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Auditor Report of Andhra Bank

Mar 31, 2017

INDEPENDENT AUDITORS'' REPORT

To

The Members of Andhra Bank

Report on the Financial Statements

1. We have audited the accompanying financial statements of Andhra Bank (“the Bank”) as at 31st March, 2017 which comprises the Balance Sheet as at 31st March, 2017, the Profit and Loss Account, the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information. Incorporated in these financial statements are the returns of 20 branches audited by us and 1375 branches 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 incorporated in the Balance Sheet and the Profit and Loss Account are the returns from 1513 branches which have not been subjected to audit. These unaudited branches account for 8.92% of advances, 19.67 % of deposits, 5.90 % of interest income and 17.31 % of interest expenses.

Management''s Responsibility for the Financial Statements

2. Management is responsible for the preparation of these financial statements in accordance with the Banking Regulation Act 1949, Reserve Bank of India guidelines from time to time and accounting standards generally accepted in India. This responsibility includes the design, implementation and maintenance of internal controls relevant to the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

3. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the Bank''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on effectiveness of the bank''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

6. In our opinion, as shown by books of the Bank, and to the best of our information and according to the explanations given to us:

(i) 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 state of affairs of the Bank as at 31st March, 2017 in conformity with accounting principles generally accepted in India;

(ii) the Profit and Loss Account, read with the notes thereon shows a true balance of Profit in conformity with accounting principles generally accepted in India, for the year covered by the account; and

(iii) the Cash Flow Statement gives a true and fair view of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

7. The Balance Sheet and the Profit and Loss Account have been drawn up as per the provisions of Section 29 of the Banking Regulation Act, 1949.

8. Subject to the limitations of the audit indicated in paragraph 1 to 5 above and as required by the Banking Companies (Acquisition and Transfer of Undertakings) Act, 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.

9. We further report that:

(a) the Balance Sheet and Profit and Loss account dealt with by this report are in agreement with the books of account and returns;

(b) 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;

(c) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with the applicable accounting standards.

For PREM GUPTA & CO For V.KRISHNAN & CO.

Chartered Accountants Chartered Accountants

FRN- 000425N FRN- 001541S

(CA Prem Behari Gupta) (CA P.GEETHA)

Partner (M. No. 080245) Partner (M. No. 202607)

For BASHA & NARASIM HAN For SAGAR & ASSOCIATES

Chartered Accountants Chartered Accountants

FRN- 006031S FRN- 003510S

(CA C.SHUNMUGASUNDARAM) (CA B.ARUNA)

Partner (M. No. 222455) Partner (M. No. 216454)

Place: Hyderabad

Date: 16.05.2017


Mar 31, 2015

1. We have audited the accompanying financial statements of Andhra Bank as at 31st March, 2015 which comprise the Balance Sheet as at 31st March, 2015 and Profit and Loss Account and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information. Incorporated in these financial statements are the returns of 20 branches audited by us and 1071 branches audited by 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 Balance Sheet and Profit and Loss Account are the returns from 1416 branches which have not been subjected to audit. These unaudited branches account for 6.68 per cent of advances, 20.64 per cent of deposits, 5.13 per cent of interest income and 17.08 per cent of interest expenses.

Management''s Responsibility for the Financial Statements

2. Management is responsible for the preparation of these financial statements in accordance with the Banking Regulation Act, 1949. This responsibility includes the design, implementation and maintenance of internal controls relevant to the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

3. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. 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. In making those risk assessments, the auditor considers internal controls relevant to the Bank''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

6. In our opinion, as shown by books of the Bank, and to the best of our information and according to the explanations given to us:

(i) 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 state of affairs of the Bank as at 31st March, 2015 in conformity with accounting principles generally accepted in India;

(ii) the Profit and Loss Account, read with the notes thereon shows a true balance of Profit, in conformity with accounting principles generally accepted in India, for the year covered by the account; and

(iii) the Cash Flow Statement gives a true and fair view of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

7. The Balance Sheet and the Profit and Loss Account have been drawn up in Forms "A" and "B" respectively of the Third Schedule to the Banking Regulation Act, 1949.

8. Subject to the limitations of the audit indicated in paragraph 1 to 5 above and as required by the Banking Companies (Acquisition and Transfer of Undertakings) Act, 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.

(c) The returns received from the offices and branches of the Bank have been found adequate for the purposes of our audit.

9. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with the applicable accounting standards.

For NAG & ASSOCIATES For PREM GUPTA & CO. V.KRISHNAN&CO. For BASHA & NARASIMHAN Chartered Accountants Chartered Accountants Chartered Accountants Chartered Accountants

FRN-312063E FRN-000425N FRN-001541S FRN-006031S

(CA Anjan Bhattacharyya) (CA Prem Behari Gupta) (CA G.Pari) (CA Sk.Phyaji Basha Saheb)

Partner (M. No. 070633) Partner (M. No. 080245) Partner (M. No. 026769) Partner (M. No. 023417)

Place: Hyderabad Date : 27.04.2015


Mar 31, 2014

1. We have audited the accompanying financial statements of Andhra Bank as at 31st March, 2014 which comprise the Balance Sheet as at 31st March, 2014 and Profit and Loss Account and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information. Incorporated in these financial statements are the returns of 20 branches audited by us and 985 branches audited by 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 Balance Sheet and Profit and Loss Account are the returns from 1109 branches which have not been subjected to audit. These unaudited branches account for 7.85 per cent of advances, 21.61 per cent of deposits, 5.50 per cent of interest income and 20.19 per cent of interest expenses.

Management''s Responsibility for the Financial Statements

2. Management is responsible for the preparation of these financial statements in accordance with the Banking Regulation Act, 1949. This responsibility includes the design, implementation and maintenance of internal controls relevant to the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

3. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. 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. In making those risk assessments, the auditor considers internal controls relevant to the Bank''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

Emphasis of Matter:

6. We draw attention to:

a) Note No: 6.2 of Schedule No. 18, Notes on Accounts to the Financial Statements in respect of Accounting treatment given effect to for creation of Deferred Tax Liability on Special Reserve under Sec 36(1)(viii) of Income Tax Act, 1961 as at 31-3-2013, pursuant to RBI Circular No. BP.BC.77/21.04.018/2013-14 dated December 20,2013.

Our opinion is not qualified in respect of the above.

Opinion

7. In our opinion, as shown by books of the Bank, and to the best of our information and according to the explanations given to us:

(i) 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 state of affairs of the Bank as at 31st March, 2014 in conformity with accounting principles generally accepted in India;

(ii) the Profit and Loss Account, read with the notes thereon shows a true balance of Profit, in conformity with accounting principles generally accepted in India, for the year covered by the account; and

(iii) the Cash Flow Statement gives a true and fair view of the cash fl ows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

8. The Balance Sheet and the Profit and Loss Account have been drawn up in Forms "A" and "B" respectively of the Third Schedule to the Banking Regulation Act, 1949.

9. Subject to the limitations of the audit indicated in paragraph 1 to 5 above and as required by the Banking Companies (Acquisition and Transfer of Undertakings) Act, 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.

(c) The returns received from the Offices and branches of the Bank have been found adequate for the purposes of our audit.

10. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with the applicable accounting standards.

For UMAMAHESWARA RAO & CO For R.SUBRAMANIAN AND COMPANY For PATRO & CO

Chartered Accountants FRN-004453S Chartered Accountants FRN-004137S Chartered Accountants FRN-310100E

(CA L.SHYAMA PRASAD) (CA R.PRAKASH) (CA P. VENKATESWARA RAO)

Partner (M. No. 028224) Partner (M. No. 205869) Partner (M. No. 208606)

For C.R.SAGDEO & CO For NAG & ASSOCIATES

Chartered Accountants FRN-108959W Chartered Accountants FRN- 312063E

(CA ANOOP C SAGDEO) (CA PRADAY KUMAR PAL)

Partner (M. No. 104659) Partner (M. No. 050395)

Place: Hyderabad

Date: 09.05.2014


Mar 31, 2013

Report on the Financial Statements

1. We have audited the accompanying financial statements of Andhra Bank as at 31st March, 2013 which comprise the Balance Sheet as at 31 st March, 2013 and Profit and Loss Account and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information. Incorporated in these financial statements are the returns of 20 branches audited by us and 808 branches audited by 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 Balance Sheet and Profit and Loss Account are the returns from 1039 branches which have not been subjected to audit. These unaudited branches account for 8.70 per cent of advances, 22.82 per cent of deposits, 8.11 per cent of interest income and 20.92 per cent of interest expenses.

Management''s Responsibility for the Financial Statements

2. Management is responsible for the preparation of these financial statements in accordance with the Banking Regulation Act, 1949. This responsibility includes the design, implementation and maintenance of internal controls relevant to the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

3. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. 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. In making those risk assessments, the auditor considers internal controls relevant to the Bank''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

6. In our opinion, as shown by books of the Bank, and to the best of our information and according to the explanations given to us:

(I) 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 state of affairs of the Bank as at 31st March, 2013 in conformity with accounting principles generally accepted in India;

(ii) the Profit $lnd Loss Account, read with the notes thereon shows a true balance of Profit, in conformity with accounting principles generally accepted in India, forthe year covered by the account; and

(iii) the Cash Flow Statement gives a true and fair view of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

7. The Balance Sheet and the Profit and Loss Account have been drawn up in Forms "A" and "B" respectively of the Third Schedule to the Banking Regulation Act, 1949.

8. Subject to the limitations of the audit indicated in paragraph 1 to 5 above and as required by the Banking Companies (Acquisition and Transfer of Undertakings) Act, 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.

(c) The returns received from the offices and branches of the Bank have been found adequate for the purposes of ouraudit.

9. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with the applicable accounting standards.

For NATARAJA IYER & CO For UMAMAHESWARA RAO & CO For RSUBRAMANIAN AND COMPANY

Chartered Accountants Chartered Accountants Chartered Accountants

FRN-002413S FRN-004453S FRN-004137S

(U. Yagneswara Sarma) (R.R. Dakshinamurthy) (R. Prakash)

Partner (M.No. 018883) Partner (M. No. 211639) Partner (M. No. 205869)

For PATRO & CO For C.R.SAGDEO & CO For NAG & ASSOCIATES

Chartered Accountants Chartered Accountants Chartered Accountants

FRN-310100E FRN-108959W FRN-312063E

(Rajendra Patro) (Suman Bose) (Indranath Nag)

Partner (M. No. 019423) Partner (M. No. 045239) Partner (M. No. 050531)

Place: Hyderabad

Date: 02.05.2013


Mar 31, 2012

1. We have audited the accompanying financial statements of the Andhra Bank as at 31st March 2012 which comprise of the Balance Sheet as at 31st March, 2012, Profit and Loss account and the Cash Flow Statement for the year then ended and a summary of the significant accounting policies and other explanatory information. Incorporated in these financial statements are returns of 20 branches audited by us, 1300 branches audited by other auditors. The branches audited by us and those audited by other auditors have been selected by the Bank in accordance with the guidelines issued by Reserve Bank of India. Also incorporated in the Balance Sheet and Profit and Loss account are the returns from 392 branches and 19 service centers which have not been subjected to audit. These unaudited branches account for 1.34 % of advances , 8.01% of deposits, 0.93% of interest income and 6.34% of interest expenses.

Management's Responsibility for the Financial Statements

2. Management is responsible for the preparation of these financial statements in accordance with the Banking Regulation Act, 1949. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

3. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatements of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the bank's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the management, as well as evaluating the overall presentation of the financial statements.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

6. In our opinion, as shown by books of bank, and to the best of our information and according to the explanations given to us;

(i) 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 state of affairs of the Bank as at 31st March 2012, in conformity with accounting principles generally accepted in India.

(ii) the Profit and Loss Account, read with the notes thereon shows a true balance of profit, in conformity with accounting principles generally accepted in India, for the year covered by the account; and

(iii) the Cash Flow Statement gives a true and fair view of the cash flows for the year ended on that date.

Emphasis of Matter

7. Without qualifying our opinion, we draw attention to:

Note no.4 of Schedule 18 regarding deferment of pension and gratuity liability to the extent of Rs 379.99 crore pursuant to exemption granted by the Reserve Bank of India to the public sector banks from application of the provisions of Accounting Standards (AS) 15, "Employee Benefits" vide its circular no. DBOD.BP.BC/ 80/21.04.018/2010-11 on Re-opening of Pension Option to Employees of Public Sector Banks and Enhancement in Gratuity Limits - Prudential Regulatory Treatment.

Report on Other Legal and Regulatory Requirements

8. The Balance Sheet and the Profit and Loss Account have been drawn up in Forms "A" and "B" respectively of the Third Schedule to the Banking Regulation Act, 1949.

9. Subject to the limitations of the audit indicated in paragraphs 1 to 5 above and as required by the Banking Companies (Acquision and Transfer of Undertakings) Act, 1980 and subject also to the limitations of disclosure required therein, we report that:

(i) we have obtained all the information and explanations which, to the best of our knowledge and belief were necessary for the purpose of audit and have found them to be satisfactory.

(ii) the transactions of the Bank, which have come to our notice, have been within the powers of the Bank.

(iii)the returns received from the offices and branches of the Bank have been generally found adequate for the purposes of our audit and where the particulars in the returns received were incomplete/inadequate, we have relied upon the information and explanations furnished by the Management.

10.In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with the applicable Accounting Standards.

For RAJU & PRASAD For NATARAJA IYER & CO For UMAMAHESWARA RAO & CO

Chartered Accountants FRN-003475S Chartered Accountants FRN-002413S Chartered Accountants FRN-004453S

(S Srinivasa Rao) (E S Ranganath) (G Siva Rama Krishna Prasad)

Partner (M. No.9329) Partner (M.No.13924) Partner (M. No. 024860)

For R SUBRAMANIAN AND COMPANY For PATRO & CO For C R SAGDEO & CO

Chartered Accountants FRN-004137S Chartered Accountants FRN-310100E Chartered Accountants FRN-108959W

(R Subramanian) (Rajendra Patro) (L S Chandrasekhar)

Partner (M. No.8460) Partner (M. No.019423) Partner (M. No.044265)

Place: Mumbai

Date: 07.05.2012


Mar 31, 2011

1. We have audited the accompanying financial statements of the Andhra Bank as at 31st March 2011 which comprises the Balance Sheet as at 31st March, 2011 and the Profit and Loss account and the Cash Flow Statement for the year then ended and a summary of the significant accounting policies and other explanatory information. Incorporated in these financial statements are returns of 20 branches audited by us, 1416 branches audited by other auditors. The branches audited by us and those audited by other auditors have been selected by the Bank in accordance with the guidelines issued by Reserve Bank of India. Also incorporated in the Balance Sheet and Profit and Loss account are the returns from 196 branches and 18 service centers which have not been subjected to audit. These unaudited branches account for 0.35 % of advances , 3.42% of deposits, 0.24% of interest income and 2.79% of interest expenses.

Managements Responsibility for the Financial Statements

2. Management is responsible for the preparation of these financial statements in accordance with the Banking Regulation Act, 1949. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.

Auditors Responsibility

3. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditorsjudgment, including the assessment of the risks of material misstatements of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the banks preparation and fair presentation of the financial statements in orderto design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the management, as well as evaluating the overall presentation of the financial statements.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

6. In our opinion, as shown by books of bank, and to the best of our information and according to the explanations given to us.

(i) 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 state of affairs of the Bank as at 31st March 2011, in conformity with accounting principles generally accepted in India.

(ii) the Profit and Loss Account, read with the notes thereon shows a true balance of profit, in conformity with accounting principles generally accepted in India, for the year covered by the accounts; and

(iii) the Cash Flow Statement gives a true and fair view of the cash flows for the year ended on that date.

Emphasis of Matter

7. Without qualifying our opinion, we draw attention to:-

(i) Note no. 4 of Schedule 18 regarding deferment of pension and gratuity liability to the extent of Rs. 506.65 crores pursuant to exemption granted by the Reserve Bank of India to the public sector banks from application of the provisions of Accounting Standards (AS) 15, "Employee Benefits" vide its circular no. DBOD.BP.BC/ 80/21.04.018/2010-11 on Re-opening of Pension Option to Employees of Public Sector Banks and Enhancement in Gratuity Limits - Prudential Regulatory Treatment.

(ii) Note no 5(a)(i) of Schedule 18 regarding the claim lodged by the bank with Government of India under

Agricultural Debt Waiver and Debt Relief Scheme 2008.

(iii) Note No. 12.2.3.(c) regarding change in Accounting Policy for depreciation on transferring securities from H.F.T. to AF.S. category and vice versa.

Report on Other Legal and Regulatory Requirements

8. The Balance Sheet and the Profit and Loss Account have been drawn up in Forms "A" and "B" respectively of the Third Schedule to the Banking Regulation Act, 1949.

9. Subject to the limitation of the audit indicated in paragraph 1 to 5 above and as required by the Banking Companies (Acquision and Transfer of Undertakings) Act, 1980 and subject also to the limitation of disclosure required therein, we report that: -

(i) we have obtained all the information and explanations which, to the best of our knowledge and belief were necessary for the purpose of audit and have found them to be satisfactory.

(ii) the transactions of the Bank, which have come to our notice, have been within the powers of the Bank.

(iii) the returns received from the offices and branches of the Bank have been generally found adequate for the purposes of our audit and where the particulars in the returns received were incomplete/inadequate, we have relied upon the information and explanations furnished by the Management.

10. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with the applicable Accounting Standards.

ForB.N.KEDIA&CO For K.K.GHEI & CO For K.S.RAMAKRISHNA & CO

Chartered Accountants Chartered Accountants Chartered Accountants

FRN-001652N FRN-001342N FRN-02888S

(S.K. Kedia) (SumitGhei) (Ch. Amar Sudheer)

Partner (M. No. 052579) Partner (M.No. 097893) Partner (M No. 201320)

For RAMAN ASSOCIATE For RAJU & PRASAD For NATARAJA IYER & CO

Chartered Accountants Chartered Accountants Chartered Accountants

FRN-02910S FRN-003475S FRN-002413S

(G.Vasudevan) (M. Siva Ram Prasad) (G.Prasad)

Partner (M. No.020739) Partner (M. No.018943) Partner (M. No.019617)

Place : Hyderabad Date : 05.05.2011

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