Punjab & Sind Bank Directors Report.

To

The Members of Punjab & Sind Bank

Report on Audit of the Financial Statements OPINION

1. We have audited the financial statements of Punjab & Sind Bank (the Bank), which comprise the Balance Sheet as at 31st March 2022, Profit and Loss Account and Cash Flow Statement 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 forthe year ended on that date of 20 branches and treasury division audited by us and 780 branches and 26 Offices/ Processing Centers audited by 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 included in financial statements are the returns from 730 branches of the bank which have not been subjected to audit. These unaudited branches account for 9.82 percent of advances, 26.78 percent of deposits, 6.88 percent of interest income and 25.15 percent of interest expenses.

2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Banking Regulation Act, 1949 (the Act) in the manner so required for bank and areinconformity with accountingprinciplesgenerallyaccepted in Indiaand:

a) The Balance Sheet, read with the notesthereon isafullandfairBalanceSheetcontainingallthe necessary particulars, is properlydrawn upsoas to exhibit a trueand fairview of the state ofaffairs ofthe Bank as at 31st March, 2022;

b) the Profitand LossAccount, read with the notesthereon shows a true balance of Profit; and

c) theCash FlowStatement gives a trueand fairview of thecash flows for the year ended onthatdate.

BASISFOROPINION

3. We conducted our audit in accordance with the Standards on Auditing (SAs) issued by the ICAI. Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit ofthe 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 financial statements prepared in accordance with the accounting principles generally accepted in India, including the Accounting Standards issued bythe ICAI, and provisions of section 29 ofthe Banking Regulation Act, 1949 and circulars andguidelines 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 appropriateto providea basisforouropinion.

EMPHASIS OF MATTER

4. Wedrawyourattentionto:

a) Schedule No.18 (Note 20) to the accompanying financial statements, which describes the uncertainties due to outbreakof Corona Virus (Covid-19) and the managements assessment of its impact on the business operations of the bank.

b) We draw your attention to Schedule No. 18 (Note. No.14 (i)) to the accompanying financial statements, regarding amortization of estimated additional liability on account of revision in family pension amounting to Rs. 236.84 crore. As stated there in, the bank has charged an amount of Rs. 47.37 crore to the Profit & Loss account for the current financial year ended 31st March 2022 and the balance unamortzed expense of Rs. 189.47 crore has been carried forward in the Balance Sheet.

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

KEYAUDITMATTERS

5. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the 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 bethe key audit matters to be communicated in ourreport:

Key AuditMatters Howthematterwasaddressedinouraudit
Classification of Advances, Income Recognition, Identification of and provisioning for non-performing Advances We obtained an understanding of the Banks Software, circulars, guidelines and direct ves of the RBI and the Banks internal instructions and procedures in respect of
(Refer Schedule 9 to the financial statements) the assets classification and its provisioning. Our audit approach consisted of testing the design of system for
The advances are classified as performing and nonperforming advances (NPA) which are governed by income recognition, asset classification and provisioning (IRAC) norms and other circulars and directives issued by the identification of Non-Performing assets to ensure conformity with theguidelinesof the RBI in the matterand test checking identification and valuation of Nonperforming assets.
Reserve Bank of India (RBI) from time to time. The classification and provisioning are carried out by the Banks We have reviewed the documentations, operations /
IT Software integrated with its Core Banking Solution (CBS). performance and monitoring of the advance accounts, on test check basis of the large and stressed advances, to ascertain any overdue, unsatisfactory conduct or weakness in any advance account, to ensure that its
The provisioning for identified NPAsis based on ageing and classification of NPAs, recovery estimates, value of security and is subject to the provisioning norms specified by RBI. classification is in accordance with the prudential norms of RBI, in respect of the branches audited by us. In respect of the branches, audited by the other branch statutory auditors we have placed reliance on their reports and ensured that changes suggested by the Branch auditors were duly carried outwherever necessary.
In the event of any improper application of the prudential norms/regulatory requirements or consideration of the incorrect value of the security, the carrying value of the advances could be materially misstated either individually orcollectively and in view of the significance of the amount of advances in the financial statements, the classification of the advances and provisioning thereon has been considered as Key Audit Matterin ouraudit. We have reviewed on test check basis the reports of the credit audit, inspection audit, internal audit, concurrent audit, regulatory audit to ascertain the advances having any adverse features / comments and reviewed the reports generated from the banks system. We reviewed advances including stressed advances on a sample basis with respect to compliance with the RBI Master Circulars / Guidelines/ Judicial pronouncements. Necessary changes were carried out wherever required during the course of audit and the effect of same was duly accounted for in the Financial statements for the year ended 31st March, 2022.
Classification and valuation of Investments identification and provisioning for Non-Performing Investments. Our Audit approach towards Investments with reference to the RBI circulars/directives included the review and
(ReferSchedule 8tothe financialstatements) testing of the design, operating effectiveness of internal controls and substantive audit procedures in relation to
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, AvailableforSaleand Held for trade. valuation, classification, identification of Non-Performing Investments, provisioning / depreciation related to Investments.
We evaluated and understood the system and internal control as laid down by the Bank to comply with relevant RBI guidelines.
Valuation ofinvestments, 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 ofRBI. We assessed and evaluated the process of identification of NPIs, and corresponding reversal of unrealized income and creation of provision.
We carried out substantive audit procedures to recompute independently the provision to be maintained and depreciation to be provided in accordance with the circulars and directives of the RBI. Accordingly, we selected samples from the investments of each category and tested for NPIs as per the RBI guidelines and recomputed the provision to be maintained in accordance with the RBI Circular for those selected sample of NPIs;
Considering judgement involved in the valuation, volume of transactions, investments on hand, regulatory requirements and significance of the amount of investments in the Financial statement, we have identified thisasa key auditmatterforthecurrentyearaudit. Necessary changes were carried out wherever required during the course of audit and the effect of same was duly accounted for in the Financial statements for the year ended 31st March, 2022.
Assessmentof Information Technology (IT) We evaluated and understood the CBS system adopted by the Bank.
The IT environment of the bank is complex and involves a large number of independent and inter-dependent IT systems used in the operations of the Bank for processing and recording a large volume of transactions at various locations.
We assessed the operative effectiveness of key automated controls within various business processes. This includes testing the integrity of system interfaces, the completeness and accuracy of data, system reconciliation controlsand automated calculations.
As a result, there is high degree of reliance and dependency on such IT systems for the financial reporting process of the bank. Appropriate IT general controls and application controls are required to ensure that such IT systems are able to process the data as required, completely accurately and consistently for reliable financial reporting. We assessed the feeding of the data in the system and going through the extraction of the financial information and statements from the IT system existing inthe bank.
Reviewed the output and reports generated by the system on sample basis.
IT controls with respect to recording of transactions, generating various reports in compliance with RBI guidelines/directions is dependent on working of Core Banking System in the Bank. Therefore, any validation failures, incorrect input data and wrong extraction of data may result in wrong reporting of data to the management and regulators. Where deficiencies were identified, we tested compensating controls or performed alternate procedures.
The Bank accounts for all the transactions related to Advances in its Information Technology System (IT System) viz. Core Banking Solution (CBS) which identifies whether the advances are performing or non-performing andcalculation of provisionsthereon. The system needs to be further strengthened for its efficacy to control deficiencies of input/output data from thesystem.
Due to the importance of the impact of the IT systems and related control environment on the Banks financial reporting process, we have identified testing of such IT systems and related control environment as a key matter forthecurrentyearaudit.
Contingent Liabilities and Claims Contingent Liability is a possible obligation, outcome of which is contingent upon occurrence or non-occurrence 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 atthis 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.

6. Information Other than the Financial Statements and Auditors Report thereon

The Banks Board of Directors is responsible for the other information. The other information comprises the Corporate Governance Report (but does not include the financial statements and our auditors report thereon), which we obtained prior to the date of this Auditors Report, and Directors Report, Business Responsibility Report including annexures, if any, thereon, which is expected to be made available to us afterthat date.

Our opinion on the financial statements does not cover the other information and Pillar 3 disclosure under Basel III and we do not express anyform of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained inthe audit, or otherwiseappearsto be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date of this auditors 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 inthis regard.

When we read the Business Responsibility Report and Directors Report, including annexure, if any, thereon, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

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

7. The Banks Board ofDirectorsisresponsiblewith respect tothe preparation ofthese financial statementsthatgivea 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 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 statementsthatgivea 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 forthe Auditofthe 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 detecta 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

throughoutthe 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, orthe override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate inthe 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 auditevidence obtained, whether a material uncertainty exists related to eventsorconditions 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.

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

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit andsignificant audit findings, including any significant deficiencies in internal control that weidentify 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 whereapplicable, 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 matters. 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 determinethata matter should notbe communicated in our reportbecausetheadverseconsequences of doingsowould reasonably be expected to outweigh the public interest benefits ofsuch communication.

Other Matters

9. We did not audit the financial statements / information of 780 branches and 26 offices / Processing Centers included in the financial statements of the Bank whose financial statements/financial information reflect total asset of Rs. 27,606.82 Crore as at 31st March 2022 and total revenue of Rs. 1,093.18 Crores for the yearendedon that date, as considered in the financial statements. The financial statements / information of these branches has been audited by the statutory 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 ofsuch branch auditors.

Our opinion is not modified in respect ofthis matter.

Report on Other Legal and Regulatory Requirements

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

11. Subject to the limitations of the audit indicated in paragraphs 6 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 reportthat:

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.

12. 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 letteras under:

(a) Our audit report on the adequacy and operating effectiveness of the Banks internal financial controls over financial reporting is given in "Annexure A" to this report. Our report expresses an unmodified opinion on the Banks internal financial controls over financial reporting as at 31st March, 2022.

(b) On the basis of the written representation received from the directors as on 31st March, 2022 and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2022 from being appointed as a director interm ofsub-section (2) ofsection 164oftheCompaniesAct,2013

(c) There are no observations or comments on financial transactions or matters which have any adverse effect on the functioning of the bank.

(d) There are no qualifications, reservations or adverse remarks relating to the maintenance of accounts and other matters connected therewith.

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 notvisited by us.

b) the Balance Sheet, the Profit and Loss Account and Cash Flows 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 statutory branch auditors of the Bank under section 29 of the Banking Regulation Act, 1949 have been sent to usand have been properly dealt with by us in preparing this report; and

d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flows Statement comply with the applicable accounting standards, to the extent they are not inconsistentwith the accounting policies prescribed by RBI.

For M/S Ghiya & Co For M/s Shiv & Associates
Chartered Accountants Chartered Accountants
FRN:001088C FRN: 009989N
CA Ashish Ghiya CA Manish Gupta
Partner Partner
M.No. 427062 M. No. 095518
UDIN: UDIN:
Place: New Delhi Place: New Delhi
For M/S Chaturvedi & CO. For M/s Manohar Chowdhry & Associates
Chartered Accountants Chartered Accountants
FRN:302137E FRN: 001997S
CA R.K. Nanda CA Sandeep Mogalapalli
Partner Partner
M.No. 510574 M. No. 221848
UDIN: UDIN:
Place: New Delhi Place: New Delhi
Dated : 19th May, 2022.

ANNEXURE"A"TO THE INDEPENDENT AUDITORS REPORT

(Referredtoin paragraph 12(a) underReportonOther Legal and Regulatory Requirementssectionofour 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.6270/08.91.001/2019-20dated March 17,2020 (as amended) (the"RBI communication")

We have audited the internal financial controls over financial reporting of Punjab & Sind Bank ("the Bank") as of 31st March ,2022 in conjunction with our audit of the financial statements of the Bank for the year ended on that date which includes internal financial controls over financial reporting ofthe selected bankbranches.

ManagementsResponsibility for Internal FinancialControls

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 andguidelines issued bythe Reserve Bank of India.

Auditors Responsibility

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 bythe 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 judgment, including the assessment of the risks of material misstatement of the financialstatements, whether duetofraudorerror.

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

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 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 financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures ofthe Bank are being made only in accordance with authorizations of management and directors ofthe Bank; and (3) provide

reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Banks assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

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 ofcompliance with the policies or procedures may deteriorate.

Opinion

In our opinion, and tothe 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 generally, in all material respects, adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March,2022, 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 ofChartered Accountants of India.

OtherMatters

Our aforesaid report in so far as it relates to the operating effectiveness of internal financial controls over financial reporting of 37 branches is based on the corresponding reports of the respective branch auditors of those branches.

Our opinion is not modified in respect ofthis matter.

For M/S Ghiya & Co For M/s Shiv & Associates
Chartered Accountants Chartered Accountants
FRN:001088C FRN: 009989N
CA Ashish Ghiya CA Manish Gupta
Partner Partner
M.No. 427062 M. No. 095518
UDIN: 22427062AJGVJF1516 UDIN: 22095518AJGVQU7465
Place: New Delhi Place: New Delhi
For M/S Chaturvedi & CO. For M/s Manohar Chowdhry & Associates
Chartered Accountants Chartered Accountants
FRN:302137E FRN: 001997S
CA R.K. Nanda CA Sandeep Mogalapalli
Partner Partner
M.No. 510574 M. No.221848
UDIN: 22510574AJGVVT3539 UDIN: 22221848AJGVWD9697
Place: New Delhi Place: New Delhi