1. We have audited the accompanying financial
statements of CSB Bank Limited (‘the Bank'), which
comprise the Balance Sheet as at 31 March 2025, the
Profit and Loss Account and the Cash Flow Statement
for the year then ended, and notes to the financial
statements, including a summary of the significant
accounting policies and other explanatory information.
2. In our opinion and to the best of our information
and according to the explanations given to us, the
aforesaid financial statements give the information
required by the Banking Regulation Act, 1949 as well as
the Companies Act, 2013 (‘the Act') and circulars and
guidelines issued by the Reserve Bank of India (‘the
RBI'), in the manner so required for banking companies
and give a true and fair view, in conformity with the
Accounting Standards specified under section 133
of the Act, read with the Companies (Accounting
Standards) Rules, 2021 and other accounting
principles generally accepted in India, of the state of
affairs of the Bank as at 31 March 2025, and its profit
and its cash flows for the year ended on that date.
BASIS FOR OPINION
3. We conducted our audit in accordance with the
Standards on Auditing specified under section 143(10)
of the Act. Our responsibilities under those standards
are further described in the Auditor's Responsibilities
for the Audit of the 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 (‘ICAI') together with
the ethical requirements that are relevant to our audit
of the 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 opinion.
KEY AUDIT MATTERS
4. Key audit matters are those matters that, in our
professional judgment, were of most significance in
our audit of the financial statements of the current
period. These matters were addressed in the context
of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
5. We have determined the matters described below to be the key audit matters to be communicated in our report.
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Key audit matters
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How our audit addressed the key audit matters
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Classification of advances, identification of non-performing advances, income recognition and provisioning for
advances
As at 31 March 2025, the Bank reported total loans and advances (net of provisions) of ' 31,507 crores (2024: ' 24,336
crores), gross NPAs of ' 498 crores (2024: ' 361 crores), and provision for non-performing assets (including claims) of
' 334 crores (2024: ' 236 crores).
Refer schedule 9 and schedule 18 (2.4) to the Financial Statements.
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Advances include Bills purchased and discounted,
Cash credits, Overdrafts, Loans repayable on demand
and term loans. The Bank's advances portfolio majorly
comprises of gold loans disbursed against pledge of
gold collateral.
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Our key audit procedures included but were not limited to the
following:
Design/Controls
• Understood and considered the Bank's accounting policies
for NPA identification and provisioning and assessing
compliance with the IRACP norms prescribed by the RBI
including the additional provisions made on advances.
• Obtained an understanding of management's approach,
interpretation, systems and controls implemented in
relation to NPA computation.
• Assessed the design, implementation and operating
effectiveness of key internal financial controls (including
application controls for system driven identification of
NPAs) over approval, recording, monitoring and recovery
of loans, monitoring overdue / stressed accounts,
measurement of provision, valuation of security, assessing
the reliability of management information which included
testing overdue reports.
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Key audit matters
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How our audit addressed the key audit matters
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The classification of advances and identification of
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• Understood the Bank's policy over appointment of external
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non-performing advances involves establishment
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appraiser for gold loans and storage of pledged gold.
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of proper mechanism and judgement is applied to
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Further, assessed the design, implementation and operating
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identify and determine the amount of provision
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effectiveness of key controls identified.
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required against non-performing assets (‘NPA') and
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• Obtained an understanding for contingency provision
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restructured advances as per the policy approved
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carried by the Bank and verified the underlying assumptions
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by the Board of Directors of the Bank and based
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for such estimate along with events identified by the
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on management's assessment of the degree of
impairment of the advances subject to the minimum
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management for usage for such provision.
• Tested review controls over measurement of provisions
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provisioning levels prescribed under the ‘Prudential
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including documentation of the relevant approvals along
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Norms on Income Recognition, Asset Classification
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with basis and rationale of the provision and disclosures in
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& Provisioning' (‘IRACP norms') prescribed by the
Reserve Bank of India (the ‘RBI') from time to time.
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financial statements.
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Similarly, the Bank is also required to make judgements
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• Tested application controls on a sample basis including
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to identify advances which are non-recoverable and
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testing of automated and manual controls, reports and
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thereby determined to be written off.
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system reconciliations, in relation to income recognition,
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The provision for advances is estimated based on
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asset classification, provisioning pertaining to advances.
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ageing and classification of such advances, underlying
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Substantive tests
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valuation, adequacy and existence of the security
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• Performed test of details over of calculation of NPA
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amongst other factors. In case of restructured
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provisions, including provisions on restructured loans for
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accounts, provision is made in accordance with
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assessing the completeness, accuracy and relevance of
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the RBI guidelines. The management also makes
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data and to ensure that the same is in compliance with the
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provisions on exposures on the basis of advances lent
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Bank's NPA provision policy and IRACP norms.
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to certain stressed sectors.
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• Tested samples of advances (based on quantitative and
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The management of the Bank relies on the CBS
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qualitative thresholds) where impairment indicators had
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(Core Banking Solutions) along with other allied
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been identified by management.
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IT systems accompanied by various estimates,
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• Evaluated the statement of accounts, approval process,
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prudent judgements relating to credit assessment
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credit review of borrowers, review of SMA reports, valuation
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of borrowers, valuation of collateral, including
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reports of collaterals for corporate loans and other related
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services of independent valuers, professionals for
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documents to assess recoverability and the classification
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completeness and timing of recognition of NPAs, asset
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of the advance.
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classification, income recognition and provisioning
thereon.
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• For selected samples for gold loans, inspected external
appraiser's valuation report certifying the purity of
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We have identified classification of advances,
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the pledged gold and checked the quantity and weight
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identification of NPAs, provisioning of advances and
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mentioned in the valuation report. Conducted independent
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income recognition as a key audit matter because
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visits to branches/offices to examine documentation and
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this requires proper control mechanism, significant
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other records relating to advances and to verify existence
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level of management judgement especially in
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of pledged gold for samples selected. Further, for the
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determining the provision and the valuation of the
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gold appraiser's valuation reports relied upon by the
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security, heightened regulatory compliances and its
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management, assessed the competency, independence,
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significance to the overall financial statements of the
Bank.
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scope of work for the purpose of our audit.
• Verified on sample basis whether the loan write-offs during
the year is in accordance with Board approved policy.
• Sought independent confirmation of account balances for
sample borrowers.
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Key audit matters
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How our audit addressed the key audit matters
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• Read the minutes of management committees and credit
committee meetings and performing inquiries with the
credit, credit monitoring, risk, asset recovery, compliance
and vigilance departments to ascertain key changes and
observations.
• Considered key observations arising out of Internal Audits,
Systems Audits and Concurrent Audits conducted as per
the policies and procedures of the Bank.
• Considered the RBI Annual Financial Inspection report on
the Bank, the Bank's response to those observations and
other communications with RBI.
• Assessed disclosures included in the financial statements in
respect of asset classification, and provisioning, including
specific disclosures required by IRACP norms.
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Information Technology (‘IT’) Systems and Internal Controls for financial reporting
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Key Audit Matter
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How our audit addressed the key audit matter
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The IT environment of the Bank is complex as it involves
a number of independent and inter-dependent IT
systems which are used in the operations of the
Bank for processing and recording a large volume of
transactions at numerous locations on a daily basis.
As a result, there is a high degree of reliance and
dependency on the IT systems for the Bank's financial
accounting and reporting processes which impacts
key financial accounting and reporting items such
as advances, interest income, provision on advances
amongst others and thereby there exists a risk that
gaps in the IT control environment could result in
the financial accounting and reporting records being
materially misstated. Amongst its multiple IT systems,
we scoped in systems that are key for the overall
financial reporting.
We have identified testing of such IT systems and
related control environment as key audit matter
because of the high level of automation, significant
number of systems being used by the Bank for
processing financial transactions, importance in
relation to accurate and timely financial reporting
and its impact on the financial records and financial
reporting process of the Bank.
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We included specialized IT auditors as part of our audit team to
perform audit procedures which included, but were not limited
to the following:
• Obtained an understanding of IT applications landscape
implemented at the Bank, followed by process
understanding, mapping of applications to the processes
related to financial reporting
• Based on our understanding, we have evaluated and tested
relevant IT general controls and IT application controls on
the systems (‘in-scope') identified as relevant for our audit
of the financial statements.
• On such in-scope IT systems, we have tested key IT general
controls with respect to the following domains:
a. User access management which includes user access
provisioning, de-provisioning, access review, password
management, sensitive access rights and segregation
of duties to ensure that privilege access to applications,
operating system and databases in the production
environment were granted only to authorized personnel.
b. Program change management which includes
controls on moving program changes to production
environment as per defined procedures and with
relevant segregation of environments
c. Other areas that were assessed under the IT control
environment included backup management and
incident management.
• We also evaluated the design and tested the operating
effectiveness of key IT application controls in key business
processes, which included loan origination, sanctioning,
disbursements, repayments and covered automated
calculations and automated accounting procedures, as
applicable focusing on advances, interest income, provision
on advances amongst others.
• Where deficiencies were identified, tested compensating
controls or performed alternative procedures.
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INFORMATION OTHER THAN THE FINANCIAL
STATEMENTS AND AUDITOR’S REPORT THEREON
6. The Bank's Board of Directors are responsible for the
other information. The other information comprises
the information included in the Annual Report
including the Pillar III Disclosure under the New Capital
Adequacy Framework (Basel III disclosures), but does
not include the financial statements and our auditor's
report thereon. The Annual Report is expected to be
made available to us after the date of this auditor's
report.
Our opinion on the 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 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
financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated.
When we read the Annual Report, 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 FINANCIAL
STATEMENTS
7. The accompanying financial statements have been
approved by the Bank's Board of Directors. The Bank's
Board of Directors are responsible for the matters
stated in section 134(5) of the Act with respect to
the preparation and presentation of these 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
Standards specified under section 133 of the Act,
read with the Companies (Accounting Standards)
Rules, 2021 and other accounting principles generally
accepted in India, and provisions of section 29 of
the Banking Regulation Act, 1949 and circulars and
guidelines issued by the 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 financial statements that
give a true and fair view and are free from material
misstatement, whether due to fraud or error.
8. In preparing the 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 the
Board of Directors either intends to liquidate the Bank
or to cease operations, or has no realistic alternative
but to do so.
9. The Board of Directors is also responsible for
overseeing the Banks's financial reporting process.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE
FINANCIAL STATEMENTS
10. 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 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 Standards on
Auditing 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 financial statements.
11. As part of an audit in accordance with Standards
on Auditing specified under section 143(10) of the
Act, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
• Identify and assess the risks of material
misstatement of the 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 with reference to
financial statements 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;
• Conclude on the appropriateness of 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 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 and
• 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.
12. 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.
13. 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.
14. From the matters communicated with those charged
with governance, we determine those matters that
were of most significance in the audit of the 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.
OTHER MATTER
15. The financial statements of the Bank for the year
ended 31 March 2024 were jointly audited by Walker
Chandiok & Co LLP and Mukund M. Chitale & Co.,
who have expressed an unmodified opinion on those
financial statements vide their audit report dated 26
April 2024. Accordingly, Sundaram and Srinivasan do
not express any opinion on the figures reported for
the year ended 31 March 2024.
Our opinion is not modified in respect of this matter.
REPORT ON OTHER LEGAL AND REGULATORY
REQUIREMENTS
16. 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 Act.
17. 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 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;
c) We have visited 40 branches to examine the
books of accounts and other records maintained
at the branch for the purpose of our audit. Since,
the key operations of the Bank are automated
with the key applications integrated to the
core banking system, the audit is carried out
at centrally as all the necessary records and
data required for the purposes of our audit are
available therein.
18. With respect to the matter to be included in the
auditor's report under section 197(16) of the Act, we
report that since the Bank is a banking company, as
defined under the Banking Regulation Act, 1949; the
reporting under section 197(16) in relation to whether
the remuneration paid by the Bank is in accordance with
the provisions of section 197 of the Act and whether
any excess remuneration has been paid in accordance
with the aforesaid section is not applicable.
19. Further, as required by section 143 (3) of the Act, based
on our audit, we report, to the extent applicable, 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 of the accompanying
financial statements;
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 Balance Sheet, the Profit and Loss Account
and the Cash Flow Statement dealt with by
this report are in agreement with the books of
account;
d) In our opinion, the aforesaid financial statements
comply with the Accounting Standards specified
under section 133 of the Act read with the
Companies (Accounting Standards) Rules, 2021,
to the extent they are not inconsistent with the
accounting policies prescribed by RBI;
e) On the basis of the written representations
received from the directors and taken on record
by the Board of Directors, none of the directors
is disqualified as on 31 March 2025 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 with reference to financial
statements of the Bank as on 31 March 2025 and
operating effectiveness of such controls, refer
to our separate report in Annexure I wherein we
have expressed an unmodified opinion and
g) 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, as detailed in schedule 12 and
schedule 18 - note 3.13 to the financial
statements, has disclosed the impact of
pending litigations on its financial position
as at 31 March 2025;
ii. The Bank, as detailed in schedule 5 and
schedule 18 - note 3.13 to the financial
statements, has made provision as at
31 March 2025, as required under the
applicable law or accounting standards,
for material foreseeable losses, if any, on
long-term contracts including derivative
contracts;
iii. There has been no delay in transferring
amounts, required to be transferred, to the
Investor Education and Protection Fund by
the Bank during the year ended 31 March
2025;
iv. a. The management has represented
that, to the best of its knowledge and
belief, as disclosed in note 4.9(a) to
the financial statements, no funds
have been advanced or loaned or
invested (either from borrowed
funds or securities premium or any
other sources or kind of funds) by
the Bank to or in any person(s) or
entity(ies), including foreign entities
(‘the intermediaries'), with the
understanding, whether recorded
in writing or otherwise, that the
intermediary shall, whether, directly
or indirectly lend or invest in other
persons or entities identified in any
manner whatsoever by or on behalf of
the Bank (‘the Ultimate Beneficiaries')
or provide any guarantee, security
or the like on behalf the Ultimate
Beneficiaries;
b. The management has represented
that, to the best of its knowledge and
belief, as disclosed in note 4.9(b) to
the financial statements, no funds
have been received by the Bank from
any person(s) or entity(ies), including
foreign entities (‘the Funding Parties'),
with the understanding, whether
recorded in writing or otherwise, that
the Bank shall, whether 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, as considered reasonable
and appropriate in the circumstances,
nothing has come to our notice that
has caused us to believe that the
management representations under
sub-clauses (a) and (b) above contain
any material misstatement.
v. The Bank has not declared or paid any
dividend during the year ended 31 March
2025.
vi. As stated in note 4.10 to the financial
statements and based on our examination
which included test checks, the Bank, in
respect of financial year commencing on or
after 01 April 2024, has used an accounting
software for maintaining its books of
account which has a feature of recording
audit trail (edit log) facility and the same
has been operated throughout the year for
all relevant transactions recorded in the
software. Further, during the course of our
audit we did not come across any instance
of audit trail feature being tampered with.
Furthermore, the audit trail has been
preserved by the Bank as per the statutory
requirements for record retention.
For Walker Chandiok & Co LLP For Sundaram & Srinivisan
Chartered Accountants Chartered Accountants
Firm Registration No.: 001076N/N500013 Firm Registration No.: 004207S
Sd/- Sd/-
Sudhir N. Pillai P Menakshi Sundaram
Partner Partner
Membership No. 105782 Membership No. 217914
UDIN: 25105782BMLICA9577 UDIN: 25217914BMKYKE2875
Place: Mumbai Place: Mumbai
Date: 28 April 2025 Date: 28 April 2025
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