1. We have audited the accompanying Standalone Financial
Statements of Indian Overseas Bank (the Bank"), which
comprise the Balance Sheet as at March 31, 2026, the
Profit and Loss Account, Cash Flow Statement for the
year then ended and Notes to the Standalone Financial
Statements including Significant Accounting Policies
and other explanatory information, in which are included
the returns for the year ended on that date of:
a) The Central office and 20 branches audited by us:
b) 1073 domestic branches and 14 other offices
audited by the respective Statutory Branch
Auditors and;
c) 04 foreign branches audited by the respective
local Auditors.
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 ('RBI').
Also incorporated in the Balance Sheet, the Profit and
Loss Account and the Cash Flow Statement are the
returns from 2377 Domestic Branches and 56 other
offices which have not been subjected to audit. These
unaudited branches and other offices account for
24.27% of advances, 50.79 % of deposits, 11.89% of
interest income and 26.56% of interest expenses.
In our opinion and to the best of our information and
according to explanations given to us, the aforesaid
Standalone Financial Statements give the information
required by the Banking Regulation Act 1949 (the
"Act"), in the manner so required for the Bank and are
in conformity with the 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, 2026;
b) the Profit and Loss Account, read with the notes
thereon shows a true balance of profit; and
c) the Cash Flow statement gives a true and fair view
of the cash flows for the year ended on that date.
BASIS FOR OPINION
2. We conducted our audit in accordance with the
Standards on Auditing ("SAs") issued by the Institute
of Chartered Accountants of India ("the ICAI"). Our
responsibilities under those standards are further
described in the Auditors' 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 ICAI together with
the ethical requirements that are relevant to our audit
of the Standalone Financial Statements, prepared in
accordance with the accounting principles generally
accepted in India, including the Accounting Standards
notified under the Companies (Accounting Standards)
Rules, 2021, as amended from time to time subject to
Directions/Guidelines issued by the Reserve Bank of
India and provisions of section 29 of Banking Regulation
Act, 1949 and circulars and guidelines issued by the 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.
EMPHASIS OF MATTER
3. We draw attention to Note No. 9 (AS -22) in Schedule 18
of Standalone Financial Statements regarding carried
balance of ?2780.97 crore relating to Deferred tax
asset and reversal of ?1050.14 crore during the year on
estimated basis and the management's assessment of
the realizability of the carried balance of the Deferred
tax asset as on March 31,2026.
Our opinion is not modified in respect of above matter.
KEY AUDIT MATTERS
4. Key audit matters are those matters that, in our
professional judgment, were of most significance in our
audit of the standalone financial statements of current
period. 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 described below to be the
Key Audit Matters of the Bank to be communicated in
our report:
I. Classification of Advances, Income
Recognition, Identification of and
provisioning for non-performing
Advances (Refer Para 5 of Schedule
17 to the financial statements)
The net advances of the Bank constitute 64.78
percent of the total assets, which is the significant
part of the financial statements. They are, inter-
alia, governed by income recognition, asset
classification and provisioning (IRACP) norms and
other circulars and directives issued by the RBI
from time to time which provides guidelines related
to classification of Advances into performing and
non-performing Advances (NPA) except in case of
foreign offices in which case the classification of
advances and provisioning thereof is made as per
local regulations or RBI guidelines, whichever is
more stringent. The Bank classifies these Advances
based on IRACP norms as per its accounting
policy followed.
Identification of performing and non-performing
Advances involves establishment of proper
mechanism. The Bank accounts for all the
transactions related to Advances in its Information
Technology System (IT System) viz. Core Banking
Solution (CBS) which also identifies whether the
advances are performing or non-performing.
Besides following the prudential norms on Income
Recognition, Asset Classification and Provisioning
relating to Advances issued by the Reserve Bank of
India ("RBI"), the Bank also has certain policies for
provisioning on non- performing assets.
The carrying value of these advances (net of
provisions) may be materially misstated if, either
individually or in aggregate, the IRACP norms are
not properly followed.
Considering the nature of the transactions,
regulatory requirements, existing business
environment, estimation/judgement involved in
valuation of securities and calculation of provisions,
it is a matter of high importance for the intended
users of the Standalone Financial Statements.
Further due to reliance placed on data submitted
by the borrowers & lead bank for Drawing Power
calculations, third party for security valuation,
computation of provisions as per various guidelines
issued by the RBI and recognition of interest
income including in non-performing advances, we
determined the above area as a Key Audit Matter.
Auditors' Responses
Principal Audit Procedures
We assessed the Bank's system in place to identify
and provide for non-performing assets. Our audit
approach consisted testing of the design and
operating effectiveness of the internal controls and
substantive testing including the following:
a) We had obtained understanding from the Bank
about the controls built in the system, checks
and balances incorporated with respect to
adherence to the RBI guidelines and related
Bank's Policies for identification of non¬
performing assets, provisioning to determine
the nature, timing and extent of the substantive
procedures and had accordingly planned our
audit procedures.
b) The accuracy of the data input in the system
for income recognition, classification into
performing and non performing Advances
and provisioning in accordance with the
IRACP norms in respect of the top 20 branches
allotted to us. In carrying out substantive
procedures at the branches allotted to us,
we have examined large advances/stressed
advances while other advances have been
examined on a sample basis including review
of valuation reports of independent valuers as
provided by the Bank's management.
c) Existence and effectiveness of monitoring
mechanisms such as Internal Audit, Systems
Audit, Credit Audit and Concurrent Audit as
per the policies and procedures of the Bank.
d) Relied on the returns received from the
branches not subject to audit and in that regard
reviewed the internal monitoring mechanisms/
systems of the Bank to satisfy the correctness
of the sample data made available to us and
ensured exceptions/deviations/errors noticed
during our audit procedures were adequately
considered by the Bank.
e) Test checked the identification and provisioning
of non-performing assets and corresponding
reversal of income, in accordance with RBI
Guidelines issued from time to time.
f) Evaluated and tested the management
estimates and judgements for the purpose of
identification of NPA and adequacy of provision
required as per RBI's Prudential norms.
g) Evaluated the effectiveness of automated
IT based system of asset classification
implemented by the Bank in accordance with
the directives of RBI.
h) We have also relied on the work done by the
branch auditors for other domestic and foreign
branches selected by the Bank.
i) Review of files of the borrowers selected on
sample basis and operations of such accounts.
j) Ensured exceptions noticed during our audit
procedures are duly corrected.
II. Information Technology (IT) and
controls impacting financial Reporting
The Bank's financial accounting and reporting
systems are highly dependent on the effective
working of the Core Banking Solution (CBS)
and other IT systems linked to the CBS or
working independently.
Our areas of focus relate to the logic that is fed
into the system, sanctity and reliability of the
data, access management and segregation of
duties. These underlying principles are important
because they ensure that changes to applications
and data are appropriate, authorized, cleansed
and monitored, so that the system generates
accurate and reliable reports/returns and other
financial and non-financial information that is
used for the preparation and presentation of the
financial statements.
Technology (IT) systems are used in financial
reporting process. The Bank's operational and
financial processes generate extensive volume
on daily basis and process varied and complex
transactions which are highly dependent on IT
systems. There is a risk that automated accounting
procedures and related internal controls may not
be accurately designed and operating effectively,
hence considered as a key audit matter.
Auditors' Responses
Principal Audit Procedures
Our audit procedures include assessment and
identification of key IT applications, and further
verifying, testing and reviewing the design and
operating effectiveness of the IT system on the
basis of reports/returns and other financial and non¬
financial information generated from the system on
a test check basis. Our audit procedures included:
a) Obtained an understanding of the Bank's IT
control environment and key changes during
the audit period that may be relevant to
the audit.
b) Reviewed the design, implementation and
operating effectiveness of the Bank's IT
controls including application, access controls
that are critical to financial reporting on test
check basis.
c) Where we identified the need to perform
additional procedures, we placed reliance
on manual compensating controls; such as
reconciliations between systems and other
information sources or performing additional
testing; extended our sample sizes, to obtain
adequate and appropriate audit evidence.
d) Reliance on the work performed by the statutory
branch auditors and the rectification entries
(MOCs) passed based on branch audits.
e) Reliance on external vendor inspection reports
wherever made available.
f) Reviewed the IS Audit Reports and discussed
with IT Department on compliance with key
IT controls.
III. Classification and Valuation of
Investments, Identification of and
provisioning for Non-Performing
Investments (Refer Para 4 of Schedule
17 read with Note 3 of Schedule 18 to
the financial Statements)
Investments include investments made by the
Bank in various Government Securities, Bonds,
Debentures, Shares, Security receipts and other
approved securities.
Investments constitute 25.31 percent of the Bank's
total assets. 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, the corresponding non¬
recognition of income and provision there against.
The valuation of unquoted investments and
thinly traded investments is an area of inherent
risk because of market volatility, unavailability of
reliable prices and macroeconomic uncertainty.
Accordingly, our audit was focused on valuation of
investments, classification, identification of non¬
performing investments and provisioning related
to investments.
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 FIBIL rates, rates
quoted on BSE/NSE, financial statements of
unlisted companies etc.
Considering the complexities and extent of
judgment involved in the valuation, volume of
transactions, investments on hand and degree of
regulatory focus, we determined the above area as
a Key Audit Matter.
Auditors' Responses
Principal Audit Procedures
Our audit approach towards Investments
with reference to the RBI Circulars/directives
included the understanding of internal controls
and substantive audit procedures in relation to
valuation, classification, identification of non-
performing investments (NPIs), provisioning/
depreciation related to Investments.
Our audit procedures with respect to audit of
Treasury, focused on:
a) We evaluated and understood the
Bank's internal control system to comply
with relevant RBI guidelines regarding
valuation, classification, identification of
NPIs, provisioning/depreciation related
to investments.
b) For the selected sample of investments in
hand, we tested accuracy and compliance
with the RBI Master Circulars and directions
by re-performing 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.
c) Independently test-checked valuation of
unquoted investments, based on the latest
available financial statements or on the basis
of other prescribed procedures in terms of the
RBI guidelines.
d) We assessed and evaluated the process of
identification of NPIs and corresponding
reversal of income and creation of provision.
e) We carried out substantive audit procedures
to re-compute independently the provision to
be maintained and depreciation to be provided
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 sample of NPIs.
IV. Assessment of Provisions and Contingent
liabilities including in respect of certain
litigations, various claims filed by other
parties not acknowledged as debt (Refer
Para 13 of Schedule 17 read with Note 14
(AS-29) of Schedule 18 and Schedule 12
to the financial statements):
The Bank has disputed claims against it including
matters pending at various levels in Tax and
non-tax matters which are pending at various
courts/forums and are at various stages in the
judicial process. The management has exercised
significant judgement in assessing the possible
outflow in such matters.
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 judgment, past experience, and advice
from legal and independent tax consultants
wherever considered necessary. Accordingly,
unexpected adverse outcomes may significantly
impact the Bank's reported profit and state of
affairs presented in the Balance Sheet.
We determined the above area as a Key Audit
Matter in view of associated uncertainty relating
to the outcome of these matters which requires
application of judgment in interpretation of law.
Accordingly, our audit was focused on analysing
the facts of subject matter under consideration and
judgments/interpretation of law involved.
Auditors' Responses
Principal Audit Procedures
a) We have evaluated the appropriateness of the
design and tested the operating effectiveness
of the management's controls over the tax
litigation matters.
b) We reviewed the management's underlying
assumptions in estimating the possible
outflow and the possible outcome of the
disputes. The legal precedence and other
rulings were considered in evaluating
management's position on these uncertain
tax/non tax positions.
c) Further we have relied upon the management
judgements, industry level deliberations and
estimates for possible outflow and opinion of
internal experts of the Bank in relations to such
disputed tax positions.
d) Read and analysed select key
correspondences, internal/external legal
opinions/consultations by management for
key disputed non tax matters.
e) Reviewed and verified other legal
pronouncements wherever available in
similar matters in the case of the Bank/
other corporate.
f) Discussed with appropriate senior
management and evaluated management's
underlying key assumptions in estimating
the provisions.
g) Assessed management's estimate of the
possible outcome of the disputed non
tax cases and relied on the management
judgments in such cases.
5. Other Matters
We did not audit the financial Statements/financial
information of 1073 domestic branches , 14 other
offices and 04 foreign branches included in the
standalone financial statements of the Bank whose
financial statements/financial information reflects total
Assets of ?2,45,922.24 crores as at March 31,2026 and
total revenue of ?19,96,056.7 8 crores for the year ended
on that date, as considered in the standalone financial
statements. These branches and offices cover 50.14 %
of total advances, 44.02 % of total deposits and 25.83
% of non-performing assets as at 31st March 2026 and
53.18 % of revenue for the year ended on 31st March
2026. The financial statements/information of these
branches have been audited by the Bank's Statutory
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 reports of such branch auditors.
Our opinion is not modified in respect of above matters.
INFORMATION OTHER THAN THE
STANDALONE FINANCIAL STATEMENTS
AND AUDITORS' REPORT THEREON
6. The Bank's Board of Directors is responsible for the
other information. The other information comprises
Directors' Report, Corporate Governance report, Key
Financial Indicators and Shareholder's Information but
does not include the Standalone Financial Statements
and our auditors' report thereon. The other information
is expected to be made available to us after the date of
this auditors' report.
Our opinion on the financial statements does not cover
the other information and Pillar 3 disclosure under the
Basel III Disclosure and we will 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 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 Directors' Report, Corporate
Governance report, Key Financial Indicators and
Shareholder's 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
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 flow of the
Bank in accordance with the accounting principles
generally accepted in India including the applicable
Accounting Standards, provisions of Section 29 of
the Banking Regulation Act, 1949 and the circulars
and guidelines issued by 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 judgements and estimate 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 true and fair view and are
free from material misstatement, whether due to fraud
or error.
In preparing the standalone financial statements, the
Board of Directors 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
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.
AUDITORS' RESPONSIBILITIES FOR THE
AUDIT OF THE STANDALONE FINANCIAL
STATEMENTS
8. 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.
• 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 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 financial statements, including the
disclosures, and whether the 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 of the current period 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
9. 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.
Subject to the limitations of the audit indicated in
paragraph 5, 7 to 8 above and as required by the Banking
Companies (Acquisition and Transfer of Undertakings)
Act, 1970/1980, and subject also to the limitations of
disclosure required therein, 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.
10. 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
F.Y. 2019-20”, read with subsequent communication
dated May 19, 2020 issued by 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 applicable accounting
standards, to the extent they are not inconsistent
with the accounting policies prescribed by 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 sub-section (2) of
Section 164 of the Companies Act, 2013 do not
apply to the bank.
d) There are no qualification, reservation 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 with reference
to financial statements is given in Annexure 'A' to
this report. Our report expresses an unmodified
opinion on the Banks's operating effectiveness of
internal financial controls over financial Reporting
with reference to financial statements as at March
31,2026.
11. We further report that:
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, Profit and Loss account and Cash flow statement dealt with by this report are in agreement with
the books of account and with the returns received from branches not visited by us;
c) The reports on the accounts of the branch offices audited by branch auditors of the Bank as per the provisions of
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 Cash Flow Statement comply with the
applicable accounting standards, to the extent they are not inconsistent with the accounting policies prescribed by
the RBI.
For R. Devendra Kumar & Associates For Tej Raj & Pal
Chartered Accountants Chartered Accountants
FRN:114207W FRN: 304124E
Anand Golas Dinakar Mohanty
Partner Partner
M. No.: 400322 M. No.: 059390
UDIN: 2640322WFFBTN7506 UDIN: 26059390IUOVSI5022
For Laxmi Tripti & Associates For Sanjeev Omprakash Garg & Co.
Chartered Accountants Chartered Accountants
FRN:009189C FRN:008773C
L N Agrawal Vikas Mittal
Partner Partner
M. No.: 078427 M. No.: 407833
UDIN: 26078427LCTLBJ3787 UDIN: 26407833DORGRB7060
Place: Chennai
Date: 29.04.2026
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