Indian Overseas Bank

To

The President of India

1. We have audited the attached Balance Sheet of Indian Overseas Bank as at 31stMarch 2010, the Profit and Loss Account and Cash Flows Statement of the Bank for the yearended 31st March 2010 annexed thereto in which are incorporated the returns of 20 branchesand 41 Regional Offices audited by us and 1705 branches including 6 Overseas Branchesaudited by other auditors. The branches audited by us and those audited by other auditorshave been selected by the Bank in accordance with the guidelines issued by Reserve Bank ofIndia. Also incorporated in the Balance Sheet and Profit & Loss Account are thereturns from 305 branches/centres which have not been subjected to audit. These unauditedbranches account for 1.35% of advances, 4.99% of deposits, 2.19% of interest income and2.35% of interest expenses. These financial statements are the responsibility of theBank's Management. Our responsibility is to express an opinion 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 mis-statements. Anaudit includes examination on a test basis, evidence supporting the amounts and disclosurein the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by the management, as well as evaluating the overallfinancial statements 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 Banking Regulation Act, 1949.

4. Reference is invited to:

i) Significant Accounting Policy No.2.2 and 2.5 (Schedule - 17) regarding revenuerecognition which are not in conformity with Accounting Standard-9 issued by the Instituteof Chartered Accountants of India.

ii) Note No.3.2 in Notes on Accounts (Schedule-18) regarding recover ability of claimspending and/or yet to be lodged with Guarantee Institutions.

The impact of the items stated herein above on the Profit & Loss Account, BalanceSheet, Capital Adequacy Ratio and business ratios as stated in Notes on Accounts(Schedule-18) is not ascertainable.

5. The additional disclosures made in Note No.4.2, 5, 6,7, 8.7 and 10.I to the Notes onAccounts (Schedule 18) with regard to information in respect of Restructured Accounts,Business Ratios, Maturity Pattern of Assets and Liabilities, Exposure to SensitiveSectors, Unsecured Advances and Concentration of Deposits, Advances, Exposures and NPAsrespectively are based on the records/Information as certified by the Bank and relied uponby us.

6. As required by the Banking Companies (Acquisition and Transfer of Undertakings) Act1970 and subject to:

i) The limitation of the audit indicated in Paraghaph 1 above, and the limitation ofdisclosure required therein

ii) Our observations in Paragraph 4 & 5 above, and

iii) Note No. 11 in Notes on Accounts (Schedule 18) regarding the write off of a sum ofRs 82.7 Crores being one third of the deficit arising on the take over of the specificassets and liabilities of a bank - as permitted by Reserve Bank of India - as againstwriting off the entire deficit of Rs.246.52 Crores as is the Generally Accepted AccountingPractice,

we report as under:

a. In our opinion and to the best of our information and according to the explanationsgiven to us and as shown by the books of the Bank maintained in accordance with generallyaccepted Accounting Principles in India.

i) The Balance Sheet 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 31st March 2010,

ii) The Profit and Loss Account shows at the balance of Profit for the year ended 31stMarch 2010 and

iii) The Cash Flows Statement gives a true and fair view of the cash flow for the yearended 31st March 2010.

b) We have obtained all the information and explanations, which to the best of ourknowledge and belief were necessary for the purpose of our audit and have found the sameto be 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 purpose of our audit.