Bank of India

To,

The President of India,

1. We have audited the attached Balance Sheet of BANK OF INDIA as at 31^stMarch, 2011, the Profit and Loss Account and the Cash Flow for the year ended on that dateannexed thereto in which are incorporated the returns of 20 branches (including TreasuryBranch) audited by us, 2796 branches audited by other auditors and 24 foreign branchesaudited by local auditors. The branches audited by us and those audited by other auditorshave been selected by the Bank in accordance with the guidelines issued to the Bank by theReserve Bank of India. Also incorporated in the Balance Sheet and Profit and Loss Accountare the returns from 674 branches which have not been subjected to audit. These unauditedbranches account for 1.23% percent of advances, 2.43% percent of deposits, 0.97% percentof interest income and 2.48% percent of interest expenses. These financial statements arethe responsibility of the Bank's management. Our responsibility is to express an opinionon these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally acceptedin India. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatements. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by the management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.

3. The Balance Sheet and the Profit and Loss Account have been drawn up in Forms"A" and "B" respectively of the Third Schedule to the BankingRegulation Act, 1949.

4. Without qualifying our opinion, we draw attention to Note no.4(a) of Schedule 18 tothe financial statements, which describes deferment of pension and gratuity liability ofthe bank to the extent of Rs 2112.89 crores pursuant to the exemption granted by theReserve Bank of India to the public sector banks from application of the provisions ofAccounting Standard (AS) 15, Employee Benefits vide its circular no. DBOD.BP.BC/80/21.04.018/2010-11 dated February 09, 2011 on Re-opening of Pension Option toEmployees of Public Sector Banks and Enhancement in Gratuity Limits - PrudentialRegulatory Treatment.

5. Subject to the limitations of the audit indicated in paragraph 1 above and asrequired by the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, wereport that:

a) In our opinion and to the best of our knowledge and according to the information andexplanations given to us and as shown by the books of the Bank:

(i) The Balance Sheet read together with the Significant Accounting Policies and Notesforming part of Accounts is a full and fair Balance Sheet containing the necessaryparticulars, and is properly drawn up so as to exhibit a true and fair view of the affairsof the Bank as at 31^st March, 2011;

(ii) The Profit and Loss Account read together with the Significant Accounting Policiesand Notes forming part of Accounts shows a true balance of Profit in conformity withaccounting principles generally accepted in India for the year covered by the accounts;and

(iii) The Cash Flow Statement gives a true and fair view of the cash flows for the yearcovered by the Statement.

b) We have obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit and have found them tobe satisfactory.

c) The transactions of the Bank which have come to our notice have been within thepowers of the Bank.

d) The returns received from the offices and branches of the Bank have been foundadequate for the purposes of our audit.

Mumbai, 2^nd May, 2011