Utkarsh Small Finance Bank Ltd Auditor Reports

To

The Members of

Utkarsh Small Finance Bank Limited

Report on the audit of the Financial Statements

Opinion

1. We have audited the accompanying Financial Statements of Utkarsh Small Finance Bank Limited (the Bank), which comprise the Balance Sheet as at 31 March 2026, theProfit and Loss Account, and the Cash Flow Statement for the year ended on that date, and notes to the Financial Statements, including a summary of the significant accounting policies and other explanatory information (the Financial Statements).

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, as well as the Companies Act, 2013 (the Act) and circulars and guidelines issued by the Reserve Bank of India (the RBI), in the manner so required for banking companies and give a true and fair view in conformity with the Accounting Standards prescribed under section 133 of the Act, read with the Companies (Accounting Standards) Rules, 2021 (AS) and other accounting principles generally accepted in India, of the State of and its Loss and Affairs its 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) specified under section 143(10) of the Act. Our responsibilities under those SAs 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 (ICAI) together with the ethical requirements that are relevant to our audit of the Financial Statements under the provisions of the Act, and the Rules thereunder, 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 and appropriate to provide a basis for our opinion.

Key Audit Matters

4. 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 year. 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 be the Key Audit Matters:

Key Audit Matter	How the matter was addressed in our audit
1. Information Technology (IT) Systems and controls over financial reporting
As the Bank operates on core banking solution across its branches and asset centres, the reliability and security of Information Technology (\u201cIT\u201d) systems plays a key role in the business operations. Since large volume of transactions are processed daily, the IT controls are required to ensure that applications process data as expected and that changes are made in an appropriate manner.	In assessing the controls over the IT systems of the Bank, we involved our technology specialists to understand the IT control environment, IT infrastructure and IT systems.
IT infrastructure is critical for smooth functioning and accurate accounting and financial reporting process.	We conducted an assessment and identified key IT systems that are critical for accounting and financial reporting process and are relevant for our audit and tested their internal controls. In particular:
Due to the pervasive nature and complexity of the IT environment, we have ascertained key IT systems used in financial reporting process and its related controls as a key audit matter.	We obtained an understanding of the Bank\u2019s IT control environment and key changes during the audit period that may be relevant to the audit;
	We tested the design, implementation and operating effectiveness of the Bank\u2019s General IT controls over the relevant IT systems that are critical to accounting and financial reporting. This included evaluation of Bank\u2019s controls for user access management, program change management, database management, network operations, incident management and other IT operations performed by the Bank during the period of audit;
	We tested key automated and manual business cycle controls and logic for system generated reports relevant to the audit; and
	We also tested compensating controls and performed alternate procedures to assess whether there were any unaddressed IT risks that would materially impact the financial statements.

Key Audit Matter	How the matter was addressed in our audit
2. Income Recognition, Asset Classification and Provisioning on Advances (IRAC) as per the regulatory requirements.
Total Loans and Advances (Net of Provision) as at 31 March 2026: INR 18,069.59 Crore
Provision for NPAs as at 31 March 2026: INR 865.85 Crore
Refer Schedule 9, Schedule 17.4 (B) and Schedule 18.4.1
The Bank is required to comply with the Master Directions issued by the Reserve Bank of India (\u2018RBI\u2019) on \u2018Income Recognition, Asset Classification and Provisioning pertaining to Advances\u2019 (the IRAC norms\u2019) and amendments thereto (\u201cRBI guidelines\u201d) which prescribes the norms for identification and classification of Non-performing Assets (\u2018NPAs\u2019) and the minimum provision required for such assets.	Our audit approach included testing the design, operating effectiveness of internal controls and substantive audit procedures in respect of income recognition, asset classification and provisioning pertaining to advances. In particular:
The Bank is also required to apply its judgement to determine the identification and provision required against NPAs considering various quantitative as well as qualitative factors.	\u2022 We have evaluated and understood the Bank\u2019s internal control system in adhering to the RBI guidelines;
As the identification of and provisioning against NPAs requires considerable level of management estimation, application of various regulatory requirements and its significance to the overall audit due to stakeholder and regulatory focus, we have identified this as a key audit matter.	\u2022 We have analysed and understood key IT systems/ applications used and tested the design and implementation and operational effectiveness of relevant controls in relation to income recognition, asset classification, viz., standard, sub-standard, doubtful and loss with reference to RBI guidelines and provisioning pertaining to advances.
	We test checked advances to examine the validity and accuracy of the recorded amounts, provision for NPAs, and compliance with IRAC norms of RBI; and
	Assessed appropriateness & the adequacy of disclosures as per RBI guidelines relating to NPAs

Other Information

5. The Banks Board of Directors are responsible for the other information. The other information comprises the information included in the Banks Annual Report but does not include the Financial Statements and our auditors report thereon. The Other Information included is expected to be made available to us after the date of this auditors report.

6. Our opinion on the Financial Statements do not cover the other information and Basel II Disclosures and we do not express any form of assurance conclusion thereon.

7. In connection with our audit of the Financial Statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the Financial Statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

8. When we read the other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and take appropriate action as applicable under the relevant laws and regulations.

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

9. The Banks Management and Board of Directors are responsible for the matters stated in section 134(5) of the Act, with respect to the preparation of these Financial Statements that give a true and fair view of the State of Affairs, Loss and Cash Flows of the Bank in accordance with the Accounting Standards specified under section 133 of the Act read with the Companies (Accounting Standards) Rules, 2021, and other accounting principles generally accepted in India and provisions of section 29 of the Banking Regulation Act, 1949 and circulars, guidelines and directions issued by the RBI from time to time (RBI Guidelines). This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act and the RBI Guidelines for safeguarding of the assets of the Bank and for preventing and detecting frauds and other irregularities; selection of the appropriate accounting software for ensuring compliance with applicable laws and regulations including those related to retention of audit logs; 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.

10. In preparing the Financial Statements, the Management and the Board of Directors are 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 the Management and the Board of Directors either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.

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

Auditors Responsibilities for the Audit of the Financial Statements

12. 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.

13. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

13.1. 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.

13.2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) the Act, we are also responsible for expressing our opinion on whether the Bank has adequate internal financial controls with reference to Financial Statements and the operating effectiveness of such controls.

13.3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Management.

13.4. Conclude on the appropriateness of the 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 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.

13.5. 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.

14. 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.

15. 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.

16. 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 for the current year 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 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

17. Attention is drawn to the fact that the Financial Statements of the Bank for the year ended 31 March 2025 were audited by predecessor auditors whose report dated 03 May 2025 expressed an unmodified opinion on those Financial Statements. Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

18. In our opinion, the Balance Sheet and the Profit and Loss account have been drawn up in accordance with the provisions of section 29 of the Banking Regulation Act, 1949 and section 133 of the Act and relevant rules issued thereunder.

19. As required by sub-section (3) of section 30 of the Banking Regulation Act, 1949, based on our audit we report that:

19.1. We have sought and obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purpose of our audit and have found them to be satisfactory;

19.2. The transactions of the Bank, which have come to our notice during the course of our audit, have been within the powers of the Bank; and

19.3. Since the key operations of the Bank are automated with the key applications integrated to the core banking system, the audit is carried out centrally, as all the necessary records and data required for the purposes of our audit are available therein. We have visited 29 branches to examine the records maintained at such branches for the purpose of our audit.

20. Further, as required by Section 143(3) of the Act based on our audit we report, to the extent applicable, that:

20.1. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

20.2. In our opinion, except for the matter stated in the paragraph 21.8 below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules 2014 (as amended) (the Rules), 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 of accounts.

20.3. The Balance Sheet, the Profit and Loss Account, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

20.4. In our opinion, the aforesaid Financial Statements comply with the Accounting Standards specified under Section 133 of the Act read with the relevant rules thereunder to the extent they are not inconsistent with the accounting policies prescribed by the RBI.

20.5. On the basis of the written representations received from the directors as on 31 March 2026 taken on record by the Board of Directors, none of the directors are disqualified as on 31 March 2026 from being appointed as a director in terms of Section 164(2) of the Act.

20.6. With respect to the maintenance of accounts and other matters connected therewith, reference is made to our remarks in paragraph 20.2 above on reporting under Section 143(3)(b) and paragraph 21.8 below on reporting under Rule 11(g) of the Rules.

20.7. With respect to the adequacy of the internal financial controls with reference to the Financial Statements of the Bank and the operating effectiveness of such controls, refer to our separate Report in Annexure A.

20.8. With respect to the other matters to be included in the Auditors Report in accordance with the requirements of Section 197(16) of the Act, as amended; The Bank is a Banking Company as defined under Banking Regulation Act, 1949. Accordingly, the requirements prescribed under Section 197 of the Act, do not apply.

21. With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014 (as amended), in our opinion and to the best of our information and according to the explanations given to us:

21.1. The Bank has disclosed the impact of pending litigations on its financialposition in its Financial Statements - Refer Schedule 12 - Contingent Liabilities to the Financial Statements.

21.2. The Bank did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

21.3. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Bank.

21.4. The Management has represented, to best of their knowledge and belief that no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Bank to or in any other person(s) or entity(ies), including foreign entities (Intermediaries), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Bank (Ultimate any guarantee, security Beneficiaries) or the like on behalf of the Ultimate Beneficiaries.

21.5. The Management has represented, to best of their knowledge and belief, that no funds have been received by the Bank from any person(s) or entity(ies), including foreign entities (Funding Parties), with the understanding, whether recorded in writing or otherwise, that the Bank shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Beneficiaries)or Party (Ultimate provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

21.6. Based on such audit procedures, that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representation under sub clause (i) and (ii) of Rule 11(e), as provided under para 21.4 and 21.5 above, contain any material misstatement.

21.7. The Bank has not declared and / or paid any dividend during the year.

21.8. Based on our examination which included test checks, the Bank has used various accounting software for maintaining its books of account which have feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software except the audit trail feature was not enabled throughout the year at the database level in respect of one accounting software to log any direct data changes.

Based on our procedures performed, we did not notice any instance of the audit trail feature being tampered with. Additionally, the audit trail has been preserved by the Bank as per the statutory requirements for record retention. In respect of the aforesaid databases, in the absence of audit trail for the said period, the question of our commenting on whether the audit trail was tampered with and whether audit trail was retained, does not arise.

Annexure A to the Independent Auditors report on the Financial Statements of Utkarsh Small Finance Bank Limited for the year ended 31 March 2026

(Referred to in paragraph 20.7 under Report on Other Legal and Regulatory Requirements section of our report of even date) Report on the Internal Financial Controls with reference to the aforesaid Financial Statements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (the Act).

Opinion

1. We have audited the internal financial controls with reference to the Financial Statements of Utkarsh Small Finance Bank Limited (the Bank) as at 31 March 2026 in conjunction with our audit of the Financial Statements of the Bank for the year ended on that date.

2. In our opinion, the Bank has, in all material respects, an adequate internal financial controls with reference to the Financial Statements and such internal financial controls were operating effectively as at 31 March 2026, based on the internal controls 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 (the Guidance Note).

Managements responsibility for Internal Financial Controls

3. The Banks Management is responsible for establishing and maintaining internal financial controls based on the internal controls over financial reporting criteria established by the Bank considering the essential components of internal control stated in the Guidance Note. 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 Act.

Auditors responsibility

4. Our responsibility is to express an opinion on the Banks internal financial controls with reference to the Financial Statements based on our audit. We conducted our audit in accordance with the Guidance

Note and the Standards on Auditing (SA), prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls with reference to the Financial Statements. Those SAs and the Guidance Note require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to the Financial Statements were established and maintained and whether such controls operated effectively in all material respects.

5. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls with reference to the Financial Statements and their operating effectiveness. Our audit of internal financial controls with reference to the Financial Statements included obtaining an understanding of internal financial controls with reference to the Financial Statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the Financial Statements, whether due to fraud or error.

6. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Banks internal financial controls with reference to the Financial Statements.

Meaning of Internal Financial Controls with reference to the Financial Statements

7. A banks internal financial controls with reference to the Financial Statements 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 with reference to the Financial Statements include 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 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 Financial Statements.

Inherent Limitations of Internal Financial Controls with reference to the Financial Statements

8. Because of the inherent limitations of internal financial controls with reference to the Financial Statements, 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 with reference to the Financial Statements to future periods are subject to the risk that the internal financial controls with reference to the Financial Statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

For M M NISSIM & CO LLP	For KKC & Associates LLP
Chartered Accountants	Chartered Accountants
Firm Registration Number: 107122W/ W100672	(formerly Khimji Kunverji & Co LLP)
	Firm Registration Number: 105146W/W100621

Navin Kumar Jain	Gautam Shah
Partner	Partner
ICAI Membership No.: 090847	ICAI Membership No.: 117348
UDIN: 26090847XEGYBQ2628	UDIN: 26117348QAMNOS4407
Place: Mumbai	Place: Mumbai
Date: 09 May 2026	Date: 09 May 2026