requiring significant estimate of the financial

key assumptions in estimating the tax provisions.

projections which are approved by the Bank's Board of Directors, availability of sufficient taxable income in the future and also involving significant judgements in the interpretation of tax regulations and tax positions adopted by the Bank. Considering the judgement

e.

Considering legal precedence and other rulings in evaluating management's position on these uncertain tax positions, the provisions made, and/ or write back of the provisions

involved in determining the recovery of deferred tax

f.

Review of the reconciliation of the underlying tax

assets, the matter is considered a Key Audit Matter

balances to supporting documentation, including correspondence with tax authorities.

g.

Obtaining the components of deferred tax assets and estimates of taxable incomes for future periods as approved by the Board of Directors.

h.

Evaluating management assessment for estimating availability of future taxable profits for recognition of deferred tax assets.

i.

Assessing the period over which the deferred tax assets would be recovered against future taxable income.

j.

Verifying the disclosures related to significant litigations and taxation matters in the standalone financial statements

Key Audit Matters

How our audit addressed the Key Audit Matters

(iv)

Litigation, Claims and Contingent Liabilities (Refer Schedule 12, Note 15 of Schedule 17 and note 14 of Schedule 18B to the standalone financial statements)

Assessment of provisions and Contingent liabilities in Our audit approach/procedures included the following: respect of certain litigations including Indirect Taxes,

- Testing the design and operating effectiveness

various claims filed by other parties not acknowledged

of the Banks key controls over the estimation,

as debt and other matters under dispute which involve

monitoring and disclosure of provisions and

significant judgement to determine the possible

contingent liabilities

outcome of these disputes.

- Obtaining an understanding of internal controls in

There is a high level of judgement required in

relation to creation of provisions and Contingent

estimating the level of provisioning for the above. The

liabilities in respect of the major litigations

Bank s assessment is supported by the facts of matter,

before various judicial forums including Indirect

their own judgement, interpretation and analysis of

Taxes, various claims filed by other parties not

the complex issues under dispute, past experience and

acknowledged as debts relevant to audit in order

orders of the judicial authorities on identical issues,

to design our audit procedures that are appropriate

and advice from legal and independent tax consultants

in the circumstances;

wherever necessary. Accordingly, unexpected adverse

outcomes may significantly impact the Bank's - Understanding the current status of the litigations/ reported profit and state of affairs presented in the tax assessments in respect of each matter for Balance Sheet. different years;

We determined the above area as a Key Audit Matter - Examining recent orders/ communications in view of associated uncertainty relating to the received from various tax authorities/ judicial outcome of these matters which requires application forums, judicial pronouncements and follow up of judgement in interpretation of law. Accordingly, action thereon; our audit was focused on analyzing the facts of

- Evaluating the merit of the issues and subject

subject matter of each dispute, issue and matter

matter under consideration with reference to

under consideration and judgements/ interpretation

of law involved the grounds presented therein and available

independent legal/ tax advice including opinion of our internal legal/tax experts;

- Review and analysis of evaluation of the contentions of the Bank through discussions, collections of details of the subject matter under consideration, the likely outcome and consequent potential outflows on those issues; and

- Verification of disclosures related to significant litigations and indirect taxation matters.

Key Audit Matters How our audit addressed the Key Audit Matters

(v) Information Technology ('IT') Systems and Internal Controls for financial reporting

IT systems and controls followed by the bank are - Obtaining a comprehensive understanding of IT

material from a financial reporting perspective, applications landscape implemented at the Bank,

due to the pervasive nature and complexity of the followed by process understanding, mapping of

IT environment, the large volume of transactions applications to the processes related to financial

processed in numerous locations daily and the reliance reporting and understanding financial risks posed on automated and IT dependent manual controls. by people-process and technology.

Therefore on account of these factors, there exists a

- We tested the design and operating effectiveness

risk that gaps in the IT control environment could result

of the Bank s IT access controls over the

in the financial accounting and reporting records being

information systems that are critical to financial

materially misstated.

reporting. We tested IT general controls (logical Our areas of audit focus included user access access, changes management and aspects of IT management, developer access to the production operational controls). environment and changes to the IT environment.

- This included testing that requests for access to

Appropriate IT general controls and application controls

systems were appropriately logged, reviewed and

are required to ensure that such IT systems are able to

authorized. We tested the Bank s periodic review

process the data, as required, completely, accurately,

of access rights. We inspected requests of changes

and consistently for reliable financial reporting.

to systems for approval and authorization. We In addition, there are increasing challenges to protect considered the control environment relating the integrity of the Bank's systems and data since cyber to various interfaces, configuration and

security has become a more significant risk in recent other application layer controls identified as

periods. These are key to ensure that IT dependent and key to our audit. application-based controls are operating effectively.

- In addition to the above, we tested the design

Due to the pervasive nature and complexity of the and operating effectiveness of certain automated

IT environment as well as its importance in relation controls that were considered as key internal

to accurate and timely financial reporting, we system controls over financial reporting using

have ascertained IT systems and controls as a Key various techniques such as inquiry, review of

Audit Matter. documentation / record / reports, observation, and

re-performance.

- Where deficiencies and mismatches were identified, we tested compensating controls or performed alternate procedures.

- In addition, we understood where relevant, changes were made to the IT landscape during the audit period and tested those changes that had a significant impact on financial reporting.

- In addition, we relied on management representation which included IS audit, and also the testing of the automated system driven controls conducted by the Management.

Information other than the standalone Financial Statements and Auditor's Report Thereon

The Bank's Management and Board of Directors are responsible for the other information. The other information comprises the information included in the Management Discussion and Analysis, Board's report including Annexures to that Board's Report, Business Responsibility and Sustainability Report, Corporate Governance and Shareholder's Information, but does not include the standalone financial statements, consolidated financial statements and our auditor's report thereon, the Pillar III disclosures under Basel III Capital Regulation, Leverage Ratio, Liquidity Coverage Ratio and Net Stable Funding Ratio. The other information is expected to be made available to us after the date of this auditor's report.

Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements, or our knowledge obtained in the audit or otherwise appears to be materially misstated.

When we read the other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements

The Bank's Board of Directors and management are responsible for the matters stated in section 134(5) of the Act, with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Bank in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 in so far as they apply to the Bank and provisions of Section 29 of the Banking Regulation Act, 1949 and circulars and guidelines issued by RBI from time to time(the "RBI Guidelines"). This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding of the assets of the Bank and for preventing and detecting frauds and other

irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, Management and Board of Directors are responsible for assessing the Bank's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management and board of directors either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing the Bank's financial reporting process.

Auditor's Responsibilities for the audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Bank has adequate internal financial controls system in place and the operating effectiveness of such controls;

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management and board of directors;

• Conclude on the appropriateness of management's and board of directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Bank's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Bank to cease to continue as a going concern;

• Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with Those Charged with Governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements for the financial year ended March 31, 2023 and are therefore the key audit matters. We describe these

matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. The Balance Sheet and the Profit and Loss Account have been drawn up in accordance with the provisions of Section 29 of the Banking Regulation Act, 1949 and Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014.

2. As required by sub-section (3) of section 30 of the Banking Regulation Act, 1949, we report that:

(a) we have sought and obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purpose of our audit and have found them to be satisfactory;

(b) the transactions of the Bank, which have come to our notice, have been within the powers of the Bank; and

(c) The key operations and functions of the Bank are administered, managed and controlled by regional offices and Head Office through centralised systems and processes with automation of critical applications integrated to the software of Core Banking System, and therefore the audit was also carried out centrally based on such centralised systems and processes with automation of critical applications by review of the relevant records, documents and data required for the purposes of our audit available centrally through such applications/ platform. Further, we visited 41 major branches to examine the operations and functioning of the branch and review the records/registers/ documents maintained at such branches as part of our audit processes and procedures.

(d) the profit and loss account shows a true balance profit for the year then ended.

3. Further, as required by section 143(3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations which to the best of our

knowledge and belief were necessary for the purpose of our audit;

(b) In our opinion, proper books of account as required by law have been kept by the Bank so far as it appears from our examination of those books;

(c) The Standalone Balance Sheet, the Standalone Profit and Loss Account, the Standalone Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014, to the extent they are not inconsistent with the accounting policies prescribed by RBI;

(e) On the basis of written representations received from the directors as on March 31, 2023, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2023, from being appointed as a director in terms of Section 164(2) of the Act;

(f) With respect to the adequacy of the internal financial controls over financial reporting of the Bank with reference to these standalone financial statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure A" to this report;

(g) With respect to the matters to be included in the Auditor's Report under Section 197(16) of the Act:

The Bank is a banking company as defined under Banking Regulation Act, 1949. Accordingly, the requirements prescribed under Section 197 of the Companies Act, 2013 do not apply by virtue of Section 35B(2A) of the Banking Regulation Act, 1949, and;

(h) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our information and according to the explanations given to us

i. The Bank has disclosed the impact of pending litigations on its financial position in its standalone financial statements - as

per details furnished in Schedule 12 and Sl.no 1 of Note 14 under Schedule 18B to the standalone financial statements;

ii. The Bank has made provision, as required under the applicable laws or accounting standards, for material foreseeable losses, if any, on long term contracts including derivative contracts - as per details furnished in Note 15 under Schedule 18B to the standalone financial statements; and

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Bank.

iv. (a) The management has represented that, to the best of its knowledge and belief, other than as disclosed in Note 20 of Schedule 18B of the notes to the standalone financial statements, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Bank to or in any other persons or entities, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Bank ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(b) Further, the management has represented, that, to the best of its knowledge and belief, other than as disclosed in in Note 20 of Schedule 18B of the notes to the standalone financial statements, no funds have been received by the Bank from any persons or entities, including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Bank shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries and

(c) Based on such audit procedures performed, that were considered reasonable and appropriate by us in the circumstances and according to

and accordingly, the requirement of reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31, 2023.

Other Matter

The audit of standalone financial statements of the Bank for the year ended March 31, 2022 was conducted by CNK & Associates LLP, Chartered Accountants and Varma and Varma, Chartered Accountants, the joint statutory auditors of the Bank, who have expressed an unmodified opinion on those financial statements. Accordingly, we, K Venkatachalam Aiyer & Co. Chartered Accountants, do not express any opinion on the figures reported in the standalone financial statements for the year ended / as at March 31, 2022.

Our opinion on the standalone financial statement is not modified in respect of the above matter.

the information and explanations provided to us by the Management in this regard, nothing has come to our notice that has caused us to believe that the management representations made under subclause (a) and (b) contain any material misstatement.

v. The Board of Directors, in their meeting held on May 11, 2023 have proposed final dividend of ? 0.30 per equity share (30%) for the year ended March 31, 2023 amounting to ' 62.78 Crores. The proposal is subject to the approval of shareholders at the Annual General Meeting as stated in note 21 of Schedule 18B to the Standalone Financial Statements.

vi. Provisions of the Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of accounts using accounting software which has features of recording audit trail (Edit log) facility are applicable to the Bank with effect from April 1, 2023,