Indian Bank Directors Report.

To

The Members of Indian Bank

Report on Audit of the Standalone Financial Statements Opinion

1. We have audited the standalone financial statements of INDIAN Bank (the Bank), which comprise the Balance Sheet as at 31 March 2020, the Statement of Profit and Loss and the Statement of Cash Flows for the year then ended, and notes to financial statements including a summary of significant accounting policies and other explanatory information in which are included returns for the year ended on that date of 20 branches and 1 Treasury branch audited by us and 1328 branches audited by statutory branch auditor. 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 included in the Balance Sheet, the Statement of Profit and Loss and Statement of Cash Flows are the returns from 1537 branches which have not been subjected to audit. These unaudited branches account for 10.83 percent of advances, 5.87% of exposure, 26.52 per cent of deposits, 34.76 per cent of interest income and 31.90 per cent of interest expenses.

2. 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 in the manner so required for bank and are in conformity with accounting principles generally accepted in India and: a) the 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, 2020; b) the Profit and Loss Account, read with the notes thereon shows a true balance of profit/loss (as applicable); and c) the Cash Flow Statement gives a true and fair view of the cash flows for the year ended on that date.

Basis for Opinion

3. We conducted our audit in accordance with the Standards on Auditing (SAs) issued by ICAI. Our responsibilities under those Standards are further described in the Auditors 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 together with ethical requirements that are relevant to our audit of the financial statements , 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.

Emphasis of Matter

4. We draw attention to the attached Note Nos 4.3.5 to 4.3.7 forming part of standalone financial statement on the impact of uncertainties caused by Covid19 on the future business and financial results and Managements assessment of the same in the prevailing situation. The Management is in the process of evaluating the effect of the uncertainties on an on going basis with reference to challenges under the prevailing uncertainties.

Key Audit Matters

5. Audit of Branches: The lock down and restrictions on travel imposed by the State and Central Governments in view of the pandemic caused by Covid 19, branch audit of the bank proved to be a major task requiring lot of attention and planning to ensure sufficient audit evidence is obtained to provide necessary assurance. Further ICAI in their advisories on impact of covid on Audit has clearly stipulated that though the methodology of audit may change, the same will not have any adverse impact on obtaining sufficient audit evidence in forming an assurance opinion.

To overcome travel restrictions, we adopted remote audit of various branches by which audit of a branch could be done from another branch by the auditors remotely where the Auditor could visit and view the accounts, documents etc of the branch to be audited. The auditors were able to view these documents and evidence from the remote branch and obtained sufficient audit evidence to form an audit opinion.

6. Reduction in number of Audited Branches

In view of pandemic caused by Covid 19 and the strict lockdown and travel restrictions imposed by the Government, RBI revisited the criteria fixed for Audit of Branches of PSU Banks and came out with a circular dated 27th April 2020 removing the criteria of compulsory audit of all branches with advance of above Rs 20 crores but ensuring that audited branches cover at least 90% of all funded and non funded exposures of the Bank. The Bank adopted the new guidelines for statutory audit of branches for the current year which resulted in 1324 number of branches getting audited by SBAs apart from the top twenty branches audited by SCAs which in effect resulted in reduction of 419 number of audited branches for the year 2019-20 as compared to the previous year . The Break up details of the branches audited as compared to previous year are as stated below To overcome this, the SCAs at the time of zonal consolidation gave special attention on such branches which would have got audited but for the circular, issued by RBI as stated above to ensure that there is no deficiency in obtaining audit evidence to form an assurance opinion

Particulars 31.03.2020 31.03.2019
Total No of branches 2886 2872
No.of Branches audited 1349 1768
No of unaudited branches 1537 1107
Total Advances Covered 183963.79 cr 171486.91 cr

7. RBIs circulars dated....on Covid concessions:

The circulars (nos. 1. DOR.No.BP.BC.47/21.04.048/2019-20 dated 27.03.2020 2. DOR. No.BP. BC.62/21.04.048/2019-20 DATED 17.04.2020 3. DOR.No.BP.BC.63/21.04.048/2019-20 DATED 17.04.2020) were issued in late March and April 2020, bank could not give effect to this in their CBS system. This necessitated identification of eligible accounts and issue of MOCs manually by the SBAs and consequent verification and updation.

Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements.

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 Accounting Standards issued by 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. 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.

In preparing the 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.

Auditors Responsibilities for the Audit of the Financial Statements

8. 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 auditors 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 the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these 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 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.

• 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 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 financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. transactions and events in a manner that achieves fair presentation.

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.

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 financial statements of the current period and are therefore the key audit matte We describe these matters in our auditors 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

9. Report on Internal financial control in the Bank The Reserve Bank of India vide Notification No DOS:ARG: No 6270/08.91.001/2019-20 dated 17/03/2020 had advised that SCAs should report in their independent Audit Report for the 2019-20 about the adequacy of internal control system with reference to financial statements in the Bank and it operating effectiveness. We have been informed by the Bank vide their letter CO/Accounts: Audit/144/20-21 dated 12th June 2020 that RBI has made it optional for the Bank for the year 2019-20 and that the Bank has opted not to implement the financial controls and the report thereon for the year 2019-20. Hence our audit report does not include report on the adequacy of internal financial control over financial statements and it operating effectiveness.

10.We did not audit the financial statements / information of 1541(number) branches included in the standalone financial statements of the Bank whose financial statements / financial information reflect total assets of Rs 12290.92 crore as at 31st March 2020 and total revenue of Rs 3216.96 crore for the year ended on that date, as considered in the standalone financial statements. The financial statements / information of these branches have been audited by the branch auditors whose reports have been furnished to us, and in 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 auditor.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

11. The Balance Sheet and the Profit and Loss Account have been drawn up in accordance with Section 29 of the Banking Regulation Act, 1949; 12.Subject to the limitations of the audit indicated in paragraphs 5 to 7 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 13.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 Balance Sheet, the Profit and Loss Account and the Statement of Cash Flows 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 Balance Sheet, the Profit and Loss Account and the Statement of Cash Flows comply with the applicable accounting standards, to the extent they are not inconsistent with the accounting policies prescribed by RBI.

For M THOMAS & CO For P S SUBRAMANIA IYER & CO For K C Mehta and Co
Chartered Accountants Chartered Accountants Chartered Accountants
FR No.004408S FR No.004104S FR No: 106237W
A ROZARIO S SUNDARA RAMAN CHIRAG BAKSHI
Partner Partner Partner
(M No. 021230) (M No. 022137) (M No. 47164)
For SRIRAMAMURTHY & CO For RAVI RAJAN & CO LLP
Chartered Accountants Chartered Accountants
FR No.009073N/N500320
FR No. 003032S
J LALITHA JAYANTH A
Place : Chennai Partner Partner
Date : 23rd June, 2020 (M.No. 0201855) (M.No. 231549)