central bank of india Auditors report

To

The Members of

Central Bank of India

Mumbai

Report on Audit of the Standalone Financial Statements

Opinion

1. We have audited the accompanying standalone financial statements of Central Bank Of India (the Bank), which comprise the Standalone Balance Sheet as at 31st March 2023, the Standalone Profit and Loss Account and the Standalone Cash Flow Statement for the year then ended, and notes to Standalone Financial Statements including a summary of significant accounting policies and other explanatory information in which are included the returns for the year ended on that date of the Head Office, 12 Zones and

i. 1 Specialized Integrated Treasury Branch audited by us

ii. 20 branches audited by us

iii. 1507 branches audited by respective statutory branch

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. Also incorporated in the Standalone Balance Sheet, the Standalone Profit and Loss Account and the Standalone Cash Flow Statement are the returns from 2966 branches which have not been subjected to audit. These unaudited branches account for 24.65 per cent of advances, 44.21 per cent of deposits, 29.45 per cent of interest income and 42.05 per cent of interest expenses.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Banking Regulation Act, 1949 (hereinafter referred to as "the Act") in the manner so required for the Bank and are in conformity with accounting principles generally accepted in India and:

a) the Standalone 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, 2023;

b) the Standalone Profit and Loss Account, read with the notes thereon shows a true balance of profit for the year ended on that date; and

c) the Standalone 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 ("ICAI"). Our responsibilities under those Standards are further described in the "AuditorsRs. 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 Institute of Chartered Accountants of India together with 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 issued by the ICAI, and provisions of section 29 of the Banking Regulation Act, 1949 and circulars and guidelines issued by the Reserve Bank of India ("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 on the standalone financial statements.

Emphasis of Matter

3. We draw attention to:

a) Note no. 14 (h) of the Statement regarding amortization of additional liability on revision of family pension amounting to Rs. 821.95 crore. The Bank has charged an amount of Rs. 164.40 crore to

the Profit and Loss Account for the year ended 31st March 2023 and the balance unamortised expense of Rs. 113.03 crore has been carried forward pursuant to RBI circular no. RBI/2021-22/105 DORACC. REC.57/21.04.018/2021-22 dt.4th October,2021.

b) Note no. 15 (g) of the Statement regarding deferred tax, wherein on the basis of tax review made by the Banks management with respect to the possible tax benefits arising out of the timing difference, the net deferred tax asset of Rs. 5798.91 crore is recognised as on 31st March 2023(Rs. 6862.05 crore as on 31st March 2022).

c) Note no. 15 (a) of the Statement regarding accounting of Performance Link Incentive to employees on accrual basis during the year which was being done on cash basis in earlier years resulting in decrease of profit by Rs. 104.24 crore.

d) Note No. 4 (h) of the Statement, which describes the uncertainties due to the COVID-19 pandemic and managements evaluation of impact on the Banks financial performance which will depend on future developments, which are uncertain.

Our opinion is not modified in respect of these matters.

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 for the year ended 31st March 2023. 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 to be communicated in our report.

 

Key Audit Matters	AuditorsRs. response
1. Identification and provisioning of nonperforming advances made in accordance with the prudential norms prescribed by Reserve Bank of India on Income recognition, Asset Classification and provisioning pertaining to Advances (refer Schedule 9 read with Note 2 of Schedule 17 to the standalone financial statements)
	Our audit approach included assessment of the design, operating effectiveness of key internal controls over approval, recording and monitoring of loans and substantive audit procedures in respect of income recognition, asset classification and provisioning pertaining to advances.
Advances comprise substantial portion of the Banks total assets. Identification of non-performing advances (NPAs) is carried out, based on system identification, by the Core Banking Solution (CBS) software in operation based on the various controls and logic embedded therein.	In particular:
Provisions in respect of such NPAs and restructured advances are made based on managements assessment of the degree of impairment of the advances subject to and guided by the minimum provisioning levels prescribed under RBI guidelines, prescribed from time to time. The provisions on NPAs are also based on the valuation of the security available. In case of restructured accounts, provision is made in accordance with the RBI guidelines. We identified NPA identification and provision on loans and advances as a key audit matter because of the significant efforts involved by the management in identifying NPAs based on the RBI Guidelines, the level of management judgement involved in determining the provision (including the provisions on assets which are not classified as NPAs), the valuation of security of the NPAs and on account of the significance of these estimates to the standalone financial statements of the Bank.	• We have evaluated and understood the Banks internal control system in adhering to the relevant RBI guidelines regarding income recognition, asset classification and provisioning pertaining to advances.
	• We assessed and evaluated the process of identification of NPAs, and corresponding reversal of income and creation of provision.
	• We have analyzed and understood key IT systems/ applications used operational effectiveness of relevant controls including involvement of manual process and manual controls in relation to income recognition, asset classification and provisioning pertaining to advances.
	In order to ensure the effectiveness of the operation of the key controls and compliance to the directions of the RBI, we have verified whether both CBS system and the management have:
	• timely recognized the depletion in the value of available security.
	• made adequate provisioning based on such time- to-time monitoring and identification of asset classification including accounts which meet the criteria for asset classification benefit in accordance with the Reserve Bank of India COVID-19 Regulatory Package.
	• We placed reliance upon the Independent Auditors Report of the respective Branch Auditors with respect to income recognition, asset classification and provisioning as well as Memorandum of changes suggested both at the branches and at Head Office.

Key Audit Matters	AuditorsRs. response
2. Investments
Investment portfolio of the Bank comprises of investments in government securities, bonds, debentures, shares, security receipts and other approved securities which are classified under three categories, Held to Maturity, Available for Sale and Held for Trading. Investments comprise a substantial portion of the Banks total assets.	Our audit approach towards Investments with reference to the RBI circulars/ directives included the review and testing of the design, operating effectiveness of internal controls and substantive audit procedures in relation to valuation, classification, identification of Non-Performing Investments, provisioning/ depreciation related to Investments. In particular:
Valuation of Investments, identification of Non-Performing Investments (NPI) and the corresponding non-recognition of income and provision thereon, is carried out in accordance with the relevant circulars / guidelines / directions of RBI. (refer Schedule 8 read with Note 5 of Schedule 17 to the standalone financial statements)	• We assessed and understood the system and internal control as laid down by the Bank to comply with relevant RBI guidelines regarding valuation, classification, identification of Non- Performing Investments, Provisioning and depreciation on Investments.
The valuation of each type of aforesaid security is to be carried out as per the methodology prescribed in the circulars and directives issued by the RBI which involves collection of data/ information from various sources such as FBIL rates, rates quoted on BSE/ NSE, financial statements of unlisted companies, NAV in case of security receipts etc.	• Tested accuracy and compliance for selected sample of investments with the RBI Master circulars and directions by re-performing valuation for each category of security in accordance with the RBI guidelines.
As per the RBI directions, there are certain investments that are valued at market price however certain investments are based on the valuation methodologies that include statistical models with inherent assumptions, assessment of price for valuation based on financial statements etc. The price discovered for the valuation of these Investments is only a fair assessment of the Investments.	• We assessed and evaluated the process of identification of NPIs, and corresponding reversal of income and creation of provision.
Hence, the valuation of Investments requires special attention and further in view of the significance of the amount of Investments in the financial statements, the same has been considered as Key Audit Matter in our audit.	• We carried out substantive audit procedures to recompute independently the provision to be created and depreciation to be provided.
	• We assessed that the standalone financial statement disclosures appropriately reflected the Banks exposure to investments valuation risks with reference to the requirements of the prevailing accounting standards and the RBI guidelines.

Key Audit Matters	AuditorsRs. response
3. Information technology (IT) systems used in financial reporting process
The Banks operational and financial reporting processes are dependent on IT systems run through Core Banking Solutions (CBS) and other integrated software with automated processes and controls large volume of transactions.	We conducted an assessment and identified key IT applications, database and operating systems that are relevant to our audit and have identified CBS and Treasury System primarily as relevant for financial reporting. For the key IT systems pertaining to CBS and treasury operations used to prepare accounting and financial information, our areas of audit focus included Access Security (including controls over privileged access), application change controls, database management and network operations.
The process and controls are to ensure appropriate user access and management processes in use.	• We obtained an understanding of the Banks IT control environment and key changes during the audit period that may be relevant to the audit.
The Bank has an in-house Department of Information & technology (DIT) run under the supervision of the top management and with the support of expert consulting agencies, for maintaining It services.	• We tested the design, implementation and operating effectiveness of the Banks General IT controls over the key IT systems that are critical to financial reporting including obtaining reports from independent experts. This included evaluation of Banks controls to evaluate segregation of duties and access rights being provisioned / modified based on duly approved requests, access for exit cases being revoked in a timely manner.
Accordingly, our audit was focused on key IT systems and controls due to the pervasive Impact on the standalone financial statements and the same has been considered as Key Audit Matter in our audit.	• We also tested key automated and manual business cycle controls and logic for system generated reports relevant to the audit; including testing of compensating controls or performed alternate procedures to assess whether there were any unaddressed IT risks that would materially impact the standalone financial statements, information other than the standalone Financial Statements and AuditorsRs. Report thereon.

4. Provisions, Contingent Liabilities and Claims:
Assessment of Provisions and Contingent Liability in respect of certain litigations on various claims filed by other parties not acknowledged as debt (Note No. 13 of Schedule 17 and Note No. 15. i. of Schedule 18).	We have obtained an understanding of Internal Controls relevant to the audit in order to design our audit procedures that are appropriate in the circumstances.
There is high level of judgement required in estimating the level of provisioning. The Banks assessment is supported by the facts of matter, their own judgement, past experience, and advice from legal and independent experts wherever considered necessary. Accordingly, unexpected adverse outcomes may significantly impact the Banks reported profit and state of affairs presented in Balance Sheet.	We broadly reviewed the underlying assumptions and estimates used by the management for provisioning but as the extent of impact is dependent on future developments which are highly uncertain, we primarily relied on those assumptions and estimates, which are subject matter of periodic review by the Bank.
Contingent Liability is a possible obligation, outcome of which is contingent upon occurrence or nonoccurrence of one or more uncertain future events. In the judgement of the management, such claims and litigations including tax demands against the bank would not eventually lead to a liability.	We have relied upon the management note and legal opinions obtained by the bank regarding the claims and tax litigations and involved our internal team to review the nature of such litigations and claims, their current status, sustainability, examining recent orders and/or communication received from various tax authorities/ judicial forums and follow up actions thereon and likelihood of claims/litigations materializing into eventual liability upon final resolution, from the available records and developments to date.
However, unexpected adverse outcomes may significantly impact the Banks reported financial results which is uncertain/ unascertainable at this stage.
Considering the uncertainty relating to the outcome of these matters which requires application of judgment in interpretation of law, this has been determined as a key Audit Matter.

Information other than the Standalone Financial

Statements and AuditorsRs. report thereon

5. The Banks Board of Directors is responsible for the other information. The other information comprises the Corporate Governance Report, which we obtained at the time of issuance of this auditorsRs. report, and the DirectorsRs. Report including annexures, and Management Discussion and Analysis which is expected to be made available to us after that date but does not include the standalone financial statements and our auditors report thereon.

Our opinion on the standalone financial statements does not cover the other information and the Pillar 3 disclosures under Capital Adequacy Framework (Basel III disclosures) and we do 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 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.

If, based on the work we have performed on the other information that we obtained prior to the date of auditorsRs. report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

When we read the DirectorsRs. Report including annexures, and Management Discussion and Analysis, if we conclude that there is material misstatement therein, we are required to communicate the matter to those charged with governance and determine the actions under the applicable laws and regulations.

Responsibilities of Management and Those Charged

With Governance for the Standalone Financial

Statements

6. The Banks 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 flows of the Bank in accordance with the accounting principles generally accepted in India, including the applicable Accounting Standards, and provisions of Section 29 of the Banking Regulation Act, 1949 and circulars and guidelines issued by the Reserve Bank of India (Rs.RBIRs.) from time to time ("RBI guidelines") and judicial pronouncements. 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, management is responsible for assessing the Banks ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the Banks financial reporting process.

AuditorsRs. responsibilities for the audit of the standalone financial statements

7. 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 auditorsRs. 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 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 managements 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 Banks ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors 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 auditors 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 Standalone financial statements, including the disclosures, and whether the Standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of the misstatements in the standalone financial statements that, individually or aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the standalone financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning of the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatement in the standalone financial statements.

We communicate with those charge 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 auditorsRs. 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 Matters

8. We did not audit the financial statements/ information of 1507 branches included in the standalone financial statements of the Bank whose financial statements / financial information reflect total assets of Rs. 2,07,308 crore as at 31st March 2023 and total revenue of Rs. 6,763 crore for the year ended on that date, as considered in the standalone financial statements. These branches cover 34.16 per cent of advances, 51.10 per cent of deposits and 19.30 per cent of non-performing assets as at 31st March 2023 and 40.23 per cent of revenue for the year ended on that date. The financial statements/ information of these branches have been audited by the 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 report of such branch auditors.

9. In the conduct of our audit, we have taken note of the unaudited returns in respect of 2966 branches certified by the respective branchs management whose financial statements/ information reflect total assets of Rs. 90,252 crore as at 31st March 2023 and total revenue of Rs. 5,393 crore for the year ended on that date. These unaudited branches cover 24.65 per cent of advances, 44.21 per cent of deposits and 13.43 per cent of non-performing assets as on 31st March 2023 and 32.08 per cent of revenue for the year then ended.

Our opinion is not modified in respect of the above matters.

Report on Other Legal and Regulatory Requirements

10. The standalone Balance sheet and the standalone Profit and Loss Account have been drawn up in accordance with Section 29 of the Banking Regulation Act, 1949;

Subject to the limitations of the audit indicated in paragraphs 5 to 9 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.

11. 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 FY 2019-20", read with subsequent communication dated May 19, 2020 issued by the 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 issued by ICAI, 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 qualifications, reservations 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 Banks internal financial controls

over financial reporting as required by the RBI Letter No. DOS. ARG. No. 6270/ 08.91.001/2019- 20 dated March 17, 2020 (as amended) is given in Annexure A to this report. Our report expresses an unmodified opinion on the Banks internal financial controls over financial reporting with reference to the standalone financial statements as at 31st March 2023.

12. 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 standalone Balance Sheet, the standalone Profit and Loss Account and the Standalone Cash Flow Statement dealt with by this report are in agreement with the books of account and with the returns received from the branches not visited by us.

c) the reports on the accounts of the branch offices audited by branch auditors of the Bank under 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 Standalone Balance Sheet, the Standalone Profit and Loss Account and the Standalone Cash Flow Statement comply with the applicable accounting standards, to the extent they are not inconsistent with the accounting policies prescribed by RBI.

FOR CHHAJED & DOSHI	FOR A S K A & CO.
CHARTERED ACCOUNTANTS	CHARTERED ACCOUNTANTS
F.R. No.101794W	F.R. No.122063W
(CA NITESH JAIN)	(CA SUHAS AMBEKAR)
PARTNER	PARTNER
M.No.136169	M.No.101373
UDIN:23136169BGWXJL7351	UDIN:23101373BGWJWE4209
FOR KISHORE & KISHORE	FOR A.R. & CO.
CHARTERED ACCOUNTANTS	CHARTERED ACCOUNTANTS
F.R. No. 000291N	F.R. No.002744C
(CA AKHILESH K. MATHUR)	(CA ANIL GAUR)
PARTNER	PARTNER
M. No.509176	M.No.017546
UDIN:23509176BGWZAV5876	UDIN:23017546BGWILP9549
Place : Mumbai
Date : April 29, 2023

ANNEXURE "A" TO THE INDEPENDENT AUDITORSRs. REPORT

(Referred to in paragraph 11 (e) under Rs.Report on Other Legal and Regulatory RequirementsRs. section of our report of even date)

Report on the Internal Financial Controls Over

Financial Reporting as required by the Reserve Bank of India (the "RBI") Letter DOS. ARG. No.6270/08.91.001/2019-20 dated March 17, 2020

(as amended) (the "RBI communication")

1. We have audited the internal financial controls over financial reporting of Central Bank of India ("the Bank") as at March 31, 2023 in conjunction with our audit of the standalone financial statements of the Bank for the year ended on that date which includes internal financial controls over financial reporting of the Banks branches.

Managements Responsibility for Internal

Financial Controls

2. The Banks management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Bank considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Banks policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Banking Regulation Act, 1949 and the circulars and guidelines issued by the Reserve Bank of India.

Auditors Responsibility

3. Our responsibility is to express an opinion on the Banks internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") issued by the Institute of Chartered Accountants of India (the "ICAI") and the Standards on Auditing (SAs) issued by the ICAI, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting were established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit

evidence about the adequacy of the internal financial controls over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal financial controls based on the assessed risk. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained and the audit evidence obtained by the branch auditors, in terms of their reports referred to in the Other Matters paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the Banks internal financial controls over financial reporting.

Meaning of Internal Financial Controls Over

Financial Reporting

4. A Banks internal financial controls over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of standalone financial statements for external purposes in accordance with generally accepted accounting principles. A Banks internal financial controls over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Bank; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of standalone financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Bank are being made only in accordance with authorisations of management and directors of the Bank; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the Banks assets that could have a material effect on the standalone financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

5. Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any

evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial controls over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

6. In our opinion, and to the best of our information and according to the explanations given to us and based on the consideration of the reports of the branch auditors referred to in the Other Matters paragraph below, the Bank has, in all material respects, adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2023, based on the criteria for internal control over financial reporting established by the Bank considering the essential components of internal control stated in the Guidance

Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

Other Matters

7. Our aforesaid report in so far as it relates to the operating effectiveness of internal financial controls over financial reporting of 106 (one hundred six) branches is based on the corresponding reports of the respective Central Statutory Auditors / Statutory Branch Auditors of those branches.

During our testing of the internal financial controls over financial reporting and based on the reports, certain matters were noticed by us where scope of improvement is there to further strengthen the process including but not limited to testing of Risk Control Matrix (RCM) at various departments of Head Office.

Our opinion is not modified in respect of this matter.