UCO Bank

To

The President of India,

1. We have audited the attached Balance Sheet of UCO Bank as on 31st March, 2010and the Profit and Loss Account for the year ended on that date annexed thereto in whichare incorporated the returns of 20 branches and the controlling offices audited by us,1679 branches (including 4 Service Branches) audited by other auditors and 4 foreignbranches audited by overseas local auditors. The branches audited by and those audited byother auditors have been selected by the Bank in accordance with the guidelines issued tothe Bank by the Reserve Bank of India. Also, incorporated in the Balance Sheet and theProfit and Loss Account are the returns from 447 branches [including 14 Service Branches)and 2 overseas representative office which have not been subjected to audit.

There unaudited branches account for 1.00% of Advances, 3.92% of Deposits, 0.84%ofInterest Income and 3.37% of Interest Expenses.

We have also audited the Cash Flow Statement annexed to the Balance Sheet for the yearended 31 March, 2010.

These financial statements are the responsibility of the bank's management. Ourresponsibility is to express an opinion on these financial statements based on our audit.

2. We have conducted our audit in accordance with the auditing standards generallyaccepted in India. Those standards require that we pIan and perform the audit to obtainreasonable assurance about whether the financial statements are free of materialmis-statement. An audit includes examining on a test basis, evidence supporting theamounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by the management, as well asevaluating the over all financial statement presentation. We believe that our auditprovides a reasonable basis for 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, 1 949.

4. Subject to limitations of the audit indicated in paragraph 1 above and as requiredby the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1 970 and subjectto the limitation of disclosures required therein, we report that:

(i) we are unable to express an opinion on the effect on the accounts which may ariseon reconciliation and adjustment of outstanding entries in inter-branch transactions(refer to Note No. 1 of Schedule 17) .

(ii) accounting of certain income on cash basis which is not in accordance withAccounting Standard 9 on 'Revenue Recognition' issued by The Institute of CharteredAccountants of India (refer to Accounting Policy No. 9.2(b) of Schedule 1 8). The quantumof such income has not been ascertained.

(iii) Classification of Credit Linked Notes (CLN) as Loans and Advances instead ofInvestments (Refer Note No. 5 of Schedule-17)

(iv) Capital Adequacy and Other Ratios disclosed in Note No. 1 4 (1.1) of Schedule 1 7ore subject to the effects of the observations in para (i) to (iii) above.

5. Subject to our observations in Para 4 (i) to (iv) above and read with Notes onAccounts and Principal Accounting Policies as per Schedules 17 and 18 respectively, wefurther report that :

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, the financial statements are inconformity with the accounting principles generally accepted in India except to the extentstated in Para 4 (ii) above and :

(i) The Balance Sheet, is a full and fair Balance Sheet containing all the necessaryparticulars and is properly drawn up so as to exhibit a true and fair view of the state ofaffairs of the Bank as on 31st March, 2010;

(ii) the Profit and Loss Account, shows a true balance of Profit for the year ended onthat date; and

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

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 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 Branches/ Controlling and Overseas offices of the Bankhave been found adequate for the purpose of our audit.