The President of India and Members of "BANK OF
MAHARASHTRA"
Report on Audit of the Standalone Financial Statements
Opinion
1. We have audited the accompanying standalone financial statements of Bank of Maharashtra, which comprise the Balance Sheet as at 31st March 2025, the Profit and Loss Account and the Statement of Cash Flows for the year then ended, and notes to financial statements including a summary of significant accounting policies and other explanatory information in which are included the returns for the year ended on that date of the Head Office, 50 Zonal Offices and 20 branches and one Treasury and International Banking Division audited by us, and 682 branches audited by Statutory Branch Auditors of the Bank.
The branches audited by us and those audited by other auditors have been selected by the Bank in accordance with the guidelines issued to the Bank by the Reserve Bank of India. Also incorporated in the Balance Sheet, the Profit and Loss Account and the Statement of Cash Flows are the returns from 1927 branches which have not been subjected to audit. These unaudited branches account for 21.70% of advances, 46.21% of deposits, 20.98% of interest income and 44.35% interest expenses.
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 in the manner so required for bank and are in conformity with accounting principles generally accepted in India and:
a. the Balance Sheet, read with the notes thereon is a full and fair Balance Sheet containing all the necessary particulars, is properly drawn up so as to exhibit a true and fair view of the state of affairs of the Bank as at 31st March, 2025;
b. the Profit and Loss Account, read with the notes thereon shows a true balance of profit for the year ended 31st March, 2025 and
c. the Cash Flow Statement gives a true and fair view of the cash flows for the year ended on that date.
2. We conducted our audit in accordance with the Standards on Auditing (SAs) issued by the Institute of Chartered Accountants of India (ICAI). Our responsibilities under those Standards 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 ethical requirements that are relevant to our audit of the financial statements prepared in accordance with the accounting principles generally accepted in India, including the Accounting Standards issued by the ICAI, and provisions of section 29 of the Banking Regulation Act, 1949 and circulars, directions and guidelines issued by the Reserve Bank of India ('RBI") from time to time 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 opinion.
3. We draw attention to Note No. 18 in Schedule 18 of the Financial Statements regarding absence of sufficient number of Independent Directors on the board, the Bank has invoked Para 14A of Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1970 and placed the Financial Statements directly to the Board for want of quorum in Audit Committee of the Board.
4. We draw attention to Note No. 4(g) in Schedule 18 of the Financial Statements where Bank continues to hold COVID-19 related provision of Rs. 1200 Crore as contingency provision as on 31st March 2025.
Our Opinion is not modified in respect of this matter.
5 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 year ended March 31 2025. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and 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 to be communicated in our report.
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Sr.
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How our Audit
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Key Audit Matters
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procedures addressed
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No
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the Key Audit Matters
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1.
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Classification of
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The audit was focused on
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Advances, Provisioning
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income recognition, asset classification and
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and other relevant compliance of RBI
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provisioning pertaining to advances. The matter has
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Guidelines:
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been addressed as
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(Refer Note No. 4 of
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follows:
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Schedule 17 of
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Our audit procedures included the assessment
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Significant Accounting
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of controls over the
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Policy to the Standalone Financial Statements)
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approval, disbursements and monitoring of loans, and reviewing the logic and assumptions used in
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The Bank's portfolio
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the CBS and other related
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comprises of Net
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IT systems for compliance
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Advances of Rs.
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of the IRAC and
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236,083.80 crores as at
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provisioning norms and
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March 31, 2025 comprising of wholesale
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its operating effectiveness.
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and retail banking. As
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This included evaluation
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required by Income
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and understanding of the
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Recognition Asset
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following:
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Classification (IRAC)
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a)Tested the design and
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Norms, guidelines issued
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operating effectiveness of
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by RBI and other
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the key controls of the
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circulars, notifications
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system of application,
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and directives issued by RBI, the Bank has
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process of approval, recording, monitoring, recovery of loans,
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classified advances and
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overdue and stressed
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has made appropriate provisions in accordance with such guidelines.
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accounts, identification of NPA and provision for NPA.
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b) Tested samples
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Identification of
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of performing assets and
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performing and non performing advances
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assessed the application of IRAC norms, as prescribed by RBI, to
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involves establishment of
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ensure the compliance of
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proper mechanism. The bank accounts for all the
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the same.
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transactions related to Advances in its
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c) Examined early warning signal reports,
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other exceptional reports
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Information Technology
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generated by the bank for
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System (IT System) viz.
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the purpose of identifying
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Core Banking Solution (CBS) which also
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potential NPA and steps taken for monitoring of such accounts including
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identifies whether the advances are performing or non performing.
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red flagged accounts to overcome assessed risks and ensure effective
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implementation of risk
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Besides following the prudential norms on
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management and related controls.
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Income Recognition,
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d) Examined the
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Asset Classification and
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adequacy and
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Provisioning relating to advances issued by the
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appropriateness of disclosures as per the relevant RBI requirements
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Reserve Bank of India
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relating to NPA and
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("RBI"), the bank also has
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applicable Accounting
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certain policies for
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Standards required to be made in accordance with
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provisioning on
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Banking Regulation Act
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non-performing assets.
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and RBI Circulars.
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Sr.
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How our Audit
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Key Audit Matters
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procedures addressed
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No
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the Key Audit Matters
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1.
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The bank has system-based
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e) System controls
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classification of
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and manual controls over
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non-performing assets in
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the timely recognition of
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accordance with IRAC norms. Since the identification of
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non-performing assets.
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Non-performing advances
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f) Evaluated and
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and provisioning of
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tested the management
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Non-performing advances
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estimates and judgements
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requires considerable level
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for the purpose of
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of management estimation,
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identification of NPA and
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application of various regulatory requirements
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adequacy of provision
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and its significance to the
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required as per RBI's
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overall audit, we have identified this as a key audit
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Prudential norms.
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matter.
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g) Evaluated the effectiveness of automated
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IT based system of asset classification implemented by the Bank in accordance with the directives of RBI.
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h) We have relied on the reports/ returns and work done by other Statutory Branch Auditors (SBA) in cases of branches not visited by us to get an overall comfort with respect to overall compliance in accordance with SA 600 - Using the Work of Another Auditor.
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Sr.
No
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Key Audit Matters
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How our Audit procedures addressed the Key Audit Matters
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2.
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Classification and Valuation of Investments:
(Refer Note No. 3 of Schedule 17 of Significant Accounting policies to the Standalone Financial Statements)
Investments are classified into Fair Value through Profit and Loss (FVTPL) with subcategory of Held for trading (HFT), Available for Sale (AFS) and Held to Maturity (HTM) categories at the time of purchase. Investments intended to be held till maturity are classified as HTM Investments. Classification of Investments, valuation and provisioning thereof are based on RBI guidelines.
Compliance of Investment Portfolio as per guidelines issued by RBI is mandatory and involves management judgement in determining the value of bonds, debentures and other securities based on the policy and the model adopted by the Bank. Impact of Impairment assessment is having overall significance to the financial results of the Bank.
Interest Income from Investment of the Bank comprises 18.87% of the total income. In view of these significant points including assessment of non-performing Investments and provisions we have identified this aspect as a Key Audit Matter
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Our audit approach towards investment portfolio with reference to the RBI Circulars / directives included a combination of test of the design, implementation, and operating effectiveness of internal controls, related process and substantive procedures in relation to classification, valuation, independent price verification, identification of non-performing investments (NPIs), provisioning/depreciation related to Investments.
Examined the investment agreements / term sheets, deal tickets, broker contract notes entered into during the current year, on a sample basis, to understand the relevant investment terms and identify any conditions that were relevant to the valuation of financial instruments.
For the selected sample of investments, tested the accuracy, completeness and compliance with the RBI guidelines and directives by re-performing valuation for each category of the security. Samples were selected in such a way that all the categories of investments (based on nature of security) were covered. Carried out on test check basis independent valuation exercise of unquoted investments on the basis of prescribed procedures in terms of the RBI guidelines.
We assessed and evaluated the process adopted for collection of information from various sources for determining fair value of these investments.
Assessed and evaluated the process of identification of NPIs and corresponding reversal of income and creation of provision. Carried out substantive audit procedures to recompute independently the provision to be maintained and depreciation to be provided in accordance with the RBI guidelines and directives of the RBI, selected samples from the investments in 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 sample of NPIs
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Sr.
No
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Key Audit Matters
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How our Audit procedures addressed the Key Audit Matters
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2.
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Verified Investment portfolio on sample basis and performed various substantive analytical procedures in determination of Income, gain / loss on sale and tested the controls implemented by the Bank in recognizing the profit / loss to profit and loss account.
Reviewed the reports of the internal audits, concurrent audits etc. conducted by the bank.
Ensured that adequate disclosures have been made by way of Notes to the financial statements as mandated by the RBI guidelines.
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3.
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Information Technology Systems and Control Framework:
The Bank is having complex Information Technology environment which comprises of various interdependent IT systems and applications used in the day-to-day operations of the Bank for processing and recording large volume of transactions across various locations. Further the Bank's key fi — nancial accounting and reporting processes are highly dependent on the Core Banking Solution (CBS), Treasury Solutions, IRAC and and other allied systems, software, network and hardware controls.
Considering the high-level of automation, complexity of the IT architecture, simultaneous and significant use of IT systems, appropriate IT general controls and application controls are required to ensure that such IT systems are able to process the data, as expected, completely, accurately and consistently for reliable financial reporting.
Hence, IT system controls have been considered as a Key Audit Matter as any control lapses, validation failures, incorrect input data and wrong extraction of data may result in wrong reporting to the management and regulators
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Our significant audit procedures included the following:
We Involved our internal IS Audit team and obtained an understanding of the Bank's IT related control environment, IT applications relevant for the purpose of our audit of the financial statements.
For this purpose, we had discussions with the process owners with respect to various IT policies, processes and procedures put in place by the Bank. Reviewed these IT policies and procedures including user management, change management, backup and recovery procedures, system & cyber security, incident management, physical and environment security, standard operating procedures, Segregation of duties, BCP, DRP, service level agreements, security policies to ensure that these are in line with business requirements of the Bank and comply with the relevant regulatory guidelines in this regard.
Tested the design and operating effectiveness of the Bank's IT controls over the IT applications. Tested IT general controls particularly, logical access, change management and aspects of IT operational controls.
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Sr.
No
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Key Audit Matters
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How our Audit procedures addressed the Key Audit Matters
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3.
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Tested that requests for access to systems were appropriately reviewed and authorized; tested controls around Bank's periodic review of access rights; inspected requests of changes to systems for appropriate approvals and authorizations.
Reviewed and placed reliance on the reports of various specialised audits by internal / external IS Auditors, consultants appointed by the Bank and discussed with IT Department on compliance with key IT controls, including IRAC Automation Controls.
In addition to the above, we tested the design and operating effectiveness of certain automated controls that were considered as key internal controls over -financial reporting.
On sample basis, verified the results obtained from the systems with the other information sources; and tested logic used for extracting the data.
Tested combination of compensating controls or remediated controls such as reconciliations between systems and other information sources and / or performed alternative audit procedures, where necessary
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Sr.
No
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Key Audit Matters
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How our Audit procedures addressed the Key Audit Matters
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4.
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Provisions and Contingent Liability:
Assessment of Provisions and Contingent Liability in respect of certain litigations on various claims filed by other parties not acknowledged as debt (Note No. 10 of Schedule 17 and Note No. 16 of Schedule 18)
There is high level of judgement required in estimating the level of provisioning. The Bank's assessment is supported by the facts of matter, their own judgement, past experience, and advice from legal and independent experts wherever considered necessary. Accordingly, unexpected adverse outcomes may significantly impact the Bank's reported profit and state of affairs presented in Balance Sheet.
We determined the above area as a Key Audit Matter in view of associated uncertainty relating to outcome of these matters which requires application of judgement in interpretation of Law.
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We have obtained an understanding of Internal Controls relevant to the audit in order to design our audit procedures that are appropriate in the circumstances.
Understanding the current status of the litigations / tax assessments. Examining recent orders and communications received from various tax authorities / judicial forums and follow up actions thereon;
Evaluated the merit of the subject matter under consideration with reference to the grounds presented therein and available independent legal / tax advice including opinion of experts. Review and analysis of evaluation of the contentions of the Bank through discussions, collection of details of the subject matter under consideration, the likely outcome and consequent potential outflows on those issues.
Verified the disclosures related to significant litigations and taxation matters.
Accordingly, our audit was focused on analysing the facts of subject matter under consideration and judgements / interpretation of law involved.
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6. The Bank's Board of Directors is responsible for other information. The other information comprises the information other than Standalone Financial Statements and our Auditors' Report thereon and the Pillar III disclosure under the Basel III disclosure.
Our opinion on the Standalone Financial Statements does not cover the other information and Pillar 3 disclosure under the Basel III Disclosure 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 and, in doing so, consider whether the other information is materially inconsistent with the
Standalone Financial Statements or our knowledge obtained during the course of audit or otherwise appears to be materially misstated.
If, based on the work we have performed on the Other Information that we obtained prior to the date of this Auditors' Report, we conclude that there is a material misstatement of this Other Information, we are required to report that fact. We have nothing to report in this matter.
7. The Bank's Board of Directors is responsible 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 issued by ICAI, and provisions of Section 29 of the Banking Regulation Act, 1949 and circulars and guidelines issued by the Reserve Bank of India ('RBI') from time to time. 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 is 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 either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Bank's Financial Reporting process.
8. Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' 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.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's 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 auditors' 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 auditors' 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 Financial Statements, including the disclosures, and whether the Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the Standalone Financial Statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of Standalone Financial Statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our Audit work and evaluating the results of our work; and (ii) to evaluate the effect of identified misstatements in the Standalone Financial Statements.
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 of the current period and are therefore the key audit matters.
We describe these matters in our auditors' 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
9 We did not audit the financial statements / information of 682 branches included in the Standalone Financial Statements of the Bank whose Financial Statements / Financial Information reflect total advances of Rs. 79025.94 crores as at March 31, 2025 and total revenue of Rs. 6514.95 crores for the year ended on that date, as considered in the Standalone Financial Statements. These branches cover 32.95% of advances, 48.99% of deposits and 43.15% of non-performing assets as at March 31, 2025 and 22.94% revenue for the year ended March 31, 2025. The Financial Statements / Information of these branches have been audited by the Branch Auditors whose reports have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of branches, is based solely on the report of such Branch Auditors.
Our opinion is not modified in respect of this matter.
10. The Balance Sheet and the Profit and Loss Account have been drawn up in accordance with Section 29 of the Banking Regulation Act, 1949;
Subject to the limitations of the audit indicated in paragraphs 7 to 9 above and as required by Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980, and subject also to the limitations of disclosure required therein and as required by sub-section (3) of section 30 of the Banking Regulation Act, 1949, we report that:
a. We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes 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 returns received from the offices and branches of the Bank have been found adequate for the purposes of our audit.
11. As required by letter no. DOS.ARG. No.6270/08.91.001/2019-20 dated March 17, 2020 on "Appointment of Statutory Central Auditors (SCAs) in Public Sector Banks - Reporting obligations for SCAs from FY 2019-20", read with subsequent communications dated May 19, 2020 issued by the RBI, we further report on the matters specified in paragraph 2 of the aforesaid letter as under:
a. In our opinion, the aforesaid Standalone Financial Statements comply with the Accounting Standards issued by ICAI, to the extent they are not inconsistent with the accounting policies prescribed by the RBI.
b. There are no observations or comments on financial transactions or matters which have any adverse effect on the functioning of the bank.
c. As the bank is not registered under the Companies Act, 2013 the disqualifications from being a director of the bank under the sub-section (2) of Section 164 of the Companies Act, 2013 do not apply to the bank.
d. There are no qualifications, reservations or adverse remarks relating to the maintenance of accounts and other matters connected therewith.
e. Our audit report on the adequacy and operating effectiveness of the Bank's internal financial controls over financial reporting is given in Annexure A to this report. Our report expresses an unmodified opinion on the Bank's internal financial controls over financial reporting with reference to the Standalone Financial Statements as at March 31, 2025.
12. a. 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 and proper returns adequate for the purposes of our audit have been received from branches not visited by us;
b. The Balance Sheet, the Profit and Loss Account and the Statement of Cash Flows dealt with by this report are in agreement with the books of accounts and with the returns received from the branches not visited by us;
c. The reports on the accounts of the branch offices audited by branch auditors of the Bank under section 29 of the Banking Regulation Act, 1949 have been sent to us and have been properly dealt with by us in preparing this report; and
d. In our opinion, the Balance Sheet, the Profit and Loss Account and the Statement of Cash Flows comply with the applicable accounting standards, to the extent they are not inconsistent with the accounting policies prescribed by RBI.
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